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RFE/RL NEWSLINE Vol 2, No. 192, Part I, 5 October 1998
___________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 192, Part I, 5 October 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 * RUSSIA COUNTING ON IMF TO FINANCE DEFICIT * DUMA THREATENS NATO * TAJIK GOVERNMENT, OPPOSITION ISSUE ULTIMATUM ON ARMS xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA RUSSIA COUNTING ON IMF TO FINANCE DEFICIT. Currently in Washington for the annual IMF/World Bank meetings, Russian government officials have adopted a conciliatory tone toward the international financial institutions. Finance Minister Mikhail Zadornov told reporters on 4 October that IMF Managing Director Michel Camdessus regarded the government's new economic program "rather favorably." Zadornov later clarified that by "program," he was referring to the emergency budget for the fourth quarter, which the government will submit to the State Duma before the end of October. Zadornov added that the government expects foreign loans worth $2.5 billion through the end of the year. According to "Kommersant-Daily" on 2 October, the draft budget calls for expenditures of 167 billion rubles ($10 billion) and revenues of only 70 billion rubles, leaving a deficit of almost 100 billion rubles. In theory, part of the deficit will be financed by borrowing from abroad and increasing export taxes and excise duties on alcohol. JAC RUBLE PRESSES ALREADY ROLLING? Former Prime Minster Yegor Gaidar told reporters on 2 October that any large budget deficit would have to be financed through a monetary emission, since he doubted foreign loans would be forthcoming. He added that he suspects that Central Bank has already extended the government a 7 billion ruble ($438 million) loan, covered by newly printed money. According to Interfax, the government has already disbursed 500 million rubles as payment on defense contracts, 400 million rubles for subsidies to the coal mining industry, and 1.4 billion rubles in back wages to soldiers. First Deputy Prime Minister Vladimir Gustov said the government has allocated 1.17 billion rubles assistance for depressed regions, 9.6 billion for the Pension Fund, and 2 billion rubles for the coal industry for the rest of the year. JAC DUMA THREATENS NATO. The Duma passed a resolution on 2 October labeling the potential use of force by NATO in Kosova "an illegal aggressive action." The Duma said that such an action would cause it to review all existing agreements between Russia and NATO, including the accord restricting arms trade with Yugoslavia. The Duma also recommended that the Foreign and Defense Ministries recall their representatives to NATO for consultations with the government. A Defense Ministry source told Interfax that NATO air strikes would eliminate any possibility that the Russian legislature would ratify START II. According to "Izvestiya" on 3 October, the Russian Foreign Ministry has not yet decided whether to use its veto at the UN Security Council. JAC YELTSIN NAMES NEW SECURITY COUNCIL. Russian President Boris Yeltsin has altered the composition of the Security Council, according to his press spokesman. In addition to Security Council Secretary Nikolai Bordyuzha, Foreign Minister Igor Ivanov and Federal Security Service (FSB) Director Vladimir Putin are members. Former Prime Minister Sergei Kirienko, former Deputy Prime Minister Boris Nemtsov, and former FSB Director Nikolai Kovalyov have been officially relieved of their duties on the council. First Deputy Prime Minister Gustov told reporters on 2 October that the post of deputy prime minister in charge of financial affairs, which Aleksandr Shokhin quit last month, should not be filled "for a while." In the meantime, Shokhin's duties have been divided among several members of the government. JAC GOVERNMENT OFFERS FARMERS ASSISTANCE. Prime Minister Yevgenii Primakov has increased the number of groups his government is willing to support by offering assistance to cash-strapped farmers. On 3 October, according to ITAR-TASS, he signed a resolution allowing farmers and agricultural enterprises to defer their debts to the federal budget by five years. "Izvestiya" concluded on 1 October that despite the poor grain harvest, the Russian population will have sufficient quantities of bread. However, the food consumption pattern throughout the country will change dramatically as the amount of meat and dairy products