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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 158 Part I, 18 August 1998


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RFE/RL NEWSLINE Vol. 2, No. 158 Part I, 18 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

* RUSSIAN MARKETS CONTINUE TO FALL

* YELTSIN REFUSES DUMA INVITATION

* SIX PRESIDENTIAL CANDIDATES REGISTERED IN AZERBAIJAN
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RUSSIA

RUSSIAN MARKETS CONTINUE TO FALL. Following the de facto
devaluation of the Russian ruble on 17 August, both the
currency exchange and Russian stock markets continued to
fall. Some banks ran out of dollars and halted exchange
operations; where dollars were for sale, some traders
received as much as 9.5 rubles for them. Russian bankers
said that they believe the Central Bank has sufficient
resources to stabilize the ruble at 7.0-7.5 to the dollar, a
15 percent drop from the rate before 17 August, Interfax
reported. Russian stock markets also dropped on 17 August.
The Prime General index fell 11.1 percent to 19.42 points,
the Prime Top index dropped 7.8 percent to 31.56 points, and
the RTS index declined by 4.85 percent. ITAR-TASS reported
that the volume traded for RTS issues was at a record low
for any one day--$10.44 million--an indication of continuing
investor uncertainty. On 18 August, the ruble fell to 6.885
to $1 on the Moscow Interbank Currency Exchange, Interfax
reported. PG

KIRIENKO ACCEPTS RESPONSIBILITY, WAS PREPARED TO RESIGN. A
"top source" in the Russian presidential administration told
Interfax on 18 August that two days earlier, Prime Minister
Sergei Kirienko had assumed personal responsibility for the
country's economic crisis and told President Boris Yeltsin
that he was prepared to resign. Yeltsin rejected his offer
and directed Kirienko to "continue working to rectify the
situation," the unidentified source said. PG

ORDINARY RUSSIANS ANGRY AT GOVERNMENT MOVE. Russians reacted
angrily to the decline in the value of the ruble, Russian
and Western agencies reported. Many Russians on 17 August
paid as much as 9.5 rubles for a single U.S. dollar, and
many others said they could not find dollars even at that
rate. Russian merchants said that the real impact of the
devaluation on prices would not hit until they ran out of
current stocks in about a month and had to replenish. One
Russian citizen told AP that "in Soviet times, we had the
sense of confidence in the future. And now Yeltsin, and your
Americans have stolen it from us." Meanwhile Moscow Mayor
Yurii Luzhkov, Deputy Prime Minister Boris Nemtsov, and
Federal Tax Service chief Boris Fedorov warned against any
"unjustified" price increases. "No one should use the
difficulties the country is experiencing in order to try to
deceive citizens," Fedorov told ITAR-TASS. PG

POLITICIANS SPLIT OVER EXCHANGE RATE SHIFT. The reaction of
Russian politicians ranged from cautious support to outright
denunciation. Former Prime Minister and leader of the Our
Home is Russia party Viktor Chernomyrdin gave cautious
backing to the shift in government policy, saying "there
could be no other opinion," ITAR-TASS reported on 17 August.
Aleksandr Zhukov, the chairman of the State Duma budget
committee, said the move is part of a broader set of
measures Russia must adopt. Krasnoyarsk Governor Aleksandr
Lebed, however, was more critical. He told Interfax that
"the Russian government has [signaled] its insolvency and
admitted that the country is bankrupt. All of us have been
deceived once again." Duma speaker Gennadii Seleznev said
the decision to allow the ruble to fall is "an egregious
mistake." And Communist Party chief Gennadii Zyuganov
suggested that the new exchange rate would "first and
foremost hit the poorer classes of the population, lead to a
price rise and simultaneously to the bankruptcy of many
commercial banks," ITAR-TASS reported. PG

