You Can Read In English About The Most Important Events In Kursk & Belgorod In 2001 A.D.

Managers of leading industrial, agrarian, and financial firms in Belgorod Oblast and Ukraine's Kharkov Oblast met on 6 December in Belgorod, the second time in the past 6 months, to discuss future cooperation between the two neighboring regions, sharing a 540 km border. Officials from the two regions signed an agreement to further develop trade, investment, joint production, and other forms of economic relations between the two regions.
Belgorod Governor Yevgenii Savchenko expressed his support for expanding economic relations with Kharkov, which already plays a significant role in the regional economy. The governor noted that in 2001 two thirds of Belgorod's trade was with Ukraine, and this volume had increased one and a half times compared to the $189 million recorded in 2000. Belgorod's exports to Ukraine include fish, cement, asbestos, honey, washing machines, and energy equipment.
Moreover, 70 percent of firms with foreign investment are joint ventures with Ukrainian enterprises - 400 of such enterprises have been registered in Belgorod.

12 December 2001

To the top of the page

GAZPROM DEFEATS MIDDLEMEN IN KURSK

On 20 November, Gazprom won a decisive victory over intermediary natural gas distributors in Kursk Oblast. The key question was who should collect the population's payments for natural gas consumption. The two main competitors were Kurskregiongaz and Kurskgaz and the battle has been underway since 1997. That year the federal government decided to separate distribution companies from Gazprom. In Kursk, as in many other regions, Gazprom set up a subsidiary called Kurskregiongaz, which nominally owns all of the natural gas in the region. However, instead of being paid for the gas it supplied, Kurskregiongaz mostly collected debts. The main problem was that there were too many middlemen between the pipeline and the final customer.
The main middleman was Kurskgaz, which owns the network of low-pressure gas pipelines that ship the natural gas to enterprises and residences. The company also owns the equipment necessary for repairing the gas lines.
Four years ago, Kurskregiongaz and Kurskgaz signed an agreement, but Kurskgaz did not meet its conditions. According to the deal, Kurskgaz would get 10 percent of the money that Kurskregiongaz collected as payment for its gas. In other words, the owner of the gas would pay the distribution company to deliver the gas. However, Kurskgaz did not like these conditions because they limited opportunities to make larger profits and made the company heavily dependent on Kurskregiongaz. So Kurskgaz decided to collect payments for the gas directly from the population even though a court ordered them to stop engaging in this illegal practice.
Today, Kurskregiongaz is owed 300 million rubles for its gas. The oblast authorities believe that the population is responsible for 60 million rubles of this debt and that Kurskgaz has taken the other 240 million rubles and does not want to pay it back.
The conflict between the two companies has gone on for years as both sides tried to collect natural gas payments directly from the population. Customers were confused about whom they were supposed to pay, but generally favored Kurskgaz because it was the most immediate provider. Kurskgaz employees often traveled door-to-door through rural parts of the oblast to collect payments directly from customers and issue receipts.
Finally the struggle between the two gas companies became so extreme that Governor Aleksandr Mikhailov set up a commission chaired by Deputy Oblast Prime Minister Vladimir Trunov that ruled in favor of Kurskregiongaz. But Kurskgaz ignored the decision of the commission and a subsequent ruling by the arbitration court.
In response, Gazprom started to buy up Kurskregiongaz's stock and quickly gained a majority stake. On 20 November, at an extraordinary meeting of Kurskgaz's board, Gazprom was able to remove Kurskgaz General Director Anatolii Ryapolov and replace him with Viktor Lysyi, once the deputy general director of Kurskregionongaz. Thus, Kurskgaz lost the battle and its leadership was dismissed. However, the struggle is unlikely to end there as Ryapolov has already declared that his removal was illegal.

28 November 2001

To the top of the page

KURSK RAISES SMALL BUSINESS TAX TO PAY SALARIES

On 29 November, the Kursk Oblast Duma voted to raise taxes on small businesses in order to secure the funds required to pay the salaries of public sector employees. Deputy Governor for finances Eduard Mosolov told the regional legislators that the oblast needed to raise more income to cover the higher public sector salaries that Moscow ordered effective 1 December (see EWI Russian Regional Report, 28 November). He made clear that Moscow did not provide sufficient funding to pay for the higher salaries for doctors, teachers, and librarians that it had ordered. By a vote of 29-7, the deputies approved the measure, which will nearly triple the cost of a small business operating license and change the way taxes are calculated to increase the oblast's income. For some types of business, licenses will now cost as much as 28,000 rubles a year.
Unfortunately, while these measures will increase tax receipts in the short term, they will have a long-term depressive effect on the Kursk economy. While a significant percent of Muscovites are employed in the small business sector, in Kursk fewer than one percent of the population work in this sphere. In 2002, the 400 small businesses working in the region are expected to produce an additional 94 million rubles. Over time, however, the higher taxes are likely to bankrupt many of these businesses, thereby reducing the tax income the oblast can collect.
The legislators had a difficult choice deciding whether to support the public sector workers or small business. In voting to increase taxes, however, they realized that ultimately they would not really help the public sector workers because inevitably the business owners will have to raise prices to cover the new taxes, passing on the costs to the consumer.

