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OMRI DAILY DIGEST - No. 59, Part I, 25 March 1997

No. 59, Part I, 25 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

OMRI, Radio Free Europe/Radio Liberty Announcement:

Due to a restructuring of operations at the Open Media Research
Institute, OMRI will cease publication of the OMRI Daily Digest with the
issue dated 28 March 1997. For more information on the restructuring of
the Institute, please access the 21 November 1996 Press Release at:

On 2 April, Radio Free Europe/Radio Liberty will launch a daily news
report, RFE/RL Newsline, on the countries of Eastern Europe and the
former Soviet Union. A successor to the RFE/RL Daily Report and the
OMRI Daily Digest, the new daily will nonetheless represent a major
departure from its predecessors. In addition to analytic materials,
RFE/RL Newsline will carry news gathered by the correspondents,
bureaus, and broadcast services of Radio Free Europe/Radio Liberty.
RFE/RL will disseminate this new publication both electronically and via
fax to all those now receiving the OMRI Daily Digest and for the time
being under the same terms.

OMRI will continue to publish the periodical Transition, for more
information on Transition please access
http://www.omri.cz/publications/transition/index.html or send a
request for information to: transition-DD@omri.cz


month, members of Grigorii Yavlinskii's Yabloko movement refused to join
the cabinet, saying that the government was not committed enough to
revising economic policy. However, the appointment of First Deputy Prime
Minister Boris Nemtsov last week revived speculation that some State
Duma deputies from the Yabloko faction may accept cabinet posts, and
Yavlinskii and Nemtsov are still holding negotiations, ITAR-TASS and NTV
reported on 24 March. Yavlinskii, who worked closely with Nemtsov in
1992 on economic reforms implemented in Nizhnii Novgorod, has said he
will support Nemtsov's efforts, even if Yabloko members do not join the
cabinet. Nezavisimaya gazeta noted on 22 March that the Kremlin and the
government are interested in securing the support of the Yabloko Duma
faction, and Nemtsov is interested in building his own "team" within the
cabinet. -- Laura Belin

CHECHEN ROUNDUP. Chechen President Aslan Maskhadov on 24 March
submitted to parliament his list of nominations for the new government,
which he will head, ITAR-TASS reported. The same day, Chechen Deputy
President Vakha Arsanov claimed that the so-called "party of war" in
Moscow had recruited Chechen renegades to perpetrate terrorist acts in
three Russian cities in order to torpedo the ongoing peace talks,
according to ITAR-TASS and Reuters. On 23 March NTV summarized an
address by Maskhadov to the Chechen people calling for the mobilization
of all national forces to consolidate peace and build an independent
state. Maskhadov further claimed that unidentified foreign intelligence
services are spreading rumors that a coup will take place in Chechnya on
1 April, and warned the population not to give in to "provocations." He
also denied rumors of a struggle for power between himself and prominent
field commanders. -- Liz Fuller

Agriculture Minister Viktor Khlystun on 24 March criticized Yeltsin's
decision to include the State Fishing Committee in his ministry as part
of an effort to streamline the government. He charged that the decision
would destroy the system for managing the fishing industry, ITAR-TASS
reported. Khlystun pointed out that the government had tried a similar
move in 1992, but had to separate the fishing industry after only four
months. Regional leaders in Primorskii Krai and Kamchatka also protested
the decision. -- Robert Orttung

AGRARIAN PARTY HOLDS CONGRESS. Addressing the fifth congress of
the Agrarian Party of Russia (APR), party leader Mikhail Lapshin called
for directing more bank capital toward the agrarian sector and sharply
reducing food imports in order to revive agricultural production, ITAR-
TASS and NTV reported on 22 March. Delegates passed resolutions opposing
the sale of farmland and calling on agricultural workers to participate
in the nationwide protest planned for 27 March. Communist Party leader
Gennadii Zyuganov was a guest at the APR congress. Having fared poorly
in the December 1995 parliamentary elections, the Agrarians depend on
Duma deputies elected from Communist ranks to maintain the 35 deputies
needed for a registered Duma faction. -- Laura Belin

REACTIONS TO HELSINKI SUMMIT. U.S. President Bill Clinton has come
under fire from conservative critics who accuse him of having abandoned
the Baltics by not including them in the first round of NATO expansion,
and of having made too many concessions to Russia in restricting work on
ABM technologies. In Russia, most centrist commentators have reacted
with cautious approval to President Boris Yeltsin's diplomacy at
Helsinki. Director of the USA-Canada Institute Sergei Rogov, writing in
Nezavisimaya gazeta on 25 March, noted that Russia had no chance of
stopping NATO expansion and praised Yeltsin for avoiding a "senseless
confrontation." However, Izvestiya on 25 March warned that the summit
left many crucial differences unresolved, hidden within the "matrioshka"
of the five agreements. -- Peter Rutland

