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RFE/RL NEWSLINE Vol 2, No. 229, Part I, 30 November 1998
________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 229, Part I, 30 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 * NEW CENTER-RIGHT BLOC FORMED * GOVERNMENT PROPOSES CUTTING VAT * ARMENIA, KARABAKH ACCEPT OSCE PLAN, BUT BAKU REJECTS IT End Note: UKRAINE'S LACK OF DIRECTION JEOPARDIZES REFORM xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA NEW CENTER-RIGHT BLOC FORMED... A new center-right alliance has formed in the wake of the murder of Duma deputy Galina Starovoitova. The bloc includes Democratic Choice leader Yegor Gaidar, former First Deputy Prime Ministers Boris Nemtsov and Anatolii Chubais, former Prime Minister Sergei Kirienko, Saratov Governor Dmitrii Ayatskov, and deputy head of the presidential administration Oleg Sysuev, according to a statement circulated to the press on 27 November. Gaidar told reporters that a founding conference will be held sometime between 10 and 15 December. JAC ...DESPITE A MISTAKE AND A FEW OMISSIONS... Despite the inclusion of his name on the statement, Ayatskov denied he was taking part or that Chubais or Kirienko had even discussed the idea with him. He told Interfax on 27 November that he remains a member of Our Home is Russia (NDR) and is not going to leave it to join any other party. Missing from the list of participants in the new alliance were the names of NDR leaders Aleksandr Shokhin and Viktor Chernomyrdin. "Nezavisimaya gazeta" reported on 28 November that Chernomyrdin was not invited to participate, while "Segodnya" reported two days earlier that Shokhin believes the "NDR should play 'first fiddle' in the new organization." JAC ...WHILE YABLOKO, DEMOCRATIC RUSSIA OPT OUT. Yabloko leader Grigorii Yavlinskii labeled plans to form a center-right bloc an "empty and useless idea." He told reporters on 29 November that Yabloko will not unite with either Gaidar or Chubais," who, he said, pursued policies that compromised the idea of market reform when they were in government. Meanwhile, Democratic Russia elected a new leader on 28 November. Georgii Khatsenkov, chairman of the board of directors of the Pressa-1 Publishing House, was a founding member of the movement. Khatsenkov ruled out an alliance with Gaidar, Chubais, or Kirienko, calling them "unviable." JAC GOVERNMENT PROPOSES CUTTING VAT. Over objections from the Finance Ministry and IMF, the cabinet of Yevgenii Primakov approved on 27 November a package of tax measures including a new proposal to lower value-added tax from 20 percent to 14 percent and then to 10 percent by 2000. Federal Tax Service chief Georgii Boos said that even with the reduced VAT rate, the government will still be able to collect 485 billion rubles ($27 billion) as planned. However, tax experts are skeptical since the VAT is considered the most collectable tax in any economy, the "Moscow Times" reported on 28 November. Dmitrii Vasiliev believes that the proposed income tax scale is excessively complex and likely to slow the work of tax inspectors, according to "Segodnya." The newspaper suggested that the measures will meet with some resistance in the State Duma, since under the proposals, towns and villages appear to be inadequately compensated with new sources of tax revenue. JAC RUSSIA, IMF TRY FOR LAST-MINUTE BREAKTHROUGH. A group of Russian economic specialists arrived in Washington, D.C. on 30 November for a special brainstorming session on Russia's economic crisis at IMF headquarters. The delegation, according to ITAR-TASS, includes former First Deputy Prime Minister Nemtsov and economists who once worked in government organs, such as Sergei Aleksashenko, Mikhail Dmitriev, and Andrei Illarionov. IMF director Michel Camdessus will himself arrive in Moscow on 1 December, only a few days after Prime Minister Primakov suggested that Russia "must listen to what the IMF is saying." Primakov added that he was irritated by "youngsters [from the IMF] coming here and telling us what to do, when they have only read a lot of books and know nothing of the real situation in Russia." Primakov also warned that without the $8 billion in IMF loans, Russia "may have to resort to unpopular measures," such as an "uncontrolled emission." JAC KIRIENKO FORMS OWN PARTY. Former Prime Minister Sergei Kirienko is forming his own political movement. According to Interfax, Kirienko plans to have his organization registered in time for the Duma elections in December 1999. In an interview with "Kommersant- Daily" on 28 November, Kirienko made only noncommittal responses to questions about the new rightist bloc, saying only "we will support anybody who will support the Russian economy. JAC TATARSTAN CREDIT RATING TAKES A HIT. Standard & Poor's on 26 November lowered the credit rating of the Republic of Tatarstan in response to the republic's turning down a $100 million loan from ING Barrings to restructure its internal debt obligations, "Kommersant-Daily" reported on 27 November. The