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RFE/RL NEWSLINE Vol. 3, No. 223, Part I, 16 November 1999
___________________________________________________________ RFE/RL NEWSLINE Vol. 3, No. 223, Part I, 16 November 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 * CHECHEN LEADERS APPEAL FOR HELP * SHOIGU SUBJECTED TO NEW SCRUTINY * OSCE REGISTERS VIOLATIONS IN GEORGIAN RUNOFF POLL End Note: OVERCOMING CORRUPTION xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA CHECHEN LEADERS APPEAL FOR HELP. Chechen President Aslan Maskhadov has appealed to Muslim states to "take an appropriate position" in response to the Russian devastation of Chechnya, Reuters reported on 16 November, quoting the secretary-general of the Organization of the Islamic Conference, Azzedine Laraki. Speaking in Jeddah, Laraki called on Russia to seek a peaceful solution to the conflict. He added that because of that conflict, he has rejected an invitation to visit Russia. In Prague, Chechen Foreign Minister Ilyas Akhmadov told journalists at RFE/RL's headquarters on 15 November that Moscow systematically rejects Chechen proposals for talks on resolving the conflict and that an outside mediator is needed. He said the UN could assume that role, as it did in Kosova (see also Part II). LF RUSSIAN REPRESENTATIVE ADVISES CIVILIANS TO LEAVE GROZNY. Russian presidential representative to Chechnya Nikolai Koshman on 15 November advised the remaining civilian population of Grozny to leave the city "for their own safety," noting that a corridor leading north from Grozny has been opened for this purpose, Interfax reported. Koshman was speaking at a press conference in Moscow on 15 November after he and Foreign Minister Igor Ivanov had tried to justify Moscow's Chechnya policy to G-7 ambassadors. On 12 November, Koshman had said he considers it inappropriate to rebuild Grozny a second time and proposed designating Gudermes the capital. Koshman also said that by 25 December, Russia aims to create eight tent camps in the "liberated" areas of northern Chechnya to which displaced persons will be encouraged to return. He predicted that over the next month, local Chechen communities would elect representatives to a new parliament, which, he said, would then name a new government by February 2000. LF BASAEV PESSIMISTIC OVER INTERNATIONAL COMMUNITY'S ABILITY TO PRESSURE MOSCOW. Field commander Shamil Basaev said in Grozny on 15 November he does not believe the West will succeed at the upcoming OSCE summit in Istanbul in persuading Russia to stop the war in Chechnya, Interfax reported. Basaev denied rumors of disagreements within the Chechen leadership or between individual field commanders. But he admitted that some residents of Gudermes had colluded with Russian troops and helped the latter take the town under their control (see "RFE/RL Newsline," 12 November 1999). OSCE Chairman-in-Office Knut Vollebaek said on 15 November that Russia must set a deadline for withdrawing its troops from Chechnya, according to AP. LF RUSSIAN MILITARY DENIES BATTLE FOR ACHKHOI-MARTAN. Chechen chief of staff Mumadi Saidaev said on 15 November that Russian armored columns were advancing from two directions on the town of Achkhoi Martan, southwest of Grozny. He noted, however, that those troops encountered serious resistance from the town's Chechen defenders, Interfax reported. But a Russian military spokesman denied that either direct clashes had taken place or that federal forces had incurred heavy losses. Meanwhile, systematic air strikes continued against Bamut and the towns of Sernovodsk and Urus Martan, while Grozny suffered fewer air raids than in recent days. LF SHOIGU SUBJECTED TO NEW SCRUTINY... Emergencies Minister and leader of the interregional movement Unity (Edinstvo) Sergei Shoigu announced on 15 November that he will go on vacation from 25-30 November in order to prepare for the upcoming State Duma elections, ITAR-TASS reported. Shoigu's announcement follows criticism from media and public figures that his recent tours to cities in Siberia, the Far East, and the North Caucasus were in effect campaign trips (see "RFE/RL Russian Federation Report," 3 November 1999.) Under Russian election law, officials are allowed to campaign only in their free time. In its latest issue (no. 45), "Literaturnaya gazeta" profiles Shoigu and the work of his ministry. According to the journal, Shoigu recently said that he takes a poor view of citizens who do not participate in elections and proposed "to deprive Russian citizenship to anyone who fails to vote three times in a row." JAC ...AS