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TT Business Intelligence Report Vol. 1, No. 34, 13 November 2002 Business Intelligence, Crime, Corruption and Debt in C&E Europe and the former Soviet Union  UPCOMING CONFERENCES DOW JONES "THE SIXTH ANNUAL RUSSIAN INVESTMENT SYMPOSIUM" To take place on 14-16 November 2002 at the Boston Marriott, Boston,United States. For further information, go to www.dowjones.com or fax +44 (0)20 7842 9681. PRAGUE BUSINESS JOURNAL'S "THE NEW FACE OF NATO" A Conference and Exhibiton on CEE Military Transformation, to take placeon 20 November 2002 at the Marriott Hotel, Prague, Czech Republic. Forfurther information, go to www.pbj.cz/events/nato.htm or [email protected]. 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 NATO IN A DILEMMA OVER BELARUS AND UKRAINE NATO is in a dilemma about the possibility the presidents of Ukraine andBelarus will gatecrash an alliance summit in Prague next week, despitewarnings they would not be welcome. "In each case it would be nice ifthey decided that they had appointments elsewhere," a senior NATOdiplomat said Tuesday. Both Belarus President Alexander Lukashenko andUkrainian President Leonid Kuchma are entitled to attend the second dayof the Nov. 21-22 summit, when leaders from the 46 Euro AtlanticPartnership Council nations will hold a meeting. But neither is wanted-- Lukashenko because of his autocratic rule and opposition to NATOenlargement and Kuchma because of unresolved questions about a reportedsale of an aircraft detection system to Iraq. "Messages have been passeddiscreetly to both saying that, for the sake of our relations, it mightnot be a good idea for you to come," a NATO official said, adding thatif they did attend there would be "a lot of empty chairs." "At the endof the day, I don't expect them to come, but they might force thesystem," the official said. The EAPC is a forum for consultation andcooperation between the 19 NATO countries and 27 partner countries. (The Moscow Times 13.xi.02) BULGARIA BULGARIA, GREECE & RUSSIA TO SIGN MEMORANDUM ON PROJECTED OIL PIPELINE Bulgaria, Greece and Russia should sign a memorandum of intent by theend of November on the construction and operation of the projected oilpipeline between the Bulgarian port city of Bourgas to Alexandroupolisin Greece. Bulgaria's Deputy Minister of Regional Development and PublicWorks, Hassan Hassan, told the press that the procedure for selectingthe companies to join a consortium for the construction of the facilitywould also be clear by the end of the month. Potential investors andcontractors would then be invited to join the project, said Hassan. Nogovernment will be involved in the project. In Athens last week,Bulgaria and Greece reached a political decision on equal participationin the project by the three states. (NewsBase 10.xi.02) CROATIA WORLD BANK TO ASSIST CROATIA IN ITS EFFORTS TO JOIN EURO-ATLANTICASSOCIATIONS Following a meeting with World Bank Vice-President for Europe andCentral Asia, Johannes F. Linn, Prime Minister Racan said the governmentwas determined to implement the reforms that had been started and towork on the other key issues that had yet to be resolved. These includethe reform of the state administration, the judiciary and the educationsystem, said Racan. Linn expressed support for the Croatian governmentand its efforts to implement reforms and said that the WB would assistCroatia in its endeavours to join Euro-Atlantic associations. The WB iscurrently working on a document which will include information onobligations and costs regarding admission to the EU, said Linn, addingthat it would soon become evident that the expansion of the EU was notonly possible but necessary. Racan highlighted the investments made inthe infrastructure, particularly roads. This project was vitallyimportant to the country, said Racan, noting that an unexpected benefitfrom the project was the development of business and industrial zonesalong highways. (NewsBase 12.xi.02) CZECH REPUBLIC CNB SPENDS EUR 6BLN TO INTERVENE AGAINST STRONG CROWN The Czech National Bank (CNB) has bought from its reserves more than EUR6 bln (CZK 180 bln) to intervene against the rapidly strengtheningCrown. First the CNB used EUR 2.3 bln for interventions in the form ofpurchasing Euros for crowns to push down the crown exchange rate. Thebank then bought from the government EUR 