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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 2, No. 25, Part I, 6 February 1998


___________________________________________________________
RFE/RL NEWSLINE Vol 2, No. 25, Part I, 6 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

* DUMA DEPUTIES TO VISIT IRAQI PRESIDENTIAL SITES

* DUMA PASSES BUDGET IN THIRD READING

* KOCHARIAN SAYS SITUATION IN ARMENIA UNDER CONTROL

* End Note: WHY TER-PETROSSYAN FELL

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RUSSIA

DUMA DEPUTIES TO VISIT IRAQI PRESIDENTIAL SITES. State Duma deputies  have
accepted an invitation from Saddam Hussein to visit Iraq to inspect "any
presidential sites of their choosing," ITAR-TASS reported on 6 February.
Hussein sent the invitation to Duma Speaker Gennadii Seleznev the previous
day. The Duma delegation will be headed by Duma Deputy Speaker Mikhail
Gutseriev  of the  Liberal Democratic Party of Russia (LDPR) and will
depart for Baghdad on 8 February. The plane carrying the Duma deputies will
also deliver  humanitarian aid. Last December, when LDPR leader Vladimir
Zhirinovsky led a delegation to Baghdad, an aid shipment was also
delivered. BP

DUMA PASSES BUDGET IN THIRD READING... The State Duma on 5 February
approved the 1998 budget in the third reading by 232 to 141 with one
abstention, Russian news agencies reported. The budget provides for 499.9
billion rubles ($83.3 billion) in spending, 367.5 billion rubles in
revenues, and a deficit of 132.4 billion rubles, or 4.7 percent of the
estimated 1998 GDP of 2.84 trillion rubles. The lower house of the
parliament must approve the document in a fourth reading,  scheduled for 11
February, before sending it to the Federation Council. That reading is
considered a formality, since no changes to revenue or spending articles
will be considered. The budget is unlikely to go into effect before early
March. Until then, monthly expenditures are equivalent to one-twelfth of
total 1997 expenditures, in line with a government directive issued last
December. LB

...AMID WIDESPREAD DOUBTS ABOUT ITS FEASIBILITY. Although government
officials pledged last year that the 1998 budget would be Russia's first
"realistic" budget in several years, "Kommersant-Daily" reported on 6
February that "no one doubts that this budget will not be fulfilled." Duma
Speaker Seleznev described the budget as "very, very weak" and said the
government will have trouble implementing it. Several members of Grigorii
Yavlinskii's Yabloko faction have observed that the recent events on
Russian markets have driven up the costs of government borrowing. There are
no additional planned revenues to compensate for those higher costs. The
Yabloko faction has voted against the budget in all readings and criticized
the document as unrealistic even before the recent market turmoil. LB

BUDGET HAS NO 'PROTECTED' ITEMS. The Duma voted not to give any articles in
the 1998 budget "protected" status, ITAR-TASS reported on 5 February. Duma
Budget Committee acting Chairman Aleksandr Zhukov praised the vote, saying
the budget should not distinguish between articles that the government must
fulfill and articles it need not implement. Some 80 percent of planned 1997
expenditures were listed as "protected" items, Zhukov said. In fact, those
items were not spared from the spending cuts or "sequester" imposed
unilaterally by the government last year. Some "protected" items, such as
agriculture subsidies, were reduced by more than 50 percent. LB

DUMA INCREASES COMPENSATION FOR HOLDERS OF OLD BANK ACCOUNTS... Also on 5
February, the Duma approved an amendment to increase spending on
compensation for holders of pre-1992 deposits in Sberbank, RFE/RL's Moscow
bureau reported. Those deposits were rendered virtually worthless by the
high inflation of the early 1990s. Until now, only citizens born before
1921 have been able to receive some compensation for their lost savings.
The Duma voted to increase expenditures on such compensation to 5 billion
rubles ($830 million) from 3 billion rubles in the original draft. Finance
Minister Mikhail Zadornov urged Duma deputies not to approve the increase
since it is not covered by  additional planned 1998 budget revenues. LB

