The worldwide economic crisis hit Russia hard. Cargo volumes in the port of St. Petersburg, Russia’s largest port, are down by over forty percent versus 2008, with no end in sight. The shipping slowdown blew a hole in the Russian Federation budget, which depends heavily on Customs duties for its income. With the good times rolled for the Russian economy, the Medvedev Administration is scrambling to find every ruble it can to meet its financial obligations.
In March, according to the Russian newspapers Kommersant and Fontanka, the Chief of the Russian Federal Customs Service ordered an inspection of Baltic Customs. Baltic Customs controls the First Container Terminal, Petrolesport and other cargo complexes in the greater Port of St. Petersburg.
Baltic Customs collects a lion’s share of customs duties for the Russian state. Now it appears that the inspection will cost some of St. Petersburg’s top Customs officers their jobs, including the Chief of Baltic Customs, Oleg Tugolukov.
Federal Customs inspectors put Baltic Customs under scrutiny after noticing differences in valuations between similar types of goods clearing customs in Moscow and in St. Petersburg. The lower the value of the goods, the less duty collected by Customs for the Russian federal budget.
A lower value assigned to goods is a strong indicator of bribery. An importer may offer to kick back a few thousand dollars to a Customs inspector in return for paying less duty on the shipment. Experts estimate that the practice costs the Russian state hundreds of millions of dollars in lost revenue annually.
Over twenty Customs officers from various departments, led by Boris Shurkin, Deputy Chief of the Federal Customs Income Department, inspected shipping documents and financial results at Baltic Customs. The inspection, which began in early March, lasted over two weeks.
The Chief of Baltic Customs, Oleg Tugolukov, and his chief economist, Elena Rumyantseva, have been asked to resign their posts for negligence of duty (упущения в работе). Kommersant and Fontanka did not offer details of the charge.
Tugolukov and Rumyantseva were offered to resign of their own free will. In Russia, resigning by one’s free will – увольнение по собственному желанию – is a commonplace resolution to labor disputes. Resignation entails a contractual buyout, usually generous (but less than mandated by government regulations). It allows the person who resigns to avoid a black mark in his or her Labor Book (Трудовая Книга), a person’s official work record.
Tugolukov apparently asked for a transfer to another position. When a guarantee was not forthcoming, he refused to tender his resignation. Kommersant dubbed the house cleaning in St. Petersburg a “purge.” According to its sources, the Chief of the Federal Customs Service, Andrey Belyaninov prepared orders to fire dozens of highly placed Russian Customs officers in the next few months.
Inspector Shurkin commented to Kommersant:
“It is worth remarking that, considering the crisis and increasing competition, very few participants in foreign trade are prepared to provide useful information about imports. At the same time, the Russian Federal Customs Service, faced with an ambitious objective set by the Russian Federation government, is becoming more and more a financial entity. Naturally, even fewer companies wish to reveal information to a financial entity, particularly considering our friendly relations with the [Russian Federation] Tax Service."
Russian President Dmitry Medvedev has declared corruption one of the biggest threats to the Russian state, and made its elimination one of the goals in his administration. In late 2008 case, the Chief of Kaliningrad Customs and eleven fellow officers were arrested for organizing a criminal group. Kaliningrad is Russia’s second largest Baltic port, is an automobile manufacturing center for BMW and has designs to become a free-trade zone.
According to Fontanka, the Kaliningrad arrests were a lead-up to the move against Baltic Customs. Following the inspection of Baltic Customs, investigators moved on to scrutinize the activities of a number of accredited, bonded warehouses and storage facilities in the St. Petersburg region, as well as St. Petersburg Customs. Upon completion of the inspection, Belyaninov summoned Yuri Prokofiev, the Chief of Northwest Customs, which has regional authority over Baltic and St. Petersburg Customs, to Moscow for discussions on further actions.
The move against Baltic Customs comes as no surprise. The port of St. Petersburg handles a huge percentage of imports into Russia, including almost ninety percent of its meat. The meat importing industry in Russia is riddled with corruption; in 2006, over thirty shipping containers of meat were stolen from the port, and a Customs inspector was gunned down in his office.
