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RFE/RL NEWSLINE Vol 1, No. 161, Part I, 17 November 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 EUROPE: Has The West Embraced The East? -- a five-part series about Europe's multilateral organizations and whether and how they've aided the integration of Central and Eastern Europe with the West -- is online at the RFE/RL Web site. http://www.rferl.org/nca/special/multilateral/index.html xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I * YELTSIN SACKS TWO MORE OFFICIALS IN BOOK SCANDAL * DUMA REJECTS USE OF FORCE AGAINST IRAQ * GEORGIAN, SOUTH OSSETIAN PRESIDENTS AGREE ON REPATRIATION End Note AZERBAIJAN'S ECONOMIC REVIVAL AHEAD OF OIL REVENUES xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA YELTSIN SACKS TWO MORE OFFICIALS IN BOOK SCANDAL. President Boris Yeltsin on 15 November sacked State Property Minister Maksim Boiko and Federal Bankruptcy Agency head Petr Mostovoi in connection with a growing scandal over fees for an unpublished book on privatization (see "RFE/RL Newsline," 13 and 14 November 1997). Yeltsin refused to accept the resignation offered by First Deputy Prime Minister Anatolii Chubais, who, like Boiko and Mostovoi, also received some $90,000 for the book manuscript from a publisher linked to Oneksimbank. However, the presidential press service said Yeltsin rebuked Chubais in a telephone conversation. Meanwhile, Russian news agencies reported on 14 November that Aleksandr Kazakov, whom Yeltsin fired as first deputy head of the presidential administration in connection with the book scandal, will continue to serve as chairman of the board of directors of the gas monopoly Gazprom. LB CHERNOMYRDIN APPROVES OF DISMISSALS. Prime Minister Viktor Chernomyrdin told journalists on 15 November that the dismissal of Boiko and Mostovoi was an "appropriate reaction" by Yeltsin to the book scandal. He said that "nobody has the right to compromise the president, the government, and the reform program itself." He added that while government officials have the right to write books and to receive fees, "legal truth" does not always coincide with what is considered acceptable behavior. The book scandal is expected to strengthen Chernomyrdin's position in the cabinet, as it damages Chubais's credibility. Meanwhile, government spokesman Igor Shabdurasulov announced on 15 November that Chernomyrdin has postponed a visit to Vietnam that was scheduled to begin on 18 November, leading to speculation that more cabinet changes may be in the offing. LB NEMTSOV SAYS YELTSIN WAS RIGHT TO KEEP CHUBAIS. In his first public comments on the book scandal, First Deputy Prime Minister Boris Nemtsov told NTV on 16 November that Yeltsin was "absolutely right" to reject Chubais's resignation. Nemtsov argued that Russia would lose billions in foreign investment if Chubais left the government. Nemtsov and Chubais espouse similar views on many policy questions and successfully lobbied for the recent ouster of Boris Berezovskii from the Security Council. Also on 16 November, Russia's Democratic Choice leader Yegor Gaidar told Russian Television that Chubais's departure from the government would prompt an exodus of foreign investors from Russian markets. Chubais is a member of Russia's Democratic Choice, while Gaidar is the chairman of the Foundation for the Protection of Private Property, to which Chubais claims to have donated most of his book fees (see "RFE/RL Newsline," 13 November 1997). LB ZYUGANOV SAYS CHUBAIS SHOULD HAVE BEEN FIRED. Communist Party leader Gennadii Zyuganov told Interfax on 17 November that Yeltsin made a mistake by not sacking Chubais, whom Zyuganov called the "chief embezzler in the government." Zyuganov also demanded an immediate meeting of the "council of four"--the president, prime minister, and speakers of both houses of parliament--as well as roundtable talks involving executive and legislative officials. Those talks should discuss the formation of a "government of national trust" that would have the support of a majority in the parliament, Zyuganov said. An unnamed source in the presidential administration told Russian news agencies on 15 November that Yeltsin rejected Chubais's resignation so as not to "destabilize the executive branch" and "do