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RFE/RL NEWSLINE Vol 1, No. 167, Part I, 25 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 ENERGY POLITICS IN THE CASPIAN AND RUSSIA: Oil has begun flowing from the Caspian Sea, home to one of the biggest oilfields in the world. RFE/RL provides continuing coverage of regional energy developments on its Web site. http://www.rferl.org/nca/special/caspian/index.html xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I *YELTSIN INSISTS HE WON'T FIRE CHUBAIS *CHERNOMYRDIN IN VIETNAM *ARMENIA TO PROPOSE "POLITICAL DIALOGUE" WITH EU End Note AZERBAIJANI PRIVATIZATION MAKES PROGRESS ON SEVERAL FRONTS xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA YELTSIN INSISTS HE WON'T FIRE CHUBAIS... Russian President Boris Yeltsin on 25 November said he will not "give up" First Deputy Prime Minister Anatolii Chubais, despite opposition calls for Chubais's ouster, ITAR-TASS reported. Chubais was removed as finance minister on 20 November over payments for an unpublished book on privatization, which critics charged were thinly veiled bribes. Yeltsin said the $90,000 fees that Chubais and four associates received in the book deal were a "mistake" but not illegal. Rather, Yeltsin said, the issue posed a "moral and ethical problem." The president, who made those comments before meeting with Chubais at the Kremlin, also criticized the cabinet and said its shortcomings would be discussed at a meeting scheduled for 1 December. AW ...DEMANDS GOVERNMENT REPORT. Saying some criticism of his government is justified, Yeltsin ordered his cabinet on 24 November to deliver a report on its own record at a meeting on 1 December. Yeltsin said most of the criticism was "superficial" but added that State Duma critics are "right in many things concerning the work of the government." Yeltsin said he hoped the 1 December meeting of cabinet ministers and heads of various (unspecified) ministries would yield "a serious talk." ITAR-TASS reported. Yeltsin was speaking before meeting with new Finance Minister Mikhail Zadornov, with whom he discussed the government's draft 1998 budget. The draft is due to be debated by the Duma on 5 December. AW YELTSIN SAYS FOREIGN TRADE MINISTRY EFFORTS LACKING. Yeltsin later continued his criticism of the government in talks with Foreign Trade Minister Mikhail Fradkov, ITAR-TASS reported. The president said trade had not matched breakthroughs in foreign relations with countries such as China, Japan, and, to a lesser degree, Canada and Finland. The poor trade record could be a result of a "lack of energy, intelligence, or something else" at the Foreign Trade Ministry, Yeltsin said. AW MITINA SUGGESTS CHUBAIS'S OUSTER AS FINANCE MINISTER WAS INEVITABLE... Viktoriya Mitina, Yeltsin's new deputy chief of staff, has lauded former Finance Minister Anatolii Chubais for his intelligence and organizational abilities. But at the same time, she hinted that his recent sacking as finance minister was inevitable, saying there are bound to be repercussions when one government clique tries to strengthen its position vis-a-vis others, ITAR-TASS reported on 24 November. Mitina was appointed to her new post on 20 November to succeed Aleksandr Kazakov, who, along with two other officials, was fired over the book payments scandal in which Chubais was also involved. AW ...OUTLINES NEW RESPONSIBILITIES. Also on 24 November, Mitina announced she will focus on regional affairs and that Yurii Yarov, who served as Kazakov's first deputy, will take over administrative duties, Interfax reported. Mitina, who previously was a deputy prefect in Moscow's Zelenograd district, said she will spend most of her time outside Moscow, searching for regional administrators, especially women, who have the potential to become national leaders, according to ITAR-TASS. Mitina also called for a restructuring of the presidential administration to rid it of "jealousy and misunderstanding," although she ruled out the need for a further cabinet reshuffle. AW ACTING CHAIRMAN OF DUMA BUDGET COMMITTEE UPBEAT ON BUDGET. Aleksandr Zhukov, the acting chairman of the Duma budget committee and a member of the communist-allied Russia's Regions bloc, expressed optimism on 24 November that the 1998 draft budget will be approved when the Duma considers it in early December, ITAR-TASS reported. "The delay in the budget is mostly of a political nature," he added. Zhukov said the State Duma will need time to study parts of the draft budget, revised by a tripartite conciliation commission. He also announced the budget