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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 125 Part I, 1 July 1998


___________________________________________________________
RFE/RL NEWSLINE Vol. 2, No. 125 Part I, 1 July 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 URGES DUMA TO APPROVE GOVERNMENT PROGRAM

* STROEV CONCERNED ABOUT ANTI-CRISIS PLAN'S EFFECT ON
REGIONS

* GEORGIA PREPARES TO BEGIN GUARDING FRONTIERS

End Note: SHAKHRAI SEEMS UNFAZED BY DISMISSAL
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RUSSIA

KIRIENKO URGES DUMA TO APPROVE GOVERNMENT PROGRAM...Prime
Minister Sergei Kirienko warned State Duma deputies on 1
July that failure to approve urgent legislative measures
could have dire consequences for the Russian economy,
RFE/RL's Moscow bureau reported. He described the
government's anti-crisis program, a package of more than 20
draft laws, as a "depoliticized" plan to cut spending and
boost revenues. He defended plans to reduce taxes on
industry and increase consumption taxes, which, he noted,
can more easily be collected. Kirienko also said the
government will consider "constructive proposals" for
amending the laws, ITAR-TASS reported. He called for
creating a conciliatory commission of government
representatives and deputies from the Duma and Federation
Council, which would revise the laws approved by the Duma in
the first reading. A similar commission hammered out a
compromise on the 1998 budget, but the government has been
unable to stick to that budget. LB

...FOLLOWING TALKS BEHIND THE SCENES TO DRUM UP SUPPORT.
Kirienko has met with several prominent Duma deputies from
opposition ranks in recent days, seeking their support for
the government's anti-crisis program. He held talks with
Communist Party leader Gennadii Zyuganov on 27 June and met
two days later with Duma Economic Policy Committee Chairman
Yurii Maslyukov and Duma Budget Committee member Yurii
Voronin, both Communists. On 30 June, the premier met with
Popular Power faction leader Nikolai Ryzhkov, ITAR-TASS
reported. The government-backed laws cannot be approved by
the Duma without at least some support from the Communists
and their allies, the Agrarian and Popular Power factions.
Meanwhile, citing unnamed sources in the business community,
Interfax reported on 30 June that Kirienko met with leading
Russian businessmen at government headquarters. The names of
those who attended the meeting are not available. LB

DUMA SET TO BACK ONLY PART OF PROGRAM QUICKLY. Our Home Is
Russia faction leader Aleksandr Shokhin on 1 July predicted
that only six or seven of the government-backed draft laws
will be approved by mid-July, RFE/RL's Moscow bureau
reported. In a speech to the Duma, he called for a
conciliatory commission to prepare a comprehensive package
for parliamentary approval in the fall. President Boris
Yeltsin and Prime Minister Kirienko have urged the Duma to
approve the entire program this month. Communist Party
leader Gennadii Zyuganov expressed support only for the
parts of the program that, he said, would reduce the tax
burden and promote the development of industry. Grigorii
Yavlinskii said his Yabloko faction is willing to work on
the government proposals but will slowly and carefully
analyze the draft laws. He called on the government to act
without waiting for decisions by the Duma, which, he said,
could take months. LB

STROEV CONCERNED ABOUT ANTI-CRISIS PLAN'S EFFECT ON REGIONS.
Federation Council Speaker Yegor Stroev on 30 June expressed
concern about some of the government's proposed measures to
stabilize the economy, RFE/RL's Moscow bureau reported. In
particular, he criticized a proposal to change the
distribution of income tax revenues, which now go entirely
to regional authorities. The government wants 40 percent of
income tax revenues to go to the federal budget and has
proposed the introduction of a sales tax to help regional
and local governments compensate for lost income tax
revenues. But Stroev noted that the anti-crisis program
calls for forcing regional governments to finance more
projects even as it calls for diverting income tax revenues
to the federal government. Prime Minister Kirienko is to
address a session of the Federation Council on 9 July,
before the upper house votes on the government-backed draft
laws. LB

FIVE OIL COMPANIES FACE REDUCED ACCESS TO EXPORT PIPELINES.
Deputy Prime Minister Viktor Khristenko announced on 30 June
that beginning on 1 July, the government will reduce access
to oil export pipelines for five companies that have not
paid their tax debts, ITAR-TASS reported. The five are
Bashneft, Sidanko, Tyumen Oil Company, Tatneft, and Onako.
The IMF, which is negotiating with Russian officials a
possible multibillion-dollar stabilization loan, has long
supported measures to force oil companies to pay their tax
debts. But according to the 27 June edition of the "Moscow
Times," the government directive linking oil export quotas
to repayment of tax debts makes an exception for companies
that are exporting oil in order to repay foreign loans.
LUKoil and Yukos are among the oil companies that have
borrowed abroad and used oil exports to secure such loans,
the newspaper said. LB