In 2008, the Federal Transportation Militia raided the offices of major container shipping firms as part of an international conspiracy to change the country of origin and cargo description for meat. The Militia determined that workers in the container shipping companies colluded with criminal organizations to falsify the information on Bills of Lading.
The endemic corruption, combined with onerous customs clearance procedures, result in an average container dwell time of up to two weeks in the port of St. Petersburg. Baltic Customs rules mandate a full, one hundred percent physical inspection of all shipping container with meat. This means each and every shipping container with meat must be moved to a special area within the terminal and opened for a complete examination of all 20 tons of meat in the container.
The shake up at Baltic Customs is part of two larger trends in the Russian shipping industry. First, the Russian government is simplifying cargo clearance by pushing all customs posts to the Russian border. Under the present system, it is possible to clear cargo either at the Russian border, or at inland customs posts. The practice is called VTT, or internal customs transit (внутренный таможенный транзит). Some perceive VTT as a temptation to corruption, since it lets importers bring cargo to “their” customs post and work with “their” customs officers. Pushing customs clearance to the borders removes this element of temptation.
Second, the number of customs brokers is decreasing in step with the decrease in cargo. Customs brokers handle the difficult and complex tasks required to clear Russian customs on behalf of importers and exporters. Literally hundreds of them service the St. Petersburg market. Generally, they operate in one of three modes – by placing a cargo bond themselves, or using a power of attorney on behalf of the cargo owner, or a bank guarantee. The financial crisis is tying their hands as well. This will be the topic of my next blog.
http://www.fontanka.ru/2009/04/17/127/
Газета «Коммерсантъ» № 63(4118) от 09.04.2009
Wednesday, April 22, 2009
Monday, April 13, 2009
St. Petersburg Automobile Industry Crashes
Valentina Matvienko, the Governor of the Leningrad Region, long dreamed of turning the city of St. Petersburg into a major production center for the Russian automotive industry. As a result of her administration’s concerted campaign to woo the world’s major automobile manufacturers, the Venice of the North seemed by 2009 well on the way to re-making itself as the Detroit of Russia.
Now the worldwide economic crisis may have driven those dreams off a cliff. And as with all questions of foreign import and export activity, the Russian Federal Customs Service was along for the ride. First, some background.
Russia’s appetite for foreign automobiles has been one of the most stable features of its economy since the fall of the Soviet Union. What Russian doesn’t love a fast ride? – goes the proverb; and throughout wrenching currency reforms, defaults, booms and busts of the past 20 years, Russians have bought and imported foreign cars in vast quantities.
However, importing new and used cars has always been fraught with difficulties – the general inefficiency of the Russian transportation system and its capricious tariff policies add hidden transaction costs, and the Russian government long wanted the prestige of partnerships with the world’s major auto manufacturers. General Motors made a few tentative inroads into opening a plant in Togliatti, on the Volga River, back in the 1990s. The much heralded “Russian-built” Blazers were actually knock-down kits from Brazil, imported in shipping containers and put together on site by Russian workers, or fully-built cars needing only to have the bumpers bolted on and mirrors bolted on to earn the “manufactured in Russia” imprimatur.
The market really began to turn around after Vladimir Putin took over as President in 2000. Rising oil prices stabilized the Russian economy and put spare cash in people’s pockets. Local Russian production became attractive to the world’s auto majors. Ford Motor Corporation was the first to strike; by 2009, Ford, Toyota, Nissan, Honda, Hyundai and General Motors are among the major automobile manufacturers with a significant presence in St. Petersburg. The Ford plant in Shushary is one of the first ‘landmarks’ a visitor sees along the road into the city from Pulkovo Airport.
All foreign automobile manufacturers in Russia operate in the same basic way. They produce certain models in Russia – generally, affordable ones such as the Ford Focus – employing local labor and a certain percentage of Russian-produced parts, in exchange for relief of taxes and customs duties. Ford, for example, set its initial contract for Russian production for a 50% Russian-parts content by 2007. Other manufacturers cut deals allowing them longer holidays.
