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RFE/RL NEWSLINE Vol. 2, No. 9, Part I, 15 January 1998
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 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I * CHERNOMYRDIN FAILS TO ATTEND CABINET MEETING * RYBKIN IN GROZNY * UKRAINE RATIFIES TREATY WITH RUSSIA xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA CHERNOMYRDIN FAILS TO ATTEND CABINET MEETING. Prime Minister Viktor Chernomyrdin did not attend a 15 January cabinet meeting that he was scheduled to chair. An unnamed government aide told Reuters that Chernomyrdin has gone to the Barvikha clinic, where President Boris Yeltsin spent two weeks in December. However, government spokesman Igor Shabdurasulov denied that Chernomyrdin was at the sanitarium, saying the premier was working on documents at home. Earlier, a government spokeswoman confirmed that First Deputy Prime Minister Anatolii Chubais chaired the cabinet meeting, but she claimed to have no information on Chernomyrdin's whereabouts. The prime minister returned to Moscow on 14 January after visits to Turkmenistan and Tajikistan. Chernomyrdin underwent heart bypass surgery in 1992, before he was appointed prime minister, but he has had no apparent health problems in recent years. LB YELTSIN UNHAPPY WITH DELAYS ON START-2 RATIFICATION. Yeltsin is not pleased that the State Duma has repeatedly delayed consideration of the START-2 arms control treaty, presidential spokesman Sergei Yastrzhembskii told ITAR-TASS on 15 January. He said Yeltsin believes the postponements harm the interests of the Russian armed forces, prospects for further reductions in strategic offensive weapons, and Russian-U.S. relations. U.S. President Bill Clinton is scheduled to visit Moscow in 1998, but both Russian and U.S. officials have said that visit should be held only after Russia ratifies START-2. The Duma is not scheduled to consider the treaty during the first half of the year (see "RFE/RL Newsline," 13 January 1998). LB RYBKIN IN GROZNY. As head of a government delegation to Grozny on 14 January, Russian Security Council Secretary Ivan Rybkin met with Chechen President Aslan Maskhadov and acting Prime Minister Shamil Basaev. Discussions focused on short-term measures to enhance cooperation, specifically Russian economic assistance. Also discussed was a possible visit to Chechnya by Chernomyrdin to pave the way for Russian President Yeltsin's planned trip. Rybkin told journalists later he believes a constitutional law should be adopted giving Chechnya the status of either a full or associate member of the Russian Federation. Also on 14 January, the Russian Security Council issued a statement denying media reports that the State Duma voted two days earlier to cut federal spending on Chechnya, ITAR-TASS reported. LF ABDULATIPOV WARNS AGAINST "STARVING" CHECHNYA. Addressing Duma deputies on14 January, Russian Deputy Prime Minister Ramazan Abdulatipov called for increased funding for reconstruction in Chechnya, arguing that a "hungry and angry Chechen is dangerous both to Russia and to Chechnya." Abdulatipov said Russia wasted the time that has elapsed since the signing in August 1996 of the Khasavyurt accords, which postponed a decision on Chechnya's future status within the Russian Federation. He added that if delays in expediting reconstruction of the Chechen infrastructure continue, "in one year [radical field commander Salman] Raduev will come to power in Grozny," an RFE/RL correspondent in Moscow reported. LF DUMA CONCERNED ABOUT DEFENSE INDUSTRY, AVIATION. The Duma on 14 January approved a resolution demanding that state support for the military-industrial complex be raised to a level that would provide for Russia's security, ITAR-TASS reported. The resolution instructed the Audit Chamber to examine how funds earmarked for conversion of defense industry enterprises have been spent. It also argued that at his next meeting with the president, prime minister, and Federation Council speaker, Duma Speaker Gennadii Seleznev should call for the president and government to stop "ignoring appeals from the State Duma...concerning the armed forces, defense industry, and Russian science." Also on 14 January, the lower house called for the government to create an independent commission to investigate airplane accidents. A resolution on the "critical situation in Russian aviation" said such a commission should include members of the Russian Academy of Sciences and Duma deputies. LB REALLOCATION OF DUMA COMMITTEES DELAYED. Duma Speaker Seleznev announced on 14 January that the leaders of the seven registered Duma factions have agreed to leave the current distribution