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RFE/RL NEWSLINE Vol 1, No. 89, Part I, 6 August 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/ xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I *COMPANY LINKED TO ONEKSIMBANK WINS NORILSK NICKEL AUCTION *YELTSIN CONCERNED ABOUT ATTACKS ON NEMTSOV *THREE CANDIDATES REGISTERED FOR KARABAKH PRESIDENTIAL ELECTIONS End Note: THREE ZEROS TO GO OFF RUBLE BILLS xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA COMPANY LINKED TO ONEKSIMBANK WINS NORILSK NICKEL AUCTION. The closed joint-stock company Svift, which is affiliated with the Oneksimbank financial empire, on 5 August won an auction for a 38 percent stake in Norilsk Nickel. Svift's winning bid was for 236.18 million Ecus (about $250 million). The terms of the sale require the winner to invest an additional $300 million and also pay back a $170 million loan Oneksimbank extended to the government in November 1995. (In exchange for that loan, Oneksimbank gained management rights over the 38 percent Norilsk stake.) Within five business days after the deal is signed, Svift must transfer 400 billion rubles ($69 million) to Norilsk Nickel. Only one other bid was submitted for the stake, for 171 million Ecus. It is not yet known what companies were behind the losing bid. AUCTION GOES AHEAD DESPITE LAST-MINUTE PROTESTS. A six- member commission on 5 August decided to go ahead with the Norilsk auction despite a last-minute appeal from Prime Minister Viktor Chernomyrdin that the sale be postponed (see "RFE/RL Newsline," 5 August 1997). Five members of that commission-- representing Norilsk Nickel, Oneksimbank, the Oneksimbank affiliate International Finance Corporation, the Finance Ministry, and the State Property Committee--voted to conduct the auction as scheduled, while the commission member representing the Russian Federal Property Fund abstained, according to ITAR-TASS. The commission vote was expected to be closer after State Property Committee Chairman Alfred Kokh was reported to have agreed that the sale should be postponed. But State Property Committee Deputy Chairman Sergei Molozhavyi told ITAR-TASS that Kokh's committee and the Procurator-General's Office had in the end agreed that there were no legal grounds for postponing the auction. Chernomyrdin has not yet commented on the Norilsk sale. "KOMMERSANT-DAILY" ON HOW AUCTION WENT AHEAD. Citing unnamed sources in the State Property Committee, "Kommersant- Daily" reported on 6 August that on the morning of 5 August, Oneksimbank President Vladimir Potanin and State Property Committee Chairman Alfred Kokh met with Procurator General Yurii Skuratov and persuaded him that the Norilsk sale should go ahead as scheduled. (Prime Minister Chernomyrdin cited an appeal from the procuracy when he ordered the Norilsk sale to be postponed.) Following that meeting, Potanin reportedly brought a letter signed by Kokh and Skuratov to a secret meeting with Chernomyrdin. However, "Kommersant-Daily" noted that Oneksimbank's competitors are already planning to contest the Norilsk auction in court. Meanwhile, "Nezavisimaya gazeta" on 6 August slammed the machinations surrounding the Norilsk auction and charged that Chernomyrdin's subordinates in the government "ignored his orders." "Nezavisimaya gazeta" has sharply criticized Oneksimbank recently (see "RFE/RL Newsline," 29-30 July 1997). YELTSIN CONCERNED ABOUT ATTACKS ON NEMTSOV. President Boris Yeltsin on 6 August said he is concerned by the recent media attacks against First Deputy Prime Minister Boris Nemtsov, ITAR-TASS reported. The president expressed hope that there will be "no more pressure of that kind." Nemtsov has recently been criticized both by political opponents and by media outlets that had previously devoted mostly favorable coverage to him (see "RFE/RL Newsline," 29-31 July, 4-5 August 1997). Yeltsin returned to Moscow on 5 August, ending a four-week vacation in the Republic of Karelia and Samara Oblast. He has not yet commented on the Norilsk Nickel auction. He did not comment directly on the recent controversial auction of 25 percent plus one share of the telecommunications giant Svyazinvest, although First Deputy Prime Minister Anatolii Chubais told journalists that Yeltsin was satisfied with the way that auction was conducted. GOVERNMENT CONSIDERING STRENGTHENING STATE ROLE IN MANAGING ORT. The government is considering changes in how the state's 51 percent stake in the Russian Public Television (ORT) network is managed, Russian news agencies reported on 5 