|The greatest happiness is to know the source of unhappiness. - Dostoevsky|
No. 18, Part I, 25 January 1996
************************************************************************ Do you need sharply focused economic news? OMRI's weekly Economic Digest provides thorough coverage of business and financial developments throughout the region. This week's edition includes stories on why Russians are buying more dollars and why Estonian tax policy is wreaking havoc on cigarette producers. For subscription and rate information, please send a message to firstname.lastname@example.org *********************************************************************** We welcome you to Part I of the Open Media Research Institute's Daily Digest. This part focuses on Russia, Transcaucasia and Central Asia. Part II, distributed simultaneously as a second document, covers Central, Eastern, and Southeastern Europe. Back issues of the Daily Digest, and other information about OMRI, are available through our WWW pages: http://www.omri.cz/Index.html ^^^^^^^^^^^^^^^^^^^^^^^^^^^TODAY'S TOP STORY^^^^^^^^^^^^^^^^^^^^^^^^^ CHECHENS RELEASE HOSTAGES. Chechen militants handed over some 46 hostages seized in Kizlyar and Pervomaiskoe to Dagestani officials in the Chechen village of Novogroznenskaya on 24 January in return for the bodies of 42 Chechens killed during the Pervomaiskoe fighting, Russian media reported. Negotiations on the release of 29 Russian power plant workers abducted on 16 January are continuing. Also on 24 January, Chechen guerrilla leader Shamil Basaev threatened to renew hostilities unless the Russian 506th regiment is withdrawn from its present position in Vedeno Raion, according to NTV. -- Liz Fuller ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ RUSSIA YELTSIN ORDERS AID TO CHECHNYA. President Yeltsin ordered the spending of 16.2 trillion rubles ($3.5 billion) and up to $1 billion in 1996 to rebuild the social and economic infrastructure of Chechnya, Russian Public TV (ORT) reported on 24 January. The spending would come on top of the agreed 1996 budget. Duma Budget Committee Chairman Mikhail Zadornov called the move "a terrible economic and political mistake," saying the investment program for the entire country is only 27 trillion rubles, Ekho Moskvy reported. Presidential economic adviser Aleksandr Livshits remarked that it is better to stop the destruction of buildings before starting to reconstruct them. -- Robert Orttung PRESIDENTIAL COUNCIL LOSES ANOTHER MEMBER. Academician Sergei Alekseev resigned from the consultative Presidential Council and the presidential Human Rights Commission on 24 January in protest of the war in Chechnya, one day after human rights advocate Sergei Kovalev did the same, Russian media reported. Izvestiya commentator Otto Latsis and Russia's Democratic Choice leader Yegor Gaidar also have quit the 28-member council in recent days. Presidential adviser Georgii Satarov criticized those who resigned for "leaving the ship in a very difficult situation," NTV reported. -- Laura Belin SOSKOVETS TO CLARIFY WORK OF PRESIDENTIAL CAMPAIGN HQ. First Deputy Prime Minister Oleg Soskovets, the head of the new presidential campaign headquarters, has agreed to answer questions about its work in the State Duma on 31 January, Russian media reported on 24 January. Soskovets insists that the headquarters is not President Yeltsin's personal campaign committee, since the president has not decided whether he will run for re-election. Also on 24 January, the Central Electoral Commission (TsIK) agreed to examine the legal status of the new campaign headquarters, NTV reported. TsIK Chairman Nikolai Ryabov has said that only the TsIK is authorized to organize and supervise the June presidential elections. -- Laura Belin SOSKOVETS OUTLINES NEW COURSE. Addressing a meeting of industrial leaders on 24 January, First Deputy Prime Minister Oleg Soskovets promised a "speedy financial restructuring" to address social questions, Russian media reported. "Today there cannot be any opponents of reform," Soskovets said, while condemning efforts to transplant foreign models of the market economy onto "Russian soil." The meeting brought together the heads of 28 financial-industrial groups uniting 4,500 firms. On 25 January, ITAR-TASS reported that Aleksandr Kazakov was appointed as the new head of the State Privatization Committee and as deputy prime minister. He was formerly the head of the department for territorial administration in the presidential apparatus. These developments appear to confirm that the conservative Soskovets will be filling the gap left by the departure of Anatolii Chubais. -- Peter Rutland METAL INDUSTRY DIRECTORS BACK YELTSIN. At a meeting