Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Putin Promises No Economic Crisis

Itar-TassA giant screen in the central square of Vladivostok broadcasting Putin's question-and-answer session on Thursday.
President Vladimir Putin said Thursday that fighting poverty had been the most challenging task of his eight years in office and offered assurances that the country would not see an economic meltdown when he steps down next year.

But Putin acknowledged that inflation was a problem and warned that consumer prices could continue to climb.

Speaking during his sixth and possibly last live call-in show as president, Putin sought to allay fears that his promises won't be fulfilled after the president election in March.

"It is extremely important to retain a stable course for our state, in which recently adopted decisions are implemented," he said.

Putin has enjoyed immense popularity as the country's oil-driven economic boom trickles down to the poor. Many Russians, however, are worried that the stability after the turbulent 1990s will evaporate once Putin leaves the Kremlin.

More worrisome, inflation is eating into people's wages, and during the three-hour call-in show, many people asked Putin about ever-increasing consumer prices.

The president conceded that the government would not meet its target of 8 percent inflation for the year and said prices could rise further. "Today the accumulated inflation is 8.5 percent, and there are 2 1/2 months to go until the end of the year," he said.

Inflation could exceed 10 percent this year, Deputy Economic Development and Trade Minister Andrei Belousov told reporters Thursday.

Inflation, Putin said, is a sign that Russia is integrating into the world economy and becoming susceptible to global trends and downturns.

Rising demand for biofuels made from cereals such as wheat are pushing prices up, he said, adding that the European Union recently stopped subsidizing many foodstuffs. He said the government was taking steps to combat inflation. Separately, Finance Minister Alexei Kudrin said the Cabinet had allocated 1 billion rubles ($40 million) to purchase inflation-sensitive foodstuffs, Interfax reported.

Putin also accused governors of helping increase prices by supporting regional monopolies. "They know what I am talking about, and they should take measures," he said.

Less than 1 percent of Russians consider themselves rich, while 14 percent say they are poor, according to a survey released by the state-run VTsIOM polling agency this week. Thirty-one percent of respondents said a family should have a monthly income of 20,000 rubles ($800) to 50,000 rubles ($2,000) to be considered rich.

The gap between the rich and poor is widening, but the number of people mired in poverty has been going down, said Sergei Ulatov, an economist with the World Bank. He said Putin and his government deserved credit for improving living standards, and that bank research has showed that Russia's economic growth has been pro-poor.

"It was his idea to reduce poverty," Ulatov said of Putin. "Another thing is that the economic situation has, of course, helped."

More than 2.5 million questions for Putin poured in by e-mail, telephone and text message. Queries touched on everything from the rising cost of living and kindergartens to Putin's aptitude for foreign languages. Putin himself chose several questions, focusing on bread-and-butter issues and avoiding potentially controversial topics.

Conspicuously absent were questions about increasing state control or infighting among various Kremlin clans and special services.

Russians from across the country tuned into Channel One, Rossia and Vesti to watch Putin. Television cameras were installed in 11 locations across Russia, from Vladivostok to Kaliningrad, as well as the Kazakh town of Aktau.

Putin told viewers not to worry about a 1998-style financial crisis.

"Will there be a banking crisis? No, there won't," he said, dismissing the possibility of a default too. "We don't have any foreign debt; we have squared accounts with everybody."

After oil prices plummeted in 1998, the government defaulted on $40 billion in debt with only $12 billion in the Central Bank. The bank's reserves climbed to a record $434 billion last week.

Putin hailed economic indicators, saying the government had cut the unemployment rate to 5.7 percent this year from 6.5 percent in 2006. "This means that some 600,000 people have found their places in life," he said.

Putin pointed out that the economy was now being fueled by sectors like transportation, trade and communications, with construction leading the growth. "There appears to be a construction boom," he said.

Oil has long driven the economy.

"What will happen to us after your departure? And will the summit be held here?" asked Olga Satinko from Russky Island, near Vladivostok, referring to an APEC summit scheduled for the city in 2012.

She also complained about tough living conditions.

"The attention of officials from all levels will not slack off in regard to the Far East," Putin said. "On the contrary, it will only increase."

He said 500 billion rubles -- the largest amount for any development program -- would be spent on the Far East.

Valtentina Markina, from the town of Buturlinovka in the Voronezh region, complained that her son was spending a lot of time near slot machines and that "gambling machines brought us trouble."

Putin reiterated that the gambling machines and casinos would be limited to four special districts across the country from 2009, adding that local authorities had the right to shut down gambling halls now.

When Alexander Tkachenko, a third-year student from Vladivostok, expressed concern that a gambling zone to be set up near the city would breed more crime. Putin said it was local authorities' task to make sure the business was conducted in a "worthy, civilized" fashion.

Other issues Putin touched upon included:

• Energy supplies to Ukraine. Putin said relations with neighboring states were a priority of his foreign policy but reiterated that Russia would no longer subsidize energy supplies to Ukraine. In the last 15 years, annual subsidies on energy supplies reached $3 billion to $5 billion. "Ukraine has not received and surely would not receive such support from any other country in the world," Putin said.

• Russia's accession to the WTO. Putin reiterated that Russia would join the World Trade Organization only under conditions that suited the country. He did not say when it might join.