Now that Vladimir Putin has stepped down from the presidency and been installed as prime minister, he is directly and formally responsible for economic policy.
On May 8, he addressed the State Duma for the first time in his new role. Rather than give a comprehensive assessment of the state of the nation covering the whole range of policy, as he would have done in a presidential address, he focused on economic policy -- specifically budgets, finance and expenditure programmes.
Economic priorities. Although Russian newspaper Rossiiskaya gazeta headlined its article on the speech, 'Attack on Poverty', this does not stand out as the dominant theme.
Putin emphasised the need for prudent macroeconomic management, starting his list of things to do with inflation. He had little to say on the vexed question of the future of such state-controlled national champions as Gazprom and Rosneft, or more generally on the role of the state or foreign capital.
Instead, the main themes of the speech were: · making Russia one of the world's leading economies in 10-15 years, in quality of healthcare and education as well as income levels;
· reducing inflation to single digits in a 'few years';
· cutting the tax burden on the oil industry, to encourage expansion;
· paying special attention to infrastructure, agriculture and research-intensive industries;
· raising expenditure on healthcare and education; and
· raising minimum wages and pensions.
Macroeconomic management. Putin put controlling inflation first. He said that inflation bore most heavily on those with low incomes, and referred to the national financial reserves (presumably the foreign exchange reserves, the Reserve Fund and the new National Welfare Fund) as important defences of financial stability.
This suggests that, as prime minister, he will continue supporting -- as he did as president -- the cautious fiscal policies espoused by Finance Minister Aleksei Kudrin, who was reappointed today. Kudrin's presence in that post sends reassuring signals about policy.
Other priorities. Noting that taxes take 75-80% of oil companies' profits, Putin accepted that this was a disincentive for private spending on exploration and maintaining or increasing production, and said that this burden would be reduced. This is a clear response to the recent stagnation of oil production in Russia. However, since state-controlled Gazprom produces 90% of Russian gas, it does not address the stagnation of gas output.
The few long-term financial commitments in the speech had to do with state spending on transport, health and education, where large rises are promised:
· By 2015, 13 trillion roubles (546 billion dollars) are to be spent on transport infrastructure, nearly 5 trillion from the federal budget
· Putin said that health spending would be 4.0 times and education 4.5 times the 2004 level.
World leader? Putin referred rather vaguely to Russia becoming one of the world's leading economies. He did not offer specific dates or GDP levels.
Nonetheless, the ambition implied is very great. Even if Russia's aggregate GDP in dollar terms already puts it among the largest in the world, in per capita terms there is a very long way to go.