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RFE/RL NEWSLINE Vol 1, No. 187, Part I, 30 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 Note to readers: "RFE/RL Newsline" will not appear on 31 December or 1 January, which are public holidays in the Czech Republic, or on 2 January. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I * RUSSIA, CHINA SIGN NUCLEAR DEAL * KEMEROVO COAL MINERS DEMAND ACTION * TAJIKISTAN, IRAN SIGN DEFENSE ACCORD xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA RUSSIA, CHINA SIGN NUCLEAR DEAL. Russian First Deputy Prime Minister Boris Nemtsov departed China on 30 December, one day after attending the signing ceremony of a nuclear power facility deal worth an estimated $3 billion. Russia will provide two VVER-1000 reactors for the Lianyungang nuclear facility in eastern China. Russian Atomic Energy Minister Viktor Mikhailov, also at the signing ceremony, had called the deal "the contract of the century," according to a 28 December report from ITAR-TASS. Mikhailov noted after the signing that Russia's victory in the tender for the project proved the country's ability to compete on the world market. ITAR-TASS also reported that the Lianyungang plant will require another four reactors, possibly offering Russia further opportunities to sell reactors and other equipment to China. BP YELTSIN TO TAKE TWO-WEEK VACATION. President Boris Yeltsin will leave Moscow on 5 January for a two-week vacation in Valdai (Novgorod Oblast), Russian news agencies reported on 29 December. The vacation was scheduled after Yeltsin recently fell ill and spent two weeks at the Barvikha clinic. The president's doctors and Kremlin officials have said Yeltsin is recovering from an ordinary viral infection. They have repeatedly denied rumors that Yeltsin's latest illness is connected to his past heart problems. LB PRIMAKOV ON NATO, IRAN, HIS OWN FUTURE. In an extensive interview published in "Nezavisimaya gazeta" on 30 December, Russian Foreign Minister Yevgenii Primakov complained of "a tendency to turn the Russia-NATO Council into a debating club" rather than a forum for resolving disagreement and achieving the maximum degree of rapprochement. He again expressed his opposition to NATO membership for the Baltic states, stressing that Russia's objections are not so much strategic as "moral-political", given that the Russian population would find it difficult to accept the use by another military bloc of the infrastructure created by the USSR. Primakov again insisted that the Russian government is not supplying Iran with nuclear technology, but conceded that he could not "totally exclude" the possibility of individual scientists supplying such technology clandestinely. Lastly, Primakov again rejected persistent rumors of his imminent resignation, affirming that Yeltsin trusts him. LF KEMEROVO COAL MINERS DEMAND ACTION. An emergency congress of coal miners in the Kuznetsk basin (Kemerovo Oblast), the largest in Russia, on 29 December resolved to organize a general strike if the federal government does not help the region's coal sector by 15 January, RFE/RL's Moscow bureau reported. Kemerovo Governor Aman Tuleev told RFE/RL in a telephone interview that the miners want a government commission to come to Kemerovo. He noted that they are demanding not new promises, but only that the government keep earlier pledges on funding for the coal sector. On 22 December, some 250 miners from the Kuznetsk basin blocked the Trans-Siberian Railroad for about 10 hours. That protest ended after Fuel and Energy Minister Sergei Kirienko promised that the government would send 13 billion rubles ($2.2 million) to the region. However, only 5 billion rubles have since arrived in Kemerovo. LB CHUBAIS SAYS COAL INDUSTRY FULLY FINANCED THIS YEAR. First Deputy Prime Minister Anatolii Chubais announced on 29 December that the government has met 1997 budget targets on financing the coal industry, Russian news agencies reported. Speaking in Moscow to an interdepartmental government commission on socio- economic problems of Russia's coal-mining regions, Chubais said 6.479 trillion rubles ($1.1 billion) has been allocated to the coal sector this year. Owing to poor tax collection, the government substantially reduced 1997 expenditures in many areas. However, Chubais claimed funding for the coal sector was not affected by those cuts and conformed to original 1997 spending plans. LB SIBNEFT PAYS TAX DEBTS OF OMSK REFINERY... The Sibneft oil company, part of Boris Berezovskii's business empire, met a 25 December deadline for paying 644.8 billion rubles ($108 million) in debts owed to the federal budget