Vol 1, No. 46, Part I, 5 June 1997

Vol 1, No. 46, Part I, 5 June 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

* YELTSIN SENDS 1998 BUDGET MESSAGE TO GOVERNMENT


* DUMA PASSES LAW ON IRAQ


* ABKHAZ FOREIGN MINISTER IN MOSCOW

End Note
ARMENIA'S SHIFTING POLITICAL LANDSCAPE

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RUSSIA

YELTSIN SENDS 1998 BUDGET MESSAGE TO GOVERNMENT. President Boris Yeltsin has
outlined his priorities for a "realistic and transparent" 1998 budget in a
message to the government, Russian and Western agencies reported on 4 June.
Yeltsin called for improved tax collection and said the budget deficit should
be cut to 0.5% of GDP in 1998, excluding the costs of servicing Russia's
internal and external debt. He called for a budget deficit of zero in
1999--again, excluding debt servicing costs. Deputy Presidential Chief of
Staff and former Finance Minister Aleksandr Livshits told reporters that in
order to avoid income shortfalls in 1998, the government may auction off
state-owned shares in companies that owe taxes. Meanwhile, the State Duma on 4
June approved a government proposal to form a working group on preparing the
1998 budget that will include government and parliamentary representatives,
ITAR-TASS reported.

YELTSIN MEETS WITH REGIONAL LEADERS. Yeltsin met with heads of 20 Russian
regions for three hours on 4 June to discuss various aspects of domestic and
foreign policy, Russian news agencies reported. Among other things, Yeltsin
called on the regional leaders to support housing reform and pledged to meet
with top regional officials more regularly. The Kremlin appears to be stepping
up efforts to keep regional leaders, who are also deputies in the Federation
Council, in the president's camp. First Deputy Prime Minister Anatolii Chubais
told Kommersant-Daily on 3 June that he talks with, on average, three or four
regional leaders a day and never refuses a governor's request for a meeting.
This year, the Federation Council has been more willing to approve laws passed
by the State Duma against the Kremlin's wishes.

DUMA PASSES LAWS ON IRAQ... The Duma on 4 June passed a draft law, proposed by
Vladimir Zhirinovsky's Liberal Democratic Party of Russia, calling for the
resumption of trade with Iraq in violation of international sanctions, Reuters
and Russian agencies reported. The law advocates purchasing oil and petroleum
products from Iraq and supplying that country with equipment and spare parts,
according to Interfax. Duma Deputy speaker Sergei Baburin told RFE/RL's Moscow
Bureau he hoped that the Federation Council would support the draft law, but
that is considered unlikely. Even if the upper house does approve it, Yeltsin
is certain to impose a veto. An unnamed Russian Foreign Ministry spokesman
told Interfax that the law is "absolutely inconsistent with international
standards and the Russian Constitution."

...AND ON RED SQUARE. The Duma also passed a law giving Moscow's Red Square
the status of national cultural heritage, Russian news agencies reported on 4
June. The law, approved by 269 votes to three, bans reconstruction or new
construction on the square. In April, the Duma passed a resolution denouncing
as "vandalism" proposals to remove Vladimir Lenin's body from the mausoleum on
Red Square. Also on 4 June, the Duma passed a resolution calling on the
Latvian parliament to release Alfreds Rubiks, former first secretary of the
Latvian Communist Party's Central Committee, from prison.

DUMA ORDERS AUDIT OF RUSSIAN PUBLIC TV. The Duma on 4 June adopted a
resolution to "strengthen state monitoring of the activities of Russian Public
TV [ORT]," ITAR-TASS reported. The resolution instructs the Audit Chamber to
examine the financing and use of federal property at the 51% state-owned
network, which broadcasts nationwide on Channel 1. The Duma also instructed
the State Tax Service to examine ORT's compliance with tax laws. The
resolution called on the government to provide all necessary information for
the audits and to conclude a trust agreement for managing the state's shares
in ORT. Duma deputies have repeatedly objected to ORT's news coverage, which
frequently portrays the lower house of the parliament in an unfavorable light.
In March, deputies stripped the network's journalists of their Duma
accreditation for one month.

