Thus the news that President Boris Yeltsin's chief security guard, Major General Alexander Korzhakov, may have influenced a key economic policy decision that has all but lost the country a $600 million World Bank loan is not completely out of context. But in a country that has already made so many sacrifices in the name of reform it is, as one Western diplomat described it, shocking.
Korzhakov, a military man with at best a sketchy knowledge of free-market economics, is no expert on Russia's complicated system of oil export quotas, tariff exemptions and domestic price barriers. Nonetheless, he argued in a letter to Prime Minister Viktor Chernomyrdin that Russia's agreements with the World Bank to rationalize that system would deal a heavy blow to the competitiveness of the country's oil industry.
Judging from his letter, one can assume that Korzhakov was not speaking for himself but for friends who have vested interests in the status quo. While only he knows exactly who those friends are, the sources of opposition to oil export reform are no secret. Many crude-oil exporters today enjoy special exemptions from the country's hated $5-a-barrel export tax -- exemptions that would likely be removed if the government were to go ahead with World Bank-approved export liberalization plans.
Also, bureaucrats in the Foreign Trade Ministry, which decides who can export and who cannot, are loathe to hand over such a bribe-laden responsibility to the state pipe-line monopoly, Transneft, which is what would happen if export quotas were removed.
The Russian government, amorphous as it may be, has been aware of the difficulties it faces in lifting export quotas since long before July 1, when Yeltsin first postponed the plan. But as the new deadline of Jan. 1 approached, no preparations were made.
Now, according to former Deputy Prime Minister Alexander Shokhin, the government is going to scuttle the plan again, replacing the export quotas with domestic sales quotas that will be even more complicated, and nearly impossible to enforce.
The move demonstrates that Russia, facing yet another year of deficit spending, with less hope than ever of finding help from international lending institutions, lacks the political resolve to attack the cozy tax exemptions and corrupt practices that cost the country trillions of rubles in lost revenues every year. This may be good news to Korzhakov's friends, but it is terrible news for Russian reform.
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