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RFE/RL Newsline, Vol. 3, No. 159, 99-08-17

Radio Free Europe/Radio Liberty: Newsline Directory - Previous Article - Next Article

From: Radio Free Europe/Radio Liberty <http://www.rferl.org>

RFE/RL NEWSLINE

Vol. 3, No. 159, 17 August 1999


CONTENTS

[A] TRANSCAUCASUS AND CENTRAL ASIA

  • [01] ROW OVER AZERBAIJAN'S MUNICIPAL ELECTION LAW CONTINUES
  • [02] TYPHOID OUTBREAK IN AZERBAIJANI ARMY
  • [03] GEORGIAN OFFICIAL SAYS DAGHESTAN FIGHTING COULD DELAY POPE'S
  • [04] KAZAKH ELECTION OFFICIAL CASTS DOUBT ON FORMER PREMIER'S
  • [05] ...AS DEADLINE PASSES FOR REGISTRATION OF CANDIDATES TO
  • [06] KAZAKH JOURNALIST FOUND DEAD
  • [07] BP REVERSES DECISION TO QUIT KAZAKH OIL PROJECT
  • [08] KAZAKHSTAN MAY SOON DECIDE ON SECOND OIL EXPORT PIPELINE
  • [09] KYRGYZSTAN ADMITS RANSOMING HOSTAGES
  • [10] DATE SET FOR KYRGYZSTAN'S LOCAL ELECTIONS
  • [11] UZBEKISTAN DENIES ITS PLANES BOMBED TAJIK TERRITORY

  • [B] SOUTHEASTERN EUROPE

  • [12] TWO SERBS KILLED IN MORTAR ATTACK
  • [13] PLIGHT OF KOSOVAR SERBS WORSENS
  • [14] MILOSEVIC DEMANDS RETURN OF SERBIAN TROOPS TO KOSOVA
  • [15] SERBIAN RAILWAY MEN RETURN TO WORK
  • [16] KOUCHNER SUSPENDS 'APARTHEID' LAWS...
  • [17] ...AFTER CRITICISM FROM KOSOVAR JUDGES
  • [18] SERBS, ALBANIANS NEGOTIATE COMPROMISE IN MITROVICA...
  • [19] ...BUT QUESTIONS REMAIN OVER IMPLEMENTATION
  • [20] SHPAK SAYS UCK DEMILITARIZATION BEHIND SCHEDULE
  • [21] SERBIA'S DINKIC CALLS DEMO 'LAST CHANCE FOR PEACEFUL
  • [22] ...OUTLINES PROGRAM FOR SERBIA'S FUTURE
  • [23] CONFUSION PERSISTS OVER BELGRADE RALLY'S LIST OF
  • [24] LEADING BUSINESSMAN LEAVES MILOSEVIC GOVERNMENT
  • [25] UP TO $1 BILLION LOST IN BOSNIAN FRAUD
  • [26] CROATIAN OPPOSTION COALITION TOTTERS
  • [27] ROMANIAN DEMOCRATIC PARTY SENDS 'MESSAGE TO TRANSYLVANIA'
  • [28] ROMANIAN OPPOSITION LEADER PROTESTS FRENCH-SWISS TV
  • [29] MENINGITIS EPIDEMIC SPREADS TO MOLDOVAN CAPITAL
  • [30] BULGARIA TO DEMOLISH DIMITROV MAUSOLEUM
  • [31] BULGARIAN EURO-LEFT NOMINATES CANDIDATE IN SOFIA MAYOR

  • [C] END NOTE

  • [32] ONE YEAR AFTER THE MELTDOWN: FEARS WANE, SHADOW LINGERS

  • [A] TRANSCAUCASUS AND CENTRAL ASIA

    [01] ROW OVER AZERBAIJAN'S MUNICIPAL ELECTION LAW CONTINUES

    At a

    meeting in Baku on 16 August, members of Azerbaijan's Central

    Electoral Commission said that the amendments to the law on

    municipal elections proposed by the U.S. National Democratic

    Institute and the Azerbaijani opposition Movement for

    Electoral Reform and Democratic Elections (MERDE) constitute

    "a premeditated insult" and interference into the country's

    internal affairs, Turan reported. They also condemned

    accusations that commission chairman Djafar Veliev is ready

    to falsify the results of the poll. Veliev presided over the

    parliamentary elections in November 1995 and the October 1998

    presidential poll, both of which were described by

    international observers as undemocratic and marred by

    widespread fraud. Meanwhile, two opposition representatives

    of MERDE told Turan on 16 August that they do not regard

    presidential administration official Ali Hasanov's criticism

    of the proposed amendments as valid (see "RFE/RL Newsline,"

