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. Last Updated: 07/27/2016

Illarionov Accuses Kremlin Of Scaring Away Investors

Former Kremlin economic aide Andrei Illarionov said Monday that Russia's bellicose rhetoric had scared away investors.

"The Russian leadership is not scared of a Cold War," Illarionov told a news conference. "But, in contrast to the Russian leadership, investors are scared of any war, whether hot or cold, or even any talk of war.

"So … any investor thinking on a medium- to long-term perspective will decide to remove funds from states whose leadership isn't scared of war."

The Kremlin has blamed external factors, in particular the credit crisis in the United States, but Illarionov said Russia's own policies had made matters much worse. "It's completely clear that investors, both foreign and Russian, judge the situation of the Russian economy as much worse than that of other countries, with the possible exception of Ukraine," he said.

He blamed government clashes with the private sector over the summer, the war with Georgia, Moscow's unilateral recognition of the independence of two rebel regions of Georgia and Russia's bellicose rhetoric for the underperformance.

The former Kremlin aide, who is now a senior fellow at the Cato Institute in Washington, said he had recently done a study comparing macroeconomic policy in Russia and Nigeria — two major oil producers that had suffered from lower oil prices.

"We came to the conclusion, unpleasant for us, that today macroeconomic policy in Nigeria is conducted on a much higher level than in Russia," he said. This, he said, helped explain why Nigeria's stock market had performed much better than Russia's this year.