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Newsline - October 3, 1997


President Boris Yeltsin warned State Duma deputies in a nationwide radio address on 3 October that "the people's patience, the president's patience is not limitless," RFE/RL's Moscow bureau reported. Yeltsin again assailed the lower house of the parliament for rejecting government-backed reductions in social benefits and for passing a land code that does not allow the purchase and sale of farmland (see "RFE/RL Newsline," 30 September 1997). Yeltsin also accused the Duma of undermining Russia's prestige by "intruding" on foreign policy issues, ITAR-TASS reported. He concluded that the Duma "must work for the good of Russia," because "it is too expensive a luxury for the people to pay for your irresponsibility." Yeltsin's address came on the anniversary of the day in 1993 that he ordered tanks to shell the opposition-dominated parliament, which he had previously sought to disband by decree.


Communist Party leader Gennadii Zyuganov slammed Yeltsin's radio address as a "confrontational ultimatum" that seeks to "blackmail" the Duma before deputies consider the draft 1998 budget, Reuters reported on 3 October. Zyuganov charged that Yeltsin's government "is utterly bankrupt--financially and intellectually." He vowed, "We will not vote for this budget." In an open letter to Yeltsin published in "Sovetskaya Rossiya" on 2 October, Duma Security Committee Chairman Viktor Ilyukhin, a leading Communist, criticized the president's "cynical" practice of criticizing the Duma generally and opposition deputies personally. Some Russian media have speculated that confrontation this fall over the 1998 budget may eventually lead to the Duma's dissolution. In addition, some newspapers, including the popular weekly "Argumenty i fakty," have recently published articles charging that the Duma deputies have too many expensive privileges and perks, which allegedly cost taxpayers 125 million rubles ($21,300) a month per deputy.


Russian Security Council spokesman Igor Ignatev told journalists on 2 October that the Russian representation in Chechnya will return to Grozny only after the Chechen leadership has formally apologized for their expulsion. Vice president Vakha Arsanov ordered the 80 representation staff members to leave Chechnya on 30 September, but President Aslan Maskhadov and Russian Deputy Premier Ramazan Abdulatipov agreed the next day they should return (see "RFE/RL Newsline," 1 and 2 October 1997). Ignatev predicted that it will be "extremely difficult" to restore the mutual trust that evolved during the negotiating process. Abdulatipov, however, told NTV that he still thinks it is possible "to find common viewpoints."


Russian Foreign Ministry spokesman Valerii Nesterushkin told journalists on 2 October that Russia has not supplied Armenia with medium-range missiles capable of carrying nuclear warheads, Interfax reported. Nesterushkin said Russia destroyed its medium and short-range nuclear missiles by May1991 in accordance with the INF treaty. Azerbaijani Foreign Minister Hasan Hasanov had claimed in September that Russia supplied Armenia with such missiles. Also on 2 October, Hasanov delivered a protest note to the Russian ambassador in Baku, Turan reported. The note listed 14 Russian-Armenian agreements on military cooperation that, Hasanov argued, constitute a "military union" between the two countries. Hasanov called for a moratorium on ratifying the Armenian-Russian friendship and cooperation treaty, signed in late August, pending a solution of the Karabakh conflict.


A spokesman for Russia's Federal Security Service (FSB) told ITAR-TASS on 2 October that the FSB has intercepted unnamed persons who were attempting to supply Iran with technology for producing nuclear missiles. The previous day, Iranian ambassador to Moscow Mehdi Safari told a news conference that the "rumors about Iran's desire to use Russian technology for production of nuclear weapons are totally groundless," according to Interfax. But Reuters on 2 October quoted an Israeli intelligence source as confirming that Russian nuclear technology continues to be transferred to Iran with official approval. Meanwhile, Yeltsin on 1 October denounced U.S. criticism of the $2 billion gas deal concluded several days earlier by Gazprom, France's Total, Malaysia's Petronas and the National Iranian Oil Company. Yeltsin said Russia, France, and Iran "are independent and freedom-loving countries. No other country should dictate to them what documents to sign," Interfax reported.


Addressing the parliament of The Netherlands on 2 October, Prime Minister Viktor Chernomyrdin again reaffirmed Russia's disapproval of NATO expansion and argued that NATO should be transformed into less of a military and more of a political organization. Chernomyrdin later told financial and business representatives that attracting more Dutch investment is a "pressing issue" for Moscow. He urged his listeners to "lose no time" in investing, particularly in the energy, transport, and food storage sectors. He also confirmed that Moscow plans to repay in full its $510 million debt to The Netherlands. The previous day, Chernomyrdin had met with his Dutch counterpart, Wim Kok, to discuss cooperation and security in Europe and bilateral trade and economic issues.


