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RFE/RL NEWSLINE Vol 1, No. 134, Part I, 8 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 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I *CHERNOMYRDIN ASKS DUMA NOT TO "FIGHT" WITH GOVERNMENT *SPOKESMAN SAYS YELTSIN LEGALLY ENTITLED TO SEEK THIRD TERM *KARABAKH PRESIDENT REJECTS MINSK GROUP PEACE PLAN End Note RUSSIA'S LANDMARK DEAL WITH LONDON CLUB xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA CHERNOMYRDIN ASKS DUMA NOT TO "FIGHT" WITH GOVERNMENT. Prime Minister Viktor Chernomyrdin on 8 October appealed to State Duma deputies not to start a "fight" with the government by passing a vote of no confidence, RFE/RL's Moscow bureau reported. Addressing a plenary session of the Duma, Chernomyrdin argued that the Russian economy is improving and warned that the public does not need more political confrontation. Before Chernomyrdin's speech, the Duma rejected a Yabloko-sponsored motion to put a no- confidence vote on the Duma's 8 October agenda. But after the prime minister's address, Duma Speaker Gennadii Seleznev announced that the Duma is likely to consider a confidence motion on 15 or 16 October. Communist Party leader Gennadii Zyuganov announced on 7 October that his faction has collected 146 signatures in favor of calling such a vote (90 signatures are required). CHUBAIS DEFENDS GOVERNMENT'S WORK. After Chernomyrdin's speech, First Deputy Prime Minister Anatolii Chubais addressed the Duma and defended the government's economic policies, RFE/RL's Moscow bureau reported. Chubais acknowledged that tax collection remains a major obstacle to fulfilling the budget. Tax revenues improved significantly in the second quarter of 1997 only to fall again in the third quarter, he said, according to Reuters. But Chubais promised that the government will further improve tax collection. He also noted that by exceeding planned social spending by 41 percent, the government had managed to pay off all pension arrears. "I don't think the government should be criticized for that," Chubais added. Earlier this year, the government imposed spending cuts in many areas in accordance with a "sequester" plan not approved by parliament (see "RFE/RL Newsline," 6 May and 20 June 1997). COMMUNISTS NOT AFRAID OF DUMA DISSOLUTION. Communist Party leader Zyuganov told journalists on 7 October that his party will back a no-confidence vote because the government's "radical wing ...has gained the upper hand" and is imposing "destructive" policies on the country, Interfax reported. He acknowledged that a no-confidence vote could eventually lead to the dissolution of the Duma, but he added that "the country is more important" than seats in the parliament. Duma Legislation Committee Chairman Anatolii Lukyanov, a prominent Communist, told RFE/RL's Moscow bureau on 7 October that he believes Yeltsin will not dissolve the Duma because the government cannot pass a new tax code or a budget if the lower house is not in session. A single no-confidence vote would not give Yeltsin the constitutional right to dissolve the Duma. But if deputies vote no confidence twice within three months, Yeltsin will be able to decide whether to dismiss the government or dissolve the lower house. GOVERNMENT NOT AFRAID OF BEING DISMISSED. First Deputy Finance Minister Aleksei Kudrin told RFE/RL's Moscow bureau on 7 October that he is not concerned about the consequences of a possible no-confidence vote by the Duma, since "the president is on our side." Kudrin, who spent the day discussing the 1998 budget with Duma deputies, added that within the government and the Finance Ministry, "more radical" approaches to forming next year's budget have been suggested. Duma deputies would therefore do well to negotiate with the government now, Kudrin added, rather than sending the draft budget back to the cabinet. DRAFT BUDGET LIKELY TO GO TO CONCILIATORY COMMISSION. The Duma is virtually certain to reject the draft 1998 budget in the first reading, but deputies appear likely to support creating a conciliatory commission to work out a compromise with the government. In remarks to the Duma on 8 October, Communist Party leader Zyuganov argued that Duma deputies, Federation Council deputies, and government representatives should discuss the budget, RFE/RL's