RFE/RL NEWSLINE Vol 1, No. 90, Part I, 7 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
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Headlines, Part I

* CONDUCT OF NORILSK AUCTION BEING INVESTIGATED

* YELTSIN WANTS TO EXPEDITE PASSING OF LAW ON RELIGION

* RUSSIA CONSIDERING NEW OIL PIPELINE TO BYPASS CHECHNYA

End Note: A PAST TOO MUCH WITH US

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RUSSIA

CONDUCT OF NORILSK AUCTION BEING INVESTIGATED. In line with a
request from Prime Minister Viktor Chernomyrdin, the Procurator-
General's Office, State Property Committee, and Russian Federal
Property Fund (RFFI) have begun investigating how the recent
auction of a 38 percent stake in Norilsk Nickel was conducted, RFFI
Chairman Igor Lipkin announced on 6 August. However, a senior
government official cited by Reuters said the investigation was
unlikely to lead to the reversal of the auction. Lipkin told Russian
news agencies that the Norilsk auction was conducted in full
compliance with the law: the rules for participating were published a
month in advance, and the shares were awarded to the company that
submitted the higher of the two bids. Lipkin added that the federal
budget will receive nearly $80 million from the sale, funds that he
said will help pay wage arrears to state employees.

BARGAIN PRICE FOR NORILSK SHARES, LACK OF TRANSPARENCY
CRITICIZED. Although RFFI Chairman Lipkin noted that the winning
bid for the Norilsk shares exceeded the minimum bid by nearly 80
percent, critics have charged that the minimum bid was set far too
low. AFP reported on 6 August that independent analysts believe the
Norilsk stake was acquired at a bargain price by Svift, a company
linked to Oneksimbank. Analysts also have criticized the lack of
transparency and apparent conflicts of interest surrounding the sale.
Oneksimbank had managed the Norilsk shares since November 1995
in exchange for a $170 million loan to the government, and Reuters
noted that the Norilsk auction was organized by MFK Moscow
Partners, a company linked to Oneksimbank's financial empire. In
addition, Oneksimbank President Vladimir Potanin held secret
meetings with State Property Committee Chairman Alfred Kokh,
Procurator General Yurii Skuratov, and Prime Minister Chernomyrdin
the day of the auction (see "RFE/RL Newsline," 5-6 August 1997).

CHUBAIS WANTS TO BAR COMMERCIAL BANKS FROM COLLECTING
CUSTOMS DUTIES ... First Deputy Prime Minister Anatolii Chubais is
seeking to bar commercial banks from collecting customs duties on
behalf of the government, Russian news agencies reported on 6
August, citing Chubais's spokesman Andrei Trapeznikov. By 18
September, the Finance Ministry, State Customs Committee, Federal
Treasury and Central Bank are to submit draft guidelines on the new
procedure to the government. All bank accounts for customs duties
are to be moved to the Central Bank, Trapeznikov said. If the Central
Bank is not prepared to handle those accounts, commercial banks will
be forced to compete for the privilege of collecting customs duties.
Under a May presidential decree, the role of so-called "authorized
banks" is to be reduced by January 1998, after which such
authorization to handle state funds may only be awarded to
commercial banks through open, competitive bidding (see "RFE/RL
Newsline," 14 May 1997).

...AS CENTRAL BANK BEGINS AUDITING ONEKSIMBANK. In line with
the May decree on reducing the role of authorized banks, the Central
Bank has begun auditing Oneksimbank, which handles more budget
funds than any other commercial bank, "Kommersant-Daily" reported
on 6 August. Critics have said that instead of transferring budget
funds to their intended destination right away, some commercial
banks have earned huge profits by investing state money in short-
term accounts at other banks. For this reason, "Kommersant-Daily"
argued on 7 August that Chubais's plan to prohibit banks from
collecting customs duties will hurt Oneksimbank more than any other
commercial bank. Some 5 trillion to 5.5 trillion rubles ($860 million
to $950 million) in customs duties are said to be held in
Oneksimbank accounts, enough for the bank to earn an estimated 3
billion rubles ($520,000) in profits for each day that it delays
transferring the customs payments to the government.

