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Newsline - July 31, 1997




SVYAZINVEST PRIVATIZATION DEAL SIGNED

Russian Federal Property Fund Chairman Igor Lipkin and a proxy representing the Cyprus-based company Mustcom Ltd. on 30 July signed an agreement on the sale of 25 percent plus one share in Svyazinvest for $1.875 billion. Mustcom was set up by a consortium including Oneksimbank, Deutsche Morgan Grenfell, and George Soros's Quantum Fund (see "RFE/RL Newsline," 28-30 July 1997). The consortium must pay at least half of the sale price to the Russian state budget within 15 days of signing the agreement and the other half within 75 days, according to Interfax. State Property Committee Chairman Alfred Kokh says the budget has already received the first $400 million in proceeds from the Svyazinvest sale. Those funds were submitted by the winning consortium as a deposit for participating in the 25 July auction.

CHUBAIS SAYS YELTSIN SATISFIED WITH DEAL

After flying to Samara Oblast to brief President Boris Yeltsin on the Svyazinvest sale, First Deputy Prime Minister Anatolii Chubais announced on 30 July that Yeltsin has approved the way the auction was handled. According to Chubais, the president is satisfied that the Svyazinvest auction was conducted in accordance with "strict rules" laid down in advance, Russian news agencies reported. Chubais said he had told Yeltsin that the proceeds from the sale will allow the government to keep its promise to pay all wage arrears to state employees by the end of the year, "Kommersant-Daily" reported on 31 July.

POTANIN ANNOUNCES PLANS FOR TELECOMMUNICATIONS GIANT

Oneksimbank president Vladimir Potanin told reporters on 31 July that the consortium that acquired the Svyazinvest stake will hold on to the shares for at least two years and will make major investments in the company, RFE/RL's Moscow bureau reported. Critics of the Svyazinvest sale have accused the consortium of planning to re-sell the shares for a profit within months rather than investing in upgrading Russia's telecommunications system. On 30 July, Potanin and Svyazinvest Director-General Nail Ismailov issued a statement outlining plans for the development of the telecommunications giant, Russian news agencies reported. The plans include installing more phone lines in Russia, upgrading the phone system with digital and cellular technology, introducing a flexible rate system for phone charges, and carrying out an audit of all Svyazinvest subsidiaries.

GUSINSKII TO SUE POTANIN

Vladimir Gusinskii, the founder of Most Bank and current head of the Media-Most group, will sue Potanin for slander, RFE/RL's Moscow bureau reported on 31 July. A statement from Gusinskii was read out to reporters by Vyacheslav Kostikov, Media-Most's deputy director-general of public relations. (Kostikov was Yeltsin's press secretary from 1992 until March 1995.) Contrary to media reports linking the Most group to the consortium that submitted the losing bid for Svyazinvest, Gusinskii's statement denied that the Most group had participated in the auction. The statement also dismissed as a "lie" Potanin's claim that Gusinskii tried to strike a back-room deal to keep Oneksimbank from bidding for Svyazinvest (see "RFE/RL Newsline, 30 July 1997). Kostikov did not confirm media reports that shortly before the auction, Gusinskii flew to France along with Potanin and Security Council Deputy Secretary Boris Berezovskii to meet with Chubais.

NEWSPAPERS CLOSE TO ONEKSIMBANK VIEW THE BATTLE...

"Izvestiya" on 31 July argued that the winning consortium acquired the Svyazinvest stake for a simple reason: they offered more money for the shares than did their rivals. Another "Izvestiya" commentary the same day said the sale should be considered not a victory for Oneksimbank, but a victory for the government's "team of reformers in the battle against the feudal financiers." Meanwhile, an unsigned commentary in "Komsomolskaya pravda" on 30 July denounced the "information war" carried out against the sale on the networks Russian Public Television (ORT) and NTV. The paper slammed Berezovskii and Gusinskii -- "the owners of ORT and NTV" -- for trying to strike a deal with Chubais shortly before the Svyazinvest auction. However, "Komsomolskaya pravda" did not report that by his own admission, Potanin flew to France with Gusinskii and Berezovskii to attend the meeting with Chubais. Oneksimbank is a major shareholder in "Izvestiya" and "Komsomolskaya pravda."

