Corporate lobbying in the State Duma: opportunities for institualization

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FEDERAL STATE AUTONOMOUS EDUCATIONAL INSTITUTION FOR HIGHER EDUCATION

NATIONAL RESEARCH UNIVERSITY

HIGHER SCHOOL OF ECONOMICS

Faculty of Social Sciences

Master Thesis

Corporate lobbying in the State Duma: opportunities for institualization

Field of Study 41.04.04 Political Science

Master's Program “Politics. Economics. Philosophy”

Mikhail I. Chapanov

Scientific Supervisor:

Professor Andrey N. Medushevsky

Reviewer:

Professor Alexander V. Obolonsky

Moscow 2019



Contents

Introduction

1. Set up and limitations

1.1 Theoretical framework for studying lobbying in lawmaking

1.2 The State Duma in the Russian system of state power

2. Veto points and veto-players in the legislative process in the State Duma

2.1 Introduction of the draft law

2.2 First reading of the draft law

2.3 Second reading of the draft law

2.4 Third reading of the draft law

2.5 Identified veto points and veto-players

3. Current regulation of interaction between corporate interests and lawmakers

3.1 Rules for lawmakers

3.1.1 Anti-corruption norms and preventing conflict of interests' regulations

3.1.2 Special powers of lawmakers to promote corporate interests

3.2 Rules for corporate interests on how to influence lawmaking

3.2.1 Direct access to the lawmakers

3.2.2 Proxy access to the lawmakers

4. Why proposed regulation of lobbying in Russia has been rejected so far?

Conclusion

List of used sources and literature

Appendix



Introduction

The phenomena of lobbing could be broadly defined as private interests' representation in the decision-making process made in the name of a public interest. Since any action, policy, or decision taken by any authority is always made on behalf of specific interest group(s), the process of the communication between the state officials and these groups (i.e. interests' representation) is the embedded element in any decision-making process of the state authority.

The lobbying can provide policymakers with valuable insights and information, as well as grant interest groups access to the development and implementation of public policies. At the same time, lobbying can also lead to unfair competition, corruption and damage to the public interests and effectiveness of public policies.

Growing concerns over lobbying practices and demands for transparency of public decision-making process have led to the growing trend in different countries to introduce regulation of lobbying and tighter regulation of conflicts of interest. Since the 1940's until early 2000s, only 4 OECD-member countries regulated lobbying practices but since 2005 an additional eleven countries have introduced such regulations http://www.oecd.org/gov/ethics/lobbying.htm.

In Russia, the issue of low transparency of public decision-making is topical as well. The institute of lobbying is not legally regulated and is handled mostly by broad anti-corruption measures and constitutional right of citizen of the Russian Federation to apply in person, as well as to send individual and collective appeals to the state bodies (Article 33 of Russian Constitution). In recent years, several drafts of lobbying regulations have been proposed, but all were rejected.

Being the part of communication between people, the lobbying has various instances, concepts and forms, which literally never could be regulated in full. This work deals with seemingly narrowed understanding of lobbying practices: only corporate interests' lobbyists who are lobbying on the basis of commercial contract and only lower house of the legislative branch of the state power which is lobbied in connection with specific draft law.

Detailed rationale for such approach is given in the second part of the paper, but it is worth mentioning in the beginning that the Parliament is the most formalized and most transparent institution in state decision-making process (as to compare with judicial or executive state powers) and the laws have highest judicial power in the State while could not be individual in their nature. At the same time all interest groups are not alike.

Defined most broadly, they can range from groups with single-issue agendas and limited public or financial support (e.g. Bow hunting Association) to groups with broad agendas and deep financial and public support (e.g. Fintech Association). Scholars and others usually differentiate the influence of business (corporate) interest groups from those of other interest groups, particularly charities, on relative financial resources and ability to organize Lloyd Hitoshi Mayer What Is This "Lobbying" That We Are so Worried About? Yale Law & Policy Review, Vol. 26, No. 2 (Spring, 2008), pp. 485-566.

However in this work the concept of “corporate interests” would be used in maximal broad sense and in fact is needed to determine the second counterpart of the agreement with lobbyist (by setting apart state authorities, political parties and probably some other subjects).

