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Moscow Times
December 7, 2006
Sanctions Bill Gains Ground in Duma
By Maria Levitov
Staff Writer

The State Duma on Wednesday gave tentative approval to a bill that authorizes the president to impose sanctions on other countries.

The measure would enhance Russia's ability to flex its muscles on the global economic arena and respond quickly to foreign threats, supporters said.

But opponents said it granted too much power to the president. They also criticized its vague wording and said that, if evoked, it could harm the Russian economy and contradict Moscow's stance on sanctions by other countries.

The bill comes amid a nearly yearlong ban on Georgian wine and mineral water, widely seen as politically motivated. Russian officials insist that the sanctions were triggered by health concerns.

"This is a mechanism for quick reaction in case a tense situation occurs between our country and another," bill co-author Vladislav Reznik, a deputy with United Russia, said during a presentation of the legislation.

The bill, titled On Special Economic Measures in Case of an International Emergency Situation, passed 356-10 with one abstention.

If passed in the two remaining readings, approved by the Federation Council and signed into law by the president, the measure would let the president freeze trade contracts, stop financial transactions, prohibit tourism and impose other economic sanctions.

The president would notify the Duma and the Federation Council of the planned sanctions, but neither would have a say in the matter, said a copy of the bill obtained by The Moscow Times. The government would then finalize the list of economic sanctions and their duration of up to four years, which could be extended for another two years if the president deemed it necessary.

Reznik said the bill was loosely modeled after U.S. law and stressed that it would help Russia assert its interests. Still, Reznik said, a group of deputies would look into the possible economic effects of the measure and try to craft a clearer definition of "emergency situations" before the second reading.

"Just because one state makes a mistake doesn't mean another must repeat it," said Valery Zubov, an independent deputy from Krasnoyarsk.

He opposed the measure, saying it would make other countries more cautious of doing business with Russia.

Vladimir Ryzhkov, an independent from the Altai region, said the bill's wording was vague and that its economic ramifications were not thought out. "Can you just give a concrete example of an emergency that may develop?" Ryzhkov asked Reznik during the presentation.

Ryzhkov noted that Russia's ban on Moldovan wine, which President Vladimir Putin lifted last week, had taken a toll on both Russian and Moldovan businesses. "The countries that institute economic sanctions suffer from them," he said.

Georgian and Moldovan wine accounted for some 44 percent of all in-store wine sales in Russia last year, according to Business Analytica, an industry consultancy. When wines from both countries were banned in March, it was a shock to Russian sellers and distributors. The ban on Georgian wine remains in place.

If the sanctions bill were already in effect, Russia would not need to "hide behind stupid excuses" when banning wine, Communist Deputy Anatoly Lokot said.

Georgian Embassy spokesman Vahtang Abashidze declined to comment on the bill, saying it was up to Tbilisi to decide whether to issue an official reaction. A spokeswoman for the Moldovan Embassy, Svetlana Ivanova, also declined to comment.

Lokot criticized the bill for not granting the Duma any real power to influence sanctions.

"The bill gives the president even more power," said Dmitry Rogozin, a former leader of the nationalist Rodina faction. Rogozin voted against the initiative.

The bill also does not make any mention of who would compensate Russian businesses if they sustained losses due to sanctions, he said.

The effectiveness of economic sanctions has often been questioned because they are difficult to enforce and because they create distortions in the economy, said Kim Iskyan, the head of research at MDM bank.

If the bill were signed into law, Russia "would have to deal with the contradictions in its broader policy script," said Rose Gottemoeller, the director of the Carnegie Moscow Center. The legislation contradicts statements by Foreign Minister Sergei Lavrov and other high-level officials, who have repeatedly stressed that economic sanctions would not work against Iran, she said.

Sanctions tend to work with broad support from the international community, Gottemoeller said, adding that they were instrumental in bringing down South Africa's apartheid regime.

"It would be a political mistake to pass a law whereby no Duma approval is required to instigate sanctions," said Sergei Markov, a Kremlin-friendly analyst.

"It would not make the president stronger, it would make the parliament weaker, and the Russian parliament is already too weak anyway," he said.

Staff Writer David Nowak contributed to this report.