If there is anyone listening to whom I owe money, I'm prepared to forget it if you are. - Errol Flynn
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 117 Part I, 19 June 1998


___________________________________________________________
RFE/RL NEWSLINE Vol. 2, No. 117 Part I, 19 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

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Headlines, Part I

* 'OLIGARCHS' SET TO FORMALIZE TIES TO GOVERNMENT

* CHUBAIS SAYS RUSSIA NEEDS $10-15 BILLION

* AZERBAIJAN REJECTS ARMENIAN STATEMENT ON KARABAKH

End Note: IMMINENT RIFT WITHIN PRO-PRESIDENTIAL CAMP IN
ARMENIA?
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RUSSIA

'OLIGARCHS' SET TO FORMALIZE TIES TO GOVERNMENT. Prime
Minister Sergei Kirienko and Russia's most influential
businessmen are to ask President Boris Yeltsin to appoint a
special council composed of business leaders to advise the
government on economic policy. According to the government's
information department, Kirienko and some 10 businessmen
agreed on the proposal during talks on the evening of 18
June, Russian news agencies reported. It was the prime
minister's second meeting with "oligarchs" in three days.
Not all the participants were named, but ITAR-TASS said CIS
Executive Secretary Boris Berezovskii was present, along
with most of the business elites who met with Yeltsin
earlier this month (see "RFE/RL Newsline," 2 and 3 June
1998). In late 1997 and early 1998, government officials
repeatedly promised to provide a level playing field for all
businesses and not to favor "oligarchs" with high-level
political connections. LB

CHUBAIS SAYS RUSSIA NEEDS $10-15 BILLION... In his first
press conference as Yeltsin's envoy to international
financial organizations, Unified Energy System chief
executive Anatolii Chubais on 18 June said Russia needs $10
billion to $15 billion to help overcome the crisis on its
financial markets, RFE/RL's Moscow bureau reported. A
Central Bank spokesman told ITAR-TASS on 18 June that
Russia's gold and hard-currency reserves totaled $15.7
billion as of 12 June. Many market analysts doubt that
Russia could fend off another run on the ruble without a
bailout from foreign governments or financial institutions.
Meanwhile, the main index of the Russian stock market closed
down 2.6 percent on 18 June, despite gains in early trading
that day. LB

...BUT WON'T NECESSARILY MEET ALL IMF DEMANDS. An IMF
mission headed by the fund's First Deputy Managing Director
Stanley Fischer is scheduled to arrive in Moscow on 22 June
for talks with Chubais and Russian government officials.
Chubais confirmed on 18 June that the talks will concern a
possible new loan from the IMF, RFE/RL's Moscow bureau
reported. But while noting that IMF credits are the cheapest
available, Chubais said that there are some conditions
Russia "will not accept from anyone, not from any financial
organizations." By way of example, he rejected the idea that
Russia can extract additional budget revenues from the oil
industry, given the slump in oil prices on world markets. He
also argued against breaking up "natural monopolies" in the
energy sector. Some Western media reported earlier this
month that the IMF has asked the Russian government to break
up the gas monopoly Gazprom. LB

IMF DELAYS DISBURSEMENT OF LOAN TRANCHE. The IMF on 18 June
postponed for several days a meeting of its board of
directors, which was scheduled to approve the latest $670
million tranche of a four-year loan to Russia. According to
Reuters, an IMF spokesman said the delay was caused by
Russia's failure to fulfill unspecified conditions for the
disbursement. Finance Minister Mikhail Zadornov told the
news agency the next day that Russia and the IMF have two
technical issues and one substantive issue to settle
concerning the disbursement. He did not specify the nature
of those differences but expressed confidence that they will
be resolved. Speaking to NTV the previous evening, Chubais
also said talks with the IMF delegation in Moscow next week
will clear obstacles to disbursing the loan tranche. LB

RUSSIA FLOATS ANOTHER EUROBOND. Russia on 18 June issued a
30-year, $2.5 billion Eurobond, which is redeemable at face
value in 10 years. According to Bloomberg Business News, the
Eurobond was priced to yield 753 basis points (7.53 percent)
above 10-year U.S. treasury bonds. (Finance Minister
Zadornov told Reuters on 19 June that news of the postponed
IMF board meeting drove down the price.) The sale came a day
after the Finance Ministry canceled two auctions for
treasury bills. The government prefers borrowing abroad to
paying sky-high interest rates on the domestic bond market.
However, this strategy entails risks, since a sharp
devaluation of the ruble could make it difficult to pay back
Eurobond-holders. Russia has issued seven Eurobonds, four of
them during the last four months. Russia recently floated a
five-year, $1.25 billion Eurobond. LB

