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RFE/RL NEWSLINE Vol 1, No. 131, Part I, 3 October 1997
A daily report of developments in Eastern and Southeastern Europe, Russia, the Caucasus and Central Asia prepared by the staff of Radio Free Europe/Radio Liberty. This is Part I, a compilation of news concerning Russia, Transcaucasia and Central Asia. Part II covers Central, Eastern, and Southeastern Europe and is distributed simultaneously as a second document. Back issues of RFE/RL NewsLine and the OMRI Daily Digest are online at RFE/RL's Web site: http://www.rferl.org/newsline RUSSIAN MEDIA EMPIRES. Government and business entities control many major Russian media. This special report on the RFE/RL Web site lists the important players. http://www.rferl.org/nca/special/rumedia/index.html xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I * YELTSIN WARNS DUMA * RUSSIA WANTS APOLOGY FROM GROZNY * ARMENIA SLASHES 1997 BUDGET EXPENDITURES End Note MORE PRIVATIZATION REVERSALS TO COME? xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA YELTSIN WARNS DUMA. President Boris Yeltsin warned State Duma deputies in a nationwide radio address on 3 October that "the people's patience, the president's patience is not limitless," RFE/RL's Moscow bureau reported. Yeltsin again assailed the lower house of the parliament for rejecting government-backed reductions in social benefits and for passing a land code that does not allow the purchase and sale of farmland (see "RFE/RL Newsline," 30 September 1997). Yeltsin also accused the Duma of undermining Russia's prestige by "intruding" on foreign policy issues, ITAR-TASS reported. He concluded that the Duma "must work for the good of Russia," because "it is too expensive a luxury for the people to pay for your irresponsibility." Yeltsin's address came on the anniversary of the day in 1993 that he ordered tanks to shell the opposition-dominated parliament, which he had previously sought to disband by decree. ZYUGANOV DECRIES "BLACKMAIL." Communist Party leader Gennadii Zyuganov slammed Yeltsin's radio address as a "confrontational ultimatum" that seeks to "blackmail" the Duma before deputies consider the draft 1998 budget, Reuters reported on 3 October. Zyuganov charged that Yeltsin's government "is utterly bankrupt-- financially and intellectually." He vowed, "We will not vote for this budget." In an open letter to Yeltsin published in "Sovetskaya Rossiya" on 2 October, Duma Security Committee Chairman Viktor Ilyukhin, a leading Communist, criticized the president's "cynical" practice of criticizing the Duma generally and opposition deputies personally. Some Russian media have speculated that confrontation this fall over the 1998 budget may eventually lead to the Duma's dissolution. In addition, some newspapers, including the popular weekly "Argumenty i fakty," have recently published articles charging that the Duma deputies have too many expensive privileges and perks, which allegedly cost taxpayers 125 million rubles ($21,300) a month per deputy. RUSSIA WANTS APOLOGY FROM GROZNY. Russian Security Council spokesman Igor Ignatev told journalists on 2 October that the Russian representation in Chechnya will return to Grozny only after the Chechen leadership has formally apologized for their expulsion. Vice president Vakha Arsanov ordered the 80 representation staff members to leave Chechnya on 30 September, but President Aslan Maskhadov and Russian Deputy Premier Ramazan Abdulatipov agreed the next day they should return (see "RFE/RL Newsline," 1 and 2 October 1997). Ignatev predicted that it will be "extremely difficult" to restore the mutual trust that evolved during the negotiating process. Abdulatipov, however, told NTV that he still thinks it is possible "to find common viewpoints." RUSSIA DENIES SUPPLYING ARMENIA WITH MEDIUM-RANGE NUKES. Russian Foreign Ministry spokesman Valerii Nesterushkin told journalists on 2 October that Russia has not supplied Armenia with medium-range missiles capable of carrying nuclear warheads, Interfax reported. Nesterushkin said Russia destroyed its medium and short-range nuclear missiles by May1991 in accordance with the INF treaty. Azerbaijani Foreign Minister Hasan Hasanov had claimed in September that Russia supplied Armenia with such missiles. Also on 2 October, Hasanov delivered a protest note to the Russian ambassador