Nezavisimaya Gazeta
State Duma deputies to leapfrog into Federation Council
Another round of reform has been proposed for the Russian Federation’s upper house. The idea is to strengthen the party character of the Federation Council and, as a result, to increase the influence exerted by United Russia and its leader Vladimir Putin. Retired State Duma deputies are expected to be recruited, obviously from United Russia. This injection of fresh blood into the Federation Council will be done despite the current rules which demand that a council member must first win a popular mandate at municipal or regional elections.
Vladimir Pligin, chairman of the State Duma’s committee on constitutional legislation, submitted the amendment to Article 1 of the law on the Federation Council at the end of last week.
In his view, the possibility that lower house deputies could go straight to the upper chamber fits with the system suggested by Dmitry Medvedev a couple of years ago. It was decided that only members of regional or municipal parliaments could become senators because they had law-making experience. Pligin is confident that serving Duma deputies have plenty of relevant experience. He predicts that many outstanding figures will find their way into the Federation Council.
The mechanism proposed is as follows. Party lists of State Duma candidates for deputies are divided into regional subgroups. An elected deputy is attached to a certain region or group of regions. These regional authorities will now be allowed to name their permanent Duma member their representative to the Federation Council. That individual will then just have to surrender his Duma deputy mandate and move to his or her new office nearby.
Since legislatures practically in all regions are controlled by United Russia, this means one can expect a large number of former Duma deputies from the party of power to enter the Federation Council in the near future after the adoption of Pligin’s amendment.
This interesting legislative initiative can be adopted very quickly. Pligin believes this will happen in two weeks’ time after the State Duma begins its fall session.
There is media speculation that all this is being orchestrated to provide jobs for State Duma deputies who do not make it on to United Russia party lists. The party’s political rivals polled by NG also believe this is the case.
But that analysis is only skin-deep. It is more interesting to observe what is happening to the upper chamber, where all party activity has been unofficially banned. At any rate, there has been no United Russia parliamentary party in the council all these years, for the simple reason that all the senators will be members of the ruling party.
Now – in the light of Pligin’s amendment – one gets a fresh perspective on the motive for the move to reseat St. Petersburg governor Valentina Matviyenko. She is viewed as the kind of person who can rouse the one-party body of power out of its slumbers, and give it a more active role in politics.
Vedomosti
Customs Union costs Russia 37 billion rubles a year
Russia pays Belarus and Kazakhstan more money in duties than it would if the Customs Union countries paid Russia in terms of real imports. Russia's federal budget could lose 37 billion rubles per year as a result.
Russia's share of total Customs Union imports could be almost four percentage points higher than the 87.97% set in the agreement between Russia, Belarus and Kazakhstan.
If the proportion depended on actual import volumes, then in the first quarter, Russia would receive 92.1% of all duties with Belarus and Kazakhstan getting 3.79% and 4.11% respectively, while the breakdown for the second quarter would be 91.98%, 3.41% and 4.61%, said the Russian official who compiled the statistics.
Based on these figures and the $146 billion in imports into the Customs Union in the first half of 2011, the Russian budget could receive about 18.5 billion rubles less for January – June 2011 alone, explained Ilya Prilepsky of the government's Economic Expert Group. But accurate estimates are difficult, he says – there is no breakdown by products and some are duty-free.
In late June, Russian Federal Customs Service head Andrei Belyaninov revealed there was a discrepancy between the numbers on paper and the reality. He estimated that Russia's partners had built up a debt to Russia of 22 billion rubles since September 2010 (15.6 billion of which is Kazakhstan's) and said that the agreement required revision; however, the Finance Ministry described this amount as an estimate that cannot be treated as the countries' debt.
Belarus and Kazakhstan do not want the agreement revised. Belarusian customs officials called Belyaninov's statement incorrect and said it ignores Customs Union regulations. They put the disparity down to goods being imported to Russia first.
