Russia Report: November 7, 2001

In an interview with "Argumenty i Fakty" on 30 October, Tatarstan's President Mintimer Shaimiev said he is concerned about "Islamophobia," noting that one of the aims of international terrorism is to provoke a clash between Christians and Muslims. According to Shaimiev, Islam is an extremely peaceful and tolerant religion. In an interview with "Trud" on 3 November, Ramazan Abdulatipov, chairman of the Council of Assembly of Peoples of Russia, said that in his opinion, "it is already difficult not to notice that the forces of Islamaphobia are gathering. In several of our regions, tension between Muslim groups and local authorities and the population are being artificially heightened." He gave as examples Murmansk and Kamchatka. In Murmansk, according to Abdulatipov, someone ravaged a construction site where a Muslim group was building a mosque. In Kamchatka, the local leader is unhappy that a Muslim group even exists let alone wants to meet regularly. (Abdulatipov is also a senator in the Federation Council representing Saratov Oblast.) Abdulatipov also noted that "with the beginning of perestroika thousands of mosques were built, thousands of Muslim went on a hajj, but there has been no policy to consolidate these achievements" and "the extremely low level of preparation of Muslim clergy enabled Islamic radicals to strengthen their position." Meanwhile, in Chelyabinsk Oblast, Muslims in the city of Zlatoust were organizing a peace march, regions.ru reported on 2 November. The march was suggested by a member of the city's branch of the Eurasian party in part to dispel rumors about the involvement of all Muslims in the Afghan conflict. JAC

The website strana.ru speculated on 1 November that an interview Tatarstan's President Shaimiev gave to Interfax the previous day on the subject of the Federation Council is an indication that Shaimiev is ready to become chairman of that body. It suggested that in the interview, Shaimiev laid out his conditions for accepting the job. In the interview, Shaimiev said he thinks the Federation Council should increase its authority beyond what it had during the "late Yeltsin" period. He said he is sure that more changes will be made within the next two years to the principles under which the Federation Council is formed. For example, he predicted that during the next State Duma elections, voters will also select senators for the upper legislative house. "Under the current rules for forming the Federation Council, questions have arisen about its legitimacy." Shaimiev added that he "has been worried from the beginning that [with the reform of the council] it would be filled with people without real ties to a specific region, and in many cases this is exactly what has happened." He continued, "among the new senators there are several people who still head this or the other commercial enterprise." According to the website, by making Shaimiev the head of the Federation Council, Russian President Vladimir Putin will deprive regional alliances of their leader and smooth over heightening ethnic and religious tensions by demonstrating tolerance toward Russia's 13 million Muslims. The website did not explain why last year special legislation was drafted -- reportedly at the Kremlin's urging -- which allowed Shaimiev to seek a third presidential term (see "RFE/RL Russian Federation Report," 20 June 2001). JAC

Former state-secretary during the administration of Russian President Boris Yeltsin, Gennadii Burbulis, has been named to represent Novgorod Governor Mikhail Prusak in the Federation Council, "Vremya MN" reported on 3 November. According to the daily, Burbulis may compete for the post of chair of the Federation Council, which will become vacant after 1 January 2002. The newspaper further suggests that even if Burbulis is not named speaker, he is likely to be one of the upper chamber's main movers and shakers, if for no other reason than his extensive experience with political intrigues. Novgorod Governor Prusak appointed Burbulis to serve as his liaison with the State Duma and Federation Council in June 2000 (see "RFE/RL Russian Federation Report," 7 June 2000). On the issue of leadership in the Federation Council, Valerii Goreglyad, the head of the Federation group in the upper chamber, said his group does not intend to raise before 1 January the question of Federation Council speaker Yegor Stroev's mandate, Interfax reported. Goreglyad noted that it is even possible that Stroev might remain in the Federation Council by resigning as governor. JAC

