| Itar-Tass
Putin shaking hands with Duma leaders after parliament adjourned
for the summer Monday. From right are Duma Speaker Gennady Seleznyov,
People's Deputy head Gennady Raikov, Fatherland-All Russia head
Vyacheslav Volodin, Unity head Vladimir Pekhtin, Russia's Regions
head Oleg Morozov and Yabloko head Grigory Yavlinsky.
In a flurry of final readings, the State Duma on Monday wrapped
up a spring session whose economic highlights included the approval
of farmland sales, a new bankruptcy law and much-needed small
business reform.
President Vladimir Putin met with leading lawmakers shortly after
the Duma recessed at 2 p.m. for the summer and praised them for
their "colossal work."
Economic Development and Trade Minister German Gref said the bills
approved in the session will fuel economic growth and attract
new investment.
In all, more than 30 economic bills were passed, many in the last
few days. It has already become somewhat of a tradition for the
Duma to extend its sessions for several working days, and this
year was no exception.
But with Russia gunning for a larger role on the world stage through
the G-8 and the World Trade Organization, there never seems to
be enough time to approve all the laws needed to push along reforms,
lawmakers said.
"As a member of all the sessions of the modern-day Russian
Duma, I can't remember one that could be compared to the latest
in terms of the intensity of the work and the importance of the
laws that were discussed," Oleg Morozov, head of the centrist
Russia's Regions faction, told reporters Friday.
"With so many bills and reforms being approved, we think
that every session will be easier than the previous one. But in
reality, it turns out to be quite the opposite," Morozov
said.
In its last day Monday, the Duma approved in final readings the
bill on bankruptcy and an initiative to simplify and cut the taxes
of small and medium-sized businesses.
Following a government request, deputies abolished a 1 percent
turnover tax and did away with a 1 percent road fund tax, which
applied to corporate revenues and is to be compensated for by
new excise taxes on tobacco, alcohol, gasoline and luxury cars.
The bills will go to the Federation Council in the fall and, if
approved, to Putin for his signature.
Also Monday, the Duma tweaked the draft 2003 federal budget to
allow the government to increase social spending on military service,
regional salaries and the judicial system.
As expected, the Duma approved a government plan to buy the Central
Bank's 99.5 percent stake in Vneshtorgbank for 42 billion rubles
($1.3 billion).
Lawmakers said the legislation passed this spring was crucial
to the country's economic future.
"Not all of the legislation is for immediate action, but
a lot of the bills will considerably change the lives of Russians
in the longer term," Viktor Pleskachevsky, head of the Duma's
property committee and a member of the pro-Kremlin Unity party,
said in a telephone interview.
Putin said Monday that the bill allowing the sale of farmland
was the crowning achievement of the session, paving the way for
the establishment of a land market in Russia for the first time
since pre-revolutionary days.
"Of course there are still a lot of holes in this bill, and
it won't be easy to build again the [land] culture that was lost
so many years ago," Pleskachevsky said. "But what is
most important is that the bill finally sets the rules for the
turnover of land."
The bill, which still needs to be approved by the Federation Council,
is the logical next step to the Land Code, which was passed last
fall and allows the sale of commercial, residential and dacha
land. The bill regulates the use and sale of 406 million hectares
of agricultural land throughout Russia. Foreigners are restricted
to leases of up to 49 years.
Putin said Monday he supported the bill and cautioned that it
was important to avoid rushing to sell land before a "civilized
market" was formed.
Morozov said the bill -- along with legislation on alternative
military service -- made this session one of the most attentively
watched throughout Russia as the issues touched everybody's lives.
Legislation that will help improve the investment climate and
protect property rights included the tax breaks for small business,
which were drawn up by the government and largely supported by
the liberal Yabloko party, and the bankruptcy bill.
"The new bankruptcy law is one of the key macroeconomic acts
that sets new mechanisms to protect the rights of private owners,"
Pleskachevsky said.
The former law was often used by creditors and competitors to
initiate bankruptcy procedures and seize control of companies.
"With the new law, which is expected to come into force in
September, the rights of the owners, creditors and the government
will be much better protected," Pleskachevsky said.
The rights of minority shareholders received a boost with amendments
that were passed to the law on joint-stock companies and the approval
of a voluntary corporate governance code.
On the investment front, the Duma passed in two readings a production-sharing
agreement for two oil and gas fields in the Caspian Sea. The PSA,
which is being heavily lobbied for by the Union of Right Forces
party, is to come up for a final reading in the fall.
In March, the Duma passed a bill on compulsory auto insurance.
Supporters of the measure hope it will bring the rule of law to
the roads, but both insurers and car owners are waiting for the
government to set insurance tariffs. The insurance law is to go
into effect July 1, 2003.
A key plank for ongoing pension reform, a bill on investing pension
funds, was approved in three readings. The bill, which has yet
to be approved by the Federation Council, allows pension funds
to invest in Russian equities, treasuries and corporate bonds.
It also gives the funds the right from 2004 to buy into index
investment funds, which invest in overseas treasuries and equities.
Putin has already signed into law the Duma's amendments to the
law on financial leasing, which abolished licensing requirements
for leasing companies and removed restrictions on the activities
of foreign leasing companies.
A new law on money laundering came into force in February imposing
new reporting obligations on financial institutions. The law is
aimed at getting Russia removed from an international blacklist
of countries that are lax toward money laundering.
On the reform front, the Duma last week gave initial approval
to a bundle of legislation for the three-stage, 10-year reform
of the railroads that will lead to their privatization.
Also, the Duma managed to override a veto from the Federation
Council on amendments to the Central Bank law. If the bill is
signed by Putin, a new regulative body called the National Banking
Council will be created to oversee the Central Bank's activities.
In a disappointment to many investors and UES head Anatoly Chubais,
the first reading of government bills on the reform of Unified
Energy Systems was put off until the fall. A special working group
of officials from the government, Duma and Federation Council
was formed to prepare the bills for the next session.
"There were no evil intentions in some of the Duma delays,"
Pleskachevsky said. "Quite the opposite, it was because of
the huge importance of some bills that we needed more time to
work on them," he said.
Putin agreed in his meeting with Duma members Monday, saying care
must be taken in taming the natural monopolies.
"Lawmakers working on these reforms have no room for any
mistakes because the price for a mistake is very high," Putin
said, Interfax reported.
He said top priorities for the fall session were the 2003 budget,
the reform of the natural monopolies and pensions, further liberalization
of the economy and cutting red tape.
The Duma reconvenes Sept. 11.
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