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RFE/RL NEWSLINE Vol. 2, No. 103 Part I, 1 June 1998
___________________________________________________________ RFE/RL NEWSLINE Vol. 2, No. 103 Part I, 1 June 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 xxxxxxxxxxxxxxxxxxx SPECIAL REPORT xxxxxxxxxxxxxxxxxxxxxx RUSSIAN MEDIA EMPIRES III A new prime minister has taken office, Boris Berezovsky's now a CIS official, and the state plans to form a new media holding company. See our updated media report. http://www.rferl.org/nca/special/rumedia3/index.html (English) http://www.rferl.org/bd/ru/russian/content/reports/rumedia3/ index.html (Russian) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I * IMF SAYS RUSSIA HAS NOT ASKED FOR SPECIAL CREDIT * COMMISSION THREATENS TAX DEBTORS WITH BANKRUPTCY * GEORGIAN, ABKHAZ PRESIDENTS PLEDGE TO IMPLEMENT CEASE-FIRE PROTOCOL xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA IMF SAYS RUSSIA HAS NOT ASKED FOR SPECIAL CREDIT... John Odling-Smee, a senior IMF expert on Russia, on 29 May said the fund has held "no formal discussions" on granting a special multi-billion dollar loan to calm Russian financial markets, Reuters reported. Odling-Smee said Russian officials have inquired about the IMF's supplemental reserve facility, which provides short-term credits, but he argued that Russia does not need such a loan. IMF officials have praised recent steps taken by the Russian government and Central Bank, such as hiking the refinancing rate to 150 percent. The fund is recommending that its board approve the release of a $670 million loan tranche, but some market analysts say sentiment among investors will not turn around unless Russia receives a multi-billion dollar bailout package. Share values on the Russian stock market fell 5-6 percent on average in early trading on 1 June after posting a 2 percent decline on 29 May. LB ...AS CHUBAIS HOLDS HIGH-LEVEL TALKS IN WASHINGTON. Former First Deputy Prime Minister Anatolii Chubais, the head of the electricity giant Unified Energy System, held talks with U.S. Treasury Secretary Robert Rubin and Deputy Treasury Secretary Lawrence Summers in Washington on 29 May, Reuters reported. Chubais also met with World Bank President James Wolfensohn and senior IMF officials. When Chubais departed for the U.S., Russian news agencies said the main goal of his trip was to discuss matters related to Unified Energy System. But Prime Minister Sergei Kirienko told NTV on 31 May that Chubais also went to Washington to discuss the current situation on Russian markets and to ask for unspecified "support." U.S. President Bill Clinton on 31 May issued a statement saying the U.S. "endorses additional conditional financial support [for Russia] from the international financial institutions, as necessary." LB COMMISSION THREATENS TAX DEBTORS WITH BANKRUPTCY. The presidential commission on tax and budgetary discipline on 29 May took "tough measures" against eight companies that each owe between 600 million and 800 million rubles ($97 million to $130 million) to the federal budget, Deputy Prime Minister Viktor Khristenko told journalists. The commission ordered that bankruptcy proceedings be initiated against some of those companies and gave others until 12 June to pay their debts or face bankruptcy or seizures of assets, Interfax reported. Khristenko also said the commission took tough measures against 11 alcohol enterprises that are fully or party state-owned. The commission did not discuss the gas monopoly Gazprom, the electricity monopoly Unified Energy System, and the Railroad Ministry after the "natural monopolies" promised on 28 May to take steps to repay their debts. Gazprom alone owes the state some 4.5 billion rubles, "Kommersant-Daily" reported on 30 May. LB MOODY'S DOWNGRADES RUSSIA'S CREDIT RATING AGAIN. The international rating agency Moody's on 29 May lowered Russia's sovereign debt rating, along with the credit ratings of nine commercial banks, seven Russian regions, and four Russian companies, Interfax reported. Moody's last downgraded Russia's credit rating in March (see "RFE/RL Newsline," 12 March 1998) and is maintaining a "negative" outlook for further changes in the rating. Meanwhile, the Fitch IBCA agency on 1 June lowered the long-term credit ratings of 14 Russian banks. If the value of the ruble dropped sharply against the dollar, some Russian banks would find it difficult or impossible to repay loans denominated in foreign currencies. LB NEW TAX SERVICE CHIEF CALLS FOR LOWER TAXES... Newly appointed State Tax Service chief Boris Fedorov says that although tax collection can be improved somewhat under current conditions, significant increases in revenues will be impossible unless the tax burden is significantly reduced. In an interview with NTV on 1 June, Fedorov suggested lowering the top income