YELTSIN AGAIN RENOUNCES THIRD TERM AMBITIONS. Speaking in
Kostroma on 19 June, Yeltsin announced that he will not run
for a third term as president, Reuters reported. He noted
that "it's not in the constitution. The constitution says
two terms." Yeltsin's remarks came one day after CIS
Executive Secretary Berezovskii told Ekho Moskvy radio that
it would be "the right decision" for Yeltsin to say he will
not run for re-election again. Yeltsin has said several
times that he does not plan to seek a third term, but his
advisers have occasionally left the door open on the
possibility. Berezovskii was one of the key financial
backers of Yeltsin's 1996 re-election campaign. He told Ekho
Moskvy that Russia's business elite may unite around another
candidate in the next presidential race, because, regardless
of their differences, financial and industrial groups share
"strategic goals" such as political stability. LB

YELTSIN, BEREZOVSKII DISCUSS CIS... CIS executive secretary
Berezovskii met with President Yeltsin, who is also chairman
of the CIS heads of state council, Russian on 18 June to
discuss trends within the commonwealth and his recent
meetings with CIS heads of state. Berezovskii told Yeltsin
that CIS presidents are aware there is "no threat" to their
sovereignty and that the West "never intended to act as...a
benefactor." He added that they are therefore reassessing
their economic ties with the U.S. in that light, Interfax
reported, quoting Russian presidential spokesman Sergei
Yastrzhembskii. Berezovskii said there is increased interest
in reforming CIS structures to promote economic and
financial integration. Also on 18 June, Berezovskii told
Ekho Moskvy that CIS heads of state are aware of the
emergence of "new unions" and consider integration within
the CIS to be essential not only for economic but also for
strategic reasons. LF

...AND ABKHAZIA. Berezovskii also told Ekho Moskvy that
Yeltsin positively assessed the coordination of efforts
between Berezovskii and the Russian Foreign Ministry to
resolve the Abkhaz conflict He did not say, however, whether
he and Yeltsin had discussed Georgian President Eduard
Shevardnadze's 15 June letter to Yeltsin proposing that an
emergency CIS summit be convened to discuss Abkhazia,
according to "Nezavisimaya gazeta" on 19 June. Berezovskii
and First Deputy Foreign Minister Boris Pastukhov are to
hold talks in Sukhumi on 19 June with Abkhaz President
Vladislav Ardzinba and Georgian special envoy Vazha
Lortkipanidze. On 18 June, six members of the Russian
peacekeeping force in Abkhazia were seriously injured when
their armored personnel carrier hit a land mine in Gali
Raion, Interfax reported. Abkhaz parliament in exile
chairman Tamaz Nadareishvili blamed the Abkhaz Interior
Ministry for the incident, which, it said, was aimed at
sabotaging Russian-Georgian relations, Caucasus Press
reported. LF

RUSSIA SLAMS TURKEY OVER MISSILES SEARCH. Speaking at a
press briefing on 18 June, Russian Foreign Ministry
spokesman Vladimir Rakhmanin condemned the Turkish
authorities' detention of a Maltese cargo ship in the
Turkish straits on 14 June as a violation of the 1936 Treaty
of Montreux, Interfax reported. That treaty allows all
vessels free transit through the straits in peace time. The
Turkish authorities intercepted and searched the ship,
believing that its cargo included S-300 missiles that Russia
intends to supply to Greek Cyprus later this summer (see
"RFE/RL Newsline," 16 June 1998.) Turkey has invoked the
Treaty of Montreux to substantiate its argument that an
increase in the volume of oil shipped through the straits
would constitute a serious ecological threat. LF

DUMA STUDYING LEGALITY OF CHUBAIS'S APPOINTMENT. State Duma
Speaker Gennadii Seleznev says legal experts in the Duma are
questioning the legality of Yeltsin's decree appointing
Unified Energy System chief executive Chubais as his envoy
to international financial organizations, Russian news
agencies reported on 18 June. He said some lawyers believe
that the provision granting Chubais the rank of a deputy
prime minister contradicts the constitutional law on the
government. If necessary, Seleznev said, the Duma will
appeal the matter to the Constitutional Court. Yeltsin also
gave Ivan Rybkin the rank of a deputy prime minister when he
appointed him as presidential envoy to the CIS last month.
But while Rybkin, a former Communist ally, is viewed by
left-leaning Duma deputies as a traitor for joining the
Yeltsin camp, Chubais is far more hated in the lower house
of the parliament. LB

