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Russian presidential adviser says unfavourable investment climate is a blip
RIA Novosti
February 8, 2005

Capital flight reached 27bn dollars last year, as against the figure of 10bn dollars which left Russia in 2001, Russian presidential adviser on economic issues Andrey Illarionov told a Moscow news conference today, Russian RIA news agency has said.

If the investment climate cools down, capital, "like a migratory bird" flies to warmer countries, he said. Many businessmen "are very attentively looking at neighbouring Ukraine. The difference in temperatures in the neighbouring countries plays a large part in capital flows across the border," he said.

Illarionov criticized the inept implementation of the cash-for-benefits law and said the atrophy of political institutions which ought to have held wide-ranging consultations beforehand was to blame, ITAR-TASS said at 1300 gmt. It is the lack of other venues for public discussion that made people take to the streets, he said, adding that "the country and society" faced a "huge danger" in that people's dissatisfaction with the law could even reach such a stage.

The fact that the Russian president has to comment in person on each new legislative initiative is another proof of the atrophy of the institutions of state: "His personal intervention became necessary, he had to face the cameras and speak to the cameras, but why is it that no-one had done this before him, this is proof of the atrophy of the institutions of power," he said. A situation in which only the head of state comments on all issues of the country's life is "absurd and dangerous", he said.

Illarionov was quoted by ITAR-TASS at 1332 gmt as saying that inflation is likely to exceed the planned figure of 8.5 per cent this year. He said inflation amounted to an average of 12 per cent a year and added that there is indirect evidence that the "stagnation of the past six months" would continue in 2005.