Accessibility links

Breaking News

Russia Seeks New Global Economic Structures

  • Peter Fedynsky

President Dmitri Medvedev is again proposing major international economic reforms even as he acknowledges that over-reliance on extractive industries, corruption, and inflation are hampering modernization of the Russian economy.

In his keynote address to the annual Saint Petersburg Economic Forum, President Medvedev called for new standards to regulate international financial markets, new rules of energy cooperation, new reserve currencies, including the Russian ruble, and new financial institutions

Mr. Medvedev says these should, in the final analysis, be fundamentally new institutions, that will not be dominated by individual political plots, motives, governments or countries.

Russian leaders have been pushing the idea of replacing existing international financial institutions and reserve currencies over the past year. Economic expert Yevgeny Volk, director of the Heritage Foundation in Moscow, told VOA the Kremlin proposals are motivated in part by a desire to reduce U.S. global economic influence. He notes, however, that the Russian economy is only one-fifth the size of America's.

Today's Kremlin rulers, says Volk, want to reinforce their superpower ambitions in the political arena, and the economic aspect involves showing that the ruble is capable of an international role, which would simultaneously demonstrate that Russia is a great nation.

President Medvedev told the Forum that Russia is in a relatively early stage of economic development, relies too heavily on extractive industries, and is mired in centuries of corruption. He said his country has a critical need to develop an intellectual or knowledge-based economy. This, he notes, would require dominance of the middle class, ability to react to a rapidly changing world, active entrepreneurs, and a mobile society.

The Russian leader says every person must understand a rather simple thing: it is necessary to become more mobile, sometimes changing jobs and even location to ensure the comfort of families and the education of children.

But Yevgeny Volk says Kremlin talk of diversification and mobility amounts to sloganeering. He says ordinary Russians are reluctant to move, and notes their government has not taken concrete steps that would encourage them to do so.

Volk says the Russian housing market is at a beginning stage, and living conditions differ sharply in various regions of the country. The European part of Russia, he says, is more developed, but the infrastructure needed for civilized work is virtually non-existent in those areas most in need of labor - Siberia, the Far East and in sparsely populated areas.

For the foreseeable future, the Russian economy is likely to rely on energy exports and the global price of oil. Deputy Prime Minister Igor Sechin told the Saint Petersburg Forum that $75 per barrel is a fair price, but warned it could hit $150 dollars within three years if investments are not made to increase production.