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Vol 1, No. 66, Part I, 3 July 1997
Vol 1, No. 66, Part I, 3 July 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 *YELTSIN INSTRUCTS GOVERNMENT TO PAY WAGE ARREARS *MORE PROBLEMS ON "MIR" SPACE STATION *MEMBERS OF TAJIK RECONCILIATION COUNCIL APPOINTED End Note YEREVAN CONFERENCE HIGHLIGHTS DIFFERENT ECONOMIC PROSPECTS OF TRANSCAUCASIAN STATES xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA YELTSIN INSTRUCTS GOVERNMENT TO PAY WAGE ARREARS. At a 2 July meeting with Prime Minister Viktor Chernomyrdin, President Boris Yeltsin instructed the government to pay its debts to the armed forces within two months and all wage arrears to teachers, doctors, and other state employees within three months, Russian news agencies reported. Persistent wage arrears have prompted teachers, doctors, and communications workers to stage strikes in many regions. First Deputy Finance Minister Aleksei Kudrin estimated in May that wage arrears in Russia total 53.7 trillion rubles ($9.3 billion), ITAR-TASS reported on 16 May. Of that sum, he said, 11.2 trillion rubles are owed to workers by federal, regional, or local governments and the rest by non-state enterprises. Kudrin also said in May that the federal government would pay all its wage arrears to state employees by the end of July. NEW JUSTICE MINISTER SETS TASKS. Sergei Stepashin, a former director of the Federal Security Service, announced that as justice minister he will help bring Russian laws and legal procedures in line with European norms to comply with the country's obligations as a member of the Council of Europe, Russian news agencies reported on 2 July. However, he said this process could take between 10 to15 years. Stepashin also said he has already met with First Deputy Prime Minister and Finance Minister Anatolii Chubais to discuss financing for the Justice Ministry and court system. Chubais promised to do "all that is necessary" to provide the judicial branch with sufficient funds, Stepashin added. Supreme Court Chairman Vyacheslav Lebedev announced on 1 July that dozens of courts across Russia have been forced to suspend their activities for lack of funding from the federal government, ITAR-TASS reported. YELTSIN PLEDGES TO SUPPORT TULEEV, CHUBAIS TO SUPPORT COAL INDUSTRY. Yeltsin promised to support Kemerovo Oblast Governor Aman Tuleev during a 2 July meeting with the new governor, Russian news agencies reported. The same day, chairing a meeting of the interdepartmental government commission on social and economic problems of coal mining regions, First Deputy Prime Minister Anatolii Chubais said the government will allocate 300 billion rubles ($52 million) to the coal industry by 15 July. But he asked Tuleev to investigate the possible misuse of 180 billion rubles transferred to Kemerovo last year as part of a World Bank loan: "First the names and the punishment [of those responsible], then financial support from the center." Tuleev's press service called on Kemerovo trade unions not to go ahead with an oblast-wide strike planned for 11 July. Meanwhile, Yeltsin appointed former Kemerovo Governor Mikhail Kislyuk to head the Federal Service for Regulation of Natural Transportation Monopolies. MUTED REACTION TO NEW ACCUSATIONS AGAINST CHUBAIS. Neither First Deputy Prime Minister Chubais nor the government's press service has issued a statement on new accusations against Chubais published in "Izvestiya" on 1 July. The paper claimed, among other things, that the Center for the Protection of Private Property, founded by Chubais in early 1996, received an allegedly suspicious loan from Stolichnyi Bank (see "RFE/RL Newsline," 2 July 1997). Citing the U.S. journal "Demokratizatsiya," "Izvestiya" also said that the Russian Center for Privatization, which Chubais had long coordinated, received more than $100 million in recent years from international financial organizations. But a 2 July press conference held by that center's director-general, Viktor Pankrashchenko, was attended by only 15 or so journalists, none of them from television networks, RFE/RL's Moscow bureau reported. Pankrashchenko discussed his center's 1996 achievements and 1997 projects but declined to