Medvedev May Skip Largess In Speech

Vladimir Putin ordered massive spending increases in his last state-of-the-nation address as president, but his successor will have to think twice about making lavish pronouncements in his debut at the podium on Wednesday.

The global financial crisis has sent oil prices plummeting, threatening the outlook for budget revenues next year. The ballooning expenses that have already been offered to aid the economy coupled with major capital flight further complicate a generous promise of funds in the annual address.

Nonetheless, some are still hanging on to hope.

President Dmitry Medvedev could announce extra spending on the economy but it would not be significant, said Oksana Dmitriyeva, a senior State Duma deputy with pro-Kremlin party A Just Russia.

If ordered, the money would likely pay for turning the economy around from its reliance on oil and gas exports by developing high technologies, a task advocated by now-Prime Minister Putin, she said. Medvedev could also propose tax incentives for that goal, Dmitriyeva said.

Ivan Melnikov, a Communist deputy speaker of the Duma, said he was sure there would be talk of more spending.

"The question is whether the favors will be extended to the banking lobby or the real sector," he said in comments passed through his spokesman.

Kaluga Governor Anatoly Artamonov ducked a question on whether he expected the president to announce more spending. Several other regional leaders did not respond to calls for comment on the address.

For any spending increases to materialize, the Duma would have to revise the budget for the next year, which it passed in the final third reading Friday.

Increased spending would help the economy withstand the credit squeeze and slowing demand, said Danila Levchenko, chief economist at brokerage Otkritie. He said he was certain Medvedev would raise spending.

In his last state-of-the-nation address in April 2007, Putin ordered a 12 percent increase in spending that year on new roads, electricity facilities and relocating people from poor housing. The increases amounted to 650 billion rubles ($24 billion). In the previous year's speech, Putin told the government to pay women 250,000 rubles for every child they have after the first starting in 2007.

Others doubted, however, that Medvedev would push to drain state coffers more. "I don't think the address will have expenses as its main ideology," Mark Urnov, dean of the political studies department at the Higher School of Economics, said ironically. "It would be great if the budget … didn't develop a deficit."

Medvedev will speak as the attention of the world's media will be glued to the outcome of the U.S. presidential elections, which Levchenko thought was intentional. Medvedev, he said, wanted to stay out of focus of the spotlight because he was going to rail against the West.

"There might be a lot of hard-line rhetoric designed exclusively for domestic use and not intended for the front pages of Western newspapers," he said. "It's not very good to make harsh statements at this point due to the capital outflow and huge pressure on the currency. In short, it's not worth it to scare investors."

Urnov, from the Higher School of Economics, countered that Medvedev would use a moderate tone for the foreign policy part of the speech. "There will be no imperialistic pathos," he said.

The address, which Vedomosti said was originally scheduled for Oct. 23, was delayed amid reports that Medvedev was not satisfied with its treatment of the financial crisis.

Medvedev, who aides said was personally amending the speech, first touched on its contents Friday, when he revealed that changes to the global financial system would be a topic.

"I will definitely pay some attention to this matter in delivering my address," he said.

Artamonov, the Kaluga governor, and Dmitriyeva, the A Just Russia deputy, said Medvedev would probably talk about fighting corruption. One of the themes could be supporting sports in the regions, Artamonov said, describing it as a "very hot topic."