Sorokina: Good evening.
As was expected, today the State Duma rejected the draft
budget for 2000 proposed by the government at its first
reading. It will come as no surprise that the Yabloko
faction voted unanimously against the new draft budget.
However, the news is that the Yabloko faction announced
today its own draft budget. Today my guest is Grigory
Yavlinsky. Hello, Grigory Alexeevich.
Sorokina: This is a significant development. On this
occasion you have approached the matter as professionals
and have proposed your own draft budget. I have studied
meticulously your draft on the Internet for several hours,
comparing it with the Government's version. Can you please
tell our viewers how long you have been working on your
Yavlinsky: We started working seriously on this text
in February, although the main principles had already
been worked out ever since we began submitting our proposals
for government draft budgets in 1994. The foundations
for this budget were established at that time. However,
we began focusing our work on the document in February.
Sorokina: It is well known that you met Prime Minister
Putin quite recently, several days ago. I believe that
you discussed different issues for several hours?
Sorokina: What was his reaction to your proposals?
Yavlinsky: He studied in detail the issues that we discussed.
He paid special attention to some issues, for example,
to the issue of prioritising, other economic forecasts
and issued some instructions. Today, however, when he
made his speech before the State Duma (Russian parliament),
he naturally supported the document that had been submitted
to parliament. We hope that this time we will manage to
stick to our positions more energetically, that we shall
manage to show the Prime Minister that the budget submitted
by the government is a copy of all the previous budgets
and consequently cannot be implemented. And all of this
means that the state of bankruptcy and breakdown of state
finances that we have seen in the past, will continue.
Sorokina: Grigory Alexeevich, surely you are breaking
the rules of the game? For only the government can propose
a draft budget. What are you trying to achieve?
Yavlinsky: Yes, there is such a formal provision, such
a restriction, that a draft budget should only be submitted
by the government. This is done, because the government
receives money from the people and only the government
can introduce an expenditure plan. We did not submit our
alternative draft as a draft law, but rather as a proposal
to the government draft. Therefore, we formally complied
with the rules for proceedings. In actual fact, however,
our proposals represent an alternative law. I mean here
a law in its entirety, with all the appendices and everything
else that is required. A small amount of work is required
from the government to turn it into a ready budget.
Sorokina: To enable our viewers to understand you
and your ideas, can you explain what is the main difference
between your version and the government draft? Could you
explain it in simple words?
Yavlinsky: I will try. Let us begin with the main goals
of the government draft. What are its priorities? What
is the top priority? What expenditures will be increased?
How will they spend the population's money?
Sorokina: Today Vladimir Putin said it would be spent
on "defence, militia, security".
Yavlinsky: If you take the budget, you will notice that
the largest expenditure increases occur in the following
areas. For example, "state management" - a 44% increase
Sorokina: What is meant by the term "state management"?
Yavlinsky: For example, the running costs of the presidential
office - a 55% increase in expenditure. This is the first
difference. Yabloko does not propose an increase in expenditure
on state management - we envisage here only 3% growth.
We will not increase expenditure on the presidential office
- we envisage here only 5%, instead of 51%. Here is a
difference. You will ask: "How will we spend this money?"
We suggest spending this money by doubling salaries for
the military, establishing a special budgetary item for
the Northern Caucasus, exhumation of the dead in the war
in Chechnya, compensation and, as a separate item, money
for the special intelligence service troops now in the
Sorokina: Where else could you obtain money?
Yavlinsky: Here is another one. The second priority for
the government is "international activity". This totals
49 billion roubles.
Sorokina: What is meant here?
Yavlinsky: Different things, including loans to the CIS
countries and fraternal republics, such as Belarus.
Sorokina: Forgive me for interrupting you, but what
is this - a habit, a tradition? Or a real need? We ourselves
are finding it hard to survive. How can we afford to issue
loans to someone?
Yavlinsky: That is what we are speaking about. There
is such a policy. It is incorrect, it is erroneous. We
think that we should not do such things today. They envisage
49 billion roubles in expenditure on "international activity".
Incidentally, here they include specific items that should
be listed as "national security" issues, and not here.
We, on the other hand, propose obtaining 5 billion roubles
from this item, involving the return of past loans to
other countries, for example repayments from India. We
would not spend 49 billion. We think that we should live
within our means. Let Lukashenko learn how to support
himself. Today we are in a situation where we need to
obtain money for oil and gas. Everyone should pay us,
irrespective of the circumstances. Today Russia is in
such a state that we can no longer envisage such expenditures.
