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Newsline - September 30, 1997


The Moscow Arbitration Court on 29 September ordered that a 41 percent stake in the Cherepovets Azot factory, Vologda Oblast, be returned to the state, RFE/RL's Moscow bureau reported. Oneksimbank acquired those shares in late 1994. The Federal Property Fund lodged the court appeal in July 1997, claiming that Oneksimbank had not met investment conditions under which the privatization contract was awarded. Informing journalists of the court decision, State Property Committee Chairman Maksim Boiko said the Cherepovets Azot investor had used funds that were intended to be invested in the enterprise for other purposes, Interfax reported. Boiko added that the state's privatization agencies "will work to ensure the honest implementation of the investment terms" following privatization sales. Boiko did not mention that Oneksimbank was the investor that failed to keep its commitments to Cherepovets Azot.


Oneksimbank's management of the Cherepovets Azot factory first gained widespread attention following an investigative report aired on Russian Public Television (ORT) on 26 July, the day after an Oneksimbank-led consortium won the controversial auction for Svyazinvest. The report was the first shot fired in the summer "bank war," which was waged by media outlets influenced by competing financial groups (see "RFE/RL Newsline," 28-29 July 1997). Among other things, ORT alleged that Cherepovets Azot had transferred some $41 million abroad while not paying its debts to the state budget. Appearing on RFE/RL on 29 September, Sergei Dorenko, the anchor of the ORT program, claimed that before the ORT report aired in July, the Moscow Arbitration Court rejected the Federal Property Fund's attempt to regain the stake in Cherepovets Azot. After the publicity, Dorenko claimed, the court considered the case again. This time "the state won," he added.


In a communique following his talks with Russian Security Council Secretary Ivan Rybkin on 29 September, Russian President Boris Yeltsin said he is aware that Grozny has drafted a Russian-Chechen inter-state treaty but that "it will never be implemented," Russian agencies reported. Yeltsin added that "mutually-acceptable solutions" to Chechnya's future status must be found but noted that sovereignty for Chechnya is possible only within the Russian Federation. Any treaty between Moscow and Grozny should be modeled on those already concluded between Moscow and other federation subjects such as Tatarstan, he argued. Earlier the same day, Yeltsin had rejected Rybkin's suggestion that a meeting between Yeltsin and Chechen President Aslan Maskhadov could resolve the deadlock. Maskhadov's press secretary, however, told ITAR-TASS on 29 September that Maskhadov has asked the Chechen delegation to the bilateral Russian-Chechen talks to prepare such a meeting.


Romano Prodi met with Yeltsin in Moscow on 29 September to discuss bilateral relations and international issues, including Russia-NATO cooperation and the peace process in former Yugoslavia, Russian agencies reported. Prodi later discussed bilateral economic cooperation with Russian Prime Minister Viktor Chernomyrdin. Among the issues discussed were increased Russian exports of natural gas to Italy (to which end Italy is prepared to finance repairs to the existing export pipeline) and cooperation in the auto industry. A memorandum was signed on joint construction of a plant in Nizhnii Novgorod that will assemble Fiat automobiles. The plant will be financed by the European Bank for Reconstruction and Development, Russia's GAZ (Gorky Car Plant), and Fiat. A contract on the manufacture of 150,000 Fiat cars annually will be signed when Yeltsin visits Italy in February 1998. Prodi assured Chernomyrdin that Italy will support Russia's bid for membership in the World Trade Organization.


Yeltsin has sharply criticized the State Duma for displaying "discord with the government" since the beginning of its fall session, Russian news agencies reported on 29 September. During a meeting with Prime Minister Chernomyrdin, Yeltsin noted that the Duma recently rejected a government-backed package of social benefits reductions and said deputies are dragging their feet on the 1998 budget. Yeltsin also said he will never sign the land code approved by the Duma because it would not allow farmers to buy and sell agricultural land. He added that the Duma committed "flagrant procedural violations" when it overrode his veto of that code (see "RFE/RL Newsline," 24 and 26 September 1997). Also on 29 September, Yeltsin's representative in the Duma, Aleksandr Kotenkov, warned that if the Duma votes no confidence in the government, it will "set in motion the constitutional process of [its own] dissolution," ITAR-TASS reported.