republic fell into financial difficulty with the collapse of the market in short-term treasury bonds and the fall of oil prices. The oil company Tatneft is the main provider of hard currency to local government coffers. JAC GERASHCHENKO TO HEAD NEW BANKING AGENCY. Central Bank Chairman Viktor Gerashchenko will head the new Agency for Restructuring Lending Institutions "during its formative stage," Deputy Prime Minister Gennadii Kulik told reporters on 27 November. Kulik said that the Central Bank should maintain one or two banks in every region for servicing local budgets and financing local industries. According to "Kommersant-Daily" on 28 November, Gerashchenko won out over the leading contender, Ashot Egiazaryan, who headed the Moscow National Bank and worked at Oneximbank and Diamant and was close to First Deputy Prime Minister Yurii Maslyukov. The Central Bank opposed Egiazaryan's candidacy in part because the bank he headed was stripped of its license long before the recent economic crisis. JAC NEW HEAD OF ROSVOORUZHENIE APPOINTED. As widely anticipated, Yevgenii Ananev was fired on 27 November as head of the arms export company Rosvooruzhenie, Interfax reported (see "RFE/RL Newsline," 18 November 1998). Russian Security Council Deputy Secretary Grigorii Rapota was appointed to replace Ananev. Rapota, who is 54, served as deputy director of Russia's Foreign Intelligence Service. Security Council spokesman Yurii Kobaladze characterized Rapota as "highly competent, experienced, charming, and easy-going," adding that he has "a good knowledge of everything to do with the arms trade." Rapota denied that he would implement a radical personnel reshuffle. LF ANTI-CRIME MEASURES APPROVED. The Primakov government approved a package of anti-crime measures on 27 November. The measures include stripping legislators of immunity from criminal prosecution, requiring candidates for political office to disclose more information, increasing sentences for gun-trafficking, and imposing tighter controls on private security firms. Prime Minister Primakov characterized the measures as a response to the recent assassination of Duma deputy Galina Starovoitova. He also suggested that the government "may be talking about the physical elimination of those who raise their hands against society, the public, and children." Primakov said that this package of draft laws was only the first intended to combat crime, Interfax reported on 27 November. "Izvestiya" argued that some of the laws may have the undesired effect of purging honest political candidates from running, since many candidates may have served time in prison for violating political articles of the Soviet-era penal code. JAC GOVERNMENT PROMOTES MOTHERHOOD. Seven out of 10 pregnancies in Russia end in abortion, while 70 percent of Russian women suffer from health problems after their abortions, according to Russian Health Ministry statistics, Interfax reported. The Russian government used the occasion of the country's first official Mother's Day on 29 November to announce that it wants to achieve a 10 percent drop in the abortion rate by 2000. The number of abortions performed in 1997--2.5 million-- represents a decline of almost one-quarter since 1992. Deputy Prime Ministry Valentina Matviyenko told reporters that the government is seriously concerned that in recent years the status of motherhood has diminshed and the number of women who want children has decreased. JAC DIPLOMATIC FEATHERS RUFFLED OVER GUARD REMOVAL. A diplomatic row is flaring up between the U.S. and Russia over the removal of a 24-hour security guard from the residence of Russian ambassador to the U.S. Yulii Vorontsov, "Kommersant-Daily" reported on 27 November. According to the newspaper, the guard post was removed "without warning" to save budget resources. A Russian diplomatic source told the newspaper that "it is entirely possible that there is a lack of coordination between Washington, D.C. city officials and the State Department." The source added that if the guard is not reinstated, it will show that "the Americans want to unofficially lower the status of our diplomatic mission." JAC RADUEV AGAIN DEFIES CHECHEN AUTHORITIES. Maverick field commander Salman Raduev inspected his General Dudaev army in Grozny on 26 November, Interfax reported. Raduev later told journalists that he will not comply with a ruling by Chechnya's Supreme Shariah Court that he undergo a medical examination. Earlier this month, the court sentenced Raduev to four years' imprisonment for an alleged coup attempt but then indicated that it may rescind that sentence if provided with evidence of Raduev's poor health. Speaking on his private YTV channel on 26 November, Raduev claimed that Chechen President Aslan Maskhadov embezzled profits from the sale of Chechnya's oil. Raduev proposed conducting a census of the Chechen population and sharing the republic's oil wealth among its citizens. LF TRANSCAUCASUS AND CENTRAL ASIA ARMENIA, KARABAKH ACCEPT OSCE PLAN, BUT BAKU REJECTS IT. The foreign