You know the U.S. has lost its way when Russia begins to look like the more capitalist economy.
Putin Sounds More Welcoming Tone to Foreign Investors
By ANDREW E. KRAMER
MOSCOW — Russia's prime minister, Vladimir V. Putin, whose government took control of several oil companies when he served as president, gave a speech Tuesday saying the state must now step back from the economy and let private enterprise take the lead in pulling Russia out of recession.
The speech, at a banking forum in Moscow, echoed recent assurances by his ministers and economic advisors that Russia is becoming more attentive to the concerns of investors. Mr. Putin also reiterated their suggestions that a new round of privatizations could be in the cards for Russia.
The speech on economic policy was noteworthy for its exceptionally warm endorsement of a role for private investors. That had not been the case in recent years.
“We understand how deceptive blind faith in an omnipotent state is, how illusory are the hopes that total intervention in economic life might fix everything and put everything in its place,” Mr. Putin said.
He went on to praise private enterprise. “To the extent that the situation stabilizes, that the effects of the crisis are overcome, we plan to consistently and purposefully reduce state intervention in the economy,” he said, adding that a new round of privatizations could follow.
The government already has been extending an olive branch to the petroleum industry, offering new investments and a greater role in a sector at a meeting with oil company executives last week.
Mr. Putin noted that, while the government inevitably took stakes in Russian companies during the crisis, it did not use the downturn to impose greater controls and did not restrict the free conversion of the ruble.
“We will continue the line of encouraging private initiative, integration into the global economy and the creation of a favorable investment climate,” he said.
In his first term as president, from 2000 until 2004, Mr. Putin had introduced a number of pro-business reforms such as a flat tax and a streamlined system for registering small enterprises, but followed this in his second term with a sweeping extension of state control over the natural resources companies during the boom.
On Tuesday, Mr. Putin took a different line. Russia may eventually liberalize even the trade in natural gas, though a monopoly would remain with Gazprom for exports for at least the medium term, he said.
During the oil boom, export revenues exploded and foreign investors rushed to pile on to the economic expansion. If anything, the government struggled with the problem of too much money, sparking inflation and making local products uncompetitive with imported goods.
That reversed last autumn, and Russia is now again in a position of having to compete for limited investor money with other emerging economies.
“Now, with capital around the world much more scarce, there’s a recognition that Russia does have to play the game,” Rory MacFarquhar, an economist at Goldman Sachs’s office in Moscow, said in a telephone interview. “It does have to make overtures to foreign investors and it cannot take them for granted.”
In one sign of some stabilization in the Russian economy, the Central Bank on Tuesday lowered its refinancing rate for the second time in two weeks, indicating it is less worried now about a run on the ruble and can instead focus on trying to stimulate lending to businesses.
By ANDREW E. KRAMER
MOSCOW — Russia's prime minister, Vladimir V. Putin, whose government took control of several oil companies when he served as president, gave a speech Tuesday saying the state must now step back from the economy and let private enterprise take the lead in pulling Russia out of recession.
The speech, at a banking forum in Moscow, echoed recent assurances by his ministers and economic advisors that Russia is becoming more attentive to the concerns of investors. Mr. Putin also reiterated their suggestions that a new round of privatizations could be in the cards for Russia.
The speech on economic policy was noteworthy for its exceptionally warm endorsement of a role for private investors. That had not been the case in recent years.
“We understand how deceptive blind faith in an omnipotent state is, how illusory are the hopes that total intervention in economic life might fix everything and put everything in its place,” Mr. Putin said.
He went on to praise private enterprise. “To the extent that the situation stabilizes, that the effects of the crisis are overcome, we plan to consistently and purposefully reduce state intervention in the economy,” he said, adding that a new round of privatizations could follow.
The government already has been extending an olive branch to the petroleum industry, offering new investments and a greater role in a sector at a meeting with oil company executives last week.
Mr. Putin noted that, while the government inevitably took stakes in Russian companies during the crisis, it did not use the downturn to impose greater controls and did not restrict the free conversion of the ruble.
“We will continue the line of encouraging private initiative, integration into the global economy and the creation of a favorable investment climate,” he said.
In his first term as president, from 2000 until 2004, Mr. Putin had introduced a number of pro-business reforms such as a flat tax and a streamlined system for registering small enterprises, but followed this in his second term with a sweeping extension of state control over the natural resources companies during the boom.
On Tuesday, Mr. Putin took a different line. Russia may eventually liberalize even the trade in natural gas, though a monopoly would remain with Gazprom for exports for at least the medium term, he said.
During the oil boom, export revenues exploded and foreign investors rushed to pile on to the economic expansion. If anything, the government struggled with the problem of too much money, sparking inflation and making local products uncompetitive with imported goods.
That reversed last autumn, and Russia is now again in a position of having to compete for limited investor money with other emerging economies.
“Now, with capital around the world much more scarce, there’s a recognition that Russia does have to play the game,” Rory MacFarquhar, an economist at Goldman Sachs’s office in Moscow, said in a telephone interview. “It does have to make overtures to foreign investors and it cannot take them for granted.”
In one sign of some stabilization in the Russian economy, the Central Bank on Tuesday lowered its refinancing rate for the second time in two weeks, indicating it is less worried now about a run on the ruble and can instead focus on trying to stimulate lending to businesses.
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