The road uphill and the road downhill are one and the same. - Heraclitus
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 8, Part I, 14 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 DEMANDS POLICIES TO STIMULATE
ECONOMIC GROWTH

* DUMA DELAYS THIRD READING OF BUDGET

* ARMENIAN LEADERSHIP DIVIDED OVER KARABAKH?

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RUSSIA

YELTSIN DEMANDS POLICIES TO STIMULATE ECONOMIC
GROWTH. President Boris Yeltsin told First Deputy Prime
Minister Boris Nemtsov on 13 January that the government
must provide for economic growth of 2-4 percent in 1998,
RFE/RL's Moscow bureau reported. During a meeting in Valdai,
where Yeltsin has been vacationing since 4 January, the
president instructed the government to implement several key
policies to make 1998 the "year of economic growth." In
particular, he called for reducing taxes and securing the
adoption of a new tax code; tackling the problem of non-
payments; restructuring social benefits so that only the needy
receive financial support from the state; and lowering interest
rates. Those policy priorities are virtually identical to the ones
outlined by Nemtsov during an interview with NTV on 12
January. The government has previously predicted GDP growth
of 2 percent in 1998. LB

FINANCE MINISTER SKEPTICAL ON GROWTH PROSPECTS.
Mikhail Zadornov told "Nezavisimaya gazeta" on 13 January
that he is not optimistic that Russia will experience economic
growth in 1998. He argued that the instability on Russian
financial markets during the last quarter of 1997 set the
country's growth prospects back at least half  a year because of
significant rises in interest rates. Zadornov added that those
rates are unlikely to be lowered to a level that will facilitate
borrowing by enterprises until the second quarter of 1998 at
the earliest. He also argued that delays in implementing tax
reform have taken their toll on prospects for economic growth.
It will take at least six months for the government and
parliament to work out a new tax code that could stimulate
domestic industry, he said. LB

FOOTAGE OF YELTSIN SHOWN ON TV. Major Russian
television networks on 13 January showed brief clips of Yeltsin
riding a snowmobile in Valdai and talking with Nemtsov. In the
only footage in which Yeltsin's voice could be heard, the
president was telling Nemtsov and other aides about ice
fishing. It was the first television footage of Yeltsin in more
than two weeks, not counting recorded holiday addresses. On
14 January, Communist State Duma Deputy Aleksandr
Mikhailov called on the Duma demand a report on Yeltsin's
health, but his proposal was not put to a vote, RFE/RL's Moscow
bureau reported. LB

DUMA DELAYS THIRD READING OF BUDGET. The Duma
Council decided on 13 January to postpone the third reading of
the budget from 23 January to 4 February, RFE/RL's Moscow
bureau reported. According to Duma Budget Committee Acting
Chairman Aleksandr Zhukov, the deputies need extra time to
consider more than 3,000 proposed amendments to the
document. The budget must pass four readings in the Duma
before going to the Federation Council and then to the
president. LB

RUSSIA WELCOMES IRAN'S OLIVE BRANCH TO U.S.
Moscow welcomes Iranian President Mohammad Khatami's 7
January affirmation that his country is ready to end its
confrontation with the U.S. and step up  bilateral dialogue,
Foreign Ministry spokesman Valerii Nesterushkin told
journalists in Moscow on 13 January. Nesterushkin said that
the normalization of U.S.-Iranian relations would impact
favorably on the situation in the Middle East. He noted that
Khatami had emphasized in his 7 January interview with CNN
that Iran has no plans to develop nuclear weapons and that it
condemns terrorism. LF

RUSSIA DELIVERS MORE PLANES TO VIETNAM. A Volga-
Dnepr Airlines cargo plane has transported two Su-27 fighter
planes from Komsomolsk-on-Amur to Vietnam, Interfax
reported on 13 January. The first two were delivered in early
December, but an An-124 cargo plane transporting two more
crashed in Irkutsk later that month. Vietnam is to receive
another two fighter planes,  but  a delay is being caused by the
current ban on Russian Air Force An-124 planes while
authorities investigate the Irkutsk crash. The director-general
of the Sukhoi company that manufactures the fighter planes
said if the ban is not lifted, he will contract Volga-Dnepr again.
BP

