RFE/RL NEWSLINE Vol 2, No. 90 Part I, 13 May 1998

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RFE/RL NEWSLINE Vol 2, No. 90 Part I, 13 May 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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COMMUNIST HOUSING: A FLAW IN THE DESIGN
More than 170 million people in Eastern Europe and the
former Soviet Union live in decaying housing complexes. This
five-part series examines the issues, compares East Berlin's
rehabilitation success story with Prague's less than
successful efforts, and describes the state of U.S. public
housing.
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Headlines, Part I

* RUSSIA CONTINUES TO CRITICIZE INDIAN NUCLEAR TESTS

* PRIMAKOV ON START-2, IRAN

* BEREZOVSKII IN YEREVAN

End Note: TENSIONS WITH RUSSIA OVERSHADOW LATVIA'S ECONOMIC
PERFORMANCE
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RUSSIA

RUSSIA CONDEMNS LATEST INDIAN NUCLEAR TESTS... Rashit
Khamidulin, an official from the Russian Foreign Ministry's
Asian Department, said India's decision to carry out two
more nuclear tests on 13 May is cause for "deep sorrow," as
it shows India "has not listened to the calls of
international community" following the tests it conducted
two days earlier, ITAR-TASS reported. An unnamed official
from the Foreign Ministry expressed concern that by this
means "India is pushing the world toward greater use of
nuclear weapons." The same official said New Delhi's
decision to conduct more tests "puts Russia in a very
uncomfortable position." The previous day, the Foreign
Ministry had released a statement saying India's nuclear
testing "contradicts the efforts by the international
community to strengthen the regime of non-proliferation of
nuclear weapons," Interfax reported. Foreign Minister
Yevgenii Primakov noted that it violates "the balance that
has been created in the world" and is "totally
unacceptable," "short-sighted," and "guided by regional
rather than global" ideas. BP

...BUT OPPOSES SANCTIONS. While there were indications on 12
May that the Russian Atomic Energy Ministry may cancel a
deal to provide India with nuclear reactors for power
plants, Russia did not join the group of countries calling
for sanctions to punish New Delhi. Russian President Boris
Yeltsin said "I think we should use diplomatic tools" and
said he would use his scheduled visit to India later this
year "to solve this problem somehow." Primakov also said
"Russia is very cautious about sanctions. They often have
counterproductive results." Interfax asked an unnamed source
at the Russian Foreign Ministry if Russia would recall its
ambassador to India. The source responded "of course not,"
adding that the test "cannot but arouse our anxiety and
regret, but not to such an extent." BP

PRIMAKOV ON START-2, IRAN. Foreign Minister Primakov told
NTV on 12 May that the U.S. Congress will harm prospects for
the ratification of the START-2 arms control treaty if it
imposes sanctions on Russian companies that do business with
Iran. Among others, the gas monopoly Gazprom, which is
involved with a project to develop Iranian gas reserves,
could be affected by such sanctions. As for allegations that
Russia is transferring missile technology to Iran, Primakov
said Russia has no reason to encourage Iran to build
missiles with a range of 2,000 kilometers. Primakov said he
and Defense Minister Igor Sergeev will work to persuade the
State Duma to ratify START-2 and predicted that the
"sensible" part of the Duma will support ratification.
However, he said some Duma deputies will try to score
political points during the debate over the treaty. LB

YELTSIN DISCOUNTS HEALTH RUMORS. Yeltsin on 12 May
discounted speculation that he is in poor health, saying he
feels good and keeps to a busy working schedule. During a
live Internet session on MSNBC, Yeltsin challenged doubters
to compete against him in sports. The English translation of
Yeltsin's remarks appeared to leave the door open to a third
presidential term: "As for the presidency, in the year 2000,
we still have two years..., we'll see." But the Russian
version of the Internet session, which was published in full
in "Kommersant-Daily" on 13 May, did not include that
comment. On several occasions the president has ruled out
seeking a third term. Asked about a presidential bid by his
daughter and adviser, Tatyana Dyachenko, Yeltsin said he has
"never spoken about this." He added that in his view,
Russian society has not yet matured enough to have a woman
president. LB

COMMUNISTS SCHEDULE EMERGENCY CONGRESS. Communist Party
leader Gennadii Zyuganov has announced his party will hold
an extraordinary congress on 23 May, Russian news agencies
reported on 12 May. The party must amend its charter in
accordance with the September 1997 law on the electoral
rights of citizens. (Political parties and movements that do
not comply with the law will be barred from the next
parliamentary elections.) In addition, the congress will
outline the party's stance toward the new government,
"Nezavisimaya gazeta" reported on 13 May. Zyuganov recently
announced that his party no longer favors "dialogue" with
the executive authorities (see "RFE/RL Newsline," 6 May
1998). Duma Speaker Gennadii Seleznev, also a Communist,
told journalists on 12 May that no Duma faction is likely to
propose a vote of no confidence in Prime Minister Sergei
Kirienko's government before the summer recess, adding that
October will be a "decisive" month for the government. LB

