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Daily intelligence briefing on the former Soviet Union

Monday, April 23, 2001

Russian Federation


Chechen Gunmen Release Hostages

• After hours of negotiations with Turkish Interior Minister Sadettin TANTAN, 13 pro-Chechen gunmen surrendered to authorities, handing over their pump rifles and automatic guns and freeing an estimated 120 hostages. Hundreds of police backed with armored cars flanked the hotel as officials negotiated with the terrorists. Istanbul Police Chief Kazin ABANOZ said the gunmen are being held at police headquarters for questioning. At approximately 1 am in Istanbul, the Chechen gunmen stormed the Swissotel and demanded that the US condemn Russia’s war against separatist fighters in Chechnya, CNN reported. The Swissotel is favored by business visitors and wealthier tourists. According to a statement released by the gunmen before they surrendered, the hostages were taken due to, “the bloody events in the Caucasus.” The gunmen identified themselves as supporters of Mohammed TOKCAN, a Turkish citizen of Chechen descent who was jailed for hijacking a Black Sea ferry in 1996. The Chechen representative office in Turkey released a statement condemning events at the Swissotel. “The action is against international law and the official Chechen government condemns it strongly. We never condone these kinds of attacks.” Even before the gunmen surrendered, the Russian Foreign Ministry said, “We vehemently condemn this barbaric act. The terrorists must free the hostages immediately…We call on Turkish authorities to take all measures to settle this dangerous situation and punish the culprits.” Although the standoff ended in less than 12 hours, it may force authorities to review the security policy towards the large number of Caucasian and more specifically Chechen groups operating in Turkey, Reuters reported. Turkey has tried to avoid any appearance in Russian eyes that it is giving aid to militants fighting Russian troops. Last month, hijackers calling for an end to Russia’s actions in Chechnya seized an Aeroflot passenger plane and forced it to land in Saudi Arabia.

Russians Uncover Mass Grave

• A special Russian reconnaissance unit has discovered a mass grave, containing the remains of at least 18 people and some other body parts in southern Chechnya, officials said Sunday. According to Kremlin spokesman Sergei YASTRZHEMBSKY, the victims appeared to have been killed in 1996 or 1997. The border guard reconnaissance unit discovered the remains Thursday while searching for guerrillas near the village of Gizikhoi in the Itum-Kale district, just north of the border with Georgia. The bodies were exhumed Saturday. All appeared to have been shot in the head and then beheaded, the Associated Press reported. The Interfax news agency quoted Chechnya’s pro-Moscow Press Minister Vasily VASILENKO as saying the victims were believed to be Georgian construction workers who had been kidnapped in 1995, while building a road through the rugged region. The head of the Itum-Kale regional administration, Edilbek UZUYEV, said the bodies appeared to have been removed from other burial places and recently cast together in the common grave. Officials were also looking into the possibility that body parts from an estimated 30 torture victims were buried in the grave.

Russian Condemns UN Resolution

• The UN Human Rights Commission, a 53-nation rights watchdog group, in a vote of 22 to 12 with 19 abstentions passed a resolution, censuring Russia for alleged abuses in Chechnya. Censure by the UN body brings no penalties but draws international attention. The Russian Foreign Ministry released a statement saying, “Russia does not consider itself bound by the provisions of the un-objective and biased resolution.” It accused the US of influencing the UN to take a hard line against it. The resolution condemned Russia for “attacks against civilians,” breaches of international law, summary executions and “forced disappearances.” It also criticized the Chechen rebels, who are accused of torture, taking hostages and the indiscriminate use of land mines. UN Secretary General Kofi ANNAN is scheduled to meet with President Vladimir PUTIN, Foreign Minister Igor IVANOV and other officials on May 15th.

Meanwhile, a Russian legislator said a prominent Russian human rights worker who has spoken against the war in Chechnya was shot and seriously wounded in the rebel region. Viktor POPKOV was wounded Friday when unidentified gunmen fired at a car carrying him and a doctor, said Yuri SHCHEKOCHIKHIN, the deputy chairman of the Russian parliament’s committee on security.


Ruble = 28.88/$1.00 (NY rate)

Ruble = 28.86/$1.00 (CB rate)

Ruble = 26.02/1 euro (CB rate)

Russians Allowed To Buy Foreign Securities

• The Russian State Duma has passed a bill to allow citizens to buy foreign securities without Central Bank authorization, Kommersant Daily reported. The bill, which must pass the Federation Council before the president can sign it into law, also will allow domestic construction companies to have foreign accounts and allow Russians to wire cash to pay for services overseas, such as funeral charges or conference participation fees. It will allow machinery-building companies to delay mandatory repatriation of hard currency earnings for up to three years, compared with the current requirement they do so within 90 days. The Russian Central Bank criticized the Duma’s move to allow citizens to wire up to $75,000 a year abroad to buy foreign equity. Central Bank Chairman Viktor GERASHCHENKO called on the government to lobby the Federation Council to reject the bill, saying it could increase capital outflows from Russia. Russian exporters must repatriate and sell for rubles 75 percent of their hard currency earnings. The country receives about 50 percent of its hard currency income from oil, gas and metals exports. As oil and gas prices stay high for the second year Russia’s hard currency reserves rose to record high $30 billion, forcing the Central Bank to increase the money supply and accelerating inflation, which reached 20.2 percent last year, Bloomberg News reported.

