As courage endagers life even so fear preserves it. - Leonardo Da Vinci
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 1, No. 114, Part I, 10 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
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Headlines, Part I

* ROKHLIN EXPELLED FROM OUR HOME IS RUSSIA FACTION

* RUSSIA, CHECHNYA SIGN OIL TRANSIT AGREEMENT

* GEORGIAN-ABKHAZ TALKS RESUME

End Note
ARMENIA'S ECONOMIC RECOVERY SLOWS DOWN

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RUSSIA

ROKHLIN EXPELLED FROM OUR HOME IS RUSSIA FACTION. State
Duma deputies from the pro-government Our Home Is Russia voted
on 9 September to expel Lev Rokhlin from their ranks. Rokhlin was
one of the movement's leading members and is the chairman of the
lower chamber's Defense Committee. He recently sharply criticized
plans to reorganize the armed forces. Rokhlin told reporters he will
leave the parliamentary faction but does not intend to give up the
chairmanship of the committee. He warned that if deputies try to
oust him from that post, the issue will have to go before the full
house. But Prime Minister Viktor Chernomyrdin, a founding member
of Our Home Is Russia, said the chairmanship has been granted to the
movement, which, he said, will nominate deputy Roman Popkovich to
the post, ITAR-TASS reported.

RUSSIA, CHECHNYA SIGN OIL TRANSIT AGREEMENT. Russian First
Deputy Prime Minister Boris Nemtsov, who is also fuel and energy
minister, and President of the Chechen state oil company (YUNKO)
Khozh-Akhmed Yarikhanov have signed five agreements that will
enable Azerbaijan to export 200,000 metric tons of "early" Caspian
oil via Chechnya beginning, as planned, in early October. Chechnya
will receive $854,000 from the federal budget, and the Russian
pipeline company Transneft will pay Grozny $0.43 for each metric
ton of oil exported, Russian media reported on 9 September. The
federal allocation comprises $1.60 per ton in transport tariffs and a
lump sum toward repairs to the pipeline, which are expected to be
completed within the next month. Yarikhanov told ITAR-TASS he
was "satisfied" with the deal but did not exclude more negotiations to
set new terms for the export of oil beginning 1 January 1998.

GROZNY POSTPONES PLANNED EXECUTIONS. Chechen prosecutor-
general Khavazh Serbiev announced on 10 September that the public
execution of two men convicted of murdering a family has been
postponed, Reuters reported. The execution was due to take place
later that day. Said-Khasan Khadzhiev, the press secretary of the
Supreme Religious Court, told ITAR-TASS that only the Chechen
president can take a decision on the public execution of convicted
criminals. Khadzhiev also denied Russian media claims that some 30
people are awaiting execution in Chechnya, saying there are only
two. The televised execution on 3 September of a couple convicted of
murder elicited widespread condemnation in Russia and abroad.
Chechen Deputy Prosecutor-General Magomed Magomadov told
ITAR-TASS that public executions are a "temporary phenomenon"
and will be discontinued as soon as the crime rate is "normalized."

DUMA APPROVES SHOKHIN'S REPLACEMENT. Duma deputies on 10
September approved the candidacy of Vladimir Ryzhkov as the lower
chamber's first deputy speaker. Ryzhkov is a member of the Our
Home Is Russia faction. He replaces Aleksandr Shokhin, who vacated
the post to take over the faction's leadership from Sergei Belyaev.
Belyaev recently quit the movement, saying its policies had become
too closely linked with those of the government.

PROCURATOR-GENERAL INVESTIGATES NEMTSOV'S CLAIM ON PHONE
TAPPING. The Procurator-General's Office has launched a criminal
investigation into alleged eavesdropping on First Deputy Prime
Minister Boris Nemtsov's telephone conversations, Russian media
reported on 9 September. Nemtsov asked the office to investigate
how the newspaper "Novaya Gazeta" obtained the transcript of a
telephone conversation he had with businessman Sergei Lisovskii.

