RFE/RL NEWSLINE Vol. 3, No. 97, Part I, 19 May 1999

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RFE/RL NEWSLINE Vol. 3, No. 97, Part I, 19 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

* STEPASHIN SAILS THROUGH CONFIRMATION PROCESS

* ANOTHER MIGHTY BANK FALLS

* AZERBAIJAN ACCUSES CHINA OF SELLING ROCKETS TO ARMENIA
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RUSSIA

STEPASHIN SAILS THROUGH CONFIRMATION PROCESS. The State Duma
on 19 May confirmed acting Prime Minister Sergei Stepashin's
candidacy for that post, with 298 votes in favor, 55 against,
and 14 abstentions, RFE/RL's Moscow bureau reported. Our Home
Is Russia, Russian Regions, and the Liberal Democratic Party
factions solidly supported Stepashin's nomination, and the
bulk of the Agrarian and People's Power faction also voted in
his favor. Yabloko members continued their practice of voting
independently: 24 cast their ballots in favor of Stepashin
and 12 against. Before the vote, Yabloko leader Grigorii
Yavlinskii announced that the group cannot give Stepashin its
full support since he played a direct role in the war in
Chechnya. In his remarks to the Duma, Stepashin emphasized
the importance of forming a government of professionals,
independent of party affiliation. JAC

ANOTHER MIGHTY BANK FALLS... The Central Bank on 18 May
revoked the licenses of 12 failing banks, including Menatep,
which before last August's devaluation of the ruble was the
country's seventh largest in terms of assets. Other banks
stripped of their licenses were Unikombank, Unibest,
Derzhavnii, Interbiznesbank, Kontakt, MV, Slaviya, ELKOM-
Bank, Krasnodarbank, Kurgansotsbank, and Nizhnevartovsk
Commercial Innovation Bank, Interfax reported. The Central
Bank explained the move by citing the banks' failure to meet
its requirements, comply with federal laws, and make payments
to creditors. Russian Television reported that Menatep's
largest investors had already transferred their main assets
to Menatep St. Petersburg. Two days earlier, then acting
Prime Minister Stepashin had said that the licenses of six
major Russian banks would be revoked in connection with the
banks' participation in the illegal export of capital abroad.
JAC

...WHILE ANOTHER 30 FACE EXTINCTION? "Moskovskii
komsomolets" reported on 19 May that many banks have been
engaged in "stealing taxes" and that more than 20 billion
rubles ($805 million) in tax money is stuck in "problem
banks." Dmitrii Ignatiev, director of a department
overseeing tax compliance among financial and credit
organizations at the Tax Ministry, told the newspaper that
the ministry might revoke the licenses of 30 banks for the
systematic violation of tax laws. JAC

SIDANKO DECLARED BANKRUPT. A Moscow court on 18 May
declared Sidanko, Russia's sixth-largest oil company,
bankrupt, ITAR-TASS reported. A 12-month external
administrator will be appointed at the court's next hearing
of the case, scheduled for 23 July, according to the
agency. Spokesmen for Sidanko and BP Amoco, one of the
world's largest oil companies, which controls a 20 percent
share in Sidanko, both expressed shock at the court's
decision, "The Moscow Times" reported on 19 May. Analysts
said the court's decision was a blow for Sidanko's
creditors and for Russia's hopes to attract foreign
investment. According to Jim Henderson, oil analyst at MFK
Renaissance, the court ruled against a plan that Sidanko's
creditors supported, Reuters reported. He added that "the
message is that buying an interest in a Russian oil company
is not a good idea." JAC

CHERNOMYRDIN, TALBOTT, AHTISAARI LOCKED IN 'TOUGH
NEGOTIATIONS.' Russian special envoy to Yugoslavia Viktor
Chernomyrdin, U.S. Deputy Secretary of State Strobe Talbott,
and Finnish President Martti Ahtisaari met in Helsinki on 19
May to resume negotiations on Kosova. Seven hours of
discussions there the previous day produced no breakthrough.
Talbott told Reuters that "these are very tough issues, but
serious people are working on them." He did not give details
but added that "there is enough purpose in continuing this
effort to go on talking." Reuters noted that the three are
trying to agree on enough details about the composition of
and control over a possible international peace-keeping force
to send Yugoslav President Slobodan Milosevic a joint
message. They also hope to pave the way for a UN Security
Council resolution on Kosova. Meanwhile in Bonn, high-ranking
Foreign Ministry officials from the G-8 countries continued
working on a draft UN resolution, the "Frankfurter Allgemeine
Zeitung" reported. FS

DID NATO FORCES OBSTRUCT RUSSIAN VERIFICATION MISSION IN
MACEDONIA? An unnamed German government official told the
"Frankfurter Allgemeine Zeitung" of 19 May that NATO forces
and the Macedonian government failed to fulfill its
obligations deriving from a 1994 OSCE agreement on
notification and verification of military activities.
According to that agreement, OSCE member states are obliged
to report military activities involving more than 9,000
soldiers to all other members 42 days in advance. As a OSCE
member state, Macedonia was obliged to report the deployment
of NATO troops on its territory but failed to do so until
after that number had been exceeded in late April. Russia
requested an inspection in early May. The official also said
that U.S. commanders failed either to brief the Russian
verifiers or to provide a helicopter for verification from
the air. He added that NATO Commander Wesley Clark argued
that verification poses threats to the troops' security. The
German official dismissed Clark's concerns, saying that NATO
operations in Macedonia, unlike in Albania, are purely
humanitarian in nature. FS

