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RFE/RL NEWSLINE Vol 2, No. 194, Part I, 7 October 1998
___________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 194, Part I, 7 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 * THOUSANDS TURN OUT FOR NATIONWIDE PROTEST * RUSSIA THREATENS TO USE UN SECURITY COUNCIL VETO * ARMENIAN PARLIAMENT CONTINUES ATTACK ON GOVERNMENT End Note: RUSSIAN CRISIS HITS UKRAINIAN FIRMS xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA THOUSANDS TURN OUT FOR NATIONWIDE PROTEST. According to Interfax, initial reports from the Interior Ministry suggest that more than 60,000 people turned out for public protests in the Far East on 7 October--a much smaller turnout than organizers had expected. In Vladivostok only 3,000, rather than the expected 5,000 citizens, participated, AP reported. ITAR-TASS estimated that turnout in Novosibirsk was some 35,000 people. Nakhodka witnessed one of its largest protest meetings the previous day when about 3,000 gathered in the city's main square. An RFE/RL correspondent in Novosibirsk noted that the centerpiece of protesters demands was the payment of back wages but that they also called for the resignation of President Boris Yeltsin. An RFE/RL correspondent in Irkutsk reported that cold weather thinned the ranks of protesters in that Siberian city, with mostly pensioners and Communist Party activists showing up. JAC FINAL PROTEST COUNT TO BE DELAYED. A final count on the number of participants in the Russia's day of national protest may not be available for sometime. In some cities, union leaders' estimates of the number people taking part in ongoing protests were twice the amount estimated by local police. The pre-event estimates of the "sponsors" of the protest action also varied widely. Mikhail Shmakov, head of the Russian Federation of Independent Trade Unions, predicted that 25 million would participate in marches, and Communist Party leader Gennadii Zyuganov said he was counting on 40 million. "Nezavisimaya gazeta" forecast a modest turnout based on what many considered the event's "dress rehearsal," the fifth anniversary of storming of the parliament on 3-4 October. Both "Nezavisimaya gazeta" and "Kommersant-Daily" reported that the early October event attracted no more than 5,000 participants. However, "Kommersant-Daily" suggested that organizers usually underestimate the number of participants. "Nezavisimaya gazeta" receives financial backing from Boris Berezovskii's LogoVAZ group, while the sources of financing for "Kommersant-Daily" are unknown. JAC RUSSIA THREATENS TO USE UN SECURITY COUNCIL VETO. After NATO postponed a decision on Kosova until 8 October, NTV on 6 October suggested that Russia's tough stance against bombings may have been the cause. Foreign Minister Igor Ivanov announced that Russia will veto any effort proposed in the UN Security Council to authorize NATO air strikes against Yugoslavia. Both Foreign Ministry spokesman Vladimir Rakhmanin and Armed Forces Colonel General Vladislav Putilin held news conferences in which they stressed that peaceful ways of settling the Kosova conflict have not been exhausted- -especially since President Yeltsin's telephone conversation with Yugoslav President Slobodan. After their discussion, Milosevic agreed to allow an OSCE delegation into Kosova (see "RFE/RL Newsline," 6 October 1998). JAC KOSOVA OUTCOME TO DETERMINE RUSSIA'S STATUS? Russian policymakers, analysts, and the press are linking the outcome of Russia's campaign against NATO air strikes in Yugoslavia with both Russia's status as a world power and its talks with the IMF. Our Home is Russia faction leader Aleksandr Shokhin declared that if Russia's tough statements on NATO air strikes against Yugoslavia are ignored, then it will be obvious that Russia is losing its status as a great power. He told reporters on 6 October that he believes Kosova constitutes a "dramatic turning point in defining Russia's role in the world." Georgii Arbatov, honorary director of the Institute for U.S. and Canada Studies, told Interfax that Russia should pressure Milosevic rather than the West. He said "It is difficult to act as a great power when you constantly beg for aid." Meanwhile, "Izvestiya" the same day reported that after "having lost its last hope of obtaining IMF monies", the Russian government issued uncharacteristically bold statements against a possible NATO action. JAC PRIMAKOV APPEALS TO POCKETBOOK, CUPBOARD. In his televised address to the nation on 6 October, Prime Minister Yevgenii Primakov promised Russian citizens not only that back wages and pensions but fruits, vegetables, and potatoes during the cold winter. He