U.S. CARRIER FILES COMPLAINT AGAINST AEROFLOT. United Airlines
has filed a formal complaint with U.S. aviation authorities against
Aeroflot in a bid to have the Russian carrier banned from landing in
Washington, Chicago, and San Francisco, U.S. media reported on 9
September. The U.S.-based airline said it filed the complaint after
Russian officials disallowed United Airlines-Lufthansa flights to
Moscow despite a 1993 agreement between Russia and the U.S.
allowing such cooperative flights. United Airlines also said Russia
rejected an application to use a recently established air route over
Russia's Far East. Cyril Murphy, United Airlines vice president for
international affairs, said Russia's actions are damaging not only to
U.S. airlines but also to Russian ones.

RUSSIA TO BUILD FLOATING NUCLEAR POWER PLANT. Russia plans
to build a floating nuclear power station off the Chukotka peninsula
to provide electricity to remote areas of northern Siberia, ITAR-TASS
reported on 10 September. A decision to build the power station,
which will be based on a submarine, was reached in a meeting
between the Minister for Atomic Energy Viktor Mikhailov and the
governor of Chukotka, Aleksandr Nazarov. The new nuclear station is
intended to replace the aging coal-powered electricity plant in the
remote Chukotka town of Pevek. It is expected to be operational by
1999.

NEW DAILY NEWSPAPER GOES ON SALE. A new daily appeared on
Moscow's newsstands on 9 September. Leonid Zlotkin, editor-in-chief
of the "Russian Telegraph," told Reuters that Oneximbank, Russia's
third largest commercial bank, is a major investor in the newspaper.
Oneximbank has been eager to boost its involvement in the media
and already has a stake in many regional and several national
newspapers. Zlotkin said the daily will be a "bourgeois, conservative
newspaper" that will have a strong business bias but will also
provide serious coverage of politics, diplomacy, and culture. "Russian
Telegraph" will soon be available in major cities across the country,
according to its editors.

HISTORICAL MUSEUM PARTLY REOPENED. The State Historical
Museum, a landmark building flanking Moscow's Red Square, partly
reopened on 9 September following renovations that have lasted for
11 years. The museum opened 13 of its more than 40 exhibition
rooms in a ceremony attended by Prime Minister Chernomyrdin and
representatives of the federal government, city administration, and
the Russian Orthodox Church. Chernomyrdin promised that the
government will come up with funds to finish restoration work in the
"near future."

RUSSIAN-GEORGIAN VODKA WAR INTENSIFIES. Russian government
minister Yevgenii Yasin said on 9 September that Moscow will not
allow the alcohol convoy currently detained at the Georgian-Russian
frontier to enter the Russian Federation because the owners of the
spirit do not have licenses, ITAR-TASS reported. The Russian
government reportedly issued a ban on imports of alcohol from
Turkey via Georgia in February 1997, but border guards began
systematically implementing it only in July. Since that time, several
hundred trucks have been stranded at the border. "Krasnaya zvezda"
estimated on 4 September that those trucks contain enough raw
alcohol to manufacture 50 million bottles of vodka. Georgian
President Eduard Shevardnadze insists that documentation for the
transit shipments is legally valid. He also accuses Russia of
attempting to undermine international confidence in Georgia's merits
as a transit corridor. Helicopters are now being hired to airlift the
alcohol across the frontier.

TRANSCAUCASUS AND CENTRAL ASIA

GEORGIAN-ABKHAZ TALKS RESUME. Georgian, Russian, and UN
representatives met in Sukhumi on 9 September for two-day talks
with the Abkhaz leadership, Russian media reported. Lander Tsaava,
the deputy chairman of the Abkhaz parliament in exile and a
member of the Georgian delegation, told Interfax that the talks will
focus on Abkhazia's future political status and conditions for the
repatriation of ethnic Georgians forced to flee during the 1992-1993
war. Russian First Deputy Foreign Minister Boris Pastukhov
commented that the main issue will be Abkhazia's future status.
"Nezavisimaya gazeta" on 10 September, however, quoted Abkhazia's
permanent representative in Moscow Igor Akhba as saying that
economic and humanitarian issues will be discussed. Meanwhile in
Tbilisi, Georgian Defense Minister Vardiko Nadibaidze said his army
is ready to "resolve the Abkhaz problem by force" if President
Eduard Shevardnadze issues the appropriate orders.

