SPRING STATE DUMA SESSION OFF TO SLOW START

UNCLAS SECTION 01 OF 03 MOSCOW 001445

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV EAGR EFIN ENRG ETRD PREL PHUM SOCI RS
SUBJECT: SPRING STATE DUMA SESSION OFF TO SLOW START



1. (SBU) SUMMARY. The spring semester of the Russian State
Duma, which began on January 11 and will run through
mid-June, got off to a slow start. Deputies are burdened
with almost 600 draft laws, with 52 designated as priority
bills focusing on water and forestry regulation,
transportation safety, use of personal information, and
export controls. However, in January, only 76 of the 111
bills planned for consideration were addressed. Upcoming
bills that may stir controversy and delay the legislative
process even further include those dealing with subsoil
resources, counterterrorism, tax administration, entry
regulations for foreigners, and protection of information.
END SUMMARY.
.
GRYZLOV,S PRIORITIES
--------------


2. (U) The Duma began its spring session on January 11. In
remarks before the first plenary meeting, State Duma Speaker
Boris Gryzlov encouraged deputies to finish the process of
adopting laws passed in their first readings in the fall
session and to focus on approving amendments and implementing
legislation for laws already enacted. He cited the example
of the Housing Code, which was passed last year but which
still lacked implementing legislation. He stressed that the
session would be "difficult and intensive" and that
parliamentarians would have to work responsibly and with
discipline. Gryzlov said the Duma had a responsibility to
use its parliamentary powers to monitor implementation of
important laws passed in 2005 and coming into force in 2006,
including those concerning social policy, special economic
zones, NGOs, and strengthened state control over the
distribution of alcoholic drinks. He urged that the Duma be
especially attentive to monitoring implementation of the
federal budget and encouraged deputies to take the initiative
in discussing options for improving the tax system. The main
aims should be decreasing the tax burden on manufacturers and
improving tax collection efforts, Gryzlov added.
.
INITIAL RESULTS DISAPPOINTING
--------------


3. (U) Despite Gryzlov's exhortations, the Duma leadership
was disappointed by January's legislative accomplishments.
Summarizing them, First Deputy Duma Chairman Lyubov Sliska
mentioned that consideration of 35 bills scheduled for
January (37% of the total 111 planned for the month) had been
postponed. In her opinion, the slow tempo of the deputies'
work was unacceptable so soon into the spring session.
However, she also directed criticism at the Government,
pointing out that the Duma Council was still waiting for
official opinions by the Government for over 80 bills sent to
it more than two months ago. "This situation is seriously
hampering the legislative process, because it is not possible
to submit a bill for consideration without the Government's
official opinion," she said. She encouraged the deputies and
the Government to coordinate more effectively and be more
diligent in introducing bills to the Duma Council and plenary
sessions.
.
LEGISLATIVE GOALS FOR SPRING 2006
--------------


4. (U) Apart from the opening session, the Duma has met in
six plenary sessions. During those sessions, deputies passed
the bill on "Advertising" in the second reading, as well as
amendments to laws on "Joint-Stock Companies" and "Banks and
Banking Activity." High priority bills currently under
consideration include a draft on the Water Code and
amendments to the Tax Code that would, among other things,
increase the tax rate for gambling businesses operating slot
machines. In the second half of February the Duma plans to
consider amendments to the law on "Trademarks, Service Marks,
and Appellations of Origin," which will exclude the clause on
reciprocal protection of specific appellations of origin
registered in foreign countries in order to make Russian
legislation consistent with WTO agreements on the trade
aspects of intellectual property rights.


5. (U) The Duma agenda also includes bills concerning
implementation of President Putin's four National Projects
(health care, education, housing construction, and the
agro-industrial sector). In addition, deputies will consider:

-- changes to the Criminal, Criminal-Procedural, and
Administrative Codes;
-- amendments to the law on local self-government;
-- amendments to the law on "Practicing Law and the Legal
Profession";
-- amendments to the law on the "Fishing Industry and
Preserving Aquatic-Organic Resources";

MOSCOW 00001445 002 OF 003


-- a bill on the "Use of Personal Information";
-- a bill on "Regulation of Export Controls";
-- ratification of the UN Convention against Corruption; and
-- adoption of the UN Food and Agriculture Organization
Charter.
.
POTENTIALLY TROUBLESOME BILLS
--------------


6. (U) One of the most criticized pieces of legislation
during the fall session -- a counterterrorism bill that would
give security services sweeping new powers to declare a state
of emergency if they believed there was a "terrorist danger"
-- will come up for a second reading in late February or
early March. The bill was drafted by the Federal Security
Service, the Interior Ministry, the Prosecutor General's
Office, and the Justice Ministry, and was approved in a first
reading December 17, 2004. It was drawn up in response to
the 2004 Beslan school massacre, but is widely seen by human
rights activists as an attack on civil liberties and an
attempt to increase the powers of Kremlin officials.


7. (U) In addition, the Duma plans to revise two laws
concerning foreigners in Russia -- "Entry and Departure
Procedures for Foreign Citizens" and the "Legal Status of
Foreign Citizens in the RF." The Committee for
Constitutional Legislation, headed by Vladimir Pligin,
drafted both measures. About 100 amendments to the laws were
passed in the first reading last April which, if enacted,
would considerably expand the number of reasons for denying
entry into Russia, as well as grant bureaucrats considerable
leeway in making decisions on entry requests. For example, a
visa application could be denied if an applicant was believed
to have committed "unfriendly actions" that "harmed the
international image of Russia," or if he/she used "insulting
language when referring to Russian national symbols, state
leaders, state power structures, or historical, cultural,
spiritual, and public values." The current draft does not
clearly define these terms. The amendments would also deny
entry to foreigners who "have caused Russia considerable
material damage" or who "are considered dangerous," including
those afflicted with an infectious disease. On a more
positive note, the Federal Migration Service intends to
introduce a bill at the end of March that would allow
foreigners to send registration papers by registered mail
within three days of their arrival instead of applying for
and obtaining registration documents in person. A post
office receipt would then serve as confirmation of
registration. Foreigners who fail to register would face
fines and perhaps other penalties when they try to leave the
country.


