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Russia Report: July 11, 2001

11 July 2001, Volume 1, Number 17
LEGISLATORS POISED FOR BATTLE OVER LAND CODE. The State Duma promises to end its spring session on 14 July with a bang, taking up for consideration the controversial Land Code, Russian agencies reported on 11 July. When the bill was first discussed in its first reading last month, the debate degenerated into a brawl as blows were exchanged, and Duma Speaker Gennadii Seleznev was whisked away to a hospital for high blood pressure (see "RFE/RL Russian Political Weekly," 25 June 2001).

And, opposition from the left may be even more fierce this time as the Kremlin appears to have outmaneuvered the Communist Party by scheduling the bill's second reading on the first day possible according to legislative regulations. By doing so, the Kremlin has made it more difficult for the Communists to finish the necessary paperwork that would necessitate the forming of a conciliatory commission to reconsider the legislation. Under the constitution, a bill which more than one-third of the legislatures of federation subjects have rejected must be sent to such a commission (see "RFE/RL Russian Federation Report," 27 June 2001).

The Communist Party, which opposes the Land Code, has managed to arrange a rejection of the code by some 39 different regions. But the State Property Committee, whose Chairman Boris Pleskachevskii is from the pro-Kremlin Unity faction, has registered only 26 reports from regional legislatures, according to "Nezavisimaya gazeta" on 7 July. At the same time, Aleksandr Kotenkov, the presidential representative to the Duma, has argued that the measures passed by the regional legislatures are quite varied in form, containing various appeals to the public, federal assembly, and government, and therefore cannot be considered from a legal point of view as legitimate reviews of the Land Code as such.

It now appears that for the second time in recent weeks a strict enforcement of legislative regulations will preclude a hearing on the floor of the country's parliament of regional leaders' objections to controversial legislation. When the Federation Council failed to consider a bill allowing imported nuclear waste within the timeframe stipulated by legislative regulations, that bill was sent to President Vladimir Putin for signing (see "RFE/RL Newsline," 28 June 2001). A number of regional leaders, such as Kemerovo Governor Aman Tuleev, had expressed their strong reservations about the legislation, and it has not been clear that the bill would pass the upper legislative house. Now, the strict enforcement of another regulation will ensure that some regions' objections to the Land Code will also be ignored.

To some political analysts and media familiar with the content of the Land Code, all the fuss seems beside the point. For example, "Vremya novostei" on 4 July noted that the defeat of the Land Code would have "more propaganda value than practical significance," since the buying and selling of agricultural land will be decided by a separate law. But "propaganda value" is not an insignificant good, particularly as some kind of election is always just around the corner. Already, the Communists' success with regional legislatures has prompted the leadership of the pro-Kremlin Unity party to start "thinking seriously" about party discipline, "Nezavisimaya gazeta" reported on 7 July. Unity faction leader Vladimir Pekhtin reportedly announced that the heads of several regional organizations could be dismissed. And, Sergei Popov, a member of the presidium of the party's political council, told the daily that members of the party's parliamentary factions should not just be "supporters of Unity" but "party members who submit to party rules and discipline."

As framework legislation, the Land Code will need to be supplemented by a variety of laws both at the federal and regional level. So a number of different battles will need to be fought in the near future. With the 15 July debate, the leaders of Russia's various political groups will get another view of how well their "troops" are prepared for these future clashes. (Julie A. Corwin)

ENTER NEMTSOV. At the end of last week, it looked as if the long saga of Gazprom-Media's takeover of Ekho Moskvy would soon come to a close. When five of Ekho Moskvy's top managers along with 12 of its journalists tendered their resignation on 5 July, Ekho Moskvy's chief editor Aleksei Venediktov asked the journalists to give him just two more weeks to complete negotiations with Gazprom for a 9.5 percent stake in the station. Acquisition of such a stake would have given the journalists a controlling interest in the station. But on 10 July, Union of Rightist Forces leader Boris Nemtsov announced that he had started discussions with Gazprom-Media head Alfred Kokh about taking over a stake in Ekho Moskvy. Nemtsov would essentially act as a guarantor of the station's independence from Gazprom.

The entrance of Nemtsov into the Ekho Moskvy saga follows pessimistic pronouncements from Ekho Moskvy's management about the prospects of reaching some kind of understanding with Gazprom-Media. Venediktov had said that based on the previous 4 months of negotiating with Gazprom-Media head Alfred Kokh, there was "a 90 percent probability" that an agreement will not be reached. Marketing Director Irina Tsvei, who was one of the station's top managers who offered their resignations, was even more pessimistic. She said that she heard Kokh admit that he wants to own Ekho Moskvy and considers his promise to sell the shares just "game-playing," "Vremya Novostei" reported on 6 July. And, Ekho Moskvy General Director Yurii Fedutinov acknowledged earlier that the possibility that the largest package of shares in the station could become the property of Kokh personally had been actively considered during negotiations, according to "Kommersant-Daily" on 5 July. For her part, Tsvei admitted that her and her colleagues' offer to resign was a "way of putting pressure on our superiors, who we think are being too soft."

For his part, Kokh, in an interview with "Moskovskii novosti" in its issue number 28, offered a starkly different view of the negotiations with Ekho Moskvy. He said that the two sides had agreed in principle on the sale of shares to the station. "But our required condition is the transformation of Ekho Moskvy from a closed stock society to an open one" and "managers of the station have agreed" with this condition. According to Kokh, Gazprom-Media "will [then] become a small, minority partner." However, the Ekho Moskvy managers have up to now not taken any steps toward changing the company's structure, according to Kokh. "It seems that all was agreed, conduct an extraordinary shareholders meeting, introduce changes into [the company's] charter, transform it into an open stock society, and buy the long-awaited package of shares," Kokh said. "[But] instead of this [only] a great noise and scandal follows from Ekho. This is their position: 'Sell us your shares, otherwise we will ruin your business.' Excuse me, but this is not a position but extortion."

This was not the first time that Kokh and Ekho Moskvy journalists have given wildly different accounts of their mutual dealings. Following a 24 June shareholders meeting, Venediktov told reporters that "despite all agreements, Gazprom blocked the candidacy of Fedutinov" for the station's board of directors and voted against all candidates nominated by the station's staff. However, a Gazprom-Media's press spokesman denied that any previous agreement on supporting Fedutinov's candidacy existed and charged that Fedutinov failed to gain a seat because he himself abstained from voting in his favor.

Meanwhile, the entrance of Nemtsov into the equation could ease some of the tension in negotiations if only by providing a temporary respite in the exchange of recriminations between the two sides. Nemtsov, as leader of the political party backed by Kokh's closest political ally, Unified Energy Systems head Anatolii Chubais, should be able to conduct a civil dialogue with Kokh. Whether Nemtsov can win the trust of Ekho Moskvy's journalists is an open question. (Julie A. Corwin)

RECENT CHRONOLOGY 10 July: SPS leader Boris Nemtsov announced that Gazprom-Media has offered to give him a number of shares in Ekho Moskvy to ensure the station's continued independence

9 July: Ekho Moskvy announced that it will cut the number of its news programs by half

5 July: Seventeen journalists at Ekho Moskvy tendered their resignations

4 July: A Moscow city court upheld an earlier court's decision that 25 percent stakes in 23 Media-MOST companies, including Ekho Moskvy, must be transferred from Media-MOST to Gazprom. As a result of that court decision, Gazprom wound up with 52 percent of the station, while the station's managers and journalists own 34 percent, according to "Kommersant-Daily" on 6 July

3 July: French President Jacques Chirac gave a live interview at Ekho Moskvy

2 July: Media-MOST head Vladimir Gusinskii's 14 percent stake in the company was frozen on orders of the Prosecutor-General's Office following a visit from Federal Security Service officers to the station's offices

24 June: A new board of directors was elected for Ekho Moskvy.

DEPUTIES GIVE LABOR CODE INITIAL NOD... As the Duma neared the end of its spring session, deputies turned their attention to a number of controversial bills, such as the Labor Code and legislation limiting the number of terms regional leaders may serve. In a number of instances the government forged compromises with its opponents in order to gain legislators' approval. Following labor union- and Communist-organized demonstrations and protests against the government's version of a new Labor Code across Russia (see "RFE/RL Newsline," 20 June 2001), the government agreed to withdraw its version of the code in favor of a draft that was worked on by representatives of the Federation of Independent Trade Unions, employers' organizations, government officials, and Duma deputies. The new version passed easily in its first reading with 288 votes in favor, 133 against, and one abstention. However, "Nezavisimaya gazeta" concluded on 6 July that the real fight over the bill has only been delayed until the second reading, which is expected to take place in the fall. Labor Minister Aleksandr Pochinok told reporters on 5 July that he expects "several thousand amendments" to be offered before that reading. JAC

...LIMIT THE NUMBER OF TERMS FOR GOVERNORS... The bill on third and fourth terms for regional heads managed to pass in its second and third readings on 4 July, despite the withdrawal of the pro-Kremlin Unity faction's support for the legislation. That group had supported the bill during its first reading (see "RFE/RL Russian Federation Report," 20 June 2001). Supporting the bill was almost all of the Communist faction, along with members of Yabloko, Union of Rightist Forces, and Fatherland-All Russia, and the Liberal Democratic Party. Almost all of the Unity faction abstained from voting. State Duma Chairman (Communist) Gennadii Seleznev also did not vote. Under the new amendments, the number of regional leaders who can serve a third term has dropped from 69 to 10. According to "Kommersant-Daily" on 5 July, the presidents of Kabardino-Balkaria (Valerii Kokov), Kalmykia (Kirsan Ilyumzhinov), Komi (Yurii Spiridonov), and Tatarstan (Mintimer Shaimiev) republics and Novgorod Oblast Governor Mikhail Prusak can seek not only a third but also a fourth term. Now eligible for a third term are Moscow Mayor Yurii Luzhkov, Astrakhan Governor Anatolii Guzhvin, Leningrad Oblast Valerii Serdyukov, Sakhalin Oblast Governor Igor Farkhutdinov, and Tver Governor Vladimir Platov. Earlier, the chief author of the bill, deputy (SPS) Boris Nadezhdin, predicted that the bill would be rejected by the Federation Council and fail to attract enough votes to overcome that veto in the State Duma. During the second and third readings, only 247 deputies supported the bill -- only 21 more votes than necessary and some 53 votes shy of the number required to overcome a rejection by the upper house. However, should the pro-Kremlin Unity faction change its position again, the bill could pass easily. JAC

...SET NEW PROFIT RATE... Deputies also approved a number of bills in the economic sphere. Deputies approved a bill lowering the corporate profit rate in its third and final reading. The vote was 286 in favor, 28 opposed and zero abstentions. The new profit tax has been set at 24 percent, compared with the current rate of 35 percent. Last month, the Duma and government managed to forge a compromise on this issue (see "RFE/RL Russian Political Weekly," 25 June 2001). Also on 6 July, deputies approved in its second reading changes to chapter 22 of the Tax Code regulating excise duties on goods such as hard alcohol, beer, wine, tobacco products, oil and gas condensate, gasoline, diesel fuel, and natural gas, according to Interfax. A bill introducing changes and amendments to the law on insolvent banks was passed in its third reading earlier in the week with the support of 334 deputies, according to Radio Rossii. The law is intended to ease the situation of individual depositors with accounts in bankrupt banks, by reducing the time period by which banks must reimburse private depositors to three months from 18-24 months, according to Interfax-AFI. On 4 July -- before Deputy Prime Minister and Finance Minister Aleksei Kudrin flew to a key G-7 finance ministers meeting, deputies approved in its second reading the bill on combating money laundering. The vote was 237 in favor and 43 against, according to Interfax-AFI. Prior to the vote, the government withdrew its insistence that the definition of "criminal proceeds" include revenue from the violation of tax, customs, and hard currency regulations, because the Fatherland-All Russia faction flatly refused to support the bill with such a definition, "Vremya novostei" reported on 5 July. JAC

...AND LIMIT FOREIGN OWNERSHIP OF NATIONAL TELEVISION STATIONS. Deputies also approved a revised version of amendments to the law on mass media in its third and final reading with 343 votes in favor. Voting against the bill was some of SPS and all of Yabloko, according to Ekho Moskvy. If enacted, the bill would limit the share of foreign capital to no more than 50 percent in television channels that broadcast to more than 50 percent of Russian territory or more than 50 percent of the population. Deputy Chairman of the Information Policy Committee (Russian Regions) Boris Reznik told reporters that provisions of the bill "can be easily bypassed" by forming a few shell companies to mask the presence of a foreign investor. He called the bill "more of an emotional outburst than legislation." In an interview with Ekho Moskvy, Union of Journalists General Secretary Igor Yakovenko expressed a similar view, calling the law a "lawoid" (zakonoid). He charged that the bill had an exclusively political purpose: "This is not a law but a kind of legislative weapon which was thought up for the struggle against two specific people, Vladimir Gusinskii and Boris Berezovskii," Yakovenko said. JAC

Legislation Law______________Date Approved____________# of reading

On combating money______4 July_____________________2nd

On insolvent credit organizations__4 July___________________3rd

Labor Code______________5 July_____________________1st

Tax Code, Part 2____________6 July____________________3rd
(on profit tax)

Tax Code, Part 2_____________6 July____________________2nd
(chapter 22, excise duties)

On Mass Media______________6 July____________________3rd

On general principles_________6 July_____________________2nd
for organizing regional bodies___________________________3rd
(3rd terms for governors)

COMINGS & GOINGS IN: Vladimir Yetylin, advisor to Chukotka Autonomous Okrug Governor Roman Abramovich on the problems of the numerically small peoples of Chukotka, was elected to the State Duma from the single-mandate district in that okrug on 30 July. Yetylin will take the seat given up by Abramovich after he won election as governor, and he has decided to join the Communist faction.

IN: State Duma deputy Aleksei Aleksandrov, who was formerly independent, has joined the Unity faction. Aleksandrov entered the Duma on the Fatherland-All Russia party list, but chose not to join its faction. Previously, he was a member of Our Home is Russia.

POLITICAL CALENDAR 12 July: French Prime-Minister Lionel Jospin will visit Moscow

12 July: Fatherland's Central Council and the presidium of Unity's political council will hold a joint session

13 July: State Duma will consider presidential package of legislation reforming pension system as well as amendments to the law on advertising in its second reading

13 July: Canadian Prime Minister Jean Chretien will visit Russia

13 July: Deadline by which Media-MOST must pay back a $262 million loan to Gazprom, according to "Moskovskii komsomolets" on 30 June

14 July: State Duma will consider Land Code in its second reading

14 July: State Duma will meet for the last day of its spring session, according to on 28 June

15-17 July: Chinese leader Jiang Zemin will visit Russia

18 July: President Putin will hold a press conference with Russian and foreign journalists at the Kremlin

18-21 July: Queen Sophia of Spain will visit St. Petersburg

20 July: Federation Council will meet for the last day of its last spring session, according to ITAR-TASS on 19 June

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

25-26 July: U.S. National Security Adviser Condoleezza Rice to visit Russia, according to ITAR-TASS on 9 July

12 August: One year anniversary of the sinking of the Kursk submarine

14 August: Finance Ministry will submit draft 2002 budget to the cabinet of ministers

September: Malaysian Prime Minister Mahathir ibn Mohamad will visit Russia

September: The public organization Business Russia, or "Delovaya Rossiya," will hold its founding congress in St. Petersburg, according to "Kommersant-Daily" on 24 April

September: Security Council will discuss the struggle against drug addiction, according to the presidential envoy to the Urals federal district, Petr Latyshev

1 September: Deadline by which a single rate agency will be created within the federal government's structure, according to Prime Minister Mikhail Kasyanov on 3 July

6 September: Aeroflot shareholders meeting will be held

7 September: Russian Public Television (ORT) will hold a shareholders meeting at which a new board of directors will be selected, according to ORT General Director Konstantin Ernst on 29 June

17 September: State Duma's fall session will begin, the website reported on 3 July

19 September: State Duma will hold the first full plenary meeting of its fall session

7 October: State Duma by-elections will be held for the single-mandate districts in Amur and Arkhangelsk oblasts. Two seats were vacated when former State Duma deputy Leonid Korotkov was elected governor of Amur and deputy Aleksandr Piskunov was named an auditor at the Audit Chamber

13 October: Fatherland will hold a congress to reorganize the movement into a party

20-21 October: President Putin will take part in the ninth informal summit meeting at the Asia Economic Cooperation forum in Shanghai, according to ITAR-TASS on 2 July

November: Russian NGOs will hold a congress in Moscow, according to Aleksei Leonov, chairman of "Slavyanin," on 12 June.