When we can begin to take our failures non-seriously, it means we are ceasing to be afraid of them. It is of immense importance to learn to laugh at ourselves. - Katherine Mansfield
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 2, No. 203, Part I, 20 October 1998


________________________________________________________
RFE/RL NEWSLINE Vol 2, No. 203, Part I, 20 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

* MORE RUSSIANS FALLING INTO POVERTY

* IMF OFFERS FOOD, NOT CASH

* GEORGIAN INSURRECTION QUASHED

End Note
SAKHALIN: WAITING FOR OIL BUT PATIENCE IS RUNNING OUT
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RUSSIA

MORE RUSSIANS FALLING INTO POVERTY... More Russians
slipped into poverty in September compared with August,
Interfax reported on 19 October. Last month, the amount
of the population living in poverty reached more than
one-third. Real incomes plunged 12.4 percent during the
first nine months of the year, compared with the same
period in 1997, while consumer prices swelled 38.4
percent in September alone--the biggest monthly rise in
three years. Nationwide, the number of unemployed
increased by 0.5 percent, while the rate of unemployment
as of 1 October was estimated at 11.5 percent.
"Segodnya" reported on 17 October that the number of
jobless in Moscow rose 10 percent from mid-September to
mid-October. JAC

...AS ECONOMIC CONTRACTION ACCELERATES. Russian gross
domestic product shrank 9.9 percent in September,
following an 8.2 percent drop in August, Interfax
reported on 19 October. The State Statistics Committee
called it the largest economic drop since 1994.
Industrial output dropped 14.5 percent in September;
automobile production was particularly hard hit,
sustaining a 35 percent decline. Among the nation's
export industries, fuel dropped 4.6 percent, iron,
steel, and non-ferrous metals fell 16 percent, and
logging, timber, pulp, and paper industries 6.4 percent.
First Deputy Prime Minister Yurii Maslyukov told a
conference of defense industry executives that the
nation's natural monopolies could be used to pull the
Russian economy out of its crisis. According to
Interfax, he added that "the lending potential of the
Central Bank should be better used for export industries
and for the construction of houses and roads." JAC

IMF OFFERS FOOD, NOT CASH. The IMF mission arrived in
Moscow on 20 October--one day after IMF Managing
Director Michel Camdessus declared that his agency is
unlikely to provide any new money soon, calling on the
West to provide Russia with humanitarian assistance to
avert hunger. "Kommersant-Daily" dubbed the offer of
humanitarian assistance "Camdessus's legs," a reference
to "Bush's legs," or the U.S. poultry imports,
especially chicken legs, that flooded the Russian market
as food aid during President George Bush's
administration. The newspaper noted that the IMF is
waiting for the government to present its economic plan,
but "all last week Maslyukov and other government
officials said that the emergency budget for the fourth
quarter was not yet ready." The newspaper also reported
that Karelia and other raions in Leningrad Oblast have
already received humanitarian assistance from
Scandinavian countries. JAC

LEGISLATORS MAINTAIN PRESSURE ON YELTSIN... Russian
legislators are continuing to pressure the presidential
administration. State Duma Security Committee Chairman
Viktor Ilyukhin (Communist Party) declared on 19 October
that he has drafted legislation requiring an independent
medical examination of President Boris Yeltsin. NTV
reported that the Impeachment Commission has completed
preparation of three clauses of the bill of indictment
and are currently deciding whether to prepare two more
or speed ahead with a vote. "Sovetskaya Rossiya"
reported on 17 October, that 79 members of the
Federation Council voted in favor of a motion asking
Yeltsin to resign voluntarily. Twenty-eight members
voted to reject the motion, while 68 members either did
not vote or failed to attend the session. JAC

...AS ADMINISTRATION FIGHTS BACK. Meanwhile, the
presidential administration is trying to characterize
continued calls for Yeltsin's resignation as politically
motivated and to link the completion of President
Yeltsin's term in office with stability. Oleg Sysuev,
presidential first deputy chief of staff, told Ekho
Moskvy that the country does not need early elections
and that "President Yeltsin will work until 2000 for the
sake of calm and stability in Russia." CIS Executive
Secretary Boris Berezovskii told reporters on 17 October
that he is categorically opposed to the early
resignation of Yeltsin. Earlier in an interview with
BBC, Berezovskii said that the era of President Yeltsin
is over and that he should go. He added "Of course, that
is conditional on what the alternative is, but I think
that today we have alternatives better than him" (see
"RFE/RL Newsline," 17 September 1998). JAC