5 December 2001

To the top of the page

NUCLEAR POWER PLAYS GROWING ROLE IN CENTRAL FEDERAL DISTRICT

Since the Central Federal District lacks its own energy resources, it relies partly on nuclear power for its electricity and heating. "That is federal policy," Presidential Representative Georgii Poltavchenko told a meeting of the District Council on 9 November. The council, which includes the governors, legislative chairmen, and chief federal inspectors of the regions in the district, met to discuss the security and effective development of nuclear power in the district. Russian Atomic Energy Minister Aleksandr Rumyantsev headed the federal delegation to the meeting. The authorities took unprecedented security measures before the meeting started.
Nuclear power is making a comeback in central Russia. By 1999, levels of production returned to their 1990 "pre-crisis" level, according to Deputy Presidential Representative Vasilii Kichedzhi. Nuclear power provides 29 percent of the electricity in the Center energy system (whose borders largely coincide with the Central Federal District). Nuclear power provides similar a amount of electricity in the Volga district and almost 40 percent in the Northwest. By comparison, these numbers are relatively small: nuclear power generates 75 percent of France's electricity, 43 percent of the European Union's, 35 percent of Japan's, but just 15 percent of Russia's.
Existing plans call for the development of central Russia's nuclear power plants, but the source of the extensive investments required for such construction remains unclear. The federal government does not have sufficient funds for this purpose. The regions are encouraging the construction of new plants on their territory because they bring new jobs, additional tax revenue, and federal funds to support the population's social needs. In Kursk, the local nuclear power station produces 24 percent of the region's gross product and fluctuations in the plant's work have an impact on the economy in general.
The council's meeting discussed three key issues: how to modernize the nuclear power plants, how to make them secure, and how to improve public attitudes toward nuclear energy. A major problem is storing and processing spent nuclear fuel and radioactive waste since a large share of these products is now stored at the nuclear plants themselves. A new storage station will not be built in Krasnoyarsk until 2005. Many participants were angry that Russia was able to store nuclear waste from Bulgaria and Hungary, but did not have room for its own. Gosatomnadzor Director Yurii Vishnevskii warned that currently not one nuclear power plant had adequate safeguards.
The main argument between the regional authorities and Minatom representatives was about the 30 kilometer special zone around each nuclear power plant and the required two percent payments for the social development of these zones. The argument ended without conclusion because the current law can be interpreted a number of ways and the only real solution is to adopt a new law. The regions are upset because they believe that the ministry is not contributing enough money into the fund. Minister Rumyantsev said that the ministry already is paying one percent and would seek a way to pay the rest of
the money. The governors, nuclear power plant directors, and federal officials agreed that only a comprehensive solution that took into account economic, security, environmental, and social problems would work in the future.
Ultimately, the conference adopted a resolution which stated that in order to avoid a crisis in electricity supplies, it was necessary to modernize and extend the life of existing nuclear power plants, bring on line new reactors at the plants by 2010, increase the use of nuclear power to reduce the cost of electricity and heating, and implement measures to reduce the loss of energy during its production and use.
The regional governments are seeking federal funds to help realize this plan. Since both the federal and regional governments want to maintain state control over the plants they are not considering private investors.

14 November 2001

To the top of the page

BELGOROD PLANT TO PRODUCE GERMAN CARBON BRUSHES FOR RUSSIAN AND UKRAINIAN ENGINES

On 18 October, the Belgorod Department of Industry and Communications organized a meeting of representatives from the German Schunk Group and the Belogord Elektromashina factory. Schunk is one of the largest producers of graphite and carbon brushes used in engines.
During the meeting, Schunk Director Egan Klatt and Elektromashina Director Nikolai Pilipenko agreed that in the first half of 2002 they would establish a Russian-German joint venture to produce machinery and a 100 percent German-owned firm focusing on know-how. The German investment in the joint venture will
consist of technology transfers, amounting to 35-40 million marks.
The German firm decided on a partnership with Elektromashina because it can facilitate Schunk's entry into the Russian and Ukrainian markets. The Belgorod company already produces 10-15,000 engines for local use and a similar amount for the Kursk Eletroagregat company.
Belgorod Oblast officials are enthusiastic about cooperation with Schunk. Governor Yevgenii Savchenko promised to provide all possible cooperation to facilitate the joint venture, which he estimated would create 200 new jobs and bring in additional tax revenue.

31 October 2001

To the top of the page

REGIONAL ELITE CONTROLS BELGOROD LEGISLATURE

Although the Communists nominated the largest number of candidates in Belgorod's 14 October regional legislative
elections, they won only one seat. Even a visit from party leader Gennadii Zyuganov one week before the elections did not help. In the 35-seat legislature, only 12 members won another term meaning that new members will make up about
two-thirds of the new body. The main victors were general directors from various industrial and agricultural enterprises who now make up 53 percent of the legislature's new membership. These men (and one woman) have enormous influence over their employees and the people working in businesses dependent on the enterprises.
Many of them are also major shareholders in their companies. Now all of Belgorod's major enterprises have representation in the legislature. These firms include Belgorodenergo (a subsidiary of Unified Energy System), Belgorodregiongaz (a subsidiary of Gazprom), the Lebedin Mining and Processing Combine, the Stoilen Mining and Processing Combine, the Oskol Electro-Metallurgical Combine, and the Praim Corporation. Four deputies represent agricultural enterprises, including the regional legislature's only female member.
Among the deputies are seven mayors, including the mayor of Belgorod, Georgii Golikov. Every mayor that sought a spot in the regional legislature was elected. Additionally, four of the new deputies are relatively high-ranking employees of the governor's oblast administration. Combined, this group of deputies makes up about one-third of the legislature's membership.
Of the membership, 6 deputies are ethnic Ukrainians (19 percent of the membership) and the rest are Russians. This breakdown reflects the ethnic composition of the region, which borders Ukraine. A new trend in the oblast is that about 10 percent of the voters marked their ballots against all candidates, a relatively large number compared to past elections. In some urban districts, this number reached as high as 20 percent. Despite the large number of new deputies, the new deputies reelected Anatolii Zelikov as their chairman. In addressing the body, Governor Yevgenii Savchenko stressed his satisfaction that the new members of the legislature represented various sectors of the "real economy" and expressed the view that the oblast's executive and legislative branches would work without conflict.
The assembly must address the problems of economic growth as this year the oblast returned to the output level it had reached in "pre-crisis" 1990. According to the governor, the main problem is that the oblast is only using half of its economic potential. Thus the governor believes that the legislature should adopt policies to support the most promising industrial sectors in the oblast economy. It should also work actively to improve the economic health of regional enterprises. The governor also stressed the need to improve conditions for small business and the overall investment climate.
The legislature faces major challenges in preparing a budget for 2002.
Because the federal government is now taking a greater share of tax revenue, the oblast calculates that it lost 1 billion rubles in revenue that it would have otherwise received in 2001. Estimates of losses to the federal government in 2002 are an additional 670 million rubles. The oblast's sources of income remain poorly defined. The State Duma is currently discussing lowering the current 5 percent sales tax. Business tax rates are also likely to change soon. It is also unclear how much of its money the federal government will transfer to the regions. The governor proposed that the legislature work closely with him to address these problems.

