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. Last Updated: 07/27/2016

Economists Fret, Kasyanov Listens

Opposition presidential hopeful Mikhail Kasyanov on Tuesday gathered leading sociologists and economists, including an adviser to the presidential administration, to brainstorm on government economic policy as he prepares a campaign agenda for his 2008 bid.

Speaker after speaker lashed out at President Vladimir Putin's government over growing corruption and increasing state interference, and they called for greater speed on improving social welfare and combating inflation. Kasyanov, a liberal who was fired as prime minister in 2004 amid a growing standoff with Putin's Kremlin, spoke little during the round table talks he was hosting. But he said in a brief interview afterward that he would use the speakers' analyses for his own economic program.

In a sign Kasyanov could be winning some support from within government, Putin's long-time economic adviser Anton Danilov-Danilyan surprisingly joined the fray. He said the government was not doing enough to activate growth in business, which, he said, faced high entry barriers, expensive loans and other obstacles. He called for sweeping changes in the system of government.

"The corrupt system does not allow for development," said Danilov-Danilyan, who now heads a working group on economics in the Kremlin and has been in and out of Kremlin advisory posts since the early 1990s. "The system must be revitalized, which can't be done without new players."

Speaking as a representative of the Delovaya Rossiya business association, he said business was feeling the impact of an increase of corruption. "There are favorites. Everyone has to give bribes."

Kasyanov is the only politician who has announced he will run in 2008, and he is working on building a political platform for the race. He has said he will hold a series of round tables to put together his agenda.

He has been trying to unite the country's fractious liberal forces, and he took a first step toward forming a new party last weekend with the creation of a political movement called the People's Democratic Union.

The economists he brought together on Tuesday were an eclectic bunch. Sergei Glazyev, an economist whose run for parliament in 2003 on the nationalist Rodina party's ticket helped popularize a Kremlin crackdown on oligarchs, also spoke at the round table, even though, at first glance, he did not appear to be a natural Kasyanov ally. Kasyanov was one of the few state officials to criticize the state campaign against Yukos owner Mikhail Khodorkovsky as heralding a rollback of market freedoms.

Glazyev on Tuesday attacked the government for not spending enough on health care and education, while overspending on defense and law enforcement. "We underfund education by a factor of two and health by a factor of two. But we spend 40 percent [of the budget] on defense and law enforcement. It's the budget of a typical police state."

"If we use the stabilization fund for health, education and investment, we'll be on a European level," he said, referring to the government fund that is collecting windfall oil revenues.

Danilov-Danilyan said businesses were starved for funds for investment because of the banking system is underdeveloped. Banks cannot make loans any cheaper because of a lack of support from the Central Bank and because many businesses that operate in the gray zone of the economy do not have assets to offer as loan security or do not have a long-enough credit history, he said.

A growing tax burden might be to blame for a business slowdown in the first two months of 2006, said Yevgeny Gavrilenkov, chief economist at Troika Dialog. Gavrilenkov contrasted economic growth for January-February of 4 percent with the tax authorities' claim that tax collection was up 40 percent.

Economist Alexander Auzan said the burden of both taxes and corruption grew last year, meaning that businesses suffered even if they conducted business lawfully. In contrast, he said, the trade-off for paying more taxes in 2001 was less informal harassment.

Georgy Satarov, the head of Indem, the anti-corruption think tank, said growing corruption contributed to inflation, because businesses raised prices to make up for bribes.

The government's unpopular reform of the utilities sector, which hiked rents and utilities and housing maintenance fees from Jan. 1 and has provoked nationwide protests, is evidence of its lack of desire to better appease the population, said sociologist Yury Levada.

Levada said public support for Putin, at 70 percent, was high but eroded, as indicated by the results of a recent poll carried out by his Levada polling agency. Only 30 percent of Putin's supporters would vote for the candidate suggested by Putin. Nearly 20 percent said they would vote for anyone but Putin's chosen successor, and more than 50 percent said they would need to think about it.

"When you ask people, why that is, they say, there's no one else to rely on -- it's a lack of alternatives," he said.

Former Economy Minister Yevgeny Yasin said Finance Minister Alexei Kudrin's goal of bringing down inflation was achievable only through methods that would hurt business activity, because a decrease of budget spending was unlikely in the years before any presidential election.

Russian labor is at a crossroads, warned Yevgeny Gontmakher, a former deputy social development minister. He said that the work force was in increasingly bad health and poorly educated, while xenophobia and an inconsistent immigration policy might curb the influx of migrant labor within the next couple of years.