STOCK MARKET, RUBLE SHOW SIGNS OF QUICK RECOVERY FROM
GOVERNMENT CRISIS. Russia's benchmark stock index, RTS,
rose 7.7 percent on 18 May from the previous day, after
serious slippage following Yevgenii Primakov's ouster as
prime minister. Shares in Surgutneftegaz soared 17.3
percent, while Mosenergo and Rostelekom gained 6.5 percent
and 5.3 percent respectively, AFP reported. The ruble,
meanwhile, gained 4 kopeks against the dollar in morning
trading on 19 May, rising to 24.75 rubles to $1, according
to Interfax. On 17 May, the ruble rose 7 kopeks on the
morning exchange. In both markets, traders attributed the
rises to anticipation that Stepashin would be confirmed as
premier. JAC

GOOD NEWS ON ECONOMIC FRONT? Real incomes rose in March by
4.7 percent compared with the previous month, while
industrial production inched up 1.5 percent in April compared
with last year, "Finansovaya Rossiya" and ITAR-TASS reported.
However, real incomes in the first quarter slumped 28.3
percent, compared with same period last year. "Rossiiskaya
gazeta" reported on 19 May that economists are divided over
whether gains in output recorded in some industries are the
first signs of a small economic recovery or are accidental.
Acting Deputy Prime Minister Vladimir Bulgak took the
optimistic view, telling the newspaper that the output growth
of certain industries is occurring not just in monetary terms
but in "physical terms" as well. On 18 May, the OECD
concluded in a recent report that the situation of the
economy "remains quite difficult and potentially unstable,"
but it added that the overall outlook is "perhaps a bit more
encouraging than in late 1998." JAC

YELTSIN REPORTS FOR WORK. Russian President Boris Yeltsin
showed up at the Kremlin on 19 May, according to the
presidential press service. Yeltsin's appearance follows a
spate of stories, sourced from the Spanish embassy in Moscow,
that Yeltsin cancelled a meeting with Spanish Prime Minister
Jose Maria Aznar because of a case of severe bronchitis (see
"RFE/RL Newsline," 18 May 1999). JAC

RUSSIAN COMPUTERS NOT READY FOR MILLENIUM. Acting Deputy
Prime Minister Bulgak told government officials on 18 May
that some essential Russian computer networks may begin to
experience failures as early as 9 September unless resolute
measures are taken to prepare for the so-called millennium
computer bug problem, "RIA-Novosti" reported. According to
the agency, Bulgak accused the Economics Ministry of the
worst performance among all government agencies in this
regard. He pointed to the ministry's inadequate efforts to
prepare industrial enterprises. Other agencies singled out
for censure were the Federal Energy Commission and the
State Committees for Cartography and Environmental
Protection. JAC

JUDICIAL APPOINTMENT CONFIRMED. The Federation Council on
18 May confirmed the appointment of Gennadii Zhilin as a
judge at the Constitution Court, ITAR-TASS reported. Zhilin
formerly served at the Russian Supreme Court. JAC

REPORTER WORKING VERY CLOSELY WITH INTERIOR MINISTRY.
Interior Ministry officials on 18 May revealed that they have
furnished Aleksandr Khinshtein, a journalist for "Moskovskii
komsomolets," with an official police identification card,
"The Moscow Times" reported on 19 May. Khinshtein is perhaps
best known for articles that led to criminal investigations
into business magnate Boris Berezovskii's alleged money-
laundering at Aeroflot and into electronic eavesdropping on
Boris Yeltsin and family. Khinshtein was charged with showing
false documents to police on 17 May when he was stopped by
police after going through a red light and revealed his card
identifying him as a police major. "Kommersant-Daily" the
next day cited an anonymous source at the Interior Ministry
as accusing Khinshtein of violating journalistic ethics by
combining his activities as a journalist and an agent.
Khinshtein's newspaper, for its part, accused various unnamed
ministry officials with conspiring against both the reporter
and Prime Minister Stepashin, who is also acting interior
minister. JAC

STEPASHIN MEDIATES BETWEEN RIVAL ELECTION CANDIDATES. At a
meeting with then acting Prime Minister Stepashin in Moscow
on 18 May the two rival candidates for the post of president
of the Republic of Karachaevo-Cherkessia agreed to refrain
from organizing public demonstrations and calling for the
revision of the region's borders, Interfax and Caucasus Press
reported. A delegation from the Russian Central Electoral
Commission will be sent to Karachaevo-Cherkessia to clarify
allegations by defeated candidate Stanislav Derev that
supporters of retired army General Vladimir Semenov rigged
the outcome of the poll. According to preliminary results,
Semenov polled 75-80 percent of the vote and Derev 20
percent. Also on 18 May, President Yeltsin appointed Deputy
Interior Minister Ivan Golubev his acting plenipotentiary in
the republic. LF

