No passion so effectually robs the mind of all its powers of acting and reasoning as fear. - Edmund Burke
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 121 Part I, 25 June 1998


___________________________________________________________
RFE/RL NEWSLINE Vol. 2, No. 121 Part I, 25 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

* DUMA SCHEDULES DEBATE ON 'ANTI-CRISIS' LAWS

* ECONOMIST SAYS DEVALUATION INEVITABLE AND DESIRABLE

* FINAL TRIAL AGAINST "WAHHABIS" OPENS IN UZBEKISTAN

End Note: AUSTERITY BATTLE MAY TRIGGER CONFRONTATION WITH
DUMA
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RUSSIA

DUMA SCHEDULES DEBATE ON 'ANTI-CRISIS' LAWS. The State Duma
Council on 25 June scheduled the debate over the
government's "anti-crisis program" for 1 July, Russian news
agencies reported. Prime Minister Sergei Kirienko is
expected to attend that Duma session. According to Finance
Minister Mikhail Zadornov, the package will contain 13 draft
laws. Deputy Prime Minister Viktor Khristenko delivered six
of them to the Duma on 24 June, and the government is to
send the other seven on 25 June. The anti-crisis program
calls for large spending cuts and various tax proposals
through which the government hopes to plug holes in the
budget and reassure financial markets. Among other things,
the government is seeking to charge a full 20 percent value-
added tax on some goods now taxed at a reduced rate (see
"RFE/RL Newsline," 14 November 1997), lower the profit tax
for businesses, and introduce a sales tax. LB

YAVLINSKII EXPRESSES LIMITED SUPPORT FOR GOVERNMENT PLANS.
Grigorii Yavlinskii says his Yabloko movement will support
the government's efforts to stabilize the current financial
and economic situation in Russia, RFE/RL's Moscow bureau
reported on 24 June. In particular, he endorsed measures to
tighten control over collection of taxes and customs duties
and to reduce the tax burden. But Yavlinskii also described
the anti-crisis program and the possible multibillion-dollar
bailout from international financial institutions as an
"anaesthetic" that might relieve pain temporarily but would
not cure the patient. He said the government's program will
not solve any "strategic tasks," and called for a "serious
economic review of the causes of the crisis." Yavlinskii did
not attend the expanded cabinet session on 23 June, at which
the anti-crisis program was discussed, on the grounds that
parliamentarians were not given a chance to review the
program before the meeting. LB

GOVERNORS CALL FOR PRINTING MORE MONEY. Sverdlovsk Oblast
Governor Eduard Rossel on 24 June praised some aspects of
the government's "anti-crisis program" but also called for
printing more money to help the government settle its debts,
ITAR-TASS reported. Sverdlovsk contains many defense
industry enterprises that have not been paid for state
orders. Altai Krai Governor Aleksandr Surikov went further,
saying the government's program does not address the causes
of the economic crisis. Noting that wage and pension arrears
are "snowballing," Surikov called for a rapid monetary
emission. Government officials have repeatedly ruled out
printing more money, saying such a measure would cause
inflation to sky-rocket. The State Statistics Committee
announced on 19 June that wage arrears in ten major sectors
rose 6.7 percent in May and now total 66.89 billion rubles
($10.8 billion). Money owed by the state accounted for 16.5
percent of the wage debts, the committee said. LB

ECONOMIST SAYS DEVALUATION INEVITABLE AND DESIRABLE...
Andrei Illarionov, the director of the Institute of Economic
Analysis, on 24 June argued that "the devaluation of the
ruble is becoming inevitable," RFE/RL's Moscow bureau
reported. He argued that the ruble exchange rate has been
kept artificially high since oil prices began a steep
decline in October and November 1997. He claimed a
devaluation in the near future would help the government
deal with the financial and economic crisis, and said
devaluation may not necessarily lead to inflation.
Illarionov also described as a "myth" the view (expressed by
President Boris Yeltsin and government officials) that
Russia's economic problems are related to a world financial
crisis. He said there is a crisis only "in countries whose
governments are pursuing a weak economic policy," Interfax
reported. In addition, Illarionov predicted that increasing
the government's foreign borrowing will inevitably lead to a
foreign debt crisis. LB

