|Russia and the CIS News Digest
Russian Central Bank Ends Dollar-Only Peg
As of Feb. 1, the Central Bank of Russia began pegging the ruble to a basket of currencies, weighted with the U.S. dollar at 90% and the euro at 10%, but it indicated that the euro's share would be increased soon. The arrangements were explained in a Central Bank press release on Feb. 4. Reporting on the development, the Financial Times of London headlined, "Russia ends de facto dollar peg and moves to align ruble with euro," commenting that "the move heightened expectations that other countries operating de facto dollar pegs, such as China, could follow suit.
"With 81% of Russia's oil exports currently sold to Europe, the move also provoked fresh speculation that Russia could decide to denominate its oil in euros. Russia is the world's second-largest oil exporter, behind Saudi Arabia," said the Financial Times. It noted that 30% of Russia's foreign currency reserves are already held in euros, as against only 5% five years ago.
No Quorum for Russian No-Confidence VoteThis Time
The Communist Party of the Russian Federation (CPRF) and the Rodina bloc in the Russian State Duma launched a vote of no-confidence in the government of Prime Minister Mikhail Fradkov, over implementation of the "monetization of benefits" reform of entitlements, which touched off nationwide demonstrations. The Feb. 9 vote was invalid, however, for want of a quorum: Fewer than 150 of the Duma's 450 members cast votes (112 against the government, 20 for it, four abstentions). Far from being a concerted move by the parliamentary majority party, United Russia, to repulse the CPRF and Rodina, the politicking around the vote revealed deep splits in United Russia itself. There were a good many more abstentions by United Russia deputies than were needed to prevent a quorum. In fact, out of 306 of them, only 18 cast votes in favor of the government.
United Russia deputy Valeri Bogomolov, in an Ekho Moskvy radio interview after the vote, expressed what he called an "ultimatum" to the government, saying that there is support from within United Russia itself for a new no-confidence vote in two months, if "mistakes" are not corrected.
Prime Minister Fradkov had to appear before the Duma to explain what has happened. He claimed to have "drawn lessons" from the monetization reform's troubles, but continued to blame ministry and regional officials for mistakes in the implementation, as opposed to a wholesale review of the monetization scam, which is a gimmick drawn from the Mont Pelerin Society's bag of tricks (other items in the bag being José Piñera's pension reform blueprint, on which he briefed President Vladimir Putin last spring; the imposition of "world market" utilities prices on Russia's impoverished population, etc.). In particular, Fradkov laced into Minister of Economic Development and Trade German Gref, saying that Gref "needs to look at many things again. He has to virtually fully reform the ministry, and he is ready to do that."
Russian Government Commissions Review of Social Policy
Amid the ongoing efforts to crisis-manage the explosion of protests, Prime Minister Fradkov has also requested Tomsk Region Governor Victor Kress to prepare an overview report on problems in the government's social policies. "I have a feeling there's something we have left undone, or are overlooking," Fradkov said at a Jan. 24 cabinet meeting. Kress had spoken at the meeting, attacking the cash-for-entitlements measures as a disaster, respecting not only access to public transport, but also medicines and other vital services. Kress also warned that even more serious protests would break out when people's rent and utilities bills begin to reflect the elimination of subsidies. According to Federation Council head Sergei Mironov, the costs of the entitlements reform have already run quadruple what had been projected.
Kress is an important regional leader, who publicly clashed with Gref and, especially, United Energy Systems (UES) CEO Anatoli Chubais during debate of the electric power sector reform in 2001. He was a member of President Putin's State Council, at the time when it produced the Ishayev Report on the need for real capital investment in science-intensive industries and manufacturinga report commissioned by Putin, but destined to be a dead letter as the monetarist approaches of Gref and others prevailed. In November 2000, during a visit by Putin to Novosibirsk, Kress, as chairman of the Siberian Accord association, pushed for the formation of a working group to elaborate a strategy for Siberian development. He said that the capacities of defense-sector companies should be used to boost manufacturing in Siberia, and in Russia as a whole.
Russian Protests Involve New Sectors of Population
As demonstrations by pensioners continued in cities throughout Russiaestimated in the Washington Post of Feb. 13 at 250,000 protesters on Saturday, Feb. 12as of Jan. 31 over half of Russia's regions had mitigated the elimination of free access to public transport for pensioners. With promises of financial support from the Federal budget, the regional leaders either restored free access, or began to issue discount passes.
At the same time, new layers began to protest against the reforms, which have slashed in-kind entitlements for many groups of citizens besides retirees. Though downplayed in the central Russian media, there are reports of other protests, including:
* Novyye Izvestia of Feb. 7 reported on a conference of police trade unions, held in Moscow the previous day. Many participants complained of not receiving the monetary compensation due them for their cancelled in-kind entitlements. Victor Chugunov, deputy police chief of Moscow, said that 350 police officers have given notice that they will leave the force.
