Miracles are natural. When they do not occur, something has gone wrong. - A Course in Miracles
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 2, No. 216, Part I, 9 November 1998


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RFE/RL NEWSLINE Vol 2, No. 216, Part I, 9 November 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

* U.S. CALLS FOR REALISM ABOUT RUSSIA

* DEBT NEGOTIATORS REACH COMPROMISE

* TAJIK MILITARY BEGINS MOP-UP OPERATION IN NORTH

End Note: RUSSIAN CRISIS FUELS LATVIAN ECONOMIC WORRIES
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RUSSIA

U.S. CALLS FOR REALISM ABOUT RUSSIA... In an address to
Stanford University on 6 November, Deputy Secretary of State
Strobe Talbott suggested the U.S. and the West adopt a
realistic but not pessimistic perspective on events in
Russia. He asserted that Russia is not necessarily "a troika-
wreck waiting to happen" and called for "realism about the
complexity of the challenges and uncertainty Russia faces."
He said it is still "too early to proclaim Russian
democratization irreversible" since "the longer the economic
meltdown continues," the harder it will be for Russia to
sustain the institutions and habits required for "political
normalcy." While he cautioned that the U.S. and Russia "may
be in for heightened tensions over security and diplomatic
issues," he also noted that "virtually every issue between
[the U.S. and Russia] can be boiled down to matters of mutual
interest and mutual benefit." JAC

...AND INVESTMENT IN OIL INDUSTRY. Talbott also concluded
that Russia will "never again be a monolith" because of its
pattern of regional differentiation with "oases of
liberalization" in Nizhnii Novgorod, Samara, Leningrad, and
Sverdlovsk Oblasts and other "Jurassic-like theme parks of
Soviet-era policies and personalities," such as Kursk,
Krasnodar, Belgorod, Pskov, and Volgograd Oblasts. He noted
that while aid from institutions such as the IMF will have to
wait until Russia appears willing "to make difficult
structural adjustments," the U.S. will remain engaged in key
areas. He said that Western energy companies continue to want
to invest into Russia's oil sector, which will need close to
"$15 billion a year for the next seven or eight years just to
get back to 1988 production levels." JAC

DEBT NEGOTIATORS REACH COMPROMISE. Foreign creditors and
Russian government negotiators agreed not to link a
restructuring of the Russian government's debt on short-term
treasury bonds to the unfulfilled forward currency contracts
of Russian commercial banks. According to ITAR-TASS on 6
November, creditors also accepted a Russian government
proposal for a new kind of ruble-denominated bond. Deputy
Finance Minister Mikhail Kasyanov explained that as a result
of this agreement, Russia's foreign debt will not grow.
Kasyanov added that at least one or two more rounds of talks
are needed to work out the precise conditions for issuing the
new ruble bonds. On 7 November, the "Moscow Times" quoted
bank analysts as saying the Russian government has apparently
decided that it can no longer afford to protect Russian banks
from their creditors. Those creditors are likely to try to
seize assets held outside Russia. JAC

JAPAN READY TO ISSUE FIRST LOAN TRANCHE TO RUSSIA. Japanese
Prime Minister Keidzo Obuchi told his Russian counterpart,
Yevgenii Primakov, in a telephone conversation on 6 November
that the first tranche of a $1.5 billion loan will soon be
released, Interfax reported. The first tranche, worth $800
million, is to be granted by Japan's Export-Import Bank. The
same day, Russia's Trade Ministry announced that trade with
Japan will likely decrease this year. Figures for January-
June 1998 showed the volume of trade at $1.9 billion,
down14.5 percent on the 1997 level. Russian exports to Japan
dropped by 28 percent, to $1.34 billion, in the first half of
1998, while imports from Japan increased by 43.3 percent, to
$606 million during the same period. The volume of trade
between the two countries last year was about $5 billion. BP

U.S., RUSSIAN FOOD DEAL FINALIZED. Russian and U.S. officials
on 6 November reached agreement on food aid to Russia,
despite a last minute dispute over taxation of the shipments
(see "RFE/RL Newsline," 6 November 1998). Russian officials
agreed not to levy taxes on the aid at the border, while the
procedure for taxing the goods once they are on Russian
territory will be determined later, according to Deputy Prime
Minister Gennadii Kulik. The U.S. had insisted that any
proceeds from the food aid be directed to the Pension Fund.
Kulik said that Russia is "ready to give the money to the
Pension Fund and spend it on social programs." Expanding on
this point, Kulik told Interfax on 7 November that part of
the earnings "will go to support national poultry breeding
and other agribusinesses." He added that the U.S. is ready to
continue talks on a second installment of food aid. JAC

