Russia Report: June 13, 2003

Last year's election in Krasnoyarsk Krai launched the career of not just one but two potential contenders for the 2008 Russian presidential race, former Norilsk Nickel head Aleksandr Khloponin and State Duma Deputy/economist Sergei Glazev. Khloponin actually won the race for the governor's office, but Glazev's third-place finish -- with more than 20 percent of the vote -- focused new attention on him as a potential alternative presidential candidate to Communist Party leader Gennadii Zyuganov. According to a political consultant familiar with the campaign, in meetings with voters in Krasnoyarsk, Glazev at times simply read from one of his economic texts. But the consensus among campaign specialists is that Glazev at least has Zyuganov beat in the charisma sweepstakes.

Glazev, 42, looks like an older, more tired, version of the American movie actor Matthew Broderick, although the latter is actually two months older than Sergei Yurievich. (Compare http://www.glazev.ru and http://www.the-movie-times.com/thrsdir/actors/actorProfiles.mv?mbroderick). Like President Vladimir Putin, Glazev likes to ski. And while he cannot throw his judo opponents across a mat as can Vladimir Vladimirovich, he could chitchat with U.S. President George W. Bush in fluent English. And as a trained economist, he could talk shop with International Monetary Fund (IMF), World Bank, and World Trade Organization officials -- although they would probably not agree on anything fundamental.

Glazev was born in Zaparozhe, Ukraine, in 1962. Had he been born just a few decades earlier, he likely would have remained in academia. But circumstances propelled him -- and other young economists -- into politics. In 1983, he finished his studies in "economic cybernetics" at the prestigious Lomonsov Institute at Moscow State University. Just three years later, at the age of 25, he defended his kandidat's degree on the theme of "economic changes in the technical development of the Soviet Union in cross-country comparisons." In 1990, at the age of 29, he defended his doctoral dissertation on the "regularity of long-term technical-economic development and its use in the administration of the people's economy." In 1990, he was the youngest person to earn a doctorate in economic science in the Soviet Union, according to "Profil" on 12 May 2003.

In the late 1980s, Glazev was in Moscow at just the right time to hook up with two other young economists who would soon play a leading role in national politics -- Yegor Gaidar and Anatolii Chubais. Starting in 1987, Glazev participated in the famous economics study group led by Chubais and Gaidar. According to "Profil," other participants in the historic seminars did not notice at the time that Glazev had any kind of penchant for "dirigiste" methods of managing the economy. In fact, some British economists who worked with Glazev and the future Russian director for the IMF, Konstantin Kagalovskii, at the Center for the Study of Communist Economics, were "flabbergasted" when later in the 1990s, Glazev started to express his more leftist orientation toward economic policy.

In the fall of 1991, when new Russian leader Boris Yeltsin called on him to form a government, Gaidar tapped fellow seminar participant Petr Aven to head the Committee for International Economic Relations. Aven turned to Glazev to be his deputy. When the committee became a ministry, Glazev became first deputy minister. At the end of 1992, Gaidar was forced to resign, and Aven also followed suit. But Glazev remained, becoming minister for international economic relations. He soon butted heads with the more influential Deputy Prime Minister Vladimir Shumeiko, and after a humiliating episode in which his plane was ordered by his higher-ups in Moscow to turn around in mid-air while on its way to debt negotiation in Africa, Glazev tendered his resignation after less than nine months as minister. On that occasion, Yeltsin did not accept Glazev's resignation, but a month later, in September 1993, Glazev again tendered his resignation, this time to protest Yeltsin's decree dissolving the Supreme Soviet, and his resignation was accepted. According to his official biography on glazev.ru, Glazev "was not a supporter of [then] parliament speaker Ruslan Khasbulatov, but as he [Glazev] says, 'Democracy is first of all a process of negotiations and respect for the law.'"