falls. According to "Rossiyskaya gazeta" on 2 October, certain regions are already experiencing shortages of specific products. For example, Yakutia and Bashkortostan lack poultry, while Nizhnii Novgorod and Vladimir Oblast lack groats. JAC ECONOMISTS PREDICT MORE HARD TIMES. Both the IMF and former Prime Minister Gaidar's Institute for Economic Problems during Transition are predicting that Russian GDP will fall 6 percent in 1998--Gaidar suggests it may drop even as much as 6.5 percent. The fund predicts that also in 1999 GDP will drop 6 percent, while Gaidar's institute foresees a 4-5 percent drop assuming hyperinflation is averted. If not, then GDP will drop from 12-13 percent. The State Statistics Committee reported that inflation reached 38 percent in September. "Izvestiya" reported on 3 October that wages and salaries have dropped two to three times in all sectors of the economy, while managers predict they will continue to decline to 1994 levels. JAC YABLOKO PRESENTS ECONOMIC PLAN. Yabloko party leader Grigorii Yavlinskii published his version of an anti-crisis program in "Nezavisimaya gazeta" on 2 October. Yavlinskii calls for forcing all exporters to sell their foreign exchange for a three-month period and for an immediate lifting of the moratorium on servicing short-term treasury bond debt. First Deputy Prime Minister Yurii Maslyukov's plan, at least according to "Kommersant-Daily," required exporters to sell 75 percent of their hard currency proceeds for an indefinite period. Yavlinskii also suggested introducing new taxes on gasoline, alcohol, and tobacco, imposing a 20 percent tax on all personal incomes, and guaranteeing the first $5,000 of all individual bank deposits with Central Bank reserves. According to "Kommersant-Daily," Finance Minister Mikhail Zadornov also supports a 20 percent flat tax on incomes. JAC RUSSIA TO CEASE OIL EXPORTS? Mikhail Khodorkovskii, CEO of the Yukos-Moskva company, told reporters on 2 October that if oil production continued to fall in Russia, then by 1999 the oil sector will not need either to reduce exports or trim domestic consumption in order to meet the country's domestic requirement. Since the beginning of 1998, according to Interfax, oil production volumes have fallen by an estimated 5 percent from the previous year's level. Khodorkovskii also warned that the 10 percent drop in industrial output envisaged by the "Maslyukov plan" will slash living standards in the country, create new wage arrears, extinguish investment, and lead to a total economic breakdown in Russia. Meanwhile, Minister for Fuel and Energy Sergei Generalov told ITAR-TASS on 4 October that he opposes new taxes on the oil and gas industries and is convinced that they can act as a "locomotive to drag Russia out of its current crisis." JAC OFFICIALS ISSUE MORE DENIALS OF DOLLAR BAN. First Deputy Prime Minister Maslyukov himself joined the chorus of officials denying that the dollar would be banned from circulation (see "RFE/RL Newsline," 2 October 1998). "Kommersant-Daily" earlier published what was allegedly Maslyukov's economic plan, which called for banning the trading of hard currency by individuals. Maslyukov told NTV on 4 October that reports of the government's plan to prohibit use of the dollar are "nonsense." And Central Bank chairman Viktor Gerashchenko, according to Interfax on 2 October, warned Duma deputies not to enact any kind of restrictions on the use of the dollar. JAC SOME CHURCHES FACING DOLLAR CRUNCH? The UK-based Keston News Service reported on 2 October that Russia's financial crisis has had various effects on religious institutions. Those that are most dependent on Western financial support are doing the best, while those that had secular, domestic sponsors such as "Russian banks and firms that were providing money for the construction of churches, chapels or rectories," suddenly find themselves without a sponsor. However, according to Keston, many religious organizations are expecting the government to increase its scrutiny of the financial system and in particular foreign exchange transactions. As it becomes possible "to monitor every dollar transaction," these flows from the West are likely to shrink. JAC TATARSTAN GOVERNMENT CRITICIZED. The opposition Republican Party of Tatarstan has accused the government of President Mintimer Shaimiev of failing either to protect the republic's population from economic disaster or to alleviate the crisis's negative