The White Guard – Kudrin in Talks About Post In Putin Government

Reuters reports that Alexei Kudrin is in talks with the Kremlin about appointment to a senior economic post.

http://www.bloomberg.com/news/articles/2015-12-29/kudrin-said-to-be-in-talks-for-top-job-in-putin-government-iirgk09y

This is good news for the Russian economy.  Kudrin was previously Minister of Finance from 2000 to 2011 and is credited with skillful economic management and, most importantly, prudent government budget management, including pro-market tax and spending reforms and creation of the national Stabilization Fund, which has become an important tool in addressing the current economic crisis.  Kudrin’s experience with the budget is particularly valuable because the most important task in the coming year will be to manage the steeply deteriorating budget situation as oil revenue continues to fall far below the level assumed in the 2016 budget.  Kudrin is also a long-time associate of Putin’s from their days together in St. Petersburg in the 1990s as deputy mayors for Anatoly Sobchak, St. Peterburg’s liberal, reform-minded mayor.  Kudrin is reported to still advise and have the confidence of Putin.

As reported by Reuters though the idea suggests a lack of seriousness and window dressing.  Positions under consideration include some sort of senior economic policy coordinator or deputy to Prime Minister Medvedev.  Policy coordination without formal authority to command reforms—as, for instance, Minister of Finance—would be pointless because Kudrin could simply be ignored or undercut, especially by opponents of reform within government or entrenched interests, of which there are many.  Deputy to Medvedev is even more absurd.  Medvedev does not command the heights of economic policy making and is more often mentioned in press as Putin’s fall guy if the economy continues to deteriorate.

The notion of a Kudrin appointment seems to be more political than economic.   Putin and his inner circle may be counting on Kudrin’s presence in government to reassure markets just enough that they can ride out the virtually certain continuing fall in the economy and erosion of the government budget until after the September 2016 general parliamentary elections.  This suggests the Putin’s game plan is stonewalling rather than reform.

As  YN Harari writes in Sapiens, “The most important economic resource is trust in the future, and this resource is constantly threatened by thieves and charlatans.”  A Kudrin appointment that lacks seriousness will drive a very large nail into the Russian coffin.

The Kremlin and Kudrin should reread Bulgakov's The White Guard about the fall of Russia in 1917 to remind themselves about the consequences of war, political turmoil and social collapse (coincidentally, The White Guard, is set in Kyiv).