CHERNOMYRDIN SEEKS TO CHANGE MOVEMENT'S IMAGE. Former Prime
Minister Viktor Chernomyrdin told Radio Mayak on 12 May that
his Our Home Is Russia (NDR) movement will seek to shed the
label of Russia's "party of power" in order to improve its
prospects for the parliamentary and presidential elections
in 1999 and 2000, Interfax reported. Chernomyrdin said the
movement's image links it with "officials' offices and
bureaucratic methods." In an interview with the latest
edition of "Argumenty i fakty" (No. 19), Duma First Deputy
Speaker Vladimir Ryzhkov admitted that the NDR is in a
"difficult situation," since Chernomyrdin still "feels more
like a prime minister" than a politician. He added that some
members of the NDR political council and Duma faction have
still not adjusted "psychologically" to the fact that their
leader is "no longer the number two person in the country."
LB

DUMA PUTS OFF CONSIDERATION OF PRIVATIZATION PLAN. The State
Duma Council on 12 May postponed by one week debate on the
government's 1998 privatization program, which was scheduled
to be considered at a 14 May plenary session, ITAR-TASS
reported. According to Aleksandr Shokhin, leader of the Our
Home Is Russia Duma faction, the Communist faction called
for the postponement to give the Audit Chamber more time to
complete an investigation into past privatization sales.
Meanwhile, Duma Speaker Gennadii Seleznev predicted on 12
May that the Duma is unlikely to approve in its entirety the
government's list of enterprises to be privatized this year.
Under a law that went into effect last August, the
government must seek parliamentary approval for its
privatization program. LB

GOVERNMENT DRAFTS DECREE ON STRATEGIC ENTERPRISES. Deputy
Prime Minister Boris Nemtsov announced on 12 May that the
government is drafting a presidential decree that would
define the criteria for determining which enterprises are
"of strategic importance," Russian news agencies reported.
The decree will list "natural monopolies" in the energy and
transportation sectors, as well as defense enterprises and
other companies with know-how that could potentially
threaten national security if it were lost. Strategically
important enterprises may not be privatized pending the
adoption of a special law on the matter. Deputy State
Property Minister Aleksandr Braverman advocated putting 765
companies on the list. But "Kommersant-Daily" reported on 13
May that the Defense Ministry opposes the State Property
Ministry's proposal. Currently some 3,000 enterprises are
considered "strategically important," the newspaper said. LB

KULIKOV FOE RETURNS TO HIGH POST IN INTERIOR MINISTRY.
Yeltsin has appointed Vladimir Rushailo as head of the
Interior Ministry's Main Administration on Organized Crime
(GUOP), "Kommersant-Daily" reported on 12 May. Rushailo was
the longtime head of the Moscow Regional Organized Crime
Administration (RUOP). He was transferred to the post of
first deputy head of the GUOP in October 1996, but then
Interior Minister Anatolii Kulikov fired him within two
weeks for criticizing his superior at the GUOP and his
successor at the RUOP. Since December 1996, Rushailo has
been an adviser to Federation Council Speaker Yegor Stroev
(see "OMRI Daily Digest," 23 October and 10 December 1996).
Meanwhile, Interior Minister Sergei Stepashin announced on
12 May that Yeltsin will soon appoint Leontii Shevtsov as
deputy interior minister for the North Caucasus, Interfax
reported. Shevtsov was recently replaced as commander of the
Interior Ministry troops (see "RFE/RL Newsline," 11 May
1998). LB

PATRIARCH SPEAKS OUT AGAINST CAPITAL PUNISHMENT, ABORTION.
Patriarch of Moscow and All Russia Aleksii II says capital
punishment is tantamount to premeditated murder and violates
the biblical commandment "Thou shalt not kill," Interfax
reported on 12 May, citing an interview the head of the
Russian Orthodox Church gave to the newspaper "Ochnaya
stavka" (published by the Prosecutor-General's Office, the
Interior Ministry and the Federal Security Service). Russia
is required to abolish capital punishment as a condition of
membership in the Council of Europe, but the parliament has
refused to ban the death penalty. In the same interview,
Aleksii argued that abortion is also murder "because a
mother kills her child and her own soul." Although the
abortion rate in Russia has dropped in recent years, it
still remains among the highest in the world at 60.5 per
1,000 women of child-bearing age. LB