Leaders of 32 opposition parties and movements met in Moscow on 29 September to discuss strategy, RFE/RL's Moscow bureau reported. Nikolai Ryzhkov, leader of the Popular Power State Duma faction, chaired the meeting. Participants included Communist Party leader Gennadii Zyuganov; Duma Defense Committee Chairman Lev Rokhlin, leader of the Movement in Support of the Army; Duma Deputy Speaker Sergei Baburin, leader of the nationalist Russian All-People's Union; and Viktor Anpilov, the leader of the radical communist movement Workers' Russia. The participants agreed to support a series of protest actions planned for this fall. In interviews with RFE/RL, both Anpilov and Baburin stressed that the opposition groups represented at the meeting sought to coordinate their actions against current government policies but did not agree to join a common organization. Ryzhkov told reporters that similar consultations will be held every month, Interfax reported.


Yurii Skuratov met with Yeltsin on 26 September to discuss the investigation of the local authorities in Leninsk-Kuznetskii, Kemerovo Oblast, Russian news agencies reported. Following an investigative series in "Izvestiya," a commission representing the Prosecutor-General's Office, Interior Ministry, and the Federal Security Service was sent to Leninsk-Kuznetskii (see "RFE/RL Newsline," 24-25 September 1997). Skuratov told Interfax that similar commissions will be sent to other regions. (Yeltsin recently announced that some 2,500 officials in Russia are being investigated for corruption.) Skuratov also said a presidential decree currently being drafted will increase the prosecutor-general's role in fighting economic crime. Meanwhile, Aleksandr Dementev, the head of the Interior Ministry's Main Department on Economic Crime, was recently replaced, "Segodnya" reported on 27 September. That department was transferred to the supervision of Deputy Interior Minister Vladimir Vasilev, who heads the ministry's Main Department on Organized Crime.


The Duma on 26 September voted to form a commission to investigate the events from 21 September to 5 October 1993, Russian news agencies reported. That period spans from Yeltsin's decree No. 1400 "on gradual constitutional reform," which dissolved the parliament, to the aftermath of the shelling of the legislature by tanks. The Duma also proposed making 4 October a holiday to honor "the defenders of the constitution and the law." Yabloko deputy Sergei Ivanenko pointed out that the Duma disbanded a similar commission after declaring an amnesty in February 1994, which applied to participants in the fall 1993 events. Meanwhile, the Duma on 26 September voted down a proposal by a Communist deputy that the lower house investigate some of the claims made by Duma deputy Aleksandr Korzhakov, Yeltsin's former bodyguard, in his recent book (see "RFE/RL Newsline," 12 August 1997).


Duma deputies have vowed to conduct their own investigation into Deputy Prime Minister Oleg Sysuev's activities as mayor of Samara, "Kommersant-Daily" reported on 27 September. Responding to a request from two Communist and Agrarian Duma deputies, the Prosecutor-General's Office informed Duma Speaker Gennadii Seleznev on 26 September that investigators had found no evidence of crimes committed by Sysuev. "Kommersant-Daily" noted that a previous investigation by the Samara tax police uncovered various "dubious documents" signed by Sysuev between 1994 and 1996. On several occasions, Sysuev authorized the use of city budget funds to guarantee bank loans to commercial enterprises. In one case, city funds were used to pay a debt of an enterprise belonging to Sysuev's friend Aleksandr Sidorenko, the chairman of the Samara Oblast Property Committee. Sysuev resigned as mayor when he joined the government in March.