NEW DRAFT NORTH CAUCASUS POLICY ENDORSED. The
Russian Ministry of Nationalities and Federal Relations on 12
January approved a draft concept on policy toward the North
Caucasus. Deputy Prime Minister Ramazan Abdulatipov told
journalists that the draft is intended to serve as a basis for
adopting measures to overcome the protracted economic and
social crises in the region. He added that it will help regulate
Chechnya's relations with Moscow and the aftermath of the
North Ossetian-Ingush conflict, according to Interfax. But
"Izvestiya" on 14 January pointed out that the document
affirms seemingly contradictory principles, a commitment to
the inviolability of the present borders of the Russian
Federation and the ethnic principle of developing Russian
federalism, but also allows input from the Russian Foreign
Ministry. The daily also cites State Duma deputy Vladimir
Lysenko as pointing out that the new North Caucasus policy is a
90 percent duplicate of one adopted in 1992. LF

CHECHEN CABINET LIST SUBMITTED TO PARLIAMENT.
Chechen President Aslan Maskhadov will continue to hold the
post of prime minister in the new cabinet, a list of whose
members was submitted to parliament on 13 January, Interfax
reported. The cabinet includes five deputy prime ministers,
including current acting premier Shamil Basaev, who said that
the new government's priorities will be restoring the economy
and combating crime. Presidential adviser Mairbek Vachagaev
commented that Maskhadov is likely to announce the
composition of the new government on 15 January, shortly
before he departs on a trip to unspecified countries in the
Middle East. LF

ATTACK ON CHECHEN ANTI-KIDNAPPING BRIGADE HQ.
Some 100 armed men staged an attack on the Grozny
headquarters of Chechnya's anti-kidnapping squad on 13
January but failed in their alleged aim of securing the release
of suspected kidnappers detained there.  A similar attack took
place last fall (see "RFE/RL Newsline," 3 November 1997).
There are currently 27 separate Chechen groups engaged in
abductions, ITAR-TASS reported on 13 January, quoting the
Chechen Prosecutor-General's office. Interfax quoted unnamed
Russian government sources as claiming there are 300 armed
groups in Chechnya with a combined strength of 2,500 men
who are beyond the control of the Chechen authorities. The
largest of these is the General Dudaev Army, commanded by
maverick field commander Salman Raduev, which numbers
approximately 1,000 troops. LF

NEW HEAD OF TREASURY APPOINTED. Duma deputy
Tatyana Nesterenko of the Russian Regions faction has been
appointed head of the Federal Treasury to replace Aleksandr
Smirnov, "Kommersant-Daily" reported on 14 January.
Nesterenko headed the finance department of Chukotka
Autonomous Okrug before being elected to the Duma, where
she served on the Budget Committee. Mikhail Zadornov chaired
that committee before he became finance minister in
November. According to "Kommersant-Daily," Nesterenko's
appointment demonstrates that Zadornov has significant
leeway in personnel matters. The newspaper claimed that First
Deputy Prime Minister and former Finance Minister Anatolii
Chubais was displeased with Smirnov's work but unable to
secure his removal. In addition, Zadornov's former top aide on
the Duma Budget Committee, Mikhail Motorin, was recently
appointed deputy finance minister in place of Sergei Shatalov,
who oversaw the drafting of the tax code. LB

BLAME GAME ON WAGE ARREARS CONTINUES... During
their meeting in Valdai, Yeltsin supported a proposal by
Nemtsov to survey mayors of some 2000 cities to find out
whether federal funds are going astray in the regions, RFE/RL's
Moscow bureau reported on 13 January. Appearing on NTV the
previous day, Nemtsov claimed the federal government has
"over-fulfilled" its obligations on helping pay wage arrears. He
again said regional leaders are responsible for the failure to
pay the debts in a few regions. However, Vera Orlova, the
deputy head of the Tomsk Oblast finance department, told
RFE/RL in a telephone interview that chronic underfunding by
the federal government in other areas sometimes forces
regional authorities to divert funds from wage payments to
essential needs such as coal and oil for heating during the
winter. LB

...AS GOVERNOR SAYS REGIONS STILL OWED MONEY.
Sverdlovsk Oblast Governor Eduard Rossel charged on 13
January that cabinet officials are not being truthful when they
claim that the federal government has settled all its debts to
the regions, ITAR-TASS reported. Rossel said the government
has not fulfilled a commitment approved months ago by Prime
Minister Viktor Chernomyrdin to loan 400 billion old rubles
($67 million) to Sverdlovsk. Just 233 billion rubles have
arrived in Sverdlovsk, and only in late December.
Consequently, Rossel said, Sverdlovsk has had to borrow money
from banks in order to pay all wage arrears to state employees,
which totaled some 400 billion rubles at the end of 1997. He
added that there is no telling when the government will pay its
debts to the Urals military district or to the defense industry.
Many manufacturers of military equipment are located in
Sverdlovsk. LB

