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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 2, No. 192, Part I, 5 October 1998


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RFE/RL NEWSLINE Vol 2, No. 192, Part I, 5 October 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

* RUSSIA COUNTING ON IMF TO FINANCE DEFICIT

* DUMA THREATENS NATO

* TAJIK GOVERNMENT, OPPOSITION ISSUE ULTIMATUM ON ARMS
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RUSSIA

RUSSIA COUNTING ON IMF TO FINANCE DEFICIT. Currently in
Washington for the annual IMF/World Bank meetings, Russian
government officials have adopted a conciliatory tone toward
the international financial institutions. Finance Minister
Mikhail Zadornov told reporters on 4 October that IMF
Managing Director Michel Camdessus regarded the government's
new economic program "rather favorably." Zadornov later
clarified that by "program," he was referring to the
emergency budget for the fourth quarter, which the government
will submit to the State Duma before the end of October.
Zadornov added that the government expects foreign loans
worth $2.5 billion through the end of the year. According to
"Kommersant-Daily" on 2 October, the draft budget calls for
expenditures of 167 billion rubles ($10 billion) and revenues
of only 70 billion rubles, leaving a deficit of almost 100
billion rubles. In theory, part of the deficit will be
financed by borrowing from abroad and increasing export taxes
and excise duties on alcohol. JAC

RUBLE PRESSES ALREADY ROLLING? Former Prime Minster Yegor
Gaidar told reporters on 2 October that any large budget
deficit would have to be financed through a monetary
emission, since he doubted foreign loans would be
forthcoming. He added that he suspects that Central Bank has
already extended the government a 7 billion ruble ($438
million) loan, covered by newly printed money. According to
Interfax, the government has already disbursed 500 million
rubles as payment on defense contracts, 400 million rubles
for subsidies to the coal mining industry, and 1.4 billion
rubles in back wages to soldiers. First Deputy Prime Minister
Vladimir Gustov said the government has allocated 1.17
billion rubles assistance for depressed regions, 9.6 billion
for the Pension Fund, and 2 billion rubles for the coal
industry for the rest of the year. JAC

DUMA THREATENS NATO. The Duma passed a resolution on 2
October labeling the potential use of force by NATO in Kosova
"an illegal aggressive action." The Duma said that such an
action would cause it to review all existing agreements
between Russia and NATO, including the accord restricting
arms trade with Yugoslavia. The Duma also recommended that
the Foreign and Defense Ministries recall their
representatives to NATO for consultations with the
government. A Defense Ministry source told Interfax that NATO
air strikes would eliminate any possibility that the Russian
legislature would ratify START II. According to "Izvestiya"
on 3 October, the Russian Foreign Ministry has not yet
decided whether to use its veto at the UN Security Council.
JAC

YELTSIN NAMES NEW SECURITY COUNCIL. Russian President Boris
Yeltsin has altered the composition of the Security Council,
according to his press spokesman. In addition to Security
Council Secretary Nikolai Bordyuzha, Foreign Minister Igor
Ivanov and Federal Security Service (FSB) Director Vladimir
Putin are members. Former Prime Minister Sergei Kirienko,
former Deputy Prime Minister Boris Nemtsov, and former FSB
Director Nikolai Kovalyov have been officially relieved of
their duties on the council. First Deputy Prime Minister
Gustov told reporters on 2 October that the post of deputy
prime minister in charge of financial affairs, which
Aleksandr Shokhin quit last month, should not be filled "for
a while." In the meantime, Shokhin's duties have been divided
among several members of the government. JAC

GOVERNMENT OFFERS FARMERS ASSISTANCE. Prime Minister Yevgenii
Primakov has increased the number of groups his government is
willing to support by offering assistance to cash-strapped
farmers. On 3 October, according to ITAR-TASS, he signed a
resolution allowing farmers and agricultural enterprises to
defer their debts to the federal budget by five years.
"Izvestiya" concluded on 1 October that despite the poor
grain harvest, the Russian population will have sufficient
quantities of bread. However, the food consumption pattern
throughout the country will change dramatically as the amount
of meat and dairy products falls. According to "Rossiyskaya
gazeta" on 2 October, certain regions are already
experiencing shortages of specific products. For example,
Yakutia and Bashkortostan lack poultry, while Nizhnii
Novgorod and Vladimir Oblast lack groats. JAC

