THE CRISIS TAUGHT US A GOOD LESSON

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THE CRISIS TAUGHT US A GOOD LESSON

Rossiyskaya Gazeta, March 15, 2000, p. 1

The annual meetings of the Russian Finance Ministry have long since gone beyond the narrow limits of an internal meeting. Each year they resemble a meeting of governmental bodies which are responsible for national economic policy.

According to first Deputy Prime Minister Mikhail Kasianov, in 1999 all state expenditures were financed, for the first time in all the years of reforms. A lot of ministries and departments received more than was planned. These lucky entities are: the Defense Ministry, the Interior Ministry, and the Prosecutor’s Office. The government has paid all debts to pensioners, and the debts of the federal budget to teachers has been halved. But the main thing is that the Finance Ministry has managed to reduce the budget deficit. Last year the budget deficit was 1.4% of GDP.

Mikhail Kasianov thinks that the rise in world oil prices was not the main reason for this success. He said: “The crisis taught us a very good lesson. In addition, the activities of the government aimed at stabilizing the situation in Russia have brought results.” Thanks to this success the Cabinet has not had to borrow from the Central Bank in the first quarter of 2000 to repay debts to foreign creditors. What’s more, the Finance Ministry began to pay back the $4.5 billion it borrowed from the Bank of Russia in 1999.

There is no doubt that the success in the negotiations with the London Club of commercial creditors in February 2000 contributed to these achievements. Russia intends to reach a similar agreement with the Paris club.

Kasianov’s colleagues from other ministries supported him, first of all Economy Minister Andrei Shapovalyants and Tax Minister Alexander Pochinok. The latter stated: “Russia is trailing 100 years behind the US in terms of real incomes. This is abnormal. Currently we have a chance to improve the situation.” But this will take a great deal of time and effort. According to Andrei Shapovalyants, it will take at least three years to raise real incomes to the level of 1998 (considering that production growth will be 6-7% a year). The fact that last year production growth was 8% is encouraging.

COMPLAINTS AND SUGGESTIONS

Izvestia, March 15, 2000, p. 6

At the recent meeting of the Council for Foreign Investments of the Russian government, representatives of foreign companies complained about taxes, as usual. Vladimir Putin, who conducted the annual meeting of the Council, showed compassion, understanding and competence, responding to practically every appeal and suggestion from the foreigners. However, their complaints and suggestions were the same as always, just like the problems of the Russian economy. Most complaints concerned taxes. The attack on unsubstantiated tax demands was headed by Ernst & Young, which itself suffered from a visit by the Tax Police. However, the world leader in consulting and audit services managed to defend its position in a court battle with tax agencies. The foreigners suggested to Putin that a special agency under the leadership of one of the deputy prime ministers be created which would be engaged with solving tax conflicts with large foreign companies. The dream of foreign investors – solve tax conflicts independently from the Taxes and Duties Ministry and Tax Police – is likely to come true. Mikhail Kasianov, first deputy prime minister, stated that the government’s reaction is “primarily positive, and the suggestion concerning creation of a special agency of this kind will be considered in due time.”

The second problem which disturbs foreigners is the state integrity of the Russian Federation, no matter how strange this may seem. To be more exact, it is such a necessary component of state integrity as market integrity. A representative of the BAT tobacco company said that he is disturbed by the introduction of various local stamps of quality compliance in some regions of Russia. Local authorities intend to require such stamps on nearly all consumer goods. In the opinion of investors, such measures will lead not to improvement in quality control, but to the growth of corruption, construction of internal trade barriers and increase of unnecessary expenses. Moscow Mayor Yuri Luzhkov, one of the pioneers of the stamp epidemic in the local administration, responded to these complaints immediately, stating that these stamps could be abolished if another way is suggested to fight poor-quality adulterated goods which pose a direct threat to the life and health of the public. Vladimir Putin did not express any definite attitude toward this problem, but noted that the state must properly fulfil its functions and that it is too early to speak about the collapse of a united market in Russia. It is worth noting that, according to talks behind the scenes, the acting president made a very favorable impression on the foreigners. For the first time the head of state personally listened to the complaints of investors, and answered them.

