Alexei Kudrin Interview

kudrin1120.jpgFor the most part, we like Russia’s Finance Minister Alexei Kudrin. He often presents some convincing arguments for the management of Russia’s overheating economy, and shows a certain amount of bravery by upholding orthodox finance views despite open threats to his position from the siloviki. His interview in today’s Wall Street Journal makes for an interesting read. There are just the excerpts.

On sovereign-wealth funds: “They’ve become saviors for Western financial institutions in the current financial situation.” [Alexei Kudrin] “This concern [about the use of funds for political purposes] is exaggerated. … If an investment is politically motivated, does that mean it’s not profitable? And if they are profitable, then how is that different from commercially motivated?” “Where is the line between commercial motivation and political ones? I don’t know, because so far I haven’t seen any politically motivated decisions.”

“The Norwegian fund is the most ideal one; it does no direct investments, just financial, with stakes not over 5%.””We invest mostly in government securities … that’s the optimal strategy in current markets … our fund has held up and its yield is still positive.”On the Chinese purchase of large stakes in U.S. banks in late 2007:”If the fund had bought this stake when there was no financial crisis, there would have been a lot of noise and it would have been considered politically motivated. It could have been stopped in Congress just like the [Dubai] ports. But when there’s a crisis and they need the money, then no one gets in the way of a deal.”On state-controlled companies:“I don’t want to discuss Gazprom now. In my view, Gazprom acts in the interests of its business.”On pressure to spend the oil windfall domestically:”We expanded government spending more than we should have. There is a lot of pressure from those who want to increase spending … In the last two years, we increased spending so much that it affected inflation.””We’ve made the goals of this [National Wealth] Fund clearer so it’s politically more acceptable for the population. That’s yet another reason why we wouldn’t invest this fund in high-risk assets.”On President Putin’s May 2007 public query to Mr. Kudrin about using the wealth fund to invest in Russian stocks:”It sometimes happens that we agree on such questions-and-answers in advance. But this wasn’t. On the eve of that meeting, [Putin] had a meeting with some businessmen whose shares were falling and they apparently proposed putting more money in to the domestic market to support their shares. I think the president was expressing an idea they proposed to him. It’s a question many people ask and I always have to answer this question and I didn’t lose my head and he agreed with me … Once this was recorded, the [Kremlin] press service decided it would be appropriate to show on television.”On outward investment by Russian companies:“[Incoming President Dmitry] Medvedev wants Russia to be an international financial center. Today, our companies have capital and some good experience.””Until recently, we had a certain psychological barrier; we were patriots and we only invested at home. Now it’s a freer, more liberal policy.””In contrast to the Chinese companies, which are mostly state-owned, our companies are privately owned, so they make their own strategies.”