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RFE/RL NEWSLINE Vol 2, No. 182, Part I, 21 September 1998
___________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 182, Part I, 21 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 Headlines, Part I * CENTRAL BANK BAILS OUT RUSSIAN BANKS * MEDIA FACING COST CRUNCH * OPPOSITIONISTS MARCH IN BAKU End Note: RUSSIA'S INTERNAL CRISIS IMPERILS COOPERATION WITH WEST xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA CENTRAL BANK BAILS OUT RUSSIAN BANKS. The Central Bank on 21 September announced that Russian banks still owe 30 billion rubles ($1.83 billion) in interbank debt, Bloomberg reported. Three days earlier, the Central Bank pledged to cover outstanding interbank debts with new loans. It also agreed to buy back most banks' defaulted treasury bonds. In theory, those measures will preserve the country's banking system and shake out the weakest banks, which will promptly go bankrupt. However, by printing such a large amount of new money, the bank risks plunging the country into hyperinflation. According to Interfax, Inkombank President Vladimir Vinogradov said in a speech on 20 September that Russian banks should surrender key stakes to the state. He added that he is prepared to give up 50-75 percent of his bank to preserve Russia's banking system. JAC ...LEAVES FOREIGN BANKS DANGLING. Meanwhile, "Kommersant- Daily" on 19 September predicted that large Western investors might wage an "economic war against Russia" because of the Central Bank's most recent action to buy back defaulted bonds from Russian banks. Some Western banks plan to take the matter to court and to seize the accounts of some Russian banks. They also plan to present their grievances to the IMF and the governments of the Group of Seven. Recently, some Western banks banded together in order to conduct negotiations with the Russian government on debt restructuring. JAC STATE TO IMPOSE NEW CURRENCY CONTROLS. In a move some analysts are predicting may trigger the rebirth of the black market, Prime Minister Yevgenii Primakov pledged on 18 September to introduce a requirement that exporters sell an additional 25 percent of their hard-currency revenues to the Central Bank. At the very least, analysts reckon that exporters will try to hide their proceeds from government scrutiny. JAC MORE CABINET APPOINTMENTS ANNOUNCED. On 21 September, after promising to complete cabinet appointments by the end of the week, President Boris Yeltsin appointed Gennadii Kulik deputy prime minister in charge of agriculture. Kulik, a State Duma deputy, is a member of the Agrarian faction and was deputy chairman of the Duma's Budget Committee. Kulik told Interfax that acting Minister of Agriculture Viktor Semyonov will remain in his position. From 1990 to 1991, Kulik was himself minister of agriculture. On 18 September, Interfax reported that Ramazan Abdulatipov, former deputy prime minister in charge of ethnic policy, would likely be appointed to the cabinet and that a new ministry overseeing the defense industry might be created. Deputy Prime Minister Aleksandr Shokhin told NTV on 20 September that acting Finance Minister Mikhail Zadornov may retain his position (see "RFE/RL Newsline," 18 September 1998). JAC RUSSIA, UKRAINE TO TAKE JOINT ANTI-CRISIS MEASURES. Informal meetings between Russian President Boris Yeltsin and Ukrainian President Leonid Kuchma concluded on 19 September with the signing of a communique. The presidents agreed to form an anti-crisis task force that would work out joint economic measures to ease the economic crisis squeezing both countries. They also discussed ways of reforming the CIS to transform it into a more effective vehicle for regional and international cooperation. According to ITAR-TASS, Kuchma pledged that part of Ukraine's debt for Russian natural gas will be settled with goods. Ukrainian Prime Minister Valeriy Pustovoytenko also met with his Russian counterpart, Primakov. They agreed that priority sectors for Russian- Ukrainian cooperation are the aero-space industry, ship- building, machine-building, and military-technical cooperation. JAC MEDIA FACING COST CRUNCH... Russian media appear to be facing a challenge on two fronts, one fiscal, the other political. On 19 September, the "Moscow Times" reported that newspaper production costs have risen 70 percent from last month's level. The advertising market has collapsed, and the money received from subscriptions has now lost much of its value, according to "Segodnya" on 17 September. "Komsomolskaya pravda" is responding by doubling the price of its subscriptions. A spokesman for Russian Public Television and NTV denied that a massive lay-off of workers is imminent, despite the 60 percent reduction in the market for commercials, according to ITAR-TASS. Some kind of help may be on the way: in October, the State Duma is scheduled to consider the law "On State Support for the Mass Media" in the second reading. JAC ...AND REDUCED ACCESS? Reports that Primakov has ordered all members of his cabinet to vet their statements to the press through the new head of the presidential apparatus, Yurii Zabakov, have triggered an outcry from Moscow-based media. "Kommersant-Daily" on 17 September quoted the chief editor of Ekho Moskvy as saying that when Primakov took charge of the Foreign Ministry, "one of his first actions was to ban interviews without his authorization." Andrei