RFE/RL NEWSLINE Vol. 2, No. 145 Part I, 30 July 1998

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RFE/RL NEWSLINE Vol. 2, No. 145 Part I, 30 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

* YELTSIN'S RETURN SPARKS NEW RESHUFFLE RUMORS

* FINANCE MINISTRY APPROVES TOUGH BUDGET FOR 1999

* RUSSIA, AZERBAIJAN SIGN CASPIAN PROTOCOL

End Note: METHOD TO LUKASHENKA'S MISCHIEF?
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RUSSIA

YELTSIN'S RETURN SPARKS NEW RESHUFFLE RUMORS. President
Boris Yeltsin's abrupt return to Moscow from Karelia (see
"RFE/RL Newsline," 29 July 1998) has fueled intense
speculation in the Russian media that he plans to reshuffle
the cabinet. NTV reported on 30 July that Yeltsin has
requested a meeting with Anatolii Chubais, head of the
electricity monopoly Unified Energy System and presidential
envoy to international financial institutions. The Kremlin
press service said Chubais on 31 July will brief the
president on Russia's recent negotiations with the IMF. But
NTV cited rumors that Yeltsin will bring Chubais back into
the government, possibly as deputy prime minister in charge
of financial matters. "Moskovskii komsomolets" speculated on
30 July that Deputy Prime Minister Oleg Sysuev, who is in
charge of social policy, will become deputy head of the
presidential administration, filling the slot vacated by new
Federal Security Service Director Vladimir Putin. LB

KREMLIN OFFICIAL DENIES DEFENSE MINISTER VULNERABLE.
Yevgenii Savostyanov, deputy head of the presidential
administration, told Interfax on 30 July that the
possibility of replacing Igor Sergeev as defense minister
"has not been raised." Some Russian newspapers have reported
in recent weeks that Sergeev is in poor health and has
submitted his resignation. But Savostyanov said Sergeev is
well and denied that there are any political or health-
related reasons for sacking the defense minister. LB

NDR OFFICIAL WANTS MORE REGIONAL LEADERS IN GOVERNMENT.
Aleksandr Shokhin, the leader of the Our Home Is Russia
(NDR) State Duma faction, told Interfax on 29 July that he
favors creating before the year 2000 a government based on a
"broad coalition." Shokhin said his proposal differs from
Communist calls for a "government of national trust." He
described it as a "government led by a strong prime minister
and with strong cabinet members capable of taking and
implementing decisions," in which "regional leaders must be
strongly represented." The NDR is one of many political
groups claiming to represent the interests of Russia's
regions, but the movement's base of support among regional
elites has eroded since Yeltsin sacked NDR leader Viktor
Chernomyrdin as prime minister in March. Several regional
leaders have reportedly rejected invitations to join the
cabinet in recent weeks (see "RFE/RL Newsline," 23 and 24
July 1998). LB

LEBED SAYS AUTHORITIES BOUND TO LOSE POWER. Addressing the
third congress of his Russian Popular-Republican Party
(RNRP), Krasnoyarsk Krai Governor Aleksandr Lebed said a
change of power is inevitable in Russia, Russian news
agencies reported on 30 July. Speaking to supporters in
Krasnoyarsk, Lebed said the RNRP and his Honor and
Motherland movement seek to "come to power relying on the
common sense of the people, not bayonets." He claimed that
loans from international financial institutions have staved
off a ruble devaluation for at most six months. He also
compared the government's tax policy to Soviet
"requisitioning of farm produce in the early 1920s" aimed at
"taking away everything possible and impossible." Lebed
characterized himself and the RNRP as representing a "third
force" in Russian politics. That expression was frequently
used in 1996, when Lebed campaigned for president as an
opponent of both Yeltsin and the Communists before
eventually teaming up with Yeltsin. LB