    16 August 1999). LF

    [02] TYPHOID OUTBREAK IN AZERBAIJANI ARMY

    Azerbaijan's Defense

    Ministry reported on 16 August that two servicemen died of

    typhoid on 4 August and another 100 are suffering from the

    disease, Interfax reported. Turan on 16 August cited "Yeni

    Musavat" as reporting that the victims were serving at the

    Geranboy and Gilazi military camps and that a quarantine has

    been imposed. LF

    [03] GEORGIAN OFFICIAL SAYS DAGHESTAN FIGHTING COULD DELAY POPE'S

    VISIT

    A spokeswoman for the Georgian Orthodox Church told

    Reuters in Tbilisi on 16 August that it may be appropriate to

    delay Pope John Paul II's trip to Georgia until 2001 because

    of the unstable situation resulting from the fighting in

    Daghestan. Vatican envoy Giovanni Battista Re announced in

    Tbilisi on 15 August after talks with Georgian Foreign

    Minister Irakli Menagharishvili and the head of the Georgian

    Orthodox church, Catholicos Ilia II, that the pontiff will

    visit Georgia at an unspecified date this fall (see "RFE/RL

    Newsline," 16 August 1999). Caucasus Press on 13 August cited

    "Dilis gazeti" as reporting that members of the Islamic Shura

    of Daghestan, which last week proclaimed an independent

    Islamic republic, have sent an e-mail to Georgian President

    Eduard Shevardnadze assuring him of their desire to establish

    friendly relations with Georgia once they take power in

    Daghestan. LF

    [04] KAZAKH ELECTION OFFICIAL CASTS DOUBT ON FORMER PREMIER'S

    ELIGIBILITY...

    Zaghipa Balieva told journalists in Almaty on

    16 August that former Prime Minister Akezhan Kazhegeldin may

    not, after all, be eligible to contend the 10 October

    elections to Kazakhstan's lower chamber of parliament,

    Interfax reported. Balieva had said at a press conference

    last week that the administrative offense Kazhegeldin

    committed in 1998 by participating in an unregistered public

    movement does not constitute an impediment to him taking part

    in the October ballot (see "RFE/RL Newsline," 13 August

    1999). But on 16 August Balieva said that she was unaware

    that Kazhegeldin had also been found guilty of contempt of

    court. LF

    [05] ...AS DEADLINE PASSES FOR REGISTRATION OF CANDIDATES TO

    SENATE

    Balieva also said on 16 August that a total of 33

    candidates have registered to contend the 16 seats in the

    upper chamber of parliament, RFE/RL's Almaty bureau reported.

    She said that the OSCE has prepared special television

    programming to inform the electorate about the ballot. Also

    on 16 August, Petr Svoik, one of the leaders of the

    opposition Azamat Party, was refused registration in an

    Almaty district as a candidate for a lower house seat. The

    next day, "Nezavisimaya gazeta" reported that for the first

    time in Kazakhstan, new computer technology will be used to

    record the identity of every citizen who casts a vote and

    thus preclude multiple voting during the upcoming

    parliamentary elections. LF

    [06] KAZAKH JOURNALIST FOUND DEAD

    Armial Tasymbekov was found

    dead in his apartment in Almaty last weekend, his relatives

    told RFE/RL's bureau in the former capital on 17 August. No

    further details of the circumstances of his death are

    available. Tasymbekov was briefly incarcerated in a

    psychiatric hospital earlier this year on suspicion of

    involvement in daubing slogans on buildings in Astana that

    denigrated President Nursultan Nazarbaev and extolled former

    Prime Minister Kazhegeldin (see "RFE/RL Newsline," 3 and 6

    May 1999). LF

    [07] BP REVERSES DECISION TO QUIT KAZAKH OIL PROJECT

    BP Amoco has

    gone back on its decision to sell its 9.5 percent stake in

    the Offshore Kazakhstan International Operating Company

    (OKIOC) for an asking price of $440 million, Interfax

    reported on 16 August, quoting an unnamed OKIOC official. BP

    had announced in July that it planned to sell its share in

    the consortium, regardless of whether the first test well

    yielded hydrocarbons (see "RFE/RL Newsline," 30 July 1999).

