He who receives an idea from me receives instruction himself without lessening mine; as he who lights his taper at mind, receives light without darkening me. - Thomas Jefferson
OMRI DAILY DIGEST

No. 117, Part I, 16 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
CHECHEN SEPARATIST COMMANDER LEADS BUDENNOVSK ATTACK. The gunmen who
attacked the Stavropol Krai town of Budennovsk are led by Chechen
separatist commander Shamil Basaev, Russian and international agencies
reported on 15 June. Basaev, a well-known field commander in the forces
of Dzhokhar Dudaev, and a group of at least 50 pro-Dudaev fighters have
barricaded themselves in the local hospital with a large number of
hostages, estimated by a Russian Radio correspondent to number 2,000.
Dudaev, however, continued to deny responsibility for the attack.
Defense Minister Pavel Grachev said at least 74 people died in the
fighting, including numerous civilians, although Russian journalists on
the scene claimed the final death toll would be much higher. Russian
television broadcast footage of burning buildings and rows of bodies
lying on the streets on 15 June. Army and interior troops, under the
command of Interior Minister Viktor Yerin and FSB Chief Sergei
Stepashin, have surrounded the hospital and re-established control over
the rest of the town. -- Scott Parrish, OMRI, Inc.

NEGOTIATIONS BEGIN IN BUDENNOVSK. At a press conference in the
barricaded hospital, Basaev demanded the withdrawal of federal troops
from Chechnya, negotiations between Yeltsin and Dudaev, and amnesty for
all Chechen fighters, Russian and Western agencies reported on 15 June.
He threatened to shoot hostages, beginning with "servicemen and local
officials," if those conditions are not met. Basaev claimed to have
already shot five Russian officers in retaliation for a delay in
allowing journalists to enter the hospital and begin the press
conference. Sergei Medvedev, a spokesman for President Yeltsin, said in
an interview that negotiators "will do everything possible to try to
convince the terrorists, but it seems unlikely they will give in."
Izvestiya reported on 16 June that the elite "Alpha" commando team was
preparing an assault on the hospital, but Federation Council Speaker
Vladimir Shumeiko told Interfax that military experts estimated that
storming the hospital would result in 100 deaths. -- Scott Parrish,
OMRI, Inc.

YELTSIN TO AVOID CHECHNYA ISSUE AT G-7 TALKS. President Boris Yeltsin
does not intend to "render an account" of current developments in
Chechnya at the upcoming G-7 talks in Halifax, a senior Russian official
told Interfax. The official said it would be "against the interest" of
the meeting to spend too much time on the issue. On the eve of his
departure, AFP reported, Yeltsin denounced the Chechen attack on
Budennovsk, saying it demonstrates that "the slogans of a struggle for
national liberation are merely a cover for criminals who have managed to
lay their hands on arms." Elaborating on those comments, a high-ranking
Russian diplomat told Interfax that the Budennovsk attack proves federal
forces in Chechnya are fighting against "bandit formations" and
"terrorists," not against the armed Chechen people as the West contends.
The events in Budennovsk, the diplomat added, should compel the West to
revise its stance towards Russian actions in Chechnya. -- Scott Parrish,
OMRI, Inc.

FEDERATION COUNCIL REVERSES ITSELF ON DUMA ELECTORAL LAW. The Federation
Council decided to accept the compromise agreement on the Duma electoral
law, by a vote of 113-9, one day after rejecting it, Western agencies
reported. The Federation Council members changed their votes after the
speaker, Vladimir Shumeiko, told them the Duma intended to override
their veto and Yeltsin was planning to sign the law even though they
opposed it. After the vote, presidential adviser Georgy Satarov told
Interfax the president would sign the law as promised. Now the
parliament and the president must agree on the law for forming the
Council. Any decision must wait until the Constitutional Court irons out
apparent inconsistencies in the constitution. According to Duma member
Viktor Ilyukhin, the constitution calls for a division of power between
the legislative and executive branches, but also states that the upper
house of the legislature is partly formed from local representatives of
the executive branch. -- Robert Orttung, OMRI, Inc.

