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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 1, No. 124, Part I, 24 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

ECONOMIC NEWS from this week's annual meeting of the IMF and
World Bank is online at RFE/RL's Web site:
http://www.rferl.org/nca/special/imfmeeting/index.html

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Headlines, Part I

*YELTSIN CALLS FOR "NEW ECONOMIC ORDER"


*FEDERATION COUNCIL APPROVES RELIGION LAW


*MINSK GROUP CO-CHAIRMEN IN BAKU


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RUSSIA

YELTSIN CALLS FOR "NEW ECONOMIC ORDER." President Boris Yeltsin
says Russia needs a "new economic order," whereby the state has a
stronger role, in order to achieve economic growth in 1998, RFE/RL's
Moscow bureau reported on 24 September. In a 30-minute televised
speech at the opening of the fall session of the Federation Council,
Yeltsin said that while the government will not interfere in legal
business activities, it will not tolerate any "attempts by businesses or
banks to put pressure on it." Yeltsin added that businessmen "must
serve society and work for the benefit of Russian citizens." The
president also said the government has begun to "tackle the
economic roots of corruption" by establishing "strict control" over
state funds. In 1998, he pledged, all federal government accounts
will be transferred from commercial banks to a Federal Treasury.

YELTSIN OFFERS TO DISCUSS BUDGET WITH REGIONS... In his speech
to the Federation Council, Yeltsin called on deputies to approve tax
reform and a "realistic budget" for 1998, which, he said, will secure
an economic "breakthrough." But he also offered regional leaders
some concessions and promised that the government will consult
them on revising the draft tax code and the 1998 budget. In the
future, Yeltsin said, enterprises in the regions will pay their federal
and regional taxes through regional branches of the Federal
Treasury, rather than directly to Treasury offices in Moscow, an
RFE/RL correspondent in the Russian capital reported. But Yeltsin
confirmed that regional governments will bear half the burden for
paying wage arrears to state employees, ITAR-TASS reported.
Regions must raise 50 percent of the funds needed before the federal
government transfers funds to settle the rest of the wage debts, the
president said.

...BUT CITES POOR LEADERSHIP IN SOME REGIONS. Yeltsin also
criticized unnamed regional leaders who, he said, are "creating
'pocket' [commercial] banks for servicing their own budgets" at a
time when the federal government is moving away from authorized
banks, ITAR-TASS reported on 24 September. The president also
blamed regional leaders for periodic energy crises. "Russia produces
enough electricity and fuel," he said, "but an intolerable energy
situation is taking shape in some regions because of unsatisfactory
leadership." Primorskii Krai has repeatedly suffered energy crises in
recent years. An ongoing strike by unpaid coal miners has led to
severe power cuts in the krai over the last ten days. In July, the
Federation Council passed a resolution asking Yeltsin to rescind
decrees whereby many powers had been transferred from Governor
Yevgenii Nazdratenko to the president's appointed representative in
Primore (see "RFE/RL Newsline," 8 July 1997).

GORE-CHERNOMYRDIN TALKS CONTINUE. Meeting in Moscow on 23
September, U.S. Vice President Al Gore and Russian Prime Minister
Viktor Chernomyrdin reached an agreement whereby the U.S. will
provide $70 million to fund the conversion of three plutonium-
producing Siberian nuclear reactors for civilian use, an RFE/RL
correspondent in Moscow reported. Chernomyrdin made clear,
however, that despite U.S. reservations, Moscow will honor its
commitment to supply Iran with some nuclear technology. The
energy policy committee of the Gore-Chernomyrdin commission
established a special body to protect investors' rights and resolve
obstacles to U.S. investment in Russia's oil sector.

GORE, YELTSIN MEET. Gore and Yeltsin, meeting in Moscow on 23
September, expressed satisfaction at the current state of bilateral
relations. The Russian president noted that many agreements
reached at earlier U.S. - Russian summits have been successfully
implemented. He praised the work of the Gore-Chernomyrdin
commission and of the Russian-U.S. space program, which, he said,
symbolized the "new relationship" between the two countries. At the
same time, Yeltsin expressed concern over U.S. restrictions on the
import of Russian goods. Gore rejected Yeltsin's complaint that the
U.S. treats Russia as a "non-market economy." He predicted that new
tax legislation will facilitate an upsurge of U.S. investment in Russia.

PRIMAKOV ADDRESSES UN ASSEMBLY... Foreign Minister Yevgenii
Primakov, addressing the UN General Assembly on 23 September,
said the transition to a multipolar world does not solve all the
problems confronting mankind. Noting there are many multinational
states in the world, he called upon the UN to prevent their "forced
disintegration" and to give "maximum rights to ethnic minorities." He
added that no one country can assume the role of settling regional
conflicts and cited the Middle East as an example, where broad-based
international efforts could "undo the tight knot." He also noted that
cooperation between the UN and Russia has led to a peaceful solution
of problems in Tajikistan and that Russia's participation, along with
the U.S. and France, was a positive factor in mediating the dispute
over the unrecognized Nagorno-Karabakh Republic.

