One word frees us of all the weight and pain of life: that word is love. - Sophocles
OMRI DAILY DIGEST

No. 56, Part I, 20 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 upcoming changes to TRANSITION
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

RUSSIA

MORE TOUGH RHETORIC ON EVE OF SUMMIT . . . Speaking in Helsinki, where
President Yeltsin meets with his American counterpart Bill Clinton on
20-21 March, presidential spokesman Sergei Yastrzhembskii underlined
Moscow's continuing rejection of NATO expansion, which he termed "the
West's biggest strategic mistake since the end of the Cold War,"
international agencies reported on 19 March. Yastrzhembskii said Yeltsin
remains convinced that there are not "any concrete reasons" which
justify expanding NATO eastwards. He argued that the dispute over NATO
expansion has already undermined Russian relations with the West, and
said the summit was more likely to produce "gradual progress" on NATO
and other issues than any major agreements. -- Scott Parrish

. . . YELTSIN WARY OF TRADE OFF BETWEEN AID AND NATO EXPANSION. The U.S.
would like the summit to feature new bilateral economic cooperation
agreements, which would demonstrate that despite the dispute over NATO
enlargement, the U.S. is not seeking to isolate Russia, Reuters reported
on 19 March. But Moscow is wary of agreements that might look like a
"payoff" in return for acquiescence on NATO expansion. A senior U.S.
official told the agency that Washington is prepared to offer "several
billion dollars" of additional investment financing to Russia through
the Export-Import Bank and OPIC. Raf Sharikov, the editor of Kommersant-
Daily, said that at a recent meeting with journalists, Yeltsin reported
that Clinton had offered him a $4 billion investment assistance package.
Yeltsin said he declined the offer, stressing that he did not want
economic talks to undermine negotiations over NATO enlargement. -- Scott
Parrish

YELTSIN DECREES CHANGES IN DEFENSE MINISTRY LEADERSHIP. President
Yeltsin has issued a decree abolishing one of five deputy minister of
defense positions, but creating two more, including a new first deputy
ministerial post, NTV reported on 19 March. The position of deputy
defense minister in charge of the Main Military Inspectorate has been
abolished, since those functions are being transferred to the new State
Military Inspectorate, which is an independent department of the
presidential administration (see OMRI Daily Digest, 5 November 1996).
Anonymous Defense Ministry sources told the network that the new first
deputy minister position is likely to be filled by Col.-Gen. Viktor
Chechevatov, currently commander of the Far Eastern Military District,
who is widely viewed as a potential successor to Defense Minister Igor
Rodionov. -- Scott Parrish

DUMA WANTS MORE ACCESS TO STATE TV. The State Duma on 20 April passed a
resolution asking the Federal Television and Radio Broadcasting Service
to change the licensing procedures for Russian TV (Channel 2), requiring
it to broadcast dispatches from the legislature's company three times a
week (for a total of 105 minutes) during prime time, ITAR-TASS reported.
The vote passed with a tally of 293-5, and one abstention. The
government's Department of Information and Culture, however, said that
the resolution could not be implemented because it violates existing
legislation. In particular, the Duma's press service can participate in
the development of material for broadcast, but not actually serve as the
broadcaster, the executive branch noted. -- Robert Orttung

RUSSIA CANCELS PRODUCTION OF ADVANCED FIGHTER. Anonymous sources in the
former Ministry of Defense Industry told ITAR-TASS on 19 March that
since the Russian Air Force cannot afford to buy new planes, the MAPO
aircraft company would not put the advanced Multi-Functional Fighter
(MFI) into serial production. A prototype of the plane (known as Project
1.42 in the West) has undergone ground tests but not yet flown and is
reported to incorporate advances in "thrust vectoring," which would make
it highly maneuverable. While research on the MFI project will continue,
MAPO will concentrate its production resources on the MiG-35, an
improved derivative of the MiG-29M fighter, which is targeted at the
export market in Southeast Asia and the Middle East. In 1996, the cash-
strapped Russian military did not purchase a single new combat aircraft.
-- Scott Parrish

MASKHADOV UNVEILS NEW GOVERNMENT . . . Chechen President Aslan Maskhadov
formally appointed several members to his new government on 19 March,
Russian and Western agencies reported. Interior Minister Kazbek
Makhashev and the head of the Yunko state oil company, Khodzh-Ahmed
Yarikhanov, remain in their posts, as do two members of the previous
government appointed by pro-Moscow former President Doku Zavgaev.
Maskhadov offered unspecified government posts to two close allies of
his defeated rival in the presidential election, field commander Shamil
Basaev. Isa Astamirov was named minister for the economy, and Akhmed
Zakaev, Maskhadov's national security advisor, will simultaneously serve
as minister of culture. -- Liz Fuller