effects, according to "Izvestiya" on 3 October. The newspaper reported that the Republican Party has about 3,000 members and 60 local branches. The "EWI's Russian Regional Report" on 1 October reported that President Shaimiev has been on vacation in Turkey for three weeks, while the prime minister has "been racing cars in Kursk." Meanwhile, local enterprises have begun paying their workers in food products instead of cash. One researcher at a state- run factory received 300 grams of candy and half a kilogram of cookies. JAC THREE BRITONS, NEW ZEALANDER KIDNAPPED IN CHECHNYA. Four employees of a British firm building a telecommunications system in Chechnya were kidnapped in Grozny on 3 October following an early morning gunfight, ITAR-TASS reported. The British Foreign Office has warned Britons against any further travel to Chechnya until at least April 2002, the Russian agency reported. Chechen officials said they have identified the kidnappers and believe they will be able to free the four captives. Chechen Prosecutor-General Mansur Tagirov told Interfax that he believes the kidnapping was intended to discredit Chechen President Aslan Maskhadov. PG RUSSIAN REPRESENTATIVE IN CHECHNYA FOUND DEAD. Akmal Saidov, the head of the social and economic department of the Russian government office in Grozny, was found dead on 3 October near the border between Chechnya and Ingushetia, Interfax reported. He had been kidnapped on 29 September in the Chechen capital. The Russian government protested the move, but even as it did so, Russian First Deputy Prime Minister Vadim Gustov told ITAR-TASS on 2 October that Russia must keep all its promises to Chechnya. PG CHECHEN LEADER SAYS U.S. BIGGER THREAT THAN RUSSIA. Chechen President Maskhadov said that the United States is using Saudi Arabia as a proxy to destabilize the Caucasus region, Interfax reported on 2 October. He said that the Saudis are financing what he called "pure Islam," a reference to what Maskhadov and others have often referred to as Wahhabism. These activities, Maskhadov said, pose "a serious threat to Chechnya because America and the West are more dangerous than Russia." PG MASKHADOV TO MEET PRIMAKOV? Interfax reported on 5 October that Russian Prime Minister Primakov will meet with Chechen President Maskhadov on 10 October. The Russian news agency cited Interior Minister Sergei Stepashin as its source. Primakov's office, however, refused to confirm the story when queried by ITAR-TASS. PG CAUCASUS MUSLIM COUNCIL APPEALS TO YELTSIN. The Supreme Religious Council of the Caucasian Peoples has sent an appeal to the Russian president to take personal responsibility for the investigation of a terrorist act in Makhachkala that led to the death of Dagestani Mufti Sayed Mukhammed-khadzhi Abubakarov, ITAR-TASS reported on 2 October. The appeal was made at an international conference in Baku. At that meeting, Sheikh ul-Islam Allahshukyur Pasha-zade was reelected chairman of the council. PG REGIONAL AFFAIRS LATVIANS VOTE IN FAVOR OF CITIZENSHIP AMENDMENTS... In a referendum on 3 October, some 53 percent of the Latvian electorate voted in favor of amendments to the citizenship law passed earlier this year, according to preliminary results released the next day. Almost 45 percent of the electorate voted against, while turnout was just below 70 percent. The "yes" vote means there are no longer any obstacles to the signing into law of the amendments, which remove the so-called naturalization windows, grant citizenship to all children born after independence if their parents so require it, and provide for simpler language tests for older residents. Commenting on the result, OSCE High Commissioner on National Minorities Max van der Stoel said that "the people of Latvia have taken a very important step towards solving inter-ethnic problems and promoting the process of integration," Reuters reported. JC ...ELECT NEW PARLIAMENT. Also on 3 October, Latvians went to the polls to elect a new parliament. According to preliminary results, the People's Party of former Prime Minister Andris Skele came first with 20.79 percent of the vote, followed by Latvia's Way with 18.50 percent, RFE/RL's Riga bureau reported the next day. The National Harmony Party, which brings together former communists and independence activists, finished a surprising third, with 14.44 percent, ahead of the Fatherland and Freedom party of incumbent Prime Minister Guntars Krasts (13.80 percent). Only two other