SENATORS ARE READY FOR AN IRRATIONAL REVOLT

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SENATORS ARE READY FOR AN IRRATIONAL REVOLT

Vremya, July 22, 2000, p. 3

Leading Russian political analysts give us their opinion about whether the Federation Council will surrender at its meeting on July 26, or resume resistance to the president.

Vyacheslav Nikonov, director of the Politika Foundation: “I think the senators will not surrender. When members of the Federation Council assemble together, a critical mass of protest is formed. Sensing their solidarity, they fight and hold their positions more strongly than when they’re apart. Therefore, it seems to me that the meeting of the upper house on July 26 will resemble the two previous meetings, which were conducted in a heated atmosphere. I would expect the greatest activity from those governors who are part the “Red Belt” (Communists), and from those who have tense relations with the Kremlin and cannot count on federal support at the next regional elections. I think the Federation Council is likely to reject the version of the reform bills submitted by the Duma conciliation commission, even though the number of votes in favor of it will be more than last time.”

Sergei Markov, director of the Political Research Institute: “So far I would say that I have no definite opinion regarding this issue. The situation is very tense. On the one hand, the governors are absolutely dissatisfied and even irritated at the compromise they reached. On the other hand, they lack a rational strategy for opposing the president, who dominates in public opinion and in the Duma, and holds the political initiative. Therefore, an irrational governors’ revolt is the only thing possible; it may happen to be their own political error and will affect Russia seriously enough. At present we see that they will most likely agree with the president, because the rational understanding of the fact that they have no resources to oppose him urges them to do so. Regarding the vote, my forecast is almost fifty-fifty. I would put my money on neither option – neither on the approval of the bills, nor another veto. If anyone gives me the money, I would rather stake it on approval with a slight majority.”

Valerii Fedorov, Deputy Director of the Russian Political Situation Center: “I doubt that the Federation Council will surrender. There is a possibility that senators will cave in, but this will only be an apparent surrender. They will actually try to propose other terms in exchange for approving the law adopted by the Duma. The tax reforms, the budget code and draft budget for 2001 is the first thing that comes to mind. Senators have wide opportunities in this sphere to block presidential initiatives. However, I think that would not be enough. In order to establish themselves as a political force, the senators will be compelled to take more resolute steps. A new initiative on convening the Constitutional Assembly, which would be able to consider principles of the state structure as a whole, may become such a step. That would be a response to the president, who wants to reform Russia in his own way, within the framework of the Constitution. Senators wish to implement their own project of reforming the Russian political system and therefore call for the Constitution be reconsidered in order the situation can be “leveled” and the president can be deprived of any advantages he has, along with the political initiative. Speaker of the Federation Council Yegor Stroev has already mentioned that on July 26 the house will consider the issue of convening the Constitutional Assembly. This initiative is also interesting because it may be supported by the Duma. Leader of the Fatherland – All Russia faction Yevgenii Primakov, who put tremendous effort into getting the regional package of bills passed, supports this idea. He hopes that under a new constitutional system the Duma would get a higher status than it has now, and the issue of relations between the center and regional elite will be settled at last.”

WESTERN BANKS SHOW INTEREST IN THE RUSSIAN GKO MARKET

Segodnya, July 22, 2000, p. 5

Foreign investors are starting to show some interest in the Russian market of state securities, states Vladimir Karmashov, Deputy Director of the Open Market Transactions Department of the Central Bank. “We are told that the Western banks are ready to invest in the GKO market, although for a short time and in small amounts,” says Karmashov. At the same time he notes that the Central Bank gives priority to creating conditions for attracting long-term foreign investment instead of speculation. He also stresses that before accepting an influx of new funds from non-residents on the market of the domestic, the Central Bank has to establish a system of currency regulation and secure itself against the possible departure of non-residents from the securities market. Therefore, measures in the sphere of currency control should be taken first, followed by liberalization of the C accounts regime, Karmashov believes.

THE WEST HAS NOT YET DETERMINED ITS ATITUIDE TOWARD RUSSIA

Segodnya, July 22, 2000, p. 4

We asked Sergei Karaganov, head of the Foreign and Defense Policy Council, about Vladimir Putin’s intense activity in foreign policy.

Q: How much goodwill toward Putin is there among world leaders?

Karaganov: Before his visits to China and North Korea he had successful meetings in Europe and already gained extensive foreign experience. Moreover, Western leaders have seen that they are dealing with a well-prepared leader. However, since the West does not yet know which path Russia will choose, it wants to keep some aces up its sleeve. Therefore, along with positive assessments of Putin’s initiatives in foreign policy, the Paris Club is being pressured in connection with restructuring Russian debt. If Putin succeeds in building a powerful state with an efficient economy, the attitude toward Russia will start changing for the better. If a “powerful” state with a weak economy is the result, the position of the West will remain tough, though respectful. Everything depends on the path Russia chooses.

