the race that during an interview with the russian media he is expected to take up the role of prime minister in a new government if putin returns to the presidency. and the terror in a libya thousands are driven from their homes in the coastal city of syria as fighting intensifies between pro and anti gadhafi forces showing no signs of letting up this city is suffering heavy shelling and a tank fire with nato warplanes flying overhead the red cross warns of the dire humanitarian situation on the ground. and that brings you up to date for now and i'll be back with more in less than thirty minutes up next on our t it's our interview show spotlight with off. culture is that so much different each musician apparently trying to market the united nations to global body in search of a mission often derided as incompetent and ineffective the u.n.

is also accused of. hello again and welcome to. the show on part. and today my guest is. the european economic turmoil the global markets spiraling down that's when say another recession may be just about to start. his face to financial turbulence filled with soft sliding and losing ground against the dollar and you hear it first it's all natural and there's no need to. sell is the second recession just a scary story or should we really want. to ask one of the most from the freshness.

of the new car much cooler. russian officials say the national economy has almost recovered after the recent recession well prices are bouncing around a relatively high price on the g.d.p. is growing again but the global markets are unstable and the fluctuations in the prize a have an effect on the russian indices yet another challenge is the resignation of the highly respected finance minister. he has been in charge of the country's fiscal policy for more than a decade and his departure is seen as a blow to russia's financial credibility. mr going to have a welcome to the show thank you very much for coming. thank you for being with us well first of all the latest political news is there is that the main russian political intrigue the intrigue of the. of the presidential elections in two thousand and twelve has been resolved well at least the candid from the ruling party is going to be played and reputed well this news didn't really influence the

markets i mean seriously why does it mean that that that from the money point of view from the point of the of of of the economic financial games putin or medvedev makes no big difference i think i think there is a lesson of this question has not really calmed the market has not really send a strong message here what then you going to make policy will be because i think nobody really had any doubts that what you are putting will continue around in the economy in the company like he used to be in the prime minister and in that sense the main question for the markets is what kind of economic policy he will be carrying out and for there we need to know the key government officials in his new government and there are something that we have not had any answer to yet so so we should wait for that government reshuffle that we may be facing when medvedev instead of being president becomes the new young prime minister i would like to

remind you that occasionally the government or shuffle actually happens before the elections even before the problem enter the election so maybe the shuffle actually happens before december because what happened in two thousand and seven runs of course the government was for. the government's downs of course was appointed and if you keep government ministers came in and they actually continued through the elections you're going to be it's already starting we will we know that one of the key figures and put it is the government minister could in whose finance minister and deputy prime minister. he lost his job recently and do you think that may be a sign. of a future reshuffle in the government the that has already started i think i think we know that cauldron will not be in the government but we don't know well we don't know yet but it looks like he is not going to be in the government he said he doesn't want to be in the government however we don't know who is replacing him

because the current replacement the acting finance minister. apparently is a temporary replacement so they will be looking for a more politically connected politically important figure who will be actually run in this very key ministry. is it true you should know that rumor there that couldn't didn't want to stay in the government because because he expected to become prime minister i think i think that almost there now nothing this is plausible explanation but i think judging by their public statements both called innovative men before me and before whom was actually quite unhappy by the military spending program which was mainly and lobbied by the president invaded president medvedev was correct saying that both prime minister putin and links him in sort of finance and it's equal that it actually signed up in doris this program and they actually signed on to this program but it is through that called in the in play this program and innovative was the key person to push for reform a father who is to get in on the eve of his resignation he said the following i

quote the global economy is facing a decade of slow growth that will make it harder for countries to service debts russia faces risks of a recession if the us and europe economies fall into recession and quote how probable is this negative recession scenario i think i think when we say slow economic growth is actually a positive scenario. whether perhaps sorry that it was a slogan or the recession was well a politician of such a scale says slow economic growth he means doubtful but you know maybe i think i think i think. if the politicians in europe and the us do their job very well still we are facing the decade of slow economic growth simply because the debt over can be so large that they will have to cut expenses raise taxes and at least in the short to medium run the growth will be slow but i think

