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RFE/RL NEWSLINE Vol. 2, No. 117 Part I, 19 June 1998
___________________________________________________________ RFE/RL NEWSLINE Vol. 2, No. 117 Part I, 19 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 * 'OLIGARCHS' SET TO FORMALIZE TIES TO GOVERNMENT * CHUBAIS SAYS RUSSIA NEEDS $10-15 BILLION * AZERBAIJAN REJECTS ARMENIAN STATEMENT ON KARABAKH End Note: IMMINENT RIFT WITHIN PRO-PRESIDENTIAL CAMP IN ARMENIA? xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA 'OLIGARCHS' SET TO FORMALIZE TIES TO GOVERNMENT. Prime Minister Sergei Kirienko and Russia's most influential businessmen are to ask President Boris Yeltsin to appoint a special council composed of business leaders to advise the government on economic policy. According to the government's information department, Kirienko and some 10 businessmen agreed on the proposal during talks on the evening of 18 June, Russian news agencies reported. It was the prime minister's second meeting with "oligarchs" in three days. Not all the participants were named, but ITAR-TASS said CIS Executive Secretary Boris Berezovskii was present, along with most of the business elites who met with Yeltsin earlier this month (see "RFE/RL Newsline," 2 and 3 June 1998). In late 1997 and early 1998, government officials repeatedly promised to provide a level playing field for all businesses and not to favor "oligarchs" with high-level political connections. LB CHUBAIS SAYS RUSSIA NEEDS $10-15 BILLION... In his first press conference as Yeltsin's envoy to international financial organizations, Unified Energy System chief executive Anatolii Chubais on 18 June said Russia needs $10 billion to $15 billion to help overcome the crisis on its financial markets, RFE/RL's Moscow bureau reported. A Central Bank spokesman told ITAR-TASS on 18 June that Russia's gold and hard-currency reserves totaled $15.7 billion as of 12 June. Many market analysts doubt that Russia could fend off another run on the ruble without a bailout from foreign governments or financial institutions. Meanwhile, the main index of the Russian stock market closed down 2.6 percent on 18 June, despite gains in early trading that day. LB ...BUT WON'T NECESSARILY MEET ALL IMF DEMANDS. An IMF mission headed by the fund's First Deputy Managing Director Stanley Fischer is scheduled to arrive in Moscow on 22 June for talks with Chubais and Russian government officials. Chubais confirmed on 18 June that the talks will concern a possible new loan from the IMF, RFE/RL's Moscow bureau reported. But while noting that IMF credits are the cheapest available, Chubais said that there are some conditions Russia "will not accept from anyone, not from any financial organizations." By way of example, he rejected the idea that Russia can extract additional budget revenues from the oil industry, given the slump in oil prices on world markets. He also argued against breaking up "natural monopolies" in the energy sector. Some Western media reported earlier this month that the IMF has asked the Russian government to break up the gas monopoly Gazprom. LB IMF DELAYS DISBURSEMENT OF LOAN TRANCHE. The IMF on 18 June postponed for several days a meeting of its board of directors, which was scheduled to approve the latest $670 million tranche of a four-year loan to Russia. According to Reuters, an IMF spokesman said the delay was caused by Russia's failure to fulfill unspecified conditions for the disbursement. Finance Minister Mikhail Zadornov told the news agency the next day that Russia and the IMF have two technical issues and one substantive issue to settle concerning the disbursement. He did not specify the nature of those differences but expressed confidence that they will be resolved. Speaking to NTV the previous evening, Chubais also said talks with the IMF delegation in Moscow next week will clear obstacles to disbursing the loan tranche. LB RUSSIA FLOATS ANOTHER EUROBOND. Russia on 18 June issued a 30-year, $2.5 billion Eurobond, which is redeemable at face value in 10 years. According to Bloomberg Business News, the Eurobond was priced to yield 753 basis points (7.53 percent) above 10-year U.S. treasury bonds. (Finance Minister Zadornov told Reuters on 19 June that news of the postponed IMF board meeting drove down the price.) The sale came a day after the Finance Ministry canceled two auctions for treasury bills. The government prefers borrowing abroad to paying sky-high interest rates on the domestic bond market. However, this strategy entails risks, since a sharp devaluation of the ruble could make it difficult to pay back Eurobond-holders. Russia has issued seven Eurobonds, four of them during the last four months. Russia recently floated a five-year, $1.25 billion Eurobond. LB YELTSIN AGAIN RENOUNCES THIRD TERM AMBITIONS. Speaking