of the Russian Metallurgy Committee on 24 January, the directors of 10 large steel and aluminum plants formed an initiative group to nominate Boris Yeltsin for president, Rossiiskaya gazeta reported the next day. However, metalworker trade union representatives refused to support the proposal and walked out of the meeting. Three candidates backed by the metalworkers' union were elected to the Duma on the Yabloko ticket. -- Peter Rutland FEDERATION COUNCIL WITHDRAWS CONSTITUTIONAL COURT SUIT. The Federation Council voted on 24 January to withdraw its request that the Constitutional Court determine whether the method of forming the Council was constitutional, Russian Public TV (ORT) reported. The previous Federation Council had filed the request on 9 December 1995. Some members of the old Council, who had been elected in December 1993 and did not necessarily hold local offices, objected to filling the Council ex officio with the executive and legislative heads of each of Russia's republics and regions. The Council also elected four deputy speakers, representing the four major regions of Russia: the Volga, Central Russia, Siberia, and the North Caucasus. -- Robert Orttung TRANSFER OF PARATROOPS STIRS CONTROVERSY. The State Duma, spurred on by ex-paratrooper Aleksandr Lebed, has appealed to President Yeltsin to overrule the Defense Ministry's recent decision to subordinate several elite Airborne Assault units to various military district commands, Ekho Moskvy reported on 23 January. General Mikhail Kolesnikov, the chief of staff explained that the four separate brigades would be transferred to the jurisdiction of the North Caucasus, Siberian, Transbaykal, and Far Eastern Military Districts. Two of Russia's five airborne divisions would also be subordinated to military districts rather than Moscow: the 76th to the Leningrad MD and the 7th to the North Caucasus MD. The three remaining divisions would stay as part of the strategic reserve. The move marks a significant step away from the highly-vaunted program to form Mobile Forces which were to be built around the airborne troops. -- Doug Clarke CHRISTOPHER DECLINES PRIMAKOV INVITATION. U.S. Secretary of State Warren Christopher has declined an invitation from his recently appointed Russian counterpart, Yevgenii Primakov, to visit Moscow for talks, Russian and Western agencies reported on 24 January. Citing Christopher's heavy travel schedule, the State Department expressed a preference for "a very brief meeting" with Primakov "in a third country." Christopher's decision hints at Washington's displeasure with recent actions by President Yeltsin, including the dismissal of several prominent liberals from his cabinet and the assault on Pervomaiskoe. Prime Minister Viktor Chernomyrdin is scheduled to visit Washington on 29-30 January. -- Scott Parrish PRIMAKOV ON REGIONS AND FOREIGN POLICY. In a meeting with representatives of Russia's 89 constituent regions, Foreign Minister Yevgenii Primakov suggested he will tighten central control over their foreign ties, Russian media reported on 24 January. Primakov was addressing a session of the ministry's Consultative Council of Russian Federation Subjects on International and Foreign Economic Relations, which was formed in December 1994. The council was ineffective under former Foreign Minister Andrei Kozyrev, but Primakov hopes to use it to limit international freelancing by regional elites, which sometimes contradicts federal government policy. -- Scott Parrish ESTONIAN-RUSSIAN BORDER TALKS RESUME. The latest round in the long- running Estonian-Russian border talks will open in Tallinn on 25 January, ITAR-TASS reported. The previous round ended on 21 December without reaching agreement (see OMRI Daily Digest, 22 December 1995). The main stumbling block in the talks concerns the status of the 1920 Tartu Treaty, which Estonia argues is still valid, while Russia refuses to recognize it. Accepting the boundaries specified in the treaty would mean transferring about 2,000 sq km of territory currently under Russian control to Estonia. However, Estonian diplomats say they want Russia to recognize as valid only those clauses of the treaty that recognize Estonian independence, not those demarcating the border, and insist that Estonia has no territorial claims on Russia. -- Scott Parrish DUMA SEEKS INCREASE IN MINIMUM WAGE AND PENSION. On 23 January, the Duma adopted on first reading bills raising the minimum wage and minimum pension from 63,250 rubles ($14) a month to 75,900 rubles ($17) as of 1 February, Russian media reported. The bill, sponsored by Duma Labor and Social Policy Committee Chairman Sergei Kalashnikov (LDPR), was severely criticized by Budget Committee