Vol. 1, No. 13 part I, 18 January 1995

We welcome you to the Open Media Research Institute's Daily
Digest Part I--a compilation of news concerning Russia,
Transcaucasia and Central Asia, and the CIS. Part II,
covering East-Central and Southeastern Europe, is distributed
simultaneously as a second document.

The Daily Digest picks up where the RFE/RL Daily Report,
which recently ceased publication, left off. Contributors
include OMRI's 30-member staff of analysts, plus selected
freelance specialists. OMRI is a unique public-private
venture between the Open Society Institute and the U.S. Board
for International Broadcasting.

RUSSIA

CONFUSION OVER NEW CHECHEN CEASE-FIRE. A Chechen government
delegation held what were termed "discussions not talks" in
Moscow on 17 January with Russian Deputy Prime Minister
Sergei Shakhrai and First Deputy Minister for Nationalities
Vyacheslav Mikhailov on the feasibility of enforcing a cease-
fire in Chechnya, Interfax reported. (Minister for
Nationalities Nikolai Egorov is reportedly "in poor health"
and failed to attend either these "discussions" or the
Federation Council session on 17 January.) The Chechen
delegation told journalists on 17 January that at a
subsequent meeting with Prime Minister Viktor Chernomyrdin,
agreement was reached on a cessation of hostilities, possibly
beginning in the evening of 18 January. But ITAR-TASS later
quoted Russian government spokesman Valerii Grishin as
stating that Chernomyrdin's talks with the Chechens had been
"unofficial" and that a formal response to the Russian
proposal for a cease-fire was awaited from Chechen President
Dzhokhar Dudaev in Grozny. The head of Yeltsin's presidential
staff, Sergei Filatov, expressed doubt whether the proposed
cease-fire would take effect given that Dudaev "clearly does
not control the situation" in Chechnya, according to The New
York Times of 18 January. Meanwhile, AFP reported that the
Russian artillery bombardment of Grozny continued on 17
January, while the Russian government press service claimed
that street-to-street fighting was subsiding and that Chechen
forces were retreating from the city in groups of 700-900
men. -- Liz Fuller, OMRI, Inc.

WHAT HAPPENS NEXT? Earlier on 17 January, Federal Counter-
Intelligence Service (FSK) Director Sergei Stepashin told
Interfax in Mozdok that talks with Dudaev's representatives
should focus only on the conditions under which illegal
militias would lay down their arms, and not on political
issues. Stepashin added that Dudaev's present whereabouts
were unknown, and predicted that anti-Dudaev Chechen forces
subordinate to Provisional Council Chairman Umar Avturkhanov
and Beslan Gantemirov could enter Grozny on 18 or 19 January
to begin "mopping up" operations. (Ruslan Labazanov, the
former head of Dudaev's bodyguards, who subsequently went
over to the anti-Dudaev opposition, realigned himself with
Dudaev in early January, according to The Economist of 6-12
January.) Russian Security Council secretary Oleg Lobov told
Interfax on 17 January that any government installed in
Chechnya following the "restoration of constitutional order"
will only be a temporary one, but that given that many of its
members have lived in Chechnya for years and had a power base
there it would be wrong to regard it as Moscow's puppet.
Lobov discounted the possibility of either a protracted
guerrilla war in Chechnya or any attempt to launch a
resistance movement with the help of foreign media and
mercenaries. US military intelligence experts testifying on
17 January before the US Senate Committee on Armed Services
and quoted by AFP predicted, however, that although the
Russians were poised to gain control of Grozny they would
then face "a long siege" against guerrilla forces in the
mountains. -- Liz Fuller, OMRI, Inc.

