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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 3, No. 210, Part I, 27 October 1999


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RFE/RL NEWSLINE Vol. 3, No. 210, Part I, 27 October 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

* FIGHTING ESCALATES IN CHECHNYA

* KEY BUDGET OFFICIAL CALLS NEW DRAFT A STEP BACK

* RUSSIA CRITICIZES GEORGIA'S ASPIRATIONS TO NATO MEMBERSHIP
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RUSSIA

FIGHTING ESCALATES IN CHECHNYA... Russian air and artillery
bombardment of Grozny intensified on 26 October and ground
forces continued their advance on the capital in what Chechen
chief of staff Mumadi Saidaev called "the fiercest and
biggest battle" since the beginning of the war, Interfax
reported. Early on 27 October, Russian troops were reported
to be just some 7 kilometers north of Grozny. Reuters quoted
unnamed Chechen officials as saying that Russian forces had
taken the town of Sernovodsk, 43 kilometers west of Grozny.
Interfax said Rusian forces have also taken the villages of
Azamat-Yurt, Stepnoe, Nizhnii Gerzel, and Kadi-Yurt and are
closing in on Gudermes, east of Grozny. Maverick field
commander Salman Raduev, together with Arbi Baraev, is
coordinating the defense of Gudermes, according to Interfax.
LF

...AS FIELD COMMANDERS VOW RETRIBUTION FOR GROZNY MARKET
BOMBING. Meeting in Grozny on 26 October, Chechen field
commanders issued a statement blaming the Kremlin for the 21
October blast in Grozny's central market place, which killed
more than 100 people, Interfax reported. They vowed that
"this crime will not go unpunished." In a statement
circulated on 25 October in the electronic Turkestan
Newsletter, Chechen President Aslan Maskhadov warned that
some groups within the Chechen army might act independently
to carry out acts of retaliation, targeting nuclear powers
plants, reservoirs, dams, and oil refineries elsewhere in the
Russian Federation. LF

U.S. URGES RUSSIAN RESTRAINT TOWARD CHECHNYA... At a news
conference with Dutch Foreign Minister Jozias van Aartsen on
26 October, U.S. Secretary of State Madeleine Albright said
the U.S. "urges Russia not to repeat the mistakes of the past
in Chechnya and instead open a dialogue toward a peaceful
resolution with legitimate Chechen partners," AP reported.
Aartsen said that "a warning toward Russia is necessary." JAC

...EXPRESSES CONCERN OVER RUSSIAN STATEMENTS ON ABM... The
same day, U.S. Secretary of State Albright told journalists
that she is "troubled" by reports of statements by some
Russian military on the U.S.'s "interest" in developing a
limited national defense system. She said that First Deputy
Defense Minister Nikolai Mikhailov's warning that Moscow
could "overcome" such a system (see "RFE/RL Newsline," 26
October 1999) was an "overreaction," adding that she does not
want anyone, whether in the U.S. or Russia, "to be reviving
old problems." Meanwhile, Interfax reported that during his
visit to Moscow on 27-28 October, U.S. Deputy Secretary of
State Strobe Talbott is expected to hold talks with Russian
First Deputy Foreign Minister Grigorii Berdennikov, who last
week took part in another round of U.S.-Russian disarmament
talks in the Russian capital. JC

...PROPOSES MOSCOW REAL ESTATE DEAL. Also on 26 October,
Interfax cited unidentified sources as saying the U.S. is
proposing that Russia transfer ownership of five real estate
properties in Moscow, including the residence of the U.S.
ambassador, in payment of the Soviet Union's lend-lease debt.
Under a 1985 agreement, according to the agency, the U.S.
agreed to pay 72,500 rubles ($2,800) annually, but more
recently the Russian government has suggested an annual rent
of $890,000. The agency also reported that Russia's
outstanding debt for assistance that the U.S. provided during
World War II is some $600-$700 million. JAC

