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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 1, No. 181, Part I, 17 December 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

* SPOKESMAN DENIES RUMORS ON YELTSIN'S HEALTH

* NEMTSOV DOWNPLAYS INFLUENCE OF YELTSIN'S 'COURT'

* GEORGIAN PARLIAMENT POSTPONES DEBATE ON CIS MEMBERSHIP

* END NOTE: IS THE WORST OF RUSSIA'S FINANCIAL MARKET CRISIS
OVER?

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RUSSIA

SPOKESMAN DENIES RUMORS ON YELTSIN'S HEALTH.
Presidential spokesman Sergei Yastrzhembskii on 17
December denied rumors that President Boris Yeltsin will need
several weeks to recover from his latest illness, RFE/RL's
Moscow bureau reported. Seven days after Yeltsin was taken
to the Barvikha sanatorium, Yastrzhembskii said the
president's health is "satisfactory" and that the effects of a
respiratory virus have been "eradicated." He said Yeltsin will
leave the clinic within the next several days. He also advised
Ekho Moskvy to be more "restrained" in its coverage. The
radio station reported on 16 December that Yeltsin will need
another three weeks to recover. In an interview in the latest
edition of the weekly "Argumenty i fakty," cardiologist Renat
Akchurin, who performed bypass surgery on Yeltsin in 1996,
again denied that the president's current illness is related to
past heart problems. LB

NEMTSOV DOWNPLAYS INFLUENCE OF YELTSIN'S
'COURT.' First Deputy Prime Minister Boris Nemtsov on 16
December cautioned against "exaggerating" the influence on
Yeltsin's decisions of family members or the Kremlin "court,"
ITAR-TASS reported. Yeltsin's daughter, Tatyana Dyachenko, is
an official presidential adviser, but Nemtsov argued that she
only deals with issues the president assigns to her. (Some
Russian media have charged that former Security Council
Deputy Secretary Boris Berezovskii and others have been able
to influence Yeltsin by maintaining good relations with his
daughter.) Nemtsov, who has periodically compared Yeltsin to
a tsar, argued that such a comparison is justified because
Yeltsin both physically "resembles a tsar" and wields powers
that are "not inferior to those of a constitutional monarch." In
fact, the Russian constitution grants the president far greater
powers than those enjoyed by European constitutional
monarchs. LB

SELEZNEV MEETS WITH BUSINESS LEADERS. State Duma
Speaker Gennadii Seleznev met with some 50 leading bankers
and business figures behind closed doors in Moscow on 16
December, Russian news agencies reported. Duma Economic
Policy Committee Chairman Yurii Maslyukov, like Seleznev a
Communist, and Duma Budget Committee Acting Chairman
Aleksandr Zhukov of the Russian Regions faction also attended
the meeting. The bankers present included Aleksandr
Smolenskii, chairman of the board of SBS-Agro, Most Bank
president Boris Khait, Alfa Group President Petr Aven, and
former Central Bank Chairman Viktor Gerashchenko, according
to "Kommersant-Daily" on 17 December. Seleznev told
journalists that the bankers were particularly interested in
draft laws on bankruptcy among banks, regulating the gold
market, and guaranteeing citizens' deposits. He added that the
business leaders agreed to "actively cooperate with us" by
extending their legal services to the parliament when relevant
legislation is being considered. LB

SIBNEFT, OMSK GOVERNOR SEEK TO BLOCK SEIZURE OF
OIL REFINERY... Konstantin Potapov, the acting chairman of
the board of directors of the Sibneft oil company, announced
on 16 December that Omsk Governor Leonid Polezhaev has
asked Yeltsin not to implement a recent decision to seize and
sell property of the Omsk Oil Refinery in order to pay tax
debts, ITAR-TASS reported. The government's emergency
commission for tax and budgetary discipline approved a plan
to seize property of the Omsk Oil Refinery and the Angara
Petrochemical Company at a meeting chaired by First Deputy
Prime Minister Anatolii Chubais (see "RFE/RL Newsline," 10
and 15 December 1997). Potapov said the Omsk refinery paid
debts totaling 80 billion rubles ($13 million) during the past
week and will settle the remainder by 1 March. Sibneft, which
is part of Boris Berezovskii's business empire, owns the Omsk
refinery. Sidanko, owned by Oneksimbank, controls the
Angara company. LB

