CONFIRMED: Vladimir Putin replaces sacked liberal Economy Minister

To those who long for a purge of liberals from the Russian government President Putin’s appointment of Maxim Oreshkin as Economics Minister to replace Alexey Ulyukaev – the previous Economics Minister sacked in disgrace following his arrest on bribery charges – will come as a major disappointment.

Little is known about Oreshkin, but his record clearly points to him being a liberal.  A graduate of the ultra-liberal Higher School of Economics, his background is in banking, where he has previously held executive positions with Rosbank, Credit Agricole, and VTB Capital.

Oreshkin worked in the Ministry of Finance from 2013 and was appointed Deputy Finance Minister in March 2015.

Oreshkin’s past connection to VTB – the Russian bank that recently managed Russia’s successful eurobond sales – suggests that he may have been the official within the Finance Ministry who was ultimately responsible for those sales.  His promotion to Economics Minister may be his reward for their success.

In other words Putin appears to have replaced one liberal (Ulyukaev) with another (Oreshkin).

There is more to it than that. 

Much has been written about Ulyukaev and of his past connections with Yegor Gaidar and Anatoly Chubais, the two leading liberals in the Russian government of the Yeltsin era.  As I have said previously, the case against him appears to be very strong, which would mean that he is also corrupt.

The fact nonetheless remains that Ulyukaev was the only high ranking official within the government to criticise the hardline monetary and fiscal policies of the Central Bank and the Finance Ministry. 

Admittedly Ulyukaev did this from a Keynesian point of view (he was obviously no supporter of the radical politician and economist Sergey Glazyev, the hero of those who want a more controlled economy) but he was at least a consistent advocate of lower interest rates and of a more gradual policy of budget cutting than are the Finance Ministry and the Central Bank. 

Ulyukaev’s replacement by a former banker and official of the Finance Ministry, who is more likely to follow the Central Bank’s and the Finance Ministry’s hard line, can only reduce the interchange of economic ideas inside the government, which means that the position of the liberal hardliners in the Central Bank and the Finance Ministry – Central Bank Chair Nabiullina, Finance Minister Siluanov, and former Finance Minister Kudrin – has been strengthened.

Some months ago, at the time of former Finance Minister Alexey Kudrin’s appointment to an advisory post, I made known my strong doubts that any sort of purge of liberals within the government was pending.  I also pointed out that everything we know about Putin points to him being an economic liberal.

When Ulyukaev was dismissed a short while ago I also made known my opinion that his dismissal was probably for the official reason given – that he was caught taking bribes – and that it did not imply any great change in the government.

Oreshkin’s appointment appears to bear this all out.  It seems that those who continue to hope for a purge of the liberals within the Russian government, and whose hopes were raised by Ulyukaev’s dismissal, have had their hopes dashed.