Moscow Mayor Yurii Luzhkov has again criticized the government's planned reductions of subsidies for housing and municipal services, Interfax reported on 29 September. Speaking at a ceremony to award medals to leading Duma deputies, Luzhkov argued that while "privatization robbed the entire country without making an impact on individuals, the housing and utilities reform can affect every family." He added, "First let the people make a living, then raise the tariffs. Otherwise a catastrophe will occur." Luzhkov also encouraged the Duma to pass a law to protect Russian language and culture. He slammed television networks, especially state-controlled Russian Public Television and the privately owned NTV, for showing "death, blood, murders, pornography," and even condom advertisements. Communist Party leader Gennadii Zyuganov, Liberal Democratic Party of Russia leader Vladimir Zhirinovsky, and Our Home Is Russia faction leader Aleksandr Shokhin were among the Duma deputies who received an award from Luzhkov.


First Deputy Prime Minister Boris Nemtsov says he and Luzhkov have no "conceptual" differences in their approach to housing reform, ITAR-TASS reported on 29 September. Speaking to students at a Moscow school, Nemtsov argued that the "heated political debates" over housing reform have come up because "certain people apparently want to score [political] points" on the issue. Nemtsov also repeated that he believes Moscow is spending too much money on subsidies for rent and utilities (see "RFE/RL Newsline," 19 and 24 September 1997). Nemtsov is the cabinet minister responsible for coordinating housing reform. He is also considered a likely candidate for president in the next election, although on 29 September he again denied having presidential ambitions.


Despite an extension of the voting period, St. Petersburg municipal elections will be declared invalid in most districts because of low turnout, RFE/RL's correspondent in St. Petersburg reported on 30 September. Governor Vladimir Yakovlev on 28 September ordered that the elections be extended for one day in 90 districts after it became apparent that turnout in those districts would fall far short of the required 25 percent. But few additional voters turned out on 29 September. In the end, citywide turnout was 18 percent, and turnout was high enough to elect a representative in only 33 of the city's districts, according to ITAR-TASS. Repeat elections are likely to be held in three months. Yakovlev has warned that the ballot will cost the St. Petersburg budget some 15 billion rubles ($2.6 million).


Air traffic controllers at 50 airports throughout Russia launched a strike on 29 September to demand the payment of wage arrears and to protest their employers' failure to abide by updated wage scales and vacation agreements, Russian agencies reported. Federal Aviation Service President Valerii Yezhov agreed to meet the strikers' demands one hour after the strike began. Previously, talks between the Federal Aviation Service and representatives of the air traffic controllers had failed to resolve the dispute.


Delegates to a 27 September congress of the peoples of Ingushetia passed a vote of no confidence in Aleksandr Kovalev, Yeltsin's representative in Ingushetia and North Ossetia, Interfax reported. They accused Kovalev of failing to take legal measures to restore the constitutional rights of the Ingush people, who were deported to Central Asia in 1944. Addressing the congress, Ingush President Ruslan Aushev reaffirmed his approval of the 10-15 year moratorium on territorial claims, which both he and North Ossetian President Akhsarbek Galazov had agreed to on 4 September, according to "Nezavisimaya gazeta" on 30 September. Aushev expressed concern at the delay in creating the conditions for Ingush displaced persons to return to their homes in North Ossetia's Prigorodnyi Raion. He also said he was worried about the high crime rate in Ingushetia. The congress agreed that presidential elections in Ingushetia will be held , as scheduled, on 1 March 1998.


Yrysbek Omurzakov on 29 September was sentenced to 30 months in a penal colony, RFE/RL correspondents in Bishkek reported. Omurzakov was found guilty of libel for writing an article that claimed a Bishkek factory manager was abusing his authority. He based the article on statements made by factory employees, two of whom also went on trial. They received six months in a penal colony but are pardoned under a 30 July amnesty law signed by President Askar Akayev. Omurzakov is not included in the amnesty because of previous convictions. Meanwhile, the Kyrgyz weekly newspaper "Asaba" was criticized by presidential spokesman Kanybek Imanaliyev as trying to discredit Akayev's economic and political reforms. Imanaliyev, who earlier was a journalist for "Asaba," said the 26 September issue of the newspaper carried eight articles that gave a negative portrayal of Akayev.


