Russia would send a positive signal to investors with the release of former Yukos Oil Co. owner Mikhail Khodorkovsky as part of an amnesty for people convicted of economic crimes, said Boris Titov, appointed by President Vladimir Putin June 21 as the commissioner for business rights.
Titov will propose to Putin the release of 13,000 people jailed for economic crimes, including Khodorkovsky, who has been in jail since 2003 and has a sentence that ends in 2017, he said yesterday in an interview at the St. Petersburg International Economic Forum.
Putin, who was president when Khodorkovsky was charged with fraud and tax evasion, returned to the Kremlin last month after four years as prime minister with a pledge of pushing Russia to 50th from 120th in the World Bank’s Doing Business ranking by 2015. The jailed tycoon’s release would provide a signal to investors, Titov said.
“For the investment climate, this would be good news,” said Titov, who reports directly to Putin. “This should be just and the right decision.” Khodorkovsky “has been in prison too long. He did something, others also did, but nobody else is serving such a sentence.”
Prime Minister Dmitry Medvedev, who ended his four-year tenure as the country’s president last month, said in April that Russia may consider an amnesty for those convicted of economic crimes, an initiative that must first be discussed with lawmakers.
Authorities may also review sentencing guidelines, Medvedev said. The Kremlin’s human rights council called a year ago for an amnesty for economic crimes that would apply to Khodorkovsky. Medvedev has said that freeing him wouldn’t be “dangerous” for the country.
“The injustice that some guilty people will be released is much less of an injustice than when you have innocent people in prison,” Titov said. “Better release guilty people than keep innocent people in prison.”
If the amnesty happens, it will be the biggest in Russian history, he said.
Titov, whose office works on proposals to improve Russia’s investment climate with plans to overhaul the tax and criminal codes and to make it easier to register businesses, said he is ready to cooperate with the human rights council. He’s also prepared to review the case of Sergei Magnitsky, an anti- corruption lawyer who died in a Moscow jail.
Titov said he would lobby for lower corporate taxes on production, which he would compensate by raising levies on consumption, property, alcohol and tobacco.
“The business climate is one of the instruments to attract investment,” Titov said. “Without investments, the economy won’t grow.”
As he tackles the biggest protests of his 12-year rule, Putin must convince investors Russia won’t repeat a 2009 meltdown that erased almost 8 percent of gross domestic product. With investors fretting over the pace of state asset sales and a capital-markets overhaul, as well as Europe’s debt crisis, Bank of America (BAC:US) Corp. warns Russia’s economy may shrink in 2013 with a worst-case budget gap approaching 2009’s 5.9 percent of GDP.
“The current problems, when an entrepreneur faces the violation of his or her rights, bureaucratic pressure, corruption or administrative barriers, need to be resolved today -- all of those problems,” Putin said Jun 21 when he announced the appointment of Titov, the head of the Delovaya Rossiya business lobby group.
The rule of law is Russia’s “biggest problem,” according to Titov, who said his office must strive to protest businesses.
Financial markets signal sentiment toward Russia has soured. The ruble-denominated Micex index is down 3.8 percent in 2012, the worst performance among the BRICS group of the world’s biggest emerging markets that also includes Brazil, China, India and South Africa. The dollar-based RTS has declined 7.3 percent, while the MSCI Emerging Markets Index is little changed for the year.
The ruble has lost 3.3 percent this year against the dollar. Brent crude, the grade that underpins prices for Russia’s Urals export blend, has tumbled about 15 percent as Europe’s debt crisis worsened and the U.S. and Chinese economies slowed. Energy exports account for about half of budget revenue.
Russia-dedicated equity funds posted redemptions for a ninth week, registering a net outflow of $20 million in the week ended June 20, according to VTB Group, which cited EPFR Global data. Russia has endured $340 billion in net private capital outflows since 2007.
“We are in a very fragile situation,” Titov said. “The economy works as a crude-oil economy, as a resource economy, not as an industrial economy. It is a very big risk.”
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