DATE=3/17/2000
TYPE=BACKGROUND REPORT
TITLE=PUTIN'S ECONOMY (PART 2)
NUMBER=5-45678
BYLINE=BARRY WOOD
DATELINE=WASHINGTON
INTERNET=YES
CONTENT=
VOICED AT:
INTRO: Oil exporting Russia is benefiting from the
tripling of oil prices over the past year and foreign
investors are confident that Vladimir Putin will
capitalize on improved government finances to launch a
new round of economic reform. V-O-A's Barry Wood
reports that even if more rigorous reform is
undertaken success is not assured.
TEXT: David Hexter who has been the Moscow
representative of the European Bank for Reconstruction
and Development says the oil bonanza has created a
huge opportunity for Russia to actually build a market
economy. Speaking at an investment forum in New York
(March 16), Mr. Hexter says if Mr. Putin is to succeed
he will have to remedy the problems that have stymied
reform in the past.
//Hexter act//
The banking system is still a mess. There has
been no attempt at systematic structural reform.
The civil service remains bloated. The taxation
system has not been reformed after years of
everybody saying this. The court system remains
extremely weak. And there has been no
fundamental restructuring of industrial
enterprises.
//end act//
At another forum (March 17) in Washington, Carnegie
Endowment researcher Anders Aslund cautions against
expectating quick reform of the banking system. While
otherwise optimistic about Russia's economic
prospects, Mr. Aslund believes Mr. Putin will move
slowly in removing former Soviet central bank chief
Viktor Geraschenko from the Central Bank of Russia.
//Aslund act//
The question is how fast can Putin do away with
him. Of course there are ways to do away with
him. But it is quite difficult. He needs to have
a majority in the Duma behind him. So I think
this is a test. If Putin is really serious about
getting something in order he will take on
Gerashshenko.
//end act//
Mr. Aslund says as long as Mr. Geraschenko heads the
central bank there can be no reform of the banking
system.
At the same American Enterprise Institute conference,
Congressional Research Service analyst John Hardt said
Mr. Putin must undertake far reaching institutional
reforms, creating the rule of law, to instill business
confidence. Mr. Hardt is pessimistic, saying the
flight of capital out of Russia has risen in the past
few months.
//Hardt act//
This is going up. This is a suggestion to me
that the system is still perverse and it is not
headed in the right direction. That there need
to be basic changes.
//end act//
Panelists did not agree on whether Mr. Putin will wage
a battle against the endemic corruption that has done
so much to discredit Russia's past efforts at reform.
However, Mr. Aslund believes the oligarchs that
dominate the Russian economy will not dominate Mr.
Putin.
//Aslund act//
The oligarchs are essentially down and out as of
August 1998. It was one of the best features of
the financial crash, that it took out most of
the oligarchs. Now you have a few standing.
Essentially, it is (Andre)Berezovsky and
Avramovich (they are both well-known tycoons)
that are trying to pursue it in the old way. And
I'm in not doubt that Putin will take them out.
//end act//
Acting-president Putin has promised to unveil his
economic reform program before the March 26th
presidential election. (Signed)
NEB/BDW/PT
17-Mar-2000 20:21 PM EDT (18-Mar-2000 0121 UTC)
NNNN
Source: Voice of America
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