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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 2, No. 185, Part I, 24 September 1998


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RFE/RL NEWSLINE Vol 2, No. 185, Part I, 24 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

* NEW DEBT CRISIS LOOMS

* RUBLE BOUNCES BACK, AFTER BANKS EXCLUDED FROM TRADING

* GEORGIAN DISPLACED PERSONS PREVENTED FROM HOLDING TBILISI
CONGRESS
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RUSSIA

NEW DEBT CRISIS LOOMS... In addition to the $473 million in
interest payments that the Russian government owes on its
defaulted treasury bills, the government also needs to find
an additional $4 billion to service its foreign debts for the
rest of 1998. Anatolii Chubais, former presidential envoy to
international financial institutions, told "Moskovskii
komsomolets" on 23 September that if the IMF does not provide
the $4.5 billion tranche that was expected in September, then
an economic crisis of more dramatic proportions than that
accompanying the ruble's devaluation would be unleashed. JAC

...AS DEBT TALKS BEGIN. Acting Finance Minister Mikhail
Zadornov on 23 September met with foreign and Russian bankers
to discuss terms for restructuring Russian debt. Interfax
reported that Zadornov told bank representatives that Russia
will stick to the principle of equality for all investors.
Analysts believe that Russia may suggest several alternative
schemes and that cash payments in rubles may be increased. On
24 September, "Kommersant-Daily" quoted one representative of
a Western bank as saying that Western bankers have the
impression that the Russian government is trying to avoid or
delay direct negotiations, explaining that one letter the
bankers sent suggesting negotiations was never answered. The
representative said "Russian authorities assure us that there
will be no discrimination against foreign investors, but it
has already happened" on 21 September when the Central Bank
agreed to buy back Russian banks' defaulted treasury bonds
JAC

RUBLE BOUNCES BACK, AFTER BANKS EXCLUDED FROM TRADING. The
ruble stabilized at 15.73 rubles to $1 during the first half
of trading on 24 September. The previous day, the ruble had
unexpectedly strengthened, rising to 15.83 rubles per dollar
from 16.21 rubles. On 21 September, the Central Bank prepared
a list of Russian commercial banks that were banned from
foreign exchange trading in part to prevent them from using
their new liquidity to speculate against the ruble. Lehman
Brothers obtained a court order seizing the UK bank accounts
of one of those banks, Inkombank, according to Bloomberg.
Inkombank failed to buy rubles from Lehman Brothers on 15
September, as it had agreed under a so-called forward
currency contract. JAC

LUZHKOV BLAMES IMF, WESTERN BANKS FOR FINANCIAL CRISIS.
Moscow Mayor and likely presidential candidate Yurii Luzhkov
has blamed the "bad advice" of the IMF for Russia's current
economic crisis. He said "following the IMF's
recommendations, [Russia] suppressed [its] own manufacturers
and began to turn into a raw material appendage of the
civilized world." He added that past Russian governments
tried to carry out monetarist principles in Russia and this
led to "an absence of a customs policy," robbing of
companies, and unrestrained lending to commercial banks,
according to Interfax on 23 September. "Finansovye izvestiya"
on 22 September alleged that Western banks, knowing that
Russia was heading for a devaluation and debt crisis, have
carefully bided their time until Russia was desperate for new
economic assistance. Now, these banks will make such aid
conditional on adopting measures like those recommended by
the U.S. Chamber of Commerce, such as the adoption of a new
tax code and restoration of the ruble's convertibility. JAC

ARMS SALES TO MAKE ENDS MEET. Writing in "Segodnya" on 23
September, military analyst Pavel Felgengauer suggested that
Russia has at least one alternative if Western aid is not
forthcoming. He said that "if the West refuses to offer
economic assistance to Russia, Moscow and its new
premier...may renew deliveries of sophisticated weapons to
Iran, Libya, and Iraq." He continued, "Of course, neither
Iraq nor other anti-Western regimes of the Third World have
the money to feed millions of hungry Russians, but it doesn't
matter. Russia may deliver weapons for delayed payment or
barter. What counts is giving Iraq and Iran missiles and
other hardware that will be able to damage British and
American navies in the Persian Gulf." JAC

