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Russia Report: August 18, 1999

18 August 1999, Volume 1, Number 25
Acting Prime Minister Vladimir Putin told members of the interregional association Siberian Accord on 13 August that "we have gathered here for the purpose of turning Russia from an almshouse into a strong, powerful, unitary state, which is impossible without powerful regions," "Kommersant-Daily" reported the next day. Former Prime Minister Sergei Stepashin had been scheduled to appear at the meeting, but his successor filled in for him--an action that "Izvestiya" on 13 August suggested illustrates how Putin is attempting to retain the economic course of the previous government while trying to establish working relations with the regional elite. However, that newspaper the next day--reporting after the event had taken place--noted that Putin, unlike his predecessor, Stepashin, "showed that he could say 'no.'" Putin spoke out decisively against Krasnoyarsk Krai Governor Aleksandr Lebed's plan to hold on to a controlling stake in a local coal company (see item below). It also noted that Putin showed an "almost surprising knowledge" of the region's economic problems. According to the daily, Putin "appraised the policy of Finance Ministry [vis-a-vis interbudgetary relations] most skillfully." Other topics covered at the meeting were preparations for the winter, the 2000 federal budget, and the military industrial complex. Governors at the meeting objected to the 58-42 percent split of tax revenues between the federal center and the regions, Interfax-Eurasia reported on 16 August. Altai Krai Governor Aleksandr Surikov told reporters in Barnaul that a 50-50 division would be more appropriate. JAC

Sakhalin Governor Igor Farkhutdinov's press secretary told RFE/RL's Vladivostok correspondents on 10 August that Stepashin's dismissal will further delay the efforts of regions dependent on federal assistance to prepare for the winter. He noted that now at least a month will pass before the Finance Ministry begins paying for supplies of fuel and food as part of its northern delivery program. A month's delay could prove critical for areas, such as Magadan, that must take advantage of the thawed sea before it freezes over again in October. Primorskii Krai Governor Yevgenii Nazdratenko told a local television station that his government will now have to renegotiate contracts with the federal government for fuel delivery. JAC

On 14 August, Federation Council Chairman Yegor Stroev told reporters that the constitution should be amended to limit the power of the Russian president to reshuffle the government. He added that "we must make a correction of the constitution sooner or later, otherwise we shall not have a stable central authority." In an article published in "Tribuna" on 12 August, Ryazan Governor Vyacheslav Lyubimov called for holding a special session of both the State Duma and the Federation Council to alter the constitution to limit the president's ability to dismiss the government. According to Lyubimov, the government should not be dismissed without the Duma's agreement and the president's offering convincing reasons for its sacking. JAC

The price of bread in Krasnoyarsk Krai rose 10 percent on 16 August, the third increase in two months, Interfax-Eurasia reported. A local bread company official linked the price rise with a 15 percent increase in the cost of flour. Meanwhile, following a 40 percent hike in the price of bread products in Saratov Oblast, Governor Dmitrii Ayatskov ordered local bakeries to produce a new type of "people's bread" that will cost consumers only 1 ruble and 50 kopeks, "Kommersant-Daily" reported on 13 August. The newspaper noted that the bread actually costs 2 rubles to produce and that local enterprises will lose 25,000 rubles a day to produce and sell the 20 tons of bread a day. Saratov Oblast agricultural official Sergei Gorbunov declared that bread makers will be compensated for their losses. Ayatskov has promised to conduct a personal inspection of stores where the people's bread will be sold. The bread, which the newspaper also dubbed "governor's bread," will be sold only in four cities in the oblast, Saratov, Engels, Balakov and Balashov. In Kirov Oblast, "Izvestiya" reported on 14 August, Governor Vladimir Sergeenkov has ordered that a local bread manufacturer be compensated for producing a type of bread that will be available to the local population at a cheaper price than market conditions would permit. JAC

Following up on earlier reports, "Moskovskii komsomolets" wrote on 13 August that members of the political council of Voice of Russia have not only voted against joining a coalition composed of Right Cause and New Force but also have declared their desire to join the Fatherland-All Russia bloc (see "RFE/RL Newsline," 11 August 1999). Samara Governor Konstantin Titov is the informal leader of Voice of Russia. "Segodnya" the same day predicted that two socio-political blocs called "Voice of Russia" may appear in the near future. According to that daily, six out of the eight parties and movements that make up the bloc nixed Titov's planned merger with the right-centrist groups. Those remaining are members of what is informally called Titov's bloc and is composed of several regional leaders who support Titov. Vladimir Medvedev, a member of the political council of All Russia, told "Vremya MN" on 11 August that the Voice of Russia never really existed, adding that it has no philosophy and Titov does not have the support of other regional leaders. He also noted that the Democratic Party of Russia, a group which earlier abandoned Voice of Russia, is now actively working with All Russia (see "RFE/RL Russian Federation Report," 28 July 1999). JAC