For a short time, Glazev returned to academia, but then a fellow veteran of the Gaidar government, Nikolai Fedorov, invited him to participate in the 1993 State Duma elections on the party list for the Democratic Party of Russia (DPR), according to "Profil." In the first Duma, Glazev became chairman of the Committee for Economic Policy. If earlier, during his stint in the cabinet, "the monetarist policies of Gaidar did not directly affect Glazev's work," according to "Kto est kto," during the debate over the 1994 budget, Glazev's found his voice. By the fall of 1994, Glazev had become the "informal leader of the Duma antigovernment movement" and potential shadow prime minister. Glazev initiated a vote of no confidence in the government, which failed. On the eve of the vote, articles appeared accusing Glazev of being a lobbyist for industry, one of which was signed by presidential administration head Sergei Filatov. A few months later, Glazev returned the favor, publishing an article in "Nezavisimaya gazeta" blasting Chubais's plan for privatization.

In December 1995, Glazev ran again for the State Duma, but the party with which he aligned himself, the Congress of Russian Communities (KRO) led by former General Aleksandr Lebed, did not surpass the 5 percent barrier to enter the parliament. After the 1996 presidential election, Glazev followed Lebed to the Security Council, but four months later when Lebed resigned, Glazev also left, finding new work in the apparatus of the Federation Council, where he remained until the next Duma elections

The appearance of Glazev's name on the Communist Party list in the 1999 Duma elections was "very unexpected," according to "Kto est kto." Some of his former colleagues still hadn't forgotten that before the union he had been a member of the DPR. An unidentified deputy from the first Duma told "Profil" that "Glazev then and Glazev now -- these are two different people -- then he was an economist and now he is a politician." But the alliance with the Communist Party finally gave Glazev a national platform to present his economic views. He became the party's chief "talking head" on economic policy matters. According to Columbia University professor of economics Richard Ericson, "the Communists had been arguing for massive state support for the flower of Soviet industry, and Glazev produced much more respectable economic arguments for it than the Communists could muster on their own." Glazev has long been in favor "of massive monetization, of granting huge credits to the machine-building industry and the other stars of Soviet industry, so that they can finance production, and produce products that they can then sell." According to "Nezavisimaya gazeta -- Figury i litsa" on 27 April 2000, in his published works, Glazev remains supportive of a market economy but he considers it expedient to create general government control over the economy during an unhealthy transitional period. He never says anywhere that this should always be the case, according to the newspaper.

According to his own official biography, Glazev had decided by 1998 that "to solve the country's serious problems, it needs a serious party." And aligned with the Communists, he managed to return to the Duma. He even became chairman of the Duma's Economic Policy and Business Committee for a time, but he has yet to achieve the same level of power and influence that he had in the first Duma. It was only his unexpectedly strong performance in the Krasnoyarsk race that pushed him to the center of national attention once again.

Earlier this month, Glazev became co-chairman of the Russian Regions party. One Communist Party official, Ilya Ponamarev, denied that this move was proof of any kind of fraying of Communist Party unity. "Sergei Yurievich just likes to collect movements," Ponamarev commented, according to "Vremya novostei" on 2 June. The fact remains, though, that Glazev's neo-Keynesian views would find a better home in a social democratic rather than communist party. Glazev may be uncomfortable being in an umbrella movement led by the Communists, and he might find a truly independent umbrella movement in which the Communists are just one component a more comfortable fit. (Julie A. Corwin)

The scandal over a report on Russian oligarchs issued by the National Strategy Council (NSC) at the end of May has continued into June. The report alleged that Russia's tycoons have decided to transform the country from a presidential republic into a parliamentary one. The oligarchs have reportedly decided that the "institution of the presidency is no longer a guarantee of stability of privatization," and are therefore seeking "to be directly promoted to key state positions." The report identifies Yukos head Mikhail Khodorkovskii as the chief "ideologue" supporting this transformation.