President Islam Karimov on 29 September signed a decree relieving Rustam Akhmedov of his duties as defense minister and reappointing him as minister for emergency situations, RFE/RL correspondents in Tashkent reported. First Deputy Prime Minister Ismail Jurabekov was removed as minister for emergency situations to make room for Akhmedov but retains his deputy premiership. The new defense minister is Major-General Khimatullah Tursunov, until now the head of the Uzbek border guards.


Colonel-General Andrei Nikolayev, the director of the Russian Federal Border Service, and Kazakh President Nursultan Nazarbayev met in Almaty on 29 September and agreed that they will sign a border accord, Russian media reported. Nazarbayev said the goal of the accord is not to "fix a rigid border" but "safeguard our citizens." Nikolayev commented that "no informal units will guard the border," referring to Russia's recent "experimental" use of Cossack units to patrol its side of the border. That move drew heavy criticism from the Kazakh government. Nazarbayev and Nikolayev also said there is a need to strengthen the borders of the four countries (Russia, Kazakhstan, Kyrgyzstan, and Belarus) belonging to the intra-CIS customs union.


The Central Asian water resources commission met in Tashkent on 26 September, Interfax reported. Representatives of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan agreed to install equipment to measure the flow of water into the Aral Sea. Under a 1992 agreement between the five countries, 14 billion cubic meters of water were to flow into the sea each year. However, that goal has not been met. The five countries also decided to set up a Central Asian water and energy consortium.


Azerbaijani Radio currently broadcasts three hours each day to an estimated audience of 30 million Azeris in Iran, according to an article by Movlud Suleymanli, the head of Azerbaijani Television and Radio, published in "Azerbaijan" on 20 September and summarized by "Turkistan Newsletter" on 29 September. Suleymanli said that programming in Azerbaijani to Iran was discontinued in 1990 but has now resumed. Suleymanli argued that his audience in Iran has "made revolutions many times in the 20th century" and needs to be informed about its language and history. He added that his staff must carry out its duties "rationally" and "without false patriotism." Azerbaijani Radio also broadcasts to Azerbaijan's Kurdish, Lezgin, and Georgian minorities.


Several tiny socialist oriented political parties and groups have united to create a Union of Socialist Forces, Noyan Tapan reported on 26 September. Representatives of the Democratic Party of Armenia and the banned Dashnak Party attended the founding meeting as observers. The union's primary objective is to draft social programs and submit them to the government. "Molorak" on 26 September quoted Aghasi Arshakyan--one of the leaders of the National Initiative, which is lobbying for Armenia's accession to the Russia-Belarus union--as saying the new alliance may support the National Initiative.


In the latest international snub to Alyaksandr Lukashenka, Jacques Warin, the French representative to the Council of Europe, has said the body will not invite the Belarusian leader to the 10-11 October summit in Strasbourg. France, which currently holds the rotating presidency of the council, is the host of that meeting. Russian President Boris Yeltsin and other leaders of council member states are expected to attend. In January 1997, the council suspended Belarus's "special guest" status as a non-member country.


Pavel Sheremet, the Russian Public Television bureau chief in Minsk, has smuggled out a letter about conditions in the Hrodno detention center where he is being held, Interfax-West reported on 29 September. The letter, published in "Belorusskaya delovaya gazeta" the same day, said his fellow prisoners are "quite tolerable." But he suggested that his experience in prison has left him with "contempt for this insane authority. Over the past two months, I have clearly realized that inmates should not be feared. One must fear those who wear uniforms." Meanwhile, President Lukashenka told Interfax that he would not discuss the Sheremet case at his 30 September meeting with visiting Russian Deputy Premier Valerii Serov.


