Putin says US dollar issuance ‘uncontrolled’, calls for diversified reserves

SOCHI, Russia — Russia’s Prime Minister Vladimir Putin on Friday said other currencies besides the dollar should be used as global reserves to reduce the risks posed by swelling U.S. debt.

Putin, who spoke at an international investment forum in the Black Sea resort of Sochi, chided the United States for “an uncontrolled issue of dollars” and said the American currency’s dominance had been “one of the triggers” of the global crisis.

Putin renewed Russia’s call on the U.S. administration and global community to give the green light to alternative reserve currencies: “If there are several reserve currencies, this will not harm the U.S. economy in any way.”

President Dmitry Medvedev’s economic advisor, Arkady Dvorkovich, said Thursday that Russia would at next week’s G20 summit in Pittsburgh press for more follow-through on measures to confront the global downturn and to change Western-dominated international financial institutions.

Russia and China have pushed for alternative reserve currencies, but being the world’s largest holders of U.S. dollar assets – such as Treasuries – they are unlikely to abandon it. Dvorkovich stressed on Thursday that Russia is not out to replace the dollar, but only diversify.

Putin, meanwhile, also promised to encourage foreign investment in Russia by removing bureaucratic hurdles.

“Russia’s economy is totally underinvested,” and state spending alone is not enough to support a recovery, Putin said in Sochi, which is hosting the 2014 Winter Olympics.

Russia’s economy has been hurt by a deep slump in commodity prices and a credit squeeze. Russian stock markets have lost nearly 30 per cent of their value since August 2008 as oil and commodities prices took a hit.

Putin said he “appreciated” that even in the crisis-hit first half of the year, $17 billion of foreign investment was transferred to Russia. He pledged to take steps to “streamline the banking sector and stock market” to make them more attractive for foreign businesses.

“We will step up our efforts to get rid of the administrative barriers,” he said. “Russia is open for foreign investment.”

Putin hailed President Barack Obama for his move Thursday to scrap the Bush-era missile defence plan for Eastern Europe, but challenged Washington to also cancel all existing restrictions on trade with Russia and give the go-ahead to World Trade Organization membership for Russia, Belarus and Kazakhstan.

“I very much hope that this right and brave decision will be followed up by the full cancellation of all restrictions on co-operation with Russia and high technology transfer to Russia as well as a boost to expand the WTO to embrace Russia, Belarus and Kazakhstan,” Putin said.

Putin stressed that the Cold War-era trade restrictions hurt American business as much as Russia. He lashed out at the U.S. administration for using the so-called “CoCom lists” to discriminate against Russia.

CoCom, or Coordinating Committee for Multilateral Export Controls, was established during the Cold War to tightly control technology exports to the Soviet Union and its allies.

“This hurts Russia’s co-operation with its partners, first of all with the United States,” he added. “This also hurts American business because it hampers development of their business contacts in Russia.”

Russia has spent years trying to get the U.S. to scrap a handful of restrictive laws on bilateral trade, including the Jackson-Vanik amendment, Cold War-era legislation that has been a key irritant in relations between Moscow and Washington.

Associated Press writer Nataliya Vasilyeva contributed to this report from Moscow.

By Sergei Venyavsky (CP)
September 19, 2009

Source: The Canadian Press

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