...WHILE CHERNOMYRDIN MAY REVERSE DECISION ON
SEIZURE. "Kommersant-Daily" reported on 16 December that
the decision to seize the Omsk Oil Refinery will be reviewed at
another meeting of the commission on tax and budgetary
discipline on 17 December. Prime Minister Viktor
Chernomyrdin will chair that meeting, while Chubais will be
absent, as he is on an official visit to India. Interfax cited
unnamed government sources as saying that the decisions to
seize property of the Omsk refinery and the Angara company
are both likely to be reversed at the 17 December meeting. LB

DEFENSE MINISTER SAYS SOME RELIEF IN SIGHT. Igor
Sergeev said on 16 December that by year's end, the
government will pay its 12.4 trillion ruble ($2.1 billion) debt
to the army for wages and social benefits, according to ITAR-
TASS. More than one-third of those funds is targeted for
civilian personnel. Sergeev noted that the families of 12,900
military personnel are without apartments. The government
has allocated 80.4 trillion rubles for the defense sector in the
1998 draft budget, but the Defense Ministry is trying to raise
that allocation to 97.2 trillion rubles. Sergeev admitted,
however, 55.9 percent of the funds allocated will go toward
housing construction. BP

CONDITIONS IN MILITARY RESPONSIBLE FOR DEATHS?
"Nezavisimaya gazeta" on 17 December reported that living
conditions for military personnel and inadequate screening of
conscripts are responsible for the recent wave of deaths
among Russian soldiers on non-combat duty. The report comes
after a drunken private killed three of his fellow soldiers and
wounded five others in Dagestan on 16 December and after a
soldier killed two colleagues in Siberia two days earlier. It
claims that the rising rate of non-combat deaths and suicides
can be attributed, among other things, to lack of housing, wage
arrears, and fazing. Moreover, 12 percent of this year's
conscripts admitted they regularly drink alcohol, 8 percent
said they use drugs, and 6 percent have criminal records. Last
year, murders within the armed services rose by 27.3 percent
and suicides by 24.5 percent. BP

IS PASKO GUILTY OF TREASON? Rear Admiral German
Ugryumoi has said the  actions of Captain Grigorii Pasko, who
was arrested at Vladivostok airport in mid-November in
possession of incriminating documents, amount to "state
treason," according to "Krasnaya Zvezda" on 16 December.
Ugryumoi said the documents taken from Pasko contain
information on the combat readiness of the Pacific Fleet and
its nuclear capability. Experts in Moscow have confirmed that
the documents were classified. BP

CHINESE-RUSSIAN TRADE DOWN. The Chinese customs
agency on 16 December announced that the total volume of
bilateral trade with Russia from January to October of this
year was $4.788 billion. In April, Chinese President Jiang
Zemin  and Yeltsin met in Moscow and called for annual
bilateral trade to reach $7-8 billion by the end of this year
and $20 billion by the year 2000. Trade between the two
countries was $6.85 billion in 1996. BP

CONSTITUTIONAL COURT SETS 1998 AGENDA.
Constitutional Court Chairman Marat Baglai told Interfax on 15
December that in 1998 the court will consider an appeal from
the State Duma against Yeltsin's refusal to sign the laws on
trophy art and on the government. Among some 50 cases to be
considered by the court next year, Baglai mentioned an appeal
against government resolutions on the construction of a high-
speed railroad between Moscow and St. Petersburg. That
appeal is based on the potential environmental consequences
of building such a railroad. Baglai also said the court will
consider a dispute between the federal authorities and the city
of Moscow over the distribution of road funds and an appeal
against residency registration rules in Sochi (Krasnodar Krai).
The Constitutional Court has already ruled three times that
requirements for residency permits [propiski] are
unconstitutional. LB

PATRIARCH CONCERNED ABOUT 'ATTACKS' ON CHURCH.
Patriarch of Moscow and All Russia Aleksii II on 16 December
expressed concern that "the negative attitude toward the
Russian Orthodox Church currently demonstrated by [Russian]
television and the press may herald a new attack on the
Church," "Nezavisimaya gazeta" and Reuters reported.
Addressing a meeting of Church officials in Moscow, Aleksii
warned that "in this world, the Church has been, still is and
always will be persecuted." He charged that a Russian Public
Television program has a "communist and anti-religious tone"
and accused the private network NTV of showing "contempt"
for the Church by broadcasting the film "The Last Temptation
of Christ" (see "RFE/RL Newsline," 7 and 10 November 1997).
Aleksii also criticized the government for seeking 240 million
new rubles ($40 million) in funding for sex education in 1998,
a sixfold increase over this year's funding. LB

