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Russia Report: November 17, 1999

17 November 1999, Volume 1, Number 38
Ingushetia's President Ruslan Aushev and Chukotka Governor Aleksandr Nazarov proposed on 11 November introducing limits to terms in office for the top posts of the upper legislative body, "Moskovskii komsomolets" reported on 12 November. According to the proposed amendments, the speaker of the Federation Council would hold his post for only two years and the chairmen of committees 12 months. The proposal was defeated and a compromise measure was accepted under which any measure to remove the current speaker of the Federation Council must receive the approval of two-thirds of the senators rather than a simple majority, according to the daily. Aushev, who had earlier declared his dissatisfaction with the reign of the current speaker, Orel Governor Yegor Stroev, promised to drop his effort to replace the upper legislative body's leadership at least until after presidential elections in June 2000, "Kommersant-Daily" reported on 12 November (see "RFE/RL Russian Federation Report," 21 July and 13 October 1999). JAC

At a session of the Federation Council's Budget Committee, Deputy Minister of Finance Tatyana Nesterenko said that from 1 January 2000, federal treasury organs will insist that regions transfer their taxes in cash only, "Vedomosti" reported on 11 November. The newspaper characterized this announcement as "unpleasant news" for the senators, who are only too aware that local authorities collect taxes in the form of surrogates and goods. According to the daily, earlier federal authorities only mildly reprimanded regions for this practice. According to "Vremya MN" last month, Omsk, Astrakhan, and Volgograd Oblasts have already started accepting budget payments only in cash (see "RFE/RL Russian Federation Report," 20 October 1999). Federal Tax Minister Aleksandr Pochinok commented at that time that "the less regions engage in barter transactions, the better their [budgetary] situation." JAC

State Duma deputy Sergei Popov from St. Petersburg recently won a ruling in a court there that the Finance Ministry had illegally underfunded local projects, such as the St. Petersburg metro and the Hermitage Museum, "The Moscow Times" reported on 11 November. Popov is demanding that the Finance Ministry fulfill the letter of the budget law, which requires that any reductions in expenditure arising from revenue shortfalls be applied across the board in a proportional manner. In practice, when there is a shortage of money the Finance Ministry often decides which project or region gets priority. The court case may take several more years to reach a conclusion, but a decision in Popov's favor could give regional authorities "a powerful tool for manipulating the federal budget," according to Aleksei Zabotkin, an analyst with the United Financial Group. JAC

The city of Irbit in Sverdlovsk Oblast was left without hot water on 11 November because of the theft of 200 meters of pipe, Interfax-Eurasia reported. A local hospital was also affected by the cut-off. The same day, the theft of 300 meters of telephone cable left an entire neighborhood in Barnaul in Altai Krai without phone service. Theft of cable and other metals has been a chronic problem throughout Russian regions, disrupting not only the flow of electricity to households but also water for irrigating crops (see "RFE/RL Russian Federation Report," 13 and 20 October 1999). JAC

Kemerovo Governor Aman Tuleev sent a letter to Communist Party head Gennadii Zyuganov demanding information on how the party's election campaign is being financed, Interfax reported on 12 November. Tuleev told reporters that day that he had heard from former Communist Party faction member Vladimir Semago that one of the main sources of financing for the party is money from the Moscow-based metallurgical investment group, MIKOM. Tuleev said that if this is the case, then the party is using "dirty money." However, on 15 November, Zyuganov told reporters that MIKOM has not provided "one kopek" of election funds and Semago's charge has no basis in reality. JAC

"Kommersant-Daily" on 12 November reported that Tuleev's accusations against the Communist Party and MIKOM are part of a struggle for control over the local Kuznetsk Metals plant (KMK). According to the daily, the oblast is on the edge of bankruptcy and its budget deficit has reached 50 percent. KMK, on the other hand, has recently emerged from a downturn and has started paying its taxes on time. Addressing reporters in Moscow on 12 November, Tuleev accused MIKOM of trying to absorb completely the local Kuznetsk Metal Plant, which he contends should remain a state-controlled company. He also said that he is hoping to enlist the support of Prime Minister Vladimir Putin in his fight. However, according to the daily, Putin and the Kremlin will help Tuleev only if it suits their goal of splitting the Communist electorate. On 5 November, workers from KMK spoke out against Tuleev in Moscow, saying that since MIKOV won a tender to manage KMK, workers were finally getting their wages, "Rossiiskaya gazeta" reported. JAC

