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MPs from United Russia, LDPR and Motherland also passed a bill that demanded from political parties to have 50,000 party members vs. 10,000 as was stated in the earlier law on political parties. Interestingly, the communists refused to support the bill, while apart from the party of power, they are the only political party that has a chance to match this particular criterion. Yet more interesting became the fact that Russian political parties do not protest against the United Russias initiative, which evidently would grant the right to exist only to correct for the power parties, as the criteria of examination of the number of party members are absolutely non transparent. In all likelihood, other political parties keep silent, because they are merely reluctant to announce the actual number of their members.

In 2004, the Duma ruled to make the transition to the proportional system of parlia mentary elections. It was announced that an MP could be recalled upon the ruling by the court of law under such a non formalized pretext as the failure to perform his obligations to the citizens. The Duma also introduced the imperative mandate that ties the MP up to the faction from which he has been elected.

After a series of defeats of the United Russias candidates at the 2004 spring regional elections (Arkhangelsk, Ryazan, Altay) and in the wake of the Beslan massacre, the Duma passed a law package on governors appointment. According to the respective bills, the power to appoint the governor on the no competition basis falls within the purview of re gional legislature. Interestingly, in the event the regional parliament thrice rejects the can didacy, the President of RF may dissolve the parliament and is bound to appoint an acting governor. The President dismisses the governor under various circumstances, particularly, in the event of the loss of the Presidents trust.

While discussing prospects for the electoral system reform and the one of the re gional executive power agencies, it should be noted their insignificant role in the medium and longer run. With no guarantees of free elections (the right for vote re count, financial sources independent of the government, independent TV, etc) the form of voting, be that a RUSSIAN ECONOMY in trends and outlooks majority or proportional one, does not matter. As concerns governors, many of them, any way were de facto appointed by means of withdrawal of their rivals and falsification of elections of votes. One equally cannot speak of most governors as figures that enjoy, at least, a relative independence in the federal politics and are sustainable to pressure, etc.

Main Political Parties in By contrast to numerous predictions, United Russia has not split into the leftist and right wings in 2004, nor it has developed its own ideology and appeared institutional com plete, as far as the legislative process is concerned. In ideological sphere the party rapidly drifts not to the declared centrism (notably, its leader, Mr. Gryzlov, no longer call it the right centrist party), but to an eclectic formation of LDPR type. As such, United Russia im plicitly supports any r. Putins initiatives and arrogates all the best happening in the country to itself, while the worst to its political opponents.

This also lies in line with the strategy of monopolization of the political space by the United Russia, as well as LDPR and Motherland provide an ideological back up to the poli cies underway, thus putting UR in a favorable position and, at the same time, frightening the domestic and, especially, overseas public opinion. The UR faction in the Parliament has failed to unfold as a fair parliamentary structure, with its MPs being de facto disfran chised18, while all the policy proposals fall under powers of its 34 heads and a few profes sional lobbyists. The actual abolishment of the Supreme Council of the party formed by a long bench of popular and semi popular governors became a symbolical sacrifice, for they are not needed now to attract votes. The supreme body of the party is the Bureau of the Supreme Council which de facto unites the leadership of the faction, executive party bodies and some representatives of the presidential Administration and sponsors.

In July 2004 two leftists parties, CPRF and Motherland, held their congresses. Whole political commentators predicted the prevalence of the pro Zyuganov majority at the CPRF party congress, the latter were failed by the archaic party Statute that suggested a cum bersome structure of its executive bodies (elected by the Congress, the partys Central Committee members outnumbering 100 is to elect the partys Chairman and his Deputies).

Prior to the announced date of the Congress there had been convened two plenums of the central Committee of CPRF, and it cannot be excluded that both managed to have quorum (for Mr. Zyuganovs enemies concentrated mostly in the partys central bodies, rather than in its regional organizations, and many CC CPRF members succeeded in attending both forums). One of the plenums dismissed Mr. Zyuganov from the party Chairmanship and elected Mr. V. Tikhonov, the governor of Ivanovo oblast, instead (incidentally, Mr.

Zyuganov more than once paid tribute to Mr. Tikhonov as a successful red governor, not withstanding an evident impoverishment of his region). In addition this plenum decided to change the Congress venue. The Zyuganov Plenum naturally voted for him as the party leader and expelled the opposition leaders from the party.

The two conflicting parties ultimately began to appeal to the RF Ministry of Justice with a request to prove the legitimacy of their respective plenums. As by the date of the Congress most party delegates apparently had become convinced in the power of the pro Zyuganovs majority, they deserted to his camp. Finally Mr. Putin received Mr. Zyuganov which was viewed as a sign of support to him from the top.

He is even in a worse position than others. For instance, he cannot introduce a bill or amendment, or even to hire an aide without the factions consent.

Section 1.

The Socio Political Background Because of the internal conflict, the protest actions against the passing in the first reading of the so called social package (monetization of benefits) were substantially weakened. It is not appropriate presently to have CPRF split, for a smaller, albeit inde pendent of the government and radicalized political group would pose a far greater prob lem to the federal policy makers.

As concerns the Motherlands congress, whose brand belongs to Mr. D. Rogozin, it was the congress of winners, with Mr. Rogozin elected as the party Chairman, while Mr.

Babakov, the head of TSKA soccer club, as the Chairman of its Executive Committee.

LDPR, as usual, did not demonstrate any serious activity in the period between elec tions.

The year of 2004 was not successful for the rightist forces. URF has failed to elect a new leader, while Yabloko, whose self positioning is a bit more articulated, suffers from a total lack of funding.

