Some things have to be believed to be seen. - Ralph Hodgson
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 1, No. 120, Part I, 18 September 1997



A daily report of developments in Eastern and Southeastern Europe,
Russia, the Caucasus and Central Asia prepared by the staff of Radio
Free Europe/Radio Liberty.

This is Part I, a compilation of news concerning Russia, Transcaucasia
and Central Asia. Part II covers Central, Eastern, and Southeastern
Europe and is distributed simultaneously as a second document.
Back issues of RFE/RL NewsLine and the OMRI Daily Digest are online
at RFE/RL's Web site:
http://www.rferl.org/newsline

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Headlines, Part I

*RUSSIA JOINS PARIS CLUB

*RUSSIA SELECTS ROUTE FOR CHECHEN BYPASS PIPELINE


*ARMENIA DENIES DEVELOPING NUCLEAR WEAPONS

End Note
THE GREAT POKER GAME
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RUSSIA

RUSSIA JOINS PARIS CLUB. First Deputy Prime Minister Anatolii
Chubais and Paris Club president Christian Noyer on 17 September
signed a deal granting Russia full membership in the Paris Club of
creditor nations. Speaking to journalists in Paris, Chubais said
admission to the club will help Russia collect part of the $140 billion
it is owed by countries that received loans from the Soviet Union.
Some $52 billion in debt, owed to Russia by developing countries and
based on an outdated exchange rate, will be reduced to $12 billion
and payments rescheduled, he said. Russian officials and Noyer
finalized the deal to grant Russia admission to the Paris Club during
the Summit of Eight in Denver (see "RFE/RL Newsline," 23 June
1997). In June 1996, Russia rescheduled its $38.7 billion debt to
Paris Club members.

CHUBAIS ON IMPLICATIONS OF PARIS CLUB MEMBERSHIP. Chubais
said that joining the Paris Club "is a very significant political event.
We will now be on an equal footing with the other industrialized
countries in the world," Reuters reported on 17 September. He added
that thanks to club membership, annual debt repayments to Russia
may increase from $150-200 million to $500-700 million. Chubais
and other Russian officials are to fly to Hong Kong on 19 September
for meetings of the World Bank and the International Monetary Fund
(IMF). As a Paris Club member, Chubais said, Russia will be able
attend those meetings "for the first time as a contributor rather than
a nation seeking aid."

RUSSIA, LONDON CLUB TO SIGN DEBT-RESCHEDULING AGREEMENT.
Chubais also told journalists in Paris on 17 September that
agreement has been reached on rescheduling repayment of the
former Soviet Union's debts to the London Club of leading foreign
commercial banks, ITAR-TASS reported. Representatives of those
banks and the Russian government will sign an agreement in Moscow
on 6 October on repayment of some $35 billion in overdue loans and
interest, a spokesman for the Deutsche Bank told "Bloomberg
Financial News" on 17 September.

RUSSIA NOT TO BORROW FROM IMF AFTER 1999. President Boris
Yeltsin told reporters in Orel Oblast that Russia will not seek to draw
any loans from the IMF once a three-year, $10 billion loan expires in
1999, an RFE/RL correspondent reported on 18 September. First
Deputy Prime Minister Chubais said earlier this year that Russia will
not seek any major IMF credits when the current loan expires and
that in the future, the World Bank will be a more important lender to
Russia. Speaking to Interfax on 17 September, First Deputy Finance
Minister Aleksei Kudrin said the IMF has already "fulfilled its main
role" with respect to Russia. He added that Russia now plans to
"become an active borrower" on the world capital market.

RUSSIA SELECTS ROUTE FOR CHECHEN BYPASS PIPELINE. The Russian
government on 17 September announced that the proposed oil
export pipeline bypassing Chechnya will run through Dagestan and
Stavropol Krai, parallel to the administrative border with Chechnya,
Russian agencies reported. Government spokesman Andrei Pershin
told journalists that the contractor for the bypass pipeline will be
chosen by tender and a decision on funding will soon be taken. Also
on 17 September, Chechen state oil company President Khazh-
Akhmed Yarikhanov said the Chechen Finance Ministry has still not
received the promised funds for repairing the Chechen sector of the
Baku-Grozny-Tikhoretsk pipeline, "Rossiiskaya gazeta" reported on
18 September (see also "End Note" below).

