No. 128, Part I, 3 July 1995

NOTICE TO READERS: The OMRI Daily Digest will not appear Tuesday, 4 July
1995, an American holdiay.

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

YELTSIN DISMISSES FOUR OVER BUDENNOVSK . . . In a clear concession to
parliament, President Boris Yeltsin dismissed Federal Security Service
Director Sergei Stepashin, Internal Affairs Minister Viktor Yerin,
Deputy Prime Minister Nikolai Yegorov, and Stavropol Krai Governor
Yevgenii Kuznetsov, Western and Russian agencies reported. The three
federal officials were hawks in Yeltsin's cabinet who strongly favored
the use of force in Chechnya. Their removal and the ascendancy of Prime
Minister Viktor Chernomyrdin may increase the chance for a negotiated
settlement of the war. Stepashin was blamed for mishandling the initial
stages of the campaign against Chechen leader Dzhokhar Dudaev and for
his agency's inability to infiltrate rebel ranks. Liberal critics feared
him because his agency had regained many of the former KGB's powers.
Yerin's troops carried out the unsuccessful storming of the Budennovsk
hospital and they are responsible for policing captured areas of
Chechnya where they have been accused of looting and atrocities against
the civil population. Also, Yerin is often blamed for the government's
inability to combat the rising crime rate. Yegorov was charged with
mishandling nationalities issues and bungling Moscow's relationship with
Chechnya long before the fighting began. Their replacements have not
been announced. -- Robert Orttung, OMRI, Inc.

. . . GRACHEV SURVIVES PURGE. Although he supported the widely-
criticized 17 June decision to storm the Budennovsk hospital, Defense
Minister Pavel Grachev was the only "power minister" to survive the
cabinet shake-up, Russian and Western agencies reported on 30 June. Duma
deputy Vyacheslav Nikonov predicted that Yeltsin is saving Grachev for a
"big sacrifice" later, possibly during the run-up to presidential
elections scheduled for June 1996, Reuters reported. Other observers
speculated that Grachev's personal loyalty to the president made him too
valuable to dismiss. Troops commanded by Grachev supported Yeltsin
during the August 1991 coup and the October 1993 conflict with hard-
liners in parliament. -- Laura Belin, OMRI, Inc.

COSSACKS PROTEST REMOVAL OF STAVROPOL GOVERNOR. Cossack groups
demonstrated in Budennovsk on 1 July and in Stavropol the next day in
protest of Yeltsin's decision to sack Stavropol Governor Yevgenii
Kuznetsov, NTV and Ekho Moskvy reported on 2 July. The Cossacks demanded
that Yeltsin revoke Kuznetsov's dismissal or agree to hold gubernatorial
elections in the region. Meanwhile, Yevgenii Nagai, Ataman of the Kuban
Cossacks, told Moscow Television on 29 June that Russia should establish
a "national guard" comprised of Cossacks to protect Russians wherever
their security is threatened. -- Laura Belin, OMRI, Inc.

DUMA BACKS DOWN IN NO-CONFIDENCE VOTE. Only 193 members of the State
Duma supported a vote of no confidence in Chernomyrdin's government,
short of the 226 necessary for the motion to succeed; 116 voted against
the measure and 48 abstained, Western and Russian agencies reported on 1
July. Some deputies from Yabloko and the Agrarian Party switched their
vote from the successful 21 June no-confidence vote to make the
government's victory possible, NTV reported. Yeltsin's unexpectedly
quick decision to sack several key cabinet members played a major role
in the vote. After the no-confidence measure failed, Chernomyrdin
withdrew his demand that the Duma give his government a positive vote of
confidence. Yeltsin and Chernomyrdin moved quickly to appease the Duma
because they did not want to disband it and hold early elections. If the
elections were called before December, Chernomyrdin's Our Home is Russia
bloc could not have competed since the new electoral law states that all
parties competing in the elections must be registered six months before
election day. -- Robert Orttung, OMRI, Inc.

