What the sick man likes to eat is his medicine. - Russian Proverb
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 1, No. 193, Part I, 12 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

* SPOKESMAN EXPLAINS YELTSIN'S ABSENCE FROM TV

* YELTSIN VETOES TWO TAX LAWS

* KARABAKH FOREIGN MINISTER SAYS PRESSURE
"INADMISSIBLE"

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RUSSIA

SPOKESMAN EXPLAINS YELTSIN'S ABSENCE FROM TV.
Presidential spokesman Sergei Yastrzhembskii told ITAR-TASS
on 9 January that Boris Yeltsin has not been shown on
television during his vacation in Valdai because "it isn't
possible to pester the president all the time." He added that
"vacation is vacation." However, Yastrzhembskii said television
footage of the president will be released sometime during the
week of 12 January. Kremlin officials have repeatedly denied
that a serious health problem is keeping Yeltsin out of public
view. Daily official statements continue to emphasize that the
president remains "active" in Valdai, holding telephone
conversations, working with documents, and engaging in
various forms of exercise. Yeltsin is scheduled to return to
work full time on 19 January. LB

YELTSIN VETOES TWO TAX LAWS. Yeltsin has vetoed
amendments to the law on excise duties that would have
introduced such charges on vodka, beer, tobacco, gasoline,
automobiles, and oil transports, ITAR-TASS reported on 11
January. According to government estimates, the amendments
would have raised 1998 revenues by 450 million rubles ($75
million) a month. However, executives in the energy sector and
some Russian media have strongly opposed the proposed excise
duty on oil transports in particular. Also on 11 January, the
presidential press service announced that Yeltsin has vetoed a
law that would have raised the tax on foreign-currency
purchases from 0.5 percent to 1 percent. In Yeltsin's veto
message to the parliament, he said both laws are inconsistent
with Russian legislation. The laws vetoed by Yeltsin were
among nine laws submitted to the parliament by the
government in order to increase 1998 budget revenues. LB

GOVERNMENT, KREMLIN AT ODDS OVER POLICY?
Yeltsin's latest vetoes suggest that some presidential advisers
are at odds with government officials over some economic
policy matters. In an interview published in "Izvestiya" on 10
January, Economics Minister Yakov Urinson acknowledged
there is occasional conflict between officials in the government
and presidential administration over economic policies. He
added that "one would like to believe that it's not political
games that lie behind all this but, if you like, objective
differences of opinion." Presidential economic adviser
Aleksandr Livshits recently criticized First Deputy Prime
Minister Anatolii Chubais's work on a government commission
on tax and budgetary discipline. Livshits also alleged that
government officials have leaked sensitive information to
international financial organizations (see "RFE/RL Newsline," 19
December 1997). LB

MINISTER ON CAUSES FOR POOR TAX COLLECTION. In the
same interview with "Izvestiya," Economics Minister Urinson
acknowledged that the government failed to improve tax
collection in 1997. However, he argued that the head of the
State Tax Service, Aleksandr Pochinok, was not to blame.
(Pochinok, seen as an ally of Chubais, was appointed last April.)
Rather, Urinson said, the poor tax collection stemmed from the
failure to reform the tax system and secure adoption of a new
tax code. In addition, Urinson continued, the government did
not make the work of its commission on tax and budgetary
discipline more effective, "so that it would be more profitable
for people to pay taxes than to evade them." Urinson denied
persistent speculation that Prime Minister Viktor
Chernomyrdin is frequently at odds with First Deputy Prime
Ministers Chubais and Boris Nemtsov. LB

TWO DOZEN FIRMS PAY TWO-THIRDS OF ALL TAXES.
State Tax Service head Pochinok told Interfax on 9 January that
more than two-thirds of tax revenues come from Russia's 17
largest companies and about six major banks. A new special
agency within the tax service will focus on those large
taxpayers, he said. Meanwhile, Moscow Mayor Yurii Luzhkov
claimed on 8 January that 30 percent of all budget revenues
contributed by Russian regions to the federal government in
1997 came from the city of Moscow. Luzhkov said Moscow's
contributions to the federal budget totaled 52.6 trillion old
rubles ($8.8 billion). LB

