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RFE/RL NEWSLINE Vol 1, No. 181, Part I, 17 December 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 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I * SPOKESMAN DENIES RUMORS ON YELTSIN'S HEALTH * NEMTSOV DOWNPLAYS INFLUENCE OF YELTSIN'S 'COURT' * GEORGIAN PARLIAMENT POSTPONES DEBATE ON CIS MEMBERSHIP * END NOTE: IS THE WORST OF RUSSIA'S FINANCIAL MARKET CRISIS OVER? xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA SPOKESMAN DENIES RUMORS ON YELTSIN'S HEALTH. Presidential spokesman Sergei Yastrzhembskii on 17 December denied rumors that President Boris Yeltsin will need several weeks to recover from his latest illness, RFE/RL's Moscow bureau reported. Seven days after Yeltsin was taken to the Barvikha sanatorium, Yastrzhembskii said the president's health is "satisfactory" and that the effects of a respiratory virus have been "eradicated." He said Yeltsin will leave the clinic within the next several days. He also advised Ekho Moskvy to be more "restrained" in its coverage. The radio station reported on 16 December that Yeltsin will need another three weeks to recover. In an interview in the latest edition of the weekly "Argumenty i fakty," cardiologist Renat Akchurin, who performed bypass surgery on Yeltsin in 1996, again denied that the president's current illness is related to past heart problems. LB NEMTSOV DOWNPLAYS INFLUENCE OF YELTSIN'S 'COURT.' First Deputy Prime Minister Boris Nemtsov on 16 December cautioned against "exaggerating" the influence on Yeltsin's decisions of family members or the Kremlin "court," ITAR-TASS reported. Yeltsin's daughter, Tatyana Dyachenko, is an official presidential adviser, but Nemtsov argued that she only deals with issues the president assigns to her. (Some Russian media have charged that former Security Council Deputy Secretary Boris Berezovskii and others have been able to influence Yeltsin by maintaining good relations with his daughter.) Nemtsov, who has periodically compared Yeltsin to a tsar, argued that such a comparison is justified because Yeltsin both physically "resembles a tsar" and wields powers that are "not inferior to those of a constitutional monarch." In fact, the Russian constitution grants the president far greater powers than those enjoyed by European constitutional monarchs. LB SELEZNEV MEETS WITH BUSINESS LEADERS. State Duma Speaker Gennadii Seleznev met with some 50 leading bankers and business figures behind closed doors in Moscow on 16 December, Russian news agencies reported. Duma Economic Policy Committee Chairman Yurii Maslyukov, like Seleznev a Communist, and Duma Budget Committee Acting Chairman Aleksandr Zhukov of the Russian Regions faction also attended the meeting. The bankers present included Aleksandr Smolenskii, chairman of the board of SBS-Agro, Most Bank president Boris Khait, Alfa Group President Petr Aven, and former Central Bank Chairman Viktor Gerashchenko, according to "Kommersant-Daily" on 17 December. Seleznev told journalists that the bankers were particularly interested in draft laws on bankruptcy among banks, regulating the gold market, and guaranteeing citizens' deposits. He added that the business leaders agreed to "actively cooperate with us" by extending their legal services to the parliament when relevant legislation is being considered. LB SIBNEFT, OMSK GOVERNOR SEEK TO BLOCK SEIZURE OF OIL REFINERY... Konstantin Potapov, the acting chairman of the board of directors of the Sibneft oil company, announced on 16 December that Omsk Governor Leonid Polezhaev has asked Yeltsin not to implement a recent decision to seize and sell property of the Omsk Oil Refinery in order to pay tax debts, ITAR-TASS reported. The government's emergency commission for tax and budgetary discipline approved a plan to seize property of the Omsk Oil Refinery and the Angara Petrochemical Company at a meeting chaired by First Deputy Prime Minister Anatolii Chubais (see "RFE/RL Newsline," 10 and 15 December 1997). Potapov said the Omsk refinery paid debts totaling 80 billion rubles ($13 million) during the past week and will settle the remainder by 1 March. Sibneft, which is part of Boris Berezovskii's business empire, owns the Omsk refinery. Sidanko, owned by Oneksimbank, controls the Angara company. LB ...WHILE CHERNOMYRDIN MAY REVERSE DECISION ON SEIZURE. "Kommersant-Daily" reported on 16 December that the decision to seize the Omsk Oil Refinery will be reviewed at another meeting of the commission on tax and budgetary discipline on 17 December. Prime Minister Viktor Chernomyrdin will chair that meeting, while Chubais will be absent, as he is on an official visit to India. Interfax cited unnamed government sources as saying that the decisions to seize property of the Omsk refinery and the Angara company are both likely