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Russia: OECD Praises Putin For Signs Of Advances In Economy

Russia is a long way from attaining membership in the Organization for Economic Cooperation and Development (OECD). But the Paris-based institution is praising talks yesterday between its chief and Russian President Vladimir Putin as a good sign for Russia's economic reforms.

Prague, 31 October 2000 (RFE/RL) -- Russian President Vladimir Putin's talks in Paris with the head of the OECD today are seen by the institution as a signal Moscow is ready to move forward on economic reforms.

The OECD groups 29 economically developed countries, with the aim of promoting stable growth by sharing economic data. Russia is not a member, but Moscow has cooperated with OECD researchers even before Russia's formal request for membership in 1996.

The talks today between Putin and OECD Secretary-General Donald Johnston are the highest level of contact since Putin became president this year.

Eric Burgeat, who directs the OECD's Center for Cooperation with Non-Members, also attended the meeting. Burgeat told RFE/RL that the momentum of cooperation with Russia has been renewed.

"It is very important for the secretary-general of the OECD to hear [directly] from President hear from him what are Russia's main priority policy issues. It shows a commitment by the [Russian] government to speed up the process of reform. And also, it can help us to better target our program of cooperation on the really critical issues."

Putin is in the middle of a three-day visit to Paris with a focus on improving economic cooperation with the European Union and institutions like the OECD. Putin said yesterday he is happy about progress in talks with French President Jacques Chirac. France currently holds the rotating post of the EU presidency.

"I greatly appreciate the fact that President Chirac has demonstrated a firm political will to develop relations between the European Union and Russia in all directions, and more importantly, in the sphere of economics and ecological safety."

For their part, officials from the EU and the OECD have been eager to hear more from Putin about his economic reforms. Burgeat says the Russian program looks good on paper. But he tells RFE/RL that more information was sought on the implementation of the plans.

"We see it as a very ambitious program. A key element there will be how it is implemented and how the Russian government will establish the capacity in the public administration, both at the center and in the regions, to implement that very ambitious program."

Despite the optimism expressed by Burgeat, the OECD still has a long list of recommendations for Moscow that must be followed before Russia can join the elite group. But once a member, Russia can expect investor confidence to rise and risk assessments by international credit rating agencies to be upgraded.

The OECD says Russia's failure to collect taxes efficiently and fairly continues to be one of the greatest obstacles in the transition to market economics. Russia has adopted some tax policy recommendations from the OECD in an attempt to bolster the budget and reduce the amount of money illegally sent abroad by tax evaders. But the OECD says the Kremlin needs to reinforce the rule of law by improving public governance.

Protection for foreign investors also is high on the list of OECD priorities. OECD research shows that potential investors have little confidence in Russia's legislative environment. The lack of adequate property and contractual rights, as well as sufficient bankruptcy laws, are just a few examples of the legislation being urged.

The organization says it wants to see regulatory agencies created to oversee private pension funds, capital markets, and institutional investors.

The OECD says the reliability of economic statistics in Russia needs to be improved, despite nearly 10 years of work on the issue. Russia now uses the internationally accepted system of national accounting. But the OECD says statistics remain unreliable because so much economic activity in Russia is clandestine.

OECD agriculture reports say the emergence of profitable private farming in Russia has been blocked by problems with the market infrastructure -- including the lack of land ownership rights and short-term credits for small farmers.

Under a joint project between the OECD and the World Bank, a roundtable on Russian corporate governance is planned for Nov. 15 and 16 in Moscow. The panel is preparing research that the OECD expects will boost internal reforms as well as international efforts to help with those reforms.

Members of the OECD include the United States, the European Union and other advanced industrial countries. Three of the leading EU candidate states in Central Europe -- Poland, Hungary, and the Czech Republic -- became OECD members in 1996. Slovakia's application has been approved and is expected to formally take effect in a few weeks.