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RFE/RL NEWSLINE Vol. 2, No. 133 Part I, 14 July 1998
___________________________________________________________ RFE/RL NEWSLINE Vol. 2, No. 133 Part I, 14 July 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 * RUSSIA TO RECEIVE $14.8 BILLION PACKAGE THIS YEAR * RUSSIA SEEKS TO ISSUE EUROBONDS INSTEAD OF TREASURY BILLS * UN, ABKHAZIA CONDEMN ATTACK ON RUSSIAN PEACEKEEPERS End Note: THE CORRUPTION OF POWER xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA RUSSIA TO RECEIVE $14.8 BILLION PACKAGE THIS YEAR. Russia will receive $14.8 billion in loans from the IMF, World Bank, and Japan this year, officials announced on 13 July. The IMF will loan Russia $12.5 billion in 1998, the bulk of which ($11.2 billion) will constitute a new stabilization loan. The first disbursement of $5.6 billion may occur soon after a 20 July meeting of the IMF's board of directors. The World Bank will extend $1.7 billion in loans to Russia this year, $800 million of which was agreed during the past two weeks. Japan has also agreed to loan Russia $600 million this year. The stabilization package also includes a combined $7.8 billion in loans to Russia from the IMF, World Bank, and Japan next year. Of that figure, $4.5 billion are new credits agreed during the last two weeks. LB RUSSIA SEEKS TO ISSUE EUROBONDS INSTEAD OF TREASURY BILLS... In an effort to reduce short-term borrowing costs, Russia will offer holders of government treasury bills (GKOs) maturing before 1 July 1999 a chance to exchange those securities for seven-year or 20-year Eurobonds denominated in dollars, Russian news agencies reported on 14 July. According to Interfax, the value of GKOs in circulation totals some $30 billion. John Odling-Smee, head of the IMF's second European department, predicted on 13 July that the planned voluntary swap will reduce Russia's debt servicing costs and relieve the pressure on the GKO market. Widespread fears of a ruble devaluation have sparked a massive sell-off of GKOs and other ruble-denominated securities during the last two months. But the Russian stock market increased by more than 9 percent on 13 July, while in early trading the next day, the stock and bond markets posted gains of more than 13 percent and 10 percent, respectively. LB ...AND EXTEND COOPERATION WITH IMF INTO NEXT CENTURY. The Russian government has informed the IMF that it will seek another Extended Fund Facility for the period 1999-2001, ITAR-TASS reported on 13 July. Before the Russian stock and bond markets began showing steep declines in fall 1997, President Boris Yeltsin and other Russian officials repeatedly said Russia will not seek any new loans from the IMF after the current four-year, $10 billion Extended Fund Facility expires in 2000 (see "RFE/RL Newsline," 18 September 1997). LB CHUBAIS DISMISSES FURTHER THREAT OF DEVALUATION. Unified Energy System head Anatolii Chubais, Russia's top negotiator with international financial institutions, announced during a 13 July press conference that "there is no need for a devaluation" of the ruble, RFE/RL's Moscow bureau reported. He said the new loan agreements "signify a restoration of faith in Russia's ability to overcome its difficulties," Reuters reported. Central Bank Chairman Sergei Dubinin told journalists on 14 July that the first $5.6 billion installment of the new IMF loan will be added to the Central Bank's gold and hard-currency reserves, ITAR-TASS reported. Those reserves dropped from $15.1 billion to $13.5 billion from 3-14 July. LB NEWSPAPER DOUBTS NEW LOANS WILL PREVENT DEVALUATION. "Nezavisimaya gazeta" on 14 July expressed doubt that the new foreign loans will eliminate the need for a devaluation. A front-page article in that newspaper, which is financed by CIS Executive Secretary Boris Berezovskii, declared that Russia has received merely a "delay of the death penalty," adding that the new loans will significantly increase Russia's debt load and "lead to the dollarization of the economy." LB YELTSIN PRESSES DUMA TO PASS ANTI-CRISIS PROGRAM... Yeltsin met with State Duma Speaker Gennadii Seleznev and representatives from all seven Duma factions on 14 July to lobby for the passage of laws contained in the government's anti-crisis program, Russian media reported. He told parliamentary deputies that "we will not be able to implement [the program] if you do not confirm it... I can decide on some matters myself but, on the whole, the destiny of the program depends on you." The program formed the basis for Russia's recent negotiations with international financial institutions. The Duma will consider many of the government's proposals during an extraordinary session on 15-16 July. It has already rejected some key proposals for increasing budget revenues (see "RFE/RL Newsline," 3 and 7 July 1998). LB ...RULES OUT NEW ELECTIONS, COUPS, CONSTITUTIONAL AMENDMENTS. Yeltsin told influential Duma officials on 14 July that "there will be no extraordinary elections, no coups, no dissolution of the Duma and no changes in the constitution," ITAR-TASS reported, quoting