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Newsline - December 7, 1998


During a brief trip to his office from the hospital on 7 December, President Boris Yeltsin dismissed the chief of the presidential administration, Valentin Yumashev, and three of Yumashev's deputies: Yurii Yarov, Mikhail Komissar, and Yevgenii Savostyanov. Yumashev will be replaced by Nikolai Bordyuzha, secretary of the Security Council and former head of the Federal Border Service. Yeltsin also transferred the Justice Ministry and Federal Tax Service to his direct oversight, in addition to the 13 ministries and agencies he was already overseeing. Russian media reported on 5 December that when meeting with Yeltsin at the hospital, Prime Minister Yevgenii Primakov had asked the president to heed the advice of his doctors and not leave the hospital ahead of schedule. Komissar told ITAR-TASS that he had wanted to leave his post in order to return to Interfax, while Yarov has been named the president's representative at the Federation Council. JAC


Deputy chief of the presidential administration Oleg Sysuev told ITAR-TASS that the reshuffle "is not the last step" the president will take to bolster his power. "Segodnya" on 4 December had tipped that Sysuev would be dismissed. The newspaper quoted Yumashev as saying that Sysuev was "carried away on a 'wave of emotion'" when he joined the recently formed center-right bloc and that the presidential administration will not support that alliance. The newspaper also noted that Yumashev openly supported former Prime Minister Viktor Chernomyrdin for the upcoming presidential elections and had met with the Our Home Is Russia faction at Yeltsin's bidding, according to presidential spokesman Dmitrii Yakushkin. JAC


According to preliminary results, liberal parties performed well in the first round of city elections in St. Petersburg, RFE/RL's St. Petersburg bureau reported on 7 December. Twenty-two candidates from Yabloko, 18 from Yurii Boldyrev's bloc, two from the Soglasie [Accord] bloc, and 10 Communists will participate in run-off elections on 20 December. Meanwhile, the City Election Commission annulled results at one polling station where the number of final votes counted was higher than the number of voters, according to ITAR-TASS. The day of the election, three polling stations received bomb threats, according to Interfax. JAC


Despite a high-level visit from the Minister of Emergency Situations last month, energy supplies are again running dangerously low in Kamchatka Oblast, "Izvestiya" reported on 5 December. The newspaper added that not one of the agencies that signed a protocol on 5 November to resolve situation on the peninsula has fulfilled its pledges. For the past two months, the temperatures in homes in Petropavlovsk- Kamchatskii have not risen above 8-13 degrees Celsius, "Kommersant-Daily" reported. There is no hot water, and in some raions there is no cold water either. According to "Izvestiya," current fuel supplies were set to last only 24 hours. Interfax reported the same day that residents of the central part of the oblast have been living without electricity since 30 November, but two tankers carrying fuel oil will arrive on 8 December. JAC


Russia is considering granting an amnesty for capital illegally diverted abroad, Prime Minister Primakov told the World Economic Forum in Moscow on 4 December. The "amnesty" would be granted by allowing Western banks to open branches in Russia and allow their customers to open numbered bank accounts without having to provide documentation for the source of their money. Primakov also pledged that Russia will not reverse the results of privatization, although he added that "something will have to be corrected." Speaking more generally, he noted that the unsuccessful economic reforms of the past "have given birth to an economy of distrust in Russia" and a crisis of confidence has afflicted almost all links in the nation's "economic chain, between the state and the people, [between] debtors and creditors, and [among] power branches." JAC


First Deputy Prime Minister Yurii Maslyukov said on 4 December that the government will earmark 3.5 percent of GDP for military spending. He added that the "economic situation in the country will change for the better in 1999, and we will channel more resources to the country's security." However, the presidential decree allocating 3.5 percent of GDP for national defense "has never been implemented," Duma Defense Committee Deputy Chairman Aleksei Arbatov of Yabloko told Interfax on 2 December. He also noted that the 1998 budget called for 2.9 percent of GDP for the armed forces but only one-third of those funds was disbursed. The military newspaper "Krasnaya zvezda" said that the 2.6 percent of GDP allocated for the military in the 1999 draft budget will "finish off the army once and for all." JAC