by its subsidiary, the Omsk Oil Refinery, State Tax Service chief Aleksandr Pochinok announced on 26 December. He said the Omsk refinery still owes some 427 billion rubles in fines and penalties, but expressed hope that the company will stay current on its tax payments in 1998, ITAR-TASS reported. The government's commission on tax and budgetary discipline recently ordered the Omsk refinery to pay its debts by 25 December or face penalties including the possible seizure and sale of company assets (see "RFE/RL Newsline," 18 December 1997). LB ...BUT NOT ENTIRELY IN CASH. Aleksandr Meling, the general director of the Omsk Oil Refinery, told ITAR-TASS on 29 December that the refinery's tax debts were paid partly in cash and partly through offsets against debts owed to the refinery by government agencies, including the Defense Ministry. Under a recent presidential decree that takes effect on 1 January, the government will be prohibited from canceling taxes owed by enterprises against other debts owed to those enterprises (see "RFE/RL Newsline," 10 November 1997). LB ANGARSK PETROCHEMICAL COMPANY FAILS TO MEET DEADLINE. The press service of the Sidanko oil company, part of the Oneksimbank empire, says it has transferred 550 billion rubles ($92 million) to the federal budget toward paying the tax debts of its subsidiary, the Angarsk Petrochemical Company, ITAR-TASS reported on 30 December. Like the Omsk Oil Refinery, Angara was ordered to pay its tax debts, estimated at 766 billion rubles, in full by 25 December. Petr Karpov, acting head of the Federal Bankruptcy Administration, warned on 29 December that the property of the Angara company may be seized and sold if the debts are not paid, RFE/RL's Moscow bureau reported. An aide to First Deputy Prime Minister Chubais announced on 29 December that Chubais has instructed various government agencies to begin procedures to force Angara to pay its debts. LB ELECTRICITY GIANT SAYS IT HAS PAID DEBTS. The press service of the electricity giant Unified Energy System (EES) claimed on 29 December that the company has paid its tax debts in full, Interfax reported. The government's commission on tax and budgetary discipline ordered EES to pay some 600 billion rubles ($100 million) in debts to the federal budget by 31 December. LB COURT REJECTS CHALLENGE TO SIBNEFT PRIVATIZATION. The Moscow Arbitration Court on 25 December turned down a legal challenge to the May privatization of a 51 percent stake in the Sibneft oil company, Reuters and ITAR-TASS reported. The KM-Invest company, which is part of the Oneksimbank empire, sought to annul the auction after being excluded from the bidding for the Sibneft stake. The Financial Oil Company, which is part of Boris Berezovskii's business empire, won that auction. The Moscow Arbitration Court had ordered that the controlling stake in Sibneft be impounded pending the resolution of the case (see "RFE/RL Newsline," 23 December 1997), but those shares have now been released. KM-Invest plans to appeal the ruling. LB ZYUGANOV PREDICTS IMMINENT OUSTER OF CHUBAIS. Communist Party leader Gennadii Zyuganov told journalists on 29 December that First Deputy Prime Minister Chubais's "days [in the government] are numbered," Interfax reported. He argued that the government will fail to pay all wage arrears to state employees and that Chubais will consequently be forced to leave the government by the end of January. After Zyuganov made similar remarks on 25 December, Chubais told Interfax that Zyuganov's "plans for me and my own [plans] do not coincide." The same day, First Deputy Prime Minister Nemtsov also denied that Chubais will soon leave the government, RFE/RL's Moscow bureau reported. LB LUZHKOV SAYS DEPENDENCE ON IMF IS 'NATIONAL DISGRACE.' Moscow Mayor Yurii Luzhkov claimed on 29 December that Russia's economic policy goals are formed by foreign institutions and termed the situation a "national disgrace," Interfax reported. He said U.S. Vice President Al Gore and IMF Managing Director Michel Camdessus should not be able to "praise or scold" Prime Minister Viktor Chernomyrdin for government decisions. Letters sent to Chernomyrdin by Camdessus and World Bank president James Wolfensohn recently sparked a scandal (see RFE/RL Newsline, 18, 19 and 23 December 1997). In addition, Luzhkov charged that the IMF member states want Russia to "remain a source of raw materials for the civilized world." He also argued that in order to improve the standard of living in Russia, capital must be channeled from what he called the "parasitic sector of the economy" to the manufacturing sector. LB BEREZOVSKII ASSAILS 'BOLSHEVIK' MENTALITY