...CUTS BENEFITS FOR VICTIMS OF POLITICAL REPRESSION. The Duma also
approved a budget amendment to halve spending on compensation for victims
of Soviet-era political repression to 500,000 rubles ($83,000), RFE/RL's
Moscow bureau reported. The amendment was proposed by the Labor and Social
Policy Committee, headed by Liberal Democratic Party of Russia member
Sergei Kalashnikov. Duma deputy Yulii Rybakov, a member of the Russia's
Democratic Choice party, fought unsuccessfully to reverse the Duma's
decision. He told RFE/RL that some 500,000 Russian citizens who were either
arrested or deported during the 1930s and 1940s qualify for the benefits,
which include free medicines and subsidies for utilities and
transportation. LB

MIXED REACTION TO YELTSIN'S DEFENSE OF CHUBAIS, NEMTSOV. Communist Party
leader Gennadii Zyuganov on 5 February criticized President Boris Yeltsin
for saying that First Deputy Prime Ministers Anatolii Chubais and Boris
Nemtsov will stay in the government until 2000 (see "RFE/RL Newsline," 5
February 1998). Zyuganov said the Communist-led opposition will prepare to
stage mass protests on 23 February, 27 March, and later this year, Interfax
reported. Duma Speaker Seleznev, also a Communist, argued that Chubais and
Nemtsov do not deserve the president's support, and he expressed doubt that
the first deputy premiers will stay in the cabinet until 2000. Aleksandr
Shokhin, leader of the Our Home Is Russia Duma faction, said Yeltsin's
decision to keep Chubais and Nemtsov in the government is "absolutely
correct," ITAR-TASS reported Shokhin said that given the difficult
financial situation, "it is important to achieve stability and give a
signal to investors so they will return" to Russian markets. LB

DID YELTSIN LEAVE DOOR OPEN ON FIRST DEPUTY PREMIERS? Some Russian
commentators have pointed out that although Yeltsin said he will protect
Chubais and Nemtsov against those who wish to force them out, he also said
the first deputy premiers will stay in the government until 2000 "if they
manage to hang on to power." That ambiguous phrase could mean that he would
allow them to resign if the pressure from their opponents became too great.
Speaking to RFE/RL's Moscow bureau on 5 February, political commentator
Andrei Piontkovsky noted that it is difficult to interpret the phrase "if
they manage to hang on to power." He also argued that Yeltsin's latest
remarks notwithstanding, Chubais and Nemtsov are unlikely to regain the
vast influence they wielded in the government last year. LB

YELTSIN ISSUES DECREES TO SPUR INVESTMENT. During a 5 February meeting with
Nemtsov, Yeltsin signed two decrees aimed at stimulating investment in
Russia. One decree provides incentives for investors who commit more than
$250 million, Russian news agencies reported. According to Nemtsov, if such
investors agree to increase each year the share of Russian parts for their
goods and if that share reaches at least 50 percent within five years, the
investors' storage facilities will be considered "free economic zones" and
subject to far lower taxes. Nemtsov said the decree says to potential
investors that "we are ready to help  you, if you create new jobs in Russia
and bring new technologies here." A separate decree on steps to attract
investments in the automobile industry provides benefits for certain
projects that  involve at least 1.5 billion rubles ($250 million) in
investments over five years. LB

CONSTITUTIONAL COURT TO HEAR CASE ON YELTSIN'S THIRD TERM. The
Constitutional Court will consider whether Yeltsin is legally entitled to
seek re-election in 2000, "Kommersant-Daily" reported on 6 February.
Although the constitution prohibits the president from serving more than
two consecutive terms, some presidential advisers have argued that
Yeltsin's current term should be considered his first, since he was elected
in 1991 under a different constitution (see "RFE/RL Newsline," 2 February
1998). The Duma has asked the court to rule on the issue. The court is
expected to consider the appeal toward the end of the year but might decide
to hear the case earlier. LB

