An in-depth look at the Russian press, October 24

MOSCOW, October 24 (RIA Novosti)

Nezavisimaya Gazeta

Putin Sets Up Alternative Government

Russian President Vladimir Putin issued a decree that approves the membership of the council for implementing top-priority national projects. In fact the government's economic ministers are now directly subordinate to Putin.

This new structure includes key presidential administration officials, presidential plenipotentiaries, and ministers, as well as influential governors and heads of business associations. But strangely, Prime Minister Mikhail Fradkov is not a council member.

Technically speaking, the council for implementing top-priority national projects, just like the other nine presidential councils, is a deliberative body. Unlike other structures, this council has a higher status because it is chaired by Putin himself. Presidential Chief of Staff Dmitry Medvedev is council's first deputy chairman. There are two other deputy chairmen, namely, Presidential Aide Igor Shuvalov, the ideologue of national projects, and Deputy Prime Minister Alexander Zhukov. Putin and his closest supporters are now personally responsible for presidential initiatives.

According to council statutes, the head of state will appoint the council's members, the heads of national-project working groups, and their members. The council will hold sessions at least once every six months. Most importantly, the decision-making process will be considerably improved, as it will no longer be necessary to coordinate all kinds of documents with certain ministries and departments, a painstaking process that often took months.

Putin used to directly contact economic ministers in the past as well, bypassing the prime minister. However, under the Constitution, only top law-enforcement officers were directly subordinate to Putin. From now on, economic ministers will virtually be his subordinates and will no longer depend on the prime minister.

"The council includes regional and municipal administrators, who have made certain headway in implementing national projects," Shuvalov said.

Vedomosti

United Russia Invites Criticism

United Russia leaders have asked regional media to criticize their party more vigorously. The party of power is displeased with the lack of press attention, but still does not know how to get the media interested, observers said.

At a routine meeting with journalists last weekend, Emergency Situations Minister Sergei Shoigu called on more than 100 chief editors, general directors, and columnists of regional media to provide constructive criticism of the party. "All of a sudden we have no opponents," Shoigu said. "We are ready for serious criticism, but the opposition is not going to give it."

Vyacheslav Volodin, secretary of United Russia's general council, said that the subject of criticism "[could] be any initiatives or proposals to rewrite the party platform."

Oleg Matveichev of consulting firm Bakster Group said that United Russia was using the "bite the hand that feeds" formula of inviting criticism to show that the country has an independent media. But he said that the underlying message was an invitation to "be friends for mutual benefit."

The opposition has its own explanation for United Russia's increased interest in media coverage. "United Russia fears an open polemic with us, and so they are trying to exert pressure on the press," Ivan Melnikov, first deputy chairman of the KPRF's (Russian Communist Party) central committee, said. Rodina (Homeland) party chairman Dmitry Rogozin said he had repeatedly invited United Russia to TV debates but all his invitations were ignored. Not wishing to conduct dialogue with the opposition, United Russia is bluffing by accusing the opponents of populism, Rogozin said.

"United Russia leaders see the media as a means of propaganda," Mikhail Fedotov, secretary of the Union of Journalists of Russia, said. Evidently, he argued, United Russia was acting on the principle of "let them criticize us, just do not forget us." But routine meetings with journalists may remain no more than costly informational occasions, Matveichev said. "In order to fuel interest on the part of regional media, they should be given fresh ideas or projects, which, however, are not yet in sight."

Kommersant

State Defense Order to Exceed 200 Billion Rubles in 2006

The 2006 state defense order is set to be approved soon. For that reason, federal officials and generals are consulting with companies that will be awarded the largest contracts.

In the last few years, the Russian state defense order has been growing at a breathtaking pace. It totaled 113 billion rubles ($3.96 billion) in 2003, climbed to 148 billion rubles ($5.18 billion) in 2004, and grew further to 187 billion rubles ($6.55 billion) in 2005. According to Defense Minister Sergei Ivanov, the state defense order will soar by at least 15%-20% in 2006.

