RFE/RL NEWSLINE Vol 1, No. 82, Part I, 28 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

*RUSSIAN-GERMAN CONSORTIUM WINS SVYAZINVEST AUCTION


*RUSSIAN FOREIGN MINISTER IN MALAYSIA, MEETS WITH
ALBRIGHT


*GEORGIA, ABKHAZIA ABJURE USE OF VIOLENCE

End Note
A WATERSHED IN CENTRAL ASIA

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RUSSIA

RUSSIAN-GERMAN CONSORTIUM WINS SVYAZINVEST AUCTION. In
Russia's largest privatization sale to date, a consortium involving
affiliates of Russia's Oneksimbank and Germany's Deutsche Bank AG
won a 25 July auction for 25 percent plus one share of the
telecommunications giant Svyazinvest. The consortium offered
$1.875 billion for the stake in Svyazinvest, which holds controlling
interests in 85 of Russia's 87 regional telecommunications companies
as well as the long-distance and international telephone provider
Rostelecom. Only one other bid, for $1.71 billion, was submitted for
the Svyazinvest auction. A consortium involving Russia's Alfa-group
and Most Bank, as well as the Spanish Telefonica de Espana SA, made
the losing bid, Interfax reported. According to Bloomberg News, 71
percent of the money raised at the auction will go to the federal
government, 24 percent to regional governments, and 5 percent
toward investment in Svyazinvest.

PROMINENT JOURNALIST CRITICIZES SVYAZINVEST SALE. The
Svyazinvest sale drew sharp criticism from Sergei Dorenko, the
anchor of a weekly news and analysis program on the state-
controlled Russian Public Television (ORT) network, Reuters reported
on 27 July. Although the winning bid was higher than the losing offer
and well above the minimum bid of $1.18 billion, Dorenko charged
on 26 July that the rival offer would have channeled more
investment toward updating Russia's telephone network. He also
claimed that State Property Committee Chairman Alfred Kokh had
shown favoritism toward Oneksimbank head Vladimir Potanin.
Reuters cited an unnamed government source as saying Security
Council Deputy Secretary Boris Berezovskii was involved in the rival
bid for Svyazinvest, but Berezovskii could not be reached for
comment. Appointed to the Security Council in October 1996,
Berezovskii has wielded considerable influence at ORT since the
network began broadcasting on Channel 1 in April 1995.

AUDIT CHAMBER CALLS FOR HALT TO NORILSK SALE. Audit Chamber
Deputy Chairman Yurii Boldyrev has sent letters to President Boris
Yeltsin, State Duma Speaker Gennadii Seleznev, and Procurator-
General Yurii Skuratov demanding that the upcoming sale of a 38
percent stake in Norilsk Nickel be halted, RFE/RL and "Kommersant-
Daily" reported on 25 July. Audit Chamber inspector Valerii
Meshalkin, who conducted a recent audit of Norilsk Nickel, told an
RFE/RL correspondent in Moscow that a May 1995 presidential
decree prohibited the sale of the government stake in Norilsk Nickel
before the end of 1998. He added that a September 1995
government directive listed Norilsk Nickel among enterprises that
have "strategic significance for national security" and therefore
should not be sold off quickly. Oneksimbank acquired the state's 38
percent stake in the company in November 1995 in exchange for a
$170 million loan. The Audit Chamber has previously declared that
acquisition illegal.

FOREIGN MINISTER IN MALAYSIA... Yevgenii Primakov, arriving in
Kuala Lumpur on 26 July to attend an Association of South East Asian
Nation conference, met with his Chinese counterpart Qian Qichen. It
was announced later that Russian President Boris Yeltsin is
tentatively scheduled to arrive in China about 10 November for an
official visit. Addressing the ASEAN conference the next day,
Primakov unveiled a plan for the ASEAN area that envisions a
"simultaneous advance in three directions: introduction of confidence
building measures, preventive diplomacy, and development of
mechanisms for settlement of conflicts." He also joined those who
called for North Korea's participation at ASEAN conferences, noting
that the situation on the Korean peninsula was potentially the most
dangerous for the Pacific area.

