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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 150 Part I, 6 August 1998


___________________________________________________________
RFE/RL NEWSLINE Vol. 2, No. 150 Part I, 6 August 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

* TAX SERVICE SEIZES OIL COMPANIES' ASSETS

* LABOR UNREST IN RUSSIAN REGIONS

* AZERBAIJANI LEADERS CALL ON OPPOSITION TO DROP ELECTION
BOYCOTT

End Note: TRANSITION NATIONS ACTIVE IN IMF LOANS
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RUSSIA

TAX SERVICE SEIZES OIL COMPANIES' ASSETS. The Federal Tax
Service on 6 August ordered the seizure of the assets of the
oil companies SIDANCO, ONAKO, and Eastern Oil for non-
payment of taxes. Vladimir Popov, head of the department
charged with collecting payments from companies in arrears,
told reporters that the assets will include buildings,
apartments, and cars belonging to the companies' management
and subsidiaries. According to Popov, SIDANCO owes 737.8
million rubles ($118 million) and ONAKO 214.5 million
rubles. Earlier, Minister of Fuel and Energy Sergei
Generalov had announced that SIDANCO and ONAKO will be
unable to access export pipelines in August owing to tax
arrears (see "RFE/RL Newsline," 3 August 1998).

FINANCE MINISTRY TO SUBMIT 1999 BUDGET. According to Russian
agencies, the Finance Ministry is putting the finishing
touches to its 1999 budget which it will submit to the
government on 7 August. The ministry is projecting 1 percent
growth in GDP and a budget deficit of 80 billion rubles
($12.8 billion) or 2.9 percent of GDP. Revenues are pegged
at 376.1 billion rubles (12.97 percent of GDP) and
expenditures at 456.1 billion rubles (15.7 percent of GDP).
ITAR-TASS reported that the government plans to spend more
on services next year--36 percent of total expenditures. In
1998, services accounted for only 31 percent of total
spending. At the end of the August, the government will pass
along the budget to the State Duma for its approval.
According to Interfax, Duma Budget Committee Chairman
Aleksander Zhukov has already said that the Duma is unlikely
to approve the budget unless it can do so with "a special
statement inserted placing the entire responsibility for it
on the government." JAC

LABOR UNREST IN REGIONS. As the crisis on Sakhalin eased
following the delivery of coal to the local power plant
during the night of 5 August, workers across Russia in
various industries expressed their dissatisfaction. On
Komsomolsk na Amure, paintshop workers at the Amur shipyard
began a hunger strike to protest two years' unpaid wages,
according to ITAR-TASS on 6 August. Meanwhile, miners in
Chelyabinsk who have been blocking the Trans-Siberian
railroad and ambulance workers in Vladivostok vow to
continue their strikes. Air-traffic controllers in Moscow
have threatened to strike, but Prime Minister Sergei
Kirienko on 6 August declared such action illegal. JAC

REGIONS UNPREPARED FOR WINTER. "Izvestiya" reports on 6
August that the government has compiled a list of 12 areas
with insufficient fuel reserves for the winter: Chukotka
Autonomous District, Primore, Khabarovsk and Altai Krais, as
well as Magadan, Kamchatka, Sakhalin, Chita, Ivanovo,
Novosibirsk, Arkhangelsk and Murmansk Oblasts. In all
localities, local energy suppliers have been owed debts for
at least eight months. In Ivanovo, for example, residents
owe more than 1 billion rubles ($158 million), and in
Arkhangelsk, Arkhenergo is owed 2.4 billion rubles. Deputy
Prime Minister Boris Nemtsov heads an interdepartmental
group established to specify measures of state support;
those measures will be elaborated in agreements to be signed
with each region. "Izvestiya" concludes that "once again
everything will depend on the availability of funds from the
state budget." JAC

ROSGOSSTRAKH SELL-OFF POSTPONED. Deputy State Property
Minister Aleksandr Braverman told a press conference on 5
August that Rosgosstrakh, the nation's largest domestic
insurance company, will not be privatized either this year
or in 1999, ITAR-TASS reported. He added that "no personnel
decision has been reached" concerning acting director
Valerii Sukhov, who was on sick leave for more than a month
and has faced tough questions from Rossgastrakh's board of
directors about his financial and personnel policies. In
February 1997, the Duma asked the government to postpone the
company's privatization until the problem of restoring the
value of insurance premiums paid before 1 January 1992 was
resolved. JAC

