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RFE/RL Newsline, Vol. 2, No. 234, 98-12-07Radio Free Europe/Radio Liberty: Newsline Directory - Previous Article - Next ArticleFrom: Radio Free Europe/Radio Liberty <http://www.rferl.org>RFE/RL NEWSLINEVol. 2, No. 234, 7 December 1998CONTENTS[A] TRANSCAUCASUS AND CENTRAL ASIA
[B] SOUTHEASTERN EUROPE
[C] END NOTE
[A] TRANSCAUCASUS AND CENTRAL ASIA[01] GEORGIA DEVALUES LARIThe government on 4 December approved National Bank chairman Irakli Managadze's proposal to cease propping up the country's failing currency, ITAR-TASS reported. The lari lost 30 percent of its value over the past week. Managadze admitted that the move could result in the lari plummeting to 2-4 to the dollar, which would be the equivalent of a 50-150 percent devaluation. In an interview with Caucasus Press on 7 December, Finance Minister Davit Onoprishvili predicted that the lari would stabilize at between 2-2.5 to the dollar within seven to 10 days. President Eduard Shevardnadze the same day said the devaluation does not signify the end of economic reform in Georgia. He said that the IMF and World Bank will shortly provide Georgia with $40-50 million and $20-25 million, respectively. The latter sum, however, is earmarked for the needs of the displaced persons and for funding the country's health system. LF[02] GEORGIAN-ABKHAZ SUMMIT UNLIKELY?Georgian President Shevardnadze said on 7 December in his weekly radio address that Tbilisi is ready to lift the blockade of the border between Abkhazia and Russia, provided that Abkhazia provides adequate security guarantees for Georgian displaced persons wishing to return to Abkhazia's Gali Raion, Caucasus Press reported. But Shevardnadze said that Abkhaz leader Vladislav Ardzinba is demanding additional compromises to which Georgia cannot currently agree. Those demands include the dissolution of the Abkhaz parliament in exile, the abolition of the White Legion and Forest Brothers, and the trial of members of those two guerrilla organizations, according to "Nezavisimaya gazeta" on 5 December. Georgian Minister of State Vazha Lortkipanidze had told journalists the previous day that the security guarantees offered by the Abkhaz side are inadequate, Interfax reported. Shevardnadze and Ardzinba had planned to meet in November to sign a protocol on the repatriation of Georgian displaced persons. LF[03] DEFEATED AZERBAIJANI PRESIDENTIAL CANDIDATE REJECTS TALKSAzerbaijan National Independence Party chairman Etibar Mamedov told the parliament on 4 December that he will agree to talks with representatives of the country's leadership only after the publication of protocols giving the results of the 11 October presidential election, Reuters reported. Those protocols should have been published within 30 days of the election. Mamedov and other defeated opposition candidates dispute the official results, which gave incumbent Heidar Aliev 76.11 percent of the vote. Mamedov believes he polled more than 35 percent and therefore deprived Aliev of the two-thirds of the vote needed to avoid a runoff. On 3 December, a leading member of Aliev's Yeni Azerbaycan party said that opposition representatives have unconditionally accepted the president's offer of a dialogue, according to Turan. LF[04] GAS SUPPLIES TEMPORARILY CUT OFF IN TAJIKISTANGas supplies to Dushanbe and regions in the southwest have been indefinitely cut off by neighboring Uzbekistan owing to technical problems, ITAR- TASS reported on 5 December. Uzbektransgaz has informed Tajikistan's energy company of the problem and promised deliveries will resume very soon. Tajikistan owes some $33 million for gas received in the first 10 months of this year. BP[05] KYRGYZSTAN DECLARES MORATORIUM ON DEATH PENALTYKyrgyz President Askar Akayev on 5 December signed a decree imposing a two- year moratorium on the death penalty, ITAR-TASS reported. The move comes three days after he declared an amnesty for 2,000 prisoners to commemorate the 50th anniversary of the signing of the UN Declaration on Human Rights. On 3 December, Turkmenistan announced it is placing a moratorium on the death penalty. BP[06] KAZHEGELDIN GIVES INTERVIEW TO RUSSIAN DAILYIn an interview with "Kommersant-Daily" published on 4 December, former Kazakh Prime Minister Akezhan Kazhegeldin said that owing to the absence of political organizations in Kazakhstan, "society and government existed separately," resulting in "branches of government becoming wedded to one another" and changes to the constitution to hold early elections and increase the president's term in office to seven years. Kazhegeldin, who was barred from participating in next month's presidential elections, said he will "form a habit in society of confronting the government." He also said he will participate in a future presidential election, predicting that such a ballot will have to be held again in two years. BP[07] TURKMEN PRESIDENT ADDRESSES STATE COUNCILSaparmurat Niyazov, addressing the State Council on 3 December, said the country's cotton sales will bring in revenues of $900 million, but he expressed disappointment at the failure to meet the cotton harvest target for 1998, Interfax reported. Niyazov said the cotton target will be lowered from 1.5 million tons this year (690,000 tons were reportedly gathered) to 1.3 million tons in 1999. The