Treat your friends as you do your pictures, and place them in their best light. - Jennie Jerome Churchill
RFE/RL NEWSLINE

Vol 1, No. 17, Part I, 23 April 1997


Vol 1, No. 17, Part I, 23 April 1997

This is Part I of Radio Free Europe/Radio Liberty's Newsline.
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 RFE/RL NewsLine are available through RFE/RL's WWW
pages: http://www.rferl.org/newsline/search/

Back  issues of the OMRI Daily Digest are available through OMRI's
WWW pages: http://www.omri.cz/

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Headlines, Part I

* CHINESE PRESIDENT MEETS WITH YELTSIN

* NEMTSOV ISSUES ULTIMATUM TO GAZPROM

* KYRGYZ PRESIDENT SUPPORTS TRASECA PROJECT,
   LUKASHENKA PROPOSES ALTERNATIVE

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RUSSIA

CHINESE PRESIDENT MEETS WITH YELTSIN... Jiang
Zemin and President Boris Yeltsin met today in Moscow and
signed declarations on a "multipolar world" and the "formation
of a new world order," ITAR-TASS and Russian Public TV
reported. The two leaders reached agreement on setting up a
Russian-Chinese Committee on Friendship, Peace, and
Development and discussed border cooperation, reduction of
border forces, economic cooperation, atomic energy projects,
and economic reforms in China. Talks also focused on
construction of a gas pipeline from Tomsk to Shanghai and
sales of equipment for Chinese hydro-electric power stations.
Earlier, Jiang attended an official welcoming ceremony at the
Kremlin. He met with high-level Russian government officials,
including Prime Minister Viktor Chernomyrdin, who is to visit
China at the end of June.

...AND ADDRESSES STATE DUMA. Following his meeting
with Yeltsin, Jiang addressed the State Duma and stressed the
need for a strategic partnership between China and Russia,
ITAR-TASS reported. He urged the development of economic,
technical, and other ties and expressed the hope that the two
countries' parliaments would achieve "maximum expansion of
ties." Jiang also said it was especially important for the
parliaments to focus on developing friendship between the
peoples of China and Russia.

NEMTSOV ISSUES ULTIMATUM TO GAZPROM. First Deputy
Prime Minister Boris Nemtsov says that if the gas monopoly
Gazprom does not meet five government conditions, a new
director will be appointed to run the company, Russian news
agencies reported yesterday. Speaking to reporters in
Krasnoyarsk, Nemtsov said Gazprom must provide for the
growth of its stock, make its financial activities more
transparent, adjust its tariffs, meet its obligations to the
federal budget and the Pension Fund, and provide all
companies wanting to work in the gas market with equal
access to gas deposits and pipelines. Nemtsov said the
government representative in Gazprom will monitor
compliance with those conditions. Gazprom management are
likely to balk at the last condition in particular. Nemtsov's
comments indicate that the agreement he reached with
Gazprom head Rem Vyakhirev last week (see RFE/RL
Newsline, 16 April 1997) did not shelve plans to increase the
government's role in managing Gazprom.

DUMA COUNCIL DEMANDS DRAFT BILL ON BUDGET
CUTS. The State Duma Council has demanded that the
government submit its proposed budget cuts to the lower
house of parliament by the end of this month, RFE/RL's
Moscow bureau reported yesterday. According to Duma
Budget Committee Chairman Mikhail Zadornov, the
government was legally obliged to submit its proposed cuts by
20 April. Zadornov, a member of the Yabloko faction,
complained earlier this week that the Finance Ministry was
withholding details on the planned cuts in non-essential
spending even from other ministries. Meanwhile, Duma
Speaker Gennadii Seleznev said the lower house would be
willing to adjust spending but would never agree to "bury" the
1997 budget by cutting 100 trillion rubles ($17.4 billion). First
Deputy Prime Minister Anatolii Chubais estimated last week
that this year's budget will exceed the state's means by 100
trillion rubles.

LUKOIL APPOINTS NEW IZVESTIYA BOARD OF
DIRECTORS. LUKoil has appointed a new Izvestiya board of
directors composed of four representatives from the oil
company and three from the newspaper, Russian news
agencies reported yesterday. Izvestiya staff had sought to
delay the shareholders' meeting. In yesterday's Nezavisimaya
gazeta, journalist Yevgeniya Albats criticized the authors of an
open letter asking Yeltsin to protect Izvestiya and
Komsomolskaya pravda. She said the appeal sought to assign
Yeltsin "the role [formerly played] by the Central Committee of
the Communist Party of the Soviet Union." Nezavisimaya
gazeta editor Vitalii Tretyakov, who signed the editors' appeal
to Yeltsin, argues in today's issue of that newspaper that
Izvestiya is not a leader of the independent press but a "party
newspaper" favoring the political line of Yegor Gaidar and
Anatolii Chubais.

