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. Last Updated: 07/27/2016

Putin Plays Down the State's Role

Russia is not going to build state capitalism with giant, government-controlled corporations holding sway over the economy, President Vladimir Putin told business leaders Tuesday.

"State corporations should not monopolize Russia," Putin said after his ally and anointed successor, Dmitry Medvedev, proposed that Putin become prime minister after a presidential election in March.

Taken together with comments by Medvedev, Putin's remarks suggested that the country's future leadership would continue to modernize the economy while seeking to ensure that fast economic growth does not exacerbate social strains.

Putin told the Russian Chamber of Commerce and Industry that the government had created state corporations such as the Development Bank and the Housing Reform Fund in areas where private business was reluctant to invest.

This year, the government handed billion of dollars to state corporations created in areas ranging from construction work ahead of the 2014 Olympic Games in the Black Sea resort of Sochi to aviation and shipbuilding.

Putin did not mention state-controlled energy companies such as Gazprom or Rosneft, which dominate the country's natural resources sector and have been aggressively seeking new acquisitions.

"We are not planning to keep state corporations in their present form. After these corporations stand on their own two feet, then I think it will be right for them to work in market conditions," Putin said. "We need to make sure they don't strangle other businesses."

He said the country would stick to its policy of stashing oil and gas windfalls for a rainy day in its $144 billion stabilization fund but that it would use some of the cash for pensions and innovative projects. He did not elaborate.

"We cannot allow the population to be robbed as a result of oil-price fluctuations," Putin said. He confirmed plans to split the stabilization fund into two subfunds next year.

Reuters, Bloomberg