We are always the same age inside. - Gertrude Stein
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 1, No. 85, Part I, 31 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

*SVYAZINVEST PRIVATIZATION DEAL SIGNED


*THREE KILLED BY BOMB IN GROZNY


*GEORGIA EQUIVOCAL OVER PEACEKEEPERS

End Note
NO LIGHT AT THE END OF THE PIPELINE

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RUSSIA

SVYAZINVEST PRIVATIZATION DEAL SIGNED. Russian Federal
Property Fund Chairman Igor Lipkin and a proxy representing the
Cyprus-based company Mustcom Ltd. on 30 July signed an
agreement on the sale of 25 percent plus one share in Svyazinvest
for $1.875 billion. Mustcom was set up by a consortium including
Oneksimbank, Deutsche Morgan Grenfell, and George Soros's Quantum
Fund (see "RFE/RL Newsline," 28-30 July 1997). The consortium must
pay at least half of the sale price to the Russian state budget within
15 days of signing the agreement and the other half within 75 days,
according to Interfax. State Property Committee Chairman Alfred
Kokh says the budget has already received the first $400 million in
proceeds from the Svyazinvest sale. Those funds were submitted by
the winning consortium as a deposit for participating in the 25 July
auction.

CHUBAIS SAYS YELTSIN SATISFIED WITH DEAL. After flying to
Samara Oblast to brief President Boris Yeltsin on the Svyazinvest
sale, First Deputy Prime Minister Anatolii Chubais announced on 30
July that Yeltsin has approved the way the auction was handled.
According to Chubais, the president is satisfied that the Svyazinvest
auction was conducted in accordance with "strict rules" laid down in
advance, Russian news agencies reported. Chubais said he had told
Yeltsin that the proceeds from the sale will allow the government to
keep its promise to pay all wage arrears to state employees by the
end of the year, "Kommersant-Daily" reported on 31 July.

POTANIN ANNOUNCES PLANS FOR TELECOMMUNICATIONS GIANT.
Oneksimbank president Vladimir Potanin told reporters on 31 July
that the consortium that acquired the Svyazinvest stake will hold on
to the shares for at least two years and will make major investments
in the company, RFE/RL's Moscow bureau reported. Critics of the
Svyazinvest sale have accused the consortium of planning to re-sell
the shares for a profit within months rather than investing in
upgrading Russia's telecommunications system. On 30 July, Potanin
and Svyazinvest Director-General Nail Ismailov issued a statement
outlining plans for the development of the telecommunications giant,
Russian news agencies reported. The plans include installing more
phone lines in Russia, upgrading the phone system with digital and
cellular technology, introducing a flexible rate system for phone
charges, and carrying out an audit of all Svyazinvest subsidiaries.

GUSINSKII TO SUE POTANIN. Vladimir Gusinskii, the founder of Most
Bank and current head of the Media-Most group, will sue Potanin for
slander, RFE/RL's Moscow bureau reported on 31 July. A statement
from Gusinskii was read out to reporters by Vyacheslav Kostikov,
Media-Most's deputy director-general of public relations. (Kostikov
was Yeltsin's press secretary from 1992 until March 1995.) Contrary
to media reports linking the Most group to the consortium that
submitted the losing bid for Svyazinvest, Gusinskii's statement
denied that the Most group had participated in the auction. The
statement also dismissed as a "lie" Potanin's claim that Gusinskii tried
to strike a back-room deal to keep Oneksimbank from bidding for
Svyazinvest (see "RFE/RL Newsline, 30 July 1997). Kostikov did not
confirm media reports that shortly before the auction, Gusinskii flew
to France along with Potanin and Security Council Deputy Secretary
Boris Berezovskii to meet with Chubais.

NEWSPAPERS CLOSE TO ONEKSIMBANK VIEW THE BATTLE...
"Izvestiya" on 31 July argued that the winning consortium acquired
the Svyazinvest stake for a simple reason: they offered more money
for the shares than did their rivals. Another "Izvestiya" commentary
the same day said the sale should be considered not a victory for
Oneksimbank, but a victory for the government's "team of reformers
in the battle against the feudal financiers." Meanwhile, an unsigned
commentary in "Komsomolskaya pravda" on 30 July denounced the
"information war" carried out against the sale on the networks
Russian Public Television (ORT) and NTV. The paper slammed
Berezovskii and Gusinskii -- "the owners of ORT and NTV" -- for
trying to strike a deal with Chubais shortly before the Svyazinvest
auction. However, "Komsomolskaya pravda" did not report that by
his own admission, Potanin flew to France with Gusinskii and
Berezovskii to attend the meeting with Chubais. Oneksimbank is a
major shareholder in "Izvestiya" and "Komsomolskaya pravda."

