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RFE/RL NEWSLINE Vol. 2, No. 172 Part I, 7 September 1998
________________________________________________________ RFE/RL NEWSLINE Vol. 2, No. 172 Part I, 7 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 * CENTRAL BANK CHAIRMAN OFFERS TO RESIGN * BOMB KILLS 17 IN DAGESTAN * GEORGIAN, AZERBAIJANI CURRENCIES LOSE VALUE End Note: RUSSIA FROM A DIFFERENT ANGLE xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA CENTRAL BANK CHAIRMAN OFFERS TO RESIGN. Sergei Dubinin on 7 September tendered his resignation, citing as one reason for his decision the State Duma's delay in passing a number of "vitally important" draft laws on banking, ITAR-TASS reported. Two days earlier, Central Bank Deputy Chairman Andrei Kozlov resigned. Kozlov was responsible the Central Bank's relations with other banks, as well as for the controversial scheme in which six top banks were forced to transfer all private individuals' bank deposits to Sberbank (see "RFE/RL Newsline," 4 September 1998). "Russkii telegraf" reported on 4 September that acting Prime Minister Viktor Chernomyrdin overruled the objections of Central Bank officials when he agreed to the basic principles for introducing a currency board. Under a currency board system, the role of the Central Bank would be diminished. JAC YELTSIN, DUMA CONVENE ROUNDTABLE. President Yeltsin met with Russia's legislative and executive branches on the morning of 7 September to seek to convince them to confirm acting Prime Minister Chernomyrdin. On 4 September, Yeltsin had submitted draft amendments to Russia's Law on Government expanding the Duma's power to select the cabinet. NDR leader Aleksandr Shokhin told Russian Television on 6 September that Chernomyrdin still had not marshaled enough votes for a victory, having won the support only of the Our Home is Russia (NDR), the Liberal Democratic Party of Russia, and most of the Russian Regions factions. Shokhin added that Chernomyrdin had at most 125-130 votes, assuming that the "Communists and their allies, the Yabloko group, fail to change their position." The same day, Yabloko leader Grigorii Yavlinskii declared his faction's continued strong opposition to Chernomyrdin. If rejected by the Duma and renamed by Yeltsin, Chernomyrdin will be considered for a third and final time. JAC GOVERNORS TO SWITCH TO LUZHKOV? Interfax reports that a group of regional governors will suggest to President Yeltsin that he nominate Moscow Mayor Yurii Luzhkov for prime minister when the roundtable between the executive and legislative branches reconvenes on the afternoon of 7 September. In an interview published in "Kommersant- Daily" on 4 September, Samara Governor Konstantin Titov said that he will back either Luzhkov or Federation Council speaker Yegor Stroev, but not Chernomyrdin. The next day, Luzhkov told reporters that Chernomyrdin did not present the country with an economic program during his speech to the Federation Council. He said that Yabloko head Yavlinskii, on the other hand, had proposals on economic stabilization that merited discussion. JAC RUSSIA TO SEEK MORE FOREIGN AID... Acting Prime Minister Chernomyrdin said in a 6 September national television address that Russia needs to double its gold and hard-currency reserves "hopefully through the assistance of the global financial system." Acting Minister of the Economy Yakov Urinson told "Vremya MN" in an interview published the next day that Russia might have to borrow up to $20 billion, kept on deposit in the central bank of another country, in order to carry out the idea of establishing a currency board for Russia. Under a currency board system, new units of money cannot be issued unless they are backed 100 percent by reserves of another, more stable currency. In his speech to the Federation Council on 4 September, Chernomyrdin implied that his government will adopt a currency board system, although he never actually used the words "currency board" (see "RFE/RL Newsline," 4 September 1998). JAC ...BUT PRESS, IMF SKEPTICAL. "Russkii telegraf" reported on 4 September that an exchange rate of 30 rubles to the dollar would require a currency board with $12 billion in reserves and a money supply of 370 billion rubles. But according to "Izvestiya" the next day, the nation's reserves are "currently negligible," and the newspaper called a possible agreement with the West "on urgent currency assistance too good to be true." IMF Managing- Director Michel Camdessus said on 4 September that a currency board for Russia, though a good