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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 118 Part I, 22 June 1998


___________________________________________________________
RFE/RL NEWSLINE Vol. 2, No. 118  Part I, 22 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

* KIRIENKO SAYS 'ANTI-CRISIS PROGRAM' WON'T BE AT
EXPENSE OF POOR

* IMF TEAM TO ARRIVE IN MOSCOW FOR TALKS

* MORE TALKS ON SOUTH OSSETIA, ABKHAZIA

* End Note: CHUBAIS RETURNS TO GOVERNMENT, FOR NOW

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RUSSIA

KIRIENKO SAYS 'ANTI-CRISIS PROGRAM' WON'T BE AT EXPENSE OF
POOR. Prime Minister Sergei Kirienko on 22 June promised that
the government's economic program for overcoming the latest
financial crisis "will not be carried out at the expense of
the least well-off layers of the population," ITAR-TASS
reported. Speaking to journalists after a Kremlin meeting
with President Boris Yeltsin, Kirienko said the "anti-crisis"
program will include unspecified mechanisms to protect the
poorest citizens. In an interview with Russian Television the
previous evening, Kirienko said the program will involve
"quick, tough, and often unpopular measures." Adopting it
will require "colossal political courage," he added, and
implementing it will require "colossal consolidation of all
the forces and resources of the authorities and society." On
22 June, Yeltsin is to chair a discussion of the program at
an expanded session of the government, which will include a
large number of  Federation Council and State Duma deputies.
LB

IMF TEAM TO ARRIVE IN MOSCOW FOR TALKS. An IMF delegation
headed by the fund's First Deputy Managing Director Stanley
Fischer are to arrive in Moscow on 22 June for talks with
Russian officials on the disbursement of a $670 million loan
tranche and a possible new multibillion-dollar loan to help
calm Russian financial markets (see "RFE/RL Newsline," 19
June 1998). Unified Energy System chief executive Anatolii
Chubais, Yeltsin's envoy to international financial
institutions, said Russia will negotiate  a $10 billion to
$15 billion loan under the IMF's Supplemental Reserve
Facility program. But speaking to reporters in Konakovo (Tver
Oblast), Chubais said "my impression is that we will not need
to spend most of these funds," Reuters reported. The same
day, Yeltsin told journalists in Kostroma that Russia needs
"trust," not cash, from foreign leaders and international
financial institutions. LB

DUMA EXPRESSES CONCERN ABOUT FOREIGN BORROWING. The Duma on
19 June passed a statement saying Russia's foreign debt "has
gone beyond reasonable limits, exceeding $135 billion, and
has become a direct threat to the state's economic and
political sovereignty," Russian news agencies reported.
Before the vote, Duma Budget Committee Deputy Chairman
Vladimir Nikitin of the Popular Power faction told deputies
that Russia "has almost exhausted" its limit on foreign
borrowing for 1998 and that "further borrowing will require
legislative approval." But an unnamed Finance Ministry
official told Interfax that the Duma does not have the right
to limit the government's foreign borrowing. The official
said a bailout package from the IMF would not necessarily
increase Russia's foreign debt since the stabilization funds
might never be spent. Russian officials hope the
psychological impact from additional IMF support would calm
the markets. LB

KREMLIN OFFICIAL SAYS YELTSIN'S FUTURE PLANS NOT DECIDED YET.
An unnamed high-ranking official in the presidential
administration on 20 June said Yeltsin has not yet made a
final decision on whether to run for re-election again in
2000, Interfax reported. The source said the president will
determine his future plans only after the Constitutional
Court rules on whether he is legally entitled to seek another
term. The Kremlin official also argued that the media "too
categorically" interpreted Yeltsin's recent comments in which
he ruled out another presidential bid (see "RFE/RL Newsline,"
19 June 1998). Last fall, the Duma asked the Constitutional
Court to rule on whether Yeltsin may run for president again.
The court is expected to consider the case in late 1998. LB

NO WORD FROM YELTSIN ON BUSINESS ADVISORY COUNCIL. An unnamed
source in the presidential admnistration told Russian news
agencies on 20 June that Yeltsin has yet to approve the
formation of a so-called Council of Mutual Economic
Assistance, on which leading businessmen will advise the
government. The source said such a council could be formed in
July at the earliest. On 19 June, ITAR-TASS quoted an unnamed
source who attended the previous day's meeting between Prime
Minister Kirienko and the "oligarchs" as saying that the
government and business leaders have already agreed to form
an advisory council. The next day, Kirienko told journalists
that the government welcomes efforts by financial and
industrial groups to advance "constructive cooperation" with
the cabinet," Russian news agencies reported. Speaking to
Russian Television on 21 June, Kirienko said the government
will not accept all the businessmen's policy proposals. LB

