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TT Business Intelligence Report Vol. 1, No. 36, 13 December 2002 Business Intelligence, Crime, Corruption and Debt in C&E Europe and the former Soviet Union  UPCOMING CONFERENCES LVA'S "11th INTERNATIONAL TRANSPORT FORUM OF THE C.I.S. AND THE BALTICSTATES" To take place on 11-14 December 2002 at the Grand Marina Hotel,Barcelona, Spain. For further information, tel: +44 (0)20 8795 2970,fax: +44 (0)8795 2977, email: [email protected], W: www.lva.co.uk EUROMONEY'S "CENTRAL & EASTERN EUROPEAN ISSUERS & INVESTORS FORUM" To take place on 14-15 January 2003 at the Hotel Inter-Continental,Vienna, Austria. For further information, tel: +44 (0)20 7779 8968,email: [email protected], W: www.euromoneyconferences.com BELARUS RUSSIA LISTS CONDITIONS FOR $40 MILLION LOAN TO BELARUS Russia pledged to make available a $40 million loan to Belarus if the Belarusian government meets a number of requirements, Belapan reportedon 11 December, quoting the Russian government press service. To disburse the loan, Moscow wants the Belarusian government to unifyexport and import tariffs; agree with the Russian government on the procedure of collecting export duties on petroleum products; ensure thatthe Belarusian budget deficit does not exceed 1.5 percent of GDP; ensure that monthly inflation rate is no higher than 3 percent; switch tocommon principles of depreciation policy; and enact a law that would ban individual tax exemptions and rebates as well as abolish previouslygranted tax preferences. (RFE/RL 12.xii.02) BOSNIA BOSNIAN SERB LEGISLATORS LEAVE PARLIAMENT Deputies from the Republika Srpska walked out of the Bosnian parliament on 3 December to protest a new ruling by High Representative PaddyAshdown, Deutsche Welle's Bosnian Service reported. The decree, which he implemented without legislative approval, effectively makes the Bosniancentral government independent of control of the two entities. Under the decree, the prime minister's job will no longer rotate frequently amongSerbian, Muslim, and Croatian ministers. Voting in the Council of Ministers will be by simple majority. A spokesman for Ashdown said theBosnian Serb deputies are simply trying to buy time in the run-up to forming a new coalition government. (RFE/RL 04.xii.02) BULGARIA PRIME MINISTER CRITICIZES JUDICIARY Prime Minister Simeon Saxecoburggotski harshly criticized the Bulgarian judicial system in an interview published in Milan's "Corriere dellaSera" on 3 December. "We have big difficulties with our judicial system, because it is a combination of [elements inherited from] the old system[and] new laws introduced in 1990, when nobody had the experience how to make reforms," Saxecoburggotski said. "The judges cannot be sacked andthey come from various periods and from differing political systems," he added. Supreme Court of Appeals President Ivan Grigorov responded thatthe only "non-lie" in Saxecoburggotski's statement was that there are indeed problems within the judiciary, according to "Monitor" of 9December. Regarding Saxecoburggotski's allusion that many judges are from the communist era, Grigorov said most of the country's judges areabout 30 years old, which makes it impossible for them to have been employed by the communist state. (RFE/RL 09.xii.02) CROATIA PROTOCOL SIGNED ON TEMPORARY REGIME ALONG SOUTHERN BORDER Foreign Minister Tonino Picula and his Yugoslav counterpart Goran Svilanovic signed a protocol on a temporary regime along the southernborder between Croatia and the Federal Republic of Yugoslavia, at the Konfin border crossing between Croatia and Montenegro on 10-Dec. Thedeadline for signing the agreement was December 15 when the mandate of the U.N Mission of Observers on Prevlaka expires. The signing shows theregion of Prevlaka is no longer an issue in Croatian-Yugoslav relations, but rather a logical spot of the two countries' co-operation, Piculasaid after the signing. "The agreement even exceeded the bilateral framework and became a clear message to the international community andan invitation to tourists to visit this region," Picula said. Svilanovic said that by signing the agreement the two governments showed that theywere