in Baku, Turan reported. The note listed 14 Russian- Armenian agreements on military cooperation that, Hasanov argued, constitute a "military union" between the two countries. Hasanov called for a moratorium on ratifying the Armenian-Russian friendship and cooperation treaty, signed in late August, pending a solution of the Karabakh conflict. RUSSIA-IRAN UPDATE. A spokesman for Russia's Federal Security Service (FSB) told ITAR-TASS on 2 October that the FSB has intercepted unnamed persons who were attempting to supply Iran with technology for producing nuclear missiles. The previous day, Iranian ambassador to Moscow Mehdi Safari told a news conference that the "rumors about Iran's desire to use Russian technology for production of nuclear weapons are totally groundless," according to Interfax. But Reuters on 2 October quoted an Israeli intelligence source as confirming that Russian nuclear technology continues to be transferred to Iran with official approval. Meanwhile, Yeltsin on 1 October denounced U.S. criticism of the $2 billion gas deal concluded several days earlier by Gazprom, France's Total, Malaysia's Petronas and the National Iranian Oil Company. Yeltsin said Russia, France, and Iran "are independent and freedom-loving countries. No other country should dictate to them what documents to sign," Interfax reported. CHERNOMYRDIN IN NETHERLANDS. Addressing the parliament of The Netherlands on 2 October, Prime Minister Viktor Chernomyrdin again reaffirmed Russia's disapproval of NATO expansion and argued that NATO should be transformed into less of a military and more of a political organization. Chernomyrdin later told financial and business representatives that attracting more Dutch investment is a "pressing issue" for Moscow. He urged his listeners to "lose no time" in investing, particularly in the energy, transport, and food storage sectors. He also confirmed that Moscow plans to repay in full its $510 million debt to The Netherlands. The previous day, Chernomyrdin had met with his Dutch counterpart, Wim Kok, to discuss cooperation and security in Europe and bilateral trade and economic issues. "KOMSOMOLSKAYA PRAVDA" BLASTS CHERNOMYRDIN. "Komsomolskaya pravda" on 2 October accused Chernomyrdin of violating a presidential decree in order to provide government loan guarantees for a satellite television project connected to Vladimir Gusinskii's Media-Most company. In June 1997, Chernomyrdin signed two directives offering government guarantees for $140 million in bank loans sought by the previously unknown company Bonum-1 to build and launch a communications satellite. "Komsomolskaya pravda" reported that Bonum-1 is a fictitious organization whose founders are also high-ranking executives at Most Bank or other companies founded by Gusinskii. It also charged that the directives signed by Chernomyrdin violate a May presidential decree that called for curtailing government loan guarantees (see "RFE/RL Newsline," 13 May 1997). Oneksimbank is a major shareholder in "Komsomolskaya pravda." Media outlets owned by Media-Most have recently criticized Oneksimbank and First Deputy Prime Ministers Anatolii Chubais and Boris Nemtsov. "IZVESTIYA" DEFENDS CHUBAIS. "Izvestiya" on 3 October reported that attacks against Chubais "in various forms and on various fronts" are only making the first deputy prime minister more "decisive and uncompromising." The newspaper noted that Chubais has moved to take away commercial banks' authorization to handle tax payments from enterprises. It argued that the new policy, soon to be declared in a presidential decree, will be a major blow to some bankers, "although the gains for the budget and for the state as a whole are obvious." (Some commercial banks have earned huge profits by delaying transfers of state funds to the government in order to earn interest off those funds.) The newspaper predicted that "the decisive actions of the [first] deputy prime minister and the forthcoming presidential decree will lead to a new round in the so-called information war." Oneksimbank is a major shareholder in "Izvestiya." "NEZAVISIMAYA GAZETA" ON CHUBAIS, ROSNEFT. "Nezavisimaya gazeta" on 3 October published a lengthy commentary expressing relief that the government's "young wolves," led by First Deputy Prime Minister Chubais, have failed to bring off an attempted "revolution" this year. The