grain target figure of 1.2 million will remain the same for 1999. Niyazov added that the 1999 budget, totaling some 20.5 trillion manat ($4 billion), includes sufficient funds to maintain health-care levels, provide free gas, water, energy, and salt to the population, and subsidize flour prices. BP[B] SOUTHEASTERN EUROPE[08] NATO FORCE DEPLOYS TO MACEDONIAFour French Hercules transport aircraft arrived at Petrovec military airport on 6 December with the first 30 French troops from NATO's rapid reaction force for Kosova and 40 tons of equipment, AP reported. The force will rescue any of the 2,000 unarmed OSCE civilian monitors in Kosova should they run into danger. The NATO mission is expected to reach its full strength of 1,700 by the beginning of 1999 and will consist of 700 French, 350 British, 250 German, 200 Italian, and 200 Dutch soldiers and officers. In Brussels, the Atlantic alliance issued a statement on 5 December saying that "the deployment of the extraction force in no way relieves the Federal Republic of Yugoslavia government of its primary responsibility for the safety and security of the OSCE verifiers." PM[09] UCK STANDS BY DEMAND FOR INDEPENDENCE...The Kosova Liberation Army (UCK) said in a statement in Prishtina on 4 December that it "rejects any solution for the Kosova crisis that falls short of full independence" for the province. In recent weeks, some Kosovar spokesmen have said that the Kosovars would "temporarily" accept the status of a republic within the Yugoslav federation provided that a referendum on independence would take place after two or three years (see "RFE/RL Newsline," 1 December 1998). PM[10] ...WHILE MODERATES SLAM HILL PLANFehmi Agani, who heads the negotiating team appointed by shadow-state president Ibrahim Rugova, told the Belgrade daily "Glas" of 7 December that U.S. envoy Chris Hill's latest plan for an interim settlement is not acceptable to the Kosovars. Agani added that "we had some objections to the previous version too, but this one is totally unacceptable.... It is obvious that Hill offers one solution after talking to us and another after talking to [Serbian President Milan] Milutinovic." Agani did not elaborate. Kosovar spokesman Mehmet Hajrizi said that the plan gives too much power to Belgrade at the expense of Prishtina, Reuters reported. An unnamed Serbian source told the news agency that the latest changes in the Hill plan are "cosmetic" and do not go far enough to please Belgrade (see "RFE/RL Newsline," 4 December 1998). PM[11] EUROPEANS CALL U.S. ESCORT FOR SERBIAN POLICE 'EMBARRASSING'Unnamed European diplomats told Reuters in Prishtina on 5 December that the U.S. practice of providing armed escorts for Serbian paramilitary police reflects "bad judgment" and appears "incongruous" in the eyes of the Kosovars (see "RFE/RL Newsline," 1 December 1998). The European diplomats added that the U.S. practice of escorting the Serbs into the Malisheva region and elsewhere may lead to UCK reprisals against Westerners. On 4 December, Chris Janowski, who is the spokesman for the United Nations High Commissioner for Refugees, said in Geneva that the Serbian police presence in the Malisheva area discourages displaced Kosovars from returning to their homes there. PM[12] CLINTON EXTENDS SANCTIONSU.S. President Bill Clinton sent a written statement to Congress on 5 December extending the "outer wall" of sanctions against Serbia for a further six months. The sanctions involve a freeze on Serbian bank accounts and property rights abroad and prevent Belgrade's return to membership in international organizations. The measures are a response to Serbia's policies regarding human rights, democracy and the Hague-based war crimes tribunal. In Vienna the previous day, Austrian Foreign Minister Wolfgang Schuessel, who holds the EU's rotating chair, told Serbian opposition leader Zoran Djindjic that Yugoslav President Slobodan Milosevic "is part of the [region's] problem, not of the solution," RFE/RL's South Slavic Service reported (see "RFE/RL Newsline," 2 December 1998) PM[13] SERBIAN PARLIAMENT TO HIKE GOVERNMENT WAGESThe legislature is slated to pass a bill on 7 December that will raise the salaries of some government officials by up to 300 percent and allow them to receive up to 85 percent of their pay after they retire, Reuters reported. The president will receive 18 times the average monthly income in Serbia, plus 20 percent. The prime minister and the speaker of the parliament will receive 18 times the average Serbian pay, government ministers 15 times, and legislators 10 times. The law applies to the retirement pay of former Serbian President Slobodan Milosevic. The average monthly income in the impoverished country is $112. The government is $1 billion behind in its payment of pensions. The authorities recently introduced a package of taxes to help fund the state budget. One-quarter of the proposed new budget will go to the police, "Danas" reported. PM[14] WESTENDORP CONDEMNS BOSNIAN SERB VIOLENCEIn Sarajevo on 5 December, the international community's Carlos Westendorp said recent violence in the Republika Srpska to protest the arrest of General Radislav Krstic for war crimes is "unacceptable" (see "RFE/RL Newsline," 3 December 1998). Westendorp noted that two EU monitors were attacked in Vlasenica and a UN vehicle damaged