Russia Report: August 25, 1999

The current draft of the 2000 budget allocates 64.3 billion rubles ($2.6 billion) for financial aid to the regions, "Nezavisimaya gazeta" reported on 19 August. More than 50 billion rubles of that sum is earmarked for the fund for financial support for the regions, which includes subsidies for deliveries to the Far North and compensation for energy tariffs in the Far East. Another 5.2 billion rubles is devoted to funding for regional development and 1.3 billion rubles more to support regional finances. First Deputy Prime Minister Viktor Khristenko said on 17 August that the volume of financial aid for the regions amounted to 14 percent of actual budget revenues in 1999, but this year the amount will be defined in the 2000 budget in concrete figures after the center and regions reach a decision on the absolute amount of the fund, ITAR-TASS reported. The previous day, Interfax had reported that revenues in the current budget total 743.6 billion rubles, which would make the current sum planned for financial aid to the regions only 8.6 percent of planned revenues. Khristenko also reportedly said that tax revenues would be split 50-50 between the center and regions, according to "Izvestiya" on 19 August. It was reported earlier that governors gathered for a meeting of the Siberian Accord earlier in the month had objected to proposed split of 58-42 in favor of Moscow (see "RFE/RL Russian Federation Report," 18 August 1999). JAC

Writing in "Nezavisimaya gazeta" on 19 August, State Duma Deputy Rinat Gabidullin argues that certain leaders within All Russia, such as Bashkortostan President Murtaza Rakhimov, are participating in coalitions for State Duma elections primarily because they want the Duma to pass legislation increasing the sovereignty of their republics. Gabidullin, who is a member of the Communist Party faction, cites as evidence the statement by Rakhimov that "while the Russian president supports [power-sharing] treaties, the Duma has not passed a single law during the past few years which would defend the state interests of the republics." Gabidullin believes that the certain members of All Russia want to "push out factions that support the integrity of Russia" and replace them with those "lobbying for the interests of the regions and pursuing the policy of regional leaders." According to Gabidullin, some of All Russia's allies, such as Moscow Mayor Yurii Luzhkov and former Prime Minister Yevgenii Primakov, and even its leader, St. Petersburg Governor Vladimir Yakovlev, back maintaining Russia's integrity and are merely using "their eastern neighbors at this stage to strengthen" their own positions. But this tactic may backfire when the new "lobbyist Duma, obedient to the regions" becomes an obstacle in their path. Gabidullin's article is the second on this theme to appear in recent weeks in "Nezavisimaya gazeta" (see "RFE/RL Russian Federation Report," 11 August 1999). The newspaper receives financial support from Boris Berezovskii's LogoVAZ group; Berezovskii is a known rival of Moscow Mayor Yurii Luzhkov. JAC

The German carmaker BMW has begun assembling vehicles at Kaliningrad's Avtotor plant, "Segodnya" reported on 19 August. According to the newspaper, a BMW-5 assembled in the oblast will cost 20 percent less than the same vehicle imported from Germany ($40,000, compared with $50,000). Beginning in October, the plant will also start assembling Land Rover vehicles. By 2002, it is expected to have an annual output of 10,000 cars. JC

Mahathir Mohamad was recently in Khabarovsk Krai on a visit aimed at boosting economic ties, AP and Russian agencies reported. On 16 August, he told Governor Viktor Ishaev that Malaysia is interested in Khabarovsk's timber and machine-building sectors. He toured the Komsomolsk-na-Amure aircraft company, which produces Sukhoi fighter jets and, according to Interfax, accounts for one-third of the region's industrial potential. A company director told Interfax that in particular, the Malaysian visitors showed interest in the Be-103 amphibian airplane, which is currently undergoing test flights. On 18 August, following a visit the previous day to one of the krai's shipyards, the Malaysian premier told journalists in Khabarovsk that on returning to Kuala Lumpur, he intends to convene a government meeting to discuss concrete steps toward cooperation with the region. JC

Addressing a meeting of 300 striking coal miners, Krasnoyarsk Krai Governor Aleksandr Lebed said on 19 August that the planned privatization of the local coal company, Krasugol, is an attempt to destabilize the situation in his region, Interfax-Eurasia reported. Thousands of miners in the krai had stopped work the previous day to protest plans to privatize Krasugol (see "RFE/RL Newsline," 19 August 1999). Lebed continued that the company is the only energy base in Siberia, excluding the Kuzbass and that its sale should therefore be prohibited. Other participants in the meeting said that if Krasugol is turned over to private owners, there is no guarantee that they will observe the interests of the region, make new investment in the company, or reduce the backlog of unpaid wages, which has reached 35 million rubles ($1.4 million). Krasugol is scheduled to be privatized under a coal sector restructuring program financed by the World Bank. JAC