    On 13 August, ITAR-TASS reported that Kazakhstan's Prime

    Minister Nurlan Balghymbaev had set in motion the drilling

    machine to bore OKIOC's first offshore test well. LF

    [08] KAZAKHSTAN MAY SOON DECIDE ON SECOND OIL EXPORT PIPELINE

    Speaking at a news conference in Atyrau after the OKIOC

    ceremony, Balghymbaev said the choice of a second Caspian

    export pipeline (in addition to the one from Tengiz to

    Novorossiisk, which is scheduled to go into operation in mid-

    2001) will be contingent on the results of the test well,

    which, he said, should be available in three to four months,

    Interfax reported. Balghymbaev hinted that the route via

    Turkmenistan to Iran is the most likely option, noting that

    the feasibility study for the alternative pipeline to China

    will not be completed for another two months. LF

    [09] KYRGYZSTAN ADMITS RANSOMING HOSTAGES

    Ministry of National

    Security spokesman Talant Razzakov told an RFE/RL

    correspondent in Bishkek on 16 August that the Kyrgyz

    authorities paid $50,000 in cash to obtain the 13 August

    release of four local guerrillas from Uzbekistan took hostage

    one week earlier in the southern district of Batken (see

    "RFE/RL Newsline," 10 and 16 August 1999). The kidnappers had

    originally demanded a $1 million payment. Razzakov also said

    that Defense Ministry forces have begun a military operation

    with the aim of neutralizing the guerrillas. Razzakov

    confirmed that Uzbek planes bombed some mountainous areas in

    Batken on 15 August as well as Tajikistan's neighboring

    Djirgatal district in an attempt to hit the guerillas. He did

    not elaborate. According to "Vechernii Bishkek" of 16 August,

    the Uzbek bombing raid was coordinated with the Kyrgyz

    leadership. LF

    [10] DATE SET FOR KYRGYZSTAN'S LOCAL ELECTIONS

    Central Electoral

    Commission chairman Sulaiman Imanbaev announced in Bishkek on

    16 August that President Askar Akayev has signed a decree

    scheduling local elections for 17 October, RFE/RL's Bishkek

    bureau reported. LF

    [11] UZBEKISTAN DENIES ITS PLANES BOMBED TAJIK TERRITORY

    Tajikistan's Foreign Minister Talbak Nazarov on 16 August

    lodged an official complaint with Uzbekistan's ambassador in

    Dushanbe, Bakhtiar Urdashev, following an incident the

    previous day in which four jets approaching from Kyrgyz

    airspace dropped eight bombs on Tajikistan's Djirgatal

    district, Russian agencies reported. Buildings were destroyed

    and some 100 sheep and cattle killed, but there were no human

    casualties. Djirgatal is close to the border with

    Kyrgyzstan's Osh Oblast, where guerrillas from Tajikistan,

    some of them reportedly ethnic Uzbeks, took four Kyrgyz

    officials hostage last week (see above). The Uzbek Foreign

    Ministry denied any knowledge of the bombing. LF


    [B] SOUTHEASTERN EUROPE

    [12] TWO SERBS KILLED IN MORTAR ATTACK

    Unknown persons fired nine

    mortar shells at the village of Klokot in the U.S. sector of

    Kosova on 16 August. Two Serbian teenagers were killed and

    five other Serbs wounded. It was one of the most serious

    incidents of apparently ethnically motivated violence since

    the fighting ended in June, AP reported. In a separate

    incident, unknown persons shot and wounded an ethnic Albanian

    boy in Petrovce, which is also in the U.S. sector. PM

    [13] PLIGHT OF KOSOVAR SERBS WORSENS

    UNHCR special envoy Dennis

    McNamara told BBC Television on 16 August that the UNHCR

    recently helped an unspecified number of Serbs to leave

    Kosova. He added that Serbs are increasingly faced with the

    danger of revenge attacks by ethnic Albanians and that the

    "pressures [on Serbs] seem to be mounting on a daily basis."