RUSSIA TO DONATE PERSONNEL, HARDWARE TO OSCE. Russian
Defense Minister Igor Sergeev told ITAR-TASS on 20
October that Russia is ready to offer the OSCE its own
aircraft to conduct flight observations of the situation
in Kosova. The previous day, Russian diplomatic sources
told Interfax that a "high-ranking Russian diplomat"
will be one of two deputy chairman of the OSCE
verification mission in Kosova. The team is still being
formed, but the same diplomatic sources predicted that
international observers could be in place in Kosova in
November. Meanwhile, two top cabinet officials, Foreign
Minister Igor Ivanov and First Deputy Prime Minister
Maslyukov, called on the State Duma to ratify START II.
Maslyukov told the military newspaper "Krasnaya zvezda"
that if Russia does not ratify START II, "no one in the
world will understand us." Earlier, cabinet officials
warned that NATO air strikes against Yugoslavia would
kill any chance of START II ratification (see "RFE/RL
Newsline," 5 October 1998). JAC

YAVLINSKII THROWS HAT IN RING. Having recovered from his
heart attack, Yabloko leader Grigorii Yavlinskii
returned to the Duma on 19 October and declared his
intention to run for president in 2000. Yavlinskii told
reporters that he does not think that President
Yeltsin's ill health is sufficient reason to hold early
elections. He denied reports that Yabloko was poised to
form a coalition with the Union of People's Power and
Labor, led by Duma deputy Andrei Nikolaev. Yavlinskii
added that all presidential candidates should undergo an
independent medical examination. JAC

HIGH-PROFILE HUMAN RIGHTS TRIAL BEGINS. The trial of
environmentalist and former Russian Navy captain
Aleksandr Nikitin began in St. Petersburg on 20 October.
Nikitin was arrested in 1996 on charges of high treason
and espionage for publicizing information about aging
nuclear submarines near the Kola Peninsula and their
waste disposal practice. Nikitin's case has attracted
much international attention, and the trial, according
to Reuters, will be monitored by more than 20
international human rights organizations (see "RFE/RL
Newsline," 1 July 1998). JAC

MORMON MISSIONARIES FACING EXPULSION. Krasnoyarsk
authorities have arrested two members of the Church of
Jesus Christ of the Latter Day Saints for "illegally
infiltrating a military unit," ITAR-TASS reported on 20
October. Aleksandr Gorovoy, chief of the Krasnoyarsk
Interior Ministry, explained that the two men said that
they committed the offense in order "to hold religious
discussions with the servicemen." He added that they
face possible deportation. On 17 October, two Mormon
missionaries were attacked in Ufa in what authorities
say was a random act of violence (see "RFE/RL Newsline,"
19 October 1998). JAC

CHECHEN MINISTER DEMANDS RELEASE OF ALL HOSTAGES.
Speaking on Chechen Television on 19 October, Shariah
Security Minister Aslanbek Arsaev issued an ultimatum to
all kidnappers to release the estimated 103 people
currently being held hostage in Chechnya within three
days, Interfax reported. Arsaev threatened "a large-
scale operation" to neutralize armed kidnappers should
they fail to comply with that demand. Also on 19
October, the Russian Federal Security Service told
Interfax it cannot confirm the claim by Arsaev's first
deputy, Supyan Akhmadov, that Russian Presidential envoy
Valentin Vlasov, who was abducted on 1 May, has been
moved from Chechnya to Dagestan. Vlasov has undergone an
appendectomy in captivity, according to "Nezavisimaya
gazeta" on 20 October. LF

TRANSCAUCASUS AND CENTRAL ASIA

GEORGIAN INSURRECTION QUASHED... Mutinous Georgian army
units retreated to their west Georgian base on 19
October following an artillery exchange with regular
army units on the outskirts of Kutaisi, Caucasus Press
reported. Three men were killed in that exchange. The
regular army troops under the personal command of
Defense Minister Davit Tevzadze recaptured the tanks and
armored personnel carriers seized by the rebels. The
insurgents, meanwhile, released National Security
Minister Djemal Gakhokidze, whom they had taken hostage
together with two generals and the presidential
representative in Imereti. Akaki Eliava, the leader of
the mutiny, has fled. LF