An arrest warrant has been issued for Krasnoyarsk Aluminum Plant head Anatolii Bykov, Interfax reported on 20 August, citing Krasnoyarsk Television. According to the agency, Bykov is still abroad undergoing medical treatment. Bykov is suspected of money laundering. It was reported earlier that Bykov was in the U.S. and would return to meet with Interior Ministry officials in the krai (see "RFE/RL Newsline," 9 April 1999). On 24 August, the acting prosecutor of the city of Nazarovo, Yevgenii Dermenev, confirmed that he had signed a warrant for Bykov's arrest. JAC/JC

A total of 20 candidates will run in the 19 September gubernatorial elections in Leningrad Oblast, ITAR-TASS reported on 19 August, the final day for registration of candidates. Thirty-six people had originally applied to take part in the ballot, but only 20 of them met the criteria to be accepted as candidates. That figure, however, is twice the number of candidates who ran in the 1996 elections, according to the news agency. Currently ahead in the opinion polls is former Leningrad Governor and ex-Russian First Deputy Premier Vadim Gustov. Acting incumbent Valerii Serdyukov, who took over from Gustov when the latter joined Yevgenii Primakov's cabinet, is also taking part in the vote. JC

The U.S. is to grant $15 million for the destruction of nuclear submarines at the Nerpa shipyard at Snezhnogorsk, "Segodnya" reported on 17 August. That project is being carried out within the framework of the program "On the Reduction of Mutual Threats," to which Russia and the U.S. agreed in 1992. Under the program, the shipyard has already destroyed three decommissioned submarines belonging to the Northern Fleet. JC

The federation Supreme Court has overruled an oblast court finding that the local legislature's decision to move up gubernatorial elections from December to September was declared valid (see "RFE/RL Russian Federation Report, 14 July 1999), "Nezavisimaya gazeta" reported on 14 August. The oblast Communist Party appealed to the Supreme Court to overrule the oblast court. According to the newspaper, this latest development was met with "virtually total indifference" in the oblast. Earlier this year, the Presidium of the Supreme Court overruled the court's decision to declare the bringing forward of the Belgorod elections illegal. The incumbent, Yevgenii Savchenko, went on to win that ballot hands down ("RFE/RL Russian Federation Report," 26 May and 2 June 1999). JC

Breakaway members of the Omsk Communist Party have founded a National-Patriotic Movement, following disagreements with Aleksandr Kravets, the oblast party chief and the party's chief ideologue at the national level, "Kommersant-Daily" reported on 19 August. The leader of the new movement, Sergei Trubin, recently addressed an open letter to Kravets accusing him of destroying the Omsk branch of the party, persecuting those who think differently from him, and pursuing dictatorial practices. A deputy leader of the new movement, Aleksandr Zakharov, is challenging Kravets for the leftist vote in the 5 September gubernatorial ballot. Neither is expected to pose a serious challenge to the incumbent, Leonid Polezhaev. JC

Under a program initiated by a German social pedagogue, juvenile delinquents from Germany are being sent to a special settlement in Omsk Oblast, rather than detention centers in their home country, to be reformed, "Vremya MN" reported on 17 August. The aim of the program is to seek to change the youths' attitude toward life and other people--in an environment that it is much harder than in Germany. The program is financed partly by the delinquents' parents and partly by the German government. As the newspaper points out, keeping the youths in a detention center would cost the German state several times more than sending them to Siberia under the reform program. JC

Police in various ports have seized 29 ships of the Vladivostok-based Vostoktransflot company, the company's board of directors announced on 19 August. A court in Primorskii Krai recently launched bankruptcy proceedings against the firm and the ships will be auctioned off to pay the company's overdue debts. according to ITAR-TASS. Control of the company had been seized back in June by Viktor Ostapenko, a former president of the company, who claimed at the time that the "foreign secret service operatives are trying to destroy the Russia's fleet in the Pacific Ocean" by selling companies such as Vostoktransflot to "foreign companies for peanuts," "The Moscow Times" reported on 24 June. Ostapenko has the backing of Primorskii Krai Governor Yevgenii Nazdratenko, who accused British investor Andrew Fox of illegally obtaining shares in Vostoktransflot and reportedly threatened him with imprisonment (see "RFE/RL Russian Federation Report," 4 August 1999). Ostapenko's takeover was declared illegal on 22 July by a local courts, but, according to the daily, it was too late for the company to return to a sound financial footing. The board of directors now claims that their first task is to rescue sailors from the seized ships, many of whom lack food and potable water. According to ITAR-TASS, sailors on one ship that was seized in Singapore have to collect rain water to drink, while the crew of ship seized in Lagos, Nigeria, has been stricken with malaria. JAC

