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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 2, No. 181, Part I, 18 September 1998


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RFE/RL NEWSLINE Vol 2, No. 181, Part I, 18 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

* CENTRAL BANK TO PRINT MORE RUBLES

* CABINET APPOINTMENTS TO TAKE ANOTHER WEEK

* MESKHETIANS EXPELLED FROM GEORGIA

End Note: TIGHTENING OF EASTERN BORDERS GIVES KYIV WESTERN
CONTACTS
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RUSSIA

CENTRAL BANK TO PRINT MORE RUBLES. The Bank of Russia
canceled ruble/dollar trading on 18 September after the ruble
dropped for a fourth consecutive day. Bloomberg cited fears
among traders that the Central Bank has already printed as
much as 3 billion rubles ($240 million) to pay back wages and
pensions to the military and that it will print even more to
cover some Russian banks' losses on defaulted government
debt. On 17 September, Deputy Prime Minister Aleksandr
Shokhin told reporters that a controlled additional printing
of money would not necessarily be harmful to the economy;
however, excessive discussion of such an emission "may
trigger inflation." Meanwhile, some residents of the Udor
district in Komi Republic are using potatoes rather than
rubles to make payment on rent and utilities, according to
ITAR-TASS. The current rate is 1 kilogram of potatoes for 2
rubles. JAC

CABINET APPOINTMENTS TO TAKE ANOTHER WEEK. President Boris
Yeltsin announced on 17 September that he and Prime Minister
Yevgenii Primakov have failed to complete the cabinet lineup,
in part because of continuing uncertainty over the right
candidate for finance minister. The next day, Communist Party
leader Gennadii Zyuganov told Interfax that the slow
formation of the cabinet is "definitely abnormal." Analysts
are divided over whether acting Finance Minister Mikhail
Zadornov will retain his post. Other candidates for the job
are former Minister for Foreign Economic Relations Sergei
Glaziev and former First Deputy Finance Minister Andrei
Vavilov, whose past service in government was scandal-ridden.
However, Deputy Prime Minister Shokhin told reporters on 17
September that Vavilov is a " most unlikely candidate."
According to "Russkii telegraf," Alfa Group President Petr
Aven and Menatep chairman Konstantin Kagalovskii are also
seeking the job. JAC

RYZHKOV SAYS NO THANKS. Reports of State Duma deputy Vladimir
Ryzhkov's appointment as deputy prime minister proved
premature (see "RFE/RL Newsline," 17 September 1998).
According to "Izvestiya" the next day, Ryzhkov, who had been
in Strasbourg, France, on business, had not yet decided to
take the job when his appointment was announced. After
returning to Moscow and meeting with Duma chairman Gennadii
Seleznev, Ryzhkov turned down the offer to work in the
government. On 18 September, ITAR-TASS reported that
Leningrad Governor Vadim Gustov will assume the post of
deputy prime minister in charge of federal, ethnic, regional,
and youth policies. JAC

FEDOROV STILL ACTING AS TAX SERVICE HEAD? The fate of Boris
Fedorov, "acting" deputy prime minister and "acting" head of
the Federal Tax Service, is still unknown. On 18 September,
the "Moscow Times" quoted Fedorov's press secretary as saying
Fedorov is still ensconced in his fourth-floor office at
government headquarters, busily ordering companies bankrupted
for tax arrears. Fedorov had declared earlier that he would
not leave the government on his accord (see "RFE/RL
Newsline," 14 September 1998). JAC

STEPASHIN CUTS INTERIOR TROOPS. President Yeltsin on 17
September signed a decree calling for the reduction of
interior forces troops by 54,000--more than one-fifth of
their current size--by 1 January. According to Interfax,
Yeltsin proposed that spending related to the withdrawal of
interior troops be included in the 1999 federal budget's fund
for assisting military reform. According to "Segodnya,"
Interior Minister Sergei Stepashin plans "to create smaller
and less financially burdensome units out of the ministry's
19 divisions, bringing them up to strength exclusively with
officers." "Segodnya" predicts a more integrated military
policy in the future and more thorough military reforms
because of the close relationship between Stepashin,
Primakov, and Defense Minister Igor Sergeev and the fact that
the National Security Council has no strong leader since the
dismissal of Andrei Kokoshin (see "RFE/RL Newsline," 11
September 1998). JAC