idea, is not appropriate under current conditions. JAC RUSSIA TO OPT FOR ARGENTINA'S QUICK FIX? The Russian press has concluded that Chernomyrdin's government has opted to follow the example of Argentina's 1991 currency reform, based on the advice of its architect, Argentine former Minister of Economy Domingo Cavallo. Cavallo arrived in Moscow last week at the invitation of acting Premier Chernomyrdin and acting Deputy Prime Minister Boris Federov. Cavallo told reporters on 4 September that Argentina's economic experience may prove useful for Russia but that Russia may still opt for a different program. When asked how much time the Russian government would require to implement "its unpopular measures" to fix the economy, Federov told Russian Public Television that "the Argentineans who advised us were saying unequivocally that while President [Carlos] Menem's popularity at the time of the reform was 10 percent, six months later he was able to win the presidential election. So the results can be very rapid." JAC LOCAL LEADERS SET UP FOOD BANKS.... Stepping into the vacuum left by continued political uncertainty in Moscow, political and business leaders around Russia have devised a variety of measures to ease the economic crisis, according to ITAR-TASS on 6 September. In Saratov, Governor Dmitrii Ayatskov issued an instruction that fruit and vegetable merchants operating at fairs in the city of Saratov and throughout the region be exempt from fees for trading at the fair in the hope that traders do not increase their prices. In St. Petersburg, Deputy Governor Ilya Klebanov said on 5 September that the city will use some of its budget monies to create a reserve of food products that it will buy only from local enterprises. JAC ...AND PRICE CONTROLS. Smolensk Governor Alexander Prokhorov on 6 September ordered the establishment of an ad hoc commission on control over pricing. The city of Novgorod has established a special working group to strictly monitor supplies to kindergartens, schools, and hospitals to ensure they do not pay exorbitant prices. In Kursk, the city administration also created an interdepartmental commission for the control of prices on goods and services. Vendors wishing to raise prices on goods such as bread, sugar, eggs, and milk will first have to seek the agreement of the local department of trade. JAC REGIONS ENGAGE IN PANIC-BUYING. ITAR-TASS reported on 7 September that regions are experiencing shortages of key goods, as citizens have begun hoarding non-perishable items. For example, in Nakhodka and Ufa, consumers are purchasing sugar, flour, and other foods in large quantities. In Vologda, a local gasoline station claimed that it has only enough gasoline to last two days. Grocery stores in Murmansk have run out of salt, cereals, cooking oil, and other staples. JAC KREMLIN FEARS CRIME WAVE. Both acting Interior Minister Sergei Stepashin and acting Director of the Federal Security Service Vladimir Putin told the Federation Council on 4 September that they fear Russia will experience a new wave of crime because of the current financial crisis. Putin told the Council that already a large layer of Russian society--which controls up to 40 percent of gross domestic product--is involved "in criminal and pre-criminal economic conduct." According to ITAR-TASS, Stepashin reported his ministry is ill- prepared for the new threat because the money planned for it will hardly be enough to pay salaries, which have been frozen since 1995. He also noted that local governments owe more than 1.3 billion rubles ($63 million) for the maintenance of municipal police forces. JAC BOMB KILLS 17 IN DAGESTAN. Seventeen persons were killed and up to 70 injured when a car bomb exploded in a residential district of Makhachkala on 4 September, Russian agencies reported. Both Dagestani Interior Minister Adilgirei Magomedtagirov and his Russian counterpart, Sergei Stepashin, attributed the explosion to local criminal groups intent on overthrowing the Dagestani government. Former Russian Deputy Prime Minister Ramazan Abdulatipov has written to Russian President Yeltsin and acting Prime Minister Chernomyrdin proposing that they impose direct presidential rule in Dagestan, Interfax reported on 5 September. Meanwhile, a warrant has been issued for the arrest of former Makhachkala municipal council chairman Kurban Makhmudgadzhiev on suspicion of having masterminded both the 4 September bombing and the assassination attempt last month on Makhachkala Mayor Said Amirov, RFE/RL's North Caucasus correspondent reported