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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 171 Part I, 4 September 1998


___________________________________________________________
RFE/RL NEWSLINE Vol. 2, No. 171 Part I, 4 September 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: HOW RUSSIA IS RULED--1998
As the string of crises continue in Russia, the question
remains: Who is in charge? This in-depth report analyzes
the country's power structure.
http://www.rferl.org/nca/special/ruwhorules/index.html

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Headlines, Part I

* CHERNOMYRDIN RECOMMENDS TOUGH MEASURES

* PRESIDENT TO MAKE ANOTHER OFFER TO DUMA

* AKAYEV SETS DATE FOR KYRGYZ REFERENDUM
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RUSSIA

CHERNOMYRDIN RECOMMENDS TOUGH MEASURES... In an
uncharacteristically bold statement, acting Prime
Minister Viktor Chernomyrdin called for the Russian
state to "switch over to economic dictatorship" starting
in January under which enterprises would no longer be
able to avoid or delay paying taxes.  Among the measures
he suggested was the payment of pension arrears totaling
20 billion rubles ($1.2 billion), back wages to public
sector employees totaling 7.5 billion rubles, 1.5
billion rubles worth of defense industry wages, and 2
billion rubles for science, health, and education
spending through a "controlled" monetary emission. And
he included 1 billion rubles the government still owes
to the victims of Chornobyl. JAC

...AND FLOATING RUBLE. Chernomyrdin also insisted that
the ruble must be allowed to float freely against the
dollar. He suggested that once the ruble is stabilized,
the nation's money supply could be linked to the Central
Bank's gold and hard currency reserves, in what some
analysts are calling a de facto currency-board system.
JAC

PRESIDENT TO MAKE ANOTHER OFFER TO DUMA. Aleksandr
Kotenkov, presidential representative to the Duma, told
reporters on 4 September that President Boris Yeltsin
will present the Duma with draft legislation allowing
the lower house a greater say in the formation of the
cabinet.  However, according to Reuters, Duma speaker
Seleznev dismissed the effort, saying that the proposal
differs little from previous ones. He added that the
Duma is still likely to reject Chernomyrdin. JAC

PRESS PREDICTS DUMA REVERSAL OVER CHERNOMYRDIN. While
State Duma speaker Gennadii Seleznev predicted on 3
September that no more than 150 deputies will vote for
Chernomyrdin, some newspapers were considering the
possibility of a Chernomyrdin victory. "If the Duma is
ready to back down, it must have reasons for doing so.
And the Federation Council and Chernomyrdin himself must
give it the reasons," "Kommersant-Daily" said on 3
September. "Segodnya" on 3 September reported that "many
deputies are unable to rid themselves of the feeling
that they overstepped the mark in opposing
Chernomyrdin's appointment and could risk losing
everything. [Liberal Democratic Party leader Vladimir]
Zhirinovsky who is always sensitive to the way the wind
is blowing ...was the first to sense that it was time to
recover lost ground." The Russian Regions faction has
showed signs that it wants a quick resolution to the
impasse. According to ITAR-TASS, faction members asked
the Federation Council to mediate a compromise between
the president and the Duma. JAC

LEBED EXPRESSES QUALIFIED SUPPORT FOR CHERNOMYRDIN...
Interviewed on 3 September by Russian Public Television,
Krasnoyarsk Krai governor Aleksandr Lebed predicted that
the Federation Council--whose members he characterized
as pragmatic and less politicized than Duma deputies--
will vote to confirm Chernomyrdin as premier on 4
September but that the Duma will reject his candidacy a
second time. Lebed hinted that he might accept the
premiership but only if it were offered him "from below,
from the people," a comment he repeated in an interview
the same day with NTV. Asked if he thinks Federation
Council chairman Yegor Stroev is a possible alternative
candidate for premier, Lebed said that Stroev is "a wise
and sober-minded person" and for that reason  would be
unlikely to accept the post if offered. LF

...OUTLINES PREFERRED FINANCIAL POLICY. Lebed said that
the leadership's top priority should be paying internal
debts by means of monetary emission. He added that
Russia's foreign creditors understand that "first we
restore order inside the country, and then we pay off
our foreign debts some time in the future--or we never
pay them." Then, Lebed advocated,  the ruble should be
allowed to find its own level against the dollar, after
which the exchange rate should be brought in line with
the Central Bank's gold and foreign-currency reserves.
LF

RUBLE'S DECLINE PICKS UP SPEED. On the morning of 4
September, the ruble fell 26 percent to 16.99 rubles per
$1 from the previous day's level of 13.48 rubles. In his
speech to the Federation Council, Chernomyrdin described
the ruble as "becoming wooden." He said "people are
buying matches, buckwheat, and sugar," implying that
these commodities are a more reliable storehouse of
value. JAC

