WHEN GOING NOWHERE IS A FORWARD STEP…
The government improved its position in its long struggle with the country’s economic crisis. At least it has gained some traction, even if signs of forward progress are still hard to discern.
The president of the State Duma, moderate Communist Gennady Seleznev, agreed to call the deputies back from recess for a special session August 19-20. The session is to consider six new government bills and give second and third readings to several emergency measures that had their first readings but did not receive final passage in July. Prime Minister Sergei Kirienko pledged not to re-submit any legislation the Duma has already rejected, but income-tax reform and land reform are on the agenda. That will ensure plenty of contention and ill will.
The legislature and the government have fought over land reform for years. The constitution gives Russians the right to own land, but to the Duma that right is not unrestricted. The Duma twice passed bills to block the free sale of agricultural land, but President Boris Yeltsin refused to sign them into law, even though in one instance his veto was (controversially) overridden. The free sale, rental, and mortgaging of land is a condition of the loan agreement worked out with the World Bank, which is putting up $6 billion of the $22.6 billion bailout package. That will add the urgency of ready money and the pungency of xenophobia to an already ugly debate.
Even better for the government than the Duma’s agreement to return is the miners’ agreement to relent. Striking coal miners have relaxed their blockade of railway traffic in several regions around the country, including Sakhalin Island and Partizansk (near Vladivostok) in the far east; in the Kuzbass region in western Siberia; in Chelyabinsk in the southern Urals; and in Pechora in the far north. Air-traffic controllers canceled their strike plans after Deputy Prime Minister Boris Nemtsov threatened them with arrest. But wage arrears have not been paid, and the bill mounts daily.
The Federal Tax Service froze the bank accounts of three large oil companies with big tax liabilities: Sidanko (owes $600 million); Onako ($140 million); and Eastern Oil ($50 million). In a strange move, the Tax Service warned Rosneft that it could face similar action unless it pays up — even though Rosneft is owned by the Russian government itself.
The government has offered 75% of Rosneft for sale at auction twice, only to find no buyers. Despite the unresolved tax issues, a third attempt at privatization is planned. Also to be scheduled for sale are nine percent of LUKoil, Russia’s largest oil company, and five percent of Gazprom, the gas monopoly that is the country’s largest enterprise.
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