Johnson's Russia List
#6165 
1 April 2002
davidjohnson@erols.com
A CDI Project
www.cdi.org

[Note from David Johnson:
  1. AP: Ukraine's Parliamentary Vote Close.
  2. Reuters: Fraud charge as Kuchma loyalists claim Ukraine poll.
  3. Interfax: Capital flight from Russia will drop by 40% by 2005.
  4. Jamestown Foundation Monitor: NEZAVISIMAYA GAZETA DEPUTY EDITOR 
CALLED IN FOR QUESTIONING.
  5. Reuters: Impoverished Uzbek west suffers man-made famine.
  6. Moscow Times: Matt Bivens, History: Bad Teacher or Bad Students?
  7. Moscow Times: Radio Liberty to Begin Broadcasting in Chechen.
  8. Interfax: Opinion poll gives Russia's Communists strong lead over 
centrists.
  9. Novaya Gazeta: Mikhail Gerasimov, A GRENADE FOR THE KREMLIN.
Zyuganov's dilemma: to leave or - to leave.
  10. Nezavisimaya Gazeta: Major-General (Rtd) Pavel ZOLOTAREV, 
WHAT IS THE ESSENCE OF RUSSIAN AND US FOREIGN POLICY. Russia Should not 
Assume the Position of a Humiliated Power.
  11. www.fednews.ru: GOVERNMENT PRESS BRIEFING. Minister for Economic 
Development and Trade German Gref on the social and economic conditions 
of the development of the country for the year 2003 and up to the year 
2005.]

*******

#1
Ukraine's Parliamentary Vote Close
April 1, 2002
By ANGELA CHARLTON
  
KIEV, Ukraine (AP) - A pro-Western banker eager to transform stagnant
Ukraine cautiously welcomed his strong showing in parliamentary elections,
but the Communist Party and a pro-presidential party looked like formidable
foes, according to results Monday. 

Sunday's election came after a stormy campaign that international observers
said was biased in favor of federal and local authorities. 

Voters put President Leonid Kuchma's controversy-shadowed but stable status
quo to the test in their France-sized nation of 49 million. The close race
reflected still-divided opinions about Ukraine's direction more than a
decade after its independence from the Soviet Union. 

With 47 percent of the vote counted, the reformist Our Ukraine party of
former Prime Minister Viktor Yushchenko had 21.2 percent, the Communist
Party had 20.2 percent, and the pro-presidential party For United Ukraine
had 14.4 percent, the Election Commission said. 

The opposition Socialist Party of former parliament speaker Oleksandr Moroz
had 7.6 percent and the fiercely anti-Kuchma party of Julia Tymoshenko, a
former deputy premier, had 6.3 percent. 

Exit polls had indicated a weaker showing for the pro-presidential party
and buoyed opposition leaders overnight. 

Yushchenko, speaking to reporters Monday, questioned the official results
and accused the authorities of ``cynical behavior,'' but expressed no doubt
that his party would emerge the winner. 

Andreas Gross, vice president of the Council of Europe's Parliamentary
Assembly, criticized the authorities for pressuring election workers and
said the campaign favored pro-presidential candidates. He told The
Associated Press that could have affected the outcome, though it was
unclear by how much. 

Another major monitoring group, comprising observers from Europe and North
America, cited numerous violations, including some people voting twice. 

Election Commission chairman Mykhailo Riabets said there were minor voting
irregularities that he insisted would not affect the overall results. 

It remained unclear who would dominate the 450-seat Verkhovna Rada, since
only half its members are elected in voting by party. The rest of the seats
will be filled by the winners of races between individuals in 225 electoral
districts, and pro-presidential candidates were expected to do well in
those contests. 

Much will depend on which of the diverse parties build coalitions in the
legislature. Yushchenko urged all ``democratic forces'' to unite. Kuchma
ally Dmytro Tabachnyk speculated that For United Ukraine, the
pro-presidential party, would wield enough clout to form a parliamentary
majority. 

The Communists dominated the outgoing parliament and blocked many reforms.
Their leader Petro Symonenko came in second in 1999 presidential elections,
but their popularity has been eroding. 

Ukraine under Kuchma has lagged economically, wallowed in corruption
controversies and frustrated foreign investors. Kuchma's reputation
suffered a blow after the death in 2000 of outspoken journalist Heorhiy
Gongadze, which prompted protests by opponents who accused the president of
involvement. Kuchma denies the charge. 

Despite Kuchma's troubles, many Ukrainians fear his opponents will
resurrect botched reform plans of the 1990s and they see the president as a
guarantor of stability. 

*******

#2
Fraud charge as Kuchma loyalists claim Ukraine poll
By Jon Boyle
  
KIEV, April 1 (Reuters) - Parties loyal to President Leonid Kuchma claimed
victory on Monday in Ukraine's weekend general elections, but opposition
reformers accused the authorities of cynically stealing the election. 

A senior European election monitor slammed the "completely incompetent"
organisation of Sunday's parliamentary elections in the former Soviet
republic and said fraud could have occurred. 

With 46 percent of the proportional vote counted, the Our Ukraine party of
ex-premier Viktor Yushchenko led with 21.26 percent, ahead of the
Communists on 20.13 percent and Volodymyr Lytvyn's pro-Kuchma For United
Ukraine party on 14.34 percent. 

But Lytvyn said that despite trailing in the count so far, his group would
secure overall victory by picking up seats in the single-member
constituencies, where powerful business barons and regional leaders largely
loyal to Kuchma hold sway. 

Under Ukraine's hybrid system, party lists account for half parliament's
450 seats. The remainder -- for which results have yet to be announced --
come from constituencies where deputies are elected on a
first-past-the-post basis. 

"I am in a very good mood. The result of the election is a big personal
victory for me. I proved that I am not only a grey cardinal but a public
politician," said Lytvyn, whose conservatives are favoured by entrenched
interests in the country. 

"The bloc For United Ukraine will determine the structure of a new
parliament," he told reporters. 

Sunday's election will not just decide who forms the next government but
determine the future of the little-loved Kuchma, Ukraine's longest-serving
post-independence leader. 

He would need two-thirds support in parliament to change the constitution
to allow himself to run for a third term when his mandate expires in 2004.
A hostile chamber could also block immunity from prosecution legislation
for when he leaves office. 

BALLOT BURGLARY? 

Yushchenko, who had claimed victory on the strength of Sunday's exit polls
that put him well in the lead with 25 percent, said his party might
challenge some results in court. 

"Democracy is the loser. That is the main defeat of these elections," a
subdued Yushchenko told a news conference. 

"We are seeing the cynical behaviour of the authorities and we have a very
pessimistic feeling about what will be announced by the Central Electoral
Commission as the result of this election." 

As premier from 1999-2001 he won respect among Ukraine's 49 million people
for economic reforms which paid previously withheld wages and pensions in
the country, the size of France. 

He has vowed to forge ahead with economic reforms which have stalled under
Kuchma, and which observers say will ensure the continued sway of
entrenched business interests. 

Ahead of voting, Western observers said pro-Kuchma parties had too much
control over local election commissions and media-coverage was slanted in
their favour. 

