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RFE/RL NEWSLINE Vol. 2, No. 121 Part I, 25 June 1998
___________________________________________________________ RFE/RL NEWSLINE Vol. 2, No. 121 Part I, 25 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 * DUMA SCHEDULES DEBATE ON 'ANTI-CRISIS' LAWS * ECONOMIST SAYS DEVALUATION INEVITABLE AND DESIRABLE * FINAL TRIAL AGAINST "WAHHABIS" OPENS IN UZBEKISTAN End Note: AUSTERITY BATTLE MAY TRIGGER CONFRONTATION WITH DUMA xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA DUMA SCHEDULES DEBATE ON 'ANTI-CRISIS' LAWS. The State Duma Council on 25 June scheduled the debate over the government's "anti-crisis program" for 1 July, Russian news agencies reported. Prime Minister Sergei Kirienko is expected to attend that Duma session. According to Finance Minister Mikhail Zadornov, the package will contain 13 draft laws. Deputy Prime Minister Viktor Khristenko delivered six of them to the Duma on 24 June, and the government is to send the other seven on 25 June. The anti-crisis program calls for large spending cuts and various tax proposals through which the government hopes to plug holes in the budget and reassure financial markets. Among other things, the government is seeking to charge a full 20 percent value- added tax on some goods now taxed at a reduced rate (see "RFE/RL Newsline," 14 November 1997), lower the profit tax for businesses, and introduce a sales tax. LB YAVLINSKII EXPRESSES LIMITED SUPPORT FOR GOVERNMENT PLANS. Grigorii Yavlinskii says his Yabloko movement will support the government's efforts to stabilize the current financial and economic situation in Russia, RFE/RL's Moscow bureau reported on 24 June. In particular, he endorsed measures to tighten control over collection of taxes and customs duties and to reduce the tax burden. But Yavlinskii also described the anti-crisis program and the possible multibillion-dollar bailout from international financial institutions as an "anaesthetic" that might relieve pain temporarily but would not cure the patient. He said the government's program will not solve any "strategic tasks," and called for a "serious economic review of the causes of the crisis." Yavlinskii did not attend the expanded cabinet session on 23 June, at which the anti-crisis program was discussed, on the grounds that parliamentarians were not given a chance to review the program before the meeting. LB GOVERNORS CALL FOR PRINTING MORE MONEY. Sverdlovsk Oblast Governor Eduard Rossel on 24 June praised some aspects of the government's "anti-crisis program" but also called for printing more money to help the government settle its debts, ITAR-TASS reported. Sverdlovsk contains many defense industry enterprises that have not been paid for state orders. Altai Krai Governor Aleksandr Surikov went further, saying the government's program does not address the causes of the economic crisis. Noting that wage and pension arrears are "snowballing," Surikov called for a rapid monetary emission. Government officials have repeatedly ruled out printing more money, saying such a measure would cause inflation to sky-rocket. The State Statistics Committee announced on 19 June that wage arrears in ten major sectors rose 6.7 percent in May and now total 66.89 billion rubles ($10.8 billion). Money owed by the state accounted for 16.5 percent of the wage debts, the committee said. LB ECONOMIST SAYS DEVALUATION INEVITABLE AND DESIRABLE... Andrei Illarionov, the director of the Institute of Economic Analysis, on 24 June argued that "the devaluation of the ruble is becoming inevitable," RFE/RL's Moscow bureau reported. He argued that the ruble exchange rate has been kept artificially high since oil prices began a steep decline in October and November 1997. He claimed a devaluation in the near future would help the government deal with the financial and economic crisis, and said devaluation may not necessarily lead to inflation. Illarionov also described as a "myth" the view (expressed by President Boris Yeltsin and government officials) that Russia's economic problems are related to a world financial crisis. He said there is a crisis only "in countries whose governments are pursuing a weak economic policy," Interfax reported. In addition, Illarionov predicted that increasing the government's foreign borrowing will inevitably lead to a foreign debt crisis. LB ...BUT CENTRAL BANK OFFICIAL DISAGREES. Central Bank First Deputy Chairman Sergei Aleksashenko argued on 24 June that Illarionov "is deliberately distorting facts" in his analysis of the current economic situation, Interfax reported. Aleksashenko denied that a sharp devaluation of the ruble is inevitable and challenged the view that significant currency depreciation would be good for the economy. He argued that a devaluation would raise prices on imported goods, undermine banks that have taken out foreign loans, and "disorient the population." He also said devaluation would lead to price hikes for transportation, communication and other services, making it "practically impossible to solve budget-related problems." LB FEDOROV SAYS PUBLIC TRIALS OF TAX EVADERS POSSIBLE. State Tax Service chief Boris Fedorov announced on 24 June that the authorities may hold public trials against some tax evaders "so that people will appreciate the serious nature of our intentions," Interfax reported. Fedorov's predecessor, Aleksandr Pochinok, alo advocated such trials, but none have yet been