...DISCUSSES NATO, NUCLEAR ARMS. Primakov also criticized NATO
enlargement, which, he commented, "does not proceed from existing
reality" and creates "new division lines." He repeated Russia's
promise to guarantee the security of the Baltic States. Primakov also
pointed out that Russia and the U.S. have already agreed to "basic
parameters" for START-III talks and that their nuclear arsenals
would soon be cut by 80 percent, compared with the Cold War era.
However, Primakov blasted countries such as Pakistan, India, and
Israel for failing last year to sign the treaty on a comprehensive ban
on nuclear tests. "They must understand that their own security is an
integral part of universal security," he said.

FEDERATION COUNCIL APPROVES RELIGION LAW. The Federation
Council unanimously approved the law on freedom of conscience and
religious organizations at its opening fall session on 24 September,
Russian news agencies reported. The previous day, presidential
spokesman Sergei Yastrzhembskii announced that Yeltsin is happy
with the revised religion law and that there is every reason to expect
the president will sign the law once it has been approved by the
Council. Yeltsin vetoed an earlier version, saying it violated the
constitution and Russia's international commitments (see "RFE/RL
Newsline," 23 July and 22 September 1997).

DUMA OVERRIDES VETO OF LAND CODE. The State Duma on 24
September voted by 304 to 52, with five abstentions, to override a
presidential veto of the Land Code, ITAR-TASS and RFE/RL's Moscow
bureau reported. Yeltsin vetoed the code primarily because it would
ban the purchase and sale of farmland (see "RFE/RL Newsline," 12
June and 7 July 1997). Yeltsin's representative in the Duma,
Aleksandr Kotenkov, denounced the vote as "falsified," saying only
184 deputies were in the chamber at the time. Kotenkov said the
president may appeal to the Constitutional Court against
parliamentary voting procedures he considers unconstitutional. In
the summer, Yeltsin refused to sign two laws after both houses of
parliament overrode his vetoes. The president objected to proxy
voting in the Duma and to a procedure whereby Federation Council
deputies who are not in Moscow may mail in ballots.

MUBARAK IN MOSCOW. On his first-ever official visit to Moscow,
Egyptian President Hosni Mubarak met with Yeltsin on 23 September
to discuss a broad range of issues, including bilateral ties, the
situation in the Middle East, and Libya. The two presidents later
issued a joint declaration affirming their commitment to creating a
multipolar world. Russian presidential spokesman Yastrzhembskii
told journalists that the two presidents had reached a "high level of
mutual understanding." He characterized the atmosphere at the talks
as "warm" and "excellent," according to ITAR-TASS. Mubarak also
met with Russian Prime Minister Viktor Chernomyrdin and First
Deputy Prime Minister Boris Nemtsov to discuss economic
cooperation. Inter-government agreements on avoiding dual taxation,
protection of investments, transportation, and legal issues were
signed.

YELTSIN CRITICIZES ISRAEL FOR OBSTRUCTING MIDDLE EAST PEACE.
Addressing reporters after his talks with Mubarak, Yeltsin blamed
Israel for obstructing the Middle East peace process and called on the
U.S. to be "more active" in trying to persuade Israel to resume
negotiations. Yeltsin added, however, that Russia too should play a
more active role in the peace talks. According to Interfax, he
subsequently instructed the Russian government to prepare
proposals on how best to accomplish that goal. Yeltsin also affirmed
his commitment to the "land for peace" formula and rejected as "not
serious" accusations that Palestinian leader Yasser Arafat was to
blame for the recent terrorist bombings in Israel. Mubarak, for his
part, said in an interview published in "Nezavisimaya gazeta" on 23
September that although Russia and U.S. are co-sponsors of the
Middle East peace process, "we do not see any moves on the part of
Russia."

IS CHECHNYA'S PRESIDENT IRRELEVANT? "Segodnya" on 23
September claims that political developments in Chechnya are
determined more by the interaction of traditional clans than by state
structures. The daily suggested that Moscow's unswerving support
for President Aslan Maskhadov, considered the most pragmatic and
flexible politician with whom to conduct negotiations, may therefore
be misguided and even counterproductive. It also claims that those
persons who currently exercise real power in Chechnya have
retreated from the limelight and that specific clans control foreign
policy (except for ties with Russia) and the underground oil
extraction and refining industry.

