He that breaks a thing to find out what it is has left the path of wisdom. - J.R. Tolkien
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 2, No. 205, Part I, 22 October 1998


________________________________________________________
RFE/RL NEWSLINE Vol 2, No. 205, Part I, 22 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

* YELTSIN'S TRAVEL PLANS 'TIGHTENED'

* RUSSIAN STOCKS FLOAT UPWARDS

* FIVE GEORGIAN INSURGENTS ARRESTED

End Note: RUSSIA'S FINANCIAL CRISIS THREATENS REGIONAL
PRESS
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RUSSIA

YELTSIN'S TRAVEL PLANS 'TIGHTENED.' President Boris
Yeltsin's trip to Austria is now scheduled to last only
one day, instead of two, as originally planned,
presidential press secretary Dmitrii Yakushin told
reporters on 22 October. Yakushin said that the trip
will be very intensive and dismissed the suggestion that
it had been shortened, saying that "the schedule has
simply been tightened." In its October issue, "Argumenty
i fakty" cited Foreign Ministry sources as saying Russia
will be able to procure money from the EU only if
Yeltsin shows up in Austria in person. The publication
claimed that "some Kremlin officials understood the
importance of the trip" and that "Boris Nikolaevich is
now being pumped full of medicines to put him in good
shape for at least a couple of days." JAC

DUMA PROTECTS INDIVIDUALS' SAVINGS. The Duma on 21
October passed a law guaranteeing individuals' private
deposits in Russian banks. The legislation guarantees
payment in full of dollar or ruble savings plus
interest. It also protects wages or pensions deposited
to bank accounts after 1 September. JAC

RUSSIAN STOCKS FLOAT UPWARDS. Russian stocks continued
to strengthen on 21 October, profiting from overall
bullishness on world markets and the perception of
traders that some Russian companies are "bargains" at
current share prices. Among the top performers was
Rostelecom, which gained 11 percent. The benchmark stock
index rose 3 percent, according to Bloomberg, and the
Russia index has become the world's seventh-best
performing index, having risen 25 percent since 22
September. Despite reports of tightened government
control over Russian oil company financing (see below)
shares in LUKoil and Surgutneftegaz surged, gaining 10
percent and 14 percent respectively, according to
Interfax. JAC

ARE TAXES COLLECTED PAPER OR REAL? Federal Tax Service
head Georgii Boos told reporters on 21 October that tax
collection improved this month because the government
successfully negotiated agreements with the country's
largest enterprises. For example, the tax service froze
the bank accounts of 14 of the country's oil companies
and will unfreeze them only if the companies agree to
make payments every 10 days. Boos's estimation of the
work accomplished by his service apparently conflicts
with that of the Finance Ministry. "Izvestiya" reported
on 21 October that Finance Minister Mikhail Zadornov
wants "taxes paid into the budget and not 'paper' taxes
based on mutual offsets as Boos wants to report." And
Deputy Defense Minister Oleg Vyugin said that "the
government has taken no substantial steps to improve tax
collection" and that a significant increase in tax
revenue should not be expected. LUKoil and Oneksimbank
are major investors in "Izvestiya." JAC

OIL COMPANIES LOSING BATTLE OR WAR? Russian oil
companies are being pressured not only by the Federal
Tax Service. Finance Minister Zadornov told Ekho Moskvy
on 21 October that his ministry wants to impose an
export duty of $6.50-$7.00 per ton of crude oil.
According to Zadornov, the tax would reduce net profits
by no more than 30-40 percent. "Izvestiya" reported on
15 October that the oil companies had won an earlier
battle to squash higher taxes by appealing to Deputy
Prime Minister Vladimir Bulgak. The newspaper argued
that the "victory of the oil dealers" was likely to be
only "temporary." It also noted that a draft law on the
critical situation in the oil industry failed to pass in
the State Duma, primarily because not enough deputies
were present to vote for it. JAC

