Eric Watkins
Oil Diplomacy Editor
The oil and gas industry will be pleased to hear that Russia must reduce its reliance on high oil prices and must press on with modernization of its economy in the next few years.
"We must not count all the time on high oil prices or on their constant growth," Russia's President Dmitry Medvedev told the St. Petersburg International Economic Forum.
"Yes, modernization is difficult. But we don't have the right to wait," Medvedev said, adding that this is a must, along with the need for Russia to tackle corruption and have effective governance.
That's good, but Medvedev was scooped the day before by Mikhail Khodorkovsky, the former head of OAO Yukos who has languished in Russian jails since 2003.
Indeed, speaking from jail a day ahead of Medvedev, Khodorkovsky said his case should remind global business leaders gathering for the St. Petersburg forum that no one is safe from extortion.
Graft threatens…
Khodorkovsky even did his sums, saying that graft threatens the international investment Medvedev seeks by as much as 10%. He also noted that Russia's failure to stop corruption and diversify the economy means it needs $200/bbl oil to match the economic growth of China and India.
"Economic reforms require 100% guarantees for private property and an effective, lawful state," Khodorkovsky said in written answers to questions by
Bloomberg News relayed through his lawyers.
"Under the current political and economic model, to get a 10% growth rate for the Russian economy the oil price would have to remain solidly above $200/bbl," said the Russian magnate.
He was referring to comments by Medvedev who said in a January interview at the World Economic Forum in Davos, Switzerland, that Russia sought to boost growth to 8-10% within 5 years.
Cosmetic changes
"So far [Medvedev] says the right words, but many changes he's initiated in important spheres of public life are peripheral and cosmetic," Khodorkovsky said, adding that Medvedev and Putin "have a common goal: to stabilize the existing political and economic system in Russia, not destroy it."
"The exit strategy is the key investment risk in Russia," Khodorkovsky said. "As long as your business isn't profitable it won't be taken away, but later various things can happen, even if you are prepared to pay bribes."
Underlining his point, Khodorkovsky said, "It would be naive to think that the corrupt bureaucracy will not use these opportunities for extortion."
According to Berlin-based Transparency International's 2010 Corruption Perceptions Index released last October, Russia is the world's most corrupt major economy, ranked 154th among 178 countries.
Khodorkovsky, recently denied parole yet again, was transferred to a new prison on June 10.
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