Korotkov, head of the Government Information Department, told journalists that the Primakov government "will not curb contacts with the press or impose any kind of censorship." Primakov himself said "I have been and remain a firm supporter of freedom of speech and independence of the media." JAC GOVERNMENT TO CONTROL TOBACCO SECTOR? A spokesman for First Deputy Prime Minister Yurii Maslyukov on 19 September rejected Russian news agency reports that the government will impose a state monopoly on the production and sale of tobacco. He said the government is only considering measures to simplify the licensing procedure for tobacco imports, set up a wholesale tobacco network, and eliminate breaks on custom duties for tobacco imports, according to Interfax. U.S. tobacco giant RJR Reynolds had temporarily suspended production in Russia because of economic uncertainty. According to the news agency reports, Prime Minister Primakov had ordered that a state monopoly be imposed on the sale and production of both tobacco and alcohol. Proceeds from the sale of the two products would reportedly be used to replenish state and local budgets. JAC RUSSIA TO IMPORT GRAIN. Because of the poor harvest, Russia will be forced to import some 2 million tons of grain--mostly wheat--this year, ITAR-TASS reported on 21 September, quoting a spokesman for the Ministry of Agriculture. The spokesman said that an estimated 56 million tons of grain will be harvested before winter, some 37 percent down from last year's level of 88.5 million tons. According to Interfax on 20 September, this year's harvest is only a little better than the worst harvest recorded over the last three decades, when Russia produced 55 million tons of grain. JAC U.S. TO FUND 'MIR' RETIREMENT? The "Washington Post" reported on 21 September that NASA will inject new funds into the Russian Space Agency in order to avoid any further delays with the international space station that is scheduled to be launched in November 1998. Earlier, a Russian Space Agency official said that the space station is unlikely to be completed on time, thus ensuring a delay in the retirement of the space station "Mir." According to the newspaper, NASA will spend up to $600 million on goods and services from the Russian Space Agency over the next four years. JAC LUZHKOV, PRIMAKOV, LEBED ON RUSSIAN FEDERALISM. Meeting on 16 September with Prime Minister Primakov, Moscow Mayor Yurii Luzhkov proposed reducing the number of federation subjects from the present 89 to 10-12 "economic conglomerates," each of which would comprise 8-10 territories, "Nezavisimaya gazeta" reported on 19 September. Primakov told journalists on 18 September that the idea of reducing the number of federation subjects is "reasonable" and that "89 territories are too many," according to Interfax. Krasnoyarsk Governor Aleksandr Lebed told the news agency on 20 September that the Russian Constitution should be changed to give individual regions greater freedom. Lebed argued that "strong regions are the backbone of a strong Russia." LF DAGESTAN DUMA DEPUTY STRIPPED OF IMMUNITY. The Russian State Duma on 18 September voted in closed session to strip Union of Muslims of Russia chairman Nadirshakh Khachilaev of his immunity from prosecution, Russian agencies reported. The Russian Prosecutor-General's Office had asked the Duma to take that action to enable criminal proceedings to be opened against Khachilaev in connection with the 21 May storming of the central government building in the Dagestani capital. Khachilaev and his brother Magomed played a leading role in that incident. Nadirshakh Khachilaev told Interfax on 19 September that he is ready to face "an independent and impartial trial." He blamed the Dagestani government for the May unrest in Makhachkala and claimed that the Duma "has become an accomplice in the plot devised by the Dagestani government in order to eliminate the opposition." LF AUSHEV SUGGESTS NEW SOLUTION TO OSSETIAN-INGUSH CONFLICT. Meeting in Moscow on 19 September with Russian Premier Primakov, Interior Minister Sergei Stepashin, and North Ossetian President Aleksandr Dzasokhov, Ingush President Ruslan Aushev proposed that North Ossetia's disputed Prigorodnyi Raion should receive the status of a condominium whose administration should be appointed by the government of Ingushetia, Interfax reported. Most of the raion's ethnic Ingush population fled ethnic cleansing by Ossetians in November 1992. Aushev termed the present situation in Prigorodnyi Raion "dangerous," accusing the North Ossetian leadership of deliberately exacerbating inter-ethnic tensions. Ossetians destroyed up to 70 Ingush dwellings on 13 September after five Ossetian policemen were shot dead on the Ingush-North Ossetian border (see "RFE/RL Newsline," 14 September 1998). Meanwhile, an Ingush-populated village in North Ossetia was subject to artillery fire on the night of 20-21 September, according to Caucasus Press. LF BRITISH HOSTAGES FREED IN CHECHNYA. Two British aid workers abducted in Chechnya in July 1997 were released on 20 September and returned to the U.K. via Moscow. Interviewed by ITAR-TASS, British Ambassador to Moscow Andrew Wood declined to give details of the negotiations that led to their release. He denied that either the British government or Russian oligarch Boris Berezovskii had paid a ransom. Meanwhile, Chechen President Aslan Maskhadov returned to Grozny via Baku