Russia Report: September 13, 2000

An unidentified high-level presidential administration official told the RIA-Novosti agency on 6 September that in the future there will be no more power-sharing agreements between the federal center and regional subjects. A few days earlier, Viktor Cherkesov, presidential envoy to the North West federal district, made a similar pronouncement, "Vremya MN" reported on 6 September. According to Cherkesov, such agreements have "outlived their usefulness politically and to an even greater degree, legally." The daily noted that the officials would likely have made such statements on such a potentially controversial subject only if they already have some sense that an official position on the matter is forming. The newspaper concluded that the Kremlin has apparently already thought through the next step in its effort to strengthen "vertical power." JAC

In one of the first acts of the first day of its fall session, the State Duma voted to support in the first reading an amendment to the first part of the Tax Code, which gives regions the right to grant exemptions from federal taxes to local enterprises, Interfax reported on 8 September. The amendment, which was proposed by deputy speaker (Fatherland-All Russia) Georgii Boos, was opposed by the government. Aleksandr Kotenkov, presidential representative to the lower house, stated that "governors give exemptions and then complain that they do not have sufficient transfers [from Moscow]." He added that Boos's idea would make sense only if all regions were donor regions. For his part, Boos argued in favor of the legislation, saying that regions with lower taxes are more economically attractive to investors and could raise even more tax revenue, as local businesses are more productive and profitable. "Kommersant-Daily" noted the next day that at first the bill failed to gather the necessary 226 votes but then a second vote was held. JAC

In a series of articles based on a six-month nationwide investigative effort, "The Moscow Times" reported on 9 September that various regional leaders acted to pressure both voters and election officials to secure a decisive victory for President Vladimir Putin in the March 2000 presidential elections. With dispatches from the republics of Daghestan, Ingushetia, Tatarstan, Bashkortostan, Kabardino-Balkaria, Mordovia and Chechnya, Primorskii Krai, and Saratov, Novosibirsk, Kursk, Nizhnii Novgorod, and Kaliningrad oblasts, the newspaper documented a pattern of election falsification. It concluded that "Putin would not have won outright on 26 March without cheating...but most likely would have faced--and easily defeated--his chief competition, Communist leader Zyuganov in a runoff." The newspaper also noted that "not one person of those interviewed over the six months since the election could offer compelling evidence that fraud was part of a national conspiracy organized on direct orders from anyone in the Kremlin." However, there was "abundant evidence that in some of Russia's 89 regions, orders to falsify the vote came directly and formally from the governors' offices" and "there are reasons to believe that Kremlin officials might have made clear, with not-always-subtle hints, that regional leaders were expected to deliver the Putin vote by hook or by crook" (see http://www.TheMoscowTimes.com/election_fraud.html) JAC

In an interview with "Kommersant-Daily" on 7 September, Vyacheslav Volodin, deputy chairman of the Fatherland-All Russia (OVR) faction in the State Duma, revealed which regional leaders in upcoming gubernatorial elections can count on OVR's support. According to Volodin, OVR is supporting Governor Anatolii Guzhvin in Astrakhan Oblast, Governor Viktor Ishaev in Khabarovsk Krai, and Governor Ravil Geniatulin in Chita Oblast, all incumbents whom the Kremlin is also supporting. However, in contrast to the Kremlin, OVR is not supporting the respective incumbents in Volgograd Oblast and Stravropol Krai, Governor Nikolai Matsyuta and Governor Aleksandr Chernogorov: "In general, we support all reasonable activities of authorities, and we criticize all those stupid and incorrect measures that authorities commit." According to "Nezavisimaya gazeta" on 6 September, Moscow Mayor Yurii Luzhkov is actively supporting General Anatolii Kulikov, a former interior minister, in the race in Stavropol. That daily also reports that in nine races, including in Stavropol, Ulyanovsk, Ryazan, Vladimir, Kurgan, Tyumen, and Kamchatka, the heads of regional legislatures are challenging the incumbent leaders. JAC

