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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 1, No. 84, Part I, 30 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

* OFFICIALS SAY SVYAZINVEST SALE IS FINAL

* YELTSIN NAMES CHERNOMYRDIN TO OVERSEE ARMS TRADE

* RUSSIA UPS ANTE OVER ABKHAZ PEACEKEEPERS

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RUSSIA

OFFICIALS SAY SVYAZINVEST SALE IS FINAL... First Deputy Prime
Minister Anatolii Chubais announced on 29 July that the results of
the Svyazinvest auction "are final and not subject to review," since
the sale was conducted "in strict compliance with a government
directive," Russian news agencies reported. A consortium involving
an Oneksimbank affiliate placed the winning bid for 25 percent plus
one share in Svyazinvest. Chubais emphasized that the money earned
from the sale will be used to pay wage arrears to armed forces
personnel. At the same press conference, Deputy Prime Minister
Vladimir Bulgak said some 9 trillion rubles ($1.6 billion) in proceeds
from the sale will go to the federal budget, RFE/RL's Moscow bureau
reported. Speaking in the Republic of Chuvashia the same day, First
Deputy Prime Minister Boris Nemtsov said only "honest auctions" can
raise enough funds to pay wage arrears.

...WHILE CHERNOMYRDIN SAYS PRIVATIZATION DEALS SHOULD BE
"TRANSPARENT." Prime Minister Viktor Chernomyrdin has called for
the government to examine the situation surrounding the recent
Svyazinvest sale, saying such privatization deals should be
"absolutely transparent" without any "innuendoes," Russian news
agencies reported on 29 July. Speaking to journalists in Krasnodar
Krai, Chernomyrdin noted that the government should take steps to
ensure that not every privatization deal ends up in court. The prime
minister recently criticized the work of the State Property
Committee, saying scandals had frequently accompanied major
privatizations (see "RFE/RL Newsline," 25 July 1997). Also on 29 July,
Chernomyrdin denied rumors of imminent personnel changes at the
Russian Public Television (ORT) network. The Svyazinvest sale has
drawn sharp criticism from ORT and NTV, along with other media
outlets financed in part by large financial groups (see "RFE/RL
Newsline," 27 and 28 July 1997).

ORT, NTV SHAREHOLDERS DENY ACCUSATION BY NEMTSOV. A
statement released by private investors in ORT on 29 July slammed
First Deputy Prime Minister Boris Nemtsov for accusing the
network's shareholders of trying to buy Svyazinvest on the cheap,
Interfax reported. Speaking in Chuvashia, Nemtsov had said earlier
in the day that the "owners of ORT and NTV" had tried to acquire one
quarter of Svyazinvest for an undervalued price and could not accept
that they had lost in a fair auction. The ORT statement said that of
the company's shareholders, only Alfa-Bank took part in the
Svyazinvest auction (implying that the LogoVAZ group affiliated with
Security Council Deputy Secretary Boris Berezovskii was not
involved). Meanwhile, the Most group issued a statement denying
that Media-Most, which owns NTV, Ekho Moskvy, and the newspaper
"Segodnya," had bid for the Svyazinvest stake.

ONEKSIMBANK HEAD JOINS FRAY. Oneksimbank head Vladimir
Potanin told Interfax on 30 July that he is against behind-the-scenes
deals related to privatization sales. Potanin confirmed that before the
Svyazinvest auction, he had met with Media-Most group head
Vladimir Gusinskii, Security Council Deputy Secretary Berezovskii,
and First Deputy Prime Minister Chubais. (On 29 July, Chubais also
confirmed that such a meeting took place, Interfax reported.) Potanin
claimed that Gusinskii and Berezovskii had proposed that
Oneksimbank not bid for Svyazinvest, allowing interests controlled
by Gusinskii and Berezovskii to acquire the stake for near the
starting price. (Only two bids were submitted in the Svyazinvest
auction.) Potanin told Interfax that he rejected the deal and that
Chubais had confirmed that the government would stand by the
terms previously announced for the Svyazinvest sale.

ANOTHER VIEW OF BANKERS' MEETING WITH CHUBAIS. Citing an
unnamed source in the presidential administration, "Kommersant-
Daily" reported on 30 July that the meeting between Chubais,
Potanin, Berezovskii, and Gusinskii was held in France on 23 July,
two days before the Svyazinvest auction. The paper said that
Berezovskii and Gusinskii sought Oneksimbank's withdrawal from
the auction. Among other things, they reportedly threatened to
unleash an "information war" and to withdraw their bid for
Svyazinvest. However, the paper alleged, Chubais insisted that the
auction take place as planned. "Kommersant-Daily" quoted its source
as saying that if the media associated with Gusinskii and Berezovskii
continue an all-out information war against Chubais's circle, two
outcomes are possible: either NTV will be weakened, ORT reorganized
and Berezovskii removed from the Security Council; or both Chubais
and Nemtsov will have to leave the government.

