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RFE/RL NEWSLINE Vol 2, No. 231, Part I, 2 December 1998
________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 231, Part I, 2 December 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 DAMPENS HOPES FOR IMF CASH * STRIKING TEACHER DIES AS PROTEST ACTIONS SPREAD * RUSSIA CALLS FOR STRICTER CONTROLS ON BORDER WITH AZERBAIJAN End Note: FIGURING RUSSIA'S FOREIGN DEBT xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA PRIMAKOV DAMPENS HOPES FOR IMF CASH... IMF Managing Director Michel Camdessus met with Prime Minister Yevgenii Primakov on 1-2 December. In remarks to reporters on 2 December, Primakov seemed to suggest that victory for his government in the form of a renewed flow of cash is not in the offing. Camdessus "arrived with an attache case containing documents, not money," he said. He added that it would be "naive to imagine that [Camdessus] will decide today whether to release the funds." However, he told the Federation Council earlier on 2 December that he had a "favorable impression" after the first round of talks. Central Bank Chairman Viktor Gerashchenko suggested that he at least is not optimistic. "I think everybody realizes that we will not get any money from the fund this year," Ekho Moskvy quoted him as saying. Primakov earlier signed a decree increasing Russia's quota in the fund. JAC ...AS BUDGET IS SLAMMED IN WASHINGTON. Meanwhile, Russian economists gathered for a "brainstorming" session at IMF headquarters were themselves not very optimistic. Andrei Illarionov told "Komsomolskaya pravda" on 2 December that a "sane" economist cannot take the government's budget seriously. "A realistic assessment of tax revenues would be 6-8 percent of GDP. The draft budget for 1999 includes expenditures equal to 16 percent of GDP," he commented. "Vremya MN" suggested the previous day that the "psychological incompatibility" between IMF personnel and Russian government officials is exacerbating negotiations. The daily quoted a member of the Russian negotiating team as saying that First Deputy Prime Minister Yurii Maslyukov will "assure [the IMF mission] he is for structural reform and privatization." But, the daily continued, the IMF mission members have "newspaper clippings with his statements about, among other things, the necessity of stopping the privatization of defense enterprises." JAC WORLD BANK LOANS REVISED. Because of the country's changed economic conditions, the World Bank is revising the terms of three of its loans to Russia, ITAR-TASS reported on 1 December, quoting World Bank Russia Country Director Michael Carter. According to the agency, the bank was originally scheduled to issue the second tranche of a $1.5 billion economic restructuring loan and a $800 million coal sector loan as well as the third tranche of a $800 million social security adjustment loan before the end of 1998. According to Interfax, Carter said Russia has not fulfilled the main condition of disbursement of the social security adjustment loan, namely balancing the Pension Fund. JAC STRIKING TEACHER DIES AS PROTEST ACTIONS SPREAD. A school teacher in Ulyanovsk Oblast who had been participating in a hunger strike to protest unpaid wages died on 1 December, Russian Television reported. Some 450 teachers in the area began the hunger strike at the end of November, and seven of them have already been hospitalized. Meanwhile, teachers in eight schools in Khabarovsk Krai have gone on strike to protest back wages totaling 158 million rubles ($9 million), and another 6,000 teachers in Irkutsk Oblast have joined colleagues who stopped work, ITAR-TASS reported on 2 December. In Chita Oblast, teachers at one school have called off their 14-day hunger strike after funds were found to pay wages through September. JAC IS U.S. ABANDONING RUSSIAN STEEL FIRMS, RUSSIA? Russian steelmakers published an appeal to Prime Minister Primakov and U.S. Vice President Al Gore in "Izvestiya" on 1 December asking again that a long-term agreement on metals trade be concluded (see "RFE/RL Newsline," 12 November 1998). Russian steel firm executives reportedly believe U.S. officials are deliberately delaying talks under pressure from domestic steelmakers, "The Journal of Commerce" reported. According to RFE/RL's Washington bureau, if a preliminary U.S. Commerce Department finding is put into practice in February, then high tariffs on Russian hot-rolled steel imports to the U.S. will be imposed retroactively. On 25 November, both "Izvestiya" and "Kommersant-Daily" concluded that the preliminary finding is indicative of a broader shift in the U.S.'s foreign policy away from supporting Russia. "Izvestiya" also argued that "Bill Clinton's advisers have evidently concluded that nothing worthwhile can happen in Russia" and "it is pointless to waste resources