Page 7 - RusRPTDec20

In parallel Russia’s development agencies are being shaken up to better organize the spending of the non-budget money on the​ ​12 national projects​. The number of agencies will be cut from 40 to about a dozen and most put under VEB.RF (formerly Vnesheconombank) which is run by Igor Shuvalov, one of Russian President Vladimir Putin’s closest confidents.
Between the two men Putin is both tightening control over the spending and at the same time institutionalizing the efforts. This is a big departure from how big state spending was organized in the past, when the largest state contracts for things like the Sochi Olympics or the Kerch bridge were given to the stoligarchs​ – Putin’s close friends – who he could then supervise personally and limit the stealing.
The amount of money that will be spent now and the number of projects on the table are too many for this informal system to work any more.
A more serious and systematic attack on getting the national projects to work should be good for the economy. The first round of spending in 2019 already was visible in real incomes that started to rise as a result. Fixed income and asset prices also rose. The national projects will be a form of economic stimulus even if they fail to delivery on their promise, and will be an even bigger boost to the economy if they work as they are all designed to be economic multipliers.
The big unknown in 2021 is what will the incoming Joe Biden do? Commentators fear new and much harsher sanctions on Russia and there are three bills in front of the US government that could be passed and could target, among other things, Russian sovereign debt – both local and international.
Countering America’s Adversaries Through Sanctions Act (CAATSA) has already been passed but there are three more bills draft bills waiting for votes: Defending Elections from Threats by Establishing Redlines Act (DETER); Defending American Security from Kremlin Aggression Act (DAASKA); and most recently Making America Safe and Secure Act (SECURE).
However, sanctions attacking Russian debt are very unlikely as too many US investors hold Russian bonds. At the same time Moscow seems to have launched a less aggressive foreign policy, where it avoids meddling in domestic politics in its neighbours and treats them with a more even hand. This was seen in Moscow’s failure to overtly support Armenia against Azerbaijan in the recent Nagorno-Karabakh war. Likewise, the Kremlin stayed out of the recent Moldovan presidential election which was run by a pro-west president as a result. Russia-based analysts at least say this is the start of a new pragmatic approach to foreign policy. It remains to be seen if the Biden administration even realises this change, let alone softens its own policy as a result.
7 ​RUSSIA Country Report​ December 2020 ​ ​www.intellinews.com