...BUT CENTRAL BANK OFFICIAL DISAGREES. Central Bank First
Deputy Chairman Sergei Aleksashenko argued on 24 June that
Illarionov "is deliberately distorting facts" in his
analysis of the current economic situation, Interfax
reported. Aleksashenko denied that a sharp devaluation of
the ruble is inevitable and challenged the view that
significant currency depreciation would be good for the
economy. He argued that a devaluation would raise prices on
imported goods, undermine banks that have taken out foreign
loans, and "disorient the population." He also said
devaluation would lead to price hikes for transportation,
communication and other services, making it "practically
impossible to solve budget-related problems." LB

FEDOROV SAYS PUBLIC TRIALS OF TAX EVADERS POSSIBLE. State
Tax Service chief Boris Fedorov announced on 24 June that
the authorities may hold public trials against some tax
evaders "so that people will appreciate the serious nature
of our intentions," Interfax reported. Fedorov's
predecessor, Aleksandr Pochinok, alo advocated such trials,
but none have yet been conducted. Fedorov called for
unspecified steps to improve the public perception of
measures to boost tax collection. The government has been
running public service advertisements on television
encouraging people to pay their taxes. One such commercial
shows a tax evader racked with guilt and fear of arrest.
Although he is not responsible for tax reform, Fedorov has
acknowledged that significant improvements in tax collection
will require fundamental changes to the tax system. LB

GOVERNMENT STICKS BY PLAN TO CUT TAX DEBTORS' OIL EXPORTS.
Deputy Prime Minister Khristenko on 24 June said the
government will strictly implement a recent directive to
restrict or entirely cut off access to state-owned pipelines
and seaport terminals for oil exporting companies that have
not cleared their tax debts by 1 July (see "RFE/RL
Newsline," 6 May 1998). He said the government has notified
13 major oil companies that could be affected by the
directive and signed agreements with each of them on
repaying their tax arrears, Russian news agencies reported.
Oil company executives are sharply opposed to the measure.
Mikhail Khodorkovskii, the head of the Yukos oil company,
one of Russia's largest, told ITAR-TASS on 24 June that
cutting off access to export pipelines could cause
production to grind to a halt at some firms. He argued that
the policy conforms to an IMF demand. LB

SYSUEV SAYS OLIGARCHS WON'T REPLACE GOVERNMENT. Deputy Prime
Minister Oleg Sysuev on 23 June dismissed fears that an
advisory council of business elites, which is expected to be
formed soon, will "replace" the cabinet or impose its will
on Prime Minister Kirienko, ITAR-TASS reported, citing an
interview with Sysuev on NTV. At the same time, Sysuev
acknowledged that the government "cannot avoid taking into
account" the views of financial and industrial groups,
which, he said, carry much influence in Russia. LB

FSB OFFICERS WIN LIBEL SUIT AGAINST PRIMORE GOVERNOR. A
Vladivostok raion court has ordered Primorskii Krai Governor
Yevgenii Nazdratenko to issue a public apology to Viktor
Kondratov, the head of the Federal Security Service's (FSB)
branch in Primore, and other FSB officers in the region,
"Kommersant-Daily" reported on 25 June. Kondratov and his
colleagues filed the lawsuit last year after Nazdratenko
gave an interview to the Moscow-based magazine "Profil." The
governor blamed local FSB officers for rising crime in
Primore and charged that they try to "provoke the public."
(When the interview was published, Kondratov was Yeltsin's
representative in Primore and was authorized under a
presidential decree to exercise powers that previously
belonged to Nazdratenko.) The court fined "Profil" 15,000
rubles ($2,400) and the journalist who conducted the
interview 1,500 rubles. Nazdratenko was not fined but was
ordered to publish an apology in three local newspapers in
Primore. LB