Hanne Severinsen, head of a the Council of Europe observer mission, was
scathing about the election's conduct. 

"Queues were huge and people just gave up...This means fewer voters were
able to cast their vote," the Dane said. 

"Seeing the incompetence, it could have happened," she added when asked if
ballot-rigging had taken place. 

Sunday's poll had been seen by the West and investors as a test of
Ukraine's embrace of democratic values and its commitment to economic reform. 

(Additional reporting by Olena Horodetska, Elizabeth Piper) 

*******

#3
Capital flight from Russia will drop by 40% by 2005 - Ministry of Economic 
Development and Trade

MOSCOW. March 29 (Interfax) - Unsanctioned capital flight from Russia will 
drop by about 40% by 2005, according to a forecast of Russia's economic 
development in 2003 and in the period up to 2005 that the Ministry of 
Economic Development and Trade prepared for a government session on Friday. 
   To accomplish this aim, it has been proposed in particular to amend the 
law On Currency Regulation and Currency Control to slow down processes 
encouraging capital flight and set up conditions for the efficient use of 
capital resources in Russia. 
   It is also planned to take other measures to enhance the financial 
transparency of major corporations' activity and create conditions for 
increasing the mobility of financial capital, reads the document. 
   The materials drafted by the Ministry interpret capital flight as the 
removal of money from Russia in violation of the law.

******

#4
Jamestown Foundation Monitor
April 1, 2002
NEZAVISIMAYA GAZETA DEPUTY EDITOR CALLED IN FOR QUESTIONING.

On March 29, Igor Zotov, a deputy chief editor of Nezavisimaya
Gazeta, which is majority owned by Boris Berezovsky, received a
summons from the Moscow Prosecutor's Office asking him to appear
today (April 1) to be charged with libel. The charges are
connected to an article published in the newspaper last November
alleging that the chairman of the Moscow City Court, Olga
Yegorova, and two federal judges had taken bribes in connection
with the criminal case against Anatoly Bykov, former head of the
Krasnoyarsk Aluminum Factory, who is standing trial on charges
of ordering the murder of a business associate (Russian
agencies, March 30).

The offending article, which was written by a freelance
journalist, not a full-time Nezavisimaya Gazeta staffer, alleged
that the judges were offered US$1 million to allow Bykov out of
prison on bail so that he could than escape abroad. It cited as
its source unnamed "reliable sources" in the Interior Ministry
(Nezavisimaya Gazeta, November 27, 2001). Last December 20, the
Moscow Prosecutor's Office, at Yegorova's request, launched a
criminal investigation into alleged libel by the paper. Six days
later prosecutors seized documents from Nezavisimaya Gazeta's
editorial offices. Six employees of the paper were subsequently
called in for questioning (Center for Journalism in Extreme
Situations [Cjes.ru], March 29).

It is not clear precisely what connection Zotov had to the
offending article. Besides being one of Nezavisimaya Gazeta's
three deputy chief editors, he is also chief editor of the
paper's book review section, "Ex libris NG." The paper issued a
statement last week charging that the case against Zotov is
politically motivated. "In essence, a person who has no
connection whatsoever to criminal transgressions is being
subjected to criminal prosecution," the statement read. "Behind
all this is big politics." The paper's editor-in-chief, Tat'yana
Koshkareva, said she believed the authorities wanted to make
Zotov a "hostage," and compared his situation to that of Anton
Titov, financial director for Vladimir Gusinsky's Media-Most
group, who was charged along with Gusinsky with large-scale
fraud and sent to prison more than a year ago, where he remains.
The Russian chapter of the PEN-Center, the international
writer's organization, seconded Koshkareva's allegations of
political persecution. The group issued a statement protesting
the "persecution" of Nezavisimaya Gazeta in general and Zotov in
particular (Nezavisimaya Gazeta, March 30).

The PEN-Center statement noted that Zotov had covered for the
paper the March 5 showing in London of Berezovsky's documentary
film "Attack on Russia," which alleges that Russia's special
services were behind the September 1999 terrorist bombings of
apartment buildings in Moscow and Volgodonsk, which killed
hundreds of people (Nezavisimaya Gazeta, March 7). Against this
backdrop, it is worth recalling that Novaya Gazeta, a biweekly
which, like Nezavisimaya Gazeta, is critical of President
Vladimir Putin, was recently fined US$1.5 million after losing
two libel cases, one involving an article alleging that the top
judge in the Krasnodar region was living beyond his means, the
other involving an article alleging that Mezhprombank, which
reportedly has close relations with the Kremlin, was involved in
the Bank of New York money laundering scandal (Moscow Times,
March 19; see also the Monitor, March 28).

The overall sense that the Russian authorities are putting
increasing pressure on the non-state media was made more
palpable by a comment last week from Yevgeny Primakov, the
former prime minister who currently heads the non-governmental
Chamber of Commerce and Industry and is also one of the heads of
Media-Socium, the non-commercial partnership which won last
week's tender for the broadcast license previously held by
Berezovsky's TV-6. Appearing at a press conference with his
fellow Media-Socium head, Russian Union of Industrialists and
Entrepreneurs chief Arkady Volsky, and Yevgeny Kiselev, the
former TV-6 general director who will be chief editor at
Media-Socium's new channel, Primakov said he hoped that the
agreement he and Volsky plan to sign with Kiselev and his team
of journalists will provide for "a certain degree of
censorship." Reminded by Kiselev that Russian law prohibits
censorship, Primakov said the censorship he had in mind "must be
internal," not "imposed from outside." "Call it self-censorship,
if you like," Primakov said. "There is nothing dangerous about
that, on the contrary, self-censorship is a guarantee against
any danger" (Gazeta.ru, March 29).

*******

#5
Impoverished Uzbek west suffers man-made famine
By Sebastian Alison 

NUKUS, Uzbekistan, April 1 (Reuters) - Two babies a few months old lie
fighting for life in a hospital in western Uzbekistan's vast and
poverty-stricken Karakalpakstan region. 

Acute respiratory infections make each breath a desperate struggle. Despite
dedicated nursing, their distress is harrowing. They do not look as if they
will enjoy long lives. 

The babies are among thousands of victims of an agricultural policy,
fashioned by the Soviet Union and pursued enthusiastically by independent
Uzbekistan, which is creating a desert, destroying the Aral Sea, poisoning
land, and cutting harvests. 

And killing people. 

Cotton is the main culprit. The valuable but thirsty crop needs long, hot
summers. The southern states of the former Soviet Union, especially
Uzbekistan, Tajikistan and Turkmenistan, have plenty of hot weather but
precious little water. 

No matter. Soviet planners built gigantic irrigation networks to divert
water from the Amu Darya and Syr Darya, the great rivers of Central Asia
running from the Pamir mountains to the Aral Sea, into the cotton fields. 

They poured thousands of tonnes of pesticides, fertilisers and other
chemicals into the fields, polluting the water as it flowed back to the
Aral Sea. Except nowadays it doesn't. 

So much water has been taken out of the rivers that they no longer reach
the sea, which is shrinking and dying. 

