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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 3, No. 78, Part I, 22 April 1999


________________________________________________________
RFE/RL NEWSLINE Vol 3, No. 78, Part I, 22 April 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

* FEDERATION COUNCIL AGAIN DEFIES YELTSIN OVER SKURATOV

* CHERNOMYRDIN IN BELGRADE

* KARABAKH CALLS ON AZERBAIJAN TO RESUME PEACE PROCESS

End Note: BAKU-CEYHAN PIPELINE PACT: OBSTACLES REMAIN
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RUSSIA

FEDERATION COUNCIL AGAIN DEFIES YELTSIN OVER SKURATOV...
Members of the Federation Council have rejected the
resignation of Prosecutor-General Yurii Skuratov for a second
time. On 21 April, only 61 votes of the necessary 90 were
cast in favor of approving Skuratov's resignation; 79 votes
were cast against. "Izvestiya" the next day wrote that the
decision is evidence that "Russia is becoming a parliamentary
republic" and that "political decisions are no longer made
behind the Kremlin's walls." "Segodnya" interpreted the
action as not only bad news for Russian President Boris
Yeltsin, who had actively been seeking the chamber's support
in his effort to dismiss Skuratov, but also a blow for Prime
Minister Yevgenii Primakov, who made a last minute appeal to
the senators to bounce Skuratov. Krasnoyarsk Governor
Aleksandr Lebed had said earlier that the vote is not a
question of a feud between Skuratov and Yeltsin; rather, if
Skuratov remains, it will mean the end of presidential power
in the country, RFE/RL's Moscow bureau reported. JAC

...AS SKURATOV'S ROLE REMAINS UNCERTAIN. During the eight-
hour discussion of his fate, Skuratov did not offer any new
revelations, insisting that such disclosures would be "fatal
for the country," Russian Television and Interfax reported.
Despite the vote, Skuratov remains suspended pending the
outcome of a criminal investigation against him, Federal
Security Service (FSB) Director Vladimir Putin announced.
Skuratov himself told reporters that he needs guarantees that
he will be able to do his job and "that the FSB and Interior
Ministry will follow up on what we tell them." After the
vote, Federation Council Chairman Yegor Stroev suggested the
creation of a bilateral commission composed of presidential
administration and parliamentary representatives to resolve
the issue. JAC

IMF AGREEMENT IMMINENT? IMF Managing Director Michel
Camdessus said on 21 April that there has been progress in
negotiations with Moscow and that "there is a possibility to
agree," even within the "next few days," RFE/RL's Washington
bureau reported. Camdessus added that the fund wants to see
more rapid progress in restructuring the banking sector and
clarification of the propriety of the behavior of the Russian
Central Bank. The next day, Petr Rodionov, deputy chairman of
Gazprom's board of governors, told "Izvestiya" that the IMF
wants Gazprom to cut supplies to customers who do not pay
their bills and to set up several competing gas companies.
According to Rodionov, Gazprom opposes both recommendations
and usually succeeds in satisfactorily explaining its reasons
why to IMF experts during negotiations. However, when the
negotiating team is replaced, then the "discussion
practically starts over from the beginning," he said. JAC

MORE ELECTORAL BLOCS EMERGE... An unidentified source in the
State Duma told Interfax on 21 April that the formation of a
new electoral bloc called Russia's Patriots, which will most
likely be headed by Duma Chairman Gennadii Seleznev of the
Communist Party, will be officially announced on 15 May. The
bloc will be composed of members of the Spiritual Heritage
movement, headed by Aleksei Podberezkin, and the Democratic
Party, led by Georgii Khatsynkov. Other likely members are
Kemerovo Governor Aman Tuleev and Popular Rule faction leader
Nikolai Ryzhkov. "Vremya MN" reported the same day that the
new bloc composed of the neo-fascist Russian National Unity,
Savior, and Renaissance will be called the National Bloc (see
"RFE/RL Newsline," 20 April 1999). According to the daily,
the National Bloc believes that the majority of votes for its
deputies in upcoming elections will be from those opposed to
NATO aggression against Yugoslavia. JAC

...INCLUDING NEW REGIONAL BLOC. A new electoral bloc called
Vsya Rossiya (All Russia) held an organizational committee
meeting on 22 April. The bloc was founded by Tatarstan
President Mintimer Shaimiev, along with Bashkortostan
President Murtaza Rakhimov, Ingushetian President Ruslan
Aushev, St. Petersburg Governor Vladimir Yakovlev, Astrakhan
Oblast Governor Anatolii Guzhvin, and Omsk Governor Leonid
Polezhaev, "Nezavisimaya gazeta" reported on 21 April (see
also "RFE/RL Russian Federation Report," 21 April 1999). In a
separate interview with the daily, the informal leader of
another regional movement, Golos Rossii, Konstantin Titov,
said that Golos Rossii will try to merge with any new
regional blocs. At the meeting, Shaimiev proposed an alliance
with Otechestvo, headed by Moscow Mayor Yurii Luzhkov, who
attended the Vsya Rossiya meeting as a "guest," ITAR-TASS
reported. According to RFE/RL's Kazan bureau, the leaders of
Chelyabinsk and Penza Oblasts as well as the Yamalo-Nenets
Autonomous Okrug are also expected to join. JAC

