Miracles are natural. When they do not occur, something has gone wrong. - A Course in Miracles
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 12, Part I, 20 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 APPROVES GOVERNMENT PLANS

* MERGER TO CREATE LARGEST RUSSIAN OIL COMPANY

* KARABAKH PRESIDENT AGAIN REJECTS OSCE PEACE
PLAN

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RUSSIA

YELTSIN APPROVES GOVERNMENT PLANS... President
Boris Yeltsin on 19 January announced that the government
has submitted proposals to him on 12 key tasks in social and
economic policy for 1998, RFE/RL's Moscow bureau reported.
He said the document is "unusual" in that it assigns
responsibility for implementing each task to one government
minister and one member of the presidential administration.
The document has not been released, but government officials
have previously said improving tax collection, reducing the tax
burden, maintaining strict control over state spending, and
tackling the non-payments problem will be top priorities this
year. Earlier the same day, Yeltsin told Prime Minister Viktor
Chernomyrdin and First Deputy Prime Ministers Anatolii
Chubais and Boris Nemtsov that the government failed to meet
its obligations for 1997, especially in terms of paying wage
arrears to state employees (see "RFE/RL Newsline," 19 January
1998). LB

...IS AMBIVALENT OVER KULIKOV'S CHECHEN
STATEMENT. Also on 19 January, Yeltsin rebuked Interior
Minister Anatolii Kulikov for his controversial 6 January
statement advocating preemptive strikes against Chechen
guerrilla bases. "Such statements should not have been made
without prior consultation with me,"  Interfax quoted him as
saying. But Yeltsin made clear that he "is very close" to
Kulikov's hard-line position on Chechnya. Commenting on
Kulikov's statement,  Russian government spokesman Igor
Shabdurasulov had said it represented the minister's "personal
opinion." Also on 19 January, Yevgenii Savostyanov, the deputy
head of the presidential administration, predicted that an
agreement between Moscow and Grozny on the precise nature
of bilateral relations will require "many, many years" of
negotiations. He added that "good-neighborly relations" cannot
be achieved by "an oil pipeline or transfers" of funds from the
federal budget. LF

NEMTSOV ON POSSIBLE CABINET CHANGES. First Deputy
Prime Minister Nemtsov told "Izvestiya" of 20 January that he
believes Yeltsin and Chernomyrdin understand it would be a
"waste of time" to "reshuffle everything and start over with a
new government." He noted that 1998 is "the last [year] in
which it is possible to work normally" before the campaigns for
the next parliamentary and presidential elections, scheduled
for 1999 and 2000. Nemtsov again said Yeltsin promised him
two years in the government when he appointed him first
deputy prime minister last March. As for the future of First
Deputy Prime Minister Chubais, Nemtsov said his opinion
whether Chubais will resign "changes strongly from day to
day." The government responsibilities of Chubais and Nemtsov
were recently downgraded (see "RFE/RL Newsline," 16 and 19
January 1998). LB

MERGER TO CREATE LARGEST RUSSIAN OIL COMPANY.
Executives of the oil companies Yukos and Sibneft on 19
January announced plans to merge. The new company, Yuksi,
will overtake LUKoil as the largest Russian oil company and
will be the third-largest private oil producer in the world,
according to the 19 January "Financial Times." Yuksi will also
include the Eastern Oil Company, in which Yukos has a
controlling stake, and the East-Siberian Oil and Gas Company,
which is affiliated with Sibneft. Mikhail Khodorkovskii, the
founder of the Menatep bank and currently the top executive
at Yukos, will be the new company's president. "Kommersant-
Daily" reported on 20 January that 60 percent of the shares in
Yuksi will belong to the current shareholders of Yukos and 40
percent to Sibneft shareholders. Khodorkovskii confirmed that
Yuksi will bid for a stake in the oil company Rosneft. LB