MORE ON LEBED AND HIS SUCCESSOR. Lt. Gen. Alexander Lebed said on 15
June that he would continue to command the 14th Army until he received
official word that President Yeltsin had removed him. Lebed told
Interfax that the president likes to send out trial balloons and it is
possible that Yeltsin will not actually sign the documents to release
him from the command. On 15 June, Segodnya characterized Yeltsin's
apparent intention to remove Russian troops from Moldova as "political
suicide." Maj. Gen. Valery Yevnevich, Lebed's replacement, supported
Yeltsin in his October 1993 battle with the Russian legislature and he
has the backing of Federation Council Speaker Vladimir Shumeiko, ITAR-
TASS reported. -- Robert Orttung, OMRI, Inc.

PROKHANOV CALLS FOR THE OPPOSITION TO UNIFY. Alexander Prokhanov, the
editor of the extremist newspaper Zavtra, called on opposition parties
to unite their strength to secure victory in the upcoming parliamentary
elections in a declaration published on 15 June in Sovetskaya Rossiya.
Prokhanov invited Communist Party leader Gennady Zyuganov, Liberal
Democratic Party leader Vladimir Zhirinovsky, former Vice President
Alexander Rutskoi, Agrarian Party leader Mikhail Lapshin, and Congress
of Russian Communities' leader Yury Skokov to set aside their
differences and form an alliance. He argued that "the people want to be
sure that Yeltsin's 'temporary occupational regime' will be eliminated."
He believes that the appearance of Viktor Chernomyrdin's bloc represents
the greatest threat to the opposition's chances in the elections. --
Robert Orttung, OMRI, Inc.

PLANS FOR NEW YOUTH LEAGUE. About 1,000 representatives of various youth
organizations will hold a meeting on 23 June at the offices of the
presidential administration in Moscow to announce the creation of the
Russian Youth League, according to Moskovsky komsomolets on 14 June. The
paper commented that several attempts have been made recently to set up
a powerful youth movement and that this latest initiative reflects the
authorities' interest in youth in the run-up to the elections. -- Penny
Morvant, OMRI, Inc.

DEFENSE INDUSTRY WORKERS HOLD ANTI-GOVERNMENT MEETING. Workers from the
Severmorput defense plant staged a rally in Murmansk to demand that the
Defense Ministry pay delayed wages, Segodnya reported on 14 June. The
protest was supported by members of the Northern Fleet's Officers' Union
and local communist activists. The demonstrators called for the
dismissal of the government and early presidential elections. -- Penny
Morvant, OMRI, Inc.

INCREASED SECURITY AT NUCLEAR SITES. "All possible measures" have been
taken to ensure the security of Russian nuclear power stations and
enterprises, Nuclear Energy Minister Viktor Mikhailov told Interfax on
15 June. He said a special conference on security had been held that
day. Mikhailov said that last December he ruled out terrorist attacks on
nuclear sites as "an insane possibility." Recent events in Budennovsk
have changed his view and he has called for the complete isolation of
Chechnya "so that even a mouse cannot get out of there." -- Doug Clarke,
OMRI, Inc.

OSCE PRAISES IMPROVED RUSSIAN HUMAN RIGHTS RECORD IN CHECHNYA. The
OSCE's special envoy to Chechnya, the Hungarian diplomat Istvan
Gyarmati, praised Russia's improved human rights record in that
republic, Reuters reported on 15 June. Speaking in Budapest, Gyarmati
said Russia had taken steps to limit civilian casualties and develop
democracy in Chechnya "as good as anywhere in Russia." He added that if
the situation in the republic didn't worsen, Chechnya could hold its
elections in December with the rest of Russia. "The rebels have to
realize that they cannot get Russia to leave the republic," he said. "On
the other hand, the Russians have to see that if they don't make peace
with Dudaev, they will face years of guerrilla fighting which would
continue to destabilize the region." -- Michael Mihalka, OMRI, Inc.

