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RFE/RL NEWSLINE Vol 2, No. 25, Part I, 6 February 1998
___________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 25, Part I, 6 February 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 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I * DUMA DEPUTIES TO VISIT IRAQI PRESIDENTIAL SITES * DUMA PASSES BUDGET IN THIRD READING * KOCHARIAN SAYS SITUATION IN ARMENIA UNDER CONTROL * End Note: WHY TER-PETROSSYAN FELL xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA DUMA DEPUTIES TO VISIT IRAQI PRESIDENTIAL SITES. State Duma deputies have accepted an invitation from Saddam Hussein to visit Iraq to inspect "any presidential sites of their choosing," ITAR-TASS reported on 6 February. Hussein sent the invitation to Duma Speaker Gennadii Seleznev the previous day. The Duma delegation will be headed by Duma Deputy Speaker Mikhail Gutseriev of the Liberal Democratic Party of Russia (LDPR) and will depart for Baghdad on 8 February. The plane carrying the Duma deputies will also deliver humanitarian aid. Last December, when LDPR leader Vladimir Zhirinovsky led a delegation to Baghdad, an aid shipment was also delivered. BP DUMA PASSES BUDGET IN THIRD READING... The State Duma on 5 February approved the 1998 budget in the third reading by 232 to 141 with one abstention, Russian news agencies reported. The budget provides for 499.9 billion rubles ($83.3 billion) in spending, 367.5 billion rubles in revenues, and a deficit of 132.4 billion rubles, or 4.7 percent of the estimated 1998 GDP of 2.84 trillion rubles. The lower house of the parliament must approve the document in a fourth reading, scheduled for 11 February, before sending it to the Federation Council. That reading is considered a formality, since no changes to revenue or spending articles will be considered. The budget is unlikely to go into effect before early March. Until then, monthly expenditures are equivalent to one-twelfth of total 1997 expenditures, in line with a government directive issued last December. LB ...AMID WIDESPREAD DOUBTS ABOUT ITS FEASIBILITY. Although government officials pledged last year that the 1998 budget would be Russia's first "realistic" budget in several years, "Kommersant-Daily" reported on 6 February that "no one doubts that this budget will not be fulfilled." Duma Speaker Seleznev described the budget as "very, very weak" and said the government will have trouble implementing it. Several members of Grigorii Yavlinskii's Yabloko faction have observed that the recent events on Russian markets have driven up the costs of government borrowing. There are no additional planned revenues to compensate for those higher costs. The Yabloko faction has voted against the budget in all readings and criticized the document as unrealistic even before the recent market turmoil. LB BUDGET HAS NO 'PROTECTED' ITEMS. The Duma voted not to give any articles in the 1998 budget "protected" status, ITAR-TASS reported on 5 February. Duma Budget Committee acting Chairman Aleksandr Zhukov praised the vote, saying the budget should not distinguish between articles that the government must fulfill and articles it need not implement. Some 80 percent of planned 1997 expenditures were listed as "protected" items, Zhukov said. In fact, those items were not spared from the spending cuts or "sequester" imposed unilaterally by the government last year. Some "protected" items, such as agriculture subsidies, were reduced by more than 50 percent. LB DUMA INCREASES COMPENSATION FOR HOLDERS OF OLD BANK ACCOUNTS... Also on 5 February, the Duma approved an amendment to increase spending on compensation for holders of pre-1992 deposits in Sberbank, RFE/RL's Moscow bureau reported. Those deposits were rendered virtually worthless by the high inflation of the early 1990s. Until now, only citizens born before 1921 have been able to receive some compensation for their lost savings. The Duma voted to increase expenditures on such compensation to 5 billion rubles ($830 million) from 3 billion rubles in the original draft. Finance Minister Mikhail Zadornov urged Duma deputies not to approve the increase since it is not covered by additional planned 1998 budget revenues. LB ...CUTS BENEFITS FOR VICTIMS OF POLITICAL REPRESSION. The Duma also approved a budget amendment to halve spending on compensation for victims of Soviet-era political repression to 