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RFE/RL NEWSLINE Vol 2, No. 90 Part I, 13 May 1998
___________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 90 Part I, 13 May 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 COMMUNIST HOUSING: A FLAW IN THE DESIGN More than 170 million people in Eastern Europe and the former Soviet Union live in decaying housing complexes. This five-part series examines the issues, compares East Berlin's rehabilitation success story with Prague's less than successful efforts, and describes the state of U.S. public housing. http://www.rferl.org/nca/special/housing/ xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I * RUSSIA CONTINUES TO CRITICIZE INDIAN NUCLEAR TESTS * PRIMAKOV ON START-2, IRAN * BEREZOVSKII IN YEREVAN End Note: TENSIONS WITH RUSSIA OVERSHADOW LATVIA'S ECONOMIC PERFORMANCE xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA RUSSIA CONDEMNS LATEST INDIAN NUCLEAR TESTS... Rashit Khamidulin, an official from the Russian Foreign Ministry's Asian Department, said India's decision to carry out two more nuclear tests on 13 May is cause for "deep sorrow," as it shows India "has not listened to the calls of international community" following the tests it conducted two days earlier, ITAR-TASS reported. An unnamed official from the Foreign Ministry expressed concern that by this means "India is pushing the world toward greater use of nuclear weapons." The same official said New Delhi's decision to conduct more tests "puts Russia in a very uncomfortable position." The previous day, the Foreign Ministry had released a statement saying India's nuclear testing "contradicts the efforts by the international community to strengthen the regime of non-proliferation of nuclear weapons," Interfax reported. Foreign Minister Yevgenii Primakov noted that it violates "the balance that has been created in the world" and is "totally unacceptable," "short-sighted," and "guided by regional rather than global" ideas. BP ...BUT OPPOSES SANCTIONS. While there were indications on 12 May that the Russian Atomic Energy Ministry may cancel a deal to provide India with nuclear reactors for power plants, Russia did not join the group of countries calling for sanctions to punish New Delhi. Russian President Boris Yeltsin said "I think we should use diplomatic tools" and said he would use his scheduled visit to India later this year "to solve this problem somehow." Primakov also said "Russia is very cautious about sanctions. They often have counterproductive results." Interfax asked an unnamed source at the Russian Foreign Ministry if Russia would recall its ambassador to India. The source responded "of course not," adding that the test "cannot but arouse our anxiety and regret, but not to such an extent." BP PRIMAKOV ON START-2, IRAN. Foreign Minister Primakov told NTV on 12 May that the U.S. Congress will harm prospects for the ratification of the START-2 arms control treaty if it imposes sanctions on Russian companies that do business with Iran. Among others, the gas monopoly Gazprom, which is involved with a project to develop Iranian gas reserves, could be affected by such sanctions. As for allegations that Russia is transferring missile technology to Iran, Primakov said Russia has no reason to encourage Iran to build missiles with a range of 2,000 kilometers. Primakov said he and Defense Minister Igor Sergeev will work to persuade the State Duma to ratify START-2 and predicted that the "sensible" part of the Duma will support ratification. However, he said some Duma deputies will try to score political points during the debate over the treaty. LB YELTSIN DISCOUNTS HEALTH RUMORS. Yeltsin on 12 May discounted speculation that he is in poor health, saying he feels good and keeps to a busy working schedule. During a live Internet session on MSNBC, Yeltsin challenged doubters to compete against him in sports. The English translation of Yeltsin's remarks appeared to leave the door open to a third presidential term: "As for the presidency, in the year 2000, we still have two years..., we'll see." But the Russian version of the Internet session, which was published in full in "Kommersant-Daily" on 13 May, did not include that comment. On several occasions the president has ruled out seeking a third term. Asked about a presidential bid by his daughter and adviser, Tatyana Dyachenko, Yeltsin said he has "never spoken about this." He added that in his view, Russian society has not yet matured enough to have a woman president. LB COMMUNISTS SCHEDULE EMERGENCY CONGRESS. Communist Party leader Gennadii Zyuganov has announced his party will hold an extraordinary congress on 23 May, Russian news agencies reported on 12 May. The party must amend its charter in accordance with the September 1997 law on the electoral rights of citizens. (Political parties and movements that do not comply with the law will be barred from the next parliamentary