The calculations were for 2007 and 2008, when Kazakhstan had its own rates, said Igor Ten, vice-president of the Kazakhstan Chamber of Commerce and Industry and former deputy chairman of the Customs Control Committee of the Kazakhstan Finance Ministry. Having brought its rates broadly into line with Russian levels, Kazakhstan lost revenue, he said, adding that there were verbal agreements not to review the proportion for two years, allowing sufficient data to accumulate.
Two quarters can not yield sufficient data, says Pepeliaev Group lawyer Galina Balandina, adding that a three year period is usually taken in such situations.
There was no mention of a moratorium – only that there would be no automatic revision, said a Russian negotiator. There are two problems with the calculations, he added – “Due to a lack of statistics in both countries, we had to use data they give the UN that we cannot verify. Plus these are pre-crisis estimates; everything has changed now.”
Balandina said that one concern was that Belarus offers more favorable customs rates, but that the country's currency crisis and difficulties relating to VAT refunds have negated these benefits. Interest in Kazakhstan is gradually increasing and the import flow problem remains, she said.
Gazeta.ru
Stock market: Gaddafi holds up buyers
Investors are gaining confidence, but falling oil prices are impeding Russian stocks’ growth.
Stock market indexes lost 4% last week, and are 15% down since the beginning of this month. However, analysts now, optimistically, expect this trend to reverse.
“It is time to buy,” said several asset managers interviewed by Gazeta.ru.
However, growth is still constrained by the ongoing military operation in Libya: oil prices are falling, Muammar Gaddafi’s regime is ceding ground. The RTS index fell 1.67% in the first five minutes of trading, to 1549.32 points.
“We expect a rebound rather than further decline,” said Artyom Laptev, managing director of AnkorInvest.
“Despite this month’s downward trends, we have a positive outlook on the market for the long and medium term,” added Konstantin Kirpichyov from Raiffeisen Capital. “We have not changed our recommendations for investors and maintain that the current stock market levels are attractive for anyone buying stock for 6-12 months and longer.”
“The Russian stock market closed a fourth week in the red for a second time since the 2008 crisis,” Rustam Nazimanov, an Alfa Capital trader, pointed out. “The fifth week closed with growth in 70% of these cases, and that’s the only reason to buy now.”
“The current levels open up a number of interesting investment opportunities which could yield a good income long term,” argues Laptev. “At some point common sense will prevail over panic.”
“Those selling stocks on the off-chance to get an opportunity to repurchase them at a lower price seem more like gamblers than people who know what they’re doing. Those building an investment portfolio stand a better chance of profiting later,” Laptev explained.
No meltdown was seen on global markets Monday, as the Nikkei 225 remained in the negative at -0.04%, MSCI Asia Apex 50 stayed flat at -0.05%, and the HangSeng at -0.93%.
U.S. markets fared worse on Friday with S&P 500 losing 1.5%, Dow Jones 1.57%, and Nasdaq 1.62%.
The dollar rose from $1.4397 per euro to $1.4368, while the yen dropped to 76.8 yens/$1 after it hit its WWII record of 75.95 yens/$1.
Oil is down on expectations of a resolution to the conflict in Libya. Brent futures have dropped to $106.08/bbl in London.
Gold for immediate delivery advanced to a record $1879.05 an ounce, up 1.5% on Monday, and up 16% since August 1.
U.S. Federal Reserve chief Ben Bernanke will address central bankers on August 26, the week’s key event. “Investors expect him to unveil new stimulus policies,” Kirpichyov said.
The markets collapsed last week for many reasons. “But there are two main reasons for the panic that seized investors – the falling oil prices and the active outflow of capital due to investors’ great wariness of entering positions,” explained Oleg Abelev from the Ricom Trust brokerage.
According to Emerging Portfolio Fund Research, funds investing in Russian stocks lost over $300mn in the week ended August 17, and $412mn the week before.
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