DAILY REPORT ON RUSSIA

AND THE FORMER SOVIET REPUBLICS

INTERCON INTERNATIONAL USA, INC., 725 15th STREET, N.W., SUITE 903,

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Daily intelligence briefing on the former Soviet Union

Published every business day since 1993

Monday, November 8, 1999

Russian Federation

Politics

Communists Mark October Revolution Day

· Russian left-wing organizations marked the 82nd anniversary of the October Revolution Sunday by demonstrations and rallies in Moscow and other major cities around the country. Approximately more than 10,000 people, mostly the poor and elderly, marched from the former October Square to Lubyanka Square, site of the former KGB headquarters, waving red flags and banners. Some banners read that YELTSIN should be put on trial and other called for a return to the times of LENIN and STALIN. Russian Communist Party leader Gennady ZYUGANOV told the rally that, "by pooling efforts of all patriotic forces, it is possible to correct the situation and to revive again the ideals of fraternity and justice." He said the top-priority tasks of Communists are to revive the Slavic brotherhood of states of the former Soviet Union. A demonstration of Labor Russia rounded out its protest in the Revolution Square with a rally which was addressed by Labor Russia leader Viktor ANPILOV and STALIN's grandson Yevgeny DZHUGASHVILI as well as other members of the Stalinist Bloc for USSR. Although Russian President Boris YELTSIN three years ago renamed the holiday as the Day of Accord and Reconciliation, many Russians continue to mark the day as the anniversary of the October Revolution. For them the holiday commemorates the day when Bolsheviks led by Vladimir LENIN seized the Tsar's Winter Palace in St. Petersburg in 1917 and overthrew the provisional government. Similar demonstrations were held in Armenia, Azerbaijan, Ukraine, Georgia and Belarus.

Maskhadov Appeals To Clinton

· Chechen President Aslan MASKHADOV has written an appeal to US President Bill CLINTON calling for help in stopping what he described as the

genocide of his people. According to the letter, he said, "We are ready for dialogue, ready to consider different ways of regulation which respect the rights of Chechen to live freely and safely. The Chechen people have huge hopes that the United States will use its authority to defend human rights." He added that Prime Minister Vladimir PUTIN should be prosecuted in international courts for killing civilians just like Yugoslav President Slobodan MILOSEVIC. Russia's domestic security service called MASKHADOV's statements part of a propaganda campaign. MASKHADOV has also written to the Organization for Security and Cooperation in Europe in hopes of putting the situation in Chechnya on the agenda of the upcoming Istanbul summit. European and US leaders have pressed Russia to find a political solution. Russian media has reported a split between the presidential administration and the army. It claimed that while the administration is prepared for talks, the army is aiming for a military victory to wash aside the humiliation from failures during the 1994 to 1996 Chechen war. Defense Minister Igor SERGEYEV and Chief of Staff Anatoly KVASHIN in a joint statement denied the split. It said, "The reason for such reports is clear: with the help of lies, slander and disinformation attempts are being made to cause a rift between the state and military leadership, break its unity and gain political capital.

Still, PUTIN has dismissed MASKHADOV's plea for peace negotiations. Warlord Shamil BASAYEV has claimed that the real fighting has not yet started. He added, "Very few Mujahideen

Today's News Highlights

Russia

IMF Mission Arrives In Moscow

Berezovsky Charges Dropped

European Republics

Estonia Offers Privatization Sale

Lith. Adamkus Attends Summit

South Caucasus & Central Asia

Georgia Rejects Rus. Pressures

Pope Makes Historic Visit

Turkmen-Iran To Sign Gas Deal

Rakhmonov Wins Re-election

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[Muslim fighters] are dying. Each bombing adds dozens more people to our ranks." Russian forces continued using artillery and aerial strikes to pound its targets in the southern areas of Chechnya, as well as in suburbs of Grozny, Bamut, Gudermes, Staraya Sudzha, Urus-Martan, Goisky and Mapustin. In Grozny, bombs have ripped 40-foot craters in the ground. Since the campaign began in September, approximately 200,000 Chechens have been driven from their homes. Russians occupy strategic high ground overlooking Grozny and have surrounded Gudermes. One woman in Grozny said, "They bomb schools, hospitals, everything, so that people will run away. They are just trying to humiliate us. They don't look where they are bombing. They just want to kill us all, women, children, everyone."

Economy

Ruble = 26.23/$1.00 (NY rate)

Ruble = 26.25/$1.00 (CB rate)

Ruble = 27.27/1 euro (CB rate)

IMF Mission Reviews Russian Economy

· An International Monetary Fund (IMF) mission, led by Gerard BELANGER, Deputy Director of the IMF's Second European Department arrived in Moscow today. The mission will review the rate of Russia's economic growth, implementation of strict fiscal policies, and collection of tax revenues for government coffers. The IMF will consider whether or not Russia is adhering to new conditions set the release of the second installment from a $4.5 billion loan. These conditions include quarterly audits of the Central Bank, a program to safeguard IMF Funds from misuse, the withdrawal by the Central Bank from the charter capital of Russian banks abroad, and a timetable for the Central Bank and commercial banks to convert to international accounting standards. The second loan installment has been delayed since September, when the Group of Seven industrialized nations determined that the Russian government had misled the IMF on the use of previous loans. The release of the installment may be negatively affected by Russia's air campaign against the breakaway republic of Chechnya. At the Russian Finance Ministry, the IMF mission members will study matters connected with the adoption of next year's budget, appreciating the realistic nature of the macro-economic parameters approved by the Russian State Duma in the first reading, in particular,

an increase in next year's gross domestic product from 5.1 million rubles to 5.35 million rubles.

