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RFE/RL NEWSLINE Vol 1, No. 69, Part I, 9 July 1997
Note to readers: the RFE/RL Web Site is providing detailed coverage of NATO's Madrid Summit from 8-9 July. News updates, analysis, and RealAudio are posted on the following page: http://www.rferl.org/nca/special/madrid-nato/index.html 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/ xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I *RUSSIAN OFFICIALS REPEAT OPPOSITION TO NATO EXPANSION. *YELTSIN EXTENDS DEADLINE FOR PAYING WAGE ARREARS *RUSSIAN SPOKESMEN DOWNPLAY AZERBAIJANI-TURKMEN OIL ROW End Note Chubais and His Clan Face Russian Reality xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA RUSSIAN OFFICIALS REPEAT OPPOSITION TO NATO EXPANSION. Following NATO's decision on 8 July to extend invitations to the Czech Republic, Hungary, and Poland to join the alliance, Russian officials repeated that Moscow is strongly opposed to NATO's plan to admit new members. Speaking in Moscow, Foreign Minister Yevgenii Primakov again said Russia considers NATO expansion "perhaps the biggest mistake since the end of the Cold War," Russian news agencies reported. Deputy Prime Minister Valerii Serov, who is heading the Russian delegation in Madrid, also confirmed that Russia has not altered its stance against NATO enlargement. Meanwhile, former Security Council Secretary Aleksandr Lebed told Interfax that he is not concerned about NATO expansion. Lebed argued that the Baltic States are unlikely ever to become NATO members. He added that "the rich and well-fed will never threaten the poor and the hungry." YELTSIN EXTENDS DEADLINE FOR PAYING WAGE ARREARS. President Boris Yeltsin interrupted his vacation in Karelia to issue a decree instructing the government to pay all debts to the armed forces within two months and all wage arrears to state employees by 1 January 1998, Russian media reported on 8 July. Yeltsin recently told Prime Minister Viktor Chernomyrdin that the government should pay back wages by 1 October (see "RFE/RL Newsline," 3 July 1997). The Finance Ministry estimates that wage arrears to state employees total 11 trillion rubles ($1.9 billion): 2.5 trillion to workers in the industrial sector and 8.5 trillion to "social" employees (including doctors and teachers). Government debts to soldiers and civilian personnel of the Defense Ministry totaled 4.2 trillion rubles at the beginning of June. Yeltsin pledged that the government will not resort to printing money to pay back wages, Interfax reported. CHERNOMYRDIN CRITICIZES FINANCE MINISTRY. Prime Minister Chernomyrdin on 8 July criticized the Finance Ministry for poor control over budget expenditures, ITAR-TASS reported. Chairing a meeting of a presidential commission on tax collection in Moscow, Chernomyrdin said that the Finance Ministry has been unable to ensure that budget funds are spent properly in the regions. Federal officials have frequently charged that regional and local leaders misappropriate federal funds, in particular those allocated to pay wages of state employees. First Deputy Prime Minister Anatolii Chubais, who is also finance minister, is a member of the commission on tax collection, but he recently began a three-week vacation and did not attend the commission's 8 July meeting. YELTSIN ISSUES DECREES ON OIL EXPORTS... Yeltsin on 8 July signed a decree changing the rules for oil exports, Interfax reported. The decree aims to improve tax collection from oil companies. According to First Deputy Fuel and Energy Minister Sergei Kirienko, oil companies that owe taxes will be required to automatically pay part of the proceeds from oil exports into the federal budget. Meanwhile, State Tax Service head Aleksandr Pochinok told journalists in Moscow that the oil companies LUKoil, Yukos, and Sibneft are complying with agreed schedules for paying off their tax debts, as is the automobile producer AvtoVAZ, ITAR-TASS reported. ...AND IMPLEMENTING PRODUCTION-SHARING AGREEMENTS. Another presidential decree issued on 8 July creates an interdepartmental government commission to oversee the implementation of production-sharing agreements. Under the 1995 law on such agreements, companies may invest in developing approved natural resource deposits in exchange for a percentage of the resources extracted in the future. First Deputy Prime