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Russia: Yeltsin's Anti-Corruption Decree Leaves Loopholes-- An Analysis

Moscow, 11 April 1997 (RFE/RL) - Olgas Larina, a 66-year-old pensioner and former school teacher, sells wild spinach and onions near a metro station in downtown Moscow. She says she knows nothing about new anti-corruption measures announced this week by Russian president Boris Yeltsin. "Ending officials' corruption? Not in this country," she says with a laugh.

Olga, like many Russian citizens, received only last month her January pension of $63. And she says she is convinced unpaid pensions and salaries never get to Russian workers and pensioners because "officials at all levels get rich at citizens' expense." She adds: "Anyway, Russia would not have enough jails for all the officials who take bribes." And she concludes that Yeltsin "has launched many anti-corruption fights in the past and too few officials have been jailed. This time it will be the same."

In a radio address to the Federation yesterday, Yeltsin tried to persuade citizens like Olga that they are wrong and that there are measures, other than ineffective criminal punishment, to discourage bribery. Yeltsin said, this time, he's seriously determined and has the political will to end the official corruption that has crippled Russia's reform prospects, and disillusioned citizens.

"The openness of budget spending is the only guarantee against the wide scale misuse of state money," said Yeltsin, explaining the main drive behind a politically sensitive decree he signed Tuesday. The decree requires that government purchases and services be subject to competitive biddings in open tenders. Currently, Government contracts are rendered in secret, allowing widespread bribery. Secret deals with federal contractors are seen as a major source of illicit income for many officials at all levels.

New First Deputy prime Minister Boris Nemtsov tomorrow is due to chair a meeting of Government officials, to detail how federal contracts are to be granted by fair and open tenders.

Yeltsin's decree gives a legal framework for all budget spending, except the payment of salaries and pensions in the state sector. Government contracts include virtually everything, from the purchase of goods for the army, to banking services and construction projects.

The decree is a two-page document, but enclosed are 23 pages illustrating in detail the mechanisms of tenders and the role of government institutions.

Natalya Nikitina, an Economy Ministry official who participated in drafting the document, says this a major novelty in legal terms. Nikitina says the mechanism of tenders for Government contracts had never been spelled out before.

The deputy chairman of the State Duma's budget committee, independent deputy Aleksandr Zhukov, estimates the measure may save up to one quarter of the budget spending, therefore contributing to reducing the budget deficit.

However, Grigory Yavlinsky, a reformist and critic of Yeltsin, tells RFE/RL that the decree has nebulous wording that leaves at least several huge loopholes for corrupt officials to get around it.

According to a copy of the decree obtained by RFE/RL, the Government reserves the right to organize tenders with limited participation -- and, participation is not solely limited to concerns for national security and defense. Other possible reasons are foreseen, such as the costly organization of some tenders, and the urgent needs for certain contracts, not allowing the time frame for the tenders' organization.

It is also possible for the government to decide simply that "limited participation is the best possible way" to conduct a tender.

The main loophole is the two-months term given to the Government in order to establish a list of purchases that will not undergo tenders under any circumstances. Observers fear that the most important deals may continue to be conducted behind closed doors, at least for the next two months. Government officials say, in private conversation, that this last point was not present in the draft and was introduced on the way to Yeltsin's desk.

This may have been the price to pay to swiftly cut through layers of feuding bureaucrats in Government and in the Presidential administration, who promote different industrial and financial lobbies.

State Duma Deputy Chairman Aleksandr Shokhin says "nothing new has basically been invented" with the decree. He says the document had existed in draft form for more than two years. But, Shokhin says, no former cabinet official had been able to organize successfully the paper's way from government offices to Yeltsin's desk.

Last month, Yeltsin promised in his state-of-the-Federation address to boost reform and fight what he called the incompetence of the former cabinet. The address was followed by the formation of a new Government, led by the two First Deputy Prime Ministers, Anatoly Chubais and Boris Nemtsov.

Many observers expressed doubts that Nemtsov, a brilliant but provincial governor, could manage to work successfully in team with Chubais, a man seen as already consumed by all sorts of Moscow political intrigues.

But Yeltsin's signing of the decree, just a few weeks after his pledge to boost reform, is a powerful sign that Nemtsov and Chubais can work effectively together, at least for the moment. The decree was drafted by officials close to Chubais, but it reached Yeltsin's desk thanks to Nemtsov.

In an interview with the "New York Times," published before the signing, Nemtsov said he had been instrumental in pushing the draft through all the levels of Russian bureaucracy. He said he had "personally rang every clerk in the Kremlin, to make sure it did not get sidetracked." Nemtsov promised Yeltsin would sign the decree this week. His confidence -- regarded as naive by several Kremlin observers and insiders -- proved right. Yeltsin signed the decree Tuesday.