OBLAST COURT APPROVES ANNULMENT OF NIZHNII ELECTION. The
Nizhnii Novgorod Oblast Court on 23 June left in place a
lower court ruling that approved the annulment of the 29
March mayoral election in Nizhnii Novgorod, "Pravda"
reported on 25 May. The controversial local businessman
Andrei Klimentev won the race by a narrow margin, but the
city electoral commission cancelled the result after high-
ranking federal officials denounced Klimentev and said there
were grounds to annul the election. Many observers and
Russian media concluded that political pressure, not legal
considerations, inspired the annulment. Klimentev filed the
court appeal but was not able to attend the oblast court
hearings, because he is serving a prison term for
embezzlement (see "RFE/RL Newsline," 18 and 29 May 1998). LB

SUPREME COURT TO RULE ON EXTREMIST GROUP'S LIBEL CASE
AGAINST JOURNALIST. The Supreme Court will hear journalist
Galina Tuz's appeal against a Stavropol Krai court ruling
that she libeled the national-socialist group Russian
National Unity (RNE) in the newspaper "Stavropolskaya
Pravda," "Russkii telegraf" reported on 24 June. The RNE
claimed that statements in a 1996 article that Stavropol
Krai's RNE "appears in essence a fascist organization" and
"pursues a fascist ideology" damaged its "business
reputation," and won a lawsuit forcing the paper's editorial
office to pay a fee and publish an apology. Tuz's lawyer,
Andrei Rakhmilovich, claims that the defense's arguments
were ignored in court, while the "Russkii telegraf" article
claims that both Stavropol public opinion and the court's
"personal convictions" were partial to the RNE. The legal
status of Aleksandr Barkashov's RNE, an overtly national-
socialist organization, has been uncertain since the Justice
Ministry refused to register the movement at the federal
level in August 1997 (see "RFE/RL Newsline," 16 May 1998).
BT

RYBKIN, STEPASHIN PLEDGE SUPPORT FOR CHECHEN PRESIDENT. Ivan
Rybkin, who as Russian Security Council Secretary, conducted
prolonged negotiations with the Chechen leadership over the
region's future status and economic claims on Moscow, said
on 24 June that peace and stability in Chechnya are
impossible without President Aslan Maskhadov, according to
ITAR-TASS. Interior Minister Sergei Stepashin similarly told
Interfax that he believes Moscow should support any measures
Maskhadov may take to counter crime and uphold law and order
in Chechnya. Both Russian officials declined to condemn the
legitimacy of the state of emergency imposed by Maskhadov on
23 June, although Rybkin conceded that the Russian
Federation Constitution empowers only the Rusiaan President
to do so. LF

RUSSIA UNHAPPY WITH CHINESE WATER DIVERSION SCHEME. Reports
in Interfax and "Segodnya" on 24 June reflect Russia's
displeasure with a Chinese plan to divert water from the
upper Irtysh River. China is planning to redirect water from
the river in the second half on this year to provide water
for oil refineries and land reclamation projects in
northwest China. According to Interfax, Russia has already
requested details of the project but has not received a
reply. According to "Segodnya," if China goes ahead with the
plan, the level of water in the river could be reduced by as
much as 15 percent during drought years, making navigation
impossible in the lower reaches of the river which pass
through Russia. BP

TRANSCAUCASUS AND CENTRAL ASIA

FINAL TRIAL AGAINST "WAHHABIS" OPENS IN UZBEKISTAN. The
fourth and last in a series of trials against alleged
Wahhabis opened in Tashkent on 24 June, Reuters and
"Nezavisimaya gazeta" reported. Uzbekistan's state
prosecutor demanded the death sentence for Talib Mamajanov,
who has admitted to being a member of a criminal group
responsible for killing 12 people, eight of them policemen,
in the Fergana Valley between 1994 and 1997. Seven other men
are charged with possession of weapons and harboring
criminals. Sentencing is expected by 6 July. In the three
earlier trials, all defendants were found guilty and
sentenced to prison terms. Alhough the state prosecutor
demanded the death penalty for Mamajanov, Uzbek courts have
been careful not to pass such a sentence at earlier trials
in order to avoid making martyrs of the defendants. BP

