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RFE/RL NEWSLINE Vol 2, No. 185, Part I, 24 September 1998
___________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 185, Part I, 24 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 * NEW DEBT CRISIS LOOMS * RUBLE BOUNCES BACK, AFTER BANKS EXCLUDED FROM TRADING * GEORGIAN DISPLACED PERSONS PREVENTED FROM HOLDING TBILISI CONGRESS xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA NEW DEBT CRISIS LOOMS... In addition to the $473 million in interest payments that the Russian government owes on its defaulted treasury bills, the government also needs to find an additional $4 billion to service its foreign debts for the rest of 1998. Anatolii Chubais, former presidential envoy to international financial institutions, told "Moskovskii komsomolets" on 23 September that if the IMF does not provide the $4.5 billion tranche that was expected in September, then an economic crisis of more dramatic proportions than that accompanying the ruble's devaluation would be unleashed. JAC ...AS DEBT TALKS BEGIN. Acting Finance Minister Mikhail Zadornov on 23 September met with foreign and Russian bankers to discuss terms for restructuring Russian debt. Interfax reported that Zadornov told bank representatives that Russia will stick to the principle of equality for all investors. Analysts believe that Russia may suggest several alternative schemes and that cash payments in rubles may be increased. On 24 September, "Kommersant-Daily" quoted one representative of a Western bank as saying that Western bankers have the impression that the Russian government is trying to avoid or delay direct negotiations, explaining that one letter the bankers sent suggesting negotiations was never answered. The representative said "Russian authorities assure us that there will be no discrimination against foreign investors, but it has already happened" on 21 September when the Central Bank agreed to buy back Russian banks' defaulted treasury bonds JAC RUBLE BOUNCES BACK, AFTER BANKS EXCLUDED FROM TRADING. The ruble stabilized at 15.73 rubles to $1 during the first half of trading on 24 September. The previous day, the ruble had unexpectedly strengthened, rising to 15.83 rubles per dollar from 16.21 rubles. On 21 September, the Central Bank prepared a list of Russian commercial banks that were banned from foreign exchange trading in part to prevent them from using their new liquidity to speculate against the ruble. Lehman Brothers obtained a court order seizing the UK bank accounts of one of those banks, Inkombank, according to Bloomberg. Inkombank failed to buy rubles from Lehman Brothers on 15 September, as it had agreed under a so-called forward currency contract. JAC LUZHKOV BLAMES IMF, WESTERN BANKS FOR FINANCIAL CRISIS. Moscow Mayor and likely presidential candidate Yurii Luzhkov has blamed the "bad advice" of the IMF for Russia's current economic crisis. He said "following the IMF's recommendations, [Russia] suppressed [its] own manufacturers and began to turn into a raw material appendage of the civilized world." He added that past Russian governments tried to carry out monetarist principles in Russia and this led to "an absence of a customs policy," robbing of companies, and unrestrained lending to commercial banks, according to Interfax on 23 September. "Finansovye izvestiya" on 22 September alleged that Western banks, knowing that Russia was heading for a devaluation and debt crisis, have carefully bided their time until Russia was desperate for new economic assistance. Now, these banks will make such aid conditional on adopting measures like those recommended by the U.S. Chamber of Commerce, such as the adoption of a new tax code and restoration of the ruble's convertibility. JAC ARMS SALES TO MAKE ENDS MEET. Writing in "Segodnya" on 23 September, military analyst Pavel Felgengauer suggested that Russia has at least one alternative if Western aid is not forthcoming. He said that "if the West refuses to offer economic assistance to Russia, Moscow and its new premier...may renew deliveries of sophisticated weapons to Iran, Libya, and Iraq." He continued, "Of course, neither Iraq nor other anti-Western regimes of the Third World have the money to feed millions of hungry Russians, but it doesn't matter. Russia may deliver weapons for delayed payment or barter. What counts is giving Iraq and