FINANCE MINISTRY APPROVES TOUGH BUDGET FOR 1999. The Finance
Ministry's board on 29 July approved the main parameters of
the draft budget for 1999, Russian news agencies reported.
The draft will be sent to the government in early August and
must be submitted to the Duma by the end of that month. The
Finance Ministry approved planned revenues of 376.1 billion
rubles ($60.3 billion) and spending of 456.1 billion rubles.
The revenue figure is little changed from the 1998 budget,
but planned expenditures are significantly lower than the
500 billion rubles foreseen in the 1998 budget. (The
government has unilaterally cut spending in many areas
because revenues collected have fallen far short of budget
targets.) The draft 1999 budget calls for a deficit of 80
billion rubles (or 2.7 percent of estimated GDP). In terms
of percentage of GDP, that deficit is a little more than
half as large as the 1998 budget deficit, a Finance Ministry
official told ITAR-TASS. LB

DRAFT BUDGET FORESEES 1 PERCENT GDP GROWTH. The draft 1999
budget approved by the Finance Ministry foresees economic
growth of 1 percent in 1999, ITAR-TASS reported on 29 July.
The 1998 budget was based on the assumption that Russia's
GDP would grow by 2 percent, but this year's economic crisis
has in effect eliminated growth prospects. Finance Minister
Mikhail Zadornov recently predicted that Russia's GDP will
contract by up to 1 percent in 1998 and will remain flat in
1999, Reuters reported on 27 July. The turmoil on Russian
financial markets has increased the government's borrowing
costs, although recent loan agreements with international
financial institutions have somewhat reduced the
government's need to borrow domestically using treasury
bills. ITAR-TASS on 29 July quoted a Finance Ministry
official as saying that the draft 1998 budget calls for 36
percent of expenditures to go toward debt servicing. In the
1998 budget, the corresponding figure was 31 percent. LB

MORE CRITICISM OF 'STATEMENT OF FOUR' ON CHECHNYA. Krasnodar
Krai governor Nikolai Kondratenko on 29 July echoed the
criticism made by his Saratov counterpart, Dmitrii Ayatskov,
of the 27 July statement by former Prime Minister
Chernomyrdin, Krasnoyarsk Krai Governor Lebed, CIS Executive
Secretary Boris Berezovskii, and Tatarstan President
Mintimer Shaimiev. That statement called for a clear Russian
policy on Chechnya and the North Caucasus. Kondratenko told
Interfax that there is no sense in persons based in Moscow
or Siberia trying to act as peacemakers in Chechnya. He said
that the Association of North Caucasus Peoples, whose
political council includes the heads of the North Caucasus
republics, is better qualified to do so. LF

ABDULATIPOV CALLS ON 'FOUR' FOR FINANCIAL CONTRIBUTIONS.
Speaking at a press conference in Moscow on 29 July, former
Russian Deputy Prime Minister Ramazan Abdulatipov appealed
to the signatories of the "statement of four," who were all
present, to donate contributions to a fund he proposed
establishing to finance reconstruction in Chechnya, ITAR-
TASS reported. Abdulatipov said he intends to donate the
royalties from his recent book on the North Caucasus to that
fund. Abdulatipov also predicted that the North Caucasus
will become a key issue in the Russian presidential campaign
in 2000, noting that the Caucasus "is already an indicator
of the capacities of government and statesmen," Interfax
reported. LF

CHECHNYA SAYS IT EXPELLED JAPANESE NATIONAL. Chechen
security officials said on 29 July that a Japanese citizen
has been expelled from Chechnya after being apprehended near
Gudermes on 16 July. Yoshikama Mumora was variously said to
have been engaged in gathering information on military
facilities for Japanese intelligence or to have intended to
stage his own abduction with the aim of pocketing part of
the ransom. But Chechen presidential spokesman Mairbek
Vachagaev claimed to be unaware of the incident, as did the
Russian Foreign Ministry and the Japanese Embassy in Moscow.
LF

RUSSIA, IRAN COMMENT ON U.S. SANCTIONS DECISION. Russian
Security Council official Nikolai Uspenskii told Interfax on
29 July that he was not surprised by the U.S. decision to
blacklist seven Russian research centers and companies
suspected of supplying dual purpose technology to Iran,
Libya, and North Korea. Iranian Ambassador to Moscow Mehdi
Safari told Russian media that the U.S. decision is based
"exclusively on rumors." Addressing a Moscow news conference
on 29 July after signing a cooperation agreement with his
Iranian counterpart, Mahdi Karbasian, Russian State Customs
Committee Chairman Valerii Draganov said the Russian customs
services "have all the necessary means" to prevent the
export of military and dual-purpose technology. He added
that investigations conducted by his agency into alleged
illegal exports of such technology have established that the
items in questions were of an exclusively peaceful nature.
LF

