RFE/RL NEWSLINE Vol. 3, No. 140, Part I, 21 July 1999

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RFE/RL NEWSLINE Vol. 3, No. 140, Part I, 21 July 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

* RUSSIA-NATO COUNCIL MEETING POSTPONED

* GOVERNMENT TO SELL OFF MORE STAKES IN ENERGY COMPANIES

* AZERBAIJANI OFFICIALS MOVE AGAINST OPPOSITION
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RUSSIA

RUSSIA-NATO COUNCIL MEETING POSTPONED. Russian and NATO
officials postponed a meeting of the Russia-NATO Permanent
Joint Council due to take place in Brussels on 20 July,
following disputes over the agenda of that meeting. It was
the first scheduled gathering of ambassadors to the joint
body since Russia suspended relations with NATO in March to
protest NATO's air campaign against Yugoslavia. NATO and
Russian diplomats intend to draw up an agenda that will
ensure the council presents a joint statement at the end of
the meeting, an RFE/RL South Slavic Service correspondent
reported from Brussels. The meeting is now expected to take
place on 22 or 23 July. Russian Foreign Ministry spokesman
Vladimir Rakhmanin told AP in Moscow that the meeting will
not mark a formal resumption of full relations with NATO. He
stressed that "we have resumed our contacts with NATO [only]
in one clearly defined sphere: interaction within the
framework of [KFOR]." FS

RUSSIAN OFFICIALS DENY CAPTURING PRISHTINA AIRPORT TO SEIZE
CLASSIFIED ARMS... Unidentified officials of Russia's
Foreign and Defense Ministries told Interfax on 20 July
that Russia did not send its troops into Prishtina on 10
June, ahead of the arrival of NATO troops, in order to
secure classified weapons (see "RFE/RL Newsline," 24 June
1999). The officials were reacting to a report in "The
Times" on 19 July quoting journalists from "Jane's Defence
Weekly" as saying that Russia's surprise move may have been
designed to withdraw Russian SA-10 surface-to-air missiles
and Czech-made Tamara devices, which are capable of
tracking stealth bombers. FS

...BUT RAF OFFICER SAYS RUSSIANS WITHDREW LARGE AMOUNTS OF
ARMS. Also on 19 July, "The Times" quoted an RAF officer at
Prishtina airport as saying that during the first few days of
Russian control in June, "the stuff [military equipment] was
pouring out of here." He added that the Prishtina airport was
one of the most impressive military facilities he has seen.
Already on 24 June, "Komsomolskaya pravda" reported that
Russian paratroopers had orders to stop British forces from
accessing a Yugoslav storage area at the airport that
included unspecified "radar devices," missiles, and laser-
guided bombs. FS

GOVERNMENT TO SELL OFF MORE STAKES IN ENERGY COMPANIES... The
State Property Ministry plans to sell a 9 percent stake in
LUKoil and 2.5 percent of Gazprom shares before the end of
the year, Igor Shuvalov, chairman of the Federal Property
Fund announced on 20 July, Interfax reported. According to
"The Moscow Times," Shuvalov said that two 0.5 percent stakes
in LUKoil are likely also to be sold off. First Deputy
Property Minister Yurii Medvedev said the same day that the
government may have to sell the stakes at below market rates,
but he stressed the sales are necessary to help finance the
budget. JAC

...DESPITE PAST FAILURES TRYING TO UNLOAD ROSNEFT, SLAVNEFT.
According to Shuvalov, tenders for stakes in Rosneft,
Slavneft, and Tyumen Oil company will be announced in August
or September. Twenty-five percent plus one share of Rosneft
and a 19.68 percent stake in Slavneft will be available,
Shuvalov said. The government has twice failed to sell stakes
in Rosneft and Slavneft in earlier privatization rounds, but
Shuvalov expressed confidence that the sales will be
structured in such a way as to attract investor interest. He
also noted that Sibneft has already expressed an interest in
the Rosneft stake, ITAR-TASS reported. "Kommersant-Daily" on
10 July was less optimistic, arguing that the proposed
package of shares is too small to allow the potential buyer
to effectively influence company policy. An additional
concern is the conflicting announcements by members of Sergei
Stepashin's government about their intention to form a
national oil company composed of Rosneft and Slavneft.
Foreign investors are likely to want to wait and see what
happens, according to the newspaper. JAC

