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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 2, No. 195, Part I, 8 October 1998


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RFE/RL NEWSLINE Vol 2, No. 195, Part I, 8 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

* PRIMAKOV TAKES CHARGE OF FINANCIAL LEVERS

* TURN-OUT FOR NATIONAL PROTEST LOWER THAN PREDICTED

* KAZAKH PRESIDENTIAL ELECTIONS SCHEDULED FOR JANUARY

End Note
KAMCHATKA: STUNNING BEAUTY, STAGGERING WASTE
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RUSSIA

PRIMAKOV TAKES CHARGE OF FINANCIAL LEVERS. Prime Minister
Yevgenii Primakov and First Deputy Prime Minister Yurii
Maslyukov seem to have divided the tasks of former Deputy
Prime Minister Aleksandr Shokhin between themselves, with
Primakov taking primary responsibility for financial policy.
"Izvestiya" concluded on 8 October that Primakov "has not
tempted fate by entrusting the most crucial sector of rescue
work in the Russian economy to his deputies." As a
consequence, Primakov has the "power to pursue a tough
financial policy." According to Interfax, Primakov will
personally oversee the work of the Finance and Justice
Ministries, the Federal Tax Service, and coordinate the
implementation of military reform. Maslyukov will manage
industrial policy, military-technical cooperation and trade,
and foreign economic relations, including dealing with the
international financial institutions. He will also coordinate
the work of the Ministries of Economy, Trade, and Anti-Trust
Policies. On 6 October, President Boris Yeltsin reappointed
Viktor Orlov minister of natural resources. JAC

TURN-OUT FOR NATIONAL PROTEST LOWER THAN EXPECTED. More than
600,000 people participated in the national day of protest on
7 October, according to Interior Ministry figures, Russian
agencies reported. Even if government figures have seriously
understated the number of actual participants, the turn-out
was significantly less than organizers had predicted (see
"RFE/RL Newsline," 7 October 1998). Rallies and marches were
held in 500 cities and villages in 78 regions, for the most
part without serious incident, according to Major-General
Aleksandr Chekalin of the Interior Ministry. "Izvestiya" on 8
October criticized regional governors such as Krasnoyarsk
Governor Aleksandr Lebed and Kemerovo Governor Aman Tuleev
for participating in marches, commenting that "regional
leaders have pretended that they have nothing to do with
Russian power structures and therefore are not at all
responsible for what is happening throughout the country and
in their regions." LUKoil and Oneksimbank are major investors
in "Izvestiya." JAC

RUSSIA NOT TO DEPLOY TROOPS IN YUGOSLAVIA. Novgorod Governor
Mikhail Prusak, chairman of the Federation Council's
International Affairs Committee, told Interfax on 7 October
that the council will not allow Russian troops to be deployed
in Yugoslavia. Under the constitution, Russia cannot send
troops to fight abroad without the Federation Council's
approval. "Kommersant-Daily" reported on 8 October that the
General Staff is not formulating any plans to use Russian
troops in Kosova and that the only Russian warplanes capable
of getting to and from Kosova and performing a combat mission
are planes better equipped for destroying than defending
Yugoslav facilities on the ground. Meanwhile, President Boris
Yeltsin telephoned British Prime Minister Tony Blair, and
Prime Minister Primakov called Italian Prime Minister Romano
Prodi to promote Russia's position against NATO air strikes.
JAC

ARAFAT VISITS MOSCOW. Palestinian leader Yasser Arafat
arrived in Moscow on 8 October for meetings with President
Yeltsin, Prime Minister Primakov, Federal Council Chairman
Yegor Stroev, Duma chairman Gennadii Seleznev, and Patriarch
Aleksii II of Moscow and All Russia. After President
Yeltsin's meeting with Arafat, according to Interfax, his
foreign policy aide, Sergei Prikhodko, announced that Yeltsin
will appoint an envoy to the Middle East, who will regularly
visit Middle Eastern capitals. Arafat invited Russia to send
a representative to Washington on 15 October to attend a
meeting with representatives from the U.S., Israel, and
Palestine. JAC

OIL COMPANIES SET TO MERGE? In an interview with
"Nezavisimaya gazeta" on 7 October, LUKoil chairman Vagit
Alekperov predicted that Russia's leading oil companies will
be forced to consolidate in order to weather the current
economic crisis and compete on international markets. He
called for the creation of two or three truly international
oil companies. Gazprom chairman Rem Vyakhirev told reporters
on 6 October that he believes a 5 percent block of shares in
his company may be sold within two months so that the
government can raise needed revenue. He added that a deal on
writing off Gazprom's tax debt is close to completion. He
also revealed that Gazprom had to cut its investment program
by two-thirds because of lower fuel prices and Russia's
economic crisis. JAC

