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RFE/RL NEWSLINE Vol. 2, No. 158 Part I, 18 August 1998
___________________________________________________________ RFE/RL NEWSLINE Vol. 2, No. 158 Part I, 18 August 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 * RUSSIAN MARKETS CONTINUE TO FALL * YELTSIN REFUSES DUMA INVITATION * SIX PRESIDENTIAL CANDIDATES REGISTERED IN AZERBAIJAN xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA RUSSIAN MARKETS CONTINUE TO FALL. Following the de facto devaluation of the Russian ruble on 17 August, both the currency exchange and Russian stock markets continued to fall. Some banks ran out of dollars and halted exchange operations; where dollars were for sale, some traders received as much as 9.5 rubles for them. Russian bankers said that they believe the Central Bank has sufficient resources to stabilize the ruble at 7.0-7.5 to the dollar, a 15 percent drop from the rate before 17 August, Interfax reported. Russian stock markets also dropped on 17 August. The Prime General index fell 11.1 percent to 19.42 points, the Prime Top index dropped 7.8 percent to 31.56 points, and the RTS index declined by 4.85 percent. ITAR-TASS reported that the volume traded for RTS issues was at a record low for any one day--$10.44 million--an indication of continuing investor uncertainty. On 18 August, the ruble fell to 6.885 to $1 on the Moscow Interbank Currency Exchange, Interfax reported. PG KIRIENKO ACCEPTS RESPONSIBILITY, WAS PREPARED TO RESIGN. A "top source" in the Russian presidential administration told Interfax on 18 August that two days earlier, Prime Minister Sergei Kirienko had assumed personal responsibility for the country's economic crisis and told President Boris Yeltsin that he was prepared to resign. Yeltsin rejected his offer and directed Kirienko to "continue working to rectify the situation," the unidentified source said. PG ORDINARY RUSSIANS ANGRY AT GOVERNMENT MOVE. Russians reacted angrily to the decline in the value of the ruble, Russian and Western agencies reported. Many Russians on 17 August paid as much as 9.5 rubles for a single U.S. dollar, and many others said they could not find dollars even at that rate. Russian merchants said that the real impact of the devaluation on prices would not hit until they ran out of current stocks in about a month and had to replenish. One Russian citizen told AP that "in Soviet times, we had the sense of confidence in the future. And now Yeltsin, and your Americans have stolen it from us." Meanwhile Moscow Mayor Yurii Luzhkov, Deputy Prime Minister Boris Nemtsov, and Federal Tax Service chief Boris Fedorov warned against any "unjustified" price increases. "No one should use the difficulties the country is experiencing in order to try to deceive citizens," Fedorov told ITAR-TASS. PG POLITICIANS SPLIT OVER EXCHANGE RATE SHIFT. The reaction of Russian politicians ranged from cautious support to outright denunciation. Former Prime Minister and leader of the Our Home is Russia party Viktor Chernomyrdin gave cautious backing to the shift in government policy, saying "there could be no other opinion," ITAR-TASS reported on 17 August. Aleksandr Zhukov, the chairman of the State Duma budget committee, said the move is part of a broader set of measures Russia must adopt. Krasnoyarsk Governor Aleksandr Lebed, however, was more critical. He told Interfax that "the Russian government has [signaled] its insolvency and admitted that the country is bankrupt. All of us have been deceived once again." Duma speaker Gennadii Seleznev said the decision to allow the ruble to fall is "an egregious mistake." And Communist Party chief Gennadii Zyuganov suggested that the new exchange rate would "first and foremost hit the poorer classes of the population, lead to a price rise and simultaneously to the bankruptcy of many commercial banks," ITAR-TASS reported. PG INTERNATIONAL REACTION MIXED. German Chancellor Helmut Kohl, whose country has made the largest investment in Russia, expressed concern about the Russian government's latest moves but said he believes that Moscow can overcome the crisis if it takes some additional steps and does not violate any previous agreements. Mike McCurry, spokesman for U.S. President Bill Clinton, said