When we can begin to take our failures non-seriously, it means we are ceasing to be afraid of them. It is of immense importance to learn to laugh at ourselves. - Katherine Mansfield
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 1, No. 117, Part I, 15 September1997



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

* YELTSIN MEETS WITH TOP BANKERS

* RUSSIA TO BUILD OIL PIPELINE BYPASSING CHECHNYA

* ANOTHER BOMB EXPLODES IN DUSHANBE

End Note : TODAY'S MOSCOW IS NOT YESTERDAY'S CHICAGO

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RUSSIA

YELTSIN MEETS WITH TOP BANKERS. President Boris Yeltsin met
with the heads of several leading Russian banks and financial groups
on 15 September, RFE/RL's Moscow bureau reported. According to
ITAR-TASS, Oneksimbank's Vladimir Potanin, Media-Most's Vladimir
Gusinskii, Inkombank's Vladimir Vinogradov, Alfa-Bank's Mikhail
Fridman, Rosprom group's Mikhail Khodovkorskii, and SBS-Agro's
Aleksandr Smolenskii attended the meeting with Yeltsin. Security
Council Deputy Secretary Boris Berezovskii, considered among
Russia's wealthiest and most influential businessmen, was not
present. He claims not to have been directly involved in business
since joining the Security Council last fall, although most Russian
observers doubt that he has fully delegated his business interests.

CHUBAIS'S SECURITY STEPPED UP. The security protecting First
Deputy Prime Minister Anatolii Chubais has been strengthened
following tips that his assassination is being plotted, Interfax
reported on 14 September, citing Chubais's spokesman Andrei
Trapeznikov and an anonymous source in the Federal Security
Service. The source suggested that an unspecified oil company
threatened by bankruptcy because of tax debts may be behind the
alleged assassination plot.

"NEZAVISIMAYA GAZETA" SLAMS CHUBAIS. "Nezavisimaya gazeta"
on 13 September accused Chubais of "striving for complete control
over Russia" and strengthening "oligarchic, not democratic" trends in
Russian society. The newspaper charged that Chubais and
Oneksimbank head Potanin have close ties and seek to use a "Trojan
horse" candidate to win the presidential election in 2000. It also
claimed Chubais "entirely controls" Russian Television, the country's
Channel 2 network, and that he is seeking to remove Security Council
Deputy Secretary Boris Berezovskii and reduce his influence over the
Channel 1 broadcaster, Russian Public Television. In addition, the
newspaper charged that Chubais seeks to limit the influence of the
private network NTV, owned by Vladimir Gusinskii's Media-Most
group. "Nezavisimaya gazeta," which is partly financed by
Berezovskii's LogoVAZ group, has repeatedly criticized Chubais and
First Deputy Prime Minister Boris Nemtsov during the past two
months, as have outlets owned by Media-Most.

YELTSIN APPROVES FOURTH-QUARTER PRIVATIZATION LIST. Yeltsin
on 12 September approved the list of enterprises scheduled for
privatization during the fourth quarter of 1997, Russian news
agencies reported. The list includes the Eastern Oil Company and the
Tyumen Oil Company. Yeltsin told State Property Committee
Chairman Maksim Boiko that although privatization is an important
source of revenue, Russia "should not hurry too much" with the sales,
ITAR-TASS reported. In particular, the president said Russia must
not "repeat scandals" such as the July sale of a 25 percent plus one
share in the telecommunications giant Svyazinvest. A Cyprus-based
consortium involving Oneksimbank won the Svyazinvest auction,
which touched off a fierce battle among major banking and financial
groups. Meanwhile, in an interview with the weekly newspaper
"Interfax-Aif," State Duma Privatization Committee Chairman Pavel
Bunich of the Our Home Is Russia faction predicted that more major
privatization scandals will occur in 1998, Interfax reported on 14
September.

DUMA COMMISSION TO INVESTIGATE CONTROVERSIAL
PRIVATIZATION SALES. The State Duma on 12 September created its
own commission to investigate four major privatization sales, ITAR-
TASS reported. The Duma commission will investigate the May
auction of a stake in the oil company Sibneft, the July sales of stakes
in the Tyumen Oil Company and the telecommunications giant
Svyazinvest, and the August auction of shares in Norilsk Nickel. The
Duma had previously requested that the Audit Chamber investigate
those four auctions (see "RFE/RL Newsline," 8 September 1997).
Meanwhile, State Anti-Monopoly Committee head Natalya Fonareva
announced on 12 September that neither her committee nor the
Federal Service for Currency and Export Controls has found any legal
violations in the conduct of the Svyazinvest sale. Prime Minister
Viktor Chernomyrdin had ordered those investigations into the
Svyazinvest auction (see "RFE/RL Newsline," 13-14 August 1997).