TOUGH CONDITIONS TRIGGER POPULATION DRAIN IN FAR EAST. U.S.
and Russian negotiators to food talks focused in part on
providing food to Russia's more remote regions in the North,
Siberia, and the Far East, where food and other commodities
are in short supply, "Rossiiskaya gazeta" reported on 5
November. Because of shortages of both food and electricity,
more than 1,000 residents of Chukotka, located in the extreme
north of the Far East, have been evacuated, Russian Public
Television reported the next day. At least another 2,000 are
scheduled to be moved out of the area. Meanwhile, according
to official data, 800,000 residents of northern regions of
the Far East--more than 10 percent--have moved to other parts
of Russia permanently since the early 1990s, ITAR-TASS
reported on 9 November. JAC

OCTOBER REVOLUTION ANNIVERSARY ATTRACTS SMALL CROWDS... The
Interior Ministry estimated that more than 270,000 people
took part in rallies in 949 cities and towns on 7 November,
the 81st anniversary of the Bolshevik Revolution, ITAR-TASS
reported. Interior Minister Sergei Stepashin and Moscow Mayor
Yurii Luzhkov both claimed that the event attracted fewer
people than in past years. In Moscow, roughly 10,000 gathered
to mark the anniversary with a procession to Lubyanskaya
Square; that is about half of the reported turn-out of the
previous year. However, sponsors of the event had a different
tally, reporting that 350,000 people participated (some
50,000 more than had been predicted by Aleksandr Kuvaev,
first secretary of the Communist Party's Moscow City
Committee on 4 November). The city of Krasnodar marked the
occasion by unveiling a monument to soldiers from both the
Reds and the Whites who died during the civil war. JAC

...AS YELTSIN RETURNS TO MOSCOW. In a television broadcast on
7 November, President Boris Yeltsin used the holiday, which
two years ago he renamed by decree as the "Day of Accord and
Reconciliation," to criticize recent Communist Party
policies, particularly with regard to the press. He also
pointed out that the Communist Party program now calls for
"democracy and private ownership, freedom of enterprises and
financial markets." He declared a victory for forces of
reform, saying that they "have not only changed the course of
history but have also changed people's mindset from one of
hostility and hatred to that of tolerance and dialogue." The
next day, Yeltsin unexpectedly returned to Moscow from Sochi,
where he was on vacation reportedly to recover from fatigue.
JAC

AVDEEV IN ANKARA. Russian First Deputy Foreign Minister
Aleksandr Avdeev held talks on 7 November with Turkish
Foreign Ministry officials on the role of the OSCE in
Europe's future security architecture and on the deadlocked
Cypriot problem, ITAR-TASS reported. The previous day,
British Foreign Secretary Robin Cook had appealed to his
Greek Cypriot counterpart, Iannakis Kassulides, to cancel the
imminent planned deployment on Cyprus of Russian S-300 anti-
air missiles, the "Turkish Daily News" reported. The
newspaper also quoted a Greek Cypriot publication as claiming
that the planned November deployment of the S-300s has been
postponed until 1999. In Washington on 5 November, U.S. State
Department spokesman James Rubin said the U.S. has asked the
Russian government to investigate Turkish allegations that
Kurdistan Workers' Party leader Abdullah Ocalan is in Russia
and to expel him immediately if he is, according to AP. LF

COMMUNISTS' SUPPORT FOR MAKASHOV CONDEMNED. CIS Executive
Secretary and influential businessman Boris Berezovskii
called for banning the Communist Party during an interview
with Ekho Moskvy on 8 November. The prohibition is justified,
according to Berezovskii, because the party has tried to
"stir up inter-ethnic discord." He told Interfax that "by
expressing their solidarity with [State Duma Deputy and
Communist Party faction member Albert] Makashov," the
Communists place themselves beyond Russian law. Last week,
the Duma rejected a resolution condemning Makashov for his
repeated anti-Semitic public statements. Of the Communist
faction, only Duma speaker Gennadii Seleznev voted in favor
of the bill. Seleznev labeled Berezovskii's call as "one more
fit of hysteria" and "an extremist statement." Former Prime
Minister Yegor Gaidar also called for the Communist Party to
be banned because of its support for Makashov. Earlier,
President Yeltsin issued a statement condemning "any attempt
to insult ethnic groups." JAC

