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Russia Report: July 16, 2001

16 July 2001, Volume 1, Number 18
LAND CODE WHIZZES PAST DUMA. On the final day of the 2001 spring session on 14 July, State Duma deputies approved the Land Code in its second reading. The vote was 253 in favor, 152 against, with six abstentions. The deputies, who had been working long hours on the floor of the Duma earlier that week, were perhaps simply too exhausted to wage the kind of fight that accompanied the passage of the code in its first reading (see "RFE/RL Russian Political Weekly," 25 June 2001). In fact when a bomb threat was announced around 5:00 p.m., deputies did not even bother to evacuate, according to the website According to "Izvestiya," leftist deputies joked that a bomb of sorts had been found in the office of Property Committee Chairman (Unity) Boris Pleskachevskii, but it turned out to be a "gold mine from the oligarchs." All in all ,it was a triumphant session for the government, which had already won a number of legislative victories in the last few weeks of the spring session.

Left deputies did not give up without a fight: Communist Party leader Gennadii Zyuganov has promised to file a complaint with the Constitutional Court regarding legal violations that occurred as the bill was pushed through the lower legislative house. Zyuganov argued that the Duma allowed only 29 rather than the 30 days required between the first and second readings and gave deputies three rather than four weeks to submit their amendments, according to "The Moscow Times" on 16 July. Both Zyuganov as well as State Duma Speaker Gennadii Seleznev had asked that a conciliatory commission be created to discuss the bill. But, on 16 July, Constitutional Court Deputy Chair Tamara Morshchakova poured cold water on any hope that the Communists could derail the legislation in that organ. Morshchakova told Ekho Moskvy that the court cannot even consider defects in how the Land Code was adopted until it has actually come into force.

Some 200 amendments were considered during the second reading, but only the ones pre-approved by Economic Development and Trade Minister German Gref appeared to pass, "The Moscow Times" concluded. Among the new amendments approved was one allowing foreigners to own commercial land; however, foreigners are not allowed to own land in border areas or in "special territories in accordance with federal law." "Vremya novostei" interpreted this to mean "strategic areas" such as Primorskii and Stavropol krais and Kaliningrad Oblast. However, Union of Rightist Forces deputy Viktor Pokhmelkin suggested that the limitation will only be a formal one and that foreigners [delete comma] who have a controlling interest in a Russian enterprise [delete comma] can use that enterprise as a legal entity through which they can acquire land.

Meanwhile, Deputy Prime Minister and Finance Minister Aleksei Kudrin said on 14 July that a draft bill on the sale of agricultural land will be prepared by the end of the year. However, two days later Economic Development and Trade Minister Gref told reporters that a bill on agricultural land sales will be submitted to the Duma during its 2001 fall session, according to ITAR-TASS. (Julie A. Corwin)

CORRECTION: "RFE/RL Russian Political Weekly" of 9 July incorrectly cited the federal constitution as the source for the requirement that a bill which has been rejected by more than one-third of the legislatures of federation subjects must be sent to a conciliatory commission. In fact, according to Emory University's Thomas Remington, the legal norm is contained in the law on demarcation of state power between the federal level and the subjects of the federation (article 13), which provides that if more than one-third of the legislative bodies of the subjects of the federation oppose ("vyskazyvayutsya protiv") a law that the Duma has passed in first reading, a conciliation commission is to be formed consisting of members of the Duma and representatives of the interested subjects of the federation. Remington reports that the norm was being applied for the first time during the lead-up to the most recent vote on the Land Code, and there was a good deal of uncertainty about how to apply it.

DEPUTIES GIVE PENSION REFORM BILLS THEIR INITIAL APPROVAL... Following a meeting between President Vladimir Putin and Duma faction leaders on 12 July, deputies voted on 13 July to support four bills of the presidential administration's pension reform package. Prior to the meeting, some deputies from leftist factions had called on the Kremlin to recall the bills and create a special working group to improve them; however, presidential envoy to the Duma Aleksandr Kotenkov dismissed the effort as "the latest attempt by those who are trying to postpone legislative decision on pension reform to the fall." The law on reform of the pension system fetched 249 votes in favor, according to ITAR-TASS. The law on workers' pensions was approved with 255 votes in favor, 129 against, and six abstentions. According to ITAR-TASS, the bill defines three types of workers' pensions, according to age, individual standards, and death of a household's chief wage earner. The retirement age for men is 60 years and for women 55 years. The law on the provision of state pensions passed with 255 votes in favor, 147 against, and seven abstentions. The law on obligatory pension insurance passed with 248 votes in favor, 84 against, and three abstentions. This bill lays out a circle of insurers, insured persons, and types of insurance that will be provided in the new pension system, according to JAC

