Lyubimov: Good evening, Grigory Alexeevich. I felt in your interview that you rated positively the present draft budget compared to previous budgets. What in particular do you like here and where have we have made progress

over the past year?

Yavlinsky: Taxes in this budget are much lower than in the past. For example, a 13% income tax, which does not increase as actual earnings increase. This is very good.

Lyubimov: I agree.

Yavlinsky: In addition, there is also a new tax component, which stipulates that the higher the wage, the lower the enterprise taxes. The wage fund is taxed in this way. In addition, there are such new developments as tax deductions on the amounts spent on health care and education. Many of our long-term proposals have been introduced.

Lyubimov: So this was your project?

Yavlinsky: Yes. Many of the things that we have advocated over five years have been introduced. The foreign debt is being curtailed. Yabloko has been insisting on these measure for a long time: that is why we support such measures.

Lyubimov: Today you met the Prime Minister Kasyanov and, as I understand, you spoke about the 88 billion in additional revenues that the government can, in your opinion, obtain. Did you convince him of your figures? Did you reach agreement on this figure?

Yavlinsky: Yes, we had a working meeting. The Prime Minister and I discussed a number of issues. We discussed the prospects of additional revenues, what steps could be taken, for example, within the amounts that the government plans to redistribute, for example, on behalf of the regions. This represents about 30 billion roubles. With regards the other amounts, we are continuing our discussions with the government.

Lyubimov: You are referring to the 53 billion roubles?

Yavlinsky: Yes.

Lyubimov: You said that it amounted to 88 billion roubles.

Yavlinsky: We receive 58 billion, if 30 billion are redistributed. We discussed this figure, but our discussion focussed on the targeted use of this funding. As we propose a doubling of the pay for the military, we advocate abolishing immediately on January 1, 2001 military conscription and switching a paid contract-basis army systems, to avoid calling up 18-year olds any more and instead forming the army on a contract basis through the cuts in the army that were recently announced. These goals require about 60 billion roubles. We propose increasing the expenditure on this item by 19 billion roubles, so that we can move on to the next level of military

reform. In addition, the military reform will involve dismissals. This means the provision of housing, 20 minimum wages as a redundancy payment, transportation so that they obtain a home, funds for retraining and requalifying in another sector. The present budget has all these funds.

Lyubimov: To the best of my knowledge, Kasyanov has agreed to the figure of 88 billion. Tomorrow the government will meet, where it will discuss the redistribution of additional revenues. Will they also agree on the 88 billion figure? What do you think, after your discussion with the Prime Minister?

Yavlinsky: The Prime Minister thinks that the budget already has 30 billion, as the Chairman of the Budget Committee of the Duma Alexander Zhukov said, “they have come to the surface”. With regards to the remaining 58 billion, the Prime Minister says that they can be used during implementation of the budget as additional revenues for the goals we have been discussing. But this is a somewhat different scheme and a subject for discussion. However, if a declaration was made today that the funds in general would be allotted to a doubling of the pay for the military and an end to military conscription for 18-year olds, this would be the most important achievement for me. However, only the President can issue such a statement. Therefore the issue is at it stands today.

Lyubimov: It is political.

Yavlinsky: Yes, it depends on the ability of the government to convince the President, submit these figures to the President and give him a chance to resolve this political problem. It depends on whether the President wishes to make this move.

Lyubimov: In my, maybe unqualified opinion, defence depends on better education and health care.

Yavlinsky: In general the greatness of Russia refers to education and health care.

Lyubimov: Simply the people.

Yavlinsky: This is the meaning for our country and the state, and this is absolutely right.

Lyubimov: However, things have turned out differently.

Yavlinsky: You cannot rely here on money. This is not proclaimed through

money. Education is an absolute priority. That is the reason why a Public Council on Education was established and almost all political forces participate there. Yabloko thinks that it is necessary to do this: using the funds included in these 58 billion we could have increased expenditure on education not by 3 billion, but by substantially more. In addition, even

though the federal budget does not provide for expenditures on secondary

school education, we think and insist and will continue to insist that the item of secondary school education should be included in the federal budget, in order to resolve the issues of computerisation and, most importantly personal individual support for teachers.

Lyubimov: However, we can’t afford to do this yet.

Yavlinsky: We can afford to: we have the money. This is the meaning of our discussion.