Russia To Make IMF Payment

• Russia will pay $117 million to the International Monetary Fund (IMF) on Tuesday, according to the Finance Ministry. The payment will consist of 78.3 million euro and 44 million Canadian dollars. Under a payment schedule, published by the IMF, Russia is due to pay 89,856,250 of Special Drawing Rights (SDR) to the Fund on April 24th. Russia’s next payment to the IMF is due on May 2nd, when Moscow is to pay 19,468,867 SDRs (about $25 million). On May 7th, Russia is scheduled to pay 104,997,169 SDRs to the IMF. The May payments are likely to be rescheduled because they fall on holidays in Russia.


Zil-Venture To Build Cars In Russia

• Zil Auto Plant, a Russian maker of trucks and limousines, and Venture Industries Inc., a closely held US auto components maker, agreed on a $250 million plan to build cars and engines in Russia. Venture has designed a low-cost family car that will be built at Zil’s Moscow factory, Bloomberg News reported. The companies plan to build 150,000 cars and 300,000 engines a year, with production starting in 2004. Australia’s Orbital Engine Corp. licensed the engines. Zil and Venture haven’t mass-produced autos before. They are hoping future economic growth in Russia will boost demand for cars from the country’s 150 million citizens. Larry WINGET, Venture’s founder and president, recently signed a contract with Zil General Director Valery NOSOV and Yuri LUZHKOV, Moscow’s mayor and Zil’s majority shareholder.


Today's News Highlights


Russia Condemns Resolution

Russia To Make IMF Payment

Zil To Build Cars In Russia

European Republics

IMF Approves Loan To Latvia

Belarus Arrests Protestors

South Caucasus & Central Asia

Shevardnadze On New Gov't

Customs Dept. Chair Dismissed

Azeri Police Beat Protestors

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Intercon's Daily

When you need to know it as it happens

April 23, 2001

When you need to know it as it happens


European Republics

IMF Approves Latvian Stand-by Credit

• The International Monetary Fund (IMF) today approved a 20-month stand-by credit for Latvia for 33 million Special Drawing Rights (SDRs) (about $42 million) to support the government’s program for 2001 to 2002. The government of Latvia does not intend draw on the stand-by credit and will treat it as precautionary. IMF Deputy Managing Director Shigemitsu SUGISAKI said of the Executive Board’s decision, “Latvia’s economy has emerged from the recession triggered by the Russia crisis.” Economic growth is strong and broad-based, inflation is close to rates prevailing in the European Union (EU), and vulnerability to external shocks has lessened. A surge in foreign direct investment has helped contain external debt indicators. However, unemployment remains relatively high. Latvia’s budget is expected to be balance over the medium term. The budget deficit is to fall in 2001 to 1 percent of gross domestic product (GDP). SUGISAKI said, “Structural reforms remain essential to achieve Latvia’s medium-term goals and reduce further its vulnerability to external shocks. Key reforms include creation of an environment conducive to private sector development and increased foreign direct investment, privatization of remaining state-owned enterprises, and measures to enhance governance.”

Belarus Police Break-up Protest

• Belarus police arrested about 20 people in Minsk on Saturday, after breaking up an illegal 500-strong protest against President Alexander LUKASHENKO. The protestors were calling on citizens not to vote for LUKASHENKO in the presidential elections expected to be held later this year. Some protesters wore LUKASHENKO masks. Others waved a banner saying, “Say no to the idiot!” and chanted, “Don’t vote for LUKASHENKO,” Reuters reported. LUKASHENKO, who extended his term in office following a controversial referendum in 1996, has said he is confident of winning the next election. He has banned international observers and accused the Organization for Security and Cooperation in Europe (OSCE) of training Belarus citizens as spies. Western states have criticized LUKASHENKO for eroding democracy in Belarus.

Belarus-China To Sign Strategic Document

• Visiting Belarus President Alexander LUKASHENKO met today with Chinese President JIANG Zemin in the Great Hall of the People. Ahead of the trip, LUKASHENKO said that Belarus and China planned to form a “strategic relationship” for the 21st century. A declaration on the strategic partnership is expected to be signed during the three-day visit. It will include provisions for military cooperation between Belarus and China.