GOVERNMENT AWAITS WORD FROM IMF, PARIS CLUB. Finance
Minister Zadornov told Ekho Moskvy on 21 October that he
expects Russia to receive part of the scheduled $4.3
billion tranche from the IMF this year. He added that
even if Russia does not receive any credits, it still
plans to set aside "more than $2 billion from the
fourth-quarter budget to service foreign debt."
According to Reuters, this amount would cover only
payments for recent debts and not those inherited from
the Soviet Union. The Russian government hopes to
persuade the Paris Club to accept a postponement of any
payments of the latter until the end of the year. Like
the IMF, the Paris Club is waiting for Russia to produce
an economic program that would explain how the debt
would ultimately be repaid. JAC

RUSSIAN POSITION ON KOSOVA OUTLINED. Russian diplomats
continue to object to what they perceive as NATO
interference in tasks more appropriately performed by
the OSCE. Russian diplomatic sources told Interfax on 21
October that Russia will not take part in the air
monitoring of Kosova as long as the NATO decision to put
its forces on high alert for a strike in Yugoslavia
remains in force. The sources claimed that they were
taken aback by statements of U.S. diplomats that NATO
forces stationed outside Kosova will be available to
assist in the rapid evacuation of monitors. They pointed
out that Yugoslav authorities have already agreed to
provide security for the observers and assist them with
evacuation. They emphasized that the OSCE rather than
NATO must provide for security for the observer mission.
JAC

TRUCKERS STALLED. Hundreds, possibly thousands, of
Russian truck drivers and their vehicles are stranded
throughout Western Europe because they cannot finance
their return home. The companies who hired them have
canceled planned shipments following the devaluation of
ruble. This has left the truckers they hired without any
financial means of returning to Russia. The Russian
Foreign Ministry has instructed its embassies in
Germany, France, the Netherlands, Belgium, Britain, and
Ireland to provide financial support to the drivers,
Interfax reported on 21 October. JAC

LUKASHENKA LANDS IN SIBERIA. Belarusian President
Alyaksandr Lukashenka began a three-day trip to Siberia
on 21 October, stopping first in Omsk. According to
ITAR-TASS, Lukashenka is expected to sign an agreement
on economic, trade, scientific, and cultural cooperation
with Omsk Oblast. Belarus wants to supply Siberia with
trolley-buses, shoes, and furniture in exchange for
tires, airplanes, aircraft engines, as well as
communications and farm equipment. On 22 October,
Lukashenka declared his firm support for President
Yeltsin and for the strongest possible union between
Russia and Belarus. According to Interfax, he urged the
Russian press and politicians to stop "toying with the
idea of early resignation" for Yeltsin (see also Part
II). JAC

ILYUMZHINOV TO SEEK ANOTHER PRESIDENCY. Just days after
reaffirming his intention to run in the Russian
presidential elections in 2000, Republic of Kalmykia
President Kirsan Ilyumzhinkov declared that he will also
seek the presidency of the Russian Soccer Union (see
"RFE/RL Newsline," 19 October 1998). Ilyumzhinov is
already president of the World Chess Federation and
hinted that he will bolster the soccer league's current
budget of $5 million. Ilyumzhinov built what some have
described as lavish facilities in his republic to host
this year's chess matches. Ilyumzhinov said, according
to ITAR-TASS, that he was "ashamed" by the nation's
soccer team, particularly by its loss to Ukraine. "How
is it possible in a nation of 150 million that 11 good
players could not be found?" he asked. JAC

BROADCASTING BLACKOUT IN EASTERN SIBERIA. More than 1
million residents in Chita Oblast have been greeted with
blank television screens and silent radios since
striking workers at a regional broadcasting center
stopped all television and radio transmissions to
protest unpaid wages, ITAR-TASS reported on 21 October.
Regional authorities are appealing to the workers to
employ some other tactic to publicize their cause. JAC