ECONOMISTS PREDICT MORE HARD TIMES. Both the IMF and former
Prime Minister Gaidar's Institute for Economic Problems
during Transition are predicting that Russian GDP will fall 6
percent in 1998--Gaidar suggests it may drop even as much as
6.5 percent. The fund predicts that also in 1999 GDP will
drop 6 percent, while Gaidar's institute foresees a 4-5
percent drop assuming hyperinflation is averted. If not, then
GDP will drop from 12-13 percent. The State Statistics
Committee reported that inflation reached 38 percent in
September. "Izvestiya" reported on 3 October that wages and
salaries have dropped two to three times in all sectors of
the economy, while managers predict they will continue to
decline to 1994 levels. JAC

YABLOKO PRESENTS ECONOMIC PLAN. Yabloko party leader Grigorii
Yavlinskii published his version of an anti-crisis program in
"Nezavisimaya gazeta" on 2 October. Yavlinskii calls for
forcing all exporters to sell their foreign exchange for a
three-month period and for an immediate lifting of the
moratorium on servicing short-term treasury bond debt. First
Deputy Prime Minister Yurii Maslyukov's plan, at least
according to "Kommersant-Daily," required exporters to sell
75 percent of their hard currency proceeds for an indefinite
period. Yavlinskii also suggested introducing new taxes on
gasoline, alcohol, and tobacco, imposing a 20 percent tax on
all personal incomes, and guaranteeing the first $5,000 of
all individual bank deposits with Central Bank reserves.
According to "Kommersant-Daily," Finance Minister Mikhail
Zadornov also supports a 20 percent flat tax on incomes. JAC

RUSSIA TO CEASE OIL EXPORTS? Mikhail Khodorkovskii, CEO of
the Yukos-Moskva company, told reporters on 2 October that if
oil production continued to fall in Russia, then by 1999 the
oil sector will not need either to reduce exports or trim
domestic consumption in order to meet the country's domestic
requirement. Since the beginning of 1998, according to
Interfax, oil production volumes have fallen by an estimated
5 percent from the previous year's level. Khodorkovskii also
warned that the 10 percent drop in industrial output
envisaged by the "Maslyukov plan" will slash living standards
in the country, create new wage arrears, extinguish
investment, and lead to a total economic breakdown in Russia.
Meanwhile, Minister for Fuel and Energy Sergei Generalov told
ITAR-TASS on 4 October that he opposes new taxes on the oil
and gas industries and is convinced that they can act as a
"locomotive to drag Russia out of its current crisis." JAC

OFFICIALS ISSUE MORE DENIALS OF DOLLAR BAN. First Deputy
Prime Minister Maslyukov himself joined the chorus of
officials denying that the dollar would be banned from
circulation (see "RFE/RL Newsline," 2 October 1998).
"Kommersant-Daily" earlier published what was allegedly
Maslyukov's economic plan, which called for banning the
trading of hard currency by individuals. Maslyukov told NTV
on 4 October that reports of the government's plan to
prohibit use of the dollar are "nonsense." And Central Bank
chairman Viktor Gerashchenko, according to Interfax on 2
October, warned Duma deputies not to enact any kind of
restrictions on the use of the dollar. JAC

SOME CHURCHES FACING DOLLAR CRUNCH? The UK-based Keston News
Service reported on 2 October that Russia's financial crisis
has had various effects on religious institutions. Those that
are most dependent on Western financial support are doing the
best, while those that had secular, domestic sponsors such as
"Russian banks and firms that were providing money for the
construction of churches, chapels or rectories," suddenly
find themselves without a sponsor. However, according to
Keston, many religious organizations are expecting the
government to increase its scrutiny of the financial system
and in particular foreign exchange transactions. As it
becomes possible "to monitor every dollar transaction," these
flows from the West are likely to shrink. JAC