newspaper argued that "the real threat of dictatorship in Russia comes not from the Communist revanchists...but from the Chubais team." The previous day, "Nezavisimaya gazeta" sharply criticized the government's planned privatization of the Rosneft oil company (see "RFE/RL Newsline," 26 September 1997). The newspaper argued that foreign investors will be allowed to acquire a controlling stake in Rosneft. It added that foreign investment in the oil industry is "very good in general," but only if Western investors do not receive controlling packets of shares in Russian companies. "Nezavisimaya gazeta," partly financed by the LogoVAZ group of Security Council Deputy Secretary Boris Berezovskii, has repeatedly criticized Chubais and privatization policy in recent months. ENERGY CRISIS ABATES IN PRIMORE. Electricity supplies to Primorskii Krai residents are back to normal now that coal miners and energy workers have ended their strike and coal shipments to power stations have been resumed, RFE/RL's correspondent in Vladivostok reported on 3 October. A government commission headed by First Deputy Fuel and Energy Minister Sergei Kirienko held consultations over several days with local politicians, representatives of Primore's utility Dalenergo, and coal company and trade union officials. Kirienko also was involved in government commissions sent to Primore during the krai's previous energy crisis, in May and June. He told journalists on 2 October that there were no "objective" reasons for the energy crisis in September (see "RFE/RL Newsline," 16 and 19 September 1997). He said wage arrears to miners and energy workers had grown because Primore officials had not fulfilled a protocol signed during First Deputy Prime Minister Nemtsov's June visit to Primore. GAZPROM, TATARSTAN REACH AGREEMENT ON GAS DEBTS. Tatar Prime Minister Farid Mukhametshin and Gazprom chairman Rem Vyakhirev have signed an agreement on rescheduling Tatarstan's 4.3 trillion ruble ($733 million) debt for natural gas deliveries, "Nezavisimaya gazeta" reported on 3 October. The debt must now be paid by the end of this year. The newspaper had reported on 25 September that gas supplies to several regions of Tatarstan had been cut because of the outstanding debt. It also reported that Mukhametshin had failed to persuade Vyakhirev to agree to rescheduling the debt. Meanwhile, addressing the Tatarstan State Council on 1 October, chairman Vasilii Likhachev said that claims made in Kemerovo by Russian State Duma speaker Gennadii Seleznev were an "insult to Tatarstan's honor." Seleznev had accused Tatarstan and Bashkortostan of destroying the Russian Federation. REGISTRATION OF LUTHERAN MISSION REVOKED IN KHAKASSIA. The authorities in the Republic of Khakassia have revoked the registration of the Evangelical Lutheran Mission of Khakassia "in accordance with the adoption of the law on freedom of conscience and religious organizations," the Keston News Service reported on 2 October. Under that law, which was recently signed by Yeltsin, "religious groups" that cannot prove they have existed in Russia for at least 15 years will have fewer rights than registered "religious organizations." The Evangelical Lutheran Mission was registered in June 1996. Rev. Pavel Zayakin, the mission's director in Khakassia, argued that Lutheranism has existed in Russia for more than 400 years. He added that the mission will file a court appeal against the Khakassian authorities. Supporters of the religion law have said it is aimed primarily against cults and "totalitarian sects," not "real religions" (see "RFE/RL Newsline," 22 and 23 September 1997). WHO WILL FUND RUSSIAN SPACE INDUSTRY? In a statement to mark the 40th anniversary of the Soviet Union's successful launch of Sputnik, the first artificial satellite in orbit, Yeltsin promised that the state "will continue to do everything necessary to preserve and develop" space research in Russia, ITAR-TASS reported on 2 October. The same day, Russian Space Agency head Yurii Koptev told ITAR- TASS that his agency plans to raise additional funds for research through advertisements on spacecraft and space facilities. Koptev said advertising agencies will soon be able to bid for exclusive rights to make advertisements related to Russia space projects., for which millions of dollars annually could be earned. Funding shortages have