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RFE/RL NEWSLINE Vol 2, No. 205, Part I, 22 October 1998
________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 205, Part I, 22 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 * YELTSIN'S TRAVEL PLANS 'TIGHTENED' * RUSSIAN STOCKS FLOAT UPWARDS * FIVE GEORGIAN INSURGENTS ARRESTED End Note: RUSSIA'S FINANCIAL CRISIS THREATENS REGIONAL PRESS xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA YELTSIN'S TRAVEL PLANS 'TIGHTENED.' President Boris Yeltsin's trip to Austria is now scheduled to last only one day, instead of two, as originally planned, presidential press secretary Dmitrii Yakushin told reporters on 22 October. Yakushin said that the trip will be very intensive and dismissed the suggestion that it had been shortened, saying that "the schedule has simply been tightened." In its October issue, "Argumenty i fakty" cited Foreign Ministry sources as saying Russia will be able to procure money from the EU only if Yeltsin shows up in Austria in person. The publication claimed that "some Kremlin officials understood the importance of the trip" and that "Boris Nikolaevich is now being pumped full of medicines to put him in good shape for at least a couple of days." JAC DUMA PROTECTS INDIVIDUALS' SAVINGS. The Duma on 21 October passed a law guaranteeing individuals' private deposits in Russian banks. The legislation guarantees payment in full of dollar or ruble savings plus interest. It also protects wages or pensions deposited to bank accounts after 1 September. JAC RUSSIAN STOCKS FLOAT UPWARDS. Russian stocks continued to strengthen on 21 October, profiting from overall bullishness on world markets and the perception of traders that some Russian companies are "bargains" at current share prices. Among the top performers was Rostelecom, which gained 11 percent. The benchmark stock index rose 3 percent, according to Bloomberg, and the Russia index has become the world's seventh-best performing index, having risen 25 percent since 22 September. Despite reports of tightened government control over Russian oil company financing (see below) shares in LUKoil and Surgutneftegaz surged, gaining 10 percent and 14 percent respectively, according to Interfax. JAC ARE TAXES COLLECTED PAPER OR REAL? Federal Tax Service head Georgii Boos told reporters on 21 October that tax collection improved this month because the government successfully negotiated agreements with the country's largest enterprises. For example, the tax service froze the bank accounts of 14 of the country's oil companies and will unfreeze them only if the companies agree to make payments every 10 days. Boos's estimation of the work accomplished by his service apparently conflicts with that of the Finance Ministry. "Izvestiya" reported on 21 October that Finance Minister Mikhail Zadornov wants "taxes paid into the budget and not 'paper' taxes based on mutual offsets as Boos wants to report." And Deputy Defense Minister Oleg Vyugin said that "the government has taken no substantial steps to improve tax collection" and that a significant increase in tax revenue should not be expected. LUKoil and Oneksimbank are major investors in "Izvestiya." JAC OIL COMPANIES LOSING BATTLE OR WAR? Russian oil companies are being pressured not only by the Federal Tax Service. Finance Minister Zadornov told Ekho Moskvy on 21 October that his ministry wants to impose an export duty of $6.50-$7.00 per ton of crude oil. According to Zadornov, the tax would reduce net profits by no more than 30-40 percent. "Izvestiya" reported on 15 October that the oil companies had won an earlier battle to squash higher taxes by appealing to Deputy Prime Minister Vladimir Bulgak. The newspaper argued that the "victory of the oil dealers" was likely to be only "temporary." It also noted that a draft law on the critical situation in the oil industry failed to pass in the State Duma, primarily because not enough deputies were present to vote for it. JAC GOVERNMENT AWAITS WORD FROM IMF, PARIS CLUB. Finance Minister Zadornov told Ekho Moskvy on 21 October that he expects Russia to receive part of the scheduled $4.3 billion tranche from the IMF this year. He added that even if Russia does not receive any credits, it still plans to set aside "more than $2 billion from the fourth-quarter budget to service foreign debt." According to Reuters, this amount would cover only payments for recent debts and not those inherited from the Soviet Union. The Russian government hopes to persuade the Paris Club to accept a postponement of any payments of the latter until the end of the year. Like the IMF, the Paris Club is waiting for Russia to produce an economic program that would explain how the debt would ultimately be repaid. JAC RUSSIAN POSITION ON KOSOVA OUTLINED. Russian diplomats continue to object to what they perceive as NATO interference in tasks more appropriately performed by the OSCE. Russian diplomatic sources told Interfax on 21 October that Russia will not take part in the air monitoring of Kosova as long as the NATO decision to put its forces on high alert for a strike in Yugoslavia remains in force. The sources claimed that they were taken aback by statements of U.S. diplomats that