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Russia: Duma Session Of Crucial Importance

Moscow, 14 July 1998 (RFE/RL) -- This week's session of Russia's lower house of parliament, the State Duma, will be critical for the country, its government, and president.

Kremlin officials said yesterday they have secured a $22.6 billion loan bailout package over two years from international financial institutions. The package is aimed at supporting the ruble and preventing the complete collapse of financial markets.

But the release of the first payment appears to be hanging on the unreliable hook of the Duma's approval of the government's anti-crisis program. Officials from the International Monetary Fund (IMF) and the World Bank, the two institutions that are to disburse most of the money, have made clear that Russia must meet several strict conditions if it wants to secure the release of the much-needed loan.

First and foremost, IMF Managing Director Michael Camdessus has said that the IMF Board of Directors will not approve the first loan payment until Russia's parliament approves the government's anti-crisis program. The Board is scheduled to meet on July 20.

The program includes new tax legislation and stringent budget cuts. Deputies in the Communist- and nationalist-dominated Duma approved some minor bills in a session earlier this month, but they voted down some of the fiscal bills that the reformist government of Prime Minister Sergei Kiriyenko considered most important.

Despite a Federation Council (Russia's upper house) resolution last week that approved the program in principal, deputies in the Duma are unlikely to support stringent measures that they consider undesirable in their closing session this week (July 15-16).

The Duma has so far avoided showdowns with Kiriyenko's government and President Boris Yeltsin by approving some bills and agreeing to negotiate with the government on others. But the government will surely face an uphill battle to gain enough parliament backing for the anti-crisis legislation.

Yeltsin has made clear he is prepared to introduce the measures by decree if necessary, but such a move probably wouldn't guarantee the degree of implementation that the government and the IMF would consider necessary.

For instance, deputies in the Duma, voicing the concerns of powerful business interests whose financial backing will be crucial in next year's parliamentary elections, have opposed a government attempt to crack down on Russia's biggest tax delinquents, including gas giant Gazprom, and force them to pay their taxes.

The Federation Council, which normally holds session once a month, has decided to convene a special session on July 22 to consider the government bills that do obtain approval of the Duma this week.

Addressing powerful regional leaders in the Federation Council on July 10, Kiriyenko said the government-proposed program in essence represented a wholesale change in Russia's economic policy.

Federation Council Speaker Yegor Stroev seemed to welcome the program, saying that for the first time the government and the assembly were, as he put it, "speaking the same language."

However, the Federation Council resolution that overwhelmingly endorsed the program in principle also sharply criticized important aspects of the plan, describing them as, in its words, "obviously insufficient." And during the debate, Federation Council members made clear they did not agree with most of the measures included in the government anti-crisis program.

Last Friday, the Federation Council started considering three bills included in the government program. The house approved bills on waiving value-added tax on imported equipment and reducing excise duties on carbonated alcoholic beverages. But it rejected a proposal to raise taxes on the gambling business. The measure had been opposed by one of the most influential members of the house, powerful Moscow Mayor Yuri Luzhkov.

Speaking to journalists, Luzhkov said he believes that IMF recommendations on fiscal policies, as he put it, "do not correspond to Russia's interests," a belief that is widespread among members of both houses of parliament.

Luzhkov is considered to be a likely presidential candidate, despite his repeated denials of any presidential ambitions. He said that the political situation in the country has changed radically from previous years and added his voice to the warning of other influential politicians who say they do not see a quiet summer this year.

Luzhkov said that if the government does not manage to settle the growing social unrest that has come from workers' desperation over unpaid wages, the situation could still deteriorate, notwithstanding international financial help. Krasnoyarsk Governor Aleksandr Lebed, a retired general who is one of Yeltsin's main opponents, has said much the same.