Adding further gloom to this unfavorable picture is the fact that nearly half of the foreign investments in Russia during the first quarter of 1994 were in oil and gas. This kind of investment, which is oriented toward extraction and exportation, is not the type Russia needs most to improve its production system. In our 1993 interviews with political and business leaders, we frequently heard the complaint that the Gaidar team had been largely inattentive to the acute needs of business people. Several governmental organizations were by this time devoted to entrepreneurship at the federal level. But rather than advancing overall entrepreneurial activity, these different bureaucracies seemed to be working at cross-purposes.
Tax rates are only one of the problems.
Repeated changes in tax regulations and in export-import tariffs and duties, and burdensome licensing requirements and regulatory provisions, have thrown up a formidable wall against new business starts. An additional problem faced by entrepreneurs is the virtual impossibility, in Yeltsin's Russia, for entrepreneurs to secure long-term loans at interest rates that are manageable. This situation, which applied effective brakes to entrepreneurship, was clearly part of Gaidar's reform agenda. In 1993, Western governments and international financial institutions, if not prominent Western advisers, began to insist more urgently that Russian leaders intensify their attention to entrepreneurship. This stepped-up emphasis on private business came at the time that Yeltsin was trying to generate support for the upcoming April 1993 referendum.