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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 1, No. 91, Part I, 8 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

*RUSSIAN, TURKMEN PRESIDENTS MEET


*RUSSIA BANS FURTHER EXPORTS OF KAZAKH GAS


*GEORGIAN POLITICIAN THREATENS MILITARY ACTION IN
ABKHAZIA

End Note: IMF TEAM SAYS GEORGIA SAFETY NET 'UNSUSTAINABLE'

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RUSSIA

RUSSIAN, TURKMEN PRESIDENTS MEET ... On 7 August, Russian
President Boris Yeltsin held a two-hour summit meeting in Moscow
with his Turkmen counterpart Saparmurad Niyazov. The meeting
succeeded in resolving some, but not all, problems in bilateral
relations. In a joint communique, the two presidents pledged to
upgrade bilateral relations on the principle of equal partnership, and
to draft economic accords on protecting mutual investment and
avoiding dual taxation in order to broaden economic cooperation.
Yeltsin accepted an invitation from Niyazov to visit Turkmenistan in
spring 1998.

... DISCUSS OIL ... Specifically, Yeltsin told Niyazov that the signing in
early July of an agreement between Azerbaijan's state oil company
SOCAR and the Russian oil companies Rosneft and LUKoil to develop
the Kyapaz oil field, ownership of which is contested by
Turkmenistan, was "a mistake" resulting from the failure of the
Russian oil companies involved to inform the Russian president and
government of their intentions, according to ITAR-TASS. (This
disclaimer lacks conviction insofar as Russian First Deputy Prime
Minister Boris Nemtsov discussed the deal with Azerbaijani President
Heidar Aliev prior to the signing and was present at the signing
ceremony.) Yeltsin noted that the positions of Russia and
Turkmenistan concerning the legal status of the Caspian Sea "are
quite close," and that both countries agree on the need to expedite
the signing by all Caspian littoral states of a convention based on
international law formalizing the status of the Caspian.

... AND GAS ... "Nezavisimaya gazeta" on 8 August quoted Niyazov as
telling journalists after his meeting with Yeltsin that their primary
topic of discussion was the market for natural gas, of which Russia
and Turkmenistan together control 68 percent of world reserves.
Niyazov claimed that "Russia fully supports Turkmenia" and will not
insist on a monopoly on the extraction and transportation within the
CIS of natural gas. Niyazov also said that Yeltsin endorsed the
unilateral annulment by the Turkmen government of the Russian-
Turkmen joint venture Turkmenrosgas. He explained that
Turkmenrosgas had been abolished because it had failed to engage as
planned in exploration, development and investment, according to
DPA. Niyazov said he and Yeltsin had reached agreement on creating
a new joint venture to supply Turkmen gas to the CIS market, but in
an implicit contradiction, he accused Russia of "squeezing
Turkmenistan out of the CIS gas market."

... BUT NO EXPORT AGREEMENT REACHED. Speaking at a joint news
conference with Niyazov, Rem Vyakhirev, head of Russia's giant
Gazprom, which controls the gas pipeline network, said that although
Russia no longer needs Turkmen gas, the company would continue its
cooperation with Turkmenistan in order to prevent the country's
population from "starving to death," Interfax and NTV reported.
Niyazov told journalists that during a meeting on 6 August with
Vyakhirev and Russian Prime Minister Viktor Chernomyrdin he had
failed to reach agreement on the export of Turkmen gas via Russia to
Europe, but that Russia had offered to continue exporting Turkmen
gas to other CIS member states, whose combined unpaid debts to
Turkmenistan for gas supplies amount to billions of dollars. Russia
and Turkmenistan are in competition to increase their exports of
natural gas to Turkey.

RUSSIA BANS FURTHER EXPORTS OF KAZAKH GAS. Vyakhirev also
announced at the press conference that Gazprom will "under no
circumstances" allow Kazakhstan to continue to use the Russian
export pipeline network to export natural gas to world markets, AFP
and Interfax reported. Vyakhirev argued that "surrendering one's
market when there is insufficient [export] capacity is ... a crime
against Russia.."