...CUT BUREAUCRATIC RED TAPE FOR ENTREPENEURS... Deputies also supported a bill amending and changing the law on licensing of types of activities with a vote to 289 in favor, 27 against, and one abstention. The bill was part of the debureaucratization package authored by the government this year (see "RFE/RL Russian Political Weekly," 5 March 2001). The amendments reduce the number of activities that must be licensed from 2000 to 100, according to "Kommersant-Daily" on 12 July. After the vote, Economic Development and Trade Minister Gref noted that "the bill will be passed, thank god, of course, the deputies managed to drag along 10-15 [additional] activities but this compromise is within the boundaries of common sense." Unity faction leader Vladimir Pekhtin said that the bill will simplify the licensing procedure, thus easing problems for entrepreneurs. In other moves to support Russian businesses, deputies approved a bill in its third reading that will protect the rights of legal entities and individual entrepreneurs during state audits of their businesses. According to ITAR-TASS, the vote was 393 in favor with one against. Earlier in the week, deputies also approved a bill in the second reading, which laid out the order for registering legal entities, i.e., their creation, reorganization, and liquidation. If adopted, the law will come into effect on 1 January 2002. JAC

...EASE FOREIGN CURRENCY REQUIREMENTS FOR BUSINESESSES... On 13 July, deputies passed in all three readings a bill lowering the requirement for firms to sell their foreign currency earnings from 75 percent to 50 percent, RIA-Novosti reported. The bill was sponsored jointly by the presidential administration and Yabloko, but was opposed by the Central Bank. According to Reuters, the bill was approved with 240 votes in favor, 141 against, and four abstentions. A bill on combating money laundering was passed in its third reading with 244 votes in favor, 107 against, and one abstention (see "RFE/RL Russian Political Weekly," 11 July 2001). Under that bill, banks and other financial institutions will be required to inform government authorities about all financial transactions in excess of 600,000 rubles ($20,500). According to AP, the previous version of the bill had set the amount at 500,000 rubles.

...CLARIFY DIVISION OF TAX REVENUE... Deputies also supported on 12 July a bill amending the second part of the Tax Code relating to sales tax, according to Interfax-AFI. According to the agency, the bill clarifies which kinds of goods and services can be taxed and how the revenue from the tax will be distributed between the center and regions. According to, deputies were presented with two different versions, the government's version and one authored by Fatherland-All Russia deputy Georgii Boos. Deputies opted to support Boos's version, which more closely followed the recommendations of the Constitutional Court that had earlier weighed in on the issue, according the website. However, reported that the chief difference was that in the Boos version, the tax applies only to retail cash operations, while the government wanted it to also apply to non-cash transactions. JAC

...GIVE REGIONS A SMALL SAY IN APPOINTING POLICE CHIEFS. Deputies approved amendments to the law on the police which establishes that interior ministers and main police department chiefs will be appointed by presidential decree with the recommendation of the federal interior minister. A first version of the bill had been passed by the Duma but rejected by the Federation Council. And deputies approved the new version produced by a conciliation commission. Under the new version, the interior minister must find out the view of the region's leader before making his recommendation to the president, according to ITAR-TASS. Deputies also approved in the first reading amendments to the third part of the Civil Code regarding inheritance rights and right to contact with foreigners. Duma Legislation Committee Chairman (Union of Rightist Forces) Pavel Krasheninnikov told Interfax on 12 July that the bill would affect the regulation of such important rights as that of inheritance. In addition, the legislation ensures that Russian citizens will not have their rights limited with regard to contacts with foreigners as was the case in the Soviet Union. JAC

Legislation Name of law___________Date Approved____________# of reading

Land Code________________14 July_________________2nd

On defense of rights of_________14 July______________3rd
legal entities and entrepreneurs
during government audits

On combating money_________14 July_________________3rd

On foreign currency________13 July_________________3rd
regulation_________________13 July_________________2nd
_________________________13 July_________________1st

On reform of the__________13 July__________________1st
pension system

On workers' pensions________13 July_________________1st

On the provision of state ____13 July________________1st

On obligatory pension________13 July_________________1st

Civil Code, Part 3__________12 July___________________1st
(inheritance rights)