KEY BUDGET OFFICIAL CALLS NEW DRAFT A STEP BACK... In an
interview with Ekho Moskvy on 26 October, State Duma Budget
Committee Chairman Aleksandr Zhukov slammed the new version
of the budget approved by the State Duma in its first reading
on 26 October. He said that the government "has taken a major
step back" and as a result the draft document is "less
realistic." In the new version, revenues are set at 797.2
billion rubles ($31 million at the current exchange rate) and
expenditures at 855.1 billion rubles. Zhukov added that the
Budget Committee will consider amendments to the budget for
its second reading on 30 October, which will likely be held
during the first week of November. The third reading must be
held before 28 November if the budget is to be approved
before the end of the year, Zhukov warned. JAC

...SAYS IMF MAY DISAPPROVE. Zhukov also said the IMF may not
approve of the 2000 draft budget in its current form because
the fund "views the additional revenues of the 2000 budget as
unrealistic in many aspects." Deputy Finance Minister Tatyana
Golikova was more optimistic, telling reporters the same day
that the government will show the IMF how budget revenues
will be increased without decreasing the primary surplus. She
added that "we are well aware that the 20.1 billion ruble
increase in revenues will necessitate strenuous work on the
part of all fiscal agencies." Finance Minister Mikhail
Kasyanov admitted that the government will "need fresh
consultations with the IMF to explain the basis for the rise
in revenues." JAC

GOVERNMENT PROMISES ALL EXPORTERS WILL SHARE THE PAIN. State
Duma Budget Committee Chairman Zhukov said that additional
taxation of oil and gas exporters required to meet the
budget's new revenue requirements will deal "a serious blow
to those industries." However, Deputy Finance Minister
Golikova noted that although increasing the export duty on
oil has been discussed for a long time, "it would be
premature to speak about concrete figures." And First Deputy
Finance Minister Aleksei Kudrin told Interfax on 26 October
that "several commodities will face higher export duties next
year besides oil." JAC

RUMORS ABOUT PUTIN'S 'TRANSFER TO ANOTHER POST' HEAT UP...
"Moskovskii komsomolets" argued on 26 October that despite
President Boris Yeltsin's assertion the previous day that he
still fully supports Putin, the prime minister's position
remains shaky. The newspaper, which is close to Moscow Mayor
Yurii Luzhkov, claims that "it is common knowledge that media
magnate Boris Berezovskii wants Putin out." It also suggested
that Yeltsin's conference with security ministers during
Putin's absence from Moscow "looks suspicious" since "who or
what prevented the president from postponing the conference
by a day?" Putin, meanwhile, is taking the speculation in
stride, according to Russian Public Television. "Gossip will
exist as long as politics exists," he said. Vladimir
Pribylovskii of the Panorama Research Center told "The Moscow
Times" on 26 October that "firing Putin would be completely
illogical right now, but we have learned never to explain or
predict Yeltsin's behavior from the point of view of logic."
JAC

...AS YELTSIN PLANS TO TAKE ANOTHER HOLIDAY. Presidential
spokesman Dmitrii Yakushkin announced on 26 October that
Yeltsin plans to take a holiday starting 27 October for "not
less than a week." Yakushkin also claimed that Yeltsin still
plans to attend an OSCE summit in Istanbul on 18-19 November.
JAC

RUSSIA LOOKING TO SELL FIGHTER JETS TO LIBYA... Deputy Trade
Minister Vladimir Pakhomov said on 26 October that Russia
hopes to boost sales of fighter jets and other warplanes next
year and intends to "resume cooperation with Libya and other
countries that feel a need for multi-purpose fighters of the
SU-type," AP reported, citing ITAR-TASS. Pakhomov noted that
sales prospects have become brighter since three factories
involved in the production of SU-type fighters consolidated
their export efforts, ending competition between them. JC

...DENIES SUPPLYING IRAN WITH PROHIBITED GOODS VIA CASPIAN.
Interfax on 26 October reported that the Russian Foreign
Ministry has issued a statement "categorically denying"
claims that Russia is using the Caspian Sea as a route for
supplying Iran with components for weapons of mass
destruction. Citing intelligence services in the West and
Middle East, London's "The Times" had reported the previous
day that Russia and Iran are believed to have concluded a
"secret agreement" whereby a Russian shipping company with
branches in Europe has been contracted to transport
"prohibited components" from Europe to Russian ports on the
Caspian Sea. From there, according to the newspaper, Russian
and Iranian shipping companies transport the goods to Iran.
JC

