RFE/RL NEWSLINE Vol 1, No. 188, Part I, 5 January 1998

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

* YELTSIN BEGINS VACATION

* NEW RUBLES GO INTO CIRCULATION

* SHEVARDNADZE SAYS GEORGIA MAY SEEK PRESSURE
ON ABKHAZIA

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RUSSIA

YELTSIN BEGINS VACATION. President Boris Yeltsin on 4
January arrived at a state residence near the resort town of
Valdai (Novgorod Oblast) for a two-week vacation, Russian
news agencies reported. Spokesmen have said the president
will do paperwork and hold some meetings with Kremlin
officials during his vacation. Yeltsin spent two weeks in the
Barvikha sanatorium in December to recover from a
respiratory infection. The Kremlin has not announced when
Yeltsin will return to Moscow, nor is it clear whether the
president's planned visit to India will go ahead on 18-19
January. Meanwhile, unnamed sources in Moscow told
Interfax on 4 January that Yeltsin's trip to Chechnya
probably will not take place this month, as originally
scheduled. LB

NEW RUBLES GO INTO CIRCULATION... Three zeroes
were removed from the Russian ruble on 1 January as the
redenomination announced in August went into effect.
Accordingly, the Central Bank set its official exchange rate
for 2 January at 5.96 rubles to the  U.S. dollar. The Central
Bank has issued new bank notes worth 5, 10, 50, 100, and
500 rubles. New coins have been issued with face values of
1, 5, 10 and 50 kopecks, and 1, 2, and 5 rubles. Old ruble
notes will still be valid currency through the end of 1998,
and banks will exchange the old notes through 2002.
However, in an interview published on 31 December in the
official newspaper "Rossiiskaya gazeta," Central Bank
Chairman Sergei Dubinin predicted that most old bank notes
will be taken out of circulation by the summer. LB

...WHILE CENTRAL BANK HEAD SEEKS TO ALLAY
FEARS. In his 31 December interview with "Rossiiskaya
gazeta," Dubinin warned against attempts to set two price
scales so as to charge consumers more if they pay for goods
in old ruble notes. Dubinin said such dual pricing will be
considered swindling and will be punished accordingly.
Dubinin also promised that there will be no "secret emission"
of new bank notes, which would increase the money supply
and in turn could spark higher inflation. Government
officials have promised that the redenomination will not
cause significant price rises. However, many Russian
commentators have predicted that inflation will increase as
shopkeepers round up prices (for instance, to charge 5
rather than 4.7 new rubles for a product that previously cost
4,700 rubles). LB

MINISTERS SAY WAGE ARREARS PAID. Prime Minister
Viktor Chernomyrdin and First Deputy Prime Minister Boris
Nemtsov on 31 December announced that the federal
government has kept its promise to pay all back wages to
state employees by the end of 1997, Russian news agencies
reported. They said the Central Bank worked until 2:00 a.m.
on 31 December in order to complete the necessary transfers
of funds. Chernomyrdin told journalists on 30 December that
the federal government transferred a total of 14.5 trillion
rubles ($2.4 billion) to Russian regions to cover the wage
arrears. That figure includes 3.2 trillion rubles in aid to
regions that were unable to cover their share of the wage
debts on their own. LB

YELTSIN WANTS BETTER ECONOMIC RESULTS. In an
interview released by Russian news agencies on 30
December, Yeltsin blamed the government for disappointing
economic results in 1997 and urged the government to do
more to secure economic growth in 1998. Yeltsin said, "We
need breakthrough ideas and new approaches." He added
that he has said "several times that the state should play a
more active role in the economic sphere. Not by giving
orders, but by creating favorable [economic] conditions."
Addressing the Federation Council in September, Yeltsin
called for a "new economic order," to involve a greater role
for the state in managing the economy (see "RFE/RL
Newsline," 24 September 1997). The president's latest
comments increased speculation that he will soon dismiss
First Deputy Prime Minister Anatolii Chubais, who has been
in charge of economic policy. Yeltsin took the Finance
Ministry portfolio away from Chubais in November. LB

