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Russia Report: March 19, 2001

19 March 2001, Volume 1, Number 9
IN PUTIN'S ABSENCE. The drama surrounding the State Duma's vote on 14 March of no confidence in the government dissipated even before the vote could be held, leaving analysts and the media to determine what -- if anything -- the mini-crisis meant. Following defections in its own ranks and widespread external criticism, Unity's leadership did an abrupt turnaround, announcing on 13 March that it would not vote with Communists to support the no-confidence measure. Earlier, Unity's faction leader Boris Gryzlov announced that Unity would support the measure as a bid to force new parliamentary elections. When the actual vote was held, however, most deputies didn't vote at all, and the measure attracted only 127 votes, almost a hundred votes shy of what was needed (see table below).

State Duma deputy (independent) Vladimir Ryzhkov told RFE/RL's Moscow bureau that for first time in his memory, at a vote of no confidence "not the prime minister, not a [single] deputy prime minister, not one minister" was included in the Duma's agenda for that day. And, at the same time, "the president was skiing." Ryzhkov concluded that the new regime is trying to convey symbolically that the Duma and its proceedings are irrelevant to the real work of government.

Ryzhkov also noted that Unity faction leader Gryzlov reversed himself not just once but two times on the issue of the no-confidence vote. When the Communists first announced that they were gathering signatures for the vote, Gryzlov called the effort "stupid" and vowed that the faction would support the government. However, Gryzlov went to Berlin, leaving deputy faction leader Frants Klintsevich in Moscow. Klintsevich then announced that Unity would support the Communists' effort. According to Ryzhkov, the logic of the move was very simple: the Kremlin is "truly catastrophically afraid" that public approval ratings are going to start to fall, that the country will start to experience difficulties next winter and next payments to the Paris Club. And, "the Duma in its current composition could go completely out of control."

In fact, there are already signs of the Duma slipping away from the Kremlin's grasp, according to Ryzhkov. First,, the Duma added 30 billion rubles ($1 billion) to the amendments to the 2000 budget, a significant difference from what the government suggested, and it refused to allow more privatization. Second, soon after this action, the Duma passed three pension bills for which there is no money in the Pension Fund (see "RFE/RL Russian Political Weekly," 26 February 2001). The third indicator, according to Ryzhkov, is that when Gryzlov tried to explain to Unity faction members why they should support the no-confidence measure, they balked.

As Otto Latsis explained in "Novye Izvestiya" on 16 March, many of Unity's members understand that they only managed to get into the Duma by accident. He added "they don't want their stroke of luck to disappear before their four-year terms expire." Latsis recalled the "Unity lists were compiled in haste," and "no one really expected anyone but candidates at the very top of the list to make it into the Duma." The next lists will be put together more carefully, he predicts. Latsis noted that not only would individual Unity members likely lose out from new elections but so would the Fatherland-All Russia faction, the Liberal Democratic Party, and People's Deputy. JAC

The Final Tally The following table shows how various factions voted during the Duma's 14 March vote of no confidence, the eighth in Duma's history, according to "Segodnya" on 15 March. Chairman Gennadii Seleznev, who despite being a Communist is considered pro-Kremlin, did not cast a vote at all. Other leaders who joined him in not voting were Fatherland-All Russia faction leader Yevgenii Primakov, Russian Regions faction leader Oleg Morozov, and Yabloko faction leader Grigorii Yavlinskii, RIA-Novosti reported on 14 March. JAC

Faction/Group___For____Against___Abstention___No Vote Cast

All Russia________0_________5________1________40
Union of Rightist
People's Deputy____0_______34________1________27
Russian Regions____5________1________0_________39


Source: "Kommersant-Daily" 15 March 2001

'DOCILE' DUMA PASSES MORE LAWS AGAINST GOVERNMENT'S WISHES... Last week, Duma deputies passed more laws that would require increases in government -- against the express wishes of the government and Kremlin. For example, on 15 March, deputies approved amendments to laws on pensions in the first reading that will increase pensions for those senior citizens who are still working. It also approved amendments to the law on servicemen's status that will grant participants in military actions an additional 15-day vacation. Presidential envoy to the Duma Aleksandr Kotenkov spoke out against the bill, saying that it would significantly increase costs to the military. Nevertheless, 395 deputies voted in favor of it, according to "Kommersant-Daily" on 16 March. The government also protested the hike in pensions, saying that there is no money in the budget for it. Nonetheless, some 350 deputies voted in favor of the bill -- 50 votes more than would be required to overcome a presidential veto. Deputies also voted to pass in the first reading a bill that would guarantee the children of small ethnic groups of the Far North the right to attend institutes of higher learning. The government and the Duma's Education Committee both recommended rejecting the bill. JAC

