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Daily intelligence briefing on the former Soviet Union

Published every business day since 1993

Friday, July 18, 1997

Russian Federation


Yeltsin to Visit Sweden in December

· Russian President Boris Yeltsin will pay a state visit to Sweden in early December at the invitation of King Carl XVI Gustaf, Russia's presidential press service said today. The trip will be the first state visit to Sweden by a Russian or Soviet leader since Tsar Nicholas in 1909.

Chernomyrdin Says Russia Wants in EU

· Following a meeting with European Commission President Jacques Santer in Brussels today, Russian Prime Minister Viktor Chernomyrdin told reporters that Russia wants to join the EU. "In the near future, I think that Russia should be in the EU with all the implications and consequences, not all of which will be easy for us," the premier is quoted by Reuters as saying.

Orthodox Church Supports Religion Law

· The head of the Russian Orthodox Church, Patriarch Aleksy II, and 49 other Orthodox leaders have written a letter to President Boris YELTSIN urging him to sign the law, "On freedom of conscience and religious associations," reported Itar-Tass. The controversial law restricts the activities of most religious organizations, while proclaiming Orthodoxy to be "an integral part of the Russian historical, spiritual, and cultural heritage."

Poll Finds Russians Don't Trust Politicians

· A new poll, conducted by Russia's Nugzar Betaneli Institute of Parliamentary Sociology, shows that 61 percent of Russians do not trust President Boris Yeltsin and the same percentage doesn't trust the government, reported Argumenty i Fakty (No. 29). The poll, which aims to determine the institutions and political parties that Russians trust,

was carried out in early July and surveys a sample of 6,000 people from 62 Russian regions.

The poll also found that 55 percent of Russians don't trust the State Duma, but 48 percent trust the Armed Forces and the Orthodox Church enjoys the confidence of 44 percent of the people. The poll shows an increase in support for the Communist Party and Grigory Yavlinsky's Yabloko bloc, as well as a drop in support for Vladimir Zhirinovsky's Liberal Democratic Party, since the December 1995 parliamentary elections. It also indicates a substantial rise in the number of people opposed to all political parties and blocs.


Yeltsin Sign Investors Protection Decree

· Russian President Boris Yeltsin signed a decree Thursday setting up a commission for the protection of rights of investors in Russia's financial and stock markets, reported Interfax. The decree was signed during a meeting in Karelia with Prime Minister Viktor Chernomyrdin. The premier has been appointed chairman of the commission, which will also include representatives from the State Duma and the Federation Council, the Central Bank, the Arbitration Court, the Interior Ministry, and the Federal Securities Commission.

The Commission is charged with working out measures to broaden the powers of agencies that regulate the stock markets. It will also develop rules for imposing

Today's News Highlights


Bankers Wary of Gold Market

Ruble Chart

European Republics

Belarus Protesters Beaten

Belarus Premier Resigns

Ukraine Population Declining

South Caucasus & Central Asia

US Aid to Georgia - $100 Mln

Eurasia Mining in Kazakh JV

Kazakhstan Hit by Locusts




July 18, 1997

Intercon's Daily

Ruble = 5,785.5/$1.00 (NY rate)

Ruble = 5,788/$1.00 (CB rate)

Ruble = 5,781|5,795/$1.00 (buy|sell rates)

European Republics

Belarus Suspends Negotiations with OSCE

· The Belarus government today suspended talks with the Organization of Security and Cooperation in Europe (OSCE) to open an office in Minsk, reported RFE/RL. In June, Belarus agreed in principle to allow the OSCE a Minsk office to help promote democracy.

Belarus Protesters Arrested, Beaten

· Belarussian police on Thursday beat and detained parents and students protesting the confiscation and closure of their school by Belarus President Aleksandr LUKASHENKO, reported the Associated Press (AP). Several dozen protesters had gathered in front of one of the country's top Belarussian-language academies to denounce the president's order to transfer management of the building to the president's office. LUKASHENKO signed an order on April 1 to take control of 22 buildings housing cultural organizations.

Other buildings seized under the order include the Belarussian Writers' Union, which is also used as a meeting place for opposition political groups. The Union claims that the building belongs to it. However, the presidential edict says that all buildings slated for confiscation are state owned, and argues that the transfer is needed to "raise the effectiveness of the use of state property," said AP.

