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RFE/RL NEWSLINE Vol. 2, No. 114 Part I, 16 June 1998
___________________________________________________________ RFE/RL NEWSLINE Vol. 2, No. 114 Part I, 16 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 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I * STOCK MARKET HITS ANOTHER LOW * FINANCE MINISTER WON'T CONFIRM SECRET BORROWING * GEORGIAN-ABKHAZ TALKS MAY RESUME THIS WEEK End Note: POWER COUNTERVAILING AND OTHERWISE xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA STOCK MARKET HITS ANOTHER LONGTIME LOW. The index of leading shares on the Russian stock market fell 7 percent on 15 June, hitting its lowest point since 1996, the "Financial Times" reported. The bond market declined as well, as yields on government treasury bills rose above the Central Bank's annual refinancing rate of 60 percent. Share values rose slightly in early trading the next day, after Russian news agencies quoted unnamed government officials as saying the IMF will send a team to Moscow next week to negotiate an additional aid package for Russia. Financial analysts have said a multi-billion-dollar bailout is needed to restore the confidence of Russian and foreign investors. Meanwhile, the presidential press service announced on 15 June that President Boris Yeltsin will chair a meeting of government and parliamentary officials on 23 June to discuss an "anti- crisis" economic program. That meeting was previously scheduled for 30 June. LB FINANCE MINISTER WON'T CONFIRM SECRET BORROWING. Interfax reported on 16 June that Finance Minister Mikhail Zadornov declined to confirm a "Financial Times" report saying Russia has secretly borrowed at least $200 million from Western banks in recent weeks (see "RFE/RL Newsline," 11 June 1998). In June and December 1997, Russia borrowed hundreds of millions of dollars from U.S. billionaire George Soros and from foreign banks, but news of those short-term loans first emerged months after the fact (see "RFE/RL Newsline," 19 February and 5 March 1998). LB RAILROADS SLASH CARGO RATES FOR SOME GOODS. Russian railroads lowered shipping rates for coal, iron ore, oil, and fuel oil by 25 percent on 15 June in line with a government decision the previous week, Russian news agencies reported. Deputy Prime Minister Boris Nemtsov told journalists on 8 June that the reduction in cargo rates is a "major structural step in the [government's] industrial policy." The change will cost the railroads an estimated 6 billion rubles ($970 million), with half of the losses from coal transportation alone, according to Nemtsov. He has said that the monopoly Unified Energy System will in June or July adopt significant reductions in electricity rates for industries. LB INTERIOR TROOPS FACE SHARP CUTS. Interior Minister Sergei Stepashin on 15 June announced that the ministry's troops will be reduced during the next two years from some 250,000 to 120,000-140,000, Russian news agencies reported. Stepashin and Colonel-General Pavel Maslov, the commander of the Interior Ministry's troops, briefed Yeltsin on the planned restructuring earlier the same day. Stepashin told journalists that Russia does not need the ministry's troops to "duplicate" the Defense Ministry's ground forces and said the Interior Ministry troops will become a more mobile force. The size of the troops grew significantly during Anatolii Kulikov's tenure as interior minister. Shortly after Yeltsin sacked Kulikov in March, officials said the Interior Ministry's troops would be downsized from 257,000 to 220,000 (see "RFE/RL Newsline," 25 March 1998). LB YELTSIN RESTRUCTURES TRAFFIC POLICE. Stepashin on 15 June announced that Yeltsin has signed a decree transforming the State Automobile Inspectorate (GAI) into the State Road Safety Inspectorate, ITAR-TASS reported. The GAI has long been notorious for corrupt officers who stop vehicles arbitrarily and demand bribes from drivers. According to Stepashin, the restructuring of the inspectorate will help motorists by introducing simpler registration rules. He also said vehicles that are less than 10 years old will no longer have to have technical checks every year. Instead, they will be checked every five or 10 years, which will save time for motorists and give officers fewer opportunities to take bribes. LB NEMTSOV SAYS 50,000 OFFICERS TO ACQUIRE APARTMENTS. Deputy Prime Minister Boris Nemtsov says 50,000 officers who are leaving the armed forces will be able to acquire apartments this year, Russian news agencies reported on 15 June. Speaking to journalists after a meeting with Yeltsin, Nemtsov said the government has already transferred money for purchasing apartments to some 3,000 officers. There is an acute housing shortage in the military, and career officers who leave military service rarely have the funds to buy apartments. In May, the government began to implement its policy to help retiring military personnel buy housing, but as military spending remains below budget targets, it is unclear whether the program will be implemented in full. LB CHERNOMYRDIN MAKES IT OFFICIAL. Former Prime Minister Viktor Chernomyrdin on 15 June confirmed that he plans to run for a State Duma seat this September, Russian news