committee will meet on 26 November to consider its position on the revised budget parameters reached by the conciliation commission, according to ITAR-TASS. Zadornov held the chairmanship of the budget committee until his recent appointment as finance minister. AW YAVLINSKII DISMISSES RUMORS OF A SPLIT. Yabloko leader Grigorii Yavlinskii said on 24 November that Zadornov's decision to leave the party and join the government as finance minister has not led to a split in Yabloko, Interfax and ITAR-TASS reported. Yavlinskii said Yabloko members unanimously had agreed that Zadornov should not have accepted the offer to join the government, whose policies Yavlinskii described as "bankrupt." Yavlinskii said he did not expect Yabloko's opposition to the government to change now that Zadornov is at the head of the Finance Ministry. AW TWO BUDGET COMMITTEE MEMBERS OFFERED KEY POSTS IN FINANCE MINISTRY. Mikhail Motorin, the head of the Duma budget committee's office, confirmed on 24 November that he has accepted an offer by Zadornov to join the Finance Ministry, Interfax reported. Motorin said his role is unclear, but he noted he has been offered the post of deputy finance minister in charge of tax policies. That post was held by Sergei Shatalov, who on 24 November announced his resignation. Shatalov said that he expected Motorin to replace him and that Tatyana Nesterenko of the Russia's Regions bloc would succeed Alexander Smirnov as head of the Main Federal Treasury Department. Nesterenko confirmed to Interfax that she has been offered the post, but she declined further comment. AW FINANCE MINISTRY CLOSES SEVEN ACCOUNTS AT ONEXIMBANK. The Finance Ministry on 24 November announced it has closed seven of its accounts at the Oneximbank, AFP and dpa reported. The accounts were used to handle government tax receipts, according to Deputy Finance Minister Alexander Smirnov. Together, the closed accounts held more than $147 million in foreign currency, he said. Oneximbank accounts of the Federal Customs Service also will be closed by year's end, but two accounts will remain open at the bank for servicing Russia's foreign debt, according to Smirnov. Critics have accused Oneximbank of delaying budget transfers to Russia's regions so that bankers can use the money to earn profits in the high-yield government securities market. In May, Yeltsin issued a decree ordering all state accounts in private banks to be transferred to the central bank by year's end. AW CHERNOMYRDIN IN VIETNAM... Prime Minister Viktor Chernomyrdin met with his Vietnamese counterpart, Phan Van Khai, in Hanoi on 24 November to discuss cooperation in gas and oil exploration and military sales, Russian media reported. It was announced that Russia will increase arms shipments to Vietnam, but no details were provided. The two premiers failed to reach agreement on Vietnam's debt to Russia totaling 10 billion so-called convertible rubles, which was left over from the Soviet era. That debt is the main topic on Chernomyrdin's agenda during his three-day visit. Also on 24 November, Chernomyrdin met with Vietnamese President Tran Duc Luong and handed him an invitation from President Yeltsin to pay an official visit to Russia. In related news, a Russian cargo plane delivered more than 24 tons of humanitarian aid to Vietnam, which was recently hit by typhoon Linda. BP ...TOGETHER WITH GAZPROM, ZARUBEZHNEFT OFFICIALS. Gazprom's Rem Vyakhirev and PetroVietnam's Ngo Thuong San have signed protocols to cooperate in gas extraction off Vietnam's northern coast, Interfax reported on 24 November. the protocol foresees cooperation in the construction of off-shore oil rigs and in the transportation of gas from existing fields. Oleg Popov of Zarubezhneft agreed with the same Vietnamese company to build Vietnam's first oil refinery, which will have an annual capacity of 6.5 million tons. Russia is already a partner in the Vietsovpetro joint venture, which produces some 9 million tons of oil yearly. Russian and Vietnamese officials also discussed ways to increase annual production at the joint venture to 14 million tons. BP RUSSIAN NAVAL OFFICER CHARGED WITH SPYING FOR JAPAN. A Russian naval officer has been charged with spying for the Japanese, ITAR-TASS reported on 24 November. Documents were confiscated from Captain Grigorii Pasko at the Vladivostok airport when he was leaving for Niigata, Japan, on 20 November. The counterintelligence service determined that the documents contained classified information about defense plants in Primorskii Krai. Pasko was arrested on his return from Japan