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Russia Report: February 21, 2003


21 February 2003, Volume 3, Number 8
KREMLIN/WHITE HOUSE
PUTIN TRIES INCREMENTAL RATHER THAN RADICAL REFORM IN THE COUNTRYSIDE
By Gregory Feifer

Russia is embarking on a series of unprecedented reforms that will allow privatization of agricultural land and possibly provide one of the most significant legacies of Russian President Vladimir Putin's administration. Enacted last month, the country's new Land Code opens the doors for an incremental restructuring of ownership of rural land as regional courts and legislatures hammer out a new set of rules for such ownership.

The sale of farmland is allowed under the country's 1993 constitution, but Communist and other leftist lawmakers successfully postponed the creation of a legal mechanism for a decade. In 2001, Putin created waves by allowing the privatization of commercial and residential land but put off addressing agricultural land until last year. The new Land Code took effect in January after being passed by the Duma last June. It stipulates that agricultural land must be sold or leased "at market prices" or at values set by auctions. It may only be used for farming and can be confiscated if neglected or used for other purposes. According to the law, first right of purchase for land sold by individuals belongs to regional or municipal governments. The state can also buy into commonly held land.

Russia has around 221 million hectares of farmland, which is almost one-quarter of the country's land mass. Agriculture Minister Aleksei Gordeev has estimated that the country's farmland is worth between $80 trillion and $100 trillion, about one-third of Russia's estimated net worth. Most of that land is now controlled by Soviet-era collective farms, which for the most part are inefficient, debt-laden behemoths struggling to survive. Many have reportedly been plundered by their managers, who are often holdovers from the communist era with reputations for running their farms with iron fists. Collective-farm managers generally oppose land reform and have tried to keep their enterprises intact.

Such officials have backed a powerful antireform lobby that includes regional authorities who stand to lose de facto control over the land. The Communist Party has also protested privatization bitterly, saying criminal groups and foreigners will snap up agricultural land and squeeze out the country's farmers. But supporters of reform say the failure to privatize farmland in the 1990s put the brakes on development in the sector and fostered massive corruption.

In theory, 137 million hectares have already been privatized in accord with the provisions of the 1993 constitution and additional presidential decrees on farmland privatization. Around 12 million Russians are said to own land; many of them are collective farmers who have been allocated small plots.

But so far, few landowners understand their legal rights. In many cases, regional and local officials have been able to keep land in the hands of collective-farm managers and other cronies.

Vladimir Kuchin lives in the Serpukhovskii Raion about 100 kilometers south of Moscow. He said that regional authorities and managers at the Zaoksk Collective Farm, where he worked as an economist, have cheated him out of his land. Kuchin currently works for the private farm Vesna, which grows cabbage and other vegetables on Zaoksk-owned farmland, which it leases.

Vesna is unusual in that it is waging a legal battle to take over the land it farms. Kuchin accuses Zaoksk's director of cheating former employees. "According to presidential decree, the land belongs to us, but [the director] wrote a letter to the head of the region and went to Moscow," Kuchin said. "[The] Serpukhovskii [regional authorities] are more cunning in the registration chamber [than we are]. [The director] registered the land in Moscow, and he was given the rights, illegally, we believe. That's why we're suing in court." The Zaoksk management, for its part, says dividing the land would make it unattractive to potential investors, such as oil major LUKoil, which is said to be interested in buying the land. Like most Soviet-era collective farms, Zaoksk needs massive investment to replace rusting machinery and rebuild its decayed infrastructure.

The new Land Code could help lay the groundwork for real change in the countryside, according to Nikolai Dyazhur, who heads an organization that defends the claims of 2,000 would-be small landholders in the Serpukhovskii Raion. But first the landholders "will have to establish [their] rights in court," he said. According to Dyazhur, the Land Code is "very dense" but is at the same time "incomplete." It has contradictory regulations and will have to be amended. He said the law will have to be clear and enforceable for Russian agriculture to be able to generate profits.

In addition to the prospect of looming ownership battles, another major obstacle to development that landowners face is lack of investment. "The most frightening problem is that not one investor will come. Not one investor will put money into farmland -- although it is a very attractive option, and such investors exist -- because the process is unregulated and massive legal violations take place, including ownership rights of small land parcels," Dyazhur said.