capable of jointly solving the Prevlaka issue and were ready to solve the remaining disputable issues in the same way. (NewsBase12.xii.02) CZECH REPUBLIC LONDON COURT RULES ON SOLVING CSOB-NOMURA DISPUTE The dispute between Ceskoslovenska Obchodni Banka (CSOB) and London-based Nomura over the legality of the sale of breweries Radegastand Prazdroj will be resolved on the Czech soil, a London trade court ruled. CSOB disagrees with the sale of the breweries previously owned bybankrupt bank IPB, and demands from Nomura CZK 24 bln in damages. Nomura was one of IPB major shareholders. (PBJ 13.xii.02) CZECH NEGOTIATORS COMPLAIN OVER EU MEMBERSHIP TERMS Amid heated negotiations over the eventual terms of EU membership, Czech negotiators complained that their country is likely to receive the leastamount of "net gain" per capita among eight post-communist entrants, Mlada fronta Dnes reported on 10-Dec. Under Brussels' current offer,Czechs would receive some $70 per citizen for the first three years after entry, or about $700m in total. That is enough to constructseveral dozen kilometres of motorway, the daily added. The "most successful" recipient, Lithuania, would net $360 per capita in the sameperiod; while the next "least successful" country, Slovenia, would yield $108 per capita despite being wealthier than the Czech Republic.(NewsBase 12.xii.02) ESTONIA ESTONIA COMPLETES EU MEMBERSHIP NEGOTIATIONS Estonia completed its EU membership negotiations on 09-Dec and Foreign Minister Kristiina Ojuland said the country won some concessions,including the right to import steel from Russia and Ukraine without price restrictions; fish for Baltic herring, which is smaller thanenvisaged by EU standards, and continue hunting bears and lynx. According to local media reports, the EU will also finance the testingof oil-shale products for European markets. Funding of $60 million will be available to improve the country's borders to Schengen levels. Theannual milk-production quota was set at 646k tons, a compromise between the EU's proposed 562k tons and Estonia's appeal for 900k tons, but thefigure may be raised if other candidate countries' quotas increase. (NewsBase 12.xii.02) HUNGARY JARAI DEFENDS HIS MONETARY POLICY A looser monetary policy would require much tighter fiscal and wage policies, National Bank of Hungary Rt (MNB) president Zsigmond Járaisaid at a hearing during yesterday's session of Parliament's economy committee. The depreciation of the forint would not help competitivenessin the long run, and its only lasting effect would be a rise in inflation, Járai said. The hearing was organized amid growing pressureon MNB to cut central bank rates further in order to reverse the forint's sharp appreciation. Deteriorating competitiveness was due towage increases in excess of productivity growth, Járai said, adding that inflation is more dangerous to the economy than slowing growth. (BBJ13.xii.02) EDF TO INVEST $128.3m IN HUNGARY French electronics firm EDF is to invest HUF 30bn ($128.3m) in Hungary, said prime minister Peter Medgyessy. After negotiations with Peugeot -Citroen, the prime minister said it is reasonable to assume that the company will build its new assembly plant in Hungary. None of the Frenchinvestors currently in Hungary intend to withdraw, while a number of new companies are showing an interest in new investments and developments.According to the Medgyessy, many French companies intend to take part in the construction of motorways in Hungary as well as the reconstructionof railway lines and the building of the fourth underground line in Budapest. The prime minister offered CEO Jean-Martin Folz a location ofadvanced infrastructure for the new factory, the co-financing of training new recruits and all discounts that are facilitated by EUregulations. The new Peugeot factory would give jobs to 3,000. (NewsBase 06.xii.02) KAZAKHSTAN KAZAKH PRESIDENT UNDER LEGAL PRESSURE IN U.S. Federal prosecutors have established that Kazakhstan's President Nursultan Nazarbaev accepted huge bribes from U.S. oil companies in theearly 1990s and, when evidence of those payments surfaced, sought to thwart the federal inquiry into the affair, "The New York