Vedomosti

Economists Urge Medvedev to Revise Three-Year Budget

Russian economists are urging Prime Minister Dmitry Medvedev to revise the budget policy, which he approved as president. With the allocations for defense and law enforcement, there will be no money left for Putin’s education and health care plans.

Our experts will forward their conclusions on the 2013-2015 budget policy to Medvedev today, said Rector of the Higher School of Economics (HSE) Yaroslav Kuzminov.

The document states that budget revenues will fall from 38.9% of GDP in 2011 to 36.2% in 2015, due to a drop in oil prices (from $115 per barrel to $106-$108) and a reduction in customs revenues as a result of Russia joining the WTO. But the HSE experts argue that budget revenues will grow to 37% of GDP by 2015.

The budget policy was calculated based on the old ruble rate, whereas experts think the ruble is likely to weaken, and a weaker ruble will secure additional oil and gas revenues. They think the budget forecast of revenues is excessively pessimistic.

Moreover, its structure is distorted, with excessive allocations on defense and law enforcement and not enough for developing human capital. Since the defense industry is not yet ready to produce modern weapons, the rearmament program should be extended over a longer period, the experts suggest.

Federal spending on education will be cut from 4.1% in 2011 to 3.9% in 2015, meaning the bulk of the costs will fall on the regional budgets.

In health care, some sources of income will come from extra-budgetary funds, but total allocations will only rise by 0.1% by 2015. Federal spending will be cut by 31%, while regional allocations are to increase by 49%. This is impossible because the budget document only specifies a 24% increase in consolidated regional budget spending. The experts concluded that some health care items have been calculated twice and that in real terms health care spending will fall by 4.5%, which rules out any modernization.

Allocations on roads had been rising until recently due to large projects in Sochi and the Far East. By 2015, they will be cut by 0.2% to 2% of GDP. The Finance Ministry expects the regions to cut their road spending too, even though about 30% of the federal road network suffers from chronic congestion. Experts argue that 500 billion rubles ($15 bln) should be allocated annually to build 500 kilometers of federal and 4,200 kilometers of regional roads.

An additional 0.4% of GDP should be invested in education and 0.6% in health care by 2015, if the government is serious about structural reforms.

In short, with this budget Russia will not achieve the goals outlined by the government and the president.

A Finance Ministry official said that changing the budget structure is impossible without a political decision. The ministry shares the view that 700 billion rubles ($21.4 bln) of defense allocations should be redistributed to social and infrastructure goals. As for the ruble rate, the ministry official urged “monitoring oil prices” before making any decisions.

Kommersant

Most Russians Approve of Kremlin Making Decisions

Of those questioned in a Levada Center poll, 55% said they think it is right that vital decisions are made in the Kremlin. Many see no need for moving decision-making to the parliament. They have not considered the issue of efficiency and are accustomed to the power vertical, experts say.

Of the 1,600 respondents polled between July 20 and 23, 17% said decisions should be made in the government and 13% in the State Duma.

Most respondents “have no illusions about the current system of power,” said Boris Nadezhdin, head of the Law Department at the Moscow Institute of Physics and Technology. “There should be a separation of powers and a system of checks and balances, with parliament adopting laws and the government dealing with current issues,” said Yury Korgunyuk, an expert from Indem. “We have no mechanism of collegiate decision-making.” State Duma Deputy Sergei Obukhov (Communist Party) believes that the president “should act as the arbiter in disputes between parliament and the government.”

It is interesting that people’s views of a correct decision-making mechanism partly coincide with reality: 32% said that decisions must be made in the Kremlin, 30% give this responsibility to the government and 20% to the State Duma. “People have become accustomed to the centralized power vertical, but their pessimistic attitude to parliamentarism is disturbing,” Nadezhdin said. “They are not yet ready for parliamentarism,” said Korgunyuk. “People cannot imagine an alternative scenario which includes their personal involvement.” We see the reconstruction of “an archaic model,” where one person has the decision-making right and the President’s Executive Office is seen as “the extension of Putin’s arm.”

“People do not understand that the Executive Office is a separate non-constitutional body, where different interests clash,” said Leonty Byzov, senior researcher at the Sociological Institute of the Russian Academy of Sciences. They have no clear view of the representative branch because of the non-transparent system of picking candidates for State Duma elections, the absence of single-mandate candidates and a generally low political culture, Byzov said.

Deputy State Duma Speaker Sergei Zheleznyak (United Russia) thinks it would be an “oversimplification” to say that all decisions are made in the Kremlin. “The question has not been formulated clearly, as the branches have different responsibilities and constructive cooperation between them is crucial for successful development,” he said. “The Constitution provides all the answers; it says that the head of state is the president, the government is responsible for socioeconomic development and the State Duma provides legislative support.”

According to the poll, 37% of respondents disapprove of the transfer of some of Putin’s former ministers to the Kremlin, while 33% approve. Levada Center expert Denis Volkov explains the negative attitude by the general demand for renewal. Explaining why a third of respondents found it difficult to answer, Volkov said that “the average Russian” does not understand the workings of the political system and has no interest in such moves.

Izvestia

Media Will Be Forbidden to Mention Ethnic Backgrounds

Shamsail Saraliyev, former Chechen Minister for Foreign Relations, National Policy, Press and Information and now a member of the United Russia parliamentary group, has suggested that the media should stop mentioning people's ethnic backgrounds.

He believes it only irritates people and provokes inter-ethnic conflicts, and that there are no bad ethnic groups.

The relevant bill will be submitted to the State Duma for examination this fall. Saraliyev said the media law was likely to be amended, and that a public discussion of this initiative was currently underway in the North Caucasus Federal District.

Saraliyev said 82% of the district's population supported the idea of the media not mentioning people's ethnic backgrounds.

Saraliyev's initiative is also supported by the expert community.

Head of the Multi-Ethnic Russia Club Alexander Sokolov said this is more about ethnic and religious affiliation than specifically about nationality.

"If there is any evidence of an ethnic or religious conflict, then such aspects should be mentioned. But if a conflict is associated with domestic violence or some other crime, then any mention of ethnic backgrounds could result in prosecution for inciting inter-ethnic strife," Sokolov noted.

He said the United States considered such issues to be very important.

Sokolov noted that any WASP (White Anglo-Saxon Protestant) police officer always had a Latino or Afro-American officer as a partner. He said the same demand applied to toys, and that "white" and "black" dolls were being manufactured in the United States. Any newspaper saying that two Negros had killed a white person would be slapped with such a hefty fine they would be forced to close down. "This approach works, we need to learn from this experience," Sokolov said.

Chairman of the State Duma Committee on Ethnic Issues Gadzhimet Safaraliyev said Saraliyev's proposal would become part of the inter-ethnic relations strategy, due to be formulated by the end of the year.

Safaraliyev, who believes that criminals have no ethnicity, said investigation departments had to know the ethnicity of suspects in order to locate crime rings, but that mention of ethnic backgrounds created stereotypes among ordinary people and also provoked aggression.

He believes the ban should also cover the movie industry.

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