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RFE/RL NEWSLINE Vol 2, No. 216, Part I, 9 November 1998
___________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 216, Part I, 9 November 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 * U.S. CALLS FOR REALISM ABOUT RUSSIA * DEBT NEGOTIATORS REACH COMPROMISE * TAJIK MILITARY BEGINS MOP-UP OPERATION IN NORTH End Note: RUSSIAN CRISIS FUELS LATVIAN ECONOMIC WORRIES xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA U.S. CALLS FOR REALISM ABOUT RUSSIA... In an address to Stanford University on 6 November, Deputy Secretary of State Strobe Talbott suggested the U.S. and the West adopt a realistic but not pessimistic perspective on events in Russia. He asserted that Russia is not necessarily "a troika- wreck waiting to happen" and called for "realism about the complexity of the challenges and uncertainty Russia faces." He said it is still "too early to proclaim Russian democratization irreversible" since "the longer the economic meltdown continues," the harder it will be for Russia to sustain the institutions and habits required for "political normalcy." While he cautioned that the U.S. and Russia "may be in for heightened tensions over security and diplomatic issues," he also noted that "virtually every issue between [the U.S. and Russia] can be boiled down to matters of mutual interest and mutual benefit." JAC ...AND INVESTMENT IN OIL INDUSTRY. Talbott also concluded that Russia will "never again be a monolith" because of its pattern of regional differentiation with "oases of liberalization" in Nizhnii Novgorod, Samara, Leningrad, and Sverdlovsk Oblasts and other "Jurassic-like theme parks of Soviet-era policies and personalities," such as Kursk, Krasnodar, Belgorod, Pskov, and Volgograd Oblasts. He noted that while aid from institutions such as the IMF will have to wait until Russia appears willing "to make difficult structural adjustments," the U.S. will remain engaged in key areas. He said that Western energy companies continue to want to invest into Russia's oil sector, which will need close to "$15 billion a year for the next seven or eight years just to get back to 1988 production levels." JAC DEBT NEGOTIATORS REACH COMPROMISE. Foreign creditors and Russian government negotiators agreed not to link a restructuring of the Russian government's debt on short-term treasury bonds to the unfulfilled forward currency contracts of Russian commercial banks. According to ITAR-TASS on 6 November, creditors also accepted a Russian government proposal for a new kind of ruble-denominated bond. Deputy Finance Minister Mikhail Kasyanov explained that as a result of this agreement, Russia's foreign debt will not grow. Kasyanov added that at least one or two more rounds of talks are needed to work out the precise conditions for issuing the new ruble bonds. On 7 November, the "Moscow Times" quoted bank analysts as saying the Russian government has apparently decided that it can no longer afford to protect Russian banks from their creditors. Those creditors are likely to try to seize assets held outside Russia. JAC JAPAN READY TO ISSUE FIRST LOAN TRANCHE TO RUSSIA. Japanese Prime Minister Keidzo Obuchi told his Russian counterpart, Yevgenii Primakov, in a telephone conversation on 6 November that the first tranche of a $1.5 billion loan will soon be released, Interfax reported. The first tranche, worth $800 million, is to be granted by Japan's Export-Import Bank. The same day, Russia's Trade Ministry announced that trade with Japan will likely decrease this year. Figures for January- June 1998 showed the volume of trade at $1.9 billion, down14.5 percent on the 1997 level. Russian exports to Japan dropped by 28 percent, to $1.34 billion, in the first half of 1998, while imports from Japan increased by 43.3 percent, to $606 million during the same period. The volume of trade between the two countries last year was about $5 billion. BP U.S., RUSSIAN FOOD DEAL FINALIZED. Russian and U.S. officials on 6 November reached agreement on food aid to Russia, despite a last minute dispute over taxation of the shipments (see "RFE/RL Newsline," 6 November 1998). Russian officials agreed not to levy taxes on the aid at the border, while the procedure for taxing the goods once they are on Russian territory will be determined later, according to Deputy Prime Minister Gennadii Kulik. The U.S. had insisted that any proceeds from the food aid be directed to the Pension Fund. Kulik said that Russia is "ready to give the money to the Pension Fund and spend it on social programs." Expanding on this point, Kulik told Interfax on 7 November that part of the earnings "will go to support national poultry breeding