RUBLE EXPECTED TO HOLD STEADY IN JUNE

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RUBLE EXPECTED TO HOLD STEADY IN JUNE

Moskovsky Komsomolets, June 2, 2000, p. 2

No unpleasant surprises are expected on the Russian currency market in summer 2000. The Finance Ministry is paying off the foreign debt on schedule, Russia’s gold and hard currency reserves keep growing, and the balance of trade is also improving. Meanwhile, the Central Bank is keeping emission under control.

However, there are some likely problems: OPEC states are anxious to push oil prices to over $28 a barrel again, so they are planning to increase oil production levels to keep prices within the $22-28 range. However, this will not affect prices of Russian oil, which means there will still be enough petro-dollars on the Russian currency market.

In the meantime the Russian authorities are facing a difficult decision: the government has to predict the ruble exchange rate for 2001, as it has already started work on the 2001 budget. Thus, in early June Prime Minister Mikhail Kasianov and the Central Bank need to reach an agreement on the ruble’s prospects. If the ruble rises against the dollar, this will bring in more cheap imported goods, which will have a negative impact on weak domestic industries. The problem could be resolved by large investments in the real sector of the Russian economy; however, it is well known that the domestic investment situation leaves much to be desired. Banks refuse to make long-term investments, primarily because of high risk and high taxes.

Paradoxically, both the Central Bank and the Finance Ministry will have to accept some ruble instability in order to improve the situation. The ruble is not likely to fall significantly in early June (no more than three to seven kopecks against the dollar), but in mid-June it is likely to reach a level of between 28.36 and 28.40 rubles to the dollar. This is the level at which the Central Bank will have to step in to support the ruble. By the end of July, the exchange rate could exceed 29 rubles to the dollar.

MOSCOW ANSWERS TATARSTAN OPPOSITION

Izvestia, June 2, 2000, p. 2

On June 1, a number of Tatarstan political parties and movements which form the Krugly Stol organization received a reply from President Vladimir Putin. In their letter to Putin, the Tatarstan opposition had pointed out some falsifications of the results of the last Tatarstan elections; and had also noted that the agreement between Tatarstan and Russia does not resolve the discrepancies between their respective Constitutions.

The presidential department for internal affairs said that the issues raised in the letter has long been of concern to the public, and that the first steps of President Putin since his inauguration are being directed at strengthening the Russian state system. As soon as Krugly Stol had received this reply, they sent another letter to Sergei Kirienko, presidential envoy for the Trans-Volga federal district. In this letter the Tatarstan opposition suggests that the Tatarstan State Council should be declared illegitimate, and the post of the president of the republic should be abolished.

USTINOV’S ULTIMATUM

Izvestia, June 2, 2000, p. 3

Yesterday at a Moscow conference General Prosecutor Ustinov gave regional prosecutors a month to bring local laws into accord with the Russian Constitution. Ustinov also called on the regional prosecutors not to take any leave this summer, since, according to him, those who fail to implement the given objective will be dismissed. Mr. Ustinov mentioned some examples of discrepancies between local constitutions and the federal Constitution. In the republics of Bashkortostan, Tatarstan, Kabardino-Balkaria, Yakutia, Komi and Tyva, the republican constitutions are considered more important that the federal Constitution. The constitutions of Adygea, Buryatia, Ingushetia, and Kalmykia stipulate the right to introduce an emergency (military) regime; Bashkortostan and Komi establish a dominant role for particular ethnic groups in their constitutions. These are the most obvious constitutional discrepancies; overall, about a third of regional laws violate the federal Constitution.

It is difficult to see how regional prosecutors and authorities will manage to “bring into accord” thousands of laws, let alone constitutions and charters. It is clear that Ustinov’s order is more of a psychological measure, intended to show the regional leaders that the Kremlin’s intentions are serious.

Another yesterday’s order serves the same aim. The government ordered the Justice Ministry, the Interior Ministry, and the General Prosecutor’s Office to check if the laws of Bashkortostan, Tatarstan and Ingushetia (the three most independent republics) on issuing new passports to the Russian citizens agree with the Russian Constitution. As is known, governments of the three republics strongly objected to the absence of “nationality” box in the new passport, and tried to improve the form of the new Russian passport themselves.

OPINION POLL ON PUTIN’S REFORMS

Rossiyskaya Gazeta, June 2, 2000, p. 2

According to the ROMIR independent research agency, about a third of Russian residents (31.7%) believe that establishing the seven federal districts in Russia will help strengthen power and order without restricting the rights of the regions.

According to the poll, 18.3% of respondents, on the contrary, think that this innovation will lead to restriction of the rights of the regions and at the same time will help strengthen the federal center.

Forty-two percent of respondents approve of the president’s initiatives on forming the Federation Council; while 31.7% are against them.

BEREZOVSKY’S OPINIONS

Trud, June 2, 2000, p. 1

At yesterday’s press-conference, Duma member and influential tycoon Boris Berezovsky said that the reform bills submitted by President Putin to the Duma “will be changed before they pass the Duma”.

Berezovsky has no objections to the president’s idea of strengthening federal power. However, according to him, these proposals will change the power structure of Russia, the whole ruling system, and these issues must not be resolved by means of legislative acts alone.

Berezovsky is convinced that the new president is trying to “revive Soviet-style rule in Russia”. He predicts that this will create a corrupt regional elite, which would have disastrous consequences for a democratic society.

According to the deputy-tycoon, the decree on the seven federal districts is a creation of seven new super-districts, which could “destroy Russia’s territorial integrity”.

However, Berezovsky stressed that “absolutely nothing has changed” in his relations with the Kremlin. He also said that President Putin is the best choice Russia could make. As for Boris Yeltsin, according to Berezovsky he made no basic errors, except for Chechnya.

PRESIDENTIAL ENVOYS HIRING STAFF

Komsomolskaya Pravda, June 2, 2000, p. 2

The envoys appointed by President Putin to head the seven new federal districts are ready to move to their new locations, although the issues of staff schedules, transportation, etc. have not been resolved yet.

The Kremlin still refuses to reveal exact staff numbers for the presidential envoys, citing the president’s decree on presidential envoys dated May 13, which stipulates that the structure and number of personnel at each envoy’s office in the federal districts are to be determined by head of the presidential administration, Alexander Voloshin, within a month (by June 13).

In the meantime, officials of the presidential administration state that the number of personnel for the presidential envoys is to remain about the same. However, according to one staffer of a former presidential envoy, the number of officials will increase considerably. For example, there used to be seven people in the office of the presidential envoy for Moscow. The new Central federal district includes 17 regions plus the capital. In each of these regions, except for Moscow, there will be a deputy envoy (former presidential envoys are likely to hold these posts), which means there are 17 more people. Besides, each of them, as well as the representative himself, will have assistants. Even if the presidential envoy’s staff has only two or three people monitoring each region, this will total 40-50 people. However, according to the experienced official, there will be no fewer than 130 employees on each envoy’s staff. And each of them will want wages.

Meanwhile, some short-sighted governors are rushing to turn the old presidential envoys out of their offices.

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