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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 1, No. 148, Part I, 29 October 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

* RUSSIAN STOCKS TAKE ROLLER-COASTER RIDE

* BASAEV NAMED ACTING CHECHEN PREMIER

* SIRADEGHIAN ELECTED TO ARMENIAN PARLIAMENT

End Note : WHEN STATES LOSE CONTROL

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RUSSIA

RUSSIAN STOCKS TAKE ROLLER-COASTER RIDE... The Russian Trading
System index rose 3.4 percent on the morning of 29 October after
Russian shares lost an average of 20 percent of their value the
previous day, ITAR-TASS reported. The plunge on 28 October
occurred despite a three-hour halt on the exchange, which was
intended to calm the market. According to an RFE/RL correspondent
in Moscow, Russian bonds denominated in rubles and foreign
currencies also suffered substantial losses. However, government
officials and market analysts attributed the decline to turmoil on
Wall Street and other world markets, rather than to internal
economic or political conditions in Russia. For the last two years, the
Russian stock market has posted the world's strongest gains. It was
up 160 percent from the beginning of January to 6 October, Reuters
reported.

...WHILE OFFICIALS PROMISE TO DEFEND MARKET. Federal Securities
Commission Chairman Dmitrii Vasilev cut short an official visit to
London because of the sharp downturn on the Russian stock market.
On 29 October, he signed an instruction ordering that trading be
halted if share values drop by more than 5 percent during a single
session, ITAR-TASS reported. First Deputy Prime Minister Anatolii
Chubais, speaking in London the previous day, expressed confidence
that Russian stocks will post strong future gains, Interfax reported.
"The Russian markets held out for a long time and were the last to
fall among the emerging markets," he commented. Central Bank
Chairman Sergei Dubinin and First Deputy Prime Minister Boris
Nemtsov also urged investors not to panic. Nemtsov argued that
Russia's economic fundamentals are good and promised that the
government and Federal Securities Commission will not allow any
"black Tuesdays" or "black Thursdays."

GOVERNMENT APPROVES BUDGET PARAMETERS. The government on
28 October approved the draft 1998 budget parameters agreed by a
trilateral commission of government, State Duma, and Federation
Council representatives, RFE/RL's Moscow bureau reported. It also
approved a package of 10 draft tax laws aimed at increasing
revenues in line with new 1998 targets, Russian news agencies
reported. The trilateral commission agreed to raise 1998 revenues by
27.5 billion new rubles ($4.7 billion) to 367.5 billion rubles (see
"RFE/RL Newsline," 27 October 1997). The proposed tax laws would,
among other things, increase the tax on foreign-currency purchases
and raise the sales tax on food from 10 percent to 20 percent, the
rate levied on other products. In addition, income tax exemptions
currently granted to military personnel would be eliminated as of 1
January.

DUMA DELAYS BUDGET VOTE. The Duma Council on 28 October
decided to put the revised 1998 budget to a first Duma reading on 12
or 14 November, RFE/RL's Moscow bureau reported. First Deputy
Prime Minister Chubais had earlier announced that the budget would
receive its first reading on 31 October, and Prime Minister Viktor
Chernomyrdin had called on Duma deputies to consider the budget
before 1 November. Appearing on NTV, Aleksandr Shokhin, the
leader of the pro-government faction Our Home is Russia, argued that
the Duma Council delayed consideration of the budget because the
Communists and their allies do not want to vote for the budget
before 7 November, when demonstrations are planned to mark the
80th anniversary of the Bolshevik Revolution.

TAX CODE DELAYED, BUT NOT WITHDRAWN. Shokhin on 28 October
confirmed that the 1998 budget revenues will be based on the tax
laws recently proposed by the government, not on a new tax code, as
government ministers have previously insisted, RFE/RL's Moscow
bureau reported. Duma First Deputy Speaker Vladimir Ryzhkov of
Our Home Is Russia said the Duma will consider the package of tax
laws on 12 November. Although the tax code appears increasingly
unlikely to be adopted by the end of the year, government and
parliamentary officials continue to rebuff attempts by Grigorii
Yavlinskii's Yabloko faction to have the government withdraw the
code. First Deputy Prime Minister Nemtsov told RFE/RL the code will
be revised by the trilateral commission that negotiated the 1998
budget.

