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Russia Report: September 11, 2002


11 September 2002, Volume 2, Number 29
ELECTIONS
THE BUSINESS OF ELECTIONS.
Although State Duma elections are still more than a year away -- and presidential elections even farther -- the likely course of the upcoming races are already a subject of lively debate. At a gathering of political pundits at Moscow's Aleksandr Haus on 10 September, the assigned topic was the agenda for the new political season, but discussion of the elections many seasons in the future dominated. That the upcoming elections should prompt so much interest could be considered surprising. After all, a sub-theme of the discussion was whether or not the upcoming races would be boring. Boring or not, however, they promise to be lucrative for at least some people. And, that perhaps, could explain the continued strong show of interest. According to "Finansovaya rossiya" (no. 24), the average cost of a campaign for a Duma seat is between $500,000 to $1 million. And on average, about 6,000-7,000 candidates compete for the 450 Duma seats, "Izvestiya" reported on 22 July.

At the same time, there are more firms in the election business now than during the 1999 campaign, so it is possible that each firm could wind up with a smaller piece of the pie than during the last Duma elections. In addition, analysts such as Nikolai Petrov and Andrei Ryabov of the Carnegie Moscow Center believe that the next round of elections will be a much calmer, quieter affair since the result of many races will be more or less decided before the electorate actually goes to the polls. According to Petrov, companies such as Nikkolo M, ImageKontakt, Novokom, and PRopaganda, will have to reinvent themselves, peddling not campaign know-how but arranging access to key Kremlin officials, since it will be these Kremlin officials, who will be deciding for whom administration resources should be marshaled.

An additional threat to some of the firms' bottom line is a proposal by the Central Election Commission to introduce licenses for the PR companies. Central Election Commission head Aleksandr Veshnyakov raised the idea again last month despite strong criticisms raised to the notion the last time it was proffered. According to gazeta.ru last month, Veshnyakov was responding to Taimyr Autonomous Okrug Governor Aleksandr Khloponin, who suggested recently that criminal liability be introduced against political consultants ("tekhnolog" in Russian) who refuse to abide by ethical norms and engage in "dirty tricks." Khloponin is also a candidate in the race for governor of Krasnoyarsk Krai. Igor Mintusov, co-chairman of one of the firms likely to be affected, Nikkolo M, told gazeta.ru that he believes the proposal to license firms may have been lobbied by companies close to commission. He called the idea "stupid" and "weak," arguing that the best way to eradicate dirty tricks would be to ensure that government officials themselves obey the country's elections laws. However, another member of Nikkolo M told RFE/RL that Nikkolo M was itself behind the proposal and favors the elimination of firms staffed by people without qualifications from the market.

Despite the threat of licensing and increased interference by the Kremlin, few political consultants contacted by RFE/RL this month believed that they will be less busy during the next election campaign than the last. Andrei Gnatyuk, president of IMA-Holding, said that the firms which have been in business as long as his are used to unreasonable dictates from government authorities. "If they tell us that our business must be conducted underwater, our response would simply be how long do we have to comply," he quipped. Likewise, Sergei Makarenko of the Center for Political Technologies reckoned that there will continue to be plenty of opportunities for Russia's now-experienced corps of campaign technicians. According to Makarenko, those candidates who are not incumbents have reduced access to administrative resources, and therefore have more incentive to seek the services of election professionals. And, Maksim Dianov, head of the Institute for Regional Problems, noted that business groups continue to play an active role in the regional elections, and they generally prefer to give their money to a political consultant to manage a campaign for their candidate than to give money to the candidate directly. Another potential client base are those candidates spurned by the Kremlin but who have not yet abandoned their hopes of a political career, according to Marat Guelman, formerly of the Foundation for Effective Technologies and currently in management at RTR television. The effort to win a place on the party list for the pro-Kremlin Edinaya Rossiya (Unified Russia) is already under way. And the losers from that battle may turn to the political technologists for the winning edge.