of committee chairmanships in place until the parliament approves the 1998 budget, RFE/RL's Moscow bureau reported. He added that the issue would not be considered before March. Under the January 1995 agreement on committees, which was to expire this month, the Communist faction was allowed to appoint heads of nine Duma committees. Our Home Is Russia, Liberal Democratic Party of Russia, and Yabloko factions were given four committees each, the Popular Power faction three, and the Agrarian and Russian Regions factions two each. Our Home Is Russia has since sought unsuccessfully to remove Lev Rokhlin, who was expelled from the faction last September, from the post of Defense Committee chairman. LB NUMBER OF BANKS CONTINUES TO DECLINE. Central Bank Deputy Chairman Aleksandr Turbanov announced on 14 January that Russia had 1,697 commercial banks as of 1 January, Interfax reported. In 1995, there were more than 2,500 such banks in Russia. Turbanov said 43 percent of Russian banks currently have less than 1 million ECU in registered capital ($1.1 million). He noted that in order to receive a license, new banks are now required to have registered capital of at least 4 million ECU. He added that beginning on 1 January 1999, all banks will be required to have at least 1 million ECU in registered capital or else lose their banking licenses. Turbanov advised banks that currently do not meet this requirement to consider merging with larger institutions. According to Central Bank Deputy Chairman Denis Kiselev, licenses were revoked from some 330 Russian banks in 1997, ITAR-TASS reported on 13 January. LB NEW LIMITS ON FOREIGN BORROWING BY BANKS. In response to the turmoil on international financial markets, the Central Bank has changed its regulations on foreign borrowing by commercial banks, "Russkii telegraf" reported on 14 January. Commercial banks will now be allowed to borrow a maximum of 400 percent of their registered capital, or 28 percent of their total assets, from foreign banks. Central Bank Deputy Chairman Kiselev told "Russkii telegraf" that the change is designed to ward off a potential crisis if foreign creditors lose confidence in the Russian banking system. He added that the new rule merely limits the growth of foreign borrowing by Russian banks and will not require them to reduce current borrowing levels. However, the newspaper reported that some bankers believe the Central Bank changed its rules because on international financial markets, loans to Russian commercial banks are competition for Russian government bonds. "Russkii telegraf" is fully owned by Oneksimbank. LB FOREIGN-CURRENCY RESERVES DEPLETED BY MARKET TURMOIL. Central Bank Chairman Sergei Dubinin announced on 13 January that the bank's gold and foreign-currency reserves totaled $18 billion as of 1 January, about the same level as at the beginning of December 1997, Russian news agencies reported. The Central Bank's gold and foreign-current reserves totaled nearly $25 billion in September, but the bank spent billions in subsequent months to support Russian treasury bills (GKOs) and prevent a significant devaluation of the ruble. Dubinin expressed the hope that by the end of 1998, yields on GKOs will fall from 31-32 percent currently to 15-18 percent. At the height of the market instability in November, GKO yields reached 45 percent. LB PUBLIC TRUST IN RUBLE LOW. Also on 13 January, Dubinin said more must be done to increase the public's trust in the ruble, ITAR-TASS reported. He noted that Russian citizens' cash holdings in U.S. dollars are now estimated at $30 billion. He did not specify how the authorities plan to achieve greater trust in the ruble. The recent redenomination, which took three zeroes off the ruble, was in part designed to increase trust in Russia's currency and facilitate the "dedollarization" of the economy. LB KEMEROVO MINERS STAGE WARNING STRIKE. Workers at all coal mines in Kemerovo Oblast staged a one-day warning strike on 15 January, an RFE/RL correspondent in Kemerovo reported. The miners, many of whom are owed several months of wages, are demanding more financial support for the coal industry. Kemerovo's Kuznetsk coal basin is the largest in Russia. In an interview with RFE/RL's Moscow bureau on 14 January, Kemerovo Governor Aman Tuleev described the strike as "madness," saying it will mainly harm the interests of the miners. Tuleev recently held negotiations with Prime Minister Chernomyrdin and other government officials in Moscow. A government commission to be chaired by Fuel and Energy Minister Sergei Kirienko will fly to Kemerovo on 19 January. Speaking to RFE/RL, Tuleev particularly praised First Deputy