Putin Reported to Solicit Alternative Economic Policy From Academy of Sciences and Sergei Glazyev
January 21, 2013 • 11:37AM

During this past, first full work-week of 2013 in Russia, turbulence around Moscow's economic policies flared with the publication of an article in the liberal financial daily Vedomosti of Jan. 18, reporting that President Vladimir Putin has commissioned a group of Russian Academy of Sciences (RAS) economists to prepare a report titled, "On a Set of Measures to Ensure Russia's Stable Development under Conditions of Global Instability." The article was headlined "Glazyev Will Set the Course for the Country" and illustrated by a photomontage depicting an alarmed Deputy Prime Minister Igor Shuvalov with a smiling Academician Sergei Glazyev leaning over his shoulder. Glazyev is an official adviser to Putin.

The Vedomosti story coincided with the four-day Gaidar Forum in Moscow, named for the late Yegor Gaidar, who launched the rapacious liberal "reforms" of the Russian economy in 1992 as acting prime minister. There, the Central Bank's deputy chairman, Alexei Ulyukayev (a member of the original Gaidar team), warned that the world is on the brink of "currency wars." Prime Minister Dmitri Medvedev told the meeting that Russia must achieve 5% annual growth, while former Finance Minister Alexei Kudrin, chairing the session, intoned that there will be no recovery in the world economy this year and that the best Russia might hope for is 4% growth — by imposing, in Kudrin's scheme, even tougher budget austerity than at present.

Across town at the Kremlin, Putin on Jan. 16 held a session of his economic aides and cabinet ministers (but not Glazyev), to take stock of the downturn of industrial growth rates in the second half of 2012, push his demands for implementation of the social spending promised during his reelection campaign last year, and call for "finding additional resources" to invest in infrastructure. Putin has already fired two ministers for recalcitrance in delivering on the campaign promises, fuelling rumors of a possible wider shakeup. At the Jan. 16 meeting, he also ordered the speedy establishment of an institution to administer the step he announced in December: investment of a portion of the National Welfare Fund, formed from Russia's oil and gas export earnings, into infrastructure.

Vedomosti claimed to have copies of Putin's December 8, 2012 order to the Academy, as well as a memo from Glazyev to Putin on the matter. The cited excerpts are consistent with policy papers published by Glazyev in recent months. Already last June, in a meeting with Academy economists, Putin had requested memos from Glazyev and others on alternative economic policy approaches. Highlighted by Vedomosti are proposals by Glazyev for a new Law on Strategic Planning and "a fundamental change in credit and monetary policy on the basis of developing domestic sources of monetary supply, creating a development budget for investing the funds accumulated in the Reserve Fund and the National Welfare Fund, and expanding the Russian economic space through Eurasian integration."

Also noteworthy is that Glazyev reportedly warns that the massive money-printing by the USA, UK, EU, and Japan, "to refinance their banks at negative real interest rates as the main line of anti-crisis policy," is not only feeding into new "debt pyramids," but opening the door to buying up and looting "real assets worldwide" — thus presenting a threat to Russia. The memo also reportedly invokes the war danger, saying that "the logic of how the global financial-political system reproduces itself involves a further escalation of military and political tension, up to and including the unleashing of a big war."

Hysteria over these leaks began in the Vedomosti article itself, which quoted a "highly placed Kremlin official" saying, "Are you kidding? This must be some kind of a misunderstanding." Anatoli Chubais, the Gaidar ally and architect of the 1990s privatization, who now heads the state-owned Rosnano nanotechnology company, took the unusual step of posting a blog entry attacking Glazyev personally as "not an economist." The Gorbachov-owned liberal weekly Novaya Gazeta wrote that "Putin must be bored," adding that it's a good thing Glazyev is only an "adviser" and not an "aide" or a cabinet minister; but their article acknowledged that Putin is weighing and comparing "dirigist" vs. "liberal" approaches.

The RAS group, which is to prepare its proposals by March, is reportedly chaired by Vice-President of the Academy of Sciences Alexander Nekilepov. This senior economist was a co-author with Glazyev, in 2000, of the so-called "Ishayev Report" (see EIR, March 2, 2001, http://www.larouchepub.com/ other/2001/2809ishayevreport.html) on "A Strategy for Development of the State to the Year 2010." The Ishayev Report, like Glazyev's recent papers, contained in-depth discussion of various ways in which the state could force the Central Bank to generate and channel credit into the real economy without triggering inflation.

Another reported member of the group would be Corresponding Academician Gleb Fetisov, who introduces a "green" element into the mix. Fetisov, who is also a billionaire from his role in Pyotr Aven's Alfa Group, heads a political party called Green Alliance — People's Cause. A programmmatic document co-authored and published by Fetisov and Glazyev in November 2011 lists solar power as a promising technology, although placing it after the space industry, the nuclear sector, and transport infrastructure in importance.

Academician Glazyev himself was a member of the first post-Soviet Russian cabinet, but he resigned in opposition to the economic looting policies and President Yeltsin's military crushing of the elected Parliament in 1993. He later served in the State Duma and ran for President. In recent years he coordinated the formation of the Russia-Belarus-Kazakstan Customs Union. As head of the Duma Committee on Economic Policy, Glazyev held hearings in June 2001 on how to ensure Russia's development under global crisis conditions; Lyndon LaRouche was a featured speaker at those hearings (EIR, July 6 and 20, 2001). The English edition of Glazyev's book Genocide: Russia and the New World Order was published by EIR in 1999.