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Putinomics vs. Medvednomics

The Lex column in the Financial Times has short piece taking a look at the fiscal and economic policy challenges facing the Russian leadership to use the energy wealth to diversify the economy … so far they have had much less luck on this front in comparison to the creation of national champions.

Moscow now faces a choice of business as usual, or pushing ahead with the original phase two: reforms to reverse the country out of what president Dmitry Medvedev has called the “dead end” of energy dependence. The latter, however, will be resisted by vested interests heading national champions. And legal reform and curtailing corruption, the biggest potential boost for small business, has been made all the harder as minor government officials have aped the state-led asset grabs of their superiors.

The outcome of this economic turf war, notes Uralsib, a Moscow investment bank, could set Russia’s course for years. Rather than a full-blooded embrace of the bold reform agenda being championed by Mr Medvedev and his allies, the best that may be expected is probably a kind of Putinomics-plus, involving limited efforts to move the economy up the commodity value chain by building more refineries, smelters and timber processors. Not the best start for Medvedomics.