    His agency may evacuate more Serbs soon, McNamara noted,

    pointing out that it is not the policy of the UNHCR to

    encourage people to leave but rather to assist them if they

    choose to do so. He said that some people who had wanted to

    be evacuated but whom his agency did not evacuate

    subsequently lost their lives. On 17 August, Reuters reported

    that in Prishtina, armed ethnic Albanians locked an elderly

    Serbian woman in her kitchen and robbed, beat, and attempted

    to rape her daughter-in-law. The women and their Serbian

    neighbors later fled for safety. British peacekeepers said it

    was the third such incident in 24 hours. PM

    [14] MILOSEVIC DEMANDS RETURN OF SERBIAN TROOPS TO KOSOVA

    Yugoslav President Slobodan Milosevic said in a statement on

    16 August that KFOR has "tolerated the rampage of bandit

    groups" in Kosova. He added that "the gravest crimes against

    Serbs have been committed [as well as] the ethnic cleansing

    of non-Albanians" since Serbian forces left under the terms

    of the June peace agreement. Milosevic demanded that KFOR

    speed up the disarmament of Kosova Liberation Army (UCK)

    fighters and expel "hordes of criminals and robbers" who have

    recently arrived from Albania. He also repeated the recent

    call by several other top Serbian officials that the UN allow

    Serbian forces to return to the province (see "RFE/RL

    Newsline," 16 August 1999). PM

    [15] SERBIAN RAILWAY MEN RETURN TO WORK

    Some 200 ethnic Serbian

    railway workers in Fushe Kosova returned to work on 16

    August. A UN spokesman told BBC Television that the men's

    experience will be a big help in arranging for the efficient

    transportation of supplies for the coming winter. The men

    will not work with their ethnic Albanian former colleagues.

    PM

    [16] KOUCHNER SUSPENDS 'APARTHEID' LAWS...

    UN spokeswoman

    Nadia Younes told an RFE/RL South Slavic Service

    correspondent in Prishtina on 16 August that UN Special

    Representative Bernard Kouchner has suspended

    "apartheid" legislation discriminating against

    individuals on ethnic or religious grounds. Kouchner

    issued the ruling at a 15 August meeting with some 50

    judges and prosecutors from throughout Kosova. He also

    appointed a 19-member working group, co-chaired by the

    ethnic Albanian Professor of Law Blerim Reka and UN

    legal experts, to review the existing laws. One of those

    laws likely to be abolished is that prohibiting

    Albanians from buying real estate from Serbs. FS

    [17] ...AFTER CRITICISM FROM KOSOVAR JUDGES

    Reka told an

    RFE/RL South Slavic Service correspondent on 16 August

    that Kouchner suspended the discriminatory laws after

    several ethnic Albanian judges had criticized them. The

    professor noted that "there is confusion about which

    laws will be applied in Kosova," pointing out that "the

    first decree that Bernard Kouchner signed says

    explicitly that those laws will be used in Kosova that

    were in force until 24 March of this year. These were

    the laws of the Yugoslav occupiers." Reka added that

    most ethnic Albanians believe that "one cannot apply the

    laws of a regime that committed genocide on the

    territory of and toward the people who were the victims

    of that genocide." FS

    [18] SERBS, ALBANIANS NEGOTIATE COMPROMISE IN MITROVICA...

    Bajram Rexhepi, who is the UCK-appointed mayor of

    Mitrovica, asked a group of ethnic Albanian protesters

    there on 16 August to disperse peacefully. He told them

    that Serbian and Albanian representatives found a

    compromise earlier that day--under UN mediation--to

    allow the return of ethnic Albanian displaced persons to

    the northern, Serb-dominated part of town. Rexhepi told

    an RFE/RL South Slavic Service correspondent that

    "according to the agreement, 25 families will return to

    their homes in the north every day. It also provides for

    free access by students to the metallurgic faculty in

    the north.... We also agreed on the creation of a joint

    board of directors for the Trepca mines." FS

    [19] ...BUT QUESTIONS REMAIN OVER IMPLEMENTATION

    Rexhepi added

    that "we will try to implement that agreement in the coming

    days. If it brings concrete results it is fine, but if not

    the population will try to find other ways to end the

    [partition] of the city." An unidentified Western official,

    however, told Reuters that neither side has signed any

    agreement. He suggested that Rexhepi is misrepresenting the

    state of affairs by presenting his side's bargaining points

    as a done deal. FS

    [20] SHPAK SAYS UCK DEMILITARIZATION BEHIND SCHEDULE

    Colonel-

    General Georgii Shpak, who is commander of the Russian

    paratrooper units, told Interfax on 16 August that the UCK is

    behind schedule with its demilitarization plan. He added that

    unidentified attackers have "often" fired shots near Russian

    checkpoints, but he added that there have been no direct

    attacks on the paratroopers. FS

    [21] SERBIA'S DINKIC CALLS DEMO 'LAST CHANCE FOR PEACEFUL

    CHANGE'...