Prime Minister Chubais's work to secure financing for the coal industry. LB COMMISSION BLOCKS PROPOSED REFERENDUM IN ROSTOV. The Rostov Oblast Electoral Commission has refused for a third time to register an opposition group seeking to hold a referendum asking voters whether they trust Rostov Oblast Governor Vladimir Chub. The commission ruled that the wording of the proposed question is open to multiple interpretations, "Kommersant-Daily" reported on 14 January. The two previous attempts to register a group supporting the referendum were rejected for the same reason. The Communist-backed opposition in Rostov has sought to hold the referendum on Chub on 29 March, the same day legislative elections are scheduled in the oblast. Chub was appointed governor of Rostov by Yeltsin in 1991 and won a September 1996 election to retain his post. However, supporters of Chub's Communist opponent charged that the 1996 election was marked by widespread fraud. LB REGIONAL AFFAIRS UKRAINE RATIFIES TREATY WITH RUSSIA. By a vote of 317 to 27, Ukrainian lawmakers ratified a friendship treaty with Russia on 14 January. President Leonid Kuchma and his Russian counterpart, Boris Yeltsin, signed the treaty last May following years of bilateral disputes over the division of the former Soviet Black Sea Fleet. The document reaffirms the countries' borders and thereby reduces Moscow's chances of claiming Crimea or its port city Sevastopol, as several Russian politicians have advocated. The Ukrainian parliament has yet to consider ratifying several agreements on the fleet, which are expected to face considerable opposition among lawmakers. PB YELTSIN PLEASED WITH RATIFICATION OF TREATY. Russian presidential spokesman Sergei Yastrzhembskii told Interfax on 14 January that Boris Yeltsin welcomed the "convincing ratification" of the treaty by the Ukrainian parliament and expects the Russian parliament to "give equally convincing support" to the document. The Russian State Duma is scheduled to consider the treaty in early February. Although Duma First Deputy Speaker Vladimir Ryzhkov predicted on 14 January that the treaty will be ratified, the document is expected to meet with vocal opposition from some Duma members, including Vladimir Zhirinovsky's Liberal Democratic Party of Russia faction and Popular Power faction co-leader Sergei Baburin. They have called for more transmissions of Russian television broadcasts in Ukraine. Baburin has also warned that Russia will pave the way for Ukraine's possible accession to NATO if it ratifies a treaty renouncing all claims on Ukrainian territory. LB SPOKESMAN SAYS YELTSIN NOT PREJUDICED AGAINST BALTICS. Also on 14 January, Yastrzhembskii said that Yeltsin wants a "constructive dialogue" with the leaders of the Baltic States, Interfax and BNS reported on 14 January. The Russian news agency quoted Yastrzhembskii as stressing that Yeltsin has "no prejudices" against any of the Baltic leaders and that Russia intends to continue to develop relations with the Baltic States. Yastrzhembskii pointed to progress in Russian- Lithuanian relations but noted that ties with Estonia and Latvia are not developing well because the rights of ethnic Russians in those countries are being violated. JC ADAMKUS SAYS KALININGRAD "INTERNATIONAL PROBLEM." Lithuanian President-elect Valdas Adamkus told the Polish weekly "Wrpost" that the status of Kaliningrad Oblast remains an "international problem," BNS reported on 14 January. Adamkus explained that statement by noting that "at the Potsdam Conference, the great powers transferred Kaliningrad to the administration of the USSR, but only temporarily--in other words, until such a time when a decision is made as to what is to be done further." He argued that problems related to the region should be resolved by international organizations, while stressing that cooperation with "all neighbors" is indispensable for peace "in this part of Europe." By contrast, incumbent President Algirdas Brazauskas last month distanced himself from challenges by Lithuanian politicians regarding Kaliningrad's status. Such challenges, Brazauskas said, "complicate our relations with neighboring countries and, of course, with Russia." JC TRANSCAUCASUS AND CENTRAL ASIA ARMENIAN PREMIER RULES OUT SUBORDINATING KARABAKH TO BAKU. Speaking to journalists in Yerevan on 14 January, Robert Kocharian again rejected any settlement of the Karabakh conflict that would entail the subordination of the unrecognized Nagorno-Karabakh Republic to Azerbaijan, RFE/RL's Yerevan bureau reported. Kocharian argued that a confederation in which Azerbaijan and Nagorno-Karabakh would have equal status is the optimum way of