One of the major points of the new law is that foreigners are not allowed to buy farmland, a concession to local officials and populist parties like the Communists and the Agrarians. Foreigners are, however, allowed to hold 49-year land leases, and some politicians have hinted that the ban on sales of arable land to foreigners may be revised in years to come.

Another complicating factor for investors and landowners is that the law leaves the details of the privatization process -- including timing and sale procedures -- up to the country's regions. Duma Deputy Viktor Pokhmelkin, co-chairman of the Liberal Russia party, said the Land Code in its current form allows room for meddling by officials and could encourage corruption, in part because it sets out the rights of the authorities more clearly than those of landowners.

However, Agriculture Minister Gordeev told reporters last month that the federal government will monitor local developments and "influence" regions, including encouraging them to adopt reforms. "The work is not simple," Gordeev said. "It's moving forward. A number of regions have already passed such legislative bills. I think it's important that we have created a unified legal space within the country. As of today, we have strengthened the rights and responsibilities of all property owners, users, and managers of land plots."

Despite the Land Code's flaws, Pokhmelkin considers its adoption a genuine step forward. "Before its passage, everything was basically regulated by presidential decrees and old Soviet-era land legislation. That's why there were huge gaps and loopholes for bureaucrats to abuse power," he said. But it is only a first step and other major changes, like the development of an independent legal system, are needed. The authorities' behavior, Pokhmelkin concluded, still makes investment in Russian agriculture a risky business.

Gregory Feifer is an RFE/RL correspondent based in Moscow.

PAN-REGIONAL ISSUES
COMMUNISTS PROTEST ACROSS RUSSIA...
Demonstrations against a possible U.S.-led military action in Iraq were held across Russia on 15 February as part of a coordinated global public action, NTV reported (see "RFE/RL Newsline," 14 February 2003). About 1,000 people gathered in front of the U.S. Embassy in Moscow, and some 5,000 people reportedly gathered in the southern city of Krasnodar. An estimated 1,000 people attended a rally organized by the Communist Party in Voronezh's central square, presscenter.ru reported. An effigy of U.S. President George W. Bush with a swastika on his sleeve was burned next to a statue of Vladimir Lenin. Pskov and Yekaterinburg hosted rallies of about 100 people each at which effigies of Bush were also immolated, regions.ru reported on 15 February. In Krasnoyarsk, heavy snow prevented demonstrators from setting the U.S. flag on fire, but each of the orators at the protest wiped his feet on the flag, according to NTV. At the end of the rally, which was attended by about 100 people, the flag was torn up. Rallies were also held in St. Petersburg and other Russian cities. Communists in Bryansk Oblast were also planning a demonstration, and Bryansk Communist Party official Viktor Gubenko explained his party's thinking to "Nash Bryansk." "Take the situation in [North] Korea. The American president is afraid they have nuclear weapons.... But why doesn't Israel have to show what it has and doesn't have? Everything that is going on now is simply preparation. First Iraq, then Korea, and then Russia," Gubenko said, according to regions.ru on 5 February. JAC

...AS VOLUNTEERS TO DEFEND IRAQ STEP FORWARD.
Some 2,500 Russian citizens have told the Iraqi Embassy in Moscow that they are interested in volunteering to defend Iraq against a possible U.S. military action, Ekho Moskvy reported on 13 February. In Chally, Rafis Kashapov, head of the local Tatar Public Center office, said that several dozen Chally residents have appealed to his group to help them fight in Iraq. However, Kashapov informed them that his group does not involve itself in military-recruitment efforts, "Trud" reported on 13 February. Kashapov told RFE/RL's Tatar-Bashkir Service that the would-be recruits belong to many ethnic groups, including Russians, Chavash, Tatars, Maris, and Udmurts. In Sverdlovsk Oblast, at least 10 residents between the ages of 30 and 40 have also expressed their desire to assist Iraq, regions.ru reported, citing the local branch of the Liberal Democratic Party of Russia. The volunteers include not only Muslims but also ethnic Russians "who are ready to fight against American commands and force," according to the agency. JAC