RUSSIANS' FAITH IN BANKS REVIVING? The Ministry of Finance is
a new combatant in the struggle to control the restructuring
of Russia's banking, "Kommersant-Daily" reported on 21 July.
That struggle already involves the Tax Ministry, the Central
Bank, and the Agency for Restructuring Credit Organizations
(ARK0). According to the newspaper, the Finance Ministry has
gotten Tax Ministry officials to submit for approval a list
of banks whose debt to the federal budget is eligible for
restructuring. Overall, banks owe around 35 billion rubles
($1.4 billion). The daily concluded that the addition of a
new bureaucratic player could prove decisive for the sector,
particularly if the Finance Ministry decides to side with the
Central Bank and ARKO and lobby for a reduction in the
sector's debts. "Kommersant-Vlast" reported on 13 July that
Russians appear to be returning to commercial banks. As of 1
May 1999, the volume of accounts in rubles increased by 15.4
percent, compared with the beginning of 1999, and accounts in
hard currency by 3.1 percent. JAC

RUSSIA TO TRIM WISHFUL LEGISLATION. The government plans to
submit draft legislation to the State Duma in the fall that
would suspend laws mandating programs that cannot be financed
by the 2000 budget, "Rossiiskaya gazeta" reported on 21 July.
First Deputy Prime Viktor Khristenko described the measure as
one "forced [by circumstances] but necessary." According to
ITAR-TASS, Khristenko added that in order to finance all
social programs called for by various laws the government
would need a sum equal to two or three annual federal
budgets. Khristenko thinks that the legislation will find
strong support in the Federal Council since it will give
regional authorities the opportunity to choose which programs
they want to be fully financed. JAC

REAL INCOMES FALL AS UNEMPLOYMENT RISES. Russian's real
incomes shrank by 25.6 percent in the first half of 1999,
compared with the previous year, according to the Russian
Statistics Agency, Interfax reported on 20 July. Real incomes
in June also slipped 22.9 percent, compared with the previous
year. Meanwhile, the ranks of the unemployed swelled by 28.9
percent during the first half of the year to 10.443 million.
JAC

ROUGHER SAILING PREDICTED IN LONDON CLUB NEGOTIATIONS.
Mikhail Zadornov, presidential envoy to international
financial institutions, predicted that once the boards of the
World Bank and IMF approve their respective programs for
Russia at the end of July, Russia will be able to conclude an
agreement with the Paris Club in only a few days, "Vremya MN"
reported on 20 July. According to the daily, both sides have
few objections to a current plan for restructuring Russia's
debts. But negotiations with the London Club will be
difficult and protracted, according to Zadornov. The daily
attributed that assessment to the presence of U.S. investment
banks in the London Club that "are more aggressive toward
Russia." However, the newspaper commented that the worst that
can happen is that London Club creditors can declare
Vneshekonombank in default: "To bankrupt Russia they will
have to prove in court that the Russian government is legally
responsible for the debts of the Soviet bank." JAC

CONSTITUTIONAL COURT RULES ON TROPHY ART LAW... The
Constitutional Court on 20 July ruled that parts of the so-
called trophy art law are unconstitutional, but it stopped
short of declaring the legislation invalid. The court
determined that cultural valuables seized from Nazi Germany
at the end of World War II and now located on Russian
territory should not be returned to former "aggressor-
countries." At the same time, it said that countries that
fought against Hitler as well as victims of the Holocaust and
the Hitler regime are entitled to the restitution of their
cultural heritage. The court also ruled that parliamentary
procedures were violated when the law was passed. Russian
President Boris Yeltsin had been forced to sign the law in
April 1998 but simultaneously filed an appeal with the court
challenging the law's contents and the procedures used to
adopt it (see "RFE/RL Newsline," 16 April 1998). JC

...GERMANY'S RUHRGAS HELPS FUND AMBER ROOM RESTORATION. One
day before the Constitutional Court ruling on the trophy art
law, the Germany company Ruhrgas announced it is donating
some $3.5 million to help restore the Amber Room of the
summer palace at Tsarskoe Selo, whose panels were plundered
by Nazi troops during World War II. Work on the project was
recently halted because of a lack of funding. JC

