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. Last Updated: 07/27/2016

EDITORIAL: New Laws Won't Deter Oligarchy




Those wily oligarchs are up to their old tricks. On one front, they are battling attempts by the government to increase taxation on their exporting companies. On the other, they are battling attempts by the State Duma to make it easier to bankrupt their banks.


In both cases, the oligarchs deserve to lose - but the odds are not good that they will.


The government started the first battle by showing unusual bravery in passing a decree imposing a 5 percent tax on exports of crucial commodities, especially natural gas, refined oil products and copper and nickel.


This temporary measure will cost big Russian exporters like LUKoil, Gazprom and Norilsk Nickel close to $1 billion. Only LUKoil has publicly expressed its anger so far but an ugly brawl is going on within the corridors of power.


The decree containing the exact terms of the export tax has yet to be published and it seems likely the oligarchs are fighting to have it softened.


If the export tax is introduced, it will mark a rare victory for Finance Minister Mikhail Zadornov, who has argued quite rightly that oil, gas and metals companies have received a huge boost to profitability as a result of the devaluation of the ruble - but that tax collection has stagnated.


The other nasty fight involves a long-delayed bill on the procedure for bankrupting banks. The general bankruptcy law already in force calls for specific legislation to cover credit institutions. The lack of it has hamstrung regulators in their attempts to clean up the mess caused by Russia's banking collapse.


Parliament passed a bill in the fall that gave the Central Bank clear powers to bankrupt banks and return money to depositors. But President Boris Yeltsin vetoed and submitted a new law that gave these powers to a new ill-defined agency, which will lack the Central Bank's independence and experience. It is a recipe for a supine ineffective bureaucracy.


This however would suit the oligarchs just fine. Immune from the threat of bankruptcy, they have spent the past few months stripping all the useful assets out of their collapsed banks rather than returning funds to depositors. Yeltsin's vetoing of the bankruptcy law is yet another sign of the unhealthy influence the oligarchs have on his inner circle.


It seemed the oligarchs were down, but clearly they have plenty of fight left in them. So much so that no senior figure in the government or the presidential administration has dared to comment openly on either of these two crucial issues.