elections.) In addition, the congress will outline the party's stance toward the new government, "Nezavisimaya gazeta" reported on 13 May. Zyuganov recently announced that his party no longer favors "dialogue" with the executive authorities (see "RFE/RL Newsline," 6 May 1998). Duma Speaker Gennadii Seleznev, also a Communist, told journalists on 12 May that no Duma faction is likely to propose a vote of no confidence in Prime Minister Sergei Kirienko's government before the summer recess, adding that October will be a "decisive" month for the government. LB CHERNOMYRDIN SEEKS TO CHANGE MOVEMENT'S IMAGE. Former Prime Minister Viktor Chernomyrdin told Radio Mayak on 12 May that his Our Home Is Russia (NDR) movement will seek to shed the label of Russia's "party of power" in order to improve its prospects for the parliamentary and presidential elections in 1999 and 2000, Interfax reported. Chernomyrdin said the movement's image links it with "officials' offices and bureaucratic methods." In an interview with the latest edition of "Argumenty i fakty" (No. 19), Duma First Deputy Speaker Vladimir Ryzhkov admitted that the NDR is in a "difficult situation," since Chernomyrdin still "feels more like a prime minister" than a politician. He added that some members of the NDR political council and Duma faction have still not adjusted "psychologically" to the fact that their leader is "no longer the number two person in the country." LB DUMA PUTS OFF CONSIDERATION OF PRIVATIZATION PLAN. The State Duma Council on 12 May postponed by one week debate on the government's 1998 privatization program, which was scheduled to be considered at a 14 May plenary session, ITAR-TASS reported. According to Aleksandr Shokhin, leader of the Our Home Is Russia Duma faction, the Communist faction called for the postponement to give the Audit Chamber more time to complete an investigation into past privatization sales. Meanwhile, Duma Speaker Gennadii Seleznev predicted on 12 May that the Duma is unlikely to approve in its entirety the government's list of enterprises to be privatized this year. Under a law that went into effect last August, the government must seek parliamentary approval for its privatization program. LB GOVERNMENT DRAFTS DECREE ON STRATEGIC ENTERPRISES. Deputy Prime Minister Boris Nemtsov announced on 12 May that the government is drafting a presidential decree that would define the criteria for determining which enterprises are "of strategic importance," Russian news agencies reported. The decree will list "natural monopolies" in the energy and transportation sectors, as well as defense enterprises and other companies with know-how that could potentially threaten national security if it were lost. Strategically important enterprises may not be privatized pending the adoption of a special law on the matter. Deputy State Property Minister Aleksandr Braverman advocated putting 765 companies on the list. But "Kommersant-Daily" reported on 13 May that the Defense Ministry opposes the State Property Ministry's proposal. Currently some 3,000 enterprises are considered "strategically important," the newspaper said. LB KULIKOV FOE RETURNS TO HIGH POST IN INTERIOR MINISTRY. Yeltsin has appointed Vladimir Rushailo as head of the Interior Ministry's Main Administration on Organized Crime (GUOP), "Kommersant-Daily" reported on 12 May. Rushailo was the longtime head of the Moscow Regional Organized Crime Administration (RUOP). He was transferred to the post of first deputy head of the GUOP in October 1996, but then Interior Minister Anatolii Kulikov fired him within two weeks for criticizing his superior at the GUOP and his successor at the RUOP. Since December 1996, Rushailo has been an adviser to Federation Council Speaker Yegor Stroev (see "OMRI Daily Digest," 23 October and 10 December 1996). Meanwhile, Interior Minister Sergei Stepashin announced on 12 May that Yeltsin will soon appoint Leontii Shevtsov as deputy interior minister for the North Caucasus, Interfax reported. Shevtsov was recently replaced as commander of the Interior Ministry troops (see "RFE/RL Newsline," 11 May 1998). LB PATRIARCH SPEAKS OUT AGAINST CAPITAL PUNISHMENT, ABORTION. Patriarch of Moscow and All Russia Aleksii II says capital punishment is tantamount to premeditated murder and violates the biblical commandment "Thou shalt not kill," Interfax reported on 12 May, citing an interview the head of the Russian Orthodox Church gave to the newspaper "Ochnaya stavka" (published by the Prosecutor-General's Office, the Interior Ministry and the Federal Security Service). Russia is required to abolish capital punishment as a condition of membership in the Council of Europe, but the parliament has refused to ban the death penalty. In the same interview, Aleksii argued that abortion is also murder "because a mother kills her child and her own soul." Although the abortion rate in Russia has dropped in recent years, it still