RFE/RL NEWSLINE Vol. 2, No. 161 Part I, 21 August 1998

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RFE/RL NEWSLINE Vol. 2, No. 161 Part I, 21 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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SPECIAL REPORT: CZECHOSLOVAKIA IN 1968--AN INVASION
REMEMBERED
Thirty years ago today Soviet tanks crushed the Prague
Spring reform movement. This special report looks at the
invasion's history and impact.
http://www.rferl.org/nca/special/invasion1968/index.html

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Headlines, Part I

* YELTSIN DENOUNCES U.S. AIR STRIKES

* KIRIENKO, GOVERNMENT FACE HOSTILE DUMA

* PLANS FOR TURKMEN-PAKISTAN PIPELINE SUSPENDED

End Note: MOSCOW MAYOR'S MEDIA EMPIRE CONTINUES TO GROW
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RUSSIA

YELTSIN DENOUNCES U.S. AIR STRIKES. Speaking in Murmansk on
21 August, Russian President Boris Yeltsin condemned U.S.
air strikes in Afghanistan and Sudan, ITAR-TASS reported.
"My attitude is indeed negative as it would be to any act of
terrorism, military interference, failure to solve a problem
through talks. I am outraged and I denounce this." Yeltsin
added that it was "indecent" that he was not informed in
advance. Yeltsin's press spokesman, Sergei Yastrzhembskii,
appeared to be less critical: he suggested that with regard
to terrorism, Russia and the U.S. are "in the same boat,"
and he reaffirmed that the September summit will take place
as scheduled. Communist chief Gennadii Zyuganov said that
the U.S. has "in fact become a terrorist state." And Liberal
Democratic Party of Russia leader Vladimir Zhirinovsky said
that the U.S. action should lead Russia to change its
foreign policy and cancel the summit. The Russian Foreign
Ministry announced it will issue a formal statement later on
21 August. PG

YELTSIN TAKES DIRECT CONTROL OVER MILITARY POLICY. Having
arrived in Murmansk on 21 August to observe a fleet exercise
and missile launch, Yeltsin announced that he will take full
control over military policy and military technical
cooperation, presidential press spokesman Sergei
Yastrzhembskii told ITAR-TASS. Yeltsin indicated that by
doing this, he will be able to ensure that officers and
soldiers are paid. PG

KIRIENKO, GOVERNMENT FACE HOSTILE DUMA. Speaking to the
State Duma on 21 August, Prime Minister Sergei Kirienko said
that the country is now entering "a serious financial
crisis" as a result of the growing state debt and falling
prices for Russia's major exports, ITAR-TASS reported.
Kirienko added that "we cannot allow ourselves the luxury of
being a popular government," pointing out that the full
impact of the country's economic difficulties is still
ahead. Finance Minister Mikhail Zadornov and Central Bank
chairman Sergei Dubinin also spoke to the deputies, noting
respectively that Russia now has few opportunities to borrow
abroad and that the Duma needs to adopt the anti-crisis
measures the government has proposed. Many Duma members were
sharply critical, while the Communists said they now have
enough signatures to force a no-confidence vote and again
called on Yeltsin to resign. PG

POLITICIANS DIVIDED ON GOVERNMENT'S FATE. In advance of the
21 August Duma session, politicians across the political
spectrum staked out positions revealing just how divided
they remain and how unlikely they are to unite on most
questions, Russian agencies reported. Communist leader
Zyuganov said his party will demand Yeltsin's immediate
resignation or ouster. Liberal Democratic Party leader
Zhirinovsky said some people in the government should be
replaced but not the entire cabinet, a view shared by many
other leaders. Duma speaker Gennadii Seleznev and Federation
Council chairman Yegor Stroev both argued that the
resignation of the government will not solve anything.
Former Prime Minister Viktor Chernomyrdin was in partial
agreement with the left opposition on the economic situation
but disagreed on the question of whether Yeltsin should go.
Chernomyrdin urged that all politicians consult in order to
prevent the escalation of the economic crisis into a
political one. Meanwhile, Yabloko leader Grigorii Yavlinskii
said that Central Bank chairman Dubinin is doing a good job
and should stay but that the government may have to leave in
the fall. And former Soviet President Mikhail Gorbachev
repeated his call for early presidential and parliamentary
elections. PG