on it." JAC DEFENSE MINISTRY LOSING BATTLE OVER BUDGET. Defense Minister Igor Sergeev has said that the amount of money set aside for the armed forces in the 1999 budget represents a "fatal" shortfall According to "Obshchaya gazeta" on 26 November, the "minimum requirements for the army and navy in 1999 total 107 billion rubles" ($6 billion), only slightly more than the forecast budget deficit, according to a version of the document published in "Kommersant-Daily" on 1 December. That document states that total expenditures will equal 587.4 billion rubles. Meanwhile, "Moskovskii komsomolets" reported on 28 November that the driving force behind opposition to Sergeev's plan to form a joint command for strategic nuclear forces is Chief of General Staff Anatolii Kvashnin. The daily argued that the "scandal" over the objections of [Deputy Defense Minister Nikolai] Mikhailkov "is but a smoke screen for the real intrigue." It went on to define that intrigue as one in which Kvashnin and his mentor, former Defense Minister Pavel Grachev, are biding their time until Kvashnin replaces Sergeev. JAC PRE-ELECTION JOCKEYING CONTINUES. The press continued to carry stories of "courtships" between political parties in advance of the 1999 parliamentary elections. "Kommersant-Daily" suggested on 2 December that former Prime Minister Sergei Kirienko is trying to distance himself from the recently formed right-center alliance and is actively negotiating with Moscow Mayor Yurii Luzhkov to join his Otechestvo [Fatherland] movement. Meanwhile, Samara Governor Konstantin Titov has not defected from Our Home is Russia (NDR) in favor of Otechestvo, as was expected. He anticipates receiving the position of NDR co-chairman, which has still to be created, "EWI Russian Regional Report" reported on 24 November. Titov has been openly critical of NDR leader Viktor Chernomyrdin (see "RFE/RL Newsline," 15 October 1998). JAC MORE ELECTION "IRREGULARITIES" IN ST. PETERSBURG. Elections monitors have begun arriving in St. Petersburg for a vote scheduled for 6 December, ITAR-TASS reported on 1 December. A number of violations of election law have already been recorded, and the agency reported that the registration of several contenders is likely to be annulled. Russian Television reported that at least 20 candidates for the St. Petersburg legislature have a criminal record. One candidate was charged with corruption only this week, while another has been detained on suspicion of extortion. State Duma Security Committee Chairman and member of the Communist Party Viktor Ilyukhin told ITAR-TASS that the murder of liberal activist and Duma deputy Galina Starovoitova was most likely linked to the upcoming elections in St. Petersburg. JAC FINANCIAL PRESSURES CONTINUE AT ORT. The Russian government met on 1 December to discuss the unpaid debts of Russian Public Television, which had recently forced the station to dramatically trim its daily newscast. ORT Director-General Igor Shabdurasulov told reporters after the meeting that ORT will submit a two-year "rescue plan" to the government by 5 December and that reductions in ORT's work force from September 1998 to January 1999 will total 15 -20 percent. He added that payroll accounts for only 15 percent of total spending and that by the end of 1998, ORT will owe more than $100 million. Meanwhile, bailiffs who had temporarily suspended their inventory of the station's property will resume their work since no decision on restructuring the station's debt has been taken. JAC ADMINISTRATION DENIES DEATH PENALTY REPORTS. Oleg Sysuev, deputy head of the presidential administration, told reporters that Primakov's government has no intention of lifting the moratorium on the death penalty, despite comments by Prime Minister Primakov calling for the "physical elimination" of certain criminals (see "RFE/RL Newsline," 1 December 1998). Russia imposed a moratorium on the death penalty when it joined the Council of Europe in 1996. JAC CHECHEN PRESIDENT CALLS FOR COORDINATION IN COMBATING CRIME. In a telegram addressed to his counterparts in Ingushetia, North Ossetia, and Dagestan, Aslan Maskhadov has proposed that the Interior Ministries of all four republics cooperate in fighting oil thefts and abductions, Reuters and Interfax reported on 1 December. On 28 November in Vladikavkaz, North Ossetian President Aleksandr Dzasokhov told a roundtable discussion convened by the Confederation of Peoples of the Caucasus that coordinated action between unspecified North Caucasus republics has halted the rise in crime in the region, "Nezavisimaya gazeta" reported on 2 December. Meanwhile, a senior official of the Grozneft oil company was kidnapped in Grozny on 1 December. LF TRANSCAUCASUS AND CENTRAL ASIA RUSSIA CALLS FOR STRICTER CONTROLS ON BORDER WITH AZERBAIJAN. Major-General Sergei