Moscow Mayor Attacks Kremlin Economic Policy

After losing out to Putin, Luzhkov pledged loyalty to the Kremlin although he has continued to criticise liberals in the government.

 Moscow's mayor accused the Russian government on Tuesday of making the financial crisis worse with its economic policies, renewing a battle between economic liberals and rivals who favour a bigger state role.

Mayor Yuri Luzhkov made his comments in a newspaper interview published after President Dmitry Medvedev sacked four regional governors for poor crisis management and made clear more heads could roll in a sign of concern about social unrest.

"The monetary policy of our authorities is one of the main reasons why we are now facing such grave problems in the real sector," Luzhkov, a veteran conservative, told Kommersant daily. "Monetarism should be abandoned."

Luzhkov singled out the policy, championed by Finance Minister Alexei Kudrin, of keeping billions of dollars from oil exports locked up in reserve funds.

The Kremlin's liberal camp -- backed by Medvedev -- has said the policy is necessary to prevent windfall oil revenues distorting the economy.

"This money did not help develop our economy," Luzhkov said. "We had zero (investment) in infrastructure projects, zero or very little at the best for ... the real economy. These are the reasons explaining our crisis."

Russia's economy is reeling from a sharp fall in the price of oil, its main export, and a liquidity crunch that has left many heavily-indebted companies struggling to repay loans.

Data this week showed industrial output contracted by a fifth in January and wage arrears jumped nearly 50 percent in January, affecting about 500,000 people.

Luzhkov has a strong power base as mayor of Russia's capital, but his comments appeared intended as self-defence after the Kremlin signalled it could remove more top officials as a concession to public discontent over the economic slowdown.

Medvedev removed the governors of the Oryol, Pskov and Voronezh regions, and the Nenetsky autonomous district, on Monday and said at the weekend he would not tolerate officials who perform poorly during the crisis.

Luzhkov was one of a group of conservative politicians who tried to gain political domination in a parliamentary election in 1999, competing against the camp of Vladimir Putin who went on to become president.

After losing out to Putin, Luzhkov pledged loyalty to the Kremlin although he has continued to criticise liberals in the government.