TRANSCAUCASUS AND CENTRAL ASIA

FIVE GEORGIAN INSURGENTS ARRESTED. Five suspected
participants in the 19 October mutiny have been arrested
in the west Georgian region of Mingrelia, but rebel
leader Akaki Eliava and several supporters are still at
large, Caucasus Press reported on 22 October. Abkhaz
security officials told Interfax and ITAR-TASS on 21
October that they have strengthened controls on the
border between Abkhazia and the rest of Georgia and can
guarantee that Eliava has not crossed into Abkhaz
territory. If he and his supporters attempt to do so,
they will be arrested or killed if they resist arrest,
Abkhaz Security Minister Astamur Tarba told Interfax. LF

RUSSIA, ZVIADISTS DENY INVOLVEMENT IN MUTINY. Russian
First Deputy Prime Minister Vadim Gustov and an unnamed
Russian Foreign Ministry spokesman have both denied any
Russian involvement in the Georgian insurrection,
Interfax reported on 21 October. Georgian State
Chancellery official Archil Gegeshidze told Interfax
that there is indirect evidence that "some forces" in
Russia provided assistance to the rebels, whom he
identified as former President Zviad Gamsakhurdia
supporters who arrived in Georgia from Moscow with large
amounts of U.S. dollars. But the Round Table-Free
Georgia coalition, founded by Gamsakhurdia in 1990, has
denied any role in the mutiny, which it suggests was
stage-managed by the Georgian authorities, Caucasus
Press reported on 21 October. Georgian presidential
adviser Levan Aleksidze pointed out that Russian
political analysts Andranik Migranian and Konstantin
Zatulin had earlier predicted an attempt to destabilize
Georgia to thwart oil exports (see "RFE/RL Caucasus
Report," vol.1, no. 31, 29 September 1998). LF

ABKHAZIA TO ISSUE OWN PASSPORTS. The unrecognized
Republic of Abkhazia is currently having its own
passports printed in France, Caucasus Press reported on
21 October, quoting Georgian deputy parliamentary
chairman Vakhtang Kolbaya. Kakha Chitaya, chairman of
the Georgian parliament committee on foreign affairs,
said that the willingness of a French company to print
the passports constitutes non-recognition of Georgia's
territorial integrity. He hinted that Georgia may make a
formal protest to the French government. LF

AZERBAIJAN, TURKEY SEND MIXED SIGNALS ON EXPORT
PIPELINE. Azerbaijan State Oil Company President Natik
Aliev told Turan on 21 October that no firm commitment
to proceed with construction of the so-called Main
Export Pipeline for Azerbaijan's Caspian oil will be
signed in Turkey on 29 October. Instead, Aliev said, the
presidents of Azerbaijan, Turkey, Georgia, and
Kazakhstan will issue a joint statement pledging their
political support for Trans-Caspian and Trans-Caucasian
oil and gas pipelines. Aliev said that proposals for
routing the MEP via Russia were submitted too late and
that the routes being considered are via Georgia and via
Turkey. Turkish Energy Minister Cumhur Ersumer told
journalists in Baku on 19 October that a decision to
route the MEP from Baku to the Turkish Mediterranean
port of Ceyhan will be signed when Azerbaijani President
Heidar Aliev visits Turkey for the 75th anniversary
celebrations of the founding of the Turkish Republic on
29 October, Interfax reported. LF

KAZAKHSTAN, U.S. ENDORSE BAKU-CEYHAN VARIANT. Kazakh
Prime Minister Nurlan Balghymbayev held talks in Tbilisi
on 21 October with his Georgian counterpart, Vazha
Lortkipanidze, and President Shevardnadze on the export
of Kazakh oil via the existing pipeline from Baku to the
Georgian port of Batumi, RFE/RL's Almaty bureau
reported. Balghymbayev will also visit Baku, where his
country's ambassador Rashid Ibraev told Turan on 21
October that one Japanese and one U.S. company have
already committed a total of $500 million toward the
construction of a Trans-Caspian oil pipeline. Ibraev
said that at present, Kazakhstan exports some 50 million
metric tons of crude by tanker and rail via Azerbaijan
and Georgia. Speaking in Ankara on 21 October, U.S.
Undersecretary of State Stuart Eizenstat again affirmed
the U.S. preference for the Baku-Ceyhan route, which he
termed optimal from the environmental, economic, and
strategic standpoints, AP reported. Ersumer said in Baku
two days earlier that the cost of that project is far
lower than media estimates of $4 billion. LF