Bondarev, deputy commander of the North Caucasus department of the Russian Federal Border Service, told colleagues on 30 November that controls on the Russian-Azerbaijani border will be intensified in the near future, Turan reported. Bondarev cited the anticipated sharp price hikes for food and other consumer goods in Dagestan, which, he said, might impel the local population to travel to neighboring Azerbaijan, where prices are cheaper. Residents of villages on the Dagestani side of the border crossed into Azerbaijan last week and tried to disarm Azerbaijani border guards. They were frustrated about not being allowed to cross the border at will (see "RFE/RL Caucasus Report," Vol. 1, No. 40, 1 December 1998). LF U.S. EXPRESSES CONCERN AT MEDIA CRACKDOWN IN AZERBAIJAN. U.S. State Department spokesman James Rubin said on 1 December that the sentencing of Azerbaijani opposition journalist Fuad Gakhramanly over an unpublished article constitutes part of the Azerbaijani government's broader campaign to "harass the opposition and restrict freedom of thought and expression," AP reported. Rubin called on the Azerbaijani leadership "to engage in dialogue with, not harassment of, political opponents." Meanwhile, some 20 independent newspaper editors have ended a hunger strike begun in mid-November, but their deputies and the entire editorial staff of the newspaper "Cumhurriyet" have begun fasting in their place, Turan reported on 1 December. Meeting last week in Baku with OSCE Chairman- in-Office Bronislaw Geremek, Azerbaijani President Heidar Aliev rejected the latter's argument that the libel suits brought against opposition newspapers are at odds with the principle of free speech, according to the "Neue Zuercher Zeitung" on 1 December. LF AZERBAIJANI PARLIAMENT RATIFIES ANOTHER OIL CONTRACT. Parliamentary deputies on 1 December voted by 88 to three with two abstentions to ratify the $2 billion contract concluded in London in July 1998 to develop the Inam Caspian oil field, which has estimated reserves of 100 million metric tons, Turan reported. The Azerbaijani state oil company SOCAR has a 50 percent stake, Amoco 25 percent, and the British Monument Oil and Gas and the Central Fuel Company of Russia 12. 5 percent each. In November, the parliament ratified the production-sharing agreements on exploiting the Shemakha-Gobustan and Muradkhanly fields. LF ARMENIAN PRESIDENT CRITICIZES PREVIOUS REGIME. In an interview with three leading Armenian television channels on 30 November, Robert Kocharian condemned the approach of his predecessor, Levon Ter-Petrossian, toward privatizing state enterprises, resolving the Karabakh conflict, and campaigning for international recognition of the 1915 genocide, Noyan Tapan reported. He described the previous regime's Karabakh policy as "conciliatory" and as implying that Armenia did not support Karabakh Armenians' aspiration to independent status. But Kocharian refrained from explicitly condemning Ter-Petrossian's administration, as demanded by opposition parties over the past several weeks. LF TAJIK NATIONAL BANK OFFICIAL KIDNAPPED. Four armed men in camouflage outfits stopped the car of Tajik National Bank deputy chairman Nawruz Valiyev and kidnapped him on 2 December, ITAR-TASS and Reuters reported. On 26 November, the Russian news agency reported that the incidence of kidnapping in Tajikistan has doubled in the first nine months of this year, compared with same period in 1997. Moreover, there are currently 2,068 wanted criminals at large, although some of them may no longer be in Tajikistan. BP KAZAKH PRESIDENTIAL CANDIDATE HOLDS PRESS CONFERENCE. Serikbolsyn Abdildin, the presidential candidate from the Communist Party, held a press conference in Almaty on 1 December to outline his political program, RFE/RL correspondents reported. Abdildin said Kazakhstan needs an "equal society" and a diversified economy that includes elements of both central planning and a free market. He also said Kazakhstan should seek closer ties with Russia, specifically by concluding a joint defense treaty. Abdildin noted that poverty must be tackled immediately as about 80 percent of the population can be considered "poor." BP END NOTE FIGURING RUSSIA'S FOREIGN DEBT by Robert Lyle An official of Germany's Deutsche Bank laughs when asked the size of Russia's total external debt. "The overall figures vary so much I don't want to get involved in that," he says. Deutsche Bank, one of the world's largest, with commercial loan and investment exposure of more than $1 billion in Russia, uses the figure of $182.8 billion as its best-guess-estimate of what Russia, publicly and privately, owes the rest of the world. United Financial Group and the daily "Moscow Times" put the total outstanding debt even higher, at $195 billion--$150 billion in state debt and $45 billion in commercial