NO FOOD SHORTAGE IN MOSCOW YET. According to Moscow
customs office head Sergei Soldatov, a food crisis is
not imminent in Moscow, RFE/RL reported on 4 September.
The Moscow region customs office has more than 50,000
tons of foodstuff in storage, which is thought to be
sufficient to keep  market shelves stocked for two to
three months. Deliveries of imported goods dropped 15
percent in August, compared with July. Former Minister
of Agriculture Viktor Khlystun told Interfax on 4
September that no one in Russia is likely to starve, but
shortages of certain food items, such as vegetable oil
and meat products, may occur. Meanwhile, the "Moscow
Times" reported on 3 September that the dry spring and
early summer followed by heavy August rains may result
in a poor harvest of potatoes this year. According to
that newspaper, potatoes account for 10 percent of the
nation's total calorific intake. JAC

BANK CUSTOMERS SAY NO THANKS. On 2 September, the
Central Bank ordered six leading commercial banks--
Inkombank, Menatep, Most Bank, Mosbiznesbank,
Promstroibank and SBS-Agro--to stop servicing the
accounts of individual depositors. Their customers had
to decide by 26 September whether to leave their money
in the private banks or transfer their funds to
Sberbank, the country's largest bank, where their money
would be guaranteed by the government. But in either
case, the customer cannot withdraw any money until 15
November. The decision was not popular. One customer
commented to NTV on 3 September: "How can you trust a
state bank if you don't trust the state?" According to
ITAR-TASS the next day, the Central Bank lifted its
restriction for customers who sign a statement giving up
their right to transfer their accounts to Sberbank. JAC

REGIONS CONSIDER ECONOMIC SEPARATISM... "Kommersant-
Daily" on 3 September suggests that the ongoing
political and economic crisis in Russia may prompt the
handful of federation subjects (including Moscow,
Tatarstan, and Krasnoyarsk Krai) that are not dependent
on subsidies from the federal budget to embark on the
path of economic separatism. The newspaper notes that
the governors of Sakha and Kemerovo, Mikhail Nikolaev
and Aman Tuleev, have already begun forming their own
gold and hard-currency reserves in violation of federal
law. At the same time, those regions dependent on
subsidies from Moscow are experiencing budget deficits,
which in some cases are equal to the entire annual
budget. The newspaper also notes that such policies risk
increasing the rift  not only between the regions and
the federal center but also between the individual
regions. Saratov governor Dmitrii Ayatskov has warned
that the present economic crisis could result in the
disintegration of Russia as a federation and its rebirth
as a confederation.  LF

...OR REDEFINING BORDERS.  Meanwhile the acting mayor of
Kyzyl, the capital of the Republic of Tyva, explained to
"Noviye izvestiya" on 3 September that the city has
asked to secede from Tyva and join neighboring
Krasnoyarsk Krai as the only way to coerce the
republic's government into paying the 19 million rubles
it owed the city as of 1 August. The Republic of
Khakasiya, which also borders on Krasnoyarsk, is
similarly debating rejoining that krai, from which it
separated in 1992. LF

DEFENSE MINISTER WARNS AGAINST DELAY IN FORMING NEW
GOVERNMENT. Speaking in Astrakhan on 3 September, acting
Russian Defense Minister Igor Sergeev warned of a
possible replay of the violence that followed President
Yeltsin's decree on dissolving the Duma in fall 1993
unless a new Russian government is named soon, ITAR-TASS
reported. Sergeev was observing joint air defense
exercises by Russian, Belarusian, Kazakh, and Kyrgyz
forces. Armenian Defense Minister Vazgen Sargsian, who
also attended, said that Armenia will participate in
similar exercises next year. Sergeev's press secretary,
General Anatolii Shatalov, told Interfax on 4 September
that rumors of army units  being concentrated near
Moscow are "untrue" and "a provocation." LF

RUSSIA TO RAISE OIL EXCISE TAX? In a blow to oil
exporters, ITAR-TASS reported on 4 September that the
Ministry of Fuel and Energy is drafting proposals for
changing the oil excise tax. The agency speculated that
the tax will be increased because a press release said
the government is seeking to revise the tax in order to
increase income to the state budget. Earlier, Russian
oil producers asked the government to reduce the oil
excise tax because of the sharp fall in world oil
prices. The Duma passed a law in July calling for a
small decrease, which President Yeltsin later vetoed
(see "RFE/RL Newsline," 17 July 1998). JAC

