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Daily intelligence briefing on the former Soviet Union

Monday, April 2, 2001

Russian Federation


Thousands Rally In Support Of NTV

• Nearly 20,000 Russians gathered in Moscow to attend a combination rock concert and political rally to speak out in favor of press freedoms and to defend NTV, the only major Russian television station outside the control of the Kremlin. The state-controlled Gazprom has been trying for months to seize control of NTV from Media Most chairman Vladimir GUSINSKY. Media Most claims that the Kremlin is trying to suppress their reporting because it is critical of Russian President Vladimir PUTIN and the military offensive in Chechnya. Demonstrators held banners defending the network and denouncing PUTIN. NTV carried parts of the rally live on its news programs, while the two state-funded channels, ORT and RTR, both ignored the rally. Politicians, athletes, artists and musicians addressed the crowd, arguing that PUTIN was responsible for suppressing the freedom of the press. Grigory YAVLINSKY, head of the liberal Yabloko party, told the crowd, “We know why NTV is being destroyed. So that we will never know about millions of dollars taken out of the country...about how a war is being conducted with slogans of fighting terrorism and corruption.” He said without the free voice of NTV, the government can say what it wants, “so that they can tell us how they fight terrorism, so that they can lie about how they fight corruption…we know that it is not a fight against terrorism [in Chechnya], but a full-scale war, senseless and cruel. We know it is not a fight against corruption, but a fight against freedom of speech,” the Associated Press reported. Alexei SIMONOV, a prominent journalist and rally organizer, said the people came to hear rock music that was once censored and to hear speeches that were impossible under Soviet times.


Russia Seeks No Special WTO Privileges

• Russia continued its interest in joining the World Trade Organization (WTO) during talks held on Friday between Russian President Vladimir PUTIN, Prime Minister Mikhail KASYANOV, and WTO Director-General Mike MOORE. PUTIN said that Russia is seeking no special privileges, but wanted an understanding that the nation was still undergoing economic restructuring. Russia has estimated that it would need a transition period of up to seven years to comply with WTO commitments. PUTIN ruled out accepting “excessive requirements.” KASYANOV said earlier that the government saw membership of the global trading system as a priority, but would only join the WTO if it can protect its economic interests. He also pointed out that Russia’s economic growth could not be sustained without free access to world markets, but the WTO would have to make allowances for the needs of Russia’s developing economy and ensure fair treatment of its exporters. “Without this, accession to the WTO would make no sense. There cannot be accession for the sake of accession,” he said. MOORE said, “The WTO will not be a full global organization with out Russia as a fully-fledged member.” He hoped that Russia would join in the next rounds of global trade negotiations as a full member. Trade and Economic Development Minister German GREF said the government planned to submit to parliament a raft of new legislation on liberalization of the trade regime as part of its efforts to speed up the entry process. Russia and the WTO have yet to agree on the most difficult issues of domestic legislation, including intellectual property rights, customs and tax regulations.

March PMI Hits Three-Month High

• Russia’s manufacturing economy expanded for the 28th straight month to hit a three-month high in March, and the overall growth rate also a modest pick up, Moscow Narodny Bank Purchasing Managers’ Index (PMI) showed today. The seasonally adjusted PMI, intended to give a snapshot of business conditions, registered 53.2 after 50.9 in February. March’s rise was the first after five months of decline. Moscow Narodny said the PMI remained down on levels seen throughout almost all of 1999 and 2000. PMI readings above 50 signals an increase in the manufacturing economy on the previous month, while readings below 50 signal a contraction, Reuters reported. ”This month’s PMI data is consistent with our expectations of easing though sustained real GDP [gross domestic product] growth through 2001,” Moscow Narodny Group Economist Paul FORREST said. “Although there remain significant constraints on maximizing the Russian economy’s output potential, growth is still likely to be in the region of four percent in real terms this year.” Moscow Narodny said the stronger manufacturing expansion in March had largely been driven by faster growth in output, new orders and employment.

Ruble = 28.74/$1.00 (NY rate)

Ruble = 28.86/$1.00 (CB rate)

Ruble = 25.45/1 euro (CB rate)


Court Bars NTV Shareholders’ Meeting

• Media Most chairman Vladimir GUSINSKY received a minor reprieve today when a Moscow court barred an NTV shareholders’ meeting called by state-dominated Gazprom, just 24 hours before it was scheduled to take place. NTV spokesman Dmitry OSTALSKY quoted the district court judgment, “Guided by article 133, 134 and 136 of the civil procedural code the court has decided: to ban...the holding of an extraordinary shareholders’ meeting of NTV on April 3rd.” Gazprom had been in the position to take control at the extraordinary general shareholders’ meeting and stuff the board with supporters. With 46 percent of the station’s shares, Gazprom said it had gained a de facto majority holding in NTV, as 19 percent of the 49 percent stake held by GUSINSKY had been pledged as collateral for loans maturing this summer. Another Russian court has frozen the 19 percent share in a separate but related legal dispute. The power to exercise the voting shares of the “frozen” holding remains a moot point which is due to be aired in court next month, Reuters reported. GUSINSKY, in Spain fighting extradition to Russia on fraud charges, says Gazprom is acting as a tool of the Kremlin to suppress the independent media. He says NTV and his Media Most empire are being punished for criticizing President Vladimir PUTIN and his administration, charges both Gazprom and the Kremlin deny.

