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RFE/RL NEWSLINE Vol. 3, No. 97, Part I, 19 May 1999
___________________________________________________________ RFE/RL NEWSLINE Vol. 3, No. 97, Part I, 19 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 * STEPASHIN SAILS THROUGH CONFIRMATION PROCESS * ANOTHER MIGHTY BANK FALLS * AZERBAIJAN ACCUSES CHINA OF SELLING ROCKETS TO ARMENIA xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA STEPASHIN SAILS THROUGH CONFIRMATION PROCESS. The State Duma on 19 May confirmed acting Prime Minister Sergei Stepashin's candidacy for that post, with 298 votes in favor, 55 against, and 14 abstentions, RFE/RL's Moscow bureau reported. Our Home Is Russia, Russian Regions, and the Liberal Democratic Party factions solidly supported Stepashin's nomination, and the bulk of the Agrarian and People's Power faction also voted in his favor. Yabloko members continued their practice of voting independently: 24 cast their ballots in favor of Stepashin and 12 against. Before the vote, Yabloko leader Grigorii Yavlinskii announced that the group cannot give Stepashin its full support since he played a direct role in the war in Chechnya. In his remarks to the Duma, Stepashin emphasized the importance of forming a government of professionals, independent of party affiliation. JAC ANOTHER MIGHTY BANK FALLS... The Central Bank on 18 May revoked the licenses of 12 failing banks, including Menatep, which before last August's devaluation of the ruble was the country's seventh largest in terms of assets. Other banks stripped of their licenses were Unikombank, Unibest, Derzhavnii, Interbiznesbank, Kontakt, MV, Slaviya, ELKOM- Bank, Krasnodarbank, Kurgansotsbank, and Nizhnevartovsk Commercial Innovation Bank, Interfax reported. The Central Bank explained the move by citing the banks' failure to meet its requirements, comply with federal laws, and make payments to creditors. Russian Television reported that Menatep's largest investors had already transferred their main assets to Menatep St. Petersburg. Two days earlier, then acting Prime Minister Stepashin had said that the licenses of six major Russian banks would be revoked in connection with the banks' participation in the illegal export of capital abroad. JAC ...WHILE ANOTHER 30 FACE EXTINCTION? "Moskovskii komsomolets" reported on 19 May that many banks have been engaged in "stealing taxes" and that more than 20 billion rubles ($805 million) in tax money is stuck in "problem banks." Dmitrii Ignatiev, director of a department overseeing tax compliance among financial and credit organizations at the Tax Ministry, told the newspaper that the ministry might revoke the licenses of 30 banks for the systematic violation of tax laws. JAC SIDANKO DECLARED BANKRUPT. A Moscow court on 18 May declared Sidanko, Russia's sixth-largest oil company, bankrupt, ITAR-TASS reported. A 12-month external administrator will be appointed at the court's next hearing of the case, scheduled for 23 July, according to the agency. Spokesmen for Sidanko and BP Amoco, one of the world's largest oil companies, which controls a 20 percent share in Sidanko, both expressed shock at the court's decision, "The Moscow Times" reported on 19 May. Analysts said the court's decision was a blow for Sidanko's creditors and for Russia's hopes to attract foreign investment. According to Jim Henderson, oil analyst at MFK Renaissance, the court ruled against a plan that Sidanko's creditors supported, Reuters reported. He added that "the message is that buying an interest in a Russian oil company is not a good idea." JAC CHERNOMYRDIN, TALBOTT, AHTISAARI LOCKED IN 'TOUGH NEGOTIATIONS.' Russian special envoy to Yugoslavia Viktor Chernomyrdin, U.S. Deputy Secretary of State Strobe Talbott, and Finnish President Martti Ahtisaari met in Helsinki on 19 May to resume negotiations on Kosova. Seven hours of discussions there the previous day produced no breakthrough. Talbott told Reuters that "these are very tough issues, but serious people are working on them." He did not give details but added that "there is enough purpose in continuing this effort to go on talking." Reuters noted that the three are trying to agree on enough details about the composition of and control over a possible international peace-keeping force to send Yugoslav President Slobodan Milosevic a joint message. They also hope to pave the way for a UN Security Council resolution on Kosova. Meanwhile in Bonn, high-ranking Foreign Ministry officials from the G-8 countries continued working on a draft UN resolution, the "Frankfurter Allgemeine Zeitung" reported. FS DID NATO FORCES OBSTRUCT RUSSIAN VERIFICATION MISSION IN MACEDONIA? An unnamed German government official told the "Frankfurter Allgemeine Zeitung" of 19 May that NATO forces and the Macedonian government failed to fulfill its obligations deriving from a 1994 OSCE agreement on notification and verification of military activities. According to that agreement, OSCE member states are obliged to report military activities involving more than 9,000 soldiers to all other members 42 days in advance. As a OSCE member state, Macedonia was obliged to report