"NEZAVISIMAYA GAZETA" SLAMS NEMTSOV ON POLICY TOWARD
ENERGY GIANTS. "Nezavisimaya gazeta" on 30 July charged that a
May presidential decree concerning Gazprom shares, drawn up by
associates of Nemtsov, had damaged the gas monopoly's market
capitalization. Noting that Gazprom shares stopped rising in value
after the decree was signed, the newspaper calculated that the state
had lost some $2 billion over the last two months. In addition, the
paper accused Nemtsov of seeking to undermine Gazprom and its top
executive Rem Vyakhirev while having Boris Brevnov, a close
Nemtsov associate, installed as chairman of the board of the
electricity giant Unified Energy System (see "RFE/RL Newsline," 2
June 1997). The newspaper argued that the recent decision to allow
the electricity giant to issue convertible bonds was orchestrated by
Nemtsov to show that only the "young reformers" in the government
are capable of solving the country's budgetary problems.
"Nezavisimaya gazeta" is partly financed by Berezovskii's LogoVAZ
group.

YELTSIN NAMES CHERNOMYRDIN TO OVERSEE ARMS TRADE...
President Boris Yeltsin on 28 July issued a decree naming Prime
Minister Chernomyrdin to oversee the arms trading company
Rosvooruzhenie and military-technical cooperation with foreign
countries, Russian media reported. The decree subordinates
Rosvooruzhenie directly to the Russian government, according to
Interfax. Its director will be appointed by the president at the prime
minister's recommendation. The decree ends a one-year struggle for
control of the weapons sector, beginning with the dismissal in June
1996 of First Deputy Prime Minister Oleg Soskovets and Yeltsin's
influential bodyguard Aleksandr Korzhakov, who until then had
supervised arms sales. At that time, Chernomyrdin failed to persuade
Yeltsin to replace Rosvooruzhenie's current director, Aleksandr
Kotelkin, with former Deputy Premier Georgii Khizha, according to
"Kommersant-Daily" on 30 July.

...APPEALS TO MILITARY TO SUPPORT REFORMS. In a statement
released by the Kremlin on 29 July, Yeltsin asked the military to
support planned reforms of the armed forces, Russian media
reported. He repeated the promise that wage arrears to servicemen
will be paid by 1 September. Reforms are necessary and will lead to
the "enhancement of the country's military," making military forces
"compact, mobile, and well-equipped," he said. Yeltsin also quoted
the 18th century Russian commander Aleksandr Suvorov's statement
that "victory is the product of skill rather than numbers." The
president wants to keep to the 1 January 1999 deadline to cut the
armed forces to 1.2 million personnel. He said housing will be
constructed and arrangements made for those leaving the service to
receive work "corresponding to their training," even if that meant
sending some abroad to study. He made no mention of his May 1996
decree to form an all-volunteer army by 2000.

CHECHNYA ACCUSES RUSSIA OF SABOTAGING OIL TRANSIT
AGREEMENT... Khozh-Akhmed Yarikhanov, head of the Chechen State
Oil Company Yunko, told journalists in Grozny on 29 July that Russian
agencies are preventing the company from acquiring equipment
needed to repair the Chechen sector of the Baku-Grozny-Tikhoretsk
oil pipeline, Interfax reported on 29 July. Yarikhanov said the
Russian Central Bank has failed to unfreeze the accounts of Yunko's
subsidiaries in Russian banks. He said that under those
circumstances, "I cannot honor the commitments under the
agreement on the pumping of Caspian oil."

...BUT SAYS IT WON'T BREAK OFF ALL CONTACTS. Also on 29 July,
Chechen presidential spokesman Kazbek Khadzhiev said the
suspension of Chechen-Russian talks announced by President Aslan
Maskhadov does not apply to contacts with the Russian government
and Security Council, according to "Nezavisimaya gazeta" on 30 July.
Security Council Secretary Ivan Rybkin told ITAR-TASS that
combined efforts to restore Chechnya's economy "have not stopped
and will not stop for one minute." Commenting on Maskhadov's call
for a full-fledged treaty between Chechnya and the Russian
Federation and for the opening of embassies in Moscow and Grozny,
Russian Foreign Ministry spokesman Valerii Nesterushkin said the
Russian government continues to observe the agreement signed in
summer 1996 in Khasavyurt that postpones a definitive ruling on
Chechnya's political status vis-a-vis the Russian Federation. He added
that Chechnya remains a federation subject.