24 October 2001

To the top of the page

KURSK PROTESTERS TARGET GLOBAL ISSUES FOR FIRST TIME

On 5 October, an unusual act of protest took place in Kursk Oblast. Members of the pro-Communist Popular Patriotic Union formed a living chain stretching the length of Lenin Street to express their negative opinion toward almost everything happening in the world and Kursk Oblast. The protest was unusual for Kursk, where such public political demonstrations are rare. Similar demonstrations took place in the cities of Kurchatov and Zheleznogorsk.
The Communists marched under new banners denouncing globalization and the usual placards blasting "anti-people" reforms in Russia. For the first time, issues of globalization took priority over domestic Russian problems.Most of the demonstrators probably could not define "globalization." But it is not hard to understand when they mean when they say this word. For them globalization is when you wear Turkish shoes and a Polish suit, smoke American cigarettes, drink Russian vodka, and prefer German cars and Japanese electronics. You love Italian music and English literature, but nevertheless, something is not right in your life. Who is to blame? Globalization, the new enemy number one.
In Kursk, the fight against globalization means the usual leftist denunciations of the reforms of Minister of Economic Trade and Development German Gref and attempts to recall local State Duma members elected on the Unity platform. Banners showed these deputies as snakes with human heads bowing before the dollar, suggesting that they had sold out to the "globalists and capitalists." Other banners denounced the buying and selling of land. Some targeted capitalism and called for the return of socialism. Others carried portraits of Lenin, Stalin, and Fidel Castro. Since the Communist Party had organized the demonstration, none of the posters aimed at Kursk's current governor, Aleksandr Mikhailov. In fact, some banners praised the governor, making clear that the Kursk Communists are fighting national leaders and international trends, but not the regional authorities. Some placards called on Kursk Mayor Sergei Maltsev not to raise prices for public transportation and housing, while preserving free education and health care.
Generally, the marchers avoided any excesses and were well behaved. Some young people (mostly college students) were among the crowds, but there was no real union of young and old leftists. There was nothing like the violence at other such protests in Seattle or Genoa.

17 October 2001

To the top of the page

FOREIGN FIRMS COMPETE FOR KURSK COMBINE CONTRACT

Germany's Holmer company is planning to assemble harvesters in Kursk Oblast and hopes to produce them there in the future. Alfonse Holmer, the head of the company, recently accompanied Deputy Agriculture Minister Vladimir Alginin on a visit to the oblast to assess the region's agricultural equipment needs. The Ministry of Agriculture is supporting a major expansion in sugar beet cultivation in Russia, from 800,000 hectares in 2001 to 1 million hectares in 2002. According to Alginin, the financing issue already has been resolved - up to one third of the five billion rubles received by the Ministry last year as a result of the budget surplus will be earmarked for purchasing sugar beets and leasing equipment.
To ascertain what equipment will be needed, Alginin visited the three main sources of sugar beet production: Krasnodar Krai, Rostov Oblast, and Kursk Oblast. Holmer is one of Russia's most reliable equipment suppliers. Two other companies also are interested in competing for the Kursk harvester market: a Ukrainian tractor factory from Kharkov, producing the KC brand of harvesters, and the German Kleime company. The KC harvesters have been used for many years in Kursk and are well known in the region, although mostly for their drawbacks.
The equipment is of low quality and still uses technology from the 1980s. As a result one fourth to one third of the sugar beet harvest is left in the fields and beets that are gathered often are damaged.
Kleime harvesters only appeared in Kursk last year, when the International Sugar Company, a major regional holding company, began using them. According to experts, they are not as good as the Holmer combines, but are one third cheaper.
Nevertheless, Holmer is likely to receive the contract to deliver the harvesters.
A Holmer harvester, produced in Germany, costs approximately $470,000 (approximately 14 million rubles). However, as Alginin explained in an interview on Kursk television, once these harvesters are assembled and produced in Russia, they could cost half as much. He noted that farmers thought highly of the Holmer harvesters. Thus, it will be thanks to these harvesters that Russia will be able
to reduce its sugar imports from Ukraine and sugar cane imports from Latin American and achieve greater self-sufficiency in food production.

17 October 2001

To the top of the page

KURSK ADOPTS NEW CHARTER THAT EMPOWERS LOCAL GOVERNMENT

Facing a Russian Constitutional Court deadline of 6 October, the Kursk Oblast legislature adopted a new version of the oblast's charter, replacing the old one that was in violation of the Russian constitution. If the legislature had not adopted the new charter, deputies feared that it faced disbandment in six months.
The amendments to the charter include serious changes such as a provision to create full-powered local governments at the raion level. Currently only the cities of Kursk, Kurchatov, and Zheleznogorsk have such local governments. Kursk today has 511 local entities as established by the 1996 oblast charter. The residents of these raions must now vote to create 31 full-powered local governments, which will be ruled by local councils. These councils will prepare and monitor the implementation of raion budgets. Each council will elect a chairman. Since the oblast authorities plan to hold elections for these new councils in March 2002, when a Russian-Belarusan parliament will be elected, the referendums creating the local governments must be held by February 2002 (Kurskaya Pravda, 28 September).
Currently the governor appoints the heads of local governments. Since the governor does not want to lose his control over the local governments, the oblast charter allows the governor to appoint his own representatives to the localities, similar to the way that the president can appoint representatives to the regions.
To avoid problems that compromise the division of power, the new charter forbids the heads of local governments from concurrently seeking a seat in the Oblast Duma. This provision provoked considerable debate in the oblast legislature because Kursk Mayor Sergei Maltsev and Zheleznogorsk Mayor Aleksandr
Kichigin are currently members of the oblast parliament. They argued that the new provision would limit their rights. Even though the oblast procurator agreed with the mayors, the deputies refused to allow the mayors to run. Mostly likely, the oblast will face many difficulties in bringing these new local institutions
to life and ensuring their functioning.

3 October 2001

To the top of the page

BELGORODENERGO MANAGER SPEAKS AT SAP CONFERENCE

In early September the SAP company, a German firm that is the world's third largest inter-enterprise software company, held its first conference in Moscow for its clients in the CIS and the Baltics about the use of SAP products in the production process. More than 700 representatives of major firms attended, including EES and LUKoil.
Belgorodenergo General Director Evgenii Makarov gave the keynote speech, in which he outlined how his company successfully assimilated a system of vertically integrated management requiring effective flows of business information and transparency in key decision-making areas. To this end, Belgorodenergo began integrating SAP's R/3 business software, which enabled the company to develop a system of strategic goals, a mechanism to control their implementation, and timely delivery of essential information to management.
According to Makarov, the software made a positive contribution by providing important information about business organization. He noted, that like EES, Belgorodenergo was actively trying to create a vertically integrated structure.
The main purpose of the reform is to divide the business into components, such as power transmission, production, and sale of electrical power and thermal energy. Other SAP products, such mySAP.com, an integrated e-business platform, enabled the company to develop a more flexible system of management.

3 October 2001

To the top of the page

FORMER KURSK OFFICIAL FACES CHARGES...