INTERNATIONAL REACTION MIXED. German Chancellor Helmut Kohl,
whose country has made the largest investment in Russia,
expressed concern about the Russian government's latest
moves but said he believes that Moscow can overcome the
crisis if it takes some additional steps and does not
violate any previous agreements. Mike McCurry, spokesman for
U.S. President Bill Clinton, said on 17 August that
Washington plans to continue to "work with" the Russian
government. U.S. Treasury Secretary Robert Rubin released a
statement calling on the Russian authorities to take action
on additional reforms necessary to restore investor
confidence. Meanwhile, Japanese First Deputy Finance
Minister Koji Tanami told ITAR-TASS on 17 August that the G-
7 countries are wary of giving any additional aid to Moscow
because they believe that the outcome there ultimately
depends on Russia itself . But international financier
George Soros praised the Russian action as "necessary,
timely, and courageous," Interfax reported. PG

IMF NEITHER PLEASED NOR LIKELY TO GIVE MORE AID. Following
meetings with IMF officials on 17 August, President Boris
Yeltsin's special envoy to international financial
organizations, Anatolii Chubais, told ITAR-TASS that the IMF
is not especially pleased by what Moscow has done but that
"there is an understanding of the necessity of this
operation and the reasons why it was carried out." Chubais
also said that the IMF is unlikely to come up with any
additional aid, but IMF Managing Director Michel Camdessus
said in a statement that the IMF may nonetheless release a
loan tranche in September as planned if the Russian
government takes additional steps to put its economic house
in order. PG

RUSSIA'S CREDIT RATING CUT AGAIN. Standard & Poor's, the
international rating agency, on 17 August cut Russia's
credit rating for long-term foreign exchange loans from B-
to CCC, ITAR-TASS reported. In its report, the rating agency
noted that Moscow's recent policy shifts could lead to a
unilateral restructuring of ruble-denominated state debt and
default of private issuers in the near future. The next day,
Standard & Poor's gave its lowest possible rating--"not
meaningful"--to six Russian banks, Interfax reported.
Meanwhile, Fitch IBCA lowered Russia's long-term foreign
currency rating to B- from BB-, according to dpa. Fitch said
it is especially concerned by Moscow's announcement of a 90-
day moratorium on external debt payments. Also on 17 August,
the international credit card issuer VIA announced that it
will block the bank identification number of Russia's
Imperial Bank because that bank has not deposited sufficient
funds to cover the settlement of claims. PG

RUSSIAN EXPORTS DOWN, IMPORTS UP. The Russian Ministry of
Foreign Economic Relations and Trade told Interfax on 18
August that Russian exports in the first half of 1998 fell
13 percent from $40.7 billion compared with the same period
in 1997 to $35.4 billion. Meanwhile, imports rose over the
same period by 12.8 percent to $26.3 billion, thus reducing
the trade surplus to $9.1 billion. The ministry said that it
expects imports to fall in the second half of 1998 because
of the devaluation of the ruble. PG

YELTSIN REFUSES DUMA INVITATION. Yeltsin will not attend the
21 August extraordinary session of the Duma, despite an
invitation to do so, his spokesman Sergei Yastrzhembskii
told Interfax on 17 August. Yeltsin's unwillingness to
appear may anger deputies, who are holding hearings on the
possibility of Yeltsin's impeachment, ITAR-TASS reported.
Meanwhile, the Duma press service announced that the State
Duma Council has decided to hold special plenary meetings on
21 August and 25 August to consider reports by Prime
Minister Kirienko and government draft laws on economic
issues. Duma speaker Seleznev said the resignation of the
government or its ministers is on the agenda, and he
indicated that no bicameral meeting of the parliament is now
in the offing. But ITAR-TASS reported that the Federation
Council may convene on 28 August. PG

FEDOROV UP, LIVSHITS OUT, DUBININ CRITICIZED. Following
meetings on 16 and 17 August, Yeltsin and Kirienko indicated
that they discussed personnel changes in the government but
said they reached no decisions, Interfax reported. Shortly
thereafter, however, Yeltsin appointed Federal Tax Service
chief Boris Fedorov as deputy prime minister with
responsibility for macroeconomics and the management of the
state debt. The deputy head of the Presidential
Administration, Aleksandr Livshits submitted a letter of
resignation noting that "possibly I bear a share of
responsibility for what has happened on the financial
market," Interfax reported. Yeltsin accepted that letter the
next day. Similarly, Central Bank chief Sergei Dubinin sent
Yeltsin a letter indicating he was prepared to leave if
Yeltsin wanted him to, but Yeltsin rejected that offer,
according to Interfax on 18 August. But Duma chairman
Seleznev told that news agency the previous day that the
parliament will support Soviet-era bank leader Viktor
Gerashchenko as Dubinin's replacement. PG

