You see things and you say 'Why?' But I dream thing that never were; and I say, 'Why not?'. - Geroge Bernard Shaw
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 146 Part I, 31 July 1998


___________________________________________________________
RFE/RL NEWSLINE Vol. 2, No. 146 Part I, 31 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

* GOVERNMENT STRIKES DEAL WITH GAZPROM ON TAXES

* TOP OFFICIALS SEEK TO REASSURE FOREIGN INVESTORS

* AZERBAIJAN PLEDGES TO ABOLISH CENSORSHIP
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NOTE TO READERS: The publisher, editor, and staff of "RFE/RL
Newsline" would like to thank Laurie Belin for her valuable
contribution to our publication and to wish her well as she
pursues an advanced degree at Oxford University, England. As
of 3 August, Julie Corwin will take over the position as
regional specialist for Russia.
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RUSSIA

GOVERNMENT STRIKES DEAL WITH GAZPROM ON TAXES. Government
officials and Gazprom chief executive Rem Vyakhirev have
agreed on a tax payment schedule, RFE/RL's Moscow bureau
reported on 30 July. The gas monopoly was originally
supposed to pay some 4 billion rubles ($640 million) in
taxes this month. However, Fuel and Energy Minister Sergei
Generalov told journalists that Gazprom's monthly tax bill
will total 3.1 billion rubles. Of that figure, 2.5 billion
rubles will come from Gazprom, and 600 million rubles will
be paid to the company from the Finance Ministry and
immediately relayed to the federal budget. (The Finance
Ministry payments will help settle debts to Gazprom accrued
by budget-funded organizations.) Earlier this month,
ministers vowed to force Gazprom to pay its full tax bill
and described as "illegal" a deal struck earlier this year
allowing Gazprom to pay 2.45 billion rubles each month (see
"RFE/RL Newsline," 3 and 7 July 1998). LB

KIRIENKO TELLS TAX CHIEF TO LEAVE GAZPROM ALONE FOR NOW.
Prime Minister Sergei Kirienko on 30 July ordered State Tax
Service chief Boris Fedorov to halt all punitive measures
against Gazprom until the government and gas monopoly have
signed an agreement on settling mutual debts, Russian news
agencies reported, citing Fuel and Energy Minister
Generalov. That agreement is expected to be signed during
the first few days of August. Speaking at a cabinet meeting
earlier the same day, Gazprom head Vyakhirev charged that
tax officials are using "inappropriate" methods against his
company, and he threatened that the company will cease
production if those methods continue. In early July, Fedorov
halted the seizure of Gazprom assets but has since warned
Vyakhirev that the asset seizures will resume if Gazprom has
not paid its July taxes in full by 1 August, "Izvestiya"
reported on 31 July. LB

TOP OFFICIALS SEEK TO REASSURE FOREIGN INVESTORS... Prime
Minister Kirienko, Central Bank Chairman Sergei Dubinin,
Finance Minister Mikhail Zadornov, Unified Energy System
chief Anatolii Chubais, and State Tax Service head Fedorov
were among the officials who met with representatives of
foreign banks and investment firms in Moscow on 30 July,
"Kommersant-Daily" reported. The officials briefed foreign
investors on economic data and the government's policy plans
but did not announce any new initiatives. At a press
conference later the same day, Zadornov said tax revenues in
cash during the first half of 1998 were 8 percent higher
than the corresponding figure from 1997, RFE/RL's Moscow
bureau reported. He added that tax revenues for July are
expected to exceed 12 billion rubles ($1.9 billion). (In
June the federal government collected 11.2 billion rubles in
taxes.) Zadornov predicted that tax collection will continue
to improve once new laws and government directives take
effect in August. LB

...INSIST DEVALUATION OUT OF THE QUESTION. Central Bank
Chairman Dubinin on 30 July dismissed speculation that the
government will be forced to abandon the ruble corridor
later this year, RFE/RL's Moscow bureau and Reuters
reported. Independent economist Andrei Illarionov is among
those who believe a sharp ruble devaluation is inevitable.
But during a joint press conference with Finance Minister
Zadornov, Dubinin said Illarionov either "does not
understand how the market works or is deliberately
misleading people." The Central Bank head even mentioned
rumors that Illarionov is trying to drive down the ruble in
order to make money on a futures contract, although Dubinin
did not vouch for the accuracy of such allegations. During
an interview with Ekho Moskvy on 30 July, Central Bank First
Deputy Chairman Sergei Aleksashenko said "rumors of the
ruble's death are premature." LB

