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RFE/RL NEWSLINE Vol. 2, No. 171 Part I, 4 September 1998
___________________________________________________________ RFE/RL NEWSLINE Vol. 2, No. 171 Part I, 4 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 SPECIAL REPORT: HOW RUSSIA IS RULED--1998 As the string of crises continue in Russia, the question remains: Who is in charge? This in-depth report analyzes the country's power structure. http://www.rferl.org/nca/special/ruwhorules/index.html xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part I * CHERNOMYRDIN RECOMMENDS TOUGH MEASURES * PRESIDENT TO MAKE ANOTHER OFFER TO DUMA * AKAYEV SETS DATE FOR KYRGYZ REFERENDUM xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA CHERNOMYRDIN RECOMMENDS TOUGH MEASURES... In an uncharacteristically bold statement, acting Prime Minister Viktor Chernomyrdin called for the Russian state to "switch over to economic dictatorship" starting in January under which enterprises would no longer be able to avoid or delay paying taxes. Among the measures he suggested was the payment of pension arrears totaling 20 billion rubles ($1.2 billion), back wages to public sector employees totaling 7.5 billion rubles, 1.5 billion rubles worth of defense industry wages, and 2 billion rubles for science, health, and education spending through a "controlled" monetary emission. And he included 1 billion rubles the government still owes to the victims of Chornobyl. JAC ...AND FLOATING RUBLE. Chernomyrdin also insisted that the ruble must be allowed to float freely against the dollar. He suggested that once the ruble is stabilized, the nation's money supply could be linked to the Central Bank's gold and hard currency reserves, in what some analysts are calling a de facto currency-board system. JAC PRESIDENT TO MAKE ANOTHER OFFER TO DUMA. Aleksandr Kotenkov, presidential representative to the Duma, told reporters on 4 September that President Boris Yeltsin will present the Duma with draft legislation allowing the lower house a greater say in the formation of the cabinet. However, according to Reuters, Duma speaker Seleznev dismissed the effort, saying that the proposal differs little from previous ones. He added that the Duma is still likely to reject Chernomyrdin. JAC PRESS PREDICTS DUMA REVERSAL OVER CHERNOMYRDIN. While State Duma speaker Gennadii Seleznev predicted on 3 September that no more than 150 deputies will vote for Chernomyrdin, some newspapers were considering the possibility of a Chernomyrdin victory. "If the Duma is ready to back down, it must have reasons for doing so. And the Federation Council and Chernomyrdin himself must give it the reasons," "Kommersant-Daily" said on 3 September. "Segodnya" on 3 September reported that "many deputies are unable to rid themselves of the feeling that they overstepped the mark in opposing Chernomyrdin's appointment and could risk losing everything. [Liberal Democratic Party leader Vladimir] Zhirinovsky who is always sensitive to the way the wind is blowing ...was the first to sense that it was time to recover lost ground." The Russian Regions faction has showed signs that it wants a quick resolution to the impasse. According to ITAR-TASS, faction members asked the Federation Council to mediate a compromise between the president and the Duma. JAC LEBED EXPRESSES QUALIFIED SUPPORT FOR CHERNOMYRDIN... Interviewed on 3 September by Russian Public Television, Krasnoyarsk Krai governor Aleksandr Lebed predicted that the Federation Council--whose members he characterized as pragmatic and less politicized than Duma deputies-- will vote to confirm Chernomyrdin as premier on 4 September but that the Duma will reject his candidacy a second time. Lebed hinted that he might accept the premiership but only if it were offered him "from below, from the people," a comment he repeated in an interview the same day with NTV. Asked if he thinks Federation Council chairman Yegor Stroev is a possible alternative candidate for premier, Lebed said that Stroev is "a wise and sober-minded person" and for that reason would be unlikely to accept the post if offered. LF ...OUTLINES PREFERRED FINANCIAL POLICY. Lebed said that the leadership's top priority should be paying internal debts by means of monetary emission. He added that Russia's foreign creditors understand that "first we restore order inside the country, and then we pay off our foreign debts some time in the future--or we never pay them." Then, Lebed advocated, the ruble should be allowed to find its own level against the dollar, after which the exchange rate should be brought in line with the Central Bank's gold and foreign-currency reserves. LF RUBLE'S DECLINE PICKS UP SPEED. On the morning of 4 September, the ruble fell 26 percent to 16.99 rubles per $1 from the previous day's level of 13.48 rubles. In his speech to the