Officials at the Novopolotsk and Homel oil transit enterprises told Belapan on 29 September that the Druzhba pipeline carrying oil from Russia to Central Europe is at risk unless repairs are made soon. But the officials, whom the news agency did not name, said they do not have the money to repair the line. "Gudok" on 27 September reported that unnamed Western companies engaged in exploiting Caspian oil have already agreed to finance repairs to the stretch of the Druzhba pipeline that crosses Ukraine.


Ukrainian President Leonid Kuchma said on 29 September that Moscow and Kyiv have no fundamental differences in approach to foreign policy questions, ITAR-TASS reported. He was speaking after representatives to the newly established Ukrainian-Russian Consultative Council handed him a document calling for the two sides to raise their "relations to the level of strategic partnership." Kuchma also said he will make an informal visit to Moscow to meet with Russian President Yeltsin before his official trip to the Russian capital in January.


Russian Foreign Minister Yevgenii Primakov told his Latvian counterpart, Valdis Birkavs, in New York recently that Moscow is developing a new policy toward the Baltic States, BNS reported 29 September. Primakov said the policy is being developed according to instructions from Yeltsin. Birkavs told BNS that Moscow's new approach appears to accentuate the positive rather than harping on the negative. He noted, however, that Primakov repeated Russia's objections to the Baltic States' desire to join NATO.


Andres Tarand, one of the signatories to the 26 September Manifesto of Seven, told BNS on 29 September that the initiative has failed because of the "suspicions" of many political figures in the country. The manifesto is entitled "What Kind of a State Do We Want?" and was circulated by foreign minister Toomas Hendrik Ilves. It warns that populism could threaten Estonia's progress and calls for a new focus on domestic problems. But many politicians and commentators suggest that the document is simply an attempt to launch a new political party.


Ukrainian President Kuchma said that several European countries have backed his call for a 1999 Baltic-Black Sea summit in Yalta, Interfax reported on 29 September. His remarks came during a visit to Kyiv by Latvian President Guntis Ulmanis, who said he too supports the idea. The 1999 meeting would be a follow up to the European security conference held in Vilnius in early September.


Aleksander Kwasniewski on 29 September asked Solidarity Electoral Action (AWS) to present its candidate for premier by 17 October, Reuters reported. AWS chairman Marian Krzaklewski, told journalists following his meeting with Kwasniewski that the AWS's candidate will be presented by that time. "We expect that the president will entrust this candidate with the task of forming a government, " he added. Krzaklewski refused to reveal the AWS's choice for premier, confirming only that he will not take the post himself. The AWS won the elections with 201 seats in the 460-seat lower house but must form a coalition with smaller parties to have a solid majority. It has started coalition talks with the 27-seat strong Peasant Party and the six-seat populist Movement for the Renovation of Poland. But it is most likely to form a cabinet with the market-friendly Union for Freedom, which has 60 seats.


Assistant Defense Secretary Frank Kramer, who recently visited the Czech Republic, Poland, and Hungary, told Czech officials they need to increase both military spending (which declined sharply in the past 12 months) and support among Czechs for NATO membership, Reuters reported on 29 September, quoting a U.S. Defense Department spokesman. Kramer also noted that the Czech Republic is lagging behind Poland and Hungary as the three states prepare to join NATO. Kramer held talks in Prague on 16 September with Defense Minister Miloslav Vyborny, who is scheduled to join U.S. Defense Secretary William Cohen and other NATO defense ministers at a two-day meeting in The Netherlands beginning on 1 October to discuss NATO expansion.


The Prosecutor-General on 29 September dropped charges against Interior Minister Gustav Krajci, who had been accused of thwarting a referendum on NATO membership and direct presidential elections, TASR reported. The move came because of insufficient evidence that a crime had been committed. It had been alleged that Krajci ensured the invalidity of the referendum by omitting the question about presidential elections from ballot papers.