DISMISSAL OF AIDE FUELS NEW SPECULATION OVER THIRD TERM FOR
YELTSIN. "Kommersant-Daily" argued on 30 June that by firing
Sergei Shakhrai as his representative in the Constitutional
Court, Yeltsin has signaled that he plans to run for re-
election again in 2000. No official reason was given for
Shakhrai's dismissal, which came two days after Shakhrai
endorsed Moscow Mayor Yurii Luzhkov for the presidency (see
"RFE/RL Newsline," 30 June 1998). In an interview published
in "Izvestiya" on 1 July, Shakhrai claimed that he was fired
because he told Yeltsin on 20 May that "he cannot run in the
[2000] elections." Shakhrai's replacement, Mikhail Mityukov,
told the 1 July edition of "Moskovskii komsomolets" that the
decision to replace Shakhrai was made "about a month ago."
The Constitutional Court is to rule later this year on
whether Yeltsin has the right to seek a third term (see also
"End Note" below). LB

NIKOLAEV RECRUITS SUPPORT FOR NEW MOVEMENT. Duma deputy
Andrei Nikolaev, the former director of the Federal Border
Service, attended the founding conference of the St.
Petersburg branch of his new political movement on 30 June.
Nikolaev said he considers trade unions strong allies of the
Union of Popular Power and Labor, which will hold its
founding congress in Moscow on 8 July, an RFE/RL
correspondent in St. Petersburg reported. Nikolaev's
movement is expected to become the core of a pro-Moscow
Mayor Luzhkov bloc for the next elections to the Duma. He
told journalists that he hopes for an alliance with all
"centrist or left-center" parties and movements for those
elections, which are scheduled for December 1999. He also
expressed respect for Yabloko leader Grigorii Yavlinskii,
with whom, he said, he is on good terms. LB

ENVIRONMENTALIST'S TREASON CASE FINALLY GOES TO COURT... The
St. Petersburg Prosecutor's Office has referred the criminal
case against retired Navy Captain Aleksandr Nikitin to the
city court, Interfax reported on 30 June. Nikitin is charged
with treason, revealing state secrets, and falsifying
documents while working for the Norwegian environmental
group Bellona. He was arrested in February 1996 after
writing two chapters for a Bellona report on the risk of
radioactive pollution from nuclear submarines in Russia's
Northern Fleet. Nikitin has said he used only public sources
to write the report. His defenders also say the case against
him is based on secret documents. In that event, the case
would be in violation of Russian law (see "RFE/RL Newsline,"
19 May 1998). LB

...AS NEW BOOK CONCLUDES HE REVEALED NO STATE SECRETS. Three
retired vice admirals--Yevgenii Chernov, Viktor Khrantsev,
and Leonid Zhdanov--have published a book about the Nikitin
case based on two years of their own research, an RFE/RL
correspondent in St. Petersburg reported on 29 June.
Speaking to journalists, Chernov refused to reveal either
the name of the publisher or the size of the book's print
run. The authors concluded that all of the information
Nikitin provided for the Bellona report was published before
in books or in the Russian press. The vice admirals also
argue that the naval experts who determined that the Bellona
report contained state secrets had an interest in seeing
Nikitin prosecuted, since they themselves were involved in
Navy policies that posed a risk of radioactive contamination
on the Kola Peninsula (Murmansk Oblast). LB

GOVERNMENT APPROVES PLAN TO RESTRUCTURE DEFENSE INDUSTRY. By
2005, the defense sector will be reduced from its current
1,700 to 600-700 enterprises, Prime Minister Kirienko
announced on 29 June, adding that the remaining enterprises
will produce civilian products and compete for state
military contracts, "Russkii telegraf" reported. The measure
is part of the government's program to restructure the
defense industry, which calls for spending 2.1 billion
rubles ($339 million) from the 1998 federal budget. Of that
sum, 632 million rubles are to be used as credit for
conversion projects, 508 million rubles for financing
private projects, and 1.019 billion as subsidies for
converting enterprises. On 26 June, Finance Minister Mikhail
Zadornov told the Duma that mutual debts between the
government and the defense sector amounting to 6 billion
rubles ($967 million) will be written off and that remaining
government debts to defense enterprises will be cleared
within one to one-and-a-half months (see "RFE/RL Newsline,"
16 February and 8 April 1998). BT

