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Russia Report: May 1, 2001

1 May 2001, Volume 1, Number 13
NOTE: The next issue of "RFE/RL Russian Political Weekly" will appear on 14 May.
PUTIN TO DO MORE SPRING-CLEANING IN CABINET? At least two Moscow-based newspapers, "Nezavisimaya gazeta" and "Obshchaya gazeta" are predicting that Russian President Vladimir Putin plans to make sweeping personnel changes in May. According to "Nezavisimaya gazeta" on 28 April, Putin is planning to announce another cabinet reshuffle during the May holidays. The daily, which is controlled by Boris Berezovskii, concludes that such an announcement is likely in part due to the "seasonal factor": It was May last year that Putin announced his reforms of how the federation is administered (see "RFE/RL Russian Federation Report," 17 May 2000). An additional reason is that Putin's appointment of new ministers to head the Defense and Interior ministries suggests that the Kremlin has prepared for a "second strike."

The exact shape of the new cabinet has not yet been determined, according to the daily. The government chief-of-staff Igor Shuvalov has received an "enormous" number of diverse proposals in response to President Putin's earlier call for proposals to streamline the cabinet. In addition there are a number of groups lobbying for their "man" to replace Prime Minister Mikhail Kasyanov. Among those being touted are Audit Chamber head Sergei Stepashin, presidential envoy to the Volga federal district Sergei Kirienko, Pension Fund head Mikhail Zurabov, and presidential administration head Aleksandr Voloshin. The first two candidates are former prime ministers who are supported by the so-called "St. Petersburg" team of officials in the cabinet. The daily concludes that despite the "buzz" over possible new prime ministers, Kasyanov stands a reasonable chance of being retained. For one thing, the Kremlin reportedly appreciated how Kasyanov handled himself during the recent no-confidence vote held by the State Duma (see "RFE/RL Russian Political Weekly," 19 March 2001).

While also predicting a "cadre revolution" will take place at the end of May and beginning of June, "Obshchaya gazeta" in its issue no. 17 paints a different picture of Kasyanov. It suggests that Kasyanov has been frenetically busy lately in part because of his uncertainty over his future. According to the weekly, "for the first time the government has a plan of work for three weeks in advance" and "Kasyanov has been constantly tormenting his ministers, not giving them a minute of peace." According to the "rumors" circulating through the Kremlin, the next prime minister will be either Economic Development and Trade Minister German Gref or Central Bank Deputy Chair Tatyana Paramonova.

According to the weekly, "other creatures of the Family [the coterie of relatives and officials around former President Boris Yeltsin]" besides Kasyanov are slated to go: administration head Voloshin and Railways Minister Nikolai Aksenenko. Media Minister Mikhail Lesin will reportedly lose his position when the Media Ministry is united together with the Culture and Education ministries. Voloshin supposedly wants to go of his own accord, but the Kremlin is still searching for a suitable candidate to replace him. According to the weekly, the chances of first deputy presidential administration head Vladislav Surkov replacing him have increased lately with the "successful operation joining [the pro-Kremlin] Unity party with Fatherland." Surkov's prospects are dimmed only by his unconventional background and the resulting perception of power ministers that he is not "one of them" (see "Profile" below).

Of course, predictions of cabinet reshuffles and Kasyanov's ouster started appearing almost as soon as the cabinet was formed. But "Nezavisimaya gazeta" last January got the timing right for Putin's first major personnel shift (see "RFE/RL Russian Political Weekly," 2 February 2001). On 31 January, it predicted that Putin would mark his one-year anniversary in office this March by conducting a thorough purge of the cabinet and administration, putting in place officials more loyal to him. Putin's actions on 28 March ended up being less of a purge and more a reshuffle with only one cabinet official, Atomic Energy Minister Yevgenii Adamov, losing his government salary. But Putin did put at the head of the Defense and Interior ministries officials, Sergei Ivanov and Boris Gryzlov, who -- if not more loyal to him -- at least owe their rise to him. And if making the cabinet more loyal is indeed a goal, then there are a number of officials, such as Aksenenko, whose ties to Putin are loose ones at best. (Julie A. Corwin)

Vladislav Yurevich Surkov: Key Player Behind The Scenes Although he failed to realize his first career aspiration -- theater director -- first deputy presidential administration head Surkov has succeeded at stage-managing a number of the country's recent political dramas that unfolded on the floor of the State Duma. Even Duma deputies who have nothing positive to say about Surkov agree that he is the "best political lobbyist of our time," "Kto est kto" reported on 13 December 2000.