REGIONS TO PAY BACK SOME LAST-MINUTE FUNDS FOR
WAGES? Finance Minister Zadornov says that in 1998 regional
governments will be obliged to return to the federal budget
some of the funds they received in December 1997 in order to
pay wage arrears. The federal government allocated some 14.5
trillion old rubles ($2.4 billion) to the regions to pay the back
wages, including 3.2 trillion rubles in extra funds for regions
that were unable to pay their share to settle the wage debts. In
an interview published in "Nezavisimaya gazeta" on 13
January, Zadornov said that the extra 3.2 trillion rubles were
allocated in the form of loans that must be repaid in 1998. LB

GOVERNMENT CREATES FEDERAL DEBT CENTER. The
government has created a Federal Debt Center to oversee sales
of property belonging to debtor enterprises, "Kommersant-
Daily" reported on 13 January. Such sales may be authorized by
courts or certain institutions, such as the tax police.
"Kommersant-Daily" argued that the Federal Bankruptcy
Service lobbied for creating the center in response to Russia's
new law on bankruptcy, which was signed by Yeltsin earlier
this month. That law deprived the Federal Bankruptcy Service
of the right to initiate bankruptcy procedures against
enterprises. "Rossiiskie vesti," the official newspaper of the
presidential administration, reported on 14 January that the
creation of the Federal Debt Center is linked to the recent
controversy over the attempt by a government commission to
order the seizure and sale of property belonging to persistent
tax debtors (see "RFE/RL Newsline," 18 and 19 December
1997). LB

HEAD OF GAZPROM-MEDIA EXPLAINS GOALS. Viktor
Ilyushin, the head of the media holding of the gas monopoly
Gazprom, says Gazprom-Media will intervene in the editorial
policy of media outlets it partly owns or finances. In an
interview published in "Kommersant-Daily" on 13 January,
Ilyushin explained that Gazprom is "not indifferent as to who
will govern the regions, who will pass laws, and what kind of
government we will have." Asked why Gazprom created a
subsidiary to manage its media assets (see "RFE/RL Newsline,"
29 December 1997), Ilyushin said that "we should legalize our
conjugal relations with certain mass media. We have had
friendly relations, but you don't get far today on friendship
alone." "Kommersant-Daily" reported that the main task of
Gazprom-Media will be to support a presidential bid by Prime
Minister Chernomyrdin. In addition, Gazprom-Media is
compiling a database of all Russian journalists. LB

BOMB EXPLODES NEAR GOVERNOR'S CAR IN
YEKATERINBURG. A bomb exploded on 14 January at the side
of a Yekaterinburg road as a car carrying Sverdlovsk Governor
Rossel passed by, RFE/RL's correspondent in Yekaterinburg
reported. Rossel was not hurt in the blast. Police are
investigating the explosion as a possible assassination attempt.
Rossel, one of Russia's more prominent regional leaders, was
sacked by Yeltsin as governor of Sverdlovsk in 1993 but
regained the post in the August 1995 election. LB

RUSSIA TO HOLD CENSUS NEXT YEAR. Russia will conduct a
census in November 1999, the first to be held there since the
Soviet census in January 1989, "Segodnya" reported on 10
January. In addition to specifying their age, gender, and
occupation, respondents will be asked to designate their
nationality (which is not included in the new Russian passports
currently being issued), their fluency in foreign languages, and
details of their employment and living conditions. In January
1989, the population of the RSFSR was 147,386,000, while on 1
November 1997, that of the Russian Federation totaled
147,200,000. Armenia, Azerbaijan, Georgia, and Kyrgyzstan will
also conduct censuses in 1999. LF