CHERNOMYRDIN PRAISES MERGER. Speaking at the signing
ceremony for the creation of Yuksi, Prime Minister
Chernomyrdin welcomed the merger of Yukos and Sibneft. He
added that "Russian companies should compete [abroad], but
within Russia they should agree between themselves,"
Kommersant-Daily" reported on 20 January. Chernomyrdin also
said he will meet with the leaders of oil companies soon to
discuss tax issues, ITAR-TASS reported. Commenting on the
government's attitude toward the creation of Yuksi, Boris
Berezovskii, a major investor in Sibneft, said that "at last Russia
has rejected the idea of demonopolization, which does not
correspond to the spirit of the times." LB

MINISTRY SAYS ECONOMY GREW IN 1997. Preliminary
data compiled by the Economics Ministry indicate that 1997
marked the first year in the post-Soviet period that Russia
experienced economic growth, ITAR-TASS reported on 19
January. The data show that GDP rose 0.4 percent in 1997 and
industrial production 1.9 percent. Preliminary data compiled
by the State Statistics Committee show similar gains of 0.4
percent in GDP and 1.8 percent in industrial production. The
government initially predicted GDP growth of 2 percent for
1997. Yeltsin has demanded that the government provide for
2-4 percent economic growth this year. LB

CREDIT-RATING OUTLOOK DOWNGRADED. Despite upbeat
statements by government officials, international rating
agencies are pessimistic about Russia's economic prospects. On
15 January, Moody's downgraded Russia's credit-rating outlook
from "stable" to "negative," meaning that it will be more
expensive for the Russian government and Russian
corporations to borrow money abroad. Standard and Poor's, the
other major international credit rating agency, revised its
rating outlook for Russia from stable to negative in December.
LB

FOREIGN MINISTRY DISPLEASED BY BULGARIAN
STATEMENTS ON GAS TRANSIT. The Russian Foreign
Ministry on 19 January said recent warnings that Bulgaria may
reduce Russia's gas transit across its territory are tantamount
to "political pressure," which, the ministry added, could
complicate Russia's relations with other countries and harm the
economic security of southeastern Europe, Russian news
agencies reported. Bulgarian Prime Minister Ivan Kostov
recently said transits of gas to Turkey, Serbia, Greece, and
Macedonia through Bulgaria may be reduced if the Russian gas
monopoly Gazprom curtails deliveries for Bulgarian
consumption (see "RFE/RL Newsline," 15 and 19 January 1998).
But the Russian Foreign Ministry said such a move would
violate intergovernmental agreements signed by Bulgaria in
1994 and 1997. Gazprom head Rem Vyakhirev has said his
company will explore alternative ways of delivering gas to
third countries if Bulgaria follows through on the threat,
"Kommersant-Daily" reported on 20 January. LB

PRESIDENTIAL ADMINISTRATION TO BE DOWNSIZED.
The presidential administration is to be downsized by 200
employees, or about 10 percent, deputy head of the
administration Yevgenii Savostyanov told Interfax on 19
January. "Kommersant-Daily" reported on 17 January that
Presidential Chief of Staff Valentin Yumashev is the initiator of
the changes. Viktoriya Mitina, who was appointed deputy head
of the presidential administration last November, has also
called for eliminating departments in the administration that
duplicate one another's work. LB

STROEV CRITICIZES COALITION GOVERNMENT
PROPOSALS... Federation Council Speaker Yegor Stroev on 19
January criticized draft proposals on forming a coalition
government, saying they lack a "concept," Russian news
agencies reported. State Duma Speaker Gennadii Seleznev has
said he will submit the proposals to Yeltsin at a meeting in late
January. He told Interfax that Stroev has not seen the final
draft of the document. Both presidential spokesman Sergei
Yastrzhembskii and Yeltsin's representative in the
Constitutional Court, Sergei Shakhrai, said recently that the
president will reject plans on forming a coalition government.
Earlier, Stroev said the president should be aware of
parliament's opinions when forming the cabinet, but he has
shied away from advocating a coalition government (see
"RFE/RL Newsline," 10 December 1997). LB