GOVERNMENT PROPOSES NATIONAL INSURANCE SYSTEM. According to
ITAR-TASS on 6 August, the Finance Ministry has submitted a
plan for the development of a national insurance system. The
ministry has proposed that the government provide support
with tax incentives and other measures in order to
strengthen Russia's domestic insurance companies. Those
companies generally do not have enough money to pay
indemnity in case of major damage. Under the government's
plan, insurance companies' minimum amount of authorized
capital would rise at least 5 times by 2000. If approved,
the program would be implemented during the remainder of
1998 through 2000. JAC

RUSSIAN TAX SERVICE TO TARGET RICH INDIVIDUALS. In an
interview with Trud on 6 August, Federal Tax Service
director Boris Fedorov proposes broadening the tax base by
increasing tax collection from small enterprises, shops, and
individuals. He also seems to suggest that foreigners living
in Russia could contribute more to government coffers since
many of the ones living in Moscow are able to pay as much as
$3,000-$4,000 a month for an apartment. According to the
first part of the new Russian tax code published in
"Rossiiskaya Gazeta" on 6 August, the tax system applies to
all Russian residents, without exception. Fedorov argued
that the tax burden is squeezing the life out of
enterprises, and he proposed easing the profits tax by 10
percent to 15 percent. Earlier, Fedorov denied that he is
drawing up a hit list of wealthy tax dodgers (see "RFE/RL
Newsline," 6 June 1998). JAC

...WHILE TAX COLLECTIONS EDGE UP ONLY MARGINALLY. Fedorov's
deputy, Vladimir Gusev, says that the Federal Tax Service's
collections in August will be up only marginally from the
July level, Interfax reported on 5 August. The agency will
collect 12.5 billion rubles ($2 billion) in August, 16
percent less than the government's previously set target of
14.8 billion rubles but 500 million rubles more than in
July. According to Bloomberg, Gusev explained that more new
tax legislation will be required for the agency to meet its
targets. JAC

NEW WOMEN'S PARTY FORMED. Russian agencies reported that the
organizing committee of a new political organization for
women, called the Russian Party for the Protection of Women,
convened in Moscow on 5 August. The party's goal is to urge
the adoption of laws that would improve the life of women.
Tatyana Roshchina, head of the organization Women for the
Future of Russia, was elected chairwoman of the committee,
according to ITAR-TASS. On 25 August, the new party will
hold its founding conference in Moscow; some 5000 members
are expected to attend. In 1993, the Women of Russia party
received 8 percent of the vote in Duma elections that year,
performing better than had been predicted. Analysts believe
that the party took away votes primarily from the Communist
Party. JAC

ZYUGANOV FEARS CREEPING COUP. According to "Vremya MN" on 5
August, Communist Party leader Gennadii Zyuganov fears that
recent staff changes in the Russian military and
intelligence services suggest "the beginning of a creeping
coup on the threshold of upcoming parliamentary and
presidential elections." Zyuganov argued that Anatolii
Chubais, presidential envoy to international financial
institutions, spearheaded the personnel changes in order to
influence upcoming parliamentary and presidential elections.
Chubais's next step will be to change the leadership of the
Ministry of Defense, he added. JAC

FREQUENT FLYERS ENDANGERED. "Kommersant-Daily" on 5 August
reported that the Russia's leadership is flying in planes
that could crash at any moment. The state transport company,
Rossiya, is in dire financial straits and cannot afford to
replace outdated engines. Money is so short that even after
a near catastrophe in January with a plane flying Russian
President Boris Yeltsin and his family, Rossiya could not
pay for needed repairs. JAC

BASAEV ACCUSES KOVALEV. In an interview in "Nezavisimaya
gazeta" on 6 August, former Chechen acting Premier Shamil
Basaev again blamed Russian intelligence for the failed 23
July attempt to assassinate President Aslan Maskhadov.
Basaev claimed that the reason President Yeltsin fired
Federal Security Service head Nikolai Kovalev was that
Kovalev had planned the assassination attempt without
informing Yeltsin. The president sacked Kovalev on 25 July
(see "RFE/RL Newsline," 27 July 1998) but rumors of
Kovalev's impending dismissal were circulating days before
23 July . Basaev also claimed that the assassination bid was
intended to plunge Chechnya into civil war and thus prevent
an investigation into the clashes in Gudermes on 14-15 July
between units from the Chechen National Guard and two
Islamic regiments. But Basaev failed to explain what the
Russian intelligence's motive might be to seek to thwart
such an investigation. LF

