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Russia Report: May 1, 2003


1 May 2003, Volume 3, Number 17
REGIONAL DISPATCH
REGIONS WANT TO KICK THE SUBSIDY HABIT
By Andrei Deriabin

Last week, while addressing members of the Federation Council, President Vladimir Putin castigated the State Duma for "approving populist acts that are not supportable financially." Putin called on the senators to keep a careful eye on their colleagues in the lower legislative chamber and "prevent this kind of legislative activity" in the run-up to the December Duma election. The upper chamber should consider any laws adopted by the Duma during this period "especially carefully," Putin said.

Putin is clearly concerned that the Duma is on the verge of returning to typical pre-election political games. However, the response of regional policymakers to at least one seemingly populist measure suggests that the deputies' efforts are not appreciated. At least one section of Russia's political elite is hankering after a new approach.

One of the bills that Putin might have had in mind when he spoke of "populist" measures is a bill on the foundations of federal support for economically depressed territories." Duma deputies passed the bill, which was introduced by the Communist faction and the Russian Regions group, in its second reading last month. The draft legislation aims to reduce social and economic disparities among subjects of the Russian Federation.

The proposed law defines an "economically depressed territory" as one with a population of less than 500,000 whose basic field of economic activity -- that is, one providing 30 percent of gross regional product and employing 25 percent of the active population during the last 12 years -- has sharply declined. Federal support for economically depressed territories would be provided in the form of direct funding for projects aimed at the overcoming the region's economic slump, creating privileges for local enterprises, and providing regional administrations with information and consulting.

One of the authors of the bill, Duma Deputy Andrei Klimov (Russian Regions), explains on his website (http://www.klimow.ru) his rationale for the bill. "In my opinion, the decisions currently being made [by federal officials] about support for economically depressed territories are subjective and arbitrary. It all depends on what the federal authorities consider to be economically depressed and how much money they want to allocate for assistance. In addition, [local and regional officials] often use funding allocated for regional development for completely different purposes. That's why we need a law that defines what constitutes an economically depressed territory, what kind of federal support it is eligible for, and how the regional government will account to the State Duma regarding how the money is spent." According to Klimov, Prime Minister Mikhail Kasyanov's government does not support his bill because ministers believe it interferes with their spheres of competence.

Despite the bill's seemingly noble goal of helping boost economic growth in regions that need it most, a number of regional experts and officials believe the draft is -- at best -- a declarative law that will never be implemented and that will be quickly forgotten after Duma elections. Worse, they say, if the bill is passed and implemented, it would have the opposite of its desired effect of promoting economic growth. If enacted, the bill would indirectly reinforce the inactivity of regional administrations and the resulting sluggishness of local economies. Although it might sound paradoxical, being poor is beneficial for many regions of Russia. "It is advantageous to be a subsidized region today. No matter how hard the Novosibirsk Oblast administration works, it won't achieve the same level of income per person of the Republic of Altai, which is a fully subsidized region despite its rich but under-explored hydroelectric and natural resources," explains Vladimir Ivankov, chairman of the Siberian Accord Interregional Association, according to a 3 April article in "Kontinent-Sibir."

The bill also creates conditions for its direct misuse. For example, the Khanty-Mansii Autonomous Okrug would be eligible for federal support according to the draft law, but in reality it scarcely needs it. It is an oil-rich region with extremely high incomes and one of the highest rates of socioeconomic development in the country. However, there can be no doubt that the regional administration would take any budget funding for which it is formally eligible. The law "will not result in the growth of local economies," according to Boris Maltsev, Tomsk Oblast Duma speaker, as quoted by "Kontinent-Sibir." "What's the point of bothering with programs for developing oil production or promoting the local timber industry, if one is given money anyway," Maltsev was quoted as saying. "The depressed territories need laws that motivate them to make money."

