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. Last Updated: 07/27/2016

Cabinet Swiftly Moves on a Pledge

The Cabinet gave its stamp of approval Thursday to legislation that will cut the statute of limitations for reviews of privatizations from 10 to three years.

The Cabinet's approval came about six weeks after President Vladimir Putin promised the change at a meeting with leading Russian businessmen. Putin repeated the pledge in his state of the nation address last month.

The much-anticipated bill will probably provide more breathing room for the business community and particularly the large industrial groups created in the 1990s.

"Ten years is too long and cannot be justified," Justice Minister Yury Chaika said at a Cabinet meeting Thursday, Interfax reported.

"[The proposed limits] will allow a stop to many of the corporate wars aimed at property acquisition," he said.

The bill -- which has yet to be submitted to the parliament, approved by both of its chambers and signed into law by Putin -- could mean that the question of hundreds of murky and dirt-cheap privatization deals of the 1990s will finally be put to rest. Those deals served as the foundation for the country's leading industrial empires.

It was unclear Thursday whether the change in legislation would provide for a way for authorities to selectively return to specific deals.

But once the bill becomes law, it could put a stop to all ongoing investigations and court cases involving privatizations conducted more than three years ago, said Yevgeny Baru, a lawyer representing oil magnate Platon Lebedev, who together with Yukos founder Mikhail Khodorkovsky is waiting for a verdict next week on charges connected to the privatization of the Apatit fertilizer plant in 1994.

Baru refused to comment on whether the bill might affect Lebedev and Khodorkovsky.

"In general, if the change works in favor of the accused, it is applied retroactively," Baru said. "And if it is tougher than the previous law, it cannot be applied retroactively.

"So the latest change could actually help at least some people [under investigation]," he said.

Putin's offer to limit reviews of privatizations appeared to be an attempt to calm jitters in the business community that the Lebedev and Khodorkovsky cases were just the start of a series of legal attacks against those involved in 1990s sell-offs.

The Cabinet's swift approval of the bill should reassure investors, who have complained that promises made by Putin in the past remain unfulfilled. In an apparent move to increase his credibility among investors and the general public, Putin on Wednesday set strict deadlines for the Cabinet to draft legislation fulfilling other promises he made in his recent state of the nation address.

Prime Minister Mikhail Fradkov, whom Putin charged with making sure the deadlines are met, warned the Cabinet on Thursday that he would not tolerate any delays. "Deadlines are deadlines, and its time to stop ignoring the schedule," Fradkov said, according to the government's official web site.

"There are a considerable number of disagreements as we go through documents at meeting, even though we could have settled them earlier," he said.

Putin lately appears to have made a priority of ensuring that his promises are fulfilled, in a remarkable shift from previous years, investment bankers said.

"He is definitely trying to create the impression that he is fulfilling the promises," said Roland Nash, chief strategist at Renaissance Capital.

"Telling Fradkov what needs to be done and the next day seeing some of it approved by the Cabinet does send a very strong signal," Nash said.

He added, however, that a lot more would have to be done for Putin to regain strong support for his policies and a belief that he is in full control.

Chris Weafer, chief strategist at Alfa Bank, said the key significance of Thursday's privatization bill lay in its swiftness rather than in the reduction from 10 to three years. Most of the most important sell-offs were carried out in 1995 as part of the controversial loans-for-shares program and, as such, are nearly 10 years old, he said.

Still, "it offers the hope that we will also now see progress on the other more serious issues such as an end to 'tax terrorism' and other state meddling in business," Weafer said. "These latter issues are at the root of the lack of cooperation between the state and big business and need to be ended if capital flight is to reverse and investment to grow."