8. (U) Another bill on the agenda is the revised text of the
law on "Information, Information Technologies, and Protection
of Information" that was initiated by the government and
passed in its first reading last November. According to
independent Duma Deputy Vladimir Ryzhkov, the government
could use such a law to assert control over the Internet.


9. (U) According to the head of the Federation Council's
Committee on Natural Resources and Environmental Protection,
Viktor Orlov, the bill on "Subsoil Resources," which has been
in the works since 2001, is unlikely to be approved by the
summer and the government may even hold off on it for two to
three years, introducing instead amendments to the existing
legislation. He said the current draft should regulate the
distribution of mining licenses and stimulate more effective
use of subsoil resources. In its present form, Orlov said,
the bill addressed only a fraction of the factors that hold
back development and investment in subsoil exploration and
mining. Based on conversations with our energy sector
contacts, the most problematic part of the bill pertains to
language that would limit foreign company participation to a
minority stake in "strategic" reserves. Nevertheless, U.S.
oil companies tell us that passage of the bill would add a
measure of predictability to an otherwise very uncertain
energy investment climate.


10. (U) On February 22, the Duma plans to consider in a first
reading draft amendments to the law on "Medicines" aimed at
preventing unsanctioned use of confidential information
presented to state authorities or other unscrupulous use of
such data. A second reading of additional amendments to the
same law is scheduled for May. These do not promote trade as
they effectively ban the use of trademarks of
pharmaceuticals, impose non-market pricing regulations, limit
funding mechanisms for clinical trials, restrict import
channels, and empower the government drug registration agency
to cancel registration or require re-registration of drugs
based on subjective grounds.


MOSCOW 00001445 003 OF 003



11. (U) In March deputies will discuss in the second and
third readings a draft law intended to improve tax
administration. However, in spite of Putin's public call to
"stop the tax terror," the draft approved in the first
reading last year could potentially worsen the situation for
taxpayers. In particular, it would extend field tax
inspections up to fifteen months and not establish a limit to
the number of documents tax inspectors could require during
inspections. Deputies, together with businesspeople, drafted
over a thousand amendments for the second reading, including
provisions making tax officials criminally and/or
administratively liable for abuse of office. However, it
remains unclear whether the pro-business amendments will get
much of a hearing -- similar discussions in April-May 2005
resulted in submission of a version drafted by the Finance
Ministry that was approved in the first reading.


12. (U) The second reading of Russia's revamped competition
law is expected in March. The current version has been
reworked extensively since the Duma,s first reading last
year; however, no details are available yet. Officials are
optimistic that the law will be adopted during the spring
session but admit that the final reading may, in fact, drag
into the fall session.
.
OPPOSITION NOT GIVING UP
--------------


13. (U) The opposition is gearing up to submit its own bills
for the spring session, as well as offer its vision
concerning the four National Projects. Communists plan to
submit an alternative bill for the national project on
education and are working on legislation to increase child
benefits and introduce a graduated income tax. According to
the Liberal Democratic Party (LDPR),four national projects
are not enough -- party leader Vladimir Zhirinovskiy wants to
propose additional projects on roads, on culture and science,
and on reducing bureaucratization of the economy. The LDPR
also intends to introduce legislation to prevent the spread
of avian flu in Russia and to push for establishment of a
parliamentary commission that would make recommendations to
Gazprom and the government concerning regulation of gas
prices and exports.


14. (U) The Rodina faction led by Sergey Baburin intends to
propose two bills. One would provide state subsidies to
young families, which would cost approximately 819 million
rubles (USD 29 million). The other would propose that Russia
return to the Julian calendar, which Baburin claims would be
more economically effective since it would add 13 working
days to the year.
.
GOVERNMENT HOUR SPEAKERS
--------------


15. (U) For the first time, the Duma has scheduled in advance
all speakers for its weekly "Government Hour." (In the past,
speakers -- usually the prime minister or one of his cabinet
ministers -- were requested a week in advance to report on
issues they oversee.) For example, Finance Minister Aleksey
Kudrin will appear on March 22 to discuss implementation of
the new benefits law, and Deputy Prime Minister and Defense
Minister Sergey Ivanov will speak about plans for building up
Russia's armed forces on May 24. The last Cabinet members to
appear before the Duma will be Foreign Minister Sergey Lavrov
and Minister for Industry and Energy Viktor Khristenko, who
will speak on June 7 and 14, respectively.
.
COMMENT
--------------


16. (SBU) The Duma has before it an ambitious legislative
agenda, including a handful of bills that will likely spark
controversy, such as the subsoil bill and draft legislation
regulating the entry of foreigners into Russia. Whether the
Duma will be able to make up for January's sluggish pace
remains to be seen. As for the outnumbered opposition's
proposals, it is unlikely that they will make it onto such an
ambitious agenda, especially given the dominant position and
influence of the majority United Russia (YR) party.
Meanwhile, YR will continue to coordinate its moves closely
with the Presidential Administration and government. As the
Duma heads into the second half of its four-year term, we
expect YR will continue to faithfully carry out Kremlin and
government legislative initiatives relatively efficiently and
without much debate, while the opposition minority,
particularly independent deputies, will have little or no
opportunity to push their own initiatives.
BURNS