August, citing an unnamed government source. The source said the measures being considered would not involve personnel or programming changes at ORT, which broadcasts on Channel 1. ORT's news coverage has long been considered slanted in favor of the president and government. However, since the Svyazinvest auction, the network has broadcast sharp criticism of some government officials. Meanwhile, in an open letter published in "Nezavisimaya gazeta" on 5 August, ORT news director Andrei Vasilev responded to criticism of the network's news coverage voiced on 2 August by presidential spokesman Sergei Yastrzhembskii. Yastrzhembskii had accused ORT of ignoring important stories in its newscasts. ORT GENERAL DIRECTOR RUMORED TO BE ON THE WAY OUT. Rumors that ORT General Director Sergei Blagovolin will soon step down or be dismissed have again been circulating in Moscow following a recent meeting between Blagovolin and Prime Minister Chernomyrdin. ITAR-TASS reported on 5 August that Blagovolin, currently on vacation, has neither confirmed nor denied those rumors. An ORT spokesman quoted by "Izvestiya" on 6 August said Blagovolin has not resigned but did not rule out the possibility that he will step down soon. "Kommersant-Daily" on 6 August quoted Blagovolin as saying he had told the ORT board of directors that he would decide his future plans during his summer holiday. Blagovolin was appointed general director of ORT in March 1995, a few weeks before the network began broadcasting on Channel 1. During the last year, he has periodically criticized the network's news coverage, leading to numerous previous rumors of his impending departure. PROGRAM FEATURING ORT GENERAL DIRECTOR NOT AIRED ON CHANNEL 2. Nikolai Svanidze, chairman of the fully state-owned Russian Television (RTR) network that broadcasts on Channel 2, on 5 August decided not to air the latest edition of the program "Moment Istiny" (Moment of Truth), "Kommersant-Daily" reported on 6 August. That show featured an interview with ORT General Director Blagovolin, in which he criticized the way ORT is managed and said he believes the weekly analytical program hosted by ORT journalist Sergei Dorenko is "extremely destructive." The interview was recorded on 20 June, long before Dorenko's recent criticism of Oneksimbank and various government officials (see "RFE/RL Newsline," 28, 29 July 1997). Svanidze told "Kommersant-Daily" that he pulled the program because he did not want RTR to appear to be attacking ORT. "Moment Istiny" host Andrei Karaulov slammed what he described as a "political" decision not to air his program. GRACHEV EXPECTS NEW APPOINTMENT SOON. Former Defense Minister Pavel Grachev says Yeltsin recently told him that "your days of relaxation are coming to an end." In an interview published in "Komsomolskaya pravda" on 5 August, Grachev predicted that he will be appointed to a new post sometime this autumn. Asked whether he might become Russian ambassador to NATO, Grachev said such rumors had some foundation, adding that he would accept that post if it were offered to him. Yeltsin sacked Grachev in June 1996, two days after the first round of the presidential election. In June of this year, presidential spokesman Sergei Yastrzhembskii denied Russian media reports that Grachev was being considered for the ambassadorship to NATO (see "RFE/RL Newsline," 6 June 1997). ZYUGANOV ON OPPOSITION PLANS. Speaking to journalists in St. Petersburg, Communist Party leader Gennadii Zyuganov said the left opposition will again present the government with 11 demands, including the dismissal of First Deputy Prime Minister Chubais, RFE/RL's correspondent in St. Petersburg reported on 5 August. Communists first issued those demands last December as a condition for their support of the 1997 budget. Zyuganov confirmed that his party will lead nationwide protests this autumn demanding Yeltsin's resignation and changes in government policies. He also advocated changing the State Duma's rules to allow factions to revoke the mandates of deputies who were elected to the Duma on party lists (see "RFE/RL Newsline," 1 and 4 August 1997). Regarding recent criticism of Duma Speaker Gennadii Seleznev by Communist Duma deputy Vladimir Semago, Zyuganov said Semago should concentrate on investigating the accuracy of income declarations submitted by government officials. STRIKE BY VLADIVOSTOK MUNICIPAL WORKERS CONTINUES. Garbage continues to pile up in the streets of Vladivostok as a strike by municipal workers enters its third week, RFE/RL's correspondent in