The manufacturers import other models – generally, more expensive ones – directly into Russia to complement brand selection. Manufacturers ship cars in shipping containers or on roll-on, roll-off vessels to Finland, and then arrange to dray or rail them to dealerships in Russia. Private citizens purchasing automobiles generally do this through a series of middlemen; these cars go either directly into Russian ports or into the Baltics, where the buyer takes care duties and customs clearance.
Overall, the Russian automobile market was, until the beginning of 2009, remarkably vigorous. Experts quoted on the website www.just-auto.com, in June 2008 predicted that Russia would produce 4 million new cars per year by 2012, surpassing even Germany as Europe’s main automobile manufacturer.
Now that prediction is in the ditch. Nationwide, Russian automobile manufacturing now is down almost 70% compared to 2008. At the beginning of the year, the Russian government introduced new tariffs on imported cars and prices rose up to 40% for some models. Anticipating the new tariffs, St. Petersburg auto majors Toyota and General Motors ramped up local production of popular models including the Captiva and Camry, and January and February pumped out 80% more cars than in the same period in 2008.
This number does not, however, reflect increased demand; many 2008 models remain unsold, in stock, and production fell off sharply in March and April. Toyota halted its production lines altogether from March 30 through April 6 to cope with falling demand, although it is now working normal hours. Ford has had a series of labor disputes with the local union over wages and hours as falling demand threatens their plant with layoffs.
Dealerships throughout St. Petersburg are closing as demand wanes, and there seems to be no end in sight. The European Business Association reports that sales of new imported cars in Russia for January and February 2009 fell on average by 36%. The biggest losers were Mitsubishi, at 64%, Hyundai at 49%, Suzuki and Land Rover at 42%, Opel and Renault at 39%, Nissan and Toyota at 37%, and Ford at 22%.
The Russian transportation system is in general so fragile, and so laden with inefficiencies and illogic, that the result of virtually any disruption is congestion to the system. If it is true that when the American economy sneezes, then the world catches a cold, then sclerotic Russia is flat on its back with viral pneumonia about now. Reserve lots in Finland are backed up with unsold cars earmarked for Russian buyers – many analysts say there is at least a six-month inventory at some locations. The crisis affects Finnish ports such as Kotka and Hamina, whose bread and butter servicing transit cargo to Russia, most of it automobiles. They report overall import volumes down by at least 20% since the New Year.
Russia insists on itself as a special case in the automobile industry, with needs to support indigenous automobile manufacturers while encouraging gradual growth in foreign production. Prime Minister Putin’s recently bailed out the Tolyatti Auto Works in Samara, not out of love for the Lada or to support the criminal gangs reputedly infesting the plant, but to ensure social stability. A few billion rubles keep a lot of disgruntled workers off the streets.
At the same time, the recent increase in tariffs on imported automobiles is hard to understand. Some St. Petersburg buyers found themselves faced with a stiff price increase on vehicles they already bought but that had not landed in Russia before the tariff increase. Russians overwhelmingly prefer foreign made vehicles to Russian made ones in any case – and maybe this would be an opportune time to bring in more foreign manufacturing, while the ruble is cheap.
Russia, however, is nothing if not contradictory. It wants the auto majors but is not willing to do what it takes, to make them feel secure about their future in Russia. As www.just-auto.com reported, major automobile manufacturers in Russia are concerned most about lack of infrastructure, customs regulations and low worker productivity. Add in the recent protectionist tariff policy and the economic outlook gets cloudier, not clearer.
As I mentioned earlier, the Federal Customs Service may not have driven the auto market over the cliff in Russia, but it was certainly along for the ride. In 2006, Customs revoked the duty free status on about 10,000 Focus automobiles, claiming that they did not have sufficient local content, and hit Ford with a $25 million dollar bill. Shipments of spare parts get held up in the port of St. Petersburg for long and tedious customs inspections, impacting the supply chain and hurting plant productivity at Shushary.
Even arranging for a green-corridor regime of minimal inspections entailed Ford going to work with a special dedicated Customs broker. This broker gets paid rates of up to $2000 per container shipment – a number, not surprisingly, near the amount that Business Transparency International cites as the average amount of a bribe to clear a shipment through Russian Customs.