TATARSTAN GOVERNMENT CRITICIZED. The opposition Republican
Party of Tatarstan has accused the government of President
Mintimer Shaimiev of failing either to protect the republic's
population from economic disaster or to alleviate the
crisis's negative effects, according to "Izvestiya" on 3
October. The newspaper reported that the Republican Party has
about 3,000 members and 60 local branches. The "EWI's Russian
Regional Report" on 1 October reported that President
Shaimiev has been on vacation in Turkey for three weeks,
while the prime minister has "been racing cars in Kursk."
Meanwhile, local enterprises have begun paying their workers
in food products instead of cash. One researcher at a state-
run factory received 300 grams of candy and half a kilogram
of cookies. JAC

THREE BRITONS, NEW ZEALANDER KIDNAPPED IN CHECHNYA. Four
employees of a British firm building a telecommunications
system in Chechnya were kidnapped in Grozny on 3 October
following an early morning gunfight, ITAR-TASS reported. The
British Foreign Office has warned Britons against any further
travel to Chechnya until at least April 2002, the Russian
agency reported. Chechen officials said they have identified
the kidnappers and believe they will be able to free the four
captives. Chechen Prosecutor-General Mansur Tagirov told
Interfax that he believes the kidnapping was intended to
discredit Chechen President Aslan Maskhadov. PG

RUSSIAN REPRESENTATIVE IN CHECHNYA FOUND DEAD. Akmal Saidov,
the head of the social and economic department of the Russian
government office in Grozny, was found dead on 3 October near
the border between Chechnya and Ingushetia, Interfax
reported. He had been kidnapped on 29 September in the
Chechen capital. The Russian government protested the move,
but even as it did so, Russian First Deputy Prime Minister
Vadim Gustov told ITAR-TASS on 2 October that Russia must
keep all its promises to Chechnya. PG

CHECHEN LEADER SAYS U.S. BIGGER THREAT THAN RUSSIA. Chechen
President Maskhadov said that the United States is using
Saudi Arabia as a proxy to destabilize the Caucasus region,
Interfax reported on 2 October. He said that the Saudis are
financing what he called "pure Islam," a reference to what
Maskhadov and others have often referred to as Wahhabism.
These activities, Maskhadov said, pose "a serious threat to
Chechnya because America and the West are more dangerous than
Russia." PG

MASKHADOV TO MEET PRIMAKOV? Interfax reported on 5 October
that Russian Prime Minister Primakov will meet with Chechen
President Maskhadov on 10 October. The Russian news agency
cited Interior Minister Sergei Stepashin as its source.
Primakov's office, however, refused to confirm the story when
queried by ITAR-TASS. PG

CAUCASUS MUSLIM COUNCIL APPEALS TO YELTSIN. The Supreme
Religious Council of the Caucasian Peoples has sent an appeal
to the Russian president to take personal responsibility for
the investigation of a terrorist act in Makhachkala that led
to the death of Dagestani Mufti Sayed Mukhammed-khadzhi
Abubakarov, ITAR-TASS reported on 2 October. The appeal was
made at an international conference in Baku. At that meeting,
Sheikh ul-Islam Allahshukyur Pasha-zade was reelected
chairman of the council. PG

REGIONAL AFFAIRS

LATVIANS VOTE IN FAVOR OF CITIZENSHIP AMENDMENTS... In a
referendum on 3 October, some 53 percent of the Latvian
electorate voted in favor of amendments to the citizenship
law passed earlier this year, according to preliminary
results released the next day. Almost 45 percent of the
electorate voted against, while turnout was just below 70
percent. The "yes" vote means there are no longer any
obstacles to the signing into law of the amendments, which
remove the so-called naturalization windows, grant
citizenship to all children born after independence if their
parents so require it, and provide for simpler language tests
for older residents. Commenting on the result, OSCE High
Commissioner on National Minorities Max van der Stoel said
that "the people of Latvia have taken a very important step
towards solving inter-ethnic problems and promoting the
process of integration," Reuters reported. JC

...ELECT NEW PARLIAMENT. Also on 3 October, Latvians went to
the polls to elect a new parliament. According to preliminary
results, the People's Party of former Prime Minister Andris
Skele came first with 20.79 percent of the vote, followed by
Latvia's Way with 18.50 percent, RFE/RL's Riga bureau
reported the next day. The National Harmony Party, which
brings together former communists and independence activists,
finished a surprising third, with 14.44 percent, ahead of the
Fatherland and Freedom party of incumbent Prime Minister
Guntars Krasts (13.80 percent). Only two other parties passed
the 5 percent hurdle to gain entry to the new parliament: the
Social Democratic Alliance (12.95 percent) and the New Party
(7.46 percent). Turnout was estimated at 72.67 percent. JC