Moscow bureau reported. The support of communist deputies would ensure passage of a motion to form a conciliatory commission. Following meetings with various government ministers on 7 October, deputies from the Agrarian, Russian Regions, Liberal Democratic Party of Russia, and Our Home Is Russia factions indicated that they will support forming such a commission. NEMTSOV DOUBTS NEED FOR "EXTREME CONSTITUTIONAL STEPS." First Deputy Prime Minister Boris Nemtsov told reporters in the Republic of Karelia that the government does not expect to have to take "extreme constitutional steps" against the State Duma, Russian news agencies reported on 7 October. However, he said Yeltsin may take such steps "in order to maintain law and order" if Duma deputies are "intransigent." Nemtsov commented that he is closer to Grigorii Yavlinskii's Yabloko movement than to any other political group, but he professed not to understand why Yabloko members have refused to join the government. "If there is a chance to do something properly, this chance must be taken," he argued. Speaking to the Duma's plenary session on 8 October, Yavlinskii sharply criticized government policies and said the government deserves a vote of no confidence at the earliest possible date, RFE/RL's Moscow bureau reported. SPOKESMAN SAYS YELTSIN LEGALLY ENTITLED TO SEEK THIRD TERM. Presidential spokesman Sergei Yastrzhembskii says Yeltsin is legally entitled to seek a third term as president in 2000, even though the constitution adopted in December 1993 allows a president to serve only two consecutive terms. In an interview published in the Belgian newspaper "Le Soir" on 7 October, Yastrzhembskii argued that Yeltsin served his first term under a previous constitution and has been elected president only once under the new constitution. Yastrzhembskii refused to speculate on the likelihood of Yeltsin seeking a third term. Yeltsin announced in September that he would not run for president again. But during a recent visit to Nizhnii Novgorod, he refused to rule out his possible candidacy in 2000 (see "RFE/RL Newsline," 2 October 1997). YELTSIN HAILS LONDON CLUB DEAL... Yeltsin on 7 October met with representatives of 11 leading banks in the London Club and praised a recent debt restructuring deal as an "enormous political step for Russia," Russian news agencies reported. Russia and the London Club signed a 25-year, $32 billion debt restructuring deal the previous day (see "End Note" below). Yeltsin told the bankers that Russia has "mastered the market," saying that current economic indicators are strong and that 70 percent of property is privately owned. But he called on the London Club banks to invest more in the Russian economy and to extend more loans to both Russian and foreign investors. ...CRITICIZES PROPOSED RUSSIAN-JAPANESE PROJECTS. Yeltsin has instructed the presidential administration and government to draft new proposals on joint projects to be discussed at his November meeting with Japanese Prime Minister Ryutaro Hashimoto, Russian news agencies reported on 7 October. During a meeting with Prime Minister Chernomyrdin, Yeltsin said he was dissatisfied with a list of proposed Russian-Japanese projects given to him recently. He called the projects too small and too narrowly focused on developing Russian raw materials, adding that he would like to see proposals on more "strategic" matters and on developing new technologies. CHERNOMYRDIN DENIES VIOLATING PRESIDENTIAL DECREE. Prime Minister Chernomyrdin has sent a letter to the editorial board of "Komsomolskaya pravda" denying the accuracy of a recent report published by the newspaper, government spokesman Igor Shabdurasulov told ITAR-TASS on 7 October. The newspaper alleged that Chernomyrdin violated a presidential decree by granting loan guarantees for a commercial satellite television project (see "RFE/RL Newsline," 3 October 1997). The company behind the project was reported to be linked to Vladimir Gusinskii's Media-Most company. Shabdurasulov commented that political rumors and accusations against government ministers appear whenever the government takes on "serious tasks," such as its current work to gain parliamentary approval for the 1998 budget and new tax code. PROMINENT U.S. BANKER STRIPPED OF RUSSIAN ENTRY VISA. Russian authorities