#10
Vedomosti
March 19, 2002
PUTIN'S RATING IS AN OBSTACLE
...to Russia's rating in the long run
Author: Tatiana Lysova, Aleksei Nikolsky
[from WPS Monitoring Agency, www.wps.ru/e_index.html]

THE POLITICAL STABILITY CREATED IN RUSSIA BY THE PRESIDENT HAS ITS REVERSE SIDE TOO. STANDARD & POOR'S SEES THE FLAW IN THIS STABILITY IN THE FACT THAT IT DEPENDS ALMOST ENTIRELY ON VLADIMIR PUTIN - WHICH AUTOMATICALLY MEANS WEAKNESS OF ALL OTHER INSTITUTIONS OF GOVERNMENT.

The West views political institutions in Russia as weak

THE POLITICAL STABILITY CREATED IN RUSSIA BY THE PRESIDENT HAS ITS REVERSE SIDE TOO. STANDARD & POOR'S SEES THE FLAW IN THIS STABILITY IN THE FACT THAT IT DEPENDS ALMOST ENTIRELY ON VLADIMIR PUTIN - WHICH AUTOMATICALLY MEANS WEAKNESS OF ALL OTHER INSTITUTIONS OF GOVERNMENT. THIS IS WHAT PREVENTS ANALYSTS FROM RAISING RUSSIA'S SOVEREIGN RATING.

Russia's macroeconomic indicators look better than ever. This assumption was admitted by most speakers at the international conference Investments in Russia that took place in New York last week. These days, it is the political and court systems that are considered major obstacles for foreign investments in Russia.

Boris Nemtsov was the first one to raise the matter in his report. According to Nemtsov, President Putin controls 250 seats in the Duma, controls the Federation Council, and has four national TV channels in his pocket. Nemtsov says that the Kremlin has a special doctrine, stipulating the impossibility of a European-type democracy in Russia and advocating a controllable democracy.

Helena Hessel, Standard & Poor's Leading Analyst and Director or Central and East Europe, delivered a report too. Hessel said that weakness of political institutions in Russia was one of the major obstacles restricting its rating growth. "Political stability in Russia rests on a single individual," she said. "We do not consider the system in Russia democratic."

According to Hessel, Russia's rating in December was upped in the wake of initiation of the court reforms. Another analyst added that the broad support with which all Putin's initiatives are greeted in Russia is of course a positive factor. "But we are talking here of the distant future which is impossible through concentration of power in one pair of hands only. Development of institutions is needed."

Interros Vice President Sergei Aleksashenko thinks otherwise. Since the president's powers will remain effective for the next six years, it will provide a sufficient period for making Russia more attractive to investors. "There are historical precedents for a nation's economy being boosted thanks to a single leader," he said.

Yevgeny Yasin of the Supreme School of Economics only partially shares the fears of excessive concentration of power. "There are two options of development for Russia - one relying on businesses and the other relying on the bureaucracy. Someone should dominate this pair," Yasin said: "On the whole, Putin is a factor of political stability, but emphasis in the reforms is still being placed on the bureaucracy, including security structures. Potentially, this is hazardous."