serious damage to the country's economy." LB DUMA REJECTS USE OF FORCE AGAINST IRAQ. The State Duma on 14 November voted by 259 to 37 with two abstentions to adopt a resolution calling on Yeltsin to pressure the UN Security Council to lift its sanctions against Iraq and opposing the use of military force against Iraq, Russian media reported. Duma International Affairs Committee Chairman Vladimir Lukin, who had submitted a less strongly-worded draft, termed the resolution counter-productive. First Deputy Foreign Minister Igor Ivanov said it contained inaccuracies, but he too rejected the use of force, arguing that a "constructive way of implementing the [council's] decisions on Iraq's disarmament must be found," Interfax reported. Speaking by telephone on 16 November with U.S. President Clinton, Yeltsin said Russia will take "all necessary measures" to facilitate a peaceful settlement of the Iraqi crisis. LF IRANIAN STUDENT ARRESTED IN MOSCOW. The Russian Federal Security Service on 14 November arrested an Iranian student in Moscow as he tried to purchase classified information on missile technology from Russian experts, Russian media reported. Russian Presidential Press spokesman Sergei Yastrzhembskii, speaking to Interfax the next day, said the arrest demonstrates that U.S. and Israeli claims that Russia is helping Iran develop its missile technology are groundless. LF RUSSIA, IRAN EXPAND OIL COOPERATION. Speaking after talks with visiting Iranian Oil Minister Bijan Namdar Zanganeh in Moscow on 15 November, Gazprom Deputy Director Valerii Remizov said Gazprom and the Iranian government have set up five working groups to expand cooperation. IRNA the next day reported that Russia and Iran also signed a memorandum of understanding on jointly developing several Iranian gas fields, according to Reuters. LF CHECHEN FIELD COMMANDERS CALL ON GOVERNMENT TO RESIGN. Former Chechen field commanders aligned in the military-patriotic Freedom Warriors movement have called for the resignation of the Chechen government, Russian agencies reported. The several hundred participants in the emergency congress convened in Grozny on 16 November included Deputy Prime Minister Ruslan Gelayev and Interior Minister Kazbek Makhashev. They denounced the Russian- Chechen peace treaty signed in May by Chechen President Aslan Maskhadov and Russian President Yeltsin and voted no confidence in Maskhadov's foreign and domestic policies. The Freedom Warriors movement was formed in early August by former acting President Zelimkhan Yandarbiev and maverick field commander Salman Raduev and has some 1,000 members. LF YELTSIN, KUCHMA MEET IN MOSCOW. Yeltsin concluded informal talks with his Ukrainian counterpart, Leonid Kuchma, on 17 November, RFE/RL's Moscow bureau reported. The two leaders endorsed quotas on duty-free imports of Ukrainian sugar, agreed on by Russian First Deputy Prime Minister Chubais and Ukrainian Prime Minister Valeriy Pustovoytenko in Kyiv (see Part II). They also discussed holding regular talks between the presidents and prime ministers of both countries. On 16 November, Yeltsin told journalists that he and Kuchma agreed the two countries would stop charging value-added tax on each other's products. Kyiv has objected to Moscow's decision in 1996 to charge 20 percent VAT on most Ukrainian goods, although Russian officials maintain that Kyiv imposed VAT on Russian goods first. LB FIRST LADIES MEET IN SIBERIA. Following her tour of Central Asia, U.S. First Lady Hillary Clinton was in Yekaterinburg on 15 November where she met with her Russian counterpart, Naina Yeltsin, Russian media reported. At the Ural State Technical Institute, the two women met with representatives from the Urals Women's Association and other non-governmental institutions. Yeltsin waxed nostalgic as she told representatives that the institute is where she first met her husband in the 1950s. The next day, Clinton was in Novosibirsk, where she delivered a speech on the role of education in promoting democracy. BP ROUNDTABLE TALKS ON LAND CODE POSTPONED. Mikhail Komissar, the deputy head of the presidential administration, announced on 15 November that a roundtable discussion on the land code, scheduled for 22 November, has been postponed until 11 December, Russian news agencies