Standing, as I do, in the view of God and eternity, I realize that patriotism is not enough. I must have no hatred or bitterness toward anyone. - Edith Cavell 1865-1915 (Spoken to the chaplain who attended her before her execution by firing squad, 12 Oct. 1915.)
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 1, No. 103, Part I, 26 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

* DRAFT 1998 BUDGET SUBMITTED TO DUMA

* YELTSIN, SHEVARDNADZE ASSESS ABKHAZ PEACE PROCESS

* NAGORNO-KARABAKH REJECTS LATEST PEACE PLAN

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RUSSIA

DRAFT 1998 BUDGET SUBMITTED TO DUMA... Prime Minister Viktor
Chernomyrdin on 25 August signed the draft budget for 1998, and
the government submitted the 1,600-page long document to the
State Duma. The draft provides for 340 billion new rubles ($58.4
billion) in revenues and 472 billion new rubles ($81.2 billion) in
expenditures. President Boris Yeltsin hailed the "unusual, but
realistic" budget during a meeting with Chernomyrdin, First Deputy
Prime Ministers Anatolii Chubais and Boris Nemtsov, and Presidential
Chief of Staff Valentin Yumashev. Chubais told journalists that
passing and implementing the budget "will guarantee Russia the start
of tangible, visible, indubitable growth in 1998," according to
Reuters. He also pledged that the 1998 budget will not be cut during
the course of the year, Interfax reported. The government has cut
1997 budget spending by 20.5 percent, citing revenue shortfalls.

...EXPECTED TO HAVE TOUGH RIDE. Duma Speaker Gennadii Seleznev
told Interfax on 25 August that the Duma debate of the budget will
be "tough." The same day, Liberal Democratic Party of Russia (LDPR)
member Vladimir Gusev, chairman of the Duma's committee on
industry, construction, transportation and energy, denounced the
draft as a "catastrophe for industry." Duma Labor and Social Policy
Committee Chairman Sergei Kalashnikov, also of the LDPR, noted that
the draft does not change Russia's overall economic policy and would
cut planned spending on industry and construction in half. Chubais
acknowledged that some provisions in the draft will meet with
opposition in the parliament. By way of example, he said federal aid
to the regions has been cut from 15 percent of total budget revenues
this year to 13 percent in 1998. Yeltsin argued that if Duma deputies
try to amend the budget to increase expenditures, they should
specify "at whose expense" the extra spending would be made.

YELTSIN, SHEVARDNADZE ASSESS ABKHAZ PEACE PROCESS. Yeltsin on
25 August praised Foreign Minister Yevgenii Primakov for breaking
the deadlock in talks between Georgia and Abkhazia, Interfax
reported. But Yeltsin also warned that Russia will not cede to the U.S.
the initiative in mediating a political solution to the conflict, noting
that Washington would never agree to send a peacekeeping force to
the region. In his weekly radio address on 25 August, Georgian
President Eduard Shevardnadze similarly expressed his appreciation
of Primakov's role in bringing Abkhaz President Vladislav Ardzinba
to Tbilisi on 14 August for talks. Georgian parliamentary speaker
Zurab Zhvania has urged Tamaz Nadareishvili not to resign as
chairman of the Abkhaz parliament in exile, saying this would be
tantamount to recognizing the legitimacy of the present Abkhaz
leadership, "Nezavisimaya gazeta" reported on 23 August.

CONFUSION OVER DISMISSAL OF ROSVOORUZHENIE HEAD. Yeltsin on
25 August said Aleksandr Kotelkin "did not resign voluntarily" as
head of the arms export company Rosvooruzhenie, Russian agencies
reported. Yeltsin conceded that Kotelkin had improved the work of
the company but said that "certain problems" had arisen, which he
refused to specify. Yeltsin stressed, however, that Kotelkin had not
done "anything bad." Deputy Prime Minister and Economics Minister
Yakov Urinson, whose responsibilities include the arms sector,
similarly praised Kotelkin's work in "raising defense cooperation to a
higher level." Both Urinson and new Rosvooruzhenie director
Yevgenii Ananev said Kotelkin's removal was a routine personnel
move, given that "work must be done differently under new
conditions."

