welcome back you're watching our team here is a look at the top stories more violence erupts in northern ca suppose nato troops adopt a shoot to field protesters demonstrating against the seizure of a disputed checkpoint. newspapers are already getting their teeth into the upcoming political challenges facing russia as president we have says prudence popularity makes him the best candidate for the top job. while gadhafi is last stronghold stands on the brink of a humanitarian catastrophe with civilians being driven out of their homes by fierce

fighting a lack of file supplies. of brings you up to date for now i'll be back with more updates in less than thirty minutes time next though our t.v. brings you an interview show spotlight with al green up. twenty years ago the largest country. to surgical razor blades. of. course had been teaching them to teach began a journey. where kids take the. truth. hello again and welcome to the spotlight brilliance of the show

on part state. and today my guest is simply. the european economic turmoil has sent the global markets spiraling downwards and that's would say another recession may be just about just talk its face to financial turbulence filled with stuff sliding in the ruble losing ground against the dollar and you get the first feels insist it's all quite natural and there's no need to. sell is the second recession just a scary story or should we really worry about it i'll say you're asking one of the most prominent russian economists prepped for a public new government school something good. russian official say the national economy has almost recovered after the recent recession world 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

oil price are heading in a match 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 from russia's financial credibility. disagree if a welcome to the show thank you very much for coming to thank you for being with us well first of all the latest political news is there is that the main russian political intrigue in the intrigue of the. of the presidential elections in two thousand and twelve has been resolved to at least be candid from the ruling party is going to be played in pretty well this news this really influence the markets i mean seriously why does it mean that that that from the money point of view from the point of view of of of the economic financial games they're put in or medvedev makes no big difference i think i think it is

a little of this question has not really calmed the market has not really a strong message for what when you're going to make policy will be because i think nobody really had any doubts nobody would put in will continue around in the economy in the country like he used to be in their prime minister and then send them in question for the markets what kind of economic policy he will be carrying out and for there when you pull nor the key government officials in his new government and there are something that we have not had any answer to yet so it's not so we should wait for the government reshuffle that we may be facing where negativity of instead of being president becomes the new young friend of i would like to remind you that occasional in government a shuffle actually happens before the elections even before the problem many election so many beautiful actually happened before december this is what happened in two thousand and seven when the government was for. governments that downs of

god was appointed and if you keep government ministers came in and they actually continued through their actions starting we will we know that one of the key figures and put in the government minister couldn't whose finance minister and deputy prime minister. he lost his job recently. do you think that may be a sign of a future reshuffle in the government that has already started over i think i think we know the cauldron will not be in the government but we don't know all right well we don't know yet but it looks like he's not going to be in the government he said he doesn't want to be in the government however we don't know who's replacing him because the current replacement be in finance minister and consul apparently is a temporary replacement so they'll be looking for a more politically connected. important figure who will be actually run in this very key ministry. is it true you should know that rumor and they're called in

didn't want to stay in the government because because he expected to become prime minister i think that in general motors they're now necking mrs plausible explanation but i think judging by the public statements both called in innovative men before me before calling was actually quite unhappy barbie military spending program which was mainly and lauded by the president when president did it was correct see a bit more prime minister putin in minister of finance telling sequal that it actually signed up in boris this program and they actually signed on for this program but yet it is true that could be in play this program and indeed it was the key person to push for reform from his birth record 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 colonies fall into recession and how probable is

this negative recession scenario i think i think when we say slow economic growth it's actually was that if someone when you know what a sorry it was a slogan or the recession is well look all of this should have such a scale says slow. i mean growth he means doubtful but you know maybe but you know i think i think i think if the politicians in europe and the us do their job very well still get a face on the slow economic growth simply because a good bit of a large they will have to cut expenses raise taxes and at least in the short and medium run the growth will be slow but i think it is great in. school and this is a very tangible very skillfully session something quake we had in two thousand and eight where a major financial institution collapses and there is a financial panic which results in what's called nuclear to squeeze and it's very hard and war on land and therefore there is an implication for the real economy and

the recession and there will of course mean a lot for our show because when people start thinking of. investing in the risk assets and russia is a risky company so they'll be with their all of capital from russia and so in russia financial crisis will be felt even in even paradise 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 that for. me. it has become natural for the u.s. to move beyond its means the countries that he has been accumulating for decades reaching up the debt ceiling by congress it's been done almost every year since nine hundred sixty to precede you has none from now until this year how. are you this been given up for the sequel to politico through which the you was that

