YABLOKO Makes It... into a Ministry

Question: How can an opposition party leader possibly work in the government? After all, YABLOKO always stated that it would only join as a team.

Artemyev: If we only air our ideas but refuse to do anything at the executive level until we get all top positions on a silver platter, this could effectively destroy YABLOKO's credibility among the general public. Yet if people see that we have done a specific job well and efficiently, I believe that their attitude toward the party will improve.

Q: Were you not surprised that after the recent parliamentary elections, which were rather unsuccessful for your party, and after YABLOKO refused to support Vladimir Putin in the latest presidential run, you were still invited to a key position in the executive?

Artemyev: Today the government aims to follow a vigorous antimonopoly policy while this has always been a priority in our party program. For my part, I already had experience working in the executive branch. Incidentally, negotiations with me began not just before the presidential elections but almost immediately after the parliamentary elections. I was offered the position of deputy minister for economic development and trade, and also responsibility for reform of the natural monopolies. At that point, however, the reorganization of the government structure began, and I was invited to head FAS.

Q: Was your appointment not made contingent on your joining United Russia?

Artemyev: I said right from the outset that I would stay on in YABLOKO. I have known some of the people who came toFAS together with me for many years from working together, and not all of them are members of our party. We want to use this opportunity to deal with some of the country's outstanding problems. An attempt to achieve a positive result in a specific, highly sensitive sphere of the country's life is certainly worth taking.

Targeting the Money Bags

Q: What legacy have you inherited: Has there been a consistent antimonopoly policy in the country?

Artemyev: The awareness that antimonopoly policy should be robust has not emerged until recently. The state authority has for a long time been very weak. Developments in the economic sphere in the early and mid-1990s brought about a situation where a handful of individuals were able to buy up the majority of enterprises in a given sector of industry. That led to monopolization.

Q: One indication of this being the growing utility charges?

Artemyev: This is one of the most negative factors in the entire business sector. It is important to remember that when we talk about a 100-percent payment for utility services, it is clear that this is not the real cost of these services but a price that is often unjustified and set by a monopoly seeking to derive a super profit. As is known, the profit margins of natural monopolies, even excluding their investment programs, came to several hundred percent. As a result, people's incomes were depreciated by growing tariffs and inflation.

Q: At one time the government was considered the main lobbyist for natural monopolies. Has the situation changed now?

Artemyev: It has to be said in fairness that the previous government initiated a number of large-scale reforms of natural monopolies - say, of the rail transport sector and RAO UES (Unified Energy Systems). Admittedly reform of RAO UES got off to a very bad start and it was not until after the president's intervention that the situation changed. Despite all its shortcomings, reform of the railways sector is moving in the right direction. Nonetheless, lobbyists were well placed to shift the course of reform any which way. Today, however, there seems to be a general understanding that the task of doubling GDP and substantially raising people's incomes cannot be accomplished without an effective antimonopoly policy.

Q: For the past two years we have not heard more vocal critics of energy sector reform in the State Duma than YABLOKO members. You led this effort within the party faction, but now you have been placed in charge of this reform. It seems that you have become less critical of the reform.

Artemyev: When they offered me this office, state leaders were perfectly aware of my position on the issue. But I must set the record straight and say that our work on this area in the Duma was a success. Amendments were adopted establishing effective constraints. Say, an amendment stipulating that in regions with closed, self-contained energy systems, not a single company may control more than 35 percent of total generating capacity. Otherwise monopolism could double: Private companies will instantly hike prices and wipe out competition in all sectors. Of course this does not take care of the problem, but it was a step in the right direction.

Super-Costly Square Meters

Q: Some of your very first public statements as head of FAS concerned the housing construction market. The runaway housing prices that we are seeing today, especially in large cities, are beyond description. What can FAS do in this situation?

Artemyev: There are some systemic matters that the FAS is not in a position to address single-handedly, such as the merger of business and the executive. But there are some things that we can straighten out: e.g., organization of competitive bidding. Today local authorities in many cities hand out – in return for kickbacks, of course - land plots to "cooperative" firms.

Naturally, they do so without any competitive bidding or by organizing the bidding process so that the bid is awarded to a winner that is predetermined in advance. Such companies thereby acquire monopoly positions on the construction market, dictating housing prices.

Q: In other words, everything that we pay in excess of a reasonable, legitimate price goes to a monopoly that kicks back a part of its profit to a public official?

Artemyev: High prices are the result not only of monopolism on the development market, but also on the building materials market. Finally, there is yet another factor: People seek to invest money in real estate.

Q: What is to be done then?

Artemyev: We propose 35-percent caps on the acreage of land that one company is authorized to develop in one region as a proportion of total land available for such purposes in this region. I have often said that Russia is a country of price collusions and cartels and this danger has yet to be fully appreciated.

Right to Legal Recourse

Q: Back in 1991, the Law on Competition and Restriction of Monopoly Activity on Commodity Markets was adopted. Has it been working?

Artemyev: Not very effectively - for various reasons. One of them is the small level of fines that it envisions. The European practice of imposing fines in "antimonopoly" cases bases them on company turnover. A fine of 10 percent of turnover could work out at 200 million to 300 million euros. A company slapped with this kind of fine could be effectively ruined.

Q: What about here?

Artemyev: All fines here are calculated as multiples of the minimum wage, the maximum fine being approximately $15,000 to $20,000. This is as much as a monopolist makes in a day or in five minutes, depending on its size. We propose that fines be set at 3 percent of a company's annual turnover.

Q: However, all monopoly tariffs have been changing only in one direction - upwards.

Artemyev: Some protection mechanisms against this have already been put in place: The government decided that a FAS representative will be an ex-officio member of the Federal Tariffs Service. Yet I am not pinning my hopes on the bureaucrats but rather on citizens. In our situation, powerful lobbyists will always push for price hikes. Only civil organizations and individuals can effectively stand up to them.

Q: How?

Artemyev: FAS proposes that non-profit organizations and individuals be given a right to file lawsuits on matters of antimonopoly policy, including claims against companies engaging in monopoly activity and unfair competition. They should be granted the right to take their case directly to an antimonopoly agency, skirting all kind of bureaucratic structures, including FAS. Presently, individuals do not have this right while a public official that they appeal to can sit on a case or obstruct it. Should our proposal be adopted, there will be no more "latent" price hikes. Legal action and the media will effectively vindicate an old truth.

Dossier

Igor Artemyev was born in Leningrad, in 1961; holds two university degrees, including a law degree. Candidate of Sciences.

In politics since 1989.

1990-1993 - deputy of the Leningrad City Council, chairman of the Commission for Ecology, member of the City Council presidium.

1994-1998 - deputy of the St. Petersburg Legislative Assembly.

1996-1999 - First Deputy Governor of St. Petersburg, Chairman of the Finance Committee in St. Petersburg administration.

Since 1999 -Head of the "EPIcenter-St. Petersburg" foundation for economic and political research.

Since December 1999 - deputy of the State Duma of the third convocation, Deputy Chairman of the Committee for Credit Organisations and Financial Markets, Deputy Head of the YABLOKO faction.

Since December 2001 - Deputy Chairman of the YABLOKO party.

Since March 2004 - Head of the Federal Antimonopoly Service.

Moskovskiye Novosti, July 23, 2004