Let me now turn to another area. Incidentally, this will
be very easy for you to understand. The government proposes
doubling expenditure on the state mass media.
Sorokina: Is this mentioned in the state draft budget?
There is an obvious reason why: the election year.
Yavlinsky: Yes, the election year. This means doubling
expenditure on the mass media that serves the government.
Therefore it should speak positively about the government
and describe it in the best light. So now you can look
at the direction of this budget: state bureaucracy, the
presidential office and the state mass media that speaks
about them positively, as well as their friends abroad.
How can these be budget priorities for an election year?
Sorokina: Surely you are simplifying things a bit
here. The term mass media may refer to the regional mass
media that cannot survive without state support.
Yavlinsky: Irrespective of whether I am simplifying things,
the priorities are quite clear. You saw them yourself
in the draft budget published on the Internet. I want
to make things as simple as possible. I propose spending
this money on education. We will not survive as a country,
if we fail to spend sufficient resources today.
Sorokina: Grigory Alexeevich, I have also noticed
that you have a revolutionary proposal on tax rates. You
propose the introduction of an average 10% tax rate and
levying this tax on everybody.
Yavlinsky: I do not propose an average rate.
Sorokina: No, this is a single rate.
Yavlinsky: A single rate: a 10% profit tax.
Sorokina: I would call it a tithe.
Yavlinsky: Just imagine. We have managed to balance the
budget, indicating that even if we don't obtain sufficient
income in the year after the tax cut, this system will
function within two or three years. People will be ready
to pay and live like people, if they only pay 10%. Today,
by the way, it is 45%! These are our proposals. Now you
should ask me the main question: where will we get this
Sorokina: However, we have been discussing this issue.
Yavlinsky: But I think that we should add one very important
thing here. Our own boundaries represent huge sources
of potential earnings - the customs. We have a huge hole
here. We have sustained significant losses from the customs'
union with Belarus. Of course, this is the country which
is closest to us - we went through the terrible war years
(the Second World War - Ed.) and Chernobyl together with
these people. This is the closest nation to us. But today
we cannot throw our money into this hole. Otherwise we
will ourselves become, if I may put it in this way, "stateless".
We have been losing our state. Therefore, we have to review
the customs' rules. We can not give our boundary to some
people who begin making money on it. Strengthening our
boundaries and customs, reducing expenditure on state
management expenditure on "international activity" - these
are the first sources for the closest attention.
Sorokina: I also noticed that significant inflationary
expectations stipulated in your budget draft are one of
the sources of rouble revenues. Does this mean that you
accept a higher inflation rate and expect the dollar to
appreciate more against the rouble than the government?
Yavlinsky: We simply believe that the economic situation
today is such that we cannot really expect low inflation
for the next year, as well as growth in the gross domestic
product. We have tried to devise a realistic budget. Our
budget has one more advantage - it is transparent. Why
will the Ministry of Finance and the Government announce
tomorrow that Yabloko's budget should not be adopted?
Mainly because it has been written differently. We indicated
clearly how much money the President will receive, how
much the Prime Minister and his deputies will earn. We
indicate how much money is being spent on postal expenses
and the President's plane, cars and writing materials.
This is not the case in "state management" in general.
This transparency will establish an executive authority
from our government. It will make the government spend
specific amounts on pencils and letters. How much is spent
on soap for the Kremlin? This amount, and not a kopeck
more. And we can calculate how much soap was bought by
the Presidential Administration over the past year. But
we cannot check a single item in the budget in its current
Sorokina: Have I understood you correctly that the
higher inflation figures, if they occur, will provide
the government with an opportunity to obtain so-called
additional revenues that are not recorded anywhere and
can be distributed as they want?
Yavlinsky: No. Unreported revenues emerge when you plan
low inflation, and it is actually high.
Sorokina: But do they have this in the government's
Yavlinsky: Yes. But we predict high inflation and want
to distribute in advance everything that we can obtain
from such figures. This is certainly a bad illness - inflation,
- but if we have it...... I also wanted to point out that
there were few deputies in the Duma today. In general,
the budget has been treated as if it is unimportant. Today
politicians have been vying to make the strongest statement
on bandits in Chechnya. But actually the country can't
conduct a war, if it does not have a realistic budget.
Sorokina: To what extent do you incorporate in your
budget our involvement in a serious, protracted military
action in the Caucasus and the presence of tens of thousands
of refugees? Do you consider that our negotiations failed
and that we will not receive the next tranche of IMF aid?