CHERNOMYRDIN REJECTS ISRAELI ACCUSATIONS. Prime Minister
Chernomyrdin on 12 September said that repeated Israeli claims that
Russia is supplying Iran with technology for building long-range
ballistic missiles are "stupid" and "unworthy of comment." The same
day, Eitan Ben-Tsur, the director-general of the Israeli foreign
ministry met with Russian ambassador to Israel Mikhail Bogdanov
and demanded that Moscow halt "further transfers" of nuclear
technology to Iran, according to AFP. Also on 12 September, the
"Washington Times" reported that U.S. President Bill Clinton had sent
a special representative to Moscow to discuss the alleged nuclear
technology transfer with the Russian leadership. Meanwhile, Israeli
National Infrastructure Minister Ariel Sharon on 15 September
denied media reports that Israeli Prime Minister Benjamin
Netanyahu has ordered the suspension of bilateral economic
agreements and talks with Moscow on buying Russian natural gas to
protest alleged Russian-Iranian nuclear cooperation, ITAR-TASS
reported.

RUSSIA TO BUILD OIL PIPELINE BYPASSING CHECHNYA. First Deputy
Premier Nemtsov, who is also fuel and energy minister, told
journalists in Moscow on 15 September that the decision has been
made to construct a 283 kilometer oil pipeline bypassing Chechnya to
export Azerbaijan's Caspian oil, ITAR-TASS reported.  The pipeline
will run from Khasavyurt, in Dagestan, to Terskaya, in North Ossetia.
Nemtsov had said on 13 September that the pipeline could be built
within one year and will cost $220 million. Its throughput capacity
will be adequate to transport not only "early" Azerbaijani oil but also
much larger quantities of mainstream oil.  Discussions on financing
the project are to begin shortly, according to Nemtsov. Speaking in
Grozny on 14 September, Chechen President Aslan Maskhadov said
that the export of oil via the existing Baku-Grozny-Tikhoretsk
pipeline is of greater political than economic interest to Chechnya.

NEW ROUND OF RUSSIAN-CHECHEN TALKS. Meeting in Dagomys on
13-14 September, senior Russian and Chechen delegations agreed to
create three working groups to draft the proposed treaty between
Russian and Chechen state agencies, Russian media reported. The
working groups will also draw up two agreements on forming
common defense and economic policies. Russian Security Council
Secretary Ivan Rybkin told the meeting that  acrimonious exchanges
between Russian and Chechen leading officials following the recent
public executions in Grozny are "detrimental to the ongoing peace
talks." Chechen First Deputy Prime Minister Movladi Udugov on 12
September had stressed Grozny's intention to abide by earlier peace
agreements. Meanwhile, Chechen President Aslan Maskhadov on 14
September said that both he and Yeltsin are "almost ready" to sign a
treaty on establishing full diplomatic relations.

CHECHEN PRESIDENT HONORS BUDENNOVSK VETERANS. Maskhadov
on 13 September presented awards to 115 Chechen fighters who
participated in the June 1995 hostage-taking in Budennovsk,
Stavropol Krai, under field commander Shamil Basaev.  Some 130
civilians and 36 police and army personnel were killed in the raid.
According to Basaev, who attended the ceremony, that raid was
perpetrated with the prior approval of Chechen President Dzhokhar
Dudaev and Maskhadov, at the time chief of staff. Budennovsk
residents have denounced the award ceremony, Interfax reported on
14 September.

RUSSIA'S "FRANK SINATRA" ELECTED TO DUMA. Popular singer and
businessman Iosif Kobzon, who is frequently described as Russia's
Frank Sinatra, won a landslide victory in a 14 September by-election
for a State Duma seat in Agin-Buryat Autonomous Okrug, RFE/RL's
Moscow bureau reported on 15 September. According to preliminary
returns, Kobzon gained some 86 percent of the vote, far outstripping
his five rivals. He replaces Bair Zhamsuev, who was elected governor
of the okrug in February. Kobzon has been accused of having mafia
ties and was denied an entry visa to the U.S. in 1995. But the
following year, he won a libel lawsuit against the newspaper
"Sovetskaya Rossiya," which had alleged that Kobzon had personal
ties to organized criminals (see "OMRI Daily Digest," 6 March 1996).
Kobzon unsuccessfully contested the December 1995 Duma election
as the number three candidate for Boris Gromov's bloc My
Fatherland.

