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Russia Report: November 8, 2000


8 November 2000, Volume 2, Number 41
PAN-REGIONAL ISSUES
KREMLIN FINDS SOLUTION FOR 'THIRD TERM' PROBLEM.
The controversy over whether some regional leaders will be allowed to seek a third term continues to receive coverage in the central press. But comments by federal officials increasingly sound alike. In an interview on 2 November with Russian Television, presidential envoy to the Volga district Sergei Kirienko commented that the question of whether Tatarstan President Mintimer Shaimiev can run again in March 2001 presidential elections is a "legal not a political" issue. He explained that federal law prohibiting a third term for regional heads was adopted only in October 1999, and either the federal Supreme Court or State Duma needs to give a precise interpretation of how the law affects governors whose second terms began before the legislation took effect. In a recent interview with "Vek," Sergei Samoilov, head of the Main Territorial Directorate of the presidential administration, also suggested that whether or not Shaimiev runs should be decided by a court on the basis of law rather than personality or individual circumstances. The comments of Kirienko and Samoilov echo the point of view expressed earlier by Central Election Commission Chairman Aleksandr Veshnyakov, who suggested that either the court or legislators needed to clarify how the law prohibiting third terms affects regional leaders who were in office at the time the law was passed (see "RFE/RL Russian Federation Report," 11 October 2000). In an interview with "Moskovskii komsomolets" on 2 November, State Duma deputy (independent) Vladimir Ryzhkov comments on draft legislation that would allow regional leaders a third term. Ryzhkov says that "there are reasons to believe" that the bill, which was authored by State Duma deputy (Russian Regions) Mikhail Bugera and others, was actually "thought up in the presidential administration." He added that presidential representative to the State Duma Aleksandr Kotenkov has "made it absolutely clear that the Kremlin wanted the amendment." Ryzhkov put the chances of the bill passing the Duma at 50-50. "Kommersant-Daily" reported last month that the administration had drafted a bill that would allow regional leaders a third term in office (see "RFE/RL Russian Federation Report," 18 October 2000). JAC

PRESIDENTIAL ENVOY COURTS REGIONAL OLIGARCHS?
"Nezavisimaya gazeta" on 3 November details the history of the now-open conflict between Sverdlovsk Governor Eduard Rossel and presidential envoy to the Urals district Petr Latyshev. The daily, which is controlled by Boris Berezovskii, argues that Rossel has had to contend with growing attrition among people loyal to him who occupied key posts in the oblast and larger Urals district. For example, during his visit to Yekaterinburg in 1999, when he was director of the Federal Security Service, President Vladimir Putin had expressed dissatisfaction with the performance of the head of FSB's department in Sverdlovsk, Gennadii Voronov. Voronov was dismissed and became the head of the Urals Security Council, which Rossel had created. Next, the Urals military district lost its commander, who became Rossel's adviser on defense sector issues. After Latyshev's appointment, the head of the local customs administration was dismissed as well as a regional prosecutor. The newspaper declares, "Step by step, the structures used to strengthen the governor's power have been 'beheaded.'" Rossel has also allegedly faced a challenge on the financial front, as the bulk of Sverdlovsk Oblast's tax revenues have been transferred to the federal budget for the first time in years. According to the daily, "the last straw" for Rossel came when Latyshev held a meeting with influential regional oligarchs. What's more, Latyshev also plans to hold meetings with Urals bankers and medium-sized companies, and he has announced a "visiting day" on which any resident can come to speak to him. According to "Novye izvestiya" (another newspaper controlled by Berezovskii), LUKoil head Vagit Alekperov, Uralmash head Kakha Bendukidze, Surgutneftegaz head Vladimir Bogdanov, among others, attended the meeting with Latyshev. According to the daily, those large enterprises had previously backed Rossel in exchange for his lobbying of their interests in Moscow. JAC

SIBERIAN ENVOY OPENS DISTRICT INFORMATION CENTER.
Presidential envoy to the Siberian district Leonid Drachevskii oversaw the official opening on 1 November of an information center for that district, Interfax-Eurasia reported. Drachevskii said the center will give journalists the opportunity to receive information "first-hand." He also explained that the center will monitor events and their coverage in the press. It will also issue information bulletins and press releases for distribution over the entire district. Also planned is a press club and "situation center." According to the agency, the opening of the center represents the beginning of the realization of the program for a single information space on the territory of the Siberian federal district. The center also follows the opening of a business center in the Central federal district (see "RFE/RL Russian Federation Report," 1 November 2000). JAC