and other agribusinesses." He added that the U.S. is ready to continue talks on a second installment of food aid. JAC TOUGH CONDITIONS TRIGGER POPULATION DRAIN IN FAR EAST. U.S. and Russian negotiators to food talks focused in part on providing food to Russia's more remote regions in the North, Siberia, and the Far East, where food and other commodities are in short supply, "Rossiiskaya gazeta" reported on 5 November. Because of shortages of both food and electricity, more than 1,000 residents of Chukotka, located in the extreme north of the Far East, have been evacuated, Russian Public Television reported the next day. At least another 2,000 are scheduled to be moved out of the area. Meanwhile, according to official data, 800,000 residents of northern regions of the Far East--more than 10 percent--have moved to other parts of Russia permanently since the early 1990s, ITAR-TASS reported on 9 November. JAC OCTOBER REVOLUTION ANNIVERSARY ATTRACTS SMALL CROWDS... The Interior Ministry estimated that more than 270,000 people took part in rallies in 949 cities and towns on 7 November, the 81st anniversary of the Bolshevik Revolution, ITAR-TASS reported. Interior Minister Sergei Stepashin and Moscow Mayor Yurii Luzhkov both claimed that the event attracted fewer people than in past years. In Moscow, roughly 10,000 gathered to mark the anniversary with a procession to Lubyanskaya Square; that is about half of the reported turn-out of the previous year. However, sponsors of the event had a different tally, reporting that 350,000 people participated (some 50,000 more than had been predicted by Aleksandr Kuvaev, first secretary of the Communist Party's Moscow City Committee on 4 November). The city of Krasnodar marked the occasion by unveiling a monument to soldiers from both the Reds and the Whites who died during the civil war. JAC ...AS YELTSIN RETURNS TO MOSCOW. In a television broadcast on 7 November, President Boris Yeltsin used the holiday, which two years ago he renamed by decree as the "Day of Accord and Reconciliation," to criticize recent Communist Party policies, particularly with regard to the press. He also pointed out that the Communist Party program now calls for "democracy and private ownership, freedom of enterprises and financial markets." He declared a victory for forces of reform, saying that they "have not only changed the course of history but have also changed people's mindset from one of hostility and hatred to that of tolerance and dialogue." The next day, Yeltsin unexpectedly returned to Moscow from Sochi, where he was on vacation reportedly to recover from fatigue. JAC AVDEEV IN ANKARA. Russian First Deputy Foreign Minister Aleksandr Avdeev held talks on 7 November with Turkish Foreign Ministry officials on the role of the OSCE in Europe's future security architecture and on the deadlocked Cypriot problem, ITAR-TASS reported. The previous day, British Foreign Secretary Robin Cook had appealed to his Greek Cypriot counterpart, Iannakis Kassulides, to cancel the imminent planned deployment on Cyprus of Russian S-300 anti- air missiles, the "Turkish Daily News" reported. The newspaper also quoted a Greek Cypriot publication as claiming that the planned November deployment of the S-300s has been postponed until 1999. In Washington on 5 November, U.S. State Department spokesman James Rubin said the U.S. has asked the Russian government to investigate Turkish allegations that Kurdistan Workers' Party leader Abdullah Ocalan is in Russia and to expel him immediately if he is, according to AP. LF COMMUNISTS' SUPPORT FOR MAKASHOV CONDEMNED. CIS Executive Secretary and influential businessman Boris Berezovskii called for banning the Communist Party during an interview with Ekho Moskvy on 8 November. The prohibition is justified, according to Berezovskii, because the party has tried to "stir up inter-ethnic discord." He told Interfax that "by expressing their solidarity with [State Duma Deputy and Communist Party faction member Albert] Makashov," the Communists place themselves beyond Russian law. Last week, the Duma rejected a resolution condemning Makashov for his repeated anti-Semitic public statements. Of the Communist faction, only Duma speaker Gennadii Seleznev voted in favor of the bill. Seleznev labeled Berezovskii's call as "one more fit of hysteria" and "an extremist statement." Former Prime Minister Yegor Gaidar also called for the Communist Party to be banned because of its support for Makashov. Earlier, President Yeltsin issued a statement condemning "any attempt to insult ethnic groups." JAC LUZHKOV FAVORS EXPANDED SLAVIC UNION. Moscow Mayor and likely Russian presidential contender Yurii Luzhkov told reporters on 6 