4 bln received for theprivatization of gas company Transgas. This year, CNB has invested morefunds in interventions than over the past 3 years put together. Thestrong crown reduced profits in the processing industry by 30% in thefirst half of 2002. (PBJ 13.xi.02) CABINET AGREES 15-16 JUNE 03 FOR REFERENDUM ON EU ACCESSION The cabinet has agreed June 15-16 2003, as a suitable date for thecountry's referendum on EU accession, although the president can onlymake the calling of the vote. The proposed dates, a Sunday and Monday,differ from the usual pattern for elections in the Czech Republic, whichnormally take place from lunchtime Friday to lunchtime on Saturday.Deputy Prime Minister and Justice Minister Pavel Rychetsky toldjournalists that under the proposal the polls would be open fromlunchtime Sunday and all day Monday. The government believes the lateweekend and the beginning of the working week is more suitable as itwill enable more people to give their opinion about the country'sfuture. "People from the big cities leave for weekend breaks on Fridays,it is on Sundays they return and on Mondays they are back at work,"Rychetsky added. The Chamber of Deputies approved the bill on thereferendum in October and the Senate-initiated bill should be approvedby the upper house next week. The electorate will be faced with thequestion: "Do you agree with the Czech Republic becoming a member of theEU in accordance with the Czech EU accession treaty?" (NewsBase 10.xi.02) HUNGARY EGIS TO BOOST SALES 25% ON CIS MARKET Pharmaceutical company Egis Rt said it expects a sales increase of morethan 25% on CIS markets, more than a 20% increase in Central and EasternEuropean markets and a sales increase of 8% in Hungary in its currentfiscal year, which began in October. Sales in Western Europe and theU.S. are expected to rise by $1 million. Hungarian sales willadditionally rise 3.2% due to drug price hikes, deputy CEO for financesLászló Marosffy said on Tuesday. Egis will launch six new drugs inHungary in the new fiscal year. Three of these could achieve annualsales of Ft 400 million each, Marosffy said. (BBJ 13.xi.02) LATVIA FOUR PARTIES IN THE NEW COALITION GOVERNMENT SIGN JOINT DECLARATION The leaders of the four parties in the new coalition government signed ajoint declaration after the first session of the new parliament, thelocal media reported. Prime Minister designate Einars Repse of New Era,Ingrida Udre of the Union of Greens and Farmers Union, Eriks Jekabsonsof Latvia's First Party and Roberts Zile of For the Fatherland andFreedom/LNNK were the signatories. The declaration states that the goalsof the government are responsible and efficient public administration,full NATO and EU membership, a strong and independent court system andcombating corruption and crime. Other goals include a national economybased on an information society and knowledge, an integrated societywith equitable development of Latvia's regions and high employment. Thefour parties also agreed to support President Vaira Vike-Freiberga foranother four-year term as president. (NewsBase 07.xi.02) POLAND POLAND LOOKS SET TO BENEFIT FOR DELAYED (2004) EU MEMBERSHIP The EU Enlargement Commissioner Guenter Verheugen has for the first timeofficially announced that EU expansion will take place in the middle of2004. May 1 or June 1 are the most likely dates for the enlargement tobecome a fact. “The new members have to join the Union before theEuropean Parliament elections on June 22, 2004,” said Verheugen. Thedelay may turn out to be good news, as it means Poland’s contribution tothe EU budget will go down by €200 million during each month of thedelay. At the same time, the EU financial support for Poland will remainunchanged. If Poland became an EU member at the beginning of June 2004it should receive €1.9 billion, compared with €900 million in subsidiesif it joined on January 1 2004. “This appears very advantageous, but wehave to remember that the negotiations are still in progress. Thecountry still has to do its best to become an EU member as soon aspossible. Maybe we will manage to join on January 1,” EU AffairsMinister Danuta Hubner said. (WBJ 13.xi.02) ROMANIA ROMANIA TO CLOSE ANOTHER FOUR CHAPTERS OF NEGOTIATION WITH EU Romania is ready to provisionally close another four chapters ofnegotiation with the European Union, Romania's EU Chief Negotiator,Vasile