The greatest happiness is to know the source of unhappiness. - Dostoevsky
OMRI DAILY DIGEST

No. 55, Part I, 19 March 1997

This is Part I of the Open Media Research Institute's Daily Digest.
Part I is a compilation of news concerning Russia, Transcaucasia and
Central Asia. Part II, covering Central, Eastern, and Southeastern
Europe is distributed simultaneously as a second document. Back issues
of the OMRI Daily Digest, and other information about OMRI, are
available through OMRI's WWW pages: http://www.omri.cz/Index.html

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
In the 21 March issue of OMRI's journal TRANSITION**:

THE MIDDLE CLASS
- Economic Reform Casts a Long Shadow in Russia
- The Making of the Middle Classes
- Poland's Perpetually New Middle Class
- Some Russians Are Learning to Be Rich

PLUS...
- RUSSIA: The NATO Distraction (A discussion with Grigorii Yavlinksii)
- UKRAINE: Caution is the Key for Ukraine's Prime Minister
(a profile of Pavlo Lazarenko)
- CENTRAL EUROPE: Security Services Still Distrusted
- TAJIKISTAN: Defining the 'Third Force'

MEDIA NOTES: Journalists as Physical Pawns;
Political Moves at Russian TV

For subscription information about OMRI's new monthly, send an e-mail
message to transition-DD@omri.cz

Note: Transition is not available electronically

**See important message below on the upcoming changes to TRANSITION
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

RUSSIA

NEW APPOINTMENTS TO CONTINUE. First Deputy Prime Minster Anatolii
Chubais told NTV on 18 March that "unexpected and quite significant
changes" may occur in the government's composition over the next several
weeks. Several slots remain to be filled, such as that of Minister for
Foreign Economic Relations. Prime Minister Viktor Chernomyrdin told
ITAR-TASS on 19 March said that First Deputy Prime Minister Boris
Nemtsov is considering who to appoint to supervise social affairs and
monopoly policy, and suggested that some "professionals" from Grigorii
Yavlinskii's Yabloko party may be persuaded to join the government. --
Peter Rutland

OPINIONS DIFFER OVER CABINET CHANGES. The recent reshuffle marks a
defeat for First Deputy Prime Minister Anatolii Chubais, argues Nikolai
Vardul in Kommersant-Daily on 18 March. He says it was Prime Minister
Viktor Chernomyrdin and not Chubais who recruited Nizhnii Novogorod
Governor Boris Nemtsov and who insisted on the removal of Chubais's
ally, banker Vladimir Potanin. Chubais was unable to persuade some key
reformers, such as Ella Pamfilova, to join the administration, and "it
suddenly turns out that Russia's No. 1 administrator does not have a
strong team of his own." In contrast, Otto Latsis, writing in Izvestiya
on 19 March, argues that Nemtsov's appointment "doubles the chances of
success in the next phase of reform" because Nemtsov is a partner, and
not a counterweight, to Chubais. Latsis suggests there was a serious
effort to push out ministers who were seen as representatives of
industrial and financial lobbies. -- Peter Rutland

NEMTSOV'S AGENDA. Boris Nemtsov laid out his economic ideas in a
February interview, published in Izvestiya on 19 March. Nemtsov noted
that subsidies for housing and utilities cost the nation 100 trillion
rubles ($18 billion) in 1996 -- more than the entire defense budget --
and ate up 22% of the Nizhnii Novgorod Oblast budget. He called for
competition in the provision of services, the formation of tenants'
cooperatives, and the installation of meters. (All these ideas are part
of the World Bank's housing reform program for Russia.) Nemtsov
acknowledged that this will take several years, and that immediate rate
hikes would be counterproductive. The state should set a single tariff
for the electricity grid and railways to stop their monopolistic
overpricing, and then encourage private firms to compete to supply power
and freight service. He said there was no need for a "revolution" with
Gazprom "since its prices are substantially below world levels." He
favors mandatory personal income declarations, prison for tax dodgers,
and an end to channeling budget funds through "authorized" banks. He
said "The country is now facing a choice. Last year it was between the
prison and the barracks. Now it is between mafia capitalism and a normal
market in a democratic society without a giant gulf between the rich and
poor." -- Peter Rutland

