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RFE/RL NEWSLINE Vol 2, No. 195, Part I, 8 October 1998
___________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 195, Part I, 8 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 * PRIMAKOV TAKES CHARGE OF FINANCIAL LEVERS * TURN-OUT FOR NATIONAL PROTEST LOWER THAN PREDICTED * KAZAKH PRESIDENTIAL ELECTIONS SCHEDULED FOR JANUARY End Note KAMCHATKA: STUNNING BEAUTY, STAGGERING WASTE xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA PRIMAKOV TAKES CHARGE OF FINANCIAL LEVERS. Prime Minister Yevgenii Primakov and First Deputy Prime Minister Yurii Maslyukov seem to have divided the tasks of former Deputy Prime Minister Aleksandr Shokhin between themselves, with Primakov taking primary responsibility for financial policy. "Izvestiya" concluded on 8 October that Primakov "has not tempted fate by entrusting the most crucial sector of rescue work in the Russian economy to his deputies." As a consequence, Primakov has the "power to pursue a tough financial policy." According to Interfax, Primakov will personally oversee the work of the Finance and Justice Ministries, the Federal Tax Service, and coordinate the implementation of military reform. Maslyukov will manage industrial policy, military-technical cooperation and trade, and foreign economic relations, including dealing with the international financial institutions. He will also coordinate the work of the Ministries of Economy, Trade, and Anti-Trust Policies. On 6 October, President Boris Yeltsin reappointed Viktor Orlov minister of natural resources. JAC TURN-OUT FOR NATIONAL PROTEST LOWER THAN EXPECTED. More than 600,000 people participated in the national day of protest on 7 October, according to Interior Ministry figures, Russian agencies reported. Even if government figures have seriously understated the number of actual participants, the turn-out was significantly less than organizers had predicted (see "RFE/RL Newsline," 7 October 1998). Rallies and marches were held in 500 cities and villages in 78 regions, for the most part without serious incident, according to Major-General Aleksandr Chekalin of the Interior Ministry. "Izvestiya" on 8 October criticized regional governors such as Krasnoyarsk Governor Aleksandr Lebed and Kemerovo Governor Aman Tuleev for participating in marches, commenting that "regional leaders have pretended that they have nothing to do with Russian power structures and therefore are not at all responsible for what is happening throughout the country and in their regions." LUKoil and Oneksimbank are major investors in "Izvestiya." JAC RUSSIA NOT TO DEPLOY TROOPS IN YUGOSLAVIA. Novgorod Governor Mikhail Prusak, chairman of the Federation Council's International Affairs Committee, told Interfax on 7 October that the council will not allow Russian troops to be deployed in Yugoslavia. Under the constitution, Russia cannot send troops to fight abroad without the Federation Council's approval. "Kommersant-Daily" reported on 8 October that the General Staff is not formulating any plans to use Russian troops in Kosova and that the only Russian warplanes capable of getting to and from Kosova and performing a combat mission are planes better equipped for destroying than defending Yugoslav facilities on the ground. Meanwhile, President Boris Yeltsin telephoned British Prime Minister Tony Blair, and Prime Minister Primakov called Italian Prime Minister Romano Prodi to promote Russia's position against NATO air strikes. JAC ARAFAT VISITS MOSCOW. Palestinian leader Yasser Arafat arrived in Moscow on 8 October for meetings with President Yeltsin, Prime Minister Primakov, Federal Council Chairman Yegor Stroev, Duma chairman Gennadii Seleznev, and Patriarch Aleksii II of Moscow and All Russia. After President Yeltsin's meeting with Arafat, according to Interfax, his foreign policy aide, Sergei Prikhodko, announced that Yeltsin will appoint an envoy to the Middle East, who will regularly visit Middle Eastern capitals. Arafat invited Russia to send a representative to Washington on 15 October to attend a meeting with representatives from the U.S., Israel, and Palestine. JAC OIL COMPANIES SET TO MERGE? In an interview with "Nezavisimaya gazeta" on 7 October, LUKoil chairman Vagit Alekperov predicted that Russia's leading oil companies will be forced to consolidate in order to weather the current economic crisis and compete on international markets. He called for the creation of two or three truly international oil companies. Gazprom chairman Rem Vyakhirev told reporters on 6 October that he believes a 5 percent block of shares in his company may be sold within two months so that the government can raise needed revenue. He added that a deal on writing off Gazprom's tax debt is close to completion. He also revealed that Gazprom had to cut its investment program by two-thirds because of lower fuel prices and Russia's economic crisis. JAC RUSSIA TO BUILD NEW MISSILES, SUBS... At a news conference on 6 