ANOTHER COMMITTEE CREATED ON STATE MONOPOLY
ON ALCOHOL. Yeltsin has signed a decree creating a State
Committee for Enforcing the Monopoly on Alcohol Production,
which will be charged with "ensuring the state monopoly on
the production of and trade in ethyl alcohol and alcoholic
products," ITAR-TASS reported on 10 January. The same
decree abolished the Federal Service for Enforcing the State
Monopoly on Alcoholic Products, which was created nearly two
years ago in place of the state inspectorate for ensuring the
state monopoly on alcoholic products. Previous presidential
decrees on the state monopoly on alcohol have not been
enforced (see "OMRI Daily Digest," 2 January 1997). Meanwhile,
Yeltsin signed a law substantially raising taxes on alcohol
imports, production and sales, ITAR-TASS reported on 11
January. LB

BEREZOVSKII DEFENDS CHUBAIS... Former Security Council
Deputy Secretary Boris Berezovskii spoke out in defense of
First Deputy Prime Minister Chubais at a Russian-U.S.
investment symposium at Harvard University, Interfax
reported on 11 January. In remarks to the symposium, U.S.
financier George Soros had accused Chubais of aiding the
development of "bandit capitalism" in Russia by organizing the
misappropriation of state property. Berezovskii, whose
LogoVAZ empire acquired lucrative stakes in several privatized
companies in recent years, argued that Soros's allegations were
unfair and tactless. He noted that Chubais and his allies
succeeded in redistributing property in Russia without
bloodshed. Berezovskii and Chubais were allies until July 1997,
when a consortium involving Berezovskii failed to win a major
stake in the telecommunications giant Svyazinvest. Since then,
Berezovskii and media financed by him have repeatedly
attacked Chubais (see "RFE/RL Newsline," 23 and 30  December
1997). LB

...SAYS WEALTHY SHOULD HELP CREATE MIDDLE CLASS.
At the same investment symposium, Berezovskii also said large
financial and industrial groups in Russia should take steps to
help create a middle class, Interfax reported on 11 January. He
added that the number of Russians living in poverty must be
reduced "so they don't hang us." Berezovskii said he will work
to ensure that the 1999 parliamentary elections are not a
repeat of the December 1995 elections to the State Duma. In
1995, the Communist Party gained far more votes than any
other party. In December 1997, Berezovskii joined the political
council of the Socialist Party of Russia, which is headed by
Security Council Secretary Ivan Rybkin. An electoral bloc
headed by Rybkin gained less than 2 percent of the vote in the
1995 parliamentary elections. LB

GOVERNMENT CALLS FOR TOUGHER ADVERTISING
STANDARDS. The government on 8 January approved
proposals to strengthen regulation of the advertising market,
especially advertisements of alcohol, tobacco, and medical
products, Russian news agencies reported. The measures, which
were prepared by the State Anti-Monopoly Committee, include
proposed amendments to the law on advertising and new
procedures on registering medicines, to be adopted by the
Health Ministry. State Anti-Monopoly Committee head Natalia
Fonareva also urged the government to try to block efforts by
some Duma deputies to weaken the ban on television
advertising for alcohol and tobacco products. LB

LATEST IMF TRANCHE TO PAY DEBTS TO DEFENSE
INDUSTRY. First Deputy Finance Minister Aleksei Kudrin told
Interfax on 9 January that the government will spend the
latest $667.5 million loan tranche from the IMF mostly on
paying debts to the defense industry. He estimated that those
debts total more than 20 trillion old rubles ($3.3 billion).
Kudrin claimed defense industry workers will receive wages
owed to them within the next six months, although he
acknowledged that it will take longer to settle all government
debts for defense orders. The IMF board approved the latest
tranche on 8 January. LB

DEFENSE MINISTRY EXPLAINS FAILURE TO PAY BACK
WAGES. The Defense Ministry says it is having trouble paying
all back wages owed to military personnel, which were
supposed to be settled by the end of 1997, because of funding
shortfalls in other areas of the defense budget. According to a
ministry statement published in the official military newspaper
"Krasnaya zvezda" on 10 January, some funds earmarked for
paying debts in soldiers' wages and financial benefits have
been spent on other areas, such as financing the draft, military
hospitals, and payments to officers laid off. Meanwhile, Defense
Ministry officials told ITAR-TASS on 9 January that the Finance
Ministry also contributed to problems in settling the wage
debts on time by allocating funds to the Defense Ministry only
on 30-31 December, rather than earlier in the month. LB