remains among the highest in the world at 60.5 per 1,000 women of child-bearing age. LB ZYUGANOV ENDORSES KRASNOYARSK INCUMBENT. Communist Party leader Zyuganov announced on 12 May that the Presidium of his party's Central Committee is calling Krasnoyarsk Krai residents to vote "for a government of popular trust" and against former Security Council Secretary Aleksandr Lebed in the 17 May election, Russian news agencies and NTV reported. Governor Valerii Zubov faces an uphill battle to defeat Lebed. He has promised to form a coalition government and has offered posts to several well-known Communists, including a Soviet-era secretary of the krai party committee, a prominent deputy in the current krai legislature, and State Duma deputy Petr Romanov, who finished third in the first round of the Krasnoyarsk election. Zyuganov said his party supports Zubov's plans. (Yeltsin has repeatedly refused to create a coalition government on the federal level.) Zyuganov added that a Lebed victory "would be a great misfortune for the country." LB ZUBOV CAMPAIGNS ON OPPONENT'S TURF. Zubov has visited the far-northern city of Norilsk, where Lebed gained some 80 percent of the vote in the first round of the election, an RFE/RL correspondent in Krasnoyarsk reported on 12 May. The governor claimed that the World Bank has agreed to give a $500 million loan to fund the resettlement of pensioners from Norilsk to other parts of Russia. The Russian government is to guarantee that loan. Meanwhile, the famous pop singer Alla Pugacheva arrived in Krasnoyarsk on 13 May to campaign on behalf of Zubov. LB LEBED DISMISSES COMMUNIST APPEAL, COALITION PLANS... Lebed on 12 May predicted that Communist efforts to block his election will backfire. He told Interfax that recent events surrounding the confirmation of Prime Minister Sergei Kirienko have exposed the Communists' "policy of compromises." As for Zubov's promise to appoint a coalition government in the krai if re-elected, Lebed borrowed a phrase recently used by Kirienko, saying "professional" rather than "political" criteria should be used when handing out government posts, RFE/RL's correspondent in Krasnoyarsk reported. Some local observers believe Zubov's effort to attract Communist support will displease voters who backed the incumbent in the first round. LB ...PROMISES TO HELP SITUATION IN NORTH CAUCASUS. Also on 12 May, Lebed announced that if he wins the gubernatorial election, he will use his seat in the Federation Council to work toward a peaceful settlement in the North Caucasus, Interfax reported. As Security Council secretary, Lebed negotiated the August 1996 Khasavyurt accords with then Chechen field commander and current Chechen President Aslan Maskhadov. He charged that federal authorities have made no progress in settling the Chechen crisis since then. Lebed has been campaigning in the krai's capital city, Krasnoyarsk, where Zubov gained more than 50 percent of the vote in the first round of the election, RFE/RL's correspondent there reported. LB IMO REJECTS RUSSIAN SHIPPING PROPOSALS. The International Maritime Organization's Security Committee on 11 May declined to debate or vote on a Russian report calling for the relaxation of restrictions on shipping passing through the Turkish Straits, according to the "Turkish Daily News" two days later. The report, which was supported by Greece, Bulgaria, and southern Cyprus, advocated increasing the number of tankers allowed to traverse the straits and rejected a Turkish requirement that all vessels take aboard a guide captain when using those waters. LF RUSSIA INCREASES STAKE IN TATAR TRUCK FACTORY. At a meeting of the board of the KamAZ truck factory on 12 May, shareholders agreed to increase the company's registered capital from 125 million rubles ($20 million) to 6.25 billion rubles, RFE/RL's Kazan bureau reported. The nominal price of individual shares is to be increased and additional 300 million shares issued. The measures are intended to reduce the plant's debts, currently estimated at 8.5 billion rubles. Russia and Tatarstan will increase their holdings in KamAZ, while the stake of the U.S. company KKR, which failed in its bid last year to find new investors for the company, is reduced to no more than11 percent. The meeting also elected a new board, which is headed by First Deputy Prime Minister Ravil Muratov and includes seven representatives of the Russian federal government and four from Russian commercial creditor banks. LF TRANSCAUCASUS AND CENTRAL ASIA BEREZOVSKII IN YEREVAN. CIS Executive Secretary Boris Berezovskii held talks in Yerevan on 12 May with President Robert Kocharian and Prime Minister Armen Darpinian, Russian and Armenian agencies reported. Berezovskii described Armenia as one of the most important members of the CIS. Discussing options for reforming that body, he and Kocharian agreed that economic cooperation should take precedence over political integration but