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Russian Economists Debating World Crisis; Capital Flight Worse Than in 1998

March 24, 2008 (EIRNS)—On yesterday's Vesti Nedeli (News of the Week) TV program, Russian Presidental aide Igor Shuvalov confirmed the open secret, that top-level Russian economists and policy-makers are fiercely debating the severity of the current financial crisis. RosBusinessnet today reported that the debate is couched in terms of how long the U.S. mortgage crisis could last, though the government Finance Academy's report, issued last week, addressed the already systemic nature of the crisis. "Some think it could continue for a long time, triggering a global economic crisis, and others expect the U.S. economy to improve this year," Shuvalov said, "Russia would like the crisis to end as soon as possible." He added that Russia plans steps to make the ruble a stable regional currency, and that the government and Central Bank are reacting quickly and correctly to global economic developments. Shuvalov backed joining the WTO, even at a time of global economic crisis, saying that the "WTO will give us new opportunities to develop our national economy."

Finance Minister Alexei Kudrin, while maintaining the line that the "Russian economy remains highly resistant to the global crisis," also admitted on First Channel TV that the net capital outflow of $20 billion in January-February 2008 was worse than the rates of capital flight in the last crisis. "In 1998, when our financial system collapsed, capital flight was lower," Kudrin said. Since August 2007, Russia's goal has been to "create such a firm and stable system that a capital flight of $20 billion to $80 billion could not collapse it. We have done it." On the world crisis, Kudrin admitted: "Of course, the wave is coming closer, but the question is how we will react, whether we will be able to keep our economic growth." He acknowledged the likelihood of "more difficult times ahead."