Russia’s Medvedev tells govt to back small business

MOSCOW (Reuters) – Russian President Dmitry Medvedev told his new government on Wednesday to step up efforts to help small- and medium-size businesses choked by red tape and corruption.

Medvedev promised during his election campaign to free the sector from the arbitrary checks officials use to extort bribes, and said he would provide solid state support for he has called “a cradle of the middle class.”

Elected in March with the strong backing of his popular predecessor Vladimir Putin, Medvedev has said creating a strong middle class interested in political and economic stability Medvedev, is a top priority.

“You will receive a special order concerning the so-called ‘extrajudicial’ rights of police to check businesses,” Medvedev told a Kremlin meeting of top government officials summoned just two days after a cabinet headed by Putin was formed.

“This should be done in accordance with the general order banning arbitrary visits by law enforcement bodies to small businesses,” Medvedev added, according to Itar-Tass news agency.

The collapse of the Soviet Union launched Russia’s transition to a market economy, a process that accelerated under Putin, who presided over eight years of uninterrupted economic growth fuelled by high energy prices.

But critics say that in large part only big Russian firms, especially those with close ties to the Kremlin and well-protected against a swelling state bureaucracy, benefited from the boom.

Small and medium-sized companies, harassed by mafia in the 90s and bureaucrats this decade, have failed to flourish. They produce less than 20 percent of Russia’s gross domestic product, compared to Medvedev’s target of at least 50 percent.

Medvedev told officials, including First Deputy Prime Minister Igor Shuvalov, to offer small firms financial support, especially with rising energy costs.

“You will receive orders concerning…the procedure of giving access for small companies to power networks and minimizing their expenses when switching to these networks,” he said.

“We should consider subsidizing these expenses through (state) budgets at different levels,” he added.