After the report was released, several of the political analysts who are members of the council said that they had never seen the version of the report that ended up being published. According to utro.ru on 30 May, council members received a different and much less strongly worded version of the report. Council co-Chairman Valerii Khomyakov said that it would be better to state that the threat of a coup d'etat by the oligarchs exists, rather than that the oligarchs will succeed in carrying one out. Another member, Ekspertiza Foundation Chairman Mark Urnov, left a recent council session declaring that he will not return unless those guilty of distributing the "incorrect" report are punished and removed from the council.

In an interview with "Novaya gazeta" (no. 40), council co-Chairman Iosif Diskin said that "not everyone received a copy of the report due to a number of technicalities." And on 6 June, Stanislav Belkovskii, a general director of the council, told RBK that an information war "with a budget of hundreds of thousands of dollars" had been unleashed against the council. Key figures in this campaign, according to Belkovskii, are State Duma Deputy Vladimir Ryzhkov (independent) and the editor in chief of "Stringer," both of whom he claimed are dependent on Yukos. However, it was the latter, "Stringer," in article on 6 June, which depicted the council's report as itself a PR action.

"Stringer's" charge was echoed by others. In an interview with strana.ru on 3 June, Urnov commented apropos of the report that "this is exactly how information wars get started," but he is "not aware of who initiated it." He speculated that Unified Energy Systems head Anatolii Chubais does not have any reason to fight with other influential businessmen, "especially in this context." Urnov added that he does not rule out the possibility that Boris Berezovskii is behind the action, since he is "one of those who are directly interested in such situations." In later commentaries, TVS commentator Yulia Latynina and Panorama head Vladimir Pribylovskii also consider the possibility that the council's report itself was likely a PR action.

Speaking on TVS on 6 June, Latynina noted that "combating the oligarchs is a perfect PR idea" and argued that the report seems to reflect a "struggle with the presidential administration" over the direction of the Unified Russia party. The administration, according to Latynina, is divided, with the St. Petersburg siloviki led by deputy presidential administration head Viktor Ivanov and presidential office head Igor Sechin on one side. On the other side are the representatives of the Family, such as presidential administration head Aleksandr Voloshin and deputy administration head Vladislav Surkov. According to Latynina, the Unified Russia party is in desperate need of a "pre-election idea," and the St. Petersburg faction is supporting the notion that the party's battle cry should be "combating the oligarchs." The problem, Latynina asserted, is that the oligarchs are believed to be financing Unified Russia, and Voloshin and Surkov, who are managing the cash flow, support the notion that the party's chief strategy should be mobilization against the Communists. The recent meeting attended by Unified Russia activists in Ryazan could be construed as supporting Latynina's assertion (see "RFE/RL Newsline," 10 June 2003). Attendees discussed ways of targeting the opposition to the Red-belt governors. According to "Gazeta" on 9 June, the event was organized by Leonid Ivlev, a deputy of Surkov's, who was assigned to the party last April.

Writing in "Novaya gazeta" (no. 40), Pribylovskii also suggests that the council's report can be seen as a kind of "ideal-propaganda action of one of the administrative-oligarchic clans -- let us say the St. Petersburg chekisty -- against another clan, the old Kremlin or 'Family.'" Expanding on this theme in an article for Jamestown Foundation's "Russia and Eurasia Review" on 10 June, he notes that the name of LUKoil head Vagit Alekperov is noticeably absent from the report. "One can interpret this silence in many ways," he concludes, "But it cannot be an accidental oversight."