    Mladjan Dinkic of the G-17 group of independent

    economists told Vienna's "Die Presse" of 16 August that the

    opposition demonstration slated for 19 August in Belgrade

    will prove decisive for Serbia's political future. He called

    it "the last chance for a peaceful transition of power and

    the last chance for the opposition to unite." He stressed

    that Milosevic must leave office before winter sets in. The

    alternative could be a violent revolution on the model of

    Romania in 1989, Dinkic warned. He expressed understanding

    that Serbian Orthodox Patriarch Pavle will not take part in

    the demonstration. Dinkic noted that Pavle must represent all

    Serbs, "including those on the other side." The opposition

    leader added, however, that many clerics will march in the

    protest and that the Orthodox Church has called for Milosevic

    to go. PM

    [22] ...OUTLINES PROGRAM FOR SERBIA'S FUTURE

    Dinkic also told

    "Die Presse" of 16 August that the G-17's "Stability Pact for

    Serbia" calls for a one-year transitional government to

    organize free and fair elections and to draft plans for

    economic reform (see "RFE/RL Newsline," 28 July 1999). Dinkic

    stressed that Serbia must quickly reach a "reasonable

    understanding" with Montenegro over the future of their

    relationship. He noted that Serbia also must join the

    international stabilization project for southeastern Europe

    and make its markets attractive for foreign investors. If

    Milosevic does not step down or is not overthrown soon,

    Serbia is likely to "remain a black hole in Europe for the

    next 10 years," Dinkic warned. PM

    [23] CONFUSION PERSISTS OVER BELGRADE RALLY'S LIST OF

    PARTICIPANTS

    Dinkic did not mention that generals-turned-

    politicians Vuk Obradovic and Momcilo Perisic do not plan to

    attend the demonstration. Kosovar Serb leader Momcilo

    Trajkovic, moreover, said that no one from the opposition has

    invited him or anyone from his Serbian Resistance Movement,

    "Danas" reported on 16 August. Alliance for Change leader

    Vladan Batic told Reuters that his group will attend the

    rally, but "we don't know who else will turn up." The main

    problem involves the sequence and number of speakers. The

    clash of egos among opposition leaders has long been the

    major obstacle to unity within the opposition. PM

    [24] LEADING BUSINESSMAN LEAVES MILOSEVIC GOVERNMENT

    Bogoljub

    Karic has resigned his position as minister-without-portfolio

    in the Serbian government, AP reported on 16 August. Karic

    said that his "government obligations have inflicted severe

    damage to my business." He is one of 308 top Yugoslav

    officials whom Western countries have withheld visas. PM

    [25] UP TO $1 BILLION LOST IN BOSNIAN FRAUD

    "The New York Times"

    of 17 August reported that U.S.-led anti-fraud investigators

    have found that Muslim, Serbian, and Croatian nationalist

    leaders have stolen up to $1 billion from public funds or

    international aid projects since the Dayton peace agreement

    was signed in 1995. The report, which exceeds 400 pages and

    was compiled for the office of the international community's

    high representative, details widespread corruption. In one

    incident, a Bosnian bank "lost" $20 million belonging to 10

    foreign embassies or aid agencies. In Tuzla, $200 million

    "disappeared" from the 1999 budget. Tuzla officials had the

    local schools painted four times in 1998, at a cost several

    times the going-rate, even though international aid

    organizations also had them rebuilt and painted. The schools

    have no heating. Few corrupt officials have ever been brought

    to justice, the report added. Observers note that Bosnia

    requires massive investments and a vigorous expansion of the

    private sector to combat rampant unemployment and poverty. PM

    [26] CROATIAN OPPOSTION COALITION TOTTERS

    Officials of the

    opposition Istrian Democratic League and the Liberal Party

    said in Rovinj on 16 August that their parties do not approve

    of the recent "strategic alliance" struck between the Social

    Democrats and Social Liberals. In Zagreb, an official of the

    People's Party said that the emergence of the two-member

    alliance threatens to destroy the six-party electoral

    coalition that seeks to win a majority in the parliamentary

    elections due by the end of 1999. The Social Democrats and

    Social Liberals are the two largest parties within the six-

    member coalition. Opinion polls suggest that the coalition

    seems likely to defeat the governing Croatian Democratic

    Community. PM

    [27] ROMANIAN DEMOCRATIC PARTY SENDS 'MESSAGE TO TRANSYLVANIA'

