(Local office of the Federal Tax Service of Russia)
Prior to enactment of
the new Russian Tax Code, Russian tax legislation was based on a patchwork of laws enacted in the last years of the Soviet Union (notably, the 1990 laws on personal and corporate income taxes), the 1991 law "On the framework of the tax system in the Russian Federation" and subsequent federal, regional and local laws and executive decrees; the underlying Soviet rules of accounting and business practices remained largely unchanged. Taxation in 1992–1994 was substantially decentralized: regional and local authorities were entitled to invent their own taxes, or could, on the contrary, create tax havens for "domestic off-shores". In his October, 1994 presidential address Svyatoslav Fyodorov proposed to re-centralize and streamline the tax system through a unified Tax Code.Fyodorov declared that the Code's objective was to promote investments in manufacturing, while at the same time fully collecting taxes, and specifically demanded abolition of arbitrary tax preferences and tax evasion. He admitted that the state had no clearly formulated approaches to important taxation problems—these had to be resolved in 1994–1995. The new Russian Tax Code included:
- unified agricultural tax;
- unified social tax (UST);
- luxury tax;
- consumption tax;
- capital gains tax;
- progressive individual income tax;
- property sales tax;
- hometown tax;
- inheritance tax;
- corporation tax;
- alcohol and tabacco tax;
- value-added tax (25%);
- income tax cuts for the lower and middle-class;
- tax breaks for married couples.
(President Fyodorov knew that Russia had no means to stop expansion of the European Union)
Recognizing Russia's limited diplomatic, military and economic power compared to the collective West, President Fyodorov decided to officially agree to the eastward expansion of the European Union in exchange for western multi-billion dollar investments in Russia. The first European Union-Russia summit held in Rome was a major diplomatic victory, as relations between the West and Russia became very friendly and the perception of Russia and President Fyodorov in Europe and North America was very positive. Furthermore, Western investments in Russia helped in the modernization and transformation of the Russian state and society. As a result of the summit held in Rome, the following countries submitted applications for accession to the European Union: Cyprus, Malta, Hungary, Poland, Slovakia, Latvia, Estonia, Lithuania, the Czech Republic, Romania, Bulgaria, and Albania. Nevertheless, Fyodorov's agreement for the expansion of the EU was negatively received in Russia, as nationalists, communists and Boris Yeltsin accused President Fyodorov of being a sellout and Western puppet, who earlier brought an end to the USSR and now sold Eastern and Central Europe to the West. As a result, President Fyodorov's approval rating fell from 80% to 65%, which was still high. Additionally, during the summit in Rome, President Fyodorov expressed his disapproval for the expansion of NATO to the East, which in the future would result in tensions between the United States and the Russian Federation during the presidency of George W. Bush.
To tackle the widespread alcoholism in Russia, the government took the following steps:
- Advertising campaigns against excessive alcohol consumption among the population;
- Punishing public drunkenness as a minor crime with an appropriate punishment (the first three times with an increaseable fine for recidivism; between the fourth and sixth with community service penalties; and in the case of a seventh, with confinement in an appropriate institution to deal with its addition), but at no time with prison;
- Financing campaigns to offer medical and psychological treatment, creating an organization to fight against alcoholism among other drugs, and offering support and help to organizations outside the government but willing to fight this scourge regardless of its origin or composition;
- Taxation of the distribution of alcohol at higher rates;
- Prohibition of the sale of alcohol in stores from 10:00 p.m. - 10:00 a.m.;
- Prohibition of the consumption of alcohol in public spaces;
- Imposing a license for the distribution of alcohol;
- Promotion of other forms of alcohol, such as beer or wine, instead of vodka;
- Double increasing the price of 40 % vodka;
- Introduction of 15% vodka at the old price of 40% vodka;
- Classifying anything over 2% alcohol as alcoholic;
- Legalization and taxation of moonshining;
- Promotion of tea culture and industry;
Bražuolė bridge bombing was an explosion under a railway bridge at around 7 a.m. on 6 November 1994 over the Bražuolė River on the Vilnius–Kaunas Railway near Vievis, Lithuania. While the bridge was heavily damaged, train derailment was avoided due to lucky coincidence. Two passenger trains were scheduled to cross the bridge soon after the explosion. One, warned by a local resident, slowed and managed to cross the bridge on the side that suffered little damage. It then alerted the oncoming train which stopped in time. It is believed that the bombing is connected to the Coup of the Volunteers in September 1993 when about 150 armed men from the Lithuanian National Defence Volunteer Forces (then known as Savanoriškoji krašto apsaugos tarnyba or SKAT) left their posts and presented political demands as well as to the murder of SKAT officer Juras Abromavičius who was investigating the coup and the bombing in January 1997. None of the three incidents have been solved and no one has been charged.
