Publication: Fortnight in Review Volume: 6 Issue: 21

The picture on the economic front was far less gloomy. Deputy Prime Minister Kudrin reported that Russia’s economy had grown by 7.5 percent in the first half of this year and predicted it would expand 6.5 percent to 7 percent in the second half, with inflation running at only 1.5 percent per month and real salaries rising. Likewise, various Western observers expressed cautious optimism regarding the Russian economy. Other experts, however, urged caution, noting that much of the good news was due to high world oil prices. Andrei Illarionov, Putin’s economic adviser, warned against budget planning based on high oil prices, and noted that Russia was moving “backward rather than forward” in many areas of economic reform. In fact, Illarionov called Russia’s huge natural resource wealth a “tragedy” which had militated against real reform and corroded both the state and the society as a whole. The Washington-based Heritage Foundation, meanwhile, released its annual index of economic freedom. Russia came in 127th out of the 155 countries ranked–less free than Rwanda, Ethiopia, Kyrgyzstan and Romania, tied with the Republic of Congo and Mauritania, freer than Kazakhstan, Togo, Bangladesh and India.