Puscas, said during the 14th meeting of the Romania-EU JointParliamentary Committee this week. Puscas identified the four categoriesas Telecommunications and IT, the Customs Union, the Free Movement ofCapital and the Culture and Policy of the Audio-visual. Denmark'sAmbassador in Bucharest, Erik Bom, confirmed for the first time that theDanish Presidency of the European Union expects the four chapters to beclosed in Jul/Dec-02. Chief of the European Commission Delegation inBucharest, Jonathan Scheele, said that in a two week-period the EuropeanCommission would finalise a plan of Romania's negotiation, which wouldbe adopted at the European Council in Copenhagen after talks are heldwith the Romanian authorities on the issue. Romanian Minister ofIntegration, Hildegard Puwak, detailed Romania's accession preparationsand voiced hope the country would prove capable of absorbing theadditional financial resources due to be allocated after the EU invitesthe first 10 states to join. Romania has opened 28 EU negotiationchapters so far, and closed 13 on a provisional basis. Since theprevious meeting of the Committee in the spring, Romania has openedanother six chapters and closed four. (NewsBase 07.xi.02) RUSSIA LUKOIL, STATOIL BOOST TIES Norwegian energy group Statoil said Tuesday it had signed a preliminarydeal with top oil company LUKoil to extend their cooperation in theCaspian Sea. The deal came during a visit to Norway by PresidentVladimir Putin, who headed a large delegation including leaders fromsome of the country's major energy firms and Energy Minister IgorYusufov. "We have now written a memorandum of understanding to look atfurther cooperation in the Caspian," Statoil spokesman Kai Nielsen said."The deal mentions a field in the Russian part of the Caspian calledYalamo-Samur," he said. "We expect this to be a big field." But Statoilexecutives declined to say how large the field's resources are likely tobe. "That's what we are going to try to find out, but it's too early tosay anything more right now," Statoil chief executive Olav Fjell said onthe sidelines of a meeting between Norwegian and Russian oil industryexecutives. Statoil already holds an 8.6 percent stake in theAzeri-Chirag-Gunashli field, which produces about 125,000 barrels perday, and is involved in exploration at the Shah Deniz, Alov, Araz andSharg fields in the Caspian Sea. "We are very interested in what theNorwegians have to offer," LUKoil first vice president Ravil Maganovsaid. Besides cooperating in the Caspian Sea, Maganov said the BarentsSea in the Far North would be another area for cooperation on both theNorwegian and Russian part of the Barents Sea, expected to hold vastpetroleum resources. Executives of energy companies including Gazprom,Yukos, Rosneft, Sibneft and Tyumen are also present in Oslo and willmeet with their Norwegian counterparts from Statoil and Norsk Hydro andengineering group Aker Kvaerner. Norway's oil minister, EinarSteensnaes, has said the meetings aim to boost cooperation among the twoneighbors in the Arctic Barents Sea. He also hopes to agree on annualministerial meetings to discuss oil policy and future developments. (The Moscow Times 13.xi.02) PUTIN SIGNS 'ACCEPTABLE' ACCORD ON KALININGRAD Speaking at a Brussels news conference on 11 November, EuropeanCommission President Romano Prodi, EU foreign affairs chief JavierSolana, and President Vladimir Putin announced an agreement on access tothe Russian exclave of Kaliningrad, Russian and Western news agenciesreported. Under the accord, Russian citizens traveling by car betweenKaliningrad and the rest of Russia will be issued specialmultiple-transit travel documents to cross Lithuanian territory andthose traveling by train will receive single-transit travel documents,newsru.com and izvestia.ru reported. Railroad travel documents will beissued when the ticket is purchased, and Lithuania will reserve theright to deny entry to anyone believed to have violated the law or topose a threat to Lithuanian security. Putin described the agreement as"not ideal, but acceptable" and said talks on the issue will continue.Izvestia.ru commented that Russia has de facto accepted the EU demandthat some sort of visa regime be implemented, even if the word "visa"does not appear in the agreement. (RFE/RL 12.xi.02) SIBNEFT STOCKS UP FOR SLAVNEFT AUCTION Sibneft has obtained a $90 million loan