Perhaps the only thing that once again made analysts happy was his assurance that the causes of the current crisis were to be looked for “…in the state of affairs in America and in a number of other largest economics and in the not too adequate international financial regulation of recent years”; he also announced that he was keeping his savings in rubles. Putin had also accentuated the foreign origin of the crisis - but at least he had mentioned some Russian problems, including the economy being heavily dependent on prices of hydrocarbons and metals.
Putin’s broadcast live on radio and TV had a very modest internal-policy component, while that of Medvedev had none of it at all. Putin pointed to the positive role of United Russia, which enjoyed majority in parliament, due to which the Government’s initiatives were accepted. Asked of his opinion on the extension of the presidential term to six years, Putin said that “longer office is a matter of taste to a certain extent”. Likewise, absolutely no comments were put forth as to the issue concerning the year 2012, although many analysts had been hoping that the New Year’s messages of either Putin or Medvedev would shed some light on the possibility of early retirement of Medvedev, which the latter had refused to refute in his recent interview to the “Figaro”.
It is not without interest that the person who presented his “personal opinion” concerning the situation in the Russian economy was RF Vice-Prime Minister and Minister of Finance A. Kudrin. He stated that the country’s budget deficit could reach 1.5 - 2.5 trillion rubles next year, “which we will have to make up from the national Reserve Fund”. The year 2009 “…will be the worst year for the world economy since World War Two”, said the Minister. Not only did he acknowledge that inflation in Russia would remain at a high level, in excess of 13%, but hw also noted that “devaluation will cause additional inflation”. Unlike the Prime Minister, Kudrin promised, instead of a rise in social expenditures, that “…we will slightly refocus the expenditures, but will not reduce them. This will affect neither wages and salaries nor pensions”.
The sum total of these assorted statements presents a relatively clear view of the State’s strategy aimed at smooth and gradual devaluation of the ruble, which would devalue the present level of state expenditures without making hard decisions concerning their sequestration or abolishment.
The RF Government composed a list of enterprises which should be assisted by the State in the first instance. “The first instance” extended to 295 enterprises which answered the mandatory requirement of having a workforce in excess of 5 thousand and a turnover of no less than 15 billion rubles. According to the estimates prepared by I. Shuvalov’s commission, these companies will require up to 3.trillion rubles to make up for their deficit of credit resources (state guarantees against credits, direct financial assistance, restructuring of tax arrears). These expenditures are several times higher than those envisaged in the existing 2009 budget.
The importance of the fact of this list having been composed should not be overestimated – it is nothing more than a political declaration, so to say, a zero stage of selecting the real recipients of funds. This was directly confirmed by both I. Shuvalov and V. Putin (for example, in December, B.
Aleshin, head of the OJSC “Avtovaz”, an enterprise included in the list and apparently a core one, was advised by the Prime Minister to place bonds in order to attract investment resources). The list simply slightly increases the chances of a fund seeker to obtain financing, while each relevant decision will be taken on an individual basis. Also, there exists a formal difference between direct credit and
“tariff support’. The list was composed with sufficiently clear intentions (which does not mean ‘logically’) – all the more or less large-scale companies were hammered into it without any consideration being given to their financial situation – plus various smaller companies important for the decision makers. The fact that some structures, such as the OJSC “Rosspirtprom”, have found their way into the list is simply shocking.
But the main shortcoming of the decision concerning state assistance is, as in the case of the previous ones, its absolute discreteness. The government of a country may indeed sometimes come to the decision to directly finance enterprises proceeding from some logic – for example, that bankruptcy of a big bank could harm the interests of numerous, completely innocent depositors - both physical persons and companies, or that the stoppage of a monoenterprise which is the main source of income in a settlement could result in a social catastrophe, sharp rise in crime, etc. The aforesaid list enterprises, however, does not follow this logic. Moreover, while the established international practice is aimed at saving enterprises from bankruptcy, it is absolutely unclear what goals are to be achieved by this “state assistance”.
