Putin diagnoses global economic malaise and offers exit receipt from the crisis
DAVOS, Switzerland - Addressing the opening of this year’s Davos World Economic Forum in Switzerland, Russian Prime Minister Vladimir Putin attached an apt clinical diagnosis to the current global economic crisis, calling it a ‘perfect storm,’ a situation that results when several powerful natural disasters converge on one spot, thus multiplying their destructive forces.
“From Russia’s point of view, today’s crisis resulted from a combination of several factors. This includes the failure of the existing financial system, poor regulatory mechanisms that led to the inability to preempt and manage economic and financial risks and the colossal disequilibrium that has accumulated over the years, first of all, between the scales of financial operations and fundamental values of assets, between the sky-high demand for loans and the sources for their provisions and repayments,” he said.
Putin also noted that the breakdown in the world economy came from the structure of the global economic growth itself, where one center practically and almost without control prints money and consumes goods and services, while the other produces cheap goods and hoards money emitted by other countries. “Besides, the generated wealth was very unevenly distributed, both within the same country, its different social strata, including even highly developed states. Besides, the global wealth was also unevenly distributed between different countries and regions of the world,” he added.
Besides, the appetites of global corporations were blown out of proportions in relations to the growing demand. The fight for boosting market indices and capitalizations became more dominating drives over the needs to boost productivity and effectiveness of companies’ operations,” he added. “All these ‘global financial pyramids’ were doomed to collapse one day, and this is what has practically happened today right before our eyes in the global economy.”
As an exit receipt from the current global economic malaise, the Russian prime minister has called on leaders of all countries in the world and global corporations to act maximally and decisively in their searches for the urgent solutions to today’s problems, but at the same time, however, warned against taking measures, even in these trying times of force majeure circumstances, that could be regretted in the future. “This is why I would like to start by stating what, in our opinion, should not be done, at least, what we are not going to do in Russia, as we tackle this crisis,” he added. “We should not allow ourselves to be pushed into policies of isolationism and uncontrollable economic egoism."
The Russian prime minister also reminded the audience of the resolutions adopted at the Summit-20, where the leaders of the world’s leading economies agreed to refrain from the introduction of barriers on trade and free movement of capital. “Russia shares those views. Though some elements of protectionism are inevitable in these crisis conditions, one, however, needs to know the limits of such measures and have sense of proportions.” Putin also named the restoration of mutual trust the key to the solutions to the current economic problems. “It is indeed trust and solidarity that will help us overcome existing difficulties, avoid numerous upheavals and achieve lasting prosperity and well-being in the 21st century.”
(PS: See the next edition of the print version of the journal for the evaluations and reactions to Putin speech)
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