IRAN, KAZAKHSTAN HOLD TALKS ON GRAIN, OIL. The Iranian
Minister of Mines and Metals, Eshaq Jahangiri, met with
Kazakh Prime Minister Nurlan Balgimbayev in the Kazakh
capital, Astana, on 24 June, Interfax and IRNA reported.
Jahangiri advocated concluding a long-term contract for
Iranian purchases of Kazakh grain, noting that "there is no
need to bring grain from far away when one can buy it in
neighboring Kazakhstan." Balgimbayev said he wanted to renew
oil exports to Iran, which were suspended in May due to the
refusal of the new management of Kazakhstan's Oil and Gas
Company to honor a contract signed in 1996. Balgimbayev and
Jahangiri also agreed to develop companies for shipping via
the Caspian Sea. BP

GEORGIA SLAMS DUMA RESOLUTION ON ABKHAZIA. Foreign Minister
Irakli Menagharishvili on 24 June condemned as "gross
interference in Georgia's internal affairs" a resolution
passed by the Russian State Duma earlier the same day. The
Duma approved a resolution calling for lifting the border
and customs restrictions currently in force on the border
between the Russian Federation and Georgia's breakaway
region of Abkhazia. Menagharishvili argued that the
restrictions could be lifted only as part of a broader
political settlement of the Abkhaz conflict. LF

AZERBAIJAN PRESIDENTIAL ELECTION UPDATE. Meeting with a
visiting European Parliament delegation on 24 June,
Azerbaijani President Heidar Aliev said that he will not
propose his own candidacy for the presidential elections due
in October, but will run for a second term if asked by the
Azerbaijani people to do so, Interfax reported. Aliev
assured the delegation that the poll will be free and fair.
Aliev has also invited opposition political parties to
propose candidates to the new Central Electoral Commission
(CEC), half of the 24 members of which are to be proposed by
the president and the remainder by the parliament. CEC
members may not be members of any political party. The
Movement for Democratic Elections and Electoral Reform,
which unites some 20 opposition parties, has proposed that
half the members of the CEC be nominated by the Movement
together with five potential opposition presidential
candidates, Turan reported on 23 June. LF

ECONOMIC UPSWING IN ARMENIA. Prime Minister Armen Darpinian
said on 24 June that Armenia registered 6.3 percent economic
growth in the first five months of 1998, according to Noyan
Tapan. Darpinian added that direct foreign investment in the
Armenian economy reached $100 million during that time
period, and is expected to total $250 million by the end of
the year, RFE/RL's Yerevan bureau reported. Addressing an
Armenian-Ukrainian business forum in Yerevan, Darpinian
attributed the inflow of foreign capital to his government's
emphasis on private enterprise and its commitment to
privatizing large state enterprises. Darpinian also
announced that the Armenian state airline company will soon
be put on international tender. "Privatization is the only
way to guarantee its efficient and competitive work," he
argued. LF

ARMENIAN PRO-PRESIDENTIAL BLOC MEETS. The leaders of four of
the five parties aligned in the Justice and Unity bloc
formed in March to back Robert Kocharian's presidential bid
met behind closed doors on 24 June to discuss their recent
meeting with the president and develop a joint plan of
action, RFE/RL's Yerevan bureau reported. Aleksandr
Aghamalian of the Scientific-Industrial and Civic Union said
the alliance reached an overall agreement regarding the
bloc's position on Nagorno-Karabakh and finalized two
documents assessing the current state of affairs in Armenia
and containing concrete proposals on that score. A spokesman
for the Dashnak party told RFE/RL the party did not send
representatives to the meeting because it was not given
advance notice that it would take place. LF

