No. 146, 03 August 1993

RUSSIA



PROTECTION FOR FOREIGN INVESTMENT. The first formal step has
been taken to protect foreign investment against political risk,
Izvestiya reported on 2-August. The head of the State Investment
Corporation and the head of the European Agency for Export Guarantees
signed an agreement on 31 July to set up an insurance fund to
serve as a guarantee against any changes in Russian legislation
or political upheaval that could threaten foreign investment.
The fund's founding capital will consist initially of gold and
precious metals to the value of about $100 million and will be
deposited in a West European country. -Keith Bush

MINISTERS TO NORTH OSSETIA FOLLOWING MURDER OF HEAD OF INTERIM
ADMINISTRATION. Defense Minister Pavel Grachev, Deputy Prime
Minister responsible for nationalities affairs Sergei Shakhrai,
and a high powered investigation team from the Ministry of Internal
Affairs flew to North Ossetia on 2-August in the wake of the
killing in an ambush on 1-August of Viktor Polyanichko, the head
of the interim administration in the area of the North Ossetian-Ingush
conflict, Russian media reported. Ingush President Ruslan Aushev
attributed the killing to forces that wanted to prevent the return
of Ingush refugees to the Prigorodnyi raion of North Ossetia,
on which a formal start was to be made at the beginning of August,
while North Ossetian spokesmen put the blame on the Ingush. In
Moscow there was an emergency meeting of the cabinet to discuss
the situation. Colonel-General Yurii Shatalin, who has been appointed
acting head of the interim administration, told ITAR-TASS that
Polyanichko had showed his courage by accepting a job that 20
people had already refused. -Ann Sheehy

SHUMEIKO ON NEW CONSTITUTION. In a speech to the Congress of
Young Compatriots (Russian emigres) which opened in Moscow on
2 August, Russian First Deputy Prime Minister Vladimir Shumeiko
assessed the ongoing debate over the new Russian Constitution,
ITAR-TASS reported. He claimed that Russia could not progress
without a new constitution. He also declared that the only feasible
state structure for Russia was a federation, since the country's
constituent republics had already established their sovereignty
and "therefore the creation of a unitary state on Russian territory
is impossible." -Wendy Slater

IS YELTSIN SERIOUSLY ILL? ON 2 AUGUST, THE FRANKFURTER ALLGEMEINE
ZEITUNG CARRIED A REPORT ON CURRENT RUMORS IN MOSCOW THAT PRESIDENT
BORIS YELTSIN IS SERIOUSLY ILL AND ABLE ONLY TO A LIMITED EXTENT
TO FUNCTION AND TO TAKE DECISIONS. A similar item was reportedly
published in Rossiiskaya gazeta during the weekend. The performance
of the president prior to and during the banknote withdrawal
affair was cited as a prime sign that he may be incapacitated,
in addition to the fact that he has hardly appeared in public
during the past three weeks. Presidential spokesmen denied the
reports in interviews with an RFE/RL correspondent and Reuters.
-Keith Bush

MALAYSIA CLOSER TO BUYING RUSSIAN MIG'S. AFP reported on 1 August
that Russia had moved a step closer to selling Malaysia 18 MiG-29
fighter jets after satisfying the demands of Malaysian military
officials that the engine and body frames of the jets be improved
to lower operational costs and ensure simpler maintenance. Malaysian
Air Forces commander Abdul Ghani, who had just returned from
an inspection tour to Russia, nevertheless suggested that the
deal had not yet been finalized. On 30 July, meanwhile, the Russian
newspaper Segodnya reported on Moscow's increasing willingness
to sell weapons at "dumping" prices, or to barter weapons for
commodities, as an important part of its strategy for breaking
into the lucrative Southeast Asian arms market. It noted that
Russia plans to accept shipments of palm oil from Malaysia as
partial repayment for the MiG's and that negotiations were also
taking place with the Philippines and Thailand on arms' deals
that would be paid for in part by bananas and rice, respectively.
-Stephen Foye

