Moscow News
www.MoscowNews.ru
November 16, 2009
Are state corporations bad?
By Ed Bentley
Tom Mundy
Equities Analyst
Renaissance Capital
It is clear that those sectors which are most closely associated with the Soviet era, with the highest levels of state involvement, were the most vulnerable to the twin shocks of oil price collapse and the freezing of domestic and international liquidity. Their collapse contributed the most to the sharp fall in Russia's industrial production this year - sectors such as transport and machine building, for example. It is encouraging, therefore, that the president recognises this. In order for Russia to modernise, the government needs to bring down the costs of doing business, cut back on red tape, corruption and encourage innovation. The more involved the private sector, the more likely this is.
Vladimir Bragin
Strategist
Trust Bank
Actually, this was not the first time the president has spoken about reforming state corporations. In August he asked heads of controlling authorities to check their operations for consistency with their goals. In fact state corporations are strange organisational structures: they control key government stakes in industries and at the same time are non-transparent and non-accountable. I think that Medvedev may not be comfortable with that.
While I see nothing bad in making them public or, if necessary, liquidating them, there is one more thing to be taken into consideration. The motives for creating these corporations were not purely economic, and there are various groups of interests standing behind them. Therefore, Medvedev's plans could meet serious political resistance.
Nikolai Petrov
Scholar-in-Residence
Moscow Carnegie Center
A report from prosecutor general Yury Chaika and presidential aide Konstantin Chuichenko brought to Medvedev a day before the address was pretty critical, especially towards Rosnano. It is too early to draw conclusions, but the president has made it fairly obvious that those corporations intended to solve certain problems should go after the problem is solved, and those that survive should be more transparent. This is a clear indication that state corporations are extremely ineffective and have become even more so due to the crisis. It is interesting that Rosnano was criticised most, even though it is relatively transparent and effective - unlike, say, Russian Technologies. State corporations are a murky area, neither transparent nor controlled by the accounting chamber, so these measures are needed to go forward.