DUMA FORMS COMMISSION TO STUDY GROUNDS FOR IMPEACHMENT. The
Duma on 19 June voted to set up a commission to study
criminal allegations against Yeltsin and draft an impeachment
motion if it deems those allegations valid, RFE/RL's Moscow
bureau reported. Communist deputy Vadim Filimonov is to head
the commission, whose 15 members will include representatives
from all seven Duma factions. Duma First Deputy Speaker
Vladimir Ryzhkov of Our Home Is Russia, who will join the
commission, explained that while his faction opposes efforts
to impeach Yeltsin, it will participate in the commission to
keep apprised of its activities and express dissenting
opinions when necessary. The commission will operate until
the Duma votes on an impeachment motion or until the end of
the Duma's term, in December 1999. Yeltsin's opponents would
likely have trouble gaining the two-thirds majority vote
needed to adopt an impeachment motion. LB

WHO IS BEHIND IMPEACHMENT EFFORTS? Although Communist leaders
have been outspoken supporters of ousting Yeltsin, the 15
June edition of the weekly magazine "Profil" argued that
"oligarchs" testing their strength against the president are
behind the Duma's latest impeachment efforts. The weekly
quoted Duma Deputy Speaker Mikhail Gutseriev of the Liberal
Democratic Party of Russia as saying that bankers are using
their money and influence to promote the creation of an
impeachment commission in the hope of encouraging Yeltsin to
confirm that he will not seek a third term. Duma deputy
Vladimir Semago, a maverick member of the Communist faction,
told "Profil" that the formation of a commission on
impeachment would signify "the active interference of bankers
in political affairs, not the strengthening of the left wing
of the Duma." Bank Imperial, reportedly close to the gas
monopoly Gazprom, is a shareholder in "Profil." LB

ZYUGANOV CALLS FOR OUSTING YELTSIN, PRESERVING PARTY UNITY.
Communist Party leader Gennadii Zyuganov on 20 June said his
party will seek to use "all legal means" to remove Yeltsin,
Russian news agencies reported. Addressing a plenum of the
Communist Party's Central Committee in Moscow, Zyuganov
hailed the creation of a Duma impeachment commission and said
Communists will prepare for a nationwide political protest.
(Critics of Zyuganov's party, in particular members of
Grigorii Yavlinskii's Yabloko movement, have accused the
Communists of using the impeachment procedure to quell
discord within their own ranks and  help erase memories of
the Communist votes that helped confirm Kirienko as prime
minister in April.) Zyuganov also announced that the
presidium of the Central Committee has said that attempts to
create a "Leninist-Stalinist platform" within the party are
"politically erroneous" and has dissolved that platform,
founded recently by more radical party members (see "RFE/RL
Newsline," 25 May 1998). LB

RUSSIA-INDIA SIGN NUCLEAR REACTOR PROTOCOL. Russian Minister
for Atomic Energy Yevgenii Adamov and Indian Nuclear Energy
Commission Chairman R. Chidambaram signed a protocol on 21
June whereby Russia will provide two light water reactors to
India, ITAR-TASS reported. The original agreement had been
signed in 1988 between the Soviet Union and India, but
differences over the means of payment delayed implementation
of the deal. The protocol was due to be signed on 22 June,
but Adamov said the two sides reached agreement quickly so "I
signed the additional protocol [on 21 June] with a light
heart." The agreement to provide two 1,000 megawatt reactors
to the Kudankulam project in Tamil Nadu is worth $2.6
billion. Adamov also met with Indian Prime Minister Atal
Behari Vajpayee in Simla and  "confirmed the solidity of our
roots of friendship and partnership." BP