Times"reported on 11 December. The paper said a lawyer for the Kazakh leadership approached Deputy Attorney General Larry Thompson threemonths ago and said Nazarbaev would be prepared to "cooperate" with the investigation into the kickbacks in return for a formal assurance thathe would not be indicted. That suggestion was reportedly rejected. (RFE/RL 12.xii.02) KAZAKH PRESIDENT SEEKS TO REASSURE FOREIGN INVESTORS Nursultan Nazarbaev met on 6 December in Astana with representatives of the largest international companies operating in Kazakhstan in anattempt to dispel concern that the Kazakh authorities are seeking to rewrite the terms of some previous agreements, according to Interfax anda 7 December press release from the Kazakh Embassy in Washington. Nazarbaev dismissed such fears as unfounded, saying he seeks only tobalance private and state interests, Reuters reported. He pointed out that almost all members of the Foreign Investors Council acknowledgeKazakhstan's normal investment image and "impressive" economic reforms. European Bank for Reconstruction and Development President JeanLemierre, who co-chairs the Foreign Investors Council, stressed the importance to foreign investors of reform of the judicial system,according to Interfax. (RFE/RL 09.xii.02) POLAND DANISH PREMIER SENDS WARNING TO CANDIDATE COUNTRIES OVER NEGOTIATIONS Danish Prime Minister Anders Fogh Rasmussen, the Copenhagen summit host, urged all the 10 candidates to accept the financial agreements on thetable, or risk delaying their entry into the Union until at least 2007. “I am not saying that it is a question of now or never. But it is aquestion of now or postponement for years, maybe for many years,” he said. He also told a news conference that some EU members thought he hadalready been too generous. “At the moment, I have no more money... I foresee tough negotiations,” he added. Diplomats said that this was ahint that there still is some space for negotiations. Chancellor Gerhard Schroeder sent a similar signal. He said that Germany, the EU’s biggestpaymaster, would not allow the historic opportunity for a peaceful and prosperous united Europe to fail. Denmark’s leaders hope to wind up thesummit on Friday evening, although they say that the negotiations could drag on into Saturday. (WBJ 13.xii.02) GOVERNMENT MOVES TO SALVAGE CABLE PLANT, PLEDGES JOBS FOR SACKED MINERS Labor Minister Jerzy Hausner on 3 December presented a scheme to revitalize the defunct Ozarow Cable Factory, which last week was thescene of tussles between police and former workers, PAP reported. The scheme envisages turning the plant into a subsection of the TarnobrzegSpecial Economic Zone and implementing a program to boost local commerce. "Repairing the situation in Ozarow is beyond localpossibilities, and this is why the government is trying to help," Hausner said. The same day, Economy Minister Jacek Piechota promisedthat each of the 17,000 miners who are to be laid off under a restructuring program in the coal industry next year will get a new job.The government has set up an interdepartmental team to provide assistance to those affected by the restructuring of the mining sectorin Silesia. (RFE/RL 04.xii.02) ROMANIA NUCLEAROELECTRICA SIGNS LOAN AGREEMENT WORTH E400m WITH BANKING CONSORTIUM Romanian nuclear power producer Nuclearoelectrica on 11 Dec signed a loan agreement worth Euro 400m ($405.5m) with a banking consortiumformed by Societe Generale, The Romanian Bank for Development and Credit Lyonnais. The money is necessary to complete the construction of Unit 2of the Romania's sole nuclear plant in Cernavoda, on river Danube. Some Euro 350m ($354.8m) will come from Societe Generale, Euro 25m ($25.3m)from the Romanian Bank for Development and Euro 9m ($9.1m) from Credit Lyonnais. The loan will be fully guaranteed by the state. (NewsBase13.xii.02) RUSSIA SURVEY PROBES RUSSIAN ATTITUDES TOWARD NATO A majority of Russians continue to believe that Russia should cooperate more closely with NATO, polit.ru reported, citing a national poll by thePublic Opinion Foundation. According to the poll, 56 percent of respondents support closer relations, while 23 percent oppose them. InMay, these figures