TRANSCAUCASIA AND CENTRAL ASIA



SHEVARDNADZE ON SITUATION IN GEORGIA, ABKHAZIA. In his weekly
radio address on 2 August, Georgian Parliament Chairman Eduard
Shevardnadze labeled UN participation in the regulation of the
Abkhaz conflict a "significant factor" and suggested that the
experience might serve as a model for calming other hot spots
in the former Soviet Union, ITAR-TASS reported. Fifty UN military
observers are expected to arrive in Abkhazia soon to join trilateral
control groups already monitoring scattered ceasefire violations.
In the same broadcast, Shevardnadze called for the establishment
of a stricter law and order regime in Georgia, Russian TV "Novosti"
reported. The same program included the announcement by Loti
Kobalia, commander of troops loyal to ex-president Zviad Gamsakhurdia,
that Georgia as such would cease to exist if Shevardnadze did
not resign. -Catherine Dale

RUSSIAN DIPLOMATIC OFFENSIVE ON TAJIKISTAN. Russian presidential
envoys have visited Afghanistan, Iran, and Pakistan to seek support
for a solution to the fighting on the Tajik-Afghan border, while
Russian First Deputy Minister of Foreign Affairs Anatolii Adamishin
has met with the presidents of Kazakhstan, Uzbekistan, and Kyrgyzstan
to pass on invitations from Russian President Boris Yeltsin to
meet in Moscow on 7 August to discuss the Tajikistan situation,
Western and Russian agencies reported on 31 July and 1 and 2-August.
Kazakhstan's President Nursultan Nazarbaev told a journalist
on 31 July that proposals for stopping the fighting in Tajikistan
had included the use of UN observers and an appeal to the leaders
of Pakistan, Iran, Afghanistan, Turkey, and Saudi Arabia to find
a formula to stabilize the region. -Bess Brown

IRAN, RUSSIA DISCUSS BORDER CRISIS. Evgenii Primakov, acting
as special envoy for President Yeltsin, met with Iranian leaders
in Tehran on 1 August to discuss the ongoing crisis on the border
between Afghanistan and Tajikistan. Few details of their discussion
were made public, however; Reuters reported only that the two
had agreed that the crisis should be resolved by negotiations
between the government and the opposition in Tajikistan. According
to Iran's IRNA agency, Primakov had emphasized the significance
of Iran's role in the region. On 31 July Primakov visited Kabul
and met with Afghan President Burhanuddin Rabbani and former
Defense Minister Ahmad Shah Masood, AFP reported. -Stephen Foye


KAZAKHSTAN TIGHTENS CIS PAYMENTS, NEW CURRENCY PLANS. Kazakh
President Nursultan Nazarbaev has issued a decree increasing
the state's control over trade transactions with other nations
of the former Soviet Union, Ekonomika i zhizn (no. 31, 1993)
reported. The decree calls on all Kazakh enterprises to close
their accounts with banks in other countries of region and henceforth
to conduct business with these nations only through Kazakh commercial
banks. Also in the sphere of national finance, the Chairman of
the Supreme Soviet of Kazakhstan, Serikbolsyn Abdildin, announced
at a press conference that the nation's new currency, the tenge,
would be introduced before the end of the year. -Erik Whitlock


UZBEKISTAN DELAYS EXCHANGE OF OLD RUBLES FOR NEW. The Uzbek government
has decided to delay indefinitely the exchange of pre-1992 rubles
for new 1993 Russian rubles, ITAR-TASS reported on 2 August.
A previous government resolution, adopted in the wake of Russia's
unexpected currency reform, had envisaged the exchange of old
rubles for new in August, but the Uzbek Central Bank has now
announced that this is impossible due to shortages of the new-style
ruble. Meanwhile the Russian Central Bank, under fire from the
finance minister for unauthorized transfers of new rubles to
Uzbekistan, has claimed that the transfers were consistent with
the policy-approved by the Russian government-of sending rubles
conditional on the Uzbek leadership's adherence to monetary policy
coordinated with Russia. Russian Radio reported a statement by
the First Deputy Chairman of the Russian Central Bank, Aleksandr
Khandruev, on 31 July, claiming that only 5% of Uzbekistan's
overall currency requirements will be covered by the delivery
of new rubles, and that these will be given to Uzbeks making
business or personal trips to Russia. -Sheila Marnie and Yalcin
Tokgozoglu