Vladivostok reported on 5 August. Mayor Viktor Cherepkov, who has blamed the protests on "political intrigues" (see "RFE/RL Newsline," 23 July 1997), still refuses to meet the strikers' demands, which include payment of wage arrears and a contract with the city on providing services. The municipal workers also have called on Cherepkov to resign. Primorskii Krai Governor Yevgenii Nazdratenko, a longtime bitter political foe of Cherepkov's, has now entered the fray. Nazdratenko recently invited representatives of the striking garbage collectors to sign a contract with the krai administration rather than with the Vladivostok authorities. Meanwhile, doctors and local health officials have warned of possible outbreaks of epidemics in Vladivostok if the garbage is not cleared away. RUSSIAN ROCKET LIFTS OFF. The Soyuz TM-26 spacecraft successfully lifted off from the Baikonur launch site on 5 August, according to Russian media. Cosmonauts Anatolii Solovev and Pavel Vinogradov are due to dock with the Mir space station on 7 August. Aboard the station, the two Russians and one American are still trying to repair an oxygen generating system which failed last week. Russian cosmonauts Vasilii Tsibliev and Aleksandr Lazutkin are scheduled to return to Earth on 14 August. On 20 August, Solovev and Vinogradov will attempt to make repairs on Mir's spektr module, which was damaged in a collision with a cargo ship on 25 June. The third man aboard Mir, U.S. astronaut Michael Foale, is scheduled to leave the space station in late September. MOSCOW TO EXPEDITE FUNDING FOR CHECHNYA. Russian Security Council Secretary Ivan Rybkin told Interfax on 5 August that Moscow will transfer 700 billion rubles ($120.7 million) in budget funds to Chechnya by the end of this year. Rybkin also said that millions of dollars worth of frozen Chechen assets would be released. Rybkin and Russian Prime Minister Chernomyrdin had discussed financing reconstruction in Chechnya on 4 August. Also on 5 August, Chechen Deputy Prime Minister Akhmed Zakaev flew to Moscow to prepare for a meeting between Yeltsin and Chechen President Aslan Maskhadov. No date has yet been set for that meeting. Chechen First Deputy President Movladi Udugov told ITAR-TASS that Maskhadov will propose signing a fully-fledged inter-state treaty between Russia and Chechnya and also will raise the issue of financial compensation, estimated at 1,500 trillion rubles ($25.8 billion), to Chechnya. CHECHNYA OPENS PERMANENT REPRESENTATION IN KAZAN. On 4 August Chechnya's permanent representative in Kazan, Umar Aiupov, met with Tatarstan's president Mintimer Shaimiev, RFE/RL's Kazan bureau reported citing Tatarstan Television. Shaimiev said that Tatarstan is ready to broaden mutually advantageous economic, technological and cultural ties with Chechnya, and advocated "the most extensive possible economic independence from the center." Tatarstan, which Shaimiev noted is "one of only 12 Russian regions that pay more into the state budget than they receive from the center in subsidies," has concluded an agreement with Moscow that the goods and services which it supplies to Chechnya will be considered as part of its tax obligation to Moscow. FOUR FRENCH AID WORKERS MISSING IN DAGESTAN. Police in Makhachkala have launched a search for four French aid workers who disappeared in the city on the evening of 2 August, Russian media reported on 6 August. "Nezavisimaya gazeta" on 6 August quoted unnamed Dagestani officials as expressing concern at a marked increase in violent crime, abductions and thefts of cattle in the regions of Dagestan that border on Chechnya and the alleged formation of a Chechen "fifth column" in Dagestan. The newspaper quotes OSCE officials in Chechnya as warning that the Chechen leadership is deliberately provoking a crisis in relations with Dagestan. UNIKOMBANK EXECUTIVE REAPPEARS. Unikombank deputy chairman Andrei Gloriozov has reappeared in Moscow after being missing for several days, "Kommersant-Daily" reported on 5 August. The paper said Gloriozov had been kidnapped on 30 July, along with his driver and a bodyguard. The three men were apparently released three days later, but "Kommersant-Daily" said there are conflicting stories as to whether the kidnappers were demanding a ransom of $17 million or compromising information on various bankers or state officials. It appears that no ransom was paid. Unikombank was at the center of a recent scandal involving alleged fraudulent use of government funds (see "RFE/RL Newsline," 4 August 1997). TRANSCAUCASUS