In an widely-circulated interview with "The Financial Times" last month, Shuvalov said the cash crunch resulting from falling oil prices gives Russia an opportunity to diversify its economy and escape its historically dangerous dependency on energy and commodities prices:
The longer we have low commodity prices, the sooner we will have a new model of our economy. Even now people say, 'Don't worry, in a year all the prices will come up again and you'll have your annual budget completely full of money and you will carry on.' But that's not good. It’s better if we have two, three, five years as a difficult period... Russians, it’s proven by our history, can invent new technologies, we can implement them and we can even sell them. But once you have this money coming from the oil rain, it completely spoils everybody.
Shuvalov is backed by Finance Minister Aleksei Kudrin and Economics Minister Elvira Nabiullina.
But he also has a very powerful -- and predictable -- opponent: Deputy Prime Minister Igor Sechin, who is also chairman of the state oil giant Rosneft. Sechin argues against diversification, saying Russia's over-dependence on energy is a fiction dreamed up in the West.
Writing in "Novaya gazeta," Andrei Ryabov, a political analyst with the Moscow Carnegie Center, summarized the polemic as follows:
This debate is bound to heat up in the coming weeks as the economy continues to tank and in the aftermath of the austere budget that Kudrin has just presented.
But at the end of the day, this debate is as much about politics as it is about economics. As I have noted here and elsewhere, diversifying the economy implies a decentralization of economic power. This would inevitably lead to a devolution of political power, something Sechin and much of the current elite finds intolerable.
In a commentary in Gazeta.ru, political analysts Vladimir Milov succinctly explains why:
This is why the polemic over the economy is closely related to the ongoing dispute about the political system, in which a growing chorus is saying the crisis makes it necessary to liberalize the authoritarian system of "sovereign democracy" instituted by Vladimir Putin.
In the bureaucratic game, which security service veterans like Sechin know how to play better than anyone, Shuvalov doesn't stand a chance.
But the wild card in the deck of course is Russian society, which is getting fed up with the government's ineptitude in addressing the crisis and -- in some quarters -- seems to be showing signs of waking up from its long slumber.
-- Brian Whitmore