"Komsomolskaya pravda" on 2 October accused Chernomyrdin of violating a presidential decree in order to provide government loan guarantees for a satellite television project connected to Vladimir Gusinskii's Media-Most company. In June 1997, Chernomyrdin signed two directives offering government guarantees for $140 million in bank loans sought by the previously unknown company Bonum-1 to build and launch a communications satellite. "Komsomolskaya pravda" reported that Bonum-1 is a fictitious organization whose founders are also high-ranking executives at Most Bank or other companies founded by Gusinskii. It also charged that the directives signed by Chernomyrdin violate a May presidential decree that called for curtailing government loan guarantees (see "RFE/RL Newsline," 13 May 1997). Oneksimbank is a major shareholder in "Komsomolskaya pravda." Media outlets owned by Media-Most have recently criticized Oneksimbank and First Deputy Prime Ministers Anatolii Chubais and Boris Nemtsov.


"Izvestiya" on 3 October reported that attacks against Chubais "in various forms and on various fronts" are only making the first deputy prime minister more "decisive and uncompromising." The newspaper noted that Chubais has moved to take away commercial banks' authorization to handle tax payments from enterprises. It argued that the new policy, soon to be declared in a presidential decree, will be a major blow to some bankers, "although the gains for the budget and for the state as a whole are obvious." (Some commercial banks have earned huge profits by delaying transfers of state funds to the government in order to earn interest off those funds.) The newspaper predicted that "the decisive actions of the [first] deputy prime minister and the forthcoming presidential decree will lead to a new round in the so-called information war." Oneksimbank is a major shareholder in "Izvestiya."


"Nezavisimaya gazeta" on 3 October published a lengthy commentary expressing relief that the government's "young wolves," led by First Deputy Prime Minister Chubais, have failed to bring off an attempted "revolution" this year. The newspaper argued that "the real threat of dictatorship in Russia comes not from the Communist revanchists...but from the Chubais team." The previous day, "Nezavisimaya gazeta" sharply criticized the government's planned privatization of the Rosneft oil company (see "RFE/RL Newsline," 26 September 1997). The newspaper argued that foreign investors will be allowed to acquire a controlling stake in Rosneft. It added that foreign investment in the oil industry is "very good in general," but only if Western investors do not receive controlling packets of shares in Russian companies. "Nezavisimaya gazeta," partly financed by the LogoVAZ group of Security Council Deputy Secretary Boris Berezovskii, has repeatedly criticized Chubais and privatization policy in recent months.


Electricity supplies to Primorskii Krai residents are back to normal now that coal miners and energy workers have ended their strike and coal shipments to power stations have been resumed, RFE/RL's correspondent in Vladivostok reported on 3 October. A government commission headed by First Deputy Fuel and Energy Minister Sergei Kirienko held consultations over several days with local politicians, representatives of Primore's utility Dalenergo, and coal company and trade union officials. Kirienko also was involved in government commissions sent to Primore during the krai's previous energy crisis, in May and June. He told journalists on 2 October that there were no "objective" reasons for the energy crisis in September (see "RFE/RL Newsline," 16 and 19 September 1997). He said wage arrears to miners and energy workers had grown because Primore officials had not fulfilled a protocol signed during First Deputy Prime Minister Nemtsov's June visit to Primore.


Tatar Prime Minister Farid Mukhametshin and Gazprom chairman Rem Vyakhirev have signed an agreement on rescheduling Tatarstan's 4.3 trillion ruble ($733 million) debt for natural gas deliveries, "Nezavisimaya gazeta" reported on 3 October. The debt must now be paid by the end of this year. The newspaper had reported on 25 September that gas supplies to several regions of Tatarstan had been cut because of the outstanding debt. It also reported that Mukhametshin had failed to persuade Vyakhirev to agree to rescheduling the debt. Meanwhile, addressing the Tatarstan State Council on 1 October, chairman Vasilii Likhachev said that claims made in Kemerovo by Russian State Duma speaker Gennadii Seleznev were an "insult to Tatarstan's honor." Seleznev had accused Tatarstan and Bashkortostan of destroying the Russian Federation.