FOREIGN MINISTRY LAUDS U.S. OVERTURES TOWARD IRAN. The
Russian Foreign Ministry on 19 June issued a statement
welcoming Washington's recently announced intention to
normalize relations with Iran, Russian news agencies
reported.  The statement expressed the hope that recent
statements by U.S. President Bill Clinton and Secretary of
State Madeleine Albright  will be followed by "practical
steps," namely that the U.S. will "abandon attempts to apply
their legislation abroad...to impede Iran's trade and
economic cooperation with other countries and to expose them
to sanctions."  On 17 June, Albright offered Iran new
confidence-building measures, while the next day, Clinton
called for "genuine reconciliation" with Iran, Reuters
reported.  The U.S. has voiced objections to Russian-Iranian
cooperation in the energy sector, particularly to Russia's
recent sale of technology for the Bushehr nuclear reactor
(see "RFE/RL Newsline," 12 and 26 May 1998). BT

DUMA DEPUTIES SEND MIXED SIGNALS ON START-2 RATIFICATION. The
Duma will ratify the START-2 treaty, Chairman of the Duma
Defense Committee Roman Popkovich (Our Home is Russia)
predicted in an interview with the weekly "Interfax-Argumenty
i Fakty," published on 22 June.  However, Popkovich told a
news conference on 19 June that "the agreement as it exists
now is hard to ratify." Among preconditions he views as
necessary for ratification are a government report on
compliance with START-2, a protocol attached to START-2
outlining future START-3 negotiations, and a provision
stating that Russia would automatically opt out of START-2 if
the U.S. violated the 1972 Anti-Ballistic Missile Treaty.
Meanwhile, Duma deputy Andrei Nikolaev, the former director
of the Federal Border Service, has expressed his support for
START-2 and predicted that the treaty will be ratified in
September or October, ITAR-TASS reported on 19 June.  Earlier
this month, the Duma postponed START-2 hearings until the
fall session (see "RFE/RL Newsline," 10 June 1998). BT

CHECHEN SECURITY CHIEF KILLED IN SHOOT-OUT.  Lechi Khultygov,
the head of the Chechen Security Service and Vakha Dzhafarov,
chief of staff to field commander Salman Raduev, were killed
during  a shoot-out in Grozny on 21 June, ITAR-TASS reported.
The day before, Interfax reported that the kidnappers of
Valentin Vlasov, Yeltsin's envoy to Chechnya, had demanded a
$2 million ransom for his return; but Chechen Interior
Minister Kazbek Makhashev denied that report, according to
ITAR-TASS.  PG

YELTSIN WARNS OF FAR-RIGHT EXTREMISM. Yeltsin on 22 June
warned that the threat of far-right extremism in Russia "is a
real danger, even if not everybody feels it," Interfax
reported. In a nationwide radio address to mark the 57th
anniversary of the Nazi invasion of the USSR, Yeltsin warned
that "Nazism is surging in Russia and poisoning the youth.
Teenagers, fascinated by military symbolism, are modeling
black uniforms." He criticized those who are "crazed with
ideas of national supremacy and anti-Semitism" and asked
whether Russians will "allow the worst ideology humanity has
known to take root in this soil." The weekly "Novaya gazeta"
predicted in its 11-17 May edition the fascist threat will be
used during the 2000 presidential election in the same way as
the threat of a Communist return to power was used in 1996 to
encourage voters to support Yeltsin's re-election. LB

BURYATIAN PRESIDENT WINS RE-ELECTION EASILY. Leonid Potapov
beat out  nine challengers to win a second term as president
of the Republic of Buryatia with some 63 percent of the vote,
ITAR-TASS reported, citing preliminary returns from the 21
June election. Vladimir Saganov, the chairman of the Budget
Committee of the Buryatian legislature, finished a distant
second with 6.5 percent. Potapov received a boost when
Aleksandr Korenev, the president of Buryatia's Union of
Industrialists and Entrepreneurs, who was considered a strong
presidential candidate, dropped out of the race on 18 June
and endorsed the incumbent. Although Potapov supported
Yeltsin's re-election in 1996, he has not always backed the
federal government's economic policies. Earlier this year, he
criticized efforts to legalize the purchase and sale of
farmland and scheduled a referendum on land reform in
Buryatia for 21 June. He later postponed that vote until 5
July, Interfax reported. LB

COMMISSION CONFIRMS ALTAI BY-ELECTION RESULT. The Central
Electoral Commission on 19 June confirmed that Agrarian Party
leader Mikhail Lapshin won a 31 May by-election in Altai
Republic for a seat in the State Duma, Russian news agencies
reported. At the request of former First Deputy Finance
Minister Andrei Vavilov, who lost the race by a slim margin
(see "RFE/RL Newsline," 1 June 1998), the commission sent a
team to Altai to investigate allegations of foul play during
the election. They found isolated violations of electoral
rules but determined they were not widespread enough to have
influenced the outcome. Vavilov's campaign had far greater
financial backing than Lapshin's, and the former Finance
Ministry official also had the support of the republic's
leader, Semen Zubakin. LB

