http://www.rferl.org/content/Article/1200407.htm
Link: ['Worst Is Yet To Come' For Russian Financial Sector] - [Radio Free Europe / Radio Liberty © 2008] .
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(Editor's note: Since this interview was conducted and posted, trading was suspended on Moscow's stock exchange amid sharp declines and furious efforts to boost Russia's banking sector.)
RFE/RL: Writing in "The Moscow Times," you said on August 8 that Russian Prime Minister Vladimir Putin "made his greatest strategic blunder" and single-handedly "wiped out a half a trillion dollars of stock market value, stalled all domestic reforms, and isolated Russia from the outside world." Explain that stock-market loss part.
Anders Aslund: Well, what happens when you start an aggressive foreign policy is that you also start an aggressive foreign trade policy. And you block domestic economic reforms. And you sharply increase the political risk in your country. And UBS [United Bank of Switzerland] has assessed that this increase in the political risk means that stock prices should be 20 percent lower – that's $300 billion right off there, off the stock market. The bond yields that are demanded now for loans to Russia are 2-3 percent higher than a month ago.
RFE/RL: You also write that, despite what happened in Georgia, the Russian economy has been headed for a slowdown for some time. Why?
Aslund: Well, it's at the end of a business cycle, the oil price has fallen by one-third, and the Russia economy suffers from massive overheating. So that's the time when you really need reform, and then Putin is turning his back on it.
RFE/RL: Russia has made it an official goal to reach half the U.S. per capita GDP by 2020. You don't think this is going to happen. Why not?
Aslund: I would say that I think that the most important [factor] is the combination of massive corruption and [the] inability to build infrastructure when the need is at its greatest. Russia today can't build motorways; they can't build pipelines. And they need some of them very badly. The traffic chaos in Moscow is just characteristic of the main problem in Russia today...
