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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 103 Part I, 1 June 1998


___________________________________________________________
RFE/RL NEWSLINE Vol. 2, No. 103 Part I, 1 June 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

xxxxxxxxxxxxxxxxxxx SPECIAL REPORT xxxxxxxxxxxxxxxxxxxxxx
RUSSIAN MEDIA EMPIRES III
A new prime minister has taken office, Boris Berezovsky's
now a CIS official, and the state plans to form a new media
holding company. See our updated media report.
http://www.rferl.org/nca/special/rumedia3/index.html
(English)
http://www.rferl.org/bd/ru/russian/content/reports/rumedia3/
index.html
(Russian)

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Headlines, Part I

* IMF SAYS RUSSIA HAS NOT ASKED FOR SPECIAL CREDIT

* COMMISSION THREATENS TAX DEBTORS WITH BANKRUPTCY

* GEORGIAN, ABKHAZ PRESIDENTS PLEDGE TO IMPLEMENT CEASE-FIRE
PROTOCOL
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RUSSIA

IMF SAYS RUSSIA HAS NOT ASKED FOR SPECIAL CREDIT... John
Odling-Smee, a senior IMF expert on Russia, on 29 May said
the fund has held "no formal discussions" on granting a
special multi-billion dollar loan to calm Russian financial
markets, Reuters reported. Odling-Smee said Russian
officials have inquired about the IMF's supplemental reserve
facility, which provides short-term credits, but he argued
that Russia does not need such a loan. IMF officials have
praised recent steps taken by the Russian government and
Central Bank, such as hiking the refinancing rate to 150
percent. The fund is recommending that its board approve the
release of a $670 million loan tranche, but some market
analysts say sentiment among investors will not turn around
unless Russia receives a multi-billion dollar bailout
package. Share values on the Russian stock market fell 5-6
percent on average in early trading on 1 June after posting
a 2 percent decline on 29 May. LB

...AS CHUBAIS HOLDS HIGH-LEVEL TALKS IN WASHINGTON. Former
First Deputy Prime Minister Anatolii Chubais, the head of
the electricity giant Unified Energy System, held talks with
U.S. Treasury Secretary Robert Rubin and Deputy Treasury
Secretary Lawrence Summers in Washington on 29 May, Reuters
reported. Chubais also met with World Bank President James
Wolfensohn and senior IMF officials. When Chubais departed
for the U.S., Russian news agencies said the main goal of
his trip was to discuss matters related to Unified Energy
System. But Prime Minister Sergei Kirienko told NTV on 31
May that Chubais also went to Washington to discuss the
current situation on Russian markets and to ask for
unspecified "support." U.S. President Bill Clinton on 31 May
issued a statement saying the U.S. "endorses additional
conditional financial support [for Russia] from the
international financial institutions, as necessary." LB

COMMISSION THREATENS TAX DEBTORS WITH BANKRUPTCY. The
presidential commission on tax and budgetary discipline on
29 May took "tough measures" against eight companies that
each owe between 600 million and 800 million rubles ($97
million to $130 million) to the federal budget, Deputy Prime
Minister Viktor Khristenko told journalists. The commission
ordered that bankruptcy proceedings be initiated against
some of those companies and gave others until 12 June to pay
their debts or face bankruptcy or seizures of assets,
Interfax reported. Khristenko also said the commission took
tough measures against 11 alcohol enterprises that are fully
or party state-owned. The commission did not discuss the gas
monopoly Gazprom, the electricity monopoly Unified Energy
System, and the Railroad Ministry after the "natural
monopolies" promised on 28 May to take steps to repay their
debts. Gazprom alone owes the state some 4.5 billion rubles,
"Kommersant-Daily" reported on 30 May. LB

MOODY'S DOWNGRADES RUSSIA'S CREDIT RATING AGAIN. The
international rating agency Moody's on 29 May lowered
Russia's sovereign debt rating, along with the credit
ratings of nine commercial banks, seven Russian regions, and
four Russian companies, Interfax reported. Moody's last
downgraded Russia's credit rating in March (see "RFE/RL
Newsline," 12 March 1998) and is maintaining a "negative"
outlook for further changes in the rating. Meanwhile, the
Fitch IBCA agency on 1 June lowered the long-term credit
ratings of 14 Russian banks. If the value of the ruble
dropped sharply against the dollar, some Russian banks would
find it difficult or impossible to repay loans denominated
in foreign currencies. LB