In December, D. Medvedev signed and put into effect two laws designed to curb the powers of the police (militia), including the abolishment of the notorious Item 25 of Article 11 of the Federal Law “On the Militia” (which authorized any inspections of businesses on suspicion of their having committed crimes or administrative offenses) and the introduction of additional guarantees of entrepreneurs’ rights. However, the new version of the Laws “On the Militia" and “On Operational and Investigative Activities” still allows the participation of the militia in tax inspections and licensing control. Also preserved are the major shortcomings of these articles, thus making it possible to seize, in the course of an inspection, practically anything and for any period of time (the only difference is that today it is preferable that a copy should be made of a document being seized). By the way, in December, D.
Medvedev suggested that Internal Ministry officials prone to harassing businesses with their inspections should be severely punished – “as a minimum, there should emerge disciplinary responsibility, … as a maximum – criminal [responsibility]”. The texts of the new laws contain nothing of this kind.
Also, D. Medvedev put forth a number of new principles to be incorporated into the Russian judicial system. Thus, for example, it was suggested that the practice of judges’ re-attestation should be abandoned, and instead they should be appointed for an indefinite term (the re-attestation procedure today being used as a means to dismiss “incorrect judges); or, that it was necessary “to consolidate various forms of making public the information on the work of courts of justice, including via the Internet”. It should be noted that, however useful these innovations might be, just as in the case of the Federal Laws “On the Militia” and “On the Operational and Investigative Activities”, they will not be very fruitful until the practice of removing judges from office by the qualification collegium of a higher court is abandoned.
The ideological orientation of yet another two laws adopted by Parliament in December is absolutely different. The laws on the introduction of amendments to the RF Code of Criminal Procedure and the RF Criminal Code will withdraw the cases of persons accused of committing terror acts, spying, subversive actions, high treason and staging mass riots from the jurisdiction of the jury. Formally, the authors of the draft law, who are all members of United Russia, speak of the increasing number of sentences of acquittal passed by the juries in the territory of the North Caucasus with regard to terrorists (that is, the authors of the draft law proceed from some a priory personal knowledge of who is a terrorist and who is not). Actually, any citizen can be accused of committing any crime (including terror acts), and the complete transfer of this category of cases into the competence of judges can mean a nearly 100-percent probability of the judgment of guilty to be passed. All this means nothing other but further toughening of legislation. Especially noteworthy is the fact that “staging mass riots” is also included in this category. The point is that nowadays the notion of “staging mass riots” is frequently applied in Russia not to violent crimes but to unsanctioned mass protests. Even a group of members of the Public Chamber, closely linked to the authorities, called upon D. Medvedev to veto this law, but it is not likely that he will be able to do so.
In December, a number of important personnel changes took place. Thus, a new, extended Board of Directors was elected in “Norilsk Nickel” to be chaired by A. Voloshin, former head of the Presidential Administration and veteran Chairman of the Board of Directors of the Unified Energy Systems of Russia - Russian Joint-Stock Company (a few days earlier, V. Putin’s acquaintance, V. Strzhalkovskii, was appointed General Director of the company). However, M. Prokhorov was not elected to the Board – he said that his failure to be elected onto the Board was an outrageous violation of a deal with shareholder RusAl (after a block of shares in Norilsk Nickel was sold to RusAl, Prokhorov became its major shareholder). Thus, this corporate conflict cannot be considered to have been resolved as yet.
The major shareholder of “Sviaz’invest”, the State, nominated E. Iurchenko to the post of General Director of the company. Before 2005, Iurchenko was Deputy-Director of Sviaz’invest; he had to leave this post after the arrival of A. Kiselev, reputedly a protg of the former head of the Ministry of Communications L. Reiman. Also, there were rumors of a possible compromise solution of L. Reiman being nominated to the post of Chairman of the Board of Directors. Thus, it will soon become clear who is to control this important structure.