In an interview with "Ekspert" on 21 April, Krasnoyarsk Krai Governor Aleksandr Khloponin echoed Maltsev's views. "The state is not a credit organization," Khloponin said. "It should create conditions for development and invest money in the infrastructure. If I understand that, say, the timber industry is my priority and it doesn't return money to the regional budget, I don't have to build another timber-processing plant. Instead, I have to create the conditions for investors to come and build it."

"What the regions really need for their sustainable development [are] changes in the regulations of local and federal budget relationships and taxation-system optimization," argues Duma Deputy Nadezhda Azarova (Fatherland-All Russia). "The Law On Depressed Territories won't work that way." According to Azarova, 69 of 89 Russian regions would be considered under the draft bill as economically depressed and backward, and "there is simply not enough money in the federal budget to provide the required support to them," "Kontinent-Sibir" reported.

While some years ago only independent think tanks and right-wing liberal politicians advocated radically reforming federal economic support for the regions, that view is now shared by a broad coalition of regional policymakers. A growing number of regional decision-makers support restructuring the economic relationships between the regions and the federal center away from the old practice of state patronage and keeping the regions on a financial hook with federal subsidies.

Andrei Deriabin is an independent media analyst and director of the nonprofit partnership Development Policies in Novosibirsk.

PAN-REGIONAL ISSUES
HAS PUTIN EXPANDED THE POWER OF HIS ENVOYS TO THE REGIONS?
"Nezavisimaya gazeta" and "Kommersant-Daily" -- both of which are controlled by self-exiled businessman Boris Berezovskii -- reported on 24 April that President Putin verbally expanded the powers of his presidential envoys to the seven federal districts at a meeting with them on 23 April to include financial oversight of money flows between the federal center and the regions. However, the newspapers said this new responsibility has not been -- and will not be -- legalized by a decree. According to "Nezavisimaya gazeta," "the president's orders were not put in the form of documents in order not to distort the power vertical," while "Kommersant-Daily" quoted presidential envoy to the Northwest Federal District Valentina Matvienko as saying the "head of the government does not plan to sign a special decree on this account." According to "Nezavisimaya gazeta," the envoys will also advise the federal government on the expediency of financing particular regional projects. At the meeting, Putin also asked his envoys to report on how regions are implementing new land and legal-reform legislation (see "RFE/RL Newsline," 24 April 2003). JAC

PUTIN ASKS REGIONAL ENVOYS TO ENSURE THAT REFORMS ON THE BOOKS ARE ACTUALLY IMPLEMENTED.
At a meeting with the presidential envoys to the seven federal districts in Moscow on 23 April, President Putin called on them to pay special attention to how legal reforms and the new Land Code are implemented in their jurisdictions, Russian media reported. On the subject of land legislation, analyst Boris Makarenko of the Center for Political Technologies told polit.ru that federal legislation "has fallen behind regional laws, which are now more varied and newer." In addition, Putin gave the envoys a deadline of 14 July to bring regional legislation into line with federal law. He also called on the envoys and their staffs to monitor elections to local legislative organs to ensure they are making the required transition to a system under which at least one-half of the mandates are distributed by party lists. JAC

INTERIOR MINISTER SAYS HE WANTS TO CLEAN UP THE FAR EAST...
Boris Gryzlov told reporters in Yuzhno-Sakhalinsk on 22 April that during the investigation of the killing last year of Major General Vitalii Gamov (see "RFE/RL Newsline," 21 May 2002), head of the Federal Border Guard Service in that city, some 260 economic crimes have been uncovered, ITAR-TASS reported. Gryzlov said that criminal groups in Sakhalin Oblast have caused damage worth more than 500 million rubles ($16 million) to the local fishing industry. According to Gryzlov, the alleged head of one of these crime groups, Vasilii Naumov, who was also known as Yakut, ordered Gamov's killing. Naumov was himself shot and killed in South Korea last week, according to Interfax. In connection with investigators' findings, Gryzlov has ordered that serious investigative work into local fishing enterprises be carried out to ensure that the firms are law-abiding and reliable taxpayers, RTR reported. JAC