Business

Charges Against Berezovsky Dropped

· The Russian Prosecutor General's Office have dropped charges against oil-to-media tycoon Boris BEREZOVSKY, accused of stealing $600 million from Russian airlines Aeroflot. After months of investigation, chief officer Nokolai VOLKOV on Thursday signed a resolution closing the case against BEREZOVSKY, a close ally and advisor to President Boris YELTSIN. BEREZOVSKY has denied any wrongdoing in the case. The probe will continue against two Aeroflot executives Nikolai GLUSHKOV and Alexander KRASNENKER. On October 16th, investigators increased their claim against BEREZOVSKY, GLUSHKOV, and KRASNENKER stating that they were connected to the disappearance of $400 million of profits from Aeroflot and taking $200 million in air traffic fees. They believe that money was hidden in two Swiss companies, Andava and Forus Services, and then laundered through various financial operations , including purchases of property and shares. Over the weekend BEREZOVSKY accused former prime minister Yevgeny PRIMAKOV of engineering investigations by the prosecutor's office against him. Deputy Prosecutor General supervising the detectives Vasily KOLMOGOROV on Friday, however, claimed that, "The investigation goes on." VOLKOV added that the case has been neither closed nor suspended.

European Republics

Estonia To Privatize Railways, Power Stations

· Estonia is going to privatize the railways and the Narva and Baltic power stations which meet 95 percent of Estonia's needs in electricity in the year 2000, Estonian Economics Minister Mihkel PAERNOJA said. Estonia is looking for a financial consultant and strategic investor for privatization sale. PAERNOJA said it is planned to sell out 49 percent of shares of the joint-stock company which includes the two power stations, as well as 51 percent to 66 percent of the shares of the railways. The Economics Minister declined to estimate a figure of revenues expected from the sales. He said, "We are not bent on earning money from the

When you need to know it as it happens

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privatization. We intend to ensure the further development of energy and transport...We aim for making the pay for electricity competitive for Estonia. And whatever company buys the package of shares of the railways, it should enhance their capacity."

France Agrees To Strengthen Lith. Security

· French secretary of state for defense Jean-Pierre MASSERET, after a working visit with parliament speaker Vytautas LANDSBERGIS in Vilnius, said that France will assist Lithuania in strengthening its security and introducing modern technical systems for the protection of the state border, especially in the East. The two discussed a, "wide range of issues concerning military cooperation between Lithuania and France, Vilnius' relations with Russia and the situation in Chechnya," in the end of October. LANDSBERGIS and MASSERET agreed that Russia's, "military actions in Ichkeria are unacceptable because they lead to heavy casualties among the civilian population." MASSERET met the security and foreign ministers and discussed military and political cooperation in greater details.

Adamkus To Attend Baltic Summit

· Lithuanian President Valdas ADAMKUS left today for the Finnish city of Jyvaskyula to attend a meeting of the Heads of State of five Baltic countries. The meeting is dedicated to the 10th anniversary of the end of the Cold War era¾the Fall of the Berlin Wall. Presidents from Poland, Latvia, Estonia, and Finland will also attend the one-day event, organized by the Jyvaskyula City Council and University. The Heads of State are expected to discuss regional security and cooperation matters and deliver reports at a conference which will take place at the local university. ADAMKUS will also meet with Finnish President Martti AHTISAARI on the sidelines of the summit.

South Caucasus & Central Asia

Georgia Rejects Russian Pressures

· Russian President Boris YELTSIN has personally asked Georgian counterpart Eduard SHEVARDNADZE for permission to transport Russian forces to Chechnya through Georgia, using controversial Russian bases located in Georgia. Georgian Defense Minister David TEVZADZE told journalists that Moscow had serious intentions to "use its military

bases in Georgia for attacking Chechnya from the South." He said, "We don't consider as acceptable Moscow's request to activate Russian military bases on our territory because we think that it could drag Georgia into undesirable consequences. On Friday, the Georgian government formally refused Moscow's request. TEVZADZE gave no further details on the decision. Georgia last week also rejected a Russian plan to form joint border patrols along the Georgian-Chechen border to prevent the infiltration of rebels. Russia's plan was described as "unacceptable for Georgia." Due to this decision, Russian demanded that a visa regime be implemented for all Georgian and Azeri citizens. Most of the former Soviet republics enjoy visa-free travel to Russia. Georgian State Minister Vazha LORDKIPANIDZE said that reports that gunmen and armaments are shipped to Chechnya through Georgia and the need to introduce a visa regime are aimed at involving Georgia in the conflict. In addition, Economics Minister Vladimir PAPAVA denounced Russian Prime Minister Vladimir PUTIN's demand that Russia will monitor the outflows of capital from Russia to Georgia and Azerbaijan. PAPAVA told the Prime News Agency that nobody has the right to prohibit Georgian citizens from transferring legal money earned in Russia to their homeland. He noted that the government would welcome the Russian military being paid in lari instead of rubles. He stressed that if Russia adopts the limits, Georgia will have to search for other partners, which will negatively influence the bilateral economic relations. PAPAVA added that such measures are in violation of all the international norms.

