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. Last Updated: 07/27/2016

Illarionov Pushes to Revive Reform Drive

SALZBURG, Austria -- Presidential economic adviser Andrei Illarionov on Tuesday urged his country to put fresh impetus into the drive for reform, warning that its growth rate was being eclipsed by some of its neighbors.

The radical pro-market economist also launched an attack on the head of the country's electricity monopoly, Anatoly Chubais, saying the former deputy prime minister had been wrong on his strategy for reforming the sector.

Speaking at the World Economic Forum's European Economic Summit in Salzburg, Austria, Illarionov said that economic reforms were slowing down.

The 4 percent growth in gross domestic product was reasonable, but looked impressive only when compared with sluggish growth in places like the United States, Europe or Japan.

"But when compared with China's 8 percent or with the 9 percent of our neighbor Kazakhstan, it is quite clear that 4 percent [growth] is not enough and cannot be called satisfying," said the adviser to President Vladimir Putin.

"The Russian economy can grow faster and actually did grow faster in 2000, when GDP grew by 9 percent, so what happened with us, and why did we forget how to do it?"

Illarionov said that Russia has learned important lessons from its economic crisis in August 1998 and now the government was paying special attention to fiscal responsibility, exchange rates and the size of government.

However, these efforts also need to address issues like national monopolies, taxes and administrative reform in order to sustain economic growth.

"But it is true that economic reforms are slowing down," he added. "One possible explanation is indeed the political cycle, the election cycle. It is one of the characteristics of returning to so-called normality, but maybe a bit unfortunate."

Speaking on legislation to reform the energy sector, now being debated by the State Duma and due to be passed by early next year, Illarionov said that he felt vindicated, although his radical reform ideas had been rejected.

"I lost the battle with Anatoly Chubais, but not the war," he said, referring to the chairman of state electricity monopoly Unified Energy Systems, which has been pressing on with its own internal reforms.

"The developments since July 2001 and the government decree on the reform [of the electricity sector] show I was right and Chubais was wrong," he added, saying that UES had lost almost 70 percent of its share value during this period.

"As a result, the Russian government alone lost close to $4 billion in 1 1/2 years of complete mismanagement," Illarionov said.

The government is overhauling the power industry in hopes of reviving the creaky energy infrastructure, which breaks down every winter.