The authorities in the Republic of Khakassia have revoked the registration of the Evangelical Lutheran Mission of Khakassia "in accordance with the adoption of the law on freedom of conscience and religious organizations," the Keston News Service reported on 2 October. Under that law, which was recently signed by Yeltsin, "religious groups" that cannot prove they have existed in Russia for at least 15 years will have fewer rights than registered "religious organizations." The Evangelical Lutheran Mission was registered in June 1996. Rev. Pavel Zayakin, the mission's director in Khakassia, argued that Lutheranism has existed in Russia for more than 400 years. He added that the mission will file a court appeal against the Khakassian authorities. Supporters of the religion law have said it is aimed primarily against cults and "totalitarian sects," not "real religions" (see "RFE/RL Newsline," 22 and 23 September 1997).


In a statement to mark the 40th anniversary of the Soviet Union's successful launch of Sputnik, the first artificial satellite in orbit, Yeltsin promised that the state "will continue to do everything necessary to preserve and develop" space research in Russia, ITAR-TASS reported on 2 October. The same day, Russian Space Agency head Yurii Koptev told ITAR-TASS that his agency plans to raise additional funds for research through advertisements on spacecraft and space facilities. Koptev said advertising agencies will soon be able to bid for exclusive rights to make advertisements related to Russia space projects., for which millions of dollars annually could be earned. Funding shortages have hampered Russian space research in recent years. Earlier this year, authorities announced that the launch of the first module of the "Alpha" international space station will be delayed from November 1997 until June 1998.


Finance and Economics Minister Armen Darbinyan told journalists in Yerevan on 2 October that projected budget expenditures for 1997 will be slashed by15 billion drams ($30 million), RFE/RL's Yerevan bureau reported. Darbinyan said the cuts are necessary because of "incorrect budget estimates" of the amount of financial aid from foreign donor states and international financial institutions. He added, however, that government revenues in September reached a record high of 10.1 billion drams, more than double the amount for the same period in 1996. Darbinyan, who took part in the recent annual meetings of the World Bank and IMF in Hong Kong, said the World Bank gave the green light for Armenian access to its commercial loans. This move, he said, reflects the West's support of Yerevan's economic policies.


Three people were killed on 2 October when an Azerbaijani Airlines helicopter carrying oil workers crashed into the Caspian Sea, Russian and Azerbaijani agencies reported. Sixteen people are still missing. The cause of the crash is unknown; visibility at the time was normal, according to Turan. Three days earlier, Belgian Foreign Minister Erik Derycke was forced to cancel a planned visit to Baku after the Azerbaijani Airlines airplane on which he was booked had to be grounded for technical reasons.


The parliament on 1 October adopted a defense doctrine drafted earlier this year, RFE/RL's Tbilisi bureau reported. Parliament Defense and Security Committee Chairman Rezo Adamia described the document as a "defensive defense doctrine," meaning that the armed forces can use force only to repel aggression. Opposition parties have criticized the doctrine as "superficial" and claimed it does not address the country's specific problems, in particular the need to restore territorial integrity.


A meat plant factory manager and his son were abducted by an unidentified armed gang in Dushanbe during the night of 2-3 October, ITAR-TASS reported. Police believe that the perpetrators are fighters loyal to warlord Revzon Sodirov and that Sodirov wishes to exchange the hostages for his brother, Bakhrom, who is being held in custody for the February abduction of a group of UN observers. Meanwhile, Interfax on 2 October quoted United Tajik Opposition leader Said Abdullo Nuri as saying the repatriation of the estimated 2,500-3,000 opposition forces from Afghanistan is being delayed by logistical and financial problems.


Some 1,000 workers from the southern city of Kentau who began marching to Almaty on 1 October to protest wage and pension arrears have reached Shymkent, RFE/RL's Almaty bureau reported on 2 October. Some of the marchers, including the trade union leaders who organized the protest, proceeded by train to Almaty; the rest are continuing on foot. An attempt by South Kazakhstan Oblast Prosecutor-General Sultan Jabanov to halt the marchers was unsuccessful. Meanwhile, Interfax on 2 October reported that 10 inmates of a high security prison in western Kazakhstan have been hospitalized after slitting open their stomachs to protest prison conditions.


