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The success of
Russia’s economic reforms depends on Putin’s ability to dismantle
the system of “robber capitalism,” which incubated in the ashes of
the Soviet Union, and create the conditions of competition in the
market that are equal for all. Russia, he correctly insists, needs a
proper legal framework for undertaking the sort of economic reforms
that could eventually bring it justice and equity as well as
material prosperity. He has sworn to put social concerns at the
center of economic policy to provide “more therapy, less shock.” He
has inducted some genuine reformers into his team. In the first term
of his presidency he has made significant moves to reform taxes, to
deregulate business, to secure protection for investors’ rights, and
to reform the land-holding system. |
Following the
defeat of the Communists and the election of a more proreform Duma
in late 1999, President Putin’s government utilized well its
parliamentary support to embark on a well-thought-out and ambitious
program of structural reforms aimed at creating a more conducive
investment climate for both domestic and foreign investors. By 2002,
the first fruits of this initiative began to appear. Bold tax
reforms, involving lowering and unifying tax rates and abolishing
exemptions, overhauled the previous arbitrary and irrational tax
system, giving Russia a flat 13 percent income tax, a much reduced
profit tax rate, and a greatly simplified system.
Legal reforms
were launched, aimed at fundamentally transforming the judicial
system, with the changes in the economic sphere involving a
separation of criminal and commercial processes and much improved
arbitration procedures. The Soviet-era labor and land codes were
replaced, putting on a sound legal basis private employment and the
sale and ownership of land. Deregulation reduced the number of
licensed activities, sought to limit intrusive inspections by
corrupt officials, and made registration of new businesses a
one-step process.
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"Deprivatizing" the State |
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