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No. 116, Part I, 15 June 1995
We welcome you to Part I of the Open Media Research Institute's Daily Digest. This part focuses on Russia, Transcaucasia and Central Asia, and the CIS. Part II, distributed simultaneously as a second document, covers East-Central and Southeastern Europe. Back issues of the Daily Digest, and other information about OMRI, are available through our WWW pages: http://www.omri.cz/OMRI.html RUSSIA GUNMEN ATTACK TOWN IN STAVROPOL. International and Russian agencies reported on 14 June that a large group of unidentified gunmen attacked the Southern Russian town of Budennovsk, located in Stavropol Krai, about 120 km northwest of the border with Chechnya. The gunmen reportedly launched assaults on the local police headquarters, administrative buildings, and other sites, as well as shooting randomly at town residents. Russian news agencies reported at least 41 deaths and large numbers of wounded. Interfax reported that one group of gunmen had fled the town to the south in buses with hostages, while another group was reported to have barricaded itself in the local hospital with about 60 hostages. According to Russian agency reports, the gunmen had identified themselves as Chechen separatist fighters, and were demanding the cessation of Russian military operations in Chechnya in return for the hostages' release. There has been no independent confirmation of the group' s identity. -- Scott Parrish, OMRI, Inc. MOSCOW DENOUNCES ATTACK, INTENSIFIES SECURITY MEASURES. Officials in Moscow reacted harshly to the attack, which they attributed to fighters led by separatist Chechen President Dzhokhar Dudaev, international and Russian agencies reported on 14 June. A government statement denounced the attack as a "monstrous provocation" aimed at "inflaming ethnic hatred," but confidently asserted that "partisan war will not spread into Russia." However, Lt. General Alexander Kulikov, commander of the Russian forces in Chechnya, said it is possible the attackers were "one of the separate groups of bandits trying to destabilize the situation and attract attention," suggesting they were not linked to Dudaev. Dudaev spokesman Khamad Kurbanov denied responsibility for the attack, which he blamed on the Russian government. Moscow placed all federal forces in the North Caucasus on "full battle alert," in anticipation of further attacks, and dispatched reinforcements to the region. Security measures in the Moscow region were also intensified. Interior Minister Viktor Yerin and FSB head Sergei Stepashin flew from Moscow to Budennovsk to take personal command of the anti-terrorist operation, ITAR-TASS reported. -- Scott Parrish, OMRI, Inc. YELTSIN ACCEPTS LEBED' S RESIGNATION. President Yeltsin accepted the resignation of Lt. Gen. Alexander Lebed, commander of Russia' s 14th Army in the former Soviet republic of Moldova, and dismissed him from the armed forces, Western and Russian agencies reported on 14 June. Yeltsin then appointed as his replacement, Maj. Gen. Valery Yevnevich, who until recently has been first deputy commander of the elite First Guards' Army. Defense Minister Pavel Grachev had already accepted the resignation, but Yeltsin had to make the final decision as commander in chief of the armed forces. Lebed offered to resign two weeks ago as a protest against plans to downgrade the 14th Army and then withdraw it from Moldova in three years. He claimed that those plans would lead to new bloodshed in the area. Lebed is known to have political ambitions and is expected to join the race for the Russian presidency. -- Robert Orttung, OMRI, Inc. FEDERATION COUNCIL REJECTS ELECTORAL LAW COMPROMISE, FOR NOW. The Federation Council rejected the compromise State Duma electoral law on 14 June by a vote of 76-26, with 13 abstentions, Western and Russian agencies reported. Another 14 votes were needed for it to pass. Later in the day, 77 Federation Council members supported a decision to annul the results of the earlier vote and once again debate and vote on the bill on 15 June, Interfax reported. The Council rejected the bill because its members say allotting half the seats to party lists gives too much representation to Moscow-based political parties, and because it requires only a 25% voter turnout for the elections to be valid. The draft had been approved by the conciliatory commission that included representatives of the president, Duma, and Council. The Duma had already approved the compromise on 9 June. If the Council does not reverse itself, the Duma will try to override the decision