Former Prime Minister Stepashin told Interfax on 17 August that he will run for a State Duma seat from a single-mandate district in St. Petersburg, most likely his home district of Krasnoselskii. "This is only the first step that demonstrates my intention not to return to government service," he said, noting that he is working on forming a right-of-center coalition. JC

"Izvestiya" reported on 17 August that the World Bank has granted St. Petersburg a loan for the reconstruction of the city's historical center. Guaranteed by the Russian government, the loan is repayable over 15 years. A tranche worth $31 million is to be followed in 2001 by a second tranche to the tune of $300 million. Under the agreement with the World Bank, St. Petersburg is to repay the loan through the sale of real estate in those areas that are to undergo reconstruction. It is also counting on increased tax revenues for the city budget stemming from the anticipated new commercial activities in such areas. JC

The run-up to gubernatorial elections on 29 August in Sverdlovsk Oblast turned explosive as unknown assailants set fire to the apartment of a local television station head, Igor Mishin, and the home of Yekaterinburg Deputy Mayor Vladimir Tungusov at the beginning of the month. At 4 o'clock in the morning of 5 August Tungusov was awakened by the sound of a Molotov cocktail landing on his porch. Tungusov, who put out the fire himself, suggested the late night delivery was the work of assistants of Sverdlovsk Governor Eduard Rossel, "Vremya MN" reported on 6 August. President for the Fund for the Protection of Glasnost Aleksei Simonov suggested at the time that the explosion which destroyed Mishin's apartment was an attempt to pressure Mishin to support a particular side in the election campaign, according to ITAR-TASS. JAC

According to a poll conducted from 5-17 July of 1000 respondents in the oblast, of the two chief competitors in the race, Yekaterinburg Mayor Arkadii Chernetskii has a slight lead over incumbent governor Eduard Rossel. "Komsomolskaya Pravda" reported on 7 August that 31.7 percent of respondents favored Chernetskii and 19.4 percent chose Rossel when asked who they would vote for if elections were held the following Sunday. Liberal Democratic Party leader Vladimir Zhirinovskii attracted 6.5 percent of the responses, even though the local election commission disqualified him from running. If a run-off were held between Rossel and Chernetskii, the former would gather 41.1 percent of the votes and the latter 49.8 percent. Nine percent said faced with this choice, they would vote against all candidates. Almost 35 percent of the respondents said they would not vote for Rossel under any circumstances, according to the daily. JAC

While wages in nominal terms rose 34.5 percent during the first seven months of the year, in real terms they fell 36.6 percent. A similar trend was observed within specific regions. In Omsk, for example, average monthly wages rose to 1120.6 rubles during the first six months of 1999 compared with the average wage for 1998 of 907 rubles (see "RFE/RL Russian Federation Report," 10 March 1999). The following table shows the average monthly wage in selected regions for the first six months of 1999. (JAC)

Region (Average monthly nominal wage)

Penza (807.2 rubles)

Altai (809 rubles)

Voronezh (950 rubles)

Lipetsk (1,041 rubles)

Novgorod (1,100.9 rubles)

Omsk (1,120.6 rubles)



Sverdlovsk (1,143 rubles)

Yaroslavl (1,150 rubles)

Leningrad (1,511 rubles)

Primore (1,697 rubles)

St. Petersburg (1,878 rubles)

Murmansk (2,255 rubles)

Magadan (2,936 rubles)

Sources: "Penzenskie vesti," "Vechernii Barnaul," "Kommuna (Voronezh)," "Lipetskaya gazeta," "Novgorodskie vedomosti," "Kommercheskie vesti (Omsk)," "Oblastnaya gazeta (Ekaterinburg)," "Zolotoe koltso (Yaroslavl)," "Utro Rossii (Vladivostok)," "Murmanskii vestnik," "Magadanskaya pravda," and "Sankt-Peterburgskie vedomosti."