REBIRTH OF BANKING SECTOR? "Moscow Times" reported on 24
September that Russia's smaller banks are attracting new
customers away from the larger, failing institutions. Smaller
banks, which in general did not participate in the
government's short-term treasury bond market, are
facilitating payments between companies in exchange for a
modest service charge. The newspaper reported that the
Chastnii Bank, which with 222 million rubles in assets is
ranked 197th, has witnessed a sharp increase in both cash
turnovers and new accounts. JAC

AUDIT INVESTIGATION LABELED POLITICAL. In his much publicized
interview with the BBC about the Russian government misuse of
IMF loans, the Auditing Chamber's chief auditor, Veniamin
Sokolov, had actually been speaking about two World Bank
loans, according to a subsequent clarification issued by the
BBC (see "RFE/RL Newsline," 23 September 1998). However,
Michael Carter, the World Bank's representative in Moscow,
said that Sokolov apparently misunderstood the nature of the
loans that he was investigating, according to the "Moscow
Times" on 24 September. Carter also noted that Sokolov has a
history of making unsubstantiated charges. The "Moscow Times"
also quoted Ivan Grachev, State Duma deputy and Yabloko
faction member, who said that the investigation into the
Central Bank's use of loans from financial institutions is
primarily "political." Meanwhile, "Nezavisimaya gazeta"
reported on 23 September that Audit Chamber Deputy Chairman
Yurii Boldyrev, who has been making his own allegations about
Bank loans, has launched his own political organization
called the Yurii Boldyrev Bloc. JAC

GOVERNMENT REORGANIZATION PANNED. "Nezavisimaya gazeta" has
sharply criticized President Yeltsin's reorganization of the
Russian government (see "RFE/RL Newsline," 23 September
1998). According to the newspaper, this "administrative
reform" is the fourth in the past two years and previous
reshuffles have had virtually undetectable results: "No one
in the government does any work for two to three months
because everyone is getting to know one another, rearranging
the desks, settling into offices, and hiring new
secretaries." The newspaper added that if events continue
this way, the government will be reformed twice a year with
the change of seasons. In the spring, thrifty young reformers
will come to power, and in the fall their actions "will be
revised by yesterday's men." The government will acquire "an
autumnal image with inflated staffs and portly old men," the
daily concluded. "Nezavisimaya gazeta" receives financial
support from Boris Berezovskii's LogoVAZ group. JAC

IVANOV MAKES DEBUT. After his speech before the UN General
Assembly on 23 September, Foreign Minister Igor Ivanov told
reporters that the West has stopped trying to attach
political labels to Yevgenii Primakov's government and is
prepared to judge the government by the content of its new
economic program. On the Kosova crisis, Ivanov told reporters
that the EU keeps extending humanitarian assistance to the
region but that a "more radical solution" is needed. Ivanov
expressed support for the draft resolution on Kosova though
he said that Moscow was against military intervention in the
province (see two related stories in Part 2). During his stay
in New York, Ivanov also met with his counterparts from the
U.S., Germany, Denmark, Austria, Poland, and Japan. JAC

SELEZNEV IN TEHRAN. Addressing the Iranian parliament on 23
September, the fourth day of his visit to Tehran, Duma
speaker Gennadii Seleznev pledged Russia's continued support
for expanded bilateral cooperation in the peaceful use of
nuclear power. He also urged an end to the civil war in
Afghanistan and a swift agreement among Caspian littoral
states on the sea's legal status. Seleznev met with First
Vice President Hassan Habibi and with former President Ali
Akbar Hashemi Rafsanjani, who expressed interest in the
causes and anticipated duration of the Russian financial
crisis, according to Interfax. The Russian delegation also
met with Oil Minister Bijan Namdar Zanganeh, who stressed the
potential benefits to Russia of exporting oil via Iran,
according to "Parlamentskaya gazeta" on 23 September. LF

ZHIRINOVSKY TO RUN FOR GOVERNOR. Liberal Democratic Party
leader Vladimir Zhirinovsky intends to run for governor of
Leningrad Oblast, "Moskovskii komsomolets" reported on 24
September. JAC

