Every custom was once an eccentricity; every idea was once an absurdity. - Holbrook Jackson
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 1, No. 69, Part I, 9 July 1997



Note to readers: the RFE/RL Web Site is providing detailed coverage of NATO's
Madrid Summit from 8-9 July. News updates, analysis, and RealAudio are posted
on the following page:

http://www.rferl.org/nca/special/madrid-nato/index.html

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/

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Headlines, Part I

*RUSSIAN OFFICIALS REPEAT OPPOSITION TO NATO EXPANSION.


*YELTSIN EXTENDS DEADLINE FOR PAYING WAGE ARREARS


*RUSSIAN SPOKESMEN DOWNPLAY AZERBAIJANI-TURKMEN OIL ROW

End Note
Chubais and His Clan Face Russian Reality

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx


RUSSIA

RUSSIAN OFFICIALS REPEAT OPPOSITION TO NATO EXPANSION. Following NATO's
decision on 8 July to extend invitations to the Czech Republic, Hungary, and
Poland to join the alliance, Russian officials repeated that Moscow is
strongly opposed to NATO's plan to admit new members. Speaking in Moscow,
Foreign Minister Yevgenii Primakov again said Russia considers NATO expansion
"perhaps the biggest mistake since the end of the Cold War," Russian news
agencies reported. Deputy Prime Minister Valerii Serov, who is heading the
Russian delegation in Madrid, also confirmed that Russia has not altered its
stance against NATO enlargement. Meanwhile, former Security Council Secretary
Aleksandr Lebed told Interfax that he is not concerned about NATO expansion.
Lebed argued that the Baltic States are unlikely ever to become NATO members.
He added that "the rich and well-fed will never threaten the poor and the
hungry."

YELTSIN EXTENDS DEADLINE FOR PAYING WAGE ARREARS. President Boris Yeltsin
interrupted his vacation in Karelia to issue a decree instructing the
government to pay all debts to the armed forces within two months and all wage
arrears to state employees by 1 January 1998, Russian media reported on 8
July. Yeltsin recently told Prime Minister Viktor Chernomyrdin that the
government should pay back wages by 1 October (see "RFE/RL Newsline," 3 July
1997). The Finance Ministry estimates that wage arrears to state employees
total 11 trillion rubles ($1.9 billion): 2.5 trillion to workers in the
industrial sector and 8.5 trillion to "social" employees (including doctors
and teachers). Government debts to soldiers and civilian personnel of the
Defense Ministry totaled 4.2 trillion rubles at the beginning of June. Yeltsin
pledged that the government will not resort to printing money to pay back
wages, Interfax reported.

CHERNOMYRDIN CRITICIZES FINANCE MINISTRY. Prime Minister Chernomyrdin on 8
July criticized the Finance Ministry for poor control over budget
expenditures, ITAR-TASS reported. Chairing a meeting of a presidential
commission on tax collection in Moscow, Chernomyrdin said that the Finance
Ministry has been unable to ensure that budget funds are spent properly in the
regions. Federal officials have frequently charged that regional and local
leaders misappropriate federal funds, in particular those allocated to pay
wages of state employees. First Deputy Prime Minister Anatolii Chubais, who is
also finance minister, is a member of the commission on tax collection, but he
recently began a three-week vacation and did not attend the commission's 8
July meeting.

YELTSIN ISSUES DECREES ON OIL EXPORTS... Yeltsin on 8 July signed a decree
changing the rules for oil exports, Interfax reported. The decree aims to
improve tax collection from oil companies. According to First Deputy Fuel and
Energy Minister Sergei Kirienko, oil companies that owe taxes will be required
to automatically pay part of the proceeds from oil exports into the federal
budget. Meanwhile, State Tax Service head Aleksandr Pochinok told journalists
in Moscow that the oil companies LUKoil, Yukos, and Sibneft are complying with
agreed schedules for paying off their tax debts, as is the automobile producer
AvtoVAZ, ITAR-TASS reported.

...AND IMPLEMENTING PRODUCTION-SHARING AGREEMENTS. Another presidential decree
issued on 8 July creates an interdepartmental government commission to oversee
the implementation of production-sharing agreements. Under the 1995 law on
such agreements, companies may invest in developing approved natural resource
deposits in exchange for a percentage of the resources extracted in the
future. First Deputy Prime Minister Boris Nemtsov, who is also fuel and energy
minister, will head the new commission.