were 62 percent and 20 percent, respectively. In June 1999, 45 percent supported closer ties, while 32 percent opposed them.The latest survey also found that 35 percent of respondents favor Russian membership in the trans-Atlantic alliance, while 41 percentoppose it. Nonetheless, 48 percent of Russians view NATO as "an aggressive military bloc" and just 26 percent see it as "a defensivemilitary bloc." These figures are virtually identical to the results of similar survey conducted in September 2001. Sixty-nine percent ofrespondents in the latest poll expressed opposition to the entry into NATO of the Baltic states. The survey found the strongest distrust ofNATO among the elderly and the middle-aged. Among those under age 35, 35 percent oppose the entry into NATO of the Baltic states and 39 percentview the alliance as an "aggressive military bloc." (RFE/RL 12.xii.02) ABDUCTED FATHER OF LUKOIL EXECUTIVE FOUND MURDERED IN GEORGIA The body of Sadi Sharipov, the 79-year-old father of LUKoil Vice President Vagit Sharipov, was found on 12 December by a roadside inBolnisi Raion, Caucasus Press reported, quoting the Georgian Interior Ministry. Sharipov was snatched from his home in neighboring DmanisiRaion on 1 December. Georgian parliament Deputy Izumrud Gurbanov said a preliminary examination suggested that Sharipov died over a week ago ofheart failure, Caucasus Press reported. (RFE/RL 12.xii.02) QUICK WORK PERMITS HALTED The Federal Migration Service has shut down a fast-track method of issuing work permits for foreign executives and specialists, who may nowhave to wait several months for permits -- and have no certainty of getting them. Those whose permits that expire soon may be unable to getnew ones any time soon. "This will hurt the companies with foreign investment that have been accustomed to getting work permits in quite aneasy way," said Sergei Melnikov, lawyer with the Your Lawyer legal firm. Deputy Interior Minister Andrei Chernenko said Tuesday that newregulations for the work permits would be published shortly in the official Rossiiskaya Gazeta. Rules come into force after publication inthe newspaper. Chernenko, who heads the Federal Migration Service, said existing permits -- which are usually valid for one year -- are still inforce. He gave no further details. No one in the Interior Ministry's passport and visa department was available to answer questions on thechange Tuesday. A woman in the city of Moscow's migration office on Novinsky Bulvar told a crowd of jostling people wanting fast-trackpermits that they would have to wait for the new regulations to be issued. The fast-track permits were scrapped Monday in connection withthe new law on foreigners, which came into force last month. Government resolutions are needed in a number of areas to meet the requirements ofthe law. (The Moscow Times 11.xii.02) 7 SO FAR FOR SLAVNEFT The Anti-Monopoly Ministry confirmed Tuesday that the seven companies wanting to participate in the auction of the government's 74.95 percentstake in oil major Slavneft adhere to anti-monopoly regulations. So far, 12 companies have submitted bids for the auction, includingSurgutneftegaz, the Tyumen Oil Co., Sibneft and the Chinese National Petroleum Corp. Russia's Property Ministry and the State Property Fundhold 55.27 percent and 19.68 percent in Slavneft, respectively. Russia's depositary and clearing company owns 12.98 percent. It is not clear whoowns the remaining 1.24 percent. (The Moscow Times 11.xii.02) GOVERNMENT MUM ON HOSTAGE-CRISIS GAS The Health Ministry on 10 December refused to answer a parliamentary request from Duma Deputy Sergei Yushenkov (independent) to identify thename of the sleeping gas used by special forces in the 26 October operation to free more than 700 hostages being held by Chechen fightersin a Moscow theater, Russian news agencies reported. In a letter to the Duma, Health Minister Yurii Shevchenko said his ministry cannot releasethe information because it is a state secret. He argued that all information dealing with intelligence and counterintelligence matters isclassified and can only be made public by authorized security agencies.