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. Last Updated: 07/27/2016

Aksyonenko Proposes Cash Pool to Support Regions

With his main potential opponent Mikhail Zadornov out of the way, First Deputy Prime Minister Nikolai Aksyonenko over the weekend came out with his first bold economic proposal - the launch of a company-backed money pool to support regional economies.

Picking the largest coal region of Kemerovo to break the news, Aksyonenko said Russian industrial enterprises should pay 2 percent of the value of their gross output into a financial pool, which will allow "a number of effective pilot projects in Yekaterinburg, the Kemerovo region, Moscow and St. Petersburg to be carried out," Prime-Tass reported.

Aksyonenko became the top minister in charge of Russia's economy after First Deputy Prime Minister Zadornov abruptly resigned Friday.

Aksyonenko said money from the proposed fund should be used to develop coal mining at two companies in Kemerovo and upgrade production facilities at the West Siberian Metal Combine.

He did not give any further details about the plan, which industry leaders said Monday looked very much like a new tax.

Viktor Kuznetsov, director general of Kuzbassrazrezugol, which would be one of the recipient coal companies, hailed the initiative, saying "miners are voting with both hands for the fund," news agencies reported.

But other producers may not be so enthusiastic, industry insiders said.

It is too early to judge Aksyonenko's plan since information remains sketchy, but "companies, especially in the regions, will be extremely wary about this project," said Yury Sakharnov, vice president of the Russian Union of Industrialists and Entrepreneurs.

"The money may be collected for a good cause, but then it can be used to patch up numerous holes, for example to pay miners if they block railroads [in strikes like last year]," Sakharnov said. "At first glance it looks like another tax."

Yelena Panina, chairwoman of the Moscow Confederation of Industrialists and Entrepreneurs, agreed.

"If they announce a 2 percent deduction with no regard to each investor's interests, saying, let's all chip in to support the coal or metal [industry], this looks like another tax," she said.

"My impression is that the money will be collected, not for the projects [which were announced], but for something else, that is, patching up holes in the budget," Panina said.

In announcing the fund proposal, Aksyonenko tried to soothe such fears, saying the money should be spent under the strict control of both the government and the State Duma, Russia's lower house of parliament.

Analysts said Monday that it looked like Aksyonenko traveled to Kemerovo, one of Russia's most politically active and volatile provinces, for reasons other than just announcing the fund. The former railways minister was probably trying to rally workers and appease regional leaders, who are likely to be irritated by his sudden rise to power, they said.

"[Aksyonenko and his Kremlin backers] dread possible antagonism on the part of the regional governments and a union in the Federation Council against the Kremlin," said Sergei Kolmakov, director of the Fond Politika think tank. "In their fight for survival they are ready to go very far, as far as allowing Russia to become a confederation, but preserve [the regional leaders'] loyalty."

Kemerovo Governor Aman Tuleyev, one of the most influential leftist regional leaders, would make an important ally, Kolmakov said.

With the dismissal of Yevgeny Primakov's populist government, which was gradually reducing wage arrears, the authorities have reason to expect a new wave of unrest in Kemerovo, he said.

"Kemerovo is a major coal supplier on one hand and a major pool of social activity on the other," said Marina Ionova, chief analyst at investment company Aton.

Aksyonenko, who has hinted that he wants control of Russia's natural monopolies, may be trying to establish influence over one of them, national power grid Unified Energy Systems, through the coal industry, UES's main supplier and creditor, Ionova added.