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. Last Updated: 07/27/2016

Wolfensohn Calls for Clarity

APPutin and World Bank chief Wolfensohn sharing a laugh in the Kremlin on Thursday.
World Bank president James Wolfensohn said Russia should clarify its position on private business and the state's role in the economy after confidence had been undermined by the dismemberment of Yukos and perceptions of a change in official policy.

President Vladimir Putin received Wolfensohn in the Kremlin on Thursday and asked for help in negotiating early payment of debt owed by Russia to the Paris Club of creditors, saying Russia does not need massive financial support from abroad.

Wolfensohn, who is set to end his 10-year tenure as the head of the World Bank in May, met with business leaders before the meeting with Putin and told journalists the country's economy was in good shape. But when asked by The Moscow Times about his views of the investment climate, he said concerns about the direction of the government's economic policy should be addressed.

"My belief is that there is still a very strong will to go with competition and the private sector, but I think that, in view of what has happened recently, that needs to be clarified and I think it is under review now in the government. I just arrived half an hour ago and I will know much more in 24 hours."

Wolfensohn said Standard & Poor's upgrade of the country's credit rating to investment grade this week and gross domestic product growth of 7.1 percent shows that the economic climate is good.

"The S&P upgrade demonstrates that from an economic point of view, the country is in decent shape -- growth of more than 7 percent last year and very high foreign exchange reserves. The general trend of the economy is still very positive, though heavily weighted to natural resources, but still very good. So you have to say that the economic climate looks good," he said.

"What the government needs to do now is to make clear the extent to which it is going to rely on government investment and the extent to which it is going to rely on private sector investment. That is the question mark that is hanging over the direction in which Russia is seeking to move."

In the Kremlin, Putin said he had "warm personal relations" with Wolfensohn, whom he asked to help Russia's efforts to repay early of some of the $44 billion debt owed to the Paris Club of creditor nations.

Russian officials are seeking a 10 percent discount for paying off the debt early, according to local newspapers. This week, Finance Minister Alexei Kudrin said Russia had paid off its remaining $3.3 billion debt to the International Monetary Fund three years early.

Wolfensohn, who at 71 is older than the World Bank itself, is known as a perfectionist. Once a world-class fencer, the Harvard-educated banker has played the cello at Carnegie Hall and made millions on Wall Street as an investment banker.

He has brought a sometimes abrasive charm to his work, putting corruption, HIV/AIDS, the environment and debt relief firmly on the World Bank's agenda since being appointed to run the bank by then-President Bill Clinton in 1995. His contract was renewed in 2000, but officials privately say that U.S. President George W. Bush's administration, with which he has occasionally clashed, did not want to see Wolfensohn take on another term.

"I have been there 10 years and that seems like a good length of time and I am such an old man that I have no energy left," said Wolfensohn, who, when asked why he was leaving, claimed to be 110 years old.

"I won't say it was totally not anything to do with the American government. It seemed like a good moment to go and perhaps it is better to leave at the top than to leave too late."