MOSCOW, Russia--A proud President
Vladimir Putin wowed a packed crowd of 350 business
leaders at the World Economic Forum's Russia Meeting
2001 this past week. He predicted that the Russian
economy would grow stronger strong and encouraged
people to feel confident about the future and invest
in it. Putin has every right to feel confident. He
could boast of a long list achievements: tax reform,
land reform, ruble stability, reasonable inflation
and unprecedented annual economic growth of almost
7 percent over the last two years. Government officials
at the meeting said some reforms were even going
faster than planned. "We have prepared 126 new
laws for this Duma session, and sometimes we can't
remember what has already been approved," Economic
Development and Trade Minister German Gref told the
meeting.
While
much has been accomplished in the area of reform, meeting
participants discussed what more would be needed for
the Russian economy to reach its full potential. A
report released at the meeting by the World Economic
Forum said Russia can expect solid economic growth
in the years to come as long as more structural reforms
are carried out in key areas such as corporate governance,
transparency, the restructuring of natural monopolies
and the banking system.
"The reform of the banking sector is long
overdue," the report said. "Today, most
of the 1,300 Russian banks serve mainly as captive
treasury operations to the companies that control
them S "
Putin said his government is working to reduce
the level of corruption, in both the public and
private sectors.
The meeting was characterized by an optimistic
mood, which was only strengthened when ExxonMobil
Corporation, the world's largest oil producer,
pledged to invest $4 billion in Russia over the
next five years as part of the Far East Oil project.
The corporation announced it is ready to begin
the project, named Sakhalin-1, early next year.
"Political stability creates a more predicitable
environment that is safer for business," said
Glenn Waller, director of external affairs for
ExxonMobil, when asked about the corporation's
decision to go ahead with the project.
Conference partipants
also cited political stability as a key factor
that will lead to Russia's accession
into the WTO. "We are witnessing a negative
trend with access of consumer goods and control
of compliance becoming more and more complex," said
Victor Kramarenko, director of external affairs
for Procter & Gamble in Russia. "What
is a positive trend and will lead to WTO accession
is this new wave of reforms and legislation," he
added.
Russia has applied
to join the WTO, but its entry depends on the
findings of a working group of member
states expected to meet at the end of next summer.
Most of the people attending a workshop titled "Fostering
Russia's Accession to the WTO" said they think
it could happen as soon as 2003 2004. Whether that
happens or not, President Putin delivered the message
that the investment climate in Russia can only
improve. "The Russian economy has always been
very promising with a great potential that was
underestimated because of big risk," Putin
said. "Our major goal is to eliminate these
risks."
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