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. Last Updated: 07/27/2016

Shuvalov Says No Need to Fear State

In a new state drive to soothe investors, First Deputy Prime Minister Igor Shuvalov said Monday that the government would not use the financial turmoil to change economic policy or nationalize large swathes of the economy.

Shuvalov spoke at what he said was the first in a series of regular government and Kremlin briefings with reporters about the financial crisis.

He said the briefings were needed because market rumors were threatening to harm the economy — even as the government has insisted that there is no crisis in Russia.

"We don't have any directives to lay our hands on as much private property as possible," Shuvalov said. "These are all rumors."

He said the government had no plans to carve up leading enterprises "on the sly."

Amid the worst financial crisis since 1998, Prime Minister Vladimir Putin's government has committed billions of dollars of public money to bail out private companies. With more than $200 billion allocated in loans, tax cuts and other measures, some observers have warned that the financial turmoil might trigger a broad redistribution of property.

Shuvalov said the government did not plan to send state managers to the companies it bailed out. There are no worse managers than the state, he said.

The three priority industries for the government are retail, construction and banking, he said, adding that prices for food staples would not increase. Supermarket chains Sedmoi Kontinent and Magnit have received money already, he said, and the government will be ready to start buying newly built apartments from construction companies in November. The government is also keen for energy companies to fulfill their investment plans and is considering a tax incentive for the oil sector.

Authorities are working daily to swiftly react to the effects of the crisis and are in close touch with businesses, said Shuvalov, noting that Putin planned to chair a closed-door government meeting on Monday night after holding a regular Cabinet meeting earlier in the day.

Shuvalov acknowledged that the government's tactic of keeping the media in the dark about its steps to stem the effects of the global liquidity crunch on Russia were breeding potentially destabilizing rumors. "Rumors and negative information have begun spreading quicker than what the reality is," he told the reporters. "I can assure you that you won't feel a scarcity of information" from the government.

The decision is rare for a government that has traditionally been wary of reporters and has tightly controlled the information that it releases.

The main television channels — which are all state-controlled — have either downgraded or ignored Russia's financial turmoil since it began in mid-September, instead focusing on the United States as the cause of the crisis. That trend, however, does not seem likely to change. None of the channels carried Shuvalov's comments on Monday night. The government briefings are being limited to print journalists.

Shuvalov sought to dismiss speculation that Russia's nest egg was disappearing quickly, saying Russia now has $500 billion in reserves. "We understand where the money went and how much of it will come back," he said, referring to speculative capital that is leaving Russia.

A decision by some stores to stop accepting credit and debit cards has nothing to do with liquidity or bank problems, he said, adding that people who contribute to "panic sentiments should be held responsible." In recent days, many people have started converting their ruble savings into dollars and euros, sending street exchange rates lower than the official rate.

Shuvalov said the government would use every means — liberal or not-so liberal — at its disposal to protect the economy. "There is no need to be embarrassed by anything," he said. "If we need to shut down a bourse, we'll shut it and explain later why we did so." The authorities have repeatedly closed the RTS and MICEX because of plunging share prices. Both stock exchanges were closed Monday.

Referring to a Cabinet meeting earlier Monday, Shuvalov said the government had approved in principle Russia's strategy through 2020 and did not plan to drop expansion plans because of the crisis.

Putin said at the meeting that Russia would not try to isolate its national economy because of the global crisis. "Of course, we should take into consideration today's realities … but strategically, of course, isolationism is absolutely not our choice," Putin said.

In a departure from remarks in August when he said Russia was in no rush to join the World Trade Organization, Putin said the country was still on track to become a member and was also interested in holding talks on a new partnership agreement with the European Union.

The EU and Russia were to meet for a summit in Nice in mid-November, but Moscow's brief war with Georgia in August has cast doubt over the talks. A Kremlin official, speaking on customary condition of anonymity, said last week that Russia was acting on the assumption that the summit would take place as scheduled.

Putin reiterated his criticism of U.S. Jackson-Vanik trade restrictions and called for the removal of barriers in the global economy.

Putin and President Dmitry Medvedev have blamed the global crisis on the inefficiency of Western institutions. Shuvalov declined to discuss which proposals Medvedev will bring to the table during a crisis summit in Washington next month, but he said the president would address the inefficiency of institutions like the International Monetary Fund and the World Bank.