There is no love sincerer than the love of food. - George Bernard Shaw
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 156, Part I, 14 August 1998


___________________________________________________________
RFE/RL NEWSLINE Vol. 2, No. 156, Part I, 14 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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Headlines, Part I

* YELTSIN RULES OUT RUBLE DEVALUATION

* DUMA TO UPSTAGE YELTSIN-CLINTON SUMMIT?

* IRAN OFFERS TO MEDIATE KARABAKH CONFLICT

* End Note: THE DOG THAT DIDN'T BARK

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

RUSSIA

YELTSIN RULES OUT RUBLE DEVALUATION. Arriving in Novgorod on
14 August, Russian President Boris Yeltsin told journalists
that "there will be no devaluation--that's firm and
definite." He said that there is "no need" for such a step,
given that "we shall be able to keep under control the
situation on the Russian financial markets," according to
ITAR-TASS. Yeltsin argued that the turmoil on Russia's
financial markets is to be attributed at least partly to
global market troubles. LF

RUSSIAN STOCK MARKET CONTINUES TO FALL. Russia's benchmark
stock index on 13 August was 6 percent down on the previous
day. According to "Izvestiya," trading was suspended for 45
minutes after "blue-chip" stocks dropped 15-25 percent.
Russian Prime Minister Sergei Kirienko described traders'
behavior as "psychologically driven," arguing that the
Russian economy is in better shape now than it was in July,
according to Interfax, He noted that the country's currency
reserve is larger and tax collections have risen. Echoing
earlier remarks by other administration officials, he said
external factors such as the slump in oil prices and the
Asian crisis have adversely influenced the Russian market
(see "RFE/RL Newsline," 13 August 1998). JAC

MORE CENTRAL BANK INTRIGUES? "Nezavisimaya Gazeta" on 13
August maintained that economic fundamentals have not changed
significantly enough to explain the market's decline.
Instead, the newspaper attributed the market turmoil to a
coalition of the Russian Central Bank, Sberbank, and other
financial institutions, which together own 66 percent of
government treasury bills and have conspired to bring the
Kirienko government down. According to the newspaper, neither
the Central Bank and its cohorts nor the communist opposition
in the State Duma is capable of removing Kirienko. Only a
mysterious "third force" is powerful enough, and it is "in a
hurry to change the government," "Nezavisimaya Gazeta"
commented. Boris Berezovskii's LogoVAZ group is a financial
backer of the newspaper, which has been highly critical of
the Central Bank chairman (see "RFE/RL Newsline," 6 August
1998). JAC

DEFAULT, DEVALUATION... The government's arguments
notwithstanding, market analysts continue to predict a
devaluation or default. According to "Izvestiya" on 13
August, many bankers believe that a default is more than a 50
percent possibility. Some even predict a default followed by
a devaluation. But more believe that a devaluation will occur
without a default. Dmitrii Volkov, head of the information
and analysis unit at Rossiskii Kredit bank, told "Kommersant-
Daily" on 13 August that the risk of a devaluation is much
greater than that of a default, arguing that the government
will simply keep paying its foreign creditors while ignoring
or postponing its domestic obligations. Proponents of
devaluation got a boost when international financier George
Soros recommended in a letter to the "Financial Times" on 13
August that Russia introduce a currency board after a modest
devaluation of 15-25 percent. JAC

...AND/OR INFLATION? Andrei Illarionov, director of the
Institute of Economic Analysis, warned on 13 August that
inflation is inevitable and only the earliest possible
devaluation would cost the least social pain. Illarionov has
been promoting the devaluation option since late July (see
"RFE/RL Newsline," 31July 1998). JAC

INTERBANK LOAN MARKET PARALYZED. A shortage of liquidity
among Russia's major banks has stalled most activity on the
interbank loan market. The Central Bank imposed strict
limitations on hard currency volumes bought by traders and
acquired by banks. Imperial Bank is reportedly one of the
banks that has had trouble repaying its loans, according to
Interfax. Deputy Fuel and Energy Minister Sergei Chizhov has
reportedly ordered its chief shareholders, Gazprom and
LUKOIL, not to take actions that would undermine the bank
during this time of crisis. JAC

