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RFE/RL NEWSLINE Vol 1, No. 148, Part I, 29 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 * RUSSIAN STOCKS TAKE ROLLER-COASTER RIDE * BASAEV NAMED ACTING CHECHEN PREMIER * SIRADEGHIAN ELECTED TO ARMENIAN PARLIAMENT End Note : WHEN STATES LOSE CONTROL xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA RUSSIAN STOCKS TAKE ROLLER-COASTER RIDE... The Russian Trading System index rose 3.4 percent on the morning of 29 October after Russian shares lost an average of 20 percent of their value the previous day, ITAR-TASS reported. The plunge on 28 October occurred despite a three-hour halt on the exchange, which was intended to calm the market. According to an RFE/RL correspondent in Moscow, Russian bonds denominated in rubles and foreign currencies also suffered substantial losses. However, government officials and market analysts attributed the decline to turmoil on Wall Street and other world markets, rather than to internal economic or political conditions in Russia. For the last two years, the Russian stock market has posted the world's strongest gains. It was up 160 percent from the beginning of January to 6 October, Reuters reported. ...WHILE OFFICIALS PROMISE TO DEFEND MARKET. Federal Securities Commission Chairman Dmitrii Vasilev cut short an official visit to London because of the sharp downturn on the Russian stock market. On 29 October, he signed an instruction ordering that trading be halted if share values drop by more than 5 percent during a single session, ITAR-TASS reported. First Deputy Prime Minister Anatolii Chubais, speaking in London the previous day, expressed confidence that Russian stocks will post strong future gains, Interfax reported. "The Russian markets held out for a long time and were the last to fall among the emerging markets," he commented. Central Bank Chairman Sergei Dubinin and First Deputy Prime Minister Boris Nemtsov also urged investors not to panic. Nemtsov argued that Russia's economic fundamentals are good and promised that the government and Federal Securities Commission will not allow any "black Tuesdays" or "black Thursdays." GOVERNMENT APPROVES BUDGET PARAMETERS. The government on 28 October approved the draft 1998 budget parameters agreed by a trilateral commission of government, State Duma, and Federation Council representatives, RFE/RL's Moscow bureau reported. It also approved a package of 10 draft tax laws aimed at increasing revenues in line with new 1998 targets, Russian news agencies reported. The trilateral commission agreed to raise 1998 revenues by 27.5 billion new rubles ($4.7 billion) to 367.5 billion rubles (see "RFE/RL Newsline," 27 October 1997). The proposed tax laws would, among other things, increase the tax on foreign-currency purchases and raise the sales tax on food from 10 percent to 20 percent, the rate levied on other products. In addition, income tax exemptions currently granted to military personnel would be eliminated as of 1 January. DUMA DELAYS BUDGET VOTE. The Duma Council on 28 October decided to put the revised 1998 budget to a first Duma reading on 12 or 14 November, RFE/RL's Moscow bureau reported. First Deputy Prime Minister Chubais had earlier announced that the budget would receive its first reading on 31 October, and Prime Minister Viktor Chernomyrdin had called on Duma deputies to consider the budget before 1 November. Appearing on NTV, Aleksandr Shokhin, the leader of the pro-government faction Our Home is Russia, argued that the Duma Council delayed consideration of the budget because the Communists and their allies do not want to vote for the budget before 7 November, when demonstrations are planned to mark the 80th anniversary of the Bolshevik Revolution. TAX CODE DELAYED, BUT NOT WITHDRAWN. Shokhin on 28 October confirmed that the 1998 budget revenues will be based on the tax laws recently proposed by the government, not on a new tax code, as government ministers have previously insisted, RFE/RL's Moscow bureau reported. Duma First Deputy Speaker Vladimir Ryzhkov of Our Home Is Russia said the Duma will consider the package of tax laws on 12 November. Although the tax code appears increasingly unlikely to be adopted by the end of the year, government and parliamentary officials continue to rebuff attempts by Grigorii Yavlinskii's Yabloko faction to have the government withdraw the code. First Deputy Prime Minister Nemtsov told RFE/RL the code will be revised by the trilateral commission that negotiated the 1998 budget. REGIONS SECURED MANY BUDGET CONCESSIONS... "Kommersant-Daily" reported on 29 October that regional leaders have secured substantial concessions during the budget negotiations. In addition to making concessions on federal transfers to the regions and funding for supplies to the far north (see "RFE/RL Newsline," 20 October 1997), the federal government agreed to keep