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Newsline - December 17, 1997


Presidential spokesman Sergei Yastrzhembskii on 17 December denied rumors that President Boris Yeltsin will need several weeks to recover from his latest illness, RFE/RL's Moscow bureau reported. Seven days after Yeltsin was taken to the Barvikha sanatorium, Yastrzhembskii said the president's health is "satisfactory" and that the effects of a respiratory virus have been "eradicated." He said Yeltsin will leave the clinic within the next several days. He also advised Ekho Moskvy to be more "restrained" in its coverage. The radio station reported on 16 December that Yeltsin will need another three weeks to recover. In an interview in the latest edition of the weekly "Argumenty i fakty," cardiologist Renat Akchurin, who performed bypass surgery on Yeltsin in 1996, again denied that the president's current illness is related to past heart problems. LB


First Deputy Prime Minister Boris Nemtsov on 16 December cautioned against "exaggerating" the influence on Yeltsin's decisions of family members or the Kremlin "court," ITAR-TASS reported. Yeltsin's daughter, Tatyana Dyachenko, is an official presidential adviser, but Nemtsov argued that she only deals with issues the president assigns to her. (Some Russian media have charged that former Security Council Deputy Secretary Boris Berezovskii and others have been able to influence Yeltsin by maintaining good relations with his daughter.) Nemtsov, who has periodically compared Yeltsin to a tsar, argued that such a comparison is justified because Yeltsin both physically "resembles a tsar" and wields powers that are "not inferior to those of a constitutional monarch." In fact, the Russian constitution grants the president far greater powers than those enjoyed by European constitutional monarchs. LB


State Duma Speaker Gennadii Seleznev met with some 50 leading bankers and business figures behind closed doors in Moscow on 16 December, Russian news agencies reported. Duma Economic Policy Committee Chairman Yurii Maslyukov, like Seleznev a Communist, and Duma Budget Committee Acting Chairman Aleksandr Zhukov of the Russian Regions faction also attended the meeting. The bankers present included Aleksandr Smolenskii, chairman of the board of SBS-Agro, Most Bank president Boris Khait, Alfa Group President Petr Aven, and former Central Bank Chairman Viktor Gerashchenko, according to "Kommersant- Daily" on 17 December. Seleznev told journalists that the bankers were particularly interested in draft laws on bankruptcy among banks, regulating the gold market, and guaranteeing citizens' deposits. He added that the business leaders agreed to "actively cooperate with us" by extending their legal services to the parliament when relevant legislation is being considered. LB


Konstantin Potapov, the acting chairman of the board of directors of the Sibneft oil company, announced on 16 December that Omsk Governor Leonid Polezhaev has asked Yeltsin not to implement a recent decision to seize and sell property of the Omsk Oil Refinery in order to pay tax debts, ITAR-TASS reported. The government's emergency commission for tax and budgetary discipline approved a plan to seize property of the Omsk Oil Refinery and the Angara Petrochemical Company at a meeting chaired by First Deputy Prime Minister Anatolii Chubais (see "RFE/RL Newsline," 10 and 15 December 1997). Potapov said the Omsk refinery paid debts totaling 80 billion rubles ($13 million) during the past week and will settle the remainder by 1 March. Sibneft, which is part of Boris Berezovskii's business empire, owns the Omsk refinery. Sidanko, owned by Oneksimbank, controls the Angara company. LB


"Kommersant-Daily" reported on 16 December that the decision to seize the Omsk Oil Refinery will be reviewed at another meeting of the commission on tax and budgetary discipline on 17 December. Prime Minister Viktor Chernomyrdin will chair that meeting, while Chubais will be absent, as he is on an official visit to India. Interfax cited unnamed government sources as saying that the decisions to seize property of the Omsk refinery and the Angara company are both likely to be reversed at the 17 December meeting. LB


Igor Sergeev said on 16 December that by year's end, the government will pay its 12.4 trillion ruble ($2.1 billion) debt to the army for wages and social benefits, according to ITAR-TASS. More than one-third of those funds is targeted for civilian personnel. Sergeev noted that the families of 12,900 military personnel are without apartments. The government has allocated 80.4 trillion rubles for the defense sector in the 1998 draft budget, but the Defense Ministry is trying to raise that allocation to 97.2 trillion rubles. Sergeev admitted, however, 55.9 percent of the funds allocated will go toward housing construction. BP