TRANSCAUCASUS AND CENTRAL ASIA

MORE TALKS ON SOUTH OSSETIA, ABKHAZIA.  Georgian President
Eduard Shevardnadze and South Ossetian leader Lyudvig
Chibirov have agreed to continue discussions on the status of
that breakaway region following talks in Borzhomi on 20 June,
Interfax reported.  The same day, Russian First Deputy
Foreign Minister Boris Pastukhov and CIS Executive Secretary
Boris Berezovskii met with Shevardnadze in Tbilisi to discuss
the situation in Abkhazia, ITAR-TASS reported. The Russian
representatives claimed that there was progress in the talks,
but the Russian Defense Ministry on 19 June had ordered
Russian peacekeepers in that region to respond with force if
they are threatened, the Russian news agency said.  In a
statement, the ministry blamed both sides for "not taking the
necessary measures to ensure the normal functioning" of their
troops. PG

BEREZOVSKII MAY VISIT KARABAKH...  Following a meeting with
Armenian President Robert Kocharian on 20 June in Yerevan,
Berezovskii said that he has reached a tentative agreement to
visit Karabakh sometime later this summer, RFE/RL's Armenian
Service reported. The two men also discussed increasing
economic ties within the CIS. Berezovskii told ITAR-TASS that
he believes the "oil factor" will have little impact on the
settlement of the Karabakh conflict. PG

...EXPRESSES OPTIMISM ON RESOLVING CONFLICT.  The following
day, the CIS executive secretary met with Azerbaijani
President Heidar Aliev in Baku and expressed optimism that
progress can be made toward resolving the Karabakh conflict,
ITAR-TASS said.  Berezovskii said that CIS leaders should say
"no" to separatism throughout the region, and he urged
Armenia to take a clear position on the future status of
Karabakh. Saying that he welcomes these ideas, Aliev
expressed the hope that the OSCE Minsk Group process could
continue. The previous day, the Azerbaijani Foreign Ministry
released a  statement criticizing an alleged remark last week
by Armenian Foreign Minister Vartan Oskanyan that Yerevan
plans to annex Karabakh. The Armenian authorities have denied
that Oskanyan made such a comment.  PG

ARMENIAN PRESIDENT SETS UP CONSULTATIVE GROUP.  President
Robert Kocharian on 19 June issued a decree establishing a
special consultative council that will include
representatives from the country's major parties regardless
of whether they are represented in the parliament, RFE/RL's
Armenian Service reported.  The council's decisions will not
be legally binding. As yet, there is no system for selecting
its members.  PG

ARMENIA GRATEFUL FOR RUSSIAN HELP AT NUCLEAR STATION.
Acknowledging that Armenia lacks the ability to operate the
nuclear power station at Metzamor without assistance, the
plant's director, Suren Azatyan, on 20 June told a group of
visiting nuclear expects from Russia that his country
appreciates their continuing assistance, ITAR-TASS reported.
Azatyan said there have been no accidents at the plant since
it was reopened three years ago. H added that there will be
routine repair and reloading operations this fall.  PG

ARMENIA SEEKS TO JOIN EUROPE.  President Kocharian on 19 June
told a visiting delegation from the Council of Europe that
"integration into European structures" is a top priority for
his government, RFE/RL's Armenian Service reported.  "Armenia
must become the most democratic nation in the Transcaucasus
since democracy predetermines the future of the country," he
commented. Meanwhile, some 2,500 Armenians demonstrated in
Yerevan against the sale of the country's brandy distillery
to Pernod-Ricard of France, Interfax reported. But Kocharian
said that the country cannot afford to block the sale lest it
"find itself left out of global economic processes." PG

NEW UN ENVOY ARRIVES IN TAJIKISTAN. The new UN special envoy
to Tajikistan, Jan Kubis, presented his credentials to Tajik
President Imomali Rakhmonov in Dushanbe on 19 June, ITAR-TASS
and Reuters reported. Kubis said the compromise reached by a
special commission and Rakhmonov after the Tajik parliament
adopted a law banning religious parties last month is a
"positive step" in maintaining the peace process in
Tajikistan. Kubis met with United Tajik Opposition leader
Said Abdullo Nuri the following day to discuss the law
banning religious parties as well as "military aspects" of
the Tajik peace agreement. Kubis assessed the peace process
as slowly moving forward but added that "sometimes it comes
to a standstill and becomes problematic." BP