REGIONS SECURED MANY BUDGET CONCESSIONS... "Kommersant-Daily"
reported on 29 October that regional leaders have secured
substantial concessions during the budget negotiations. In addition to
making concessions on federal transfers to the regions and funding
for supplies to the far north (see "RFE/RL Newsline," 20 October
1997), the federal government agreed to keep in place tax privileges
for the republics of Tatarstan and Bashkortostan. Moscow will also
receive some compensation payments for the cost of maintaining
federal facilities in the capital, although the amount of those
payments has yet to be determined. "Kommersant-Daily" argued that
the budget concessions to the regions came at the expense of
industrial interests, especially the fuel and energy sector. The
government needs the support of the regional leaders, who are also
members of the Federation Council, in order to win parliamentary
approval for the budget.

...BUT 'DONOR REGIONS' STILL NOT SATISFIED. High-ranking officials
from several "donor regions," which contribute more to the federal
budget than they receive from the center, met in Moscow on 28
October to discuss 1998 budget and tax policy, RFE/RL's Moscow
bureau reported. Samara Oblast Governor Konstantin Titov, who also
chairs the Federation Council's Budget Committee, told RFE/RL that
boosting economic performance will be impossible unless more
revenues are allocated to the regions. In particular, the donor regions
want a quarter of sales tax revenues (the proposed tax code would
allocate all such revenues to the federal government). They also want
a greater share of privatization revenues and legislation to force
large corporations to pay taxes in the regions in which their branches
operate, rather than in Moscow, where most company headquarters
are registered. Depending which calculation methods are used, Russia
has between 10 and 16 donor regions.

BASAEV NAMED ACTING CHECHEN PREMIER. Before departing for
Turkey on 28 October, Chechen President Aslan Maskhadov named
former field commander Shamil Basaev as acting prime minister and
deputy premier responsible for industry, Russian media reported.
Basaev told RFE/RL's Moscow bureau that he stepped down as
deputy prime minister in July because of disagreements with
Maskhadov over domestic politics. But he said that following a recent
telephone conversation, they had "found some common ground."
Basaev said his main priority will be to stabilize the internal
situation in Chechnya, adding this will require passing a new law on
weapons. Maskhadov, meanwhile, told "Kommersant-Daily" of 29
October, that he and Basaev have identical views and that "I cannot
work without him."

MOSCOW MAKES CONCILIATORY GESTURES TO GROZNY. Maskhadov's
flight to Turkey was delayed for six hours because Russian Federal
Border Guard commander General Andrei Nikolaev insisted that the
Chechen president undergo customs clearance at another North
Caucasus airport, Russian media reported. Russian Prime Minister
Chernomyrdin later intervened personally and overruled Nikolaev.
The previous day, Russian Interior Ministry troops reopened two
checkpoints on the border between Chechnya and Dagestan. The
frontier was closed on 25 October following the killing of a Dagestani
police official and the kidnapping of eight people. Maverick Chechen
field commander Salman Raduev was reportedly behind the
kidnapping.

GOVERNMENT SPOKESMEN DEFEND ACQUISITION OF "SUPER-
COMPUTERS." Government spokesman Igor Shabdurasulov on 28
October asked the U.S. not to make an issue of the Russian Atomic
Energy Ministry's acquisition of IBM super-computers.
Shabdurasulov admitted he is uncertain whether the purchase
violates U.S. legislation, but he said the issue was discussed by U.S.
Vice President Al Gore and Russian Prime Minister Chernomyrdin in
Moscow in September. U.S. State Department spokesman James Rubin
had said on 27 October that the U.S. is prepared to compromise if
Moscow can prove the computers will be used for civilian purposes,
according to AFP. An unnamed Russian Atomic Energy Ministry
spokesman told Interfax that the ministry has bought several super-
computers for use in nuclear facilities but that the purchase does not
contravene U.S. export regulations.

'NOVYE IZVESTIYA' JOURNALIST SACKED. Leonid Krutakov told
"Komsomolskaya pravda" on 29 October that the commercial director
of "Novye Izvestiya" sacked him after he published an article in
"Moskovskii komsomolets" criticizing Security Council Deputy
Secretary Boris Berezovskii. According to Krutakov, "Novye Izvestiya"
editor Igor Golembiovskii refused to publish that article, which
alleged that Berezovskii has diverted hundreds of millions of dollars
from the state-run airline Aeroflot. Although Berezovskii has not
confirmed that he is helping finance "Novye Izvestiya," he attended a
26 October party celebrating the paper's pilot issue. Golembiovskii
told "Komsomolskaya pravda" that Krutakov was asked to resign
because he had written an article for a competitor but "not a line" for
"Novye Izvestiya." Oneksimbank, which has frequently been
criticized in media financed by Berezovskii, is a major shareholder in
"Komsomolskaya pravda."