"Nezavisimaya gazeta" on 17 December reported that living conditions for military personnel and inadequate screening of conscripts are responsible for the recent wave of deaths among Russian soldiers on non-combat duty. The report comes after a drunken private killed three of his fellow soldiers and wounded five others in Dagestan on 16 December and after a soldier killed two colleagues in Siberia two days earlier. It claims that the rising rate of non-combat deaths and suicides can be attributed, among other things, to lack of housing, wage arrears, and fazing. Moreover, 12 percent of this year's conscripts admitted they regularly drink alcohol, 8 percent said they use drugs, and 6 percent have criminal records. Last year, murders within the armed services rose by 27.3 percent and suicides by 24.5 percent. BP


Rear Admiral German Ugryumoi has said the actions of Captain Grigorii Pasko, who was arrested at Vladivostok airport in mid-November in possession of incriminating documents, amount to "state treason," according to "Krasnaya Zvezda" on 16 December. Ugryumoi said the documents taken from Pasko contain information on the combat readiness of the Pacific Fleet and its nuclear capability. Experts in Moscow have confirmed that the documents were classified. BP


The Chinese customs agency on 16 December announced that the total volume of bilateral trade with Russia from January to October of this year was $4.788 billion. In April, Chinese President Jiang Zemin and Yeltsin met in Moscow and called for annual bilateral trade to reach $7-8 billion by the end of this year and $20 billion by the year 2000. Trade between the two countries was $6.85 billion in 1996. BP


Constitutional Court Chairman Marat Baglai told Interfax on 15 December that in 1998 the court will consider an appeal from the State Duma against Yeltsin's refusal to sign the laws on trophy art and on the government. Among some 50 cases to be considered by the court next year, Baglai mentioned an appeal against government resolutions on the construction of a high-speed railroad between Moscow and St. Petersburg. That appeal is based on the potential environmental consequences of building such a railroad. Baglai also said the court will consider a dispute between the federal authorities and the city of Moscow over the distribution of road funds and an appeal against residency registration rules in Sochi (Krasnodar Krai). The Constitutional Court has already ruled three times that requirements for residency permits [propiski] are unconstitutional. LB


Patriarch of Moscow and All Russia Aleksii II on 16 December expressed concern that "the negative attitude toward the Russian Orthodox Church currently demonstrated by [Russian] television and the press may herald a new attack on the Church," "Nezavisimaya gazeta" and Reuters reported. Addressing a meeting of Church officials in Moscow, Aleksii warned that "in this world, the Church has been, still is and always will be persecuted." He charged that a Russian Public Television program has a "communist and anti-religious tone" and accused the private network NTV of showing "contempt" for the Church by broadcasting the film "The Last Temptation of Christ" (see "RFE/RL Newsline," 7 and 10 November 1997). Aleksii also criticized the government for seeking 240 million new rubles ($40 million) in funding for sex education in 1998, a sixfold increase over this year's funding. LB


Konstantin Titov charged on 16 December that federal budget policies are reducing the economic potential of Russian regions and in some cases "driving regions into the arms of businesses" in order to remain solvent, RFE/RL's Moscow bureau reported. Addressing the Second International Conference on Federalism, Titov criticized the draft 1998 budget in particular. (Titov and other regional leaders have complained that the budget and new tax legislation proposed by the government would assign all revenues from taxes that are easy to collect to the federal government, while leaving regional authorities the proceeds from those whose collection is difficult.) Titov also charged that during the first 11 months of 1997, his oblast collected some 25 percent more tax revenues than planned, but none of those extra revenues returned from federal coffers to Samara. LB


Moscow Mayor Yurii Luzhkov on 17 December said the recent elections to the Moscow City Duma demonstrate that Muscovites want their legislative and executive authorities to "constructively cooperate" and "not get involved in political arguments," ITAR-TASS reported. City Duma Chairman Vladimir Platonov, a loyal Luzhkov ally who was easily re-elected, commented the previous day that Moscow voters showed that they want "professionals, not politicians who only make promises." However, State Duma deputy Nikolai Gonchar has charged that the campaign was marked by numerous violations of electoral legislation, an RFE/RL correspondent in Moscow reported on 15 December. In particular, Gonchar cited an aggressive leaflet campaign against him and Arkadii Murashev of the Russia's Democratic Choice party in the final days before the vote. Gonchar's bloc did not win a single seat in the Moscow City Duma (see "RFE/RL Newsline," 15 December 1997). LB


