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Andrei Illarionov: Crisis in Russia has Nothing to Do with a Decline in Economic Growth in Georgia

An interview with Andrei Illarionov, a formereconomic policy advisor to the President of the Russian Federation  

How do you assess the Western sanctions against  Russia? How strong they are, and what effect may they have on the Russian leadership?

Sanctions are generally ineffective and weak, belatedly, selective, they cover  a very small number of individuals and companies. These sanctions will not have a significant impact on the macroeconomic, and especially the political situation in Russia.

For example, the sanctions were imposed on large companies such as Rosneft  and Gazprom, but restrictions apply their secondary operations, and thus, by and large their functioning is not in danger. The international community had every opportunity to provide more stringent, effective, and long-term sanctions.

How do you rate retaliatory  sanctions declared  by  Russia?

The sanctions announced by the Putin regime’s for  his own people are more stringent than the sanctions from the West. They had a very negative impact on the life of the country. This is especially felt in the food sector, as a ban on food imports from the EU has a direct blow to  a consumer market in Russia.

Prime Minister of Georgia Irakli Garibashvili said that  joining  the international sanctions against Russia will not bring any results, and it would be better if the Georgian farmers were able to benefit from emerging opportunities. How do you assess  this position?

It cannot be called a healthy position. When the civilized world  announces sanctions in response to Russia’s  aggression, who was the aggressor in Georgia and Ukraine, a civilized and responsible government is obliged to join them. If it tries to  take advantage of the situation, it means it contributes to aggression. This is a very strange statement by the Georgian government.

The Government of Georgia explains the slowdown in economic growth by developments in Russia and in the region as a whole. Do you see any connection?

I don’t see any connection between the situation in Russia and the slowdown in the economy of Georgia. In recent years, Georgia’s economy grew faster than in Russia, so it’s mistakenly to assume that the Georgian economy is so dependent on Russia.

A fact that in the last two years Russian market has been opened for Georgian products says nothing.Prior to 2006, Russia was the largest economic partner of Georgia, but in the following years, Georgia has managed to get away from this dependence, and Russia has become the 5th or 6th trading partner. This is especially true in such sectors as oil, gas and energy.

It is obvious that the Georgian business should always remember that Russia is using the economy as a lever of political influence.

Do you understand economic policy of the Georgian current government which says  it is socially oriented?

The current Georgian authorities do not understand what “socially oriented” means. They think  thatthey should take away from those who earn and give to those who do not earn. This is probably the best way to bury the country’s economy. From 2004 to 2008, the growth of the Georgian economy was 8.9 and 10%. Today, nothing of the kind is observed.

A few words about Ukraine. Do the current  Ukrainian authorities have  resources and political will to carry out the necessary reforms?

Recently a group of advisers to the Government of Ukraine issued an action plan to reform the country’s economy, one of the authors was  Kakha  Bendukidze. I absolutely agree with this plan, which consists of several elements – change in tax policy, public spending cuts, a significant reduction in energy subsidies. To date, the bureaucratic apparatus is a  heavy burden on the economy of Ukraine that  does not give her a chance to rise.

A way out of this difficult situation certainly exists, but the government of Ukraine should show political will and fulfill all the reforms  in the preparation of which Kakha Bendukidze took part.