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Newsline - December 2, 1998


IMF Managing Director Michel Camdessus met with Prime Minister Yevgenii Primakov on 1-2 December. In remarks to reporters on 2 December, Primakov seemed to suggest that victory for his government in the form of a renewed flow of cash is not in the offing. Camdessus "arrived with an attache case containing documents, not money," he said. He added that it would be "naive to imagine that [Camdessus] will decide today whether to release the funds." However, he told the Federation Council earlier on 2 December that he had a "favorable impression" after the first round of talks. Central Bank Chairman Viktor Gerashchenko suggested that he at least is not optimistic. "I think everybody realizes that we will not get any money from the fund this year," Ekho Moskvy quoted him as saying. Primakov earlier signed a decree increasing Russia's quota in the fund. JAC


Meanwhile, Russian economists gathered for a "brainstorming" session at IMF headquarters were themselves not very optimistic. Andrei Illarionov told "Komsomolskaya pravda" on 2 December that a "sane" economist cannot take the government's budget seriously. "A realistic assessment of tax revenues would be 6-8 percent of GDP. The draft budget for 1999 includes expenditures equal to 16 percent of GDP," he commented. "Vremya MN" suggested the previous day that the "psychological incompatibility" between IMF personnel and Russian government officials is exacerbating negotiations. The daily quoted a member of the Russian negotiating team as saying that First Deputy Prime Minister Yurii Maslyukov will "assure [the IMF mission] he is for structural reform and privatization." But, the daily continued, the IMF mission members have "newspaper clippings with his statements about, among other things, the necessity of stopping the privatization of defense enterprises." JAC


Because of the country's changed economic conditions, the World Bank is revising the terms of three of its loans to Russia, ITAR-TASS reported on 1 December, quoting World Bank Russia Country Director Michael Carter. According to the agency, the bank was originally scheduled to issue the second tranche of a $1.5 billion economic restructuring loan and a $800 million coal sector loan as well as the third tranche of a $800 million social security adjustment loan before the end of 1998. According to Interfax, Carter said Russia has not fulfilled the main condition of disbursement of the social security adjustment loan, namely balancing the Pension Fund. JAC


A school teacher in Ulyanovsk Oblast who had been participating in a hunger strike to protest unpaid wages died on 1 December, Russian Television reported. Some 450 teachers in the area began the hunger strike at the end of November, and seven of them have already been hospitalized. Meanwhile, teachers in eight schools in Khabarovsk Krai have gone on strike to protest back wages totaling 158 million rubles ($9 million), and another 6,000 teachers in Irkutsk Oblast have joined colleagues who stopped work, ITAR-TASS reported on 2 December. In Chita Oblast, teachers at one school have called off their 14-day hunger strike after funds were found to pay wages through September. JAC


Russian steelmakers published an appeal to Prime Minister Primakov and U.S. Vice President Al Gore in "Izvestiya" on 1 December asking again that a long-term agreement on metals trade be concluded (see "RFE/RL Newsline," 12 November 1998). Russian steel firm executives reportedly believe U.S. officials are deliberately delaying talks under pressure from domestic steelmakers, "The Journal of Commerce" reported. According to RFE/RL's Washington bureau, if a preliminary U.S. Commerce Department finding is put into practice in February, then high tariffs on Russian hot- rolled steel imports to the U.S. will be imposed retroactively. On 25 November, both "Izvestiya" and "Kommersant-Daily" concluded that the preliminary finding is indicative of a broader shift in the U.S.'s foreign policy away from supporting Russia. "Izvestiya" also argued that "Bill Clinton's advisers have evidently concluded that nothing worthwhile can happen in Russia" and "it is pointless to waste resources on it." JAC


Defense Minister Igor Sergeev has said that the amount of money set aside for the armed forces in the 1999 budget represents a "fatal" shortfall According to "Obshchaya gazeta" on 26 November, the "minimum requirements for the army and navy in 1999 total 107 billion rubles" ($6 billion), only slightly more than the forecast budget deficit, according to a version of the document published in "Kommersant-Daily" on 1 December. That document states that total expenditures will equal 587.4 billion rubles. Meanwhile, "Moskovskii komsomolets" reported on 28 November that the driving force behind opposition to Sergeev's plan to form a joint command for strategic nuclear forces is Chief of General Staff Anatolii Kvashnin. The daily argued that the "scandal" over the objections of [Deputy Defense Minister Nikolai] Mikhailkov "is but a smoke screen for the real intrigue." It went on to define that intrigue as one in which Kvashnin and his mentor, former Defense Minister Pavel Grachev, are biding their time until Kvashnin replaces Sergeev. JAC


