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Russia Report: November 10, 1999

10 November 1999, Volume 1, Number 37
Deputy Prime Minister Vladimir Shcherbak declared on 5 November that the federal government will take harsh measures against those regions that failed to transfer all the proceeds from the sale of U.S. food assistance to a special account of the Finance Ministry, Interfax reported. According to Shcherbak, the agreement that was signed between the U.S. and Russia requires that the proceeds be transferred to that account in order to replenish the Pension Fund. Shcherbak added that those regions owing monies to the center cannot count on any new food assistance until their debt has been paid. The regions owing the most money are Kemerovo, Amur, and Chelyabinsk Oblasts and the Republics of Daghestan and Sakha (Yakutia), according to the agency. JAC

Nine governors are among more than 30 signatories to an appeal published in a campaign booklet supporting Gennadii Zyuganov's Communist Party of the Russian Federation. The appeal, a shortened version of the KRPF's campaign platform, rarely mentions the word "communist" or the name of Zyuganov's party. Instead, it calls on "patriots" and "compatriots" to help support fairness and honest labor, fight corruption and criminality, and return Russia to greatness ("RFE/RL Russian Election Report," 12 November 1999--forthcoming). Tula Oblast Governor Vasilii Starodubtsev is the number three candidate on the KPRF's party list. The other governors who signed the campaign appeal are Aman Tuleev (Kemerovo Oblast), Nikolai Vinogradov (Vladimir Oblast), Nikolai Kondratenko (Krasnodar Krai), Vyacheslav Lyubimov (Ryazan Oblast), Nikolai Maksyuta (Volgograd Oblast), Aleksandr Prokhorov (Smolensk Oblast), Aleksandr Nazarchuk (Altai Krai), and Aleksandr Chernogorov (Stavropol Krai). All govern regions in which the KPRF had an especially strong showing in the 1995 parliamentary election. LB

The volume of freight traffic on the Far Eastern railway soared 42 percent in October from the beginning of the year, ITAR-TASS reported. Rail experts conclude that the jump indicates that industrial production has rebounded in the region and in the country as a whole. During the first nine months, industrial output jumped 7 percent in the country as a whole compared with the same period last year. JAC

Smolensk and Orenburg Oblasts had official registered unemployment of 0.5 percent of the working population at the end of September, Interfax reported on 7 November, citing the federal Economics Ministry. The areas with the lowest levels of unemployment are Central Russia with 1.6 percent and the Central-Black Earth region with 1.5 percent. Oblasts with the highest levels of unemployment are found primarily in the Far North and Caucasus areas. For example, Ingushetia has 10.6 percent unemployment and Koryak Autonomous Okrug 9.5 percent. JAC

In 1964, war veteran and railway worker Ivan Tabituev filled out a request to have a phone installed in his house, "Izvestiya" reported on 6 November. After fruitless hours spent in the corridors of various offices, he finally tried appealing to the republic's Center for Defense of Human Rights, according to the daily. A phone company representative arrived soon after and within less than hour installed his phone. He only had to wait 35 years. JAC

The Open Society Institute of U.S. philanthropist George Soros has opened a center in Kaliningrad aimed at helping servicemen who have been laid off to start up businesses and adapt to civilian life, "Vremya MN" reported on 2 November. Located on a former military site, the so-called "business-incubator" houses the offices of new companies founded by former servicemen, who pay either minimal rent or none whatsoever. It also accommodates psychologists, sociologists, lawyers, and other professionals whose task is to help the former servicemen and their families get used to life after the military. Moreover, the new entrepreneurs among those servicemen can apply for loans from two credit organizations established with a starting capital from the OSI. The fund has allocated a total of some $450,000 to open the center, retrain servicemen, and offer support to small businesses. JC

"Nezavisimaya gazeta" reported on 4 November that the republic's population is shrinking at an ever quicker pace, and the death rate is now almost twice as high as that of births. According to data from the republican branch of the State Statistics Committee, the population diminished by some 4,264 people during the first half of this year alone. The total population of the republic currently stands at 932,887, according to the daily. JC

