History is made out of the failures and heroism of each insignificant moment. - Franz Kafka
RFE/RL NEWSLINE

RFE/RL NEWSLINE, Vol 1, No. 88, Part I, 5 August 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

* CHERNOMYRDIN CALLS FOR HALTING NORILSK NICKEL SALE AT
ELEVENTH HOUR

* NEMTSOV DEMANDS INQUIRY INTO WIRETAP

* GEORGIAN, ABKHAZ PRESIDENTS AGREE TO TALKS

End Note : HOW YELTSIN DECIDES

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RUSSIA

CHERNOMYRDIN CALLS FOR HALTING NORILSK NICKEL SALE AT
ELEVENTH HOUR. Citing an appeal from the Procurator-General's
Office, Prime Minister Viktor Chernomyrdin on 4 August ordered the
State Property Committee and Russian Federal Property Fund to
postpone the sale of a 38 percent stake in Norilsk Nickel. The auction
was scheduled to take place on 5 August. According to Reuters, State
Property Committee Chairman Alfred Kokh on 5 August agreed that
the Norilsk sale should be postponed. However, Reuters said that it is
not clear whether a government official or an Oneksimbank
representative will cast the deciding vote at a 5 August meeting of a
commission with the power to postpone the auction. Oneksimbank
acquired management rights over the 38 percent stake in November
1995 in exchange for a $170 million loan to the government. Critics
have said the planned sale was stacked in Oneksimbank's favor (see
"RFE/RL Newsline," 22, 28, 31 July 1997).

FSB CHECKING SVYAZINVEST SALE. The Russian Federal Property
Fund on 1 August submitted documents concerning the Cyprus-based
Mustcom, Ltd. to the Federal Security Service (FSB), "Kommersant-
Daily" reported on 2 August. The Mustcom consortium, which
includes Oneksimbank, Deutsche Morgan Grenfell and George Soros's
Quantum Fund, won the recent auction for a stake of 25 percent, plus
one share in the telecommunications giant Svyazinvest (see "RFE/RL
Newsline," 28 July-1 August 1997). The FSB has been given a month
to check the documents concerning Mustcom and the Svyazinvest
sale. "Kommersant-Daily" said that under a December 1993
presidential decree, if a privatization auction is won by foreign
companies, information about those companies must be submitted to
the government and the security service. An FSB statement released
on 1 August indicated that so far no irregularities connected to the
Svyazinvest sale have been uncovered, Interfax reported.

WEEKLY ACCUSES NEMTSOV OF HOLDING UP PRESIDENTIAL DECREE...
The weekly "Novaya gazeta" has charged that First Deputy Prime
Minister Boris Nemtsov inappropriately delayed the publication of a
presidential decree. On 4 August the paper published an alleged
transcript of a May telephone conversation between Nemtsov and
the businessman Sergei Lisovskii. (Lisovskii was one of two workers
on President Boris Yeltsin's campaign detained in June 1996 while
carrying more than $500,000 out of government headquarters. See
"RFE/RL Newsline," 8 April 1997.) In the transcript, Nemtsov
demands that $100,000 in royalties for his book "The Provincial" be
transferred to his bank account quickly. He says he is holding up the
publication of a presidential decree requiring officials to submit
income and property declarations, explaining that he needs to
declare the book royalties so as not to be accused later of trying to
hide the income. "Novaya gazeta" argued that Nemtsov acted out of
personal considerations, fearing a scandal that could damage his
future political career.

...NEMTSOV DEMANDS INQUIRY INTO WIRETAP. Appearing on Ekho
Moskvy, Nemtsov's lawyer Vitalii Khavkin confirmed that a
telephone conversation between Nemtsov and Lisovskii took place
but said Nemtsov cannot remember what was discussed. Nemtsov
has demanded that the Procurator General's Office investigate how
his telephone conversation with Lisovskii was recorded, how the
recording reached "Novaya gazeta," and whether that recording had
been tampered with, Russian news agencies reported on 4 August.
Nemtsov argued that the tap on his telephone was an illegal violation
of his privacy rights. In an article accompanying the transcript,
"Novaya gazeta" journalist Aleksandr Minkin acknowledged he did
not know whether Nemtsov's telephone conversation had been
recorded legally, but he argued that "machinations with presidential
decrees" are a matter of state importance, not Nemtsov's private
affair. Meanwhile, Nemtsov departed Moscow on 5 August for a two-
and-a-half week vacation in Sochi.