CENTRAL BANK GUARANTEES RUSSIAN DEPOSITS. In a move designed
to restore confidence in the country's beleaguered banking
system, the Russian Central Bank on 20 August promised to
guarantee deposits in Russian banks, ITAR-TASS reported. The
guarantees would be given through arrangements with
Sberbank, according to statement released by the Central
Bank. But Central Bank Deputy Chairman Sergei Aleksashenko
told Interfax that a number of banks, including some of the
20 largest, may soon go bankrupt. And he acknowledged that
Central Bank reserves fell $2 billion in the last week alone
and that there has been some $4 billion in capital flight
from Russia between May and mid-August. PG

MOSCOW SEEKS TO REASSURE FOREIGN INVESTORS. Prime Minister
Kirienko, presidential envoy to international financial
institutions Anatolii Chubais, Deputy Prime Minister Boris
Fedorov, and Central Bank chairman Dubinin met with 50 major
foreign investors on 20 August to reassure them that the
government will not discriminate against them and will
pursue a "transparent" approach to any policy changes, ITAR-
TASS reported. But some investors may not have been entirely
reassured. Dubinin said earlier in the day that even more of
Russian bank commitments to foreign investors should be
restructured, Interfax reported. Also on 20 August, Dubin
sent a letter to the central banks of the G-7 countries and
Switzerland asking them to show "moral support" for Russian
banks during this "difficult period" and saying that all
problems could be solved during negotiations beginning on 24
August, ITAR-TASS reported. PG

RUBLE STABILIZES, EQUITY MARKETS CONTINUE TO FALL. The ruble
declined by half a kopeck on 20 August closing at 6.995 to
$1, ITAR-TASS reported. Exchanges on the street reported
rates of 7.5 to 9.0 rubles to the dollar, with markedly less
fluctuation and demand than earlier this week. But stock
markets continued to fall from 4 to 6 percent on the
lightest day of trading so far this year. There was little
demand, and traders said the market is likely to continue to
fall until the government resolves the treasury bond
rescheduling. PG

LIVSHITS SAYS MOSCOW NOW CANNOT BORROW ABROAD. Aleksandr
Livshits, President Boris Yeltsin's former economic adviser,
who resigned on 17 August, told AP on 20 August that Moscow
will be unable to borrow much on world financial markets for
at least the next two years because of its radical and
unexpected change in economic policy. Livshits said that he
told people that "we'd do everything possible to keep the
ruble stable, not to let it drop. I'd said if it drops, I
go." PG

EU CONSIDERS GIVING RUSSIA MORE HELP. European Commission
President Jacques Santer has asked the EU to propose ways in
which the EU might be able to help Russia overcome its
financial crisis, ITAR-TASS reported on 20 August. But EU
Finance Commissioner Yves Thibault said Moscow must work to
restore the trust of its Western partners and that East
European countries seeking to join the EU should be
"vigilant" in dealing with any impact the Russian crisis may
have on them. PG

ECONOMIC CRISIS HITS KALININGRAD, OTHER REGIONS. The
introduction of the broader ruble corridor has made it
impossible to implement a program to provide housing
certificates to Russian military personnel, an official
overseeing the program told ITAR-TASS on 21 August.
Leningrad Oblast deputy governor Sergei Susekov told the
Russian agency the same day that price increases of 23-30
percent are likely by the end of the year. He added that
local police officials are busy tracking down cases of
unlawful price hikes and inflated exchange rates. But in
most regions, people are more concerned about the
instability that the decline in the ruble signals rather
than about the decline itself, Russian agencies reported. PG

YELTSIN MARKS PRAGUE SPRING, 1991 COUP. President Yeltsin on
20 August said that the 1968 Prague spring, crushed by
Soviet tanks, was an attempt to "escape from ideological
dogmatism and lies," AP reported. And he also suggested that
Russians should remember the August 1991 coup when in
"protecting democracy," they proved that there is "no power
that can stop the drive of the people toward democracy. "
Yeltsin's comments came in a message to a gathering of
poets, activists, and former dissidents who were marking the
30th anniversary of the Czechoslovak reform move (see also
Part II). PG

