RFE/RL NEWSLINE Vol 3, No. 25, Part I, 5 February 1999

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RFE/RL NEWSLINE Vol 3, No. 25, Part I, 5 February 1999

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

* MISDEEDS OF CENTRAL BANK DETAILED

* BUDGET PASSAGE PREDICTED

* SIX CIS STATES AFFIRM READINESS TO PROLONG SECURITY TREATY

End Note: SCANDAL EXPOSES SHADY SIDE OF TER-PETROSSIAN ERA
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RUSSIA

MISDEEDS OF CENTRAL BANK DETAILED. Details from former
Prosecutor-General Yurii Skuratov's report of his
investigation into activities of the Russian Central Bank
finally emerged on 4 February. According to the report, the
bank allowed a tiny offshore firm in the Channel Island of
Jersey to manage roughly $50 billion of its currency reserves
over five years and to charge allegedly illegal commissions,
Interfax reported. In addition, the report said that bank
officials sold federal property, such as real estate and
cars, without the permission of the State Property Fund and
used official bank credit cards with monthly credit limits of
$5,000-$15,000 to purchase personal items. The bank also used
600 million rubles ($25 million at the current exchange rate)
from its 1997 profits for a special social fund for
employees. The "Moscow Times" on 5 January quoted an
anonymous Central Bank official as saying that "current
accusations may be based on unprofessional conclusions." JAC

BUDGET PASSAGE PREDICTED. As the State Duma began the fourth
and final reading of the 1999 budget on 5 February, both Duma
deputies and government officials were predicting the
budget's smooth passage. The previous day, the Duma's Budget
Committee recommended the current draft be approved. More
important was Communist Party leader Gennadii Zyuganov's
agreement to accept the government's proposal to reduce
spending on the presidential administration by 20 percent
rather than 40 percent, as stipulated during the budget's
last reading. When passed, the budget will be forwarded to
the Federation Council, which is also expected to approve it
quickly. JAC

AEROFLOT OFFICES SEARCHED. Investigators from the Prosecutor-
General's Office on 4-5 February searched offices of Aeroflot
and several of companies with which it contracts work as part
of its continuing investigation into allegations that Boris
Berezovskii authorized the installation of illegal electronic
listening devices in President Boris Yeltsin's office and
home. Berezovskii reportedly owns a large stake in Aeroflot
Investigators are also searching for evidence of "illegal
entrepreneurial activity," according to Interfax. On 5
February, the Aeroflot board of directors dismissed four
senior vice presidents. JAC

SUPREME COURT PROLONGS NIKITIN CASE. At a closed hearing on 4
February, the Supreme Court decided to return the espionage
case of environmentalist Aleksandr Nikitin for further
investigation, turning down an appeal by Nikitin's lawyers to
dismiss the case. Nikitin told reporters after the ruling
that he is worried that the additional investigation "will
last forever." The International Helsinki Federation for
Human Rights denounced the decision, arguing that the court
ignored one of the most fundamental principles of criminal
proceedings, that the defendant should be presumed innocent.
Nikitin is charged with including classified materials in a
report on Russia's Northern Fleet prepared for the Norwegian-
based Bellona Foundation. JAC

RUSSIA POISED TO TURN OFF ENERGY SPIGOT TO NEIGHBORS. Prime
Minister Yevgenii Primakov told cabinet members on 4 February
that other CIS countries owe Russia more than $600 million
for fuel and energy. He argued that "a kind of moratorium" on
further supplies should be imposed while talks on debt
repayment are held. Regarding the chronic fuel shortages to
the regions in Russia's Far North, Primakov suggested that
the problem "must be lifted from the shoulders of government"
and competitive tenders to transport fuel should be held
among commercial firms, ITAR-TASS reported. JAC

START-II ON HOLD UNTIL FUNDING FOR NUCLEAR FORCES ALLOCATED.
In an interview with the military newspaper "Krasnaya zvezda"
on 2 February, State Duma Defense Committee Chairman Roman
Popkovich of Our Home Is Russia said that the Duma must first
adopt the law on financing Russia's strategic nuclear forces
until 2010 before it can turn to the issue of ratification of
the START II treaty. Popkovich admitted that if the Duma were
to ratify the treaty, there would be no money in the 1999
budget for implementation and probably none would be
available for "the next two or three years." Popkovich added
that Russia is already "spending too much on the liquidation
of armaments under previous agreements and treaties." JAC

