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RFE/RL NEWSLINE Vol 1, No. 136, Part I, 10 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 * DUMA REJECTS BUDGET IN FIRST READING * YELTSIN SAYS NO THIRD TERM * KAZAKH PRIME MINISTER RESIGNS End Note : GAZPROM'S PLANS STRAIN RUSSIAN-BULGARIAN RELATIONS xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA DUMA REJECTS BUDGET IN FIRST READING. The State Duma on 9 October rejected the draft budget for 1998 in the first reading, by 326 to 13 with one abstention, RFE/RL's Moscow bureau reported. Deputies rejected a motion sponsored by the Popular Power faction to send the budget directly back to the government. They also voted down a Yabloko motion to schedule a no confidence vote for 10 October. Deputies then approved a Communist proposal to send the budget to a trilateral commission representing the Duma, the Federation Council, and the government. The creation of a trilateral commission is a departure from normal Duma procedure, under which a conciliatory commission on the budget would include mainly Duma and government representatives. Federation Council deputies, many of whom have already criticized the draft budget, are now expected to have more influence on the budget debate than the upper house had last year. KREMLIN WELCOMES OUTCOME OF BUDGET VOTE. President Boris Yeltsin told reporters in Strasbourg, where he is attending the Council of Europe summit, that he is confident work on the 1998 budget will now proceed "normally," Russian news agencies reported on 9 October. He commented that Duma deputies had apparently understood his recent radio address. In that address, Yeltsin warned that the Duma must become more cooperative or risk exhausting the patience of the president and the public (see "RFE/RL Newsline," 3 and 6 October 1997). First Deputy Prime Minister Anatolii Chubais called the Duma's decision to create a trilateral commission a "victory for common sense," which "makes the adoption of a budget before the end of the year a realistic proposition." (The 1997 budget was not signed into law until late February.) Speaking to reporters in Bishkek on 10 October, Prime Minister Viktor Chernomyrdin praised the Duma's decision to create a trilateral commission as "absolutely correct." ZYUGANOV PINS HOPES ON REGIONAL LEADERS. Communist Party leader Gennadii Zyuganov announced on 9 October that his party insisted on forming a trilateral commission to discuss the 1998 budget because it wants tougher negotiations with the government than during the 1997 budget process, RFE/RL's Moscow bureau reported. He also told journalists, "we badly need the support of the Federation Council" in order to change the government's economic policies, according to Reuters. Regional leaders have particularly objected to the government's plans to decrease expenditures on "transfers," or federal funds allocated to most regions. The draft budget would cut spending on such transfers from 15 percent of total budget revenues to 13 percent. ITAR-TASS on 7 October quoted an unnamed government representative as saying that the government will not give in to demands that planned spending on regional transfers be restored to the current level. YABLOKO DEMANDS WITHDRAWAL OF NEW TAX CODE. Yabloko member Oksana Dmitrieva, who heads a Duma subcommittee on the budget, announced that the movement's faction may alter its opposition to the 1998 budget and its support for a no-confidence vote if the government withdraws the new tax code, ITAR-TASS reported on 9 October. Yabloko leader Grigorii Yavlinskii has repeatedly criticized the proposed code as a "repressive document" that would not significantly lower the tax burden on enterprises. First Deputy Prime Minister Chubais and First Deputy Finance Minister Aleksei Kudrin on 9 October indicated that the government will accept some compromises on the code. For instance, they said, it could be introduced in stages rather than all at once on 1 January 1998. Projected revenues in the 1998 budget are based on the assumption that the new tax code will be in effect at the beginning of the year. YELTSIN SAYS NO THIRD TERM. Yeltsin has again said that he will not seek a third term as president in 2000, Russian news agencies reported. Upon his arrival in Strasbourg for the Council of Europe summit, Yeltsin said, "As the president, I am the guarantor of the constitution. I should be the first to give an example of how to abide by the constitution." He said he will not seek a