"Nezavisimaya gazeta" reported on 12 November that although Tuleev is number four on the Communist Party's list of candidates, he is in fact supporting local candidates on the list of the pro-Kremlin interregional movement Unity (Edinstvo). Of the four candidates in single-mandate districts who have secured Tuleev's backing, two are members of the interregional movement Unity, while only one is a member of the Communist Party. Local analysts believe these four candidates have the best chances of success in elections and note that after recent elections to the oblast legislative assembly, 34 of 35 available seats are now occupied by members of the Bloc of Aman Tuleev, according to the daily. Unity's candidates include the director of the one of the region's most successful coal mines and the chief engineer of the Kuzbass department of the West Siberian Railway, where he oversees the work of some 20,000 employees. "Nezavisimaya gazeta" receives funding from Boris Berezovskii's LogoVAZ group. Berezovskii is considered a supporter of Unity. JAC

Aleksandr Zhirinovskii has been refused registration for the 19 December State Duma elections in the single-mandate district of Mordovia, "Nezavisimaya gazeta" reported on 10 November. The would-be Duma candidate is the brother of the more famous Vladimir, who saw his Liberal Democratic Party of Russia (LDPR) denied registration by the Central Election Commission but who then formed the Zhirinovskii Bloc, which successfully registered for the ballot. Aleksandr Zhirinovskii, a member of the LDPR, is appealing to the Central Election Commission to overturn the local body's decision. Six people are currently registered to run in next month's election from Mordovia. JC

The federal Prosecutor-General's Office on 15 November forwarded to Budapest the necessary documents for the extradition of Krasnoyarsk Aluminum plant head Anatolii Bykov to Russia, Interfax reported. Bykov was detained at the Hungarian-Yugoslav border on 29 October. In an interview with "Kommersant-Daily" on 11 November, Bykov said he will not resign from his post at the plant and that "a good manager organizes work so that his temporary absence does not affect company operations." He also said that the reasons for his arrest were political and he does not exclude the possibility that his detention is related to the upcoming State Duma elections, for which he unsuccessfully tried to register as a candidate. According to Interfax, Krasnoyarsk Aluminum plant workers sent an open letter to Bykov suggesting that he seek political asylum in Hungary. "Newsweek" reported on 11 November that "a possibly critical player in any forthcoming trial [of Bykov] could be Vladimir Tatarenkov, a reputed Siberian organized crime figure," who according to law enforcement officials, "heads his own criminal organization and has had a business relationship with Bykov." JAC

Acting Vladivostok Mayor Yurii Kopylov has announced that the city can afford to divert $3 million from its budget for the construction of a new Russian Orthodox Cathedral in that city, "Vladivostok News" reported on 5 November. The new church will cost $6 million and will be able to hold five times as many people as the current main place of worship in the city. According to the electronic publication, many houses in the city do not have working elevators or adequate heating. It also adds that Kopylov is the chairman of a trust council to raise funds for the project. Last April, Voronezh Oblast Prosecutor declared illegal Governor Ivan Shabanov's earlier decree allocating 7 million rubles ($267 million) from the oblast budget to help pay for the restoration of a local Russian Orthodox cathedral (see "RFE/RL Russian Federation Report," 14 April 1999). JAC

A St. Petersburg municipal court on 15 November ruled that the Legislative Assembly's 8 October vote to bring forward gubernatorial elections from April 2000 to 19 December 1999 was valid. The opposition Yabloko faction had challenged the legality of that ballot, saying the electronic voting system had been tampered with so that votes were "cast" by opposition deputies who had walked out of the chamber. The assembly's Audit Chamber supported that claim, as did several State Duma members who were observing the session (see "RFE/RL Russian Federation Report," 13 October 1999). The court, however, dismissed the eye-witness accounts and, according to "Vremya MN" on 16 November, based its ruling on the fact that the Legislative Assembly deems the violations that took place during the 8 October vote to be "immaterial." Yabloko has said it will appeal to the federal Supreme Court. Also on 15 November, Governor Vladimir Yakovlev, whose supporters had pushed through the bill providing for early elections, submitted more than 70,000 signatures supporting his candidacy for the December gubernatorial ballot, according to "The St. Petersburg Times" on 16 November. JC

