A host is like general: calamities often reveal his genius. - Horace
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 2, No. 179, Part I, 16 September 1998


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RFE/RL NEWSLINE Vol 2, No. 179, Part I, 16 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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Headlines, Part I

* RUBLE RESUMES DROP

* CENTRAL BANK PREPARES PRESSES

* SEVEN KILLED IN SHOOTINGS ON ABKHAZ-GEORGIAN BORDER
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RUSSIA

RUBLE RESUMES DROP. The value of the ruble wavered
erratically on 15 September, finally closing on the
electronic exchange at 11.95 rubles per dollar--27 percent
lower than the official exchange rate. Yulia Romanenkova,
president of the Guild of Professional Dealers, told Interfax
that in the first half of the trading session, the Central
Bank bought a large amount of rubles at an artificially low
rate of 7.5 rubles per dollar. The Central Bank might have
taken such action to subsidize Russian banks, reducing their
losses on "forward contracts," agreements to sell rubles at a
certain rate at a future date (see "RFE/RL Newsline," 15
September 1998). However, the Central Bank denied reports
that it is intervening in the currency market. On 16
September, the bank lowered the official rate of the ruble
from 8.67 rubles to 9.61 rubles per dollar. JAC

CENTRAL BANK PREPARES PRESSES... Recently appointed Central
Bank Chairman Viktor Gerashchenko says Russia "cannot do
without" a monetary emission. He told reporters on 15
September that there is a "catastrophic" shortage of money in
Russia. Gerashchenko declined to specify the size of the
emission until the bank's board of directors has met and made
its own assessment. President Yeltsin approved all eight of
Gerashchenko's nominees for the board, which included Andrei
Kozlov, who had resigned from the Bank only 10 days ago (see
"RFE/RL Newsline," 7 September 1998). "Russkii telegraf"
argued that "there will be no need to define the parameters
of the [planned] emission" if the "cabinet decides to
immediately index-link all deposits and to provide
compensation for the losses suffered by the poorest sections
of the population while also increasing enterprises' working
capital. The printing presses will go out of control and will
themselves determine not only economic policy but the future
of the [Prime Minister Yevgenii] Primakov government,"
according to the newspaper. JAC

...WHILE SHOKHIN PLEDGES NO NEW MONEY. New Deputy Prime
Minister for Finance Aleksandr Shokhin of the Our Home is
Russia faction told Russian Public Television on 15 September
that "issuing money as a means of resolving all problems" is
ruinous for the economy. He added that it is important not to
rely too heavily on any single method such as issuing money
or price controls. Communist Party leader Gennadii Zyuganov
blasted Shokhin's appointment, saying that Shokhin, together
with recently deposed acting Prime Minister Viktor
Chernomyrdin, has "squandered away the entire state treasury
and failed to fulfill every budget." Another member of the
Our Home is Russia faction and State Duma deputy, Georgii
Boos, will head the Federal Tax Service, a post held by
acting Deputy Prime Minister Boris Fedorov, ITAR-TASS
reported, Whether Fedorov will retain his other post is not
yet known. JAC

PRIMAKOV PROMISES PAYMENTS WITHOUT INFLATION. Prime Minister
Primakov told reporters on 15 September that Russia will pay
back wages and pensions but prevent hyperinflation and a
worsening of the country's economic situation. According to
ITAR-TASS, Primakov and trade union leaders agreed the same
day to form a tripartite commission composed of
representatives from the government, unions, and employers to
address the problem of wage arrears. Meanwhile in Krasnodar,
Vladimir Rybalko, a locksmith, killed himself by self-
immolation, leaving behind a note in which he complained he
had not been paid for two years. And, in the Vorkuta region,
a group of miners blocked a highway to protest non-payment of
wages. JAC

PRESS PROFILES BORDYUZHA... Russian newspapers described
Foreign Minister Igor Ivanov and Secretary of the National
Security Council Nikolai Bordyuzha as capable bureaucrats,
appointed as much for their loyalty as their skills.
"Izvestiya" on 16 September said that Bordyuzha is
"absolutely loyal" to his superiors and openly known as
"Primakov's man." According to "Kommersant-Daily" on 15
September, Bordyuzha was elevated to his new position
primarily for his loyalty to President Boris Yeltsin. Those
people behind the decision to appoint Bordyuzha want to
preclude the National Security Council from acting
independently in Kremlin maneuverings, the newspaper
commented. "Russkii telegraf," on the other hand, cites
Bordyuzha's reform of the organization of the Federal Border
Service and concludes that Bordyuzha will bring to the
National Security Council concrete experience with
"conceptual reforms." JAC

...AND IVANOV. "Nezavisimaya gazeta" suggested Primakov's
selection of his right-hand man at the Foreign Ministry
responsible for the ministry's day-to-day operations means
that despite his new responsibilities, Primakov will retain
control over foreign affairs. According to the newspaper,
"for several years Ivanov has had the whole diplomatic
service in his hands, knowing every individual and every
paperclip on every document," thus enabling Primakov to focus
on the larger policy issues and not the specifics of running
the ministry. The newspaper added that "no head of department
was appointed without reference to Ivanov" and "all key
diplomats are now 'his people.'" JAC

