I go to encounter for the millionth time the reality of my existence, and to forge in the smithy of my soul the uncreated conscience of my race. - James Joyce
OMRI DAILY DIGEST

No. 18, Part I, 25 January 1996


************************************************************************
Do you need sharply focused economic news? OMRI's weekly Economic Digest
provides thorough coverage of business and financial developments
throughout the region.

This week's edition includes stories on why Russians are buying more
dollars and why Estonian tax policy is wreaking havoc on cigarette
producers.

For subscription and rate information, please send a message to
econ@omri.cz
***********************************************************************

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

^^^^^^^^^^^^^^^^^^^^^^^^^^^TODAY'S TOP STORY^^^^^^^^^^^^^^^^^^^^^^^^^
CHECHENS RELEASE HOSTAGES. Chechen militants handed over some 46
hostages seized in Kizlyar and Pervomaiskoe to Dagestani officials in
the Chechen village of Novogroznenskaya on 24 January in return for the
bodies of 42 Chechens killed during the Pervomaiskoe fighting, Russian
media reported. Negotiations on the release of 29 Russian power plant
workers abducted on 16 January are continuing. Also on 24 January,
Chechen guerrilla leader Shamil Basaev threatened to renew hostilities
unless the Russian 506th regiment is withdrawn from its present position
in Vedeno Raion, according to NTV. -- Liz Fuller
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

RUSSIA

YELTSIN ORDERS AID TO CHECHNYA. President Yeltsin ordered the spending
of 16.2 trillion rubles ($3.5 billion) and up to $1 billion in 1996 to
rebuild the social and economic infrastructure of Chechnya, Russian
Public TV (ORT) reported on 24 January. The spending would come on top
of the agreed 1996 budget. Duma Budget Committee Chairman Mikhail
Zadornov called the move "a terrible economic and political mistake,"
saying the investment program for the entire country is only 27 trillion
rubles, Ekho Moskvy reported. Presidential economic adviser Aleksandr
Livshits remarked that it is better to stop the destruction of buildings
before starting to reconstruct them. -- Robert Orttung

PRESIDENTIAL COUNCIL LOSES ANOTHER MEMBER. Academician Sergei Alekseev
resigned from the consultative Presidential Council and the presidential
Human Rights Commission on 24 January in protest of the war in Chechnya,
one day after human rights advocate Sergei Kovalev did the same, Russian
media reported. Izvestiya commentator Otto Latsis and Russia's
Democratic Choice leader Yegor Gaidar also have quit the 28-member
council in recent days. Presidential adviser Georgii Satarov criticized
those who resigned for "leaving the ship in a very difficult situation,"
NTV reported. -- Laura Belin

SOSKOVETS TO CLARIFY WORK OF PRESIDENTIAL CAMPAIGN HQ. First Deputy
Prime Minister Oleg Soskovets, the head of the new presidential campaign
headquarters, has agreed to answer questions about its work in the State
Duma on 31 January, Russian media reported on 24 January. Soskovets
insists that the headquarters is not President Yeltsin's personal
campaign committee, since the president has not decided whether he will
run for re-election. Also on 24 January, the Central Electoral
Commission (TsIK) agreed to examine the legal status of the new campaign
headquarters, NTV reported. TsIK Chairman Nikolai Ryabov has said that
only the TsIK is authorized to organize and supervise the June
presidential elections. -- Laura Belin

SOSKOVETS OUTLINES NEW COURSE. Addressing a meeting of industrial
leaders on 24 January, First Deputy Prime Minister Oleg Soskovets
promised a "speedy financial restructuring" to address social questions,
Russian media reported. "Today there cannot be any opponents of reform,"
Soskovets said, while condemning efforts to transplant foreign models of
the market economy onto "Russian soil." The meeting brought together the
heads of 28 financial-industrial groups uniting 4,500 firms. On 25
January, ITAR-TASS reported that Aleksandr Kazakov was appointed as the
new head of the State Privatization Committee and as deputy prime
minister. He was formerly the head of the department for territorial
administration in the presidential apparatus. These developments appear
to confirm that the conservative Soskovets will be filling the gap left
by the departure of Anatolii Chubais. -- Peter Rutland