AND CENTRAL ASIA IMF TEAM SAYS GEORGIA'S SOCIAL SAFETY NET "UNSUSTAINABLE." A team of experts from the International Monetary Fund (IMF) has told Georgian authorities that the country's social support system is "unsustainable" because it is not providing adequate protection to the most vulnerable, an RFE/RL correspondent in Washington reported on 5 August. The Georgian safety net currently costs the equivalent of about 3 percent of GDP (gross domestic product, the size of the economy) or about one-third of the state budget, but the standard monthly benefit level of 9.8 lari (7.70 dollars) is equal to only one- tenth the official minimum subsistence level. The IMF experts said that many people in Georgia have managed to maintain living standards at about subsistence levels with support from relatives and by depleting their assets which in the long term is "unsustainable". THREE CANDIDATES REGISTERED FOR KARABAKH PRESIDENTIAL ELECTIONS. On 5 August the Central Election Commission of the self- proclaimed Republic of Nagorno-Karabakh registered three candidates for the presidential elections to be held on 1 September, an RFE/RL correspondent reported from Stepanakert. They are the current Nagorno-Karabakh Foreign Minister Arkadii Ghukasyan, parliament speaker Artur Tovmasyan, and parliament deputy Boris Arushanyan. Acting president Leonard Petrossyan is not running as a candidate. Observers expect that the vote will be a race between Ghukasyan and Arushanyan. The post of president became vacant in March 1997, when incumbent Robert Kocharyan was appointed Prime Minister of Armenia. Kocharyan received a majority of more than 86 percent in the November 1996 presidential elections. The elections were not recognized as valid either by Azerbaijan or by the international community. His closest rival, Boris Arushanyan, polled 6.9 percent. CONFUSION OVER LUKOIL'S PARTICIPATION IN KYAPAZ/SERDAR. On 5 August the Russian Foreign Ministry issued a statement confirming that the Russian oil companies Rosneft and Lukoil have withdrawn from the contract they signed in early July with the Azerbaijani state oil company SOCAR to develop the Kyapaz (Serdar) Caspian oil field, ITAR-TASS reported. Turkmenistan had immediately protested that the oilfield in question lies in Turkmenistan's sector of the Caspian. On 31 July, a spokesman for Rosneft President Yuri Bespalov told Interfax Rosneft would withdraw from the contract. The "Financial Times" on 6 August, however, quoted a spokesman for Lukoil as saying that Lukoil will not withdraw. Also on 5 August, Iranian deputy foreign minister Mahmud Vaezi criticized the signing by Azerbaijan of four new major oil contracts with U.S. companies, AFP reported. Vaezi said the contracts "ignore the rights and interests of other countries" and risk precipitating a crisis in the Caspian region. JAILED KYRGYZ JOURNALIST RELEASED. The Kyrgyz Supreme Court on 5 August overturned a decision by a Bishkek municipal court and acquitted the editor of the Kyrgyz independent weekly newspaper "Res Publica," Zamira Sydykova, of slander charges, according to RFE/RL correspondents in Bishkek. Sydykova had been sentenced to 18 months in a prison colony after the head of the Kyrgyz state gold company, Dastan Sarygulov, filed suit charging several articles in Res Publica had slandered him. Sydykova was found guilty on 23 May and has been serving her sentence, doing janitorial work at the colony, since that time. KAZAKHSTAN PLANS TO INSTALL NUCLEAR REACTORS. The Kazakh government has approved a plan to install six nuclear reactors at its first nuclear power plant by the year 2030, according to a 5 August ITAR-TASS report. The new Russian-made VVER reactors will be installed at a power plant on the southern shore of Lake Balkhash. Kazakhstan is heavily dependent on Russian and Uzbek supplies of energy and is deep in debt to both countries as a result. The project is estimated to cost about $5 billion. JAPANESE TRAINING CENTER TO OPEN IN TASHKENT. The Japanese company "NEC" will open a communication's training center in the Uzbek capital of Tashkent, this October, ITAR-TASS reported on 6 August. The center will offer instruction by "highly qualified experts" from NEC in the use of modern communications equipment. NEC and Mitsiu Bissan are already helping Uzbekistan reconstruct its telephone exchange infrastructure. The Japanese company also has already established a similar center in St. Petersburg. END NOTE RUSSIA: THREE ZEROS TO GO OFF RUBLE BILLS By Stephanie Baker Declaring an end