GROUP OF SEVEN TO RECONVENE. British Prime Minister Tony
Blair announced on 15 September that a meeting of the foreign
ministers of major industrialized nations to discuss Russia's
financial crisis is merited (see "RFE/RL Newsline," 15
September 1998). The meeting will take place in New York on
24 September. An IMF/World Bank mission is currently in
Moscow. JAC

LEADING NEWSPAPERS TO MERGE. Mirroring the trend in the
industry of its main benefactor, namely banking, newspapers
are starting to merge in order to weather the current
financial crisis. On 16 September "Kommersant-Daily" reported
that Interros holding company president Vladimir Potanin
announced that his "company is being forced to dispose of
inefficient assets." Because "'Russkii telegraf' is not
profitable and 'Izvestiya' is just breaking even," the two
newspapers will be merged. Staff at "Izvestiya" will be cut
and some of "Russkii telegraf" personnel will work on the new
newspaper. According to "Kommersant-Daily," the editor of the
new newspaper will likely be chairman of the board of
"Izvestiya" Mikhail Kozhokin. JAC

GOLD OUTPUT DROPPING. In the first eight months of 1998,
Russian gold production dropped from 66.4 million tons during
the same period last year to 59.4 million tons. The Ministry
of Economics told Interfax that total gold production this
year will be lower than in 1997 because of sharp declines in
two gold-producing regions, Yakutia and Chukotka. An
additional problem is that some producers are holding onto
their gold rather than selling it. Several banks have proved
unable to pay for volumes of gold already under contract. JAC

TRANSNEFT EXECUTIVES FACING CRIMINAL CHARGES. According to
ITAR-TASS, the prosecutor-general has launched a criminal
investigation into the activities of former managers of
Russia's giant pipeline company, Transneft. Former President
Valerii Chernayev and his deputies reportedly used company
money to buy up the shares in the firm and then transferred
the stock to outside companies that they controlled. Twenty-
five percent of the company was transferred to employees, who
were then pressured by management into selling or
transferring their stock. Chernayev was fired in May. JAC

RESTIVE REGIONS EXAMINED. "Segodnya" on 15 September argued
that recent unilateral actions by regions to separate their
economies from Russia's center may have been only a dress
rehearsal for a new crisis. "No one in Russia has repealed
the winter, which promises to be far colder than usual, and
the crisis as such is still far from overcome," the newspaper
commented. "It will be extremely difficult for Yevgenii
Primakov to steer a line toward state regulation after the
regions have already experienced independence as a result of
the crisis." According to the newspaper, the regions'
yearning for local rule is barely contained: "Only two
senator-governors--for Maritime Krai and Moscow--have
remained staunch state supporters." "Segodnya" concluded that
an extreme leftward tilt in government policy would alienate
the liberal governors, while a continuation of the current
crisis would drive everyone away. JAC

RUSSIA ADVOCATES POSTPONING CIS PREMIERS MEETING. Prime
Minister Primakov has asked CIS Executive Secretary Boris
Berezovskii and Ukrainian Prime Minister Valeriy
Pustovoytenko to postpone the 24-25 September session of the
CIS Heads of Government Council, Russian agencies reported on
15 September. Primakov explained that only after a new
Russian government is formed can Moscow formulate its
official position on CIS reform. Addressing a 15 September
session in Minsk of the interstate forum tasked with
preparing proposals on reform within the CIS, Berezovskii
said some CIS prime ministers still want this month's planned
meeting to take place as scheduled. LF

NEW LIFE FOR 'MIR'? Russian cosmonauts on 15 September
quickly carried out repairs inside an airless Spektr module
on board the space station "Mir," rejoining two cables that
had loosened. According to ITAR-TASS, the repair took less
than an hour although mission control had allotted almost
three hours. Reuters quoted Russian Space Agency spokesman
Vyacheslav Mikhailichenko as saying that the country's
economic crisis may delay completion of the new International
Space Station and extend the operational life of "Mir," which
is scheduled to be retired next June. He added that "as long
as the International Space Station is not in orbit, it does
not make sense to bring 'Mir' down." JAC

CHECHEN PARLIAMENT TO INVESTIGATE CORRUPTION ALLEGATIONS.
Addressing the parliament on 15 September, Chechen Vice
President Turpal Atgeriev proposed creating a special
commission to investigate what he termed the "unfounded and
baseless" accusations leveled by Vice President Vakha Arsanov
against President Aslan Maskhadov and other members of the
Chechen leadership, Caucasus Press and "Nezavisimaya gazeta"
reported. On 8 September, Arsanov had accused Maskhadov of
financial irregularities and of being unable to establish
order in Chechnya. He advocated convening a nationwide
conference to assess the leadership's effectiveness. Arsanov
is aligned with radical elements opposed to the more moderate
policies of Maskhadov, who is currently visiting Malaysia. LF