Russian Orthodox priests' blessings of vessels, armaments, and boundary posts is becoming increasingly popular in the armed forces, "Segodnya" reported on 4 December. The newspaper also noted that despite the Defense Ministry's official position that it does not discriminate on the basis of nationality or religion, it continues to register the nationality of its servicemen. According to the ministry's tally, more than 75 percent of the armed forces are Slavic. The next largest groups are the Tatars, who compose 2.2 percent, and the Ossetians, 1.1 percent. The paper concluded that owing to the "centrifugal mood" within the armed forces, the "would-be Russian professional army may turn out to be exclusively Slavic and particularly Orthodox, which is nonsense in a multinational federal state." JAC


Russian steel producers, already facing possible punitive tariffs on their products in the U.S., are now being investigated for dumping in Canada, ITAR-TASS reported on 5 December. Five major steel producers in Canada have filed a complaint against Russian exporters of hot-rolled steel. The Ottawa government will investigate the complaint over the next 60 days. Russian exporters, according to the agency, have almost 16 percent of the Canadian market for hot rolled steel. JAC


Psychiatrists have found Tamara Rokhlin, wife of murdered Duma deputy Lev Rokhlin, sane, ITAR-TASS reported on 6 December. In a television interview, her daughter and son-in-law repeated their earlier claim that Tamara Rokhlin has confessed to her husband's murder only because of a threat to the life of her children. They continue to assert that the murder was politically motivated. JAC


The acting mayor of Anzhero- Sudzhensk in Kemerovo Oblast, Viktor Ivshin, was elected to his post on 6 December, ITAR-TASS reported. Ivshin captured almost twice as many votes as the only other contender, Liberal Democratic Party member Sergei Zamotaev. More than 56 percent of eligible voters participated in the election. JAC


At the end of a three-day visit to Japan, General Anatolii Kvashnin, chief of staff of Russia's armed forces, told journalists he discussed with Japanese military and political officials the "normative and legal basis for development of relations between Moscow and Tokyo in the military sphere," Russian media reported on 6 December. Kvashnin also said that the possibility of a "joint information security system to coordinate relations and resolve political problems that arise" had been discussed but only in general terms. Much work remains in order to implement such a project, he added. Kvashnin met with Chief of Staff of the Japanese Armed Forces Admiral Kadzuya Natsukawa, Foreign Minister Masahiko Komura, and the chief of Japan's National Defense Agency, Hoseya Norota . Kvashnin commented that it is a sign of progress in Russo-Japanese relations that he is the first chief of the Russian General Staff ever to visit Japan. BP


Acting Chechen Foreign Minister Isa Idigov on 4 December denied a report in the London- based newspaper "Al Hayat" that Grozny may offer political asylum to Saudi millionaire Osama bin Laden, who is wanted for his role in the U.S. embassy bombings in Kenya and Tanzania in August, ITAR-TASS reported. Idigov also denied that the Chechen leadership and Taliban representatives are holding talks on establishing diplomatic relations. Idigov's predecessor, Movladi Udugov, had said in August that such talks are under way (see "RFE/RL Newsline," 24 August 1998). LF


The Chechen parliament on 4 December again rejected President Aslan Maskhadov's proposed structure for the republic's new government as "too sophisticated," ITAR-TASS reported. Maskhadov has proposed dividing cabinet posts into nine blocs, each headed by a deputy prime minister.The parliament wants to limit the number of deputy premiers to five (see "RFE/RL Newsline," 24 November 1998). Speaking on Chechen Television on 5 December, Maskhadov said he will re-submit his planned government structure to the parliament without amending that document. LF


The government on 4 December approved National Bank chairman Irakli Managadze's proposal to cease propping up the country's failing currency, ITAR-TASS reported. The lari lost 30 percent of its value over the past week. Managadze admitted that the move could result in the lari plummeting to 2-4 to the dollar, which would be the equivalent of a 50-150 percent devaluation. In an interview with Caucasus Press on 7 December, Finance Minister Davit Onoprishvili predicted that the lari would stabilize at between 2-2.5 to the dollar within seven to 10 days. President Eduard Shevardnadze the same day said the devaluation does not signify the end of economic reform in Georgia. He said that the IMF and World Bank will shortly provide Georgia with $40-50 million and $20-25 million, respectively. The latter sum, however, is earmarked for the needs of the displaced persons and for funding the country's health system. LF