Analysts were divided not only over who ordered the PR action but also who exactly carried it out. The council itself is composed of the some of the most well-known specialists in the realm of political "PR." However, according to Latynina, some members of the NSC credited a nonmember, Foundation for Effective Politics head Gleb Pavlovskii, with crafting the report. The television program "Postscript" on 31 May noted that three years ago Pavlovskii spoke about an oligarch's conspiracy aimed at assuming full control over the president. And even before that, Pavlovskii first gained public notoriety in 1994 when he was revealed to be the author of "Theory No. 1" in "Obshchaya gazeta." That article professed to be a transcript of a conversation between Oleg Soskovets, Viktor Chernomyrdin, and Yurii Luzhkov planning the overthrow of the government (see "RFE/RL Russian Political Weekly," 12 March 2001). If Pavlovskii, the master of political intrigues, did not actually write the report, perhaps he at least provided the inspiration. (Julie A. Corwin)

The NSC report creates two categories of oligarchs, "clean" and "unclean." "Unclean" refers to oligarchs who interfere in politics. As Prybylovskii notes, LUKoil head Alekperov is noticeably missing from either category. Also missing from the lists are the names of St. Petersburg banker Sergei Pugachev and Severstal head Aleksei Mordashov, who are frequently identified as oligarchs (see "RFE/RL Russian Political Weekly," 10 October 2002). JAC

Unclean Oligarchs

Chukotka Autonomous Okrug Governor Roman Abramovich
Alfa Group head Mikhail Fridman
Unified Energy Systems head Anatolii Chubais
Russian Aluminum head Oleg Deripaska
Yukos head Mikhail Khodorkovskii
MDM Group head Andrei Melnichenko
Interros Group head Vladimir Potanin

Clean Oligarchs

Sistema head Vladimir Yevtushenkov
United Machine Works head Kakha Bendukidze
TVS Chairman Oleg Kiselev
International Business Systems Group head Anatolii Karachinskii

Sources: "Khodorkovskovo 'naschitali' 25 paz, Alekperov ni pazu, k chemu by eto?" "Novaya gazeta" no. 40 and "Gosudarstvo i oligarkhiya," "Konservator," no. 18.

State Duma legislators passed the presidential bill on amending the law on organizing legislative and executive bodies in the regions in its second reading on 11 June, RosBalt reported. The vote was 242 in favor, with 126 against and one abstention, according to the agency. The bill attempts to delineate the responsibilities of the three levels of government: federal, regional, and local. In addition, Article 26 would allow direct federal rule in regions where debts exceed revenues by more than 30 percent. Some 1,300 amendments were submitted to the bill after its first reading, more than 200 of which deputies took into account while the rest were rejected, the agency reported. An attempt by the Communists to postpone consideration of the bill failed. A second bill in the package reforming local government barely passed with only 231 votes in favor -- just six more than necessary -- and 171 against, according to RosBalt. The bill amending the law on local self-rule elaborates the procedure for transferring functions to local governments. If approved, it would come into force on 1 January 2005. JAC

Legislators also managed to pass on 11 June one of the most controversial bills of the spring 2003 session. By a vote of 267 in favor with 38 against, legislators approved in its second reading a presidential bill amending various elections laws regarding media coverage, RosBalt reported on 12 June (see "RFE/RL Newsline," 19 March 2003). The bill was passed in its first reading last March (see "RFE/RL Russian Political Weekly," 26 March 2003). The bill amends the law on mass media so that a court can decide to shut down a media outlet that violates election rules for the entire period of the campaign. If the outlets commits more than one violation, then its broadcasting license can be cancelled. JAC

At the same session, deputies also approved in its second reading a new scheme for forming single-mandate districts for State Duma elections. The vote was 366 in favor, according to RosBalt. Under the legislation, a single-mandate district should have a population of 478,000 voters. If this new norm is adopted, then certain regions, such as Murmansk and Irkutsk oblasts, will lose a district, while others, such as Daghestan and Krasnodar Krai, will gain one. JAC

Also adopted on 11 June was a new framework legislative act that will establish certain minimum social standards for citizens, ITAR-TASS reported. The bill, which was passed in its first reading, will require the provision of certain minimum levels of free social services across the territory of Russia. A group of deputies proposed the legislation. JAC

