* Kremlin estimates 2014 growth at 1 pct
* IMF envisages 0.2 pct growth
* Putin ally berates government policies
(Adds comment from U.S. official)
By Darya Korsunskaya and Lidia Kelly
MOSCOW, July 23 Russian officials on Wednesday
lined up to dismiss the economic impact of Western sanctions
imposed for Moscow's role in the Ukraine crisis, saying they
were "peanuts" compared to what their country had to face during
In a show of unity a day after an ally of President Vladimir
Putin warned that Russia's anti-Western rhetoric could derail
the economy, ministers said growth had not been dampened by the
sanctions which include measures against some major companies.
The economy is on the brink of a recession as a result of
the sanctions and a broader risk aversion towards emerging
markets that have sent equities and the rouble tumbling and
spurred nearly $75 billion in capital flight so far this year.
"The sanctions in their current format don't have a
macroeconomic effect," Andrei Belousov, the Kremlin's top
economic adviser, told journalists.
"My assessment is that we're in the vicinity of 1 percent
(gross domestic product growth) and will stay there until the
end of the year."
Trade Minister Denis Manturov said the measures by the West
could not drive Russia into the isolation of Soviet times.
"What sanctions? A holy place is never empty: if one market
closes, another opens," he told journalists. "What's happening
today is peanuts compared to what was then."
The comments came after Alexei Kudrin, a long-time friend of
Putin, criticised the government's policies and the growing
conservatism around the Kremlin - rare criticism in a country
where officials usually speak with one voice.
A former finance minister, Kudrin quit in 2011 in protest at
a government proposal to raise military spending, but Putin
still summons him to the Kremlin to discuss economic issues.
Saying Moscow should not intervene in eastern Ukraine, he
estimated that sanctions so far had cost Russia about 1 percent
in GDP growth. More measures would be more painful and felt by
businesses and ordinary Russian alike, he said.
"The impact will be as follows: the deterioration in GDP
growth by a few points for a few years, the decline in real
income and lower wages," Kudrin told state news agency
Belousov's 1 percent growth forecast for the year is much
higher than the 0.2 percent estimates by the International
Monetary Fund and that of many economists working in Russia.
Sergei Guriev, an economist who fled Russia last year after
criticising the Kremlin, said Belousov's assessments were
unrealistic. "Kudrin is right," he said.
In Washington, a senior U.S. official welcomed Kudrin's
critique as a sign of "discomfort" in some quarters over Putin's
policy and the impact of Western sanctions.
"It's pretty extraordinary to have Russian figures coming
out and questioning the course of action," the official said.
"It's that kind of questioning that we want to make clear to the
Russian leadership they have to address."
FEAR OF SPEAKING OUT
The zero GDP growth seen in the second quarter followed a
decline in the first three months of the year, hurt by plunging
investment by Russian firms where owners are increasingly
worried about the future and access to foreign funding.
Russia's annexation of Crimea from Ukraine in March strongly
boosted Putin's popularity at home. But relations with the West,
already at their lowest since the Cold War, dived yet further
after a Malaysian airliner was shot down over eastern Ukraine
last week with the loss of 298 lives.
Many have been worried to speak out against the Kremlin,
fearing they may have to follow Guriev or meet the fate of
Mikhail Khodorkovsky, once Russia's richest man who was
imprisoned for nearly 10 years for speaking out against Putin.
The oligarchs and the super-rich who constitute no more than
2 percent of the population but control a vast share of the
country's economy, have remained silent.
"Yes, they are very worried," said a Russian economist who
asked not to be identified.
Kudrin, who helped the state to amass more than $160 billion
in two funds that now serve as a contingency plan for a
financial crisis, has always been allowed to say more than most.
He has known Putin for decades and has been a close ally
since both worked for the local government in St Petersburg.
"He is a friend of Putin and there is an understanding that
as long as he is within certain limits he can publicly criticise
the government, although probably not the president," the
(Additional reporting by Katya Golubkova in Moscow and Matt
Spetalnick in Washington; Writing by Lidia Kelly; Editing by
Elizabeth Piper, Giles Elgood and Nick Macfie)