DUMA TO UPSTAGE YELTSIN-CLINTON SUMMIT? The Duma Council will meet on 17
August to reach a final decision on the timing of
an emergency session. President Yeltsin wrote to the Duma on
14 August proposing that it convene such a session,
presidential spokesman Sergei Yastrzhembskii told ITAR-TASS.
Prime Minister Kirienko had requested that Duma convene mid-
August to consider new anti-crisis legislation. However, a
meeting of Duma factions and deputies groups declared a
meeting impossible before 2 or 4 September. U.S. President
Bill Clinton will be in Moscow from 1 to 3 September for
meetings with President Yeltsin. JAC

FSB TO TARGET MINERS? According to "Moskovskii Komsomolets"
on 13 August, Director of the Federal Security Service (FSB)
Vladimir Putin has ordered his officers to collect
information to bring criminal charges against striking
miners. Putin's order was greeted with open bewilderment by
FSB personnel, who questioned whether such activity came
under the FSB's jurisdiction. The newspaper notes that the
Lubyanka has had its own problems paying wages. JAC

KALMYKIA'S 'TEAM LEADER' SPEAKS OUT. President of Kalmykia
Kirsan Ilyumzhinov explained his theories of governing in an
interview with "Parlamentskaya Gazeta" on 13 August. When
pressed to admit that he was a dictator, Ilyumzhinov
explained that Kalmykia is governed by a team of young people
who discuss the republic's problems fiercely and passionately
but always democratically. "Once a decision is made, I always
demand its implementation," he explained. "In this way, I am
a dictator." According to Ilyumzhinov, the political
opposition in Kalmykia accounts for only 5 percent to 7
percent of the population, so there is in fact little
opposition for him to squelch. JAC

NOVGOROD TO GET UPGRADE. During his visit to Novgorod on 14
August President Yeltsin announced he will sign a decree
within days changing the name of the city to Velikii
Novgorod, ITAR-TASS reported. JAC

YELTSIN SAYS RUSSIA, TAJIKISTAN, UZBEKISTAN CAN REPEL TALIBAN ADVANCE.
Yeltsin also said in Novgorod that Russia,
Tajikistan, and Uzbekistan "are fully capable of resisting
the Taliban," ITAR-TASS reported. The previous day, Yeltsin
had a phone conversation with Tajik President Imomali
Rakhmonov, following which the Kremlin released a statement
saying "the CIS must agree on a series of questions on
strengthening the Commonwealth's southern borders." BP

PAKISTANI AMBASSADOR TO RUSSIA SPEAKS OUT ON
AFGHANISTAN. Masoor Alam said in an interview with Interfax on
13 August that his country's policy toward Afghanistan "has been not
to have favorites." Alam was responding to claims made by
several Russian officials recently that Pakistan is giving
direct aid to Afghanistan's Taliban movement (see "RFE/RL
Newsline," 13 August 1998). Alam said Pakistan has
"maintained an attitude of neutrality" and advocates
"bringing about a cease-fire and intra-Afghan dialogue." He
admitted that Pakistan has "always recognized the group in
control of Kabul as the government of Afghanistan." He also
said in areas controlled by the Taliban "there has been
almost complete peace and a reduction in the crime rate."
Russia has not played a "constructive role" in Afghan events,
Alam concluded. BP

VLADIVOSTOK DEPUTY MAYOR ESCAPES PETROL BOMB. Nikolai
Beletskii and his family escaped unscathed on 13 August after
unknown assailants threw two Molotov cocktails through the
window of their apartment, "Nezavisimaya gazeta" reported on
14 August. Beletskii is the closest associate of Vladivostok
mayor Viktor Cherepkov. Meanwhile, paramedics in Vladivostok
have voted to continue their 10-day old strike, despite the
allocation by the mayor's office of a 1.243 billion rubles
(some $207 million) loan to pay wage arrears for April-May,
ITAR-TASS reported on 14 August. The strikers are demanding a
decision on a permanent source of financing for the first-aid
service. LF

LEBED PRAISES RYBKIN'S CAUCASIAN EXPERTISE. In an interview
with Interfax on 13 August, Krasnoyarsk Krai Governor
Aleksandr Lebed lamented the Russian leadership's "ostrich"
policy toward the North Caucasus and called for creating the
post of Russian presidential representative in the region.
Lebed suggested that Ivan Rybkin, who succeeded him as
Russian Security Council secretary, would be the ideal
candidate for such a post. "Nezavisimaya gazeta" on 14 August
recalled that one year ago, Lebed harshly criticized Rybkin's
activities in Chechnya and accused him of systematically
sabotaging the Khasavyurt accord, which Lebed signed with
then Chechen chief of staff Aslan Maskhadov (see "RFE/RL
Newsline," 1 September 1997). LF

CORRECTION. "RFE/RL Newsline" on 12 August cited incorrect
Russian agency reports saying that the Russian government is
going to sell off 50 percent of the telecommunications giant
Svyazinvest. In fact the government will sell only 25 percent
minus two shares. Last year, it sold a 25 percent plus one
share in the firm.