Hungarian Prime Minister Gyula Horn on 29 September invited his Slovak counterpart, Vladimir Meciar, for talks to discuss the disputed Gabcikovo-Nagymaros hydropower project on the River Danube. The move comes after the International Court of Justice in The Hague ruled that the two states must respect the terms of the 1977 treaty, which requires Bratislava and Budapest to negotiate in good faith. Hungary and Slovakia took the issue to the court in 1992, after the Slovaks diverted the Danube to Slovak territory to supply a power station at Gabcikovo. Earlier, in 1989, Hungary had unilaterally suspended work on its side, citing environmental concerns.


Laszlo Kovacs, who is visiting Washington, says he expects NATO to be satisfied with Budapest's defense budget. He said Hungary will spend less than requested by NATO but noted that military spending will be roughly equal to that of smaller NATO member countries, such as Belgium or Portugal, Reuters reported. Together with his Polish counterpart, Darius Rosati, and Czech Deputy Foreign Minister Karel Kovanda, Kovacs met with National Security Adviser Sandy Berger at the White House on 29 September. Berger acknowledged that the three countries are making "serious efforts" to prepare for NATO membership.


Slobodan Bijelic, the Bosnian Serb speaker of the all Bosnian parliament, told SRNA on 29 September that Republika Srpska President Biljana Plavsic, has already violated the 24 September Belgrade agreement by postponing parliamentary elections by eight days until 23 November. He said her unilateral move could contribute to the further disintegration of Republika Srpska and to a "renewed flare up of emotions." Meanwhile, Momcilo Krajisnik, the Bosnian Serb co-president of Bosnia, met with Yugoslav President Slobodan Milosevic in Belgrade on 29 September. According to Tanjug, the two leaders said that "an important step forward" was taken when the Bosnian collective Presidency agreed that Republika Srpska citizens will be able to apply for Yugoslav citizenship in addition to retaining their status as citizens of Bosnia-Herzegovina.


Republika Srpska Prime Minister Gojko Klickovic, speaking on Montenegrin Television on 27 September, said that arresting Radovan Karadzic "would lead to a complete collapse of the Dayton Agreement and new conflicts in Bosnia-Herzegovina." He said the international community will "gain nothing if they destroy the 80 percent of the Dayton Agreement implemented so far." Klickovic stressed that the Serbs will not "give up" Karadzic, who, he added, has withdrawn from all political functions and "is just doing his earlier job." But Klickovic stressed that Karadzic is still a leader and that his name cannot simply be forgotten. According to Klickovic, Karadzic "is now forced to hide, although he is guilty of nothing except defending his people." The Bosnian Serb premier argued that no one has any evidence of his guilt, Montena-Fax reported.


Ethnic Albanian students in Kosovo have rejected pleas by Kosovar leader Ibrahim Rugova and a visiting delegation of Belgrade-based diplomats to postpone protests due to begin in seven Kosovo towns on 1 October. Senior diplomats from the U.S., Russia, and European countries argued that the protests should not take place between the first and second rounds of the Serbian elections. The students are protesting the failure to implement an Albanian-language education agreement signed in 1996 by Rugova and then Serbian President Slobodan Milosevic. The diplomats met separately with Rugova and local Serbian authorities. Veljko Odalovic, the Serb-appointed deputy leader of Kosovo, told the delegation that ethnic Albanian political leaders must give up the idea of an independent Kosovo.


Momir Bulatovic, who is running for reelection as president, took his campaign to the multi-ethnic mountain town of Plav near the border with Albania and Kosovo . He told a crowd of several thousand people that "what hurts most is the fact that an attempt is being made to divide us along ethnic lines.... I hope that Muslims and [ethnic] Albanians will vote like full-fledged citizens in line with their beliefs," Radio Belgrade reported on 29 September. Bulatovic added that "enormous pressure is being exerted on Muslim and ethnic Albanian residents by the secret police," which he accused of "spreading untruths and fear."