LOCALS PROTEST PLANNED COLONY FOR PRISONERS WITH HIV. More
than 6,000 residents of Ardatov, Nizhnii Novgorod Oblast, have
signed a petition protesting plans to establish a special prison colony
for convicts with the HIV virus, RFE/RL's correspondent in Nizhnii
Novgorod reported on 27 October. With nearly 500 registered cases,
Nizhnii Novgorod has the third-highest incidence of HIV infection
among Russia's 89 regions, after Kaliningrad Oblast and Krasnodar
Krai. An estimated 100 prisoners in Nizhnii Novgorod are HIV
positive, and officials fear that overcrowded prison conditions could
facilitate the rapid spread of the virus. But Ardatov residents say the
planned site for the special prison colony is in a residential area, only
a few dozen meters from schools. "Rossiiskie vesti" reported on 23
September that law enforcement officials in Pechora, Komi Republic,
have decided to create a special prison colony for convicts infected
with HIV or tuberculosis.

TRANSCAUCASUS AND CENTRAL ASIA

SIRADEGHIAN ELECTED TO ARMENIAN PARLIAMENT. Vano
Siradeghian, the mayor of Yerevan and the controversial chairman of
the ruling Armenian Pan-National Movement (HHSh), won the 26
October parliamentary by-election in Hrazdan with 56 percent of the
vote, RFE/RL's Yerevan bureau reported . Communist Party candidate
Ashot Mikaelian polled 36 percent and independent candidate Ruben
Yegorian, considered Siradeghian's main challenger, only 7.5 percent.
Voter turnout was some 60 percent. Yegorian, whose elder brother
Eduard recently quit the HHSh to form an opposition parliamentary
faction, told RFE/RL the election was unfair and that he will submit a
list of alleged irregularities to election officials. An unusually large
number of senior government officials and police were present at the
polling stations.

AZERBAIJAN LINKS CIS INTEGRATION TO KARABAKH CONFLICT.
Azerbaijan will not participate in any attempt to achieve greater
integration within the CIS until a "just solution" of the Karabakh
conflict is reached, Interfax reported on 27 October, quoting a senior
government source in Baku. Saying that all CIS member states should
be regarded as equal, the official accused Russia of considering the
commonwealth as an organization superior to its individual
members. He also rejected the proposal to dispatch a CIS
peacekeeping force to Nagorno-Karabakh.

POSSIBLE OBSTACLES TO AZERBAIJAN OIL TRANSIT. Speaking on
NTV on 27 October, Russian Security Council Deputy Secretary Boris
Berezovskii said the beginning of oil shipments from Azerbaijan
through the Baku-Grozny-Novorossiisk pipeline is a "shared victory"
for Russia and Chechnya and a "stability factor" in Chechnya. But he
warned that relations between Moscow and Grozny are still "in
crisis." Russian First Deputy Fuel and Energy Minister Sergei Kirienko
similarly warned that the agreement between Moscow and Grozny on
the tariffs Chechnya receives for the transit of oil is valid only until
the end of 1997, according to Interfax. The transit of oil through the
pipeline began on 25 October but was halted the next day for 48
hours to coordinate pumping pressure, which differs between the
Azerbaijani and Chechen sectors of the pipeline, Turan reported on
28 October.

UKRAINIAN PRESIDENT IN GEORGIA. Leonid Kuchma, who in Tbilisi
for a two-day official visit, met with his Georgian counterpart,
Eduard Shevardnadze, on 28 October to discuss boosting political and
economic cooperation, Russian agencies reported . The two presidents
signed a "Declaration of Two," intended as a "counterbalance to
unions and alliances within the CIS," according to "Izvestiya" on 29
October. Kuchma dismissed the CIS peacekeeping operation in
Abkhazia as "unproductive" and repeated his offer to send Ukrainian
peacekeeping troops to the region. He also stressed Ukraine's interest
in purchasing Caspian oil from Azerbaijan and in the development of
the Traseca transport project linking Central Asia, the Transcaucasus,
and Europe.

