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The drastically enhanced ownership driven expansion of the largest Russian groups in foreign countries, which has been typical over the period of 2004 through 2005,25 has not been encountered by any restrictive counter measures as yet. For instance, the active participation of a number of largest oil companies in fastening of the branch verticals onto consumers (purchase of oil refineries and gas station networks abroad, etc.), the Norilsk Nickel efforts in the sphere of gold mining, the Severstal measures with respect to the Canadian Stelco and Italian Lucchini and other ferrous metallurgy companies, the Bazovy Element actions in regard to aluminum production enterprises, the SUAL activity in a variety of projects in non-ferrous metallurgy, telecommunications and diamond production business, etc.

On the contrary, any options of including foreign companies into the list of principal shareholders of the largest Russian extractive-industry groups are subject to approval by the government. Since recently, all major transactions related to purchase of Russian assets by foreign companies are subject to the compulsory preliminary negotiations involving the RF President (for instance, the N - BP in 2003, Silovye Mashiny and Siemens, LUKOIL and ConocoPhillips in 2004). Most likely such approval was also needed by Rosneft in order to obtain a loan from a syndicate of Chinese banks to the amount of US $ 6 billion, which is to be repaid by oil supplies to the CNPC, a Chinese oil company (48.4 million metric tons till 2010). According to some evaluations, this loan was obtained to effect For instance, the active participation of a number of largest oil companies in fastening of the branch verticals onto consumers (purchase of oil refineries and gas station networks abroad, etc.), the Norilsk Nickel efforts in the sphere of gold mining, the Severstal measures with respect to the Canadian Stelco and Italian Lucchini and other ferrous metallurgy companies, the Bazovy Element actions in regard to aluminum production enterprises, the SUAL activity in a variety of projects in non-ferrous metallurgy, telecommunications and diamond production business, etc.

settlements on Yuganskneftegaz26, although officially Rosneft does not consider this transaction a loan and indicates that the funds are intended to make investments in industrial and economic activity and implementation of capital intensive strategic projects. The issue of the revision of privatization results remains the most important tool intended to exert psychological pressure upon large businesses. Although almost all senior government officials have expressed, at least once, their non-acceptance of such methods on a large-scale basis, the true intentions of the government are represented by the uncertainty persisting in this sphere. None of the relatively efficient solutions (the public political decision on the moratorium as concerns the revision of privatization results; the reduction of limitation periods; the differentiation of possible approaches to the revision of transactions depending on the criminal components therein; the adoption of clearly defined rules of nationalization, etc.) that were put forward in the period between 1999 and 2004, has been adopted.

A report prepared by the RF Audit Chamber, An analysis of the processes of privatization of state owned property in the Russian Federation over the period between 1993 and 2003, which was drafted in 2004 and scheduled for discussion (after several delays) at the State Duma during its spring session in 2005, has been widely discussed. It is our opinion that the report itself provides no discoveries or innovations in regard to the Russian privatization, which had escaped analysis on the part of Russian or foreign experts in the 1990s and 2000s (the respective literature may be measured in thousands of articles and monographs on the subject). Tens, if not hundreds, of facts of nontransparent or questionable privatization transactions were reported by the national and regional mass media (in this case, it is not important whether these materials were of the contracted nature or not). It is generally recognized that almost every privatization transaction conducted in the 1990s and 2000s might be challenged on the grounds of at least formal (procedural) pretexts. Furthermore, since its creation in 1995, the RF Audit Chamber itself performed several audits with respect to privatization both at the level of separate enterprises and objects and across specific industries and regions. As far as we know, its audit reports have received no serious response (although quite unreasonably in several cases) until the mid2000s.

This is a complex problem, which in order to be settled requires that several questions should be answered: who is the formal author of the report (a private or a state entity), who is the informal customer of the report (unless the report was a politically correct initiative of the RF Audit Chamber itself), which social and political environment is it replicated in, and, consequently, who is in need of such conclusions for the practical application According to the practice specific for the mid-2000s, there is practical demand for negative assessment of the results of privatization. It is our opinion, however, that the companies mentioned in the report of the RF Audit Chamber will not necessarily be selected as most likely and priority candidates for de-privatization.

To all outward appearances, the primary political objective of the report (perhaps, the authors of the report had no such desire whatsoever) is to a priori increase uncertainty for all subjects, whereas certain sanctions will be imposed only on the selected entities by the authorities quite other than the auditors of the RF Audit Chamber. It is obvious that under the present circumstances large businesses will be subject only to surgical strikes on the basis of the three criteria as follows: whether a company is presently owned by government supporters or cosmopolitans, whether such owners are politically loyal and whether the company may be selected as an object of interest on the part of the persons going to become the new tycoons. At the same time, the transaction with the shares of Yuganskneftegaz has revealed quite effective and legal options of seizing property at any level by the application of non-judicial methods and practically in bypass of the regulations on companies, bankruptcy, and nationalization.

Therefore, on the whole in may be assumed that the issue of protection of ownership rights, which has been a long lasting problem in the modern Russia, has evolved to a qualitatively new level. The issue of the sale of shares in the framework of the Yuganskneftegaz transaction is not so much a case of illicit dealing with these shares, on the contrary, the situation is quite opposite, since the shares were Kommersant Publishing House, www.kommersant.ru, July 22, 2004; Finans, 2005, No. 5. p. 52. According to certain data, in the framework of this agreement the price of the barrel of oil is significantly lower than the current market price.

most probably sold on a formally legitimate basis. And, paradoxically, exactly this circumstance creates major risks in terms of protection of business related ownership rights in Russia.