...MEETS WITH ALBRIGHT. Also on 27 July, Primakov met with U.S.
Secretary of State Madeleine Albright to discuss disarmament and
the Middle East peace process. Primakov later said a new "impulse is
needed" to accelerate the peace process and that it is necessary to
consider both the Syrian-Lebanese and the Palestinian sides. The
next day, Primakov addressed the Post Ministerial Conference and
once again blasted NATO's recent invitation to three former eastern
bloc states to join the alliance. Primakov said Moscow views this
"enlargement" as a threat to its security, and he called such alliances
an "anachronism." Russia fears that "bloc expansion would once again
create dividing lines" similar to those that existed and fueled
tensions during the Cold War, he commented.

ZYUGANOV SLAMS PRESIDENTIAL VETOES. Communist Party leader
Gennadii Zyuganov says President Boris Yeltsin "has begun a new
stage of the crusade against Russia" by vetoing the law on religious
organizations and the land code, Interfax reported on 26 July. The
previous day, Yeltsin vetoed the code, primarily because it would
have banned the purchase and sale of farmland (see "RFE/RL
Newsline," 25 July 1997). Zyuganov charged that Yeltsin "has already
sold two-thirds of the country" through privatization and now "is
preparing the third re-distribution of property" through land sales.
However, he admitted that the State Duma will find it "very, very
difficult" to override the veto. At the same time, Zyuganov expressed
confidence that both the Duma and the Federation Council will
override Yeltsin's recent veto of the religion law. A two-thirds
majority in both houses of parliament is required to override a
presidential veto.

YELTSIN SIGNS PRIVATIZATION LAW... Yeltsin signed the law on
privatization on 25 July, ITAR-TASS reported. Under that law, the
government is to seek parliamentary approval for its annual
privatization targets. Transfers of government stakes in enterprises
in exchange for bank loans ("loans for shares" schemes) will be
prohibited. In addition, the privatization of certain "strategically
important enterprises" will require the passage of a special federal
law. The law signed by Yeltsin also allows the state to appropriate
privatized property if the new owner fails to meet investment
requirements or other obligations under which the privatization
contract was awarded (see "RFE/RL Newsline," 25 June and 7 July
1997).

...VETOES SEVERAL OTHER LAWS. Yeltsin vetoed several laws on 25
July, including the law "on military-technological cooperation with
foreign countries," which would have declared a state monopoly on
the arms trade, Russian news agencies reported. Yeltsin also vetoed
the law on protecting Lake Baikal and the law on the status of those
serving in the armed forces or troops subordinate to federal agencies
(see "RFE/RL Newsline," 8 July 1998). The presidential press service
did not specify on what grounds those laws were rejected. On 23
July, Yeltsin vetoed a law on regulating relations between
autonomous okrugs and the krais or oblasts of which they are part.
In a message to the parliament, Yeltsin said a recent Constitutional
Court decision on Tyumen Oblast's relationship to Khanty-Mansi and
Yamal-Nenets Autonomous Okrugs should be taken into account
when that law is revised (see "RFE/RL Newsline," 16 July 1997).

IRKUTSK MAYOR WINS GUBERNATORIAL ELECTION. Boris Govorin
was elected governor of Irkutsk Oblast on 27 July with 50.34 percent
of the vote, according to preliminary results, RFE/RL's correspondent
in Irkutsk reported on 28 June. Communist candidate Sergei
Levchenko finished a distant second with 18.8 percent. State Duma
deputy Viktor Mashinskii of the Popular Power faction gained some
14 percent, while Vostsibugol director Ivan Shchadov, who was
backed by former Security Council Secretary Aleksandr Lebed and
Yabloko leader Grigorii Yavlinskii, gained just over 7 percent,
according to Russian news agencies. Turnout was 46 percent.
Although Govorin was the candidate favored by the Moscow
authorities, he campaigned primarily on promises to defend the
oblast's interests; no federal officials traveled to Irkutsk to campaign
on his behalf. Govorin was considered the front-runner in the race
but was not expected to win by such a large margin.