Georgian President Shevardnadze said on 7 December in his weekly radio address that Tbilisi is ready to lift the blockade of the border between Abkhazia and Russia, provided that Abkhazia provides adequate security guarantees for Georgian displaced persons wishing to return to Abkhazia's Gali Raion, Caucasus Press reported. But Shevardnadze said that Abkhaz leader Vladislav Ardzinba is demanding additional compromises to which Georgia cannot currently agree. Those demands include the dissolution of the Abkhaz parliament in exile, the abolition of the White Legion and Forest Brothers, and the trial of members of those two guerrilla organizations, according to "Nezavisimaya gazeta" on 5 December. Georgian Minister of State Vazha Lortkipanidze had told journalists the previous day that the security guarantees offered by the Abkhaz side are inadequate, Interfax reported. Shevardnadze and Ardzinba had planned to meet in November to sign a protocol on the repatriation of Georgian displaced persons. LF


Azerbaijan National Independence Party chairman Etibar Mamedov told the parliament on 4 December that he will agree to talks with representatives of the country's leadership only after the publication of protocols giving the results of the 11 October presidential election, Reuters reported. Those protocols should have been published within 30 days of the election. Mamedov and other defeated opposition candidates dispute the official results, which gave incumbent Heidar Aliyev 76.11 percent of the vote. Mamedov believes he polled more than 35 percent and therefore deprived Aliyev of the two-thirds of the vote needed to avoid a runoff. On 3 December, a leading member of Aliev's Yeni Azerbaycan party said that opposition representatives have unconditionally accepted the president's offer of a dialogue, according to Turan. LF


Gas supplies to Dushanbe and regions in the southwest have been indefinitely cut off by neighboring Uzbekistan owing to technical problems, ITAR- TASS reported on 5 December. Uzbektransgaz has informed Tajikistan's energy company of the problem and promised deliveries will resume very soon. Tajikistan owes some $33 million for gas received in the first 10 months of this year. BP


Kyrgyz President Askar Akayev on 5 December signed a decree imposing a two-year moratorium on the death penalty, ITAR-TASS reported. The move comes three days after he declared an amnesty for 2,000 prisoners to commemorate the 50th anniversary of the signing of the UN Declaration on Human Rights. On 3 December, Turkmenistan announced it is placing a moratorium on the death penalty. BP


In an interview with "Kommersant-Daily" published on 4 December, former Kazakh Prime Minister Akezhan Kazhegeldin said that owing to the absence of political organizations in Kazakhstan, "society and government existed separately," resulting in "branches of government becoming wedded to one another" and changes to the constitution to hold early elections and increase the president's term in office to seven years. Kazhegeldin, who was barred from participating in next month's presidential elections, said he will "form a habit in society of confronting the government." He also said he will participate in a future presidential election, predicting that such a ballot will have to be held again in two years. BP


Saparmurat Niyazov, addressing the State Council on 3 December, said the country's cotton sales will bring in revenues of $900 million, but he expressed disappointment at the failure to meet the cotton harvest target for 1998, Interfax reported. Niyazov said the cotton target will be lowered from 1.5 million tons this year (690,000 tons were reportedly gathered) to 1.3 million tons in 1999. The grain target figure of 1.2 million will remain the same for 1999. Niyazov added that the 1999 budget, totaling some 20.5 trillion manat ($4 billion), includes sufficient funds to maintain health-care levels, provide free gas, water, energy, and salt to the population, and subsidize flour prices. BP


President Alyaksandr Lukashenka has appointed Ural Latypov to head an enlarged Foreign Ministry, RFE/RL's Belarusian service reported on 4 December. Lukashenka's press service said that Foreign Minister Ivan Antanovich, Minister of Foreign Economic Relations Mikhail Marinich, and CIS Affairs Minister Valentyn Velychka have all been sacked. Ivan Pashkevich, the deputy head of the president's administration, said the duties of Velychka and Marinich will be integrated into the new Foreign Ministry. Pashkevich added that Antanovich's removal does not mean "that the president is unsatisfied with his work" but that the country is faced with "new, concrete economic tasks--promoting goods in new markets." Latypov, who had been Lukashenka's foreign affairs adviser, worked for the KGB from 1974-1989. The changes follow those made last week (see "RFE/RL Newsline," 3 December 1998). PB