On 3 September, the Lenin Raion court in the city of Kursk began the trial of former Kursk Oblast Prime Minister Boris Khokhlov, the third and final person to occupy this position during the governorship of Aleksandr Rutskoi. Prosecutors have charged Khokhlov with embezzling large sums of money and overreaching his powers. He faces penalties ranging from insignificant fines to ten years incarceration with confiscation of his property.
The first of two charges involves a deal between the Kursk Nuclear Power Plant and the Moscow trading house Premium in September 1998, when Khokhlov worked as deputy general director at the plant. Prosecutors charge that Khokhlov embezzled 8.6 million rubles that was intended for the purchase of fuel oil. At that time Khokhlov was one of the richest and most influential businessmen in the oblast.
The second charge involves a crime that allegedly took place when Khokhlov was a public official. Prosecutors claim that he illegally sold a large share of the local alcohol factory. Before becoming prime minister, Khokhlov already controlled the production and sale of alcoholic beverages in Kursk and today owns a controlling stake in the Kursk liquor factory. Additionally, his son, born in July 1999, owns a 20 percent share. The courts will have to work through the complexities of this family-dominated ownership structure to figure out exactly what happened in the case.
Many of Khokhlov's other relatives were also active in the petroleum products market, owned casinos, or worked in businesses connected with insurance, medicine, construction, and security. For example, Khokhlov and his closest relatives own the largest restaurants in Kursk. Khokhlov's restaurants are feeding him while he is in jail and his relatives are attending the court hearings to offer additional support. Many observers believe that Khokhlov will not face serious punishment because his lawyer is the chairman of the collegium of lawyers in Kursk Oblast, Aleksandr Derenkov.

17 September 2001

To the top of the page

SBERBANK AND BELGOROD GOVERNOR HOLD TALKS ON NEW PROJECTS

On 4 June Belgorod Governor Evgenii Savchenko held negotiations about the development of agribusiness in the oblast with the first deputy president of Sberbank's board of directors, Alla Aleshkina, and the general director of Rosagro, Vadim Mashkovich. The managers of several local firms and a French company also took part in the meeting.
As Belgorod television reported, the officials and business representatives discussed specific investment projects, some of which Sberbank might be able to fund. One possible project concerns pork meat processing, in conjunction with French partners, who already have a significant share of Moscow's meat market.
The project would involve setting up a factory in Belgorod Oblast, which would process 100,000 tons of pork annually. A second project would involve chicken meat processing. According to the Governor, the oblast has colossal potential in the meat processing industry and access to Moscow's vast consumer market.
A third project, which could be financed by Sberbank, would produce 80-120,000 tons of malt annually. Investment of $30-40 million dollars would be necessary to complete the project. According to Savchenko, Belgorod Oblast has experience in this sector as well.
According to Alla Aleshkina, interviewed on Belgorod television on 5 June, each project has its own merits. Sberbank is prepared to provide credits for the two meat processing projects immediately. Sberbank already granted the oblast 3 billion rubles in investment credits in 2001. Rosagro, a Sberbank subsidiary, has been working in the oblast for more than five years and owns three sugar processing plants, which are considered to be the best in Russia.
These plants process a half a million tons of sugar per annum. Moreover, Rosagro established a holding company, which integrated more than ten agribusiness companies. According to the governor, Rosagro is playing an active role in agribusiness reform in the oblast.
Based on Rosagro's example, more than ten agribusiness holding companies have been established in the oblast. The new companies, headed by major industrial and processing firms, oversee 60 percent of Krasnodar's arable land and 60 percent of its farms, many of which previously had been only partially productive or idle. According to Governor Savchenko, the creation of agribusiness holding companies provides a unique opportunity to revive the sector, not just in Belgorod, but in Russia as a whole. Last year the oblast
invested 2 billion rubles of its own funds in agriculture. Savchenko stated that 5 billion rubles will be invested by the end of 2001.

18 July 2001

To the top of the page

KURSK LEATHER GOODS PRODUCERS SEEK FEDERAL SUPPORT

On 15 May 600 workers at Russian leather goods production plants staged a demonstration in front of Moscow's White House to protest against the export of leather to Italy for processing. More than 350 employees of the Kursk Leather company, one of the major domestic manufacturers, were among the protestors.
The workers decided to demonstrate to call the government's attention to a growing problem in the industry: the major Russian manufacturers increasingly face a shortage of leather and consequently are unable to produce at capacity levels. For example Kursk Leather only works at 50 percent of its capacity.
Workers at the Kursk plant and at other Russian firms blame the Italians for this state of affairs. According to the protestors, ever since the Russian default in 1998, the Italians have been buying up the leather and sending it to Italy for processing.
This tendency became more pronounced after the epidemic of mad cow disease which decimated the cattle supply in many West European countries. To compensate for the leather shortage in Europe, Italian firms have been willing to pay three times the price for Russian leather. Since Russian cattle farmers sell to the highest bidder, Russian companies are unable to pay the going price.
A network of small and medium-sized businesses has emerged to work as intermediaries for the Italian firms in their search for leather. These middlemen are active in marketing and place advertisements in Kursk newspapers about upcoming sales of cattle hide.
Manufacturers in Kursk and other cities also contend that it is no longer necessary to send leather abroad for processing since they now possess all the necessary technology. The Russian leather producers called on federal authorities to support the domestic manufacturing industry and to prevent the country from becoming a resource supplier for the West, where the Russian leather industry is considered to be inferior to Italian production in quality, variety, and price.
According to Kursk Leather President Oleg Shevtsov, one of the initiators of the demonstration, "The current 5 percent duty on leather exports is not a solution to the problem. A complete ban on leather exports is necessary for one or two years." Deputy Prime Minister Aleksei Kudrin met with a delegation from the leather manufacturers and promised to support them.

21 June 2001

To the top of the page

BELGOROD, UKRAINE'S KHARKOV INCREASE TIES

A 13 June meeting of businesspeople and politicians in the Ukrainian region of Kharkov discussed cross-border relations between Kharkov and Belgorod. There is currently a significant amount of trade between the two regions, and both sides would like to see this
increase. To this end, a free economic zone between the oblasts may be created, along with a "green card" that would make border crossing easier.
Belgorod Governor Yevgenii Savchenko pointed out the necessity of widening economic cooperation and said that the next decade should see an increase in meetings between Ukrainian and Russian entrepreneurs. Belgorod is currently working to organize a follow-up forum, in what is likely to become the next in a series of frequent meetings between the two regions.
Currently, 60 percent of regional exports from Belgorod go to Ukraine.
The amount of interregional trade between the two more than doubled in 2000 and continues to grow (See the governor's official website ).
Leaders of the oblasts are hoping that large-scale plans to improve Russian-Ukrainian relations in the coming years will have particular impact in these border regions.
Belgorod and Kharkov became part of their respective countries' frontiers with the break-up of the Soviet Union in 1991. As they were part of the same nation for so long, ties run far deeper than in many border areas.
Nearly 80 percent of Belgorod residents have Ukrainian relatives - including Governor Savchenko. Thus, in addition to business meetings, there are plans for future cultural exchanges.