Yavlinsky: First of all our budget is based on the assumption
that we won't receive any loans next year. If international
organisations reviewed our budget version - given that
the deficit is 10 times lower here than in the government's
draft and our budget in this sense is more realistic and
reliable - then maybe negotiations would take another
path. But at least we base our budget on the assumption
that we freeze the debt. We don't receive any more loans.
That is over. We have already taken so much that we cannot
repay it for the time being. This is a special problem
in the Northern Caucasus. How can we build a line of defence
there, if we don't have the resources and our budget is
Sorokina: Did you bear this in mind?
Yavlinsky: We have already borne this in mind, by stipulating
military expenditure in detail and absolutely transparently,
so that each soldier would receive money and this could
be controlled. In addition, we consider national security
to be a top priority. We allotted the largest percentage
increase in funds to this area - for salaries, the purchase
of weapons. We wrote out the whole military budget in
detail. We think that this is very important.
Sorokina: The refugees...
Yavlinsky: First of all we would like to act here politically.
We should treat refugees in a way which reveals that we
are thinking today about what they will do in winter.
They are all citizens of the Russian Federation and we
must treat them with full understanding of developments
there. Now why have we stipulated such a huge inflow of
refugees? This is related to our concern that the situation
in 1994-1995 will be repeated in Chechnya; that the military
efforts may be directed in a way that may cause civilian
casualties, and peaceful civilian targets may be hit.
This is absolutely inadmissible. I would like to state
categorically that civilian sufferings will definitely
lead to another defeat. We must not allow this to happen.
Sorokina: It looks as if we are about to engage in
action on the ground again.
Yavlinsky: Anything related to ground operations and
civilian casualties is absolutely inadmissible. We should
ruthlessly eliminate bandits and their groups and be extremely
careful with civilians, as we are with compatriots who
are in danger. Only in this case can we finally achieve
positive results in the Northern Caucasus.
Sorokina: If we can return to the budget, I notice
that you stipulate a moratorium on the debt payments of
the former USSR. How can we expect this to happen? Creditors
are unlikely to agree to such terms.
Yavlinsky: This is closely linked to the type of policy
that we conduct. If we refuse (as it has just transpired)
to co-operate in anti-corruption measures and refuse to
explain where the borrowed money has gone, it is impossible
to count on such a resource. And we will always resemble
a bankrupt who cannot pay his debts. We must immediately
review this policy. We need to be honest, open and brave,
instead of ingratiating ourselves, and have professionally
solid relations with our creditors.
Sorokina: Then we can count on this support?
Yavlinsky: In this case we can count on such support.
Sorokina: Grigory Alexeevich, let us now turn to your
colleagues in the Duma who are not displaying much interest
in the budget, but still discuss it: how do they view
Yavlinsky: We submitted our budget several weeks ago:
it was mailed to all the deputy groups. Everyone understands
that it is impossible to create a perfect budget today.
Items in our draft also provoke heated debate and tension.
But at least we propose several things that change the
situation in principle. We don't take loans. Our priority
is national security. Education. A reduction in taxes
to10%, and profits tax to 20%. They can vote for some
things in this budget. Most importantly, we propose tax
initiatives that will considerably reduce the shadow economy.
And this is principally new in our tax proposals.
Sorokina: Grigory Alexeevich, isnít your draft utopian?
Yavlinsky: We must start along this course. Then we can
see how far we can go in this direction.
Sorokina: However, do you know how deputies from other
factions regard your budget?
Yavlinsky: Yes. We have received the backing of some
factions. But there are also lobby interests and other
interests. We should work at this. But our budget will
become a reality, if the government decides to consider
Sorokina: What if the government fails to consider
your proposals or considers them only partially? Would
you vote for such a draft budget? Or must it include all
Yavlinsky: We would like to help the government as much
Sorokina: Do you mean that there may be room for compromise?
Yavlinsky: There may be room for compromise. We will
move in that direction. We will welcome any improvements
to the budget. However, we won't allow ourselves to be
deceived and will not approve any strange figures, as
we need a budget that will enable our country to survive
in these hard times.
Sorokina: In your opinion, will they adopt the budget
Yavlinsky: We have a new Prime Minister. Let him show
us what he can do. In my opinion he has a chance to do
constructive work. As the budget has been developed by
three prime ministers, he has an opportunity to review
the key issues and then really improve the budget.