FIGHTING ON TAJIK-UZBEK FRONTIER. Four Tajik border guards were
wounded during the night from 27 to 28 October when their border
post was fired on from neighboring Uzbek territory, Russian media
reported. Earlier, Uzbek Foreign Ministry spokesman Zafar Ruziev
denied Russian media reports that elements within the Uzbek
military were aiding and abetting Tajik anti-government forces (see
"RFE/RL Newsline," 27 October 1997). On 28 October, a Tajik
government delegation headed by Deputy Premier Abdurrahim
Azimov was in Tashkent to discuss the incidents. Tajik Presidential
Guard commander Gafor Mirzoev told RFE/RL the next day that his
troops have "neutralized" the group responsible for the 27 October
attack near Tursunzode. Meanwhile, a Russian State Duma delegation
visiting Dushanbe told ITAR-TASS that the Russian peacekeeping
forces currently deployed along the Tajik-Afghan frontier should
remain there as their withdrawal would mean "we lose Central Asia
for good," ITAR-TASS reported.

KAZAKH FORMER PREMIER RESURFACES IN PRINT. In an article
published in "Finansovye izvestiya" on 28 October, Akezhan
Kazhegeldin argued that a degree of state control over the economy
is imperative during the initial transition from a planned to a free
market economy. But intervention should be limited to "vitally
important areas of production," such as housing and food supplies, he
commented. Kazhegeldin warned against the emergence of profit-
oriented "monopolistic oligarchies" created by a fusion of private and
state interests, which he said could cause "chronic instability." In
mid-October, Kazhegeldin resigned as prime minister, allegedly on
health grounds. President Nursultan Nazarbayev subsequently
praised his macroeconomic stabilization policies but slammed his
failure to reform the agricultural, industrial, and social sectors.

END NOTE

WHEN STATES LOSE CONTROL

by Paul Goble

        Diplomats have never found it easy to resolve conflicts. But in
recent years, they have faced an ever more daunting obstacle to
making peace: the increasing ability of individuals and groups to
sabotage whatever accords their governments may agree to.
        Nowhere has this problem been greater than in post-
communist conflict zones such as the southern Caucasus and the
former Yugoslavia. In both regions, the power and authority of
political leaders are relatively weak, many individuals and groups in
the population are well armed, and many of those groups enjoy the
direct or covert support of other governments that benefit from
conflict situations.
        Such factors reduce the effectiveness of traditional diplomacy
except when it is backed by force. But even when they have not
prevented diplomatic negotiations, they have defined how
governments choose to participate in talks.
        Indeed, those factors are probably more important in
determining what diplomacy can achieve and what it cannot than is
the "extreme nationalism" that outsiders usually invoke to explain
why no agreements seem to be possible. But because representatives
of major outside powers sometimes do not take those factors into
account when they attempt to intervene diplomatically, they often
unintentionally lead the governments directly involved to behave in
ways that preclude rather than produce peace.
        Efforts by the international diplomatic community to resolve
the conflict over Nagorno-Karabakh are perhaps the clearest example
of that predicament. Neither Baku nor Yerevan is fully in control of
its own population, much of which is deeply committed to prolonging
the conflict until their particular goals are achieved. Groups in both
countries have been willing to undermine efforts to reach
agreements in the past, sometimes by passive resistance and
sometimes by the use of violence, including attacks on individuals
and on economic infrastructure such as pipelines and power
networks.
        Nor does Yerevan have much leverage over the Karabakh
Armenian leadership, which has enormous resources, including the
possibility of violence, to undermine any agreement. As a result,
some members of the Armenian leadership have been reluctant to
agree to anything that might either cost them popular support or
ignite violence against themselves. Some Azerbaijanis, for their part,
have been willing to support authoritarian measures by their own
government in order to create a situation whereby an agreement
might be possible, one that would allow oil to flow and to enrich their
country.
        The fundamental disagreement between the three conflict
parties on the relative merits of a "phased" as opposed to a "package"
solution to the conflict further complicates the international
diplomatic effort to achieve a lasting peace in the region.
        Meanwhile, the situation in Bosnia-Herzegovina suggests that,
even in an age when non-governmental groups are playing an
increasingly large role, the diplomacy of states can achieve a great
deal if it is backed by another major resource of today's nation state:
the use of force.
        NATO-led troops on the ground in Bosnia-Herzegovina have
ended most of the violence and given both diplomats and
governments there the possibility of dealing with the situation in a
non-violent way. This application of force is, of course, by no means
certain to solve the situation in the former Yugoslavia. But it has
restricted the activities of independent individuals and groups and
thus given the states a chance to act in a more traditional way.
        The contrast between the cases of the southern Caucasus and
the former Yugoslavia has highlighted the importance of building
strong political institutions. Unless they exist or have the chance to
grow with some protection from outside, individuals and groups
living inside those states may make it impossible for anyone to make
peace and move on to a better future.


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