CHERNOMYRDIN IN BELGRADE. Russian President Boris Yeltsin's
special envoy to Yugoslavia, Viktor Chernomyrdin, arrived in
Belgrade on 22 April for talks with Yugoslav President
Slobodan Milosevic, ITAR-TASS reported. Interfax reported
that Chernomyrdin planned to discuss ways to solve the Kosova
crisis but gave no details. The previous day, Patriarch of
Moscow and All Russia Aleksii II briefed Chernomyrdin, Prime
Minister Yevgenii Primakov, and Foreign Minister Igor Ivanov
on his recent visit to Belgrade (see "RFE/RL Newsline," 21
April 1999). Chernomyrdin also met with Yugoslav Ambassador
to Moscow Borislav Milosevic, the brother of the president.
He did not disclose details of his meetings. FS

IVANOV DESCRIBES RUSSIAN PEACE PLAN. Foreign Minister Ivanov
held telephone conversations with his British, Spanish,
Italian, and Vatican counterparts on 21 April to discuss
efforts to find a political solution in Kosova, ITAR-TASS
reported. In an interview published in "Le Monde" the
previous day, he explained that Russia's peace plan envisages
an immediate end to NATO air strikes, the withdrawal from
Kosova of Serbian soldiers and police, the withdrawal from
Yugoslavia's borders of NATO forces, the safe return of all
refugees, free access to Kosova for humanitarian
organizations, the resumption of peace talks aimed at giving
Kosova substantial autonomy while respecting Yugoslavia's
territorial integrity, and the deployment of a UN peace-
keeping force with Belgrade's consent. FS

RUSSIA TO BOYCOTT NATO ANNIVERSARY. Foreign Minister Igor
Ivanov said that Russia will boycott NATO's 50th anniversary
celebrations and the summit focusing on the Kosova crisis in
Washington, ITAR-TASS reported on 21 April. He said that the
Russian boycott aims to put pressure on NATO to end its air
strikes. Belarus is also boycotting the meeting, but all
other 13 former Soviet republics have confirmed their
participation. Chernomyrdin has just returned from a tour of
the former Soviet republics of Georgia, Azerbaijan, and
Ukraine, where he tried to rally support for Russia's
position (see "RFE/RL Newsline," 21 April 1999). Meanwhile,
State Duma deputy speaker Sergei Baburin has proposed setting
up a special commission to compile data on alleged NATO war
crimes so that alliance commanders can be put on trial, AP
reported. FS

GOVERNMENT ANGERS METAL PRODUCERS BY IMPOSING NEW CUSTOMS
DUTY. The Russian government on 21 April approved the
introduction of a 5 percent export duty on some kinds of
ferrous metals and aluminum, ITAR-TASS reported. The duties
will remain in effect for six months. Russian metal producers
have responded to the new government action with anger and
frustration, condemning their chief lobbyist, the
International Union of Metallurgists, "Novye Izvestiya"
reported on 21 April. They claim that the new duty could
prove fatal to their industry, given that global metal prices
are already declining and approaching the cost of their
production in Russia. According to the resolution, the duty
was adopted to increase budget revenues and improve the
regulation of foreign economic activities. JAC

CHUKOTKA LEADERS FLOAT IDEA OF NUCLEAR POWER PLANT ON WATER.
Local authorities in the polar city of Pevek in the Chukotka
Autonomous Okrug have agreed to the construction of the
world's first 70 megawatt floating nuclear power plant in a
local harbor, according to "EWI Russian Regional Report" on
22 April. However, for construction to go ahead, approval of
the federal authorities is still needed. Residents are hoping
that the plant, which would be constructed in 2004-2006,
would help alleviate chronic fuel shortages during the
region's long harsh Arctic winter. JAC

TATAR NATIONALISTS ALARMED THAT YUGOSLAVIA MAY JOIN RUSSIA-
BELARUS UNION. The All-Tatar Public Center, which has an
estimated 50,000 members, has expressed concern that
Yugoslavia's accession to the Russia-Belarus Union will
create a "monstrous" formation that would embark on
"genocide, state terror, and other forms of violence" against
the non-Slav peoples of Russia, according to "Nezavisimaya
gazeta" on 21 April. The center calls on the leaders and
people of the national republics of the Russian Federation to
declare their independence from the impending "Union of
Three" and join an independent Eastern Union that would be
composed of all national republics and okrugs "from Siberia
to the Caucasus." Sheikh Ravil Gainutdin, the spiritual head
of Russia's Muslims, has also expressed his opposition to
Yugoslavia's joining the Russia-Belarus Union, the newspaper
noted. LF

