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Russia Report: April 23, 2001

23 April 2001, Volume 1, Number 12
...AND PRESIDENTIAL BILLS GET STRONG SUPPORT. On 19 April, deputies voted to support almost unanimously amendments to election laws in its first reading that would prohibit regional leaders from resigning from their posts in order to move up election dates, according to Interfax. Former Kemerovo Oblast Governor Aman Tuleev was the most recent governor to do so. After resigning last January, he competed in new elections on 22 April. On the same day, deputies also gave strong support to a law on declaring emergency rule that had been submitted by President Putin. Both bills was supported by the presidential administration. JAC

Legislation Law________________Date Approved_______# of Reading
On the use of Atomic______18 April________________2nd

On environmental protection__18 April______________2nd

On special environmental_____18 April_______________2nd
programs aimed at rehabilitating
territories contaminated by radiation

On the insolvency of credit____18 April______________2nd

On banks and banking________18 April______________2nd

Amendments to Tax Code_______18 April____________1st
Part 2, Chapter 26

On the Central Bank___________18 April_____________2nd

On general principles___________19 April_____________1st
of the organization of legislative
state bodies in federation subjects

On martial law________________19 April_____________1st

COMINGS AND GOINGS SHIFTED: At the Interior Ministry, two new deputy ministers have been named, Yevgenii Soloviev and Vitalii Mozyakov. Soloviev was formerly deputy director of the Federal Security Service, and Mozyakov headed the special prosecutor's office in St. Petersburg. Andrei Novikov, from the Krasnogvardeisk raion directorate for internal affairs in St. Petersburg, was named to head the Interior Ministry's apparatus, while Vyacheslav Zakharenkov, from the Northwest internal affairs directorate for transportation, was named Gryzlov's chief consultant. At the Defense Ministry, Major General Ivan Efremov was appointed on 17 April head of the Main Cadre Department. At the Justice Ministry, Vyacheslav Evdokimov was named state secretary and first deputy justice minister on 17 April, according to ITAR-TASS. Evdokimov most recently headed the ministry's department for coordinating legislative activities.

IN: Alikhan Amirkhanov won by-elections held on 15 April for the State Duma from a single mandate district in Ingushetia. Amirkhanov was most recently deputy prime minister of the republic of Ingushetia.

IN: State Duma deputy Boris Reznik, formerly of People's Deputy, has joined Russian Regions, "Izvestiya" reported on 11 April. Deputy Aleksandr Ryazanov, who was formerly independent, joined People's Deputy, while deputy Aleksei Guzanov, formerly of the Liberal Democratic Party faction, also joined People's Deputy.

IN: Igor Porshnev, a former director of the political information department at Interfax, was appointed chief of the presidential information office, the presidential press service announced on 19 April.

OUT: Anatolii Yurkov, editor in chief of "Rossiiskaya gazeta," retired on 19 April, according to ITAR-TASS.

POLITICAL CALENDAR 25 April: Trial of U.S. student John Tobin to begin in Voronezh.

25 April: Commission on liberalization of Gazprom share market will meet in Moscow.

25 April: Cabinet ministers will discuss draft Land Code.

27 April-1 May: Chinese Foreign Minister Tang Jiaxuan will visit Moscow.

3-6 May: Foreign Minister Igor Ivanov will visit India.

10-11 May: Foreign Minister Igor Ivanov will visit Finland.

11 May: Government will discuss six laws aimed at reforming the pension system, according to Pension Fund head Mikhail Zurabov.

14 May: TV-6 shareholders meetings to be held.

17-19 May: Foreign Minister Igor Ivanov to visit the United States.

17-23 May: National Council on Pension Reform will convene.

17 May: Finance minister must submit main parameters for 2002 budget to cabinet.

19 May: Democratic Choice of Russia will convene a congress.

26 May: Union of Rightist Forces to host congress in Moscow.

25-27 May: Patriarch of All Russia and Moscow Aleksii II to visit Azerbaijan.

27 May: Election for State Duma seat in a single-mandate district in Irkutsk Oblast will be held. The seat was left vacant when former State Duma deputy Vladimir Tikhonov was elected governor of the oblast.

20-22 June: International Financial Action Task Force to hold a new meeting at which issue of Russian money laundering is likely to be discussed, according to "Izvestiya" on 23 March.