Perhaps the biggest source of confidence for all the political consultants is the Kremlin's record vis-a-vis elections so far. Despite Russian President Vladimir Putin's high rating, the presidential administration continues to back more losers than winners in regional elections and frequently must settle only on removing the most loathsome candidate from office rather than placing its man of choice in office. Dianov notes that in the upcoming mayoral elections in Nizhnii Novgorod, the choice of the Kremlin is Vadim Bulavinov, a State Duma deputy, who currently faces the very real prospect of not qualifying for the second round. Currently leading the polls is convicted felon and former Mayor Andrei Klimentiev, against whom many resources were deployed during the most recent gubernatorial election. Klimentiev lost that election but he has returned again, and if Bulavinov fails to qualify for the second round, the presidential administration will be forced to deploy all of its resources in favor of the likely second-place finisher, the incumbent Mayor Yurii Lebedev. Last March President Putin criticized not only Lebedev personally but also the experimental program for alternative civil service that he personally launched. Putin said he believes the program was organized exclusively to help Lebedev, "who has a very low rating and zero chance of being re-elected." So while there perhaps may be some cause to fear boredom during the next election cycle, Russia remains a big enough and complex enough country to continue to proffer the prospect of a least a few surprises. (Julie A. Corwin)

PROFILE
NIKKOLO M: A FIRM FIT FOR A PRINCE
By Maria Danilova

In the middle of the fallout over the disastrously close 2000 presidential elections in the U.S., the Russian television network NTV showed police apprehending a man at a Moscow airport trying to steal a suitcase from a plane en route to the U.S. When police opened up the suitcase, they found it was not full of valuables but voting ballots marked for Al Gore. The segment was, in fact, a skit from the satirical show "Itogo" rather than from a news show, but it perhaps illustrates how quickly over the past 10 years Russia has learned the tricks of elections, acquiring a cynicism about the election process that could be called precocious.

In slightly more than a decade that Russia held competitive elections both on local and the federal levels, Russian political campaigners have come up with a variety of techniques for winning elections. Some of them, as the NTV show demonstrates, are a far cry from the generally accepted norms of fair competition. In recent years, a number of election campaigns have been marred by the use of so-called "black PR" or other dirty tricks. Such techniques include the use of "doubles," which involves registering a candidate with the same name as one's rival in order to confuse the electorate. Another tactic used is distributing leaflets tarnishing a candidate while he is speaking at his own rally.

But those and other techniques can be remarkably successful. The team responsible for President Boris Yeltsin's 1996 re-election campaign is widely credited with hauling the incumbent president's ratings from the single digits to widespread public support and a confident victory in the second round of that race.

In addition to generating a fair share of controversy, political consulting in Russia has also generated profits. Among the industry's top performers is Nikkolo M. One of country's first political consulting firms, it was founded in 1992 and was named after the Italian philosopher Niccolo Machiavelli, who, according to the firm's co-Chairman Igor Mintusov, invented systemized political consulting.

Nikkolo M started out as a small team of psychologists and sociologists and from 1992 to 1995 employed as few as five to seven people. Today, the company is one of the largest in its field, specializing not only in political consulting, but also in advertising, marketing, and financial consulting and employs more than 50 full-time and more than 150 part-time workers, Vladimir Kravtsov, head of Nikkolo M's PR branch told RFE/RL.

Over the years Nikkolo M has conducted more than 100 political campaigns at governors', parliamentary and presidential elections. According to Mintusov, the company has overseen 10 gubernatorial elections, winning eight of them. Kravtsov said that during the 1999 Duma elections, their specialists conducted campaigns from Kaliningrad to Vladivostok, winning 51 single-mandate seats out of 225 in the Duma.

"The Western PR people used to look down on us," said Nikkolo M co-Chairwoman Yekaterina Yegorova, said in early interview, noting that Russian PR was first seen merely as a duplicative of Western methods and technologies. However, by now Russian PR specialists have come up with their own unique methods, and "the West observes them with interest, studies, and adopts them," Yegorova added.