presidential spokesman Sergei Yastrzhembskii. During the Kremlin meeting, Yeltsin also argued that the executive and legislature form "one team," adding that "we are one state." The president recently announced that law enforcement agencies are strong enough to reject any coup attempt (see "RFE/RL Newsline," 13 July 1998). Those remarks appear to have been prompted by an article in "Nezavisimaya gazeta" proposing the creation of a Temporary State Council to govern Russia and call early presidential and parliamentary elections. Several proposed constitutional amendments are being drafted in the Duma and are tentatively scheduled for consideration this fall, "Nezavisimaya gazeta" reported on 11 July. LB SARATOV GOVERNOR SUGGESTS YELTSIN MAY BE FORCED OUT. Dmitrii Ayatskov has predicted that "surges of discontent" from throughout Russia may force Yeltsin and the government to resign by September. Speaking to Interfax on 13 July, Ayatskov called on Yeltsin to "admit that he made a mistake" with Prime Minister Sergei Kirienko's cabinet. The Saratov governor criticized the government's economic and regional policies, adding that it would be "naive" to expect the government to solve the problem of wage and pension arrears. Ayatskov also said early parliamentary and presidential elections would not be a "tragedy," and he argued in favor of having "more people in government with social democratic tendencies, such as [Moscow Mayor Yurii] Luzhkov and Ayatskov." The Saratov governor was a Yeltsin appointee in 1996 and won an election that year to retain the post. Since then, relations between the two men have been good (see "RFE/RL Newsline," 27 August 1997 and 18 May 1998). LB NOVGOROD GOVERNOR URGES YELTSIN TO BACK CONSTITUTIONAL CHANGES. Mikhail Prusak has called on Yeltsin to support amending Russia's constitution, "Nezavisimaya gazeta" reported on 11 July. Prusak made the appeal during the Federation Council's session on 9 July. The same day, he met with Yeltsin and suggested "taking economic functions away from the president" and giving them to the government, Interfax reported. Prusak also called for reinstating the post of vice president. The Novgorod governor has repeatedly spoken out in favor of amending the constitution and changing Russia's electoral system (see "RFE/RL Newsline," 26 May 1998). Like Ayatskov, he initially became governor as a presidential appointee and has been a loyal supporter of Yeltsin. But Prusak recently blasted the Kirienko government, which, he claimed, is inexperienced and lacks the trust of the regions, according to the 2 July edition of the "IEWS Russian Regional Report." LB MINERS REJECT TULEEV'S APPEAL. The blockade of the Trans- Siberian Railroad in Kemerovo Oblast continues, despite Governor Aman Tuleev's appeal to protesting miners on 13 July to allow the transport of materials needed by regional industries, news agencies reported. Tuleev told a meeting of the Kemerovo administration that a government commission will fly to Kemerovo "an hour after the blockade has been lifted," referring to Deputy Prime Minister Oleg Sysuev's offer to negotiate with the protesters if the railroad is opened and miners' political demands are not discussed. Tuleev said a train that is loaded with enriched uranium and bound for a nuclear power plant in Seversk Oblast has for several days remained close to where miners are blocking the railroad. He added that the train poses a major environmental threat. The blockade of the Novokuznetsk- Tashtagol railroad, one of three such blockades in Kemerovo Oblast, was lifted on 13 July, after the mayor of Osinniki told the pickets that Tashtagol was on the verge of rationing food, Interfax reported. BT KIRIENKO WRAPS UP JAPANESE VISIT. Before departing for China on 14 July, Russian Prime Minister Sergei Kirienko met with Japanese businessmen in Tokyo, ITAR-TASS reported. Kirienko offered the businessmen the opportunity to participate in several projects in Russia, in particular the Kovyktinskii gas-condensate field in Irkutsk. Kirienko also said his government is ready to establish "special regimes for economic activities in Russia's Far East," including projects on the Kuril Islands. Kirienko said the introduction of such "regimes" could facilitate an understanding on "as yet unresolved issues." With regard to the $400 million credit Japan's Eximbank is expected to extend to Russia by 16 July under an agreement reached earlier this year, Kirienko said the money will be used to "settle the problems of the Russian coal mining industry." The previous day, after meeting with Foreign Minister Keidzo Obuchi, Kirienko met briefly with outgoing Prime Minister Ryutaro Hashimoto and was received by Emperor Akihito. BP CYPRIOT PRESIDENT IN MOSCOW. Glafcos Clerides, who is visiting Moscow at the invitation of Mayor Yurii Luzhkov to attend the World Youth Games, held "friendly" talks on 13 July with President Yeltsin and Foreign Minister Yevgenii Primakov, Russian agencies reported. The talks focused on bilateral relations, in particular boosting economic cooperation. The two presidents