VISITORS FROM INDIA . . . Indian Prime Minister H.D. Deve Gowda
arrived in Moscow on 24 March for two days of talks, ITAR-TASS reported.
He is expected to sign a $2 billion deal for delivery of two VVER-1,000
light-water reactors to India. The deal was initially planned in 1988,
but delayed due to disagreements over payment arrangements. Later this
year Russia will begin delivery to India of seven cryogenic kick
(fourth) rocket stages which will be used for satellite launches. The
rocket stages will cost $150 million. After U.S. complaints, Russia
withdrew an earlier $800 million plan to sell India the technology to
make the cryogenic boosters. This month Russia also began delivery of
Su-30 MK fighter jets to India under a $1.8 billion contract signed in
November 1996. -- Peter Rutland

. . . AND CHINA. Also on 24 March Chinese Foreign Minister Qian
Qichen began a four day visit to Moscow, aimed at preparing for the
Russo-Chinese presidential summit scheduled for April. Due to a mix-up
Qian was left waiting by his hosts for 20 minutes at Sheremetevo
airport, Reuters reported. Deputy Foreign Minister Grigory Karasin said
that at the summit Russia, China, Kyrgyzstan, Tajikistan, and Kazakstan
intend to sign a treaty on the reduction of military forces along their
mutual borders, ITAR-TASS reported. According to a poll by the Beijing
Public Opinion Institute, 40% of Chinese think that relations with
Russia are more important than relations with Japan or the U.S.,
although 46% thought all three countries were of equal importance, ITAR-
TASS reported on 25 March. 19% approved of the changes in Russia since
1991, 35% disapproved, and 25% thought the changes would not last. --
Peter Rutland

majority of whose members are communists, demanded that the oblast
executive ban a local theater production of Vladimir Nabokov's Lolita,
ITAR-TASS reported on 24 March. The council members believe that the
story about an affair between a 12-year-old girl and an old man is
"amoral" and would corrupt the city's youth. A local youth theater is
sponsoring the production. -- Robert Orttung

TUBERCULOSIS RATES RISING. The Russian Health Ministry said on 24
March that about 65 people in every 100,000 are suffering from
tuberculosis, a 10% increase in comparison with last year, ITAR-TASS
reported. The number of deaths from tuberculosis has risen by almost 90%
over the past five years. TB rates are particularly high in Tyva and the
Koryak Autonomous Okrug (three times the national average) and in
Buryatiya, Dagestan, North Ossetiya, the Jewish Autonomous Oblast, and
Kurgan Oblast (almost twice the national average). Those most at risk
from the disease include prisoners, migrants, "shuttle-traders," and the
homeless. TB rates in prisons and penal colonies are more than 40 times
the national average. -- Penny Morvant

chief, Lt.-Gen. Nikolai Kulikov, has issued an order prohibiting the
capital's policemen from concluding private agreements to guard
businesses or their employees, Kuranty reported in its issue of 19-25
March. The decision followed the discovery that a Moscow police unit had
been guarding a leading organized crime figure. After the murder on 23
January of Vladimir Naumov, a businessmen and prominent member of the
Koptevo criminal gang, investigators found that he had been guarded by a
Moscow spetsnaz (special-designation) unit in their off-duty hours. Many
former law enforcement personnel are involved in private security, while
others moonlight in the sector to boost their income. -- Penny Morvant

Statistical Committee (Goskomstat) reported GDP growth of 0.1% in
January and 0.9% in February. However, Reuters reported on 17 March that
the apparent upturn may be due to a change in Goskomstat methodology.
Goskomstat increased its estimate of shadow economy activity for 1997
from 20% to 25% of GDP - but did not adjust upwards the 1996 figures.
This allegation was confirmed in a Financial Times article on 25 March,
which noted that without the alteration reported GDP would have fallen
by 6% in January. The Financial Times said that the new methodology
would have produced a figure of 5% growth for February, which was so
unbelievable that the figure was adjusted downwards. Russian GDP has
been falling for the past seven years; the World Bank predicts the fall
will cease this year, but does not expect positive growth till 1998. --
Peter Rutland

ministries have surprisingly low budgets and staffing levels, according
to Profil no 10. The journal examines the spending on ministry
bureaucracies in the 1997 budget. The State Tax Service takes up a huge
4.8 trillion rubles out of the total budget for civilian ministries of
11.6 trillion rubles ($2 billion). The tax service will also get an
additional 1.5 trillion rubles from a special fund. Second in line is
the Finance Ministry, with 2.6 trillion rubles, followed by the
Presidential Administration with 824 billion. The foreign ministry will
spend 113 billion rubles, the justice ministry 52 billion. Many
ministries have extremely low administrative budgets - the health
ministry budget is 13 billion rubles ($2.3 million), the State Property
Committee 9 billion, the communications ministry 7 billion. -- Peter