Following last month's explosion in a marketplace in Ryazan, Ryazan Governor Vyacheslav Lyubimov is facing an even tougher re-election bid, "Segodnya" argues on 7 September. According to the daily, the region's economic results over the past four years have been "pitiful," and now "Ryazan residents do not feel safe and secure." According to the daily, which is owned by Vladimir Gusinskii's Media-MOST group, Lyubimov's chief rival is a "charismatic reformer," Mikhail Malakhov, whose only weak spot is his lack of government resources to deploy in his favor. The newspaper also predicted that because of poor economic performance in other regions in the so-called Red Belt, such as Ryazan, Bryansk, and Tula, local voters may decide to unseat incumbent governors with close ties to the Communist Party. On 11 September, Communist Party leader Gennadii Zyuganov told reporters that the party will not support the following incumbents: Kursk Governor Aleksandr Rutskoi, Kemerovo Governor Aman Tuleev, and Kaliningrad Oblast Governor Leonid Gorbenko. He added that the party's position vis-a-vis the remaining candidates in upcoming regional elections will be decided over the next week. JAC

Transneft has announced the liquidation of the Baltic Pipeline Company (BTS), which was created one year ago to oversee the construction of an oil pipeline connecting oil fields in western Siberia with the Primorsk terminal in Leningrad Oblast. The property and employees of BTS will be subsumed into the company Upper Volga Pipelines (VMN), which fully owned BTS and, in its turn, belongs entirely to Transneft. A special department is to be created within VMN to oversee the pipeline construction project until a new subsidiary of Transneft has been formed to take over that role. According to Transneft Vice President Sergei Grigorev, President Putin had expressed the wish in early August that a Transneft subsidiary oversee the project. But "Kommersant-Daily reported on 6 September that there may have been another reason for liquidating BTS: Grigorii Dvaz, the chairman of the Leningrad Oblast Committee for Economic Policy and Investments, recently commented that criminal structures were trying to seek a role in that project through BTS. The daily also suggests that the decision to liquidate BTS might be related to what the government called Transneft's "irrational use" of investment tariffs (paid by oil companies seeking stakes in the pipeline) that reportedly resulted in losses to the state totaling $2 million. JC

The government of Buryatia, with the help of the Moscow city government, is planning to search for oil and gas in Lake Baikal, "Novye izvestiya" reported on 6 September. According to the newspaper, which is controlled by Boris Berezovskii, an agreement signed by Buryatia President Leonid Potapov and Moscow Deputy Mayor Valerii Shantsev on economic, scientific, and cultural cooperation contains a surprising provision calling for joint searches for natural gas in the delta of the Selenga River, which empties into Lake Baikal. According to the daily, six wells have already been drilled at the river's delta. News of the agreement has sparked a scandal in Buryatia, as environmental groups have objected to the project, which they are labeling a purely speculative venture. The delta has been included on a UNESCO list of unique natural phenomena of "planetary significance." For example, the delta is the most significant point in central Siberia along the path of migratory birds. The lake itself is considered one of the world's most biologically diverse lakes and is on UNESCO's World Heritage list. JAC

According to "Kommersant-Daily" on 9 September, the candidacy of incumbent Governor Leonid Gorbenko in the upcoming gubernatorial ballot may be in doubt, following what members of the pro-Kremlin Unity party see as a violation of local election legislation. When Gorbenko failed to submit registration documents within the allotted period, the oblast election commission extended that period, apparently to give the governor more time to collect the required number of signatures supporting his candidacy. Gorbenko duly collected the necessary signatures and was registered as a candidate. Oblast Election Commission head Vasilii Zyubanov told "Kommersant-Daily" that before extending the registration period, he had consulted with the Central Election Commission. But a member of that commission with consultative voice, Unity's Vladimir Voshchinin, said he could not rule out that members of his party will file a complaint with the central election body. In opinion polls, Gorbenko is trailing Baltic Fleet commander Vladimir Yegorov, who enjoys the support of both Unity and President Vladimir Putin. JC