...AND DECIDES NOT TO MIX BUSINESS WITH POLITICS?
On 21 April, Gryzlov announced in Vladivostok that the federal Interior Ministry will maintain its special control over the Primorskii Krai Interior Ministry Directorate because of the increase in contract killings, attempted murders, and the activities of organized crime in the region this year, RIA-Novosti reported. On 21 April, a local businessman was shot dead on one of the city's busiest streets, the agency reported. According to the RIA-Novosti, Gryzlov cancelled a previously scheduled meeting with local members of the Unified Russia party in Vladivostok. Gryzlov heads the national Unified Russia Party, and analysts have suggested that the Far East is a region currently up for grabs in the December State Duma election (see "RFE/RL Newsline," 18 April 2003). JAC

MORE EVIDENCE FOUND OF RURAL DEPOPULATION TREND.
State Statistics Committee Deputy Chairman Sergei Kolesnikov told ITAR-TASS on 23 April that preliminary census results show that nearly one-third of Russian villages have been deserted. According to Kolesnikov, 8 percent of 155,000 rural settlements are completely depopulated. He also reported that villages inhabited by no more than 10 people account for 22 percent of all rural populated areas. Regions in the Far North -- such as Chukotka Autonomous Okrug and Kamchatka and Magadan oblasts -- have experienced some of the biggest declines in village populations. Sixty-six of the 89 federation subjects have experienced population declines since the last census, the agency reported. Last October, Irina Zbarskaya, head of the population census and demographic statistics department of the State Statistics Committee, told reporters that census takers working in the Far North and Far East had encountered several ghost towns that remain on the official register, but have in fact been deserted by their inhabitants (see "RFE/RL Newsline," 9 October 2002). JAC

KAMCHATKA
GOVERNOR CHALLENGED TO DUEL FOR ETHNIC SLUR.
Aleksei Bobryakov, an administrator of the Association for Numerically Small Native Peoples, has challenged Kamchatka Oblast Governor Mikhail Mashkovtsev to a duel, regions.ru reported on 23 April, citing Kamchatka television station Channel 10. Bobryakov was insulted by Mashkovtsev's use of the term "asphalt Koryaks" on local television a few days prior. Bobyrakov had asked Mashkovtsev about the distribution of fishing quotas allotted to native peoples living in Petropavlovsk-Kamchatskii, when Mashkovtsev responded that he does not recognize "asphalt Koryaks." Koryaks are traditionally semi-nomadic reindeer herders who live in north Siberia, and, according to the website, the term "asphalt Koryak" refers to people who are "fully assimilated into the dominant ethnic culture and no longer participate in traditional means of exploiting nature," such as fishing. JAC

KEMEROVO
PRO-GOVERNOR BLOC WINS IN KUZBASS RACE.
Thirty-four candidates from the electoral bloc I Serve the Kuzbass for 35 seats in Kemerovo Oblast's legislature won in elections held on 20 April, RFE/RL's Kemerovo correspondent reported the next day. The bloc also did well in municipal elections, with 11 of 12 candidates to head cities or towns winning. The voting was peaceful, with the exception of the discovery of a homemade explosive device at one polling station, "Kommersant-Daily" reported on 21 April. No one was injured in that incident. The I Serve the Kuzbass bloc was formed in February on the basis of local branches of Unified Russia and the People's Party and the oblast movement of People Power. The bloc's main goal is "to enable the realization of the course of [Kemerovo Oblast Governor] Aman Tuleev, which is directed at achieving sociopolitical stability and the renewal of the region." Tuleev supported the bloc and approved each candidate. JAC

