THE GROWTH IN INDUSTRIAL PRODUCTION: A SIGN OF OVERCOMING THE CRISIS OR AN ACCIDENTAL PHENOMENON?

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THE GROWTH IN INDUSTRIAL PRODUCTION: A SIGN OF OVERCOMING THE CRISIS OR AN ACCIDENTAL PHENOMENON?

Rossiyskaya Gazeta, May 19, 1999, pp. 1, 3

The latest data of the National Statistics Committee, which witness small but steady growth in a number of Russian industries, have provoked contradictory reactions in economic circles. Some consider it to be the end of the crisis, while others think it is an accidental and ephemeral phenomenon. We asked acting Deputy Premier Vladimir Bulgak to give us his opinion.

As he said, “A growth in production in certain industries is indeed taking place, and not just in monetary value (much of this can be written off because of inflation), but in physical terms, too. I do not want to repeat the already pronounced figures regarding a number of leading industries. I want only to say that, in my opinion, they witness the commencement of the gradual revival of industry after the crisis.

However, it would be of little value to make any long-term forecasts regarding the speed of further growth. There are too many factors, both subjective and objective, which influence the situation in industry.

For instance, the situation in the sphere of the fuel and energy complex, and in particular in the oil industry, cannot be called a simple one. Oil refineries are working at 45% of their production capacities. Out of 140,000 oil wells, over 40,000 have closed during the last several years because of indiscreet tax policy. World prices for Russian oil ($14 per barrel) are still considerably lower then they were five years ago, when they reached $24 per barrel.

However, at the current price level the profitability of oil export could be considerably higher than it is at the moment. The issue is that one-third of our exports pass through neighboring countries, which charge transit tariffs which are too high. For instance, Ukraine charges $2.35 per ton of oil for transportation on the 300-km long interval in the direction of Novorossiysk, which is five times higher than the analogous tariffs of Transneft.”

Q.: Incidentally, the administrations of a number of regions are dissatisfied with the fact that leading oil companies concentrate too seriously on exporting and do not provide local industry and agriculture with the necessary fuel.

A.: Indeed, such discontent exists. In particular, was been expressed by the Krasnodar governor at the meeting in Tuapse. But there are no insoluble problems. To the credit of all participants in the discussion, they managed to find compromise options to provide fuel for local workers rather quickly and the problem will be settled. It is quite clear that regions will profit from the realization of large-scale projects.

As for the situation in Russia on the whole, at the moment needs for diesel fuel in the countryside are 95% fulfilled. The incomplete delivery of the final 5% is supped to be compensated for by the end of May. And, incidentally, on the whole the countryside has already received 20% more fuel than during the same period last year.

RUSSIA AND THE EU ELABORATE A STRATEGY FOR FURTHER RELATIONS

Parlamentskaya Gazeta, May 19, 1999, p.5

The strategy for the further development of relations between Russia and the EU, as well as the situation in the Balkans, were the subject for discussion between acting German Foreign Minister Joschka Fisher, who is also Chair of the EU, and his Russian counterpart Igor Ivanov. Russian Foreign Minister flew to Brussels on Sunday for a one-day visit to participate in the work of the Russia-EU Council for Cooperation.

A document about mutual relations between Russia and the EU is currently being worked out in Russia and, within the next month and a half, it should be submitted to the government for discussion. This strategy provides for the development of a mature strategic partnership between Russia and the EU. The EU is now busy elaborating a “general strategy” for relations with Russia. It will be approved in Cologne at the summit of heads of EU countries on June 3-4. In the course of his conversation with Ivanov, Fisher emphasized that EU members consider it necessary to strengthen political dialog with Moscow.

Regarding the situation in the Balkans, the Russian Foreign Minister stated that “the missile-bomb strikes should be stopped immediately.” According to Ivanov, this question is causing the discrepancy between the sides. However, Russia, as Ivanov stressed, is ready to start elaborating a resolution of the UN Security Council to stop the Balkan crisis.