500,000 rubles ($83,000), RFE/RL's Moscow bureau reported. The amendment was proposed by the Labor and Social Policy Committee, headed by Liberal Democratic Party of Russia member Sergei Kalashnikov. Duma deputy Yulii Rybakov, a member of the Russia's Democratic Choice party, fought unsuccessfully to reverse the Duma's decision. He told RFE/RL that some 500,000 Russian citizens who were either arrested or deported during the 1930s and 1940s qualify for the benefits, which include free medicines and subsidies for utilities and transportation. LB MIXED REACTION TO YELTSIN'S DEFENSE OF CHUBAIS, NEMTSOV. Communist Party leader Gennadii Zyuganov on 5 February criticized President Boris Yeltsin for saying that First Deputy Prime Ministers Anatolii Chubais and Boris Nemtsov will stay in the government until 2000 (see "RFE/RL Newsline," 5 February 1998). Zyuganov said the Communist-led opposition will prepare to stage mass protests on 23 February, 27 March, and later this year, Interfax reported. Duma Speaker Seleznev, also a Communist, argued that Chubais and Nemtsov do not deserve the president's support, and he expressed doubt that the first deputy premiers will stay in the cabinet until 2000. Aleksandr Shokhin, leader of the Our Home Is Russia Duma faction, said Yeltsin's decision to keep Chubais and Nemtsov in the government is "absolutely correct," ITAR-TASS reported Shokhin said that given the difficult financial situation, "it is important to achieve stability and give a signal to investors so they will return" to Russian markets. LB DID YELTSIN LEAVE DOOR OPEN ON FIRST DEPUTY PREMIERS? Some Russian commentators have pointed out that although Yeltsin said he will protect Chubais and Nemtsov against those who wish to force them out, he also said the first deputy premiers will stay in the government until 2000 "if they manage to hang on to power." That ambiguous phrase could mean that he would allow them to resign if the pressure from their opponents became too great. Speaking to RFE/RL's Moscow bureau on 5 February, political commentator Andrei Piontkovsky noted that it is difficult to interpret the phrase "if they manage to hang on to power." He also argued that Yeltsin's latest remarks notwithstanding, Chubais and Nemtsov are unlikely to regain the vast influence they wielded in the government last year. LB YELTSIN ISSUES DECREES TO SPUR INVESTMENT. During a 5 February meeting with Nemtsov, Yeltsin signed two decrees aimed at stimulating investment in Russia. One decree provides incentives for investors who commit more than $250 million, Russian news agencies reported. According to Nemtsov, if such investors agree to increase each year the share of Russian parts for their goods and if that share reaches at least 50 percent within five years, the investors' storage facilities will be considered "free economic zones" and subject to far lower taxes. Nemtsov said the decree says to potential investors that "we are ready to help you, if you create new jobs in Russia and bring new technologies here." A separate decree on steps to attract investments in the automobile industry provides benefits for certain projects that involve at least 1.5 billion rubles ($250 million) in investments over five years. LB CONSTITUTIONAL COURT TO HEAR CASE ON YELTSIN'S THIRD TERM. The Constitutional Court will consider whether Yeltsin is legally entitled to seek re-election in 2000, "Kommersant-Daily" reported on 6 February. Although the constitution prohibits the president from serving more than two consecutive terms, some presidential advisers have argued that Yeltsin's current term should be considered his first, since he was elected in 1991 under a different constitution (see "RFE/RL Newsline," 2 February 1998). The Duma has asked the court to rule on the issue. The court is expected to consider the appeal toward the end of the year but might decide to hear the case earlier. LB RUSSIA CRITICIZES U.S. HUMAN RIGHTS REPORT. Foreign Ministry spokesman Gennadii Tarasov on 5 February said the U.S. State Department's 1997 survey of human rights in various countries "contains unconfirmed facts" and "does not take into account the development of democratic processes in Russia," Russian news agencies reported. The report described the Russian judiciary as weak and criticized prison conditions, infringements on press freedom, discrimination against ethnic minorities, and the new