AUDIT CHAMBER CRITICIZES USE OF FUNDS BY FINANCE MINISTRY. Eleonora
Mitrofanova, a member of the Audit Chamber, says that commercial banks earned
at least 4 trillion rubles ($690 million) in 1996 at the expense of the state
budget by making loans to the Finance Ministry, Interfax reported on 4 June.
She said the ministry has repeatedly used bank loans to cover its expenses and
repaid the loans using budget funds. Mitrofanova said the procedure
constituted an "improper" use of funds, since the ministry was in effect
amending budget expenditures "in favor of the banking system" without approval
from the parliament. Meanwhile, Audit Chamber Deputy Chairman Yurii Boldyrev
recently told Argumenty i fakty (no. 22) that the Pension Fund, Obligatory
Medical Insurance Fund, Social Security Fund, and Employment Fund have
squandered 370 billion rubles during the first five months of 1997 alone.

GOVERNMENT DIRECTIVE APPOINTS HEADS OF COMMISSIONS. The government has issued
a directive naming new heads of nearly 30 government commissions whose
chairman were dismissed during the March cabinet reshuffle, Russian news
agencies reported on 4 June. First Deputy Prime Minister Anatolii Chubais will
be in charge of commissions on financial and lending policies, foreign debt,
revising tax law, and government grants to the media. First Deputy Prime
Minister Boris Nemtsov will run commissions on reforming Russia's social
benefits system and on reburying the family of the last tsar, Nicholas II.
Interior Minister Anatolii Kulikov will head the government's anti-drug
commission. Economics Minister Yakov Urinson will be in charge of commissions
on exports and on matters related to the World Trade Organization, while CIS
Affairs Minister Aman Tuleev will head a commission on Russian-Tajik
cooperation.

NEMTSOV RELEASES INCOME DECLARATION... First Deputy Prime Minister Nemtsov
earned about 92.5 million rubles ($16,000) in 1996 and another 435 million
rubles so far this year in royalties from his book The Provincial, Russian
news agencies reported on 4 June. Documents submitted to the State Tax Service
also show that Nemtsov owns 1,000 square meters of land in Nizhnii Novgorod,
with an estimated value of 6 million rubles, and a Russian-made car purchased
in 1992, worth about 25 million rubles. Nemtsov has been an outspoken
supporter of a presidential decree demanding that top officials release income
and property declarations. Yeltsin recently declared his own income and
property holdings (see RFE/RL Newsline, 2 June 1997).

...DENIES RUMORS ABOUT PENSION REFORM. Nemtsov has denied Russian media
reports that the government plans to cut the income of working pensioners,
ITAR-TASS reported on 4 June. He admitted that the government has sent Yeltsin
a "very tough draft decree, which we do not like at all" to help stabilize
pension payments. But he said he hoped the Duma would pass proposed laws on
reforming Russia's social benefits system so that Yeltsin would not need to
sign the pension decree. Izvestiya claimed on 4 June that the government
"intends to solve the pensions problem at the expense of pensioners." The
paper said a draft presidential decree would put a ceiling on the total income
a working pensioner could earn and still receive a state pension.

CHECHEN-RUSSIAN AGREEMENT ON OIL TRANSIT READY FOR SIGNING. After talks in
Moscow on 4 June with his Chechen counterpart Movladi Udugov, Russian First
Deputy Prime Minister Nemtsov said an agreement on the export of Azerbaijan's
Caspian oil from Baku via Chechnya to Novorossiisk, scheduled to begin on 1
October, is ready for signing, Russian agencies reported. Nemtsov did not
disclose details, and it is unclear whether Chechnya will receive the standard
Russian tariff of $2.70 per barrel or the higher rate that it has demanded.
Udugov and Russian Security Council Secretary Rybkin reached agreement on 3
June on a plan to finance Chechen reconstruction whereby other Russian regions
and former Soviet republics (except Ukraine) will provide aid to Chechnya in
exchange for writing off their debts to Russia, Russian media reported.

