Gaidar, who as Russia's acting prime minister also oversaw the "shock" economic therapy in the early 1990s, said the government believed that the money in the Stabilization Fund must not be spent. "It has no other models of a responsible policy," he said.
Until the end of 2004, the monetary and budget policy of Russia was highly commendable, and professionals admired the operation of the Central Bank and the Finance Ministry, which managed the growing inflow of petrodollars and kept inflation and the ruble within limits.
"The trend changed in 2004, and inflation is accelerating now," Gaidar said.
To solve this problem, the government should do what it did several years ago, which is repay the major foreign debt inherited from the Soviet Union for as long as it can. Gaidar said the reduction of the debt and interest payments would create genuine sources of income independent of oil revenues. These sources can be invested in health care, education and culture.
In addition, the government should give firm guarantees to business. Despite its general pragmatism and cynicism, business "will forget the offense" and continue working with a not very democratic regime, a highly specific judicial system and corrupt bureaucracy. But for this it "needs clear rules that are not changed every other day," the expert said.
Gaidar said that Russia's non-democratic political system was doomed in the long-term. He said nothing would change in the next few years, but such systems always crumbled unexpectedly due to their inflexibility.