...WHILE "SEGODNYA" KEEPS UP ATTACK ON NEMTSOV. The
newspaper "Segodnya" on 30 July published two articles sharply
critical of the Svyazinvest deal and First Deputy Prime Minister Boris
Nemtsov. The newspaper, which is owned by Gusinskii's Media-Most,
ridiculed Nemtsov's claim that the Svyazinvest sale had been an
"honest auction." "Segodnya" also alleged that Nemtsov is planning to
run for president in 2000 and that his need for financial backers
underlies his newfound "passion for [State Property Committee
Chairman] Kokh and Potanin." In recent days, Nemtsov has criticized
the losers of the Svyazinvest auction for "going into hysterics on
television."

SELEZNEV CRITICIZES SVYAZINVEST DEAL, DEFENDS DUMA. State
Duma Speaker Gennadii Seleznev has charged that by selling the
Svyazinvest stake, Russia has lost its "information independence,"
Interfax reported on 30 July. He added that Russia has become a
"bandit country." Seleznev also discounted recent criticism of the
Duma's activities by Yeltsin and officials in the presidential
administration. He noted that in the last week of its spring session
alone, the Duma had passed 31 laws that were later approved by the
Federation Council and that Yeltsin has signed 18 of those laws.
Seleznev accused the president of vetoing the controversial law on
religious organizations "under pressure from the [U.S.] Capitol and the
Vatican."

NEXT BATTLE IN BANK WAR TO BE FOUGHT OVER NORILSK NICKEL.
State Property Committee Chairman Kokh on 30 July predicted that
another scandal will erupt over the upcoming sale of a 38 percent
stake in Norilsk Nickel, Interfax reported. He added, "None of our
auctions have passed without screams or fits of hysteria."
"Kommersant-Daily" predicted on 30 July that Berezovskii and
Potanin will clash over the Norilsk sale, planned for 5 August.
"Nezavisimaya gazeta" -- partly financed by Berezovskii's LogoVAZ
group -- on 31 July charged that the conditions for the Norilsk
auction violate Russian laws and that the starting price for the stake
is far too low. Oneksimbank acquired a 38 percent stake in Norilsk in
November 1995 in exchange for a $170 million loan to the
government. The Audit Chamber has already called for a halt to the
Norilsk auction (see "RFE/RL Newsline," 22 and 28 July 1997).

THREE KILLED BY BOMB IN GROZNY. Three people were killed on 30
July when a car bomb exploded outside the Grozny headquarters of
radical field commander Salman Raduev. Raduev, who escaped
unhurt, blamed the attack on "Russian special services," according to
Interfax. The car used in the attack is reported to have had Dagestani
license plates. Raduev achieved notoriety for his leading role in the
Kizlyar hostage-taking in January 1996. He was reported killed in a
clash with rival Chechen units in March 1996 but resurfaced four
months later. He has since claimed responsibility for several terrorist
attacks in Russia.

YELTSIN WANTS POWER-SHARING TREATY WITH CHECHNYA. Russian
President Yeltsin on 30 July said that he plans to meet with Chechen
President Aslan Maskhadov at an unspecified date, Russian agencies
reported. Yeltsin told journalists at his vacation residence in Samara
Oblast that he plans to discuss with Maskhadov the reconstruction of
the Chechen economy and the neutralization of radical Chechen
political forces. Yeltsin proposed signing a power-sharing agreement
with Grozny similar to those concluded with Tatarstan and other
federation subjects on condition that Chechnya accepts the status of a
constituent republic of the Russian Federation, according to NTV.
Yeltsin added that "we are not ready" to sign a fully-fledged treaty
with Chechnya comparable to those concluded between Russia and
France or the U.S.

REFUGEE CAMP RAIDED IN NORTH OSSETIA. Some 1,000 men on 29
July attacked a makeshift settlement housing Ingush refugees in
North Ossetia's disputed Prigorodnyi Raion, Russian media reported.
The attackers, some of whom were armed, beat up several dozen
refugees, burned 73 trailers, and tried to lynch seven Ingush. A
Russian police patrol intervened and escorted the Ingush back to
Ingushetia. Ingush President Ruslan Aushev characterized the
attackers as a "drunken mob, probably encouraged by the slogans of
certain members of the Ossetian political elite." He again appealed to
Yeltsin to impose direct presidential rule on Prigorodnyi Raion on the
grounds that the North Ossetian leadership cannot guarantee stability
there. "Nezavisimaya gazeta" on 31 July quoted North Ossetian
Deputy Parliamentary Chairman Ermak Dzansolov as saying the
imposition of presidential rule would violate both the Russian and
the North Ossetian constitutions.