State Duma deputies also approved in their first reading on 11 June amendments to the Tax Code, Interfax reported. The amendments would cancel the excise tax on natural gas in 2004, raise the tax on the extraction of oil and natural gas, and raise the export duty on natural gas from 5 percent to 20 percent. The vote was 278 in favor with 47 against and two abstentions. Also approved were government-sponsored amendments to the Tax Code lowering the value-added tax (VAT) from 20 percent to 18 percent. The vote was 355 in favor, according to RosBalt. JAC

On 6 June, legislators endorsed in its first reading a presidential bill on witness protection, RIA-Novosti reported. The bill, which was initiated by President Putin, passed by a vote of 353 in favor to one against. The bill calls for the establishment of a state-sponsored program for the long-term protection of witnesses who testify in high-profile criminal proceedings. The bill allows for changing witnesses' and their family's places of residence, work, or study, and altering their identities and appearance. Approximately 735 million rubles ($24.06 million) would be allocated from the federal budget to support the program. Also on 6 June, legislators also passed a bill in all three readings that bans public organizations from participating in elections as political parties. Some 250 deputies supported the bill in its third reading, according to RosBalt. Deputies also voted to approve in its third and final reading a bill increasing the minimum monthly wage index from 450 rubles ($15) to 600 rubles as of 1 October. The vote was 416 in favor, with zero against and one abstention, according to RIA-Novosti. According to RosBalt, the measure will require 10.6 billion rubles in additional expenditure from the 2003 federal budget. JAC

Also on 6 June, deputies supported the bill changing the banner of the Russian armed forces in its second and third readings. If adopted, the law would add the words "Fatherland, Duty, and Honor" and a golden double-headed eagle to the banner. The bill was passed earlier in the week over the objections of the Communist faction, RIA-Novosti reported (see "RFE/RL Newsline," 5 June 2003). According to polit.ru, the Communist faction tried to get an answer from the bill supporters as to why the new legislation was necessary when a law on state symbols was passed just two years ago. JAC

Legislation

Name of bill__________________Date approved_________# of reading

On general principles_____________11 June_______________2nd
for organizing legislative and
executive bodies in the Russian regions

On general principles for__________11 June_______________2nd
organizing local government
in Russia

On the introduction of changes_____11 June_______________2nd
and amendments to several legislative acts
in connection with the adoption
of the federal law on basic guarantees of
election rights and the right to participate
in referendums

On the election of State Duma______11 June______________2nd
deputies (single-mandate districts)

On minimal state social___________11 June_______________1st
standards

Tax Code______________________11 June_______________1st
(natural gas, oil, VAT)

On the banner of the armed________6 June______________2nd, 3rd
forces, the banner of the navy______4 June_______________1st
and the banner of other
services and troops

On witnesses____________________6 June_______________1st

On election of State Duma
deputies________________________6 June____________1st, 2nd, 3rd

On main guarantees of suffrage______6 June____________1st, 2nd, 3rd
and the right of Russian citizens
to participate in a referendum

On political parties________________6 June_______________1st

On the minimum measure__________6 June_______________3rd
for wages

TRANSFERRED: President Putin has issued a decree appointing Georgii Mamedov Russia's ambassador to Canada, transferring the current ambassador, Vitalii Churkin, to "other work," Interfax reported on 9 June. Mamedov most recently served as deputy foreign minister in charge of relations with the United States, Canada, and the Group of Eight (G-8), "Kommersant-Daily" reported the next day.