UPCOMING ROSNEFT PRIVATIZATION NOT TO RESTRICT SHARE
PURCHASES BY FOREIGNERS. Yurii Bespalov, the president of the fully
state-owned oil company Rosneft, has announced that the number of
Rosneft shares that may be purchased by foreign investors will not
be restricted when the company is privatized later this year, Russian
news agencies reported on 29 July. It would be the first oil company
privatization in Russia with no limits on foreign participation. Under
a plan recently approved by the company's board of directors, the
state will not retain a controlling stake in Rosneft, Bespalov said.
Instead, 7.6 percent of Rosneft shares will be sold to company staff, a
51 percent stake will be auctioned in August or September, and the
remaining shares will be sold to investors under terms to be
announced later. Earlier this year, Fuel and Energy Ministry officials
had suggested that the state would keep a controlling stake in
Rosneft.

LEBED CRITICIZES NEMTSOV, SUGGESTS ALLIANCE WITH LUZHKOV
POSSIBLE. Former Security Council Secretary Aleksandr Lebed says
First Deputy Prime Minister Nemtsov has "made too many mistakes"
to be considered a serious contender for the next presidential
election. He told Interfax on 29 July that Nemtsov's planned reform
of payments for housing and municipal services will hurt the poor
far more than the rich, adding that the standard of living should be
raised before housing reform is implemented. With regard to his own
presidential prospects, Lebed said consultations with potential
supporters were under way, and he suggested that Moscow Mayor
Yurii Luzhkov might become one of his allies. Lebed's criticism of the
government's planned housing reform echoes recent comments by
Luzhkov. But in September 1996, the Moscow mayor was one of the
most outspoken critics of the peace plan Lebed negotiated with
Chechen rebel commander Aslan Maskhadov. Luzhkov called the deal
a "bomb under the [Russian] constitution."

BREAD PRICES TO FALL IN KEMEROVO AS GUBERNATORIAL
CAMPAIGN HEATS UP. Kemerovo Governor Aman Tuleev told ITAR-
TASS on 30 July that, thanks to advanced technology in grain
production and processing, bread prices in Kemerovo Oblast will
gradually be reduced by an average of 20 percent beginning in
August. Tuleev was appointed governor by Yeltsin in early July and
will contest an election for that post in October. "Nezavisimaya
gazeta" reported on 30 July that Tuleev's appointment has divided
the left camp in Kemerovo. Four other politicians, all Communists,
have already declared that they will run for governor. Some
formerly staunch supporters of Tuleev now call him a traitor and
believe he will serve the interests of the Kremlin and Moscow
businessmen. Although Tuleev is not a Communist Party member, he
was third on the Communist list for the December 1995
parliamentary elections and supported party leader Gennadii
Zyuganov's presidential bid in 1996.

BORDER GUARDS CRACK DOWN ON ALCOHOL SHIPMENTS FROM
GEORGIA. Over the past few days, Russian border guards have turned
back some 170 alcohol tankers at the frontier between Georgia and
North Ossetia, Russian agencies reported. Border guards have been
fired on with anti-tank missiles and offered bribes of up to $1
million to allow the tankers to enter Russia. Some 550 tankers, each
containing 20 metric tons of alcohol, are currently being refused
entry to Russia from two frontier crossing posts, the head of the
Vladikavkaz frontier district told Interfax on 29 July. Since the
closure of many defense plants in North Ossetia, the manufacture of
fake vodka has become the leading industry in the republic.

TRANSCAUCASUS AND CENTRAL ASIA

RUSSIA UPS ANTE OVER ABKHAZ PEACEKEEPERS. The CIS
peacekeeping force deployed along the border between Abkhazia
and the rest of Georgia will be withdrawn unless Georgia and
Abkhazia formally request that its mandate be prolonged after it
expires on 31 July, Russian Foreign Ministry spokesman Valerii
Nesterushkin told ITAR-TASS on 29 July. According to "Nezavisimaya
gazeta" the next day, the peacekeepers are already training for the
withdrawal. The Georgian parliament has rejected a proposal by
opposition deputies to convene an emergency session to discuss the
peacekeepers' continued presence and has begun its summer recess,
"Rossiiskaya gazeta" reported. The chairman of the Abkhaz
parliament in exile, Tamaz Nadareishvili, said that the 3,000 ethnic
Georgian former Abkhaz police who have been sent to western
Georgia will not automatically cross the border into Abkhazia's Gali
Raion if the peacekeepers withdraw, "Svobodnaya Gruziya" reported
on 29 July.