MORE ARGUMENTS FOR, AGAINST RATIFYING START-2. In an article
published in "Nezavisimaya gazeta" on 18 September, Sergei Rogov,
the director of Russia's Institute for the U.S. and Canada, argued that
while the START-2 treaty "is not ideal," its ratification is essential
given Russia's present economic weakness. He conceded that
ratification will necessitate considerable additional short-term
expenditures but pointed out that it creates conditions for preserving
approximate parity in strategic forces between Russia and the U.S. He
also noted that the U.S. will have to destroy its most modern
warheads. State Duma Foreign Affairs Committee Chairman Vladimir
Lukin of Yabloko told ITAR-TASS that he will "do everything
possible" to persuade Duma deputies to vote in favor of ratification.
Duma Defense Committee chairman Lev Rokhlin, however, said that
ratification "will complete the ruin of the Russian army."

PRIMAKOV DENIES RESIGNATION RUMORS. Foreign Minister Yevgenii
Primakov told journalists in Moscow on 17 September that he has no
intention of quitting, Interfax reported. Primakov said media reports
charging that he has already submitted his resignation are "fantasies
of those who would like me to resign." Spokesmen for the president,
government, and Foreign Ministry have also denied the reports (see
"RFE/RL Newsline," 17 September 1997). Primakov is to travel to the
U.S. on 20 September to attend the upcoming session of the UN
General Assembly. He is scheduled to meet with U.S. President Bill
Clinton on 22 September, a Foreign Ministry source told Interfax.

FORMER PRESIDENTIAL ADVISER SAYS HE LEFT VOLUNTARILY.
Former presidential adviser Georgii Satarov, who was recently
dismissed by presidential decree, says he informed Yeltsin and
Presidential Chief of Staff Valentin Yumashev long ago of his
intention to resign, RFE/RL's Moscow bureau reported on 17
September. Satarov told journalists that as head of an independent
analytical center, he will continue to cooperate with the presidential
administration. His first project will be to prepare Yeltsin's 1998
message to the parliament. Satarov said he will not write memoirs
about his Kremlin experience but will cooperate with friends and
former colleagues who plan to do so. Meanwhile, Mikhail Komissar,
deputy head of the presidential administration, denied a
"Kommersant-Daily" report suggesting that he had insisted on
Satarov's ouster, Interfax reported. Komissar was director of Interfax
before joining the presidential administration in August (see "RFE/RL
Newsline," 15 August and 17 September 1997).

CATHOLICS, PROTESTANTS CRITICIZE REVISED RELIGION LAW.
Russia's Catholic, Baptist, Seventh-Day Adventist and Pentecostal
communities have issued a joint statement urging Yeltsin to reject
the new version of the law on religious organizations, Interfax
reported on 17 September. Yeltsin submitted a revised religion law
to the Duma on 3 September, having vetoed an earlier version in
July. The groups' statement argued that, except for the preamble, the
new version is "practically unchanged" and still contains
"discriminatory" and "unconstitutional" limits on minority religions.
Presidential aide Andrei Loginov had claimed that Catholic and
Protestant groups support the revised religion law, but
representatives of various denominations told the Keston News
Service on 11 September that Loginov misrepresented their stance.
Meanwhile, ITAR-TASS reported on 17 September that a Duma vote
on the revised religion law has been delayed for at least one week
while more amendments are considered.

DUMA AGAIN FAILS TO ELECT HUMAN RIGHTS COMMISSIONER. None
of the seven candidates for federal human rights commissioner
gained the necessary two-thirds majority (300 votes) in the State
Duma on 17 September. Communist-backed candidate Oleg Mironov
led the field with 265 votes, "Nezavisimaya gazeta" and "Rossiiskaya
gazeta" reported on 18 September. He was also the leading candidate
in the Duma's last unsuccessful attempt to elect a human rights
commissioner (see "RFE/RL Newsline," 7 April 1997). Vladimir
Isakov, the Agrarian faction's candidate, who chaired the Duma's
Legislation Committee in 1994 and 1995, finished second with 198
votes, followed by Yabloko candidate Yelena Mizulina with 176.
Duma faction leaders decided to postpone further attempts to elect a
human rights commissioner for one month. The Duma sacked its last
human rights commissioner, Sergei Kovalev, in March 1995.

