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Russia Report: March 24, 1999

24 March 1999, Volume 1, Number 4
Many regions in Russia are not ready for what are likely to be the country's worst floods in 50 years, "Komsomolskaya pravda" reported on 18 March. Last spring, 25 people died during flooding, and material losses in 28 regions of Russia amounted to around 2 billion rubles ($80 million). This year, government experts worry not only about a much higher number of fatalities and greater level of economic damage but also about a real ecological catastrophe, as already vulnerable dams, canals, and locks are collapsing from the higher-than-expected water levels to occur in the next month-and-a-half. This year, according to the State Hydro-Meteorological Center, the water level in the Oka, Sur, and the Bolshoi Irgiz Rivers will be 1.5-2.5 meters higher than normal. Water in the Kostroma, Unzha, Kama, Vyatka, and Luga rivers will be 1-1.5 meters higher. According to the newspaper, larger cities such as Vladimir, Kaluga, Kirov, Kursk, Orel, Pskov, Ryazan, Tula, and Ufa as well as a number of smaller villages are the most vulnerable to flooding. JAC

Samara Governor Konstantin Titov suggested on 18 March that his movement, Golos Rossii, join Our Home Is Russia (NDR), "Novye Izvestiya" reported on 19 March. According to Titov, such an alliance would be assured of surpassing the 5 percent barrier for the State Duma. Since Titov has openly criticized NDR leader Viktor Chernomyrdin on a number of occasions, his proposal took some analysts by surprise. However, "Segodnya" on 20 March, citing "a source close to the executive committee of NDR," said that Titov was favorably impressed by the NDR's new economic program drafted by faction leader Vladimir Ryzhkov. Titov believes, acccording to "Novye Izvestiya," that "Now everything depends on Chernomyrdin, who should understand that the NDR without the regions, without a strong regional policy, without a clear-cut policy on federalism will be preparing for elections by going down a blind alley." Titov said that "non-confrontational negotiations in the spirit of compromise" are taking place with a number of members and the leadership of NDR. Chernomyrdin apparently remains undecided. At a recent press conference, the newspaper reported, he refused to comment on a possible alliance with Golos Rossii. JAC

The opposition of mayors and the heads of city administrations is likely to be one of the biggest stumbling blocks in the path of Golos Rossii, Igor Kharichev, director general of the Center for Applied Election Technology, writes in "Nezavisimaya gazeta" on 20 March. Around election time, lack of support from these officials could deprive the regional movement of important organizational resources in Russia's large cities. According to Kharichev, the leadership of Golos Rossii is dangerously underestimating the problem. He also reckons that although many mayors and other top municipal officials have pledged their allegiance to Moscow Mayor Yurii Luzhkov's Otechestvo party, their affection for Luzhkov is shallow and the lack of any initiative on the part of Golos Rossii to try and woo them is simply stupid. JAC

Unpaid wages and other compensation owed to teachers in the Altai Krai increased by 1.2 million rubles ($55,000) at the beginning of 1999 to total 193.1 million rubles ($9 million), Interfax-Eurasia reported on 19 March. If the actions are not taken to reduce the debt, teachers are prepared to begin new protest actions, according to the local union of educational and science workers. The total backlog of wages decreased in only eight districts, while it grew in 37 and remained at the same level in 25. The median wage debt is three months. JAC

De Beers has become a strategic investor in the exploitation of the Lomonosov diamond deposits, "Vremya MN" reported on 15 March, citing ITAR-TASS. At an extraordinary meeting, the shareholders of the Severalmaz company, which owns the license to exploit those deposits, voted to transfer the rights of strategic investor to Soglasie--De Beers Mining Investments. South Africa's De Beers has a 50 percent stake in that company. JC

More than 60 percent of Bashkortostan's estimated 2.85 million voters cast their ballots on 14 March in parliamentary and local elections, Russian media reported. A total of 144 candidates were elected to the lower and 30 to the upper house of the parliament; of those, 83 and 14, respectively, had been members of the previous parliament. No Communist Party candidate was elected to either chamber. But that does not reflect an absence of widespread dissatisfaction with social conditions: "Nezavisimaya gazeta" reported on 16 March that in 10 constituencies in Ufa, the number of votes cast against all candidates for the local council was larger than the combined total of votes for any given candidate. The poll in those districts was therefore declared invalid. LF

