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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 2, No. 24, Part I, 5 February 1998


___________________________________________________________
RFE/RL NEWSLINE Vol 2, No. 24, Part I, 5 February 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 SAYS RUSSIA WON'T ALLOW STRIKE AGAINST IRAQ

* DUMA PASSES LAW ON COOPERATION WITH IRAQ

* KOCHARIAN ALLY ELECTED ARMENIAN PARLIAMENTARY SPEAKER

* End Note: ARMENIAN PRESIDENT'S RESIGNATION LIKELY TO CAUSE POLICY CHANGES
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RUSSIA

YELTSIN SAYS RUSSIA WON'T ALLOW STRIKE AGAINST IRAQ. Commenting on the
Iraqi crisis, President Boris Yeltsin told  reporters on 5 February that
Moscow will "not allow the problem to be solved by force." The president
added that he is an optimist and believes the crisis has already peaked.
Later, Yeltsin announced he had received a telephone call "about Iraq" and
that Russian diplomacy has succeeded in finding a peaceful solution to the
situation. ITAR-TASS, however, commented that "he did not define what [the
telephone conversation] was about." BP

RUSSIAN OFFICIAL EXPLAINS YELTSIN'S COMMENT ON 'WORLD WAR THREE.' Yeltsin's
4 February comment that a strike against Iraq could lead to World War Three
was a reference to the use of nuclear weapons, according to Russian
Ambassador to the UN Sergei Lavrov. A press release from the U.S. Embassy
in Moscow on 4 February said the U.S. does not intend to use nuclear
weapons against Iraq because "we realize the...consequences of such
actions." Meanwhile, talking to Yeltsin by telephone on 4 February, British
Prime Minister Tony Blair noted that in order to have Iraq to comply with
inspections, there has to be "a real threat of force and the use of force
if necessary." Meanwhile in China, Deputy Foreign Minister Grigorii Karasin
is continuing talks with Chinese officials. A spokesman for the Chinese
Foreign Ministry said "both countries oppose military action against Iraq."
BP

DUMA PASSES LAW ON COOPERATION WITH IRAQ. The State Duma on 4 February
passed by 290 to seven with three abstentions a law on cooperation with
Iraq, RFE/RL's Moscow bureau reported. The law, which was proposed by the
Liberal Democratic Party of Russia, is a revised version of a bill passed
last year by the Duma but rejected by the Federation Council. It would
prohibit federal funds from being used to maintain UN sanctions against
Iraq unless such expenses are listed as a separate item in the federal
budget, Interfax reported. It also would allow Russian companies to conduct
trade with Iraq "that is not banned by the Russian president and
government." The bill was approved after deputies passed a controversial
resolution urging Yeltsin to review Russia's adherence to UN sanctions if
Iraq comes under military attack (see "RFE/RL Newsline," 4 February 1998).
LB

LUKIN COMMENTS ON IRAQ DIPLOMACY. Duma Foreign Affairs Committee Chairman
Vladimir Lukin of Yabloko argued on 4 February that the Russian government
must make sure its promises regarding Iraq take into account the "limit of
Russian diplomatic possibilities in the Middle East," ITAR-TASS reported,
quoting comments made in an interview with Ekho Moskvy. Lukin said he had
voted against the non-binding resolution on Iraq approved by the Duma,
which he described as "distorted." In particular, he questioned a provision
in the resolution saying Iraq does not pose a global or regional threat.
Foreign Ministry officials also criticized that resolution and urged Duma
deputies to reject it. LB

YELTSIN SAYS CHUBAIS, NEMTSOV TO STAY. Yeltsin said on 5 February that
First Deputy Prime Ministers Anatolii Chubais and Boris Nemtsov will stay
in the government until 2000 if they wish to do so, despite attempts by
others to secure their removal. Yeltsin said that Chubais and Nemtsov "are
not trying to rock the boat" but that others "are trying to force them out
either individually or together," ITAR-TASS reported. He added that he will
"resist all those who are putting pressure on [Chubais and Nemtsov] and
will not allow them to be touched." The comments reflect Yeltsin's
traditional leadership style of balancing competing factions in his
government. Since last November, the authority wielded by Chubais and
Nemtsov has been significantly reduced, and a recent redistribution of
responsibilities within the cabinet was seen to strengthen Prime Minister
Viktor Chernomyrdin (see "RFE/RL Newsline," 16 and 19 January 1998). LB