Instead the water evaporates, leaving dry river beds and fields covered in
a nasty chemical salt which blows across the region, poisoning ever more
land as well as animals and people. 

Air quality is atrocious, full of dust, chemicals and salt, and the quality
of water keeps deteriorating. 

Throw in a drought which has afflicted a huge swath of Central Asia for
three years and the result is poverty, famine, disease and death. 

"The drought has a direct impact on diseases of the kidneys, limbs and
respiratory infections. And there's a lot of anaemia -- almost 85 percent
of people here are anaemic," says Shekhnazar Allaniyazov, chief doctor at
the hospital where the babies are being cared for. 

"Of course it's getting worse. There's not enough food." 

STRANGE WAY TO SOLVE THE PROBLEM 

The authorities in Karakalpakstan, which covers the western third of
Uzbekistan but is home to just a million of its 24 million people, are well
aware that there is a problem. 

"The Aral Sea has been dying since 1961, and intensive farming of the Amu
Darya basin is one of the main reasons," says Rashid Kusheikov, head of the
department of water resources of Karakalpakstan's Ministry of Agriculture
and Water. 

"Of course, every year its area diminishes and the level of dangerous
matter and salt keeps growing." 

Atajan Khamraev, Karakalpakstan's Deputy Minister of Public Health, says
one result is a rapid growth in cases of tuberculosis, despite six years of
prophylactic measures. 

"This proves public health does not only depend on medicines but on
external social and environmental factors," he says. 

But even though the authorities recognise the catastrophe, their solutions
seem surprising. 

"We are considering a switch from water-hungry crops to crops which use
water more economically," says Kusheikov. 

But while this sensible-sounding approach has already started, close
examination shows some strange anomalies. 

While the area sown to cotton was cut to 80,000 hectares (197,700 acres)
last year from 125,000 hectares (308,900 acres) in 2000, the rice area was
cut from 60,000 hectares (148,300 acres) in 2000 to just 5,000 last year --
enough to provide seeds for the future, but not enough to eat. 

So the Uzbek state, which persists in operating an almost totally state-run
economy despite pledges to reform it, continues to fill its coffers by
compulsory purchases of cotton from farmers who receive a fraction of its
world market price. And locals in Karakalpakstan have less and less to eat. 

So bad is the situation that the Red Cross is now giving out emergency food
aid around Nukus, Karakalpakstan's bleak capital -- not because of war or
emergency, but because sustained cotton growing and irrigation have
rendered the land useless. 

WASH THE POISONED FIELDS 

Indeed, to grow crops on this land at all now, fields must first be flooded
and drained to clear the poison from the surface -- not once but four
times, Red Cross officials say. 

The resultant run-off flows back to the Amu Darya river, but does not reach
the sea. Instead as the water evaporates, yet more toxic sludge is left to
dry, blow around the region, endanger more lives, and poison more land,
which must be flooded and washed even more frequently the following year. 

So food supply is falling and, increasingly, aid is keeping people alive. 

On a recent visit to a Red Cross food distribution point 50 km (30 miles)
from Nukus, crowds of people had walked over 10 km (six miles) from a
collective farm which cannot feed them to collect huge sacks full of
cooking oil, rice, flour and salt. 

Most blamed the food shortage purely on the recent lack of rain, unaware of
the wider reasons behind the crisis. 

"If there was rain we could feed ourselves, but this year we need this
support very much," said 51-year-old Zhupargul, a mother of 11, at home as
one of her sons returned laden with aid. 

"For two years now we've been living on tea and bread." 

She receives a pension of 9,000 soms ($6 at the black market rate) per
month, and another 1,715 soms (about $1.15) per month for each of her four
children under 16. The family's hardship is self-evident as they talk in
their primitive house. 

Uzbekistan has become a key ally of the United States in the post-September
11 anti-terror coalition, with over 1,000 U.S. troops based there for
humanitarian operations in neighbouring Afghanistan. 

President Islam Karimov, long criticised for his poor record on democracy
and human rights, has just been rewarded for his support with a state visit
to Washington and U.S. cash is filtering into the country. 

But there is no evidence so far that Karakalpakstan's hungry are seeing any
benefit. 

*******

#6
Moscow Times
April 1, 2002
History: Bad Teacher or Bad Students?
By Matt Bivens 

WASHINGTON -- Several months ago, Judyth Twigg, a professor at Virginia 
Commonwealth University, briefed a dozen members of the U.S. Congress on the 
state of Russian public health. Twigg says she mentioned a few positive 
trends in what was otherwise overwhelmingly a litany of doom. Yet after she 
finished, Twigg says, a member of the house thanked her publicly for "a 
positive presentation that focuses on the good things happening in Russia." 
Twigg says: "She just didn't hear the majority of what I was saying!"
 
Tales of being seen yet not heard were plentiful at a two-day conference here 
sponsored by the Kennan Institute about misadventures in Russia-watching and 
Kremlinology -- a topic that could fill a small library. There was the U.S. 
State Department official who insisted Boris Yeltsin never slurred his words: 
It was just his regional accent. There was the memo alleging Russian 
corruption that U.S. Vice President Al Gore returned to the CIA along with a 
dismissive "barnyard epithet." 

Or there was aid worker Fred Cuny's struggle to get the State Department's 
help with brokering a cease-fire in the carpet bombing of Grozny, just for a 
few days, to evacuate thousands of civilians. When Cuny flew to Washington in 
March 1995 to make his case, high-level officials in President Bill Clinton's 
administration expressed shock at his account of the carnage (as if it wasn't 
leading CNN every night), even as Secretary of State Warren Christopher 
opined, "It's best in such matters to leave it to the judgment of President 
Yeltsin. ... I'm sure he thought through what he was doing before he did it, 
and it's best we let him run such things."

But buying the Potemkin Village was not, as it sometimes seemed, an 
exclusively Clinton administration failing. Much of the conference dwelled 
upon how wrong the U.S. intelligence community was about Soviet staying power 
and military might. Conference participants spoke of a tension between 
diplomatic defense attaches -- on the ground getting Russian mud on their 
boots -- and "threat inflators" back in Washington writing the Pentagon 
budgets.

Mark Medish, a former deputy assistant treasury secretary, suggested a 
similar bureaucratic arc was in play when writing aid budgets for the Yeltsin 
team. "Our [administration's] advertising about what was happening in Russia 
tended to be boosterish," Medish said. "To get appropriations out of 
Congress, we had to tell a big story about the transitions that were 
possible. We led the markets."

But are Washington politics the only reason Americans so often misread 
Russia? No, says James Schlesinger -- a former director of central 
intelligence and former U.S. defense secretary, among other things. Invited 
to give the final speech, Schlesinger could have championed any of a number 
of explanations for why Americans get it wrong: from an emotional need to see 
other people a certain way, to a failure to foster, or respect, in-country 
experience.

Instead, Schlesinger drily noted "the infinite power of the human mind to 
resist the introduction of knowledge."