...AND POWER-SHARING TREATIES WITH REGIONS. Also
on 19 January, Stroev again criticized the practice of bilateral
agreements being concluded by the federal government and
regional authorities, "Kommersant-Daily" reported on 20
January. Addressing a conference on Russian federalism hosted
by the Federation Council, Stroev said such power-sharing
agreements contribute to the arbitrary nature of relations
between Moscow and regional governments and leave
relatively weak regions almost completely dependent on the
Kremlin. Stroev added that the strongest regions, such as the
Republic of Tatarstan, have virtually "confederative" relations
with Moscow. More than 30 regions have signed power-sharing
agreements. Stroev also criticized attempts to blame regional
leaders for failing to pay all wage arrears to state employees.
He asked rhetorically, "if the government has not paid for state
orders, and the regional government is consequently unable to
collect all taxes, is the governor to blame?" LB

OFFICIALS CRITICIZE REGIONAL LAWS. Addressing the
same conference on federalism, Prosecutor-General Yurii
Skuratov announced that nearly 2,000 regional laws have been
revoked for contradicting the Russian Constitution, Interfax
reported on 19 January. But Skuratov called for better
compliance with federal legal norms, noting that Russia
currently lacks sufficient "levers" for ensuring that
Constitutional Court rulings on regional laws are implemented.
Justice Minister Sergei Stepashin told the conference that about
one-third of the 16,000 regional laws examined by the Justice
Ministry since summer 1995 have been found to violate
federal legislation, ITAR-TASS reported. By way of example, he
said some two-thirds of Russian regions have passed laws on
alcohol production and distribution that violate federal law. LB

COURT RULES LOCAL GOVERNMENTS MUST BE
ELECTED... The Constitutional Court on 15 January struck
down passages in the Komi Republic's constitution and law on
executive authorities that allow the republican administration
to appoint local governments, "Nezavisimaya gazeta" reported
on 16 January. The ruling means that elections must be held in
all municipalities to choose local authorities. In the past, Yurii
Spiridonov, the head of the Komi Republic, has appointed some
local leaders. In addition, the court rejected a passage in the
Komi Constitution that says local executive authorities must
answer to local legislative authorities. Article 131 of the
Russian Constitution says that the people alone may determine
the structure of local government. LB

...AND RESIDENCE PERMIT NOT REQUIRED FOR FOREIGN
PASSPORT. Also on 15 January, the Constitutional Court ruled
that authorities may not require Russian citizens to produce
residency permits in order to be issued passports valid for
foreign travel, "Kommersant-Daily" reported on 16 January.
The judges struck down a passage in the law on procedures for
leaving and entering the Russian Federation, saying it violated
the constitutional right to freedom of movement. Aleksandr
Avalov, who has lived in Moscow for several years but is
officially registered as a resident of Tbilisi, lodged the court
appeal. The court ruling means that homeless people, forced
migrants, and others who lack a permit ("propiska") for their
city of residence may receive passports valid for foreign travel.
The Constitutional Court has previously ruled on several
occasions that the "propiska" system is itself unconstitutional.
LB

SUSPECT IN YEKATERINBURG BOMB ATTACK DETAINED.
Lieutenant-General Valerii Kraev, the head of the Sverdlovsk
Oblast police department, told Interfax on 19 January that
authorities believe a man detained on charges of illegal
weapons possession may have been involved in the 14 January
bomb explosion in Yekaterinburg. The bomb went off as a car
carrying Sverdlovsk Governor Eduard Rossel passed by. Kraev
said investigators suspect that organized crime groups are
behind the attack. RFE/RL's correspondent in Yekaterinburg
reported on 15 January that local observers believe the
relatively small bomb was not intended to kill Rossel. Nikolai
Ovchinnikov, head of the Yekaterinburg police, told journalists
on 14 January that he does not believe the blast was linked to
the recent arrests in Yekaterinburg of some 50 criminals from
throughout Russia and the CIS. Ovchinnikov cited the
"unprofessional" and "poorly prepared" nature of the bombing.
LB

NORTH OSSETIAN PRESIDENT-ELECT RECEIVES
CONGRATULATIONS. Aleksandr Dzasokhov affirmed on 19
January that he will seek to resolve the republic's serious
economic problems and work with Moscow to expedite a
solution to the Ossetian-Ingush and Ossetian-Georgian conflicts,
ITAR-TASS reported. The presidents of neighboring Ingushetia
and Georgia, Ruslan Aushev and Eduard Shevardnadze, both
greeted Dzasokhov's election victory. Aushev noted that
Dzasokhov, unlike outgoing president Akhsarbek Galazov
"bears no responsibility" for the clashes in November 1992 in
North Ossetia's disputed Prigorodnyi Raion, in which hundreds
of ethnic Ingush were killed. In Moscow, Deputy Prime
Minister Ramazan Abdulatipov predicted that Dzasokhov's
election "will have a positive effect" on regional policy in the
North Caucasus. LF