to be reversed at the 17 December meeting. LB DEFENSE MINISTER SAYS SOME RELIEF IN SIGHT. Igor Sergeev said on 16 December that by year's end, the government will pay its 12.4 trillion ruble ($2.1 billion) debt to the army for wages and social benefits, according to ITAR- TASS. More than one-third of those funds is targeted for civilian personnel. Sergeev noted that the families of 12,900 military personnel are without apartments. The government has allocated 80.4 trillion rubles for the defense sector in the 1998 draft budget, but the Defense Ministry is trying to raise that allocation to 97.2 trillion rubles. Sergeev admitted, however, 55.9 percent of the funds allocated will go toward housing construction. BP CONDITIONS IN MILITARY RESPONSIBLE FOR DEATHS? "Nezavisimaya gazeta" on 17 December reported that living conditions for military personnel and inadequate screening of conscripts are responsible for the recent wave of deaths among Russian soldiers on non-combat duty. The report comes after a drunken private killed three of his fellow soldiers and wounded five others in Dagestan on 16 December and after a soldier killed two colleagues in Siberia two days earlier. It claims that the rising rate of non-combat deaths and suicides can be attributed, among other things, to lack of housing, wage arrears, and fazing. Moreover, 12 percent of this year's conscripts admitted they regularly drink alcohol, 8 percent said they use drugs, and 6 percent have criminal records. Last year, murders within the armed services rose by 27.3 percent and suicides by 24.5 percent. BP IS PASKO GUILTY OF TREASON? Rear Admiral German Ugryumoi has said the actions of Captain Grigorii Pasko, who was arrested at Vladivostok airport in mid-November in possession of incriminating documents, amount to "state treason," according to "Krasnaya Zvezda" on 16 December. Ugryumoi said the documents taken from Pasko contain information on the combat readiness of the Pacific Fleet and its nuclear capability. Experts in Moscow have confirmed that the documents were classified. BP CHINESE-RUSSIAN TRADE DOWN. The Chinese customs agency on 16 December announced that the total volume of bilateral trade with Russia from January to October of this year was $4.788 billion. In April, Chinese President Jiang Zemin and Yeltsin met in Moscow and called for annual bilateral trade to reach $7-8 billion by the end of this year and $20 billion by the year 2000. Trade between the two countries was $6.85 billion in 1996. BP CONSTITUTIONAL COURT SETS 1998 AGENDA. Constitutional Court Chairman Marat Baglai told Interfax on 15 December that in 1998 the court will consider an appeal from the State Duma against Yeltsin's refusal to sign the laws on trophy art and on the government. Among some 50 cases to be considered by the court next year, Baglai mentioned an appeal against government resolutions on the construction of a high- speed railroad between Moscow and St. Petersburg. That appeal is based on the potential environmental consequences of building such a railroad. Baglai also said the court will consider a dispute between the federal authorities and the city of Moscow over the distribution of road funds and an appeal against residency registration rules in Sochi (Krasnodar Krai). The Constitutional Court has already ruled three times that requirements for residency permits [propiski] are unconstitutional. LB PATRIARCH CONCERNED ABOUT 'ATTACKS' ON CHURCH. Patriarch of Moscow and All Russia Aleksii II on 16 December expressed concern that "the negative attitude toward the Russian Orthodox Church currently demonstrated by [Russian] television and the press may herald a new attack on the Church," "Nezavisimaya gazeta" and Reuters reported. Addressing a meeting of Church officials in Moscow, Aleksii warned that "in this world, the Church has been, still is and always will be persecuted." He charged that a Russian Public Television program has a "communist and anti-religious tone" and accused the private network NTV of showing "contempt" for the Church by broadcasting the film "The Last Temptation of Christ" (see "RFE/RL Newsline," 7 and 10 November 1997). Aleksii also criticized the government for seeking 240 million new rubles ($40 million) in funding for sex education in 1998, a sixfold increase over this year's funding. LB SAMARA GOVERNOR SLAMS FEDERAL BUDGET POLICIES. Konstantin Titov charged on 16 December that federal budget policies are reducing the economic potential of Russian regions and in some cases "driving regions into the arms of businesses" in order to remain solvent, RFE/RL's Moscow bureau reported. Addressing the Second International Conference on Federalism, Titov criticized the draft 1998 budget in particular. (Titov and other regional leaders have complained that the budget and new tax legislation