LACK OF CASH DICTATES MORE CUTS IN ARMED FORCES. The size of
the army and navy must be reduced by two times if the
government is going to be able to fully fund them, according
to a Defense Ministry report on funding the armed forces
until 2000, "Nezavisimaya gazeta" reported on 4 February.
Under the report's pessimistic scenario, if Russia
experiences annual rates of economic growth of 0.5-1.5
percent, then it will be possible only to fully finance an
"Army numbering 550,000 to 600,000." Even if the Russian
economy manages to grow by 8-10 percent a year, the Defense
Ministry would not receive adequate financing for the army's
present size until 2004-2005. JAC

ANOTHER POPULATION DECLINE RECORDED. Russia's population
dipped by 401,000 or 0.3 percent in 1998 compared with the
previous year, according to a preliminary estimate by the
State Statistics Committee, ITAR-TASS reported on 4 February.
In 1997, the population also fell by 0.3 percent. As of 1
January, 146 million people lived in Russia. JAC

WORLD BANK CHECKS UP ON COAL LOAN. World Bank officials
arrived in Kemerovo Oblast on 3 February to try to find out
what happened with monies disbursed to local organizations
under the coal-sector loan, "Izvestiya" reported. The money
had been earmarked for the creation of new jobs for
unemployed coal miners. According to the newspaper, bank
officials wanted to see with their own eyes exactly how money
had been spent before they began negotiations with Moscow on
further installments. World Bank Country Director of Russia
Michael Carter had warned earlier that the bank might suspend
further installments of its coal loan, unless it receives
clarification of the Russian government's plans for the coal
sector (see "RFE/RL Newsline," 18 January 1999). JAC

NIZHNII NOVGOROD MAKING LIFE DIFFICULT FOR BUSINESS? The
Nizhnii Novogorod municipal authorities have increased rents
for business premises, prompting protests among angry local
business owners, according to the "EWI Russian Regional
Report" of 4 February. Special breaks have been announced for
businesses that serve municipal needs, companies offering
social services, and exporters. But according to the report,
this means that some businesses will have to pay up to 11
times more than previously. Locals now fear spiraling retail
prices, coming on the heels of a newly introduced 5 percent
sales tax and hikes in petroleum products and utilities. A
similar rent hike introduced by the St. Petersburg
authorities last year resulted in many bankruptcies of small
businesses and failed to increase municipal revenues, the
report points out. JC

VLADIVOSTOK LOCALS CONTINUING TO BACK FORMER MAYOR. The
Supreme Court on 4 February rejected former Vladivostok Mayor
Viktor Cherepkov's suit against President Yeltsin's decree
removing him from office, Interfax reported (see "RFE/RL
Newsline," 15 December 1998). The previous day, "Segodnya"
reported that some residents in Vladivostok formed an
association for the protection of voters' rights and sent a
telegram to Moscow demanding the resignations of top
officials of Vladivostok's Internal Affairs Department and
Prosecutor-General's Office as well as the abolition of krai
and municipal election committees. According to the
newspaper, a local theater capable of holding 300 people was
jammed at the association's inaugural conference. "Izvestiya"
suggested that the next local elections would likely result
in a city assembly that was even more strongly in favor of
Cherepkov than before. JAC

PRESIDENT OF TATARSTAN HOSPITALIZED. Mintimer Shaimiev was
admitted to hospital on 1 February suffering from high blood
pressure, ITAR-TASS reported three days later. RFE/RL's Kazan
bureau quoted the presidential press service as saying that
Shaimiev's condition is "stable" but that his doctors have
advised him to remain in hospital under observation for two
weeks. Shaimiev celebrated his 62nd birthday on 20 January.
LF

KOVALYOV REFUSING TO EAT JAIL FOOD. Former Justice Minister
Valentin Kovalyov, who was arrested on 3 February told
Russian Television, the next day that he is going on a hunger
strike to protest not being allowed to contact his lawyers.
Kovalyov is charged with embezzling $50,000 and the illegal
possession of firearms, Interfax reported. He was sacked from
the Justice Ministry in July 1997, after a videotape of him
frolicking with naked women in a sauna was aired on national
newscasts. JAC

'MIR' EXPERIMENT CANCELED. The reflective screen that
cosmonauts on the space station "Mir" tried to unfurl on 4
February got caught in an antenna, dpa reported. Meanwhile,
unaware that the experiment had failed, residents of
Karaganda, Kazakhstan, assembled on the city streets at 8.04
p.m. local time that day to witness the station's "sunbeam,"
ITAR-TASS reported. The next day, Mission Control Center in
Moscow decided against conducting the experiment again. JAC