Dozens of schoolchildren throughout Altai Krai have appealed to the federal government on behalf of the children of the small city of Gornyak, RFE/RL's correspondent in Barnaul reported on 7 August. Sixty-five percent of the children in the city are so-called "yellow children"--they were born with jaundice and damage to their central nervous system, Infants were first diagnosed with this condition 10 years ago and at that time died from it. Now they are surviving, but they remain weak throughout their lives and cannot have healthy children of their own. Doctors believe that the condition results from pollutants in the soil and water from heavy metal mining, nuclear experiments at neighboring Semipalatinsk, and debris from rocket launches at the Baikonur cosmodrome in Kazakhstan. During a recent visit, then Prime Minister Stepashin promised to find financing for rehabilitating the raions in the krai that had suffered damage from the nuclear experiments. In the meantime, residents of the city cannot find work since most of the enterprises are either closed or failing. JAC

Andrei Balashov, director-general of the Arkhenergo joint-stock company, told ITAR-TASS on 13 August that electricity to urban residential and rural areas is being cut off for up to eight hours a day. The reason for the outages are the lack of fuel oil at the oblast's thermal power stations (see "RFE/RL Russian Federation Report," 4 August 1999) and the reduced amount of electricity that United Energy Systems is transferring to the oblast, Balashov said. According to the news agency, some 70 percent of the region's industrial enterprises have only limited supplies of electricity or none whatsoever. JC

An exhibition featuring the Atlas of Tibetan Medicine opened on 10 August, providing locals with their first opportunity to view the text, ITAR-TASS reported. After a year-long restoration effort, the book was part of a touring exhibition in the U.S. and only returned to Ulan Ude last month (see "RFE/RL Russian Federation Report," 28 July 1999). Prior to the restoration, the text was primarily available to scientists, according to the agency. JAC

ITAR-TASS reported on 10 August that the Baltic Fleet was urgently trying to secure bread supplies for its sailors after a local bakery halted deliveries because of outstanding debts. The bakery claimed that the fleet owes it some 3.2 million rubles ($130,000) and said that at least half of that total must be paid before supplies are resumed. A spokesman for the fleet, however, responded that there is no money available to pay off the debt, adding that the fleet could use its flour reserves to bake its own bread. JC

The Krasnoyarsk Krai administration, the coal miners union, and the managers of the Borodinskii, Berezovskii, and Nazarovskii mines have reached an agreement taking effective control of the mines away from the local coal company, Krasugol, Deputy Governor Svyatoslav Petrushko told "The Moscow Times" on 12 August. Krasugol is scheduled to be privatized under a coal sector restructuring program financed by the World Bank, according to the daily. Krai Governor Aleksandr Lebed has been conducting talks with federal authorities to obtain a guarantee that the privatization would not lead to outside ownership of the mines, which are some of the area's richest resources. The mines' managers now plan to issue new shares that would dilute Krasugol's controlling stake and that would be handed over to the krai administration in lieu of some of the mine's outstanding tax arrears. According to the newspaper, the World Bank has declined to comment on the scheme until after concrete steps have been taken. The State Property Ministry issued a statement on 11 August saying that "it will call the Krasugol management to account if it permits the company's shares put up for sale to be devalued." On 14 August, acting Prime Minister Putin criticized Lebed's attempt to retain control over Krasugol. Putin said that "the Krasnoyarsk administration sees the aim of privatization of the region's coal industry as keeping the controlling stake. From the point of view of the international financial organizations, such privatization cannot raise the effectiveness of the region's coal industry," according to Prime-Tass. JAC

Beginning in September, teachers in Krasnoyarsk Krai will get a 50 percent pay increase, Interfax-Eurasia reported on 10 August. Vladimir Ovchinnikov, first deputy governor, told the agency that as of 1 September the krai will be able to start paying teachers wages on time without delay. According to the krai administration's press service, unpaid wages to teachers as of 1 August totaled 195 million rubles, which was 97 million rubles less than as of 1 April. JAC

In an interview published by "Nezavisimaya gazeta" on 10 August, Yurii Loskutov, deputy head of the Institute for the Problems of Regional Security and a candidate in the upcoming gubernatorial ballot, said that Leningrad Oblast and the City of St. Petersburg could be unified by 2002. That prediction, he noted, is based on a careful examination of all legal aspects of unification and on consultations with the Russian government and the Federation Council. An initiative group recently began collecting signatures for a referendum on the unification of the two federation subjects. According to Loskutov, the referendum will take place in December, within one week after the elections to the State Duma. He also noted that opinion polls show 80 percent of the oblast's residents are in favor of unification, while the main base of resistance to the initiative is to be found, predictably, among those whose jobs would be most threatened--namely, oblast government officials. JC