OF CHUBAIS. Boris Berezovskii lashed out at Chubais during a 24 December press conference, RFE/RL's Moscow bureau reported. He again accused Chubais of having a "Bolshevik" mentality, which, he said, was well-suited for the first stage of Russian economic reforms. However, he claimed that the second stage of Russian reforms requires "super- professionalism." Berezovskii also said western financial institutions should not "dictate" policy demands to the Russian government, ITAR-TASS reported. Media partly financed by Berezovskii, including the Russian Public Television network and "Nezavisimaya gazeta," have accused Chubais of using his contacts with the World Bank and the IMF to put pressure on Chernomyrdin. Chubais is believed to have played an important role in persuading Yeltsin to fire Berezovskii from the Security Council in November. LB CHUBAIS RETURNS FIRE. In an interview published in "Izvestiya" on 24 December, Chubais claimed that Berezovskii's frequent allegations about "Bolshevism" conceal his true goals. Chubais argued, "Berezovskii naively thinks [his] whole problem is with Chubais. The problem is that no authorities in Russia (if they are civilized) will ever allow themselves to be transformed into a housemaid for big business." He recalled an interview Berezovskii gave the "Financial Times" in autumn1996, in which Berezovskii boasted that he and six other bankers controlled half the Russian economy. LB DUMA APPROVES AMNESTY. The State Duma on 24 December approved an amnesty proposed by Yeltsin in order to reduce prison overcrowding. Some 35,000 convicts will be released from prison under the amnesty, mainly men over age 60, pregnant women, mothers of young children or women over age 55, inmates who have tuberculosis, and veterans who participated in armed conflicts during their military service. Repeat offenders and those convicted of the most serious violent crimes will not be covered by the amnesty. The measure will affect another 365,000 convicted criminals, either by shortening their prison terms or by commuting punishments that do not involve serving time in prison. The measure need not be approved by the Federation Council or by Yeltsin, since the constitution grants the Duma the sole right to adopt amnesties. LB UPPER HOUSE FAILS TO OVERRIDE VETO ON VETERANS' BENEFITS. The Federation Council on 24 December failed to override a presidential veto of an amendment to the law on veterans, ITAR-TASS reported the next day. The amendment would have expanded the definition of a "veteran of labor" and thereby increased the number of citizens eligible for certain benefits. Yeltsin vetoed the measure after the government calculated that the amendment would entail paying out an additional 12 trillion rubles ($2 billion) annually. Government officials have called for restructuring social benefits payments to provide financial support only to those living in poverty rather than to whole categories of citizens. LB ADVERTISING FIRM HIRES BOOK SCANDAL CASUALTY. Former State Property Minister Maksim Boiko has been appointed general director of the Video-International advertising firm, ITAR-TASS reported on 24 December. Boiko, an ally of First Deputy Prime Minister Chubais, served in the cabinet for just three months before being sacked for receiving a $90,000 payment as a co-author of an unpublished book on privatization (see "RFE/RL Newsline," 17 November 1997). Video-International has close ties to the Kremlin and produced the television commercials for Yeltsin's 1996 re-election campaign. One of the firm's founders, Mikhail Lesin, was appointed deputy chairman of the fully state-owned Russian Television network in June. LB PRESIDENT OF CHUVASHIA RE-ELECTED. Nikolai Fedorov was re-elected as president of Chuvashia on 28 December with some 56.5 percent of the vote compared to 35 percent for his main rival, Valentin Shurchanov, the leader of the Communist Party's branch in Chuvashia. The three other presidential candidates each gained less than 2 percent of the vote. According to an RFE/RL correspondent who visited Chuvashia during the presidential campaign, local observers predicted Fedorov's victory but had expected that he would be forced to contest a runoff election against Shurchanov. (Fedorov won December 1993 presidential elections in Chuvashia only in the second round, and even then he gained less than 30 percent of the vote.) Before he became president of Chuvashia, Fedorov was Russia's justice minister, and some observers believe he has ambitions to return to high politics. LB NORTH OSSETIAN PRESIDENTIAL ELECTION PREVIEW. A group of academics in Vladikavkaz have addressed