HARVEST, SOWING SLOWED. Harvesting of Russia's grain crop has
slowed this year because of cold weather and rain in Siberia
and the Urals, Interfax reported on 23 September. According
to the Ministry for Food and Agriculture, only 9.4 million
hectares of cereals have been "threshed," compared with 11
million hectares on the same date last year. The area sown
for winter crops -- 10 million hectares -- is 5 percent
smaller than last year's area, because farmers received
insufficient supplies of fuel and lubricants. JAC

RUSSIA BECOMING LESS CORRUPT? On the annual "Corruption
Perceptions Index" complied by corruption watchdog
Transparency International, Russia ranked 76th, with the 85th
country having the highest level of perceived corruption,
according to questionnaires filled out by international
businessmen. "Kommersant-Daily" reported on 23 September that
Russia has apparently made some modest improvement since
1996, when it occupied the next to last place, in front of
only Nigeria. In 26th position, Estonia came out "cleaner"
than any other country in Eastern Europe or the former Soviet
space included on the list. JAC

FIELD COMMANDERS RENEW CRITICISM OF CHECHEN PRESIDENT. The
Chechen parliament convened an emergency session on 23
September to consider accusations leveled against President
Aslan Maskhadov. In an open letter to parliamentary deputies,
field commanders Shamil Basaev, Salman Raduev, and Khunkar
Israpilov accused Maskhadov of usurping power and riding
roughshod over the judicial system. They also charged that he
violated the law on Chechnya's state sovereignty by holding
talks with Moscow on Chechnya's status vis-a-vis the Russian
Federation. They demanded that the parliament initiate
proceedings against Maskhadov to save Chechnya from "total
crisis and civil confrontation." But after listening to the
president's rationale for his actions, the parliament
dismissed the criticisms against him. Press-secretary Lom-Ali
Mirsibiev told Interfax that "the occasional departures from
the letter of the constitution are a minor matter." LF

COUNTER-DEMONSTRATION IN KARACHAEVO-CHERKASSIA. Some 6,000
people congregated in Cherkessk, capital of the Republic of
Karachaevo-Cherkessia, on 23 September to condemn a rally
that began on 17 September to demand elections to the post of
republican head, "Nezavisimaya gazeta" reported. The 23
September meeting was convened by organizations representing
the ethnic Russian and Cossack population of the republic.
Ethnic Russians are the largest ethnic group in the RChK,
accounting for 42.2 percent of the population, followed by
the Karachais (31.2 percent) and the Cherkess (9.7 percent).
Speakers at the 23 September meeting accused participants of
earlier demonstrations of attempting to provoke inter-ethnic
bloodshed. "Kommersant-Daily" on 23 September quoted
parliamentary deputy Murat Khachukaev as predicting that
Khubiev will refuse to sign the law on direct elections of
the republican head, passed by the parliament the previous
day. LF

TRANSCAUCASUS AND CENTRAL ASIA

GEORGIAN DISPLACED PERSONS PREVENTED FROM HOLDING TBILISI
CONGRESS. Georgian police on 23 September prevented ethnic
Georgians forced to flee Abkhazia during the 1992-1993 war
from approaching the Philharmonic building in Tbilisi, where
they had intended to hold a two-day congress, Caucasus Press
reported. The police also arrested the son of the congress's
organizer, Boris Kakubava, who heads the Coordinatig Council
of Political Parties and Organizations of Abkhazia and
Samachablo (South Ossetia). Other organizations representing
the displaced persons and the Abkhaz government in exile had
expressed disapproval of the proposed congress, but Georgian
President Eduard Shevardnadze had endorsed it and promised to
attend, "Nezavisimaya gazeta" reported on 22 September. An
attempt by Kakubava in November 1997 to convene a congress in
the Philharmonic building was similarly thwarted by police.
LF

GEORGIANS INJURED IN SHOOTING IN ABKHAZIA. Georgian
presidential representative in Svaneti Iveri Chelidze, a
journalist, and one other person were injured on 21 September
when their car was fired on in the Kodori gorge, in
southeastern Abkhazia, ITAR-TASS reported. LF