ANOTHER CHECHEN GROUP CALLS FOR KHACHILAEV'S RELEASE. The
Congress of Peoples of Chechnya and Dagestan, the founder and
chairman of which is former acting Chechen Prime Minister
Shamil Basaev, has formally demanded that the Dagestani
authorities release Magomed Khachilaev, ITAR-TASS reported on
15 September, quoting the Congress's deputy chairman, Ilyas
Musaev. Khachilaev, who is one of the leaders of the Kazi
Kumukh organization that represents Dagestan's Lak minority,
was arrested on 9 September in connection with the storming
in May of the government building in Makhachkala. Chechen
warlord Salman Raduev threatened reprisals against the
Dagestani leadership unless Khachilaev was released, but he
later retracted that threat (see "RFE/RL Newsline," 10 and 14
September 1998). LF

TRANSCAUCASUS AND CENTRAL ASIA

SEVEN KILLED IN SHOOTINGS ON ABKHAZ-GEORGIAN BORDER. Seven
people were shot dead by unidentified gunmen and several more
injured in the Abkhaz border village of Tagiloni on 15
September. Reuters and AP quoted Georgian security officials
as saying that those killed were Abkhaz police officers,
while Interfax and ITAR-TASS quoted Abkhaz sources that said
they were civilian farmers. Abkhaz Interior Minister Aslanbek
Kshach blamed the shootings on the Georgian guerrilla
organization White Legion, which has vowed revenge for the
bomb explosion in the Zugdidi administrative building on 24
August, according to an RFE/RL correspondent in Tbilisi.
White Legion leader Zurab Samushia has disclaimed any
responsibility for the 15 September incident. LF

GEORGIAN PROSECUTORS PROPOSE SENTENCES IN 'TRIAL OF CENTURY.'
Prosecutors on 15 September called for sentences of up to 15
years in the trial of Mkhedrioni leader Djaba Ioseliani and
14 other men accused of involvement in the August 1995
assassination attempt against Eduard Shevardnadze and of
planning a coup d'etat. The prosecutors demanded 15 years'
imprisonment for Ioseliani, whose defense lawyer has
protested that the case against his client is largely based
on evidence by a co-defendant that the latter subsequently
retracted. The trial, which opened last December, will resume
on 28 September. LF

GEORGIA'S ETHNIC ARMENIANS DRAFT OWN CONSTITUTION. Caucasus
Press on 15 September reported that Djavakhk, the
organization that is lobbying for autonomy for predominantly
Armenian-populated districts in southern Georgia, has drafted
a separate constitution for the region. That document has
been sent to Tbilisi to be translated from Armenian into
Georgian. LF

ARMENIAN COGNAC ROW CONTINUES. Presidential spokeswoman
Gassia Apkarian told journalists on 15 September that
President Robert Kocharian is not violating the constitution
by delaying a response to the June request by 68 parliament
deputies to convene a special parliamentary session to
discuss the sale of the Yerevan cognac factory (see "RFE/RL
Newsline," 15 September 1998), RFE/RL's Yerevan bureau
reported. She rejected rumors that Kocharian has demanded the
resignation of Prime Minister Armen Darpinian. Also on 15
September, opposition deputies said they have collected the
required number of signatures to refer Kocharian's alleged
refusal to appeal to the Constitutional Court. Hayrenik
faction chairman Eduard Yegorian said his group will try to
collect the 96 signatures required to begin impeachment
proceedings against the president. LF

UZBEK PRESIDENT IN ISRAEL. Meeting on 15 September, Islam
Karimov and Israeli Prime Minister Benjamin Netanyahu
discussed regional security issues, including the threat
posed by Islamic fundamentalism, and signed a series of
agreements on expanding bilateral trade and cooperation in
agriculture, Reuters and AP reported. Karimov also met in the
West Bank town of Ramallah with PLO chairman Yasser Arafat,
who described the Uzbek president as a close personal friend
as well as a friend of the Palestinian people, according to
dpa. Arafat assured Karimov that the U.S.-mediated Mid-East
peace talks will continue. LF

TAJIK-IRANIAN TALKS FOCUS ON AFGHANISTAN. On a working visit
to Dushanbe on 15 September, Iranian Deputy Foreign Minister
Morteza Sarmadi met with Tajik President Imomali Rakhmonov
and Tajik Foreign Minister Talbak Nazarov to discuss the
situation in Afghanistan and bilateral economic and trade
cooperation, Interfax and ITAR-TASS reported. Sarmadi handed
Rakhmonov an invitation from Iranian President Mohammad
Khatami, which Rakhmonov accepted. The date of that visit
will be determined later. LF

KAZAKH PREMIER OUTLINES INDUSTRIAL REFORM PLANS. Industry,
Energy and Trade Energy Minister Mukhtar Abliyazov told a
cabinet session on 15 September that under a five-year reform
program, the Kazakh government will create a number of state
holding companies and bring the majority of the country's
heavy industry under state control, with the aim of a 25
percent increase in industrial output by 2003 and a 50
percent rise in the number of people employed in the
industrial sector, RFE/RL's Almaty bureau reported. He added
that the Kazakh government will control foreign investment in
the industrial sector. Abliyazov also announced that shuttle
traders importing foreign goods will be required to pay a 25
percent value-added tax on those goods. LF

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