#5518
[Second Issue of the Day]
#4
Moscow Times
October 31, 2001
Press Ministry Sees Paper's New Potential
By Yulia Latynina
Socialism may have slipped into the past long ago, but our ministers aren't averse to managing the economy.
It was always suspected that Press Minister Mikhail Lesin, one-time owner of the biggest advertising agency in the country, Video International, needed his post as a means to establish a commercial monopoly over the media.
Some say that it was none other than Lesin who set the Kremlin against Vladimir Gusinsky, and who, by way of a reward, requested a superholding comprising VGTRK, NTV and ORT. There was no easy victory, however, and the Kremlin did not hand him the superholding, enraged as it was by the shameful and protracted fight.
Now Mikhail Yurich is lobbying for a new project -- he wants to control Russia's pulp and paper industry.
Lesin sent the prime minister a most curious letter together with the proposed text for a government decree "On measures for regulating the internal newsprint market of the Russian Federation."
The letter states a worrying fact: It appears that the manufacturers of Russian newsprint (of which there are eight) hatched a cunning plan to dictate their prices to the media by fixing them above average world prices. So as to stop these monopolistic practices and ensure the constitutional right of citizens to receive information, the minister proposes, first, that 35 percent of the total production of newsprint be sold to Russian consumers.
And second, that export duty on newsprint be established at 35 percent, including VAT. But in the event that a certificate is provided confirming that the 35 percent target was met, duty shall be reduced to 10 percent. Who issues the certificates? That's right -- the Economic Development and Trade Ministry with the Press Ministry's consent.
There is indeed a difference between the price of newsprint on the domestic and foreign markets: On the domestic market it costs about $570 per ton, while it costs $510 to $530 on the foreign market.
The difference can be explained not by a plot formed between the eight producers but by protectionist duties. Foreign newsprint is subject to 15 percent duty and 20 percent VAT and costs $710 in Russia per ton. It would be sufficient to remove the duty and the prices would be the same.
But Lesin is ready to take on the difficult task of regulating the market and taking the reins of the pulp and paper plants.
The idea is doubly advantageous. Both for private individuals and for the state. The state benefits in that paper sellers can be told exactly which publications should be supplied with cheap newsprint in order to receive a certificate for exporting it abroad, and which it is best not to supply.
On the other hand, there are benefits for private individuals. For example, what if it suddenly emerges that in order for some Volga paper company to receive a license there is no need at all to meet this 35 percent target? And what if, though it is terrible to say, a certificate can simply be bought? By doing so the company receives the right to export 100 percent of its production at the lower customs rate.
And there is another dreadful consideration. Imagine that some factory or other comes to the Press Ministry and doesn't get a certificate. It doesn't get anything for one month, two months, three months. The factory suffers, it loses money. While punctually supplying paper on the internal market, it nonetheless cannot get a license to sell it abroad. Naturally the factory will ask why it is so disliked. And the answer will come back: "You just pass out the shares and everything will all be fine."
In other words, by introducing the certificate a certain administrative capital is created that theoretically can be exchanged for shares in a company. It would be logical to write still another resolution, according to which the Press Ministry would be able to control the prices for the machine tools that manufacture the newsprint, for the metal from which the machine tools are made, for the pellets from which the metal itself is made ...
Yulia Latynina is a journalist with ORT.
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