confirmed that the controversial sale of Russian S-300 air defense missiles to Cyprus will go ahead, but they did not discuss the anticipated postponement of the delivery of those weapons, Yeltsin's aide Sergei Prikhodko told journalists later. Yeltsin and Clerides also expressed satisfaction that their views on the outlook for and possible ways of resolving the Cyprus issues coincide completely. Clerides told journalists on 14 July, however, that Nicosia would consider canceling the deployment of the S-300s if peace talks with the Turkish Cypriot community begin immediately and the island is demilitarized, dpa reported. LF DOG FOOD DISCOVERED AT MILITARY FOOD DEPOT. Military prosecutors have discovered more than1,000 tons of dog food and large amounts of products purchased after their expiration date at a military food depot near Moscow, "Kommersant-Daily" reported on 10 July. Criminal charges have been filed against two officials at the depot, and the head of the Defense Ministry's food service has resigned. The Military Prosecutor's Office said it will inspect all major military food depots by the end of the year. Meanwhile, businessman Yurii Lysenko has been charged with taking bribes worth $3.05 million in 1996, ITAR-TASS reported on 13 July. At the time, he was deputy director- general of the Federal Food Corporation, an Agriculture Ministry agency that buys food for a state reserve supplying the armed forces. BT TWO OIL COMPANIES FACE REDUCTIONS IN EXPORT QUOTAS. The government has trimmed the number of oil companies that will be allowed to export less oil because of persistent tax arrears, Deputy Prime Minister Viktor Khristenko told journalists on 10 July. The measure will now affect only Onako and Vareganneft (a subsidiary of Oneksimbank- controlled Sidanko), Russian news agencies reported. The government initially planned to reduce the oil export quotas of five companies (see "RFE/RL Newsline," 25 June and1 July 1998). The Tyumen Oil Company was the first to be dropped from the list. According to the "Moscow Times" on 27 June, that company has used oil exports to secure foreign loans, and such firms are exempt from the government directive on export reductions. The government reduced the export quotas for Tatneft and Bashneft but restored them after the companies agreed on a payment schedule with the tax authorities. LB ONLY ONE-FIFTH OF SOLDIERS LIVE ON THEIR PAY. In a survey of 1,500 officers in western Russia published in "Izvestiya" on 14 July, more than half said their families rely either wholly or party on secondary activities, such as construction and pawning, to survive. Some 15 percent said they rely on the earnings of family members and relatives, while only 18.5 percent said they live on their pay alone. However, 55.1 percent said they plan to continue serving in the military. BT CHECHEN PRESIDENT ASSESSES ANTI-CRIME CAMPAIGN RESULTS. Aslan Maskhadov told journalists in Grozny on13 July that anti-crime measures implemented three weeks earlier have resulted in the closing down of hundreds of small-scale illegal oil refineries, the release of 18 hostages, as well the arrest of 112 people for serious crimes and 64 for drug- related offenses, ITAR-TASS reported. As a result, Maskhadov said he will not prolong the state of emergency imposed on 23 June after its expires on 15 July. Maskhadov has nonetheless decided to restructure and streamline Chechnya's numerous law enforcement and security bodies, his press spokesman Mairbek Vachagaev told Interfax. The anti- terrorism center is to be abolished and the National Security Service reorganized, according to RFE/RL's correspondent in the Chechen capital. That service has been in crisis since its commander, Lecha Khultygov, was shot dead last month. LF POLICE DETAIN ANOTHER KURSK OFFICIAL. The Kursk Oblast branch of the Interior Ministry has arrested Aleksandr Lukyanchikov, the deputy chairman of the oblast administration's Agriculture Committee, ITAR-TASS reported on 13 July. He is suspected of embezzling goods worth more than 50,000 rubles ($8,000). Last month, Kursk Oblast Prosecutor Nikolai Tkachev filed criminal charges against two deputies of Governor Aleksandr Rutskoi. They are accused of involvement in schemes to embezzle some 11 million rubles (see "RFE/RL Newsline," 17 June 1998). Tkachev has also filed corruption charges against the governor's brother, Mikhail Rutskoi, who was recently sacked as head of the oblast branch of the Interior Ministry. Governor Rutskoi has tried several avenues to secure Tkachev's removal, so far without success. LB TRANSCAUCASUS AND CENTRAL ASIA UN, ABKHAZIA CONDEMN ATTACK ON RUSSIAN PEACEKEEPERS... The UN Security Council issued a statement on 13 July condemning the deaths the previous day of five members of the Russian peacekeeping force deployed under CIS auspices on the border between Abkhazia and the rest of Georgia, ITAR-TASS reported. The five peacekeepers died when their vehicle ran over a land mine in Abkhazia's Gali Raion. Abkhaz Foreign Minister Sergei Shamba told Interfax that he is convinced the attack was