constitutional amendment to allow himself a third term and expressed hope that after he leaves office, he will be succeeded by a "young, energetic democrat." Yeltsin made similar comments in September, but during a recent visit to Nizhnii Novgorod he appeared to leave the door open to a possible presidential candidacy in 2000. Yeltsin's spokesman Sergei Yastrzhembskii recently argued that the current constitution would allow Yeltsin to serve a third term. YELTSIN PROPOSES KARABAKH PEACE CONFERENCE. Over a gourmet dinner in Strasbourg on 9 October, Yeltsin and French President Jacques Chirac agreed to invite the presidents of Armenia and Azerbaijan, Levon Ter-Petrossyan and Heidar Aliev, to Moscow for quadrilateral talks on the Karabakh conflict, ITAR-TASS reported. Yeltsin expressed the hope that such talks could lead to "another step forward" in the peace process. Russia and France, together with the U.S., are co-chairmen of the Organization for Security and Cooperation in Europe's Minsk Group, which since1992 has been trying to mediate a settlement of the conflict. Yeltsin added that the U.S. is also invited to participate in the talks. Arkadii Ghukasyan, the president of the unrecognized Nagorno-Karabakh Republic, is apparently not invited. Ter-Petrossyan, who is also in Strasbourg for the Council of Europe summit, is to proceed to Paris for an official visit during which he will meet with Chirac. RUSSIAN-CHECHEN TALKS RESUME. Russian Security Council Secretary Ivan Rybkin, together with his deputies Boris Agapov and Boris Berezovskii, met near Sochi on 9 October with Chechen First Deputy Prime Minister Movladi Udugov, Russian agencies reported. Rybkin had said before leaving Moscow that "there is no alternative to a peace process" and that talks would therefore continue. But he added that the Russian government mission in Grozny, whose personnel were recently expelled, may be closed if it proves "redundant." Chechen Presidential Press Secretary Kazbek Khadzhiev told ITAR-TASS on 10 October that Udugov had again proposed to the Russian delegation that Moscow and Grozny sign an inter-state treaty providing for the establishment of diplomatic relations. Moscow has repeatedly refused to consider this, insisting that Chechnya remains a federation subject. Also on 9 October, Chechen President Aslan Maskhadov dismissed the Supreme Court judges responsible for Islamic law because of unspecified "errors," ITAR- TASS reported. CHUBAIS, LUZHKOV SPAR OVER COMPENSATION FOR MOSCOW. First Deputy Prime Minister Chubais on 9 October defended the government's decision to remove special subsidies for Moscow from the draft 1998 budget, Russian news agencies reported. In the past, such payments have compensated Moscow for the costs of maintaining federal facilities in the capital. Chubais argued that average monthly wages in Moscow are twice as high as the Russian average. He added that Moscow's request for compensation payments was unconvincing given the lavish celebrations recently held to mark the city's 850th anniversary. Chubais also noted sarcastically that Moscow may receive the payments after all if the parliament votes "to take money from other Russian regions and give it to Moscow as the most needy Federation subject." Moscow Mayor Yurii Luzhkov vowed that his administration will fight all government decisions that infringe on the capital's interests (see "RFE/RL Newsline," 9 October 1997). JUSTICE MINISTRY TO RUN PRISONS. Yeltsin on 9 October issued a presidential decree transferring the penitentiary system from the jurisdiction of the Interior Ministry to the Justice Ministry, Russian news agencies reported. The transfer is in line with recommendations of the Council of Europe and has been anticipated since June, shortly before former Federal Security Service director Sergei Stepashin was appointed justice minister. "Nezavisimaya gazeta" remarked on 10 October that a new government commission to be charged with implementing the transfer has difficult work ahead. In addition, the parliament will have to amend at least 50 laws. "Kommersant-Daily" reported on 9 October that according to Interior Ministry data, some 20,000 workers in the prison system have resigned in recent months because they do not want to work under the jurisdiction of the Justice Ministry. REDENOMINATION TO BE APPLIED TO OLD SAVINGS ACCOUNTS. Central Bank Chairman Sergei Dubinin has confirmed that the redenomination of the ruble, planned for 1 January 1998, will be applied to savings