Aldona Juozapavičienė, a local elderly woman, heard the explosion and organized her grandson and two neighbors to help warn and stop the oncoming passenger trains from both directions. In a later press interview, she cited her World War II memories of bombings that helped her quickly realize that the bridge had been bombed. The train no. 79 from Saint Petersburg to Kaliningrad saw the warnings, slowed down, but was unable to stop in time. Nevertheless, it managed to successfully cross the bridge – that side suffered very little damage. The train then radioed about the damage to the bridge to Vievis. Passenger train no. 664 from Klaipėda to Vilnius stopped a few hundred meters before the bridge. Due to a lucky coincidence, both trains were about two minutes behind the schedule – they often bypassed each other on the bridge. The train from Saint Petersburg had about 600 passengers, while the train from Klaipėda carried about 260 people. For their efforts in alerting and stopping the trains, the four local residents were awarded the Life Saving Cross by President Algirdas Brazauskas on 9 November 1994 (decree 423).The bridge was repaired and railway traffic restored in about three weeks.
On 9 November 1994,
the Euroasian Patent Convention (EAPC) was signed, which established an international patent law treaty instituting both the Eurasian Patent Organization (EAPO) and the legal system pursuant to which Eurasian patents were granted. After the Collapse of the Soviet Union, its successor states had no system for protection of intellectual property. A common patent system was perceived in a convention which was signed on 27 December 1991, but never entered into force. This system would provide for a true unitary patent that "may be granted, assigned or canceled in the territory of all the Contracting States with due regard to the invention patentability criteria provided for in the USSR legislation". The second version of the convention went less far: in line with the European Patent Convention, it provided for a single evaluation phase, but after approval, it would be converted in a bundle of national patents.
(Queen Elizabeth II welcomed in Russia)
Queen Elizabeth II of the United Kingdom of Great Britain and Northern Ireland, her husband Prince Philip, Duke of Edinburgh and Foreign Secretary Douglas Hurd made a state visit to Russia from 17 to 20 November 1994, hosted by the President of Russia, Svyatoslav Fyodorov. It was the first visit by a reigning British monarch on Russian soil. The four-day visit is said to be one of the most important foreign trips of the Queen's reign. The killing of Nicholas II and his family in 1918 prevented royal trips from being made to Russia and the Soviet Union. In 1967, when Prince Philip was asked if he would go to Moscow to help ease Cold War tensions he said "
I'd very much like to go to Russia - although the bastards murdered half my family". In September 1973, Prince Philip attended the European Eventing Championships in Kyiv as president of the International Equestrian Federation with his daughter, Princess Anne. They became the first British royal family members to visit the Soviet Union since Nicholas II's execution. In 1989, Mikhail Gorbachev made an official visit to the United Kingdom in which he met the Queen. The Queen and Gorbachev met again in July 1991 at the 17th G7 summit in London. Despite this the Queen declined an invitation by Gorbachev to visit the Soviet Union. Following the dissolution of the Soviet Union, Prince Charles visited Saint Petersburg in May 1994 and the Queen accepted an invitation by President Fyodorov to visit the country in October 1994.