NO TRUCE IN BANK WAR. "Nezavisimaya gazeta" on 18 September
published a blistering attack on Oneksimbank, which it described as
an "aggressive" actor on the Russian market that is seeking to
establish monopolies in various sectors. Since a consortium involving
Oneksimbank acquired a stake in the telecommunications giant
Svyazinvest, "Nezavisimaya gazeta" has repeatedly criticized
Oneksimbank and its president, Vladimir Potanin (see "RFE/RL
Newsline," 29 July 1997). The newspaper is partly owned by Security
Council Deputy Secretary Boris Berezovskii's LogoVAZ group. On 15
September, Yeltsin met with six leading bankers and said he had
persuaded them to stop "quarreling with the government" and
"slinging mud" at one another in the mass media. Berezovskii did not
attend that meeting. "Nezavisimaya gazeta" on 16 September accused
First Deputy Prime Minister Boris Nemtsov of exceeding his authority
by attempting to prevent the bank SBS-Agro from issuing additional
shares earlier this summer.

STROEV AGAINST "DOUBLE STANDARDS" FOR REGIONS. Federation
Council Speaker Yegor Stroev has spoken out against "double
standards" for Russian regions, saying the constitution guarantees
equal rights to all regions. In an interview published in "Rossiiskaya
gazeta" on 18 September, Stroev, who is also governor of Orel Oblast,
expressed regret that Russia's 89 regions were no longer drawn on
purely territorial lines. (Twenty-one republics, 10 autonomous
okrugs, and the Jewish Autonomous Oblast are named after ethnic
groups.) Stroev argued, "all peoples should get what they deserve,
what they have earned, and not gain at each other's expense." (Of the
more than 30 regions that have signed power-sharing agreements
with the federal authorities, Tatarstan and Sakha [Yakutia] are
among those that have obtained the most favorable terms.) Stroev
met with Yeltsin during his visit to Orel Oblast on 18 September.

STATUS OF ORT DIRECTOR-GENERAL UNCERTAIN. Russian Public
Television (ORT) Director-General Sergei Blagovolin has been working
for the last two months as president of the Financial-Industrial
Corporation, a Moscow bank, "Izvestiya" and "Kommersant-Daily"
reported on 18 September. During that time, Blagovolin has hardly
shown up at ORT, but the board of directors of Russia's Channel 1
network has still not accepted his resignation. Appointed head of ORT
in March 1995, Blagovolin has occasionally criticized his own
network's news coverage. For instance, in February he described
ORT's unflattering coverage of Moscow Mayor Yurii Luzhkov as
"stupid" and "dangerous." In a June interview with the Russian
Television network, which was never aired, Blagovolin charged that
ORT's weekly analytical program is "extremely dangerous" (see
"RFE/RL Newsline," 6 August 1997). Security Council Deputy
Secretary Boris Berezovskii is believed to be the most influential
figure at 51 percent state-owned ORT.

LEBED ON RUSSIAN-JAPANESE RELATIONS. Former Russian Security
Council Secretary Aleksandr Lebed, who is currently in Japan on a
private visit, said the problem of the Kurile Islands must be resolved,
Russian media reported on 17 September. Lebed said it is impossible
to have a peace treaty with Japan without settling territorial issues.
But he noted that it would take "at least 20 years" to conclude an
agreement on turning over the islands to Japan and that a
referendum would first have to be held among the people living on
the islands. He also said Russia's strategic and defense interests must
be kept in mind and that any talks on returning the islands would
have to involve the U.S., which has defense treaties with Japan.

TRANSCAUCASUS AND CENTRAL ASIA

ARMENIA DENIES DEVELOPING NUCLEAR WEAPONS. Armenian
Defense and Foreign Ministry spokesmen have rejected Azerbaijani
claims that Armenia is developing nuclear weapons at secret bases,
RFE/RL's Yerevan bureau reported on 17 September. Azerbaijani
Foreign Minister Hasan Hasanov made the allegations the previous
day at a conference on nuclear non-proliferation in Tashkent.
Armenian Foreign Ministry spokesman Arsen Gasparyan said
Yerevan fully adheres to its obligations under the Nuclear Non-
Proliferation Treaty and uses its nuclear potential "only for peaceful
purposes." He said Armenia's Medzamor nuclear power plant is
regularly inspected by the International Atomic Energy Agency,
which, he stressed, has found no violations. Hasanov had called for
the closure of Medzamor and for the declaration of the South
Caucasus as a nuclear-free zone, according to Interfax.

CHANGES TO KARABAKH PEACE PLAN IN OFFING? Armenian First
Deputy Foreign Minister Vartan Oskanian told an RFE/RL
correspondent in Yerevan on 17 September that he believes the co-
chairmen of the Organization for Security and Cooperation in Europe's
Minsk Group will make changes in their latest peace proposals for
Nagorno-Karabakh. The co-chairmen are scheduled to arrive in the
Armenian capital on 19 September. The unrecognized Nagorno-
Karabakh Republic has already rejected the draft plan proposed by
the Minsk Group in early June, and Armenia has expressed
reservations. Oskanian said Yerevan has made alternative proposals,
but he declined to reveal them. Karabakh President Arkadii
Ghukasyan said on 17 September that Yerevan and Stepanakert have
differing approaches to resolving the conflict but that they have the
same strategic goal, Interfax reported.