accounts opened in Sberbank before 1992. In an interview published in "Izvestiya" on 10 October, Dubinin said the accounts, which were rendered virtually worthless by high inflation in the early 1990s, will be indexed when a separate law is implemented. "Redenomination has nothing to do with this," he added. Dubinin told ITAR-TASS on 9 October that the government currently lacks the funds to restore the value of the old Sberbank accounts. Opposition politicians have called for not applying the redenomination to the old accounts, which would in effect increase their value by 1000 times. Yeltsin has previously indicated that the government was considering this option (see "RFE/RL Newsline," 25 August and 19 September 1997). POLITICIANS DEMAND PRESIDENTIAL ELECTION IN KARACHAEVO- CHERKESSIA. Ten prominent politicians in the Republic of Karachaevo-Cherkessia have sent an open letter to Yeltsin demanding that a presidential election be held in the republic, RFE/RL's correspondent in Vladikavkaz reported on 9 October. Karachaevo-Cherkessia is the only Russian region still governed by a Yeltsin appointee who has never faced an election. President Vladimir Khubiev has been the top official in Karachaevo-Cherkessia for 18 years. Yeltsin issued a decree in 1995 extending Khubiev's authority until 1999. In April 1997, the republic's Supreme Court ruled that Karachaevo-Cherkessia's constitution requires the president to be elected. The court instructed the republican legislature to set an election date by September, but the legislature, which is dominated by supporters of Khubiev, ignored the court ruling. Communist candidates did well in Karachaevo-Cherkessia in the 1995 State Duma election and in the Russian presidential election last year. U.S. BANKER GIVEN SINGLE-ENTRY VISA. U.S. citizen Boris Jordan, who heads the Moscow-based investment bank MFK and the Renaissance Capital fund, has returned to Moscow after being granted a single-entry visa, ITAR-TASS and Reuters reported on 9 October. The visa allows Jordan to remain in Russia for only one week. A spokesman for Renaissance indicated that the terms of the new visa are "unacceptable" and that Jordan should be given a new multiple entry visa. MFK, which plans to merge with Renaissance Capital, is part of the Oneksimbank empire. First Deputy Prime Minister Boris Nemtsov has criticized the recent decision to revoke Jordan's multiple entry visa, saying the incident was inspired by Russia's "bank war" and will deter foreign investors from doing business in Russia (see "RFE/RL Newsline," 8 October 1997). CIS PRIME MINISTERS MEET. Seven CIS prime ministers and 7 first deputy premiers met in Bishkek on 9 October to discuss the Concept for Integrated Economic Development of the CIS. That document was discussed, but not unanimously endorsed, at the previous summit in March 1997 (see "RFE/RL Newsline," 1 April 1997). All the participants in the 9 October meeting, except Georgia, signed a document on implementing this concept. Twenty-three other agreements were signed, including on transnational corporations, a common agricultural market, and international road transport. Addressing his CIS counterparts, Russian Prime Minister Chernomyrdin expressed concern that trade between CIS states had declined by 10 percent during the first six months of this year. Chernomyrdin also called for a coordinated monetary policy. According to "Izvestiya" on 10 October, the prospect of introducing a single CIS currency between 2005 and 2010 was also discussed. TRANSCAUCASUS AND CENTRAL ASIA KAZAKH PRIME MINISTER RESIGNS... Akezhan Kazhegeldin, currently in Switzerland for medical treatment, tendered his resignation on 10 October, as did his cabinet. President Nursultan Nazarbaev accepted Kazhegeldin's resignation, allegedly on health grounds, but asked the government to continue to discharge its duties. Addressing the parliament earlier the same day, Nazarbaev had acknowledged the government's "energetic" work but said that "reforms have been insufficient and in some aspects have not produced the desired results." Kazhegeldin's resignation had been widely predicted following allegations of corruption and two interviews with Russian newspapers in September in which he claimed to have been recruited by the KGB in the late 1980s and to have played a key role in the arms scandal. Kazhegeldin also predicted that all the younger members of his cabinet would soon resign. Nazarbaev reacted to Kazhegeldin's September revelations by