...WHILE "SEGODNYA" KEEPS UP ATTACK ON NEMTSOV

The newspaper "Segodnya" on 30 July published two articles sharply critical of the Svyazinvest deal and First Deputy Prime Minister Boris Nemtsov. The newspaper, which is owned by Gusinskii's Media-Most, ridiculed Nemtsov's claim that the Svyazinvest sale had been an "honest auction." "Segodnya" also alleged that Nemtsov is planning to run for president in 2000 and that his need for financial backers underlies his newfound "passion for [State Property Committee Chairman] Kokh and Potanin." In recent days, Nemtsov has criticized the losers of the Svyazinvest auction for "going into hysterics on television."

SELEZNEV CRITICIZES SVYAZINVEST DEAL, DEFENDS DUMA

State Duma Speaker Gennadii Seleznev has charged that by selling the Svyazinvest stake, Russia has lost its "information independence," Interfax reported on 30 July. He added that Russia has become a "bandit country." Seleznev also discounted recent criticism of the Duma's activities by Yeltsin and officials in the presidential administration. He noted that in the last week of its spring session alone, the Duma had passed 31 laws that were later approved by the Federation Council and that Yeltsin has signed 18 of those laws. Seleznev accused the president of vetoing the controversial law on religious organizations "under pressure from the [U.S.] Capitol and the Vatican."

NEXT BATTLE IN BANK WAR TO BE FOUGHT OVER NORILSK NICKEL

State Property Committee Chairman Kokh on 30 July predicted that another scandal will erupt over the upcoming sale of a 38 percent stake in Norilsk Nickel, Interfax reported. He added, "None of our auctions have passed without screams or fits of hysteria." "Kommersant-Daily" predicted on 30 July that Berezovskii and Potanin will clash over the Norilsk sale, planned for 5 August. "Nezavisimaya gazeta" -- partly financed by Berezovskii's LogoVAZ group -- on 31 July charged that the conditions for the Norilsk auction violate Russian laws and that the starting price for the stake is far too low. Oneksimbank acquired a 38 percent stake in Norilsk in November 1995 in exchange for a $170 million loan to the government. The Audit Chamber has already called for a halt to the Norilsk auction (see "RFE/RL Newsline," 22 and 28 July 1997).

THREE KILLED BY BOMB IN GROZNY

Three people were killed on 30 July when a car bomb exploded outside the Grozny headquarters of radical field commander Salman Raduev. Raduev, who escaped unhurt, blamed the attack on "Russian special services," according to Interfax. The car used in the attack is reported to have had Dagestani license plates. Raduev achieved notoriety for his leading role in the Kizlyar hostage-taking in January 1996. He was reported killed in a clash with rival Chechen units in March 1996 but resurfaced four months later. He has since claimed responsibility for several terrorist attacks in Russia.

YELTSIN WANTS POWER-SHARING TREATY WITH CHECHNYA

Russian President Yeltsin on 30 July said that he plans to meet with Chechen President Aslan Maskhadov at an unspecified date, Russian agencies reported. Yeltsin told journalists at his vacation residence in Samara Oblast that he plans to discuss with Maskhadov the reconstruction of the Chechen economy and the neutralization of radical Chechen political forces. Yeltsin proposed signing a power-sharing agreement with Grozny similar to those concluded with Tatarstan and other federation subjects on condition that Chechnya accepts the status of a constituent republic of the Russian Federation, according to NTV. Yeltsin added that "we are not ready" to sign a fully-fledged treaty with Chechnya comparable to those concluded between Russia and France or the U.S.

REFUGEE CAMP RAIDED IN NORTH OSSETIA

Some 1,000 men on 29 July attacked a makeshift settlement housing Ingush refugees in North Ossetia's disputed Prigorodnyi Raion, Russian media reported. The attackers, some of whom were armed, beat up several dozen refugees, burned 73 trailers, and tried to lynch seven Ingush. A Russian police patrol intervened and escorted the Ingush back to Ingushetia. Ingush President Ruslan Aushev characterized the attackers as a "drunken mob, probably encouraged by the slogans of certain members of the Ossetian political elite." He again appealed to Yeltsin to impose direct presidential rule on Prigorodnyi Raion on the grounds that the North Ossetian leadership cannot guarantee stability there. "Nezavisimaya gazeta" on 31 July quoted North Ossetian Deputy Parliamentary Chairman Ermak Dzansolov as saying the imposition of presidential rule would violate both the Russian and the North Ossetian constitutions.