comment on the "Izvestiya" article. ONEKSIMBANK BEHIND "IZVESTIYA" ATTACKS? The formerly pro-government "Izvestiya" followed up its unprecedented attack on Chubais with a 2 July article by the same authors criticizing Menatep bank and its alleged government patrons, such as Central Bank Chairman Sergei Dubinin. Some analysts believe the new editorial line of "Izvestiya" is related to the recent election of Oneksimbank deputy chairman Mikhail Kozhokin as chairman of the newspaper's board of directors. In a 2 July interview with RFE/RL's Moscow bureau, Sergei Markov, senior associate of the Carnegie Moscow Center, suggested that Oneksimbank President Vladimir Potanin has turned against the government. Markov noted that Oneksimbank lost a bid to acquire the Sibneft oil company in May and more recently failed to install the head of an Oneksimbank affiliate on the Gazprom board of directors (see "RFE/RL Newsline," 30 June 1997). Potanin was first deputy prime minister from August 1996 to March 1997. MORE PROBLEMS ON "MIR" SPACE STATION. A malfunction in the gyrodines of the space station "Mir" is complicating its ability to draw power through its solar panels, international media reported. Deputy chief of Russian Mission Control Sergei Krikalev said on 3 July that the astronauts are using the station's rocket engines to realign the station's position but that "it presents no danger for either the station or the cosmonauts as we have enough fuel." The latest theory as to why a cargo ship crashed into "Mir" is that the cargo ship was overloaded and its breaking systems did not compensate for the additional weight as it docked with "Mir." Meanwhile, the cargo ship was allowed to enter Earth's atmosphere and burn up over the Pacific Ocean on 2 July. RUSSIA FAVORS LIFTING OIL EMBARGO ON IRAQ. Meeting on 2 July with a visiting Iraqi parliamentary delegation, First Deputy Prime Minister Boris Nemtsov said the Russian leadership advocates lifting the oil embargo on Iraq, providing that Baghdad "complies with all UN resolutions." He added that Russia will raise this issue with the UN Security Council in October, ITAR-TASS reported. Federation Council Chairman Yegor Stroev similarly told journalists on 2 July after talks with his Iraqi counterpart, Saadoun Hammadi, that the "question of lifting the embargo is justified," noting that it "had caused a sharp increase in infant mortality," Interfax reported. Russian State Duma speaker Gennadii Seleznev told the Iraqi delegation the previous day that "Russia has an economic interest in restoring ties with Iraq, and Russian businessmen are prepared to work with their Iraqi colleagues." AZERBAIJANI PRESIDENT IN MOSCOW. Heidar Aliev arrived in Moscow on 2 July on his first official visit since regaining power in Azerbaijan four years ago, Russian and Western agencies reported. Aliev told journalists on his arrival that "Azerbaijan has good relations with Russia" and that he hoped to sign a "soundly-based" bilateral treaty on friendship and cooperation as well as 12 other agreements. Aliev met on 2 July with Russian Prime Minister Viktor Chernomyrdin and discussed the export of Azerbaijan's Caspian oil via Russia and the legal status of the Caspian Sea. Aliev also held talks with Moscow Mayor Yurii Luzhkov and with Foreign Minister Yevgenii Primakov. CENTRAL BANK HEAD ON GOLD, HARD CURRENCY RESERVES, AUTHORIZED BANKS. Central Bank Chairman Sergei Dubinin has announced that as of 1 July, the Central Bank's gold and hard currency reserves had risen to $23.8 billion, compared with $15 billion at the beginning of 1997, RFE/RL's Moscow bureau reported on 2 July. He also said the Central Bank has discovered that two commercial banks authorized to handle state funds defrauded the budget of more than $400 million. Details about those banks, which he did not name, have been sent to the Procurator-General's Office for investigation, Dubinin added. Asked by RFE/RL to comment on the 2 July "Izvestiya" report saying he had used his connections to help Menatep gain permission to handle more state funds than any other bank, Dubinin avoided a direct answer, saying only, "As far as I know, in the rating of lobbyists [in the government] I come in last