reported. Komissar said Federation Council Speaker Yegor Stroev suggested postponing the roundtable, which is to include government, presidential, and parliamentary representatives. Yeltsin, Chernomyrdin, and State Duma Speaker Gennadii Seleznev approved the delay, according to Komissar. The 11 December talks may cover proposals on indexing savings accounts opened in Sberbank before 1992 as well as the land code. Communist Party leader Zyuganov spoke out against delaying the roundtable's first meeting in a 15 November interview with ITAR-TASS. LB DUMA CALLS FOR HALT TO PRIVATIZATION. The Duma on 14 November passed a non-binding resolution calling on the government to suspend all privatization sales "until a federal law on the state program for privatization is adopted," Russian news agencies reported. The resolution says such a law should include a list of enterprises to be privatized, along with information about those companies and the reason for selling government stakes in them. The State Property Ministry issued a statement confirming that privatization sales will continue, despite the Duma's action, Interfax reported. The ministry charged that the Duma exceeded its authority by passing the resolution. Although the Duma passed a resolution condemning current privatization policy in June (see "RFE/RL Newsline," 12 June 1997), the government has accelerated privatization sales this year in order to boost budget revenues. LB YELTSIN ALLOWS MORE REGIONS TO ISSUE EUROBONDS. Yeltsin has issued a decree permitting Leningrad, Orel, and Samara Oblasts, along with the Komi Republic, to issue Eurobonds, ITAR-TASS reported on 14 November. Previous decrees have entitled the cities of Moscow and St. Petersburg, Krasnoyarsk Krai, and the oblasts of Moscow, Sverdlovsk, and Nizhnii Novgorod to float Eurobonds. Several other regions want to issue such bonds; the oil-rich Khanty-Mansi Autonomous Okrug is planning to float a $100 million bond in December. However, regions must gain the president's permission in order to borrow on international markets. LB MINERS CONTINUE PROTEST IN VORKUTA. Nine trade union leaders in Vorkuta, Komi Republic, have stayed underground for the sixth straight day to protest some 560 billion rubles ($95 million) in wage arrears to the area's coal miners, Interfax reported on 16 November. During a visit to Komi on 11 November, Prime Minister Chernomyrdin said the federal government has allocated 250 billion rubles to pay the Vorkuta miners. However, Yurii Vishnevskii, the leader of the Vorkuta coal miners' trade union, said Yurii Malyshev, the head of the state coal company Rosugol, told him on 15 November that there is no money to pay the miners. The same day, ITAR-TASS reported that none of the 250 billion rubles in promised government aid has arrived in Vorkuta. LB COURT RULES ALCOHOL TAX ILLEGAL IN CHELYABINSK. The Chelyabinsk Oblast Court has struck down an oblast law on taxing alcohol "imported" from other Russian regions or abroad, "Kommersant-Daily" reported on 14 November. The law was designed both to increase oblast budget revenues and to protect the local vodka producer Kazak, which has had trouble competing against higher-quality brands. The court ruling is retroactive to March 1997, when Russia's Constitutional Court declared that regional authorities may introduce only taxes that are mentioned in federal laws. In addition, "Kommersant-Daily" noted, Article 8 of the constitution guarantees economic competition and prohibits restrictions on the distribution of goods within Russia. Local businessmen may now demand that the Chelyabinsk authorities return hundreds of billions of rubles in alcohol taxes collected since the law went into effect. LB ALLEGED LEFT-WING TERRORISTS ARRESTED. Federal Security Service spokesman Aleksandr Zdanovich announced on 14 November that two men arrested the previous day are suspected of involvement in several explosions and the murder of a St. Petersburg official, Interfax reported. Zdanovich said authorities arrested Valerii Sklyar and Sergei Maksimenko, members of the little-known Revolutionary Military Council of the RSFSR, on suspicion of blowing up a monument to Tsar Nicholas II in April and attempting to bomb a statue of Peter the Great in July. The Revolutionary Military