CRITICISM OF ONEKSIMBANK IN PRESS INTENSIFIES. Several
newspapers have attacked Oneksimbank over some 5.5 trillion
rubles ($950 million) in customs duties said to be held in
Oneksimbank accounts (see "RFE/RL Newsline," 7 August 1997).
"Moskovskii komsomolets" on 7 August said those funds alone could
pay off about one-tenth of wage arrears owed by the state.
(Government officials have said recent sales of government stakes in
Svyazinvest, the Tyumen Oil Company, and Norilsk Nickel are needed
to pay wage arrears.) The paper also reminded readers that
Oneksimbank President Vladimir Potanin was first deputy prime
minister dealing with economic matters from August 1996 until
March 1997. "Segodnya" on 7 August also slammed Oneksimbank for
making money from customs duties, asking rhetorically on whose
money Oneksimbank had won recent privatization auctions. Owned
by Vladimir Gusinskii's Media-Most, "Segodnya" has sharply
criticized Oneksimbank since the Svyazinvest sale (see "RFE/RL
Newsline," 29, 31 July 1997).

"IZVESTIYA" VIEWS LATEST DEVELOPMENTS. Although Oneksimbank
is a major shareholder in "Izvestiya," that paper's business
supplement "Finansovye izvestiya" on 7 August argued that the
"hasty" sale of a 38 percent stake in Norilsk Nickel "clearly
contradicted Russian state interests." Attempts by government
officials to postpone the auction were both "fair" and "economically
correct," the paper said. A company linked to Oneksimbank won the
controversial Norilsk auction (see "RFE/RL Newsline," 4-7 August
1997). A separate commentary in the 7 August "Izvestiya" blamed
government policies of the past two years for failing to establish fair
conditions for the sales of state assets. By way of example, the paper
cited the deal under which Stolichnyi Bank acquired a controlling
interest in Agroprombank last November. That arrangement was
either "unwise" or a straightforward "give-away" by the government,
"Izvestiya" said. (Stolichnyi Bank, now called SBS-Agro, partly
finances "Kommersant-Daily.")

YELTSIN PROMISES RUBLE REDENOMINATION WILL NOT CREATE
"VICTIMS." Yeltsin has promised that unlike monetary reforms of the
Soviet and post-Soviet period, the upcoming redenomination of the
ruble will not hurt Russian citizens. Beginning on 1 January 1998,
three zeroes will be taken off the ruble (see "RFE/RL Newsline," 4-5
August 1997). In an 8 August nationwide radio address, Yeltsin
promised the reform will not involve any "victims" or "confiscations"
and will make it easier for people to calculate and plan their
spending. He added, "With this currency reform we declare firmly
that we have conquered inflation. We have it firmly under control.
The ruble will not be devalued again."

TWO NEW ASTRONAUTS JOIN "MIR" CREW. Russian astronauts
Anatolii Solovev and Pavel Vinogradov joined one U.S. and two
Russian astronauts aboard the space station "Mir" on 7 August after
their Soyuz capsule docked with the station. In the coming weeks,
Solovev and Vinogradov are to attempt repairs to the Spektr module,
damaged in a 25 June collision with a cargo shuttle. However, vital
repairs to the station's oxygen generating system will have to wait
until late September, when a U.S. space shuttle will bring a new part
to "Mir." Reuters quoted Russian Space Agency head Yurii Koptev as
saying oxygen canisters on board "Mir" can supply enough oxygen to
last 70 days.