ZYUGANOV VAGUE ABOUT INTENTIONS ON BUDGET VOTE. Communist Party leader
Gennadii Zyuganov announced on 4 February that his faction will vote
"intelligently, knowledgeably, and responsibly" when the 1998 budget is put
to a third reading in the Duma, ITAR-TASS reported. He added that the
Communist stand on the budget will reflect the "interests of domestic
industry," but he did not elaborate. Communist leaders vowed to oppose the
budget in the first and second readings, but on both occasions the document
was approved by slim margins with some Communist support (see "RFE/RL
Newsline," 8 and 29 December 1997). On 4 February, the Duma began debating
the budget in the third reading, during which deputies vote on the document
item by item, but a final vote was postponed until the next day. Duma
Budget Committee acting Chairman Aleksandr Zhukov urged deputies to approve
the document. LB

DUMA APPROVES INCREASED FUNDING FOR MILITARY REFORM. The Duma on 5 February
passed an amendment to the 1998 budget that calls for allocating 1 percent
of the consolidated budget (the combined federal and regional budgets)
toward carrying out military reform, ITAR-TASS reported. Yabloko deputy
Oksana Dmitrieva, who chairs a budget subcommittee, spoke out against the
amendment. She described the measure as a "built-in sequester," since it
will reduce by 1 percent expenditures on all other programs, including
science, education, and agriculture. However, the Duma approved the
amendment by 237 to 23 with three abstentions. LB

OFFICIAL CITES NEED TO RATIFY START-2... First Deputy Defense Minister
Nikolai Mikhailov argued on 4 February that military reform will be
"brought to a standstill" if Russia fails to ratify the START-2 arms
control treaty, Russian news agencies reported. Mikhailov said Russia
cannot afford to maintain its current stockpile of nuclear weapons. He
added that the country's security is determined not by the number of
warheads it possesses but by its ability to launch those warheads. LB

...WHILE ZYUGANOV CALLS FOR REJECTING TREATY. Communist Party leader
Zyuganov told journalists on 4 February that no member of the parliament
"who has self-respect" should vote to ratify the START-2 treaty, RFE/RL's
Moscow bureau reported. Zyuganov slammed recent U.S. actions concerning
Iraq, saying the U.S. "talks about democratic principles" but behaves like
a "slightly intoxicated cowboy." He also charged that the U.S. has violated
earlier arms control treaties, including the START-1 agreement. LB

DEFENSE MINISTRY OFFERS EXPLANATION FOR ARMY PROBLEMS. The Defense Ministry
says inadequate training is to blame for the wave of killings and suicides
in the military, according to "Segodnya" of 2 February. The daily reported
the Defense Ministry as explaining that "society is sick and therefore
sends to the army sick conscripts." A lack of discipline among the ranks is
exacerbated by sergeants, 90 percent of whom are draftees under 21. In
addition, lieutenants are being rushed through military academies, "as if
in time of war," to fill depleted ranks. The Defense Ministry's plans to
cut up to 100,000 "experienced officers"  as part of downsizing the
military. BP

RUSSIA TO CEASE NEW BORROWING IN FIRST QUARTER... During a meeting with
First Deputy Prime Minister Chubais on 4 February, Yeltsin instructed the
government to "live within its means" and to avoid new foreign and domestic
borrowing during the first quarter of the year, Russian news agencies
reported. Chubais told ministers at a 5 February cabinet meeting that
Russia will be able to avoid new borrowing during the first quarter of
1998, thanks to improved tax collection, ITAR-TASS reported. He said tax
receipts in January were up 26 percent and collection of customs duties up
30 percent over the same month last year. Finance Minister Mikhail Zadornov
announced on 3 February that tax revenues totaling 9.5 billion rubles ($1.6
billion)  were collected in January, close to the target of 10 billion
rubles. Central Bank First Deputy Chairman Sergei Aleksashenko said the
previous day that tax receipts for January 1998 were 40 percent higher than
in January 1997. LB

