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. 110, Part I, 4 September 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/

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Headlines, Part I

* DUMA TO PROBE PRIVATIZATION DEALS

* RUSSIA, CHECHNYA REACH COMPROMISE ON OIL TRANSPORT
TARIFFS

* AZERBAIJAN SEEKS TO INTENSIFY COOPERATION WITH U.S

End Note
EU RETHINKS ITS FUNDING TO EAST

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RUSSIA

DUMA TO PROBE PRIVATIZATION DEALS. At the opening of its fall
session on 3 September, the State Duma established a commission to
probe the Svyazinvest and Norilsk Nickel privatization deals, Interfax
reported. The commission will check whether the auctions were
conducted in accordance with the law and investigate the role of
government officials in the two deals. According to Interfax, the
Duma said the commission was established following the public
outcry over the controversial deals. Alfred Kokh resigned as deputy
prime minister and head of the State Property Committee after he
was accused of being linked with Oneksimbank, the winner of both
sales of stakes in Svyazinvest and Norilsk Nickel.

SELEZNEV CALLS FOR CONSTRUCTIVE COOPERATION. Duma Speaker
Gennadii Seleznev on 3 September called for constructive cooperation
between the parliament and the government. He said legislators will
consider some 400 bills during the fall session. The debate on the
1998 budget is one of the most important issues "on which the
prospects of the Russian economy [and] the nearest future of
education, science, culture and other subsidized spheres and progress
of army reform depend," Interfax quoted him as saying. However,
Seleznev criticized the 1998 government draft budget as continuing
the "same destructive policy by the government.... It is not a policy; it
is an offense to reason." The Communists and other parties in the
Duma issued a joint statement on 1 September criticizing the draft
budget. They said it fails to guarantee the rights of workers, rejects
state regulation of vital branches of the economy, and promotes both
the destruction of natural monopolies and the sale of state property.

YAVLINSKII SAYS TAX CODE MOST VITAL ITEM ON DUMA AGENDA.
Also on 3 September, Yabloko leader Grigorii Yavlinskii told Duma
deputies that adoption of a new tax code will be the most pressing
issue for legislators in the fall session, Interfax reported. Yavlinskii
said adoption or rejection of the code will have far-reaching
consequences for the economy and the budget. He added that the
next most important issue for the Duma was debate on the budget
and described the government's 1998 budget draft as realistic. (The
previous day, Yavlinskii had told an RFE/RL correspondent that it
was a "budget of stagnation.") Yavlinskii said Yabloko will continue
what he called "its course of democratic opposition to those in
power."

RUSSIA, CHECHNYA REACH COMPROMISE ON OIL TRANSPORT
TARIFFS. Russian and Chechen representatives have finally agreed
on tariffs for the export of Azerbaijan's Caspian oil via Chechnya,
Russian agencies reported on 3 September. Under the compromise
agreement, proposed by Russian Security Council Secretary Ivan
Rybkin, Chechnya will be paid the standard Russian rate of $0.43 per
metric ton of oil transported. The Russian pipeline company
Transneft will make up the difference between that amount and the
$2.2 that the Chechens had demanded. Chechnya had rejected
Rybkin's earlier suggestion that Chechnya receive a fixed sum in aid
from the federal budget in lieu of the higher tariff. Khozh-Akhmed
Yarikhanov, chairman of the Chechen state oil company, told Interfax
that Chechen President Aslan Maskhadov initially rejected the
compromise proposal but then reluctantly accepted. Speaking in
Moscow on 3 September, Prime Minister Viktor Chernomyrdin
argued that any concession by Russia on tariffs would be "misplaced."

GOVERNMENT SETS ENERGY LIMITS FOR STATE ENTERPRISES. First
Deputy Prime Minister Boris Nemtsov has said that beginning 1
October, state-run enterprises will be restricted in their fuel and
electricity use, RFE/RL's Moscow bureau reported on 3 September.
Nemtsov, who is also fuel and energy minister, told journalists that
Gazprom and United Energy Systems will cut off all energy supplies
of those government-financed enterprises exceeding the new energy
usage limits. Nemtsov also announced the government will issue
bonds worth 3 trillion rubles ($517.2 million) to cover part of the
energy sector's debt to the federal budget, according to ITAR-TASS.
The energy sector is heavily indebted to the federal government,
mostly because of the inability of Russian enterprises and other
consumers to pay for fuel and electricity.