NENETS
GOVERNOR ALLEGEDLY SLUGS TRAFFIC COP.
A St. Petersburg prosecutor has opened a criminal case against Nenets Autonomous Okrug Governor Vladimir Butov for allegedly punching a traffic police officer in the face, NTV and RosBalt reported on 23 April. The incident allegedly took place on 11 April, when Butov was in town to attend a meeting of Northwest Federal District governors with President Putin. According to NTV, a traffic cop stopped Butov's car for trying to drive immediately behind Putin's motorcade. Commenting on the case, an unidentified representative of the okrug in St. Petersburg said that okrug officials could themselves "file a complaint about the actions of the traffic inspector, who insulted the leader of one of the federation subjects," regions.ru reported, citing Federal Post. Last year, federal authorities opened a criminal case against Butov for not fulfilling a Moscow arbitration court order to sign a license to develop a local oil field (see "RFE/RL Russian Federation Report," 18 April 2002). JAC

NORILSK
NORILSK MAYORAL CAMPAIGN DISINTEGRATES.
The Norilsk Election Commission has set 19 October as the date for a new election for city mayor after all the candidates who participated in the first round of voting on 20 April were either disqualified or withdrew from the 4 May second round, newsru.com and other media reported on 30 April. On 28 April, the Norilsk Municipal Court disqualified trade-union leader Valerii Melnikov, who came in first in the first round with just over 47 percent of the vote. The court ruled that Melnikov's campaign had committed "numerous violations," including financial irregularities and violations of rules concerning campaigning on television. The following day, second-place contender Norilsk City Council Chairman Sergei Shmakov, who garnered 31 percent in the first round, withdrew from the race, Interfax reported. Shmakov said that he did not want to participate in a "no-choice" election, and told TVS on 29 April that voters should be able to decide among the candidates in an "honest, open contest." Also on 29 April, third-place candidate Leonid Fraiman, deputy head of Norilsk Nickel's Zapolyarnyi branch, was certified to participate in the runoff, but he withdrew from the race as well. Fraiman received just 2.8 percent of the 20 April vote. The fourth-place candidate, lawyer Aleksandr Gliskov, who polled just over 1 percent in the first round, was then certified to participate as the only candidate in the runoff, newsru.com reported. However, he also withdrew from the race the same day. LB/RC

ST. PETERSBURG
GOVERNOR INDICATES WILLINGNESS TO RESIGN OFFICE EARLY...
Speaking on the local television program "Governor's Time " on 23 April, Vladimir Yakovlev said that "they need him out in December" and he is "ready to do this even earlier," RosBalt reported on 24 April, without identifying the "they" in Yakovlev's statement. According to RosBalt, Yakovlev said that according to the constitution the election for St. Petersburg's new head shouldn't take place until spring 2004. He also declared that "there is a person whom he will support" to succeed him, and he will make this name public in the near future. The next day, presidential envoy to the Northwest Federal District Matvienko said that no one pressured Yakovlev when he decided not to participate in the next gubernatorial election. She added that Yakovlev only made his statement "out of a wish to dampen political speculation." Yakovlev announced that he will not seek a third term earlier this month (see "RFE/RL Newsline," 3 April 2003). JAC

...AS CITY RESIDENTS SKEPTICAL ABOUT JUBILEE.
Meanwhile, in a survey of 1,000 St. Petersburg residents conducted this month by the All-Russia Center for the Study of Public Opinion (VTsIOM), 58 percent of respondents said Yakovlev is not eligible for another term, and 43 percent did not approve of the appointment of Matvienko as presidential envoy to the Northwest Federal District. Seventeen percent had difficulty answering, while 40 percent approved of that appointment. When asked if they thought the 300th anniversary of the city's founding is a holiday for the entire city, the entire country, or just the political elite, 59 percent chose the third option. One-quarter said the holiday is for the city, and 12 percent for all of Russia. JAC