LEBED SLAMS MILITARY REFORM PLANS...

Former Security Council Secretary Aleksandr Lebed has charged that a "narrow circle" of officials who lack the expertise to deal with the problems of the Russian armed forces have made recent key decisions concerning military reform plans, RFE/RL's Moscow bureau reported on 30 July. He named Deputy Defense Minister Andrei Kokoshin, the highest-ranking civilian in the Defense Ministry, and Col.-Gen. Valerii Manilov, a senior officer at the General Staff, as two of the officials who drafted the plans. At the same time, Lebed called Defense Minister Igor Sergeev a "worthy and sensible person," according to the 31 July "Nezavisimaya gazeta." But he did criticize Duma Defense Committee Chairman Lev Rokhlin for not letting Lebed's Honor and Motherland movement join Rokhlin's new movement to support the military. Several influential Communists who have long criticized Lebed have already joined Rokhlin's movement.

...ATTACKS BEREZOVSKII

At the same press conference, Lebed blamed Security Council Deputy Secretary Berezovskii for the war in Chechnya and said Berezovskii had profited from the bloodshed there, RFE/RL's Moscow bureau reported on 30 July. According to Radio Rossii, Lebed added that after he had negotiated the peace deal with Chechen chief of staff Aslan Maskhadov in September 1996, Berezovskii approached Lebed and accused him of spoiling "a very good business." Berezovskii was appointed to the Security Council soon after Lebed's ouster in October. Meanwhile, "Moskovskii komsomolets" charged on 30 July that since May 1996, some $98 million has been channeled from the state-owned airline Aeroflot to the Swiss company Andava, which Berezovskii owns. The paper noted that Berezovskii's longtime associate Nikolai Glushkov, co-founder and acting chairman of LogoVAZ, joined the Aeroflot board of directors in November 1995 and soon became the airline's chief financial officer.

RUSSIAN SPY IN JAPAN...

The Tokyo Metropolitan Police Department and Interpol are searching for an alleged Russian spy of Asian descent who is believed to have spied on Japan for Moscow for 30 years . The man assumed the identity of Ichiro Kuroba, who disappeared in 1966, and even married a Japanese woman in 1976. Japanese authorities believe the alleged spy was a secretary at the Russian Embassy in Tokyo who was transferred home in early July. Japanese Prime Minister Ryutaro Hashimoto said the news "will not have a favorable impact on bilateral relations."

...FOREIGN SPIES IN RUSSIA

Platon Obukhov, who is accused of spying for Britain, has been ordered by a Moscow court to undergo medical treatment in Moscow before facing charges, according to the Russian press. A forensic psychiatric examination showed Obukhov to be insane. Obukhov's lawyer argues his client is unfit to stand trial. State prosecutors, however, claim Obukhov was responsible for his actions when he committed them. Obukhov could be imprisoned for 12-20 years for state treason. Meanwhile, Russia's counterintelligence service (FSB) announced that over the last three years it has discovered 1,200 foreign intelligence officers working in Russia, of whom 52 were expelled. It also said it had tracked down 46 Russian citizens working for foreign intelligence services, Interfax reported on 30 July.

TULEEV SAYS FUNDS INTENDED FOR KEMEROVO DISAPPEARED

Kemerovo Governor Aman Tuleev says 300 billion rubles ($52 million) that the federal government promised to transfer to Kemerovo did not reach the oblast and now cannot be accounted for. In an interview with RFE/RL's Moscow bureau on 30 July, Tuleev said the president, prime minister, and First Deputy Prime Minister Chubais had promised to allocate the money, which was meant to pay wage arrears and to fund preparations for the coming winter. However, according to Tuleev, during Chubais's recent vacation "certain malicious forces" in Moscow misappropriated the funds. He warned that if the money is not allocated, Kemerovo will face widespread social protests in the fall. Trade unions in Kemerovo called off plans to hold an oblast-wide strike on 11 July, largely because of Tuleev's appointment as governor and the federal government's promises that funds would be transferred to the oblast soon.