SHEVARDNADZE'S NEPHEW ACCUSED OF FINANCIAL MISCONDUCT.
President Shevardnadze has ordered an investigation of the
company IVERIA +, which is headed by his nephew Nugzar, AP
and Caucasus Press reported on 23 September. Several
Georgians newspapers had printed allegations the previous day
that Nugzar Shevardnadze had failed to repay debts to a Greek
company. IVERIA + issued a statement rejecting the
allegations as part of a smear campaign directed against the
Georgian president in the runup to local elections scheduled
for November. LF

EXPERTS SAY ARMENIAN NUCLEAR POWER STATION "IS SAFE." Nuclear
safety experts who attended a two-day seminar on the Medzamor
nuclear power station told journalists in Yerevan on 23
September that continued exploitation of the plant does not
pose a threat to the environment, RFE/RL's Yerevan bureau
reported. The plant was reactivated three years ago after
being moth-balled in 1989. Working at 85 percent capacity, it
currently generates some 35 percent of Armenia's electricity.
The plant's director, Suren Azatian, said Medzamor can
operate for another 10 years after 2004, the tentative
closure date set by the European Bank for Reconstruction and
Development as a condition for advancing a 10 million ECU
($8.5 million) loan to finance the reactivation of and safety
measures at the plant. LF

KAZAKH PRESIDENT IN ITALY. Visiting Rome on 22-23 September,
Nursultan Nazarbayev held talks with his Italian counterpart,
Oscaro Scalfaro, Prime Minister Romano Prodi, the chairmen of
both houses of the Italian parliament, and the management of
Italy's Agip corporation, which is engaged in oil and gas
projects in Kazakhstan. Nazarbaev's talks with Salfaro and
Prodi focused on expanding bilateral economic cooperation,
closer cooperation between Kazakhstan and the EU, the
situation in Afghanistan, and Russia's economic crisis, which
Nazarbayev again said has not affected his country. LF

KYRGYZ LANGUAGE COMMISSION MEETS. Meeting on 22 September,
the National Commission on the State Language discussed a new
10-year program and compliance to date with the 1989 law on
the state language, RFE/RL's Bishkek bureau reported the
following day. That law designates Kyrgyz as the state
language in Kyrgyzstan and envisages that beginning in 2000,
all official documentation in the country will be in Kyrgyz.
Kambaraly Bobulov, president of the Kyrgyz Til [Language]
Society, told RFE/RL that the Kyrgyz language is still "very
weak" and requires government support. He said that if
Russian becomes a second state language, it will
significantly further weaken the Kyrgyz language. The Kyrgyz
parliament has rejected proposals by some public
organizations and politicians to give Russian the status of a
second state language or of a language of inter-ethnic
communication. Ethnic Russians account for approximately 14
percent of Kyrgyzstan's population. LF

TAJIK PRESIDENT TO VISIT IRAN? Imomali Rakhmonov met with
Iranian Ambassador Saidrasul Musavi on 23 September to
discuss the domestic political situation in Tajikistan as
well as developments in Afghanistan and their possible impact
on the region, Interfax reported. Rakhmonov acknowledged
Iran's contribution to ending the civil war in Tajikistan and
pledged that isolated actions by "destructive forces" will
not deter the Tajik government from honoring its obligations
under last year's peace agreement. The two also discussed
preparations for a Tajik-Iranian summit, which may take place
before the end of this year. Also on 23 September, Rakhmonov
met with visiting World Bank Vice President Johannes Linn, to
whom he stressed Tajikistan's commitment to economic reform
and appealed for increased international aid. In addition to
the $142 million that the Bank has granted Tajikistan since
1993, the Bank approved a three-year $165 million loan this
summer (see "RFE/RL Newsline," 31 July 1998). LF

TAJIK OPPOSITION FIGHTERS REPATRIATED. The final contingent
of Tajik opposition fighters has succeeded in crossing the
Pyanj River and returning from Afghanistan to Tajikistan,
ITAR-TASS reported on 24 September. The crossing had been
delayed after a bomb was discovered on the barge that was to
transport the returnees (see "RFE/RL Newsline," 23 September
1998). The fighters are to be escorted by Russian
peacekeeping troops to a military base near Dushanbe. LF

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