DEFICITS AND OIL PRICES. While the government easily dodged the no-confidence bullet in the Duma, internal and external economic developments could combine to produce a real crisis further down the road. On 11 March, the Finance Ministry revealed that the budget was already in deficit for the first two months of the year. In February, expenditures exceeded revenues by more than 20 billion rubles ($700,000), according to ""Nezavisimaya gazeta" on 12 March, and in the context of a slowing economy, the deficit could widen as revenue sources shrink, the daily suggested. Inflation in January and February also exceeded budget parameters. In February, it measured 2.3 percent, and for the first two months reached 5.1 percent. In order to be in line with the budget's projection of 12-14 percent annual inflation, monthly inflation should not exceed 1.16 percent, according to "Vremya MN."

Of greater concern is the direction of world oil prices, which are falling and could reach the $21 a barrel projected in this year's budget. According to Interfax on 15 March, the price of Urals crude to Mediterranean ports dipped to $20.49 per barrel and to $20.84 per barrel to Western European ports. Michael Bernstam of Stanford University told RFE/RL's Moscow bureau on 15 March that for every one-dollar drop in the price of a barrel of oil, oil companies lose $4 billion dollars in revenue annually. He noted while the correlation between what Russian oil companies earn and what they may actually pay in taxes to the government is not a direct one, lower oil prices cannot help but affect the government's budget revenues. At the time the budget was adopted, most analysts in the Duma and government assumed that the budget's oil price projection was on the pessimistic side.

The government, meanwhile, remains nonchalant. Deputy Prime Minister Aleksei Kudrin said that the recent fall in oil prices would not lead to a "reconsideration of additional budget revenue projections for this year," adding that "there is still no steady negative trend even noticeable so far." Former Economics Minister Yevgenii Yasin supported Kudrin's position, telling "Rossiya" on 16 March, that as long as prices stay above $18 a barrel, Russia will not face serious problems. JAC

PRESIDENT PREPARES FOR 2003. As President Putin enjoyed his vacation skiing in Khakasia, some pundits and politicians back in Moscow were predicting an imminent fall in his public approval ratings. Former Soviet President Mikhail Gorbachev told reporters on 16 March that unless Putin explains the Kremlin's goals and future plans for the government and economy, his popular support could drop. Gorbachev, who was addressing journalists in Tomsk, said that people from the regions are constantly asking him about Russia's future and urge him to get answers from the president.

Earlier in the week, Mikhail Delyagin, writing in "Vedomosti" suggested that "Putin is a hostage of his own popularity" and policies based on opinion poll ratings "inevitably deteriorate into populism and the rating eventually crashes." According to Delyagin, Putin "is following [former Prime Minister Yevgenii] Primakov's course: He does not allow oligarchs in politics, while he gives them free rein in economic expansion." According to "Kommersant-Daily" on 13 March, Putin was staying in a resort in Khakasia that is partially owned by Oleg Deripaska's Siberian Aluminum, although a source in that company denied that it was involved in the preparation for Putin's trip. Deripaska plays a major role in the political life of Khakasia and is trying to expand his business interests into Irkutsk and Chelyabinsk Oblasts (see "RFE/RL Newsline," 16 March 2001).

