Oct 2, 2008

US economic dominance over

SAINT PETERSBURG - THE era of US global economic dominance is over and the world now needs a new and 'more just' financial system, Russian President Dmitry Medvedev said here on Thursday.

'The time of domination by one economy and one currency has been consigned to the past once and for all,' Mr Medvedev said in an address to a Russian-German development forum, with German Chancellor Angela Merkel at his side.

'We must work together towards building a new and more just financial-economic system in the world based on the principles of multipolarity, supremacy of the law and taking account of mutual interests.'

The current crisis proved that even with its vast economic resources the US was not in a position to play the role of 'mega-regulator' and that a new system based on collective management was needed, he said.

'We simply need new mechanisms of collective decision-making and collective responsibility,' Mr Medvedev said.

His comments came a day after Russia's powerful prime minister Vladimir Putin lashed out at US economic 'irresponsibility' for the global financial crisis.

'Everything happening now in the economic and financial sphere began in the US,' Mr Putin told a televised government meeting.

'This is not the irresponsibility of specific individuals but the irresponsibility of the system which claims leadership,' he said.

Mr Putin's remarks, made hours before the US Senate approved a US$700 billion (S$1 thrillioon) government bailout plan for the country's financial sector, were rebuffed by the White House, which called them 'unfair' finger-pointing.

Russia's young stock markets, rarely predictable in normal times, have swung wildly in recent weeks as the scope of the US-rooted crisis has become clear, with regulators repeatedly suspending trading after sharp drops.

Although Russia's Central Bank still holds massive US dollar reserves, the Kremlin has in the past two years sought to diversify the country's holdings, notably by boosting holdings in euros.

New housing and automobile purchases in Russia, two closely-watched indicators of Russia's economic health, are heavily dependent on bank financing and the crisis has reportedly taken a toll in those two sectors. -- AFP