Putin's task

It is hard to fault Vladimir Putin for his analysis of Russia's daunting problems in his state of the nation address on Tuesday. The Russian president pulled few punches in spelling out the need for further drastic measures to clarify and simplify the legal system, reduce the arbitrary interference of the state, and guarantee property rights, to underpin economic recovery. He was much less clear on how and when it could be done.

In attempting to transform the Russian state from the corrupt and ossified world of public ownership to a law-based market economy, Mr. Putin has to perform an extraordinary balancing act. He has to revitalize the system of government, with a clear division of power between Moscow and the far-flung regions, while reducing its interference in citizens' lives. He paid a great deal of attention to the former but rather less than he should to the latter.

He rules out any attempt at redistributing ownership of former state assets, and thus directly challenging the power of the financial oligarchs and state managers who seized control of the most profitable parts of the economy in the chaotic first phase of privatization. Instead, he will seek to tax their ill-gotten gains, and enforce laws to make their accounting transparent.

This is an admission of weakness, not strength. If he fails to curb their commercial dominance, as well as the arbitrary authority of the state, Mr. Putin will be unable to liberalize the entrepreneurship urgently needed to revive the Russian economy. The country needs the rule of law but it also needs free spirits to produce prosperity.

-- The Financial Times, London