Prime Minister Vladimir Putin outlined various options for overcoming the global financial crisis
On Wednesday evening, Mr Putin made the opening speech at the World Economic Forum in Switzerland's foggy Davos after Russia was invited to open the forum for the first time. All forum delegates showed up for his policy speech. This proves that the world's business elite, which is scared stiff of the crisis, was eager to hear Mr Putin's ideas.
When Mr Putin compared the crisis to "a perfect storm, a situation when Nature's forces converge in one point of the ocean and increase their destructive potential many times over", the forum's delegates flinched and became downcast.
To defuse the situation, Mr Putin remarked jokingly: "The crisis comes unexpectedly, just like Russian winter. Although we prepare for winter all year long, it always arrives unexpectedly."
The elite smiled, with some delegates beginning to laugh. After that Mr Putin said: "The current situation is no exception either. Although the crisis was simply hanging in the air, the majority did not want to notice the rising wave."
Mr Putin did not want to blame the crisis on the United States, the way many people do today. Only two paragraphs were devoted to the subject.
"A year ago, American delegates speaking from this rostrum emphasised the US economy's fundamental stability and its cloudless prospects. Today, investment banks, the pride of Wall Street, have virtually ceased to exist. In just 12 months, they have posted losses exceeding the profits they made in the last 25 years. This example alone reflects the real situation better than any criticism."
"The time for enlightenment has come. We must calmly, and without gloating, assess the root causes of this situation and try to peep into the future."
It appears that Mr Putin was mostly interested in the future this time. So, here is what he said.
What is to be done?
1. We must first atone for the past and open our cards, so to speak. This means we must assess the real situation and write off all hopeless debts and "bad" assets. However, we would "conserve" and prolong the crisis, unless we clean up our balance sheets.
2. It is high time we got rid of virtual money, exaggerated reports and dubious ratings. We must not harbour any illusions while assessing the state of the global economy and the real corporate standing, even if such assessments are made by major auditors and analysts. In effect, our proposal implies that the audit, accounting and ratings system reform must be based on a reversion to the fundamental asset value concept.
3. Excessive dependence on a single reserve currency is dangerous for the global economy. Consequently, it would be sensible to encourage the objective process of creating several strong regional currencies in the future.
4. Most nations convert their international reserves into foreign currencies and must therefore be certain that they are reliable. Those issuing reserve and accounting currencies are objectively interested in their use by other states.
Prime Minister Putin also said: "A system based on cooperation between several major centres must replace the obsolete unipolar world economic concept."
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Expert Opinion
"Industrial nations must follow their own advice"
Davos Economic Forums of the last few years resembled master classes, with industrial nations teaching the developing countries to fight financial bubbles, to fearlessly bankrupt ineffective companies and to join in the process of globalisation. In effect, they were telling everyone to follow their example.
However, the current global crisis was caused by a financial bubble in the United States, an industrial nation which tutored the entire world in the art of economics.
Igor Nikolayev, Director of the FBK company's Strategic Analysis Department, said it was high time that industrial nations started following their own advice. National leaders make correct statements for several months but cannot get down to business, Mr Nikolayev said.
For instance, the G20 summit in Washington agreed to renounce protectionism. However, Russia, the European Union and the United States are doing nothing to accomplish this objective, Mr Nikolayev said.
Everybody agrees with statements about protectionism at the Davos Forum. We can overcome the global financial crisis only through concerted efforts. The industrial world, which has a more advanced financial system, must set an example. We have various international organisations, such as the International Monetary Fund and the World Bank. What were the responsibilities of these organisations if they have failed to predict the crisis? We must now switch over from declarations to agreements making it incumbent on everyone to fulfill specific commitments, Mr Nikolayev said.
Nigina Beroyeva