three days later. BP FLARE-UP AT CEREMONY IN VLADIVOSTOCK. Ill-feelings between Primorskii Krai Governor Yevgenii Nazdratenko and embattled Valdivostok Mayor Viktor Cherepkov came to the fore at a 23 November ceremony at which a new Interior Ministry building was opened in Vladivostock. An RFE/RL correspondent in the city reported the next day that despite not being invited by the mayor, Nazdratenko showed up at the ceremony just minutes before the start and began giving a speech in which he took credit for the building's construction. An angered Cherepkov called a halt to the ceremonies and had all refreshments removed . As the banquet tables were being cleared, Nazdratenko entered the room and reportedly punched an elderly war veteran in the head when the latter failed to heed Nazdratenko's orders to leave the food on the table. The war veteran has filed charges against Nazdratenko. AW TRANSCAUCASUS AND CENTRAL ASIA ARMENIA TO PROPOSE "POLITICAL DIALOGUE" WITH EU... At his weekly press briefing on 24 November, Foreign Ministry spokesman Arsen Gasparian said Armenia will soon make a formal offer to the EU to start what it calls a political dialogue on security and foreign policy issues, RFE/RL's Yerevan bureau reported. That dialogue would be in addition to existing economic cooperation. Gasparian said the proposal reflects "substantial progress" in relations between the EU and Armenia in recent months. He noted that Armenian First Deputy Foreign Minister Vartan Oskanian recently signed a temporary agreement on cooperation with the EU in Brussels, which will remain in force until the April 1996 Treaty on Partnership and Cooperation signed by the EU and Armenia is ratified by all union members. LF ...AND TO EXPAND COOPERATION WITH NATO. At the same press briefing, Gasparian said that while in Brussels, First Deputy Foreign Minister Oskanian reached agreement with NATO officials on boosting bilateral ties within the framework of the Partnership for Peace program, RFE/RL's Yerevan bureau and Noyan Tapan reported. Gasparian said NATO's role in the Transcaucasus should complement, and not infringe on, the CIS Collective Security Treaty, Russian- Armenian agreements on security cooperation, and the CFE Treaty. Gasparian accused Azerbaijan of trying to use NATO as an instrument to "contain and oppose" Russia in the Transcaucasus. Gasparian termed that policy "destructive," arguing that it may exacerbate "tension" in the region. LF ARMENIAN DEFENSE MINISTER ASSESSES CIS MILITARY COOPERATION. In an interview in "Nezavisimaya gazeta" on 25 November, Vazgen Sargsian affirmed that Armenia aspires to "good- neighborly relations with all neighboring states based on the principles of guaranteeing peaceful coexistence and the regional balance of forces." Sargsian said some CIS states signed the CIS Collective Security Treaty solely in order to obtain the maximum possible share of former Soviet military hardware. He said he finds "incomprehensible" Russia's complaints about NATO expansion eastward in the light of Moscow's failure to promote the creation of a single CIS defense space. Sargsian again denied that Armenia received any illegal supplies of arms from Moscow. He noted that Azerbaijan received three times more equipment, including strategic weapons, from the former Soviet army than did Armenia. Azerbaijan's defense expenditure in recent years was four times higher than Armenia's, he added. LF ARMENIAN DRAFT BUDGET CRITICIZED. Father Husik Lazarian, the outgoing chairman of the majority Hanrapetutyun faction in the parliament, said on 24 November that there is growing disagreement between Hanrapetutyun and the government over the latter's economic policies, which run counter to the bloc's electoral programs, RFE/RL's Yerevan bureau reported. Lazarian criticized the 1998 draft budget, which he said provided for "survival" rather than "development." He argued that, if passed, the budget would at best maintain living standards at the same level as this year and may even cause real wages to drop in 1998. Lazarian threatened not to vote for the draft budget unless major changes are made to it. He declined to say, however, whether his views reflect those of the majority faction. LF ADJARIA AMENDS CONSTITUTION. The Supreme Soviet of Georgia's autonomous Adjar Republic voted on 22 November to amend the region's constitution, Caucasus Press reported on 24 November. The head of the Revival faction within the Georgian parliament said the amendments provide for the creation of the post of ombudsman and a Constitutional Court. But the