INFLATION TO RISE NEXT YEAR

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INFLATION TO RISE NEXT YEAR

Versty, No. 145-146, December, 2000, p. 3

According to the State Statistics Committee, inflation for November 2000 was 1.5%. However, not all economists consider this figure reliable. There are some reasons to believe that the official figure is understated. At any rate, between January and November consumer prices rose by an average of 18.2%. Thus, inflation is “on track”, in line with predictions in the 2000 federal budget. Since the beginning of the year, consumer prices in Moscow have risen by 20.1%, and in St. Petersburg by 21.2%. Prices are expected to grow even more in December, because of the usual season factors. At the same time, it is hard to predict whether there will be any seasonal drop in inflation for January 2001. The Anti-Monopoly Ministry and the Federal Energy Commission have approved the plans of the Communications Ministry and Russian Joint Energy Systems company to increase telecommunications and electricity rates. Moreover, the Federal Energy Commission has agreed to Gazprom’s proposed gas price rises. So it seems the inflation figures for next year are unlikely to be favorable for Russia.

ELECTRICITY RATES SET TO RISE

Finansovaya Rossia, No. 47, December, 2000, p. 3

Yakov Urinson, deputy chair of the RJES board of directors, said last week that electricity prices would inevitably rise over the next few years. According to him, “The proportion of household expenditures spent on electricity is still below what it was in Soviet days.”

According to the Federal Energy Commission, next year electricity rates are likely to increase by 20-30%. Although no final decision has yet been made, according to our sources, RJES is currently negotiating to raise prices by 50%.

Electricity companies say that such drastic price rises are necessary because of scheduled wage increases in the industry, as well as rising expenses.

At the same time, experts consider the planned increases to be excessive. They note that the electricity companies have managed to get their cash payments level up to 75% only due to rate restrictions. Thus, it must first be aske whether they will be able to collect the same amounts if prices are higher.

ONLY THE RICH CAN BECOME RICH IN RUSSIA

Argumenty i Fakty, No. 50, December, 2000, p. 10

The Institute for Socio-Economic Issues at the Russian Academy of Sciences, headed by Natalia Rimashevskaya, recently studied the lifestyle of wealthy Russians. According to the results, the minimum income level required to qualify as rich in Russia is about $5,000 a month. There are 12-18 million such people in Russia (8-12% of the population).

At the same time, life in the provinces is considerably different from life in Moscow. Thus, being rich in Moscow means having an income 200-250% higher than those who are considered rich in the provinces. Among Muscovites there are some who are rich even by world standards: their annual income is over $120,000.

On average, those with incomes of over $60,000 per annum are considered rich in Russia.

According to official data, Russians are growing richer every month: real incomes are rising by 10% a year. However, there is almost no data on how this growth is distributed among different social layers. So the incomes of the rich and well-to-do are increasing by 20% a year, incomes of the middle class are increasing by 10%, while the incomes of the poor are not growing at all.

Analyste believe there are currently many opportunities for making a fortune in Russia. However, for those who are already rich the opportunities are greatly enhanced; according to the Institute, they have a 96% chance of maintaining their income level. Those with government contacts also have a good chance of becoming wealthy: 92%. Those involved in organized crime have an 82% chance. The rest of Russia’s citizens have minimal chances of becoming rich: only 30%.

Paradoxically, a good education is not essential for success. Moreover, it seems a tertiary education actually reduces people’s chances of becoming rich: those with degrees only have a 64% chance.

DRUG ADDICTION IS A NATIONAL PROBLEM

Rossiyskie Vesti, No. 51, December, 2000, p. 6

A fifth of crimes in Russia (i.e. over 200,000 crimes) are committed either under the influence of drugs, or by those who have a habit to support.

The number of drug addicts in Russia is rapidly and steadily rising. According to official figures, there are now 3 million drug addicts. However, obviously, this figure is most unlikely to be accurate: it is next to impossible to monitor drug turnover. According to expert assessments, the real number of addicts is at least three or four times higher.

Along with drugs, Russia has been hit by the AIDS epidemic. According to the World Health Organization and UNAIDS, the number of people with AIDS in East-Central Europe and Eurasia (including Russia) has risen by 35% (to 250,000). The disease is mostly spread by sharing needles. Considering that the average age for starting drug use is about 14, it is easy to conclude that the spread of drug addiction in Russia has become a national problem.

RUSSIAN GOVERNMENT TRIES TO SOLVE THE REFUGEE PROBLEM

Finansovaya Rossia, No. 47, December, 2000, p. 6

Representatives of the Federation Council, the Cabinet, and the State Duma have considered a bill on migration policy.

While discussing the document, Alexander Blokhin, Minister for Federation Issues, Ethnic and Migration Policy, experienced the vulnerability of a Cabinet member responsible for an area of domestic policy which clearly has problems.

