RFE/RL NEWSLINE Vol 2, No. 33, Part I, 18 February 1998

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RFE/RL NEWSLINE Vol 2, No. 33, Part I, 18 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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SPECIAL REPORT: A quarter of Russia's labor force receives its wages late,
in kind or not at all. This three-article series on the RFE/RL Web site
examines why. Russia's Workers: Why They Go Without Wages
http://www.rferl.org/nca/special/rulabor/index.html

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Headlines, Part I

* DUMA POSTPONES BUDGET VOTE

* UN CONFIRMS RUSSIA-IRAQ TALKS ON BIOLOGICAL WEAPONS

* WHICH 'ZVIADISTS' TRIED TO KILL GEORGIAN PRESIDENT?

* End Note: YELTSIN WARNS OF CABINET RESHUFFLE

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RUSSIA

DUMA POSTPONES BUDGET VOTE. The State Duma on 18 February removed the
fourth reading of the 1998 budget from its agenda for the day, RFE/RL's
Moscow bureau reported. Also on 18 February, Prime Minister Viktor
Chernomyrdin met with the leaders of Duma factions and called for the lower
house of the parliament to approve 12 proposed budget amendments submitted
by the government the previous day. Those amendments are to be examined by
the Duma Budget Committee and by Duma factions before being put to the vote
on 20 February at the earliest. The most controversial amendment deals with
the 27.9 billion rubles ($4.6 billion) in expenditures added to the budget
during negotiations between the government and parliament last fall. The
amendment would stipulate that those funds are not to be spent unless the
government receives sufficient revenues to cover them--an unlikely
prospect, given the government's poor record on tax collection. LB

CONTROVERSIAL AMENDMENT DRAWS OPPOSITION... The Duma is expected to approve
11 of the government's 12 proposed budget amendments, including one that
would eliminate all planned offset (as opposed to "real money") payments.
However, deputies are expected to fight the amendment that would likely cut
the additional 27.9 billion rubles in spending. Communist Party leader
Gennadii Zyuganov told RFE/RL's Moscow bureau on 18 February that the
proposal is a "provocation" by First Deputy Prime Minister Anatolii Chubais
in order to "ruin the budget process." Even the pro-government Our Home Is
Russia faction opposes that amendment. Faction leader Aleksandr Shokhin
told RFE/RL that the government's power to impose spending cuts on any
program should be broadened. He noted that the 27.9 billion rubles are not
listed as a separate part of the budget but have been incorporated into
many budget articles. LB

...BUT YABLOKO SUPPORTS MEASURE. In an interview with RFE/RL's Moscow
bureau on 17 February, Yabloko leader Grigorii Yavlinskii praised the
proposal to withhold spending of the 27.9 billion rubles added to the
budget last fall. He said he is glad Yeltsin recognized that the draft
budget is unrealistic, as Yabloko has long maintained. However, Yavlinskii
said that even if the government refrains from spending those 27.9 billion
rubles, the 1998 budget, as currently drafted, remains unrealistic. He
estimated that planned expenditures will outstrip planned revenues this
year by 70 billion rubles, not including the 27.9 billion rubles. LB

FEDERATION COUNCIL FAILS TO OVERRIDE VETO ON LAND CODE. The Federation
Council on 18 February fell well short of the two-thirds majority needed to
override Yeltsin's veto of the land code, ITAR-TASS reported. The vote was
67 in favor, 70 against, and 15  abstentions (119 votes were needed for the
measure to pass). Yeltsin vetoed the code last July, and the Duma overrode
his veto in September. Yeltsin and top officials from the government and
both houses of the parliament agreed in late December to forge a compromise
on the code within three months, but there has been little progress on
revising the code since then (see "RFE/RL Newsline," 5 February 1998). LB

UN CONFIRMS RUSSIA-IRAQ DISCUSSED BIOLOGICAL WEAPONS.  UN Special
Commission Chairman Richard Butler has written to Russian Ambassador to the
UN Sergei Lavrov asking him to clarify documentation that his inspectors
secured in Baghdad in September 1997, AFP reported on 17 February. The
documentation confirms that discussions took place in 1995 between Russian
and Iraqi officials on possible cooperation in manufacturing biological
weapons. The Russian Foreign Ministry recently issued a statement rejecting
claims by the "Washington Post" that Russia has Iraq equipment that could
be used for the manufacture of such weapons (see "RFE/RL Newsline," 12
February 1998.) LF