Council allegedly claimed responsibility for other explosions, including a 7 November blast at a naval arms depot in Primorskii Krai. Zdanovich said Sklyar and Maksimenko also say they were involved in the August assassination of St. Petersburg privatization chief Mikhail Manevich. Many observers believe organized criminals seeking to influence privatization policy arranged Manevich's murder. LB JAPANESE JOURNALISTS DETAINED IN FAR EAST. Nine Japanese journalists were detained in the Khasan district of Primorskii Krai on 14 November, Russian sources reported. The journalists, who work for Japan's NHK TV, allegedly violated Article 18 of the federation law on the state border. However, Russian officials in the area could not agree on the nature of the violation. One said the reporters had the necessary visa but no permit to film, while another said they had neither. The Japanese TV company, meanwhile, insisted they had both visas and permission to film. The journalists are being allowed to remain in their hotel while the authorities clarify the facts. BP TRANSCAUCASUS AND CENTRAL ASIA GEORGIAN, SOUTH OSSETIAN PRESIDENTS AGREE ON REPATRIATION. Eduard Shevardnadze and Lyudvig Chibirov met for two hours in the South Ossetian town of Djava on 14 November to assess progress in dealing with the consequences of South Ossetia's drive to secede from Georgia in 1990-1992. The two presidents signed an interim document giving priority to the repatriation in 1998 of people forced to flee their homes during the conflict, CAUCASUS PRESS reported. Shevardnadze subsequently told journalists that he and Chibirov have discussed South Ossetia's future political status vis-a-vis the central Georgian government, but he declined to give details. The two presidents also discussed the unresolved conflict with North Ossetian President Akhsarbek Galazov, Russian presidential adviser on nationalities Emil Pain, and the head of the Organization on Security and Cooperation in Europe's mission in Georgia. LF EX-PRESIDENTIAL CANDIDATE ARRESTED. Lawyer Kartlos Gharibashvili, who ran unsuccessfully against Eduard Shevardnadze in the1995 Georgian presidential elections, was arrested on 13 November on charges of having assaulted a Tbilisi district judge and falsely accused another of taking a $20,000 bribe, CAUCASUS PRESS reported. Gharibashvili was defense lawyer at the trial of former Georgian railways director Remi Vashakidze, who was sentenced recently to 10 years in prison for bribery. LF GEORGIAN PARAMILITARY MEMBERS SENTENCED. The Georgian Supreme Court on 15 November sentenced 13 leading members of the banned Mkhedrioni paramilitary movement to prison sentences of between six and 12 years for "mass banditry." They had carried out reprisals against villages in Mingrelia in November 1993. Mkhedrioni leader Djaba Ioseliani is scheduled to stand trial shortly on charges of involvement in the August 1995 failed attempt to assassinate Shevardnadze. LF ARMENIAN LEFTIST ALLIANCE HOLDS FOUNDING CONGRESS. The Union of Socialist Forces (SUM) held its founding congress in Yerevan on 15 November, RFE/RL's bureau in the Armenian capital reported. The SUM comprises more than a dozen small leftist parties and other organizations and is headed by former chief presidential adviser Ashot Manucharian. Addressing the founding congress, Manucharian said the alliance should develop a new "socialist model" adapted to Armenia's national and cultural identities. The congress adopted a statement on Nagorno-Karabakh affirming that under no circumstances should the disputed region be returned to Azerbaijani control. LF ARMENIAN OPPOSITION AGAIN PROTESTS KARABAKH POLICY. Some 8,000 opposition supporters gathered in Yerevan on 14 November to condemn the Armenian leadership's perceived readiness to sign a Karabakh peace settlement that would formally uphold Azerbaijan's sovereignty over the disputed region, RFE/RL's Yerevan bureau reported. Soviet-era dissident and Self-Determination Union leader Paruyr Hayrikian told participants that Ter-Petrossyan has no public mandate to sign crucial treaties on behalf of the Armenian people because he was not elected in free and fair elections. LF AZERBAIJANI PARLIAMENT RATIFIES ANOTHER OIL CONTRACT. Lawmakers on 14 November ratified a $2 billion