President’s choice: More power to investor

Unveiling his vision of liberalising state-controlled economy, Medvedev asks investors to take charge and pitches strongly for reforms.


A bullish Dmitry Medvedev left investors so enthusiastic at St. Petersburg economic forum earlier this month that even his biggest shortcoming could not spoil the mood: He refused to say whether he would address the forum as president again next year.

Medvedev was forced to admit at the very end of the closing session that he could not promise to stand for re-election. "When I believe the moment is right to say directly whether I will or will not run, I will do so," he said. "But this forum is not the best venue for that." The question of who will run the country after the State Duma elections in December and the presidential vote next March has become ever more vexing since Medvedev and his prime minister and predecessor, Vladimir Putin, have both said they might stand, while seemingly drifting further apart in their policies.

Medvedev fuelled talk of a rift that has governed the country since 2008 when he lit a blaze of liberal policies in his keynote speech at the Forum. As a central theme, he touted an end to government intervention in the economy, which he described both as state capitalism and "manual control" — a definition closely associated with Putin's habit of personally intervening in industry decision making.

The president's repudiation of what is seen as Putin's style was perhaps the most striking moment in his 35-minute address. "This is not my choice — my choice is something else," he said slowly, adding that private entrepreneurs and investors should play the dominant role, while the state should protect them.

Medvedev also suggested harsher punishment for corrupt officials, saying they could be fired for "loss of confidence" when evidence of bribery does not allow pressing criminal charges. He had fired Moscow Mayor Yury Luzhkov after 18 years for "loss of confidence" last September and has never elaborated on the reason. The president told his audience, which included scores of governors, that his sacking of long-serving regional bosses often led to improved local business climate. Citing Moscow as an example, he said that under Mayor Sergei Sobyanin the number of documents necessary to start construction projects has decreased.

Russian President Dmitry Medvedev has yet to declare whether he will stand for re-election. Prime Minister Vladimir Putin, too, keeps people guessing whether he will take the plunge.

Medvedev’s pro-reform remarks were seen by many participants as bordering on a campaign speech. “A pretty presidential speech,” said Andrew Somers, president of the American Chamber of Commerce in Russia.

Medvedev was trying to win the support of “his colleagues in power and the Russian elite” ahead of the election, said Darrell Stanaford, managing director of real estate agency CB Richard Ellis in Russia. Stanaford said both foreign and Russian business agree that the government should not dictate from above but rather provide conditions for them to thrive. "This is the format which is necessary," he said.

Others noted Medvedev's frequent use of the word "choice," which in Russian is the same as the word for election.

By reiterating "my choice," Medvedev has indicated that he personally backs his promises, said Klaus Kleinfeld, CEO of U.S. aluminum giant Alcoa. "It is the same language that a U.S. president would use," Kleinfeld, who chairs the U.S.-Russia Business Council, said in an interview. Arkady Dvorkovich, Medvedev's top economic policy aide, told reporters that the president had undoubtedly given "a political speech." But he was careful to stress that it was wrong to call it a campaign speech. "The election campaign hasn't started yet," he said.
But in another twist, Medvedev made it clear that his modernisation policy would be followed even if he weren't in the Kremlin. "The project will go ahead no matter who holds office in this country over the coming years. I guarantee this personally as the president of this country," he declared.

Medvedev sought to push the envelope further saying plans for a privatization drive that he initiated were "too modest" and the government must adjust them by Aug. 1. Dvorkovich later explained that privatisation revenues from 2012 to 2014 should amount to at least 450 billion rubles ($16 billion) per annum instead of the previous target of 300 billion rubles ($10 billion).

Deputy Economic Development Minister Alexandra Levitskaya added that the government planned to rake in 500 billion rubles from privatisations this year alone.

Participants were also buoyant about the prospect of the country's accession to the World Trade Organisation by the end of the year.

Medvedev provided one of his strongest arguments for accession so far by saying the economy could not function without free trade.

"Markets are like parachutes — they work only when open. Without an open economy, we will fall very badly," said Medvedev, while asserting that Russia’s admission to the WTO was realistic by year-end and would be done only under acceptable terms.

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