No. 113, Part I, 12 June 1995

We welcome you to Part I of the Open Media Research Institute's Daily
Digest. This part focuses on Russia, Transcaucasia and Central Asia, and
the CIS. Part II, distributed simultaneously as a second document,
covers East-Central and Southeastern Europe. Back issues of the Daily
Digest, and other information about OMRI, are available through our WWW
pages: http://www.omri.cz/OMRI.html

RUSSIA
DUMA PASSES DUMA ELECTORAL LAW. The State Duma passed an electoral law
that will fill half of the lower house's seats by party list in 264-45
vote, with three abstentions on 9 June, Interfax reported. President
Boris Yeltsin had vetoed an earlier draft of the bill on 23 May in part
because he wanted to lower the number of party-seats to one-third.
However, the Duma deputies and the president were able to put together a
compromise at the end of last week. Vladimir Isakov, chairman of the
Conciliatory Commission, said the Duma refused to cave in on the party-
list voting and forced the president to accept many of their demands,
Segodnya reported on 10 June. The agreement rejected Yeltsin's proposal
to hold the elections in two rounds. The Federation Council, which did
not approve earlier Duma versions, will begin considering the law 13
June. -- Robert Orttung, OMRI, Inc.

YELTSIN SAYS IT IS TOO EARLY TO ANNOUNCE HIS PLANS. President Yeltsin
said he will only announce his plans for seeking a second term at the
last minute in order not to disrupt the country, according to an
interview with Izvestiya excerpted by Western agencies. He said that if
he declared right away, all of his actions would be seen as part of the
campaign, and if he announced he would not run, it would upset the work
of the presidential staff, the government, and other parts of the
executive branch. -- Robert Orttung, OMRI, Inc.

DUMA SEEKS CONSTITUTIONAL COURT CLARIFICATION ON SEPARATION OF POWERS.
Viktor Ilyukhin, chairman of the Duma Security Committee, has won the
Duma's approval to ask the Constitutional Court to examine the role of
the Russian president, Segodnya reported on 10 June. The request pointed
out that the constitution mandates a division between executive,
legislative, and judicial branches but does not describe the president
as part of any branch. Moreover, the Duma identified a contradiction in
the separation of powers because the constitution states that half of
the seats in the Federation Council must be filled by regional
representatives of the executive branch. With apparent agreement over
the Duma electoral law, the president and parliament must now define how
future members of the Federation Council will be chosen. Yeltsin wants
them to be executive and legislative leaders from each of Russia's 89
republics and regions, while his critics want them to be directly
elected by the population. -- Robert Orttung, OMRI, Inc.

GRACHEV SKIPS NATO MEETING: SNUB OR DOMESTIC POLITICS? Defense Minister
Pavel Grachev did not attend a 9 June meeting in Brussels of defense
ministers from countries in NATO and the Partnership for Peace (PfP)
program. Western agencies reported that NATO and American officials
expressed understanding for Grachev's absence since he had accompanied
President Yeltsin to his summit with Ukrainian President Leonid Kuchma,
but quoted one unnamed source as saying "it would not hurt for Grachev
to send a deputy." According to Kommersant-Daily on 9 June, Grachev had
intended to send one of his deputies, but Foreign Minister Andrei
Kozyrev "saw to it that the Defense Ministry mission's trip to Belgium
was canceled." Russia was represented at the meeting by its ambassador
to Belgium, Vitaly Churkin, who is a former Kozyrev deputy. The paper
explained that while both ministries were opposed to NATO expansion, the
Foreign Ministry preferred "different, softer, and smoother tactics in
relation with the West" than those of the blunt generals. -- Doug
Clarke, OMRI, Inc.