conducted. Fedorov called for unspecified steps to improve the public perception of measures to boost tax collection. The government has been running public service advertisements on television encouraging people to pay their taxes. One such commercial shows a tax evader racked with guilt and fear of arrest. Although he is not responsible for tax reform, Fedorov has acknowledged that significant improvements in tax collection will require fundamental changes to the tax system. LB GOVERNMENT STICKS BY PLAN TO CUT TAX DEBTORS' OIL EXPORTS. Deputy Prime Minister Khristenko on 24 June said the government will strictly implement a recent directive to restrict or entirely cut off access to state-owned pipelines and seaport terminals for oil exporting companies that have not cleared their tax debts by 1 July (see "RFE/RL Newsline," 6 May 1998). He said the government has notified 13 major oil companies that could be affected by the directive and signed agreements with each of them on repaying their tax arrears, Russian news agencies reported. Oil company executives are sharply opposed to the measure. Mikhail Khodorkovskii, the head of the Yukos oil company, one of Russia's largest, told ITAR-TASS on 24 June that cutting off access to export pipelines could cause production to grind to a halt at some firms. He argued that the policy conforms to an IMF demand. LB SYSUEV SAYS OLIGARCHS WON'T REPLACE GOVERNMENT. Deputy Prime Minister Oleg Sysuev on 23 June dismissed fears that an advisory council of business elites, which is expected to be formed soon, will "replace" the cabinet or impose its will on Prime Minister Kirienko, ITAR-TASS reported, citing an interview with Sysuev on NTV. At the same time, Sysuev acknowledged that the government "cannot avoid taking into account" the views of financial and industrial groups, which, he said, carry much influence in Russia. LB FSB OFFICERS WIN LIBEL SUIT AGAINST PRIMORE GOVERNOR. A Vladivostok raion court has ordered Primorskii Krai Governor Yevgenii Nazdratenko to issue a public apology to Viktor Kondratov, the head of the Federal Security Service's (FSB) branch in Primore, and other FSB officers in the region, "Kommersant-Daily" reported on 25 June. Kondratov and his colleagues filed the lawsuit last year after Nazdratenko gave an interview to the Moscow-based magazine "Profil." The governor blamed local FSB officers for rising crime in Primore and charged that they try to "provoke the public." (When the interview was published, Kondratov was Yeltsin's representative in Primore and was authorized under a presidential decree to exercise powers that previously belonged to Nazdratenko.) The court fined "Profil" 15,000 rubles ($2,400) and the journalist who conducted the interview 1,500 rubles. Nazdratenko was not fined but was ordered to publish an apology in three local newspapers in Primore. LB OBLAST COURT APPROVES ANNULMENT OF NIZHNII ELECTION. The Nizhnii Novgorod Oblast Court on 23 June left in place a lower court ruling that approved the annulment of the 29 March mayoral election in Nizhnii Novgorod, "Pravda" reported on 25 May. The controversial local businessman Andrei Klimentev won the race by a narrow margin, but the city electoral commission cancelled the result after high- ranking federal officials denounced Klimentev and said there were grounds to annul the election. Many observers and Russian media concluded that political pressure, not legal considerations, inspired the annulment. Klimentev filed the court appeal but was not able to attend the oblast court hearings, because he is serving a prison term for embezzlement (see "RFE/RL Newsline," 18 and 29 May 1998). LB SUPREME COURT TO RULE ON EXTREMIST GROUP'S LIBEL CASE AGAINST JOURNALIST. The Supreme Court will hear journalist Galina Tuz's appeal against a Stavropol Krai court ruling that she libeled the national-socialist group Russian National Unity (RNE) in the newspaper "Stavropolskaya Pravda," "Russkii telegraf" reported on 24 June. The RNE claimed that statements in a 1996 article that Stavropol Krai's RNE "appears in essence a fascist organization" and "pursues a fascist ideology" damaged its "business reputation," and won a lawsuit forcing the paper's editorial office to pay a fee and publish an apology. Tuz's lawyer, Andrei Rakhmilovich, claims that the defense's arguments were ignored in court, while the "Russkii telegraf" article claims that both Stavropol public opinion and the court's "personal convictions" were partial to the RNE. The legal status of Aleksandr Barkashov's RNE, an overtly national- socialist organization, has been uncertain since the Justice Ministry refused to register the movement at the federal level in August 1997 (see "RFE/RL Newsline," 16 May 1998). BT RYBKIN, STEPASHIN PLEDGE SUPPORT FOR CHECHEN PRESIDENT. Ivan Rybkin, who as Russian Security Council Secretary, conducted prolonged negotiations with the Chechen leadership over the region's future status and economic claims on Moscow, said on 24 June that peace and stability in Chechnya are impossible without President Aslan Maskhadov, according to ITAR-TASS. Interior Minister Sergei Stepashin similarly told Interfax that he believes Moscow should support any measures Maskhadov may take to counter crime and uphold law and order in Chechnya. Both Russian officials declined to condemn the legitimacy of the state of emergency imposed by Maskhadov on 23 June, although Rybkin conceded that the Russian Federation