DUMA REJECTS ECONOMIC AMNESTY BILL. By three votes, the Duma
on 26 June rejected a draft law on amnesty for economic
crimes in its third reading Interfax reported. The law would
have granted amnesty to those who transfer illegally-earned
funds from foreign accounts to Russian banks. Duma
Legislation Committee member Nikolai Shaklein (Popular Power
faction) argued that the law is too vague and would allow
criminals to escape punishment without returning significant
amounts of money to Russia. Liberal Democratic Party leader
Vladimir Zhirinovsky voted against the law, saying it would
encourage the "shadow economy." Earlier, he had supported
it, claiming the return of some $500 billion from foreign
accounts could "stabilize the economy for many years," ITAR-
TASS reported. Meanwhile, Interior Minister Sergei Stepashin
met with the Association of Russian Banks on 30 June to
discuss measures to combat crime in the banking sector,
"Kommersant-Daily" reported. BT

REGIONAL LEGISLATURES VOTE NO CONFIDENCE IN YELTSIN. The
Yaroslavl Oblast Duma on 30 June became the third regional
legislature to express its displeasure with Yeltsin in
recent weeks. Deputies voted by 35 to four with one
abstention to vote no confidence in Yeltsin and to support
the State Duma's decision to launch impeachment proceedings.
The Yaroslavl legislature's statement said Yeltsin is
incapable of "stabilizing the situation and leading the
country on the path of steady development and high quality
of life," Interfax reported. The Ryazan Oblast Duma on 27
May unanimously adopted an appeal asking Yeltsin to resign,
"Nezavisimaya gazeta" reported on 1 July. The Sakhalin
Oblast Duma passed a similar appeal on 25 June. According to
"Nezavisimaya gazeta," the legislatures of Tula and Belgorod
Oblasts are to consider similar resolutions. LB

CHECHEN PRESIDENT TARGETS ABDUCTIONS, OIL THEFTS. Speaking
on Chechen television on 30 June, Aslan Maskhadov vowed that
within 20 days, the Chechen security forces will put an end
to kidnappings and illegal oil refining, which is said to be
worth 20 million rubles ($3.3 million) a month, Interfax
reported. Under the state of emergency introduced eight days
ago, Maskhadov has placed all ministries on increased alert
and appointed two of his close associates to head the
presidential administration and presidential guard. Also on
30 June, Chechnya's Sharia court ruled blood feud murders
illegal and punishable by the death sentence. Russian
observers have argued that fear of revenge killings was the
primary factor preventing a more ruthless crackdown on
abductions in Chechnya. "Kommersant-Daily" on 1 July quoted
Chechen spokesmen as denying that the security measures were
prompted by fear of a coup against Maskhadov (see also
"RFE/RL Caucasus Report," Vol. 1, No. 18, 30 June 1998). LF

RUSSIA REJECTS CHECHEN STANCE ON UN, OSCE. Russian Foreign
Ministry spokesman Vladimir Rakhmanin told journalists on 30
June that Chechnya is not entitled to apply for UN
membership as it is a subject of the Russian Federation,
Interfax reported. Rakhmanin also said that only the federal
government is competent to review the status of the OSCE
mission in Chechnya and that there are "no serious reasons"
for doing so. The previous day, Chechen Foreign Minister
Movladi Udugov had said that Chechnya intends to seek UN
membership. He also threatened to expel the OSCE mission if
it does not formally apply to the Chechen government within
15 days for a new mandate. LF

TRANSCAUCASUS AND CENTRAL ASIA

GEORGIA PREPARES TO BEGIN GUARDING FRONTIERS... Georgian
border troops on 1 July began preparations to assume sole
responsibility for guarding the country's land and sea
borders, which since 1992 have been jointly patrolled by
Georgian and Russian forces. Georgian Frontier Guard
Commander Valerii Chkheidze told journalists in Tbilisi on
29 June that Georgia will assume responsibility for guarding
its 12 km territorial waters on 16 July and its land border
with Turkey in September. An agreement to this effect was
initialed in Moscow on 27 June. LF

...AMID ABKHAZ, RUSSIAN RESERVATIONS. Abkhaz Defense
Minister Vladimir Mikanba on 30 June warned that "Abkhazia
as a sovereign state will not allow patrol ships of a
country with which it is in conflict enter its territorial
waters," according to Interfax. Mikanba suggested that
Russian border guards should continue to protect Abkhazia's
sea borders until relations with Georgia are clarified. In
Moscow, former Russian Federal Border Service director
Andrei Nikolaev said the withdrawal of Russian border troops
from Georgia is tantamount to the "loss of Russia's
strategic position in the Caucasus." LF

