Actuality January 14, 2008

   One of the main business (and even ideological) problems of Vladimir Putin's epoch was the overcoming of typical for the 90s financial dependence of economic policy of Russia from the western creditors.

   In 1990s International Monetary Fund gave to the Russian government advice about pursuing a rigid financial policy and fight against inflation. These advice were some times

carried out, sometimes were not, and the fund depending on the contentment with the state of affairs in Russia gave or didn't give credits. The Parisian and London clubs were begged to restructure the large foreign debt inherited since Soviet times. It was clear that the Russian financial position is completely defined by kind credit will of the West because the Russian authorities needed currency, and it was extremely not enough. Therefore, from the very beginning of presidency, Vladimir Putin had to provide rising of gold-value reserves of the Central Bank, to provide enough currency in Russia. The circumstance that extremely helped was that in 2000 the world prices for oil were at quite decent level, at least twice above observed in 1998, in the year of the Russian currency-financial crisis.

   After 2000 prices didn't fall during several years, and since some moment they began to establish a record after a record. A powerful stream of petrodollars poured to Russia, and their considerable part somehow appeared in Central Bank reserves.

Full change in moods of the Russian banks, and also common citizens helped no less.

Since 2003 the ruble constantly grew, and the dollar constantly fell.

Everybody decided that it was necessary to get rid of dollars urgently while they didn't fall in price at all. The Central Bank willingly supported this idea, having advanced the official slogan of de-dollarization of the Russian economy, and started to buy up dollars within the bounds of this de-dollarization. And replenishment of reserves came exclusively easily as it paid for dollars with rubles printed by it; moreover, it was possible to present operation of dollars purchase as ruble intervention in support of the American currency that fell at least not so quickly. As a result, by the end of 2007 when the world price for oil reached the point of $100 per barrel, gold-value reserves of Russia were already on the third place – after China and Japan. With the majority of debts Russia paid off its debts ahead of schedule, no western country had even a small part of the Russian currency reserves, and there was no financial dependence of the Russian economic policy from the western creditors.

   To consolidate success of independent Russian economic policy, in 2003 Vladimir Putin put forward an idea about twofold increase of Russian gross national product.

However, the authorities got confused themselves, to what term it is necessary

to do – either for 10 years, that is by 2013, or by 2010. The Russian slogan of tw

ofold increase of gross national product reminded the Japanese experience of the 1950th.

That time Japanese provided the decision of problem of twofold increase in the shortest terms.

Russia also showed quite good rates.

The matter was explained by the fact that in the conditions of high inflation and constant depreciation of dollar the Russian citizens had a proof impression that all money – both Russian, and foreign – depreciates and it is necessary to invest money in purchase of the goods. Despite import growth, the Russian production also began to grow – citizens of

Russia bought any goods.

   The fierce growth of internal demand provided maintenance of the Russian inflation at stably high level, absolutely inconceivable by measures of the western countries. Despite Vladimir Putin's all requirements to accept drastic measures on inflation restraint, consumer prices in Russia did not obey him, and in 2007 inflation rates even accelerated in comparison with the previous years. The Russian authorities, in order to explain the failure in struggle against inflation, had constantly to allege effect of the forces outside of Russia.

First of all it was the growth of the world oil prices that not only have provided unprecedented growth of the Russian credit status, but also have flooded the country with petrodollars. Also in 2007 prices for food, dried milk and grain crops went up with a leap.

   The fast increase in internal demand leading to increase of the enterprises' profitableness, high rates of economic growth and grandiose

growth of the world prices for oil made the Russian market of shares extremely attractive to foreign investors.

RTS index steadily grew.

Russia remains in the top four on gross national product growth.

These are BRIC countries (Brazil, Russia, India, and China).