Page 19 - bne IntelliNews Russia Country report May 2017

The rhetoric above, however, highlights the emerging diversity of opinions over the rationale behind maintaining the economic sanctions imposed in summer 2014.
On Thursday 4 May, Russia, Turkey and Iran announced the signing of a memorandum on the creation of ‘de-escalation zones’ at the fourth round of the Astana talks on Syria. Alexander Lavrentiev, the Russian President’s envoy to Syria, said that Russia was ready to send its observers to help enforce the safe zones. Neither the Syrian government, nor the representatives of the armed opposition, both of which participated in the Astana talks, put their signatures to the document. The US State Department published a press release welcoming the efforts of Turkey and the Russian Federation, expressing concerns over the involvement of Iran “as a so called guarantor” and explicitly emphasising that the US had not participated directly in the talks and “was not, at this point, a party to the agreement.” Iran’s involvement is also the main source of reservations for the Syrian armed opposition. The UN Special Envoy for Syria, Staffan de Mistura, who also attended the Astana talks, described the agreement as a step in the right direction.
Former Finance Minister Alexei Kudrin will unveil a new “Strategy for Modernizing the Economy and Social Institutions” in a meeting with President Putin in May. The plan’s stated aim — GDP growth rate of 3.5% or higher — has been shaped by Putin himself. To jumpstart the economy, Russia will need to increase labor efficiency, Kudrin told the TASS news agency. For this reason, he suggests significantly upping public spending on education and healthcare — by 0.8 and 0.7 percent of GDP, respectively. Over the course of the next presidential term, 150 key Russian universities will be upgraded and equipped with the latest scientific technology. Life expectancy should grow from 71.5 to 76 years. And 0.8 percent of GDP should be spent on building high-speed roadways and improving transportation. Other than this, details remain sparse. Kudrin suggests diverting some oil revenues to spending. He also suggests increasing the public deficit from 1 percent to 1.5 percent. A decrease in spending on defense and the state apparatus will provide additional funding. The final plan will likely ignore these systemic problems. “The crucial element lacking in Kudrin’s calculations is why the economy started losing growth in 2012 and 2013,” Rogov says. Even before the collapse of oil prices in 2014, Russia’s economy showed zero growth. “We don’t have an answer to this question and we’re not seeing debate about it,” Rogov says. “Without that, it’s difficult to assess the feasibility of Kudrin’s initiatives.”
Foreign businesses operating in Russia lack guarantees from the state
that the terms of investment will remain unchanged, the country's business ombudsman Boris Titov said in an annual report to President Vladimir Putin that was published on May 23. "A foreign investor has no guarantees that terms and conditions of investing in Russia will remain unchanged," Titov wrote. "There is a risk that the state may revoke previously introduced measures intended to stimulate investment." According to Titov, foreign investors are unable to evaluate the risks and potential expenditures if case regulations are amended, which "seriously decreases Russia's investment potential and prevents due observance of requirements, established by the state". The report also points out "limiting investors’ intellectual property rights by introducing mandatory licensing of intellectual rights or by amending the concept of exhaustion of intellectual property rights through introducing parallel
19 RUSSIA Country Report May 2017 www.intellinews.com