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Daily intelligence briefing on the former Soviet Union

Published every business day since 1993

Thursday, August 5, 1999

which Washington accuses of sharing information and technology with Iran to acquire weapons of mass destruction. He said, "Unfortunately, the problem of lifting sanctions, imposed by the United States against a number of Russian enterprises and institutes, remains in force. I hope that in the near future this issue will be resolved." PUTIN noted that the recent visit of Prime Minister Sergei STEPASHIN to the US last month helped boost bilateral relations and create a positive background for the development of Russian-American relations, including the successful continuation of the hot line dialogue.

Nuclear Reactor Incidents Reach New Levels

· The State Atom Supervision Authority of Russia reports that the automatic safety systems at the Russian nuclear power stations under its jurisdiction were activated eight times in July. Two of the cases at the Kola nuclear power station the warning systems went off due to a failure in the energy system operated by the Kolaenergo Company. Six cases were reported due to equipment breakdowns at the Kola nuclear power station (two times), the Smolensk nuclear power station (three times) and at the Novovoronezh nuclear power station (once). In addition, the output at some reactors had to be lowered at requests from the servicing personnel to enable them to do away with equipment defects. This happened three times at the Novovoronezh nuclear power station, two times at the Kursk nuclear power station, and once at each of the nuclear power stations located in Smolensk, Leningrad region,

Russian Federation


Aksyenenko's Authority Expands

· Russian Prime Minister Sergei STEPASHIN signed a decree on Tuesday that redistributed duties among his Cabinet. First Deputy Prime Minister Nikolai AKSYENENKO is now responsible for overseeing the Federal Energy Commission, Federal Property Fund, and the State Property Ministry, according to RIA-Novosti. The latter two entities were formally supervised by STEPASHIN and First Deputy Prime Minister Viktor KHRISTENKO. AKSYENENKO will also assume some control over the Anti-Trust Ministry, while KHRISTENKO will continue to monitor certain policy areas at the Property Ministry and Federal Energy Commission. In addition, he will oversee the Culture, Sports, and Tourism Ministries, instead of Deputy Prime Minister Valentina MATVIENKO, who now has oversight of the new Media Ministry. In May, AKSYENENKO was thought to be a candidate for the prime minister post, after President Boris YELTSIN sacked former prime minister Yevgeny PRIMAKOV.

Putin-Berger Hold Hot-Line Conversation

· Secretary of the Security Council of the Russian Federation Vladimir PUTIN and US President Bill CLINTON's National Security Adviser Samuel BERGER held a hot-line conversation on Wednesday to soften tensions between the two departments during the Kosovo conflict. PUTIN reassured BERGER about Russia's commitment to halting the international proliferation of weapons of mass destruction. He said, "Russia pays careful attention to US concerns in the area of [arms and nuclear technology] export controls and has a right to expect adequate reciprocal measures." PUTIN urged the US to lift its sanctions imposed earlier this year against Russian scientific institutes and companies,

Today's News Highlights


Ban On Oil Exports Considered

Media War Editorial Casualty

Gazprom Investors Get A Voice?

European Republics

Rus-Belarus Unification Session

Russia To Test Warning System

Estonia Evicts Union of Russia

South Caucasus & Central Asia

Abkhaz Talks Solve Nothing

Uzbek Statement On Afghanistan




August 5, 1999

Intercon's Daily

Kalinin and Bilibino. The safety systems shut down nuclear reactors at some of the research centers—twice due to faults in the equipment in the Nuclear Research Institute in Dimitrovgrad and once because of the fluctuation of voltage in the external electricity network at the Obninsk physical research institute. Sources in the Russian central supervising authority said no violations of the "limits to safe operation" had been registered in any of the above incidents. Fortunately the report noted the radiation levels had not changed at any of the installations.


Ruble = 24.3/$1.00 (NY rate)

Ruble = 24.4/$1.00 (CB rate)

Ruble = 26.28/1 euro (CB rate)

London Club Talks End On Promising Note

· Russian Finance Minister Mikhail KASYANOV's negotiations with the London Club surprised many analysts in ending initial talks on a promising note, instead of weeks and months of drawn out talks. Both sides agreed to resume in September at which time Russia will present a detail proposal. The Financial Times reports that Russia has offered creditors the chance to upgrade their holdings of Soviet-era debt into "other instruments." These may include foreign currency eurobonds which carry less risk, since they are backed by the government. The eurobonds are more likely to be paid, than the existing Prins and Ians. Russia hopes that in return the London Club might forgive some of the debt outright. Talks appear to be moving swiftly in order to repair Russia's relations with international lending institutions ahead of presidential elections in 2000, for fears that a new president might be more combative. Nicholas SUNDSTROM of Russia's Citibank said, "It is about managing the situation until you have a new man in the Kremlin. A key part of this strategy is to solve the break in relations [with the international financial community] and if they get a London Club deal that will essentially be achieved."