COMMERCIAL BANKS TO LOSE ROSVOORUZHENIE ACCOUNTS? Urinson
also announced on 25 August that Rosvooruzhenie accounts currently
held in commercial banks are to be transferred to the Federal
Treasury, "Kommersant-Daily" reported on 26 August. In 1996, some
$3.4 billion in proceeds from Rosvooruzhenie contracts passed
through accounts in 10 different commercial banks, and funds
passing through Rosvooruzhenie accounts are expected to double in
1997. The newspaper said Oneksimbank handles more
Rosvooruzhenie funds than any other commercial bank. First Deputy
Prime Minister Chubais recently ordered that accounts containing
customs duties be transferred to the Central Bank (see "RFE/RL
Newsline," 7 and 18 August 1997). That move is also expected to bite
into Oneksimbank's revenues. In addition, Chubais wants the Finance
Ministry's hard-currency accounts, currently held in commercial
banks, to be transferred to the Central Bank, "Kommersant-Daily"
reported on 23 August.

NO GRUDGES BETWEEN YELTSIN, STARODUBTSEV SIX YEARS ON.
Speaking by telephone with Yeltsin on 25 August, Tula Oblast
Governor Vasilii Starodubtsev invited the president to visit Tula but
warned him that the coal policy proposed by Chubais threatens to
cause severe unemployment in the oblast, "Kommersant-Daily"
reported on 26 August (see "RFE/RL Newsline," 21 August 1997).
Yeltsin told Chubais and other top government officials the same day
that he shared Starodubtsev's concerns. In August 1991,
Starodubtsev was imprisoned after participating in the coup attempt
by the State Committee on State Security. He was released under an
amnesty declared by the parliament in February 1994 and elected
governor of Tula in March 1997. In an interview with "Trud" on 21
August, Starodubtsev said he had participated in the coup to save the
Soviet Union's territorial integrity and unity: "The country was on the
edge of a schism, and we tried to stop it. Unfortunately, we failed."

BOIKO, "IZVESTIYA" ON VICTIMS OF PRIVATIZATION. State Property
Committee Chairman Maksim Boiko told "Izvestiya" on 26 August
that he believes the assassination of Mikhail Manevich, deputy
governor of St. Petersburg and head of the city's State Property
Committee, was masterminded by those who do not want
privatization tenders to be fair. Manevich was shot on 18 August by
a sniper (see "RFE/RL Newsline," 18-20 and 22 August 1997).
"Izvestiya" commented that both Manevich and former State
Property Committee Chairman Alfred Kokh are "victims of
privatization," whose fates show "the price paid by reformers in the
cabinet for the attempt to change privatization rules." Kokh was
replaced by Boiko on 13 August. "Izvestiya," in which Oneksimbank
is a major shareholder, did not mention that Yeltsin on 15 August
criticized Kokh for showing favoritism to some commercial banks.
Oneksimbank won recent privatization auctions for large stakes in
Svyazinvest and Norilsk Nickel.

"IZVESTIYA" SAYS BANKERS ARE GOVERNMENT'S MAIN OPPONENTS.
In the same interview with Boiko, "Izvestiya" argued that recent
rows over privatization sales demonstrate that bankers embittered
by the change in privatization rules have replaced Communists as the
government's main opponents. Security Council Deputy Secretary
Boris Berezovskii -- also an influential businessman -- recently said
that First Deputy Prime Ministers Chubais and Boris Nemtsov are
making a "serious strategic error" by not heeding the opinions of the
business community (see "RFE/RL Newsline," 21 August 1997).
Asked if he feels pressure from the banking community, Boiko told
"Izvestiya" that no banker has called him since he took up his new
post. Companies linked to Berezovskii and Media-Most head Vladimir
Gusinskii are believed to have been involved in the losing bid for
Svyazinvest.