MEASURES COULD PLACE PRIVATIZATION AUCTION RESULTS IN
DOUBT. The Central Bank's audit of Oneksimbank and the proposed
changes in rules on collecting customs duties could force the recent
sales of government stakes in the telecommunications giant
Svyazinvest and in Norilsk Nickel to be reviewed, "Kommersant-
Daily" argued on 6 and 7 August. The paper noted that Oneksimbank
has not yet paid out all the money it pledged toward the winning
bids for Svyazinvest and Norilsk. If it is deprived of the right to
handle state funds and customs duties, Oneksimbank may simply be
unable to earn enough in profits to meet investment commitments it
assumed as conditions for the Svyazinvest and Norilsk auctions.
Under a new privatization law that went into effect on 2 August, the
government may appropriate privatized property if the new owners
fail to meet investment commitments under which the property was
awarded (see "RFE/RL Newsline," 28 July 1997).

YELTSIN WANTS TO EXPEDITE PASSING OF LAW ON RELIGION.
Russian President Boris Yeltsin told journalists on 6 August that he
would like the conciliatory commission charged with making the
required changes to the controversial law on religious organizations
to present its revised draft by 1 September, Russian media reported.
Yeltsin vetoed the law last month despite appeals from Patriarch of
Moscow and All Russia Aleksii II. Attending the ceremonial
consecration of the Chapel of Saints Boris and Gleb in Moscow on 6
August together with Aleksii, Yeltsin noted that cooperation between
the Russian Orthodox Church and the state has increased in recent
years, and praised the patriarch for his peacemaking and charitable
activities. Aleksii expressed confidence that the revised version of
the law will be enacted shortly. He praised Yeltsin's role in
"overcoming the heritage of Soviet rule" and noted that St. Boris is
Yeltsin's patron saint, NTV reported.

OPPOSITION STANDS BEHIND ROKHLIN. In an interview published in
"Nezavisimaya gazeta" on 6 August, Communist Party leader Gennadii
Zyuganov said activists from the Communist-led Popular-Patriotic
Union of Russia are involved in forming regional branches of State
Duma Defense Committee Chairman Lev Rokhlin's new movement to
support the armed forces and defense industry. Meanwhile, the
opposition newspaper "Sovetskaya Rossiya" on 7 August charged that
local elites used underhanded methods to prevent Rokhlin from
meeting with potential supporters during his recent visit to Tver
Oblast. The paper charged that Tver newspapers carried little
information about where Rokhlin would be speaking. In addition, the
venue of Rokhlin's public meeting was changed at the last minute.
The paper said that shortly before his visit, Rokhlin sent a message
to Tver Governor Vladimir Platov expressing the desire to cooperate
to defend the interests of defense enterprises in Tver, but the oblast
authorities ignored Rokhlin's appeal.

SEMAGO CRITICIZES DUMA, COMMUNIST ACTIVITIES. State Duma
Deputy Vladimir Semago, a member of the Communist Party (KPRF),
has criticized the priorities of the KPRF leadership and has charged
that the Duma's work is generally unproductive. In an article for the
6 August "Nezavisimaya gazeta," Semago said KPRF figures holding
senior posts in the Duma had stalled on forming a commission to
investigate corruption and subsequently hindered the commission's
work. He also called for a "serious discussion" of the KPRF's future
strategy in the Duma and in regional elections. He said he had tried
to publish his article in the opposition newspapers "Pravda,"
"Pravda-5," and "Sovetskaya Rossiya," as well as in the KPRF organ
"Pravda Rossii," but all had rejected it. Semago's public criticism of
senior Communists has recently drawn fire from Duma Speaker
Gennadii Seleznev and party leader Zyuganov (see "RFE/RL
Newsline," 4 and 6 August 1997).