NEW INFORMATION COMES TO LIGHT ABOUT HIS MINISTRY. The journal also reported that Shoigu, who has been unusually successful in marshalling budget funds for his agency, managed to establish a special force within the ministry armed with light infantry weapons and staffed by former agents of elite forces such as Alpha. Among its missions is counter-terrorism and "providing security for the constitutional system." The journal argues that the existence of the group has been kept a secret with the complicity of the Kremlin, which "possibly saw" in the "enhanced Emergency Ministry a kind of gun under the pillow." However, this violates the constitution "since the ministry is not among the bodies specified for 'providing security.'" The office of Moscow Mayor Yurii Luzhkov reportedly owns 25 percent of the stock of "Literaturnaya gazeta" Publishers. JAC YELTSIN APPOINTS PUTIN'S CHOICE FOR SECURITY COUNCIL CHIEF. President Boris Yeltsin on 15 November named Sergei Ivanov, the deputy director of the Federal Security Service (FSB), as the secretary of the Security Council. The 46-year-old Ivanov takes over that post from Prime Minister Vladimir Putin, who proposed Ivanov as his successor at the council, Interfax reported, quoting presidential spokesman Dmitrii Yakushkin. Like Putin, Ivanov is a native of St. Petersburg and made a career in intelligence, first in the KGB and then in the FSB, both at home and abroad. Also on 15 November, Yeltsin signed a decree appointing FSB Director Nikolai Patrushev (another St. Petersburg native) a permanent member of the council to replace former Prime Minister Sergei Stepashin. JC DUMA TO BOOST MILITARY SPENDING. The State Duma's Budget Committee on 15 November recommended that the Duma adopt amendments to the 1999 budget that will increase military spending by 8.695 billion rubles ($330 million), Interfax reported. Last week, Finance Minister Mikhail Kasyanov explained that at least some of the unexpected additional tax revenues collected would be directed toward the army (see "RFE/RL Newsline," 15 November 1999). "Vremya MN" on 16 November reported that although all factions and political parties have already declared they will support the activities of the government in Chechnya, deputies would like more specific information from the government on how the money will be spent. The daily added that with elections looming, deputies would also like to earmark additional funds for assistance to children. The Duma is scheduled to hold the third reading of the 2000 budget on 29 November and the fourth reading on 3 December--16 days before the Duma elections. JAC INDUSTRIAL PRODUCTION CONTINUES TO EDGE UP. Russian industrial production grew 7.5 percent during the first 10 months of 1999, compared with the same period last year, according to the Russian Statistics Agency on 15 November. During the first three quarters, production jumped 7 percent (see "RFE/RL Newsline," 20 October 1999). Output in October alone leaped 10.3 percent, compared with the same month last year. The Organization for Economic Cooperation and Development forecast in its latest economic outlook that Russian GDP growth will slip to 1 percent in 2000 from 2 percent in 1999, Reuters reported on 16 November. The OECD concluded that "while there are signs of recovery, the macroeconomic situation remains potentially rather fragile." The organization also noted that while inflation would decline from 40 percent this year to 30 percent in 2000, upward pressure on energy and transportation prices would eventually hurt the manufacturing sector. JAC RUSSIA TO CONTINUE TO PUSH FOR DEBT WRITE-OFF. One day before the next round of negotiations with London Club creditors was scheduled to begin, Finance Minister Kasyanov told reporters on 15 November that the Russian government will ask the London Club creditors to write off 40 percent of its debt, Interfax reported. In September, Western sources told Interfax that Russia was hoping to have 30 percent of its debt to the club written off (see "RFE/RL Newsline," 16 September 1999). London Club members are reportedly prepared to consider partial debt forgiveness if the government is prepared to convert all debts from Vneshekonombank securities into Eurobonds. JAC YELTSIN AFFIRMS PRESIDENTIAL ELECTION DATE. After meeting with Central Elections Commission Chairman Aleksandr Veshnyakov on 15 November, President Yeltsin told reporters that Russia's next presidential elections will be held on 4 June 2000. That date was established in accordance with the bill on presidential elections, which was passed by