Refugees are not satisfied with the government’s statement that the 2001 budget allocates 420 million rubles for the problems of forced resettlers.

Nonetheless, the government is doing its best: this year, federal budget funding for aiding refugees in Chechya has reached 300 million rubles. By the end of December, a further 200 million rubles will be spent on this problem. Still, the major issue is monitoring expenditure. According to Blokhin, it would be hard to find even ten people out of his Ministry’s staff of 3,000 who would be willing to visit the refugee camps. Inspectors are simply afraid of being either killed or abducted.

CHECHEN GUERRILLAS STILL ABDUCTING PEOPLE

Argumenty i Fakty, No. 50, December, 2000, p. 24

According to Interior Minister Vladimir Rushailo, there are no more foreigners being held hostage in Chechnya. But what about Russian citizens? How many of them remain in captivity?

Elena Rumyantseva, PR manager at the State Department for Combating Organized Crime, says: “According to our data, about 600 people abduction victims are currently being held by illegal armed formations in Chechnya. Over the past two years, the number of hostages has been gradually reduced: in the first ten months of this year 166 people were freed; including seven foreign citizens, seven citizens of former Soviet republics, 13 minors, and 42 servicemen.” Unfortunately, Chechen bandits are still abducting people. According to the Interior Ministry, in 2000 there have been 66 abductions. In these terms, Russian military personnel are the most at-risk group (28 soldiers have been abducted), as well as those who have to work in Chechnya.

RUSSIA PAYING ITS DEBTS

Rossiiskaya Gazeta, December 16, 2000, p. 1

According to the State Auditing Commission’s official account, Russia has paid the London Club of commercial creditors $4.2 billion in 1994-2000. In August-September 2000, Vneshekonombank paid out $588 million in debt payments.

CHECHENS TO HOLD A CONFERENCE IN MOSCOW

Novye Izvestia, December 16, 2000, p. 2

On December 19, a conference on restoration of Chechnya’s economy will be held at the President Hotel.

Ali Visaev, President of the Moscow Universities Alumni Club, was the initiator of the conference. According to him, the conflict in Chechnya is more of a conflict between forces within Chechnya than a Russian-Chechen conflict.

It is the first time that the federal military has sat at the same table with influential figures from Chechnya. To all appearances, the military has realized that this problem will not be solved by force.

Among participants are such people as Duma deputy Aslambek Aslakhanov; Salambek Khadjiev, head of the People’s Renaissance of Chechnya in 1994-95; Academician Djabrail Gakaev; and even Ruslan Khasbulatov, former Chairman of the Supreme Soviet of the Russian Federation. Akhmad Kadyrov and Bislan Gantamirov are also expected at the President Hotel.

According to a preliminary agreement, Maskhadov’s representative may also come to Moscow. This decision was made at the very last moment, after several meetings with Aslan Maskhadov at which this issue was discussed.

However, no one can guarantee security for Maskhadov’s envoy. Any Moscow police officer could detain him as a terrorist, as previous experience shows.

OFFICIAL WANTED TO SELL OFF THE MOTHERLAND

Kommersant, December 16, 2000, p. 1

The Primorye Federal Security Service (FSB) Department reports that it has prevented a transaction according to which the Ternei District of the Primorye Territory could have lost its economic independence. Vladimir Usoltsev, head of the Ternei District government, wanted to get some foreign investment – and offered the district’s budget, its natural resources, and forests as security. The official does not think there is anything illegal about this investment project.

According to the FSB Primorye Department, in September 1999 a person appealed to Usoltsev on behalf on the Moscow-based company Sovkomflot Ltd. He proposed to invest $100 million in the district, on the aforementioned terms. Usoltsev consented to this transaction, although the timber resources of the district alone are worth $1.926 billion, according to expert estimates. The $100 million loan was to be allocated to the Ternei District only after the district government signed a paper pledging all the district’s assets as collateral. However, the Primorye FSB Department considered this transaction would violate the rights of the district – and prevented it.

Further investigation revealed that Sovkomflot Ltd. did not exist, and the actual stock company Sovkomflot had nothing to do with this scheme.

NOVOSTI NEWS AGENCY TO PROVIDE FREE NEWS

Kommersant, December 16, 2000, p. 2

From January 1, 2001, the Novosti news agency will provide free news via the Internet. This means that a form of competition has begun on the post-Soviet news market. The free access to the Novosti news site is certainly a promotional move; it will attract more clients, who may later pay to subscribe to other news digests produced by Novosti. An increase in the number of clients will also increase the amount of state funding for this agency.

It is worth noting that this move was made soon after Gleb Pavlovsky launched his Strana.ru site, aspiring to become the main state propagandist website. But since the opening of the Novosti free news site, Pavlovsky’s project has gained a strong rival on the news market.

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