opposition Party of National Ideology of Georgia issued a statement condemning the amendments, which they claim endow Adjar Supreme Soviet chairman Aslan Abashidze with "virtually unlimited powers" and increase Adjaria's status almost to that of an independent state. On 24 November, Abashidze dismissed the internal affairs ministers and his deputies because of a recent increase in crime. Abashidze will take over as acting interior minister in addition to his chairmanship of the Supreme Soviet. LF GEORGIAN OFFICIAL RESIGNS OVER MASS POISONING. Rustavi Mayor Temuri Dalakishvili has resigned following the recent gastro-enteritis epidemic in the city caused by the leakage of sewage into the drinking water supply (see "RFE/RL Newsline," 21 November 1997), Caucasus Press reported on 24 November. More than 400 people, most of them children, have been hospitalized. LF ENERGY CRISIS IN TBILISI? Georgian Energy Minister Davit Zubitashvili is negotiating terms with Russia's Gazprom for a resumption of natural gas supplies, which have been cut owing to Georgia's unpaid debts, Caucasus Press reported on 24 November. None of Tbilisi's gas-fired power stations is currently functioning. LF TAJIK DONOR CONFERENCE BEGINS IN VIENNA. At the opening of a two-day donor conference in Vienna on 24 November, Tajik President Imomali Rakhmonov told delegates that $7 billion is needed to repair damage caused during Tajikistan's five-year civil war. Said Abdullo Nuri, the leader of the United Tajik Opposition and the chairman of the National Reconciliation Commission, assured potential donors that the inclusion of UTO members in the government will not have a negative impact post-war reform. "We are not going to impose our political and religious ideas on anyone," Nuri said. The Swiss government is to help Tajikistan's membership in the Asian Development Bank by paying the $3.7 million admission fee. Tajik officials are hoping to raise $65 million at the conference. BP UZBEK PRIME MINISTER IN U.S. Utkur Sultanov met with U.S. Deputy Secretary of State Strobe Talbott, Energy Secretary Federico Pena, and U.S AID administrator William Atwood in Washington on 24 November, ITAR-TASS reported. Sultanov praised U.S.-Uzbek cooperation, noting that in the last three years the trade volume between the two countries has risen sevenfold. The U.S. is Uzbekistan's second biggest trade partner and accounts for $800 million in direct investment since 1991. Officials announced that the U.S.-Uzbek commission on political, economic, and technological cooperation will convene for the first time in February 1998. BP BIG DRUG BUST IN UZBEKISTAN. Uzbek customs officials and National Security Service agents have discovered more than 200 kilograms of narcotics aboard a Dushanbe-Moscow train, ITAR-TASS reported on 24 November. The drugs were concealed in the train's dining car. This is reportedly the largest drug bust in Uzbekistan this year. BP MAJOR KAZAKH CANAL IN DANGER OF FREEZING OVER. Irregular electricity energy to the Irtysh-Karaganda canal may cause the vital waterway to freeze over this year, ITAR-TASS reported on 24 November. Energy supplies have been curtailed to the company operating the canal because of payment arrears. The 458-kilometer long canal supplies nearly all of central Kazakhstan with water. BP REGIONAL AFFAIRS MEDIA FREEDOM IN DANGER IN SEVEN CIS STATES. A recent report compiled by the international journalists' organization Reporters sans Frontieres lists seven CIS states and two East European countries where journalists' rights and freedoms are seriously threatened. Those countries are Moldova, Ukraine, Belarus, Turkmenistan, Tajikistan, Azerbaijan, and Uzbekistan as well as Romania and Macedonia, according to INFOTAG on 24 November. The assessment is based on the availability and influence of state-run media, the level of development of the independent media, violence against journalists, and the number of court proceedings against the media initiated by official bodies. Moldova was named as the worst offender owing to its 1994 press law, which makes it very difficult for journalists to defend their rights. All attempts by democratically- minded Moldovan deputies to revise that law have failed, the report noted. LF END NOTE AZERBAIJANI PRIVATIZATION MAKES PROGRESS ON SEVERAL FRONTS by Michael Wyzan The privatization process in Azerbaijan is governed by a three- year program whereby 70 percent of enterprises are to be privatized by the end of 1998. The program divides enterprises into small, medium-size, and large and employs different