...BUT WHAT WAS ITS OBJECTIVE? "Izvestiya" on 20 October
quoted Eliava as demanding the resignation of Georgian
President Eduard Shevardnadze. Eliava told Caucasus
Press on 19 October that he was protesting the
plundering of Georgia by a corrupt leadership. But
Shevardnadze's press spokesman, Vakhtang Abashidze, told
the news agency that the rebels were demanding the
restoration of what they termed the "legal government"
formed by Gamsakhurdia in 1990. Shevardnadze, for his
part, claimed that the insurrection was intended to
sabotage plans for exporting Azerbaijan's Caspian oil
via Georgia. LF

ARMENIAN PRESIDENT CALLS FOR DIASPORA ENGAGEMENT.
Meeting on 19 October with a delegation from the
Armenian General Benevolent Union, Robert Kocharian
expressed gratitude for that organization's assistance
since Armenia regained its independence, RFE/RL's
Yerevan bureau reported. But he also appealed to
Diaspora Armenians to share their "experience and
capabilities" to promote economic revival, which he
characterized as his "number one priority." LF

AZERBAIJAN OPPOSITION TO DISCUSS UNITED ACTION. Four of
the five Azerbaijani opposition leaders who boycotted
the 11 October presidential election may meet soon with
three defeated candidates to discuss joint actions,
Turan reported on 19 October. The five boycotters and
defeated candidate Ashraf Mehtiev issued a statement
on19 October condemning gerrymandering and the
"usurpation of power" by President Heidar Aliev. They
added that they will not recognize the legitimacy of any
international agreements signed by Aliev's leadership.
Musavat Party chairman Isa Gambar, Democratic Party
chairman Ilyas Ismailov, and defeated presidential
candidate Nizami Suleymanov all cast doubt on the
sincerity of Aliev's 18 October plea for dialogue with
the opposition, but at the same time they did not reject
that appeal out of hand. LF

DEFEATED PRESIDENTIAL CANDIDATE'S APPEAL REJECTED. The
Azerbaijani Supreme Court has rejected a suit by
defeated presidential candidate Etibar Mamedov, refusing
even to consider his 20-page statement and accompanying
evidence of the alleged falsification of the 11 October
vote, Turan reported on 19 October. Mamedov's Azerbaijan
National Independence Party plans to hold a march in
Baku on 24 October to protest the ruling. LF

NEW CHAIRMAN APPOINTED TO TAJIK RECONCILIATION
COMMISSION. Muhammed Sharif Himmatzoda has been named
chairman of the legal subcommission of Tajikistan's
National Reconciliation Commission, ITAR-TASS and
Interfax reported on 19 October. Himmatzoda, formerly
chairman of the Islamic Renaissance Party of Tajikistan,
was chosen by representatives of the United Tajik
Opposition. He replaces Otakhon Latifi, who was killed
in Dushanbe on 22 September by assailants still at
large. BP

CRIME INCREASES TAJIKISTAN. In the first nine months of
1998, crime more than doubled in Tajikistan, compared
with the same period last year, ITAR-TASS reported on 19
October. The increase in the theft of weapons accounts
for the growing number of crimes committed with guns or
acts of terrorism employing explosives. There has also
been an increase in mafia wars and kidnappings. BP

KAZAKH OPPOSITIONIST SUFFERS HEART ATTACK. Petr Svoik,
co-chairman of the opposition movement Azamat, has been
hospitalized after suffering a heart attack, RFE/RL
correspondents in Almaty reported on 20 October. Svoik
was serving a three-day jail sentence for participating
in a meeting of the For Fair Elections movement earlier
this month (see "RFE/RL Newsline," 16 October 1998). BP

