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RFE/RL NEWSLINE Vol. 2, No. 169 Part I, 2 September 1998
________________________________________________________ RFE/RL NEWSLINE Vol. 2, No. 169 Part I, 2 September 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 RUSSIA IN CHAOS Continuing coverage in English and Russian of Russia's economic and political crisis. http://www.rferl.org/nca/special/ruchaos98/index.html xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I * IMF TO DELAY NEXT TRANCHE? * CLINTON, YELTSIN AGREE ON BALLISTIC MISSILES * SUSPECTS IN UN MURDERS ARRIVE IN DUSHANBE End Note: LITHUANIA FINDS MAINTAINING FIXED EXCHANGE RATE INCREASINGLY DIFFICULT xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA IMF TO DELAY NEXT TRANCHE? The IMF may delay the next $4.3 billion disbursement to Russia, scheduled to be released in September, Bloomberg reported. The agency cites an interview with Stanley Fisher, the fund's first deputy managing director, broadcast by CNN on 1 September. Fisher said, "It's clear that the Russians will have to do quite a lot before that money can be released. That means we have to consider the possibility that it will take longer than this month." He also said that "there's a lot of belief out there that they can do things in an unorthodox way. That's not really true, and our role is to help them as they realize they have to confront their problems." Also on 1 September, Reuters reported that the U.S. Senate adopted a non-binding resolution urging the IMF not to give Russia more money if the country's economic policies are significantly altered by the Russian Communist Party or offer markedly less free market conditions. JAC DUMA, ADMINISTRATION STALEMATE CONTINUES... President Boris Yeltsin on 1 September reaffirmed his support for acting Prime Minister Viktor Chernomyrdin, telling reporters: "I will be fighting to ensure that, within literally a week, the chairman of the government will be endorsed." The same day, the State Duma Council approved a proposal made by People's Power faction leader Nikolai Ryzhkov, to address the nation on why it rejected Chernomyrdin and will continue to do so. The Duma will vote on Chernomyrdin's candidacy on 4 September, as the Communist Party faction had requested, rather than on 7 September, as previously announced. JAC ...AS CHERNOMYRDIN ORGANIZES GOVERNMENT. According to Interfax, Chernomyrdin has directed the government to continue working, despite its uncertain status. He ordered the Finance Ministry to draft proposals for tax reform "immediately." On 2 September, he approved a proposal to reduce customs tariffs on imported goods. "Russkii telegraf" the previous day reported that acting Deputy Prime Minister Boris Fedorov has ordered the State Tax Service, of which he is also acting director, to apply the entire range of punitive measures allowed under the law against taxpayers who have been tardy with their payments. According to the "Moscow Times" of 2 September, the State Tax Service distributed a letter to schoolchildren warning them that they will be deprived of a free education if their parents do not pay their taxes. JAC DUMA ELECTIONS NEXT YEAR? "Izvestiya" on 2 September reported that although the Russian Constitution stipulates that an election be organized so that a new Duma meets no later than four months after the old one's dissolution, the 1998 budget does not envision the large expenditure that an election would require. Therefore, the newspaper concludes, an election may be delayed until the next fiscal year. The newspaper also suggests that the Duma could prevent its dissolution by bringing impeachment proceedings against Yeltsin, which would give the deputies a reprieve, at least until the Federation Council considers whether to approve the Duma's decision. "Russkii telegraf" reported on 1 September that Aleksandr Kotenkov, presidential representative to the Duma, said that in the case of the lower house's dissolution, he "doubted" that new Duma elections could be held in the time stipulated by the constitution. JAC CLINTON, YELTSIN AGREE ON BALLISTIC MISSILES. According to ITAR-TASS on 2 September, Presidents Bill Clinton and Yeltsin have reached an understanding on exchanging information on ballistic missile launches by third countries. According to "The Washington Post," Moscow and Washington will immediately notify each other of any combat, test, or research launchings of long-, medium-, and short-range missiles from the territories of other countries. The agreement is expected to reduce future misunderstandings and/or tense situations, similar to the one that developed when Norway launched a research missile in January 1995. On 31 July 1998, North Korea tested a ballistic missile, which according to some reports, landed in Russian waters. Three days later, Interfax reported that Russian Foreign Ministry Spokesman Vladimir Rakhmanin said Russia "is already exchanging information with the US, China, Japan, and South Korea." JAC CLINTON GETS