...AND CHIEF MUFTI SPEAKS OUT AGAINST MILITARY ACTION AGAINST IRAQ.
On 11 February, the head of the Ufa-based Central Religious Board of Muslims of Russia and the European Countries of the CIS, Supreme Mufti Telget Tajetdin, said during his morning sermon that he opposes the use of force to resolve the crisis in Iraq, RFE/RL's Ufa correspondent reported the next day. JAC

PUTIN URGES LEGISLATORS TO MAKE POLITICAL SYSTEM 'MORE STABLE AND PREDICTABLE.'
President Vladimir Putin on 18 February attended a meeting of the newly established Council of Legislators, a group composed of the heads of regional legislatures (see "RFE/RL Newsline," 15 May 2002), Russian news agencies reported. According to ORT, Putin urged the legislators to enforce strictly the law requiring that half of the members of regional legislatures be elected according to party lists. Putin said that the system "is not being introduced to suit someone's interests" but "to make Russia's political system more stable and predictable" and "to ensure that when our people go to vote they elect not just a good person but a good person with understandable political convictions." Putin also commented that the gap between federal and local regulations has been closing, according to TV-Tsentr. However, "Nezavisimaya gazeta" reported the same day that a group of lawmakers from the Volga Federal District have drafted federal legislation that would leave the number of seats reserved for political parties within regional dumas up to the discretion of regional lawmakers. In contrast to current federal legislation, the percentage would range from 15 percent to 50 percent. JAC

AND THEN THERE WERE 88?
Legislators in Perm Oblast voted unanimously on 13 February to confirm the text of a letter to President Putin calling for merging the oblast with neighboring Komi-Permyak Autonomous Okrug, polit.ru reported. Legislators in the okrug voted on 11 February to support the idea, according to "Vedomosti." State Duma Deputy Andrei Klimov (Russian Regions), who was elected from the okrug's single-mandate district, told the daily that the desirability of merging the two regions has been discussed for the last 12 years but that starting the process only became possible in 2002 with the passage of a federal bill outlining the procedure for combining federation subjects (see "RFE/RL Russian Political Weekly," 30 January 2003). Klimov said that regional leaders plan to hold a referendum about merging the two regions in December at the same time as the State Duma elections. JAC

REGIONAL ELECTIONS
SECOND ROUND OF MAGADAN RACE ENDS IN UPSET...
Acting Magadan Oblast Governor Nikolai Dudov on 16 February won the second round of the oblast's gubernatorial election with 50.41 percent of the vote, compared to 42.38 percent for rival Magadan Mayor Nikolai Karpenko, ITAR-TASS reported. Karpenko had been the favorite to win the race, and he beat Dudov in the first round by a 12 percent margin (see "RFE/RL Newsline," 3 February 2003). According to "Kommersant-Daily" on 17 February, Karpenko was the victim of a number of dirty tricks, or "black public relations," between the two rounds. For example, reworked film clips of Karpenko were shown with his campaign slogan "Nikolai Karpenko is our man!" altered to read "Nikolai Karpenko is whose man?" Karpenko's supporters in Magadan and Moscow are reportedly attributing Dudov's victory to the aggressive media campaign he waged between rounds. Karpenko had the strong support of the pro-Kremlin Unified Russia party, and an unidentified party official told the daily that his loss came as a complete surprise. Georgii Satarov of the INDEM Foundation told RFE/RL's Moscow bureau on 18 February that this election was an "important [indicator] for the party of power, which intends to obtain more than 50 percent of the vote in the [December 2003] State Duma election." According to Satarov, achieving such a goal was "problematic" even before this race but that now the party "should seriously consider whether such a task is beyond its strength." JAC

...AS MORDOVIAN HEAD WINS THIRD TERM IN LANDSLIDE.
The head of Mordovia, Nikolai Merkushkin, won a re-election bid on 16 February, with more than 87 percent of the vote, ITAR-TASS reported. His closest rival, Communist-backed candidate Anatolii Chubkov, head of the Saransk Instrument-Making Factory, received only about 7 percent of the vote, RFE/RL's Saransk correspondent reported. Merkushkin had strong support from the federal center, and during the weeks prior to the election he hosted visits from Deputy Prime Minister Valentina Matvienko, as well as from members of the Duma's Fatherland-All Russia faction, including former Prime Minister Yevgenii Primakov. JAC

