Publication: Monitor Volume: 5 Issue: 112

During a meeting of the Russian government today, Prime Minister Sergei Stepashin warned that if the State Duma fails to pass a package of draft laws introduced by the government he will be forced to ask for a vote of confidence (Russian agencies, June 10). The laws in question are designed to raise revenues in order to meet International Monetary Fund (IMF) conditionalities for a US$4.5 billion credit. Yesterday, the Duma, ignoring pleas from Stepashin, put off debate on a law which would tax gasoline filling stations. Stepashin is set to meet with IMF Managing Director Michel Camdessus next week in St. Petersburg, and the IMF’s board of directors is scheduled to meet soon to discuss its agreement with Russia, which was reached with Yevgeny Primakov’s government. If Russia does not meet the IMF conditions, it will be forced to pay US$2.6 billion to the Fund in payments for previous loans (the new credit would essentially be a roll-over of the old debt). Finance Minister Mikhail Kasyanov warned yesterday that Russian failure to reach an agreement with the IMF would pose problems for Russia due to its inadequate tax revenues. Russia has promised the IMF that it will raise an additional US$3.3 billion in revenues by the end of the year (Russian agencies, June 9).

The Communist Party faction in the Duma announced yesterday that it would oppose the gas tax measure. The legislation is also opposed by influential regional leaders: Samara Governor Konstantin Titov, who heads the budget committee in the Federation Council, the parliament’s upper chamber, denounced the measure. Titov said yesterday that the “natural monopolies,” including Gazprom, United Energy Systems and the railways should be the main source of new revenues. Oil companies and gas station owners are also opposed to the bill (Moscow Times, June 10).

Gasoline prices rose sharply in April and May, and Stepashin has given the cabinet ten days to come up with measures to stabilize them. The prime minister blamed the Duma’s failure to pass the draft legislation for the price hikes, and has also ordered law enforcement agencies to crack down on price speculation. Stepashin also asked First Deputy Prime Minister Nikolai Aksenenko to gather the heads of Russia’s main oil companies to sign an agreement on pricing policy which, according to Stepashin, would amount to a moratorium on price rises for the rest of the year (Russian agencies, June 10). Aleksandr Livshits, former finance minister and economic advisor to the president, said yesterday that the government is likely to push for an increase of roughly US$300 million in the money supply this month (Moscow Times, June 10).

Stepashin’s threat to ask for a confidence vote means that Russia may be plunged into yet another political crisis in a few weeks’ time. If the Duma votes no-confidence, President Boris Yeltsin can dismiss it and call new elections. Russian media have speculated that the Kremlin may use the opportunity of the Duma’s dismissal to push changes in Russia’s electoral laws so that the next Duma would be elected only from single-mandate districts, not according to party lists. This would likely be detrimental to the communists’ electoral prospects. Some observers have speculated that Kremlin hardliners may push for even more radical steps, such as banning the Communist Party.