The civil congress entitled Russia for democracy and against dictatorship was held on December 12, 2004. The forum has failed to emerge into a serious factor of designing the rightist parties development strategy. Furthermore, the obvious issue of attraction of the masses to stand for democratic freedoms and against the red tape oppression trig gered a heated debate, for some participants in the forum believed that in Russia the masses can be mobilized only under national socialist slogans. The leftist hue partici pants, on the contrary, saw the genuine source of troubles in the Eltzin Constitution and liberal reforms.

Obviously, the oppositional to UR parties main mission so far will be a historical analysis of the last centurys events from 1917 through 1993, rather than survival. That is why they do not deserve any interest in, nor they raise any concern about them.

By contrast to the federal parliamentary elections, the parties demonstrated a differ ent performance at regional ones, which were held by party lists in the half of constutien cies. The party of powers performance outcomes showed a striking contrast between 70% of votes collected in Tatarstan and the humble second result in Altay Krai and Sakha lin. Overall, nearly everywhere UE showed poorer performance vis vis the federal parlia mentary elections, while they dropped substantially only at Sakhalin (from 30.1 to 17.7%) and Tula (29.9 to 22.3%) Oblast lections.

The communists have won representation in all the local legislature, while their results do not basically differ from those in Decenber 2003. Quite a number of voters supported Motherland clone blocks and they likewise overcame the 5% barrier practically everywhere.

URF played a real dark horse at the elections, with overcoming the barriers in 5 re gions and loosing I just 2 ones, while Yabloko either failed to participate or suffered a de feat. But a real eye opener of the political cycle became the Russian Pensioners Party that overcame the barrier in all the regions. Finally, representatives of the Agrarian Party were also elected in some regions.

1.1.5. The 2004 Main Foreign Policy Outcomes Russias 2004 foreign policy was bearing two important components: those were, first, economic integration attempts in the CIS framework and, second, negotiations on Russias accession to WTO.

Russias CIS Policy The presidents of Russia, Ukraine, Belarus and Kazakhstan agreed on establishment of the United Economic Zone (UEZ) and signed the respective agreement in 2003. But RUSSIAN ECONOMY in trends and outlooks there was no activity on adoption of documents necessary for the UEZ functioning after wards. The process began to gain its momentum after Russia had promised in 2004 to pay VAT on its exported energy sources to the other counterparts budgets. The price of the promise accounts for some Rb. 35.8 bln. annually. After that a task force coordinated the list of 29 priority agreements, which the presidents consequently approved. The docu ments should be ready for signing by July 1, 2005 and comprise, in particular, agreements on a free moving of goods, services, capital and workforce between the countries. But propelled by political, rather than economic, considerations, the eagerness to accelerate the creation of UEZ will hardly entail greater benefits for Russia than those resulted from other similar projects (the Union state of Russia and Belarus, EurAsEZ).

De facto, in 2004 UEZ was a PR club for non elected presidents against the back ground of parliamentary elections in Kazakhstan and Belarus and presidential ones In Ukraine. However, the concept for UEZ practically had lost its urgency by late 2004, when back upped by Mr. Putin, Mr. Yanukovich was defeated at the presidential elections in Ukraine and had to leave the office under the pressure of mass protests against the falsifi cations. Many analysts believe that the newly elected V. Yuschenko would not be in favor of promotion of the UEZ project, which deprives it of prospects.

Negotiations on Russias Accession to WTO The accession to WTO on acceptable conditions as the way to secure Russias ac cessionto the international arbitration is dictated by the ongoing structural changes in its economy. Given that the USSR export to the West at 90% accounted for oil and gas, the present share of minerals in Russias export accounts for just 50%. Such a decline in the proportion of minerals in the countrys overall export has taken place thanks to the rise in the share of primary processed produce of the metallurgical and chemical sectors. But it is the group of exports that often falls a victim to protectionist policy.

In 2004, it suddenly has become possible to promptly finalize the negotiations be tween the RF Minister of Economic Development and Trade and the EU Trade Commissar.

The final protocol set conditions of accession of EU companies to Russian markets for goods and services. He European Union lifted a greater part of its original claims in respect to the energy package (abolition of export duties on energy sources and OAO Gasproms export monopoly, accession of foreigners to pipeline construction in Russia, increase of domestic gas prices, among others). The protocol contains obligations with regard to a full compensation with the gas price for the gas producers domestic costs, including the investment component, and the refusal of a further rise of export duties.

Other concessions of the Russian party included lowering import tariffs for civic aircraft, assembly parts and cars, cancellation of OAO Rostelecoms monopoly on long distance communication, the promise to revise the system of levies presently applied to the EU air companies for the trans Siberian flights, and ratification of the Kyoto protocol by Russia.

The above agreement with EU forms a substantial progress on the path of Russias accession to WTO. Suffice it to say, the negotiations have been lasting for some 6 years, however, the process is far from completion. Certain countries, such as China and Austra lia in particular still have some claims to Russia, while the protocol with EU forms just a framework arrangement that needs further specification.

However, the refusal of the WTO+ claims to Russia and, particularly, those involving an absurd price rise for these or those groups of domestic produces up to an interna tional level signifies a considerable success of Russias foreign trade policy.

Section 1.

The Socio Political Background The country has also managed to sign the respective individual agreements with Sin gapore, Taiwan, Chile and South Korea and to preliminary convince China to cancel its claims for an unlimited supply of workforce.

Meanwhile, still the US and Canada are keen to negotiate such issues as opening banks and insurance companies branches in Russia, and, in part, prices for energy sources), while Japan questions import tariffs for cars and the Kern group of countries support to the agrarian sector.

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