NATO forces stationed outside Kosova will be available to assist in the rapid evacuation of monitors. They pointed out that Yugoslav authorities have already agreed to provide security for the observers and assist them with evacuation. They emphasized that the OSCE rather than NATO must provide for security for the observer mission. JAC TRUCKERS STALLED. Hundreds, possibly thousands, of Russian truck drivers and their vehicles are stranded throughout Western Europe because they cannot finance their return home. The companies who hired them have canceled planned shipments following the devaluation of ruble. This has left the truckers they hired without any financial means of returning to Russia. The Russian Foreign Ministry has instructed its embassies in Germany, France, the Netherlands, Belgium, Britain, and Ireland to provide financial support to the drivers, Interfax reported on 21 October. JAC LUKASHENKA LANDS IN SIBERIA. Belarusian President Alyaksandr Lukashenka began a three-day trip to Siberia on 21 October, stopping first in Omsk. According to ITAR-TASS, Lukashenka is expected to sign an agreement on economic, trade, scientific, and cultural cooperation with Omsk Oblast. Belarus wants to supply Siberia with trolley-buses, shoes, and furniture in exchange for tires, airplanes, aircraft engines, as well as communications and farm equipment. On 22 October, Lukashenka declared his firm support for President Yeltsin and for the strongest possible union between Russia and Belarus. According to Interfax, he urged the Russian press and politicians to stop "toying with the idea of early resignation" for Yeltsin (see also Part II). JAC ILYUMZHINOV TO SEEK ANOTHER PRESIDENCY. Just days after reaffirming his intention to run in the Russian presidential elections in 2000, Republic of Kalmykia President Kirsan Ilyumzhinkov declared that he will also seek the presidency of the Russian Soccer Union (see "RFE/RL Newsline," 19 October 1998). Ilyumzhinov is already president of the World Chess Federation and hinted that he will bolster the soccer league's current budget of $5 million. Ilyumzhinov built what some have described as lavish facilities in his republic to host this year's chess matches. Ilyumzhinov said, according to ITAR-TASS, that he was "ashamed" by the nation's soccer team, particularly by its loss to Ukraine. "How is it possible in a nation of 150 million that 11 good players could not be found?" he asked. JAC BROADCASTING BLACKOUT IN EASTERN SIBERIA. More than 1 million residents in Chita Oblast have been greeted with blank television screens and silent radios since striking workers at a regional broadcasting center stopped all television and radio transmissions to protest unpaid wages, ITAR-TASS reported on 21 October. Regional authorities are appealing to the workers to employ some other tactic to publicize their cause. JAC TRANSCAUCASUS AND CENTRAL ASIA FIVE GEORGIAN INSURGENTS ARRESTED. Five suspected participants in the 19 October mutiny have been arrested in the west Georgian region of Mingrelia, but rebel leader Akaki Eliava and several supporters are still at large, Caucasus Press reported on 22 October. Abkhaz security officials told Interfax and ITAR-TASS on 21 October that they have strengthened controls on the border between Abkhazia and the rest of Georgia and can guarantee that Eliava has not crossed into Abkhaz territory. If he and his supporters attempt to do so, they will be arrested or killed if they resist arrest, Abkhaz Security Minister Astamur Tarba told Interfax. LF RUSSIA, ZVIADISTS DENY INVOLVEMENT IN MUTINY. Russian First Deputy Prime Minister Vadim Gustov and an unnamed Russian Foreign Ministry spokesman have both denied any Russian involvement in the Georgian insurrection, Interfax reported on 21 October. Georgian State Chancellery official Archil Gegeshidze told Interfax that there is indirect evidence that "some forces" in Russia provided assistance to the rebels, whom he identified as former President Zviad Gamsakhurdia supporters who arrived in Georgia from Moscow with large amounts of U.S. dollars. But the Round Table-Free Georgia coalition, founded by Gamsakhurdia in 1990, has denied any role in the mutiny, which it suggests was stage-managed by the Georgian authorities, Caucasus Press reported on 21 October. Georgian presidential adviser Levan Aleksidze pointed out that Russian political analysts Andranik Migranian and Konstantin Zatulin had earlier predicted an attempt to destabilize Georgia to thwart oil exports (see "RFE/RL Caucasus Report," vol.1, no. 31, 29 September 1998). LF ABKHAZIA TO ISSUE OWN PASSPORTS. The unrecognized Republic of Abkhazia is currently having its own passports printed in France, Caucasus Press reported on 21 October, quoting Georgian deputy parliamentary chairman Vakhtang Kolbaya. Kakha Chitaya, chairman of the Georgian parliament committee on foreign affairs, said that the willingness of a French company to print the passports constitutes non-recognition of Georgia's territorial integrity. He hinted that Georgia may make a formal protest to the French government. LF AZERBAIJAN, TURKEY SEND MIXED SIGNALS ON EXPORT PIPELINE. Azerbaijan State Oil Company President Natik Aliev told Turan on 21 