The Tyumen Oblast Court on 16 December declined to rule on whether deputies should be allowed to serve simultaneously in the Tyumen legislature and a legislature in either Khanty-Mansi or Yamal-Nenets Autonomous Okrug, ITAR-TASS reported. The court decided that the Constitutional Court is the proper forum for resolving the case. Khanty-Mansi and Yamal-Nenets are part of Tyumen Oblast but are also Russian Federation subjects in their own right. Politicians from Tyumen have long-running political and economic disputes with their counterparts in the oil- and gas-rich okrugs. The Tyumen Oblast Duma recently moved to bar deputies from serving in more than one legislature (see "RFE/RL Newsline," 4 November 1997). But three deputies from the Yamal- Nenets legislature and one from the Khanty-Mansi legislature won seats to the Tyumen Oblast Duma in the 14 December elections. LB


The Georgian parliament convened a special session on 16 December in response to a demand by 73 opposition deputies to debate whether Georgia should consider quitting the Commonwealth of Independent States, Caucasus Press reported. Instead of debating the issue, however, lawmakers adopted a resolution on the creation of a commission that is to assess whether Georgia's membership in various international organizations--including the CIS, the UN, and the Organization on Security and Cooperation in Europe, contributes to the restoration of the country's territorial integrity. The commission will present its findings within four months. In Moscow, Russian Foreign Ministry spokesman Valerii Nesterushkin expressed approval of the postponement, Interfax reported. Nesterushkin conceded that cooperation within the CIS poses certain problems but said a decision on quitting that body "requires deep and thoughtful analysis." LF


The trial of former Mkhedrioni paramilitary leader Djaba Ioseliani and 14 of his associates resumed in Tbilisi on 16 December, AFP and Caucasus Press reported. Ioseliani and several other defendants, who face charges of masterminding the failed assassination attempt against then parliamentary chairman Eduard Shevardnadze in August 1995, protested that the proceedings were illegal and demanded that three prosecutors be replaced. Judge Djemal Leonidze rejected that demand. Several defendants also claimed they had given evidence under duress or torture during the pre- trial investigation. LF


Some 10,000 people attended a demonstration in Yerevan on 15 December to protest the perceived readiness of the country's leadership to sign a Karabakh peace agreement restoring Azerbaijani control over the disputed enclave, RFE/RL's Yerevan Bureau reported. Participants adopted a statement that was delivered to the embassies of the three countries--Russia, France, and the U.S.--that co-chair the OSCE's Minsk Group, which is mediating a settlement of the conflict, according to Noyan Tapan. The next day, Armenian President Levon Ter- Petrossyan met with the Russian, French, and U.S. ambassadors to discuss the agenda for the upcoming OSCE foreign ministers' meeting in Copenhagen, ArmenPress reported. LF


Direct foreign investment is expected to total $70-80 million by year's end, according to an unnamed Industry and Trade Ministry official quoted by ArmenPress on 15 December. The official said the lion's share of investment is divided between the recently privatized telecommunications enterprise ArmenTel, Coca-Cola Bottlers Armenia, Midland Bank Armenia, and the Armenian-U.S. joint venture Global Gold Armenia. Of a total of 766 joint ventures partly or wholly funded by foreign capital, 404 (53 per cent) are engaged in trade. Russia is the most important foreign investor (193 enterprises), followed by Iran, the U.S., France, Georgia, Germany, and Syria. Meanwhile, the Armenian government on 16 December granted two South African metallurgical companies a four-month exclusive concession to prospect for gold, copper, and molybdenum and prepare proposals for the joint development of deposits, RFE/RL's Yerevan bureau reported. LF


Rasul Guliev, who was forced to resign as parliamentary speaker in September 1996 and now lives in the U.S., was stripped of his deputy's mandate on 16 December, Turan reported. The official reason was that Guliev has failed to attend parliamentary sessions for more than one year. The previous day, however, the ruling Yeni Azerbaycan party had issued a statement accusing Guliev of anti-state activities. Ali Nagiev, the party's first deputy chairman, told journalists on 16 December that Guliev will shortly be expelled from the party. In his recently published book, "Path To Democracy," Guliev harshly criticizes the economic polices of President Heidar Aliev. LF