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

20-22 July: G7/G8 summit will convene in Genoa, Italy.

November: Unification congress for Unity and Fatherland parties.

...AS IMF LEGISLATION ALSO PASSES... On the same day, Duma deputies also approved in its second reading a package of legislation reforming the banking sector. These bills were part of a set of bills known as the IMF package, because they were drafted at the initiative of that international financial institution, according to Interfax. The legislation reportedly introduces new criteria for declaring banks insolvent as well as increasing the responsibility of banks' management for declaring bankruptcy. According to "The Moscow Times" on 19 April, the bills also weaken the Central Bank's control over foreign currency operations. According to the Duma Banking Committee Chairman (People's Deputy) Aleksandr Shokhin, the proposed amendments to the laws on banking and banking activities are supported by all relevant parties, the Duma, government, Central Bank, and presidential administration. Deputies also approved in its first reading amendments to the second part of the Tax Code regarding government duties, according to Interfax-AFI. JAC

BILL ALLOWING IMPORTED SPENT NUCLEAR FUEL CLEARS ANOTHER HURDLE... The controversial package of legislation allowing Russia to import spent nuclear fuel for processing and storage was approved in its second reading on 18 April. Of the three bills including in the package, the key bill passed by a narrow margin -- only 4 more votes than the necessary 226. Only the Yabloko and Union of Rightist Forces factions opposed the legislation. However, only a third of the Communist faction, some 33 deputies, followed the lead of its leader Gennadii Zyuganov and supported the legislation, according to "Izvestiya" on 19 April. That newspaper provided the following breakdown of one of the votes on the bills: 72 Unity members supported the bill, while 7 were opposed; 27 members of Fatherland-All Russia were in favor while 11 were opposed, 12 members of Liberal Democratic Party voted for the bill along with 39 members of People's Deputy, 22 members of Russian Regions, and 18 members of the Agro Industrial Group. The leader of the Agro-Industrialists Nikolai Kharitonov opposed the bill. JAC

DUMA CONSIDERS LIMITS ON MEDIA OWNERSHIP BY FOREIGNERS. The bitter feud around NTV and the idea of attracting foreign investors as a potential safeguard against state control have spurred interest among lawmakers to regulate foreigners' ownership of Russian media companies. The State Duma in coming days may consider three proposals to limit access to the media market for foreign investors. Russian law currently places no limit on foreign ownership of media concerns. This contrasts to the United States and other Western countries, which do place some restrictions on foreign ownership.

Alexandr Chuev, a deputy from the pro-Kremlin Unity faction, last week said he would present a bill to limit foreign ownership of electronic and print media to 50 percent. Chuev says he has the backing of at least seven deputies and that he is "absolutely convinced" that any investor with a controlling stake would try to bend editorial policy in his favor. By way of example, he says that a Chinese investor could broadcast misleading propaganda about the investment climate in Russia. He also says he would like to make his bill retroactive as a way of invalidating any past deals, including a bid by U.S. media magnate Ted Turner for NTV, that may already have been made. The Duma considered a similar proposal two years ago when well-known media businessman Rupert Murdoch expressed an interest in buying Russia's ORT television (see "RFE/RL Newsline," 8 March 1999). That bill, which banned the state from selling any media shares to foreigners, died before it was ever put to a final vote.

A second bill to be considered by the Duma would impose an even lower limit for foreign ownership in media of 30 percent. A third bill proposed by some liberal deputies would impose a 25 percent maximum stake for all investors. Duma Legislation Committee Deputy Chairman (SPS) Viktor Pokhmelkin, the author of the bill, explains that in his opinion the real issue is not xenophobic fear of foreigners' policies in Russia, but concern lest anyone gain control over the media. Pokhmelkin says his proposal, by splitting responsibility and control, would be the Russian media's best chance at achieving balanced coverage.

Experts say that given the investment climate, with foreigners already wary of putting money into the country, none of the options are especially attractive. The economic weekly "Vek," for example, said it was "unlikely" that a foreign investor would put money into a company that it can't control, especially in Russia. And Kim Iskyan, a media investment expert at the investment bank Renaissance Capital, told RFE/RL that new restrictions would dampen investor enthusiasm, but she says foreigners dealing with Russia are used to it: "It certainly casts a [cloud] over potential investment and raises the level of uncertainty considerably. [I don't think] it will completely chase away any potential investors because foreign investors are quite accustomed to the investment environment shifting."