LIVSHITS TO ADMINISTRATION, POTANIN BACK TO BANKING. Former Deputy Prime
Minister and Finance Minister Aleksandr Livshits will now join the
presidential administration as deputy chief of staff for economic
issues, NTV reported on 18 March. Prior to his appointment in August
1996, Livshits had served as presidential economics advisor. Livshits
found himself embroiled in clan battles between various financial-
industrial groups, and proved unable to tackle the slump in tax revenue.
Former First Deputy Prime Minister Vladimir Potanin was the only former
minister to hold a press conference after the cabinet reshuffle. He said
he will return to head the powerful Oneksimbank, the position he
resigned from on 15 August. -- Robert Orttung

IGNATENKO LEAVES GOVERNMENT BUT STAYS AT ITAR-TASS. Vitalii Ignatenko
put a positive spin on his removal from the government and the
liquidation of the post of deputy prime minister in charge of media
issues. Ignatenko told ITAR-TASS on 18 March that during the last two
years he had helped create a "legislative and financial basis" for the
media, eliminating the need for further government supervision of media
activities. Ignatenko will continue to head the ITAR-TASS news agency, a
job he has held since 1991. -- Laura Belin

KOMSOMOLSKAYA PRAVDA TO SELL 20% STAKE TO ONEKSIMBANK. The board of
directors of the daily Komsomolskaya pravda (KP) has decided to sell a
20% equity stake in the paper to Oneksimbank, ITAR-TASS and Kommersant-
Daily reported on 18-19 March. KP directors say they need additional
financial resources. Originally, the stake was supposed to be sold to
gas giant Gazprom, but this deal fell through. The decision to sell the
stake, however, was opposed by the majority of KP's editorial board.
Chief Editor Valerii Simonov believes the sale threatens the paper's
editorial independence. -- Natalia Gurushina

RODIONOV: SHAKEUP OF TOP BRASS IMMINENT. Defense Minister Igor Rodionov,
who appears to have survived the ongoing cabinet reshuffle, told
journalists on 18 March that "some generals" who "are engaged in
activities incompatible with military service," would soon be sacked,
ITAR-TASS reported. While he did not mention any names, Rodionov said he
expected President Yeltsin to sign a decree soon confirming the
dismissal of Army General Vladmir Semenov, the commander of the ground
forces. Semenov has been suspended from duty since last November, when
Rodionov accused him of misconduct. Semenov himself issued a statement
the same day complaining that in the four months since Rodionov leveled
charges against him, the defense minister neither substantiated them nor
met with Semenov to explain them. -- Scott Parrish

RUSSIA CRITICIZES GERMANY ON DESERTERS, U.S. ON BELARUS. Russian Foreign
Ministry spokesman Vladimir Andreev denounced as "politically motivated"
the recent decision by Bonn to grant asylum to Soviet Army deserters
(see OMRI Daily Digest, 27 February, 1997), ITAR-TASS reported on 18
March. Andreev said that granting asylum to the some 600 soldiers, who
deserted from former Soviet troops based in Germany until 1994, was an
admission that Germany was responsible for their decision not to return
to Russia, saying he hoped Bonn did not aim at encouraging desertion.
Russia had requested the soldiers' extradition, saying many had
committed other crimes. Andreev also panned American policy toward
Belarus as "erroneous and counterproductive," saying attempts to
"artificially isolate" Minsk could generate "political tension." He said
Moscow is "astonished" at Washington's criticism of Russo-Belarusian
integration efforts, since the U.S. supports economic integration in
Western Europe. -- Scott Parrish

YELTSIN VETOES LAW ON CONSTITUTIONAL AMENDMENT PROCEDURE. President
Yeltsin vetoed a law outlining the procedure for adopting constitutional
amendments, which was passed by the Duma in February after the president
vetoed an earlier version, ITAR-TASS reported on 18 March. A statement
issued by the presidential press service claimed the law was
unconstitutional but did not specify which articles it contradicted. The
constitution stipulates that amendments must be approved by a two-thirds
majority in the Duma, a three-fourths majority in the Federation
Council, and by legislatures in at least two-thirds of Russia's 89
regions. A federal law such as that which Yeltsin vetoed is needed to
specify procedural details. -- Laura Belin