HOW MANY COMMUNISTS WILL VOTE FOR PUTIN?

Moskovsky Komsomolets, March 15, 2000, pp. 1, 3

Many pundits are now talking about the strong possibility of a second round of voting (it will be held if no candidate gets more than 50% of the vote in the first round). They are discussing the way the votes which were given to Putin’s rivals will be distributed in the second round of voting. Among three leaders who have appeared in the presidential campaign to date, Grigory Yavlinsky has the most stable rating: 3%, 5%, 4% (over three weeks to March 6). This conclusion was made by analysts of the National Center for Public Opinion Studies (NCSPO) who asked the respondents to answer the question “For whom would you vote if the election were held this Sunday?” The ratings of Putin and Zyuganov fluctuated. Zyuganov’s popularity started to grow – 18%, 21%, and, at last, 22%. As for Putin, there was a 3% drop in the last week of February, but then he regained his position – 59%, 56%, 59%. The pollsters ascribe the 3% fall to the events in Chechnya. It is still unknown how the latest casualties in Chechnya, intensively discussed in the media, have influenced the public’s attitude to Putin, but he is likely to lose a certain number of votes.

As for the remaining candidates, Vladimir Zhirinovsky (who was not mentioned by the pollsters because of his problems with the Central Election Commission) has drawn close to the leaders. The cunning pollsters presented the LDPR leader under the guise of “another candidate”. This “another candidate” captured 3% of the vote, the greater part of which was obviously intended for Zhirinovsky. All other candidates, who have practically no chance, can be divided into two groups. Some of them have already stated whom they will support in the second round, others can be judged by their political views. Putin will get the votes of Alexei Podberezkin and Aman Tuleev, and the contribution of the Kemerovo governor will be substantial – 2%. The leader of Spiritual Heritage, Podberezkin, has less than one percent. The LDPR leader may also support Putin, so in the second round of voting Putin can count on five additional percentage points as a maximum. As for other outsiders: Yuri Skuratov, Konstantin Titov, Stanislav Govorukhin, and Ella Pamfilova, who have about one percent each, Putin can hardly count on their electorates.

There is an interesting phenomenon – according to the polls of the NCSPO, not all people who supported the CPRF, Unity etc. are going to vote for the leaders of these movements. Over 17% of Communist supporters are ready to vote for Putin; 60.5% of Fatherland-All Russia supporters also see him as the head of state, along with the same number of Zhirinovsky’s supporters and 40.7% of those who voted for Yabloko at the Duma elections. The supporters of Unity give 86.8% of their votes to Putin, whereas supporters of the Union of Right Forces – 75.9%. Only a small portion is left for Zyuganov – 3.1% from Unity, 5.6% from Fatherland-All Russia, 7.3% – from the LDPR, 2.3% – from Yabloko.

CENTRAL ELECTION COMMISSION WANTS TO DEREGISTER ZHIRINOVSKY

NTV, Segodnya, March 14, 2000, 14:00

Today the Central Election Commission requested the General Prosecutor’s Office to appeal against the Supreme Court’s appeals board decision concerning Vladimir Zhirinovsky. Zhirinovsky was registered as a candidate for president after the appeals board ordered the CEC to grant him a deputy’s certificate. Alexander Veshnyakov, chair of the CEC, reported today that the General Prosecutor’s Office can lodge an appeal by the end of the week, in which case the Presidium of the Supreme Court will have enough time to consider the issue by March 26. If the Supreme Court upholds the CEC’s appeal, Zhirinovsky will be disqualified for the second time – and the last time.