proposed by the government would assign all revenues from taxes that are easy to collect to the federal government, while leaving regional authorities the proceeds from those whose collection is difficult.) Titov also charged that during the first 11 months of 1997, his oblast collected some 25 percent more tax revenues than planned, but none of those extra revenues returned from federal coffers to Samara. LB DIFFERING VIEWS ON MOSCOW CITY ELECTIONS. Moscow Mayor Yurii Luzhkov on 17 December said the recent elections to the Moscow City Duma demonstrate that Muscovites want their legislative and executive authorities to "constructively cooperate" and "not get involved in political arguments," ITAR-TASS reported. City Duma Chairman Vladimir Platonov, a loyal Luzhkov ally who was easily re- elected, commented the previous day that Moscow voters showed that they want "professionals, not politicians who only make promises." However, State Duma deputy Nikolai Gonchar has charged that the campaign was marked by numerous violations of electoral legislation, an RFE/RL correspondent in Moscow reported on 15 December. In particular, Gonchar cited an aggressive leaflet campaign against him and Arkadii Murashev of the Russia's Democratic Choice party in the final days before the vote. Gonchar's bloc did not win a single seat in the Moscow City Duma (see "RFE/RL Newsline," 15 December 1997). LB TYUMEN COURT DECLINES TO RULE ON ELECTION CONTROVERSY. The Tyumen Oblast Court on 16 December declined to rule on whether deputies should be allowed to serve simultaneously in the Tyumen legislature and a legislature in either Khanty-Mansi or Yamal-Nenets Autonomous Okrug, ITAR-TASS reported. The court decided that the Constitutional Court is the proper forum for resolving the case. Khanty-Mansi and Yamal-Nenets are part of Tyumen Oblast but are also Russian Federation subjects in their own right. Politicians from Tyumen have long-running political and economic disputes with their counterparts in the oil- and gas- rich okrugs. The Tyumen Oblast Duma recently moved to bar deputies from serving in more than one legislature (see "RFE/RL Newsline," 4 November 1997). But three deputies from the Yamal-Nenets legislature and one from the Khanty- Mansi legislature won seats to the Tyumen Oblast Duma in the 14 December elections. LB TRANSCAUCASUS AND CENTRAL ASIA GEORGIAN PARLIAMENT POSTPONES DEBATE ON CIS MEMBERSHIP. The Georgian parliament convened a special session on 16 December in response to a demand by 73 opposition deputies to debate whether Georgia should consider quitting the Commonwealth of Independent States, Caucasus Press reported. Instead of debating the issue, however, lawmakers adopted a resolution on the creation of a commission that is to assess whether Georgia's membership in various international organizations--including the CIS, the UN, and the Organization on Security and Cooperation in Europe, contributes to the restoration of the country's territorial integrity. The commission will present its findings within four months. In Moscow, Russian Foreign Ministry spokesman Valerii Nesterushkin expressed approval of the postponement, Interfax reported. Nesterushkin conceded that cooperation within the CIS poses certain problems but said a decision on quitting that body "requires deep and thoughtful analysis." LF GEORGIAN TERRORISM TRIAL RESUMES. The trial of former Mkhedrioni paramilitary leader Djaba Ioseliani and 14 of his associates resumed in Tbilisi on 16 December, AFP and Caucasus Press reported. Ioseliani and several other defendants, who face charges of masterminding the failed assassination attempt against then parliamentary chairman Eduard Shevardnadze in August 1995, protested that the proceedings were illegal and demanded that three prosecutors be replaced. Judge Djemal Leonidze rejected that demand. Several defendants also claimed they had given evidence under duress or torture during the pre-trial investigation. LF ARMENIANS PROTEST LEADERSHIP'S KARABAKH POLICY. Some 10,000 people attended a demonstration in Yerevan on 15 December to protest the perceived readiness of the country's leadership to sign a Karabakh peace agreement restoring Azerbaijani control over the disputed enclave, RFE/RL's Yerevan Bureau reported. Participants adopted a statement that was delivered to the embassies of the three countries--Russia, France, and the U.S.