Pope Makes Historic Visit To Georgia

· Georgian President Eduard SHEVARDNADZE has hailed the visit to Georgia of John Paul II, which began today. He described the visit as, "the most important event in history of Christianity in the Caucasus." In his weekly radio address, the President stressed that the visit will contribute to the realization of the idea of bringing peace to the region and will become an important event in view of Georgia's European integration. Georgian President believes that the visit of John Paul II to Georgia confirms that Georgia is a country with rich historic and cultural traditions, and traditions of statehood. The Polish Pontiff was welcomed at the airport by SHEVARDNADZE, Iliya II, Catholicos-Patriarch of All Georgia, parliamentary chairman Zurab ZHVANIA, State Min

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ister Vazha LORDKIPANIDZE, other officials, representatives of the Georgian Orthodox church, and members of the general public. The Pope will hold Mass in the Palace of Sports in Tbilisi, a decision which was made jointly with the Vatican, instead of an outdoor ceremony in a square near Metekhi Church due to security reasons. After a short rest, the Pope will meet with the Catholicos-Patriarch of All Georgia Iliya II in Georgian Patriarchy. His Holiness John-Paul II intends to visit the ancient capitol of Georgia, city-museum Mtskheta together with Iliya II. SHEVARDNADZE stressed that Georgia is the first post-soviet republic to be visited by the Pope of Rome. "The Pope is one of the greatest an most prominent thinkers of the age," he added.

In contrast to the warm reception, the Pope's visit had been earlier opposed by Georgia's Orthodox Church, which has been coping with an internal split. One side of the Georgian Orthodox Church has close relations with the Russian Orthodox Church. This Church faction recently used its influence to rescind an invitation by the Georgian government to the Pope, who is also a head of state, and prevented an exhibition of art and culture from touring the US. SHEVARDNADZE told the Pope, "All Georgian people, no matter what their religion, have been looking forward to meeting you because your kind and noble personality is dear to each of them." The Pope responded by saying, "My presence among you now is a sign of how deeply the Catholic Church desires to foster communion with the Georgian Church." Georgia's Christian heritage dates back to its conversion in 337 AD.

Turkmen-Iran To Sign Gas Agreement

· Turkmen President Saparmurat NIYAZOV and Iranian deputy minister of oil and head of the national gas company Mehdi Khashemi BAHRAMANI have confirmed their commitment to signing an agreement on the purchase and sale of gas for the year 2000. They reviewed a draft agreement at a meeting on Wednesday, under which Turkmenistan will deliver to Iran 8 billion cubic meters of gas next year. The

figure fully corresponds to the capacity of the Turkmen-Iranian pipeline Korpedzhe-Kurt-Kui, in the South-West of Turkmenistan put in operation in December 1997. This year only 1.3 billion cubic meters of gas were transported by the gas pipeline, far less than the planned figure of 4 billion cubic meters. The growth of gas deliveries is explained by the reduction of the gas price. Under the 1995 contract, Turkmenistan sells gas to Iran at the price of $40 per 1,000 cubic meters. The Turkmen and Iranian officials discussed a possible import by Iran of Turkmen gas from the Eastern gas fields of the country, as well as joint development of off-shore oil and gas deposits.

Rakhmonov Wins Seven-Year Term

· Incumbent President Emomali RAKHMONOV as expected won Saturday's presidential election by a landslide, winning 96 percent of the vote. Official results will be available ten days from the election. The election pitted secular RAKHMONOV against Islamic Davlat USMON, the Economics and Foreign Relations Minister. Approximately 2.8 million Tajik citizens or 98 percent voted. USMON, who garnered only 2 percent, immediately denounced the results. The opposition candidate said, "This vote was falsified in the tradition of the Soviet Union. The 98 percent figure speaks for itself." He said that the vote was rigged and estimates that only 20 percent to 30 percent of eligible voters cast ballots. According to the Central Electoral Commission, elections were monitored by over 100 representatives from other countries. USMON, the Islamic Revival candidate, had planned to boycott the vote, although his name still appeared on the ballot. He was persuaded by RAKHMONOV and an opposition leader to change his mind on the eve of the election. Electoral chairman Mirzoali BOLTUYEV said, "By voting for RAKHMONOV, the Tajik people actually favored support and continuation of democratic changes, peace, and stability in the republic." RAKHMONOV will be sworn in on November 16th and will serve a seven-year term as described in a constitutional amendment, passed in September.

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

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