Putin’s Plan Goes according to Plan
// The new Prime Minister to fulfil the programme of the former President
As Prime Minister, Vladimir Putin will start with the stock market and public spending
The speech of Vladimir Putin, candidate for Prime Minister, that he delivered at the State Duma May 8, sheds light on the agenda of the government within a year. The government is most interested in the reform of the stock and financial markets, the efficiency of public spending, and taxation. Preparation for the medical care and education reforms will start no sooner than 2009.
The speech of Vladimir Putin, merely a candidate for Prime Minister at that moment, at the State Duma had been planned to be brief, comprising about 15 minutes. Nonetheless it turned out truly pithy. Complying with the time-limit, Mr Putin outlined the policy of the future government, focusing on the economic and social issues. The address to the MPs contained less news than the annual addresses of President Putin to the Parliament. Still you can judge of the White House’s future priorities, basing on the key points of the speech.
First of all, the program of the Prime Minister appears too short-termed: Vladimir Putin clearly defined three spheres for the government to get engaged in till early 2009. The speaker thrashed those three out, generalizing everything else. Mr Putin set the task to “prevent inflation from exceeding the 9% limit,” but he did not mention the exact deadline, saying “within the next year, or few years.” Although the speech began with the outlining of long-term priorities (“We can and must become one of the leading nations in terms of key indexes of life quality within 10-15 years.” Quality of life implies the level of income, social services, the quality of education, life expectancy, ecological welfare and provision of lodging), Vladimir Putin evidently shunned long-term development plans, speaking about the next few months only.
You could hardly figure out the key news of Vladimir Putin’s speech since he simply failed to directly declare it. Here medical care and education are meant. Reiterating the basic principles of the future reform of these branches and the numbers of public spending on them within the current three-year budget, Mr Putin explained that “all preparations” for the future reform of the social sphere “must start as early as 2009.” It means that the reforms of social services are postponed. The only novelty in the social sphere that the PM declared was the introduction of legislative indexation of the minimum wage (according to Mr Putin, it will amount to 4.330 roubles starting with January 1, 2009, which is equal to the living wage for late 2007) to the inflation rate. But this won’t happen immediately, only within the next few years.
Judging from Mr Putin’s speech, his government will mostly pay attention to the stock and financial markets. Under his guidance, the government will optimize the infrastructure and state control of finances, as well as legal propositions, and provide for “a comfortable tax regime” on the equity market, by means of promoting corporate management. Vladimir Putin backed the thesis proposed by the Sberbank head German Gref in January, saying that it is necessary to maintain the expansion of Russian corporate capital into foreign markets. Judging from the detailed description of the issue that the PM gave, as early as May, 2008 the government will set to preparing Moscow to become one of the major financial centers of the world.
Control of public spending and its efficiency is the second priority of Vladimir Putin’s government. “The public spending policy is no good at all,” the PM stated emotionally. He pledged to reverse the present trend, changing the principles of allocating state investments, controlling the number of state officials (though he did not say anything about cutting on the bureaucratic apparatus), and changing state standards in building.
Though welcomed with applause, taxation, the third part of the address covered in detail by Vladimir Putin, contained the known measures, introduced by Vladimir Putin during the session of the State Council February 8 in the framework of the 2020 strategy of Russia’s development, and suggested by Dmitry Medvedev in his pre-election speech at the Krasnoyarsk forum a week later. The revenue initiatives have already been included into the main guidelines of the taxation policy for 2009-2010, approved in April. To manifest the continuity of the political line once again, Vladimir Putin stated in the State Duma that “it is high time to take the decision to ease the tax burden of this economic sector” to encourage oil production. This implies the increase in the exemption limit from $9 to $15, when figuring the minerals mining tax, starting in 2009: The Finance Ministry has already calculated that it will allow companies to save 104.1 bln roubles in 2009 and 112 bln roubles in 2010. Interestingly, the passionate words of the PM concerning the easing of the tax burden of the oil industry caused the stock market to grow May 8. As to another hot point regarding taxation – the VAT, the PM did not reveal anything new, too. He only reasserted the commitment to arrive at a decision concerning the VAT in August. It need be said that he was more than evasive when speaking about the possibility of cutting its rate. According to Mr Putin, the government should define “when to lower taxes, and to what extent.” In August the government of Vladimir Putin can arrive at any decision: It need be reminded that the Ministry of Finance suggests leaving the VAT as is and considering the possibility of reducing the profits tax.
In his economic outline, delivered at the Krasnoyarsk economic forum February, Russia’s President Dmitry Medvedev was more definite about the VAT. The then candidate for President urged that “a law should be passed as soon as possible, stipulating the terms of the transition to the decreased flat rate of the VAT,” and that “analysis of the substituting the VAT with the profits tax should be carried out.” On the whole, the Krasnoyarsk speech of Mr Medvedev was more concrete, covered a wide range of problems, and he did not avoid confirming his words with figures. Vladimir Putin, using the same rhetoric in his Duma address, provided far fewer figures, mentioning only those worked out by the governments of Mikhail Fradkov and Victor Zubkov.
Curiously, Vladimir Putin did not use the word “corruption” in his speech. He dared utter it only when answering the questions of MPs. Admitting in his address that people “steal” in Russia, the Prime Minister offered no solution to the problem, apart from “the office of public prosecutor and law machinery.” In his turn, Dmitry Medvedev devoted quite a part of his Krasnoyarsk speech to the necessity to reform the institutions of the executive power and urged “to elaborate and implement a nation-wide plan on combating corruption.”
Finally, you can’t understand what the structure of the new government will look like, judging by the speech of Vladimir Putin and the one of his successor two months earlier. It need be reminded that, according the 112th article of the Constitution, Vladimir Putin is to impart his conception of the new composition of the executive body to Dmitry Medvedev before May 15.
Dmitry Butrin, Piotr Netreba, Vadim Visloguzov
All the Article in Russian as of May 12, 2008
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Photo: Yury Martyanov