religion law (see "End Note," "RFE/RL Newsline," 2 February 1998). Tarasov argued that the report views the human rights situation in Russia "from the point of view of [U.S.] law, practice, and priorities." He also said it ignores Russia's efforts to improve prison conditions and make progress on other fronts. As for the religion law, Tarasov said it is designed to protect Russian society against "totalitarian sects" and is not aimed against all "non-traditional" faiths. LB LUKOIL, SIDANKO NOT TO MERGE. Vagit Alekperov, president of the oil company LUKoil, announced on 5 February that his company is not considering a merger with the Sidanko oil company, Interfax reported. Some Russian media have speculated that LUKoil and Sidanko, which is part of the Oneksimbank empire, would join forces in response to the recent merger of the Yukos and Sibneft oil companies (see "RFE/RL Newsline," 22 January 1998). At the same time, Alekperov confirmed that LUKoil and Sidanko are discussing possible cooperation on certain projects, including the upcoming auction for a stake in Rosneft, ITAR-TASS reported. LB FORMAT OF NEW PASSPORTS MAY BE CHANGED. Mikhail Komissar, the deputy head of the presidential administration, on 5 February told Vasilii Likhachev, the chairman of Tatarstan's legislature, that the presidential administration and government are considering suggestions from regional leaders on the format of Russia's internal passports, ITAR-TASS reported. Leaders of Russia's republics, in particular Tatarstan and several republics in the North Caucasus, have sharply criticized the new passports, which the government began issuing last year. Among other things, they have objected to the absence of the line listing the nationality of the passport holder and the lack of a page listing the information about the holder in the titular language of the republic in which the holder resides (see "RFE/RL Newsline," 6 and 18 November 1997). LB OUR HOME IS RUSSIA SEEKS COMPROMISE ON ELECTORAL LAW. Aleksandr Shokhin says his Our Home Is Russia (NDR) Duma faction is seeking a compromise with the president on proposed changes to the electoral law, "Kommersant-Daily" reported on 6 February. NDR opposes Yeltsin's proposal to abolish the proportional representation system currently used to elect half the 450 State Duma deputies. Instead of amending the law so as to elect all Duma deputies in single-member districts, NDR favors less radical changes. For instance, the pro-government faction would support removing the current requirement that parties receive at least 5 percent of the vote in order to be assigned any of the Duma seats allocated proportionally. In the December 1995 Duma elections, NDR won just 10 of the 225 seats elected in single-member districts--fewer than many analysts had predicted. LB MOSCOW RAISES UTILITY CHARGES FOR OWNERS OF MULTIPLE APARTMENTS. Moscow Mayor Yurii Luzhkov on 3 February announced that effective 1 January 1998, residents of the capital who own more than one apartment will pay 100 percent of the costs of municipal services, "Kommersant-Daily" reported on 4 February. The average Muscovite currently pays just 17.6 percent of the cost of those services, which include electricity, heating, and telephone charges. Although the city administration is counting on the new regulation to provide an additional 144 million rubles ($24 million) in budget revenues this year, "Kommersant-Daily" argued that the revenue increase will be much smaller. Anyone who wishes to avoid the higher charges for municipal services can simply transfer the title of a second or third apartment to a relative, the newspaper noted. LB CAPITAL'S HOUSING REFORM DIFFERS LITTLE FROM FEDERAL PROGRAM. Luzhkov has been one of the most outspoken critics of the federal government's housing reform plan, which is supervised by First Deputy Prime Minister Nemtsov. However, the concept of the housing reform plan being implemented by the Moscow city government differs little from the federal plan. Both policies call for citizens to pay a higher share of the costs for municipal services each year, and both promise subsidies for low-income families. The main difference is that the federal plan calls for citizens to pay 50 percent of utility costs in 1998, with gradual annual increases until 2003, when citizens will have to pay those costs in full. The Moscow policy calls for more gradual rate increases