place." CHERNOMYRDIN CLAIMS ECONOMY IS GROWING. Attending a science awards ceremony in Moscow, Prime Minister Chernomyrdin announced on 2 July that GDP grew by slightly more than 1% in the first six months of 1997, Russian news agencies reported. Chernomyrdin did not say how that figure was calculated. The State Statistics Committee announced in June that GDP for the first five months of 1997 was down 0.2% from 1996 levels. In addition, cabinet officials recently said the government had revised its 1997 economic forecasts and was predicting a GDP decline of up to 2% for the year. Also on 2 July, Central Bank head Dubinin said inflation for the first six months of 1997 was 8.4%. But the State Statistics Committee estimated inflation for the first half of the year at 8.6%, down from 15.5% inflation during the same period in 1996, Interfax reported. CONSTITUTIONAL COURT STRIKES DOWN REPUBLICAN ANTI-CRIME LAW... The Constitutional Court has ruled that an anti-crime law in the Republic of Mordovia violates citizens' constitutional rights, ITAR-TASS reported on 2 July. The law allowed those suspected of belonging to organized criminal groups to be detained for up to 30 days without charges being brought against them. Yeltsin recently rescinded a 1994 anti-crime decree that allowed law enforcement agencies to detain some suspects for up to 30 days without filing charges (see "RFE/RL Newsline," 18 June 1997). ...AND REGIONAL LAW ON RESIDENCE PERMITS. Also on 2 July, the Constitutional Court struck down a Moscow Oblast law requiring new residents to pay a fee equivalent to 300 monthly minimum wages (more than 22.5 million rubles or $3,900) in order to receive a residence permit for the oblast, ITAR-TASS reported. The court found that the law violates citizens' constitutional right to live anywhere in the Russian Federation. Judges also said the law contradicts the constitution by imposing a regional tax not provided for by federal legislation. According to the weekly "Itogi" (no. 25), the Constitutional Court in March 1996 struck down a similar residence permit ("propiska") requirement imposed by the city of Moscow. The weekly commented that by ignoring the earlier Constitutional Court decision, the Moscow Oblast legislature had forced the court to consider the same case twice. GOVERNMENT SIGNS POWER-SHARING AGREEMENTS WITH SARATOV, VOLOGDA. Prime Minister Chernomyrdin has signed power-sharing agreements between the federal government and the administrations of Saratov and Vologda Oblasts, ITAR-TASS reported on 2 July. More than two dozen of Russia's 89 regions have signed similar agreements with federal authorities to obtain various economic and political privileges. Saratov Governor Dmitrii Ayatskov and Vologda Governor Vyacheslav Pozgalev were both Yeltsin appointees who easily won gubernatorial elections in their oblasts in fall 1996. TRANSCAUCASUS AND CENTRAL ASIA MEMBERS OF TAJIK RECONCILIATION COUNCIL APPOINTED. The 26 members of the Tajik Reconciliation Council have been named, RFE/RL corespondents in Dushanbe reported. The council has13 members from the United Tajik Opposition and 13 from the Tajik government. Among the government members are Deputy Prime Minister Basgul Dodikhudoyeva, First Deputy Parliamentary Speaker Abdumajid Dostiyev, presidential adviser Ibrahim Usmonov, and Minister of Labor Shukurjon Zuhurov. The UTO representatives include UTO leader Said Abdullo Nuri and chairman of the Democratic Party Juma Niyazov. The council will convene in Moscow on 7 July to elect a chairman from the UTO and a deputy chairman from the government. The question of a general amnesty will also be discussed. KAZAK PRESIDENT PROMISES PENSIONS WILL BE PAID. Nursultan Nazarbayev, speaking on national television and radio on 2 July, told pensioners all arrears will be paid by the end of 1997, RFE/RL correspondents in Almaty reported. On 1 July, a new system for paying pensions was launched whereby pensioners are to receive their benefits on the first day of the following month (meaning June pensions were to be disbursed on 1 July). Nazarbayev promised pensions would be paid regularly and without any delay, saying a special state board will make sure that local administrations do