Chairman Mikhail Zadornov (Yabloko), who described it as a populist measure that would only result in a new round of payments arrears. Kalashnikov admitted that the adoption of the bills contravened parliamentary procedure, which requires that such bills first be screened by the government and Pension Fund, but argued that the government is legally obliged to index these payments every three months, and the last indexation occurred on 1 November, Izvestiya reported on 25 January. -- Penny Morvant MINERS PICKET RUSSIAN GOVERNMENT BUILDING. Up to 1,000 miners began a three-day picket of the Russian government building in Moscow on 24 January to demand the payment of wage arrears and more support for the coal industry, Russian media reported. In an attempt to avert industrial action, Prime Minister Viktor Chernomyrdin had met with representatives of the Coal Industry Workers' Union on 23 January. According to Izvestiya on 25 January, Chernomyrdin ordered the Economics Ministry to pay the miners 400 billion rubles ($88 million) owed from 1995 and promised that $500 million in World Bank loans would be invested in socioeconomic programs for coal regions. The miners are still considering whether to call a national strike on 1 February. -- Penny Morvant GOVERNMENT OFFERS PARTIAL TAX HOLIDAY. President Yeltsin has signed a decree (no. 65) launching a new scheme to tackle the problem of tax arrears, Izvestiya reported on 25 January. Firms currently owe the federal government about 30 trillion rubles ($6.5 billion)--almost one third of the total taxes due in 1995. Under the new plan, devised by Anatolii Chubais before he left office, firms that meet their current tax payments on time will be allowed to reschedule their outstanding tax debt over two years. Critics argue that the plan gives too much discretion to tax inspectors and the regional governors who supervise their work. Many firms are not in a position to pay current taxes, and probably will not be eligible for the plan. Tax arrears are penalized by fines of 0.7% per day (20% per month). -- Peter Rutland NEW CHAIRMAN FOR SBERBANK. On 23 January, shareholders in Sberbank (Savings Bank), Russia's largest bank, elected 37-year-old Andrei Kazmin as its new chairman, Russian media reported the same day. Kazmin was formerly a Deputy Finance Minister. According to Kommersant-daily, Central Bank Chairman Sergei Dubinin wants to assert stronger control over Sberbank. The Central Bank owns 51% of Sberbank shares: no other owner holds more than 1%. Sberbank has been criticized for advancing credits to state enterprises at interest rates below the rate of inflation. -- Natalia Gurushina TRANSCAUCASIA AND CENTRAL ASIA AZERBAIJANI POPULAR FRONT MEMBERS SENTENCED. Twenty-one members of the Nakhichevan branch of the opposition Azerbaijani Popular Front who were arrested in August 1994 have been sentenced to a total of 208 years of imprisonment on charges of creating illegal armed formations, illegal possession of arms, and violence against members of the police, Turan reported on 24 January. Defense lawyers plan to appeal the verdict in a higher court. -- Liz Fuller KINKEL IN TBILISI. On a one-day visit to Georgia on 25 January, German Foreign Minister Klaus Kinkel said his country will provide an additional DM 20 million in aid to Georgia, mainly to support the energy sector, Western agencies reported. Kinkel said the aid is an acknowledgment of Georgian President Eduard Shevardnadze's role in bringing about German unification during his stint as Soviet foreign minister. He further pledged support for Georgia's territorial integrity but declined to mediate in the ongoing conflicts between the central government in Tbilisi and the breakaway regions of Abkhazia and South Ossetiya. -- Liz Fuller IRAN UPSET WITH TAJIK STATEMENT. Iran has rejected the Tajik government's accusations on 22 January that it is responsible, along with Pakistan and Afghanistan, for helping to train guerrillas "to terrorize the people of Tajikistan," Reuters reported. Iranian Foreign Ministry spokesman Mahmoud Mohammadi deplored Tajik President Imomali Rakhmonov's allegation that Iran is "teaching terrorist acts," according to the Iranian daily paper Salam on 24 January. Rakhmonov's comments came in response to the murder of Mufti Fatkhullo Sharifzoda on 21 January. -- Bruce Pannier [As of 1200 CET] Compiled by Victor Gomez The OMRI Daily Digest offers the latest news from the former Soviet Union and Central, Eastern, 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 Please note that there is a new procedure for obtaining permission to reprint or redistribute the OMRI Daily Digest. 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