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. Last Updated: 07/27/2016

EC Warns Russia on Reforms

OTTAWA -- The European Union on Saturday said that while Russia had made "remarkable progress" toward restoring economic stability, it needed to introduce much more sweeping and effective reforms.

Pedro Robles, the European commissioner for economic affairs, told a news conference that investors would stay away from Russia unless Moscow brought in transparent corporate legislation and a proper reform of the banking system.

Robles was speaking at the end of a meeting of finance ministers of the Group of Seven leading industrialized nations that held a separate discussion with Russian Finance Minister Alexei Kudrin.

Robles's gloomy comments contrasted with the final G7 communique, which welcomed Russia's strong growth and what it said were significant structural reforms.

The European Union, which has a more jaundiced eye where Russia is concerned, is pressing Moscow to do more to open up its markets to foreign competition.

"We consider that Russia has made remarkable progress towards restoring macroeconomic stability and equilibrium. It is true that in spite of this fact, substantial economic problems remain," Robles told a news conference.

"The economy is slowing down in spite of the good situation and investments -- and this is one of the problems we have underlined -- are losing dynamism."

A senior EU team held talks in Moscow last week on services, industrial tariffs, nontariff barriers and the level of allowable subsidies to agriculture.

Russia has slapped restrictions on foreign companies getting into the banking and finance markets by putting limits on ownership by foreigners.

"Declining business profitability is expected in 2002 and is also a bad sign for the near future. [This is why] we insisted in our debate with the Russian authorities on the necessity to go further as concerns structural reforms which could improve the economic environment," said Robles. "We consider that corporate legislation is not sufficiently transparent and the business environment is uncertain and risky."

These are the kinds of issues that Russia will have to resolve before it becomes a member of the World Trade Organization, an accession Moscow hopes to achieve in 2003.

Robles, saying no one wanted Russia's accession to be ill-prepared, also criticized Moscow's efforts to reform the banking system.