CENTRAL BANK'S HARD-CURRENCY RESERVES INCREASE. The Central
Bank's gold and hard-currency reserves rose from $13.6
billion to $19.2 billion from 17 to 24 July, ITAR-TASS
reported on 30 July. During that week the bank received $4.8
billion in funds from an IMF credit. Several Eurobond issues
helped bolster the Central Bank's reserves earlier this
year, but Finance Minister Zadornov announced on 30 July
that Russia plans no further sales of Eurobonds until late
October, Interfax reported. He said Russia will borrow
abroad again only once market conditions become more
favorable. Turmoil on Russian financial markets and
downgrades by international credit rating agencies have
driven up the cost of foreign borrowing for the Russian
government. LB

KIRIENKO WILL NOT TOLERATE RAILROAD BLOCKADES. Prime
Minister Kirienko said at a 31 July conference at the
Railroads Ministry that "the government will instill order"
to bring an end to the railroad blockades, Interfax
reported. Sakhalin Oblast's botched attempt to have Interior
Ministry troops disperse miners blockading a power plant on
30 July drew strong criticism. The chairman of the
nationwide coal miners' union said it will incite its
600,000 members to civil disobedience, including the
blockade of highways and railroads if force is used against
Sakhalin protesters. The management of a coal operation in
Sakhalin warned that such force would trigger social unrest
throughout Russia's mining regions, ITAR-TASS reported on 30
July. Sakhalin Deputy Governor Ivan Malakhov told reporters
the next day that the regional authorities will not use
force to disperse the picketers. Meanwhile, coal shortages
caused by the blockade have led to further electricity
outages in Sakhalinsk. Sakhalin's hospitals will have
electricity for only 6 hours on 31 July. BT

CHELYABINSK GOVERNOR GIVES PROTESTING MINERS ULTIMATUM. Petr
Sumin announced that a state of emergency would be imposed
in Chelyabinsk Oblast if miners did not lift their five-day
blockade of the Trans-Siberian Railroad by the night of 30
July, "Kommersant-Daily" reported. Blockaders have begun to
stop passenger trains in addition to freight trains, leading
to fist fights between miners and train officials. The
federal government recently sent 9.6 million rubles ($1.5
million) to pay wage debts, but the miners insist on 60
million rubles as a condition for lifting the blockade. BT

RUSSIAN-JAPANESE NAVAL EXERCISE 'BIG SUCCESS.' The first
Russian-Japanese naval maneuvers have been dubbed a "big
success " by both sides, ITAR-TASS and Interfax reported.
Two destroyers from each country, along with Russian
helicopters and Japanese airplanes, conducted a mock rescue
of a Japanese ship in the northeastern part of the Sea of
Japan, about 400 kilometers from Vladivostok. Bad weather
forced the exercise to continue until 30 July. Meanwhile,
Yeltsin and Kirienko sent letters of congratulations to the
new Japanese Prime Minister Keidzo Obuchi on 30 July.
Yeltsin's letter also contained an invitation to Obuchi to
visit Russia this fall. The Russian president also sent a
message to former Prime Minister Ryutaro Hashimoto thanking
him for his part in the "history-making" developments in the
two countries' relations. BP

NEW FSB CHIEF SAYS NO MAJOR PURGE DURING REORGANIZATION.
Federal Security Service (FSB) Director Vladimir Putin told
"Kommersant-Daily" on 30 July that there will be no "massive
firings" during the reorganization of the FSB. He said the
service's staff does not greatly exceed 4,000 people, the
upper limit set by a recent presidential decree (see "RFE/RL
Newsline," 27 July 1998). Putin said staff reductions will
be carried out mostly by attrition. Commenting on reports
describing him as a close ally of Unified Energy System head
Anatolii Chubais, Putin said he and Chubais hardly knew each
other in St. Petersburg. He added that it was Kremlin
official Pavel Borodin who invited him to join the
presidential administration in 1996 (when Chubais was
Yeltsin's chief of staff). Writing in "Nezavisimaya gazeta"
on 31 July, a correspondent from St. Petersburg also
discounted reports characterizing Putin as "Chubais's man."
LB

