Greenspan Warns Russia Over Inflation

Former U.S. Federal Reserve chief Alan Greenspan said Wednesday that the double-digit inflation rate was hurting Russia's economy, Interfax reported.

While Greenspan praised the development of the Russian economy, he said the government could not "sterilize" the excess money flowing into the economy because of high energy prices and the size of the country's oil and gas sector, the agency said.

Greenspan said there were "legitimate concerns" about the role of sovereign wealth funds, such as Russia's, investing in global financial markets, but as long as they behaved "wholly like profit-making institutions" their money would be welcomed.

Greenspan's comments, relayed by satellite link to an investment forum in Moscow, come after Finance Minister Alexei Kudrin said at the World Economic Forum in Davos last week that money held in Russia's stabilization fund would only be used to invest in stakes of up to 5 percent in foreign companies.

Russia currently relies for more than 70 percent of its exports on oil and gas, Kudrin told the same investor conference, which was organized by Troika Dialog, earlier in the day.

The government has reported an inflation rate for 2007 of 11.9 percent, and the State Statistics Service on Wednesday estimated that consumer prices for January would rise by 2.3 percent to 2.4 percent.

n In an interview with Germany's Die Welt, a transcript of which was published Wednesday, Greenspan said the chances of a U.S. recession were "50 percent or better."