preserving Azerbaijan's territorial integrity, according to Noyan Tapan. He acknowledged that serious differences emerged within the Armenian leadership over Karabakh at the 7-8 January Security Council session, adding that such differences are "a normal phenomenon." But Kocharian denied a press report that his resignation was discussed at the Security Council session (see "RFE/RL Newsline," 14 January 1998). LF GEORGIAN OFFICIALS RESPOND TO MAFIA CHARGES AGAINST DIPLOMAT. Georgian parliamentary chairman Zurab Zhvania and parliamentary Commission for Foreign Affairs chairman Kakha Chitaia have expressed their support for the country's diplomatic corps while acknowledging shortcomings in its work, Caucasus Press reported on 14 January. The two officials were responding to a statement by parliamentary Commission on State and Legal Affairs chairman Mikhail Saakashvili accusing Georgian Ambassador to Italy Begi Tavartkiladze of neglecting his duties and of ties with "dubious" Italian financial circles. LF AZERBAIJAN DENIES SELLING MISSILES TO PERU. Azerbaijan's Ministry of Defense has officially denied allegations in the "Washington Times" on 12 January that Azerbaijan has sold to Peru air-to-air missiles worth $8 million, Turan reported on 14 January. "The New York Times" on 7 January had cited a Human Rights Watch report that gun- runners from Azerbaijan, Turkmenistan, Ukraine, and Bulgaria had transported arms to Hutu and Tutsi militants in Burundi. LF AZERBAIJANI OIL OUTPUT DOWN, BUT EXPORTS UP. Azerbaijan in 1997 met its oil production target of 9.02 million metric tons, down 0.9 per cent on 1996 levels, Interfax reported on 12 January. In an interview with "Nezavisimaya gazeta" two days later, Natik Aliev, the president of the state oil company SOCAR, admitted that the target for extraction of natural gas was not met. Aliev disclosed that in 1997 Azerbaijan exported a record quantity of oil, the lion's share of which went to Iran, Georgia, and Dagestan. (That oil was extracted by SOCAR, not by any of the international consortia of which SOCAR is a member.) Aliev said that domestic consumption of oil has fallen since SOCAR began demanding pre-payment for deliveries to all domestic customers, except the Ministries of Defense and Agriculture. LF AZERBAIJANI PRESIDENT NAMES EXPERTS TO NEGOTIATE WITH TURKMENISTAN. Heidar Aliev has appointed a group of oil officials and diplomats to conduct talks with Turkmenistan on delineating the dividing line between the Azerbaijani and Turkmen sectors of the Caspian, Turan and Interfax reported on 13 January . Foreign Minister Hasan Hasanov told journalists that it may prove easier for the five Caspian littoral states to reach agreement on the disputed status of the Caspian after the sea's median line is delineated. Visiting Ashgabat on 13 January, Russian Prime Minister Chernomyrdin expressed the hope that all disputes related to Caspian Sea resources will be resolved this year. LF RUSSIAN PREMIER IN TURKMENISTAN ... On the second day of his visit to Ashgabat, Chernomyrdin on 14 January failed to reach agreement with Turkmen President Saparmurat Niyazov on the resumption of Turkmen natural gas exports via Russia. Niyazov rejected Russian offers to purchase 25 billion cubic meters of gas for resale to Ukraine or to pay $32 in transit tariffs per thousand cubic meters of Turkmen gas exported to Ukraine via Russia. But both Niyazov and Gazprom board chairman Rem Vyakhirev, who accompanied Chernomyrdin, hinted that a compromise on export tariffs may be reached, but not earlier than within one month. LF ... AND TAJIKISTAN. In Dushanbe on 14 January, Chernomyrdin and Tajik President Imomali Rakhmonov signed several bilateral agreements, including one on defense cooperation in 1998. Talks focused on Tajikistan's request for membership in the CIS customs union and a possible 500 million ruble ($85 million) Russian loan to Tajikistan. Tajik Prime Minister Yakhye Azimov told Interfax on 13 January that a "financial injection" is needed to enable Tajikistan to honor previously signed bilateral agreements with Russia. But Russian Deputy Prime Minister Valerii Serov said Russia could not agree to such a loan before adoption of the 1998 budget. Serov also said that complete stabilization of the political situation in Tajikistan is necessary before Russia can complete construction of the Rogun hydroelectric power station, in which it has a 50 percent stake. LF KAZAKH OPPOSITION CONDEMNS CHINESE REPRESSION OF UIGHURS. Members of the AZAT, AZAMAT, and ATTAN- Kazakhstan movements convened a press conference in Almaty on 14 January to condemn the execution last month in China's Xinjiang