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Updated: 29/01/2009 | 03:16 PM IST
Wen and Putin blame 'blind pursuit of profit' for crisis
Press Trust of India
Thursday, January 29, 2009 (Davos)
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Chinese and Russian leaders Wen Jiabao and Vladimir Putin hit out at US capitalist excesses for sparking the economic crisis as the Davos political and business summit made a gloomy start.

Chinese premier Wen said the "blind pursuit of profit" had led to the worst recession since the Great Depression as he opened the World Economic Forum late Wednesday.     

Putin said, "this pyramid of expectations would have collapsed sooner or later. In fact it is happening right before our eyes."

Wen blamed "inappropriate macroeconomic policies of some economies" and "prolonged low savings and high consumption," in a barely veiled attack on the United States.     

He blasted the "excessive expansion of financial institutions in blind pursuit of profit and the lack of self-discipline among financial institutions and ratings agencies" while the "failure" of regulators had allowed the spread of toxic derivatives.

The Chinese leader called for faster reform of international financial institutions and for a "new world order" for the economy.     

The Russian prime minister followed him to the podium and said the crisis had been a "perfect storm". He also took aim at capitalist excesses.

"Although the crisis was simply hanging in the air, the majority strove to get their share of the pie, be it one dollar or one billion, and did not want to notice the rising wave."

Putin insisted he would not criticise the United States, but added: "I just want to remind you that just a year ago, American delegates speaking from this rostrum emphasised the US economy's fundamental stability and its cloudless prospects."

Condoleezza Rice, when US secretary of state, gave a speech in Davos last year saying the US economy was safe.

"Today investment banks, the pride of Wall Street, have virtually ceased to exist. In just 12 months they have posted losses exceeding the profits they made in the last 25 years. This example alone reflects the real situation better than any criticism," said Putin.

"The existing financial system has failed. Substandard regulation has contributed to the crisis, failing to duly heed tremendous risks."     

Wen said the crisis had posed "severe challenges" for China and that it needed 8.0 percent growth in 2009 to maintain social stability while the International Monetary Fund predicted 6.7 percent for this year.

Both Wen and Putin called for greater cooperation from new US President Barack Obama in international affairs. But both spoke out against protectionism and said excessive government intervention would harm recovery prospects.

US tensions with China have been raised in recent days with new US Treasury Secretary Timothy Geithner saying Obama believes China manipulates its currency to gain an edge in trade.

"In meeting the international financial crisis, it is imperative for the two countries to enhance cooperation, that is my message to the US administration," Wen said.     

Germany's Chancellor Angela Merkel and the British and Japanese prime ministers Gordon Brown and Taro Aso -- who have between them spent hundreds of billions of dollars battling the crisis -- were also among about 40 heads of state or government who will speak this week.

But with much attention on Obama's efforts to get a 825 billion dollar (621 billion euro) stimulus package through Congress and grim new IMF predictions for the world economy, the forum has been a dark affair.
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