SAMARA GOVERNOR SLAMS FEDERAL BUDGET
POLICIES. Konstantin Titov charged on 16 December that
federal budget policies are reducing the economic potential of
Russian regions and in some cases "driving regions into the
arms of businesses" in order to remain solvent, RFE/RL's
Moscow bureau reported. Addressing the Second International
Conference on Federalism, Titov criticized the draft 1998
budget in particular. (Titov and other regional leaders have
complained that the budget and new tax legislation proposed
by the government would assign all revenues from taxes that
are easy to collect to the federal government, while leaving
regional authorities the proceeds from those whose collection
is difficult.) Titov also charged that during the first 11 months
of 1997, his oblast collected some 25 percent more tax
revenues than planned, but none of those extra revenues
returned from federal coffers to Samara. LB

DIFFERING VIEWS ON MOSCOW CITY ELECTIONS.
Moscow Mayor Yurii Luzhkov on 17 December said the recent
elections to the Moscow City Duma demonstrate that
Muscovites want their legislative and executive authorities to
"constructively cooperate" and "not get involved in political
arguments," ITAR-TASS reported. City Duma Chairman
Vladimir Platonov, a loyal Luzhkov ally who was easily re-
elected, commented the previous day that Moscow voters
showed that they want "professionals, not politicians who only
make promises." However, State Duma deputy Nikolai Gonchar
has charged that the campaign was marked by numerous
violations of electoral legislation, an RFE/RL correspondent in
Moscow reported on 15 December. In particular, Gonchar cited
an aggressive leaflet campaign against him and Arkadii
Murashev of the Russia's Democratic Choice party in the final
days before the vote. Gonchar's bloc did not win a single seat
in the Moscow City Duma (see "RFE/RL Newsline," 15
December 1997). LB

TYUMEN COURT DECLINES TO RULE ON ELECTION
CONTROVERSY. The Tyumen Oblast Court on 16 December
declined to rule on whether deputies should be allowed to
serve simultaneously in the Tyumen legislature and a
legislature in either Khanty-Mansi or Yamal-Nenets
Autonomous Okrug, ITAR-TASS reported. The court decided
that the Constitutional Court is the proper forum for resolving
the case. Khanty-Mansi and Yamal-Nenets are part of Tyumen
Oblast but are also Russian Federation subjects in their own
right. Politicians from Tyumen have long-running political and
economic disputes with their counterparts in the oil- and gas-
rich okrugs. The Tyumen Oblast Duma recently moved to bar
deputies from serving in more than one legislature (see
"RFE/RL Newsline," 4 November 1997). But three deputies
from the Yamal-Nenets legislature and one from the Khanty-
Mansi legislature won seats to the Tyumen Oblast Duma in the
14 December elections. LB


TRANSCAUCASUS AND CENTRAL ASIA

GEORGIAN PARLIAMENT POSTPONES DEBATE ON CIS
MEMBERSHIP. The Georgian parliament convened a special
session on 16 December in response to a demand by 73
opposition deputies to debate whether Georgia should consider
quitting the Commonwealth of Independent States, Caucasus
Press reported. Instead of debating the issue, however,
lawmakers adopted a resolution on the creation of a
commission that is to assess whether Georgia's membership in
various international organizations--including the CIS, the UN,
and the Organization on Security and Cooperation in Europe,
contributes to the restoration of the country's territorial
integrity. The commission will present its findings within four
months. In Moscow, Russian Foreign Ministry spokesman
Valerii Nesterushkin expressed approval of the postponement,
Interfax reported. Nesterushkin conceded that cooperation
within the CIS poses certain problems but said a decision on
quitting that body "requires deep and thoughtful analysis." LF

GEORGIAN TERRORISM TRIAL RESUMES.  The trial of
former Mkhedrioni paramilitary leader Djaba Ioseliani and 14
of his associates resumed in Tbilisi on 16 December, AFP and
Caucasus Press reported.  Ioseliani and several other
defendants, who face charges of masterminding the failed
assassination attempt against then parliamentary chairman
Eduard Shevardnadze in August 1995, protested that the
proceedings were illegal and demanded that three prosecutors
be replaced. Judge Djemal Leonidze rejected that demand.
Several defendants also claimed they had given evidence
under duress or torture during the pre-trial investigation. LF