an appeal to President Akhsarbek Galazov, former rector of the North Ossetian State University, not to seek a second term in the presidential elections scheduled for 18 January, RFE/RL's North Caucasus correspondent reported on 29 December. Recent opinion polls show that 60 per cent of those questioned intend to vote for Russian State Duma deputy Aleksandr Dzasokhov. Only 10 per cent favor Galazov. Twelve potential candidates have been registered for the poll. LF DAGESTAN DEMANDS EXTRADITION OF BUINAKSK GUNMEN. Dagestan's State Council on 29 December demanded that Chechen President Aslan Maskhadov hand over the gunmen responsible for the 22 December attack on a Russian army facility in the Dagestani village of Buinaksk, Interfax reported. Russian Interior Ministry forces on 22 December had surrounded, but then failed to apprehend, the gunmen. The commander of the North Caucasus Military District, Colonel-General Viktor Kazantsev, told journalists on 23 December that he suspected Khottab, the Jordanian field commander still under arms in Chechnya, of masterminding the attack. Maskhadov denied on 27 December that any citizens of Chechnya had participated. LF TRANSCAUCASUS AND CENTRAL ASIA TAJIKISTAN, IRAN SIGN DEFENSE ACCORD. Tajik Defense Minister Sherali Khairulloyev and his Iranian counterpart Rear-Admiral Ali Shamkhani signed a letter of understanding on defense cooperation in Tehran on 29 December, ITAR-TASS and IRNA reported. Shamkhani said Iran would provide logistical and technical training to military personnel in Tajikistan in order to "consolidate peace and stability in the region." The defense accord is the first Tajikistan has signed with a non-CIS member state. BP UNITED STATES CAUTIOUS ABOUT IRAN-TURKMEN PIPELINE. The United States took a cautious view of the official opening of a pipeline bringing natural gas from Turkmenistan to Iran, according to AFP and ITAR-TASS. The Korpedzhe-Kurdkui pipeline will eventually stretch into Turkey and make Turkmen gas available to Europe but must run across Iran. U.S. State Department spokesman James Foley said on 29 December America will "carefully examine" any proposals for pipelines through Iranian territory but added that construction of the Korpedzhe-Kurdkui line began two years before the U.S. adopted a law imposing sanctions on any company doing business with Iran or Libya, and therefore does not "appear to constitute sanctionable activity." BP AZERBAIJANI EX-PARLIAMENT SPEAKER: "ALIEV IS NO CHURCHILL." In a statement to RFE/RL's Azerbaijani Service on 21 December, former parliament speaker Rasul Guliev accused Azerbaijani President Heidar Aliev of systematically liquidating those persons who engineered his return to power in Baku in June, 1993. Guliev said that he had believed that Aliev could transform Azerbaijan as Churchill had transformed Britain and Adenauer -- Germany, but that instead Aliev's policies had led to serious defeats in the Karabakh war. Guliev said that the rift between himself and Aliev stemmed from disagreements during the budget debate in March, 1996, and Guliev's criticism one month later of immoderate adulation of the president. Guliev was constrained to resign in September, 1996, and was stripped of his deputy's mandate on 16 December. Azerbaijani human rights activivists have protested that move as illegal in a letter to the Supreme Court, Turan reported on 27 December. LF GEORGIA EXTRADITES KURDISH ACTIVIST TO TURKEY. A spokesman for the Moscow-based Front for the National Liberation of Kurdistan, which is loosely aligned with the banned PKK (Kurdistan Workers' Party), suggests that the Georgian authorities were motivated by economic considerations when they agreed to extradite to Turkey Suleyman Koc, a member of the Turkish National-Democratic Party, "Nezavisimaya gazeta" reported on 30 December. Koc had fled to Georgia to avoid a ten-year prison sentence in Turkey, and had worked at a Tbilisi center for Georgia's 40,000 ethnic Kurds, who are concerned that his extradition may herald a crackdown on FNLK activities in Georgia. LF END NOTE 1997: Another Busy Year for the IMF in the Post-Communist World by Michael Wyzan The International Monetary Fund (IMF) continues to play the dominant role in providing financial support for the balance of payments of post-communist and developing countries. The fund has the dual role of providing such support and of encouraging economic reform by attaching stringent conditions to its loans. In 1997 the IMF approved new credits for Albania, Armenia (actually, the second annual loan under a three- year facility), Azerbaijan, Bulgaria, Croatia, Estonia, Georgia (an identical situation to Armenia's), Kyrgyzstan, Latvia, Macedonia, Mongolia, Romania, Tajikistan, and Ukraine. Among the transition countries not listed, some - including Kazakhstan, Lithuania, Moldova, and Russia - attempted during the year to qualify for the release of tranches under existing loans. The Visegrad countries have had sufficiently strong private capital inflows not to rely on the IMF for balance-of-payments support, although Hungary was awarded a two-year loan in March 1996, which it has not drawn upon. The IMF suspended lending in1995 to Belarus and Uzbekistan out of dissatisfaction with their weak reform efforts, in the latter case citing the restrictive foreign exchange regime introduced that year. Two further striking cases are Federal Yugoslavia and Turkmenistan. The former has been under UN sanctions and is not yet a member of the IMF; the latter is a member, but has not been sufficiently reformist to quality for support. Bulgaria and Romania won large new loans in April (in this endnote, all agreements are dated based on when hey received approval from the IMF's Executive Board), as new, reformist governments vowed to put their predecessors' sluggishness behind them. The Bulgarian loan is supposed to provide $657 million over 14 months, while the Romanian one is slated to provide $414 million over 13 months. Subsequently, the fund pronounced itself satisfied with Bulgarian economic policy, and released additional loan tranches in July, August, and December. Romania's relations with the fund in1997 were problematic, however. In the summer the IMF criticized the size of the budget deficit, continuing high inflation, and price controls on energy and food products. It was especially concerned about the slow pace of liquidation and privatization of state enterprises, prompting the government to announce in August the closure of 17 enterprises. That move led to the Fund's releasing of the second tranche in September. The IMF remains concerned about slow privatization and high inflation in Romania. However, a privatization decree issued on 21 December, if passed by parliament in February, may help convince it to release the next tranche in early 1998. Albania received $12 million from the IMF in November for "emergency post-conflict assistance." In August, the IMF HAD set as conditions for renewed lending that the authorities close the remaining pyramid schemes, privatize or liquidate two of three state banks, reform the civil service, create an agricultural land market, improve tax collection, raise tax rates, and cut government spending. Agreement was held up until November by legal problems involving the closure of the pyramids. Tajikistan received a similar, $10 million, loan in December. At the other end of the spectrum are Estonia and Latvia, which both received standby loans late in 1997 - worth $22 million and $45 million, respectively - which they do not intend at present to draw upon. Relations between the IMF and Croatia made headlines in an unusual way in1997. Under pressure from the United States, the fund in July refused to release a $40 million loan tranche. The U.S. cited Zagreb's balking at releasing war criminals to the Hague. Those individuals were apprehended and dispatched to the Netherlands in October, and the IMF approved the release of the money, but Croatia then decided it did not need the funds after all. Russia and Ukraine, two of the IMF's biggest borrowers, experienced ups and downs in their relations with it IN 1997. In October, the fund, citing poor tax collection, announced that it would not release a $700 million tranche of a loan to Russia until early 1998. However, an IMF mission in December recommended releasing it, citing progress in that area. Ukraine received a one-year, $542 million standby loan in August. That is not as good news as it seems, since Kyiv and the IMF had been negotiating over a $2.9 billion, three-year loan, but in the end the fund decided that reform progress had been insufficient. Relations with the IMF mirror the overall direction of transition economies. Relations remain on track between the fund and the Transcaucasian states, even though Georgia and Azerbaijan were slow starters on reform. In contrast, the IMF, citing problems with privatization, energy pricing, and the budget deficit, postponed from June until July releasing one loan tranche to Moldova (an early CIS reformer); it then delayed until early 1998 releasing the next one. *Michael Wyzan is an economist living in Austria. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1997 RFE/RL, Inc. 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