a cauldron is right in. your interest of it and this is a very tangible risk of a recession something like we had in two thousand and eight where immediate financial institution collapses and there is a financial panic which results in what's called liquidity screens and it's very hard to morrow in land and therefore and there is an implication for the real economy and the recession and that will of course mean a lot for us because when people start thinking about to be a six they try to invest less in the risky assets in russia is a risk it can't be so they'll be a withdrawal of capital from russia and so in russia financial crisis will be felt even in even part of that well we mentioned the united states the political debate in the united states over dealing with the country's debt has almost brought the world to the verge of another global recession and here's a story on that from spotlights union that he made. it has become natural for the u.s. to live beyond its means the countries that he has been accumulating for decades

the reason of the debt ceiling by congress it's been done almost every year since nine hundred sixty the procedure has long been and from ality this year how would. you this been given up for the sequel to politico through which the u.s. debt holders in suspense at one point there seemed little possibility that the republicans and democrats would come to an agreement and the danger of. real is just couldn't hold that would style last minute debt ceiling do you didn't exactly turn out to be a happy ending to this story days after it standard and. downgraded the country's credit rating for the first time in its history to you wes most wanted list. the markets reacted with panic and the sharpest since the financial crisis three years ago. the crisis in the you were sent out strong shock waves throughout the

international markets including russia even though the situation even for this there belies there's still the feel of the debt ceiling crisis beating and the west going back into recession and that field will only grow until i read the call and long term solution to the debt problem is found in washington. well actually i don't share your learning. worries a bad bad bad about the dollar because because i suspect that what happens in the states is more a game power game then real life though what's happening in europe may be more worrying because they're trying to hide the problem you know do you agree i fully agree or i think i think you're right we shouldn't really warty by the us she mentioned that the us was facing default actually that somebody else was facing the risk of technical default and of course it was as you very well sort of again sort of a game i think it was it was a big big negative surprise for everybody that u.s.

politicians are acting saw irresponsibly but yet i think was shown to be rewarding i think the new president clear he is or she is in two thousand and twelve two thousand and thirteen starts now probably two thousand and thirteen starts cutting the expenditures and raising taxes bringing in their cars and all of their probably before the election so it will not really help the new president you mean above it has no chance no it could be in your new democratic president obama but usually in a presidential democracy like the us in the beginning a new presidential term the new president comes in and says i have some time let's do that and sort of think the second term of the first couple of years of the second term is that it is the time to do. to do to exist. in europe you're absolutely right the politicians have lost credibility you mention could've been seen things which are probably more diplomatic i think in your of this game went too far and i think politicians have been slow in doing too little too late and i think they've lost a lot of credibility i think there are risks are very high and i think we shouldn't

only would involve greece i think greece greece destruction in our defaults all that any given think we should worry about bigger countries such as spain and italy and eve. they can tag and from greece is not is not is not prevented from spreading to spain and italy and then i think will will be facing the real trouble i don't think it's too late now i think there are still a number of things there can be done in europe but i think judging by previous acts of politicians we should be worried are you mentioned new economic policy that we may expect from the new government in russia. putin i have a quote here also mentioned that the new government a quote will have to take unpopular steps to deal with the global financial tormato end quote so said so put in this what is i what i will not all know a lot of good deep fried little bit here you think your problem is that we'll have

to take out a popular stance what does he mean by this and i think i think he means something that. has mentioned many times. you just called it americans living beyond their means to russians on paper live within their means we do have a budget deficit but it's limited to also have very little that we have an easier fund but this is only because oil prices high and no price comes down russia suddenly will face the reality that russia's been living beyond its means and for example pension system is not balanced over the next over the next ten years or so russia needs to be completely redesign inspection system and some. somehow bring its house in order because what we are doing now is sustainable at one hundred twenty or one hundred forty dollars per barrel but it will not be sustainable if oil prices at eighty or so even sixty dollars per barrel so so good all of the new economic school spotlighting do down should we will continue to talk about the

possibility that the problem is the root of all our plans to say which will. i am nature and discover is. a communicate with the want to. test yourself and become free and. see what nature can give you the. elite.