FEDERAL FORCES LAUNCH NEW ATTACK IN CHECHNYA. Federal troops launched an
offensive against Chechen separatist forces over the weekend, Interfax
and Western agencies reported on June 10. Fighting was particularly
intense around the villages of Shatoy and Nozhay-Yurt, which Russian
officers described as two of the last strongholds of Chechen resistance.
In an interview with Radio Rossii on 11 June, Lt. Gen. Gennady Troshev,
commander of the joint group of federal forces in Chechnya, described
the offensive as "the final one," adding that the Chechen separatist
forces "should be destroyed within two weeks." On 9 June, the Duma
passed a resolution calling on President Yeltsin to end military action
in Chechnya. According to the resolution, there have been some 5,000
Russian army casualties in the fighting. In an interview with Izvestiya
on the same day, Yeltsin showed no sign of changing his approach to the
conflict. -- Scott Parrish, OMRI, Inc.

HUNT FOR QUAKE VICTIMS ENDS. On 9 June, rescue workers called off the
search for survivors in the rubble of Neftegorsk, which was flattened by
an earthquake last month, Russian and Western agencies reported. The
Emergencies Ministry said the death toll had risen to 1,841 by the time
the search was halted; more than 400 people from the town survived the
quake and about 200 are missing. A new series of tremors registering up
to 4 points on the Richter scale shook northern Sakhalin on 10 June. --
Penny Morvant, OMRI, Inc.

CONSTITUTIONAL COURT NOT TO RULE ON LEGALITY OF NUCLEAR FUEL DECREE. The
Constitutional Court resolved on 9 June to end its examination of a
presidential decree on the storage in Russia of spent nuclear fuel from
foreign nuclear power plants, Interfax reported. Yeltsin's decree
provided for continuing construction of a plant near Krasnoyarsk to
process spent nuclear fuel; Duma deputies appealed to the court on the
grounds that the decree contradicts the Law on the Environment, which
bans the import of nuclear fuel. According to Izvestiya on 9 June,
Russia is obliged under international agreements to accept spent fuel
from power plants constructed according to Russian design, but the new
plant is intended to process radioactive waste that has no connection
with Russia as well. The court decided to drop the case on the grounds
that the decree is not a legal act because it is meant to cover a
limited period and contains specific instructions for one plant. --
Penny Morvant, OMRI, Inc.

ROSUGOL TO BECOME JOINT-STOCK COMPANY? At a meeting on 9 June, the Fuel
and Energy Ministry board backed a proposal by the directors of Rosugol
to convert the state-owned coal association into a joint-stock company,
Kommersant-Daily reported on 10 June. Under a six-year restructuring
program, approved by the Duma's Industry, Construction, Transport, and
Energy Committee on 8 June, about 100 loss-making mines are to be
closed, including about 70 by 1998. According to Rosugol chairman Yury
Malyshev, the coal industry will need subsidies of 14 trillion rubles in
1996. The 1995 budget allotted 7.5 trillion rubles to the industry, and
another 2.5 trillion rubles will be paid later in the year from India's
debt to the USSR. -- Penny Morvant, OMRI, Inc.

DUMA PROPOSES PEACE PLAN FOR BOSNIA. The Duma passed a resolution
outlining a proposed peace plan for Bosnia on 9 June, Interfax reported.
The plan calls for Bosnian Serb forces to release their hostages in
exchange for a moratorium on NATO air strikes against their positions,
followed by an "indefinite truce" and negotiations between Bosnian Serbs
and Muslims on a political settlement. In a declaration accompanying the
proposed plan, the Duma expressed its opinion that the recent creation
of a NATO "rapid reaction force" to support UN peacekeeping in Bosnia
"presents a special danger" and is aimed "at the gradual replacement of
UN peacekeeping forces . . . with NATO forces." The declaration also
criticized Foreign Minister Kozyrev's suggestion that Russian troops
might be added to the rapid reaction force, calling it a "mistake." --
Scott Parrish, OMRI, Inc.

RUSSIAN AND AMERICAN SPACE GIANTS PLAN JOINT MARKETING. The American
firm Lockheed Martin and Russia's Khrunichev State Space Research and
Scientific-Production Center announced on 10 June in Paris that they had
set up a joint company to market their space boosters, AFP reported. The
new company, International Launch Services (ILS), will compete directly
with the European space company Arianespace which currently holds half
the world market for commercial space launches. ILS will offer both the
American Atlas and the Russian Proton rockets, and company officials
said they could provide clients greater flexibility in placing
satellites in orbit. -- Doug Clarke, OMRI, Inc.