19 June 2001

To the top of the page

KURSK GOVERNOR, INVESTOR AGREE TO NEW DIRECTOR FOR METAL PLANT

Relations between recently elected Kursk Oblast Governor Aleksandr Mikhailov and the leadership of the Mikhailov Mining and Processing Plant, the largest enterprise in the region, have been difficult since the beginning of his term. The plant, owned by the Metalloinvest holding company, is Russia's second largest producer of iron ore and the oblast budget depends heavily on its tax revenue.
Relations between the plant and former Governor Aleksandr Rutskoi were much better. Rutskoi secured the Metalloinvest's favor because Rutskoi won an agreement with the federal government for a 50 percent reduction in electricity prices for the plant and kept this discount in place during his entire term.
Rutskoi also reached an agreement with the Moscow railroad to carry ore from Kursk Oblast at a lower price in exchange for subsidies from the Kursk budget for passenger routes in the region. The tripartite deal (governor, factory, railroad) suited everyone since the oblast increased its tax income, the railroads increased their volume of cargo and passengers and received money from the oblast budget, and Metalloinvest received lower rates in transporting its iron ore. However, this contract was based on Rutskoi's personal connections and collapsed after he lost his reelection bid.
The post-Rutskoi conflict between Metalloinvest and the Kursk branch of the Moscow railroad over the price for transporting iron ore resulted in the ore being transported through Orel, thanks to the special efforts of Orel Governor Yegor Stroev. As a result the Railroads Ministry has merged the Kursk branch of the railroad into the Orel branch. The conflict between Metalloinvest and the Unified Energy System, the national monopoly that owns Kurskenergo, led to a week-long blackout at the factory and a decision to lift the previous discounts leading to higher prices for the iron ore and the steel made from it. The utility always wins these disputes because it can simply switch off the electricity. As a result of such conflicts, the oblast government lost out on hundreds of rubles of income for the 2001 budget.
Confounding Metalloinvest's difficulties in coping with higher electricity and transportation prices, conflict erupted between the company and the new oblast administration in February 2001. Members of the Mikhailov Mining and Processing Plant Board of Directors who are also members of the Oblast Duma actively blocked Governor Mikhailov from placing an ally in the chairmanship of the Duma and as the Duma's representative to the Federation Council. Mikhailov Plant Director Vsevolod Vukolov orchestrated this political maneuvering. Vukolov was not able to thwart the governor's plans, but his opposition required Mikhailov and his Communist allies to work harder to achieve their goals.
Since only the utility seemed to gain from the conflict, the governor, factory, and railroad had a strong incentive to work together and the governor ordered the drafting of a new agreement between the oblast administration and Metalloinvest. After three months of negotiations, the administration and Metalloinvest signed an agreement on 30 May.
Under the terms of the agreement, Metalloinvest agreed to invest 250 million rubles to refurbish the plant. It also agreed to pay its oblast taxes on time and set up a schedule for paying back its debts. In exchange, the oblast government agreed to give the firm a "free hand" in management issues and support in seeking lower electricity prices. However, the plant made some key personnel moves to please the governor. Director Vukolov will leave his post as head of the plant and instead become a vice president of the Metalloinvest
holding company in charge of new investment projects. Sergei Shcherbin, the former deputy general director of the Orel Steel Rolling Mill, will serve as acting director and handle all day-to-day operational and strategic issues.
Additionally, one of the governor's allies was appointed first vice president of the Metalloinvest company.

6 June 2001

To the top of the page

KURSK: FEDERAL GOVERNMENT STRENGTHENS POSITION DURING REGIONAL ELECTIONS

The history of bringing Kursk Oblast's laws into line with federal norms stretches back to August 1997 and the era of former Kursk Governor Aleksandr Rutskoi. In August 1997, President Boris Yeltsin issued a special decree overturning a decree by Rutskoi forbidding the export of agricultural products from the oblast. In September 1999, the Kursk Oblast Arbitration Court supported two complaints from the oblast procurator against a law blocking the export of grain from the region. In each case, the agencies cited the regional laws' violation of federal norms.
At the beginning of May 2000, just as Putin was about to launch his reform, Kursk Oblast faced more than 50 complaints from the procurator about various laws or executive branch decisions that violated federal law (Kurskii vestnik, 18 May 2000). The procurator worked in tandem with the presidential representatives (Viktor Surzhikov and Leonid Bashkeev) and with the presidential administration and the federal authorities exerted the greatest pressure on the oblast authorities during May and June of last year.
Most of the non-compliance with federal law was concentrated in the oblast's charter so initial work focused on amending it. The oblast adopted a new charter six months later on 16 December 2000. By this time, Communist Aleksandr Mikhailov had replace Governor Rutskoi and the legislature's term had almost expired.
The process of amending the oblast charter was long and difficult. After months of fruitless debate, the Russian Constitutional Court issued a ruling on 30 November that defined all the amendments ultimately made to the charter (Kurskaya Pravda, 6 February). Amendments to the new charter significantly changed the organization of state power in the oblast (article 30) and the section on the executive branch was almost completely rewritten (articles 54-67). The new versions include clauses that allow for the government to be removed from office and the oblast legislature to be disbanded if they take
actions that violate federal norms.
Additionally, Kursk brought its gubernatorial and legislative election laws in line with federal legislation. Moreover, at the end of 2000, the Oblast Duma brought seven of its resolutions adopted between 1996 and 1998 into line with federal norms. These resolutions generally affected laws dealing with sales and profit taxes and were in violation of the second part of the tax code, which came into effect on 1 January 2001.
Although these legal changes took place during a gubernatorial election, the regional players involved acted while taking into account federal preferences. In the case of Kursk, the federal authorities effectively used the unstable situation in the oblast to strengthen their position.

