Putin says economic reform his top priority

[June 22, 2012]  ST. PETERSBURG, Russia (AP) -- President Vladimir Putin said Thursday that reforming Russia's economy is his top priority. Business leaders welcomed the commitment, but noted that such pledges have been made before and need to be backed up by action.

Putin also touched upon the unprecedented protests that accompanied his return to the presidency, arguing that while the government should be "open to dialogue," he would not allow the opposition to weaken the centralized system he has built during his 12 years in power.

In what was his first major policy address since beginning his third term in May,

Putin confirmed his commitment to economic reforms that should make Russia a more attractive business destination.

"We have mapped out an entire program of large-scale reform, and it has received broad public support," he told investors and the heads of global corporations at Russia's premier economic forum. "I see its fulfillment as the main goal of my tenure as president."

Putin admitted that the government has failed to diversify Russia's economy away from its reliance on crude oil, but pledged to tackle the issue. He said the government will soon be drafting its budgets in a way that Russia's main expenditures and investment projects will not rely on taxes expected to come in from oil companies enjoying high oil prices.

In a move cheered by businessmen and investors, Putin on Thursday appointed a presidential ombudsman vested with special powers to defend the rights of company owners and directors.

The new ombudsman, Boris Titov, will have powers to represent owners and directors in courts and suspend official rulings which could be viewed as hampering their rights. Titov had previously served as a chairman of the well-respected business lobby Delovaya Rossiya.

Russian authorities have admitted that a poor investment climate is scaring investors away and hope Titov's appointment will improve the country's profile and reputation.

Andrew Somers, president of the American Chamber of Commerce in Russia, told The Associated Press that he sees "a significant chance of success" in that initiative. Titov has a lot of experience lobbying for businesses and the government has thoroughly researched how similar institutions work in other countries, he said.

While acknowledging that the economic goals Putin has set out are turning into "a long, complicated process," Somers said he believes that Putin is "challenging himself and the government to meet those goals."

Dennis Nally, chairman of PwC, said he was encouraged by the "pro-reform message," but said the

government needs to make good on its promises.

It's "not just about putting the right policies in place," he told the AP, "but it's about making tangible progress, making these policies come to life every day in terms of execution. That's what the business community has come here to see."

Putin stepped down as president in 2008 because of a constitutional limit of two consecutive terms, but remained at the helm as prime minister. He won a third term in March amid large-scale protests fueled by anger over evidence of fraud in December's parliamentary election and fatigue with his long rule.

At the very end of Thursday's 50-minute speech, Putin signaled that he would not tolerate any challenge to his rule.

"A striving for change is a driver of progress, but it gets counter-productive and dangerous when it destroys peace in society and the state," he said. "We must be aware of the things in our political system that can and must be improved, and which values and institutions are fundamental and ought to remain unchanged."

In a veiled warning to opposition leaders, Putin said that anyone who wants to get involved in politics, "who considers himself a politician, must express his position within the boundaries of the law."

Angela Stent, director of the Center for Eurasian, Russian and East European Studies at Georgetown University, said this statement should be seen in the context of a new law Putin signed this month that imposes huge fines on those who take part in unauthorized street protests.

"You create rather stringent conditions and then you say you have to obey the laws," she said.

[Associated Press; By NATALIYA VASILYEVA]

Lynn Berry contributed to this report.

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