RUSSIA MAY SUPPLY SYRIA WITH AIR DEFENSE SYSTEMS... Russian
military-industrial enterprises have begun preparing a
contract on the delivery to Syria of S-300 (SA-10) anti-
aircraft defense systems, Interfax reported on 19 July,
citing an unidentified "informed source." The contract is to
be drawn up by the Russian arms exporter Rosvooruzhenie and
fulfilled by the Moscow-based Almaz central design bureau.
The source did not specify when the document would be signed
or how many systems delivered. JC

...WHILE HELPING CHINA, SOUTH KOREA DEVELOP AIR DEFENSE. The
Almaz bureau is currently developing parts of air defense
systems for China and South Korea, the bureau's director,
Nikolai Polyashev, told Interfax on 20 July. He noted that
these activities are being supervised by the federal
authorities, in particular the Russian Defense Ministry,
adding that "numerous countries" have asked Almaz to develop
various elements of their air defense. Also on 20 July,
Colonel-General Leonid Ivashov, who oversees Russia's
military cooperation with foreign countries, told Interfax
that the Russian and Chinese Defense Ministries are expanding
contacts in two spheres--defense and military technology. He
stressed that all weaponry delivered to China is of a
defensive nature. JC

U.S. ASKS MOSCOW TO RESPOND TO Y2K TRANSITION PROPOSAL. A
U.S. Defense Department official told Reuters on 20 July that
Washington has again asked Moscow to participate in an effort
to minimize the risk of misunderstandings over missile
launches at the beginning of the year 2000. The official said
that the latest "U.S. overture" was made fairly recently but
that Russia has not yet responded. Washington wants Moscow to
take part in a temporary "early warning" center in Colorado
that would keep missile-launch commanders informed about what
the other side sees and does on New Year's Eve, the agency
reported. Meanwhile, Norway's Bellona environmental group has
said that Russia's Northern Fleet lacks funds to deal with
the Y2K problem and that its warning systems may report non-
existent missile attacks at the start of the millennium, AP
reported. The Northern Fleet, for its part, has said its
nuclear weapons can be launched only manually. JC

ARMY CLAIMS LITTLE AFFECTED BY ELECTRICITY SHUT-OFF IN FAR
EAST. The Strategic Rocket Forces press service denied that
any "direct danger" resulted from electricity being shut off
to "objects of secondary significance" at the 11th Army of
the Air Force and Anti-Aircraft Defense Forces based in
Khabarovsk Krai, "Izvestiya" reported on 21 July. News
agencies had reported the previous day that an electricity
cut-off resulted in radar units losing their ability to
monitor the country's air border (see "RFE/RL Newsline," 20
July 1999). Lieutenant-General Aleksandr Ionov, acting chief
of the Air Force Main Staff, told "Rossiiskaya gazeta" the
same day that the power outage did not affect the 11th Army's
combat capability and the air border remained sealed.
According to a Unified Energy Systems spokesman, the 11th
Army has not paid for electricity in Khabarovsk for the past
three years, which has put Khabarovskenergo on the brink of
bankruptcy, ITAR-TASS reported on 20 July. JAC

CHECHNYA MOVES TO REPAIR PIPELINE. Transneft Vice President
Oleg Gordeev told ITAR-TASS on 20 July that Grozny is working
to restore its section of the Baku-Novorossiisk pipeline.
Since 7 July, Russia has been bypassing Chechnya by shipping
oil to Dagestan via pipeline and from there by train. PG

INGUSH PRESIDENT APPROVES POLYGAMY. Ruslan Aushev on 20 July
issued a decree permitting male residents of the Republic of
Ingushetia to have up to four wives, Caucasus Press reported.
Aushev said he took the decision in response to "the current
demographic situation in the republic" and he added that he
is appealing to the Russian State Duma to make the necessary
modifications in the country's family code. PG

NORTH OSSETIAN LEADER URGES RUSSIA TO COMBAT OUTSIDE
INFLUENCES IN CAUCASUS. North Ossetian President Aleksandr
Dzasokhov told Caucasus Press and ITAR-TASS on 20 July that
Russia must expand its influence in the North Caucasus via
diplomatic and special services means. "The day has come," he
said, "when Russian diplomacy must ensure that the Caucasus
is an area of Russian and not North Atlantic national
interests." And he complained that the Russian Foreign
Ministry has been slow in responding to the U.S. challenge in
this region. PG

