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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 131 Part I, 10 July 1998


___________________________________________________________
RFE/RL NEWSLINE Vol. 2, No. 131 Part I, 10 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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Headlines, Part I

* UPPER HOUSE BACKS ANTI-CRISIS PROGRAM IN PRINCIPLE

* OFFICIALS RULE OUT PAYING WAGES AT EXPENSE OF DEBT
SERVICING

* INTERFAX RETRACTS REPORT ON NATO PEACEKEEPING FORCE

End Note: PIPELINES UNDER TROUBLED WATERS
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

RUSSIA

UPPER HOUSE BACKS ANTI-CRISIS PROGRAM IN PRINCIPLE. The
Federation Council on 10 July voted by 97 to four to support
in principle the government's plan to deal with the current
economic and financial crisis, Reuters reported. Of the more
than 20 laws in the government's program, most have not been
adopted by the State Duma and therefore cannot yet be
considered by the upper house of the parliament. Prime
Minister Sergei Kirienko addressed the Council on 10 July
and urged deputies to support the government's plan. He
warned that "the situation on financial markets has
worsened, treasury bill yields are rising, social tension is
also growing." He also repeated that one of the main goals
of the government's policies is to shift the tax burden from
industry to consumption, RFE/RL's Moscow bureau reported
(see "RFE/RL Newsline," 1 and 2 July 1998). LB

OFFICIALS RULE OUT PAYING WAGES AT EXPENSE OF DEBT
SERVICING. Finance Minister Mikhail Zadornov told the
Federation Council on 10 July that the government will not
sacrifice its debt servicing requirements in order to ensure
the timely payment of wages to state employees, RFE/RL's
Moscow bureau reported. He rejected a proposal by Primorskii
Krai Governor Yevgenii Nazdratenko that the government
temporarily halt repayments of Russia's domestic debt in
order to help solve the chronic problem of wage arrears. In
his address to the upper house, Prime Minister Kirienko also
said that the government is "ready to consider any proposal,
but we simply cannot fail to repay treasury bills," Reuters
reported. The Russian bond market has declined significantly
over the last two months, forcing the government to borrow
at higher interest rates and increasing future debt
servicing costs. LB

GOVERNMENT WANTS TO CUT OFF PENSIONS FOR WORKING
PENSIONERS... Deputy Prime Minister Oleg Sysuev announced
during a 10 July session of the Federation Council that the
government wants to stop paying pensions to those who
continue to work, ITAR-TASS reported. He said pension
arrears in Russia now total 12.5 billion rubles ($2 billion)
and added that the figure could rise considerably by year-
end. Sysuev also claimed that working people do not receive
pensions in any other country. The relatively low level of
pensions, as well as their irregular payment, prompts
millions of elderly people in Russia to work to supplement
their incomes. On several occasions in 1997, officials
announced provisional plans to reduce or eliminate pension
payments to working pensioners, but each time President
Boris Yeltsin or government ministers backed off from such
plans (see "OMRI Daily Digest," 7 February 1997 and "RFE/RL
Newsline," 30 June 1997). LB

...AND FREEZE INDEXATION OF ALL PENSIONS. In his speech to
the Federation Council, Sysuev also said the government
wants to return pensions to their pre-February 1998 level
and halt further indexation of pensions, ITAR-TASS reported
on 10 July. The proposal would suspend implementation of a
law that took effect in February, which calls for pensions
to be recalculated every three months, using the average
monthly wage as a baseline. In addition, Sysuev said the
government is seeking to raise Pension Fund contributions
from individuals from 1 percent to 5 percent while reducing
Pension Fund contributions by employers from 28 percent to
21 percent. The planned changes in pension policy are part
of the government's anti-crisis program to boost federal
budget revenues and reduce expenditures. LB