ARMENIAN GOVERNMENT, BANKERS DISCUSS ECONOMIC SITUATION.
The heads of commercial banks operating in Armenia met
the country's leadership on 21 October to discuss the
economic situation and the government's fiscal-monetary
policies, RFE/RL's Yerevan bureau reported, citing the
presidential press service. The participants "stressed
the need to improve banking legislation and tighten law
and order in the banking sector." Responding to
unspecified concerns expressed by the bankers, President
Robert Kocharian called for the further strengthening of
the "stable banking system," which he called one of
Armenia's key achievements. Analysts suggest that the
economic turmoil in Russia is affecting Armenia's market
for short-term government bonds, which until recently
was dominated by Russian investors who have now
withdrawn their capital from Armenia. LF

KAZAKHSTAN REPORTS POOR GRAIN HARVEST. Kazakhstan's 1998
grain harvest was one of the worst in the last 40 years,
Reuters reported on 21 October. According to preliminary
figures, only 7.3 million tons are expected to be
gathered this year, compared with 12.3 million tons in
1997. The 1998 plan was for 14 million tons but bad
weather and problems with locusts during the summer have
had a negative impact on the harvest. The head of the
Agricultural Ministry's information service, Aleksandr
Korablin, said next year's harvest may be worse, as
banks and companies will now be reluctant to invest in
the agricultural sector. BP

NAZARBAYEV MAKES NEW APPOINTMENTS. Kazakh President
Nursultan Nazarbayev appointed Asylbek Beysenbayev as
his press secretary on 20 October, RFE/RL correspondents
in Astana reported. Beysenbayev replaces Kairat
Sarybayev, who is now a deputy foreign minister. BP

UN APPEALS FOR AID FOR TAJIKISTAN. The UN has issued an
appeal to the international community to give aid to
Tajikistan, ITAR-TASS reported on 22 October. According
to the UN, 80 percent of Tajikistan's population lives
on the poverty line and nearly half are unemployed.
Pensioners survive almost exclusively on aid distributed
by UN organizations working in the country. So far in
1998, those organizations have raised $6.4 million in
aid. Secretary-General Kofi Annan has said $34 million
is needed and has urged those who have promised aid to
Tajikistan to fulfill their pledge. BP

KYRGYZ JUSTICE MINISTRY CLOSES DOWN THREE NEWSPAPERS.
The Kyrgyz Justice Ministry has shut down three
newspapers for "insulting the religious feelings of
believers," ITAR-TASS reported on 22 October. The
ministry claimed that "Limon," "Paishanba," and
"Kattamadaidzhest" contained erotic material that could
be considered offensive to some people. "Paishanba" is
owned and published by the same group that put outs the
well-known weekly "Asaba," which this year has also run
into difficulties with the authorities. The founder of
both newspapers, Melis Eshimkanov, said "it's just the
latest attempt by the authorities to strike out at
undesirable opponents." Eshimkanov added that "erotic
publications can be banned on religious grounds, but
first there is a need to change the Kyrgyz Constitution,
in which it is written that the country is secular
state." BP