A local court has ordered Sali Katyk, former director of the Omsk Transmasha factory, along with several of his deputies, to pay back money received from the enterprise for the "right" to produce the T-80UK tank, "Kommersant-Daily" reported on 3 November. In 1993, those officials concluded an agreement with Transmasha whereby for a period of 10 years, the enterprise was to hand over annually 5 percent of the value of total sales of the tank, in whose development, they claimed, they had directly participated (as of November 1996, that share was reduced to 2 percent). In early 1997, the 68-year-old Katyk was forced to resign when workers, angry at not having received wages for a number of months, protested the "production right" payments to the enterprise heads. And in late 1998, the Omsk Prosecutor-General's Office successfully filed suit against Katyk and his deputies to have the 1993 agreement declared void. All five defendants must now pay the company 147,000 rubles ($5600). "Kommersant-Daily" commented that the case may set a precedent for other military-industrial enterprises--particularly those that have concluded contracts abroad--whose management claimed similar rights for themselves. JC

According to "Izvestiya" on 4 November, Deputy Speaker of the State Duma Sergei Baburin (Communist Party) may be thwarted in his bid to hold on to his Duma seat in a single-mandate district in Omsk. Also running in that district will be fellow Communist and party top ideologist Aleksandr Kravets. Since the two Communist candidates will be competing for the leftist vote, local businessman and Omsk parliamentary deputy Aleksandr Vereteno, described as a moderate centrist, is considered to have a chance to make it into the Duma. And in such a case, Baburin might find himself shut out of the lower house altogether. The Russian All People's Union, which he leads and on whose list he occupies the first position, is considered unlikely to overcome the 5 percent hurdle for entry into the federal legislature. JC

"Kommersant-Daily" reported on 6 November that the Moscow Tax Inspection has uncovered a "suspicious" credit issued by the National Reserve Bank (NRB) to Orel Oblast. That credit, totaling 50 billion undenominated rubles, was issued in August 1997 for a one-year period, which the oblast asked to be extended shortly before the debt was due. The bank made several restructuring proposals but did not receive an answer, and on 26 August 1998 the credit was declared overdue. Two months later, the oblast proposed paying part of the debt in real estate but, likewise, received no answer. According to the newspaper, there is a political reason for the "discovery" at this time of the outstanding debt: the Kremlin wants to put pressure on Orel Governor and chairman of the Federation Council Yegor Stroev, who, according to sources within the administration, has not shown sufficient loyalty and has maintained contacts with "unfriendly" political forces. Tax inspectors are quoted as suggesting that bribe-taking may have been involved in the case of the outstanding debt, according to the daily. "Kommersant-Daily" is controlled by business magnate Boris Berezovskii. JC

Sergei Shakhrai, former deputy prime minister and minister for nationality affairs, has registered to participate in State Duma elections from a single-mandate district in Perm Oblast, "Nezavisimaya gazeta" reported on 2 November. According to the newspaper, Shakhrai's plans came as a complete surprise to everyone, even Perm Governor Gennadii Igumnov, since Shakhrai has "had no relationship with the region and has only visited three times." Shakhrai told the daily that his experience in Moscow's corridors of power will help the residents of Perm. He also did not exclude the possibility that if elected, he will seek the speaker's position. JAC

The son of the Russian writer, Mikhail Sholokhov, was denied registration as a candidate for State Duma elections from a single-mandate district in the Rostov Oblast because he had not gathered enough signatures, "Trud" reported on 6 November. Also disqualified by the local election commission was Sergei Mikhailov, the alleged crime kingpin known as "Mikhas," State Duma Deputy Vitalii Linnik (Our Home Is Russia), and Rostov Oblast's First Deputy Minister of Agriculture Vyacheslav Vasilenko. Mikhas was barred because of his dual Greek and Russian citizenship. Chairman of the oblast's election commission Sergei Yusov told the daily that Rostov Oblast has one of Russia's most highly developed political cultures, and even during a period of political struggle in the early 1990s, political candidates did not resort to the use of the so-called "dirty" campaign technologies. The newspaper also claimed that despite the presence of many different nationalities in Rostov Oblast and its proximity to the hot spots in the North Caucasus, elections in the oblast have proceeded without any special "cataclysms" because the parties consult with one another on a regular basis. JAC