SVYAZINVEST DEAL PRONOUNCED LEGAL. The State Anti-Monopoly
Committee, the Justice Ministry, and the Federal Service for Currency
and Export Controls have submitted a joint report to the government
declaring that no laws were broken in the July sale of a 25 percent
plus one share in the telecommunications giant Svyazinvest, ITAR-
TASS reported on 23 September, citing government spokesman Igor
Shabdurasulov. Prime Minister Chernomyrdin ordered the probe
following allegations that the Cyprus-based consortium Mustcom,
Ltd., which submitted the winning bid for Svyazinvest, had broken
laws on hard currency transactions (see "RFE/RL Newsline," 13
August 1997). Oneksimbank led the Mustcom consortium.

ZYUGANOV STANDS BY CRITICISM OF YELTSIN. Communist Party
leader Gennadii Zyuganov has said there is "nothing illegal" about his
recent criticism of the authorities, and he will not take back any of
his statements, ITAR-TASS reported on 23 September. Addressing
the founding congress of Duma Defense Committee Chairman Lev
Rokhlin's Movement in Support of the Army on 20 September,
Zyuganov had called Yeltsin the "ringleader" of a regime that is
carrying out a "criminal policy" and "destroying the country." Yeltsin
slammed Zyuganov's remarks as "political blackmail" and told
Interior Minister Anatolii Kulikov on 22 September that "those who
shout from the podium that the leaders are gangsters must be made
to answer," Interfax reported. The same day, the Justice Ministry
released a statement saying comments made by Communist Party
figures at the 20 September congress are "unacceptable and beneath
the dignity of politicians of such a level."

LUZHKOV RESPONDS TO CRITICISM BY NEMTSOV. Moscow Mayor
Yurii Luzhkov has dismissed recent criticism of his city's policies by
First Deputy Prime Minister Nemtsov as "unfounded" and "poorly
thought-out," Russian news agencies reported on 23 September.
Nemtsov argued that subsidies for rents and for municipal services
in the capital are too "extravagant" and that Moscow is spending too
much on the construction of a ring road (see "RFE/RL Newsline," 19
September 1997). Luzhkov said Nemtsov's remarks did not take into
account the capital's unique characteristics. He added that Nemtsov
knows little about road construction and that the ring road costs less
than equivalent projects in other countries. He called on Nemtsov to
make "responsible" statements and vowed not to keep silent when
city leaders "are accused of incompetence." Luzhkov and Nemtsov are
both likely to contest the next Russian presidential election.

FEDERAL COMMISSION TO INVESTIGATE AUTHORITIES IN SIBERIAN
CITY. A special commission has arrived in Leninsk-Kuznetskii,
Kemerovo Oblast, to investigate allegations that Mayor Gennadii
Konyakhin is a convicted criminal and is allowing criminal associates
to run the city, ITAR-TASS reported on 24 September. During
meetings with Interior Minister Anatolii Kulikov and Federal
Security Service (FSB) director Nikolai Kovalev on 22 September,
Yeltsin ordered the Interior Ministry, the Procurator-General's Office,
and the FSB to form a joint commission to investigate charges
published in "Izvestiya" on 17-19 September. The president said the
commission should try to prevent the "further criminalization of
power" in Leninsk-Kuznetskii and also investigate whether similar
events have taken place in other cities, Interfax reported. He
criticized law-enforcement bodies for not informing the authorities
early enough about the situation in Leninsk-Kuznetskii.

TRANSCAUCASUS AND CENTRAL ASIA

MINSK GROUP CO-CHAIRMEN IN BAKU. Meeting with the three co-
chairmen of the Organization for Security and Cooperation in Europe's
Minsk Group in Baku on 23 September, Azerbaijani President Heidar
Aliev said Azerbaijan accepts the plan proposed by the co-chairmen
on 18 July as a basis for resolving the Karabakh conflict, Turan and
Interfax reported. He argued that the two-month delay since then
does not "promote our common purpose." He also expressed the hope
that "important steps" toward resolving the Karabakh conflict will be
taken before the end of this year. Turan quoted Russian co-chairman
Yurii Yukalov and Azerbaijani Foreign Minister Hasan Hasanov as
saying Armenia has accepted a "phased resolution" of the conflict
whereby a decision on the future status of the unrecognized
Nagorno-Karabakh Republic will be postponed. The republic's
leadership has rejected the peace plan and wants all aspects resolved
simultaneously.

AZERBAIJAN'S DEPUTY PARLIAMENTARY CHAIRMAN IN TEHRAN.
Yashar Aliev met with Iranian President Mohammed Khatami in
Tehran on 21 September, IRNA reported. The deputy speaker
handed over a letter from Azerbaijani President Heidar Aliev to
Khatami, who described Azerbaijan as a "friendly, brotherly country".
Khatami called for a negotiated settlement to the Karabakh conflict in
the interests of regional stability and security. Yashar Aliev
commented that bilateral relations are "gaining momentum." Those
ties have been strained for more than a year following the arrest and
sentencing for espionage of several members of the pro-Iranian
Islamic Party of Azerbaijan.