immediately appointing Deputy Premier Ahmetzhan Yesimov acting premier. ...WHILE PRESIDENT NAMES SUCCESSOR. Addressing the parliament on 10 October, Nazarbaev named Nurlan Balgimbaev, the head of the Kazakhstan National Petroleum Company, as prime minister. Balgimbaev, who will turn 50 in November, is a graduate of the Kazakh Polytechnical Institute and has spent most of his working life as an engineer in the oil sector. Between 1986 and 1992, he worked in the former USSR Oil and Gas Industry Ministry in Moscow. He then studied at MIT, in the U.S., and at Chevron's headquarters. He was appointed Kazakh oil and gas industry minister in October 1994 and head of the state oil company created to replace that ministry in March 1997. TAJIK PRESIDENT ORDERS RELEASE OF OPPOSITION MEMBERS. Following his 8 October meeting with United Tajik Opposition (UTO) leader Said Abdullo Nuri, Imomali Rakhmonov has ordered the release by 12 October of some 170 out of 700 jailed opposition supporters, according to an Interfax report. An amnesty for participants in the 1992-1993 fighting provides for their release. Rakhmonov and Nuri also discussed how to repatriate opposition fighters still in Afghanistan and where they should be stationed once back in Tajikistan. TAJIK MILITARY MOVES TO FREE HOSTAGES. The Tajik presidential guard on 9 October launched an operation to locate and secure the release of six hostages currently held by warlord Rizvon Sodirov on the outskirts of Dushanbe (see "RFE/RL Newsline," 3 October 1997). Davlat Usmon, the chief of staff of the armed units subordinate to the UTO, told ITAR-TASS that "it is time to put an end to terrorism, lawlessness, and hostage-taking." He said that "adequate measures" will be taken against all illegal armed groups that fail to comply with the 16 November deadline to surrender their arms. ARMENIA AGREES "IN PRINCIPLE" TO KARABAKH PEACE PLAN. Armenian Foreign Ministry spokesman Arsen Gasparyan told RFE/RL's Yerevan bureau on 9 October that Armenia has accepted in writing the most recent Karabakh peace plan proposed by the Organization for Security and Cooperation in Europe's Minsk Group. Gasparyan said Armenia accepts the plan "as a basis for further negotiations" but has unspecified serious reservations about it. Gasparyan denied statements by some Azerbaijani officials that the plan's first stage involves an immediate withdrawal of Karabakh Armenian forces from six occupied Azerbaijani districts and that the future of the Shusha and Lachin districts will be solved at the same time as the issue of Nagorno-Karabakh's status. Mediators have not yet decided on "the sequence of the stages," he commented. Azerbaijani presidential adviser Vafa Gulu-Zade told Interfax on 9 October that Azerbaijan gave its written acceptance of the peace plan on 8 October. SHOOTINGS ON CIS-TURKISH FRONTIER. Shortly after taking off from Batumi on 8 October, a Russian border guards helicopter came under fire, Russian agencies reported. The helicopter belonged to the Russian border guards unit that, together with its Georgian counterpart, jointly controls the Georgian-Turkish frontier. The helicopter was badly damaged, but none of the crew or passengers were injured. In a second incident on 9 October, Russian border guards in Armenia were fired on from Turkish territory. No casualties were reported. The Turkish Foreign Ministry denied any knowledge of the first incident, while the governor of Artvin province said on 9 October that local peasants had opened fire on the helicopter. According to the Russian Federal Border Service, the helicopter had not entered Turkish airspace. END NOTE GAZPROM'S PLANS STRAIN RUSSIAN-BULGARIAN RELATIONS by Ron Synovitz A dispute over Gazprom's plans for a Balkan pipeline network has developed into a political crisis between Sofia and Moscow. Bulgarian officials accuse Moscow of letting Gazprom's economic agenda influence foreign relations. Bulgarian newspapers go further, charging that Moscow is using the Russian natural gas monopoly's economic influence to pressure Sofia on issues such as the Bulgarian desire to join NATO and the EU. At the root of the dispute is a battle for control of pipelines that carry Russian natural gas across Bulgaria to Macedonia, Turkey, Serbia, and Greece. The disagreement has stalled construction for years of a crucial pipeline link from Bulgaria's Black Sea port of Burgas to Greece's Aegean Sea port at Alexandropolis. Gazprom insists that the project's joint venture, Topenergy, should