AZERBAIJAN TO DELAY OPENING EMBASSY IN ISRAEL. Israfil
Vekilov, Azerbaijan's ambassador to Egypt, said in Cairo on 9
September that opening an Azerbaijani embassy in Israel is
contingent on a settlement in the Middle East, AFP reported. Israel
has an embassy in Baku. Vekilov called on Arab countries to open
diplomatic representations in Azerbaijan. He also deplored the lack of
trade between his country and the Arab world. "Literaturnaya
gazeta" on 3 September reported that Azerbaijani President Heidar
Aliev has repeatedly postponed an official visit to Israel, originally
scheduled for 1995, in order to avoid further exacerbating Baku's
already strained relations with Iran.

AZERBAIJANI OPPOSITION PROTESTS TRAVEL RESTRICTIONS.
Deputies of the opposition Azerbaijan Popular Front on 9 September
appealed to Interior Minister Ramil Usubov to protect their
constitutional right to travel within the country, Turan reported. Four
members of the front were detained by police at Nakhichevan
airport on 6 September and ordered to return to Baku (see "RFE/RL
Newsline," 8 September 1997). The Nakhichevan Interior Ministry
broadcast a statement on national television claiming that local police
had discovered a cache of weapons believed to belong to the front in
the village of Keleki, where former President Abukfaz Elchibey has
lived since fleeing Baku in June 1993. The front issued a statement
on 8 September denying having stockpiled arms in Keleki.

MORE EXPLOSIONS IN TAJIK CAPITAL. Four small bombs exploded in
the Dushanbe area early on 10 September, RFE/RL correspondents
reported. The bombs, planted in districts adjoining the main route to
the airport, went off within several minutes of one another. No one is
reported injured, but the explosions are expected to further delay
the arrival of United Tajik Opposition leader Said Abdullo Nuri from
Tehran.

PLANS TO PROTEST NATO EXERCISE IN KAZAKHSTAN. The Almaty
committee of the Workers Movement on 9 September announced it is
organizing a demonstration in front of the U.S. embassy on 12
September to protest NATO-sponsored military exercises, according
to Kazakh Commercial Television and Reuters. A statement released
by the committee noted that NATO is "already on the borders of
Russia, Ukraine, and Belarus." The exercise is scheduled to take place
in southern Kazakhstan and northern Uzbekistan from 14-21
September under NATO's Partnership for Peace program. Troops
from U.S., Turkey, Russia, Georgia, Latvia, Kazakhstan, and Uzbekistan
will be taking part.

IMMINENT MEAT SHORTAGE IN KYRGYZSTAN? Minister of
Agriculture and Water Resources Jumakadyr Akineyev is quoted in
the 5-12 September issue of "Pravda-5" as saying number of sheep
in the country has decreased by more than half. Sheep are
traditionally the most important, and least expensive, source of meat
in Kyrgyzstan. According to Akineyev, their number has dwindled in
the last few years from some 10 million to 2-3 million. The minister
blamed the overuse of easily accessible grazing lands and financial
constraints on most herders preventing them from reaching remote,
virtually untouched pastures. The minister conceded that it currently
costs some $200 to raise a sheep for two years and its sale price is
only $80. He added that there may be meat shortages and
accompanying higher prices later this year.

ARMENIA'S ECONOMIC RECOVERY SLOWS DOWN

by Gagik Bakhshian and Michael Wyzan

Armenia's main economic indicators during the first half of 1997
were less favorable than in the last few years. The growth of gross
domestic product slowed to 1.4 percent from 5.8 percent in 1996,
and industrial production fell by 2.9 percent, after increasing by 1.2
percent in 1996. Official unemployment rose to 10.6 percent in June
from 10.1 percent in December 1996.

