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Daily intelligence briefing on the former Soviet Union

Published every business day since 1993

Monday, October 19, 1998

puted between the two countries, despite their long-standing differences over the territory. KOMURA and First Deputy Prime Minister Yuri MASLYUKOV met as co-chairmen of the inter-governmental trade and economic cooperation commission and discussed investments, technological cooperation and technical assistance. KOMURA confirmed his country's readiness to assist Russia in stabilizing its financial system and normalizing the financial situation in the country. KOMURA also met with a group of Russian statesmen and politicians, including Moscow Mayor Yuri LUZHKOV. The main purpose of KOMURA's visit was to pave the way for Japanese Prime Minister Keizo OBUCHI's official visit to Moscow scheduled for next month. OBUCHI's visit will be the first official trip to Russia by a Japanese prime minister since 1973, when Kakuei TANAKA visited Moscow. A sub-commission of the bilateral commission in charge of preparing a peace treaty will meet on October 29th and 30th, IVANOV said.

CIS Inter-parliamentary Assembly Meets

· The Commonwealth of Independent States (CIS) Inter-parliamentary Assembly opened its regular plenary sitting in St. Petersburg on Saturday. Its chairman Yegor STROYEV, speaker of the Russia's Federation Council, said in opening remarks that Russia's crisis warranted a CIS coping mechanism. STROYEV called for coordination between executive and legislative bodies of CIS members and for regular consultations at the parliamentary level. He said starting from the 12th plenary sitting of the Assembly, due in

Russian Federation


Yeltsin Cancels Top Level Meetings

· Russian President Boris YELTSIN canceled meetings today with top level officials and advisers due to his state of his health. YELTSIN will be resting at his country residence Rus. Presidential spokesman Dmitry YAKUSHKIN said YELTSIN's health is, "satisfactory, but there are still some vestiges of cold." Meetings with Prime Minister Yevgeny PRIMAKOV, Boris PASTUKHOV, Federal Security Service chief Vladimir PUTIN, and federal Border Service Director Konstantin TOTSKY have been rescheduled for Tuesday. The President's doctors say that YELTSIN has no serious health problems and will serve out his term.

Japanese Foreign Minister Praises Visit

· Prime Minister Yevgeny PRIMAKOV met with visiting Foreign Minister Masahiko KOMURA Saturday to discuss bilateral relations since April. PRIMAKOV stressed that the Russian side is committed to the positions worked out by President Boris YELTSIN and former Japanese Prime Minister Ryutaro HASHIMOTO and will strive for a peace treaty by 2000. PRIMAKOV said Japan sets much value by economic, political and cultural relations with Russia. KOMURA expressed Japan's continued support for Russia's efforts to reform its crippled economy. Japan will make "regular payments" of a $1.5 billion loan for Russia. Tokyo pledged $600 million as the first tranche of the loan earlier this year. About $400 million has already been transferred to Russia. The two sides expressed a desire to boost bilateral relations in fields such as investments, power engineering, personnel training, transport, atomic power and fishery. Foreign Minister Igor IVANOV said that Russian and Japan should start joint economic activities on a group of islands dis

Today's News Highlights


IMF Mission To Arrive In Russia

India Interested In Russian Oil

Western Magazines Cut Back

European Republics

Belarus To Pay Gazprom

Gas Transport To Drop

South Caucasus & Central Asia

Georgian Army Revolt Fails

Georgian-Abkhazian Talks

Turkmen-Uzbek Summit




October 19, 1998

Intercon's Daily

December, "it is time not only to pass model laws but other organizational measures. Discussions in the form of conferences on major problems of the Commonwealth [of Independent States] might play a useful role." The session was attended by delegations of Russia, Azerbaijan, Armenia, Georgia, Belarus, Kazakhstan, Kyrgyzstan, Moldova and Tajikistan. The delegation of Ukraine attends the sitting as an observer. The 15-item agenda included the setting up of a working group for drafting a model education code for CIS countries, attendance of the Assembly's delegation at the seventh annual session of the Parliamentary Assembly of the Organization for Security and Cooperation in Europe, the Inter-parliamentary Assembly's fund-saving measures, CIS reforms and the Assembly's international contacts. CIS secretary Boris BEREZOVSKY presented a report on improvement of CIS activities. The CIS Council of Heads of States will meet before the middle of December, BEREZOVSKY said, adding that an agreement was also made on a meeting of the CIS Council of Prime Ministers after November 20th. BEREZOVSKY called for return of the CIS Consultative Coordinating Committee, saying that The committee should be put in charge of economic, social and policy issues within the CIS.

Bulgak Appointed EU Relations Rep.

· Russian Premier Yevgeny PRIMAKOV signed a government decree endorsing Deputy Prime Minister Vladimir BULGAK as chairman of the Russian governmental commission for cooperation with the European Union. Under the same decree, BULGAK is obliged to submit to the government proposals for the Commission's composition within four weeks.


