Leading Russian presidential contender Sergei Ivanov says his country can become a leading high-tech and industrial power by 2020.  But as VOA's Moscow correspondent Peter Fedynsky reports, corruption and bureaucracy could stifle hopes for Russia's economic development. 

Russian First Deputy Prime Ministers and two potential candidates to succeed President Vladimir Putin, Sergei Ivanov (R) and Dmitry Medvedev, 9 June 2007

"We no longer have our own maritime fleet," he said.  "Only one-third of the ships sailing under the Russian flag were built in Russia.  And the absence of effective controls over cargo shipments is costing the state billions each year."

On Saturday, Ivanov told a major international economic forum in Saint Petersburg that the Russian government will foster innovative breakthroughs by creating large state holding companies.  The Russian official says these companies will buy out private businesses at market prices and will not engage in any form of protectionism. 

But Natalia Volchkova, senior economist at Moscow's New Economic School, fears state involvement will also foster corruption.

She says corruption and wasteful spending will start the moment the government buys a private business.  The government, she says, is the least effective part of any economy, adding that a free market should be a market, not a government.

Volchkova says that foreign investors could be skeptical about doing business with state- run companies.

She says investors, both foreign and domestic could fear not only the unexpected loss of a license, but also the threat of such loss, and will not go for any deals with the government.

In a sign of what some analysts consider better U.S.-Russian business relations, America' Boeing Aircraft Corporation on Saturday signed a $3 billion deal to deliver 22 airliners to Russia's Aeroflot airline.  Aeroflot, the former Soviet state airline, is now a private corporation.  It remains to be seen to what extent investors will help support Sergei Ivanov's vision of a high-tech Russia under increased state control.  In recent years Russia dismantled its centralized Soviet economy.  Ivanov's proposal suggests a step toward recentralization.

"The time has come to fundamentally change the situation," he said.

Ivanov spoke in this instance about shipbuilding, but if his vision of a high-tech Russia is to be fulfilled within 13 years, change will likely be needed in other major sectors of the economy.  Investors, and perhaps voters in next year's presidential election will likely have a say in whether greater state involvement in the Russian economy represents needed change.