YELTSIN, LI PENG EXPRESS "CONCERN" OVER IRAQ. In a joint statement
following their talks on 17 February, Russian President Boris Yeltsin and
Chinese Premier Li Peng expressed "profound concern" at the dangerous
development of events surrounding Iraq, ITAR-TASS reported. They confirmed
that, as permanent members of the UN Security Council,  Russia and China
reject resolving the crisis by force and support a settlement providing for
Iraq's full compliance with Security Council resolutions and guaranteeing
the removal of Iraq's potential to manufacture weapons of mass destruction.
Such a settlement, the statement continued, would expedite the lifting of
current sanctions against Iraq, in particular the oil embargo. The same
day, Russian Foreign Minister Yevgenii Primakov said Iraq is prepared to
allow UN weapons inspectors access to sites suspected to contain weapons of
mass destruction, according to AFP.  LF

RUSSIA, CHINA SIGN COOPERATION AGREEMENTS. Also on 17 February, Li and
Prime Minister Chernomyrdin signed five bilateral agreements following
two-hour talks, Russian news agencies reported. The agreements deal with
cooperation in ship-building, the settlement of Russian debts to China,
trade and economic cooperation in 1998, streamlining the procedure for
allowing Russians into some Chinese cities, and setting up a new railroad
border crossing. Li told journalists that "direct links" between the most
industrialized Chinese provinces and Russian regions must be established in
order to significantly increase bilateral trade turnover from the current
level of $6 billion annually. (The Primorskii Krai administration announced
on 18 February that more than 40 business deals were signed during a recent
Russian-Chinese trade show.) Li and Chernomyrdin also discussed
preparations for an informal meeting between Yeltsin and Chinese President
Jiang Zemin, scheduled for later this year. LB

CHECHEN LEADERS CONDEMN RADUEV. President Aslan Maskhadov and Prime
Minister Shamil Basaev have said that maverick field commander Salman
Raduev's claim that he was responsible for the bid to assassinate Georgian
President Eduard Shevardnadze "discredit" Chechnya's  leadership and
adversely affect its foreign relations, AFP reported. Basaev intends to
convene a congress of field commanders on 21 February to discuss Raduev's
"anti-state" activities. He is also ready to use force against Raduev if
necessary, RFE/RL's Grozny correspondent reported on 18 February. On 15
February, Raduev ignored a summons to appear at the Chechen
Prosecutor-General's office for questioning in connection with his claims.
LF

LUZHKOV STILL HAS EYE ON SEVASTOPOL... During a speech to World War Two
veterans on 17 February, Moscow Mayor Yurii Luzhkov vowed that "we will
still fight for Sevastopol," ITAR-TASS reported. Luzhkov criticized what he
called the "forced Ukrainianization" taking place in the Crimean port,
where the Black Sea Fleet is based and which Luzhkov has repeatedly
declared a Russian city. He confirmed that the city of Moscow will continue
to fund the construction of housing for Russian sailors based in
Sevastopol. Luzhkov also told the veterans that Russia must develop a
strong defense industry. The mayor, who  is considered a leading contender
for the support of the "patriotic" electorate in the next presidential
election, recently announced that all defense enterprises located in Moscow
will be exempt from city taxes, ITAR-TASS reported on 10 February. LB

...TAKES ISSUE WITH GOVERNMENT POLICIES. Luzhkov was one of three regional
leaders whom Yeltsin praised by name during his 17 February address to both
houses of the parliament, ITAR-TASS reported. (The others were Novgorod
Oblast Governor Mikhail Prusak and Saratov Oblast Governor Dmitrii
Ayatskov.) But commenting on the president's speech, the Moscow mayor again
criticized the federal government's economic policy. Luzhkov said growth
cannot be achieved through the "monetarism" supported by Prime Minister
Viktor Chernomyrdin, First Deputy Prime Minister Anatolii Chubais, and
Economics Minister Yakov Urinson, Interfax reported on 17 February. Luzhkov
favors an economic policy focused on supporting domestic industry. On 13
February, Luzhkov said the government should change its customs policy to
reduce imports of food products, ITAR-TASS reported. He has also assailed
the government for leaving courts chronically underfunded. LB

LEBED MAKES IT OFFICIAL... Former Security Council Secretary Aleksandr
Lebed on 17 February confirmed that he is running for governor of
Krasnoyarsk Krai, RFE/RL's Moscow bureau reported. He did not disclose the
identity of the financial backers of his campaign but said he has held
talks with all major Russian financial groups. He noted that all of those
groups have an interest in resource-rich Krasnoyarsk. Losing the 26 April
election would damage Lebed's prospects in the next presidential election.
For that reason, Lebed believes that some of his political opponents are
trying to harm his chances in Krasnoyarsk. In an interview with
"Nezavisimaya gazeta" on 17 February, Lebed charged that Viktoriya Mitina,
the deputy head of the presidential administration, has warned "almost all
somewhat well-known bankers in Moscow and Krasnoyarsk" not to support his
gubernatorial bid. LB