ministers of Armenia and the unrecognized Nagorno-Karabakh Republic said on 26 November in Yerevan that they have officially accepted the latest OSCE Minsk Group's Karabakh peace proposals as a basis for further talks, despite unspecified reservations, RFE/RL's Yerevan bureau reported. Karabakh Foreign Minister Naira Melkumian said that the guarantees envisaged for Karabakh's future security and economic development need further clarification. She also noted that Stepanakert will not make any further concessions to Azerbaijan. The previous day, Azerbaijani President Heidar Aliev had told visiting OSCE chairman-in-office Bronislaw Geremek that Azerbaijan "will never accept" the proposal that Azerbaijan and Karabakh form a common state. Aliev complained that the new peace plan puts Azerbaijan "in a difficult position" ahead of the 2 December Oslo meeting of the OSCE foreign ministers. LF RUSSIA WILL CONTINUE SUPPLYING ARMENIA WITH NUCLEAR FUEL. Atomic Energy Minister Yevgenii Adamov told journalists in Moscow on 25 November that Russia will continue supplying nuclear fuel for Armenia's Medzamor nuclear power plant "out of political necessity," despite that country's debt of 180 million rubles ($10 million) for earlier deliveries, AP and ITAR-TASS reported. Russian First Deputy Prime Minister Vadim Gustov said the following day that an agreement on the supply of fuel elements will be signed within days, according to Interfax. Armenian Prime Minister Armen Darpinian said in Moscow on 26 November that he reached agreement during talks with Gustov and Russian Prime Minister Yevgenii Primakov on the release of $7-11 million in earthquake relief funds frozen in Armenia's former Soviet Vneshekonombank, Interfax reported. LF ARMENIA DROPS OBJECTIONS TO OSCE SUMMIT IN TURKEY. Armenian Foreign Minister Vartan Oskanian told journalists in Yerevan on 26 November that the Armenian leadership has withdrawn its objections to the choice of Istanbul as the venue for the next OSCE summit, due in 2000 or 2001, RFE/RL's Yerevan bureau reported. The Armenian leadership had argued earlier that Turkey is not a suitable venue for the summit in the light of its poor human rights record and its refusal to open its frontier or establish diplomatic relations with Armenia. Oskanian said the Armenian decision was motivated by the desire to promote regional cooperation. On 27 November, ITAR-TASS reported that the previous week Turkish border guards had shot dead an Armenian citizen who tried to cross the Armenian-Turkish frontier in the mistaken belief that he was a Kurdish suicide bomber. LF AZERBAIJANI OPPOSITIONIST SENTENCED FOR ALLEGED COUP PLAN. A leading member of the Azerbaijani Popular Front Party, Fuad Gakhramanly, was sentenced to 18 months in prison on 27 November for authoring an article allegedly outlining ways to overthrow President Aliev, Reuters and Turan reported. Gakhramanly was arrested in June after the unpublished article was confiscated during a search of the premises of the opposition newspaper "Chag" (see "RFE/RL Newsline," 30 June and 19 November 1998). LF AZERBAIJANI JOURNALISTS' PROTEST FORCIBLY DISPERSED. Police broke up a picket in front of the presidential administration building in Baku on 25 November. The action had been organized by editors of opposition publications protesting the recent crackdown on the independent media, Turan and Interfax reported. Meeting the following day with some 20 editors who had launched a hunger strike earlier this month to protest libel cases brought by leading officials against independent newspapers, OSCE chairman-in-office Geremek pleaded with them to end their action, which, he said, "has demonstrated the dramatic state of freedom of speech in Azerbaijan." Some editors stopped their hunger strike later that day on medical advice. Meanwhile, 13 senior officials and members of President Aliev's family have opened separate libel cases against the newspaper "Azadlyg," demanding a total of $462,000 in damages. The newspaper claimed they had acquired real estate abroad, Turan reported on 25 November. LF UN EXPRESSES CONCERN OVER ABKHAZIA. The UN Security Council issued a statement on 25 November expressing concern at the possibility of renewed fighting in Abkhazia and calling for the planned meeting between Georgian President Eduard Shevardnadze and Abkhaz leader Vladislav Ardzinba to take place as soon as possible, AP and dpa reported. Shevardnadze told journalists on 26 November that the reasons for the postponement of that meeting, originally planned for the first half of November, was that agreement had not been reached with the Abkhaz leadership on security guarantees for ethnic Georgians returning to Abkhazia. Shevardnadze also expressed surprise at a statement earlier that day by Tamaz Nadareishvili, chairman of the Abkhaz parliament in exile. Nadareishvili claimed to have information that the Abkhaz were planning to shoot down Shevardnadze's airplane if he flew to Sukhumi to meet with Ardzinba, according to Caucasus Press. LF