The new financial monitoring committee that was recently established by presidential decree will create representative offices in each of the seven federal districts next year, Radio Mayak reported on 2 November (see "RFE/RL Newsline," 2 November 2001). The new agency was established in order to combat money laundering. According to the station, the central apparatus will have more than 300 people, and more than 100 additional personnel will work in territorial organs. On 6 November, Deputy Prime Minister Viktor Khristenko told reporters in Moscow that a decree establishing the new single tariff organ is on the desk of Prime Minister Mikhail Kasyanov, awaiting his signature, Interfax reported. He added that it is possible that the organ will have offices in each of the seven federal districts, but not in each region. JAC

A scandal has already arisen in the Republic of Altai's presidential race, "Kommersant-Daily" reported on 6 November. Elections there are scheduled for 16 December. According to the daily, opponents of incumbent President Semen Zubakin claim that they have information about his connections with the "infamous group" headed by Sverdlovsk industrialist Pavel Fedulev. According to the daily, some 17 candidates have been nominated, and the leading contenders, according to pollsters, are Zubakin, State Duma deputy and Agrarian Party leader Mikhail Lapshin, and head of the republic's Interior Ministry directorate Aleksandr Berdnikov. Berdnikov was nominated by the local Unity party branch. JAC

Communist Party officials in Birobidzhan, the capital of the Jewish Autonomous Oblast, have threatened to smash the cameras of any journalists who try to film their meetings on 7 November, Interfax-Eurasia reported on 6 November. The television journalists believe that the local Communist Party has taken this position because it blames the local TV media for its heavy losses in recent elections to the oblast's legislative assembly. JAC

Following the closing of the deadline for submitting registration documents on 31 October, no more than nine candidates will now be eligible to run in Komi Republic's 16 December presidential elections, strana.ru reported the next day. Among the candidates are incumbent President Yurii Spiridonov; chairman of the local legislature Vladimir Torlopov; Sever-OIL General Director Mikhail Kodanev; writer Aleksandr Nekrasov; Leonid Musinov, an assistant to a State Duma deputy; Leonid Kochanov, an unemployed resident of Syktyvkar; and pensioner Rita Chistokhodovaya. According to "Kommersant-Daily" on 6 November, the main struggle will be waged between Spiridonov and Torlopov. Meanwhile, a local NGO called "For Honest Elections," together with Kochanov, has filed a complaint with the local election commission alleging that Spiridonov's election registration contains numerous violations. For example, on his application to register as a candidate, Spiridonov neglected to list the street address for his residence and put down only "Syktyvkar, Komi Republic." However, the daily concluded that it is hardly likely that Spiridonov's registration will be canceled. JAC

The daily also argued that the relationship between the Kremlin and Spiridonov is not particularly warm because President Putin ignored an invitation to visit the republic to celebrate the 80th anniversary of its statehood. And at the end of October, the presidium of Unity's political council did not examine a petition from Komi's Unity branch seeking support for Spiridonov's re-election. Meanwhile, Torlopov was invited to participate in a presidential delegation to Brussels, and last month had an "audience" with Unity leader Sergei Shoigu. JAC

The OTV-Prim television company and Ekho Moskvy vo Vladivostoke radio station have stopped their local broadcasts, regions.ru reported on 5 November citing Vostok-Media. Vostok-Media explained the closures by asserting that the situation in the krai is now less "politicized" under the new Governor Sergei Darkin: "Darkin's administration does not want to fight with anyone, nor does anyone want to fight with him." In addition, according to the agency, Vladivostok Mayor Yurii Kopylov controls the most popular newspaper and several popular television and radio programs, which as a result strive to create a positive image of the city's administration. During recent gubernatorial elections, Ekho Moskvy carried an interview with Darkin's chief competitor Viktor Cherepkov, and that interview was subsequently used by the local election commission to disqualify him (see "RFE/RL Russian Federation Report," 20 June 2001). JAC