External developments were also worrisome in the period from
January to June. Exports decreased by 21 percent, while imports rose
by 16 percent, yielding a trade deficit (net of foreign assistance) of
$326 million, compared with $571 million in 1996 as a whole.

Nonetheless, the economic situation in the first half of 1997 had its
positive sides, including low inflation. Consumer prices were up by
only 7.2 percent compared with the same period last year. Moreover,
performance may improve in the second half of 1997, as was the
case last year, when GDP growth was 3.2 percent for the first five
months and 5.8 percent for the year. In addition, in 1996 inflation
turned out to be lower than projected during the year.

Armenia enjoyed the best economic macroeconomic performance in
the CIS from 1994 to 1996. GDP grew by 5.4 percent in 1994, 6.9
percent in 1995, and 5.8 percent last year. The figures for 1994 and
1995 were the highest in the CIS those years. By 1996, consumer-
price inflation had fallen to 5.7 percent on a December-to-December
basis, the lowest of any former Soviet republic since the break-up of
the USSR.

The biggest macroeconomic problems are sizable external
imbalances, which result from very weak export performance, and
large budget deficits. Although both types of deficit have been
largely financed by international assistance, such a situation cannot
persist indefinitely.

>From 1991 to 1993, GDP fell by 63 percent, while four-digit annual
inflation continued through 1994. That disastrous performance was
caused by such factors as the 1988 earthquake, the shutting down of
the Medzamor nuclear power plant in 1989 (reopened in 1995), the
disruption of trade with the rest of the former Soviet Union,
blockades by Turkey and Azerbaijan, and civil unrest in Georgia,
which cut off Armenia's only remaining outlet to the sea.

In early 1995, the economy rebounded almost immediately after
IMF awarded the country its first, $23.6 million loan in December
1994. Inflation fell from almost 61 percent in that month to 3.9
percent in January, while GDP growth went from -14.8 percent in
1993 to 5.4 percent in 1994.

In February 1996, the IMF granted Armenia a three-year, $148
million loan. Although the fund has generally praised Armenian
economic policy, it has expressed concern this year over poor
performance on tax collections and a growing debt burden. Such
concern has resulted in a delay in its release of the first tranche of
the loan from the first to the second quarter.

There are grounds for uneasiness about the future of Armenia's
economy beyond slightly worse statistics and a more standoffish IMF
this year. It is unclear whether Armenia will be able to generate the
sustained, rapid economic growth necessary to raise its standard of
living. As in most transition countries, foreign investment--especially
in new plant and equipment for production of goods for export--is
vital for achieving such growth. Several factors make it difficult for
Armenia to attract such investment, however.

The country is landlocked, isolated from world markets, and has no
direct economic contact with two neighbors, Turkey and Azerbaijan.
It is also rather poor in natural resources, although they are good
prospects for the exploitation of copper and molybdenum deposits
(as well as gold in territory disputed with Azerbaijan). Most
important, the threat of a renewed conflict over the unrecognized
Nagorno-Karabakh Republic hangs over its economic prospects.

It is likely that the Armenian Diaspora, by itself, could provide
sufficient foreign investment to improve the country's
macroeconomic performance. But so far, cumulative foreign
investment is in the range of only $12-24 million. Another roadblock
to growth are banks unable to mobilize domestic savings or stimulate
investment.

Better economic prospects might result from improved relations with
Russia. The two countries signed a treaty on "friendship, cooperation,
and mutual assistance" on 29 August. They also signed a second
accord creating a joint venture to re-export Russian gas to Turkey.
But Armenian Energy Minister Gagik Martirossian's prediction that
revenues from the transit and export of gas will enable Armenia to
repay its foreign debt within two years and pay off its external
finance requirements is perhaps overly optimistic.

Gagik Bakhshian is deputy director of the Center for Economic Policy
Research and Analysis in Yerevan. Michael Wyzan is a research
scholar at the International Institute for Applied Systems Analysis in
Laxenburg, Austria.




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