COMMUNISTS APPEAL TO HERZOG TO HELP KRENZ. Communist Duma
deputies appealed to visiting German President Roman Herzog on 3
September to intervene in granting clemency to jailed former East
German leader Egon Krenz, Interfax and Reuters reported. In a
statement, the Communists condemned the imprisonment of Krenz,
calling it the "continuing persecution of former leaders of [East
Germany,] a country that was a full member of the United Nations
and different organizations and with which a majority of states had
diplomatic relations." In July, a Berlin court found Krenz guilty on
four counts of manslaughter for his role in the deaths of people
trying to flee over the Berlin Wall. Krenz, who was East German
leader for six weeks in late 1989, was sentenced to six-and-a-half
years in prison.

NORTH CAUCASUS REPUBLICS FAIL TO ADOPT ANTI-CRIME
MEASURES. Representatives of the North Caucasus republics ended a
two-day meeting in Pyatigorsk on 3 September without signing any
of the four proposed documents on coordinating measures to combat
crime, "Izvestiya" reported on 4 September. A North Ossetian official
told the newspaper that the draft documents, which had been drawn
up in Moscow, were "too far removed from reality" and that
participants had suggested more than 120 amendments. Interior
Minister Anatolii Kulikov on 2 September told the conference that
crime and terrorism in the region constitute a direct threat to
Russian security Deputy Prime Minister Ramazan Abdulatipov
expressed concern at frequent alliances between criminal elements
and local leaders.

CHERNOMYRDIN MEETS WITH JORDANIAN CROWN PRINCE... During a
meeting with Prince Hassan in Moscow on 3 September, Prime
Minister Viktor Chernomyrdin said bilateral relations with Jordan
are a top priority Interfax and ITAR-TASS reported. Chernomyrdin
said Moscow intends to pursue closer trade, economic, and political
ties with Jordan. In an earlier meeting with Foreign Minister
Yevgenii Primakov, Hassan urged Russia not to limit its involvement
in the Mideast peace process to Arab countries. He appealed to Russia
to try to exert influence on Israel as well. Primakov said the views of
Russia and Jordan on the Mideast settlement are close or coincide in
many respects, according to Interfax.

...REPEATS OPPOSITION TO BALTICS JOINING NATO. Also on 3
September, Chernomyrdin stressed again Moscow's opposition to
NATO membership for the three Baltic States, saying it would
inevitably lead to "new sources of mistrust and suspicion" in their
relations with Russia. Chernomyrdin said no one had been able to
explain why Latvia, Lithuania, and Estonia should join NATO. He said
that Kaliningrad, seized by Soviet troops from Germany at the end of
World War Two, will always remain part of Russia. Chernomyrdin is
due to arrive in Vilnius on 5 September for a 12-nation summit,
where he will meet with Baltic and other East European leaders.

JUSTICE MINISTER ON DEATH PENALTY. After meeting with
President Boris Yeltsin on 3 September, Sergei Stepashin said Russia
is still debating whether to abolish the death penalty. Moscow
promised to ban capital punishment in January 1996 when it joined
the Council of Europe. But Yeltsin's attempts to outlaw executions
have been blocked by hard-liners in the parliament, who warn that
crime in the country will only worsen if capital punishment is
banned. Human rights activists say Russia executed 62 prisoners
after joining the council, but Russian officials say there have been no
executions since 1996. In July, Yeltsin sent a new bill to the
parliament that would permit capital punishment only after approval
by the chairman of Russia's Supreme Court, procurator-general, and
the presidential Commission for Pardons.

