Publication: Monitor Volume: 2 Issue: 184

A row erupted yesterday when Gazprom, Russia’s second largest company and the world’s biggest producer of natural gas, accused the Russian government of freezing the bank accounts of some of Gazprom’s subsidiaries to punish it for unpaid taxes. Gazprom is furious for two reasons. First, it says it is not to blame for the tax arrears: as a result of the government’s failure to resolve the crisis of inter-enterprise debt, Gazprom is owed much more by its customers (49 trillion rubles) than it owes to the state (15 trillion). Second, the government could not have chosen a worse moment to attack Gazprom: next week, the company is to launch a long- awaited international share-offering in which it will invite foreign investors to stump up $400 million for a 1 percent stake in the company. The government’s move threatens to destroy market confidence and undermine the share-offer, which has already been postponed once this year because of uncertainty provoked by Russia’s presidential elections. (BBC World Service, Financial Times, October 2)

The government’s action was loudly deplored by Gazprom chairman Rem Vyakhirev, who alleged that the government is preparing inventories of the property of several Gazprom subsidiaries and threatening to auction them off if the company does not pay its taxes. This is the latest spiral in war of words between Gazprom and the Russian government. Earlier this week, Vyakhirev fired off an angry letter in which he called on the Russian parliament to protect Gazprom from government plans to break up a number of natural monopolies (Gazprom, the unified power grid, and Russia’s single railway network) into separate, independent companies. Complaining that the government was acting at the behest of the International Monetary Fund, which has made breaking up the monopolies a condition of its $10.2 billion extended loan to Russia, Vyakhirev said Gazprom would be broken up "over his dead body." (Nezavisimaya gazeta, October 2)

The government’s bad timing, and the fact that it has moved against Gazprom at a moment when all the ministers most responsible for the Russian economy are in Washington meeting with the IMF and World Bank, prompted speculation in Moscow that something murky was afoot. Although the Russian government is under heavy IMF pressure to improve its tax collection procedures, there was speculation that the clampdown might have been secretly initiated by top-level Gazprom managers who oppose the sale of shares to foreign investors and would prefer Gazprom to remain in state hands. The plot thickened when Finance Minister Aleksandr Livshits, who is supposed to be responsible for taxation, told journalists in Washington that he had no knowledge of the decision to move against Gazprom. (BBC World Service, October 2) Conspiracy theories apart, the row adds further weight to impressions that, in President Yeltsin’s absence, the Russian government is a house deeply divided against itself pursuing a multiplicity of frequently conflicting aims.

Rodionov Indicates No Quick Shift to All-Volunteer Force.