Russian President Vladimir Putin. Photo: Ronald Martinez/Getty Images
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Remembering Vladimir Putin as a boy

Mina Moiseevna Yuditskaya, Putin's former German teacher, recounts her experiences with the most powerful man in Russia.

In the late 1960s, Mina Moiseevna Yuditskaya was working at a secondary school in Leningrad, now St Petersburg, where she taught a “sporty”, soft-spoken teenage boy “with a shy smile” and tousled blond hair. Four decades later, the then 84-year-old resident of central Tel Aviv met her former pupil again, this time in Jerusalem: she a retired employee of the Israeli air force, he the most powerful man in Russia.

It was at the end of the 1990s, watching TV in her living room, that Yuditskaya first caught a glimpse of a boy she once knew. “I saw [President] Yeltsin,” she told me recently, speaking in her native Russian, “and to the side of him was Putin. I ran up to the television to get a closer look.”

Yuditskaya began following the progress of her former student, to whom she had taught German, as he rose through the ranks, becoming prime minister and president of Russia twice over. One morning, she noticed an article in the newspaper about a forthcoming visit to Israel.

“I took the newspaper and went to the [Russian] embassy. The consul asked me: ‘What do you want?’ I said, ‘I want to see him, from a distance. Only from a distance.’”

Instead, a car whisked her to the King David Hotel in Jerusalem. There, amid a crowd of Soviet war heroes, the Russian president approached Yuditskaya and invited her to tea. “He told me: ‘Mina Moiseevna, I’m now bald,’” she recalls. “And I said, ‘Yes, I see that.’ I started asking him about the past. He asked me about the future.

“‘How do you remember me?’ I said, expecting him to say fifochka, the Russian word for a young woman who takes great care of her appearance and clothes. Instead, after a pause, he replied: ‘Honest, fair, kind.’ He said those three words. I was very moved.”

Putin introduced his former teacher to the then Israeli president, Moshe Katsav. “Katsav asked me what Putin was like in school,” Yuditskaya told me. “I gave him a thumbs-up to say that he was excellent.”

Some weeks after their encounter, a representative from the Russian embassy visited Yuditskaya, announcing that the president had decided to buy her a flat. “‘Why?’ I asked. ‘I already have one.’” She was shown two properties in Tel Aviv, and chose the smaller of the two, where our interview took place. It’s a cosy, one-bedroom apartment, with pink and orange walls, decorated with souvenirs from her extensive travels. There are glamorous black-and-white portraits of Yuditskaya, now 93, as a young woman.

“I told him that all I need is to be close to the bus stop, the doctor and the market,” she explained in an interview with the Israeli news website Ynet.

She said she no longer misses St Petersburg. “At first, I felt a great nostalgia. I would stand on my balcony and look in the direction of Leningrad. But now, all I feel is sadness.”

Yuditskaya, who was born in Ukraine and left the USSR for Israel in the 1970s, insisted that she does not follow Russian politics but said she listens to all of Putin’s speeches on TV. “Molodets, molodets!” she said, praising him, noting that he has an excellent memory. “He doesn’t read his speeches like Medvedev,” she joked.

And yet, for all her gains, she said that ultimately the meeting provoked a feeling of melancholy in her. “It was so sad to look at him,” she said. “I thought, ‘He was just a boy . . . and I was a young woman. And now the boy is grown up and I’m so old.’ I didn’t feel happiness or pride. I drifted back into the past.” 

This article first appeared in the 08 January 2015 issue of the New Statesman, The Churchill Myth

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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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