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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 3, No. 85, Part I, 3 May 1999


___________________________________________________________
RFE/RL NEWSLINE Vol. 3, No. 85, Part I, 3 May 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

* BOMBS PLANTED NEAR TWO SYNAGOGUES

* COMMUNISTS HINT AT SHOWDOWN OVER 'IMF BILLS'

* VERDICT ON KYRGYZ NEWSPAPER UPHELD

End Note: AZERBAIJANI ECONOMY STILL GROWING, BUT PROBLEMS
ACCUMULATE
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RUSSIA

BOMBS PLANTED NEAR TWO SYNAGOGUES. Two bombs exploded near
two synagogues in Moscow on 1 May. Neither synagogue was
damaged and no injuries were sustained, Interfax reported.
Russia's Chief Rabbi, Adolf Shaevich, suggested that the
explosions were linked with the recent court ban on the
Moscow branch of Russian National Unity (RNE). Shaevich
added that he does not think the incidents had anything to
do with the approaching Jewish holiday of Lag Ba-Omar,
although a bomb exploded near one of the synagogues last
year on that day, causing some damage. Interior Minister
Sergei Stepashin also suggested that the bombs were planted
by neo-Nazi groups. He told NTV on 2 May that for "the past
two or three months, all authorities and the government in
Moscow have been actively working to suppress the RNE and
other pro-Nazi groups" (see "RFE/RL Newsline," 20 April
1999). He also announced that his ministry has formed a
task force to investigate the incidents. JAC

COMMUNISTS HINT AT SHOWDOWN OVER 'IMF BILLS'... The State
Duma's first reading of legislation drafted to meet the
IMF's conditions for new loans will take place after 20
May, Duma Budget Committee Chairman Aleksandr Zhukov told
reporters on 30 April. Zhukov based his prediction on the
assumption that the cabinet will submit the bills in early
May. The committee will then need at least 10 days to
discuss the legislation, he noted. Leader of the Duma's
largest faction, Communist Party head Gennadii Zyuganov,
hinted that he is not completely in favor of the bills,
saying that the legislation would double oil and gasoline
prices, make food at least 40 percent more expensive, and
thrust another 10 million people below the poverty line.
First Deputy Prime Minister Yurii Maslyukov, on the other
hand, said the bills contain "nothing surprising" and "will
not turn us into slaves of the IMF." JAC

...AND RECALL OF MASLYUKOV. Our Home Is Russia faction
leader Vladimir Ryzhkov told Interfax on 30 May that
Maslyukov "finds himself in a terrible situation," since as
a Communist, he will be put forward to push the bills
through the Duma. According to Ryzhkov, Valentin Kuptsov,
deputy chairman of the Communist faction, recently refused
to rule out that Maslyukov might be recalled from the
cabinet, which Ryzhkov called an indication that the
Communists are considering the possibility of breaking with
the cabinet. JAC

RUSSIA WARNS OF FURTHER DEFAULT ON SOVIET-ERA DEBT. Russian
Finance Minister Mikhail Zadornov told reporters on 30
April that Russia might miss payments in May and June on
Soviet-era debt, Interfax reported. Earlier, the Finance
Ministry had announced that Russia is unlikely to be able
to make a $1.2 billion payment on Ministry of Finance bonds
maturing on 14 May (see "RFE/RL Newsline," 21 April 1999).
These particular bonds are debt incurred by the Soviet
Union. Vneshekonombank Chairman Andrei Kostin said on 27
April that overdue payments on Soviet-era debt to the
London and Paris Clubs total $2 billion. JAC

CHERNOMYRDIN CONTINUES SHUTTLE DIPLOMACY. President Boris
Yeltsin's envoy to Yugoslavia Viktor Chernomyrdin said in
Moscow on 1 May that Yugoslav President Slobodan Milosevic
agreed in Belgrade the previous day to an unspecified
international peace-keeping force for Kosova. Chernomyrdin
told ITAR-TASS that "Belgrade shows concrete and constructive
intentions, which can become a basis for further progress."
Meanwhile, Yeltsin met with six senior advisers on 2 May to
discuss the Kosova conflict and talked on the telephone with
U.S. President Bill Clinton for 15 minutes. Chernomyrdin left
the next day for Washington, where he will hand over a
personal message from Yeltsin to Clinton, AP reported.
Chernomyrdin said that the message outlines "concrete
suggestions for solving the conflict," but he gave no
details. Chernomyrdin also plans to meet with UN Secretary-
General Kofi Annan and Vice President Al Gore. He added that
another visit to Belgrade will "depend on the results of our
negotiations." FS