COMMUNIST WINS DUMA SEAT IN STAVROPOL. Preliminary results
show that Communist Party candidate Ivan Meshcherin easily won a
14 September by-election for a State Duma seat in Stavropol Krai,
RFE/RL's Moscow bureau reported on 15 September. In a field of 16
candidates, Meshcherin gained some 43 percent of the vote,
according to ITAR-TASS. He replaces Nikolai Manzhosov, who died in
the spring. Manzhosov won the seat in the December 1995 Duma
election as a Communist Party candidate. The Stavropol race had
attracted media attention because of high-profile extreme nationalist
candidates, including  author Eduard Limonov and a candidate
representing Aleksandr Barkashov's national-socialist party Russian
National Unity (RNE). Limonov and RNE candidate Mikhail Burlakov
received just 2.5 and 3.5 percent of the vote, respectively. Candidates
supported by the Congress of Russian Communities and Vladimir
Zhirinovsky's Liberal Democratic Party of Russian gained 14 and 6
percent.

KREMLIN SAYS LUKASHENKA PROMISED TO FREE ORT JOURNALIST.
The Russian presidential press service on 13 September said that
during his recent meeting with Russian President Yeltsin, Belarusian
President Alyaksandr Lukashenka promised to free Russian Public
Television (ORT) journalist Pavel Sheremet, ITAR-TASS reported. The
press service also said the Kremlin will consider the problem
regarding ORT journalists in Belarus resolved only when Sheremet
has been released. Sheremet has been imprisoned since mid-July for
allegedly crossing the Belarusian-Lithuanian border illegally. Other
ORT journalists arrested on similar charges have been released, but
ORT's accreditation to work in Belarus has been revoked. On 12
September, Interfax quoted Lukashenka as saying that during their 6
September meeting, Yeltsin had agreed that the case against
Sheremet was justified. Lukashenka previously said the case against
Sheremet, a Belarusian citizen, will be settled under Belarusian law
(see "RFE/RL Newsline," 8 September 1997).

ONEKSIMBANK EXPANDS ACTIVITIES IN BELARUS. Oneksimbank
head Vladimir Potanin expressed optimism regarding his bank's
long-term participation in the Belarusian banking system, Russian
news agencies reported on 12-13 September. Potanin discussed a
proposed Belarusian Eurobond issue and other topics during 12
September meetings with Lukashenka, Belarusian Prime Minister
Sergei Ling, and Belarusian National Bank Chairman Gennadii
Aleinikov. Oneksimbank and its affiliates recently purchased 49
percent of the shares in Minskkompleksbank, which was reorganized
in July (see "RFE/RL Newsline," 15 August 1997). Potanin suggested
that Minskkompleksbank will help alleviate the non-payments
problem in Belarus and will attract more Russian and other
international investment in the Belarusian economy. Potanin
participated in a 13 September seminar on Oneksimbank's activities
in Belarus, which was attended by bankers and factory directors as
well as some Belarusian government officials.

GAZPROM HEAD TO RETAIN CONTROL OVER MOST STATE-OWNED
SHARES. A new trust agreement to be signed between the
government and the gas monopoly Gazprom will allow Gazprom head
Rem Vyakhirev to continue to manage a 35 percent state-owned
stake in the company, First Deputy Premier Nemtsov told Interfax
and ITAR-TASS on 14 September. The state owns 40 percent of
Gazprom shares, and Vyakhirev has managed most of those shares
under a 1994 trust agreement. In the spring, Nemtsov sharply
criticized that agreement and vowed that the government will take a
stronger role in managing state-owned shares in the monopoly (see
"RFE/RL Newsline," 14, 16, and 29 April 1997).  In June, Gazprom
finished paying an estimated $2.5 billion in debts to the federal
budget. It is seen as closely allied with Prime Minister
Chernomyrdin, who headed the gas monopoly from 1989 to 1992.

DUMA APPROVES PROPOSAL TO FOUND OWN MAGAZINE. The  Duma
on 12 September passed a resolution approving a Federation Council
proposal that the parliament found a magazine called "Rossiiskaya
Federatsiya," ITAR-TASS reported. Representatives of both houses of
the parliament will help with the registration of the new publication.
The government announced in June that it would cease publication of
a small-circulation monthly magazine called "Rossiiskaya
Federatsiya," whose editor was criticized by First Deputy Prime
Minister Chubais (see "RFE/RL Newsline," 12 and 17 June 1997).
Opposition Duma deputies have repeatedly called for creating media
to be run by the parliament, claiming that most Russian media
outlets offer biased coverage of the legislature's activities.