RUSSIA TO BUILD NEW MISSILES, SUBS... At a news conference on
6 October, First Deputy Prime Minister Maslyukov called for
the ratification of START II and the construction of 35-45
new Topol-M missiles every year starting in 2000 and several
new submarines for the Navy. The new missile system is
necessary because existing weaponry is aging and will start
to be deactivated within two or three years, he commented.
JAC

...AND NEGLECT CONVENTIONAL FORCES? Writing in "Segodnya" on
7 October, military analyst Pavel Felgengauer critiqued
Maslyukov's proposals as unrealistic. He argued that "six
intercontinental warheads would provide sufficient nuclear
deterrence against the U.S., but Maslyukov is demanding more
than 40 strategic nuclear missiles a year." He added that the
"Russian military-industrial complex can survive only as a
small, separate, narrowly specialized sector. If [Russia]
attempts to continue the Soviet tradition of combining the
development and production of TV sets and teleguidance for
aviation bombs at the same firm, then televisions will
spontaneously explode as they used to and half the bombs will
miss their target." The other danger, Felgengauer concluded,
was that if all of Russia's resources are used on nuclear
deterrent forces, then conventional forces will suffer and
Russia will be vulnerable to attack by a thousand well-
trained guerrillas. JAC

WESTERN BANK BRANCHES ENSNARED BY DEFAULT. According to an
"Interfax 100" report, the Russia-based subsidiaries of
Western banks were among the most heavily invested in Russian
government securities and therefore were among the hardest
hit when the Russian government imposed a moratorium on debt
payments, the "Moscow Times" reported on 7 October. Sberbank
lost the largest amount, since it held 101.4 billion rubles
($6.4 billion) in Russian treasury bills and state
securities, which accounted for 52 percent of its total
assets. The Russian subsidiaries of Chase Manhattan and
Republic National Bank of New York also had invested more
than half of their assets in government bonds. SBS-Agro and
Uneximbank both had only 19 percent of their assets invested
in government bonds, but these banks have experienced other
problems with contracts on Eurobonds and forward currency
transactions. JAC

LUZHKOV GAINING SUPPORTERS. Although Moscow Mayor Yurii
Luzhkov has not officially declared he is running for
president, his candidacy is gaining new endorsements. Mikhail
Lapshin, Agrarian Party leader, said his party will support
Luzhkov for president, provided Luzhkov assists farmers with
concrete measures, "Nezavisimaya gazeta" reported on 6
October. Interfax reported the next day that Mikhail
Nagaitsev, chairman of the Moscow Federation of Trade Unions,
declared at a rally that trade unions will advance Luzhkov's
candidacy for president. Meanwhile, according to ITAR-TASS,
Luzhkov expressed his profound admiration for Yabloko leader
Grigorii Yavlinskii and his economic program, calling him a
"very serious, solid, highly respected political figure"
capable of leading the country out of its current crisis. JAC

SACHS SLAMS RUSSIA, FUND. In an interview with "Noviye
izvestiya" on 7 October, Harvard University professor Jeffrey
Sachs accused Russian government officials of "squandering"
$50 billion to $100 billion of credits from the U.S. and
international financial institutions, funneling the money
into foreign bank accounts and real estate. Sachs, a former
economic adviser to the government headed by then Prime
Minister Yegor Gaidar, accused the IMF of injecting billions
of dollars into Russia but not into its economy. He added
that many people believe that he criticizes the Russian
government because he no longer has the opportunity to work
with it. In fact, he said, he quit his position because he
could no longer tolerate corruption on such a massive scale.
JAC

RUSSIAN FAR EAST LOSES U.S. AIR CONNECTION. Alaska Airlines
suspended regular flights between Kamchatka and the U.S. on 8
October. According to ITAR-TASS, the airline has been having
trouble filling its planes since Russia's economic crisis
began. JAC

CHECHEN OPPOSITION TO PRESS FOR MASKHADOV'S RESIGNATION.
Thirty-five Chechen opposition groups have formed a special
coordinating body to press for the resignation of Chechen
President Aslan Maskhadov, Interfax reported on 7 October.
Denying that it would employ force, the new coordinating body
said that it will discuss its demands with the parliament the
next day. In other developments, Arbi Barayev, the head of
the Islamic Regiment combat group, was severely wounded on 7
October in what the authorities said was an assassination
attempt, ITAR-TASS reported. And the Russian envoy to
Chechnya, Georgii Kurin, denied reports that a meeting has
been scheduled between Maskhadov and Russian Prime Minister
Primakov. PG