Surkov is credited with successfully organizing the "PR-campaign" that enabled Sergei Stepashin in May 1999 to win confirmation as prime minister from the Duma in the first round, according to "Profil" on 14 June 1999. To achieve this result, Surkov spread two rumors among the legislators. One, that if Stepashin was not confirmed, then President Yeltsin would suggest another candidate even more unacceptable to the deputies, Unified Energy Systems head Anatolii Chubais. Then, deputies would face the unpleasant choice of having to confirm someone completely loathsome to them and lose face or risk the dissolution of the lower legislative chamber. And a dissolution would have meant that the majority of the left deputies would lose all the material and organizational support that a legislative seat gives them for preparing for a new election campaign.

The second rumor he spread, according to the monthly, was "prepared particularly for the Communist deputies": The Kremlin could not reach agreement with the Liberal Democratic Party faction, and therefore Stepashin would not have enough votes to be confirmed. The result of this "information campaign" was that the leadership of the largest faction, the Communists, decided to give its members the right to vote freely on the issue of Stepashin's confirmation. As a result, Stepashin's nomination sailed through, and he received more than 50 votes from the Communists (see "RFE/RL Newsline," 19 May 1999).

Surkov is not only one of Moscow's most successful political lobbyists, he is also one of the youngest, having been born in 1964. Surkov studied to be a theater director at the Moscow Institute of Culture, but did not complete his degree there, according to "Karera" on 1 October 2000. Instead, Surkov, unemployed, reportedly spent most of his time in the kitchen of his future wife's apartment, drinking tea, writing poetry, and bumming cigarettes. According to "Karera," the apartment was known as a "big hippie hang-out." Later when Surkov got an office in a room at the Center for Scientific and Technical Creations of Youth, he met Mikhail Khodorkovskii, the founder of Menatep.

In 1989, Khodorkovskii offered Surkov what appears to have been his first job, inviting him to take up advertising. One of Surkov's former colleagues at Menatep who worked with him at the beginning told "Karera" that "Slava had the idea of exchanging the logo of Menatep with that for the television program 'Vremya.' The first channel then took us to court, that is how there was an advertisement for our firm" on national television and later the logotype of Menatep appeared on the front page of "Moskovskii komsomolets." Surkov stayed with Menatep until 1997, becoming the first vice president of Rosprom-YUKOS, and played not an unimportant role in the rise of that bank into one of Russia's largest. According to "Karera," Menatep managed to attract large government credits, through Surkov's connections with high-level government bureaucrats. Surkov also was reportedly behind one of the bank's efforts to gain more cooperation from then Central Bank Chairman Georgii Matyukhin. Surkov allegedly gathered "kompromat" on Matyukhin and, with the help of several other banks, "began a wide-scale information war against Matyukhin," publishing compromising materials about him in 16 different publications.

In 1997, Surkov left Menatep to become first deputy chairman of the Alfa Bank. According to Alfa Bank Vice President for Public Relations Aleksandr Gafin, the reason Surkov left after a little less than a year was because he could not observe the bank's credo of non-involvement in politics. [That this is Alfa Bank's credo may come as a surprise to some observers.] Another reason was that in January 1998 he got an offer from Boris Berezovskii to join the board of directors for Russian Public Television, where Surkov served as first deputy general director. Then in May 1999, in the middle of the Duma's consideration of impeachment counts against then President Yeltsin and the confirmation process for Stepashin, Surkov was made an assistant to administration head Voloshin, according to "Itogi" on 18 April 2000. In August of that year, he was officially named deputy head of the presidential administration, replacing Sergei Zverev, who according to some sources was fired for his close ties to Vladimir Gusinskii. According to an article in "Profil" at the time ( 9 August 1999), Surkov had already earned the reputation as a "PR-manager supreme" -- and "more omnivorous" than his predecessor Zverev.

If "Obshchaya gazeta" is correct, then the recent announcement of the Unity-Fatherland merger represents not only Surkov's most recent achievement but the vehicle for his next rise. While some analysts and politicians remain skeptical about the mechanics of the merger and what practical effect it will have, many believe at the very least the union signifies the "political surrender" of Fatherland's leader, Moscow Mayor Yurii Luzhkov (see "RFE/RL Russian Political Weekly," 23 April 2001). Duma deputy Vladimir Lysenko (Russian Regions) told "Profil" in its most recent issue that Luzhkov was simply "hounded" until he gave in. And since Luzhkov does not represent the last of the Kremlin's political rivals needing to be recast in the role of ally, Surkov may have many more political spectacles in the future to produce. (Julie A. Corwin)

COUNTRY'S LEAD PROSECUTOR SPEAKS OUT AGAINST JUDICIAL REFORM. At a hearing in the State Duma on 25 April, Prosecutor-General Vladimir Ustinov came out publicly against judicial reforms proposed by the special commission on judicial and legal reforms chaired by deputy head of the presidential administration Dmitrii Kozak. Ustinov charged that the proposed reforms have not been thought out properly: "A real reform must begin with an analysis of the entire state judiciary systems. No such analysis has been made." He then added, "The reformers are only copying Western standards and are telling us that this is the best and the newest we may have." According to "Nezavisimaya gazeta" on 26 April, the commission has confirmed earlier recommendations that some functions and powers from the prosecutor's office be transferred to the courts.

