Kommersant, October 21, 2000, p. 2

On October 20, the Duma passed the draft 2001 budget in the second reading – almost unanimously. The third stage, as a rule, involves the most dispute. Duma deputies need to distribute all specific expenditures and divide hypothetical additional budget revenues.

Debate on the draft budget took less than four hours. This is a record. In previous years, such debates have taken up the entire day The Communists and the Agrarians were dissatisfied with distribution of the budget funds, and despite an extra 5 billion rubles for agriculture, they voted against the draft. However, even without them, the draft was supported by 304 deputies; and 226 votes would have been enough.

Deputy Prime Minister Alexei Kudrin has called this vote a new phase in cooperation between parliament and the Cabinet. President Putin has also applauded the Duma’s decision.

Now the main point is to distribute spending within the budget items that have been passed. There are already several contentious issues. The most controversial budget items will be defense spending and industry. For instance, Andrei Nikolaev, Chairman of the Duma Defense Committee, believes that the 12.6 billion rubles of extra defense spending should be distributed as follows: 4.6 billion on fuel and lubricants, 1.9 billion on clothing, 500 million on medical services, 3.6 billion on housing construction, and 2 billion on arms procurement. Likely additional revenues should be spent entirely on arms procurement, and research and development. The Cabinet has quite a different view: it believes that it is necessary to spend the entire 12.6 billion rubles on arms procurement and research and development, whereas additional revenues should be spent on current needs. As for fuel, the draft 2001 budget allocates 7 billion rubles for it, which is twice as much as the previous year’s budget.


Nezavisimaya Gazeta, October 21, 2000, p. 1

Central Bank chief Viktor Gerashchenko has confirmed that he is not in favor of any changes to the status of the Central Bank. He said, “If the Duma decides to limit the independence of the Central Bank of Russia, it would be the wrong decision.” President Putin has suggested that the Central Bank should be turned into a federal government agency. Our source in the Presidential Administration says the president’s initiative does not limit the Central Bank’s powers: “If the Central Bank’s analysts could tell us what difficulties they might face in implementing the president’s proposals, it would be much easier for us to talk with them.” Meanwhile, the likely change in status is not the only problem the Central Bank is facing. On October 20, a commission on electing an auditor for the Central Bank met in the Duma, and its decision is unlikely to find favor with Central Bank executives. The commission recommended Deloitte & Touche, rather than the Central Bank’s usual auditor PriceWaterhouseCoopers.


Moskovsky Komsomolets, October 21, 2000, p. 2

On October 20, a source close to the negotiations between Media-Most and Gazprom-Media revealed a few details of the upcoming agreement to the Interfax agency.

According to the source, Gazprom will receive 25% plus one share in Media-Most, and 16% of NTV shares, to cover Media-Most’s $211.6 million loan. Besides, Gazprom will get 25% plus one share in Media-Most, and 19% of NTV shares, as security for the $262 million loan which falls due in July 2001. If Vladimir Gusinsky’s holding does not repay the loan, these shares will become Gazprom’s property too.

If this “peace treaty” is signed in its current form, Gazprom will not receive the controlling interest in any Media-Most subsidiary.


Versty, October 21, 2000, p. 2

Some influential regional leaders are showing their dissatisfaction with the role assigned to them by the federal government. Sergei Filatov, former head of the Presidential Administration, comments:

I think this conflict is being exacerbated. The recent statements of President Murtaza Rakhimov of Bashkortostan, President Nikolai Fedorov of Chuvashia, and Governor Eduard Rossel of the Sverdlovsk region prove this. It is clear that presidential envoys are not just representatives of the president: they are an intermediary government. This institution is trying to gain control over all spheres of activity, including financial channels. Presidential envoys are already setting up judicial and law enforcement systems, and soon there will be seven new federal units, while the regions will be a secondary institution.

Of course, this is clearly unconstitutional. Naturally, the wealthiest regions are beginning to defend themselves in this situation, since the draft 2001 budget shows that the material state of other Russian regions will be improved at their expense. However, these regions are well off not only because of their natural resources, but also because their leaders had management skills, and succeeded in boosting their regions. And interference in their internal affairs, especially the economy and personnel policy, will cause outrage.


Novye Izvestia, October 21, 2000, p. 2

Mikhail Shmakov, head of the Federation of Independent Labor Unions (FILU) has announced that labor unions intend to launch a campaign aimed at postponing the introduction of the uniform social tax for at least one year. The labor union leader recently visited the Rostov, Chita, and Sakhalin regions, where most residents support this measure. Shmakov pointed out that some economic progress can be noticed throughout Russia, although these changes could be more rapid. At the same time, many people are worried about the introduction of the uniform social tax from January 1, 2001, which may lead to the loss of a number of social security benefits.