Now the worldwide economic crisis may have driven those dreams off a cliff. And as with all questions of foreign import and export activity, the Russian Federal Customs Service was along for the ride. First, some background.
Russia’s appetite for foreign automobiles has been one of the most stable features of its economy since the fall of the Soviet Union. What Russian doesn’t love a fast ride? – goes the proverb; and throughout wrenching currency reforms, defaults, booms and busts of the past 20 years, Russians have bought and imported foreign cars in vast quantities.
However, importing new and used cars has always been fraught with difficulties – the general inefficiency of the Russian transportation system and its capricious tariff policies add hidden transaction costs, and the Russian government long wanted the prestige of partnerships with the world’s major auto manufacturers. General Motors made a few tentative inroads into opening a plant in Togliatti, on the Volga River, back in the 1990s. The much heralded “Russian-built” Blazers were actually knock-down kits from Brazil, imported in shipping containers and put together on site by Russian workers, or fully-built cars needing only to have the bumpers bolted on and mirrors bolted on to earn the “manufactured in Russia” imprimatur.
The market really began to turn around after Vladimir Putin took over as President in 2000. Rising oil prices stabilized the Russian economy and put spare cash in people’s pockets. Local Russian production became attractive to the world’s auto majors. Ford Motor Corporation was the first to strike; by 2009, Ford, Toyota, Nissan, Honda, Hyundai and General Motors are among the major automobile manufacturers with a significant presence in St. Petersburg. The Ford plant in Shushary is one of the first ‘landmarks’ a visitor sees along the road into the city from Pulkovo Airport.
All foreign automobile manufacturers in Russia operate in the same basic way. They produce certain models in Russia – generally, affordable ones such as the Ford Focus – employing local labor and a certain percentage of Russian-produced parts, in exchange for relief of taxes and customs duties. Ford, for example, set its initial contract for Russian production for a 50% Russian-parts content by 2007. Other manufacturers cut deals allowing them longer holidays.
The manufacturers import other models – generally, more expensive ones – directly into Russia to complement brand selection. Manufacturers ship cars in shipping containers or on roll-on, roll-off vessels to Finland, and then arrange to dray or rail them to dealerships in Russia. Private citizens purchasing automobiles generally do this through a series of middlemen; these cars go either directly into Russian ports or into the Baltics, where the buyer takes care duties and customs clearance.
Overall, the Russian automobile market was, until the beginning of 2009, remarkably vigorous. Experts quoted on the website www.just-auto.com, in June 2008 predicted that Russia would produce 4 million new cars per year by 2012, surpassing even Germany as Europe’s main automobile manufacturer.
Now that prediction is in the ditch. Nationwide, Russian automobile manufacturing now is down almost 70% compared to 2008. At the beginning of the year, the Russian government introduced new tariffs on imported cars and prices rose up to 40% for some models. Anticipating the new tariffs, St. Petersburg auto majors Toyota and General Motors ramped up local production of popular models including the Captiva and Camry, and January and February pumped out 80% more cars than in the same period in 2008.
This number does not, however, reflect increased demand; many 2008 models remain unsold, in stock, and production fell off sharply in March and April. Toyota halted its production lines altogether from March 30 through April 6 to cope with falling demand, although it is now working normal hours. Ford has had a series of labor disputes with the local union over wages and hours as falling demand threatens their plant with layoffs.
Dealerships throughout St. Petersburg are closing as demand wanes, and there seems to be no end in sight. The European Business Association reports that sales of new imported cars in Russia for January and February 2009 fell on average by 36%. The biggest losers were Mitsubishi, at 64%, Hyundai at 49%, Suzuki and Land Rover at 42%, Opel and Renault at 39%, Nissan and Toyota at 37%, and Ford at 22%.
