RUSSIA’S NEW CREDIT RATING TO HELP INVESTORS

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RUSSIA’S NEW CREDIT RATING TO HELP INVESTORS

Segodnya, July 29, 2000, p. 2

The international rating agency Standard & Poor’s has assigned a B- long-term unsecured rating to the Russian Federation’s forthcoming Eurobond issues due in 2010 and 2030. This news has been well accepted by the Russian stock market, and the game of increasing share prices has started. As a result, at the close of trading on the Russian RTS exchange on Friday the price of most liquid shares grew by 1.95% compared to Thursday, and by 1.36% compared to Friday morning.

According to Prime Minister Mikhail Kasianov, the increase of the rating is to lead to increase of investments in the Russian economy. As Director of Russlavbank’s Stock Operations Department Igor Pavlovsky told us “this event will be positive for the Russian economy.” Russia’s reputation, lost after the default in August 1998, is being gradually restored, and soon Russia will again be treated as a full-fledged partner of Western countries.

However, not everything is going so well, as every coin has two sides. It is not sensible to talk about writing off Russia’s debts to the Paris Club now that industrial output in Russia is growing, ratings are increasing, prices of raw materials are high, and IMF representatives positively view the state of the Russian economy. In this connectio, the position of Germany is noteworthy. The German authorities agree to ignore Russia’s debts for some time, but they do not agree to write them off. According to Igor Pavlovsky, the Russian authorities are waiting at the moment. If the macroeconomic situation worsens in Russia, it will be much easier for them to talk with the Paris Club.

ASKAR AKAEV: WE HAVE SEPARATED BUT NOT PARTED

Izvestia, July 29, 2000, p. 2

On July 28, President Askar Akaev of Kyrgyzstan finished the Moscow part of his four-day visit to Russia. This is the most successful of his visits to Russia. Before the flight to Yekaterinburg Akaev gave a short interview to an “Izvestia” correspondent at the Vnukovo-2 state airport.

Question: Have you managed to do everything you wanted in Moscow?

Askar Akaev: This was an excellent visit. I am still impressed by all the friendly and business talks.

Question: A declaration of eternal friendship between Russia and Kyrgyzstan has been signed. What stopped this from being done earlier?

Askar Akaev: Everything should go its way. Now we have realized that it’s time for this agreement. Russia and Kyrgyzstan have suffered enough to achieve the current level of mutual understanding and trust. We have strengthened our relations for all these years, and now Russia is with us.

Q.: What do you mean?

AA: We have been putting things into place for ten years. We separated, but we never parted from each other. Of course there were mutual complaints and offenses, but the power of historic gravitation has proved to be stronger. And the new generation of my compatriots take the 200-year friendship with Russia as a value they have inherited from their ancestors. They would like to preserve this tradition and pass on this baton to their descendants.

Q.: Is it true that you are bringing a pleasant gift to your compatriots – 30,000 jobs?

AA: Yes, it is. We have just visited the Russian Atomic Energy Ministry. We are restoring Kyrgyzstan’s defense sector. These are not just jobs, but jobs for skilled engineers involved with those sectors that used to form the backbone of our industry. Now we will be able to revive a number of other enterprises.

WHAT PUTIN WAS TOLD BEHIND CLOSED DOORS

Kommersant-daily, July 29, 2000, p. 2

Vladimir Potanin, head of Interros: Reconsideration of the results of privatization is unacceptable, since this would destabilize all business in Russia.

Mikhail Fridman, chairman of the board of Alfa-Bank: It is unacceptable to make law enforcement agencies an instrument of social revenge and punishment of rivals.

Boris Nemtsov, leader of the Union of Right Forces faction: Government bodies should be at an equal distance from any business entity.

Alexei Mordashov, CEO of Severstal: The worst threat to national security is aging of equipment.

Nikolai Pugin, President of GAZ: Industry needs cheap state loans, state regulation of prices, and strengthening of relations between major enterprises and their contractors and providers.

Taymuraz Bolloev, head of Baltika Breweries: The brewing industry is playing the leading role in the national economy, and if this branch of industry is destroyed, this will lead to destruction of agriculture too. It is necessary to free the brewing industry from taxes.

Oleg Kiselev, chairman of the board of IMPEXbank: Business should unite and form special permanent consultative agencies for cooperating with the government.

WHAT KIND OF STATE COUNCIL DO YOU NEED?

Kommersant-daily, July 29, 2000, p. 2

Dmitry Ayatskov, Governor of the Saratov Region: It is not worthwhile to make the state council a semblance of the Federation Council. Only the most literate and respectable regional leaders should be included in it. I have long advised the president to found a state council. Thanks to this body, most important decisions will be made not in the Kremlin narrow circle, but together with representatives of regions.