AIR FORCE TURNS TO UNCONVENTIONAL SOURCES OF
FUNDS. The Russian Air Force raised more than $25 million in
1997 by renting out military equipment, Reuters reported on 9
January, citing an interview published the same day in
"Krasnaya zvezda." Major-General Nikolai Anisimov, who heads
the financial department of the air force, told the newspaper
that leasing military aircraft to private firms or to other
branches of the armed forces accounted for most of the
"unconventional" financing. He said more money could be
raised in the future by  renting out some of the air force's
hangar and storage space and by charging commercial rates for
private treatment at military hospitals and vacations in
military resorts. LB

HEAD OF RUSSIA'S LARGEST HOTEL KILLED. Yevgenii
Tsimbalistov, the director-general of the massive Hotel Rossiya
in Moscow, was shot dead in his apartment building on 9
January. Police believe the murder was a contract killing.
Tsimbalistov became director of the hotel in 1995, after his
predecessor was murdered. According to ITAR-TASS, the Hotel
Rossiya, which has more than 3,000 rooms, is owned by the
Moscow city government. The murder of Tsimbalistov is the
latest in a string of apparent contract killings in the capital's
hotel industry. Last November, the director-general of the
Sovintsentr hotel and trade complex was shot dead, Reuters
reported. In November 1996, an assailant killed U.S. citizen
Paul Tatum, who was involved in an ownership dispute over
the Radisson-Slavyanskaya Hotel. Those crimes remain
unsolved. LB

MORE RUSSIAN-CHECHEN TALKS.  A Russian government
delegation headed by Deputy Prime Minister Ramazan
Abdulatipov held talks in Grozny on 10 January with Chechen
acting Prime Minister Shamil Basaev and other government
officials on a timetable for economic reconstruction and on
upgrading the status of Grozny's Sheikh Mansur airport,
Russian agencies reported. Georgii Kurin, Russian presidential
representative in Chechnya, said that establishing a free
economic zone in Chechnya is a necessary precondition for
stabilization, according to ITAR-TASS. Basaev warned that
"Chechnya expects Russia to fulfill its obligations, especially in
the economic sphere [so that] cooperation in other areas will
develop successfully."  But Chechen Deputy Prime Minister
Akhmed Zakaev told Interfax on 10 January that he thinks
further Russian-Chechen talks are "pointless" since Russia "has
not met a single commitment" made to Chechnya in the past 18
months. LF

YELTSIN TO MEET WITH NORTH CAUCASUS ELDERS.  On
his return from Grozny to Moscow on 10 January, Abdulatipov
told journalists that Russian President Boris Yeltsin will meet
with North Caucasus elders in late January to discuss the
"complicated and extremely contradictory" situation in the
region, Russian agencies reported. Abdulatipov said that
preparations for this meeting have been under way for some
time and that "it will be a very useful dialogue."  He said the
meeting may be held either in Moscow, or in Stavropol or
Makhachkala, the capital of Dagestan. LF

BASAEV PRESENTS CABINET NOMINATIONS.  Acting
Chechen Prime Minister Shamil Basaev on 11 January met with
President Aslan Maskhadov to discuss the 22 nominations to
his new government, ITAR-TASS reported. First Deputy Prime
Minister Movladi Udugov is expected to be named foreign
minister, field commander Ruslan Gilaev defense minister, and
Basaev's brother, Shirvani, minister of power and fuel. It is
unclear whether Maskhadov will cede to Shamil Basaev the
post of premier, which he currently occupies. On 10 January,
Russian presidential envoy Petr Marchenko told ITAR-TASS
that the outgoing Chechen government has failed to perform
adequately and that its orders are frequently ignored by
former field commanders. Marchenko said this trend
undermines the authority of the Chechen leadership (see also
"End Note" below). LF

TRANSCAUCASUS AND CENTRAL ASIA

KARABAKH FOREIGN MINISTER SAYS PRESSURE
"INADMISSIBLE." Meeting with visiting U.S. Congressman
Frank Pallone on 9 January in Stepanakert , Naira Melkumian
said that attempts to impose an "unacceptable" solution to the
Karabakh conflict on the unrecognized Nagorno-Karabakh
Republic are "inadmissible," Noyan Tapan reported. She called
for direct talks between Stepanakert and Baku and for the
signing of a tripartite cease-fire agreement, which, she said,
would expedite the peace process. Affirming that a "strategy to
isolate Karabakh is counterproductive and will not work,"
Pallone pledged to try to convince Congress that supporting
self-determination for Karabakh is not detrimental to U.S.
Caspian oil interests, according to a 10 January press release by
the Armenian Assembly of America. LF