be given control of Bulgaria's gas pipeline network for nearly 50 years. That would essentially give Gazprom control of pipelines on Bulgarian territory because the Russian firm owns 50 percent of Topenergy and has the allegiance of the largest Bulgarian partner, the private conglomerate Multigroup. Gazprom also wants a Multigroup-owned distributor, Overgas, to be an intermediary for most Russian gas deliveries in Bulgaria. The demands have angered Sofia's pro-market government, which controls only 20 percent of Topenergy through the state- owned Bulgargaz. Prime Minister Ivan Kostov's cabinet complains that a private monopolist intermediary like Multigroup would force impoverished Bulgarians to pay 30 percent more than German consumers now pay for Russian gas. Instead, Kostov wants gas deliveries in Bulgaria to be handled by Bulgargaz. Sofia also wants Multigroup subsidiaries to sell their Topenergy shares to Bulgargaz, thus raising the state holding to 50 percent. Bulgaria depends upon Russia for oil and gas, and Gazprom is the largest and perhaps most politically influential company in Russia. Allegations that Gazprom has a powerful say in Moscow's political decisions are based on the fact that Viktor Chernomyrdin headed the firm from its creation in the late 1980s until he became Russian prime minister in 1992. Meanwhile, many companies under the Multigroup umbrella are reported to have been started by Sofia's totalitarian-era ruling elite in the late 1980s and early 1990s. Headed by alleged Soviet-era Bulgarian Intelligence Service agent Iliya Pavlov, Multigroup has been accused of draining the Bulgarian economy by plundering assets of state firms through hidden privatization schemes. The late Andrei Lukanov also has been closely linked to Multigroup. Lukanov, a former Communist Party Central Committee member, became Bulgaria's first post-communist premier after helping orchestrate the fall of dictator Todor Zhivkov in November 1989. Some three years earlier, Lukanov's friendship with Chernomyrdin helped him negotiate a cheap gas supply contract that continued until early this year. The contract benefited firms like the state steel maker Kremikovtzi, by far the largest Bulgarian consumer of Russian gas, and the private Intersteel Ltd., a Multigroup subsidiary that has profited from conducting Kremikovtzi's trade operations. Lukanov was also Topenergy's first board chairman, a position that he held until a few months before his assassination by an unknown gunman in Sofia on 2 October 1996. His successor at Topenergy was Multigroup's Pavlov. Recent editorials in the Sofia press have exacerbated tensions by charging that Gazprom is trying to retain a monopoly on the gas market for both itself and its Multigroup partners in order to give Moscow leverage over the political situation in Sofia. Russian Ambassador to Bulgaria Leonid Kerestedjiantz has called the articles "organized harassment." But Prime Minister Kostov and Foreign Minister Nadezhda Mihailova have both said they are feeling pressure from the Russian government. Mihailova has urged Moscow not to confuse economic disputes with political relations. Ivan Krastev, a political scientist in Sofia who sometimes advises the government, says Gazprom is trying to implement a calculated plan that threatens Bulgarian independence on issues like NATO and European Union membership. He argues that a Gazprom- backed intermediary would allow Russia to limit the sovereignty of small countries by raising gas prices or refusing to deliver supplies. He calls the scenario the "doctrine of Vyakhirev," in reference to current Gazprom Chairman Rem Vyakhirev. Gazprom and Bulgargaz have so far failed to reach agreement on a new gas contract. The Bulgarian Interior Ministry has accused Gazprom of trying to "blackmail" Sofia with high prices. Moreover, relations have been strained further by Sofia's recent refusal to invite Russia to talks with U.S. Defense Secretary William Cohen and defense officials from eight southeastern European countries. Russian Foreign Minister Yevgenii Primakov refused to meet Mihailova in New York during the United Nations General Assembly. Primakov's spokesman said Bulgaria tried too late to arrange the meeting. But Mihailova's spokesman says Sofia tried repeatedly to confirm a meeting that had been agreed in advance. The author is an RFE/RL news editor. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1997 RFE/RL, Inc. 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