SAKHA SEEKS TATARSTAN'S HELP. A government delegation from
the Republic of Sakha-Yakutia met in Kazan on 5 August with
Tatar Prime Minister Rustam Minnikhanov to secure financial
and technical help in overcoming the aftermath of recent
flooding, RFE/RL's Kazan bureau reported. The damage from
the floods, which affected 22 of Sakha's 35 regions, is
estimated at about 1 billion rubles ($158 million) or 20
percent of the republic's annual budget. The Sakha
delegation expressed particular interest in Tatar-produced
diesel generators and special vehicles. Minnikhanov promised
that Tatarstan will give what help it can afford. The
delegation also met with Tatar State Council Deputy
Chairwoman Zilya Valeeva to compare the two regions'
legislation. LF

TRANSCAUCASUS AND CENTRAL ASIA

AZERBAIJANI LEADERS CALL ON OPPOSITION TO DROP ELECTION
BOYCOTT... Presidential administration head Ramiz Mehtiev
told journalists on 5 August that the Azerbaijani
authorities still hope that five prominent opposition
figures will reconsider their declared boycott of the 11
October presidential election. The five had reaffirmed their
intention not to participate in the poll after meetings on 3
and 4 August with Mehtiev. They were informed by Mehtiev
that President Heidar Aliev has rejected their conditions
for lifting the boycott but is prepared to postpone the
election to give the opposition more time to prepare for it.
Aliev on 4 August had sent a letter to three of the five
opposition politicians (Azerbaijan Popular Front Party
Chairman Abulfaz Elchibey, Musavat Party Chairman Isa
Gambar, and Liberal Party Chairwoman Lala-Shovket Gadjieva,
who in 1993 served briefly as his secretary of state) urging
them to participate in the poll. The three rejected that
appeal, RFE/RL's Baku bureau reported. LF

...BUT SENDS MIXED SIGNALS OVER EX-PARLIAMENT SPEAKER.
Mehtiev on 5 August referred respectfully to the Musavat and
Azerbaijan Popular Front parties. He described them as
":influential" and expressed the hope that they will free
themselves from the influence of former parliamentary
speaker Rasul Guliev, whom he termed an unhealthy force.
Guliev is also one of the five who declared their intention
to boycott the elections. But a second member of Aliev's
administration, Ali Hasanov, took a softer line on Guliev,
suggesting that he may be allowed to return to Azerbaijan
from his U.S. exile to contest the poll, given that
presidential candidates enjoy immunity from criminal
proceedings. Guliev has been charged in absentia with large-
scale embezzlement. LF

AZERBAIJAN PUZZLED BY U.S. SPY WARNING. An unidentified
Azerbaijani National Security Ministry official told Turan
on 5 August that he sees no reason for the statement issued
the previous day by the U.S. State Department warning U.S.
citizens visiting or working in Azerbaijan against possible
anti-American provocations. The statement said that
unidentified "anti-U.S. elements" have engaged in surveying
U.S. companies, property, and personnel in Azerbaijan. It
urged increased vigilance and security precautions. The
Azerbaijani official said the U.S. statement is groundless,
given that the "crime situation" in Baku and Azerbaijan as a
whole "is safe." LF

AZERBAIJANI OPPOSITION AGAINST VISIT BY ARMENIAN PRESIDENT.
Several leading Azerbaijani opposition figures have
criticized the invitation extended by President Heidar Aliev
to his Armenian counterpart, Robert Kocharian, to attend an
international conference in Baku in September, Turan
reported on 5 August. The same day, Aliev's press service
confirmed the invitation has been sent. Liberal Party
chairwoman Lala-Shovket Gadjieva said the invitation is
proof that the Azerbaijani government is "closing its eyes
to Armenian aggression." Democratic Party Secretary-General
Sardar Djalaloglu said it is "illogical" to invite a man
against whom the Azerbaijani Prosecutor-General has
instigated a criminal case. But Armenian presidential
adviser Aram Sargsian told Interfax that Armenian
participation at the conference, devoted to the EU's TRACECA
project, "would be welcome." "Nezavisimaya gazeta" on 6
August quoted unnamed EU sources as similarly expressing the
hope that an Armenian delegation will attend. LF