GOVERNMENT TO PUSH FOR LAW BANNING FASCIST PROPAGANDA. The
government on 30 July approved a draft law that would ban
"nazi symbols and literature in any form," Russian news
agencies reported. Justice Minister Pavel Krasheninnikov
said the draft outlines specific criteria and would ban
symbols used by Italy's National Fascist Party and Germany's
National-Socialist Party during the 1930s and 1940s. He said
the law would make exceptions for films and books that
"propagandize humanitarian ideas and denounce fascism,"
according to ITAR-TASS. Prime Minister Sergei Kirienko
called for submitting the law to the State Duma as soon as
possible. The Duma has twice rejected laws to ban fascist
propaganda (see "OMRI Daily Digest," 24 March 1997 and
"RFE/RL Newsline," 30 October 1997). On both occasions
Communist deputies and their allies warned that the laws
were vague and consequently could be used to crack down on
various opposition groups. LB

PRESIDENT SIGNS DECREE ON TRANSFER OF PRISON SYSTEM. Yeltsin
signed a decree on 28 July ordering the long-delayed
transfer of the prison system from the Interior Ministry to
the Justice Ministry to take place by 1 September, news
agencies reported. Justice Minister Krasheninnikov told a 29
July press conference that the transfer was made possible by
20 laws that recently came into force, ITAR-TASS reported.
Human rights groups have warned that epidemics of AIDS, food
poisoning, and tuberculosis plague Russia's unsanitary and
overcrowded jails. Krasheninnikov said the Justice Ministry
is planning major reforms in prisons, such as limiting the
duration of trials to one year, reducing the time suspects
are held in pre-detention centers, and creating separate
jails for convicts infected with HIV and tuberculosis.
However, Interior Ministry official Vyacheslav Bubnov told
Reuters on 29 July that "if the government does not have any
money, it will be hard to solve these problems wherever you
put the system." BT

POLICE BACK DOWN FROM CONFRONTATION WITH SAKHALIN MINERS.
Sakhalin Oblast authorities sent 60 unarmed Interior
Ministry troops to break up the six-day blockade of a
Sakhalin power station, but the troops withdrew without
breaking up the protest, ITAR-TASS reported on 30 July.
Earlier that day, Sakhalin Deputy Governor Ivan Malakhov
said he "cannot allow a group of pickets to hold the entire
island hostage," referring to the sporadic power outages
resulting from the blockade of the power plant. The miners
announced they will let through enough coal to keep one
power unit functioning for safety reasons. Meanwhile, miners
in Kemerovo Oblast on 29 July lifted the 25-day blockade of
the local Novokuznetsk-Tashtagol railroad near Osinniki
after the town received 5 million rubles ($800,000) to pay
back wages. BT

CONTROVERSIAL CANDIDATE REGISTERED FOR NIZHNII MAYORAL
ELECTION. The Nizhnii Novgorod electoral commission on 29
July registered the entrepreneur Andrei Klimentev as a
candidate in the mayoral election scheduled for 27
September, RFE/RL's Nizhnii Novgorod correspondent reported.
Klimentev narrowly won a mayoral election in March, but the
result was subsequently annulled. He has since been
sentenced to six years in prison on embezzlement charges. On
30 July, the Supreme Court was to hear Klimentev's appeal
against that prison sentence, but the court postponed
consideration of the case until 10 August, ITAR-TASS
reported. "Kommersant-Daily" predicted that if the Supreme
Court leaves the sentence against Klimentev in place, the
electoral commission will annul his registration as a
mayoral candidate. Even if he is allowed to run for mayor,
Klimentev faces an uphill battle because of a recent
amendment to Nizhnii Novgorod's electoral law (see "RFE/RL
Newsline," 3 June 1998). LB