RUSSIA CRITICIZES U.S. HUMAN RIGHTS REPORT. Foreign Ministry spokesman
Gennadii Tarasov on 5 February said the U.S. State Department's 1997 survey
of human rights in various countries "contains unconfirmed facts" and "does
not take into account the development of democratic processes in Russia,"
Russian news agencies reported. The report described the Russian judiciary
as weak and criticized prison conditions, infringements on press freedom,
discrimination against ethnic minorities, and the new religion law (see
"End Note," "RFE/RL Newsline," 2 February 1998). Tarasov argued that the
report views the human rights situation in Russia "from the point of view
of [U.S.] law, practice, and priorities." He also said it ignores Russia's
efforts to improve prison conditions and make progress on other fronts. As
for the religion law, Tarasov said it is designed to protect Russian
society against "totalitarian sects" and is not aimed against all
"non-traditional" faiths. LB

LUKOIL, SIDANKO NOT TO MERGE. Vagit Alekperov, president of the oil company
LUKoil, announced on 5 February that his company is not considering a
merger with the Sidanko oil company, Interfax reported. Some Russian media
have speculated that LUKoil and Sidanko, which is part of the Oneksimbank
empire, would join forces in response to the recent merger of the Yukos and
Sibneft oil companies (see "RFE/RL Newsline," 22 January 1998). At the same
time, Alekperov confirmed that LUKoil and Sidanko are discussing possible
cooperation on certain projects, including the upcoming auction for a stake
in Rosneft, ITAR-TASS reported. LB

FORMAT OF NEW PASSPORTS MAY BE CHANGED. Mikhail Komissar, the deputy head
of the presidential administration, on 5 February told Vasilii Likhachev,
the chairman of Tatarstan's legislature, that the presidential
administration and government are considering suggestions from regional
leaders on the format of Russia's internal passports, ITAR-TASS reported.
Leaders of Russia's republics, in particular Tatarstan and several
republics in the North Caucasus, have sharply criticized the new passports,
which the government began issuing last year. Among other things, they have
objected to the absence of the line listing the nationality of the passport
holder and the lack of a page listing the information about the holder in
the titular language of the republic in which the holder resides (see
"RFE/RL Newsline," 6 and 18 November 1997). LB

OUR HOME IS RUSSIA SEEKS COMPROMISE ON ELECTORAL LAW. Aleksandr Shokhin
says his Our Home Is Russia (NDR) Duma faction is seeking a compromise with
the president on proposed changes to the electoral law, "Kommersant-Daily"
reported on 6 February. NDR opposes Yeltsin's proposal to abolish the
proportional representation system currently used to elect half the 450
State Duma deputies. Instead of amending the law so as to elect all Duma
deputies in single-member districts, NDR favors less radical changes. For
instance, the pro-government faction would support removing the current
requirement that parties receive at least 5 percent of the vote in order to
be assigned any of the Duma seats allocated proportionally. In the December
1995 Duma elections, NDR won just 10 of the 225 seats elected in
single-member districts--fewer than many analysts had predicted. LB

MOSCOW RAISES UTILITY CHARGES FOR OWNERS OF MULTIPLE APARTMENTS. Moscow
Mayor Yurii Luzhkov on 3 February announced that effective 1 January 1998,
residents of the capital who own more than one apartment will pay 100
percent of the costs of municipal services, "Kommersant-Daily" reported on
4 February. The average Muscovite currently pays just 17.6 percent of the
cost of those services, which include electricity, heating, and telephone
charges. Although the city administration is counting on the new regulation
to provide an additional 144 million rubles ($24 million) in budget
revenues this year, "Kommersant-Daily" argued that the revenue increase
will be much smaller. Anyone who wishes to avoid the higher charges for
municipal services can simply transfer the title of a second or third
apartment to a relative, the newspaper noted. LB

CAPITAL'S HOUSING REFORM DIFFERS LITTLE FROM FEDERAL PROGRAM. Luzhkov has
been one of the most outspoken critics of the federal government's housing
reform plan, which is supervised by First Deputy Prime Minister Nemtsov.
However, the concept of the housing reform plan being implemented by the
Moscow city government differs little from the federal plan. Both policies
call for citizens to pay a higher share of the costs for municipal services
each year, and both promise subsidies for low-income families. The main
difference is that the federal plan calls for citizens to pay 50 percent of
utility costs in 1998, with gradual annual increases until 2003, when
citizens will have to pay those costs in full. The Moscow policy calls for
more gradual rate increases so that citizens will pay 22 percent of utility
costs this year, 27 percent in 1999, and 100 percent by 2007,
"Kommersant-Daily" reported on 4 February. LB

