Index

DATE=7/6/2000 TYPE=BACKGROUND REPORT TITLE=PUTIN'S SLOW-STARTING REFORMS NUMBER=5-46619 BYLINE=BARRY WOOD DATELINE=WASHINGTON INTERNET=YES CONTENT= INTRO: It's been 100 days since Vladimir Putin assumed the Russian presidency promising far-reaching economic reform including a campaign against corruption, a fairer tax system, and secure property rights. With the Russian economy now growing swiftly for the first time since communism collapsed a decade ago, V-O-A's Barry Wood reports the much-touted reforms read well on paper but have been slow to be implemented. TEXT: For energy economist Matthew Sagers (of Washington's Planecon consultancy) the tripling in oil prices over the past 18 months have triggered a boom in the Russian economy. //Sagers act// The Russian economy is going just gang-busters here in the first half of 2000. Industrial output is way up, g-d-p is way up. And so besides the multiplier effect from higher oil prices-and what it means for tax revenues, revenues for companies, and incomes, it also seems to be playing a major role in sustaining the economy. //end act// Oil and gas are Russia's primary exports and the boom in the energy sector translates into rising foreign exchange reserves and an overall boost to the economy. Russia is expected to register solid five percent growth this year. John Hardt, a Russia specialist at the Congressional Research Service, is sceptical that oil prices will remain at their current high level. He believes that to assure long-term economic growth Mr. Putin has to put substantive reforms in place. //Hardt act// My sense is that he has a number of ingredients underway which seem to be headed in the right direction. Reform of the tax policy, an approach to monetary reform, a willingness to address the administrative system, to change the rules of the game-to make it more competitive and to change the corruption prone environment, are all admirable and understandable goals. But it remains to be seen if this can be carried out consistently and whether or not he can maintain the degree of broad support he now has in the Duma. //end act// Mr. Hardt is encouraged by parliament's preliminary approval of the government's economic program. However, specific measures concerning tax policy and enterprise restructuring will not be implemented until September at the earliest. Janine Wedel, a professor at George Washinton University who has written extensively on corruption in Russia, anticipates no great changes in Russia's overall approach to the rule of law. //Wedel act// My suspicion would be that he is under pressure to demonstrate both for domestic and international consumption that he is interested in the rule of law and must therefore pay lip service to this rather vague notion of the rule of law. But I think it definitely remains to be seen whether he is interested in helping to create institutions that will establish property rights, shareholder rights and the kinds of institutions that are associated with building the rule of law where fair transactions can take place. //end act// But purely on economic grounds the early results of the Putin presidency have been positive. Inflation seems to be under control. Tax revenues are up. Russia is keeping current on its debt payments to the International Monetary Fund. And the I-M-F and World Bank are sending missions to Moscow this month to discuss new lending programs. U-S Treasury Secretary Larry Summers this week welcomed Russia's healthier budget and rising reserves. But he said the substantial improvement in Russia's economy can't be sustained without establishing the rule of law and enforceable property rights. (Signed) NEB/BDW/ENE/PT 06-Jul-2000 16:17 PM EDT (06-Jul-2000 2017 UTC) NNNN Source: Voice of America .