Minister Boris Nemtsov, who is also fuel and energy minister, will head the new commission. SELEZNEV ELECTED DEPUTY CHAIRMAN OF OSCE PARLIAMENTARY ASSEMBLY. State Duma Speaker Gennadii Seleznev has been elected deputy chairman of the Parliamentary Assembly of the Organization for Security and Cooperation in Europe, ITAR-TASS reported on 8 July. He will hold that post for three years. Addressing the assembly on the final day of its annual session in Warsaw, Seleznev said the Russian parliament is opposed to "NATO-centrism" and also to attempts to make NATO the "bedrock of European security." Russian officials have repeatedly called for broadening the OSCE's role in European security matters. PLANNED TV PROGRAM ON RUSSIAN JOURNALISM PULLED FROM RTR. The state-run network Russian Television (RTR) has decided not to air a scheduled series of programs on journalism called "Chetvertaya vlast" (The Fourth Estate), RFE/RL's Moscow bureau reported on 7 July. The series was produced with funding from Internews, an U.S.-based non-government organization that promotes independent electronic media. The first show, which included segments on how Chechen rebels "won the information war" and whether journalism is compatible with espionage, was supposed to have its premiere on 29 June. It again failed to be broadcast on 6 July, even though the show's producers agreed to remove the segment on Chechnya at the network's request. Recently appointed RTR Deputy Chairman Mikhail Lesin, a founder and former top executive of the Video-International advertising firm, made the final decision to cancel the series, according to "Kommersant-Daily" on 8 July. FORMER DEFENSE MINISTER SUPPORTS ROKHLIN. Igor Rodionov says he supports State Duma Defense Committee Chairman Lev Rokhlin's plans to create an All-Russian Movement to Support the Army, Military Science, and Defense Industry, Interfax reported on 8 July. Rodionov, whom Yeltsin fired in May, said that while serving as defense minister he had concluded that "the country's political leadership is indifferent toward issues of the country's defense capacity." The new movement is to hold its first meeting on 9 July. Rokhlin recently issued an open appeal slamming Yeltsin's policies toward the military (see "RFE/RL Newsline," 25-27 June 1997). Although the appeal was sharply condemned by various top officials, the pro-government movement Our Home Is Russia delayed a decision on whether to expel Rokhlin until after the Duma's summer recess. BOMB KILLS TEN RUSSIAN POLICEMEN IN DAGESTAN. Ten Russian policemen were killed and several more seriously injured on 8 July when a remote-controlled bomb exploded as the bus in which they were traveling drove past, Russian media reported. Also on 8 July, five Chechens were forcibly abducted in North Ossetia from a Grozny-bound bus. Leading Chechen officials termed the kidnapping a provocation aimed at destabilizing the entire region and demanded the Chechens' immediate release. Chechen President Aslan Maskhadov said the abduction was intended to sabotage Chechen independence. He claimed that foreign intelligence services may have been involved in this and other recent incidents. A spokesman for the French organization Medicins sans Frontieres told Reuters on 8 July that a French aid worker was recently abducted in the Ingushetian capital, Nazran. RUSSIAN-SOUTH KOREAN TALKS YIELD RESULTS. The first session of the Russian-South Korean commission on trade, economics, science, and technology ended in Seoul on 8 July, Russian media reported. Agreement was reached on Russia's paying its debt to South Korea in raw minerals, helicopters, and military hardware. South Korea was also given the lease on 330 hectares of land in the Nakhodka free economic zone. More than 100 South Korean firms are expected to participate in the construction of a "technological park" producing electronic goods, foodstuffs and light-industrial products as well as processing lumber. Russia hopes other countries will join in the development of the zone, which is located close to Russia's deep-water port of Vostochnyi and is expected to eventually produce goods worth $2 billion each year. The second session of the talks starts on 9 July. PAKISTANI FOREIGN MINISTER IN MOSCOW. Gohar Ayub Khan met with Russian Deputy Prime Minister Vladimir Bulgak on 8 July, Russian media reported. Bulgak