16 May 2001

To the top of the page

RUSSIAN-UKRAINIAN GROUP TO DEVELOP FOOD PROCESSING IN KURSK

On 20 April, the Kursk Oblast administration and the Razguliai-UKRROS Group, a Russian-Ukrainian financial group with considerable experience in agribusiness, signed an agreement for cooperation in food processing. The Razguliai-UKRROS group has been a leading investor in the region over the past three years. It makes sense for Russian-Ukrainian investors to be interested in Kursk Oblast, bordering on
Ukraine.
Cooperation with the group has been crucial for the new governor, Aleksandr Mikhailov, who campaigned on a platform of developing agriculture and food processing industries. In late 1999, the Kursk administration signed an agreement with Razguliai-UKROSS to restore and diversify sugar and beetroot production in the oblast. Under the terms of the agreement, Kursk received major funding for increasing sugar beet production, improving food processing technology, purchasing chemical fertilizer, and protecting arable land.
The April 20 agreement will restore and develop the production capacity of the Lgovsky sugar and milk products plant, and the Krivetskii sugar combine, a key experimental center for introducing new technology for sugar production. The Russian-Ukrainian group plans to establish agribusiness complexes in the Lgovsky, Pristensky and Manturovsky districts. The Russian sugar company (a member of the holding company) will invest $30 million over the next five years to restore sugar production in these three districts. The Russian sugar company played an important role in improving access to agricultural machinery and increasing sugar production in the Lgovsky district, under the terms of the 1999 agreement.
Despite efforts to protect domestic producers, the Russian sugar industry has been in decline since 1999 due to poor beetroot harvests. As a consequence of a glut on the world sugar market, resulting in lower prices despite new Russian tariffs, Russia continues to import large amounts of sugar cane from Cuba and other countries.
As a part of the new agreement between Kursk Oblast and the Razguliai-UKROSS group, the Russian food processing company (a part of the holding company) also will develop the meat industry and will provide a 180 million ruble credit to the Agromiaso firm and its subsidiaries, the major meat processing firms in the oblast. The Razguliai-Zerno company will invest 212 million rubles over the next five years for new seeds and technological
improvements in the Lgovsky, Rzhavsky, and Krivetsky bread factories.
In addition to investing in local food processing industries, the Razguliai-UKROSS group also will contribute funds to some localities to improve living conditions. The Russian sugar company will invest $200,000 to develop the city of Lgov and provide gas service to the town of Seim. The Russian food processing company granted the city of Kursk 25 million rubles and the Razguliai-Zerno company plans to allocate more than 7 million rubles over the next five years to the cities of Lgov and the towns of Pristen, Krivets and
Manturovo credits of for socio-economic development.

9 May 2001

To the top of the page

BELGOROD GOVERNOR SIGNS ENTERPRISE TREATIES TO AVOID PUTIN TAX REFORM LOSSES

Belgorod Governor Yevgenii Savchenko announced at a 17 April press conference that he was adopting a new policy of signing treaties with his region's major enterprises to compensate the administration for the money that the regional budget might otherwise lose due to the amendments adopted in the federal tax code last year. The State Duma's adoption of the second part of the Russian tax code in 2000 gave the federal government control over a greater share of revenue than it had in the past. The regional governments lost a similar amount. The oblast administration seeks the contracts to ensure that the enterprises give the oblast budget no less revenue in 2001 than they gave in 2000.
Thus, in 1999-2000, 65 percent of the taxes collected in Belgorod remained within the oblast, while 35 percent went to the federal government. In 2001, the federal government is planning to take 48.2 percent. Additionally, several taxes were simply abolished. Thus, the regional tax to support municipal housing (which was adopted in violation of federal legislation) and which remained in the region no longer exists, costing Belgorod Oblast 40 million rubles this year.
On 16 April, the administration signed a treaty with the Stoilen Mining and Processing Combine. Savchenko described this treaty as the first of many.
According to the treaty, the combine will pay no less than 188 million rubles into the oblast's combined budget this year. This figure is 11 million rubles larger than last year. Additionally, the enterprise agreed to give priority to administration-sponsored projects aimed at supporting veterans, pensioners, sports, health care, and education; preserving existing social programs and jobs; while also improving working conditions, and preserving an average pay no less than the level in 2000. The enterprise will also invest in programs to develop agriculture, food processing, processing plants, and other sectors of
the economy.
In exchange for this help from the enterprise, the oblast administration has taken on the task of lobbying the legal interests of the plant with the federal authorities, the federal and regional branches of the natural monopolies (such as the Unified Energy System and Gazprom), and the energy commissions, and cooperating in the realization of the plant's investment ventures, particularly in the area of agriculture.

25 April 2001

To the top of the page

KURSK'S COMMUNIST GOVERNOR SEEKS HELP FROM POLTAVCHENKO

On 22 March, Kursk Governor Aleksandr Mikhailov met with Presidential Representative to the Central Federal District Georgii Poltavchenko. Mikhailov had long sought the meeting to ask for aid from the federal official, but Poltavchenko had put off the meeting.
Mikhailov won last year's gubernatorial election after the courts had disqualified incumbent Governor Aleksandr Rutskoi from the race. He defeated the local head of the Federal Security Service who clearly had the Kremlin's backing.
Poltavchenko did not attend Mikhailov's inauguration. Subsequently, he arranged a meeting with the Kursk city mayor in Moscow. He had also met with legislators from the region and had visited neighboring Belgorod and Orel oblasts. Local observers concluded that Poltavchenko did not want to have the meeting.
Kursk's oblast administration believes that it is facing a variety of crises that required a meeting with the representative and even President Vladimir Putin himself. Agriculture is a top priority for the governor since much of his support is based in the rural parts of the region. Kursk's farmers expect Mikhailov to reward their support with increased subsidies, fuel supplies, and overall help in conducting their spring planting. All this aid
would cost about 1.5 billion rubles, but there are only 700 million rubles for these purposes in the oblast's 2001 budget. The administration has won the regional legislature's approval for a loan of 100 million rubles from Sberbank and 70 million from Kurskprombank, but needs at least another 630 million rubles.
Energy concerns make up the other group of problems facing the region. For the first time, Kursk's major enterprises and public transportation system have faced blackouts this year. In a personal meeting with the governor, Gazprom head Rem Vyakhirev easily agreed to restructure the region's natural gas debt.
However, Unified Energy System head Anatolii Chubais refused to even consider additional concessions or the payment of 30 percent of the bill in the form of goods produced by Kursk Oblast enterprises, although he did sign a cooperation agreement for 2000-2001.
Mikhailov's willingness to work with the energy companies brought him into conflict with the region's mayors who do not agree with the energy providers' policies. The governor wholeheartedly supports the monopolies' war against the municipal companies that distribute the energy. These companies often skim off profits for themselves, leaving little for the national monopolies. For example, Mikhailov supported Kurskenergo's demand that the municipalities pay off a 200 million ruble debt by handing over Kursk Electric Network and Kursk Heating Network, which are worth no less than 500 million. In the conflict between Kurskregiongaz (a subsidiary of Gazprom) and Kurskgaz (a municipal gas distribution network) over who should receive customer payments, the governor
supported Gazprom. Nevertheless, the problem of paying for energy, particularly to supply the region's large enterprises, remains and the governor wants Putin's help in dealing with it. A third area of concern is Kursk's relationship with the Railroads Ministry. Recently Minister Nikolai Aksenenko and the head of the Moscow Railroads Gennadii Fadeev decided to transfer all the assets of Kursk railroad to Orel's railroad. Mikhailov has protested this decision strongly as it may cost jobs in Kursk and increase social tensions. He also has argued that it may adversely affect overall railroad service. On 21 March he sent an open letter to Aksensnko complaining about the failure of his negotiations with the ministry (Kurskaya Pravda, 21 March). Orel Governor Yegor Stroev and Metalloinvest, which now transports the ore from the enormous Mikhailovskii
Mining and Processing Combine, benefited most from the transfer of Kursk's railroad assets.
Finally, social policy poses the greatest challenge for the communist governor, who had pledged during his campaign to address issues such as subsidized medicine, the distribution of social payments, and the rising cost of municipal services. The governor has received numerous complaints about these issues from pensioners, invalids, and other disadvantaged members of society, but has asserted that the administration lacks the funds to deal with these problems. At the same time, the governor has not kept his promise to reduce the staff of the oblast administration and government by 50 percent. Criticism of the failures of the new governor is pervasive in Kursk.
Mikhailov's meeting with the federal authorities is unlikely to solve many of these problems, but the governor is still optimistic about the results.