with a two- thirds vote and send the bill to Yeltsin, according to Duma deputy Viktor Sheinis. Presidential adviser Georgy Satarov indicated that the president would face a difficult choice if the bill is presented to him. On 15 June, Izvestiya warned that failure to adopt the law would not only threaten the parliamentary elections in December but lead to overall political instability. -- Robert Orttung, OMRI, Inc. YELTSIN BEHIND FEDERATION COUNCIL VOTE?. Federation Council member Yelena Mizulina, who played a large role in working out the compromise on the Duma electoral law, told Interfax that the defeat was organized by the presidential staff which is not interested in holding elections in December as mandated by the constitution. Other speculation in the Moscow press suggests that the delay is an attempt to hold the presidential and parliamentary elections simultaneously in June 1996. Duma Speaker Ivan Rybkin made this proposal in 1994 following consultations with Yeltsin, Council Speaker Vladimir Shumeiko, and Prime Minister Viktor Chernomyrdin. -- Robert Orttung, OMRI, Inc. GOVERNMENT ADOPTS PROGRAM TO COMBAT UNEMPLOYMENT. The Russian government has adopted a program to fight unemployment in 1995, Rossiiskaya gazeta reported on 14 June. It aims to help 3 million people find work, create 260,000 new jobs, and provide temporary employment for 1.3 million people; it will be financed with 5.6 million rubles ($1.2 billion) from the State Employment Fund. The report cited experts as predicting that the number of officially registered unemployed could increase to 3-4 million by the end of the year (from about 2.2 million now) owing to bankruptcies in various sectors, including light industry, machine building, construction, and the military-industrial complex. The article also warned that successful implementation of the program is threatened by the widespread practice of officials squandering public funds. On 25 May, Finance Minister Vladimir Panskov sharply criticized the Federal Employment Service for wasting government money. -- Penny Morvant, OMRI, Inc. RUSSIA' S CHOICE SLAMS DRAFT CRIME LAW. The Russia' s Choice faction in the Duma has lashed out at a draft law on organized crime submitted by the Security Committee, saying it "is pervaded by the cynical disregard for basic human rights" and could become "a powerful instrument in creating a police state," Interfax reported on 14 June. Faction leader Yury Rybakov said the draft law, due to receive its second reading in the Duma next week, would give government bodyguard services, the Tax Police, and the Customs Committee the right to create their own services to investigate organized crime and that these would be authorized to stage undercover sting operations and plant agents in government and public bodies as well as criminal groups. Thus, Rybakov contended, "any public or political organization" could find itself "full" of such agents. -- Penny Morvant, OMRI, Inc. FINAL QUAKE TOLL PUT AT 1,989. Vitaly Gomilevsky, the deputy governor of Sakhalin Oblast, announced on 14 June that the final death toll from the earthquake that destroyed Neftegorsk on 28 May was 1,989, Reuters reported. ITAR-TASS quoted First Deputy Prime Minister Oleg Soskovets as saying that plans to reinforce existing buildings on the island and build stronger structures in the future will be finalized this week. -- Penny Morvant, OMRI, Inc. RUSSIANS FINALLY CLOSE DEALS AT PARIS AIR SHOW. Two Russian space companies have announced that they will be engaging in joint projects with Western partners, according to press releases distributed at the 1995 Paris Air Show. NPO Energomash announced it would form a joint venture with Pratt & Whitney to produce and sell a modified Russian-made rocket engine. RSC Energia, based in Primorsky krai, announced that it would join with Rockwell Aerospace and Daimler-Benz Aerospace to investigate the commercial feasibility of its free-flying space servicing vehicle, called Inspector. It will launch an Inspector to the Mir space station in January 1997 to validate the concept. -- Doug Clarke, OMRI, Inc. RUBLE SURGES UP 70 MORE POINTS. The Russian ruble surged 70 points against the U.S. dollar in 14 June MICEX trading, closing at 4,766 rubles to $1, Russian and Western agencies reported. Since early May, the ruble has risen 364 points, or nearly 7%, representing its strongest climb in two years. Intervention by the Central Bank of Russia to slow the currency' s rise has flooded the market with rubles, increasing the money supply. Deputy Economics Minister Sergei Vasiliev told the media that