GOVERNMENT REJECTS INCREASE IN MINIMUM WAGE. The cabinet on
18 June decided not to send the State Duma a draft law on
increasing the minimum monthly wage from 83.49 rubles to 110
rubles ($13.5 to $18) as of 1 April 1999, ITAR-TASS
reported. Labor Minister Oksana Dmitrieva presented the
draft law, which also called for indexing the minimum wage
annually. However, Deputy Prime Minister Boris Nemtsov and
Finance Minister Mikhail Zadornov called for rejecting the
plan, which would have cost the federal budget 18.6 billion
rubles and budgets at all levels a combined 68.3 billion
rubles. They argued that the state is already unable to
ensure timely payment of wages to its employees and said
increasing the minimum wage now would exacerbate the
problem. Many salaries and social payments are set in terms
of multiples of the minimum wage. LB

SCIENTISTS CALL FOR YELTSIN'S RESIGNATION. Some 500
scientists from the Russian Academy of Sciences demonstrated
in front of government headquarters in Moscow on 18 June to
protest lack of state funding for scientific institutions,
Russian media reported. Demonstrators carried banners
calling for Yeltsin to resign and fraternized with coal
miners who have been picketing the White House since 11
June, "Nezavisimaya gazeta" reported on 19 June. Vladimir
Strakhov, director of the Institute of Earth Physics, warned
that if financing for science does not improve, scientific
research "will simply perish within two or three years,"
ITAR-TASS reported. Strakhov has staged two hunger strikes
to protest lack of funding for science (see "OMRI Daily
Digest," 14 October 1996 and 7 January 1997). The 1998
budget reduced funding for scientific research by 26.5
percent, and the Academy of Sciences has received only 70
percent of allocated money for the second quarter. BT

CONFERENCE CALLS ATTENTION TO PLIGHT OF AFGHAN REFUGEES. The
overwhelming majority of refugees from Afghanistan living in
Russia are denied basic rights, according to human rights
activists, scientists, and government officials who spoke at
a 17 June conference at the UN's Russian Federation
headquarters in Moscow. Of the estimated 150,000 Afghan
refugees in Russia, only 300 former high officials have been
granted refugee status, "Nezavisimaya gazeta" reported on 18
June. Among those living in Russia illegally, thousands have
become homeless. The federal law on refugees, which provides
for humanitarian aid such as temporary shelters, is
frequently not implemented because the Federal Migration
Service and the Interior Ministry have not granted refugee
status to most refugees. Russian authorities have argued
that they lack funds to carry out the legalization of
refugees. The Interior Ministry and the Foreign Ministry did
not send representatives to the conference. BT

SUSPECTS IN JOURNALIST'S MURDER MOVED OUT OF KALMYKIA. The
three suspects in the recent murder of "Sovetskaya Kalmykia
Segodnya" editor Larisa Yudina have been transferred from
pre-trial detention in the Republic of Kalmykia to a
facility in Stavropol Krai, ITAR-TASS reported on 19 June,
citing Sergei Prokopov, a spokesman for the Prosecutor-
General's Office's department in the North Caucasus. The
previous day, Vladimir Shanukov became the third man charged
with premeditated murder in connection with Yudina's death.
Prokopov said the authorities moved the three suspects to
Stavropol in order to prevent pressure on the investigators
and leaks. LB

RUTSKOI'S ASSOCIATES FACE CRIMINAL CHARGES. Kursk Oblast
Deputy Governors Yurii Kononchuk and Vladimir Bunchuk have
been formally charged with abuse of office, ITAR-TASS
reported on 19 June. Prosecutors say the two embezzled some
11 million rubles ($1.8 million). Kursk Governor Aleksandr
Rutskoi has vowed to fight the criminal charges against his
associates, saying the case is politically motivated.
Rutskoi has long been at odds with the top prosecutor in
Kursk, Nikolai Tkachev. Kononchuk and Bunchuk were arrested
while Rutskoi was visiting the Republic of Bashkortostan
(see "RFE/RL Newsline," 17 June 1998). LB

Correction: The Bratskoe water reservoir into which a
chemical enterprise has dumped massive quantities of mercury
waste is located in Irkutsk Oblast, not Krasnoyarsk Krai, as
was reported by "RFE/RL Newsline" on 18 June.