ZYUGANOV ENDORSES KRASNOYARSK INCUMBENT. Communist Party
leader Zyuganov announced on 12 May that the Presidium of
his party's Central Committee is calling Krasnoyarsk Krai
residents to vote "for a government of popular trust" and
against former Security Council Secretary Aleksandr Lebed in
the 17 May election, Russian news agencies and NTV reported.
Governor Valerii Zubov faces an uphill battle to defeat
Lebed. He has promised to form a coalition government and
has offered posts to several well-known Communists,
including a Soviet-era secretary of the krai party
committee, a prominent deputy in the current krai
legislature, and State Duma deputy Petr Romanov, who
finished third in the first round of the Krasnoyarsk
election. Zyuganov said his party supports Zubov's plans.
(Yeltsin has repeatedly refused to create a coalition
government on the federal level.) Zyuganov added that a
Lebed victory "would be a great misfortune for the country."
LB

ZUBOV CAMPAIGNS ON OPPONENT'S TURF. Zubov has visited the
far-northern city of Norilsk, where Lebed gained some 80
percent of the vote in the first round of the election, an
RFE/RL correspondent in Krasnoyarsk reported on 12 May. The
governor claimed that the World Bank has agreed to give a
$500 million loan to fund the resettlement of pensioners
from Norilsk to other parts of Russia. The Russian
government is to guarantee that loan. Meanwhile, the famous
pop singer Alla Pugacheva arrived in Krasnoyarsk on 13 May
to campaign on behalf of Zubov. LB

LEBED DISMISSES COMMUNIST APPEAL, COALITION PLANS... Lebed
on 12 May predicted that Communist efforts to block his
election will backfire. He told Interfax that recent events
surrounding the confirmation of Prime Minister Sergei
Kirienko have exposed the Communists' "policy of
compromises." As for Zubov's promise to appoint a coalition
government in the krai if re-elected, Lebed borrowed a
phrase recently used by Kirienko, saying "professional"
rather than "political" criteria should be used when handing
out government posts, RFE/RL's correspondent in Krasnoyarsk
reported. Some local observers believe Zubov's effort to
attract Communist support will displease voters who backed
the incumbent in the first round. LB

...PROMISES TO HELP SITUATION IN NORTH CAUCASUS. Also on 12
May, Lebed announced that if he wins the gubernatorial
election, he will use his seat in the Federation Council to
work toward a peaceful settlement in the North Caucasus,
Interfax reported. As Security Council secretary, Lebed
negotiated the August 1996 Khasavyurt accords with then
Chechen field commander and current Chechen President Aslan
Maskhadov. He charged that federal authorities have made no
progress in settling the Chechen crisis since then. Lebed
has been campaigning in the krai's capital city,
Krasnoyarsk, where Zubov gained more than 50 percent of the
vote in the first round of the election, RFE/RL's
correspondent there reported. LB

IMO REJECTS RUSSIAN SHIPPING PROPOSALS. The International
Maritime Organization's Security Committee on 11 May
declined to debate or vote on a Russian report calling for
the relaxation of restrictions on shipping passing through
the Turkish Straits, according to the "Turkish Daily News"
two days later. The report, which was supported by Greece,
Bulgaria, and southern Cyprus, advocated increasing the
number of tankers allowed to traverse the straits and
rejected a Turkish requirement that all vessels take aboard
a guide captain when using those waters. LF

RUSSIA INCREASES STAKE IN TATAR TRUCK FACTORY. At a meeting
of the board of the KamAZ truck factory on 12 May,
shareholders agreed to increase the company's registered
capital from 125 million rubles ($20 million) to 6.25
billion rubles, RFE/RL's Kazan bureau reported. The nominal
price of individual shares is to be increased and additional
300 million shares issued. The measures are intended to
reduce the plant's debts, currently estimated at 8.5 billion
rubles. Russia and Tatarstan will increase their holdings in
KamAZ, while the stake of the U.S. company KKR, which failed
in its bid last year to find new investors for the company,
is reduced to no more than11 percent. The meeting also
elected a new board, which is headed by First Deputy Prime
Minister Ravil Muratov and includes seven representatives of
the Russian federal government and four from Russian
commercial creditor banks. LF