have revoked the multiple entry visa of Boris Jordan, a U.S. citizen who heads the Moscow-based investment banks MFK and Renaissance Capital. Sources in the Foreign Ministry told Interfax on 7 October that unspecified "state interests" are behind the decision, which, the sources said, was not made by the Foreign Ministry. Jordan, who was denied a Russian entry visa in 1996, has applied for a new visa. MFK is part of the Oneksimbank empire and was involved in the consortium that recently acquired a major stake in Svyazinvest. According to Reuters, Renaissance Capital is involved in a controversy over management of one of Russia's largest steel mills. First Deputy Prime Minister Nemtsov said it is "outrageous" to revoke Jordan's visa and attributed the incident to the "continuation of the bank war," ITAR-TASS reported on 8 October. KEMEROVO GOVERNOR MAKES NEW ALLEGATIONS AGAINST PROSECUTOR. Aman Tuleev has vowed that Valentin Simuchenkov, the prosecutor of Kemerovo Oblast, will be brought to justice for allegedly not taking action against the oblast's "mafia structures." In a 7 October interview with RFE/RL's Moscow bureau, Tuleev accused Simuchenkov of creating and overseeing a fund collecting contributions from organizations that owe taxes to the oblast budget. He charged that Simuchenkov has "closed his eyes" to many crimes and is responsible for a "disgraceful practice" whereby accused murderers are often set free on bail and people charged with less serious crimes remain in custody. Simuchenkov recently filed several slander lawsuits against Tuleev (see "RFE/RL Newsline," 7 October 1997). Tuleev said he will seek to have the court hearings held in any Russian region except Kemerovo. PRIMORE LEGISLATURE STANDS BEHIND APPOINTED MAYOR. The Primorskii Krai Duma continues to consider Yurii Kopylov the legitimate mayor of Vladivostok, despite a court ruling, a protest by the krai prosecutor, and a criminal case recently opened against Kopylov, RFE/RL's correspondent in Vladivostok reported. Deputies on the krai Duma's Council heard a report from Kopylov on 7 October and praised him for showing courage in difficult political conditions. The legislature has appealed to officials at Vladivostok's law enforcement agencies and the local treasury, as well as to commercial banks authorized to handle city funds, asking them not to hinder Kopylov's attempts to carry out his duties. Meanwhile, ITAR-TASS reported on 8 October that Vladivostok Mayor Viktor Cherepkov has undergone unspecified surgery and will remain hospitalized for another two weeks. When he went on sick leave, Cherepkov appointed Nikolai Markovtsev acting mayor (see "RFE/RL Newsline," 1 and 6 October 1997). BASHKIR PRESIDENT NOT TO RUN FOR SECOND TERM. Murtaza Rakhimov has announced he will not run for reelection in late 1998, "Kommersant-Daily" reported on 7 October. Until now, he was considered the only prospective candidate. The newspaper cited unsubstantiated allegations in other Russian media that Rakhimov is implicated in the illegal sale of petroleum products. The 63-year-old Rakhimov was elected chairman of the Bashkir Oblast Soviet in 1990 and president of Bashkortostan three years later. TRANSCAUCASUS AND CENTRAL ASIA KARABAKH PRESIDENT REJECTS MINSK GROUP PEACE PLAN. Arkadii Ghukasyan told journalists on 7 October that Karabakh cannot accept any proposed peace plan based on the region's subordination to Baku, RFE/RL's correspondent in Stepanakert reported. Ghukasyan said Nagorno-Karabakh is ready to discuss a "confederative relationship" with Azerbaijan and to cede part of its de facto independence to establish such a relationship. Ghukasyan also rejected a "phased" resolution of the conflict whereby a decision on Karabakh's status will be postponed until the final stage of the peace process. He admitted that a "package" solution resolving all contentious issues within one framework document would be more difficult to achieve, according to Noyan Tapan. Ghukasyan also admitted that he recently discussed with Armenian President Levon Ter-Petrossyan unspecified differences in their approaches to resolving the conflict. Also on 7 October, the Karabakh Foreign Ministry released a statement protesting violations of the confidentiality of the peace process by Azerbaijani leaders, including