Minister of Finance Kudrin refuses to act on the President's "incorrect" orders
The Ministry of Finance thinks the Russian President's interference in the country's tax policy is unwarranted. This conclusion can be drawn from the ministry's draft report to Dmitry Medvedev following his instructions to review the system of taxation for the coal sector.
This bureaucratic correspondence may mean that Deputy Prime Minister and Minister of Finance Alexei Kudrin is ignoring the president's instructions.
Nearly two years ago, a group of State Duma deputies submitted a draft law on changing the severance tax for the coal sector. Late last year, Sergei Mironov, speaker of the Federation Council, joined the authors of the law. Since then, he has sent two letters to the president complaining about the Ministry of Finance's unconstructive attitudes. He sent his last letter in mid-January.
This newspaper previously wrote (see the issue of February 6, 2009) that Mironov had asked the president to ensure the fulfilment of his instructions. Medvedev demanded to know about the situation.
This is not the first time the president has addressed the coal issue. On October 19 last year, he instructed the executive branch to improve relevant draft law ensure their adoption, and write the requisite expenditures into the 2009 budget.
Now he needs to tackle the problem again. According to this newspaper's sources, on February 13 Sergei Naryshkin, Chief of the president's Executive Office, reported to the president on the fulfilment of his instructions.
The report was extremely unfavourable for the Ministry of Finance. "They are taking too long. ...The Government has not implemented your executive order of October 19, 2008," Naryshkin wrote to the president. He proposed that the Ministry be given a week to fulfil the instructions.
The president's reaction, however, was much tougher. He wrote for Kudrin on the report: "To be reviewed within five days" and signed his name.
It appears that the president reviewed Naryshkin's report personally - he underlined the above-mentioned quotes with his own hand.
Last autumn, the President instructed Kudrin, through Vladimir Putin, to consider a tax for the coal sector, and the Prime Minister issued corresponding instructions to his deputy. However, Putin has now dissociated himself, at least publicly, from the conflict between Medvedev and Kudrin.
Unofficially, he seems to be supporting his Minister of Finance, or else Kudrin would not have referred to the government instructions of February 12 in his report to Medvedev. The February instructions apparently disregard Medvedev's efforts to force the Ministry of Finance to act on his orders. The instructions charge Kudrin with drafting a new law on taxation in the coal sector and to present the relevant document to Putin by April 14.
This explains why Kudrin did not act on the President's order by February 18 or later. On February 19, Deputy Finance Minister Sergei Shatalov wrote to his boss regarding his February 17 instructions to implement the President's order that said the order need not be fulfilled.
Shatalov also drafted Kudrin's report to the President in the same spirit. After a long list of meetings, conferences, and coordination of efforts, the draft concludes that Naryshkin's report to the President "appears to be unwarranted."
In plain English, this means that Kudrin wanted to tell Naryshkin, the chief of President's Executive Office, that he knows nothing about taxation and that the President, therefore, knows nothing about it, either. The Ministry of Finance apparently intended to convince Medvedev to withdraw his "coal" order of February 13.
According to this newspaper's information, this is exactly what it tried to do several days ago. Instead of writing a brief report saying that the President's order has been fulfilled, or at least pleading guilty to not fulfilling it, the Ministry sent a very long report. It covered everything, including technical details about methane-containing formations, future problems due to an undeveloped system of monitoring the situation on the global coal market, etc. The only thing the report did not explain was why they were reporting these interesting details only now, when the deadline of the president's order was only several days away.
This newspaper's sources in the Executive Office say that some of its high-ranking officials tried to convince Kudrin not to write that scathing letter, even though it was worded very politely, to the President.
We are monitoring the development of this romance in letters, and will report on the answer of the President and his administration to the Ministry of Finance.
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Dmitry Medvedev's order was not fulfilled by February 18 or later.
Ivan Rodin