LEBED SLAMS MILITARY REFORM PLANS... Former Security Council
Secretary Aleksandr Lebed has charged that a "narrow circle" of
officials who lack the expertise to deal with the problems of the
Russian armed forces have made recent key decisions concerning
military reform plans, RFE/RL's Moscow bureau reported on 30 July.
He named Deputy Defense Minister Andrei Kokoshin, the highest-
ranking civilian in the Defense Ministry, and Col.-Gen. Valerii
Manilov, a senior officer at the General Staff, as two of the officials
who drafted the plans. At the same time, Lebed called Defense
Minister Igor Sergeev a "worthy and sensible person," according to
the 31 July "Nezavisimaya gazeta." But he did criticize Duma Defense
Committee Chairman Lev Rokhlin for not letting Lebed's Honor and
Motherland movement join Rokhlin's new movement to support the
military. Several influential Communists who have long criticized
Lebed have already joined Rokhlin's movement.

...ATTACKS BEREZOVSKII. At the same press conference, Lebed
blamed Security Council Deputy Secretary Berezovskii for the war in
Chechnya and said Berezovskii had profited from the bloodshed
there, RFE/RL's Moscow bureau reported on 30 July. According to
Radio Rossii, Lebed added that after he had negotiated the peace deal
with Chechen chief of staff Aslan Maskhadov in September 1996,
Berezovskii approached Lebed and accused him of spoiling "a very
good business." Berezovskii was appointed to the Security Council
soon after Lebed's ouster in October. Meanwhile, "Moskovskii
komsomolets" charged on 30 July that since May 1996, some $98
million has been channeled from the state-owned airline Aeroflot to
the Swiss company Andava, which Berezovskii owns. The paper
noted that Berezovskii's longtime associate Nikolai Glushkov, co-
founder and acting chairman of LogoVAZ, joined the Aeroflot board
of directors in November 1995 and soon became the airline's chief
financial officer.

RUSSIAN SPY IN JAPAN... The Tokyo Metropolitan Police Department
and Interpol are searching for an alleged Russian spy of Asian
descent who is believed to have spied on Japan for Moscow for 30
years . The man assumed the identity of Ichiro Kuroba, who
disappeared in 1966, and even married a Japanese woman in 1976.
Japanese authorities believe the alleged spy was a secretary at the
Russian Embassy in Tokyo who was transferred home in early July.
Japanese Prime Minister Ryutaro Hashimoto said the news "will not
have a favorable impact on bilateral relations."

...FOREIGN SPIES IN RUSSIA. Platon Obukhov, who is accused of
spying for Britain, has been ordered by a Moscow court to undergo
medical treatment in Moscow before facing charges, according to the
Russian press. A forensic psychiatric examination showed Obukhov to
be insane. Obukhov's lawyer argues his client is unfit to stand trial.
State prosecutors, however, claim Obukhov was responsible for his
actions when he committed them. Obukhov could be imprisoned for
12-20 years for state treason. Meanwhile, Russia's
counterintelligence service (FSB) announced that over the last three
years it has discovered 1,200 foreign intelligence officers working in
Russia, of whom 52 were expelled. It also said it had tracked down
46 Russian citizens working for foreign intelligence services, Interfax
reported on 30 July.

TULEEV SAYS FUNDS INTENDED FOR KEMEROVO DISAPPEARED.
Kemerovo Governor Aman Tuleev says 300 billion rubles ($52
million) that the federal government promised to transfer to
Kemerovo did not reach the oblast and now cannot be accounted for.
In an interview with RFE/RL's Moscow bureau on 30 July, Tuleev
said the president, prime minister, and First Deputy Prime Minister
Chubais had promised to allocate the money, which was meant to pay
wage arrears and to fund preparations for the coming winter.
However, according to Tuleev, during Chubais's recent vacation
"certain malicious forces" in Moscow misappropriated the funds. He
warned that if the money is not allocated, Kemerovo will face
widespread social protests in the fall. Trade unions in Kemerovo
called off plans to hold an oblast-wide strike on 11 July, largely
because of Tuleev's appointment as governor and the federal
government's promises that funds would be transferred to the oblast
soon.

