Poverty and corruption threaten Russia: Medvedev

By Janet McBride and Michael Stott

MOSCOW (Reuters) - Poverty and corruption are the biggest internal threats to Russia's security, President Dmitry Medvedev told Reuters, promising a major push to fight the twin scourges.

Foreign policy would not be swayed by criticism from abroad, the new Russian leader said, but guided by the national interest in line with "freedom, democracy and the right to private property".

In his first interview with Western media since taking power on May 7, Medvedev rated unstable financial markets, terrorism and international crime as universal dangers to be tackled through coordinated action at a European and G8 level.

European Union chiefs arrive in Siberia on Thursday for an EU-Russia summit to open talks on a new partnership agreement between the bloc and its main energy supplier, Russia. The G8 leaders, including Medvedev, meet in Japan next month.

"Threats to Russia's economy are linked to international financial instability, the food crisis and related issues. Other factors are terrorism and international crime," Medvedev said in the interview, conducted at the Kremlin earlier this week.

"We also have specific Russian problems. First of all poverty, which we have not yet defeated. Resolving this problem is the main task for the government. We are going to work hard at this, using all of our economic might."

"The second problem is corruption. Corruption as a systemic challenge, as a threat to national security, as a problem which leads to a lack of faith among citizens in the ability of government to bring order and protect them."

Russia is the world's second biggest oil exporter. Record prices close to $140 a barrel have boosted revenues and the country's two oil windfall funds hold a combined $162 billion.

But rising inflation and widespread poverty mean a huge gap in living standards between spendthrift professionals in major cities and struggling pensioners in far-flung villages.

Endemic corruption -- a senior prosecutor estimated earlier this month that corrupt officials are pocketing $120 billion a year -- is reluctantly accepted as a part of life that has defeated past attempts to rein it in. Moscow's traffic police are feared and loathed in equal measure.

"We need to strengthen the judicial and legal systems and that's something we have already begun," said Medvedev, a former corporate lawyer and the first Russian leader in generations to have worked in the private sector.

The government must put in place institutions and regulations to block corruption and it must educate officials to be guided by the law and not by corrupt instincts, he said.

"This is the most difficult, but it's among measures we are undertaking."

CHANGE OF STYLE

Medvedev is only seven weeks into his presidency of the world's biggest country. A longtime ally of the former President Vladimir Putin, the new leader has repeatedly said he stands for continuity in policy.