TRANSCAUCASUS AND CENTRAL ASIA

IRAN OFFERS TO MEDIATE KARABAKH CONFLICT. During talks in
Baku on 12 August, Azerbaijani President Heidar Aliev and
Iranian Foreign Minister Kamal Kharrazi affirmed their mutual
commitment to expand bilateral cooperation, specifically in
the sphere of transporting energy resources and in supplying
electricity to the Azerbaijani exclave of Nakhichevan,
Interfax reported. But they failed to make substantive
progress toward resolving their differences over determining
the legal status of the Caspian or to reach agreement on
expanded Iranian participation in the exploitation of
Azerbaijan's Caspian oil. Kharrazi advocated direct talks
between Baku and Yerevan on resolving the Karabakh conflict,
saying that Iran is prepared to mediate such talks, ANS-Press
reported. LF

AZERBAIJANI OPPOSITION ACCEPTS RESTRICTIONS ON BAKU RALLY.
Azerbaijani opposition parties on 13 August met to discuss,
and finally agreed to, the Baku city authorities' offer to
make available a motor-racing stadium on the outskirts of
Baku for a mass rally on 15 August. Riot police held practice
maneuvers at that stadium last week, according to RFE/RL's
Baku bureau. Also on 13 August, the Democratic Congress,
which unites a number of opposition parties, issued a
statement rejecting claims made the previous day by Interior
Minister Ramil Usubov that opposition activists intend to
resort to violence during the planned rally, Turan reported.
LF

PASTUKHOV CALLS FOR SHEVARDNADZE-ARDZINBA MEETING.
Speaking at a press conference in Moscow on 13 August, Russian
First Deputy Foreign Minister Boris Pastukhov criticized what he
termed the apparent unwillingness of either Georgia or
Abkhazia to make an effort to resolve the Abkhaz conflict and
expedite the repatriation of ethnic Georgian displaced
persons, Interfax reported. Pastukhov said that "two
significant documents prepared with Russia's help" remain
unsigned, and he suggested that a meeting between Georgian
President Eduard Shevardnadze and his Abkhaz counterpart,
Vladislav Ardzinba, might lead to the signing of an agreement
on preventing further armed clashes and on repatriating the
fugitives. Some Georgian displaced persons have spontaneously
established contact with the Abkhaz authorities, who have
granted them permission to return on condition that they
never take up arms against the Abkhaz, Caucasus Press
reported on 14 August. LF

ARMENIAN PRESIDENT SAY ECONOMIC STABILITY 'TOP PRIORITY.' In
an interview with "Noviye izvestiya" on 14 August, Robert
Kocharian said Armenia's economic upswing is largely the
result of innovations in the tax system and budget that he
had introduced in his capacity as former premier in the
spring of 1997. "We have moved from the concept of survival
to that of active development," he remarked. A further key
factor, Kocharian said, is the increased willingness of
diaspora Armenians to invest in the country's economy.
Kocharian said he believes that the ongoing process of
determining domestic and foreign policy priorities in all the
Transcaucasus states and Caucasus republics militates against
regional accord at present. He pointed out that the original
venue for the September conference on the TRACECA project to
which his Azerbaijani counterpart, Aliev, has invited him was
Tbilisi but that Aliev himself had insisted it be moved to
Baku. LF

ARMENIA'S ASSYRIANS STRUGGLE TO PRESERVE IDENTITY. Speaking
at a press conference on 12 August, a spokeswoman for the
Assyrian community greeted the introduction of a class with
Aramaic-language instruction in one of Yerevan's schools. But
at the same time, she called for the reinstatement of an
Armenian-Assyrian teacher fired from a school in one of three
predominantly Assyrian-populated villages near the capital,
RFE/RL's Yerevan bureau reported. The spokeswoman said that
the Assyrian community has shrunk in recent years from 9,000
to approximately 4,000, as many of its members have been
forced to emigrate for economic reasons. She stressed that
"the Armenian state does everything for us not to leave the
country." LF