"The St. Petersburg Times" on 2 November reported that the local branch of the Jehovah's Witnesses last month opened a 2,600-seat hall in the city, to be used for congresses, weekly bible meetings, and discussion seminars. Branches of Jehovah's Witnesses throughout the federation financed the $4 million building, and kindred organizations in Scandinavia supplied building materials. Some 10,000 people belong to the St. Petersburg branch of the religious group, which has frequently been targeted by those opposed to the Jehovah's Witnesses. According to the newspaper, nerve gas was released at a recent meeting of the group in the northern city, resulting in the hospitalization of several participants. Earlier this year, the federal Justice Ministry re-registered the Jehovah's Witnesses as an organization. A Moscow city prosecutor, however, has been seeking to ban the group from that city under the 1997 controversial law on freedom of conscience and religious organizations. The plaintiffs accuse the group of violating the Russian Constitution through their intensive missionary activities. JC

A sharp cut in its supply of coal from Kazakhstan resulted in the temporary shutdown in almost all of the region's large factories, RFE/RL's correspondent in Yekaterinburg reported on 31 October. Kazakhstan failed to deliver about two-thirds of the coal it had contracted to provide and local power plans are configured to run only on Kazakh coal. According to "Nezavisimaya gazeta" on 3 November, Sverdlovsk Oblast requires 12 trains of coal from the Ekibastuz coal basin daily in Kazakhstan, but it had been receiving an average of only 3.5 trains. An agreement between Kazakhstan and Russia's Unified Electricity Systems (EES) to write off part of their mutual debts might lead to a resumption of regular coal supplies and thus resolve the oblast's energy problem. The two parties agreed to set up a joint venture under which each party will own a 50 percent stake in the Ekibastuz Power Generating Plant, according to Interfax on 5 November (see "RFE/RL Newsline," 9 November 1999). JAC

AT THE PUMP: Fuel Blues
by Julie A. Corwin

Regions' persistent problems with fuel supplies will likely prove a key topic at the Russian government's talks with IMF mission members in Moscow this week. Before the mission arrived, Fuel and Energy Minister Viktor Kalyuzhnyi declared the fund's insistence on dropping restrictions on the export of oil products a non-starter. According to Kalyuzhnyi, Russia must keep the caps in place, otherwise, "we will get in trouble with oil product supplies to the regions." Currently, some refineries are allowed to export only some 10 percent of their refined products, while others can export as much as 40 to 50 percent of their output. The federal government also forces refiners to sell fuel at below market prices.

Despite these administrative measures, regions continue to report sharp hikes in price of fuel at the pump as well as sudden shortages. For example, at the end of October, higher octane gasoline was completely unavailable in Magadan Oblast, according to Interfax-Eurasia, while low octane gasoline was selling for 8 rubles a liter, but only in a few places. Earlier in the month, the Jewish Autonomous and Orel Oblasts experienced a spike in gasoline prices of 26.1 and 20.9 percent, respectively. October's crisis follows a similar one in July.

One reason for regions' chronic fuel problems is that even when gasoline prices spike, they remain low relative to world prices and the cost of production. As a result, refiners have a greater economic incentive to produce other refined products that they can sell abroad, such as fuel oil and gas oil. Also contributing to tight supply is that many refineries need expensive upgrades so that they can produce a higher proportion of lighter products, such as gasoline. But the major reason for chronic product shortages, according to Washington-based PlanEcon's Matthew Sagers, is that regional governments and other domestic consumers do not pay regularly for the products they consume. Sagers believes that as long as the federal government continues to keep prices low and consumers still have reasonable assurances that the government will ensure their supplies regardless, the seasonal cycle of nonpayments and shortages will continue.

Almost 2,000 municipal transportation workers went on strike on 9 November, leaving more than 150 cities grounded, ITAR-TASS reported. Workers are demanding back wages as well as a 50 percent salary increase from 1 October. The city has responded that the strike action is illegal and that there is no money for a salary increase ... TULA. ITAR-TASS reported on 7 November that coal miners at the Priupskaya mine are continuing their strike, which started almost one month ago. The miners are demanding unpaid wages worth almost 100 million rubles ($3.8 million) ... TUVA. Teachers at 22 schools in Kyzyl are continuing the second month of their strike, Interfax-Eurasia reported on 1 November. The teachers, who have not been paid for several months, are demanding not only their pay but also reimbursement for textbooks and other teaching materials. JAC