production-sharing contract between EXXON and the Azerbaijani state oil company SOCAR, Russian agencies reported. The contract, signed in Washington in August, is for exploration and exploitation of the Nakhchivan oil and gas field, which lies 90 kilometers south of Baku. LF RUSSIAN TV AIRS FOOTAGE OF KYRGYZ CHILDREN'S HOME... Three Russian television channels on 13 November broadcast footage shot by a Norwegian crew this summer at the Belovodsk orphanage home in Kyrgyzstan. AFP on 15 November quoted Russia's NTV as claiming the children are undernourished and some tied up. It also alleged that while most of the children entered the home in good health, only a third survived their time there. The broadcasts drew the attention of Naina Yeltsin, the wife of the Russian president, who on 14 November appealed to the Russian Red Cross to help the children. BP ...DRAWS HARSH RESPONSE FROM KYRGYZ GOVERNMENT. Kyrgyz leaders sharply criticized the three Russian television channels' decision to air footage on the Kyrgyz children's home, Interfax and ITAR-TASS reported. Deputy Prime Minister Mira Jangaracheva said the broadcasts were a "fabricated sensation" that does not "correspond to reality." President Askar Akayev said it "undermines democratic reforms and Kyrgyzstan's authority on the international scene." Meanwhile, Denmark's Save the Children charity organization, which owns the copyright to the footage, released a statement objecting to the Russian broadcasts. It said the footage was taken in order to attract donors and sponsors and that both its and the children's rights had been violated. BP FIRST PHASE OF TAJIK REFUGEE REPATRIATION ENDS. The last group of Tajik refugees have returned from Afghanistan in the first phase of the repatriation program, ITAR-TASS reported on 15 November . Between 180 and 250 refugees left Afghanistan on 15 November, most of whom passed through the Termez crossing in Uzbekistan. Others crossed at the Nizhni Pyanj and Ishkashim crossings on the Tajik-Afghan border. More than 10,000 have returned since July, according to ITAR-TASS reports. The majority of those remaining in Afghanistan are fighters of the United Tajik Opposition (UTO). BP UN EXTENDS OBSERVER MANDATE IN TAJIKISTAN. The UN Security Council on 14 November voted unanimously to extend the mandate of its observer mission in Tajikistan, RFE/RL correspondents reported. The extension runs through 15 May. UN Secretary-General Kofi Annan favored expanding the role of the 44-member mission to help Tajikistan in its early stages of peacetime reform. In other news, the leaders of Tajikistan's power ministries met with National Reconciliation Commission Chairman Said Abdullo Nuri on 15 November. They discussed integration of opposition and government armed forces and reaffirmed that 16 November was the last day for armed groups to declare their loyalties to either the government or the UTO. Groups not responding to that call will be disarmed by force. BP RUSSIAN GAS HEATS SOUTH KAZAKHSTAN. Kazakhstan's southern regions have begun receiving gas from Russia, ITAR-TASS reported on 15 November. The regions, which include the former capital Almaty, were without gas for a week following Turkmenistan's decision to cut gas shipments to Ukraine via the Bukhara-Ural pipeline. Kazakhstan's southern regions had received gas transported by that pipeline as compensation for the pipeline running through that territory. BP END NOTE AZERBAIJAN'S ECONOMIC REVIVAL AHEAD OF OIL REVENUES by Michael Wyzan Accompanied by high-ranking officials from around the world, Azerbaijani President Heidar Aliev on 12 November opened a valve on a platform in the Caspian Sea, allowing the first "early oil" to flow into an underwater pipeline through which it will be transported to an onshore terminal and then to Grozny and Novorosiisk. Baku has already signed oil deals worth $30 billion, while the country's offshore fields are expected to produce oil worth $100 billion over the next 30 years. Neither of those figures takes into account the revenues from the transit of Central Asian oil and gas through its territory. Both the recent publicity surrounding oil agreements and the renovations under way in Baku suggest Azerbaijan is already a wealthy land. In fact, only Tajikistan has