noted that his government has slashed tariffs on transportation of fruits and vegetables and removed other restrictions against movement of food on Russian territory. With regard to remedying the nation's economy, he emphasized restructuring the banking system, creating an effective tax system, and breaking "the vicious circle of nonpayments" between businesses and the budget as well as among businesses themselves. Primakov also promised to continue with privatization but "not so some individuals and groups can get rich." Primakov explained his government's delay in presenting a finished economic program by citing the program's dependence on negotiations currently being conducted at home and abroad. JAC TAX REFORM IN THE WORKS. In the same address, Primakov promised that the government will submit proposals to improve the tax system in the "nearest future." In the meantime, he reported giving instructions to the state tax service to release equipment from storage worth more than $1 billion that had been seized from enterprises that did not pay their taxes. He justified the action, saying the enterprises employ "human beings" and are "about to yield solid profits to the state soon" once the equipment has been reinstalled. JAC RUSSIA PREPARED FOR FAILURE WITH IMF? The Russian press is characterizing Russian government talks with the IMF as "circular" and likely to end in failure. "Vremya MN" on 6 October reported that the IMF is demanding that the government complete its economic program. However, "Russia claims it cannot complete its program until it knows whether or not the West will give it money." "Izvestiya" the same day said that although Zadornov has threatened the West with the possibility of domestic unrest and Russian default on loans owed to Western banks if money is not forthcoming, "Russia's position remains bad." The newspaper explained that "the fund has no money, since the US Congress has not agreed to grant it an extra $18 billion" and the "IMF 'doctors' have other patients--in East Asia and South America." Meanwhile, State Duma Chairman Gennadii Seleznev told reporters that Zadornov may bring a "disquieting message" to Moscow from Washington. LUKoil and Oneksimbank are major investors in "Izvestiya," and Sberbank and the Central Bank provide indirect financial support to "Vremya MN."JAC GOVERNMENT TO LOCK UP VODKA STILLS. Russian President Boris Yeltsin signed a decree on 6 October establishing tighter government regulation of the production and distribution of alcohol stronger than 28 percent proof. According to ITAR- TASS, alcohol will be produced only by companies that the state either fully owns or has a controlling interest in. Deputy Prime Minister Gennadii Kulik told reporters that the measure will not increase prices or diminish the choice of imported alcohol available. Kulik explained that the change in regulation could yield an additional 30-35 billion rubles ($1.9 billion) in budget revenues by curbing the illegal production and import of vodka and other alcohol. It may also save lives. "Profil" reported on 7 September that almost 22,000 Russians had already died in 1998 after drinking fake vodka, according to Interior Ministry data. JAC POLITICAL FOE OF LEBED ARRESTED. A deputy of Krasnoyarsk Governor Aleksandr Lebed's predecessor has been charged with misusing budget funds, according to "Kommersant-Daily" on 6 October. Vladimir Kuzmin, former first deputy governor, was arrested for allegedly misappropriating 9 billion old rubles that were intended for residents of Krasnoyarsk but were deposited instead in an interest-bearing account in a Moscow bank. "Vremya MN" reported that a group of Duma deputies from a variety of political organizations have appealed to the prosecutor on Kuzmin's behalf. According to the newspaper, many in Krasnoyarsk believe that the prosecutor's pursuit of Kuzmin is primarily political. During his election campaign, Lebed had promised to investigate the activities of his predecessor. JAC RUSSIA SAYS CHECHEN KIDNAPPINGS THREATEN WORLD COMMUNITY. Foreign Ministry spokesman Rakhmanin told ITAR-TASS on 6 October that kidnappings in Chechen "can be regarded only as a challenge to the present Chechen leadership and to the world community" by those who seek to destabilize Chechnya. Rakhmanin added that Russian and Chechen investigators have made no progress in identifying those responsible, a statement confirmed by Chechen acting Deputy Prime Minister Kazbek Makhashev. In other developments, Leon Wascinski, the OSCE official responsible for Chechnya, arrived in Moscow on 6 October to discuss the situation. And Yeltsin's press secretary, Dmitrii Yakushkin, denied reports that