Krasnoyarsk Krai Governor and former presidential nominee Aleksandr Lebed announced on 9 September the formation of a new party, called Union of Krasnoyarsk, whose goal will be to campaign for economic independence for those regions that have a wealth of natural resources, Interfax-Eurasia reported. According to the agency, proposed changes in the way taxes are collected have helped contribute to the new party's emergence. For example, the federal government plans to collect the bulk of value-added tax and then redistribute these revenues through a compensation fund. Lebed and other governors have bitterly criticized the planned changes (see "RFE/RL Russian Federation Report," 19 July 2000). At the Union's founding meeting, a statement was signed by Lebed, Krasnoyarsk Mayor Petr Pimashkov, members of the local legislature and the leaders of the local branches of several political parties, including the Communists. Meanwhile, "Izvestiya" reported on 12 September that leaders of Russia's donor regions who are dissatisfied with the federal tax policy were planning to meet in Moscow that day. According to a document prepared by the Federation Council's Budget Committee, the budget revenues of donor regions will decrease by 68.6 million rubles in 2001, Interfax-Eurasia reported. At the same time, they will receive only 23.9 million rubles from the newly created compensation fund. JAC

Sergei Dorovskoi is suing a local opposition newspaper for allegedly damaging his professional reputation, but according to "Kommersant-Daily" of 6 September, the suit is aimed primarily at closing down the publication. "Delovoi Lipetsk" recently ran an article relating how the vice governor fell asleep during an economic council meeting devoted to the problems encountered by the Lipetsk Pipe Company--the largest debtor to the oblast budget. The offending article was accompanied by a photograph of the slumbering Dorovskoi, provided by a local television company. While Dorovskoi and his cohorts have tried various means to bring "Delovoi Lipetsk" to heel--including buying shares in the company that founded the newspaper and subjecting the publication to checks by, among others, the tax police and fire authorities--its editors have continued their line of opposition to the ruling administration. Now, however, they may have met their match: Dorovskoi, who claims he wasn't asleep at all but had in fact blinked at the moment the photograph was taken, is demanding damages of 100 rubles ($3.6) from the author of the article and 100,000 rubles from the editorial leadership. That sum, which "Kommersant-Daily" describes as "astronomical" for a private provincial newspaper, would almost certainly mean the closure of "Delovoi Lipetsk." JC

The republican State Assembly has voted to revoke its earlier decision bringing forward the presidential ballot by two months to coincide with elections to the local legislature, Interfax reported on 7 September. Governor Vyacheslav Kislitsyn, who has come under increasing pressure from the opposition this year, was instrumental in having the election date brought forward. But last month, Marii El Prosecutor-General Nikolai Piksaev appealed to the republican Supreme Court to rule on the legality of holding early presidential elections, arguing that such a ballot contravenes federal legislation. Moreover, the local legislature had received a letter from the federal Central Election Committee pointing out the disparity between the republican law bringing forward the ballot and federal legislation (see "RFE/RL Russian Federation Report," 12 July and 30 August 2000). The presidential vote will now take place, as originally scheduled, on 3 December. JC

At the opening of its fall session last week, the Legislative Assembly witnessed a major shift in faction alliances away from Governor Vladimir Yakovlev and toward the pro-Kremlin Unity party, "The St. Petersburg Times" reported on 8 September. Six members of the Reasonable Compromise faction announced on 6 September that they are joining the Unity group. Among the six was Stanislav Zhitkov, the only deputy who belongs to the Communist Party. The Unity faction now has nine members in the 50-strong assembly, compared with 15 for the main opposition Yabloko parliamentary group. JC