so that citizens will pay 22 percent of utility costs this year, 27 percent in 1999, and 100 percent by 2007, "Kommersant-Daily" reported on 4 February. LB TRANSCAUCASUS AND CENTRAL ASIA KOCHARIAN SAYS SITUATION IN ARMENIA UNDER CONTROL. Acting Armenian President Robert Kocharian said on 5 February that he is in complete control of the situation in Armenia, Interfax reported. He hinted that he might appoint Vardan Oskanian, the first deputy foreign minister, as acting foreign minister. Asked about his citizenship, Kocharian, who is from Nagorno-Karabakh, said he does not know "for sure if I am an Armenian citizen or not." Armenian citizenship is a requirement for candidates in the presidential elections, which are scheduled for 16 March (see also "End Note" below). PG ARMENIAN PRESIDENTIAL RACE BEGINS. Meanwhile, Vazgen Manukian, the leader of the opposition National Democratic Union, has said he will take part in the presidential elections next month, RFE/RL's Armenian Service reported on 5 February. Calling the resignation of Levon Ter-Petrossyan the doorway to a "new epoch" in Armenian politics, Manukian said he did not expect fighting in Karabakh to resume. Other likely candidates are the Communist Party's Sergey Badlian and longtime anti-Soviet dissident Paruir Hairikian. PG FURTHER REACTIONS TO TER-PETROSSYAN RESIGNATION. Georgian President Eduard Shevardnadze on 5 February praised Ter-Petrossyan for his courage in resigning, saying the decision will promote "stability in the region," ITAR-TASS reported. Meanwhile, Russian Foreign Ministry spokesman Gennadii Tarasov said the same day that Moscow considers the resignation an "internal affair" of a friendly country. PG AZERBAIJAN, TURKMENISTAN AGREE ON DIVISION OF CASPIAN. In a breakthrough for Baku and a setback for Moscow, Azerbaijan and Turkmenistan have agreed that the Caspian Sea should be divided into national sectors, ITAR-TASS reported on 5 February. Such a division would allow each of the five littoral states to develop the offshore oil resources without taking into consideration the views of the other four countries, as Russia has been insisting. Azerbaijani Foreign Minister Hasan Hasanov announced the agreement following consultations in Ashgabat. PG EU SUPPORTS TURKMENISTAN OVER PROPOSED PIPELINE. Kees Wittebrood, the chief of the EU's Central Asian department, met with Turkmen President Saparmurat Niyazov on 5 February, Interfax reported. Wittebrood told Niyazov that the EU supports a proposed pipeline that would transport Turkmen natural gas to Europe via Iran and Turkey. Wittebrood also announced the EU will provide 14 million ecu ($12.7 million) in food aid to Turkmenistan. Niyazov proposed a joint project with the EU for cotton production. BP TIME, LOCATION SET FOR CENTRAL ASIAN MILITARY EXERCISE. A two-day conference on planning the next Central Asian military exercise under NATO's Partnership for Peace program ended in Almaty on 5 February, ITAR-TASS reported. The first deputy defense ministers from Kazakhstan, Kyrgyzstan, and Uzbekistan were present, along with representatives from Russia, the U.S., Georgia and Turkey. The next round of exercises will take place at the end of September 1998 in southern Kazakhstan, in Uzbekistan, and in Kyrgyzstan. BP KAZAKHSTAN CREATES HUMAN RIGHTS COMMISSION. Kazakhstan and the UN have agreed to set up a presidential commission on human rights in the Central Asian state, Reuters and AFP reported on 5 February. The commission will review complaints from citizens, mediate in disputes with authorities, and sponsor seminars to raise make citizens aware of their rights. The UN is donating $100,000 to help start up the commission. BP KAZAKH BANK TO OPEN OFFICES ABROAD. Kazakhstan's Narodnyi Bank will open representative offices in Moscow, Beijing, and London over the next six months, AFP reported on 5 February. Those offices will not engage in banking activities. A bank official said "our bank is opening new credit lines by working with foreign banks, so it's necessary for us to represent our interests [abroad]." BP END NOTE WHY TER-PETROSSYAN FELL by Paul Goble The resignation earlier this week of Armenian President Levon Ter-Petrossyan highlights the limits of international pressure on countries with democratic political systems and the dangers inherent in ignoring those limits. Under pressure from the Organization for Security and Cooperation in Europe's Minsk Group--led by Russia, France, and the U.S.