Iran missiles and other hardware that will be able to damage British and American navies in the Persian Gulf." JAC REBIRTH OF BANKING SECTOR? "Moscow Times" reported on 24 September that Russia's smaller banks are attracting new customers away from the larger, failing institutions. Smaller banks, which in general did not participate in the government's short-term treasury bond market, are facilitating payments between companies in exchange for a modest service charge. The newspaper reported that the Chastnii Bank, which with 222 million rubles in assets is ranked 197th, has witnessed a sharp increase in both cash turnovers and new accounts. JAC AUDIT INVESTIGATION LABELED POLITICAL. In his much publicized interview with the BBC about the Russian government misuse of IMF loans, the Auditing Chamber's chief auditor, Veniamin Sokolov, had actually been speaking about two World Bank loans, according to a subsequent clarification issued by the BBC (see "RFE/RL Newsline," 23 September 1998). However, Michael Carter, the World Bank's representative in Moscow, said that Sokolov apparently misunderstood the nature of the loans that he was investigating, according to the "Moscow Times" on 24 September. Carter also noted that Sokolov has a history of making unsubstantiated charges. The "Moscow Times" also quoted Ivan Grachev, State Duma deputy and Yabloko faction member, who said that the investigation into the Central Bank's use of loans from financial institutions is primarily "political." Meanwhile, "Nezavisimaya gazeta" reported on 23 September that Audit Chamber Deputy Chairman Yurii Boldyrev, who has been making his own allegations about Bank loans, has launched his own political organization called the Yurii Boldyrev Bloc. JAC GOVERNMENT REORGANIZATION PANNED. "Nezavisimaya gazeta" has sharply criticized President Yeltsin's reorganization of the Russian government (see "RFE/RL Newsline," 23 September 1998). According to the newspaper, this "administrative reform" is the fourth in the past two years and previous reshuffles have had virtually undetectable results: "No one in the government does any work for two to three months because everyone is getting to know one another, rearranging the desks, settling into offices, and hiring new secretaries." The newspaper added that if events continue this way, the government will be reformed twice a year with the change of seasons. In the spring, thrifty young reformers will come to power, and in the fall their actions "will be revised by yesterday's men." The government will acquire "an autumnal image with inflated staffs and portly old men," the daily concluded. "Nezavisimaya gazeta" receives financial support from Boris Berezovskii's LogoVAZ group. JAC IVANOV MAKES DEBUT. After his speech before the UN General Assembly on 23 September, Foreign Minister Igor Ivanov told reporters that the West has stopped trying to attach political labels to Yevgenii Primakov's government and is prepared to judge the government by the content of its new economic program. On the Kosova crisis, Ivanov told reporters that the EU keeps extending humanitarian assistance to the region but that a "more radical solution" is needed. Ivanov expressed support for the draft resolution on Kosova though he said that Moscow was against military intervention in the province (see two related stories in Part 2). During his stay in New York, Ivanov also met with his counterparts from the U.S., Germany, Denmark, Austria, Poland, and Japan. JAC SELEZNEV IN TEHRAN. Addressing the Iranian parliament on 23 September, the fourth day of his visit to Tehran, Duma speaker Gennadii Seleznev pledged Russia's continued support for expanded bilateral cooperation in the peaceful use of nuclear power. He also urged an end to the civil war in Afghanistan and a swift agreement among Caspian littoral states on the sea's legal status. Seleznev met with First Vice President Hassan Habibi and with former President Ali Akbar Hashemi Rafsanjani, who expressed interest in the causes and anticipated duration of the Russian financial crisis, according to Interfax. The Russian delegation also met with Oil Minister Bijan Namdar Zanganeh, who stressed the potential benefits to Russia of exporting oil via Iran, according to "Parlamentskaya gazeta" on 23 September. LF ZHIRINOVSKY TO RUN FOR GOVERNOR. Liberal Democratic Party leader Vladimir Zhirinovsky