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Russia: Lenfilm Studio Fights To Survive

St. Petersburg, 11 August 1998 (RFE/RL) - St. Petersburg's Lenfilm, one of Russia's two leading film studios, said yesterday that it was at the point of near collapse. The studio blamed the Russian government for instigating the crisis by crushing the industry with taxes.

Lenfilm's announcement comes a week after an ultimatum made by Armen Medvedev, head of Goskino, the federal film commission. Medvedev said he would resign in 100 days if the government did not take steps to halt the decline in the country's film industry.

The administration of Lenfilm has sent an open letter to President Boris Yeltsin and the Russian government stating that "our faith in your course of reform is dying together with the approaching destruction of the Russian film industry." The letter adds that "film makers are not miners, and our protest will unlikely be as loud and threatening, but please remember that you came to power in most part thanks to the support of the intelligentsia."

Viktor Sergeyev, head of Lenfilm, says production has entirely stopped at his studio, and the situation is just about the same at the other smaller film studios that work on the territory of Lenfilm.

According to Sergeyev, his studio only finished four out of 12 planned films in 1997. Over ten were planned to be released in 1998, but so far only two have been completed, and no more will likely follow. For most of 1997, the Russian film industry seemed to be on the way to recovery, with more films produced than in the past several years combined. However, that growth was in part fostered by various financial deals that have since ended with a recent presidential decree forbidding such practices.

According to Sergeyev, the Russian film industry in 1997 received only 17 percent of the subsidies promised by the government, while Lenfilm received only nine percent. Sergeyev says his studio needs two million rubles a month to work at a satisfactory level ($ 320,000). The average film costs about $600,000 to make.

Film makers, however, are not asking for government handouts. Their chief demand is that the government simply adhere to its own laws.

The federal government has not fully implemented the 1996 law "On Support to the Russian Film Industry," which promises businessmen tax breaks on money invested into Russian film making.

"The government has done everything possible so that this law does not work," says Sergeyev. "If this law worked then we would not need government subsidies," he adds.

Instead, tax authorities continue to heavily tax such investors, and the government, in its efforts to increase revenue, recently revoked the few tax privileges that were in effect.

Lenfilm, the country's oldest film studio, was founded in the spring of 1918. It has produced its own school of film known either as the Leningrad, or St. Petersburg School of Film. This school is famous for "high cinema" - the creation of intellectual and artistic classics, as well as experimentation in film that places the studio solidly in the European tradition.

By contrast, the idea of a Moscow school of film does not even exist. Yet, the Moscow film industry is enjoying relative prosperity, thanks to active support from Moscow Mayor Yuri Luzhkov. According to Sergeyev, so far this year Luzhkov has donated $15 million toward film making and another five million for new equipment.

Sergeyev says that the privatization of Lenfilm is one solution to the financial crisis and that negotiations are currently on with Russkoye Zoloto, the country's powerful gold company which often sponsors cultural activities, to finance 10 films a year. He would not give more details, however.

Sergeyev also says that one of Russia's new oligarchs, whom he would not name, had approached him with an offer to buy Lenfilm. But when the idea of turning the film studio into a Russian "Disney World" was mentioned, Sergeyev turned down the offer.