NO BREAKTHROUGH IN LATEST ROUND OF RUSSIAN-CHINESE BORDER
TALKS. The latest session of the Sino-Russian joint demarcation
commission, which met in Beijing from 21 July to 4 August, failed to
resolve outstanding disputes over the eastern section of the border,
"Nezavisimaya gazeta" reported on 8 August. The previous day,
Interfax quoted Primorskii Krai Deputy Governor Vladimir Stegnii as
saying China had agreed not to claim Russian territory near the
Tumannaya River--an apparent breakthrough. However, RFE/RL's
correspondent in Beijing reported on 7 August that neither Chinese
officials nor the official Xinhua news agency had confirmed Stegnii's
statement. Stegnii told "Nezavisimaya gazeta" that he was misquoted
by Interfax. Speaking to journalists in Moscow on 7 August, Russian
Foreign Ministry spokesman Valerii Nesterushkin said Russia and
China have agreed on three-fourths of their border and still hope to
complete the demarcation process by the end of 1997.

FUTURE OF CIS AFFAIRS MINISTRY IN DOUBT. More than a month
after Yeltsin appointed then CIS Affairs Minister Aman Tuleev as
governor of Kemerovo Oblast, the fate of the CIS Affairs Ministry
remains in doubt, "Izvestiya" reported on 7 August. Tuleev's
successor has not yet been appointed, and the acting head of the
ministry, Vasilii Shcheglovskii, is considered to lack authority among
CIS leaders. Among those rumored to be considered for CIS affairs
minister are State Duma Deputy Speaker Sergei Baburin, Yeltsin's
representative in the Constitutional Court Sergei Shakhrai, Our Home
Is Russia Duma faction leader Sergei Belyaev, and Duma First Deputy
Speaker Aleksandr Shokhin, also of Our Home Is Russia. Of those four
politicians, only the outspoken opposition figure Baburin has denied
that he is being considered for the post. A plan to downgrade the CIS
Affairs Ministry into a department within the Foreign Ministry is
also under consideration, according to "Izvestiya."

RUSSIAN PRINTERS REPORTEDLY SHUN KORZHAKOV'S MEMOIRS. State
Duma deputy Aleksandr Korzhakov, Yeltsin's former bodyguard and
confidant, is having trouble finding a printer for his memoirs,
"Kommersant-Daily" reported on 8 August. Representatives of the
Interbuk publishing house say several printers initially expressed
interest in Korzhakov's book, but all have retracted their orders in
recent weeks. Interbuk Deputy Director Sergei Goncharenko claimed
that pressure from unnamed law enforcement agencies was being
brought to bear on the printers. However, Korzhakov told
"Kommersant-Daily" that he is confident his book will nonetheless
appear in Russian within one week. Excerpts from the memoirs,
published in the "Times" of London on 3 August, portray Yeltsin as
having a chronic drinking problem and depict the president's
behavior during various foreign visits as embarrassing and erratic.

INDIGENOUS PEOPLES CALL FOR BOYCOTTING CELEBRATIONS IN
KAMCHATKA. The Council for the Revival of Kamchatka Itelmens (an
indigenous Paleo-Siberian ethnic group) has decided to boycott the
upcoming celebrations of the 300th anniversary of Kamchatka
becoming part of the Russian empire, "Segodnya" reported on 7
August. The council called on groups representing other indigenous
peoples to boycott the celebrations as well. A statement adopted by
the Itelmens argued that it is time for Russia to admit that it
captured Kamchatka as a colony, without trying to portray seizure of
territory and "genocide" of indigenous peoples as a "noble gesture."
About 1,400 Itelmens remain in Kamchatka Oblast out of an
estimated population of 15,000 when Russia first colonized the area.
Most villages populated by Kamchatka's indigenous peoples are in
Koryak Autonomous Okrug, which makes up the northern part of the
oblast. "Segodnya" noted those villages are afflicted with high rates
of unemployment and alcoholism.