OFFICIAL WARNS OF POSSIBLE RADIATION THREAT IN NORTH. Deputy
Atomic Energy Minister Nikolai Yegorov on 30 July warned
that spent fuel removed from nuclear submarines could pose a
radiation hazard in the Andreev Bay (Murmansk Oblast),
Russian news agencies reported. Speaking to journalists
following a meeting of a Russian-Norwegian commission on
radiation safety, which he co-chairs, Yegorov said the
radiation level is currently under control but noted that
"the situation is getting worse with each passing year" and
could eventually become a "catastrophe." He said Russia has
decommissioned 157 submarines, 95 of which belong to the
Northern Fleet. But whereas an estimated $1.5 billion is
needed to dismantle decommissioned submarines and improve
the way spent fuel is stored, Interfax said the Russian
budget has earmarked only some $35 million for such
projects. ITAR-TASS said Norway, Japan, and The Netherlands
have promised a combined $53 million to help deal with the
problem. LB

PROSECUTORS CHARGE FORMER DEFENSE MINISTRY OFFICIAL. Chief
Military Prosecutor Yurii Demin announced on 30 July that
his office has filed criminal charges against former Deputy
Defense Minister Konstantin Kobets, RFE/RL's Moscow bureau
reported. Kobets gained fame when he helped defend the White
House during the August 1991 coup and later held high posts
in the Defense Ministry. Duma Defense Committee Chairman Lev
Rokhlin publicly accused Kobets of corruption in July 1996,
but Kobets was fired and arrested only in May 1997. He is
charged with taking bribes, abusing his official position,
and illegal possession of firearms (see "RFE/RL Newsline,"
19 and 20 May 1997). No trial date has been set, as Kobets
will be given time to read documents related to the case
against him. He denied the charges against him in an
interview with "Kommersant-Daily" on 31 July. LB

OFFICIAL SAYS AMNESTY BENEFITS HIGH-RANKING MILITARY
CRIMINALS. Chief Military Prosecutor Demin told journalists
on 30 July that an amnesty declared by the State Duma has
allowed the heads of some criminal groups to escape
punishment, RFE/RL's Moscow bureau reported. Demin said 14
former high-ranking generals have been sentenced during the
last two years, another 14 are under criminal investigation,
and 13 have been freed under an amnesty (see "RFE/RL
Newsline," 7 January 1998). He argued that the wording of
the amnesty resolution has allowed highly decorated generals
who masterminded some crimes to be freed, while the lower-
ranking officers who carried out those crimes serve prison
terms. The constitution grants the Duma alone the power to
declare amnesties. LB

UNION OF RUSSIAN CITIES PROTESTS GOVERNMENT TAX LAWS. The
Union of Russian Cities has issued a resolution protesting
the anti-crisis program's budget and recent tax laws as
infringements on "cities' financial independence,"
"Nezavisimaya gazeta" reported on 30 July. According to the
union, new tax laws cut local governments' share of overall
tax revenues while increasing municipalities' responsibility
for spending on services like education and housing.
Planned revenues to offset municipalities' losses, such as
the sales tax, are to be implemented on a regional level,
but the new system may make mayors more dependent on
regional governors or republican presidents. "Nezavisimaya
gazeta" points out that in many regions, mayors and
governors are political opponents. The Union will appeal to
the President to veto legislation passed by the parliament.
It plans to "recall" deputies and regional leaders who are
"destroying local self-government and deepening the
country's crisis" through the legislation. However, the
Union has no mechanisms to change federal laws or recall
deputies. BT

PROSECUTORS INVESTIGATING POSSIBLE FRAUD IN NIZHNII. The
Prosecutor's Office in Nizhnii Novgorod is investigating
allegations that officials falsified the results of the
March mayoral election, which was later annulled, RFE/RL's
correspondent in Nizhnii Novgorod reported on 31 July. Yurii
Lebedev, who resigned as presidential representative in
Nizhnii Novgorod Oblast after the mayoral election, alleged
during a recent appearance on local television that Governor
Ivan Sklyarov phoned election officials, asking them how
many votes they shaved off Andrei Klimentev's total. The
official tally indicated that Klimentev won the race by just
2 percent of the vote, but Lebedev says Klimentev's real
margin of victory was 10 percent. Prosecutors have
questioned Lebedev and the former chairman of the city
electoral commission in connection with the allegations, and
are expected to question the governor soon. Sklyarov, a
former mayor of Nizhnii Novgorod, supported Vladimir Gorin,
who finished second to Klimentev in the March election. LB