tax rate from 35 percent to 20 percent and criticized current tax legislation, which, he said, makes buying shares in Russian companies more advantageous for foreigners than for Russian citizens. Fedorov argued that the government has not done enough to secure parliamentary approval of a new tax code. However, he praised the measures approved at the 29 May meeting of the commission on tax and budget discipline. Fedorov will have the rank of a cabinet minister, a higher status than previous heads of the State Tax Service, Russian news agencies reported on 29 May. LB ...AS HIS APPOINTMENT DRAWS MIXED REACTION IN RUSSIAN PRESS. "Russkii telegraf," which is owned by Oneksimbank, on 30 May described Fedorov as "fully capable of putting pressure on taxpayers" and predicted that he will make his predecessor, Aleksandr Pochinok, seem like a "good cop" by comparison. In contrast, "Nezavisimaya gazeta," which is financed by CIS Executive Secretary Boris Berezovskii's LogoVAZ group, slammed Fedorov's appointment and cast doubt on his ability to improve tax collection, given the prevalence of barter rather than cash payments in the Russian economy. The newspaper speculated that Fedorov may soon be removed if he is implicated in a corruption scandal involving the sale of diamonds and precious metals (see "RFE/RL Newsline," 13 January 1998). (A leading suspect in that case is to be extradited to Russia this week.) "Nezavisimaya gazeta" also assailed the government's strategy for dealing with the current financial crisis as "pseudomonetarism." LB GOVERNMENT SEEKS APPROVAL OF LAWS TO BOOST REVENUES. The government has submitted to the State Duma four draft laws aimed at increasing federal revenues by 6.5 billion rubles ($1.1 billion) for the year, Interfax reported on 29 May, citing Finance Minister Mikhail Zadornov. One law would levy customs duties on gas when Gazprom ships gas to buyers rather than when payment for such shipments is made. The government also wants to increase the land tax and double the tax on agricultural land that is being used for other purposes, "Vremya MN" reported on 1 June. The fourth draft law seeks to guarantee regular contributions to the Pension Fund, Zadornov said. The finance minister also called on the Duma to speed up its consideration of tax laws that were submitted to the parliament earlier this year, saying those laws could boost revenues by 4.5 billion rubles. LB PENSION FUND OWED SIX MONTHS' WORTH OF PENSIONS. Russian enterprises owe the Pension Fund a total of 100.2 billion rubles ($16 billion), Interfax reported on 29 May, citing Svetlana Zaika, the head of the fund's press service. She said the fund is obliged to pay 15.8 billion rubles each month in pensions but has been unable to collect more than 13 billion rubles in any month of this year. Consequently, pension arrears rose from 1.2 billion rubles as of 1 April to 4.3 billion rubles as of 1 May. Zaika said that pensioners in 18 out of Russia's 89 regions have not yet received their April pensions. She predicted that there will be difficulties in paying pensions for the month of June in at least 70 regions. LB RUSSIA'S REACTION TO PAKISTANI NUCLEAR TESTS "VERY NEGATIVE." Russian Foreign Minister Yevgenii Primakov told reporters in Finland on 30 May that Russia's "attitude is very negative" toward the nuclear tests that Pakistan undertook the previous day, ITAR-TASS reported. "Nezavisimaya gazeta" quoted Primakov as saying "there is a need to pressure [Islamabad] but we are against imposing economic sanctions," which, he said, might make Pakistan "feel backed into a corner." The minister said his government favors holding two UN Security Council meetings-- one with the foreign ministers of the permanent Security Council members and the other also attended by India's and Pakistan's foreign ministers in attendance. Pakistani Ambassador to Russia Mansur Alam told Ekho Moskvy on 29 May that the purpose of the test was "peaceful" after "India's test destroyed the strategic balance in the region." BP JUSTICE MINISTER SAYS RUSSIA NOT READY TO ABOLISH DEATH PENALTY. Pavel Krasheninnikov told Interfax on 29 May that he believes Russia is "not ready" to abolish capital punishment, "neither from a criminological nor from a moral point of view." He said opinion polls show that the majority of Russian citizens are in favor of keeping the death penalty. Yeltsin decreed a moratorium on executions in August 1996, but the parliament rejected a draft law on banning capital punishment in March 1997 and refused to ratify a protocol on the issue earlier this year (see "RFE/RL Newsline," 23 February 1998). Outlawing capital punishment is a condition of membership in the Council of Europe, which Russia joined in February 1996. LB BARELY A DAY PASSES WITHOUT NON-COMBAT DEATHS IN ARMY. Only three days so far this year--7 January