TRANSCAUCASUS AND CENTRAL ASIA

AZERBAIJAN REJECTS ARMENIAN STATEMENT ON KARABAKH. In an
interview with Turan on18 June, Azerbaijani presidential
adviser Vafa Gulu-zade said that Armenian Foreign Minister
Vartan Oskanian statement's that the Karabakh peace process
is deadlocked as a result of Azerbaijan's intransigence is
"groundless." Gulu-zade also rejected Oskanian's argument
that Armenia cannot allow the deadlock to continue for a
period of years as to do so would permit Azerbaijan to build
up its military strength. In such a case, according to
Oskanian, Armenia would be have to provide more concrete
security guarantees to the Armenian population of the
unrecognized Nagorno-Karabakh Republic and would consider
all other options, including the possible reunification of
Armenia and the republic. Azerbaijani Deputy Parliamentary
Chairman Yashar Aliev told Interfax on 18 June that
Oskanian's statement testifies to Armenia's "aggressive
stance and...claims on Azerbaijani land." LF

AZERBAIJANI OPPOSITION PROTESTS CRACKDOWN. An independent
journalists' trade union, a group for the protection of
women's rights, and the Democratic Congress (which is
composed of a dozen leading opposition parties) have all
issued statements condemning the detention of Amaliya
Seidova, editor of the opposition newspaper "Chag," Turan
reported. Security forces arrested Seidova after the
newspaper's premises were searched on 16 June. LF

SECOND PRESIDENTIAL CANDIDATE NAMED IN AZERBAIJAN. The Party
of National Independence of Azerbaijan on 14 June voted to
nominate its chairman, Etibar Mamedov, as a candidate for
the October presidential elections, Turan reported. Mamedov,
whose political orientation is ambivalent, told Turan he
does not believe that opposition leaders' unanimous stance
on boycotting the vote will last, given the substantive
disagreements between them. Meanwhile, the Consultative
Assembly, which unites 11 pro-government parties, issued a
statement on 18 June saying that the controversial law on
the presidential elections corresponds to international
standards. The opposition has condemned that law as
undemocratic (see "RFE/RL Caucasus Report," Vol. 1, No. 16,
16 June 1998.) LF

ARMENIAN PRESIDENT URGES COMPROMISE OVER ELECTION LAW.
Meeting on 17 June with representatives of the Justice and
Unity bloc, which was formed in March to back his
presidential candidacy, Robert Kocharian called for a
compromise solution to the deadlock within the parliament
over the new election law, Noyan Tapan and RFE/RL's Yerevan
bureau reported. Kocharian argued that Armenia is not yet
ready for a parliament elected exclusively under a majority
system. The presidential press service quoted him as
suggesting that half the seats within the new parliament
should be allocated to single-member constituencies and the
other half on the basis of party lists. Kocharian also
proposed "rating voting" in the party lists, whereby voters
would be able to endorse candidates included on those lists
(see also "End Note"). LF

TAJIK LAW ON POLITICAL PARTIES AMENDED. President Imomali
Rakhmonov on 18 June endorsed amendments to the
controversial law passed last month banning religious-based
political parties. The amendments were drafted by a
trilateral commission composed of representatives from the
government, parliament and the opposition. Oppositionists
objected to the original wording of the law, which, they
feared, would be used to ban the influential opposition
Islamic Revival Party. Under the compromise wording,
political parties are now forbidden to use either religious
organizations or their premises for political ends. LF

TAJIK PRESIDENT DENIES RUSSIAN OFFICERS BACK OPPOSITION. In
an interview with "Krasnaya zvezda" published on 18 June,
Rakhmonov said he is aware of rumors that some Russian army
officers serving in Tajikistan support the opposition. But
Rakhmonov insisted that those rumors are without foundation.
LF

KAZAKHSTAN, CHINA TO INCREASE MILITARY COOPERATION. Wrapping
up his first visit to China on 17 June, the chief of staff
of Kazakhstan's armed forces, Bykhtyzhan Yertayev, told
ITAR-TASS that he reached agreement with his Chinese
counterpart, Fu Quanyou, on sharing experience in the fields
of military construction and reform of the armed forces.
Yertayev also met with Chinese Defense Minister Chi Haitian
and toured Chinese army units in Shanghai, Nanjing, and
Urumqi. LF

CANADIAN OFFICIAL QUESTIONED OVER KYRGYZ CYANIDE SPILL. The
Kyrgyz Security Ministry has begun questioning the former
president of the Canadian-Kyrgyz gold-mining joint venture,
one of whose lorries discharged 20 tons of sodium cyanide
into the Barskoon River last month, Interfax reported. Legal
proceedings have been launched in connection with the spill.
Meanwhile, the Movement for Ecological Safety, founded
earlier this week (see "RFE/RL Newsline," 18 June 1998), met
for the first time in Bishkek on 18 June to discuss the
aftermath of the spill, RFE/RL's Bishkek bureau reported.
Chairman Topchubek Turgunaliev said the movement will
conduct an independent investigation into the accident. It
will also campaign for the cancellation of the contract
between the Kyrgyz government and the Canadian company
CAMECO and launch legal proceedings against all those
responsible for the accident. LF