Q: Will acceptance into the club of world leaders strengthen Putin’s position within Russia?

Karaganov: This will strengthen his position greatly, primarily in the Kremlin. Until recently he has been, so to speak, first among equals. Now he will be returning to Russia as an international leader. Activity in the sphere of foreign policy will allow Putin to strengthen his position among the Russian ruling elite, what is especially important on the eve of the intensifying political struggle expected this autumn.

Q: Is the West ready to drop its criticism about freedom of speech in Russia?

Karaganov: The West can stop objecting to infringements of freedom of speech in Russia if it benefits the West to do so. Putin’s hands are tied if he wants to provide for economic growth in Russia, because with a stagnant system of power Russia will in the foreseeable future fail to receive investments from abroad. Putin should play in accordance with certain rules accepted in the advanced countries.

POLICY CHANGE NEEDED IN THE RUSSIAN FAR EAST

Rossiiskaya Gazeta, July 22, 2000, p. 1

President Vladimir Putin noted on July 21 in Blagoveshchensk that it is very important for the presidential envoy in the Far East federal district to strengthen that area’s relations with the rest of Russia.

At present, the Russian Far East and the Trans-Baikal area are developing rather slowly, stressed the president; industrial enterprises often produce uncompetitive goods, and the whole issue is connected with the lack of infrastructure. At the same time, the vast natural resources in this region and more skilled use of industrial resources could “turn the region into a prosperity area”. Putin noted that there were plenty of programs for developing the region, including presidential ones, but they were “implemented very badly”, because they “had been worked out in isolation from reality”. “If a presidential program does not work it should be reviewed,” said the president; and set the government the task of working out a concept of rational and concentrated use of resources dispatched into this region.

Russia needs to make sweeping changes to its state policy in the Russian Far East.

Following the G8 summit in Okinawa Vladimir Putin will set out for Petropavlovsk-Kamchatskii, where on July 24 he will conduct a meeting dedicated to problems of social-economic development on the Kamchatka Peninsula.

THE GENERAL STAFF SETS PROBATION PERIOD FOR THE STRATEGIC MISSILE FORCES

Kommersant-daily, July 22, 2000, p. 2

On July 21 Topol-M intercontinental ballistic missile was to be launched on its first test flight from the RS-12M1 mobile launcher at the Plesetsk launching site. However, the launch failed. The General Staff of the Strategic Missile Forces denied any official explanations for the reason of rescheduling the test flight. Off the record, officers of the forces say that the General Staff prevented them from launching the Torol-M missile at the last moment. The opposition between the General Staff and the SMF has reached boiling point.

When late last year the General Staff was approving plans for conducting test launches of the newest Russian ICBMs, it could not occur to anyone what significance the launch of Topol-M missile will have for top Russian commanders and the Armed Forces as a whole. However, events of the last week turned an ordinary event for the military into an event of tremendous significance.

On July 21 a test launch of Topol-M mobile launcher was to be tried for the first time. Before launches were made from silo launchers of RS-12M1 complex only, which were added to the armament of the Russian SMF (overall, 10 launches were made, and 20 Topol-M stationed in silos are deployed already). A successful launch of Topol-M missile from a mobile installation several days before the significant meeting of the Security Council could become a weighty argument in favor of the SMF, if Kvashnin were for some reason to deny the newest kind of armament and try to dismiss the forces; a successful launch would show their high efficiency.

Nevertheless, a launch was not conducted. The press service of the SMF flatly denied any comments on the event. The General Staff preferred to remain silent as well. However, a source at the Plesetsk launching site told us that an order to cancel the test launch had been received on the eve from the General Staff.

It is highly possible that it was so. Kvashnin has too much at stake to permit the SMF to gain such an advantage on the eve of the meeting of the Security Council. However, the categorical unwillingness of the command of the General Staff of the SMF to give at least a hint that intrigues of the General Staff caused the cancellation of the launch, casts doubt on the authenticity of this theory. Moreover, the silence of the SMF may be considered as an unwillingness to promulgate the fact that a certain technical malfunction in the new system was the real reason for canceling the test launch.

Regardless, it is evident that the opposition between the General Staff and the SMF has reached a peak. The outcome is expected next week.

BEREZOVSKY HAS BECOME A FREQUENT GUEST AT THE GENERAL PROSECUTOR’S OFFICE

Kommersant-daily, July 22, 2000, p. 3

On July 21 Boris Berezovsky was summoned to the General Prosecutor’s Office for questioning for the second time in a week. This time he was questioned also as an injured party, along with giving testimony.

That time the oligarch was summoned to the General Prosecutor’s Office by investigator Vladimir Danilov, who is running two cases at once, allegations of illegal interference in private life against agents of the security service of the Media-Most Group and Atoll private security agency. He decided to question Berezovsky not as a witness only, but also as an injured party.