ELECTIONS
KREMLIN FAVORITE FAILS TO WIN IN KURSK...
State Duma deputy (Communist) Aleksandr Mikhailov is to succeed Aleksandr Rutskoi as governor of Kursk, having won the 5 November run-off in the oblast. Mikhailov garnered 55.5 percent of the vote, according to official results reported the next day, while Kursk Oblast main federal inspector Viktor Surzhikov, who was widely regarded to have been the Kremlin's favorite in the ballot, received 37.9 percent backing. Forty-seven percent of the electorate turned out to vote. Three days before the run-off, Rutskoi had lost his appeal to the federal Supreme Court to overturn a regional court's ruling that had barred him from seeking re-election (see "RFE/RL Russian Federation Report," 25 October 2000). The Supreme Court upheld the lower court's ruling that Rutskoi was guilty of failing to declare all his property and of abusing his office during the election campaign. Following the higher court's decision, Rutskoi announced he would appeal to the presidium of the Supreme Court. Interestingly, Rutskoi appears to have the backing of the local branch of the pro-Kremlin Unity. The head of the executive committee of the Kursk Unity branch, Anatolii Khakhalev, was among several people who went to court in Kursk to contest the legality of the run-off election but were unsuccessful, "Kommersant-Daily" reported on 5 November. The Kremlin, for its part, is widely considered to have been behind the decision to bar Rutskoi from the gubernatorial ballot. JC

...BUT LEADS INCUMBENT IN KALININGRAD.
Baltic Fleet Commander Admiral Vladimir Yegorov polled some 37 percent of the vote in the first round of gubernatorial elections in Kaliningrad Oblast on 5 November, compared with only 21 percent for incumbent Governor Leonid Gorbenko, ITAR-TASS reported on 6 November, citing preliminary results announced by the regional election commission. Yegorov is considered the Kremlin's choice in that election. A run-off will take place on 19 November. JC

NO CHANGE AT THE TOP IN MAGADAN.
Magadan Oblast Governor Valentin Tsvetkov was re-elected in the 5 November gubernatorial ballot, having won 62.8 percent of the vote with some 92 percent of the ballots counted, Interfax reported the next day. His main rival, State Duma deputy (Russia's Regions) Vladimir Butkeev, had only 14.18 percent of the vote. JAC

BRYANSK
COMMUNISTS SPLIT SUPPORT BETWEEN TWO CANDIDATES FOR GOVERNOR.
The local branch of the Communist Party is supporting two candidates, both Communists, in the 3 December gubernatorial ballot, "Bryanskoe vremya" reported on 4 October. One of those candidates is Stepan Ponasov and the other is incumbent Governor Yurii Lodkin. A Communist Party spokesman told the local newspaper that his group has no problem supporting two candidates since both Lodkin and Ponasov have been nominated as candidates by initiative groups, not the party. That remark prompted the newspaper to comment that either the standing of the Communist Party in Bryansk is so low that the candidates prefer not to have it nominate them or the quality of candidates is such that the party prefers to keep its distance in order to avoid seeing its authority eroded even further. Lodkin has been named in the federal media as one of several governors the Kremlin wants replaced. JC

BURYATIA
SMALL BUSINESS SECTOR UNDERDEVELOPED.
Entrepreneurs taking part in the fourth conference of entrepreneurs of Buryatia appealed to the republic's government for state financial support of no less than 2 percent of the local budget resources, "Nezavisimaya gazeta-regiony" reported on 31 October. Businessmen also called for a state policy of protectionism for small businesses. According to the semi-monthly, 80,000 people in the republic are employed by small businesses. The share of tax revenues provided by small businesses in the republic totals some 6.5 percent, which is almost 1.5 times lower than the average in Russia, the publication reported. JAC