Mikhail Chyhir said on 5 December that he will run for the Belarusian presidency in the next presidential elections, RFE/RL's Belarusian service reported. In interviews published by the independent newspapers "Narodnaya Volya" and "Svobodniye Novosti," Chyhir said he "knows what should be done to stop the collapse of the country [and] the mass impoverishment of the people." He said he hopes for support from "clear-thinking" directors of political parties, factories, collective farms, and non-government organizations. Chyhir, who resigned as premier in November 1996 in protest at President Lukashenka's policies, said the state budget will collapse, hyperinflation will take effect, and stores will be empty if current policies continue. According to the 1994 constitution, Lukashenka's term expires in eight months. But in a constitutional referendum two years ago, his term was extended until 2001. PB


Several hundred people marched in Minsk on 6 December to commemorate the 50th anniversary of the signing of the Universal Declaration of Human Rights, AP reported. Oleh Belyavsky, the main organizer of the protest, alleges that some 500 people have been unjustly arrested or beaten this year and that thousands have been "politically repressed" during the four years of President Lukashenka's rule. In other news, Belarusian authorities announced on 4 December that charges of malicious hooliganism against Belarusian Popular Front youth leader Paval Sevyarynets have been dropped, Belapan reported. They cited "a change in circumstances" as the reason for that move. PB


Some 20 Belarusian linguists, journalists, and editors met at RFE/RL headquarters in Prague on 5-6 December to discuss the codification of traditional Belarusian orthography, which was banned by the Soviet regime in 1933 and revived in Belarus in the late 1980s. According to Belarusian linguists, the 1933 ban suppressed the development of the Belarusian language by artificially bringing it closer to Russian in terms of both vocabulary and spelling. Editor Syarhey Dubavets, whose "Nasha Niva" is being sued by the Belarusian government for using the banned spelling (see "RFE/RL," 10 August 1998), told RFE/RL that the conference was a "very optimistic event for all those believing in the revival of the Belarusian language." JM


A Swiss judge on 4 December charged former Ukrainian Premier Pavlo Lazarenko with money-laundering, AFP reported. Lazarenko has been detained and will remain in custody in Geneva until his trial. The judge said a "relatively large" amount of money has been seized in Geneva. Lazarenko, who was arrested last week (see "RFE/RL Newsline," 4 December 1998), denies the charges and claims the whole affair is an attempt to discredit him and his Hromada party ahead of next year's elections. Two members of Hromada flew to Switzerland on 5 December to "clarify" the incident. PB


Paul Siegelbaum, the World Bank's director for Ukraine and Belarus, said today he is concerned that the parliament in Kyiv is blocking World Bank projects, AP reported on 4 December. Siegelbaum said several projects have been neither ratified nor begun. He added that the bank will suspend $140 million in energy loans unless the Constitutional Court overrules a recent parliamentary ban on raising utility costs. In other news, the Ukrainian News Agency reports that President Leonid Kuchma has ordered the government to study a possible floating exchange rate for the hryvna next year, perhaps as soon as January. The National Bank has opposed such a move. PB


The first-ever meeting of the Estonian-Russian intergovernment commission has been hailed by both sides as a "breakthrough" in bilateral relations, ETA and BNS reported on 4 December. Commission co-chair and Russian Deputy Prime Minister Valentina Matvienko commented after the meeting that Russia and Estonia "inherited a heavy burden from the past, which can be got rid of by enough time, honesty, and persistence," according to ETA. Her co-chair, Estonian Prime Minister Mart Siimann, was quoted as saying that the meeting took place in a "very open, honest environment." Matvienko also said that high customs tariffs imposed by Russia on Estonian goods could be reduced by next summer. President Lennart Meri, meanwhile, told Matvienko that the development of Estonian-Russian relations will depend on Russia's revising its stance on the 1940 occupation. Moscow has not yet acknowledged that the Baltic States were forcibly incorporated into the Soviet Union. JC