HOLIDAY USED FOR ANTI-NATO PROTESTS. Trade union members,
Communists, nationalists and other groups organized street
rallies on the 1 May holiday across Russia. An estimated
35,000 people gathered in Moscow, 12,000 in St. Petersburg,
19,000 in Yakutia, 6,000 in Chita and 2,000 in Saransk,
ITAR-TASS and Interfax-Eurasia reported. A new theme
appeared to commemorate worker solidarity: anti-NATO
condemnations. Speaking at one rally, Moscow Mayor Yurii
Luzhkov condemned "NATO's genocide against the people of
Yugoslavia." Communist leader Zyuganov, addressing another
demonstration, said that "the U.S. sees a united Europe as
a rival and that's why it is waging this war in Central
Europe." JAC

MOSCOW TO TRANSFER FUNDS FOR STRIKING METRO WORKERS. The
federal government agreed on 30 April to transfer 19
million rubles ($790,000) to Sverdlovskmetrostroi, the
construction company for the rapid transit system in
Ekaterinburg, whose workers have staged various strikes for
a number of months. According to ITAR-TASS, Finance
Minister Zadornov described the transfer as "merely a
gesture of the government's good will toward the municipal
government in Ekaterinburg, for whom the metro's
construction is a mayor expenditure." The previous day,
Interfax-Eurasia reported that 48 workers have stepped up
their hunger strike by refusing not only food but also
water. At the same time, 157 of their striking co-workers
were continuing with the more "usual" form of hunger
strike. "Izvestiya" reported earlier that the total debt to
the metro workers is 34 million rubles, which is the
equivalent of 11 months of arrears (see "RFE/RL Russian
Federation Report," 31 March 1999). JAC

FARMERS SLAUGHERING LIVESTOCK TO RAISE FUNDS FOR FUEL.
Anonymous specialists at the Ministry of Agriculture told
ITAR-TASS on 30 April that a number of farmers are being
forced to slaughter cattle so that they can raise the money
to buy fuel to run equipment for spring sowing. The
agriculture officials blamed the Finance Ministry for not
transferring funds in time for the spring sowing season.
According to the agency, the governor of Nizhnii Novgorod
Oblast was forced to outlaw the slaughter of cattle. JAC

BEREZOVSKII FREE TO TRAVEL. The Office of Russia's
Prosecutor-General has lifted the travel ban on business
tycoon Boris Berezovskii, who is being charged with money
laundering and "illegal entrepreneurship," Interfax reported
on 30 April. Berezovskii was earlier ordered not to leave
Moscow pending the conclusion of the investigation of the
case against him. On 1 May, Berezovskii told Interfax he was
leaving for France but would return to Moscow after the May
holidays. JAC

TATARSTAN, IRAQ DISCUSS OIL INDUSTRY COOPERATION. Meeting in
Moscow on 29 April, Tatarstan's Prime Minister Rustan
Minnikhanov and Iraqi Oil Minister Mukhammad Rashid discussed
the possibility of Tatneft's participation in the consortium
of Russian oil companies being formed to exploit Iraq's West
Qurna oil field, RFE/RL's Kazan bureau reported on 30 April
(see "RFE/RL Newsline," 28 April 1999). Minnikhanov said
Tatarstan could provide Iraq with drilling equipment and
spare parts. Rashid expressed an interest in purchasing KamAZ
trucks and in Tatarstan's aviation and petrochemical
industries. LF

TRANSCAUCASUS AND CENTRAL ASIA

RUSSIA MAY CONSTRUCT AIRCRAFT IN ARMENIA. Hovannes Ohanian,
an Armenian senior executive of Russia's Sukhoi Production
Company, said in Yerevan on 29 April that the company may
begin manufacturing light sport aircraft in Armenia, provided
a tax exemption agreement is reached with the Armenian
government, RFE/RL's Yerevan bureau reported. Ohanian said
Sukhoi wants the present, three-year exemption from profit
tax for foreign companies extended to five years. He said
Sukhoi would then invest some $7 million in Armenian
production facilities, enabling it to produce 40 planes in
2000 and 80 the following year. LF

AZERBAIJANI OPPOSITION CRITICIZES DRAFT BILL ON MUNICIPAL
ELECTIONS. The 17 opposition parliamentary deputies aligned
in the Democratic Bloc issued a statement on 30 April
protesting the refusal of the parliamentary majority to
discuss a draft bill on municipal elections prepared by three
opposition groups, Turan reported. The bloc argued that the
parliament's decision to proceed with discussion of its
alternative draft law in the absence of opposition deputies
is a violation of parliamentary procedure. The Democratic
Bloc announced a boycott of parliamentary sessions last month
to demand a debate on the performance of the legislature and
its speaker (see "RFE/RL Newsline," 26 April 1999). Lawyer
Vidadi Makhmudov told Turan on 1 May that the parliament's
draft bill on municipal elections is "unprogressive," as it
does not provide for the allocation of seats under the
proportional system or envisage municipal elections in the
capital, Baku. LF