Vladimir Ryzhkov, a Duma deputy: We need a good and beautiful state council, like in Ilya Repin’s painting of “A Meeting of the State Council.” I would also introduce a special uniform with gold buttons and ask Shilov or Glazunov (former Soviet court artists who painted pictures of Politburo leaders – translator’s note) to paint a picture “The First Meeting of the New State Council.” If I am invited, I will take part with pleasure.

Oleg Korolev, Governor of the Lipetsk Region and Deputy Speaker of the Federation Council: The main point is that all the regions should be represented in the state council. The idea of founding a state council is correct, and I am sure that it is the president who should determine its staff and functions.

Gleb Pavlovsky, head of the Effective Policy Foundation: The state council should be as small, quiet, and harmless as possible. Why should we set up institutions and only then think of what they will do? The very term is a poor analogy for an institution of the Russian Empire, and people will have too many expectations. A small state council may be founded to make the Russian political vista less monotonous, but it should not complicate the state structure. The president has apparently decided to ingratiate himself with governors, I don’t think it was his own idea.

Yury Vechkasov, Chairman of the Legislative Assembly of the Penza Region: It is necessary that the president have some regional council. This will make it possible to inform the president about the actual situation in regions, since presidential envoys are not always well informed.

Yury Lyubimov, Director of the Taganka Theater: We don’t need any state council at all. Currently, the number of officials in Russia is many times larger than in the USSR. The authorities want to found this state council only for offended senators. If the matter develops this way further, the state council won’t be enough, since there are too many offended officials in Russia. Senators had better think about how to raise people’s salaries at least by 100 rubles a month, not about where they themselves will be.

METTINGS WITH PRESIDENT

Segodnya, July 29, 2000, p. 3

We have interviewed some business leaders who were not invited to the Kremlin for a meeting with the president on July 28. The question was what they expect from the meeting.

Pavel Shapkin, President of the National Alcohol Association: I would like the president to look at economic problems through the eyes of common people. From this point of view the meeting may be useful, since it is necessary to perfectly know the ropes to fully understand a subject. It is good that the president will get information from people other than state officials.

Semyon Kukes, President of the Tumen Oil Company: The authorities should seek agreement with business. The main point is that it should not turn into empty words.

Irina Alexandrova, Director of the Development and Marketing Department of LOCO-Bank: I don’t think it is worthwhile to hope that an agreement on some topical issues will be signed at this meeting. There are too many contradictions in this field. I believe only general statements about the necessity of cooperation between business and the state, and creation of conditions for development of the Russian economy, will be made at this meeting. These statements do not oblige anyone to do anything, and so they are of no use. However, the very fact of this summit may be viewd as a good sign. It shows that big business in Russia will not be eliminated without any protest.

Mikhail Kuzovlev, Deputy Chairman of Prombiznesbank: In my opinion, the meeting was held merely for the sake of introduction. This was the first experience of communication with President Vladimir Putin, and it is no use expecting global issues to be discussed at this meeting. It would be good to make such meetings with representatives of big business regular. There was talk at the meeting about the complication of relations between big business and the Kremlin that is currently observed. Business leaders expressed anxiety about the state of things. I think the president should clarify the situation.

MOSCOW AUTHORITIES INSIST ON LEGITIMACY OF REGISTRATION

Segodnya, July 29, 2000, p. 4

Moscow Mayor Yury Luzhkov has written to Georgy Poltavchenko, presidential envoy for the Central federal district, in connection with the discussion of the current residency registration requirements in Moscow. It is noted in the letter that the rules of registration in Moscow are based on the federal law on citizens’ right to freedom of movement, as well as on the decree of the Russian government on “confirmation of the rules of registration and de-registration of Russian citizens in their places of permanent and temporary residence.”

WILL RUSSIA AND WEST UNDERSTAND EACH OTHER?

Vremya MN, July 29, 2000, p. 2

“Will Russia and the West understand each other?” was the question from George Soros’ article “Berezovsky. Putin. The West.” discussed by Russian politicians and political analysts in our offices.

Vladimir Ryzhkov, a Duma deputy: According to Putin’s state policy, the Russian state will be not strong but bureaucratic, corrupt, inefficient, and not liberal. In this sense Soros’s fears were fair.

Leonid Sedov, a sociologist: There are three fatal questions in Russia: “What is to be done?” – “Who is to blame?” and “Do you respect me?” The west has not understood it yet.

Alexander Rubtsov, a philosopher: The meaning of our Constitution is to do everything possible so that no one person can govern a democracy. Why then should we have started to talk about “governable democracy”?

Igor Klyamkin, a sociologist: There is an obvious attempt to make Putin the leader of the federal bureaucracy, but the civilian and the military one.

Lev Timogeev, a human rights advocate: The slogan that will gain unanimous public support contains only one word: benefit.

Dmitry Oreshkin, a political analyst: Putin will go as far as we let him.