Meanwhile, "Izvestiya" speculated on 12 March that the presidential administration is already planning a huge public event to launch Putin's re-election campaign. According to the daily, Putin has ordered that $500,000 from the federal budget will be spent on the 300th anniversary of St. Petersburg, which will occur in 2003. Earlier, it was announced that presidential envoy to the Northwestern federal district Viktor Cherkesov will work with the Audit Chamber to ensure that the 40 billion rubles ($1.4 billion) being set aside for the celebration are spent properly (see "RFE/RL Russian Federation Report," 7 March 2001). JAC

JUDGES CAST THEIR VOTE AGAINST JUDICIAL REFORMS. That Russia needs some kind of reform of its judiciary is a point on which there is little disagreement. Yet, the reforms themselves have been slow in materializing. Next month, the Kremlin promises that a package of laws reforming Russia's judicial system will be submitted to the State Duma. According to deputy head of the presidential administration Dmitrii Kozak, who heads a commission working on the legislation, the package will include one law on the status of judges and another on the judicial system, as well as amendments to the Arbitration-Trial Code and the Civil Code. Around this time, the Duma will also consider legislation designed to improve the mechanism for implementing decisions of the Constitutional Court.

At a press conference on 12 March, Kozak admitted that a number of features of the reforms are still being hashed out. For example, the government is considering whether to separate arbitration courts in the regions into a court of the first instance and an appeals court, "Vremya MN" reported the next day. Also under consideration are changes in the role of the prosecutors in arbitration and civil proceedings. Limits on judges' terms are also being mulled, such as an automatic retirement age of 65 for raion-level courts and 70 for oblast-level and higher courts. Earlier, Economic Development and Trade Minister German Gref suggested introducing 15-year terms for judges, which sparked a furious response. According to "Kommersant-Daily," judges are not much happier with the suggested retirement ages, since court chairmen frequently don't reach their position until their late 50s or early 60s which would give them only a decade on the bench at that level.

Judges aren't the only ones riled. At the beginning of March, a representative of the Prosecutor-General's office, Vladimir Kolesnikov, suggested that the draft concept of judicial reform that Kozak's group produced should simply be thrown out. He proposed that the work start all over again with a parliamentary commission which would include members of the security agencies, according to "Nezavisimaya gazeta" on 3 March.

While Kolesnikov's view may not be representative of all of the country's prosecutors, his office has and will continue to play a major role in the upcoming battle in the Duma over judicial reform. Last January, when the Kremlin introduced "liberal" amendments to the criminal, criminal procedure, and other codes and then quickly withdrew them, some sources reported that Prosecutor-General Vladimir Ustinov, Interior Minister Vladimir Rushailo, and Federal Security Services head Nikolai Patrushev persuaded Putin to withdraw the legislation (see "RFE/RL Russian Political Weekly," 26 January 2001). The proposed amendments would have required prosecutors to first seek court approval before issuing their own orders for arrests and searches. According to "Vremya MN" on 13 March, this week Putin intends to lead a separate meeting on the problems of the Criminal Procedural Code. The daily noted "everyone is waiting" for Putin to make a decision on the proposed changes and "for that decision to be transformed into a concrete mission." JAC

PROFILE - DMITRII KOZAK Dmitrii Nikolaevich Kozak, 42, is perhaps best known for not being named Russia's prosecutor-general. Last May, according to a variety of sources, President Putin had reportedly signed a decree naming Kozak as prosecutor-general. But Putin was then reportedly persuaded by presidential administration head Aleksandr Voloshin to sign and release another decree naming then acting Prosecutor-General Vladimir Ustinov to the post. Voloshin was allegedly acting on behalf of Boris Berezovskii, who was close to Ustinov. "Segodnya" reported at the time that Voloshin was not sure that Kozak would drop investigations of Aeroflot financing and alleged kickbacks from the Swiss firm Mabetex to top Kremlin officials. When asked about the incident in an interview with "Kommersant-Daily" on 12 February, Kozak offered a different explanation. He said that Ustinov was named to the position because he, Kozak, didn't want it.

If true, that might be the first time Kozak has rejected an offer from Vladimir Putin. According to "In the First Person," a book of interviews with Putin, Putin takes credit for persuading Kozak to stay in the city government of St. Petersburg after Mayor Anatolii Sobchak was defeated in 1996. According to an article about Kozak in "Profil" of 5 June 2000, Kozak did not expect to last with the city's new head Vladimir Yakovlev for more than six months. However, he wound up staying two and a half years -- despite trying to resign on three separate occasions.