    Democratic Party leader Petre Roman revealed in Targu Mures

    on 16 August his party's "Message to Transylvania," RFE/RL's

    Bucharest bureau reported. Roman said that his party does not

    want the Romanian majority to "merely coexist" with the

    Hungarian minority because "coexistence [means] separate

    development." The Democrats, Roman said, want the region to

    build on its historical traditions and spearhead cooperation

    among all Romanians on the country's progress toward

    integration into European structures. Addressing the region's

    Hungarian ethnic minority, Roman said "we respect and back

    your fidelity toward your national cultural values and we

    expect to receive from you a political pledge of fidelity

    toward the Romanian national unitary state." MS

    [28] ROMANIAN OPPOSITION LEADER PROTESTS FRENCH-SWISS TV

    PRODUCTION

    Party of Social Democracy in Romania leader Ion

    Iliescu, in an open letter addressed to Romanian political

    leaders and journalists, demanded that a protest be launched

    against the French television channel TV 5's showing of what

    he called "a profoundly anti-Romanian" movie, Romanian media

    report. The movie, which was aired on 12-13 August, depicts

    the ordeals of an ethnic Hungarian who returns to Romania

    after 1989 and finds out that his brother has been killed by

    the Ceausescu secret police. Iliescu said that the film is

    based on "falsehood and myth, ignorance of historical reality

    [and] fabricated lies." A spokesman for the channel told AFP

    that the movie was "fiction, which by definition cannot be

    guided by the same criteria of objectivity as a report." MS

    [29] MENINGITIS EPIDEMIC SPREADS TO MOLDOVAN CAPITAL

    The

    meningitis epidemic has spread from Romania--where more

    than 2,000 cases have been recorded so far--to Chisinau,

    Infotag reported on 16 August, citing an official from the

    National Center of Preventive Medicine. The official told

    the agency that 67 cases were registered in July and

    another 67 in the first 10 days of this month. He said no

    information is available on the spread of the disease to

    other parts of Moldova. MS

    [30] BULGARIA TO DEMOLISH DIMITROV MAUSOLEUM

    A spokeswoman for

    the Ministry of Construction said on 16 August that the

    Georgi Dimitrov mausoleum will be demolished by 8 September

    because "experts agree that it does not match Sofia's

    overall architectural image," Reuters reported. Dimitrov's

    body was removed from the mausoleum and cremated in 1990.

    The opposition Socialist Party said that the decision is

    "politically motivated" and linked to the October local

    elections. It added that it wants the building to be turned

    into a memorial for Bulgarian soldiers. MS

    [31] BULGARIAN EURO-LEFT NOMINATES CANDIDATE IN SOFIA MAYOR

    ELECTIONS

    Nikolai Kamov of the Euro-Left Party will run for

    the Sofia mayoralty in the fall local elections. Kamov's

    candidacy has also been endorsed by the Bulgarian Social

    Democratic Party (BSDP) and the United Labor Bloc, BSDP

    honorary chairman Petar Dertliev told BTA on 13 August. Kamov

    was originally expected to be the candidate of the entire

    leftist opposition, but the Bulgarian Socialist Party has

    nominated former minister Rumen Ovcharov to run for the post.

    MS


    [C] END NOTE

    [32] ONE YEAR AFTER THE MELTDOWN: FEARS WANE, SHADOW LINGERS

    By Floriana Fossato

    Many analysts assessing the state of the Russian economy

    one year after the August 1998 financial meltdown note that

    their worst fears have not come true. Some even feel that it

    was a healthy development for Russia.

