RFE/RL NEWSLINE Vol 1, No. 71, Part I, 11 July 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 BLAMES FACTORY MANAGERS FOR ECONOMIC
WOES

*CONFUSION OVER RESIGNATIONS OF CHECHEN
OFFICIALS

*RUSSIAN SPOKESMAN DENIES REPORTS OF ABKHAZ
FIGHTING

End Note
How Much Will NATO Enlargement Cost?

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RUSSIA

YELTSIN BLAMES FACTORY MANAGERS FOR ECONOMIC
WOES. In his weekly nationwide radio address, President
Boris Yeltsin has blamed much of the country's economic
crisis on unscrupulous and incompetent factory directors,
Russian media reported on 11 July. Yeltsin said many
bosses were either incapable of coping with new market
conditions or were siphoning off profits for their own
enrichment. The Russian president noted that 80 percent of
overdue wages were owed by inefficient enterprises, not
by the state, and he urged workers and shareholders to use
their newly acquired stakes to get rid of incompetent
directors. Yeltsin said he had ordered First Deputy Prime
Minister Boris Nemtsov to prepare a government program
to select 5,000 new, senior-level managers and 25,000-
30,000 middle managers annually. The most talented would
be sent to study in the U.S., Britain, France, Italy, and Japan,
according to Yeltsin.

GOVERNMENT WILL NOT BORROW TO PAY WAGE
ARREARS. Economics Minister Yakov Urinson, who is
attending the annual Central and Eastern European
Economic Summit in Salzburg, Austria, says Russia will not
borrow more money to pay public-sector wage arrears by
the end of the year. Urinson told reporters on 10 July that
improved tax collection and better cooperation with
regional leaders are expected to make up the shortfall.
Yeltsin has ordered all overdue salaries paid by 1 January
1998 (see "RFE/RL Newsline," 9 July 1997). First Deputy
Prime Minister Boris Nemtsov said this week that the
government will pay off 5.4 trillion rubles ($ 940 million) in
back wages by September and another 25 trillion rubles
($4.3 billion) in other public-sector arrears by the end of
the year.

CHERNOMYRDIN DECLARES INCOME. Prime Minister
Viktor Chernomyrdin has declared his personal assets at
$46,000, Russian media reported on 10 July. According to a
statement submitted to the Tax Inspectorate,
Chernomyrdin declared 46.4 million rubles ($8,000) in
income for 1996. His assets include a small country house,
valued at 156 million rubles ($27,000), and a Chevrolet
Blazer utility vehicle, valued at 112 million rubles
($19,000). "Perhaps this is not in keeping with the spirit of
the times, but I do not have any stock holdings. And I have
no property abroad," Chernomyrdin told Interfax.

RUSSIAN BANK SELLS GOLD INGOTS. Rossiiskii Kredit
has become the first Russian bank to sell gold ingot bars to
private buyers, ITAR-TASS reported on 10 June. The sale
follows the government's June decision to allow Russian
citizens to purchase gold ingots at commercial banks. At
least three other Russian banks--Inkombank, SBS-AGRO,
and Gold-Platinum Bank--say they will follow suit.

RUSSIA IMPORTED BRITISH BEEF. Agriculture Minister
Viktor Khlystun confirmed on 10 July that Russia has
imported 730 tons of British beef, Russian media reported.
The imports violate a worldwide ban imposed over fears of
BSE, or "mad cow disease." Khlystun said the meat posed a
danger to public health, but he added that the shipments
would be hard to trace since they were officially marked as
coming from Belgium. The European Commission recently
said that 1,600 tons of British beef was illegally exported
with Belgian help to Holland, Egypt, Russia, and Equatorial
Guinea.

FSB CHIEF SAYS HOT LINE FOR SPIES YIELDS
"FANTASTIC" RESULTS. Federal Security Service (FSB)
director Nikolai Kovalev announced on 9 July that the "hot
line" opened to allow Russian spies for foreign intelligence
services to offer to become double agents has yielded
"fantastic" results, ITAR-TASS reported. Kovalev said 298
confessed spies had called the FSB's hot line, and he
described 80 of those calls as "very serious." He added,
"We had feared that there would be a lot of calls from
mentally ill people, but that did not happen."