IMF APPROVES LOAN TRANCHE. The IMF board of directors on 3
September approved a $700 million tranche of its three-year loan to
Russia, Reuters reported. The fund noted economic developments in
Russia in the first six months of 1997 have been encouraging, adding
that monetary policy is on track to keep inflation down and the ruble
stable. However, Moscow needs to do more to settle its problem of
budgetary arrears, according to the fund. Wage, pension, and tax
arrears are one of Russia's most pressing social and economic
problems. The IMF has delayed several disbursements of the three-
year, $10 billion loan to Russia because of low tax revenues, a leading
cause of the arrears problem.

NEW JOB FOR FORMER STATE PROPERTY COMMITTEE CHAIRMAN.
Alfred Kokh has been elected chairman of the board of the Montes
Auri investment firm, Interfax and "Kommersant-Daily" reported on
3 September. Board member Arkadii Yevstafev said that beginning
this fall, Montes Auri will bid in auctions for shares in major
enterprises, and Kokh will supervise the firm's largest investment
projects. As a member of the State Property Committee for several
years and its chairman from September 1996 to August 1997, Kokh
was closely involved in preparing the government's privatization
program. First Deputy Prime Minister Anatolii Chubais earned some
1.25 billion rubles ($250,000) from investments with Montes Auri
between January and July 1996, when he held no official post.
Yevstafev also heads the Fund for the Protection of Private Property,
founded by Chubais. He gained fame in June 1996 as one of two men
detained outside government headquarters carrying more than
$500,000 in cash.

DIFFERING VIEWS ON NEW VERSION OF RELIGION LAW. Yeltsin's
Political Consultative Council has approved amendments to the
controversial law on freedom of conscience and religious
organizations, Interfax reported on 2 September. The new version is
to be submitted to the Duma soon, although some Duma deputies
advocate overriding Yeltsin's July veto of the original religion law.
The amended law would expand the list of "traditional" Russian
faiths. The original version recognized only Russian Orthodoxy, Islam,
Buddhism, and Judaism as "traditional." Duma deputy Galina
Starovoitova charged on 28 August that the new version retains
major flaws and would still violate the constitutional guarantee that
all religious groups are equal under the law, ITAR-TASS reported.
Patriarch of Moscow and All Russia Aleksii II, a strong supporter of
the law, announced on 2 September that the Russian Orthodox
Church is satisfied with the amendments, which "have not changed
[the law's] concept and essence."

CHRIST THE SAVIOR CATHEDRAL OPENED TO PUBLIC. Yeltsin and
Patriarch Aleksii II attended the opening on 3 September of the
rebuilt Christ the Savior Cathedral. "From now on this path [leading
to the cathedral] will welcome hundreds and thousands of pilgrims
coming here, as in earlier times to worship the Lord," the Patriarch
said. The original cathedral was intended to commemorate the defeat
of Napoleon's army in 1812 but was not completed until 1883. It was
blown up on Stalin's orders in 1931, and the site was later turned
into an enormous public swimming pool. The opening coincided with
the 850th anniversary of Moscow's founding.

TRANSCAUCASUS AND CENTRAL ASIA

AZERBAIJAN SEEKS TO INTENSIFY COOPERATION WITH U.S. President
Heidar Aliev on 3 September issued a decree instructing cabinet
ministers, the Foreign Ministry, and the National Bank to intensify
dialogue and cooperation with their U.S. counterparts, Turan and
Interfax reported. The Foreign Ministry was also ordered to maintain
closer contacts with France and Russia. Those two countries and the
US are the co-chairs of the Organization for Security and Cooperation
in Europe's Minsk Group, which is mediating a settlement of the
Karabakh conflict. Aliev also charged the Foreign and Defense
Ministries to expand military cooperation with the U.S. under the
aegis of NATO's Partnership for Peace program and the North
Atlantic Cooperation Council and to work more closely in the fields of
security and arms control. The "Turkish Daily News" on 4 September
reported that Azerbaijan, the U.S., and Israel are supplying
intelligence data to Turkey on the planned transfer of Russian S-300
missiles to Greek Cyprus.