from a visit to Malaysia. Maskhadov said that "for the first time, Chechnya had the opportunity to conduct equal talks at the state level" with the Malaysian king and prime minister, ITAR-TASS reported on 20 September. On 18 September, Maskhadov discussed the situation in Dagestan and the North Caucasus with Azerbaijani President Heidar Aliev, Turan reported. LF TRANSCAUCASUS AND CENTRAL ASIA OPPOSITIONISTS MARCH IN BAKU. Opposition supporters staged a march in Baku on 20 September to demand the postponement of the presidential elections scheduled for 11 October and the resignation of President Heidar Aliev. Opposition supporters put the number of participants at between 25,000 and 50,000, whereas Reuters estimated that some 10,000 people took part. After negotiations with opposition representatives, the Baku municipal authorities on 18 September agreed an a compromise route for the march. Police did not intervene. At an opposition march on 12 September, police had clashed with would-be demonstrators (see "RFE/RL Newsline," 14 September 1998). LF ALIEV DOES NOT EXCLUDE NEW WAR OVER KARABAKH. Addressing some 20,000 supporters at a rally on the outskirts of Baku on 19 September, President Aliev pledged his continued commitment to democracy and to ensuring that the presidential poll is free and democratic, AP reported. He claimed the credit for numerous construction projects in Azerbaijan in the 1970s and 1980s, including roads, schools, and hospitals, but conceded unspecified mistakes and failings during the past five years. He pledged to rectify those faults. Aliev also warned that if it proves impossible to resolve the Karabakh conflict by peaceful means, then "we will use our own powers to restore our territorial integrity," according to Reuters. LF AZERBAIJAN APPEALS TO DESERTERS TO RETURN. Azerbaijani Military Prosecutor Major-General Ramiz Rzaev has called on all Azerbaijanis who fled the country after deserting from the armed forces during the Karabakh war in 1992-1993 to return home, according to "Izvestiya" on 19 September. Rzaev stressed that all deserters have been amnestied under a recent presidential decree. LF FORMER KAZAKH PREMIER'S AIDE DETAINED. Akezhan Kazhegeldin on 20 September demanded the release of his aide Mikhail Vasilichenko, who was arrested two days earlier in the Kazakh capital, Astana, AP reported. Vasilichenko was to have handed over to President Nursultan Nazarbayev and government officials proposals for amending the country's constitution and election laws. "Nezavisimaya gazeta" reported on 11 September that printing of the Kazakh edition of a book by Kazhegeldin analyzing the current situation in Kazakhstan has been halted and all copies of the Russian-language edition confiscated. LF TAJIK FOREIGN MINISTRY REJECTS OPPOSITION CRITICISM. The Tajik Foreign Ministry has issued a statement condemning as "a deliberate attempt to disinform the world community" claims by Tajik opposition spokesmen that the Tajik government is deliberately delaying implementation of the peace agreement that ended the civil war, "Nezavisimaya gazeta" reported on 19 September. Four days earlier, United Tajik Opposition leader Said Abdullo Nuri accused the Tajik leadership of failing to deliver on its commitment to reform the government and amend the constitution (see "RFE/RL Newsline," 17 September 1998). LF TAJIK INSURGENTS' TRIAL BEGINS. The closed trial of four men accused of attempting to overthrow the Tajik government in August 1997 (see "RFE/RL Newsline," 11-12 August 1997) began in Dushanbe on 20 September, ITAR-TASS reported. The four men, who include former parliamentary deputy Sherali Mirzoev, are said to be associates of rebel Colonel Makhmud Khudoiberdiev, who had launched two previous unsuccessful coup attempts. LF UZBEK AIRLINE SIGNS COOPERATION AGREEMENTS WITH AEROFLOT. The national airlines of Uzbekistan and Russia signed an agreement on 18 September establishing joint flights between Moscow and the Uzbek cities of Tashkent, Samarkand, Urgench, and Bukhara. They also signed accords on cargo airlifting on the Moscow-Tashkent-New Delhi route and on introducing special tariffs for flights from Uzbekistan to European and Baltic cities via Moscow, ITAR-TASS reported. Uzbek Airlines director Aslan Ruznetov told journalists at the signing ceremony that the current Russian economic crisis will not impact on cooperation between the two airlines. LF REGIONAL AFFAIRS IRAN FAVORS CLOSER TIES WITH CIS. A spokesman for the Iranian Embassy in Moscow told Interfax on 18 September that Tehran has "sought ways to expand former areas of cooperation" with CIS states ever since that body was set up. Speaking in Minsk on 15 September at the second session of the inter-state commission to discuss CIS reform, CIS Executive Secretary Boris Berezovskii argued that there is huge unexplored potential for expanding relations with Iran. Berezovskii reasoned that Iran falls within the orbit of interests of almost all CIS states and that it would therefore be logical to develop cooperation with Iran within the framework of the CIS, according to "Vremya-MN" on 17 September. LF END NOTE RUSSIA'S INTERNAL CRISIS IMPERILS COOPERATION WITH WEST By Christopher Walker Russia's domestic chaos has entered a new and more precarious stage, one that may distinctly alter the country's direction for the foreseeable future. In the years since the collapse of the Soviet Union, Russia