Publication: Monitor Volume: 7 Issue: 224

President Vladimir Putin met yesterday in the Kremlin with representatives of the Association of Entrepreneurial Organizations of Russia (OPOR), which was formed this past September to represent the interests of small business. Putin indicated he shared the group’s concerns, noting that while in countries with developed market economies small- and medium-sized businesses accounted for, on average, two-thirds of the labor resources, they accounted for only 22 percent of the labor resources in Russia. “Since 1996, the number of small businesses has not increased, and one-quarter of them are in the stage of liquidation,” the president added. “These are rather alarming facts.” Putin noted that the State Council, which he heads, has worked up a state policy for the support and development of small business that will include measures to “de-bureaucratize” the small-business sector and to make both small and medium business more attractive. Putin also promised that taxes on small businesses would be simplified (Kommersant, December 6).

For his part, Andrei Nasonov, a member of OPOR’s presidium, told reporters that that the governmental and state agencies with regulatory functions are “extremely commercialized” today and essentially “get rich off of businessmen” by means of regulations requiring such things as product certification. This situation, he said, amounts to “legalized corruption.” OPOR representatives told Putin that they have “exhaustive information” about which agencies and departments engage in such activities (during their press conference they said it would be simpler to list those that do not engage in such activities), and Putin asked them to give him a list of those state and governmental agencies and departments guilty of creating administrative barriers to small business. “Judging by the emotional reaction of the president, he wants the list immediately,” Nasonov told reporters. “What will happen with these agencies is up to the president.” The OPOR representatives said the president viewed the issue of small business development as being of principal importance and that he linked the development of small- and medium-sized businesses with the development of democracy and civil society (Prime-Tass, December 5).

Putin’s promises are a follow-on to Kremlin-backed efforts to debureaucratize the Russian economy through such measures as reducing the number of activities requiring licensing (see the Monitor, July 16). The size of Russia’s state bureaucratic apparatus remains a major hindrance to the formation of small and medium businesses, which account for 30 percent of Russia’s total business activity–a figure much lower, for example, than in the countries of Western Europe, where small and medium businesses account for more than 90 percent of total business activity, or in Japan, where small and medium businesses make up 70 percent of the total (Siora.ru, September 11). Since becoming president at the start of last year, Putin has met on a number of occasions with the Russian Union of Industrialists and Entrepreneurs, which represents the country’s big businesses and “oligarchs.” Earlier this year he met with representatives of the newly formed Delovaya Rossiya association, which represents medium-sized businesses (Kommersant, December 6).