there. He also criticized as inflammatory public remarks by Mayor Stanimir Reljic of Vlasenica, which was Krstic's headquarters during the Bosnian war. PM[15] LIMITED RESULTS FROM CROATIAN DONORS' CONFERENCEA two-day conference in Zagreb aimed at raising funds for reconstruction and development yielded pledges of $25 million, RFE/RL's South Slavic Service reported on 5 December. The EU's representatives delayed "until the last minute" their acceptance of an invitation to attend in order to protest what they called discriminatory legislation against returning Serbian refugees. The government estimates that Croatia needs $2.5 billion to repair damage sustained during the 1991-1995 conflict. PM[16] ALBANIAN STUDENTS GO ON STRIKE...Several hundred student supporters of the opposition Democratic Party began a strike last week in Tirana and Shkodra, ahead of the 8 December anniversary of the 1990 student revolt that toppled communism, "Shekulli" reported on 6 December. They are demanding better living conditions, the release of what they call "political prisoners," and quicker results from the investigation into Azem Hajdari's murder (see "RFE/RL Newsline," 4 December 1998). Many protesters have cut classes. In Shkodra, protesting students threw stones at the university dean on 4 December. According to dpa, the protests have failed to gain massive support from among students. Meanwhile, a student spokesmen said in Tirana that the protesters will launch a hunger strike on 8 December unless the government meets their demands. FS[17] ...WHILE INTERIOR MINISTER WARNS OF UNRESTPetro Koci told "Shekulli" of 6 December that police expect riots during the 8 December student protests. He told the newspaper that police are ready to prevent a repetition of unrest that shook Tirana after the funeral of Hajdari on 14 September (see "RFE/RL Newsline," 15 September 1998). Koci stressed that the students' demands for better living conditions are legitimate but that police will not tolerate attacks against state institutions. He said that opposition leaders and former President Sali Berisha are seeking to use the students' movement]in order to return to power." He added that Berisha "will not succeed." FS[18] ROMANIAN COALITION PARTIES DIFFER OVER REFORMPrime Minister Radu Vasile and members of his government asked President Emil Constantinescu on 5 December to use his influence over parliamentary deputies from the ruling coalition to ensure the passage of a far-reaching reform program approved by the cabinet two days earlier. The program calls for the immediate closure of 49 loss-making enterprises. The leadership of the National Peasant Party Christian Democratic said on 3 December that the reform must be linked to property restitution. The Democratic Party, the Liberal Party, and the Hungarian Democratic Coalition of Romania said linking the two issues will again lead to disputes at a time when the reform measure package is urgently needed. MS[19] FIRST ROMANIAN STATE BANK PRIVATIZEDThe Romanian Bank for Development became the first Romanian bank to be privatized when Societe Generale de France won a tender for a majority stake in the bank on 3 December. Romanian officials refused to give details, saying only they will become known when the deal is officially signed on 15 December. Mediafax, citing AFP, reported on 6 December that Societe Generale de France will pay $200 million for a 51 percent stake. MS[20] COUNCIL OF EUROPE OFFICIAL MEETS TIRASPOL MOLDOVAN PRISONERJosette Durrieux, deputy chairwoman of the Parliamentary Assembly of the Council of Europe and the assembly's rapporteur for Moldova, was allowed on 4 December to visit Ilie Ilascu, a Moldovan parliamentary deputy who has been in prison since he was sentenced to death in 1992 on charges of terrorism. Ilascu told Durrieux that he is isolated from others sentenced at the same time on terrorism charges and is seldom allowed visits by members of his family. The visit did not take place in the prison where he is being detained but in what the Transdniester authorities called a "hotel," Durrieux said. She said Ilascu is apparently in good physical shape and is mentally "very balanced," Radio Bucharest reported. MS[21] BULGARIAN PARLIAMENT APPROVES PRIVATIZATION PLANThe parliament on 4 December approved a government plan providing for the sale next year of state property worth more than 996 billion leva ($595 million), dpa reported. More than 1,000 state companies are to be sold under the plan. The list, however, does not include the largest state- owned firms such as the telephone giant BTK, the oil refinery Neftochim, and the tobacco company Bulgartabak. MS[C] END NOTE[22] RUMORS OF OLIGARCHS' DEMISE GREATLY EXAGGERATEDby Donald N. JensenSince the collapse of Russia's economy in August, much has been written about the demise of the business oligarchs--the small circle of influential entrepreneurs who grew rich over the past decade through close ties to the government, currency speculation, and, some say, criminal activities. Indeed, the business empires heavily dependent on the financial sector, such as Vladimir Gusinskii's Most Group and Vladimir Potanin's Oneksimbank, have been seriously damaged by the crash, while Aleksandr Smolenskii's SBS- Agro and Vladimir Vinogradov's Inkombank are ruined. However, entrepreneurs