ARMENIAN, RUSSIAN PREMIERS AGREE TO MEET MONTHLY. Following
their session in Moscow on 20 July, Russian Prime Minister
Stepashin and his Armenian counterpart, Vazgen Sarkisian,
agreed to meet approximately once a month "not to start
chattering about problems but to settle issues in a working
environment," Armenpress reported. PG

TRANSCAUCASUS AND CENTRAL ASIA

AZERBAIJAN'S ALIEV WELCOMES TALKS WITH KOCHARIAN. Azerbaijani
President Heidar Aliev on 19 July told U.S. Ambassador to
Baku Stanley Escudero that he felt his 16 July meeting with
Armenian President Robert Kocharian was "very significant,"
even though the two sides remained far apart, Turan news
agency reported on 20 July. "I feel we are both trying to
understand each other, and I want this to yield results and
bring peace," Aliev said. PG

AZERBAIJANI OFFICIALS MOVE AGAINST OPPOSITION. During the
last few days, the Baku authorities have moved against
several opposition figures and groups. On 20 July, the trial
of Geyrat Party chairman Ashraf Mekdiyev on charges of
insulting President Aliev continued, Turan reported. On 19
July, Baku police prevented United Azerbaijan Movement leader
Ashdar Tagizade from flying to Switzerland. And on 18 July,
officials in Ganja prevented Democratic Party of Azerbaijan
(DPA) activists from holding a meeting by briefly detaining
10 DPA members, Baku's "525 Gazet" reported on 20 July. PG

IRANIAN ENVOY REFUSES BAKU POST. Abdulnaser Himmati, who was
recently named Tehran's ambassador to Azerbaijan, has refused
to take up his position, "525 gazet" reported on 20 July. An
ethnic Azerbaijani from Iran's Hamadan, Himmati reportedly
cited personal reasons. This is the second time an Iranian
appointee to Baku has refused to serve there; the first was
in 1994. Meanwhile, Azerbaijan's Space television reported
that various Azerbaijani opposition groups have picked the
Iranian embassy in Baku to protest what they say is Iranian
repression of ethnic Azerbaijanis in Iran. PG

GEORGIAN ANGER AT LEBED COMMENTS GROWS. Revaz Adamia, the
chairman of the Georgian parliament's Defense Committee,
sharply criticized Aleksandr Lebed, the governor of Russia's
Krasnoyarsk Krai, for his comments in Ajaria (see "RFE/RL
Newsline, 19 July 1990), Prime News reported on 20 July. Part
of the reason for this reflects Tbilisi's concern about
unsettled conditions in that region, the Georgian news agency
reported. PG

KAZAKHSTAN POLICE ARREST SUNNI FAITHFUL. The authorities
arrested 70 people in Zhambul region on 19 July, Kazakh
Khabar television reported on 20 July. Originally suspected
of being Wahhabis or escaped prisoners, those arrested proved
to be Sunni Muslims, a group permitted by Kazakhstan's
legislation. PG

FIRST CENSUS RESULTS IN KYRGYZSTAN. The Kyrgyzstan
authorities on 20 July released the first results of a census
conducted there last spring, Interfax reported. The country's
population now stands at 4.856 million, up 13 percent since
1989. Final results from this first post-independence count
are to be released by the end of the year. PG

TAJIKISTAN BANS CARRYING ARMS IN PUBLIC. The Tajik government
and the United Tajik Opposition on 17 July agreed to ban
carrying arms in public, Interfax reported on 20 July. The
Russian news agency said the order seems to have had an
effect almost immediately in Dushanbe. PG

NIYAZOV RENAMES TURKMENISTAN CITY. On 19 July, President
Saparmurad Niyazov renamed Chardzhou Turkmenabad, Interfax
reported. He said he took this step to ensure that the names
in the country reflect its rebirth. PG

NO AFGHAN ACCORD AT TASHKENT TALKS. Two days of talks in
Tashkent between Afghan factions and the six countries
supporting a peace effort there have ended without
significant progress. The meeting concluded with a
declaration that a military solution is impossible and that
there must be further talks, Interfax reported on 20 July. PG

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