. . . AND ISSUES DECREE RESTRUCTURING MILITARY. On the same day,
Maskhadov issued a decree ordering the creation of a national guard, the
structure and size of which remains unclear, ITAR-TASS reported. The
guard will be partly made up of young Chechen fighters who formerly
served in the field commanders' units that are to be disarmed and
dissolved by early April. ITAR-TASS quoted a member of the Chechen
general staff as confirming that Chechnya plans to maintain a standing
army of 2,000 men, including special task battalions, an armored
division, air defense units and a rapid reaction force. On 18 March
Radio Rossii quoted the commander of Russia's Interior Ministry troops,
Col.-Gen. Anatolii Shkirko, as stating that Maskhadov's decree on the
creation of Chechen regular armed forces violates the Russian
constitution. -- Liz Fuller

DUMA MOVES TO LIMIT CITY NAME CHANGES . . . The parliament's lower house
on 19 March passed a draft law restricting the freedom of local
authorities to rename cities, ITAR-TASS reported. The bill states that
name changes must be approved by the federal authorities, who must take
into account public opinion, and sets out a series of procedures in the
renaming process. The move comes two months after Chechnya's outgoing
government renamed Grozny, its capital, Dzhokhar-Gala in honor of late
Chechen President Dzhokhar Dudaev. -- Penny Morvant

. . . CONSIDERS SOCIAL LEGISLATION. Also on 19 March, the Duma passed on
second reading a draft law on the subsistence minimum, ITAR-TASS
reported. The bill defines how the subsistence minimum should be
calculated and amended and provides for its use in the formulation of
regional social programs to assist those on low incomes. The deputies
also overcame a Federation Council veto on a draft law setting the basic
cost of a minimum consumer basket in 1990. The figure will be used in
the calculation of compensation to Russians whose savings were devalued
as a result of the economic reforms launched in 1991-1992. The Duma
draft put the cost of the basket in 1990 prices at 444 rubles, whereas
the government argues that it should be 524 rubles. -- Penny Morvant

LAW ON PRODUCTION SHARING BLOCKED AGAIN. On 19 March, at the initiative
of the Liberal Democratic Party, the State Duma voted 234-127 to
postpone a planned discussion of the production sharing law, Russian TV
(RTR) reported. The law itself was passed in 1995, but in May 1996 the
Duma blocked approval of the government's list of approved deposits,
without which the law cannot go into effect. The recent government
shuffle, leaving Chernomyrdin as prime minister and Petr Rodionov as
fuel and energy minister, does not suggest any radical initiatives from
the government will be forthcoming to break the deadlock over energy
policy. Energy output continues to fall due to a lack of investment. In
the first two months of 1997 oil output fell 2%, gas 1%, coal 4%, and
electricity 4%, compared to the same period last year, ITAR-TASS
reported on 15 March. -- Peter Rutland

SUPREME COURT REJECTS HIGH-SPEED TRAIN CASE. The Russian Federation
Supreme Court resolved on 19 March not to consider a lawsuit aimed at
halting the construction of a high-speed railway line between Moscow and
St. Petersburg, declaring that the case is outside its jurisdiction,
ITAR-TASS reported. The suit was filed on 27 February by Duma
Environmental Committee Chairwoman Tamara Zlotnikova, who has also
threatened to appeal to the Constitutional Court. Zlotnikova argues that
the project, which would require railway tracks to be laid through a
national park, violates several laws and would damage the environment.
She has also questioned its estimated cost (75 trillion rubles), arguing
that it would cost considerably more to implement. -- Penny Morvant

TAX SERVICE THREATENS BANKRUPTCY . . . On 19 March the State Tax Service
threatened bankruptcy proceedings against 90 firms whose tax debts total
35 trillion rubles ($6.1 billion), AFP reported. The list is headed by
auto plant AvtoVAZ, which owes 2 trillion rubles, and six oil and gas
firms each owing more than 1 trillion rubles. Although the new
government has promised to crack down on tax deadbeats, similar threats
were made last fall (and the fall before that), but not implemented. --
Peter Rutland

. . . BUT FACES UPHILL STRUGGLE. Bankruptcy proceedings rarely produce
positive results in Russia. Complete closure of large firms is not an
option for political reasons, and bankrupt companies that continue
operating skillfully hide their revenues from the authorities. The State
Tax Service estimates that only 20-30% of payments to energy suppliers
go into the firm's main account, the rest being hidden, Radio Rossii
reported on 18 March. Thus, for example, the Chelyabinsk Metal Plant
owes 90 billion rubles to the oblast pension fund, and a local
arbitration court ordered the "arrest" of its assets on 18 March. Tax
inspectors seized finished steel, while managers complained that the
steel had already been paid for by a foreign buyer -- which makes one
wonder where the money went. The West Siberian railway has filed for
bankruptcy against the giant West Siberian and Kuznetsk steel mills in
Kemerovo Oblast for unpaid bills, Izvestiya reported on 19 March. The
court is considering forcing the plants to issue new shares to cover
their debts, but the newspaper asked "what idiot would buy them?" --
Peter Rutland