INDONESIAN OFFICIAL IN RUSSIA. Indonesian Science
and Technology Minister Yusuf Habibi failed to reach
agreement on buying Russian warplanes during his recent
nine-day visit to Russia, Western media reported. Habibi
said at the end of his visit on 9 July that any final decision
on buying planes would have to made in Jakarta. But
according to Interfax the next day, Russia will help
Indonesia develop its civilian nuclear power facilities.
Russian Atomic Energy Minister Viktor Mikhailov said he
reached an understanding with Habibi whereby Russia will
help build two reactors in Indonesia. He was confident that
an agreement would be signed before the end of 1997 but
noted that Russia still faces competition for the contract
with firms from the U.S., Canada, and Japan.

CONFUSION OVER RESIGNATIONS OF CHECHEN
OFFICIALS. Former radical field commander and defeated
presidential candidate Shamil Basaev submitted his
resignation as first deputy prime minister for industry on
10 July, Russian media reported. Basaev told Reuters in a
telephone interview that he was resigning voluntarily.
Speaking on Chechen television last month, Basaev had
rejected rumors of his impending resignation and said his
absence from cabinet sessions was due to ill health. AFP
quoted Chechen Vice President Vakha Arsanov as saying
that President Aslan Maskhahdov will not accept Basaev's
resignation. Meanwhile, ITAR-TASS reported on 10 July
that Chechen Security Service head Abu Movsaev, said to
be a close associate of Basaev's, has resigned "for family
reasons." The next day, however, the agency reported that
Movsaev has contacted the office of the Russian
presidential representative in Grozny to deny he has
resigned.

CHECHEN-RUSSIAN ECONOMIC AGREEMENTS SIGNED.
Russian and Chechen representatives have finally signed a
agreement on opening an account for the Chechen National
Bank at Russia's Central Bank, Russian media reported on
11 July. The accord also allows Chechen banks to open
branches abroad and foreign banks to open branches in
Chechnya. The Chechen delegation brought back from
Grozny the Russian-Chechen customs agreement, to which
Maskhadov had added his signature. That document had
been signed earlier by Russian Prime Minister
Chernomyrdin. The signing of the two agreements removes
the last obstacle to an accord between Russian, Chechen,
and Azerbaijani oil companies on the transit of Azerbaijan's
Caspian oil via Chechnya.

VOLGOGRAD'S MOTHER RUSSIA STATUE IN DANGER OF
COLLAPSE. The Mother Russia Statue in Volgograd
(formerly Stalingrad), the most impressive World War II
memorial to have been erected in the Soviet Union, is in
danger of collapsing due to neglect, Russian media
reported on 10 July. The 70-meter-high statue was
erected some 30 years ago to mark the battle of
Stalingrad, one of the turning points of World War II. But
the gigantic concrete monument is now riddled with cracks,
particularly on the head and along the 33-meter-long
sword it holds aloft. The memorial's manager says only a
complete restoration will save the statute from collapse
but added that no money has been forthcoming so far.

TRANS-SIBERIAN RAILROAD TRAFFIC HALTED. Traffic
along a 650-kilometer stretch of the Trans-Siberian
railroad stopped for six hours on 10 July after a regional
power company cut off electricity supplies, ITAR-TASS
reported. The Chitaenergo company said the railroad owes
it more than 30 billion rubles ($5.3 million). Railroad
officials say the Trans-Siberian line is owed much more by
government ministries and coal-mining companies. Service
was resumed after a railroad official warned that coal
shipments to heating and power stations in Chita Oblast
would be imperiled by the cut.

TRANSCAUCASUS AND CENTRAL ASIA

RUSSIAN SPOKESMAN DENIES REPORTS OF ABKHAZ
FIGHTING. Russian Foreign Ministry spokesman Valerii
Nesterushkin on 10 July denied media reports that up to 20
guerrillas have been killed in fighting in the Kodori gorge,
Interfax reported. Nesterushkin rejected as "libelous"
claims that Abkhaz militants were transported to the
region in a helicopter belonging to the CIS peacekeeping
force. Abkhaz Defense Minister Vladimir Mikanba similarly
dismissed as "fabrication" claims of increased tensions in
the Kodori gorge region. Abkhaz President Vladislav
Ardzinba told AFP on 10 July that the situation is "critical"
and that if the protocol outlining measures for resolving
the conflict is not signed soon, there will be "serious
consequences." Abkhaz Foreign Minister Sergei Shamba
blamed Tbilisi for the delay, saying each time the Abkhaz
were ready to sign the draft, the Georgian side insisted on
new additions to the text.