On Thursday, a Moscow court threw out a bid by GUSINSKY to block the April 3rd NTV shareholders’ meeting. In a statement, Media Most said it was “powerless in the face of the arbitrariness of the Russian legal process,” but vowed to “fight to the end” to defend its rights. London’s High Court, meanwhile, ruled it could not hear a separate challenge by GUSINSKY to decide who controls the frozen 19 percent stake, used as loan collateral by Media Most.

EU Ends Gazprom Anti-Trust Case

• The European Commission (EC) is wrapping up a year-long investigation into whether gas contracts between Gazprom and three Italian suppliers break European Union (EU) antitrust regulations on fair competition, the European Commission said Tuesday. The Commission, which acts as the EU’s anti-monopoly watchdog, could decide within weeks whether to object to clauses in the contracts that limit the sale of Russian gas in Italy to the three companies Enel, Snam, and Edison while forbidding them from reselling the gas to third countries. Gazprom provides 20 billion cubic meters (bcm) of the 60 bcm of gas that Italy consumes each year. About 750 gas suppliers operate in Italy. EC spokeswoman Amelia TORRES said the Commission would decide shortly if the clauses in the contracts are illegal and would then debate what action to take. The Commission could fine each of the Italian companies up to 10 percent of their global turnover. EU Competition Commissioner Mario MONTI said late last week that he believed some of the clauses in the contracts breach European antitrust rules, the St. Petersburg Times reported.


Today's News Highlights


March PMI Hits New High

Court Bars NTV Shareholder Mtg

EU Ends Anti-Trust Case

European Republics

Tymoshenko Re-arrested

Lith Backs Repegging Bill

South Caucasus & Central Asia

FBI Gives Georgia A Crime Lab

EC Approves Financing

Uzbek-German Relations

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When you need to know it as it happens

April 2, 2001

When you need to know it as it happens


European Republics

Ukraine’s Supreme Court Frees Tymoshenko

• Former deputy prime minister and opposition leader Julia TYMOSHENKO was re-arrested on Saturday at a medical hospital in Kiev, where she was being treated for a stomach ulcer. Later Saturday, she was taken into custody, following the ruling of the Kiev City Court. Guards were posted on her hospital floor and her contact with visitors limited. Ukraine’s Supreme Court today ruled that TYMOSHENKO should be freed from detention. By granting this decision, the Supreme Court suspended the judgment of the Kiev City Court until a study of her lawyers’ appeal and her second arrest charges is conducted. She was first arrested on February 13th and then kept in detention in the Lukyanovskoye pre-trial prison in Kiev till March 27th. She was charged with stealing and illegally exporting Russian gas and paying millions of dollars in bribes to her one-time ally, former Ukrainian Prime Minister Pavlo LAZARENKO. Prime Minister Viktor YUSHCHENKO, a close ally of TYMOSHENKO’s when she was a cabinet minister, said on Saturday her arrest did little to encourage a speedy resolution to the ex-Soviet state’s political crisis. TYMOSHENKO says she is being hounded because she is an opponent of President Leonid KUCHMA. Her re-arrest outraged her supporters, who have for months been calling for the resignation of KUCHMA and other top officials, whom they also accuse of corruption and incompetence. Opposition leader Alexander TURCHYNOV said, “This is the regime’s step back to disrupt peaceful talks.”

Lithuania Backs Bill To Peg Litas To Euro

• Lithuania’s parliament on March 27th passed in its first reading an amendment to peg the Lithuanian litas currency to the euro at a market rate, rather than fixed against the dollar. Currently the litas is pegged at four to the dollar but the central bank has for several years planned to shift the peg to include at least some weighting of European currencies. The draft says the litas rate can only be changed when the euro is chosen as its anchor and at prevailing market rates. Central Bank chairman Reinoldijus SARKINAS told Reuters, “We want to make sure that when the repeg is made there will be neither devaluation nor revaluation and the exchange rate could be influenced only by currency markets.” He added that no date for the second and final reading of the bill was set yet but he expected the lawmakers to vote on the legislation within the next few weeks. In January, the Central Bank said it was looking to shift the peg about one month after January 1, 2002. The move is being made as Lithuania seeks closer ties to the European Union (EU) to ease its transition into the bloc. Lithuania hopes to join the EU in 2004.