that normal economic development is impossible as long as conflicts remain unresolved. They also agreed that the CIS can be transformed into a functioning structure only after "the stereotype that the CIS exists under Russian sponsorship" is dispelled. Berezovskii told journalists that he and Kocharian had discussed the Karabakh conflict, but he gave no details, according to RFE/RL's Yerevan bureau. But he did say that his personal experience mediating between Moscow and Chechnya could be of value in the Karabakh context. LF ARMENIAN PRIME MINISTER UNVEILS GOVERNMENT PROGRAM. Armen Darpinian on 12 May submitted to the parliament the government's program for socio-economic development based on the transition from stability to economic growth, Noyan Tapan and RFE/RL's Yerevan bureau reported. The program aims to ensure annual GDP growth of 6 percent and low inflation. Taxation will be lowered, with the aim of stimulating investment and creating new jobs, but tax evasion will be targeted even more rigorously than before. The program estimates that privatization of remaining state enterprises will bring more than $1 billion in private investment over the next five years. It also pledges to complete reconstruction by 2001 of the areas of northern Armenia devastated in the 1988 earthquake. LF ARMENIAN EDITORIAL APPOINTMENT SPARKS CONTROVERSY. The staff of Armenia's Russian-language government-funded daily "Respublika Armeniya" have made clear their opposition to the proposed appointment of Shamiram Aghabekian as the newspaper's editor, RFE/RL's Yerevan bureau reported on 12 May. Aghabekian was selected by the Armenian parliament, which is a co-founder of the paper, to replace acting editor Ashot Gazazian. The newspaper's staff say they were not consulted over Aghabekian's appointment. Gazazian, meanwhile, has refused to quit, arguing that Aghabekian is not competent to take over his duties. LF GEORGIAN PARLIAMENTARY DEPUTY QUITS TO JOIN GUERRILLAS. Germane Patsatsia, head of the minority Abkhazeti faction in the Georgian parliament, told journalists on 12 May that he will give up his "senseless" legislative activity to join the ranks of Georgian guerrillas fighting in Abkhazia, Caucasus Press reported. Patsatsia claimed that Abkhazia's southernmost Gali Raion is already under the control of the Georgian informal paramilitaries. He said the district's Georgian population is on the verge of revolt and argued that the guerrilla formation should be legalized and provided with state funding and medical care since 90 percent of its members suffer from tuberculosis. LF AZERBAIJAN DECLARES MASS AMNESTY. The parliament on 12 May passed a law proposed one week earlier by President Heidar Aliev granting an amnesty to some 10,000 people convicted of minor crimes. The amnesty, which does not extend to those convicted of murder, treason, terrorism, or theft, marks the 80th anniversary of the May 1918 founding of the Azerbaijan Democratic Republic. Also on 12 May, a Baku district court sentenced Meshadi Panakhov, a member of the board of the opposition Azerbaijan Popular Front, to five years' imprisonment on charges of illegal possession of weapons during a state of emergency, Turan reported. LF SENTENCES HANDED DOWN TO UZBEK TERRORISTS. Four men found guilty in connection with the violence that broke out in the eastern city of Namangan last December were sentenced to between five and eight years in prison, Interfax reported. Vali Egamberdyev, Mukhtor Mannonov, and the brothers Abdullo and Zhobir Shakhbiddinov had pleaded guilty last week in Namangan to charges of terrorism, attempting to undermine the country's constitution, and seeking to promote Wahhabism. Another eight men are scheduled go on trial in Namangan and 15 in Tashkent on similar charges. BP IRAN COMPLAINS ABOUT UZBEK CAMPAIGN AGAINST ISLAM. A Tehran IRIB Television broadcast on 12 May criticized the "anti- Islam stance" of Islam Karimov, saying the Uzbek president has for some time been trying to form an anti-Islamic alliance with Russia and Tajikistan. The broadcast said that only Karimov seems to be stressing the need for such an alliance. It also claimed that Karimov is attempting to draw the attention of the U.S. and the West to himself "through recourse to an old and meaningless slogan of combating Islam in a region where all nations are Muslim." BP POLYGAMY TO BE REINTRODUCED IN KAZAKHSTAN? RFE/RL correspondents in the Kazakh capital, Astana, reported on 12 May that the parliament has begun discussing amending the laws on family and marriage to allow Kazakhs to have more than one wife. Before the Soviet era, polygamy was common among the people of the Kazakh steppe. BP END NOTE TENSIONS WITH RUSSIA OVERSHADOW LATVIA'S ECONOMIC PERFORMANCE by Michael Wyzan Latvia has recently been buffeted by Moscow's threats to impose unilateral economic sanctions. Russia has sought to justify those threats by citing what it considers