AZERBAIJANI PRESIDENT IN U.S. Heidar Aliev, meeting with UN
Secretary-General Kofi Annan in New York on 28 July, discussed
ways to alleviate the plight of the Azeris driven from their homes
during the Karabakh conflict. Annan expressed his support for the
deployment of a multinational peacekeeping force under the auspices
of the Organization for Security and Cooperation in Europe, according
to AFP.

TAJIK OPPOSITION UNHAPPY WITH DELAYS IN IMPLEMENTING
AGREEMENTS. The leadership of the United Tajik Opposition has
appealed to UN special envoy to Tajikistan Gerd Merrem to use his
influence to pressure the Tajik government to adhere to agreements
reached in Moscow in June, according to RFE/RL correspondents in
Tajikistan. The 27 July session of the National Reconciliation
Commission was postponed for "technical reasons," meaning the
failure to find housing and office space for members of the UTO
returning to Dushanbe to participate in the commission's work. UTO
leader Said Abdullo Nuri, meeting with Iranian Foreign Minister Ali
Akbar Velayati on 29 July in Tehran, requested that Iran use its
influence to accelerate government efforts at resolving the "technical
problems." Iran is one of the guarantors of the Tajik peace process.

ANOTHER DEMONSTRATION IN KAZAKHSTAN. About 400 people
gathered in the northern city of Kokchetau on 29 July to protest
living conditions, ITAR-TASS reported. They called for an end to the
reform process, which, they say, has had little effect in their area.
The news agency reports that every fourth person in Kokchetau is
without employment and that every third cannot pay for housing
and utilities. Pensioners are only now receiving their March and
April payments. The situation grew worse after Kokchetau Oblast
was merged with Northern Kazakhstan Oblast earlier this year.
Kokchetau city was subsequently deprived of the funding it had
previously received as a regional center.

US COMPANY INVESTS IN KAZAKH POWER. The U.S. company A.E.S.
Suntry Power has reached agreement with the Kazakh government
on concession rights to the Shulbinsk and Ust-Kamenogorsk
hydroelectric plants, Interfax reported on 29 July. The U.S. company
plans to invest about $600 million in the plants, which, according to a
Kazakh official, are in a "deplorable state." A.E.S. bought Kazakhstan's
Ekibastuz thermal power plant in August 1996.

SHELL OIL SHOWS INTEREST IN TURKMEN HYDROCARBONS. The U.S.
company Shell Oil has sent a letter to President Saparmurat Niyazov
expressing the company's interest in participating in projects to
develop Turkmenistan's "legendary" hydrocarbon resources, ITAR-
TASS reported on 29 July. The letter also noted that, because of its
geographical location, Turkmenistan was in the "unique position" to
supply several markets. Shell also referred to the potential of
Caspian Shelf fields. "Nezavisimaya gazeta" on 30 July quoted
Niyazov as saying that Turkmenistan intends to hold a tender in the
U.S. for for exploitation of the disputed Kyapaz field of the Caspian
the Turkmen call Serdar. Azerbaijani and Russian oil companies
signed an agreement earlier in July on the joint exploitation of the
deposit.

UZBEK ECONOMIC DATA. President Islam Karimov announced on 29
July that in the first six months of this year, industrial output
increased by 5.4 percent and agricultural production by 22.8 percent,
Interfax reported. Transportation and communications operations
rose by 1.8 percent, construction by 1 percent, retail commodity
turnover by 13.5 percent, and services by 18.1 percent. Karimov also
pointed out that while GDP was up by only 1.6 percent in 1996, it
had already grown by 3.9 percent in the first six months of this year.
Inflation decreased from 13 percent in December 1996 to 2.9 percent
in May 1997 and consumer prices fell by 3.1 percent in June. While
some international financial organizations predicted average monthly
inflation at 7 percent, the rate for January to June 1997 was 3.5
percent.

PLAINTIFF IN KYRGYZ SLANDER CASE APPEALS TO SUPREME COURT.
The Procurator's Office and plaintiff Dastan Sarygulov on 29 July
appealed to the Supreme Court to enforce the original verdict against
four journalists for the Kyrgyz weekly newspaper "Res Publica,"
according to RFE/RL correspondents in Bishkek. In May, two
journalists for "Res Publica" were sentenced to 18 months in jail and
two others barred from practicing journalism for the same period
because of accusations printed against Sarygulov in their newspaper.
The verdict against the journalists was overturned in June by a
Bishkek court, which revoked the sentences of three of the
journalists and ruled that editor-in-chief Zamira Sydykova would
serve her sentence in a penal colony rather than in jail.





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