General Anton Tus, in an interview with the Rijeka daily "Novi list" on 27 September, accused President Franjo Tudjman of having "frequently subordinated military operations to political decisions" during fighting against the Yugoslav Army (JNA) and rebel Serbs in 1991-1992 and 1995. Tus said Tudjman foiled his attempt to lift the Serbian siege of Vukovar in 1992 by yielding to EU pressure to grant passage to a humanitarian convoy. Tus says he ignored Tudjman's orders not to attack JNA barracks and seized military facilities in Karlovac, Bjelovar, Delnice, Samobor, and Buna. He added that Tudjman opposed his suggestions, at the end of 1992 and again in 1995, to take western Bosnia and the area along Bosnia's Sava river area. Tus was Tudjman's chief military adviser until fall 1995.


The Supreme Court on 29 September overturned the convictions of all 32 former communist officials sentenced to prison for crimes against humanity. Brief verdicts read by Supreme Court Chairman Avni Shehu declared the former officials innocent of "genocide," for which they had been sentenced by lower courts. Prosecutors said the charges were dropped because communist Albanian legislation did not refer to such a crime. They noted that the former officials should have been prosecuted for abuse of power, for which many have already been sentenced. Only four of the former leaders are serving time. Shehu said they will be freed.


In an interview with RFE/RL's Bucharest bureau, Virgil Magureanu, the former director of the Romanian Intelligence Service, has denied he intends to set up a new political party (see "RFE/RL Newsline," 29 September 1997). Magureanu said he wants to "contribute" to the setting up of a "center-left" political alliance, which, he believes, will come into being "within two months." He also said it is not his intention to head the new alliance but to be a member of its leadership.


Emil Constantinescu, meeting in Brussels on 29 September with European Commission President Jacques Santer, again argued in favor of simultaneous negotiations with all candidates for EU membership, an RFE/RL correspondent in Brussels reported. Constantinescu also met with Belgian Prime Minister Jean-Luc Dehaene. In other news, the Senate on 29 September amended a 1990 law on compensation to victims of the communist dictatorship. The legislation provides for monthly payments of 60,000 lei (about $7.50) for each year spent in prison or as a deportee abroad and 30,000 lei for each year spent in psychiatric wards as punishment. The law applies also to Romanian citizens residing abroad.


Addressing the UN General Assembly on 29 September, Moldovan Foreign Minister Nicolae Tabacaru said Russia is stalling over the withdrawal of its troops and weapons from the breakaway Transdniester region, ITAR-TASS reported. In response, Aleksandr Gorelik, Russia's deputy permanent representative at the UN, said the Moldovan position contradicts the agreements reached at the recent meeting in Moscow between the two countries' presidents. He said that according to those agreements, the withdrawal should not be "hasty" in order to prevent "creating a situation beyond control, especially [given] the large arsenals of weapons in this area."


Colonel Aleksandr Baranov, the deputy commander of the Russian troops stationed in the Transdniester, told journalists on 29 September that 49 railroad cars have been loaded with engineering equipment and will leave for Russia "in the next days," RFE/RL's Chisinau bureau reported. Infotag reported the same day that a convoy left on 27 September. Observers note that such equipment has been withdrawn in the past and that the latest move does not necessarily mean an end to the dispute over ownership of Russian armaments in the region. A military adviser to Igor Smirnov, the leader of the breakaway republic, said the Russian military equipment will be sold "in line with the agreement reached between Russia and the Transdniester." The adviser added that "Moldova has no right whatever" to those weapons.


Some 15,000 cubic meters of fluid radioactive waste from the Kozloduy nuclear plant threaten the environment along the River Danube, BTA reported on 29 September. Citing experts from the Academy of Sciences, the agency said the waste is being stored in containers. A reprocessing plant for the waste has not yet been built. In other news, President Petar Stoyanov on 29 September began a three-day private visit to Germany at the invitation of the Konrad Adenauer Foundation. He will meet with German President Roman Herzog.


by Michael Wyzan

All transition countries are dealing with problems posed by the pension systems they inherited. The difficulties are similar to those currently experienced by many advanced and developing countries that now find themselves with systems they cannot afford. Moreover, those systems provide disincentives for the working-age population to find employment in the formal sector (meaning those enterprises that pay taxes and social insurance contributions) and to save.