RUSSIAN-GEORGIAN ALCOHOL WAR CONTINUES.  Senior Russian and
Georgian military and Foreign Ministry officials met on 12 September
to discuss restrictions on the transit of alcohol through Georgia to
Russia, ITAR-TASS reported.  Colonel-General Vladimir Ruzlyaev, the
commander of the Caucasus  special border district,  told journalists
later that trucks transporting alcohol may enter Russia only if their
drivers possess a license from the Russian Ministry for Foreign
Economic Relations, can prove that customs duties have been paid,
and have written permission from the Russian State Customs
Committee. The next day, Georgian President Eduard Shevardnadze
chaired a session of the national Security Council to discuss the
situation on the frontier, where several hundred truckloads of
alcohol are stranded. Shevardnadze's press spokesman accused
Russia of violating intra-CIS transit agreements by imposing the new
restrictions. On 11 September, Georgian frontier guards began
preventing their Russian counterparts and Russian military vehicles
from entering Georgian territory.

RUSSIA, TURKEY DISCUSS S-300 MISSILES.  Turkish Foreign Ministry
official Ali Tuygan has told Russian First Deputy Foreign Minister
Boris Pastukhov and Deputy Foreign Minister Viktor Posuvalyuk that
Ankara will exercise its right to take the necessary measures to
prevent the "premature" transfer by Russia to Greek Cyprus of S-300
missiles, the "Turkish Daily News" reported on 13 September.

FORMER ROSVOORUZHENIE BOSS APPOINTED DEPUTY MINISTER.
General Aleksandr Kotelkin, who resigned under pressure as head of
the arms export company Rosvooruzhenie in late August, was
appointed deputy minister for foreign economic relations on 10
September, Russian media reported. Kotelkin had worked in the
ministry's department for military-technical cooperation from 1992-
1994, when he was named head of Rosvooruzhenie. In his new post,
Kotelkin will continue to coordinate Russian arms exports, according
to "Kommersant-Daily"  on 11 September and "Izvestiya" on 13
September. Under Kotelkin's leadership at Rosvooruzhenie, Russia
became the world's number two arms exporter in 1996.

TATARSTAN TO OPEN REPRESENTATION IN KAZAKHSTAN.  Tatar
President Mintimer Shaimiev has issued a decree on opening a
plenipotentiary representation in Kazakhstan, RFE/RL's Kazan bureau
reported on 15 September. The office will seek to increase bilateral
trade and expand economic, scientific, cultural, and humanitarian
relations.

MORE COMPUTER PROBLEMS ABOARD "MIR." The main computer
system aboard the space station "Mir" malfunctioned again on 14
September, Russian media reported. Russian officials downplayed
this latest problem, saying it will soon be fixed. Built in 1989, the
computer was used aboard the analog "Mir" station on Earth and was
"urgently" sent to the space station in 1995, when there were
computer problems. It had also malfunctioned on 8 September. A
computer that failed earlier this year was finally shut down in mid-
August, following maintenance using parts from two other "faulty
computers."

TRANSCAUCASUS AND CENTRAL ASIA

ANOTHER BOMB EXPLODES IN DUSHANBE. Just hours after President
Imomali Rakhmonov and United Tajik Opposition (UTO) leader Said
Abdullo Nuri spoke of "unity" and "peace" at a joint press conference,
a bomb went off in a Dushanbe bazaar, RFE/RL correspondents
reported on 12 September. The explosion, which left 16 people
injured, was the third such incident in the Tajik capital in eight days.
In other news, the UN Security Council voted the same day to extend
the mandate of the UN observer mission to Tajikistan until 15
November. UN Secretary-General Kofi Annan said in a letter to the
council that the mission should provide assistance in integrating the
armed forces of the government and the UTO and help in the work of
the National Reconciliation Commission. That body is scheduled to
hold its first session in Dushanbe on 15 September.

CENTRAZBAT KICKS OFF IN KAZAKHSTAN. The Centrazbat military
exercises began in southern Kazakhstan on 15 September, RFE/RL
correspondents reported. Some 40 soldiers from Kazakhstan,
Kyrgyzstan, and Uzbekistan and 500 troops from the U.S. 82nd
Airborne Division, led by Marine Corps General John Sheehan,
parachuted into the area from U.S. airplanes to meet up with other
Central Asian troops. Paratroopers from Russia and Turkey are to
join them for the first stage of the exercises, which end on 17
September. U.S. troops are not taking part in the second stage, which
will be held in Uzbekistan; but the Central Asian troops will be joined
by soldiers from Georgia and Latvia for that part of the exercise.
Sheehan said the message the US wants to send is "that the Central
Asian republics live in stability."

