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Wednesday, March 23, 2005

Yukos Exile Nevzlin Accuses Putin of Stalinism

Vladimir Putin / Photo: AFP21.03.2005 11:52 MSK MosNews - The situation in Russia today can be described as Stalinism, Leonid Nevzlin, a core Yukos shareholder and a longtime business associate of Russian oil tycoon Mikhail Khodorkovsky, told the New York Times on Sunday. The longtime business associate of the imprisoned oil tycoon spoke out from self-imposed exile in Israel, denying criminal charges by the Russian authorities and saying the accusations against him are a continuation of a Kremlin campaign of intimidation. "The situation in Russia today I would describe as Stalinism," Leonid Nevzlin said in a interview at his home in Herzliya, in the Tel Aviv suburbs. President Vladimir Putin "enjoys the absolute power of one person, in that he uses the law enforcement system and the lack of free press" to intimidate Russia's business elite and to renationalize Yukos, once Russia's largest private oil company, he said. Yukos has been torn apart in a struggle between the Kremlin and Mikhail Khodorkovsky that has shaken Western confidence and helped drive oil prices to record highs. It has also prompted Russia's business elite to re-evaluate the Kremlin's commitment to capitalism, and consider whether the leadership is seeking something akin to state control of the economy's commanding heights. Yukos' main production unit Yuganskneftegaz was auctioned off last year to pay off extensive back taxes, but two remaining production units continue to pump a total of 600,000 barrels of oil a day — and Nevzlin is now the controlling shareholder in the company after Mr. Khodorkovsky transferred his stake in January. Leonid Nevzlin estimates his net worth in the "hundreds of millions, but not billions" of dollars. "We're trying to learn to live without the pipeline of oil," he said of himself and other shareholders. Nevzlin said the Russian judicial system "is using illegal methods and taking hostages" among former Yukos employees. A British judge on Friday rejected Russian government claims seeking the extradition of a Yukos accountant and a lawyer who fled to London. In the interview Nevzlin for the first time publicly made the accusation that there was an element of anti-Semitism behind the Kremlin's campaign against him and other Yukos executives, some of whom are also Jewish. He joined a number of prominent Russian billionaires who have either fled to or established dual citizenship in Israel, including Vladimir Gusinsky, now a media tycoon. "Putin is surrounded by anti-Semites," he said, "from the prosecutors all the way to the FSB," the successor intelligence agency to the KGB. Nevzlin said he intended to sue in European and U.S. courts on behalf of other shareholders over the seizure of Yukos' assets. "When we start shaping the new board of directors, we will represent the interests of all shareholders," he said, hinting that Western pension funds and other foreign investors may sit on the new board. He declined to identify any candidates. Property rights in Russia "do not exist in the western sense," he said, adding, "All kinds of rights in Russia are selective." He said he would also finance political opposition candidates running in the 2008 presidential elections, including the chess champion Garry Kasparov and former Prime Minister Mikhail Kazyanov. "There is the possibility of a liberal, democratic structure in Russia," he said. "But it will take tremendous work to create it, and only if the will of the electorate coincides."

Monday, March 14, 2005


MOSCOW, March 14 (RIA Novosti) - Russian President Vladimir Putin does not like the way small- and medium-scale business is developing in Russia. The government and the regional authorities still have not paved the way for the development of small- and medium-scale business, the president said at the conference with cabinet members. "I'm not talking about taxes. We know that something is going on here. But it is actually impossible to register an enterprise. It is mere violation of human dignity and sober sense. Those who open a business should get a medal for courage", the head of state noted sarcastically. Many questions have been put on the level of regions and municipalities. "We and our colleagues in the federation entities should go for a common framework decision. Without it, the rampaging around will go on", Mr. Putin said. Meanwhile, the Economic Development and Trade Ministry hopes that the new law on state purchases will let small-scale business get access to state purchases. "Small-scale business should play the key role in the system of state purchases. Small enterprises are the motive force, the basic source of growth of the economy", board director at the Economic Development Ministry Kirill Androsov has told RIA Novosti. He takes part in the exhibition-forum Goszakaz-2005 (State Purchase-2005), opened in Moscow on Monday. "The more transparent the procedures followed in the state purchase of commodities and services, the easier it will be for small enterprises to get access to them", Mr. Androsov believes. The ministerial spokesman noted that the Goszakaz-2005 largely represents small enterprises in direct contact with state purchasers and those in command of budget funds. Participants in the forum-exhibition are boards of the governments of Moscow and St.Petersburg managing state purchases. State purchase information portals of Moscow and St.Petersburg are open in the Internet to provide free information to small enterprises on competitions and where to file applications. In Moscow in 2004, out of the 400 billion rubles (1 dollar equals 27.46 rubles) of budget funds over 130 billion rubles were placed to competitions, effecting the saving of 7 billion rubles in the municipal budget. In 2005 the scheduled volume of competition purchases is to be brought up to 160 billion rubles. In St.Petersburg competitions make up only 27 percent of state purchases. Owing to the competition procedures, the municipal budget effected the saving of over two billion rubles in 2004. The Economic Development and Trade Ministry is for a more vigorous involvement of small enterprises in state purchases by natural monopolies, Mr. Androsov said. "We are trying to persuade natural monopolies - Gazprom, UES, Russian Railways - into giving preference to small enterprises in the placement of state orders", he said.