Ustinov's opposition to the reform does not come as a complete surprise. Other officials from his office have spoken out against the planned changes in the country's legal system, and last January several news accounts claimed that Ustinov was among those policymakers that had persuaded President Putin to withdraw "liberal" amendments to the Criminal Procedure and Criminal codes that would have changed the current method for arresting and detaining criminal suspects (see "RFE/RL Russian Political Weekly," 19 March & 26 January 2001). More recently, at a press conference on 20 April, the deputy director of the Prosecutor-General's Office, Sabir Kekhlerov was more specific about prosecutors' objections to the reforms. He said that Russia needs to improve its living standards and its citizenry needs to develop more respect for the law before Russia's prosecutors should give up some of their power to the courts, RFE/RL's Moscow bureau reported. According to Kekhlerov, the prosecutor's office is the last resort for citizens to protest against corrupt judges.

That Ustinov would express his opposition so publicly to reforms that President Putin has backed explicitly prompted some newspapers to conclude that his career is either in the process of derailing or has already jumped the tracks. "Vremya MN" noted on 26 April that for Ustinov "it sounds so much better to be fired for 'telling the truth' than for incompetence." "Nezavisimaya gazeta" on the same topic concluded that "Ustinov's rebellion could be the last straw." It suggested without reference to sourcing that at least some parts of the Kremlin are opposed to Ustinov's "mad hunt for [Media-MOST Group head Vladimir] Gusinskii all over the world."

Other observers were less confidant that opposition from the Prosecutor-General's Office could be so easily squashed. Writing in "Itogi" on 17 April, Dmitrii Pinsker suggested that the battle over judicial reforms long ago ceased to be a 'legal discussion' and has been transformed into a drawn-out political conflict: "Can the head of the government overcome the opposition of the Prosecutor-General and restrain that Soviet monster, which had been raised especially for the struggle against opposition?" Pinsker predicted that the result of the conflict will determine not only the fate of the judicial reform but of the other "liberal" programs of President Putin.

Perhaps anticipating more opposition to the reforms from the nation's prosecutors, Kozak, meanwhile, appears to be wooing another group that has expressed opposition to the reforms -- judges (see "RFE/RL Russian Political Weekly," 19 March 2001). Among other things, judges are not happy about recommendations of Kozak's commission that the existing college of judges, responsible for appointing and suspending judges, should be reduced to just three judges and expanded to include legal experts from outside the court systems, according to RFE/RL's Moscow bureau. At a meeting of the Council of Judges on 17 April, Kozak reported that the reforms would be implemented from 2002-2006 and would require some 42 billion rubles -- the largest part of which would go towards raising judges' wages, "Nezavisimaya gazeta" reported the next day. Also included in the planned expenditures is the cost repairing court buildings and improving judges' living quarters. And, on the pro-Kremlin website, Kozak was quoted telling judges that the planned reforms would raise judges' salaries from their current level of about $200 a month to $1,000 by 2006. In addition, their ranks would increase, as more judges would be hired.

For judges in some regions, who have had to turn to local authorities to cover costs which were not being met by federal authorities, promises of more money being sent from Moscow may ring hollow. They may conclude that things like reorganizing the college of judges, which they don't want, is a low-cost measure that will occur long before they see a fatter paycheck. (Julie A. Corwin)

DEPUTIES APPROVE SOME MEASURES APPEALING TO WESTERN INVESTORS... On 24 April, deputies approved in its first reading amendments to the Criminal Code that reduces the penalties for managers who do not disclose certain kinds of information about their companies, "Kommersant-Daily" reported the next day. The amendments were supported by the Federal Securities Commission. The next day, the Duma took two actions likely to appeal to Western investors and improve Russia's image in the West. They approved amendments to the Criminal Code and Criminal Procedure Code that impose tougher sanctions on violations of intellectual property law, such as the illegal use of trademarks. The amendments will increase the fine for illegal use of trademarks from 200-400 minimum monthly wages to 400-800 minimum monthly wages to up to five years in prison. Deputies also confirmed an international convention on the struggle against money laundering. The convention was signed by Russian officials in May 1999. And, now even with the Duma's approval, it is necessary for supporting legislation to be approved, such as the law on preventing the legalization of revenues received by criminal means, in order for the convention to come into full force, according to RFE/RL's Moscow bureau. According to "Moskovskii komsomolets" this bill was submitted to the Duma by the government on 25 April. Also on 25 April, deputies rejected two bills aimed at reducing legislators' immunity from criminal prosecution. The first one sponsored by Deputy Viktor Pokhmelkin (SPS) had already been rejected earlier by the Duma (see "RFE/RL Newsline," 21 September 2000). The Unity and SPS factions supported for the bill, while People's Deputy group did not. JAC