Russian State Duma deputy Gennadii Raikov, addressing an international conference in Riga on 5 December, said the Duma is drafting a document expressing satisfaction with the results of the 3 October referendum on amendments to the Latvian citizenship law. Raikov said the document will urge that Latvia respect the "interests of the majority," which voted in favor of the amendments. He added that the Duma is planning to approve the document on 9 December. JC


Following a six-week debate, the Lithuanian parliament has adopted a balanced budget for 1999, BNS reported on 3 December. The vote was 70 to 27 with seven abstentions. Finance Minister Algirdas Semeta commented that it is Lithuania's first balanced budget since 1993. "The key feature of next year's budget is the implementation of a savings program that will provide for maintaining macro-economic stability," he said. The government anticipates 10.3 billion litas (some $2.6 billion) in revenues, an increase of 11.7 percent compared with this year. GDP growth is estimated at 5.5 percent and annual inflation at 5 percent. JC


Valdas Adamkus has called for a nationwide campaign to reduce the country's suicide rate, AP reported on 4 December. Some 1,700 people out of a population of 3.7 million have committed suicide so far this year. That is equivalent to some 45 suicides per 100,000 people, one of the highest rates in the world. Presidential spokeswoman Violeta Gaizauskaite said that Adamkus has asked private institutes and government agencies to develop a nationwide suicide prevention program. JC


Rudolf Scharping said in Warsaw on 5 December that Poland, the Czech Republic, and Hungary may officially join NATO before the planned date in April, dpa reported. Scharping said the early admission of the three would allow them to participate in formulating NATO strategy. Scharping also met with Defense Minister Janusz Onyszkiewicz and Foreign Minister Bronislaw Geremek during his two-day visit. In other news, a man found frozen to death in western Poland on 6 December was the 90th victim of the cold snap in that country. PB


Helmut Zilk has been cleared of accusations that he collaborated with communist Czechoslovakia's secret police in the 1960s, the Czech embassy in Vienna announced on 4 December. Those accusations were made in the German press in October, prompting Czech President Vaclav Havel to withdraw a top state award that Zilk was to have received at a special ceremony. The Czech embassy in Vienna told Reuters that an investigation has shown there was "no substance" to the charges. It added that Zilk has been invited to meet with Havel in Prague on 8 December. Czech Foreign Minister Jan Kavan expressed his regret over the incident to the Austrian ambassador to Prague. MS


Milos Zeman on 6 December told CTK that the social democratic governments of the Czech Republic and Germany will be able to find a common language on issues related to the future without burdening them "with the past." Zeman was responding to German Deputy Foreign Minister Guenter Verheugen's statement at the German-Czech Discussion Forum in Dresden on 5 December that the German government still considered the post-war expulsion of Sudeten Germans an injustice with which Czechs will have to come to terms. At the same time, Verheugen said that the new German cabinet will not press property claims against the Czech Republic, since the issue is of a moral and political, rather than legal, nature. MS


Former Premier Vladimir Meciar said in a statement on 4 December that he will quit public life entirely and "will not contest any position in the state administration in the future," Reuters reported. Meciar said he will not run for the post of Slovak president and that "at a time which I shall set myself, I shall leave public life and go into solitude." MS


Foreign Minister Eduard Kukan on 6 December chastised Zdenka Kramplova for ignoring orders to return to Slovakia, RFE/RL's Bratislava bureau reported. Kramplova resigned as foreign minister in September and was appointed ambassador to Canada by the previous cabinet, headed by Meciar. In late October, the new cabinet, headed by Mikulas Dzurinda, recalled Kramplova and ordered her to return to the Foreign Ministry in Bratislava. Kukan told TV Markiza that as Kramplova is ignoring that order, he intends to resolve the matter "radically." Her unauthorized use of diplomatic property, he added, is costing the Slovak taxpayer "hundreds of thousands of Slovak crowns." MS


The national congress of the far-right Hungarian Justice and Life Party (MIEP) has re-elected Istvan Csurka as the party's chairman, Hungarian media reported on 7 December. At the same time, Lukacs Szabo, who earlier had questioned the party's finances, was expelled from the MIEP, which called on him to return his parliamentary seat to the party. Szabo said his expulsion will leave the party one seat short of the minimum needed to form a parliamentary group, commenting that "Csurka has not only smashed the parliamentary group but also the party." MSZ