With his career facing uncertain prospects, Prosecutor-General Yurii Skuratov might be pleased to learn that the regional elite in the Republic of Buryatia is "actively" discussing asking him to run as a single-mandate candidate to the State Duma from Buryatia, "Nezavisimaya Gazeta Regiony" reported on 16 March. No one has officially asked Skuratov to run, but acccording to the newspaper many people believe that it would be advisable for the republic to have "someone who can open doors in Moscow's corridors of power." JAC

According to Valerii Platonov, a leading official at the Chelyabinsk Tractor Factory (ChTZ), the federal government is preparing to give the ailing enterprise a "present" by 1 June--just in time for its 66th birthday, "Vremya MN" reported on 16 March. By that date, Moscow plans to free ChTZ of its debts and to set up a new joint-stock venture. Next month, a meeting of creditors has been scheduled to discuss the possibility. CHTZ was founded in 1933 and was soon producing some 60,000 tractors a year. By the early 1990s, output had dwindled to a fraction of that figure, and in 1997, the enterprise was declared bankrupt. A bid to auction off the company in its entirely failed earlier this year. Since then, there have been reports that some of its component parts will be sold separately (see "RFE/RL Russian Federation Report," 3 March 1999). JC

Leonid Gorbenko, following a meeting with former Federation Council Chairman Vladimir Shumeiko, has spoken out against the latter's proposal to turn Kaliningrad Oblast into a "Baltic Republic within the Russian Federation" (see "RFE/RL Russian Federation Report," 3 March 1999), BNS reported on 22 March. The Kaliningrad regional press service reported that Gorbenko's position "with regard to separatism and political extremism remains unchanged: the Kaliningrad region is an inalienable part of Russia and the all-embracing crisis can be overcome only through [accord]." JC

Gorbenko's order to set up a new television station, Dyuny, in the exclave met with dismay in the regional Duma and sparked speculation about the governor's intentions. "Kaliningradskaya Pravda" on 27 February quoted the deputy chairman of the Duma, Valerii Frolov, as pointing out that there is not "one spare kopeika" in the oblast's budget and that social and cultural programs have had to be cut. Also, the Duma is of the opinion that the several television and radio stations already operating in the oblast are "fully sufficient" for a population of less than a million. Rumors are circulating that leading local businessmen have been summoned to the oblast administration building and offered "various privileges" in return for helping to fund the new television company. The newspaper comments that in the upcoming election campaign, the Central Election Committee will be portioning out "to the second" the amount of airtime available to gubernatorial candidates. But it will be "another thing" altogether if one has a television station "in one's very own pocket." JC

The former mayor of the city of Belovo in Kemerovo Oblast, Yevgenii Parshukov, has been arrested on bribery charges, ITAR-TASS reported on 18 March, citing New Siberian Television. According to the television company, Parshukov is suspected of accepting a bribe in the form of an exemption for a repayment of a 62,000 ruble loan ($2,500). Parshukov is also charged with misusing 700,000 rubles in federal funds that had been intended for creating new jobs for coal miners but were instead transferred to a city transportation enterprise. Parshukov resigned from the post of mayor two months ago for unannounced reasons at the request of Governor Aman Tuleev. New mayoral elections for the city as well as for seats in the oblasts' legislative assembly will be held on 18 April. JAC

Kemerovo Oblast Governor Aman Tuleev told Interfax on 15 March that he expects a new railways war to start in June if the federal government continues its present practice of underfinancing the coal industry. Tuleev said that the entire 5.8 billion rubles ($220 million) set aside for the coal industry in the first half of 1999 should go to the coal miners themselves. He predicted that the railways war will start in the Kuzbass area and then spread to the rest of Russia. Tuleev declined to answer the question of whether he was offered a post in the Primakov government, but he said "in general, Primakov needs stronger people in positions there." JAC

Fuel and Energy Minister Sergei Generalov arrived in Krasnoyarsk Krai on 19 March to participate in a board of directors meeting for the controversy-plagued Krasnoyarsk Coal Company (Krasugol), Interfax-Eurasia reported. At the meeting, which took place on 20 March, Generalov supported Krasnoyarsk Krai Governor Aleksandr Lebed's new plan for the company and Vladimir Bondarchenko, a former Krai level official, was elected director of the company, "Kommersant-Daily" reported on 23 March. At the meeting, Lebed announced that he had found the money to cover the company's 72 million ruble ($2.7 million) debt that had first raised the spectre of bankruptcy for the company (see "RFE/RL Russian Federation Report," 3 March 1999). According to the newspaper, the money is coming from a firm controlled by Lebed's younger brother, Alekseii, who is the president of the Republic of Khakassia. JAC