ROMANIAN PRESIDENT IN BAKU. Emil Constantinescu and
President Heidar Aliev met for two hours in Baku on 30 June
for talks focusing primarily on Romania's potential role as
a transit country for exports of Azerbaijani Caspian oil.
Constantinescu pointed out that existing terminal and
refining facilities at Romania's Black Sea port of Constanta
have a handling capacity of 31 million metric tons per year.
Aliev agreed that the Baku-Supsa-Constanta route could
function as one of several, together with the Baku-
Novorossiisk and Baku-Ceyhan pipelines, according to Turan.
The two presidents also discussed the potential for
cooperation within the Black Sea Economic Cooperation
Organization and the EU "Silk Road" project. A declaration
on further cooperation and inter-governmental agreements on
cargo traffic and exchange of information by the two
countries' official news agencies were signed. LF

DATE SET FOR AZERBAIJANI PRESIDENTIAL ELECTIONS. The newly
elected Central Electoral Commission has scheduled the
upcoming presidential elections for 11 October, Turan
reported on 30 June The previous day, 17 of the 18 members
already appointed to the commission elected Jafar Veliev as
chairman. Veliev, who also chaired the previous commission,
vowed that the body will do its best to ensure that the
presidential elections are free and fair. He added that the
commission will create all conditions necessary for the
participation of international observers. The OSCE is
expected to send 140 such observers. LF

AZERBAIJANI EX-PRESIDENT INTERROGATED. Former President and
Azerbaijan Popular Front Party chairman Abulfaz Elchibey was
questioned for three hours on 30 June by the Azerbaijani
Interior Ministry's Department to Combat Organized Crime,
Turan reported. A ministry spokesman said that the questions
focused on Elchibey's aide Gabil Mamedov, who was arrested
on 14 June on fabricated charges of illegal possession of
arms, and on a document entitled "Meeting Tactics of the
Opposition." That document was confiscated during a search
of the premises of the opposition newspaper "Chag" on 16
June. LF

IMPRISONED FORMER AZERBAIJANI DEFENSE MINISTER ON HUNGER
STRIKE. Rahim Gaziev, who was extradited from Russia to Baku
in April 1996, embarked on a hunger strike on 22 June to
demand a public retrial, Caucasus Press reported on 30 June.
Gaziev was sentenced to death in absentia in 1994 on charges
of embezzlement, illegal possession of arms, and
surrendering the towns of Lachin and Shusha to Armenian
forces in May 1992. LF

ARGENTINEAN PRESIDENT IN YEREVAN. Carlos Menem and his
Armenian counterpart, Robert Kocharian, discussed economic
cooperation, regional issues, and cooperation within the
framework of international organizations during Menem's one-
day visit to Yerevan on 30 June, RFE/RL's Yerevan bureau
reported. The two presidents signed a joint declaration on
the "fundamentals of friendly relations" and pledged their
support for the Argentinean Bridas oil and gas company's
participation in the planned construction of a gas pipeline
from Iran to Armenia. Inter-ministerial agreements on
cooperation in the peaceful use of nuclear energy, health
care, culture, and education were also signed. Kocharian
told journalists that the two presidents "understood each
other correctly," having "very close or identical" views on
all issues discussed. Kocharian visited Argentina in May
1996, while still president of the unrecognized Nagorno-
Karabakh Republic. LF

NAZARBAYEV ADDRESSES PARLIAMENT ON ECONOMY. Kazakh President
Nursultan Nazarbayev told a joint session of the parliament
on 30 June that the country must become less dependent on
the fluctuations of the world financial market, Interfax
reported. Nazarbayev said small and medium-size businesses
must be developed, the tax system made more flexible to
benefit the internal market, and value-added tax revised.
Nazarbayev also said industries producing consumer goods and
all banks except the National Bank must be privatized. And
he commented that the Asian financial crisis "has not left
Kazakhstan unaffected," mentioning that prices for
Kazakhstan's main exports--oil and nonferrous metals--have
dropped on world markets. The Kazakh president said the
government needs to take measures to support exporters
through tariffs, adding that he favors diversifying exports.
BP

KYRGYZSTAN RECEIVES ANOTHER IMF LOAN. The board of the IMF
approved an economic structural adjustment facility (ESAF)
loan for Kyrgyzstan, Interfax reported on 29 June.
Kyrgyzstan will receive between $20-36 million annually for
the next three years. Finance Minister Talaibek Koichumanov
said the money will be used to support the national
currency. An RFE/RL correspondent based in Washington
describes an ESAF loan as "available to the poorest members
of the IMF [and] given at a 0.5 percent interest rate with
five-and-a half year grace period." BP