Four French Hercules transport aircraft arrived at Petrovec military airport on 6 December with the first 30 French troops from NATO's rapid reaction force for Kosova and 40 tons of equipment, AP reported. The force will rescue any of the 2,000 unarmed OSCE civilian monitors in Kosova should they run into danger. The NATO mission is expected to reach its full strength of 1,700 by the beginning of 1999 and will consist of 700 French, 350 British, 250 German, 200 Italian, and 200 Dutch soldiers and officers. In Brussels, the Atlantic alliance issued a statement on 5 December saying that "the deployment of the extraction force in no way relieves the Federal Republic of Yugoslavia government of its primary responsibility for the safety and security of the OSCE verifiers." PM


The Kosova Liberation Army (UCK) said in a statement in Prishtina on 4 December that it "rejects any solution for the Kosova crisis that falls short of full independence" for the province. In recent weeks, some Kosovar spokesmen have said that the Kosovars would "temporarily" accept the status of a republic within the Yugoslav federation provided that a referendum on independence would take place after two or three years (see "RFE/RL Newsline," 1 December 1998). PM


Fehmi Agani, who heads the negotiating team appointed by shadow-state president Ibrahim Rugova, told the Belgrade daily "Glas" of 7 December that U.S. envoy Chris Hill's latest plan for an interim settlement is not acceptable to the Kosovars. Agani added that "we had some objections to the previous version too, but this one is totally unacceptable.... It is obvious that Hill offers one solution after talking to us and another after talking to [Serbian President Milan] Milutinovic." Agani did not elaborate. Kosovar spokesman Mehmet Hajrizi said that the plan gives too much power to Belgrade at the expense of Prishtina, Reuters reported. An unnamed Serbian source told the news agency that the latest changes in the Hill plan are "cosmetic" and do not go far enough to please Belgrade (see "RFE/RL Newsline," 4 December 1998). PM


Unnamed European diplomats told Reuters in Prishtina on 5 December that the U.S. practice of providing armed escorts for Serbian paramilitary police reflects "bad judgment" and appears "incongruous" in the eyes of the Kosovars (see "RFE/RL Newsline," 1 December 1998). The European diplomats added that the U.S. practice of escorting the Serbs into the Malisheva region and elsewhere may lead to UCK reprisals against Westerners. On 4 December, Chris Janowski, who is the spokesman for the United Nations High Commissioner for Refugees, said in Geneva that the Serbian police presence in the Malisheva area discourages displaced Kosovars from returning to their homes there. PM


U.S. President Bill Clinton sent a written statement to Congress on 5 December extending the "outer wall" of sanctions against Serbia for a further six months. The sanctions involve a freeze on Serbian bank accounts and property rights abroad and prevent Belgrade's return to membership in international organizations. The measures are a response to Serbia's policies regarding human rights, democracy and the Hague-based war crimes tribunal. In Vienna the previous day, Austrian Foreign Minister Wolfgang Schuessel, who holds the EU's rotating chair, told Serbian opposition leader Zoran Djindjic that Yugoslav President Slobodan Milosevic "is part of the [region's] problem, not of the solution," RFE/RL's South Slavic Service reported (see "RFE/RL Newsline," 2 December 1998) PM


The legislature is slated to pass a bill on 7 December that will raise the salaries of some government officials by up to 300 percent and allow them to receive up to 85 percent of their pay after they retire, Reuters reported. The president will receive 18 times the average monthly income in Serbia, plus 20 percent. The prime minister and the speaker of the parliament will receive 18 times the average Serbian pay, government ministers 15 times, and legislators 10 times. The law applies to the retirement pay of former Serbian President Slobodan Milosevic. The average monthly income in the impoverished country is $112. The government is $1 billion behind in its payment of pensions. The authorities recently introduced a package of taxes to help fund the state budget. One-quarter of the proposed new budget will go to the police, "Danas" reported. PM


In Sarajevo on 5 December, the international community's Carlos Westendorp said recent violence in the Republika Srpska to protest the arrest of General Radislav Krstic for war crimes is "unacceptable" (see "RFE/RL Newsline," 3 December 1998). Westendorp noted that two EU monitors were attacked in Vlasenica and a UN vehicle damaged there. He also criticized as inflammatory public remarks by Mayor Stanimir Reljic of Vlasenica, which was Krstic's headquarters during the Bosnian war. PM