hampered Russian space research in recent years. Earlier this year, authorities announced that the launch of the first module of the "Alpha" international space station will be delayed from November 1997 until June 1998. TRANSCAUCASUS AND CENTRAL ASIA ARMENIA SLASHES 1997 BUDGET EXPENDITURES. Finance and Economics Minister Armen Darbinyan told journalists in Yerevan on 2 October that projected budget expenditures for 1997 will be slashed by15 billion drams ($30 million), RFE/RL's Yerevan bureau reported. Darbinyan said the cuts are necessary because of "incorrect budget estimates" of the amount of financial aid from foreign donor states and international financial institutions. He added, however, that government revenues in September reached a record high of 10.1 billion drams, more than double the amount for the same period in 1996. Darbinyan, who took part in the recent annual meetings of the World Bank and IMF in Hong Kong, said the World Bank gave the green light for Armenian access to its commercial loans. This move, he said, reflects the West's support of Yerevan's economic policies. THREE KILLED IN CASPIAN HELICOPTER CRASH. Three people were killed on 2 October when an Azerbaijani Airlines helicopter carrying oil workers crashed into the Caspian Sea, Russian and Azerbaijani agencies reported. Sixteen people are still missing. The cause of the crash is unknown; visibility at the time was normal, according to Turan. Three days earlier, Belgian Foreign Minister Erik Derycke was forced to cancel a planned visit to Baku after the Azerbaijani Airlines airplane on which he was booked had to be grounded for technical reasons. GEORGIAN PARLIAMENT ADOPTS NEW DEFENSE DOCTRINE. The parliament on 1 October adopted a defense doctrine drafted earlier this year, RFE/RL's Tbilisi bureau reported. Parliament Defense and Security Committee Chairman Rezo Adamia described the document as a "defensive defense doctrine," meaning that the armed forces can use force only to repel aggression. Opposition parties have criticized the doctrine as "superficial" and claimed it does not address the country's specific problems, in particular the need to restore territorial integrity. ANOTHER HOSTAGE-TAKING IN TAJIKISTAN. A meat plant factory manager and his son were abducted by an unidentified armed gang in Dushanbe during the night of 2-3 October, ITAR-TASS reported. Police believe that the perpetrators are fighters loyal to warlord Revzon Sodirov and that Sodirov wishes to exchange the hostages for his brother, Bakhrom, who is being held in custody for the February abduction of a group of UN observers. Meanwhile, Interfax on 2 October quoted United Tajik Opposition leader Said Abdullo Nuri as saying the repatriation of the estimated 2,500-3,000 opposition forces from Afghanistan is being delayed by logistical and financial problems. PROTEST MARCH CONTINUES IN KAZAKHSTAN. Some 1,000 workers from the southern city of Kentau who began marching to Almaty on 1 October to protest wage and pension arrears have reached Shymkent, RFE/RL's Almaty bureau reported on 2 October. Some of the marchers, including the trade union leaders who organized the protest, proceeded by train to Almaty; the rest are continuing on foot. An attempt by South Kazakhstan Oblast Prosecutor-General Sultan Jabanov to halt the marchers was unsuccessful. Meanwhile, Interfax on 2 October reported that 10 inmates of a high security prison in western Kazakhstan have been hospitalized after slitting open their stomachs to protest prison conditions. MORE PRIVATIZATION REVERSALS TO COME? by Stephanie Baker In a sign that pressure is building to clean up Russia's scandal- plagued privatization process, the Moscow Arbitration Court has ruled that 41 percent of the shares in the chemicals plant Cherepovets Azot be returned to the government. It is the first high-profile privatization to be reversed, targeting the country's third largest bank, Oneksimbank, which in 1994 acquired a 41 percent stake in the chemicals factory. The court ruled on 29 September that the shares should be returned to the government because Oneksimbank had failed to meet the investment conditions stipulated in the tender. Russian media have played up the case because Oneksimbank's founder, former First Deputy Prime Minister Vladimir Potanin, has been embroiled in a media war over his involvement in