GOVERNMENT PREPARES FOR UNREST. President Yeltsin on 17
September ordered increased security measures in preparation
for the national labor protest scheduled for 7 October.
According to AP, Yeltsin ordered Interior Minister Stepashin
to set up additional mobile police squads. Stepashin told
reporters that mass rioting will not take place. He said that
"we will meet leaders of movements and parties to talk to
them before the event." On 15 September, Prime Minister
Primakov held talks with union representatives to address
their concerns in the hope of forestalling the planned labor
action. However, Russia's most radical labor leaders were
excluded from the meeting, "Nezavisimaya gazeta" reported.
JAC

KUCHMA, YELTSIN TO DISCUSS ECONOMIC CRISIS. Ukrainian
President Leonid Kuchma on 18 September traveled to Moscow
for two days of informal talks with Russian President
Yeltsin. According to Interfax, Kuchma is expected to raise
the issue of the economic crises plaguing both countries and
propose the creation of a free trade zone in the CIS rather
than a customs union, an idea supported by Russia and other
CIS members. Yeltsin is likely to raise the issue of
Ukraine's unpaid debts for Russian natural gas and Russian
naval bases in the Black Sea. Sergei Prikhodko, deputy chief
of the presidential staff, told reporters on 17 September
that Primakov will also meet with Ukrainian Prime Minister
Valeriy Pustovoytenko and Russian Central Bank chairman
Viktor Gerashchenko to discuss financial cooperation.
"Nezavisimaya gazeta" cited the fact that Yeltsin's Ukraine
visit as well as others to Kazakhstan and Uzbekistan had to
be postponed or rearranged as evidence that Russia's foreign
policy problems are being neglected because of the economic
crisis. JAC

U.S. FIRMS SCALING BACK IN RUSSIA. The head of the American
Chamber of Commerce, Scott Blacklin, told reporters on 17
September that fifty major U.S. companies have lost almost
$500 million in Russia since the crisis began and witnessed a
significant decline in demand for their goods and services.
Many are reducing staff and delaying payments to creditors,
while some have even stopped production temporarily. Blacklin
said that businesses are now in the process of allocating
resources for the next year and will probably cut local staff
and planned new investments, adding that most are not ready
to pull out yet. However, the business community needs the
new government to act quickly with concrete measures,
Blacklin warned. Most desirable to the Chamber of Commerce,
according to "Kommersant-Daily," would be passage of a new
tax code, restoration of a convertible ruble, and adequate
compensation for the losses of Western investors from the
collapse of the short-term treasury bond market. JAC

SEMAGO QUITS PARTY? State Duma deputy Vladimir Semago
announced he is leaving the Communist Party on 17 September
because of its leaders "conciliatory" position in its
relations with the country's government. According to
"Kommersant-Daily" on 18 September, Communist Party officials
said that Semago was already expelled from the faction
because of violations of party discipline. The reason for the
dispute was Semago's circulation of a "dear colleague" letter
to fellow Communist Party members calling for the party to
hold an emergency congress and to seek to replace opposition
leadership for its "spineless behavior." The newspaper quoted
Yurii Lebedev, former presidential representative to Nizhnii
Novgorod, as saying that Semago's protests against party
leaders are part of a pre-election strategy designed to
appeal to an increasingly radical electorate. Semago is
running for mayor of Nizhnii Novgorod in elections scheduled
for 27 September. JAC

FSB TO MONITOR INTERNET? "Vremya MN" reported on 15 September
that the Federal Security Service (FSB) is discussing the
installation of special equipment enabling FSB computers to
"control" communications via the Internet. According to the
newspaper, counter-intelligence officials are currently
focusing on the technical problems such "control" would
entail. FSB officials figure that Internet providers
themselves would absorb the cost of installing monitoring
devices. JAC

DAGESTAN TO HOLD REFERENDUM ON PRESIDENCY. The State Council
on 15 September voted to hold a referendum on whether to
introduce the post of elected president. The referendum will
be held simultaneously with parliamentary elections on 3
March 1999. The State Council also appointed Akhmednabi
Magdigadzhiev, former head of the regional organized crime
directorate, as Security Council secretary. Meanwhile the
investigation is continuing into the case of Kaspiisk City
Mayor Ruslan Gadzhibekov, arrested on 14 September on
suspicion of embezzlement, organizing a contract killing, and
participating in the storming of the government building in
Makhachkala in May. On 16 September, the Russian Prosecutor-
General's Office asked the State Duma to lift the immunity of
Nadirshakh Khachilaev, chairman of the Union of Muslims of
Russia, whose supporters were in the vanguard of that attack.
LF