SELEZNEV ELECTED DEPUTY CHAIRMAN OF OSCE PARLIAMENTARY ASSEMBLY. State Duma
Speaker Gennadii Seleznev has been elected deputy chairman of the
Parliamentary Assembly of the Organization for Security and Cooperation in
Europe, ITAR-TASS reported on 8 July. He will hold that post for three years.
Addressing the assembly on the final day of its annual session in Warsaw,
Seleznev said the Russian parliament is opposed to "NATO-centrism" and also to
attempts to make NATO the "bedrock of European security." Russian officials
have repeatedly called for broadening the OSCE's role in European security
matters.

PLANNED TV PROGRAM ON RUSSIAN JOURNALISM PULLED FROM RTR. The state-run
network Russian Television (RTR) has decided not to air a scheduled series of
programs on journalism called "Chetvertaya vlast" (The Fourth Estate),
RFE/RL's Moscow bureau reported on 7 July. The series was produced with
funding from Internews, an U.S.-based non-government organization that
promotes independent electronic media. The first show, which included segments
on how Chechen rebels "won the information war" and whether journalism is
compatible with espionage, was supposed to have its premiere on 29 June. It
again failed to be broadcast on 6 July, even though the show's producers
agreed to remove the segment on Chechnya at the network's request. Recently
appointed RTR Deputy Chairman Mikhail Lesin, a founder and former top
executive of the Video-International advertising firm, made the final decision
to cancel the series, according to "Kommersant-Daily" on 8 July.

FORMER DEFENSE MINISTER SUPPORTS ROKHLIN. Igor Rodionov says he supports State
Duma Defense Committee Chairman Lev Rokhlin's plans to create an All-Russian
Movement to Support the Army, Military Science, and Defense Industry, Interfax
reported on 8 July. Rodionov, whom Yeltsin fired in May, said that while
serving as defense minister he had concluded that "the country's political
leadership is indifferent toward issues of the country's defense capacity."
The new movement is to hold its first meeting on 9 July. Rokhlin recently
issued an open appeal slamming Yeltsin's policies toward the military (see
"RFE/RL Newsline," 25-27 June 1997). Although the appeal was sharply condemned
by various top officials, the pro-government movement Our Home Is Russia
delayed a decision on whether to expel Rokhlin until after the Duma's summer
recess.

BOMB KILLS TEN RUSSIAN POLICEMEN IN DAGESTAN. Ten Russian policemen were
killed and several more seriously injured on 8 July when a remote-controlled
bomb exploded as the bus in which they were traveling drove past, Russian
media reported. Also on 8 July, five Chechens were forcibly abducted in North
Ossetia from a Grozny-bound bus. Leading Chechen officials termed the
kidnapping a provocation aimed at destabilizing the entire region and demanded
the Chechens' immediate release. Chechen President Aslan Maskhadov said the
abduction was intended to sabotage Chechen independence. He claimed that
foreign intelligence services may have been involved in this and other recent
incidents. A spokesman for the French organization Medicins sans Frontieres
told Reuters on 8 July that a French aid worker was recently abducted in the
Ingushetian capital, Nazran.

RUSSIAN-SOUTH KOREAN TALKS YIELD RESULTS. The first session of the
Russian-South Korean commission on trade, economics, science, and technology
ended in Seoul on 8 July, Russian media reported. Agreement was reached on
Russia's paying its debt to South Korea in raw minerals, helicopters, and
military hardware. South Korea was also given the lease on 330 hectares of
land in the Nakhodka free economic zone. More than 100 South Korean firms are
expected to participate in the construction of a "technological park"
producing electronic goods, foodstuffs and light-industrial products as well
as processing lumber. Russia hopes other countries will join in the
development of the zone, which is located close to Russia's deep-water port of
Vostochnyi and is expected to eventually produce goods worth $2 billion each
year. The second session of the talks starts on 9 July.

PAKISTANI FOREIGN MINISTER IN MOSCOW. Gohar Ayub Khan met with Russian Deputy
Prime Minister Vladimir Bulgak on 8 July, Russian media reported. Bulgak said
Russia was anxious to receive repayments on the $180 million in loans made to
Pakistan during the Soviet era. The two leaders also discussed possible
Russian participation in energy projects and port construction in Pakistan.
Khan later met with Russian Foreign Minister Yevgenii Primakov to talk about
Afghanistan. Primakov said he hoped that Pakistan's involvement in Afghanistan
would not be a repetition of the Soviet experience, noting it was impossible
for one "force" to control the situation in that country. Khan asked for
Russian help in mediating Pakistani-India problems and noted that the
proximity of large forces along that border could spark a war involving
nuclear weapons.