Following Moscow's decision not to allow the Belarusian leader to visit two Russian regional cities, Alyaksandr Lukashenka on 2 October sent a telegram to President Boris Yeltsin saying the incident "did not correspond" to relations between the two countries and "contradicts the common strategy" of integration, ITAR-TASS reported. Meanwhile, Belarusian Foreign Minister Ivan Antonovich told the UN General Assembly that relations between Minsk and Moscow are not proceeding "smoothly" but could nonetheless serve as a model for relations between other countries, Belarusian media reported. His remarks followed increasingly harsh exchanges between the two capitals over the nature of their relations, Interfax reported.


Russian State Duma Speaker Gennadii Seleznev says the forced cancellation of Belarusian President Lukashenka's planned visit to Lipetsk Oblast is an "unfriendly move" that may damage Russian-Belarusian relations, ITAR-TASS reported on 2 October. The same day, Yeltsin said Belarusian authorities should release Russian Public Television (ORT) journalist Pavel Sheremet before Lukashenka visits Russia. But Seleznev argued that is "absolutely unacceptable" to link a "simple criminal case with inter-state relations." Also on 2 October, Governor Anatolii Lisitsyn of Yaroslavl Oblast, which Lukashenka had also been scheduled to visit, told Interfax that the cancellation of Lukashenka's trip defied logic, commenting "Farewell, common sense! Long live ORT!" Lisitsyn also said unnamed authorities in Moscow tried to pressure him to cancel Lukashenka's visit but that he had refused on the grounds that the visit would help the Yaroslavl economy.


Vladimir Gorbulin, the secretary of the Ukrainian National Security Council, has complained that Kyiv has made "no serious progress" in developing cooperation with NATO, Interfax reported on 2 October. Gorbulin made his remarks during the first meeting of a new state commission intended to promote cooperation with the Western alliance. He called on all ministries and state agencies to work together to increase cooperation with NATO.


The government on 2 October convened an emergency session that was also attended by defense forces commander Major-General Johannes Kert, ETA reported. Following the meeting, Justice Minister Paul Varul said nothing has been done to improve the situation in the defense forces since the accident in mid-September in which 14 peacekeepers perished. He pointed out that it was only on 30 September that the head of the ill-fated peacekeeping unit was relieved of his duties. Kert, for his part, said he had waited for the government report to appear before taking action. He stressed, however, that he would now act decisively. A government investigative commission blamed the military leadership for the tragedy. President Lennart Meri has sharply criticized the government report and pointed to shortcomings at the Defense Ministry (see "RFE/RL Newsline," 1 and 2 October 1997).


According to Gediminas Vagnorius, claims that parliamentary chairman Vytautas Landsbergis collaborated with the Soviet KGB are "rude attacks inspired by personal and political motives...[and] based on accusations by antagonistic Soviet security officers," BNS reported on 2 October. Vagnorius is a prominent leader of Landsbergis's Conservative Party. Also on 2 October, the chairman of the parliamentary commission investigating deputies' possible links with secret services abroad said that testimony against Landsbergis has been received from only one former KGB official, adding that it cannot be considered valid evidence. Earlier press reports claimed that four former KGB officials submitted testimony (see "RFE/RL Newsline," 2 October 1997). Meanwhile, opposition deputies have proposed that Landsbergis suspend his political activities while the investigation into his past continues.


NATO Secretary-General Javier Solana has told top defense officials from Poland, the Czech Republic, and Hungary that they will have to bear most of the costs of joining the alliance. Solana met with the Central European officials on 2 October in Maastricht. U.S. Defense Secretary William Cohen also stressed that the new members must demonstrate their willingness to pay for expansion and not depend on wealthier members. Polish Deputy Defense Minister Andzej Karkoszka, addressing an annual NATO gathering, said Warsaw is willing and able to pay the costs. Czech Defense Minister Miroslav Vyborny promised defense spending will double in the next two years. His Hungarian counterpart, Gyorgy Keleti, said Budapest will allocate 1.51 percent of GDP for defense spending in 1998 and 1.81 percent by the year 2001.


Solidarity Electoral Action (AWS) leader Marian Krzaklewski and Freedom Union chief Leszek Balcerowicz have said they will meet soon to begin to decide who will fill which posts in the new government, PAP reported on 2 October. The same day, the leadership of the Polish Roman Catholic Church said it would support the creation of a new Christian Democratic Party based on the AWS. Meanwhile, the outgoing government has made an announcement that the new cabinet may find hard to live up to: according to Finance Minister Marek Belka, the economy would grow by 5.5 percent and inflation fall to 9.5 percent in 1998 if the current government's budgetary plans were adhered to.


