VZCZCXYZ0007
RR RUEHWEB

DE RUEHMO #0431/01 0461427
ZNR UUUUU ZZH
R 151427Z FEB 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 6652
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC

UNCLAS MOSCOW 000431 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/RUS, EBB/IFD 
STATE PASS TO USTR 
TREASURY FOR TORGERSON 
COMMERCE FOR EDWARDS 
 
E.O. 12958: N/A 
TAGS: EINV ETRD RS
SUBJECT: Medvedev's Four "I"s: - The Keys to His Economic Program 
 
¶1. (U) Summary.  In a speech at an economic forum in Krasnoyarsk, 
Siberia February 15, Deputy Prime Minister and presidential hopeful 
Dmitry Medvedev identified four economic priorities for Russia: 
infrastructure, innovation, investment, institutions.  He called for 
a smaller state role in the economy, including a diminished role for 
government officials on the boards of state-owned enterprises.  He 
also said that if he were elected, he would seek to turn Russia into 
"one of the biggest financial centers in the world" with a stable 
currency, strong banking sector and reformed tax system.  Medvedev 
identified combating corruption as one of most serious challenges 
before Russia, and called for a stronger and more independent 
judiciary and mass media as means to reducing corruption.  He 
emphasized freedom - personal and economic, as well as freedom of 
expression.  End Summary 
 
Economic platform 
----------------- 
 
¶2. (U) In his speech, Medvedev outlined several key tasks: lowering 
administrative barriers, reducing the VAT, turning the ruble into 
one of the world's resource currencies, modernizing transportation 
and energy infrastructure, creating an innovation society and 
implementing a social development program for the country. 
 
Modernization and the State 
--------------------------- 
 
¶3. (U) Medvedev criticized the insufficient investment levels in oil 
and gas production over the past decades, and called for a series of 
measures that would increase production, create state-of the art 
generating plants - nuclear, goal, electricity and gas-driven - and 
define the regulatory framework for investment.  He stated that the 
government had a role to play in co-financing major projects.  The 
state also should assume significant responsibility for improving 
 
the state of the roads, and for ensuring that everyone has access to 
modern, uninterrupted telecommunication and internet services. 
 
¶4. (U) Medvedev, however, cautioned about the state having too large 
a role in the economy.  He called for a greater transfer of assets 
to the private sector and urged that government officials not hold 
the majority of seats on the boards of state-owned companies.  He 
also subtly encouraged the SOEs to become more flexible. 
 
Russia - A financial center 
--------------------------- 
 
¶5. (U) The ruble should be seen as a world currency and used in 
reserves, according to Medvedev.  He called for measures to support 
Russian exports and investment abroad.  Russian raw materials should 
be priced in rubles, which would help turn the ruble into a world 
currency reserve.  Russia should become one of the world's largest 
banking sectors, with a stable currency and reformed tax system. 
Regarding the latter, he suggested that value-added tax rates should 
be lowered as well as taxes imposed on the sale of stocks on the 
Russian market. He supported the creation of tax incentives for 
companies in the extractive industries to increase production and 
adopt modern technologies. 
 
¶6. (U) Medvedev said the government would be ready to assist the 
banking sector, should global economic conditions start to take 
their toll, and would use the newly created Welfare Fund if 
necessary to provide the financial support. 
 
Closing the Gap 
--------------- 
 
¶7. (U) Recognizing that not everyone has benefited from Russia's 
recent economic growth, Medvedev called for pension reform.  He also 
advocated a lowering of taxes on private expenditures on education 
and health-care related services and pensions.  He pointed out the 
need to increase the affordability of housing, observed that only 20 
percent of the population can afford housing, and said the GOR's 
goal is not less than 35 percent by 2012. 
 
Combating Corruption, Increasing Freedom 
---------------------------------------- 
 
¶8. (U) Medvedev harshly criticized the level of corruption that 
permeates all aspects of life in Russia.  He urged for a 
comprehensive anti-corruption campaign, and pointed to an 
independent judicial system, free access to information and media as 
critical elements.  He also called for the strengthening of measures 
to protect private property.  Expounding on the need for judicial 
reform, he expressed support for the development of pre-trial and 
non-court conflict resolution mechanisms, the introduction of a 
compensation fund for losses from unlawful court decisions, and a 
'humanization' of the judicial system.  The grounding principle 
should be freedom, in all its aspects - personal freedom, economic 
freedom, and freedom of expression.  The grounding value should be 
the rule of law, he argued. 
 
Comment 
------- 
 
¶9. (SBU) Medvedev seems to be increasingly intent on demonstrating 
his liberal economic tendencies.  His goals are both technical in 
nature but significant in scope, and are designed to increase 
Russia's global competitiveness and to ensure that the benefits of 
economic growth trickle down.  End Comment.