the Duma in its first reading in late October. A second reading has not yet been scheduled, but Veshnyakov said earlier that he hopes the draft law will be approved no later than early December. JAC KVASHNIN WARNS OF 'RETALIATORY MEASURES' OVER POSSIBLE ABM CHANGES... Chief of the General Staff of the Russian Armed Forces General Anatolii Kvashnin said on 15 November that if the U.S. sets up a national defense system, Russia will have to take "retaliatory steps and raise the effectiveness of [its] strategic nuclear forces." Arguing that the U.S. process of deploying such a system has become "irrevocable," Kvashnin commented that the "selection of the deployment areas makes the objective of the national system clear. It is to intercept ballistic missiles launched from Russia and China." The U.S. is proposing a limited national defense system based in Alaska. JC ...SAYS NATO MIGHT USE FORCE ON TERRITORY OF FORMER USSR. Also on 15 November, Kvashnin said that Moscow has not ruled out the possibility that NATO will use force on the territory of the former Soviet Union, among other places. "Not only the growing military-political activity in the former Soviet Union but [also] the evident attempts to declare these regions a sphere of NATO security interests are alarming," he commented. Arguing that "Kosovo and Iraq" were the first examples of NATO's "growing readiness" to use armed force, Kvashnin went on to say that "one may expect that other territories, including former Soviet territories, will be no exception." At the same time, Kvashnin noted that Moscow still believes that there is "no alternative to cooperation with NATO" and hopes to renew "equal and constructive relations" with the alliance. JC U.S. CARRIER NOT TO RETURN TO RUSSIAN FAR EAST IN SHORT TERM. Charles Cooper, director for international operations at Alaska Airlines, told Interfax-Eurasia on 15 November that his company will resume flights to Russia's Far East no sooner than the middle of the next decade of the next century. The company began serving Khabarovsk in 1991. Last November, following the August 1998 financial crisis, the company closed its operations in Russia. Far Eastern cities have recently witnessed increased air fares owing to the rising cost of jet fuel (see "RFE/RL Russian Federation Report," 10 November 1999). For example, Domodedovo increased fares for flights between Magadan and Moscow by more than one-third. JAC MOSCOW CONTINUES TO PRESSURE LONDON. An official at the Russian Embassy to the U.K. told journalists in London on 15 November that Moscow has requested that the British authorities carry out a thorough investigation to establish whether "Muslim centers" for training fighters in Chechnya "can function" in the U.K., ITAR-TASS reported. He added that if it becomes clear to Russia that the British authorities have "a soft approach to the issue to the detriment of Russia's national interests," Russian-British relations will be "affected." That statement follows an incident in which Russian journalists were allegedly beaten by people attending a meeting to raise funds for Chechen forces fighting against Russian troops (see "RFE/RL Newsline," 15 November 1999). JC TRANSCAUCASUS AND CENTRAL ASIA LOW-GRADE EXPLOSIVES FOUND IN ARMENIAN PARLIAMENT. Police on 15 November evacuated the Armenian parliament building following an anonymous telephone warning to speaker Armen Khachatrian, RFE/RL's Yerevan bureau reported. They subsequently found under the presidium table a package containing low-level explosives. That package was rendered harmless, and Deputy Interior Minister Oganes Varyan denied it was life-threatening. Presenting newly appointed National Security Minister Karlos Petrosian to ministry personnel on 15 November, President Robert Kocharian said it is still premature to give a final evaluation of the 27 October parliament shootings, in which eight people, including Prime Minister Vazgen Sargsian, died. LF ARMENIA SENDS RESCUE TEAM TO TURKEY. An Armenian government spokesman said on 15 November that Yerevan is ready to send relief supplies, including blankets, generators, and medicines, to those made homeless by the 12 November earthquake in northwestern Turkey, RFE/RL's Yerevan bureau reported. A 24-strong Armenian rescue squad flew to the region on 13 November. LF AZERBAIJAN ASKED TO RESPOND TO TORTURE ALLEGATIONS. The UN Committee Against Torture in Geneva on 15 November asked Azerbaijan's Deputy Prosecutor-General Fikret Mamedov to respond to claims by human rights watchdogs that Azerbaijani prisoners are subjected to ill-treatment and