JUDGE SAYS NEW ELECTION IN BASHKORTOSTAN UNLIKELY. Irek
Muksinov, the chairman of Bashkortostan's Constitutional
Court, says the republic is unlikely to hold a new
presidential election regardless of court rulings on the
federal level. The Russian Supreme Court recently ruled that
two candidates were illegally kept off the ballot in the
June election (see "RFE/RL Newsline," 27 July 1998). But
"Vremya-MN" on 29 July quoted Muksinov as saying that
Bashkortostan has its own legal system, in accordance with a
power-sharing agreement signed with the federal authorities
in 1994. Since there is currently no mechanism for
coordinating the republic's constitution and laws with their
federal equivalents, Muksinov said the Bashkortostan
authorities "will be governed by our own laws." Forcing the
republic to implement federal court rulings will be
difficult, since President Murtaza Rakhimov appoints judges
in Bashkortostan and enjoys the loyal support of the
republican legislature. LB

KHAKASSIAN LANGUAGE TO BECOME REQUIRED SUBJECT IN REPUBLIC.
Khakassian, which is a Turkic language, will become a
required subject in schools in the Republic of Khakassia in
line with an education policy approved by the republic's
government on 30 July, ITAR-TASS reported. The plan also
envisages courses in Khakassian history and nature in the
eastern Siberian republic. In addition, some schools will
offer language courses in Chuvash (another Turkic language)
and Polish. The plan is to take effect in the new academic
year, provided that it has been coordinated with the federal
Education Ministry by then. LB

TRANSCAUCASUS AND CENTRAL ASIA

RUSSIA, AZERBAIJAN SIGN CASPIAN PROTOCOL. A Russian
government delegation headed by First Deputy Foreign
Minister Boris Pastukhov and including the Russian co-
chairman of the OSCE Minsk Group, Yurii Yukalov, held talks
in Baku on 28-29 July on Russian-Azerbaijani relations and
the status of the Caspian Sea. Pastukhov told journalists on
29 July after meeting with President Heidar Aliev and
Foreign Minister Tofik Zulfugarov that Russia and Azerbaijan
are ready to sign a formal agreement on the division of the
Caspian sea bed and that Azerbaijan "holds the key" to
reaching agreement among all five littoral states on
dividing water resources. Azerbaijan wants the sea's waters
similarly divided among the littoral states, whereas Russia
favors the "condominium" principle, whereby each state would
receive a 10 or 12 km zone of territorial waters, leaving
the remainder of the sea under joint jurisdiction. Such an
agreement, Pastukhov said, would facilitate the
demilitarization of the Caspian. LF

PROGRESS ON TRANS-CASPIAN GAS PIPELINE. The U.S. company
ENRON has won the tender for conducting a feasibility study
on laying an underwater gas pipeline from Turkmenistan to
Baku, Turan and Interfax reported on 29 July, quoting
Turkmen Oil and Gas Minister Redjepbai Arazov. Under a U.S.-
Turkmen agreement signed in April, 1998, the U.S. has made
available $750,000 for such a study, which is expected to be
completed by mid-November. Speaking in Baku on 29 July,
Azerbaijani State Counselor Vafa Gulu-zade rejected Russian
and Iranian claims that an underwater gas pipeline would
pose a serious ecological threat to the Caspian. Gulu-zade
said such arguments, which figured in a joint statement
released after Pastukhov's visit to Tehran earlier this
month, are tantamount to an attempt to prevent the export of
fuel to the West via Azerbaijan and to have all export
pipelines routed through Russia and Iran instead, according
to Interfax. LF

ARMENIA ADVOCATES 'UNCONVENTIONAL' STATUS FOR NAGORNO-
KARABAKH. Armenian Foreign Ministry spokesman Arsen
Gasparian told journalists in Yerevan on 27 July that a
formal settlement of the Karabakh conflict should give
Karabakh a status that is "unique and non-conventional" in
international practice, RFE/RL's Yerevan bureau reported.
Gasparian said Armenia would welcome the introduction of
"elements" of the status enjoyed by the Principality of
Andorra, which is an independent country and a member of the
OSCE and is headed by two "co-princes," France's president
and Spain's bishop of Urgel. LF