TRANSCAUCASUS AND CENTRAL ASIA

ARMENIAN LEADERSHIP DIVIDED OVER KARABAKH?
Serious differences emerged within the Armenian leadership
during the 7-8 January Security Council meeting, RFE/RL's
Yerevan bureau reported on 14 January, citing the independent
daily "Aravot." The newspaper quotes an unidentified source as
saying President Levon Ter-Petrossyan's conciliatory position
was backed by Yerevan Mayor Vano Siradeghian and
parliamentary leaders.  Prime Minister Robert Kocharian,
Defense Minister Vazgen Sarkisian, and Interior and National
Security Minister Serzh Sarkisian supported the leadership of
the unrecognized Nagorno-Karabakh Republic, which has
rejected the most recent peace proposal of the Organization on
Security and Cooperation in Europe's Minsk Group.  Presidential
spokesman Levon Zurabian denied that Ter-Petrossyan
threatened to split into two the Interior and National Security
Ministry, headed by Karabakh-born Serzh Sarkisian. That
threat reportedly prompted Kocharian, also a native of
Karabakh, to tender his resignation, which Ter-Petrossyan
refused to accept. LF

GEORGIA ACCUSES ABKHAZIA OF GENOCIDE... The
Georgian Foreign Ministry on13 January issued a statement
claiming that the allegedly "barbaric" detention of ethnic
Georgians in Gali Raion on 7 January is part of a "policy of
ethnic purges and genocide" against the breakaway republic's
ethnic Georgian population, Interfax reported. The Abkhaz
police detained 30 Georgian bus passengers on 7 January to
check their identity papers (see "RFE/RL Newsline," 8 and 9
January 1998). The Georgian statement further appealed for
stronger international support, primarily from the UN, for
Tbilisi's efforts to achieve a peaceful solution to the conflict.  LF

...WHILE ABKHAZIA DENIES CHARGES. Also on 13 January,
Igor Akhba, Abkhazia's permanent representative in Moscow,
rejected the Georgian Foreign Ministry's charges of genocide,
saying the new Abkhaz passport checks introduced last month
are aimed solely at combatting crime. The same day, the
Abkhaz Foreign Ministry condemned any attempt to resolve
the dead-locked conflict by force. Since 1 January, Georgian
President Eduard Shevardnadze has twice suggested that the
international community could mount a peace-keeping
operation in Abkhazia similar to that in Bosnia. Meeting in
Tbilisi in August1997, Shevardnadze and his Abkhaz
counterpart, Vladislav Ardzinba, rejected the use of force in
resolving their differences. LF

CHERNOMYRDIN IN TURKMENISTAN. Russian Prime
Minister Viktor Chernomyrdin met with Turkmen President
Saparmurat Niyazov in Ashgabat on 13 January. The two
signed an agreement avoiding double-taxation did not conclude
an accord on shipping natural gas via Russia, which was
Chernomyrdin's publicized reason for visiting Turkmenistan.
Chernomyrdin was accompanied by a Gazprom delegation
headed by the company chairman, Rem Vyakhirev.
Turkmenistan has complained about the high costs of using
Russian pipelines and that Russia buys Turkmen gas for half its
real value.  BP

KUNAEV COMMEMORATED. A mass meeting took place in
Almaty on 12 January to mark the 86th anniversary of the
birth of Dinmuhammed Kunaev, former CPSU Politburo full
member and First Secretary of the Kazakh Communist Central
Committee from 1964 to 1986, RFE/RL's Almaty bureau
reported the next day. Kunaev's ouster in December 1986 and
his replacement by ethnic Russian Gennadii Kolbin sparked
mass protest demonstrations in Almaty in which dozens of
people were killed. Kunaev died in 1993. Also on 12 January,
prayers were held at his grave in Almaty's Kentau cemetery.
LF

MAJOR INCREASE IN GOLD PRODUCTION IN
KYRGYZSTAN. The state gold company Kyrgyzaltyn
announced on 13 January that gold production reached 17 tons
last year, RFE/RL correspondents in Bishkek reported. That
total is a major increase over the 1996 figure of 1.5 tons. The
boost in production is attributed to the Kumtor mining
operation, a joint venture with Canada's Cameco Corp., which
began full operations last year. Although the gold produced in
1997 has an estimated value of $176 million, the Kyrgyz state
budget received only about $8 million from the gold industry
last year. BP

REGIONAL AFFAIRS

DATE OF NEXT CIS SUMMIT IN QUESTION?  CIS Deputy
Executive Secretary Stanislav Lebeznik told Interfax on 13
January that the schedules of all CIS heads of state must be
coordinated in order to set the date for the next CIS summit. At
the last summit in Moldova in October, it was agreed that
summits should be held annually on 23 January and on 16
March. The January summit was canceled last week at the
initiative of Ukrainian President Leonid Kuchma to allow for
"fundamental preparation of all the necessary documents,"
according to Labeznik. At that time, however, it was also
announced that the March summit will go ahead as scheduled.
LF

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