on 17 August that Washington plans to continue to "work with" the Russian government. U.S. Treasury Secretary Robert Rubin released a statement calling on the Russian authorities to take action on additional reforms necessary to restore investor confidence. Meanwhile, Japanese First Deputy Finance Minister Koji Tanami told ITAR-TASS on 17 August that the G- 7 countries are wary of giving any additional aid to Moscow because they believe that the outcome there ultimately depends on Russia itself . But international financier George Soros praised the Russian action as "necessary, timely, and courageous," Interfax reported. PG IMF NEITHER PLEASED NOR LIKELY TO GIVE MORE AID. Following meetings with IMF officials on 17 August, President Boris Yeltsin's special envoy to international financial organizations, Anatolii Chubais, told ITAR-TASS that the IMF is not especially pleased by what Moscow has done but that "there is an understanding of the necessity of this operation and the reasons why it was carried out." Chubais also said that the IMF is unlikely to come up with any additional aid, but IMF Managing Director Michel Camdessus said in a statement that the IMF may nonetheless release a loan tranche in September as planned if the Russian government takes additional steps to put its economic house in order. PG RUSSIA'S CREDIT RATING CUT AGAIN. Standard & Poor's, the international rating agency, on 17 August cut Russia's credit rating for long-term foreign exchange loans from B- to CCC, ITAR-TASS reported. In its report, the rating agency noted that Moscow's recent policy shifts could lead to a unilateral restructuring of ruble-denominated state debt and default of private issuers in the near future. The next day, Standard & Poor's gave its lowest possible rating--"not meaningful"--to six Russian banks, Interfax reported. Meanwhile, Fitch IBCA lowered Russia's long-term foreign currency rating to B- from BB-, according to dpa. Fitch said it is especially concerned by Moscow's announcement of a 90- day moratorium on external debt payments. Also on 17 August, the international credit card issuer VIA announced that it will block the bank identification number of Russia's Imperial Bank because that bank has not deposited sufficient funds to cover the settlement of claims. PG RUSSIAN EXPORTS DOWN, IMPORTS UP. The Russian Ministry of Foreign Economic Relations and Trade told Interfax on 18 August that Russian exports in the first half of 1998 fell 13 percent from $40.7 billion compared with the same period in 1997 to $35.4 billion. Meanwhile, imports rose over the same period by 12.8 percent to $26.3 billion, thus reducing the trade surplus to $9.1 billion. The ministry said that it expects imports to fall in the second half of 1998 because of the devaluation of the ruble. PG YELTSIN REFUSES DUMA INVITATION. Yeltsin will not attend the 21 August extraordinary session of the Duma, despite an invitation to do so, his spokesman Sergei Yastrzhembskii told Interfax on 17 August. Yeltsin's unwillingness to appear may anger deputies, who are holding hearings on the possibility of Yeltsin's impeachment, ITAR-TASS reported. Meanwhile, the Duma press service announced that the State Duma Council has decided to hold special plenary meetings on 21 August and 25 August to consider reports by Prime Minister Kirienko and government draft laws on economic issues. Duma speaker Seleznev said the resignation of the government or its ministers is on the agenda, and he indicated that no bicameral meeting of the parliament is now in the offing. But ITAR-TASS reported that the Federation Council may convene on 28 August. PG FEDOROV UP, LIVSHITS OUT, DUBININ CRITICIZED. Following meetings on 16 and 17 August, Yeltsin and Kirienko indicated that they discussed personnel changes in the government but said they reached no decisions, Interfax reported. Shortly thereafter, however, Yeltsin appointed Federal Tax Service chief Boris Fedorov as deputy prime minister with responsibility for macroeconomics and the management of the state debt. The deputy head of the Presidential Administration, Aleksandr Livshits submitted a letter of resignation noting that "possibly I bear a share of responsibility for what has happened on the financial