DEPUTY PRIME MINISTER SAYS MORE REVENUE-BOOSTING PLANS IN
WORKS. Viktor Khristenko announced on 9 July that the
government is preparing two additional documents to add to
its "stabilization program" (the phrase officials now prefer
to use instead of "anti-crisis program"). He said the
documents will address the liability of corporations for the
debts of their subsidiaries and measures that can be taken
against corporations that do not pay their taxes, Russian
news agencies reported. Khristenko said federal budget
revenues in June totaled some 22 billion rubles ($3.5
billion), including 11.2 billion rubles in tax revenues (up
600 million rubles from the total in May) and 7.44 billion
rubles in customs duties (240 million rubles more than were
collected in May). Speaking to the Federation Council on 10
July, Prime Minister Kirienko said Russia must spend 30-31
billion rubles a month on debt servicing. LB

FEDERATION COUNCIL OVERRIDES THREE MORE PRESIDENTIAL
VETOES... The Federation Council on 9 July approved a law
regulating mortgage procedures, overriding a presidential
veto. The law allows enterprises, buildings, apartments, and
some land plots to be mortgaged, RFE/RL's Moscow bureau
reported. However, it prohibits mortgages of farmland or
property belonging to the state or municipalities. Several
deputies called attention to flaws in the law, and the
Council approved it on condition that certain passages be
amended. Also on 9 July, the upper house overrode Yeltsin's
vetoes of a law to double the tax on foreign-currency
purchases from 0.5 percent to 1 percent and of legislation
granting discounts on transportation fees for children who
need treatment at sanitoria, ITAR-TASS reported. Yeltsin is
obliged to sign laws after both houses of the parliament
override his veto. LB

...BUT REJECTS LAW ON MEDICAL CHECKS FOR PRESIDENT. The
Federation Council on 9 July rejected a law that would have
outlined a procedure for determining the president's fitness
to serve, Russian news agencies reported. The law would have
allowed the Supreme Court to rule on whether the president
displays a persistent inability for health reasons to
perform the duties of his office (see "RFE/RL Newsline," 3
July 1998). The same day, the Council voted down a law
passed by the Duma, which would have declared 23 February a
non-working holiday. During the Soviet period, 23 February
was celebrated as Red Army Day and was a major holiday. Now
it is Defenders of the Fatherland Day and is not a
guaranteed day-off from work. LB

COUNCIL FAILS TO APPROVE BUDGET CODE. The Federation Council
on 9 July decided not to consider the budget code, which was
passed by the Duma on 3 July. Instead, the upper house voted
to form a conciliatory commission to amend that law, which
is part of the government's anti-crisis program. The budget
code outlines the procedure for adopting and amending the
federal budget and also regulates relations between federal
and regional budgets. Also on 9 July, the Council approved
several laws that would increase 1998 budget spending, ITAR-
TASS reported. The laws seek to add a separate article to
the budget on funding for teachers' salaries and to allocate
30 million rubles ($4.8 million) for the office of Russia's
human rights commissioner (see "RFE/RL Newsline," 17 June
1998). Another law would allocate more government funds for
low-interest credits to agricultural enterprises. LB

NEMTSOV CONDEMNS RAILROAD BLOCKADE... Deputy Prime Minister
Boris Nemtsov told a 9 July congress of the main trade union
for coal miners that the blockade of the Trans-Siberian
Railroad in Kemerovo Oblast is an insulting response to
government measures to help the coal industry, such as the
lowering of freight tariffs on coal by 25 percent, ITAR-TASS
reported. Nemtsov urged the congress to oppose the
economically "devastating" blockade and proposed that unions
make a proposal for trade-union control of federal
expenditures to the coal industry. In an interview with
RFE/RL's Moscow bureau, Nemtsov said the current blockade is
"not linked to the worsening of the social or economic
position of miners," which, he argued, has somewhat improved
since May. Instead, Nemtsov claimed, "on both the regional
and federal level, there are political forces that try to
use miners to achieve their own narrow goals." He declined
to elaborate, but called for "the toughest measures" to be
imposed against those behind the protests. BT