parties passed the 5 percent hurdle to gain entry to the new parliament: the Social Democratic Alliance (12.95 percent) and the New Party (7.46 percent). Turnout was estimated at 72.67 percent. JC FIRST RUSSIAN RESPONSES TO LATVIAN REFERENDUM VOTE. Russian Foreign Ministry spokesman Vladimir Rakhmanin told ITAR-TASS on 5 October that Moscow "positively appraises" the results of the referendum on the citizenship law amendments. He noted that the Latvian people have given a "clear signal" to the newly elected parliament and the future government that they link the long-term interests of their country with "inter- ethnic harmony, integration of society, and observance of human rights." He added that it is only this way that Latvia can "gain international prestige and normalize relations with Russia." Communist Party leader Gennadii Zyuganov, in an interview with Ekho Moskvy the previous day, also welcomed the referendum result, commenting that for Latvia, "it is better to have Russia as a friendly neighbor than to violate the rights of our compatriots." JC TRANSCAUCASUS AND CENTRAL ASIA TAJIK GOVERNMENT, OPPOSITION ISSUE ULTIMATUM ON ARMS. Tajik military helicopters flew over neighborhoods east of Dushanbe on 4 October to drop leaflets ordering the surrender of illegal arms within one week, ITAR-TASS reported. A presidential adviser on defense and social order, Mizrob Kabirov, said this distribution method was necessary because not all residents of the areas have access to television and radio, both of which are broadcasting the order. Kabirov said the leaflets are directed at groups engaged in "banditry, mafia territorial wars, terrorism, and kidnapping." The Tajik government will guarantee the safety and freedom of those who heed the call. Kabirov said, however, said that both the government and United Tajik Opposition are currently drawing up measures to "liquidate" those who refuse to hand over their arms. BP ARMENIAN PREMIER SEEKS DELAY IN PRIVATIZATION DEBATE. Prime Minister Armen Darpinian on 2 October asked his political opponents in the parliament to delay a discussion of his privatization program until he returns from Washington, RFE/RL's Armenian Service reported. Darpinian left for the U.S. on 3 October to participate in consultations on the international financial crisis. PG GEORGIANS, ABKHAZ EXCHANGE FIRE. Georgian and Abkhazian units exchanged fire along the Inguri River on 4 October, ITAR-TASS reported the next day. Georgian Television said that the Abkhaz had attacked the Georgians and that the Georgians had returned fire. PG SHEVARDNADZE HOPES RUSSIA WILL STABILIZE. Following a meeting on 3 October with visiting Russian State Duma speaker Gennadii Seleznev, Georgian President Eduard Shevardnadze said that Tbilisi is "interested in political and economic stability of its great neighbor Russia as well as in its democratic development," ITAR-TASS reported on 4 October. Seleznev reiterated Moscow's desire to continue to serve as an intermediary in Tbilisi's dispute with the breakaway republic of Abkhazia. But he asked Shevardnadze not to press Moscow to ratify the friendship treaty between the two countries anytime soon, the Russian agency said. PG ADJAR DELEGATION IN TBILISI. Georgian Minister of State Vazha Lortkipanidze met with a delegation from Adjaria on 1 October to discuss the tensions between the Georgian central government and that autonomous republic, Caucasus Press reported quoting the daily "Rezonansi." The Adjar delegation expressed concern at what they perceived as a campaign of vilification of Adjar Supreme Council Chairman Aslan Abashidze in the Georgian central press. And it hinted that the Adjar leadership may demand the closure of some of the media outlets involved. LF SCHOOLCHILDREN, PENSIONERS STAGE PROTESTS IN WESTERN GEORGIA. Some 100 schoolchildren blocked the Zugdidi-Anaklia highway on 1 October to protest the continued occupation of their schools by displaced persons who fled Abkhazia's Gali Raion during the fighting in May, Caucasus Press reported the following day. The displaced persons refuse to move from the schools to other accommodation, thus preventing the start of tuition. In Kutaisi, 43,000 pensioners staged a protest against the city authorities' decision to pay their pensions in wheat flour. They have not yet received their pensions for August. LF xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. 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