ARKHANGELSK
ARE ABORTIONS STILL OUTSTRIPPING BIRTHS?
In Arkhangelsk Oblast in 2002, there were almost twice as many abortions as live births, regnum.ru reported on 5 February, citing the oblast's chief gynecologist Sergei Krasilnikov. According to the agency, some 13,940 babies were born, compared to 22,318 abortions or "mini-abortions." Moreover, for every 1,000 live births, 12 infants are born dead. Almost five years ago, Yekaterina Lakhova, who at the time headed a presidential commission on women, family, and demographics , noted that there are 192 abortions for every 100 births in Russia and called for increased efforts to expand family-planning programs (see "RFE/RL Newsline," 10 April 1998). JAC

KHAKASIA
LEGISLATORS WANT THIRD TERM FOR LOCAL LEADER.
Deputies in the Supreme Council of the Republic of Khakasia on 5 February finished gathering signatures for an appeal to the presidium of the republican parliament about introducing changes to the republic's constitution that would allow the head of the government to serve more than two consecutive terms, "Kommersant-Daily" reported on 6 February. If the amendment is adopted, current republican President Aleksei Lebed would be allowed to seek a third term in December 2004. Under current federal legislation, his first term is considered to have begun in 1999 (when the relevant legislation came into force), and he is allowed to seek an additional term only if doing so does not violate regional legislation. Irina Smolina, a spokeswoman for the republican government, denied that it played any role in the deputies' initiative, saying it was "their personal matter." However, Lebed revealed last year during one of his Internet conferences with voters that his deputy, Vasilii Tsyganok, was personally organizing the collection of signatures. JAC

KHANTY-MANSII
AN OKRUG BY ANY OTHER NAME.
Khanty-Mansii Autonomous Okrug Governor Aleksandr Filipenko and speaker of the okrug legislature Vasilii Sondykov have sent a letter to President Putin asking him to change the name of the okrug to Khanty-Mansii Autonomous Okrug-Yugra, "Kommersant-Daily" reported on 10 February. Yugra is the ancient name of the region populated by the Khanty and Mansii ethnic groups. Okrug legislators on 7 February adopted an amendment to the okrug's charter conferring the new name. The legislators are now asking that Putin introduce legislation to amend Article 65 of the Russian Constitution that lists the official names of all federation subjects. JAC

KOMI
FORMER REPUBLICAN LEADER SAYS APPOINTMENT WAS BOUGHT.
Nikolai Levitskii, a 30-year-old representative of the MDM Group, has been named first deputy head of the Komi government, replacing Aleksei Grishin, who will now represent the executive branch in the Federation Council, RosBalt reported on 11 February. Former head of the republic Yurii Spiridonov, who lost a re-election bid to Vladimir Torlopov in December 2001, said that Levitskii's appointment should be examined immediately by prosecutors because the nomination is a clear example of "one debt in exchange for another, or as the people say, a 'blat' appointment." "Blat" refers to a system of informal contacts and personal networks used to obtain goods and services under the Soviet-era goods-distribution system, according to scholar Alena Ledeneva in her 1998 book "Russia's Economy of Favours." JAC

KURGAN
FARMERS IN AGRICULTURAL REGION THREATEN TO SLAUGHTER ALREADY DWINDLING LIVESTOCK HERDS.
Farmers in Kurgan Oblast's Katai Raion have sent a letter to oblast Governor Oleg Bogomolov informing him that they do not intend to carry out a sowing campaign this year and that if the poor economic situation plaguing the agro-industrial sector is not improved, they will slaughter their remaining cattle, ITAR-TASS reported on 11 February. The heads of agricultural enterprises wrote that agriculture has become "unprofitable" in the region because of the sharp decrease in grain prices and increases in fuel prices. According to the agency, the number of collective farms in the district has dropped from 16 to eight in the past six years, and of the eight remaining, only three are not on the verge of bankruptcy. The number of cattle and pigs has already plunged dramatically. Kurgan Oblast is frequently mentioned as one of Russia's least solvent regions (see "RFE/RL Newsline," 24 May 2002). JAC