GARBAGE BEING REMOVED IN VLADIVOSTOK. Vladivostok workers
have begun clearing an estimated 27,000 tons of garbage from the
city's streets, ITAR-TASS reported on 7 August. Primorskii Krai
Governor Yevgenii Nazdratenko recently invited Vladivostok's
striking garbage collectors to sign a contract with the krai
administration and promised them 9 billion rubles ($1.6 million)
toward paying wage arrears. Vladivostok Mayor Viktor Cherepkov
denounced Nazdratenko's "interference" in the strike, but attempts
by the city administration to organize alternative brigades to clear
the garbage met with little success. Meanwhile, on 8 August
Cherepkov met with representatives of other municipal workers on
strike in Vladivostok, who have staged numerous demonstrations
outside the city administration building since 21 July, ITAR-TASS
reported. The mayor promised to allocate some 15 billion rubles
toward paying back wages, and the workers agreed to end their
strike on 11 August.

TATARSTAN'S CONSTITUTIONAL WATCHDOG TERMS GOVERNMENT
RESOLUTION UNCONSTITUTIONAL. Tatarstan's Constitutional
Oversight Committee has recommended that several key elements of
a government resolution adopted in May should be overturned, an
RFE/RL correspondent in Kazan reported on 6 August. The resolution
was highly controversial because the republic's government sought
to raise funds to increase the minimum wage for government
employees by sacking 47,000 workers. In a decision published on
August 6 in "Respublika Tatarstan," the Constitutional Oversight
Committee says the government's resolution violates Tatarstan's
Constitution and labor law. The Committee calls on the government to
review the measure and bring it into conformity with the republic's
legislation.

RYBKIN IN GROZNY. Russian Security Council Secretary Ivan Rybkin
met in Grozny on 7 August with Chechen first deputy prime minister
Movladi Ugudov to discuss the planned meeting between Yeltsin and
Chechen President Aslan Maskhadov, Russian and Western agencies
reported. Rybkin subsequently told journalists that preparations for
the meeting, which is to take place within the next week, are almost
complete. He said both sides are concerned that previously signed
agreements are not being implemented. In Moscow, Yeltsin's press
spokesman Sergei Yastrzhembskii said the upcoming meeting "will
not be easy," but that the signing of a bilateral power sharing
agreement is planned, ITAR-TASS reported. Also on 7 August,
Maskhadov delivered a new ultimatum to kidnappers to release all
those whom they have abducted by 10 August, AFP and Interfax
reported.


TRANSCAUCASUS AND CENTRAL ASIA

GEORGIAN POLITICIAN THREATENS MILITARY ACTION IN
ABKHAZIA. Tamaz Nadareishvili, the chairman of the Tbilisi-based
Abkhaz parliament in exile, has said that if the Georgian government
fails to take decisive steps to resolve the Abkhaz conflict before 31
August, the parliament in exile will act independently to restore
Tbilisi's control over Abkhazia by force, the Georgian newspaper
"Rezonansi" reported on 7 August. Nadareishvili was addressing the
leaders of military units subordinate to the parliament in exile in the
west Georgian town of Zugdidi. Russian Foreign Minister Yevgenii
Primakov, who is currently vacationing in Sochi, is likely to meet
there in the next few days with Abkhaz President Vladislav
Ardzinba, and in Tbilisi on 14 August with Georgian President
Eduard Shevardnadze to discuss Yeltsin's most recent Abkhaz peace
proposals.

KAZAKH, KYRGYZ, UZBEK PRIME MINISTERS MEET. At a one-day
meeting of the Inter-State Council of the Central Asian Union held in
Almaty on 7 August, the prime ministers of the three member states
-- Kazakhstan, Kyrgyzstan, and Uzbekistan -- signed 10 agreements,
including regulations on immigration and railroad tariffs, Interfax
reported. The three premiers postponed the signing of agreements on
international road haulage and energy, and failed to address
coordinating taxation systems and value-added tax. Speaking at a
joint press conference afterwards, Kazakh Prime Minister Akezhan
Kazhegeldin termed the meeting "productive" and said it proved that
integration among Central Asian states is possible, according to an
RFE/RL correspondent in Almaty.