SOME BETTER ECONOMIC NEWS. On a day when most of the news
seemed to be bad, Russian officials were quoted as signaling
improvements in the future. The Russian Finance Ministry
announced that the steps outlined by the government on 17
August will not affect the servicing of foreign debt,
according to Interfax. (The Moscow city government also
announced that it will pay all its obligations, ITAR-TASS
reported.) Deputy Prime Minister Nemtsov told the latest
issue of "Newsweek" that Russian tax collections have
significantly improved in recent months, something he called
"good news." And the Russian privatization agency announced
plans for selling off portions of Svyazinvest and Gazprom.
Meanwhile, Russia's 12 largest banks agreed to cooperate
with one another and the Central Bank to create a special
clearinghouse. PG

JUSTICE MINISTER SEEKS RELEASE OF 100,000 PRISONERS. In
order to reduce prison overcrowding widely blamed for
outbreaks of a variety of infectious diseases, Justice
Minister Pavel Krashenninikov said on 14 August that he will
ask the Duma to amnesty some 100,000 prisoners now held for
what he called minor crimes, ITAR-TASS reported. In
addition, Krashenninikov said that he wants to limit all
future pre-trial detentions to less than a year. That move
would require Duma approval. PG

CHECHEN PROSECUTOR-GENERAL FIRED. President Aslan Maskhadov
on 16 August dismissed Husein-Khodji Batukaev as chairman of
the Chechen Supreme Shariat Court and Khavazh Serbiev as
prosecutor-general, RFE/RL's Grozny correspondent reported.
Serbiev was appointed to that post two years ago by then
acting President Zelimkhan Yandarbiev. Maskhadov personally
requested the Chechen parliament's endorsement of Serbiev's
dismissal on the grounds of incompetence, pointing out that
the prosecutor failed to complete investigations into
several recent incidents, including the 21 June shooting in
Grozny of National Security Service Director Lecha
Khultygov, the armed clashes in Gudermes on 14-15 July, and
the assassination attempt against Maskhadov on 23 July.
Maskhadov did not propose a replacement for Serbiev but said
that his successor should be "firm, militant, and with
experience in the law enforcement organs." LF

GROZNY BANS PRODUCTION OF OIL CONDENSATE. Maskhadov issued a
decree on 17 August banning the production of oil condensate
(oil mixed with diesel fuel), ITAR-TASS reported. Numerous
inhabitants of Grozny currently make a livelihood from
illegally extracting and refining oil, much of which has
seeped into the soil and threatens to cause a major
ecological catastrophe. The Chechen Fuel and Energy Ministry
claims that millions of tons of crude oil have accumulated
10-15 meters underground and pose a threat to the ground
water as well as the entire region. LF

DAGESTAN'S ISLAMIC RADICALS DECLARE INDEPENDENT TERRITORY.
Three villages in Dagestan's Buinak Raion that have
repeatedly been identified as a hotbed of Wahhabism declared
the district an independent Islamic territory on 17 August,
Interfax reported. They are refusing to acknowledge the
jurisdiction of the republican authorities. The villages'
inhabitants have clashed several time with local police
since June 1997. Meeting in Nazran on 17 August, the muftis
of Dagestan, North Ossetia, Chechnya, Karachaevo-Cherkessia,
Kabardino-Balkaria, and Ingushetia decided to form a
Coordinating Council of the Muslims of North Caucasus,
Caucasus Press reported. The aim of the council is to
promote the revival of Islam, combat "harmful trends,"
including Wahhabism, and contribute to the stabilization of
the North Caucasus. LF