in place tax privileges for the republics of Tatarstan and Bashkortostan. Moscow will also receive some compensation payments for the cost of maintaining federal facilities in the capital, although the amount of those payments has yet to be determined. "Kommersant-Daily" argued that the budget concessions to the regions came at the expense of industrial interests, especially the fuel and energy sector. The government needs the support of the regional leaders, who are also members of the Federation Council, in order to win parliamentary approval for the budget. ...BUT 'DONOR REGIONS' STILL NOT SATISFIED. High-ranking officials from several "donor regions," which contribute more to the federal budget than they receive from the center, met in Moscow on 28 October to discuss 1998 budget and tax policy, RFE/RL's Moscow bureau reported. Samara Oblast Governor Konstantin Titov, who also chairs the Federation Council's Budget Committee, told RFE/RL that boosting economic performance will be impossible unless more revenues are allocated to the regions. In particular, the donor regions want a quarter of sales tax revenues (the proposed tax code would allocate all such revenues to the federal government). They also want a greater share of privatization revenues and legislation to force large corporations to pay taxes in the regions in which their branches operate, rather than in Moscow, where most company headquarters are registered. Depending which calculation methods are used, Russia has between 10 and 16 donor regions. BASAEV NAMED ACTING CHECHEN PREMIER. Before departing for Turkey on 28 October, Chechen President Aslan Maskhadov named former field commander Shamil Basaev as acting prime minister and deputy premier responsible for industry, Russian media reported. Basaev told RFE/RL's Moscow bureau that he stepped down as deputy prime minister in July because of disagreements with Maskhadov over domestic politics. But he said that following a recent telephone conversation, they had "found some common ground." Basaev said his main priority will be to stabilize the internal situation in Chechnya, adding this will require passing a new law on weapons. Maskhadov, meanwhile, told "Kommersant-Daily" of 29 October, that he and Basaev have identical views and that "I cannot work without him." MOSCOW MAKES CONCILIATORY GESTURES TO GROZNY. Maskhadov's flight to Turkey was delayed for six hours because Russian Federal Border Guard commander General Andrei Nikolaev insisted that the Chechen president undergo customs clearance at another North Caucasus airport, Russian media reported. Russian Prime Minister Chernomyrdin later intervened personally and overruled Nikolaev. The previous day, Russian Interior Ministry troops reopened two checkpoints on the border between Chechnya and Dagestan. The frontier was closed on 25 October following the killing of a Dagestani police official and the kidnapping of eight people. Maverick Chechen field commander Salman Raduev was reportedly behind the kidnapping. GOVERNMENT SPOKESMEN DEFEND ACQUISITION OF "SUPER- COMPUTERS." Government spokesman Igor Shabdurasulov on 28 October asked the U.S. not to make an issue of the Russian Atomic Energy Ministry's acquisition of IBM super-computers. Shabdurasulov admitted he is uncertain whether the purchase violates U.S. legislation, but he said the issue was discussed by U.S. Vice President Al Gore and Russian Prime Minister Chernomyrdin in Moscow in September. U.S. State Department spokesman James Rubin had said on 27 October that the U.S. is prepared to compromise if Moscow can prove the computers will be used for civilian purposes, according to AFP. An unnamed Russian Atomic Energy Ministry spokesman told Interfax that the ministry has bought several super- computers for use in nuclear facilities but that the purchase does not contravene U.S. export regulations. 'NOVYE IZVESTIYA' JOURNALIST SACKED. Leonid Krutakov told "Komsomolskaya pravda" on 29 October that the commercial director of "Novye Izvestiya" sacked him after he published an article in "Moskovskii komsomolets" criticizing Security Council Deputy Secretary Boris Berezovskii. According to Krutakov, "Novye Izvestiya" editor Igor Golembiovskii refused to publish that article, which alleged that Berezovskii has diverted hundreds of millions of dollars from the state-run airline Aeroflot. Although Berezovskii has not confirmed that he is helping finance "Novye Izvestiya," he attended a 26 October party celebrating the paper's pilot issue. Golembiovskii told "Komsomolskaya pravda" that Krutakov was asked to resign because he had written an article for a competitor but "not a line" for "Novye Izvestiya." Oneksimbank, which has frequently been criticized in media financed by Berezovskii, is a major shareholder in "Komsomolskaya pravda." LOCALS PROTEST PLANNED COLONY FOR PRISONERS WITH HIV. More than 6,000 residents