The Media Ministry has distanced itself from the Duma proposals. Deputy Media Minister Mikhail Seslavinskii told ITAR-TASS last week that the mere discussion of a bill to limit foreign investment in Russian media would discourage potential investment in all spheres. He suggests that the Duma wait until the situation surrounding NTV calms down and only then make a decision on investment limits. In the past the Media Ministry has been very careful in its assessment of foreign investment in media. In 1999, for example, then newly appointed Media Minister Mikhail Lesin said foreign capital should not be banned from the Russian media market. Chuev admits to a disagreement with the Media Ministry, but he claims that his idea to limit foreign investment has the support of the presidential administration.

Indeed, Russian authorities have shown an increasing willingness to impose media restrictions in the name of safeguarding what they call "information security." A controversial doctrine adopted last September by the Security Council and endorsed by President Vladimir Putin underscored this concern (see "RFE/RL Security Watch," 18 September 2000). It specifically cites foreign economic and financial activity in the information sphere as a threat to information security. (Sophie Lambroschini, Moscow)

HOW THE MIGHTY MAYOR HAS FALLEN? Soon after Fatherland leader Luzhkov declared the beginning of a new phase in Russia's history with the launching of the new Unity-Fatherland party (see item above), Moscow-based newspapers controlled by Boris Berezovskii declared Luzhkov's political career "finished." In a long article about the proposed merger on 14 April, "Nezavisimaya gazeta" concluded that "although its future prospects and configuration are not completely clear, it is possible to determine one fact -- the political career of Yurii Luzhkov has without a doubt come to a close. The Moscow mayor, judging by all, has swapped it for peace for himself and his circle." According to "Kommersant-Vlast" in its issue number 15, the Interior Ministry is investigating more than thirty cases of alleged corruption involving Moscow authorities. According to "Nezavisimaya gazeta," the investigations by various law enforcement organs will come to a close, and it will be possible once again "to do business" in Moscow as before.

"Kommersant-Vlast" sounded a similar note in arguing that "the Moscow mayor's chances of remaining a national political figure are cloudy at best." It concludes that the "merger with Unity marks the total capitulation of one of Russia's most ambitious regional leaders -- who just 18 months ago, was even aspiring to the presidency." Like "Nezavisimaya gazeta," the weekly concludes that the pressure of the investigations in combination with the prospect of the draft law on political parties coming into force caused Luzhkov to abandon his previous independent political stance.

"Nezavisimaya gazeta" speculates that Luzhkov will allow the Kremlin to elect its own legislators during the December 2001 elections to the Moscow City Duma. The danger for Luzhkov in the future will be that, deprived of his political and legislative support, the next time that Luzhkov finds himself in a disagreement with the Kremlin, "there will be no one to defend him." "Kommersant-Vlast" on the other hand speculates that Luzhkov still hopes to control the Moscow City Duma and capitulated to the Kremlin in order to hold onto that one remaining bastion of his power, since the Kremlin and Unity were looking for their own candidates to oppose Luzhkov supporters.

Luzhkov, for his part, may believe that rather than his national political career being finished, it is about to take off. He has after all been tapped to head the coordination council of the nation�s new "party of power." (Julie A. Corwin)

THE EMERGENCE OF A NEW 'PARTY OF POWER.' At the same time as Gazprom-Media was moving against NTV (see "RFE/RL Russian Political Weekly," 16 April 2001), leaders of two of Russia's most influential political parties, the pro-Kremlin Unity and Moscow Mayor Yurii Luzhkov's Fatherland, announced plans to merge. On 12 April at a press conference in Moscow, Unity leader Sergei Shoigu and Luzhkov modestly declared that "the history of Russia has entered a new stage." Four days later, the party's leaders in the Duma announced the formation of a centrist "coalition" within the Duma, comprised of both the Unity, Fatherland-All Russia (OVR) factions as well as the Russian Regions and the People's Deputy groups. Combined, the four groups will have well over the necessary 226 votes to pass legislation.