LAST UTO FIGHTERS BEGIN TO RETURN TO TAJIKISTAN. A group of
some 150 fighters from the United Tajik Opposition who had
been stranded in Afghanistan crossed the lower Pyanj River
into Tajikistan on 1 July, RFE/RL correspondents and ITAR-
TASS reported. Their repatriation is being overseen by the
UN observer mission to Tajikistan, Russian border guards,
and the joint peace-keeping force. Some 500 fighters have
been waiting for more than a year to return home, following
the signing of the Tajik peace accord in Moscow last June.
BP

END NOTE

SHAKHRAI SEEMS UNFAZED BY DISMISSAL

by Floriana Fossato

	Sergei Shakhrai, sacked by President Boris Yeltsin as
presidential representative at the Constitutional Court,
does not seem to regret losing his long-time job.
	On the contrary, Shakhrai has given the impression to
journalists that he is satisfied that his statements at the
weekend have had the desired effect. He has suggested that
he can now join a bloc of political forces preparing to
support Moscow Mayor Yurii Luzhkov in the 2000 presidential
elections.
	Shakhrai was long regarded in Moscow as one of
Yeltsin's more loyal officials. Observers therefore were
surprised when, at a weekend congress of his almost
forgotten Party of Russian Unity and Accord, Shakhrai said
that in preparation for the next parliamentary and
presidential elections, the party should shift its political
allegiances to Luzhkov's camp.
	Shakhrai also criticized the presidential
administration for underestimating the threat of
presidential impeachment procedures that the State Duma is
trying to initiate.
	According to Shakhrai, deputies' demands for a
parliamentary debate on Yeltsin's impeachment will garner
the support of at least two-thirds of Duma deputies, as
required by the constitution for the formal start of
impeachment procedures. The Kremlin. meanwhile, has brushed
off the Duma's threat of impeachment.
	Sergei Markov, director of the Moscow Institute of
Political Studies, told RFE/RL that because of the
provisions of Russia's Constitution, the impeachment bid is
"purely theoretical." Even if at least 300 of the Duma's 450
members support a formal indictment of Yeltsin, the charges
against the president--including instigating the collapse of
the USSR, launching the war in Chechnya, or ruining the
Russian economy--are unlikely to be deemed valid by the
Supreme Court.
	Shakhrai, one of the main authors of the 1993
constitution, is well aware of the difficulties that
Yeltsin's foes could face. The start of the impeachment
commission "will become a reality when parliamentary work on
the government anti-crisis project reaches a dead-end and
only the dissolution of the Duma and early parliamentary
elections will break the [deadlock]," he commented
	According to the constitution, the president cannot
disband the lower house of the parliament if the Duma has
adopted a motion on impeachment.
	Shakhrai also said that Yeltsin would be "unelectable"
if he decided to run again in the year 2000. In an interview
with "Russkii telegraf," he said the president "cannot
announce his decision to run if he does not want everyone to
laugh at him."
	This fall, the Constitutional Court will examine the
possibility that Yeltsin, taking advantage of a
Constitutional loophole, will run again. According to
Markov, "it is clear that Yeltsin has decided some time ago
to run and that his decision is opposed by influential
business and financial tycoons who are now trying to put
pressure on him in different ways, including with the
impeachment threat, in order to discourage him."
	Shakhrai said that the next parliamentary elections,
scheduled for December 1999, will "determine two leading
candidates for the presidency: Luzhkov and Krasnoyarsk Krai
Governor Aleksandr Lebed." The result, he said, will "help"
the powerful oligarchs who backed Yeltsin's re-election bid
in 1996" to take a final decision on the candidate they will
support in the next election.
	Shakhrai seems to have put his stakes on Luzhkov.
According to "Russkii Telegraf," the "usually careful"
Shakhrai may have decided "that the Kremlin boat is sinking
and the moment has come to leave it."
	Shakhrai told "Kommersant" that his party will most
likely compete in the next parliamentary elections as part
of a coalition of political movements close to Luzhkov.
Luzhkov has repeatedly said he will not participate in the
presidential election, but few observers are inclined to
believe him.
	"Russkii Telegraf" argued that Luzhkov is unlikely to
express gratitude to Shakhrai. In 1993, Shakrai's party
gained some 6.7 percent of the vote in Duma elections. But
in the 1995 parliamentary elections, it gained just 0.36
percent and did not make it to the Duma.
	So far, the Moscow mayor has not commented on
Shakhrai's announcement.

The author is an RFE/RL correspondent based in Moscow.

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