from Westdeutsche Landesbank,"Vedomosti" reported on 5 November. The loan is just part of a packageof credit guarantees totaling $675 million that Sibneft securedrecently, allowing the oil company to pump up its cash reserves for theupcoming privatization of Slavneft. Troika Dialog analyst ValeriiNesterov told "Vedomosti" that Sibneft's current debt of $1.8 billion --$10 per barrel -- leaves room for another $500 million in borrowing.These latest loan moves follow a 30 October earnings report thatsuggests Sibneft may have increased its stake in a trust that owns 12.98percent of Slavneft from 25 percent to 75 percent (Tyumen Oil Company[TNK] holds the remaining 25 percent stake). Controlled by politicallyinfluential Roman Abramovich, Sibneft is seen by many as a front-runnerin the race for Slavneft. (RFE/RL 12.xi.02) ...AS TNK THROWS HAT IN RING TNK President Semen Kukes told the "Financial Times" on 5 November thathis company will enter a bid for a 75 percent stake in Slavneft in thenext two weeks. Kukes was cagey on the possibility of a joint bid withSibneft, saying only, "We have a similar approach to Sibneft." The StateProperty Fund has set a minimum price of $1.3 billion, while analystssay competition could send it up to $2 billion. In a move widely seen aspreparation for the Slavneft auction, TNK recently completed a $400million bond issue. Alfa-Group, which controls TNK, floated anadditional $175 million in Eurobonds on 5 November. Prime MinisterMikhail Kasyanov has said the Slavneft auction will take place no laterthan 20 December, gazeta.ru reported on 9 November. (RFE/RL 12.xi.02) ECONOMIC DEVELOPMENT MINISTER SENDS SHEREMETEVO HEAD PACKING Economic Development Minister German Gref personally oversaw thedismissal of Sheremetevo Airport Director Sergei Belyaev, igniting a newcontroversy over the airport's troubled reconstruction program andreopening a Pandora's box of scandals past. Gref, who heads state-runSheremetevo's board of directors, ousted Belyaev at a 2 November boardmeeting and replaced him with recently fired Deputy Director YevgeniiBakhteev, "Izvestiya" reported on 5 November. The board charged Belyaev,who was on sick leave and did not attend the meeting, with insufficientpreparation for the winter and the allotment of 15 million rubles($472,144) in dubious credits to top executives. Belyaev had clashedwith Gref over securing investment support for a new $300 passengerterminal, with Belyaev pushing for a deal with Aeroflot and Gref lookingto foreign investors. In a 6 November interview with gazeta.ru, Belyaevdefended the credits as "incentives" and accused Gref of "brazenincompetence," promising to seek satisfaction in court. In a dismayed 5November editorial, "Vedomosti" noted that since 1999 the airport hasseen five reconstruction projects and two management teams come and go,all against the backdrop of a "lousy Soviet airport, a gaping vacant lotin place of [new terminal] Sheremetevo-3, and fleeing foreign airlines."(RFE/RL 12.xi.02) $100M LOAN FOR IKEA The European Bank for Reconstruction and Development will lend $100million to the Russian subsidiary of the world's biggest furnitureretailer, Sweden's IKEA, to build a huge mall just outside Moscow. TheEBRD said in a statement Monday that the mall and entertainment complex,which will include shops, restaurants, a cinema and a skating rink,would be Russia's largest and attract 25 million visitors per year."IKEA is a company focused on a long-term view of Russia and committedto good corporate governance and sustainable development," said NoreenDoyle, the EBRD's first vice president. IKEA already has two stores onthe outskirts of Moscow, and the new complex will be attached to the onein the south of the city. (The Moscow Times 12.xi.02) COMMUNISTS SEEK TO END YELTSIN'S PRIVILEGES Communist Duma Deputy Viktor Ilyukhin on 11 November introduced a billthat would revise the privileges and immunity granted to former RussianPresident Boris Yeltsin under the current law on guarantees to theRussian president and his family, RosBalt reported. Under the law,Yeltsin and his family receive about 50-60 million rubles ($1.6million-$1.9 million) per year in expenses and benefits. "Such a sumequals the entire budget of an average raion settlement and consideringthe impoverishment of millions of citizens, it is a superfluous andinexcusable waste of state