A two-day conference in Zagreb aimed at raising funds for reconstruction and development yielded pledges of $25 million, RFE/RL's South Slavic Service reported on 5 December. The EU's representatives delayed "until the last minute" their acceptance of an invitation to attend in order to protest what they called discriminatory legislation against returning Serbian refugees. The government estimates that Croatia needs $2.5 billion to repair damage sustained during the 1991-1995 conflict. PM


Several hundred student supporters of the opposition Democratic Party began a strike last week in Tirana and Shkodra, ahead of the 8 December anniversary of the 1990 student revolt that toppled communism, "Shekulli" reported on 6 December. They are demanding better living conditions, the release of what they call "political prisoners," and quicker results from the investigation into Azem Hajdari's murder (see "RFE/RL Newsline," 4 December 1998). Many protesters have cut classes. In Shkodra, protesting students threw stones at the university dean on 4 December. According to dpa, the protests have failed to gain massive support from among students. Meanwhile, a student spokesmen said in Tirana that the protesters will launch a hunger strike on 8 December unless the government meets their demands. FS


Petro Koci told "Shekulli" of 6 December that police expect riots during the 8 December student protests. He told the newspaper that police are ready to prevent a repetition of unrest that shook Tirana after the funeral of Hajdari on 14 September (see "RFE/RL Newsline," 15 September 1998). Koci stressed that the students' demands for better living conditions are legitimate but that police will not tolerate attacks against state institutions. He said that opposition leaders and former President Sali Berisha are seeking to use the students' movement]in order to return to power." He added that Berisha "will not succeed." FS


Prime Minister Radu Vasile and members of his government asked President Emil Constantinescu on 5 December to use his influence over parliamentary deputies from the ruling coalition to ensure the passage of a far-reaching reform program approved by the cabinet two days earlier. The program calls for the immediate closure of 49 loss-making enterprises. The leadership of the National Peasant Party Christian Democratic said on 3 December that the reform must be linked to property restitution. The Democratic Party, the Liberal Party, and the Hungarian Democratic Coalition of Romania said linking the two issues will again lead to disputes at a time when the reform measure package is urgently needed. MS


The Romanian Bank for Development became the first Romanian bank to be privatized when Societe Generale de France won a tender for a majority stake in the bank on 3 December. Romanian officials refused to give details, saying only they will become known when the deal is officially signed on 15 December. Mediafax, citing AFP, reported on 6 December that Societe Generale de France will pay $200 million for a 51 percent stake. MS


Josette Durrieux, deputy chairwoman of the Parliamentary Assembly of the Council of Europe and the assembly's rapporteur for Moldova, was allowed on 4 December to visit Ilie Ilascu, a Moldovan parliamentary deputy who has been in prison since he was sentenced to death in 1992 on charges of terrorism. Ilascu told Durrieux that he is isolated from others sentenced at the same time on terrorism charges and is seldom allowed visits by members of his family. The visit did not take place in the prison where he is being detained but in what the Transdniester authorities called a "hotel," Durrieux said. She said Ilascu is apparently in good physical shape and is mentally "very balanced," Radio Bucharest reported. MS


The parliament on 4 December approved a government plan providing for the sale next year of state property worth more than 996 billion leva ($595 million), dpa reported. More than 1,000 state companies are to be sold under the plan. The list, however, does not include the largest state-owned firms such as the telephone giant BTK, the oil refinery Neftochim, and the tobacco company Bulgartabak. MS


by Donald N. Jensen

Since the collapse of Russia's economy in August, much has been written about the demise of the business oligarchs--the small circle of influential entrepreneurs who grew rich over the past decade through close ties to the government, currency speculation, and, some say, criminal activities. Indeed, the business empires heavily dependent on the financial sector, such as Vladimir Gusinskii's Most Group and Vladimir Potanin's Oneksimbank, have been seriously damaged by the crash, while Aleksandr Smolenskii's SBS-Agro and Vladimir Vinogradov's Inkombank are ruined. However, entrepreneurs with extensive interests either in natural resources extraction, such as Rem Viakhirev of Gazprom and Vagit Alekperov of LUKoil, or in industry, such as Mikhail Khodorkovskii of Menatep and Boris Berezovskii of LogoVAZ, remain influential, albeit less so than previously.