Saparmurat Niyazov on 15 December signed a decree abolishing the Academy of Sciences and all post-graduate institutions, Interfax reported. Researchers and scientists of the academy will now be responsible to the government ministries and agencies that deal with their respective specialist areas. Niyazov said he made the decision because of the "lack of any practical scientific results" from either the academy or the post-graduate institutions. BP


The Tajik government has declared 17 December an official day of mourning for the 85 victims of the Tajik airliner crash in the United Arab Emirates on 15 December, according to ITAR-TASS. The Tajik Financial Ministry has been ordered to allocate funds for compensation to the families of those who died. Each family will receive a lump sum payment of 400,000 Tajik rubles (about $533). An investigation into the cause of the crash is under way. Tajik officials have said the plane was in good working order and that the crew were familiar with the Khujand-Sharja route. BP


NATO foreign ministers met in Brussels on 16 December to sign accession protocols with the Czech Republic, Hungary, and Poland. Before the signing ceremony, Czech Foreign Minister Jiri Sedivy said the event was not only a crucial moment in his nation's modern history but also proof of NATO's readiness for the tasks of the 21st century. Hungarian Foreign Minister Laszlo Kovacs told his NATO colleagues that Hungary considers the enlargement a historic step that will expand the zone of stability of the entire Euro-Atlantic region. Polish Foreign Minister Bronislaw Geremek said NATO's expansion is a unique event in the history of mankind and a source of joy, pride, and hope for Poles. He said Poland hoped to help build an undivided, free Europe. MS


Czech President Vaclav Havel has announced he will appoint National Bank governor Josef Tosovsky as prime minister, CTK reported. Tosovsky will be sworn in on 17 December. Havel explained his choice by saying that Tosovsky enjoys the support of all three parties that make up the outgoing coalition government as well as that of the opposition Social Democrats. He said the new government is likely to ask the parliament for a vote of confidence in January. Outgoing Premier Vaclav Klaus expressed surprise at the speed of the announcement, saying he was informed only hours before the media. He did not indicate whether he backed the appointment but said "we are ready to negotiate." MS


Former Civic Democratic Party (ODS) deputy leader Jan Cerny has been elected to replace Jiri Honajzer as leader of the party faction in the Chamber of Deputies, CTK reported on 16 December. Honajzer recently resigned from that post. In his new capacity, Cerny becomes a member of the ODS top leadership, which will decide on the party's future course. He has recently voiced different views from those of Klaus and does not support Klaus's position that the ODS should go into "constructive opposition." Meanwhile, an opinion poll released by STEM on 16 December shows that 69 percent of Czechs have confidence in Havel but only 21 percent trust the outgoing cabinet, down 16 percentage points since April. Confidence in the Chamber of Deputies has also fallen over the past eight months, from 40 percent to 25 percent. MS


The Ukrainian and German defense ministers on 16 December signed a five-year military cooperation agreement, ITAR- TASS reported. The same day, Greek President Konstantinos Stephanopoulos told the Ukrainian parliament that Athens will help Ukraine join the EU and other European institutions. And NATO and Ukraine signed an accord on responding to natural disasters. PG


One day after a Minsk court cleared Belarusian Popular Front deputy chairman Yury Khadyka, Minsk police on 16 December apologized to journalist Valeriy Shchukin for his mistreatment during a demonstration in April 1997 against the Belarus-Russia integration pact, RFE/RL's Belarusian service reported. The police acknowledged they had treated Shchukin "unlawfully." PG


Minsk Mayor Uladzimir Yarmoshin has issued a directive to all shop owners in the center of the city to illuminate their windows with Christmas lights or face fines or even closure, RFE/RL's Belarusian service reported on 16 December. Several shops have already been closed down as a result of the directive. That step will cost the government millions of Belarusian rubles in tax revenue. PG


Prime Minister Mart Siimann told reporters on 16 December that some 50 people are likely to form the delegation that will hold accession talks with the EU beginning April 1998, ETA reported. Foreign Minister Toomas Hendrik Ilves will head that delegation, and preparatory work groups will be set up in all ministries except for defense. JC


