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Daily intelligence briefing on the former Soviet Union

Monday, April 16, 2001

Russian Federation


Putin Visits Chechnya, Following Attack

• President Vladimir PUTIN made a surprise visit to Chechnya, reinforcing the Kremlin’s commitment to fighting Chechen rebels to the end. He visited the site where 84 Russian troops were wiped out in an ambush by Chechen rebels in March, 2000, state-run RTR television said. The President inspected a special forces unit near the town of Khatuni and moved on to a meeting with officials at the federal base at Khankala east of the capital, Grozny. Russia will use all necessary force to eliminate the rebels, PUTIN said, adding that troops being withdrawn from the republic are only superfluous units. PUTIN praised the troops for doing, “a good job in accordance with the assignments they receive from the command. I am satisfied.” The purpose of his visit was to discuss the financing of federal forces in the region. “In fact, one of the problems which we plan to deal with today is precisely financing, material support, and the exact payment of combat pay,” he said. Some of the soldiers who signed up for Chechnya on a contract basis have complained they didn’t get paid.

In Grozny, deputy city prosecutor Vladimir MOROZ was shot to death on Saturday afternoon, when returning from investigating the killing of three Russian women at a city market earlier in the day, Interfax said. Also Saturday, rebels claimed responsibility for the death Thursday of Adam DENIYEV, a Chechen who was deputy head of the pro-Russian civilian administration. DENIYEV was killed by an explosion as he taped a television broadcast in his home village of Avtury. A statement from a spokesman for rebel President Aslan MASKHADOV said DENIYEV was killed for cooperating with Russia. DENIYEV was a special representative for head of the Chechen administration Akhmad KADYROV to the Middle East and Africa as well as being one of his deputies. He also was a presidential candidate in the 1997 Chechen elections. KADYROV said Sunday that PUTIN had made it clear to military commanders and local leaders in Chechnya that there had been no possibility to hold any talks with the MASKHADOV and his followers. The President also reaffirmed the course to restore the constitutional system in Chechnya, and to unite the breakaway republic with the Russian legal system.

Borodin Returns To Moscow

• Pavel BORODIN, state secretary of the Russia and Belarus Union, returned to Moscow from Geneva Friday night after three months of prison life in Switzerland and the US for charges of money laundering, bribe taking, and membership in organized crime groups. BORODIN thanked Russian President Vladimir PUTIN and Belarus President Alexander LUKASHENKO for their support. First arrested in New York on January 18th, under a Swiss warrant, BORODIN was held without bail until he until he was extradited to Switzerland on April 7th. Swiss prosecutors charge BORODIN, 54, with taking $30 million in kickbacks from two Swiss firms, Mercata and Mabetex, which won lucrative contracts to renovate government buildings, including part of the Kremlin. At the time, he served as YELTSIN’s property manager, a job in which he oversaw an empire said to be worth several hundred million dollars. On April 12, the Geneva tribunal agreed to release BORODIN on bail worthy of five million Swiss francs ($3 million). The court threw out a charge against BORODIN of belonging to a criminal organization charge, saying investigators had failed to prove there had been a systematic conspiracy to launder the money in Switzerland. Geneva’s chief prosecutor Bernard BERTOSSA said that BORODIN could return to Russia, but would have to come back to Geneva, if he is summoned by an investigating officer. BERTOSSA said he was not optimistic that BORODIN would show up for more questioning, but said it was up to the Russian people to protest if the bail is not returned to their country. “If the Russian people accept that their bureaucrats allow persons to run around free who put what comes into their fingers into their own pockets, what can I do? People there must protest,” BERTOSSA said.


Ruble = 28.86/$1.00 (NY rate)

Ruble = 28.85/$1.00 (CB rate)

Ruble = 25.55/1 euro (CB rate)

March Industrial Output Rises

• The State Statistics Committee said Russia’s March industrial output rose at a faster annual rate than in February as production of fuels, chemicals and microbiological goods increased. March output rose at 3.6 percent from a year ago, after rising 0.8 percent in February, the slowest annual pace since the 1998 financial crisis in February, and 5.3 percent in January from January, 2000, the State Statistics Committee said. Industrial output rose at 3.3 percent in the first quarter of 2001 from the same quarter a year earlier. Russia’s industrial output will slow to 4 percent this year from 9 percent in 2000, the government said in a report received by Bloomberg. Russia’s main challenge is to introduce reforms to keep the economy growing after it expanded the past two years, analysts said. Microbiological producers output rose by 71.2 percent in March from a year ago, while fuel output rose by 5.7 percent from March, 2000. Production of ferrous metals fell by 0.8 percent, medical output fell by 20 percent and production of building materials declined 1.1 percent from March, 2000. Growth over the past two years was fuelled by high prices for the crude oil, natural gas and metals that make up half Russia’s exports combined with the effects of the 1998 devaluation, which helped domestic producers by making imports more expensive. Industrial output grew by 11.9 percent in the first quarter of 2000, compared with the same period in 1999.