The Russian transportation system is in general so fragile, and so laden with inefficiencies and illogic, that the result of virtually any disruption is congestion to the system. If it is true that when the American economy sneezes, then the world catches a cold, then sclerotic Russia is flat on its back with viral pneumonia about now. Reserve lots in Finland are backed up with unsold cars earmarked for Russian buyers – many analysts say there is at least a six-month inventory at some locations. The crisis affects Finnish ports such as Kotka and Hamina, whose bread and butter servicing transit cargo to Russia, most of it automobiles. They report overall import volumes down by at least 20% since the New Year.
Russia insists on itself as a special case in the automobile industry, with needs to support indigenous automobile manufacturers while encouraging gradual growth in foreign production. Prime Minister Putin’s recently bailed out the Tolyatti Auto Works in Samara, not out of love for the Lada or to support the criminal gangs reputedly infesting the plant, but to ensure social stability. A few billion rubles keep a lot of disgruntled workers off the streets.
At the same time, the recent increase in tariffs on imported automobiles is hard to understand. Some St. Petersburg buyers found themselves faced with a stiff price increase on vehicles they already bought but that had not landed in Russia before the tariff increase. Russians overwhelmingly prefer foreign made vehicles to Russian made ones in any case – and maybe this would be an opportune time to bring in more foreign manufacturing, while the ruble is cheap.
Russia, however, is nothing if not contradictory. It wants the auto majors but is not willing to do what it takes, to make them feel secure about their future in Russia. As www.just-auto.com reported, major automobile manufacturers in Russia are concerned most about lack of infrastructure, customs regulations and low worker productivity. Add in the recent protectionist tariff policy and the economic outlook gets cloudier, not clearer.
As I mentioned earlier, the Federal Customs Service may not have driven the auto market over the cliff in Russia, but it was certainly along for the ride. In 2006, Customs revoked the duty free status on about 10,000 Focus automobiles, claiming that they did not have sufficient local content, and hit Ford with a $25 million dollar bill. Shipments of spare parts get held up in the port of St. Petersburg for long and tedious customs inspections, impacting the supply chain and hurting plant productivity at Shushary.
Even arranging for a green-corridor regime of minimal inspections entailed Ford going to work with a special dedicated Customs broker. This broker gets paid rates of up to $2000 per container shipment – a number, not surprisingly, near the amount that Business Transparency International cites as the average amount of a bribe to clear a shipment through Russian Customs.
Monday, April 6, 2009
St. Petersburg Chinovniki Debate Courchavel Vacations
Nothing is duller – and more dangerous – than pointing out sleaze in the Russian government. Militia officers stop drivers on Russian roads with no other pretense than to collect bribes. Parents bribe the administrators of Russian schools and universities to ensure admission for their children. Doctors and hospital workers take money for elementary health care. Plumbers take bribes to repair sinks, faucets, military officers shake down cadets for part of their salaries, and highly placed businessmen expect percentage kickbacks for commercial deals. Mentioning corruption in general terms gets you a yawn in Russia; actually revealing them about the wrong people, though, gets you a bullet in the head, like Anna Politkovskaya or Paul Khlebnikov.
Russian institutions are so awash in corruption that nobody even seems to get worked up about it; western companies operating there just find good middlemen to pay off the right people. Corruption becomes another line item, a just a Cost of Doing Business. Transparency International estimates that the average cost of additional fees exceeds two thousand dollars per shipping container for every import and export shipment arriving and departing Russia. These additional fees, paid to customs brokers, often go directly into the pockets of dishonest officers in the Federal Customs Service. Corporations would be outraged over such a thing in Rotterdam or Newark (well, maybe less so in Newark). However, foreign shipping companies, in a dog-eat-dog struggle for market share, just shrug, pass along the costs and keep the deniability plausible.
In the good times, corruption may not matter so much – over the past ten years, Russia experienced an average double-digit annual growth, thanks to high energy prices and the relative fiscal discipline of the Putin administration. The rising tide lifted many boats. A nascent middle-class formed, and average citizens could afford many previously unattainable luxuries; automobiles, trips abroad, imported clothes and shoes. The stuff that makes life not merely bearable but enjoyable. Investment in infrastructure increased and, even with endemic theft, many Russian cities became noticeably better places to live.