Novye Izvestia, October 21, 2000, p. 2

Central Bank President Viktor Gerashchenko announced on Friday that the Central Bank of Russia intends to lower the refinancing rate by two or three percentage points.

Currently, the refinancing rate is 28% per annum. Gerashchenko attributes the decision to the fact that inflation in Russia has slowed.


Segodnya, October 21, 2000, p. 1

On October 20, the 48 hours stipulated at the summit in Sharm el-Sheik for Jews and Arabs to stop the fire in Israel expired. However, the conflict continues. Bill Clinton has tried to save the situation, speaking by phone with Ehud Barak and Yasser Arafat. On the evening of October 20, he telephoned Vladimir Putin. The details of their conversation remain undisclosed; it is only known that they were discussing the Mideast conflict.

Moscow has displayed Byzantine subtlety by letting Clinton “display his personal and political courage” on the Middle Eastern front – and fail. It is not ruled out that this has been done in order to later help the US regulate the conflict – in exchange for something. However, skeptical analysts think that Russia does not have much to offer, since it has no significant financial or political resources. The most important factor will be the result of the current summit of the League of Arab States. Among participants there are several of “Russia’s friends,” such as Syria and Iraq. Some participants have already called for a boycott of Israel. Palestinians have already suggested that Israel’s allies in the West should be paralyzed, by cutting oil exports. Perhaps Moscow will put pressure on some of its old Arab friends, provided they still understand its “Arabic.” However, Clinton shouldn’t count on Moscow’s capacities.


Segodnya, October 21, 2000, p. 2

Vladimir Putin seems to be successful at conciliation. The result of his meeting in Sochi with Deputy Prime Minister Viktor Khristenko, Gazprom chief Rem Vyakhirev, and Anatoly Chubais, head of Russian Joint Energy Systems, was an agreement to develop a national energy strategy for the period to 2020. Simultaneously, all parties agreed to end confrontation. A draft strategy is planned to be prepared by the end of November. According to Chubais, a commission consisting of representatives of both companies will be set up to discuss all differences.

However, this strategy may prompt another round of the conflict between Chubais and Vyakhirev, since they have different views on which energy source should be considered as the fundamental one in the future.


Segodnya, October 21, 2000, p. 2

After saying that people are tired of elections, Central Election Commission head Alexander Veshnyakov has now said it is possible to reduce the voter turnout required for an election to be considered valid (currently 25%). For the time being, he is only referring to parliamentary elections. Last Sunday there was a by-election in the 209th district of St. Petersburg, a seat won by Sergei Stepashin in December 1999, who subsequently resigned to head the Auditing Commission. The voter turnout in the by-election was just 18.7%.

Reducing the required voter turnout, according to the CEC, would make elections more efficient and help cut costs. The CEC seems unfazed by any thought that a member of parliament elected by such a low proportion of voters could hardly be said to represent the majority of the electorate. From the CEC’s point of view, repeated attempts to elect a member are even worse (up to nine by-elections in some districts).

Actually, the CEC has even more ideas. For example, it might only be necessary to call by-elections if the number of members of an elected body falls below a certain threshold and affects its effectiveness. Such a threshold (five members remaining unelected) has already been written into the bill on elections for the parliament of the Union of Russia and Belarus, as cited by Veshnyakov. The Duma can also afford to do without one member. For example, this happened in the Yamalo-Nenetsk district, when Viktor Chernomyrdin withdrew from the race at the last moment – so the residents of that district had no member of parliament for four months.

Whether this is a good thing is another matter.


Kontinent, No. 42, October, 2000, p. 6

Aslan Maskhadov has ordered money to be paid to Chechen guerrillas “only for specific results of actions against federal forces”. According to reconnaissance reports, this decision was prompted by the fact that instead of buying weapons and paying wages, Chechen field commanders spend money issued by Maskhadov on personal needs, such as houses and cars.

The Interior Ministry has information that Maskhadov still receives technical and financial aid from abroad, which is sent to Chechnya by his former bodyguards, Umar and Ruslan, who now live in Malaysia. A month ago, these two sent Maskhadov five cell phones and $50,000.

Interior Ministry analysts say that a serious split is now evident among the Chechen separatists. In particular, Zelimkhan Yandarbiev said repeatedly during his trip to the Middle East that financial aid to Maskhadov should be separated from aid to guerrilla units of field commanders Basaev and Khattab. “Maskhadov is obviously not the one to consolidate the Chechen people and competently direct the battle against the infidels,” said Yandarbiev, who returned from his journey with about $2 million for the Basaev and Khattab units.