The former director general of the company, Sergei Opanasenko, who resigned just last month, was arrested on 18 March for abuse of office. According to "Kommersant-Daily" the next day, the regional office of the MVD promises more arrests will be forthcoming. The daily reported that as soon as local business chieftain Anatolii Bykov started battling with Krasnoyark Governor Lebed for control of the company, he attracted the attention of the MVD and brigades of investigators began performing checks on all his enterprises. JAC

The Kursk Oblast legislative assembly approved the resignation of the head of the oblast government, Boris Suraev, on 19 March, "Izvestiya" reported. Just one week earlier, local legislators had supported Suraev in his confrontation with Kursk Oblast Governor Aleksandr Rutskoi. But according to local political analysts, the daily reported, they switched sides when Suraev ceased offering constructive criticism of the governor and began making indiscriminate charges. Rutskoi dismissed Suraev at the beginning of March, citing as justification Suraev's neglect implementing his recommendations and the oblast's lack of preparation for spring sowing (see "RFE/RL Russian Federation Report," 10 March 1999). JAC

A large deposit of titanium and zirconium was discovered in Novosibirsk, the "Moscow Times" reported on 17 March. Deputy head of Novosibirsk's committee for natural resources, Aleksandr Nevolko, said the deposit contained estimated reserves of 20 million cubic meters of ore-bearing sand. According to Nevolko, the deposit is ideally located in terms of available infrastructure, but metal analysts said that while the find is significant, its development is currently beyond the country's financial capabilities. JAC

First Deputy Governor of Omsk Oblast Andrei Galushko survived an assasination attempt on 22 March, ITAR-TASS reported. Galushko is in charge of finance, foreign trade, and property issues within the oblast administration and he is also a member of the commission for tax and budget discipline. That commission recently passed a series of decisions designed to bring order to the region's crime-ridden grain, vodka, and beer businesses, according to the agency. Omsk Governor Leonid Polezhaev's press secretary said that the attack on Galushko was a result of his attempts to fight drug trafficking, corruption, and the "vodka mafia." Galushko received two bullet wounds and his driver was killed. JAC

Major General Sergei Verevkin-Rokhalskii was appointed director of the regional directorate of the Federal Security Services (FSB) in Primorskii Krai, replacing Lieutenant-General Viktor Kondratov who had held that position as well as the position of presidential representative to the territory, "Izvestiya" reported on 18 March. According to the newspaper, Verevkin-Rokhalskii is 51 years old, attended the KGB school in Minsk and began his career in intelligence in Kaliningrad. In 1996, he was named head of the FSB's regional directorate in Sakhalin Oblast. He attracted wide attention there in 1997 when Sakhalin Governor Igor Farkhutdinov issued a resolution that all contracts between the oblast and foreign companies had to first be reviewed by the local FSB branch, "Kommersant-Daily" reported. Verevkin-Rokhalskii later announced that already signed agreeements woud be neither reviewed nor rescinded. JAC

Rostov Oblast Governor Vladimir Chub not only provided local tax authorities with a full accounting of his income for 1998, he also published details in the local newspaper, "Nezavisimaya Gazeta Regiony" reported on 16 March. His gross earnings in 1998 totalled 154,246 rubles ($6,300), of which 2,331 rubles came from interest on bank deposits. JAC

Secret plans to construct a tunnel from the Russian mainland to the island of Sakhalin were discovered in Khabarovsk, Interfax-Eurasia reported on 22 March. Construction of the tunnel was under way when then Soviet leader Josif Stalin died and work was suspended. Hundreds of kilometers of railroad lines were built leading from Komsomolsk na Amur to Cape Pogibi in preparation for digging the tunnel. Railway Minister Nikolai Aksenenko reportedly said during a recent trip to the Far East that he wants the project revived and the tunnel built. JAC

Interior Minister Sergei Stepashin named Alekseii Krasnikov, who oversaw intra-Urals transportation, the new head of the regional directorate of the MVD, "Kommersant-Daily" reported on 19 March. Krasnikov's predecessor, Valerii Kraev, was dismissed following accusations of corruption and links to organized crime. Sverdlovsk Oblast Governor Eduard Rossel told reporters the previous day that the city's MVD directorate would be liquidated, resulting in the doubling of the oblast level directorate staff. According to Rossel, Krasnikov will continue his predecessor's fight against organized crime. JAC

Following weeks of negotiations, Moscow and Kazan have reached agreement on prolonging for five years the 1994 power-sharing treaty, RFE/RL's Kazan bureau reported on 19 March. President Mintimer Shaimiev told journalists on his return to Kazan from Moscow the previous day that various details, including tax rates in Tatarstan, may be amended by the mutual consent of Tatarstan and the federal authorities. LF