President Guntis Ulmanis has said he agrees with those political parties that want the president to be elected by popular vote, BNS reported on 16 December. Under current law, the head of state is elected by the parliament. Ulmanis argued that a direct vote would increase the president's responsibilities and benefit both the population and the state. He also argued in favor of a mixed system (single-member constituencies and party lists) of parliamentary elections instead of the current system of party lists only. JC


The government on 16 December reduced the waiting period for re-sitting the naturalization examination, BNS reported. Candidates who are unsuccessful first time round will now have to wait only three months to repeat the Latvian language test and only one month for the test on the country's history and constitution. Previously, six months had to elapse before unsuccessful candidates could re-take either test. The move follows a government decision earlier this month to cut the 30 lats ($60) naturalization fee by half for some applicants and to waive it altogether for others. JC


Prime Minister Vladimir Meciar announced on Slovak state radio on 16 December that Finance Minister Sergej Kozlik will leave that post in order to have more time "for political work before the [September 1988] elections," TASR reported. Kozlik will continue in his posts as deputy premier and deputy leader of Meciar's Movement for a Democratic Slovakia. Miroslav Maxon, head of the parliament's Budget Commission, replaces Kozlik at the Finance Ministry. MS


In a 16 December letter to Hungarian Prime Minister Gyula Horn, British Premier Tony Blair said that the United Kingdom, in its capacity as chair of the EU beginning January, will launch the expansion process on 30 March by hosting a conference attended by officials from applicant countries, "Nepszabadsag" reported. He said official talks will open with Hungary after the conference and expressed the hope that he can meet with Horn in January. In other news, the London-based Economist Intelligence Unit has said Hungary heads the list of the seven most developed CENTRAL AND EASTERN EUROPEan countries. MSZ


Carlos Westendorp, the international community's chief representative in Bosnia, announced in Sarajevo on 16 December that a proposed law on Bosnian citizenship will go into force on 1 January. This is the first time that he used the powers the international community recently gave him to impose settlements when the Serbs, Croats, and Muslims cannot agree on issues of key importance for the implementation of the Dayton agreement (see "RFE/RL Newsline, 16 December 1997). Westendorp said that his decision to impose a settlement was reluctant and that he expects the Bosnian parliament to eventually pass the law. The Serbs blocked passage because the law contains no reference to dual Yugoslav and Bosnian citizenship for Bosnian Serbs. PM


U.S. Secretary of State Madeleine Albright said in Brussels on 16 December that Washington will donate $1 million to the Hague-based war crimes tribunal so that it can build a second court room and hence speed up its work. Albright noted that NATO officials are currently discussing various options regarding a possible extension of the mandate of the Bosnian peacekeeping force beyond its expiration date in June 1998. She added that Serbia and Belarus threaten European stability because they oppose democratic principles and regional integration, "Nasa Borba" reported. Meanwhile in Washington, Clinton administration officials said that the U.S. is preparing proposals for an aid package to help rebuild basic infrastructure in parts of the Republika Srpska controlled by President Biljana Plavsic. It would be the first major international development package for the Bosnian Serbs. PM


Alija Izetbegovic, the Muslim member of the Bosnian joint presidency, said in Sarajevo on 16 December that interethnic relations in Bosnia could suffer following Croatia's failure to list Muslims among the ethnic minorities explicitly named in its new constitutional amendments (see "RFE/RL Newsline," 16 December 1997). Izetbegovic added that he fears Croatia's "unjustified and regrettable" move will lead to a loss of rights for the thousands of Muslims in Croatia, many of whom have lived there for decades. PM


Slovenia had earlier protested the exclusion of Slovenes from the list of ethnic minorities and also warned that the exclusion could affect bilateral relations. But the Croatian Foreign Ministry issued a statement on 16 December in which it sought to reassure Ljubljana: "The Croatian government wants to stress that the implementation of the stated constitutional regulations will have no negative influence on the status of the Slovene minority in Croatia. The government continues to firmly support all kinds of assistance to Slovene minority bodies for the purpose of preserving their identity and the protection of their minority rights." PM


In his Christmas message on 16 December, Archbishop Josip Bozanic criticized government officials who get rich at the public's expense. He said that it is evident that a few citizens are rapidly becoming very rich while the great majority of Croats are becoming poorer, an RFE/RL correspondent reported from Zagreb. PM