FRANKLIN/TEMPLETON GROUP LAUNCHES RUSSIA FUND. The Franklin/Templeton
Group, a U.S. pioneer in emerging market funds, announced its plan to
raise $60 million with the initial sale of the Templeton Russian Fund,
Western agencies reported on 15 June. The U.S. Securities and Exchange
Commission (SEC) approved a plan in April allowing Franklin/Templeton to
hold Russian securities using a special custody arrangement with Chase
Manhattan Bank. It was the first time the SEC approved a U.S. based
mutual fund to hold Russian stocks. Until now, the typical American
investor had little opportunity to invest in Russia. An index of the 85
most actively traded Russian stocks has risen 15% since mid-April. The
same stock index is up 21% in dollar terms since April, although the
stock market has fallen 27% in dollar terms since the beginning of the
year. -- Thomas Sigel, OMRI, Inc.

DUMA QUESTIONS BUDGET DECREE. Members of the Duma have questioned
President Yeltsin's decree which permits only the president to reduce or
increase budget expenditures, Segodnya reported on 15 June. They claim
that the decree contradicts the constitution which states that budgetary
issues fall under the jurisdiction of the Federal Assembly. -- Thomas
Sigel, OMRI, Inc.

SECOND "BLACK TUESDAY" UNLIKELY TO OCCUR. Deputy Economics Minister
Sergei Vasiliev said another collapse in the value of the ruble such as
last October's "Black Tuesday" is unlikely to occur this year, Segodnya
reported on 15 June. Vasiliev said hard currency reserves had risen from
$2.5 billion to $8 billion, and by August will make up        8-10% of
the Central Bank of Russia's overall monetary funds. Under the agreement
concluded last week in Paris, Russia will only pay Paris Club creditors
$1.1 billion this year instead of the $8 billion initially due,
Moskovskaya pravda reported on 10 June. -- Thomas Sigel, OMRI, Inc.

TRANSCAUCASIA AND CENTRAL ASIA

GERMAN COMPANY TO LOOK FOR OIL IN KAZAKHSTAN. The German company
Preussag Energy GmbH is the latest company to sign a deal to explore for
oil and gas in Kazakhstan. Kazakh Deputy Minister of Geology Marat
Bitimbaev announced the signing of a contract by the joint venture
Aktobe Preussag Munai Ltd. to work in the Aktyubinsk hydrocarbon fields
in northern Kazakhstan, according to Interfax. The company will prospect
an 8,000 square km area for the next six years, investing $110 million
in the process. The German company will control 50% of the charter
capital with Kazakhstan's holding Tulpar and joint-stock company
Aktyubinskneft each controlling 25%. The Kazakh government received a $1
million signing incentive from the company. The Kazakh government had
been working in the fields previously but a shortage of finances caused
its operation to close down. -- Bruce Pannier, OMRI, Inc.

COUNTERFEIT AFGHANIS PRODUCT OF UZBEKISTAN? The Uzbek Foreign Ministry
protested charges that it was involved in producing counterfeit Afghanis
and smuggling them into Afghanistan, Interfax reported on 14 June. The
charge was initially made by the Deputy Director of the Afghan Central
Bank, Abdikadir Fitrat. -- Lowell Bezanis, OMRI, Inc.

GEORGIAN DEBTS TO BE RESCHEDULED. On 14 June, Russia provisionally
agreed to reschedule $135 million debts that Georgia accumulated in
trade with Russia in         1992-93, Interfax reported on 14 June. The
outstanding debts will be repaid from 1998 to 2002. Last year,
Turkmenistan agreed to postpone for seven years the $400 million it is
owed by Georgia for gas supplies from   1993-94. Georgia owes a total of
more than $1 billion to foreign creditors, and expects to be granted
credits by the IMF later this month. -- Peter Rutland, OMRI, Inc.

[As of 1200 CET]

Compiled by Victor Gomez

The OMRI Daily Digest offers the latest news from the former Soviet
Union and East-Central and Southeastern Europe. It is published Monday
through Friday by the Open Media Research Institute.  The OMRI Daily
Digest is distributed electronically via the OMRI-L list. To subscribe,
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Copyright (c) 1995 Open Media Research Institute, Inc. All rights
reserved.


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