funds," Ilyukhin wrote in a memorandumaccompanying his bill. Under Ilyukhin's amendment, the existing law onguarantees to the president would not apply to anyone who served in thatoffice prior to 31 December 1999. In 1991, Ilyukhin, then a stateprosecutor, became famous when he unsuccessfully attempted to prosecutethen-Soviet President Mikhail Gorbachev for "state treason." (RFE/RL 12.xi.02) RUSSIA ASKS FOR OLIGARCH'S EXTRADITION The Prosecutor-General's Office has formally asked Great Britain toextradite self-exiled tycoon Boris Berezovskii, Russian news agenciesreported on 5 November. Berezovskii and two associates, BadriPatarkatsishvili and Yulii Dubov, face charges of massive embezzlementstemming from an alleged car-sales scam at LogoVAZ in 1994-95. In aninterview with strana.ru, Berezovskii said he has not been informed of aformal extradition request. He also said that he has applied forpermanent residency in Great Britain and will resist extradition toRussia. (RFE/RL 12.xi.02) SWEDEN EXPELS TWO RUSSIANS FOR ESPIONAGE The Swedish Foreign Ministry announced on 11 November that it hasexpelled two Russian Embassy diplomats on suspicion of espionage,Russian and Western news agencies reported. The ministry declined toreveal the names or positions of the diplomats and said they havealready left the country. In Moscow, Boris Labusov, a spokesman for theForeign Intelligence Service (SVR), also declined to comment on thereport. Lenta.ru, however, wrote that two Russians were caughtred-handed by Swedish counterintelligence agents receiving secretdocuments from telecommunications defense contractor LM Ericsson. ThreeEricsson employees are reportedly under investigation in connection withthe incident. (RFE/RL 12.xi.02) THIEVES PLUCK NEWTON'S APPLE Thieves on 6 November stole a rare first edition of Isaac Newton's"Philosophiae Naturalis Principia Mathematica" from the Russian NationalLibrary in St. Petersburg, Reuters reported on 10 November. The thievesreportedly posed as readers and requested the volume for use in thelibrary's reading room, failing to return it when the library closed.For unknown reasons, the library only reported the theft to police on 8November. "Principia" was first published in 1687 and contains Newton'sexplanation of the three laws of motion and the law of universalgravitation. (RFE/RL 11.xi.02) SERBIA CREDIT LINE AGREEMENT SIGNED FOR FINANCING SMALL & MEDIUM-SIZEDENTERPRISES The European Agency for Reconstruction, the Serbian Revolving CreditFund and Serbia's Komercijalna Banka signed an agreement on a E1.5mcredit line for financing small and medium-seized enterprises, theBelgrade daily Politika reported. Five-year loans, amounting to E200k,will be approved with a one-year grace period and a 10% annual interestrate. Komercijalna Banka also announced a E40m credit line for SMEs, tobe co-financed by the European Investment Bank, and a E10m share capitalincrease. Komercijalna Banka President Ljubomir Mihajlovic said that thebank will boost its share capital from the present E61.4m to E71.4m,adding that the federal securities commission is expected to approve theshare capital increase. The bank's total capital currently stands atE128m. Komercijalna Banka is one of 16 Serbian banks in which the stateacquired stakes after the Yugoslav Central Bank decided to swap theirdebts to the Paris Club of state creditors and the London Club of banklenders into state-held equity. (NewsBase 11.xi.02) UKRAINE OPPOSITION LEADER SAYS KUCHMA'S INTERNATIONAL ISOLATION IS 'OBVIOUS'. Our Ukraine leader Viktor Yushchenko told journalists on 1 November thatNATO's decision not to invite President Leonid Kuchma to its summit inPrague is a "dramatic page in Ukraine's modern history [and] an obvioussign of international isolation," UNIAN reported. Yushchenko saidUkraine's current international situation is another argument for apolitical dialogue between Ukrainian authorities and rival social andpolitical forces. Yushchenko also said Our Ukraine continues to conducttalks with the Labor Ukraine and Ukraine's Regions parliamentarycaucuses on the creation of a democratic parliamentary majority. Headmitted, however, that it has recently become "more and more difficult"for these forces to talk with one another. (RFE/RL 06.xi.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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