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RFE/RL NEWSLINE Vol 3, No. 28, Part I, 10 February 1999
________________________________________________________ RFE/RL NEWSLINE Vol 3, No. 28, Part I, 10 February 1999 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 * RANKS OF BANKS MAY THIN BY 80 PERCENT * EFFORT TO BAN RELIGIOUS GROUP CONTINUES * ANOTHER ARMENIAN SENIOR OFFICIAL SHOT DEAD End Note: DOWN TO SUBSISTENCE xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA RANKS OF BANKS MAY THIN BY 80 PERCENT... Central Bank Chairman Viktor Gerashchenko told reporters on 9 February that Russia may have only 200-300 commercial banks by the end of 1999. According to Gerashchenko, Russia had about 1,500 banks as of early September 1998. Since then, 200 banks have lost their licenses, while 200 more licenses are likely to be pulled. The next day, more than 300 angry Inkombank depositors gathered in Moscow to plan a 23 February march on the Central Bank to demand their savings, the "Moscow Times" reported on 10 February. Inkombank's customers want earlier compensation than they are currently likely to get if they wait for Inkombank's bankruptcy case to make its way through Russian courts. JAC ...AS CENTRAL BANK SCANDAL PASSED OVER BY PRESS. Meanwhile, recent allegations by former Prosecutor-General Yurii Skuratov against the Central Bank have failed to attract much Russian press attention. According to the "Journal of Commerce," the Duma's Audit Chamber concluded that more than 50 percent of the bank's annual operating expenses was spent on staff compensation. Gerashchenko told the chamber that this was in line with practices at Western banks. However, citing Western banking sources, the newspaper reported that 20 percent is standard for most Western commercial banks, while most countries' central banks spend less than 10 percent on staff. In statements after news of Skuratov's allegations broke, Gerashchenko praised the work of the Audit Chamber to the detriment of the Prosecutor-General's Office. JAC DEBT DOWNGRADE LOOMING. Standard & Poor's warned on 9 February that it will downgrade Russia's foreign debt "in the near future" if the country does not receive new external loans or take action to bolster its foreign exchange reserves. The previous day, former Prime Minister Sergei Kirienko told reporters in Germany that Russia and its creditors should make a "political decision" to write off half of Russia's debts inherited from the Soviet Union and to refinance IMF loans without coordinating an economic program, Interfax reported. According to "Kommersant-Daily" on 10 February, Prime Minister Yevgenii Primakov sent Kirienko to Bonn for talks with financiers and will deploy him during the next round of negotiations with the IMF. First Deputy Prime Minister Yurii Maslyukov reported an IMF mission will be in Moscow 18-20 February, while IMF Moscow representative Martin Gilman told Interfax no date has been set. JAC COMMUNISTS, YABLOKO PAN POLITICAL PACT. While State Duma Chairman Gennadii Seleznev echoed the call by Communist Party leader Gennadii Zyuganov for constitutional amendments to shift the country's balance of power, the Communist Party's Duma faction announced on 10 February that it will not support the draft political cease-fire agreement approved by the Security Council on 5 February, Interfax reported. Zyuganov said that supporting the document would be tantamount to "acting in a tragicomedy staged by [Russian President Boris] Yeltsin." Yabloko faction deputy chairman Sergei Ivanenko said that his faction does not take the document seriously either. The Duma must approve the pact for it to enter into force. Meanwhile, Duma deputies Sergei Yushenkov (Democratic Choice) and Konstantin Borovoi (who has no party affiliation) have started collecting signatures to demand a vote of no confidence in the government. JAC EFFORT TO BAN RELIGIOUS GROUP CONTINUES. A Moscow district court resumed hearing the case brought by city prosecutor against the religious group, Jehovah's Witnesses, on 9 February. The prosecutor is seeking to ban the group from Moscow under a 1997 controversial law on freedom of conscience and religious organizations (see "RFE/RL Newsline," 30 September 1998). Metropolitan Kirill of Smolensk and Kaliningrad spoke out against the group that day, saying that the Russian Orthodox Church "categorically disagrees with the methods of the organization, whose members go from door to door...engage in personal manipulation, in effect intruding on people's spiritual world and exerting psychological pressure on them." Russian Public Television reported that police investigators were looking into a possible link between the Jehovah's Witnesses and the recent joint suicide of three schoolgirls in Moscow. JAC ITALY TO NUDGE IMF FOR RUSSIA... Visiting Italian Prime Minister Massimo D'Alema has expressed support for Russia's effort to obtain new money from the IMF, ITAR-TASS reported on 9 February. He