Constitution empowers only the Rusiaan President to do so. LF RUSSIA UNHAPPY WITH CHINESE WATER DIVERSION SCHEME. Reports in Interfax and "Segodnya" on 24 June reflect Russia's displeasure with a Chinese plan to divert water from the upper Irtysh River. China is planning to redirect water from the river in the second half on this year to provide water for oil refineries and land reclamation projects in northwest China. According to Interfax, Russia has already requested details of the project but has not received a reply. According to "Segodnya," if China goes ahead with the plan, the level of water in the river could be reduced by as much as 15 percent during drought years, making navigation impossible in the lower reaches of the river which pass through Russia. BP TRANSCAUCASUS AND CENTRAL ASIA FINAL TRIAL AGAINST "WAHHABIS" OPENS IN UZBEKISTAN. The fourth and last in a series of trials against alleged Wahhabis opened in Tashkent on 24 June, Reuters and "Nezavisimaya gazeta" reported. Uzbekistan's state prosecutor demanded the death sentence for Talib Mamajanov, who has admitted to being a member of a criminal group responsible for killing 12 people, eight of them policemen, in the Fergana Valley between 1994 and 1997. Seven other men are charged with possession of weapons and harboring criminals. Sentencing is expected by 6 July. In the three earlier trials, all defendants were found guilty and sentenced to prison terms. Alhough the state prosecutor demanded the death penalty for Mamajanov, Uzbek courts have been careful not to pass such a sentence at earlier trials in order to avoid making martyrs of the defendants. BP IRAN, KAZAKHSTAN HOLD TALKS ON GRAIN, OIL. The Iranian Minister of Mines and Metals, Eshaq Jahangiri, met with Kazakh Prime Minister Nurlan Balgimbayev in the Kazakh capital, Astana, on 24 June, Interfax and IRNA reported. Jahangiri advocated concluding a long-term contract for Iranian purchases of Kazakh grain, noting that "there is no need to bring grain from far away when one can buy it in neighboring Kazakhstan." Balgimbayev said he wanted to renew oil exports to Iran, which were suspended in May due to the refusal of the new management of Kazakhstan's Oil and Gas Company to honor a contract signed in 1996. Balgimbayev and Jahangiri also agreed to develop companies for shipping via the Caspian Sea. BP GEORGIA SLAMS DUMA RESOLUTION ON ABKHAZIA. Foreign Minister Irakli Menagharishvili on 24 June condemned as "gross interference in Georgia's internal affairs" a resolution passed by the Russian State Duma earlier the same day. The Duma approved a resolution calling for lifting the border and customs restrictions currently in force on the border between the Russian Federation and Georgia's breakaway region of Abkhazia. Menagharishvili argued that the restrictions could be lifted only as part of a broader political settlement of the Abkhaz conflict. LF AZERBAIJAN PRESIDENTIAL ELECTION UPDATE. Meeting with a visiting European Parliament delegation on 24 June, Azerbaijani President Heidar Aliev said that he will not propose his own candidacy for the presidential elections due in October, but will run for a second term if asked by the Azerbaijani people to do so, Interfax reported. Aliev assured the delegation that the poll will be free and fair. Aliev has also invited opposition political parties to propose candidates to the new Central Electoral Commission (CEC), half of the 24 members of which are to be proposed by the president and the remainder by the parliament. CEC members may not be members of any political party. The Movement for Democratic Elections and Electoral Reform, which unites some 20 opposition parties, has proposed that half the members of the CEC be nominated by the Movement together with five potential opposition presidential candidates, Turan reported on 23 June. LF ECONOMIC UPSWING IN ARMENIA. Prime Minister Armen Darpinian said on 24 June that Armenia registered 6.3 percent economic growth in the first five months of 1998, according to Noyan Tapan. Darpinian added that direct foreign investment in the Armenian economy reached $100 million during that time period, and is expected to total $250 million by the end of the year, RFE/RL's Yerevan bureau reported. Addressing an Armenian-Ukrainian business forum in Yerevan, Darpinian attributed the inflow of foreign capital to his government's emphasis on private enterprise and its commitment to privatizing large state enterprises. Darpinian also announced that the Armenian state airline company will soon be put on international tender. "Privatization is the only way to guarantee its efficient and competitive work," he argued. LF ARMENIAN PRO-PRESIDENTIAL BLOC MEETS. The leaders of four of the five parties aligned in the Justice and Unity bloc formed in March to back Robert Kocharian's presidential bid met behind closed doors on 24 June to discuss their recent meeting with the president and develop a joint plan of action, RFE/RL's Yerevan bureau reported. Aleksandr Aghamalian of the Scientific-Industrial and Civic Union said the alliance reached an overall agreement regarding the bloc's position on Nagorno-Karabakh and finalized two documents assessing the current state of affairs in Armenia and containing concrete proposals on that score. A spokesman for the Dashnak party told RFE/RL the party did not send representatives to the meeting because it was not given advance notice that it would take place. LF END