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. Last Updated: 07/27/2016

Devil Is in the Details as Duma Starts Fall Term

Photo by ITAR-TASSState Duma Speaker Gennady Seleznyov, right, inspecting new seats in the renovated chamber.
When deputies file into the State Duma on Wednesday for the opening of the autumn session, they will be returning to a newly renovated chamber -- and a daunting amount of work.

Out of about 2,000 bills waiting for discussion in the Duma portfolio, about 700 are scheduled to be reviewed by the end of this year -- and 125 fall into the high-priority category.

Among the priority legislation listed for discussion in the autumn session are the 2002 budget, land and labor codes and packages of bills on pensions, banking, tax and judicial reforms. Some are expected to have thousands of amendments because many controversial regulations were hurriedly passed in the final weeks of the spring session.

"When so many significant bills are concentrated into such a small time, the possibility of mistakes and inaccurate solutions is high," Oleg Morozov, head of the Russia's Regions faction, said Monday on Radio Rossii.

"Thank God we deferred the second and third reading of several significant documents over the summer, cooled down, and had a better look at them. Maybe now the government and the president will see some of the issues differently."

The package of reforms that President Vladimir Putin's government started to implement in 2001 is seen as having great importance to the economic development of the country.

"It is only marginally an exaggeration to say that 2001 could prove to be as significant a period in the process of reform as 1986, when Mikhail Gorbachev began perestroika," said a September report by the Renaissance Capital brokerage.

On Wednesday, after the Duma approves the agenda for its autumn session, deputies are likely to pass several regulations on fighting terrorism and then hear the first reading of amendments to the Criminal Code's articles that concern crime in the securities market.

Land Code

The third and final reading of the most controversial draft law ever to go through the Duma, the Land Code, could come as early as this week. Although it concerns sales of only 2 percent of the country's land -- in cities, suburbs and villages -- Communist deputies chanted "shame, shame" when Economic Development and Trade Minister German Gref presented it to the Duma for its first reading.

Communists left the hall in protest over what they saw as "the selling of the Fatherland," but the pro-Kremlin majority supported the draft. The second reading on July 14 was calmer, but the Communist faction said the reading was illegal because legislative assemblies of 35 regions had rejected the draft. Most of the assemblies' resolutions said they opposed the code because it does not ban the sale of agricultural land and allows land sales to foreigners.

A separate draft law dealing with agricultural land is expected to be presented to the Duma by the end of this year.

The 2002 Budget

Debate is expected when deputies discuss budget targets for 2002. The first reading is tentatively scheduled for Sept. 28. The Duma's budget committee has already recommended that the government raise several targets -- budget revenues by 119.1 billion rubles ($40.5 million) to 1.86 trillion rubles and gross domestic product by 435 billion rubles to 11.035 trillion rubles.

Lyubov Sliska, a Duma deputy speaker, said Tuesday that after the terrorist attacks in the United States, deputies will now have to deal with the need to increase the budgets for the military and the police. Additionally, the country has to accumulate funds to pay off a large chunk of its foreign debt in 2003.

However, Deputy Prime Minister Valentina Matviyenko, who oversees social issues, quickly replied that she will not allow military expenditures to grow at the expense of social funding, which has traditionally suffered first.

Labor Code

The second reading of the Labor Code, passed in its first reading July 5, is also expected this fall. One of its authors, Labor Minister Alexander Pochinok, said that "up to 15,000 amendments" will be received from deputies for the second reading.

The draft says that minimum monthly wages must not be lower than subsistence level, now about 1,507 rubles ($51) a month; that the employer must pay workers two-thirds of their wages if they remain idle through some fault of the employer; and the employer must pay penalties for delays in payment of wages.

However, the cost of raising the minimum monthly wages is too high, according to Pochinok. He said it would add costs of 2.7 trillion rubles to the state budget and 7 trillion rubles to private employers. A new bill on the gradual increase of minimum monthly wages will be prepared, he said.

Pension Reform

Also to be heard shortly is a package of regulations on pension reforms affecting the country's 38.5 million pensioners. The package consists of six bills, including a law on labor pensions that establishes three levels of pensions -- base, insurance-based and accumulated -- and also legislation on state pensions, individual pension accounts, mandatory pension insurance and the country's pension system.

"We will not establish limits on which funds people may choose -- the state fund, or a private fund, or a mutual fund, or some Ivanov may refuse to do it and get bigger wages," Pochinok said at a summer meeting of the American Chamber of Commerce. "We will also think about the possibility to invest in foreign pension funds, and we have in mind to create a system in which money invested into pension funds will not be taxed."

However, Oksana Dmitriyeva, former labor minister and now a Duma deputy, said that besides a few other shortcomings, the pension bills do not take inflation into consideration, and at current inflation levels, money paid now will lose up to 80 percent of its value in 25 years.

Judicial Reform

The deputies are also to continue debating a package of bills aimed at reforming the country's judicial system, which still functions much as it did in Soviet times.

The disputed Criminal Code, which establishes significantly more democratic criminal investigation procedures and improves protection of suspects, is scheduled to pass its third and final reading this session. The others, including a bill on legal defense and another on the status of judges, should come up for their second readings.

The Kremlin is hoping all bills relating to judicial reform will get final approval this session.

Tax Laws

Changes to tax laws expected to be debated this session include Unity's proposals to cut value-added tax from 20 percent to 15 percent, with the simultaneous lifting of all tax breaks on VAT, and sales tax cuts from 5 percent to 3 percent.

Tax reduction proposals will meet with opposition from the government. Deputy Finance Minister Sergei Shatalov was quoted by Vedomosti this month as saying that sales tax cuts alone next year would deprive regional administrations of 25 billion rubles out of the 55 billion rubles that they would have received.

Banking Reform

Changes in the law on bankruptcy are expected that would improve creditors' rights, while a draft on bank deposit guarantees is expected to be submitted by the government in December. Changes to the law on the Central Bank are also expected to be submitted to the Duma soon, but experts expect a difficult debate.

"Quite a lot of changes have been made to the law on the Central Bank that crucially change its contents," said Pavel Medvedev, deputy head of the Duma's banking committee. "The most important amendment adds a second management level to the Central Bank -- the National Banking Council -- that would share management functions with the existing management."

But while Medvedev said that creating an extra management level is a waste of resources, the head of the Duma's banking committee, Alexander Shokhin, said the council would fulfill different functions "like regulating all issues about the Central Bank's participation in the capital of other credit organizations."