ARMENIAN, TURKISH FOREIGN MINISTERS MEET.
Alexander Arzoumanian and Ismail Cem discussed bilateral
relations in Madrid on 9 July within the framework of the
NATO summit, according to the "Turkish Daily News" on 11
July. Arzoumanian denied media reports that Armenia has
supplied anti-aircraft missiles to the PKK and said his
government is ready to cooperate to investigate those
allegations. Cem said that Ankara cannot agree to the
Armenian proposal to economic cooperation with Turkey
until a solution is reached to the Karabakh conflict.

ARMENIAN OPPOSITION PAPER SUSPENDS
PUBLICATION. Publication of "Ayzhm," the weekly paper
of Vazgen Manukyan's opposition National Democratic
Union, has been suspended indefinitely, according to Noyan
Tapan on 10 July, quoting the paper's editor, Vigen
Sargssian. Sargssian said the paper's owners have no funds
to buy newsprint. Publication of "Ayzhm" was temporarily
suspended last September following the attack on the
Armenian National Assembly building in the wake of the
disputed presidential elections.

GEORGIAN COMMUNIST SENTENCED. Vazha
Khachapuridze, a former regional governor and one of the
leaders of the United Communist Party of Georgia, was
sentenced to five years in prison on 9 July for abuse of his
official position and illegally creating a team of 15
bodyguards, "Akhali taoba" reported on 10 July. The
Georgian Supreme Court rejected charges of treason and
calling for the overthrow of the country's leadership,
according to Interfax.

TAJIK COMMISSION SIGNS FIRST AGREEMENTS. The
National Reconciliation Commission, which was officially
set up following the signing of the 27 June peace treaty by
the Tajik government and United Tajik Opposition,
concluded its first session in Moscow on 10 July, RFE/RL
correspondents in the Russian capital reported. The
commission agreed on a "general forgiveness," meaning
past enmities are to be forgotten, and signed an accord on
a general amnesty that will allow members of the UTO to
legally return to Tajikistan. Those opposition members who
were imprisoned for political reasons or captured in
military actions since 1992 are to be released. Excluded
from the amnesty are those guilty of violent crimes and
crimes against society. Those prisoners who believe they
were found guilty of such crimes as a pretext to imprison
them for their political actions have the right to request
that their trial and the charges brought against them be
reviewed.

PREPARATIONS FOR CHANGES IN POST-WAR
TAJIKISTAN. The Tajik government and CIS border guards
are preparing for the changes foreseen in the 27 June
peace treaty for post-war Tajikistan, RFE/RL
corespondents in Dushanbe reported. Border guards are
making preparations for the return of refugees from
Afghanistan, who will re-enter Tajikistan via two check
points along the Tajik-Afghan border. Tajik President
Imomali Rakhmonov has ordered medical workers to
prepare for the influx, which may total up to 22,000
refugees from Afghanistan. Rakhmonov also announced that
his country's armed forces are to be cut by 30 percent
from their estimated current strength of 17,000. The
money saved will be used to pay teachers and medical
personnel, he said.

UZBEKISTAN ESTABLISHES STATE CUSTOMS
COMMITTEE. President Islam Karimov has signed a decree
ordering the creation of a State Customs Committee,
Interfax reported on 10 July. The aim of the new body is to
"improve customs policy" and "increase the role played by
the customs services in stepping up the country's
economic security." The committee is considered a law
enforcement body directly subordinate to the government.
It will be empowered to sign international agreements and
treaties on customs, impose penalties for offenses against
customs regulations, and provide evidence of offenses to
the judicial organs. The decree cites the "unsatisfactory
state of and irresponsible attitudes toward the
maintenance and increase of working capital, which disrupt
business links, facilitate non-payment of taxes, and are
therefore likely to increase social tensions."

END NOTE

How Much Will NATO Enlargement Cost?

by Michael Mihalka

A number of reports have appeared recently in the
Western media asserting that the cost of NATO
enlargement could exceed $100 billion. Such assertions are
based on several fallacies.