DEMONSTRATION IN KARACHAEVO-CHERKASSIA. Thousands of
demonstrators gathered on the central square in Cherkessk on
17 September to demand the adoption of a law on electing the
republic's head and a date for that vote to take place,
"Nezavisimaya gazeta" reported. The present republican head,
65-year-old Vladimir Khubiev, has occupied that post since
1992 but has never been directly elected to it. He was
reappointed to that post in 1995 by President Yeltsin pending
the adoption of a constitution for the Republic of
Karachaevo-Cherkassia. The republic's parliament adopted a
new constitution in 1996 but failed to set a date for
elections for the republican head. LF

TRANSCAUCASUS AND CENTRAL ASIA

MESKHETIANS EXPELLED FROM GEORGIA. Georgian special police
detachments on 17 September detained some 40 Meskhetian men,
loaded them into buses, and deported them to the Russian
Federation, Black Sea Press and Caucasus Press reported. The
men were part of a delegation of some 80 Meskhetians who had
arrived in Georgia from Russia and Azerbaijan the previous
day in the hope of meeting with representatives of the
Georgian leadership and securing permission to return to
Georgia (see "RFE/RL Newsline," 17 September). The other
members of the delegation, all of whom are women, are still
in Tbilisi. Interior Minister Kakha Targamadze told
journalists on 17 September that he personally gave the order
to deport the Meskhetians as they are aligned with opposition
supporters of late President Zviad Gamsakhurdia. The entire
Meskhetian population was deported by Stalin from their homes
in southwestern Georgia in November 1944. LF

WHEREABOUTS OF ARRESTED BAKU DEMONSTRATORS UNKNOWN.
Opposition Musavat Party deputy chairman Ibragim Ibragimli
told Turan on 17 September that the whereabouts of 27 people
arrested when demonstrators clashed with police in Baku on 12
September remain unclear. Musavat Party chairman Isa Gambar
said that those persons who threw stones and bottles during
the clashes were "agents-provocateurs," adding that their
identity is known. On 15 September, Interior Minister Ramil
Usubov accused Gambar and Azerbaijan Popular Front Party
chairman Abulfaz Elchibey of planning the throwing of
missiles. Meanwhile, the Coordinating Council of the Movement
for Democratic Elections and Electoral Reform issued a
statement on 17 September announcing mass protest actions in
Sumgait unless the chairman of the Sumgait branch of the
Azerbaijan Popular Front Party, who was one of those detained
on 12 September, is released immediately. LF

MINSK GROUP CO-CHAIRMEN IN STEPANAKERT. Naira Melkumian,
foreign minister of the unrecognized Nagorno-Karabakh
Republic, said that the co-chairmen of the OSCE Minsk Group
presented new peace proposals during their 17 September talks
in Stepanakert with the enclave's leadership, RFE/RL's
Stepanakert correspondent reported. Melkumian said that the
co-chairs "seemed to receive with greater understanding"
Karabakh's insistence on a settlement based on a single
framework accord settling all contentious issues. The
Karabakh leadership last year rejected a "phased" OSCE plan
for resolving the conflict. Also on 17 September,
Azerbaijan's Central Electoral Commission issued a statement
condemning as "illegal" the municipal elections in Nagorno-
Karabakh scheduled for 27 September, Turan reported. LF

NEW ARMENIAN PROSECUTOR-GENERAL APPOINTED. President Robert
Kocharian has appointed Aghvan Hovsepian as prosecutor-
general to succeed Henrik Khachatrian, who was murdered last
month (see "RFE/RL Newsline," 7 August 1998). Hovsepian, who
was born in 1953, graduated from the law faculty of Yerevan
State University, after which he worked as an investigator in
the Karelian ASSR and as a department head in the Nagorno-
Karabakh Prosecutor-General's office. He has worked for the
Armenian Procuracy since 1989. LF

LUKOIL PLANS NEW TRANSCAUCASUS PROJECTS. Visiting Baku this
week, LUKoil chairman Vagit Alekperov held talks with
President Heidar Aliev and Natik Aliev, president of the
Azerbaijan state oil company SOCAR. But he failed to sign the
anticipated protocol on exploiting the on-shore Govsany and
Zykh fields near Baku, Caucasus Press reported. Alekperov
told journalists that LUKoil and SOCAR will conduct their own
feasibility study on those fields, which have estimated
residue reserves of 10-15 million tons and will require
investment of up to $800 million. Meeting in Tbilisi on 17
September with President Eduard Shevardnadze, Alekperov said
that LUKoil is interested in exporting oil via the Georgian
Black Sea port of Supsa. Alekperov also attended the formal
opening of LUKoil's Tbilisi office. LF