NEW TAX SERVICE CHIEF CALLS FOR LOWER TAXES... Newly
appointed State Tax Service chief Boris Fedorov says that
although tax collection can be improved somewhat under
current conditions, significant increases in revenues will
be impossible unless the tax burden is significantly
reduced. In an interview with NTV on 1 June, Fedorov
suggested lowering the top income tax rate from 35 percent
to 20 percent and criticized current tax legislation, which,
he said, makes buying shares in Russian companies more
advantageous for foreigners than for Russian citizens.
Fedorov argued that the government has not done enough to
secure parliamentary approval of a new tax code. However, he
praised the measures approved at the 29 May meeting of the
commission on tax and budget discipline. Fedorov will have
the rank of a cabinet minister, a higher status than
previous heads of the State Tax Service, Russian news
agencies reported on 29 May. LB

...AS HIS APPOINTMENT DRAWS MIXED REACTION IN RUSSIAN PRESS.
"Russkii telegraf," which is owned by Oneksimbank, on 30 May
described Fedorov as "fully capable of putting pressure on
taxpayers" and predicted that he will make his predecessor,
Aleksandr Pochinok, seem like a "good cop" by comparison. In
contrast, "Nezavisimaya gazeta," which is financed by CIS
Executive Secretary Boris Berezovskii's LogoVAZ group,
slammed Fedorov's appointment and cast doubt on his ability
to improve tax collection, given the prevalence of barter
rather than cash payments in the Russian economy. The
newspaper speculated that Fedorov may soon be removed if he
is implicated in a corruption scandal involving the sale of
diamonds and precious metals (see "RFE/RL Newsline," 13
January 1998). (A leading suspect in that case is to be
extradited to Russia this week.) "Nezavisimaya gazeta" also
assailed the government's strategy for dealing with the
current financial crisis as "pseudomonetarism." LB

GOVERNMENT SEEKS APPROVAL OF LAWS TO BOOST REVENUES. The
government has submitted to the State Duma four draft laws
aimed at increasing federal revenues by 6.5 billion rubles
($1.1 billion) for the year, Interfax reported on 29 May,
citing Finance Minister Mikhail Zadornov. One law would levy
customs duties on gas when Gazprom ships gas to buyers
rather than when payment for such shipments is made. The
government also wants to increase the land tax and double
the tax on agricultural land that is being used for other
purposes, "Vremya MN" reported on 1 June. The fourth draft
law seeks to guarantee regular contributions to the Pension
Fund, Zadornov said. The finance minister also called on the
Duma to speed up its consideration of tax laws that were
submitted to the parliament earlier this year, saying those
laws could boost revenues by 4.5 billion rubles. LB

PENSION FUND OWED SIX MONTHS' WORTH OF PENSIONS. Russian
enterprises owe the Pension Fund a total of 100.2 billion
rubles ($16 billion), Interfax reported on 29 May, citing
Svetlana Zaika, the head of the fund's press service. She
said the fund is obliged to pay 15.8 billion rubles each
month in pensions but has been unable to collect more than
13 billion rubles in any month of this year. Consequently,
pension arrears rose from 1.2 billion rubles as of 1 April
to 4.3 billion rubles as of 1 May. Zaika said that
pensioners in 18 out of Russia's 89 regions have not yet
received their April pensions. She predicted that there will
be difficulties in paying pensions for the month of June in
at least 70 regions. LB

RUSSIA'S REACTION TO PAKISTANI NUCLEAR TESTS "VERY
NEGATIVE." Russian Foreign Minister Yevgenii Primakov told
reporters in Finland on 30 May that Russia's "attitude is
very negative" toward the nuclear tests that Pakistan
undertook the previous day, ITAR-TASS reported.
"Nezavisimaya gazeta" quoted Primakov as saying "there is a
need to pressure [Islamabad] but we are against imposing
economic sanctions," which, he said, might make Pakistan
"feel backed into a corner." The minister said his
government favors holding two UN Security Council meetings--
one with the foreign ministers of the permanent Security
Council members and the other also attended by India's and
Pakistan's foreign ministers in attendance. Pakistani
Ambassador to Russia Mansur Alam told Ekho Moskvy on 29 May
that the purpose of the test was "peaceful" after "India's
test destroyed the strategic balance in the region." BP

JUSTICE MINISTER SAYS RUSSIA NOT READY TO ABOLISH DEATH
PENALTY. Pavel Krasheninnikov told Interfax on 29 May that
he believes Russia is "not ready" to abolish capital
punishment, "neither from a criminological nor from a moral
point of view." He said opinion polls show that the majority
of Russian citizens are in favor of keeping the death
penalty. Yeltsin decreed a moratorium on executions in
August 1996, but the parliament rejected a draft law on
banning capital punishment in March 1997 and refused to
ratify a protocol on the issue earlier this year (see
"RFE/RL Newsline," 23 February 1998). Outlawing capital
punishment is a condition of membership in the Council of
Europe, which Russia joined in February 1996. LB