PYRAMID SCHEME DOCUMENTS GIVEN TO GENERAL PROCURATOR. The Federal
Securities Commission (FKTsB) has passed documentation on the activities
of 984 financial companies operating without licenses to the Interior
Ministry and the General Procurator's Office, Segodnya and Izvestiya
reported on 19-20 March. Among these companies are the infamous
financial pyramids MMM and Vlastilina. FKTsB and the federal fund for
defending shareholders' rights have also decided to pay compensation to
World War II invalids who lost their savings in such pyramid schemes.
The fund, which gets 2% of privatization revenue, now has 10 billion
rubles ($1.75 million) at its disposal. FKTsB head Dmitrii Vasilev said
that the commission made its decision in reponse to the recent events in
Albania. -- Natalia Gurushina

CENTRAL BANK'S GOLD RESERVES INCREASE. The Central Bank (TsB) has
accumulated 390 metric tons of gold reserves, or 90% of all gold
reserves in Russia, ITAR-TASS and Reuters reported on 19 March, citing
TsB First Deputy Chairman Sergei Aleksashenko. In 1996, TsB's gold
reserves went up by 90 metric tons. Aleksashenko said that the bank aims
at increasing reserves by some 25% a year in 1997 and 1998. Experts
consider Aleksashenko's statement as a major policy change for Russia,
which was selling gold over the last few years in order to finance
economic reforms and bring down inflation. Russia's gold output declined
from 133 metric tons in 1994 to 101 metric tons last year. -- Natalia
Gurushina

TRANSCAUCASIA AND CENTRAL ASIA

NAGORNO-KARABAKH LEADER TO BE APPOINTED ARMENIA'S NEW PRIME MINISTER?
RFE/RL on 19 March quoted deputies of the Armenian parliament as
claiming that President Levon Ter-Petrossyan is considering appointing
the president of the self-proclaimed Republic of Nagorno-Karabakh,
Robert Kocharyan, as Armenia's new prime minister. Observers note that
Kocharyan is currently in Yerevan, holding consultations with senior
Armenian officials. Kocharyan, 42, was named president by the Nagorno-
Karabakh parliament in late 1994 and was reelected to that post by
popular vote in November 1996 elections that were condemned by the
international community. Among other candidates to replace Prime
Minister Armen Sarkisyan, who resigned on 6 March because of poor
health, is controversial Yerevan Mayor and former Interior Minister Vano
Siradeghyan. Earlier, Siradeghyan, who is considered by the opposition
as one of the main organizers of the alleged 22 September election
rigging, told RFE/RL that he will accept the post if offered. -- Emil
Danielyan

SADVAL, OPON MEMBERS SENTENCED IN BAKU. On 18 March, Azerbaijan's
Supreme Court handed down sentences of between two and 15 years
imprisonment on seven members of the Lezgin separatist organization
Sadval on charges of treason, premeditated murder, and the violation of
national equality, Nezavisimaya gazeta reported on 20 March. On 19
March, eleven former members of the OPON special police were sentenced
to terms of between five and 13 years for their part in the so-called
"coup attempt" by Rovshan Djavadov in March 1995, Western agencies
reported. -- Liz Fuller

TURKISH PARLIAMENT SPEAKER IN AZERBAIJAN. On 19 March, the first day of
a two-day visit to Azerbaijan, Turkish parliament speaker Mustafa
Kalemli met with his Azerbaijani counterpart Murtuz Alesqerov, who
expressed the hope that Turkey would participate actively in the export
of Azerbaijan's Caspian oil to the West, Turan reported. Addressing
Azerbaijan's Milli Mejlis, Kalemli reiterated that Turkey will not
endorse any solution to the Nagorno-Karabakh conflict that does not
ensure Azerbaijan's territorial integrity, according to ITAR-TASS. In an
implicit warning to Moscow to cease its support for exile Kurdish groups
with links to the PKK, Kalemli also stressed Turkey's readiness to
develop partnership relations with all neighboring countries, especially
Russia, on the basis of mutual respect and non-interference in each
other's internal affairs. -- Liz Fuller

UIGHUR PROTEST AT CHINESE EMBASSY IN KAZAKSTAN. A group of some 30
ethnic Uighurs held what was described as a "noisy protest" outside the
Chinese embassy in Almaty on 19 March, Reuters reported. The
demonstration came in response to reports by the United National
Revolutionary Front of Eastern Turkestan (the Uighur independence
movement) about the planned execution of two Uighur students in China.
The students are charged with rioting in China's western Xinjiang
province in February. The Uighurs in Kazakstan claim that hundreds of
Uighurs were killed in the rioting. China says the figure was 10 killed
and 100 wounded. Protesters outside the Chinese Embassy in Almaty
shouted "East Turkestan" and "Allah Akbar" (God is Great) while staff
inside the embassy videotaped them. -- 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

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

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