Putin pledges to improve investment climate

April 11, 2012. Russian Prime Minister Vladimir Putin addresses the Russian State Duma with the final report on the work of the current government. (RIA Novosti/Grigory Sysoev)
Prime Minister Vladimir Putin has pledged to mend the country's fragile investment climate and further encourage major global companies to cooperate with Russia, claiming it to be absolutely vital for the country's development.

``We will be able to solve no issue in the economy or social sphere until we fix the situation with the business climate,'' Putin said in his annual government report to Parliament.

Putin promised to shake up the Russian legal system to make Russia more hospitable to foreign businesses before the end of the year, and to introduce the position of an ombudsman to champion investors' rights.

Capital outflow from Russia has been a major headache for the Russian economy with $84bln leaving the country last year. It’s a signal of domestic and foreign investors' decreasing confidence in the future of the economy.

Foreign businesses are often citing the poor investment climate and corruption as an obstacle to doing business in the country. Vladimir Putin seems to have found a remedy by forcing government officials to state their incomes and account for their budgetary expenses over $1bln.

Outgoing President Dmitry Medvedev made the investment climate a priority of his rule but his policies have not succeeded in fighting capital flight and the lower investment attractiveness of Russia.

Putin said the government must encourage major global companies to cooperate with Russia in the sphere of innovative technology, stressing the importance of turning it into a profitable business. It’s also crucial not only to encourage foreign firms dealing in all types of industry to set up production lines on the Russian soil, but also to establish technological centers.

Also on the Prime Minister’s agenda is strengthening the national banking system, making it immune to any kind of external shake-up, self-sufficient and able to support modernization projects.

“Who shall we turn to in case we are short of money? Greece comes to Brussels for money and it receives it. Who will give it to us? Well, we might receive it as well, but under what conditions? If Greece loses its sovereignty in decision-making process, the stance towards Russia will be even tougher”, said Putin. “I remember 2002 well when we were offered ultimatums, but I’m not going to recollect this in order not to disappoint anyone”, he continued. “Without reserves Russia will be in danger”.

Putin painted a rosy picture for Russia’s economic future, saying the country’s GDP rose more that 4% and unemployment reached the levels seen before the 2008 crisis. He displayed confidence that Russia will make it to the list of 5 biggest economies in three years’ time.

RT’s Daniel Bushel has been listening to the Prime-minister’s address.