KRASNOYARSK ENVIRONMENTALISTS TO APPEAL TO CONSTITUTIONAL COURT

Environmentalists in Krasnoyarsk Krai, who seek to hold a referendum on halting construction of a nuclear waste processing plant in Krasnoyarsk-26, have announced they will take their battle to the Constitutional Court, ITAR-TASS reported on 31 July. Earlier this year, environmental groups gathered more than 100,000 signatures in favor of holding a referendum on further construction of the plant, the first part of which has already been built. However, the krai legislature voted in April against a popular vote on the issue (see RFE/RL Newsline, 24 April 1997). The environmentalists have since lost appeals to the Krasnoyarsk Krai court and the Supreme Court.




GEORGIA EQUIVOCAL OVER PEACEKEEPERS

Speaking on national radio on 30 July, Georgian Foreign Minister Irakli Menagharishvili said the Georgian leadership does not think that the mandate of the CIS peacekeeping force in Abkhazia should be extended beyond 31 July, when it is due to expire. But he stressed this does not mean that Georgia is calling for the peacekeepers' withdrawal, Reuters reported. Menagharishvili told journalists that Georgia still wants the peacekeepers' mandate broadened to enable them to protect ethnic Georgians who wish to return to their abandoned homes in Abkhazia. He also denied media speculation that the Georgian leadership is split over the issue of whether the peacekeepers should remain, according to Interfax. In Moscow, Russian Foreign Ministry special envoy for Abkhazia Gennadii Ilichev again said that the peacekeeping force will be withdrawn after 31 July unless Georgia formally requests that its mandate be extended.

ARMENIAN EDITORS CALL FOR CLEMENCY FOR OPPOSITION ACTIVIST

Directors of independent news agencies and editors of nine Armenian newspapers, including the government-funded Armenian language daily and several opposition publications, have called on President Levon Ter-Petrossyan to pardon Dashnak party activist Hrant Markaryan, RFE/RL's Yerevan bureau reported on 30 July. In a letter published in the Dashnak party newspaper "Hayots ashkhar," the journalists argue that the release of Markaryan would help overcome the "polarization of political life" in Armenia and expedite national reconciliation. An Iranian citizen, Markaryan emigrated to Armenia in1990 and distinguished himself fighting as a volunteer in Nagorno-Karabakh. He was arrested together with other Dashnak party members in December 1994 and sentenced last year to five years' imprisonment on charges of illegal possession of weapons.

AZERBAIJANI PRESIDENT UPBEAT OVER BAKU-CEYHAN PIPELINE

Heidar Aliyev is confident that the proposed pipeline for exporting Azerbaijan's Caspian oil from Baku to the Turkish Mediterranean terminal at Ceyhan "will become a reality," the "Turkish Daily News" reported on 31 July. During his first full day of engagements in Washington, Aliyev met with Congressional leaders and attended a reception with U.S. Deputy Secretary of State Strobe Talbott, who predicted that a settlement of the Karabakh conflict could be reached by the end of this year.

KYRGYZSTAN REGISTERS LARGEST PRODUCTION INCREASE IN CIS

In a CIS Interstate Statistics Committee report on industrial production from January to June 1997, Kyrgyzstan came first ahead of the 11 other CIS countries, Interfax reported on 30 July. Kyrgyzstan's industrial production rose by 28.8 percent during that period. Azerbaijan, Belarus, Georgia, Kazakhstan, Russia, and Uzbekistan, all registered increases, while the other five -- Armenia, Moldova, Ukraine, Tajikistan, and Turkmenistan -- saw declines in production. The report states that the largest decrease was in Turkmenistan (according to the Turkmen National Statistics Committee, industrial production dropped by 35.2 percent -- see also below). Kyrgyzstan also showed a 6.8 percent increase in GDP but ranked behind Georgia (14.7 percent increase) and Belarus (11 percent).