ST. PETERSBURG
PREPARATION FOR ST. PETERSBURG GALA FOUND WANTING.
Audit Chamber head Sergei Stepashin told reporters on 10 February that the chamber has recommended that the government of St. Petersburg return to the federal budget some 521.35 million rubles ($16.39 million), RosBalt reported. According to Stepashin, an audit revealed that this sum was not used for its designated purpose, i.e., preparations for the city's 300th anniversary in May. The city administration allegedly failed to fulfill its responsibility to see that roadwork was completed, and a report about the city's failures was sent to St. Petersburg Governor Vladimir Yakovlev on 28 January. Yakovlev has until 28 February to respond to the Audit Chamber's findings. Earlier in the month, Deputy Prime Minister Matvienko publicly expressed the government's dissatisfaction with the pace of restoration work on architectural monuments in St. Petersburg, "Gazeta" reported on 3 February. JAC

SVERDLOVSK
DIRTY TRICKSTERS ENABLE PUBLIC TO REACH LOCAL OFFICIALS AT HOME.
Yekaterinburg, the capital of Sverdlovsk Oblast, has been plastered with flyers bearing the home telephone number of Sverdlovsk Oblast Deputy Prime Minister Yurii Osintsev, regions.ru reported on 11 February, citing Novyi region. According to the agency, city officials are vigorously denying any involvement in the prank, although the oblast and city administrations are frequently at loggerheads. Sergei Tushin, chairman of the city administration's Analytical and Public Relations Committee, told Novyi region that "interference with [a person's] private life is unacceptable." "The organizers of this provocation must be found and punished," Tushin declared. An unidentified city administration official told the agency that Osintsev is not the first victim of "black public relations." Tushin's mobile-phone number was printed on posters during the last regional elections, the source noted. JAC

TATARSTAN
MODERATE NATIONALIST TATAR GROUP CONTEMPLATES GOING UNDERGROUND...
A plenum of the Tatar Public Center discussed in Kazan on 8 February the "forcible harmonization" of the republican constitution with the federal one and preparations for national elections, RFE/RL's Kazan bureau reported on 10 February. Plenum participants sharply criticized U.S. policy toward Iraq and Russia's authorities for infringing upon the interests, languages, and cultures of non-Russian peoples and the national republics. They also lambasted Tatarstan's leadership for its failure to defend the Tatar Constitution and the interests of the Tatar people. Center Chairman Reshit Yegeferov told the forum that the deteriorating political situation in Russia is making it increasingly difficult to sustain the organization and to promote the idea of Tatar, Muslim, and Turkic unity. He said that recent legislation that prohibits regional parties might even force the center to become an underground organization. JAC

...AND RAISES THE SPECTER OF CHECHNYA.
On the next day, Rafis Kashapov, head of the Tatar Public Center's Chally branch, was quoted by REN-TV as saying that "if this pressure on Tatarstan and the republics of the Volga region continues, it will lead to -- I would say -- extreme measures." When asked what he meant by extreme measures, Kashapov said, "Well, look at what happened in Chechnya...." According to REN-TV, a book called "The Jihad of the Tatar People" was on sale at the plenum for 10 rubles ($0.30). The station also quoted Tatar legislator Marat Galeev as saying that under Putin-era federal reforms, Tatarstan has experienced "an increase in unemployment, a reduction of its regional budget by almost half, and a decline in road construction by some 60 percent." JAC

ULYANOVSK
BUREAUCRATS ASPIRE TO WALK ALL OVER PUTIN.
State officials at all levels from the presidential administration to city hall have lined up to obtain a special limited-edition rug bearing a portrait of President Putin, "Simbirskii kurer" reported on 11 February. In its first edition, the rug, which was produced by the Nometeks textile factory in Dimitrovgrad, depicted Putin against the background of the Russian flag. However, the plant ran out of red thread, and the flag was subsequently dropped. In the newer version, the flagless Putin appears to be unshaven. The rug makers explain, however, that this is only because the density of the weave makes it difficult to render straight lines. The factory declined to name names, but it did acknowledge that officials from Moscow, Ulyanovsk, Dimitrovgrad, Samara, and other cities have purchased the carpet, which costs some 4,000 rubles ($126). An unidentified source told the newspaper that Ulyanovsk Oblast Governor Vladimir Shamanov was among the purchasers. JAC