TRANSCAUCASUS AND CENTRAL ASIA

KAZAKH PRESIDENTIAL ELECTIONS SCHEDULED FOR JANUARY. A joint
session of the Kazakh parliament on 8 October approved
holding presidential elections on 10 January 1999, RFE/RL
correspondents in Astana reported. That vote was originally
slated to take place in December 2000. Opposition parties and
movements are expected to protest that decision. One day
earlier, deputies approved amendments to the constitution
extending the terms in office of both houses of the
parliament and the president (see "RFE/RL Newsline," 7
October 1998). They also struck the provisions that a
president may not be older than 65 and may not serve more
than two terms in office. BP

NAZARBAYEV APPROVES DECISION. President Nursultan Nazarbayev
has approved the parliament's decision to bring the
presidential election forward, thereby shortening his current
term in office by almost two years. Nazarbayev was elected
once as president following independence in 1991, and his
term in office was extended through a referendum in 1995,
which also stipulated that the presidential election would
take place in December 2000. BP

UZBEKISTAN TO INTRODUCE MONTHLY REPORTS ON FOREIGN TRADE.
President Islam Karimov has signed a document stipulating
that companies must produce monthly reports on their foreign
trade activities, Interfax reported on 7 October. Starting in
January 1999, "both public and private economic entities" are
required to submit monthly reports of their exports, imports,
and currency flows. Special legislation will be introduced to
punish company heads who do not meet the deadlines. BP

KYRGYZ CHIEF BANKER PAINTS GLOOMY PICTURE. The chairman of
Kyrgyzstan's National Bank, Marat Sultanov, was quoted by
ITAR-TASS on 8 October as saying "we were prepared for the
Russian crisis in Kyrgyzstan but not on such a scale."
Sultanov noted that the Russian Federation is his country's
main trading partner, accounting for 25 percent of
Kyrgyzstan's foreign trade. He said the value of the national
currency, the som, has decreased by 17-18 percent since the
beginning of the Russian economic crisis. And he revealed
that Kyrgyzstan was able to prop up the som by using bank
reserves, "which then decreased by 7-8 percent." BP

DEPUTY SPEAKER OF ARMENIAN PARLIAMENT RESIGNS. As the
parliament met for the third day to consider opposition
demands that the government's privatization program be
changed, Albert Bazeyan, a deputy speaker of that body,
announced his resignation on 7 October, RFE/RL's Armenian
Service reported. Bazeyan, a leading figure in the Yerkrapah
group, which supports President Robert Kocharian, said that
he "does not want to participate in political games."
Following his announcement, the parliament narrowly rejected
the opposition's changes to the privatization program. PG

ONLY 7,000 PARTICIPATE IN ARMENIAN COMMUNIST RALLY. Some
7,000 communist supporters--far fewer than organizers had
predicted--participated in a demonstration in Yerevan on 7
October to express "solidarity" with protesters in Russia and
to demand the resignation of the Armenian government,
RFE/RL's Armenian Service reported. Communist party leader
Sergei Badalian told the crowd in Yerevan that Armenians must
place their hopes on the "victory of the Russian people." PG

ARMENIAN AIRLINE IN TROUBLE. Vyacheslav Yaralov, the
director-general of Armenian Airlines, told RFE/RL's Armenian
Service on 7 October that his enterprise needs at least $50
million in the immediate future to overcome serious financial
difficulties, replace aging Soviet-made aircraft, and acquire
Western planes. Yaralov acknowledged that the airline lost $2
million in the first six months of 1998. PG

ARMENIA ASKS COUNCIL OF EUROPE TO SET UP CAUCASUS MEETING.
Armenian parliamentary chairman Khosrov Arutyunyan on 7
October asked the Council of Europe to organize a joint
meeting of the parliamentary speakers of Armenia, Azerbaijan,
and Georgia, ITAR-TASS reported. Arutyunyan made the proposal
in Tbilisi, where he is taking part in an expanded meeting of
the bureau of the OSCE Parliamentary Assembly. PG

ALIEV AGAIN REJECTS AZERBAIJANI ELECTION DELAY. Arguing that
the Azerbaijani Constitution gives him no choice, President
Heidar Aliev on 7 October again rejected opposition demands
that the presidential poll be postponed, Interfax reported.
Aliev's statement came on the date the opposition had
declared as a deadline for any announcement. In other
remarks, Aliev noted that the country's hard currency
reserves rose to $500 million in recent years, up from only
$2 million in 1994. He added that inflation has fallen to
nearly zero, and that the manat has strengthened against the
dollar. And he also commented that he sees no reason to
change the current government, which he said "consistently
and intelligently implements the course of reforms." PG