and 17 and 27 May-- have passed without any non-combat deaths in the Russian armed forces, "Segodnya" reported on 30 May, citing Vladimir Kulakov, the head of the army's Main Department for Educational Work. Suicides alone account for some 40 deaths a month, while accidents, hazing, and killings by fellow soldiers also claim many lives. According to former Duma Defense Committee Chairman Lev Rokhlin, there were 1,534 non-combat deaths (including 614 suicides) in the armed forces last year and the first four months of this year. Rokhlin, who in 1997 founded an opposition Movement to Support the Army, plans to sue Defense Minister Igor Sergeev for alleged "crimes" committed against the armed forces while carrying out military reform, "Segodnya" reported. LB AGRARIAN PARTY LEADER WINS HARD-FOUGHT ALTAI ELECTION. Mikhail Lapshin, the leader of the Agrarian Party of Russia, won the 31 May by-election in Altai Republic for a seat in the State Duma with 42 percent of the vote, Russian news agencies reported. Gazprom adviser and former First Deputy Finance Minister Andrei Vavilov fell just short of victory, winning 40 percent, despite having spent far more money during the campaign and enjoying the support of the republican authorities (see "RFE/RL Newsline," 28 and 29 May 1998). The Altai race was a bruising battle in which the leading candidates accused each other of violating campaign regulations and, during the final days before the election, sought to have the other's name struck from the ballot. On 29 May, the Supreme Court rejected an appeal by Lapshin against the Central Electoral Commission, which ignored Lapshin's complaints concerning the Altai electoral commission's refusal to revoke Vavilov's registration as a candidate. LB CHERNOMYRDIN ALLY WINS DUMA SEAT IN CHUKOTKA. Vladimir Babichev, the former head of the government apparatus and a close ally of former Prime Minister Viktor Chernomyrdin, won the 31 May by-election for a Duma seat from Chukotka Autonomous Okrug with some 57 percent of the vote, ITAR-TASS reported on 1 June. Babichev's nearest rival, independent candidate Vladimir Yetylin, gained 21 percent. Babichev has been a key organizational figure in Chernomyrdin's movement, Our Home Is Russia (NDR), since its creation in May 1995. He chairs the NDR's executive council and is first deputy chairman of the movement's political council. "Russkii telegraf" speculated on 30 May that if elected to the Duma, Babichev would replace Aleksandr Shokhin as head of the NDR Duma faction. Chernomyrdin has not yet announced whether he will run for a Duma seat this year or wait until the 1999 parliamentary elections. LB STEPASHIN DISCUSSES MAKHACHKALA DISTURBANCES WITH KHACHILAEV... Meeting with Union of Muslims of Russia Chairman Nadirshakh Khachilaev on 31 May, Russian Interior Minister Sergei Stepashin urged the Russian State Duma to form a commission to investigate the causes of the shootings and subsequent storm of the government building in Makhachkala by Khachilaev's supporters on 21 May, Russian agencies reported. Stepashin told journalists that he and Khachilaev agreed there is no truth to Russian allegations of Chechen involvement in the unrest. Khachilaev expressed approval of Russia's response to the incident. Meanwhile, Dagestani State Council Chairman Magomed-Ali Magomadov has called on movements representing the various ethnic groups in Dagestan either to disband voluntarily or to agree to holding a republic-wide referendum on their dissolution, "Nezavisimaya gazeta" reported on 30 May. LF ...ANNOUNCES OPERATION TO LIBERATE VLASOV. Stepashin also said that Russian and Chechen Interior Ministry forces will launch a joint operation in the next few days to secure the release of Valentin Vlasov, the Russian presidential envoy to Chechnya abducted on 1 May. Senior Ukrainian government official Nikolai Brichko, who was in Chechnya to conclude agreements on rebuilding work, has also been abducted in Chechnya, Interfax reported on 29 May. LF TRANSCAUCASUS AND CENTRAL ASIA GEORGIAN, ABKHAZ PRESIDENTS PLEDGE TO IMPLEMENT CEASE-FIRE PROTOCOL. In a telephone conversation on 29 May, Eduard Shevardnadze and Vladislav Ardzinba affirmed their shared commitment to preventing another large-scale conflict in Abkhazia's Gali Raion, ITAR-TASS and Caucasus Press reported. Ardzinba also agreed to allow Georgian women and children who fled during the 19-25 May fighting to return to their homes but said the men should be screened to prevent those who took part in the fighting from returning. Ardzinba demanded that Tbilisi halt the activities of guerrilla units on Abkhaz territory and that both guerrilla organizations and the so-called Abkhaz parliament in exile (composed of Georgian deputies to the Abkhaz parliament elected in 1991) be disbanded. The chairman of that body, Tamaz