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Russia: Putin Pledges Economic Reform, Calls Russia Investment Opportunity

By Jeremy Bransten/Francesca Mereu

Moscow, 30 October 2001 (RFE/RL) -- Russian President Vladimir Putin, addressing an international business forum in Moscow today, expressed optimism about his country's reforms and said Russia was now one of the world's most promising economies for foreign investors.

Addressing more than 300 Russian and foreign investors at a conference organized by the Swiss-based World Economic Forum, Putin said the Russian government had embarked on a path of long-term reforms meant to bring Russia into the family of modern market economies. He said that in the wake of the 11 September terrorist attacks on America and the subsequent declaration of war on terrorism -- in which Moscow has allied itself with Washington -- global cooperation is now more important than ever.

"Today in the system of international relations, a principle regarding global responsibilities and [global] rights is taking shape. This is the reason why our opposition to violence and hate has to be clear, well thought out and decisive. All different aspects of collaboration [among countries] are important at this point and in the first place, economic issues are very important."

Putin said the government has bold plans to wean Russia from its current dependence on the export of natural resources and transform it into a vibrant exporter of quality manufactured goods. Putin said Russia had always offered "big opportunities" for business but that the risks for investors had until now been too high. He said his government's goal was to lower those risks to acceptable levels.

"Russia's strategic aim is to become a country that produces goods and services able to compete in the market. All our efforts are oriented in this direction. We understand that to integrate in the international capital market, we have to find a solution to problems like the defense of private property rights, and [we also need] to improve governance and financial transparency in business."

Putin said the government would push for the judiciary to be reformed and the banking sector to be restructured to provide the proper underpinnings for a well-functioning economy. He noted the tax code had already been significantly simplified. In 2001, Russia introduced a flat 13 percent individual income tax rate -- the lowest in Europe. It has also lowered corporate profit taxes from 35 percent to 24 percent -- a process the Russian president said would continue.

Putin underlined Russia's strong economic performance over the past two to three years, and expressed the hope that this factor, coupled with the announced reforms, would pave the way for fairly rapid access into the World Trade Organization. But he said Russia wanted to be accepted into the exclusive club on equal terms.

"Under no circumstances will we agree to join the WTO according to non-standard conditions. We are looking at the whole issue with optimism, but we resolutely want standard conditions to be applied to us. We don't want demands imposed on us that other candidate countries would never accept."

The Russian president's speech was well received by Western bankers and business leaders attending the Moscow meeting. Many said they had weathered Russia's 1998 economic crisis and hoped the current rates of growth -- which have seen GDP rise by 20 percent over the past three years -- would continue and that the government would make good on its reform pledges.