METAL INDUSTRY DIRECTORS BACK YELTSIN. At a meeting of the Russian
Metallurgy Committee on 24 January, the directors of 10 large steel and
aluminum plants formed an initiative group to nominate Boris Yeltsin for
president, Rossiiskaya gazeta reported the next day. However,
metalworker trade union representatives refused to support the proposal
and walked out of the meeting. Three candidates backed by the
metalworkers' union were elected to the Duma on the Yabloko ticket. --
Peter Rutland

FEDERATION COUNCIL WITHDRAWS CONSTITUTIONAL COURT SUIT. The Federation
Council voted on 24 January to withdraw its request that the
Constitutional Court determine whether the method of forming the Council
was constitutional, Russian Public TV (ORT) reported. The previous
Federation Council had filed the request on 9 December 1995. Some
members of the old Council, who had been elected in December 1993 and
did not necessarily hold local offices, objected to filling the Council
ex officio with the executive and legislative heads of each of Russia's
republics and regions. The Council also elected four deputy speakers,
representing the four major regions of Russia: the Volga, Central
Russia, Siberia, and the North Caucasus. -- Robert Orttung

TRANSFER OF PARATROOPS STIRS CONTROVERSY. The State Duma, spurred on by
ex-paratrooper Aleksandr Lebed, has appealed to President Yeltsin to
overrule the Defense Ministry's recent decision to subordinate several
elite Airborne Assault units to various military district commands, Ekho
Moskvy reported on 23 January. General Mikhail Kolesnikov, the chief of
staff explained that the four separate brigades would be transferred to
the jurisdiction of the North Caucasus, Siberian, Transbaykal, and Far
Eastern Military Districts. Two of Russia's five airborne divisions
would also be subordinated to military districts rather than Moscow: the
76th to the Leningrad MD and the 7th to the North Caucasus MD. The three
remaining divisions would stay as part of the strategic reserve. The
move marks a significant step away from the highly-vaunted program to
form Mobile Forces which were to be built around the airborne troops. --
Doug Clarke

CHRISTOPHER DECLINES PRIMAKOV INVITATION. U.S. Secretary of State Warren
Christopher has declined an invitation from his recently appointed
Russian counterpart, Yevgenii Primakov, to visit Moscow for talks,
Russian and Western agencies reported on 24 January. Citing
Christopher's heavy travel schedule, the State Department expressed a
preference for "a very brief meeting" with Primakov "in a third
country." Christopher's decision hints at Washington's displeasure with
recent actions by President Yeltsin, including the dismissal of several
prominent liberals from his cabinet and the assault on Pervomaiskoe.
Prime Minister Viktor Chernomyrdin is scheduled to visit Washington on
29-30 January. -- Scott Parrish

PRIMAKOV ON REGIONS AND FOREIGN POLICY. In a meeting with
representatives of Russia's 89 constituent regions, Foreign Minister
Yevgenii Primakov suggested he will tighten central control over their
foreign ties, Russian media reported on 24 January. Primakov was
addressing a session of the ministry's Consultative Council of Russian
Federation Subjects on International and Foreign Economic Relations,
which was formed in December 1994. The council was ineffective under
former Foreign Minister Andrei Kozyrev, but Primakov hopes to use it to
limit international freelancing by regional elites, which sometimes
contradicts federal government policy. -- Scott Parrish

ESTONIAN-RUSSIAN BORDER TALKS RESUME. The latest round in the long-
running Estonian-Russian border talks will open in Tallinn on 25
January, ITAR-TASS reported. The previous round ended on 21 December
without reaching agreement (see OMRI Daily Digest, 22 December 1995).
The main stumbling block in the talks concerns the status of the 1920
Tartu Treaty, which Estonia argues is still valid, while Russia refuses
to recognize it. Accepting the boundaries specified in the treaty would
mean transferring about 2,000 sq km of territory currently under Russian
control to Estonia. However, Estonian diplomats say they want Russia to
recognize as valid only those clauses of the treaty that recognize
Estonian independence, not those demarcating the border, and insist that
Estonia has no territorial claims on Russia. -- Scott Parrish

DUMA SEEKS INCREASE IN MINIMUM WAGE AND PENSION. On 23 January, the Duma
adopted on first reading bills raising the minimum wage and minimum
pension from 63,250 rubles ($14) a month to 75,900 rubles ($17) as of 1
February, Russian media reported. The bill, sponsored by Duma Labor and
Social Policy Committee Chairman Sergei Kalashnikov (LDPR), was severely
criticized by Budget Committee Chairman Mikhail Zadornov (Yabloko), who
described it as a populist measure that would only result in a new round
of payments arrears. Kalashnikov admitted that the adoption of the bills
contravened parliamentary procedure, which requires that such bills
first be screened by the government and Pension Fund, but argued that
the government is legally obliged to index these payments every three
months, and the last indexation occurred on 1 November, Izvestiya
reported on 25 January. -- Penny Morvant