German Foreign Minister Klaus Kinkel and Czech Prime Minister Vaclav Klaus agreed in Prague on 3 October that the Czech-German discussion forum and the joint Fund for the Future will begin operations on 1 January. Germany is to deposit DM 140 million ($22.6 million) and the Czech Republic 440 million crowns ($13.5 million) in the fund. The January 1997 bilateral declaration on mutual relations provided for the fund and stipulated that the money will be used for the victims of Nazism but not as compensation to individuals. Kinkel avoided a reporter's question about whether Germany will compensate individual Czech victims of Nazi persecution with other funds. The establishment of a discussion forum has been prevented until now by disagreement over who should participate and whether hard-line Sudeten German expellees should be included.


Prague's High Court on 2 October halted further prosecution of two communist-era hard-liners, Milos Jakes and Jozef Lenart, on charges of treason. Chief judge Vladimir Vocka told the daily "Pravo" that the proceedings were halted because their crime was "not a punishable offense." In May 1997, Jakes and Lenart were indicted for treason in connection with having taken part in negotiations at the Soviet embassy in August 1968 (during the Soviet-led Warsaw Pact invasion of Czechoslovakia) on forming a "workers' and peasants' government."


Bratislava municipal authorities on 2 October ordered the removal of a large electronic digital rooftop clock showing the number of days left until President Michal Kovac's five-year term in office expires in February. A local official told "Sme" that the clock, which faces the presidential palace, is an "unlawful advertising device." Meanwhile, Prime Minister Vladimir Meciar told a rally of his Movement for a Democratic Slovakia (HZDS) on 2 October that the party would like to have as president a "person with national consciousness [and] a sense of social and Christian values, respecting all people, uniting instead of dividing them, and treating them as a father." He conceded that an HZDS candidate would have no chance of becoming president but said the possibility of combining the posts of premier and president remains an "open question."


In an interview with the Hungarian daily "Nepszabadsag," Vladimir Zhirinovsky, leader of the nationalist Liberal Democratic Party of Russia, has offered to help Hungary regain territories that are now part of Ukraine and have a large Hungarian minority. The territories belonged to the former Czechoslovakia between the two World Wars and were briefly annexed by Hungary during World War II. Zhirinovsky, who is in Budapest on a private visit, also warned that Hungary "would swarm with spies and provocateurs" if it joins NATO, AFP reported on 2 October. In other news, Hungarian Foreign Minister Laszlo Kovacs on 2 October presented a piece of the barbed wire fence that separated communist-era Hungary from Austria to the George Bush Library in Houston, "Nepszabadsag" reported.


The Russian Foreign Ministry on 2 October said there was no "serious justification" for the NATO-led operation the previous day to seize control of hard-line Bosnian Serb radio and television, Interfax reported. Russian Foreign Ministry spokesman Valerii Nesterushkin said "there are reasons to fear that such actions may jeopardize the implementation of the Belgrade agreements of 24 September on overcoming the crisis in Republika Srpska and provoke a new wave of confrontation." But the U.S. State Department has rejected Russian criticism about the NATO seizures. State Department spokesman James Foley noted the operation was "fully in conformity with agreements" reached by the alliance's foreign ministers at Sintra, Portugal in May and at subsequent meetings "to which the Russians were a party."


A total of 87 bodies have been recovered from a mass grave at Hrgar, in northwestern Bosnia, ending a month-long exhumation supervised by the UN, Bosnian Television reported on 2 October All the bodies have been exhumed and undergone an autopsy, according to experts involved in the excavation. To date, 43 of the victims, all believed to be Muslim civilians, have been identified. Residents from the surrounding area with relatives reported missing have been asked to help identify the bodies. Hrgar was a Bosnian Serb artillery position during the siege of the Bihac enclave. Several Bosnian officials said the victims at Hrgar were civilians arrested by Serbian forces as they tried to flee the area, HINA reported.