(RFE/RL 11.xii.02) CITIBANK LOOKS TO PUMP UP MOSCOW MARKET PRESENCE U.S. financial-services powerhouse Citibank will seek to capitalize on its recent entrance to the Russian market by setting up automatedbanking centers at British Petroleum (BP) filling stations in Moscow, "Vedomosti" reported on 6 December. The centers will include ATM's,Internet kiosks, and a 24-hour hotline to the bank. In addition to filling up their cars, customers will be able to withdraw and depositfunds and perform other transactions. Five centers are now operational. Citibank plans to extend the network to all of BP's 39 stations. BP, forits part, intends to expand to 120 stations within the next five years, "The Moscow Times" reported on 6 December. The arrangement will allowCitibank to expand its market presence without sinking vast sums into new branches. According to "The Moscow Times," Citibank already has1,200 customers -- just two weeks after arriving in Russia. Russia's leading foreign bank, Austrian Raiffeisenbank, has 32,000 customers.Raiffeisenbank retail Director Aleksandr Koloshenko seemed unimpressed with his competitor's move, telling "Vedomosti," "We maintain a'personalized' approach to serving clients.... We're in Russia, after all, and our clients prefer to deal with a live person." (RFE/RL10.xii.02) NATO HEAD SEES 'NO OBSTACLES' TO FURTHER COOPERATION WITH RUSSIA During a live appearance on RTR television on 10 December, NATO Secretary-General Lord George Robertson said he sees no obstacles tocooperation between the alliance and Russia's military-industrial complex, strana.ru reported. Moscow and Brussels "are working along theentire spectrum of cooperation issues and there are no obstacles," Robertson was quoted as saying. "And this especially includesantimissile defense." He also said that "about 80 percent" of NATO's military bases have been closed down since the end of the Cold War and"all its offensive systems have been withdrawn and most of them dismantled." On 9 December, Robertson met with business leaders inMoscow and urged accelerated military reforms "both in the countries of the alliance and in Russia," RosBalt reported. He said that militaryreform in Russia could stimulate trade and investment and help the development of small business. (RFE/RL 10.xii.02) MOSCOW UPGRADE Standard & Poor's said Friday it had upgraded the long-term ratings of Moscow and St. Petersburg to BB from BB-. "Both cities have continued tobenefit from the overall improvement in Russia and are experiencing sustained economic growth, boosting their liquidity and tax revenues,"Standard & Poor's public finance credit analyst Yelena Okorotchenko said. "Their performance will nonetheless continue to be affected by theongoing intergovernmental reform within Russia, which, among other things, has led to significant changes in the structure of tax revenuesand equalization mechanisms, and limits revenue predictability and flexibility," S&P said in a statement. (The Moscow Times 09.xii.02) QUESTIONS LINGER 40 DAYS AFTER HOSTAGE DRAMA Russia on 4 December marked the 40th day since the end of the October hostage drama in Moscow with solemn religious services, Russian newsagencies reported. In Moscow, a service was held in the Christ the Savior Cathedral to remember the 129 hostages who died during theincident. Meanwhile, strana.ru reported that the Federal Security Service (FSB) declined to clarify conflicting reports on the number ofChechen fighters who were killed and/or captured during the 26 October storming of the theater. According to a 26 October Interfax report, FSBDirector Nikolai Patrushev told President Putin that day that 34 fighters had been killed, "several" were arrested, and none escaped.RIA-Novosti reported the same day that FSB sources said 50 fighters -- 18 women and 32 men -- had been killed and three arrested. Anunidentified spokesman for the Moscow prosecutor's office told the website that three fighters remain in custody, as well as one personarrested later on charges of abetting the hostage takers. The same source told strana.ru that 41 fighters were killed in the stormingoperation -- 22 men and 19 women. (RFE/RL 04.xii.02) SERBIA IMPORTS 30% LOWER THAN OFFICIAL IMPORT FIGURES Yugoslav