the surging ruble "could undermine efforts to tame inflation". -- Thomas Sigel, OMRI, Inc. MICEX HOLDS FIRST AUCTION ON NEW FEDERAL BONDS. The first auction of new government securities, federal loan bonds, was held at the MICEX on 14 June, Interfax reported. The Central Bank of Russia, acting as an agent of the Finance Ministry, placed 59% of the planned amount of bonds, with an average annual profit rate of 94%, on the market. While foreign investors can own federal loan bonds, some restrictions apply. All transactions must be expedited through any of the 70 official dealers of the Finance Ministry. Federal loan bonds have a circulation period of 378 days and a floating quarterly coupon rate pegged to the profitability rate in the treasury bond market. -- Thomas Sigel, OMRI, Inc. PRODUCTION-SHARING LAW PASSED. The draft law "On Production-Sharing Agreements" which was rejected on 9 June by the State Duma, passed on 14 June, Interfax reported. Once finalized and adopted, the law will remove some of the vagueness concerning jurisdiction over resources, licensing, and taxation for foreign oil companies. A high-ranking official in one of Russia' s largest oil companies, YUKOS, told the Petroleum Information Agency that the law will enable companies to sign a $20 billion contract with U.S. Amoco on exploration of the Priobe oil and gas field in Western Siberia. In addition, another 12 major oil and gas projects, suspended due to the gap in legislation, can now be launched. -- Thomas Sigel, OMRI, Inc. TRANSCAUCASIA AND CENTRAL ASIA KAZAKHSTAN TO HAVE NEW CONSTITUTION. Kazakh President Nursultan Nazarbaev has approved the main provisions of a new constitution, Interfax reported on 13 June. The Kazakh president said the current constitution is obsolete and an obstacle to progress, according to VEK. Nazarbaev met with the head of the French Constitutional Court, Roland Dumas, and Kazakh Justice Minister Nagashbai Shaikenov on 12 June to discuss the new constitution. Shaikenov said it met international standards, providing for a democratic state with a strong presidency and a more coherent arrangement for power sharing between government branches. The new parliament will be bicameral, but the head of state will have the power to dissolve it. There will be a provision for impeaching the president. Nazarbaev said there will be no dual citizenship and that Russian will not be made an official language, however the requirement for government officials to be proficient in the Kazakh language has been postponed for 15 years. -- Bruce Pannier, OMRI, Inc. KARIMOV ISSUES DECREES ON LIBERALIZING ECONOMY. Uzbek President Islam Karimov issued a decree aimed at accelerating the transformation of state-owned enterprises into publicly held companies, Interfax reported on 13 June. However, the details of the scheme have not yet been made public. First Deputy Prime Minister Ismail Dzhurabekov told Handelsblatt in May that most small and medium-sized businesses, especially in the service sector, had already been sold to their employees on the basis of long-term interest free loans. The EBRD, however, estimates that no more than 20% of GDP is currently generated by the private sector. Also on 13 June, Karimov issued another decree lifting restrictions on the exchange of the som for foreign currency. Meanwhile, over the past 17 months, Uzbekistan has signed credit agreements worth $900 million with various donor countries and international financial institutions. -- Lowell Bezanis and Elizabeth Fuller, OMRI, Inc. [As of 1200 CET] Compiled by Victor Gomez The OMRI Daily Digest offers the latest news from the former Soviet Union and East-Central and Southeastern Europe. It is published Monday through Friday by the Open Media Research Institute. The OMRI Daily Digest is distributed electronically via the OMRI-L list. To subscribe, send "SUBSCRIBE OMRI-L YourFirstName YourLastName" (without the quotation marks and inserting your name where shown) to LISTSERV@UBVM.CC.BUFFALO.EDU No subject line or other text should be included. To receive the OMRI Daily Digest by mail or fax, please direct inquiries to OMRI Publications, Na Strzi 63, 140 62 Prague 4, Czech Republic; or electronically to OMRIPUB@OMRI.CZ Tel.: (42-2) 6114 2114; fax: (42-2) 426 396 OMRI also publishes the biweekly journal Transition, which contains expanded analysis of many of the topics in the Daily Digest. For Transition subscription information send an e-mail to TRANSITION@OMRI.CZ Copyright (c) 1995 Open Media Research Institute, Inc. All rights reserved.
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