privatization methods for each category of firm. In industry, enterprises with fewer than 50 workers are considered small, while those with between 50 and 300 are classified as medium-sized and those with more than 300 as large. The respective figures in the service sector are 10, 11-50, and more than 50. Small enterprises are privatized by auction. More than 15,000 such firms have been sold this way, and the process is now 70-80 percent complete. A local peculiarity is that, even under communism, small enterprises were run by individuals who were regarded as their "owners." All but one of the auctions have had only one bidder. It is considered unethical to bid against someone who is already seen as owning the firm up for auction. The absence of competition at auctions may reduce the state's privatization revenues and deprive many individuals of the opportunity to participate in small-scale privatization. Nonetheless, the sense of ownership felt by Azerbaijanis even when "their" small businesses were state property illustrates the entrepreneurial inclinations of much of the population. Those inclinations are evident in the quality of service in Baku's many restaurants and shops, which is unusually high for a postcommunist country. The privatization of such small businesses is relatively easy and uncontroversial. But determining the fate of large industrial enterprises that have lost their markets in the former Soviet Union is another matter, as is finding a way for the local private sector to participate in the burgeoning oil business. Although the state oil company will not be privatized, experts estimate that private consortia will account for 75 percent of oil production by 2010. A mass privatization program was launched in March. Under that program, 7,100,000 books--each containing four vouchers--were distributed among the population between 1 March and 15 August. All citizens were eligible to participate, and each was entitled to a single book or, in the case of war veterans, two books. The first step in the privatization of larger enterprises is to turn them into joint-stock companies, after which 15 percent of the shares must be sold to their employees for vouchers. Another 55 percent must be sold at open voucher auctions and the remaining 30 percent in cash auctions in which foreigners may also participate. Voucher auctions have been held at regular intervals over the eight months since the program was launched. At any such auction, some 50 enterprises are up for sale and bidding takes place in six cities, with the results pooled by computer. The prices of the shares are determined by the number of vouchers offered for them in those auctions. To date, shares in 340 large enterprises have been sold. By the end of 1997, that figure is expected to reach 400 (out of a total of some 2,000). Vouchers are tradable, officially at the country's 10-20 voucher shops but in practice also on the black market. There is as yet no stock exchange where the shares obtained with the vouchers could be traded, although it is possible to update computer records to indicate that share ownership has changed. Large enterprises fall into one of four categories. Companies in the first category may not be privatized and include railroads, water facilities, historical and cultural monuments, pension funds, and the national bank. The second category comprises companies that may be privatized only by presidential decree; such companies are involved in fuel and energy production, petrochemicals, telecommunications, and bread- and wine-making. The privatization method for firms in this category is the same as for other large firms, except that a non- voting "golden share" is reserved for the state. The third category covers enterprises that may be privatized only by decree of the Council of Ministers; those companies deal with sales of oil and oil products, construction, road maintenance, and medical services. The final category embraces the remaining large enterprises, all of which must be privatized. Investment funds have yet to be set up, although the legislation governing such bodies is already in place. In the long run, creating mutual investment funds and pension funds--which will allow people to benefit from the nation's vast resource wealth--may be more important for the country's economic fortunes than giving those people shares in moribund industrial enterprises. The author is an economist living in Austria. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1997 RFE/RL, Inc. 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