--that co-chair the OSCE's Minsk Group, which is mediating a settlement of the conflict, according to Noyan Tapan. The next day, Armenian President Levon Ter-Petrossyan met with the Russian, French, and U.S. ambassadors to discuss the agenda for the upcoming OSCE foreign ministers' meeting in Copenhagen, ArmenPress reported. LF FOREIGN INVESTMENT IN ARMENIA. Direct foreign investment is expected to total $70-80 million by year's end, according to an unnamed Industry and Trade Ministry official quoted by ArmenPress on 15 December. The official said the lion's share of investment is divided between the recently privatized telecommunications enterprise ArmenTel, Coca-Cola Bottlers Armenia, Midland Bank Armenia, and the Armenian- U.S. joint venture Global Gold Armenia. Of a total of 766 joint ventures partly or wholly funded by foreign capital, 404 (53 per cent) are engaged in trade. Russia is the most important foreign investor (193 enterprises), followed by Iran, the U.S., France, Georgia, Germany, and Syria. Meanwhile, the Armenian government on 16 December granted two South African metallurgical companies a four-month exclusive concession to prospect for gold, copper, and molybdenum and prepare proposals for the joint development of deposits, RFE/RL's Yerevan bureau reported. LF FORMER AZERBAIJANI PARLIAMENT SPEAKER STRIPPED OF MANDATE. Rasul Guliev, who was forced to resign as parliamentary speaker in September 1996 and now lives in the U.S., was stripped of his deputy's mandate on 16 December, Turan reported. The official reason was that Guliev has failed to attend parliamentary sessions for more than one year. The previous day, however, the ruling Yeni Azerbaycan party had issued a statement accusing Guliev of anti-state activities. Ali Nagiev, the party's first deputy chairman, told journalists on 16 December that Guliev will shortly be expelled from the party. In his recently published book, "Path To Democracy," Guliev harshly criticizes the economic polices of President Heidar Aliev. LF TURKMEN PRESIDENT CLOSES ACADEMY OF SCIENCES. Saparmurat Niyazov on 15 December signed a decree abolishing the Academy of Sciences and all post-graduate institutions, Interfax reported. Researchers and scientists of the academy will now be responsible to the government ministries and agencies that deal with their respective specialist areas. Niyazov said he made the decision because of the "lack of any practical scientific results" from either the academy or the post-graduate institutions. BP DAY OF MOURNING IN TAJIKISTAN. The Tajik government has declared 17 December an official day of mourning for the 85 victims of the Tajik airliner crash in the United Arab Emirates on 15 December, according to ITAR- TASS. The Tajik Financial Ministry has been ordered to allocate funds for compensation to the families of those who died. Each family will receive a lump sum payment of 400,000 Tajik rubles (about $533). An investigation into the cause of the crash is under way. Tajik officials have said the plane was in good working order and that the crew were familiar with the Khujand-Sharja route. BP REGIONAL AFFAIRS RUSSIA-BELARUS UNION BUDGET APPROVED. The Parliamentary Assembly of the Russia-Belarus Union on 15 December approved the alignment's first joint budget, "Kommersant-Daily" reported on 17 December. That move, however, is not legally binding. Russia is to provide 65 percent of planned revenues amounting to 385,811,000 new Russian rubles ($64,302,000) and Belarus 35 percent or 206,196,000 rubles ($34,366,000). The largest single item of expenditure is financing cooperation between the Interior Ministries, border guards, and customs services, for which 42.1 percent of total expenditures are earmarked. Another 17.1 percent is for finance, military, and technical cooperation, Interfax reported. Addressing the session, Russian Deputy Prime Minister Valerii Serov said that a single currency may be established for certain unspecified financial transactions within the union. LF WHICH PIPELINE FOR RUSSIAN GAS EXPORTS TO TURKEY? Gazprom chairman Rem Vyakhirev will visit Georgia and Armenia on 17-18 December to discuss Russian gas exports to Turkey via those countries. Speaking in Tbilisi on the eve of Vyakhirev's visit, Georgian President Eduard Shevardnadze expressed doubts that the planned Trans-Black Sea underwater pipeline from Dzhughba to Samsun, which is intended to transport Russian natural gas to Turkey, will be built unless all Black Sea littoral states give their agreement. Shevardnadze pointed out that the existing gas pipeline through Georgia and Armenia to Turkey has an annual throughput capacity of 12 billion cubic meters, which is not being fully realized, according to Interfax. Bulgaria has protested that the Trans-Black Sea under-water pipeline poses an ecological threat. In late November, Sofia negotiated an agreement with Russia on gas exports to Turkey via its territory. LF IS THE WORST OF RUSSIA'S FINANCIAL MARKET CRISIS OVER? by Floriana Fossato First Deputy Prime Minister Anatolii Chubais believes that Russia has overcome the worst of the global financial crisis that shook the country's financial markets in recent weeks. In a joint news conference with Finance Minister Mikhail Zadornov