DRAFT BUDGET MAY BE IN POLITICAL TROUBLE …

The Russian budget for 1999, which was drafted by Prime Minister Yevgeny Primakov’s cabinet late in 1998 and received initial approval by the State Duma, now appears to be in trouble. Over the weekend, opposition legislators, who last month approved the draft in its first reading after Primakov threatened to resign were it rejected, returned from the long New Year’s holiday in an apparently obstreperous mood. Gennady Zyuganov, head of the Communist Party of the Russian Federation (KPRF), along with Ivan Melnikov, a KPRF deputy who heads the Duma’s science and education committee, attacked the budget for insufficient allotments to science and education. Zyuganov said the KPRF faction will insist on increased spending for science, education and defense (Russian agencies, January 10). On January 9, Duma Speaker Gennady Seleznev said that the budget will be examined in its second reading on January 19. Seleznev, generally viewed as one of the KPRF’s more pragmatic leaders, said that preparations for the second examination of the draft were “proceeding with difficulty” and that the Duma committees involved had made a “negative assessment” of the document (Russian agencies, January 9).

While the opposition members might be suspected of political grandstanding, Vladimir Ryzhkov, first deputy speaker of the Duma and a leading member of the center-right Russia is Our Home, confirmed that the draft budget is facing serious opposition. In remarks published today, Ryzhkov said that the various committees examining the document had already offered 150 amendments, and that deputies were particularly dissatisfied with “underfinancing” of the army, the Interior Ministry, the “social spheres” and the regions. Ryzhkov predicted legislators would demand increased spending in these areas at the expense of foreign debt payments, foreign policy-related programs and, especially, funding of the presidential administration. According to Ryzhkov, the deputies want to cut the Kremlin’s expenses by 40 percent (Moskovsky komsomolets, January 11).

Another indicator of the trouble facing the 1999 budget was the report yesterday that growing opposition to the draft has forced Deputy Prime Minister Yuri Maslyukov to cut short his upcoming trip to the United States. Russian agencies, citing “cabinet sources,” reported that Maslyukov will meet with Michel Camdessus, managing director of the International Monetary Fund (IMF), and James Wolfensohn, head of the World Bank, during a January 13-15 visit to Washington DC. Maslyukov had planned to attend the second Russian-U.S. investment conference at Harvard University (Russian agencies, January 10), but will instead return to Moscow early. An IMF mission is set to arrive in Moscow on January 20, Deputy Finance Minister Oleg Vyugin said yesterday. The Fund apparently decided to postpone its trip–which was originally expected in mid-January–to await the results of the second reading of the draft 1999 budget (Russian agencies, January 10).

…WHILE UNPLEASANT FINANCIAL REALITIES UNDERMINE IT FURTHER.