The press continued to carry stories of "courtships" between political parties in advance of the 1999 parliamentary elections. "Kommersant-Daily" suggested on 2 December that former Prime Minister Sergei Kirienko is trying to distance himself from the recently formed right-center alliance and is actively negotiating with Moscow Mayor Yurii Luzhkov to join his Otechestvo [Fatherland] movement. Meanwhile, Samara Governor Konstantin Titov has not defected from Our Home is Russia (NDR) in favor of Otechestvo, as was expected. He anticipates receiving the position of NDR co-chairman, which has still to be created, "EWI Russian Regional Report" reported on 24 November. Titov has been openly critical of NDR leader Viktor Chernomyrdin (see "RFE/RL Newsline," 15 October 1998). JAC


Elections monitors have begun arriving in St. Petersburg for a vote scheduled for 6 December, ITAR-TASS reported on 1 December. A number of violations of election law have already been recorded, and the agency reported that the registration of several contenders is likely to be annulled. Russian Television reported that at least 20 candidates for the St. Petersburg legislature have a criminal record. One candidate was charged with corruption only this week, while another has been detained on suspicion of extortion. State Duma Security Committee Chairman and member of the Communist Party Viktor Ilyukhin told ITAR-TASS that the murder of liberal activist and Duma deputy Galina Starovoitova was most likely linked to the upcoming elections in St. Petersburg. JAC


The Russian government met on 1 December to discuss the unpaid debts of Russian Public Television, which had recently forced the station to dramatically trim its daily newscast. ORT Director-General Igor Shabdurasulov told reporters after the meeting that ORT will submit a two-year "rescue plan" to the government by 5 December and that reductions in ORT's work force from September 1998 to January 1999 will total 15 -20 percent. He added that payroll accounts for only 15 percent of total spending and that by the end of 1998, ORT will owe more than $100 million. Meanwhile, bailiffs who had temporarily suspended their inventory of the station's property will resume their work since no decision on restructuring the station's debt has been taken. JAC


Oleg Sysuev, deputy head of the presidential administration, told reporters that Primakov's government has no intention of lifting the moratorium on the death penalty, despite comments by Prime Minister Primakov calling for the "physical elimination" of certain criminals (see "RFE/RL Newsline," 1 December 1998). Russia imposed a moratorium on the death penalty when it joined the Council of Europe in 1996. JAC


In a telegram addressed to his counterparts in Ingushetia, North Ossetia, and Dagestan, Aslan Maskhadov has proposed that the Interior Ministries of all four republics cooperate in fighting oil thefts and abductions, Reuters and Interfax reported on 1 December. On 28 November in Vladikavkaz, North Ossetian President Aleksandr Dzasokhov told a roundtable discussion convened by the Confederation of Peoples of the Caucasus that coordinated action between unspecified North Caucasus republics has halted the rise in crime in the region, "Nezavisimaya gazeta" reported on 2 December. Meanwhile, a senior official of the Grozneft oil company was kidnapped in Grozny on 1 December. LF


Major-General Sergei Bondarev, deputy commander of the North Caucasus department of the Russian Federal Border Service, told colleagues on 30 November that controls on the Russian- Azerbaijani border will be intensified in the near future, Turan reported. Bondarev cited the anticipated sharp price hikes for food and other consumer goods in Dagestan, which, he said, might impel the local population to travel to neighboring Azerbaijan, where prices are cheaper. Residents of villages on the Dagestani side of the border crossed into Azerbaijan last week and tried to disarm Azerbaijani border guards. They were frustrated about not being allowed to cross the border at will (see "RFE/RL Caucasus Report," Vol. 1, No. 40, 1 December 1998). LF