GOVERNMENT TO ASSESS PERFORMANCE IN
FEBRUARY. Government spokesman Igor Shabdurasulov
announced on 31 December that the government will meet
on 26 February to assess its performance during 1997,
Russian news agencies reported. By mid-February, final
official economic data for 1997 should be available, he said.
Shabdurasulov added that no date has been scheduled for
the government to report to the president on its
performance, but he suggested that the report may also take
place on 26 February. Yeltsin initially ordered the
government to brief him on its performance on 1 December,
but the briefing has been postponed twice. LB

CHUBAIS DEFENDS 1997 ECONOMIC ACHIEVEMENTS.
First Deputy Prime Minister Chubais argued in a 30
December interview with Russian Television (RTR) that the
government made substantial economic achievements in
1997. He said the government was able to collect most taxes
owed by the country's largest tax debtors, such as the gas
monopoly Gazprom, the car manufacturer Avtovaz, and the
electricity giant Unified Energy Systems. Chubais also
claimed that in 1997, unemployment and mortality rates
declined while real wages and industrial production
increased. He promised that the government will pay wages
to state employees and pensions on time in 1998. Other
major tasks for the year include tax reform, measures to
increase pensions, and steps to solve the problem of massive
non-payments, Chubais said. News coverage on fully state-
owned RTR is mostly favorable to Chubais. LB

'IZVESTIYA' SLAMS LIVSHITS. Writing in the 30
December edition of "Izvestiya," economist Andrei Illarionov
argued that Chubais has managed Russian economic policy
far more effectively this year than Aleksandr Livshits did as
finance minister from August 1996 until March 1997.
Illarionov said several important economic indicators
showed improvement in 1997, thanks to Chubais. For
instance, he argued that Chubais helped the government
collect more taxes in cash, while under Livshits taxes were
more frequently collected in the form of money surrogates.
Illarionov also noted that while Livshits was finance
minister, Russia's budget deficit increased and an unrealistic
budget for 1997 was adopted. Livshits recently criticized
alleged information leaks from the Russian government to
Western financial institutions, and various Russian media
have blamed Chubais for those leaks (see "RFE/RL Newsline,"
19 and 22 December 1997). Oneksimbank, which is close to
Chubais, is a major shareholder in "Izvestiya." LB

BASAEV TO FORM NEW CHECHEN GOVERNMENT.
Chechen President Aslan Maskhadov has dismissed the
current government and asked First Deputy Premier Shamil
Basaev to form a new cabinet, Interfax reported on 1
January. Basaev is to submit a list of nominees by 10
January, and Maskhadov is expected to appoint the new
cabinet by 20 January. Speaking on Chechen Television on 3
January, Basaev pledged to resign as prime minister in six
months if his government has not solved Chechnya's serious
social problems. A former field commander, Basaev gained
fame in Russia when he led the Chechen raid on Budennovsk
(Stavropol Krai) in June 1995. Meanwhile, Chechen Security
Service chief Apti Batalov resigned on 30 December. No
successor has been named to date. PG/LB

CHECHNYA TO ISSUE NEW PASSPORTS. Chechen Vice
President Vakha Arsanov told Interfax on 1 January that
Grozny will issue new passports in the next few weeks. The
documents, which have already been issued to some 200 top
Chechen officials, feature Chechnya's flag and emblem. They
are printed in the Chechen and English languages. Passages
in Chechen are written in Latin, rather than Cyrillic, script.
Although Chechen officials say the new passports will be
valid for travel abroad by Chechen citizens, Russian news
agencies on 2 January quoted an unnamed source in the
Russian Security Council as saying the documents will not be
recognized by Russia or by foreign countries. LB

KIDNAPPED CHECHEN JOURNALISTS RELEASED. Seven
Chechen journalists who were taken hostage on 22 December
in Dagestan were released unharmed on 31 December,
Russian news agencies and Reuters reported. The journalists,
all residents of Chechnya, are employed by Russian Public
Television, the Russian private network NTV, the news
agencies Reuters, Associated Press, and Chechen-press, and
the Worldwide Television News network. They disappeared
while in Dagestan to cover the recent attack on a Russian
tank unit in Buinaksk (see "RFE/RL Newsline," 23 December
1997). The People's Volunteer Corps of Dagestan, the little-
known group that claimed responsibility for kidnapping the
journalists, had called for exchanging them for several
Dagestani police who are allegedly being held prisoner by
Chechens. However, no Dagestani hostages appear to have
been released in Chechnya. In the first half of 1997, several
journalists were taken prisoner in Chechnya and released
only after large ransoms were reportedly paid. LB

