Publication: Monitor Volume: 5 Issue: 199

Following an October 25 warning from President Boris Yeltsin about foot-dragging, the State Duma yesterday passed the first reading of the 2000 budget. As a concession to the Communist Party of the Russian Federation (KPRF) and other leftist factions in the Duma, the government agreed to an increase–by 6 billion rubles (US$233 million)–in projected revenue and spending which might not be to the liking of the International Monetary Fund. Lowered spending is one of the IMF’s demands for releasing a US$640 million tranche from its US$4.5 billion aid program. Only two pro-Kremlin factions in the Duma–Russia is Our Home, headed by former Prime Minister Viktor Chernomyrdin, and the Liberal Democratic Party of Russia, headed by Vladimir Zhirinovsky–supported the draft budget from the outset. Yesterday, only Grigory Yavlinsky’s Yabloko faction voted against the budget (Russian agencies, October 26; Moscow Times, Kommersant, October 27).

The issue of Russia’s federal budget, however, is probably not the crucial one for the IMF. The Fund has a greater worry at the moment–the allegations that Russia’s government and Central Bank may have misused loans from the IMF and other multilateral lending institutions. Thus Russia’s attempts to meet it halfway on the budget–by keeping budget increases within “reasonable” boundaries–will probably be deemed adequate as long as Moscow is able to convince the Fund’s member-states that it is taking other measures to ensure financial transparency, particularly involving the Central Bank, which has been accused of keeping billions from Russia’s hard currency reserves in offshore accounts. In fact, the various budgets produced by various cabinets over the years have had “no relationship to reality,” as Segodnya correspondent Yulia Latynina put it, and been riven with financial black holes into which public funds disappear (Moscow Times, October 27).

It is more interesting, however, to consider how the government managed to convince the KPRF and other opposition factions to pass the budget only months before parliamentary elections. According to a newspaper report today, Deputy Prime Minister Viktor Khristenko met on October 23 with Nikolai Kharitonov, head of the opposition Agrarian Party, and offered him “support” in the upcoming elections in exchange for support for the budget. The paper also reported that another top Agrarian official was approached and asked which members of the party needed financial help in their electoral campaigns. On October 25, Kharitonov announced the Agrarians would vote for the budget. Yesterday, the day of the vote, Prime Minister Vladimir Putin reportedly met with KPRF leader Gennady Zyuganov. The KPRF voted in favor of the budget.

The paper also reported that Vladislav Surkov, a deputy head of the Kremlin administration, who previously worked stints in two of Russia’s big banks, Menatep and Alfa, has forged a “nonaggression pact” with the KPRF and Yabloko. Its alleged terms: In return for “cooperation,” the Kremlin will refrain from attacking either party via Kremlin-controlled media–or leak “kompromat” on the leaders of either party–and will give both parties access to television, which, as always, will play the decisive role in the elections. The Kremlin’s goal in supporting these parties would be to rob votes from Fatherland-All Russia, the bloc headed by Moscow Mayor Yuri Luzhkov and former Prime Minister Yevgeny Primakov (Kommersant, October 27).

It is hard to say whether the “nonaggression pact” story is true, given that the paper which reported it, Kommersant, is owned by Kremlin insider Boris Berezovsky, and may have been trying to discredit Yabloko and the KPRF in the eyes of their opposition-minded constituents. It is worth noting, however, that on October 24, both Russian Public Television (ORT)–which is said to be controlled by Berezovsky–and the state’s RTR television–which is said to be controlled by Mikhail Lesin, Russia’s press minister and another Kremlin insider–featured long interviews with Yabloko leader Yavlinsky (RTR, ORT, October 24). On the other hand, Yavlinsky’s faction voted against the Kremlin-backed budget.