1991 COUP LEADER SEES NO POSSIBILITY OF REPETITION. Former
Soviet Prime Minister Valentin Pavlov told Interfax on 20
August that there is no possibility of a coup like the one
he helped launch seven years ago. "Those who have offices
similar to those of the 1991 coup leaders will not take the
risk," Pavlov said. He claimed that he and his colleagues
would have prevented the economic and political collapse of
the country, noting that "today everyone can see where an
accelerated, Bolshevik-like approach to building a
capitalist society has led us." PG

GORBACHEV WOULD TESTIFY AGAINST YELTSIN. Reversing his
earlier statements that he would not appear before a Duma
commission considering the impeachment of Boris Yeltsin,
former Soviet leader Gorbachev told Ekho Moskvy on 20 August
that he would appear before such a commission. Gorbachev
said that Yeltsin's approach had made it impossible for the
Soviet Union to continue. PG

HEALTH MINISTRY TO KEEP MEDICINE PRICES LOW. Health Minister
Oleg Rutkovskii told ITAR-TASS on 20 April that the ministry
is to introduce a system of price controls on pharmaceutical
products. While he acknowledged that the prices of some
imported medicines will inevitably increase, Rutkovskii
suggested that there is no need for Russians to stock up now
in anticipation of shortages. PG

CYPRIOT DIPLOMAT DENIES S-300s ALREADY DEPLOYED. The
controversial Russian S-300 air defense missiles that
originally were to have been delivered to Cyprus in July or
August have not yet been sent to the island, the Cypriot
charge d'affaires in Moscow told Interfax on 20 August. He
added that the new delivery date was agreed to during a
meeting in July between Russian President Yeltsin and his
Greek Cypriot counterpart, Glafcos Clerides. Clerides told
journalists after the meeting that the schedule for
deployment remains unchanged (see "RFE/RL Newsline," 14 July
1998). But Cypriot spokesmen subsequently said the missiles
will be deployed in November. LF

DAGESTAN'S MUFTI KILLED BY CAR BOMB. Saidmukhamed Abubakarov
and two other passengers were killed when the car in which
they were traveling was destroyed by a car bomb in
Makhachkala on 21 August, ITAR-TASS reported. Abubakarov was
known for his hard-line stance on Wahhabism. LF

DAGESTAN SAYS WAHHABIS COULD SPARK CIVIL WAR... Speaking at
an emergency session of Dagestan's State Council on 19
August, chairman Magomedali Magomedov said the decision by
three villages to declare an "independent Islamic territory"
(see "RFE/RL Newsline," 18 August 1998) "will lead to civil
war," "Vremya-MN" reported on 19 August. Dagestani Security
Council acting Secretary Magomed-Salikh Gusaev said the
residents of the three villages, most of whom are Wahhabis,
are propagating the concept of an independent Islamic
republic comprising Chechnya, Dagestan, Ingushetia,
Kabardino-Balkaria, and Karachaevo-Cherkessia. The council
ordered the Dagestani police to take resolute action to
restore control over the villages. The villagers themselves
told journalists from "Nezavisimaya gazeta" earlier this
month that they armed themselves only in response to
systematic oppression by the republic's authorities. LF

...BUT MOSCOW DOWNPLAYS DANGER. Russian Nationalities
Minister Yevgenii Sapiro stressed on 20 August that only
three villages are involved, and that the use of force to
resolve a "local problem" could cause the protest to
escalate "on the Chechen scale." Chechen field commander
Shamil Basaev warned that he will deploy his troops to
protect the villagers if the Dagestani authorities resort to
violence against them, Interfax reported on 20 August. In
response, Gusaev stated that Dagestan will treat any Chechen
move to support the Wahhabis as an act of war, RFE/RL's
North Caucasus correspondent reported on 21 August. LF

CHECHEN RAID FAILS TO LOCATE, FREE VLASOV. Acting on
information received, members of the Chechen anti-abduction
squad raided a town in the southern raion of Shatoi on 19
August but failed to locate and free kidnapped Russian
presidential envoy Vladimir Vlasov, whom they believed was
being held there, ITAR-TASS reported. Anti-abduction squad
commander Shadid Bargishev told journalists in the Chechen
capital on 20 August that one Russian hostage was released
during the Shatoi operation. Bargishev estimated the number
of hostages still being held in Chechnya at 17, including
two British and two Turkish citizens. Independent observers
believe the number is closer to 50. LF