torture, an RFE/RL correspondent in Geneva reported. Mamedov conceded that isolated cases of ill-treatment occur. He outlined new legislation intended to improve the rights of detainees and preclude police brutality. LF GEORGIA REJECTS RUSSIAN CRITICIM OVER CFE. In his weekly radio broadcast, Georgian President Eduard Shevardnadze said on 15 November that Russian Foreign Minister Igor Ivanov's claim that Georgia and Moldova are creating obstacles to the signing at the OSCE Istanbul summit of the revised CFE treaty is "unfair," ITAR-TASS reported. Shevardnadze told journalists later that day that Georgia will not give up the quota of armaments to which it is entitled under the CFE treaty. It currently shares that quota with Russia on a 50:50 basis. He said Georgia is ready to make unspecified compromises, but not to the detriment of the country's interests. LF OSCE REGISTERS VIOLATIONS IN GEORGIAN RUNOFF POLL. In a statement issued in Tbilisi on 15 November, the OSCE/ODIHR Election Observation Mission registered "serious violations" during the runoff poll the previous day in 24 constituencies where no candidate had won a majority in the 31 October vote, Caucasus Press reported. Those irregularities included intimidation of members of local election commissions and ballot-stuffing in Tbilisi, Abasha, and Chkhorotsku. The statement also noted deficiencies in tabulating the first round returns. And it said that only 13 out of 19 members of the Central Electoral Commission signed the final protocol listing the first round results. LF GEORGIA'S FUEL AND ENERGY MINISTER RESIGNS. Temur Giorgadze announced at a Tbilisi press conference on 15 November that he has submitted his resignation following a public disagreement with Mikhail Saakashvili, who heads the majority Union of Citizens of Georgia faction in the Georgian parliament, Caucasus Press reported. President Shevardnadze said that Giorgadze's decision to step down was "in principle correct." Georgia has long suffered from intermittent and inadequate electricity supplies. A foreign study earlier this year calculated that $1.5 billion in foreign investment is needed in order to rehabilitate the entire power generating network. LF KAZAKHSTAN CALCULATES DAMAGE FROM RUSSIAN ROCKET EXPLOSION. The director of Kazakhstan's Space Research Agency, Meirbek Moldabekov, told journalists on 15 November that Russian and Kazakh experts have estimated that Kazakhstan should receive 19 million tenges (approximately $36,000) in compensation for the damage caused when a Russian proton rocket exploded on 27 October shortly after blastoff from the Baikonor cosmodrome, RFE/RL's Kazakh Service reported. Kazakhstan's Deputy Premier Aleksandr Pavlov and his Russian counterpart, Ilya Klebanov, will sign an agreement on 17 November on the payment of compensation for the damage. Pavlov told both chambers of Kazakhstan's parliament on 12 November that when he meets with Klebanov he will insist that Russia pays promptly and in full the $115 million annual rent for the use of Baikonur, according to Interfax. LF KAZAKHSTAN ABOLISHES RESTRICTIONS ON FOREIGN-CURRENCY EARNINGS. National Bank of Kazakhstan Chairman Grigorii Marchenko told a congress of financiers in Almay on 15 November that the bank has revoked its April requirement that exporters sell 50 percent of their foreign-currency earnings, Interfax-Kazakhstan reported. Marchenko said the financial system has now stabilized following the de facto devaluation of the tenge in April. LF KYRGYZ PARLIAMENT REJECTS BUDGET DRAFT IN FIRST READING. Parliamentary deputies on 15 November rejected the draft budget for 2000 after the government refused to increase the minimum wage for teachers and doctors, RFE/RL's Bishkek bureau reported (see "RFE/RL Newsline," 15 November 1999). Meanwhile the Kyrgyz government has failed to reach agreement with the IMF on the terms of a second Economic Structural Adjustment Facility loan. Talks on that loan will resume in February. LF KYRGYZSTAN ESTABLISHES DIPLOMATIC RELATIONS WITH AFGHANISTAN. Meeting in Moscow on 15 November, the Kyrgyz and Afghan ambassadors to Russia, Akmatbek Nanaev and Abdul Wahif Assifi, signed a protocol establishing diplomatic relations, RFE/RL's Bishkek bureau reported. LF TAJIK PRESIDENT SWORN IN. Imomali Rakhmonov was sworn in for a second term as president on 16 November, Asia Plus-Blitz reported. Russian Prime Minister Vladimir Putin, the foreign ministers of Iran, Afghanistan, and Ukraine, and senior officials from China, India, and Uzbekistan attended the ceremony in Dushanbe. Rakhmonov said the most