CHECHNYA MARKS THIRD ANNIVERSARY OF DUDAEV'S DEATH. "Scores
of thousands" of people from Chechnya and neighboring
Dagestan and Ingushetia gathered on 21 April near the village
of Gekhi-chu, where Chechnya's first president Djokhar Dudaev
was killed by a remote-controlled missile three years ago,
Interfax reported. Addressing the mourners, current President
Aslan Maskhadov reaffirmed his commitment to Dudaev's
aspiration to create an independent Islamic state in
Chechnya. Maskhadov also expressed the hope that his planned
meeting with President Yeltsin will break the deadlocked
relations between Moscow and Grozny and serve as a guarantee
of future stability throughout the North Caucasus. He added
that Chechnya 'wants Russia to be a good reliable neighbor
and partner, not an eternal enemy." LF

TWO ARRESTED FOR ASSASSINATION ATTEMPT IN KARACHAEVO-
CHERKESSIA. Two men have been arrested by regional officials
of the FSB on suspicion of participating in the 13 April
grenade attack on Islam Burlakov, chairman of the Supreme
Court of the Republic of Karachaevo-Cherkessia, Caucasus
Press reported on 22 April. Burlakov was hospitalized with
serious injuries after that attack (see "RFE/RL Newsline," 15
April 1999). LF

TRANSCAUCASUS AND CENTRAL ASIA

KARABAKH CALLS ON AZERBAIJAN TO RESUME PEACE PROCESS. In a
statement issued on 20 April, the Foreign Ministry of the
unrecognized Nagorno-Karabakh Republic accused the
Azerbaijani leadership of ignoring the March appeal by the
OSCE Chairman-in- Office and the Minsk Group co-chairmen to
exercise restraint in their official statements so as not to
jeopardize efforts to resolve the conflict, Noyan Tapan
reported. The statement accuses Baku of rewriting Azerbaijani
history and propagating a hostile image of Armenians, which,
it noted, could have irreversible negative repercussions. The
statement calls on the Azerbaijani leadership to "stop the
propaganda of nationalism and xenophobia," embark on
confidence-building measures, and resume peace negotiations
on the basis of the most recent draft Minsk Group proposal.
LF

EMIR OF QATAR VISITS KAZAKHSTAN. Sheykh Hamad bin-Khalifa
ath-Thani met with President Nursultan Nazarbaev on his
arrival in Astana late on 21 April to discuss expanding
bilateral economic relations, RFE/RL's Astana bureau
reported. The presidential press service also quoted
Nazarbaev as saying that Kazakhstan wants to upgrade its
cooperation within the framework of the Organization of the
Islamic Conference. While the two sides affirmed that their
views on most urgent international and regional issues are
similar, the visit, which was originally scheduled for two
days, was curtailed, reportedly because of inclement weather
conditions. As a result, only two bilateral agreements were
signed, instead of the expected nine. LF

KYRGYZ PARLIAMENT APPROVES NEW PREMIER. After a lengthy and
heated debate on 21 April, parliament deputies voted to
approve the candidacy of Amangeldi Muraliev as prime
minister, RFE/RL's Bishkek bureau reported. Of the 61
deputies who attended the session, 37 voted in favor, two
against, and the remainder abstained. Deputies expressed
concern at the country's deteriorating economic situation and
tensions in relations with neighboring countries. They also
criticized Akaev's personnel policy. In response, Akaev
conceded that numerous unspecified mistakes have been made
but added that Kyrgyzstan "is not bringing up the rear" in
terms of its commitment to reform, according to Interfax.
Akaev said that a 10-year strategic development program will
soon be drafted with the help of international financial
organizations. LF

CZECH PREMIER VISITS UZBEKISTAN. Milos Zeman headed a Czech
government delegation that visited Uzbekistan on 20-21 April
to discuss expanding bilateral economic cooperation and
trade, ITAR-TASS reported. Trade turnover between the two
countries totaled $800 million last year. Zeman held talks
with President Islam Karimov and his Uzbek counterpart, Utkir
Sultanov, and signed a declaration on developing mutually
beneficial cooperation. He also opened a trade exhibition. LF

TURKMENISTAN, UKRAINE TRY TO RESOLVE GAS NON-PAYMENT
PROBLEMS. Turkmenistan's President Saparmurat Niyazov said on
21 April that Ukraine has not paid for supplies of Turkmen
gas since the beginning of 1999, Interfax reported. As a
result, Ukraine's gas debt to Turkmenistan has risen to $223
million, half of which is due in hard currency and half in
barter goods. Niyazov said the Ukrainian government has
undertaken to ensure the shipment of barter goods owed. On 15
April, Ukraine's First Deputy Prime Minister Vladimir
Kuratchenko announced that the Ukrainian government will halt
the import of Turkmen natural gas by the state company
Neftegaz Ukrainy, which is unable to pay for those imports.
Instead, it will hand over the right to engage in such trade
to commercial companies, ITAR-TASS reported. LF

