WASHINGTON, D.C., April 30 -- "The Russian Federation joined the International Finance Corporation (IFC) just over two weeks ago on April 12th. This is a very positive development indeed. Nevertheless, the transformation of a command economy into a market economy in Russia will be a long process. The challenges of transforming the Russian economy are formidable. The governments of Central Europe have made a solid start beginning with liberalization and macro-economic reform. But structural changes, the modernization of industry, take longer; and in Russia, a much larger country which has lived under Communism for much longer, it will take many years. When we started working with the Russian government, alongside the World Bank and the EBRD in late 1991, we decided that IFC was best placed to work at the grass-roots level with reform-minded politicians in the regions to create and implement privatizations which could serve as models to be replicated throughout Russia. With the help of funding from USAID and ot
her donors, we provided technical assistance initially in the town of Nizhny Novgorod and launched the first small-scale privatizations in Russia. This became a model for other cities and regions in Russia. Building on the success of small-scale privatization, we moved next to free up the monopolistic distribution channels in Russia establishing a model for the privatization of the trucking industry. From there we moved to the privatization of medium and large enterprises through voucher auctions.
We continue to assist the privatization process in Russia. We have 40 IFC staff and consultants there. Our efforts have helped launch thousands of new private enterprises. These figures tell only a small part of the story. The most significant result of IFC's privatization efforts is the opportunity created for brave individuals who have bought a shop or a truck or shares in a factory. These entrepreneurs are the future of Russia's market economy and it is through their energy, creativity and tenacity that economic transformation will be achieved. With Russian membership, the IFC now can move aggressively to find financing opportunities with joint venture partners to invest directly in Russia. I believe that in the medium to long term, the potential for foreign investment in Russia is very large. The country has major resources in oil and gas. It also has a highly-educated population. However, the country's success in attracting foreign capital absolutely will depend very much on the stabilization of the poli
tical and economic environment. Foreign investors will be reluctant to invest in Russia until inflation is under control." (30)