INFLATION PROJECTIONS RISE. The Economics Ministry reported
on 26 October that the annual rate of inflation in 1999 may
reach 41-43 percent, and not 30 percent, as was projected in
the 1999 budget, according to Interfax. During the first nine
months of the year, inflation totaled 31.4 percent. Central
Bank Chairman Viktor Gerashchenko, however, has come up with
a different figure. He told reporters on 25 October that
Russia will likely end the year with an annual inflation rate
of 38 percent and money supply growth rates of 43-50 percent.
Previously, the money supply was predicted to increase by 18-
26 percent, according to ITAR-TASS. JAC

CIS CUSTOMS UNION MEMBERS MEET. Meeting in Moscow on 26
October, the presidents of the five members of the CIS
Customs Union--Russia's Boris Yeltsin, Belarus's Alyaksandr
Lukashenka, Kazakhstan's Nursultan Nazarbaev, Kyrgyzstan's
Askar Akaev, and Tajikistan's Imomali Rakhmonov--signed 10
agreements, including one imposing value-added tax in the
place of destination and one on rail transport tariffs. The
five leaders also signed a "Moscow Declaration" stressing the
importance of political and economic stability as a basis for
further economic integration and condemning "all forms of
international terrorism and religious extremism," Russian
agencies reported. In addition, Russia, Belarus, and
Kazakhstan agreed on a shared position on accession to the
World Trade Organization, of which Kyrgyzstan is already a
member. The participants praised the role of Nazarbaev, who
is chairman of the Inter-State Council, in reversing the
decline in trade between the union's member states that
followed the 1998 Russian financial crisis, according to
"Nezavisimaya gazeta" on 27 October. LF

EBRD DENIES CO-FUNDING CHECHEN BYPASS PIPELINE. A spokesman
at the London headquarters of the European Bank for
Reconstruction and Development denied on 26 October that the
bank is contributing to the funding of the oil pipeline
bypassing Chechnya, ITAR-TASS reported. The construction of
the pipeline began the same day. Interfax on 19 October had
quoted Semen Vainshtok, director of the Russian pipeline
operator Transneft, as saying that Russia's Sberbank and the
EBRD has agreed to guarantee $120 million to fund that
project. Transneft Deputy Director Sergei Ter-Sarkisyants
said on 26 October that the company has lowered the cost of
the bypass pipeline from more than $180 million to under $100
million and could provide at least half of that sum from its
own funds. LF

TRANSCAUCASUS AND CENTRAL ASIA

COUNCIL OF EUROPE SAYS ARMENIAN LOCAL ELECTIONS 'FREE AND
FAIR.' In a statement issued in Yerevan on 26 October, a
delegation from the Council of Europe Local and Regional
Authorities of Europe described the Armenian local elections
two days earlier as free, fair, and a significant improvement
on the 1996 local ballot, Noyan Tapan and RFE/RL's Yerevan
bureau reported. The delegation, whose members visited 88
polling stations, said the vote was well organized and that
voting and the vote count were conducted in conformity with
the election law. This positive assessment is likely to
expedite Armenia's full membership in the Council of Europe.
LF

U.S. DEPUTY SECRETARY OF STATE VISITS AZERBAIJAN. Visiting
Baku on 26 October, Strobe Talbott assured Azerbaijan's
President Heidar Aliev that the U.S. appreciates and will do
its best to support Aliev's efforts to resolve the Karabakh
conflict, Reuters and ITAR-TASS reported. Talbott is to
travel to Yerevan on 27 October and then to Moscow (see
above). The U.S. hopes to persuade Aliev and his Armenian
counterpart, Robert Kocharian, to sign a formal settlement of
the conflict at the OSCE summit in Istanbul in November, but
Kocharian has said he considers the venue inappropriate (see
"RFE/RL Newsline," 19 October 1999). Talbott and Aliev also
discussed the planned Baku-Ceyhan oil export pipeline. Turkey
and Azerbaijan are to sign four legal and political
agreements that constitute the framework for that project at
the Istanbul summit. LF

