Putin promises economic reform, but does little



President Vladimir Putin, Russian officials have long agreed that the country's economy must reform or risk prolonged stagnation as it comes out of the longest recession in 20 years.

But nine months before the presidential elections, he intends to argue and win, it remains to be seen whether Putin will always succeed in making repeated promises to revise the country's squeaking economy.

WHY REFORM?

The economic model that saw high energy prices fuel the meteoric growth during the first two terms of Putin in power from 2000 to 2008 went off. Now, relying on Russia 's vast supply of oil and gas is no longer sufficient.

Even before the fall in oil prices and sanctions against Ukraine triggered the latest crisis in 2014, growth had already fallen.

In a recent study, the French credit insurer Coface cited "a shortage of labor" and "lack of investment" as the "major obstacles" to diversification Of the economy.

In December, Putin warned legislators that growth may "remain stuck around zero for years"

WHAT REFORMS?

Putin has enlisted two respected characters to elaborate competing reform plans covering the next presidential term from 2018 to 2024.

Former finance minister Alexei Kudrin, a proponent of budgetary rigor, is calling for more money for education – instead of the vast spending currently being spent on the army – and the revision of mutual legal assistance and bureaucracy.

Meanwhile, the figure head of the company, Boris Titov, argues that the government must lose its ropes and start spending in order to strengthen growth.

At present, the government is attacking a cautious follow-up: reduce spending and maintain high interest rates in order to curb inflation without addressing problems Underlying structural constraints.

Officials are trying to maintain a competitive advantage for Russian companies caused by the fall of the ruble in an attempt to prevent the rise in the currency too high and finance a reduction in corporate social security contributions by increasing VAT.

DRAINED WORDS?

Despite Putin's repeated insistence each year on the economic forum of Russia, St. Petersburg, that the country liberalizes, there have been few signs that the boss of the Kremlin is willing to make good these words.

Instead, under the former KGB officer, the role of state giants has increased and dependence on energy supply remains as strong as ever.

Now that Russia has stopped emerging from recession and oil prices have recovered at least partially, some fear that there will be even less incentive for the Kremlin to make changes .

Analyst Andrei Kolesnikov of the Carnegie Center said that Putin could take something in the reform plans proposed by Kudrin and Titov, but warned that there would be no "change radical".

"No attempt to authoritarian modernization of the economy decided from the top never worked," he said.

"There is no reason to believe that things will be different now, given that Russia is in a worse place."



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