Russia Needs Fair Polls to Grow Economy, Cut Role of Energy, Kudrin Says

Russia needs “just and fair” elections to spur economic growth and cut dependence on energy, Finance Minister Alexei Kudrin said.

The country, scheduled to hold parliamentary elections in December and a presidential poll next year, needs to ensure a credible vote to establish “the mandate of trust necessary for economic reform,” Kudrin said in a speech to an economic forum late yesterday in the Siberian city of Krasnoyarsk, according to a transcript on the government’s website.

“If distrust is established, we will not be able to carry out our tasks fully,” said Kudrin, who also holds the rank of deputy prime minister. “All major political forces in society” need to be represented in the elections for the results to be trusted, he said.

The Organization for Security and Cooperation in Europe’s main election monitoring bodies refused to observe Russia’s 2008 presidential election, saying they would be restricted in their duties and there was not enough competition in the field of candidates. Russia is the world’s most corrupt major economy, ranking alongside Tajikistan and Kenya in this year’s Transparency International Corruption Perceptions Index.

Russia’s economy will probably grow by about 4 percent over the next few years, which is “not enough” for the world’s largest energy exporter and oil producer to compete on the global stage, Kudrin said, estimating that the rate needs to be as fast as 7 percent. Foreign direct investment into Russia slid by as much as $14 billion last year, he said, citing preliminary data. That would be the second straight annual decline, according to figures compiled by Bloomberg.

“Investors are in the mood to wait and see how Russia recovers in the wake of the crisis and we need to quickly create the necessary conditions and guarantees,” Kudrin said. “We need to substantially improve the investment climate.”

Industry Rebounds

Russian industry has rebounded to 97 percent to 99 percent of its output before the global financial crisis, which saw the economy contract by a record 7.8 percent in 2009, Kudrin said yesterday. Some sectors remain behind, with the metals industry 8 percent off its pre-crisis levels and construction down 5 percent from where it was in early 2008, he added. The economy, which grew 5.2 percent in 2008, will probably return to those levels this year, Kudrin said.

The Finance Minister said Russia needs to reduce its dependence on oil and gas, which makes up about a quarter of economic output. There is also risk of further “currency wars” if countries around the world don’t allow their currencies to trade freely, Kudrin said in the speech.

To contact the reporter on this story: Emma O’Brien in Moscow at eobrien6@bloomberg.net

To contact the editor responsible for this story: Dick Schumacher at dschumacher@bloomberg.net

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