REGIONAL AFFAIRS

BEREZOVSKII'S CIS REFORM PLAN REJECTED. At a meeting in
Minsk on 21 October of the working group on CIS reform,
CIS Executive Secretary Boris Berezovskii's blueprint
for reforming the commonwealth was unanimously rejected
by representatives of the 12 CIS member states, Interfax
reported. According to Belarusian representative Sergei
Posokhov, Berezovskii's proposal to create a
Coordinating Consultative Committee merely "mechanically
unites" the present functions of the Executive
Secretariat and the CIS Inter-State Economic Committee
but contains no new ideas on how to expedite CIS
integration. Posokhov said that working group members
took exception to Berezovskii's suggestion that
representatives at CIS summits be seated in accordance
with their country's financial contributions to the
organization. Addressing the group, Berezovskii ruled
out any changes to the present CIS charter. Such changes
were also rejected by a session of the CIS Inter-
Parliamentary Assembly several days earlier,
"Nezavisimaya gazeta" reported on 20 October. LF

END NOTE

RUSSIA'S FINANCIAL CRISIS THREATENS REGIONAL PRESS

by Paul Goble

	The slow but steady progress Russia's privately
owned regional newspapers have made in the seven years
since the collapse of communism has been undermined in
less than a month by that country's financial crisis.
	Across the country, some of these newspapers have
been forced to close. Many more have cut back in size,
frequency, and staffing. And still a larger number have
been forced to drop links to the Internet and
subscriptions to national and international wire
services.
	Not surprisingly, the publishers of many of those
newspapers have concluded that the only way they can
survive is to make deals with local businesses or seek
government support. In such an event and if the crisis
deepens, they are likely to be exploited by both local
businesses and the government.
	Taken together, these developments threaten the
survival of freedom of the press across much of the
Russian Federation. That sweeping prediction arises from
the findings of a recent survey released by the National
Press Institute, a Moscow-based press watchdog agency.
	Last month, that body surveyed editors and
publishers across Russia to see how they were coping
with the collapse of the ruble, the banking system, and
public confidence in key institutions. It reached three
main conclusions.
	First, the privately owned regional press was in
trouble even before the current crisis hit. Most faced
stiff competition from state-owned monopolies that
denied them the necessary autonomy to do their jobs.
Many of those newspapers were and are managed by
journalists with little experience in running a business
and who had done little to build the kind of cash and
other reserves necessary to weather any serious
downturn. And few had been able to attract the kind of
advertising revenues that would free them from
dependence on either subscriptions or subsidies.
	There are several reasons for this: Russian
enterprises have little experience with advertising. The
country's tax system does little to encourage them to
spend money on commercial advertising. And most
publishers have done little to develop this market.
	Second, the current crisis has already claimed its
first victims and will claim more as it continues.
Because so few newspapers had any cash reserves, the
impact of the economic crisis was hard and immediate.
	Faced with a decline or even complete loss of
advertising revenue and dramatically higher costs for
paper and printing, newspapers have laid off staff, cut
back in their print runs, and eliminated subscriptions
to major news organizations. And although relatively few
of these newspapers have closed so far, the Russian
public has lost an important window on the world at
precisely the time when it most needs one.
	Third, the consequences of this crisis, even if it
is relatively short-lived, seem likely to prove far more
severe to the future of freedom of the press in Russia
than many appear to expect. By highlighting the
volatility of advertising as a source of revenue, the
crisis has led ever more publishers and editors to turn
back to single businesses or governments for assistance.
	That may save some newspapers in the short run but
it guarantees that those rescued in this way will be
less free to report the truth in the future. By
underscoring the weakness of the privately-owned press
to business cycles, the National Press Institute found,
the crisis has undercut the authority of the press
itself and thus sent much of it on a continuing downward
spiral.
	And by forcing so many journalists out of their
traditional work, the crisis has called attention to
something that few in Russia have wanted to take
seriously: namely, the intimate relationship between the
strength of the market and the strength of the media.
	Indeed, the National Press Institute underscores
this final point by quoting former U.S. President
Herbert Hoover. Speaking just before the onset of the
Great Depression in the United States in 1929, President
Hoover said that "Free speech does not live many hours
after free industry and free commerce die." That is a
lesson the Russian regional press is learning in a most
difficult school.

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