MOSCOW, September 27 (Itar-Tass) - Prime Minister Dmitry Medvedev said his government would do its best to protect private property because the private sector should become the main driving force for economic development in the country.
“I think that the protection of private property and competition remains our unconditional political priority,” Medvedev said in an article published by the financial daily Vedomosti on Friday, September 27.
He regretted that industrial growth in Russia was sustained almost solely by implementing large investment projects with the participation of the state and state-controlled companies, raising salaries in the public sector, and increasing subsidies to agricultural producers and some other industries against the background of high oil prices.
“However this source of development is limited by its dependence on high oil prices,” he observed.
The prime minister admitted that the government had so far failed to convince private investors that their work in Russia would be economically safe. “The level of investments in the Russian economy is not high yet not so much because of arithmetical calculations of potential returns on investments as because investors continue to be seized by the irrational fear of working in inscrutable and sometimes unpredictable Russia as well as their quite explainable mistrust in public institutions, most regrettably, in the judicial system and law enforcement agencies,” Medvedev said.
He believes that one of the reasons for this is that many government officials, judges and police officers still think that state property and therefore state-owned companies have exclusive rights to protection that are immeasurably bigger than those of individuals and that the latter pursue solely their personal interests and for that reason they are suspicious and should be under close control.
To prove his point, Medvedev referred to the banking system where five largest banks, which are directly or indirectly controlled by the state, account for 56 percent of individual deposits and 53 percent of loans in the economy as a whole. “They have obvious preferences from the state, including state-owned companies, and enjoy its practically unlimited support, while almost a thousand banks have no chance to build themselves into the system of state aid,” he admitted. “The result is declining competition in the financial market, the absence of effective regional banks and exorbitant interest rates that limit entrepreneurial and investment activity,” the premier said.
“This can’t be found in any country with a developed legal and political system. We must get rid of this practice if we want to become a competitive country with a developed economy,” Medvedev concluded.