agencies reported. He made the announcement during a visit to Yamal- Nenets Autonomous Okrug, where the by-election will be held to fill the seat Vladimir Goman gave up to become chairman of the State Committee on the North. Most of Russia's gas reserves are located in the okrug, and Chernomyrdin is a former head of the gas monopoly Gazprom, the largest employer in Yamal-Nenets. LB YELTSIN NOT TO ATTEND TSAR'S REBURIAL. Deputy Prime Minister Nemtsov on 15 June confirmed that Yeltsin will not attend the 17 July reburial of Nicholas II, Russia's last tsar. The president's decision was expected, particularly after the Holy Synod of the Russian Orthodox Church decided not to send high-level clerics to the ceremony in St. Petersburg (see "RFE/RL Newsline," 10 and 11 June 1998). Nemtsov said Prime Minister Sergei Kirienko will appoint an official government representative to attend the ceremony. LB SUSPECT IN CORRUPTION CASE TO BE RETURNED TO RUSSIA. Greek Justice Minister Evangelos Yiannopoulos on 15 June approved plans to extradite Andrei Kozlenok, a key suspect in a high- level corruption case, to Russia, ITAR-TASS reported. The Greek Supreme Court rejected Kozlenok's final appeal against extradition last month (see "RFE/RL Newsline," 19 May 1998). Kozlenok then applied for political asylum in Greece, but the Greek minister for public order rejected his application on 9 June. Kozlenok, who is accused of embezzling $180 million worth of precious metals and gemstones, claims that his life will be in danger in Russia. If he cooperates with investigators or is tried, several former high-ranking officials may be implicated in the case. LB DUMA DEPUTY PROPOSES NEW LIBEL LAW. Iosif Kobzon, a popular singer and State Duma deputy, has announced that he and an academic, Yurii Bokan, are preparing a draft law on protecting the honor and dignity of Russian citizens, ITAR- TASS reported on 15 June. He did not specify any of the draft's provisions or explain why he considers current legislation prohibiting libel and slander inadequate. In 1996, Kobzon won a libel lawsuit against "Sovetskaya Rossiya," which accused him of having ties to organized crime (see "OMRI Daily Digest," 6 March 1996). He is a culture adviser to Moscow Mayor Yurii Luzhkov, who recently lost a libel suit against Russia's Democratic Choice leader Yegor Gaidar (see "RFE/RL Newsline," 21 May 1998). LB TWO SUSPECTS CONFESS TO MURDERING JOURNALIST... Two suspects arrested in connection with the murder of "Sovetskaya Kalmykia Segodnya" editor Larisa Yudina have confessed to the crime, Interfax reported on 16 June, quoting Yurii Biryukov, the deputy head of the Prosecutor- General's Office's Main Department in the North Caucasus. He said Sergei Vaskin, a former aide to Kalmykian President Kirsan Ilyumzhinov, and Tyurbi Boskomdzhiev, Ilyumzhinov's representative in Volgograd Oblast, have been charged with premeditated murder. Authorities are still searching for a third suspect in the case, Biryukov said. Investigators believe Yudina's murder was linked to her journalist activities. "Sovetskaya Kalmykia Segodnya," which is printed outside the republic, is the only local newspaper that criticizes Ilyumzhinov. Yeltsin remarked on 15 June that "not everything" relating to the investigation can be shared with law enforcement officials in Kalmykia. LB ...AS KALMYK AUTHORITIES BAN RALLY IN JOURNALIST'S MEMORY. The authorities in the Republic of Kalmykia have prohibited a rally planned in memory of Yudina, ITAR-TASS reported on 15 June. Lidiya Dordzhieva, a close friend of Yudina's and head of a grass-roots organization in Kalmykia, told the news agency that the authorities banned the rally on the "pretext" that it might stir up ethnic strife in the republic. Dordzhieva came to Moscow on 15 June, saying she has received death threats in Elista, the capital of Kalmykia, since Yudina was killed. Yudina's last story, published posthumously in "Sovetskaya Kalmykia Segodnya," covered Dordzhieva's forced treatment at a psychiatric clinic in Elista this March. LB YELTSIN CONGRATULATES BASHKIR PRESIDENT... Yeltsin has congratulated Murtaza Rakhimov on his victory in the 14 June presidential election in Bashkortostan, ITAR-TASS reported on 16 June. A telegram from Yeltsin said Bashkortostan's voters demonstrated that "they tie their hopes for the well- being of the republic with your political leadership. The latest elections are convincing evidence that the republic's population supports the economic strategy and reforms that are being carried out." Rakhimov has been a loyal ally of Yeltsin and is believed to have helped Yeltsin substantially improve his showing in Bashkortostan during the 1996 presidential election. In the first round of that election, Yeltsin trailed Communist candidate Gennadii Zyuganov in the republic by 42 percent to 34 percent. However, in the second round, Yeltsin gained 51 percent of the vote in Bashkortostan to 43 percent for Zyuganov. LB ...AS RACE DRAWS MIXED REACTION FROM OTHERS. Commenting on the presidential election in Bashkortostan, some Russian media and politicians noted that voters had no genuine alternative to Rakhimov, as the incumbent's opponents were excluded from the ballot (see "RFE/RL Newsline," 