LUZHKOV FAVORS EXPANDED SLAVIC UNION. Moscow Mayor and likely
Russian presidential contender Yurii Luzhkov told reporters
on 6 November that he favors Yugoslavia joining the Union of
Russia and Belarus. Luzhkov added that Yugoslavia's effort to
join the union must be supported and that he will fly to
Minsk to discuss the issue with Belarusian President
Alyaksandr Lukashenka soon. The same day, Luzhkov met with
Vojislav Seselj, deputy prime minister of Yugoslavia and
leader of the Serbian Radical Party. Seselj also met with
Patriarch Aleksii II of Moscow and All-Russia and Interior
Minister Sergei Stepashin. In addition to conducting foreign
policy for Moscow, Luzhkov concluded a commercial agreement
with Nizhnii Novgorod Governor Ivan Sklyarov, establishing a
joint company for cutting and selling diamonds. JAC

TRANSCAUCASUS AND CENTRAL ASIA

TAJIK MILITARY BEGINS MOP-UP OPERATION IN NORTH... Tajik
government troops have forced rebels from the district of
Aini and have cleared the highway from Dushanbe to the main
northern city of Khujand. Aini was the last pocket of rebel
resistance after government troops stormed the old fortress
in Khujand on 7 November, freeing "dozens" of Interior
Ministry troops held captive by the rebels. Latest reports
suggest the rebels have broken up into small bands and are
attempting to make their way to Uzbekistan. The Tajik
government has reinforced border guards along the Tajik-Uzbek
border. Leninabad Region administrative head Kasym Kasymov
appeared on national television on 7 November saying at least
70 government soldiers and civilians have been killed and
more than 300 wounded since fighting broke out on 4 November.
BP

...BUT REBEL LEADERS REMAIN AT LARGE. The whereabouts of
rebels whom the Tajik government hold responsible for the
fighting are unknown. Presidential spokesman Zafar Saidov
said they may have already crossed the border into
Uzbekistan. The government has named former army Colonel
Mahmud Khudaberdiyev, former deputy Transportation Minister
Narzullo Dustov, as well as former Prime Minister Abdumalik
Abdullojonov and his brother, former Khujand Mayor Abdughani
Abdullojonov, as the masterminds behind what Dushanbe calls
an attempted coup. The Prosecutor-General's Office launched
criminal proceedings against the four on 8 November, noting
that Khudaberdiyev and Abdumalik Abdullojonov are already
wanted on earlier charges. BP

NAZARBAYEV NOT OPPOSED TO EX-PREMIER RUNNING IN ELECTIONS.
Kazakh President Nursultan Nazarbayev said on 7 November he
welcomes other candidates in the 10 January presidential
elections and has nothing against former Prime Minister
Akezhan Kazhegeldin taking part in that race, ITAR-TASS
reported. Nazarbayev's press secretary, Asylbek Bisembayev,
said the previous day that in order to be eligible to run,
Kazhegeldin must have a court ruling against him overturned
in a higher court before 30 November. However, Bisembayev
also said Kazhegeldin needs to show more respect for the
Medeu Court, which found him guilty of attending an
unsanctioned meeting in early October. He added that
Kazhegeldin "three times ignored the Medeu court sessions"
held to consider his case. BP

KAZAKH PREMIER SAYS ECONOMY REMAINS SOUND. Nurlan Balgimbayev
on 6 November said that inflation has been kept at 2.3
percent since the beginning of this year, Interfax reported.
Balgimbayev said this is an improvement over last year, when
inflation reached more than 7 percent. ITAR-TASS reported on
9 November that Kazakhstan has the highest average monthly
pension (some $36) among the CIS countries. BP

AZERBAIJANI OPPOSITION, POLICE CLASH IN BAKU. Police resorted
to violence against opposition leaders and their supporters
in Baku on 7 and 8 November, Reuters and Interfax reported.
On 7 November, dozens of people were injured and many more
detained temporarily when police intervened to prevent an
unsanctioned march by 3,000-4,000 supporters of Azerbaijan
National Independence Party chairman Etibar Mamedov. The
marchers were protesting the falsification of the results of
the 11 October presidential elections. Mamedov claims his
share of the vote was large enough to warrant a runoff
between himself and Heidar Aliev, who according to official
returns received 76 percent of the vote. On 8 November,
police attacked and beat Liberal Party leader Lala Shovket
Gadjieva and Democratic Party chairman Ilyas Ismailov
following a sanctioned rally in Baku attended by between
10,000 and 15,000 people. The demonstrators similarly
protested the falsification of the presidential election
results. LF