The federal prosecutor assigned to the Sakha Republic (Yakutia), Nikolai Polyatinskii, filed a protest with the Russian Supreme Court on 5 November in connection with the decision of the republic's election commission to register incumbent Sakha President Mikhail Nikolaev as a candidate in 23 December presidential elections, Interfax-Eurasia reported. The same day, the press service of the Central Election Commission said that the commission is satisfied with Polyatinskii's action. Nikolaev will be seeking his third term -- something which Central Election Commission Chairman Aleksandr Veshnyakov earlier said he had no right to do (see "RFE/RL Russian Federation Report," 31 October 2001). Meanwhile, RFE/RL's Yakutsk correspondent reported on 25 October that relations between Nikolaev and Moscow have been strained for some time, as was evidenced by the lack of a single high-level guest from Moscow at Nikolaev's inauguration five years ago. At that time, an article appeared charging Nikolaev with exporting diamonds abroad in an ordinary attache case, after which Nikolaev's diplomatic passport was revoked. JAC

According to RFE/RL's Yakutsk correspondent, Nikolaev has involved some of the local media in his bid to be re-elected. The newspapers, "Viktoria-press" and "Molodezh Yakutii" have been used by his supporters to report every development in the continuing controversy from Nikolaev's point of view. What's more, both newspapers have increased their print runs several times and are now distributed free of charge. The newspapers' materials have conveyed that Nikolaev is ready for a protracted struggle to preserve his registration as a candidate and to seek the office even under the conditions of a confrontation with Moscow. In the meantime, however, Nikolaev is said to have an insurance policy in case of failure -- a fellow candidate, ALROSA-Sakha head Vyacheslav Shtyrov, who is considered one of Nikolaev's proteges. Materials for Shtyrov's registration as a candidate were gathered in record time -- after the republic's parliament refused to alter the local constitution as Nikolaev had requested. However, Shtyrov, who is not a Yakut, is not terribly popular in the republic, and recently said that budget expenditures on the agro-industrial complex should be cut. The candidate reportedly backed by the Kremlin Deputy Prosecutor-General Vasilii Kolmogorov has an even lower approval rating. Another candidate, chief federal inspector for Yakutia Ruslan Shipkov, is considered to have better chances, since he was a deputy head of the local legislature. And, although he is ethnic Russian, he speaks Yakut fluently. JAC

In what "Kommersant-Daily" is describing as a first in recent Russian history, an oblast government has declared that it is imposing external controls over a city's budget. Samara Oblast Deputy Governor Viktor Kazakov announced on 5 November that the oblast authorities have taken over the finances of the city of Samara. According to the daily on 7 November, the specter of bankruptcy for the city was first raised in January, when the question was only when the city's budget would crash -- before or after 15 June mayoral elections. However, incumbent Mayor Georgii Limanskii managed to postpone the crisis until after that ballot by borrowing more than 200 million rubles ($6.7 million) from commercial banks. After his re-election, Limanskii and his administration unsuccessfully tried to wrest more revenues from the oblast administration, which refused. Limanskii responded by waging "an information war against [Governor Konstantin Titov]." Now the oblast administration has struck back by utilizing Article 112 of the Budget Code, which empowers it to take charge when a certain level of indebtedness has been reached. JAC

Journalists in Saratov have appealed to the oblast's legislature demanding that legislators stop financing the oblast's press ministry, RFE/RL's Saratov correspondent reported on 6 November. According to the correspondent, the conflict started at the end of October, when local reporters were not allowed to attend the last session of the oblast's government and were told that future sessions would also be closed. Journalists informed local Media Minister Yurii Sanberg about the problem and appealed to the local prosecutor. Only the prosecutor responded, warning Saratov Governor Dmitrii Ayatskov that by barring access he is violating the law on mass media. Now the journalists are asking the deputies to eliminate funding for the ministry in next year's budget, using the money instead for social needs. JAC

Following a meeting with Tatarstan's President Mintimer Shaimiev, the chairman of Tatarstan's Muslim Religious Board, Gusman Khazrat Iskhakov, told reporters in Kazan he is deeply concerned the prospect that the Afghan conflict will spread rather than conclude by 16 November, when Ramadan begins, RFE/RL's Kazan bureau reported on 5 November. Gusman Khazrat said Afghanistan is a poor country ruined by two decades of war, adding that its residents have nothing but their homeland and will defend it. He said terrorist acts in the United States have raised interest in Islam around the world, but, "We must show that Islam is a religion of peace and love." Gusman Khazrat said preparations for a forthcoming congress of Tatarstan's Muslims were also discussed at his meeting with Shaimiev. Last month, the Tatar newspaper "Kyzyl Tang" called for not just a temporary suspension but a halt to the bombing of Afghanistan, RFE/RL's Kazan bureau reported on 2 November. The daily said that bombings against a country -- where the one-story buildings are made of dung and the primary means of transportation is by donkey -- can only serve to annihilate the peaceful population rather than plants and factories. JAC