CENTRAL AND EASTERN EUROPE



BOSNIAN UPDATE. Bosnian President Alija Izetbegovic refused to
participate in the resumption of the Geneva peace talks on Bosnia-Herzegovina
on 2 August as long as the Serbs continue their offensive at
Mt. Bjelasnica. According to international media he said: "If
they don't withdraw, we will again postpone the negotiations."
Bosnian government sources said that the Serbs launched a major
offensive with hundreds of men and helicopters while Muslim troops
are losing ground. Izetbegovic nonetheless said he will remain
in Geneva rather than completely leave the talks, which are scheduled
to continue on 3 August. According to a negotiations spokesman,
Bosnian Serb leader Radovan Karadzic has agreed to let UN troops
take over his forces' positions on the mountain. The spokesman
said that Lord Owen and Thorwald Stoltenberg are "disappointed"
that the session on 2-August was so short. Meanwhile fighting
between Muslims and Serbs continued around Brcko, while in central
Bosnia Muslims successfully overran Gornji Vakuf. On 3 August
NATO discussed possible air strikes against the Serbs if they
continue their stranglehold on Sarajevo and other areas. After
a meeting in Brussels from 2 to 3 August officials said that
NATO will prepare immediately for air strikes if the Serbs continue
their actions. -Fabian Schmidt

SERBS SINK MASLENICA BRIDGE. Croatian TV ran footage in its 2
August evening newscast showing the pontoon bridge linking Dalmatia
with the rest of Croatia blasted into sections and submerged
in the water. The broadcast said that shells fired that afternoon
were responsible, while news agencies quoted local Serb rebels
as saying that they wanted to give the Croats "a sort of warning"
to evacuate their troops from the area. Croatian military units
were to have left last weekend according to a UN-sponsored agreement,
but Zagreb then demanded that Serb artillery be placed under
UN control at the same time. That would be in keeping with the
1992 Vance plan but was not specified in the July document. Croatian
President Franjo Tudjman launched an offensive in January to
recapture Maslenica and has placed great political emphasis on
the bridge and keeping it open. He nonetheless has not yet responded
directly to the Serb challenge, and the BBC's Croatian Service
on 3 August quotes him as instead blaming the UN for not protecting
the bridge. Elsewhere, news agencies on 2-August quoted UN human
rights investigator Tadeusz Mazowiecki as protesting Croatia's
recent repatriation of some Bosnian refugees, saying that such
moves are banned because Bosnia is a war zone. Hina, however,
cites Croatian officials as saying that undocumented aliens will
be dealt with in keeping with Croatian law. -Patrick Moore

SUCHOCKA REPRIMANDS LOCAL OFFICIALS. One day after admonishing
police officials for undermining the apolitical nature of their
service by running for office on the job, Prime Minister Hanna
Suchocka delivered a similar message to state administrative
officials in Poland's 49 voivodships. Meeting with voivodship
chiefs in Warsaw on 2 August, Suchocka said that the state administration
must preserve political neutrality. Administrative posts to which
officials are appointed and not elected "may not serve as a trampoline
from which to leap into elective office," she stressed. Suchocka
expressed outrage that many administrative officials had chosen
to run for office without resigning or requesting leaves of absence.
Polish TV reports that 12 of 98 voivodship chiefs and deputy
chiefs are now running for the Sejm or the Senate. Suchocka gave
them three days to decide between the election campaign and their
jobs. Already on 2 August, Suchocka fired the deputy voivodship
chief in Plock for "disloyalty to the state." The official in
question, a candidate to the Sejm for the opposition Polish Peasant
Party, had criticized government policy in interviews with the
local press. -Louisa Vinton