GOVERNMENT PROMISES EMERGENCY FUNDS TO END LABOR UNREST IN VORKUTA. As
thousands of coal miners in the northern city of Vorkuta (Komi Republic) took
to the streets on 4 June demanding that Yeltsin and the government resign,
First Deputy Prime Minister Chubais promised to disburse 150 billion rubles
($260 million) in emergency government funds to Vorkuta starting on 5 June,
RFE/RL's Moscow bureau reported. Chubais, who also heads the government's
Interdepartmental Commission on the Socioeconomic Problems of Mining Regions,
acknowledged that the money would not cover all wage arrears but said it would
help ease tensions and pay vacation expenses for miners' children. Chubais
sharply criticized a commission from the Fuel and Energy Ministry and the
state coal company Rosugol for failing to resolve the crisis in Vorkuta
sooner. Workers at Vorkuta's nine mines, who have not been paid since last
fall, declared an open-ended strike on 1 June.

720,000 RUSSIANS HAVE GONE ON STRIKE SO FAR IN 1997. According to the State
Statistics Committee, some 720,000 Russian citizens participated in strikes
during the first five months of 1997, five times more than the number of
strikers during the same period in 1996, Izvestiya reported on 4 June. The
main demand of the strikers is payment of back wages. Strikes lasting longer
than one day were held at more than 14,600 enterprises and organizations. The
data indicate that more than 92% of all strikes this year have been called at
educational institutions. The largest number of teachers' strikes were in
Omsk, Chita, Kirov, and Smolensk Oblasts and in Krasnoyarsk Krai.

FSB SEEKING DOUBLE AGENTS. In a 3 June interview on Moscow Television, Federal
Security Service (FSB) director Nikolai Kovalev called on Russians working for
foreign security services to offer to become double agents, Russian news
agencies reported the next day. Kovalev said prospective double agents could
call a special telephone number in Moscow. He promised to guarantee the
anonymity of volunteers and even to allow them to keep the money they received
from foreign security services. Kovalev also warned that the FSB will find and
arrest those who do not offer to become double agents. The FSB claims to have
caught 39 Russians employed by foreign services in 1995 and 1996, Reuters
reported.

POLISH COURT DELAYS DECISION ON STANKEVICH'S EXTRADITION. A Polish court has
delayed a decision on whether to extradite former presidential adviser and
Moscow Deputy Mayor Sergei Stankevich to Russia, RFE/RL's correspondent in
Warsaw reported on 4 June. The court asked Russian law enforcement authorities
to produce within two months evidence that Stankevich took a $10,000 bribe in
1992. Meanwhile, former Moscow Mayor Gavriil Popov published an open letter in
Gazeta Wyborcza appealing to Polish authorities not to extradite Stankevich.

SLAIN JOURNALIST'S HUSBAND TO APPEAL TO SUPREME COURT. German journalist
Gisbert Mrozek is preparing a Supreme Court appeal to protest the verdict
handed down against a soldier who shot his wife, journalist Natalya Alyakina,
Nezavisimaya gazeta reported on 5 June. Alyakina was killed in Budennovsk in
June 1995, and the soldier who fired the fatal shots was given a two-year
suspended sentence in July 1996. Mrozek, who claims the investigation into his
wife's death was incomplete, recently lost an appeal in a military court (see
RFE/RL Newsline, 30 May 1997).


TRANSCAUCASUS AND CENTRAL ASIA

ABKHAZ FOREIGN MINISTER IN MOSCOW. After meeting in Moscow on 4 June with
Russian First Deputy Foreign Minister Boris Pastukhov, Sergei Shamba said
Abkhazia wants an extension of the mandate of the CIS peacekeeping force
currently deployed along the border between Abkhazia and the rest of Georgia,
Russian agencies reported. Shamba said their withdrawal would hinder a
political solution to the conflict and that Abkhaz troops would immediately
take their place, possibly supported by units from the Confederation of
Peoples of the Caucasus. In Tbilisi, parliamentary chairman Zurab Zhvania
rejected Russian presidential spokesman Sergei Yastrzhembskii's charge that
the 30 May Georgian parliament resolution setting conditions for the
peacekeepers' continued presence constituted "blackmail." Georgian
presidential press spokesman Vakhtang Abashidze said that Eduard Shevardnadze
has again appealed to the Russian leadership to implement the decision taken
at the March summit of the CIS heads of state to broaden the peacekeepers'
mandate.