...WHILE UNIONS OPPOSE NEMTSOV. Most union representatives
opposed Nemtsov's appeal to condemn the blockade of the
Trans-Siberian Railroad, "Nezavisimaya gazeta" reported on
10 July. Telegrams from miners who did not receive back
wages promised by recent government protocols were presented
at the congress, RFE/RL's Moscow bureau reported. Of the two
candidates expected to run for leadership of the Independent
Trade Union of Coal Miners, "Nezavisimaya gazeta"
anticipated the victory of Ivan Mokhnachuk, who supports the
miners' demands for Boris Yeltsin's resignation. Meanwhile,
the number of pickets on the Trans-Siberian in Kemerovo
Oblast doubled by 10 July, ITAR-TASS reported. The previous
day, Deputy Prime Minister Sysuev sent a telegram to
Kemerovo Governor Aman Tuleev offering to chair a meeting of
the Inter-Departmental Commission for the Problems in Mining
Regions in Kemerovo Oblast before 25 July, on condition that
the blockade is immediately lifted and the miners'
"political demands" not discussed. BT

GOVERNMENT EXTENDS DEADLINE FOR BIDDING ON ROSNEFT. First
Deputy State Property Minister Aleksandr Braverman announced
on 10 July that the government has extended the deadline for
the privatization auction of a 75 percent stake plus one
share of the oil company Rosneft, RFE/RL's Moscow bureau
reported. The government had scheduled the auction for this
month after the first attempt to sell the controlling stake
in Rosneft failed in May. But in recent days, the companies
considered most likely to purchase Rosneft have announced
that they will not bid for the shares (see "RFE/RL
Newsline," 7 July 1998). Braverman said the government will
now accept bids for the Rosneft stake until 27 October and
will announce a winner three days later. Fuel and Energy
Minister Sergei Generalov told NTV on 9 July that the
government hopes world oil prices will rise by this fall,
making Rosneft a more attractive investment. LB

PROSECUTORS CHARGE WIFE OF SLAIN OPPOSITION FIGURE. Tamara
Rokhlina has been charged with premeditated murder in the 3
July killing of her husband, former State Duma Defense
Committee Chairman Lev Rokhlin, ITAR-TASS reported on 10
July, citing Vladimir Solovev, the deputy head of the team
from the Prosecutor-General's Office that is investigating
the killing. Rokhlina confessed to the crime while being
questioned by police. The weekly "Argumenty i fakty"
reported in its latest edition that Rokhlina had threatened
to kill her husband on many occasions. But several other
newspapers, most recently "Komsomolskaya pravda" on 10 July,
suggest that police forced her to confess and have pointed
to evidence that casts doubt on her guilt (see also "RFE/RL
Newsline," 7 July 1998). "Novye izvestiya" on 8 July
speculated that the special services may have been involved
in the murder. Rokhlin's allies have also charged that his
death was a political killing. LB

IS RUSSIA PLANNING ANOTHER CAUCASUS WAR? The Russian
military and the Interior Ministry are engaged in systematic
large-scale preparations for a new war in the North
Caucasus, according to "Moskovskii Komsomolets" on 9 July.
The newspaper identifies as the key figures in those
preparations Colonel-General Leontii Shevtsov, who commands
the Interior Ministry's Operational Force in the North
Caucasus, and Chief of General Staff Anatolii Kvashnin, both
of whom were involved in drafting plans for the 1994
invasion of Chechnya. The plans reportedly include "surgical
strikes" by Russian bombers against guerrilla bases in
Chechnya. Any decision on the beginning of combat actions
must be endorsed by the Russian Security Council, of which
Russian President Yeltsin is chairman. LF

TRANSCAUCASUS AND CENTRAL ASIA

INTERFAX RETRACTS REPORT ON NATO PEACEKEEPING FORCE.
Interfax on 9 July issued a revised version of a report
released the previous day on a Tbilisi press conference held
by newly appointed U.S. Ambassador Kenneth Spencer Yalowitz.
Interfax admitted that the original report "contained an
error which significantly affected the essence of what the
ambassador said." That report cited Yalowitz as saying the
U.S. intends to promote a decision on the deployment in
Abkhazia of a NATO peacekeeping force (see "RFE/RL
Newsline," 9 July 1998). The revised dispatch quotes
Yalowitz as saying that a political decision by Georgia and
Abkhazia is a necessary precondition for the deployment of a
NATO force and that since no such decision has been made,
there are no grounds for deploying NATO peacekeepers in
Abkhazia. LF