STATE DUMA
ELECTRICITY-SECTOR REFORMS PASS CRITICAL BARRIER.
The State Duma on 14 February approved in its second reading a package of six bills reforming Russia's electricity sector, Russian news agencies reported. One of the key bills in the package, entitled "on electrical energy," sets up two open joint-stock companies: one that will manage the national electricity grid and another that will be the system operator of the unified energy system, Radio Rossii reported. The legislative package was adopted in its first reading in October. The legislation was opposed by the Yabloko and Communist factions, and according to Interfax, the final bill in the package amending the law on energy conservation passed with 262 votes -- just 36 more than necessary -- with 152 against and one abstention. Economic Development and Trade Minister German Gref hailed the passage of the bills, saying that a very important step has been taken in the market reform of the electricity industry. At the same time, Gref promised that the government will strictly control rates policies in the sector until at least 2008, RFE/RL's Moscow bureau reported. JAC

LEGISLATION
Name of law____________Date approved____________No. of reading

On natural monopolies_____14 February_______________2nd

On state regulations of______14 February_______________2nd
tariffs for electricity and heat

Civil Code_______________14 February_______________2nd
(electricity)

On electrical energy_________14 February______________2nd

On enactment of the law______14 February______________2nd
on electrical energy

On energy conservation______14 February______________2nd

COMINGS & GOINGS
OUT: Prime Minister Mikhail Kasyanov on 14 February "temporarily suspended" State Fisheries Committee Chairman Yevgenii Nazdratenko, Russian news agencies reported. Kasyanov said he took the step in response to continuous protests by Far Eastern fishermen and officials complaining about the reductions of fishing quotas, RFE/RL's Russian Service reported.

IN: Aleksandr Gerasimov on 17 February was named deputy general director of NTV in charge of information programming, TVS reported. Gerasimov was most recently deputy general director for information and public/political broadcasting at REN-TV. Before that, he worked at NTV until Gazprom-Media took over the station in 2001.

SWITCHING: Dmitrii Rogozin, chairman of the State Duma's International Relations Committee and presidential envoy on Kaliningrad, has signed a declaration announcing his departure from the People's Party, polit.ru reported on 17 February. Rogozin has applied for membership in the Unified Russia party.

IN THE RUNNING: Secretary of State for Russia-Belarus Union Pavel Borodin may run for governor of Moscow Oblast in December 2003, Interfax reported on 16 February. Borodin's press secretary, Ivan Makushok, said the Borodin has already held several meetings with potential voters who promise to set up a group to nominate him.

POLITICAL CALENDAR
21 February: State Duma will consider first of several bills on reforming local self-government

27-28 February: The Union of the People of Chechnya movement will meet in Moscow, Duma Deputy Aslanbek Aslakhanov (Fatherland-All Russia) announced on 18 December

28 February: Slavneft will hold shareholders meeting to elect new board of directors, according to "Vremya-MN" on 30 January

Early March: President Putin will visit Bulgaria, according to Foreign Minister Igor Ivanov on 29 January

March: Unified Energy Systems' board of directors will meet and consider whether to sell the company's stake in REN-TV, Interfax reported on 17 February

6 March: Date by which the final version of the constitution of the Russia-Belarus Union will be prepared, according to Duma Speaker Gennadii Seleznev on 3 February

8 March: International Women's Day observed

12 March: Norilsk Nickel management will meet with workers to avert possible strike

22 March: Congress of Democratic Forces will be held in Moscow

23 March: A referendum will be held in Chechnya on the republic's draft constitution and draft laws on the election of the president and parliament

24 March: Terms of members of the current Central Election Commission will expire

29 March: Unified Russia party will hold a congress

May: St. Petersburg will celebrate the 300th anniversary of its founding

11 May: Parliamentary elections will be held in North Ossetia

31 May: Russia-EU summit will take place in St. Petersburg

17-21 June: Seventh International Economic Forum will be held in St. Petersburg

27 June: Gazprom will hold annual shareholders meeting.

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