At the current Davos summit, many leaders have whacked the US for its role in bringing the global economy to its knees. Wen Jiabao of China can criticise, but OMG Putin should shut his face. For my life, I cannot understand why Russia was invited into the G8 and not China????? Why does he have the gall to even criticise the US? Its like Thailand advising Malaysia on how to play better politics, or rather, like Malaysia advising Thailand on how to play better politics!
Why Russia should shut up:
a) Despite the huge run up in oil price and hence Russia's reserves, the country did not improve its infrastructure. It allowed Russian gang leaders (or some may call them oligarchs) to lead many big companies, and when things do not go their way, these ballbusters would use the courts, extortion, kidnapping and murders to get their way. Foreign investors who have been in Russia can attest to that.
b) While opening arms to welcome foreign funds, Russia also openly go about nationalising industries whenever they wanted to, or coerce foreign interests to sell back their stakes whenever Russia wants. Now they are angry when foreign funds flee Russia in droves over the past 12 months... wonder why?
c) Business has been firmly reminded that in a country where traditional institutional mechanisms for the implementation of policy are weak, the informal lines of communication should be respected. Its a whole load of bureaucracy and tinged with vested interests everywhere.
d) According to Insead, some recent moves by the Russian central government suggest that foreign companies may face new formal and informal hurdles such as restrictions on investing in certain industries without presidential approval. The current challenging atmosphere creates greater possibilities for those firms that acquire this knowledge to reap greater profits. For example, a company is often served by such simple actions as paying regular visits to government officials, inviting bureaucrats to visit the foreign company, and helping to administer local programs such as work-force retraining or upgrading health care facilities.
e) Compared with the other BRICs, Russia’s market infrastructure is only moderately effective because of the government’s significant participation in and direct ownership of firms. Of Russia’s 80 largest public companies, 71% had a controlling shareholder. Among these controlling stakes, the government held 30%. An additional 21% (of the 80) had one or more blocking shareholder (those with a 25% or greater stake), with the government representing 10% of these. In Russia, the government’s influence is particularly strong at large “strategic companies,” and the combination of a bureaucratic approach to management and continuing pockets of government corruption can hinder the development of more effective corporate governance across a range of industries.
f) The problems with the ruble and Russia's fragile oil base economy seem to be rooted in an erroneous perception of the Russian economy, as the government is echoing the course that was taken following the 1998 default, but the present situation is drastically different. Ten years ago, most prices and salaries were in dollars, and those who were able to keep their jobs had their incomes indexed. Now, everything is mostly in rubles. The consumption growth model has been in place for the last eight years. It has been stalled and it is time to move on to an investment-based economy to improve production. Now they’re still following that model trying to get people to go and spend their savings by allowing further devaluation and inflation; whatever positive effect it has will be only short-term and we’ll still have the same model in place.
Russia, don't go blaming someone else for your problems. Yes, the US credit implosion had some effect but if you had improved your infrastructure, balance sheet, stopped bullying smaller former nations into submission, rein in your gang-like oligarchs, sell more government shares, improve shareholders' rights, treat foreign investors fairly and not in a Sopranos-way, regulate your banks better.... Russia might not be in such a pile of heap.
Russia should not be criticising the US until it has improved their market transparency, accountability, regulatory effectiveness, protection of minority shareholders... its like Iceland criticising the US, shuddup already!!!
Putin is mad because the ruble has totally collapsed, foreign investors have left in droves, and most galling is the fact that Russia used to get above $120 per barrel of oil just a year back. Now he is using the platform to criticise the US and everybody else for heaping troubles onto Russia. Please la Putin, why I don't hear you saying "Gee, oil at $140 is totally out of whack, it is unsustainable, its the US liquidity pushing up commodity prices... you guys beware OK"... If you were smiling when oil was raking in dough above $100... well, take your medicine now. You cannot have it both ways, grow up.
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Various News Media: Wen Jiabao and Vladimir Putin on Wednesday blamed the United States for causing the global economic crisis on a gloomy first day of the Davos forum. Both called for a new attitude by President Barack Obama, while deepening pessimism over the future of the global economy enshrouded the World Economic Forum.
Chinese premier Wen said America's voracious appetite for debt and 'blind pursuit of profit' had led to the worst recession since the Great Depression which has rocked the 2,500 strong political and business elite gathered in the Swiss mountain resort.
Mr Putin said the disappearance of some Wall Street titans over the past six months testified to the errors committed. Mr Wen blamed the crisis on 'inappropriate macroeconomic policies of some economies' and 'prolonged low savings and high consumption,' in a lightly veiled attack on the United States. He blasted the 'excessive expansion of financial institutions in blind pursuit of profit and the lack of self-discipline among financial institutions and ratings agencies' while the 'failure' of regulators had allowed the spread of toxic derivatives.
Mr Wen said the crisis had posed 'severe challenges' for China and that it needed 8.0 per cent growth in 2009 to maintain social stability while the International Monetary Fund predicted 6.7 per cent for this year. The Chinese leader called for faster reform of international financial institutions and for a 'new world order' for the economy.
The Russian prime minister followed him to the podium and said the crisis had been a 'perfect storm'. He also took aim at US banks and the outgoing US administration.' Although the crisis was simply hanging in the air, the majority strove to get their share of the pie, be it one dollar or one billion, and did not want to notice the rising wave.'
Mr Putin insisted that he would not join critics of the United States, but added: 'I just want to remind you that just a year ago, American delegates speaking from this rostrum emphasised the US economy's fundamental stability and its cloudless prospects. Today investment banks, the pride of Wall Street, have virtually ceased to exist. In just 12 months they have posted losses exceeding the profits they made in the last 25 years. This example alone reflects the real situation better than any criticism,' said Mr Putin.
Mr Putin called for a constructive attitude from Mr Obama in international affairs. 'We wish the new team success. I hope they are willing to cooperate constructively,' he said.
US tensions with China have been raised in recent days with new US Treasury Secretary Timothy Geithner saying Mr Obama believes China manipulates its currency to gain an edge in trade. 'In meeting the international financial crisis, it is imperative for the two countries to enhance cooperation, that is my message to the US administration. Three decades of formalised ties between the United States and communist China had shown that 'a peaceful and harmonious relationship will make both sides winners, while a confrontational one will leave both losers,' he added.
p/s photo: Akumsiri Suwansook
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