BULGARIAN PRESIDENT IN TBILISI. During his visit to Tbilisi on 26-27 November, Petar Stoyanov met with his Georgian counterpart, Shevardnadze, to discuss implementation of the TRACECA project, including the projected ferry link from Poti to Varna, and the prospects for exporting Caspian oil via Bulgaria. On 27 November, Stoyanov visited both Poti and the oil terminal at Supsa. Georgian and Bulgarian officials signed a number of bilateral agreements on defense and frontier cooperation, combating drugs and crime, and avoiding double taxation. LF TAJIK REBELS IMPLICATE UZBEKISTAN. At a 27 November press conference in Dushanbe, 16 rebels who were captured during fighting in Tajikistan's northern Leninabad Oblast earlier this month claimed they were trained in Uzbekistan and Afghanistan, Russian agencies reported. The rebels said they crossed into Afghanistan via the Uzbek border city of Termez and were trained in Uzbekistan by members of former Tajik Army Colonel Mahmud Khudaberdiyev's troops and "military specialists of Uzbekistan's special forces." They later received additional training in Uzbekistan's Jizzak Oblast before entering northern Tajikistan. Uzbek President Islam Karimov on 30 November denied that Uzbekistan has any links to the rebels. According to Interfax on 27 November, 114 government servicemen died and 431 were wounded during the fighting in Leninabad Oblast, while 220 rebels were killed and 215 wounded. BP UZBEK FOREIGN MINISTER IN IRAN, PAKISTAN. Abdulaziz Kamilov was in Iran and Pakistan from 24-27 November to whip up support for a conference on Afghanistan in Tashkent, ITAR-TASS reported. Meeting with his Iranian counterpart, Kamal Kharrazi, he extended an invitation to both Kharrazi and Iranian President Mohammad Khatami to visit Uzbekistan. IRNA reported on 24 November that while Kharrazi described Uzbekistan as a country that has "close ties with Iran," this does not mean the two countries hold identical views on issues. On 27 November, Kamilov met with Pakastani Prime Minister Nawaz Sharif and handed over a letter from Uzbek President Islam Karimov. Kamilov also met with Taliban representative Wakil Ahmad to discuss Taliban participation in the Tashkent conference. Ahmad, however, said his movement will participate only if it is invited as the legal government of Afghanistan. BP KAZAKHSTAN, UES AGREE ON DEBT PAYMENT. Kazakhstan on 28 November announced it will pay off its $229 million debt to Russia's Unified Energy Systems (UES) by turning over the Ekibastuz Power Plant No. 2, the Ekibastuz-Omsk power line, and the Severny coal pit to the Russian company, Russian agencies reported. UES board chairman Anatolii Chubais, who was in northern Kazakhstan for discussions with Kazakh officials, called the decision a "breakthrough" and said it paved the way for the creation of powerful joint industrial conglomerate that would export electricity from Kazakhstan to Russia. BP CANDIDATES FOR KAZAKH PRESIDENTIAL ELECTIONS ANNOUNCED. The Central Elections Committee announced on 30 November, the last day of registration for the January presidential elections, that incumbent President Nursultan Nazarbayev, chairman of the Customs Committee Gany Kasymov, parliamentary deputy Engels Gabbasov, and Communist Party chairman Serikbolsyn Abdildin have all registered to compete, RFE/RL correspondents in Astana reported. Abdildin had said at a 26 November press conference he has collected only 115,000 of the 170,000 signatures required to register and that he doubted he would be able to pay the registration fee of $30,000, which is 1,000 times the minimum average wage in Kazakhstan. Also on 26 November, the U.S. State Department criticized the ruling of the Kazakh Supreme Court two days earlier upholding a lower court's decision that in effect barred former Prime Minister Akezhan Kazhegeldin from running in the elections. BP KYRGYZ OPPOSITION LEADER RELEASED EARLY FROM JAIL. The chairman of the opposition party Erkin Kyrgyzstan, Topchubek Turgunaliev, was released from prison on 24 November, RFE/RL correspondents in Bishkek reported. Turgunaliev was sent to prison for four years on charges of abuse of power in February 1997. Those charges stemmed from the period when Turgunaliev was rector at the Bishkek University of Humanities in 1994. BP RUSSIAN STATE DUMA SPEAKER IN TURKMENISTAN. Gennadii Seleznev said at a press briefing in Ashgabat on 25 November that there must be a resolution to the dispute between Russia's Gazprom and Turkmenistan, Interfax and ITAR-TASS reported. Gazprom and Turkmenistan have again failed to reach agreement on the price of Turkmen natural gas supplies delivered to Europe via the Russian company's pipelines. He also criticized Turkmenistan's delays in facilitating the granting of Russian citizenship to those who wish to have it. The two countries have an agreement on dual citizenship. BP END NOTE UKRAINE'S LACK OF DIRECTION JEOPARDIZES REFORM By Christopher Walker Seven years into its post-Soviet experience as an independent state, Ukraine