November that he favors Yugoslavia joining the Union of Russia and Belarus. Luzhkov added that Yugoslavia's effort to join the union must be supported and that he will fly to Minsk to discuss the issue with Belarusian President Alyaksandr Lukashenka soon. The same day, Luzhkov met with Vojislav Seselj, deputy prime minister of Yugoslavia and leader of the Serbian Radical Party. Seselj also met with Patriarch Aleksii II of Moscow and All-Russia and Interior Minister Sergei Stepashin. In addition to conducting foreign policy for Moscow, Luzhkov concluded a commercial agreement with Nizhnii Novgorod Governor Ivan Sklyarov, establishing a joint company for cutting and selling diamonds. JAC TRANSCAUCASUS AND CENTRAL ASIA TAJIK MILITARY BEGINS MOP-UP OPERATION IN NORTH... Tajik government troops have forced rebels from the district of Aini and have cleared the highway from Dushanbe to the main northern city of Khujand. Aini was the last pocket of rebel resistance after government troops stormed the old fortress in Khujand on 7 November, freeing "dozens" of Interior Ministry troops held captive by the rebels. Latest reports suggest the rebels have broken up into small bands and are attempting to make their way to Uzbekistan. The Tajik government has reinforced border guards along the Tajik-Uzbek border. Leninabad Region administrative head Kasym Kasymov appeared on national television on 7 November saying at least 70 government soldiers and civilians have been killed and more than 300 wounded since fighting broke out on 4 November. BP ...BUT REBEL LEADERS REMAIN AT LARGE. The whereabouts of rebels whom the Tajik government hold responsible for the fighting are unknown. Presidential spokesman Zafar Saidov said they may have already crossed the border into Uzbekistan. The government has named former army Colonel Mahmud Khudaberdiyev, former deputy Transportation Minister Narzullo Dustov, as well as former Prime Minister Abdumalik Abdullojonov and his brother, former Khujand Mayor Abdughani Abdullojonov, as the masterminds behind what Dushanbe calls an attempted coup. The Prosecutor-General's Office launched criminal proceedings against the four on 8 November, noting that Khudaberdiyev and Abdumalik Abdullojonov are already wanted on earlier charges. BP NAZARBAYEV NOT OPPOSED TO EX-PREMIER RUNNING IN ELECTIONS. Kazakh President Nursultan Nazarbayev said on 7 November he welcomes other candidates in the 10 January presidential elections and has nothing against former Prime Minister Akezhan Kazhegeldin taking part in that race, ITAR-TASS reported. Nazarbayev's press secretary, Asylbek Bisembayev, said the previous day that in order to be eligible to run, Kazhegeldin must have a court ruling against him overturned in a higher court before 30 November. However, Bisembayev also said Kazhegeldin needs to show more respect for the Medeu Court, which found him guilty of attending an unsanctioned meeting in early October. He added that Kazhegeldin "three times ignored the Medeu court sessions" held to consider his case. BP KAZAKH PREMIER SAYS ECONOMY REMAINS SOUND. Nurlan Balgimbayev on 6 November said that inflation has been kept at 2.3 percent since the beginning of this year, Interfax reported. Balgimbayev said this is an improvement over last year, when inflation reached more than 7 percent. ITAR-TASS reported on 9 November that Kazakhstan has the highest average monthly pension (some $36) among the CIS countries. BP AZERBAIJANI OPPOSITION, POLICE CLASH IN BAKU. Police resorted to violence against opposition leaders and their supporters in Baku on 7 and 8 November, Reuters and Interfax reported. On 7 November, dozens of people were injured and many more detained temporarily when police intervened to prevent an unsanctioned march by 3,000-4,000 supporters of Azerbaijan National Independence Party chairman Etibar Mamedov. The marchers were protesting the falsification of the results of the 11 October presidential elections. Mamedov claims his share of the vote was large enough to warrant a runoff between himself and Heidar Aliev, who according to official returns received 76 percent of the vote. On 8 November, police attacked and beat Liberal Party leader Lala Shovket Gadjieva and Democratic Party chairman Ilyas Ismailov following a sanctioned rally in Baku attended by between 10,000 and 15,000 people. The demonstrators similarly protested the falsification of the presidential election results. LF AZERBAIJANI, TURKISH OFFICIALS DISCUSS PIPELINE PROJECT. Meeting in Istanbul on 6 November, Azerbaijani and Turkish government officials finalized draft agreements on construction of the proposed Baku-Ceyhan export pipeline for Azerbaijan's Caspian oil, AP and