Lieutenant General Vladimir Shamanov, one of the Russian army commanders in Chechnya, has informed the oblast election commission that he intends to run in the 24 December gubernatorial ballot, Interfax reported on 11 September. Shamanov has been nominated as a candidate by a group of voters and must now collect the necessary signatures supporting his candidacy. JC

The Ataman of the Don Cossacks in the Tsaritsynsk okrug in Volgograd Oblast, Vladimir Melikhov, has appealed to President Vladimir Putin to introduce direct presidential rule in his region, "Izvestiya" reported on 6 September. Melikhov told reporters the previous day that Putin's intervention is needed in order to protect the ethnic Russian and Cossack population from terrorist acts committed by immigrants from the Caucasus. Melikhov also complained about "genocide," citing the view of "specialists" that ethnic Russians will be a minority in the oblast within 15-20 years because of the growing numbers of Asian and Caucasian peoples. The leader of the Don Cossacks Volgograd okrug, Aleksandr Biryukov, said that many Cossack leaders in our other okrugs were surprised by Melikhov's appeal, noting that he had not advised them of his plans. Valerii Napalkov, chief federal inspector of the Southern District for Volgograd and Astrakhan Oblasts and the Kalmykia Republic, told the daily with gubernatorial elections approaching, certain local politicians have started gathering votes and Melikov has "entered into these games." Napalkov called Melikhov's actions "intolerable and alarming" since the region currently needs a "delicate" and "competent" approach to interethnic relations. JAC

According to "Nezavisimaya gazeta-regiony" on 5 September, during the last 10 years the ethnic balance in the region has shifted dramatically, causing tension. It also predicts that in 30 years, Russians will be an ethnic minority in the oblast. According to the semi-monthly, the number of non-Russians has increased more than three times during the last 10 years and today totals some 350,000 people. Among this group, the "largest and strongest" ethnic communities are the Chechens and Azerbaijanis. The Chechens number no fewer than 70,000 and, according to some specialists, constitute the largest "diaspora" in all Russia. The publication claims that the Chechens control the oblast's "entire oil business" as well as a significant part of the retail trade, meat processing, and other revenue-producing businesses. The Azerbaijani diaspora numbers some 75,000-80,000, the Armenian community 30,000-35,000, and the Kazakh community 40,000-50,000. The newspaper notes that "with each year the number of light-haired students in the first year of grade schools becomes fewer," while oblast "authorities prefer not to comment" on the "obvious nationality problem." When "reminded of its existence, they employ the formula that since time immemorial the territory has been multi-ethnic and will somehow survive." JAC

The Volgograd department of the Federal Security Service, together with other local security structures, has reached an agreement with newspapers in the oblast whereby the latter must confer with the former before publishing articles that refer to the oblast's security structures, "Versiya" reported in its issue No. 34. According to I. Kuznetsov, the head of the press service of the Volgograd FSB department, that agreement is intended not to impose censorship on the press but rather to preclude "possible unfounded accusations against specific employees" of the security services. Only two newspapers--"Ekspress-Yug" and "Komsomolskaya pravda--Volgograd"--refused to sign the agreement; according to "Versiya," they may now run the risk of encountering difficulties with printing and distribution. Kuznetsov denies that the Russian FSB ordered its Volgograd counterpart to secure such an agreement. At the same time, he notes that security structures in many regions throughout the federation have reached similar accords with the local press. JC