in Kostroma on 19 June, Yeltsin announced that he will not run for a third term as president, Reuters reported. He noted that "it's not in the constitution. The constitution says two terms." Yeltsin's remarks came one day after CIS Executive Secretary Berezovskii told Ekho Moskvy radio that it would be "the right decision" for Yeltsin to say he will not run for re-election again. Yeltsin has said several times that he does not plan to seek a third term, but his advisers have occasionally left the door open on the possibility. Berezovskii was one of the key financial backers of Yeltsin's 1996 re-election campaign. He told Ekho Moskvy that Russia's business elite may unite around another candidate in the next presidential race, because, regardless of their differences, financial and industrial groups share "strategic goals" such as political stability. LB YELTSIN, BEREZOVSKII DISCUSS CIS... CIS executive secretary Berezovskii met with President Yeltsin, who is also chairman of the CIS heads of state council, Russian on 18 June to discuss trends within the commonwealth and his recent meetings with CIS heads of state. Berezovskii told Yeltsin that CIS presidents are aware there is "no threat" to their sovereignty and that the West "never intended to act as...a benefactor." He added that they are therefore reassessing their economic ties with the U.S. in that light, Interfax reported, quoting Russian presidential spokesman Sergei Yastrzhembskii. Berezovskii said there is increased interest in reforming CIS structures to promote economic and financial integration. Also on 18 June, Berezovskii told Ekho Moskvy that CIS heads of state are aware of the emergence of "new unions" and consider integration within the CIS to be essential not only for economic but also for strategic reasons. LF ...AND ABKHAZIA. Berezovskii also told Ekho Moskvy that Yeltsin positively assessed the coordination of efforts between Berezovskii and the Russian Foreign Ministry to resolve the Abkhaz conflict He did not say, however, whether he and Yeltsin had discussed Georgian President Eduard Shevardnadze's 15 June letter to Yeltsin proposing that an emergency CIS summit be convened to discuss Abkhazia, according to "Nezavisimaya gazeta" on 19 June. Berezovskii and First Deputy Foreign Minister Boris Pastukhov are to hold talks in Sukhumi on 19 June with Abkhaz President Vladislav Ardzinba and Georgian special envoy Vazha Lortkipanidze. On 18 June, six members of the Russian peacekeeping force in Abkhazia were seriously injured when their armored personnel carrier hit a land mine in Gali Raion, Interfax reported. Abkhaz parliament in exile chairman Tamaz Nadareishvili blamed the Abkhaz Interior Ministry for the incident, which, it said, was aimed at sabotaging Russian-Georgian relations, Caucasus Press reported. LF RUSSIA SLAMS TURKEY OVER MISSILES SEARCH. Speaking at a press briefing on 18 June, Russian Foreign Ministry spokesman Vladimir Rakhmanin condemned the Turkish authorities' detention of a Maltese cargo ship in the Turkish straits on 14 June as a violation of the 1936 Treaty of Montreux, Interfax reported. That treaty allows all vessels free transit through the straits in peace time. The Turkish authorities intercepted and searched the ship, believing that its cargo included S-300 missiles that Russia intends to supply to Greek Cyprus later this summer (see "RFE/RL Newsline," 16 June 1998.) Turkey has invoked the Treaty of Montreux to substantiate its argument that an increase in the volume of oil shipped through the straits would constitute a serious ecological threat. LF DUMA STUDYING LEGALITY OF CHUBAIS'S APPOINTMENT. State Duma Speaker Gennadii Seleznev says legal experts in the Duma are questioning the legality of Yeltsin's decree appointing Unified Energy System chief executive Chubais as his envoy to international financial organizations, Russian news agencies reported on 18 June. He said some lawyers believe that the provision granting Chubais the rank of a deputy prime minister contradicts the constitutional law on the government. If necessary, Seleznev said, the Duma will appeal the matter to the Constitutional Court. Yeltsin also gave Ivan Rybkin the rank of a deputy prime minister when he appointed him as presidential envoy to the CIS last month. But while Rybkin, a former Communist ally, is viewed by left-leaning Duma deputies as a traitor for joining the Yeltsin camp, Chubais is far more hated in the lower house of the parliament. LB GOVERNMENT REJECTS INCREASE IN MINIMUM WAGE. The cabinet on 18 June decided not to send the State Duma a draft law on increasing the minimum monthly wage from 83.49 rubles to 110 rubles ($13.5 to $18) as of 1 April 1999, ITAR-TASS reported. Labor Minister Oksana Dmitrieva presented the draft law, which also called for indexing the minimum wage