Russia Considers Ban On Oil Exports

· The Russian Fuel and Energy Ministry announced that it intends to ban the export of gasoline and limit foreign sales of diesel and fuel oil in hopes of boosting low domestic supplies. On Wednesday, the ministry ordered local oil refineries to sell all of the local companies' gasoline output on the domestic

market in August to prevent further fuel shortages. Local refineries are also required to supply 70 percent of their diesel fuel and oil output to domestic customers. The Russian government on Monday ordered the Fuel and Energy Ministry to determine monthly mandatory domestic delivery quotas for the period from August to December. Many regions in Russia are suffering from shortages of fuel, endangering this year's harvest. Russian oil producers boosted their exports earlier this year to take advantage of the rising oil prices on the world market and the opportunity to earn hard currency revenues. Fuel and Energy Ministry spokesman Yuri NOGOTKOV said, "We will study the market on a month-to-month basis and take measures accordingly.

News of the possible ban sent oil prices higher Wednesday. Brent crude for September delivery was last traded at $19.66 per barrel, up 23 cents, on the London market. Earlier, the session reached a low of $19.25 and high of $19.90.

Russia Received IMF Installment

· Russia on Tuesday received $640 million from the International Monetary Fund (IMF), presidential envoy to lending bodies Mikhail ZADORNOV said. In terms of Russia's chance of getting a second IMF tranche worth $640 million, he said a final decision would be based on a report by the Fund's mission due to arrive in Moscow on August 24th. If there is a positive response, Russia may received it as soon as September. According to preliminary data, June's tax revenue was six billion rubles ($248 million) more than expected, and deficit figures did not go beyond the budget's parameters. In terms of the government's monetary program, he said its results would be announced only in late August.


Media Flare Up: Kommersant Editor Sacked

· The editor-in-chief of the influential Russian business Kommersant Daily, Raf SHAKIROV, was fired on Tuesday by what he said was an irregular the shareholders' meeting of the Kommersant Publishing House. In an interview with NTV Channel today, he said that business tycoon Boris BEREZOVSKY was really behind his sacking. SHAKIROV said BEREZOVSKY had recently become the real if unofficial owner of the newspaper. "I can say surely that 100 percent of shares are controlled by him," SHAKIROV said. He said "persons close to

When you need to know it as it happens




August 5, 1999

Intercon's Daily

BEREZOVSKY" took part in the shareholders' meeting, in particular Badri PATARKATSISHVILI, who is first deputy general director of ORT, or Public Russian Television, also controlled by BEREZOVSKY. Ostensibly, the American Capital Fund, whose president is an Iranian-born American citizen Kia JURABCHIAN, has become the official holder of the controlling stake in Kommersant Publishing House. SHAKIROV said he suspected that the newspaper really ended up in BEREZOVSKY's hands. The oil-to-media oligarch did not hide the fact that his LogoVAZ auto-making company had been negotiating with the publishing house to buy it. SHAKIROV believes that the new owner, "could no longer tolerate what we write." He pointed out that the decision to sack him, comes at a time when the oligarchs are strengthening their holdings in the media to influence the upcoming elections. However, the first bid to sack SHAKIROV was made back in March.

Gazprom Small Investors To Be Heard?

· Russian State Duma deputy Pyotr SHCHELISHCH, who is also the chairman of the Russian Union of Customers, said Wednesday that he would be willing to represent the interests of Gazprom's small investors at the extra session of the Gazprom shareholder's meeting on August 26th. Approximately 11 percent of the gas monopoly's stocks are held by small investors, whose interests have not been represented at the general shareholder's meetings of Gazprom. SHCHELISHCH said 20 percent of Gazprom stocks are held by about 600,000 individuals, of which 11 percent never vote at general shareholders' meetings, as the voting participation requires at least a 16 million ruble worth of voting stocks. SHCHELISHCH said he was prepared to represent the small investors, "to protect the company from unconscious political games." Boris FYODOROV, a Duma deputy and president of Russia Forward political movement, is also spearheading an effort to bring Gazprom's minority investors' interests to the shareholder's meeting. The meeting is being held to consider expanding the government's number of seats on the board of directors from four to five. The government has proposed 19 candidates.

collegium on the unification of the Russian and Belarus legislations. The session, which opened today, will last until August 7th. This is the second session of the two Justice Ministries' joint collegium. It will be held under the chairmanship of KRASHENINNIKOV and Belarus Justice Minister Gennady VORONTSOV. The session will discuss equal rights for their citizens to education, medical aid and rights to property and immobility ownership in the other state. KRASHENINNIKOV is also scheduled to meet with Belarus President Alexander LUKASHENKO on Friday. On Saturday, KRASHENINNIKOV is expected to meet Belarus Prime Minister Sergei LING.

