Russian President Vladimir Putin reshuffled his top economic aides on Monday in a move analysts said was aimed at giving the Kremlin more control to spend its way out of a looming recession. Putin's former top economic advisor Elvira Nabiullina took over as governor of the Russian central bank from the retiring Sergei Ignatyev in a shift that had first been announced in March.
Meanwhile, the Kremlin said that economy minister Andrei Belousov had been named to replace Nabiullina as the top Kremlin economic advisor. Deputy central bank governor Alexei Ulyukayev is taking over as economy minister, according to a decree signed by Putin posted on the Kremlin website. Belousov, 54, has in recent months emerged as one of the government's most vocal supporters of more state action to rescue the economy from a slowdown that some officials have warned could become a recession.
Nabiullina is also seen as a close confidante of Putin who is unlikely to stand in the way of the Kremlin's desire to see a more relaxed monetary policy to help stimulate the economy. Keeping a watchful eye on persistently high inflation, the central bank under Ignatyev had defiantly resisted pressure from some officials to cut interest rates.
"The reshuffles could be interpreted as strengthening the axis of economic power around President Putin," said Ivan Tchakarov, chief Russia economist at Renaissance Capital. He said in a note to clients that Belousov had been firmly behind the recent calls for a "more dirigiste approach to supporting the flagging economy".
"With the appointment of Belousov and Nabiullina one may argue that Putin is creating a more united and focused nerve centre to tackle the recent economic slowdown." Ulyukayev's departure from the central bank had been widely expected by analysts who did not believe that the hawkish economist would be able to work successfully with Nabiullina. 'Nabiullina + Ulyukayev - Belousov =....'
Russia's top economic policymakers appear to be locked in a dispute all to familiar to EU countries about how much spending to allow to stimulate the economy without pushing up inflation or hurting the budget. The government is now forecasting growth this year of just 2.4 percent, a measly figure given Russia is proudly part of the BRICS group of fast-emerging economies. The figure is a far cry from the stellar growth rates in excess of seven percent seen in the first two terms of the Putin presidency when high oil prices gave the Kremlin a false sense of security. Putin now admits that Russia needs to diversify its economy away from its reliance on energy exports but analysts say the country remains completely addicted to the so-called "oil needle".
At a meeting with Putin after his appointment, Ulyukayev acknowledged that the situation was "not straightforward" and Russia's task was to prevent recession in the short term and then create long-term economic growth. "I am deeply convinced that everything will be decided by investment and we must create the right conditions for private investment," he told Putin.
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