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Eastwest Institute Russian Regional Report Vol. 7, No. 1, 9 January 2002 EastWest Institute Russian Regional Report Vol. 7, No. 1, 9 January 2002 TABLE OF CONTENTS The New Federation Council Kalmykiya Appoints Two Outside Businessmen to Federation Council Kareliya Governor Appoints Predecessor as Representative Enlarging Regions Putin Signs Law on Enlarging Regions Regional Elections Krasnoyarsk Parliamentary Elections Go Badly for Lebed Executive Branch Wins Tyumen Legislative Elections Fedorov Hangs on for Third Term in Chuvashiya Lapshin Wins in Gornii Altai Republic Luzhkov Allies Secure Moscow City Duma Elections Business and Politics in the Regions Primorskii Governor Hires FSB General To Oversee Economic Security MAIR Business Group Signs Agreement with Kursk Governor Center-Periphery Relations Putin Wants 7 Representatives To Strengthen Local Government Latyshev Seeks Changes in Federal Laws Banking in the Regions Big Banks Expected To Swallow Medium Sized Ones Regional Resources On-Line Petersburgers in Moscow Advertisements ***High Quality English and Russian Printing Services Available*** NOW UPDATED On-Line Handbook of Russian Regions EWI Russian Regional Investor EastWest Institute Publisher's Society A List of RRR Sponsors Instructions on How to Contribute AVAILABLE ON-LINE PDF Version of the RRR: http://www.iews.org/rrrabout.nsf/pages/rrr+page RRR Russian-language Version: http://www.iews.org/rrrabout.nsf/pages/rrb+page THE NEW FEDERATION COUNCIL President Vladimir Putin's reform of the Federation Council took full effect on 1 January 2002. From the beginning of 1996 through the end of 2001, Russia's governors and legislative chairmen had served as the representatives of their regions to the national legislature's upper house. Now the regional executive and legislative branches must appoint a representative to the "senate." In the articles below, the RRR continues tracking how the regional leaders are choosing their representatives. In appointing their representatives to the upper chamber, Russia's governors are naturally seeking to improve their position in Moscow, but they are also working to strengthen their base within their own regions. To obtain more resources from the federal government and generate outside investment capital for their regions, the governors often appoint well-placed Moscow officials or businessmen as their senators. One of the best examples of this trend was Tyva President Sherig-ool Oorzhak's decision to name Mezhprombank head Sergei Pugachev as his representative. Pugachev is considered to be one of the most powerful business and political insiders in Moscow. Likewise, Kalmykiya has chosen two bankers as its representatives (see story in this issue). Even left-leaning governors recognize the need to maintain good ties with the Kremlin. Newly elected Altai Republic President Mikhail Lapshin, the leader of the Agrarian Party of Russia, was straightforward in this regard, announcing that he would wait for the Kremlin to tell him who could best represent the republic in the Federation Council (RFE/RL Newsline, 8 January). Beyond these considerations, reelection calculations influence the governors’ appointments to the Federation Council. By selecting a wealthy entrepreneur, the governor potentially gains access to campaign financing as he faces the next election. And, as the governor of Kareliya demonstrated, a well-chosen representative can help to eliminate a potentially dangerous election rival (see story in this issue). As the story below on enlarging regions demonstrates, the new Federation Council is more willing to accept guidance from the presidential administration than its predecessor. However the new members of the upper chamber will be more active in considering legislation than the governors and regional speakers they replaced. The body will hold sessions three times a month instead of just once as it did in the past and it will have more time to discuss the details of legislation. The speaker will apparently have seven deputies, one representing each of the seven federal districts, and the number of committees will rise. Putin's seven presidential representatives are playing a role in defining the procedures of the new body, according to Kommersant Daily(13 December 2001). KALMYKIYA APPOINTS TWO OUTSIDE BUSINESSMEN TO FEDERATION COUNCIL. On 21 December Kalmykiya appointed two close business associates of President Kirsan Ilyumzhinov as the republic's representatives in the Federation Council. Neither of the men has a political base in the republic, reportedly an important factor for Ilyumzhinov. Approximately one-third of the new Federation Council members have a business background. Kalmykiya's contribution to this pool is two bankers, whose main interests are outside Kalmykiya's borders. R. Iskhakov, 40, has chaired the board of directors of the YuSIBI commercial bank and the Aerostan airlines (Izvestiya Kalmykii, 22 December). I. Provkin, 34, became the head of the Russkii bankirskii dom commercial bank in 1994, one of Russia's 100 largest banks, according to Ekonomika i zhizn - Kalmykiya (29 December). The political views of the new