KOZYREV, CHRISTOPHER MEET. Russian Foreign Minister Andrei
Kozyrev assured Secretary of State Warren Christopher of his
country's commitment to democracy and market reform and its
determination to negotiate a peaceful settlement of the
conflict in Chechnya during a three-hour dinner in Geneva on
17 January, The New York Times reported on 18 January.
Kozyrev did not indicate what concrete steps his country
intended to take; he claimed that Russia's inability to find
Chechens to negotiate with prevented any progress from being
made. Christopher warned Kozyrev to find a political way out
of the conflict so that Russia can have a normal relationship
with other countries, a senior official paraphrased
Christopher as saying. Christopher also mentioned several
issues that have put a strain on US-Russian relations:
Russia's determination to sell arms to Iran, its eagerness to
end the international embargo against Iraq, its refusal to
provide information about its chemical weapons program and,
most important, its unwillingness to halt attacks on
civilians in prosecuting its war in Chechnya. Nevertheless,
Christopher praised President Boris Yeltsin as "the most
committed democrat in the country who is in a high position."
Yeltsin has invited US President Bill Clinton to come to
Moscow around May 9 to participate in the 50th anniversary of
the victory over Nazi Germany. Christopher told Kozyrev that
Clinton could not yet make a firm commitment on the
invitation. The diplomats plan to meet again on 18 January.
-- Robert Orttung, OMRI, Inc.

CHUVASHIA TOLD TO CANCEL DECREE ON CHECHNYA. President
Yeltsin has called on Chuvash President Nikolai Fedorov to
rescind a decree issued last week challenging Moscow's right
to intervene in Chechnya, telling him it is unconstitutional,
ITAR-TASS reported on 17 January. In addition, the Russian
government was quoted as saying that the decree "stirs up
disobedience" among residents of the republic and encourages
draft dodging. The Presidium of the Chuvash parliament,
however, called for an amendment to the constitution to limit
the use of military power in circumstances similar to those
in Chechnya. -- Penny Morvant, OMRI, Inc.

KORZHAKOV SPEAKS OUT. The head of President Yeltsin's
security service, Aleksandr Korzhakov, suggested creating a
special body to coordinate the activities of Russia's special
services, Interfax reported 17 January, quoting an article to
be published in Argumenty i fakty on 18 January. Korzhakov
claimed the need to create such a body was strong because
criminal financial and industrial groups were buying
officials in the special services and dictating their will
through them. He declared that he will not be one of the
leaders of the new body. Korzhakov also denounced claims that
his service was becoming an independent political force in
Russian politics. He said that his duties included working
out security arrangements for the president's activities as
well as fighting corruption. Korzhakov claimed that the
Interior Ministry and Federal Counter-Intelligence Service
(FSK) as well as his staff were responsible for security in
the country, and that the new body was necessary to
coordinate all their activities. Korzhakov rejected
allegations that he was the leader of a "war party" in
Russia, saying that if the point at issue was a war on crime,
corruption, and illegal armed groups, he was certainly a
supporter of such a party and would uncompromisingly fight
against that evil. He denied sole responsibility for
initiating the conflict in Chechnya, implying that the
decision had been taken collectively by presidential
advisors, the chief of the presidential staff, the former
deputy chief of the FSK and security council members. In
light of concerns that Russia was becoming a police state, he
pointed out that "the real threat to society is posed not by
the security service, but by those who unceremoniously and
outrageously walk about the center of Moscow heavily armed
under the nose of the mayor and the financial mafia, which
nurtures a new generation of politicians in order to have a
puppet government." -- Robert Orttung, OMRI, Inc.

