Illarionov on Russia’s Economic Crisis

Andrei Illarionov has a piece up on Gazeta.ru which argues that Russia itself is for the most part to blame for its current financial crisis. The Barents Observer provides a good English summary of his comments:

Meanwhile, the Russian government says the complicated financial situation in the West is to blame for the crisis. Prime Minister Putin has himself said that the outflow of foreign capital from the country is triggered by “speculation from western companies”. Mr. Illarionov writes that the negative situation on the Russian stock market following the international trend in the period until 17 July when the index dropped 13,1 percent. Then, everything changed on July 18, when Russian authorities gave TNK-BP manager Robert Dudley only a 10-day visa, thus openly intervening in the corporate conflict around the company. Foreign investors subsequently abandoned the country.

Then, over the next two months the fall in the Russian stock market dropped a remarkable 51,8 percent, far more than the international markets. In the same period, the U.S. marked dropped 8,5 percent and the global market – 12,4 percent, Illarionov writes.The economist underlines that the Russian crisis is deeply rooted in institutional reasons – in the contradiction between [on the one hand] the open global markets, the process of integration of Russian society in the world system, the tolerance and respect as leading principles of international co-existence and [on the other hand] Russian authorities’ paranoid and aggressive foreign policy and cult of isolation and violence […]