RUSSIAN-IRANIAN NUCLEAR COOPERATION. Russia may supply Iran with two more
VVER-1000 "light water" reactors in addition to the one that is to be provided
for the first block of the Bushehr nuclear power station under a January 1995
agreement, ITAR-TASS reported on 8 July. Some 750 Russian specialists are
currently engaged in construction work at Bushehr; the reactor is being
assembled in Russia. The plant is scheduled to go on line in four years.
Iranian Vice President Reza Amrollahi, who heads the country's atomic energy
organization, told Iranian Television on 7 July that Iran is interested in
expanding cooperation with Russia in the atomic energy sector, specifically in
the construction of more nuclear power stations. He stressed these would be
used exclusively for peaceful purposes. Russia and Iran recently signed an
agreement on safety measures at Bushehr.

ST. PETERSBURG WANTS TO CONDUCT EXPERIMENT IN ALTERNATIVE SERVICE. St.
Petersburg Governor Vladimir Yakovlev says Defense Minister Igor Sergeev
supports his proposal to create an experimental battalion in St. Petersburg
for youths who refuse to perform military service, RFE/RL's correspondent in
St. Petersburg reported on 8 July. More than 5,000 young men are registered as
conscientious objectors in St. Petersburg. Although Article 59 of the
constitution guarantees the right to perform alternative service, the State
Duma has not yet passed a law on it. Under Yakovlev's proposal, youths
participating in the experiment would serve for three or four years instead of
the two years required for military service. They would live at home and work
on city improvement projects or in hospitals. However, there are fears in St.
Petersburg that the experimental battalion could become an "elite formation"
for children of wealthy businessmen and influential officials.

KALININGRAD TAKES OUT EXPERIMENTAL LOAN TO PAY TEACHERS. The Kaliningrad city
legislature has voted to allow the city administration to borrow 6 billion
rubles ($1 million) from the Kaliningrad oblast budget to pay teachers' wages
and summer vacation benefits, ITAR-TASS reported on 8 July. A city-run sports
complex will be the collateral for the loan. Although the Kaliningrad Oblast
administration has loaned the city funds before, this is the first time
officials have demanded that such a loan be guaranteed with city property.

TRANSCAUCASUS AND CENTRAL ASIA

ARMENIAN PRIME MINISTER ON RUSSIA, NAGORNO-KARABAKH, DOMESTIC POLITICS.
Speaking at a press conference in Yerevan on 8 July to mark his first 100 days
in office, Robert Kocharyan urged the expansion of cooperation with Russia,
especially in the economic sphere, ITAR-TASS reported. Kocharyan said an
Armenian delegation is currently holding talks in Moscow with Gazprom
representatives on creating a joint company to export Russian gas to Turkey
via Armenia. Kocharyan greeted Russian President Boris Yeltsin's proposal to
set up a Russian-Armenian-Azerbaijani government commission to investigate
Russian arms shipments to the Caucasus, Armenian agencies reported. Kocharyan
also called for direct talks between Baku and Stepanakert on resolving the
Nagorno-Karabakh conflict. He rejected the assertion by Yerevan Mayor Vano
Siradeghyan that government ministers should be political figures, not
professionals, arguing that this is appropriate for Western Europe but not for
Armenia.

AZERBAIJAN APPLIES FOR WTO MEMBERSHIP. Officials at the Geneva headquarters of
the World Trade Organization said on 8 July that Azerbaijan has submitted a
formal request to join the organization, according to Reuters. Negotiations on
Azerbaijan's accession to the organization are likely to last at least two
years, and Baku will be required to demonstrate a commitment to opening up its
economy to foreign goods and services. Azerbaijan is the 13th former Soviet
republic to request WTO membership. Only Turkmenistan and Tajikistan have not
yet done so.

RUSSIAN SPOKESMEN DOWNPLAY AZERBAIJANI-TURKMEN OIL ROW. Spokesman Igor
Shabdurasulov told journalists on 8 July that the Russian government does not
intend to take any action in response to Turkmenistan's demand for the
annulment of a recent agreement between two Russian oil companies and the
Azerbaijan state oil company SOCAR to explore the Kyapaz oil field. Ashgabat
claims that the oil field lies in its sector of the Caspian Sea. Shabdurasulov
said the two Russian oil companies, LUKoil and Rosneft, should decide on their
own whether to suspend participation and what their obligations are to SOCAR
and Turkmenistan. The Russian Foreign Ministry considers the Kyapaz deal "a
purely commercial one," a spokesman told Interfax.