pledged that Italy will assist Russia in forging an agreement with the fund. After his meeting with D'Alema, Prime Minister Primakov told reporters that Russia and Italy see eye to eye on many international problems, such as Kosova. D'Alema also met with Moscow Mayor Yurii Luzhkov and Duma Chairman Seleznev, and he chatted with former acting Premier Yegor Gaidar, Liberal Democratic Party leader Vladimir Zhirinovskii, Yabloko leader Grigorii Yavlinskii, and others at a party at the Italian embassy. JAC ...AS YELTSIN'S PLANE BUMPS ITALIAN PRIME MINISTER'S. President Yeltsin's Il-96 plane knocked the tail wings off Prime Minister D'Alema's plane while taxiing at Vnukovo-2 airport in Moscow, "Kommersant-Daily" reported on 10 February. Neither the president, who was on board, nor the plane sustained any damage. According to the newspaper, the incident occurred because of the poor condition of the tarmac rather than a pilot error. JAC KREMLIN SENDING ASSISTANCE TO LEBED? Security Council Secretary and head of the presidential administration Nikolai Bordyuzha announced on 5 February that an operational group from the Interior Ministry, the President's Main Control Department, and staff from the Security Council would be sent to Krasnoyarsk Krai to address the region's very serious crime problem, "Kommersant-Daily" reported on 9 February. Krasnoyarsk Governor Aleksandr Lebed visited Moscow in late January to try to enlist Prime Minister Primakov's and Bordyuzha's support in his battle with local business titan and former ally Anatolii Bykov. "Moskovskii novosti" in its 7-14 February issue suggests that Krasnoyarsk is in effect ruled by two governors, Lebed and Bykov, both of whom are running for future office, although neither has officially declared their intentions. Lebed, according to the newspaper, will run for president of Russia, while Bykov is planning to seek the governor's seat. JAC BREAD SHORTAGE IMMINENT IN VORONEZH? Bakeries in Voronezh Oblast have enough white flour to last only five or six days, "Tribuna" reported on 9 February. Local bakers are concerned that a bread shortage may ensue since the oblast's wheat reserves have run dry and the cash-strapped authorities cannot afford to pay farmers for new supplies. According to "Tribuna," such a state of affairs has never before occurred during peace time in the heart of the country's black earth region. Last year's grain harvest was the worst in a quarter of a century. Agricultural experts recently predicted bread shortages and sharp increases in bread prices would occur throughout Russia (see "RFE/RL Newsline," 1 February 1999). JC GREECE ACQUIRES CONTROL OVER CONTROVERSIAL RUSSIAN MISSILES. The defense ministers of Cyprus and Greece, Yannakis Chrisostomis and Akis Tsohatzopoulos, signed an agreement in Athens on 8 February whereby Greece will assume operational control of the Russian S-300 air defense missiles that Cyprus contracted to buy from Russia, Reuters reported the following day. The missiles will remain Cypriot property. In response to threats by Turkey to destroy the missiles and following U.S. and European pressure to renege on the deal, the Greek Cypriot leadership announced in December that the S-300s would be deployed in Greece, not on Cyprus (see "RFE/RL Newsline," 4 January 1999). Chrisostomis will travel to Moscow on 15 February for talks with the Russian Defense Ministry and the arms export concern Rosvooruzhenie on unspecified amendments to the January 1997 contract to purchase the S-300s, according to Interfax. LF STROEV LEADS DELEGATION TO INDIA. Russian Federation Council chairman Yegor Stroev told a meeting of Indian business executives on 10 February, the last day of his three-day visit to India, that the "government of Yevgenii Primakov enjoys the confidence of society, the Federal Assembly, and all the branches of power," ITAR-TASS reported. Stroev added that "Russia has finally chosen the right road, and the economy will develop successfully." Stroev is in India to seek to improve bilateral relations, particularly trade relations. The previous day, the speaker of India's lower chamber of parliament, Ganti Mohan Chandra Balayogi, termed those ties "not lost but [in need of] renovation." Stroev admitted to Balayogi that there has been "a period of cooling" but pointed to the size of his delegation as proof that Russia highly values its relations with India. BP KALININGRAD GOVERNOR FAVORS 'SELF-RELIANCE.' In an interview published in the 9 February "Nezavisimaya gazeta--Regiony," Leonid Gorbenko recommends that his oblast strive for economic self-reliance. Noting that Kaliningrad has suffered more than other regions during the financial crisis, owing to its distance from Moscow and dependency on fuel and energy imports, he said that "we consider the main principle of our economic policy to beКthe support and protection of local manufacturers." The same day, ELTA quoted Gorbenko as telling the Baltic Sea States Council that