Putin changes economic team amid slowdown

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. Ulyukayev won a special message of support from former finance minister Alexei Kudrin -- the spiritual leader of Russian liberal economists -- who praised him as a "good specialist with great practical experience and deep theoretical preparation". It remains to be seen how the trio -- all with different backgrounds and views -- will together formulate policy. "Nabiullina + Ulyukayev - Belousov =...." asked the Moskovsky Komsomolets daily. Putin said last week that up to 450 billion rubles ($13.7 billion) could be used from a sovereign wealth fund for infrastructure projects to help stimulate the economy, including a high speed railway between Moscow and the Volga city of Kazan. He made the announcement at the annual Saint Petersburg economic forum that ended on Saturday, an event that Russia likes to see as a showcase for its economic achievements. But the daily Vedomosti complained that the various debates at the forum this year sounded as relevant as a "children's fairy tale" at a time when "no-one is planning to reform the economy". It said that while tens of billions of dollars of contracts were signed at the forum, almost all of this was due to a massive oil deal with China and the rest of the contracts all involved energy.