To Lure Foreign Investment, Russian President Calls for Reforms
2011-03-31 13:02:45
The president of Russia, , on Wednesday proposed a sweeping change to the management of the country’s many state-run companies, saying an overhaul that would remove ministers from the boards of directors is overdue.
If enacted as proposed, the change would unwind one of several formal mechanisms of state control over the economy put in place by Mr. Medvedev’s predecessor, and now prime minister, .
After a decade of rolling back the results of its early post-Soviet privatizations, the Russian economy is again top-heavy with government-run companies, particularly in the and industries.
The prospect of putting ministers at arm’s length from corporate decisions caused one of the sharpest stock rises in recent months at Transneft, the partially state-owned oil pipeline company, which rose 3.5 percent on the news by the market’s close on Wednesday.
The change, which would still allow the government to appoint representatives to the boards, was intended to improve Russia’s image with foreign investors, Mr. Medvedev said. It is to be completed by the middle of this year.
Mr. Medvedev announced the change while speaking, in particularly blunt language, at a meeting of a presidential commission on modernizing the economy, held in Magnitogorsk, a steel town in the Ural Mountains. Mr. Medvedev said that both Russians and foreigners have withdrawn money from the country recently, in spite of rising oil prices.
“I already gave in the past my assessment of the investment climate in our country: it is very bad, very bad,” Mr. Medvedev said, according to a transcript published on the Kremlin Web site.
He then described the conflict of interest that investors have been chafing at for years. “Government leaders who answer for the rules and regulations in a certain industry also sit on the board of directors of competitive companies,” he said.
Mr. Medvedev said the government should initiate shareholder meetings and vote in replacements before the middle of this year.
Mr. Medvedev said he also expected Parliament would ease a rule barring foreign investors from oil and other mineral deposits so large that they are considered of strategic value by the government. He also suggested that state companies publish more detailed financial documents.
Mr. Medvedev has earlier pressed for an overhaul of the court system, and tried to crack down on corruption in the government, with slight results.
Mr. Putin, who as president established the practice of appointing favored ministers to the boards of state companies, is still considered the more powerful of the two.
As president, Mr. Putin had appointed loyal officials in his government to crucial positions on the boards of large companies dealing in energy, transportation, military industry and aviation. Igor I. Sechin, a deputy prime minister overseeing the oil industry, is chairman of the state oil company , for example.
By late in Mr. Putin’s term, seemingly every minister wore two hats. Even liberal-tilting members of government, like Aleksei L. Kudrin, the minister of finance, were no exception. Mr. Kudrin is on the board of , Russia’s diamond mining company.
Mr. Medvedev, when he served as deputy prime minister before his election as president in 2008, had also served as chairman of , the big natural gas company.