Russia's Kudrin Gets Audit Post as Hopes of Bigger Role Fade

(Bloomberg) -- Former Finance Minister Alexei Kudrin confirmed Monday he’s agreed to head Russia’s Audit Chamber, disappointing hopes that the investor favorite could get a more powerful role in setting economic policy.

“The fight against corruption should be focused not only on catching criminals red-handed but most of all in creating the mechanisms to prevent corruption, to reduce the opportunities for it to a minimum,” Kudrin said in a website statement after legislators from the ruling party endorsed his candidacy. The Audit Chamber is a watchdog body focused on monitoring the spending of government funds.

Earlier this month, Kudrin was said to be consideration for a top job in economic policy in the Kremlin where he would have helped direct overhauls to accelerate growth. Kudrin won over many investors when he served as finance minister during President Vladimir Putin’s first two terms, helping stabilize government finances and pay down debt.

But he quit in 2011 over differences with Dmitry Medvedev, who was then president and is now prime minister. Putin named Kudrin to draft an economic program for his new term last year, raising hopes that he would have a bigger role and could push steps to liberalize the economy and spur growth. The Audit Chamber doesn’t have major policy impact, however.

Not ‘Inspiring’

“This will be generally seen as a far lower role for him than expected by the market,” Luis Saenz co-head of global equities at BCS Global Markets, said by email. “Overall, this is better than him remaining on the sidelines but not very inspiring.”

Kudrin said he hadn’t been offered any other posts in the latest round of appointments, and hadn’t spoken to Putin directly about the Audit Chamber job, although he said the president was aware of the nomination, Interfax reported. Parliament has to confirm Kudrin for the post, but that’s a virtual certainty with the backing of the ruling party, which holds a majority.

Putin began his fourth term on May 7 and has so far made relatively minor changes to his team. In the government, Anton Siluanov, a Kudrin protege, is to be promoted from finance minister to first deputy prime minister. The current head of the Audit Chamber, Tatyana Golikova, another onetime Kudrin ally, is to be named deputy prime minister for health and welfare policy. Putin is expected to finalize appointments Tuesday.

“He’s putting people in who can ensure budget discipline,” said Valery Solovei, a political scientist at the Moscow State Institute for International Relations. “All this is aimed at a single strategic goal: Russia will be living in survival mode, no one is talking about development.”

Putin has promised to accelerate sluggish economic growth and deliver a “decisive breakthrough” in living standards in his new term, but most forecasters expect the current sputtering performance to continue even with higher oil prices. U.S. and European sanctions, as well as the steadily increasing role of the state in the economy, are expected to sap business confidence and much-needed investment.

Kudrin had advocated easing tensions with the West and boosting the role of the private sector to revive the economy.

“Everyone understands that the geopolitical situation doesn’t allow any kind of breakthrough,” Solovei said.

©2018 Bloomberg L.P.

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