NEW AZERBAIJANI FOREIGN MINISTER NAMED. President Aliev on 26
October named parliamentary deputy and Democratic
Independence Party co-chairman Vilayat Guliev as foreign
minister, Reuters and Turan reported. Guliev, who is 48, is a
philologist who speaks English and Persian. He has never
worked in foreign policy or held any diplomatic post,
according to Turan. Guliev replaces Tofik Zulfugarov, who
submitted his resignation on 24 October to protest Aliev's
policy on resolving the Karabakh conflict. LF

ANOTHER WESTERN OIL COMPANY PULLS OUT OF AZERBAIJAN. The
Houston-based oil company Conoco has announced the closure of
its Baku office, following its failure after three years of
talks to reach agreement with the Azerbaijan state oil
company SOCAR on reviving the shallow-water sector of the
Gyuneshli oil field, Business Wire and Interfax reported on
21 and 26 October, respectively. Meanwhile a SOCAR spokesman
told Interfax on 21 October that he opposes the over-hasty
implementation of plans for the company's partial
privatization. Under those plans, which President Aliev has
not yet approved, the state would retain a 15 percent stake
in SOCAR and in the Azerkhimiya, Azerigaz and Azerenergiya
companies. Thirty percent of the shares would be sold at a
cash auction and the remaining 55 percent for vouchers. LF

RUSSIA CRITICIZES GEORGIA'S ASPIRATIONS TO NATO MEMBERSHIP...
In an indirect response to a remark made the previous day by
Georgian President Eduard Shevardnadze to the "Financial
Times," the Russian Foreign Ministry on 26 October issued a
statement warning that NATO enlargement "does not help to
strengthen stability in the Euro-Atlantic region," ITAR-TASS
reported. Shevardnadze had told the London-based daily that
if he is re-elected president next year, Georgia will
campaign vigorously for NATO membership. The Russian Foreign
Ministry statement said that doing so "is not the way to
solve the problem of the security of one's own country or on
the whole continent." In a separate development, an unnamed
Russian Foreign Ministry official told Interfax on 26 October
that Russia is interested in the strengthening of peace and
stability in Georgia and in continuing its policy of pursuing
friendly relations with that country. Also on 26 October,
Shevardnadze and Russian President Yeltsin held a telephone
conversation, no details of which have been disclosed. LF

...AS GEORGIA DENOUNCES RUSSIAN OFFICER'S ELECTION COMMENTS.
The Georgian Foreign Ministry on 26 October officially
protested as "provocative and irresponsible" a remark made by
Major General Vyacheslav Borisov, commander of the Russian
military base in Batumi, to the independent Rustavi-2 TV
station two days earlier, ITAR-TASS and Caucasus Press
reported. Borisov had said that the majority of troops at the
base support the election alliance headed by Adjar Supreme
Council chairman Aslan Abashidze. He said if that bloc wins
the 31 October parliamentary elections, the new parliament
will ratify the 1994 agreement allowing Russia to maintain
military bases in Georgia for 25-30 years. The Georgian
protest note said Borisov's statement constitutes
interference into Georgia's internal affairs. LF

COMPOSITION OF NEW KAZAKH PARLIAMENT BECOMES CLEARER. The
Otan Party, which supports Kazakhstan's President Nursultan
Nazarbaev, will be the largest faction in the lower chamber
of Kazakhstan's new parliament. It won 15 of the 47 seats
contested in the second round of voting on 24 October, giving
it a total of 23, Interfax reported on 26 October, quoting
Central Electoral Commission member Tatyana Okhlopkova. The
Civic Party, which also supports the Kazakh leadership, won
three additional seats, giving it 12 in all. The Communist
Party has three seats, the Agrarian Party two, and the
Republican People's Party of Kazakhstan one. It is unclear
how many of the remaining deputies are nominally independent
but support the present government. LF

TURKMEN PRESIDENT SAYS 'ANYONE' MAY RUN FOR PARLIAMENT,
PRESIDENT. In a 27 October speech marking the anniversary of
Turkmenistan's 1991 declaration of independence, Saparmurat
Niyazov promised that the 12 December parliamentary elections
will be free and democratic and that anyone may run as a
candidate, RFE/RL's Turkmen Service reported. He added that
all candidates will be granted access to state television to
publicize their election programs. Niyazov similarly said
that "anyone" is free to contest the presidential elections
due in 2002. LF

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