NEMTSOV SAYS GOVERNMENT TO CUT BUREAUCRACY. First Deputy
Prime Minister Boris Nemtsov says the government has adopted a
resolution to reduce the federal bureaucracy by 10 percent, Russian
news agencies reported on 26 July. Answering telephone calls to a
hot line organized by the newspaper "Komsomolskaya pravda,"
Nemtsov said the money saved would go toward "burning needs"
such as paying wages, pensions, and benefits for those serving in the
armed forces. He added that he would cut by 25 percent the
personnel of the Fuel and Energy Ministry, which he also heads. In
recent years, promises by various government officials to cut down
the bureaucracy by as much as a third have not been implemented.
Nemtsov also promised that housing benefits for those serving in or
discharged from the military will be transferred directly to soldiers'
bank accounts to prevent the funds from being "pocketed by local
authorities."

COURT HEARS LAWSUIT AGAINST NEMTSOV. A Nizhnii Novgorod
court heard the first arguments in Communist State Duma deputy
Gennadii Khodyrev's lawsuit against First Deputy Prime Minister
Nemtsov, RFE/RL's correspondent in Nizhnii Novgorod reported on 25
July. Appearing in the Republic of Mordovia on 30 June, Nemtsov
repeatedly asked his audience whether they wanted a "Communist"
or a "normal person" to be in charge of the neighboring oblast. Those
comments were broadcast on local television in Nizhnii Novgorod on
1 and 2 July, and Khodyrev lost a gubernatorial election to Ivan
Sklyarov on 13 July. Khodyrev claims that by implying that all
Communists are abnormal, Nemtsov insulted his honor and dignity
and damaged his business reputation. He is demanding that Nemtsov
apologize and publicly retract his statement. The next court hearing
in the case is scheduled for October.

MOSCOW POLICE WANT TO REOPEN CRIMINAL CASE AGAINST
ZHIRINOVSKY. The command of the Moscow city police has asked the
city's procuracy to reopen the criminal case against Liberal
Democratic Party of Russia leader Vladimir Zhirinovsky, Interfax
reported on 25 July. Television journalist Yuliya Olshanskaya had
previously asked the Moscow procurator's office to reopen the case,
according to the 25 July "Kommersant-Daily." Zhirinovsky was
investigated for hooliganism following an incident in which he forced
Olshanskaya into his car after striking her and her cameraman (see
"RFE/RL Newsline," 9 and 21 May 1997). The Moscow city police
closed the case on 10 July on the grounds that Zhirinovsky's actions
had not been premeditated. Even if the case is reopened, Zhirinovsky
cannot be prosecuted unless the Duma votes to lift his parliamentary
immunity.

RYBKIN IN NORTH OSSETIA. Russian Security Council Secretary Ivan
Rybkin and Nationalities Minister Vyacheslav Mikhailov met with
Ingush refugees in North Ossetia's disputed Prigorodnyi Raion on 25
July, Interfax reported. They were accompanied by the presidents of
North Ossetia and Ingushetia, Akhsarbek Galazov and Ruslan Aushev.
Rybkin said the 200 billion rubles ($34.6 million) earmarked by the
federal government for aid to refugees should be exempt from the
budget sequester. ("Nezavisimaya gazeta" on 26 July quoted a local
official as saying the North Ossetian leadership had received only 14
billion of the planned 200 billion rubles.) Rybkin called for vigorous
measures to defuse rising tensions in the region, but he neither
agreed to nor rejected Aushev's suggestion that Russian Interior
Ministry troops be deployed in Prigorodnyi Raion to prevent
violence.