DUMA DEPUTY MAY TAKE KLIMENTEV'S PLACE IN NIZHNII ELECTION.
Communist Duma deputy Vladimir Semago told ITAR-TASS on 30
July that he may compete in the Nizhnii Novgorod mayoral
election this September in place of Klimentev, who is
currently serving a prison sentence. Semago assisted
Klimentev's mayoral campaign earlier this year and
criticized the cancellation of the election. He later
defended Klimentev in court. He has been collecting
signatures to register as a candidate in the September
election in case Klimentev is unable to compete or withdraws
his candidacy. Semago, a wealthy businessman who owns a
casino and other properties in Moscow, has been a thorn in
the side of the Communist leadership since his election to
the Duma. He has periodically criticized the party's
strategy and has suggested that top officials may be
involved in corruption (see "RFE/RL Newsline," 7 August and
23 October 1997). LB

KRASNODAR LEGISLATURE SEEKING TO LIMIT GOVERNOR'S POWERS.
The Krasnodar Krai legislature has passed an amendment to
the regional law on the budget, which would limit the
governor's control over regional expenditures, ITAR-TASS
reported on 30 July. Governor Nikolai Kondratenko has
slashed some budget items this year without obtaining
approval from the legislature, and cuts have not affected
all programs equally. Education programs have been
especially hard hit. Legislators also charge that the
governor has used his power over budget allocations to
benefit well-connected firms. LB

LUZHKOV OVERSPENDS ON WORLD YOUTH GAMES BUDGET. The city of
Moscow spent 240 million rubles ($40 million) on July's
World Youth Games, some five times the planned amount,
Moscow finance head Serafim Yarnykh told reporters on 30
July. The city constructed an Olympic Village for the 7,000
participating teenage athletes, bought 200 new buses for the
event, and stationed 32,000 police in Moscow for the
duration of the games, Reuters reported. In September 1997,
Mayor Yurii Luzhkov's government staged elaborate and
expensive festivities for Moscow's 850th birthday. BT

DETAILS OF KIRIENKO-MASKHADOV MEETING STILL UNCLEAR. The
venue and agenda for the planned 1 August meeting between
Russian Prime Minister Kirienko and Chechen President Aslan
Maskhadov is still unclear, RFE/RL's Grozny correspondent
reported on 31 July. Maskhadov's press spokesman Mairbek
Vachagaev declined to confirm that the talks will take place
in the Ingushetian capital, Nazran, while a senior Russian
Interior Ministry official told ITAR-TASS on 31 July that
the probable venue will be the Dagestani capital,
Makhachkala. The talks are likely to focus on economic aid
for Chechnya rather than political issues. Viktor Ilyukhin,
chairman of the Duma Security Committee, told ITAR-TASS on
30 July that Kirienko should demand the disarming of all
Chechen forces that have not pledged loyalty to Maskhadov,
adding that the Russian premier should offer the assistance
of federal forces in achieving that objective. LF

TRANSCAUCASUS AND CENTRAL ASIA

TAJIK OFFICIAL DIES FROM INJURIES. Ali Imomnazrov, the
deputy head of the Tajik Customs Committee, died on 31 July
from injuries sustained when a bomb planted in his car
exploded the previous day, ITAR-TASS reported. The Tajik
Interior Ministry has so far not commented on the
investigation. BP

TAJIK OPPOSITION RECEIVES GOVERNMENT POSTS. President
Imomali Rakhmonov met with United Tajik Opposition (UTO)
leader Said Abdullo Nuri on 30 July to discuss appointments
of UTO members to posts in the government, RFE/RL
correspondents reported. Rakhmonov approved Shodi Kabirov as
minister of agriculture, Salamshah Muhabbatov as chairman of
the State Committee for Oil and Gas, Muhammadjon Davlatov as
chairman for the State Committee for Precious Stones,
Muhammadruzi Iskandarov as chairman of the State Committee
on Emergency Situations and Civil Defense, and Dovudkhoja
Islomov as chairman of the State Committee for Milk and
Meat. However, Rakhmonov rejected the leader of the Islamic
Renaissance Party, Muhammadsharif Himmatzoda, as deputy
prime minister and UTO field commanders Mirzo Ziyoyev as
defense minister and Amirkul Shukurov as chairman of the
State Committee of Industry. The rejection of the last three
will be discussed again by the two leaders in the near
future. BP