league. just so. it was created to serve public interests to inform and to entertain. these days there's nothing easier than opening a new media outlets but there is nothing harder than revoking its license in case of corruption.

you can involve in a community where you have one large corporation controlling the daily newspapers radio stations television stations the cable outlets you told me that that sells what democracy's public opinion versus f.c.c. frauds. as a blues march. welcome back to spotlight i'm. just a reminder that my guest in the studio today is siggy good actor of the new konami school mr goody if you just before the break you mentioned one twenty five dollars per barrel has the oil price that is that is reasonable for rush well. as far as i remember a couple of years ago the russian budget the budget of this country could be

sustained at a price of around seventy to eighty dollars per barrel and we said well we have two hundred three hundred but we can survive it so now today we see one twenty five one thirty not less so does that mean mean we've increased the spending that it happened if it had been because the policy of mr couldn't in the finance minister the government to put in medvedev or is it just objective reasons i think i think i think of the person responsible eventually of course for the report i'm basis his government his policy and i think even he would tell purpose absolutely i think i think first it was a reaction to the crisis but then. clearly understands that his political support is based on their ability to raise the material standard of living standards of russian population and if new that he spends more and more and you mentioned seventy two dollars per barrel if we compare today's situation to your two thousand and eight lehman brothers collapse and that crisis and i would remind you that

before that year say year two thousand and seven the russian budget would be a balance of fifty five dollars but i don't know the times where no price was there one percent to ten was awful but i remember times when we said thirty thirty's from thirty one we will survive exactly and this is growing. in just five four years from fifty five to one twenty five shows the level of spending impression government has to throw into the economy of government companies to be leasing spendings matters inclusions what it means spending what we're looking creasing the military budget we are increasing we are increasing military budget already do you admit that you've said we shouldn't crease no tree branches or we should increase even more of the increase in that we will increase even more if we will and this is why mr calderon is not is not happy about this policy we will spend on infrastructural so we raced pensions. by almost a factor of one and

a half we raced and we raced spending on the police and they're there all all avenues of spending very rushed is actually spending more and more and more and part of their bodies because i think the call on the call more the russian government is to sustain the popularity through more spending well. the finance minister the former finance minister hey he was labeled to be a liberal he characterized the liberal the liberal wing of the russian public policy makers russian government. was his financial policy really liberal and are we facing the end of the liberal finance policy in which its financial policy would be rather characterized as conservative and responsible rather than liberal because it is not the job of finance minister to be liberal or not his job is to keep budget balanced or in surplus or no prices high to pay for say for the

rain in the window of price goes down and in that sense he did his job he did his job especially we'll see five years to go through that crisis many manpower after the crisis spending did not go down in the then why does everybody call him a liberal because he was very vocal in this he was very critical of all these strands. and he eventually stepped down which actually showed that he didn't like what what was happening i think the liberal politician would be done by somebody else and president medvedev gave the speech in some bit of american june which could be called a liberal speech where president you've said state capitalism is not my approach my approach is part of it is ation diggle ation improving investment climate decentralization of economic and political decisions that will be a liberal in a liberal leaning the military budget of which president may dispose of the other day a very good fact absolutely no not really how we increasing how we increasing the will too but we are increasing the military budget we are not privatizing even

though there's been a number of speeches and prime minister putin also said i'm against state capitalism but we only see the increase of the presence of the state in the economy and we include receiving could be used by the government we see increased regulation and in that sense unfortunately we have not seen the new economic policy both men of a different putin have been talking about some way if they go to the moon to get the money for more of their it's a good question that's a good question russia can borrow a lot but i think if oil price goes down they thought happened because of a global recession and that's the situation of the outflow of capped an outflow of cattle exactly there will be the situation russia will and will not be able to borrow a lot simply because the investors will not like the indian to countries like russia well. we've been talking here now for about fifty minutes and i get the impression that we are. walking around the classic question which some called guns versus butter you do have is it true is it would