OPINIONS DIFFER OVER TALIBAN 'THREAT.' Kazakh President
Nursultan Nazarbayev said in Astana on 13 August that he is
concerned about events in Afghanistan, ITAR-TASS and Interfax
reported. Nazarbayev said Kazakh troops are already deployed
in Tajikistan and warned Afghanistan's Taliban movement not
to "overstep the boundaries" of its own country. Nazarbayev
said that he is against "the use of force" and added that
Kazakhstan wants to see a stable Afghanistan and will seek
"normal relations" with that country once the war is over. He
also said a stable Afghanistan offered the possibility to lay
oil and gas pipelines through that country. In the Kyrgyz
capital, Bishkek, First Deputy Defense Minister Major-General
Ismail Isakov said the same day he does not believe the
Taliban will cross CIS borders. "Breaching the border of even
one Central Asian state would mean declaring war on all
countries in the region, [which are] tied by the [CIS]
collective security treaty," he said. BP

KAZAKHSTAN WORRIED ABOUT ISLAMIC FUNDAMENTALISM. ITAR-TASS on 14 August
reported that officials in Kazakhstan are worried
about "foreign missionaries" propagandizing the teachings of
radical fundamentalist Islam. According to news agency,
criminal proceedings have been brought against missionaries
from Egypt, Sudan, and Jordan. A Turkish citizen has been
discovered teaching Wahhabism in the southern Kazakh city of
Shambyl, and an Uzbek citizen was recently deported for
violating the country's law on freedom of worship and
religious associations. The Uzbek citizen was reportedly
preaching "radical Islamic fundamentalism" in the town of
Kyzylorda, arranging polygamous marriages, and encouraging
"young religious fanatics" to follow him "blindly." BP

IRANIAN FOREIGN MINISTER IN TURKMENISTAN. Kamal Kharrazi
arrived in the Turkmen capital, Ashgabat, on 13 August, ITAR-
TASS reported. At talks with President Saparmurat Niyazov on
the status of the Caspian Sea, the two agreed to form a
working group that will develop a plan on the legal framework
for dividing the Caspian among the littoral states and
present that plan to the presidents of Iran and Turkmenistan
by 1 September. There was no progress on Iran's proposal to
purchase Turkmen natural gas. Kharrazi offered $32 per 1,000
cubic meters, while Niyazov reminded him that Russia's offer
of $36 per 1,000 cubic meters had already been turned down.
Kharrazi spoke out against Afghanistan's Taliban movement at
a press conference, but there are no reports indicating that
Turkmen officials commented on the issue. BP

THE DOG THAT DIDN'T BARK

by Paul Goble

	The most remarkable feature of the current Russian
economic crisis is one that most commentaries have
overlooked: namely, that the Russian collapse has not spread
to the other post-Soviet states.
	Even five years ago, most of the former Soviet republics
were still sufficiently integrated that difficulties in the
largest of them would inevitably have a large and immediate
impact on all the others.
	Now that has changed. More and more post-Soviet
countries have succeeded in diversifying their trading
partners so that problems in Russia will not be the
determining factor in their development.
	That is not to say that the problems in Moscow will not
have an impact. Rather, the ways in which these Russian
problems will affect the non-Russian countries are very
different and more indirect than many are now assuming.
	First, some but by no means all of the post-Soviet
states remain sufficiently integrated with the Russian
economy that problems in Moscow will have precisely the kind
of impact that some are assuming will happen across the
region. Ukraine, Belarus and Kazakhstan, for example, will be
under enormous pressure to devalue their national currencies
if the Russian ruble continues to fall.
	Second, many of the post-Soviet states have not yet
completed the reform of their economic and legal systems that
would make them able to withstand negative trends abroad.
These countries--which are in the majority--thus suffer from
many of the same kind of problems that Russia does and for
the same reasons. Without reforms, they cannot attract the
kind of investment that will help power their future
development. Indeed, the exceptions to this general pattern--
Estonia, Latvia, and Lithuania--prove the rule.
	The three Baltic countries rapidly liberalized their
economies and now enjoy some of the highest rates of Western
investment and economic growth anywhere in the region. Those
that have failed to reform their economies, on the other
hand, are in increasing difficulty. But the primary cause of
their problems is the absence of reform rather than
difficulties in the Russian marketplace.
	Third, all of these countries are profoundly affected by
the attitudes of Western investors. Because the Russian
market is the best-known, many in the West have concluded
that all post-Soviet states and indeed all emerging markets
are in the same situation. That is absolutely wrong. In the
most recent quarter for which economic statistics are
available, virtually all the post-Soviet states did better
than Russia on virtually every measure of economic
development, relative to the size of their markets.
	But while those judgments are incorrect, they have an
impact on the economies of the other countries in the region,
an impact that some analysts in both Moscow and the West will
undoubtedly suggest shows just how "integrated" the region
remains.
	To a large extent, this misreading of the economic
situation in the post-Soviet states reflects a larger
misunderstanding of the situation there. Nearly seven years
after the Soviet Union collapsed, all too many in the West
continue to refer to the countries there as "new independent
states" and to think about the region as a single whole
rather than as 12 new countries and the three restored Baltic
States.
	Such observers thus have missed the broad
diversification over the last few years in a region dominated
until a decade ago by a single center. If the Russian
economic crisis does in the end have an impact across all
these countries, it is far more likely to be the result of
Western misperceptions than the product of integration left
over from Soviet times.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
               Copyright (c) 1998 RFE/RL, Inc.
                     All rights reserved.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