* The same newspaper reported a protest demonstration by civilian employees of Northern Fleet naval units, in the Leningrad Region (around St. Petersburg).
* On Feb. 10, a few hundred civilian employees of the Ministry of Defense picketed in front of the Ministry's main building in Moscow, while another 500 demonstrated in front of government headquarters, demanding a 20% wage increase. (Boris Berezovsky's Nezavisimaya Gazeta particularly played up the threatened expansion of these actions, quoting an official of the Federation of Trade Unions for Armed Forces Workers and Employees, who said his organization was prepared for "nationwide protests across all of Russia" in March, if their demands are not met for the 800,000 civilian personnel of the ministry working for the Defense Ministry.)
* Russian TV and wires monitored by RFE/RL Newsline reported protests against rising gasoline prices, occurring Feb. 10 in Moscow, St. Petersburg, Vladivostok, Nizhni Novgorod, Volgograd, Novosibirsk, Khabarovsk, Petrozavodsk, Kursk, and Arkhangelsk. Clubs of motorists are protesting the rise of gas prices in petroleum-rich Russia, above U.S. and towards European levels. Deputy Premier Alexander Zhukov received a delegation from one of these groups.
While in major cities like St. Petersburg the demonstrations have been invaded by people pushing political slogans, in imitation of Ukraine's "orange" insurgency, the majority of newly reported demos in other cities have to do with pressing economic matters.
Yevgeni Primakov Tours Southwest Asia
Former Prime Minister Yevgeni Primakov, Russia's leading expert on the regions of Southwest Asia, toured the Southwest Asia in early February, in his capacity as head of Russia's Chamber of Commerce and Industry. After visiting Syria, Jordan, and Lebanon, Primakov was set to arrive in Iran Feb. 12. His delegation includes executives from 30 companies in the fields of trade, investment, the steel industry, airplane-manufacturing, telecommunications, information technology, banking, transportation, oil and gas. The delegation was due to sign several agreements on establishment of a joint trade council and exchange of trade expertise. During the two-day stay in Tehran, the businessmen were to attend a trade conference at the premises of the Iran Chamber of Commerce, Industries and Mines.
Primakov and his entourage are slated to hold talks with senior Iranian officials. Given his experience in the region, including his intervention prior to the Iraq war, in an attempt to prevent it, Primakov will certainly be discussing more than business.
Also in February, Russian nuclear energy officials visited Iran to finalized a deal whereby Russia will buy back from Iran the fuel burnt in the Bushehr Nuclear Power Plant. "The Iranians believeand we support them on itthat the fact they buy the fuel from Russia means it becomes Iranian property, and Russia will have to pay for the irradiated fuel," Aleksandr Rumyantsev, Russian Nuclear Energy Minister, said at a recent press briefing.
Questions Raised About Georgian PM's Death
The funeral of Zurab Zhvania, the Prime Minister of Georgia, who died from carbon monoxide poisoning two weeks ago, was held Feb. 6 in Tbilisi. The coroner ruled his death an accident, but questions have been raised about that, in the context of the political turmoil over his successor. Opposition figure Irina Sarishvili-Chanturia voiced the suspicion that there had been tampering with the space heater involved in the death of Zhvania and an associate. Shalva Natelashvili, leader of the Labor Party, said he thought Zhvania's death was related to infighting in the Saakashvili regime. Deputy Prime Minister Baramidze said that Zhvania "had many enemies," while the Boris Berezovsky-owned Russian press started rumors that the Russians had poisoned him.
Sources in Tbilisi say that Zhvania was considered a stabilizing influence on President Michael Saakashvili. Educated as a biologist, Zhvania was founder of the Green movement in Georgia, then collaborated with the government of Eduard Shevardnadze. He broke with Shevardnadze politically, but remained on good terms with the former President. He also served as Speaker of Parliament in Georgia. Within the Saakashvili regime, which took power in December 2003, Zhvania worked for negotiated solutions to the crises around the Abkhazia and South Ossetia districts, which several times appeared to be headed towards armed conflict between Georgia and Russia.
Saakashvili has appointed Finance Minister Zurab Nogaideli to succeed Zhvania, a move that drew criticism from Speaker of the Parliament Nino Burjanadze, one of the three top politicians (with Saakashvili and Zhvania) in the December 2003 Rose Revolution, and the person tipped by many observers for the premiership. She revealed that she and Saakashvili had had an understanding that a different person would get the job, and denounced Nogaideli as an uncooperative person.