SOME RELIGIOUS GROUPS BANNED IN DAGESTAN. The
Dagestani parliament on 30 December voted to amend the
law on freedom of conscience and religious organizations to
curtail the activities of some religious groups in the region,
Interfax reported. Under the amendments, local
administrations are empowered to ban religious groups and
prevent groups that have violated public order from re-
registering. The amendments come after the recent attack in
Buinaksk, in which Wahhabi extremists allegedly took part
Meanwhile, Magomedali Magomedov, the chairman of the
Dagestani State Council, called on the Chechen leadership to
begin talks with Dagestan on bilateral relations and security.
He stressed that while no one wants problems with
Chechnya, it must be taken into account that "gunmen come
from Chechnya and hide there, too." BP

YELTSIN SIGNS LAW CHANGING INCOME TAX
SCALE... Yeltsin on 31 December signed a law establishing a
new income tax scale, ITAR-TASS reported. Under the new
scale, Russians with annual incomes of less than 20,000
rubles ($3,400) will pay a 12 percent income tax. Tax rates
on annual incomes between 20,000 rubles and 100,000
rubles will gradually increase from 12 percent to roughly 26
percent. Russians in the top tax bracket, who have annual
incomes exceeding 100,000 rubles, will pay 20,400 rubles on
their first 100,000 rubles of income, plus a 35 percent tax on
all income over 100,000 rubles. LB

...AND AMENDMENTS TO LAW ON GOVERNMENT. Also
on 31 December, Yeltsin signed a law amending some
passages of the federal constitutional law on the
government, ITAR-TASS reported. The amendments, which
were approved by both houses of parliament on 25
December, confirm that the president oversees the activities
of agencies and ministries dealing with defense and security
questions. Yeltsin agreed to sign the law on the government
only after receiving assurances that the parliament will
approve the amendments (see "RFE/RL Newsline," 18
December 1997). LB

JAPAN, RUSSIA FINALLY CONCLUDE FISHING
AGREEMENT. Following 13 rounds of talks over the past
three years, Russian and Japanese officials have agreed on  a
six-page, 10-article document defining fishing rights around
the Kuril Islands, ITAR-TASS and Interfax reported on 30
December. Japanese fisherman now have quotas for the
number of fish they can catch. The bulk of Japanese
payments for fishing rights, which are estimated at $3
million annually, will be used to develop the four Kuril
Islands. The Russian and Japanese governments are now
reviewing the agreement, and the official signing ceremony
is expected at the end of this month. BP

ZHIRINOVSKY CALLS FOR CLOSER TIES WITH LIBYA...
Liberal Democratic Party of Russia (LDPR) leader Vladimir
Zhirinovsky on 30 December called for closer ties between
Russia and Libya, Interfax reported. Having returned from
Tripoli, where he met with the Libyan leader Muammar
Gaddafi, Zhirinovsky said Russians can find markets, jobs,
and recreation facilities in Libya. The LDPR has repeatedly
proposed boosting Russian/Libyan trade. Zhirinovsky also
has visited Iraq several times to meet with that country's
leader, Saddam Hussein. On 25 December, an airplane
carrying Zhirinovsky and other LDPR members landed in
Baghdad with a shipment of medical supplies for Iraq. LB

...REFUSES TO APOLOGIZE TO JOURNALIST. Also on 30
December, Zhirinovsky said he will not apologize to NTV
reporter Yelena Masyuk, whom he has accused of taking
money from Chechen rebels in exchange for broadcasting
favorable reports about them, Interfax reported. Rather, he
said he will appeal a Moscow municipal court ruling on 29
December that Zhirinovsky slandered Masyuk. The court
ordered Zhirinovsky to pay her 25 million rubles ($4,200)
and publicly retract his allegation. Masyuk had asked for
100 million rubles in damages. The court rejected a lawsuit
filed against Zhirinovsky by NTV. Neither Zhirinovsky, who
was in Libya, nor his lawyer attended the court proceedings.
The LDPR leader and his attorney also did not appear at two
previous court hearings in the slander case (see "RFE/RL
Newsline," 18 December 1997). LB

