THE DUMA REFUSES TO ENACT THE TAX ON GAS STATIONS

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THE DUMA REFUSES TO ENACT THE TAX ON GAS STATIONS

Izvestia, June 18, 1999, p.1

Speaking yesterday in the Duma, Minister for Taxes and Duties Alexander Pochinok stated that the cost of enacting the tax on gas stations “is not 4 billion rubles but tens of billions of rubles and the destabilization of the economy.”

The Duma rejected the law undoubtedly with only the best intentions: the deputies are aware that the new tax would increase prices for gasoline and other commodities. However, the decision of the Duma will most possibly hit the pockets of the general public rather than car owners. The failure of the bill will negatively affect the payment of wages, pensions, subsidies, and the receipt of the IMF loans and the negotiations to delay payments on the external debt. One can only conjecture why the IMF fixated on a tax on gas stations. But the essence remains: Russia will most possibly not receive loans from the IMF this summer, and consequently its external debt will be paid out of its own scanty reserves.

Neither the distribution to deputies of the recently signed treaty concluded between natural monopolies and the largest industrial companies to restrict prices, nor the trick of introducing a “bad” variant of the law with its following rejection produced the desired effect. The law was rejected through the efforts of the left factions and Yabloko.

Since monopolists control the major part of the gasoline market, it is impossible to solve the problem of price growth without the interference of the state: during last year alone, they have increased by 30% in various regions. Having rejected the law on the introduction of a new tax, the deputies proposed enacting its “administrative-regulating part” separately. However, it is doubtful that it will ever be possible to enact the provision to increase the tax rate by five times depending on “a deliberate rise in prices for gasoline” (due to absence of the tax itself); however, deputies could have adopted any number of other measures, for instance a fine of up to 10% of the balanced cost of the assets of gas stations for increasing prices or creating artificial deficit, or even for refusing to conclude agreements with domestic buyers.

SARATOV GOVERNOR ADOPTS THE IDEA OF TRANSFORMING THE CIS INTO A CONFEDERATION

Izvestia, June 18, 1999, p.3

Saratov Governor Dmitry Ayatskov is currently visiting Georgia. The main goal of the journey is to restore lost economic relations. In particular, the trade balance between Georgia and the Volga region have considerably decreased, and currently totals some $500,000 (to compare: the trade balance between the Saratov region and Uzbekistan is 135 times greater).

During the visit, it is planned to sign a number of agreements on trade and economic cooperation between Georgia and the Saratov region. In particular, Georgia is very interested in Saratov’s energy resources and the population of Saratov in the vegetables and fruits growing in the republic of Georgia.

During his conversation with the “Izvestia” reporter, Ayatskov stated that the idea of transforming the CIS into a confederation is the main topic about which he wants to speak with Shevardnadze. Ayatskov has flown to Minsk and Kiev with this very idea, where he proposed it to presidents Leonid Kuchma and Alexander Lukashenko. After Tbilisi, the Saratov governor intends to visit Baku.

THE PRESIDENT FLATLY OPPOSES

Parlamentskaya Gazeta, June 18, 1999, p.1

“Russia will seek for ways” to reach concord regarding the zones of location of the Russian peacekeeping troops in Kosovo, stated Russian President Boris Yeltsin before the beginning of yesterday’s meeting with Secretary of the Security Council Vladimir Putin.

The president mentioned that the question of sectors in which the Russian peacekeeping troops should be quartered is the main issue of the negotiations. He stressed that he had asked Defense Minister Igor Sergeev to tell his partners in the negotiations that “the Russian president flatly opposes” such an approach. At the same time, Yeltsin stated that there is still a basis for the negotiations.

WATCH ON THE RHINE

Rossiyskaya Gazeta, June 18, 1999, p.2

The economic situation in Russia will be discussed at the summit of the G-8 in Cologne on June 19 as a separate subject, stated Deputy Director of the Presidential Administration Sergei Prikhodko.

The presentation, which will take place on June 18 at 7 p.m. in the city hall of Cologne, will in essence open the summit of the G-8.

As has been reported before, on June 18-19 Russia will be represented at the Cologne summit by Prime Minister Sergei Stepashin, and on June 20 by Russian President Boris Yeltsin.

After the official meetings within the framework of the G-8 are over, on June 20, before returning to Moscow, Yeltsin will conduct a series of bilateral meetings, in particular with Gerhard Schroeder and US President Bill Clinton.

THE WORLD MARKET WILL BE ENTERED TOGETHER

Rossiyskaya Gazeta, June 18, 1999, p.2

Yesterday, CIS Executive Secretary Yury Yarov, speaking at the economic forum in St. Petersburg, supported the introduction of the standards and rules of the World Trade Organization in the CIS.

He stated that “all member countries of the CIS are striving to join the World Trade Organization and becoming full-fledged members.”

According to Yarov, the formation of a free trade zone in the CIS cannot hinder this process.

As Yarov assumes, the introduction of the standards of the World Trade Organization will, in particular, promote improvement of discipline in offsetting in the CIS. As Yarov stated, “We have become accustomed to not paying each other for oil and gas, which is absolutely inadmissible in international practice.” According to Yarov, it is necessary to introduce a mechanism of clearing offsets to distribute non-payments among members of the CIS.

Nigmatzhan Isingarin, leader of the integration committee of Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan spoke yesterday at the economic forum against CIS countries joining the World Trade Organization separately. He announced that the CIS countries cannot join the World Trade Organization separately on terms proposed by the organization since this may ruin the emerging free trade zone of the CIS.

RUSSIA AND THE US COME TO AN AGREEMENT CONCERNING THE STATUS OF THE RUSSIAN CONTINGENT IN KOSOVO

Russian Television, Vesti, June 17, 1999, 20:00

The issue of the status of the Russian peacekeepers in Kosovo was settled at the negotiations of the Russian and US defense and foreign ministers which took place in Helsinki on June 17. Russia upheld its position.

According to Russian Foreign Minister Igor Ivanov, the sides came to an agreement concerning the matter of using the Slatina airport, taking into consideration the interests of all peacekeeping forces. The functions of the Russian contingent and representatives of other countries were defined during the negotiations.

OIL EXTRACTION IN RUSSIA DECREASES

Russian Radio, Vesti, June 17, 1999, 20:00

According to Fuel and Energy Minister Victor Kalyuzhny, reserves of coal and black oil are low compared to the same period of 1998. But the government promises to do its best to guarantee replenishment of the reserves. At the same time, Director of LUKoil Vagit Alikperov, who was invited to the meeting with the minister, stated that the extraction of oil is decreasing and that it has reached the critical level of less than 300 million tons per year. The minister intends to devote a special meeting of the government to this problem.

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