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 with this. style last minute there you didn't exactly turn. now to be happy and to the school three days after standard and poor's downgraded the country's credit rating for the first time in its history. most wanted list three days the markets reacted with panic and the sharpest fall since the financial crisis three years ago. the crisis b.b.q. where sent out strong shock waves throughout the international markets including russia even though the situation even for the stabilized there's still the feel of the debt ceiling crisis beating and. the recession and that feel. too radical and long term solution to the debt problem is found in washington.

well actually i don't share your. worries a bad bad bad about the dollar because because i suspect that what happens in the states is more a game a power game then real life though what's happening in europe may be more worrying because they're trying to i mean the problem here do you agree michael the gear i think i think you're right the really what he wanted the u.s. to mention. the u.s. was facing default actually that somebody else was facing the risk of technical default and of course it was a sort of a game sort of a game and i think it was it was a big a big negative surprise for everybody but us politicians i reckon saw the responsibility but here i think we shouldn't be rewarding i think the new president clearly he is or she is in two thousand and twelve two thousand and thirteen starts now probably for thousand and thirteen starts cutting the expenditures and raising taxes and bringing in their cars and all of their probably before the election

cycle not really how can you present human about it has no chance no it could be in your new democratic president obama but usually in a presidential democracy. in the beginning of a new presidential term the new president comes in and says i have some time. i think the second to the first couple of years of the second term is that it is the time to to do to exist. in europe you're absolutely right because we have lost credibility you mentioned who didn't seen things which are probably more diplomatic i think in europe this game went too far and if the politicians have been slow in doing for a little too late and i think it was the world of credibility i think there would be six are of very high and i think will shown only what he bought and greece i think greece greece restructuring or a default solidarity given think we should worry about bigger countries such as spain and italy. they can tag and from greece is not is not is not

prevent them from civilian for spain and italy and i think will will be facing the real problem i don't think it's to lead now i think it's still a number of things that can be done in europe but i think judging by previous acts of politicians we should be worth it you mention 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 turmoil and quote so so so put in this what is i know i will not all go love to be private and through with you when you have been to take part in the steps one of the need i think i think you mean something that mr putin has mentioned many times. you just called it americans living beyond their means to russians on paper at least we've been there means we do have

a budget deficit but it's limited also have very little that and we have an easier fine but this is only because oil prices high and low price comes down russia suddenly will face the reality about russia's going to live in beyond its means and for example pension system is not about that sort of a knack but a next step. in years or so russia needs to do a completely redesign inspection system and 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 a sixty dollars a barrel so. all of the new economic school the spotlight should be will contain the pulse of the problems with all my friends say with.

the move. just so.

that's. welcome back to the spotlight. just a reminder that my guest in the studio today is sevigny greif rector of the new condemning school mr goody if you just before the break you mentioned one twenty

five dollars per barrel has the world price that is that is reasonable for russia 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 a barrel and we said well we have two hundred three hundred but we can survive and so now today we see one twenty five one thirty not less so there's me you mean we've increased the spending let it happen if it had been because the policy of mr cordone the finance minister the government put in medvedev or is a just objective reasons and i think i think i think of the person responsible eventually is of course the name of putin and that's us his government his policy and i think even though he was on purpose. i think i think first it was a reaction to the crisis but then. clearly understands that his political support is based on the ability poor to raise material standards and even standards of

russian population and if you look he spends more and more and you mentioned seventy dollars per barrel if we compare it to dissipation through the year two thousand and eight on brother scott and their prices and i would remind you that before that year of say year two thousand and seven the russian budget will be a balance of fifty five dollars and i don't know the time is. ten was awful but i remember times when we said thirty thirty's from thirty one we will survive exactly and this is growth in just five four years. from fifty five to one twenty five shows the level of spain the impression government has not thrown into the on the me of government can point to russia is increasing spending matters and reasons why in spending when we were looking creating the move we are increasing we are increasing military budgets already you. said we should mention and we should increase even more it increased in that we will increase even more we will and this

is why minister called in is not is not happy about this policy we will spend on infrastructural pensions. by almost a factor of one and a half we. are weary spending on the police and there there are all all avenues of spending varieties actually spending more and more and more and part of their bodies because i think they call on their call more the russian government is to sustain the popularity through more spending. the finance minister the former finance minister he was labeled to be a liberal he characterized the liberal the liberal wing of the russian policymakers russian government. was his financial policy really liberal and are we facing the end of the liberal fight in spots in which his financial policy will be. as conservative sponsible 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 when oil prices high to people see for the rain in the window of prices goes dark and in that sense he did his job and give his job especially we'll see five years to go through that crisis many in manpower after the crisis did not go down in the then why does everybody call it a liberal because he was very vocal about this he was very critical of his stance and he eventually. which actually sure that he didn't like what was happening i think the liberal call this issue would be done by somebody else and president when we did give the speech in st petersburg in june which could be called a liberal speech where a president would have said speed capitalism is not my approach my approach is spirit his asian nation improving investment climate decentralization of economic and political decisions that will be a liberal in