The Russian Foreign Minister also held discussions of the Kosovo problem with British Foreign Minister Robin Cook and Greek Foreign Minister Georgios Papandreu.

A GREAT DESIRE TO LEARN

Izvestia, May 19, 1999, p.2

A certain government official described the debut of acting First Vice Premier Nikolai Aksenenko as Chair of the Governmental Committee for Operational Questions (COQ) as “He has a great desire to learn.”

On May 18, the committee assembled for its first meeting since the dismissal of Primakov’s government, thus fulfilling Stepashin’s task of becoming the “headquarters of the government” until the new Cabinet is formed. At the meeting, the members of the committee discussed the results of restructuring the debts of industrial enterprises to each other and budgets of all levels. It should be mentioned that the results were rather distressing. According to the information of the Economics Ministry, recently creditors’ debt (including to budgets) has increased 1.5 times and is unlikely to decrease. The total amount of overdue payments exceeds 1 trillion rubles.

It seems that these factors, as well as the fact that the chairman was not able to stop them, gave economists grounds to talk about his “absolute incomprehension of the basics of the financial system.” However, even critics themselves add that “Aksenenko is really good in dealing with the property sector and he will not be cheated in this sphere like the notorious Vadim Gustov, although so far he cannot speak well about it.” Nevertheless, currently “he is imbibing a lot of information, according to officials of the White House, and is capable of digesting it and making a proper decision.” The protocol decision of the COQ, which, after such “natural-geographical debates” was uncommonly distinct, was evidence of this. Thus, it was decided to prepare a governmental decree on restructuring debt, elaborating an appropriate law, and finishing the restructuring of 1998 debts to show industrial enterprises that debts will not be remitted infinitely. Moreover, funds for investments, which are envisaged by the federal program (6.3 billion rubles this year) but have not been granted since the beginning of 1999, will be granted to extremely exemplary and attractive enterprises.

The debut of the new acting first vice premier is a done deal. According to the conclusion which the officials made after the meeting of the “headquarters of the government”, “If macroeconomics and finances are given to Zhukov Aksenenko can easily cope with the entire property sector. Moreover he really wants to establish order there.”

YURY SKURATOV: I WILL FIGHT TO THE END

Komsomolskaya Pravda, May 19, 1999, p. 2

Q.: Yury Ilyich, how unexpected for you was the decision of the Moscow Municipal Court which abolished the decree of Moscow Deputy Prosecutor Rosinsky on the point of instituting legal proceedings against you and which was fulfilled on April 2 based on the testimonies of the three citizens who supposedly “serviced” the General Prosecutor?

A.: I have always said that the case was instituted illegally and groundlessly, which was proven by the decision of the court. That much I expected. Although I had certain doubts: what if the judge could not handle the pressure from all sides? But the judge showed real civilian valor and adherence to principles. I evaluate this deed as one more step on the way toward the legal state.

Q.: Was there no pressure on your part? Your complaint was considered only last Friday, and the results of the consideration were announced already on Monday…

A.: The thing is that the law sets a term of three days for considering such testimonies. And how could I have pressured the court while here on my dacha? I have never seen this judge before. All your suspicions about me are pure nonsense.

Q.: It was the institution of legal proceedings against you that was the reason for your removal from office. Will you now insist on obtaining permission to start fulfilling the duties of the general prosecutor again?

A.: Although the decision of the court confirms the groundlessness of the presidential decree, it has not yet come into effect, and besides, as far as I know it was protested by the General Prosecutor’s Office. And now this case is being considered by the Supreme Court. Therefore I, as a lawyer, should act strictly within the framework of the law, i.e. I will wait for the Supreme Court to implement its decision, and only then define my actions.