GEORGIAN SUPREME COURT REJECTS CLEMENCY FOR IMPRISONED
WARLORD. The Georgian Supreme Court has a rejected an appeal
by the lawyer of Mkhedrioni leader Djaba Ioseliani to review
the latter's 11-year sentence, Caucasus Press reported on 1
May. Ioseliani was sentenced in November 1998 on charges of
attempting to assassinate Georgian head of state Eduard
Shevardnadze in August 1995 as well as of treason and robbery
(see "RFE/RL Newsline," 11 November 1998). Lodging the appeal
earlier this year, Gabunia argued that Ioseliani's trial was
illegal, since at the time of his arrest in November 1995 he
was a parliamentary deputy and therefore immune from
prosecution. He said at that time that if the Supreme Court
rejected his plea, he would appeal to the International Human
Rights court in Strasbourg (see "RFE/RL Newsline," 12
February 1999). Ioseliani has been hospitalized with
tuberculosis of the bone marrow, according to "Rezonansi" of
3 May. LF

WEST GEORGIAN TOWN COUNCIL RENAMES MAIN BOULEVARD AFTER
GAMSAKHURDIA. The municipal council in Zugdidi, the capital
of the late Zviad Gamsakhurdia's home region of Mingrelia,
has renamed the town's central street after the deceased
president, Caucasus Press reported on 1 May. The council also
presented a house in the town to Gamsakhurdia's widow, Manana
Archvadze-Gamsakhurdia. LF

KAZAKH JOURNALIST SENT TO PSYCHATIRIC HOSPITAL. On arriving
at Almaty main station from Astana last week, Armial
Tasymbekov was arrested by National Security Committee
officials and taken to a psychiatric clinic, RFE/RL's Almaty
bureau reported on 30 April. Tasymbekov is suspected of
involvement in daubing slogans on buildings and fences in
Astana that denounced President Nursultan Nazarbaev and
lauded former Premier Akezhan Kazhegeldin (see "RFE/RL
Newsline," 31 March and 21 April 1999). LF

KAZAKHSTAN TO RESTRICT FREE HIGHER EDUCATION. Beginning this
year, university students in Kazakhstan will be required to
pay fees ranging from $700-$1,000, ITAR-TASS reported on 2
May. Young people from low-income families will have access
to interest-free loans to finance their studies, while some
19,000 exceptionally gifted high-school graduates will retain
the right to continue their education free of charge. LF

VERDICT ON KYRGYZ NEWSPAPER UPHELD. The Bishkek City Court on
1 May approved the fines that a district court handed down
one month earlier on the independent weekly "Res Publika,"
RFE/RL's Bishkek bureau reported. The court had fined the
paper 200,000 som ($6,670) for insulting the honor and
dignity of Amanbek Karypkulov, president of Kyrgyzstan's
National Television and Radio Corporation (see "RFE/RL
Newsline," 1 April 1999). On 12 January, the newspaper
published an open letter from 20 employees at the corporation
to President Askar Akaev, Prime Minister Jumabek Ibraimov,
and the speakers of both chambers of the parliament
protesting that Karypkulov, in his capacity as ideological
secretary of the Kirghiz SSR Communist Party in the early
1980s, had repressed media freedom and continues to do so
now. The newspaper's editor, Yuri Maksimov, is to appeal to
the country's Supreme Court. LF

KYRGYZSTAN'S PARLIAMENT PASSES ELECTORAL CODE. The
Legislative Assembly--the lower chamber of the parliament--
passed the new election code in the second reading on 29
April, RFE/RL's Bishkek bureau reported. The code provides
for 15 of the 60 seats in the new parliament to be allocated
to political parties under the proportional system. The
parliament had earlier rejected that provision. Only those
political parties that registered with the Ministry of
Justice one year before the election date (23 March 2000) are
eligible to contest those seats. LF

ABDUCTORS RELEASE THREE TAJIK POLICE OFFICERS. "As a gesture
of unilateral good will in the name of peace," opposition
field commander Mansur Muakalov released on 1 May three of
the six police officers his subordinates had abducted two
days earlier, AP reported (see "RFE/RL Newsline," 29 and 30
April, 1999). But Muakalov said he will continue to hold the
other three men until the Tajik authorities comply with his
demand for the release of five opposition fighters held on
murder charges. LF