TRANSCAUCASUS AND CENTRAL ASIA

KOCHARIAN SAYS SITUATION IN ARMENIA UNDER CONTROL. Acting Armenian
President Robert Kocharian said on 5 February that he is in complete
control of the situation in Armenia, Interfax reported.  He hinted that he
might appoint Vardan Oskanian, the first deputy foreign minister, as acting
foreign minister.  Asked about his citizenship,  Kocharian, who is from
Nagorno-Karabakh, said he does not know "for sure if I am an Armenian
citizen or not." Armenian citizenship is a  requirement for candidates  in
the presidential elections, which are scheduled for 16 March (see also "End
Note" below). PG

ARMENIAN PRESIDENTIAL RACE BEGINS. Meanwhile, Vazgen Manukian, the leader
of the opposition National Democratic Union, has said he will take part in
the presidential elections next month, RFE/RL's Armenian Service reported
on 5 February.  Calling the resignation of Levon Ter-Petrossyan the doorway
to a "new epoch" in Armenian politics, Manukian said he did not expect
fighting in Karabakh to resume.  Other likely candidates are the Communist
Party's Sergey Badlian and longtime anti-Soviet dissident Paruir Hairikian.
PG

FURTHER REACTIONS TO TER-PETROSSYAN RESIGNATION.  Georgian President Eduard
Shevardnadze on 5 February praised Ter-Petrossyan for his courage in
resigning, saying the decision will promote "stability in the region,"
ITAR-TASS reported. Meanwhile, Russian Foreign Ministry spokesman Gennadii
Tarasov said the same day that Moscow considers the resignation an
"internal affair" of a friendly country.  PG

AZERBAIJAN, TURKMENISTAN AGREE ON DIVISION OF CASPIAN.  In a breakthrough
for Baku and a setback for Moscow, Azerbaijan and Turkmenistan have agreed
that the Caspian Sea should be divided into national sectors, ITAR-TASS
reported on 5 February. Such a division  would allow each of the five
littoral states to develop the offshore oil resources without taking into
consideration the views of the other four countries, as Russia has been
insisting. Azerbaijani Foreign Minister Hasan Hasanov announced the
agreement following consultations in Ashgabat.  PG

EU SUPPORTS TURKMENISTAN OVER PROPOSED PIPELINE. Kees Wittebrood, the chief
of the EU's Central Asian department,  met with Turkmen President
Saparmurat Niyazov on 5 February, Interfax reported. Wittebrood told
Niyazov that the EU supports a proposed pipeline that would transport
Turkmen natural gas to Europe via Iran and Turkey. Wittebrood also
announced the EU will  provide 14 million ecu ($12.7 million) in food aid
to Turkmenistan. Niyazov proposed a joint project with the EU for cotton
production. BP

TIME, LOCATION SET FOR CENTRAL ASIAN MILITARY EXERCISE. A two-day
conference on planning the next Central Asian military exercise under
NATO's Partnership for Peace program ended in Almaty on 5 February,
ITAR-TASS reported. The first deputy defense ministers from Kazakhstan,
Kyrgyzstan, and Uzbekistan were present, along with representatives from
Russia, the U.S., Georgia and Turkey. The next round of exercises will take
place at the end of September 1998 in southern Kazakhstan,  in Uzbekistan,
and in Kyrgyzstan. BP

KAZAKHSTAN CREATES HUMAN RIGHTS COMMISSION. Kazakhstan and the UN have
agreed to set up a presidential commission on human rights in the Central
Asian state, Reuters and AFP reported on 5 February. The commission will
review complaints from citizens, mediate in disputes with authorities, and
sponsor seminars to raise make citizens aware of their rights. The UN is
donating $100,000 to help start up the commission. BP

KAZAKH BANK TO OPEN OFFICES ABROAD. Kazakhstan's Narodnyi Bank will open
representative offices in Moscow, Beijing, and London over the next six
months, AFP reported on 5 February. Those offices will not engage in
banking activities. A bank official said "our bank is opening new credit
lines by working with foreign banks, so it's necessary for us to represent
our interests [abroad]." BP