TWO UN OBSERVERS ABDUCTED IN WEST GEORGIA. Two members of
the UN observer mission in western Georgia were abducted on 16
September by unidentified persons, RFE/RL's Tbilisi bureau reported
citing BS-Press. The two mission members were released the
following day. A UN spokesman confirmed the abduction but gave no
further details. The nationality of the abductors is not known.

TURKMEN TENDER UPDATE. Turkmen Minister for Foreign Economic
Relations Toyli Kurbanov says none of the international oil companies
interested in developing 11 oil and gas deposits in the Turkmen
sector of the Caspian Sea has questioned the legality of
Turkmenistan's ownership of the Serdar (Kyapaz in Azerbaijani)
field, "Nezavisimaya gazeta" reported on 18 September. Kurbanov
reaffirmed Turkmenistan's claim to ownership of the Chirag and
Azeri fields, which are being developed by a major Western
consortium. He said that Turkmenistan will not prevent the
consortium from developing the deposits in question but will insist
that the Azerbaijani government give Ashgabat a share of the profits.

ITALIAN PRIME MINISTER IN UZBEKISTAN. Romano Prodi met with
Uzbek President Islam Karimov in Tashkent on 17 September to sign
a friendship and cooperation agreement, Reuters and Interfax
reported. At a joint press conference, Prodi said there is a "huge
potential to expand our relations," while Karimov noted that bilateral
trade was up 60 percent in the first half of 1997 compared with the
same period last yar. The same day, an agreement was signed on
setting up a joint venture between the Italian company Stet and the
Uzbek government to form the telephone communications firm
Udinet. The Italian oil company Agip is currently negotiating with
Uzbekistan's state oil and gas corporation Uzbekneftegaz for rights to
explore Uzbek fields.

KARIMOV COMMENTS ON RUSSIA, AFGHANISTAN. At the 17
September press conference with visiting Italian Premier Prodi,
Karimov said problems in Uzbek-Russian relations were due to forces
inside Russia that had not "renounced the imperial vision with regard
to former USSR republics." Karimov said he wanted relations
developed "on an equal basis" but added that relations in the CIS
were being developed "according to Russia's desire." With regard to
Afghanistan, Karimov said the problems there needed to be solved
by the Afghan people. He objected to the Russian press's portrayal of
General Abdul Rashid Dostum as an "Uzbek general." Dostum is an
ethnic Uzbek who recently returned to Afghanistan. Meanwhile,
ITAR-TASS on 18 September cited Taliban militia sources as saying
they had captured the town of Khairaton on the southern bank of the
Amu-Darya River, opposite the Uzbek city of Termez.

KAZAKH OPPOSITION LEADER SENTENCED. Madel Ismailov, a leader of
the Almaty's Workers Movement, has been sentenced to one year's
hard labor, RFE/RL correspondents reported. Ismailov was found
guilty of organizing "events that could cause mass unrest in the
capital" in connection with his role in a 30 May demonstration in
Almaty. Ismailov had been imprisoned while an investigation into
the incident had taken place. During the trial proceedings, the judge
asked the police chief investigator, Talghat Iskakov, if he was aware
that under Article 2 of Chapter 170 of the criminal code, a person not
considered dangerous cannot be imprisoned while an investigation is
under way. Iskakov replied he had received his orders "from above"
and had never read the relevant chapter of the criminal code.

PROGRESS ON DEMARCATING KAZAKH-CHINESE BORDER. Kazakhstan
and China have delimited another 11 kilometer stretch of their
common border, near the Khan-Tengri peak, Interfax reported on 17
September. An agreement on that section of the border is expected to
be signed when Chinese Premier Li Peng visits Kazakhstan on 25
September. Sections on the 1,700 kilometer border east of Almaty
and in the far eastern part of Kazakhstan have still be determined.