the family of Valentin Vlasov, the Russian official kidnapped in Chechnya, has not received state support, as Interior Minister Sergei Stepashin said on 5 October, the Russian agency reported. PG TRANSCAUCASUS AND CENTRAL ASIA KAZAKH PARLIAMENT APPROVES AMENDMENTS. A joint session of the Kazakh parliament on 7 October passed amendments to the country's constitution, RFE/RL correspondents in Astana reported. Under those amendments, the term of deputies in the lower house would be extended from four to five years and in the upper house from five to six years. The president's term in office would be increased from five to seven years, and parliamentary and presidential elections would be held in January 1999, one year ahead of schedule. BP UN RESUMES FOOD PROGRAM IN TAJIKISTAN. Despite the fact that most of the personnel of the UN mission to Tajikistan remain outside that country's borders, the program to supply food to fighters of the United Tajik Opposition resumed on 6 October, ITAR-TASS reported. The UN mission is providing food and blankets to 10 UTO centers in eastern Tajikistan at the request of the Tajik government. The bulk of the UN mission will not return until an investigation into the murders of four UN employees in late July has been completed and the findings made public. BP ARCHITECT FOR NEW KAZAKH CAPITAL CHOSEN. Kazakh President Nursultan Nazarbayev on 6 October announced the winner of a competition to design the new Kazakh capital, Astana, Interfax reported. Japanese architect Kise Kurokawa was selected from the 27 competitors. Nazarbayev said the winning design reflects a symbiosis of European and Asian cultures and of nature and man. BP KYRGYZ GOVERNMENT RELEASES INITIAL ESTIMATE OF ISSYK KUL DAMAGE. Deputy Prime Minister Boris Silayev has said that according to a preliminary estimate, the damage caused by the sodium cyanide spill earlier this year in the southern area of Issyk Kul totals 91 million som (about $4 million), Interfax reported on 7 October. In May, a truck belonging to the Kumtor gold mine overturned into the Barskoon River, which flows into Issyk Kul, spilling 1.7 tons of sodium cyanide into the water. Silayev, who heads the government commission investigating the damage to the area, said the estimate does not include agricultural losses. An RFE/RL journalist who visited the village most affected by the spill, Barskoon, found that while a medical center has been set up there, residents have not received compensation for their losses and humanitarian aid to the village amounted to one notebook, one pen, and five pieces of candy per inhabitant. BP ARMENIAN PARLIAMENT CONTINUES ATTACK ON GOVERNMENT. Opposition deputies stepped up their attacks on the government's privatization program during a special meeting of the parliament on 6 October, RFE/RL's Armenian Service reported. Vano Siradeghian, chairman of the former ruling Armenian Pan-National Movement, said that President Robert Kocharian is intent on replacing the current parliament with a rubber-stamp legislature. He said that Kocharian may seek to dissolve the assembly before the end of this year and call elections that are likely to be manipulated by "people with money and levers." PG ARMENIAN PRESIDENT WANTS ENHANCED RUSSIAN ROLE IN CAUCASUS. Kocharian said on 6 October that Yerevan will seek to expand Moscow's role in the Caucasus, including in the transport of oil and gas, ITAR-TASS reported. Kocharian also said that his government highly values Russia's role in resolving conflicts across the region. PG ARMENIAN COMMUNISTS PLEDGE SOLIDARITY WITH RUSSIAN PROTEST. The Armenian Communist Party issued an appeal on 6 October calling for its supporters to take to the streets to express "solidarity" with the mass protest action scheduled to take place in Russia the next day, RFE/RL's Armenian Service reported. Sergey Badalian, the party's leader, said that he expects "tens of thousands" of supporters to march in central Yerevan, adding that "there is a revolution going on in Russia." Badalian also said that he and his supporters will demand the ouster of the "anti-popular" Yerevan government and Armenia's inclusion in a "new union" of former Soviet republics. PG SHEVARDNADZE PRAISES OSCE ROLE IN CAUCASUS. Speaking to the OSCE Parliamentary Assembly in Tbilisi on 6 October, President Eduard Shevardnadze praised the role of the OSCE in seeking to settle conflicts in the Caucasus region, Interfax reported. Shevardnadze said that he is particularly pleased that the OSCE has become the first international organization to "bravely and openly" declare that Georgians were subject to ethnic cleansing in Abkhazia. And he said that his government