NTV Raided, Journalists Quit

• Under the instruction of Boris JORDAN, Gazprom’s chosen General Director of NTV, security guards raided NTV’s station gaining control of the offices early Saturday morning. Guards ordered NTV reporters and staff to sign a letter of commitment to the new management or resign. As many as 85 percent of NTV’s 1,200 resigned and pledged to continue their independent reporting at another station. Nonetheless, JORDAN claimed that there is tremendous energy among NTV ranks to build a television station with “true” independence. He said, “I will do an audit with Arthur Anderson and Price Waterhouse [PricewaterhouseCoopers] and I will publish it for the whole world to show everyone what was going on in this company. Now we will have free speech, now we will have independence of the media.” Tatyana BLINOVA, a former NTV spokeswoman who quit after the raid said, “The raid shows the real aim: the powers that be want to place NTV under control, because we criticize the authorities, we criticize the war in Chechnya, we speak the truth…We talk too much: we uncover corruption, we criticize the authorities, and they don’t want to hear it they want to stop it.” Ousted NTV board member Igor MALASHENKO said Gazprom’s takeover was part of a “creeping coup” against democracy. Liberals see the brawl over NTV as a test of President Vladimir PUTIN’s commitment to media freedom, claiming that the Kremlin is trying to silence a vocal critic. PUTIN says it is a commercial dispute and refuses to step in. Gazprom counters by saying NTV is a financial disaster and that it simply wants to recoup its investment, nearly $1 billion invested in NTV or affiliated companies.

The massive resignation of NTV staff appears certain to undermine a bid by CNN-founder Ted TURNER to buy 30 percent of NTV and keep it independent. TURNER spokesman Brian FAW told Vedomosti, “We are very disturbed by the forceful seizure of NTV and we are now reassessing our position.” The NTV’s renegade staff broadcast their rival version of NTV’s news program “Sevodnya (Today)” via TNT television, a second-tier channel that also belongs to NTV’s beleaguered founder Vladimir GUSINSKY. They said they would continue to broadcast news and current affairs on the channel for at least two months while plans to found a new independent network were thrashed out. Russian business tycoon Boris BEREZOVSKY, one-time rival now friend of GUSINSKY, has offered ousted NTV chief Yevgeny KISELYOV the position of acting general director of his TV6 network, which broadcasts to 69 Russian cities. KISELYOV said Sunday he’s accepted the job. KISELYOV has proposed creating a new national network with the staff from NTV, TV6 said. Meanwhile, in a show of support for NTV, head of Russia’s state-run RTR Oleg DOBRODEYEV, who was one of the founders of NTV, resigned his position. “Today, I could not avoid being here, where the situation is tough. I could not be here as the chairman of the RTR.”

Glushkov Attempts To Escape Custody

• Former Aeroflot senior official Nikolai GLUSHKOV, charged with embezzlement, tried to escape from custody Thursday night, but was stopped. Senior spokesman for the Russian Prosecutor-General’s Office, Leonid TROSHIN said that a group of GLUSHKOV’s accomplices tried to arrange for his escape from Moscow’s Hematology Clinic where he was treated for a blood disease. The former director of Aeroflot was stopped as he was getting into his Volvo car with his personal driver. GLUSHKOV has been placed in a detention ward to prevent further escape attempts. TROSHIN said preliminary investigation was continuing into GLUSHKOV and another chief executive officer of Aeroflot, Alexander KRASNENKER, who have been formally charged with major embezzlement and money laundering. Two Swiss companies are suspected of laundering Aeroflot’s proceeds on foreign ticket sales. Investigators said hundreds of millions of dollars could have been siphoned off. An adviser to the Russian prosecutor-general, Vladimir KOLESNIKOV, told Itar-Tass that prosecutors believed Badri PATARKATSISHVILI, director of TV-Moscow television station, and Boris BEREZOVSKY, business tycoon, were complicit in GLUSHKOV’s attempt to flee. GLUSHKOV was charged in last year’s December and placed in Moscow’s Lefortovo prison. A criminal case was opened against GLUSHKOV on the charge of attempted escape with preliminary group collusion.