BARELY A DAY PASSES WITHOUT NON-COMBAT DEATHS IN ARMY. Only
three days so far this year--7 January and 17 and 27 May--
have passed without any non-combat deaths in the Russian
armed forces, "Segodnya" reported on 30 May, citing Vladimir
Kulakov, the head of the army's Main Department for
Educational Work. Suicides alone account for some 40 deaths
a month, while accidents, hazing, and killings by fellow
soldiers also claim many lives. According to former Duma
Defense Committee Chairman Lev Rokhlin, there were 1,534
non-combat deaths (including 614 suicides) in the armed
forces last year and the first four months of this year.
Rokhlin, who in 1997 founded an opposition Movement to
Support the Army, plans to sue Defense Minister Igor Sergeev
for alleged "crimes" committed against the armed forces
while carrying out military reform, "Segodnya" reported. LB

AGRARIAN PARTY LEADER WINS HARD-FOUGHT ALTAI ELECTION.
Mikhail Lapshin, the leader of the Agrarian Party of Russia,
won the 31 May by-election in Altai Republic for a seat in
the State Duma with 42 percent of the vote, Russian news
agencies reported. Gazprom adviser and former First Deputy
Finance Minister Andrei Vavilov fell just short of victory,
winning 40 percent, despite having spent far more money
during the campaign and enjoying the support of the
republican authorities (see "RFE/RL Newsline," 28 and 29 May
1998). The Altai race was a bruising battle in which the
leading candidates accused each other of violating campaign
regulations and, during the final days before the election,
sought to have the other's name struck from the ballot. On
29 May, the Supreme Court rejected an appeal by Lapshin
against the Central Electoral Commission, which ignored
Lapshin's complaints concerning the Altai electoral
commission's refusal to revoke Vavilov's registration as a
candidate. LB

CHERNOMYRDIN ALLY WINS DUMA SEAT IN CHUKOTKA. Vladimir
Babichev, the former head of the government apparatus and a
close ally of former Prime Minister Viktor Chernomyrdin, won
the 31 May by-election for a Duma seat from Chukotka
Autonomous Okrug with some 57 percent of the vote, ITAR-TASS
reported on 1 June. Babichev's nearest rival, independent
candidate Vladimir Yetylin, gained 21 percent. Babichev has
been a key organizational figure in Chernomyrdin's movement,
Our Home Is Russia (NDR), since its creation in May 1995. He
chairs the NDR's executive council and is first deputy
chairman of the movement's political council. "Russkii
telegraf" speculated on 30 May that if elected to the Duma,
Babichev would replace Aleksandr Shokhin as head of the NDR
Duma faction. Chernomyrdin has not yet announced whether he
will run for a Duma seat this year or wait until the 1999
parliamentary elections. LB

STEPASHIN DISCUSSES MAKHACHKALA DISTURBANCES WITH
KHACHILAEV... Meeting with Union of Muslims of Russia
Chairman Nadirshakh Khachilaev on 31 May, Russian Interior
Minister Sergei Stepashin urged the Russian State Duma to
form a commission to investigate the causes of the shootings
and subsequent storm of the government building in
Makhachkala by Khachilaev's supporters on 21 May, Russian
agencies reported. Stepashin told journalists that he and
Khachilaev agreed there is no truth to Russian allegations
of Chechen involvement in the unrest. Khachilaev expressed
approval of Russia's response to the incident. Meanwhile,
Dagestani State Council Chairman Magomed-Ali Magomadov has
called on movements representing the various ethnic groups
in Dagestan either to disband voluntarily or to agree to
holding a republic-wide referendum on their dissolution,
"Nezavisimaya gazeta" reported on 30 May. LF

...ANNOUNCES OPERATION TO LIBERATE VLASOV. Stepashin also
said that Russian and Chechen Interior Ministry forces will
launch a joint operation in the next few days to secure the
release of Valentin Vlasov, the Russian presidential envoy
to Chechnya abducted on 1 May. Senior Ukrainian government
official Nikolai Brichko, who was in Chechnya to conclude
agreements on rebuilding work, has also been abducted in
Chechnya, Interfax reported on 29 May. LF

TRANSCAUCASUS AND CENTRAL ASIA

GEORGIAN, ABKHAZ PRESIDENTS PLEDGE TO IMPLEMENT CEASE-FIRE
PROTOCOL. In a telephone conversation on 29 May, Eduard
Shevardnadze and Vladislav Ardzinba affirmed their shared
commitment to preventing another large-scale conflict in
Abkhazia's Gali Raion, ITAR-TASS and Caucasus Press
reported. Ardzinba also agreed to allow Georgian women and
children who fled during the 19-25 May fighting to return to
their homes but said the men should be screened to prevent
those who took part in the fighting from returning. Ardzinba
demanded that Tbilisi halt the activities of guerrilla units
on Abkhaz territory and that both guerrilla organizations
and the so-called Abkhaz parliament in exile (composed of
Georgian deputies to the Abkhaz parliament elected in 1991)
be disbanded. The chairman of that body, Tamaz
Nadareishvili, announced his resignation on 29 May, saying
he still believes that Tbilisi can only regain control over
Abkhazia by force, according to Caucasus Press. LF

