VEDOMOSTI, KOMMERSANT
Kremlin set to re-engage its main resource in the run-up to the second round of the Ukrainian elections
Viktor Yushchenko, the opposition leader, won the first round of the Ukrainian presidential elections. Yesterday, the Central Election Commission announced the final results after processing all the ballot papers: Mr. Yushchenko polled 39.87% of votes and Viktor Yanukovich (the current prime minister backed by Moscow) - 39.32%.
Sergei Tigipko, head of Mr. Yanukovich's campaign HQ, told Vedomosti, "in Ukraine, it is not the winner of the first round who usually takes the runoff." Therefore, he added, Mr. Yanukovich would be at least 3-4% ahead of his rival. Today is the first day when the two candidates are allowed to start their campaigning again.
Yesterday, news broke that Russia's President, Vladimir Putin, would visit the Crimea (Ukrainian autonomy) on Friday. The Crimea's council of ministers confirmed this for Kommersant. The Crimean government suggests a direct link between this trip and the Ukrainian elections. Sources in the Ukrainian presidential administration believe that Mr. Putin will meet with Ukrainian President Leonid Kuchma and Prime Minister Yanukovich.
On October 28, three days before the first round, Vladimir Putin visited Ukraine as well. Then he appeared on three national TV channels in a move that many people interpreted as part of Mr. Yanukovich's election campaign.
Russian experts interviewed by Vedomosti believe that the Yushchenko victory in the first round marks a split in the Ukrainian political and business elite that initially intended to support Mr. Yanukovich, and the Russian factor will not increase the prime minister's chances in the second round. Stanislav Belkovsky, president of the Institute of National Strategy, is convinced that "the votes were calculated a week ago," but "official results" were not announced until after all the interested sides had consulted President Kuchma as to who should be declared the winner. According to Mr. Belkovsky, the Ukrainian leader wants to ensure that his successor - be it Mr. Yushchenko or Mr. Yanukovich - is as weak as possible.
NOVYE IZVESTIA
Liberal ministers oppose prime minister's plans
Yesterday, liberal officials and leading businessmen came out together against "the inexpedient use", as they see it, of the Stabilization Fund's resources. According to them, this means raising public sector wages, and building ships and pipelines. This position, Novye Izvestia reports, obviously contradicts the plans of Prime Minister Mikhail Fradkov, as he is seeking to saturate the economy with money.
A roundtable was held yesterday in Moscow to consider ways of spending the Stabilization Fund's resources, which are expected to reach nearly 600 billion rubles ($1 equals 28.67 rubles) by the end of this year, and a trillion rubles in 2005, if the foreign economic situation remains unchanged. Alexei Savatyugin, the director of the Finance Ministry's financial policy department, put forward the ministry's position. According to him, the share of the oil profits that goes to the Stabilization Fund needs to be increased. Presently, the fund receives income from oil sales if the price per barrel exceeds $20, but Mr. Savatyugin suggested that this "cut-off figure" be raised to $21 or even $21.5. According to him, it would be appropriate to settle the state debt with a $1-1.5 margin.
Andrei Klepach, the head of the Ministry of Economic Development and Trade's macroeconomic forecasting department, believes it would be sensible to use this money for developing venture projects, and not building roads or transport junctions, as his minister, German Gref, previously suggested. Mr. Klepach also disagrees with the opinion that the Stabilization Fund money should be used for pipeline construction.
According to Alexei Ulyukayev, first deputy chairmanof the Central Bank, the only sensible solution is to pay our debts to the Paris Club.
The president's economic adviser, Andrei Illarionov, took issue with nearly everyone at the roundtable. "Many demands regarding ways of spending the Stabilization Fund's resources sound absurd for a civilized society," he said. He believes that the money should be spent abroad: on debt payments, on diplomatic representations, on improving the country's image and on election campaigns (Mr. Illarionov failed to specify what exactly he meant by that).
KOMMERSANT
Ban on Violence Catches Television Unawares
Yesterday the Russian State Duma adopted in the first reading an amendment to the law on the media that prohibits electronic media showing violence from 7 a.m. to 10 p.m. Although the committee for the information policy, the leadership of United Russia and the government's representative in the Duma were against the amendment, 420 deputies voted for it.
The information policy committee, Kommersant recalls, considered the amendment on May 13, but voted it down. Its author, Andrei Skoch explained that the ban was necessary to help children, "whose thought process is not sufficiently developed until the age of 14."