debt. If the United Financial figures are correct, Russia borrowed $70 billion in 1997 and the first six months of 1998. The global organization of commercial financial firms, the Institute of International Finance (IIF), says Russia borrowed $22 billion in the first half of 1998 alone. The IMF will not release the figures it is using, although in a report before Moscow's splurge of borrowing and this year's financial crisis, it put Russia's external debt at the end of 1996 at $125 billion. That included Soviet debt Moscow assumed on the break-up of the USSR and then rescheduled as well as $15.4 billion still owed to its old partners in the communist economic and trade group COMECON. Russia has not issued an official accounting of all of its external debt, but Deutsche Bank estimates that the largest portion--$152.8 billion--is owed by the Russian federation government. It estimates that local and regional governments owe another $1.5 billion and banks and corporations $28.5 billion. The United Financial Group and the "Moscow Times" put debt due in 1999 at $32.5 billion--$17.5 billion in state debt and $15 billion in commercial debt. The IIF, however, says the $17.5 billion government figure does NOT include whatever Russia will pay on treasury bills now being rescheduled. Deutsche Bank includes the interest as well in its estimates that public and private borrowers in Russia are supposed to pay foreign creditors a total of $49 billion in 1999. Meanwhile, Deputy Finance Minister Mikhail Kasyanov has said Moscow will be able to pay back less than $10 billion of the $17.5 billion owed through 1999. The overall situation is confusing because negotiations on dealing with each part of the debt are conducted with different creditors under different circumstances. For example, Russia's official debt to commercial bankers is being dealt with in at least two sets of talks under the so-called London Club, a grouping of about 600 commercial banks worldwide. The most pressing talks are over part of the rescheduled Soviet Union debt--instruments called PRINS--which is due on 2 December but has a 15-day grace period. Under the rescheduling agreement worked out in 1997, half of what is due on 2 December was to be paid in cash and half in bonds to be called Interest Arrears Notes (IANs). Instead, Russia has now proposed to pay the entire $724 million with new IANs said to be worth only about 13 percent of their face value. Russian officials in Moscow have been quoted as saying there would be an additional $216 million cash interest payment. The "Moscow Times" reports that Russia feels an obligation to honor this paper, but the banks involved in the London talks said they have seen nothing on that. A Deutsche Bank spokesman says this issue may be taken up this week by negotiators from the banks but that most of their attention is still focused on the agreement in principle announced two weeks ago on the Russian government treasury notes, known as GKOs. The spokesman said a number of subcommittees of commercial bankers are still working on the Russian offer of a complicated mix of instruments to handle the approximately $10 billion owed on the GKOs to foreign commercial creditors. There continue to be disagreements among the Western banks involved. One group--those with continuing active business involvement in Russia--are willing to take more ruble-denominated securities that could be used only for transactions within Russia. A second group wants to get hard currency out as quickly as possible. Russian official government debt to other countries--handled through the so-called Paris Club of official creditors -- amounted to more than $50.4 billion at the end of 1996. But that is nearly covered by the more than $47 billion other countries owe Russia. Most are Soviet-era debts owed by poor, developing countries. Russia's other big foreign debt is what it owes the IMF, the World Bank, and the European Bank for Reconstruction and Development, totaling more than $25.5 billion. Russian officials last week suggested they might ask the IMF to "reschedule" what Moscow is due to repay the fund in 1999, but IMF officials have underscored that the fund does not and will not reschedule debt owed by member countries. IMF officials will not say exactly how much Russia is due to repay in 1999--it has kept up its repayments so far on a total debt of $19.58 billion-- but United Financial estimates that $4.8 billion is due next year. IMF officials point out that the repayment schedule is heavier in later years because of grace periods in some of the loans. The author is an RFE/RL correspondent based in Washington. Floriana Fossato, a Moscow-based RFE/RL correspondent, contributed to this article. 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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