--Ter-Petrossyan was forced to accept the so-called Lisbon principles for the resolution of the Karabakh conflict. Although Ter-Petrossyan himself sometimes violated democratic norms, his grudging acceptance of those principles cost him the support of both his own government and people and ultimately forced his resignation. Moreover, it brought to office Robert Kocharian, who is less susceptible to international pressure and less sympathetic to the Lisbon principles. Those principles, presented at the OSCE summit in 1996, call for the restoration of Soviet-era borders, broad autonomy for ethnic Armenians in the disputed region of Nagorno-Karabakh, and international guarantees of such a settlement. While many have repeatedly invoked them as OSCE policy, they were, in fact, never formally adopted by that body. Yerevan refused to give its approval, arguing that the principles failed to take into account its own interests as well as facts on the ground. As Ter-Petrossyan made clear at the time, Armenia could never agree to compromise the fate of the Armenians of Karabakh by forcing them to accept the restoration of Azerbaijani control of the disputed enclave. His government made clear that Armenians were being asked to concede their victories in the field with little to show for it except Azerbaijan's promises that it would respect the autonomy of Karabakh in the future. And neither Ter-Petrossyan nor other Armenians placed much faith in the notion that the international community would effectively monitor any settlement that might be reached. Instead, they feared that the international community would eventually turn away from the issue out of deference to Baku and its enormous oil wealth and because of a sense that the Karabakh situation was no longer a pressing issue. But following the 1996 summit, the Minsk Group put ever more pressure on Ter-Petrossyan to agree its proposals. Ter-Petrossyan frequently countered by pointing out that neither his government nor his electorate could support them. He noted that the international community, in the form of the Minsk Group, was putting all the pressure on Armenia and thereby allowing Azerbaijan to obtain at the negotiating table what it had been unable to achieve in the field. With each visit by Minsk Group diplomats, Ter-Petrossyan moved ever closer to the Lisbon principles, winning praise in the chancelleries of the Minsk Group countries but costing him support at home. The popularity of Ter-Petrossyan in those foreign capitals was evident in the comments of world leaders after his fall from office. But his unpopularity at home is the reason he fell. Ter-Petrossyan clearly recognized that danger and sought to limit it last year by appointing Karabakh leader Robert Kocharian as his prime minister. Although politically shrewd, that move bought Ter-Petrossyan only a small amount of time. Moreover, it meant that Kocharian, who opposes the Lisbon principles, could mobilize Armenian opinion against the policies of his president. Kocharian did that with both skill and abandon; as a result, Ter-Petrossyan is out of office and Kocharian is now acting president. On the one hand, the change at the top in Armenia may introduce a certain clarity in any future talks on reaching a settlement of the Karabakh dispute. No one can doubt where Kocharian stands, and an appreciation of that may lead to more serious talks. On the other hand, a broader lesson has been learned: however well-meant, international pressure on leaders of democratic or even democratizing countries may quickly become counterproductive if it fails to take into account popular attitudes in those countries. Ter-Petrossyan was prepared to go along with the Minsk Group. As he stressed in his resignation speech, he was the leader of the party of peace in Armenia. But the Minsk group did not take into account Armenian popular attitudes and did not appear to many Armenians to be even-handed in its dealings with the parties to the conflict. Also, it did not provide Ter-Petrossyan with the concessions he needed to remain in power. Now, the Minsk Group program is at best on hold, and the dangers of a renewed conflict in the region are far greater than they were before Ter-Petrossyan's departure. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. 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