GEORGIA CONDEMNS ABKHAZ STATE OF EMERGENCY. The Georgian
Foreign Ministry issued a statement on 29 May saying the
state of emergency imposed by Ardzinba in Gali and parts of
two neighboring raions two days earlier is a violation of
the Georgian Constitution, Caucasus Press reported. The
statement said the state of emergency could hinder the
implementation of the 25 May agreement on a cease-fire and
the return of Georgian fugitives to their homes. In
addition, the ministry rejected Ardzinba's claims that
Ukrainian mercenaries participated in the recent fighting
alongside Georgian guerrillas, according to ITAR-TASS. Also
on 29 May, Russian First Deputy Foreign Minister Boris
Pastukhov told Interfax that Russia opposes any peace-
enforcement operation in Gali Raion. Pastukhov rejected
charges that Russian peacekeepers supplied Abkhaz Interior
Ministry troops with the heavy artillery they used during
the fighting. LF

ABKHAZ DENY TAKING HOSTAGES. Abkhaz officials on 31 May
denied Georgian media reports that four Georgians seeking to
return to their homes in a Gali village had been taken
hostage, according to ITAR-TASS. Caucasus Press reported on
29 May that Abkhaz fighters were looting abandoned Georgian
homes in the villages of Tagiloni and Nabakevi. A Georgian
Interior Ministry official told Interfax the next day that
police in three western Georgian raions have been placed on
alert and security precautions intensified at the oil
terminal under construction in Supsa. LF

SOUTH OSSETIAN DEPUTY PREMIER ASSASSINATED. Valerii Khubulov
was shot dead in his car by unidentified assailants in the
North Ossetian capital, Vladikavkaz, on 31 May, ITAR-TASS
and Caucasus Press reported. A Russian businessman
accompanying Khubulov was also killed. LF

ARMENIA WELCOMES FRENCH PARLIAMENT VOTE ON GENOCIDE... In a
29 May statement, Armenian Foreign Minister Vartan Oskanian
expressed his thanks to French politicians and the French
parliament for their unanimous vote to recognize the 1915
genocide of Armenians in Ottoman Turkey, RFE/RL's Yerevan
bureau reported. The statement said the open discussion of
the genocide within the framework of Armenian-Turkish
relations could have a positive impact on establishing
mutual trust between the two peoples as well as on security
and stability in the region. LF

...WHILE AZERBAIJAN, TURKEY CONDEMN IT. The following day,
the Azerbaijan Popular Front condemned the vote as an act
aimed at the entire Turkish world. The front called for
France to be stripped of its co-chairmanship of the OSCE
Minsk Group which is mediating a settlement of the Karabakh
conflict, Turan reported. Turkish Foreign Minister Ismail
Cem condemned the resolution as "an attempt to destroy
Turkish-French friendship," according to the "Turkish Daily
News" of 30 May. LF

UTO THREATENS TO WALK OUT OF TAJIK PEACE PROCESS. United
Tajik Opposition (UTO) leader Said Abdullo Nuri on 30 May
announced that his group may cease participating in the
Tajik peace process, RFE/RL correspondents reported. Nuri's
statement comes one week after the parliament refused to
endorse the candidacies of opposition representatives Khoja
Akbar Turajonzoda for first deputy prime minister and Davlat
Usmon as economics minister and adopted a law banning
religious political parties. Nuri raised the issue with the
visiting head of the IMF, Michel Camdessus, saying the
parliament's actions are the biggest obstacle to peace and
stability in Tajikistan. The previous day, Nuri received
some unexpected help from Russian Foreign Ministry spokesman
Valerii Nesterushkin, who said in Moscow that the ban on
parties presumes those formations' activities will be
unconstitutional, Interfax reported. He also noted that the
prohibition may "complicate" the situation in Tajikistan. BP

KUMTOR HEADS VISIT TO DISASTER SITE. The heads of the Kumtor
gold mining project on 29 May visited residents of the area
in which one of the company's trucks overturned and spilled
nearly two tons of cyanide into the water supply, RFE/RL
correspondents reported. Dastan Sarygulov and Gerhardt
Glattis said the company will pay for all medical costs of
the more than 1,000 people affected by the spill and will
install a water system to villages on the south shore of
Lake Issyk-Kul. The residents have demanded that there be no
further shipments of sodium cyanide along the lake's
southern road. ITAR-TASS reported on 29 May that on the
lake's northern shore, where tourist facilities are located,
more than half the reservations for the summer season have
been canceled following reports of cyanide in Issyk-Kul. BP

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               Copyright (c) 1998 RFE/RL, Inc.
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