Russian President Vladimir Putin outlined Moscow’s vision of the main challenges facing the G20 in the era of growing economic and financial instability in an article published in Mexico’s El Universal daily on Monday.
Measures taken by the G20 to deal with the 2008 crisis have proven successful in many aspects but “the systemic problems are still far from all solved” and the effects of the past crisis “are still visible today,” Putin wrote in his article, entitled The G20 and Global Economic Challenges.
Negative market trends over the past few months have prompted analysts to make “very pessimistic forecasts,” the article, which was published on the first day of a G20 summit n Mexico’s Los Cabos, reads.
To survive a new wave of global crisis, Russia and its partner states should find a “reasonable balance” between fiscal consolidation and strict budget discipline on the one hand, and job creation, economic growth, and tackling social problems, on the other hand, Putin said.
In order to avoid “outbreaks of financial panic” due to growing market instability, it is important to ensure that the global financial architecture is “tied to real assets and values,” he said.
He called on partner states to agree to implement tougher regulation of derivatives trading, facilitate the emergence of new reserve currencies and expand their use in global trade and investment, and increase the role of developing countries and "new economic powers" in managing international financial institutions, including the International Monetary Fund and the World Bank.
He also warned against excessive trade protectionism as a means to deal with the crisis. He cited a 12-percent decrease in global trade in 2009, the biggest slide in the entire post-World War II period, as an example, which he said was largely due to some countries’ “extensive de-facto use of tough protectionist measures to protect their own markets.”
“It is time to recognize that governments are, on the one hand, declaring protectionism unacceptable, but, on the other hand, are devising ever more sophisticated ways to protect their own economies, disguising protectionist measures as environmental or technical restrictions, for example,” he said, adding that such practice must stop.
All those issues will be among Russia’s priorities when it takes over the G20 presidency next year, he added.
“It is equally important to ensure that the G20 does not become just another elite club that selfishly looks after its members’ interests alone,” but that it lays down “fair rules for sustainable development throughout the entire global economy.”
Russia’s Economy Stable, but Needs Quicker ‘Change’
Russia, the world’s sixth-biggest economy in terms of purchasing parity power, has strengthened its financial and budget system over recent years, being one of the fastest growing large economies in Europe with a growth rate of 4.3 percent, Putin wrote.
He admitted, however, that Russia’s budget stability was due to its high oil and gas revenues, and if those are deducted, the country would see “high budget deficit figures,” which Putin said have grown over the years of the crisis to the “maximum level which may be allowed.”
“We are very much aware that we need to speed up the pace of change” that would reduce Russia’s dependence on raw material exports, he added.
In order to achieve this, he said, the Russian government has been working to “radically” improve the investment climate, reduce infrastructure bottlenecks and build up human capital in order to make Russia a “globally competitive place to do business” while respecting the government’s social commitments.
