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. Last Updated: 07/27/2016

Wunderkind Delyagin Back in White House

For months, he has railed against the way Prime Minister Mikhail Kasyanov's government has handled the economy, calling 2001 a "lost year" in terms of reforms.

He blames the government for doing little to curtail the "burgeoning corruption" he says is sweeping the country and calls its stated intention of joining the World Trade Organization by the end of 2003 a "huge mistake."

So when Kasyanov last week asked the young and outspoken economist Mikhail Delyagin to be his adviser, most observers were surprised.

Delyagin, who has earned a reputation as a doomsayer and protectionist, re-enters public life as a member of the country's economic leadership, but with views quite different than the influential ultra-liberal set dominated by top presidential economic adviser Andrei Illarionov, Economic Development and Trade Minister German Gref, a staunch free-trade proponent, and the powerful industrial lobby.

Delyagin, 33, was tight-lipped Tuesday about the specifics of his appointment and the tasks he is expected to fulfill, except to make one thing clear:

"This is not a political appointment," he said in a telephone interview. "I have simply returned to government work, which I've done for a fair amount of time in the past."

Indeed, the wunderkind economist has wandered among the ruling elite since the fall of the Soviet Union, first advising then-President Boris Yeltsin and later doing the same for then-deputy prime ministers Anatoly Kulikov and Boris Nemtsov. His last prominent public post came in the wake of the financial crisis of August 1998, when he was named an adviser to then-First Deputy Prime Minister Yury Maslyukov, a Communist.

Now, after 2 1/2 years running his own think tank, the Institute for Problems of Globalization, Delyagin is back at the White House, although in an uncertain capacity.

He said that he is just part of a group advising Kasyanov on a range of economic issues. But observers and local media have speculated that his opinions and personality could lead to an aggressive public debate with Illarionov, whose views are more or less at odds with Delyagin's.

In fact, there has been some speculation that this is precisely why Delyagin was hired -- to give Kasyanov more ammunition against Illarionov, who has often criticized the prime minister, most recently for his debt program.

"Delyagin is a person that can create a debate. Although the question is how much debate and on which issues," said Peter Westin, senior economist at the Aton brokerage.

Delyagin's appointment coincides with a quietly boiling debate over Russia's bid to join the WTO. While the Cabinet's official line, voiced mostly by quick-entry advocate Gref, Delyagin has called for a more cautious approach.

Among the reasons not to join the WTO too soon, according to Delyagin, is the risk that certain major energy-consuming producers, such as aluminum producers, will fall victim to a uniform energy tariff that will have to be introduced to gain membership to the global trade body.

Major energy-consuming producers, already lobbying Kasyanov to keep energy prices down, will likely be pleased to have a fellow traveler with the prime minister's ear.

"Possibly, Kasyanov needs someone who can deliver an argumentative concept to advocate this theory," said Alexei Moiseyev, economist with Renaissance Capital investment bank.

There were also reports that the government planned to hire a special consultant on WTO issues. Wondering if Delyagin was the one, Westin doubted his expertise on the issue.

"Delyagin being an adviser to Kasyanov is like Dr. Ruth being the adviser to the pope," said Westin, referring to the diminutive and elderly American sex therapist Ruth Westheimer.

Westin called the appointment of Delyagin "puzzling."

"He doesn't stand for the policies we think the government is pursuing," he said.

Independent economists note that Delyagin has consistently called for a bigger state role in managing industries and higher government spending to boost economic growth -- a position diametrically opposed to Illarionov's.

In addition to Illarionov, however, Delyagin is likely to face criticism from others in his profession.

Moiseyev said that state spending can only be increased two ways: either by borrowing more money or by printing more money. Neither option is suitable given the current conditions of the economy, he said.

Heavy borrowing led to the 1998 financial crisis, which Russia is still recovering from, while printing money tends to work only in countries that, unlike Russia, have low inflation expectations, Moiseyev said.

Advocating protectionist measures and an increased role for the state in regulating industry, however, might result in Delyagin finding a key political ally -- industrialists themselves.

The nation's most powerful trade lobby, the Russian Union of Industrialists and Entrepreneurs said Tuesday that it had begun working on a comprehensive national industrial policy that it hopes the government will eventually adopt.

But some observers doubt that Delyagin will have much of a say in that, or in anything much at all.

"It looks like a formal revival of Yeltsin's tradition of covering up the tanks with branches, or having advisers to voice someone else's opinion," said Yury Korgunyuk, a political analyst with the Indem think tank.

"But the times have changed: Covering something no longer means that the original thing is not obvious," he said.

Moiseyev added that the whole notion of Kasyanov having an economic adviser contradicts the structure of the Cabinet.

"It is unclear why Kasyanov would need an economic adviser, since he has ministers that are his direct subordinates," he added.