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Chubais Forecasts Radical Decline in Russia’s Trading Balance

February 12, 2008 | www.kommersant.com

RAO UES CEO Anatoly Chubais predicted radical decline in Russia’s trading balance in the wake of the global financial problems. The top-ranked bureaucrat made his forecast in the February 11 interview to The New Times.

Chubais, who is the current boss of Russia’s electricity, warned that Russia will lose the trading surplus not in five to seven years, as some optimists hope, but in two or three years at the latest. The zero balance will cut short the currency flow, i.e. the growth motor will disappear, Chubais warned, specifying that he isn’t sure that the cabinet will be able to offset the loss of $130 billion of trading balance by the increase in investments flow.

The problem will expand from financial sphere to the political one. Blaming all evils on the West will isolate Russia’s economy, which will lead to the catastrophe. We are witnessing the first signs now, Chubais went on. The most vivid signal is the turning point in inflation - it had been going down till 2006 but accelerated in 2007.

Russia had the inflation of 11.9 percent past year.

The probability of this scenario’s development is 50 percent, Chubais said. Another option is restoring basic principles of liberal economic policy, the electricity boss explained, reminding that such actions had been taken in 1990s and in mid.-2000s in time of the Stabilization Fund establishment.

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