He did not offer a forceful view on current Russian affairs. But he did say 
Americans were still probably getting it wrong. "Will we do better? I wish I 
could be optimistic, but I do not think so. We are missing the forest for the 
trees again."

In a slow and grave voice, he concluded: "The only thing that we learn from 
history is that we learn nothing from history." 

Matt Bivens, a former editor of The Moscow Times, is a Washington-based 
fellow of The Nation Institute [www.thenation.com].
 
*******

#7
Moscow Times
April 1, 2002
Radio Liberty to Begin Broadcasting in Chechen

After a monthlong delay, Radio Liberty on Wednesday will 
begin its controversial broadcasts in Chechen and two other North Caucasus 
languages, Avar and Circassian.

"We will produce 20-minute releases in each language, which will be broadcast 
from Prague every day," Sonya Winter, a spokeswoman for Radio Free 
Europe/Radio Liberty, said by telephone Sunday from Prague. The total 
broadcast time in all three languages combined will be two hours a day.

She said that some 10 days ago the Broadcasting Board of Governors, an 
official body in Washington that oversees U.S. foreign broadcasts, gave the 
go-ahead for broadcasting in the three North Caucasus languages. 

The U.S.-funded radio broadcasts had been scheduled to begin in late 
February, but BBG delayed the launch at the request of the U.S. State 
Department. 

The BBG said the Congress and White House wanted a chance to review the 
planned broadcasts, which had drawn stern criticism from the Kremlin.

Winter said she could offer no explanation for the decision to proceed with 
the broadcasts.

The Kremlin, while still unhappy about the planned broadcasts, was less harsh 
in its comments over the weekend. 

The decision to start broadcasting in Chechen "contains in it a certain 
risk," Sergei Yastrzhembsky, the Kremlin's chief spokesman on Chechnya, said 
Saturday.

He said Russia would not at the moment make any pessimistic forecasts. "We 
will monitor the broadcasts' content and selection of newsmakers with 
exceptional attention, and only after doing so will we make any conclusions," 
he was quoted by Interfax as saying.

In January, Yastrzhembsky warned Radio Liberty that the government would 
revoke its license in Russia if the Chechen programming was pro-separatist.

The choice of Avar and Circassian also has been questioned by some in Russia, 
who say the broadcasts could be a destabilizing force. 

Although Avar is the second most popular language in the region after 
Chechen, it is only one of several dominant languages in Dagestan, where 
there is an internal struggle for power among ethnic groups. 

Circassian is one of two main languages in Karachayevo-Cherkessia, where 
ethnic tensions also are easily stirred. 

*******

#8
Opinion poll gives Russia's Communists strong lead over centrists 
Interfax

Moscow, 1 April: If elections to the State Duma [lower house of the Russian
parliament] were scheduled for next Sunday [7 April], the Communist faction
led by Gennadiy Zyuganov would receive a third of all votes (34 per cent),
sociologists from the All-Russia Centre for Public Studies told Interfax
today, citing a nationwide poll among 1,600 Russians conducted on 26 March.

Only respondents who are going to vote or have already made their choice
regarding a faction, bloc or movement were taken into consideration.

Every fifth respondent (21 per cent) would vote for One Russia, led by
[Emergencies Minister] Sergey Shoygu and [Moscow mayor] Yuriy Luzhkov.
Third place (8 per cent) would go to the Russian Liberal Democratic Party
led by [Duma deputy speaker] Vladimir Zhirinovskiy.

Others support the Women of Russia faction led by Alevtina Fedulova (7 per
cent), Yabloko, led by Grigoriy Yavlinskiy (7 per cent), and the Union of
Right Forces led by Boris Nemtsov (6 per cent). All other factions and
movements would not be able to exceed the 5 per cent minimum required for
entering the State Duma.

****** 

#9
Novaya Gazeta
No. 22
March 28, 2002
A GRENADE FOR THE KREMLIN
Zyuganov's dilemma: to leave or - to leave
Author: Mikhail Gerasimov
COMMUNIST LEADER GENNADY ZYUGANOV IS FACING A DILEMMA: TO LOSE THE 
REMNANTS OF HIS AUTHORITY BY RUNNING IN THE NEXT PRESIDENTIAL ELECTION 
AND LOSING FOR A THIRD TIME; OR TO LOSE THE STATUS OF THE COMMUNIST 
LEADER, BY REFUSING TO BECOME THE CANDIDATE OF THE UNITED OPPOSITION. 

     At first glance, it may seem all is quiet in the Communist Party. 
In fact, the passions are seething: at the last congress of the party, 
Gennady Zyuganov of all members of the central committee was severely 
criticized. 
     Appointment of a candidate from the united opposition at the next 
presidential elections is to become the grindstone for Zyuganov's 
influence and apparatus power. 
     Patriotic political consultants understand very well that 
Zyuganov will never win the presidential elections, no matter how many 
attempts he makes. At present, Zyuganov is facing a dilemma: to lose 
the remnants of his authority by participation in the presidential 
elections and losing them for a third time, or to lose the status of 
the Communist leader, refusing to become the candidate of the united 
opposition. In the second case, the party has a chance to win, but 
without Zyuganov. 
     There are younger and more energetic people in the opposition 
that Gennady Zyuganov, for instance, Duma Speaker Gennady Seleznev, 
though he seems to have lost his charisma together with the missed 
chance to take the position of the Moscow Region Governor. 
     Besides, lately the press has openly announced executive 
secretary of the People's Patriotic Union of Russia Gennady Semigin a 
favorite of the Kremlin. Vladislav surkov lobbies his interests in the 
presidential administration, and he has an image of a successful 
businessman, though no one in the Communist Party is able to explain 
where his money is from. People close to the Communist Party believe 
he pretends to be rich, while in fact he only manages the means he 
receives for each event. 
     Undoubtedly, Semigin is as convenient for the Kremlin as 
Zyuganov: he will never win the presidential elections. 
     It is suggested more often that some "red" governor was promoted 
as a candidate at the presidential elections. In fact, according to 
election experience in democratically developed countries, politicians 
who have successful gubernatorial experience have maximum chances to 
win presidential elections. 
     If scrutinize the possible candidatures, it becomes evident that 
there is no time for "advancing" the new governor. So, it is necessary 
to choose from those who already have a reputation of a federal scale 
figure. 
     Gennady Khodyrev headed the Gorky region in the Soviet times. In 
1989 he had a conflict with Mikhail Gorbachev and became famous all 
over the country. 
     After 1991 Khodyrev was dismissed from the gubernatorial position 
but he did not leave the political arena: he twice won the 
parliamentary elections, and in Primakov's government was appointed as 
anti-monopoly minister. After dismissal from the minister, he again 
became a Duma deputy and squeezed through the law on reduction of non-
ferrous metal exports - at the very last stage he overcame Putin's 
presidential veto. Why was he so audacious on the threshold of the 
gubernatorial elections in the Nizhny Novgorod? Khodyrev had very 
serious goals and he triumphally won the gubernatorial elections.
     Moreover, a day after the elections, Khodyrev's wife Mrs. 
Teplyakova said in her interview that she plans to stand in the next 
gubernatorial elections in the region. Then, all considered it to be 
inexperience of the first lady of the region, as what would her 
husband do then? There are two ways: retirement or promotion. As is 
known, politicians do not retire at 62, and what promotion can satisfy 
the head of the third most significant region of the country? The 
chair of prime minister seems to be too small here....
     Khodyrev's party associates noted his activity - now Khodyrev 
suspended his communist party membership - and in the party analytical 
documents the activities of the Nyzhny Novgorod governor and his 
spouse are described only negatively. Khodyrev is still popular among 
party activists, but the party nomenclature is rather cautious about 
him. 
     Moreover, at the additional elections to the Duma, the governor 
obviously supports notorious writer and national-Bolshevik Eduard 
Limonov. He seems to be purposely mocking the presidential 
administration. The governor knows perfectly well of the sharply 
negative attitude of the Kremlin towards Limonov, but still he 
supports him. If Limonov is elected, he is to be released from prison, 
where he is now with a rather dubious sentence.
     The released prisoner will be constantly present in the Duma 
halls, he will write inquiries, and go to instances. All efforts of 
the state security bodies will fail. Moreover, the whole country will 
see that the power that seems to be so terrible, can be humiliated 
many times and no punishment may follow. Actually, it is one of the 
most effective election techniques for the opposition: such 
humiliations visibly reduce the authority of the power. 
     Apparently, at present, Khodyrev is more dangerous for Zyuganov 
than for Putin. The present Communist leader is doing his best not to 
allow Khodyrev to stand in the presidential elections as an official 
opposition candidate. 
     There are two more years before the elections, and many things 
may change within this time. The issue is that neither Putin nor 
Zyuganov will make any surprises, while Khodyrev can....
(Translated by Arina Yevtikhova )