TURKMEN AGRICULTURE MINISTER SACKED. President Saparmurat Niyazov signed a
decree on 7 July relieving the Minister of Agriculture Pirguly Adayev as well
as the governor and all local officials of Akhal Province of their duties,
RFE/RL correspondents reported. Akhal Province, where the capital Ashgabat is
located, is one of the country's two major grain producing regions. This year,
the province will meet only 35 percent of its target figure for grain output
Niyazov told the Akhal officials and the minister that they were fired because
of incompetence, mismanagement, fraud, and nepotism. Official figures show
Turkmenistan will meet only 50 percent of its target for grain in 1997.

KAZAK DEMONSTRATORS PUNISHED. Two miners accused of organizing an unsanctioned
demonstration in Karaganda in June to protest pension reforms (see "RFE/RL
Newsline," 17 June 1997) have been put under "administrative arrest."
according to ITAR-TASS on 8 July. Vladimir Karpov and Vyacheslav Sheigarchuk
were sentenced to 15 and seven days in jail, respectively. The men were
originally fined one month's pay, but the Karaganda town council subsequently
decided to put them in jail. The miners' union says this is a clear violation
of the due process of law because there was no court hearing. Miners object to
the government's decision to raise the age at which they become eligible for
pensions to 63. They note that few miners live to reach that age.

KYRGYZ HUMAN RIGHTS ACTIVIST STILL IN JAIL. Tursunbek Akunov, the leader of
the Kyrgyz Human Rights Movement, has been sentenced by a Bishkek court to 15
days in jail for organizing an unsanctioned meeting, RFE/RL correspondents
reported on 9 July. Eleven other people arrested in connection with the
demonstration were freed after receiving a warning from the same court.

END NOTE

Chubais and His Clan Face Russian Reality

by Donald N. Jensen

        Yeltsin's recent government shakeup has been widely perceived as a major
  step
toward economic reform. In its first 100 days, the new government has improved
tax collection, proposed a simplified tax code, ordered public officials to
disclose their financial holdings, and sought to reassert Kremlin control over
independent-minded regional governors. While those are undoubtedly laudable
goals, the shakeup also marks the continued consolidation of power by the
driving force behind the new government--First Deputy Prime Minister Anatolii
Chubais--and the financial-industrial oligarchy supporting him. That network
includes banks such as Oneksimbank, Most, and Menatep; oil companies such as
Yukos and Sidanko; and national media organs such as NTV, "Segodnya," and
"Komsomolskaya pravda."

        The government shakeup follows a year of steadily increasing influence f
 or
Chubais and his clan and has enabled him to gain the upper hand over other
clans, informal political alliances, economic interest groups, and media
organs that dominate Russian politics. Since the 1996 presidential elections,
Chubais has chalked up several achievements. He was named head of the
Presidential Administration and subsequently used his friendship with
President Boris Yeltsin's daughter to control access to the president and
depose arch-rivals former presidential bodyguard Aleksandr Korzhakov and
former Security Council Secretary Aleksandr Lebed. He took advantage of
Yeltsin's illness last fall to strengthen his relations with key businessmen.
And he used his connections in the West and with international financial
institutions to ensure money flows to the cash-starved government.

        Despite those successes, Chubais's preeminence is not unchallenged. Ther
 e is
considerable overlapping of interests among elite clans, and alliances are
constantly shifting. Two competing clans, moreover, continue to pose a threat.
On the one hand, Prime Minister Viktor Chernomyrdin's clan favors maintaining
significant state ownership over the country's large natural monopolies--gas,
electricity, and railroads--and rebuilding Russia's high-technology sector.
Key clan members are the Gazprom, Rosneft, and LUKoil companies, the banks
Imperial and Inkombank, and Deputy Prime Minister and Interior Minister
Anatolii Kulikov. On the other hand, Moscow Mayor Yurii Luzhkov's clan favors
increased government financing of the regions and domestic industries. Its
clout rests on the city's interests in virtually every major business and real
estate enterprise in the capital as well as its widespread investment in other
regions in the Russian Federation. Largely because of those ties, Luzhkov has
good relations with other members of the Federation Council, many of whom
oppose Chubais's efforts to reduce the authority of regional leaders.

        Chubais is also confronted with other problems that may ensure his domin
 ance
is short-lived. First, divisions may be emerging among his supporters.
Industrialist and Deputy Security Council Secretary Boris Berezovskii and
Oneksimbank President Vladimir Potanin, both firmly in the Chubais camp for
the past year, waged a public battle for control over Sibneft in May. Tensions
are also reported between Berezovskii and media mogul Vladimir Gusinskii,
another Chubais ally. Moreover, Chubais is also not assured of continued
backing by First Deputy Prime Minister Boris Nemtsov, who has presidential
aspirations and an independent political base.