October that no firm commitment to proceed with construction of the so-called Main Export Pipeline for Azerbaijan's Caspian oil will be signed in Turkey on 29 October. Instead, Aliev said, the presidents of Azerbaijan, Turkey, Georgia, and Kazakhstan will issue a joint statement pledging their political support for Trans-Caspian and Trans-Caucasian oil and gas pipelines. Aliev said that proposals for routing the MEP via Russia were submitted too late and that the routes being considered are via Georgia and via Turkey. Turkish Energy Minister Cumhur Ersumer told journalists in Baku on 19 October that a decision to route the MEP from Baku to the Turkish Mediterranean port of Ceyhan will be signed when Azerbaijani President Heidar Aliev visits Turkey for the 75th anniversary celebrations of the founding of the Turkish Republic on 29 October, Interfax reported. LF KAZAKHSTAN, U.S. ENDORSE BAKU-CEYHAN VARIANT. Kazakh Prime Minister Nurlan Balghymbayev held talks in Tbilisi on 21 October with his Georgian counterpart, Vazha Lortkipanidze, and President Shevardnadze on the export of Kazakh oil via the existing pipeline from Baku to the Georgian port of Batumi, RFE/RL's Almaty bureau reported. Balghymbayev will also visit Baku, where his country's ambassador Rashid Ibraev told Turan on 21 October that one Japanese and one U.S. company have already committed a total of $500 million toward the construction of a Trans-Caspian oil pipeline. Ibraev said that at present, Kazakhstan exports some 50 million metric tons of crude by tanker and rail via Azerbaijan and Georgia. Speaking in Ankara on 21 October, U.S. Undersecretary of State Stuart Eizenstat again affirmed the U.S. preference for the Baku-Ceyhan route, which he termed optimal from the environmental, economic, and strategic standpoints, AP reported. Ersumer said in Baku two days earlier that the cost of that project is far lower than media estimates of $4 billion. LF ARMENIAN GOVERNMENT, BANKERS DISCUSS ECONOMIC SITUATION. The heads of commercial banks operating in Armenia met the country's leadership on 21 October to discuss the economic situation and the government's fiscal-monetary policies, RFE/RL's Yerevan bureau reported, citing the presidential press service. The participants "stressed the need to improve banking legislation and tighten law and order in the banking sector." Responding to unspecified concerns expressed by the bankers, President Robert Kocharian called for the further strengthening of the "stable banking system," which he called one of Armenia's key achievements. Analysts suggest that the economic turmoil in Russia is affecting Armenia's market for short-term government bonds, which until recently was dominated by Russian investors who have now withdrawn their capital from Armenia. LF KAZAKHSTAN REPORTS POOR GRAIN HARVEST. Kazakhstan's 1998 grain harvest was one of the worst in the last 40 years, Reuters reported on 21 October. According to preliminary figures, only 7.3 million tons are expected to be gathered this year, compared with 12.3 million tons in 1997. The 1998 plan was for 14 million tons but bad weather and problems with locusts during the summer have had a negative impact on the harvest. The head of the Agricultural Ministry's information service, Aleksandr Korablin, said next year's harvest may be worse, as banks and companies will now be reluctant to invest in the agricultural sector. BP NAZARBAYEV MAKES NEW APPOINTMENTS. Kazakh President Nursultan Nazarbayev appointed Asylbek Beysenbayev as his press secretary on 20 October, RFE/RL correspondents in Astana reported. Beysenbayev replaces Kairat Sarybayev, who is now a deputy foreign minister. BP UN APPEALS FOR AID FOR TAJIKISTAN. The UN has issued an appeal to the international community to give aid to Tajikistan, ITAR-TASS reported on 22 October. According to the UN, 80 percent of Tajikistan's population lives on the poverty line and nearly half are unemployed. Pensioners survive almost exclusively on aid distributed by UN organizations working in the country. So far in 1998, those organizations have raised $6.4 million in aid. Secretary-General Kofi Annan has said $34 million is needed and has urged those who have promised aid to Tajikistan to fulfill their pledge. BP KYRGYZ JUSTICE MINISTRY CLOSES DOWN THREE NEWSPAPERS. The Kyrgyz Justice Ministry has shut down three newspapers for "insulting the religious feelings of believers," ITAR-TASS reported on 22 October. The ministry claimed that "Limon," "Paishanba," and "Kattamadaidzhest" contained erotic material that could be considered offensive to some people. "Paishanba" is owned and published by the same group that put outs the well-known weekly "Asaba," which this year has also run into difficulties with the authorities. The founder of both newspapers, Melis Eshimkanov, said "it's just the latest attempt by the authorities to strike out at undesirable opponents." Eshimkanov added that "erotic publications can be banned on religious grounds, but first there is a need to change the Kyrgyz Constitution, in which it is written that the country is secular state." BP REGIONAL AFFAIRS BEREZOVSKII'S CIS REFORM PLAN REJECTED. At a meeting in Minsk on 21 October of the working group on CIS