REGIONAL INDEX

Regional Patterns of Foreign Investment, 2000 First half

Geographic________________Foreign

Unit______________________Investment,

_________________________thousands, U.S. dollars____Ranking*



Russian Federation__________$2,445,925



Central District________________847779

Belgorod Oblast__________________3878____________34

Bryansk Oblast___________________2806____________39

Vladimir Oblast___________________5475____________32

Voronezh Oblast__________________6963____________29

Ivanovo Oblast_____________________0_____________69

Kaluga Oblast__________________ 25542____________15

Kostroma Oblast___________________169____________57

Kursk Oblast_______________________0_____________69

Lipetsk Oblast_____________________430____________53

Moscow Oblast_________________62294______________6

Orel Oblast______________________5974_____________31

Ryazan Oblast______________________52_____________62

Smolensk Oblast__________________3642_____________35

Tambov Oblast___________________1326_____________49

Tver Oblast______________________1632_____________48

Tula Oblast____________________27515______________13

Yaroslavl Oblast__________________2039_____________44

Moscow City__________________698042______________1



Northwest District______________427196

Karelia Republic___________________9056_____________27

Komi Republic___________________23891_____________17

Arkhangelsk Oblast_________________9916_____________25

Nenets Aut. Okrug___________________0_______________69

Vologda Oblast_____________________11_______________65

Kaliningrad Oblast__________________3441______________36

Leningrad Oblast__________________93063______________4

Murmansk Oblast___________________8617_____________28

Novgorod Oblast__________________19977______________20

Pskov Oblast________________________281_____________55

St. Petersburg City_________________25946_____________14



South District__________________252518

Kalmykia Republic_________________n/a_______________n/a

Krasnodar Krai__________________218320______________3

Stavropol Krai_____________________2438______________40

Astrakhan Oblast_____________________12______________64

Volgograd Oblast__________________22551______________18

Rostov Oblast______________________9127_____________26



Volga District____________________117211

Bashkortostan Republic________________2328___________42

Marii El Repubic______________________0______________69

Mordovia Republic____________________1842___________46

Tatarstan Republic___________________25213____________16

Udmurtia Republic_____________________545____________51

Chuvashiya Republic____________________496____________52

Kirov Oblast_________________________4572____________33

Nizhnii Novgorod Oblast______________16800____________21

Orenburg Oblast_______________________612___________50

Penza Oblast__________________________151___________60

Perm Oblast_________________________13818___________23

Komi-Permyak Aut. Okrug_______________0_____________69

Samara Oblast________________________50834___________7

Saratov Oblast__________________________0_____________69

Ulyanovsk Oblast________________________0_____________69



Ural District______________________124627

Kurgan Oblast_________________________165____________38

Sverdlovsk Oblast____________________20975_____________19

Tyumen Oblast_______________________35818____________11

Khanty-Mantii Aut. Okrug_______________6544_____________30

Yamalo-Nenets Aut. Okrug____________14956_____________22

Chelyabinsk Okrug___________________67669_____________5



Siberia District____________________568153

Altai Republic________________________0_______________69

Buryatia Republic_____________________7_______________66

Tuva Republic________________________381____________54

Khakasia Republic_____________________0______________69

Altai Krai__________________________1697______________47

Krasnoyarsk Krai______________________0_______________69

Taimyr Aut. Okrug____________________0________________69

Evenk Aut. Okrug_____________________0_______________69

Irkutsk Oblast______________________33947_______________12

Ust-Ordinskii Aut. Okrug________________2_______________68

Kemerovo Oblast____________________194_______________56

Novosibirsk Oblast__________________36016______________10

Omsk Oblast______________________493802______________2

Tomsk Oblast________________________1950_____________45

Chita Oblast_________________________159_______________59

Aginsk Buryat Aut. Okrug______________0________________69





Far East District______________________108441

Sakha Republic________________________43105____________9

Primorskii Krai_________________________10461___________24

Khabarovsk Krai________________________ 3400___________37

Amur Oblast___________________________3383___________38

Kamchatka Oblast________________________2422___________41

Koryak Aut. Okrug_________________________0____________69

Magadan Oblast__________________________2271__________43

Sakhalin Oblast__________________________43349__________8

Jewish Aut. Oblast___________________________50__________63

Chukotka Aut. Okrug________________________0____________69



*Rankings are only up to 69 because 14 regions tied with 0 dollars of foreign investment, while no data was available for five regions in the Southern district.

Source: PlanEcon, Washington, D.C.