a liberal leaning to move the tree budget of which president no disco the other day . absolutely have sold oh not only are we increasing how we increasingly will trim it we are increasing the military budget and we are not privatizing even though there's been a number of speeches and priming so we can also say i mean state capitalism but we only see the increase of the presence of the state in the economy we include and we see the increased spending by the government we seem to be silly galatians and that sense unfortunately we have not seen the new economic policy board member different put in have been put in and bought someone. did the running for more of a good question it's a good question russia can borrow a lot but i think if the oil price goes down there what happened because of a global recession and that's the situation of the oil flow kept an outflow of cattle exactly they will do this if you will or will not be able to borrow a lot simply because the investors will not like the indian poor 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 call the guns versus butter you do have is it true is it what brush is facing today guns or butter that's a good question i think i think we've gone through the law without rushing into a lot of guns because i think nor by any in their in their sober mind would see. 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 of view lennon was talking about the us and even beyond their means now being financed by the standard and poor's their own greed 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 poor climate science areas of service and government their flexible market

economy develops financial system so if the leave beyond their means it's not a disaster russia doesn't have a currency like the dollar and so if russia runs out of carriage we've seen that happen in the end of the eight years russians see they've been done and then you are serious we've seen the venture to the soviet union twenty years ago we've seen the default in russian and then the bad me actually happened in the russia if if if russia runs out of cash that may actually have a serious economic and political implications would russia have to worry he 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 would be should they expect this country would be borrowing money so as long as it's not gives you there is a global recession or even if it just of oil prices go it's been substantial and russia will have to borrow and in principle russia has

a burial all debt burden compared to european or and european countries sort of the united states or japan a year. it's going to be released here so i think russia will be able to worry just a little bit and that means the it all of this grants spending a lot of military spending will have to become and i think this is exactly minister called it's war any. president will be a different prime minister but we can you can promise a lot but it is very likely 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 when done be fact out of them are so simple because soviet union and then would actually be out of cash and people these guns or rockets or whatever and that me will happen in russian. president medvedev said that he will continue to work on his modern vicious modernization project even if when he when he is no longer becomes prime minister i'll be i'll continue the

modernization currently modernization projects are aimed as they say into the future but they cost a lot today. are they a significant spending in the in the russian budget i think can comparable to the military budget to put the pension age and so on and of course we're not talking about the president of a of slavery projects like scoll cover another be related projects there are not a bit of smaller actually toward the mine you can smaller going to military problem and in that sense our pension pension spending these are completely different things this is not the will be saving money you know there 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 russian government has not done and before stock prices and oil prices were high unfortunately as it is very

likely that russian government will sell their government seats in the last year treaty because barebone. from when the oil prices law and therefore the market will not be about much for this essence but the russian government will happen but what we're. doing the last twelve months since the autumn of the russian has been experiencing a capital flight amounting to about five percent of the g.d.p. what are the fundamental reasons for for the careful work well i know you have already mentioned that people would not later invest in this country but why why do russian capitalists move their room anyway that's a very good question and i think it is a specialist that i can give and the outside world is not doing that well given the huge uprooting just for investment in russia a good investment is actually the russian investor them selves not invest in a national or pindar mining l design other guys who knew how to do business and

because i'm sure they were born in the build the mangle truly know how and how everything moves here compared to europe no reason we just mentioned europe isn't our all us and problem yet put out an investor to keep an eye on you know why big probably because investment climate has not been great corruption is high political it is high and he's got his critics expropriation is high and we don't know or what the economic policy of the new government will be as far as as far as i understand the best the russian carefulness can do whatever russian including so you guys are going to march when they move their money away it to the west they only have this serving them and they're not making a lot of money there they're making their money here in their own country there they just said he said so this has your biz you are becoming like a savings bank for the russian oligarchs not necessarily be some problems actually reduce the prices in europe a lot you can buy you can buy stock in europe for a fraction of what what used to be and that. is there even before the market

economic situation is so bad i think when we are talking about investment gulf war i think this is the indication that something is really wrong in iraq. an economy right now or in russia i would say that political risk and of course corruption and it's for peace in our issues not in the sort of most what about thank you thank you very much and just a reminder that my guest on the show today was to gauge reaction to the new economic school spotlights worldwide will be back with more friends than the common song was going on in and outside russia until then it's the young artsy take it.