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| Russia to Tap Reserve Funds for Infrastructure Projects | Russia to Tap Reserve Funds for Infrastructure Projects |
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| ST. PETERSBURG, Russia — Faced with meager economic growth worldwide and a worrisome ebbing of Russia’s own oil and gas revenues, President Vladimir V. Putin announced on Friday an ambitious and risky economic stimulus program that would spend up to $43.5 billion in reserve funds on three big infrastructure projects. | ST. PETERSBURG, Russia — Faced with meager economic growth worldwide and a worrisome ebbing of Russia’s own oil and gas revenues, President Vladimir V. Putin announced on Friday an ambitious and risky economic stimulus program that would spend up to $43.5 billion in reserve funds on three big infrastructure projects. |
| Mr. Putin’s plan, which would lend money from the national pension reserves, has provoked fierce debate within the Russian government as well as warnings from international economic experts, who said that what the Russian financial system needed most was deep structural reform, to eliminate corruption and build investor confidence. | Mr. Putin’s plan, which would lend money from the national pension reserves, has provoked fierce debate within the Russian government as well as warnings from international economic experts, who said that what the Russian financial system needed most was deep structural reform, to eliminate corruption and build investor confidence. |
| Mr. Putin, now in his 13th year as Russia’s pre-eminent political leader, made the stimulus plan the centerpiece of his speech at an annual economic forum here that serves as a gathering of the country’s top financial officials, business leaders and most important foreign investors. Slowing growth has been the obsessive topic this year. | Mr. Putin, now in his 13th year as Russia’s pre-eminent political leader, made the stimulus plan the centerpiece of his speech at an annual economic forum here that serves as a gathering of the country’s top financial officials, business leaders and most important foreign investors. Slowing growth has been the obsessive topic this year. |
| In his speech, Mr. Putin said Russia would use the reserves to modernize the storied Trans-Siberian Railway, which runs to Moscow from Vladivostok in the Russian Far East; to construct a 500-mile, high-speed rail line to Moscow from Kazan, the capital of the Tatarstan region; and to build a superhighway ringing Moscow. | In his speech, Mr. Putin said Russia would use the reserves to modernize the storied Trans-Siberian Railway, which runs to Moscow from Vladivostok in the Russian Far East; to construct a 500-mile, high-speed rail line to Moscow from Kazan, the capital of the Tatarstan region; and to build a superhighway ringing Moscow. |
| “Our key challenge in the coming years is to remove many infrastructure constraints that literally stifle our country, and prevent unlocking the potential of entire regions,” said Mr. Putin, wearing a dark suit and deep purple tie. “Investors are hugely interested in infrastructure projects, especially if the state is ready to provide guarantees, minimize the risks and act as a co-investor.” | “Our key challenge in the coming years is to remove many infrastructure constraints that literally stifle our country, and prevent unlocking the potential of entire regions,” said Mr. Putin, wearing a dark suit and deep purple tie. “Investors are hugely interested in infrastructure projects, especially if the state is ready to provide guarantees, minimize the risks and act as a co-investor.” |
| But while courting foreign investors is a major focus of the economic forum each year, and experts say Russia needs the influx of capital, endemic corruption often drives up the cost of infrastructure projects, making it difficult to recruit investors and hard to realize returns. Experts say money is often wasted or stolen. | But while courting foreign investors is a major focus of the economic forum each year, and experts say Russia needs the influx of capital, endemic corruption often drives up the cost of infrastructure projects, making it difficult to recruit investors and hard to realize returns. Experts say money is often wasted or stolen. |
| In a report just this week, an official from the International Monetary Fund warned against stimulus spending. “Fiscal stimulus at this time would likely be ineffective, and merely intensify inflation pressures” said Antonio Spilimbergo, who led an I.M.F. team on a two-week fact-finding mission in Russia this month. | In a report just this week, an official from the International Monetary Fund warned against stimulus spending. “Fiscal stimulus at this time would likely be ineffective, and merely intensify inflation pressures” said Antonio Spilimbergo, who led an I.M.F. team on a two-week fact-finding mission in Russia this month. |
| In addition to the infrastructure program, Mr. Putin outlined steps to boost Russia’s economy, including a plan to rein in tariffs on utilities and to encourage lower interest rates on commercial loans. | |
| The growth in tariffs has often outpaced the rise in inflation in recent years. | The growth in tariffs has often outpaced the rise in inflation in recent years. |
| Mr. Putin also said Russia would continue and perhaps strengthen efforts to reduce inflation, efforts he described as successful in recent years. Economists have cited Russia’s low growth and high inflation as evidence of structural flaws in the economy. | |
| Mr. Putin was joined on stage on Friday by Angela Merkel, the German chancellor, who spoke about the strong economic ties between the two countries. “Germany wishes to support Russia in the process of opening its economy, diversifying its economy,” she said. | Mr. Putin was joined on stage on Friday by Angela Merkel, the German chancellor, who spoke about the strong economic ties between the two countries. “Germany wishes to support Russia in the process of opening its economy, diversifying its economy,” she said. |
| But a series of recent tensions, the latest involving a long-simmering dispute over the spoils of World War II, belied the amicable appearance on stage. | |
| Ms. Merkel had planned to attend the opening of an art exhibition at the Hermitage on the Bronze Age, featuring several treasures taken from German museums by retreating Soviet soldiers at the end of the war. Germany wants them back, citing international law, but Russia has refused. | |
| According to Georg Streiter, a spokesman for Ms. Merkel, she had planned to underline the German demand for the return of the art, including several gold bangles and objects known as the Eberswalde Treasure, which will be on display in a special exhibition for the next few months. | |
| Mr. Streiter told reporters in Berlin on Friday that after Mr. Putin informed the Germans that he would not be able to attend the event, the chancellor also decided not to attend. He insisted that the Germans “have no reason to doubt the motives” of Mr. Putin. | |
| The latest spat between Berlin and Moscow also comes only days after Germany publicly commemorated the 1953 uprising of hundreds of thousands of East Germans against the Communist government, which was controlled by the Soviets. President Joachim Gauck, who like Ms. Merkel is a former East German, called for the German revolt to be given a more prominent place in the country’s history. | |
Melissa Eddy contributed reporting from Berlin. | Melissa Eddy contributed reporting from Berlin. |