in Moscow on 15 December, Chubais said that "the turn is for the better...and there are grounds to believe that the more dangerous stage is already behind us." Russia's financial market suffered severely from the recent crisis in Asia, which undermined investors' confidence in emerging markets, prompting investor flight also from Russia's market. That development has threatened the modest economic stability Russia has achieved so far this year and cast doubt over optimistic forecasts. Chubais, however, said that purchases of foreign exchange, which threatened to cause a significant devaluation of the Russian currency, have declined significantly. "Last week, the central bank was not selling but buying foreign currency on the markets," he commented. He also remarked that, with loans totaling more than $2 billion expected from the IMF and the World Bank, the government is not seeking additional credit from abroad. Moscow will be able to meet President Boris Yeltsin's target of paying by the end of the year $1.6 billion in back wages to public sector employees, he predicted. Economic analysts in Moscow, however, remain skeptical that the government will be able to pay all back wages by 31 December because of continued revenue shortfalls. The payment of those wages is essential for Chubais's future in the government. His standing was badly damaged in a scandal in November over a high royalties payment for a book on Russian privatization. After the book scandal erupted, Zadornov replaced Chubais as finance minister, and some Russian observers say Yeltsin may soon sacrifice Chubais altogether. The source of Chubais' optimism was a decision recently taken by an IMF review team in Moscow. That team issued a statement saying it will recommend the release of a $700 million installment of a three-year $10.1 billion credit. IMF officials in Washington told RFE/RL that the fund's board may consider releasing the tranche as early as the first week in January. The IMF froze loan disbursements to Russia in October, because of poor tax collection (in the first nine months of the year, only 66 percent of projected revenues had been collected) and because of the government's failure to reform the tax system. Now, however, the IMF has indicated it is encouraged by Russia's effort to clean up its finances, saying the Russian authorities have "clearly confronted" their problems on tax collection and budget spending. IMF officials added that Russia has good economic prospects for 1998, "provided that the fiscal and monetary policies agreed during the review are fully applied on a sustained basis." A similar statement was recently made by the Organization for Economic Development and Cooperation (OECD), which predicted GDP growth of 0.5 percent. Chubais said at the 15 December press conference that, despite the financial crisis, Russia still may meet a government target of 2 percent economic growth for 1998. Zadornov, for his part, said that tax collection improved in November and December. The sale of part of the state-owned Eastern Oil Company for $800 million dollars also helped boost revenues. That sale took place despite the recent unfavorable conditions on the stock market, and Chubais said about 20 percent of the money that was withdrawn from the treasury bill market in November is now being re-invested in Russia. However, analysts say that world markets are not yet steady and that Russia remains vulnerable, since it is not achieving revenue targets for 1997. Chubais and Zadornov both said they are encouraged by the fact that prospects are also good for two World Bank loans that the bank's board is expected to examine for final approval within the next few days. The two loans, which are intended for structural adjustment and reform of the coal industry, would total some $1.6 billion. World Bank officials have said their release would take place within hours of the final approval. Russian observers believe these positive developments allowed the Russian government to put off negotiations with four Western banks for a $2 billion loan. But the optimistic picture on which Russian financial officials and international financial institutions have recently based their decisions is marred by the State Duma's refusal to approve a government proposal to increase the government's foreign-borrowing limit. Moreover, the State Duma Council on 16 December approved a government request to postpone the second reading of the 1998 budget until 24 December. Duma Budget Committee Acting Chairman Aleksandr Zhukov explained that deputies need more time to consider government-backed amendments on planned 1998 expenditures. The author is a Moscow-based RFE/RL correspondent. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1997 RFE/RL, Inc. 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