SARATOV
DEPUTY GOVERNOR PICKED UP FOR QUESTIONING IN ASSAULT CASE.
Saratov Oblast Deputy Governor Yurii Moiseev was picked up by police on 23 April on suspicion of beating up a local resident, Vitalii Gladyshev, in September 1998, regions.ru reported on 24 April, citing Saratovbizneskonsalting. According to an article in the local newspaper "Reporter," a criminal case was opened after the incident, in which Moiseev allegedly struck Gladyshev in the head with a rubber nightstick, causing a concussion. However, witnesses in the case reportedly received threats and withdrew their statements, causing the case to be closed, according to grani.ru. Gladyshev's family was also reportedly threatened, but then they were offered 40,000 rubles ($1,300) for Gladyshev's medical expenses, "Reporter" reported. Gevorg Dzhlavyan, who is now the oblast's transportation minister, reportedly organized Gladyshev's medical treatment. Because of information provided by "Reporter," the case has now been reopened. According to regions.ru, Moiseev is not only Saratov Oblast Governor Dmitrii Ayatskov's deputy, but also his nephew. JAC

TATARSTAN
SHAIMIEV RIVAL THROWS HIS HAT IN THE RING EARLY.
In an interview with "Moskovskii komsomolets v Tatarstane," Rafgat Altynbaev, the former Federation Council representative whom Tatar President Mintimer Shaimiev recently recalled, said he plans to run in Tatarstan's 2006 presidential elections, RFE/RL's Kazan bureau reported on 17 April. Altynbaev declared that "there are no forces that can stop" him, and his followers from participating in the race. The previous day, Duma Deputy Aleksandr Salii (Communist) told regions.ru that "Shaimiev sees in Altynbaev a competitor -- not an appointed successor, but someone who could take power away from him." According to Salii, Shaimiev has noted Altynbaev's growing influence in Tatarstan. Andrei Ryabov of the Carnegie Moscow Center told RosBalt on 14 April that the Kremlin decided to resolve "the Shaimiev problem" by promoting Altynbaev. According to Ryabov, Altynbaev was one of the main initiators of presidential legislative package to reform local self-government, which is currently being considered by the State Duma (see "RFE/RL Russian Political Weekly," 17 April 2003). JAC

STATE DUMA
LEGISLATORS AMEND CUSTOMS, TAX CODES.
The State Duma acted on a number of bills on 25 April, ORT reported. Deputies passed in its third reading a new version of the Customs Code that forbids customs officials from impounding goods for undefined periods, from seizing documents from importers and exporters, or from dictating at which customs posts shipments must be processed. Still, the new version of the code leaves the State Customs Committee with a large number of important "control functions," including operational-investigative functions, currency- and monetary-control functions, and antiterrorism functions. The Duma also passed in all three readings a bill amending the Tax Code that raises the interest rate above which ruble bank accounts may be taxed from 13.5 percent to 18 percent. The bill is retroactive to 1 January, meaning that some account holders will receive refunds. In addition, the Duma passed in its first reading legislation amending the laws governing life insurance for military personnel, polit.ru reported. In particular, the legislation mandates insurance payments to military personnel who have committed suicide if those servicemen have been in the armed forces at least six months and if a court proves they were driven to take their own lives. Some 300 servicemen commit suicide each year and, according to Duma Defense Committee Deputy Chairman Nikolai Bezborodov (Russian Regions), around 70 percent of these suicides take place in the period between six months and two years of military service. JB

Legislation

Name of law______________Date approved__________No. of reading

Customs Code______________25 April________________3rd

Tax Code__________________25 April______________1st, 2nd, 3rd

COMINGS & GOINGS
IN: President Putin signed a decree on 24 April appointing Boris Aleshin as deputy prime minister for industrial policy and Galina Karelova as deputy prime minister in charge of social policy, Russian media reported. Aleshin, 48, was born in Moscow, where he attended several technical institutes, RIA-Novosti reported. He most recently worked as chairman of the State Standards and Measures Committee, and in 2000 he served as first deputy industry and science minister. Karelova, 52, was born in Sverdlovsk Oblast. She has served in the Sverdlovsk Oblast Legislative Assembly, the State Duma, and the Federation Council. She has headed the commission for women's affairs at the Federation Council since 1999. According to strana.ru, she also served as first deputy labor minister.