Federation Council, Chernomyrdin described the ruble as "becoming wooden." He said "people are buying matches, buckwheat, and sugar," implying that these commodities are a more reliable storehouse of value. JAC NO FOOD SHORTAGE IN MOSCOW YET. According to Moscow customs office head Sergei Soldatov, a food crisis is not imminent in Moscow, RFE/RL reported on 4 September. The Moscow region customs office has more than 50,000 tons of foodstuff in storage, which is thought to be sufficient to keep market shelves stocked for two to three months. Deliveries of imported goods dropped 15 percent in August, compared with July. Former Minister of Agriculture Viktor Khlystun told Interfax on 4 September that no one in Russia is likely to starve, but shortages of certain food items, such as vegetable oil and meat products, may occur. Meanwhile, the "Moscow Times" reported on 3 September that the dry spring and early summer followed by heavy August rains may result in a poor harvest of potatoes this year. According to that newspaper, potatoes account for 10 percent of the nation's total calorific intake. JAC BANK CUSTOMERS SAY NO THANKS. On 2 September, the Central Bank ordered six leading commercial banks-- Inkombank, Menatep, Most Bank, Mosbiznesbank, Promstroibank and SBS-Agro--to stop servicing the accounts of individual depositors. Their customers had to decide by 26 September whether to leave their money in the private banks or transfer their funds to Sberbank, the country's largest bank, where their money would be guaranteed by the government. But in either case, the customer cannot withdraw any money until 15 November. The decision was not popular. One customer commented to NTV on 3 September: "How can you trust a state bank if you don't trust the state?" According to ITAR-TASS the next day, the Central Bank lifted its restriction for customers who sign a statement giving up their right to transfer their accounts to Sberbank. JAC REGIONS CONSIDER ECONOMIC SEPARATISM... "Kommersant- Daily" on 3 September suggests that the ongoing political and economic crisis in Russia may prompt the handful of federation subjects (including Moscow, Tatarstan, and Krasnoyarsk Krai) that are not dependent on subsidies from the federal budget to embark on the path of economic separatism. The newspaper notes that the governors of Sakha and Kemerovo, Mikhail Nikolaev and Aman Tuleev, have already begun forming their own gold and hard-currency reserves in violation of federal law. At the same time, those regions dependent on subsidies from Moscow are experiencing budget deficits, which in some cases are equal to the entire annual budget. The newspaper also notes that such policies risk increasing the rift not only between the regions and the federal center but also between the individual regions. Saratov governor Dmitrii Ayatskov has warned that the present economic crisis could result in the disintegration of Russia as a federation and its rebirth as a confederation. LF ...OR REDEFINING BORDERS. Meanwhile the acting mayor of Kyzyl, the capital of the Republic of Tyva, explained to "Noviye izvestiya" on 3 September that the city has asked to secede from Tyva and join neighboring Krasnoyarsk Krai as the only way to coerce the republic's government into paying the 19 million rubles it owed the city as of 1 August. The Republic of Khakasiya, which also borders on Krasnoyarsk, is similarly debating rejoining that krai, from which it separated in 1992. LF DEFENSE MINISTER WARNS AGAINST DELAY IN FORMING NEW GOVERNMENT. Speaking in Astrakhan on 3 September, acting Russian Defense Minister Igor Sergeev warned of a possible replay of the violence that followed President Yeltsin's decree on dissolving the Duma in fall 1993 unless a new Russian government is named soon, ITAR-TASS reported. Sergeev was observing joint air defense exercises by Russian, Belarusian, Kazakh, and Kyrgyz forces. Armenian Defense Minister Vazgen Sargsian, who also attended, said that Armenia will participate in similar exercises next year. Sergeev's press secretary, General Anatolii Shatalov, told Interfax on 4 September that rumors of army units being concentrated near Moscow are "untrue" and "a provocation." LF RUSSIA TO RAISE OIL EXCISE TAX? In a blow to oil exporters, ITAR-TASS reported on 4 September that the Ministry of Fuel and Energy is drafting proposals for changing the oil excise tax. The agency speculated that the tax will be increased because a press release said the government is seeking to revise the tax in order to increase income to the state budget. Earlier, Russian oil producers asked the government to reduce the oil excise tax because of the sharp fall in world oil prices. The Duma passed a law in July calling for a small decrease, which President Yeltsin later vetoed (see "RFE/RL Newsline," 17 July 1998). JAC RUSSIA'S MOST DANGEROUS