ARMENIA ACCUSES AZERBAIJAN OF VIOLATING CFE TREATY. The head
of the Armenian Foreign Ministry's national security and
conventional weapons department, Armen Kharazian, told
RFE/RL on 5 August that Azerbaijan continues to exceed its
arms allocations under the 1990 Conventional Forces in
Europe (CFE) treaty, thereby posing a "grave threat to
Armenia's national security." According to Kharazian,
Azerbaijan has officially declared that it possesses 270
battle tanks, 557 armored personnel carriers, and 300
artillery systems, thereby exceeding the CFE allocations of
220, 270, and 285, respectively. The CFE treaty stipulates
equal quotas for all three Transcaucasus states. Kharazian
said Armenia strictly complies with the CFE provisions and
possesses 200 tanks, 218 armored personnel carriers and 225
artillery systems. He said a recent Turkish-led
international inspection of an Armenian military detachment
registered no violations of the treaty. He said the number
of Azerbaijan's military aircraft and attack helicopters is
within the CFE quotas but is eight times higher than
Armenia's. LF

GEORGIA TO DECIDE ON FUTURE OF CIS PEACEKEEPERS. Speaking at
a press conference in Tbilisi on 5 August, Georgian Foreign
Minister Irakli Menagharishvili said that the Georgian
leadership will decide in the next few days whether to
request the renewal of the mandate of the Russian
peacekeeping force currently deployed under CIS auspices in
Abkhazia, ITAR-TASS reported. That mandate expired on 31
July and can be renewed only by CIS heads of state
collectively. Menagharishvili noted that Georgia has
repeatedly criticized the peacekeeping force's inability to
protect ethnic Georgians in Abkhazia, but he did not
advocate its replacement with a UN contingent, as Georgian
leaders have suggested in the past. Also on 5 August, Abkhaz
President Vladislav Ardzinba told journalists in Sukhumi
that any state wishing to participate in a future
peacekeeping operation should have the consent of both
parties to the conflict. Ardzinba denied that Georgian
President Eduard Shevardnadze has made new proposals for
resolving the conflict, "Nezavisimaya gazeta" reported on 6
August. LF

TALIBAN REJECT UZBEK, RUSSIAN OFFER FOR MEDIATION. Abdul
Mutmain, an official spokesman for Afghanistan's Taliban
movement, said the movement is not interested in an offer
made by Uzbekistan and Russia to mediate the conflict in
Afghanistan, ITAR-TASS reported on 6 August. Mutmain said
Afghanistan will be "liberated exclusively by military
means." He also rejected any deals with the coalition forces
opposed to the Taliban. "Kommersant-Daily" reported on 5
August that Taliban forces have seized part of the Hairaton
area, which borders on Uzbekistan. That claim was refuted by
anti-Taliban alliance commander General Rosi Geldy in an
interview with RFE/RL's Turkmen service later the same day.
BP

FOREIGN EXPERTS DENIED ACCESS TO INFORMATION ON KYRGYZ
CHEMICAL SPILL. Two foreign toxicologists invited by the
management of Kyrgyzstan's Kumtor Mining company to examine
findings on the consequences of the 20 May chemical spill
have been denied access to that information, RFE/RL
correspondents reported on 5 August. The Kyrgyz Health Care
Ministry said that the U.S.'s Allen Holl and Russia's Yurii
Ostapenko do not have authorization from the World Health
Organization to investigate the effects of the incident, in
which 1.7 tons of sodium cyanide spilled into the Barskoon
River. Kyrgyz Deputy Minister of Health Care Viktor Grinenko
said that without such authorization, the two toxicologists
are not allowed to talk with people who were hospitalized
following the spill. Grinenko added that the information
gathered on the accident is now in the hands of the National
Security Ministry, which has begun its own investigation. BP

TAJIK CLERIC FOUND MURDERED. The bodies of Domullo Kiemiddin
and one of his students have been found in a mortuary in the
Kofarnikhon district about 20 kilometers from Dushanbe,
ITAR-TASS and RFE/RL correspondents reported on 5 August.
Kiemiddin, a mullah at a Dushanbe mosque, and his student
went to Kofarnikhon 10 days ago on "religious business,"
according to United Tajik Opposition (UTO) leader Said
Abdullo Nuri. Nuri has called on the Tajik government to
allow UTO fighters to help in investigating "the growing
number of murders committed by unidentified armed criminals
in Tajikistan." BP