RUSSIA'S MOST DANGEROUS PROFESSION? In the second attack
on a mayor in the oil producing region of Western
Siberia in less than four months, Nizhnevartovsk Mayor
Yurii Timoshkov was seriously injured when a bomb
exploded in his car. Yurii Shirmankin, deputy head of
the Nizhnevartovsk-based Tyumen Oil Company, told
Reuters that Timoshkov was targeted by "a certain group"
that wants to gain influence over the local budget and
oil companies in the region. Timoskhov survived a
previous assasination attempt in April. In June,
Vladimir Petukhom, mayor of Nefteyugansk, also in the
Tyumen Oblast, was shot dead while walking to work.
Russian newspapers speculated that the killing might
have been connected with Petukhov's long history of
clashes with the management of YUKOS, whose subsidiary
Yuganskneftegaz, is the major employer in Nefteyugansk
(see "RFE/RL Newsline," 29 June 1998). JAC

RUSSIAN VISA PROCESS SIMPLIFIED. In October, foreign
visitors to Russia will no longer have to list the
cities they  intend to visit when they apply for a visa.
President Yeltsin signed a decree last year allowing
foreigners to move freely around the country, but some
local officials remained unaware of the change. JAC

RUSSIAN-CHINESE BORDER FULLY DEMARCATED. Russian Foreign
Ministry spokesman Vladimir Rakhmanin announced on 3
September that the entire Russian-Chinese border has now
been demarcated, ITAR-TASS and Interfax reported. Most
of the border demarcation was completed by last
November, leaving only stretches in the west unmarked.
Rakhmanin said the final demarcation of the 4,200-
kilometer border is a "new significant step" in Russo-
Chinese relations. Rakhmanin did not mention three
islands in the Amur River, which by mutual consent have
been left out of the demarcation process. BP

CHECHEN PRESIDENT WILL NOT CEDE PREMIERSHIP. Aslan
Maskhadov has said that in accordance with the
constitution of the Chechen Republic Ichkeria, he will
continue to occupy the position of prime minister,
RFE/RL's  Grozny correspondent reported on 4 September.
Maskhadov was responding to a report to the parliament
by former acting Premier Shamil Basaev on the
performance of his cabinet during the first half of
1998.  Maskhadov also denied that he has appointed
former Chechen parliamentary speaker Yusup Soslambekov
as deputy prime minister (see "RFE/RL Newsline," 3
September 1998). Maskhadov said that Soslambekov will
liaise between the Chechen and Russian leaderships.
Maskhadov also categorically rejected rumors that former
Russian parliamentary speaker Ruslan Khasbulatov will be
offered a post in the next Chechen government. On 3
September, Khasbulatov testified to the Russian State
Duma commission for the impeachment of the president on
the events that preceded the attack on the Russian
parliament in October, 1993.  LF

RUSSIA SOFT-PEDALS IN DAGESTAN. Meeting on 3 September
with residents of two Dagestani villages that last month
declared an independent Islamic territory, acting
Russian Interior Minister Sergei Stepashin pledged that
the Russian authorities will not resort to violence
against the villagers or other followers of traditional
Islam in Dagestan, Caucasus Press reported. The previous
day, the Russian State Duma unanimously passed a
resolution assessing the situation in Dagestan as highly
tense and calling on the Russian government to establish
a special commission, on which representatives of both
chambers of the parliament would be represented, to
draft a new policy on the North Caucasus.  The most
recent draft policy document for the region was rejected
as too general by most regional leaders. Interviewed by
"Kommersant-Daily" on 3 September, former Dagestan
Security Council secretary Magomed Tolboev warned of a
popular uprising in Dagestan unless State Council
chairman Magomedali Magomedov voluntarily steps down. LF

TRANSCAUCASUS AND CENTRAL ASIA

AKAYEV SETS DATE FOR KYRGYZ REFERENDUM... Kyrgyz
President Askar Akayev on 3 September announced that a
referendum on amendments to the country's constitution
will be held in mid-October, RFE/RL correspondents in
Bishkek reported. Akayev said the amendments will be put
to a public debate until 5 October. That statement has
annoyed parliamentary deputies, who were not offered the
opportunity to review the proposed amendments before the
announcement of the referendum. BP

...EXPLAINS REASON FOR VOTE. Also on 3 September, Akayev
held a press conference to explain his motives for
holding the referendum, RFE/RL correspondents reported.
The president  said the parliament is not fulfilling its
duties and is dragging its feet on passing several
essential laws. He mentioned private land ownership as
one area where the parliament has failed to make
progress. Turning to the subject of the CIS, Akayev said
member countries need to support President Boris Yeltsin
and Russia  and noted that undermining the legitimacy of
the Russian president could precipitate the collapse of
the CIS and ruin its members' economies. BP