I do not know when this situation will be brought for discussion in the Federation Council again. But it may be reasonable to wait for the results of the consideration of the case by the Supreme Court and only then to make my own decision. Senators should also act within the framework of the law. Although things do happen…

STEPASHIN WILL BE CONFIRMED

Izvestia, May 19, 1999, p.2

On May 19 the Duma is supposed to approve or reject Stepashin’s candidacy as premier. However, deputies were still deciding whether the acting premier would be confirmed or not on the eve of the vote.

It seems that the votes which are necessary for Stepashin’s approval as premier will be the main results of long negotiations and consultations. It is noteworthy that many people in the Duma doubt that the new premier will be approved in the first round of voting. Members of all factions and deputy groups are unanimous in their opinion that Stepashin’s candidacy “is more preferable” than others which may be proposed by the president later. The mater primarily concerns acting First Vice Premier Nikolai Aksenenko, Director of RJES Anatoly Chubais, and Special Presidential Representative Victor Chernomyrdin.

It was not by chance that Chair of the People’s Power deputy group Nikolai Ryzhkov proposed a number of terms to Stepashin during the course of his meeting with leaders of left deputy groups. First of all, the acting premier should assure the left opposition that Gaidar, Kirienko, Chubais, Yasin, Urinson, Chernomyrdin and other “odious personalities” will not be included in the government. Secondly, Stepashin should promise to retain the course taken by his predecessor. It is clear that the terms of the Communists and their allies are acceptable to Stepashin, although they are of greater need to the left than the acting premier.

Incidentally, the acting premier has already accepted these terms. At his meeting with the Russian Regions group on May 17, Stepashin stated to members of parliament that “the issue should be raised not of resuming the course taken by Primakov, but of resuming Primakov’s course which provided stability in society.” Demands which were “acceptable” to the acting premier, as well as the announcements of leaders of factions which were expressed on the eve of the vote prove that Stepashin’s candidacy may be approved in the first round of voting. Thus, Gennady Zyuganov “does not exclude the possibility” that Stepashin’s candidacy will be approved. Zhirinovsky is sure that the new premier will gain between 230 and 240 votes, the minimum being 226. Yavlinsky noted that “no forecasts are necessary anymore, since the three largest factions have already given their answers and you can consider this question solved.”

THE DUMA INTENDS TO SUPPORT STEPASHIN

Independent Television, May 18, 1999, 14:00

After the meeting of the Duma it became clear that deputies do not intend to delay voting on the candidacy of Sergei Stepashin. But Speaker of the Duma Gennadi Seleznev preferred to refrain from predicting the results of the vote.

According to Vladimir Ryzhkov, the Duma will support Stepashin only for the sake of preventing new upheavals. Many deputies are sure that the Duma will not worsen the situation and will support Stepashin.

ZHIRINOVSKY LAYS DOWN CONDITIONS

ORT, Novosti, May 18, 1999, 09:00

Vladimir Zhirinovsky stated that his movement will support Stepashin if he accomplishes two of his conditions. According to Zhirinovsky, the transfer of power in some regions is being carried out with the help of police forces. These regions are Belgorod, Cherkessk, and Prokopyevsk. If some regional governors or presidents of republics use police forces to come to power, “we will not support Stepashin.” So Zhirinovsky’s first condition is that Stepashin must give orders to police forces to stop helping regional governors in Belgorod, Cherkessk, and Prokopyevsk.

The second condition is as follows: “If I am not made vice premier and five or six of my followers are not appointed ministers, we will not support Stepashin. But the highest position I would like to attain is the Secretary of Lenin Funeral Committee. This year I will bury him, and we will do away with this old system, because everyone is tired of this Communist bacchanalia.”

RUSSIAN REGIONS MOVEMENT SUPPORTS STEPASHIN

ORT, Novosti, May 18, 1999, 12:00

On May 18, Sergei Stepashin met with members of Russian Regions movement. Leader of the movement Oleg Morozov liked Stepashin’s report. “All the items of the report touched on the question of regional problems. And I think that the majority of members of the movement will support Stepashin. But we will discuss this question.”

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