GOVERNMENT MAY CHANGE FINANCIAL POLICY

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GOVERNMENT MAY CHANGE FINANCIAL POLICY

Izvestia, September 5, 2002, p. 2

The Russian government has been showing some indications of possibly rejecting the idea of repaying the nation’s debts at its own expense. The latest statements of ministers testify to that. Duma members with close links to the Cabinet have expressed ardent support for such statements, demanding that the government should simply forget about a budget surplus. They are arguing in favor of spending all revenues next year, while using new loans to cover existing debt repayments.

The cost of servicing Russia’s foreign debts will be as much as $16.5 billion next year ($700 million more than this year). It is expected that around $10.7 billion ($4 billion more than this year) will be allocated for debt servicing. The Finance Ministry promises that there will be some more revenue from privatization, and the financial reserve will be replenished by the end of this year. So Russia will manage to service its debts. However, analysts have other opinions.

According to many analysts, the budget for 2003 is rather vulnerable. Moreover, it does not provide for any financial reserve.

Mikhail Zadornov, deputy chairman of the Duma Budget Committee: “The draft budget has been written mechanically, following the pattern of the last two years, and is based on favorable world oil prices.”

Vladimir Tikhomirov, an analyst with NIKoil: “It is doubtful whether there will be any financial reserve. Half the planned contributions to it depend on uncertain factors like revenues from privatization and oil prices.”

Alexander Ustinov, an analyst with the Economic Expert Group, believes the major problem of the budget for 2003 is the financial reserve. According to the Economic Expert Group, this year the government will accumulate much less money than expected: no more than 90 billion rubles.

Alexander Ustinov: “In July revenues were really high, which made the government feel more optimistic; but substantial foreign debt payments are being made in August and September. Moreover, these two months usually bring a seasonal fall in revenues. This means the government will have to set aside up to 40 billion rubles a month in the fourth quarter in order to reach reserve targets – and that is unlikely.”

Analysts are also questioning the increased economic growth predicted by the government due to cuts in state spending.

PLENTY OF VOTERS, NOT ENOUGH LEADERS

Izvestia, September 5, 2002, p. 4

According to August polls done by the Public Opinion Foundation, if the next parliamentary election were held now, both the Union of Right Forces (URF) and Yabloko could count on getting up to 4% of the vote. Polls by the National Public Opinion Research Center (VTsIOM) indicated 6-8% voter support.

The Public Opinion Foundation poll showed that only 1% of respondents would vote for Boris Nemtsov at a presidential election, and only 2% for Grigory Yavlinsky. And 24% would not vote for Nemtsov under any circumstances (21% would not vote for Yavlinsky).

When VTsIOM attempted to determine which politicians are most trusted by the public, Boris Nemtsov was named by 5% of respondents and Grigory Yavlinsky by 6%. The Public Opinion Foundation provides somewhat different data: only 2% of respondents trust Yavlinsky, and Nemtsov was not on the list at all.

According to VTsIOM, in January 2001 the URF and Yabloko had 18% of the vote between them, while in January 2002 they were down to 11%. VTsIOM says combined support for the two right-wing parties has ranged from 11% to 17% this year. In March, it rose to 13% (from 11% in January and February), and to 17% in April. But in May it fell back to 12%.

Yabloko leaders have great hopes for results from the party’s internal reorganization in spring, but pollsters and analysts are not as optimistic: most believe that Yabloko will probably pass the 5% barrier in the next Duma elections, but this is not a certainty. The main vulnerability of Yabloko, according to political scientists, is that like the URF, it has been unable to define its electorate or what voters expect from the party.

The middle class which ensured victory for the URF at the last parliamentary election has failed to become a strategic resource for the right-wing forces. Over its four years in the Duma, the URF has not managed to present even one prominent initiative that would appeal to the middle class. As before, the party is focused on big business, and recollects the middle class mainly in connection with local issues. But the middle class itself no longer believes right-wing leaders, considering that the URF is doomed to remain the personal pet project of Anatoly Chubais.