has distinguished itself as much by what it has avoided as by what it has accomplished. On the one hand, the country has managed to escape the deep ethnic divisions many predicted and, for the time being at least, has sidestepped the near total economic and social collapse Russia has undergone. But at the same time, Ukraine has also avoided many of the critical reforms necessary to pave the way for long-term prosperity. Thus, Ukraine now finds itself at a crossroads, uncertain whether the belated implementation of strict reforms would generate Polish-style prosperity or Russian-style destabilization. The reluctance to proceed with an ambitious program of painful measures is in many ways understandable. Average Ukrainians have suffered enormous hardships since 1991. If asked to endure even more in a bid to achieve the promised, albeit theoretical prosperity, many Ukrainians would answer "no." A kind of symbiotic paralysis has developed between Ukraine's political decision-makers and the country as a whole. Each knows action must be taken, but neither is able to identify the force that could act as the catalyst for change. Recognizing this, the Communists, in cooperation with leftist forces in the parliament, point to Russia's difficult experience with Western-style reform to bolster their argument for taking a different course at home. The battle lines are visible in the current dispute over the state budget, in which members of the opposition are heavily attacking the government's proposed budget as endangering Ukraine's social safety net. While Russia's difficulties loom large on Ukraine's eastern border, a more constructive example is provided by Poland, to the West. Poland's success did not come easily. The economic recovery, which began in 1992, was preceded by nearly three years of economic suffering and social dislocation. After the fall of communism, Poland was indisputably in a better position than Ukraine to make the difficult post-Soviet transition, but despite the initial hardships, Poland has steadfastly stayed the reform course. It now is enjoying the rewards of its hard-fought efforts. Poland has achieved rapid private-sector growth, estimated at 10 percent annually from 1995 through 1997. Unemployment has been steadily declining and is now under 10 percent, down from a high of 16 percent in 1994. Moreover, Poland has attained positive GDP growth annually over the past six years. Foreign investors have acknowledged Poland's commitment to economic reform. From 1990 to mid-1997, total foreign investment in Poland was $16.2 billion. By comparison, foreign investment in Ukraine from independence in 1991 through the third quarter of 1998 totals $2.6 billion. Of course, as long as the Ukrainian authorities dither over reform, foreign investors will be reluctant to commit significant resources to the Ukrainian market. Ukraine should also consider the implications of Poland's growing prosperity and its entry into the Western sphere of influence. To both countries' credit, they have worked assiduously to forge a balanced and constructive relationship. However, the EU is asking Poland to take firmer steps on a number issues related to Poland's eastern neighbors. For example, Warsaw is facing considerable pressure from Brussels to tighten border restrictions with Ukraine, but for the time being it has refused to impose visa requirements on Ukrainians. At home, Ukraine is beset by a host of other problems, including pension and wage arrears, rampant organized crime, and widespread official corruption. A burgeoning shadow economy has evolved in response to the dysfunction of the official market. The shadow economy, along with the many individuals and businesses that flout the law, accounts for a huge loss in desperately needed tax revenues. In fact, the authorities' frustration with widespread tax evasion payment was revealed last summer when Prime Minister Valeriy Pustovoytenko ordered 1,500 business executives to a tent camp outside Kyiv until they paid delinquent taxes. Other evidence of Ukraine's economic weakness is observable in the vast number of Ukrainians who travel abroad in search of employment. Large numbers of Ukrainians work as manual laborers in the Czech Republic, Poland, Germany, and other countries for periods of several weeks or months. Many of these jobs are run by Ukrainian gangs or criminal syndicates that claim to offer safe transport, employment documents, and a large amount of money by Ukrainian standards. After completing their terms of employment, many are disappointed to learn that they will receive only a bus ticket back to Ukraine, if that. By venturing westward to countries that already belong to the EU or are within striking distance of joining that organization, these Ukrainian workers are implicitly acknowledging the direction their own country should take. The author is manager of programs at the European Journalism Network. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. 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