Russian President Vladimir Putin sought to reassure skittish investors on Monday in his annual State of the Nation address that rampant tax probes, greedy bureaucrats and a shifting economic playing field will be made things of the past.
However, opposition politicians and economic analysts reacted sceptically to Putin’s promises, noting that they came just two days before judges start delivering a verdict against oil magnate Mikhail Khodorkovsky in what many maintain is a politically motivated criminal case.
The words ”sound like a mockery” coming so soon before the verdict, said Sergei Mitrokhin, deputy head of the liberal Yabloko party.
In his 50-minute address delivered to an audience of lawmakers, government officials, regional governors and religious representatives, Putin said tax inspectors don’t have the right to ”terrorise business”, and repeated a call for the time for challenging the results of past privatisation deals to be cut to three years from the current 10.
Foreign companies need clear ”rules of the game” on which sectors of the economy are open to investment, Putin said, while Russians should be encouraged to bring their undeclared earnings home rather than squirrel them away abroad.
”That money must work in our country, in our economy, and not sit in offshore zones,” Putin said.
Putin called for an end to overzealous quota-filling by the taxman and for a clear set of rules defining which defence enterprises and natural reserves are off-limits to foreigners.
He slammed bureaucrats who see themselves as ”a caste, closed and arrogant, perceiving state service as just another kind of business”.
While the president accurately pinpointed businesses’ bugbears, observers said, it remains to be seen whether his words are turned into deeds to counter the economic damage of a politically tainted campaign against Khodorkovsky.
Since Khodorkovsky’s Yukos oil empire saw its biggest production unit sold off against a disputed $28-billion back-tax bill in December, tax authorities have opened a swathe of investigations against Russian businesses — a move that analysts have warned could scare away investors and slow economic growth.
Putin tried to reassure business leaders at a Kremlin meeting in March that the probes would be reined in.
But the relief was short-lived: Anglo-Russian oil company TNK-BP was slapped with a $1-billion back-tax bill weeks later and antitrust authorities blocked a planned acquisition by Germany’s Siemens of Power Machines, a Russian power-station builder that holds defence contracts.
”It’s clear the Russian government wants to make life easier and more predictable for business. The question is whether all these reforms, all these improvements, get pushed down through the various levels of bureaucracy,” said Steven Dashevsky, head of research at the Aton investment bank.
Liberal politician Irina Khakamada dismissed Putin’s address as an ”export product” marked by ”liberal rhetoric and ritual statements addressed to the West”, Interfax reported.
In a reflection of investors’ wait-and-see attitude, Russia’s benchmark RTS index remained flat following the speech.
”Here we react to the actions of the prosecutor general’s office and the tax inspectors — this is real,” said Yuri Korgunyuk, a political analyst with the Indem research institute.
The address was Putin’s sixth, and his second since being overwhelmingly re-elected to a second-term in 2004.
Critics have attacked Putin for slapping restrictions on independent media, ending the direct election of governors, ensuring a compliant Parliament and attacking the politically ambitious Khodorkovsky.
In an apparent response to foreign allegations that Russia has been backtracking on democracy under his watch, Putin said Russia’s main political task is to develop as a free, democratic nation with European ideals. He stressed that individual freedoms will not be compromised by the state’s own strengthening.
”We are a free nation and our place in the modern world will be defined only by how successful and strong we are,” Putin said.
The nation’s main political challenges include boosting the rule of law and judicial institutions, and deepening respect for both individual liberties and the activities of NGOs, he said.
Putin called attention to Russia’s dire population decline, and said the government must take steps to reduce the approximately 100 road accident deaths per day, and devote greater attention to preventing alcoholism and drug abuse — noting that about 40 000 people per year die of alcohol poisoning.
He also said the government should give legal migrants the opportunity to become Russian citizens. Millions of citizens of former Soviet republics live and work in Russia, but many have faced bureaucratic obstacles to winning citizenship.
Putin’s popularity has been dented over the past year by street protests over painful social reforms in Russia and his unsuccessful attempts to head off a popular uprising in the ex-Soviet republic of Ukraine.
Putin is constitutionally barred from seeking a third term, but many Russians assume that the Kremlin will ensure a Putin loyalist wins the balloting in 2008. — Sapa-AP