Constitutional Court has rejected the petition filed in February by
representatives of the Komi Republic, Irkutsk Oblast, Altai Krai, and
Volgograd and Vladimir oblasts, in which they argued that the tax law
forbidding local authorities from introducing their own taxes
contradicts the Russian constitution, ITAR-TASS and Kommersant-Daily
reported on 21-22 March. The government has prepared a new draft of the
tax code which envisage a drastic cut in the number of taxes (from some
200 to just over 30). The court confirmed the legitimacy of these
restrictions and ruled that regions only have the right to impose those
taxes that have been specifically allowed by the federal government. --
Natalia Gurushina

has decided to lower obligatory ruble reserve requirements for
commercial banks effective 1 May, Kommersant-Daily reported on 22 March.
Requirements on deposits of up to 30 days, those of 31-90 days, and of
over 91 days will go down from 16% to 14%, from 13% to 11%, and from 10%
to 8%, respectively. This measure should help the government to place
10-15 trillion rubles of long-term federal bonds (OFZs) with commercial
banks in order to raise money for repaying wage and pension arrears. At
the same time, the TsB increased requirements on foreign currency
deposits (from 5% to 6%), attempting to reduce the dollarization of the
economy. This step, however, may weaken the position of banks
specializing in foreign trade operations. -- Natalia Gurushina


President Eduard Shevardnadze argued in his traditional Monday radio
interview on 24 March that the upcoming CIS heads of state summit should
either broaden the mandate of the CIS peacekeeping forces deployed in
Abkhazia to enable them to protect the Georgian population more
effectively, or comply with the Georgian parliament resolution calling
for their withdrawal, Reuters reported. Both the Turkish Ambassador in
Tbilisi, Tofik Okiazus, and Georgian presidential press secretary
Vakhtang Abashidze have rejected the claim by Russian State Duma deputy
Sergei Baburin that Turkey has moved troops closer to its border with
Georgia in anticipation of the deployment of a NATO peacekeeping force
in Abkhazia, Nezavisimaya gazeta reported on 21 March. Meeting two weeks
ago with a delegation from the Turkish parliament, Shevardnadze had
proposed that Turkey take a more active role in resolving conflicts in
the Caucasus, and Abkhazia in particular. -- Liz Fuller

ALIEV IN KYIV. On arrival in Kyiv on 24 March for a two-day official
visit, Azerbaijan's President Heidar Aliev held talks with his Ukrainian
counterpart Leonid Kuchma on bilateral cooperation, the planned
Transcaucasus transport corridor, European security, and the future of
the CIS, ITAR-TASS reported. Aliev subsequently told journalists that
after the existing Baku-Batumi oil pipeline is repaired and extended to
the Georgian Black Sea port of Supsa in 1998, Azerbaijan's Caspian oil
will be shipped from Supsa to Ukraine for export to the West.
Azerbaijani and Ukrainian representatives signed a series of bilateral
inter-governmental agreements including several on military cooperation,
but Ukrainian Foreign Minister Henadii Udovenko stressed that the latter
are not directed against any third country. -- Liz Fuller

Levon Ter-Petrossyan on 24 March introduced newly appointed Prime
Minister Robert Kocharyan to the government members, Armenian and
Russian media reported. Ter-Petrossyan said that Kocharyan's
"popularity, efficiency and ability to get things done" were the reasons
for his choice. He said the appointment of the Nagorno-Karabakh leader
will not change Armenia's economic strategy, arguing that his country
remains committed to democracy and free-market reforms. Also, according
to Radio Rossii, Foreign Minister Aleksandr Arzumanyan claimed that
Yerevan will not take a harder line at the negotiations on the Nagorno-
Karabakh conflict's settlement as a result of the change of prime
ministers. Vazgen Manukyan, the leader of the Armenian opposition, told
NTV that Kocharyan's appointment is "absurd" as it will create
additional problems for Armenia regarding Nagorno-Karabakh. -- Emil

KAZAKSTANI OIL COMPANY SOLD. On 24 March it was announced that
Central Asian Petroleum (CAP), a subsidiary of the Indonesian Setdco
Group, has won a 60% stake in Kazakstan's largest oil company,
Mangistaumunaigaz, Reuters reported. Mangistaumunaigaz produced six
million metric tons of oil, about one third of the Kazak total, and 1.8
billion cubic meters of gas in 1995. CAP offered $250 million,
outbidding five other minor challengers. Analysts were concerned that
major Western oil companies stayed away from the sale, suggesting that
they do not trust the Kazakstan government to clearly define the assets
and liabilities of the firms up for sale. -- Peter Rutland

[As of 12:00 CET]

Compiled by Steve Kettle


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. Transition will also offer readers from abroad a
window on the experiences of countries moving away from a single
ideology. We are certain that the magazine's new format and orientation
will make it even more useful for your work, as well as contributing
more to your understanding.

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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