Putin vows to reform Russian economy

Bloomberg

Vladimir Putin, Russia's prime minister, is seen during the opening ceremony of the new Nord Stream pipeline near Vyborg, Russia, on Tuesday, Sept. 6, 2011. Gazprom will today start pumping natural gas into a $10 billion subsea pipeline from Russia to Germany, bypassing Ukraine, where disputes halted supplies to European customers twice since 2006. Photographer: Alexander Zemlianichenko Jr./Bloomberg *** Local Caption *** Vladimir Putin

Stuart Williams Moscow

WITHIN five years, Russia will be one of the top five global economies with growth of up to 7 percent based on a thriving and innovative business sector.

Prime Minister Vladimir Putin vowed yesterday to make this vision of economic transformation – until now a distant dream – a reality when he announced that he would stand for a second stint as Russian president in elections next year.

But economists last week questioned Putin’s appetite for reform after moves to encourage business and end dependence on oil came to a standstill in his first presidency from 2000 to 2008.

Putin had been able to boast of propelling Russia to stellar growth rates up to the 2008 crisis after its 1998 financial meltdown but these were driven largely by high crude prices rather than the fruits of economic change.

“Putin said these words but I have a feeling that I have heard this all before,” said Moscow Higher School of Economics director Yevgeny Yasin. He was a Russian economy minister in the 1990s.

Shortly after Putin first rose to the Kremlin in 2000, after the shock resignation of Boris Yeltsin, his reformist economy minister German Gref presented a “Strategy 2010” for wholesale change of the economy in the decade.

“If you ask me what needs to be done now, I say take the Gref programme and carry it out. They say it has been fulfilled to 35 percent, for me no more than 15 percent,” Yasin said yesterday.

President Dmitry Medvedev, who is to stand aside for Putin and swap jobs to become prime minister, embarked on a much-trumpeted modernisation programme that has failed to make headway.

On the surface Russia has a relatively stable economic position, in particular a budget deficit forecast to be just 1 percent of gross domestic product this year that is the envy of its debt-ridden EU partners.

But investors have repeatedly diagnosed ills that could spell major trouble, including low labour productivity, a lack of business activity outside the energy sector, overspending on pensions and still endemic corruption.– Sapa-AFP