Medvedev gives Putin deadline on corporations

Russian President Dmitry Medvedev ordered Prime Minister Vladimir Putin on Friday to produce a plan by March 1 for reorganizing the huge state corporations that Putin himself built up while in the Kremlin.

News of the order was published on the Kremlin website in a statement with the heading "Dmitry Medvedev has instructed Prime Minister Vladimir Putin to present proposals by March 1, 2010 for the reform of state corporations."

The order came a day after Medvedev used his annual address to the nation to announce that these state behemoths have "no future" and was an unusual display of assertiveness by the president over his powerful predecessor and mentor.

"The absence of controls on their activities in a number of cases has led to the inadequate use of state resources," the Kremlin statement said, referring to the industrial giants referred to in Russia as "state corporations."

Those groups that are not active in the competitive sector should have a "fixed time limit" for their operation, the president said.

He told Putin to come up with a plan no later than March 1 next year for changing the laws that govern these industrial giants in order to ensure their "transparency and total control by the state."

During Putin's 2000-2008 presidency, Russia created an array of massive state corporate "champions" with the aim of spurring growth in sectors such as car manufacturing, aviation, nanotechnology, nuclear energy and arms building.

Many economists however say the sprawling congolomerates are costly to the state and their opaque structure gives huge powers with little accountability to Putin allies like Sergei Chemezov, head of Russian Technologies.

Speaking later Friday to Sergei Naryshkin, his chief of staff, Medvedev said the proposals should take account of the hundreds of thousands of people employed by these firms, who must know "what will happen to them."

Last month, Medvedev slammed state corporations as "out of control" and in his address on Thursday said they should eventually be wound down or transformed into joint stock companies.

Medvedev's top economic aide, Arkady Dvorkovich, named three state corporations he said could be partially privatized as early as next year.

He identified the three firms as Russian Technologies, Russian Nanotechnologies and VEB, the giant state-run development bank.

"We have instructions to act rather decisively," he told reporters.