the deployment of NATO troops on its territory but failed to do so until after that number had been exceeded in late April. Russia requested an inspection in early May. The official also said that U.S. commanders failed either to brief the Russian verifiers or to provide a helicopter for verification from the air. He added that NATO Commander Wesley Clark argued that verification poses threats to the troops' security. The German official dismissed Clark's concerns, saying that NATO operations in Macedonia, unlike in Albania, are purely humanitarian in nature. FS STOCK MARKET, RUBLE SHOW SIGNS OF QUICK RECOVERY FROM GOVERNMENT CRISIS. Russia's benchmark stock index, RTS, rose 7.7 percent on 18 May from the previous day, after serious slippage following Yevgenii Primakov's ouster as prime minister. Shares in Surgutneftegaz soared 17.3 percent, while Mosenergo and Rostelekom gained 6.5 percent and 5.3 percent respectively, AFP reported. The ruble, meanwhile, gained 4 kopeks against the dollar in morning trading on 19 May, rising to 24.75 rubles to $1, according to Interfax. On 17 May, the ruble rose 7 kopeks on the morning exchange. In both markets, traders attributed the rises to anticipation that Stepashin would be confirmed as premier. JAC GOOD NEWS ON ECONOMIC FRONT? Real incomes rose in March by 4.7 percent compared with the previous month, while industrial production inched up 1.5 percent in April compared with last year, "Finansovaya Rossiya" and ITAR-TASS reported. However, real incomes in the first quarter slumped 28.3 percent, compared with same period last year. "Rossiiskaya gazeta" reported on 19 May that economists are divided over whether gains in output recorded in some industries are the first signs of a small economic recovery or are accidental. Acting Deputy Prime Minister Vladimir Bulgak took the optimistic view, telling the newspaper that the output growth of certain industries is occurring not just in monetary terms but in "physical terms" as well. On 18 May, the OECD concluded in a recent report that the situation of the economy "remains quite difficult and potentially unstable," but it added that the overall outlook is "perhaps a bit more encouraging than in late 1998." JAC YELTSIN REPORTS FOR WORK. Russian President Boris Yeltsin showed up at the Kremlin on 19 May, according to the presidential press service. Yeltsin's appearance follows a spate of stories, sourced from the Spanish embassy in Moscow, that Yeltsin cancelled a meeting with Spanish Prime Minister Jose Maria Aznar because of a case of severe bronchitis (see "RFE/RL Newsline," 18 May 1999). JAC RUSSIAN COMPUTERS NOT READY FOR MILLENIUM. Acting Deputy Prime Minister Bulgak told government officials on 18 May that some essential Russian computer networks may begin to experience failures as early as 9 September unless resolute measures are taken to prepare for the so-called millennium computer bug problem, "RIA-Novosti" reported. According to the agency, Bulgak accused the Economics Ministry of the worst performance among all government agencies in this regard. He pointed to the ministry's inadequate efforts to prepare industrial enterprises. Other agencies singled out for censure were the Federal Energy Commission and the State Committees for Cartography and Environmental Protection. JAC JUDICIAL APPOINTMENT CONFIRMED. The Federation Council on 18 May confirmed the appointment of Gennadii Zhilin as a judge at the Constitution Court, ITAR-TASS reported. Zhilin formerly served at the Russian Supreme Court. JAC REPORTER WORKING VERY CLOSELY WITH INTERIOR MINISTRY. Interior Ministry officials on 18 May revealed that they have furnished Aleksandr Khinshtein, a journalist for "Moskovskii komsomolets," with an official police identification card, "The Moscow Times" reported on 19 May. Khinshtein is perhaps best known for articles that led to criminal investigations into business magnate Boris Berezovskii's alleged money- laundering at Aeroflot and into electronic eavesdropping on Boris Yeltsin and family. Khinshtein was charged with showing false documents to police on 17 May when he was stopped by police after going through a red light and revealed his card identifying him as a police major. "Kommersant-Daily" the next day cited an anonymous source at the Interior Ministry as accusing Khinshtein of violating journalistic ethics by combining his activities as a journalist and an agent. Khinshtein's newspaper, for its part, accused various unnamed ministry officials with conspiring against both the reporter and Prime Minister Stepashin, who is also acting interior minister. JAC STEPASHIN MEDIATES BETWEEN RIVAL ELECTION CANDIDATES. At a meeting with then acting Prime Minister Stepashin in Moscow on 18 May the two rival candidates for the post of president of the Republic of Karachaevo-Cherkessia agreed to refrain from organizing public demonstrations and calling for the revision of the region's borders, Interfax and Caucasus Press reported. A delegation from the Russian Central Electoral Commission will be sent to Karachaevo-Cherkessia to clarify allegations by defeated candidate Stanislav Derev that supporters of retired