Moscow, 16 December: The Russian economy could follow two different scenarios whereas there is a vast difference between the pessimistic and optimistic ones, according to the chairman of the board of the Institute of Modern Development (whose board of trustees is led by President Dmitriy Medvedev) and the vice-president of Russian Union of Industrialists and Entrepreneurs, Igor Yurgens.

The optimistic scenario will come into life if China, which is an important customer for Russian exports, maintains its economic growth at the level of about 8 per cent, the global system of lending starts to work and oil prices rise to 60-65 dollars per barrel. In this case in the second half of the year Russian companies start receiving loans at "conceivable interest rates". In the view of Yurgens, there is a possibility for oil prices going up because for many of the largest producer countries, including Kuwait and Iran, the price of 35 dollars per barrel is below the cost of production.

If the optimistic scenario comes into being, the Russian economy in 2009 will show zero growth or will grow 1-2 per cent, Yurgens suggested.

In the pessimistic scenario, China would not manage to maintain growth rates and the oil price would nor rise above 35 dollars. "In this case we will face GDP falling 10 per cent, a substantial reduction in employment and a full-blown crisis," Yurgens suggested.

In the view of the director of the Institute of Economics of the Russian Academy of Sciences, Ruslan Grinberg, the Russian economic model is very vulnerable because it is mainly "tied to" exports. In the past eight "years of plenty" the structure of the economy of the Russian Federation has become even more primitive, he noted. The crisis will provide "a window of opportunity" for replacing external demand with internal demand, Grinberg stressed.

Yurgens also noted that the Institute of Modern Development has objections to the behaviour of the Russian executive powers during the crisis. "We think that it is necessary to move from half phrases and hints to more honest dialogue with the society," Yurgens said. "A number of measures that would require a public discussion are by their nature declarative, originating from headquarters," he noted.

Yurgens cited the example of the recent decision by the government of the Russian Federation to introduce protective import duties on second-hand cars. In his view, the decision to increase import duties on foreign-made cars was hasty and at present could possibly be reconsidered in the face of the dissatisfaction in the Far East. This could have been avoided had the duties been discussed with representatives of business and public beforehand, Yurgens was convinced.

"Decisions that are adopted democratically are more reliable and there is a lesser likelihood of mistakes," Grinberg agreed with him.