VETERAN ARMENIAN DISSIDENT SLAMS AUTHORITIES. Paruir
Hairikyan, head of the Union for Self-Determination and a Soviet-era
dissident, has said his party's efforts to cooperate with the
authorities to "establish democracy" have failed, RFE/RL's Yerevan
bureau reported on 12 September. Hairikyan said the government
did not want free and fair elections, and he claimed that Levon Ter-
Petrossyan owed his reelection as president last year to hard-line
politicians such as Defense Minister Vazgen Sarkisyan and Yerevan
Mayor Vano Siradeghyan. Hairikyan said deputy parliamentary
speaker Ara Sahakyan's draft election law does not provide equal
conditions for all parties. But he predicted that the united Armenian
opposition could nonetheless defeat the ruling Republic bloc in future
elections. Hairikyan was harshly criticized by other opposition
parties for engaging in a dialogue with the Armenian leadership
earlier this year.

ARMENIA, AZERBAIJAN ANTI-CRIME COOPERATION.  Officials from
the Armenian and Azerbaijani Interior Ministries have discussed
joint efforts to combat crime in the regions adjoining their common
border, Armenian and Azerbaijani news agencies reported. The
discussion took place during the 11-12 September meeting of CIS
interior ministers in Baku. Armenian Deputy Interior Minister Haik
Harutyunyan told journalists in Yerevan on 12 September that there
have been "isolated attempts" to use Armenia as a transit country for
drugs. But he noted that those attempts do not yet pose a serious
threat.

END NOTE

TODAY'S MOSCOW IS NOT YESTERDAY'S CHICAGO

by Paul Goble

        A recent World Bank report demolishes one of the most
widely-held views about the nature of the Russian economy and the
reforms taking place in that county. That view holds that Russia is
now passing through the "robber baron" stage of capitalism, much as
the U.S. economy did one century ago. And it implies that the Russian
economy will just as inevitably graduate to mature capitalism.
        In its 20th annual world development report,  which was
released in late June and is entitled "The State in a Changing World,"
World Bank experts make three key arguments. They point out that
the Russian economy is fundamentally different from the "robber
baron" capitalism of the U.S. past. They suggest that there is nothing
inevitable about a "robber baron" stage of economic development.
And they also argue that a quick and easy escape from what many
call the "robber baron" stage of economic development is not
inevitable.
        The report makes a distinction between "robber baron"
capitalism in the U.S. and what it calls "robber capitalism" in Russia.
In the U.S. case, entrepreneurs during the latter part of the 19th
century built enormous industrial enterprises, often flaunting the
law in the process but creating something of real value for society. In
the Russian case, various former Communist Party officials and
economic managers have privatized the Soviet economy into their
own hands, selling off assets rather than building up new ones and
exporting capital instead of creating it.
        The report also notes that many of the more than 60 countries
surveyed have developed free market economies without passing
through a "robber baron" stage at all. In some of those countries, a
strong legal system kept entrepreneurs from gaining control of the
political system. In  others, the legal system grew apace with the
economic one, preventing outrages of either the U.S. or the Russian
kind.
        Finally, the report makes it very clear that Russian "robber
capitalism" today, just like U.S. "robber baron" capitalism of a century
ago, does not necessarily contain within itself a cure for its excesses.
Rather those excesses must be addressed by the political system and
in a comprehensive way over time.
        That is what happened in the U.S. Popular revulsion at the
behavior of the robber barons helped to power a political movement
that imposed a variety of constraints on their behavior and thus
allowed the U.S. economic system to mature. In Russia, on the other
hand, that process has not yet really begun. Some Moscow officials
are now trying to cope with some excesses of "robber capitalism" and
are even having some success. But no mass political movement has
emerged to push the process further.
        As a result, virtually all efforts to reform the Russian economy
after privatization have been incomplete or have had consequences
directly opposite to those the reformers have sought. Indeed, the
World Bank report concludes that the successes to which Russian
reformers point are almost always matched--or exceeded--by
negative developments that the political leaders in Moscow have
been unwilling or unable to address.
        But if the bank's conclusions about the current situation in
Russia are largely negative, its findings do provide some guidance
both for that country and for others who hope to see the Russian
economy develop. The message is a simple one: Russia cannot
overcome its own "robber capitalism" stage by economics alone.
Instead, it must create a state that enjoys sufficient authority to
erect the boundaries within which economic development can occur.
If Russia achieves that political goal, it will have greater economic
success. If it does not, the World Bank report suggests, Russia faces a
bleak future economically as well as politically.


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