Vasilii Starodubtsev--governor of Tula Oblast, prospective Communist Party candidate in the upcoming parliamentary elections, one of the 1991 coup-makers, and a Hero of Socialist Labor--has been charged with tax evasion estimated to have caused losses to the state totaling 130 million rubles (some $5 million). The charge is linked to irregularities discovered at the Lenin Kolkhoz in Tula Oblast, which Starodubtsev headed after serving a prison sentence for his role in the 1991 coup until his election as Tula governor in March 1997. According to "Vremya MN" of 16 March 1999, if the governor does not make up the losses to the state in the near future, he faces the possibility of a trial.

The investigation into the goings-on at the Lenin Kolkhoz began three years ago, in March 1996, when the Tula tax police took an interest in contracts concluded with Belarusian and Baltic enterprises for deliveries of alcohol produced at a distillery belonging to the kolkhoz. From the beginning of 1995 until March 1996, the kolkhoz claimed to have sold abroad some 1.8 million dekaliters of alcohol. The contracts, however, proved to have been forgeries, under which the kolkhoz avoided having to pay excise duties. And the alcohol, instead of ending up abroad, was shipped to Moscow, Ryazan, and Oryol Oblasts, where it was sold to vodka distilleries.

In September 1996, the Tula tax police launched a criminal investigation into tax evasion at the kolkhoz. The following summer, in the wake of Starodubtsev's election as governor by 62 percent of those who cast their ballots, the Federal Tax Police Service (FSNP) took over the case, arguing that such a measure was necessary to prevent Starodubtsev from exercising an influence over the ongoing investigation. When the investigation was concluded earlier this month, the FSNP charged the governor, as well as some two dozen others, with tax evasion.

Whether Starodubtsev will ever appear in court on the charges brought against him is questionable. As a member of the Federation Council, he enjoys parliamentary immunity and could be stripped of that privilege only by a two-thirds majority vote in the upper house. Such a vote, however, may be preempted by Starodubtsev himself. The Tula governor plans to run in the upcoming elections to the State Duma on the ticket of the Communist Party (under the constitution, however, he would be barred from serving simultaneously in the Federation Council and the Duma). If the Communists do as well as is currently expected, he would likely survive such a vote in a lower house dominated by leftist forces.

But if he is indeed stripped of his parliamentary immunity, Starodubtsev will become the second Tula governor--past or present--facing the prospect of a trial. When Starodubtsev took office as governor two years ago, he embarked on a campaign to root out corruption among the leadership of the former and the current administration. One of those who fell victim to that campaign was Nikolai Sevryugin, Starodubtsev's predecessor and the man he beat in the March 1997 elections. Sevryugin is currently being detained on charges of accepting bribes and misappropriating office furniture worth some 150,000 rubles.

According to "Kommersant-Daily" on 17 March 1999, Starodubtsev has maintained silence since the charges were brought against him. But not for long, perhaps. The daily quoted an official of the oblast administration's press service as saying the governor intends to appear on local television to reveal why he has been investigated by the tax police and who, in fact, is behind the alcohol scandal. JC

After Prime Minister Yevgenii Primakov's government marked its six-month anniversary on 11 March, Interfax-AiF asked a number of regional leaders to evaluate its results and its budget policy vis-a-vis the regions.

Yurii Evdokimov, Murmansk Oblast governor: "I was one of a number of governors who voted against the new budget, because it put regions on the edge of extinction. Worst of all is the method by which regions are not encouraged to be self-supporting. What we earn is taken away from us. Judge for yourself: for the last two years in Murmansk Oblast the volume of industrial production grew 14 percent and the tax base 40 percent.� After this, you would think that Murmansk residents live better, but instead we have had to cut almost all social programs. I believe that budget relations between the center and the regions are completely unacceptable."

Sergei Katanandov, chairman of the Republic of Karelia government: "What's most important for us is stability in the sphere of politics and economics. In such circumstances, the regions can act more freely, make decisions and take responsibility for local problems. Unfortunately, things are proceeding in such a way that this [1999] budget will be 'sequestered.' In my opinion, it will be revised after the first half of the year."

Valentin Tsvetkov, Magadan Oblast governor : "In general, the government performed sufficiently well. We reached understanding on a number of questions.� But there is still insufficient attention paid to the problems of the North, where most of the nation's wealth is concentrated. On the question of the budget, without a doubt the new tax policy is better...but only the establishment of a free economic zone would help us increase investment and improve the economic life of the oblast."