DAILY REPORT ON RUSSIA

AND THE FORMER SOVIET REPUBLICS

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

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

Monday, February 28, 2000

Acting President Vladimir PUTIN called on prosecutors to speed up the case. He said BABITSKY should not remain behind bars during the investigation. If found guilty of forging documents, BABITSKY could face up to two years in jail.

Human Rights Commissioner Tours Chechnya

· Several foreign governments and international human-rights groups have increased pressure on Russia to investigate reports of atrocities, including torture, summary executions, and mass burial sites as revealed by the N24 Television channel. Frank HOEFLING, the German TV cameraman who shot the film, said that the Russian soldiers engaged in the burial did not object to him filming it. He estimated the number of bodies in one grave as 15 and in another 25 to 30. Alvaro GIL-ROBLES, the Council of Europe human rights commissioner, visited a refugee camps in Ingushetia, housing about 5,000 Chechens. Vladimir KALAMANOV, Russian Acting President Vladimir PUTIN's representative for human rights in Chechnya, is traveling with GIL-ROBLES. US President Bill CLINTON on Friday demanded Russia give human rights groups access to Chechnya to investigate allegations of atrocities. CLINTON said, "It is imperative for the Russians to allow the appropriate international agencies unfettered access to do the right inquiries, to find out what really went on and to deal with it in an appropriate way." Human Rights Watch, a prominent human-rights group, said this month that Chechens are being tortured and abused by Russian soldiers in detention camps. GIL-ROB

Russian Federation

Politics

Missing Journalist Arrested Again

· Radio Free Liberty journalist Andrei BABITSKY, who had been missing for nearly a month, reappeared in Makhachkala, Daghestan on Friday. He was able to telephone his wife Ludmilla, before he was arrested by the Russian Interior Ministry for carrying a passport from Azerbaijan. His wife and lawyer Alexander ZOZULYA went to Makhachkala on Sunday to seek his release. ZOZULYA defended his client, stating that BABITSKY, "does not need a false passport...He has a Russian passport, a passport for external use and accreditation from the Russian Foreign Ministry." Ludmilla was refused permission to visit her husband. International officials have pressed Russia to clear up the case.

In an interview with state-run RTR Television, BABITSKY said he used the fake passport because "I had no other documents and I was afraid to reveal my location." The Associated Press reported BABITSKY said that a Russian official came to see him at a Russian detention camp in Chernokozovo on January 31st. "He said that Chechen field commander Turpal ATGERIYEV...was ready to exchange me for Russian servicemen...I thought for 10 minutes, then agreed, since I knew ATGERIYEV." BABITSKY, however was not handed over to ATGERIYEV, but to a masked Chechens whom he did not know. RTR said that according to their information the Chechens tried to smuggle BABITSKY into neighboring Azerbaijan a day before he was detained. An RFE\RL colleague, who was able to meet with him Oleg KUSOV said that BABITSKY did not want to talk about his detention nor how he made it to Daghestan. RFE/RL President Thomas DINE said that RFE/RL will not rest until BABITSKY is free and able to return to his family and friends in Moscow.

Today's News Highlights

Russia

Oil Export Duties Raised

Yukos Pays Out Dividends

UES-Gazprom Set Supply Levels

European Republics

IMF Unlikely To Resume Loans

South Caucasus & Central Asia

Caucasus Stability Pact

Baku-Ceyhan Talks Resume

Rus-Armenian Border Guards

Tajik Parliament Elections Valid

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February 28, 2000

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LES is en route to Gronzy today. Oleg MIRONOV, Russia's human rights commissioner, said on Saturday that the Foreign Ministry had been obstructing a tour of Chechnya by GIL-ROBLES.

Meanwhile, dozens of rebels broke through federal lines in Southern Chechnya today. They escaped despite heavy air and artillery bombardment and joined other Chechens in the mountains. Their movements show that Russian troops are still unable to contain them, even though troop have surrounded the village of Shatoi, the rebels' last big stronghold. The Interior Ministry said it was creating a new tactical army group to battle the rebels in the Argun Gorge. Federal warplanes and helicopter gunships flew 60 combat missions over the past 24 hours. The military is hoping to wipe out the rebels before spring, when they can move more easily than they can in the snow and when new foliage gives them better cover. Russian military commanders continue to warn of hit-and-run tactics and other terrorist activities in Russia. The British newspaper Times today said that the war could spread into Georgia, claiming that nation as its next victim. According to the newspaper, "thousands of well armed Chechens hide in mountains nearby the border with Georgia. After the snow melts in the beginning of April, Chechens will be able to break through to Georgia. That will allow them to replace the wounded by new gunmen and to secure a stabile supplies of arms." However, Georgian President Eduard SHEVARDNADZE today said that Georgia, "will not give [Russian troops] a reason" to the spread of the conflict into its territory, Prime News Agency reported. The head of state expressed hope for the fast settlement in Chechnya, in order for the 6,000 Chechen refugees currently living in Georgia to return to their homes.

