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Vol 1, No. 13, Part I, 17 April 1997
Vol 1, No. 13, Part I, 17 April 1997 This is Part I of Radio Free Europe/Radio Liberty's Newsline. Part I is a compilation of news concerning Russia, Transcaucasia and Central Asia. Part II, covering Central, Eastern, and Southeastern Europe, is distributed simultaneously as a second document. Back issues of RFE/RL NewsLine are available through RFE/RL's WWW pages: http://www.rferl.org/newsline/search/ Back issues of the OMRI Daily Digest are available through OMRI's WWW pages: http://www.omri.cz/ xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I * FEDERATION COUNCIL DELAYS DECISION ON TROPHY ART LAW * CHUBAIS SAYS "MONSTROUS" CRISIS FORCES REVISION OF BUDGET * MORE FALLOUT FROM "YEREVANGATE" ARMS SCANDAL xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA FEDERATION COUNCIL DELAYS DECISION ON TROPHY ART LAW. The Federation Council has decided to use written ballots in the vote on the law on cultural valuables, thereby delaying a decision on the controversial legislation, RFE/RL's Moscow bureau reported yesterday. According to the unusual voting procedure, ballots will be distributed to deputies who did not attend yesterday's session and the final tally will be announced sometime next month. Although Russian commentators believe the Federation Council is likely to override President Boris Yeltsin's veto of the law, the delay spares Yeltsin a potentially embarrassing scandal during his three-day visit to Germany. Yeltsin arrived yesterday in Baden- Baden, where he is to hold talks with German Chancellor Helmut Kohl and receive an award from a German media organization. CHUBAIS SAYS "MONSTROUS" CRISIS FORCES REVISION OF BUDGET. First Deputy Prime Minister Anatolii Chubais has announced that the 1997 budget must be substantially revised because of a "monstrous" crisis, RFE/RL's Moscow bureau reports. Addressing the Federation Council today, Chubais said the budget exceeds the state's means by 100 trillion rubles ($17.4 billion). He noted that revenues during the first quarter of this year totaled only 57% of government targets and that tax collection was only at 39% of budgeted levels. The government is expected to submit a revised budget to the parliament this month, but the sharp proposed cuts in non-essential spending are likely to meet with strong opposition. Chubais said that despite the revision, the government will still be able to pay all pension arrears by 1 July. MINIMUM PENSION INCREASE APPROVED. By a vote of 99 to 16, the Federation Council has approved a law that would raise the minimum monthly pension by 13% to 78,620 rubles ($14) beginning on 1 March. Pension Fund head Vasilii Barchuk urged deputies before the ballot not to pass the law, saying the extra expenditures could not be financed. Deputy Prime Minister Oleg Sysuev told ITAR-TASS yesterday that the measure would index debts rather than pensions. Yeltsin is likely to veto the law. Meanwhile, the Federation Council has decided to vote on the law on the government (see RFE/RL Newsline, 15 April 1997) using the same written ballot procedure adopted for the trophy art law. ANOTHER CONSTITUTIONAL COURT NOMINEE REJECTED. The Federation Council has rejected the candidacy of presidential legal adviser Mikhail Krasnov, whom Yeltsin nominated to the Constitutional Court last week, RFE/RL's Moscow bureau reported yesterday. Yeltsin tried twice in 1994 to appoint Krasnov to the court but was stymied by the council. Last month, the upper house refused to confirm Mikhail Fedotov, Yeltsin's first choice to fill the latest vacancy in the court. While Yeltsin searches for a new nominee, the court will function with 18 rather than 19 judges. NEW CABINET APPOINTMENTS. Yeltsin has named Aleksandr Pochinok, until now chairman of the State Duma subcommittee on taxes, to head the State Tax Service, Russian news agencies reported yesterday. Pochinok belongs to the Russia's Democratic Choice party of Yegor Gaidar and Anatolii Chubais. Yeltsin has also appointed Mikhail Fradkov to head the Foreign Trade Ministry. Fradkov has been acting foreign trade minister since Oleg Davydov was removed in last month's cabinet reshuffle. In addition, Yeltsin created an advisory Presidential Economic Department, which will be supervised by former finance minister and current presidential adviser Aleksandr Livshits. DUMA LIMITS TV COVERAGE OF ITS WORK. The State Duma has voted by 264 to 30 to bar TV journalists from filming in the Duma chamber, ITAR-TASS reported yesterday. Instead, the Duma's press service will release videotapes of parliamentary sessions to TV networks. Duma Information Committee Chairman Oleg Finko of the Liberal Democratic Party of Russia, who proposed the measure, said the new rules would allow voters to watch "unbiased information" about the Duma's work. The major TV networks generally portray the parliament in an unfavorable light, and opposition deputies have long complained of media bias. In March, the Duma stripped journalists from state-controlled Russian Public Television (ORT) of their accreditation for one month. ORT appealed to the Supreme Court, which ruled that the Duma's ban was illegal. CHECHNYA CREATES SPECIAL TASK FORCE TO SEARCH FOR HOSTAGES. The Chechen Interior Ministry has created a 20-strong force tasked with searching for abducted persons, Russian agencies reported yesterday, quoting Interior Minister Kazbek Makhashev. The force's top priority will be to locate the four