CHECHEN POLITICAL PARTIES TO WORK FOR "STABILIZATION."
Meeting in Grozny on 26 July, representatives of up to 20 Chechen
political parties called for the consolidation of political forces in the
Caucasus, the annexation of districts in neighboring Dagestan
traditionally inhabited by Chechens, the extradition to Chechnya of
pro-Russian former leaders Salambek Khadzhiev and Doku Zavgaev,
and establishing Islam as the world religion, Russian agencies
reported. Speaking on Chechen television on 25 July, Khozh-Akhmed
Yarikhanov, the head of the Chechen Oil Company, called for
volunteers to join a 450-strong force that will guard the Baku-
Grozny-Tikhoretsk oil pipeline. He added that Chechnya will receive
$4-5 of the $15.67 that Azerbaijan will pay for each metric ton of oil
exported, according to Interfax. In other news, the last two of five
Chechens taken hostage in North Ossetia on 8 July were released on
24 July.

NEW RAILWAY INAUGURATED IN DAGESTAN. A 78 km stretch of
railway went into operation from Kizlyar, in Dagestan, to Karlan-Yurt,
bypassing Chechnya on 26 July, Russian agencies reported. The
railway, which was built in eight months, will end the virtual
blockade of Dagestan caused by the suspension of rail transport
through Chechnya.

TRANSCAUCASUS AND CENTRAL ASIA

GEORGIA, ABKHAZIA ABJURE USE OF VIOLENCE. Georgian and Abkhaz
government representatives agreed on 26 July not to resume
hostilities after the expiration on 31 July of the mandate of the CIS
peacekeeping force currently deployed along the border between
Abkhazia and the rest of Georgia. The agreement came after two
days of talks under the aegis of the UN and with the participation of
U.S., French, German, British, and Russian representatives, all of
whom asked the conflict parties to agree to the extension of the
peacekeepers' mandate. Abkhaz President Vladislav Ardzinba told
journalists on 26 July that he is optimistic that the peacekeepers'
mandate will be extended. But he added that if they withdraw,
Abkhaz units will advance south and occupy their positions, Interfax
reported. The Georgian parliament will vote in the next few days on
whether to endorse extending the peacekeepers' mandate.

GERMANY GRANTS LOAN TO ARMENIA TO MODERNIZE ENERGY
SECTOR. Under an intergovernment loan signed in Yerevan on 25
July, Germany will lend Armenia DM 10 million (some $5.4 million)
to finance reconstruction of the Kanaker hydro-electric power
station, Interfax and Armenpress reported. A second agreement
worth DM 15 million is scheduled to be signed in August.

KAZAKH POLL. According to a poll conducted by Kazakhstan's Giller
Institute among 1,400 people from six of the country's regions,
President Nursultan Nazarbayev would win presidential elections if
they were held today, Interfax reported. He garnered the support of
41.6 percent of respondents. Some 33 percent said they back the
present course of reforms, while 48.6 percent said they did not favor
Nazarbayev's economic policy. Only 5.5 percent said they have trust
in the government. About one-third said they thought Kazakhstan
would be a "well-off" country one day; 11.4 percent said the country
would never be considered "prosperous." Only 1.9 percent thought
the economic situation in Kazakhstan had improved, and 13.7 percent
said the country is sliding into "chaos."

SEMIRECHE COSSACKS CELEBRATE 130 YEARS. The Semireche
Cossacks have celebrated their 130th anniversary, according to
ITAR-TASS. On 26 July 1867, a detachment of Cossacks arrived at the
foot of the Tien-Shan Mountains and constructed fortification of
Vernyy, which was renamed Alma-Ata early in the Soviet era.
Semireche Cossacks invited to their anniversary celebration
members of the government, Almaty municipal officials,
representatives from the Organization for Security and Cooperation
in Europe, and ambassadors of Russia, Belarus, and Ukraine. ITAR-
TASS on 26 July reported that Kazakh officials had not given their
approval to the festivities. Many members of the indigenous ethnic
groups of Central Asia regard the Cossacks as "instruments of
colonization," according to the news agency.