2 April 2001

To the top of the page

EUROPEANS WORRIED ABOUT INCREASED USE OF NUCLEAR POWER IN RUSSIA

The growth of the Russian economy over the last two years has created an increased demand for power. Demand for electricity has outstripped the ability of the Unified Energy System monopoly to supply it, creating an energy crisis. The need for more electricity has driven officials to reconsider decisions made in the early 1990s to halt the construction of nuclear power plants. Now construction has been resumed at the Rostov and Kursk nuclear power plants and work is under way to modernize the Leningrad, Kolsk, and Kalinin nuclear power plants, which were built in the late 1970s and early 1980s. The goal of the upgrade is to increase the reliability of the stations and extend their life another 5-10 years.
All 13 of these units are identical to the unit (RMBK-1000) that exploded at the Chernobyl Nuclear Power Plant in 1986. Naturally, Russia's neighbors, and particularly nearby Europeans, are worried about the safety of these stations. In 1986, the world first learned of the Chernobyl accident from sources monitoring radiation in Scandinavia. Russia now is setting up an early warning system to monitor the level of radiation in the area around the stations.
The EBRD has provided funding for Skylink, a system of 12 posts to measure radiation levels within 30 kilometers of the Kursk Nuclear Power Plant. The German firm Genitron Instruments provided the monitoring equipment in November 2000. The Skylink project in Kursk Oblast cost $9 million in 2000 (Kurskaya Pravda, 13 March). The posts send information electronically to a station at the power plant, which then forwards it to a crisis center at Rosenergoatom. The company then sends the data to a similar center at the Atomic Energy Ministry.
From there information will be sent to similar information gathering centers in the European Union. The general public should have access to information about radiation levels from this system.
The EBRD plans an extensive expansion of the project during 2001 and 2002. If all goes well, similar systems will be set up across Russia.

21 March 2001

To the top of the page

POLTAVCHENKO ALIGNS WITH DUMA DEPUTIES AGAINST GOVERNORS

At an 8 March press conference, State Duma Deputy Aleksandr Chetverikov announced that he and several other Duma members from Kursk Oblast backed the formation of an inter-party Duma group uniting members elected from the Central Federal District. He said that both the legislators and Presidential Representative to the Central Federal District Georgii Poltavchenko were interested in the new initiative. The deputies only have limited opportunities to lobby the interests of their individual regions and believe that uniting in a large group will increase their influence. Poltavchenko is interested because he can expand his influence in the legislature without having to wait for Putin to enlarge his powers by decree.
The deputies hope that the presidential representative will help them enhance their positions. Many Duma members have strained relations with the governors from their regions. In Kursk Oblast, for example, of the five local Duma members, only Obkom First Secretary Nikolai Ivanov has close ties to Communist Governor Aleksandr Mikhailov. The remaining four, Aleksandr Chetverikov (independent), Vladimir Bykov, Aleksandr Fedulov (both Yedinstvo), and Vitalii Gukov (Otechestvo-Vsya Rossiya), all intend to join the new group.
These legislators complain that they do not have the ability to monitor the implementation of decisions and seek to expand their powers. They believe that the alliance with the presidential representative will increase their power in relation to the governor. Such a balance of power suits Poltavchenko, who has no interest in strong, independent governors. Overall, the cooperation between the representative and Duma members should be mutually advantageous.
OVR's decision to cooperate with Poltavchenko is much more surprising than the pro-Kremlin Yedinstvo's. State Duma member Georgii Boos explained his position in a statement to Strana.ru . He said that strengthening the power hierarchy means that the representatives must have money, cadres, and a "stick." Boos said that representatives could receive money if his proposals for the 2002 budget are adopted to establish a consolidated federal district budget. Today the representatives have considerable political leverage, but little administrative influence. Boos, an ally of Moscow Mayor Yurii Luzhkov, claims that if federal transfers are not distributed through the regions as they are now, but through the federal districts, then the governors will be dependent on the presidential representatives. Boos's motivations are clear: Luzhkov is trying to win Poltavchenko as an ally and seeks to increase his power, so that Poltavchenko can help improve his strained relations with the federal authorities. Luzhkov was Putin's most serious rival in the run-up to the December 1999 State Duma elections.
Nikolai Ryzhkov will most likely be the head of the new deputies' group. Poltavchenko proposed his candidacy and almost all the deputies supported it. Poltavchenko called on the State Duma deputies to help bring regional laws into line with federal norms. Poltavchenko claimed that his office had found more than 2,000 regional laws in violation with federal norms and has brought more than 80 percent of them into conformity. Nevertheless, Poltavchenko said that it was "too soon to speak of a unified legal space."