...CHANGES TUNE ON BEREZOVSKII. In an interview with "Nezavisimaya gazeta"
on 17 February, Lebed said he has changed his opinion of former Security
Council Deputy Secretary Boris Berezovskii. Noting that he himself began
the peace process in Chechnya, Lebed said he has come to believe that
Berezovskii continued that process. Following his ouster as Security
Council secretary in October 1996, Lebed repeatedly accused Berezovskii of
profiting from the war in Chechnya and trying to sabotage his peacemaking
efforts. He charged that Berezovskii had once chided him for "ruining a
very good business." After Yeltsin sacked Berezovskii last November, Lebed
acknowledged that Berezovskii's actions in the Caucasus region were
effective, but he nonetheless argued that Berezovskii put his business
interests before the interests of the Russian government (see "RFE/RL
Newsline," 7 November 1997). LB

BEREZOVSKII TRANSFERRED TO SWISS CLINIC. Berezovskii has flown from
Moscow's Central Clinical Hospital to a private clinic in Switzerland for
treatment over the next 10-12 days, ITAR-TASS reported on 18 February. The
head of the LogoVAZ business empire reportedly suffered a spinal injury
when he recently fell off a snowmobile. LB

NEWSPAPER SAYS BEREZOVSKII RETAINS INFLUENCE OVER ORT. Berezovskii has
managed to retain his influence over 51 percent state-owned Russian Public
Television (ORT), "Kommersant-Daily" reported on 14 February. Although
businesses controlled by Berezovskii own only some 8 percent of ORT shares,
Berezovskii has in recent years partly financed the network and paid the
salaries of some ORT executives. ORT recently adopted a new charter and
elected a new board of directors; six of the 11 members of the board are
state-appointed representatives (see "RFE/RL Newsline," 13 February 1998).
Two of those representatives--board chairman Vitalii Ignatenko and
government spokesman Igor Shabdurasulov--are considered part of Prime
Minister Chernomyrdin's team, "Kommersant-Daily" noted. Media financed by
Berezovskii have provided consistently favorable coverage to Chernomyrdin
since last summer. Berezovskii is also believed to have close ties with
another ORT board member, Yeltsin's daughter Tatyana Dyachenko. LB

OFFICIAL NEWSPAPER WANTS TO SEVER TIES WITH ADMINISTRATION. Employees of
the official daily newspaper "Rossiiskie vesti" have met with
editor-in-chief Valerii Kucher and supported his proposal to make the paper
independent of the presidential administration, RFE/RL's Moscow bureau
reported on 17 February. Kucher told RFE/RL that "Rossiiskie vesti" wants
to sever relations with its partner partly because the presidential
administration has not invested "a single kopeck" in the publication. In
addition, Kucher charged that at meetings with him, Kremlin officials have
sought to "dictate terms" for the newspaper's content and have insisted
that the newspaper publish only official materials, many of which Kucher
considers uninteresting. He said "Rossiiskie vesti" journalists "want
freedom" and independence from bureaucratic interests and financial groups.
He did not explain how he expects the newspaper to survive financially
without ties to the presidential administration or business groups. LB

SUPREME COURT RULES AGAINST INGUSH PRESIDENT. The Supreme Court of the
Russian Federation ruled on 17 February that Ingush President Ruslan
Aushev's decree providing for a referendum on reform of the republic's
legal and court system is invalid, ITAR-TASS reported. The referendum is
scheduled to take place at the same time as the 1 March Ingush presidential
elections.  Russian Prosecutor-General Yurii Skuratov asked the Supreme
Court to ban the referendum on the grounds that such votes may not be used
to decide issues that are either within the competence of the federal
center or fall under the joint jurisdiction of the center and federation
subjects. "Kommersant-Daily" on 6 February quoted Aushev as confirming he
will disregard the Supreme Court's ruling. Also on 17 February, seven
presidential candidates issued a statement accusing Aushev and the
republican authorities of numerous violations of the electoral law. LF