Economy

Ruble = 28.8/$1.00 (NY rate)

Ruble = 28.66/$1.00 (CB rate)

Ruble = 27.82/1 euro (CB rate)

Russia Hopes Fore Japanese Investment

· Russian Economic Minister Andrei SHAPOVALYANTS said today that he hopes the recently ratified bilateral investment treaty will lay the ground work for large-scale investment in Russia. SHAPOVALYANTS, who arrived in Japan for a three-day visit, made the remarks in a meeting with

Japanese Foreign Minister Yohei KONO held in Tokyo. KONO told SHAPOVALYANTS it is important to develop a legal framework and heighten stability. He expressed Japan's continued support for Russia to implement economic reforms under acting President Vladimir PUTIN. SHAPOVALYANTS stressed that economic assistance from foreign countries is of considerable importance to Russian politics and that he expects bilateral economic ties will develop.

Russia Hikes Oil Export Duty

· Deputy Prime Minister Viktor KHRISTENKO on Thursday said the Russian government approved increasing the export duty on crude oil by 33 percent from $15 to $20 per metric ton. The higher export duty will not go into effect before April 15th, he pointed out. The government is also increasing the export duty on gasoline, used for diesel engines and sometimes for heating, from $10 to $15 per metric ton. The export duties on fuel oil and gasoline will remain unchanged at $12 and $20 a ton, respectively. According to KHRISTENKO, government agencies will work out a procedure for raising or decreasing oil and oil products' duties in line with price movements on world markets. Russian oil and natural gas producers account for about one-third of the country's tax revenues.

Business

Yukos To Pay Shareholders 1999 Dividend

· Yukos Oil Company, Russia's second-biggest oil producer, plans to pay $100 million in dividends for 1999, after the company posted a pre-tax profit last year from a loss the year before. The oil company said it plans to pay a $4.50 dividend, after 1999 pretax profit totaled an estimated $600 million, compared with a $200 million loss in 1998. Revenue totaled about $3.9 billion. At a meeting with foreign investors and minority shareholders on Friday, Yukos outlined its consolidation plans through 2002. The company plans to receive a listing on the Moscow Interbank Currency Exchange and return to the Russian Trading System exchange. Vladimir NOSOV, an analyst with Moscow-based Fleming UCB investment bank said, "The company has the potential to return to its positive image after a long-term fight with its minority shareholders, which is mostly over now." Yukos plans to raise its market capitalization to $3 billion by the end of the year from $700 million to $800 million now, said NOSOV. It also plans to sell Ameri

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can depository receipts. The company earlier said it plans to sell 25 percent of its shares to Russian and foreign investors. Yukos has expressed an interest in taking over a 60 percent stake in the biggest Russian river shipping company, Volgotanker. Yukos owns a 40 percent stake in the shipping Company, with a 30 percent share held by foreign investors led by ING Barings. Yukos nominated nine candidates for the Volgotanker's 11-member board of directors for the annual shareholders meeting in May. Volgotanker operates about 200 crude and oil products tankers in Russia and in the Caspian Sea.

UES-Gazprom Set Gas Supplies

· Unified Energy Systems (UES), Russia's monopoly power utility, said it agreed with Gazprom, the world's largest natural gas company, on gas supplies to power utilities for the first quarter. According to a UES statement, "The preparation of an operating plan for the first quarter helps us forecast gas consumption, payments and cash flow." Gazprom will sell UES 45 billion cubic meters of gas in the first quarter. UES has pledged to pay in full for the gas and will gradually increase the amount of cash payments for gas. UES pays for gas in cash and partly in goods and services. Last year, UES paid cash for 40 percent of gas deliveries from Gazprom in the fourth quarter, a rise from 15 percent in the first quarter. Individual subsidiaries of UES will sign separate agreements with Gazprom by the end of the month. UES comprises 73 regional power companies across Russia.

Tuapse Refinery To Boost Oil Exports

· Rosneft, Russia's state-owned oil producer, announced plans to double export capacity at its Tuapse Refinery as part of a $485 million investment program this year. The oil company will invest $70 million in the Tuapse Refinery's tank farm and loading terminal to increase petroleum output to 12 million tons a year from the current capacity of 6 million tons of crude and oil products, said Rosneft Vice President Sergei OGANESYAN. Rosneft also plans to invest $300 million in the Tuapse Refinery to increase the output of light products over the next several years. Rosneft plans to invest up to 14 billion rubles ($485.3 million) in production and refining projects this year up from 4 billion rubles in 1999 OGANESYAN said, "We plan to use mostly our internal resources for the investment projects...We

plan to reinvest half of our profits [in the projects]." The oil company estimated 1999 pretax profit will reach $450 million. The oil company has secured a $150 million loan from Sberbank. Rosneft wants to increase total oil production by 6 percent from an estimated 12.5 million tons of crude output last year, said Rosneft spokesman Sergei SVISTUNOV.

