03.06.09

The FAS is going to develop amendments, establishing the responsibility of officials, whose projections affect market prices, said Mr. Artemiev. “For me, when officials announce that the prices on real estate will not decline, it is, without a doubt, a market signal,” Artemiev told the Interfax news agency.

According to Artemiev, it is necessary to fine these officials for such projections and to disqualify them for up to three years for repeated violations. Artemiev went on to say that the following amendments may be prepared in the framework of the second government antitrust package (already approved by the State Duma in the first reading.)

Sergey Puzyrevsky, the Chief of the FAS Law Office, says such an amendment could be added to a new article of the Administration Code, imposing responsibility for limiting competition on federal and local authorities.  By the article, officials of federal, regional, and municipal governments would initially face a fine of 15,000 to 30,000 rubles. The content of the article will be clarified soon, said Puzyrevsky, “but it will be general, and will not include any points of contention among department heads.”

FAS has not been discussed the new initiative with the federal government, said Dmitry Peskov, press secretary for Prime Minister Vladimir Putin. However, next week, a meeting with the First Vice Prime Minister Igor Shuvalov will examine a series of adjustments to the government antitrust package.

There are exceptions to this bill, explained Chief of Analytical Management of FAS, Aleksey Sushkevich: some departments, such as the Ministry of Economic Development, are obliged to predict the fluctuation of market prices, as regional ministries plans programs based on the projections of housing prices. Therefore if that department discloses the figures, there would be no violation. Sushkevich explains that, the punishment is mostly mean for the announcement of predictions that fall outside of the knowledge of officials. Often these forecasts are made by regional officials on the prices on real estate and oil.

The projections of the prices on the real estate in January were announced by the capital’s mayor Yuri Luzhkov, and in February by the vice mayor, Vladimir Resin, who reassured viewers of the television station TVTs that prices in Moscow may slightly decline, but would not steeply decline. He also advised, “those who wish to invest into real estate, need to do so now.” Two officials of the Moscow government refused to comment on the initiative, arguing that Luzhkov and Resin announced these projections within their jurisdiction. Yesterday, the Moscow government did not answer repeated calls.
Some ministers love to give advice. In the Summer of 2008, Governor Alexei Gordeyev of the Voronezh region, who is also the Minister of Agriculture, urged the farmers to sell their new grain crops for no less than 6,000-6,500 rubles a one ton. , Nadezhda Mashina, Gordeyev's assistant, declined to comment further, declaring that the "projection problem" has no connection to the Governor.

Businessmen say that these announcements can greatly influence the market. For example, the government may begin to support these markets. The government should impose laws that would define in which cases officials could make these price projections; however, it is not clear how to the law would be enforced.

Translated by Alinga Consulting Group.

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Source: "Vedomosti"