ITAR-TASS reported. Those agreements are to be signed by the respective heads of state later this month. Also on 6 November, Turkish State Minister for Maritime Affairs Burhan Kara said Ankara may increase transit fees for tankers passing through the Turkish straits in a move that would make the export of oil via that route "irrational," AP reported. LF AZERBAIJANI GOVERNMENT CRITICIZES OIL, GAS SECTORS... At a government session on 6 November chaired by President Aliev, Azerbaijani Prime Minister Artur Rasi-zade criticized the failure of the state oil company SOCAR to reverse the ongoing decline in gas extraction, despite an increase in oil production, Turan reported. Rasi-zade also expressed concern at the decline in the export of oil products, but he did not estimate to what degree that decline is the result of the oil price slump on world markets. President Aliev gave an overall positive assessment of the country's economic performance during the first nine months of 1998, noting GDP growth of 8.5 percent. Aliev also said that Azerbaijan's per capita foreign debt ($73) is one of the lowest of any former Soviet republic. LF ...ASSESSES PRIVATIZATION. Aliev told government ministers that 80 percent of small state-owned enterprises and 20 percent of smaller ones have been privatized. He added that 51 percent of GDP is currently generated by the private sector. "Azadlyg" in late October reported that plans have been drawn up to privatize SOCAR and several other strategic enterprises. Those plans allegedly provide for members of Azerbaijan's ruling elite to acquire those enterprises under cover of fake foreign companies. LF ARMENIAN PARTIES FAIL TO RESOLVE ELECTION LAW DEADLOCK. Viktor Dallakian of the Yerkapah group, the largest in the Armenian parliament, told journalists on 6 November that he does not believe the minority factions within the parliament are interested in resolving the current dispute over the country's proposed new election law, RFE/RL's Yerevan bureau reported. Dallakian said that Fatherland group leader Eduard Yegorian, the author of one of the two drafts currently under discussion, failed to attend a planned meeting convened in the hope of reaching a compromise agreement. The Yerkrapah want 60 percent of the 131 seats in the new parliament to be allocated in single-mandate constituencies. Opposition parties reject that scheme, arguing that it facilitates gerrymandering. They have said they may boycott the poll if the Yerkrapah draft is voted into law (see "RFE/RL Newsline," 5 November 1998). LF CHAIRMAN OF FORMER RULING PARTY ASSESSES ELECTION CHANCES. Armenian Pan-National Movement (HHSh) chairman Vano Siradeghian told a Yerevan press conference on 6 November that he thinks the HHSh will be represented in the next parliament but is unlikely to make a strong showing in the elections due next summer, RFE/RL's Yerevan bureau reported. He predicted that those elections will not be fair, observing that "the opposition can close only one third of all vote- rigging loopholes." Siradeghian dismissed as "a witch-hunt" calls by the Armenian Revolutionary Federation (HHD) for the present leadership unequivocally to condemn corruption by members of former President Levon Ter-Petrossian's leadership team, many of whom still hold key positions. He criticized Ter-Petrossian's successor, Robert Kocharian, for what he termed the new leadership's hard-line foreign policies toward Turkey and on resolving the Karabakh conflict. LF GEORGIAN MILITARY OFFICIAL ARRESTED. Henrikh Lolua, deputy head of the United Military Academy of Tbilisi, was arrested on 9 November on suspicion of involvement in last month's insurrection by army units in western Georgia sympathetic to deceased President Zviad Gamsakhurdia, Caucasus Press reported. LF GEORGIAN PRESIDENT COMMENTS ON JUSTICE REFORM SETBACK. In his weekly radio address, Eduard Shevardnadze on 9 November declined to condemn outright the 3 November ruling by Georgia's Constitutional Court that a law enacted earlier this year introducing a new professional examination for all judges is unconstitutional, Caucasus Press reported (see "RFE/RL Newsline," 6 November 1998). Shevardnadze commented that "no reform has ever been painless," adding that Georgian society supports the new measures aimed at minimizing corruption within the legal system. Parliamentary majority leader Mikhail Saakashvili, who drafted the new law, described the Constitutional Court's ruling as "absurd and anti-legal." LF END NOTE RUSSIAN CRISIS FUELS LATVIAN ECONOMIC WORRIES by Katya Cengel Russia's continuing economic crisis is causing problems for those countries with which it has significant trade links. That is certainly true of