RAVE, PAN. Russian Public Television warmly appraised US President Clinton's speech on 1 September to the Moscow State Institute of International Relations. The newscaster said that "Clinton has displayed an amazing knowledge of Russian history. He kept quoting Pushkin and Chekhov, and it was obvious that he is very familiar with the economic situation in Russia." However, "Noviye izvestiya" on 2 September declared the summit "a meeting of two invalids" that was "pointless." It added that "both participants in the event are in political plaster, bound to their presidential seats exclusively by their own thirst for power." JAC LUKIN OPINES ON START-II. Vladimir Lukin, Duma International Affairs Committee chairman, told Ekho Moskvy on 1 September that "there is not yet a majority in favor of START-II in the Duma, because the issue has been excessively politicized." He added that he thinks the U.S. administration's attempt to link Clinton's visit with ratification of START-II is a "serious diplomatic mistake." However, he noted that START-II is advantageous to Russia because it reduces the U.S.'s nuclear potential and allows Russia to maintain parity with the U.S., despite its financial difficulties. Lukin added that after a new government has been installed, the Duma can address the treaty; "First we must depoliticize it, remove it from the arena of political squabbles." According to Interfax, Clinton said that he and President Yeltsin have already agreed on key provisions of START-III. JAC FINANCE MINISTRY OFFICIAL ARRESTED. First Deputy Finance Minister Vladimir Petrov, who was involved in IMF negotiations, was arrested on 1 September on suspicion of taking a large bribe, ITAR-TASS reported. According to the State Prosecutor's Office, Petrov is also suspected of using his position to benefit a commercial bank. JAC TEACHERS STRIKE IN ALTAI, BURYATIA. According to ITAR- TASS, some 11,000 teachers in the Altai Republic went on strike 2 September to demand unpaid wages totaling 116 million rubles ($10.7 million). Interfax reported that the strike will last only three days, but if wages go unpaid the strike will resume in mid-September and October. Teachers at schools in Ulan-Ude, Buryatia, also began a three-day warning strike beginning on 2 September to demand back wages totaling some 7 million rubles. JAC PRESS ON POWER MINISTRIES' PREPARATIONS. The Russian press continues to carry reports on the efforts of the Defense Ministry and Federal Security Service (FSB) to ready themselves for "mass disturbances." According to "Nezavisimaya gazeta" on 2 September, constant military maneuvers are being used to maintain the effectiveness of army units. The most combat-capable mobile units are intensively engaged in combat training. Airborne assault troops, marines, and aviation and ground force units are on constant combat readiness. "Noviye izvestiya" reported on 1 September that the FSB will set up a separate directorate for defense of the constitution. According to an FSB source, the service will not be ready for a coup d'etat or social upheaval, because it has been "very much weakened by the in-house reorganization." More than 2,000 counterintelligence officers are to be laid off. JAC DAGESTAN MUFTI'S PRESUMED MURDERER ARRESTED. Dzhelav Gadjibagomedov, who is alleged to be a Wahhabi from the Dagestani village of Karamakhi, was arrested on 31 August on suspicion of murdering Dagestan's mufti Said- Mukhamed Abubakarov last month, Interfax reported, citing unspecified sources in Makhachkala. Gadjibagomedov is said to have been trained in Chechnya by Jordanian field commander Khottab, allegedly a sympathizer of the radical Islamists. "Izvestiya" on 25 August published Abubakarov's last interview, in which the late mufti expressed concern at the weakness of the republic's leadership and called for a clearly defined state policy with regard to Islam, which is the religion of the majority of Dagestan's population. In an interview in "Trud" on 2 September, former Russian Deputy Premier Ramazan Abdulatipov attributed the spread of radical Islam in Dagestan to appalling socio-economic conditions, high unemployment, and the indifference of the republic's leadership to those phenomena. LF MORE BLOODSHED ON NORTH OSSETIAN-INGUSH BORDER. One person was killed and three injured in a gunfight on 1 September between North Ossetian police and the passengers of a car they flagged down close to the border with Ingushetia, ITAR-TASS reported. Elsewhere on the border, one ethnic Ingush was killed and a second seriously wounded when North Ossetian border guards opened fire for reasons that are unclear, according to Caucasus Press. During the night of 31 August-I September a bomb exploded on a window sill of the government building in the Ingushetian capital, Nazran, causing minor damage but no casualties. LF TRANSCAUCASUS AND CENTRAL ASIA SUSPECTS IN UN MURDERS ARRIVE IN DUSHANBE. Three men suspected of murdering four UN employees in central Tajikistan in July were taken by