* * *
President of Russia Dmitry Medvedev: I gave a number of instructions in Magnitogorsk at the end of March aimed at improving our market institutions’ performance, reducing costs to business, and attracting investment into the Russian economy. It is important in politics to make sure that decisions are actually carried out, and the Magnitogorsk initiatives are being carried out now. We decided, for example, after lengthy discussion, to lower the maximum rate for compulsory insurance fund payments from 34 to 30 percent starting next year, and bring them down to 20 percent for small business in the production and social sectors. Of course, this is not such a radical reduction, but it will nonetheless make a real difference for a huge number of small and medium-sized businesses. I think that this decision is fair and balanced in the transition period.
We have also drafted decisions that reduce controls on strategic foreign investment and give minority shareholders access to information on public companies’ activities. We have introduced the post of insurance ombudsman in the federal districts, and the mobile presidential reception office has also started work. We have drafted a federal law setting out a special procedure for examining reports containing accusations of corruption. The replacement of senior officials with independent directors in key state-owned companies is almost complete now. This process will be completed in all of the companies controlled by the state by autumn this year.
We have established the Russian Direct Investment Fund managing company, and the federal budget has earmarked around $2 billion for its initial capital. Talks have been held with key potential partners, who show a lot of interest, and concrete projects are due to be examined over the coming months.
Discussion of the Magnitogorsk initiatives showed there is great demand for objective and speedy decisions. This is only natural. Modernisation cannot be achieved through one-off measures, even big decisions, but only through constant and uninterrupted change and, of course, the political will needed to keep this process moving predictably ahead, one step at a time, but steadily moving forward.
I think that in this context the following new steps are needed.
First, the state does not need so many assets. The Government has drafted proposals on a timetable for privatising big companies. These plans must be carried out of course. But they need to go further. I think we need to give up not just controlling stakes but, in a number of cases, also blocking stakes in many big companies that are currently still state-owned today.
Of course, we need to take a more cautious approach with regard to infrastructure monopolies and companies that are essential for our country’s military security. The Government has until August 1 to adjust the privatisation timetable accordingly, so as to carry out this task. I am sure that we can organise a transparent and modern privatisation process that will attract effective private investors and help to bring considerable funds into the Russian budget.
Second, our federal system needs to be an engine for our vast and diverse country’s development and give us a competitive advantage. It is not possible in the modern world to run a country from one single place, all the more so when we’re talking about a country like Russia. In fact, we have already gone through the kind of system when everything operates only on the Kremlin’s signal, and I know from my own experience that this kind of system is not viable and is always been adjusted to suit the particular individual. We therefore need to change it. I will soon set up a special high-level working group to draft proposals on decentralising powers between the different levels of power, above all in favour of the municipal authorities. This will include proposed adjustments to the tax system and principles for relations between the budgets at the different levels too. I am certain that these decisions will be more in keeping with the Russian economy’s future demands and organisation.
Third, we need to take further steps to improve the work of our judicial system. Much has been written about the problems in this area. We are well aware of these problems and we can resolve them on our own, without help from outside. I am sure that the judges themselves will do this.
I receive proposals from people suggesting that we establish a separate court, essentially a separate legal system, for foreign investors. I do not think this is the right decision. Everyone needs a unbiased, fair and effective court system. Our citizens need it, and so does every organisation and individual. This is the goal to work towards. We will encourage judges to specialise in the arbitration court, separate the arbitration court and mediation, and improve judges’ training. I think we need to bring new people into the judges’ corps, people with experience and specialised in different areas of law. We will take the necessary decisions soon so as to give this process the impetus it needs.
I am also giving the instruction to draft amendments to the procedures for selecting judges and for their disciplinary liability. At the moment, these functions come under the qualification commissions at the different levels. I think a more balanced approach would be to divide these functions between the qualification commissions and the regional disciplinary commissions. This is a specific matter, but it is important too.
Fourth, we hear constantly that corruption is strangling Russia. We need to reply in kind and put a relentless stranglehold on those guilty of corruption. The whole of Russian society without exception shares this view. Corruption is difficult to detect, however, and the current criminal prosecution procedures in these cases are very slow and complex. We should maintain these procedures in place if only to ensure reliable guarantees in the case of unfounded accusations, of which there are a fair few, regrettably. But at the same time, the state bodies need to clean themselves of corrupt employees faster and more decisively, and to do this we should broaden the grounds for firing people suspected of corruption from the civil service. Grounds for firing people in such cases could include evidence revealed by investigations, but which is not presented in a way that can be used to launch criminal prosecution. Such dismissals would essentially amount to dismissal on the grounds of loss of confidence. Of course, we would need to keep legal procedures in place giving people the right to appeal against such dismissals.
I think we could also look at making civil servants and state officials bear full material liability to the state treasury, which in the past always compensated the losses caused to private individuals by civil servants’ unlawful action or inaction. We need to squeeze out everyone who holds the law, order, and their honest colleagues in contempt, and sadly, there are many such people, including in the law enforcement system. In particular, I am referring to investigators who turn unfounded criminal charges and investigations into a corporate raiding tool and essentially a business. We need to use the institution of mandatory checks by the prosecutor’s office of all criminal cases that were opened and then closed without being sent before the courts. If prosecutors find evidence of abuse, they can make the investigators liable, including criminal liability. I will send these amendments to our legislation to the parliament very soon.
Fifth, we need not just fine plans but also real progress in establishing the financial centre in Moscow. Many important amendments to legislation have already been made this year. The Moscow city government is also working fast to put together the package of main measures that will change the city’s life. We will also take decisions on a number of issues, such as abolishing many of the restrictions on placement and circulation of Russian securities abroad, very soon.
Finally, we seek to introduce visa-free travel with the European Union and other countries, but much here depends on our partners. We are ready to demonstrate our good will on this matter by taking concrete steps. We are therefore offering the chance for all investors and entrepreneurs with substantial business in Russia to obtain long-term visas, and this includes people taking part in the Skolkovo innovation centre projects and the Moscow international financial centre.
And finally, in order to improve greater Moscow’s development, boost the financial centre’s development, and quite simply make life easier for many people, we will also examine the question of expanding Moscow’s borders. This would involve creating a capital federal district that goes beyond the current Moscow city limits, and consequently expands beyond these limits a substantial share of federal lever administrative functions and state organisations.
<…>