“I was given transcripts of my telephone calls, tapped and recorded supposedly by the Media-Most Group,” reported Berezovsky after questioning. As we know, following the May searches at Media-Most offices, Director of the FSB Assistance Programs Department Alexander Zdanovich reported that the security service of Media-Most had tapped the phones of many well-known people, including Interior Minister Vladimir Rushailo.

The investigator was interested in Berezovsky’s concern with Atoll and why audio and video tapes with records of the businessman’s talks with various high-ranking officials had been found at Atoll’s office. “I gave comprehensive answers to these questions,” reported Berezovsky.

STOCK MARKET PROTEST AGAINST THE TAX CODE

Kommersant-daily, July 22, 2000, p. 5

Participants in the stock market intend to initiate a debate on the consequences of passing the second part of the Tax Code, notes a statement posted on July 21 on the website of the National Association of Stock Market Participants (NAUFOR). They think that adoption of the Tax Code “caused a critical situation for the Russian securities market”. They think that the code does not take into consideration many specific issues of the stock market, infringes on interests of private investors and strengthens dependence on foreign brokers. In this connection the participants of the stock market intend to consult the Duma, the Federation Council, the Ministry for Taxes and Duties and the Federal Securities Commission.

TO KICK OUT BOTH

Kommersant-daily, July 22, 2000, p. 3

The confrontation between Chechen leader Akhmad Kadyrov and his deputy Beslan Gantamirov has woken up another Chechen politician – Chair of the Chechen State Council Malik Saidullaev. On July 21 he conducted a press conference, having proposed to solve the dispute through a radical method of “kicking out both of them”. Their place should be occupied by a person whom “the Chechen people want to see”, i.e. Saidullaev himself.

“It is true that Beslan Gantamirov is a brave guy. However, it is hard to live with courage without intellect. A person who has insufficient brains to solve a problem by negotiation goes to war with weapons in his hands,” commented Saidullaev on debates between Kadyrov and Gantamirov. These politicians will fail to work together, thinks Saidullaev, and therefore the only possibility for solving the conflict in a peaceful way is to dismiss both and conduct open elections, which would allow the people to choose a leader.

Saidullaev did not conceal his desire to head Chechnya either. His election as chair of the republican State Council was his first step toward realizing his dream (this happened in October 1999 at the meeting of “Zavgaev’s” Chechen parliament formed in 1996). However, Moscow was taking its time with recognizing this structure and entrusted government representative Nikolai Koshman with “steering” the republic. However, Saidullaev did not despair, and was a frequent guest in Chechnya, where he unmasked either intrigues of Basaev’s bandits, or brutalities of the Russian military. In May 2000 the Russian authorities finally seemed to notice Saidullaev, having awarded him a medal on the 300th Anniversary of the Russian Fleet and the badge of Participant of the Military Operations in Chechnya. However, as a result, Kadyrov became Chechen leader instead of Saidullaev.

Now when Kadyrov and Gantamirov are nearly shooting at each other, Saidullaev decided to draw attention to himself once more. Firstly, against the background of “brawlers” his mildness and inclination to compromise looks rather favorable. Secondly, if the competing leaders do shoot one another, for Saidullaev it is important to be the first candidate to take the vacant position.

THE GENERAL PROSECUTOR’S OFFICE CLEARS UP STATE PROPERTY

Nezavisimaya Gazeta, July 22, 2000, p. 1

The legal status of the management of state property was discussed on July 21 at the second meeting of the board of the Russian General Prosecutor’s Office, chaired by General Prosecutor Vladimir Ustinov. At the board it was noted that “the number of crimes in this sphere remains high, and has a strong growth trend,” reported the PR service of the General Prosecutor’s Office. Among crimes connected with the use of state and municipal property, the most widespread are cases of illegal management and misappropriation of parcels of shares belonging to the state, and premeditated non-compliance with court decisions to return misappropriated property to the state. Moreover, special emphasis was placed on poor management by state officials on the boards of joint stock companies with state shares, abusee of power by state officials when leasing property, arranging tenders, auctions, setting the starting price when selling this property, and bribery. The board of the General Prosecutor’s Office connects such assumptions with “improper carrying out of duties by management bodies entrusted with state and municipal property at all levels”.

A PRESENT TO THE REGIONAL GOVERNORS

Vek, No. 29, July, 2000, p. 3

The government has announced its intention to transfer the taxes, which are paid by the country’s main taxpayer – Gazprom, to the Federation subjects, where the subsidiaries of this company are located. This is a serious concession, which is aimed at inducing the regional leaders to become more obedient to “the new course” of the Kremlin. “The young reformer” dreamt of this. The regional governors tried to gain control over the natural monopolies, but they did not have enough strength to realize their plans. Currently, the regional governors are deciding whether it is advisable to oppose the Kremlin.

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