Police burst into a St. Petersburg courtroom on 16 November to arrest local parliamentary deputy Yurii Shutov just minutes after he was released on bail, AP reported. Shutov, who is a member of the St. Petersburg Legislative Assembly and a candidate in the 19 December State Duma elections had been in custody since February on suspicion of arranging several high-profile contract killings. According to "Kommersant-Daily" on 17 November, the court ruled that the criminal case brought against Shutov was illegal. Meanwhile, St. Petersburg prosecutor Ivan Sydoruk has asked the Municipal Court to overturn the decision to register Shutov for the Duma elections, "Kommersant-Daily" reported on 13 November. According to Sydoruk, Shutov failed to identify the source of his election fee, which was transferred anonymously, and omitted important information from his property declaration. Earlier, the local election commission had refused to revoke Shutov's registration on the basis of these violations. JC

by Jan Cleave

Since joining the EU in 1995 and, more particularly, since assuming the rotating union presidency in July of this year, Finland has sought to ensure that ties with Russia feature prominently on the union's agenda. One of the cornerstones of Finland's EU Russian policy is the so-called Northern Dimension, which was the subject of a 12 November meeting in Helsinki attended by foreign ministers from the union and several partner countries: Estonia, Iceland, Latvia, Lithuania, Norway, Poland, and Russia. While aimed at involving all those partner countries, the initiative focuses to a large degree on the northwestern regions of the Russian Federation (extending from Pskov Oblast to the Nenets Autonomous Oblast) as well as the Russian exclave of Kaliningrad.

According to a Finnish Foreign Ministry statement, one of the main objectives of the Northern Dimension is "to create favorable conditions for EU enlargement without creating new dividing lines on the European continent." The statement points out that Finland is currently the only EU country that has a border with Russia--that frontier runs some 1,300 kilometers alongside Murmansk Oblast, the Republic of Karelia, and Leningrad Oblast. When Poland and the three Baltic States join the union, the EU-Russian border will become roughly half as long again and will leave the Russian exclave of Kaliningrad surrounded by EU territory. To enhance cooperation and economic interdependence between the EU and those Russian regions that have--or will have--borders with union member states is a primary goal of the Northern Dimension initiative.

The initiative identifies energy and natural resources as two key areas for such cross-border cooperation. "Increasing demand for energy and raw materials in Europe underscores the strategic importance of Northwest Russia's reserves," the Finnish Foreign Ministry statement notes. In particular, parties to the Northern Dimension have pointed to the need for producer and consumer countries to establish favorable "commercial conditions" in the gas sector and to link up all partner countries on the Continent to European gas networks. The Baltic Ring project to connect the power grids of all Baltic Sea countries is also an important component of the Northern Dimension. And other areas of interest include forestry, fishing, and mining, while parties to the initiative stress that in developing these sectors, the rights of Arctic indigenous peoples and other local populations must be respected.

At the same time, the Northern Dimension attempts to address issues that are of particular concern to the Scandinavian countries and Finland: namely, environmental problems and nuclear safety in Russia's Northwest. Untreated sewage emitted from the St. Petersburg region into the Gulf of Finland, nickel deposits polluting the Barents Sea, insufficient safety standards at Chornobyl-era nuclear reactors on the Kola Peninsula, and leaking nuclear waste from decommissioned submarines docked near Murmansk are among some of the most urgent issues requiring attention. Individual countries in Europe have already earmarked monies to help deal with some of these problems: Norway, for example, has allocated funds totaling some $60 million toward ensuring nuclear safety in northwestern Russia. The Northern Dimension aims at giving new impetus to such efforts.

While Finland, by virtue of its geographic location, will clearly be among the first to benefit from increased cooperation with Russia's Northwest as well as from environmental projects, it argues that the initiatives' advantages will be enjoyed by all EU member states. Indeed, the 12 November meeting in Helsinki confirmed that there is widespread backing for the initiative. Participants stressed the need to draw up a Northern Dimension action plan, for which authorization is to be sought at next month's EU summit in Helsinki. If, as is expected, that authorization is forthcoming, Finland hopes to have a draft action plan ready within the first half of next year.