Ruble = 15.58/$1.00 (NY rate)

Ruble = 16.95/$1.00 (CB rate)

Ruble = 16.91|16.95/$1.00 (buy|sell rates)

Restrictions Lifted For Six Banks

· The Central Bank of Russia has lifted restrictions from six banks on deposit operations with individuals. Inkombank, Most-Bank, Menatep, Mosbiznesbank, Promstroibank, and SBS-Agro may resume deposit operations in both rubles and foreign currency. The restrictions were imposed on September 1st. Russian commercial bank, Inkombank, will stop servicing its client's accounts today. Inkombank

wants Russia's Central Bank to step in and take over its management, The Wall Street Journal reported. Inkombank, which invested heavily in Russian Treasury-Bills, ran into a liquidity crisis after Russia defaulted on its domestic debt. The Russian Sberbank savings bank has decided to grant additional credits to the Pension Fund. The amount of the credits was not disclosed.

Rus-IMF Negotiations To Resume In Moscow

· Russian officials and representatives of an International Monetary Fund (IMF) mission will resume negotiation talks Tuesday. The government will present its revised fourth quarter 1998 budget and economic priorities. IMF Managing Director Michel CAMDESSUS said the Fund is ready to provide further loans to Russia on condition that the new Russian government presents a realistic program. He added that Russia will have to undertake serious commitments, before the IMF would allocate funds. Talks are not expected to be substantial as the new Cabinet has not developed an economic and financial strategy to pull Russia out of its crisis. Russian Finance Minister Mikhail ZADORNOV on Friday said, "They [IMF] have got their proposals, and we have got ours." The Central Bank of Russia will enter a new round of talks with the IMF with a new "monetary program and a plan for restructuring the banking system," ZADORNOV said. CAMDESSUS also noted that the IMF has no evidence of misappropriations of its loans in Russia, no evidence of corruption. According to him, when the IMF provided loans to Russia, the Russian government reported in detail on how the loans had been used.


India To Invests In Russian Oil And Gas

· An Indian delegation led by Minister of Oil and Natural Gas K. Vazhapadi RAMAMURTHY are in Moscow today to discuss Indian investments in the Russian oil and natural gas sector and prospects for the renewal of Russian-Indian interaction in the field of oil and gas extraction. Indian companies are prepared to invest $40 million in prospecting for oil in Russia, oil development and processing with subsequent imports of petroleum products from Russia. India has shown particular interest in the development of the oil fields on the Sakhalin island and its sea shelf, in Tatarstan and the Caspian sea. India is also prepared to cooperate with Russian gas

When you need to know it as it happens




October 19, 1998

Intercon's Daily

giant Gazprom oil company in a project for the development and processing of natural gas in Russian territory and in the construction of a pipeline to Iran. The Indian minister will take part in a session of the bilateral working group for oil and gas which operates within the framework of the Russian-Indian intergovernmental commission for trade, economic and technological cooperation. This is the first delegation from the Indian ministry of oil and natural gas to visit Moscow since the break-up of the Soviet Union.

Western Magazines Cut Russian Editions

· The publisher of the Russian editions of several international magazines has announced plans to slash circulation by up to 35 percent and cut the number of editions to six per year, down from 12 editions, because of Russia's economic turmoil. The magazines affected so far include Harper's Bazaar, the US-based fashion magazine owned by the Hearst Corp., and the Russian editions of Marie Claire and Men's Health. The publisher said the financial crisis was forcing major cutbacks. Distribution of the magazines would concentrate on the major cities including Moscow and St. Petersburg, rather than the entire country, in a "refocusing of the target market."

Gas Transit Across Ukraine May Drop

· Chairman of the Naftogaz Ukrainy Company Igor BAKAY on Thursday said that transit of Russian gas across Ukraine to Central and West European countries may drop by 48 percent by 2000 without drastic measures to reconstruct and overhaul gas pipelines. If this happens, Ukraine will lose nearly 17 billion cubic meters of gas worth over $1 billion, which annually comes to the country as payment for the transit of Russian gas, BAKAY said. Over 30 percent of trunk gas pipelines have been operating for 20 to 45 years and 40 percent during 10 to 20 years. It is necessary to replace annually at least 220 kilometers of piping to maintain them in a working condition, but only 26 kilometers were replaced since January, BAKAY said. He noted that 50 percent of all gas-pumping units have worked out their service life, and their efficiency dropped by 50 percent. Out of 50 million gryvnas, necessary to overhaul gas-pumping units, it has been possible to collect only seven million gryvnas. Russian gas giant Gazprom annually exports, on average, 120 to 130 billion cubic meters of gas across Ukraine, supplying it with 30 to 35 billion cubic meters of gas as transit payment.