TURKMEN PRESIDENT TO YIELD SOME POWERS TO PARLIAMENT.
Saparmurat Niyazov told the parliament on 30 April that he
will transfer some of his oversight powers to the parliament,
RFE/RL's Turkmen Service reported. A special commission,
chaired by the president, will formulate the necessary
constitutional amendments, which must be endorsed by the
People's Council at its next meeting in December, according
to Interfax. Also on 30 April, the parliament passed
legislation on the conduct of the parliamentary elections
scheduled for 12 December, which for the first time will be
held on an alternative basis. LF

END NOTE

AZERBAIJANI ECONOMY STILL GROWING, BUT PROBLEMS ACCUMULATE

By Michael Wyzan

	To all appearances, Azerbaijan seemed to feel the
effects of the decline in world oil prices and the Russian
crisis relatively little last year. However, there are a
number of indicators of economic problems, especially in the
external sector. Foreign investment and oil exports are
declining, and there is a net outflow of foreign businessmen.
	The country's 10 percent GDP growth in 1998 was the
highest in the CIS; indeed, such growth accelerated during
the fourth quarter to 13.1 percent, led by a booming
construction industry and, to a lesser extent, the transport
and communications sectors. Industry and agriculture grew
more slowly, however. The 2.2 percent growth in industrial
production was the highest since independence, but this
conceals the fact that non-oil industrial production fell
last year by 4.1 percent.
	Developments in the Azerbaijani oil sector were both
positive and negative. Crude oil production reached 11.4
million metric tons in 1998, up from 9.0 million tons the
previous year and the highest since 1991, as new offshore
wells of the Azerbaijan International Operating Company
(AIOC) came on line. On the other hand, the price received
for that oil fell by 18.1 percent.
	Largely as a result of that decline, exports during
January-September 1998 fell by 11 percent relative to the
same period in 1997, with oil exports down by 36 percent and
those of semi-processed cotton (the second most important
export good) down by 67 percent. From January to September,
imports were up by 22 percent and the trade deficit reached
$740 million, compared with $448 million during the same
period in 1997.
	As expected in a country experiencing a major inflow of
foreign direct investment (FDI) into its oil sector, while
new oil production and exports are slow to appear, Azerbaijan
has had enormous current account deficits. In 1998, the
shortfall was about 35 percent of GDP, a figure that the IMF
projects will increase in the coming years.
	With investment in the oil sector leveling off, FDI in
January-September 1998--of which the oil sector accounted for
81 percent--decreased to $674 million from $724 million
during the same period in 1997. However, oil bonuses during
January-September 1998 were $73 million, up from $64 million
in 1997 as a whole.
	Another area where problems have arisen owing to the
decline in oil export revenues is the state budget: the
general government deficit was 4.3 percent of GDP in 1998, up
from 3.6 percent the year before. Oil-related revenue was
47.5 percent of total budget revenue in 1997 but fell to 31.7
percent in January-June 1998.
	Overall, the Azerbaijani economy seems to have suffered
less contagion from Russia's economic crisis than other CIS
lands. The manat closed 1998 at 3,886 to the dollar, almost
exactly where it was at the end of 1997 (and down from 4,440
at the close of 1995). Not surprisingly, in the face of such
stability, consumer prices declined by 3.5 percent last year
(December-to-December). However, the standard of living has
benefited little from such stability, as average monthly
wages--both in dollars and in constant manats--grew more
slowly last year than in 1997. The average dollar wage was
only $44.8 in the final quarter of 1998.
	This year's prognoses suggest that economic performance
will be somewhat weaker than in 1998, with the government
program envisioning 7 percent GDP growth and average annual
inflation of 4 percent. Among the worrying indicators are
cutbacks by international oil consortia operating in the
country. The AIOC, for example, announced in February that it
would cut costs by 20 percent and lay off 25-30 expatriate
staff. The numbers of foreigners working in Baku is
declining, having peaked at 6,000.
	This outflow reflects more than the downturn in the oil
sector: it was reported in late March that 110 Turkish
companies left Azerbaijan last year, pointing to
arbitrariness and corruption among government officials as
well as an unclear and frequently changing tax policy. In
another harbinger of a downturn, the boom in housing
construction has ended, with apartment prices falling for the
first time in recent years.
	In granting the country a $112 million loan in late
January ($79 million of which was a special loan to cope with
low oil prices and the Russian financial crisis), the IMF
pointed to the need to strengthen and streamline the public
sector, restructure the banks, improve the privatization
process, and reform public enterprises. This is a standard
set of desirable reforms for transition countries.
	However, world experience suggests that countries
specializing in oil are particularly likely to be burdened
with a corrupt and inefficient government that is easily
swayed by interest groups. Thus, Azerbaijan's task is
especially difficult, suggesting that high priority must be
given to economic diversification.

	The author is a research scholar at the International
Institute for Applied Systems Analysis in Laxenburg, Austria.

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