a lower gross domestic product (GDP) per capita within the CIS. In the Soviet era, industry specialized in machine-building for the oil sector. Some 87 percent of such equipment was "exported" to other republics, a market that has since disappeared. Further, the country lost 15 percent of its territory when ethnic Armenian forces occupied six districts adjacent to Nagorno-Karabakh and the surrounding areas in southwestern Azerbaijan. There are now at least 800,000 Azerbaijani refugees from Armenia and internally displaced people, who are unable to work and for whom some provision must be made. Nonetheless, Azerbaijan, like Armenia and Georgia, had chalked up a solid macroeconomic performance by late 1996, albeit from a low base. GDP grew by 1.3 percent in 1996--the first positive figure since independence--and rose by 5 percent during the first nine months of this year. Industrial production, which fell through March 1997, is now growing slowly. Inflation has fallen dramatically since it peaked at 1,610 percent in 1994, reaching 6.7 percent in 1996 (both figures December-to-December). It was only 4.3 percent in the first nine months of 1997, compared with same period last year. According to official statistics, 98 percent of the population lives below the poverty line, set at 350,000 manats ($89) per month. But a study by Deputy Economy Minister Oktay Hagverdiev quoted a figure of about 40 percent. He pointed out in an interview in Baku in early November that there are many informal labor exchanges, where people officially classified as poor can find short-term work paying up to $20 a day. He added that official unemployment statistics err in the opposite direction, showing an unemployment rate of around 1 percent. Hagverdiev puts the true figure at around 17 percent. The government budget has also shown signs of improvement. The deficit fell from 10.7 percent of GDP in 1994 to 3.1 percent in 1996. For the first nine months of 1997, it amounted to only 1.8 percent. That fiscal improvement results from having sharply cut back expenditure. In fact, revenues as a share of GDP has fallen steadily over the post-communist period. Foreign-sector indicators are also strengthening. In 1996, the trade deficit totaled $330 million, but during the first eight months of 1997, the country registered a $60 million surplus. Exports during that period were more than 82 percent of the total amount in1996 as a whole. The foreign reserves are currently about $500 million, a healthy figure considering that imports were below $1 billion last year. The improving balance of payments is reflected in the strengthening of the manat from 4,440 per dollar at the end of 1995 to about 3,950. This appreciation reflects the impact of market forces rather than of government decree. In September, the national bank allowed the exchange rate to be determined freely on the interbank market. While current figures on the external sector are impressive, they are tiny for a country with 7.5 million people. But foreign direct investment (FDI) statistics more accurately reflect the shape of things to come, once the oil boom gets under way. Azerbaijan has received $1.2 billion in FDI so far this year and expects $2 billion in 1998. It is also encouraging that the share of FDI outside the oil sector has risen to about 25 percent. As in most impoverished countries that successfully stabilize their economies, Azerbaijan's success owes much to international financial institutions. The IMF approved loans worth $46 million in April 1995, $132 million in November 1995, and $219 million in December 1996. Nonetheless, both the IMF and other international lenders will probably play a major role in Azerbaijan for only a short period. Experts predict that within four or five years, private-sector capital inflows will be so large that official lending will no longer be necessary. Azerbaijan will soon be able to choose its own development path. A key element will have to be economic diversification, since it is unlikely that oil extraction alone will provide much employment for the country's large educated population. The author is an economist living in Austria. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1997 RFE/RL, Inc. 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