Now, however, energy prices and demand have sunk, capital is less available and the bottom of the consumer goods market has fallen out. Fontanka.ru, the major St. Petersburg newspaper, daily reports on closing grocery stores and auto dealerships. Governor Valentina Matvienko’s plan to convert the Venice of the North into the Russian Detroit fell afoul of the world economic crisis.
The good times for Russia are over, at least for the near future, and as might be expected, this sets people to wondering exactly where their money went during the good times. Russian President Dmitry Medvedev set the elimination of corruption high on his agenda when he came into office. And, surprisingly, he appears to be doing something about it.
A February decree requires presidential staff to report the destination and duration of all trips overseas, excluding those for official business. At year’s end, the presidential administration will publish the name of each staff member, along with the trip details.
Medvedev hopes to achieve two things with this decree. First, staff members will have to explain just how they can afford to vacation three times a year on the Cote d’Azur, when their official salary might be enough for a couple of weeks at the dacha. Accounting for their expenses, the logic goes, will make Russia’s highly placed civil servants – chinovniki – account for their income. Second, Medvedev hopes to defuse social tensions among regular citizens, who may resent the chinovniki living high off the hog while they are forced to tighten their belts.
According to Fontanka.ru, now the city of St. Petersburg is considering a similar measure, requiring its chinovniki to account for their overseas vacations. While we may never get a glimpse of the inner workings of the Kremlin, thanks to Fontanka.ru, we can read about the debate this type of ruling creates in the lower ranks of the Russian bureaucracy.
The debate between city administrators apparently is quite heated – while promoters of the bill defend its merits, opponents resent the invasion of their privacy. For example, Zoya Zaushnikova, deputy for the Fair Russia faction, voted against the measure, angrily stating,
“Why should I have to justify myself to [St. Petersburg Duma House Speaker] Tyulpanov if I go to Egypt or Turkey on vacation? I don’t want him to know where I vacation, it’s my personal business!”
St. Petersburg Legal Committee Commissioner Viktor Evtukhov, initiator of the legislation, calmed Zaushnikova, saying,
“If you want to go to Egypt, or Turkey, or Courchavel [a French skiing resort popular among the Russian elite] or Miami, that’s your right, not your obligation. We want the affairs of our chinovniki to be open and our voters to know what we spend money on. Nobody really wants to go to Courchavel…”
Then he continued, coyly ignoring the fact that he was speaking with in the presence of the press,
“I won’t tell anybody how you voted. Unlike the leader of your faction, who passes everything along to the mass media, I will prohibit my political apparatus from informing anybody that you voted against the measure. Nobody will ever know about it, Zoya Valentinova…”
According to the article, there are hints that Russia’s chinovniki have an unspoken agreement among themselves not to visit elite European resorts until the disclosure fever subsides. Russian media recently published photographs from Courchavel of important chinovniki and influential figures such as Leonid Tyagechev, Vladimir Kozhin, Evgeni Murov, Krasnodarsk senator Igor Kamenskoi, Russian NATO representative Dmitri Rogozin and Tver governor Dmitri Zelenin. Moscow region financial director Alexei Kuznetsov, under investigation for expropriating $20 billion worth of land in the prestigious Podmoskovye region, was seen vacationing with them as well.
Other important Russian chinovniki are quite open about where they enjoy to spend their vacations. For example, St. Petersburg Governor Valentina Matvienko prefers Greece, where she was an ambassador during the 1990s. Viktor Evtukhov, author of the legislation, enjoys Greece too, especially the island of Tasos.
http://www.fontanka.ru/2009/04/03/072/
Russian institutions are so awash in corruption that nobody even seems to get worked up about it; western companies operating there just find good middlemen to pay off the right people. Corruption becomes another line item, a just a Cost of Doing Business. Transparency International estimates that the average cost of additional fees exceeds two thousand dollars per shipping container for every import and export shipment arriving and departing Russia. These additional fees, paid to customs brokers, often go directly into the pockets of dishonest officers in the Federal Customs Service. Corporations would be outraged over such a thing in Rotterdam or Newark (well, maybe less so in Newark). However, foreign shipping companies, in a dog-eat-dog struggle for market share, just shrug, pass along the costs and keep the deniability plausible.