SIX BORDER GUARDS KILLED IN TAJIKISTAN. Six border guards,
five Tajiks, and one Russian were killed on 20 June while
attempting to prevent drug traffickers from crossing into
Tajikistan from Afghanistan, ITAR-TASS reported. Three people
were also wounded in the incident The drug traffickers
escaped, and border guards have launched a search for them.
According to ITAR-TASS on 20 June, more than 140 kilograms of
narcotics have been seized by  border guards in the "last few
days." BP


CHUBAIS RETURNS TO GOVERNMENT, FOR NOW

by Stephanie Baker

	Amid a deepening financial crisis, President Boris
Yeltsin has appointed former economic policy chief Anatolii
Chubais as his special envoy in charge of Russia's relations
with international lending organizations.
	Chubais, who was sacked as first deputy prime minister
in March, returns to the government as Russia's financial
markets have been plunged into turmoil.
	A Kremlin spokesman said Chubais will assume the role of
a deputy prime minister responsible for negotiations with
multilateral financial institutions, such as the IMF. Yeltsin
on 19 June said, however, that Chubais will remain in
government only temporarily to help Russia win "certain
support and investments." He said Chubais will remain chief
executive of national electricity company Unified Energy
Systems (EES).
	Two days earlier, Prime Minister Sergei Kirienko had
announced that the government is hoping to tap additional
funds from the IMF to help prop up the Central Bank's
reserves, which have dwindled since Asia's financial woes hit
Russia last October. He emphasized that "It will not be a new
wasteful credit for consumption." And while he declined to
comment on the size of the loan under discussion, other
Russian officials have said it could be for as much as $10
billion. An IMF team is due in Moscow next week to discuss
the new financial aid package.
	Russia is battling one of its most serious financial
crises in years, which has sharply increased the government's
cost of borrowing to cover budget holes. The economic turmoil
has been compounded by poor tax collection and slumping world
prices for oil, one of Russia's leading exports.
	Reports of Chubais returning to the government came
after Kirienko met  with Russia's leading bankers and
financial tycoons early last week to discuss ways to
stabilize the country's jittery markets. According to Russian
news reports, the financiers were pushing for Chubais to
coordinate the government's anti-crisis measures.
	The government is preparing to announce an anti-crisis
plan this to restore the confidence of investors, Further
budget cuts could be in the making. And the government
already is planning to slash spending by 3 percent of GDP.
	Kirienko acknowledged that the program will be
"unpopular." But he said: "The world financial crisis has
fallen on fertile ground, namely the crisis of confidence in
a system that lives beyond its means."
	Media reports that Chubais would be brought back into
the government sparked a rally on the country's stock market,
which rose 8 percent on 17 June. The Finance Ministry also
abruptly canceled its weekly treasury bill auction. The move
fueled speculation that the government had found other
sources of funds to redeem more than $1 billion dollars in
maturing T-bills. And on 19 June, the government launched a
major Eurobond for a reported $2 billion, but the exact
amount has not been disclosed.
	With Chubais back in government, markets are betting
that Russia will succeed in getting additional IMF support,
which investors believe is needed to halt speculation on the
ruble. Chubais has long played a key role in the government's
relations with the IMF and World Bank. His latest appointment
confirmed that this will continue.
	Last month, Chubais was in Washington for "informal"
talks with senior officials from the IMF and U.S.
administration, as financial markets continued to plunge. As
he put it: "I happened to have close friendly relations with
top officials of financial bodies, such as the IMF and the
World Bank."
	Analysts agree that Chubais has the political clout and
track record to do a deal with the IMF. In the words of Chris
Speckhard, an economist at the Russian brokerage Alfa Kapital
in Moscow: "He's someone they know and trust. His ties with
the final oligarchs also have a big influence on the
decision."
	But there is also a possibility that putting Chubais in
charge of international financial institutions could divert
his attention from EES, which is at the center of a circle of
non-payments choking the economy.
	As John Paul-Smith, a Russian strategist at Morgan
Stanley in London, put it: "The more time Chubais spends on
this, the worse it is for EES. Sorting out EES is one of the
biggest structural problems facing the government."

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

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