carried out by Georgian guerrillas with the aim of destabilizing the situation. Shamba claimed that "certain forces" within the Georgian leadership are intent on preventing the planned meeting between the Georgian and Abkhaz presidents. Documents on the repatriation of Georgian fugitives to Abkhazia's Gali Raion are to be signed at that meeting. LF ...WHILE GEORGIA DENIES RESPONSIBILITY. Georgian Intelligence chief Avtandil Ioseliani told Caucasus Press on 13 July that there is no evidence that Georgian guerrillas laid the mine. The Georgian Foreign Ministry has issued a statement expressing condolences and concern lest the incident lead to a new deadlock in the peace process. LF AZERBAIJANI OPPOSITION LAYS DOWN CONDITIONS FOR PRESIDENTIAL POLL. Former President Abulfaz Elchibey told Turan on 13 July that opposition candidates will contend the 11 October presidential elections only if certain conditions are met. Those conditions include parity in the composition of the Central Electoral Commission, "the democratization of the pre-election situation," the release of all political prisoners, the abolition of censorship, and the suspension of criminal proceedings against former parliamentary speaker Rasul Guliev and Musavat Party chairman Isa Gambar. Two days earlier, the United Communist Party of Azerbaijan voted to propose its secretary-general, Sayad Sayadov, as a candidate for the presidential poll, Turan reported. LF AZERBAIJANI OPPOSITIONIST CALLS FOR CRIMINAL PROCEEDINGS AGAINST ALIEV. Rasul Guliev has addressed a 20-page statement to the Azerbaijani Prosecutor-General calling for President Heidar Aliev to be charged with crimes against the Azerbaijani nation and state, Turan reported. Guliev claimed that Aliev inflicted irretrievable damage on the country's armed forces, which, he said, led to the occupation of six Azerbaijani raions by Karabakh Armenian forces. Guliev also repeated the claim he made in a recent interview with "Moskovskie novosti" that Aliev and his family have misappropriated hundreds of millions of dollars. LF FIGHTING STOPS EAST OF TAJIK CAPITAL. Fighting between two armed groups from the United Tajik Opposition has ceased in the Kofarnikhon region, 30 kilometers east of Dushanbe, following the death of more than 20 people, ITAR-TASS and Interfax reported. The clash began on 12 July between followers of field commanders Nozim Yunusov and Mullo Kasym Ismati, who are reported to have been at odds for some time. Yunusov and 12 of his followers were killed in the battle, but casualty figures for Ismati's followers and for civilians vary, with some reports saying that neither group suffered any casualties. The fighting ceased after mediation by Tajik Deputy Prime Minister Khoja Akbar Turajonzoda. BP TALIBAN WARN TAJIKISTAN, UZBEKISTAN. The leader of Afghanistan's Taliban Movement, Mulla Mohammad Omar, has warned both Tajikistan and Uzbekistan not to allow anti- Taliban coalition forces to use bases in their countries, ITAR-TASS reported on 14 July. The Taliban have reportedly captured most of Afghanistan's northern Faryab Province during the past week. As a result, Taliban troops are moving closer to the borders of Turkmenistan and Uzbekistan. BP AUSTERITY MEASURES TO BE INTRODUCED IN KAZAKHSTAN. The Kazakh government is preparing to introduce austerity measures to stabilize the economic situation, Interfax and Reuters reported on 13 July. A memorandum adopted the previous day cites the economic crisis in Asia and the decrease in the prices of oil and metals, Kazakhstan's two major exports, as the reasons for the move. The measures will include cuts in personnel working for state organizations, which are expected to affect 10,000 people. Use of electricity, heating, and communications equipment at those organizations will be regulated, while regional governors and heads of state organizations will be held personally responsible for debts to the budget. Contracts with foreign companies are to be revised, and those that have been breached will be annulled. BP PRODUCTION-SHARING AGREEMENT SIGNED IN TURKMENISTAN. Representatives of the Turkmen government and a Western consortium composed of the U.S. company Mobil and British company Monument signed an agreement on 10 July to develop the Garashsyzlyk oil field in western Turkmenistan, Interfax and ITAR-TASS reported. The field has estimated oil reserves of 100-300 million metric tons but has been subject to only limited exploration, prompting speculation that those reserves may be larger. Mobil has a 52.4 percent stake, Monument 27.6 percent, and the state-owned company Turkmenneft 20 percent. BP END NOTE THE CORRUPTION OF POWER by Paul Goble Corruption now threatens the authority and even power of many governments in the post-Soviet states. But the way some of those governments seek to combat it could undermine chances for a transition to democracy. At least a few leaders in the region appear to be using anti-corruption campaigns in the way their Soviet predecessors did: to punish opponents, to strengthen the security forces, and to consolidate their personal