Press Review (25-31 May)

Russia won't be asking the IMF for loans

President Dmitriy Medvedev has presented his budget message. For the first time he did this in public, at a meeting with the Cabinet in the presence of Prime Minister Vladimir Putin. The president himself stated that he had done this deliberately, in order `to focus attention on it'.

Vremya Novostey notes that this was no accident: "The Russian authorities have never before had to prepare the country's main financial document in such difficult circumstances. No one ventures to predict when the world economic crisis will end, Russia's financial reserves will run out next year, and only the most optimistic scenarios envisage the country's economic growth being restored in 2010. The theme of the budget message was the need to save money and the collective responsibility of the federal authorities, the regions and state-owned companies for expenditure. For the first time in many years the authorities will have to reduce the items of expenditure in the budget and resume government borrowing."

The scale of the impending borrowing was set out by Finance Minister Aleksey Kudrin, who is quoted by most of the media. Next year this figure may be more than 7,000 million dollars, and then may exceed 10,000 million. Any borrowing will be on the market. "We're not intending to apply to the IMF," said Mr Kudrin. It will consequently be a matter of domestic bonds and Eurobonds, with the priority on domestic borrowing.

Zavtra, a newspaper which takes a tough opposition stance, takes the view that "the figures announced by Aleksey Kudrin are essentially a verdict on the Russian financial system, which after seven years of extremely favourable market conditions has proved unable to withstand the crisis even for a year, yet continues to keep the manufacturing sector in a state of `financial starvation'."

Novyye Izvestiya says that "for the first time in the last ten years expenditure will exceed income. The budget deficit will be not less than 7% of GDP - and even that's an optimistic figure, the president said. At the same time he tried once again to be reassuring: the state's reserves will enable it to meets its social commitments."

Vedomosti quotes an anonymous government official: "The main value of the message is that it is absolutely and uncompromisingly frank. It is right to say that things are bad. We knew that, but the unpleasant truth should not have been made public, so as not to alarm the people."

Rossiyskaya Gazeta publishes the views of some well known economists. Yevsey Gurvich says that "today we need a new growth model for our economy, and an answer to the question: not how do we get out of the crisis, but where do we go in the future? How can the economy grow not just on the basis of oil but with new sources of expansion?"

In the opinion of Yevgeniy Nadorshin, the budget message "is a challenge to live within our means and not to count on government support in 2010. We're beginning to understand that the country cannot afford the kind of economic boost that the USA and other countries are trying to achieve. They've got more resources for this."

Vladimir Mau considers that "the budget message was aimed at achieving a responsible budget policy. It's easier to pursue such a policy when money is short."

Blackmailers and extortionists from Pyongyang

Dmitriy Trenin of the Carnegie Moscow Centre writes in Novaya Gazeta: "North Korea's new test of a nuclear device is a continuation of the policy of blackmail and extortion which Pyongyang has been pursuing since the end of the `Cold War', when the DPRK was deprived of the Soviet Union's political patronage and material assistance. The aims of this policy are to deter external threats to the security of the North Korean regime (nuclear missile blackmail of the USA, South Korea and Japan) and to secure resources from its neighbours and the West to enable the regime to survive (extortion)."

The liberal radio station Ekho Moskvy, as ever, lets the most varied people have their say. Konstantin Kosachev, chairman of the State Duma foreign affairs committee, broadcast his alarm that "this time North Korea is not making any demands. Whereas previously it said `Drop the sanctions' or `Give us our latest delivery of fuel oil immediately' or `Unfreeze our bank accounts in Macau', or something else, this time there's none of that. That is, we are dealing perhaps with state terrorism, yet the terrorists aren't making any demands. This is some kind of meaningless terrorism."

But writer and editor Aleksandr Prokhanov, who is known for his nationalistic views, is not at all worried. "North Korea is in this case behaving like a normal country, it's creating a system to repulse outsiders. It's creating a nuclear missile shield to protect itself from strikes by the Americans. Thank God that there's at least one country in the world that is saying no to America, that empire of evil."

Izvestiya assesses the possible ways the situation could develop, saying that "the worst of them is a local nuclear conflict, with Pyongyang launching a strike against South Korea and American military targets on its territory, and the USA bombing the DPRK. But in any case that's not a world war. Although on the whole, it is already a world crisis: what's happened is what the most perceptive experts have long warned us about. The nuclear club is getting `smaller' - now it even includes small countries and small rulers. Who's next? Alas, the fanatical terrorists - Al-Qaeda, the Taleban and so on - are next."

Izvestiya has conducted an internet poll of its readers regarding North Korea's actions. Here are the results:
60%: It's blackmail, based on the economic collapse in the country
23%: This is how you have to talk to the world to make people listen to you and fear you
13%: It's political PR and there's no need to take it seriously
4%: Kim Jong-il has decided to unleash the third world war
The most curious thing is the second line. Almost a quarter of those questioned are not at all inclined to condemn the North Korean regime.

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