has gone through periodic spasms of economic and political crisis and is currently suffering what is widely described as an "economic meltdown. " It seems that the outside world is learning a great deal more about Russia's desperate state of affairs than it would prefer. But while Russia's internal crisis is making headlines now, another issue of vital importance will preoccupy the Western community when the dust settles: namely, the impact of Russia's volatile domestic affairs on its foreign policy. One likely result of the latest protracted crisis is the hardening of a Russian foreign policy that has already been drifting away from Western interests for some time. In fact, with the collapse of the Russian economy and the consequent growth in influence of communist and nationalist political forces, there is a grave danger that Russia's foreign policy will become more rigidly anti-Western--anti-American, in particular--than at any time since the end of the Cold War. Anti-Americanism is already on the rise in Russia. This is in no small measure due to the Russians' linkage of failed Western-inspired economic reform with current social and economic pain. Much of Russia has concluded that the Western prescription for domestic reform is ill-suited to their country. They may similarly conclude that cooperation on a range of international matters is not in Russia's interests either. The recent installment of Yevgenii Primakov as prime minister may be providing a sense of relief to the immediate political crisis in Russia, but there is real doubt whether his experience is suited to bringing about an improvement in Russia's economy. Primakov's strength is in the foreign arena. A tough professional diplomat and former head of Russia's External Intelligence Service, he has extensive foreign policy experience and has been a strong proponent of an assertive posture for Russia in world affairs. Primakov's compromise candidacy resulted from President Boris Yeltsin's inability to gain adequate support for his own first choice, Viktor Chernomyrdin. That inability revealed Yeltsin's acute political weakness. While dogged and at times valiant, Yeltsin's leadership has finally succumbed to the overwhelming forces massed against it: a chronically ailing economy, widespread corruption, rampant crime, and a disaffected population. The Communists and nationalists in the Duma--whose influence has steadily increased since gains in the 1993 and 1995 parliamentary elections--are now suggesting Cold War-era solutions for today's pressing domestic emergencies. Those proposals include economic isolation and renationalization of major industries and banks. Although Yeltsin's reform team became mired in the corruption that has colored Russia's recent past, their program was fundamentally integrationalist, predicated on modernizing the country's economy and bringing Russia into the global economic system. With regard to international matters, the Russian foreign policy elite, much of which has not accepted its Cold War defeat, still harbors ambitions of more actively using Russian power abroad. As Yeltsin has weakened politically, this same elite--which includes Primakov--has come out against Western interests in a number of critical areas: supporting the sale of sophisticated arms to Iran; maintaining close relations with a number of outlaw states, including Syria; undermining the weapons' inspection process in Iraq; assuming an often obstructionist role in former Yugoslavia during the Bosnian and Croatian wars; and at times playing a similarly uncooperative role in Kosova. A more nationalist and aggressively anti-Western Russian foreign policy could mean greater antagonism toward the Baltic states and increased meddling in former Soviet republics in the south Caucasus and Central Asia. Russia's own weak economic condition may limit the degree to which it can exert such influence, but it is nonetheless likely to pursue anti-Western policies with increased vigor. Some observers now speculate that Primakov will use his credibility with the Communists and his ties to the Russian foreign policy elite to curb the impulse of these hard-liners toward an even more aggressive foreign posture. But even if he were inclined to do so, he will find it difficult to withstand pressure from the very forces instrumental in his becoming prime minister. Enjoying an increased share of power, the hard-liners doubtless have their sights on more fully orienting Russia's foreign policy in a direction not consistent with Western interests. Playing on the anxieties of an impoverished and demoralized population, the anti-Western elements on Russia's political scene may well consolidate their gains and thereby delay the establishment of a global security order. This will present the U.S. and the Western community as a whole with a new set of foreign policy challenges, not to mention a dose of nostalgia that few are eager to relive. The author is manager of programs at the European Journalism Network. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. All rights reserved. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx HOW TO SUBSCRIBE Send an email to firstname.lastname@example.org with the word subscribe as the subject of the message. HOW TO UNSUBSCRIBE Send an email to email@example.com with the word unsubscribe as the subject of the message. 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