DOCUMENT READY FOR SIGNING AT ARDZINBA-SHEVARDNADZE MEETING.
Abkhaz presidential envoy Anri Djergenia and Georgian
Ambassador to Moscow Vazha Lortkipanidze have reached
agreement on "the basic principles" of a document to be
signed by Georgian President Eduard Shevardnadze and his
Abkhaz counterpart, Vladislav Ardzinba, "Nezavisimaya
gazeta" reported on 10 July. Djergenia said the planned
meeting between the two presidents can now take place "in
the very near future." The document focuses on measures to
repatriate and guarantee the security of the estimated
35,000 ethnic Georgians who fled from Abkhazia's
southernmost Gali Raion during the fighting in late May. LF

GEORGIAN OPPOSITION WANTS TERRITORIAL DIVISIONS ABOLISHED.
Fifty-two opposition representatives on 9 July announced
they will appeal to the Constitutional Court to abolish the
existing territorial-administrative division of the country,
Caucasus Press and RFE/RL's Tbilisi bureau reported. Labor
Party leader Shalva Natelashvili told journalists that the
present division of the country into administrative regions
is inadmissible, both politically and economically. He added
that unspecified regional administrators may demand formal
autonomy for their fiefdoms and that the funds allocated for
local administration could better be spent on social needs.
Natelashvili said that his party and other opposition
parties agree on the need for changes in the Constitution to
redefine the role of the Cabinet of Ministers and to
introduce a two-chamber parliament. LF

ARMENIA'S YEZIDI KURDS WANT REPRESENTATION IN PARLIAMENT.
Meeting on 9 July in Yerevan, the Presidium of the Union of
Yezidis of Armenia unanimously agreed to propose to the
president, prime minister, and parliament that the new
election law allow the Yezidi community to elect a
representative to the Armenian parliament, Noyan Tapan
reported. There are an estimated 50,000-70,000 Yezidi Kurds
in Armenia, some of whom are lobbying for recognition as an
ethnic group distinct from the Muslim Kurds. LF

ARMENIAN SUPREME COURT DISBANDED. In accordance with the
1995 Constitution of the Republic of Armenia, the Supreme
Court has been superseded by a Court of Appeals, which is
vested with fewer responsibilities, RFE/RL's Yerevan bureau
reported on 9 July. The new court is divided into two
"chambers": criminal-military and civil-economic. It will
examine only those appeals against verdicts handed down by
lower courts. Introducing chairman Henrik Danielyan to the
new court, President Robert Kocharian rejected criticism of
the new Criminal Procedural Code adopted by the National
Assembly, according to Noyan Tapan. LF

AZERBAIJANI OPPOSITION CRITICIZES ELECTION LEGISLATION. The
Democratic Congress, which is composed of 10 opposition
parties, issued a statement on 9 July assessing the recent
changes to legislation on the upcoming presidential
elections, Turan reported. The statement said the changes
are not substantive and do not address the opposition's
criticisms. It stressed that the opposition will nominate a
candidate for the elections only if the minimum turnout is
reduced from 50 percent plus one vote to 25 percent and if
parity is observed in forming electoral commissions. Also on
9 July, the Social Democratic Party of Azerbaijan announced
it will join the opposition boycott of the 11 October
ballot. President Heidar Aliev has signed a decree
empowering the parliament, Foreign Ministry, and Central
Electoral Commission to invite foreign observers to monitor
voting. LF

KAZAKH GOVERNMENT SPARED AX--FOR NOW. Kazakh President
Nursultan Nazarbayev expressed displeasure after hearing a
report on the country's economic performance in the first
half of 1998 but did not sack the government of Prime
Minister Nurlan Balgimbayev as had been rumored, ITAR-TASS
and Interfax reported on 10 July. ITAR-TASS the previous day
had quoted an unnamed government official as saying
Nazarbayev would dismiss the government after hearing the
report. Interfax the same day quoted presidential press
secretary Kairat Sarybayev as refuting such rumors.
According to the report, tax revenues and investments are
down and the economic situation is worsening. While not
dismissing the government, Nazarbayev told cabinet members
"I am warning you, perhaps for the last time." BP