AZERBAIJANI, TURKISH OFFICIALS DISCUSS PIPELINE PROJECT.
Meeting in Istanbul on 6 November, Azerbaijani and Turkish
government officials finalized draft agreements on
construction of the proposed Baku-Ceyhan export pipeline for
Azerbaijan's Caspian oil, AP and ITAR-TASS reported. Those
agreements are to be signed by the respective heads of state
later this month. Also on 6 November, Turkish State Minister
for Maritime Affairs Burhan Kara said Ankara may increase
transit fees for tankers passing through the Turkish straits
in a move that would make the export of oil via that route
"irrational," AP reported. LF

AZERBAIJANI GOVERNMENT CRITICIZES OIL, GAS SECTORS... At a
government session on 6 November chaired by President Aliev,
Azerbaijani Prime Minister Artur Rasi-zade criticized the
failure of the state oil company SOCAR to reverse the ongoing
decline in gas extraction, despite an increase in oil
production, Turan reported. Rasi-zade also expressed concern
at the decline in the export of oil products, but he did not
estimate to what degree that decline is the result of the oil
price slump on world markets. President Aliev gave an overall
positive assessment of the country's economic performance
during the first nine months of 1998, noting GDP growth of
8.5 percent. Aliev also said that Azerbaijan's per capita
foreign debt ($73) is one of the lowest of any former Soviet
republic. LF

...ASSESSES PRIVATIZATION. Aliev told government ministers
that 80 percent of small state-owned enterprises and 20
percent of smaller ones have been privatized. He added that
51 percent of GDP is currently generated by the private
sector. "Azadlyg" in late October reported that plans have
been drawn up to privatize SOCAR and several other strategic
enterprises. Those plans allegedly provide for members of
Azerbaijan's ruling elite to acquire those enterprises under
cover of fake foreign companies. LF

ARMENIAN PARTIES FAIL TO RESOLVE ELECTION LAW DEADLOCK.
Viktor Dallakian of the Yerkapah group, the largest in the
Armenian parliament, told journalists on 6 November that he
does not believe the minority factions within the parliament
are interested in resolving the current dispute over the
country's proposed new election law, RFE/RL's Yerevan bureau
reported. Dallakian said that Fatherland group leader Eduard
Yegorian, the author of one of the two drafts currently under
discussion, failed to attend a planned meeting convened in
the hope of reaching a compromise agreement. The Yerkrapah
want 60 percent of the 131 seats in the new parliament to be
allocated in single-mandate constituencies. Opposition
parties reject that scheme, arguing that it facilitates
gerrymandering. They have said they may boycott the poll if
the Yerkrapah draft is voted into law (see "RFE/RL Newsline,"
5 November 1998). LF

CHAIRMAN OF FORMER RULING PARTY ASSESSES ELECTION CHANCES.
Armenian Pan-National Movement (HHSh) chairman Vano
Siradeghian told a Yerevan press conference on 6 November
that he thinks the HHSh will be represented in the next
parliament but is unlikely to make a strong showing in the
elections due next summer, RFE/RL's Yerevan bureau reported.
He predicted that those elections will not be fair, observing
that "the opposition can close only one third of all vote-
rigging loopholes." Siradeghian dismissed as "a witch-hunt"
calls by the Armenian Revolutionary Federation (HHD) for the
present leadership unequivocally to condemn corruption by
members of former President Levon Ter-Petrossian's leadership
team, many of whom still hold key positions. He criticized
Ter-Petrossian's successor, Robert Kocharian, for what he
termed the new leadership's hard-line foreign policies toward
Turkey and on resolving the Karabakh conflict. LF

GEORGIAN MILITARY OFFICIAL ARRESTED. Henrikh Lolua, deputy
head of the United Military Academy of Tbilisi, was arrested
on 9 November on suspicion of involvement in last month's
insurrection by army units in western Georgia sympathetic to
deceased President Zviad Gamsakhurdia, Caucasus Press
reported. LF