Kaliningrad will be increasingly used to "establish and maintain mutually beneficial relations with an expanding EU." He also said the exclave will seek to enlarge the visa-free zone in the Baltic region to create a "Baltic Schengen." JC HOUSING REALLOCATION PROPOSED IN SVERDLOVSK. Members of the Our Home, Our City faction in the Sverdlovsk Oblast Duma suggested selling the new, reportedly luxurious, residence of Governor Eduard Rossel in order to raise money for state employees' overdue wages, "Izvestiya" reported on 9 February. State workers have been picketing the governor's residence as well as the oblast's White House, which houses the government and the Duma, "Tribuna" reported on 9 February. Rossel's supporters suggest that the logical outcome of the sale of Rossel's residence would be auctioning off the White House, according to "Tribuna." Earlier, "Izvestiya" reported that the southern half of the oblast, particularly Beloyarsk Raion, has seen a sharp increase in the number of homeless animals, such as dogs, cats, and horses, who have been abandoned by their owners. JAC CHECHEN OPPOSITION CREATES SHADOW GOVERNMENT. Meeting in Grozny on 9 February, Chechen field commanders opposed to President Aslan Maskhadov elected a state council that is intended to rule the republic in accordance with Islamic law, AP and Interfax reported. Maskhadov was named a member of the council, together with former acting President Zelimkhan Yandarbiev, field commanders Shamil Basaev and Ruslan Gilaev, and former Chechen Foreign Minister Movladi Udugov. Also on 9 February, the field commanders threatened reprisals for the sentencing by a Russian court of two Chechen women on charges of planting a bomb at a railway station in the North Caucasus town of Pyatigorsk in April 1997 (see "RFE/RL Newsline," 29 April 1997 and 13 January 1999). LF TRANSCAUCASUS AND CENTRAL ASIA ANOTHER ARMENIAN SENIOR OFFICIAL SHOT DEAD. The body of Deputy Interior and National Security Minister Major-General Artsrun Markarian was found close to a major highway north of Yerevan on 9 February, RFE/RL's bureau in the Armenian capital reported. He had been shot in the head and chest. Markarian had been seriously wounded in January 1998 in what appeared to have been an assassination attempt (see "RFE/RL Newsline," 21 January 1998). LF ARMENIAN PARLIAMENT UPHOLDS TELECOM MONOPOLY. Deputies voted narrowly on 9 February to reject an opposition demand that ArmenTel be stripped of its monopoly on the telecommunications sector, RFE/RL's Yerevan bureau reported. Eduard Yegorian of the opposition Hayrenik faction, who had initiated the debate, told RFE/RL that the vote means Armenians will continue to pay high prices for mediocre telephone connections. On 8 February, former Communications Minister Grigor Pokhpatian issued a statement denying allegations made by a former U.S. employee of ArmenTel that he accepted bribes from the company's former shareholder, Transworld Telecom Company (see "RFE/RL Newsline," 9 February 1999). LF FIRE HALTS EXPORT OF AZERBAIJANI OIL VIA CHECHNYA. The Azerbaijan state oil company SOCAR has been forced to halt the pumping of Caspian crude through the Baku-Grozny- Novorossiisk export pipeline as a result of a 4 February fire in the Chechen sector of the pipeline, ITAR-TASS reported on 9 February. The incident had led to a complete halt in the extraction of oil from the offshore Chirag field, which earlier had produced 90,000 barrels per day. Also on 9 February, a Georgian official with Chevron's Georgian subsidiary said the Georgian government has agreed to reduce from $7.75 to $5 per metric ton the tariff for the rail shipment from Baku via Georgia to the Black Sea port of Batumi of Kazakh oil produced by the Tengiz-Chevroil joint venture, Reuters reported. LF AZERBAIJANI OPPOSITIONISTS SENTENCED. Seven supporters of defeated Azerbaijani presidential candidate Etibar Mamedov were sentenced to terms of two to three years' hard labor on 9 February on charges of hooliganism, resisting arrest, and insulting the honor and dignity of President Heidar Aliev, Turan reported. The men had participated in an unsanctioned demonstration in Baku in November 1998 to protest the alleged falsification of the outcome of the 11 October presidential election (see "RFE/RL Newsline," 9 November 1998). Also on 9 February, parliamentary deputies representing six opposition parties, together with an unspecified number of independent deputies, announced the creation of the Democratic Bloc, which will hold its founding congress on 16 February. LF AZERBAIJANI PARLIAMENT DENIES DESTRUCTION OF ARMENIAN MONUMENTS. Deputies adopted a statement on 9 February rejecting as "a lie" reports of the destruction of an Armenian cemetery and other Armenian monuments in the Azerbaijani exclave of Nakhichevan (see "RFE/RL Newsline," 14 and 15 December 1998), Turan reported. They said such reports are aimed at "preparing the ground for new territorial claims by Armenia." Responding