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Kremlin warns shoddy imports threaten economy

Published 05/25/2010, 06:45 AM
Updated 05/25/2010, 06:48 AM

* Medvedev's top aide warns of risks to economic security

* Kremlin boss says developed countries holding Russia back

* Says Russia may become too dependent on foreign technology

By Gleb Bryanski

MOSCOW, May 25 (Reuters) - Russia must become more self-sufficient in high technology equipment and avoid relying on shoddy, ageing imports, President Dmitry Medvedev's chief of staff said in an article published on Monday.

Sergei Naryshkin, the highest ranking Kremlin official after the president, warned that Russia needed to take immediate steps to ensure its economic security.

Developed countries were using export finance to make Russian companies buy ageing machinery, often decades old, hindering Russia's development, he wrote in the Voprosy Ekonomiki academic journal.

"Russia is thus helping developed countries to replace outdated machinery and modernise while it frequently remains on the sidelines of global innovation processes, losing national competitiveness," he said.

Naryshkin did not mention any specific companies or countries, but the comments from such a senior Kremlin official indicate that Russia could try to increase regulation of technology and machinery imports.

Russia has used trade barriers and incentives to force major foreign car makers to open assembly lines in Russia.

"In the foreseeable future, the main threat to Russia's economic security is the loss of self-sufficiency in the innovational development of production facilities," Naryshkin wrote.

"The country may become increasingly -- and later irreversibly -- dependent on foreign innovation ideas, including technologies, types of products and management," he added.

While Russia's economy boomed from 1999 to 2008, companies snapped up machinery in Europe, the United States and Asia to replace decrepit Soviet-era plants.

Even as the economy slumped during the crisis, telecoms giants Vimpelcom and MTS used export finance to buy equipment from foreign producers such as Sweden's Ericsson and Nokia Siemens Networks.

President Medvedev says the severity of the crisis -- which inflicted Russia's worst annual economic decline since 1994 -- has shown the need to reduce reliance on oil, gas and metals by developing the high-technology and processing sectors.

Naryshkin said Russia should influence investment flows, encouraging investment in higher added value sectors, with foreign investment contributing to "demand for national innovation products".

He also said Russia should create a system of "investment security management" which would help identify the potential consequences of investment activity, saying that developed countries already have such a system in place.

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