Both Mintusov and Yegorova are optimistic about the future development of political consulting in Russia. "The market is big and there is [little] competition, because demand considerably exceeds supply," Yegorova once said. Mintusov sees Nikkolo M's current goal as that of widening the sphere of their activity and looking for Western partners. Nikkolo M has already diversified its client base by conducting political campaigns in countries such as, Poland, Moldova, Lithuania, Bulgaria, South Korea, and Venezuela. In 1998 Mintusov was hired by the U.S. Democratic Party to serve as an independent political consultant for Senate elections in various states. Apparently, though, he was in the U.S. too early to have been any help to candidate Gore.

Maria Danilova worked in the Washington bureau of RFE/RL and is currently a graduate student at the Central European University in Budapest.

STATE DUMA
BACK IN BUSINESS.
After a long summer break, the State Duma will open its spring session on 11 September to widespread expectations that its centrist pro-Kremlin majority will continue its practice of quickly passing government-initiated bills. The lower house of parliament is slated to consider a whopping 535 legislative bills before breaking up for the winter holidays at the end of December. The Interfax news agency cites Duma Deputy Speaker Lyubov Sliska as saying 144 bills are considered priority legislation.

Consideration of the federal budget for next year dominates the agenda, followed by reform at national power utility Unified Energy Systems (EES) and changes to the distribution of power at the local and municipal levels of government. Led by the pro-Kremlin umbrella United Russia party, the Duma's centrists hold roughly 240 seats in the 450-seat chamber. That makes it difficult for the opposition to do much to influence a government-initiated, legislative-reform juggernaut set in motion when President Putin took office in 2000.

Boris Makarenko, an analyst at Moscow's Center for Political Technologies, says the fall session will likely not differ from previous sittings, in which the government rammed through a barrage of bills that deputies often did not have time to read.

Duma Deputy Sergei Ivanenko, a prominent member of the liberal Yabloko party, agrees. He told RFE/RL that as parliament reconvenes, it is clearer than ever that the Duma has "liquidated itself as a political organ." He added, "The Duma as a whole is continuing its line of complete dependence and total subjugation to the executive branch."

Encouraging the process is the so-called "zero reading" that precedes parliament's open-floor consideration of bills, which usually consists of four readings. The term "zero reading" refers to the practice, begun last year, of the government and the Duma's powerhouse centrist factions meeting earlier to agree on general parameters. Ivanenko says the routine further diminishes the independence of the country's legislative branch, and points as an example to an agreement on the budget hammered out over the past two months between the government and the Duma centrists. Ivanenko adds that debate over the budget, which usually takes up the bulk of the fall session, represents the Duma's best opportunity to stake out its position on the country's major economic problems: "The Duma -- in the form of the centrists, the union of four [parties] -- has already refused to do that. It announced it would support the draft introduced by the finance minister -- that was probably the most visible event that occurred in the period leading up to the fall session."

Some parliamentarians, including Deputy Speaker Sliska, nonetheless predict a major tussle over the budget. But Ivanenko says the issue has ceased to be a matter of political debate, becoming instead the focus of chiefly backroom lobbying. Makarenko agrees, saying the budget's main points this year will most likely not undergo significant change under parliament's scrutiny. Negotiations will instead concern concrete allocations within the pre-arranged parameters. Haggling this year, he adds, will probably take up even less time than last year, when the document sailed through parliament.

Rather than lamenting the lack of argument, the centrists say the lower house has finally become an effective institution after years of paralysis under Yeltsin. Duma Deputy Oleg Morozov, who heads the centrist Russian Regions group, echoes the view in an interview with polit.ru on 9 September. "The Duma has changed," he said "In the past year it began to successfully combine political debate with routine work on legislation." He adds: "It bothers me when people say that that's boring. Parliamentary work is generally a dull thing. In any case, it's normal parliamentary work."

Vladislav Reznik, co-head of the Duma's pro-Kremlin Unity faction, which makes up the bulk of the Unified Russia party, told Interfax that power-utility reform and the budget rank at the top of the faction's list of priorities along with electoral and tax reform. Electricity-sector restructuring is a highly charged political issue. EES chief Anatolii Chubais has long pushed for liberalization he says would distribute control to regional power companies and help attract investors by allowing market mechanisms to set higher rates.