POLITICAL CALENDAR
May: St. Petersburg will celebrate its 300th anniversary

May: New daily publication called "Rezonans," produced by some of the staff of the now-defunct newspaper "Novye izvestiya," expected to debut

May: Japanese Foreign Minister Yoriko Kawaguchi will visit Vladivostok

1 May: Moscow Federation of Trade Unions will hold massive rally in Moscow in celebration of Labor Day

1 May: Deadline by which the government is expected to finish preparing a package of legislation establishing a mortgage system, ITAR-TASS reported on 26 February

5-6 May: Foreign Minister Igor Ivanov to visit Romania

9 May: Victory in World War II celebrated

11 May: Parliamentary elections will be held in North Ossetia

13 May: Extradition hearing in London scheduled for tycoon Boris Berezovskii and his associate Yulii Dubov

16 May: State Duma will consider ratification of the Russian-U.S. Strategic Offensive Reductions Treaty

18 May: New law on railway transportation will come into force

18 May: Leonid Parfenov's program "Namedni" scheduled to return to the airwaves on NTV after a three-month hiatus

20 May: Legislative elections in Leningrad Oblast will take place

21 May: Foreign ministers from Russia and the EU along with U.S. Secretary of State Colin Powell will attend a signing ceremony for the Multilateral Nuclear Environmental Program for the Russian Federation in Stockholm, Deputy Foreign Minister Vladimir Chizhov announced on 21 April

22 May: The current term of presidential ombudsman for human rights Oleg Mironov expires

25 May: Gubernatorial elections to be held in Belgorod Oblast

25-26 May: U.S. President George W. Bush will visit St. Petersburg

25-27 May: Chinese President Hu Jintao will visit Russia

30 May: Russia-European Union summit will take place in St. Petersburg

31 May-1 June: Czech President Vaclav Klaus will visit St. Petersburg

June: President Putin scheduled to visit London, according to ITAR-TASS on 29 April

1 June: Deadline for Russian veterinary inspectors to complete inspections of U.S. chicken farms

1-3 June: G-8 summit will take place in Evian, France

15 June: Karachaevo-Cherkessia will hold presidential elections

16-22 June: A meeting of 25 Nobel Prize laureates on the topic of "Science and the Progress of Humanity" will be held in St. Petersburg

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

27 June: Gazprom will hold annual shareholders meeting

July: Month by which a working group of European and Russian legislators wants to create a "road map" for implementation of the joint Russian-EU accord on Kaliningrad of 11 November 2002, ITAR-TASS reported on 3 March

1 July: Date by which the new State Committee on Drug Trafficking will be created and new Federal Service for Economic and Tax Crimes will be formed, according to the committee's head Viktor Cherkesov on 8 April and ITAR-TASS on 10 April

1 July: United Arab Emirates national airline will begin regular flights from Moscow's Domodedovo Airport

1 July: Date by which Russia should ratify a border treaty with Lithuania, according to State Duma Foreign Affairs Committee Chairman Dmitrii Rogozin on 27 March

14 July: Deadline set by President Putin for Russian regions to bring their laws into compliance with federal regulations

September: Second Russian-U.S. Commercial Energy Summit will take place in Moscow

September: Gennadii Seleznev's Party for Russia's Revival will hold a congress in Moscow

1 September: Campaign officially begins for State Duma elections

14 September: Sverdlovsk Oblast Governor Eduard Rossel's second term officially expires

23 September: The first European-Pacific Ocean Conference will take place in Vladivostok devoted to improving dialogue among intellectuals in European countries and the Pacific region, regions.ru reported on 6 March

October: Days of Bulgarian Culture will be held in Russia

October: President Putin and German Chancellor Gerhard Schroeder will meet in Yekaterinburg, Novyi region reported on 14 April

9 October: Repeat mayoral elections to be held in Norilsk

23-26 October: First anniversary of the Moscow theater hostage crisis

29 October: 85th anniversary of the founding of the Komsomol.

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