ALMATY WATER SUPPLY CONTAMINATED. Traces of cholera bacteria
have been found in the reservoirs and rivers that provide
water to Kazakhstan's largest city, Almaty, ITAR-TASS
reported on 9 July. Local epidemiologists have requested
that all water reservoirs within city limits be drained,
their beds dredged to a depth of 1.5 meters, and the soil
transported outside Almaty for treatment. Waste from
recreation areas in the nearby mountains is being blamed for
the problem. BP

FLOODING IN UZBEKISTAN LEAVES 71 DEAD. Flooding in the Uzbek
section of the Fergana Valley has left at least 71 people
dead, ITAR-TASS reported on 10 July. A landslide in the
mountains of neighboring Kyrgyzstan two days earlier causes
the water of lakes to rise by 3-4 meters; those lakes were
already over-filled as a result of earlier rains. The Uzbek
village of Shakhimardan was especially hard hit when water
in the Ak-su River also rose by 3-4 meters. An Uzbek
official from the Fergana Oblast said "the main reason" why
people were not evacuated from the area was the lack of a
timely warning by the Kyrgyz authorities of the approaching
flood. BP

CENTRAL ASIA'S 'ROYAL WEDDING' ANNOUNCED. Aydar Akayev, the
oldest son of Kyrgyz President Askar Akayev will marry Aliya
Nazarbayeva, the daughter of Kazakh President Nazarbayev, in
the second half of July, Interfax reported on 10 July. The
ceremony will be held at President Akayev's residence on the
shores of Issyk-Kul near the town of Cholpon-Ata. The
wedding will follow a Central Asian Union summit meeting in
Kyrgyzstan scheduled to begin on 17 July. BP

REGIONAL AFFAIRS

FEDERATION COUNCIL CALLS FOR ACTION AGAINST LATVIA. The
Federation Council on 9 July unanimously approved a non-
binding resolution calling on President Boris Yeltsin to
"take the toughest steps against the Latvian authorities,
going as far as an economic embargo against Latvia, to put
an end to the large-scale violations of the rights" of
ethnic Russians, Interfax reported. The same day, the
Council unanimously approved a statement "on the continuing
violations of fundamental human rights and freedoms" in
Latvia. It called on the government to consider imposing an
economic embargo on Latvia and urged politicians and
entrepreneurs to put more pressure on Latvian authorities,
"going as far as curtailing business relations with Latvia."
Moscow Mayor Yurii Luzhkov, one of the most outspoken
critics of Latvia's policy toward ethnic Russians, urged his
colleagues to pass both documents (see "RFE/RL Newsline," 13
and 30 March 1998). LB

LATVIAN PRESIDENT URGES OSCE TO CEASE RECOMMENDATIONS ON
CITIZENSHIP. At a joint press conference with Polish
President Alexander Kwasniewski in Riga on 8 July, Guntis
Ulmanis said he hopes the OSCE will give Latvia guarantees
that it will not make any "new and unfeasible"
recommendations on amending Latvia's citizenship law,
Interfax reported the next day. Poland currently chairs the
OSCE. In response to a journalist's question as to whether
such guarantees would be forthcoming, Kwasniewski said that
in Europe there is a "long-established approach" to the
problem of ethnic minorities. "If the OSCE leadership
confirms that this approach is correct, then we accept it,"
he said. JC

BIRKAVS IN ST. PETERSBURG. Earlier this week, Latvian
Foreign Minister Valdis Birkavs visited St. Petersburg,
despite calls by the Russian presidential administration for
regional leaders to snub him (see "RFE/RL Newsline," 3 July
1998). RFE/RL's Latvian Service reports that Birkavs met
with the deputy governor of St. Petersburg but that a
scheduled meeting with the governor of that city did not
take place. JC