Autonomous Region of 13 young Uighurs for their alleged involvement in terrorist and separatist activities, RFE/RL's Almaty bureau reported on 15 January. Leaders of the ethnic Uighur minority in Kazakhstan have sent a written protest to the Chinese Embassy in Almaty. The Kazakh opposition activists called on the Kazakh government to sever all economic and other relations with China until the oppression of ethnic Uighurs in Xinjiang ends. LF END NOTE YELTSIN ORDERS CABINET TO KICKSTART ECONOMY by Stephanie Baker President Boris Yeltsin has ordered the government to ensure that 1998 is the first year Russia records solid economic growth, but his finance minister has cast doubt on whether that goal can be realized. After meeting with First Deputy Prime Minister Boris Nemtsov at a holiday retreat in northwestern Russia on 13 January, Yeltsin issued a statement saying he is instructing the government take steps to ensure Russia achieves 2-4 percent growth in 1998. Yeltsin called for the government to push through a new tax code this year and reduce tax rates to stimulate the economy. He also urged the government to take steps to bring down interest rates in order to allow private sector lending to get off the ground. But Finance Minister Mikhail Zadornov said in an interview published the same day that he doubts whether the country can achieve economic growth in 1998. "To be honest, I am not a big optimist about economic growth in 1998.... I think the  parameters will roughly follow figures for 1997," he told the Russian daily "Nezavisimaya Gazeta." Zadornov's comments put him at odds with the rest of the government. Prime Minister Viktor Chernomyrdin told a cabinet meeting last week that promising year-end economic results mean that Russia is well placed to achieve growth this year. And First Deputy Prime Minister Anatolii Chubais has said that 2 percent growth in 1998 is realistic. According to preliminary figures, Russia's gross domestic product was up a modest 0.4 percent in 1997, the first time the country recorded economic growth since the collapse of the Soviet Union. But Zadornov said the recent market crisis had thrown a wrench into the government's economic plans. As he put it: "The market crisis of October-November has thrown Russia back at least half a year." The Finance Minister said it would take a minimum of three months to bring down interest rates. The global financial crisis that began last October has hit Russia hard, as foreign investors fled both the country's debt and equity markets. Yields on treasury bills jumped to 45 percent in November, before coming down to the current level of roughly 32 percent. But yields are still well above pre-crisis levels of 17 percent. Central Bank chairman Sergei Dubinin told State Duma deputies on 13 January that foreign investors withdrew $8 billion from the debt and equity markets during the last few months of 1997. He said the bank's hard currency and gold reserves stood at $18 billion as of 1 January 1998, unchanged from 1 December. In September, reserves stood at $25 billion. As Dubinin put it: "Foreign investors have now calmed down, and practically no money is being taken out of Russia." But he admitted that foreigners were by and large still staying away from the Russian market, which was keeping T-bill yields high. The market crisis has jacked up the government's cost of borrowing, putting a squeeze on the federal budget. Zadornov said the government would not resort to borrowing to cover budget holes as long as yields on treasury bills remain at current levels. He said the Finance Ministry will continue to place only enough treasury bills on the market every week to retire old debt. Zadornov said the first quarter of 1998 will be difficult for the budget due to the high cost of borrowing on domestic markets and an expected drop in tax collection rates in January and February. Russia has been struggling to boost tax collection rates, which were dismally low all last year. Zadornov also said his ministry will press ahead with tax reform and submit a revised tax code to the Duma by the end of January, taking into account proposals from deputies. In his words: "We think that, together with the State Duma, we will succeed in finalizing the draft tax code and passing its basic parts in the first half of the year." With Duma elections scheduled for 1999 and a presidential election slated for 2000, observers have noted that 1998 is the last year the government can hope to push through tax reform. The author is a Moscow-based RFE/RL correspondent. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. 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