intends to run for governor of Leningrad Oblast, "Moskovskii komsomolets" reported on 24 September. JAC HARVEST, SOWING SLOWED. Harvesting of Russia's grain crop has slowed this year because of cold weather and rain in Siberia and the Urals, Interfax reported on 23 September. According to the Ministry for Food and Agriculture, only 9.4 million hectares of cereals have been "threshed," compared with 11 million hectares on the same date last year. The area sown for winter crops -- 10 million hectares -- is 5 percent smaller than last year's area, because farmers received insufficient supplies of fuel and lubricants. JAC RUSSIA BECOMING LESS CORRUPT? On the annual "Corruption Perceptions Index" complied by corruption watchdog Transparency International, Russia ranked 76th, with the 85th country having the highest level of perceived corruption, according to questionnaires filled out by international businessmen. "Kommersant-Daily" reported on 23 September that Russia has apparently made some modest improvement since 1996, when it occupied the next to last place, in front of only Nigeria. In 26th position, Estonia came out "cleaner" than any other country in Eastern Europe or the former Soviet space included on the list. JAC FIELD COMMANDERS RENEW CRITICISM OF CHECHEN PRESIDENT. The Chechen parliament convened an emergency session on 23 September to consider accusations leveled against President Aslan Maskhadov. In an open letter to parliamentary deputies, field commanders Shamil Basaev, Salman Raduev, and Khunkar Israpilov accused Maskhadov of usurping power and riding roughshod over the judicial system. They also charged that he violated the law on Chechnya's state sovereignty by holding talks with Moscow on Chechnya's status vis-a-vis the Russian Federation. They demanded that the parliament initiate proceedings against Maskhadov to save Chechnya from "total crisis and civil confrontation." But after listening to the president's rationale for his actions, the parliament dismissed the criticisms against him. Press-secretary Lom-Ali Mirsibiev told Interfax that "the occasional departures from the letter of the constitution are a minor matter." LF COUNTER-DEMONSTRATION IN KARACHAEVO-CHERKASSIA. Some 6,000 people congregated in Cherkessk, capital of the Republic of Karachaevo-Cherkessia, on 23 September to condemn a rally that began on 17 September to demand elections to the post of republican head, "Nezavisimaya gazeta" reported. The 23 September meeting was convened by organizations representing the ethnic Russian and Cossack population of the republic. Ethnic Russians are the largest ethnic group in the RChK, accounting for 42.2 percent of the population, followed by the Karachais (31.2 percent) and the Cherkess (9.7 percent). Speakers at the 23 September meeting accused participants of earlier demonstrations of attempting to provoke inter-ethnic bloodshed. "Kommersant-Daily" on 23 September quoted parliamentary deputy Murat Khachukaev as predicting that Khubiev will refuse to sign the law on direct elections of the republican head, passed by the parliament the previous day. LF TRANSCAUCASUS AND CENTRAL ASIA GEORGIAN DISPLACED PERSONS PREVENTED FROM HOLDING TBILISI CONGRESS. Georgian police on 23 September prevented ethnic Georgians forced to flee Abkhazia during the 1992-1993 war from approaching the Philharmonic building in Tbilisi, where they had intended to hold a two-day congress, Caucasus Press reported. The police also arrested the son of the congress's organizer, Boris Kakubava, who heads the Coordinatig Council of Political Parties and Organizations of Abkhazia and Samachablo (South Ossetia). Other organizations representing the displaced persons and the Abkhaz government in exile had expressed disapproval of the proposed congress, but Georgian President Eduard Shevardnadze had endorsed it and promised to attend, "Nezavisimaya gazeta" reported on 22 September. An attempt by Kakubava in November 1997 to convene a congress in the Philharmonic building was similarly thwarted by police. LF GEORGIANS INJURED IN SHOOTING IN ABKHAZIA. Georgian presidential representative in Svaneti Iveri Chelidze, a journalist, and one other person were injured on 21 September when their car was fired on in the Kodori gorge, in southeastern Abkhazia, ITAR-TASS reported. LF SHEVARDNADZE'S NEPHEW ACCUSED OF FINANCIAL MISCONDUCT. President