Parents and students have been protesting at the school since Monday, when the order was made public, but on Thursday police blocked the school. The protesters gathered at the back of the building, carrying textbooks and educational materials, and then marched around the block. Police and 15 plainclothes men entered the crowd, clubbing the protesters, and detaining some of the adults.

Belarus Prime Minister Resigns

· Belarus Prime Minister Sergei LING has tendered his resignation to the country's president, reported Interfax, citing an anonymous source in the Belarussian government. The source said that LING wanted to retire, as he had turned 60 on May 7.

Analysts in Minsk suggest, however, that the resignation is connected to the country's economic difficulties. LING was appointed premier in February.

Feb Mar Apr May Jun Jul

fines and administrative punishments for violations and work out a procedure for correcting these violations by securities issuers and professional traders. In addition, measures to accelerate court hearings of lawsuits by deceived investors will be proposed.

Russian Banks Wary of Gold Sales

· Recent Russian government efforts to open up the country's gold market appear to be insufficient to prompt commercial banks to buy up gold and invest in the ailing gold mining sector. "They are saying that the market has been liberalized, but nothing has been liberalized," Dmitri IGNATIYEV, head of precious metals at the Russian Banks' Association, is quoted by Reuters as saying. He added that commercial banks want the right to quote their own prices for gold and to export it freely. "They're going to scare us away from financing output, which is extremely risky without proper legislation and guarantees."

The government recently decided to allow certain commercial banks to buy and sell gold, as well as to allow Russian citizens to purchase gold. This partial liberalization is aimed at creating incentives for gold production and investment in gold mines.

Bankers say they are waiting to see if the Central Bank follows through on a pledge to sign documents next week permitting banks to freely export gold. Individuals will not have this right and some analysts predict that, at the moment, few have enough money buy gold as savings.


When you need to know it as it happens



July 18, 1997

Intercon's Daily

Population of Ukraine Declining

· Ukraine's population dropped by 2.3 percent to 50.2 million this year from 52 million in 1991, reported Xinhua. Accordingly, the average life expectancy for Ukrainians has shortened by 3.5 years. The average life expectancy is 61.2 years for men and 62.7 years for women, said Social Security Department head Nikolai Soldatenko. The population will decrease further by four million by 2026, he said.

Public Health Minister Andrei Serdiuk attributed the population reduction mainly to infectious diseases and insufficient funds for people to buy medicines. Some 8.5 million people were registered as suffering from infectious diseases, he said.

Within the next 30 years, the number of children under the age of 15 will decrease by some three million and constitute only 16.8 percent of the population, compared with 21.6 percent at present, said Soldatenko.

He noted that the number of people aged between 15 and 49 will decrease by 2.5 million, while residents above 60 will account for 30 percent of the population, much higher than the current 21.2 percent. He suggested the government raise the age of retirement.

Other former Soviet republics, notably Russia and Kazakhstan, are also suffering population declines.

Ukraine Gas Co. Deep in Debt

· The Ukrainian Tax Administration has frozen the bank accounts of state gas company Ukrgazprom because it owes more than 493 million hryvnia (about $274 million) in taxes, reported Xinhua on Thursday. Ukrgazprom President Bogdan Kliuk told parliament that his company had incurred late payment fines of 284 million hryvnia (about $156 million) on its 535 hryvnia ($294 million) debt to the state budget.

KLIUK linked Ukrgazprom's financial troubles to nonpayments by gas consumers, noting the private consumers, state companies, and municipal services have run up a debt of more than $1 billion to Ukrgazprom for gas supplied this year. Moreover, the rate of payment by customers is worsening, falling from 83 percent in 1995 to only 15.6 percent this year, said Kliuk, adding that consumers still owe $1.5 billion for gas supplied in 1995 and 1996.

Ukrgazprom's lack of funds is not only holding up tax payments, but is threatening future gas supplies to consumers, warned Kliuk. The company is now short of cash to buy chemicals it uses to add an odor to gas. Without these chemicals, it will be impossible to continue supplies to consumers.

Kliuk called for a 20-30 percent cut in national gas consumption and cited figures from other European countries and around the world to support his claim that Ukrainians burn too much gas. He said natural gas accounts for 45.5 percent of the country's fuel needs. In most European countries this figure is between 30 and 35 percent, and in the rest of the world only 21 percent.

Ukrgazprom supplied 15.5 billion cubic meters of gas worth 2.4 billion hryvnia (about $1.3 billion) to consumers in the first half of this year. Annual consumption in Ukraine is around 86 billion cubic meters, 79 percent of which is imported, said Kliuk.

