DAILY REPORT ON RUSSIA

AND THE FORMER SOVIET REPUBLICS

INTERCON INTERNATIONAL USA, INC., 725 15th STREET, N.W., SUITE 908,

WASHINGTON, D.C. 20005 -- 202-347-2624 -- FAX 202-347-4631

Daily intelligence briefing on the former Soviet Union

Published every business day since 1993

Friday, October 11, 1996

What, in the opinion of the Russian people, is being done today by the administration, whose traditional "100 days"—counting from July 3—are up? Nearly every third respondent believes that the administration is not doing anything particularly important.

While a substantial group (34 percent) thinks that the regime is effectively working toward reaching a peace settlement in the Chechnya conflict, this effort is more or less closely associated with an individual—Aleksandr LEBED, as opposed to with the government as a whole. This may help explain LEBED's increasing popularity and the perception that he can be trusted above other Russian leaders.

Although Lebed came in third in the first round of presidential elections with some 15 percent of the vote, polls indicate that he would fare better today. Respondents say that, if elections were held now, 20 percent would vote for YELTSIN, 23 percent for Communist Gennady Zyuganov, and 25 percent

Russian Federation

Politics

Yeltsin Addresses Taxes On Radio

· In a radio address broadcast today, Russian President Boris Yeltsin announced a major government crackdown on tax evasion in the country, blaming enterprises that avoid taxes and regional leaders who misappropriate state funds for preventing Russia's economic recovery. "Those dodging taxes doom pensioners, the army, sciences and culture to an almost beggar-like existence. I know that taxes are high today but only making order in fulfillment of tax laws will allow us to lower them. First we will collect taxes and then we will be lowering them," he is quoted by Dow Jones as saying. YELTSIN also suggested that the wage and pension arrears crisis in the country was a result of corruption and poor management by some local officials.

He pledged to form an "emergency" commission to collect revenue and ensure that budget outlays reach workers and senior citizens. The commission will be headed by Prime Minister Viktor CHERNOMYRDIN with presidential chief-of-staff Anatoly CHUBAIS as his deputy. The issue of insufficient tax receipts came to the forefront in Russia in July when the IMF refused to release the monthly tranche of its $10 billion loan to Russia due to poor tax collection.

Public Opinion 100 Days into Yeltsin's 2nd Term

· Opinion polls taken to gauge Russian society's mood 100 days after the presidential elections indicate the public is not satisfied with its chosen leadership. Most people seem to believe that President Boris YELTSIN and his government are pursuing their own interests, rather than fulfilling campaign promises or dealing with the problems of paramount importance to the public, according to polls cited in Thursday's Kommersant-Daily.

Today's News Highlights

Russia

Korzhakov Speaks Out

Scientists Protest Arrears

Space Cooperation w/Canada

Russia Real Estate Accord

European Republics

World Bank Loan for Ukraine

Raytheon in Estonia

Belarus Pol. Struggle Resumes

Transcaucasia & Central Asia

McDonalds Planned for Almaty

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Ruble = 5,427/$1.00 (NY rate)

Ruble = 5,429/$1.00 (CB rate)

Ruble = 5,424|5,434/$1.00 (buy|sell rates)

Korzhakov Concerned About Yeltsin/Himself

· Former presidential bodyguards chief Aleksandr KORZHAKOV held a press conference today and accused President Boris YELTSIN's current inner circle of purposely tiring him out in order to usurp power. "Some people who are now in the president's entourage really wanted to run him into the ground in order to get the situation which we have now. ... And, naturally, they wanted to manipulate behind his back after that," Reuters quoted him as saying. He further said that unelected, illegitimate forces behind the president had taken over considerable power. "We have got an unconstitutional institution of regency while the president is alive. The president has fewer and fewer levers of power left in his hands."

He also said he fears for his life because LogoVAZ chief BEREZOVSKY and Most Group head GUSINSKY have ordered his assassination as an act of revenge, reported Russian Television (RTV).

Russian media reported today that KORZHAKOV will be summoned by Prosecutor-General Yuri SKURATOV to testify on the contents of a book he plans to write and on the documents on which the book will be based. Also, the Prosecutor is interested in finding some documents that he claims are missing from KORZHAKOV's office since his dismissal.