Private gasoline sellers have returned to the streets of the Serbian capital after having disappeared following the easing of wartime sanctions in 1996. The latest gasoline shortage is the result of China's decision to cut off supplies following Yugoslavia's failure to pay for previous deliveries, an RFE/RL correspondent reported from Belgrade. PM


President Kiro Gligorov said in Skopje on 16 December that any attempt to challenge Macedonia's territorial integrity would be adventurism. He warned that there are still unnamed forces in the Balkans that seek to promote instability and threaten peace. Gligorov added that Yugoslavia, Bulgaria, and Greece have failed to act on recent Macedonian proposals aimed at defusing regional tensions. Earlier this year, he criticized ethnic Albanians for wanting to secede from Macedonia and join Albania. Skopje has also had difficulties with Belgrade over delimiting the border between Macedonia and Yugoslavia. PM


An Interior Ministry spokesman said in Tirana on 17 December that Interior Minister Neritan Ceka has given police shoot-to-kill orders against what the spokesman called masked bandits and criminals. The spokesman added that "the bodies of criminals killed by police will be left lying on the ground for two or three days as an example to other thugs." The move follows the killing of three police officers this week and a series of highway robberies. Previously, police were obliged to fire a warning shot before taking aim at robbers. PM


A bomb destroyed the car of a local drug dealer in Gjirokaster on 16 December, police spokesmen said. It was the fourth bomb explosion in the southern city within four days and took place shortly after the arrival of special police forces. Police said they have no indication as to who may have planted the bombs, one of which destroyed the house of late communist dictator Enver Hoxha (see "RFE/RL Newsline," 16 December 1997), "Gazeta Shqiptare" reported. Meanwhile, seven Italian anti-Mafia investigators arrived in Tirana to look into the smuggling of immigrants across the Adriatic. FS


At the start of a three-day visit to Bonn, Emil Constantinescu on 16 December met with his German counterpart, Roman Herzog, and with Chancellor Helmut Kohl, an RFE/RL correspondent in Germany reported. The talks focused on bilateral relations and on Romanian efforts to join Euro-Atlantic structures. Kohl said Germany's "official policy" is that Romania should join the EU "as rapidly as possible." Constantinescu also met with German businessmen and asked them to increase their investments in his country. He also announced that 1998 will be "German year" in Romania. MS


By a vote of 82 to 49, the Senate on 16 December approved the "Pruteanu version" of government regulations amending the education law. That version makes the teaching of history and geography in the Romanian language compulsory in all schools, permits teaching of Romanian from special manuals for minorities in grades one to four only, and forbids separate universities in the languages of ethnic minorities. Bela Marko, the chairman of the Hungarian Democratic Federation of Romania, expressed the hope that the Chamber of Deputies will approve a different version. He also repeated the appeal that the National Peasant Party Christian Democratic replace George Pruteanu as chairman of the Senate's Education Commission, RFE/RL's Bucharest bureau reported. MS


By a vote of 136 to 99 with one abstention, the Chamber of Deputies on 16 December rejected a motion by the opposition Party of Social Democracy in Romania criticizing the sharp drop in living standards, RFE/RL's Bucharest bureau reported. The same day, however, the ruling coalition again experienced inner turmoil when Democratic Party deputies joined the opposition to vote against allowing the government to introduce regulations that take effect immediately during parliamentary recesses. The resolution passed by a margin of just one vote. Democratic Party deputies called for a halt to the practice of ruling by regulation instead of parliamentary legislation. MS


Lawmakers on 16 December amended the 1998 budget to allow a deficit of 600 million lei (some $128.5 million), which is the equivalent of 6 percent of GDP. That figure is double the one approved by the legislature on 25 November and violates agreements with the IMF, RFE/RL's Chisinau bureau reported. Also on 16 December, the parliament approved a resolution whereby the country's six largest state-owned industrial enterprises will defer until 2002 payments of debts to the National Bank and interest on those debts, Infotag and BASA-press reported. The resolution was backed by Minister of Finance Valeriu Chitan. MS


The Social Democratic Party, the Party of Socio-Economic Justice, and the Radical Youth Organization have set up a joint electoral bloc called the Union of Justice, Infotag reported on 16 December. They said the decision was taken "out of concern about the aggravating socio-economic crisis in the republic [and about] the consolidation of anti- reform extremist forces and against the background of the general impoverishment of the population." The previous day, the Moldovan Socialist Party set up an electoral alliance with Socialist Unity-Edinstvo and the Communist Union. MS