GOVERNMENT PREPARES FOR DAY OF ACTION. On 18 March, less than two weeks
before a nationwide day of protest organized by the Federation of
Independent Trade Unions of Russia (FNPR), Prime Minister Chernomyrdin
ordered regional leaders to personally conduct negotiations with union
representatives and employers to find ways to reduce social tension and
to report back to Moscow on a daily basis, ITAR-TASS reported. Cherno-
myrdin stressed the need to tackle wage arrears, which total about 50
trillion rubles. FNPR Deputy Chairman Aleksei Surikov said the same day
that the protest would go ahead on 27 March despite the recent
government reshuffle, but Labor Minister Gennadii Melikyan said the FNPR
would not call for the resignation of the government. Such calls are,
however, likely to be heard in some regions. -- Penny Morvant

CHECHEN PARLIAMENT ELECTS SPEAKER. After several inconclusive rounds of
voting, on 17 March the new Chechen parliament elected field commander
Ruslan Alikhadzhiev as its speaker, ITAR-TASS reported. Alikhadzhiev, a
member of the Chechen National Independence Party, was characterized by
a colleague as "a decent man with a higher economic education."
Addressing the parliament session, President Aslan Maskhadov urged
deputies to draft and enact urgently needed legislation. Also on 17
March, the leader of the Terek Cossack army sent a letter to Maskhadov
requesting a meeting to discuss stabilizing the situation in the North
Caucasus and protecting ethnic Russians in the region from terrorism,
according to ITAR-TASS. Plans for staging terrorist attacks were
confiscated from a group of Chechen militants, subordinate to field
commander Salman Raduev, who were detained on the border between
Chechnya and the rest of the Russian Federation, Rabochaya tribuna
reported on 18 March quoting local media in Krasnodar krai. -- Liz
Fuller

CONFUSION OVER ALLEGED ASSASSINATION ATTEMPT IN CHECHNYA. Chechen
Security Council Secretary Akhmed Zakaev told ITAR-TASS on 18 March that
a bomb explosion in central Grozny the previous day had been intended to
kill acting First Deputy Prime Minister Movladi Udugov. Udugov, however,
denied having been in the vicinity at the time of the explosion. Also on
18 March, a Russian military helicopter patrolling the border between
Chechnya and North Ossetiya was fired on from Chechen territory, Reuters
reported. No one was injured. -- Liz Fuller

PLANE CRASHES EN ROUTE TO TURKEY. About 50 passengers and crew were
killed when a Russian airliner en route to Turkey crashed near Cherkessk
in southern Russia on 18 March, international agencies reported. The
plane, a Stavropol Airlines AN-24, crashed half an hour after taking off
from Stavropol for the Turkish city of Trabzon. Officials said most of
the passengers were Russian "shuttle traders" traveling to Turkey to
purchase consumer goods for resale at home. Safety standards have fallen
since the Soviet monopoly Aeroflot was split into numerous smaller
domestic companies, some of which take shortcuts in maintenance and
safety standards. -- Penny Morvant

BUS BOMBERS SENTENCED. The Supreme Court of Kabardino-Balkariya on 17
March convicted two brothers for the June 1996 bombing of a bus in the
republic's capital, Nalchik, in which six people were killed, Russian
agencies reported. The brothers received relatively light sentences --
seven and seven and a half years -- because they are minors. -- Penny
Morvant

RUSSIA-IRAQ ECONOMIC RELATIONS GET NEW BOOST. Iraq's government gave
Russia most-favored-nation status in selling Iraqi crude oil in exchange
for food and other humanitarian products, agencies reported on 18 March.
Under the U.N. food-for-oil deal, Iraq can sell $2 billion worth of oil
every six months. Russian Fuel and Energy Minister Petr Rodionov, who
heads the Russian delegation at the meeting of the Russian-Iraqi
committee for economic cooperation in Baghdad, encouraged Russian
companies (which expressed interest in selling some 100,000 tons of
wheat, 50,000 tons of sugar, as well as spare parts for power stations
to Iraq) to increase the supply of goods to Iraq. He noted that so far
they have failed to realize the full potential of the food-for-oil deal.
-- Natalia Gurushina