Today's News Highlights


March Industrial Output Rises

NTV Raided, Journalists Quit

Glushkov Attempts To Escape

European Republics

US Grants Melnichenko Asylum

South Caucasus & Central Asia

Georgia To Adopt Polish Advice

US Allocates Funds For Georgia

Aliyev Satisfied With US Talks

Sino-Uzbek To Boost Relations

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Intercon's Daily

When you need to know it as it happens

April 16, 2001

When you need to know it as it happens


Intercon's Daily

European Republics

US Grants Asylum To Melnichenko, Gongadze

• The US on Friday granted political asylum to Ukrainian Security officer Nikolai MELNICHENKO, who released tapes implicating President Leonid KUCHMA of ordering the murder of internet journalist Georgy GONGADZE. The journalists’ death has sparked Ukraine’s biggest political crisis since gaining independence. KUCHMA has denied all involvement in the GONGADZE case and says the tapes were doctored. The President has refused to step down despite large-scale protests. The US State Department declined to comment on the asylum, which was extended to his nuclear family. Political asylum has also been offered to GONGADZE’s wife and two daughters. Ukraine’ Foreign Ministry said, “The US side’s decision...is viewed by Ukraine as failing to correspond to the spirit of Ukrainian-American partnership and as creating obstacles in the way of a criminal investigation.” The Ukrainian General Prosecutor’s Office had filed a criminal case against MELNICHENKO for illegal eavesdropping and revealing state secrets. The step could complicate relations between the two countries and strengthen claims by some Russians and Ukrainians that Washington has tacitly supported the political opposition with the goal of ousting KUCHMA. Ukraine is seeking to boost relations with the West and cooperates in NATO-sponsored events while also trying to keep good relations with Russia. The US has expressed support for Ukraine’s reform efforts, but has questioned KUCHMA’s commitment to democracy and human rights, the Associated Press reported. Opposition-minded legislator Yuri KARMAZIN told the Interfax news agency, “It is a priority issue for the United States to get such a witness, because along with him they are getting a data base. This will cause tremendous damage to Ukrainian national security as MELNICHENKO’s tapes indeed contain state secrets.”

South Caucasus & Central Asia

Georgian To Implement Baltserovich Advice

• Georgian Finance Minister Zurab NOGAIDELI on April 10th said that Georgia will immediately implement the “fundamental advice and recommendations” of the presidential advisor on economic issues and current Polish Central Bank Chairman Leshek BALTSEROVICH. He holds this position due to financial support from the US. The Finance Minister noted that BALTSEROVICH’s recommendations are “important psychological stimulus” for the Georgian government to solve its own problems. BALTSEROVICH pointed out the importance of negotiations with creditor nations for the restructuring of Georgia’s $1.6 billion debt as well as issues of amendments in the tax system. Six components to the tax code were specified. These included almost full cancellation of the current tax privileges, simplified mechanism of small business, initial production in the agrarian branch, system of income tax, decrease of the excise tax from 7 to 4 varieties, cancellation of several ineffective taxes, Prime News agency reported. NOGAIDELI pointed out that talks with BALTSEROVICH did not cover finance and tax and revenue ministry unification.

US To Allocate Funds For Georgia

• The US government will allocate a grant worth $92 million for the development of democracy and market economy in Georgia in the new fiscal year that begins in October, 2001, the Black Sea Press agency reported, referring to a representative of the USAID office in Tbilisi. He mentioned they are discussing priorities for financial aid in the Georgian economy now. The grant will be allocated within the framework of the Freedom Support Act. This program provides for financial aid to former Soviet countries from the US Congress. The US congress allocated $27.8 million to Georgia in 1997, $92.5 million in 1998, $84.4 million in 1999, and $108.4 million in 2000.

Azeri Leader Satisfied With NK Peace Talks

• Azerbaijan President Geidar ALIYEV expressed satisfaction with the results of US hosted Nagorno-Karabakh peace talks. He said each meeting helps to settle the conflict and calls attention of the world public to the problem. ALIYEV called the format of the Key West talks as their main advantage. He thinks it expedient that the co-chairmen of the Organization for Security and Cooperation in Europe's (OSCE) Minsk Group on Nagorno-Karabakh should also participate in the talks, apart from the Armenian and Azerbaijan Presidents. “This indicates the start of a new stage in the negotiating process,” ALIYEV continued. The Azeri President claimed that some kind of agreement on settling the Nagorno-Karabakh conflict could be signed by the results of the next round of negotiations, which is to be held in Geneva. Asked by reporters about a possible resumption of combat operations, ALIYEV stated that, “a military way of settling the problem has never been precluded.” The Azeri leader emphasized at the same time that he, “does not feel any need for war.”

Sino-Uzbekistan To Strengthen Relations

• Uzbek Prime Minister Utkur SULTANOV and Chinese Deputy Prime Minister LI Lanqing met in Tashkent on Thursday. The two sides agreed to further strengthen bilateral ties. LI expressed satisfaction with the stable and sound development of the Sino-Uzbek relations over the past few years. The Chinese Deputy Prime Minister pointed out that there are great potentials in Sino-Uzbek cooperation, especially in natural gas, railway transport, and telecommunications, Xinhau reported. He expressed appreciation for the Uzbek government’s positive China policy. SULTANOV praised LI for his part in opening Uzbek-Chinese relations. LI led a Chinese government delegation to Uzbekistan nine years ago to sign documents on the establishment of the Sino-Uzbek diplomatic relations. SULTANOV said Uzbekistan highly values its ties with China in all the fields ranging from politics, economy and trade, to science and education. Tashkent has been closely following China’s progress of reform and opening-up, maintaining that China’s road of development can serve as a reference for Uzbekistan. LI also toured the Chikarov Aircraft Plant near Tashkent and the ancient city of Samarkand.

April 16, 2001

Intercon's Daily


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When you need to know it as it happens

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April 16, 2001