Wednesday, March 09, 2005

Stabilization Fund growing

03.09.2005 RBC News - The Russian Stabilization Fund amounted to RUR707.5bn (around USD25.26bn) on March 1, a source close to the Russian Finance Ministry told RBC. As of February 1, the Stabilization Fund rose to RUR647.2bn (around USD23.11bn) from RUR522.3bn (around USD18.65bn) as of January 1.
As Russian finance minister Alexey Kudrin earlier said, RUR74bn (around USD2.64bn) of the amount of Stabilization Fund's money exceeding the RUR500bn (around USD17.85bn) level will be allocated for financing the Pension Fund deficit under the law on the federal budget. Other funds are to be accumulated till they total RUR160bn (around USD5.71bn), which are to be spent on state debt settlement, he added.
Kudrin also stressed, that the Stabilization Fund could be spent on increasing pensions in 2005. Extra budget revenue is first to be allocated for increase in pensions, he elaborated on. The Stabilization Fund will be used for financing pension only if extra budget revenue lacks for this target.
Moreover, currently the possibility of using the Stabilization Fund for paying compensations of lost budget revenue if VAT is cut is being discussed. On January 1, the VAT rate was cut to 18 percent from 20 percent. Earlier the Finance Ministry announced its decision to lower the VAT rate to 16 percent starting January 1, 2006 with the possibility of canceling benefits on VAT. The issue is being negotiated on now.
Prime Minister Mikhail Fradkov insists on cutting VAT to 13 percent. The government office believes that the use of the Stabilization Fund for targets like this one could result in extra economic growth of 1.5-2 percentage points. The Finance Ministry and the Economic Development and Trade Ministry oppose this idea.
Finance Ministry experts point out such negative impacts of this use of the Stabilization Fund as a higher pace of increase in money supply. If in 2005 RUR400bn (around USD14.28bn) are spent this way in 2005, it could result in additional growth in money supply of 8 percent and in annual increase of 36 percent instead of earlier targeted 26-30 percent. This could spur the inflation rate by 1.5 percentage points in 2005. If the Stabilization Fund is allocated for debt servicing the real effective ruble exchange rate might strengthen 1.5-2 percent in 2005. The Finance Ministry is afraid of forecasted decrease in oil prices cutting oil exports revenue, of which the Stabilization Fund consists.
The Stabilization Fund was has been formed since January 1, 2004. Extra federal budget revenue from high oil prices is transferred to the fund.

Thursday, March 03, 2005

U.S. to Keep up Pressure on Russia Over Democracy - Rice

Secretary of State Condoleezza Rice / Photo: AFP03.03.2005 12:22 MSK MosNews - The US will continue to press Russia on what it sees as backsliding on democracy issues, U.S. secretary of state Condoleezza Rice said in an interview published today, in Russian-language daily, Vremya Novostei. Assessing the Bratislava summit between U.S. president George Bush and President Vladimir Putin, Rice said Washington's message to Moscow is cordial but firm concerning what it fears is growing authoritarianism under Putin's watch, AFX news agency reports. "We stated very clearly that we are concerned about the course of democracy in Russia," Rice is reported to have said, according to a translation of her comments to Vremya Novostei. "We retain these concerns. This concerns a certain centralization of power in the Kremlin and the state of the free press," Rice said. However, she added: "At the same time I would like to assure you that we have very constructive relations with Russia at this time. This is really the case, and we plan to develop such relations." "We... are offering to launch an open dialogue between our countries concerning questions that worry us," Rice said. The U.S. has been critical of Putin's decision to scrap direct gubernatorial - governor - elections and to eliminate single-mandate seat elections to the State Duma lower house of parliament. All of the national television stations have also fallen under state control since Putin came to power in 2000.

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