END NOTE

BAKU-CEYHAN PIPELINE PACT: OBSTACLES REMAIN

by Michael Lelyveld

	A protocol signed last week by Azerbaijan and Turkey on
building the Baku-Ceyhan pipeline is both more and less than
meets the eye.
	While the agreement was hailed by both countries, the
preliminary pact, known as the Istanbul Protocol, is just one
of many steps that must be taken before the Caspian Sea oil
line to the Mediterranean can proceed beyond the field of
dreams.
	At its most obvious level, the accord for the U.S.-
backed project is little more than an agreement to conclude
another agreement, perhaps in three months' time. Officials
feared that the 18 April general elections in Turkey could
have delayed talks on Baku-Ceyhan by six months without a
pact to give negotiations a head-start.
	For now, Azerbaijan and Turkey have at least averted the
criticism that no progress has been made on the plan for a
main export pipeline, which many regard as too costly, too
risky, and too political to succeed. The pipeline policy
still has many obstacles to overcome.
	The Istanbul Protocol must be accompanied by a host
country agreement, an inter-government agreement, a
government guarantee agreement, and a turnkey agreement
before the 1,730-kilometer pipeline to Western markets gets
off the drawing boards, industry sources say.
	There have already been countless protocols aimed at
advancing the oil export plan supported by the administration
of U.S. President Bill Clinton, as well as the parallel
project for a trans-Caspian gas line.
	But what may make the latest agreement different is the
growing commitment to the idea that Turkey must provide a
guarantee against cost overruns on the Baku-Ceyhan project.
	Ankara has argued for more than a year that industry
estimates are simply wrong and that the line from Azerbaijan
through Georgia and Turkey will cost no more than $2.4
billion. Oil companies are concerned that it will cost $4
billion dollars or more.
	A government guarantee would put Turkey's assertions to
the test and take the burden of being wrong off the
Azerbaijan International Operating Company (AIOC), the only
international consortium currently exporting Caspian oil from
Azerbaijan. That consortium is reluctant to make a firm
commitment. The U.S. administration has been pressing the
Turkish government for such a guarantee for the past six
months as a way to break the impasse between the governments
and the oil companies.
	But if the concept of a guarantee is approved, industry
officials have at least two major questions. The first is how
much it will cover. There is bound to be bargaining over
whether Turkey will hold itself accountable for costs only up
to $3 billion or $4 billion, or whether it will pay all
excess costs, no matter how high they might go.
	The question is not trivial in light of AIOC's
experience with the early oil line between Baku and the
Georgian port of Supsa, which was inaugurated on 17 April.
Original project estimates, variously reported as $315
million to $325 million, were grossly exceeded, with actual
costs reported at between $560 million and $590 million.
	Even using the most conservative comparison, the overrun
on Baku-Supsa amounted to more than 72 percent. If the same
formula were applied to the Baku-Ceyhan project, final costs
would total more than $4.1 billion.
	The second question is whether Turkey can legally be
held liable for overruns in construction costs that do not
take place on its own territory. The parties are likely to
take great care in dealing with such questions. AIOC and the
State Oil Company of the Azerbaijani Republic have argued for
months over who should pay for the overruns on the Baku-Supsa
line.
	But assuming that such problems are eventually settled,
the oil companies will have pulled off a remarkable coup. The
government cost guarantee would amount to little more than a
subsidy to private industry, greatly reducing its risk.
	Similarly, the U.S. government's commitment to use
financing from the Export-Import Bank and other agencies for
Baku-Ceyhan makes the project more attractive, although it
undercuts earlier arguments that the line must be
commercially viable. While oil companies have stuck to their
insistence over the past four years that the pipeline must be
a sound investment for them, governments have been gradually
drawn in to tip the balance and make the deal work.
	When and if a comprehensive deal on cost overruns is
signed, the question of commercial viability will largely
cease to be a problem for the oil companies. Governments will
instead be taking the risk, in exchange for the benefits of
being able to direct the flow of oil.
	Before such a deal is struck, there may be a renewed
debate about the nature and the value of such benefits. The
reasons for controlling Caspian export routes may be seen as
economic, strategic, or simply political.
	The questions about the Caspian are the same ones that
have been asked since the start of offshore development. But
once governments assume business risk by devoting their
resources, the public may inquire more closely about the
benefits, and it may demand more precise answers this time.

The author is a senior correspondent for the "Journal of
Commerce."
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                     All rights reserved.
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