END NOTE

IMF TEAM SAYS GEORGIA'S SAFETY NET 'UNSUSTAINABLE'

By Robert Lyle

  A team of experts from the International Monetary Fund (IMF) has
told Georgian authorities that the country's social support system is
"unsustainable" because it is not providing adequate protection to the
most vulnerable.
        The team came to that conclusion after working with the
government at its request to help design a better social support
mechanism.
        In its report, a summary of which was released by the fund,
the IMF team said Georgia had already made great strides by
scrapping its old social system when it gained its independence and
instituting pay-as-you-go systems for social security, unemployment
and health.
        The Georgian safety net currently costs the equivalent of about
3 percent of GDP (gross domestic product) or about one-third of the
state budget. Among measures already successfully implemented,
the IMF team pointed to the rise in retirement ages from 55 to 60
years for women and from 60 to 65 for men instituted in early 1996.
While that move had the unintended immediate effect of increasing
the pension rolls -- as many as 50,000 previously unregistered
elderly took advantage of the grandfathering provisions to get in
under the deadline -- it will eventually reduce the number of
pensioners by about 40 percent.
        At the same time, the team said that by targeting social
benefits on the poorest and most vulnerable of the population,
Georgia has been able to increase benefits generally in line with
government wages, including a 15 percent increase in benefits last
January 1st, increasing payments on average by about 100 percent
in real terms.
        Still, says the team, benefit levels remain low, with the
standard monthly rate of 9.8 lari (7.70 dollars) only one-tenth the
official minimum subsistence level. According to that standard, said
the team, "all employees of the public sector, for whom the monthly
average wage is only lari 35, are destitute."
        However, the team added, the official poverty standard is
"misleading" because it is based on the situation before reforms and
before the major price adjustments since 1992. First, it said, an
alternative basket of food with the same calorie content can be
assembled easily for 35 lari a month.
        More importantly, the IMF team said a recent household
survey indicates that cash incomes constitute only a "small
proportion of total household incomes," especially among the poorest.
        "It is therefore misleading to base poverty assessments solely
on cash incomes, which are generally very low," the team said. When
allowance is made for in-kind income -- trading of goods, etc. -- the
income distribution for the country becomes much more even.
        With this, the team said it estimates that about 25 to 30
percent of the Georgian population is living below the poverty line,
considerably fewer than the official estimate of 65 percent of the
people.
        Nevertheless, the team said there is reason for concern because
the "considerable reliance" among the citizenry on subsistence
production and other informal activities "confirms the stresses the
population has experienced since transformation to a market-based
system."
        The IMF experts said that many people in Georgia have
managed to maintain living standards at about subsistence levels
with support from relatives and by depleting their assets --
remedies the team says provide "only short term relief."
        "This situation is unsustainable," the IMF team concluded, and
requires improvements in the size and coverage of benefits.
        The team recommended further modifications to better target
vulnerable groups which have been missed by the present system,
for example, large families and single mothers.
        To better concentrate the benefits on the most needy, and
make them high enough to provide real protection, the IMF team
recommended further tightening of eligibility criteria, using income
tests to weed-out people with high incomes, and improved benefit
administration.
        The team also gave government officials ideas about
redesigning the country's pension system to put it on a sound
financial footing. One proposal involves shifting the pension system
to a defined-contributions scheme based on individual contributions.
However, the team cautioned. such a scheme -- now popular in the
west -- would imply a "substantial loss of payroll tax collections,
initially placing an insupportable burden on the budget to finance
the continued retention of present safety net provisions."
        For now, the team said, the emphasis should continue to be
placed on sustaining an adequate safety net for the elderly without
compromising the budget.
        As to the country's economy in general, the IMF team said
Georgia has made "major strides in stabilization and structure reform
after a period of acute economic crisis," and said it expects economic
growth this year to reach 10 percent.

 Robert Lyle is an RFE/RL correspondent in Washington.



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