MORE DETAILS ABOUT RUBLE REDENOMINATION. Central Bank
Chairman Sergei Dubinin on 4 August said the ruble redenomination
planned for 1 January 1998 marks the "end of the era of
hyperinflation," RFE/RL's Moscow bureau reported. Dubinin and First
Deputy Finance Minister Vladimir Petrov predicted the ruble will not
decline against the dollar when the redenomination takes effect and
three zeroes are knocked off the ruble, Interfax reported. Dubinin
also said new banknotes and coins have already been printed and
minted. The new banknotes will be worth 5, 10, 50, 100 and 500
rubles, while the new coins will have face values of 1, 5, 10 and 50
kopecks as well as 1, 2, and 5 rubles. Dubinin and other senior
officials, including First Deputy Prime Minister Anatolii Chubais and
Deputy Presidential Chief of Staff Aleksandr Livshits, all echoed
Yeltsin's promise that the currency reform will not hurt ordinary
people.

PATRIARCH TO DISCUSS RELIGION LAW WITH PRESIDENT. Patriarch
of Moscow and All Russia Aleksii II says he and Yeltsin spoke by
telephone on 1 August and agreed to meet on 6 August to discuss
amendments to the controversial law on religious organizations.
Yeltsin recently vetoed that law despite appeals to sign it from
Aleksii and other Russian Orthodox Church leaders (see "RFE/RL
Newsline," 23-25 July 1997). In an interview published in "Izvestiya"
on 5 August, Aleksii denied that the original version of the law was
discriminatory. For instance, he argued that Catholicism cannot be
considered a "traditional" religion for today's Russia, because before
the 1917 revolution, Catholics lived primarily in the part of the
Russian empire that is now Poland. The patriarch also told "Izvestiya"
that he has not met with leaders of the Communist Party for two
years. Communist Party leader Gennadii Zyuganov has frequently
called for supporting the church and blasted Yeltsin's veto of the
religion law.

ROKHLIN'S MOVEMENT MAY DEMAND RESIGNATION OF PRESIDENT,
PRIME MINISTER. State Duma Defense Committee Chairman Lev
Rokhlin says that at its founding congress in September, his
movement to support the armed forces and defense industry may
call for the resignation of the president and prime minister and the
formation of a "government of national trust," RFE/RL's Moscow
bureau reported on 4 August. These demands echo positions long
taken by the Communist opposition, which has several
representatives on the organizing committee of Rokhlin's movement.
Although Rokhlin may be expelled from the Our Home Is Russia
Duma faction in September, he cannot be removed from his Defense
Committee post as long as he has the support of Communists and
allied groups who have a majority in the Duma. According to the 5
August "Kommersant-Daily," Rokhlin also warned that Russia is
becoming a police state as the army's ground forces are downsized
and the Interior Ministry troops increased.

STATE RADIO RESTRUCTURED. Yeltsin signed a decree on 4 August
"liquidating" state-owned Radio-1 and merging the stations Mayak
and Yunost into one station which will be called Mayak, RFE/RL's
Moscow bureau reported. The move was made because of funding
problems. The Russian government was able to pay out only 5
percent of finances planned for radio stations this year. The new
system is expected to save 200 billion rubles ($34 million). The most
popular state-owned station, Radio Rossii, will continue to broadcast
on channel 1, with the new Mayak on channel 2. Channel 3 will be
used by state-owned and private radio stations to be announced
later.

CHECHNYA ESTIMATES FINANCIAL DAMAGE FROM WAR. Chechen
first deputy prime minister Musa Doshukaev told journalists in
Grozny on 4 August that the "moral and material" damage inflicted
on Chechnya during the war of 1994-6 amounts to 1,500 trillion
rubles ($25.8 billion), Interfax reported. Doshukaev said this figure
had been calculated on the basis of guidelines from the Organization
for Security and Cooperation in Europe (OSCE), and that "moral
damage" accounts for approximately half of the total. Also on 4
August, Shmidt Dzoblaev, secretary-general of the Assembly of
National Democratic and Patriotic Forces of Russia, was released by
his Chechen captors, Russian media reported. Dzoblaev was a
member of a North Ossetian delegation abducted in Chechnya in
December 1996. The delegation was en route for talks with Chechen
leaders in Grozny.

EXPERIMENTAL LAND-FOR-DEBT EXCHANGE IMPLEMENTED IN ST.
PETERSBURG. For the first time, a Russian city has paid off its debt to
an enterprise by granting that enterprise full ownership rights to the
land on which it is based, an RFE/RL correspondent in St. Petersburg
reported on 1 August. Through a complicated procedure involving a
credit from the commercial bank Baltoneksimbank, the Kirov factory
received the land underneath its buildings as compensation for St.
Petersburg's 12.9 billion ruble ($2.2 million) debt to the factory. The
experimental program suits both the city, which lacks the funds to
pay its debts, and companies, which lack the cash to purchase the
land plots underneath their buildings but view the lack of full land
ownership rights as a barrier to foreign investment. According to the
2 August "Kommersant-Daily," some 50 other enterprises in St.
Petersburg plan to take advantage of the experimental scheme.