important objectives of his second term in office are creating conditions for political pluralism and media freedom, cracking down on crime, terrorism, and drug-smuggling, and making Tajik products more competitive on world markets. With regard to foreign policy, Tajikistan will continue strengthening ties with Russia, other Central Asia states, and the world community, he said. LF END NOTE OVERCOMING CORRUPTION by Paul Goble Macroeconomic reforms--such as privatization, price liberalization and making national currencies convertible-- are not in themselves sufficient to overcome the corruption now holding back many post-communist countries, according to the European Bank for Reconstruction and Development. In its annual report on transition economies released last week, the EBRD argues that such reforms have not had the effects on either relations between the state and the economy or hence on the level of corruption that both that bank and most other advocates of reform had expected. And it concludes that post-communist governments must do more to promote fair and transparent laws, strong regulatory agencies, and efficient and effective court systems if they are to bring corruption under control, something the bank said few of these countries have been able to do so far. In short, the solutions to the multifaceted problems of corruption are more often to be found in politics rather than economics. In the past, the EBRD, like other international lenders, has tended to shy away from discussing corruption in these countries, typically treating it as a transitional problem certain to be cured by the kind of free market reforms it and other Western institutions have advocated. But as the bank's report acknowledges, the high levels of corruption in these countries and, more important, the real sources of that corruption have prompted the EBRD to change its approach. The level of corruption in many of these countries is staggering. According to the report, officials in Georgia extract in the form of bribes some 8.1 percent of the annual revenues of companies operating there. In Ukraine, that figure is 6.5 percent, and in the Commonwealth of Independent States as a whole 5.7 percent. By adding to the costs of doing business, bribery keeps many firms from making a profit and thus dooms them to an early end. At the same time, demands for bribes discourage new investors from both within the countries involved and abroad. Indeed, the EBRD found that newly formed companies in these countries had to pay almost twice as much of their revenues in bribes as did more established concerns--5.4 percent, compared with 2.8 percent. And thus bribes serve as yet another barrier to the establishment of new businesses. Perhaps the most striking aspect of this year's EBRD report on transition economies, however, is its focus on what macroeconomic reforms cannot achieve by themselves. The bank noted that most post-communist countries have privatized many firms and reduced direct state intervention in the economy. But those macroeconomic steps have not necessarily reduced "the overall level of intervention or the informal tax imposed on firms in the form of bribes and time spent dealing with government officials." Indeed, the EBRD found that state-owned firms and privatized ones of the same size were forced to pay approximately the same percentage in bribes, an indication that privatization has not had the impact on corruption that many had expected. Sometimes this appears to be because the new owners are the former communist-era managers, who have a special relationship with government officials. Sometimes it is because the firms or the government agencies with which they must deal have one or another kind of monopoly power, something privatization has done little to change. Because economic changes alone have failed to overcome corruption, the EBRD argued that these countries must turn to political means instead. Indeed, in releasing the report, the bank's president, Horst Koehler, said: "I underline this twice. Weak institutions are the main obstacle to economic growth in a number of transition countries." But in contrast to some analysts who have written off any chance for improvement in these societies, the EBRD notes that the fight against corruption can be won by leaders and governments willing to take the political risks involved in breaking with the past and building institutions capable of managing a modern, free market economy. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1999 RFE/RL, Inc. 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