reform, CIS Executive Secretary Boris Berezovskii's blueprint for reforming the commonwealth was unanimously rejected by representatives of the 12 CIS member states, Interfax reported. According to Belarusian representative Sergei Posokhov, Berezovskii's proposal to create a Coordinating Consultative Committee merely "mechanically unites" the present functions of the Executive Secretariat and the CIS Inter-State Economic Committee but contains no new ideas on how to expedite CIS integration. Posokhov said that working group members took exception to Berezovskii's suggestion that representatives at CIS summits be seated in accordance with their country's financial contributions to the organization. Addressing the group, Berezovskii ruled out any changes to the present CIS charter. Such changes were also rejected by a session of the CIS Inter- Parliamentary Assembly several days earlier, "Nezavisimaya gazeta" reported on 20 October. LF END NOTE RUSSIA'S FINANCIAL CRISIS THREATENS REGIONAL PRESS by Paul Goble The slow but steady progress Russia's privately owned regional newspapers have made in the seven years since the collapse of communism has been undermined in less than a month by that country's financial crisis. Across the country, some of these newspapers have been forced to close. Many more have cut back in size, frequency, and staffing. And still a larger number have been forced to drop links to the Internet and subscriptions to national and international wire services. Not surprisingly, the publishers of many of those newspapers have concluded that the only way they can survive is to make deals with local businesses or seek government support. In such an event and if the crisis deepens, they are likely to be exploited by both local businesses and the government. Taken together, these developments threaten the survival of freedom of the press across much of the Russian Federation. That sweeping prediction arises from the findings of a recent survey released by the National Press Institute, a Moscow-based press watchdog agency. Last month, that body surveyed editors and publishers across Russia to see how they were coping with the collapse of the ruble, the banking system, and public confidence in key institutions. It reached three main conclusions. First, the privately owned regional press was in trouble even before the current crisis hit. Most faced stiff competition from state-owned monopolies that denied them the necessary autonomy to do their jobs. Many of those newspapers were and are managed by journalists with little experience in running a business and who had done little to build the kind of cash and other reserves necessary to weather any serious downturn. And few had been able to attract the kind of advertising revenues that would free them from dependence on either subscriptions or subsidies. There are several reasons for this: Russian enterprises have little experience with advertising. The country's tax system does little to encourage them to spend money on commercial advertising. And most publishers have done little to develop this market. Second, the current crisis has already claimed its first victims and will claim more as it continues. Because so few newspapers had any cash reserves, the impact of the economic crisis was hard and immediate. Faced with a decline or even complete loss of advertising revenue and dramatically higher costs for paper and printing, newspapers have laid off staff, cut back in their print runs, and eliminated subscriptions to major news organizations. And although relatively few of these newspapers have closed so far, the Russian public has lost an important window on the world at precisely the time when it most needs one. Third, the consequences of this crisis, even if it is relatively short-lived, seem likely to prove far more severe to the future of freedom of the press in Russia than many appear to expect. By highlighting the volatility of advertising as a source of revenue, the crisis has led ever more publishers and editors to turn back to single businesses or governments for assistance. That may save some newspapers in the short run but it guarantees that those rescued in this way will be less free to report the truth in the future. By underscoring the weakness of the privately-owned press to business cycles, the National Press Institute found, the crisis has undercut the authority of the press itself and thus sent much of it on a continuing downward spiral. And by forcing so many journalists out of their traditional work, the crisis has called attention to something that few in Russia have wanted to take seriously: namely, the intimate relationship between the strength of the market and the strength of the media. Indeed, the National Press Institute underscores this final point by quoting former U.S. President Herbert Hoover. Speaking just before the onset of the Great Depression in the United States in 1929, President Hoover said that "Free speech does not live many hours after free industry and free commerce die." That is a lesson the Russian regional press is learning in a most difficult school. 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. 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