NO SLANDER CHARGES TO BE FILED AGAINST LEBED.
The Prosecutor-General's Office has refused to open a
criminal case against former Security Council Secretary
Aleksandr Lebed for slander, "Segodnya" reported on 27
December. Last summer, Boris Berezovskii requested that
prosecutors press slander charges against Lebed after Lebed
had accused Berezovskii of having profited from the war in
Chechnya (see "RFE/RL Newsline," 31 July 1997). Berezovskii
became deputy secretary of the Security Council following
Lebed's dismissal in October 1996. He was involved in
official negotiations with Chechen officials until his firing in
November 1997. He may still file a civil suit against Lebed.
LB

ST. PETERSBURG GOVERNOR SETTLES SUIT AGAINST
SOBCHAK. Vladimir Yakovlev has agreed to drop his 50
million ruble ($8,400) slander lawsuit against former St.
Petersburg Mayor Anatolii Sobchak, ITAR-TASS reported on
30 December. Yakovlev, who defeated Sobchak in a June
1996 election, filed suit in summer 1997, soon after an
interview with Sobchak appeared in the weekly
"Sovershenno sekretno." The newspaper quoted Sobchak as
alleging that Yakovlev has ties to St. Petersburg's so-called
Tambov criminal group. Yakovlev agreed to drop his lawsuit
provided that "Sovershenno sekretno" print a partial
retraction to make clear that Sobchak was merely referring
to an accusation made by an anonymous caller during a
radio show with Anatolii Ponidelko, the head of the St.
Petersburg and Leningrad Oblast branch of the Interior
Ministry. Sobchak has been in Paris since November. He is
reportedly recuperating from heart trouble (see "RFE/RL
Newsline," 13 and 14 November 1997). LB

TRANSCAUCASUS AND CENTRAL ASIA

SHEVARDNADZE SAYS GEORGIA MAY SEEK PRESSURE
ON ABKHAZIA. Speaking on 1 January, President Eduard
Shevardnadze said that he is in favor of settling the Abkhaz
dispute through dialogue but that "the leadership of our
country plans to raise the question of other variants" if no
progress is made soon, ITAR-TASS reported on 2 January.
The Georgian leader said the number of people in Tbilisi
urging the use of pressure--including the introduction of
international forces--was growing. PG

BAKU APPEALS TO AZERBAIJANIS ABROAD.  On 31
December, Azerbaijan marked the Day for Solidarity with
Azerbaijanis Throughout the World, ITAR-TASS reported.
First organized in 1989 to protest Moscow's refusal to allow
Azerbaijanis in the Soviet Union to meet with Azerbaijanis
abroad, this holiday remains laden with political meaning:
Far more Azerbaijanis live abroad than in Azerbaijan itself.
PG

PIPELINES, POLITICS IN CASPIAN BASIN. A pipeline
linking a port and a rail terminal in Dyubendy went into
commission in the presence of Azerbaijani President Heidar
Aliev, ITAR-TASS reported on 4 January. The facilities are a
trans-shipment point for oil from the Tengiz field in
Kazakhstan brought to Dyubendy by ship and then
transported by train to Batumi. Meanwhile, Uzbekistan and
the U.S. agreed on 31 December to increase their cooperation
in the development of Uzbekistan's oil and gas industry,
Interfax reported. But the previous day, the Kazakh Foreign
Ministry told Interfax-Kazakhstan that Akmola has "serious
concerns" about a Russian tender offer and demands that the
tender be "annulled," Interfax-Kazakhstan reported. PG