    Former Economics Minister Yevgenii Yasin, for example,

    recently told RFE/RL that last August's meltdown was a

    "moment of truth" for Russia. "We found out that it is

    impossible to live on debts and impossible to live with an

    inflated ruble exchange rate," he said. "The market has

    brought everything back to normal. Now we stand on a more

    realistic footing. We can like it or not, but it is better to

    dance to this music than to live on illusions."

    A year ago today, the government of then Prime Minister

    Sergei Kirienko in effect devalued the ruble and defaulted on

    some domestic debt. Within three weeks, the ruble plummeted

    from six to 16 to the dollar, banks refused to return clients

    their savings, most business activities suffered huge losses,

    and foreign investment dried up. As a result, many people

    lost their jobs, and most of those who managed to keep them

    saw their salaries reduced or delayed.

    When the crisis peaked last summer, Russians emptied

    shop shelves and started stocking up on goods, preparing for

    the worst. They once again showed their endless capacity for

    enduring cataclysms. And, significantly, there was no major

    social unrest.

    A new left-leaning government led by Yevgenii Primakov

    talked much about implementing measures that could have led

    to hyperinflation. But in the end it avoided a full economic

    crash by enforcing a policy that some observers called

    "positive inaction." As a result, the ruble continued its

    fall, but finally found firmer ground at a rate of about 24

    to the dollar.

    Following the ruble devaluation, imports fell

    drastically--by 46 percent in the first half of this year--

    helping boost domestic production. Demand has increased for a

    wide range of domestically produced goods, which now are

    cheaper owing to the devaluation. Those goods range from food

    products to construction materials.

    Another reason for Russia's improving trade balance is

    the upward trend of world prices for oil and other raw

    materials. A barrel of Russian oil was worth only 8.58

    dollars in February, but the price had risen to 19.34 dollars

    by July.

    Yasin, however, notes that the current positive trend

    had a high price and that currently Russians are poorer than

    a year ago. "The positive trends we notice now in industry

    and in several other sectors--the increase in exports, the

    [domestic] production growth to replace imports, the improved

    budget situation--has been paid for by the people. The

    population's standard of living has decreased by 25 to 30

    percent."

    Official figures released in July say that the number of

    Russians living in poverty increased from 33 million last

    year to 55 million this year. This means that nearly four out

    of every 10 people live below the official subsistence level,

    defined as a monthly income not exceeding 829 rubles (some

    $34).

    The average monthly wage now equals about $50, having

    fallen from some $200 before last August. The average pension

    now equals only about $17 a month.

    Some economic analysts argue that government policies

    have contributed little to the current positive trends. Denis

    Rodionov, an analyst with Brunswick Warburg, told RFE/RL that

    "deeper reforms--structural and institutional--are still not

    there." He said that the main policy needs continue to be the

    reform of monopolies, the introduction of bankruptcy

    legislation, the reduction of barter practices, the

    improvement of tax collection, and the restructuring of the

    banking system.

    Others argue that another huge problem is persisting

    corruption and the inefficiency of both the authorities and

    state and private businesses.

    The government and central bank program outlining

    economic policy for this year states that the Russian

    authorities are committed to further structural reform. The

    program was submitted to the IMF ahead of the fund's long-

    awaited decision late last month to issue $4.5 billion in new

    loans over the next 18 months. The money is intended to help

    refinance previous loans that are coming due.

    The IMF decision has been of critical importance for

    Russia. Not only has it unlocked additional funds from the

    World Bank and Japan's Eximbank. It has also made possible an

    agreement with the Paris Club of foreign debtors on

    postponing payment of some Soviet-era debts.

    But the IMF's new loan was accompanied by unusually

    strong words from fund officials. Citing an audit that found

    Russia's central bank had falsified the size of its reserves

    in 1996 by secretly channeling funds through the offshore

    company FIMACO, the IMF's first deputy managing director,

    Stanley Fischer, said the fund has "made clear to the highest

    levels of Russian government" that what happened was

    "unacceptable".

    Peter Westin, an economist at the Moscow-based European

    Center for Economic Policy, wrote recently in the English-

    language "Moscow Times" that the IMF decision "was mainly

    political." He said it "reconfirms the suspicion that

    creditors view Russia as too big to fail."

    One year after the meltdown, most analysts seem to agree

    that the shadow of August 1998 lingers.

    The author is an RFE/RL correspondent based in Moscow.

    17-08-99


    Reprinted with permission of Radio Free Europe/Radio Liberty
    URL: http://www.rferl.org


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