to be anti-Russian activities in Latvia and Riga's incorrect treatment of the country's Russian minority. Russian officials have suggested that their country develop new ports to avoid having to use Latvian ones on the Baltic Sea. Russian border guards have refused entry to Latvian drivers who cannot produce notarized Russian translations of their driver's licenses. And Russia's Transportation Ministry has threatened to limit the number of entry permits issued to Latvian truckers. The threats have already had an affect on Latvia. The cabinet on 6 May approved legal amendments granting citizenship to all children born in Latvia after 21 August 1991. That change may well be for the best (it was recommended by the Organization for Security and Cooperation in Europe). But meanwhile the economic effects of Russian pressure are proving harmful. Since early April, there has been a significant decline in freight traffic on Latvian railroads and through its ports. And the Dow Jones Riga Stock Exchange Index fell from 336 on 16 March to 275 on 23 April (before recovering slightly more recently). These shock waves have hit a rather healthy and well- managed economy. In mid-April, the IMF Executive Board lauded Latvia for its excellent performance and "prudent financial policies," although it stressed the need for further progress on large-scale privatization, tax collection and administration, and making the budget process more transparent. Last year's achievements followed the 1996 strong recovery from the downturn of 1995 (which was sparked by a banking crisis). GDP grew by 5.9 percent in 1997, compared with 2.8 percent in 1996, and the growth of industrial production accelerated from 1.4 percent in 1996 to 6.1 percent in 1997. Unemployment fell from 7.2 percent in December 1996 to 7.0 percent one year later, while the average monthly wage in the public sector rose from $242 in December 1996 to $272 last December. Consumer price inflation sank to 7.0 percent from 13.1 percent in 1996 (in both years, it was the lowest in the Baltic States). It declined further to 6.1 percent in the 12 months to February 1998. Last year, the state budget was in surplus for the first time since 1993. The lats has been pegged to the IMF's Special Drawing Right since 1994, so it has not depreciated in tandem with inflation, which, though low for a transition country, remains higher than in Latvia's Western trading partners. The trade deficit rose from $877 million in 1996 to $1.1 billion last year, while the 1997 current account imbalance is projected at $460 million, similar to 1996's and a high 9 percent of GDP. The foreign reserves rose from $729 million at the end of 1996 to $778 million one year later. Thus, a capital account surplus was sufficient to cover the current account deficit. A rise in cumulative foreign direct investment from $645 million at the end of 1996 to $850 million on 30 September contributed to that surplus. How much would Russian sanctions hurt Latvia? Russia remains the leading destination for Latvia's exports, accounting for 21 percent in 1997. By the same token, Russia accounted for 15.6 percent of imports, slightly less than the 16.0 percent supplied by Germany, Latvia's leading import source. Latvia's exports to Russia in 1997 were worth more than $350 million. A special feature of Latvian trade with Russia is the fact that its ports are important entrepots for Russian exports to third countries. Some of this trade is reflected in the goods worth $425 million that Latvia officially imported from Russia last year. Another factor is Latvia's total reliance on Russia for its natural gas, for which it pays world market prices. Latvia is not in arrears in paying for that gas, and Gazprom is a shareholder in the Latvian gas company. Thus, it would appear that Gazprom, an important foreign policy actor in its own right, is unlikely to favor sanctions against the country. Russia is also a significant investor in Latvia, accounting for 10.4 percent of the total foreign direct investment stock in September 1997, second only to Denmark. Nonetheless, recent events suggest that Latvia will probably be forced to follow the example of those CIS states that seek to reduce their economic dependence on Russia. If Moscow persists in thwarting the normal economic intercourse between states--for example, by refusing to use Latvian ports or denying Turkmenistan access to its gas pipeline to Europe--for political ends, it will increasingly be seen as an unreliable partner. Developing such a reputation is in no one's interest, least of all Russia's. The author is an economist living in Austria. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. All rights reserved. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx HOW TO SUBSCRIBE Send an email to email@example.com with the word "subscribe" as the subject or body of the message. 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