END NOTE

PIPELINES UNDER TROUBLED WATERS

by Paul Goble

	The actions of Western oil companies and the concerns
of their Russian counterparts have prompted Moscow to change
its position on the legal status of the Caspian Sea.
	But Moscow's shift, as reflected in a new accord with
Kazakhstan signed earlier this week, seems unlikely to end
disagreements among Caspian littoral states over the
exploitation of the natural resources in and below that body
of water. Instead, both Moscow's response and the Western
actions that appear to have triggered it may mean that
development in the Caspian basin will proceed without any
formal resolution of this dispute.
	That development, in turn, could set the stage for
some new and even more intense disagreements among the
countries and companies involved in the dispute.
	On 6 July, Russian President Boris Yeltsin and
visiting Kazakh President Nursultan Nazarbayev signed an
accord delimiting the northern Caspian sea bed and thus
allowing the two countries to exploit resources lying under
the sea bed without having to worry about a legal challenge
from the other.
	Both Russian and Western media suggested that this was
a major change in Moscow's position and that Moscow's new
position in effect settles the conflict over the status of
the Caspian Sea. And Umirsek Kasenov, a senior Kazakhstan
scholar, told RFE/RL two days later that the accord marked
"the first step toward the full regulation of the issue."
	In fact, the accord may not do anything of the kind.
It does not represent a complete negation of Russia's
earlier insistence that the Caspian be treated as a lake and
exploited only on the basis of a joint agreement of all
littoral states. Rather, it simply draws a line on the sea
floor of one small part of the northern Caspian that adjoins
the Russian Federation and Kazakhstan. And it specifically
holds that exploitation of the fish and other bio-resources
of the sea should be governed by a joint agreement between
all five littoral states.
	Moreover, the Russian-Kazakh agreement does not
satisfy the other littoral states, which continue to insist
that the Caspian be treated as a sea and thus subdivided on
the basis of territorial waters. And it has already been
denounced by two of those countries as a breach of earlier
internationally recognized agreements.
	Azerbaijan, for example, continues to insist that both
the sea and the sea bed must be divided, while the leaders
of Turkmenistan and Iran denounced the Russian-Kazakh
agreement.
	Speaking in Tehran on 8 July, Turkmen President
Saparmurat Niyazov said that "the sea bed and the waters of
the sea cannot be divided on a bilateral basis." And the
previous day, the Iranian Foreign Ministry said that Tehran
"will not recognize" a bilateral accord that is "contrary to
the existing legal regime of the Caspian Sea."
	But three other announcements this week suggest that
the Russian shift may mark a turning point in the
development of the region, albeit one very different from
the kind many are predicting.
	First, Russian reporting on the accord suggested that
it had been concluded for largely economic reasons. Several
Moscow experts described as "equally distant from the
internal political ambitions" of Yeltsin and Prime Minister
Sergei Kirienko said Moscow had acted because it is seeking
"cheap credits" from the West.
	By suggesting that the latest shift does not reflect
Russia's strategic interests, they implicitly pointed to the
power of Russian oil and gas interests in forcing Yeltsin's
hand. That, in turn, suggests a new coalition in the Russian
capital that may try to cut economically beneficial deals
with other littoral states even at large geopolitical costs.
	Second, another Russian analyst suggested that "only
Washington" will be able to promote a consensus on the
Caspian, "considering the interests of American oil and gas-
producing companies." Having argued that Turkmenistan and
Azerbaijan have "granted the Americans de-facto the right to
divide the Caspian," this analyst suggested that Moscow had
little choice but to modify its earlier views.
	Third, and perhaps most significantly, Azerbaijan
indicated on 8 July that it would no longer let disputes on
the Caspian affect the construction of pipeline under the
Caspian between Turkmenistan and Azerbaijan.
	Vafa Goulizade, a senior adviser to Azerbaijani
President Heidar Aliev, said that the building of this
pipeline should "absolutely not" be linked to a resolution
of the legal question of the status of the sea.
	If that attitude receives the support of Western oil
and gas companies and the deference of Russian petroleum
concerns, that in itself could set the stage for a new kind
of competition over the Caspian. Instead of being between
governments, it would be among firms.
	But as has happened so often before, the actions of
large companies could draw in the governments as well. And
in the absence of any semblance of legal regulation of the
status of the Caspian Sea, such involvement by strong firms
and regional governments might not only lead to potentially
serious clashes but draw in outside powers as well.

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