CHANGES IN GOVERNMENT AND PRESIDENTIAL ADMINISTRATION

Vremya MN, July 29, 2000, p. 3

Vyacheslav Nikonov, President of the Politika Foundation: Officially, the autumn-winter season will start with the first meeting of the Duma after the summer vacation. As for an event that may open the next political season, there may be three such events. The first one is a change in the authorities of the Presidential Administration. The second one is a change in the government. And the third one is the president’s probable proposal to alter the Constitution. I cannot say that it is the time for these events. However, it is possible to find faults with anyone, and Boris Yeltsin used to show us that changes may happen before their due time. Everything will depend on Putin’s will in the long run, but not on political conditions. As for me, I don’t think it’s time to change the Presidential Administration, the government, the Constitution, and the Federation Council.

Sergei Markov, Director of the Institute for Political Studies: I think there will be no changes, either in the Presidential Administration or in the government. Besides, I don’t think the process of amending the Constitution will start either. All this will be put off until the end of this year or the beginning of 2001. During this fall the new political regime will be consolidated, and changes in power structures will start only after the end of this consolidation. Quite different things will take place in autumn. First, there will be attempts to implement the new economic program. Secondly, a number of regional elections will take place, and they will attract attention too. The layout of forces in various gubernatorial elections will show the actual layout of forces in the country in general.

Valery Fedorov, Deputy Director of the Russian Political Situation Center: I think the most likely event in autumn is a series of major battles on the budget front. As far as I understand, it is the government’s readiness to amend the draft budget in favor of some regions that caused such rapid capitulation of the Federation Council in the battles for the Tax and Budget Codes and some other important bills. Governors will try to get some compensation for this concession, but the government that was ready to concede in a very difficult situation will hardly listen to regions’ opinions so attentively in a new situation, now that it is holding all the aces. Therefore I think that coordination of the budget will provoke a conflict, or at least a tense situation. Besides, we will witness the ineffectiveness of the Putin system of governing the country. This system is of a transitional nature, something between federalism and unitarism, and therefore it is unstable. Soon we will see a lot of conflicts between governors and presidential envoys, and it will be clear that the new system of governing the country does not make it possible to solve the main problems of Russia. So far, I don’t see anything in Putin’s actions that could direct all the strength of the power bodies to resolution of issues that are most topical for Russia at the moment.

PUTIN’S MEETINGS

Nezavisimaya Gazeta, July 29, 2000, p. 1

Russian President Vladimir Putin held a number of meetings in the Kremlin on July 28. Interior Minister Vladimir Rushailo reported about the results of work of police and Interior Ministry forces during the first half of 2000. Rushailo informed the president about disclosures of illegal armed groups that planned terrorist acts in various regions of the Russian Federation. Rushailo also reported about implementation of the president’s order to take more action on solving crimes in the economic sphere. The minister also informed the president about work on strengthening cooperation between law enforcement agencies and presidential envoys in federal districts. The president has also ordered to intensify the work on disclosing crimes against individuals. Director of the Federal Border Guard Service Konstantin Totsky reported to the president about the situation on Russian borders, and the results of activities of his service in the first six months of 2000. Minister for Information and Communications Leonid Reiman informed the president about the results of the negotiations with Japan on development of scientific-technical cooperation in telecommunications, and a number of joint projects in satellite communications.

TARIQ AZIZ LEAVING RUSSIA

Nezavisimaya Gazeta, July 29, 2000, p. 2

On July 28, Russian Foreign Minister Igor Ivanov met with Iraqi Deputy Prime Minister Tariq Aziz in Moscow. Summing up the results of Aziz’s visit to Moscow, Igor Ivanov stressed that Russia supports lifting of economic sanctions against Iraq as soon as possible, in exchange for restoration of the system of international monitoring over banned military programs, as was stipulated by well-known programs of the UN Security Council.

Igor Ivanov and Tariq Aziz also agreed at their meeting to activate the bilateral cooperation in the international arena at the UN, not only on issues related to the Iraqi regulation. As for the recent criticism of Russia by the US State Department, Igor Ivanov announced: “Russia is an independent and sovereign state, and we ourselves will determine with whom we will cooperate, and to what extent.”

The foreign minister has appealed to the US and the UK to give up their plans for air strikes, and invited all members of the UN Security Council to join in Russia’s efforts to regulate the conflict on the basis of existing resolutions.

As for Russian-Iraqi contracts, which are temporarily blocked by the UN Commission for Sanctions, the foreign minister has announced that Russia will do its best to unfreeze them. Russia has managed to have 60 contracts unfrozen since March 1, 2000, which total $200 million. During the meeting it was suggested that a Moscow-Baghdad direct air route be opened. Russian diplomats are of the opinion that there are no impediments to this step from the viewpoint of international law. However, there are some technical difficulties, including transit above territories of some states. Igor Ivanov has also denied the recent reports that Russia allegedly sells weapons to Iraq.

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