MILITARY UPDATE. Despite the Defense Ministry's repeated
appeals for additional funds, Russia's armed forces received
only 53% of their budget allocation in the first quarter of 1997,
ITAR-TASS reports today, citing the ministry's press service.
The ministry says that the 11 trillion rubles it received during
the last three months was spent on wages, foodstuffs, and fuel
and that no funds remained for training exercises or
equipment maintenance. Meanwhile, Admiral Igor Khmelnov,
the former commander of the Pacific Fleet, was formally
charged yesterday with fraud, perjury, and abuse of power,
Interfax reported. Khmelnov was sacked on 11 April after
being accused of illegally obtaining apartments for himself and
his family in Vladivostok, the fleet's main base.

CHUBAIS TELLS BANKERS TO INVEST AT HOME. First
Deputy Prime Minister Chubais has advised Russian bankers
to invest in domestic industry rather than relying on currency
speculation as their main source of revenue, ITAR-TASS
reported yesterday. Chubais told the seventh congress of the
Association of Russian Banks that their future profits can no
longer be exclusively tied to the internal lending market. He
said "those who understand this soonest will win, those who
understand this later will lose, and those who fail to
understand it will perish." Chubais added that the government
plans to lower yields for short-term bonds, making it harder
for banks to profit from the internal borrowing market.

LENIN'S BIRTHDAY CELEBRATED QUIETLY. Communist
Party leader Gennadii Zyuganov led a procession of some
1,000 supporters to Red Square yesterday to mark the 127th
birthday of Vladimir Lenin, Russian news agencies reported.
Participants laid wreaths at Lenin's mausoleum and filed past
his embalmed body inside the building. Zyuganov yesterday
denounced proposals to move Lenin's body out of the
mausoleum as "blasphemous." Duma Speaker Gennadii
Seleznev told Ekho Moskvy that there is no need to bury Lenin
as his body is already lying two meters below ground, as
required by Christian tradition. Meanwhile in St. Petersburg,
Communists rallied near Smolnyi, the building that housed
the Bolshevik headquarters during the 1917 revolution.

TATARSTAN'S ACADEMY OF SCIENCES RECOMMENDS
SWITCH TO LATIN ALPHABET. The Academy of Sciences of
Tatarstan has recommended that the Tatar language adopt the
Latin alphabet on the grounds that Cyrillic letters do not
correspond well to sounds in Tatar, ITAR-TASS reported
yesterday. The Tatar language was written in Arabic script
until 1927, when a switch was made to the Latin alphabet. As
in the case of other Turkic languages spoken in the USSR, the
Cyrillic alphabet was imposed in 1939. RFE/RL's Tatar-
Bashkir service reports this is the first official endorsement of
changing back to the Latin alphabet. Previously, only Tatar
civic groups had called for the change.

YELTSIN REMEMBERS HIS HOMETOWN. Yeltsin has
granted 1 billion rubles ($174,000) from the presidential
reserve fund to his native village of Butka in Sverdlovsk
Oblast, Russian news agencies reported yesterday, citing the
presidential press service. The money is intended to repair
social facilities in the village. Yeltsin has instructed the oblast
government to monitor how the funds are spent.

TRANSCAUCASUS AND CENTRAL ASIA

KYRGYZ PRESIDENT SUPPORTS TRASECA PROJECT,
LUKASHENKA PROPOSES ALTERNATIVE. Askar Akayev and
his Georgian counterpart, Eduard Shevardnadze, held talks in
Tbilisi yesterday that focused on strengthening bilateral
relations and cooperating in transportation, RFE/RL's bureau
in the Georgian capital reported. Akayev stressed the
importance to Kyrgyzstan of the TRASECA road and rail
project that will link China, Central Asia, and the
Transcaucasus with Europe. Kyrgyzstan has received a $140
million loan from Japan to finance its participation in the
project. Meanwhile, Belarusian President Alyaksandr
Lukashenka proposed in Seoul yesterday the creation of a
Beijing-Moscow-Minsk transport corridor "not only as a victory
for the economy but as a response to NATO enlargement,"
Interfax reported. Belarusian economists say the corridor
would constitute a cheaper and safer way of transporting
Chinese goods to the CIS and Europe than existing routes.
Lukashenka said he will discuss the project with the Chinese
leadership in Beijing on 28 April.

IRANIAN FOREIGN MINISTER CALLS FOR CLOSER
REGIONAL COOPERATON. Ali Akbar Velayati told journalists
in Baku yesterday that the Transcaucasian countries should
join forces to prevent the increase of U.S. influence in the
region, RFE/RL's Baku bureau reported. He also said that the
liberation of Azerbaijani territories currently occupied by
Karabakh Armenian forces should take place without the
intervention of external powers. Velayati refused to answer
questions about Iranian economic cooperation with Armenia or
about his government's failure to honor an agreement to open
an Azerbaijani consulate in Tabriz. In response to Azerbaijani
President Heidar Aliev's request to "exert influence" on
Armenia to expedite a settlement to the Karabakh conflict,
Velayati said Iran will do what it can to promote "normal
relations" between Azerbaijan and Armenia, according to ITAR-
TASS.