South Caucasus & Central Asia

Shevardnadze Calls For Gov’t Changes

• In his traditional Monday radio address, Georgian President Eduard SHEVARDNADZE reiterated his call for a prime minister position and a cabinet. The President stressed that the introduction of a prime minister and cabinet will be a step forward in the building of state structures. SHEVARDNADZE said the government would have a strong president, strong parliament, and a quite powerful cabinet of ministers. He underlined that the government will have a chance to make radical decisions. The Georgian parliament’s authority will increase to control the activity of the government. It will have the right to call a no confidence vote of the government. Meanwhile, the President will maintain his leverage to control the government. The President will have the right to disband the parliament in a crisis and call for new parliamentary elections. SHEVARDNADZE explained that the decision to change the government was based on political principle. He said the majority party in parliament will form the government and that political party will be responsible for the success of economic reforms. SHEVARDNADZE said the new model will provide for the cooperation of political parties. He had not announced possible candidates for the prime minister position, but noted that he intends to keep current officials as members of the new government. “The element of mutual understanding in the current government is high,” the President stated. The future government will include one or several Deputy Prime Ministers and several State Ministers, depending on the need for regional representation.

Customs Department Chair Dismissed

• Georgian President Eduard SHEVARDNADZE on Friday dismissed Customs Department Chairman Giorgy GACHECHILADZE from his position. He has been re-appointed to the position of First Deputy State Property Minister. Levan DZNELADZE, the State Property Minister, said GACHECHILADZE’s change in positions was brought about by his own personal initiative, Prime News Agency reported.

New Head of Georgia’s Civil Aviation

• Zurab PERISHVILI, formerly Vice President and Executive Director of Airzena-Georgian Airlines, was appointed head of administration for Georgia’s Civil Aviation, according to the Transportation and Communications Ministry. The former head of Georgia’s Civil Aviation Giorgy NIZHARADZE was released from his position and was appointed deputy minister of the Transportation and Communications Ministry, Prime News Agency reported.

Azeri Police Clash With Opposition Protestors

• About 300 supporters of the Oppositional Democratic Party clashed with Azeri police in Baku on Saturday. Police blocked some 300 participants, who were trying to stage an unsanctioned march in Baku. Police in full riot gear dispersed the demonstration after about 40 minutes, beating protesters with police clubs. The protestors demanded the released of political prisoners and an end to the persecution of the party’s leader, ex-speaker of parliament Rasul GULIYEV. The Democratic Party said that its secretary general Sardar DZHALALOGLY was among those who were beat up and arrested. Baku police said in a statement they had arrested 31 people. The statement said 17 policeman were injured and five of them were taken to hospital. Authorities say Azerbaijan does not have political prisoners and all who are seen by the opposition as such are state criminals.

Azerbaijan Seeks $200M IMF Loan

• Azerbaijan is seeking a $200 million loan from the International Monetary Fund (IMF) under a planned three-year cooperation program, the Azeri Central Bank Chairman Elman RUSTAMOV said on Sunday. He hopes to sign the deal within two months. “The main aim of the program is macroeconomic stability...and structural reforms,” RUSTAMOV told Reuters on the sidelines of the annual meeting of the European Bank for Reconstruction and Development (EBRD). He said an IMF mission was due to visit to Azerbaijan at the end of April. Russian news agency Interfax reported earlier this month that the size of the loan under discussion would be $100 million to $150 million.

Kazakhstan Offers To Host Peace Talks

• Kazakhstan’s President Nursultan NAZARBAYEV has offered to host talks on ending the conflict in Afghanistan, according to the UN special envoy on Afghanistan Francesc VENDRELL, who was meeting with the President in Almaty. Afghanistan is mostly controlled by the radical Islamic Taliban militia, but the opposition Northern Alliance is fighting over some five percent of the country. The alliance is recognized by the UN. VENDRELL said, “NAZARBAYEV confirmed his readiness to organize a meeting of all sides interested in the Afghan process...to achieve a peaceful solution to the Afghan question. I noted that President NAZARBAYEV is very well versed in the situation in Afghanistan, and his views coincide with those of the United Nations and my own views on the problems of Afghanistan.”

Kazakhstan does not border Afghanistan, but shares borders with Turkmenistan, Uzbekistan and Tajikistan. Central Asia’s presidents have identified the potential spread of Islam fundamentalism from Afghanistan as one of the greatest threats to regional security, along with the drug trade. Afghanistan is the world’s largest producer of opium. Only three countries, Saudi Arabia, Pakistan and the United Arab Emirates, recognize the Taliban, although Kazakhstan and Uzbekistan have recently held talks with the group through their embassies in Islamabad, Reuters reported.

Intercon's Daily

April 23, 2001

Intercon's Daily


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April 23, 2001