MARII EL
KISLITSYN FIGHTS ON.
Despite considerable pressure from the center, which is widely believed to be opposed to his leadership, President Vyacheslav Kislitsyn has registered for the 3 December presidential elections in the republic, declaring he will "continue the fight," "Kommersant-Daily" reported on 3 November. At a recent meeting in Nizhnii Novgorod, presidential representative to the Volga district Sergei Kirienko had suggested "sufficiently strongly" that Kislitsyn not take part in the upcoming vote, but the Marii El president had rejected that suggestion, noting that none of the other candidates is "trustworthy," according to the Moscow newspaper, citing sources in Kirienko's office. Last month, a special commission headed by the deputy presidential representative to the Volga District had found numerous instances of corruption among the Marii El leadership and had accused those leaders of "third-rate management" (see "RFE/RL Russian Federation Report," 1 November 2000). "Kommersant-Daily" also reported that one of the most serious challengers to Kislitsyn next month is likely to be the republican Interior Affairs Minister Anatolii Ivanov, who is rumored to have the backing of the Kremlin. JC

MORDOVIA
AUTHORITIES TARGET 'KULAKS.'
In what locals have compared to the Communists' dispossession of the kulaks, the head of Ichalkovsk Raion has launched a campaign against those private farmers who in recent years have managed to acquire tractors and other farm machinery, RFE/RL's Russian Service reported on 3 November. Local security officials were ordered to carry out a thorough check of private holdings to identify those farmers who possess such equipment; a special raion commission was then formed to determine whether that equipment had been acquired legally. Acting under the slogan "Fighting the illegal acquisition of agricultural machinery by private individuals," officials have confiscated machines and implements lacking registration documents. RFE/RL's Russian Service notes that in this way, the raion leadership is hoping to resolve the problem of the insufficient number of agricultural machinery on kolkhozes, as a result of which some of this year's harvest could not be brought in. JC

OREL
STROEV SECURES CONTROL OVER REGIONAL MEDIA OUTLET.
"Nezavisimaya gazeta" on 27 October pondered how regional leaders may be responding to the drive, spearheaded by presidential representative to the Northwest District Viktor Cherkesov (see "RFE/RL Russian Federation Report," 12 July 2000), to create district-level media outlets and thereby secure central control over the media in the regions. It singled out Orel Governor Yegor Stroev, who in August 1999 issued a decree establishing the Oblast Television and Radio Broadcasting Channel, a joint-stock company owned 100 percent by Orel Oblast. The newspaper points out that in forming that new entity, the oblast administration transferred assets from the oblast State Television and Radio Company [GTRK] and thereby "ignored" the federal law on "the state management and support of the All-Russia State Television and Radio Company [VGTRK]," of which the GTRK is a subsidiary. That law states that VGTRK's assets cannot be privatized and can be transferred only with the consent of the federal government. Stroev's decree declares that the Oblast Television and Radio Broadcasting Channel's founder is the oblast Committee for the Administration of State Property and its general manager, Vladimir Babin, who is also director of the Orel GTRK. In addition, it transferred a building belonging to the oblast GTRK to the authorized capital of the new joint-stock company. In mid-July 2000, shortly after Cherkesov announced his desire to create a district news outlet, the Oblast Television and Radio Broadcasting Channel was registered to "disseminate topical, objective, and full information on life in Orel Oblast." In the one year between Stroev's decree and the channel's registration, the newspaper remarked, nothing at all had been heard about the Oblast Television and Radio Broadcasting Channel, as if Stroev had been "saving his [new] media outlet for a 'rainy day.'" JC

RYAZAN
INCUMBENT'S MAIN CHALLENGER GETS SUPPORT FROM SPS, YABLOKO.
The Union of Rightist Forces (SPS) and Yabloko have announced they are supporting one candidate in the 3 December gubernatorial ballot in Ryazan Oblast, a region that traditionally belongs to Russia's so-called Red Belt, "Kommersant-Daily" reported on 2 November. That candidate is reformer Mikhail Malakhov, who is considered to be the main challenger to incumbent Governor Vyacheslav Lyubimov. "Segodnya" had recently noted that Lyubimov's prospects for re-election appear dim against the backdrop of the region's "pitiful" economic results over the past four years and the fact that Ryazan residents no longer feel safe following the August bomb explosion in a downtown marketplace (see "RFE/RL Russian Federation Report," 13 September 2000). JC

