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Putin Tells Davos That Financial Crisis Is 'Perfect Storm'

"All countries have found themselves in the same boat," Putin told those gathered in Davos.
(RFE/RL) -- Russian Prime Minister Vladimir Putin has told the World Economic Forum in Davos that the global financial crisis is a "perfect storm" whose destructive powers have been multiplied.

Putin compared the economic meltdown to the Great Depression of the late 1920s and early '30s, but said the difference this time is that every country in the world has been affected.

"In an era of globalization, the crisis has affected all countries without exception, regardless of their political or economic system," Putin said. "All countries have found themselves in the same boat."

Putin said he did not blame the United States for the crisis, but he reminded his audience that at last year's Davos forum, then-U.S. Secretary of State Condoleezza Rice said the U.S. economy was fundamentally stable.

"I will remind you that only a year ago we heard our American friends talk on this podium about the fundamental stability and unclouded future of the U.S. economy," Putin said. "Today, Wall Street's pride -- investment banks -- have practically ceased to exist. In a matter of one year, they had to acknowledge losses exceeding their profits for a quarter of a century."

He said that fact spoke louder than any criticism could.

Putin warned world leaders against reacting to the crisis by sliding into isolationism "and unrestrained economic selfishness." He brought up the agreement by world leaders at the last G20 summit to refrain from erecting barriers against trade, and said Russia still advocates that position.

Putin also cautioned against allowing the state to intervene in the market, saying it could lead to a concentration of assets "in the hands of the state."

"Another possible mistake is excessive intervention by the state in economic life, the blind belief in the omnipotence of the state," he said. "Yes, the strengthening of its role in the conditions of a crisis is a natural reaction to the failure of [free market mechanisms]. However, instead of improving market mechanisms, there is now a temptation to expand the state's direct involvement in the economy as much as possible. The reverse side of anticrisis measures almost in every country is the concentration of excessive assets in the hands of the state."

'Cooperate Constructively'

The Russian prime minister called on the new U.S. leader, President Barack Obama, to "cooperate constructively" in international affairs and said he wishes the new administration success.

As president of Russia, Putin presided over a huge increase in Russia's defense. Today, he said militarization will not solve the world's problems.

"Militarization does not help resolve the problem but only pushes it back, taking from the economy vast financial and material resources that could be used much better elsewhere," Putin said. "I'm confident that reasonable constraints on military spending along with the strengthening of global security will ultimately yield economic dividends."

He said "multilateral political mechanisms" had failed to end conflicts like 2008's Russia-Georgia war, the attacks in Mumbai, and the recent fighting between Palestinians and Israelis in Gaza.

And he called for a new international legal framework to guarantee energy security. Earlier this month, a dispute with Ukraine interrupted supplies of Russian natural gas to Europe.

Putin said Russia wants to build a new gas pipeline to the Pacific and China that would parallel a new oil pipeline on Russia's Far East coast.

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