TURKMEN DEFENSE OFFICIALS FIRED. President Saparmurat Niyazov
dismissed Defense Minister Danatar Kopekov and Chief of
General Staff Akmurad Mulkamanov on 17 September, Russian
agencies reported. Niyazov also fired two prominent security
officials. The dismissals followed an investigation into the
12 September incident in which five soldiers stole arms and
ammunition and took seven villagers hostage, four of whom
were killed in the ensuing rescue operation (see "RFE/RL
Newsline," 14 September 1998). Niyazov appointed Interior
Minister Kurbanmukhamed Kasymov as defense minister and
promoted one of his deputies, Poran Berdiev, to interior
minister. LF

END NOTE

TIGHTENING OF EASTERN BORDERS GIVES KYIV WESTERN CONTACTS

by Jan de Weydenthal

	Earlier this week, Polish Foreign Minister Bronislaw
Geremek called on Ukraine to impose full control over its
eastern borders as an important step toward preserving visa-
free travel to Poland and providing for easier contacts with
the West.
	Speaking at the Kyiv Institute of International
Relations on 16 September, Geremek said Poland intends to
resist Western pressure to introduce visas for Ukrainians.
But, he said, Ukraine must take firmer steps to counter the
smuggling of weapons and drugs from the East across Polish
territory.
	Poland has been under pressure from the EU to tighten
control over its eastern border. German Interior Minister
Manfred Kanther told Polish officials during a visit to
Warsaw last month that the government should bring its visa
policies into line with those of the EU. He added that this
is a condition of Poland's EU membership.
	Warsaw has signed agreements on visa-free travel and on
the re-admission of illegal migrants with Kyiv. But it has
restricted entry for Russians and Belarusians, whose
governments failed to reach similar accords.
	Ukraine has been concerned that any restriction on
travel to Poland would adversely affect its economy. Poland
is an important source of trade and employment to thousands
of Ukrainians. During a meeting with Geremek, Ukraine's Prime
Minister Valeriy Pustovoytenko said that Kyiv might set up
several free economic zones along the border with Poland to
further promote economic contacts.
	Polish-Ukrainian bilateral trade turnover reached almost
$1.7 billion in 1997 and has grown rapidly so far this year.
	Trade with Poland has become even more important for
Ukraine since the onset of Russia's economic crisis. Russia
is Ukraine's main trading partner, accounting for 40 percent
of trade turnover, and Russia's financial crisis has
disrupted those ties with Ukraine
	Geremek emphasized in his speech that the Russian crisis
provides a reminder of the need for speeding up reforms and
expanding contacts with the West. He said that Poland would
like to see Ukraine in all European institutions and is ready
"to support Ukraine at this difficult moment."
	The economic decline in Russia is certain to affect
Ukraine's economy. In addition, the continuing political
uncertainty in Moscow does not augur well for many unsolved
problems in Ukrainian-Russian relations.
	The Russian State Duma has failed to ratify a Ukrainian-
Russian friendship treaty recognizing Ukraine's independence.
And there is still no agreement on delimiting borders between
the two states, seven years after Ukraine's declaration of
independence. Influential Russian politicians still talk
about what they call the "inherent" unity of the two
countries within Russian-dominated Slavic nationhood.
	This state of affairs has not been lost on Ukrainian
leaders. During Geremek's visit to Ukraine, there were
frequent mentions of a strategic partnership between Kyiv and
Warsaw. Stricter control over Ukraine's borders with Russia
and Belarus appears to be an important element in the future
development of such a partnership.
	Following talks with Geremek, Volodymyr Horbulin, head
of Ukraine's Security and Defense Council, said that "we have
to stop the smuggling of drugs, stop organized crime and
illegal immigration through our eastern border."
	Such a program would have important political
implications in reinforcing Ukraine's national and
territorial separateness from Russia.
	Poland is to enter NATO next year and is currently in
accession talks with the EU. Geremek said that Poland's
membership in these institutions could benefit Ukraine.
Currently, the main problem is the one of visas. And
resolving that problem depends on how Ukraine seeks to
tighten its eastern borders, he said.
	Meanwhile, Polish President Aleksander Kwasniewski is to
meet with his Ukrainian counterpart, Leonid Kuchma, in Crimea
next week. They are to discuss bilateral relations and the
regional repercussions of the Russian crisis.

The author is an RFE/RL senior correspondent.

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