Putin Has Restricted Russia's Economic Freedom, Says Former Aide

by Tatiana Smolenskaya, Tax-News.com, Moscow

26 January 2006

President Vladimir Putin's former economic advisor, Andrei Illarionov, has launched a scathing attack on the economic policies of Kremlin, accusing the present administration of stifling economic freedom through the increasing autocracy of state organs such as the Federal Tax Service and turning Russia into a "corporatist state."

“Today Russia is not the country it was six years ago," Illarionov stated in an article published in the newspaper Kommersant on Monday.

"The country was unsettled, chaotic, impoverished. But it was free. Today Russia has changed. It is richer. And unfree,” he added.

Illarionov had become a thorn in the side of the government when he resigned as Putin's chief economic aide in December, mainly for his vocal criticism of what he perceived to be Putin's increasingly autocratic style of leadership and interventionist economic policies.

"When I took the job, we spoke about conducting a liberal economic policy. Now, the state has evolved in quite the opposite direction," Illarionov remarked upon announcing his resignation.

He accused Putin of presiding over a de facto nationalisation of certain companies and using state companies as the "attack weapons of a corporatist state."

Illarionov named Yuganskneftegaz, the former main production unit of Yukos which was sold to help pay almost $30 billion in back tax claims, as one "victim" of this process.

The Yukos case also exemplifies the "selectivity" of Russia's new economic model, according to the former Putin aide.

"One company is subjected to the maximum possible (or impossible) tax claims, and another receives exclusive breaks. In one case the sale of shares to foreigners is banned, and in another it receives full state support," he observed.

"This economic model can be called various things. But it cannot be called free," Illarionov was quoted as stating.

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