15 June 1998). Russia's Democratic Choice leader Yegor Gaidar on 15 June denounced the election as an "anti-constitutional farce," RFE/RL's Moscow bureau reported. "Kommersant-Daily" on 16 June quoted unnamed sources from Rakhimov's campaign as saying the incumbent did not want to tarnish his image as an unchallenged leader by competing against opponents such as Duma deputy Aleksandr Arinin. Meanwhile, Federation Council Speaker Yegor Stroev welcomed Rakhimov's victory on 15 June. Stroev was re-elected last October as governor of Orel Oblast with some 95 percent of the vote. As in Bashkortostan, the only alternative candidate on the ballot in Orel spoke out in favor of the incumbent. LB RUSSIA TO PAY ARREARS FOR USE OF CHECHEN PIPELINE. Russian Deputy Prime Minister Nemtsov told journalists on 15 June that by the end of this week, Moscow will settle its debts to Chechnya for the maintenance and security of the Baku- Grozny-Tikhoretsk-Novorossiisk oil pipeline, Russian agencies reported. The previous day, Chechen acting Prime Minister Shamil Basaev threatened to halt shipments of oil through the pipeline unless Moscow honored its commitments under the agreement signed in September 1997. Chechen President Aslan Maskhadov told Interfax on 15 June that Russia has not yet provided any funds for security measures but added that he hopes shipments will not need to be suspended. LF RUSSIA DENIES SHIPPING S-300 COMPONENTS TO CYPRUS. A Russian Defense Ministry spokesman on 15 June denied that the missile-launching pads found by Turkish authorities the previous day on a Maltese-registered ship transiting the Turkish straits were part of a consignment of S-300 missiles intended for Greek Cyprus, Russian agencies reported. The ship's cargo was designated as tractors and cars bound for Egypt. Also on 15 June, Russian Foreign Ministry spokesman Vladimir Rakhmanin denied a Turkish news agency report that Russia may reconsider the delivery of the S-300s to Cyprus if Ankara agrees to purchase large amounts of Russian weaponry, Interfax reported. LF TRANSCAUCASUS AND CENTRAL ASIA GEORGIAN-ABKHAZ TALKS MAY RESUME THIS WEEK. Georgian presidential press secretary Vakhtang Abashidze told Interfax on15 June that talks between the Georgian and Abkhaz presidential envoys that were suspended in Moscow on 11 June may resume this week. At a meeting with journalists in Sukhumi on 15 June, the Abkhaz representative at those talks, Anri Djergenia, said he believes a meeting between the Georgian and Abkhaz presidents should take place as soon as possible. The chairman of the Abkhaz parliament in exile, Tamaz Nadareishvili, told Caucasus Press it should assume responsibility for conducting talks with the Abkhaz leadership. He added that it should also liaise with the Georgian guerrilla movement and allocate emergency aid to the Georgian displaced persons who fled Abkhazia during last month's fighting. The previous day, an Abkhaz policeman was shot dead when Georgian guerrillas ambushed a patrol in Abkhazia's Gali Raion, Russian agencies reported. LF GEORGIAN PRESIDENT PRAISES RUSSIAN POSITION. In his weekly radio address on 15 June, Eduard Shevardnadze expressed his approval for Moscow's "clear-cut and radical" assessment of last month's fighting in Gali. Shevardnadze said that if the present situation does not change, Moscow will classify what happened in May as genocide and ethnic cleansing. He did not say, however, what exactly would impel Russia to revise its evaluation of events that have already taken place. LF GEORGIAN FOREIGN MINISTER IN YEREVAN. Irakli Menagharishvili made a brief stopover in Yerevan on 15 June on his return from a three-day official visit to Tehran, RFE/RL's Yerevan bureau reported. Menagharishvili and his Armenian counterpart, Vartan Oskanian, reached agreement on coordinating activities aimed at expediting the two countries' integration into European structures and on resuming the work of a joint commission on economic issues. The two also discussed the recent fighting in Abkhazia but subsequently refused to comment on reports that Yerevan may join ongoing efforts to mediate a settlement of that conflict. Menagharishvili told journalists that Georgia's policy of maintaining good relations with both Armenia and Azerbaijan does not impinge on either country's interests. Oskanian positively assessed Georgian President Shevardnadze's "Peaceful Caucasus" initiative but noted that Azerbaijan is an obstacle to Armenian participation in pan- Caucasian initiatives, Caucasus Press reported. LF ARMENIANS FROM KARABAKH PUSH FOR REPATRIATION. Armenians forced to flee Nagorno-Karabakh's Shaumian raion during an assault by Soviet army and Azerbaijani OMON troops in June 1991 visited the Yerevan embassies of the three countries that co-chair the OSCE Minsk Group, Noyan Tapan reported on 12 June. The fugitives are classified as internally displaced persons, not as refugees, because they fled within the confines of the USSR. They appealed for help in returning to their homes and in tracing missing relatives. LF DEMIRCHIAN REGISTERS OWN POLITICAL PARTY. The Armenian Ministry of Justice on 15 June formally registered the National Party of Armenia Noyan Tapan reported. That formation is headed