to the era of inflation, Russian President Boris Yeltsin on 4 August announced that the Central Bank will lop three zeros off the ruble next year with the introduction of a new ruble note. He also said that the bank will bring back the kopek, which will be one one-hundredth of a ruble. Analysts said Russia's decision to issue a new ruble note was a mostly cosmetic confidence building exercise. But they say it is significant for being the first time Russia will revamp its currency without wreaking havoc and robbing the population of hard-won savings. Starting January 1, 1998, the Central Bank is to issue new notes and coins, including a shiny new kopek, which will be used in parallel with the old bills for one year. An old 1,000 ruble note will be equal to a new 1 ruble note. By the start of 1999, the government plans to phase out use of the old notes, but old rubles can be exchanged for new notes until 2002. Yeltsin said in a nationwide address that over the last 50 years, monetary reform had hit the "common people" particularly hard. But now the government is determined to prevent any suffering. As he put it: "Nobody is going to lose anything as a result of the reform. Nobody's interests will be trampled on -- the reform will not amount to confiscation." By announcing plans to introduce the new bills a full five months in advance, the Central Bank hopes it will have enough time to persuade Russians not to panic. It has even set up a hot-line to field inquiries. During previous currency reforms in 1991 and 1993, many Russians lost their savings when they were forced to switch old notes for new ones virtually overnight. The government hopes to avoid the characteristic chaos this time by introducing the new notes gradually. In Yeltsin's words: "I want everyone to be well-prepared for it, so that there will be no haste or stress." After weathering hyperinflation and several botched attempts at monetary reform, most Russians hold their savings in dollars. On the streets of Moscow, most people greeted the announcement calmly, noting that the exchange rate to the dollar is unlikely to fluctuate. The reforms should slim down the average consumer's wallet by getting rid of worthless bills, such as the hated 100 ruble note. The new notes, which look almost identical to the rubles currently in circulation but minus three zeros, will be issued in five denominations: 5, 10, 50, 100, 500. Coins will be revived with the introduction of 1, 2 and 5 ruble denominations. Kopeks will be issued in 1, 5, 10 and 50 denominations. Central Bank Chairman Sergei Dubinin said the new notes would help boost public confidence in what he called a "new heavy and firm ruble." He added that redenomination would not affect Russia's monetary policy next year. Dubinin said the decision to introduce the new notes signals an end to inflation and the economic slump of years past. Once rampant inflation, which peaked in 1992, has been largely brought under control, with the government forecasting a 12 percent rate this year. Dubinin dismissed speculation that the cost of printing new notes would drain the Central Bank's resources or put added pressure on the government's cash-strapped budget. He said there is constant demand to replace old notes with crisp new bills, spurred by the proliferation of automatic teller machines. Pavel Teplukhin, an economist at Troika Dialog, said previous attempts at monetary reform had essentially amounted to a confiscation money from the population. As he put it: "This time people will not suffer." Others said the decision to knock of three zeros from the ruble only signals that the government has the muscle and confidence to stick to a stable ruble and low inflation. Rumors of a re-denomination first surfaced last February, but the government waited until now to announce the reforms, apparently cheered by upbeat news on the economic front and increased political stability. The move could give a boost to the government's economic reforms by removing inflationary expectations and persuading Russians to choose rubles over dollars, luring some of the so-called "mattress money" into ruble bank accounts. As Roland Nash, an economist at the Moscow investment bank Renaissance Capital, put it: "It should encourage people to hold their savings in rubles, which should free up some capital to invest in the real economy." The author is an RFE/RL correspondent based in Moscow. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1997 RFE/RL, Inc. 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