NOTE AUSTERITY BATTLE MAY TRIGGER CONFRONTATION WITH DUMA by Floriana Fossato Russian Prime Minister Sergei Kirienko on 24 June started consultations with parliamentary factions in a bid to ensure support for and swift approval of the government's anti-crisis program. That program was outlined at an expanded cabinet meeting the previous day. The government also formally approved its austerity plan, including cuts in spending of 8 percent and revenue increases of about 4 percent. The plan aims to fill holes in the 1998 budget, restore calm to Russian financial markets, and convince the IMF that Russia is ready to implement the stringent fiscal-discipline measures considered a precondition for negotiations on additional financial support from the fund. But the measures outlined in the plan cannot be implemented in their entirety without supporting legislation approved by the parliament. Only parts of the anti-crisis plan could be imposed by presidential decree. Most observers in Moscow are skeptical about whether the government will be able to persuade the State Duma to adopt 20 draft bills related to the plan before the lower house of the parliament adjourns for its summer recess on 16 July. According to observers, the time frame set by the Kremlin could lead to a confrontation with the Duma and possibly to the dissolution of that body if lawmakers fail to give the cabinet the requested support. President Boris Yeltsin on 23 June endorsed the government plan and told the expanded cabinet session, which included legislators as well as regional and business leaders, that "the economic crisis has become so acute that there are social and political dangers." Yeltsin called on the parliament to adopt the government's plan and vowed to take unspecified "other measures" if it did not. In 1993, Yeltsin had ordered tanks to shell the parliament building to dislodge rebellious members of the previous parliament, the Supreme Soviet. The constitution, adopted after the shelling of the White House, gives the president powerful levers to force the Duma to comply with his plans. Yeltsin could dissolve the Duma or issue laws by decree if legislators block the government's plan. However, the constitution does not cite the refusal to pass legislation as grounds for dissolving the Duma. But analysts say that a confrontation could easily be manufactured. Nikolai Petrov, a senior associate of the Carnegie Centre in Moscow, told RFE/RL that the time frame proposed by the government for the parliamentary passage of its plan is "not realistic." He added that Yeltsin's "thinly veiled threat to the Duma indicates that we may well be heading for a new fight." Confrontation between the president and his foes in the opposition-dominated Duma is a habitual feature of Russia's political life. The Duma initially rejected the appointment of little-known Kirienko to the post of prime minister when Yeltsin sacked former Premier Viktor Chernomyrdin and his government three months ago. At that time, however, the economic and political situation had not reached what Federation Council Speaker Yegor Stroev on 23 June called the "boiling point," in a reference to the current situation. Communist leaders in the Duma have already slammed Yeltsin's 23 June performance, while welcoming some of the points included in the government's austerity plan. Communist Party and parliamentary faction leader Gennadii Zyuganov said that Yeltsin "performed his usual repertoire. He opened the meeting, started threatening the Duma, was rude, insulted us, and left." And Anatolii Lukanov, an influential Communist member who heads the Duma's legislative committee, said "there was a time when such threats could have influenced the Duma, but not now." Petrov of the Carnegie Centre says that "the Duma seems ready for dissolution." According to Petrov, "the situation of growing economic and political crisis now means that the Communists could benefit from the election, increasing their presence in the Duma, unlike in the spring, when economic forecasts were overall positive, and they would have been disadvantaged in an early election." Parliamentary elections are scheduled for December 1999. Petrov said that a possible dissolution could be set up "in a simple way. The government presents the draft bills. The Duma says it does not have enough time to consider, debate, and vote on them before the recess. Then the prime minister, arguing that the Duma is not acting in the requested cooperative way, calls for a confidence vote in the government. The Duma votes no confidence and, at this point, a constitutional scenario allowing the president to dissolve [the Duma] and call early elections is set up." For the time being, however, deputies seem to have taken time out in order to clarify their positions. The leader of the pro-government Our Home Is Russia faction, Aleksandr Shokhin, has said the Duma will not start examining the government plan before 1 July. Shokhin and his faction, closely identified with Chernomyrdin, were scheduled to meet with Kirienko on 24 June. Shokhin told the Interfax news agency that "part of the government draft bills have a good chance of being approved...but not all the measures are likely to be." 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. HOW TO UNSUBSCRIBE Send an email to firstname.lastname@example.org with the word "unsubscribe" as the subject of the message. 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