August 1, 2011

US a ‘parasite’ on world economy, says Putin

SELIGER (AFP) – Russian Prime Minister Vladimir Putin on Monday accused the United States of acting as a “parasite” on the world economy by accumulating massive debts that threaten the global financial system.

“The country is living in debt. It is not living within its means, shifting the weight of responsibility on other countries and in a way acting as a parasite,” Putin told a group of pro-Kremlin youth in central Russia.

He also suggested that Washington may have been flirting with the idea of a default in order to weaken the dollar “and create better conditions for exporting their goods.

“But they had enough common sense and responsibility” to avoid a default, Russia’s former president added.

US President Barack Obama on Sunday announced an 11th hour debt deal that will allow the country to avoid its first default in history while pushing ahead with a painful austerity plan designed to slash Washington’s swelling debt.

The deal was met initially with relief on global financial markets and saw Moscow’s two stock exchanges open the day up about two percent but investors then began to have doubts about the plan and gains were reversed sharply.

Putin has repeatedly criticised the United States’ recent foreign exchange policy and its propensity to cover budget deficits with treasury bills and bonds held by sovereign clients such as China and Russia.

The value of that paper will shrink if US debt is downgraded by a major Western ratings agency and Putin was insistent Monday that the world should be seeking new reserve currencies for trade and savings.

“If the US encounters a systemic malfunction, this affects everyone,” Putin told the Seliger camp gathering. “There should be other reserve currencies.”

Putin added that the debt agreement announced by Obama “was not that great overall because it simply delayed the adoption of a more systemic solution.”

The former president was attending the pro-Kremlin lakeside youth camp as part of a continuing series of public appearances that are being closely watched by political observers as December parliamentary elections approach.

Putin’s United Russia party is hoping for a strong performance in December that can catapult their leader into presidential elections scheduled for March.

President Dmitry Medvedev has found strong backing in some Washington circles and has worked more closely on a “reset” in relations with Obama’s team.

Putin for his part clashed repeatedly with Washington during his 2000-2008 stay in the Kremlin and has a promoted a brand of Russian nationalism that distinguishes him from the Communist Party heroes of Moscow’s past.

But he told some 7,000 youths on Monday that totalitarianism was “an ineffective form of government” that would never prosper.

“Lots of people died in Stalin’s camps,” said Putin in reference to the millions who are believed to have perished in his labour camps.

“But the scary thing the totalitarian form of government did was that it killed the freedom and energy that no government can replace,” he said in some his sharpest criticism of the Soviet era.

“Such a government is condemned to failure, which is what happened to the Soviet Union.”