MINERS PICKET RUSSIAN GOVERNMENT BUILDING. Up to 1,000 miners began a
three-day picket of the Russian government building in Moscow on 24
January to demand the payment of wage arrears and more support for the
coal industry, Russian media reported. In an attempt to avert industrial
action, Prime Minister Viktor Chernomyrdin had met with representatives
of the Coal Industry Workers' Union on 23 January. According to
Izvestiya on 25 January, Chernomyrdin ordered the Economics Ministry to
pay the miners 400 billion rubles ($88 million) owed from 1995 and
promised that $500 million in World Bank loans would be invested in
socioeconomic programs for coal regions. The miners are still
considering whether to call a national strike on 1 February. -- Penny
Morvant

GOVERNMENT OFFERS PARTIAL TAX HOLIDAY. President Yeltsin has signed a
decree (no. 65) launching a new scheme to tackle the problem of tax
arrears, Izvestiya reported on 25 January. Firms currently owe the
federal government about 30 trillion rubles ($6.5 billion)--almost one
third of the total taxes due in 1995. Under the new plan, devised by
Anatolii Chubais before he left office, firms that meet their current
tax payments on time will be allowed to reschedule their outstanding tax
debt over two years. Critics argue that the plan gives too much
discretion to tax inspectors and the regional governors who supervise
their work. Many firms are not in a position to pay current taxes, and
probably will not be eligible for the plan. Tax arrears are penalized by
fines of 0.7% per day (20% per month). -- Peter Rutland

NEW CHAIRMAN FOR SBERBANK. On 23 January, shareholders in Sberbank
(Savings Bank), Russia's largest bank, elected 37-year-old Andrei Kazmin
as its new chairman, Russian media reported the same day. Kazmin was
formerly a Deputy Finance Minister. According to Kommersant-daily,
Central Bank Chairman Sergei Dubinin wants to assert stronger control
over Sberbank. The Central Bank owns 51% of Sberbank shares: no other
owner holds more than 1%. Sberbank has been criticized for advancing
credits to state enterprises at interest rates below the rate of
inflation. -- Natalia Gurushina

TRANSCAUCASIA AND CENTRAL ASIA

AZERBAIJANI POPULAR FRONT MEMBERS SENTENCED. Twenty-one members of the
Nakhichevan branch of the opposition Azerbaijani Popular Front who were
arrested in August 1994 have been sentenced to a total of 208 years of
imprisonment on charges of creating illegal armed formations, illegal
possession of arms, and violence against members of the police, Turan
reported on 24 January. Defense lawyers plan to appeal the verdict in a
higher court. -- Liz Fuller

KINKEL IN TBILISI. On a one-day visit to Georgia on 25 January, German
Foreign Minister Klaus Kinkel said his country will provide an
additional DM 20 million in aid to Georgia, mainly to support the energy
sector, Western agencies reported. Kinkel said the aid is an
acknowledgment of Georgian President Eduard Shevardnadze's role in
bringing about German unification during his stint as Soviet foreign
minister. He further pledged support for Georgia's territorial integrity
but declined to mediate in the ongoing conflicts between the central
government in Tbilisi and the breakaway regions of Abkhazia and South
Ossetiya. -- Liz Fuller

IRAN UPSET WITH TAJIK STATEMENT. Iran has rejected the Tajik
government's accusations on 22 January that it is responsible, along
with Pakistan and Afghanistan, for helping to train guerrillas "to
terrorize the people of Tajikistan," Reuters reported. Iranian Foreign
Ministry spokesman Mahmoud Mohammadi deplored Tajik President Imomali
Rakhmonov's allegation that Iran is "teaching terrorist acts," according
to the Iranian daily paper Salam on 24 January. Rakhmonov's comments
came in response to the murder of Mufti Fatkhullo Sharifzoda on 21
January. -- Bruce Pannier

[As of 1200 CET]

Compiled by Victor Gomez

The OMRI Daily Digest offers the latest news from the former Soviet
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              Copyright (c) 1996 Open Media Research Institute, Inc.
                       All rights reserved. ISSN 1211-1570
 
         

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