is prepared to help the OSCE find a settlement to the Karabakh dispute between Armenia and Azerbaijan. PG GUAM GROUP TO COOPERATE TO OVERCOME WORLD CRISIS. Representatives of the four GUAM countries--Ukrainian Premier Valery Pustovoitenko, Moldovan Premier Ion Ciubuk, Georgian state minister Bazha Lordkipanidze, and Azerbaijan presidential economic adviser Vakhid Akhundov--issued a declaration in Washington on 6 October that their governments will work together to overcome the world economic crisis, Interfax reported. They said that they will both coordinate their policies and seek to promote transit across their region. PG END NOTE RUSSIAN CRISIS HITS UKRAINIAN FIRMS by Stefan Korshak Ukraine's Motor-Sych appeared to have it all: direct government support, an expanding Russian customer base, cheap labor and materials, as well as a weak national currency to exploit those advantages even further. Then the Russian financial crisis set in, sending the ruble into freefall. Motor Sych's customer base of large Russian aerospace companies dried up almost immediately. The few customers that remained operational could pay only in rubles. Moreover, a number of Russian suppliers of key components shut down their production lines. Motor Sych, Ukraine's largest engine maker, is among a host of companies paying for Ukraine's inability--or unwillingness--to loosen the economic bond with Russia. The recent price of maintaining such close ties has been steep. Falling exports to Russia have crippled key industries such as metallurgy and machine building. And it has forced the government to devalue the hryvna. Through August, Russia had accounted for almost half (44.3 percent) of Ukraine's general trade turnover in 1998. Most exports (55 percent) to Russia were products of the former Soviet military-industrial complex: for example, metallurgical products (15 percent), heavy machinery (14 percent), and chemicals (10 percent). In July, Russia slapped a 3 percent import duty on Ukrainian industrial and agricultural commodities. Then the crisis hit. The hryvna's downslide, rooted in Ukraine's long- standing foreign currency crunch, might also have been prompted by a calculated effort by the government to make exports competitive. Paul Gregory, head of the research section at Alfa Capital Kyiv, told RFE/RL that "one way for the Ukrainian government to increase income is to increase the volume of its exports." He said "one means of doing that is worsening the hryvna's exchange rate against other currencies, so Ukrainian products become cheaper." But Gregory also said that even if the Ukrainian exchange rate winds up lower relative to the ruble than it was before the crisis, it will not affect trade statistics until some time next year. The Donetsk Iron and Steel Works (DISW), one of Ukraine's metal exporters, was another company hit first by the Russian excise duty and then by the fall of the ruble. Olexsander Pilipenko, DISW's vice president, told RFE/RL that his company is not currently receiving many new orders from Russia. He said the main reason is that Russian companies are short of funds. A partly privatized mill and a leader in the Ukrainian steel industry, DISW was in the process of expanding and modernizing its product line when the Russian crisis hit. The crisis put a damper on that process. Pilipenko said that as of the beginning of September, many Russian firms stopped sending payments to his company. He said Russian companies buy only 10 percent of his firm's products, adding that "non-payment by any customer is by no means good news." With some 80 percent of its products traditionally labeled for Russia, Motor Sych is worse off. Vladislav Matvienko of Motor Sych's import-export division said its "Russian customers are experiencing certain problems in settling contracts agreed with earlier." He said Russian firms "are still paying, but sometimes with a delay." And when they pay, he added, they do it often in rubles, which only adds to Motor-Sych's problems. Matvienko added that "like many other companies," his is having trouble exchanging rubles paid by Russian firms. He noted that his company sometimes has to exchange into a third currency--a so-called multi-stage currency exchange --in order to get the currency it needs to make its own payments. The Ukrainian government has curtailed sales of dollars and the conversion of rubles on Ukrainian exchanges, making the Russian currency essentially worthless. There are no clear prospects of a change in that situation any time soon. The author is a Kyiv-based RFE/RL correspondent. 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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