END NOTE

A WATERSHED IN CENTRAL ASIA

by Paul Goble and Bruce Pannier

        A demonstration last week at the Kazakh-Uzbek border drew
attention to an issue -- the distribution of Central Asia's scarce water
supplies -- that is likely to put a brake on the efforts of some leaders
there to promote integration. On 24 July, residents of Southern
Kazakhstan Oblast staged a demonstration to protest a decision by
the Uzbek government to cut the amount of water flowing from that
country into Kazakhstan. The demonstrators said the Uzbek decision
threatened the corn and cotton crops on some 100,000 hectares of
land in the oblast. While insignificant in itself, the protest reflects the
conjunction of three factors: geographical location, the legacy of
Soviet policy, and the imperatives of competing national interests
since independence. Combined, those factors will almost certainly
generate more popular protests as well as high-level political
conflicts.
        For most of its history, Central Asia has suffered from a
shortage of water, a problem that has been compounded by
extremely rapid population growth, the introduction of cotton
monoculture by tsarist and Soviet administrators, and the fact that
the region's major rivers rise in areas dominated by one ethnic
community but flow into areas where other national groups
predominate. While the first and second of those factors have
attracted widespread attention from specialists in the region and
beyond, the third has not, even though it may ultimately prove the
most significant.
        There are two major rivers in the region: the Amu Darya and
the Syr Darya. The Amu Darya rises in Tajikistan, where it is known
as the Pyanj, but it flows through Uzbekistan and Turkmenistan
before reaching the Aral Sea. The Syr Darya rises in Kyrgyzstan,
where it is fed by two smaller rivers, the Naryn and the Kara Darya.
It then flows through eastern Uzbekistan, Tajikistan, and Kazakhstan
before draining into the Aral Sea. Along the length of both rivers,
local governments are drawing out part of the flow for their growing
populations and to support agricultural development . The combined
amount withdrawn is so great that the flows of the two rivers into
the Aral Sea are insufficient to prevent the sea's disappearance in
the first decades of the next century. Not surprisingly, water
shortages both current and anticipated have already sparked
conflicts.
        Under the Soviets, the borders of the Central Asian republics
were drawn in such a way as to ensure there would always be
competition between water-surplus and water-short republics. Such
a competition worked to Moscow's advantage in two ways. Fights
over water reinforced the national distinctiveness of the five
republics and thus limited the ability of the republics to cooperate in
ways that would threaten Soviet control. In short, water policy
became part and parcel of Moscow's effort to divide and rule the
region. Also, competition over water forced the republics to look to
Moscow to adjudicate disputes among them. The Soviet authorities
were only too willing to do so. They established a complex set of
dams and irrigation arrangements to control the size of the flow of
the two major river systems as well as institutions to allocate water
among the various republics and local authorities.
        Since achieving independence, the five countries of the region
have had to cope with this inheritance. Not surprisingly, those
suffering water shortages have pressed hard for maintaining regional
cooperation, while those with water surpluses increasingly have
wanted to defend their own particularist interests.
        Complicating and exacerbating those tensions are three factors,
each of which played a role in the 24 July demonstration. First, the
civil war in Tajikistan has effectively removed from the competition
one of the largest suppliers of water in the region. Several days
before the demonstration, a Tajik official told representatives of the
region's other governments that neither he nor his embattled
government could make any promises over future water supplies.
        Second, the independent governments lack the funds to repair
the decaying Soviet-era infrastructure. Earlier this year, Kyrgyzstan's
parliament discussed asking downstream countries to help offset the
$4 million Bishkek now spends to maintain its river-water control
system. To date, none of those countries has publicly offered to help
out.
        And third, the five governments, driven by national interests
or pressed by their own populations, are looking to their own
interests rather than trying to find a way out of the water crisis
through cooperation. To the extent that they continue to do so, the
recent demonstration in southern Kazakhstan could prove a
watershed for regional cooperation as well.


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