The sector is still mired in the Soviet-era practice of having the state heavily subsidize public services, which in turn cannot raise enough revenues to raise desperately needed investment. Critics, including foreign investors in EES, say Chubais wants to give away the utility's assets to regional insiders by effectively engaging in asset stripping. Jacking up charges is also highly unpopular with the country's impoverished population, raising accusations that reform is being carried out to benefit the wealthy at the expense of the masses.

That sentiment is not lost on politicians. On 6 September, Putin told Duma Speaker Gennadii Seleznev during a meeting between the two that the Duma should approach reform at EES cautiously, especially in regard to how changes would affect consumers. Anvar Amirov, an analyst at Moscow's Panorama political research group, said that the government's views on EES reform are actually closer to that of the Duma's liberal groups than the majority ones, whose members think more control should be given to regional government. "It's clear that in the current situation, the government will try to use the influence of SPS [Union of Rightist Forces] and Yabloko to push forward its position," Amirov said. "But the principal line-up won't change," he continued. "There just aren't any issues that would affect the current line-up of forces because the centrist parties, Fatherland and Unity in particular, base their voting on the Kremlin position on all other questions."

Other issues likely to face dispute in the Duma include banking reform as well as a plan to address local and municipal government, now the subject of a long-planned proposal by deputy head of the presidential administration Dmitrii Kozak. The scheme envisions a wide-ranging number of bills meant to delineate authority between federal, regional, and local state structures. They form the final part of Putin's restructuring of regional state structures, which has included changes curbing the power of the Federation Council (upper house) and the country's governors.

Meanwhile, jostling ahead of Duma elections scheduled for December of next year will undoubtedly influence this fall's proceedings. Russian Regions Deputy Morozov told polit.ru that every discussion on the Duma floor will be politically charged. "That's why I think there won't be any ordinary, uncontroversial questions," he says, adding that the atmosphere will still not affect parliament's prolific activity. (Gregory Feifer is RFE/RL's Moscow correspondent)

POLITICAL CALENDAR
12 September: The presidium of the All-Russian Union of Insurers will discuss draft legislation regulating the insurance market

13 September: Slovenian Prime Minister Janez Drnovsek will arrive in Sochi for a meeting with President Putin

13 September: The Audit Chamber will hold a session to discuss the 2003 federal budget with Finance Minister Aleksei Kudrin in attendance

13 September: State Duma deputies plan to examine amendments to the law on the stock market and on shareholder societies

14-23 September: The World Association of Female Entrepreneurs will hold its 50th international congress in St. Petersburg

15 September: Mayoral election will be held in Nizhnii Novgorod

15 September: Government will submit to the Duma amendments to the law on Russian as a state language

18 September: First plenary meeting of State Duma's fall session

19 September: Date by which Russian cabinet will make a final decision on the nature and extent of its intervention in grain markets

26-27 September: Association of Election Organizers from the Countries of Central and Eastern Europe will hold a special conference in Moscow, according to "Izvestiya" on 17 June

29 September: By-election in single-mandate district in Omsk Oblast for State Duma seat formerly occupied by Aleksandr Vereteno, who died in April

1 October: Ferry service will start between Kaliningrad and St. Petersburg, according to deputy presidential envoy to the Northwest Federal District Andrei Stepanov

5 October: Criminal investigation by Prosecutor-General's Office of oligarch Boris Berezovskii to end officially

7 October: CIS summit to be held in Chisinau, Moldova, according to Interfax on 13 May

12-14 October: Japanese Foreign Minister Yoriko Kawaguchi will visit Russia

20 October: By-election in single-mandate district in Khanty-Mansii Autonomous Okrug for State Duma seat once occupied by Aleksandr Lotorev, who now directs the Duma's apparatus

20 October: Presidential elections in Kalmykia

26-27 October: Putin to attend APEC summit in Los Cabos, Mexico

14 November: Meeting of united political council of Union of Rightist Forces and Yabloko scheduled

1 January: Date by which Unified Energy System plans to redeem 80 percent of debts to Russian coal companies, according to company statement on 29 August.

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