recent privatization sales. Potanin led a consortium that won a major stake in Russia's telecommunications holding company Svyazinvest in July. The apparent losing bidders, however, cried foul play and launched a campaign against the sale through their media outlets. In early August, a company linked to Oneksimbank won an auction for a controlling stake in the metals giant Norilsk Nickel, despite last- minute calls for that auction to be postponed. Recent allegations that former State Property Committee Chairman Alfred Kokh, who oversaw both auctions, accepted money from a Swiss company linked to Oneksimbank for a questionable book deal have only intensified speculation that Svyazinvest and Norilsk Nickel were sweetheart deals. Sergei Dorenko, a Russian Public Television (ORT) journalist, first publicized Oneksimbank's mismanagement of Cherepovets in a report aired just after the Svyazinvest auction. He alleged that Oneksimbank dodged its investment requirements under the tender by diverting $41 million to an off-shore bank. In an interview with RFE/RL, Dorenko later claimed credit for the court's decision, saying his coverage of the story had forced the court to take a closer look at the case. State Property Minister Maksim Boiko, however, portrayed the court's ruling as part of his efforts to clean up the privatization process, which has been plagued by accusations that the state has handed property to insider banks at cut-rate prices. Boiko said that funds earmarked for investment in the Cherepovets factory had been used for other purposes. He pledged to ensure the "honest" enforcement of investment terms following sell-offs of state property. Whether the court's decision was politically motivated is open to speculation. But there is clearly pressure building on the government to plug some of the many loopholes that have been exploited during the privatization process. Until just recently, the government had used "investment tenders" to sell off state property. But many of the owners were able to evade the investment conditions due to lax oversight or, as many observers believe, insider deals between the buyer and seller. Russia's new privatization law attempts to define the rules of the game more clearly. Although the Cherepovets case was tried under the criminal code after charges of fraud were brought, the privatization law includes a provision that allows sales of state shares to be reversed if investment conditions have not been fulfilled. The new law, which went into effect on 2 August, also allows sales of state property to be overturned if there is evidence of collusion between buyer and seller, if the price of the sale has been fixed, or if beneficial conditions have been granted to one bidder over another. While the law is clearly meant to address some of the wrongs that have dogged the privatization process, and particularly the Cherepovets case, some lawyers point out that the legislation is so vague that it makes overturning a privatization for political or technical reasons relatively easy. The law could affect not just major players like Oneksimbank but smaller investors as well. William Simons, a lawyer with Pepper, Hamilton & Sheets and a faculty member at Leiden University's Institute for East European Law and Russian Studies in The Netherlands, says the law creates uncertainty for owners. He asks: "From a policy point of view, the main question is, once a transaction has been completed, is it a stable decision or can it be turned back?" The law mentions nothing about shares that were auctioned off and then resold to third parties, nor does it clearly spell out a statute of limitations. Last month, the State Duma set up a committee to investigate whether the sales of Svyazinvest, the oil company Sibneft, Norilsk Nickel, and the Tyumen Oil Company complied with existing legislation. The committee, culled from different parliamentary factions, is due to announce its findings on 1 November. It is charged with examining the starting prices of the state shares, procedures for the sales, and the role of state officials in the auctions. Observers, however, doubt that the committee's findings will result in any reversals. The author is a Moscow-based RFE/RL correspondent. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1997 RFE/RL, Inc. 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