South Caucasus & Central Asia

FBI Providing Crime Lab To Georgia

• The US government has approved the donation of a FBI crime lab to Georgia’s Justice Ministry. The lab will be state of the art, Prime News Agency reported. Deputy Justice Minister Konstantin KULBASHVILI said the purpose of Justice Minister Misha SAAKASHVILI’s trip to the US this week is in part to finalize the details of transferring the lab property to Georgia. The deal has been under consideration for six years. The lab will be used by the police, lawyers, Prosecutor General’s office, and the Tax Department. One of the basic requirements of the US government is that the lab be located at the Justice Ministry’s Experts Center. An analogous project was implemented by the US on the territory Kosovo, Yugoslavia. This will be the first laboratory of its kind in the former Soviet Union. FBI Director Louis FREEH was in Georgia last month to discuss this project with top Georgian officials.

EC Approves Georgian, Armenian Financing

• The European Commission on Thursday approved a financing decision on 1.95 million euro ($1.72 million) for the people in Georgia and Armenia affected by the drought. The operation is targeted above all at housewives, displaced persons and families dependent on subsistence agriculture. Noticing that the drought in Georgia and Armenia is aggravating what is already a difficult economic situation and undermining food security, the European Union (EU) executive said the financing will enable non-governmental organizations (NGOs) over the next eight months to meet immediate food requirements and guarantee small farmers’ incomes, thereby avoiding the danger of rural depopulation. An aid of 1.05 million euro ($924,000) will provide to 7,000 vulnerable Georgian farmers through distribution of spring seed, including sunflower seeds. Meanwhile, 900,000 euro ($792,000) will be distributed among several NGOs to buy spring seed including wheat and potato seeds for Armenian farmers, according to the commission.

Littoral States Support BLACKSEAFOR

• Delegates from Turkey, Russia, Georgia, Ukraine, Bulgaria, and Romania signed an agreement in Istanbul today for the formation of the Black Sea operational cooperation naval grouping, to be called BLACKSEAFOR. As proposed by Turkey, each of the signatory countries will send one warship to the force. The countries will remain in full command of their ships in the grouping. BLACKSEAFOR will be responsible for cooperating in search and rescue operations, humanitarian aid, mine-clearing operations, environmental protection programs, goodwill visits and other missions. Rotating command of the grouping will be taken up by turns. Turkey is the first to lead the newly made grouping.

Karimov To Boost Relations With Berlin

• Uzbekistan’s President Islam KARIMOV is scheduled to arrive in Berlin today for a three-day visit. He will hold talks with the German President, the Federal Chancellor, the Bundestag President, and meet with leading businessmen and members of the financial community of Germany. A package of documents is expected to be signed as a result of the Uzbek President’s visit. KARIMOV will participate in a ceremony opening the new Uzbek Embassy building in Berlin. Bilateral relations between Germany and Uzbekistan are based on more than 50 documents treaties and agreements signed at the interstate, intergovernmental and inter-agency levels. The two countries have implemented more than 40 investment projects. German businessmen operate in Uzbekistan in such areas as telecommunications, transport, the light industry, the production of medicinal preparations and pharmaceuticals, the processing of farm produce, and the automobile servicing. Trade turnover between Uzbekistan and Germany ran at $291.9 million in 2000.

Akayev Received Collective Security Chief

• Kyrgyz President Askar AKAYEV Friday met with Valeri NIKOLAYENKO, Secretary-General of the Collective Security Council. They met in the Cholpon-Ata residence, located in a resort area on the coast of Lake Issyk-Kul. AKAYEV and NIKOLAYENKO, “coordinated the agenda of the forthcoming session of the signatories to the Collective Security Treaty, due to be held in Yerevan late in April.” They discussed the possibility of the creation of a rapid-deployment force in Central Asia within the framework of the Collective Security Treaty. It is to be made up of military contingents of Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. Organizing problems connected with the creation of a Commonwealth of Independent States (CIS) collective force are also expected to be discussed in Yerevan by presidents of the signatory countries.

Kyrgyz Economic Statistics

• The Kyrgyz National Statistics Committee on Thursday reported that the number of people unemployed in Kyrgyzstan rose to 60,700, or 3.2 percent of the workforce, at the end of February, compared with 57,600 in the same month in 2000. In January, the number of unemployed totaled 59,400. Kyrgyzstan posted a trade deficit of $3.6 million in January, compared with a deficit of $7.6 million in the same month in 2000. Exports in January totaled $31.9 million, while imports totaled $35.5 million. In the whole of last year Kyrgyzstan posted a trade deficit of $50.1 million, including exports worth $504.5 million and imports worth $554.6 million. Kyrgyzstan’s industrial output rose 15.4 percent in January to February over the same levels a year ago.

Intercon's Daily

April 2, 2001

Intercon's Daily


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When you need to know it as it happens

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April 2, 2001