Most likely, in order to make it into the Duma, the URF will have to repeat the story of 1999 and appeal to President Putin. By doing so, it would be sending the message that the most liberal party recruits supporters by using methods that are far from liberal.

However, the Kremlin is not prepared to give the URF its full support; it is dissatisfied with the party’s performance in the assignments it is given. Yet analysts believe that the Kremlin is not likely to abandon the URF, its right-wing favorite, and support Yabloko alone. It is more likely to pay some attention to both parties, while conveying to the URF that it is hovering on the verge of failing to pass the 5% barrier – then the party will be easier to manipulate.

RUSSIA-BELARUS UNION: PUTIN FINDS A WAY

Moskovsky Komsomolets, September 5, 2002, p.2

It is the Russian president’s turn to make a move in the saga of establishing the Russia-Belarus Union, following indignant statements from President Alexander Lukashenko. In a special memorandum, President Vladimir Putin has proposed to set up a joint working group to determine “the most reasonable model of integration”. But for the Belarusian part of the group, this presents an unsolvable problem, since the two options proposed in Putin’s letter and regarded as most appropriate by Moscow (following the pattern of the European Union, or full integration) have in fact been rejected by Lukashenko recently. For the time being, more attention should be paid to the economic factors in Russia-Belarus relations, according to President Putin. In this connection the Russian president noted that he was waiting for response to his proposal to speed up the introduction of a common currency. As for the recent disagreement between Moscow and Minsk, the Russian president was very diplomatic, while referring to it as “growth problems due for the most part to the scale and novelty of the steps we are taking”.

SHEVARDNADZE’S SLIPPERY TRACE

Moskovsky Komsomolets, September 5, 2002, p. 2

It seems that only Washington can resolve the dispute that has flared up once again on the political scene over the agreement between the former USSR and the United States concerning delimitation of the Bering Strait. The agreement in question was signed as far back as 1990 by Soviet foreign minister Eduard Shevardnadze and US Secretary of State James Baker. Congress soon ratified the agreement, but the Soviet and later Russian parliaments have never done so. The agreement is still in effect, on a provisional basis.

Foreign Ministry spokesman Alexander Yakovenko says the agreement is quite “in line with Russia’s interests”, and the main problem may be reduced to the question of compensation for Russian fishing vessels operating in the Bering Sea. This issue was covered in a special message recently sent to Washington from Moscow.

However, another message with more “revolutionary” content will be sent to Washington soon. Alexander Nazarov, chairman of the Federation Council’s Arctic committee, says a revision of the agreement will be sought: “Russia is losing $200 million a year, and the United States is not meeting its obligations in terms of compensation for 1.5 million tons of fish.”

NEMTSOV OPENS THE POLITICAL SEASON

Rossiiskaya Gazeta, September 5, 2002, p. 3

The new political season looks like being rich in scandals. Even before the start of regular Duma sessions, Union of Right Forces faction leader Boris Nemtsov has made the first colorful statement.

Nemtsov announced that he intends to request Prosecutor General Vladimir Ustinov to take some action over a transcript of Nemtsov’s telephone conversation with the leader of a Belarusian opposition party, which was published in the “Sovetskaya Rossiia” newspaper on Tuesday.

Nemtsov said: “I confirm that I did have this conversation, using a telephone in my Duma office. I’d like to note that although this conversation was private, I didn’t say anything I hadn’t said repeatedly in public – about Lukashenko’s policies and the prospects of the Russia-Belarus Union.”

Nemtsov said the Prosecutor General’s Office ought to ascertain who is monitoring and taping the telephone conversations of Duma faction leaders, how this is being done, and how such transcripts are subsequently sold.

“Sovetskaya Rossiia” says the transcript it published was received from the “Zavtra” newspaper, another publication associated with the leftist opposition – the Communist Party and the Popular-Patriotic Union of Russia.

Translate by Sergei Kolosov and P. Pikhnovsky

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