GEORGIA BACKS CHECHEN PROPOSAL FOR CAUCASIAN OSCE. Parliamentary chairman
Zhvania expressed support on 4 June for the creation of a Caucasian
inter-parliamentary assembly modeled on the Organization for Security and
Cooperation in Europe, ITAR-TASS reported. This idea has been discussed
intermittently in recent years and was again raised on 31 May by Chechen
delegates to a conference of North Caucasus leaders in Kislovodsk (see RFE/RL
Newsline, 2 June 1997). Segodnya on 4 June reported that the creation of a
Caucasian equivalent of the OSCE with international status was discussed
during talks the previous day between Chechen First Deputy Prime Minister
Movladi Udugov and Russian Security Council Secretary Ivan Rybkin. This
suggests that Russia aspires to leadership of the proposed organization. Some
Georgian parliamentary deputies have argued that Russia should not be granted
membership.

ANNAN FAVORS EXTENDING OBSERVERS MANDATE IN TAJIKISTAN. UN Secretary-General
Kofi Annan said on 4 June he favored extending the mandate of the UN Mission
of Observers in Tajikistan, which expires on 15 June, RFE/RL's Tajik Bureau
reported. Annan also said that following the formal signing of the Tajik peace
accord, the UNMOT mandate will have to be adjusted and its numbers revised.
Currently, there are some 70 UN personnel in Tajikistan. The signing was
scheduled to take place on 13 June but has been postponed due to the Tajik
opposition's insistence that prisoner exchanges begin beforehand and that a
building be found in Dushanbe in which the proposed reconciliation council can
convene.

OPPOSITION CALLS FOR OUSTER OF KAZAK LEADERSHIP. The opposition labor movement
issued a statement on 4 June demanding that President Nursultan Nazarbayev,
the government, and the parliament step down, Interfax reported. According to
the statement, the government is not serving the "lawful interests of the
country" and neglects the will of the people, who "have been driven to poverty
and are starving." Members of the movement participated in the 30 May
demonstration outside the government building in Almaty, and several of the
movement's leaders were put in jail for 15 days for their part in the
unsanctioned rally. The movement plans to picket the government building again
soon.

CHINESE COMPANY WINS KAZAK TENDER. China National Petroleum Corporation beat
out American companies Texaco and Amoco and the Russian company Yuzhny Most
for a 60% stake in the Aktyubinsk oil field, ITAR-TASS and the Financial Times
reported. The 4 June announcement added that the Chinese company will invest
$4.3 billion in the project and will also construct a 3,000 km pipeline from
the western Kazak oil field to China's Xinjiang Province. The Chinese company
will contribute $3.5 billion to the pipeline project.

KYRGYZ GOLD COMPANY AHEAD OF SCHEDULE. The Kumtor Gold Company, a joint
venture of the Kyrgyz state gold company Kyrgyzaltyn and Canada's Cameco,
announced on 4 June that it extracted more gold in the first five months of
1997 than planned, Interfax reported. The company intended to extract 3.8 tons
of gold between January and May, but Kumtor head Len Homeniuk said the figure
for that period was 4.2 tons. The projected output for 1997 is 12.75 tons, but
Homeniuk noted the total may exceed 13 tons.

