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Moscow Times
January 19, 2004
Kasyanov Sets Tone For New Duma
By Valeria Korchagina
Staff Writer

The government and presidential administration intend to pursue further economic reforms by pushing more bills through a compliant parliament, Prime Minister Mikhail Kasyanov said Friday at the opening session of the newly elected State Duma.

"We aim to increase the share of bills sponsored by the government and president to 60 percent at a minimum [from 40 percent in the previous Duma]," Kasyanov told deputies, two thirds of whom are members of the pro-Kremlin United Russia faction.

Kasyanov said deputies who raise objections to government bills will be listened to but only if they are right. "If we find deputies' proposals and objections worthy, I do not rule out that we will change bills," he said. "But if the deputies are wrong, we will use the Duma majority to pass them."

Friday's session was the official launch of the new parliamentary season, the first in post-Soviet history when the president enjoys the support of a parliamentary majority big enough to change the Constitution.

"He's basically saying 'Get out the rubber stamp,'" said James Fenkner, head of research at Troika Dialog, who added that Kasyanov may be saying what the Kremlin wants to hear to try to hang onto his job.

By law, the prime minister and the rest of the Cabinet must tender their resignations following the March 14 presidential election. The question remains open on whether Kasyanov will be reappointed if President Vladimir Putin wins re-election as expected.

"His statements are always rather difficult now," Fenkner said. "And are his statements so supportive of Putin just because he wants to keep his job? We and most of the market expect him to be nixed after the presidential election."

According to Kasyanov, the new Duma is facing a strenuous season in which deputies will consider a range of bills aimed at helping the economy.

The gross domestic product, he said, grew by 30 percent over the past four years, as did industrial output. Labor productivity grew by more than 30 percent, investment into charter capital was up 40 percent, and the agricultural sector grew by 20 percent in the same period of time. Also, household consumption increased from 45 percent to 50 percent of GDP.

"The current trends show that we have overcome the reduction in the economic growth rate of 2002 and reached a rate that will allow us to double Russia's GDP in 10 years," Kasyanov said.

The economy is estimated to have grown by 6.7 percent to 6.8 percent in 2003, from 4.3 percent growth in 2002.

Despite the achievements, however, about every fifth Russian still earns less than the minimum subsistence level. By the fourth quarter of 2003, the number of people whose income is below subsistence level was reduced by about 3 million people, the prime minister said, but this still leaves about 27.8 million people whose incomes fall below this level.

Among the priorities for the new Duma and the government Kasyanov listed social security reform. Apart from the introduction of compulsory health insurance, work is to be started on creating a safety net for those who lose their jobs as a result of growing efficiency in various sectors of the economy, he said.

Kasyanov also emphasized the completion of tax reform and said a new fiscal system should be in place by 2007.

Among the most immediate priorities to be tackled by the Duma before summer are the passage of laws on individual property tax, taxation of inheritance and gifts, and water and land taxes.

The Duma is to work on a law on subsoil resources, and on a Forestry Code and Water Code.

"This year, we will also lay the foundation for gas sector reform, which will help to lower the economy's energy consumption and will boost the efficiency of the gas sector itself," Kasyanov said.

Reform of the natural gas sector, and the subsequent reform of Gazprom, has been promised for years.

It was unclear what kind of reform Kasyanov was implying, given that in an interview last week he said he was against any price liberalization on the gas market -- a key factor that could force consumers to improve energy efficiency.

Kasyanov also said the Duma and government will push ahead with long-awaited reforms of the banking sector and administrative reform.

The government and presidential administration should have little trouble getting their bills considered or passed. United Russia deputies head all 29 Duma committees, which approve all bills before they are presented to the entire chamber

"There is a message to deputies. You are there because of the president. You have to support his program," Christopher Granville, chief strategist at UFG investment bank, told Reuters over the weekend.

n Duma deputies from United Russia will not be allowed to talk to journalists directly and will only be able to give interviews sanctioned by the faction's chiefs, Interfax reported Friday, citing a faction source.

Deputies will have to ask the permission of faction head Boris Gryzlov or his first deputy, Yury Volkov, if they are approached by journalists for comments or interviews, the report said.

Staff Writer Alex Nicholson contributed to this report.