SELEZNEV TO SUPPORT YAKOVLEV FOR GOVERNOR OF ST. PETERSBURG

NTV, Segodnya, March 14, 2000, 09:00

Duma Speaker Gennady Seleznev said today that at the upcoming gubernatorial election in St. Petersburg he is inclined to support Vladimir Yakovlev, the incumbent mayor. He will do so not because he does not like Valentina Matvienko, who will also run for governor, but on the principle of “one good turn deserves another”, since Yakovlev supported Seleznev at the parliamentary election.

At a press conference following a meeting of the Duma Council, Seleznev also expressed his opinion on other issues. For instance, he stated that Russia will no longer pay for international delegations which tour the North Caucasus. If they want to check something, they should do it at their own expense, the Duma speaker said.

Gennady Seleznev: They have seen everything they wanted. They have always been concerned that Russia is concealing something from them, but I told them openly that we are not hiding anything from them, and that we ask them to pay for themselves next time. We will no longer receive international parasites. Our budget is not large enough to grant them planes and helicopters, provide security, provide VIP halls, buses, etc.

INTERVIEW WITH ALEXANDER VESHNYAKOV

ORT, Novosti, March 14, 2000, 09:00

Today we invited Alexander Veshnyakov, head of the Central Election Commission, to our studio. There are less than two weeks left before the election. Would you please tell us if we can expect any changes to the list of candidates?

Veshnyakov: This is possible, theoretically. Today we proposed to the General Prosecutor’s Office to appeal against the resolution on Zhirinovsky’s case, and to have the matter considered at the meeting of the Presidium of the Supreme Court. Besides, today we will complete the investigation of the reports concerning Tuleev’s apartments. Now I can only say that in the opinion of the working group, there is no reason for disqualification. Besides, every candidate has the right to withdraw voluntarily, it is up to them to decide. The only condition is that this must be done before March 21, since it is stipulated by the law. Therefore, we will know everything within days. But the main thing is that all election commissions, including district commissions, have been set up – 94,000 of them. New ballot papers have been printed. Readiness for voting is quite high at this stage of the election campaign.

Q: Disturbing reports are coming in from various regions of Russia. For example, today the Interfax-Eurasia agency reported, citing one of the heads of the State Television and Radio Company of the Russian Far East, that some candidates are ignoring the election campaign in the electronic media; free TV air-time granted to candidates is sometimes used for music videos or cartoons, and the time intended for debates is not used either. Do you know anything of these cases, and what do you think of them?

Veshnyakov: Yes, we are aware of such cases. This testifies to the fact that these candidates must have failed to prepare for the election campaign properly, they were not ready for such an amount of air-time for them to express their views, their election platforms, that is active participation in campaigning. We cannot force candidates to appear on TV with their election program – that is their own business.

Q: As far as I know, the CEC is going to use some technical innovations when counting votes. Could you tell us any details?

Veshnyakov: The first thing we will do is implement stricter monitoring of summing up of election results. We will see to it that the law is strictly followed: ballot papers must be shown to all those present at the polling station, i.e. observers from every candidate and public organization. We will also make the process of counting votes more efficient. As soon as the election commission at a polling station finishes its work, it will draw up a report on the results of the election, which will be transferred to a higher district commission and then entered into the GAS-Election system. Therefore, at 9 p.m. Moscow time on March 26, as soon as voting closes in the Kaliningrad region, the westernmost point, we will start announcing preliminary results of the election in the Far East. But we will also use scanners on ballot papers in some regions. They will make it possible to count votes within a few minutes. Then we will be able to announce the results not in the Far East alone, but even at some polling stations in Moscow and the Vologda region. We will announce the results on the hour, all night. I think that by about 2 a.m. or 3 a.m. approximately 50% of polling stations will have connected to the GAS-Election system, and we will present substantial results for the whole of the Russian Federation.

Q: When does early voting begin?

Veshnyakov: Early voting begins on March 15. But I must warn you that it is held only in some special cases, in some distant regions, on ships which are at sea at the moment. According to our estimate, 250,000 people at most will take part in early voting, this is less than half of one per cent of the total number of voters, that is 108 million. Still, this must be done.

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