Author: Kim Iskyan



By Kim Iskyan



Smoke signal: Moscow suffers as wildfires rage

In response to a severe drought that could destroy as much as a third of Russia’s grain harvest, and following a spike in grain prices in July, Russia’s prime minister Vladimir Putin in early August announced a ban on grain exports through the end of the year.


Russia’s Federal Antimonopoly Service indicated that it would pay close attention to price hikes for staple goods. Price caps for bread, pasta, dairy products and meat might be implemented in certain regions in an effort to stem public discontent over higher prices.


Meanwhile, wildfires throughout the Russian heartland threatened to further reduce the grain crop. Underground peat fires thrust Moscow—suffering through the hottest weather on record—into a dark smoke for days on end.


In late July the finance ministry announced preliminary plans to raise as much as $29 billion in 2011–2013 to help plug the burgeoning budget deficit by selling off state-owned assets, including stakes in state oil champion Rosneft, state banks Sberbank and VTB, pipeline monopoly Transneft and hydroelectric utility RusHydro. The partial privatizations, which would be the first large-scale sales since the mid-1990s, would not erode the state’s control over the assets, as the state will maintain a majority stake in each firm.


After months of contentious debate, the cabinet decided in late July to support a 61% increase in the mineral extraction tax for natural gas in 2011. An increase will likely be imposed on crude oil for the following two years. The sharp tax increase reflects the government’s determination to raise revenues for the sake of deficit reduction, even at the expense of future hydrocarbon production.


In a blow to the meager progress made by president Dmitry Medvedev in liberalizing the political environment, the highly respected head of the Kremlin’s advisory council on human rights and civil society, Ella Pamfilova, quit her post. Speculation suggested that she had grown weary of the weak support she had received from the government.