Publication: Monitor Volume: 8 Issue: 89

President Vladimir Putin has again taken his cabinet to task concerning the government’s projected economic growth figures. During a scheduled cabinet meeting yesterday, Putin, who last month criticized the cabinet for being “insufficiently ambitious” in presenting a four-year economic plan with projected yearly growth in the 4-4.5 percent range, declared: “We spoke of the need to revise the main parameters of the country’s development for the next four to five years. A month has already passed and I haven’t seen the new figures…. I am counting on at least the preliminary drafts of the plan being done soon, all the more so given that it is necessary to think about this in preparing the 2003 budget.”

What is more, the people at whom the president’s unhappiness was directed–Prime Minister Mikhail Kasyanov, Deputy Prime Minister Viktor Khristenko, Trade and Economic Development Minister German Gref and Finance Minister Aleksei Kudrin–were still on their May Day-Victory Day vacations and were not at yesterday’s cabinet meeting. It was attended by, among others, two deputy prime ministers, Valentina Matvienko and Aleksei Gordeyev, Defense Minister Sergei Ivanov, Interior Minister Boris Gryzlov, Federal Security Service Director Nikolai Patrushev and Security Council Secretary Vladimir Rushailo. “I hope that those who are today on vacation will in the nearest future undertake with new force to resolve those tasks which are before them,” Putin said pointedly of those absent. Kasyanov is set to return to Moscow today; Kudrin and Khristenko are scheduled to return on May 13 (Gazeta.ru. May 6).

When Putin first criticized the government’s projected GDP growth figures during an April 8 cabinet meeting, he said that such growth rates would keep Russia from catching up with the developed world. Two years ago, at the start of his tenure, Putin said that even with an annual growth rate of at least 8 percent, Russia’s gross domestic product would need eighteen years to catch up to Portugal’s. Similar concerns have been echoed by Putin’s economic adviser, Andrei Illarionov, who has repeatedly called for cuts in government spending to stimulate rapid economic growth (see Russia’s Week, April 10, 17; Monitor, Fortnight in Review, May 19). After Putin took the cabinet to task, Gref said it would be possible to take a “more radical approach to speed up socioeconomic reforms,” but warned that the possibilities for speeding up GDP growth were “not unlimited.” Kudrin, for his part, said that growth could be accelerated by more intensive structural reforms, including in the banking sector, along with further tax cuts and reduced government spending. Yet on April 18, Putin delivered a surprisingly gloomy annual State of the Nation speech, in which he again complained about sluggish growth and said the main obstacle to rapid growth is the inefficiency and corruption of the state apparatus. Following the speech, Gref’s deputy, Arkady Dvorkovich, said it might be possible to achieve 5 percent GDP growth in 2003. Kudrin had earlier predicted that the economy would grow 3.2 percent to 3.8 percent next year (Moscow Times, April 15, 22; AFP, April 12).

None of this, apparently, has satisfied Putin, and it is difficult to avoid concluding that the head of state is setting up the members of the cabinet’s “economic bloc” to take the heat for a possible upsurge in popular dissatisfaction at various reforms, including hikes in electricity tariffs and cuts in housing subsidies, particularly if these reforms fail to stimulate increased economic growth, at least in the short or medium term. Such dissatisfaction is already apparent. Last month, up to 20,000 people demonstrated against cuts in housing subsidies in the southern Russian town of Voronezh. The sense that Putin may be targeting members of the cabinet, possibly for eventual removal, was heightened during May Day demonstrations in Moscow, when members of United Russia, the new pro-Putin party formed out of the merger of various “centrist” groupings, including Unity and Fatherland-All Russia, carried signs denouncing members of Kasyanov’s “economic bloc” and Anatoly Chubais, head of United Energy Systems, Russia’s electricity monopoly (see Russia’s Week, May 1; the Monitor, May 2).