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. Last Updated: 07/27/2016

Medvedev Scolds Cabinet for Energy Dependence

GORKI, Moscow Region — President Dmitry Medvedev harshly criticized senior ministers Friday for failing to diversify the country's economy away from oil and gas production.

Medvedev said Russian companies spend "shockingly low" amount on modernizing their aging production facilities, adding that productivity of labor at Russian plants is just a quarter of that in the United States.

"There is barely any progress on the issue which is supposed to be one of our priorities," Medvedev told senior ministers and bankers, referring to the modernization of the economy. "No substantial changes in the
technological level of our economy are happening."

The global financial crisis has hit the country particularly hard as the economy is heavily dependent on energy resources and other commodities — markets that have plummeted in the past six months.

Liberal-leaning ministers, such as First Deputy Prime Minister Igor Shuvalov, said the crisis gives Russia a chance to turn around its economy. Low commodity prices must teach Russia that it has to modernize to a "new model of economy," he said in a recent interview.

At a meeting with Shuvalov, Economic Development Minister Elvira Nabiullina and heads of state-controlled banks, Medvedev admitted that such widely publicized initiatives as IT parks and special economic zones "exist only on paper."

Medvedev said that Russian business expects a quick yield and remains reluctant to invest in modernization. He described Russian companies' investment in innovation — 6 percent of their total spending — as "shockingly low."

"We spend very little on that and will get nowhere if we continue like that," Medvedev said, adding that he will personally take charge of the issue.

Other officials at the meeting included Vladislav Surkov, the Kremlin's first deputy chief of staff, German Gref, the head of Sberbank, and Vladimir Dmitriyev, the head of the VEB, Russia's state development bank.

Medvedev's comments were the latest in a series of statements in which he criticized the Cabinet led by Prime Minister Vladimir Putin for low efficiency and failure to fulfill its objectives.

Medvedev never criticized his predecessor Putin by name, but some observers saw the statements as a sign of emerging rift between the two men amid the nation's financial crisis. (AP, Reuters)