market," Interfax reported. Yeltsin accepted that letter the next day. Similarly, Central Bank chief Sergei Dubinin sent Yeltsin a letter indicating he was prepared to leave if Yeltsin wanted him to, but Yeltsin rejected that offer, according to Interfax on 18 August. But Duma chairman Seleznev told that news agency the previous day that the parliament will support Soviet-era bank leader Viktor Gerashchenko as Dubinin's replacement. PG SOME BETTER ECONOMIC NEWS. On a day when most of the news seemed to be bad, Russian officials were quoted as signaling improvements in the future. The Russian Finance Ministry announced that the steps outlined by the government on 17 August will not affect the servicing of foreign debt, according to Interfax. (The Moscow city government also announced that it will pay all its obligations, ITAR-TASS reported.) Deputy Prime Minister Nemtsov told the latest issue of "Newsweek" that Russian tax collections have significantly improved in recent months, something he called "good news." And the Russian privatization agency announced plans for selling off portions of Svyazinvest and Gazprom. Meanwhile, Russia's 12 largest banks agreed to cooperate with one another and the Central Bank to create a special clearinghouse. PG JUSTICE MINISTER SEEKS RELEASE OF 100,000 PRISONERS. In order to reduce prison overcrowding widely blamed for outbreaks of a variety of infectious diseases, Justice Minister Pavel Krashenninikov said on 14 August that he will ask the Duma to amnesty some 100,000 prisoners now held for what he called minor crimes, ITAR-TASS reported. In addition, Krashenninikov said that he wants to limit all future pre-trial detentions to less than a year. That move would require Duma approval. PG CHECHEN PROSECUTOR-GENERAL FIRED. President Aslan Maskhadov on 16 August dismissed Husein-Khodji Batukaev as chairman of the Chechen Supreme Shariat Court and Khavazh Serbiev as prosecutor-general, RFE/RL's Grozny correspondent reported. Serbiev was appointed to that post two years ago by then acting President Zelimkhan Yandarbiev. Maskhadov personally requested the Chechen parliament's endorsement of Serbiev's dismissal on the grounds of incompetence, pointing out that the prosecutor failed to complete investigations into several recent incidents, including the 21 June shooting in Grozny of National Security Service Director Lecha Khultygov, the armed clashes in Gudermes on 14-15 July, and the assassination attempt against Maskhadov on 23 July. Maskhadov did not propose a replacement for Serbiev but said that his successor should be "firm, militant, and with experience in the law enforcement organs." LF GROZNY BANS PRODUCTION OF OIL CONDENSATE. Maskhadov issued a decree on 17 August banning the production of oil condensate (oil mixed with diesel fuel), ITAR-TASS reported. Numerous inhabitants of Grozny currently make a livelihood from illegally extracting and refining oil, much of which has seeped into the soil and threatens to cause a major ecological catastrophe. The Chechen Fuel and Energy Ministry claims that millions of tons of crude oil have accumulated 10-15 meters underground and pose a threat to the ground water as well as the entire region. LF DAGESTAN'S ISLAMIC RADICALS DECLARE INDEPENDENT TERRITORY. Three villages in Dagestan's Buinak Raion that have repeatedly been identified as a hotbed of Wahhabism declared the district an independent Islamic territory on 17 August, Interfax reported. They are refusing to acknowledge the jurisdiction of the republican authorities. The villages' inhabitants have clashed several time with local police since June 1997. Meeting in Nazran on 17 August, the muftis of Dagestan, North Ossetia, Chechnya, Karachaevo-Cherkessia, Kabardino-Balkaria, and Ingushetia decided to form a Coordinating Council of the Muslims of North Caucasus, Caucasus Press reported. The aim of the council is to promote the revival of Islam, combat "harmful trends," including Wahhabism, and contribute to the stabilization of the North Caucasus. LF TRANSCAUCASUS AND CENTRAL ASIA SIX PRESIDENTIAL CANDIDATES REGISTERED IN AZERBAIJAN. The Azerbaijan Central Electoral Commission has formally registered six candidates for the 11 October presidential election, Turan reported