TRANSCAUCASUS AND CENTRAL ASIA

BEREZOVSKII IN YEREVAN. CIS Executive Secretary Boris
Berezovskii held talks in Yerevan on 12 May with President
Robert Kocharian and Prime Minister Armen Darpinian, Russian
and Armenian agencies reported. Berezovskii described
Armenia as one of the most important members of the CIS.
Discussing options for reforming that body, he and Kocharian
agreed that economic cooperation should take precedence over
political integration but that normal economic development
is impossible as long as conflicts remain unresolved. They
also agreed that the CIS can be transformed into a
functioning structure only after "the stereotype that the
CIS exists under Russian sponsorship" is dispelled.
Berezovskii told journalists that he and Kocharian had
discussed the Karabakh conflict, but he gave no details,
according to RFE/RL's Yerevan bureau. But he did say that
his personal experience mediating between Moscow and
Chechnya could be of value in the Karabakh context. LF

ARMENIAN PRIME MINISTER UNVEILS GOVERNMENT PROGRAM. Armen
Darpinian on 12 May submitted to the parliament the
government's program for socio-economic development based on
the transition from stability to economic growth, Noyan
Tapan and RFE/RL's Yerevan bureau reported. The program aims
to ensure annual GDP growth of 6 percent and low inflation.
Taxation will be lowered, with the aim of stimulating
investment and creating new jobs, but tax evasion will be
targeted even more rigorously than before. The program
estimates that privatization of remaining state enterprises
will bring more than $1 billion in private investment over
the next five years. It also pledges to complete
reconstruction by 2001 of the areas of northern Armenia
devastated in the 1988 earthquake. LF

ARMENIAN EDITORIAL APPOINTMENT SPARKS CONTROVERSY. The staff
of Armenia's Russian-language government-funded daily
"Respublika Armeniya" have made clear their opposition to
the proposed appointment of Shamiram Aghabekian as the
newspaper's editor, RFE/RL's Yerevan bureau reported on 12
May. Aghabekian was selected by the Armenian parliament,
which is a co-founder of the paper, to replace acting editor
Ashot Gazazian. The newspaper's staff say they were not
consulted over Aghabekian's appointment. Gazazian,
meanwhile, has refused to quit, arguing that Aghabekian is
not competent to take over his duties. LF

GEORGIAN PARLIAMENTARY DEPUTY QUITS TO JOIN GUERRILLAS.
Germane Patsatsia, head of the minority Abkhazeti faction in
the Georgian parliament, told journalists on 12 May that he
will give up his "senseless" legislative activity to join
the ranks of Georgian guerrillas fighting in Abkhazia,
Caucasus Press reported. Patsatsia claimed that Abkhazia's
southernmost Gali Raion is already under the control of the
Georgian informal paramilitaries. He said the district's
Georgian population is on the verge of revolt and argued
that the guerrilla formation should be legalized and
provided with state funding and medical care since 90
percent of its members suffer from tuberculosis. LF

AZERBAIJAN DECLARES MASS AMNESTY. The parliament on 12 May
passed a law proposed one week earlier by President Heidar
Aliev granting an amnesty to some 10,000 people convicted of
minor crimes. The amnesty, which does not extend to those
convicted of murder, treason, terrorism, or theft, marks the
80th anniversary of the May 1918 founding of the Azerbaijan
Democratic Republic. Also on 12 May, a Baku district court
sentenced Meshadi Panakhov, a member of the board of the
opposition Azerbaijan Popular Front, to five years'
imprisonment on charges of illegal possession of weapons
during a state of emergency, Turan reported. LF

SENTENCES HANDED DOWN TO UZBEK TERRORISTS. Four men found
guilty in connection with the violence that broke out in the
eastern city of Namangan last December were sentenced to
between five and eight years in prison, Interfax reported.
Vali Egamberdyev, Mukhtor Mannonov, and the brothers Abdullo
and Zhobir Shakhbiddinov had pleaded guilty last week in
Namangan to charges of terrorism, attempting to undermine
the country's constitution, and seeking to promote
Wahhabism. Another eight men are scheduled go on trial in
Namangan and 15 in Tashkent on similar charges. BP

IRAN COMPLAINS ABOUT UZBEK CAMPAIGN AGAINST ISLAM. A Tehran
IRIB Television broadcast on 12 May criticized the "anti-
Islam stance" of Islam Karimov, saying the Uzbek president
has for some time been trying to form an anti-Islamic
alliance with Russia and Tajikistan. The broadcast said that
only Karimov seems to be stressing the need for such an
alliance. It also claimed that Karimov is attempting to draw
the attention of the U.S. and the West to himself "through
recourse to an old and meaningless slogan of combating Islam
in a region where all nations are Muslim." BP