said Russia was anxious to receive repayments on the $180 million in loans made to Pakistan during the Soviet era. The two leaders also discussed possible Russian participation in energy projects and port construction in Pakistan. Khan later met with Russian Foreign Minister Yevgenii Primakov to talk about Afghanistan. Primakov said he hoped that Pakistan's involvement in Afghanistan would not be a repetition of the Soviet experience, noting it was impossible for one "force" to control the situation in that country. Khan asked for Russian help in mediating Pakistani-India problems and noted that the proximity of large forces along that border could spark a war involving nuclear weapons. RUSSIAN-IRANIAN NUCLEAR COOPERATION. Russia may supply Iran with two more VVER-1000 "light water" reactors in addition to the one that is to be provided for the first block of the Bushehr nuclear power station under a January 1995 agreement, ITAR-TASS reported on 8 July. Some 750 Russian specialists are currently engaged in construction work at Bushehr; the reactor is being assembled in Russia. The plant is scheduled to go on line in four years. Iranian Vice President Reza Amrollahi, who heads the country's atomic energy organization, told Iranian Television on 7 July that Iran is interested in expanding cooperation with Russia in the atomic energy sector, specifically in the construction of more nuclear power stations. He stressed these would be used exclusively for peaceful purposes. Russia and Iran recently signed an agreement on safety measures at Bushehr. ST. PETERSBURG WANTS TO CONDUCT EXPERIMENT IN ALTERNATIVE SERVICE. St. Petersburg Governor Vladimir Yakovlev says Defense Minister Igor Sergeev supports his proposal to create an experimental battalion in St. Petersburg for youths who refuse to perform military service, RFE/RL's correspondent in St. Petersburg reported on 8 July. More than 5,000 young men are registered as conscientious objectors in St. Petersburg. Although Article 59 of the constitution guarantees the right to perform alternative service, the State Duma has not yet passed a law on it. Under Yakovlev's proposal, youths participating in the experiment would serve for three or four years instead of the two years required for military service. They would live at home and work on city improvement projects or in hospitals. However, there are fears in St. Petersburg that the experimental battalion could become an "elite formation" for children of wealthy businessmen and influential officials. KALININGRAD TAKES OUT EXPERIMENTAL LOAN TO PAY TEACHERS. The Kaliningrad city legislature has voted to allow the city administration to borrow 6 billion rubles ($1 million) from the Kaliningrad oblast budget to pay teachers' wages and summer vacation benefits, ITAR-TASS reported on 8 July. A city-run sports complex will be the collateral for the loan. Although the Kaliningrad Oblast administration has loaned the city funds before, this is the first time officials have demanded that such a loan be guaranteed with city property. TRANSCAUCASUS AND CENTRAL ASIA ARMENIAN PRIME MINISTER ON RUSSIA, NAGORNO-KARABAKH, DOMESTIC POLITICS. Speaking at a press conference in Yerevan on 8 July to mark his first 100 days in office, Robert Kocharyan urged the expansion of cooperation with Russia, especially in the economic sphere, ITAR-TASS reported. Kocharyan said an Armenian delegation is currently holding talks in Moscow with Gazprom representatives on creating a joint company to export Russian gas to Turkey via Armenia. Kocharyan greeted Russian President Boris Yeltsin's proposal to set up a Russian-Armenian-Azerbaijani government commission to investigate Russian arms shipments to the Caucasus, Armenian agencies reported. Kocharyan also called for direct talks between Baku and Stepanakert on resolving the Nagorno-Karabakh conflict. He rejected the assertion by Yerevan Mayor Vano Siradeghyan that government ministers should be political figures, not professionals, arguing that this is appropriate for Western Europe but not for Armenia. AZERBAIJAN APPLIES FOR WTO MEMBERSHIP. Officials at the Geneva headquarters of the World Trade Organization said on 8 July that Azerbaijan has submitted a formal request to join the organization, according to Reuters. Negotiations on Azerbaijan's accession to the organization are likely to