AZERBAIJAN, TURKMENISTAN TO DISCUSS CASPIAN DISPUTE. Hasan
Hasanov told journalists on 23 September that legal and oil experts
from Azerbaijan and Turkmenistan will meet in October to discuss
dividing the Caspian into national sectors, ITAR-TASS reported.
Hasanov told LUKoil President Vagif Alekperov in Baku two weeks
earlier that Turkmenistan has agreed to an Azerbaijani proposal to
divide the Kyapaz/Serdar oil field, according to "Nezavisimaya
gazeta." Both countries claim ownership of that field.

AZERBAIJANI EARLY OIL COUNTDOWN. Visiting Baku on 23
September, Transneft Vice President Oleg Gordeev assured the
leadership of Azerbaijan's state oil company SOCAR that work began
that day on repairs to the Baku-Grozny-Novorossiisk pipeline
through which Azerbaijan's "early" Caspian oil is to be exported,
Russian and Azerbaijani agencies reported. Gordeev said the repairs
will be completed within 22 days and that the first tanker-load of oil
could leave Novorossiisk in December, according to "Nezavisimaya
gazeta" on 24 September. Meanwhile, Russian First Deputy Premier
Boris Nemtsov, who is also fuel and energy minister told Reuters that
the alternative Baku-Novorossiisk pipeline bypassing Chechnya can
be completed in nine months and that Russia will issue Eurobonds to
meet the cost. "Trud" on 23 September reported, however, that
Novorossiisk Mayor Valerii Prokhorenko categorically opposes
construction of the alternative pipeline on ecological grounds.

ARMENIAN PARLIAMENT ELECTS CHAIRMAN OF KEY COMMITTEE.
The National Assembly on 23 September elected Vigen Khachatryan
as chairman of its State and Legal Affairs Committee, RFE/RL's
Yerevan bureau reported. Khachatryan is the leader of the small
Liberal Democratic Party, one of the five members of the ruling
Hanrapetutyun bloc. The committee's previous chairman, Eduard
Yegoryan, was removed on 10 September after quitting the
Hanrapetutyun bloc to form an opposition parliamentary faction.
Khachatryan, who is also governor of Armenia's northern Lori
province, vowed to continue Yegoryan's efforts to "form a basic legal
framework in Armenia." The Armenian Pan-National Movement had
originally claimed the right to nominate the committee's new
chairman but reversed that decision on 20 August at the request of
President Levon Ter-Petrossyan and parliamentary speaker Babken
Ararktsyan (see "RFE/RL Newsline," 22 September 1997).

BELARUSIAN PRESIDENT IN KAZAKHSTAN. Alyaksandr Lukashenka,
who is on a three-day official visit to Kazakhstan, met with his
Kazakh counterpart, Nursultan Nazarbayev, on 23 September to
discuss boosting bilateral trade. Compared with the same period last
year, Belarusian-Kazakh trade was down 40 percent in the first half
of 1997. Lukashenka said, however, that by year's end, trade figures
would at least equal those for 1996. Agreements were signed on
trade, air links, and protection for the rights of one country's citizens
working in the other country. Belarus will also open an embassy in
Kazakhstan. Lukashenka said he favored Nazarbayev to take over as
head of the four-country customs union, which also includes Russia
and Kyrgyzstan. The Belarusian president currently occupies that
position.

NAZARBAYEV SUPPORTS BELARUS ON ORT JOURNALIST. Nazarbayev
gave his full support to Belarus's position in its dispute with Russia
over Russian Public Television (ORT) reporter Pavel Sheremet, an
RFE/RL correspondent in Almaty reported. Sheremet has been under
arrest in Minsk since mid-July on charges of having violated the
Belarusian-Lithuanian border. Interfax quotes Nazarbayev as saying
each country has the "right to insist that its citizens implement the
country's laws." He called on the media "to contribute to the
rapprochement between peoples rather than sow discord between
them or ignite tension between countries." Nazarbayev also criticized
the fact that while Russian television channels are available in other
CIS countries, no television programming from those countries is
available in Russia. "The Russian people therefore only know one
position," he added.

JAPAN TO HELP BUILD TURKMEN RAIL LINE. Japan's Itochu
Corporation has agreed to help form a consortium to build a rail line
running from the Kazakh city of Yeralievo to the Turkmen city of
Turkmenbashi, on the eastern shore of the Caspian Sea, ITAR-TASS
reported on 23 September. Japanese experts are reviewing a
feasibility study carried out by Russia's Mosgiprotrans. The 450-
kilometer rail line may eventually be linked to Russian lines in the
Urals and Siberia and to the Turkmen-Iran line.

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