The oligarchs came to the notice of many people in the West in October 1996, when Berezovskii boasted in an interview that he and six other tycoons had ensured Yeltsin's reelection by bankrolling his campaign. Moreover, he bragged that he and six cronies controlled much of the Russian economy. But while the Big Seven, as the oligarchs came to be called, controlled a large chunk of the economy and had a decisive say on some key issues, their influence was less than Berezovskii had suggested. There were many issues, such as military reform, where they played virtually no role at all. Moreover, there were influential interest groups at the time that Berezovskii did not mention: LUKoil, Gazprom, lobbyist holdovers from the Soviet era such as collective farmers, and regional leaders like Moscow Mayor Yurii Luzhkov.

Since the meltdown, Moscow's Alfa Bank, which has long- standing ties to the Yeltsin administration and whose relatively small holdings in the now defunct short-term securities market left it more or less unscathed, has been able to gain a competitive advantage over its more exposed rivals. In the absence of a strong state treasury, Alfa has been "authorized" to service the St. Petersburg City budget, a task offering numerous possibilities for corruption. Banks that service oil, gas, and precious metals exporters also remain important.

In the regions, the economic collapse has accelerated the formation of oligarchic structures. In Saint Petersburg and Yekaterinburg, local governments have taken over regional banks to ensure ready access to revenue streams. The Nizhnii Tagil Metallurgy Combine has given a 25 percent stake to the government of Sverdlovsk Oblast in exchange for the restructuring of its tax debts and the cancellation of the salaries it owed its workers.

Still other oligarchs are regrouping. The strategic alliance recently announced by LUKoil and Gazprom may strengthen their economic and political clout. Gazprom already pays a quarter of all Russia's taxes, and LUKoil is also a major contributor to the country's tax coffers. Even if they do not unite, the firms will almost certainly remain two of the few effective foreign-policy levers, especially toward Europe and Russia's neighbors.

Indeed, Yevgenii Primakov's government, far from trying to end crony capitalism, appears to be favoring its own cronies. Favored banks participated in several debt swaps orchestrated by the Central Bank in September, and the Central Bank has sharply reduced reserve requirements to increase banks' liquidity. Most of the "socially important" large banks the government intends to save have ties to the new government, Central Bank Chairman Viktor Gerashchenko, or the Luzhkov administration.

The government has announced that it intends to save, among others, Menatep and Most. The former has strong supporters in power, though few depositors and no regional network. The latter's extensive media holdings make it invaluable as the legislative and presidential elections approach. Meanwhile, Oneksimbank, widely considered to have been close to ousted the ousted Sergei Kirienko, Anatolii Chubais, and Boris Nemtsov, has so far been left in the cold.

In the non-banking sector, the government's highly publicized battle with Gazprom over taxes owed appears to have been resolved in the firm's favor. Gazprom will provide food aid to needy Russians instead of paying money to the cash-starved federal government. A shakeup in the leadership of Rosvooruzhenie, the state arms export agency, now under the control of an alleged Primakov protege, suggests that the Russian arms industry may well experience a resurgence as it more aggressively seeks clients for high-tech weaponry abroad.

That is not to say that Russia's business interests win every battle. The government has warned six major oil companies that their access to highly profitable export pipelines will be cut off if they do not draft a plan to sell more crude on the domestic market. There are serious differences among the oligarchs over policy and economic interests, such as protectionism. But since the differences are often over who is to receive increasingly scarce government favors, they are unlikely to benefit the long-suffering Russian public and may well become fiercer as total default looms.

What survived the August collapse, however, are the rules by which Russian politics is played. Much of politics is informal, authority is personalized, institutions are weak, the distinction between public and private is blurred, and money is the currency of political power. Some people will doubtless profit financially under such regulations, but economic reform and democratic development will likely stagnate. It was this absence of the rule of law in the sphere of economic reform that the 1998 EBRD Transition Report cited as one of the reasons why Russia's transition has been so difficult. The author is associate director of broadcasting at RFE/RL.