...AS DOWNGRADE THREATENS TO RAISE BORROWING COSTS. The move to avoid new
foreign and domestic borrowing comes as market turmoil and interest rate
hikes have pushed up the cost of borrowing on Russian markets through
treasury bills. In addition, an expected downgrade in Russia's credit
rating is likely to increase the cost of future foreign borrowing. The
international credit rating agency Moody's announced on 3 February that it
is sending representatives to Moscow to consider downgrading Russia's
sovereign debt rating. Moody's is also reviewing the credit ratings of nine
major Russian commercial banks. On 4 February, the Finance Ministry
announced that it is ready to meet with Moody's experts in order to
convince them that Russia's fiscal situation has improved, Russian news
agencies reported. Chubais announced at the 5 February cabinet meeting that
Russia will not borrow on European markets again before late March at the
earliest. LB

YELTSIN DEMANDS TOUGH TAX POLICY, INVESTOR PROTECTION. In an apparent
effort to boost confidence in the Russian markets, Yeltsin told Chubais on
4 February that the government must do more to promote tax reform and
protect investors' rights. He urged the government to seek to ensure that,
by the end of March, the Duma passes the new tax code in the first reading.
He also told Chubais that the government must be tough with tax debtors and
must not allow tax debts to be canceled against other debts owed to
companies. (A November presidential decree banned the use of offsets to
settle tax debts as of 1 January 1998.) In addition, Yeltsin called for
convening a session of a government commission on the rights of foreign and
domestic shareholders. He said those who do not respect shareholders'
rights must be punished. LB

GOVERNMENT REPRESENTATIVES CRITICIZE EES MANAGERS. The government
representatives in the electricity monopoly Unified Energy System (EES) on
4 February criticized both Anatolii Dyakov, the chairman of the company's
board of directors, and Boris Brevnov, the company's chief executive,
Interfax reported. The representatives concluded that the energy sector has
been harmed by the high-profile struggle between Dyakov and Brevnov, which
began when the EES board recently tried to sack Brevnov (see "RFE/RL
Newsline," 29 January 1998). They also decided to call an extraordinary
meeting of EES shareholders in March. Government spokesman Igor
Shabdurasulov announced on 3 February that the government will make
personnel changes at EES after it has studied a report on the company by
the Audit Chamber, ITAR-TASS reported. The Prosecutor-General's Office is
also investigating alleged financial crimes committed by EES managers. LB

PREDICTABLE PRESS COVERAGE OF SCANDAL. "Komsomolskaya pravda" on 4 February
published a friendly interview with Brevnov, who denied the allegations
against him and again accused his adversary Dyakov of improprieties.
Oneksimbank is a major shareholder in "Komsomolskaya pravda," which
generally supports First Deputy Prime Minister Boris Nemtsov (Brevnov's
patron). In contrast, coverage of the EES conflict in "Nezavisimaya gazeta"
has been unsympathetic to Brevnov. On 5 February, the newspaper charged
that the EES leadership has managed the company poorly and is not concerned
enough about "the dangers to the national economy posed by the
consolidation of EES shares in the hands of foreigners." The company plans
to raise cash by reducing its state-owned stake from some 52 percent to 50
percent plus one share. "Nezavisimaya gazeta" is largely financed by the
LogoVAZ group of Boris Berezovskii, who has recently warned against foreign
investment in the Russian energy sector. LB

NO PROGRESS MADE ON REVISING LAND CODE. Duma Agrarian Affairs Committee
Chairman Aleksei Chernyshev told Interfax on 4 February that work on
revising the draft land code has not begun, despite an agreement reached at
roundtable talks on land reform last December. Chernyshev, a member of the
Agrarian faction, said a conciliatory commission of representatives from
the Duma, Federation Council, and government has not even been formed.
State Land Committee Chairman Ilya Yuzhanov, who has sharply criticized the
current version of the land code, recently said reaching agreement on the
document by the end of March will be extremely difficult (see "RFE/RL
Newsline," 29 December 1997 and 8 January 1998). LB

DAGESTANI POLICE PUT ON ALERT. Authorities in Dagestan have put police
there on alert ahead of the 15 February elections for mayor of the capital
city of Makhachkala, ITAR-TASS reported on 4 February.  They also put
Dagestani police on alert along the Dagestan-Chechnya border out of concern
that the Chechens might stage an incident.  Grozny, however, has denied any
such possibility. PG