South Caucasus & Central Asia

Georgian Servicemen Revolt Fails

· About 100 Georgian servicemen from the Georgian Defense Ministry's Senaki Brigade early this morning joined forces with rebels under the leadership of Akaki ELIAVA, who is a Zviadist supporter and a former enlisted officer of the Senaki Brigade, in a revolt against the Georgian government. The rebels seized ten tanks, two armored personnel carriers, and more than 70 machine guns. They have blocked the roads of Senaki and Samtredia leading west to the Black Sea port city of Poti with seven tanks the rest headed East toward the city of Kutaisi. Georgian President Eduard SHEVARDNADZE has placed the armed forces on high alert. According to his press office, the President called on the residents of Senaki, Abasha, Zugdidi, Martvili, Samtredia, Khoni regions to remain calm. The statement said, "The government is in control of the situation, and if necessary will make a decision to declare a state of emergency." The government had over the past several months received threats from political forces and individuals to initiate instability. SHEVARDNADZE threatened to launch a

European Republics

Belarus To Pay Gazprom In Food And Goods

· The Executive Committee of the Rus-Belarus Union in Moscow on Friday has devised a plan for the government of Belarus to pay back the Russian gas giant Gazprom. Belarus owes some $250 million to Gazprom. By the end of this year, the debt could increase to $550 millions. The $200 million debt will be paid with the supply of foods and material-technical resources of Belarus producers to Russian budget-financed organizations. Gazprom will enjoy a tax exemption of the equal sum in its payments to the federal budget. Another $200 million will be restructured with the emission of Belarus bonds, to be passed over in the property of Gazprom. The gas company expects to receive $100 million from Belarus, as well as to get $50 million worth of commodities and resources for its own needs. Belarus has not fulfill its obligations to Gazprom before. Gazprom hopes that the decisions will be implemented and become a basis for the mutually-beneficial cooperation between Belarus and Gazprom.

When you need to know it as it happens




October 19, 1998

Intercon's Daily

military operation against the rebels, if they fail to surrender. Security was tightened around key government buildings in Tblisi, including government headquarters, parliament, and the broadcasting center. The Georgian government sent special representative in the Imereti region Temur SHASHIASHVILI, Defense Minister David TEVZADZE, and National Security Minister Jemal GAKHOKIDZE have been sent to the region, "for ascertaining the situation and settling the conflict." The rebels have taken GAKHOKIDZE hostage, after he attempted to negotiate with them. He has since been released. Speaker of the parliament Zurab ZHVANIA said the rebels were demanding the restoration of Zviad GAMSAKHURDIA's parliament. GAMSAKHURDIA was ousted as Georgia's leader in 1992 and died under mysterious circumstances in 1994. His supporters have never fully recognized SHEVARDNADZE's rule and have been suspected of being responsible for the most recent assassination attack on SHEVARDNADZE's life. ZHVANIA said the revolt was, "an attempt at an armed coup d'etat and may have been part of a larger scale operation to drive the country to chaos." This has failed. The rebel forces attempted to enter Kutaisi, but were immediately repulsed by Georgian forces using cannons and other artillery. One rebel was killed, two were wounded. In addition, one tank surrendered and returned to the Georgian military side. The remainder of the mutineers are handing out AK-47 rifles to the population as they retreat to the base. The situation is predicted to last no more than a day. It appears the Mutineers thought there would be other support for them in the country, but it failed to materialized. This rebel force has no public support, but sources suspect that they may have been encouraged by Russian forces seeking to deter investment and inhibit pipeline development. Georgian sources report that the government will use this rebellion to conduct a thorough housecleaning of unreliable elements.

UN Sponsored Georgian-Abkhaz Talks End

· During a three-day conference in Athens, Georgia

and the breakaway region of Abkhazia Sunday agreed to hold direct talks to resolve their problems. Georgian State Minister Vazha LORDKIPANIDZE and head of the separatist government, Sergei BAGAPSH agreed to discuss security, economic cooperation, the return of refugees to their homes and cultural issues. They agreed to form a joint mechanism with the participation of the UN observer mission in Georgia and the CIS peace- making troops to investigate into violations of the agreement on cease-fire and the separation of forces of May 14, 1994, and prevent similar wrongdoing in future. The Georgians and the Abkhazians reaffirmed their obligation on the free return of refugees and displaced persons and agreed to finalize related documents and implement the Sukhumi protocol of September 24, 1998. Foreign Minister Theodoros PANGALOS said Greece desires that peace and stability be restored in Abkhazia. PANGALOS opened a UN sponsored Georgian-Abkhazian confidence building meeting, chaired by UN secretary-general's special envoy to Georgia Liviu BOTA with the participation Friends to Georgia countries Russia, the US, France, Germany and Britain. The conference was the first substantial contact between the two sides since the end of the war in 1993.

Turkmen-Uzbek Summit Discusses Afgahnistan

· Uzbek President Islam KARIMOV visiting Turkmen President Saparmurat NIYAZOV said peace and stability in Afghanistan should be restored as soon as possible in the interests of the Afghan people and regional security. The two presidents expressed their support for United Nations General-Secretary Kofi ANNAN's efforts in search of a peaceful settlement to the Afghan conflict. The two leaders agreed on all the issues of the agenda. The agenda of the talks was not disclosed, but it is believed to have included steps to increase bilateral cooperation in the struggle against drug trafficking, international terrorism, extremism and illegal shipments of arms. The two presidents said that they had given the necessary instructions to their governments for implementation of the cooperation.

Paul M. Joyal, President, Editor in Chief Clifton F. von Kann, Publisher Jennifer M. Rhodes, Principal Editor

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When you need to know it as it happens