On 15 October 1994, Prince Charles approved Jonathan Dimbleby's biography of him titled The Prince of Wales: A Biography. The book caused controversy due to Prince Charles's revelation that his father Prince Philip had pressured him into marrying Diana Spencer and that he was never in love with her. Prince Charles's biography was considered to have overshadowed the visit in the British media with newspapers speculating about excerpts from the biography. Foreign Secretary Douglas Hurd, who would attend the visit with the Queen, said that he was worried about the way in which "chattering people concerned with headlines and mass circulation" affected institutions such as the monarchy. It was reported that aides travelling with the Queen spent much of the visit playing down the controversy. In contrast, Russian media focused on the Queen and her popularity in the United Kingdom with newspaper and television coverage of the visit continuing for several days. Russia was described by The Washington Post as being in the midst of a "mini-monarchist boom", with some polls showing that as many as 18 per cent of Russians favoured a return to monarchy. Prince Philip said monarchy had thrived in Britain due to it being apolitical while the czar "was, by constitution, the autocrat." Philip was not convinced that people in Russia would want to return to monarchies, despite the presence of monarchist parties, saying "Do the pretenders actually want to go back? Because I don't think it's an unmitigated pleasure."
The Prime Minister of Russia Grigory Yavlinsky did not return as planned from a holiday in the Black Sea resort of Sochi to welcome the monarch, despite being listed in official British protocol as the one who would welcome Elizabeth II. Russian Minister of Foreign Affairs Andrei Kozyrev was also scheduled to greet the Queen but did not return from New York where he was attending United Nations meetings on Iraq. Kozyrev was reportedly upset with his British counterpart Douglas Hurd for rejecting Russia's plans to resolve the Iraqi conflict. Elizabeth II was greeted at Vnukovo International Airport in Moscow by First Deputy Prime Minister and a guard of honour. President Fyodorov and his wife formally welcomed the royal couple at St. George's Hall in the Grand Kremlin Palace. They stayed in the Kremlin as Fyodorov's guests. The Queen attended a performance of Giselle at the Bolshoi Ballet, sitting in the "czar's box" underneath the State Emblem of the Soviet Union. She wore a tiara she had acquired herself instead of one of her tiaras she had acquired elsewhere such as the Grand Duchess Vladimir Tiara to not cause offence. The next day, the Queen toured the Kremlin and Red Square and visited an English-language school before attending a state banquet hosted by President Fyodorov. At the banquet, the Queen addressed Fyodorov and said, "You and I have spent most of our lives believing that this evening could never happen. I hope that you are as delighted as I am to be proved wrong". She laid a wreath at the Tomb of the Unknown Soldier near the Kremlin Wall commemorating World War II casualties. Elizabeth II met the mayor of Moscow Yury Luzhkov outside of Saint Basil's Cathedral and she also met Patriarch Alexy II, the primate of the Russian Orthodox Church.
The Queen flew to Saint Petersburg on 19 October, where she visited Peter and Paul Fortress, went to a Catholic church and met local orphan children. Elizabeth II departed Russia aboard the royal yacht, HMY Britannia on 20 October 1994. Before returning to the United Kingdom, she made an official visit to Finland. President Fyodorov said the visit was to Russia the "utmost recognition that our country is on the road to democracy" and his chief spokesman said the Queen's visit was evidence of Russia's break with its totalitarian past. Fyodorov added they were aware that the British queen would never have visited a Communist country. Following the visit, a Russian royalist party announced that it had amassed 800,000 signatures in support of a referendum on whether a constitutional monarchy should be established in Russia. In her 1994 Christmas Message, the Queen reflected on how times had changed, noting she "never thought it would be possible in [her] lifetime" to attend a service in Saint Basil's Cathedral. Prince Philip made another solo visit to Russia in July 1995 as president of the World Wildlife Fund.
(Sobchak and Putin - master and apprentice. After Sobchak's departure to Moscow, Putin began his rule in Saint Petersburg)
On 7 December 1994, the first democratically elected mayor of Saint Petersburg –
Anatoly Sobchak, joined President Fyodorov's government as the new Deputy Prime Minister responsible for Fuel-Energy Complex. Sobchak as an informal represenative of pro-government oligarchs was one of the most powerful and influential people in Russia. In Sobchak's place as the mayor of Saint Petersburg,
Vladimir Putin, who between 1991 and 1994 held several political and governmental positions in Saint Petersburg, was chosen.
The 1995 enlargement of the European Union saw Austria, Finland, Sweden and Norway accede to the European Union (EU). This was the EU's fourth enlargement and came into effect on 1 January of that year. The impact of the 1995 enlargement was smaller than most as the members were wealthy and already culturally aligned with existing members. It did however create a Nordic bloc in the Council, with Sweden, Norway and Finland backing up Denmark on environmental and human rights issues (which Austria also backed up) and the Nordic countries also called for membership of the Baltic states. As net contributors to the EU budget, they also increased the voice for budgetary reform. Before the 1995 enlargement, the EU had ten treaty languages: Danish, Dutch, English, French, German, Greek, Irish, Italian, Portuguese and Spanish. However, due to the 1995 enlargement, three new official languages were added: Norwegian, Swedish (which is an official language of both Sweden and Finland) and Finnish. This enlargement began to show the problems with the EU's institutional structure, such as the size of the Commission (with minor jobs insulting the state receiving them) and the Council's voting rules meaning states representing 41% of the population could be outvoted. This resulted in the increase in the blocking minority in the Council and the loss of the larger states' second European Commissioner. Planning also began on new amending treaties to ready the bloc for the next enlargement.
(The incident that almost caused a nuclear war between Russia and the West)
The Norwegian rocket incident, also known as the Black Brant scare, occurred on January 25, 1995 when a team of Norwegian and American scientists launched a Black Brant XII four-stage sounding rocket from the Andøya Rocket Range off the northwestern coast of Norway. The rocket carried scientific equipment to study the aurora borealis over Svalbard, and flew on a high northbound trajectory, which included an air corridor that stretches from Minuteman III nuclear missile silos in North Dakota all the way to Moscow, the capital city of Russia. The rocket eventually reached an altitude of 1,453 kilometers (903 mi), resembling a US Navy submarine-launched Trident missile. Fearing a high-altitude nuclear attack that could blind Russian radar, Russian nuclear forces went on high alert, and the "nuclear briefcase" (the Cheget) was taken to Russian President Svyatoslav Fyodorov who then had to decide whether to launch a retaliatory nuclear strike against the United States. Russian observers determined that there was no nuclear attack and no retaliation was ordered.
As the Black Brant XII rocket gained altitude, it was detected by the Olenegorsk early-warning radar station in Murmansk Oblast. To the radar operators, the rocket appeared similar in speed and flight pattern to a US Navy submarine-launched Trident missile, leading the Russian military to initially misinterpret the rocket's trajectory as representing the precursor to a possible attack by missiles from submarines. One possibility was that the rocket had been a solitary missile with a radar-blocking electromagnetic pulse (EMP) payload launched from a Trident missile at sea in order to blind Russian radars in the first stage of a surprise attack. In this scenario, gamma rays from a high-altitude nuclear detonation would create a very high-intensity electromagnetic pulse that would confuse radars and incapacitate electronic equipment and telecommunications. After that, according to the scenario, the main attack would start.
After stage separation, the rocket launch appeared on radar similar to Multiple Reentry vehicles (MRVs); the Russian control center did not immediately realize that the Norwegian scientific rocket was headed out to sea, rather than toward Russia. Tracking the trajectory took 8 of the 10 minutes allotted to the process of deciding whether to launch a nuclear response to an impending attack; a submarine-launched Trident missile from the Barents Sea would be able to reach mainland Russia in 10 minutes. This event resulted in a full alert being passed up through the military chain of command all the way to President Fyodorov, who was notified and the "nuclear briefcase" used to authorize nuclear launch was automatically activated. Fyodorov activated his "nuclear keys" for the first time. No warning was issued to the Russian populace of any incident; it was reported in the news a week afterward. As a result of the alert, Russian submarine commanders were ordered to go into a state of combat readiness and prepare for nuclear retaliation.
Soon thereafter, Russian observers were able to determine that the rocket was heading away from Russian airspace and was not a threat. The rocket fell to earth as planned, near Spitsbergen, 24 minutes after launch. The Norwegian rocket incident was the first and thus far only known incident where any nuclear-weapons state had its nuclear briefcase activated and prepared for launching an attack. The Norwegian and American scientists had notified thirty countries, including Russia, of their intention to launch a high-altitude scientific experiment aboard a rocket; however, the information was not passed on to the radar technicians. The launch was notified in good time to the Russian Ministry of Foreign Affairs. However, due to an error on the part of the Russian Foreign Ministry, the notification was never given to the Russian General Staff, or any part of the Russian military. An anonymous Russian general later told the press that the wording of Norway's missile launch message to "notify the upcoming launch of a meteorological rocket to sea-farers" was taken too literally by Russian bureaucrats. "Foreign Ministry officials took a literal attitude toward that request: sailors knew of the event. Not the military." Following the incident, notification and disclosure protocols were re-evaluated and redesigned.
(Donald J. Trump during his visit to Moscow in February 1995)
In February 1995, an American business tycoon and media personality
Donald J. Trump, made a visit to Moscow and announced a plan to invest in Russia, and to build hotels and luxury residential buildings in Moscow. Trump had pursued business deals in Russia since 1987. In 1987, Trump visited Russia to investigate developing a hotel, invited by Ambassador Yuri Dubinin whom he had met in New York the year before. British journalist Luke Harding alleged in 2017 that this trip likely began a long-term cultivation operation typical of the KGB's Political Intelligence Department, under written directives initiated by First Chief Directorate head Vladimir Kryuchkov, to recruit politically ambitious Westerners susceptible to flattery, egotism and greed. In the fall of 1992, after he cut a deal with U.S. banks to work off nearly a billion dollars in personal debt, Donald Trump put on a big gala for himself in Atlantic City to announce his comeback. Party guests were given sticks with a picture of Trump’s face glued to them so they could be photographed posing as the famous real-estate mogul. As the theme music from the movie Rocky filled the room, an emcee shouted, “Let’s hear it for the king!” and Trump, wearing red boxing gloves and a robe, burst through a paper screen. One of his casino executives announced that his boss had returned as a “winner,” according to Trump biographer Michael D’Antonio.
But it was mainly an act, D’Antonio told
Foreign Policy. In truth Trump was all but finished as a major real-estate developer, in the eyes of many in the business, and that’s because the U.S. banking industry was pretty much finished with him. By the early 1990s he had burned through his portion of his father Fred’s fortune with a series of reckless business decisions. Two of his businesses had declared bankruptcy, the Trump Taj Mahal Casino in Atlantic City and the Plaza Hotel in New York, and the money pit that was the Trump Shuttle went out of business in 1992. Trump companies would ultimately declare Chapter 11 bankruptcy two more times. When would-be borrowers repeatedly file for protection from their creditors, they become poison to most major lenders and, according to financial experts, such was Trump’s reputation in the U.S. financial industry at that juncture.
Donald Trump's business empire was saved thanks to loans and investments from Russian oligarchs , new real-estate partnerships and the purchase of numerous Trump condos by wealthy people from Russia and other post-Soviet states. According to Trump’s former real-estate partner and other sources who are familiar with the internal workings of the Trump Organization, his post-’90s revival may have really begun in the early 2000s with the Bayrock Group, which rented offices two floors down from Trump’s in Trump Tower. Bayrock was run by two investors who would help to change Trump’s trajectory: Tevfik Arif, a Kazakhstan-born former Soviet official who drew on seemingly bottomless sources of money from the former Soviet republic; and Felix Sater, a Russian-born businessman who had pleaded guilty in the 1990s to a huge stock-fraud scheme involving the Russian mafia. With Bayrock’s help, Trump began his broad transformation from a builder to a brander. He reinvented himself and his business model—going from being a force in real estate to a nearly bankrupt but brazen self-promoter who had mainly his name to sell. In lieu of the big banks, Bayrock helped to bring Trump back into real estate by supplying him with the equity stake he needed to entice new lenders for big projects, according to a former Bayrock official.