President Heidar Aliev. "NO DIFFERENCES" OVER KARABAKH BETWEEN ARMENIAN PRESIDENT, FOREIGN MINISTRY. Speaking at a news conference in Yerevan on 6 October, Foreign Ministry spokesman Arsen Gasparyan denied Turkish press speculation about differences of opinion over Karabakh between Levon Ter-Petrossyan and the Foreign Ministry. Gasparyan said that such differences "do not and cannot exist." Gasparyan differentiated between applying the "phased" approach to the negotiating process and to a settlement document. At the same time, he declined to elaborate on the provisions of the "phased" plan proposed by the Minsk Group co-chairmen before the three conflict sides have submitted their written responses to that plan. They are scheduled to do so within the next few days. Gasparyan also expressed the hope that Baku will at last consent to direct talks with the Karabakh Armenian leadership. He said that only such talks could "yield a breakthrough and give new impetus to the peace process." RUSSIAN FOREIGN MINISTER IN BAKU. Following his meeting with President Aliev in Baku on 7 October, Yevgenii Primakov told journalists that the two-hour talks were "useful and interesting," Russian agencies reported. Primakov again stressed that the Russian- Armenian treaty on friendship, cooperation and mutual assistance, signed in late August, is not directed against Azerbaijan and will not be used to support forces that oppose Azerbaijan's territorial integrity. Primakov welcomed Baku's positive assessment of the most recent Karabakh peace proposals by the co-chairmen of the Organization for Security and Cooperation in Europe's Minsk Group. Aliev said those proposals entail the withdrawal of Armenian forces first from six districts adjacent to Karabakh and then from the Karabakh town of Shusha and the district of Lachin, which lies between Karabakh and the Azerbaijani-Armenian frontier. GEORGIA WON'T OPEN AIR SPACE TO CHECHNYA. Zurab Chankotadze, the head of the Georgian Air Transport department, told Interfax on 7 October that Chechnya has not officially asked Georgia to open an air corridor across its territory. Chankotadze commented that if the Chechen leadership were to make such a request, it would be "impossible" for Georgia to comply without Russia's consent. Also on 7 October, Chechen parliamentary speaker Ruslan Alikhadzhiev told ITAR-TASS that Chechnya is preparing to issue its own domestic and international passports. CHEVRON ON PIPELINE ROUTES FOR KAZAKH OIL. Chevron President Richard Matzke has held separate talks in Almaty and Baku with Presidents Nursultan Nazarbaev and Heidar Aliev on the optimal route for exporting oil from Kazakhstan's Tengiz field. That field will yield some 7.5 million metric tons by the end of 1997, but only 3 million can be exported via the existing pipeline across Russia. Matzke told journalists in Almaty on 3 October that he would prefer to export larger quantities via Russia but that if this proves impossible Chevron will consider the Baku-Batumi pipeline. Meanwhile, Vladimir Stanev, director-general of the Russian affiliate of the Caspian Pipeline Consortium, which is to build a pipeline from Tengiz to the Russian Black Sea port of Novorossiisk, said on 7 October that a feasibility study for that pipeline will be completed by April 1998. Construction will begin in September 1998 and will be completed by August 2000. TENSIONS RISE BETWEEN KAZAKH MARCHERS, POLICE. Police continue to prevent workers from the Achisay Polimetal plant in Kentau from crossing a bridge over the Arys irrigation canal near Turkestan, ITAR-TASS reported. The workers are planning to march on Almaty to protest non-payment of wages. They have rejected an offer by regional officials to pay half the accumulated wage arrears and are demanding payment in full. Representatives of the local trade union branch in Kentau have met with Turkestan's mayor and agreed to send five delegates to the capital to meet with President Nazarbaev, RFE/RL's Almaty bureau reported. Workers' representatives from the cities of Tekeli, Pavlodar, and Oskemen have traveled to Turkestan to demonstrate solidarity with the marchers, whose numbers have grown to some 2,000, including 300 women and 100 children. UZBEKISTAN PROPOSES AFGHAN PEACE PLAN. Addressing the UN General Assembly on 7 