First, the YUKOS affair, in particular the sale of its primary oil production asset Yuganskneftegaz, has demonstrated that the Russian regulations currently in force provide a formally legitimate basis for taking control over any company. Second, the legitimate nature of transfer of Yuganskneftegaz under the control of a state owned company is an illustrative example of the methods permitting to redistribute assets bypassing bankruptcy procedures and avoiding corporate wars. All the facts discussed above mean that the Russian legislation currently in force and the present law enforcement system fail to ensure the complete protection of private ownership on the part of the state. Finally, the sale of Yuganskneftegaz and, as a consequence, collapse of a major Russian company YUKOS, may become a threshold of a new stage of redistribution of property in Russia.

Third, the aforementioned latest innovations of the Russian law proposed in 2005 are quite illustrative in this context (the potential costs of the regulation of transfer prices stipulated in the RF Tax Code, confiscation amendments to the RF Criminal Code, toughening of the legislation concerning mineral wealth, pro-state versions of the legislation on competition issues, etc). The positive effects of the reduction of limitation periods from 10 to 3 years with respect to privatization transactions (discussed in April of 2005), as well as restrictions imposed on tax inspections conducted by the RF Federal Tax Service will be many times compensated for by new measures toughening the conditions of business operations and enabling the government to subjectively interfere in private sectors affairs.

Even the most liberal government officials seem to be well aware of that as well. Tax regulations (above all tax amnesty) would not be eased and privatization transactions would be subject to revision, acknowledged G. Gref, the Head of the RF Ministry of Economic Development and Trade, at a meeting of the Federation Council held in February of 2005.

The situation existing in Russia in the period between the beginning of the 1990s and the early 2000s was characterized by the formation of a relatively developed economic legislation, while the law enforcement system was in the most critical state. It seems that in the middle of 2000s the accents shifted: although the diseases of the Russian law enforcement system remained uncured27, there have been observed certain shifts as concerns the legislation on economic issues (and its interpretations), what, on the one hand, has significantly enhanced the uncertainty of the effects of economic decisions taken by the business community in terms of retaliatory measures undertaken by the government, and, on the other hand, has substantially toughened the regime of relations between the government and private businesses. The problems related to the law enforcement system in Russia, as being reinforced by the move towards the reestablishment of tight legislative regulations, are significantly enhancing the range of risks in the sphere of ownership rights. Consequently, the only way to avoid a dead-end and provide a distinct picture of the governments intentions is to revise the legislation of the Russian Federation in order to remove ambiguous interpretations as concerns the rights of private ownership, refrain from the reestablishment of the punitive regulations removed as early as the post-communist period, and refrain from the substitution of civilized law enforcement actions with the tactics based on force.

A. Radygin New approach to budget financing of the Russian agrifood sector In spring 2005 remarkable changes have taken place in the framework of ongoing administrative reform and reform of budget financing in the agrifood sector. The Resolution was adopted that radically revises the system of agricultures budget support on the federal level, and the draft Report on budget Typical assessments of the judicial system (except for the opinions of official government representatives of the judicial power in Russia) are basically varying in the range from inefficient and corrupted (in regard to the entire system) to judicial service market and close to catastrophe. The same was stated by senior public officials representing various branches of authority in Russia. In particular, the systemic corruption was mentioned by V. Zorkin, the Chairman of the RF Constitutional Court (2004), while catastrophic and threatening situation in the judicial system was stated by D. Kozak, the representative of RF President in the Southern Federal Okrug (2005), who had earlier been vested with the supervision of the judicial system.

support to the sector for the coming three years was prepared. The following paper examines positive and negative (from the authors point of view) aspects of these changes.

The RF Ministry of Agriculture has prepared Report on performance results and guidelines for and the period till 2008. This is a complex document that includes analysis of the current situation in the agrifood sector, outlines the Ministrys mission and strategic goals for the coming period, defines measures, indicators and budget expenditures needed for their implementation and the projected outcomes. The Report is quite a good example of program target approach to the budget planning. This success was surely preconditioned by the Ministrys year-long experience of developing draft law on regulating RF agrifood sector in 2005-2008.

In brief the Reports essence is as follows. The current food supply of the Russian population is largely based on import of agricultural and food commodities. This leads to the forming of stagnant rural poverty and degradation of the national agricultural and natural potential creating long-term problems for the countrys social and economic development. So, the present-day strategic goals of the Ministry of Agriculture should be:

Higher competitiveness of domestic farming;

Sustainable development of rural areas;

Preservation of agricultures resource potential for the future periods.

In order to achieve the first goal the accent is made on: 1) better access of farm producers to basic production resources including credits; 2) import substitution, first of all in the livestock production;

3) expansion of export, first of all that of grain. Subsidies and institutional measures are defined to support each of these activities.

The second goal implies growth of rural populations incomes from farming as well as from alternative employment in rural areas. The second component in the system of measures designed to achieve this goal is the forming of good living conditions in the countryside, i.e. the development of social and engineer infrastructure.

In the framework of the third goal the focus is made on preserving soil fertility at present the most acute problem in sustaining the resource base of farm production.

This logic looks quite sensible both by its form and most importantly by its essence. From our point of view it absolutely correctly assesses the situation in the sector and sets guidelines for government actions to solve the urgent problems. Moreover, it surely lies within the competence of the RF Ministry of Agriculture.

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