ARMENIAN SECURITY COUNCIL MEETING UPDATE.
Armenian First Deputy Foreign Minister Vartan Oskanian told
"RFE/RL Newsline" on 9 January that despite extensive
discussions, Armenian and Karabakh leaders failed to reach a
"definite common position" on resolving the conflict at the 7-8
January Armenian Security Council session. But he added that
they will continue talks to that end.  Yerevan has accepted
"phased" peace plan proposed by the co-chairmen of the
Organization on Security and Cooperation in Europe's Minsk
Group  as a basis for future talks, but Stepanakert continues to
insists on a "package" solution that would resolve all
contentious issues, including the enclave's future status and
international security guarantees, in a single framework
document. LF

JAPAN TO BUILD OIL REFINERY IN GEORGIA. Japan's
Itochu Corporation will sign a $300 million contract in Tbilisi
later this month to build an oil refinery at the Black Sea port of
Supsa, Interfax reported on 10 January, quoting Georgian
International Oil Company President Giorgi Chanturia. The
refinery will be located close to the terminal of the Baku-Supsa
export pipeline, which is currently under construction, and will
have an annual capacity of 3 million metric tons. It will
produce fuel oil for electric power stations, diesel fuel, gasoline,
and petrochemicals for both domestic consumption and export
to Ukraine and Turkey. Itochu signed a memorandum of
understanding with Georgia in September 1997, which covers
investment in and modernization of hydro-electric power
stations in Georgia. LF

GEORGIA, GREECE SIGN DEFENSE COOPERATION
AGREEMENT. Visiting Athens on 8-10 January, Georgian
Defense Minister Vardiko Nadibaidze met with Greek President
Constantinos Stephanopoulos and Foreign Minister Theodoros
Pangalos, Russian media reported. Nadibaidze and his Greek
counterpart, Apostolos Tsochatzopoulos, signed a cooperation
agreement on exchanging information, joint maneuvers, and
the transfer next month of a Greek patrol boot to the Georgian
coast guard. Tsochatzopoulos stressed that Georgia and Greece
are located in the same geo-political region and that greater
interaction between them will contribute to countering regional
instability.  Greece signed a similar defense cooperation
agreement with Armenia in July 1997. LF

U.S.-AZERBAIJANI MINING AGREEMENT IN QUESTION?
Vasif Halilzade, the deputy head of Azerbaijan's State Precious
Metals Institute, has hinted that the Azerbaijani government
may cancel a $500 million contract with a U.S. consortium to
explore and develop the country's gold, silver, and copper
deposits, AFP reported on 9 January citing Turan. Halilzade said
RV Investment Group Services LLS has taken no steps to date
to implement the contract , which was signed last summer (see
"RFE/RL Newsline," 21 and 25 August 1997). LF

HOSTAGE CRISIS RESOLVED IN TAJIKISTAN... Rahmon
Sanginov and his followers on 10 January freed five hostages
after securing freedom for three of their compatriots held by
the Tajik government, RFE/RL correspondents in Dushanbe
reported. Three days earlier, Tajik militia had detained three of
Sanginov's men for carrying arms, prompting Sanginov to set
up a road block outside eastern Dushanbe. As representatives
of the Tajik government and National Reconciliation
Commission were negotiating the men's release on 10 January,
Sanginov's group took five hostages in downtown Dushanbe,
one of whom was the city's deputy mayor. The exchange of
hostages for prisoners was made on the evening of 10 January.
BP

...WHILE NURI SAYS NO MORE HELP FROM HIS GROUPS.
Chairman of the National Reconciliation Commission Said
Abdullo Nuri warned on 12 January neither the commission
nor the United Tajik Opposition, which Nuri also heads, will
intervene again to resolve a hostage crisis, RFE/RL
correspondents in Dushanbe reported. Members of the
commission and the UTO have taken part in negotiations with
hostage takers and/or kidnappers on several occasions.. Nuri
said anyone engaging in such illegal activities will be on their
own in the future. BP

END NOTE

WHO CONTROLS CHECHNYA?