ARMENIAN PRESIDENT ENDORSES DECENTRALIZATION. Meeting on 28
July with the mayors of more than 20 Armenian towns, Robert
Kocharian argued that decentralization is an essential
precondition for stability throughout the country, Noyan
Tapan and "Hayastani Hanrapetutiun" reported. Kocharian
proposed that local administrative bodies take over from
various ministries the responsibility for kindergartens,
schools, and hospitals. Financing will continue to be the
prerogative of the central government. Kocharian vowed that
the decentralization process will be completed before the
local elections due in 1999. LF

GEORGIA REJECTS RUSSIAN ALLEGATIONS. The Georgian Foreign
Ministry issued a statement on 29 July rejecting as
"unfounded and irresponsible" claims that the Russian
Foreign Ministry had made the previous day, ITAR-TASS
reported. The Russian Foreign Ministry had accused Tbilisi
of failing to take adequate measures to preclude further
terrorist incidents in Abkhazia's Gali raion. More than a
dozen Russian peacekeepers have been killed or injured in
land-mine explosions in Gali in recent weeks. Under the
terms of the cease-fire protocol signed in Gagra on 25 May,
the Georgian government undertook to prevent Georgian
guerrillas from infiltrating Gali. The Georgian Foreign
Ministry also accused Abkhazia of violating the remaining
three provisions of the 25 May protocol. Meanwhile, a top
Russian military official told ITAR-TASS on 29 July that the
Defense Ministry has no plans to withdraw the Russian
peacekeepers from Abkhazia when their mandate expires on 31
July. LF

FORMER GEORGIAN STATE MINISTER GIVEN NEW POST. Niko
Lekishvili was named deputy chairman of the ruling Union of
Citizens of Georgia (SMK) at a meeting of the party's
council on 28 July, Interfax reported. That meeting was
attended by President Eduard Shevardnadze. Announcing his
resignation on 26 July, Lekishvilki had said he planned to
work with the SMK in the runup to the parliamentary
elections due in November 1999 and that he will support
Shevardnadze's candidacy in the presidential elections the
following year. Interviewed by Interfax on 29 July, the head
of the "Popular" parliamentary group, Mamuka Giorgadze,
described the resignation of virtually the entire Georgian
cabinet as "theater of the absurd" intended to distract the
population from the unresolved Abkhaz conflict. Giorgadze
argued that parliamentary chairman Zurab Zhvania and the
heads of parliamentary committees should also step down. LF

TAJIK GOVERNMENT OFFICIAL INJURED BY CAR BOMB. Ali
Imomnazarov, deputy head of the Tajik customs committee, was
seriously injured when a bomb exploded in his official car
close to the presidential palace in Dushanbe early on 30
July, Reuters and ITAR-TASS reported. An unidentified
Interior Ministry official told Reuters the attack was
probably not politically motivated. LF

END NOTE

METHOD TO LUKASHENKA'S MISCHIEF?