TAIMYR
REGIONAL OLIGARCH RUNS FOR OFFICE...
Following in the footsteps of former Sibneft head and State Duma deputy (independent) Roman Abramovich, who recently announced his plans to seek the governorship in Chukotka Autonomous Okrug, Norilsk Nickel General Director Aleksandr Khloponin declared his candidacy for the governorship of Taimyr Autonomous Okrug, ITAR-TASS reported on 1 November. Like Chukotka, Taimyr is a sparsely populated region in the Far North. Taimyr is home to Norilsk Nickel, which is the world's largest producer of nickel. Khloponin told a gathering of deputies from neighboring Krasnoyarsk Krai's Legislative Assembly that the "model for governing a territory is not that different from governing a large corporation," "Kommersant-Daily" reported on 3 November. According to the daily, the deputies expressed their fear that in the event of Khloponin's possible victory, Norilsk Nickel's tax payments might be directed away from the krai to Taimyr. Some 70 percent of the krai's budget revenues come from Norilsk Nickel. Incumbent Governor Gennadii Nedelin has not yet declared his intention with regard to the election, scheduled for 28 January 2001. According to the newspaper, Khloponin's chief competition will be Longin Khan, director of the Dudinskii sea port, and Mikhail Steklov, deputy in Taimyr's legislative assembly. JAC

...AS LEBED, CHUBAIS OFFER THEIR ENDORSEMENTS.
Krasnoyarsk Krai Governor Aleksandr Lebed told reporters on 3 November that Khloponin has crisis-management experience as well as being young (at 35) and a very decent person. And, Lebed stressed, Khloponin "is simply wealthy and doesn't need $100 in an envelope. This is an anti-corruption guarantee." Unified Energy Systems head Anatolii Chubais said that Norilsk Nickel is one of the most effective companies in the country and people who have demonstrated their ability to manage a huge corporation in complex circumstances deserve the deepest respect. JAC

REGIONAL INDEX
HOW VULNERABLE ARE REGIONS TO 'OBSCURE FINANCE MINISTRY OFFICIALS'?
In an article in "Itogi" on 31 October, Mikhail Delyagin, head of the Institute for Globalization, appraises the government's new plan for evening out economic disparities between the regions. Delyagin argues that the government has tinkered with the two-year-old "Concept for the Reorganization of Budget Relations" and, as a result, the level of development and the tax-paying potential of many Russian regions will change dramatically next year. For example, he claims Koryak Autonomous Okrug, which is currently viewed as one of Russia's weakest regions economically, will next year be viewed as Russia's fourth most-developed (see table below). Another change will be that in 2001 regions will start receiving federal subsidies if fulfillment of their budgets falls below 80 percent; this year that threshold was 91.2 percent. Delyagin, noting government officials reportedly "assure everyone that they are abiding by the two-year old concept," harshly criticizes government officials for being "too fond of changing the mechanism." As a result, he argues, the parameters and standards of federal tax revenue distribution change each year. He also suggests that the reduction of revenues to the regions in the 2001 draft budget will exacerbate the fiscal crisis in the region triggered by the 13.7 percent reduction in tax revenues under the 2000 budget. He declares that "as a rule, the tax-collecting potential of recipient regions is insufficient even for a minimal level of social maintenance." He continues, "As a result, the lives of 65 percent of Russian citizens hang on the thin thread of payments that depend on the mood of obscure Finance Ministry officials. The federal government is leaving the regions without financial room for maneuver and turning them into hostages of the federal budget and federal officials." "Argumenty i fakty" in its issue No. 44 quotes an unidentified Finance Ministry official who argues that distribution of tax revenue will be subject to less personal discretion because the ministry, together with the World Bank, has worked out a formula for calculating transfers that takes into account all factors, from the average minimum wage in a given region to its demographic situation. According to the official, regional leaders will no longer be able to appeal to cabinet members or manage to get "money from the federal budget via personal connections." JAC

RUSSIA'S RICHEST REGIONS

Region_______Ranking in 2000______Predicted Ranking in 2001

Yamal-Nenets__________3____________1

Khanty-Mansii__________2____________2

Nenets_______________58____________3

Koryak_______________81___________4

Sakha (Yakutia)________60____________5

Moscow_______________1____________6

Chukotka_____________79____________7

Komi_________________16___________8

Magadan_______________72__________9

Murmansk______________26_________10

Samara_________________4__________16

St. Petersburg____________5__________22

Perm___________________6__________17

Tatarstan________________7__________15

Tyumen_________________8__________14

Sverdlovsk_______________9__________23

Lipetsk_________________10_________33

Source: Mikhail Delyagin of the Institute for Globalization writing in "Itogi," 31 October 2000.

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