Meanwhile, the Northern Dimension's focus on relations with individual Russian regions rather than the federation as whole has been endorsed--albeit indirectly--by at least one political leader from the former East bloc. In a recent interview, Estonian Prime Minister Mart Laar commented that the West should seek closer ties with Russian regions as the best way to foster political and economic change in Russia itself. "[Our] relations with the regions are a lot better than our relations with the central power," said Laar, whose country has been accused by Moscow of discrimination against its Russian minority. While denying that such an approach might lead to the break up of the federation, Laar commented that "Russia has very big problems, often related to the regions. So every step that helps the regions helps Russia as a whole."

The Federation Council on 11 November approved legislation adding the Northern Territories oil field to those deposits that can be developed under production-sharing agreements. The lower house had passed that legislation last month (see "RFE/RL Newsline," 21 October 1999). The development of the oil field will be led by LUKoil.

Located in Nenets Autonomous Okrug, the Northern Territories field is estimated to have recoverable reserves totaling 170 million tons, of which some 100 million tons are to be extracted during the 45-year period of the project, Interfax-ANI reported on 11 November. Under a PSA, more than $3 billion in investments are to be raised, of which $465 million will be used for the construction of a pipeline network. The Russian Federation will receive 77 percent of the revenues from the project, and half of that share will go to the Nenets Autonomous Okrug. The project is expected to create 2,000 jobs, while project investors will be required to pay some $2 million to help support the small indigenous populations of the region.

(Also on 11 November, the upper house of parliament approved legislation allowing the Priobskoe oil field to be developed under a PSA. Located in the Khanty-Mansiiskii Autonomous Okrug [Western Siberia], the Priobskoe oil field has estimated recoverable reserves totaling 676 million tons, of which some 578 million tons are to be extracted during the period of the project. Investments totaling more than $23 billion are to be raised, and the project is to be carried out by Yukos.)

Meanwhile, leftist factions in the State Duma have announced their intention to block the passage of legislation that would allow other oil and gas fields to be developed under PSAs. Interfax-ANI on 15 November quoted the head of the Duma working group on PSAs, Yurii Ten, as saying he believes that this is a pre-election ploy on the part of leftist deputies. Among those fields that the current Duma is slated to consider for development under PSAs is the Shtokmanovskoe gas-condensate field in the Barents Sea. JC

The government Commission for Operative Questions has announced its decision to set up a Northern Sea Route joint-stock company, to be called Sevmorput. Commission chairman and First Deputy Prime Minister Nikolai Aksenenko told a 9 November meeting of the commission that Sevmorput must be a "Russian corporation, whose shareholders, other than the state, would be the companies Norilsk Nikel, LUKoil, Sberbank, as well as other companies and [Russian] regions." Among the various tasks envisaged for the new company are guaranteeing equal work conditions for all Arctic shipowners, drawing up a tariff and price policy, as well as increasing freight turnover and the volume of foreign freight.

According to data cited at a Moscow conference in August, only 1.48 million tons of cargo was transported along the route last year, compared with 6.58 million in 1987. Aksenenko had warned at that meeting that unless the government takes "well-calculated" measures now, Russia might "lose" the Northern Sea Route in the next five to 10 years. In particular, he pointed to the poor condition of the northern ports and of the ice-breakers currently operating the route. Repairs to that fleet totaling some 1.5 billion rubles are urgently required, and according to First Deputy Transport Minister Aleksandr Lugovets, at least 6 million tons of freight would have to pass along the route annually for the fleet to operate without making losses.

Norilsk Nikel has already expressed its interest in participating in Sevmorput (in recent years, nickel ore, along with raw timber, has accounted for a large part of the tonnage shipped along the Northern Sea Route). First Deputy Director-General Dmitrii Zelenin was quoted by "Nezavisimaya gazeta" on 11 November as saying that his company is prepared to invest in all infrastructure related to the Northern Sea Route and, in particular, in the completion of the icebreaker "Fifty Years of Victory," which since 1987 has been docked at a berth in St. Petersburg. That vessel is reported to be 67.2 percent complete and would require some $120 million to be made seaworthy (in August, Sberbank had been reported likely to issue a credit totaling some $126 million for the completion of the icebreaker).

The setting up of the joint-stock company Sevmorput is expected to take until the end of next year, according to "Nezavisimaya gazeta." JC