U.S. State Department spokesman James Rubin said on 1 December that the sentencing of Azerbaijani opposition journalist Fuad Gakhramanly over an unpublished article constitutes part of the Azerbaijani government's broader campaign to "harass the opposition and restrict freedom of thought and expression," AP reported. Rubin called on the Azerbaijani leadership "to engage in dialogue with, not harassment of, political opponents." Meanwhile, some 20 independent newspaper editors have ended a hunger strike begun in mid-November, but their deputies and the entire editorial staff of the newspaper "Cumhurriyet" have begun fasting in their place, Turan reported on 1 December. Meeting last week in Baku with OSCE Chairman-in-Office Bronislaw Geremek, Azerbaijani President Heidar Aliyev rejected the latter's argument that the libel suits brought against opposition newspapers are at odds with the principle of free speech, according to the "Neue Zuercher Zeitung" on 1 December. LF


Parliamentary deputies on 1 December voted by 88 to three with two abstentions to ratify the $2 billion contract concluded in London in July 1998 to develop the Inam Caspian oil field, which has estimated reserves of 100 million metric tons, Turan reported. The Azerbaijani state oil company SOCAR has a 50 percent stake, Amoco 25 percent, and the British Monument Oil and Gas and the Central Fuel Company of Russia 12. 5 percent each. In November, the parliament ratified the production-sharing agreements on exploiting the Shemakha-Gobustan and Muradkhanly fields. LF


In an interview with three leading Armenian television channels on 30 November, Robert Kocharian condemned the approach of his predecessor, Levon Ter-Petrossian, toward privatizing state enterprises, resolving the Karabakh conflict, and campaigning for international recognition of the 1915 genocide, Noyan Tapan reported. He described the previous regime's Karabakh policy as "conciliatory" and as implying that Armenia did not support Karabakh Armenians' aspiration to independent status. But Kocharian refrained from explicitly condemning Ter-Petrossian's administration, as demanded by opposition parties over the past several weeks. LF


Four armed men in camouflage outfits stopped the car of Tajik National Bank deputy chairman Nawruz Valiyev and kidnapped him on 2 December, ITAR- TASS and Reuters reported. On 26 November, the Russian news agency reported that the incidence of kidnapping in Tajikistan has doubled in the first nine months of this year, compared with same period in 1997. Moreover, there are currently 2,068 wanted criminals at large, although some of them may no longer be in Tajikistan. BP


Serikbolsyn Abdildin, the presidential candidate from the Communist Party, held a press conference in Almaty on 1 December to outline his political program, RFE/RL correspondents reported. Abdildin said Kazakhstan needs an "equal society" and a diversified economy that includes elements of both central planning and a free market. He also said Kazakhstan should seek closer ties with Russia, specifically by concluding a joint defense treaty. Abdildin noted that poverty must be tackled immediately as about 80 percent of the population can be considered "poor." BP


Lawmakers on 1 December voted by 167 to 74 to reject an agreement signed by the government and the World Bank, AP reported. That agreement would have allowed the cabinet to provide guarantees to foreign creditors and investors to protect them from possible losses or other risks linked to Ukraine's economic instability. The World Bank pledged to back the guarantees by a special fund amounting annually to $120 million. The vote came on the same day as a World Bank mission arrived in Kyiv to discuss new projects and loans. Valeriy Aloshyn, head of the parliamentary Finance Committee, commented that the failure to ratify the document stemmed from the "general negative attitude [among lawmakers] to any deals that have to do with foreign loans." JM


Also on 1 December, the parliament voted by 342 with one abstention to override President Leonid Kuchma's veto on a tax law that forbids the president from setting tax rates and granting tax exemptions. Kuchma had argued that the legislation could lead to lower budget revenues because it would not allow the president to change excise and import taxes if necessary. Serhiy Teryokhyn of the parliamentary Finance Committee urged lawmakers to override the veto, arguing that the country's constitution grants them the exclusive right to determine tax rates and breaks. Earlier this month, the parliament approved amendments prohibiting the president from limiting state spending on certain items in the budget. JM


Belarusian President Alyaksandr Lukashenka visited the Minsk Tractor Plant on 1 December to discuss low wages and high prices in a "dialogue without intermediaries," Belarusian Television reported. He told plant workers that there will be no more price hikes in Belarus "even if it is very difficult in the country. If in Russia, to which we are tied, prices are increased by 5 percent, we will stick to a 3-4 percent increase," he said. He underscored that the government will not increase the price of vodka, adding that the authorities have made provision for food reserves so that people will not be left "without a slice of meat or bread" on New Year's Day. JM