        Second, the implementation of Chubais's economic program has run into st
 iff
opposition from the natural monopolies. For example, although the government
abolished an agreement giving the Gazprom management a permanent proxy vote on
the state's 40% shareholding and ordered a reorganization of the state
regulatory commission, it has been unable to force Gazprom to yield its
monopoly on pipelines. The new government's rhetoric has already begun to
change: after his mixed success battling with Gazprom, Nemtsov praised the
preservation of the state's role in managing that firm.

        Third, as he recovers from his health problems, Yeltsin--whose usual sty
 le
has been to strike a balance between his lieutenants to prevent any one side
from gaining too much power--has shown signs that he is reserving the right to
rein in Chubais. Chubais's move from the Presidential Administration to the
government, where he is politically exposed, could give Yeltsin the room for
maneuver to reduce Chubais's role should government policies become too
unpopular.

        It is very doubtful that the rise of the Chubais clan is an unalloyed vi
 ctory
for "reform." In May, the Finance Ministry again requested "competitive" bids
from commercial banks for the right to grant government guaranteed loans to
the state on extremely favorable terms. The winners were banks supporting
Chubais; the rules governing the bidding ensured opponents never had a chance.
Chubais also sided with bankers pressing for permission from the Central Bank
to act as share dealers in 1998, when new stock market regulations go into
effect.

        For the West, too, there are perils. The recent Harvard aid scandal show
 ed
how foreign assistance, in this case favoring a group close to Chubais, almost
inevitably becomes entangled in Russia's clan wars. Russian foreign-policy
decisions--such as how to transport Caspian oil--also tend to reflect the
agenda of whatever clan is dominant at any given moment, rather than national
interests. Most important, it is unclear how the growing concentration of
wealth in a few hands, unregulated by the rule of law, will further the
development of a democratic state, which, as Chubais's clan stresses, Russia
so desperately needs.

The author is associate director of RFE/RL's Broadcasting Division.



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

SUBSCRIBING:

1) To subscribe to RFERL-L, please send a message to
        listserv@listserv.buffalo.edu
2) In the text of your message, type
        subscribe RFERL-L YourFirstName YourLastName
3) Send the message

UNSUBSCRIBING:

1) To un-subscribe to RFERL-L, please send a message to
        listserv@listserv.buffalo.edu
2) In the text of your message, type
        unsubscribe RFERL-L
3) Send the message

ON-LINE ISSUES OF RFE/RL Newsline:

On-line issues of RFE/RL Newsline are available through the
World
Wide Web: http://www.rferl.org/newsline/

BACK ISSUES OF RFE/RL Newsline:

Back issues of RFE/RL Newsline are available through the
World
Wide Web: http://www.rferl.org/newsline/search/

BACK ISSUES OF OMRI Daily Digest:

Back issues of the OMRI Daily Digest are available through the
World
Wide Web, and by FTP.

WWW: http://www.omri.cz/Publications/DD/
FTP: ftp://FTP.OMRI.CZ/Pub/DailyDigest/

REPRINT POLICY:

To receive permission for reprinting, please direct
your inquires to Paul Goble, publisher.

Email: goblep@rferl.org
Phone (U.S.) : 202-457-6947
International: 001 202-457-6947
Postal Address: RFE/RL, Connecticut Ave. 1201, NW,
Washington D.C., USA

RFE/RL Newsline Staff:

Paul Goble (Publisher), goblep@rferl.org
Jiri Pehe ( Editor, Central and Eastern Europe),  pehej@rferl.org
Liz Fuller (Deputy Editor, Transcaucasia), carlsone@rferl.org
Patrick Moore (West Balkans),  moorep@rferl.org
Michael Shafir (East Balkans), shafirm@rferl.org
Laura Belin (Russia), belinl@rferl.org
Bruce Pannier (Central Asia), pannierb@rferl.org
Jan Cleave, cleavej@rferl.org.

Newsline Fax: (420-2) 2112-3630.

Current and back issues are available online at:
http://www.rferl.org/newsline/

[English] [Russian TRANS | KOI8 | ALT | WIN | MAC | ISO5]

F&P Home ° Comments ° Guestbook


1996 Friends and Partners
Natasha Bulashova, Greg Cole
Please visit the Russian and American mirror sites of Friends and Partners.
Updated: 1998-11-

Please write to us with your comments and suggestions.

F&P Quick Search
Main Sections
Home
Bulletin Board
Chat Room
F&P Listserver

RFE/RL
1999
1998
1997
1996
1995
1994
1993
1992
1991
Search

News
News From Russia/NIS
News About Russia/NIS
Newspapers & Magazines
Global News
Weather

©1996 Friends and Partners
Please write to us with any comments, questions or suggestions -- Natasha Bulashova, Greg Cole