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. Last Updated: 07/27/2016

Lebed Seeks Economic Clout

While Alexander Lebed, Russia's new national security chief, has distanced himself from the details of a National Security Council blueprint for economic policy, under Lebed's direction the council will likely seek a bigger role in economic policy.


The document, published by Interfax on Wednesday, outlined a series of economic initiatives designed to increase national security, including measures to stem capital flight, more state control of agriculture and an anti-corruption and tax evasion task force.


Recently appointed as the National Security Council's secretary, Lebed said Thursday that the document was produced by the council, but it was not his personal vision. "[The document] only approached the topic," he was quoted by Itar-Tass as saying.


Vladimir Titov, Lebed's aide in the State Duma, said that a final document covering the same ground as the blueprint will likely be published next week and it would cover "profoundly" economic issues.


Whatever the published draft's status, it is likely that with Lebed in charge the National Security Council has ambitions to regulate sections of the economy currently managed by purely economic ministries.


"I don't think that kind of program existed before Lebed's appointment," said Andrei Arofikin, an analyst at the investment bank CS First Boston. "It's likely that what was published is a fusion of some old ideas and Lebed's innovations."


For instance, the draft lists capital flight as a national security issue and proposes detailed measures to fight it.


These include restrictions on the profit margins of raw materials exporters and an amnesty to attract flight capital back into the country along with substantial tax breaks of between 25 and 50 percent for investors willing to put the money into domestic production.


The document also placed agricultural self-sufficiency in the national security sphere. It advocated stiff protection of domestic producers, and a system of fixed term contracts that would subsidize the industry for a limited time to help it adapt to market changes.


The draft suggests that the council could also turn its hand to corruption and low tax collection. The document proposed that officials be required to make declarations of income every three months. The National Security Council would create a special investigative unit to police these returns and also look into tax evasion.


Arofikin said the council's role was unconventional. "It is not typical for a national security body to regulate the economy and engage into structural changes."


But he said it might be time for extreme measures. For instance, he said that with tax collection over the past few months down to half the levels planned in the budget, the government had no choice.


"When tax discipline is in disarray, it's very difficult to make people follow the rules again," he said.


"It's wrong when the Security Council is collecting tax arrears. That is what the tax police should be doing. But since that body is not functioning properly or is corrupt, it will only take a couple of cases [investigated by the Security Council] to scare everyone into paying taxes again," Arofikin said.


"If they don't start collecting the taxes in this quarter, the T-bills market could collapse," he said.


Arofikin said that extension of the national security area over economics was a reflection of the fact that Lebed is being groomed as a possible successor to Yeltsin. "Yeltsin himself hinted several times that he was preparing a successor, so Lebed in that capacity will have the right to tackle a broader set of issues," Arofikin said.


It is not clear how much difference the National Security Council will make on a set of problems that have been vexing Russia for some time. Viktor Levashov, director of the Institute for Social and Political Studies RAN, said the new proposals of the Security Council looked fresh only in the context of recent government re-shuffle.


"These issues were on the agenda a year ago just as well as four years ago. Probably Lebed's strength is that he chose the right timing and political set-up to speak up on the issues," he said.