ARMENIANS PROTEST LEADERSHIP'S KARABAKH
POLICY. Some 10,000 people attended a demonstration in
Yerevan on 15 December to protest the perceived readiness of
the country's leadership to sign a Karabakh peace agreement
restoring Azerbaijani control over the disputed enclave,
RFE/RL's Yerevan Bureau reported. Participants adopted a
statement that was delivered to the embassies of the three
countries--Russia, France, and the U.S.--that co-chair the
OSCE's Minsk Group, which is mediating a settlement of the
conflict, according to Noyan Tapan.  The next day, Armenian
President Levon Ter-Petrossyan met with the Russian, French,
and U.S. ambassadors to discuss the agenda for the upcoming
OSCE foreign ministers' meeting in Copenhagen, ArmenPress
reported. LF

FOREIGN INVESTMENT IN ARMENIA. Direct foreign
investment is expected to total $70-80 million by year's end,
according to an unnamed Industry and Trade Ministry official
quoted  by ArmenPress on 15 December. The official said the
lion's share of investment is divided between the recently
privatized telecommunications enterprise ArmenTel, Coca-Cola
Bottlers Armenia, Midland Bank Armenia, and the Armenian-
U.S. joint venture Global Gold Armenia. Of a total of 766 joint
ventures partly or wholly funded by foreign capital, 404 (53
per cent) are engaged in trade. Russia is the most important
foreign investor (193 enterprises), followed by Iran, the U.S.,
France,  Georgia, Germany, and Syria. Meanwhile, the
Armenian government on 16 December granted two South
African metallurgical companies a four-month exclusive
concession to prospect for gold, copper, and molybdenum and
prepare proposals for the joint development of deposits,
RFE/RL's Yerevan bureau reported. LF

FORMER AZERBAIJANI PARLIAMENT SPEAKER
STRIPPED OF MANDATE. Rasul Guliev, who was forced to
resign as parliamentary speaker in September 1996  and now
lives in the U.S., was stripped of his deputy's mandate on 16
December, Turan reported. The official reason was that Guliev
has failed to attend parliamentary sessions for more than one
year. The previous day, however, the ruling Yeni Azerbaycan
party had issued a statement accusing Guliev of anti-state
activities. Ali Nagiev, the party's first deputy chairman, told
journalists on 16 December that Guliev will shortly be expelled
from the party. In his recently published book, "Path To
Democracy," Guliev harshly criticizes the economic polices of
President Heidar Aliev. LF

TURKMEN PRESIDENT CLOSES ACADEMY OF SCIENCES.
Saparmurat Niyazov on 15 December signed a decree
abolishing the Academy of Sciences and all post-graduate
institutions, Interfax reported.  Researchers and scientists of
the academy will now be responsible to the government
ministries and agencies that deal with their respective
specialist areas. Niyazov said he made the decision because of
the "lack of any practical scientific results" from either the
academy or the post-graduate institutions. BP

DAY OF MOURNING IN TAJIKISTAN. The Tajik
government has declared 17 December an official day of
mourning for the 85 victims of the Tajik airliner crash in the
United Arab Emirates on 15 December, according to ITAR-
TASS. The Tajik Financial Ministry has been ordered to
allocate funds for compensation to the families of those who
died. Each family will receive a lump sum payment of 400,000
Tajik rubles (about $533). An investigation into the cause of
the crash is under way. Tajik officials have said the plane was
in good working order and that the crew were familiar with
the Khujand-Sharja route. BP

REGIONAL AFFAIRS

RUSSIA-BELARUS UNION BUDGET APPROVED. The
Parliamentary Assembly of the Russia-Belarus Union on 15
December approved the alignment's first joint budget,
"Kommersant-Daily" reported on 17 December. That move,
however, is not legally binding. Russia is to provide 65 percent
of planned revenues amounting to 385,811,000 new Russian
rubles ($64,302,000) and Belarus 35 percent or 206,196,000
rubles ($34,366,000). The largest single item of expenditure is
financing cooperation between the Interior Ministries, border
guards, and customs services, for which 42.1 percent of total
expenditures are earmarked. Another 17.1 percent is for
finance, military, and technical cooperation, Interfax reported.
Addressing the session, Russian Deputy Prime Minister Valerii
Serov said that a single currency may be established for
certain unspecified financial transactions within the union. LF

WHICH PIPELINE FOR RUSSIAN GAS EXPORTS TO
TURKEY? Gazprom chairman Rem Vyakhirev will visit
Georgia and Armenia on 17-18 December to discuss Russian
gas exports to Turkey via those countries.  Speaking in Tbilisi
on the eve of Vyakhirev's visit, Georgian President Eduard
Shevardnadze expressed doubts that the planned Trans-Black
Sea underwater pipeline from Dzhughba to Samsun, which is
intended to transport  Russian natural gas to Turkey, will be
built unless all Black Sea littoral states give their agreement.
Shevardnadze pointed out that the existing gas pipeline
through Georgia and Armenia to Turkey has an annual
throughput capacity of 12 billion cubic meters, which is not
being fully realized, according to Interfax. Bulgaria has
protested that the Trans-Black Sea under-water pipeline poses
an ecological threat. In late November, Sofia negotiated an
agreement with Russia on gas exports to Turkey via its
territory. LF