DIFFERING VIEWS ON MORDOVIAN ELECTION RESULT. In its 17 February issue, the
official newspaper "Rossiiskie vesti" argued that the recent presidential
election in Mordovia demonstrated that reforms have produced "tangible
results" in some regions. The newspaper said that in voting for incumbent
"reform architects" by wide margins, residents of such regions seek to
"consolidate" the results of reform. (Mordovian President Nikolai
Merkushkin won with 96.6 percent of the vote, and his only competitor did
not actively campaign against him.) "Russkii telegraf" noted on 17 February
that high-profile critics of Merkushkin were excluded from participating in
the race and that since last fall the local radio and television have
carried out a "massive propagandistic attack" in favor of the incumbent.
The newspaper also reported that Merkushkin is one of very few regional
leaders considered loyal to Moscow Mayor Luzhkov, who is rumored to have
supported Merkushkin's campaign. LB

MORDOVIAN POLICE OFFICERS CONVICTED OF TORTURING SUSPECTS. The Supreme
Court of Mordovia has convicted several officers on charges of torturing
suspected criminals, "Izvestiya" reported on 17 February. The republican
prosecutor's office brought the case after a series of disturbing
incidents, including the death of 19-year-old Oleg Igonin, who was arrested
for burglary (a charge of which he was posthumously cleared) and tortured
by several police officers. He was eventually asphyxiated when officers put
a gas mask on him and cut off the air supply. The Mordovian Supreme Court
sentenced two officers to nine-and-a-half years in prison and five others
to terms ranging from three to five years. In addition, the court ordered
the Mordovian branch of the Interior Ministry to pay 200,000 rubles
($33,000) to Igonin's mother and more than 100,000 rubles to others who
have been tortured in custody. LB

TRANSCAUCASUS AND CENTRAL ASIA

WHICH 'ZVIADISTS' TRIED TO KILL GEORGIAN PRESIDENT? Speaking on Georgian
television on 16 February, Interior Minister Kakha Targamadze disclosed
that most of those who took part in the 9 February attempt to kill Eduard
Shevardnadze are former members of the battalion headed by Loti Kobalia,
ITAR-TASS reported. Kobalia served in 1992-1993 as head of ousted President
Zviad Gamsakhurdia's private army and led Gamsakhurdia's failed attempt in
August 1993 to return to power by force. Kobalia was sentenced to death in
Tbilisi in November 1996 on charges of treason and banditry. Gamsakhurdia's
widow, Manana Archvadze-Gamsakhurdia, told journalists in Tbilisi on 17
February that Kobalia is a "traitor" and that she has no contact with him.
She further denied that her late husband's supporters played any part in
the attempt to kill Shevardnadze, Caucasus Press reported. Meanwhile, two
other suspects have been arrested in connection with the 9 February attack,
Caucasus Press reported on 18 February. LF

KOCHARYAN MEETS WITH DASHNAKS FROM ABROAD. Armenian Prime Minister and
acting President Robert Kocharyan on 17 February met with a sizable
Armenian Revolutionary Federation (Dashnaktsutyun) delegation from abroad,
the Yerevan News Agency and RFE/RL's Yerevan bureau reported.  Kocharyan
underscored the importance to Yerevan of the Armenian Diaspora  and
promised that in future ARFD members will be allowed unrestricted travel to
Armenia. He also advocated introducing dual citizenship, currently barred
by the constitution, for Armenians living abroad. LF

OSCE MONITORS SHOT AT IN KARABAKH. A Karabakh Armenian officer was wounded
on 17 February when Azerbaijani units opened machine-gun fire on a car in
which cease-fire monitors from the Organization for Security and
Cooperation in Europe were traveling. The incident took place in the
eastern Karabakh district of Martuni, Noyan Tapan reported, quoting the
Foreign Ministry of the unrecognized Nagorno-Karabakh Republic. LF

"NO CHANGES" IMMINENT IN AZERBAIJANI FOREIGN POLICY.  In an interview with
Turan on 17 February, Azerbaijani presidential adviser Vafa Gulu-Zade
denied that his country's foreign policy will change following the
dismissal by President Heidar Aliev of Foreign Minister Hasan Hasanov.
Gulu-Zade also denied that he himself is likely to be named as Hasanov's
successor. According to the news agency, Hasanov has written to Aliev
acknowledging he made a "mistake" in using Turkish credits to finance
construction of the Europa Hotel and casino complex. Hasanov denied that
partial control of the complex was granted to Turkey's Imperial Group in
payment of massive gambling debts incurred by Aliev's son Ilham. The former
minister pleaded with the president to show "magnanimity." LF