by Liz Fuller

        On 1 January 1998, Chechen President Aslan Maskhadov
acquiesced to maverick field commander Salman Raduev's
repeated demands that he dismiss his cabinet. Acting Prime
Minister Shamil Basaev, notorious for his leading role in the
June1995 Budennovsk hostage-taking, was charged with
forming a new government. That move will inevitably fuel the
ongoing debate in the Russian media about the extent of
Maskhadov's control over his unruly countrymen and the
alignment of domestic forces opposed to him.
        A former Soviet army colonel who served as chief of staff
to President Dzhokhar Dudaev, Maskhadov won the adulation
of the forces serving under his command during the 20-month
war against Russia. Meeting with then Russian Security Council
Secretary Aleksandr Lebed in August 1996, Maskhadov signed
the agreements that in effect ended hostilities and paved the
way for extended talks on Chechnya's future status vis-a-vis
Moscow. Many Russian politicians made no secret of their
desire to see Maskhadov, whom they considered pragmatic and
open to reason, elected president of Chechnya rather than one
of the more radical and unpredictable former field
commanders, such as Basaev.
        But since his presidential election triumph in January
1997, Maskhadov has become increasingly perceived as having
only limited authority.  The real power, most observers agree,
lies with the 18-strong Field Commanders' Council headed by
Vice President Vakha Arsanov. By contrast, neither the
parliament, the government, nor most political parties exercise
significant influence on political developments.
        The former field commanders, each of whom established
control over a specific district of Chechnya during the war,
have thus emerged as a counterbalance and complement to the
"teyps" (clans) that until late1994 were the single most
important social and political entity. (There is a strict hierarchy
among the more than 150 Chechen teyps, the most numerous
and powerful of which, the "benoy," is one of the 20 or so
oldest and most respected such groups.)
        This is not to assert that the power of the teyps has been
totally eclipsed or that teyp membership carries no clout.
Various teyps still control foreign policy and the oil sector, for
example. Maskhadov's own faction is supported by Chechen
businessmen from the smaller teyps who made their fortunes
in Russia during the war. And two other groups jockeying for
power are likewise teyp-oriented: the former Dudaev faction,
which also includes representatives of some Ingush teyps; and
that of Dudaev's deputy president, writer Zelimkhan
Yandarbiev, and former chairman of the Chechen Oil Company,
Khozh-Akhmet Yarikhanov, both of whom reportedly enjoy the
support of the richest and noblest teyps.
        This latter faction also includes radical field commander
Raduev and First Deputy Prime Minister Movladi Udugov, who,
lacking teyp support, is engaged in building an alternative
power base in the form of the Islamic Path party,  which he
heads.  In August 1997, Yandarbiev and Raduev founded the
Warriors of Freedom movement, which is composed of some
1,000 war veterans and opposes any compromise approach to
securing Chechnya's formal independence from the Russian
Federation.
        The visible erosion of Maskhadov's authority dates from
May 1997, when he and Russian President Boris Yeltsin met in
Moscow to sign a formal treaty on peace and bilateral relations.
That move reportedly so outraged the Field Commanders'
Council that its members contemplated a coup to depose
Maskhadov. In early July, Shamil Basaev, at that time
perceived as Maskhadov's most influential supporter within
the council, resigned from his post as deputy premier. Basaev
himself declined to comment on his motives, but one observer
has claimed that Basaev's directives were routinely ignored
and that he was not consulted when decisions were taken on
matters within his competence.
        In late September, Vice President Arsanov, described by
one Russian journalist as "unpredictable, single-minded, and
ruthless," spontaneously ordered the expulsion of the entire
Russian mission in Grozny. That move highlighted his role as
what Ivan Rybkin, Lebed's successor as Security Council
secretary, termed "the tail that controls the fox." One month
later, in a possible bid to preclude further destabilizing moves
by Arsanov, Maskhadov named Basaev first deputy prime
minister and empowered him to act as premier during
Maskhadov's private visits to Turkey and the U.S.
        It is unclear whether Maskhadov will continue to
combine the posts of president and prime minister as he has
done until now, despite objections from the Field Commanders'
Council.  Since Arsanov reportedly exercises full control over
domestic political and economic issues, Basaev may find
himself frustrated and side-lined if Maskhadov appoints him
prime minister. Moreover, Basaev would be unable to prevent
the further erosion of Maskhadov's dwindling authority.
        Meanwhile, Yandarbiev, Raduev and Udugov, united by
their pathological antipathy to Russia, await an opportune
moment to realize their shared objective of establishing an
Islamic state in the North Caucasus. Maskhadov's avowed
commitment to dialogue with Moscow is the single largest
impediment to that objective.

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