power rather than to root out corruption. That may now be happening in Kazakhstan. On 10 July, Kazakh President Nursultan Nazarbayev told an extraordinary meeting of his Security Council in Astana that "the most important thing" is to seek to fight corruption in order to "show our people we can improve our image and change their view of us." Nazarbayev warned that he and his security agencies would hold everyone accountable, including cabinet ministers. And he promised to make a nationwide address in which he would tell "all my friends and people with whom I once worked that there will be no exceptions for anyone." But despite what appears to be Nazarbayev's plan to give sweeping new powers to his security agencies, the Kazakhstan leader added somewhat defensively that "I am talking not about repression but about regaining trust in the state power structures." While corruption has long been a problem in Kazakhstan, Nazarbayev may have been prompted to make this announcement because of an increasingly well-organized protest movement against himself and his government. In recent weeks, some 21,000 Kazakhs in five cities throughout the country have signed a petition demanding that Nazarbayev take action not only to improve economic conditions in the republic but to force the law enforcement agencies to do their jobs. If he fails to do so, the petition says, those who have signed it will force Nazarbayev "to leave the post of the head of the Kazakh state." The signatories almost certainly lack the ability to carry out that threat. Not only do polls suggest that Nazarbayev retains support from most people in Kazakhstan, but the president's power base in the country's security agencies seems unquestioned. Nonetheless, the Kazakh leader is sufficiently concerned about popular unhappiness with his regime and himself as well as about the image of his country abroad that he has decided to launch an anti-corruption campaign. While many in Kazakhstan and elsewhere are likely to welcome efforts to crack down on corruption, there are three reasons to be concerned about Nazarbayev's plans. First, whatever the Kazakh president says, his campaign almost certainly will be highly selective. Not only are many of his most senior officials widely thought to be involved in corruption, but each has built up his power base by protecting more junior officials. At the 10 July meeting, Nazarbayev's security chief Alnur Musayev complained openly that senior officials had blocked prosecutions against their subordinates and that many judges had refused to open criminal probes against their colleagues, regardless of the evidence his agency had collected against them. Thus, a sweeping attack against corruption could have the effect of undermining the political structures of the state itself. That scenario is made even more likely by the second reason for concern. Precisely because the law enforcement agencies and the courts are so thoroughly corrupt, Nazarbayev clearly plans to use the what he calls "the state power structures" to combat corruption. In addition to the National Security Committee, the successor to the Soviet-era KGB in Kazakhstan, Nazarbayev indicated that he would use a special presidential Supreme Disciplinary Committee to examine cases of corruption. While those measures may appear justified by the extent of the problem, the strengthening of such extra-judicial agencies may give Nazarbayev even more unregulated personal power over the state and society. That, in itself, could constitute yet another obstacle on Kazakhstan's path to democracy. Finally, the third reason to be concerned is that Nazarbayev's announcement suggests his efforts at fighting corruption will be a campaign like any other rather than a turning point in the way Kazakhstan deals with a problem that can threaten any country. In such a case, the campaign will be announced with much fanfare and will gradually be forgotten as the country moves on to other issues. And that pattern will both increase public cynicism and allow those dealing in corruption to continue to do so after only a short interval of "good government." Kazakhstan is far from the only country where this problem exists and this logic applies. The 9 July "Nezavisimaya gazeta," for example, commented that corruption in Georgia has reached such a level that the World Bank commissioned a special study on how it might be overcome. That move comes, despite Georgian President Eduard Shevardnadze's earlier declaration that his government will make a breakthrough against corruption this year. If Kazakhstan and the other countries in this region genuinely want to overcome corruption, they will need to change public and official attitudes toward it. And they will have to create institutions to ensure that all who violate the rules are punished. However well-publicized, a single campaign against corruption won't do that. In fact such a campaign may become a substitute for the kind of changes that are really needed. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. 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