RUSSIAN, CHECHEN PRESIDENTS TO MEET 10 AUGUST? Chechen First
Deputy Prime Minister Movladi Udugov told ITAR-TASS on 6 August
that the planned meeting between Yeltsin and Aslan Maskhadov may
take place on 10 August. Russian Security Council Secretary Ivan
Rybkin and Deputy Secretary Boris Agapov will fly to Grozny today
to prepare for the meeting, at which a document regulating relations
between Moscow and Grozny is to be signed. Maskhadov has called
for an interstate treaty, but "Nezavisimaya gazeta" on 7 August
quoted sources in the Russian Security Council as saying that the
document in question will be called neither an interstate treaty nor
an agreement on power-sharing. The sources said the document
probably will be called "On Relations between the Organs of State
Power of the Russian Federation and Chechnya."

RUSSIA CONSIDERING NEW OIL PIPELINE TO BYPASS CHECHNYA.
Russian First Deputy Fuel and Energy Minister Sergei Kirienko told
journalists in Moscow on 6 August that talks on the transit of
Azerbaijan's Caspian oil via Chechnya to Novorossiisk "are
deadlocked" because of Chechnya's "impossible" tariff demands,
Russian agencies reported. Kirienko said his ministry had conducted
feasibility studies on six routes for an alternative pipeline through
Dagestan. He said that a bypass pipeline would take 1 1/2 -2 years to
build, at an estimated cost of $250 million, but that the final decision
on whether a bypass pipeline should be built would be taken by the
Russian government. Under the 11 July agreement signed by Russian,
Azerbaijani and Chechen oil company heads, Russia is to receive
$15.67 in transit fees per metric ton of oil. Chechnya's share was set
at $4-5, but Kirienko said the Chechens are now demanding $6.

TRANSCAUCASUS AND CENTRAL ASIA

GEORGIAN BORDER GUARD COMMANDER DENIES CHECHEN INCURSION.
On 6 August Major General Valeri Chkheidze denied Georgian
television reports earlier in the day that several dozen Chechen
militants had advanced into Georgia, according to ITAR-TASS. The
Chechens allegedly intended to thwart a proposed meeting between
Georgian President Eduard Shevardnadze and his Chechen
counterpart Aslan Maskhadov. Maskhadov's representative Akhmed
Zakayev left for Tbilisi on 6 August to coordinate a date for that
meeting, Interfax reported. In a written address to the Georgian
parliament and people, Maskhadov on 6 August repeated his support
for Shevardnadze's efforts to find a peaceful solution to the Abkhaz
conflict.

PROBLEMS REMAIN ON TAJIK-AFGHAN BORDER. Russian border
guards, late on 5 August, repelled an attempt by two armed groups
of drug couriers to cross the Tajik-Afghan border, ITAR-TASS
reported. During one of the attempted crossings, a Russian border
guard and two of the drug runners were killed in the exchange of
fire. Meanwhile, border guard deputy director Aleksei Kozhevnikov
inspected border posts and voiced alarm at a buildup of armed
groups near the border in Afghanistan. Kozhevnikov said the group is
part of the United Tajik Opposition (UTO). A UTO representative in
Dushanbe, Dawlat Usmon, said the opposition would discourage
anyone from breaking the recently signed peace accord. Kozhevnikov
also said that the process of repatriation of refugees continues and
that 500 people cross into Tajikistan from Afghanistan at the Nizhnii
Pyanj checkpoint every day.

BIGGEST GRAIN HARVEST REGISTERED IN KYRGYZSTAN. Indications
early in the Kyrgyz harvest show the country will increase its grain
production this year to 1.4 million tons, according to RFE/RL
correspondents in Bishkek. Wheat and barley crops account for the
increase. The Russian newspaper "Pravda-5" on 6 August claimed the
reason for the increase is due to a switch in the use of land.
According to the paper, 14 percent more land was given over to
wheat and barley at the expense of Kyrgyzstan's cotton and tobacco
crop, but the actual figure for land under cultivation is continuing to
shrink.

AZERBAIJAN GAS OUTPUT DOWN. Azerbaijan's State Oil Company
SOCAR produced 5.2 million metric tons of oil and 3.5 billion cubic
meters of gas during the first seven months of this year, Interfax
reported. Of the total, 4.3 million metric tons of oil and 3.4 billion
cubic meters of gas were produced offshore. Gas output declined by
3.3 per cent compared with the corresponding period for 1996. The
CIPCO consortium representing Pennzoil, Russia's Lukoil, the Russian-
Italian joint venture LUKAgip and SOCAR began drilling its first
exploratory well in Azerbaijan's Caspian Karabakh field in early
August, ITAR-TASS and Turan reported on 6 August. The Karabakh
deposit has estimated reserves of 80 million metric tons.