KRASNOYARSK ENVIRONMENTALISTS TO APPEAL TO
CONSTITUTIONAL COURT. Environmentalists in Krasnoyarsk Krai,
who seek to hold a referendum on halting construction of a nuclear
waste processing plant in Krasnoyarsk-26, have announced they will
take their battle to the Constitutional Court, ITAR-TASS reported on
31 July. Earlier this year, environmental groups gathered more than
100,000 signatures in favor of holding a referendum on further
construction of the plant, the first part of which has already been
built. However, the krai legislature voted in April against a popular
vote on the issue (see RFE/RL Newsline, 24 April 1997). The
environmentalists have since lost appeals to the Krasnoyarsk Krai
court and the Supreme Court.

TRANSCAUCASUS AND CENTRAL ASIA

GEORGIA EQUIVOCAL OVER PEACEKEEPERS. Speaking on national
radio on 30 July, Georgian Foreign Minister Irakli Menagharishvili
said the Georgian leadership does not think that the mandate of the
CIS peacekeeping force in Abkhazia should be extended beyond 31
July, when it is due to expire. But he stressed this does not mean that
Georgia is calling for the peacekeepers' withdrawal, Reuters reported.
Menagharishvili told journalists that Georgia still wants the
peacekeepers' mandate broadened to enable them to protect ethnic
Georgians who wish to return to their abandoned homes in Abkhazia.
He also denied media speculation that the Georgian leadership is split
over the issue of whether the peacekeepers should remain, according
to Interfax. In Moscow, Russian Foreign Ministry special envoy for
Abkhazia Gennadii Ilichev again said that the peacekeeping force will
be withdrawn after 31 July unless Georgia formally requests that its
mandate be extended.

ARMENIAN EDITORS CALL FOR CLEMENCY FOR OPPOSITION
ACTIVIST. Directors of independent news agencies and editors of
nine Armenian newspapers, including the government-funded
Armenian language daily and several opposition publications, have
called on President Levon Ter-Petrossyan to pardon Dashnak party
activist Hrant Markaryan, RFE/RL's Yerevan bureau reported on 30
July. In a letter published in the Dashnak party newspaper "Hayots
ashkhar," the journalists argue that the release of Markaryan would
help overcome the "polarization of political life" in Armenia and
expedite national reconciliation. An Iranian citizen, Markaryan
emigrated to Armenia in1990 and distinguished himself fighting as a
volunteer in Nagorno-Karabakh. He was arrested together with other
Dashnak party members in December 1994 and sentenced last year
to five years' imprisonment on charges of illegal possession of
weapons.

AZERBAIJANI PRESIDENT UPBEAT OVER BAKU-CEYHAN PIPELINE.
Heidar Aliev is confident that the proposed pipeline for exporting
Azerbaijan's Caspian oil from Baku to the Turkish Mediterranean
terminal at Ceyhan "will become a reality," the "Turkish Daily News"
reported on 31 July. During his first full day of engagements in
Washington, Aliev met with Congressional leaders and attended a
reception with U.S. Deputy Secretary of State Strobe Talbott, who
predicted that a settlement of the Karabakh conflict could be reached
by the end of this year.

KYRGYZSTAN REGISTERS LARGEST PRODUCTION INCREASE IN CIS. In
a CIS Interstate Statistics Committee report on industrial production
from January to June 1997, Kyrgyzstan came first ahead of the 11
other CIS countries, Interfax reported on 30 July. Kyrgyzstan's
industrial production rose by 28.8 percent during that period.
Azerbaijan, Belarus, Georgia, Kazakhstan, Russia, and Uzbekistan, all
registered increases, while the other five -- Armenia, Moldova,
Ukraine, Tajikistan, and Turkmenistan -- saw declines in production.
The report states that the largest decrease was in Turkmenistan
(according to the Turkmen National Statistics Committee, industrial
production dropped by 35.2 percent -- see also below). Kyrgyzstan
also showed a 6.8 percent increase in GDP but ranked behind Georgia
(14.7 percent increase) and Belarus (11 percent).