********

#10
Nezavisimaya Gazeta
No. 55
2002
WHAT IS THE ESSENCE OF RUSSIAN AND US FOREIGN POLICY
Russia Should not Assume the Position of a Humiliated Power 
By Major-General (Rtd) Pavel ZOLOTAREV, president of the Interregional 
Public Foundation in Support of Military Reform
     
     Joint efforts within the anti-terror coalition following 
the tragic events of September 2001 have aroused a wave of 
euphoric  expectations in Russia's political circles. There was 
a talk about a possible U-turn in relations between Russia and 
the United States, and in its relations with the West as a 
whole.
However, there has never been and cannot be any real ground for 
such euphoria. 
     
                         Deceptive Idealism
     Euphoria is bred by non-grounded expectations of Russian 
politicians counting on an honest, sensible and far-sighted 
policy of the United States and the West, as they see it.
However, it is not that these views are wrong. Russians simply 
proceed from their inner commitment to justice, honesty, and 
peace. Such is the innate idealism of the Russian people. 
     The West, and the more so the United States, base their 
moves on somewhat different culture and values. 
     The United States has always acted and will continue to 
act as the only strong and unrestricted international leader 
entitled to make the decisions it deems proper. The United 
States will always try to make the best of any situation to its 
own benefit.
Co-operation, alliances, coalitions with any nation are only 
possible if they meet the US national interests and goals.
Sincere care for a man, concern over his life can be displayed 
only if this man is a US citizen. 
     At the present time, the entire foreign policy of the 
United States is subjected to the task it has set for itself -- 
to consolidate its positions of the only world leader. The 
United States will follow this line toughly, without any 
sentiments or consideration for others' opinion. 
     
                        Reasons for Concern 
     The US President has clearly outlined his vision of the 
new strategic relations with Russia. To take a closer look at 
it, Russia will inevitably cut its strategic nuclear weapons, 
whereas the United States will dismantle excess warheads to be 
kept in storage, ready to be promptly returned on carriers if 
necessary.
The United States has no intention to assume obligations on 
limiting the NMD military potential, as it has recently 
mentioned. Neither does it show any willingness to assume any 
contractual obligations. 
     Perhaps, we need not worry, and should accept the 
Americans' initiative? For we are not enemies.
     However, if our countries refuse to rely upon the 
contractual base, how will this affect non-proliferation of 
nuclear and other types of weapons of mass destruction?
Negatively, of course. The control over the non-proliferation 
regime is already going through a crisis. And the United States 
seems to realise this only too well. Regretfully, this 
realisation only prompts it to justify its next step -- the 
right to use force against the violators of this regime. 
Moreover, the United States reserves the right for itself to 
identify the violators and mete out punishment.
     As for the fight against international terrorism, it boils 
down to military action with as much showing off as possible. 
The victory has been demonstrated, but it is still far off in 
reality. Others will have to deal with the consequences of this 
victory. The United States has also demonstrated readiness to 
deliver a strike on other nations of the 'axis of evil'.
Nevertheless, these moves do not eradicate, and are not even 
meant to eradicate, the reasons behind international terrorism.
Besides, there is no mentioning of the countries, heavily 
contributing to the development of international terrorist 
structures, providing them with funds, and, more important, 
with ideological backing. Thus, the system of double standards 
remains an integral part of the American policy. 
     The past decade saw the creation of foreign policy 
instruments, which can allow legitimate or semi-legitimate use 
of force. First, peacemaking efforts were used as such an 
instrument, now it is the fight against international terrorism.
Then, it may be a campaign against those violating the regime 
of non-proliferation of weapons of mass destruction. 
     
                  Debate without Confrontation
     The United States has already made it quite clear that 
NATO will further expand and the Baltic countries will be 
admitted to the Alliance. NATO's new members have to meet an 
entire set of requirements as regards collective defence and 
adopt a corresponding approach to the development and use of 
military infrastructure. But what's most impressive is the 
essence and vector of NATO's operative training and military 
exercises. 
     So what is to be done? 
     First of all, we should realise that the US actions are 
not aimed against Russia. They are targeted against the entire 
world, seeking to establish US sole leadership and the right to 
make all decisions at its own discretion. At the present stage, 
the USA's unrivalled leadership meets the interests of global 
and regional stability. Both uni-polar and multi-polar world 
order, which is so popular among our politicians, are temporary 
and can hardly last long. A self-developing system can maintain 
a balance only if it relies on two poles. However, a uni-polar 
world order is better than multi-polar chaos. The United States 
is powerful enough to ensure stability worldwide, provided it 
does not act according to the 'might is right' principle. This 
condition can be realised only through the efforts of other 
nations, above all the US partners. And Russia's role is 
particularly significant here.
     Russia remains a great power despite its misfortunes, but 
its strength lies in its spiritual, intellectual and moral 
potential. Only Russia can counter the Americans' cowboy-style 
manners, proceeding from high moral principles of its foreign 
policy. However, this should be done through debating rather 
than confrontation. Other European countries can become our 
natural allies in pursuing such a policy line. This does not at 
all mean that we should make an attempt to drive a wedge 
between Europe and the United States, which is harmful and 
counterproductive. We should act as a united system 
safeguarding the interests of the Western civilisation. 
     In pursuing a policy of morality and ethics, Russia may 
win the support of the poorest countries and prevent the 
formation of a bipolar world order based on confrontation. As 
history has it, Russia has been for centuries the area of 
mutual enrichment and interaction of various cultures. Thus, 
Russia is most capable of influencing their further interaction 
as part of the current globalisation. This is where its 
Eurasian background can come in handy. To this end, Russia 
should establish and maintain all-embracing co-operation with 
all nations and not restrict it to superpowers. 
     So what exactly can be done now as regards strategic arms 
and the policy toward NATO?
     As to strategic weapons, Russia needs a treaty with the 
United States. The latter should provide a ceiling for 
strategic offensive weapons, set limits to the missile defence 
system and a ban on the deployment of the ABM systems in space, 
preserve and streamline measures of control and transparency, 
and draw up measures to reduce the risks brought about by the 
state of mutual nuclear deterrence. The latter is particularly 
important what with the present-day activities of international 
terrorist organisations. 
     As regards NATO, Russia should be more enterprising and 
insistent, and not solely remain respondent to the proposals of 
the West. The '20' format of co-operation can and should become 
more effective. 
     The Permanent Joint Council should continue working, at 
least until the interaction of '20' is streamlined. Joint 
consultations on the most controversial issues will help find 
compromise solutions before they are discussed within the 
format of '20'. 
                