MIXED REACTION TO CHECHNYA'S INTRODUCTION OF ISLAMIC LAW.
Russian State Duma speaker Gennadii Seleznev called on those
Russian agencies responsible for the North Caucasus to
determine precisely how President Aslan Maskhadov's 3
February decree imposing Shariah law in Chechnya will be
interpreted and implemented, Russian agencies reported.
Seleznev added that violations of the Russian Constitution in
Chechnya "should be taken for granted." Nationalities
Minister Ramazan Abdulatipov commented that Maskhadov's
decision has brought him far "closer to the extremist forces
which he had actively opposed in the past." Ingushetian
President Ruslan Aushev interpreted Maskhadov's decree as a
preemptive move intended to prevent the spread of "extremist
forms of Islam" in Chechnya, according to Interfax.
Krasnoyarsk Krai Governor Aleksandr Lebed observed that
"Chechens have never been radical believers," and he
advocated trusting Maskhadov's judgement. Lebed and Maskhadov
signed the 1997 agreements ending the war in Chechnya. LF

TRANSCAUCASUS AND CENTRAL ASIA

COUNCIL OF EUROPE DELEGATION VISITS ARMENIA. Armenian
President Robert Kocharian assured a fact-finding mission
from the Parliamentary Assembly of the Council of Europe on 3
February that Armenia is committed to democracy and complete
freedom of the press, speech, belief, and political activity,
Noyan Tapan and Interfax reported. Presidential spokesman
Vahe Gabrielian told journalists on 3 February that a Human
Rights Watch report arguing that Armenia should not be
granted full membership in the Council of Europe was based on
inaccurate statistics. He added that the report, which cited
widespread and egregious human rights violations, had
exaggerated the incidence of such occurrences, Noyan Tapan
reported (see "RFE/RL Newsline," 22 January 1999). A member
of the PACE delegation was quoted in the Armenian press as
saying that a decision on whether to grant Armenia to full
membership in the Council of Europe will be contingent on the
fairness and transparency of the parliamentary elections
tentatively scheduled for May. LF

AZERBAIJANI FOREIGN MINISTER IN PARIS. Meeting in Paris on 2
February, Tofik Zulfugarov and his French counterpart, Hubert
Vedrine, discussed ongoing efforts to mediate a solution to
the Karabakh conflict, which Vedrine said undermines the
region's potential for development. The two ministers also
agreed to hold regular consultations on security issues and
discussed the potential for expanding economic ties, Turan
reported. Zulfugarov discussed the latter issue in greater
depth with Foreign Trade Secretary Jacques Dondoux, focusing
on aeronautics, telecommunications, and infrastructure
development. LF

MOSCOW WANTS TO EXPEDITE SOLUTION TO ABKHAZ CONFLICT.
Speaking at the CIS Foreign Ministers' meeting in Moscow on 4
February, Russian Foreign Minister Ivanov expressed
dissatisfaction with the lack of progress towards a
negotiated settlement of the Abkhaz conflict, Russian
agencies reported. He noted the "enormous difficulties"
dogging the peace negotiations, and stressed Russia's
interest in expediting a settlement. Also on 4 February,
Caucasus Press summarized the results of a poll conducted
among Georgian displaced persons from Abkhazia that revealed
83 percent of those questioned will not return to their homes
until Georgian jurisdiction over Abkhazia is restored. Abkhaz
leader Vladislav Ardzinba has offered to allow all Georgian
displaced persons from Gali Raion to return to their homes
beginning 1 March. He has also created a government
commission to ensure adequate economic and security
conditions in the region. LF

SIX CIS STATES AFFIRM READINESS TO PROLONG SECURITY TREATY.
At the CIS foreign ministers' meeting in Moscow on 4
February, the representatives of Russia, Armenia, Belarus,
Kazakhstan, Kyrgyzstan, and Tajikistan said their countries
will extend their participation in the CIS Collective
Security Treaty beyond the April expiry date, Interfax
reported, quoting Russian Foreign Minister Igor Ivanov.
Georgia will also do so after unspecified amendments are made
to the treaty, Ivanov added. Speaking in Baku the same day,
Azerbaijani presidential adviser Vafa Guluzade hinted that
Azerbaijan should consider not extending its participation
because the treaty failed to end Armenia's aggression against
its fellow CIS state Azerbaijan, Turan reported. LF

