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. Last Updated: 07/27/2016

Chubais: Asian Crisis Is Russia's Main Threat




The greatest threat to Russia this year is market turmoil in Southeast Asia, First Deputy Prime Minister Anatoly Chubais said Tuesday.


However, if the economy survives this threat it could see real growth by 2002, he said.


In a downbeat assessment of Russia's prospects for 1998, Chubais was quoted by the Kommersant Daily newspaper as saying that the tax code -- one of the government's key reforms -- was unlikely to be passed and people would not feel much improvement.


But he said he was generally optimistic about Russia's future, despite worries over the continuing fallout from economic problems in Asia that have already affected markets worldwide and emerging markets such as Russia in particular.


Officials say investors pulled $8 billion out of Russian markets after nervousness hit markets in late October.


"The biggest threat to Russia this year is financial crisis in Southeast Asia and in the world as a whole," Chubais said.


"If it does not materialize, then my expectations for the coming year and further off are highly optimistic."


Chubais said last year's 0.4 percent economic growth was a significant achievement -- the first positive number in eight years of the difficult transition from communism.


But the sort of growth that could be felt by ordinary people -- a rate of about 7 percent to 8 percent -- would not be possible this year. "With sensible policy, it's possible in 2001 to 2002," he said.


Chubais said tax reform was a priority for 1998 but that the government's key tax code would not be passed unless parliament was given a time limit of Jan. 1, 1999.


Lowering the prices charged by Russia's energy and transport monopolies was another priority, as was unravelling a knot of nonpayments strangling the economy, although he said he saw that problem continuing well beyond this year.


Chubais said that by the time of the next presidential elections in 2000, social tensions due to economic problems should have died down and it would not be a straight contest between communists and democrats as it was in 1996.


But it would be another 15 years until the emergence of a significant middle class transformed Russia into a leading world economy.


"In terms of total gross domestic product, Russia has a real chance of being somewhere in the middle of the top 10 by 2015," he said.