annually. However, Deputy Prime Minister Boris Nemtsov and Finance Minister Mikhail Zadornov called for rejecting the plan, which would have cost the federal budget 18.6 billion rubles and budgets at all levels a combined 68.3 billion rubles. They argued that the state is already unable to ensure timely payment of wages to its employees and said increasing the minimum wage now would exacerbate the problem. Many salaries and social payments are set in terms of multiples of the minimum wage. LB SCIENTISTS CALL FOR YELTSIN'S RESIGNATION. Some 500 scientists from the Russian Academy of Sciences demonstrated in front of government headquarters in Moscow on 18 June to protest lack of state funding for scientific institutions, Russian media reported. Demonstrators carried banners calling for Yeltsin to resign and fraternized with coal miners who have been picketing the White House since 11 June, "Nezavisimaya gazeta" reported on 19 June. Vladimir Strakhov, director of the Institute of Earth Physics, warned that if financing for science does not improve, scientific research "will simply perish within two or three years," ITAR-TASS reported. Strakhov has staged two hunger strikes to protest lack of funding for science (see "OMRI Daily Digest," 14 October 1996 and 7 January 1997). The 1998 budget reduced funding for scientific research by 26.5 percent, and the Academy of Sciences has received only 70 percent of allocated money for the second quarter. BT CONFERENCE CALLS ATTENTION TO PLIGHT OF AFGHAN REFUGEES. The overwhelming majority of refugees from Afghanistan living in Russia are denied basic rights, according to human rights activists, scientists, and government officials who spoke at a 17 June conference at the UN's Russian Federation headquarters in Moscow. Of the estimated 150,000 Afghan refugees in Russia, only 300 former high officials have been granted refugee status, "Nezavisimaya gazeta" reported on 18 June. Among those living in Russia illegally, thousands have become homeless. The federal law on refugees, which provides for humanitarian aid such as temporary shelters, is frequently not implemented because the Federal Migration Service and the Interior Ministry have not granted refugee status to most refugees. Russian authorities have argued that they lack funds to carry out the legalization of refugees. The Interior Ministry and the Foreign Ministry did not send representatives to the conference. BT SUSPECTS IN JOURNALIST'S MURDER MOVED OUT OF KALMYKIA. The three suspects in the recent murder of "Sovetskaya Kalmykia Segodnya" editor Larisa Yudina have been transferred from pre-trial detention in the Republic of Kalmykia to a facility in Stavropol Krai, ITAR-TASS reported on 19 June, citing Sergei Prokopov, a spokesman for the Prosecutor- General's Office's department in the North Caucasus. The previous day, Vladimir Shanukov became the third man charged with premeditated murder in connection with Yudina's death. Prokopov said the authorities moved the three suspects to Stavropol in order to prevent pressure on the investigators and leaks. LB RUTSKOI'S ASSOCIATES FACE CRIMINAL CHARGES. Kursk Oblast Deputy Governors Yurii Kononchuk and Vladimir Bunchuk have been formally charged with abuse of office, ITAR-TASS reported on 19 June. Prosecutors say the two embezzled some 11 million rubles ($1.8 million). Kursk Governor Aleksandr Rutskoi has vowed to fight the criminal charges against his associates, saying the case is politically motivated. Rutskoi has long been at odds with the top prosecutor in Kursk, Nikolai Tkachev. Kononchuk and Bunchuk were arrested while Rutskoi was visiting the Republic of Bashkortostan (see "RFE/RL Newsline," 17 June 1998). LB Correction: The Bratskoe water reservoir into which a chemical enterprise has dumped massive quantities of mercury waste is located in Irkutsk Oblast, not Krasnoyarsk Krai, as was reported by "RFE/RL Newsline" on 18 June. TRANSCAUCASUS AND CENTRAL ASIA AZERBAIJAN REJECTS ARMENIAN STATEMENT ON KARABAKH. In an interview with Turan on18 June, Azerbaijani presidential adviser Vafa Gulu-zade said that Armenian Foreign Minister Vartan Oskanian statement's that the Karabakh peace process is deadlocked as a result of Azerbaijan's intransigence is "groundless." Gulu-zade also rejected Oskanian's argument that Armenia cannot allow the deadlock to continue for a period of years as to do so would permit Azerbaijan to build up its military strength. In such a case, according to Oskanian, Armenia would be have to provide more concrete security guarantees to the Armenian population of the unrecognized Nagorno-Karabakh Republic and would consider all other options, including the possible reunification of Armenia and the republic. Azerbaijani Deputy Parliamentary Chairman Yashar Aliev told Interfax on 18 June that Oskanian's