Russian President Wants to Shake Up 'Humiliating' Soviet Style Economy

MOSCOW Nov. 12, 2009— -- Russian President Dmitry Medvedev addressed a joint session of parliament today in a lengthy state-of-the-nation speech that centered on his vision for the economic modernization he says Russia desperately needs.

He described the economy's Soviet-style reliance on the country's vast natural resources as "humiliating," and called for efforts to focus on high tech innovation in energy, medicine, telecommunication and space.

"We haven't managed to get rid of the primitive structure of our economy," he told parliamentarians and officials at the Kremlin. "It's a question of our survival in the modern world."

"The nation's prestige and welfare can't depend forever on the achievements of the past."

As he has done in the past, Medvedev railed against corruption as a principle obstacle to modernization. Time behind bars for corrupt officials is not a cure-all, he said, "but you must sling them into jail anyway."

Proving he meant business, he said over 500 government officials have been prosecuted and more than 700 in law enforcement were convicted of corruption in the first six months of this year.

Prime Minister Vladimir Putin's party swept regional elections in October. Opposition parties alleged they were fraudulent. Medvedev tried to assuage democratic concerns today with assurances that multi-party elections are at the heart of Russia's democracy.

He promised reforms at the local level, more transparency and doing away with rules such as requiring signatures for candidacy (one opposition candidate was told in October his own signature had been forged).

However, democracy can only go so far in today's Russia. "Attempts to rock the situation with democratic slogans, to destabilize the state and split society" will not be tolerated, he said.

Rocking the "tandem" relationship Medvedev has with Putin - generally acknowledged to be the more powerful of the pair - was also avoided. Though some of Medvedev's proposed reforms run contrary to Putin's policies while president, Medvedev never criticized his predecessor who sat in the front row, looking mildly bored.

Medvedev's Plan to Modernize Russia

"[Medvedev] has come up with a shrewd and political analysis of the state of affairs in Russia and made it clear the policies of the previous years were not right, were not good," says Masha Lipman, a political expert at the Carnegie Endowment for International Peace in Moscow.

"He cannot go farther and say "my predecessor did not do things right, I'm a different man and have different ideas."

"He didn't point to a single individual and say they did something wrong. It was always 'us.' We did something wrong. The implication was there, but he didn't say this," Lipman added.

Unlike Putin, who blamed the U.S. for the financial crisis that hit Russia particularly hard, Medvedev again blamed Russia's lack of economic diversification.

"We shouldn't be looking for the guilty party abroad," he said. "We haven't done enough."

Among the economic proposals put forward today that observers will point to as another sign Medvedev is trying to get out from behind Putin's shadow is his criticism of the giant state-run companies he says have "no future." Russia currently controls around 40 percent of the country's economy, largely thanks to Putin who encouraged government involvement and control through the large companies.

Instead, Medvedev said today he wants independent auditors to analyze the companies and either make them sell shares to the public or let them fail.

Noting that Russia covers 11 time zones, the president also suggested that number be reduced for "economic efficiency."

Medvedev's hour and 40 minute speech yielded little in the way of new ideas or detail. In what was billed as a preview to the speech, Medvedev wrote an editorial in the independent newspaper Novaya Gazeta in September titled" Go, Russia!" outlining his plans for modernization. He referenced the article several times throughout the speech, noting that it had gotten 16,000 comments on his website and blog that supposedly helped shape today's address.

Medvedev Says Russian Military Must Modernize

Medvedev insisted the military modernize as well, announcing that next year Russia will deploy 30 ballistic missiles and three nuclear submarines, among other arms.

Analysts criticize Medvedev for talking the talk but not walking the walk. October's elections were the latest indication that in his year and a half in office, his rhetoric has more often than not failed to turn into policy.

"The questions remain the same. Why can [these ideas] be implemented now if he couldn't before?" asks Lipman.

"The political system remains the same, virtually no accountability, virtually no governance. Without these things changing, it is hard to expect that the president's plans will be implemented," she says.

Knowing how difficult the road to modernization for Russia will be, Medvedev closed by invoking World War II, speaking reverently of those who fought in what is referred to here as"The Great Patriotic War."

"Our fathers and grandfathers won in that war. Today we must win! Go, Russia!"