In the good times, corruption may not matter so much – over the past ten years, Russia experienced an average double-digit annual growth, thanks to high energy prices and the relative fiscal discipline of the Putin administration. The rising tide lifted many boats. A nascent middle-class formed, and average citizens could afford many previously unattainable luxuries; automobiles, trips abroad, imported clothes and shoes. The stuff that makes life not merely bearable but enjoyable. Investment in infrastructure increased and, even with endemic theft, many Russian cities became noticeably better places to live.
Now, however, energy prices and demand have sunk, capital is less available and the bottom of the consumer goods market has fallen out. Fontanka.ru, the major St. Petersburg newspaper, daily reports on closing grocery stores and auto dealerships. Governor Valentina Matvienko’s plan to convert the Venice of the North into the Russian Detroit fell afoul of the world economic crisis.
The good times for Russia are over, at least for the near future, and as might be expected, this sets people to wondering exactly where their money went during the good times. Russian President Dmitry Medvedev set the elimination of corruption high on his agenda when he came into office. And, surprisingly, he appears to be doing something about it.
A February decree requires presidential staff to report the destination and duration of all trips overseas, excluding those for official business. At year’s end, the presidential administration will publish the name of each staff member, along with the trip details.
Medvedev hopes to achieve two things with this decree. First, staff members will have to explain just how they can afford to vacation three times a year on the Cote d’Azur, when their official salary might be enough for a couple of weeks at the dacha. Accounting for their expenses, the logic goes, will make Russia’s highly placed civil servants – chinovniki – account for their income. Second, Medvedev hopes to defuse social tensions among regular citizens, who may resent the chinovniki living high off the hog while they are forced to tighten their belts.
According to Fontanka.ru, now the city of St. Petersburg is considering a similar measure, requiring its chinovniki to account for their overseas vacations. While we may never get a glimpse of the inner workings of the Kremlin, thanks to Fontanka.ru, we can read about the debate this type of ruling creates in the lower ranks of the Russian bureaucracy.
The debate between city administrators apparently is quite heated – while promoters of the bill defend its merits, opponents resent the invasion of their privacy. For example, Zoya Zaushnikova, deputy for the Fair Russia faction, voted against the measure, angrily stating,
“Why should I have to justify myself to [St. Petersburg Duma House Speaker] Tyulpanov if I go to Egypt or Turkey on vacation? I don’t want him to know where I vacation, it’s my personal business!”
St. Petersburg Legal Committee Commissioner Viktor Evtukhov, initiator of the legislation, calmed Zaushnikova, saying,
“If you want to go to Egypt, or Turkey, or Courchavel [a French skiing resort popular among the Russian elite] or Miami, that’s your right, not your obligation. We want the affairs of our chinovniki to be open and our voters to know what we spend money on. Nobody really wants to go to Courchavel…”
Then he continued, coyly ignoring the fact that he was speaking with in the presence of the press,
“I won’t tell anybody how you voted. Unlike the leader of your faction, who passes everything along to the mass media, I will prohibit my political apparatus from informing anybody that you voted against the measure. Nobody will ever know about it, Zoya Valentinova…”
According to the article, there are hints that Russia’s chinovniki have an unspoken agreement among themselves not to visit elite European resorts until the disclosure fever subsides. Russian media recently published photographs from Courchavel of important chinovniki and influential figures such as Leonid Tyagechev, Vladimir Kozhin, Evgeni Murov, Krasnodarsk senator Igor Kamenskoi, Russian NATO representative Dmitri Rogozin and Tver governor Dmitri Zelenin. Moscow region financial director Alexei Kuznetsov, under investigation for expropriating $20 billion worth of land in the prestigious Podmoskovye region, was seen vacationing with them as well.
Other important Russian chinovniki are quite open about where they enjoy to spend their vacations. For example, St. Petersburg Governor Valentina Matvienko prefers Greece, where she was an ambassador during the 1990s. Viktor Evtukhov, author of the legislation, enjoys Greece too, especially the island of Tasos.
http://www.fontanka.ru/2009/04/03/072/
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