IS THE WORST OF RUSSIA'S FINANCIAL MARKET CRISIS
OVER?

by Floriana Fossato

        First Deputy Prime Minister Anatolii  Chubais believes that
Russia has overcome the worst of the global financial crisis that
shook the country's financial markets in recent weeks. In a joint
news conference with Finance Minister Mikhail Zadornov in Moscow
on 15 December, Chubais said that "the turn is for the better...and
there are grounds to believe that the more dangerous stage is
already behind us."
        Russia's financial market suffered severely from the recent
crisis in Asia, which undermined investors' confidence in emerging
markets, prompting investor flight also from Russia's market. That
development has threatened the modest economic stability Russia
has achieved so far this year and cast doubt over optimistic
forecasts.
        Chubais, however, said that purchases of foreign exchange,
which threatened to cause a significant devaluation of the Russian
currency, have declined significantly. "Last week, the central bank
was not selling but buying foreign currency on the markets," he
commented.
        He also remarked that, with loans totaling more than $2
billion expected from the IMF and the World Bank, the government is
not seeking additional credit from abroad. Moscow will be able to
meet President Boris Yeltsin's target of  paying by the end of the
year $1.6 billion in back wages to public sector employees, he
predicted.
        Economic analysts in Moscow, however, remain skeptical that
the government will be able to pay all back wages by 31 December
because of continued revenue shortfalls. The payment of those
wages is essential for Chubais's future in the government. His
standing was badly damaged in a scandal in November over a high
royalties payment for a book on Russian privatization. After the
book scandal erupted, Zadornov replaced Chubais as finance
minister, and some Russian observers say Yeltsin may soon
sacrifice Chubais altogether.
        The source of Chubais' optimism was a decision recently
taken by an IMF review team in Moscow.  That team issued a
statement saying it will recommend the release of a $700 million
installment of a three-year $10.1 billion credit. IMF officials in
Washington told RFE/RL that the fund's board may consider
releasing the tranche as early as the first week in January.
        The IMF froze loan disbursements to Russia in October,
because of poor tax collection (in the first nine months of the year,
only 66 percent of projected revenues had been collected) and
because of the government's failure to reform the tax system. Now,
however, the  IMF has indicated it is encouraged by Russia's effort
to clean up its finances, saying the Russian authorities have
"clearly confronted" their problems on tax collection and budget
spending.
         IMF officials added that Russia has good economic prospects
for 1998, "provided that the fiscal and monetary policies agreed
during the review are fully applied on a sustained basis." A similar
statement was recently made by the Organization for Economic
Development and Cooperation (OECD), which predicted GDP growth
of 0.5 percent.
        Chubais said at the 15 December press conference that,
despite the financial crisis, Russia still may meet a government
target of 2 percent economic growth for 1998. Zadornov, for his
part, said that tax collection improved in November and December.
The sale of part of the state-owned Eastern Oil Company for $800
million dollars also helped boost revenues.
        That sale took place despite the recent unfavorable conditions
on the stock market, and Chubais said about 20 percent of the
money that was withdrawn from the treasury bill market in
November is now being re-invested in Russia. However, analysts say
that world markets are not yet steady and that Russia remains
vulnerable, since it is not achieving revenue targets for 1997.
        Chubais and Zadornov both said they are encouraged by the
fact that prospects are also good for two World Bank loans that the
bank's board is expected to examine for final approval within the
next few days. The two loans, which are intended for structural
adjustment and reform of the coal industry, would total some $1.6
billion. World Bank officials have said their release would take
place within hours of the final approval.
        Russian observers believe these positive developments
allowed the Russian government to put off negotiations with four
Western banks for a $2 billion loan. But the optimistic picture on
which Russian financial officials and international financial
institutions have recently based their decisions is marred by the
State Duma's refusal to approve a government proposal to increase
the government's foreign-borrowing limit.
        Moreover, the State Duma Council on 16 December approved a
government request to postpone the second reading of the 1998
budget until 24 December. Duma Budget Committee Acting Chairman
Aleksandr Zhukov explained that deputies need more time to
consider government-backed amendments on planned 1998
expenditures.

The author is a Moscow-based RFE/RL correspondent.

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