helicopter to Dushanbe on 1 September, RFE/RL correspondents reported. The three were taken into custody by forces of the United Tajik Opposition (UTO) and are reportedly former members of the UTO. A fourth suspect remains at large. The three men are being questioned, and formal charges are expected to be filed in the next 10 days. The UN special envoy to Tajikistan, Jan Kubis, has expressed his satisfaction at the arrest of the three men. On 2 September, he said he has begun working on plans to repatriate some 200 UTO fighters currently in northern Afghanistan (see "RFE/RL Newsline," 1 September 1998). BP SUSPECTS IN TURSUNZADE SHOOTING IDENTIFIED. Tajik police have identified most of those involved in the 27 August attack on the mayor's office in the western Tajik town of Tursunzade, ITAR-TASS reported on 1 September. Police took three residents of that town into custody and learned from them the names of several others. Tajik authorities claim many have fled to another country and that a request has been made to law enforcement authorities in that country to apprehend the suspects. Tajik officials refused to name the country, but immediately after the shootings in Tursunzade, the Tajik government had said many of the culprits had escaped to Uzbekistan. Five people, including the mayor, were killed in that attack. BP CRIME STILL A PROBLEM IN TAJIK CAPITAL. RFE/RL correspondents have confirmed reports by the Voice of the Islamic Republic of Iran that the home of UTO deputy leader Muhammadsharif Himmatzoda came under fire from a grenade launcher on 31 August. Three people were wounded in that attack. The Dushanbe home of the head doctor of the government's medical clinic also came under fire on 30 August, ITAR-TASS reported. The previous day, a Russian border guard officer was shot in the back in downtown Dushanbe and remains in a critical condition. On 1 September, an automobile driven by a Russian journalist was carjacked in downtown Dushanbe. The journalist was held in a basement on the outskirts of the capital but managed to escape after several hours. So far, no suspects have been apprehended for any of these crimes. BP RUSSIAN DAILY PUBLISHES LIST OF POTENTIAL TROUBLE-MAKERS IN UZBEKISTAN. "Vremya MN" on 1 September published a list of potential trouble-makers that the Uzbek government has allegedly distributed to leaders in villages and city districts. Those leaders are to keep track of residents between 16-32 years of age who have left the city and to find out what they are doing now and how their families are supported. Others who are to be kept an eye on include shuttle traders traveling to Saudi Arabia, Turkey, Pakistan, or Iran; those who call upon women and girls to adhere to Islamic codes of conduct; anyone who has links with Wahhabis; anyone who has ever grown a beard; any man who has more than one wife; any family members of known Wahhabis who have reached 18 years of age and are not serving in the armed forces; and any girls who were married off before they turned 16. BP TURKMEN "DISSIDENT" ARRESTED. The former spokesman for Turkmen President Saparmurat Niyazov was arrested on 1 September in Ashgabat on charges of embezzlement, RFE/RL correspondents reported. Durdumuhammed Gurbanov, who served as presidential spokesman from 1991-1994, is accused of mismanagement of funds and misuse of state property. Gurbanov, who has criticized the Turkmen government in the international media this year, has been branded a dissident by the Turkmen government. BP AZERBAIJANI OPPOSITION TO GO AHEAD WITH BANNED RALLY. The Movement for Democratic Elections and Democratic Reforms, which unites some two dozen opposition parties and NGOs, voted on 1 September to go ahead with plans to hold a demonstration on Baku's central Freedom Square on 5 September, despite the ban imposed by Baku Mayor Rafael Allakhverdiev, Turan reported. Allakhverdiev has also written to the leadership of the Azerbaijan Popular Front Party rejecting their request that the party be allowed to retake possession of its headquarters in central Baku. Allakhverdiev claimed that large quantities of arms and ammunition were found in the basement of the building, which, he said, proved that the premises were not used for purely political purposes. The party was evicted from the building in early 1994. LF GEORGIA TAKES MEASURES TO PREVENT DYSENTERY EPIDEMIC. The Georgian Ministry of Health has advised residents of Tbilisi to boil all drinking water as a precautionary measure following 84 cases of amebic dysentery in Tbilisi last month, Caucasus Press reported. Two people died of the disease and another 30 were hospitalized. Investigations established that the disease is not being spread by drinking water but that salad herbs cultivated in southern Georgia were washed in contaminated water. Health Minister Avtandil Djorbenadze told journalists on 1 September that additional measures to monitor the quality of food on sale in Tbilisi will be introduced. LF END NOTE LITHUANIA FINDS MAINTAINING FIXED