Moscow Mayor Lashes Out at Kremlin Policies

In a sign that Russia’s economic crisis is leading regional leaders to openly question the Kremlin, Moscow Mayor Yury Luzhkov spoke out against federal economic policies Tuesday.  Talking with the Kommersant newspaper (Rus), Luzkhov said that the government’s policies have made the financial crisis worse for Russia and the real economy.

“For Russia, with its massive international reserves, constant budget surplus, and large stabilization fund, it would seem the crisis shouldn’t exist,” Luzhkov said in the interview.  “But nonetheless, our [stock] quotes collapsed by three to five times, while in Europe, which is closer to the source of the crisis, they fell by merely 30-50 percent.”

The mayor blamed Finance Minister Alexei Kudrin for the decision to keep oil windfall in a government stabilization fund.  The funds, he said, should have been used to boost Russian infrastructure and the real economy.

“The monetary policy of our authorities is one of the main reasons why we are now facing such grave problems in the real sector,” Luzhkov added. “Monetarism should be abandoned.”

Russian manufacturing output fell by nearly 20 percent in January, marking the biggest drop since the mid-1990s, when Russia suffered a severe recession.  In the automobile industry, Prime-TASS reported that production was down nearly 80 percent in January, as plants shortened work-weeks and extended involuntary holidays.  Russian President Dmitry Medvedev on Monday fired four regional governors for poor management of the crisis, as public confidence in authorities showed signs of waning.

Luzhkov also blamed business and Russian business leaders for borrowing heavily from the West, and failing to invest the money into Russia.  The country’s wealthiest individuals, known collectively as “oligarchs,” spent more on personal luxuries like “football teams and yachts” than the good of the country, the mayor said.

On February 10th, Luzkhov told Kommersant (Rus) that the government should “temporarily” take away businesses from the oligarchs, develop them, then resell them on the open market when the economic crisis ends.  The state should do everything in its power, he said, “to prevent bankruptcy of the strategic industries that ensure the country’s sovereignty.”

“The government must take away these businesses, but not to create state capitalism, but to put them on the market when the crisis situation ends.”

Previously, Luzhkov also alleged that the United States was completely to blame for the global economic crisis.  In a system where goods are sold for money, the US replaced the goods with “papers,” which it then used to “flood the whole world,” he said.  Russia, meanwhile, did not have the conditions which would typically lead to a recession, according to the mayor.