END NOTE

ARMENIA'S SHIFTING POLITICAL LANDSCAPE

by Liz Fuller and Harry Tamrazian

        For more than six years, Armenia's ruling Pan-National Movement [HHSh] h
 as
dominated politics in that country. But in recent months, splits within the
movement have become increasingly apparent, prompting leaders of the movement
to concede it no longer qualifies as a ruling party.
        The HHSh was created in 1989 from the Karabakh Committee, set up by a ha
 ndful
of Armenian academics the previous year, to coordinate Armenian support for
the drive by the predominantly ethnic Armenian population of Azerbaijan's
Nagorno-Karabakh Autonomous Oblast to achieve unification with Armenia. The
movement obtained a majority in the post-communist Supreme Soviet elected in
the summer of 1990, and its leader, Levon Ter-Petrossyan, was elected
president the fall of the following year.
        Although popular support for the Armenian leadership plummeted between 1
 992
and 1994 as a result of economic collapse, successive attempts by opposition
parties--including the Union for National Self-Determination, headed by
veteran dissident Paruir Hairikyan, and former Prime Minister Vazgen
Manukyan's National Democratic Union--to create a lasting opposition coalition
failed. The only serious threat to the HHSh was the Armenian Revolutionary
Federation--Dashnaktsutyun (ARFD). Banned by Ter-Petrossyan in December1994
for alleged involvement in terrorist activities, the ARFD was unable to field
candidates in the July1995 parliamentary elections.
        The Republic bloc, comprising the HHSh and four smaller parties, won 114
  of
the 190 seats in the new parliament. But the ban on the ARFD, in conjunction
with violations of voting procedure, led some opposition politicians to
question the legality of the poll. Ruben Mirzakhanyan, chairman of the
Ramgavar party, argued that the HHSh's hold on power rested on an elaborate
network of patron-client relationships permeating the national and local
governments as well as the police. In December, 1995, Ter-Petrossyan appeared
to be distancing himself from the HHSh, which, he said, should form the
nucleus of a broader right-wing party.
        The disputed presidential poll of September 1996, in which Ter-Petrossya
 n was
narrowly re-elected with 51.75% of the vote, served to split the HHSh into two
camps: the "bureaucrats" grouped around former Prime Minister Hrant Bagratyan,
former national security adviser Davit Shahnazaryan, and parliamentary legal
affairs committee chairman Eduard Yegoryan; and powerful shadow economic
interest groups backed by former Interior Minister Vano Siradeghyan (now mayor
of Yerevan) and Defense Minister Vazgen Sargsyan.
        Two months ago, political forces began to realign after it became appare
 nt
that the president might consider dissolving the current parliament and
holding early parliamentary elections. In early April, Ter-Petrossyan
initiated talks with ARFD representatives, which observers in Yerevan predict
will culminate in that party's re-legalization. If that happens, the Dashnaks
could once again emerge as the strongest opposition party.
        In late May, Hairikyan announced that he no longer recognizes Vazgen Man
 ukyan
as leader of the opposition National Alliance created in September 1996 to
support Manukyan's presidential candidacy. Also in late May, Bagratyan, whose
aggressive free-market policies earned him the nickname of the "Armenian
Gaidar," launched his own liberal political party, Azatutyun. Several ranking
members of the HHSh have already defected to that party, while Hairikyan and
other opposition leaders have also indicated they are willing to cooperate
with the liberals.
        On 30 May, the Yerevan branch of the HHSh met to prepare for the movemen
 t's
congress to be held in June. Some members may break away at that meeting to
align themselves either with the liberals or conceivably even with Manukyan.
Many of the movement's leaders have expressed concern that the HHSh has lost
its political clout and can no longer be considered the ruling party. Some
have suggested that they may seek a vote of no confidence in the government of
Prime Minister Robert Kocharyan, the former president of Nagorno-Karabakh, who
is not a HHSh member. Such a move would bring the HHSh into open conflict with
Ter-Petrossyan.
        In an implicit challenge to the president to choose to side with either
 the
HHSh or the prime minister, parliament deputy speaker and ranking HHSh member
Ara Sahakyan told the HHSh's newspaper Haik on 3 June that the chairman of the
ruling party should be Ter-Petrossyan. Observers in Yerevan suggest that a
conflict between the HHSh and Kocharyan is inevitable, particularly since the
latter's campaign to wipe out tax evasion is likely to impact on the economic
interests of many HHSh members. But the strong backing Kocharyan enjoys both
from the president and from the ARFD makes him the probable victor. And since
Ter-Petrossyan has stressed he will not seek a third term as president,
Kocharyan is well placed to succeed him in the 2001 elections.

Harry Tamrazian is deputy director of RFE/RL's Armenian Service.

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