"OBSHCHAYA GAZETA" SLAMS CHUBAIS, ONEKSIMBANK. An unsigned
editorial in the latest edition of "Obshchaya gazeta" accused First
Deputy Prime Minister Chubais of attempting to replace the "rule by
the seven bankers" in Russia with one powerful financial group,
Oneksimbank. The newspaper said Chubais has created a "ruling
oligarchy" during the 1996 presidential campaign by uniting Russia's
most powerful bankers behind the Yeltsin re-election effort and
bringing the mass media to heel. The newspaper also claimed that
with a view toward improving First Deputy Prime Minister
Nemtsov's prospects in the next presidential election, Chubais is
coordinating a campaign to "foist Nemtsov on the ruling elite" by
"destroying" the financial base of Oneksimbank's competitors and
their capacity to influence the media. Vladimir Gusinskii's Media-
Most group recently became an investor in "Obshchaya gazeta."
Outlets owned by Media-Most have repeatedly criticized
Oneksimbank, Nemtsov and Chubais during the recent privatization
scandals.

CHECHEN FIELD COMMANDERS WANT MASKHADOV'S POWERS
REDUCED. A group of Chechen field commanders has published a
statement in the Chechen newspaper "Put Dzhokhara" demanding
that the positions of president and prime minister not be held by one
and the same person, Interfax reported on 25 August. They proposed
that the Chechen parliament amend the republic's constitution
accordingly. Aslan Maskhadov currently holds the offices of both
president and premier. The field commanders also demanded the
creation of a republican defense ministry and a commission of legal
experts to review several unspecified government and presidential
decrees. Russian observers have repeatedly suggested that
Maskhadov is under pressure from rivals within the leadership, but
Maskhadov denies that is the case.

DID LIBYA SEND AID TO CHECHNYA? A Turkish court is investigating
allegations that former Prime Minister Necmettin Erbakan's Welfare
Party misappropriated $10 million in aid destined for Chechnya, dpa
reported on 26 August, citing "Hurriyet." That sum had allegedly
been sent to Ankara by Libyan leader Col. Muammar Gaddafi.

MORE MONEY FOR SPACE, MORE PROBLEMS FOR "MIR." Economics
Minister Urinson said on 25 August that Russia has taken "exhaustive
measures" to provide its share of funds for the "Alpha" international
space station, Russian media reported. Urinson said about 1.1 billion
new rubles ($191 million) had been allocated for the space program
in 1998. That contradicts a statement by Yeltsin in his 22 August
nationwide radio address saying that 3.5 billion new rubles ($600
million) would be spent on space programs in 1998. Urinson also said
the "Mir" space station would continue functioning through 1998 and
possibly until the year 2000. Aboard the space station, there was a
temporary malfunction in one of the oxygen systems late on 25
August, but ITAR-TASS reported the next day that the station's crew
had repaired the problem.

NEW SPIRITUAL BOARD FOR RUSSIAN MUSLIMS. A recent conference
of Muslims of Siberia and Russia's Far East voted to establish a
separate Spiritual Board for Muslims in those regions, ITAR-TASS
reported on 25 August. The board will have its headquarters in
Tobolsk, and Sheik Nafiula Ashirov will be its chairman and mufti of
Siberia and the Far East. The conference took place in Tobolsk from
8-10 August and was attended by 500 delegates from Sakha,
Primore, Magadan, Sakhalin, Chita, and other Russian regions.

TRANSCAUCASUS AND CENTRAL ASIA

NAGORNO-KARABAKH REJECTS LATEST PEACE PLAN. Arkadii
Ghukasyan, foreign minister of the self-proclaimed Nagorno-
Karabakh Republic and one of three candidates contesting the1
September presidential elections, said on 22 August that the
enclave's leadership has rejected the peace plan submitted in late
May by the Organization for Security and Cooperation in Europe's
Minsk Group, Noyan Tapan reported. That plan envisages the
withdrawal of Armenian forces from occupied Azerbaijani territory
and from the town of Shusha in the south of the NKR. It also proposes
the deployment of international troops along the Lachin corridor,
which links the NKR and Armenia, and the downsizing of the
Karabakh armed forces. Armenia and Azerbaijan have accepted the
proposals "as a basis for peace," according to Ghukasyan. He said that
peace negotiations will resume under the aegis of the OSCE after the
NKR presidential elections.