Andrei Belyaninov, head of Russia's Federal Service for Defense Order (Rosoboronzakaz), completed a trip to the Far East over the weekend. Belyaninov visited the Komsomolsk-on-Amur aircraft production association that is named after Yury Gagarin (KnAAPO) and said that the enterprise would have to work hard next year. "In my opinion, the difficult period that was predicted for 2005 is now over," he said.

First of all, this factory will upgrade the Sukhoi Su-27-SM Flanker fighters for the Russian Air Force. Initially, there were plans to overhaul 11 Su-27s this year and another six in 2006. This summer, however, Sukhoi and the defense ministry reached a preliminary agreement to upgrade all 17 fighters during 2005. The project's financing was settled during Belyaninov's visit.

KnAAPO is also expected to overhaul the Su-33 Naval Flanker fighters that are stationed aboard the Admiral Kuznetsov aircraft carrier.

Sukhoi is pinning its hopes on the Valery Chkalov Novosibirsk aircraft production association (NAPO). General Vladimir Mikhailov, commander of the air force, inspected the company last week and said that the state defense order for producing the Su-34 Fullback two-seat strike aircraft would increase 20-fold, that is, from 100 million rubles ($3.5 million) to 2 billion rubles ($70 million). According to Mikhailov, NAPO should annually produce 10-12 Su-34s by 2008.

Biznes

Environmentalists Disarm Russian Defense Industry

The Russian defense industry may lose its main supplier of special steels due to the excessive diligence of the Federal Environmental Management Service, which has begun the process to revoke Izhstal's water use license. If the company stops production even for a short time, no one in Russia will be able to fulfill that part of the government order.

Agency inspectors contend that in 2004-2005 the level of petrochemicals in the company's waste waters exceeded the standards by 74 times. The agency plans to take the company to court, claiming environmental damage to Izhevsk and the Izh River.

Alexei Sotskov, PR head of Mechel, Izhstal's parent company, said that in the past the holding had always promptly complied with similar requirements, and the government had never had to resort to such drastic measures.

Yevgeny Khutulev of the Economic Expert Group said he did not see any political implications in the claims and that they were legally justified. However, he did not rule out the possibility that the agency may have overdramatized the situation and that Izhstal may contest the radical allegations in court.

Dmitry Baranov, head of the analytical department at Prado Banker & Consultant, was also surprised by the agency's radical stance. "It would be impossible to find a company in this country that fully complied with environmental legislation," he said.

He warned that such diligence on the part of environmentalists might bring the entire Russian defense industry to a standstill. "Izhstal produces rare and special steels and steel products that are manufactured by only a few other companies in small amounts," he said. He did not rule out that Russia would have to buy the necessary commodities in Ukraine.

Gazeta

Russia Leads the World in Counterfeit Cigarette Production

Russian counterfeit cigarettes are increasingly worrying the European Union. Its customs agencies say Russia has become infamously known as the world's leader in tobacco counterfeiting.

"The specific features of taxation in Russia and the EU have created a vast gap in the cost of tobacco, so that cigarette smuggling has become a highly profitable business for criminal structures," Pavel Tkachenko, head of the contraband department of the Central Operations Customs of Russia, said.

A pack of Marlboros costs about 8 euros ($9.55) in the EU and $1 in Russia. Counterfeit cigarettes can be bought for peanuts.

Customs agencies claim that the production of counterfeit cigarettes in Russia is mushrooming. Last Friday, more than 33,000 packs of counterfeit Philip Morris's were burned. They were part of a batch of 1 million cigarettes seized by customs agencies. "Field agents have uncovered a criminal group of Russian and Baltic citizens, who organized illegal delivery of fake Marlboro cigarettes to Eastern Europe," Tkachenko said.

The quality of this batch of counterfeit cigarettes, which was produced for export, was higher than the legal Russian output. "The taste standards are very high indeed," Tkachenko said. "They [cigarettes] were clearly not meant for the Russian market."

Customs agencies said the low quality of Russian Marlboros and Parliament cigarettes was due to the saturation of the domestic market with counterfeits.

It is very difficult but possible to fight counterfeit products. Customs authorities have suggested looking at the excise stamp carefully, as the small print cannot be faked, and the connection of the filter to the tobacco rod.