*******

#11
TITLE:  GOVERNMENT PRESS BRIEFING [with German Gref]
        [RUSSIAN FEDERATION GOVERNMENT HOUSE, 16:10,
        MARCH 29, 2002]
SOURCE: FEDERAL NEWS SERVICE (http://www.fednews.ru/)

     Moderator: Good afternoon, ladies and gentlemen. We are in the
press center of the House of Government and our guest today is the
Minister for Economic Development and Trade Mr. German Gref who
will tell you about the results of the discussion by the government
of the social and economic conditions of the development of the
country for the year 2003 and up to the year 2005. He will also
tell you about the discussion around the draft law on the
foundations of technical regulation. You have the floor.

     Gref: Thank you very much. Today we discussed two very
important topics. One is according to schedule, under the law on
forecasting. It is supposed to be discussed in the first quarter of
every year. It is the scenario-based conditions for the functioning
of the economy and the report on the development of the economy for
the previous year. Today we examined both these issues and the
government supported the scenario development block proposed by the
Economic Development Ministry. It is the scenario-based conditions
for economic development for medium term. I will remind you the
technology. The scenario conditions are the first document with
which the budget process begins. Based on scenario conditions we
draft a forecast and based on the forecast we draft the budget.
     In this way one can consider that within the deadlines
established by the government the first document today was examined
and approved  by the government. This document, unlike those of
previous years, was somewhat changed. The document was seriously
broadened and the analysis presented at the government meeting was
probably more profound and large-scale by one order of magnitude as
compared to the traditional approach.
     This was done for a number of reasons, in virtue of the fact
that the budget message of the president, the annual message of the
President formulated the task for the government to intensify the
medium-term planning and forecasting, the budget planning and
forecasting of the economy. 
     Secondly, we come to the conclusion about the need for
medium-term, financial planning and also economic planning so that
we could see how the economy would develop over several years, how
particular decisions to be taken in the current year would affect
the medium-term perspective.
     Thirdly, in this current year there was a clear demonstration
of the dependence of the Russian economy on foreign economic
conditions and that is why there were serious changes introduced
into the section concerning the so-called external factors which
analyzes the status of the world economy and forecasts a particular
scenario of the development of events and how this will affect the
situation inside Russia. We tried to gain a possibly fuller
understanding of the factors that determine the development of the
world economic centers, which include Europe, the United States,
Japan and we have forecast the world situation. A lot of documents
was examined, pertaining to the consensus forecasts of the world
economy, of the development of different sectors of world economy.
We also tried to forecast the price situation as regards the
foreign economic situation. 
     We did that with regard to the Russian products and services.
Today we submitted to the government the scenario conditions in two
variants which differ mainly in the external conditions which in
turn largely determine the development of internal conditions of
the economy. In the first place this is true of the favorable and
not quite favorable conditions for the prices of Russian products,
the fuel and energy products and other mostly raw material sectors
which determine the position of Russian export. 
     In the first variant we assumed the price for oil to be 18.5
dollars per barrel and in the second variant we took the average
price of 21.5 dollars per barrel. We also (with regard to fuel and
energy products) examined the subvariant of variant 1, variant A,
when the price, the contract price of Russian oil equals 16 dollars
per barrel. We also forecast a model for the foreign economic
situation and the structural shift with regard to the main products
of Russian export and so we tried with maximum accuracy to project
their influence on domestic situation.  Based on the domestic
situation we established and forecast and simulated such factors as
the correlation or rather the rate of inflation, the relationship
between the growth of unemployment or the fall in unemployment by
the years, then the GDP growth figures. I think it would be
interesting for you to know this that in the first scenario too we
assume that the GDP growth will amount to an average of 3.5 percent
depending on the situation and in the second variant it is up to
4.1 percent. In the medium-term perspective, meaning up to the year
2005, we assume that after the current structural change the GDP
growth will reach 5-5.5 percent on average during the year.
     Among the important factors we must mention the growth of
consumption, the growth of people's incomes and the growth of labor
remuneration. The forecast an average increase in people's incomes
at the rate of about 6 percent a year. It was said that the labor
remuneration in this country in the medium-term will continue to
grow with the labor productivity and strictly speaking all that
pertains to wages -- we assume that in the medium term the pace
will grow at 6-10 percent a year. 
     I will probably enumerate all the factors. Maybe you will ask
questions because I may talk for a long time? In principle, we also
tried to subject to a detailed analysis the trend of the last two
months of this year. Today we can assess the situation of the first
two months of this year as positive, especially I have in mind the
trend that appeared in February. In February the GDP growth was 0.3
percent, the industrial growth was 0.8 percent over the previous
month.
     As to over the appropriate period last year, we believe that
in the first quarter of this year the growth will reach 3.1 percent
of the GDP. Already now it is obvious that the rate of lowering of
inflation if we take the average quarterly, we forecast the rate of
inflation at the level of 1.8 percent a month. In March, based on
data we have today, we believe that the rate of inflation will be
at the level of 0.9 -- 1 percent. This downward trend allows us to
say that we will most likely be able to keep inflation within the
projected limits and there are no serious reasons why we can't.
     We also forecast that inflation will go down in a medium-term
perspective and stand at about 10-12 percent in 2003 and 8-10
percent in the subsequent years. We also forecast capital flight in
absolute figures. As you know, last year was the first year when we
saw a relative decrease in capital flight, by relative I mean as a
percentage of the balance of payments, the balance of trade. 
     During the first two months, as the initial data show, capital
flight decreased for the first time in absolute figures too, which
represents a positive trend for economic development. 
     Let me stop here because there is too much information and
huge work has been done. This work was done during the last three
months. A month ago it was considered by the board of the Ministry
of Economic Development and Trade. The work was done jointly by the
Economic Development Ministry, the Finance Ministry, the Bank of
Russia, the Labor Ministry, and the State Statistics Committee.
That's all as far as the first point is concerned.
     The second important question that was discussed today
concerned the approval of the law on technical regulation, on the
basic principles of certification and standardization, and
conformity verification. We believe this is the most important law
for three reasons. First, this is an important law aimed at
debureaucratizing the Russian economy. Second, this law encourages
economic growth, tighter control and better quality of products
that enter the market. Third, this is a law Russia needs to adopt
in order to become a full member of the World Trade Organization.
     The law calls for cardinal changes in this sphere. We believe
that the existing system of technical regulation and
standardization is obsolete and does not match the realities of
modern industrial potential development. In fact, it slows down the
development of industry. Today this is a sphere where the
omnipotence of bureaucrats and agencies has turned into a serious
brake on the development of key economic sectors. 
     There are 60,000 mandatory standards in Russia. Of them,
24,000 are at the state level, and 37,000 are departmental
standards. Ninety percent of products traded on the Russian market
are subject to standardization and certification. No other country
in the world has such a level of mandatory technical regulation. We
can say that more than 80 percent of existing standards and
mandatory rules of technical regulations are not observed by
manufacturers. Because of this, the economy still exists and
develops. If all enterprises were made comply with all existing
standards, the biggest part of Russian industry would have to stop
operation because this would require it to make uncompetitive goods
of bad quality which consumers would not want to buy, and, second,
in order to bring these goods in line with existing norms and
standards, a huge amount of ineffective investment would be needed.
Ineffective because no one really needs this, primarily consumers. 
     What do we propose? We propose to introduce a new modern
system of standardization, certification and conformity. First of
all, it is necessary to give the status of law to mandatory
technical regulations so that not only manufacturers but also
consumers could contribute to the adoption of appropriate mandatory
requirements to products.
     Second, we propose to introduce rules of voluntary
certification and conformity. Third, we propose to tighten control
over the manufacture of low-quality, substandard and hazardous
products, including by using administrative, criminal and material
sanctions, such as mandatory withdrawal of products from the market
at the expense of the manufacturer. 
     Why has the bill caused so much dispute? First of all, it
strips departments and agencies of the right to introduce
departmental normative acts binding on manufacturers. We believe
this is a key novelty of the law and think that this will eliminate
many unnecessary and non-mandatory requirements that impede the
development of industry. The government approved that concept today
and it approved approaches stated in the bill, and gave us another
month to get this bill approved by 20 ministries. 
     I must say we spent the last eight months trying to get it
approved by all concerned ministries. During this time, the bill
was changed dramatically. But the most important thing is that its
key idea and key norms set forth in its concept were confirmed at
the government meeting today, and this means that this bill will be
approved by the government and submitted to the State Duma.
     To give you an example of existing rules and requirements,
there were heated debates at the government meeting today over
building norms and rules. For example, according to these norms and
rules, only cauldrons that have peepholes can be used in Russia.
But the world stopped making such cauldrons 10 years ago. If we
observed these norms and rules, the country would not have a single
modern cauldron provided with automatic controls. 
     Such "masterpieces" of departmental law-making abound. We
think that the law and technical regulations should include only
requirements that are mandatory for end products, requirements that
contain safety norms for people and the environment. The rest of
the norms and rules concerning the procedure for determining the
correspondence of testing and certification must be made the
subject of a separate government decision, not lower than that
level.
     Strictly speaking, this is the main idea of the draft law. One
can say a lot here and may be I will try to briefly answer your
questions. 