Shevardnadze has ordered an investigation of the company IVERIA +, which is headed by his nephew Nugzar, AP and Caucasus Press reported on 23 September. Several Georgians newspapers had printed allegations the previous day that Nugzar Shevardnadze had failed to repay debts to a Greek company. IVERIA + issued a statement rejecting the allegations as part of a smear campaign directed against the Georgian president in the runup to local elections scheduled for November. LF EXPERTS SAY ARMENIAN NUCLEAR POWER STATION "IS SAFE." Nuclear safety experts who attended a two-day seminar on the Medzamor nuclear power station told journalists in Yerevan on 23 September that continued exploitation of the plant does not pose a threat to the environment, RFE/RL's Yerevan bureau reported. The plant was reactivated three years ago after being moth-balled in 1989. Working at 85 percent capacity, it currently generates some 35 percent of Armenia's electricity. The plant's director, Suren Azatian, said Medzamor can operate for another 10 years after 2004, the tentative closure date set by the European Bank for Reconstruction and Development as a condition for advancing a 10 million ECU ($8.5 million) loan to finance the reactivation of and safety measures at the plant. LF KAZAKH PRESIDENT IN ITALY. Visiting Rome on 22-23 September, Nursultan Nazarbayev held talks with his Italian counterpart, Oscaro Scalfaro, Prime Minister Romano Prodi, the chairmen of both houses of the Italian parliament, and the management of Italy's Agip corporation, which is engaged in oil and gas projects in Kazakhstan. Nazarbaev's talks with Salfaro and Prodi focused on expanding bilateral economic cooperation, closer cooperation between Kazakhstan and the EU, the situation in Afghanistan, and Russia's economic crisis, which Nazarbayev again said has not affected his country. LF KYRGYZ LANGUAGE COMMISSION MEETS. Meeting on 22 September, the National Commission on the State Language discussed a new 10-year program and compliance to date with the 1989 law on the state language, RFE/RL's Bishkek bureau reported the following day. That law designates Kyrgyz as the state language in Kyrgyzstan and envisages that beginning in 2000, all official documentation in the country will be in Kyrgyz. Kambaraly Bobulov, president of the Kyrgyz Til [Language] Society, told RFE/RL that the Kyrgyz language is still "very weak" and requires government support. He said that if Russian becomes a second state language, it will significantly further weaken the Kyrgyz language. The Kyrgyz parliament has rejected proposals by some public organizations and politicians to give Russian the status of a second state language or of a language of inter-ethnic communication. Ethnic Russians account for approximately 14 percent of Kyrgyzstan's population. LF TAJIK PRESIDENT TO VISIT IRAN? Imomali Rakhmonov met with Iranian Ambassador Saidrasul Musavi on 23 September to discuss the domestic political situation in Tajikistan as well as developments in Afghanistan and their possible impact on the region, Interfax reported. Rakhmonov acknowledged Iran's contribution to ending the civil war in Tajikistan and pledged that isolated actions by "destructive forces" will not deter the Tajik government from honoring its obligations under last year's peace agreement. The two also discussed preparations for a Tajik-Iranian summit, which may take place before the end of this year. Also on 23 September, Rakhmonov met with visiting World Bank Vice President Johannes Linn, to whom he stressed Tajikistan's commitment to economic reform and appealed for increased international aid. In addition to the $142 million that the Bank has granted Tajikistan since 1993, the Bank approved a three-year $165 million loan this summer (see "RFE/RL Newsline," 31 July 1998). LF TAJIK OPPOSITION FIGHTERS REPATRIATED. The final contingent of Tajik opposition fighters has succeeded in crossing the Pyanj River and returning from Afghanistan to Tajikistan, ITAR-TASS reported on 24 September. The crossing had been delayed after a bomb was discovered on the barge that was to transport the returnees (see "RFE/RL Newsline," 23 September 1998). The fighters are to be escorted by Russian peacekeeping troops to a military base near Dushanbe. LF 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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