END NOTE

WHY TER-PETROSSYAN FELL

by Paul Goble

        The resignation earlier this week of Armenian President Levon
Ter-Petrossyan highlights the limits of international pressure on countries
with democratic political systems and the dangers inherent in ignoring
those limits.
        Under pressure from the Organization for Security and Cooperation
in Europe's Minsk Group--led by Russia, France, and the
U.S.--Ter-Petrossyan was forced to accept the so-called Lisbon principles
for the resolution of the Karabakh conflict. Although Ter-Petrossyan
himself sometimes violated democratic norms, his grudging acceptance of
those principles cost him the support of both his own government and people
and ultimately forced his resignation. Moreover, it brought to office
Robert Kocharian, who is less susceptible to international pressure and
less sympathetic to the Lisbon principles.
        Those principles, presented at the OSCE summit in 1996, call for
the restoration of Soviet-era borders, broad autonomy for ethnic Armenians
in the disputed region of Nagorno-Karabakh, and international guarantees of
such a settlement. While many have repeatedly invoked them as OSCE  policy,
they were, in fact, never formally adopted by that body. Yerevan refused to
give its approval, arguing that the principles failed to take into account
its own interests as well as facts on the ground.
        As Ter-Petrossyan made clear at the time, Armenia could never agree
to compromise the fate of the Armenians of Karabakh by forcing them to
accept the restoration of Azerbaijani control of the disputed enclave. His
government made clear that Armenians were being asked to concede their
victories in the field with little to show for it except Azerbaijan's
promises that it would respect the autonomy of Karabakh in the future.  And
neither Ter-Petrossyan nor other Armenians placed much faith in the notion
that the international community would effectively monitor any settlement
that might be reached.
        Instead, they feared that the international community would
eventually turn away from the issue out of deference to Baku and its
enormous oil wealth and because of a sense that the Karabakh situation was
no longer a pressing issue.
        But following the 1996 summit, the Minsk Group put ever more
pressure on Ter-Petrossyan to agree its proposals. Ter-Petrossyan
frequently countered by pointing out that neither his government nor his
electorate could support them. He noted that the international community,
in the form of the Minsk Group, was putting all the pressure on Armenia and
thereby allowing Azerbaijan to obtain at the negotiating table what it had
been unable to achieve in the field.
        With each visit by Minsk Group diplomats, Ter-Petrossyan moved ever
closer to the Lisbon principles, winning praise in the chancelleries of the
Minsk Group countries but costing him support at home.
        The popularity of Ter-Petrossyan in those foreign capitals was
evident in the comments of world leaders after his fall from office. But
his unpopularity at home is the reason he fell. Ter-Petrossyan clearly
recognized that danger and sought to limit it last year by appointing
Karabakh leader Robert Kocharian as his prime minister.
        Although politically shrewd, that move bought Ter-Petrossyan only a
small amount of time. Moreover, it meant that Kocharian, who opposes the
Lisbon principles, could mobilize Armenian opinion against the policies of
his president. Kocharian did that with both skill and abandon; as a result,
Ter-Petrossyan is out of office and Kocharian is now acting president.
        On the one hand, the change at the top in Armenia may introduce a
certain clarity in any future talks on reaching a settlement of the
Karabakh dispute. No one can doubt where Kocharian stands, and an
appreciation of that may lead to more serious talks.
        On the other hand,  a broader lesson has been learned: however
well-meant, international pressure on leaders of democratic or even
democratizing countries may quickly become counterproductive if it fails to
take into account popular attitudes in those countries. Ter-Petrossyan was
prepared to go along with the Minsk Group. As he stressed in his
resignation speech, he was the leader of the party of peace in Armenia.
        But the Minsk group did not take into account Armenian popular
attitudes and did not appear to many Armenians to be even-handed in its
dealings with the parties to the conflict. Also, it did not provide
Ter-Petrossyan with the concessions he needed to remain in power.
        Now, the Minsk Group program is at best on hold, and the dangers of
a renewed conflict in the region are far greater than they were before
Ter-Petrossyan's departure.



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