Lukashenka told plant workers that a trade union protest planned for 2 December would only destroy the image of the country as stable and calm, Interfax reported. "Street action will not change anything," the agency quoted him as saying. He added that he is doing his best to alleviate the consequences of the Russian crisis. Lukashenka told journalists after the meeting that he does not intend to oust the cabinet over the current economic problems in Belarus. The government is "performing well. If some people have run out of steam and have to be replaced, this is a natural process, I think," he said. JM


Belapan reported that the protest rally planned by the Belarusian Trade Union Federation in Minsk on 2 December will "most likely" be postponed until January. The postponement followed the 1 December talks between presidential administration chief Mikhail Myasnikovich, cabinet ministers, and trade union leaders. According to the news agency, the government promised "to do everything possible" to meet trade unions' demands regarding the improvement of living standards. Belarusian Television also reported that the 2 December protest has been rescheduled "to some later date" but provided no details. JM


Syamyon Sharetski, chairman of the Belarusian Supreme Soviet dissolved by Lukashenka in 1996, wants presidential elections to be held in 1999, as required by the 1994 constitution, Interfax reported on 1 December. The current Belarusian Constitution, which was adopted in the controversial 24 November 1996 referendum, extended Lukashenka's term until 2001. According to the 1994 constitution, Lukashenka's term expires on 20 July 1999. Sharetsky told journalists on 1 December that members of the Supreme Soviet regard themselves as representatives of a legitimate parliament and plan to meet to set a date for presidential elections. He added that he is ready to assume the powers of the head of state starting 21 July 1999 if a new president has not been elected by then. JM


In a speech broadcast on national television on 1 December, Lennart Meri announced he has called general elections for 7 March. Under the Estonian Constitution, elections to the parliament must be held at least once every four years. The last such ballot was held in March 1995. Urging voters to use the opportunity to elect politicians with fresh ideas and policies, Meri said that the elections should be "against stagnation," according to ETA. "Bureaucracy, unoriginal solutions--all this threatens a small country like Estonia," he commented. The last day for parties to submit their final list of candidates is 21 January, after which the official election campaign begins. JC


Farmers organized protests throughout Estonia on 1 December to express dissatisfaction with the government's agricultural policy and to demand measures to protect the domestic market, including the introduction of import tariffs, ETA and BNS reported. Addressing farmers who had gathered near the Polva County government building, where the cabinet was meeting the same day, Prime Minister Mart Siimann said that within the next two weeks, the Agriculture Ministry will submit to the government an aid package that includes proposals for implementing protective duties, payments of direct subsidies, and providing credit for export. JC


Russian Foreign Minister Igor Ivanov said at a press conference in Stockholm on 1 December that despite progress by Latvia and Estonia toward integrating ethnic Russians and other minorities, Moscow still thinks both countries are not doing enough in this regard. Ivanov said he will discuss the issue in detail at a meeting of OSCE foreign ministers that opens in Oslo on 2 December. In October, Latvians voted in a referendum to approve amendments to the country's citizenship laws that provide for virtually automatic citizenship for stateless children under 16 who were born after the re-establishment of independence. The Estonian parliament is to vote on similar amendments in the third and final reading later this month. JC


Addressing the first session of his government on 1 December, Prime Minister Vilis Kristopans said that approving the 1999 state budget will be one of the cabinet's most important and "toughest" tasks, BNS and Reuters reported. "I see no major changes in the draft," he said, "but we have to discuss projected revenues. We will have to think how to act in case they prove to be lower." Finance Minister Ivars Godmanis has already indicated that revenues and expenditures may have to be decreased in order to deal with the economic slowdown in the wake of the Russian financial crisis. Also on 1 December, the Russian- language "SM" newspaper reported that the leftist National Harmony Party has reached agreement with Kristopans over supporting his minority government in the parliament. The cabinet has 46 seats in the 100-member legislature and the National Harmony Party 16. JC


Polish Prime Minister Jerzy Buzek has pledged to remove all crosses erected around the so-called Papal Cross outside the former Auschwitz concentration camp, Polish media reported on 1 December. A letter containing that promise was handed over to Jewish organizations in Washington on 1 December before the opening of a conference devoted to the issue of Jewish property seized during the Holocaust. Buzek stressed that the government will resolve the protracted Jewish-Polish cross controversy "without breaking Polish law." According to the 2 December "Gazeta Wyborcza," Jewish organizations were pleased with the letter. The newspaper added that the fate of the Papal Cross will be subject to further negotiation. JM