POLYGAMY TO BE REINTRODUCED IN KAZAKHSTAN? RFE/RL
correspondents in the Kazakh capital, Astana, reported on 12
May that the parliament has begun discussing amending the
laws on family and marriage to allow Kazakhs to have more
than one wife. Before the Soviet era, polygamy was common
among the people of the Kazakh steppe. BP

END NOTE

TENSIONS WITH RUSSIA OVERSHADOW LATVIA'S ECONOMIC
PERFORMANCE

by Michael Wyzan

	Latvia has recently been buffeted by Moscow's threats
to impose unilateral economic sanctions. Russia has sought
to justify those threats by citing what it considers to be
anti-Russian activities in Latvia and Riga's incorrect
treatment of the country's Russian minority.
	Russian officials have suggested that their country
develop new ports to avoid having to use Latvian ones on the
Baltic Sea. Russian border guards have refused entry to
Latvian drivers who cannot produce notarized Russian
translations of their driver's licenses. And Russia's
Transportation Ministry has threatened to limit the number
of entry permits issued to Latvian truckers.
	The threats have already had an affect on Latvia. The
cabinet on 6 May approved legal amendments granting
citizenship to all children born in Latvia after 21 August
1991. That change may well be for the best (it was
recommended by the Organization for Security and Cooperation
in Europe). But meanwhile the economic effects of Russian
pressure are proving harmful. Since early April, there has
been a significant decline in freight traffic on Latvian
railroads and through its ports. And the Dow Jones Riga
Stock Exchange Index fell from 336 on 16 March to 275 on 23
April (before recovering slightly more recently).
	These shock waves have hit a rather healthy and well-
managed economy. In mid-April, the IMF Executive Board
lauded Latvia for its excellent performance and "prudent
financial policies," although it stressed the need for
further progress on large-scale privatization, tax
collection and administration, and making the budget process
more transparent.
	Last year's achievements followed the 1996 strong
recovery from the downturn of 1995 (which was sparked by a
banking crisis). GDP grew by 5.9 percent in 1997, compared
with 2.8 percent in 1996, and the growth of industrial
production accelerated from 1.4 percent in 1996 to 6.1
percent in 1997. Unemployment fell from 7.2 percent in
December 1996 to 7.0 percent one year later, while the
average monthly wage in the public sector rose from $242 in
December 1996 to $272 last December.
	Consumer price inflation sank to 7.0 percent from 13.1
percent in 1996 (in both years, it was the lowest in the
Baltic States). It declined further to 6.1 percent in the 12
months to February 1998. Last year, the state budget was in
surplus for the first time since 1993.
	The lats has been pegged to the IMF's Special Drawing
Right since 1994, so it has not depreciated in tandem with
inflation, which, though low for a transition country,
remains higher than in Latvia's Western trading partners.
The trade deficit rose from $877 million in 1996 to $1.1
billion last year, while the 1997 current account imbalance
is projected at $460 million, similar to 1996's and a high 9
percent of GDP.
	The foreign reserves rose from $729 million at the end
of 1996 to $778 million one year later. Thus, a capital
account surplus was sufficient to cover the current account
deficit. A rise in cumulative foreign direct investment from
$645 million at the end of 1996 to $850 million on 30
September contributed to that surplus.
	How much would Russian sanctions hurt Latvia? Russia
remains the leading destination for Latvia's exports,
accounting for 21 percent in 1997. By the same token, Russia
accounted for 15.6 percent of imports, slightly less than
the 16.0 percent supplied by Germany, Latvia's leading
import source. Latvia's exports to Russia in 1997 were worth
more than $350 million.
	A special feature of Latvian trade with Russia is the
fact that its ports are important entrepots for Russian
exports to third countries. Some of this trade is reflected
in the goods worth $425 million that Latvia officially
imported from Russia last year.
	Another factor is Latvia's total reliance on Russia
for its natural gas, for which it pays world market prices.
Latvia is not in arrears in paying for that gas, and Gazprom
is a shareholder in the Latvian gas company. Thus, it would
appear that Gazprom, an important foreign policy actor in
its own right, is unlikely to favor sanctions against the
country. Russia is also a significant investor in Latvia,
accounting for 10.4 percent of the total foreign direct
investment stock in September 1997, second only to Denmark.
	Nonetheless, recent events suggest that Latvia will
probably be forced to follow the example of those CIS states
that seek to reduce their economic dependence on Russia. If
Moscow persists in thwarting the normal economic intercourse
between states--for example, by refusing to use Latvian
ports or denying Turkmenistan access to its gas pipeline to
Europe--for political ends, it will increasingly be seen as
an unreliable partner. Developing such a reputation is in no
one's interest, least of all Russia's.

The author is an economist living in Austria.


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