INDONESIA TO BUY RUSSIAN AIRCRAFT. State Planning Minister
Ginanjar Kartasasmita announced on 5 August that his country will
purchase 12 Russian Sukhoi-30 fighter planes and 8 Mi-17
helicopters, according to ITAR-TASS. Negotiations for buying the
planes began after Indonesia cancelled plans to buy nine American
F-16 fighters in early June because of human rights criticism from
members of the U.S. Congress over East Timor, which Indonesia
annexed in 1976. Indonesia will pay for the aircraft with goods,
notably palm oil, coffee and rubber.


TRANSCAUCASUS AND CENTRAL ASIA


GEORGIAN, ABKHAZ PRESIDENTS AGREE TO TALKS. On 4 August, in
his weekly radio address, Eduard Shevardnadze again expressed his
readiness to meet with Abkhaz President Vladislav Ardzinba and
Boris Yeltsin, Russian and Western agencies reported. Shevardnadze
termed Yeltsin's proposals on resolving the Abkhaz conflict
"absolutely acceptable" to the Georgian government. These proposals
give Abkhazia broad autonomy within "a unified and indivisible
Georgian state." Ardzinba likewise accepted Yeltsin's invitation to
trilateral talks, but said the only acceptable basis for discussion is the
protocol drafted by the Russian Foreign Ministry to which he agreed
in talks in Moscow in June. Georgia then demanded changes to the
text which Abkhazia rejected as unacceptable. Also on 4 August, the
chairman of the Abkhaz parliament in exile, Tamaz Nadareishvili,
said in Tbilisi that Abkhaz guerrillas had murdered 14 ethnic
Georgians in Abkhazia's Kodori gorge on 3 August, Interfax reported.

ARMENIAN MAJORITY PARTY LEADER OUTLINES STRATEGY. On 2
August chairman Vano Siradeghyan told the board of the Armenian
Pan-National Movement -- the senior party in the ruling
Hanrapetutyun (Republic) bloc -- that his top priority is to "restore
people's trust" in the party before the parliamentary elections due in
July, 1999, an RFE/RL correspondent in Yerevan reported on 4
August. Siradeghyan, who was elected chairman of the board of the
Movement in early July, but is not a parliament deputy, said the
Movement must form a "new bloc" with its allies to win the elections,
but did not specify whether the Movement will leave the Republic
bloc and set up a new alliance. He hinted that the Shamiram party --
the second largest within parliament -- and the Union of
Industrialists and Businessmen will be incorporated into the
Armenian Pan-National Movement "in the coming months."

ARMENIAN, TURKISH BUSINESSMEN DISCUSS ECONOMIC
COOPERATION. Meeting in Yerevan on 1-2 August, a group of Turkish
business figures signed a protocol with the Union of Industrialists
and Businessmen of Armenia to set up a Turkish trading center in
Armenia and expand cooperation in banking, investment and textile
production, Armenian agencies reported. The signatories also will
conduct surveys on the viability of building a gas pipeline through
Armenia to Turkey, and the use of Armenian territory as a transit
zone between Turkey and the CIS. The possibility of creating a free
economic zone in the Armenian regions of Armavir and Shirak also
was discussed. Participants estimated that opening a frontier post
between the two countries would facilitate the growth of annual
bilateral trade to half a billion U.S. dollars. Turkish leaders say a
frontier crossing cannot be opened until a solution is found to the
Karabakh conflict.

AZERBAIJAN TO REFORM BANKING SECTOR, CREATE INTERBANK
CURRENCY MARKET. The Azerbaijani government plans to introduce
more stringent banking regulations, including raising the minimum
capital requirement from $600,000 to $1.2 million by the end of this
year, the "Wall Street Journal" reported on 5 August. A second
program drafted in conjunction with the IMF and the World Bank
will expedite the privatization of those state-owned banks deemed
viable. At the same time, the issuing of licenses to foreign banks has
been temporarily suspended. The Azerbaijani government also plans
to create an interbank currency market in anticipation that oil
revenues will create favorable conditions for full convertibility of the
manat. The Multilateral Investment Guarantee Agency has
announced the extension of its guarantees of investments into 11
more countries, including Azerbaijan and Georgia, in 1997, an RFE/RL
correspondent in Washington reported on 4 August.

EXPLOSION NEAR TAJIK ALUMINUM PLANT. A home-made bomb
went off outside the Tursunzade aluminum plant in western
Tajikistan on 4 August, injuring two people, RFE/RL correspondents
in Tajikistan reported. The bomb was planted at a bus stop near the
factory gates. There is speculation in Tajikistan that an organized
crime group is responsible for the bombing. The aluminum plant is
the most lucrative enterprise in Tajikistan and has been the center of
contention between various criminal groups since 1992.