In December, there was a sharp rise, or better say resumption, of mass protests, which were nowhere to be seen in the first 11 months 2008. In Moscow, December saw the first “March of Discontent” of the year 2008 (in March and April, the attempts to organize it proved futile). But much more important were the protests of car owners against the RF Government’s decision to increase the import duty on second-hand foreign cars (adopted in December, it should come into force from 11 January 2009). Protest actions involving many thousands took place in Novosibirsk, Krasnoyarsk, Irkutsk and Primorskii Krai, where they were not limited to Vladivostok but spread to other cities as well. Protesters in Primorskii Krai repeatedly clashed with the special police units airlifted from Moscow, and the action began to assume political character. Nevertheless, V. Putin reiterated his government’s decision and refused to change it. It is noteworthy that the local authorities, as well as the local organization of United Russia, took the side of the protesters and not of Moscow – for the first time since the protests against the construction of a pipeline in the vicinity of Baikal. In that instance, the decision concerning the pipeline was cancelled, and the situation in the region returned to normal. It is possible that some compromise will be found again, because otherwise yet another seat of tension is sure to emerge.
In December, Moscow Patriarch Aleksey II (secular name Aleksey Rediger) passed away after having been head of the largest Orthodox denomination for more than fifteen years. In the stormy 1990s, he emphasized his detachment from politics; in the 2000s he began to support the authorities to the extent of speaking in favor of the official candidates to the post of RF President. At the same time, he managed to preserve some autonomy of his organization. The official candidate to the vacant throne of Moscow Patriarchs is Metropolitan Kirill, Head of the Department for External Church Relations of the Moscow Patriarchate, supported by the Kremlin. Apart from him, there are now two more candidates – Metropolitan Vladimir of Kiev, and the major competitor, Metropolitan Kliment of Kaluga, Chancellor of the Moscow Patriarchate. What is most intriguing is not whether Kirill or Kliment will become Patriarch (there are no doubts that Kliment, who is a member of the RF Public Chamber, is equally far from radicalism), but whether the Kremlin will manage to prevent competition among the candidates and to impose unanimity. Otherwise, the Moscow Patriarchate risks to become a new venue for discussions, which are fraught with schisms, as is exemplified by the election of the previous patriarch1.
Budgetary and Tax Policy N.Luksha As of November results, the CPI in Russia amounted to 0.8 per cent, which is lower than in the relevant period of the preceding year 2007 (1.2 per cent). Tthe consumer prices growth within January - November has reached 12.5 per cent. ). In November the financial crisis was deteriorating in the country, what has affected the real sector of economy. Despite the decline in reduction of foreign currency reserves in November, as well as reduced rate of capital outflow, it is still too early to speak about the new trend in economy. To restrain prices growth rates and maintain stability of the financial system, the Bank of Russia has taken a number of measures. From December 1, the refinancing rate was raised by 1 p.p., to 13 per cent, as well as the interest rates on credits and deposits of the RF Central Bank. Moreover, since mid-November the RF Central Bank pursues the policy of “smooth ruble devaluation”.
The consumer price index in November made 0.8 per cent, as compared with 0.9 per cent in October (see Fig. 1.). From December 1 to 22, consumer prices have grown by another 0.5 per cent, In 1990, the then head of the Kiev Mitropoly of the Moscow Patriarchate, Metropolitan Filaret, founded a new denomination after having lost Patriarch’s election, and thus initiated a schism.
thereby the inflation rate has exceeded the estimates of the Central Bank, 13 per cent by the end of the year.
Like in October, the utmost growth rates were observed in prices for food stuffs, which have grown during the month by 1 per cent. The most significant growth was observed in regard to eggs (+2.4 per cent), meat and paultry (+ 1.7 per cent), milk and dairy products (+ 1.4 per cent). Herewith, granulated sugar and sunflower oil continued further downgrading: within the month their prices have declined by 1.4 per cent. Seasonal decline in prices for fruit and vegetables is over, prices have grown by 1 per cent.