by former Armenian Communist Party First Secretary and defeated presidential candidate Karen Demirchian. "Azg" on 16 June described the new party's orientation as "centrist, moderately liberal, and social democratic," predicting that it will result in a "redistribution of forces in Armenia's political landscape." LF KAZAKH PRESIDENT MEETS WITH TURKISH COUNTERPART. Nursultan Nazarbaev and Suleyman Demirel held talks at the latter's Ankara residence on 15 June, an RFE/RL's Kazakh Service correspondent reported. Nazarbaev called for increasing the annual trade turnover between the two countries from $267 million to $1 billion, according to dpa. Nazarbaev also met with Foreign Minister Ismail Cem and Premier Mesut Yilmaz. Kazakh Presidential spokesman Kairat Sarybaev told Interfax on 14 June that Nazarbaev's talks with Turkish leaders would focus on the expansion of bilateral economic ties and Kazakhstan's possible use of the proposed Baku-Ceyhan pipeline simultaneously with other routes for the export of Kazakh oil. LF END NOTE POWER COUNTERVAILING AND OTHERWISE by Paul Goble The weakness of the Russian state increasingly allows privatized firms there to challenge its authority, but the strength of these firms on occasion may help Moscow to extract more resources from the international financial community. That dual role of large Russian firms was highlighted at the weekend, when Gazprom chief Rem Vyakhirev told European officials that his firm would not be able to afford to sign new gas export contracts if the Russian government implemented plans to collect more taxes from his company. But because the IMF reportedly has demanded that Moscow break up the Russian gas monopoly, Vyakhirev's threat at a meeting in Sardinia could trigger a new financial and hence political crisis in the Russian capital. In a speech in Sardinia to the European Business Congress, which Vyakhirev himself founded, the Gazprom chief said that Moscow's plans to impose a value-added tax of 22 percent and an excise duty of 30 percent on exports would effectively "bury" future gas supplies from Russia to Europe. Such taxes, Vyakhirev said, were making the export of gas increasingly unprofitable, with his company now losing approximately "a dollar for every 1,000 cubic meters." No privately owned firm, he noted, could continue to operate for very long with such losses. By painting the situation in such dark colors, Vyakhirev was clearly hoping to use the threat of reduced natural gas deliveries to force the West to stop putting pressure on the Russian government over tax collection. The West wants Moscow to improve its collection of taxes, particularly from large firms like his. But Vyakhirev's effort to enlist Western support for his company against the Russian authorities may paradoxically work to the advantage of that very government as well. In order to ensure that Russian gas keeps flowing westward, Europeans and those dependent on the European economies are likely to press both for a more understanding approach to Moscow's difficulties with tax collection and for additional loans to the beleaguered Russian government. And they may even back away from the support they apparently have given to IMF plans to demand that the Russian government break up Gazprom and make other reforms if Moscow is to receive more aid. If Vyakhirev's threat works in that way, the Russian government would be the beneficiary in the short run, but the Russian economy and political system might be its victims over the longer haul. Greater IMF assistance and less IMF micro-management of the Russian economy could indeed give Moscow the resources it needs to get through its current financial crisis and also allow it greater freedom of action in dealing with powerful interests in Russian society. But this victory could prove a Pyrrhic one both for the Russian government and for Gazprom itself. More foreign assistance and fewer conditions on it would allow the Russian government to put off some reforms that will be necessary if it is to put its economy back on track. And to the extent that happens, the crises that Russia is experiencing may be put off but will not be solved. And any success by Gazprom in holding both the Russian government and Western Europe hostage on tax collections and gas deliveries is likely to increase demands from reformers in the Russian government for breaking up a domestic firm with so much power. Such demands and the certain resistance by Gazprom and other members of the oligarchy that now dominates the Russian economic scene could trigger a new and potentially more serious political crisis. And that crisis, in turn, would provide another measure of the strengths and weaknesses of both sides as well as of the ways in which each continues to depend on and support the other. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. All rights reserved. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx HOW TO SUBSCRIBE Send an email to firstname.lastname@example.org with the word "subscribe" as the subject or body of the message. HOW TO UNSUBSCRIBE Send an email to email@example.com with the word "unsubscribe" as the subject or body of the message. 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