October, First Deputy Prime Minister Maslyukov called for the ratification of START II and the construction of 35-45 new Topol-M missiles every year starting in 2000 and several new submarines for the Navy. The new missile system is necessary because existing weaponry is aging and will start to be deactivated within two or three years, he commented. JAC ...AND NEGLECT CONVENTIONAL FORCES? Writing in "Segodnya" on 7 October, military analyst Pavel Felgengauer critiqued Maslyukov's proposals as unrealistic. He argued that "six intercontinental warheads would provide sufficient nuclear deterrence against the U.S., but Maslyukov is demanding more than 40 strategic nuclear missiles a year." He added that the "Russian military-industrial complex can survive only as a small, separate, narrowly specialized sector. If [Russia] attempts to continue the Soviet tradition of combining the development and production of TV sets and teleguidance for aviation bombs at the same firm, then televisions will spontaneously explode as they used to and half the bombs will miss their target." The other danger, Felgengauer concluded, was that if all of Russia's resources are used on nuclear deterrent forces, then conventional forces will suffer and Russia will be vulnerable to attack by a thousand well- trained guerrillas. JAC WESTERN BANK BRANCHES ENSNARED BY DEFAULT. According to an "Interfax 100" report, the Russia-based subsidiaries of Western banks were among the most heavily invested in Russian government securities and therefore were among the hardest hit when the Russian government imposed a moratorium on debt payments, the "Moscow Times" reported on 7 October. Sberbank lost the largest amount, since it held 101.4 billion rubles ($6.4 billion) in Russian treasury bills and state securities, which accounted for 52 percent of its total assets. The Russian subsidiaries of Chase Manhattan and Republic National Bank of New York also had invested more than half of their assets in government bonds. SBS-Agro and Uneximbank both had only 19 percent of their assets invested in government bonds, but these banks have experienced other problems with contracts on Eurobonds and forward currency transactions. JAC LUZHKOV GAINING SUPPORTERS. Although Moscow Mayor Yurii Luzhkov has not officially declared he is running for president, his candidacy is gaining new endorsements. Mikhail Lapshin, Agrarian Party leader, said his party will support Luzhkov for president, provided Luzhkov assists farmers with concrete measures, "Nezavisimaya gazeta" reported on 6 October. Interfax reported the next day that Mikhail Nagaitsev, chairman of the Moscow Federation of Trade Unions, declared at a rally that trade unions will advance Luzhkov's candidacy for president. Meanwhile, according to ITAR-TASS, Luzhkov expressed his profound admiration for Yabloko leader Grigorii Yavlinskii and his economic program, calling him a "very serious, solid, highly respected political figure" capable of leading the country out of its current crisis. JAC SACHS SLAMS RUSSIA, FUND. In an interview with "Noviye izvestiya" on 7 October, Harvard University professor Jeffrey Sachs accused Russian government officials of "squandering" $50 billion to $100 billion of credits from the U.S. and international financial institutions, funneling the money into foreign bank accounts and real estate. Sachs, a former economic adviser to the government headed by then Prime Minister Yegor Gaidar, accused the IMF of injecting billions of dollars into Russia but not into its economy. He added that many people believe that he criticizes the Russian government because he no longer has the opportunity to work with it. In fact, he said, he quit his position because he could no longer tolerate corruption on such a massive scale. JAC RUSSIAN FAR EAST LOSES U.S. AIR CONNECTION. Alaska Airlines suspended regular flights between Kamchatka and the U.S. on 8 October. According to ITAR-TASS, the airline has been having trouble filling its planes since Russia's economic crisis began. JAC CHECHEN OPPOSITION TO PRESS FOR MASKHADOV'S RESIGNATION. Thirty-five Chechen opposition groups have formed a special coordinating body to press for the resignation of Chechen President Aslan Maskhadov, Interfax reported on 7 October. Denying that it would employ force, the new coordinating body said that it will discuss its demands with the parliament the next day. In other developments, Arbi Barayev, the head of the Islamic Regiment combat group, was severely wounded on 7 October in what the authorities said was an assassination attempt, ITAR-TASS reported. And the Russian envoy to Chechnya, Georgii Kurin, denied reports that a meeting has been scheduled between Maskhadov and Russian Prime Minister Primakov. PG TRANSCAUCASUS AND CENTRAL ASIA KAZAKH PRESIDENTIAL ELECTIONS SCHEDULED FOR JANUARY. A joint session of the Kazakh parliament on 8 October approved holding presidential elections on 10 January 1999, RFE/RL correspondents in Astana reported. That