South Caucasus & Central Asia

US Aid for Georgia Grows to $100 Mln

· The US Senate on Thursday overwhelmingly approved a $13.2 billion foreign aid bill for 1998, which provides $800 million for former Soviet republics, including $100 million for Georgia. The large increase in assistance for Georgia, which received only about $25 million last year, is a strong endorsement of Georgia's hard-won political stability and economic recovery. A statement from the Senate Appropriations Committee said: "The Committee has substantially expanded and earmarked funds for Georgia believing assistance at this critical juncture could make a significant difference in securing and making permanent key reforms, economic growth, and stability."

According to a Senate Appropriations Committee document, a portion of the $100 million for Georgia is earmarked as follows: $10 million to support energy development and privatization initiatives, $15 million for development of border security telecommunications infrastructure, $7 million for judicial reform and law enforcement training, $5 million to support training for border and customs control, $3 million to support political party and related institutional development, $5 million for urban and com

When you need to know it as it happens




July 18, 1997

Intercon's Daily

mercial development of the Black Sea port of Supsa, and $7 million for business and education exchanges and related activities.

The Senate version of the bill also shows a trend toward moving aid from Russia to other former Soviet republics and attaching conditions to the disbursement of aid money. Two amendments govern the $200 million in aid to Russia, one cuts off aid if nuclear cooperation with Iran continues and the other if President Boris YELTSIN signs a law restricting religious freedom. In addition, half of the $225 million earmarked for Ukraine will be withheld pending administration certification of the country's efforts to end corruption.

Shevardnadze, Cohen Sign Mil. Coop. Accord

· Georgian President Eduard SHEVARDNADZE met with US Defense Secretary William COHEN on Thursday at the Pentagon, where the two signed a cooperation agreement on prevention of the proliferation of weapons of mass destruction and promotion of defense and military relations. COHEN told reporters after the meeting that the extension of the Cooperative Threat Reduction program to Georgia would ensure that the country "remains a sturdy brick in the wall holding back the spread of weapons of mass destruction."

Shevardnadze also met with the Chairman of the Joint Chiefs of Staff John SHALIKASHVILI and had lunch with Vice President Al GORE. Today, the Georgian president is scheduled to hold talks with World Bank and International Monetary Fund officials and is expected to meet with President Bill CLINTON this evening.

Eurasia Gold in Kazakh Mining JV

· Canada's Eurasia Gold Corp. announced on Thursday that it has signed documents to form a joint venture, called Akzhar gold, with Kazakhstan's Ulzhan Ltd., said a company press release. Eurasia holds a 60 percent interest in this joint venture. The venture has a 100 percent interest in a precious metal

Exploration License that covers 29 square km, some 175 km northeast of Almaty.

Eurasia Gold also announced that, based on current gold economics and project fundamentals, it has terminated its agreements to earn a 50 percent interest in the Zarkulak gold deposit in southeastern Kazakhstan.

Kazakhstan Battles Locust Infestation

· Kazakhstan is frantically fighting to save some 1.5 million hectares of land planted with wheat, barley and other grain from a swarm of locusts, reported Itar-Tass. The government has mounted a large-scale campaign in northern Kazakhstan to save crops from being eaten by the insects, brought out by a recent spell of hot, dry weather.

A total of 865 tractors, 24 planes, and seven generators—all the agricultural machinery in the area— have been spraying pesticides from early morning until late at night the past few days, said Itar-Tass.

There are reports of locust swarms in other areas of Kazakhstan, and if the reports are true, experts are predicting this year's grain harvest will be severely affected. This year's harvest was estimated at 14 million tons of grain this year, said Itar-Tass.

Kazakh Grain Crop Estimated at 12 MMT

· A recently-released report from the US agricultural attaché in Almaty forecast Kazakhstan's grain production for marketing year (MY) 1997/98 at 12 million metric tons (MMT) of grain (including eight MMT of wheat, three MMT of barley, 0.25 MMT of rice, 0.25 MMT of oats, and 0.15 MMT of corn), according to Futures World News.

Total domestic consumption is expected to drop to 5.4 MMT, mainly because of lower demand for feed grain as the number of livestock heads is reduced. Annual exports will remain no more than 3.0 MMT, in mainly food soft wheat. Russia and other CIS countries will remain major importers of Kazakh grain and exports to East European countries are likely to rise.

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

Svetlana Korobov, Contributing Editor

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When you need to know it as it happens