not use pension funds for other purposes, as has happened in the recent past. The president called on pensioners to be patient and not to take part in demonstrations or other protests. KYRGYZ PRESIDENT ON CUSTOMS UNION WITH RUSSIA, BELARUS, KAZAKSTAN. Askar Akayev told journalists in Bishkek on 2 July that the customs union between Russia, Belarus, Kazakstan, and Kyrgyzstan has not lived up to expectations owing to problems "between Russia and Kazakstan," RFE/RL correspondents and Russian media reported. He pointed out that Kazakstan has raised its customs tariffs without consulting other union members. Akayev said if the union functioned at its full potential, Kyrgyzstan could boost its trade turnover with Russia and Kazakstan by three or four times. He also noted that Kyrgyzstan's GDP grew by 5% in the first half of 1997 and said that, on the whole, the privatization process has been successful. BEREZOVSKII CONTINUES ABKHAZ SHUTTLE DIPLOMACY... Following talks on 1 July in Tbilisi with Georgian President Eduard Shevardnadze and parliamentary chairman Zurab Zhvania, Russian Security Council Deputy Secretary Boris Berezovskii flew to Sukhumi to discuss with Abkhaz President Vladislav Ardzinba unspecified proposals for resolving the Abkhaz conflict, Russian and Western agencies reported. Berezovskii flew back to Tbilisi on 2 July with proposals that Georgian Foreign Minister Irakli Menagharishvili characterized as "rather interesting," according to ITAR-TASS. After a second round of talks with Shevardnadze, Berezovskii returned to Sukhumi with Zhvania and Georgian Ambassador to Russia Vazha Lortkipanidze, "Nezavisimaya gazeta" reported on 3 July. Berezovskii said that the negotiations were "difficult" but that the main goal is to "move forward all the time." ...WHILE BATURIN WARNS AGAINST WITHDRAWING PEACEKEEPERS. Meanwhile, Russian Defense Council Secretary Yurii Baturin held talks in Tbilisi on 2 July with Shevardnadze and Georgian Defense Minister Vardiko Nadibaidze on military and economic cooperation, Russian and Western agencies reported. Baturin later told journalists that it is in the interest of both countries that Russia maintains its military bases in Georgia. Baturin said that the CIS peacekeeping force currently deployed along the border between Abkhazia and the rest of Georgia would be withdrawn after its mandate expires on 31 July if Georgia insists. But he warned that this could lead to a resumption of hostilities, Reuters reported. After discussing Georgia's claims to part of the Black Sea fleet with Nadibaidze, Baturin told journalists that the value of the former Soviet naval base at Poti far exceeds that of the vessels formerly stationed there, according to Interfax. IRAN PROTESTS MISTREATMENT OF ITS NATIONALS IN AZERBAIJANI PRISONS. The Iranian Foreign Ministry has formally protested to the Azerbaijani ambassador in Tehran about the alleged mistreatment of Iranians held in Azerbaijani jails, Western agencies reported, citing IRNA. An Iranian Foreign Ministry official claimed that three Iranians recently died as a result of ill treatment and that conditions in Azerbaijan's prisons do not conform with intern ational standards. END NOTE YEREVAN CONFERENCE HIGHLIGHTS DIFFERENT ECONOMIC PROSPECTS OF TRANSCAUCASIAN STATES by Michael Wyzan The American University of Armenia staged a conference in Yerevan in mid -June on "The Transcaucasus Today: Prospects for Regional Integration." Participants included officials and scholars from Armenia and Georgia, along with foreign specialists on the area. Officials were also invited from Baku, but they declined to attend. The Azerbaijani view was presented instead by Azeris living abroad and by Western scholars. The conference highlighted Armenia's frustration with what it perceives as a tilt in the West (and especially the U.S.) toward the Azerbaijani position on the Nagorno-Karabakh dispute--a shift that they blame on the attractiveness of Caspian Sea oil. Whatever the topic under discussion at the conference, the participants kept returning to petroleum--a subject that is obviously of great importance to Azerbaijan. Georgia will be the site of one or more pipelines carrying Azerbaijani oil. Since it enjoys