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World Bank says most difficult reforms still ahead for Russian government

CEP20021220000325 Moscow Interfax in English 1518 GMT 20 Dec 02

[FBIS Transcribed Text]

 MOSCOW. Dec 20 (Interfax) - A senior World Bank official believes that despite the progress made in recent years, the most difficult reforms are yet to come for the Russian government.
  Summing up this year's results, Christof Ruehl, the chief economist at the Bank's Moscow office, told journalists on Friday that 2002 became the fourth consecutive year of successive economic growth that could exceed 4%.
  However, he said many important and most difficult reforms are still on the government's long-term agenda. First and foremost, they concern state management reform, natural monopoly reforms, and a banking reform, Ruehl said.
  He blamed some slowing down in the rate of implementing these reforms not only because of the upcoming parliamentary and presidential elections, but because of a number of other weighty reasons. These reforms are very complex, especially from a technical point of view, said Ruehl.
  In addition, he said, they inevitably cause resistance on the part of many influential business groups since they set new competition standards, which greatly differ from the current ones.
  Ruehl said that opposition to reforms from big businesses is typical for many sectors of Russia's economy, which stands out for the significant concentration of capital.
  At the same time, he stressed that a considerable slowdown in the pace of reforms or halting them makes it increasingly difficult to carry them out with every passing year.
  On the whole, Ruehl believes that Russia's economy has used up the window of opportunities for reforms that opened up after the 1998 crisis. However, in order to attain sustainable growth in the long- term, Russia needs to further diversify the economy, reduce dependence on the oil market, and cut government staff.
[Description of Source: Moscow Interfax in English -- non-government information agency known for its aggressive reporting, extensive economic coverage, and good coverage of Russia's regions]



Russia: Yabloko leader discusses reforms within energy, housing sectors

CEP20021220000160 Moscow Radio Rossii in Russian 1230 GMT 20 Dec 02

[FBIS Report]

The guest on the latest edition of Radio Russia's "Persona Grata" interview programme was  Grigoriy Yavlinskiy, the leader of the Yabloko party. The programme, which was broadcast at 1230 gmt on 20 December 2002, was presented by Vitaliy Ushkanov.
  Yavlinskiy's main topic was the progress of reform in the energy industry and the housing and municipal services sector. He expressed his displeasure at the current state of these reforms, which, he claimed, "had not been properly thought through". The individuals responsible for driving through the required changes were guilty of asking Russians to accept a bitter compromise: "You will live badly, but it won't last long". Yavlinskiy added that many of the changes were being scuppered by "incompetence and selfish interest", with the result that the Russian people were paying far too heavy a price for reform.
  Yavlinskiy reserved some of his harshest criticism for Unified Energy System of Russia (UES), the company which operates Russia's national electricity grid. Russians, Yavlinskiy complained, were being forced to pay too much for their electricity, while the company's top managers feathered their nests with luxury cars and private jets. This had led to a ridiculous situation - Russians were being charged more for electricity than export customers abroad.
  The housing and municipal services sector, according to the Yabloko leader, is also guilty of charging too much for what it provides. While the people who ran the sector were insisting that domestic users pay 100 per cent of the cost of services, Yavlinskiy argued that customers should know what they were getting for their money. None of the providers were accountable or transparent to their customers. Indeed, Yavlinskiy claimed that the sector was being driven into the ground deliberately. As soon as it collapsed, opportunists would move in and reap the benefits of privatization.
  Yavlinskiy argued that Russians need to learn how to subordinate the country's government to their own needs. Government officials were competent people, often more able than their European counterparts, but were taking advantage of the complete absence of checks and balances. Placed in a similar situation, Yavlinskiy suggested, European governments would also succumb to greed and self-interest.
  The Yabloko leader concluded by stating that Russians should be given the life, prosperity, security and respect which they deserved.



Document ID: CEP20021218000312

Russian State Duma Delays Decision on Power Industry Reform

CEP20021218000312 Moscow Nezavisimaya Gazeta in Russian 18 Dec 02 P 3


  1. Russian Duma deputies disagree on when to schedule energy debate CEP20021217000225 Moscow Russia TV RTR Russian 1400 GMT 17 Dec 02

[Report by Ivan Rodin: Deputies Ready To Fulfill Any Order"--taken from html version of source provided by ISP.]

[FBIS Translated Text]

    Reform of the electrical power industry has sharply exacerbated the struggle between groupings in the President's Administration and the government.

    This week, the State Duma will not discuss the packet of laws on reform of the electrical power industry and vote on it in the second reading.   Yesterday's Council of the lower house adopted the decision to postpone all of these draft laws from 18 December to an unspecified time.   Then again, this same Council decreed that it would once again discuss the prospects of the energy laws on 23 December.

    We may recall that, the day before, after the Coordinating Council of the four centrist factions had agreed with the People's Deputy initiative group to postpone discussion of the laws, some of the leaders of the "foursome" spoke out much more categorically.   For example, Gennadiy Raykov stated that the people could greet the New Year calmly, without worrying about the results of the second reading.   He also noted that, to all who had expected some kind of colorful show to take place on 18 December on Okhotnyy Ryad, we may boldly say: The spectacle will not take place.   On Monday evening, Raykov insisted that his group would not participate in the voting on the electrical energy packet until the draft law on state regulation of tariffs on thermal and electrical energy (which at the present time has been rejected by the Federation Council) has been adopted in its final form.   The head People's Deputy told our Nezavisimaya Gazeta correspondent that it will probably not be possible to coordinate this document--which provides for one-time ratification of tariffs before the budget for the following year--with both the government and the upper house before the end of the year.   And therefore, in his opinion, we may presume that the entire energy packet is also being put off until the next Duma session.

    We must note that the other centrist leaders were either less categorical, or refused to comment altogether.   Yesterday, they finally began expressing cautious predictions about the fact that, perhaps, the last week of December would after all become the time when the plan for reform of RAO [Russian joint-stock company] YeES Rossii--and along with it of this entire Russian sector--will at last take on some final and, most importantly, legal outlines.   The heads of the Unity and OVR [Fatherland-All Russia] factions, Vladimir Pekhtin and Vyacheslav Volodin, allowed themselves such predictions.   However, the leader of the Russia's Regions group, Oleg Morozov, still specified that any variant is possible--voting on the laws in December, and their postponement until January, and even   more distant times for the second reading.

    In lobby discussions, many deputies are speaking out much more simply: Everything will depend on what decision the Kremlin makes, after all.   As our Nezavisimaya Gazeta correspondent managed to determine, the next few days will be filled with numerous meetings with Aleksandr Voloshin and various deputy prime ministers and ministers.   We might add that rumors began to emanate from the SPS [Union of Right-Wing Forces] faction yesterday to the effect that, perhaps, German Gref and Aleksey Kudrin will in the nearest time make abrupt and, most importantly, public statements to the effect that the Putin administration, which is trying to deal with the economy together and parallel with the government, is thereby bringing the country no benefit whatsoever.   Rather, it is doing it harm.   Then again, as yet such rumors have not found confirmation from other sources.

    Thus, the prediction once expressed by Nezavisimaya Gazeta--that postponement of the reform of the electrical power industry until after the elections is entirely probable--still retains its current importance.   In any case, deputies are demonstrating amazing flexibility at the present time: They are ready to fulfill any order of the supreme authorities, even despite what may be written in the laws on privatization of one of the major Russian natural monopolies.

[Description of Source: Moscow Nezavisimaya Gazeta in Russian -- Daily Moscow newspaper aimed at an elite audience and controlled by Boris Berezovskiy.]


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