The IMF on 16 December approved the release to Sofia of a fourth $80 million installment of a stand-by loan approved in April. Some $160 million remain to be released, an RFE/RL correspondent in Washington reported. The loan agreement is valid until June 1998. MS


by Floriana Fossato

First Deputy Prime Minister Anatolii Chubais believes that Russia has overcome the worst of the global financial crisis that shook the country's financial markets in recent weeks. In a joint news conference with Finance Minister Mikhail Zadornov in Moscow on 15 December, Chubais said that "the turn is for the better...and there are grounds to believe that the more dangerous stage is already behind us."

Russia's financial market suffered severely from the recent crisis in Asia, which undermined investors' confidence in emerging markets, prompting investor flight also from Russia's market. That development has threatened the modest economic stability Russia has achieved so far this year and cast doubt over optimistic forecasts.

Chubais, however, said that purchases of foreign exchange, which threatened to cause a significant devaluation of the Russian currency, have declined significantly. "Last week, the central bank was not selling but buying foreign currency on the markets," he commented.

He also remarked that, with loans totaling more than $2 billion expected from the IMF and the World Bank, the government is not seeking additional credit from abroad. Moscow will be able to meet President Boris Yeltsin's target of paying by the end of the year $1.6 billion in back wages to public sector employees, he predicted.

Economic analysts in Moscow, however, remain skeptical that the government will be able to pay all back wages by 31 December because of continued revenue shortfalls. The payment of those wages is essential for Chubais's future in the government. His standing was badly damaged in a scandal in November over a high royalties payment for a book on Russian privatization. After the book scandal erupted, Zadornov replaced Chubais as finance minister, and some Russian observers say Yeltsin may soon sacrifice Chubais altogether.

The source of Chubais' optimism was a decision recently taken by an IMF review team in Moscow. That team issued a statement saying it will recommend the release of a $700 million installment of a three-year $10.1 billion credit. IMF officials in Washington told RFE/RL that the fund's board may consider releasing the tranche as early as the first week in January.

The IMF froze loan disbursements to Russia in October, because of poor tax collection (in the first nine months of the year, only 66 percent of projected revenues had been collected) and because of the government's failure to reform the tax system. Now, however, the IMF has indicated it is encouraged by Russia's effort to clean up its finances, saying the Russian authorities have "clearly confronted" their problems on tax collection and budget spending.

IMF officials added that Russia has good economic prospects for 1998, "provided that the fiscal and monetary policies agreed during the review are fully applied on a sustained basis." A similar statement was recently made by the Organization for Economic Development and Cooperation (OECD), which predicted GDP growth of 0.5 percent.

Chubais said at the 15 December press conference that, despite the financial crisis, Russia still may meet a government target of 2 percent economic growth for 1998. Zadornov, for his part, said that tax collection improved in November and December. The sale of part of the state- owned Eastern Oil Company for $800 million dollars also helped boost revenues.

That sale took place despite the recent unfavorable conditions on the stock market, and Chubais said about 20 percent of the money that was withdrawn from the treasury bill market in November is now being re-invested in Russia. However, analysts say that world markets are not yet steady and that Russia remains vulnerable, since it is not achieving revenue targets for 1997.

Chubais and Zadornov both said they are encouraged by the fact that prospects are also good for two World Bank loans that the bank's board is expected to examine for final approval within the next few days. The two loans, which are intended for structural adjustment and reform of the coal industry, would total some $1.6 billion. World Bank officials have said their release would take place within hours of the final approval.

Russian observers believe these positive developments allowed the Russian government to put off negotiations with four Western banks for a $2 billion loan. But the optimistic picture on which Russian financial officials and international financial institutions have recently based their decisions is marred by the State Duma's refusal to approve a government proposal to increase the government's foreign-borrowing limit.

Moreover, the State Duma Council on 16 December approved a government request to postpone the second reading of the 1998 budget until 24 December. Duma Budget Committee Acting Chairman Aleksandr Zhukov explained that deputies need more time to consider government-backed amendments on planned 1998 expenditures. The author is a Moscow-based RFE/RL correspondent.