STRIKING KAZAKH  MINERS DISRUPT RAIL TRAFFIC. Several hundred workers from
the Janatas Phosphorous Plant in Jambyl Oblast blocked the railroad station
in the town of Taraz on 17 February, halting  rail traffic between Shymkent
and Almaty, RFE/RL's Almaty bureau reported. Some 3,000 employees of the
Janatas plant launched a strike four months ago to protest wage arrears
from 1996 and 1997. The police prevented other strikers from storming the
Jambyl Oblast administration building, while  oblast leaders failed to
persuade the strikers to call off their protest. The strikers continue to
demand to meet with Prime Minister Nurlan Balgimbaev. A meeting with the
premier was scheduled for 13 February, but Balgimbaev failed to show up. LF

BELGIAN COMPANY BLAMES KAZAKH GOVERNMENT OVER GAS SHORTAGES.  A
representative of the Belgian utilities company Tractebel has disclaimed
responsibility for the current gas  shortages in southern Kazakhstan,
RFE/RL's Almaty bureau reported. Speaking at a press conference in Almaty
on 17 February, Tractebel Vice President Ludo Candries said Prime Minister
Balgimbaev precipitated the shortages by preventing the transfer of a key
gas storage facility to Tractebel's subsidiary, Intergas. Candries also
accused Kazakh officials of harassment and of threatening to close down
Tractebel's Almaty office, according to ITAR-TASS. LF

END NOTE

YELTSIN WARNS OF CABINET RESHUFFLE

by Stephanie Baker

        Russian President Boris Yeltsin has warned that there will be a
cabinet shakeup if ministers fail to solve the economic problems facing the
country.
        In his annual speech to a joint session of the parliament on 17
February, Yeltsin called for the adoption of a realistic budget and the
passage of tax reform to ensure substantial economic growth this year. "If
the government is not capable of resolving these strategic tasks, we will
have a new government," he said.
        The Russian president patted himself and his cabinet on the back
for bringing down inflation, stabilizing the ruble, and reversing the
decline of the economy last year. But he said "this is no longer enough. We
need a steady and qualitative economic growth. We need a growth supported
by a mighty influx of investments."
        Yeltsin called on legislators to amend the 1998 budget to ensure
that it contains realistic revenue and spending parameters. The amendments
were due to be submitted later that day to the State Duma, the lower house
of the parliament. The Duma is expected to pass the budget in a fourth and
final reading soon.
        Also on 17 February, Finance Minister Mikhail Zadornov warned that
Yeltsin could veto the budget bill unless the Duma passed the amendments.
It is unclear what specific changes the government is proposing, but First
Deputy Prime Minister Anatolii Chubais said the amendments are intended to
tighten budget policy and increase revenues in response to the world market
volatility. He remarked that "if the country pursues an irresponsible
financial policy at a time of financial crisis, if the budget is not
realistic, it is a terrible threat to its economy."
        The Asian financial crisis has shaken the Russian economy, pushing
up interest rates and making it far more expensive for companies to raise
funds on international markets. At the same time, investors have been
demanding that the government cut spending to prevent its budget deficit
from expanding. In his address, Yeltsin acted to meet some of those
concerns, ordering the government to draw up a program by May to slash
government spending. "It is time to learn to do what any housewife knows
how to do--spend money economically, rationally and live according to one's
means," he commented.
        At the top of the government's agenda this year is tax reform,
considered essential if Russia's messy public finances are to be cleaned up
and tax evasion eradicated. The government submitted a revised tax code to
the Duma earlier this month, after a similar proposal was rejected by
deputies last year. Yeltsin urged the Duma to pass the much anticipated tax
bill, saying it is the precondition for economic growth and "cannot be
delayed any longer."
        The government has made much of a 40 percent increase in tax
revenues in January, compared with the same period last year. But analysts
say the increase is due to a one-off tax payment by gas giant Gazprom.
        Yeltsin's push for tax reform coincided with the arrival of
International Monetary Fund head Michel Camdessus in Moscow on 17 February.
He is to discuss the fund's $10 billion  loan to Russia. The IMF has
repeatedly suspended loan payments due to chronically low tax revenues.
Yeltsin, for his part, has said he wants the current IMF loan to be
Russia's last.
        Among other initiatives, Yeltsin ordered the Economics Ministry to
draw up an industrial policy program by June that would help domestic
producers compete with foreign companies.
        Reaction to Yeltsin's speech was muted. The markets generally
shrugged off the speech, despite Yeltsin's call for driving full-speed
ahead with reforms. Some observers remarked that Yeltsin's proposals were
reminiscent of past promises that were not kept.

The author is an RFE/RL correspondent based in Moscow.


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