SENATORS STOP SHORT OF REPLACING SHUMEIKO. The opposition in
the Federation Council's Defense and Security Committee did
not succeed on 17 January in their attempt to replace
Vladimir Shumeiko as the speaker Federation Council, Russian
television newscasts, ITAR-TASS and an RFE/RL correspondent
in Moscow reported. The attempt was initiated by Petr
Romanov, who is the reported joint candidate of communists
and moderate Russian nationalists for the next presidential
election. Romanov disapproved of the speaker's pronouncements
on the Chechen war (Shumeiko has made a number of
contradictory public statements, proclaiming his whole-
hearted support for the use of force in order to crush
Chechnya one day, and protesting the bombing of Grozny a day
later.) Apart from this, critics have accused Shumeiko and
Ivan Rybkin, the speaker of the State Duma, of "acting as the
president's representatives in the parliament, rather than
representing their positions within their chambers of the
parliament . . . " Romanov further complained that Shumeiko
does not report to the Federation Council on the proceedings
of the Security Council, of which Shumeiko is a member.
Although five of the nine members of the Federation Council's
Defense and Security Committee shared Romanov's opinion on
the speaker (according to ITAR-TASS), after the day of
debates the Committee decided not to include Shumeiko's
status on the agenda. -- Julia Wishnevsky, OMRI, Inc.

RUSSIA'S GROSS DOMESTIC PRODUCT DROPS 39% IN THREE YEARS.
Gross domestic product (GDP) in 1994 numbered 630 trillion
rubles ($165.78 billion), a 15% decline from 1993 and a 39%
drop from pre-reform 1991, Interfax reported on 17 January.
The official figures, released by the Russian Statistics
Committee on 17 January, stated that 62% of the GDP came from
the private sector. The rate of decline in industry in 1994
appeared higher than in the two previous years and totaled
20.9%, compared to 16.2% in 1993 and 18% in 1992. The
Statistics Committee noted that the 1994 fourth quarter, as
compared to a year earlier, showed a 17.8% growth in
production. Other 1994 figures showed a continued reduction
of capital investments in the economy--a fall of 27% in the
past year. Overall, investments have fallen 61% since 1991.
Retail prices grew 220%; wholesale prices rose 230%. Real
income figures for the population were up 14% from 1993,
while unemployment increased 28.6%, up 5.3 million from the
previous year. -- Thomas Sigel, OMRI, Inc.

CENTRAL BANK CURBS OPEN CURRENCY POSITION OF BANKS UP TO 30%.
In an effort to ease the problems of crediting and monetary
policies amidst rising inflation, the Central Bank has
reduced the open-currency positions of commercial banks. All
currency above the 30% limit must be sold effective 18
January, Russian agencies reported. This move will most
likely force many banks to withdraw from the currency market.
Central Bank of Russia Vice President Aleksandr Khandruyev,
according to Interfax on 17 January, said that "the degree
and extent of the dollarization of the Russian economy cannot
be underestimated." He said that foreign cash is often used
for savings and settlements between companies and
individuals, which is a breach in the country's legislation
Khandruyev said that the ultimate goal of the Central Bank is
to establish a predictable floating ruble rate, but in order
to achieve this, the Central Bank needs to strengthen gold
and foreign exchange reserves and utilize part of the
excessive ruble reserves built up by commercial banks
operating in the currency markets. Khandruyev hoped that this
latest Central Bank move would be a step toward financial
stabilization. -- Thomas Sigel, OMRI, Inc.

CIS

OFFICIAL STATEMENTS ON UKRAINIANS IN CHECHNYA. Ukrainian
Foreign Minister Henadii Udovenko has sent a letter to his
Russian counterpart, Andrei Kozyrev, denouncing reports by
the Russian media of Ukraine's involvement in the Chechen
conflict, Ukrainian Television reported on 17 January.
According to Udovenko, there is no evidence of Ukraine's
involvement in Chechnya and allegations by senior Russian
officials of Ukrainian mercenaries participating in the
fighting are an attempt to damage Russian-Ukrainian
relations. He charged the Russian media with not taking
Ukraine's official position into account in their reporting.
Reuters reported the same day that the leader of the ultra-
nationalist Ukrainian National Assembly (UNA), Dmytro
Korchynsky, had openly acknowledged that as many as 100
members of UNA's paramilitary arm, the Ukrainian National
Self-Defense Organization (UNSO), were involved in the
fighting on the side of Chechen President Dudaev. -- Ustina
Markus, OMRI, Inc., OMRI, Inc.

[As of 1200 CET]

Compiled by Pete Baumgartner

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