CZECH SENATE SPEAKER AFFIRMS SUPPORT FOR AZERBAIJANI
OPPOSITION. Czech Senate Chairman Petr Pithart has congratulated
Azerbaijani former President Abulfaz Elchibey and Musavat party
chairman Isa Gambar on their election as co-chairmen of the
opposition Democratic Congress. The text of Pithart's letters to both
men were made available to "RFE/RL Newsline." The Czech leader
assured them of his moral support "in your fight against all forms of
totalitarianism". He also expressed the hope that the Democratic
Congress will soon assume a decisive role in Azerbaijan's political life.
The Democratic Congress unites seven right-wing, pro-Western
opposition parties. Elchibey and Gambar were elected its co-chairmen
in late April. Elchibey announced in June that he plans to return to
Baku from Nakhichevan, where he fled four years earlier. Since the
beginning of August, he has been subject to intensive surveillance by
Interior Ministry troops.

AZERBAIJAN, CHECHNYA DISCUSS EXPORT PIPELINE. Meeting in Baku
on 25 August with Azerbaijani President Heidar Aliev, Chechen Vice
President Vakha Arsanov complained that Russia has not yet made
available the necessary funds for repairs to the Baku-Grozny-
Tikhoretsk oil pipeline, Turan and ITAR-TASS reported. Aliev
expressed concern that the delay in repairing the pipeline could
postpone yet again the export of the first so-called "early oil" from
the Chirag Caspian field, currently scheduled to begin 1 October.
Azerbaijani and Chechen oil company representatives and Russian
Fuel and Energy Minister Boris Nemtsov signed in July an agreement
on repairing the 153 kilometer Chechen sector of the pipeline. A
Chechen official estimated this would take 30-40 days. Russia
undertook to provide the funding for the repairs, and Chechnya to
protect the pipeline from attack.

TURKMENISTAN, IRAN, RUSSIA TO DEVELOP KYAPAZ? Turkmenistan
plans to exploit the disputed Kyapaz (Serdar in Turkmen) Caspian oil
field together with the National Iranian Oil Company and an
unnamed Russian company, Reuters reported, citing an unidentified
Turkmen government spokesman. Azerbaijan, which claims that the
field lies within its national sector of the Caspian, will also be invited
to participate, the spokesman said.

GERMAN ECONOMICS MINISTER IN TURKMENISTAN. Gunter Rexrodt
met with Turkmen President Saparmurat Niyazov on 25 August and
asked him to "end barriers to trade and investment," dpa and ITAR-
TASS reported. Among the German delegation accompanying Rexrodt
were representatives of 40 German companies looking to invest in
Turkmen oil and natural gas. According to dpa, German trade with
Kazakhstan, Kyrgyzstan, Turkmenistan, and Uzbekistan amounted to
$1.08 billion in 1996 but only $94 million was with Turkmenistan.
President Niyazov is scheduled to arrive in Germany on 27 August
for a four-day visit. The German delegation is scheduled to proceed
to Kazakhstan, Uzbekistan, and Kyrgyzstan.

TATAR PRESIDENT IN KAZAKHSTAN. Mintimer Shaimiev concluded a
two-day visit to Kazakhstan on 26 August, RFE/RL correspondents in
Almaty reported. He met with his Kazakh counterpart, Nursultan
Nazarbayev, and Prime Minister Akezhan Kazhegeldin to discuss
improving economic relations. Both presidents agreed that the total
volume of trade ($60 million) between the Russian region and the
Central Asian state was too low. The Tatar delegation expressed
interest in participating in the development of Kazakh petroleum
fields. Representatives of the two countries discussed Kazakhstan
exporting to Tatarstan metals and petroleum and importing grain,
rice, and wheat as well as automotive parts from the KamAZ factory.
They also considered the possibility of opening a KamAZ assembly
plant in Kazakhstan. An agreement was signed to open a permanent
Tatar mission in Kazakhstan.

GERMAN BANKS EXTEND CREDIT TO KAZAKHSTAN. The Kazgermunai
Society and a consortium of German banks concluded a deal on 25
August extending a $200 million credit to Kazakhstan, ITAR-TASS
reported. The money is intended to develop the Akzhabulak oil field
in southeastern Kazakhstan, including the construction of a pipeline,
a refinery, and housing for workers at the site.

UZBEKISTAN RECALLS STUDENTS FROM TURKEY. Uzbek President
Islam Karimov has recalled some 2,000 Uzbek students studying in
Turkey, ITAR-TASS reported on 25 August. Karimov made the move
after learning that under the former government of Necmettin
Erbakan, Islamic clerics who belong to fundamentalist sects had tried
to recruit those students.


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