In addition to serving under Mayor Sobchak at the same time, Kozak and Putin attended the same law school, Leningrad State University, although Kozak completed his studies in 1985, some ten years after Putin. Some six years younger than Putin, Kozak was born in 1958 in the Kirovograd Oblast of Ukraine. After law school, Kozak worked as an assistant prosecutor in Leningrad until 1989. He then worked briefly at the Association of Marine Trading Ports. In 1990, Anatolii Sobchak, who was then chairman of the city council, asked him to serve on the legal department of the executive committee of the Leningrad City Soviet. When Sobchak became mayor, Kozak was appointed chairman of the city administration's judicial committee, according to "Profil". In this capacity, he checked the legality of several deals put together by the first deputy mayor at that time, Vladimir Putin, such as the privatization of the Baltic Sea Steamship Line and the hotel Astoria.

In May 1999, Putin intervened in Kozak's life again, asking him to come to Moscow. He was to serve as a deputy head of the presidential administration, but when Putin was named prime minister two months later, Kozak got the job of head of the governmental apparatus. About a year later, Voloshin again reportedly interfered in his career by making sure that Kozak was replaced with Igor Shuvalov, the former head of the Federal Property Fund and a close Voloshin ally. Kozak was transferred to the position of deputy head of the presidential administration responsible for legal questions. It has been in this position that Kozak has focused on judicial reform. With the Prosecutor-General's office already making strong public pronouncements against the judicial reform package, Kozak may find that he butts heads with Voloshin or one of his allies again.

POLITICAL CALENDAR 20 March: Regions to submit their proposals for land legislation to the government.

22 March: Presidium of State Council to meet, according to "Nezavisimaya gazeta" on 14 March.

22 March: State Duma will debate in its second reading a law allowing the import of spent nuclear fuel.

22 March: Supreme Court to hear appeal of environmental groups against Central Election Commission's rejection of signatures submitted for nationwide referendum.

24 March: Daily newspaper, "Vremya MN," will cease publication.

Last week of March: President Putin to deliver his state of the nation address to the Federal Assembly, according to "Kommersant-Daily" on 13 March.

Middle of April: Government to submit legislation on judicial reform, according to deputy head of the presidential administration Dmitrii Kozak.

28 April: Unified Energy Systems shareholders' meeting.

May: Prime Minister Kasyanov to visit Poland.

18-19 June: Norwegian Prime Minister to visit Russia, according to Interfax on 14 March.

29 June: Gazprom annual shareholders' meeting.

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

Legislation Law_________________Date approved_________# of reading

On the status of members____14 March____________1st
of the Federation Council and State Duma deputies

On state judicial-expert______14 March____________2nd

On servicemen's status_____15 March______________1st

On calculating and_______15 March_______________1st
increasing pensions

On children of small_________15 March______________1st
ethnic groups of the Far North

On elections______________15 March__________2nd, 3rd

...AND ASKS FOR KURSK TO BE RAISED. Deputies voted on 14 March almost unanimously to send a directive to Prime Minister Mikhail Kasyanov asking him to quickly resolve the question of financing the raising of the submarine Kursk, which sank last August. The Duma also issued a decree ordering the Audit Chamber to investigate the effectiveness of expenditures of foreign credits by 1 July. Duma deputies rejected amendments to the Criminal Code in their first reading on 14 March, which would have imposed criminal responsibility for misusing budget funds and for the illegal granting of tax privileges. The measure attracted only 13 votes, according to Interfax-AFI. JAC

...TINKERS WITH ELECTION LAW... Also on 15 March, deputies approved amendments to the law on elections in its second, third, and final readings, that will revoke the provision in the law banning parties from State Duma elections if one of their top three candidates is disqualified. This provision resulted in the exclusion of the Liberal Democratic Party in the 1999 Duma election, when its leader Vladimir Zhirinovskii's registration was challenged (see "RFE/RL Newsline," 12 October 1999). On 14 March, Duma deputies approved amendments to the law on the status of Federation Council members and State Duma deputies in the first reading. The amendments give the new members of the Federation Council who are or were selected under the new rules of forming that body the status of full-time federal legislators. Deputies also approved in its second reading a law "on state judicial-expert activities in the Russian Federation," which was introduced by Deputy (Communist) Viktor Ilyukhin. The law lays out the legal bases and principles of organization for state expert opinions offered during constitutional, civil, administrative, and criminal legal proceedings. JAC