army General Vladimir Semenov rigged the outcome of the poll. According to preliminary results, Semenov polled 75-80 percent of the vote and Derev 20 percent. Also on 18 May, President Yeltsin appointed Deputy Interior Minister Ivan Golubev his acting plenipotentiary in the republic. LF TRANSCAUCASUS AND CENTRAL ASIA GEORGIAN PRESIDENT SAYS NATO MEMBERSHIP UNLIKELY BEFORE 2005. Speaking on NTV's "Man of the Day" program on 18 May, Eduard Shevardnadze predicted that Georgia will not join NATO while he is president, even if he is re-elected next year for a second five-year term, Caucasus Press reported. Shevardnadze admitted that Georgia is currently incapable of meeting membership requirements. Reuters on 18 May quoted a Georgian Defense Ministry spokesman as saying that for financial reasons, Defense Minister Davit Tevzadze has ordered the cancellation of the planned 26 May military parade to mark the 81st anniversary of Georgia's independence. The spokesman said the ministry is so short of funds it cannot even buy gasoline for its fleet of cars. LF GEORGIAN PARLIAMENTARY SPEAKER REJECTS ADJAR LEADER'S CHALLENGE. Zurab Zhvania has turned down a 17 May invitation by Adjar Supreme Council chairman Aslan Abashidze to take part in a televised debate, Caucasus Press reported on 19 May, citing "Dilis gazeti." A colleague of Abashidze's had accused Zhvania in 1997 of planning Abashidze's assassination, a charge that Zhvania denied (see "RFE/RL Newsline," 21 and 22 October 1997 ). At the same press conference on 17 May, Abashidze accused the central Georgian leadership of incompetence and called on its members to resign, according to "Rezonansi" on 18 May. He also criticized as undemocratic amendments to the existing election legislation drafted by Zhvania's Union of Citizens of Georgia. LF RUSSIA TO PROPOSE NEW ABKHAZ PEACE PLAN. Lev Mironov, who is the Russian Foreign Ministry's envoy for the Abkhaz conflict, told Caucasus Press on 18 May that as soon as the new Russian government has been formed, Moscow will advance a new initiative for kick-starting the deadlocked negotiations on a settlement of that conflict. Mironov accused both Tbilisi and Sukhumi of attaching greater importance to "upholding political prestige" than to seeking a compromise that would expedite the repatriation to Abkhazia of Georgian displaced persons. LF AZERBAIJAN ACCUSES CHINA OF SELLING ROCKETS TO ARMENIA. State foreign policy adviser Vafa Guluzade said in Baku on 18 May that Azerbaijan has formally protested Armenia's acquisition of eight Chinese Typhoon multiple rocket systems, AFP and Turan reported. He added that he does not believe the explanation of the Chinese ambassador in Baku, who said that Armenia bought the weapons from an unnamed foreign company involved in trading with China without the involvement of the Chinese authorities. Guluzade said the sale was agreed on last October when Armenian Defense Minister Vazgen Sargsian and his Russian counterpart, Igor Sergeev, visited Beijing. He accused Beijing of aspiring to prevent the export of Caspian oil via Azerbaijan. (Kazakhstan has signed s preliminary agreement with China on building an export pipeline.) Arguing that the sale is a violation of international norms and agreements, Guluzade demanded that China ask Yerevan to return the weapons. LF KAZAKHSTAN AGAIN CUTS OFF GAS SUPPLIES TO KYRGYZSTAN. Kazakhstan's Intergaz company on 18 May cut gas supplies to northern Kyrgyzstan, RFE/RL's Bishkek bureau reported, quoting the deputy director-general of the Kyrgyzgas state company. Toktosun Abduvaliev said his company owes Intergaz some $2.2 million for supplies received in 1997-1998. LF IMF, KYRGYZ GOVERNMENT REACH AGREEMENT. The Kyrgyz government has agreed to IMF conditions for resumption of financing under a three-year Economic Structural Adjustment Facility (ESAF-2) program, Interfax reported on 18 May. Harry Trines, head of the IMF mission in Bishkek, said that over the next two years, Kyrgyzstan must implement tough monetary and financial policies, keep inflation below 20 percent in 1999, and increase budget revenues while cutting expenditures. The IMF initially allocated $88 million for the three-year program, of which the first $41 million was disbursed in 1998. It increased the total sum to $120 million last year. LF TAJIK PRESIDENT PLEDGES TO EXPEDITE PARLIAMENTARY ELECTIONS. Presidential spokesman Zafar Saidov told ITAR-TASS on 18 May that President Imomali Rakhmonov intends to expedite the drafting of amendments to the country's constitution that will pave the way for parliamentary elections early next year. Saidov added that presidential elections will take place by 6 November 1999, the day when Rakhmonov's term expires. LF TURKMEN PRESIDENT VISITS IRAN. At the invitation of Iranian President Mohammad Kharrazi, Saparmurat Niyazov paid a one- day visit to the Iranian province of Golestan on 17 May to attend the ceremonial inauguration of the mausoleum of the 18th-century poet and philosopher Makhtum Kuli, RFE/RL's Turkmen Service reported. LF 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. 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