to an appeal from Armenian Foreign Minister Vartan Oskanian to intervene to prevent further such destruction at the Old Julfga cemetery in Nakhichevan, UNESCO Director-General Federico Mayor said measures have been taken to prevent a repeat of such "vandalism," Noyan Tapan reported on 8 February. LF RUSSIA APPREHENDS GAMSAKHURDIA-ERA GEORGIAN OFFICIAL. Valerii Gabelia, who was a local administration official under Zviad Gamsakhurdia in 1990-1991, has been arrested by Russian police near Moscow, where he has lived since leaving Georgia in 1994, "Nezavisimaya gazeta" reported on 10 February. The Georgian government had requested his extradition to stand trial on charges of treason, attempting a coup d'etat, and banditry. LF KAZAKHSTAN LIMITS IMPORTS FROM KYRGYZSTAN, UZBEKISTAN. Kazakhstan's Prime Minister Nurlan Balgimbayev told journalists in Astana on 9 February that in order to protect domestic producers, his country will limit imports from neighboring Kyrgyzstan and Uzbekistan, Interfax reported. Kazakhstan's Minister of Energy, Industry, and Trade, Mukhtar Ablyazov said the restrictions will affect several food imports. He also said the government will form an anti- dumping committee. BP KAZAKHSTAN'S GOVERNMENT HOLDS SESSION ON ECONOMIC RESULTS... Prime Minister Balgimbayev told the government on 9 February that last year, Kazakhstan was able to mitigate the impact of the world financial crisis, Interfax reported. However, he noted that Kazakhstan posted a $1.7 billion trade deficit owing to the fall in world prices of the country's major exports: oil, metals, and grain. At year's end, inflation was 1.9 percent, significantly below the 9.5 percent forecast. The average wage in Kazakhstan remained the highest among CIS countries, at the equivalent of $120-130 monthly, while the average monthly pension rose to $48. He said the government has paid nearly all pension arrears also. Balgimbayev also noted that the country attracted $2.2 billion in investments in 1998, up on the 1997 level. BP ...FOLLOWING REPORT BY STATE STATISTICS COMMITTEE. The chairman of Kazakhstan's State Statistics Committee, Jaksybek Kulekeyev, announced on 8 February that foreign trade in the first 11 months of 1998 fell by 7 percent, Interfax reported. Exports fell by 15 percent, compared with 1997, and totaled $5.5 billion. Imports increased during the same period by 1 percent, totaling $7.13 billion. Trade with CIS countries, including "shuttle" trade, totaled $5.8 billion, an 11 percent drop from 1997. Exports to the CIS were worth $2.4 billion, while imports were unchanged against 1997 figures, at $3.4 billion. BP KYRGYZ PRESIDENT MEETS WITH BANK OFFICIALS... Askar Akayev, meeting with the heads of the country's 24 commercial banks in Bishkek on 9 February, said bankers need to formulate a plan for building a national banking system, RFE/RL correspondents reported. Akayev recommended the banks do more to attract private investors, noting that small and medium- sized banks that have already done so survived the initial impact of the Russian financial crisis. Akayev also emphasized the importance of the bank's support for agriculture, noting that this is a strategic industry and that 95 percent of state loans to farmers in 1998 were paid back. Akayev warned that the government, the National Bank, and commercial banks must ensure that there is no repeat of last fall's devaluation of the som. BP ...HEARS COMPLAINTS. The chairwoman of the Association of Bankers, Sharipa Sadybakasova, said the National Bank has too much control over commercial banks, and she recommended greater independence for the latter. The chairman of the National Bank, Ulan Sarbanov, said his institution will continue to exert strong control over commercial banks. He favored limited independence for commercial banks. The chairman of the board of directors and the owner of KRAMDS bank brought up the subject of Erkinbek Alimov, the bank's chairman, who is currently held on charges of embezzlement. Both said there is no legal reason for his arrest, as Alimov had only approved loans to people who then embezzled that money. They demanded his release, threatening that otherwise they will appeal to international organizations. BP TURKMEN FOREIGN MINISTER VISITS IRAN... Boris Shikhmuradov made a one-day visit to Iran on 6 February to discuss possible routes for exporting Turkmen natural gas and oil, IRNA reported. In his meeting with Iranian Foreign Minister Kamal Kharrazi, Shikhmuradov said his country is in favor of exporting oil via Iran as "the Iranian route is economical and safe." The chairman of Iran's Expediency Council, Akbar Hashemi Rafsanjani told Shikhmuradov in a separate meeting that he agrees with that viewpoint and hopes for the speedy implementation of agreements between the two countries, "despite overt and covert opposition of the U.S. to the transfer of energy...via Iranian territory." Shikhmuradov also met with Iranian President Mohammad Khatami, who