TRANSCAUCASUS AND CENTRAL ASIA

SIX PRESIDENTIAL CANDIDATES REGISTERED IN AZERBAIJAN. The
Azerbaijan Central Electoral Commission has formally
registered six candidates for the 11 October presidential
election, Turan reported on 17 August. The six are incumbent
President Heidar Aliev, Azerbaijan National Independence
Party chairman Etibar Mamedov, Independent Azerbaijan Party
chairman Nizami Suleymanov, Azerbaijan Social Welfare Party
chairman Khanguseyn Kazymly, Communist Party leader Firudin
Hasanov, and Association of Victims of Political Repression
chairman Ashraf Mekhtiev. Three applicants were rejected on
the grounds of irregularities in the collection of
signatures supporting their candidacy: Umid [Hope] Party
chairman Abulfaz Akhmedov, Alliance for Azerbaijan chairman
Abutalib Samedov, and businessman Ilgar Kerimov. LF

GEORGIAN DEFENSE MINISTER POSTPONES TRIP TO MOSCOW. Davit
Tevzadze's visit to Moscow, scheduled to begin on 16 August,
has been postponed indefinitely due to the protracted
disagreement over the division between Russia and Georgia of
former Soviet military facilities in Georgia, Caucasus Press
reported. During a visit to Kyiv last week, Tevzadze and his
Ukrainian counterpart, Oleksandr Kuzmuk, discussed the
creation of a peacekeeping battalion composed of units from
the GUAM states (Georgia, Ukraine, Azerbaijan and Moldova).
Kuzmuk said that proposals for the structure and
organization of that battalion have already been drafted and
submitted to the Ukrainian Foreign Ministry. LF

GEORGIAN DISPLACED PERSONS ISSUE ULTIMATUM. Some 200 ethnic
Georgian fugitives from Abkhazia staged a demonstration in
Tbilisi on 15 August, Caucasus Press reported. The
demonstrators, who make a living by trading in medications,
were protesting the confiscation by city inspectors of their
merchandise. Many of the drugs and antibiotics in which the
demonstrators trade reportedly have either date-expired,
thereby posing a health hazard, or were part of humanitarian
aid consignments and therefore may not be resold. The
demonstrators demanded that either their wares be returned
and they be allowed to continue trading or the Georgian
authorities take measures to enable them to return to
Abkhazia. LF

GEORGIA TO INTRODUCE NEW IMMIGRATION PROCEDURES. As of 1
September, all persons arriving in Georgia by air at
Tbilisi, Kutaisi, and Batumi airports will be required to
complete immigration forms detailing the purpose and
duration of their stay in the country, Caucasus Press
reported on 18 August. The procedure will be extended in
1999 to visitors arriving by sea. LF

KARABAKH BISHOP LAMBASTES JEHOVAH'S WITNESSES. In a recent
address to the Armenian nation, Bishop Pargev Martirossian
condemns the missionary activities in Armenia and Nagorno-
Karabakh of Jehovah's Witnesses, whom he terms "a
totalitarian sect" that poses "a most horrible threat to our
people, our state, [and] our faith," Noyan Tapan reported on
17 August. He said Jehovah's Witnesses' refusal to take up
arms to defend their country "undermines the foundations of
our state." The bishop also expressed concern that those
countries that refuse official registration to the Jehovah's
Witnesses may be considered to have violated international
commitments to freedom of conscience and may consequently be
refused membership in the Council of Europe. Armenia
currently has special guest status in that organization. LF

CENTRAL ASIAN PRESIDENTS DISCUSS AFGHANISTAN. Kazakh
President Nursultan Nazarbayev spoke by telephone with the
presidents of Kyrgyzstan, Tajikistan, and Uzbekistan on 17
August, ITAR-TASS and Interfax reported. The four agreed
that given the successful offensives by troops of
Afghanistan's Taliban movement, a meeting of their
countries' foreign and defense ministers is necessary.
Nazarbayev's press service released a statement saying the
four were "unanimous" that the meeting should be held to
discuss "strengthening security in the Central Asian
region." The ministers are expected to meet in the Uzbek
capital, Tashkent, in the near future. BP

UN ENVOY'S BODYGUARD FOUND DEAD. The bodyguard of UN special
envoy to Tajikistan, Jan Kubis, was found dead in his
Dushanbe apartment on 17 August, ITAR-TASS reported. U.S.
citizen Jori de Marco apparently committed suicide.
Investigators from the Tajik Interior Ministry found no
evidence of a struggle. It is believed that De Marco shot
himself in the head with his own gun. BP

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