last at least two years, and Baku will be required to demonstrate a commitment to opening up its economy to foreign goods and services. Azerbaijan is the 13th former Soviet republic to request WTO membership. Only Turkmenistan and Tajikistan have not yet done so. RUSSIAN SPOKESMEN DOWNPLAY AZERBAIJANI-TURKMEN OIL ROW. Spokesman Igor Shabdurasulov told journalists on 8 July that the Russian government does not intend to take any action in response to Turkmenistan's demand for the annulment of a recent agreement between two Russian oil companies and the Azerbaijan state oil company SOCAR to explore the Kyapaz oil field. Ashgabat claims that the oil field lies in its sector of the Caspian Sea. Shabdurasulov said the two Russian oil companies, LUKoil and Rosneft, should decide on their own whether to suspend participation and what their obligations are to SOCAR and Turkmenistan. The Russian Foreign Ministry considers the Kyapaz deal "a purely commercial one," a spokesman told Interfax. TURKMEN AGRICULTURE MINISTER SACKED. President Saparmurat Niyazov signed a decree on 7 July relieving the Minister of Agriculture Pirguly Adayev as well as the governor and all local officials of Akhal Province of their duties, RFE/RL correspondents reported. Akhal Province, where the capital Ashgabat is located, is one of the country's two major grain producing regions. This year, the province will meet only 35 percent of its target figure for grain output Niyazov told the Akhal officials and the minister that they were fired because of incompetence, mismanagement, fraud, and nepotism. Official figures show Turkmenistan will meet only 50 percent of its target for grain in 1997. KAZAK DEMONSTRATORS PUNISHED. Two miners accused of organizing an unsanctioned demonstration in Karaganda in June to protest pension reforms (see "RFE/RL Newsline," 17 June 1997) have been put under "administrative arrest." according to ITAR-TASS on 8 July. Vladimir Karpov and Vyacheslav Sheigarchuk were sentenced to 15 and seven days in jail, respectively. The men were originally fined one month's pay, but the Karaganda town council subsequently decided to put them in jail. The miners' union says this is a clear violation of the due process of law because there was no court hearing. Miners object to the government's decision to raise the age at which they become eligible for pensions to 63. They note that few miners live to reach that age. KYRGYZ HUMAN RIGHTS ACTIVIST STILL IN JAIL. Tursunbek Akunov, the leader of the Kyrgyz Human Rights Movement, has been sentenced by a Bishkek court to 15 days in jail for organizing an unsanctioned meeting, RFE/RL correspondents reported on 9 July. Eleven other people arrested in connection with the demonstration were freed after receiving a warning from the same court. END NOTE Chubais and His Clan Face Russian Reality by Donald N. Jensen Yeltsin's recent government shakeup has been widely perceived as a major step toward economic reform. In its first 100 days, the new government has improved tax collection, proposed a simplified tax code, ordered public officials to disclose their financial holdings, and sought to reassert Kremlin control over independent-minded regional governors. While those are undoubtedly laudable goals, the shakeup also marks the continued consolidation of power by the driving force behind the new government--First Deputy Prime Minister Anatolii Chubais--and the financial-industrial oligarchy supporting him. That network includes banks such as Oneksimbank, Most, and Menatep; oil companies such as Yukos and Sidanko; and national media organs such as NTV, "Segodnya," and "Komsomolskaya pravda." The government shakeup follows a year of steadily increasing influence f or Chubais and his clan and has enabled him to gain the upper hand over other clans, informal political alliances, economic interest groups, and media organs that dominate Russian politics. Since the 1996 presidential elections, Chubais has chalked up several achievements. He was named head of the Presidential Administration and subsequently used his friendship with President Boris Yeltsin's daughter to control access to the president and depose arch-rivals former presidential bodyguard Aleksandr Korzhakov and former Security Council Secretary Aleksandr Lebed. He took advantage of Yeltsin's illness last fall to strengthen his