with extensive interests either in natural resources extraction, such as Rem Viakhirev of Gazprom and Vagit Alekperov of LUKoil, or in industry, such as Mikhail Khodorkovskii of Menatep and Boris Berezovskii of LogoVAZ, remain influential, albeit less so than previously. The oligarchs came to the notice of many people in the West in October 1996, when Berezovskii boasted in an interview that he and six other tycoons had ensured Yeltsin's reelection by bankrolling his campaign. Moreover, he bragged that he and six cronies controlled much of the Russian economy. But while the Big Seven, as the oligarchs came to be called, controlled a large chunk of the economy and had a decisive say on some key issues, their influence was less than Berezovskii had suggested. There were many issues, such as military reform, where they played virtually no role at all. Moreover, there were influential interest groups at the time that Berezovskii did not mention: LUKoil, Gazprom, lobbyist holdovers from the Soviet era such as collective farmers, and regional leaders like Moscow Mayor Yurii Luzhkov. Since the meltdown, Moscow's Alfa Bank, which has long- standing ties to the Yeltsin administration and whose relatively small holdings in the now defunct short-term securities market left it more or less unscathed, has been able to gain a competitive advantage over its more exposed rivals. In the absence of a strong state treasury, Alfa has been "authorized" to service the St. Petersburg City budget, a task offering numerous possibilities for corruption. Banks that service oil, gas, and precious metals exporters also remain important. In the regions, the economic collapse has accelerated the formation of oligarchic structures. In Saint Petersburg and Yekaterinburg, local governments have taken over regional banks to ensure ready access to revenue streams. The Nizhnii Tagil Metallurgy Combine has given a 25 percent stake to the government of Sverdlovsk Oblast in exchange for the restructuring of its tax debts and the cancellation of the salaries it owed its workers. Still other oligarchs are regrouping. The strategic alliance recently announced by LUKoil and Gazprom may strengthen their economic and political clout. Gazprom already pays a quarter of all Russia's taxes, and LUKoil is also a major contributor to the country's tax coffers. Even if they do not unite, the firms will almost certainly remain two of the few effective foreign-policy levers, especially toward Europe and Russia's neighbors. Indeed, Yevgenii Primakov's government, far from trying to end crony capitalism, appears to be favoring its own cronies. Favored banks participated in several debt swaps orchestrated by the Central Bank in September, and the Central Bank has sharply reduced reserve requirements to increase banks' liquidity. Most of the "socially important" large banks the government intends to save have ties to the new government, Central Bank Chairman Viktor Gerashchenko, or the Luzhkov administration. The government has announced that it intends to save, among others, Menatep and Most. The former has strong supporters in power, though few depositors and no regional network. The latter's extensive media holdings make it invaluable as the legislative and presidential elections approach. Meanwhile, Oneksimbank, widely considered to have been close to ousted the ousted Sergei Kirienko, Anatolii Chubais, and Boris Nemtsov, has so far been left in the cold. In the non-banking sector, the government's highly publicized battle with Gazprom over taxes owed appears to have been resolved in the firm's favor. Gazprom will provide food aid to needy Russians instead of paying money to the cash-starved federal government. A shakeup in the leadership of Rosvooruzhenie, the state arms export agency, now under the control of an alleged Primakov protege, suggests that the Russian arms industry may well experience a resurgence as it more aggressively seeks clients for high-tech weaponry abroad. That is not to say that Russia's business interests win every battle. The government has warned six major oil companies that their access to highly profitable export pipelines will be cut off if they do not draft a plan to sell more crude on the domestic market. There are serious differences among the oligarchs over policy and economic interests, such as protectionism. But since the differences are often over who is to receive increasingly scarce government favors, they are unlikely to benefit the long-suffering Russian public and may well become fiercer as total default looms. What survived the August collapse, however, are the rules by which Russian politics is played. Much of politics is informal, authority is personalized, institutions are weak, the distinction between public and private is blurred, and money is the currency of political power. Some people will doubtless profit financially under such regulations, but economic reform and democratic development will likely stagnate. It was this absence of the rule of law in the sphere of economic reform that the 1998 EBRD Transition Report cited as one of the reasons why Russia's transition has been so difficult. The author is associate director of broadcasting at RFE/RL. 07-12-98 Reprinted with permission of Radio Free Europe/Radio Liberty
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