TRANSCAUCASUS AND CENTRAL ASIA

KOCHARIAN ALLY ELECTED ARMENIAN PARLIAMENTARY SPEAKER. Khosrov Harutunian,
a long-time adviser of acting President Robert Kocharian, has been elected
speaker of the parliament by a vote of 99 to 66, RFE/RL's Armenian Service
reported on 4 February. Khosrov was prime minister briefly in 1992 but was
dismissed by then president Levon Ter-Petrossyan over policy differences.
Also on 4 February, the parliament formally accepted Ter-Petrossyan's
resignation (see "End Note" below). PG

KOCHARIAN SAYS ARMENIAN VOTE WILL TAKE PLACE ON SCHEDULE... Acting
President Kocharian said on 4 February that new presidential elections will
take place within 40 days, as specified by the constitution, RFE/RL's
Armenian Service reported. Kocharian said the vote will be free and fair
but declined to hint whether he will be a candidate. Because Kocharian
comes from Nagorno-Karabakh, he would be allowed to run only if the
constitutional provisions on Armenian citizenship and residency for the
presidency are waived. PG

...OUTLINES HIS PLANS FOR KARABAKH, ARMENIA. Kocharian says he is committed
to a peaceful settlement of the conflict in Karabakh and that his accession
to the presidency does not represent any threat to peace, ITAR-TASS
reported on 4 February. But Kocharian suggested that the current stability
in the region may be upset by the introduction of peacekeepers or
observers--both of which are provisions of the peace formula suggested by
the Organization for Security and Cooperation in Europe's Minsk Group. In
another move certain to strengthen those opposed to the Minsk Group
formula, Kocharian announced he will re-legalize the Dashnak party, a
nationalist group that Ter-Petrossyan banned in December 1994 for alleged
involvement in terrorism. PG

INTERNATIONAL COMMUNITY EXPRESSES REGRET, HOPE OVER CHANGES.  Governments
around the world have generally reacted with regret over Ter-Petrossyan's
resignation but also with hope that the political changes in Yerevan will
not affect the Karabakh peace process or change Armenia's relations with
other countries.  Azerbaijani President Heidar Aliev convened his Security
Council and announced that he is "concerned" by developments in Yerevan,
ITAR-TASS reported on 4 February. Russia's President Boris Yeltsin and
State Duma leaders expressed regret at Ter-Petrossyan's departure but said
they hope that ties between Yerevan and Moscow will remain strong. A U.S.
State Department spokesman praised Ter-Petrossyan but said Washington has
"every hope" that the OSCE Minsk Group's proposals will ultimately be
accepted as the basis for peace.  France, the third co-chairman of that
group, expressed deep regret but also said it hopes that the peace process
will continue.  PG

UTO FREES MORE GOVERNMENT TROOPS. Forces loyal to the United Tajik
Opposition in the central Tavil-Dara region have freed the last 44 Tajik
government soldiers captured during fighting there in 1996-1997, RFE/RL
correspondents in Dushanbe reported. The UTO claims it has now freed all
government soldiers captured in the five-year civil war. UTO spokesman
Yusuf Khakimov said the organization now awaits "the release of 1,300
opposition soldiers from government prisons." BP

TAJIK DEBT TO UZBEKISTAN RESCHEDULED. Uzbek Prime Minister Utkur Sultanov
paid a one-day visit to Tajikistan on 4 February to meet with Tajik
President Imomali Rakhmonov, RFE/RL correspondents in Dushanbe reported.
The two leaders agreed to reschedule payment of Tajikistan's $150 million
debt to Uzbekistan until the year 2000. They also discussed Tajikistan's
entry into the Central Asian Customs Union (whose members are Uzbekistan,
Kyrgyzstan, and Kazakhstan) and Uzbek President Islam Karimov's upcoming
visit to Tajikistan. Sultanov also met with his Tajik counterpart, Yahye
Azimov, to discuss  bilateral trade. BP

HUNGER STRIKER DIES IN KAZAKHSTAN. One of the hunger strikers in the
southern city of Janatas has died, RFE/RL correspondents in Almaty
reported. The 26-year-old Jumahan Esentayev, who worked at the Janatas
phosphorus plant, died of a heart attack. Some of the plant's workers have
been on hunger strike for three months demanding payment of wage arrears,
which in  some cases go back three years. BP