statement testifies to Armenia's "aggressive stance and...claims on Azerbaijani land." LF AZERBAIJANI OPPOSITION PROTESTS CRACKDOWN. An independent journalists' trade union, a group for the protection of women's rights, and the Democratic Congress (which is composed of a dozen leading opposition parties) have all issued statements condemning the detention of Amaliya Seidova, editor of the opposition newspaper "Chag," Turan reported. Security forces arrested Seidova after the newspaper's premises were searched on 16 June. LF SECOND PRESIDENTIAL CANDIDATE NAMED IN AZERBAIJAN. The Party of National Independence of Azerbaijan on 14 June voted to nominate its chairman, Etibar Mamedov, as a candidate for the October presidential elections, Turan reported. Mamedov, whose political orientation is ambivalent, told Turan he does not believe that opposition leaders' unanimous stance on boycotting the vote will last, given the substantive disagreements between them. Meanwhile, the Consultative Assembly, which unites 11 pro-government parties, issued a statement on 18 June saying that the controversial law on the presidential elections corresponds to international standards. The opposition has condemned that law as undemocratic (see "RFE/RL Caucasus Report," Vol. 1, No. 16, 16 June 1998.) LF ARMENIAN PRESIDENT URGES COMPROMISE OVER ELECTION LAW. Meeting on 17 June with representatives of the Justice and Unity bloc, which was formed in March to back his presidential candidacy, Robert Kocharian called for a compromise solution to the deadlock within the parliament over the new election law, Noyan Tapan and RFE/RL's Yerevan bureau reported. Kocharian argued that Armenia is not yet ready for a parliament elected exclusively under a majority system. The presidential press service quoted him as suggesting that half the seats within the new parliament should be allocated to single-member constituencies and the other half on the basis of party lists. Kocharian also proposed "rating voting" in the party lists, whereby voters would be able to endorse candidates included on those lists (see also "End Note"). LF TAJIK LAW ON POLITICAL PARTIES AMENDED. President Imomali Rakhmonov on 18 June endorsed amendments to the controversial law passed last month banning religious-based political parties. The amendments were drafted by a trilateral commission composed of representatives from the government, parliament and the opposition. Oppositionists objected to the original wording of the law, which, they feared, would be used to ban the influential opposition Islamic Revival Party. Under the compromise wording, political parties are now forbidden to use either religious organizations or their premises for political ends. LF TAJIK PRESIDENT DENIES RUSSIAN OFFICERS BACK OPPOSITION. In an interview with "Krasnaya zvezda" published on 18 June, Rakhmonov said he is aware of rumors that some Russian army officers serving in Tajikistan support the opposition. But Rakhmonov insisted that those rumors are without foundation. LF KAZAKHSTAN, CHINA TO INCREASE MILITARY COOPERATION. Wrapping up his first visit to China on 17 June, the chief of staff of Kazakhstan's armed forces, Bykhtyzhan Yertayev, told ITAR-TASS that he reached agreement with his Chinese counterpart, Fu Quanyou, on sharing experience in the fields of military construction and reform of the armed forces. Yertayev also met with Chinese Defense Minister Chi Haitian and toured Chinese army units in Shanghai, Nanjing, and Urumqi. LF CANADIAN OFFICIAL QUESTIONED OVER KYRGYZ CYANIDE SPILL. The Kyrgyz Security Ministry has begun questioning the former president of the Canadian-Kyrgyz gold-mining joint venture, one of whose lorries discharged 20 tons of sodium cyanide into the Barskoon River last month, Interfax reported. Legal proceedings have been launched in connection with the spill. Meanwhile, the Movement for Ecological Safety, founded earlier this week (see "RFE/RL Newsline," 18 June 1998), met for the first time in Bishkek on 18 June to discuss the aftermath of the spill, RFE/RL's Bishkek bureau reported. Chairman Topchubek Turgunaliev said the movement will conduct an independent investigation into the accident. It will also campaign for the cancellation of the contract between the Kyrgyz government and the Canadian company CAMECO and launch legal proceedings against all those responsible for the accident. LF FORMER KYRGYZ PREMIER APPOINTED AMBASSADOR TO GERMANY. President Askar Akaev on 17 June appointed former Prime Minister Apas Djumagulov as ambassador to Germany, RFE/RL's Bishkek bureau reported. Djumagulov replaces Omar Sultanov, who was named head of the presidential administration in late March. The former premier, 64, was appointed director of the state oil and gas company following his resignation in March 1998, which, he said, was