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RFE/RL NEWSLINE Vol. 2, No. 118 Part I, 22 June 1998
___________________________________________________________ RFE/RL NEWSLINE Vol. 2, No. 118 Part I, 22 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 * KIRIENKO SAYS 'ANTI-CRISIS PROGRAM' WON'T BE AT EXPENSE OF POOR * IMF TEAM TO ARRIVE IN MOSCOW FOR TALKS * MORE TALKS ON SOUTH OSSETIA, ABKHAZIA * End Note: CHUBAIS RETURNS TO GOVERNMENT, FOR NOW xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA KIRIENKO SAYS 'ANTI-CRISIS PROGRAM' WON'T BE AT EXPENSE OF POOR. Prime Minister Sergei Kirienko on 22 June promised that the government's economic program for overcoming the latest financial crisis "will not be carried out at the expense of the least well-off layers of the population," ITAR-TASS reported. Speaking to journalists after a Kremlin meeting with President Boris Yeltsin, Kirienko said the "anti-crisis" program will include unspecified mechanisms to protect the poorest citizens. In an interview with Russian Television the previous evening, Kirienko said the program will involve "quick, tough, and often unpopular measures." Adopting it will require "colossal political courage," he added, and implementing it will require "colossal consolidation of all the forces and resources of the authorities and society." On 22 June, Yeltsin is to chair a discussion of the program at an expanded session of the government, which will include a large number of Federation Council and State Duma deputies. LB IMF TEAM TO ARRIVE IN MOSCOW FOR TALKS. An IMF delegation headed by the fund's First Deputy Managing Director Stanley Fischer are to arrive in Moscow on 22 June for talks with Russian officials on the disbursement of a $670 million loan tranche and a possible new multibillion-dollar loan to help calm Russian financial markets (see "RFE/RL Newsline," 19 June 1998). Unified Energy System chief executive Anatolii Chubais, Yeltsin's envoy to international financial institutions, said Russia will negotiate a $10 billion to $15 billion loan under the IMF's Supplemental Reserve Facility program. But speaking to reporters in Konakovo (Tver Oblast), Chubais said "my impression is that we will not need to spend most of these funds," Reuters reported. The same day, Yeltsin told journalists in Kostroma that Russia needs "trust," not cash, from foreign leaders and international financial institutions. LB DUMA EXPRESSES CONCERN ABOUT FOREIGN BORROWING. The Duma on 19 June passed a statement saying Russia's foreign debt "has gone beyond reasonable limits, exceeding $135 billion, and has become a direct threat to the state's economic and political sovereignty," Russian news agencies reported. Before the vote, Duma Budget Committee Deputy Chairman Vladimir Nikitin of the Popular Power faction told deputies that Russia "has almost exhausted" its limit on foreign borrowing for 1998 and that "further borrowing will require legislative approval." But an unnamed Finance Ministry official told Interfax that the Duma does not have the right to limit the government's foreign borrowing. The official said a bailout package from the IMF would not necessarily increase Russia's foreign debt since the stabilization funds might never be spent. Russian officials hope the psychological impact from additional IMF support would calm the markets. LB KREMLIN OFFICIAL SAYS YELTSIN'S FUTURE PLANS NOT DECIDED YET. An unnamed high-ranking official in the presidential administration on 20 June said Yeltsin has not yet made a final decision on whether to run for re-election again in 2000, Interfax reported. The source said the president will determine his future plans only after the Constitutional Court rules on whether he is legally entitled to seek another term. The Kremlin official also argued that the media "too categorically" interpreted Yeltsin's recent comments in which he ruled out another presidential bid (see "RFE/RL Newsline," 19 June 1998). Last fall, the Duma asked the Constitutional Court to rule on whether Yeltsin may run for president again. The court is expected to consider the case in late 1998. LB NO WORD FROM YELTSIN ON BUSINESS ADVISORY COUNCIL. An unnamed source in the presidential admnistration told Russian news agencies on 20 June that Yeltsin has yet to approve the formation of a so-called Council of Mutual Economic Assistance, on which leading businessmen will advise the government. The source said such a council could be formed in July at the earliest. On 19 June, ITAR-TASS quoted an unnamed source who attended the previous day's meeting between Prime Minister Kirienko and the "oligarchs" as saying that the