667 CANDIDATES REGISTER FOR SENATE ELECTIONS. The state election
commission reported on 2-August that 667 candidates have registered
to run for the 100 seats in the Senate. The registration deadline
passed on 26 July, but the process has not yet concluded; court
challenges by some rejected candidates are still pending. The
candidates represent 145-different election committees, including
19 parties, 14 social organizations, 5 coalitions, and 107-voters'
committees. Unlike the proportional Sejm elections, the Senate
elections work on the "first-past-the-post" system, with 2 seats
available in each voivodship (3 seats in Warsaw and Katowice).
The most candidates-28-are registered in Katowice, the fewest-8-in
Przemysl, PAP reports. Candidates had to collect 3,000 supporting
signatures to register. Election commissioner Andrzej Zoll noted
that undue pressure had been applied to collect signatures in
some areas and reminded candidates of their legal obligation
to refrain from such practices. Gazeta Wyborcza has reported
cases in which candidates collected signatures among subordinates
in military installations and prisons. A candidate for the Liberal
Democratic Congress in Cracow was disqualified when some of the
signatures on his petition were found to use the names of people
long deceased. -Louisa Vinton

CZECH INTELLIGENCE CHIEF DENIES SPYING ON POLITICIANS. On 2 August,
Stanislav Devaty, the acting director of the Czech Bureau of
Intelligence and Security and former deputy director of the Federal
Bureau of Intelligence and Security, sent a letter to CTK in
which he rejects media allegations that the FBIS spied on leading
Czech politicians. Devaty argues that charges made against the
FBIS are a result of a misunderstanding. In a related development,
Vladimir Suman, chairman of the parliament's security and military
committee told CTK on 2 August that at its extraordinary session
in August the committee will examine whether intelligence services
have broken the law. In yet another development the director
of the Center for Democracy and Free Enterprise, Ladislav Venys,
who was accused in the media of running a private intelligence
network for the ruling Civic Democratic Party, said that the
charges against him and the Prime Minister Vaclav Klaus's CDP,
as well as attempts to discredit Viktor Kozeny, the president
of the largest investment fund in the Czech Republic, should
above all be seen as an attack on the voucher privatization scheme.
-Jiri Pehe

ILIESCU'S SOUTH AMERICAN TOUR. On 1 August Romanian President
Ion Iliescu ended a two-day visit to Uruguay and left for Santiago
de Chile, the third stop on his South American tour. In an interview
with Radio Bucharest on 31 July Iliescu spoke of the economic
aspects of his just concluded visit to Argentina and Uruguay.
-Michael Shafir

STRIKING MINERS EYE BUCHAREST AGAIN. On 2-August striking miners
from Romania's Jiu Valley demanded that Prime Minister Nicolae
Vacaroiu come to the region and lead the government's negotiations
in person, Radio Bucharest reports. Vacaroiu rejected the demand.
Miron Cosma, the miners' union leader, said the strike will continue
until the government meets their demands for pay increases. Cosma
hinted that the miners might descend on Bucharest; they did so
several times in the past and precipitated major political crises.
He also called on leaders of other unions to back the miners'
demands and attacked those union leaders who oppose their strike.
Some leaders of other trade unions, including the powerful railway
workers' union, arrived in the valley on 2-August, and the Bucharest
subway union warned it might take action supporting the miners.
But other union leaders, including Victor Ciorbea, who heads
the largest trade union confederation, criticized the action.
The crisis is viewed as the biggest labor challenge yet to Vacaroiu's
nine-month-old cabinet. -Michael Shafir

YELTSIN SENDS MESSAGE TO SNEGUR. In a message handed to Moldovan
President Mircea Snegur by the Russian ambassador in Chisinau
on 30 July, Yeltsin assured Snegur that Russia was abiding by
the 21 July 1992 agreement on the peaceful regulation of the
armed conflict in Transdniestria. Moldovapres-TASS reports. Yeltsin
said he is concerned about the political instability on the left
bank of the Dniester, and the "excessive activity of certain
individuals whose actions in no way reflect Russia's policy"-a
reference to the provocative statements made recently by extreme
nationalist Russian deputies visiting Transdniestria. The version
of Yeltsin's message circulating in Moldova omits the final paragraph,
which expressed the hope that "the sides" in the conflict in
eastern Moldova will negotiate a solution "through Russia's mediation."
Chisinau finds this unacceptable because it puts Moldova and
Transdniestria on an equal footing and claims a role for Russia
in arbitrating Moldova's constitutional arrangements. Snegur
told the Russian ambassador that he thinks it was time for the
two presidents to renew direct contacts to solve the conflict.
-Ann Sheehy and Vladimir Socor