rush is facing today guns or butter that's a good question i think i think we don't really know whether russia needs a lot of guns because i think nobody in their in their sober mind would see that. russia's face in the threat from neda but that's another issue i think one issue is we need to leave within our means and your critics point until then i was talking about the u.s. living beyond their means now being financed by the standard and poor's there and downgrade in and also the markets think russia should also understand that there is a difference though between the u.s. and russia u.s. has a more than two hundred science areas of service and government that flexible market economy develops financial system so if they live beyond their means it's not a disaster russia doesn't have a currency like dollar and so if russia runs out of cash we've seen that happen in

eight years i should say cash they mean done and then we're going to see as we've seen the benefits of the soviet union twenty years ago we've seen the default in russia in one thousand nine hundred there may actually happen in the russia if if if russia runs out of cash that may actually have a serious economic and political implications but will russia have to borrow who said russia can borrow russia can borrow a lot so so i know a lot of specialists are watching our channel today maybe right now will they should they expect that this country will be borrowing money as long as it's not if there is a global recession or even if they just oil prices goes down substantially and russia will have to borrow and in principle of russia has a very low debt burden compared to european or a new european country sort of the united states or japan yet. going to be a risky asset and i think russia will be able to borrow just

a little bit and that means that it lot of this grants spend a lot of military spending will have to become and i think this is exactly minister called that it's warning. to the president in very different prime minister putin you can promise a lot but it is very unlikely that you will actually have to default on your promise and this is this this is something that happened twenty years ago in soviet union collapsed in military spending went down by a factor of ten or so simply because soviet union and then russia didn't have cash to pay for these guns or rockets or whatever and that me well happened in russian. president medvedev said that he will continue to work on his modernize ambitious modernization project even if when he when he is no longer protocol's prime minister i'll be i'll continue the modernization project the modernization projects are aimed as they say into the future but they cost a lot today. are they

a significant spending in there in the russian budget how they could compete comparable to the military budget to put the pension budget in the cellar and of course not when we're talking about the present event of space very projects like scoll cover and other related projects they're an order of magnitude smaller than actually adored the magnitude smaller than the military problem and in that sounds are pension pension spending these are a completely different thing and this is not where the they are they will be saving money you know they will not be able to save a lot of money by cutting this project so i think i think most of the revenue sources will be privy to zeeshan and i think russian government will have to sell its crown jewels and it is very unfortunate that the russian government has not done and before been stock prices and oil prices were high unfortunately as it is very likely that the russian government will sell the government stakes in rosner treaty because better bond. from when the oil prices law and therefore the market

will not be that much for this assets but the russian government will have to look at well experts say that june the last twelve months since the order to move last year russia has been experiencing a capital flight amounting to about five percent of the g.d.p. what are the fundamental reasons for for the outflow of capital work well i know you have already mentioned that people would not like to invest in this country but why why do russian capitalists move their room money away that's a very good question and i think it is especially striking given that the outside world is not doing that well and given the huge opportunities for investment in the russia the fact that investment is actually the russian investor themselves don't invest in russia but they are mining our design of the guys who know how to do business or because i'm sure they were born in the though the land will surely know how how everything moves here compared to europe you know even we just mentioned europe is on travel years of travel and yet the russian investors take money out

why big probably because investment climate is more than great corruption is high political risk is high in scope as critics expropriation is high and we don't know or what the economic policy of the new government will be as far as i know this far as i understand the best the russian couples can do whatever russian is losing so you guys are going to march when they move their money away to the west they only do this saving their money they're not making a lot of money there they're making their money here in their own country there they just say these are so has your because you are becoming like a savings bank for the russian oligarchs not not not necessarily and maybe some troubles actually reduced prices in europe a lot you can buy you can buy stock in europe for a fraction of what or what used to be and that. is there even though the market economic situation is so bad i think when we're talking about investment doubtful i think this is the indication that something is really wrong in russia. in the quantum right now or in russian politics i would say that political risk and of

course corruption and that's where patients are issues that in the subset of. thank you thank you very much and just to remind that my guest on the show today was sort of rector of the new economic school spotlights be back with more profound comments father was going on in and outside russia to stay on our sea to take it.

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