What was Lukashenko saying?

The dramatic hostage-taking in a Moscow theater on Wednesday night eclipsed what would have otherwise been the day's main sensation: the expulsion of SPS (Union of Right Forces) leaders Boris Nemtsov and Irina Khakamada from Belarus. Certainly, what went on in the Minsk airport does raise a number of questions.

Nemtsov, along with his colleagues flew in from Moscow to take part in a conference on the future of the Russian-Belarusian Union, but was removed from the plane by the Belarusian secret service and taken to a room where he was shown a folder full of U.S. dollars and some propaganda literature that the Belarusian KGB says is aimed at overthrowing current President Alexander Lukashenko.

Khakamada and Nemtsov quickly declared that this was all an underhand provocation, demanded to speak to lawyers and refused any further comment on the situation. But the outcome was already decided, and the Russian politicians were escorted back on to the plane, which returned to Moscow.

What's significant is that Khakamada and Nemtsov are not only politicians from a country friendly to Belarus, they are both Duma deputies, and, as a deputy speaker, Khakamada is one of Russia's higher-ranking state figures. This takes the murky story of the dollars and propaganda supposedly found on Nemtsov to a different level.

The most interesting question is not whether Nemtsov really brought the folder and the literature filmed by the Belarusian KGB cameras into the country. Some observers have ironically noted that the incident in Minsk could have positive PR fallout for the Union of Right Forces (SPS). The interesting question is what advantage Lukashenko saw in the scandal.

Observers say the incident has obvious anti-union connotations since it was very demonstrative. This could be used as a pretext for launching an open campaign against the union. Lukashenko is known as being against the union, in the form President Vladimir Putin is proposing it, because it would mean that political influence in the new entity would be proportional to each side's political and economic weight, and this goes against Lukashenko's dictatorial ambitions. But as he can't afford to simply back out of union plans without losing face, he's keen to create the illusion that Russia is not playing by the rules.

Russian politicians expressed incomprehension over the incident and condemned the actions taken by the Belarusian authorities. This gives Belarus the formal pretext to feel offended and start holding up the integration process.

This week brought several examples of different state agencies and lobby groups being unable to reach any sort of agreement. Among the issues causing controversy are the proposed securities-market regulations, a bank deposit-guarantee system and liberalization of the currency market.

President Putin vetoed a law on securities market regulation at the beginning of the week. This effectively overturned all the Federal Securities Market Commission's (FKTsB) efforts to regulate the market. Up until then, the FKTsB had looked successful in its lobbying efforts. The Anti-Monopoly Ministry opposed the commission in its plans. Just when the FKTsB was about to celebrate its victory, it turned out that the Anti-Monopoly Ministry had made a clever move and won Putin to their cause.

Now the FKTsB officials are saying that the issue is only one of legal and technical nuances. But analysts say this is just a way for the commission to put on a brave face. In his explanatory note, Putin criticized the regulatory functions that the commission wanted to take on for itself: controlling short-term contracts, issuing licenses for trade in ADRs, and introducing financial consultants.

At the same time, the news came that the Presidential Administration's legal department had negatively evaluated the draft law on bank deposit guarantees. The need for a deposit guarantee system was first talked about after the currency reform of 1991. But the idea never got off the ground. There are too many different sides involved, each wanting to tug the blanket its way. Large and small banks and various state organizations would all like to ensure they get control of the money that would be in the deposit guarantee system, and this has meant the proposal has never met with general agreement.

The latest project, put forward by the Agency for the Restructuring of Credit Organizations (ARCO) looked like it stood a good chance of getting through the Duma, but it too is now at a standstill.

Finally, the news emerged that if differences over changes to the laws regulating the currency market are not overcome, as previously thought, they threaten to spark a new round of conflict.

Putin and Prime Minister Mikhail Kasyanov had promised the big businessmen from the Russian Union of Industrialists and Entrepreneurs that currency liberalization was just around the corner, but these promises have met with stiff resistance from the Finance Ministry and the Central bank. Government sources had been saying that the law would soon be approved, but now, after two weeks of time out, there is talk that if an agreement is still not reached, it will be time to make some personnel changes.