Central Bank Governor Mladjan Dinkic said that Serbia's real imports are 30% lower than the official import figures released by thestatistical office, and accused importers of inflating import invoices so as to reduce their tax obligations. Serbia's imports in the first tenmonths of the year reached $4.3bn, and only $3.1bn of the reported imports were paid for. This means that 30% of imports were not paid for,and that some invoices, mostly for the import of consumer goods, were inflated in attempts to evade taxes, said Dinkic. According to him,there are countries, such as Cyprus, Liechtenstein, Virgin Islands, Marshall Islands, and the Seychelles, from which Serbia imports nothing,but pays huge amounts of money for alleged imports. (NewsBase 13.xii.02) MOSCOW MAYOR OFFERS TO HELP BELGRADE Yurii Luzhkov said in Belgrade on 11 December that his visit to the Serbian capital "has no political goals," ITAR-TASS reported. He notedthat the two cities have many problems in common and that Moscow can help Belgrade deal with questions of water supplies, housing, and howbest to use downtown properties to attract investment. For her part, Belgrade Mayor Radmila Hrustanovic noted that her city is anxious toexpand its market in Moscow for pharmaceuticals and products of the Ikarbus company. Luzhkov is scheduled to meet with Yugoslav PresidentVojislav Kostunica, Yugoslav Prime Minister Zoran Djindjic, and Patriarch Pavle of the Serbian Orthodox Church. (RFE/RL 12.xii.02) UKRAINE OFFICIALS CLAIM GONGADZE MURDER WAS A 'SETUP'. The Ukrainian Prosecutor-General's Office considers it highly likely that the murder of "Ukrayinska pravda" journalist Heorhiy Gongadze wasdeliberately organized by opponents to undermine the reputation of President Leonid Kuchma, pravda.ru reported 4 December, quotingUkrainian Deputy Prosecutor-General Viktor Shokin at a press conference the same day. In the long-drawn-out saga of the investigation intoGongadze's murder, officials facing the clamor of international and local watchdog groups for justice, as well as increasingly criticalWestern governments, have resorted to pointing the finger back at the opposition. In another interview with the newspaper "Segodnya" cited bypravda.ru, Shokin floated several theories of the assassination, including one version where rogue police agents known as "werewolves"killed Gongadze over debts. Yet another independent forensic examination of the tissue of the body found in a forest will be performed by Frenchexperts in Switzerland in January, journalists say, noting that the Gongadze has yet to be buried. (RFE/RL 06.xii.02) INFORMATION PROVIDERS NEWSBASE NewsBase is a leading provider of business and economic news and intelligence from Russia, Central Europe and the FSU. Daily bulletins and industry specific weekly reports backed by an archive containing over 10 million words combine to provide a comprehensive service to a global blue chip client base. Contact: Jon Laurijssen T: +44 (0)131 478 8537 F: +44 (0)131 478 7001 E: [email protected] W: www.newsbase.com, www.newsbaseworldmonitoring.com NEW WORLD PUBLISHING New World Publishing is a primary source of business-related information for Central Europe, through its publications the Prague, Budapest and Warsaw Business Journals. Contact: Mark Child T: +420 2 4608 6524 F: +420 2 4608 6501 E: [email protected] W: www.ceebiz.com, www.pbj.cz, www.wbj.pl, www.bbj.hu THE MOSCOW TIMES The Moscow Times offers readers an independent and precise view of the political, economic and business life of Russia. Contact: Andrew Boag T: +7 095 232 3200 F: +7 095 232 1761 E: [email protected] W: www.themoscowtimes.com RADIO FREE EUROPE / RADIO LIBERTY Radio Free Europe/Radio Liberty is a private, international communications service to Central, Eastern and Southeastern Europe; the Caucasus; and Central and Southwestern Asia funded by the U.S. Congress through the Broadcasting Board of Governors. Contact: Peter Baumgartner T: +420 (0)2 2112 2039 F: +420 (0)2 2112 2012 E: [email protected] W: www.rferl.org TEMPLETON THORP T +44 (0)20 7520 9380 F +44 (0)20 7504 8180 E [email protected] W www.templetonthorp.com |
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