vote was originally slated to take place in December 2000. Opposition parties and movements are expected to protest that decision. One day earlier, deputies approved amendments to the constitution extending the terms in office of both houses of the parliament and the president (see "RFE/RL Newsline," 7 October 1998). They also struck the provisions that a president may not be older than 65 and may not serve more than two terms in office. BP NAZARBAYEV APPROVES DECISION. President Nursultan Nazarbayev has approved the parliament's decision to bring the presidential election forward, thereby shortening his current term in office by almost two years. Nazarbayev was elected once as president following independence in 1991, and his term in office was extended through a referendum in 1995, which also stipulated that the presidential election would take place in December 2000. BP UZBEKISTAN TO INTRODUCE MONTHLY REPORTS ON FOREIGN TRADE. President Islam Karimov has signed a document stipulating that companies must produce monthly reports on their foreign trade activities, Interfax reported on 7 October. Starting in January 1999, "both public and private economic entities" are required to submit monthly reports of their exports, imports, and currency flows. Special legislation will be introduced to punish company heads who do not meet the deadlines. BP KYRGYZ CHIEF BANKER PAINTS GLOOMY PICTURE. The chairman of Kyrgyzstan's National Bank, Marat Sultanov, was quoted by ITAR-TASS on 8 October as saying "we were prepared for the Russian crisis in Kyrgyzstan but not on such a scale." Sultanov noted that the Russian Federation is his country's main trading partner, accounting for 25 percent of Kyrgyzstan's foreign trade. He said the value of the national currency, the som, has decreased by 17-18 percent since the beginning of the Russian economic crisis. And he revealed that Kyrgyzstan was able to prop up the som by using bank reserves, "which then decreased by 7-8 percent." BP DEPUTY SPEAKER OF ARMENIAN PARLIAMENT RESIGNS. As the parliament met for the third day to consider opposition demands that the government's privatization program be changed, Albert Bazeyan, a deputy speaker of that body, announced his resignation on 7 October, RFE/RL's Armenian Service reported. Bazeyan, a leading figure in the Yerkrapah group, which supports President Robert Kocharian, said that he "does not want to participate in political games." Following his announcement, the parliament narrowly rejected the opposition's changes to the privatization program. PG ONLY 7,000 PARTICIPATE IN ARMENIAN COMMUNIST RALLY. Some 7,000 communist supporters--far fewer than organizers had predicted--participated in a demonstration in Yerevan on 7 October to express "solidarity" with protesters in Russia and to demand the resignation of the Armenian government, RFE/RL's Armenian Service reported. Communist party leader Sergei Badalian told the crowd in Yerevan that Armenians must place their hopes on the "victory of the Russian people." PG ARMENIAN AIRLINE IN TROUBLE. Vyacheslav Yaralov, the director-general of Armenian Airlines, told RFE/RL's Armenian Service on 7 October that his enterprise needs at least $50 million in the immediate future to overcome serious financial difficulties, replace aging Soviet-made aircraft, and acquire Western planes. Yaralov acknowledged that the airline lost $2 million in the first six months of 1998. PG ARMENIA ASKS COUNCIL OF EUROPE TO SET UP CAUCASUS MEETING. Armenian parliamentary chairman Khosrov Arutyunyan on 7 October asked the Council of Europe to organize a joint meeting of the parliamentary speakers of Armenia, Azerbaijan, and Georgia, ITAR-TASS reported. Arutyunyan made the proposal in Tbilisi, where he is taking part in an expanded meeting of the bureau of the OSCE Parliamentary Assembly. PG ALIEV AGAIN REJECTS AZERBAIJANI ELECTION DELAY. Arguing that the Azerbaijani Constitution gives him no choice, President Heidar Aliev on 7 October again rejected opposition demands that the presidential poll be postponed, Interfax reported. Aliev's statement came on the date the opposition had declared as a deadline for any announcement. In other remarks, Aliev noted that the country's hard currency reserves rose to $500 million in recent years, up from only $2 million in 1994. He added that inflation has fallen to nearly zero, and that the manat has strengthened against the dollar. And he also commented that he sees no reason to change the current government, which he said "consistently and intelligently implements the course of reforms." PG END NOTE KAMCHATKA: STUNNING BEAUTY, STAGGERING WASTE by Floriana Fossato The annual salmon run on Kamchatka Peninsula in Russia's Far East brings millions of salmon back to their spawning grounds after three or four years at sea. This year, the salmon run is particularly good. "In fact, the best in the last 40 years," say officials at Kamchatka's fish resources department. As Russia's financial and