AZERBAIJAN CONCERNED ABOUT RUSSIAN-ARMENIAN TREATY.
Speaking at a press conference in Moscow on 2 September, Russian
Foreign Ministry spokesman Valerii Nesterushkin denied that the 29
August Russian-Armenian Treaty on Friendship, Cooperation, and
Mutual Assistance is "aimed at a third party, notably Azerbaijan,"
Interfax reported. On 1 September, Azerbaijani Foreign Minister
Hasan Hasanov had told Moscow's ambassador to Baku that he was
"concerned" and "bewildered" at the treaty. Hasanov also responded
to Armenian President Levon Ter-Petrossyan's statement that the
treaty provides for military assistance if one of the signatory states
is attacked. Hasanov said the statement is an "open challenge to
Azerbaijan, which is itself the victim of aggression by Armenia,"
according to "Nezavisimaya gazeta" on 4 September. Azerbaijani state
foreign policy adviser Vafa Gulu-Zade told the newspaper that if
Azerbaijan tries to reconquer territories currently occupied by
Armenian forces, it will be drawn into a war with Russia.

OSCE UPBEAT ON ABKHAZIA. Niels Helveg Petersen, the Danish
foreign minister who is also OSCE chairman-in-office, has said the
prospects for resolving the Abkhaz conflict are "encouraging," ITAR-
TASS reported on 3 September. Petersen was in Tbilisi in late August
for talks with the Georgian leadership on both Abkhazia and South
Ossetia. On 2 September, the first day of the fall session of the
Georgian parliament, speaker Zurab Zhvania said the attitude of the
Russian leadership toward resolving the Abkhaz conflict has
improved, according to Interfax. Parliamentary deputies from
several factions, however, consider the Georgian government's
Abkhaz policy has resulted in "deadlock." They intend to create a
coalition to restore Georgian hegemony over the region, the Caucasian
Institute for Peace, Democracy and Development reported on 3
September, citing "Rezonansi".

GEORGIAN PRESIDENT CANCELS PLANNED MOSCOW VISIT.
Presidential press secretary Vakhtang Abashidze said on 4
September that Eduard Shevardnadze has canceled his planned visit
to Moscow to take part in the city's 850th anniversary celebrations,
Interfax reported. Shevardnadze's decision was taken in response to
a statement on 1 September by Col.-Gen. Andrei Nikolaev, the
Russian Federal Border Service director. Nikolaev said that his men
will use "all available means" to prevent some 300 trucks carrying
alcohol from entering the Russian Federation. The convoy has been
halted for several weeks at the Georgian-Russian frontier. Gen.
Valerii Chkheidze, Nikolaev's Georgian counterpart, said on Georgian
Radio on 3 September that Russian prohibition is an "attempt to
discredit Georgia."

PROBLEMS ON TAJIK-AFGHAN BORDER. Russian border guards on 3
September stopped eight men from crossing into Tajikistan from
Afghanistan, killing five of the intruders, ITAR-TASS and Reuters
reported. One border guard was wounded during the brief exchange
of fire. The three men who survived fled back to Afghanistan. The
incident comes one day after an ethnic Tajik serving in a Russian
border guard unit near the Pyanj border crossing was killed.
Authorities said that the 2 September attack was a "terrorist action."
The amount of drugs confiscated in Central Asia has increased
recently, likely because of the advent of winter and the
accompanying snowfalls that will block the major routes from
Afghanistan to its northern neighbors.

KAZAKH PRESIDENT WRAPS UP VISIT TO ARAB STATES. Nursultan
Nazarbayev on 3 September ended his tour of several Arab states in
the Persian Gulf area, TAR-TASS and Interfax reported. Nazarbayev
left Oman, his last stop, having signed agreements on cooperation
between the two countries' Foreign Ministries. He also discussed with
Omani officials how to bring Kazakh oil to the Persian Gulf. Oman has
invested in Kazakhstan's Tengiz oil field. Previously, Nazarbayev was
in Bahrain, where he signed agreements on avoiding double taxation
and on investments. Bahrain also raised the possibility of opening an
embassy in Kazakhstan soon. The main goal of Nazarbayev's tour,
which started in Kuwait, was to encourage the Gulf states to invest in
Kazakhstan.