Deputies of the oblast Legislative Assembly have passed a law, proposed by Governor Ivan Sklyarov, whereby managers of agricultural enterprises will be rewarded with a bonus equalling up to 18 times the minimum wage for each percentage point of production growth that their enterprises achieve, "Izvestiya" reported on 11 August. Agricultural managers who clock up 15 years in service will receive higher pensions, while graduates of institutes will additionally receive the equivalent of two or three minimum wages each month for their first two years at an agricultural enterprises. According to the newspaper, the turnover among agricultural managers has recently exceeded 50 percent. JC

On the first day of the campaign for gubernatorial and mayoral elections, Governor Leonid Polezhaev and Omsk Mayor Valerii Roshchupkin publicly made up their differences and announced they regret their verbal attacks on each other, "Vremya MN" reported on 11 August. Polezhaev is quoted at saying that he takes "personal responsibility" for the unleashing of the "information war between the oblast and the city," while Roshchupkin, reportedly more reticent than Polezhaev, said he acknowledged his mistakes and would conduct only "clean politics" from now on. "Vremya MN" commented that since Polezhaev succeeded in ensuring that the two ballots take place on the same day, 5 September, there is no longer any reason for the two men to fight. Roshchupkin has given up any aspirations for the gubernatorial seat and will run only for the mayoralty, which he is expected to win easily. Polezhaev, meanwhile, is reported to have no serious rival in his bid to be re-elected as governor (see "RFE/RL Russian Federation Report," 21 July 1999). JC

RFE/RL's "Korrespondentskii chas" program reported on 7 August that the transmitter belonging to the private television station STV-3 was impounded ahead of the elections in the oblast. After the television station broadcast footage of a local enterprise director accusing the oblast deputy prosecutor-general of financial irregularities, the Prosecutor-General's Office conducted an investigation that concluded the accusations were groundless (although it stripped STV-3 journalists of their accreditation even before the investigation was completed). A criminal case was opened, on charges of slander, against those who had made and disseminated the accusations. And when the station continued to broadcast information that was unflattering for the administration, the Prosecutor-General's Office moved to have the transmitter impounded. JC

Former Vladivostok Mayor Viktor Cherepkov is now the subject of a new scandal, "Kommersant-Daily" reported on 11 August. The Primorskii Krai prosecutor has launched criminal proceedings against Cherepkov in connection with a fraudulent business deal. According to the daily, while he was mayor in 1998, Cherepkov reached an agreement with a company called Sinetek to supply dozens of trolleybuses and rolled metal products for 20.2 million rubles ($80,000). After the money was transferred to Sinetek's bank account, Sinetek's head, Vladimir Neyaskin, disappeared. Cherepkov is also implicated in another scheme involving the supply of mazut to the city that never materialized.The newspaper notes that Cherepkov is reportedly going to announce his intention to compete in gubernatorial elections against Primorskii Krai Governor Yevgenii Nazdratenko. It notes that this announcement may have reactivated local law enforcement agencies' investigations of his tenure as mayor. JAC

Coal miners in Tula Oblast announced on 10 August that they will march on Moscow to protest wage arrears, "Izvestiya" reported. According to the daily, the main culprits for the miners' miseries are consumers, who owe some 250 million rubles ($10 million) to Tula coal mining companies. The federal government, the newspaper argued, is fulfilling its obligations vis-a-vis the miners by making up the difference between the cost and sale prices. "Vremya MN" on 11 August reported that the Tula coal miners have received no wages for one year and are given only "meager advances" on which to subsist. Meanwhile, "Pravda" on 17 August reported that Tula Governor Vasilii Starodubtsev will join the protestors if Moscow does not meet their demands. JC

Regional Industries Perk Up.

One rare piece of economic good news coming from Russia recently has been the revival of Russian industry following the devaluation of the ruble in August 1998. The Russian Statistics Agency reported that industrial output in Russia overall increased by 3.1 percent during the first six months of 1999, compared with the same period last year. This table shows how industries have fared in selected regions on a percentage basis during the first half of 1999, compared with the same period last year. (JAC)

_Region__Industrial Output_

_Primore_-6.8 percent

_Novosibirsk_0 percent

_Voronezh_+1.4 percent

_Murmansk_+2 percent

_Magadan_+2 percent

_Lipetsk__+2 percent

_Omsk__+2 percent

_Novgorod_+5.5 percent

_Kirov__+6.1 percent

_Altai__+11.3 percent

_Yaroslavl_+11.4 percent

_Ulyanovsk_+12.6 percent

_Tatarstan_+13.6 percent

_Stavropol_+17.6 percent

Sources: "Utro Rossii" (Vladivostok), "Vechernii Barnaul," "Kommuna" (Voronezh), "Murmanskii vestnik," "Magadanskaya pravda," "Lipetskaya gazeta," "Novgorodskie vedomosti," "Kirovskaya pravda," "Zolotoe Koltso" (Yaroslavl), "Ulyanovskaya pravda," "Republika Tatarstan," and "Stavropolskaya pravda."