October, Uzbek Foreign Minister Abdulaziz Kamilov proposed creating a "Contact Group" for Afghanistan composed of Russia, the U.S., China, Iran, and countries bordering on Afghanistan, AFP reported. The group would hold talks with the various warring Afghan factions in a bid to mediate an end to the war. Kamilov also called for an arms embargo against Afghanistan. "The New York Times" on 5 October quoted Kamilov as saying that Uzbekistan advocates creating a coalition government in Kabul that would include the Taliban and other political groups. He said that no single faction is strong enough to build a stable government. END NOTE RUSSIA'S LANDMARK DEAL WITH LONDON CLUB by Stephanie Baker Russia and the London Club of commercial creditors have signed a landmark agreement to restructure Soviet-era debts totaling billions of dollars. Russia inherited the massive debt after the collapse of the Soviet Union under a deal with the former republics that gave Moscow control over all Soviet foreign assets. The long- awaited restructuring deal allows Russia to pay off some $32 billion over 25 years. It comes shortly after Russia joined the Paris Club of official creditors, following an agreement that $40 billion in Soviet debts to foreign governments would be rescheduled over 25 years. Officials hail the London Club deal as paving the way for a new wave of investment in the Russian economy. Talking to journalists after the 6 October signing ceremony, First Deputy Prime Minister Anatolii Chubais said "leaders of the biggest banks in the world recognized the irreversibility of our reforms and the prestige of Russia in the international community." He said the agreement would speed up Russia's efforts to join other international financial institutions and help pump desperately needed funds into the economy. He also commented that the deal would allow Russian enterprises to tap international financial sources, weaning them off dependency on the nation's powerful banks. "In effect it opens the door to a non-oligarchic capitalism in Russia," he remarked. Tessen von Heydebreck, a board member at the Deutsche Bank who worked on the restructuring, told reporters that the agreement heralds Russia's return to the international capital markets "as a reliable creditor." He said the agreement could result in a credit rating upgrade for Russia, which would reduce Moscow's costs of borrowing on global financial markets. Top officials from 13 major banks took part in the 6 October signing ceremony in Moscow, together with officials from Vneshekonombank, which has been the Russian government's agent in the negotiations. The deal restructures $24 billion in principal and $8 billion in interest payments on a combined total of 27,000 loans extended to Russia by foreign commercial banks. Von Heydebreck described the agreement as "one of the largest financial transactions of its kind." Banking officials attending the signing said the deal would be an incentive for commercial banks to lend to Russia. Thomas Wells, the vice president of Bank of America in London, said it would "give commercial banks additional confidence to lend to Russia and to private enterprises." Chubais moved to bolster confidence further on 6 October when he announced that Russia will now focus on restructuring an additional $4 billion in outstanding debts owed by Soviet-era enterprises to commercial creditors outside the London Club deal. Those credits were not guaranteed by the Soviet authorities. The closing date for the London Club deal is 2 December, when Russia is scheduled to pay $3 billion in cash toward overdue interest. At that time, the holders of the loans will retire the original debt and receive new Vneshekonombank bonds in exchange. There will be two kinds of the new bonds: some representing interest owed, others principal owed. Eric Fine, an analyst at Morgan Stanley, said there could be volatility on the market as the closing date approaches. But he maintained that in the long term, the London Club deal would help Russia attract a new class of investors and boost its reputation as a reliable creditor on international markets. The author is a Moscow-based RFE/RL correspondent. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1997 RFE/RL, Inc. 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