journalists from Radio Rossii and ITAR-TASS who were abducted in Grozny on 4 March. Meanwhile, Russian Security Council Secretary Ivan Rybkin said former Chechen Security Department head Abu Movsayev's warning of terrorist attacks on eight Russian cities on 21 April--the first anniversary of the death of Chechen President Dzhokhar Dudaev--was a "provocation." Rybkin also said that a peace accord between Moscow and Chechnya is "almost ready," AFP reported. ZYUGANOV SEEKING ALLIANCE WITH LEADERS OF NATURAL MONOPOLIES. Communist Party leader Gennadii Zyuganov says his party is joining forces with leaders of the natural monopolies in the energy and transportation sectors to oppose the government's restructuring plans, RFE/RL's Moscow bureau reported. Zyuganov said the policies pursued by "radical reformers" would lead to Russia's disintegration. He added that he has spoken with many regional leaders who share his concerns. Zyuganov also claimed that the government has a "secret plan" to dissolve the Duma and to make economic restructuring irreversible during the few months before new parliamentary elections would have to be held. Duma deputy Viktor Sheinis of Yabloko told RFE/RL that a Communist alliance with the heads of Russia's natural monopolies would probably alienate the more hard-line communists in Zyuganov's camp. GOVERNOR DEFENDS NATURAL MONOPOLIES. Sverdlovsk Oblast Governor Eduard Rossel says the gas monopoly Gazprom, the electricity giant Unified Energy System, and the railways network should not be restructured "under any circumstances," ITAR-TASS reported yesterday. At the same time, he called on the natural monopolies to cut their tariffs by one-third. Earlier this week, Rossel advocated restoring the Ministry of Defense Industry to provide state planning and protection for Russia's military-industrial complex. That ministry was abolished last month and its responsibilities transferred to the Economics Ministry. Kommersant-Daily suggested on 15 April that Rossel may be seeking to revive the Ministry of Defense Industry so that he can join the government as head of the ministry. RUSSIA SIGNS PROTOCOL ON ABOLISHING DEATH PENALTY. Russia has signed Protocol 6 of the European Convention on Human Rights, which outlaws capital punishment, Reuters reported yesterday, citing a statement released by the Council of Europe. Russia agreed to abolish the death penalty within three years when it joined the Council of Europe in February 1996, and Yeltsin ordered the Foreign Ministry to sign the protocol earlier this year. However, the measure is unlikely to be ratified by the parliament. Last month, the Duma voted against a moratorium on the death penalty. RUSSIA TO LAUNCH MORE EUROBONDS. First Deputy Finance Minister Aleksei Kudrin says that within the next few months, Russia will float its third Eurobond issue, which will be denominated in dollars, ITAR-TASS reported yesterday. Kudrin said two or three more Eurobond issues will be launched by the end of the year. Russia launched its first $1 billion issue of Eurobonds last November and floated its second issue, worth 2 billion German marks ($1.18 billion), in March. Meanwhile, Central Bank Chairman Sergei Dubinin announced on 15 April that the governments of Moscow, St. Petersburg, and Nizhnii Novgorod Oblast are likely to issue Eurobonds this year, ITAR-TASS reported. Yeltsin issued a decree earlier this month allowing the three regions to issue Eurobonds to cover up to 30% of their annual revenues. RUSSIA REFUSES TO PROMISE NOT TO CHANGE TRADE RULES. The Russian delegation at talks with the World Trade Organization in Geneva has refused to promise not to toughen trade rules while Russia is negotiating to join the WTO, according to ITAR-TASS yesterday. Deputy Foreign Trade Minister Georgii Gabuniya said Moscow hopes to maintain "stability" in its trade legislation but cannot rule out the need to enact changes in the future. The U.S., Canada, Japan, and the EU asked Russia to proclaim a "standstill" on trade rules on 15 April, Reuters reported. Russia applied for WTO membership in 1993. TRANSCAUCASUS AND CENTRAL ASIA MORE FALLOUT FROM "YEREVANGATE" ARMS SCANDAL. Zahid Garalov, head of an Azerbaijani parliamentary delegation in Tibilisi to discuss Russian arms shipments to Armenia via Georgian territory, told a press conference yesterday that the arms transfers were sanctioned by Georgian Defense Minister Vardiko Nadibaidze, a close associate of former Russian Defense Minister Pavel Grachev. The Armenian news agency Turan quoted Garalov as saying the weaponry included "tactical missiles of the P-17 complex," which can carry chemical or nuclear warheads. Nadibaidze, for his part, told the Azerbaijani ambassador in Tbilisi that he shared Azerbaijan's concern, Nezavisimaya gazeta reports today. Meanwhile, the Russian State Duma has approved a resolution demanding more stringent state control over arms sales abroad, ITAR-TASS reported yesterday. ABKHAZIA CUTS POWER SUPPLIES TO GEORGIA. Abkhaz President Vladislav Ardzinba on 15 April ordered power supplies to Georgia to be cut off in retaliation for Tbilisi's decision the previous day to re-route all telephone communications from Abkhazia to Russia via Tbilisi, ITAR- TASS reported. Georgian Minister of Communications Pridon Indjia said his country's decision was in accordance with international agreements. An Abkhaz government statement denied this was the case, saying the move was a violation of human rights and could jeopardize further peace