     Q: Russky Fokus. Concerning your forecast. In his introductory
statement Mikhail Mikhailovich spoke about the new model of
forecasting and implied that, based on domestic demand, the figure
will be more. Could you explain what the thing is about? It is not
quite clear as to whether now we are counting things differently or
we simply accommodate the factors of a bigger domestic demand? This
is by way of setting the record straight.
     Secondly, a little about the tariffs policy with regard to
natural monopolies. The plan is to examine in May the costs policy
and so it will turn out that the short-term forecast does not take
into account the tariffs policy, does it?  So, how is this
correlated? Thank you.

     Gref: I will specify it so that it be clear. It is not a
forecast -- it is scenario assumptions, the forecast is the next
stage.

     Q: But we shall be restoring the budget... 

     Gref: I repeat that I specifically said that the budget
process has its three stages and there is the stage of the drafting
of the budget by the government. The first is the scenario
conditions, the second is the forecast and the third is the budget.
The basis of the budget is the forecast.
     Now with regard to the model with which we calculate the
forecast or the scenario conditions. Firstly, I must specify the
following. In his statement the premier spoke not about the model
for counting, he spoke about what has changed, a model of the
internal sources of economic growth, if you wish. While previously
the determining factors of economic growth were external factors
and the devaluation of the ruble which, strictly speaking, turned
these external factors into the main ones, while today those
external factors have been replaced by the internal ones.  This was
analyzed in the report in detail. About 30-odd percent is the final
demand, the demand of the end consumers and about 34 percent is the
internal investment demand. To sum up: over 60 percent of the GDP
and the growth sources is formed at the expense of internal
sources. This is a cardinal change that occurred last year and it
occurred on an even bigger scale at the beginning of the current
year. 
     This is if you wish the slowing down of the economy by the end
of the year, it is a "stand still" pause and it has to do with all
kinds of tectonic shifts that occur inside the economy and,
compared to sources of growth of the year 2000, it has a completely
different basis and different roots.
     As regards the growth of prices of services of natural
monopolies, today the topic was also discussed. And we believe that
in this year we have been able to find the acceptable compromise.
Although the leaders of natural monopolies today say that the
indexing is not quite sufficient to keep the given parameter of
development, we believe that the trend that we have designated this
year must be kept in the coming years.
     Indeed, you put it absolutely correctly that  we have the
deadline in the month of May to present an analysis of the budgets
of natural monopolies. We are actively dealing with this now. After
this we shall be probably able to finally formulate the dynamic of
the prices of the services of natural monopolies.
     Today in the scenario conditions we, of course, used a certain
dynamic. It is close to inflationary expectations, in line with the
structural changes dictated by the energy strategy. But the final
answer to the question must be provided by the research in
question. Thank you.

     Q: Finansovaya Rossiya.Can one say that the government's
expectations with regard to the rate of growth of the GDP have
somewhat diminished for the coming years, compared to the forecasts
published last year. This is the first question and the second is:
Don't you think that the Duma will simply have physical difficulty
coping with a huge number of technical rules and procedures it is
supposed to adopt and, on the other hand, it will not be able to
discuss them in a competent way?