European Republics

Ukraine Might Not Receive IMF Funding

· Ukrainian Economics Minister Serhiy TYHIPKO believes that Ukraine is unlikely to qualify for a resumption in lending from the International Monetary Fund (IMF). However, he noted that Ukraine might receive more loans in April. The IMF has stressed that it wants to see economic improvements, including the restructuring of about $2 billion in debt falling due in 2000 and 2001. The Economics Minister said, "First of all, we should implement debt restructuring. He described talks last week with the IMF mission as "tough." The government will continue talks with the IMF in Washington this week. As of today, more than 85 percent of holders of Ukraine's gas bonds falling due this and next year have agreed to restructure the debt. In order to get more loans from the IMF in April, Ukraine also needs to speed up reform of its bureaucracy, cancel existing export restrictions, increase utilities and housing prices and abolish more tax privileges, TYHIPKO said. The government initially expected to start receiving loans from the IMF in March. It expects that the IMF will release $900 million to Ukraine this year, including first payment of between $300 million to $400 million. The IMF postponed lending to Ukraine last September due to slow reforms.

South Caucasus & Central Asia

Caucasus Stability Pact Talks In March

· Georgian President Eduard SHEVARDNADZE and Turkish President Suleyman DEMIREL will host representatives from the UN, US, Russia, Turkey, Azerbaijan, Georgia and Armenia in Tbilisi in March for talks on a proposed Caucasus Stability Pact. This will be the first time talks will be held on the proposal since it was raised by DEMIREL last month. The Turkish President in January said, "Stability and peace in Caucasus should be under European guarantee because this is important not only for

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Georgia and other countries of this region, but for their neighbors." SHEVARDNADZE stressed that the proposal could bring long-awaited peace to the region. Meanwhile, Russian Deputy Prime Minister Ilya KLEBANOV is scheduled to pay a two-day official visit to Turkey starting today. He is expected to present DEMIREL with a letter from Russian acting President Vladimir PUTIN regarding the stability pact.

Baku-Ceyhan Talks Resume In Istanbul

· Azerbaijan and Georgia began talks in Istanbul on Saturday to try to settle disagreements on the implementation of the Baku-Ceyhan oil project. Georgian Foreign Minister Irakli MENAGARISHVILI and president of Georgian International Oil Corporation Giorgi CHANTURIA were attending the talks. The US and Turkey also sent representatives to the talks. Georgian President Eduard SHEVARDNADZE said that the determination of the responsibility of all the project participant countries "is very important". He, "does not believe" any issues in transit of oil by Baku-Tbilisi-Ceyhan will remain unsettled. President of the State Oil Company of Azerbaijan Republic (Socar) Natik ALIYEV said that the most complicated issues were security for the pipeline in participant countries and financial guarantees in case of possible risks or natural disasters. If the sides succeed in reaching progress, the construction of the pipeline will be begin in 2001 and end in 2004.

Russia To Continue Armenian Patrols

· Russian Federal Border Guard Director Konstantin TOTSKY met with his Armenian counterpart, General Levon STEPANYAN in Yerevan to discuss joint patrols of Armenia's borders and ways to improve them. He said that Russia will continue to help Armenia guard its borders Turkey and Iran. TOTSKY told the President Robert KOCHARYAN and Prime Minister Aram SARKISYAN that, "Russian border guards will secure Armenian borders, only if it will be necessary for Armenian state." He noted that there is no need to revise the 1992 treaty whereby the two countries jointly provide for security on Armenia's

borders. They also touched on financial issues and material and technical supplies. TOTSKY added that equipment for doing so is becoming obsolete and will need to be replaced over the next few years. He described relations between the countries' border guard services as, "strong and having a long-term perspective." STEPANYAN expressed, "gratitude to Russian counterparts for their assistance in the development of the republic's border troops." TOTSKY also toured the Russian Artashan border guard unit in Armenia.

Tajik Parliamentary Elections Valid

· A total of 80.3 percent of 2,872,000 Tajiks voted in Sunday's parliamentary elections, Chairman of the Central Electoral Commission Mirzoali BOLTUYEV said, making the elections valid. Tajik President Emomali RAKHMONOV said the election, "was a major step toward the democratization of society and rounds off the peace process in the republic." He added that this election, "laid down a firm basis for politically stable development of society." Said Abdullo NOURI, the leader of the Islamic Renaissance Party (IRP), chairman of the National Reconciliation Commission, agreed, saying that the election can be regarded democratic as six political parties. However, Makhmadali KHAITOV a spokesman for the election department of the IRP, said, "The election was neither democratic nor free¾it was totally falsified." He added that the election was worse than the presidential vote, in which RAKHMONOV received 99.9 percent of the vote. The Central Electoral Commission has not received complaints from about 170 observers, public organizations and candidates' commissioners. The opposition IRP and Communists, along with the pro-government People's Democratic Party, were expected to lead the six-party race for 22 seats contested by party lists for the first time since the former Soviet republic became independent nine years ago. A further 212 people are contesting 41 single-member constituency seats. Preliminary results, originally promised for early today, were not yet available due to power failures outside the capital Dushanbe.

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

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