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Monday, 17 April, 2000, 16:32 GMT 17:32 UK
Putin's bid to encourage investors
Putin and Blair
Vladimir Putin has promised to improve investment climate in Russia
Russia's President-elect Vladimir Putin began his first official visit to the West with a plea for greater British investment.

Top executives of some of UK's largest corporations and banks came to the Confederation of British Industry headquarters in central London to hear about Mr Putin's strategy for economic reforms in Russia.


Putin
Mr Putin has sought to encourage further British investment in Russia
Mr Putin told them his primary goal was to integrate Russia into the world economy.

He said the new government intended to dismantle bureaucracy and bring in free market reforms, as well as cutting the tax burden on business.

"The British Government has said on many occasions that the Russian angle is very important for your economy. We have a similar perception and a similar determination to develop our cooperation," he said.



The significant root cause of Russia's problems in the past years has been political instability. We can say that this problem is being successfully overcome

Vladimir Putin
Mr Putin told the business leaders he understood Western concerns about Russia's ineffective tax system and widespread corruption. This he promised to improve, specifically by changing the tax code later this year.

He also said that he needed to restore order to Russia to push through further market reforms, undertake structural reforms and make the government more effective.


Brokers
Russian businesses are desperate for foreign investment
"The significant root cause of Russia's problems in the past years has been political instability. We can say that this problem is being successfully overcome," he said.

Vladimir Putin brought some of his top ministers to London, including Fuel and Energy minister, Viktor Kalyuzhny, and Trade minister, Mikhail Fradkov.

Each were expected to hold their own meetings in London.

Russian economy is improving

The Russian economy has proved surprisingly resilient last year.

The Paris-based Organisation for Economic Cooperation and Development estimates that the Russian economy grew 3% in 1999, after shrinking 5% in 1998.

Inflation slowed to 37% in 1999 after hitting 84% the previous year, the OECD estimated.

But on balance it says overall economic performance has been disappointing.



The future growth and prosperity of the Russian economy depends on the ability of the government to jump start the process of structural reform in this difficult context

OECD report
"The future growth and prosperity of the Russian economy depends, first and foremost, on the ability of the government to jump start the process of structural reform in this difficult context," the OECD said.

Russia still needs to sort out local government finances and devolve fiscal responsibility to the regions.

It still has to reform tax laws - in a bid to increase tax revenues - and force through bankruptcy of companies and in some cases regions.

Too many people rely on the black economy, with non-cash barter accounting for nearly 40% of industrial trade.

But nevertheless, Russia does collect 33% of GDP in tax revenues - as much as in the United States.

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See also:

16 Apr 00 | Europe
Putin flies into legal battle
16 Apr 00 | Europe
Putin seeks UK 'co-operation'
24 Nov 99 | Business
'New life' in Russian economy
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