...WHILE ACTING TO LIMIT THEIR PARTICIPATION IN MEDIA HOLDINGS. On 26 April, a bill prohibiting foreign citizens and companies from buying more than 50 percent or a controlling package of shares in Russian mass media organizations proved very popular, winning some 332 votes in favor during its first reading, RFE/RL's Moscow bureau reported. One of the authors of the bill, Unity deputy Aleksandr Chuev, explained to legislators before the vote that the bill is necessary because having a controlling interest in a media company in the possession of foreigners "could restrict the rights of Russians to freedom of speech." On the same day, deputies also approved in the third and final reading the law on martial law or emergency rule. Also approved in its first reading was a bill increasing pension payment for invalids whose condition resulted from their military service. Deputy Labor Minister Yurii Lyublin said that the legislation would require the government to spend an additional 180 million rubles ($6.2 million) a year, according to ITAR-TASS. On the same day, deputies approved in the first, second, third and final readings amendments to the law on state subsidies for people with children. The bill gives parents whose average incomes are less than the survival minimum wage the right to receive subsidies from the state. Deputies also passed amendments to the law on mortgages in its first reading, the amendments had been rejected the previous day. Legislators declined to support an appeal to President Putin regarding anti-Semitism in Russia. Only 129 votes were cast in favor of the appeal, which was sponsored by a member of Unity. Thirty-eight members of Fatherland-All Russia voted in favor of it, joined by only 20 members of Unity. Sixty-two members of Unity declined to vote on the bill at all. JAC

Legislation Law______________Date Approved_________# of reading

Criminal Code__________24 April______________1st
(Article 185)

Criminal Code__________25 April______________1st
(illegal trademark use)

Criminal Procedure Code__25 April_____________1st
(illegal trademark use)

On media______________26 April______________1st

On martial law__________26 April_______________3rd

On state pensions________26 April______________1st

On government subsidies__26 April_________1st, 2nd, 3rd
to citizens with children

On mortgages___________26 April______________1st

COMINGS AND GOINGS IN: Lieutenant General Nikolai Pankov was named on 24 April to head the apparatus of the Defense Ministry, replacing Colonel General Vyacheslav Meleshkov, who has been dismissed, "Kommersant-Daily" reported on 25 April. Pankov most recently headed the apparatus of the Security Council. On 17 April, Colonel General Ivan Yefremov was named head of the ministry's Main Cadre Administration, replacing Lieutenant General Ilya Panin. Yefremov is the former head of the Military University.

OUT: Five deputies have announced their departure from the Unity faction in April. On 27 April, Duma deputy Aleksandr Fedulov announced that he was resigning from the faction to protest the failure of his fellow members to support his resolution condemning anti-Semitism the previous day. On 23 April, deputy and leader of the Generation of Freedom movement Vladimir Koptev-Dvornikov told Ekho Moskvy that he and three other members of his movement, Vladimir Semenov, Alexander Barannikov and Andrei Vulf, were leaving Unity to join the Union of Rightist Forces faction.

IN: Duma deputy Alikhan Amirkhanov, who was recently elected from a single-mandate district in Ingushetia, joined the Unity faction, Interfax reported on 27 April.

POLITICAL CALENDAR 16 May: Duma will approve new schedule for the remainder of spring session, according to Duma Chairman Gennadii Seleznev.

Second half of May: Proposals to reform the government are due to be submitted to President Putin, according to Prime Minister Kasyanov.

19 May: Democratic Choice of Russia will convene a congress.

26 May: Union of Rightist Forces to host congress in Moscow.

27 May: Election for State Duma seat in a single-mandate district in Irkutsk Oblast will be held. The seat was left vacant when former State Duma deputy Vladimir Tikhonov was elected governor of the oblast.

Mid-June: New IMF mission slated to arrive in Moscow, according to Interfax on 24 April.

20-22 June: International Financial Action Task Force to hold a new meeting at which issue of Russian money laundering is likely to be discussed, according to "Izvestiya" on 23 March.

1 July: Audit Chamber to deliver its report on the effectiveness of Russia's expenditures of foreign credits in 2000.

5 July: Duma's spring session will come to a close, under the revised schedule, according to Seleznev on 26 April.

20-22 July: G7/G8 summit will convene in Genoa, Italy.

September: The public organization, Business Russia or "Delovaya Rossii," will hold its founding congress in St. Petersburg, according to "Kommersant-Daily" on 24 April.

November: Unification congress for Unity and Fatherland parties.