St Petersburg International Economic Forum

Russia 'better off' in international organizations: Ex-Fin Min

Russia should stay in global bodies: Ex-Fin Min

A key ally of Russian President Vladimir Putin thinks the country should remain in international institutions like the World Trade Organisation, despite the recent furor over Ukraine and economic sanctions by the West targeting Russia.

Russia's hard-won seat at the international economic table—as represented by its position in the G-8 group of leading economies—has been threatened by the contretemps over its actions in Ukraine. Russia was suspended from the G-8 in March.

Alexei Kudrin, the country's former finance minister, who is believed to still have Putin's ear, told an audience at the St. Petersburg Economic Forum (SPIEF) that the country was "better" inside the international tent. The comments came amid a series of statements suggesting Russia was preparing to soften its stance on Ukraine.

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Alexey Kudrin
Sasha Mordovets | Getty Images

He stressed the importance of a free market economy and a freely convertible currency to Russia's economic future.

Some Russian troops have been withdrawn from their controversial position on the border with Ukraine, ahead of this weekend's elections in the ex-Soviet state.

Kudrin, one of Russia's longest-serving finance ministers, is often credited with steering the country through the economic crisis of 2008-09. His ousting in 2011 was greeted with dismay internationally, as he was seen as a stabilizing influence on Russia's potentially volatile economy.

Since then, Kudrin has maintained a relatively low profile in academia, although he recently became a member of Putin's economic council.

He warned that "informal sanctions", such as Western companies putting off investment in Russia as a result of the situation in Ukraine, might have an even greater impact than formal sanctions, such as Western governments forbidding trading with certain companies.

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The popularity of Putin's actions in Ukraine outweighs any concerns about their economic impact at the moment, according to Kudrin. He added, however, that the sanctions may end up forcing Russia to implement much-needed reforms.

Russia has seemed to align itself more closely with China and other non-Western powers following the crisis, with Wednesday's $400 billion gas deal with China one of the symbols of this volte-face.

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Kudrin denied that Russia was "turning its face" from Europe.

"There are many aspects, including culture and education, in which we are aligned with Europe," he said.