PROFESSION? In the second attack on a mayor in the oil producing region of Western Siberia in less than four months, Nizhnevartovsk Mayor Yurii Timoshkov was seriously injured when a bomb exploded in his car. Yurii Shirmankin, deputy head of the Nizhnevartovsk-based Tyumen Oil Company, told Reuters that Timoshkov was targeted by "a certain group" that wants to gain influence over the local budget and oil companies in the region. Timoskhov survived a previous assasination attempt in April. In June, Vladimir Petukhom, mayor of Nefteyugansk, also in the Tyumen Oblast, was shot dead while walking to work. Russian newspapers speculated that the killing might have been connected with Petukhov's long history of clashes with the management of YUKOS, whose subsidiary Yuganskneftegaz, is the major employer in Nefteyugansk (see "RFE/RL Newsline," 29 June 1998). JAC RUSSIAN VISA PROCESS SIMPLIFIED. In October, foreign visitors to Russia will no longer have to list the cities they intend to visit when they apply for a visa. President Yeltsin signed a decree last year allowing foreigners to move freely around the country, but some local officials remained unaware of the change. JAC RUSSIAN-CHINESE BORDER FULLY DEMARCATED. Russian Foreign Ministry spokesman Vladimir Rakhmanin announced on 3 September that the entire Russian-Chinese border has now been demarcated, ITAR-TASS and Interfax reported. Most of the border demarcation was completed by last November, leaving only stretches in the west unmarked. Rakhmanin said the final demarcation of the 4,200- kilometer border is a "new significant step" in Russo- Chinese relations. Rakhmanin did not mention three islands in the Amur River, which by mutual consent have been left out of the demarcation process. BP CHECHEN PRESIDENT WILL NOT CEDE PREMIERSHIP. Aslan Maskhadov has said that in accordance with the constitution of the Chechen Republic Ichkeria, he will continue to occupy the position of prime minister, RFE/RL's Grozny correspondent reported on 4 September. Maskhadov was responding to a report to the parliament by former acting Premier Shamil Basaev on the performance of his cabinet during the first half of 1998. Maskhadov also denied that he has appointed former Chechen parliamentary speaker Yusup Soslambekov as deputy prime minister (see "RFE/RL Newsline," 3 September 1998). Maskhadov said that Soslambekov will liaise between the Chechen and Russian leaderships. Maskhadov also categorically rejected rumors that former Russian parliamentary speaker Ruslan Khasbulatov will be offered a post in the next Chechen government. On 3 September, Khasbulatov testified to the Russian State Duma commission for the impeachment of the president on the events that preceded the attack on the Russian parliament in October, 1993. LF RUSSIA SOFT-PEDALS IN DAGESTAN. Meeting on 3 September with residents of two Dagestani villages that last month declared an independent Islamic territory, acting Russian Interior Minister Sergei Stepashin pledged that the Russian authorities will not resort to violence against the villagers or other followers of traditional Islam in Dagestan, Caucasus Press reported. The previous day, the Russian State Duma unanimously passed a resolution assessing the situation in Dagestan as highly tense and calling on the Russian government to establish a special commission, on which representatives of both chambers of the parliament would be represented, to draft a new policy on the North Caucasus. The most recent draft policy document for the region was rejected as too general by most regional leaders. Interviewed by "Kommersant-Daily" on 3 September, former Dagestan Security Council secretary Magomed Tolboev warned of a popular uprising in Dagestan unless State Council chairman Magomedali Magomedov voluntarily steps down. LF TRANSCAUCASUS AND CENTRAL ASIA AKAYEV SETS DATE FOR KYRGYZ REFERENDUM... Kyrgyz President Askar Akayev on 3 September announced that a referendum on amendments to the country's constitution will be held in mid-October, RFE/RL correspondents in Bishkek reported. Akayev said the amendments will be put to a public debate until 5 October. That statement has annoyed parliamentary deputies, who were not offered the opportunity to review the proposed amendments before the announcement of the referendum. BP ...EXPLAINS REASON FOR VOTE. Also on 3 September, Akayev held a press conference to explain his motives for holding the referendum, RFE/RL correspondents reported. The president said the parliament is not fulfilling its duties and is dragging its feet on passing several essential laws. He mentioned private land ownership as one area where the parliament has failed to make progress. Turning to the subject of the CIS, Akayev said member countries need to support President Boris Yeltsin and Russia and noted that undermining the legitimacy