TRANSCAUCASUS AND CENTRAL ASIA

KARABAKH PRESIDENT AGAIN REJECTS OSCE PEACE
PLAN. On 19 January, Arkadii Ghukasyan again rejected the
most recent peace proposals by the Organization for Security
and Cooperation in Europe's Minsk Group, RFE/RL's
Stepanakert correspondent responded.  Ghukasyan said those
proposals would only serve to "freeze" the Karabakh conflict
and restore the status quo that existed prior to February 1988.
He added that "simple common sense" prevented the Karabakh
population from agreeing to "unilateral concessions."
Ghukasyan also criticized those responsible for spreading
rumors about the possible resignation of Armenian Prime
Minister Robert Kocharyan, saying they "are playing a
dangerous game."  Ghukasyan said that Kocharyan, his
predecessor as president of the unrecognized Nagorno-
Karabakh Republic, is "a man who has done a great deal for the
consolidation of the Armenian people."  LF

SHOTS FIRED AT ARMENIAN PRESIDENTIAL SECURITY
CHIEF.  Major-General Romik Ghazarian, the head of the
presidential security service, escaped unhurt on the night of 18
January when gunmen opened fire on his jeep. Kazarian was
returning from Armavir  to Yerevan. An investigation has been
opened into the incident. LF

KAZAKH WORKERS DEMAND LAST TWO YEARS' WAGES.
The number of striking workers from the Janatas Phosphorus
plant has grown to 3,000 since their protest began in mid-
December, RFE/RL correspondents in Kazakhstan reported on
20 January. The workers are demanding the payment of  back
wages for 1996 and 1997 totaling some $5 million. Some 50
workers set out for Akmola to meet with the president, but
militia barred them from entering the capital. The strike has
the support of the Federation of Kazakh Trade Unions.
According to ITAR-TASS on 19 January, the prosecutor-general
has opened a case against the federation for using "financial
support from abroad" and exploiting the protests to  destabilize
the country. BP

KYRGYZSTAN STILL SUFFERS POWER SHORTAGES. The
upper house of the parliament on 19 January reviewed the
country's energy situation, RFE/RL correspondents in Bishkek
reported. First Deputy Prime Minister Kamelbek Nanayev said
there are still shortages in gas supplies from Uzbekistan.
Kyrgyzstan and Uzbekistan  reached agreement on the level of
supplies earlier this month (see "RFE/RL Newsline," 6 January
1998). The same day, Bakirdin Sartkaziev, the president of
Kyrgyzenergoholding, told a press conference that low levels in
the Tokhtogul reservoir are contributing to the "critical" energy
situation. The reservoir usually contains 11 million cubic
meters of water at this time of year but currently has only 9.5
million cubic meters. Sartkaziev also said Kazakhstan has not
fulfilled its part of an agreement on coal deliveries to
Kyrgyzstan. So far, nothing has been received, Sartkaziev noted.
BP

PREPARATIONS UNDER WAY FOR NEXT "CENTRAZBAT."
The next military exercises in Central Asia under the NATO
Partnership for Peace program will be held in Kyrgyzstan and
Uzbekistan, Interfax reported on 19 January. According to
Uzbek Deputy Defense Minister Kakhramon Abdullayev, one
part of the exercises will be held Kyrgyzstan's Osh region, while
Uzbekistan has not decided yet whether the other part will be
conducted in the Fergana or Tashkent region. Abdullayev said
troops from Kazakhstan and other countries in the NATO
program will also take part. Last year, Kyrgyzstan, Kazakhstan,
and Uzbekistan,  along with other countries, held the
"Centrazbat" exercises on Kazakh and Uzbek territory. It is has
not yet been revealed when this year's exercises will take
place. BP

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