aimed at making way for a younger and more energetic head of government. LF END NOTE IMMINENT RIFT WITHIN PRO-PRESIDENTIAL CAMP IN ARMENIA? by Emil Danielyan Disagreements over the country's new political system are emerging within the broad coalition that supports Armenian President Robert Kocharian. The euphoria over the election last spring of the president, shared by most opposition parties and the state apparatus, is starting to wane in the face of intensifying conflicts of interest. The issue provoking controversy is how the next Armenian parliament should be elected. The answer to that question--which at first glance seems insignificant--will determine how the new political landscape in Armenia differs from the previous one. Four former opposition parties within the pro-Kocharian Justice and Unity bloc want the majority of parliamentary seats to be allocated according to the system of proportional representation. They argue that elections based on that system are more difficult to falsify and will promote the development of political parties, a prerequisite for democracy. But the bloc's other member, the Yerkrapah union of Karabakh war veterans, headed by Defense Minister Vazgen Sargsian, favors allocating the overwhelming majority of the 131 seats in the next parliament in single-mandate constituencies. The Yerkrapah argues that most of the country's intellectuals are not aligned with any specific political party and will therefore will not play a role if party lists take precedence. In reality, this seemingly conceptual debate is all about how to win elections. The Yerkrapah's position is indicative of the interests of a wider class that can tentatively be called the "people of power." Such people have no developed political ideology but have clearly defined economic interests that hinge on close ties with government bodies and, especially, on control over local authorities. The single-mandate system frees them of the need to formulate political programs by shifting the emphasis to the personalities of the candidates. It also creates fertile ground for vote manipulation through ties to local quasi-mafiosi clans, leverage over the authorities, and substantial financial resources. Such tactics enabled the Pan-Armenian Nat reported ruling party, to ensure the victory of Levon Ter-Petrossian in the disputed 1996 presidential elections. Opposition politicians contend that the relationship between Kocharian government's and the "power class" (top bureaucrats, local bosses, businessmen, and so forth) has so far been based on an arrangement whereby the latter gives full political backing to the former in exchange for non- interference in its sometimes dubious economic activities. The power class has remained largely unaffected by the change of leadership in Armenia last winter after many of its members transferred their allegiance from the HHSh to the Yerkrapah. (Some HHSh members have, however, been stripped of their jobs, others are under investigation for financial abuses.) Its position, however, could be jeopardized if it loses control over the parliament. The single-mandate system would leave the other Justice and Unity parties with few chances of winning considerable representation in the parliament. After many years of political isolation, they want to gain a broader share in the government system than is currently provided by the handful of minor positions distributed to the former opposition groups. Free and fair parliamentary elections (which it believes are possible only under a proportional representation system) is the only way to achieve that goal. Meeting with representatives of the Justice and Unity group on 17 June, Kocharian urged them to try to reach a compromise. He proposed that half the seats in the new parliament be allocated under the single mandate system and the remaining half on the basis of party lists. He also said that he backs the idea of "rating voting" to be applied to party lists. According to it, as well as voting for political parties, Armenian voters would also make their choice among concrete individuals included on electoral slates. It remains unclear whether the Yerkrapah will accept this compromise, or whether they will forge ahead with their intention to draft a new law from scratch. If they opt for the latter course, a showdown between the two camps will probably occur in the fall, when the new Yerkrapah draft law will be submitted for discussion. Some parties have already said they may boycott the summer 1999 parliamentary elections. Such a move would run the risk of renewed political polarization and signal the end of the new regime's declared "national unity." The author is a Yerevan-based RFE/RL correspondent. 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. 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