Russia 110422 Basic Political Developments

Betting on Business

By Tai Adelaja Russia Profile 04/21/2011

Moscow Mayor Sergei Sobyanin gave a long-awaited backing to the development of small and medium-sized enterprises (SME) on Tuesday, in what experts say could prove to be the only effective tool in promoting economic growth and expanding employment in Russia’s largest metropolis. “City Hall is interested in further enhancing the role of small and medium-sized businesses,” Sobyanin told a government meeting on Tuesday. He said that small and medium-sized businesses currently employ about 2.5 million people in the city.

City Hall currently allocates about 2.3 billion rubles ($89 million) to support small and medium-sized businesses in the city, but Sobyanin said the money is hardly sufficient to expand the small business sector. He said City Hall would increase grants and subsidies to private entrepreneurs and double the refunds it pays for interest rates on loans. Municipal loan guarantees to small businesses could also go up by 80 percent, he said. City Hall estimates that such an increase will raise the total volume of loans given to SMEs from the current four billion rubles ($142 million) to seven billion rubles ($250 million), and could double the number of potential beneficiaries of such loans.

Some of the measures announced on Tuesday could have far-reaching benefits for the mayor, whose administration is struggling to shake off an anti-business image, experts say. Weeks after he was appointed mayor in October, Sobyanin toured the city's streets inspecting kiosks – the ubiquitous symbol of small enterprises in the capital. He said he was "appalled" by what he saw. Within days hundreds of kiosks were removed from the capital's streets, parks, and metro stations. Another of his first actions in office was to freeze the existing program for financing small and medium-sized businesses. He said the administration of the funds has been plagued with corruption and bureaucratic barriers. Sobyanin promised to hold a comprehensive audit of administrative barriers at all levels of society, in order to create "a modern investment climate." "The main problems faced by small and medium-sized businesses are bureaucratic barriers," he said. "The investment climate will change completely if they are eradicated."

President Dmitry Medvedev, who appointed Sobyanin as mayor in October, has consistently said that "support for small and medium-sized businesses is a priority task" that should be geared toward "the creation of the middle class in [the] country.” In March, Medvedev called for addressing unemployment by financing small businesses, promising to continue state subsidies for startups. The president proposed tax breaks estimated at 41 billion rubles ($1.45 billion) for the small business sector over the next two years. Small enterprises provide about 25 million to 30 million jobs nationwide, including more than 2.5 million in Moscow, according to the Russian Association of Small and Medium Enterprises.

The federal budget has allocated 20.8 billion rubles ($742 million) to support small businesses this year, 15 percent more than it allocated last year. About 4.8 billion rubles ($171 million) will be spent on capital projects such as the construction of business incubators, technology parks, industrial parks and purchasing equipment. But the lion share will be transferred to municipalities like Moscow as subsidies to small companies and the formation of the financial infrastructure to support small businesses. The money will also be used to subsidize the operating costs of a wide range of innovative companies, as well as support modernization and microfinance.

Sobyanin not only expressed support for such initiatives on Tuesday, but he also came up with a few initiatives of his own. He said City Hall is mulling ways to increase the size of office spaces that could be privatized by entrepreneurs in municipally-owned buildings. He said that the area of redeemable property has recently been increased from 100 square meters to 300 square meters, and that the city has also extended the lease of its office spaces to private businesses at a minimum rate of 1,800 rubles per square meter. The mayor promised to reduce the administrative burden for businesses and said he would give preferences to SMEs in the procurement of products for the city. In the first quarter of 2011, small and medium-sized businesses in the city received orders worth about 14 billion rubles ($500 million), he said.

However, the mayor still appears to be directing most of his energies to right the wrongs purportedly committed by his predecessor, former Mayor Yury Luzhkov. Sobyanin said on Tuesday that up to 75 percent of the funds allocated in 2010 to support small and medium-sized businesses in Moscow were misused. "Together with the Audit Chamber and other relevant departments, we have analyzed the effectiveness of spending in support [of small and medium-sized businesses] for last year and concluded that 75 percent of allocated funds were spent inefficiently,” Sobyanin told a government meeting on Tuesday. There is a need, he said, to change the way small and medium-sized businesses receive state support “so that the funds actually reach their destination.”

Alexei Komissarov, who heads City Hall’s department for the development of small and medium-sized businesses, confirmed that only 315 million rubles ($11.2 million) in state subsidies were distributed to roughly 453 businesses out of the 2.3 billion rubles ($82 million) allocated for the purpose last year. He said the previous administration was able to keep private businesses out of the scheme by deliberately concealing information about the program. In an apparent effort to change the status quo, Sobyanin ordered Komissarov’s department on Tuesday to prepare documents explaining the pr

Pope to contact ISS

http://english.ruvr.ru/2011/04/22/49290578.html

Apr 22, 2011 05:03 Moscow Time

On May 4th Pope Benedict XVI will contact the crew of the International Space Station.

The 84-year-old pontiff will communicate with astronauts on the occasion of the last mission of the space shuttle Endeavour which is scheduled to be launched on April 29.

On board the ISS will also be two Italian astronaut; Roberto Vittori and Paolo Nespoli, which is in and of itself a rarity. there has only been one such meeting.

The launch of Endeavour will be the penultimate in the history of the shuttle program, which should end on June 28th, when the Atlantis will fly to the ISS.

April 22, 2011 11:29

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