OUT: The Union of Rightist Forces (SPS) has expelled Deputy Vera Lekareva from its faction, RosBalt reported on 4 June. SPS deputy faction leader Boris Nadezhdin told the agency that Lekareva was being kicked out because she had voted too often against the decisions of the faction. Lekareva was elected from a single-mandate district in Samara Oblast. JAC

14 June: Liberal Russia faction that supports Boris Berezovskii will hold extraordinary congress in Moscow

16-22 June: A meeting of 25 Nobel Prize laureates on the topic of "Science and the Progress of Humanity" will be held in St. Petersburg

16 June: State Council will meet in St. Petersburg to discuss government cultural policy

17-21 June: Seventh International Economic Forum will be held in St. Petersburg

17 June: Central Election Commission Chairman Aleksandr Veshnyakov will visit Krasnoyarsk

17 June: Russian peacekeeping troops will start withdrawing from Kosovo

18 June: State Duma will consider a vote of no confidence in the government

18 June: A court in Saratov Oblast will consider the question of releasing National Bolshevik Party leader Eduard Limonov from prison

18 June: Singapore's Institute of Southeast Asian Studies will host a seminar on "Russia's Role and Interests in the South-Pacific Region"

19-20 June: Prime Minister Mikhail Kasyanov will chair the Consultative Council on Foreign Investment

19 June: Political party leaders will meet with Central Election Commission to discuss campaign for State Duma

19-20 June: National Strategy Council will meet in Saratov

21 June: State Duma will hold its last plenary session of the spring session

22 June: Current term of Human Rights Ombudsman Oleg Mironov will expire

26 June: Central Election Commission Chairman Veshnyakov will meet with lawyers of leading Russian media outlets

27 June: Gazprom will hold annual shareholders meeting

28 June: 3,500 delegates will attend a Unified Russia party forum called "Together with the President" in Moscow, "Vedomosti" reported on 3 June

28 June: Second All-Russia Festival of National Culture will be held in Petrozavodsk

July: Month by which a working group of European and Russian legislators wants to create a "road map" for implementation of the joint Russian-EU accord on Kaliningrad of 11 November 2002, ITAR-TASS reported on 3 March

1 July: Date by which the new State Committee on Drug Trafficking will be created and new Federal Service for Economic and Tax Crimes will be formed, according to the committee's head, Viktor Cherkesov, on 8 April and ITAR-TASS on 10 April

1 July: United Arab Emirates national airline will begin regular flights from Moscow's Domodedovo Airport

13-16 July: Prince Charles will visit Russia

14 July: Deadline set by President Putin for Russian regions to bring their laws into compliance with federal regulations

14 July: Federal law on basic guarantees of electoral rights will come into effect requiring 50 percent of regional legislatures to be elected from party lists

15 July: Government will consider draft bill on mineral resources, Prime-TASS reported on 28 May

15 July: Deadline for new company, Russian Railways, to be registered

1 August: Deadline for Russian peacekeeping troops to withdraw from Kosovo

12 August: Third anniversary of the sinking of the "Kursk" submarine

13 August: Air-traffic controllers will hold a nationwide protest

15 August: Date by which Duma should approve new map of single-mandate districts; if it fails to do so, the Central Election Commission will have the right to confirm the map

17 August: Karachaevo-Cherkessia will hold presidential elections

end of August: Campaign officially begins for State Duma elections

September: Second Russian-U.S. Commercial Energy Summit will take place in Moscow

September: Gennadii Seleznev's Party for Russia's Revival will hold a congress in Moscow

1 September: Date by which government commission will have drafted 2004 budget

7 September: Novgorod Oblast will hold gubernatorial elections

14 September: Sverdlovsk Oblast Governor Eduard Rossel's second term officially expires

23 September: The first European-Pacific Ocean Conference will take place in Vladivostok devoted to improving dialogue among intellectuals in European countries and the Pacific region, regions.ru reported on 6 March

30 September-2 October: The Second All-Russian Sociological Congress will take place at Moscow State University

1 October: 33 percent salary hike for budget-funded workers to go into effect

6 October: British court to consider Russia's request to extradite Boris Berezovskii

October: President Putin and German Chancellor Gerhard Schroeder will meet in Yekaterinburg, Novyi region reported on 14 April

23-26 October: First anniversary of the Moscow-theater hostage crisis

29 October: 85th anniversary of the founding of the Komsomol

7 December: State Duma elections will be held.