END NOTE

KAMCHATKA: STUNNING BEAUTY, STAGGERING WASTE

by Floriana Fossato

	The annual salmon run on Kamchatka Peninsula in Russia's
Far East brings millions of salmon back to their spawning
grounds after three or four years at sea. This year, the
salmon run is particularly good. "In fact, the best in the
last 40 years," say officials at Kamchatka's fish resources
department.
	As Russia's financial and political crisis deepens, it
is clear that fish and vegetables, mainly potatoes, from
private plots will be the main sources of food for most of
the 400,000 people living on the peninsula, which lies some
11,000 kilometers to the east of Moscow.
	Kamchatka, like other Russian regions, imports a large
amount of foodstuffs from abroad, says Aleksandr Potievskii,
head of foreign economic relations at the regional
administration. Until August, when Russia in effect defaulted
on its debt and devalued the ruble, importing goods from
abroad was cheaper than bringing them from the "mainland," as
continental Russia is called on the peninsula. According to
Potievskii, transport tariffs across Russia made goods more
expensive than those from abroad. As a result, food imports
came mainly from the U.S., South Korea, China, and Japan.
	Vyacheslav Zviagintsev, manager of the private Krechet
tourist agency, one of Kamchatka's longer established
companies, said in August that even importing helicopter fuel
from the U.S was "cheaper than importing it from Russia."
Following a controversial agreement with the regional
administration, Krechet has the exclusive right to bring
tourists by helicopter to the Valley of Geysers, one of
Kamchatka's most fascinating and most frequently visited
sites.
	However, foreign imports had to be paid for in hard
currency. Now, with Russia's banking and payments sector in
effect paralyzed, most traders have reportedly had to cease
their operations. Many are sinking in a sea of debt.
	According to Potievskii, revenues from tourism, which
last year contributed 10 percent to the regional budget, will
also fall, since the number of foreign and Russian tourists
is set to decrease sharply.
	Potievskii said that some 90 percent of foreign tourists
came from Japan, a country that itself is now deeply mired in
economic difficulties. He added that the regional
administration wanted to improve the tourist infrastructure,
including upgrading the local airport. As for Russian
tourists, only in the past two years had the country's
emerging middle class started exploring Russia's best
preserved wilderness, featuring 160 dormant and 29 active
volcanoes as well as hot springs and a rich wildlife.
	Now, as the middle class's profits and prospects are
being wiped out, Kamchatka's plans and foreseeable tourism
revenues, estimated at more than $1 billion in the next
decade, are also likely to suffer, at least in the short
term.
	The main source of revenue for both the budget and the
population of Kamchatka has traditionally been its fisheries,
not tourism. According to official data, more than 80 percent
of budget revenues originate in the fishing industry, and
members of every family are involved in one way or another in
the industry.
	Much of the fish is sold abroad, mainly to Japan and in
many cases in deals made directly at sea. Fishing authorities
are widely accused of involvement in the activities of black-
market traders.
	The phenomenal salmon run of this year may have proven
crucial in helping Kamchatka's economy. But the evidence
suggests that profits will be strangled by a lack of adequate
fish-processing and other facilities, poaching, and
bureaucratic ineptitude.
	The spectacle of rivers brimming over with salmon is
remarkable, but the sight of trucks dumping tons and tons of
unprocessed dead fish is appalling. The salmon are caught and
their precious red eggs, which will be sold as caviar, are
extracted, but the fish themselves are literally "good for
nothing" as the available facilities are unable to process
them in large quantities. Moreover, there are no
refrigerating and transport facilities that would enable
small fishing companies to take the produce to markets
outside Kamchatka.
	"Such blind exploitation and waste of natural resources
is criminal," said Masha Vorontsova, Russian coordinator of
the International Fund for Animal Welfare.
	"It is a sad sight indeed," concedes Pavel Gordeychuk,
head of fishing expertise at Kamchatka's Federal Department
for Protection and Reproduction of Fish Resources and
Fisheries Regulations. "However," he explains, "since the
breakup of the Soviet Union, fish processing facilities on
land have collapsed, as previously state-run fishing
companies were privatized and only now, amidst huge problems,
are small steps bring taken to revive the sector."
	To compensate the people of Kamchatka who are too old or
unhealthy to help fishing companies with this year's salmon
run, authorities have organized the free transport and
distribution of tons of fish to the regional capital,
Petropavlovsk Kamchatskii.
	People elsewhere in the region, along with the wild bear
population of Kamchatka, are stocking up on fish as best they
can in order to make it through the long winter.

This is the first article in a three-part series on Russia's
Far East by Floriana Fossato, an RFE/RL correspondent based
in Moscow.

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