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We will be the biggest driver of growth in the future

Ruben Vardanyan Troika Dialog Manager

Date: 26 January 2009

Source: CNN

What are you looking for from Mr. Putin later?

I think it’s great that he is here. I think everybody is concerned not only with Russia, but the worldwide crisis and about how the different countries that are playing an important role can influence decisions which will help us solve these problems quicker. I hope that Prime Minister Putin will address the main issues not about Russia but about the global picture and about how Russia in this global picture can play an important role.

Russia has in a sense some very serious problems of its own. It’s very much a commodities economy in terms of energy and oil and gas and the bottom is dropping out in pricing there. These are very much difficult times for an economy which became used to commodities driven growth.

I will disagree with you because these last seven years we have a bigger internal market, demand, and more and more consumers who want to buy more commodities and more different services and a better life. More and more technology is being developed. Of course, it continues to be influenced by oil, but the last seven years have brought us in the right direction. And also I would say Russia has better reserves, is in a better position than ten years ago, with better macroeconomic stability. Yes, we have some specific problems, but we didn’t have big leverage like in the U.S. and in Europe.

All the same, there has been a lot of hard work there by the Russian Central Bank pumping out liquidity through the major banks, VTB for example. How successful do you think the Russian Central Bank and policymakers have been in combating the credit crunch?

It was a shock for everybody worldwide. We already saw that it was not an easy task for any central bank. Our central bank handled it quite well despite all the criticism coming from different sides. For example, we were saying that devaluation needed to be quicker and more dramatic immediately following the crisis. They did it a little bit slower, but they did it finally. They kept the banking system under control and alive. This was very important in the crisis time. They put more money into the system.

So you’re relatively optimistic about Russian growth?

Yes, I believe we have some advantages that not a lot of other countries have. We have money, reserves, internal demand. We have a basic product demand. People don’t want to have a very complex derivatives market. They want to get mortgages for buying their own flats, not for their second or third house. They want to have their own cars. And this is why we have a basic product demand and will be the biggest driver of growth in the future.

Let’s stay on the subject of growth for a minute. Turn and look at the board. We’re asking people when growth will return. How long will this thing last? Some people are saying this year. Some people are saying 2010, and some are saying 2011 or later. What’s your guess?

We’re speaking about worldwide, or the U.S?

Why don’t you tell us in terms of Russia?

I will say that I believe the U.S. will start recovery, if nothing happens force-majeure, like Madoff 2, at the end of 2009-start of 2010. Some emerging markets will go in 2010. The other part of developed countries will go in 2011.

You’ve got one mark. (Laughs)

Russia will go in 2010, I will say.

That was Ruben Vardanyan, CEO of Troika Dialog.