Economy

Russian Scientists Revolt

· Like miners and teachers before them, 600 Russian scientists took to the streets on Thursday to demand payment of back wages, a salary increase, and more funding for research, reported Itar-Tass Carrying banners that read, "Scientists, Get Up off Your Knees," members of the Academy of Sciences gathered in central Moscow in protest. The group is also planning a general strike for November 5. "The funding of Russian science has shrunk fifteen-fold over the past five years," said Institute of Earth Sciences director Vladimir Strakhov, who went on a hunger strike to protest the fate of science in the new Russia. Protesters say the Academy of Sciences has received only 50.8 percent of the already reduced funds it was allocated in the 1996 budget.

The Academy of Sciences includes 336 institutes and 122,000 members. Salaries have not been paid

May Jun Jul Aug Sep Oct

would support Lebed, said Kommersant-Daily. According to the paper, the latest poll shows that 62 percent of Russian's consider LEBED the most trustworthy politician in Russia, up from 49 percent in late July. However, other similar polls don't show the former general in quite such a positive light. Another poll conducted between September 6 and 29, asked 2,430 Russians, "Name the five or six politicians in Russia whom you trust most."

The Russian parliament apparently doesn't enjoy the confidence of the people either. About 20 percent of respondents believes that the State Duma is working effectively with good results, while some 40 percent believes the opposite, said Kommersant-Daily. Moreover, 30 percent said the Duma is only doing harm to Russia. According to the newspaper, these responses do not conform to some of the usual polarization of society: "town and countryside, party and non-party people, and leftists and rightists are as one in their antipathy of the Duma," it said.

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for four months. The lack of research funds and substandard salaries has led many to leave science for business or to go abroad. Vladimir FORTOV, recently-appointed deputy prime minister in charge of science, recently told the newspaper Nezavisimaya Gazeta that fundamental science in Russia hangs "between life and death."

Business

Russia-Canada Space Cooperation

· Canada's Akjuit Aerospace Inc. announced on Thursday that it will formally sign an agreement today to form an international alliance with Russia's Scientific and Technological Center Complex (STC Complex) to launch commercial satellites with Russian booster rockets, said a company press release. This alliance will combine Akjuit's SpacePort Canada launch facilities, located in Manitoba province with STC's Start-class booster rockets in a turn-key launch services package. The agreement represents a major step forward in the ongoing development of SpacePort Canada, as the world's first international commercial polar spaceport, said Akjuit.

Akjuit Aerospace's President and CEO Ms. Siobhan M. Mullen says the partnership will allow SpacePort Canada to provide complete, turn-key services to non-military, commercial space customers. "What we are building is an international airport for international launch vehicles."

"The START family of launch vehicles is highly reliable and cost-effective," says Yuri Solomonov, First Deputy and General Designer of MIHT, Vice President of STC Complex. "We are confident that our technology and Akjuit's launch facilities will be very attractive to many global customers."

This alliance is also historic because it represents the first time that a Russian company has been granted a license to provide commercial launch services utilizing the start family of launch vehicles from a foreign country. The first launch from SpacePort Canada under this international alliance is projected for late 1998.

Russia Signs Agreement with US NAR

· The National Real Estate Associations of Russia has signed a cooperative real estate agreement with the international section of the National Association

of Realtors (NAR), said an NAR press release. Russia, as well as the Czech Republic, Poland, Hungary, and Bulgaria all signed bilateral agreements with NAR at the Third Annual Conference of the Central European Real Estate Associations held in Budapest, October 3-5. The agreements are designed to increase business and professional networking opportunities among members of the associations. They also provide for an exchange of market information through publications and statistical profiles between the five countries and NAR's international section. The National Association of Realtors is the largest US professional association, representing nearly 730, 000 members involved in all aspects of the real estate industry.

NAR President Art Godi told conference participants that the signing of the agreements will help create home ownership opportunities for the citizens of Russia, the Czech Republic, Poland, Hungary and Bulgaria in a manner similar to what is available in the US today. He noted that the key is establishing training standards in these countries in order to improve the quality and skill mix of real estate practitioners. "In order to meet this global need, it is important that we serve as the example for these countries to develop and implement licensing or certification of qualified people who conduct themselves in a professional, businesslike, and ethical manner," Godi said. He has taught real estate fundamentals in all of the five Eastern European countries who signed agreements. GODI noted that the ownership and transfer of real estate must become clear to everyone involved in the transaction, and that means creating an effective property registration system.

