MOSCOW (Thomson Financial) - President Vladimir Putin has warned that Russia's economy is highly inefficient and that a failure to diversify from oil and gas exports could threaten the country's existence.
'The main problem of the Russian economy is its extreme inefficiency,' Putin said in a speech to regional governors and parliamentary leaders in Moscow, referring to low labour productivity in Russia.
Putin urged far-reaching modernisation of the economy and said that Russia was overly reliant on the natural resources sector. 'We have only modernised the economy in a piecemeal way,' he said.
'This will lead to increased dependency on the import of goods and technologies and to a strengthening of our role as an energy annexe to the global economy,' he continues.
'Following this scenario, we will not be able to guarantee the security of the country or its normal development and we will threaten its very existence,' Putin said.
In his speech, which outlined his vision of Russia's development until 2020, Putin highlighted in particular the 'very tough' bureaucratic difficulties faced by small businesses in Russia.
'You can't start your own business for months. You have to go to every agency with a bribe: to the firemen, the health inspection, the gynaecologists. Who don't you have to go to? It's just terrible,' Putin said.
But Putin also praised the economic successes of his eight years in power, pointing to a more than twofold increase in salaries for public sector workers and in pensions, as well as a halving of the poverty rate. tf.TFN-Europe_newsdesk@thomson.com jlw/ejb COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.