Russia still moving stragetically for the future, US still lead by a dry-drunk, psychopathic Moron

Putin Promotion of Ivanov Marks New Push to Break Oil `Needle'

By Lyubov Pronina

Feb. 16 (Bloomberg) -- Sergei Ivanov's promotion to the post of Russian first deputy prime minister, responsible for breaking the nation's reliance on oil and gas, marks a turning point for the economy, analysts said.

President Vladimir Putin promoted Ivanov, a fellow former KGB agent, yesterday, relieving him of his previous duties as defense minister.

``Russia is entering an active phase of industrial policy this year and Ivanov's role is to drive this policy, to help diversify the economy away from oil dependency,'' said Yaroslav Lissovolik, an economist at Deutsche Bank AG's Moscow brokerage.

Russia, the world's largest energy producer, will invest billions of dollars in manufacturing and other non-energy industries. Putin this month urged the richest businessmen to help wean the economy, expanding for a ninth year, off the ``natural resources needle'' by developing ``high-tech, high- value products.''

The government is moving toward ``emphasizing innovative technologies,'' Putin aide Viktor Ivanov said today, Interfax news service reported. ``Sergei Ivanov's appointment is related precisely to this.''

Ivanov, 54, and Dmitry Medvedev, 41, the other first deputy prime minister, are most often mentioned by Russian media as the frontrunners in next year's presidential poll to replace Putin.

`Held Accountable'

``What's important is that the two first deputy prime ministers will be in charge of all new finances coming into the budget,'' said Vladimir Tikhomirov, an economist at UralSib Financial Corp. in Moscow. ``From the Kremlin's point of view, there's a certain apprehension that this money may be scattered and misused. Ivanov will be the man held accountable.''

One of Ivanov's new responsibilities will be overseeing a development bank being creating to channel $35 billion into transportation infrastructure, power generation and other sectors through 2011, Tikhomirov said. Medvedev is in charge of national projects in education, health care and housing.

The development bank will oversee the state Investment Fund, which will hold a total of 377.9 billion rubles ($14.4 billion) of budget money in 2009, Arkady Dvorkovich, Putin's senior economic adviser, said today on the sidelines of a conference in Krasnoyarsk, Siberia. The bank aims to attract 3 rubles from the private sector for every ruble the government contributes.

`Not Spoiled'

The Investment Fund is one of four main platforms the state prepared to roll out its new industrial policy, which will focus on developing aerospace, shipbuilding, heavy machinery and information technology, Deutsche's Lissovolik said.

The other three platforms are a fund for information technology projects, the creation of special economic zones offering tax incentives to attract businesses, and federal programs targeting specific industries, Lissovolik said.

Diversifying the economy won't be easy, though Ivanov may be up to the task, said billionaire lawmaker Alexander Lebedev. ``He's not spoiled by any ties to commercial projects or businessmen,'' said Lebedev, who also worked for the KGB.

Before yesterday's promotion, Ivanov was already in charge of Russia's aviation industry and chairman of OAO Unified Aircraft Corp., the state-controlled aerospace holding created last year to unite major designers and manufacturers.

`Drove It Forward'

``No one in the government dealt with that issue over the past five years,'' said Lebedev, who controls 30 percent of OAO Aeroflot, Eastern Europe's largest airline. ``Ivanov studied it and drove it forward.''

The government is also consolidating parts of the defense industry, most recently aircraft-engine manufacturing and shipbuilding, to focus investment on breakthrough technologies and new types of weapons systems.

Russia is the world's biggest arms exporter to developing nations, earning more than $6 billion a year. The potential for growth in the industry is enormous, said Yuri Koptev, head of the Industry and Energy Ministry's defense department.

More than 1.7 million people are employed at more than 1,250 defense enterprises that work on average at 30 percent of capacity, Koptev wrote in a ministry publication. At its peak, the defense industry accounted for 60 percent of the Soviet Union's economy, according to Koptev. The current percentage is classified.

``The Soviet industry was based on two pillars: natural resources and the defense industry,'' said UralSib's Tikhomirov. ``If we look beyond natural resources, where else are we competitive? Historically, it has been the defense industry, which still has potential. It may make sense to invest in that.''

Original article posted here.