Russia To Test Warning System In Belarus

· A top Russian defense official Monday said that an early warning facility in Branovichi, Belarus will be tested before the end of the year and "supplied to the armed forces in 2000." Colonel-General Vladimir YAKOVLEV, commander of the Russian Strategic Rocket Forces said the early warning facility is expected to restore the single radar field over the western and northwestern sectors after the elimination of the radar facilities in Skrunde, Latvia. "The radar facilities at Skrunde will be completely decommissioned this year." The commander added that the "hole" opened up in the single radar field is being filled by the facilities located at Sofrino and Chekhov outside Moscow. However, YAKOVLEV said, "the loss of a single information field will inevitably affect the stability of our nuclear weapons complex." He stressed that the first [space-based] and second [ground-based] echelons of the early-warning system, "are essential to decision-making, including as regards the use of nuclear weapons." He said that in accordance with interstate agreements, Russia will supply information on rocket attacks to those countries of the Commonwealth of Independent States that have Russian early warning systems. These countries include Belarus, Ukraine, Kazakhstan and Azerbaijan.

Estonia Evicts Union of Russian Citizens

· The City Court in Narva has decided to evict the Union of Russian Citizens from its building for debts in lease payments estimated at nearly 2000 Estonian crowns, or $135. The Narva Municipal Services refused to prolong the lease contract to the Union as early as late 1998, and later initiated a lawsuit. The

European Republics

Rus-Belarus Hold Unification Session

· Russia's Justice Minister Pavel KRASHENINNIKOV today left for Minsk to attend a session of the joint

When you need to know it as it happens




August 5, 1999

Intercon's Daily

Union of Russian Citizens defends the interests of nearly 100,000 Russian citizens, permanently residing in Estonia, as well as of a considerable part of the entire Russian-speaking minority that makes up more than 30 percent of Estonia's 1.5 million population. On Monday, Oleg MOROZOV Estonia went on a hunger strike to protest against his detention and order to leave Estonia. He is one of the leaders of the Union of Russian citizens. Pyotr ROZHOK and MOROZOV have been accused of having organized a number of unsanctioned meetings and made what Estonian authorities described as unconstitutional statements, speeches and declarations.

South Caucasus & Central Asia

Georgian-Abkhaz Talks Solve Nothing

· Georgian State Minister Vazha LORDKIPANIDZE and Abkhazian President Vladislav ARDZINBA held a meeting in Moscow on Wednesday evening with the mediation of Russian Prime Minister Sergei STEPASHIN to discuss the settlement of the conflict in Abkhazia. A statement released after the meeting said, "The Russian side expressed concern about the lack of progress in the process of settlement and reaffirmed its unequivocal position in favor of an invigorated dialogue between Tbilisi and Sukhumi in order to find a compromise and mutually acceptable solutions to all disputable questions." The talks focused on the return of refugees to the Gali district of Abkhazia and measures to rebuild the economy, but no firm agreements were reached. However, the Russian Minister for Commonwealth of Independent States (CIS), Leonid DRACHEVSKY said, "the sides brought some of their positions closer." Foreign Minister Igor IVANOV, who also attended the meeting said, "the necessary decisions will be adopted within a week and they will extend the mandate of the Russian peacekeeping force in Abkhazia." The talks were initiated on instructions from President Boris YELTSIN. STEPASHIN held separate meetings with LORDKIPANIDZE and ARDZINBA.

During his visit, LORDKIPANIDZE co-chaired the Russian-Georgian intergovernmental commission

on economic cooperation. The two sides signed a protocol agreement on double taxation with regard to the income and property taxes and an agreement between the government of Russia and the executive power of Georgia on cooperation and mutual assistance in the struggle against illicit financial operation and money laundering. The commission considered a number of questions in the field of military, humanitarian and customs cooperation. LORDKIPANIDZE noted that, "Many aspects of these [bilateral] relations are in need of rethinking and analysis. We must chart new frontiers." To date, the two countries have signed over 80 bilateral agreements on political, economic, military, cultural, scientific and technical cooperation. Trade with Russia amounts to 21.4 percent of Georgia's total turnover. In 1998, the value of trade between the two countries amounted to $265 million, with exports accounting for 28 percent and imports for 20 percent.

Uzbek Statement On Afghan Developments

· The Uzbek Foreign Ministry on Tuesday issued a statement calling for the end of military action in Afghanistan and the resumption of peace talks. It said, "Escalation of hostilities has brought new sufferings for the population of the country and resulted in suspension of international humanitarian aid deliveries to Afghanistan." The statement adds, "Resuming of the large-scale military hostilities in Afghanistan seriously undermines the efforts of the international community in respect of the settlement of the Afghan problem, contradicts the main principles of the Tashkent Declaration recently adopted by the neighbors and friends of Afghanistan, within the framework of Six-plus-two Group." Peace talks were held in Tashkent involving the governing Taliban, an opposition alliance, the UN special envoy for Afghanistan, China, Pakistan, Iran, Uzbekistan, Turkmenistan and Tajikistan as well as the US and Russia. The participants signed a declaration, appealing to both sides to end the war and realize national reconciliation. Uzbekistan has called on all participants to observe their commitments not to render military assistance to any Afghan party.

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