on 7 September. LF TRANSCAUCASUS AND CENTRAL ASIA GEORGIAN, AZERBAIJANI CURRENCIES LOSE VALUE. The Georgian lari on 6 September fell from 1.38 to 1.70 to $1 in street trading, AP reported the following day. In his weekly radio address on 7 September, Georgian President Eduard Shevardnadze warned against panic, affirming that the lari is stable and there are no objective reasons for it to fall in value. Meanwhile in Baku, officials from the National Bank of Azerbaijan began touring currency exchange stalls on 4 September in the hope of preventing panic buying of dollars, according to ANS-Press. As of 5 September, the manat was trading at between 3,940 and 3,950 to $1, an increase of 100 manats over the previous week, Turan reported. ANS- Press quoted unconfirmed reports that customs officials have imposed restrictions on the import and export of foreign currencies. LF BAKU DEMONSTRATION POSTPONED. Meeting on 3 September, the opposition Movement for Democratic Elections and Electoral Reform decided to postpone the protest demonstration scheduled for 5 September, RFE/RL's Baku bureau reported. Baku Mayor Rafael Allakhverdiev had rejected the opposition's demand to be allowed to hold the demonstration on the city's main Freedom Square, proposing instead that it take place at a motor-racing stadium in the suburbs. LF CIVILIAN KILLED IN COMBAT MANEUVERS IN GEORGIA. A man was killed and his wife and mother injured on 5 September when Russian peacekeeping forces inadvertently fired an anti-tank missile at their home near Tskhinvali, ITAR-TASS reported. The Russian troops, who are part of a peacekeeping contingent deployed in the self-proclaimed Republic of South Ossetia, were engaged in routine combat training. LF GEORGIAN BORDER GUARDS PRESSURE RUSSIAN COUNTERPARTS TO LEAVE. Georgian border guards on 6 September entered the Russian border guard post in the Georgian Black Sea port of Poti and demanded that the Russians vacate the premises, Caucasus Press reported the following day. Under an agreement signed by Georgia and Russia earlier this year, Georgian border guards were to assume full responsibility for patrolling Georgia's sea borders on 1 September. The Russian contingent will be transferred from Poti to the Adjar capital, Batumi. LF KYRGYZ PREMIER ADDRESSES PARLIAMENT. Addressing the upper house of the parliament on 4 September, Kubanychbek Jumaliev said the country's economic situation is stable. He noted that GDP growth during the first eight months of 1998 was 4.5 percent, and he predicted an annual inflation rate of 12 percent this year. Jumaliev admitted, however, that the Asian and Russian financial crises have adversely affected the som. He proposed banning any financial transactions in U.S. dollars and conducting all such transactions only in the national currency. Jumaliev also informed lawmakers that the government will not implement the law, enacted earlier this year, that reduces land tax by 50 percent. He asked the parliament to amend that legislation. LF TAJIK PRESIDENT ASSESSES MILITARY. In an interview with ITAR-TASS on 5 September, Imomali Rakhmonov said that despite the 1992-1997 civil war, Tajikistan has succeeded in building armed forces adequate to ensure the country's security. He added that joint maneuvers in recent months involving Russian forces and Tajik Interior Ministry troops, presidential guards, and army units have demonstrated that Tajikistan's armed forces "are capable of assuming control of the situation in conditions where either an external threat or local conflicts [arise]." In other news, the body of Mukhiddin Zamonov, a bodyguard for one of the opposition members of the National Reconciliation Committee, was found in a reservoir near Dushanbe on 4 September, one week after he was abducted by unidentified gunmen, AP reported. An Interior Ministry official has been arrested and has confessed to the killing, which is believed not to have been politically motivated. LF END NOTE RUSSIA FROM A DIFFERENT ANGLE by Julie Corwin While Moscow--or the press, at least-- is riveted by the Kremlin's current political gyrations, one suspects after reading Fen Montaigne's "Reeling in Russia" (St. Martin's Press; New York, 1998) that the Russian countryside is paying only scant attention. Montaigne, a former Moscow-based correspondent for the "Philadelphia Inquirer," journeyed over 6,000 miles from Murmansk to Kamchatka with fly-fishing rod in one hand and notepad in the other. The book that results is part travelogue, part reflection on Russia--a kind of Marquis de Custine goes