CHERNOMYRDIN-GORE TALKS CONCLUDE. During two days of talks which ended
on 1 July, U.S. Vice President Albert Gore and Russian Prime Minister
Viktor Chernomyrdin reached agreement on a number of issues, Russian and
Western agencies reported. Chernomyrdin reiterated an earlier promise by
President Yeltsin not to conclude any additional weapons contracts with
Iran and addressed American concerns by handing over details of current
contracts. Gore said the U.S. would now support Russian membership in a
new international organization to control the spread of conventional
weapons. However, they made no progress on the controversial issue of
selling Russian nuclear reactors to Iran. Gore also said an agreement
had been reached that would allow Russia to join the international
Missile Technology Control Regime, although it was unclear how the
agreement might affect the sale of Russian missile technology to Brazil,
which American officials have previously criticized. -- Scott Parrish,
OMRI, Inc.

NATO WANTS JULY TALKS WITH RUSSIA. Talks between NATO and Russia on
upgrading relations in both the military and political spheres are
provisionally scheduled for 17 July, NATO sources told Reuters on 30
June. The Russian side had not yet confirmed that it would attend. The
talks could lead to a new treaty and/or the creation of a standing
commission to monitor ties between Russia and the alliance. NATO
diplomats said the alliance wants to get this process moving before the
long summer break. On 31 May, Russian Foreign Minister Andrei Kozyrev
had initialed Russia's Partnership for Peace (PfP) individual
partnership program but remarked at the time that it should only serve
as the forerunner of a wider relationship. -- Doug Clarke, OMRI, Inc.

GOVERNMENT, PARLIAMENT SET UP PERMANENT CONCILIATION GROUP. A new
permanent commission to mediate disputes between the parliament and
government will be set up next week, State Duma Chairman Ivan Rybkin
announced on 1 July, AFP reported. The commission will include five
members of the Federation Council and 12 from the Duma, Rybkin, and the
leaders of the 11 current parliamentary factions. -- Robert Orttung,
OMRI, Inc.

TOP EDITOR OF ROSSIISKAYA GAZETA TO BE SACKED. Natalya Polezhaeva,
editor-in-chief of the official newspaper Rossiiskaya gazeta, announced
that she was about to be fired, NTV reported on 2 July. On 30 June,
Rossiiskaya gazeta ignored a court order to print a retraction of
damaging allegations the newspaper had made about Vladimir Gusinskii's
Most group. Instead, it erroneously reported that the court had ruled in
its favor against Gusinskii's lawsuit. Polezhaeva's dismissal may also
be connected to alleged financial irregularities at the newspaper; a
recent audit revealed that the newspaper had created several closed
joint stock companies. In 1994, Rossiiskaya gazeta received nearly 25
billion rubles ($5.7 million) in press subsidies; all other Russian
newspapers combined received about 31 billion rubles ($7 million).
Polezhaeva is expected to fight the dismissal. -- Laura Belin, OMRI,
Inc.

GROZNY NEGOTIATIONS STALL. Russian and Chechen delegates failed to make
substantive progress during talks on 1-2 July, Russian and international
agencies reported. The two delegations issued a joint statement on 1
July in which they pledged not to seek revenge and to avoid using force.
However, further progress has been stymied because Chechen separatist
President Dzhokhar Dudaev has not made a formal response to the so-
called "zero option" proposed by the Russian delegation, Russian
television reported. Negotiators also remain deadlocked over the issue
of Chechnya's future political status. Chechen delegation head Usman
Imaev said, "At the moment, no agreement looks likely," but added that
the question could not be resolved "in a day." Izvestiya expressed
pessimism on 1 July that negotiators could reach agreement on a
compromise. Talks are scheduled to resume on 3 July. -- Scott Parrish,
OMRI, Inc.

LOW QUALITY FOOD PRODUCTS POSE HEALTH THREAT. Many food products on sale
in Moscow, St. Petersburg, and a number of other large cities are of
poor quality and could lead to mass outbreaks of food poisoning, Radio
Rossii reported on 2 July, citing health officials. About 14% of
domestic meat and dairy products are said to have failed tests for
chemical content while 18% did not conform to bacteriological standards.
Last year, there were 35 cases of mass food poisonings. -- Penny
Morvant, OMRI, Inc.

INDEBTED MENTAL HOSPITAL TO RELEASE PATIENTS. A mental hospital in
Kaliningrad has gone broke and is planning to discharge about half of
its patients, ITAR-TASS reported on 30 June. According to the report,
the hospital cannot even afford to pay for bread deliveries. Elderly
patients will be sent home first and the rest will be released if a
solution to the crisis is not found. -- Penny Morvant, OMRI, Inc.