The pension systems used by most countries are provided by the state on a "pay-as-you-go" (PAYG) basis and offer "defined benefits" to retirees. The pensions paid to current retirees are funded by contributions from current workers. A retiree's pension is determined in advance according to various criteria (age, gender, length of employment). It does not reflect the contributions that the retiree paid into the system during his working life.

In developed countries, PAYG systems become problematic as the population ages and the number of beneficiaries increases relative to the number of contributors. People retiring during the first years of such a system receive pensions that exceed the amount they paid in. Later generations, on the other hand, receive less than they contributed.

Moreover, people can retire before they reach the official retirement age, with only a small reduction in benefits. To fund such largesse, high payroll taxes are necessary, which people avoid by working in the informal sector. Such practice reduces the tax base and requires still higher taxes on those who cannot avoid them. In Latin America and the former communist countries, there are additional problems. In the former East bloc, in particular, retirement ages are low, especially for women and in certain sectors.

Many countries have reformed their pension systems. In 1981, Chile replaced its PAYG system with a mandatory savings scheme, whereby a worker's pension is financed by a savings account into which he pays during his working life. That pension depends on the contribution rate, the growth in the worker's salary, the interest rate, and the number of years at work and in retirement. Such schemes are "fully funded," because a worker's contribution finances all his benefits, and are based on "defined contributions," which are determined in advance.

"Averting the Old Age Crisis," a book published in 1994 by the World Bank, outlines a recommended "three-pillar" pension reform. Acknowledging the popularity of PAYG schemes, especially among older workers, the bank proposes that the first pillar be mandatory, tax-financed, and publicly managed. The second pillar is mandatory, fully funded, privately managed, and publicly regulated (as in Chile). The third pillar differs from the second one largely in that it is voluntary.

Among transition countries, Latvia was the first to heed the bank's recommendations on pension reform (with Poland, Estonia, and Hungary following its lead). Riga benefited from technical assistance offered by Sweden, which in 1994 passed legislation providing for a two-pillar system. In the summer of 1995, Latvia passed similar laws.

A new PAYG system based on "notional accounts" went into effect in Latvia on 1 January 1996, while a funded scheme will begin in 2000. Such accounts differ from the standard PAYG system in that an individual account is maintained for each worker, although benefits are paid by someone else's contributions.

The contribution rate is 20 percent of income, of which 2 percent will be channeled to the funded ("second") pillar as of 2000. In time, 6-7 percent of income will go toward the second pillar. Privately managed individual accounts will be provided to workers born in or after 1949.

At retirement, a worker receives a PAYG annuity based on the balance in his notional account and his life expectancy. PAYG benefits are indexed to price inflation until 2000 and thereafter to both price inflation and wage growth. Retirement can be either partial or full after age 60, and additional wages earned during partial retirement add to the balance of the notional account and increase the benefits. There is also a "social pension" for the elderly poor who are not eligible for any other such payment. That pension is currently set at 25 percent of the average wage.

The new system pays benefits to anyone who worked in the formal sector for 10 years. Participation does not depend on citizenship, so the system does not discriminate against the Russian minority.

Pension reform is one of several examples of radical economic measures undertaken by both Latvia and its northern neighbor, Estonia. Others include a currency board (Estonia), a tough line toward failed banks (both), and a favorable attitude toward foreign investors (especially Estonia). It is striking that such measures have occurred amid unstable political environments, especially in Latvia, with its frequent changes of ministers and governments. It is even more striking that Latvia has been able to undertake a more comprehensive pension reform than more advanced and prosperous countries such as the Czech Republic or Slovenia--not to mention France or the U.S.

The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria.