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RFE/RL NEWSLINE Vol. 3, No. 85, Part I, 3 May 1999
___________________________________________________________ RFE/RL NEWSLINE Vol. 3, No. 85, Part I, 3 May 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 * BOMBS PLANTED NEAR TWO SYNAGOGUES * COMMUNISTS HINT AT SHOWDOWN OVER 'IMF BILLS' * VERDICT ON KYRGYZ NEWSPAPER UPHELD End Note: AZERBAIJANI ECONOMY STILL GROWING, BUT PROBLEMS ACCUMULATE xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA BOMBS PLANTED NEAR TWO SYNAGOGUES. Two bombs exploded near two synagogues in Moscow on 1 May. Neither synagogue was damaged and no injuries were sustained, Interfax reported. Russia's Chief Rabbi, Adolf Shaevich, suggested that the explosions were linked with the recent court ban on the Moscow branch of Russian National Unity (RNE). Shaevich added that he does not think the incidents had anything to do with the approaching Jewish holiday of Lag Ba-Omar, although a bomb exploded near one of the synagogues last year on that day, causing some damage. Interior Minister Sergei Stepashin also suggested that the bombs were planted by neo-Nazi groups. He told NTV on 2 May that for "the past two or three months, all authorities and the government in Moscow have been actively working to suppress the RNE and other pro-Nazi groups" (see "RFE/RL Newsline," 20 April 1999). He also announced that his ministry has formed a task force to investigate the incidents. JAC COMMUNISTS HINT AT SHOWDOWN OVER 'IMF BILLS'... The State Duma's first reading of legislation drafted to meet the IMF's conditions for new loans will take place after 20 May, Duma Budget Committee Chairman Aleksandr Zhukov told reporters on 30 April. Zhukov based his prediction on the assumption that the cabinet will submit the bills in early May. The committee will then need at least 10 days to discuss the legislation, he noted. Leader of the Duma's largest faction, Communist Party head Gennadii Zyuganov, hinted that he is not completely in favor of the bills, saying that the legislation would double oil and gasoline prices, make food at least 40 percent more expensive, and thrust another 10 million people below the poverty line. First Deputy Prime Minister Yurii Maslyukov, on the other hand, said the bills contain "nothing surprising" and "will not turn us into slaves of the IMF." JAC ...AND RECALL OF MASLYUKOV. Our Home Is Russia faction leader Vladimir Ryzhkov told Interfax on 30 May that Maslyukov "finds himself in a terrible situation," since as a Communist, he will be put forward to push the bills through the Duma. According to Ryzhkov, Valentin Kuptsov, deputy chairman of the Communist faction, recently refused to rule out that Maslyukov might be recalled from the cabinet, which Ryzhkov called an indication that the Communists are considering the possibility of breaking with the cabinet. JAC RUSSIA WARNS OF FURTHER DEFAULT ON SOVIET-ERA DEBT. Russian Finance Minister Mikhail Zadornov told reporters on 30 April that Russia might miss payments in May and June on Soviet-era debt, Interfax reported. Earlier, the Finance Ministry had announced that Russia is unlikely to be able to make a $1.2 billion payment on Ministry of Finance bonds maturing on 14 May (see "RFE/RL Newsline," 21 April 1999). These particular bonds are debt incurred by the Soviet Union. Vneshekonombank Chairman Andrei Kostin said on 27 April that overdue payments on Soviet-era debt to the London and Paris Clubs total $2 billion. JAC CHERNOMYRDIN CONTINUES SHUTTLE DIPLOMACY. President Boris Yeltsin's envoy to Yugoslavia Viktor Chernomyrdin said in Moscow on 1 May that Yugoslav President Slobodan Milosevic agreed in Belgrade the previous day to an unspecified international peace-keeping force for Kosova. Chernomyrdin told ITAR-TASS that "Belgrade shows concrete and constructive intentions, which can become a basis for further progress." Meanwhile, Yeltsin met with six senior advisers on 2 May to discuss the Kosova conflict and talked on the telephone with U.S. President Bill Clinton for 15 minutes. Chernomyrdin left the next day for Washington, where he will hand over a personal message from Yeltsin to Clinton, AP reported. Chernomyrdin said that the message outlines "concrete suggestions for solving the conflict," but he gave no details. Chernomyrdin also plans to meet with UN Secretary- General Kofi Annan and Vice President Al Gore. He added that another visit to Belgrade will "depend on the results of our negotiations." FS HOLIDAY USED FOR ANTI-NATO PROTESTS. Trade union members, Communists, nationalists and other groups organized street rallies on the 1 May holiday across Russia. An estimated 35,000 people gathered in Moscow, 12,000 in St. Petersburg, 19,000 in Yakutia, 6,000 in Chita and 2,000 in Saransk, ITAR-TASS and Interfax-Eurasia reported. A new theme appeared to commemorate worker solidarity: anti-NATO condemnations. Speaking at one rally, Moscow Mayor Yurii Luzhkov condemned "NATO's genocide against the people of Yugoslavia." Communist leader Zyuganov, addressing another demonstration, said that "the U.S. sees a united Europe as a rival and that's why it is waging this war in Central Europe." JAC MOSCOW TO TRANSFER FUNDS FOR STRIKING METRO WORKERS. The federal government agreed on 30 April to transfer 19 million rubles ($790,000) to Sverdlovskmetrostroi, the construction company for the rapid transit system in Ekaterinburg, whose workers have staged various strikes for a number of months. According to ITAR-TASS, Finance Minister Zadornov described the transfer as "merely a gesture of the government's good will toward the municipal government in Ekaterinburg, for whom the metro's construction is a mayor expenditure." The previous day, Interfax-Eurasia reported that 48 workers have stepped up their hunger strike by refusing not only food but also water. At the same time, 157 of their striking co-workers were continuing with the more "usual" form of hunger strike. "Izvestiya" reported earlier that the total debt to the metro workers is 34 million rubles, which is the equivalent of 11 months of arrears (see "RFE/RL Russian Federation Report," 31 March 1999). JAC FARMERS SLAUGHERING LIVESTOCK TO RAISE FUNDS FOR FUEL. Anonymous specialists at the Ministry of Agriculture told ITAR-TASS on 30 April that a number of farmers are being forced to slaughter cattle so that they can raise the money to buy fuel to run equipment for spring sowing. The agriculture officials blamed the Finance Ministry for not transferring funds in time for the spring sowing season. According to the agency, the governor of Nizhnii Novgorod Oblast was forced to outlaw the slaughter of cattle. JAC BEREZOVSKII FREE TO TRAVEL. The Office of Russia's Prosecutor-General has lifted the travel ban on business tycoon Boris Berezovskii, who is being charged with money laundering and "illegal entrepreneurship," Interfax reported on 30 April. Berezovskii was earlier ordered not to leave Moscow pending the conclusion of the investigation of the case against him. On 1 May, Berezovskii told Interfax he was leaving for France but would return to Moscow after the May holidays. JAC TATARSTAN, IRAQ DISCUSS OIL INDUSTRY COOPERATION. Meeting in Moscow on 29 April, Tatarstan's Prime Minister Rustan Minnikhanov and Iraqi Oil Minister Mukhammad Rashid discussed the possibility of Tatneft's participation in the consortium of Russian oil companies being formed to exploit Iraq's West Qurna oil field, RFE/RL's Kazan bureau reported on 30 April (see "RFE/RL Newsline," 28 April 1999). Minnikhanov said Tatarstan could provide Iraq with drilling equipment and spare parts. Rashid expressed an interest in purchasing KamAZ trucks and in Tatarstan's aviation and petrochemical industries. LF TRANSCAUCASUS AND CENTRAL ASIA RUSSIA MAY CONSTRUCT AIRCRAFT IN ARMENIA. Hovannes Ohanian, an Armenian senior executive of Russia's Sukhoi Production Company, said in Yerevan on 29 April that the company may begin manufacturing light sport aircraft in Armenia, provided a tax exemption agreement is reached with the Armenian government, RFE/RL's Yerevan bureau reported. Ohanian said Sukhoi wants the present, three-year exemption from profit tax for foreign companies extended to five years. He said Sukhoi would then invest some $7 million in Armenian production facilities, enabling it to produce 40 planes in 2000 and 80 the following year. LF AZERBAIJANI OPPOSITION CRITICIZES DRAFT BILL ON MUNICIPAL ELECTIONS. The 17 opposition parliamentary deputies aligned in the Democratic Bloc issued a statement on 30 April protesting the refusal of the parliamentary majority to discuss a draft bill on municipal elections prepared by three opposition groups, Turan reported. The bloc argued that the parliament's decision to proceed with discussion of its alternative draft law in the absence of opposition deputies is a violation of parliamentary procedure. The Democratic Bloc announced a boycott of parliamentary sessions last month to demand a debate on the performance of the legislature and its speaker (see "RFE/RL Newsline," 26 April 1999). Lawyer Vidadi Makhmudov told Turan on 1 May that the parliament's draft bill on municipal elections is "unprogressive," as it does not provide for the allocation of seats under the proportional system or envisage municipal elections in the capital, Baku. LF GEORGIAN SUPREME COURT REJECTS CLEMENCY FOR IMPRISONED WARLORD. The Georgian Supreme Court has a rejected an appeal by the lawyer of Mkhedrioni leader Djaba Ioseliani to review the latter's 11-year sentence, Caucasus Press reported on 1 May. Ioseliani was sentenced in November 1998 on charges of attempting to assassinate Georgian head of state Eduard Shevardnadze in August 1995 as well as of treason and robbery (see "RFE/RL Newsline," 11 November 1998). Lodging the appeal earlier this year, Gabunia argued that Ioseliani's trial was illegal, since at the time of his arrest in November 1995 he was a parliamentary deputy and therefore immune from prosecution. He said at that time that if the Supreme Court rejected his plea, he would appeal to the International Human Rights court in Strasbourg (see "RFE/RL Newsline," 12 February 1999). Ioseliani has been hospitalized with tuberculosis of the bone marrow, according to "Rezonansi" of 3 May. LF WEST GEORGIAN TOWN COUNCIL RENAMES MAIN BOULEVARD AFTER GAMSAKHURDIA. The municipal council in Zugdidi, the capital of the late Zviad Gamsakhurdia's home region of Mingrelia, has renamed the town's central street after the deceased president, Caucasus Press reported on 1 May. The council also presented a house in the town to Gamsakhurdia's widow, Manana Archvadze-Gamsakhurdia. LF KAZAKH JOURNALIST SENT TO PSYCHATIRIC HOSPITAL. On arriving at Almaty main station from Astana last week, Armial Tasymbekov was arrested by National Security Committee officials and taken to a psychiatric clinic, RFE/RL's Almaty bureau reported on 30 April. Tasymbekov is suspected of involvement in daubing slogans on buildings and fences in Astana that denounced President Nursultan Nazarbaev and lauded former Premier Akezhan Kazhegeldin (see "RFE/RL Newsline," 31 March and 21 April 1999). LF KAZAKHSTAN TO RESTRICT FREE HIGHER EDUCATION. Beginning this year, university students in Kazakhstan will be required to pay fees ranging from $700-$1,000, ITAR-TASS reported on 2 May. Young people from low-income families will have access to interest-free loans to finance their studies, while some 19,000 exceptionally gifted high-school graduates will retain the right to continue their education free of charge. LF VERDICT ON KYRGYZ NEWSPAPER UPHELD. The Bishkek City Court on 1 May approved the fines that a district court handed down one month earlier on the independent weekly "Res Publika," RFE/RL's Bishkek bureau reported. The court had fined the paper 200,000 som ($6,670) for insulting the honor and dignity of Amanbek Karypkulov, president of Kyrgyzstan's National Television and Radio Corporation (see "RFE/RL Newsline," 1 April 1999). On 12 January, the newspaper published an open letter from 20 employees at the corporation to President Askar Akaev, Prime Minister Jumabek Ibraimov, and the speakers of both chambers of the parliament protesting that Karypkulov, in his capacity as ideological secretary of the Kirghiz SSR Communist Party in the early 1980s, had repressed media freedom and continues to do so now. The newspaper's editor, Yuri Maksimov, is to appeal to the country's Supreme Court. LF KYRGYZSTAN'S PARLIAMENT PASSES ELECTORAL CODE. The Legislative Assembly--the lower chamber of the parliament-- passed the new election code in the second reading on 29 April, RFE/RL's Bishkek bureau reported. The code provides for 15 of the 60 seats in the new parliament to be allocated to political parties under the proportional system. The parliament had earlier rejected that provision. Only those political parties that registered with the Ministry of Justice one year before the election date (23 March 2000) are eligible to contest those seats. LF ABDUCTORS RELEASE THREE TAJIK POLICE OFFICERS. "As a gesture of unilateral good will in the name of peace," opposition field commander Mansur Muakalov released on 1 May three of the six police officers his subordinates had abducted two days earlier, AP reported (see "RFE/RL Newsline," 29 and 30 April, 1999). But Muakalov said he will continue to hold the other three men until the Tajik authorities comply with his demand for the release of five opposition fighters held on murder charges. LF TURKMEN PRESIDENT TO YIELD SOME POWERS TO PARLIAMENT. Saparmurat Niyazov told the parliament on 30 April that he will transfer some of his oversight powers to the parliament, RFE/RL's Turkmen Service reported. A special commission, chaired by the president, will formulate the necessary constitutional amendments, which must be endorsed by the People's Council at its next meeting in December, according to Interfax. Also on 30 April, the parliament passed legislation on the conduct of the parliamentary elections scheduled for 12 December, which for the first time will be held on an alternative basis. LF END NOTE AZERBAIJANI ECONOMY STILL GROWING, BUT PROBLEMS ACCUMULATE By Michael Wyzan To all appearances, Azerbaijan seemed to feel the effects of the decline in world oil prices and the Russian crisis relatively little last year. However, there are