of Ardatov, Nizhnii Novgorod Oblast, have signed a petition protesting plans to establish a special prison colony for convicts with the HIV virus, RFE/RL's correspondent in Nizhnii Novgorod reported on 27 October. With nearly 500 registered cases, Nizhnii Novgorod has the third-highest incidence of HIV infection among Russia's 89 regions, after Kaliningrad Oblast and Krasnodar Krai. An estimated 100 prisoners in Nizhnii Novgorod are HIV positive, and officials fear that overcrowded prison conditions could facilitate the rapid spread of the virus. But Ardatov residents say the planned site for the special prison colony is in a residential area, only a few dozen meters from schools. "Rossiiskie vesti" reported on 23 September that law enforcement officials in Pechora, Komi Republic, have decided to create a special prison colony for convicts infected with HIV or tuberculosis. TRANSCAUCASUS AND CENTRAL ASIA SIRADEGHIAN ELECTED TO ARMENIAN PARLIAMENT. Vano Siradeghian, the mayor of Yerevan and the controversial chairman of the ruling Armenian Pan-National Movement (HHSh), won the 26 October parliamentary by-election in Hrazdan with 56 percent of the vote, RFE/RL's Yerevan bureau reported . Communist Party candidate Ashot Mikaelian polled 36 percent and independent candidate Ruben Yegorian, considered Siradeghian's main challenger, only 7.5 percent. Voter turnout was some 60 percent. Yegorian, whose elder brother Eduard recently quit the HHSh to form an opposition parliamentary faction, told RFE/RL the election was unfair and that he will submit a list of alleged irregularities to election officials. An unusually large number of senior government officials and police were present at the polling stations. AZERBAIJAN LINKS CIS INTEGRATION TO KARABAKH CONFLICT. Azerbaijan will not participate in any attempt to achieve greater integration within the CIS until a "just solution" of the Karabakh conflict is reached, Interfax reported on 27 October, quoting a senior government source in Baku. Saying that all CIS member states should be regarded as equal, the official accused Russia of considering the commonwealth as an organization superior to its individual members. He also rejected the proposal to dispatch a CIS peacekeeping force to Nagorno-Karabakh. POSSIBLE OBSTACLES TO AZERBAIJAN OIL TRANSIT. Speaking on NTV on 27 October, Russian Security Council Deputy Secretary Boris Berezovskii said the beginning of oil shipments from Azerbaijan through the Baku-Grozny-Novorossiisk pipeline is a "shared victory" for Russia and Chechnya and a "stability factor" in Chechnya. But he warned that relations between Moscow and Grozny are still "in crisis." Russian First Deputy Fuel and Energy Minister Sergei Kirienko similarly warned that the agreement between Moscow and Grozny on the tariffs Chechnya receives for the transit of oil is valid only until the end of 1997, according to Interfax. The transit of oil through the pipeline began on 25 October but was halted the next day for 48 hours to coordinate pumping pressure, which differs between the Azerbaijani and Chechen sectors of the pipeline, Turan reported on 28 October. UKRAINIAN PRESIDENT IN GEORGIA. Leonid Kuchma, who in Tbilisi for a two-day official visit, met with his Georgian counterpart, Eduard Shevardnadze, on 28 October to discuss boosting political and economic cooperation, Russian agencies reported . The two presidents signed a "Declaration of Two," intended as a "counterbalance to unions and alliances within the CIS," according to "Izvestiya" on 29 October. Kuchma dismissed the CIS peacekeeping operation in Abkhazia as "unproductive" and repeated his offer to send Ukrainian peacekeeping troops to the region. He also stressed Ukraine's interest in purchasing Caspian oil from Azerbaijan and in the development of the Traseca transport project linking Central Asia, the Transcaucasus, and Europe. FIGHTING ON TAJIK-UZBEK FRONTIER. Four Tajik border guards were wounded during the night from 27 to 28 October when their border post was fired on from neighboring Uzbek territory, Russian media reported. Earlier, Uzbek Foreign Ministry spokesman Zafar Ruziev denied Russian media reports that elements within the Uzbek military were aiding and abetting Tajik anti-government forces (see "RFE/RL Newsline," 27 October 1997). On 28 October, a Tajik government delegation headed by Deputy Premier Abdurrahim Azimov was in Tashkent to discuss the incidents. Tajik Presidential Guard commander Gafor Mirzoev told RFE/RL the next day that his troops have "neutralized" the group responsible for the 27 October attack near Tursunzode. Meanwhile, a Russian State Duma delegation visiting Dushanbe told ITAR-TASS that the Russian peacekeeping forces currently deployed along the Tajik-Afghan frontier should remain there as their withdrawal would mean "we lose Central Asia for good," ITAR-TASS reported. KAZAKH FORMER