UZBEKISTAN CLARIFIES POSTION ON SECURITY AGREEMENTS... The
Uzbek Foreign Ministry released a statement on 4 February
clarifying the country's position on security agreements,
ITAR-TASS reported. The statement confirmed that Uzbekistan
will not renew its membership in the CIS Collective Security
Treaty. But it added that "this position has no relationship
to bilateral agreements on cooperation with the Russian
Federation and other states of the Commonwealth." It also
states that such relationships "will develop on the basis of
generally accepted norms of international law, mutually
advantageous cooperation, mutual respect, and non-
interference in each other's internal affairs." BP

...WHILE RUSSIA SEEMS UNCONCERNED. Russian Minister for CIS
Affairs Boris Pastukhov said on 4 February that it is
pointless to "overdramatize" Uzbekistan's decision not to
renew its participation in the CIS Collective Security
Treaty, Interfax reported. Pastukhov said "all of the CIS's
agencies and organizations are established on a voluntary
basis," adding that "it is the sovereign right of a every
state...to make a decision which it considers to be
necessary." Pastukhov said he personally has heard nothing
from the Uzbek side on the issue. BP

TAJIKISTAN FORMS SPECIAL MILITARY UNIT. Following UN
representatives' criticism about the lack of progress on
integrating United Tajik Opposition units into the government
forces, the press center of the Reconciliation Commission
announced on 4 February that a special rapid reaction force
combining government and opposition fighters will be formed,
Interfax reported. The unit will be used to combat illegal
paramilitary formations still present in Tajikistan. BP

HUMAN RIGHTS WORKER DEPORTED FROM TURKMENISTAN. Aleksandr
Petrov from the Moscow office of Human Rights Watch was
deported from Turkmenistan on 3 February, RFE/RL's Turkmen
Service reported. Petrov was part of a four-man team that
arrived in Turkmenistan on 29 January to evaluate the human
rights situation there. After two members of the team
departed on other business, officers from Turkmenistan's
National Security Committee came to Petrov's hotel room,
accused him of possessing material that threatened the
country's security, and asked him to return to Moscow. Petrov
told RFE/RL upon his return that the "offending" materials
were earlier reports about human rights in Turkmenistan. BP

EBRD CRITICIZES IMPORT RESTRICTIONS IN KAZAKHSTAN. An
economist for the European Bank of Reconstruction and
Development (EBRD), Martin Raisner, told a news conference in
Almaty on 4 February that Kazakhstan should not restrict
imports and should stop giving direct support to industrial
and agricultural companies, Interfax reported. Raisner said
restrictions would reduce competition and proposed instead
that tariffs be regulated to promote competition. Raisner
also said farming and industrial companies should be left to
fend for themselves but that the EBRD is prepared to issue
loans and offer technical aid and consultation to these
companies. Raisner acknowledged that 1999 will be a difficult
year for Kazakhstan, but he praised the monetary and lending
policies of the country's National Bank, saying the EBRD sees
no danger that Kazakhstan will default on its debts. BP

U.S. DIPLOMAT TOURS CENTRAL ASIA. A delegation from the U.S.
State Department, led by senior department official Ross
Wilson, arrived in Ashgabat on 4 February for talks with the
Turkmen leadership, ITAR-TASS and Interfax reported. The
topic under discussion was implementing energy projects in
the Caspian Basin, including the Trans-Caspian pipeline
project. Companies participating in that project are due to
be announced in Ashgabat on 19 February. Wilson promised his
country would help mediate a dispute between Turkmenistan and
Azerbaijan over Caspian oil fields to which both countries
lay claim. Wilson was also in Kyrgyzstan on 1-2 February,
where he promised officials that the U.S. will recommend that
the IMF extend further loans to the country. Wilson also
visited Uzbekistan, but there is no information on that
visit. BP