a number of indicators of economic problems, especially in the external sector. Foreign investment and oil exports are declining, and there is a net outflow of foreign businessmen. The country's 10 percent GDP growth in 1998 was the highest in the CIS; indeed, such growth accelerated during the fourth quarter to 13.1 percent, led by a booming construction industry and, to a lesser extent, the transport and communications sectors. Industry and agriculture grew more slowly, however. The 2.2 percent growth in industrial production was the highest since independence, but this conceals the fact that non-oil industrial production fell last year by 4.1 percent. Developments in the Azerbaijani oil sector were both positive and negative. Crude oil production reached 11.4 million metric tons in 1998, up from 9.0 million tons the previous year and the highest since 1991, as new offshore wells of the Azerbaijan International Operating Company (AIOC) came on line. On the other hand, the price received for that oil fell by 18.1 percent. Largely as a result of that decline, exports during January-September 1998 fell by 11 percent relative to the same period in 1997, with oil exports down by 36 percent and those of semi-processed cotton (the second most important export good) down by 67 percent. From January to September, imports were up by 22 percent and the trade deficit reached $740 million, compared with $448 million during the same period in 1997. As expected in a country experiencing a major inflow of foreign direct investment (FDI) into its oil sector, while new oil production and exports are slow to appear, Azerbaijan has had enormous current account deficits. In 1998, the shortfall was about 35 percent of GDP, a figure that the IMF projects will increase in the coming years. With investment in the oil sector leveling off, FDI in January-September 1998--of which the oil sector accounted for 81 percent--decreased to $674 million from $724 million during the same period in 1997. However, oil bonuses during January-September 1998 were $73 million, up from $64 million in 1997 as a whole. Another area where problems have arisen owing to the decline in oil export revenues is the state budget: the general government deficit was 4.3 percent of GDP in 1998, up from 3.6 percent the year before. Oil-related revenue was 47.5 percent of total budget revenue in 1997 but fell to 31.7 percent in January-June 1998. Overall, the Azerbaijani economy seems to have suffered less contagion from Russia's economic crisis than other CIS lands. The manat closed 1998 at 3,886 to the dollar, almost exactly where it was at the end of 1997 (and down from 4,440 at the close of 1995). Not surprisingly, in the face of such stability, consumer prices declined by 3.5 percent last year (December-to-December). However, the standard of living has benefited little from such stability, as average monthly wages--both in dollars and in constant manats--grew more slowly last year than in 1997. The average dollar wage was only $44.8 in the final quarter of 1998. This year's prognoses suggest that economic performance will be somewhat weaker than in 1998, with the government program envisioning 7 percent GDP growth and average annual inflation of 4 percent. Among the worrying indicators are cutbacks by international oil consortia operating in the country. The AIOC, for example, announced in February that it would cut costs by 20 percent and lay off 25-30 expatriate staff. The numbers of foreigners working in Baku is declining, having peaked at 6,000. This outflow reflects more than the downturn in the oil sector: it was reported in late March that 110 Turkish companies left Azerbaijan last year, pointing to arbitrariness and corruption among government officials as well as an unclear and frequently changing tax policy. In another harbinger of a downturn, the boom in housing construction has ended, with apartment prices falling for the first time in recent years. In granting the country a $112 million loan in late January ($79 million of which was a special loan to cope with low oil prices and the Russian financial crisis), the IMF pointed to the need to strengthen and streamline the public sector, restructure the banks, improve the privatization process, and reform public enterprises. This is a standard set of desirable reforms for transition countries. However, world experience suggests that countries specializing in oil are particularly likely to be burdened with a corrupt and inefficient government that is easily swayed by interest groups. Thus, Azerbaijan's task is especially difficult, suggesting that high priority must be given to economic diversification. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1999 RFE/RL, Inc. 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