Medvedev seeks overhaul of Russian economy

MOSCOW - Russian President Dmitry Medvedev called yesterday for a bold overhaul of his nation's economy, saying Russia must remedy its "primitive economy" and "humiliating dependence on raw materials."

Medvedev ticked off a long list of changes that Russia should bring about to diversify beyond oil and gas, such as funding high-tech companies, combating corruption, and making Russian goods more competitive on the world market.

Left largely unsaid was how he intends to enact such changes. Most of the measures he spelled out in his annual address to parliament were similar to those Russian leaders have proposed for years.

While there is wide agreement that the economy needs to be revamped, it's not clear how an opaque government burdened by a Soviet-legacy bureaucracy and rampant corruption can modernize a country with an outdated and often crumbling infrastructure.

"Russia is stuck," said Vladimir Pribylovsky, head of the liberal Panorama research center in Moscow. "In his speech today, Medvedev admitted that nothing material had been created in Russia after the collapse of the Soviet Union."

Instead of investing in its own development, Russia has relied mostly on black gold.

With oil prices moving back up recently, from $34 a barrel last winter to about $80 now, which has pushed up the ruble and Russian stock markets, some worry there will be little incentive to bring change.

"When oil prices kept growing, many people, I might as well admit almost everyone, was under an illusion that structural reforms can wait," Medvedev said. That, he said, can no longer be the case.

Alexei Pushkov, a prominent Russian TV commentator with extensive contacts in Moscow political circles, said the president would have his work cut out for him.

Medvedev's two predecessors also said they wanted to modernize the economy but they, too, had to grapple with "a certain inertia that exists in the country," Pushkov said. Kremlin critics say that inertia is fueled by a tradition of officially sanctioned corruption and a consolidation of power under Vladimir V. Putin, prime minister and previous president.

The rhetoric has left many Russian experts pondering whether Medvedev is trying to move away from Putin, who is widely seen as the real ruler of Russia, or whether the two are playing a sort of good-cop/bad-cop routine.

There were no answers yesterday. With Putin watching, Medvedev said the government should loosen its control of industry - a reversal of Putin's approach while president.