neighboring Latvia. Russia is Latvia's second-largest market, and many Latvian companies are now feeling the strain. Official statistics show that before the crisis, some 15 percent of Latvia's exports went to Russia and almost 12 percent of its imports came from that country. It is widely expected that newer numbers will show a drop in trade, the effect of which is already being seen in unemployment figures. In August, Latvia's unemployment rate was officially listed as 7.4 percent, but according to the State Employment Service, it had climbed to 7.6 percent one month later. Much of the increase is being linked to the situation in Russia, as higher-than-average unemployment is being registered in those districts where exports to Russia are highest. This applies, in particular, to areas dealing with food and fish products. At a press conference last month, Latvian Welfare Minister Vladimirs Makarovs said he expects another 10,000 people to lose their jobs owing to the closure of Latvian companies as a result of the Russian crisis. He said that he expects official unemployment to reach 8.6 percent in the coming months and that "even highly qualified and well paid workers are in danger." Among the companies most severely affected are 70 that have scaled down their business or manufacturing operations. Of these, 14 have halted work altogether and 46 have partly closed. Some 2,000 employees have been laid off and another 5,000 sent on unpaid leave. Auto Elektroaparatu Rupnicas [Riga Auto Electric Apparatus Plant] is an example of a company that has been forced to reorganize. With 70 percent of its business involving shipments to Russia, the company recently reduced its 1,200 employees to 700. Arnis Ermanis Shemins, president of the company, said his firm was unable to make severance payments to its former employees, adding that further lay-offs are expected. The company has suspended exports to Russia and sales have declined by half. Some companies are encountering difficulties making other payments as well. Maiga Dzervite, deputy director- general of the State Revenue Service, says 50 companies have requested extensions for making tax payments. Of those, 15 are linked to the fishing industry, nine to the transport sector, and eight to the food and beverages industry. Latest available figures put the export of food products at 8.7 percent down on last year's level, while the export of machinery and electrical equipment has declined by 6.8 percent. Dzervite warns that worse is to come for the economy as a whole: "Revenue is decreasing, the economy is distorted, and the gross national product is going down." She added that Latvia "will survive but it will not be such a nice picture as we originally drew for 1998." Dzervite describes the effects of the Russian crisis as occurring in three stages. The first affects companies selling directly to Russia. The second hits those supplying goods to companies that export to Russia. And the third involves firms from all sectors of the economy supplying goods to Latvian consumers, since higher unemployment means smaller demand for goods and services. Some companies are resorting to barter to continue trade with Russia. OlainFarm pharmaceuticals, which formerly sold 60 percent of its products to Russia, has just signed a contract to exchange medicine for Russian coal. Currently, about 30 percent of their production is going to Russia in barter trade. The company's advertising director, Egils Grikis, credits the Russian government with the barter idea, which will allow OlainFarm to retain all its employees. The arrangement has lowered the need to find new markets, which, in itself, is a difficult process. Agris Skuja, director of the industry department for the Latvian Economics Ministry, acknowledged that Latvian products are generally "not of a sufficiently high quality for the European market," adding that "it is expensive to meet European standards." He added that the situation is "very bad" and can be improved only through a long, expensive program. Worker training needs to be enhanced, the government must provide a better legislative framework for business, companies must better explore other markets and develop marketing strategies, and Latvia must gain increased political and economic support from the EU, he argues. Some officials hope Latvia's entrance into the World Trade Organization will help provide a way forward. Latvia was accepted as a WTO member last month, and ratification by the Latvian parliament is expected within the next few weeks. The author is a Riga-based contributor to RFE/RL. 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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