Pavel Rychetsky said on 2 December that he expects a majority government of "national unity" to come to power in the Czech Republic and warned of a severe economic downturn in the next year. In an interview in the daily "Pravo," Rychetsky said he considers a majority government to be the only way to cope with the economic and social problems that the government expects to face by mid-1999. Rychetsky said the government was informed of "a rapid decline in production" in the country, adding that there is "a danger that the Czech economy would seriously disintegrate." He also argued that the oncoming problems are the reason why former Premier Vaclav Klaus's Civic Democratic Party (ODS) did not "attempt to maintain the responsibilities of a governing party." Rychetsky said the ODS "was probably better informed than we were about where the economy was heading." PB


The Slovak parliament called on the European Parliament in Strasbourg and the parliaments of EU countries to back a flexible approach toward Slovakia and its efforts to join the EU, CTK reported on 1 December. In a statement, the parliament proposed that the various EU legislatures recommend that the European Commission write an addendum to its report on Slovakia that would take into account the coming to power of the new government in Bratislava. The statement said such an action might enable Slovakia to join fast-track EU accession by the middle, rather than the end, of 1999. The parliament added that it is prepared to guarantee democracy, the rule of law, human rights, and the protection of minorities. PB


The opposition Socialist Party (MSZP) and Alliance of Free Democrats (SZDSZ) walked out of parliament on 1 December after deputies of the coalition parties defeated a measure to establish two committees that would investigate the activities of the Tax Office and the cabinet's appointment policies. SZDSZ parliamentary leader Gabor Kuncze said the coalition's actions contravened parliamentary regulations stating that the parliament is obliged to set up such committees if 20 percent of parliamentary deputies back such a move. Jozsef Szajer, the parliamentary leader of the ruling Federation of Young Democrats-Hungarian Civic Party, said the measure to establish the committees was voted down because the coalition objected to the proposed chairmen, Matyas Eorsi and Sandor Burany. MSZ


State Department spokesman James Rubin said on 30 November that Yugoslav President Slobodan Milosevic is the root of "the problem" in the former Yugoslavia and cannot be a source of stability in the region, RFE/RL's South Slavic Service reported. Rubin added that Washington favors the democratization of Serbia and applauds the moves by the Montenegrin government aimed at promoting democracy. The following day, Rubin noted that the U.S. will not "lose any sleep if [Milosevic] passes from the scene." The spokesman declined to comment on unspecified press reports that Bill Clinton's administration is actively seeking Milosevic's overthrow in order to expedite an interim political solution in Kosova. Rubin added that the recent agreement between Milosevic and U.S. envoy Richard Holbrooke shows that Washington must "balance principle and pragmatism in a very complicated situation." On 29 November, London's "The Observer" wrote that the Clinton administration recently decided to work for Milosevic's downfall. PM


The Yugoslav government sent a strongly worded statement to the OSCE on 1 December blasting international efforts to draw the Kosova Liberation Army (UCK) into the peace process as "legalizing the terrorists." The text said that the UCK is involved in "insolent, criminal activity and provocative actions, [which] present an obstacle to the peace process.... The aim of the terrorists and separatists is not a political solution...but terror, violence, and an attempt to change borders." The Yugoslav authorities warned against maintaining "contacts...with terrorists, killers, kidnappers, bandits and other criminals that call themselves" the UCK. The statement concluded that Belgrade "will not allow [the UCK to continue its attacks] no matter what the price." PM


Adem Demaci, who is the UCK's political spokesman, said in Prishtina on 1 December that the guerrillas have not given up their goal of independence, even though they are willing to accept the status of a republic within Yugoslavia as part of an interim political settlement. He also denied unspecified press reports that the UCK has ties to internationally wanted terrorist Osama Bin Laden (see "RFE/RL Newsline," 30 November 1998). PM


A shipment of some 9 million coins arrived from the U.K.'s Royal Mint in Sarajevo on 1 December. The coins are in the denominations of 10, 20, and 50 fenigs and will replace the candies and chocolate bars that have been used as small change until now. This summer, the international community introduced the "convertible mark," which is pegged to the German mark at the rate of one-to-one, as the all-Bosnian currency. The Croatian kuna is also used in Croat-controlled parts of Bosnia, and the Yugoslav dinar is legal tender in the Republika Srpska. The German mark is the most widely accepted currency throughout the former Yugoslavia. Meanwhile in Banja Luka, the Bosnian Serb government revoked its earlier decision to devalue the Yugoslav dinar. The latest move is aimed at restoring normal business links with Serbia and Montenegro, RFE/RL's South Slavic Service reported (see "RFE/RL Newsline," 13 November 1998). PM