14 March 2001

To the top of the page

POLTAVCHENKO SETS UP ECONOMIC COUNCIL THREATENING INTERREGIONAL ASSOCIATIONS

On 9 February, Presidential Representative to the Central Federal District Georgii Poltavchenko conducted the first meeting of the Central Federal District Council. The council was established last December to develop concrete economic programs for the 18 regions that make up the district. At Poltavchenko's suggestion, Orel Governor and Federation Council Speaker Yegor Stroev was elected chairman of the council. Stroev is already chairman of the Black Earth Association.
Observers view the council's creation as an attempt to set up an alternative to the Black Earth and Central Russia interregional economic associations. The council and the associations address the same issues. However, the council, working under Poltavchenko's aegis, would be subject to greater federal control than the associations, which were horizontal alliances among neighboring regions, rather than a top-down structure organized by Moscow. When asked specifically if the new council would duplicate the work of the associations, Poltavchenko said, "Either we will work out a mechanism for cooperation, or there will be no need for the associations."
He said that the decision would be up to the governors in the district. All of the regions in the district face severe problems in their industrial and agricultural sectors. Only Moscow and Moscow Oblast are exceptions. The district was the only one of Russia's seven to show an increase in crime during the first nine months of 2000. Stroev called on the regions to work together to solve their problems.
Poltavchenko's assistant on economic issues, Vasilii Kichedzhi, suggested setting up an investment agency for the district. The agency would be a non-profit partnership between the 18 regions and Sberbank, Vneshtorgbank, and Unified Energy Systems as well as other potential investors. Kichedzhi said that he had already reached an agreement with these groups. The governors want the agency to focus on generating domestic investment for the region. Many governors believe that the regions are not able to perform these tasks by themselves.
Moscow Mayor Yurii Luzhkov said that he would set up an information center in the capital to advertise the products produced in the central district that currently do not reach a large audience. Luzhkov said that Moscow would also contribute 250 million rubles to the investment agency.
Luzhkov argues that the members of the agency's board of directors should be determined proportionally by the size of the contributions each region makes to it. Other governors reject this idea, charging that Muscovites would dominate the agency's management under such a system. Apparently, Luzhkov is pursuing a strategy by which Moscow will increase its political standing in the council, but share some of its economic resources with the neighboring regions.
Another issue that aroused heated discussion was the plan to restructure Svyazinvest, the telecom giant that provides phone service through regional subsidiaries, into seven larger stock companies (one each in each of the federal districts). Advocates of the reform believe that the company's division into more that 80 units makes it unattractive to investors. However, if the parts were brought together to form larger companies, there would be greater investor interest in the resulting conglomerations. In the Central Federal District, the Moscow Oblast company Elektrosvyaz would be the basis upon which the 18 existing regional companies would be merged. Ultimately the new company would serve an area stretching from Yaroslavl and Kostroma in the north to Belgorod and
Voronezh in the south. The governors opposed the reorganization plans, pointing out that the regional Svyazinvest companies now contribute significant sums to regional budgets.
If the regional companies are unified into a larger company, it is not clear where the tax revenue would go, and regional budgets are likely to suffer. Shareholders in the current regional companies are also concerned about how their stock will be converted into shares in the larger company, fearing that they will lose some of their current value. Additionally, Stroev and Luzhkov warned about the monopolization of the telecom market.

14 February 2001

To the top of the page

BLACK EARTH ASSOCIATION TO OPEN OFFICES IN EUROPE

The Black Earth economic cooperation association decided to open representative offices in Germany and other European Union countries. The association's members include eight
regions: Belgorod, Orel, Kursk, Lipetsk, Voronezh, Tula, Smolensk, and Tambov. Orel Oblast Governor Yegor Stroev, who is also Federation Council chairman, is the president of the association. The decision to open offices in Europe reflects the priority member regions place on attracting foreign investment for regional programs and creating the necessary conditions to make the Black Earth area attractive to potential investors. As the
association?s managing director, Grigorii Fedorov told Komosomolskaia Pravda-Voronezh on 30 January, members hope to expand foreign economic relations between their territories and foreign partners. However, it was the Lower Saxon region of Germany that first suggested foreign cooperation with the Black Earth Association. The German representative office will be located in the city of Celle, only a few hours from major German cities and business centers such as Berlin, Frankfurt, Hanover, and not far from Brussels, and other European capitals. Liptesk Oblast, one of the "economic locomotives" in the Black Earth region first supported the idea of opening a representative office in Germany.
Lipetsk leads other member regions in foreign trade and volume of foreign investment. For this reason, the head of the new office in Celle will come from Liptesk: Gennadii Zherebilov, who is the director of the department of investment and foreign economic relations for the Lipestk administration.

7 February 2001

To the top of the page

KURSK SETS UP BORDER WITH UKRAINE

After the collapse of the Soviet Union, Kursk Oblast became one of Russia's border regions. The process of establishing the new state border with Ukraine has been going on for tens years now, and the end is not yet in sight. In 1992, the CIS countries established the principle of transparent borders, which meant no borders in practice from 1992-3. More recently, a real border has started to take shape between Russia and Ukraine. The problem of demarcating the border, which stretches for more than 2,000 kilometers, is one of the most difficult questions in Russian-Ukrainian relations.
Demarcation work has gone on since April 1998. According to the Ukrainian Foreign Ministry, the two sides have agreed on 1,300 crossing points, while discussions of an additional 200 sites are on-going. The points which have not been agreed upon are located in Russia's Rostov Oblast and Ukraine's Lugan and Donets oblasts.
In December 2000, the Commission on Demarcating the Border held its tenth meeting in Kiev. Of the five Russian regions bordering Ukraine, only Kursk Oblast has a permanent representative to the group. The other oblasts (Belgorod, Bryansk, Voronezh, and Rostov) are only represented by members of the working group.
The 245 km of the Ukrainian border that run through Kursk has largely been defined, though some problems remain. For example, in south-western Kursk, the Bryansk-Vorozhba railroad crosses the border three times in 18 kilometers. Ukraine's high customs duties on importing sugar beets make it too expensive to bring the beets to the Tetkin Sugar Factory from nearby farms. In many cases, the border goes through cities and even divides private landholdings. The Tetkin Bread Factory has buildings on both sides of the border, complicating the life of its management. Usually such arguments are resolved by trading parcels of land along the border. However, at the December meeting, the Ukrainian side did not agree with Russian proposals to swap land. As a result, the Kursk plant owners continue to pay rent to their Ukrainian neighbors.
The next commission meeting will be in March, but that does not mean that the existing problems will be solved. For three years, the two sides have fruitlessly discussed the question of providing free border crossing for residents of the border region. Often the oblast and local government are more interested in having the border and customs services work well than is the federal government. Thus local authorities commonly provide necessary services to the border and customs services even though they should be supplied from federal funds.
The Ukrainian border also brings a lot of crime into Kursk Oblast. The most common problem is the illegal imports of weapons and drugs. Many illegal immigrants go through Ukraine to Poland, Hungary and Western Europe. Asian immigrants often enter Russia from Ukraine. During the first nine months of 2000, 750,000 people passed through the Kursk Oblast transit points. More than half a million of them were foreigners. The authorities detained 3 people with false documents and another 230 who had documents that were not in order. Additionally, they apprehended 58 illegal immigrants and 113 trying to cross the border between authorized check points.

7 February 2001

To the top of the page

1998-1999-2000-2001-2002-2003-2004-2005

Catalogue По русски