Tax Code, Part 2___________12 July__________________1st
(Article 20, sales tax)

On state registration of_______12 July__________________2nd
legal entities

On the police_______________12 July______________conciliation

On the licensing of various____12 July__________________2nd
types of activities____________13 July__________________3rd

SEPARATE BUT EQUAL PARTIES OF POWER? Following dramatic announcements of the formation of a new "party of power" last spring (see "RFE/RL Russian Political Weekly," 23 April 2001), the leaders of the Unity and Fatherland party appeared to scale back their plans, announcing on 12 July the formation of an alliance of the two groups, which will keep their separate structures intact. The 45-minute gathering in Moscow of some 400 delegates from across Russia appeared to be mostly ceremonial: the coalition's documents were passed unanimously without amendments or comments, "The Moscow Times" reported on 13 July. In fact, the delegates initially forgot to vote for the leaders of the two unions and instead started clapping, according to the daily. "Kommersant-Daily" likened the meeting to fitness class with the delegates rising in unison and raising their arms at the signal of their leader.

The quickie congress occurred on the same day that President Putin signed into law the federal bill "on political parties." That bill was intended, among other things, to encourage the formation of larger parties. However, an unidentified Kremlin source told "Vremya novostei" on 13 July that the presidential administration is in fact indifferent about whether Unity and Fatherland merge: "The main thing for us is that they go into the next elections together," said the source. Vladislav Surkov, deputy presidential administration head, who attended the congress, was quoted on the website as saying that "in the future parliamentary elections Unity and Fatherland will go on one [party] list."

Nevertheless, "Vremya novostei" reported that the two leaders of the new union, Unity head Sergei Shoigu and Fatherland leader and Moscow Mayor Yurii Luzhkov, each told the delegates that the creation of the new union is "absolutely" a step towards the formation of single political party. However, Luzhkov cautioned that to talk about a single party is "still too early," but he did not exclude that in November this "could happen." Likewise, Shoigu reportedly said that "it is not yet the right time to talk about the joining into a [single] organization. We should keep our own party structures." In its coverage, "Nezavisimaya gazeta" put a different spin on the leaders' remarks, noting that Luzhkov declared at one point that "perhaps we will move towards the idea of a single party, or perhaps we will preserve the structure of the coalition."

The issue of structure aside, the party's leaders tried to present a common front with regard to presidential legislative initiatives. For example, Vyacheslav Volodin, parliamentary secretary of Fatherland's political council, chided Fatherland's faction leaders in regional legislatures for not giving enough support to the Land Code and Labor Code, "Nezavisimaya gazeta" reported. However, Volodin, who is also first deputy head of the Fatherland-All Russia (OVR) faction in the State Duma, did not touch on the OVR's own lack of support for other Kremlin initiatives in the federal legislature. Earlier this month, Unity decided to abstain from support for a bill limiting the number of terms governors could seek, while the bulk of OVR supported the bill (see "RFE/RL Russian Political Weekly," 11 July 2001).

And, more departures by OVR in the Duma from the course being plotted by Unity can be expected in the future. Emory University Professor of Political Science Thomas Remington suggests that while "Unity of course would love to dominate a disciplined majority coalition in the Duma, that's mostly wishful thinking." According to Remington, OVR "decided that it wanted to keep a separate political identity rather than dissolve itself into Unity, which was certainly how Unity saw the union initially." And as a result, the party leaders agreed on a "union," which is more of an electoral alliance than a real unification. In the meantime, voters will be left to ponder why such a loose electoral alliance had to be created so far in advance of the next Duma elections. (Julie A. Corwin)

BUREAUCRATS BY NUMBERS -- GIVE OR TAKE A MILLION. Total number of federal-level officials across Russia in 2001, according to Deputy Prime Minister Aleksei Kudrin: 333,232
federal employees based in Moscow: 24,902
total annual amount allocated for federal employees' wages: 25.4 billion rubles

Total number of federal-level officials across Russia in 2001, according to Communist Duma deputy Yegor Ligachev: 1.34 million
Increase in cost of state apparatus from 1995 to 2001: +900 percent

Total number of federal-level officials outside of Moscow in 1999, according to then Prime Minister Yevgenii Primakov: more than 300,000