END NOTE

SAKHALIN: WAITING FOR OIL BUT PATIENCE IS RUNNING OUT

by Floriana Fossato

	Russian Prime Minister Yevgenii Primakov has
repeatedly underlined the importance of having regional
leaders on his side to prevent local tendencies toward
independence dividing the country.
	Sakhalin governor Igor Farkhutdinov, who presides
over a region where offshore energy resources are
estimated by some experts to rival those of the North
Sea, was one of the first governors to hold talks with
the new prime minister. The focus of that meeting was
almost certainly how to speed up the development of oil
and gas projects on Sakhalin as well as how to deal with
the threat of social unrest on the Far Eastern island.
For despite Sakhalin's great natural wealth, the level
of poverty in the region is one of the highest in
Russia, with more than a third of the population of
600,000 people officially registered as living below the
subsistence line.
	Farkhutdinov's main aim at the talks would likely
have been to forge the same cooperative links with
Primakov as he had with the previous Moscow government
on a key issue, namely securing the passage through the
parliament of legislation guaranteeing the protection of
foreign investment in Russia.
	Since the early 1990s, the Communist-dominated
State Duma has put obstacles in the way of laws
guaranteeing the protection of foreign investment for
consortia and a share of the oil and gas extracted.
Those terms are included in the so-called production-
sharing agreements (PSA) signed by local authorities and
the consortia.
	Local officials have tried to galvanize the Duma
into taking action and are frustrated by the lack of
results. Galina Pavlova, director of the Sakhalin local
department for offshore oil development, told RFE/RL in
a recent interview that "instead of working together,
the Duma obstructs everything...; as a result we are,
with our own hands, destroying our own possibilities."
	Farkhutdinov says passage of the necessary laws is
a critical issue for Sakhalin if the big foreign oil
companies already working there are to remain committed
to developing the region's resources. "At a time when
foreign capital is fleeing Russia, this is not happening
on Sakhalin," he commented. "Sakhalin cannot go on
without money, but if we want to overcome this difficult
situation and not become a burden for the state, we need
legislation even more than financing."
	Enormous sums of money are at stake. Foreign
consortia have said that the first three major projects,
called Sakhalin-1, -2, and -3, could result in
investments totaling $36 billion.
	Sakhalin-2, the only project on target so far, is
scheduled to begin production next spring. Those
prospects, however, could suffer if the Duma decides not
to approve a bill amending existing legislation to
comply with tax breaks and provisions included in PSA.
Meanwhile, Sakhalin-2 managers put on a brave face.
	Sakhalin's road toward the desired oil and gas
wealth has not been an easy one. Vladimir Sorochan, the
editor of the newspaper "Sovietskii Sakhalinsk," said
that prospects for oil production, coupled with plans
for developing rich gas fields, provoked "euphoria"
earlier in the 1990s, when it was thought that there
would be cheap energy, jobs, and positive developments
for the island.
	But the situation "has changed radically over the
years," Sorochan commented. "People have understood they
will have to wait a long time for tangible results," he
said, "while hopes of jobs are fading and the governor,
instead of improving people's lives in decrepit cities
and villages, seems more interested in grandiose plans
like the building of an international airport."
	Farkhutdinov denies those charges. "If the oil
projects finally get under way, 20,000 permanent jobs
will be created over the years...and an international
airport would be a sound investment, if only because
every meeting with foreign investors starts with the
question: what's your airport like?" The regional
administration has also announced that the first $20
million bonus from the Sakhalin-2 project is to be used
for urgent construction projects such as a new school or
hospital.
	After the breakup of the Soviet Union, Russian
authorities acknowledged that extraction and production
operations in Sakhalin's oil sector required expensive
and sophisticated technologies that the country did not
have. So they started offering the reserves to consortia
dominated by, and often composed entirely of, foreign
companies. Foreign oil companies were lured by the
prospect of gaining access to offshore oil reserves
estimated at 29 million barrels.
	There is interest also in Sakhalin's vast gas
resources. Farkhutdinov told RFE/RL that the development
of gas resources would provide cheap energy for the
island and would thereby solve the problem of energy
cuts owing to the non-payments crisis in the coal
sector. That crisis led to the coal miners strikes this
summer that paralyzed Sakhalin for weeks.
	Even more important, said the governor, noting
Sakhalin's proximity to Asian markets, energy companies
involved in the oil projects, would help build natural
gas pipelines running to Japan, South Korea, and China.

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

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