MISSILE MAIL. The converted submarine-launched intercontinental
ballistic missile that carried a German experiment into space on 9 June
also delivered mail to the Kamchatka Peninsula in the Russian Far East
ITAR-TASS reported. The agency said 1,270 letters were aboard the
missile, which was fired from a Russian submarine in the Barents Sea.
The mail was parachuted to the ground on the peninsula and was delivered
the same day along with special certificates certifying it had been
delivered by ballistic missile. -- Doug Clarke, OMRI, Inc.

RUBLE STRENGTHENS AGAINST DOLLAR. The Russian ruble strengthened against
the dollar on 9 June, closing at 4,881 to $1 compared with 4,991 to $1
on 8 June, the Financial Information Agency reported. Trading was
substantial at $202.9 million. Since April, the ruble has gained almost
5% against the U.S. dollar, even though monthly inflation hovers around
8%. On 8 June, Economics Minister Yevgeny Yasin expressed concern that
the ruble's rise was not necessarily beneficial for the economy. --
Thomas Sigel, OMRI, Inc.

STATE DUMA REJECTS PRODUCTION SHARING LAW. The State Duma rejected a
production sharing agreement that could have paved the way for large
foreign oil and gas investments on its second reading, Russian and
Western agencies reported on 9 June. The bill would have removed some of
the vagueness concerning jurisdiction over resources, licensing, and
taxation, thus encouraging foreign oil companies to move forward with
projects. -- Thomas Sigel, OMRI, Inc.

CHUBAIS ENCOURAGES INVESTMENT. Russia's monetary stabilization policy is
attracting financial investment and foreigners are participating more
actively on the stock market, Russian First Deputy Premier Anatoly
Chubais told Russian and Western agencies on 9 June. He said foreign
portfolio investments totaled $40 million in March, $100 million in
April, and $200 million in May and noted that 40-45% of the investments
in shares were in the oil sector. -- Thomas Sigel, OMRI, Inc.

TRANSCAUCASIA AND CENTRAL ASIA

AZERBAIJAN SIGNS NEW CASPIAN OIL DEAL. The Azerbaijan State Oil Company
(SOCAR) has signed an agreement with Russia's Lukoil, the Italian
company Agip, and the U.S. company Pennzoil to develop the Karabakh
offshore oil field with estimated extractable resources of 85-120
million metric tons, Interfax reported on 9 June. Lukoil has a 32% stake
in the consortium, Agip and Pennzoil hold 30% each, and SOCAR, which is
experiencing serious problems financing its share in a larger consortium
to develope three other offshore fields, holds 7.5%. -- Liz Fuller,
OMRI, Inc.

CIS

UKRAINE AND RUSSIA REACH AGREEMENT OVER BLACK SEA FLEET. Ukrainian
President Leonid Kuchma and his Russian counterpart Boris Yeltsin
reached an agreement over the Black Sea Fleet during their meeting in
Sochi, international agencies reported on 10 June. Although the accord
was hailed by Kuchma as having "generally solved" the dispute over the
fleet and its basing, it left many of the controversial points open to
interpretation. The agreement reiterated that the fleet itself would be
divided equally but Russia would buy out the majority of Ukraine's
share, leaving Kiev with less than 20% of the fleet's vessels. It was
also agreed that Russia would be able to base its share of the fleet in
Sevastopol, a concession earlier opposed by Ukraine. The text of the
accord did not, however, preclude the basing of Ukraine's navy in
Sevastopol as well. The accord was assailed by the Congress of Ukrainian
Nationalists and Ukrainian communists as betraying the country's
interests by allowing Russia to use Sevastopol as its main base, and one
deputy, Stepan Khmara, called for Kuchma's impeachment. -- Ustina
Markus, OMRI, Inc.
[As of 1200 CET]

Compiled by Victor Gomez

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