HOW TO SUBSCRIBE
Send an email to newsline-request@list.rferl.org with
the word subscribe as the subject of the message.

HOW TO UNSUBSCRIBE
Send an email to newsline-request@list.rferl.org with
the word unsubscribe as the subject of the message.

For subscription problems or inquiries, please email
listmanager@list.rferl.org
________________________________________________
CURRENT AND BACK ISSUES ON THE WEB
Back issues of RFE/RL Newsline and the OMRI Daily Digest
are online at: http://www.rferl.org/newsline/search/
_________________________________________________
LISTEN TO NEWS FOR 23 COUNTRIES
RFE/RL programs for countries in Eastern Europe,
the Caucasus, Central Asia, Russia and the South
Slavic region are online daily at RFE/RL's
24-Hour LIVE Broadcast Studio.
http://www.rferl.org/realaudio/index.html
_________________________________________________
REPRINT POLICY
To receive reprint permission, please contact
Paul Goble, Publisher
Email: GobleP@rferl.org
Phone: 202-457-6947
Fax: 202-457-6992
Postal Address:  RFE/RL,  1201 Connecticut Ave., NW
Washington, DC  20036  USA
_________________________________________________
RFE/RL NEWSLINE STAFF
* Paul Goble, Publisher, GobleP@rferl.org
* Liz Fuller, Editor-in-Chief, CarlsonE@rferl.org
* Patrick Moore, Team Leader, MooreP@rferl.org
* Julie A. Corwin, CorwinJ@rferl.org
* Jan Maksymiuk, MaksymiukJ@rferl.org
* Bruce Pannier, PannierB@rferl.org
* Michael Shafir, ShafirM@rferl.org
* Jan Cleave, CleaveJ@rferl.org

Freelance And Occasional Contributors
* Fabian Schmidt
* Matyas Szabo
* Pete Baumgartner
* Jeremy Bransten
* Jolyon Naegele
* Anthony Wesolowsky
* Julia Guechakov
* Floriana Fossato

RFE/RL Newsline Fax: (420-2) 2112-3630
_________________________________________________
RADIO FREE EUROPE/RADIO LIBERTY, PRAGUE, CZECH REPUBLIC

[English] [Russian TRANS | KOI8 | ALT | WIN | MAC | ISO5]

F&P Home ° Comments ° Guestbook


1996 Friends and Partners
Natasha Bulashova, Greg Cole
Please visit the Russian and American mirror sites of Friends and Partners.
Updated: 1998-11-

Please write to us with your comments and suggestions.

F&P Quick Search
Main Sections
Home
Bulletin Board
Chat Room
F&P Listserver

RFE/RL
1999
1998
1997
1996
1995
1994
1993
1992
1991
Search

News
News From Russia/NIS
News About Russia/NIS
Newspapers & Magazines
Global News
Weather

©1996 Friends and Partners
Please write to us with any comments, questions or suggestions -- Natasha Bulashova, Greg Cole