government and business leaders have already agreed to form an advisory council. The next day, Kirienko told journalists that the government welcomes efforts by financial and industrial groups to advance "constructive cooperation" with the cabinet," Russian news agencies reported. Speaking to Russian Television on 21 June, Kirienko said the government will not accept all the businessmen's policy proposals. LB DUMA FORMS COMMISSION TO STUDY GROUNDS FOR IMPEACHMENT. The Duma on 19 June voted to set up a commission to study criminal allegations against Yeltsin and draft an impeachment motion if it deems those allegations valid, RFE/RL's Moscow bureau reported. Communist deputy Vadim Filimonov is to head the commission, whose 15 members will include representatives from all seven Duma factions. Duma First Deputy Speaker Vladimir Ryzhkov of Our Home Is Russia, who will join the commission, explained that while his faction opposes efforts to impeach Yeltsin, it will participate in the commission to keep apprised of its activities and express dissenting opinions when necessary. The commission will operate until the Duma votes on an impeachment motion or until the end of the Duma's term, in December 1999. Yeltsin's opponents would likely have trouble gaining the two-thirds majority vote needed to adopt an impeachment motion. LB WHO IS BEHIND IMPEACHMENT EFFORTS? Although Communist leaders have been outspoken supporters of ousting Yeltsin, the 15 June edition of the weekly magazine "Profil" argued that "oligarchs" testing their strength against the president are behind the Duma's latest impeachment efforts. The weekly quoted Duma Deputy Speaker Mikhail Gutseriev of the Liberal Democratic Party of Russia as saying that bankers are using their money and influence to promote the creation of an impeachment commission in the hope of encouraging Yeltsin to confirm that he will not seek a third term. Duma deputy Vladimir Semago, a maverick member of the Communist faction, told "Profil" that the formation of a commission on impeachment would signify "the active interference of bankers in political affairs, not the strengthening of the left wing of the Duma." Bank Imperial, reportedly close to the gas monopoly Gazprom, is a shareholder in "Profil." LB ZYUGANOV CALLS FOR OUSTING YELTSIN, PRESERVING PARTY UNITY. Communist Party leader Gennadii Zyuganov on 20 June said his party will seek to use "all legal means" to remove Yeltsin, Russian news agencies reported. Addressing a plenum of the Communist Party's Central Committee in Moscow, Zyuganov hailed the creation of a Duma impeachment commission and said Communists will prepare for a nationwide political protest. (Critics of Zyuganov's party, in particular members of Grigorii Yavlinskii's Yabloko movement, have accused the Communists of using the impeachment procedure to quell discord within their own ranks and help erase memories of the Communist votes that helped confirm Kirienko as prime minister in April.) Zyuganov also announced that the presidium of the Central Committee has said that attempts to create a "Leninist-Stalinist platform" within the party are "politically erroneous" and has dissolved that platform, founded recently by more radical party members (see "RFE/RL Newsline," 25 May 1998). LB RUSSIA-INDIA SIGN NUCLEAR REACTOR PROTOCOL. Russian Minister for Atomic Energy Yevgenii Adamov and Indian Nuclear Energy Commission Chairman R. Chidambaram signed a protocol on 21 June whereby Russia will provide two light water reactors to India, ITAR-TASS reported. The original agreement had been signed in 1988 between the Soviet Union and India, but differences over the means of payment delayed implementation of the deal. The protocol was due to be signed on 22 June, but Adamov said the two sides reached agreement quickly so "I signed the additional protocol [on 21 June] with a light heart." The agreement to provide two 1,000 megawatt reactors to the Kudankulam project in Tamil Nadu is worth $2.6 billion. Adamov also met with Indian Prime Minister Atal Behari Vajpayee in Simla and "confirmed the solidity of our roots of friendship and partnership." BP FOREIGN MINISTRY LAUDS U.S. OVERTURES TOWARD IRAN. The Russian Foreign Ministry on 19 June issued a statement welcoming Washington's recently announced intention to normalize relations with Iran, Russian news agencies reported. The statement expressed the hope that recent statements by U.S. President Bill Clinton and Secretary of State Madeleine Albright will be followed by "practical steps," namely that the U.S. will "abandon attempts to apply their legislation abroad...to impede Iran's trade and economic cooperation