END NOTE

TRANSITION NATIONS ACTIVE IN IMF LOANS

by Robert Lyle

	Of the 183 member nations of the IMF, the countries of
the former Soviet Union and its East European allies account
for only 14 percent. Yet among the 61 active programs listed
by the fund, more than one quarter are with the nations in
transition.
	Last month, new loans worth $11.2 billion were
approved as part of an IMF-led Russian rescue package. A
first drawing of $4.8 billion was released immediately,
while a $6.4 billion trance will be available in September
if Russia implements the required reforms.
	IMF First Deputy Managing Director Stanley Fischer was
in Moscow recently to review program implementation, a trip
one IMF official privately described as part of Fischer's
"war against complacency" by Russian officials. Afterward,
Fischer said that "the agreed measures are being
implemented" and that if this continues, the September
tranche should be available on time as well.
	In Kyiv, another IMF team reached tentative agreement
with Ukrainian officials on a projected three-year extended
fund facility loan of $2.2 billion. The head of the IMF
delegation, Mohammad Shadman-Valavi, said the new Ukrainian
loan would go to the fund's Board of Directors in late
August. The long-term loan will replace a one-year $585
million stand-by arrangement that was suspended last spring
after the Ukrainian government missed a number of key
economic targets.
	The new program contains a long list of reforms that
the government must implement. Thirty-three of those
reforms, including a new reduced-deficit budget, had to be
in place before the loan could be approved. The IMF had
insisted upon parliamentary passage of the entire package
but accepted the assurances of speaker Oleksandr Tkachenko
that the parliament will stand behind President Leonid
Kuchma's decree putting the new budget into effect.
	Yet another IMF team was in Sofia last week and
reached agreement with Bulgarian officials on a new, three-
year extended loan program worth around $800 million. Anne
McGuirk, head of the IMF delegation, said the loan would be
part of overall foreign funding totaling $1.6 billion that
should be available to Bulgaria over the next three years.
	McGuirk said that a key part of the large reform
program underlying this proposed new loan is the
privatization of state enterprises. The new long term loan
will follow up what was begun under a regular stand-by
facility of around $502 million. When Sofia drew the final
tranche of that loan in May, the IMF praised Bulgaria for
its "good track record" of stabilization and reform.
	Romania, whose last one-year stand-by loan of around
$414 million expired in May with only two of five tranches
drawn, has made no noticeable progress on putting together a
new IMF program. Fund officials say they are still waiting
for details on how Romania proposes to proceed with a new
loan program.
	A number of other countries continue to work through
their IMF reform programs and draw their loans:
	Bosnia, which received its first stand-by loan of
around $81.8 million at the end of May, has drawn nearly $33
million so far.
	Estonia, which received a stand-by loan of nearly $22
million last December, has not drawn any of the money, as
planned. But it has used the IMF technical guidance, which
is part of the program.
	Latvia, similarly, has not drawn any of its loan of
around $44.5 million, approved last October. Like Tallinn,
Riga took the loans merely to have IMF experts provide
advice and guidance.
	In addition to Ukraine, countries in the region with
extended fund facility loans are:
	Azerbaijan, which has drawn around $43.4 million of
its $79 million three-year program approved in December
1996;
	Croatia, which has drawn about $38.8 million from its
$477 million loan, approved in March;
	Kazakhstan, which has drawn the entire $417.6 million
of its loan, which was granted in July 1996;
	And Moldova, whose $182 million loan, first approved
in May 1996, has been suspended since last year owing to the
failure of the government to meet the goals to which it had
agreed. An IMF team was in Chisinau in June and worked out a
memorandum on economy policy which, if fully implemented,
could reopen the loan this fall, perhaps in October. Moldova
agreed to revise its budget, tighten fiscal discipline and
speed up privatization as pre-conditions for resuming the
loan. It had drawn around $50.6 million of the loan before
it was suspended.
	Seven East European or former Soviet nations have loan
programs under the fund's Enhanced Structural Adjustment
Facility, a special program of subsidized loans for poorer
nations:
	Albania, which has drawn only the first tranche of
about $7.9 million from its $47.6 million loan, approved in
May;
	Armenia, which has drawn $91 million from its $136.6
million three-year loan, approved in February 1996;
	Azerbaijan, which has drawn $75 million from its $126
million long-term loan adopted in December 1996;
	Georgia, which received approval last week for the
latest $37 million drawing from its $224.7 million three-
year loan, approved in February 1996. Georgia had previously
drawn about $150 million;
	Kyrgyzstan, which has not yet taken the first drawing
on its $87 million loan, approved in late June;
	Macedonia, which has drawn about $36.8 million of its
$73.6 million three-year loan, approved in April 1997;
	And Tajikistan, which has drawn $24 million from its
$130 million loan, approved in early June.

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

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