political crisis deepens, it is clear that fish and vegetables, mainly potatoes, from private plots will be the main sources of food for most of the 400,000 people living on the peninsula, which lies some 11,000 kilometers to the east of Moscow. Kamchatka, like other Russian regions, imports a large amount of foodstuffs from abroad, says Aleksandr Potievskii, head of foreign economic relations at the regional administration. Until August, when Russia in effect defaulted on its debt and devalued the ruble, importing goods from abroad was cheaper than bringing them from the "mainland," as continental Russia is called on the peninsula. According to Potievskii, transport tariffs across Russia made goods more expensive than those from abroad. As a result, food imports came mainly from the U.S., South Korea, China, and Japan. Vyacheslav Zviagintsev, manager of the private Krechet tourist agency, one of Kamchatka's longer established companies, said in August that even importing helicopter fuel from the U.S was "cheaper than importing it from Russia." Following a controversial agreement with the regional administration, Krechet has the exclusive right to bring tourists by helicopter to the Valley of Geysers, one of Kamchatka's most fascinating and most frequently visited sites. However, foreign imports had to be paid for in hard currency. Now, with Russia's banking and payments sector in effect paralyzed, most traders have reportedly had to cease their operations. Many are sinking in a sea of debt. According to Potievskii, revenues from tourism, which last year contributed 10 percent to the regional budget, will also fall, since the number of foreign and Russian tourists is set to decrease sharply. Potievskii said that some 90 percent of foreign tourists came from Japan, a country that itself is now deeply mired in economic difficulties. He added that the regional administration wanted to improve the tourist infrastructure, including upgrading the local airport. As for Russian tourists, only in the past two years had the country's emerging middle class started exploring Russia's best preserved wilderness, featuring 160 dormant and 29 active volcanoes as well as hot springs and a rich wildlife. Now, as the middle class's profits and prospects are being wiped out, Kamchatka's plans and foreseeable tourism revenues, estimated at more than $1 billion in the next decade, are also likely to suffer, at least in the short term. The main source of revenue for both the budget and the population of Kamchatka has traditionally been its fisheries, not tourism. According to official data, more than 80 percent of budget revenues originate in the fishing industry, and members of every family are involved in one way or another in the industry. Much of the fish is sold abroad, mainly to Japan and in many cases in deals made directly at sea. Fishing authorities are widely accused of involvement in the activities of black- market traders. The phenomenal salmon run of this year may have proven crucial in helping Kamchatka's economy. But the evidence suggests that profits will be strangled by a lack of adequate fish-processing and other facilities, poaching, and bureaucratic ineptitude. The spectacle of rivers brimming over with salmon is remarkable, but the sight of trucks dumping tons and tons of unprocessed dead fish is appalling. The salmon are caught and their precious red eggs, which will be sold as caviar, are extracted, but the fish themselves are literally "good for nothing" as the available facilities are unable to process them in large quantities. Moreover, there are no refrigerating and transport facilities that would enable small fishing companies to take the produce to markets outside Kamchatka. "Such blind exploitation and waste of natural resources is criminal," said Masha Vorontsova, Russian coordinator of the International Fund for Animal Welfare. "It is a sad sight indeed," concedes Pavel Gordeychuk, head of fishing expertise at Kamchatka's Federal Department for Protection and Reproduction of Fish Resources and Fisheries Regulations. "However," he explains, "since the breakup of the Soviet Union, fish processing facilities on land have collapsed, as previously state-run fishing companies were privatized and only now, amidst huge problems, are small steps bring taken to revive the sector." To compensate the people of Kamchatka who are too old or unhealthy to help fishing companies with this year's salmon run, authorities have organized the free transport and distribution of tons of fish to the regional capital, Petropavlovsk Kamchatskii. People elsewhere in the region, along with the wild bear population of Kamchatka, are stocking up on fish as best they can in order to make it through the long winter. This is the first article in a three-part series on Russia's Far East by Floriana Fossato, an RFE/RL correspondent based in Moscow. 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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