senators are unknown in the republic. The local press has yet to publish an interview with the two men, or even a photograph. At a press conference, Provkin said that he is not a member of any political party, is new to politics, and does not have any fixed political beliefs. Both men are close associates of Ilyumzhinov. Provkin said that he had offers from other regions to serve as their senator, but could not turn down Ilyumzhinov's offer since he had long known and respected Kalmykiya's leader. Several high-ranking bureaucrats had also been in the running for the offices. However, Ilyumzhinov chose to recruit outsiders rather than select local candidates and the sponsors standing behind them. This choice is not the first time that Ilyumzhinov has turned to outsiders, and past experiences have not always been successful. In 1999 Ilyumzhinov appointed Viktor Baturin, a close relative of Moscow Mayor Yurii Luzhkov, as republican prime minister. Baturin and his Moscow associates from the Inteko construction company tried to gain control of the republic's financial flows, provoking the enmity of the local elite. Within three months, the republican parliament voted no confidence in the government and it was forced to resign. Baturin and his associates made a number of crude errors due to their lack of knowledge of the ethno-political realities of Kalmykiya and their ignorance of the balance of power between various groups among the ruling elite. Despite some grumbling among the local elite about the choice of outsiders, the protests might not move beyond words, especially if the new senators do not try to play an active role inside the republic and if they are successful in lobbying the republic's interests in Moscow. Provkin said that he will seek to deliver for the region: "I know many senators well. Not only do I know how the Federation Council works, but I also have helped other senators in their work. I think that this experience will help me represent Kalmykiya in the Federation Council and will benefit the republic." It is hard to say if the appointment of the senators was the result of a deal between Ilyumzhinov, the Kremlin, and big business. Such deals have been common in the appointment of senators. Hopefully, the banker-senators will be able to resolve some of the republic's financial problems. They may be able to bring more funds into the republican budget from the federal level. This task is increasingly complicated as Moscow is centralizing financial resources, refusing to provide credits to the regions, and reducing the attractiveness of Kalmykiya's special economic zone by cutting the tax rates that the zones help enterprises escape. The bankers may also be able to provide investment capital from their own companies. Under the "Russian South" federal program approved in 2001, Kalmykiya will get 567.2 million rubles, but this sum is only one-third of what is required for the planned projects. If the senators could generate funding for this program, it would meet the interests of the republic, as well as those of Presidential Representative to the Southern Federal District Viktor Kazantsev, who is spearheading the adoption and implementation of the program, and the Russian government. Provkin has already promised to work on investment programs, the development of a mortgage system, and addressing the concerns of small and medium-sized businesses. Finally, the new senators could help finance Ilyuzhinov's presidential reelection campaign in the fall of 2002. They could also provide crucial support in his battle for the right to run for a third term. - Vladimir Volgin in Elista KARELIYA GOVERNOR APPOINTS PREDECESSOR AS REPRESENTATIVE. Kareliya Governor Sergei Katanandov appointed his immediate predecessor Viktor Stepanov as his representative to the Federation Council in late December. Katanandov, then mayor of Petrozavodsk, defeated Stepanov in the republic's elections held 17 May 1998 (see EWI Russian Regional Report, 21 May 1998). Stepanov was a member of the leftist opposition at the time of the election. Katanandov apparently appointed Stepanov to the upper chamber of the national parliament to neutralize a threat that Stepanov might again seek the governor's seat. With Kareliya's gubernatorial elections set for March 2002, Stepanov had two choices: either lead the republican opposition in a bid to win back his position as governor or accept Katanandov's offer to represent Kareliya's executive branch in the Federation Council. Stepanov considered both offers for several months, consulting with former Federation Council Speaker Yegor Stroev and the leadership of the Communist Party of the Russian Federation, before deciding to accept Katanandov's offer. In an interview, Stepanov asserted that he will maintain his independence from Katanandov even though his job is to represent the governor's interests in the Federation Council. "I will represent my own point of view. He has entrusted me with this position." However, Stepanov conceded that, "of course we will have to agree on several issues." - Maksim Timofeev in Petrozavodsk ENLARGING REGIONS PUTIN SIGNS LAW ON ENLARGING REGIONS.
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