European Republics

World Bank Loan for Ukraine Electricity

· The World Bank on Thursday approved a $317 million loan to Ukraine to help finance an Electricity Market Development Project, said a Bank press release. The project will support the development of a competitive electricity market by providing working capital necessary for the efficient functioning of the country's thermal power generation plants. The Bank-assisted projected is designed to complement the Ukrainian government's power industry reform program by providing maximum support for the finan

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cial strengthening of Ukraine's power generation companies and the National Dispatch Center (NDC), the state-owned company in charge of administering the wholesale electricity market.

The three-year project includes four components: building up fuel stocks at 14 thermal power plants to levels that are consistent with standard industry practices ($141.6 million); increasing the stocks of spare ports and carrying out deferred maintenance at 14 thermal power plants ($144.24 million); installing metering and communications equipment to improve recording and billing of electricity flows at key wholesale market delivery points ($83.26 million); technical services and training for project implementation, financial management, and the development of a privatization program ($8.5 million).

Raytheon Wins Estonia Contract

· US-based Raytheon Electronic Systems announced on Thursday that it had signed a $1.8 million contract wit the Estonian Air Navigation Services (EANS) to supply a monopulse secondary surveillance radar (MSSR) for Tallinn, said a company press release. The new system will provide improved safety for travelers to Estonia. The MSSR for Tallinn will be manufactured in the UK by Raytheon Cossor and will go into service on January 1, 1998. MSSR systems are designed to provide aircraft identity and flight level information to a range of 250 miles, enhance the management of aircraft traffic in condition of heavy congestion, and eliminate false radar replies to primary radars.

Earlier this year, Raytheon signed a contract to supply an MSSR system to Martna in southwest Estonia. That system is nearing completion in a UK factory and will be shipped to the site in November.

Belarus Exec./Leg. Fail to Find Common Ground

· Belarus President Aleksandr LUKASHENKO made a brief attempt to "compromise" with his country's parliament over proposed constitutional amendments today, before storming out of the par

liament building. He asserted that he will go ahead with his planned referendum to change the constitution and extend his term in office, declaring that "the people will be our judge," reported Itar-Tass. LUKASHENKO on Thursday offered to grant lawmakers wider powers, if they would drop plans to hold a separate referendum on constitutional changes on November 24. However, the "compromise" did not include any mention of LUKASHENKO halting his own planned referendum. The president abandoned his self-avowed conciliatory efforts after Belarus Constitutional Court chairman Valery TIKHINA characterized his new constitution as a "legal Chernobyl." "Tomorrow we will have a totalitarian regime in the center of Europe, with a castration of our parliament and the constitutional court," TIKHINA is quoted by Reuters as saying.

Meanwhile, Nikolai GONCHAR, the head of the Belarussian Central Electoral Commission said Wednesday that his organization was not prepared to hold either of the two planned constitutional referendums, reported Reuters. He said the commission would not be able to draw up a list of voters or set up local electoral bodies by November 7, and likely not as late as November 24 either. "We cannot guarantee the observation of all democratic procedures and are asking [both sides] to hold the referendums later," he is quoted by Reuters as saying.

Transcaucasia and Central Asia

Kazakhstan to Get Big Macs

· A McDonald's restaurant will open in Almaty in early 1998, reported Itar-Tass Thursday, following a meeting between McDonald's representative for the Caucasus and Central Asia and Kazakh President Nursultan Nazarbayev. McDonald's opened its first restaurant in the former Soviet Union in Moscow in 1990, and now has nine in the Moscow and one in St. Petersburg.

Daily Report on Russia and the FSU will not be published

on Monday, October 14, in observance of Columbus Day.

Paul M. Joyal, President, Editor in Chief Clifton F. von Kann, Publisher Ellen Shapiro, Managing Editor

Alycia S. Draper, Rebecca Martin, Contributing Editors

Daily Report on Russia is published Monday-Friday (excluding holidays), by Intercon International, USA. Subscription price for Washington, D.C. Metro area: $895.00 per year. A discount is

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