FIRST RUSSIAN RESPONSES TO LATVIAN REFERENDUM VOTE. Russian
Foreign Ministry spokesman Vladimir Rakhmanin told ITAR-TASS
on 5 October that Moscow "positively appraises" the results
of the referendum on the citizenship law amendments. He noted
that the Latvian people have given a "clear signal" to the
newly elected parliament and the future government that they
link the long-term interests of their country with "inter-
ethnic harmony, integration of society, and observance of
human rights." He added that it is only this way that Latvia
can "gain international prestige and normalize relations with
Russia." Communist Party leader Gennadii Zyuganov, in an
interview with Ekho Moskvy the previous day, also welcomed
the referendum result, commenting that for Latvia, "it is
better to have Russia as a friendly neighbor than to violate
the rights of our compatriots." JC

TRANSCAUCASUS AND CENTRAL ASIA

TAJIK GOVERNMENT, OPPOSITION ISSUE ULTIMATUM ON ARMS. Tajik
military helicopters flew over neighborhoods east of Dushanbe
on 4 October to drop leaflets ordering the surrender of
illegal arms within one week, ITAR-TASS reported. A
presidential adviser on defense and social order, Mizrob
Kabirov, said this distribution method was necessary because
not all residents of the areas have access to television and
radio, both of which are broadcasting the order. Kabirov said
the leaflets are directed at groups engaged in "banditry,
mafia territorial wars, terrorism, and kidnapping." The Tajik
government will guarantee the safety and freedom of those who
heed the call. Kabirov said, however, said that both the
government and United Tajik Opposition are currently drawing
up measures to "liquidate" those who refuse to hand over
their arms. BP

ARMENIAN PREMIER SEEKS DELAY IN PRIVATIZATION DEBATE. Prime
Minister Armen Darpinian on 2 October asked his political
opponents in the parliament to delay a discussion of his
privatization program until he returns from Washington,
RFE/RL's Armenian Service reported. Darpinian left for the
U.S. on 3 October to participate in consultations on the
international financial crisis. PG

GEORGIANS, ABKHAZ EXCHANGE FIRE. Georgian and Abkhazian units
exchanged fire along the Inguri River on 4 October, ITAR-TASS
reported the next day. Georgian Television said that the
Abkhaz had attacked the Georgians and that the Georgians had
returned fire. PG

SHEVARDNADZE HOPES RUSSIA WILL STABILIZE. Following a meeting
on 3 October with visiting Russian State Duma speaker
Gennadii Seleznev, Georgian President Eduard Shevardnadze
said that Tbilisi is "interested in political and economic
stability of its great neighbor Russia as well as in its
democratic development," ITAR-TASS reported on 4 October.
Seleznev reiterated Moscow's desire to continue to serve as
an intermediary in Tbilisi's dispute with the breakaway
republic of Abkhazia. But he asked Shevardnadze not to press
Moscow to ratify the friendship treaty between the two
countries anytime soon, the Russian agency said. PG

ADJAR DELEGATION IN TBILISI. Georgian Minister of State Vazha
Lortkipanidze met with a delegation from Adjaria on 1 October
to discuss the tensions between the Georgian central
government and that autonomous republic, Caucasus Press
reported quoting the daily "Rezonansi." The Adjar delegation
expressed concern at what they perceived as a campaign of
vilification of Adjar Supreme Council Chairman Aslan
Abashidze in the Georgian central press. And it hinted that
the Adjar leadership may demand the closure of some of the
media outlets involved. LF

SCHOOLCHILDREN, PENSIONERS STAGE PROTESTS IN WESTERN GEORGIA.
Some 100 schoolchildren blocked the Zugdidi-Anaklia highway
on 1 October to protest the continued occupation of their
schools by displaced persons who fled Abkhazia's Gali Raion
during the fighting in May, Caucasus Press reported the
following day. The displaced persons refuse to move from the
schools to other accommodation, thus preventing the start of
tuition. In Kutaisi, 43,000 pensioners staged a protest
against the city authorities' decision to pay their pensions
in wheat flour. They have not yet received their pensions for
August. LF

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