INGUSH LEADERSHIP'S ECONOMIC POLICY UNDER FIRE. Employees of
Ingushetia's oil and gas complex have written to the
republic's government requesting that it reconsider a deal
concluded in May with the U.S. oil company Pacific
Petroleum, "Nezavisimaya gazeta" reported on 21 August. The
deal allows the U.S. company to exploit the republic's most
promising deposits and retain over 80 percent of the
anticipated profits, leaving the local oil workers to
develop deposits that are virtually exhausted. In a letter
to President Ruslan Aushev, Ingushetian oil and gas industry
head Belan Khamchiev outlined alternative proposals for the
sector to expand annual production from 1998-2001 to 300,000
metric tons. Khamchiev was subsequently fired. On 12 August,
"Nezavisimaya gazeta" criticized Aushev's policy of
investing the proceeds from Ingushetia's status as an
offshore zone in grandiose projects that proved economically
unviable. LF

TRANSCAUCASUS AND CENTRAL ASIA

PLANS FOR TURKMEN-PAKISTAN PIPELINE SUSPENDED. Following the
U.S. strikes on terrorist-related positions in Afghanistan
and Sudan on 20 August, the U.S. company UNOCAL Corp. has
suspended its participation in a planned Turkmen-Pakistan
natural gas pipeline via Afghanistan, the "Los Angeles
Times" reported. A spokesman for the company is quoted as
saying that "In light of the U.S. government's actions....,
we feel it appropriate to suspend all activities on the
proposed pipeline. We will not move forward." For several
years, UNOCAL and Saudi Arabia's Delta Corp. have been
discussing the pipeline with the Turkmen and Pakistani
governments as well as representatives of Afghanistan's
Taliban movement. Turkmen President Saparmurat Niyazov said
earlier this month that construction of the pipeline will
begin before the end of 1998. BP

YERKRAPAH OFFERS MINOR CONCESSION ON ELECTION LAW. Smbat
Ayvazian, chairman of the majority Yerkrapah parliamentary
group, told RFE/RL's Yerevan bureau on 20 August that the
group still advocates allocating the majority of seats in
the next parliament in single-member constituencies but is
prepared to increase from 30 percent to 40 percent the
number allocated on the basis of party lists. Other
political parties, however, are likely to reject that
proposal and to continue insisting that the majority of
seats be allocated in accordance with the party-list system.
Ayvazian said the group will submit its own draft election
law to the relevant parliamentary committees within the next
few days. It rejects all three existing variants, which give
precedence to the party list system. LF

GEORGIA, ABKHAZIA TO CREATE WORKING GROUP ON BORDER ISSUES.
Meeting in Sukhumi on 20 August, Abkhaz President Vladislav
Ardzinba and Georgian Border Guard commander Major-General
Valerii Chkheidze agreed to create a working group to
discuss the defense of Georgia's frontiers, Caucasus Press
reported on 21 August. Arzdinba rejected Chkheidze's
proposal that Abkhaz and Georgian forces jointly control the
Abkhaz sector of Georgia's frontiers, according to an RFE/RL
correspondent in Tbilisi. Meanwhile, Abkhaz units continue
to erect concrete and barbed wire fortifications along the
Inguri River (see "RFE/RL Newsline," 19 August 1998),
according to Caucasus Press. LF

AZERBAIJANI POLICE RELEASE DETAINED OPPOSITIONIST.
Democratic Party leader Sardar Djalaloglu was released from
custody on 20 August, 24 hours after being detained on
suspicion of calling for crimes against the state, Turan
reported. On 18 August, Azerbaijani television had aired
footage of a Baku resident who claimed Djalaloglu had
offered him money to telephone bomb warnings to various
locations in Baku on the eve of the 15 August opposition
demonstration. An investigation is continuing. Also on 19
August, Musavat Party chairman Isa Gambar called for the
postponement of the presidential elections scheduled for 11
October and the adoption of a new and democratic election
law that would prevent the present authorities from
monopolizing the election campaign, AP reported. LF

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