UZBEKISTAN OPENS EMBASSY IN ISRAEL. Uzbekistan on 3 September
opened an embassy in Israel, ITAR-TASS reported. From 1992,
Uzbekistan had a consulate in Tel-Aviv. Acting Uzbek ambassador to
Israel is Rustam Isayev, who was the former consul. At the opening
ceremony, Isayev said the friendship between Israel and Uzbekistan
is much older than five years. He recalled that Jews have been living
in Uzbekistan for centuries and that many found refuge in
Uzbekistan during World War Two.

END NOTE

EU RETHINKS ITS FUNDING TO EAST

by William Echikson

        The European Union set up its TACIS and PHARE programs five
years ago to aid the countries of Central and Eastern Europe and the
former Soviet Union. When the two programs were launched, they
focused on providing emergency food and transport aid. Since then,
they have expanded and evolved to embrace hundreds of separate
projects in 25 countries. Recent reports, however, criticize their
effectiveness.
        Under a mandate from the European Parliament, independent
consultants prepared so-called interim evaluations in August. At the
same time, the EU's Luxembourg-based Court of Auditors carried out
audits of the two programs. Significant overlap was uncovered in the
two aid programs. In theory, PHARE helps Central and Eastern
Europe, while TACIS is designed for the former Soviet Union, except
for the Baltics. But in practice, the two often duplicate each other.
        Worse, almost two-thirds of the aid money goes to highly paid
Western consultants, including wealthy multi-national consulting and
accounting groups. Those expensive consultants do not even record
their working hours, the Court of Auditors complained. In particular,
consultants working in Ukraine did not bother "to warn their
superiors of the alarming situation in the nuclear-power stations."
        The auditors found that, because of the heavy use of
consultants, the aid money produced few concrete, lasting results.
"About 80 percent of PHARE projects managed on a decentralized
basis are spent on contracts for services, supplies, or work," the
report concluded. Also, EU officials prefer to stay in comfortable
Brussels rather than resettle in the countries receiving the aid.
        The supposed benefactors of the EU's are furious. One Russian
member of parliament told EU investigators. "TACIS programs are
supervised now by foreign specialists whose work is paid at the
expense of funds allocated for our country.... In fact, TACIS [is
helping solve] the problem of unemployment in the EU."
        Bureaucratic bumbling means that much money approved by
the EU's political leaders is never spent. PHARE still has not managed
to disburse $2.2 billion. Nonetheless, PHARE's budget is scheduled to
rise from $1.4 billion in 1997 to $1.76 billion in 1999.
        TACIS's budget is about half that amount, even though the
countries in TACIS are more backward than their neighbors in
PHARE. But the EU Court of Auditors noted in its report that only a
third of the $180 million allocated to improve Ukrainian nuclear
safety has been disbursed.
        Months are needed to get EU programs up and running, but
many of the countries receiving the aid are moving fast toward
market economies. The EU's TACIS Interim Evaluation report
acknowledged that "most projects are outdated even before the
tenders make their bids and strategy proposals." At the same time, it
notes that "poor projects are rarely terminated." Only 10 TACIS
projects were canceled owing to poor performance. But 80 programs
were able to run their full course, despite signs they had failed to
reach their interim objectives. The two programs are funding too
many separate projects, the report concluded.
        PHARE and TACIS official are pledging to change their ways in
response to such criticism. "This is a wake-up call," an unnamed
PHARE official admitted. "We realize that our program has to be
revised." PHARE officials say that in the future only projects costing
more than $2.2 million will be approved in the hope that fewer
larger projects will be easier to control than numerous smaller ones.
        Instead of continuing to divide funds into 13 areas, PHARE will
focus on funding infrastructures. For example, the main Berlin to
Warsaw highway will be improved. Up to 70 percent of the overall
program will be spent on such projects. A second priority will be
preparing Central and Eastern European recipients to join the EU.
Money will go toward computerizing customs facilities and upgrading
other public institutions to meet EU standards.
        The poor -- or even nonexistent -- image of the two programs
has also been sharply criticized. Some PHARE and TACIS officials
would like to change the programs' names to something more
recognizable, such as "Europa." When the Rowland Company's
contract to promote the two programs ran out this summer, a new
public relations firm was hired for the job.

The author runs the Brussels-based East-West news agency.




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