The Organization for Security and Cooperation in Europe on 2 October released the results of the September local elections for a further 14 communities. Bosnian President Alija Izetbegovic's Democratic Action Party (SDA) maintained its control of three of Sarajevo's four constituencies. In the Muslim-controlled town of Bosanski Petrovac, which was 74 percent Serbian before the war, refugee voters ensured the victory of a Serbian opposition coalition party. Similarly, in the formerly multi-ethnic, now Serb-controlled town of Kotor Varos, the Muslim coalition won the vote. Meanwhile, the Bosnian branch of the Croatian Democratic Union (HDZ) has challenged the results in Bosanski Brod , in which the Serbian bloc won 24 town council seats and the Croatian-Muslim bloc 21. Local HDZ chairman Zdravko Marinic said this is exactly what the HDZ had feared and why it had wanted to boycott the elections, HINA reported.


Pristina University student leaders have pledged to resume protests by mid-October unless the Serbian authorities implement the 1996 education agreement between then Serbian President Slobodan Milosevic and Kosovar leader Ibrahim Rugova, the Kosovo Information Center reported on 2 October. The previous day, student leaders agreed to calls by Rugova and Western diplomats to postpone further protests (see "RFE/RL Newsline," 2 October 1997). Ernest Luma, deputy chairman of the Student Union of Pristina University, has said that at least 100 students were beaten by the police, of whom 13 sustained "severe injuries." Police are maintaining tight control on all access routes to Pristina in a bid to prevent young people from entering the city, ATA reported.


Zoran Lilic, the left-wing candidate in the 5 October run-off presidential elections in Serbia, told Kosovo's Serbian Radio Mitrovica on 2 October that ethnic Albanians in Kosovo cannot attend schools in Serbia that use curricula drawn up in Tirana, nor can they open universities. "There exists one university and one education system [in Kosovo], which must be respected", he said, adding, "they have the opportunity, if they choose to take it, to attend classes in Albanology, to have the right to their own culture, history, and media in their own language. They have the right to everything other minorities throughout the world have." Lilic also remarked that Serbs and Montenegrins in Kosovo will never be a national minority, nor will there ever be another republic in Serbia in addition to the Republic of Serbia.


The government on 2 October announced that all competent state bodies will undertake rigorous and coordinated action to eliminate the parallel or gray economy, Tanjug reported. The cabinet noted that the "illegal parallel economy has reached such a level as to become a serious threat to the country's economic and even political system." Measures will include tax reform and strict enforcement of the penal code.


Unidentified persons on 2 October used antitank shells to attack the police headquarters in Saranda, in southern Albania, ATA reported. Police believe the attack was linked with the detention of three persons suspected of injuring a police officer and of robbery. An explosion in front of the town hall occurred simultaneously with the antitank attack. Interior Minister Neritan Ceka and Interior Ministry Secretary of State Ndre Legisi arrived in Saranda the same day for talks with local government and police officials.


The government on 2 October asked Foreign Minister Adrian Severin to submit to the appropriate authorities evidence substantiating his allegations that "foreign agents" are active in political parties and in the media (see "RFE/RL Newsline, 23 September 1997). A governmental press release said the executive will debate the issue again following the completion of the investigation. Also on 2 October, the ruling coalition's Coordination Commission recommended that the ordinance on the closure of mines and on miners' compensation remain in force, RFE/RL's Bucharest bureau reported. That decision contradicts the recent agreement between Finance Minister Mircea Ciumara and leaders of the mining trade unions (See "RFE/RL Newsline," 1 October 1997).


The Senate has voted in favor of an urgent debate on Senator Ticu Dumitrescu's draft law on accessing the files of the former communist secret police. The debate will take place on 14 October and is seen as support for Dumitrescu in his dispute with the leadership of the National Peasant Party Christian Democratic (see "RFE/RL Newsline," 2 October 1997). However, an RFE/RL Bucharest correspondent noted there are doubts about the constitutionality of the vote. The basic document stipulates that if a draft law affects the state budget, it must be considered by the government before the parliament can debate it. The Dumitrescu draft falls into that category since it provides for the setting up of a body overseeing access to the files and for the financing of that body from the budget.


At a meeting with a visiting Organization for Security and Cooperation in Europe delegation on 2 October, Petru Lucinschi said he is confident that agreement on a solution to the Transdniester conflict will be reached in negotiations at expert level in Moscow in October, Infotag reported. He stressed Chisinau's intention to offer Tiraspol broad autonomy within a unified Moldova. However, Aleksandr Karaman, the breakaway region's vice president, told the same delegation in Tiraspol that the Transdniester authorities view the "joint state" as being made up of two equal entities with some common structures jointly agreed on.