fishing minus the uppity French attitude. By skipping Moscow altogether, Montaigne provides a useful antidote to most Western media coverage of Russia, which rarely ventures out of one time zone, let alone covers all 11. The portrait of the people that emerges is one of a populace anaethesized by alcohol, deeply mistrustful of political institutions, and reduced by economic upheavals to eking out little more than a subsistence-level income. The few individuals with energy and initiative face constant setbacks. For example, Victor Chumak, one of Russia's first private farmers living in Rtysheva, in Saratov Oblast watched the foundation of his small agricultural empire erode overnight. Interest rates on bank loans hit 200 percent, and the bank repossessed his 12 tractors, two harvesters, and three trucks. In the village of Umba on the Kola Peninsula, Victor Shmelyov, a former highly paid truck driver now unable to find work, has been reduced to taking whatever odd jobs he can find, such as ushering foreigners around in his broken- down van. And then there are the individuals who don't participate in the economy any differently than their forebears might have 100 years ago: Vasily Volkov and his daughter Yelena pick berries on Kola Peninsula during the high season and spend the rest of their time fishing on the lakes and rivers in the forests of Karelia. The berries they sell for $14 a bucket; the fish they trade for bread and cured pork. Their only source of steady income is Volkov's monthly pension, worth about $60 a month. The Volkov's relationship is similar to that of most of people Montaigne encounters. They don't just live on the land, they live off it. They see the forests, rivers, lakes as vast basins of inexhaustible resources that exist to be exploited. Poaching is the rule, enforcement of fishing regulations the exception. On the Kola River, biologists estimate that poachers kill up to 50 percent of the salmon run. Some poachers catch enough fish merely to feed their families, while others string large nets across the mouths of rivers and make hundreds of thousands of dollars a season. Inspectors are routinely bribed to look the other way; those who won't are transferred. At one point, an American naturalist tries to persuade his listeners in Kamchatka that efforts must be made to preserve Russia's unique steelhead trout before it disappears from the local Utkholok, Tigil, Kvachina, and Snatolveyem Rivers, as it did in the American Pacific Northwest. Against the background of these individual struggles and on almost every page of the book is vodka. Consumed in vast quantities late into the evening as well as early in the morning, it appears to function as the social/political/economic lubricant, numbing the population to unnecessary indignities while at the same time making everything run less efficiently. At Kem on the Karelian coast, Montaigne encounters Yevgeny Nikonov, the owner of a small lumber mill, who argues that he must keep a cap on wages in order to preserve a minimum level of sobriety at his business. Nikonov says, "'The average worker wants to earn only enough for a bottle of vodka a day, two packs of cigarettes, and a little food. If you pay him more, he'll drink a second bottle and not come to work the next day." Nikonov claims that the workers he fired for drunkenness on the job have vandalized his house and boat and robbed the store run by his sister several times. When reporting his experiences directly, Montaigne is an engaging writer. He can make a character and a place come to life quickly. His zest for adventure, quiet sense of humor, and a profound love for Russia make him an entertaining guide. His attempts, however, to wrap up the Russian national character every five pages or so become tiresome, and at times the long fishing interludes distributed over longer intervals feel like a device--or, even perhaps, a ploy by a publishing company eager to find a way to market a book about rural Russia to group of consumers who routinely pay $60 to $100 for new graphite rods. Perhaps for his next book, Montaigne should leave the rods at home and stay in one place--possibly a struggling former collective farm. He writes with feeling and obvious enthusiasm about agriculture, and a longer stay with the people he writes about might enable him to make them seem less stereotypical: less Vasily the Peasant and Andrei the New Russian and more like vivid, unique individuals. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. 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