FORMER KYRGYZ PREMIER APPOINTED AMBASSADOR TO GERMANY.
President Askar Akaev on 17 June appointed former Prime
Minister Apas Djumagulov as ambassador to Germany, RFE/RL's
Bishkek bureau reported. Djumagulov replaces Omar Sultanov,
who was named head of the presidential administration in
late March. The former premier, 64, was appointed director
of the state oil and gas company following his resignation
in March 1998, which, he said, was aimed at making way for a
younger and more energetic head of government. LF

END NOTE

IMMINENT RIFT WITHIN PRO-PRESIDENTIAL CAMP IN ARMENIA?

by Emil Danielyan

	Disagreements over the country's new political system
are emerging within the broad coalition that supports
Armenian President Robert Kocharian. The euphoria over the
election last spring of the president, shared by most
opposition parties and the state apparatus, is starting to
wane in the face of intensifying conflicts of interest.
	The issue provoking controversy is how the next
Armenian parliament should be elected. The answer to that
question--which at first glance seems insignificant--will
determine how the new political landscape in Armenia differs
from the previous one. Four former opposition parties within
the pro-Kocharian Justice and Unity bloc want the majority
of parliamentary seats to be allocated according to the
system of proportional representation. They argue that
elections based on that system are more difficult to falsify
and will promote the development of political parties, a
prerequisite for democracy. 	But the bloc's other
member, the Yerkrapah union of Karabakh war veterans, headed
by Defense Minister Vazgen Sargsian, favors allocating the
overwhelming majority of the 131 seats in the next
parliament in single-mandate constituencies. The Yerkrapah
argues that most of the country's intellectuals are not
aligned with any specific political party and will therefore
will not play a role if party lists take precedence.
	In reality, this seemingly conceptual debate is all
about how to win elections. The Yerkrapah's position is
indicative of the interests of a wider class that can
tentatively be called the "people of power." Such people
have no developed political ideology but have clearly
defined economic interests that hinge on close ties with
government bodies and, especially, on control over local
authorities. The single-mandate system frees them of the
need to formulate political programs by shifting the
emphasis to the personalities of the candidates. It also
creates fertile ground for vote manipulation through ties to
local quasi-mafiosi clans, leverage over the authorities,
and substantial financial resources. Such tactics enabled
the Pan-Armenian Nat reported ruling party, to ensure the
victory of Levon Ter-Petrossian in the disputed 1996
presidential elections.
	Opposition politicians contend that the relationship
between Kocharian government's and the "power class" (top
bureaucrats, local bosses, businessmen, and so forth) has so
far been based on an arrangement whereby the latter gives
full political backing to the former in exchange for non-
interference in its sometimes dubious economic activities.
The power class has remained largely unaffected by the
change of leadership in Armenia last winter after many of
its members transferred their allegiance from the HHSh to
the Yerkrapah. (Some HHSh members have, however, been
stripped of their jobs, others are under investigation for
financial abuses.) Its position, however, could be
jeopardized if it loses control over the parliament.
	The single-mandate system would leave the other
Justice and Unity parties with few chances of winning
considerable representation in the parliament. After many
years of political isolation, they want to gain a broader
share in the government system than is currently provided by
the handful of minor positions distributed to the former
opposition groups. Free and fair parliamentary elections
(which it believes are possible only under a proportional
representation system) is the only way to achieve that goal.
	Meeting with representatives of the Justice and Unity
group on 17 June, Kocharian urged them to try to reach a
compromise. He proposed that half the seats in the new
parliament be allocated under the single mandate system and
the remaining half on the basis of party lists. He also said
that he backs the idea of "rating voting" to be applied to
party lists. According to it, as well as voting for
political parties, Armenian voters would also make their
choice among concrete individuals included on electoral
slates.
	It remains unclear whether the Yerkrapah will accept
this compromise, or whether they will forge ahead with their
intention to draft a new law from scratch. If they opt for
the latter course, a showdown between the two camps will
probably occur in the fall, when the new Yerkrapah draft law
will be submitted for discussion. Some parties have already
said they may boycott the summer 1999 parliamentary
elections. Such a move would run the risk of renewed
political polarization and signal the end of the new
regime's declared "national unity."

The author is a Yerevan-based RFE/RL correspondent.

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