     Gref: Regarding the rates of growth, I would say that the
trend will fully remain the one incorporated in our forecasts in
the year 2000 -- the rate is indeed being adjusted a little
downward in some periods of time. And there are, of course,
fluctuations, which is natural. In our short-term forecasts we
always give a more or less accurate figure than in the medium-term
forecasts. A medium-term forecast always has some slight errors.
     Without a doubt, the rates of growth now are influenced -- and
much less incidentally than we expected -- by the unfavorable
foreign economic situation that developed over the past eight
months. We see now a certain revival of the world economy. We were
gladdened by reports that Europe, the euro area and the United
States are registering a growth from the beginning of this year.
You know that the United States has somewhat rectified their rate
of growth -- instead of 1.3 percent tentatively for the fourth
quarter, they have now published data about a 1.7 percent growth
and we are gladdened by this because this will spur up or has
already spurred up the price situation with regard to Russian
export and, as a consequence, this will improve the financial
conditions of the Russian enterprises, increase investment and
business activity in the country and thus the rate of growth.
     If the foreign economic conditions remained stable last year,
we could get another plus 1 percent of the GDP growth. So, we lost
one percent last year only because the foreign economic situation
deteriorated compared to the one at the beginning.
     Your second question concerning the adoption by the Duma of
technical rules and procedures and the discussion by non-specialist
deputies of these draft laws. Indeed, there is the danger that for
quite a long time we shall be adopting a huge mass of the normative
acts and today this concern was expressed at the government
meeting. But the structure is as follows: until all the technical
rules and procedures are adopted in accordance with laws, the old
standards and technical conditions are bound to be applied, if they
are obligatory in their nature. As to the recommendatory ones,
those not related to life and health of citizens and environmental
protection -- those will not work, while all the obligatory
standards will continue to be applied.
     So, regarding the discussion of these things by the
non-specialist deputies, I would say that we have 450 deputies and
they are not all specialists in tax legislation, medical
legislation, conservation legislation and on and on. However, the
parliament exists in all countries, and I am sure we should
consider this as an element of public discussion and the adoption
of such acts that directly restrict citizens' rights because every
technical regulation imposes certain restrictions on business
activities.
     According to the Constitution, such restrictions of one's
rights can be introduced only by law. And this is a key point. But
when this issue is raised cumbersomely by an official in some
agency, and I can say that often it is simply thought up, the
top-level ministries and agencies which approve these technical
norms do not even suspect what they are about. They are written by
low-tier officials who then create a system of tributes from all
businessmen who come to them for commission not to apply these very
norms and standards. You know this as well as I do.

     Q: I'd like to clarify one thing. It's about the old standards
that will apply to safety issues. Will there be any acts specifying
which norms concern safety and which not, and which are simply
recommendations.

     Gref: The law will only set forth criteria for determining
which requirements are mandatory. It is not possible to divide
physically them because then we would have to issue a huge number
of documents. But experience shows that they can be quite easily
divided into categories by using these criteria.

     Q:A question about scenarios. The draft on the government's
web site sets the price of oil at $18.5 per barrel which gives an
average annual increase of 3.5 percent in the Gross Domestic
Product. This scenario is called the most likely one. I understand
that this draft was prepared a long time ago because it still
refers to the March 15 OPEC summit in the future tense. 
     Looking today at the oil price trend, which of the two
scenarios -- $21.5 or $18.5 per barrel -- you think is the most
likely one?

     Gref: First of all as you know, this document has to be
submitted to the government not later than two weeks in advance. I
think this one was submitted as early as March 14 and therefore was
prepared even earlier. 
     As for our expectations they haven't changed much. If you have
seen the terms of the scenarios, you must have seen our arguments.
First, current fluctuations on the market, as all leading experts
believe, are caused by two factors. First, an unstable situation
and expectations connected with Iraq. Second, economic growth and
dwindling reserves in the United States. We all hope of course that
the world economy will continue to develop and grow, but the first
factor cannot last forever and it will have to cease to exist at
some point.
     In this case, it will be hard to forecast oil price
fluctuation because there may be very many different scenarios to
consider. Speaking of medium-term perspectives, I would believe
that the price of $18.5 per barrel is the most probable scenario.
And we must proceed from this price, not higher, in planning our
budget expenditures.
     We already have the experience of this year and the idea of
financial reserve that may be implemented in the future in order to
accumulate certain funds to be spent if the foreign economic
situation worsens.

     Q: I have a question regarding technical regulation. Will
there be regional laws on certification and standardization?

     Gref: No, the Constitution makes this the exclusive
prerogative of federal authorities. 

     Q: How will the problem of  secrecy regarding weapons and
other such things regulated in this law?

     Gref: This law does not cover it. There will have to be a
separate law.

     Q: When this law is adopted, apparently the WTO will have no
complaints about technical regulation procedures? Can we say this
with confidence?

     Gref: The problem is that the law is not adopted yet. It has
only been given an overall approval and will have to be considered
by the government again.

     Q: But when it is adopted, apparently no complaints about
technical regulation will remain. Can we say that?

     Gref: Most of them will be resolved. We can say that.

     Q: What text changes will be made for small business when the
government considers this issue? And second, you said there are
60,000 standards in Russia. Do you have any figures for other
countries?

     Gref: I can only tell you how many mandatory standards we plan
to leave in Russia. About 400-500.

     Q: But how many standards do other countries have?

     Gref: This issue depends on the country and its traditions,
but speaking of mandatory technical regulation, it's about as many
as I said.

     Q: And the first question, taxation for small business.

     Gref: As for taxation -- I understand that you have no more
questions about today's topic -- the president said yesterday, and
we fully agree with his assessments, that this is a key and even
revolutionary bill for small business.
     I must say that the bill that will be submitted to the
government at its next meeting includes all the bold decisions, I
think I can say that, which we planned to adopt in this sphere. In
my view, we have succeeded to a large extent in achieving our key
goals we set ourselves, and the president and the prime minister
set for us to achieve after drafting this bill.
     First, it's a radical simplification of taxation for small
business, accounting and reporting procedures. Second, it's a
radical reduction of the tax, of the overall tax burden for
business. Third, it encourages employment and remuneration of
people working in this sector. Fourth, it maintains the level of
social production in this sector.
     I believe the decision was rather complex, but the ministries
that drafted this bill for the last six months -- the Ministry of
Economic Development and Trade, the Finance Ministry and the Tax
Ministry -- succeeded in finding solutions. They are as follows.
     We propose two system of taxation: a simplified one and a
temporary one. A simplified system of taxation allows entrepreneurs
to choose which tax to pay, either the tax on revenues which will
be 8 percent, if of course it is approved by the government and the
State Duma, or the tax on profits, which is revenues less 20
percent expenditures.
     In order to maintain the level of social protection, the law
will set a certain level of payments to the Pension Fund, to the
cumulative personal pension account. It will be 14 percent which
can be deducted either from the overall sum of taxes or included in
the non-taxable base. So the total burden will not be bigger than
that. 
     The temporary system of taxation has changed considerably
compared to what it was and what it is now. The rights of
constituent regions and republics to manipulate different ratios
and the overall tax burden have been reduced substantially. Now
they will have only two key rights. First, they will be able either
to introduce or not to introduce the temporary system of taxation,
and second, play with the ratios to apply if the temporary system
of taxation is introduced.
     We believe this may make it much easier for small businesses
to project and conduct their activities, and will reduce the
overall tax burden. Our forecasts show that these measures may
reduce the overall tax burden by about two and more times. I think
that's all. There are many details which, I think, we will have
time to talk about later, and I believe the next meeting of the
government will have this issue at the top of its agenda. Thank
you.

     Moderator: Thank you.

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