WORLD BANK APPROVES LOAN TO TAJIKISTAN. The World Bank
announced on 30 July that it has approved a $50 million loan
to Tajikistan, ITAR-TASS reported. The loan is part of $165
million loan package over three years and is to be used for
economic reform. BP

LORTKIPANIDZE ACCEPTS POST OF GEORGIAN STATE MINISTER. Vazha
Lortkipanidze told journalists in Tbilisi on 30 July that he
has accepted the post of minister of state offered him by
Georgian President Eduard Shevardnadze on 27 July. He said
his first priority would be to expedite economic reform.
Lortkipanidze rejected the allegations of opposition
politicians that he is "pro-Russian." He said both Georgia
and Russia need to take steps to elevate bilateral relations
to a new level. Lortkipanidze declined to name possible
candidates for his new cabinet but did not rule out creating
a coalition government, according to Caucasus Press. LF

UN EXTENDS OBSERVERS' MANDATE IN GEORGIA. The UN Security
Council has extended until 31 January 1999 the mandate of
the UN Observer Mission in Georgia, which expires on 31
July, Reuters reported on 30 July. The Security Council
also adopted a resolution condemning the "deliberate
destruction of houses by Abkhaz forces with the apparent
motive of expelling people from their home areas." It
stopped short, however, of complying with the Georgian
leadership's request that it condemn the punitive measures
against ethnic Georgians in Abkhazia's Gali Raion as
genocide. LF

RUSSIA WANTS GEORGIAN DECISION ON CIS PEACEKEEPERS. Russia's
special envoy for the Abkhaz conflict, Lev Mironov, told
Interfax on 30 July that Moscow wants the Georgian
leadership to state clearly whether or not it wishes the
mandate of the CIS peacekeeping force deployed along the
border between Abkhazia and the rest of Georgia to be
extended. That mandate expires on 31 July. Abkhaz President
Vladislav Ardzinba has written to Russian President Yeltsin
to request that the peacekeepers' mandate be prolonged. But
several prominent Georgian political figures have argued
that there is no sense in doing so if the peacekeeping force
is unwilling or unable to protect the Georgian population in
Gali. LF

RUSSIA, AZERBAIJAN ISSUE JOINT STATEMENT ON CASPIAN. A
statement issued on 30 July summarizing Russian First Deputy
Foreign Minister Boris Pastukhov's talks with Azerbaijani
leaders notes that Moscow and Baku have moved closer to an
agreement on dividing the sea bed of the Caspian but
continue to differ over dividing the waters and surface area
of the sea, ITAR-TASS reported. Pastukhov told journalists
before leaving Baku on 29 July that the agreement concluded
between Russia and Kazakhstan earlier this month on
delineating the northern sector of the sea will take effect
only after all five littoral states have signed a convention
on the Caspian's status. LF

AZERBAIJAN PLEDGES TO ABOLISH CENSORSHIP. Meeting in
Washington on 29 July with National Democratic Institute
personnel, Shahin Aliev, a legal adviser to Azerbaijani
President Heidar Aliev, announced that within seven to 10
days an official decree will be passed abolishing
censorship, Turan reported the next day. LF

DASHNAK PARTY CRITICIZES ARMENIAN PRESIDENT. Meeting with
journalists on 30 July, Dashnak Party (HHD) leaders said
that the party approves most, but not all aspects of
President Robert Kocharian's policy, RFE/RL's Yerevan
bureau reported. Vahan Hovanissian, who also is an aide to
Kocharian, and Armen Rustamian criticized Kocharian's
personnel policy, with the latter claiming that 22
"discredited" officials who served under the previous
leadership still occupy prominent positions. Hovanissian
took issue with Kocharian's assertion that there are no
longer any political prisoners in Armenia, noting that
several persons convicted in two notorious trials in 1996-
1997 remain in prison. The HHD was one of several parties
that aligned in the Justice and Unity bloc to support
Kocharian's candidacy in the March presidential election. On
27 July, a two-week congress of the HHD's Armenia-based
organization concluded with the election of a new nine-
member "supreme body." LF

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