TRANSCAUCASUS AND CENTRAL ASIA

GEORGIAN PRESIDENT SAYS NATO MEMBERSHIP UNLIKELY BEFORE 2005.
Speaking on NTV's "Man of the Day" program on 18 May, Eduard
Shevardnadze predicted that Georgia will not join NATO while
he is president, even if he is re-elected next year for a
second five-year term, Caucasus Press reported. Shevardnadze
admitted that Georgia is currently incapable of meeting
membership requirements. Reuters on 18 May quoted a Georgian
Defense Ministry spokesman as saying that for financial
reasons, Defense Minister Davit Tevzadze has ordered the
cancellation of the planned 26 May military parade to mark
the 81st anniversary of Georgia's independence. The spokesman
said the ministry is so short of funds it cannot even buy
gasoline for its fleet of cars. LF

GEORGIAN PARLIAMENTARY SPEAKER REJECTS ADJAR LEADER'S
CHALLENGE. Zurab Zhvania has turned down a 17 May invitation
by Adjar Supreme Council chairman Aslan Abashidze to take
part in a televised debate, Caucasus Press reported on 19
May, citing "Dilis gazeti." A colleague of Abashidze's had
accused Zhvania in 1997 of planning Abashidze's
assassination, a charge that Zhvania denied (see "RFE/RL
Newsline," 21 and 22 October 1997 ). At the same press
conference on 17 May, Abashidze accused the central Georgian
leadership of incompetence and called on its members to
resign, according to "Rezonansi" on 18 May. He also
criticized as undemocratic amendments to the existing
election legislation drafted by Zhvania's Union of Citizens
of Georgia. LF

RUSSIA TO PROPOSE NEW ABKHAZ PEACE PLAN. Lev Mironov, who is
the Russian Foreign Ministry's envoy for the Abkhaz conflict,
told Caucasus Press on 18 May that as soon as the new Russian
government has been formed, Moscow will advance a new
initiative for kick-starting the deadlocked negotiations on a
settlement of that conflict. Mironov accused both Tbilisi and
Sukhumi of attaching greater importance to "upholding
political prestige" than to seeking a compromise that would
expedite the repatriation to Abkhazia of Georgian displaced
persons. LF

AZERBAIJAN ACCUSES CHINA OF SELLING ROCKETS TO ARMENIA. State
foreign policy adviser Vafa Guluzade said in Baku on 18 May
that Azerbaijan has formally protested Armenia's acquisition
of eight Chinese Typhoon multiple rocket systems, AFP and
Turan reported. He added that he does not believe the
explanation of the Chinese ambassador in Baku, who said that
Armenia bought the weapons from an unnamed foreign company
involved in trading with China without the involvement of the
Chinese authorities. Guluzade said the sale was agreed on
last October when Armenian Defense Minister Vazgen Sargsian
and his Russian counterpart, Igor Sergeev, visited Beijing.
He accused Beijing of aspiring to prevent the export of
Caspian oil via Azerbaijan. (Kazakhstan has signed s
preliminary agreement with China on building an export
pipeline.) Arguing that the sale is a violation of
international norms and agreements, Guluzade demanded that
China ask Yerevan to return the weapons. LF

KAZAKHSTAN AGAIN CUTS OFF GAS SUPPLIES TO KYRGYZSTAN.
Kazakhstan's Intergaz company on 18 May cut gas supplies to
northern Kyrgyzstan, RFE/RL's Bishkek bureau reported,
quoting the deputy director-general of the Kyrgyzgas state
company. Toktosun Abduvaliev said his company owes Intergaz
some $2.2 million for supplies received in 1997-1998. LF

IMF, KYRGYZ GOVERNMENT REACH AGREEMENT. The Kyrgyz government
has agreed to IMF conditions for resumption of financing
under a three-year Economic Structural Adjustment Facility
(ESAF-2) program, Interfax reported on 18 May. Harry Trines,
head of the IMF mission in Bishkek, said that over the next
two years, Kyrgyzstan must implement tough monetary and
financial policies, keep inflation below 20 percent in 1999,
and increase budget revenues while cutting expenditures. The
IMF initially allocated $88 million for the three-year
program, of which the first $41 million was disbursed in
1998. It increased the total sum to $120 million last year.
LF

TAJIK PRESIDENT PLEDGES TO EXPEDITE PARLIAMENTARY ELECTIONS.
Presidential spokesman Zafar Saidov told ITAR-TASS on 18 May
that President Imomali Rakhmonov intends to expedite the
drafting of amendments to the country's constitution that
will pave the way for parliamentary elections early next
year. Saidov added that presidential elections will take
place by 6 November 1999, the day when Rakhmonov's term
expires. LF

TURKMEN PRESIDENT VISITS IRAN. At the invitation of Iranian
President Mohammad Kharrazi, Saparmurat Niyazov paid a one-
day visit to the Iranian province of Golestan on 17 May to
attend the ceremonial inauguration of the mausoleum of the
18th-century poet and philosopher Makhtum Kuli, RFE/RL's
Turkmen Service reported. LF

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