TURKMEN STATE COUNCIL DISCUSSES ECONOMIC SITUATION.
Meanwhile, the Turkmen State Council met on 30 July to examine the
country's economic situation in the first half of 1997, according to
RFE/RL correspondents in Ashgabat. It was announced that the
output of the cotton-ginning industry dropped to 20.7 percent of its
level in the same period last year, while the refusal to supply other
CIS countries with gas because of large outstanding debts led to a
sharp decrease in gas exports (down 57.7 percent on the 1996
figure). In addition, only 53 percent of the target figure for grain
production in 1997 was met. President Saparmurat Niyazov called
for full use of the country's resources to combat this trend. On a
positive note, he commented that prices and the national currency
have stabilized. He also emphasized the need to meet the cotton
quota of 1.4 million tons by 15 October.

DEMONSTRATION IN KAZAKH CAPITAL. Following a demonstration in
the northern city of Kokchetau (see "RFE/RL Newsline," 30 July
1997), some 400 pensioners gathered in front of the parliament
building in Almaty to protest pension arrears and hikes in housing
and utility costs, RFE/RL correspondents in the capital reported.
Members of the parliament's lower house invited representatives of
the demonstrators to enter the building to discuss the matter. No
information is available on that meeting.

END NOTE

NO LIGHT AT THE END OF THE PIPELINE

by Paul Goble

        Washington's decision not to oppose Western involvement in an
Iranian pipeline project fundamentally changes the geopolitical
situation in Eurasia even if it is unlikely to lead to a new outflow of
natural gas anytime soon. U.S. officials said recently that Washington
has concluded it has no legal basis for objecting to Western
participation in the development of a pipeline system to carry
Turkmenistan natural gas across Iran to Turkey. They argued that
the principle beneficiaries of the pipeline would be Turkmenistan
and Turkey, rather than Iran. Therefore, a White House
spokeswoman said, the decision in no way represents a change in
policy or any signal regarding that policy."
        But despite such denials, the decision is likely to be seen across
the region as a major shift away from the U.S. policy of seeking to
isolate Iran, long identified as a sponsor of international terrorism,
by imposing sanctions on any firm doing business there. That
perception, in itself, will have a significant, if sometimes
contradictory, impact on Iran, on Iran's relations with its neighbors,
and on Russian relations with the Caucasus and Central Asia and with
the U.S.
        For Iran, Washington's decision represents both an important
concession from its chief opponent on the international scene and an
equally strong stimulus to continue the more moderate path it has
pursued since presidential elections last spring. While explicitly
limited to the current case, the decision will inevitably trigger
expectations that Washington will become even more forthcoming
and will curtail further the U.S. effort to keep the Europeans in line
on the issue of isolating Iran. If such expectations prompt Iranian
leaders to move toward a more moderate course, the decision could
herald a fundamental change in relations between Iran and the rest
of the world on a broad range of issues.
        Even more significant than its likely impact on the Iranians
themselves is the effect the decision is bound to have on Iran's
relationship with other countries in the region. Few countries in the
Middle East, Central Asia, or the Caucasus have been willing to follow
Tehran's ideological lead, but all the countries in those regions have
wanted to maintain good relations with Iran because of both its size
and its location. Many have felt constrained in pursuing such ties by
the vehemence of U.S. opposition to the Iranian authorities. The
latest U.S. decision is likely to encourage some countries to step up
their efforts in that direction.
        But perhaps the most important consequence of Washington's
decision will be its impact on Moscow's ability to maintain its
influence over the former Soviet republics that are now independent
countries in the Caucasus and Central Asia.
        Many experts have pointed out that those eight countries
would be far more independent of Moscow today if they had been
able to export across Iran. But the radicalism of the Iranian
authorities and U.S. opposition to it has limited their ability to do so.
Thus, U.S. efforts to isolate Tehran, unintentionally had the effect of
blocking efforts by those countries to pursue a more independent
line. That served Moscow's geopolitical purposes and also helped
explain why the Russians have provided military and even nuclear
technology to the Iranian authorities, despite repeated U.S.
objections.
        Consequently, this shift in U.S. policy, reflecting Washington's
desire to gain access to the enormous oil and gas reserves of the
Caspian Sea basin, may appear to some in Moscow to be a direct
challenge to Russian geopolitical interests. Past and present Russian
aid to Tehran may give Moscow the leverage in Iran to block the
flow of Central Asian or Caucasian oil and gas across that country to
the West. But any Russian efforts in that direction are likely to
exacerbate divisions within the Iranian leadership. Iranian radicals
who will see the construction of such a pipeline and any further
rapprochement with the West as a threat to their vision of the future
may agree with the Russians.
        Such conclusions may thus presage a number of shifts in the
road and the pipeline before any gas begins to come across Iran to
the West.





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