AIRLINE HIJACKING FOILED. Police overpowered two hijackers who had taken
over an airplane flying from Yakutsk to Moscow with 184 people on board
on 1 July, international agencies reported. The pair had threatened to
blow up the plane if they did not receive 1.5 million rubles ($330) when
it landed for refueling in Norilsk. After receiving the money, the
hijackers demanded a larger sum. They were arrested after security
forces persuaded them to leave the plane to collect it. -- Penny
Morvant, OMRI, Inc.

SAKHALIN OIL DEAL SIGNED. A Russian-American-Japanese agreement for
joint exploration of oil and gas fields around Sakhalin island was
signed in Moscow on 30 June, Western and Russian agencies reported. The
long-anticipated deal, worth a reported $15 billion, will open fields
containing an estimated 2.5 billion barrels of oil and 15 trillion cubic
feet of gas. The U.S. and Japanese partners in the deal will each hold a
30% interest, while the Russian participants will hold a 40% share. --
Scott Parrish, OMRI, Inc.

RUSSIA TO PAY 1 BILLION TO LONDON CLUB IN 1995. Russian Foreign
Economics Minister Oleg Davydov told Interfax on 1 July that Russia
intends to repay $1 billion to the London Club of creditor banks in
1995. Davydov said the payment would erase Russia's debt to the banks
incurred in 1992-94. Davydov begins negotiations with the London Club in
Frankfurt on 3 July. The talks will address the long-term restructuring
of Russia's $25 billion debt to the club. Estimates place Russia's total
foreign debt at about $120 billion. -- Scott Parrish, OMRI, Inc.

RUSSIA, U.S. AGREE ON URANIUM. Russia and the U.S. have put a troubled
uranium deal back on track. On 30 June, following talks with Prime
Minister Chernomyrdin in Moscow, Gore said the U.S. corporation that is
to buy 500 tons of Russian weapons grade uranium had signed a protocol
to provide prompt payment to Russia. He added that the two sides had
also agreed on transparency procedures for the uranium's conversion into
low-enriched power station fuel, Reuters reported. -- Doug Clarke, OMRI,
Inc.

INFLATION 6.7% IN JUNE. Prime Minister Chernomyrdin said on 2 July that
inflation was running at 6.7% in June, compared with 7.9% in May,
Russian and Western agencies reported. The government hopes to reduce
the monthly inflation rate to 2% by the end of the year. Chernomyrdin
was speaking in Moscow at a meeting of the Foreign Investment Council,
which comprises senior ministers and the heads of multinational
corporations. He exhorted foreign investors to abandon their doubts
about Russia's political stability and take advantage of Russia's "huge"
investment opportunities. Direct foreign investment in Russia fell by
25% in the first quarter of 1995 compared with the last quarter of 1994.
Interfax quoted Chernomyrdin as saying that the government would look
into creating a single investment regime for domestic and foreign
investors seeking to purchase shares in Russian enterprises but gave no
details. -- Penny Morvant, OMRI, Inc.

TRANSCAUCASIA AND CENTRAL ASIA

KAZAKHSTAN'S DRAFT CONSTITUTION READY. The Assembly of Peoples of
Kazakhstan opened a special one-month session to review the country's
new draft constitution on 30 June, Reuters reported. Work began on the
new constitution six months ago with the help of experts from the
Constitutional Council of France. Among the items included in it are the
creation of a two-chamber parliament, consisting of a 47-seat senate and
a 55-seat lower house, an impeachment process and rules for dissolving
parliament, and the government's right to overrule a no-confidence vote
in it. -- Bruce Pannier, OMRI, Inc.

TALKS IN TEHRAN ON CASPIAN. No progress was achieved in determining the
legal status of the Caspian Sea during talks among the littoral states
in Tehran, Reuters reported on 30 June, citing Iranian radio. At the
conclusion of the meeting a statement was released pointing to
differences on political, economic, and environmental issues. Azerbaijan
and Kazakhstan continue to argue that the Caspian should be classified
under maritime law as an enclosed sea, which permits them to exploit
resources in sectors drawn according to international treaties. Russia,
Iran, and Turkmenistan argue the Caspian is a lake and its resources
must be shared on the basis of common ownership. Despite the
disagreement, all sides said the Tehran talks were positive and
constructive and agreed to meet again in Almaty on 23 August. -- Lowell
Bezanis, OMRI, Inc.

[As of 1200 CET]

Compiled by Victor Gomez

The OMRI Daily Digest offers the latest news from the former Soviet
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