"DNIESTER REPUBLIC" PAPER BLASTS NATO DELEGATION. Dnestrovskaya
pravda, the main newspaper of the "Dniester republic," informed
its readers on 20 July that the NATO delegation visiting Moldova-including
the left bank of the Dniester-has arrived on "an ordinary intelligence
mission" to spy on Russia's 14th Army, which "sits like a bone
in the throat not only of Moldova, but of Moldova's Western string-pullers."
In receiving the delegation, the article continued, President
Snegur "showed a marionette-like readiness to serve the possible
new masters." "With the USSR and the Warsaw Pact gone, NATO controls
the behavior of their successors both in Eastern Europe and in
the CIS." -Vladimir Socor

BULGARIANS ADOPT MASS PRIVATIZATION. On 2-August the cabinet
approved a general plan for mass privatization of 500 large and
medium-sized companies, BTA reports. Representing a compromise
version of two previous government drafts, the present scheme
envisages the privatization of state property worth 180 billion
leva ($6.5 billion). The mining and power industry, as well as
companies involved in oil processing, rail transport, and military
production, will not be affected. According to the plan, each
adult Bulgarian is to receive a nontransferable option on shares
worth 30,000 leva ($1,000), for which he or she can purchase
shares either in an enterprise or in a holding company. Each
option, plus 5% interest, must be paid off in six installments
between the years 1999 and 2005. To date Bulgaria has only privatized
three large-scale companies, but half of all retail trade is
now considered to be in private hands. -Kjell Engelbrekt

HUNGARIAN PRIVATIZATION PLAN ON TRACK. The State Property Agency
said on 30 July that the mass privatization program can start
early 1994, Hungarian Radio reports. The government will decide
on the plan in two weeks. The plan was first revealed in March
1993 but was not well received. It was seen as the ruling coalition's
desperate attempt to "buy" votes in next spring's general elections.
The program would give 100,000 forint (about $1000) worth of
interest-free credit to every Hungarian citizen over the age
of 18 to participate in privatization. Estimates put the number
of participants as high as half a million. -Karoly Okolicsanyi


NEW EC LIMITS ON POLISH EXPORTS. The European Community imposed
minimum prices on Polish exports of black currants on 2 August,
PAP reports. The EC commission charged that Polish exports undercut
prices prevailing on EC markets. The restriction applies only
to Poland. The foreign trade ministry issued a statement arguing
that the price limits are "a further measure aimed at impeding
access to EC markets by Polish soft fruit exporters." In a similar
decision, the EC imposed minimum prices on imported Polish cherries
on 19 July. -Louisa Vinton

POLAND TO EXPORT $40 MILLION IN CARS TO CHINA. Poland's FSO automaker
concluded a deal on 2 August to sell 4,000 Polonez cars to a
Chinese company representing the Shenzhen special economic district,
PAP reports. The deal will earn Poland $40-million. Attending
the signing ceremony in Warsaw, Deputy Prime Minister Henryk
Goryszewski commented that "our foreign trade cannot be oriented
exclusively toward cooperation with the EC. We need a foundation
in the East in order to be strong in the West, so that we do
not have to take part in European integration in the role of
a poor cousin." The director of the FSO plant said the contract
would help keep his company afloat financially. -Louisa Vinton


THE GM-VW EXECUTIVE DISPUTE: THE CENTRAL EUROPEAN CONNECTION.
The European edition of The Wall Street Journal reported on 2
August that J.-Ignacio Lopez decided to join Volkswagen A.G.
only after General Motors corporate officials surprised him on
9-March 1993 with a decision to set up "Plateau Six," an innovative
production facility Lopez had hoped to win for his native Basque
region of Spain, in either Hungary or Poland. There is already
a GM plant in Hungary, where Opel car engines are assembled.
GM negotiations with Poland have been going on for years, but
there is apparently no other public information about the fate
of this project. -Karoly Okolicsanyi