HAS KAZAKH PRESIDENTIAL CAMPAIGN BEGUN? There is growing
speculation in Kazakhstan that President Nursultan
Nazarbayev has already begun his presidential campaign,
RFE/RL correspondents reported on 3 September.
Nazarbayev has made several tours of the country's
regions recently, sparking rumors in the local press
that he is seeking to get a head start and will bring
forward the presidential election, currently scheduled
to take place in 2000. Kazakh economists are forecasting
that an economic crisis in Kazakhstan will peak toward
the end of next year. In order to avoid holding
elections when his popularity could be diminishing,
Nazarbayev may opt to hold early elections. Opposition
parties are reportedly now gravitating to former Prime
Minister Akezhan Kazhegeldin as an alternative
presidential candidate to Nazarbayev. BP

TURKEY OFFER SUPPORT TO CIS CENTRAL ASIAN STATES. The
Turkish Deputy Undersecretary of the Foreign Ministry,
Mehmet Ali Irtemcelik, said in Bishkek on 3 September
that Ankara will support the CIS Central Asian states
against the threat of Afghanistan's Taliban movement,
the Anatolia news agency reported. According to ITAR-
TASS the same day, Irtemcelik, who is on a tour of the
CIS Central Asian states, will convey an offer by
Turkish President Suleyman Demirel to hold a
presidential summit on Afghanistan. Demirel's letter to
the CIS Central Asian presidents notes that Ankara
shares their concern  and can no longer sit on the
sidelines as an observer. Offers to hold a conference on
the Afghan situation have been made many times by
Kyrgyzstan, Iran, and Japan, but without success. BP

ARMENIAN DRAM BOUNCES BACK. The national currency
regained ground on Armenian financial markets on 3
September after losing some 4 percent of its value
against the U.S. dollar the previous day, RFE/RL's
Yerevan bureau reported. But in an interview with
"Yerkir" on 3 September, Tigran Jrbashian of the Sed
Marsed consulting company downplayed Armenia's improved
macroeconomic performance in 1998. Arguing that the
present exchange rate of the dram is "artificial," he
predicted that it will fall in value in the coming
months and that "signs of a serious crisis" will emerge
in October or November. LF

PRESIDENTIAL ELECTION CAMPAIGN KICKS OFF IN AZERBAIJAN.
In his initial campaign TV broadcast, Independent
Azerbaijan Party chairman Nizami Suleimanov called upon
incumbent President Heidar Aliev to retire from
politics, ITAR-TASS and Turan reported on 3 September.
Suleimanov said that if he wins the 11 October
presidential poll, he will form a coalition government
that includes the opposition Musavat, Azerbaijan
Democratic, and Azerbaijan Popular Front parties  and
will raise the salaries of state sector employees up to
tenfold. Communist Party candidate Firuddin Gasanov
offered a program of "progressive socialism" similar to
the programs of the Chinese, French, Italian, and
Russian Communist Parties. Gasanov promised quick
solutions to social problems,  including a return to
free education and health care, and a strong army. Six
candidates, including Aliev, will contend the poll. LF

AZERBAIJAN, IRAN DISCUSS COOPERATION IN OIL SECTOR.
President Aliev on 2 September  met with Ali Akbar
Hashimi, director-general of Iran's Oil Industries
Engineering and Construction Company, Turan reported the
following day.  That company has 10 percent stakes in
the consortia formed to exploit the Shah-Deniz and the
Lenkoran-Deniz off-shore Caspian oil fields. Hashimi
indicated that his company is keen to expand its
activities in Azerbaijan and enter the petrochemical and
gas sectors. Natik Aliev, president of the Azerbaijan
state oil company SOCAR, whose dismissal on corruption
charges was rumored last week to be imminent, also
attended the talks. LF

ABKHAZIA SIGNALS INTEREST IN OIL PIPELINE. The Abkhaz
government delegation to the Coordinating Council,
meeting in Sukhumi on 2 September, indicated that the
breakaway republic's leadership is interested in the
proposed construction of an oil export pipeline linking
Russia's Black Sea terminal of Novorossiisk with the
Georgian port of Supsa (see "RFE/RL Caucasus Report,"
Vol. 1, No. 1, 3 March 1998),  "Nezavisimaya gazeta"
reported on 4 September. The Abkhaz say that
construction of the pipeline would contribute
substantially to restoring the region's economy and
reducing unemployment. But Georgian presidential adviser
Levan Aleksidze told Interfax on 3 September that talks
on economic reconstruction in Abkhazia should be shelved
until the ethnic Georgians forced to flee fighting in
Abkhazia in 1992-1993 and/or in May 1998 have been
allowed to return to their homes. LF

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