Nadareishvili, announced his resignation on 29 May, saying he still believes that Tbilisi can only regain control over Abkhazia by force, according to Caucasus Press. LF GEORGIA CONDEMNS ABKHAZ STATE OF EMERGENCY. The Georgian Foreign Ministry issued a statement on 29 May saying the state of emergency imposed by Ardzinba in Gali and parts of two neighboring raions two days earlier is a violation of the Georgian Constitution, Caucasus Press reported. The statement said the state of emergency could hinder the implementation of the 25 May agreement on a cease-fire and the return of Georgian fugitives to their homes. In addition, the ministry rejected Ardzinba's claims that Ukrainian mercenaries participated in the recent fighting alongside Georgian guerrillas, according to ITAR-TASS. Also on 29 May, Russian First Deputy Foreign Minister Boris Pastukhov told Interfax that Russia opposes any peace- enforcement operation in Gali Raion. Pastukhov rejected charges that Russian peacekeepers supplied Abkhaz Interior Ministry troops with the heavy artillery they used during the fighting. LF ABKHAZ DENY TAKING HOSTAGES. Abkhaz officials on 31 May denied Georgian media reports that four Georgians seeking to return to their homes in a Gali village had been taken hostage, according to ITAR-TASS. Caucasus Press reported on 29 May that Abkhaz fighters were looting abandoned Georgian homes in the villages of Tagiloni and Nabakevi. A Georgian Interior Ministry official told Interfax the next day that police in three western Georgian raions have been placed on alert and security precautions intensified at the oil terminal under construction in Supsa. LF SOUTH OSSETIAN DEPUTY PREMIER ASSASSINATED. Valerii Khubulov was shot dead in his car by unidentified assailants in the North Ossetian capital, Vladikavkaz, on 31 May, ITAR-TASS and Caucasus Press reported. A Russian businessman accompanying Khubulov was also killed. LF ARMENIA WELCOMES FRENCH PARLIAMENT VOTE ON GENOCIDE... In a 29 May statement, Armenian Foreign Minister Vartan Oskanian expressed his thanks to French politicians and the French parliament for their unanimous vote to recognize the 1915 genocide of Armenians in Ottoman Turkey, RFE/RL's Yerevan bureau reported. The statement said the open discussion of the genocide within the framework of Armenian-Turkish relations could have a positive impact on establishing mutual trust between the two peoples as well as on security and stability in the region. LF ...WHILE AZERBAIJAN, TURKEY CONDEMN IT. The following day, the Azerbaijan Popular Front condemned the vote as an act aimed at the entire Turkish world. The front called for France to be stripped of its co-chairmanship of the OSCE Minsk Group which is mediating a settlement of the Karabakh conflict, Turan reported. Turkish Foreign Minister Ismail Cem condemned the resolution as "an attempt to destroy Turkish-French friendship," according to the "Turkish Daily News" of 30 May. LF UTO THREATENS TO WALK OUT OF TAJIK PEACE PROCESS. United Tajik Opposition (UTO) leader Said Abdullo Nuri on 30 May announced that his group may cease participating in the Tajik peace process, RFE/RL correspondents reported. Nuri's statement comes one week after the parliament refused to endorse the candidacies of opposition representatives Khoja Akbar Turajonzoda for first deputy prime minister and Davlat Usmon as economics minister and adopted a law banning religious political parties. Nuri raised the issue with the visiting head of the IMF, Michel Camdessus, saying the parliament's actions are the biggest obstacle to peace and stability in Tajikistan. The previous day, Nuri received some unexpected help from Russian Foreign Ministry spokesman Valerii Nesterushkin, who said in Moscow that the ban on parties presumes those formations' activities will be unconstitutional, Interfax reported. He also noted that the prohibition may "complicate" the situation in Tajikistan. BP KUMTOR HEADS VISIT TO DISASTER SITE. The heads of the Kumtor gold mining project on 29 May visited residents of the area in which one of the company's trucks overturned and spilled nearly two tons of cyanide into the water supply, RFE/RL correspondents reported. Dastan Sarygulov and Gerhardt Glattis said the company will pay for all medical costs of the more than 1,000 people affected by the spill and will install a water system to villages on the south shore of Lake Issyk-Kul. The residents have demanded that there be no further shipments of sodium cyanide along the lake's southern road. ITAR-TASS reported on 29 May that on the lake's northern shore, where tourist facilities are located, more than half the reservations for the summer season have been canceled following reports of cyanide in Issyk-Kul. BP xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. 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