END NOTE

AUSTERITY BATTLE MAY TRIGGER CONFRONTATION WITH DUMA

by Floriana Fossato

	Russian Prime Minister Sergei Kirienko on 24 June
started consultations with parliamentary factions in a bid
to ensure support for and swift approval of the government's
anti-crisis program. That program was outlined at an
expanded cabinet meeting the previous day.
	The government also formally approved its austerity
plan, including cuts in spending of 8 percent and revenue
increases of about 4 percent. The plan aims to fill holes in
the 1998 budget, restore calm to Russian financial markets,
and convince the IMF that Russia is ready to implement the
stringent fiscal-discipline measures considered a
precondition for negotiations on additional financial
support from the fund.
	But the measures outlined in the plan cannot be
implemented in their entirety without supporting legislation
approved by the parliament. Only parts of the anti-crisis
plan could be imposed by presidential decree. Most observers
in Moscow are skeptical about whether the government will be
able to persuade the State Duma to adopt 20 draft bills
related to the plan before the lower house of the parliament
adjourns for its summer recess on 16 July.
	According to observers, the time frame set by the
Kremlin could lead to a confrontation with the Duma and
possibly to the dissolution of that body if lawmakers fail
to give the cabinet the requested support.
	President Boris Yeltsin on 23 June endorsed the
government plan and told the expanded cabinet session, which
included legislators as well as regional and business
leaders, that "the economic crisis has become so acute that
there are social and political dangers." Yeltsin called on
the parliament to adopt the government's plan and vowed to
take unspecified "other measures" if it did not. In 1993,
Yeltsin had ordered tanks to shell the parliament building
to dislodge rebellious members of the previous parliament,
the Supreme Soviet.
	The constitution, adopted after the shelling of the
White House, gives the president powerful levers to force
the Duma to comply with his plans. Yeltsin could dissolve
the Duma or issue laws by decree if legislators block the
government's plan. However, the constitution does not cite
the refusal to pass legislation as grounds for dissolving
the Duma.
	But analysts say that a confrontation could easily be
manufactured. Nikolai Petrov, a senior associate of the
Carnegie Centre in Moscow, told RFE/RL that the time frame
proposed by the government for the parliamentary passage of
its plan is "not realistic." He added that Yeltsin's "thinly
veiled threat to the Duma indicates that we may well be
heading for a new fight."
	Confrontation between the president and his foes in
the opposition-dominated Duma is a habitual feature of
Russia's political life. The Duma initially rejected the
appointment of little-known Kirienko to the post of prime
minister when Yeltsin sacked former Premier Viktor
Chernomyrdin and his government three months ago. At that
time, however, the economic and political situation had not
reached what Federation Council Speaker Yegor Stroev on 23
June called the "boiling point," in a reference to the
current situation.
	Communist leaders in the Duma have already slammed
Yeltsin's 23 June performance, while welcoming some of the
points included in the government's austerity plan.
Communist Party and parliamentary faction leader Gennadii
Zyuganov said that Yeltsin "performed his usual repertoire.
He opened the meeting, started threatening the Duma, was
rude, insulted us, and left." And Anatolii Lukanov, an
influential Communist member who heads the Duma's
legislative committee, said "there was a time when such
threats could have influenced the Duma, but not now."
	Petrov of the Carnegie Centre says that "the Duma
seems ready for dissolution." According to Petrov, "the
situation of growing economic and political crisis now means
that the Communists could benefit from the election,
increasing their presence in the Duma, unlike in the spring,
when economic forecasts were overall positive, and they
would have been disadvantaged in an early election."
Parliamentary elections are scheduled for December 1999.
	Petrov said that a possible dissolution could be set
up "in a simple way. The government presents the draft
bills. The Duma says it does not have enough time to
consider, debate, and vote on them before the recess. Then
the prime minister, arguing that the Duma is not acting in
the requested cooperative way, calls for a confidence vote
in the government. The Duma votes no confidence and, at this
point, a constitutional scenario allowing the president to
dissolve [the Duma] and call early elections is set up."
	For the time being, however, deputies seem to have
taken time out in order to clarify their positions. The
leader of the pro-government Our Home Is Russia faction,
Aleksandr Shokhin, has said the Duma will not start
examining the government plan before 1 July. Shokhin and his
faction, closely identified with Chernomyrdin, were
scheduled to meet with Kirienko on 24 June. Shokhin told the
Interfax news agency that "part of the government draft
bills have a good chance of being approved...but not all the
measures are likely to be."

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

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