Economic data can be hard to read. State Statistical Office Goskomstat released figures last month showing solid growth last year across the country. But Andrei Illarionov, the president’s chief economic adviser, is having none of it.

Illarionov told the website that last year’s 7 percent overall economic growth is seriously misleading. High world oil and gas prices, Illarionov says, buoyed the energy sector and inflated government revenues. Despite Goskomstat data showing industrial output up in all eighty-nine of Russia’s regions, and retail sales up in all but ten, Illarionov sees a slowdown that began in the second half of last year and continued in 2001. Russia, he says, is already in recession.

Certainly the energy sector had a lot to do with the Goskomstat numbers, which are grouped according to Russia’s seven federal districts. The strongest performance came from the energy-producing Urals district, already Russia’s wealthiest area, and the weakest performance came from the Far East, where the energy infrastructure has collapsed.

If Illarionov is right about an economic decline, the impact on ordinary citizens could be severe. Across the country, Goskomstat calculates the average wage at just $89 per month or $1,068 per year. True, the figure does not include earnings from off-the-books economic activity. But even adding 25 or 30 percent for “unofficial” income still leaves the impression of a working class not far from poverty.

The belief that Russia’s economy is stagnant or contracting is widely held among economists. Declining profits, declining investment and rising levels of government and private debt were evident in the second half of 2000 in nearly all economic sectors. The burst of growth that followed the August 1998 devaluation may have been a bubble, inflated by a sudden drop in real wages (which lifted profits), a rise in demand for domestic goods to replace costly imports, and a forced repatriation of export earnings boosted by high energy prices. The impetus of the first two of these factors is about played out.

Illarionov, a Soviet-trained economist with a 1983 doctorate from Leningrad State University, is no Keynesian looking for government to take up the slack. His prescription for a return to growth is a budget surplus of at least 5 percent. Government spending, he says, has to come down, or the country will face a “very unpleasant situation” when world oil prices fall.

So far neither President Vladimir Putin nor Prime Minister Mikhail Kasyanov are taking this advice. Instead, the government is asking the Duma to increase government spending, mainly to pay the $3.8 billion due this year to Western governments which had made loans to the Soviet Union. Those funds had been left out of the 2001 budget enacted last December, but under heavy pressure from Germany, Russia’s largest creditor and most important trading partner, the government in January sent the Duma an amendment to cover these obligations.

After a long and bitter fight, the Duma last week agreed in principle to steer an additional $1.5 billion toward servicing the foreign debt and split an additional $4.3 billion between debt service and domestic spending, including a 20 percent raise for government workers. But with Communists and Agrarians in opposition, the government had to win over center-left votes by postponing plans to sell certain state-owned enterprises. The political deal leaves a hole on the revenue side that could be hard to fill, especially if–as Illarionov fears–oil and gas income falls below expectations.