END NOTE

SCANDAL EXPOSES SHADY SIDE OF TER-PETROSSIAN ERA

by Emil Danielyan

	One of the key politicians who helped shape the history
of post-Soviet Armenia, former Interior Minister Vano
Siradeghian fled Armenia on 29 January, several days after
state prosecutors accused him of murder. He is now rumored to
be in Paris. While Siradeghian's supporters say he has gone
abroad for medical treatment, his enemies are convinced that
he fled to avoid punishment for serious "crimes." Whatever
the truth, there are few indications that the formerly
powerful and feared minister will voluntarily return home if
the Armenian parliament eventually lifts his immunity. And
regardless of whether the charges are based on facts--and
Siradeghian and other members of the former ruling Armenian
Pan-National Movement, which he heads, claim they are not--
the Siradeghian affair is another sign of the crumbling
legacy of Levon Ter-Petrossian, the country's first post-
Soviet president.
	The scandal broke on 25 January when Prosecutor-General
Aghvan Hovsepian told the parliament that Siradeghian should
be arrested and put on trial for ordering two police officers
murdered five years ago, when he was interior minister.
Hovsepian said the officers were shot dead after failing to
assassinate an Armenian-born Russian businessman, Serge
Jilavian, who was at odds with the former authorities.
Hovsepian accused Siradeghian of obstructing the
investigation into the two men's disappearance and misleading
their relatives. Last summer, investigators found what they
said were the officers' remains in a Yerevan suburb.
	The main witness in the case is a former interior troops
commander, Vahan Harutiunian, who the prosecutors say was
instrumental in executing the death orders. Denying the
charges, Siradeghian alleged that the arrested ex-commander
is "mentally sick" and that his testimony was extracted by
force. Siradeghian said the accusations against him signal
the start of political "repressions," which, he added, could
lead Armenia to "civil war" and ultimately "destruction."
	Voting the day after the prosecutor's speech, the
parliament refused to allow Siradeghian's prosecution. On 29
January, Prosecutor-General Hovsepian told reporters that he
would again ask the parliament to lift Siradeghian's
immunity. A few hours later, the former interior minister
left Armenia. A question many observers are asking is why the
authorities moved against him now. The explanation of the
Armenian Pan-National Movement (HHSh) that President Robert
Kocharian wants to "break up the party" ahead of
parliamentary elections is hardly credible. The discredited
former ruling party (of which Ter-Petrossian was the
unofficial leader) is not a serious threat to the present
regime. The material self-enrichment of many HHSh leaders
against the background of a mostly impoverished population
since1991 has engendered a widespread hatred toward the
former rulers. And for many people, the flamboyant
Siradeghian is the main symbol of an official engaging in
corruption with impunity. Lashing out at Siradeghian was
therefore bound to boost the dwindling popularity of
Kocharian's leadership.
	That Kocharian's blow struck home was evidenced by the
fact that Ter-Petrossian finally broke the silence he had
maintained since his resignation on 3 February 1998. The ex-
president said the authorities have "disgraced" Armenia by
targeting Siradeghian. Since Ter-Petrossian did not speak out
last December, when Siradeghian admitted that the 1996
presidential election was rigged to ensure Ter-Petrossian's
second term, the former president may well see a danger for
himself if his old comrade-in-arms goes on trial. In such a
case, the former president may be held accountable for the
actions of his former subordinate. And if the murder
allegations proved true, the disgrace caused to Ter-
Petrossian would cast a shadow on his seven years in power,
which he believes was a period of sweeping reforms
constituting an important chapter in the country's history.
	Siradeghian's rise and fall epitomizes the outcome of
those reforms. Touted as a promising fiction writer in the
1980s, Siradeghian joined the famous Karabakh committee that
led the 1988 movement for the unification of Armenia and
Nagorno-Karabakh. His role was confined to "friend-of-the-
people" functions until, in 1992, he was appointed interior
minister. He held that post until 1996, when he was named
mayor of Yerevan. Siradeghian's supporters credit him with a
successful fight against crime, which declined dramatically
during his tenure. Yet that period was also characterized by
the pervasive power of the police, which also spread to the
economic sphere.
	Siradeghian is believed to have made a huge personal
fortune, of which his house in Yerevan (estimated to be worth
$1 million) is the most conspicuous evidence. His flamboyant
behavior and extravagant, contradictory, and often cynical
discourse were apparently based on political calculations.
For example, in the wake of the 1996 post-election unrest, he
reportedly endorsed the release of an amateur video featuring
a drunken party of "power" ministers (including himself) and
generals who could be seen congratulating one another on
having successfully engineered Ter-Petrossian's re-election.
Armenians were thus given to understand that they cannot
change their leadership through fair elections.
	Regardless of whether the parliament gives the green
light for criminal proceedings against Siradeghian, the
political survival of the former interior minister now hangs
in the balance.

The author is an RFE/RL correspondent based in Yerevan.

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