The parliament on 2 October overrode President Lucinschi's vetoes of two laws. Lucinschi had refused to promulgate a law, passed by the legislature on 25 July, that would abolish penalties for failing to make payments to the state budget that were due by 1 July. The president had argued the law would greatly reduce financial discipline. The second piece of legislation he had vetoed would amend the law on the State Accounting Chamber to require that body to submit reports to the parliament within five days of receiving such a request, RFE/RL's Chisinau bureau reported.


by Stephanie Baker

In a sign that pressure is building to clean up Russia's scandal-plagued privatization process, the Moscow Arbitration Court has ruled that 41 percent of the shares in the chemicals plant Cherepovets Azot be returned to the government.

It is the first high-profile privatization to be reversed, targeting the country's third largest bank, Oneksimbank, which in 1994 acquired a 41 percent stake in the chemicals factory. The court ruled on 29 September that the shares should be returned to the government because Oneksimbank had failed to meet the investment conditions stipulated in the tender.

Russian media have played up the case because Oneksimbank's founder, former First Deputy Prime Minister Vladimir Potanin, has been embroiled in a media war over his involvement in recent privatization sales. Potanin led a consortium that won a major stake in Russia's telecommunications holding company Svyazinvest in July. The apparent losing bidders, however, cried foul play and launched a campaign against the sale through their media outlets. In early August, a company linked to Oneksimbank won an auction for a controlling stake in the metals giant Norilsk Nickel, despite last-minute calls for that auction to be postponed.

Recent allegations that former State Property Committee Chairman Alfred Kokh, who oversaw both auctions, accepted money from a Swiss company linked to Oneksimbank for a questionable book deal have only intensified speculation that Svyazinvest and Norilsk Nickel were sweetheart deals.

Sergei Dorenko, a Russian Public Television (ORT) journalist, first publicized Oneksimbank's mismanagement of Cherepovets in a report aired just after the Svyazinvest auction. He alleged that Oneksimbank dodged its investment requirements under the tender by diverting $41 million to an off-shore bank. In an interview with RFE/RL, Dorenko later claimed credit for the court's decision, saying his coverage of the story had forced the court to take a closer look at the case.

State Property Minister Maksim Boiko, however, portrayed the court's ruling as part of his efforts to clean up the privatization process, which has been plagued by accusations that the state has handed property to insider banks at cut-rate prices. Boiko said that funds earmarked for investment in the Cherepovets factory had been used for other purposes. He pledged to ensure the "honest" enforcement of investment terms following sell-offs of state property.

Whether the court's decision was politically motivated is open to speculation. But there is clearly pressure building on the government to plug some of the many loopholes that have been exploited during the privatization process.

Until just recently, the government had used "investment tenders" to sell off state property. But many of the owners were able to evade the investment conditions due to lax oversight or, as many observers believe, insider deals between the buyer and seller.

Russia's new privatization law attempts to define the rules of the game more clearly. Although the Cherepovets case was tried under the criminal code after charges of fraud were brought, the privatization law includes a provision that allows sales of state shares to be reversed if investment conditions have not been fulfilled.

The new law, which went into effect on 2 August, also allows sales of state property to be overturned if there is evidence of collusion between buyer and seller, if the price of the sale has been fixed, or if beneficial conditions have been granted to one bidder over another. While the law is clearly meant to address some of the wrongs that have dogged the privatization process, and particularly the Cherepovets case, some lawyers point out that the legislation is so vague that it makes overturning a privatization for political or technical reasons relatively easy. The law could affect not just major players like Oneksimbank but smaller investors as well.

William Simons, a lawyer with Pepper, Hamilton & Sheets and a faculty member at Leiden University's Institute for East European Law and Russian Studies in The Netherlands, says the law creates uncertainty for owners. He asks: "From a policy point of view, the main question is, once a transaction has been completed, is it a stable decision or can it be turned back?"

The law mentions nothing about shares that were auctioned off and then resold to third parties, nor does it clearly spell out a statute of limitations.

Last month, the State Duma set up a committee to investigate whether the sales of Svyazinvest, the oil company Sibneft, Norilsk Nickel, and the Tyumen Oil Company complied with existing legislation. The committee, culled from different parliamentary factions, is due to announce its findings on 1 November. It is charged with examining the starting prices of the state shares, procedures for the sales, and the role of state officials in the auctions. Observers, however, doubt that the committee's findings will result in any reversals.

The author is a Moscow-based RFE/RL correspondent.