Statistics of the lawmaking results in last years show that State Duma is not the place where the most of the decisions are prepared. The results of lawmaking activity of 5th and 6th convocations of State Duma are as follows Data of Analytical Department of State Duma Staff http://iam.duma.gov.ru/node/8/5052#:

	6 Convocation (December 2011 - October 2016)	5 Convocation (December 2007 - December 2011)
Draft Law Initiator	Considered drafts	Approved laws	Success Rate	Considered drafts	Approved laws	Success Rate
President	175	174	99%	227	220	96%
Government	1205	1137	94%	668	628	94%
Supreme Court	37	23	62%	39	22	56%
Federation Council's Members	497	167	33%	385	107	28%
Duma's Members	3065	661	20%	1995	559	28%
Regions	1628	157	10%	1539	147	10%

The legacy of more than 15 years of one-party majority in the Parliament has led to obvious weakness of parliament opposition parties. The lacking of competition in politics is supported by similar developments in economic sphere. The share of the state and state-owned companies in production of GDP doubled to reach 70% in 2015 as to compare with 35% in 2005 https://www.vedomosti.ru/economics/articles/2016/09/29/658959-goskompanii-kontroliruyut-ekonomiki. The corporate interest groups nowadays are concentrated near the state, which gives more opportunities to lobby their interests through executive branch of state power on individual basis.

At the same time, State Duma still has the constitutional powers to consider and approve laws and the institute of federal law is still functioning, and many of corporate interests are still closely tighten with the need to introduce, amend or make inactive specific legislative norms.

Another argument for upcoming change in the status-quo is the problem of “transit of power of 2024” (end of the constitutional mandate of the current president) and the need to address the issue of continuity of power, its legitimacy and leadership. According to the scholars, one of the possible trajectories could be a move to the depersonalized (institutionalized) system of state authorities by the adoption of new "rules of the game". These rules theoretically would include: the gradual expansion of intra-elite competition, the movement from a simulation to a real (even if controlled) multi-party system with a gradual connection to this process of civil institutions societies; restoring the balance of power (with the parallel abolition of redundant legislative, judicial and administrative restrictions of modern times); revision of the supercentralized decision-making mechanism (expansion of parliamentarism and the limitation of the absolute predominance of presidential power over all others), the introduction of transparent leader change procedures A.N .Medushevsky, The constitution and social demand for change in contemporary Russian society. Comparative Constitutional review, 1, 2019 . duma lobbying lawmaking russian

In fact, Russian legislation provides for special tools for corporate interest representation such as the right to send appeals and proposals for improving the legislation to the public authorities, the right of personal reception in public authorities, etc. However, the efficiency of practical application of these rights is highly questionable.

The aim of the paper is to develop basic arguments for institualization of corporate lobbying in Russian Lower House of Parliament. The institualization of lobbying is defined as introduction to the legislation specific set of check-and-balances regulating lobbying practices. In order to further operationalize the concept of institutionalized corporate lobbying, it is meant to be defined as paid (commercial) activity performed on a regular basis by an entity (agent) on behalf of principals (corporates) on the basis of the contract with the aim to communicate with lawmakers in Parliament in connection with specific draft law. So the main difference and the determining factor of corporate lobbyism from other forms and types of lobbyism is the existence of a written document (agreement) authorizing the lobbyist to act in relation to a specific legislative initiative.

The hypothesis is that nowadays there is unregulated “grey zone” for corporate interests' representation in lawmaking process, which should be put under regulation (institutionalized) to benefit anti-corruption and prevention of conflict of interests' efforts by increasing transparency of the lawmaking process and accountability of lawmakers. At the same time institutionalizing corporate lobbying would not change the composition and the number of existing veto players or veto points in the legislative process.

The methodology of this research is institutional analysis of normative environment which regulates communication/interaction between corporates and legislators using data collected from primary sources: federal laws and regulations. Also neoinstitutional analysis of Russian lawmaking procedure will be used. Methodologically this implies studying how formalized legislative procedure constrains the interaction among the individual and collective decision-makers and lobbyists (agents of corporates), sequence of such actions, information available to the actors, possible available choices of action, and specific results of such actions. In order to test existing decision-making procedure against introduction of the new institution (corporate lobbyists) the concept of veto-points by E.Immergut and veto-players by G.Tsibelis are also employed.

The research shows that introduction of regulation of corporate lobbying would not change existing number and the composition of key decision-making (veto) players, veto-points in the legislative process. There have been revealed several informal points of access for corporate lobbyists to the lawmaking procedure, which should be specifically taken into account while drafting the regulation. Also the research shows that unregulated “grey zone” for corporate interests' representation in lawmaking does exist and could be shaped in terms of access to lawmakers in more transparent, clear and public manner. Both results are the arguments in favor of introducing corporate lobbying regulation in Russian Parliament, with the clear potential to reduce corruption.

The research is structured in the following way: next chapter describes main theories of lobbying in lawmaking and explains the rationale to reduce the scope of the regulation of lobbying to corporate lobbying in the State Duma lawmaking process only. Specific attention is paid to the theory of lobbying as subsidy to the lawmakers, which is really helpful in terms of understanding the role of corporate lobbyists in the lawmaking process particularly.

This theory inter alia implies that lawmakers are not lobbyists as they are elected politicians who have different policy preferences and re-election strategies while operating limited resources.

So lobbyists (agents of corporate interests) relax budget constraints of strategically selected and like-minded legislators by offering policy information, political intelligence and legislative labor. Notwithstanding the fact that the model of lobbying as subsidy is created on the US Congress experience, it could be fully operated in Russian Parliament, as its' main elements and assumptions are fully applied to the Russian lawmaking process.

Next part of research shows that lawmaking process consists of specific number of veto players (political faction, government, president) and veto points (introduction of draft law, committee hearings, chamber voting). Lobbyists as new institute for lawmaking process could not change the number and composition of such players/points.

Next step describes existing process of communication / interaction between business interests and lawmakers. As it is not specifically regulated, there is “grey zone” which makes this process not transparent, involves different agents, rises risks of corruption.

When there is overview of all past draft law initiatives proposed to regulate lobbying which were refused. Main drawbacks are indicated based on the research results and main elements of possible regulation of corporate lobbying in Russian lawmaking process are suggested. Last part concludes.



1. Set up and limitations

1.1 Theoretical framework for studying lobbying in lawmaking

Theoretical research of the institutionalized lobbying in lawmaking has been conducted for decades mostly in the USA and resulted in several distinct approaches. The first is exchange model, which assumes that participants in the lawmaking process - government officials, interest groups, citizens - make specific actions in rational-choice exchange to improve their political, economic or social state Stigler, George “The Theory of Economic Regulation” Bell Journal of Economics, 1971. The mechanism of this model is relatively simple: interest group, which wants to promote specific policy, pays for the official's support of this policy by electoral support, election campaign financing or specific information that is valuable for the policymakers. The lobbyists are considered as the agents of the exchange. Among the most interesting features of this model is that the price payed for the support of the specific policy could vary depending on the interest group nature (size, location, repetitive or one-time nature of relationships) and the policymaker level of influence (competence and party/committee leadership generally make legislator more influential over legislative process). Using utility maximization approach the exchange model is good for predicting political behavior of the actors involved in such exchange.

However, the exchange models have several theoretical flaws. The very first theoretical issue is uncertainty on why the exchange deal should work in the absence of any independent enforcement mechanism. Snyder, James “Long-Term Investing in Politicians; or, Give Early, Give Often” Journal of Law&Economics, 1992 The second problem is that empirical studies show that the size and timing of election campaign financing in USA by different interest groups has no connection with the procedure of passing specific laws and reasonably could not be considered as buying votes of the legislators Stratmann, Thomas “Are Contributors rational: Untangling Strategies of Political Action Committees” Journal of political Economy, 1992. And finally this model does not explain why public interest groups which have little electoral or financial resources to trade are represented and supported by the legislators Berry Jeffrey, “The new liberalism: The rising power of citizen Groups”, Washington: Brookings Press, 1999.

The second “pluralist” model emphasizes the mechanism of persuasion, not exchange. The model suggests that new interest groups that emerged in reply to economic or social challenges mobilize and push for policy changes. This disturbs other interests, which in reply start to mobilize their own interest groups. Once all interests have been mobilized, legislators and policymakers access all material data and information, based on which a new policy equilibrium would be developed.

The main critique of the pluralist model relates to collective action problem, which suggests that in the large group of actors, a rational actor would do nothing if it could free ride on the efforts of other group's members Olson Mancur, “The logic of collective action”, Harvard University Press, 2009. So this model can hardly predict anything as smaller sized groups often more easily mobilize its members and relevant resources and thus defeat others.

More recent studies put information transmission at the center of lobbyist-legislator relationships. Some scholars argue that reelection minded legislators often are uncertain about the position they should take on specific issues. Interest groups acquire private and costly information about the issue/constituency opinion (or the consequences of policy change) and transmit it to influence legislators' choice of policies Hansen John, “Gaining Access: Congress and the Farm Lobby, 1919-1981”, University of Chicago Press, 1991. “The point at which access ends and influence begins is the point at which legislators adjust their beliefs on the basis of lobbying information” Wright John, “Interest groups and Congress” Allyn&Bacon, 1996, page 81.

However these “informational” models also have some puzzles. One of which is that there are many alternative sources of information which legislator can use (and normally uses) - executive agencies reports, party-sponsored researches, colleagues' cues, staff endeavors, etc Kingdon John, Congressman's Voting Decisions, University of Michigan Press, 1989. Another point to note is “principal - agent” problem as both legislator and lobbyists have incentives to dissemble (game with asymmetric information).

Interesting insight comes from legislative and rational choice scholars. As Kenneth Shepsle notes “As far as I can determine, there is near-universal consensus that much of legislative politics is micropolitics. There are no grand controversies, methodological or substantive, pitting microanalysis against macroanalysis. Because of this consensus, one is not taken to be a cynic for seeing the legislature as an arena in which self-interested behavior is manifested, that is, in which micromotives determine macroperformance.” Shepsle Kenneth, “Prospects for Formal Models of Legislatures Legislative Studies Quarterly, Vol. 10, No. 1,1985 In other words legislators clearly negotiate, bargain, deal, and "shop around" just like their counterparts in the marketplace. However the nature of such self-interest is in much dispute (starting from public interest and to the legislators' own material enrichment) IBID.

Echoing Shepsle, Richard Hall and Alan Deardorff offered alternative concept of the lobbying - as a form of a legislative subsidy - grant of policy information, political insights and legislative / legal labor to the legislators who are natural allies, in order to assist them in achieving their own coincident objectives. In other words lobbyists offer help on a matter that the legislator cares about rather than request a favors or try to change his opinion. This model provides distinctive conception of access to the legislator, which is conventionally pictured as something that need to be bought by the interest group or grudgingly given by legislators. To the contrary, legislators should also initiate contacts with lobbyists, especially with those whom they already know support their objectives Hall Richard, Deardorff Alan, “Lobbying as legislative subsidy” The American Political Science Review, 2006.

The model of lobbying as subsidy offered by Hall and Deardorff is based on the following main assumptions. First of all to have influence on a policy legislator must work at it, that is somehow participate or otherwise extend “effort” in the legislative process (be member of relevant committee, initiate draft laws/amendments on the issues, negotiate compromises, show up in public, etc.). The second thing is that legislator together with his staff have limited capacity in terms of time, information, labor, expertise and hence resources to effectively address all the issues on which legislator would like to be involved in. Next point assumes that legislator cares about some issues more than others as while choosing the issues to spend his limited resources on he would range according to his own and constituencies' policy preferences. And finally, relative to legislators, lobbyists are specialists. Whereas most legislators simultaneously care about multiple issues, a lobbyist focuses on relatively few. The lobbyist thus has greater issue-relevant experience, expertise, and time to invest in assisting legislators. These resources are developed to promote only the policy objective of the interest group IBID.

With mentioned assumptions in mind, the model suggests the following roles in legislator-lobbyist relationships:

Legislator typical input	Lobbyist typical input
ь Lawmaking efforts to achieve own preferences by: - Political capital - Constitutional access to the process - Network of legislative and extra-legislative contacts	ь In-depth issue analysis, reports and expertise in politically user-friendly form ь Political/legislative intelligence: monitoring of legislative developments, procedural advices, private info from issue network, etc. ь Information about constituency interests and opinions

In the settings presented in the model the main normative issue of the institute of lobbying is that it obviously negatively affects representation function of lawmakers by moving allocation of their efforts in favor of resource-rich interests. However the counter arguments are (1) lobbyists enlarge legislators' resources, which is actually good for representation, as elected representatives would not have enough resources to represent all constituencies on all issues that concern them and (2) according to the model, lobbyists approach legislators who already support interest group objectives (among other issues in a long list of his priorities), so representation is compromised without individual representatives being compromised.

In order to conclude this section it should be noted that the concept of lobbying in lawmaking conventionally could more or less successfully be explained as a form of information exchange or persuasion, but more recent studies offer new distinct approach - form of subsidy. This new concept resolves main flaws of conventional theories (principal-agent problem, collective action, credible commitment, etc.) and at the same time reiterates extremely important and still unresolved issue of coexistence of equal political representation as pre-requisite for democracy and resource inequality as pre-requisite for market economy.

In this paper the model of lobbying as legislative subsidy would be further used to operationalize the concept of lobbying in Russian parliament for regulative purposes, in other words the lobbyists would be determined as legal entities (agents) who are involved in paid (commercial) activity on a regular basis on behalf of principals (corporates) with the aim to provide lawmakers (staff) with policy information, political intelligence and legislative labor in connection with specific draft law.

1.2 The State Duma in the Russian system of state power

There are different ways to regulate lobbying, ranging from mandatory systems such as in the United States to the voluntary systems in France or even self-regulation of lobbyists. However, every approach to the regulation should have in place clear definition of subjects, objects, main requirements, procedures, etc. In this context, the analysis below shows that in Russia, the institute of the federal law and connected lawmaking procedure make the State Duma (and legislative branch of power) the most appropriate place to introduce regulation of lobbying practices and specifically by corporate interests.

According to the article 10 of the Constitution of the Russian Federation the state power is exercised on the basis of the division into legislative, executive and judicial branches; each of them is independent from another.

If we use the concept of institutionalized corporate lobbying suggested above, there is little space for corporate lobbying in the judicial system. Russian judges are independent and must act only on the basis of the Constitution and federal laws. Fair competition, public and open process as well as equal rights of the parties are the pre-requisites for the litigations.

In executive branch of power the corporate lobbying is active but hardly could be regulated in great detail. Federal government inter alia manages state finances (federal budget), has authority to develop and implement financial, economic and social policies, etc. but generally speaking the decisions of the government represent individual (specific group of interests) measures. Thus private interests' representation in such a decision-making process of the executive branch should be primarily cleared for risks of corruption/conflict of interests of the officials. Still some specific regulations of public disclosure of the details of the meetings with lobbyists could be considered for the officials of executive branch of power.

The State Duma specifically performs two main functions: representative (political) and legislative (professional). The core professional activity of the Duma is connected with the federal laws: all draft laws are introduced to the State Duma, considered by majority rule in 3 public readings by 450 Members of Parliament, and if supported draft law becomes Federal law and is being sent to the Federal Council for further consideration.

Federal law as the institute has unique features. One of the numerous definitions of the law is the following: “normative legal document issued by the highest state (representative) body or by the people directly, which has the highest legal power and contains initial legal rules in the country” Алексеев С.С. Право: азбука-теория-философия: опыт комплексного исследования, Статут 1999, с. 82. The highest legal power of the law means that all other state regulations (orders, rulings, acts, etc.) in the country should be based on and comply with the laws.

At the same time according to the article 55 of the Constitution of the Russian Federation federal law is the only legal ground to limit the rights and the freedoms of a person and a citizen of the Russian Federation and only to the extent which is necessary to protect the constitutional order, morality, health, rights and legitimate interests of others, ensure the country's defense and state security.

So the laws and the lawmaking procedure performed by the elected representatives of competing political parties represents the very first and base level to all further regulations of specific relationships. This fact should have utmost importance for any rational actor who is willing to influence public policies.

The next theoretical question is what exactly corporate interests would require from the state? This work operates more broad sense of corporate interest, but if to reduce it to the business interests only, George Stigler pointed out that the main problem of state regulation is the problem of discovering when and why an industry (or interest group) is able to use the state for it purposes, or is singled out by the state to be used for alien purposes. There are 4 main policies which an industry may seek of the state Stigler, George “The Theory of Economic Regulation” Bell Journal of Economics, 1971:

-Direct subsidy of money;

-Control over entry by new rivals (protective tariff, other barriers);

-Measures affecting substitutes and complements;

-Price controls (large competition leads to price discrimination).

Stigler resumes that the industry which seeks regulation must be prepared to pay relevant costs to political power seller - party. These costs are votes (in support of the measure, education of constituencies) and resources (campaign contributions, services, employment of party members, etc.).

Obviously the lobbying as legislative subsidy is another form of the costs which business is paying in order to influence state regulation. And if to assume that business is the most resource - rich and able to mobilize social group, there are increased risks of wrongdoing, so additional transparency of this process (including regulation of lobbying) is desirable.

In order to sum up this section there are 3 main arguments for limiting the research of institualization of corporate lobbying only by the State Duma. Firstly, legislative branch of power has relevantly open and formalized decision-making procedure as to compare with executive or judicial branches of power. Secondly, the decisions made by the State Duma in the form of federal law have highest legal power in the state. Finally from rational-choice perspective lobbying in the beginning of the legislative process is more efficient than to compare to the lobbying at the consecutive stages of law enforcement, because early-identified issue allows corporations to employ a wider range of alternatives to choose from before committing itself to appropriate action Meng, Max, Early Identification Aids Issues Management, The Public Relations Journal; New York 1992.



2. Veto points and veto-players in the legislative process in the State Duma.

In order to consider how institutionalized corporate lobbying could influence the legislative process in the State Duma below is described the process of introduction and approval of draft federal laws in the Lower House of Russian Parliament. The logic of the analysis is the following. The lawmaking procedure is highly formalized and characterized primarily and specifically by the number of veto-players and the configuration of veto-points and reflects the balance of interests between the main political actors.

Explaining the notion of veto-points Ellen Immergut noted: “The fate of legislative proposals… depends upon the number and location of opportunities for veto along this chain. The ability of interest groups to influence such legislative outcomes depends upon their access to the political representative situated at the 'weak links' or veto points in this chain” Immergut E.M. Institutions, veto points, and policy results: A Comparative Analysis of Health Care, Journal of Public Policy, 1990, page 396.. The concept of veto players is introduced by George Tsebelis who defined them as “individual or collective actors whose agreement is required for a change of the status quo” Tsebelis G. Decision Making in Political Systems: Veto Players in Presidentialism, Parliamentarism, Multicameralism and Multipartyism. British journal of political science, 1995..

This part of the paper would scrutinize the lawmaking process in the State Duma with the intention to identify and classify existing veto points and veto players.

The question then is whether the introduction of the concept of lobbying as subsidy into the lawmaking procedure could change veto-points or remove existing/introduce new veto-players and thus destabilize the system of decision-making? This seems to be the main risk to consider then introducing any new institute to the legislative process. As it was mentioned above, currently, the legislative process is initiated by draft laws introduced in the State Duma which is considered in 3 consecutive readings by majority rule.

The division of the procedure for consideration of draft laws into readings and each reading itself, as noted by the Constitutional Court of the Russian Federation in Decree No. 11-P of July 5, 2001, is important “for ensuring the search for the most appropriate regulatory decisions and for verifying the compliance of their textually-written content with the genuine will of the legislator”. Approval of the draft law consistently in each of the 3 readings - with their different purposes in a single rulemaking process - is also a guarantee for taking into account the initial position of the law's authors. In 1 reading is being considered the concept of the initiative. No changes in the concept of the draft law can occur at the 2 reading (stage of introducing amendments), so that changes of fundamental importance do not appear as the result of random, non-included into initial concept, discussions. Constitutional Court reiterated that the violation of this requirements for readings in the legislative procedure leads to a distortion of the initial expression of the will of lawmaker and thereby affects “the fate of the act as a whole, indicates the unconstitutionality of such an act not only in the order of adoption, but ultimately in the content of the norms”.

There is one important limitation to the applicability of the analysis below which is connected with current political situation in Russia. In fact in current political conditions there is strong pro-president consolidation of all major political actors, which make them one collective veto-player in legislative process: President, Government, State Duma (United Russia party holds constitutional majority of the seats).

However, this will not always be the case; therefore, the analysis below uses the presumption that the law is adopted subject to the consent of all the main participants in the parliamentary-stage legislative process: the Parliament (political support), the Government (implementation and enforcement of the norms of the new law, including financial side), the President (constitutional veto player). Although this simplification of the absence of power struggle (except between parliamentary factions) seems significant, however, taking into account the areas of legislation that are most interesting to the corporate interests (see the previous part of the work), and the requests that they mainly address to the authorities, such presumption is not significant distortion of real-life legislative processes. In other words, the majority of changes to the legislation initiated by corporate interests are related in nature to the specific industries regulations, which is usually not a significant political event or subject of attention of the broad society.

2.1 Introduction of the draft law

According to the article 104 of the Constitution of the Russian Federation, the draft laws are introduced to the State Duma. The same article states that the right to do so have 450 deputies of the State Duma, Federal Council itself and each of its 170 members (+17 more currently vacant seats for president's nominees), legislative (representative) bodies of 85 regions of Russia, Federal Government and the President. Higher and Constitutional courts could also introduce draft laws but only in the sphere of their competence. Totally there are 727 actors who could introduce draft law to the Russian Parliament: 90 of which are collective bodies and the rest of 637 - are individuals.

Article 105 of the Internal regulations of the State Duma (hereinafter referred to as “Reglament”) prescribes that the draft law must be accompanied by the set of documents, which generally consists of (1) explanatory note to the draft law, outlining the concept of the proposed regulation, type of existing (or new) relationships to be regulated as well as the necessity and importance of the adoption of the draft law; (2) statement on whether the implementation of the draft law will require government funding and the assessment of such costs if any; and (3) a list of existing laws which are subject to revocation, suspension, modification or adoption in case the draft law would be adopted.

There are more requirements for additional documents in some specific cases (such as if the draft law changes Criminal Code, Budget Code, ratification of international agreement, etc.) which are omitted in present analysis as these rarely directly involve corporate interests. However, one specific case should be outlined here as very important. Both Constitution (article 104) and Reglament (article 105) state that a draft law which introduces or cancels taxes, proposes exemption from their payment, proposes changing financial obligations, new expenses or decreasing revenues of the federal budget, can be introduced only accompanied by the conclusion of the Government of the Russian Federation.

This requirement used to be a veto-point in the legislative process as the absence of the Government's conclusion prevented Duma deputies and other lawmakers from introducing draft laws. Before 2007, Government basing on “Reglament of the Government and Regulation of Government's Staff” (hereinafter reffered to as Government Reglament) Enacted by Government Ruling #260 dated June 01, 2004 often returned draft laws without preparing any conclusions, formally stating that the authors had not provided enough financial calculations and other materials for the conclusion to be made. However Constitutional Court determined this practice as not complaining with constitutional right to initiate draft law and since when Government has not required any specific information to make conclusions on draft laws Constitutional Court of the Russian Federation Ruling #9-P dated November 29, 2006.

Notwithstanding the fact that Federal Constitution Law “On Government of the Russian Federation” directly states that the conclusion should be prepared by the Government in 30 days, this term used to be not respected quite often http://api.duma.gov.ru/api/transcript/196372-4. In February 2015 to the article 108 of the Reglament was introduced new point 3.1 which in case of delay with providing Government's conclusion describes the mechanism of escalation of such case to the top-level Duma's officials and further to the Government. That is being said that if the Government intentionally tries to use the delay in producing its conclusion as a veto-point for the introduction of the draft law, this case could easily receive political attention and the veto-point would be override. It is worth mentioning that negative Government's conclusion (which does not support the adoption of the draft law) could not prevent the lawmakers from introducing or considering such draft law.

The set of documents described above should be sent to the Chairman of the State Duma, who arranges for official registration of the draft law as the project with unique ID and designates one of the Duma's committees responsible for all further stages of the consideration of the draft law. In the State Duma of 7th convocation there are 26 committees, formed proportionally to the parliamentary fractions (as a common rule). Each deputy (except chairman and his deputies) should be member of only one committee.

One of the recent changes to the Reglament introduces the first collective veto-player in the legislative process. Specifically the point 1.2 of article 107 of the Reglament (enacted May 19, 2017) requires State Duma deputy to inform his parliamentary faction about the draft law, prepared for the introduction to the parliament. In other words if faction would take decision to somehow monitor/control its members in order to increase party's discipline or whatever reason, deputies would have to abide to this collective rules, including pre-agree draft laws to be introduced.

The designated committee should take the decision on whether introduced draft law complies with the cited above requirements on (1) full completeness of the documents, including conclusion of the Government and (2) correctness of the draft law authors' statement that implementation of the draft law will not require additional spending funded by federal budget. This decision potentially could be considered as veto-point in the process (as if (1) or (2) failed, the draft law must be returned to the authors), but Reglament requires committee while making this decision take into account position of the Legal Department of State Duma Staff, which is independent from political parties actor.

In case the set of documents introducing the draft law complies with all requirements, designated committee confirms this as well as its competence in the concerned branch of legislation. This committee becomes responsible for further considering and passing of the draft law.

The next step in the legislative procedure is (1) preliminary scheduling the session (month) when the draft law would be considered in the 1 reading (usually not earlier than 30-45 days after draft law introduced) (2) sending out the draft law and accompanying set of documents to the State Duma committees, commissions, factions, the President, the Federation Council, the Government, Accounts Chamber and Public Chamber of the Russian Federation for review, feedbacks and comments. If the draft law concerns issues which are in the joint competence of the Russian Federation and the regions (Article 72 of the Constitution), the draft law is also sent to the regional legislatures and governors.

The following chart (chart 1) summarizes the process of introduction of the draft law to the State Duma and shows identified veto-points and veto-players at the very first stage of the legislative process.

Chart 1. Introduction of draft law

To conclude the first part, the only veto player identified at this stage is political party' faction (this institute is described in more details in the next section). The requirement of preliminary faction notification about the draft law to be introduced, is not formalized in sufficient details so it would be primarily enforced at faction's discretion and therefore this stage could be considered as veto point. All other processes within this stage of the lawmaking process is well described and formalized in Duma's and Government's Reglament. All the actors mentioned but factions could not block the initial stage of the legislative process at own discretion so there is no other veto-players discovered.



2.2 First reading of the draft law

In the first reading of the draft law, the deputies consider its concept, compliance with the Constitution, discuss necessity and importance of the adoption of the draft law. No changes or amendments to the wording of the draft law could be made at first reading.

The first reading procedure is structured to take place at two levels: first responsible committee, then chamber hearings. Responsible committee arranges for the legal expertize of the draft law from the side of Legal Department of the Duma's staff. Again this step should not be seen as veto-point as Duma's staff is independent actor from political parties and even if the expertize shows significant flaws of the draft law it could not stop the legislative process. Except this there is no other mandatory feedback or formal expertize required to initiate first reading of the draft law at the committee (first) level.

At the same time according to the State Duma's Reglament responsible committee has significant authority to organize professional discussion of the draft law among experts, government representatives, business, and other interested parties. To be more precise article 26 states that committee meeting could be attended by the representatives of the President, Government, Chamber of Accounts, etc. The committee has the authority to invite at the meetings federal ministers and representatives of law enforcement agencies. The same article directly gives the committee the right to invite at the meetings experts, representatives of public associations, mass media, etc. Additionally in order to find out the actual state of affairs and public opinion on legislative issues and other issues under the jurisdiction of committee, it can hold parliamentary hearings, conferences, meetings, roundtables, seminars and take part in their work.

As a general rule the responsible committee considers the draft law in a meeting, which is open to the deputies, all interested experts and mass media (there are some issues with physical access to the Duma's premises, some committees broadcast meetings online). According to the Reglament's article 24 the Committee meeting is eligible if it is attended by more than half of the total number of committee members. The decision of the committee is adopted by a majority of votes of the total number of members of the committee present at the meeting. The Chair of the responsible committee has relevantly more authority in setting the agenda of the meetings but he/she should not be considered as veto-player as preliminary schedule of consideration of draft law is publicly fixed in the stage of introducing the draft law (see above) and in case of unnecessary protraction (or acceleration) of the draft law consideration, this case can be easily escalated by interested deputy to his/her faction and thus political level.

In fact time period between introduction of the draft law and its first reading depends on several instances. The size of the draft law, economic impacts, political meaning, these all matter as well as the quality of legal wording of the draft law, competence of the author, his/her knowledge of the Reglament and the ability to persuade other deputies and members of responsible committee to vote for the draft law Крашенинников П.В. «Закон и законотворческий процесс» М Статут, 2017, стр. 79 .

Consideration of the draft law at the responsible committee meeting begins with author's speech explaining the concept, necessity and importance of the draft law. When members of committee, representatives of government and other interested parties could ask questions and discuss the concept of the draft law. Given professional nature of the draft law discussion on the committee level (as to compare with political debates on the level of the Chamber), executive branch of state power (Government and President) prepares its official positions on the draft law in advance of the committee meeting.

Finally the responsible committee could vote for one of the following decision, reasonably explaining it in the relevant statement:

- Recommendation to the chamber to support the concept of the draft law and approve it in the first reading;

- Recommendation to the chamber not to support the concept of the draft law and decline it in the first reading

- Recommendation to the draft law's authors to change its wording in order to take into account the comments and suggestions made at the committee meeting and re-introduce it to the Parliament.

If no decision is reached due to the equal split of the votes of committee members, the draft law goes to the Chamber's consideration without responsible committee recommendation, which is very rare option in practice.

As the next step, the responsible committee sends the draft law and relevant materials to the State Duma Council, which is intermediate point for main stages of consideration of the draft laws. According to the Article 13 of Duma's Reglament State Duma Council consists of Duma Chair, deputies of the Chair and leaders of parliamentary factions.

In other words, its structure proportionally reflects parliamentary parties composition, represented by political parties leaders and top-executives of Duma (who also have parties affiliation). Apart from broad set of procedural issues which involve political attention (listed in Article 14 of the Reglament), one of the most important competence of the Council of State Duma is setting up agendas of Chambers meetings (for next meeting and for the period).

Council of the State Duma determines the date of the draft law consideration at the Chamber's meeting and sends its text and relevant materials to the President, Federation Council, State Duma deputies, Government and draft law authors not less than 3 days before this draft would be considered at Chamber's meeting.

It is important to note that President and Government receive all relevant information about draft law well in advance its hearings at State Duma meeting but they have no constitutional authority to veto or intervene into the legislative process at parliamentary stage. But as it was mentioned in the beginning of this part, due to mostly professional (not political) nature of the draft laws which corporate interests are usually concerned about, both these collective actors could be considered as collective veto-players.

Presidential staff' and Government's written opinions are important and necessary elements for substantive consideration of the draft laws. Their official representatives in State Duma could execute veto power (by postponing consideration or not supporting draft law) at any level of the draft law consideration in the first reading: responsible committee meeting, Council of State Duma meeting or Chamber hearings.

First reading of the draft law at the Chamber hearing mostly repeats committee's meeting procedure but with more emphasize made on political side of the concept of the draft law and in more time-constrained manner. After the speeches of the author of the draft law and representative of the responsible committee, relevant speeches in favor or against the draft law delivered by representatives of political factions and Q&A session the draft law is voted for or against by the deputies. At this point another collective veto-player should be mentioned in more details - parliamentary faction.

Parliamentary factions are the basis of the parliamentary structure as they group the elected deputies according to political party affinity (Article 16 of Duma's Reglament). The factional organization of the activities of the parliament allows deputies to unite, form and collectively defend their political position, which facilitates the work of the legislature, makes its more stable and predictable. At the same time it also has negative aspects, since the stability and discipline of parliamentary party factions can be used as the means of imposing narrow party, departmental and lobbying solutions Decision of the Constitutional Court of the Russian Federation of February 28, 2012 № 4-P.

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