END NOTE

THE GREAT POKER GAME

by Liz Fuller

        In recent weeks, Russian and Chechen leaders have engaged in
a high-stakes exercise in brinkmanship over the planned export from
Azerbaijan via Chechnya of Azerbaijan's Caspian oil. This has
highlighted dissent in Moscow both over the importance of the
pipeline and over support for the present Chechen leadership.
        The first "early" oil from Azerbaijan's Chirag Caspian field is
scheduled to be exported through the sole available pipeline, which
runs from Baku via Grozny and Tikhoretsk to the Black Sea terminal
of Novorossiisk. The export is scheduled to begin on 1 October, but
extensive repairs and modifications to the pipeline are required
before that date to make it operational.
        Renovating the pipeline was a top priority of both the Russian
and Chechen governments following the signing in May of a treaty
formally ending Moscow's undeclared war against Chechnya. In July,
Russian First Deputy Prime Minister Boris Nemtsov (who is also fuel
and energy minister), Chechen President Aslan Maskhadov, and
Natik Aliev, the president of Azerbaijan's state oil company SOCAR,
signed a document providing for the annual export via Chechnya of 5
million metric tons of Azerbaijani oil. In addition, Moscow undertook
to finance necessary repairs to the 153 kilometer sector of the
pipeline that runs through Chechnya. Yarikhanov estimated that
those repairs could be accomplished within 20-30 days at a cost of
$2 million.
        Within weeks, however, Yarikhanov complained that Moscow
was sabotaging the agreement by failing to release the required
funds for repairs. In early August, Russian Deputy Fuel and Energy
Minister Sergei Kirienko said Grozny was making "impossible" tariff
demands. He noted that his ministry had conducted feasibility
studies on six routes for an alternative export pipeline through
Dagestan, bypassing Chechen territory.
        On 27 August, Kirienko resumed talks with the Chechen
leadership on the question of transport tariffs. Under the July
agreement, Russia was to receive $15.67 in transit fees per metric
ton of oil and Chechnya $4-5. But Moscow apparently backtracked on
that agreement and offered the standard rate--$0.43--for the
transport of oil within the Russian Federation, instead of the $4.27
demanded by the Chechens.
        In early September, Russian Security Council Secretary Ivan
Rybkin tried to break the deadlock over tariffs by advocating that
Chechnya be paid a lump sum from the federal budget to compensate
for the lower tariff rate. The Chechen delegation rejected that
suggestion but accepted Rybkin's proposal that Transneft pay the
difference between the standard $0.43 and the $2.20 subsequently
demanded by the Chechens. Nemtsov, however, rejected that option.
        On 9 September, Nemtsov and Yarikhanov finally reached
agreement on the terms for the export of 200,000 metric tons of oil
in 1997. Chechnya is to be paid $0.43 per ton and receive from the
federal budget an additional $854,000 to cover the cost of repairs to
the pipeline. While professing at the time of signing to be satisfied
with the compromise, each side threatened to abrogate the accord
the following day unless the other agreed to additional conditions.
Nemtsov said Russia would "tear up" the agreement if Grozny could
not ensure the safety of members of the Russian repairs team, two of
whom were injured in an explosion on the border between Chechnya
and Dagestan on 9 September. Chechen First Deputy Prime Minister
Movladi Udugov, for his part, said implementation was contingent on
Moscow paying wage arrears to teachers and doctors in Chechnya.
        Three days later, Nemtsov raised the stakes even higher by
announcing that Russia will proceed with plans to build an
alternative pipeline, bypassing Chechen territory. He explained that
the throughput capacity of the existing pipeline is inadequate for the
huge volumes of oil that will begin to be exported within several
years. He added, however, that Russia will honor its commitment to
the Chechens to repair the existing pipeline. Nemtsov predicted that
the 283 kilometer bypass pipeline could be built within one year at a
cost of $220 million. This would make it considerably cheaper than
the proposed "main export pipeline" from Baku to the Turkish
Mediterranean terminal at Ceyhan.
        The decision to build a second Baku-Novorossiisk pipeline not
only confirms Russian aspirations to exercise maximum control over
the export of both Azerbaijani and Kazakh Caspian oil. It also appears
to be a compromise between two camps within the Russian
leadership. Nemtsov and Prime Minister Viktor Chernomyrdin both
opposed concessions to the Chechens and therefore advocated a
bypass pipeline, regardless of the consequences for the Chechen
leadership.
        President Boris Yeltsin and Rybkin, on the other hand, argued
that Moscow should abide by its commitment to Maskhadov to
provide funds for repairing the existing pipeline in order to enable
Grozny to benefit from the transit tariffs. Maskhadov is currently
under considerable pressure from rivals in Grozny, including
maverick field commander Salman Raduev. In early September,
Raduev threatened to prevent the recommissioning of the existing
pipeline unless Russia officially recognizes Chechnya as an
independent state.


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