UZBEKISTAN, TAJIKISTAN REACH ACCORD ON DEBT.
Uzbek President Islam Karimov and his visiting Tajik
counterpart, Imomali Rakhmonov, have signed agreements
to settle debts between their two countries, ITAR-TASS
reported on 4 January. Karimov said Tashkent will oppose
any efforts by the Tajik opposition to transform that country
into an Islamic state. The two presidents are to join the their
counterparts from Kazakhstan, Kyrgyzstan, and
Turkmenistan for a Central Asian summit in Ashgabat on 5
January. That meeting will have no specific agenda,
according to Interfax.  PG

BURGLARS WOUND IRANIAN DIPLOMAT IN
KYRGYZSTAN. Thieves seeking to steal a satellite television
dish from the Iranian consulate in Bishkek attacked the
consul and his son, IRNA reported on 4

END NOTE

ONE COUNTRY, TWO FOREIGN POLICIES

by Paul Goble

Conflicting statements by Russian President Boris Yeltsin and
his foreign minister, Yevgenii Primakov, on the state of
relations between Moscow and the West raise some
questions about Russian foreign policy intentions in 1998.
        In his New Year's messages to foreign leaders, Yeltsin
said Russia's inclusion in the G-7 group of major economic
powers--which now becomes in effect the G-8--and progress
on disarmament issues by the U.S. and Russia were evidence
of "effective Russian-American cooperation."
        But in his year-end assessment at a 30 December press
conference, Primakov adopted a very different tone by
suggesting that Moscow's effort to form a strategic
partnership with the West has failed. He commented that
the idea of such cooperation has "lost its luster with time"
and that "such ties have started turning into those between
patron and client." Russia could never find such a
relationship acceptable, he stressed.
        Primakov went on to say that Russia not only
remained opposed to any eastward expansion of NATO but
was actively considering the extension of Russian security
guarantees to those countries in Central and Eastern Europe
not offered membership in the Western alliance.
        Despite coexisting in the same government, the two
men have often been at odds in the past on a wide variety of
foreign policy issues. But seldom has the distance between
the two been so great on an issue of such fundamental
importance. This raises three interrelated questions.
        First, does the latest difference between Yeltsin and
Primakov presage a break between the two? Second, is it
simply a tactic designed to compensate for Russia's current
weakness? And third, what does it portend for Russian
foreign policy, especially if Yeltsin is incapacitated for
lengthy periods this year?
        In virtually any other country, such a deep division
between the president and his top foreign policy aide would
presage the rapid departure of the latter from office. No
president with executive responsibility for foreign affairs
could be expected to tolerate what must appear to other
leaders as open insubordination.
        One explanation for Primakov's continued survival is
that he represents a part of the Russian political spectrum
that Yeltsin cannot or will not challenge even if he
personally disagrees with it. Yeltsin appointed Primakov to
placate the nationalists within the State Duma and more
broadly among the Russian population;  he may not be able
to fire him even if he wants to.
        A second interpretation is that Primakov may be in
political trouble and that he is speaking out now precisely to
drum up support for himself among his traditional allies. If
that is the case, Russia may have a new foreign minister
sooner rather than later.
        Another interpretation, increasingly heard both in
Moscow and the West, is that this public disagreement is
simply a clever tactic, with Yeltsin agreeing to play the part
of the sympathetic good cop while Primakov acts out the bad
cop. Each would stand to gain as a result. Yeltsin could
approach the West as a friend with a warning--in the form
of the voice of Primakov--that another, less sympathetic
Russia is possible if the West does not give him what he
wants.
        If this interpretation is correct, the two men have
more in common than a superficial reading of their speeches
might suggest. Moreover, no one should expect a
fundamental change in the direction of Russian foreign
policy anytime soon.
        But even if the two men are playing such roles--which
is far from certain--they do have very different ideas, at
least as far as can be judged on the basis of their public
remarks. That in turn raises the issue of just where
Primakov might take Russian foreign policy if Yeltsin were
incapacitated for an extended period, as was often the case
last year.
        If Yeltsin were to disappear from the political arena, a
new Russian government might decide either to replace
Primakov or to back him fully. But if Yeltsin is not in full
control of the situation, Primakov may be able to act ever
more independently. That could have the effect of making
Primakov's New Year message a self-fulfilling prophecy,
thereby undercutting Yeltsin's more hopeful one.

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