described Tehran-Ashgabat relations as "deep-rooted and strong." BP ...HINTS AT IMPROVEMENT IN REGIONAL TIES. In his talks with Kharrazi, Shikmuradov mentioned that during his recent visit to Islamabad, Pakistani officials spoke of a desire to "open a new chapter in Tehran-Islamabad relations" (see "RFE/RL Newsline," 26 January 1999). Shikhmuradov said he had also met with representatives of Afghanistan's Taliban movement in Islamabad who had assured him that the murderers of Iranian diplomats and a reporter would soon be brought to justice. The Taliban officials had said they want good relations with all their neighbors, including Iran. Shikhmuradov and the Iranian officials with whom he met agreed on the need for clearly defining the "Caspian Sea's legal regime." BP END NOTE DOWN TO SUBSISTENCE By Paul Goble Nearly three out of every four Russians now grow some or all of their own food, a measure of the ways in which they are attempting to cope with their ever-increasing impoverishment. That figure comes from a U.S. Information Agency- sponsored survey of more than 2,000 residents of the Russian Federation. Conducted in September-October 1998 and released last month, this poll not only helps to answer "just how bad" poverty in Russia now is but, equally important, undercuts some assumptions about how Russians are dealing with their economic difficulties. The poll's findings about subsistence farming are perhaps the most striking. More than half of all Russians-- some 55 percent--currently grow approximately half or more of their food in private gardens, at their dachas, or on other plots of land. Only 27 percent, the poll found, do not grow any of the food they consume--and that in a country whose population remains more than 70 percent urban. But this is just one of the ways Russians are trying to cope at a time when only 50 percent of Russian adults are employed and only one in four of those who are employed are being paid on a more or less regular basis. Not surprisingly, many Russians are turning to family and friends. Some 57 percent of those polled had borrowed money, and another 52 percent had accepted assistance of one kind or another from family or friends in the six months before the poll. But most expressed fear that this source may be drying up. Fewer than 40 percent said they believe they can count on this source of alternative income if things become even worse. Russians are not turning to two potential sources of income that many have assumed they are using to keep afloat. As the USIA report notes, "contrary to popular accounts, the substitution of barter for wares overall is not that prevalent." And workers not paid on time are not making money "in a flourishing second economy." With regard to barter, the survey found that in the six months before the poll, only 27 percent of those working had received goods in lieu of wages and that in half of these cases, this was only a one- or two-time event. And the survey found such wage substitutes are doing little to help those not being paid on a regular basis. Some 35 percent of workers who have either not been paid or have been paid more than a month late "never receive payment in kind," the report said. With regard to the question of second jobs, the USIA survey failed to find much evidence that Russians are making use of them to supplement their incomes. While some may have underreported their participation in such jobs owing to concerns about taxation, 82 percent said they do not have a second job. Only 10 percent said they have a regular second job, and only 6 percent indicated they sometimes do. Moreover, most of these jobs provide relatively little income. Forty-three percent of those with such jobs say it provides them with less than 25 percent of their income; only 16 percent say that it provides more than half. Given the assumptions many have made about the role of the second economy in Russia, the USIA survey intriguingly found that those not paid regularly are no more likely to have a second job than those who are paid on time. That lack of individual entrepreneurship in much of the Russian labor force was reflected in another finding of the USIA-sponsored poll: namely, that large majorities of working Russians were unwilling to leave their current jobs even if they are not being paid on a regular basis. Most believe that it would be difficult, if not impossible, to find an equivalent position quickly or at all. And all are aware that the government is unlikely to provide them with unemployment benefits in the interim. Indeed, two out of three unemployed Russians today have never received such benefits. Given such concerns and difficulties, Russians are turning toward subsistence, an obvious survival strategy and one that represents an unspoken call for help from the outside. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1999 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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