talks. ARMENIA, TURKMENISTAN, IRAN SIGN MORE COOPERATION AGREEMENTS. The foreign ministers of Armenia, Turkmenistan, and Iran have signed memoranda on cooperation in trade, transport, banking, and energy and gas supplies and on tourism, ITAR-TASS reported. The three leaders met yesterday in Yerevan. It was the sixth such meeting in two years on expanding trade and economic cooperation between the three countries. Iranian Foreign Minister Ali Akbar Velatyati said "the doors to this cooperation are open to other countries." The Chinese Ambassador to Armenia also attended the meeting, Noyan Tapan reported. KAZAKSTAN WANTS COSSACKS AWAY FROM ITS BORDER. Kazakstan has lodged an official protest with Moscow over the inclusion of Cossacks in Russian formations guarding the countries' common border, Reuters reported yesterday. Kazakstan's Foreign Ministry expressed "serious concern" about what it called the "experiment" by the Russian Federal Border Guards. A spokesman for the border guards said the formations were made up of volunteers and that not all those volunteers are Cossacks. He added that while the formations are currently unarmed, that may soon change because of "irregularities" in the region, particularly drug smuggling. TAJIK SECURITY FORCES STORM PRISON. Tajik security forces have stormed a prison in the northern city of Khujand where more than 100 inmates seized control earlier this week, RFE/RL correspondents in the area report today. Initial reports indicate as many as 40 people have died in the security force attack, although officials in Dushanbe are saying no blood has been shed. Some 800 people are currently being held in the prison, which is intended to accommodate only 300. On 15 April, the rebel inmates took four guards hostage to demand trials for those not yet sentenced and hospitalization for those seriously ill. They are also opposed to any prisoners being moved to the southern part of Tajikistan, where prison conditions are reported even worse. Rumors that some inmates would be moved to the south sparked the revolt. Sky Cloudy for Russian Defense Industry by Simon Saradzhyan Despite record export sales, the Russian defense industry fears that output will continue to fall in 1997, along with already meager state subsidies. The industry is regretting the loss of its main defender and lobbyist, the Ministry of Defense Industry Ministry, or Miniboronprom, which was disbanded earlier this year as part of the cuts in the federal government. Its responsibilities were transferred to an expanded Ministry of Economics. Former Minboronprom official Yurii Chervakov says there is a widespread feeling that the crisis cannot be overcome in the near future. But why is Russia's massive defense industry plunged into gloom when overseas sales are booming? A dramatic expansion of arms sales is expected to provide the equivalent of U.S. $4 billion this year. Chervakov explains that domestic business has dried up, and that is hitting hard the many non-export defense enterprises. Even in cases where it is still placing orders with enterprises, the Russian military ends up paying for less than half of the equipment it actually receives. Tens of thousands of defense industry workers have gone without wages for months, and the number of defense enterprises has shrunk more than three-fold in the last few years. Today, there are only 500 such enterprises. Even those companies that have converted their production to civilian goods are troubled. Last year, they saw their output fall by 24%, as they could not compete against cheap imports. Official figures show that Russia has cut its military spending from 7.9% of gross domestic product in 1990 to the current 3.7%. Chervakov and other former Minoboronprom officials say they are pessimistic about the government's recent promises to pay wage arrears and to increase funding for 1997 defense orders. Those orders include contracts for military research and development, design, construction, production, and arms purchases. The government managed to fund only half of last year's orders. The state is so impoverished that it is currently funding construction of only one prototype of each type of advanced weaponry in its arms development program. That program is intended to revamp the Russian military's aging arsenal by the year 2005. Chervakov says he believes Minoboronprom's demise will disrupt sweeping defense industry reforms that were planned and partly implemented by Miniboronprom. The former ministry wanted to unite more than 320 defense production facilities, research institutes, and design bureaus into 30 state-controlled corporations. He said that at least five such conglomerates have been set up but that prospects for further consolidations now seem dim. He also said the Ministry of Economics will find great difficulty in taking over many aspects of defense equipment procurement because of a lack of specialists. Of course, not all analysts paint such a gloomy picture as the Miniboronprom experts. Yaroslav Lisovolik of the Russian- European Center for Economic Reforms offers a different perspective. He expects the government to allocate enough resources to preserve advanced technologies until an economic recovery enables it to support full military production. According to the Economics Ministry, the country will be able to resume spending 5.5% of GDP on the military by early next century. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1997 RFE/RL, Inc. 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