PREMIER RESURFACES IN PRINT. In an article published in "Finansovye izvestiya" on 28 October, Akezhan Kazhegeldin argued that a degree of state control over the economy is imperative during the initial transition from a planned to a free market economy. But intervention should be limited to "vitally important areas of production," such as housing and food supplies, he commented. Kazhegeldin warned against the emergence of profit- oriented "monopolistic oligarchies" created by a fusion of private and state interests, which he said could cause "chronic instability." In mid-October, Kazhegeldin resigned as prime minister, allegedly on health grounds. President Nursultan Nazarbayev subsequently praised his macroeconomic stabilization policies but slammed his failure to reform the agricultural, industrial, and social sectors. END NOTE WHEN STATES LOSE CONTROL by Paul Goble Diplomats have never found it easy to resolve conflicts. But in recent years, they have faced an ever more daunting obstacle to making peace: the increasing ability of individuals and groups to sabotage whatever accords their governments may agree to. Nowhere has this problem been greater than in post- communist conflict zones such as the southern Caucasus and the former Yugoslavia. In both regions, the power and authority of political leaders are relatively weak, many individuals and groups in the population are well armed, and many of those groups enjoy the direct or covert support of other governments that benefit from conflict situations. Such factors reduce the effectiveness of traditional diplomacy except when it is backed by force. But even when they have not prevented diplomatic negotiations, they have defined how governments choose to participate in talks. Indeed, those factors are probably more important in determining what diplomacy can achieve and what it cannot than is the "extreme nationalism" that outsiders usually invoke to explain why no agreements seem to be possible. But because representatives of major outside powers sometimes do not take those factors into account when they attempt to intervene diplomatically, they often unintentionally lead the governments directly involved to behave in ways that preclude rather than produce peace. Efforts by the international diplomatic community to resolve the conflict over Nagorno-Karabakh are perhaps the clearest example of that predicament. Neither Baku nor Yerevan is fully in control of its own population, much of which is deeply committed to prolonging the conflict until their particular goals are achieved. Groups in both countries have been willing to undermine efforts to reach agreements in the past, sometimes by passive resistance and sometimes by the use of violence, including attacks on individuals and on economic infrastructure such as pipelines and power networks. Nor does Yerevan have much leverage over the Karabakh Armenian leadership, which has enormous resources, including the possibility of violence, to undermine any agreement. As a result, some members of the Armenian leadership have been reluctant to agree to anything that might either cost them popular support or ignite violence against themselves. Some Azerbaijanis, for their part, have been willing to support authoritarian measures by their own government in order to create a situation whereby an agreement might be possible, one that would allow oil to flow and to enrich their country. The fundamental disagreement between the three conflict parties on the relative merits of a "phased" as opposed to a "package" solution to the conflict further complicates the international diplomatic effort to achieve a lasting peace in the region. Meanwhile, the situation in Bosnia-Herzegovina suggests that, even in an age when non-governmental groups are playing an increasingly large role, the diplomacy of states can achieve a great deal if it is backed by another major resource of today's nation state: the use of force. NATO-led troops on the ground in Bosnia-Herzegovina have ended most of the violence and given both diplomats and governments there the possibility of dealing with the situation in a non-violent way. This application of force is, of course, by no means certain to solve the situation in the former Yugoslavia. But it has restricted the activities of independent individuals and groups and thus given the states a chance to act in a more traditional way. The contrast between the cases of the southern Caucasus and the former Yugoslavia has highlighted the importance of building strong political institutions. Unless they exist or have the chance to grow with some protection from outside, individuals and groups living inside those states may make it impossible for anyone to make peace and move on to a better future. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1997 RFE/RL, Inc. 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