Dusan Sehovac, who chairs the Democratic Initiative of Sarajevo Serbs, said on 1 December that Serbs are subjected to "quiet, subtle, and very effective" discrimination in the school system of the mainly Croatian and Muslim federation. Sehovac noted that text books show pictures of mosques and of Roman Catholic churches but not of Orthodox churches, "Oslobodjenje" reported. Political organizations representing Sarajevo Serbs, many of whom remained in the besieged city throughout the war or fought in Bosnian army ranks, seek full legal equality within the federation. PM


OSCE Ambassador to Albania Daan Everts has proposed that an unnamed Norwegian prosecutor take part in the investigation of the September murder of Democratic Party legislator Azem Hajdari, "Shekulli" reported on 2 December. The authorities have accepted the offer. Ongoing investigations have not produced any results, but Democratic leaders have repeatedly charged that the controversial Hajdari was the victim of a political murder orchestrated by the government. Parliamentary deputy speaker Jozefina Topalli (of the Democratic Party) said on 1 December that the Norwegian official should report to the Council of Europe or to the OSCE rather than to the Albanian government if he comes to help with the case. She added that if the prosecutor "comes as an adviser to the iron-fisted Albanian state [who is] against the opposition..., the opposition will consider his mission worthless and boding ill for the future rule of law." FS


Albanian Health Minister Leonard Solis told ATA news agency in Tirana on 1 December that a highly mobile labor force and widespread prostitution could lead to an AIDS explosion in Albania." He noted that there are only 38 registered AIDS cases but that health officials suspect the real number of those infected with HIV is as high as 3,000. Solis added that the authorities lack the facilities and experience to monitor the spread of the disease, and he commented that the population is poorly informed about how to prevent the disease and about the need to test for AIDS. Some 85 percent of the known cases involved transmission of the virus through sexual contact, while the remaining 15 percent contracted HIV through transfusions of contaminated blood or through sharing hypodermic needles. PM


Romanian President Emil Constantinescu said in a speech marking the 80th anniversary of the return of Transylvania to Romania that "there is nothing more important for a people than its unity, independence, and sovereignty," Rompres reported on 1 December. An estimated 20,000 people watched a military parade in Bucharest. Some officials criticized the cost of the festivities--$900,000--at a time when the country is in such dire economic straits. Constantinescu added that "regional cooperation, seen as the central element for stability, is the country's pillar on which its present and future policies rest." PB


In the first 10 months of this year, Moldova's foreign trade declined by 11.4 percent compared with the same period last year, BASA-press reported on 30 November. The Ministry of Economy and Reform said the total value of the country's foreign trade through October was $1.43 billion. Exports declined by 19.3 percent, while imports dropped by 5.7 percent. The bulk of the decline occurred in September and October as a result of the Russian financial crisis and Romania's imposition of a 6 percent tax on imports. In other news, Mark Horton, IMF permanent representative to Moldova, said on 30 November that the IMF and the World Bank will indefinitely postpone renewing loans to Moldova if the parliament procrastinates passing the 1999 budget. MS


Bulgarian Prime Minister Ivan Kostov and Foreign Minister Nadezhda Mikhaylova said they hope the election of a new government in Macedonia will "open a new chapter" in bilateral relations, Bulgarian Radio reported on 1 December. Kostov said in a telegram to newly confirmed Macedonian Premier Lyubco Georgievski that he is "filled with confidence...that an atmosphere of mutual respect and understanding" will develop between Bulgaria and Macedonia. Mikhaylova also congratulated her Macedonian counterpart, Aleksandar Dimitrov, by telegram. PB


An international team of nuclear reactor specialists said on 1 December that the safety standards at the controversial Kozloduy nuclear power station are "good," an RFE/RL correspondent in Sofia reported. The inspectors--from France, Switzerland, and Russia--inspected the two oldest reactors at the station from 23-27 November. The EU has pressured the Bulgarian government to close the reactors, despite millions of dollars in upgrades and some positive inspections of the plant by Western officials. PB


by Robert Lyle

An official of Germany's Deutsche Bank laughs when asked the size of Russia's total external debt. "The overall figures vary so much I don't want to get involved in that," he says.