Increase in the number of federal bureaucrats from 1992 to 1997, according to then Prime Minister Sergei Kirienko: 1.2 million persons

Rank of President Putin in list of best-paid Russian public officials: 10

Percentage difference between the monthly salary of State Duma Chairman Gennadii Seleznev and President Putin: +200 percent

Percentage difference between the monthly salary of presidential administration head Aleksandr Voloshin and his deputies: -200 percent

Sources: "Izvestiya" 28 June 2001, ITAR-TASS 20 March 1999, Federal News Service 10 April 1998, REN-TV 27 June 2001

COMINGS & GOINGS RESHUFFLED: On 13 July Putin signed a decree rearranging positions within the Defense Ministry. Lieutenant General Anatolii Mazurkevich, most recently head of the ministry's foreign relations office, will now head the main office for international military cooperation, replacing Colonel General Leonid Ivashov. According to ITAR-TASS, Ivashov is also dismissed from the Armed Forces; however, Interfax quoted Defense Minister Sergei Ivanov as saying that Ivashov will be given another equally important position. If not, Ivashov may be able to use the extra spare time to publish more volumes of poems and songs; in 1999, Ivashov won acceptance to the Writers' Union (see "RFE/RL Newsline," 29 July 1999). Colonel General Ivan Yefremov, most recently head of the ministry's personnel department, will now command the Moscow Military District. Yefremov had been in his last position only since April (see "RFE/RL Russian Political Weekly," 1 May 2001). Lieutenant General Nikolai Pankov will replace Yefremov at the personnel department.

President Putin on 10 July issued a decree making a series of appointments at the Interior Ministry. Nikolai Bobrovskii was named head of the Criminal Police Service, a position which has the rank of deputy interior minister, according to "Vedomosti" on 11 July. Bobrovskii was most recently deputy tax minister, a position to which Putin assigned him just last March (see "RFE/RL Russian Political Weekly," 16 April 2001). Aleksandr Ovchinnikov, who served in the Interior Ministry's Operational Department, was named head of the Main Department for Fighting Organized Crime, replacing Mikhail Vanichkin. Vladimir Gordienko, former head of the Russian national bureau for Interpol, was named head of the Criminal Investigation Department, replacing Vyacheslav Trubnikov. Aleksei Orlov, former head of the St. Petersburg Department for Combating Economic Crime, is now head of the ministry's Main Department for Fighting Economic Crime, replacing Nikolai Nino, according to "Kommersant-Daily on 3 July. Mikhail Ignatiev, most recently logistics commander of the Interior Ministry forces, is now head of the Logistics Service and deputy interior minister, replacing Petr Nelezin, according to Interfax. Aleksandr Chekalin, formerly a deputy interior minister, is now head of the Public Security Service, which also has the rank of deputy interior minister, replacing Valentin Chernyavskii. JAC

IN: The following are members of the new General Council of the new union of Unity and Fatherland parties, according to "Nezavisimaya gazeta" on 13 July: The four members from Fatherland will be secretary of the group's political council Aleksandr Vladislavlev, first deputy head of the OVR faction Vyacheslav Volodin, member of the political council Tatyana Dmitrieva, and Deputy Chairman of the State Duma's Committee on Labor and Social Policy Andrei Isaev. Unity will be represented by chairman of Unity's political council Frants Klintsevich, Unity faction leader Vladimir Pekhtin, deputy chairman of the political council Sergei Popov, and Vladislav Reznik, member of the presidium of the political council. The ninth member is deputy presidential envoy to the Central federal district Aleksandr Bespalov.

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

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

20 July: Federation Council will consider the bill liberalizing foreign currency controls

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

26 July: Security Council will discuss Kaliningrad Oblast

29 July: Gubernatorial elections in Irkutsk and Nizhnii Novgorod oblasts

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

15 August: Deadline by which the 2002 federal budget should be submitted to the State Duma, according to ITAR-TASS

End of August: New U.S. Ambassador Alexander Vershbow will take office in Moscow, according to "Nezavisimaya gazeta" on 11 July

September: Malaysian Prime Minister Mahathir ibn Mohamad will visit Russia

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

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

23 September: Gubernatorial elections in Rostov Oblast

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 of the Asia Economic Cooperation forum in Shanghai, according to ITAR-TASS on 2 July

28 October: Gubernatorial elections in Orel Oblast

28 December: Duma's fall session will come to a close, according to ITAR-TASS on 13 July.