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. Last Updated: 07/27/2016

Expo Opener Mixes Keynes, Politics

Paying no heed to money-laundering scandals and bombs in the heart of Moscow, Mayor Yury Luzhkov opened an investment fair Thursday by promising Russia years of prosperity and a place in the civilized world.

The first Moskva-Invest investment forum was held in London last fall, where Luzhkov's eloquence was intended to convince creditors that City Hall would continue servicing its debts despite Russia having defaulted on sovereign debt.

Since then, the action has moved to Moscow, where Luzhkov is trying to advance his political ambitions.

Splashing out a mix of Keynesian ideas and populistic slogans, Luzhkov on Thursday called for a hike in pensions and salaries, boosting output at idle industrial enterprises and political stability. "We believe that the draft [2000 federal] budget should forecast a completely realistic 5 percent to 6 percent rise in gross domestic product rather than a defeatist 1.5 percent," Luzhkov said.

On the same day, the State Statistics Committee reported that in the first half of 1999, domestic GDP shrank 1 percent on a yearly basis to 1.83 trillion rubles ($81.7 billion).

The audience at Moskva-Invest was either friendly or neutral. "The fact that such an untransparent country as China gets $40 billion [in foreign investments] while Russia gets $2 billion means that much has to be done," said Scott Blacklin, chairman of the American Chamber of Commerce.

He lashed out at the Kremlin, saying the dismissal in early August of Prime Minister Sergei Stepashin's government was "a very serious blow to Russia's executive power."

Most private businesses and government officials were telling success stories. The World Bank's director in Russia, Michael Carter, said at the forum in remarks reported by Interfax that the government's economic program approved by the IMF and World Bank was producing good results.

The government must limit interference in the economy, Carter said.