First, it is frequently claimed that new members must
replace their Soviet-era equipment with modern Western
weaponry. In fact, new members need only make their
current forces interoperable with NATO, meaning providing
English-language courses, changing air defense and
command-and-control procedures, and perhaps purchasing
communication equipment. German Defense Minister Volker
Ruehe has called claims that new members must buy
Western equipment "pure drivel." He noted that "it is
perverse to say that modern tanks and aircraft are
necessary in the new member states. We are not talking
about EU agriculture. The purchase of tanks can wait."

Second, it is often maintained that requirements drive
defense budgets. In fact, politics drive those budgets. Many
studies of the costs of NATO enlargement specify tasks
that would need to be performed by new members. Costs
are then associated with those tasks. The higher estimates
are based on a scenario of hedging against a large-scale
short-warning attack such as NATO was prepared for during
the Cold War. According to that scenario, NATO would
deploy forward, large air and ground combat forces in the
new member states. NATO has already decided that it does
not need to pursue that option.

A third fallacy is that NATO dictates the terms of
membership. In fact, while the alliance says what it expects
membership candidates to do, those countries can they can
do as they please once they become members. Some NATO
countries, such as Iceland and Luxembourg, have no or only
notional armed forces. Others, such as Norway, refuse to
have foreign troops or nuclear weapons stationed on their
territories. Still others, such as Spain, Greece, and France,
have sometimes refused to participate in the integrated
military structure.

Finally, it is frequently claimed that joining an alliance
increases military expenditures. But, in fact, countries are
more likely to spend less on defense in the long run if they
belong to an alliance rather than having to deal with
security concerns on their own.

Most policy-makers in Central and Eastern Europe believe
that the costs associated with NATO enlargement would be
small and manageable. They also realize that they needed
to modernize their forces regardless of whether they join.
Cost assessments by the Czech Republic, Hungary, and
Poland fall far short of those carried out in the West.

Peter Necas, the former Czech deputy defense minister,
said in an April 1997 interview (when he was chairman of
the parliamentary Defense and Security Committee) that
modernizing the army was essential unless troops were
simply to be used as a castle guard in handsome uniforms
for parades. He also pointed out the direct costs to ensure
interoperability with NATO were already being paid so that
Czech units could participate in exercises with NATO
members and in the Stabilization Force (SFOR) in Bosnia-
Herzegovina. He estimated that another part of the direct
costs--the contribution to NATO's budget--would total 300-
400 million crowns annually (about $10-12 million).

A Polish study group that included officials from the
Defense and Foreign Affairs Ministries estimated that the
essential costs of joining NATO--integrating the command
system with NATO, ensuring the compatibility of the
telecommunications and air defense systems, and
modernizing airfields--would total some $1.5 billion. The
group assumed that Poland would need to contribute $35-
40 million annually to the alliance's joint budget. According
to those estimates, the Polish defense budget would
increase by no more than 4 percent. Janusz Onyskiewicz,
former defense minister and currently chairman of the
parliamentary Defense Committee, noted that the cost of
NATO enlargement presents no major difficulty to either
new or current members.

Imre Mecs, the chairman of the Hungarian parliament's
Defense Committee, said in March 1997 that defense
expenditures might increase by 15-20 percent but that
most of the increase would be needed to modernize a
military that had not been upgraded in 15 years. Joining
NATO would not pose an economic burden for the Hungarian
people, he argued.

The May 1996 Congressional Budget Office study, which
contains the highest estimates of the costs of NATO
enlargement, defined the worst-case scenario so that U.S.
legislators would know the highest amount the U.S. might
have to contribute. Even that study concluded it would cost
only $21.2 billion for training and exercises and for
upgrading air defense and command as well as control and
communications equipment in the Czech Republic, Hungary,
Poland, and Slovakia. Of that amount, those four countries
would have paid 70 percent, while the U.S. would have
needed to contribute $1.9 billion and its European allies
$3.7 billion over several years. That amount does not differ
significantly from the one given in the February 1997 State
Department study of the costs of NATO enlargement.
According to that study, the U.S. would need to pay about
$150-200 million a year--or less than 0.1 percent of the
annual U.S. defense budget.

The author teaches at the George C. Marshall Center for
Security Studies in Garmisch-Partenkirchen, Germany.




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