TRANSCAUCASIA AND CENTRAL ASIA

INDEPENDENT UNIONS FACE HARASSMENT IN KAZAKSTAN. The 19 March edition of
Nezavisimaya Gazeta reports that the independent trade union (NPTsK)
president of Kazakstan, Leonid Solomin, has been charged under
Kazakstan's criminal code for "engaging in an illegal hard currency
operation." The charge stems from Solomin's wages being paid in hard
currency, which is against Kazak law. The paper points out that this is
the latest of several actions against independent trade unions made by
the government's Committee for National Security (KNB). The leader of
the Karaganda NPTsK, Rahim Uteuov, said the KNB uses criminal
proceedings to intimidate non-Kazaks, and that Kazaks who participate in
unions are branded "traitors." -- Bruce Pannier

KAZAKSTAN TO PULL OUT OF CUSTOMS UNION? Gani Kasymov, chairman of the
State Customs Committee of Kazakstan, said "the economic security of the
state is suffering" due to "the huge amount of contraband goods brought
in," Reuters reported on 18 March. Kasymov complained that "There is no
point carrying out internal economic reforms if the length and breadth
of our borders are so porous." It appears that Kazakstan may be planning
to withdraw from the custom's union with Russia, Kyrgyzstan, and
Belarus, although Almaty does not want to be blamed for the union's
collapse. -- Bruce Pannier

BORDER GUARD CHIEF IN KYRGYZSTAN. The head of the Russian Federal Border
Guard Service, Gen. Andrei Nikolaev, held talks with Kyrgyz President
Askar Akayev and Security Minister Myrzakan Subanov on 18-19 March,
according to Russian sources. A protocol between Kyrgyzstan and Russia
on financing the border guards in Kyrgyzstan was signed. Also agreed to
was use of Kyrgyz air bases for operations by the Border Guards in
Tajikistan. -- Bruce Pannier

THE DEATH PENALTY IN CENTRAL ASIA. The Kyrgyz daily Vechernyy Bishkek on
7 March released figures on the number of executions in five Central
Asian states for 1996. According to the article, Kyrgyzstan executed 41
people in 1996 and pardoned one. Kyrgyzstan is the only Central Asian
state not to employ the death penalty for drug related offenses and will
lower the number of crimes punishable by death from 16 to five.
Kazakstan executed 42 people but has also lowered crimes punishable by
death from 17 to six. The number of executions in Turkmenistan could
only be estimated but the article put it at around 400. Uzbekistan also
does not publish figures but uses the death penalty for "crimes against
peace and security." Tajikistan officially executed 20 people last but
the newspaper noted this was a dubious figure. -- Bruce Pannier

[As of 12:00 CET]

Compiled by Pete Baumgartner

*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!

What's in Store for the magazine Transition

We've learned much in the last two years about what sort of magazine
Transition can be and what role it should play in Central and Eastern
Europe and the former Soviet Union. Of greatest help in this process has
been the advice of readers. Among some of the desired changes are for
Transition to offer even more articles by writers in the region - lively
opinion pieces as well as fact-filled analysis and expanded departments.

Accordingly, Transition will be substantially restructured and
relaunched as a monthly with the issue dated June 1997. The last
biweekly issue will be 6 April, followed by a brief hiatus. All existing
subscriptions will be honored and extended according to the new monthly
frequency, which is priced at $65 for 12 issues. As before, we offer a
substantial discount for readers in and of the countries we cover (apply
to the contacts listed below for more information).

For engaged intellectuals, policymakers, journalists, and scholars from
the region, the new Transition will provide a rare forum for the
exchange of ideas and criticism on political, economic, and cultural
issues and events.

For more information, contact the OMRI Marketing Department at tel.
(420-2) 6114 2114, fax (420-2) 6114 3181; email: transition-DD@omri.cz

*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!*^!

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            Copyright (c) 1997 Open Media Research Institute, Inc.
                      All rights reserved. ISSN 1211-1570
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