Deutsche Bank, one of the world's largest, with commercial loan and investment exposure of more than $1 billion in Russia, uses the figure of $182.8 billion as its best-guess-estimate of what Russia, publicly and privately, owes the rest of the world.

United Financial Group and the daily "Moscow Times" put the total outstanding debt even higher, at $195 billion--$150 billion in state debt and $45 billion in commercial debt. If the United Financial figures are correct, Russia borrowed $70 billion in 1997 and the first six months of 1998.

The global organization of commercial financial firms, the Institute of International Finance (IIF), says Russia borrowed $22 billion in the first half of 1998 alone.

The IMF will not release the figures it is using, although in a report before Moscow's splurge of borrowing and this year's financial crisis, it put Russia's external debt at the end of 1996 at $125 billion. That included Soviet debt Moscow assumed on the break-up of the USSR and then rescheduled as well as $15.4 billion still owed to its old partners in the communist economic and trade group COMECON.

Russia has not issued an official accounting of all of its external debt, but Deutsche Bank estimates that the largest portion--$152.8 billion--is owed by the Russian federation government. It estimates that local and regional governments owe another $1.5 billion and banks and corporations $28.5 billion.

The United Financial Group and the "Moscow Times" put debt due in 1999 at $32.5 billion--$17.5 billion in state debt and $15 billion in commercial debt. The IIF, however, says the $17.5 billion government figure does NOT include whatever Russia will pay on treasury bills now being rescheduled.

Deutsche Bank includes the interest as well in its estimates that public and private borrowers in Russia are supposed to pay foreign creditors a total of $49 billion in 1999. Meanwhile, Deputy Finance Minister Mikhail Kasyanov has said Moscow will be able to pay back less than $10 billion of the $17.5 billion owed through 1999.

The overall situation is confusing because negotiations on dealing with each part of the debt are conducted with different creditors under different circumstances.

For example, Russia's official debt to commercial bankers is being dealt with in at least two sets of talks under the so- called London Club, a grouping of about 600 commercial banks worldwide. The most pressing talks are over part of the rescheduled Soviet Union debt--instruments called PRINS--which is due on 2 December but has a 15-day grace period. Under the rescheduling agreement worked out in 1997, half of what is due on 2 December was to be paid in cash and half in bonds to be called Interest Arrears Notes (IANs). Instead, Russia has now proposed to pay the entire $724 million with new IANs said to be worth only about 13 percent of their face value.

Russian officials in Moscow have been quoted as saying there would be an additional $216 million cash interest payment. The "Moscow Times" reports that Russia feels an obligation to honor this paper, but the banks involved in the London talks said they have seen nothing on that.

A Deutsche Bank spokesman says this issue may be taken up this week by negotiators from the banks but that most of their attention is still focused on the agreement in principle announced two weeks ago on the Russian government treasury notes, known as GKOs. The spokesman said a number of subcommittees of commercial bankers are still working on the Russian offer of a complicated mix of instruments to handle the approximately $10 billion owed on the GKOs to foreign commercial creditors.

There continue to be disagreements among the Western banks involved. One group--those with continuing active business involvement in Russia--are willing to take more ruble-denominated securities that could be used only for transactions within Russia. A second group wants to get hard currency out as quickly as possible.

Russian official government debt to other countries--handled through the so-called Paris Club of official creditors -- amounted to more than $50.4 billion at the end of 1996. But that is nearly covered by the more than $47 billion other countries owe Russia. Most are Soviet-era debts owed by poor, developing countries.

Russia's other big foreign debt is what it owes the IMF, the World Bank, and the European Bank for Reconstruction and Development, totaling more than $25.5 billion.

Russian officials last week suggested they might ask the IMF to "reschedule" what Moscow is due to repay the fund in 1999, but IMF officials have underscored that the fund does not and will not reschedule debt owed by member countries.

IMF officials will not say exactly how much Russia is due to repay in 1999--it has kept up its repayments so far on a total debt of $19.58 billion-- but United Financial estimates that $4.8 billion is due next year. IMF officials point out that the repayment schedule is heavier in later years because of grace periods in some of the loans. The author is an RFE/RL correspondent based in Washington. Floriana Fossato, a Moscow-based RFE/RL correspondent, contributed to this article.