on 17 August. The six are incumbent President Heidar Aliev, Azerbaijan National Independence Party chairman Etibar Mamedov, Independent Azerbaijan Party chairman Nizami Suleymanov, Azerbaijan Social Welfare Party chairman Khanguseyn Kazymly, Communist Party leader Firudin Hasanov, and Association of Victims of Political Repression chairman Ashraf Mekhtiev. Three applicants were rejected on the grounds of irregularities in the collection of signatures supporting their candidacy: Umid [Hope] Party chairman Abulfaz Akhmedov, Alliance for Azerbaijan chairman Abutalib Samedov, and businessman Ilgar Kerimov. LF GEORGIAN DEFENSE MINISTER POSTPONES TRIP TO MOSCOW. Davit Tevzadze's visit to Moscow, scheduled to begin on 16 August, has been postponed indefinitely due to the protracted disagreement over the division between Russia and Georgia of former Soviet military facilities in Georgia, Caucasus Press reported. During a visit to Kyiv last week, Tevzadze and his Ukrainian counterpart, Oleksandr Kuzmuk, discussed the creation of a peacekeeping battalion composed of units from the GUAM states (Georgia, Ukraine, Azerbaijan and Moldova). Kuzmuk said that proposals for the structure and organization of that battalion have already been drafted and submitted to the Ukrainian Foreign Ministry. LF GEORGIAN DISPLACED PERSONS ISSUE ULTIMATUM. Some 200 ethnic Georgian fugitives from Abkhazia staged a demonstration in Tbilisi on 15 August, Caucasus Press reported. The demonstrators, who make a living by trading in medications, were protesting the confiscation by city inspectors of their merchandise. Many of the drugs and antibiotics in which the demonstrators trade reportedly have either date-expired, thereby posing a health hazard, or were part of humanitarian aid consignments and therefore may not be resold. The demonstrators demanded that either their wares be returned and they be allowed to continue trading or the Georgian authorities take measures to enable them to return to Abkhazia. LF GEORGIA TO INTRODUCE NEW IMMIGRATION PROCEDURES. As of 1 September, all persons arriving in Georgia by air at Tbilisi, Kutaisi, and Batumi airports will be required to complete immigration forms detailing the purpose and duration of their stay in the country, Caucasus Press reported on 18 August. The procedure will be extended in 1999 to visitors arriving by sea. LF KARABAKH BISHOP LAMBASTES JEHOVAH'S WITNESSES. In a recent address to the Armenian nation, Bishop Pargev Martirossian condemns the missionary activities in Armenia and Nagorno- Karabakh of Jehovah's Witnesses, whom he terms "a totalitarian sect" that poses "a most horrible threat to our people, our state, [and] our faith," Noyan Tapan reported on 17 August. He said Jehovah's Witnesses' refusal to take up arms to defend their country "undermines the foundations of our state." The bishop also expressed concern that those countries that refuse official registration to the Jehovah's Witnesses may be considered to have violated international commitments to freedom of conscience and may consequently be refused membership in the Council of Europe. Armenia currently has special guest status in that organization. LF CENTRAL ASIAN PRESIDENTS DISCUSS AFGHANISTAN. Kazakh President Nursultan Nazarbayev spoke by telephone with the presidents of Kyrgyzstan, Tajikistan, and Uzbekistan on 17 August, ITAR-TASS and Interfax reported. The four agreed that given the successful offensives by troops of Afghanistan's Taliban movement, a meeting of their countries' foreign and defense ministers is necessary. Nazarbayev's press service released a statement saying the four were "unanimous" that the meeting should be held to discuss "strengthening security in the Central Asian region." The ministers are expected to meet in the Uzbek capital, Tashkent, in the near future. BP UN ENVOY'S BODYGUARD FOUND DEAD. The bodyguard of UN special envoy to Tajikistan, Jan Kubis, was found dead in his Dushanbe apartment on 17 August, ITAR-TASS reported. U.S. citizen Jori de Marco apparently committed suicide. Investigators from the Tajik Interior Ministry found no evidence of a struggle. It is believed that De Marco shot himself in the head with his own gun. 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