EXCHANGE RATE INCREASINGLY DIFFICULT Michael Wyzan Lithuania's economy generally receives less attention from foreign observers than its two Baltic neighbors. It is often seen as less reformed than Estonia and Latvia, although since last year its macroeconomic performance has been at least as strong as theirs. A continuing distinction between Lithuania and the other two Baltic States is that it remains more dependent on trade with Russia: 22 percent of its exports went to that country during January-April, while the corresponding figure for imports was 24.4 percent. The corresponding figures for Latvian trade with Russia during the same period were 17.4 percent for exports and 13.6 percent for imports. Some 8.3 percent of Estonia's exports went to Russia, while 8.5 percent of its imports came from there. Most Lithuanian macroeconomic indicators are highly favorable. GDP in the first quarter of 1998 was 6.9 percent higher than in the same period last year, reflecting an acceleration of economic growth from 1997's figure of 5.7 percent. Sales of industrial production were up by 9.4 percent during the first six months, almost double last year's 5.0 percent. While production has boomed, consumer price inflation has subsided, reaching 6.1 percent in the 12 months to June, compared with 8.4 percent in the year to December 1997. Another favorable macroeconomic indicator is the budget deficit, which as of May was on target to meet the goal of 1 percent of GDP, which was agreed to with the IMF. That deficit fell from 4.5 percent in 1996 to 1.8 percent last year. Wages have been booming, along with the economy: the average gross monthly wage reached $249 in May, compared with $199 a year earlier. This may explain why the unemployment rate has been higher during every month this year than in the corresponding month in 1997. However, by June the difference was negligible, with the rate that month of 5.5 percent only slightly above June 1997's 5.3 percent. Large current account deficits have been a hallmark of the Lithuanian economy. As economic growth turned positive in 1995, the current account imbalance rose from $94 million (2.2 percent of GDP) in 1994 to $981 million in 1997 (a high 10.3 percent). This trend continued into the first quarter of 1998, when the deficit was $514 million, up $118 million on the same period last year. Such deficits have been commonplace in rapidly growing transition economies, especially ones with fixed exchange rates; the litas has been pegged at four to the dollar under the currency board introduced in April 1994. The Bank of Lithuania is currently undergoing a transition to a normal central bank, a three-stage process scheduled to be completed next year. For example, under the currency board, the bank is not allowed to provide overnight loans to commercial banks. In April, as part of the transition to central banking, it set the interest rate it will charge on such loans. To retain confidence in monetary policy, the fixed rate for the litas against the dollar is to remain valid at least until 1999, when the currency will be tied partly to EU currencies; by the end of 2000, the litas will be pegged to the Euro. Although the current account deficit is high, the Bank of Lithuania's foreign reserves have risen steadily, reaching $1.2 billion in June (further augmented by privatization proceeds in July), compared with $939.6 million in June 1997. Another encouraging sign is the rapid rise in foreign direct investment, which was a cumulative $1.1 billion at the end of June, compared with. $727.6 million in June 1997. The IMF's Executive Board in July praised the government for increasing excise taxes, improving tax collection and the budget process, privatization successes in banking and telecommunications; and creating an Energy Pricing Commission. The board called for further fiscal tightening to limit the growth of expenditures and to put the Social Security Agency on a firmer footing, especially by raising the retirement age. These are the standard recommendations that the fund would make to any successful economy in transition. A more interesting question is how vulnerable Lithuania will prove to contagion from the financial turbulence in East Asia and especially Russia. Large current account deficits under fixed exchange regimes are often an indication of such vulnerability. The key issue is whether Lithuania will be able to manage the transition to central banking under a fixed exchange rate or whether it will be forced to allow its currency to weaken, as the Czech Republic did in spring 1997 and Russia on 17 August 1998. In this context, Lithuania's high trade dependence on Russia is worrisome, since the weaker ruble will probably further increase the Baltic State's already large trade deficit with that country. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria. 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 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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