RUSSIA'S REGIONS WAIT FOR BUSINESS WHILE INVESTORS KEEP THEIR CAPITAL IN MOSCOW

By Francesca Mereu

The positive changes in the Russian economy have improved the country's business climate, but for the most part, foreign and Russian firms are still opting to keep their capital invested in the Moscow region rather than branching out into the Russian provinces. Russia's reforms and improving economic performance were the main topics of a conference organized in Moscow by the Swiss-based World Economic Forum held on 29-30 October. Russian and foreign economists at the conference expressed optimism about Russia's economic reforms, noting that the overall improvement of the economy has attracted a return of foreign investments to the country.

Sergei Kirienko, the presidential envoy to the Volga federal district, pointed out that over the past few years the regional economic situation has improved. But, he says, the gulf between Moscow and the regions is still too wide. He cites differences in federal and regional business laws as one of the reasons for the gap. In his own Volga district, for example, a number of regional laws stand in direct contradiction of federal guidelines. "In the Volga federal region alone there were more than 2,000 laws that contradicted the federal law, and very often they concerned areas of business activities. Because of this situation, big investors who registered their business in one region could not sell their product in another region. Now the first task is to eliminate legal and economic barriers of this kind," Kirienko explained. He said many problems have been resolved over the past few years, but that much work remains to be done.

Boris Nemtsov, a member of the State Duma and head of the liberal Union of Rightist Forces, said the main problem in the Russian regions is the lack of democratic structures. He said that investments usually go where democratic standards have been established: "More than a half of foreign and Russian capital [that is invested] is invested in Moscow, the Moscow region, St. Petersburg, and Yekaterinburg. According to a study by the Institute of Transition Economics, investments go where you have more freedom -- where you have press freedom, democratic government, and civil society. In short, there is a strict link between the investments that were done in the regions and the democratic values and freedoms protected in the regions."

Nemtsov says many governors of Russia's 89 regions act more like despots than democratic leaders, driving away many potential investors.

Clifford Kupchan, vice president of the Eurasia Foundation -- a private organization that supports democratic and free-market systems -- pointed out that investment goes where it feels safe and where there are safe institutions -- guarantees that the Russian regions have so far been unable to provide. Kupchan says some interest groups in the regions have no desire to see a change in the present situation: "Political leadership and political will in the regions still matters. Even though governors play more than an economic role, getting the politics right matters in attracting investments. By getting the politics right we mean predictability, a budget, and we mean implementing the rule of law. Another thing I'd like to add is that the location is extremely important. Being in Moscow gets you things done more quickly. The problem in my view is that there are still interest groups that benefit from the old system."

Investment programs working in the regions now favor investing modest sums in a large number of small enterprises. In 1997, the European Bank for Reconstruction and Development (EBRD) founded the Russian Small Business Fund in Vladivostok to provide loans of up to $125,000.

But according to Augusto Lopez, the executive director of the U.K. branch of Lehman Brothers bank, it is Russia that has to supply a good banking system capable of providing small loans to small and medium businesses: "It is so unusual that in Russia it is actually the EBRD's micro-credit program which is fulfilling -- at least for very, very small entrepreneurs -- the role that a banking system should be playing today, which is providing credits to small and medium enterprises. In most transition countries the banking system is doing it quite efficiently. What's important, I think, is that Russians should gradually reconcile themselves to the idea that perhaps over the long term a good share of the Russian banking system is going to be owned by foreigners."

Kupchan of the Eurasia Foundation said that working out an effective regional strategy will mark a major step forward for the Russian economy.

Francesca Mereu is an RFE/RL correspondent based in Moscow.