BELARUS STIFFENS MONETARY POLICY. Speaking at a press conference
in Minsk on 28-July, the head of the National Bank of Belarus,
Stanislau Bogdankevich, said that the bank and government had
come to an agreement on a much stricter monetary policy, according
to various Belarusian news reports. The bank pledged to cut low-interest
loans to enterprises and end credit to firms producing unmarketable
products. Bogdankevich said the practice of augmenting enterprises'
working capital with central credits will be stopped as well.
The shift in policy was among conditions needed to qualify for
the $98 million dollars in credits from the IMF announced that
same day. On 2-August an RFE/RL correspondent reported that the
World Bank has approved a contribution to a $18-million fund
to support Belarusian economic reforms. The World Bank's contribution,
totaling $8.3 million, will be combined with $7.6 million from
other foreign institutions and $2.1 million from the Belarusian
government itself. -Erik Whitlock and Robert Lyle

LITHUANIA'S CURRENCY SLOW TO CATCH ON. Since 1 August there has
been a government ban on using or accepting foreign currency
as payment for goods and services in Lithuania. Such payments
must be made in the national currency, the litas. The ban is
intended to stabilize the litas, which was introduced in June.
Initial Baltic media reports of 2-August suggest that Lithuanians
have been slow to comply with the government policy and continue
to use a mixture of currencies, as long as a policeman is not
in sight. -Dzintra Bungs

TROUBLES IN UKRAINE'S DEFENSE INDUSTRIES. The Russian newspaper
Segodnya on 30 July published an article describing the many
problems that Ukraine's defense enterprises face today. Arguing
that the defense complex lies in ruins, the article quotes former
Minister of Defense Industries Viktor Antonov, who claims that
defense production from 1991 to 1992 fell by some 65%. The article
also quotes other Ukrainian officials who argue that conversion
must be financed by arms sales abroad. In an effort to reverse
the sector's decline, a Military-Industrial Commission has been
created in Ukraine to oversee policy within the defense industrial
sector, including arms sales, the article says. Further, Valerii
Shmarov has been appointed to what was described as a new government
position, and will serve as deputy prime minister on questions
concerning the defense industrial complex. The problems that
Ukraine faces and the solutions that have been proposed appear
to parallel very closely developments in Russia's defense sector.
-Stephen Foye

UKRAINIAN DEFENSE MINISTER ON US VISIT. Konstantin Morozov, just
back from an official visit to the United States, said on 2 August
that US attitudes toward Ukraine are changing for the better
and that the two states have become military partners. According
to Kiev UNIAR Radio, Morozov suggested, however, that the $175
million granted by the US for dismantling Ukrainian nuclear weapons
is insufficient. Morozov was less positive about relations with
Russia, saying that an absence of consensus on issues concerning
strategic forces in Ukraine and the division of the Black Sea
Fleet preclude Kiev's establishing a defense relationship with
Moscow similar to that with the US. According to Reuters, Morozov
also said that he expects 10 of the country's SS-19 strategic
nuclear missiles to be dismantled by the end of September. -Stephen
Foye

DELAY IN PULLOUT OF RUSSIAN TROOPS FROM LITHUANIA? BALTIC MEDIA
REPORTED ON 1-2 AUGUST ON DISAGREEMENT OVER CERTAIN POINTS IN
THE OVERALL TREATY ON THE PULLOUT OF RUSSIAN TROOPS FROM LITHUANIA
AND, IN PARTICULAR, ABOUT THE AMOUNT OF COMPENSATION THAT LITHUANIA
IS DEMANDING FOR THE DAMAGES RESULTING FROM THE PRESENCE OF THOSE
TROOPS. If differences can be ironed out, the treaty might be
signed by the two presidents when they meet in Moscow. No date
for that meeting has been announced, but it could take place
even as early as this week. Russian authorities have indicated
that, lacking agreement on the amount of compensation, the withdrawal
process might be frozen. -Dzintra Bungs

MUTINOUS ESTONIAN INFANTRY OFFICER ARRESTED. On 2 August Estonian
authorities arrested Jaak Mosin, deputy commander of a rebellious
infantry unit at Pullapaa. Mosin is accused of having provoked
mutinous actions in his company last week and similar actions
last summer at the Kuperjanov battalion. The men at Pullapaa,
dissatisfied with the conditions of military service, have been
told by the government that their company has been dissolved
and that they must surrender their weapons and equipment, which
they have refused to do. Baltic media reported the story on 1-2
August. -Dzintra Bungs



[As of 1200 CET] Compiled by Wendy Slater and Charles Trumbull







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