NORTH CAUCASIAN PRESIDENTS WANT GREATER ROLE
IN MEDIATING ABKHAZ CONFLICT. The presidents of
Russia's North Caucasian republics believe that, given the
opportunity, they could mediate a political settlement between
the Georgian and Abkhaz leaderships, RFE/RL's Tbilisi bureau
reported yesterday, citing BS-Press. Unnamed North
Caucasian leaders are reportedly unhappy that the mediation
process is monopolized by international organizations. They
say they want to play a greater role in that process. Georgia
enjoys harmonious relations with North Ossetia and is
expanding ties with Chechnya. Georgian First Deputy Security
Minister Avtandil Ioseliani will travel to the North Caucasus
next month.

"YEREVANGATE" DISCLOSURES LEAVE KEY QUESTIONS UNANSWERED

by Liz Fuller

        More than two months have passed since the allegations
of large-scale clandestine arms shipments from Russia to
Armenia triggered a major political scandal. On 14 February,
Moskovskii komsomolets reported that Russian weaponry was
being illegally supplied to conflict zones, including
Chechnya, Abkhazia, and Nagorno-Karabakh. The one concrete
example cited was the transfer to Armenia in 1995 and 1996 of
84 T-72 tanks and 50 armored combat vehicles. At a news
conference the same day, Russian Minister for CIS Affairs
Aman Tuleev said the transfer of tanks and armored vehicles
to Armenia had taken place and that Russia had received no
payment for them. He said he had alerted senior Russian
officials and asked them to investigate the matter.
        In a letter to Tuleev released to the press in mid-
March, Russian Defense Minister Igor Rodionov confirmed the
transfer of arms to Armenia, sparking denials from the
Armenian Foreign Ministry, protests from Azerbaijan, and
speculation in the Russian press about who sanctioned the
shipments. While corroborating details have since emerged, a
number of key questions remain unanswered.
        At a 2 April closed session of the Russian State Duma,
Gen. Lev Rokhlin presented the findings of a Duma
investigation, listing all the military hardware involved and
specifying how, when, and with whose connivance it was
transported to Armenia from various locations in the Russian
Federation. Rokhlin estimated the worth of the equipment at
more than $1 billion but exonerated Armenia of trying to
avoid payment and suggested that huge sums of money had been
misappropriated by middlemen. He also argued that the
transfers could not have taken place without the knowledge of
then Defense Minister Pavel Grachev and that former chief of
staff Mikhail Kolesnikov could not have authorized them
without consulting Grachev. He did not speculate about who
could have given Grachev the green light to proceed but,
revealing an implicit flaw in his argument, said the arms
shipments continued after Igor Rodionov replaced Grachev as
defense minister last July but without Rodionov's knowledge.
        Possibly on the basis of Rokhlin's testimony,
Azerbaijani Ambassador to Russia Ramiz Rizaev told
journalists on 4 April that "the main culprits" were Grachev,
Kolesnikov, and Col.-Gen. Fedor Reut, who was dismissed from
his post as commander of the Group of Russian Forces in the
Transcaucasus on 4 March. In mid-April, a spokesman for the
presidential Main Control Directorate announced that neither
Russian President Boris Yeltsin nor the Russian government
had authorized the arms shipments. Vladimir Putin, the head
of the directorate, told reporters that Yeltsin knew the
names of those responsible and that Grachev, who had been
questioned by the directorate during its investigation, was
not one of them.
        Various hypotheses have been advanced as to why the arms
transfers to Armenia were made public and for what reason,
with much attention focusing on Rokhlin's perceived role. It
has been suggested that the whole objective of the leak was
to thwart the Duma's ratification of the 1995 agreement,
signed by Yeltsin and Armenian President Levon Ter-
Petrossyan, permitting Russia to maintain a military presence
in Armenia. (The Duma ratified that agreement last week by an
overwhelming majority.) In early February, Nezavisimaya
gazeta's Yerevan correspondent identified Rokhlin as one of
the authors of a draft Duma resolution calling for a revision
of Russia's military-strategic policy in the Transcaucasus--
but not, as some observers have argued, the closure of
Russian bases in Georgia and Armenia, which Rokhlin opposes.
True, there are interest groups in Moscow that advocate
revising Russia's Transcaucasus policy to favor oil-rich
Azerbaijan at the expense of Moscow's traditional ally,
Armenia. But Yeltsin stated unequivocally at the CIS summit
in March that it is he who determines Russia's policy toward
the CIS member states.
        It is conceivable that the data cited by Moskovskii
komsomolets was deliberately leaked by Defense Ministry
officials angry at the continued underfunding that has
weakened Russia's military potential, with the aim of
embarrassing and thereby exerting pressure on Yeltsin.
Rokhlin, for his part, has repeatedly stressed that his
disclosures were not directed against Armenia and that his
primary concern was to prevent further astronomical financial
losses. The sum of $1 billion, he points out, would pay for
30,000 apartments for military personnel or three months
wages for all officers and warrant officers of Russia's armed
forces.
        Other players with other motives may also have been
involved in the "Yerevangate" affair. The findings of the
ongoing Russian Military Procuracy investigation may clarify
the still unanswered questions--assuming they are made
public.

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               Copyright (c) 1997 RFE/RL, Inc.
                     All rights reserved.
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