KAZAKH CHILDREN ACCIDENTALLY INFECTED WITH TUBERCULOSIS. Negligence among
medics in Janatas is being blamed for the infection of 133 children with
tuberculosis, ITAR-TASS reported on 4 February. The children were diagnosed
with disease last September and given inoculations of the wrong vaccine.
Local officials attempted to cover up the mistake, and the incident went
unreported until "several days ago." Criminal proceedings have been
launched against both the medics and those who covered up the incident. BP

END NOTE

ARMENIAN PRESIDENT'S RESIGNATION LIKELY TO CAUSE POLICY CHANGES

by Emil Danielyan

        The sudden resignation of Armenian President Levon Ter-Petrossyan
is likely to have far-reaching consequences for both the Nagorno-Karabakh
conflict and Armenia's internal politics.
        An immediate result is that politicians who take a harder line are
now in full control of the country. Prime Minister Robert Kocharian is
acting president. Both he and his ministers have consistently rejected the
recent "phased" peace plan on Nagorno-Karabakh proposed by the Organization
for Security and Cooperation in Europe's Minsk Group.
        That plan, which has been approved by Ter-Petrossyan and
Azerbaijan, would provide for the withdrawal of the Karabakh Armenian
forces from six occupied districts in Azerbaijan proper before
Nagorno-Karabakh's status is resolved. Ter-Petrossyan argued that
confidence-building measures would facilitate an overall agreement on
status.
        Kocharian's government and Karabakh Armenians, however, say the
plan is too dangerous because it provides no sufficient guarantees that
Azerbaijan will not attack the disputed enclave once it regains lost
territories. Instead, they call for a "package" deal that would  involve a
single framework accord on all contentious issues.
        With the new Armenian leadership and Nagorno-Karabakh  certain to
reject the "phased" approach, the Russian, U.S. and French co-chairs of the
OSCE Minsk Group may be forced to return to the "package" strategy.
International mediators from the OSCE postponed a meeting in Paris on 4
February pending the resolution of the political crisis in Armenia.
        In his final address to the nation, Ter-Petrossyan said internal
government disputes over the peace process merely disguise fundamental
differences on how and when to end the 10-year dispute with Azerbaijan.
        Ter-Petrossyan appears to believe that Armenia has no prospect of
economic development without a lasting peace with Azerbaijan. In his view,
Armenia will eventually find it very difficult to cope with the oil-rich
Azerbaijan. That made him inclined to compromise on Karabakh's status,
namely to accept Karabakh returning to Azerbaijani rule but preserving a
high degree of autonomy, its own armed forces, and a land corridor link to
Armenia.
        Kocharian and his two closest associates, Defense Minister Vazgen
Sarkisian and Interior and National Security Minister Serzh Sarkisian (who
is not related to Vazgen), take a much tougher view. They rule out any
"vertical subordination" of Karabakh to Baku. Kocharian recently said that
Armenia should insist on the establishment of some kind of trilateral
confederation in which Karabakh and Azerbaijan would be equal entities.
        Having forced Ter-Petrossyan's resignation, Kocharian and his
associates feel that Armenia could reach prosperity even without a
settlement of the Karabakh issue.
        Karabakh is important to the Armenians because of historical and
psychological factors. After having lost territories for centuries, the
Armenians are reluctant to "lose" Karabakh now that they have won a war
against Azerbaijan.
        But it is clear that the ouster of Ter-Petrossyan will affect the
peace process for at least several months. International reaction will
depend on internal political developments in Armenia. Ter-Petrossyan's
resignation will result in either the country's democratization or stronger
authoritarian rule than is the case at present. Observers believe that
democratization is the more likely of those two options.
        Kocharian said on 4 February that presidential elections, scheduled
for March, will be free and fair. He seems to think that he has good
chances of winning those elections. Although only an Armenian citizen can
become president, Kocharian, who comes from Nagorno-Karabakh, may find a
loophole in the constitution enabling him to run.
        Kocharian is likely to rally a broad coalition behind him. The
re-legalization of the banned Dashnak party, expected later this week, will
give a crucial boost to Kocharian's popularity. His main challenger will
probably be the former opposition presidential candidate, Vazgen Manukian.
In fact, the two men have similar agendas: both favor democratization and a
firmer stand on Karabakh.
        Another option is that Armenia could be transformed into a
parliamentary republic. That idea is supported by most opposition parties
but has not been formally considered.

The author is an RFE/RL corresponent based in Yerevan.


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