- The Washington Times - Thursday, April 5, 2001

Russia's growth this year will slow compared with the sizzling 7.7 percent pace of 2000, but the government is committed to further market-oriented reforms, the country's leading economic official said yesterday.
German O. Gref, Russia's minister for economic development and trade and architect of President Vladimir Putin's reform program, pleaded for U.S. understanding and support in two speeches and a meeting with reporters during his first trip here to meet with senior officials of the new Bush administration.
"We had a good relationship with the Democratic administration, but realistically, very little was done," Mr. Gref said at a Tuesday evening dinner hosted by the U.S.-Russia Business Council.
"It might be better if we embraced less frequently in public but accomplished some real work," he said.
The Russian minister met with Energy Secretary Spencer Abraham, Commerce Secretary Donald L. Evans, and senior State and Treasury Department officials before returning home yesterday.
Mr. Gref said that tax, tariff and administrative reforms pushed through by Mr. Putin last year had already produced results.
Russia saw a 70 percent surge in revenues after a flat 13 percent income tax was instituted at the beginning of the year while thousands of regional statutes that conflicted with federal laws were removed from the books.
Noting that President Bush is trying to push his own tax-cutting program, Mr. Gref joked: "We think perhaps we can become a shining example for you."
Many private analysts say Russia's recent economic surge is the product of higher world oil and gas prices Russia is a major exporter of both and a one-time boost in exports from the sharp devaluation of the ruble following the 1998 financial crisis.
But Mr. Gref argued in a speech to the annual conference of the Export-Import Bank yesterday that growth in Russia's energy sector actually lagged behind the overall economy in 2000, while light industry and machinery led the way.
He said the government now expects to see growth this year of about 4 percent, and slightly lower growth rates in the next couple of years as the economy absorbs a new round of investment.
As the investment improves production and the efficiency of domestic producers, Mr. Gref said, the government projects growth rates to increase to about 5 percent a year by 2010.
Ex-Im Bank Chairman James A. Harmon yesterday said he was "bullish on Russia," but the administration's budget calls for a 25 percent cut in the agency's funding for fiscal 2002. U.S. business investors at the business council dinner Tuesday said the cuts could have a major impact on American investment in Russia, where financing and risk management are major hurdles.
Rep. Jim Kolbe, the Arizona Republican who chairs the House Appropriations subcommittee that funds the Ex-Im Bank, indicated yesterday he thought the proposed cuts were too deep.
"At a time when we are seeking to help developed countries around the world, this is not the time to be cutting back on Ex-Im Bank funding," Mr. Kolbe said.
Mr. Putin has outlined a broad new round of reforms for this year, including revamping the defense sector, reducing corruption, land privatization, overhauling health and other social program, and legal and corporate governance reform.
Mr. Gref said the Russian president and his economic team are determined to stay the course.
"I don't think anything can stop President Putin from continuing along this line," he said.


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