good relations with Azerbaijan, Georgia need not sacrifice other national objectives to enjoy those pipelines' economic and other benefits. On the other hand, it is unlikely that Armenia would be the site of a pipeline carrying Caspian oil. The only way to convince Azerbaijan to agree to such a scenario would presumably be to return Nagorno-Karabakh to Azerbaijani sovereignty. Moreover, even if such a pipeline were built, Azerbaijan could always stop the flow of oil in response to a provocation or try to convince Armenia to change its position on an issue under discussion. World Bank economist Jonathan Walters argued that the large investments in infrastructure that the region urgently needs cannot be financed without substantial (private) foreign direct investment. He noted that reforming the state--including establishing judicial independence and appropriate regulation of natural monopolies--is pivotal to attracting investors in the infrastructure. Foreign investment and increased exports will gain in importance as the international financial institutions wean the Transcaucasian states from generous support for their fiscal and current account imbalances. Robert E. Ebel of the Center for Strategic and International Studies in Washington, D.C., noted that U.S. energy policy prioritizes reducing the country's dependence on Persian Gulf oil. That fact accounts for the U.S.'s recently awakened interest in the region. In the early 20th century, Great Britain dominated the concessions working Caucasian oil deposits. Ebel observed that oil wealth need not promote economic development; ins tead, it may result in arms races, corruption, large-scale consumer-goods imports, and the construction of show projects. The former USSR's concentration on exploiting oil and gas deposits in Russia--rather than those in Azerbaijan, Kazakstan, or Turkmenistan--has left a significant share of unexploited deposits in those new states. However, despite the growing interest in those deposits, Caspian Sea oil cannot replace Persian Gulf oil in terms of political risk, quantity, cost of production, or market access. Ebel expects that within ten years, Caspian Sea oil will account for only 3%-4% of world production. Andrei Illarionov of the Institute of Economic Analysis in Moscow noted that the Transcaucasian states suffered from the sharpest output declines in the Council of Independent States (CIS). However, economic growth resumed early, starting with Armenia (the first CIS member to experience positive growth) in 1994, followed by Georgia in 1995 and Azerbaijan last year. Inflation and budget deficits have fallen markedly in all three countries. Illarionov noted that inter-regional trade is below potential, although trade volumes between Georgia and the other two countries have recently risen significantly. The long-awaited oil and gas investment boom in Azerbaijan began in 1996, when it received 17% of gross domestic product in foreign direct investment. In the end, it seems pointless to lecture the Armenians--as many Western participants did--on the economic benefits of improved relations with their neighbors. Armenia (and Nagorno-Karabakh) would no more sacrifice their perceived national interests to share Azerbaijani oil wealth than Israel would withdraw from the Golan Heights in exchange for a similar promise from Iran or Saudi Arabia. Rapprochement between Armenia and Azerbaijan may be a distant prospect. Fortunately, technological advance has made such a rapprochement less cr ucial for Armenia's economic development than in the past. Today, a land-locked nation that has troubled relations with its neighbors but a highly skilled population and good connections with the outside world should be capable of enjoying rapid economic growth. For example, diamonds polished in Armenia, exported by air to Antwerp, are currently one of Armenia's largest exports. Once political and economic life is sufficiently stable, the prospects o f Diaspora Armenians and others investing in the creation of a local "Silicon Valley" are likely to be good. Such activity has already begun. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1997 RFE/RL, Inc. 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