CHINESE CORPORATION WINS ANOTHER KAZAKH OIL TENDER. China
National Petroleum Co. won the tender for the Uzensk oil field in
western Kazakhstan, Interfax reported on 4 August. The Chinese
corporation now has the exclusive right to negotiate for the contract.
The Uzensk field currently produces 2.7 million tons of oil annually
but the Chinese side says it can increase that figure to 7 million
annually. In order to secure the contract, the Chinese company must
form a joint venture with Kazakhstan's Uzenmunaigaz and help
construct a pipeline from the field to China and the Kazakh section of
a pipeline south to Iran via Turkmenistan. The Kazakh government
and China National Petroleum now have one month to agree to terms,
otherwise negotiations can begin with the other participants in the
tender, Amoco and the U.S.-Malaysian companies Unocal-Petronas. In
early June, China National Petroleum Corp. also bought 60 percent of
the Aktyubinskmai field and facilities in northwest Kazakhstan.

END NOTE

DIAMOND IN THE ROUGH: HOW YELTSIN DECIDES

By John Helmer


  One of the best things about Boris Yeltsin, an opposition deputy said
before the president's first heart attack, was the way he would listen
attentively to what you said, and agree with you. One of the worst
things about him, the deputy added, was that Yeltsin agreed with
everyone.
        First Deputy Prime Minister Anatolii Chubais knows the
president's qualities. So he drafted a decree in August 1996 -- while
Yeltsin was in medical isolation -- that strictly regulated how
presidential decrees could take force. Chubais arranged the
paperwork so if someone with a piece of paper managed to see
Yeltsin and Yeltsin signed it, nothing could happen until the paper
was published. And publication remained under Chubais's control.
        Last month, while Yeltsin was on holiday on the Volga, he
signed a decree reforming Russia's diamond industry. The document
had been in preparation for months. Diamond producers in the Sakha
republic, diamond manufacturers and exporters in Moscow, and
different parts of the government bureaucracy lobbied for their
interests.
        Yeltsin wasn't personally involved, as he once was. But prime
minister, ministries, and Chubais were all agreed. The decree
stripped the Sakha Republic of tax and other privileges it had been
granted by Yeltsin five years ago. The monopoly of diamond sales
inside Russia and abroad, which Almazy Rossii-Sakha (ARS), a
diamond mining company, had sought, was rejected. Price
competition was introduced by allowing, for the first time, diamond
cutters in Russia to import diamonds from abroad without duty. New
Finance Ministry controls were ordered over every aspect of the
diamond industry, including the stationing of inspectors inside ARS.
The company was prohibited from supplying diamonds at a discount
to Sakha Republic President Mikhail Nikolaev's administration or its
friends.
 This was the biggest defeat Nikolaev has ever suffered at Yeltsin's
hands. So, on July 25, he flew down to see the president face to face.
Nikolaev had been seeking this meeting for months, but was always
blocked. This time, with Chubais on holiday out of Russia, he got his
wish.
 And more than that. Officials of ARS were saying last week that
Yeltsin did the proverbial. He agreed to everything Nikolaev asked
for. The ARS officials claim the Sakha government will be able to buy
the stones it wants from ARS at a price Nikolaev told Yeltsin was at
cost. Re-selling or exporting cut-price goods will be easy and
profitable. Yeltsin reportedly agreed, and signed a paper to that
effect.
        This is awkward, because in section 10 of the paper Yeltsin
signed five days earlier, he decreed that Sakha could buy diamonds
but only on terms and prices fixed by the Russian government. That
meant the Ministry of Finance. Now that he's back from vacation,
that means Finance Minister Chubais.
        Sensing the potential for embarrassment, some ARS officials
now say they can't confirm the meeting between Nikolaev and
Yeltsin took place. The presidential press service rummaged in its
records, and said a meeting had occurred about a week ago. A
Finance Ministry official in charge of the diamond sector said he, as
he put it, had "heard something about the meeting, and (was) sure
they agreed on something." He wasn't sure what.
        The legal department of the Kremlin, which also was ordered
by last year's ukaz to check every decree before signing, says it can't
do this, because the only place all the decrees must now go is to
Chubais's office.
        Just what the latest document may say is hinted at by
Nikolaev's representative in Moscow, Kliment Ivanov. He claims
Yeltsin has approved government action to settle the terms on which
the republic will get its stones, taking into consideration the interests
of the republic Chubais followed Nikolaev to see Yeltsin four days
later. His office hasn't responded to questions about what was
decided, if anything.

  The author, a journalist based in Moscow, regularly contributes
articles to RFE/RL.


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