Yesterday's decision came as a total surprise for television companies. The Channel One and Rossiya refused to comment on it. However, in May, when the amendment seemed to have been finally buried, representatives of state-owned channels were quite outspoken. A spokesman for the Channel One said then, "it would be better [for deputies] to attend to more topical social problems than to score dubious points at the expense of television's popularity."
Yesterday Vladimir Kulistikov, NTV general director, was the only person to comment on the situation. "The problem definitely exists," he admitted. "But should it be solved by such absurd means? If we follow the bill's logic, we should ban films about the Great Patriotic war and Bondarchuk's War and Peace." According to him, if the ban becomes a law, it will be impossible to offer impartial and accurate coverage of terrorist attacks, crimes and accidents, which "is tantamount to distributing false information about these important events."
VREMYA NOVOSTEI
Russia to Sell $7Bln Worth of Weapons a Year
Last year, Russia earned a record $5.2 billion by selling weapons and military equipment. Many experts believe this is the ceiling and forecast a decline. Mikhail Dmitriyev, general director of the Federal Service for Military and Technical Cooperation with Foreign Countries, told Vremya Novostei about the outlook in military and technical cooperation.
Today, Russia has opportunities to further increase military and technical interaction, he said. It may achieve the level of $7 billion annually, but the problem is in prompt supply of spare parts and post-sale servicing.
The number of Russian companies with a right to sell on foreign markets will most probably decline. "There were plans to give licenses to 20 enterprises, but they were given only to 16," Mr. Dmitriyev said. "By the end of the year we will analyze in detail what they have done." Several licenses may be revoked as a result. Simultaneously, "new players may appear on this field". "Western countries revoke licenses as easily as they grant them," the service head added. "Russia also should demonstrate such intervention when necessary. We have a monopoly of the state on weapons sales, but not of one company."
When speaking about the geography of Russia's military and technical cooperation, Mr. Dmitriyev said that there were "geographic acquisitions" every year. "Another point is how deeply we strike root in a region. We have got a fairly good contract for armored vehicles supplies to Morocco to be carried out from this year, and good contracts with Saudi Arabia and Libya. The order portfolio of Rosoboronexport today amounts to $12.3 billion."
The export structure has changed somewhat, he said. Now naval hardware (destroyers, submarines and speedboats) accounts for 51% of exports, surpassing the aviation sphere. In Europe, there is a positive outlook for modernizing weapons and equipment supplied to former members of the Warsaw Pact.
Finansovye Izvestia
Central Bank acknowledges inflation increase
The Central Bank of Russia was the last financial institution to acknowledge the obvious - the annual inflation rate in Russia this year will be at least 1% higher than predicted.
Until late October, representatives of all concerned bodies insisted that the inflation would be kept within the predicted margins (10%), Finansovye Izvestia writes. And that is despite the absence of any signs of expected deflation in August or September, which could have neutralized the effects of inflation accumulated throughout the year.
The Central Bank finally spoke on Wednesday. First Deputy Chairman Alexey Ulyukaev announced that the inflation rate might be as high as 10.5-11% this year. In his opinion, short-term local factors - an increase in prices for meat, bread and gasoline - rather than fundamental factors caused this.
It is too early to predict whether the monetary authorities will be able to keep the growth of inflation within 10.5-11% margin. The problem is from January through October, price increases have reached 9.3% and they should not surpass a 0.5-0.7% monthly rate before the end of the year. It is going to be rather difficult to keep to these rates because November and December are generally considered high inflation months. A leading expert at the Center of Macroeconomic Analysis and Short-Term Forecasting, Dmitri Belousov, believes that if the situation takes its own course, inflation might reach 11.1-11.2%. "It is impossible to keep the price increase within 10.5% anymore," he says. "Nevertheless, the authorities are taking urgent measures to stop its growth at the 11% mark." He continued that it was a political, rather than economic issue. "If inflation stays within the 10.8-11% margin," he told the newspaper, "then the forecast would be slightly wrong and the positive dynamics compared to last year would be maintained. But, if inflation goes over the 11% mark and nears 12% - last year's figure - then it would mean that no progress compared with the previous year has been made."
Unfortunately, it seems that officials have refused to learn this year's lessons regarding the sound forecast of inflation rates. According to Mr. Ulyukaev, the inflation level in 2005 might be as low as 8.5%.