with other countries and to expose them to sanctions." On 17 June, Albright offered Iran new confidence-building measures, while the next day, Clinton called for "genuine reconciliation" with Iran, Reuters reported. The U.S. has voiced objections to Russian-Iranian cooperation in the energy sector, particularly to Russia's recent sale of technology for the Bushehr nuclear reactor (see "RFE/RL Newsline," 12 and 26 May 1998). BT DUMA DEPUTIES SEND MIXED SIGNALS ON START-2 RATIFICATION. The Duma will ratify the START-2 treaty, Chairman of the Duma Defense Committee Roman Popkovich (Our Home is Russia) predicted in an interview with the weekly "Interfax-Argumenty i Fakty," published on 22 June. However, Popkovich told a news conference on 19 June that "the agreement as it exists now is hard to ratify." Among preconditions he views as necessary for ratification are a government report on compliance with START-2, a protocol attached to START-2 outlining future START-3 negotiations, and a provision stating that Russia would automatically opt out of START-2 if the U.S. violated the 1972 Anti-Ballistic Missile Treaty. Meanwhile, Duma deputy Andrei Nikolaev, the former director of the Federal Border Service, has expressed his support for START-2 and predicted that the treaty will be ratified in September or October, ITAR-TASS reported on 19 June. Earlier this month, the Duma postponed START-2 hearings until the fall session (see "RFE/RL Newsline," 10 June 1998). BT CHECHEN SECURITY CHIEF KILLED IN SHOOT-OUT. Lechi Khultygov, the head of the Chechen Security Service and Vakha Dzhafarov, chief of staff to field commander Salman Raduev, were killed during a shoot-out in Grozny on 21 June, ITAR-TASS reported. The day before, Interfax reported that the kidnappers of Valentin Vlasov, Yeltsin's envoy to Chechnya, had demanded a $2 million ransom for his return; but Chechen Interior Minister Kazbek Makhashev denied that report, according to ITAR-TASS. PG YELTSIN WARNS OF FAR-RIGHT EXTREMISM. Yeltsin on 22 June warned that the threat of far-right extremism in Russia "is a real danger, even if not everybody feels it," Interfax reported. In a nationwide radio address to mark the 57th anniversary of the Nazi invasion of the USSR, Yeltsin warned that "Nazism is surging in Russia and poisoning the youth. Teenagers, fascinated by military symbolism, are modeling black uniforms." He criticized those who are "crazed with ideas of national supremacy and anti-Semitism" and asked whether Russians will "allow the worst ideology humanity has known to take root in this soil." The weekly "Novaya gazeta" predicted in its 11-17 May edition the fascist threat will be used during the 2000 presidential election in the same way as the threat of a Communist return to power was used in 1996 to encourage voters to support Yeltsin's re-election. LB BURYATIAN PRESIDENT WINS RE-ELECTION EASILY. Leonid Potapov beat out nine challengers to win a second term as president of the Republic of Buryatia with some 63 percent of the vote, ITAR-TASS reported, citing preliminary returns from the 21 June election. Vladimir Saganov, the chairman of the Budget Committee of the Buryatian legislature, finished a distant second with 6.5 percent. Potapov received a boost when Aleksandr Korenev, the president of Buryatia's Union of Industrialists and Entrepreneurs, who was considered a strong presidential candidate, dropped out of the race on 18 June and endorsed the incumbent. Although Potapov supported Yeltsin's re-election in 1996, he has not always backed the federal government's economic policies. Earlier this year, he criticized efforts to legalize the purchase and sale of farmland and scheduled a referendum on land reform in Buryatia for 21 June. He later postponed that vote until 5 July, Interfax reported. LB COMMISSION CONFIRMS ALTAI BY-ELECTION RESULT. The Central Electoral Commission on 19 June confirmed that Agrarian Party leader Mikhail Lapshin won a 31 May by-election in Altai Republic for a seat in the State Duma, Russian news agencies reported. At the request of former First Deputy Finance Minister Andrei Vavilov, who lost the race by a slim margin (see "RFE/RL Newsline," 1 June 1998), the commission sent a team to Altai to investigate allegations of foul play during the election. They found isolated violations of electoral rules but determined they were not widespread enough to have influenced the outcome. Vavilov's campaign had far greater financial backing than Lapshin's, and the former Finance Ministry official also had the support of the republic's leader, Semen Zubakin. LB TRANSCAUCASUS AND CENTRAL ASIA MORE TALKS ON SOUTH OSSETIA, ABKHAZIA. Georgian President Eduard Shevardnadze and South Ossetian leader Lyudvig Chibirov have agreed to continue discussions on the status of that breakaway region following talks in Borzhomi on 20 June, Interfax reported. The same day, Russian First Deputy Foreign Minister Boris Pastukhov and CIS Executive Secretary Boris Berezovskii met with Shevardnadze in Tbilisi to discuss the situation in Abkhazia, ITAR-TASS reported. The Russian representatives claimed that there was progress in the talks, but the Russian Defense Ministry on 19 June had ordered Russian peacekeepers in that region to respond with force if they are threatened, the Russian news agency said. In a statement, the ministry blamed both sides for "not taking the necessary measures to ensure the normal functioning" of their troops. PG BEREZOVSKII MAY VISIT KARABAKH... Following a meeting with Armenian President Robert Kocharian on 20 June in Yerevan, Berezovskii said that he has reached a tentative agreement to visit Karabakh sometime later this summer, RFE/RL's Armenian Service reported. The two men also discussed increasing economic ties within the CIS. Berezovskii told ITAR-TASS that he believes the "oil factor" will have little impact on the settlement of the Karabakh conflict. PG ...EXPRESSES OPTIMISM ON RESOLVING CONFLICT. The following day, the CIS executive secretary met with Azerbaijani President Heidar Aliev in Baku and expressed optimism that progress can be made toward resolving the Karabakh conflict, ITAR-TASS said. Berezovskii said that CIS leaders should say "no" to separatism throughout the region, and he urged Armenia to take a clear position on the future status of Karabakh. Saying that he welcomes these ideas, Aliev expressed the hope that the OSCE Minsk Group process could continue. The previous day, the Azerbaijani Foreign Ministry released a statement criticizing an alleged remark last week by Armenian Foreign Minister Vartan Oskanyan that Yerevan plans to annex Karabakh. The Armenian authorities have denied that Oskanyan made such a comment. PG ARMENIAN PRESIDENT SETS UP CONSULTATIVE GROUP. President Robert Kocharian on 19 June issued a decree establishing a special consultative council that will include representatives from the country's major parties regardless of whether they are represented in the parliament, RFE/RL's Armenian Service reported. The council's decisions will not be legally binding. As yet, there is no system for selecting its members. PG ARMENIA GRATEFUL FOR RUSSIAN HELP AT NUCLEAR STATION. Acknowledging that Armenia lacks the ability to operate the nuclear power station at Metzamor without assistance, the plant's director, Suren Azatyan, on 20 June told a group of visiting nuclear expects from Russia that his country appreciates their continuing assistance, ITAR-TASS reported. Azatyan said there have been no accidents at the plant since it was reopened three years ago. H added that there will be routine repair and reloading operations this fall. PG ARMENIA SEEKS TO JOIN EUROPE. President Kocharian on 19 June told a visiting delegation from the Council of Europe that "integration into European structures" is a top priority for his government, RFE/RL's Armenian Service reported. "Armenia must become the most democratic nation in the Transcaucasus since democracy predetermines the future of the country," he commented. Meanwhile, some 2,500 Armenians demonstrated in Yerevan against the sale of the country's brandy distillery to Pernod-Ricard of France, Interfax reported. But Kocharian said that the country cannot afford to block the sale lest it "find itself left out of global economic processes." PG NEW UN ENVOY ARRIVES IN TAJIKISTAN. The new UN special envoy to Tajikistan, Jan Kubis, presented his credentials to Tajik President Imomali Rakhmonov in Dushanbe on 19 June, ITAR-TASS and Reuters reported. Kubis said the compromise reached by a special commission and Rakhmonov after the Tajik parliament adopted a law banning religious parties last month is a "positive step" in maintaining the peace process in Tajikistan. Kubis met with United Tajik Opposition leader Said Abdullo Nuri the following day to discuss the law banning religious parties as well as "military aspects" of the Tajik peace agreement. Kubis assessed the peace process as slowly moving forward but added that "sometimes it comes to a standstill and becomes problematic." BP SIX BORDER GUARDS KILLED IN TAJIKISTAN. Six border guards, five Tajiks, and one Russian were killed on 20 June while attempting to prevent drug traffickers from crossing into Tajikistan from Afghanistan, ITAR-TASS reported. Three people were also wounded in the incident The drug traffickers escaped, and border guards have launched a search for them. According to ITAR-TASS on 20 June, more than 140 kilograms of narcotics have been seized by border guards in the "last few days." BP CHUBAIS RETURNS TO GOVERNMENT, FOR NOW by Stephanie Baker Amid a deepening financial crisis, President Boris Yeltsin has appointed former economic policy chief Anatolii Chubais as his special envoy in charge of Russia's relations with international lending organizations. Chubais, who was sacked as first deputy prime minister in March, returns to the government as Russia's financial markets have been plunged into turmoil. A Kremlin spokesman said Chubais will assume the role of a deputy prime minister responsible for negotiations with multilateral financial institutions, such as the IMF. Yeltsin on 19 June said, however, that Chubais will remain in government only temporarily to help Russia win "certain support and investments." He said Chubais will remain chief executive of national electricity company Unified Energy Systems (EES). Two days earlier, Prime Minister Sergei Kirienko had announced that the government is hoping to tap additional funds from the IMF to help prop up the Central Bank's reserves, which have dwindled since Asia's financial woes hit Russia last October. He emphasized that "It will not be a new wasteful credit for consumption." And while he declined to comment on the size of the loan under discussion, other Russian officials have said it could be for as much as $10 billion. An IMF team is due in Moscow next week to discuss the new financial aid package. Russia is battling one of its most serious financial crises in years, which has sharply increased the government's cost of borrowing to cover budget holes. The economic turmoil has been compounded by poor tax collection and slumping world prices for oil, one of Russia's leading exports. Reports of Chubais returning to the government came after Kirienko met with Russia's leading bankers and financial tycoons early last week to discuss ways to stabilize the country's jittery markets. According to Russian news reports, the financiers were pushing for Chubais to coordinate the government's anti-crisis measures. The government is preparing to announce an anti-crisis plan this to restore the confidence of investors, Further budget cuts could be in the making. And the government already is planning to slash spending by 3 percent of GDP. Kirienko acknowledged that the program will be "unpopular." But he said: "The world financial crisis has fallen on fertile ground, namely the crisis of confidence in a system that lives beyond its means." Media reports that Chubais would be brought back into the government sparked a rally on the country's stock market, which rose 8 percent on 17 June. The Finance Ministry also abruptly canceled its weekly treasury bill auction. The move fueled speculation that the government had found other sources of funds to redeem more than $1 billion dollars in maturing T-bills. And on 19 June, the government launched a major Eurobond for a reported $2 billion, but the exact amount has not been disclosed. With Chubais back in government, markets are betting that Russia will succeed in getting additional IMF support, which investors believe is needed to halt speculation on the ruble. Chubais has long played a key role in the government's relations with the IMF and World Bank. His latest appointment confirmed that this will continue. Last month, Chubais was in Washington for "informal" talks with senior officials from the IMF and U.S. administration, as financial markets continued to plunge. As he put it: "I happened to have close friendly relations with top officials of financial bodies, such as the IMF and the World Bank." Analysts agree that Chubais has the political clout and track record to do a deal with the IMF. In the words of Chris Speckhard, an economist at the Russian brokerage Alfa Kapital in Moscow: "He's someone they know and trust. His ties with the final oligarchs also have a big influence on the decision." But there is also a possibility that putting Chubais in charge of international financial institutions could divert his attention from EES, which is at the center of a circle of non-payments choking the economy. As John Paul-Smith, a Russian strategist at Morgan Stanley in London, put it: "The more time Chubais spends on this, the worse it is for EES. Sorting out EES is one of the biggest structural problems facing the government." The author is a Moscow-based RFE/RL correspondent. 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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