Rather than being complementary efforts, Emory University's Thomas Remington, a professor of political science and an expert on the Duma, told RFE/RL that he thinks that the faction leaders inside the Duma, primarily OVR's Yevgenii Primakov and People's Deputy Gennadii Raikov, have tried by this coalition announcement to "preempt" the efforts of their party leaders outside of the Duma, Unity's Shoigu and Fatherland's Luzhkov. President Putin gave the deal between Luzhkov and Shoigu his seal of approval, and the Kremlin leaders along with Shoigu and Luzhkov likely have their minds focused on the next elections, according to Remington. The Duma leaders, on the other hand, are more concerned with the more immediate issues of how to function in upcoming votes and in the possible redistribution of committee chairs.

Raikov had been trying to negotiate a redistribution of committee assignments, and the announcement of the centrist coalition caused some analysts to conclude that a redistribution of committee chairs was likely one incentive causing the four groups to come together in the first place: They had found a way to redivide coveted Duma committee assignments amongst themselves (see "RFE/RL Russian Political Weekly," 26 March 2001). But Unity faction leader Vladimir Pekhtin announced on 22 April that he will propose at the upcoming meeting of the coalition's Coordination Council that discussion of a redivision of committee chairs should be postponed to the fall, according to Interfax. According to Pekhtin, the Duma has too much important legislation to consider first. What he didn't say was that Unity and the Communists would have the most to lose from any kind of rearrangement, particularly if the total number of committees were slashed as Raikov proposed. In addition, deputy head of the Yabloko faction Sergei Ivanenko told "Nezavisimaya gazeta" on 21 April that he doesn't believe that the presidential administration wants to change the Duma's present political configuration.

If the four groups cannot agree among themselves about a redistribution of committee posts, it remains to be seen just what they will manage to forge a consensus on. Almost as soon as the Unity-Fatherland (or "EdinOt" as one newspaper dubbed it) merger was announced, Communist Party leader Gennadii Zyuganov and other critics suggested that the unlikely amalgamation would never completely gel. Even the Duma leaders in the centrist coalition themselves declared that the coalition would be of a "soft" variety. According to "Versty" on 14 April, Primakov stated that OVR would continue to "vote with either the left or the right on a range of issues, depending on what it in the interests of the voters who elected us." And Russian Regions head Oleg Morozov told Interfax on 16 April that the new grouping "will not be a political union but a political coalition," which he said means that "votes will not be unanimous in 100 percent of the cases."

Apart from how the groups would behave in the Duma, however, other analysts saw the merger of Unity and Fatherland as a natural. Dmitrii Pinsker writing in "Itogi" in its issue no. 15 declared that some kind of unification of the two groups was likely "sooner or later" since there are no ideological differences between them. Whatever conflict that existed between them stemmed from the 1999 State Duma elections when Fatherland was "the party of regional barons, trying to defend and advance its interests on the federal level." Pinsker continues, "Unity, on the other hand, was trying to strengthen the position of the old bureaucratic apparatus of [former President Boris] Yeltsin." Pinsker concludes that Shoigu and Luzhkov were right when they declared that Russia is entering "a new stage in its history" as the "line between executive and legislative power has almost been effaced."

Writing in "Segodnya" on 13 April, Leonid Radzikhovskii reaches perhaps a more upbeat conclusion. He pairs the merger of Unity-Fatherland with the takeover of NTV, considering both part of a broader effort to create an authoritarian state. However, he concludes that the effort isn't likely to be successful. He argues that like Putin's earlier effort to bolster Russia's "power vertical" with the creation of presidential envoys in Russia's seven federal districts -- "envoys who don't really know what to do, who don't wield real power, and who don't command respect" -- this new effort is also "built on sand" (see also "RFE/RL Russian Federation Report," 14 March 2001). Similarly, the Unity-Fatherland amalgamation, according to Radzikhovskii, is unlikely to become "a combat-ready party commanding respect."

In the Duma, the new coalition may soon get the chance to show whether it will be a power to be reckoned with or a coalition in name only. President Putin submitted to the Duma on 19 April the first package of legislation connected with the major overhaul of the pension system, according to "Izvestiya" on 20 April (see "RFE/RL Russian Political Weekly," 9 February 2001). That legislation could prove controversial as will the law on privatization. An earlier battle over the government's proposed privatization program resulted in what some analysts called the Duma delivering a "crushing blow" to the government, and resulted in the later purging of some three deputies from the People's Deputy group (see "RFE/RL Russian Political Weekly," 26 February & 26 March 2001). Another purge would not be an auspicious beginning for either a "soft" centrist coalition or the new party of power. (Julie A. Corwin)