by Christopher Walker

	As the controversy surrounding the Drazdy diplomatic
housing compound in Minsk continues, it may be useful to
examine more closely Belarusian President Alyaksandr
Lukashenka's strategy for diverting attention from domestic
ills in Belarus, while simultaneously consolidating his
position as one of the most effective populist politicians
in the post-Soviet world.
	While the boorish action taken by Belarusian
authorities against foreign diplomats is emblematic of
Lukashenka's blatant disregard of international norms, this
approach has also served his purposes, helping him to
burnish his image as a politician prepared to stand up to
the West and further his goal of becoming a player on a
larger stage in the former Soviet Union. Lukashenka's recent
public dialogue with Moscow Mayor Yurii Luzhkov provided a
forum in which Lukashenka could portray the West as a bully
set on dictating terms of behavior to former Soviet states,
thus rallying his base in Belarus and gaining political
mileage with Russians frustrated by the slow pace of
economic reform.
	Lukashenka's railing against the West is part of an
ongoing effort to blame present-day economic pain on Western
reform programs and methods rather than on the backward
Soviet era policies that originally brought on economic
implosion. In Russia, where a great deal of reform has been
undertaken, the distress resulting from social and economic
dislocation has created an environment where reforms already
applied are more closely associated with current pain than
the decades of Soviet communism that crippled the country's
economy and infrastructure.
	Whether Lukashenka will be able to wedge himself more
deeply into the Russian political scene is not yet clear,
but if he fails, it will not be for lack of trying. Albeit
on a limited scale, the Belarusian president continues to
travel to Russia and to broadcast his populist, Soviet-style
message via Belarusian State Radio to Russian regions. As
times get tougher, Lukashenka's claims of Western heavy-
handedness and his own promises of stability and order may
gain greater currency.
	Lukashenka will not likely ignore the fact that Boris
Yeltsin nearly had to beg the Western financial community to
stave off collapse of the Russian ruble and financial
markets. The tough conditions set by the IMF to encourage
needed restructuring of the Russian economy may be
characterized by some as a noose being tightened around the
country's economic neck, rather than medicine to help it get
better. With the Russian economy and so many of its key
institutions in disarray, it is easy to understand how many
Russians could be led to the conclusion that the West does
not have Russia's best interests at heart or at least is not
fully sensitive to the depth of the hardships being
experienced there. Loss of prestige as a world power is now
as palpable as ever in Russia, and Lukashenka does not
hesitate to play upon this sensitivity.
	In Belarus, the operative word is "control." This
wide-ranging control enables Lukashenka to exert his
authority over virtually all spheres of Belarusian life. He
himself deems this governing style as necessary for avoiding
the problems Russia and other former Soviet republics are
now facing. This domination extends over the judiciary,
parliament, media, NGO community, and economy. It is,
however, Belarus's own poor economic health under
Lukashenka's stewardship that may be his greatest domestic
political problem.
	It is telling that during the dispute over diplomats'
housing, both the IMF and the World Bank recalled their
respective representatives from Belarus. The IMF and the
World Bank explained that move by citing Belarus's failure
to fulfill mutual agreements and the obdurate refusal of the
regime to implement serious economic reform. With its low
levels of foreign investment and privatization and its heavy
reliance on barter arrangements with Russia, the World
Bank's country director for Belarus has said that the
Belarusian government needs "to have a fundamental
rethinking of its economic strategy".
	Russians may have been compelled to swallow their
collective pride in requesting this latest massive IMF loan
package, but Belarusians will enjoy only short-term relief
from their own government's economic policies, such as
restriction on foreign exchange trading and other quick-fix
measures taken in Minsk to prop up the Belarusian ruble. In
addition, Lukashenka's attempt to distinguish Belarus from
Russia with respect to wage arrears has been simply to
direct his treasury to print more money in order to pay
workers, thus raising the specter of inflationary pressures.
	But while Lukashenka and his inner circle may possess
a weak grasp of market economics, he does understand the
politics of the economic and social pain experienced by
people in former Soviet republics. The very issues to which
Lukashenka routinely refers--corruption, fraud, wage
arrears, profiteering, and economic insecurity--are, in
fact, those which plague Russia.
	As Russia contends with its most severe economic
crisis since the collapse of the Soviet Union, Lukashenka
gathers more fodder for his arguments against the incomplete
results of Western-style reform. The stakes are high.
Russia's internal situation is weak and its foreign policy--
less Western-friendly since the parliamentary elections of
December 1994--is being contested by nationalist xenophobes
and those who seek greater integration into and cooperation
with the West.
	With all of his apparent limitations, there is a
danger that in some disturbing ways, the times in post-
Soviet Russia could increasingly be more suited to
Lukashenka and his brand of populist politics. Though
Lukashenka may not be able to make good on his claim of
being "president for life", he may remain in power long
enough to cause a great deal of discomfort to those hoping
for greater cooperation and integration east of the newest
NATO member countries.
	Never short on surprises, Lukashenka has made
stability his rallying cry at home; at the same time, his
approach will generate just the opposite effect abroad.

The author is based in Prague and manager of programs at the
European Journalism Network.

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