of the Russian president could precipitate the collapse of the CIS and ruin its members' economies. BP HAS KAZAKH PRESIDENTIAL CAMPAIGN BEGUN? There is growing speculation in Kazakhstan that President Nursultan Nazarbayev has already begun his presidential campaign, RFE/RL correspondents reported on 3 September. Nazarbayev has made several tours of the country's regions recently, sparking rumors in the local press that he is seeking to get a head start and will bring forward the presidential election, currently scheduled to take place in 2000. Kazakh economists are forecasting that an economic crisis in Kazakhstan will peak toward the end of next year. In order to avoid holding elections when his popularity could be diminishing, Nazarbayev may opt to hold early elections. Opposition parties are reportedly now gravitating to former Prime Minister Akezhan Kazhegeldin as an alternative presidential candidate to Nazarbayev. BP TURKEY OFFER SUPPORT TO CIS CENTRAL ASIAN STATES. The Turkish Deputy Undersecretary of the Foreign Ministry, Mehmet Ali Irtemcelik, said in Bishkek on 3 September that Ankara will support the CIS Central Asian states against the threat of Afghanistan's Taliban movement, the Anatolia news agency reported. According to ITAR- TASS the same day, Irtemcelik, who is on a tour of the CIS Central Asian states, will convey an offer by Turkish President Suleyman Demirel to hold a presidential summit on Afghanistan. Demirel's letter to the CIS Central Asian presidents notes that Ankara shares their concern and can no longer sit on the sidelines as an observer. Offers to hold a conference on the Afghan situation have been made many times by Kyrgyzstan, Iran, and Japan, but without success. BP ARMENIAN DRAM BOUNCES BACK. The national currency regained ground on Armenian financial markets on 3 September after losing some 4 percent of its value against the U.S. dollar the previous day, RFE/RL's Yerevan bureau reported. But in an interview with "Yerkir" on 3 September, Tigran Jrbashian of the Sed Marsed consulting company downplayed Armenia's improved macroeconomic performance in 1998. Arguing that the present exchange rate of the dram is "artificial," he predicted that it will fall in value in the coming months and that "signs of a serious crisis" will emerge in October or November. LF PRESIDENTIAL ELECTION CAMPAIGN KICKS OFF IN AZERBAIJAN. In his initial campaign TV broadcast, Independent Azerbaijan Party chairman Nizami Suleimanov called upon incumbent President Heidar Aliev to retire from politics, ITAR-TASS and Turan reported on 3 September. Suleimanov said that if he wins the 11 October presidential poll, he will form a coalition government that includes the opposition Musavat, Azerbaijan Democratic, and Azerbaijan Popular Front parties and will raise the salaries of state sector employees up to tenfold. Communist Party candidate Firuddin Gasanov offered a program of "progressive socialism" similar to the programs of the Chinese, French, Italian, and Russian Communist Parties. Gasanov promised quick solutions to social problems, including a return to free education and health care, and a strong army. Six candidates, including Aliev, will contend the poll. LF AZERBAIJAN, IRAN DISCUSS COOPERATION IN OIL SECTOR. President Aliev on 2 September met with Ali Akbar Hashimi, director-general of Iran's Oil Industries Engineering and Construction Company, Turan reported the following day. That company has 10 percent stakes in the consortia formed to exploit the Shah-Deniz and the Lenkoran-Deniz off-shore Caspian oil fields. Hashimi indicated that his company is keen to expand its activities in Azerbaijan and enter the petrochemical and gas sectors. Natik Aliev, president of the Azerbaijan state oil company SOCAR, whose dismissal on corruption charges was rumored last week to be imminent, also attended the talks. LF ABKHAZIA SIGNALS INTEREST IN OIL PIPELINE. The Abkhaz government delegation to the Coordinating Council, meeting in Sukhumi on 2 September, indicated that the breakaway republic's leadership is interested in the proposed construction of an oil export pipeline linking Russia's Black Sea terminal of Novorossiisk with the Georgian port of Supsa (see "RFE/RL Caucasus Report," Vol. 1, No. 1, 3 March 1998), "Nezavisimaya gazeta" reported on 4 September. The Abkhaz say that construction of the pipeline would contribute substantially to restoring the region's economy and reducing unemployment. But Georgian presidential adviser Levan Aleksidze told Interfax on 3 September that talks on economic reconstruction in Abkhazia should be shelved until the ethnic Georgians forced to flee fighting in Abkhazia in 1992-1993 and/or in May 1998 have been allowed to return to their homes. LF xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. 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