GEORGIAN PRESIDENT COMMENTS ON JUSTICE REFORM SETBACK. In his
weekly radio address, Eduard Shevardnadze on 9 November
declined to condemn outright the 3 November ruling by
Georgia's Constitutional Court that a law enacted earlier
this year introducing a new professional examination for all
judges is unconstitutional, Caucasus Press reported (see
"RFE/RL Newsline," 6 November 1998). Shevardnadze commented
that "no reform has ever been painless," adding that Georgian
society supports the new measures aimed at minimizing
corruption within the legal system. Parliamentary majority
leader Mikhail Saakashvili, who drafted the new law,
described the Constitutional Court's ruling as "absurd and
anti-legal." LF

END NOTE

RUSSIAN CRISIS FUELS LATVIAN ECONOMIC WORRIES

by Katya Cengel

	Russia's continuing economic crisis is causing problems
for those countries with which it has significant trade links.
That is certainly true of neighboring Latvia. Russia is
Latvia's second-largest market, and many Latvian companies
are now feeling the strain.
	Official statistics show that before the crisis, some 15
percent of Latvia's exports went to Russia and almost 12
percent of its imports came from that country. It is widely
expected that newer numbers will show a drop in trade, the
effect of which is already being seen in unemployment
figures.
	In August, Latvia's unemployment rate was officially
listed as 7.4 percent, but according to the State Employment
Service, it had climbed to 7.6 percent one month later. Much
of the increase is being linked to the situation in Russia,
as higher-than-average unemployment is being registered in
those districts where exports to Russia are highest. This
applies, in particular, to areas dealing with food and fish
products.
	At a press conference last month, Latvian Welfare
Minister Vladimirs Makarovs said he expects another 10,000
people to lose their jobs owing to the closure of Latvian
companies as a result of the Russian crisis. He said that he
expects official unemployment to reach 8.6 percent in the
coming months and that "even highly qualified and well paid
workers are in danger."
	Among the companies most severely affected are 70 that
have scaled down their business or manufacturing operations.
Of these, 14 have halted work altogether and 46 have partly
closed. Some 2,000 employees have been laid off and another
5,000 sent on unpaid leave.
	Auto Elektroaparatu Rupnicas [Riga Auto Electric
Apparatus Plant] is an example of a company that has been
forced to reorganize. With 70 percent of its business
involving shipments to Russia, the company recently reduced
its 1,200 employees to 700.
	Arnis Ermanis Shemins, president of the company, said
his firm was unable to make severance payments to its former
employees, adding that further lay-offs are expected. The
company has suspended exports to Russia and sales have
declined by half.
	Some companies are encountering difficulties making
other payments as well. Maiga Dzervite, deputy director-
general of the State Revenue Service, says 50 companies have
requested extensions for making tax payments. Of those, 15
are linked to the fishing industry, nine to the transport
sector, and eight to the food and beverages industry. Latest
available figures put the export of food products at 8.7
percent down on last year's level, while the export of
machinery and electrical equipment has declined by 6.8
percent.
	Dzervite warns that worse is to come for the economy as
a whole: "Revenue is decreasing, the economy is distorted,
and the gross national product is going down." She added that
Latvia "will survive but it will not be such a nice picture
as we originally drew for 1998."
	Dzervite describes the effects of the Russian crisis as
occurring in three stages. The first affects companies
selling directly to Russia. The second hits those supplying
goods to companies that export to Russia. And the third
involves firms from all sectors of the economy supplying
goods to Latvian consumers, since higher unemployment means
smaller demand for goods and services.
	Some companies are resorting to barter to continue trade
with Russia. OlainFarm pharmaceuticals, which formerly sold
60 percent of its products to Russia, has just signed a
contract to exchange medicine for Russian coal. Currently,
about 30 percent of their production is going to Russia in
barter trade.
	The company's advertising director, Egils Grikis,
credits the Russian government with the barter idea, which
will allow OlainFarm to retain all its employees. The
arrangement has lowered the need to find new markets, which,
in itself, is a difficult process.
	Agris Skuja, director of the industry department for the
Latvian Economics Ministry, acknowledged that Latvian
products are generally "not of a sufficiently high quality
for the European market," adding that "it is expensive to
meet European standards."
	He added that the situation is "very bad" and can be
improved only through a long, expensive program. Worker
training needs to be enhanced, the government must provide a
better legislative framework for business, companies must
better explore other markets and develop marketing
strategies, and Latvia must gain increased political and
economic support from the EU, he argues.
	Some officials hope Latvia's entrance into the World
Trade Organization will help provide a way forward. Latvia
was accepted as a WTO member last month, and ratification by
the Latvian parliament is expected within the next few weeks.

The author is a Riga-based contributor to RFE/RL.

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