relations with key businessmen. And he used his connections in the West and with international financial institutions to ensure money flows to the cash-starved government. Despite those successes, Chubais's preeminence is not unchallenged. Ther e is considerable overlapping of interests among elite clans, and alliances are constantly shifting. Two competing clans, moreover, continue to pose a threat. On the one hand, Prime Minister Viktor Chernomyrdin's clan favors maintaining significant state ownership over the country's large natural monopolies--gas, electricity, and railroads--and rebuilding Russia's high-technology sector. Key clan members are the Gazprom, Rosneft, and LUKoil companies, the banks Imperial and Inkombank, and Deputy Prime Minister and Interior Minister Anatolii Kulikov. On the other hand, Moscow Mayor Yurii Luzhkov's clan favors increased government financing of the regions and domestic industries. Its clout rests on the city's interests in virtually every major business and real estate enterprise in the capital as well as its widespread investment in other regions in the Russian Federation. Largely because of those ties, Luzhkov has good relations with other members of the Federation Council, many of whom oppose Chubais's efforts to reduce the authority of regional leaders. Chubais is also confronted with other problems that may ensure his domin ance is short-lived. First, divisions may be emerging among his supporters. Industrialist and Deputy Security Council Secretary Boris Berezovskii and Oneksimbank President Vladimir Potanin, both firmly in the Chubais camp for the past year, waged a public battle for control over Sibneft in May. Tensions are also reported between Berezovskii and media mogul Vladimir Gusinskii, another Chubais ally. Moreover, Chubais is also not assured of continued backing by First Deputy Prime Minister Boris Nemtsov, who has presidential aspirations and an independent political base. Second, the implementation of Chubais's economic program has run into st iff opposition from the natural monopolies. For example, although the government abolished an agreement giving the Gazprom management a permanent proxy vote on the state's 40% shareholding and ordered a reorganization of the state regulatory commission, it has been unable to force Gazprom to yield its monopoly on pipelines. The new government's rhetoric has already begun to change: after his mixed success battling with Gazprom, Nemtsov praised the preservation of the state's role in managing that firm. Third, as he recovers from his health problems, Yeltsin--whose usual sty le has been to strike a balance between his lieutenants to prevent any one side from gaining too much power--has shown signs that he is reserving the right to rein in Chubais. Chubais's move from the Presidential Administration to the government, where he is politically exposed, could give Yeltsin the room for maneuver to reduce Chubais's role should government policies become too unpopular. It is very doubtful that the rise of the Chubais clan is an unalloyed vi ctory for "reform." In May, the Finance Ministry again requested "competitive" bids from commercial banks for the right to grant government guaranteed loans to the state on extremely favorable terms. The winners were banks supporting Chubais; the rules governing the bidding ensured opponents never had a chance. Chubais also sided with bankers pressing for permission from the Central Bank to act as share dealers in 1998, when new stock market regulations go into effect. For the West, too, there are perils. The recent Harvard aid scandal show ed how foreign assistance, in this case favoring a group close to Chubais, almost inevitably becomes entangled in Russia's clan wars. Russian foreign-policy decisions--such as how to transport Caspian oil--also tend to reflect the agenda of whatever clan is dominant at any given moment, rather than national interests. Most important, it is unclear how the growing concentration of wealth in a few hands, unregulated by the rule of law, will further the development of a democratic state, which, as Chubais's clan stresses, Russia so desperately needs. The author is associate director of RFE/RL's Broadcasting Division. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1997 RFE/RL, Inc. 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