END NOTE

A PAST TOO MUCH WITH US

By Paul Goble

  Russian President Boris Yeltsin's decree reclosing a city in his
country to all outsiders reflects both how little has changed in his
country since Soviet times -- and also how much.
        On the one hand, Yeltsin's action simply extends the Soviet
practice of using this administrative device to hide things Moscow
does not want anyone to find out about. But more disturbingly, it
calls attention to both the large number of Russian cities that remain
"closed" from Soviet times and Yeltsin's willingness to close some
opened more recently.
        On the other hand, the Russian president's actions have
sparked a lively public discussion in the Russian press about both
Yeltsin's motives in this particular case and the implications of using
this administrative device in a country that seeks to be a democratic
one.
        At the end of July, Yeltsin issued a decree declaring that
Shikhana, an urban center some 130 kilometers north of Samara, was
once again a "closed city." This decree means that no one -- Russian
or foreigner -- can enter it without special permission from the
Russian defense or interior ministries.
        A closed city in Soviet times known as Volzhk 18, Shikhana is
home to some 15,000 civilians, an unknown number of military
personnel, and one of the Russian military's largest chemical
weapons manufacturing and testing facilities.
        The Soviet authorities routinely closed such military industry
centers both to enhance the army's control of their populations and
to block efforts by foreign intelligence services to gain access to their
secrets.
        But at the end of the Soviet era and in the beginning of post-
Soviet Russian history, Moscow ended such restrictions in many
cases. Sometimes this was done because of a sense that the end of
the Cold War made such restrictions obsolete.
        Sometimes, these restrictions were lifted in response to local
civilian pressures for greater democratization. And sometimes,
Moscow took this step in order to give Russian military industries
located in these areas the ability to market their goods abroad.
        Not surprisingly, many Russian reformers are deeply concerned
about both Yeltsin's motives in this particular case and his
willingness to use Soviet-style methods to deal with some
fundamental political, economic, and ecological problems.
        One Moscow paper has suggested that Yeltsin's motives were
anything but encouraging. It quoted the conclusion of an ecological
group based in Samara that "the closing of Shikhana is nothing less
than the sabotage of the process of destroying chemical weapons
according to the agreements Russia has signed and which it is
prepared to sign."
        As a result, the leader of the group Vladimir Petrenko told
"Obshchaya gazeta," Yeltsin "has given back total secrecy to the
manufacture and testing of chemical weapons."
        Another environmental group from the region told the Moscow
press that the closing of the city might in fact be the result of reform
rather than a means of blocking it. The"Ecology and Legal Defense"
group said that the Russian army has set up a private commercial
firm in Shikhana to produce and sell highly-toxic arsenic.
        The group said that one of the founders of this company is
Stanislav Petrov, the head of Russia's chemical weapons troops. And
the group's spokesman implied that Petrov had used his influence to
get Yeltsin to take a step that will make it difficult for anyone to
monitor what he is doing or to prevent his company from continuing
to poison the environment there.
        What is most striking about all this, of course, is not the
existence of closed cities in a country long used to their existence or
the willingness of officials and entrepreneurs there to use this
method to advance their own interests, however selfish or
duplicitous.
        Instead, what is striking is that Yeltsin's actions have sparked
discussions in Moscow but they have not prompted widespread
protests from the West, both from human rights activists concerned
about progress toward the rule of law there and from governments
concerned that Russia live up to its promises to destroy chemical
weapons.
        At a time when the United States has allowed the Russian air
force to overfly American territory -- as it did this week under the
provisions of the "open skies" agreement -- Yeltsin's decision to
reclose a city is a particularly disturbing reminder that some
unfortunate features of the past remain very much with us.


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               Copyright (c) 1997 RFE/RL, Inc.
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