TURKMEN STATE COUNCIL DISCUSSES ECONOMIC SITUATION

Meanwhile, the Turkmen State Council met on 30 July to examine the country's economic situation in the first half of 1997, according to RFE/RL correspondents in Ashgabat. It was announced that the output of the cotton-ginning industry dropped to 20.7 percent of its level in the same period last year, while the refusal to supply other CIS countries with gas because of large outstanding debts led to a sharp decrease in gas exports (down 57.7 percent on the 1996 figure). In addition, only 53 percent of the target figure for grain production in 1997 was met. President Saparmurat Niyazov called for full use of the country's resources to combat this trend. On a positive note, he commented that prices and the national currency have stabilized. He also emphasized the need to meet the cotton quota of 1.4 million tons by 15 October.

DEMONSTRATION IN KAZAKH CAPITAL

Following a demonstration in the northern city of Kokchetau (see "RFE/RL Newsline," 30 July 1997), some 400 pensioners gathered in front of the parliament building in Almaty to protest pension arrears and hikes in housing and utility costs, RFE/RL correspondents in the capital reported. Members of the parliament's lower house invited representatives of the demonstrators to enter the building to discuss the matter. No information is available on that meeting.




BELARUS RESISTS RUSSIAN PRESSURE OVER ARRESTED JOURNALISTS

In a statement issued on 30 July, Belarusian President Alyaksandr Lukashenka's office expressed "surprise" at remarks the previous day by Russian President Boris Yeltsin. Yeltsin had said he was indignant over the arrests of Russian journalists Pavel Sheremet and Dmitrii Zavadskii, who, Belarus says, illegally crossed the country's border from Lithuania while preparing a report. Sheremet and Zavadskii both work for the Russian Public Television (ORT) network. The statement says it is unacceptable that the current and future union of Russia and Belarus be put in doubt by the "banal provocation of one man." Lukashenka claimed the same day that Sheremet is in the pay of foreign intelligence services. Belarusian Foreign Minister Ivan Antonovich called on Russia not to let the row worsen the countries' relations. Meanwhile, Amnesty International has called for the journalists' immediate release. If convicted, the two journalists could receive up to five years in prison.

MORE GOVERNMENT APPOINTMENTS IN UKRAINE

President Leonid Kuchma on 30 July appointed former Economics Minister Yuri Yekhanurov to head the newly created committee on promoting business, Reuters reported. Oleksander Osaulenko was named as head of the state statistics committee. Kuchma reappointed Serhiy Osyka as minister of foreign economic relations and trade and Valery Kalchenko as emergency situations minister.

GERMAN FOREIGN MINISTER SAYS UKRAINE CRUCIAL FOR EUROPEAN STABILITY

Klaus Kinkel said at the close of his visit to Kyiv on 30 July that Ukraine plays a key role in European stability. Speaking to reporters, Kinkel praised the recent diplomatic achievements of Ukraine, notably the conclusion of friendship treaties with Poland and Romania and a border agreement with Belarus as well as Ukraine's participation in peacekeeping operations in Bosnia. Kinkel said Ukraine "is now much stronger than several years ago" and is becoming an increasingly important member of the international community. He said that "Germany supports Ukraine on its way to Europe, democracy, and a market economy." He also commented Europe recognizes the sensitivity of Ukraine's relations with Russia and will strive to prevent Ukraine from becoming a buffer zone between East and West.

ESTONIAN FOREIGN MINISTER IN WASHINGTON

Toomas Hendrick Ilves told journalists in the U.S. capital on 30 July that he expects "long and somewhat tough negotiations" before his country becomes a member of the EU. He said that Tallinn expects to join the union within seven to 10 years. The European Commission recently named Estonia among six countries recommended to begin talks on EU membership. Asked about Russia's objections to the Baltic States joining NATO, Ilves said that Moscow has no right to interfere in the security arrangements of other nations. He added that Russian opposition to Baltic membership in NATO is one reason why Estonia wants to join the alliance. Ilves, a former ambassador to the U.S., is in Washington to mark the 75th anniversary of diplomatic relations between the U.S. and Estonia.

LATVIAN PRESIDENT ON LINEUP OF NEXT GOVERNMENT

Guntis Ulmanis on 30 July urged political parties not to include in the new government those ministers who resigned amid the recent corruption scandal, BNS reported. He said he shares the opinion of the Fatherland and Freedom party (see "RFE/RL Newsline," 30 July 1997) that cabinet members who were found to have violated the anti-corruption law should not be reappointed. Ulmanis was speaking before his departure to the U.S., where he is to receive the American Bar Association's Central and East European Law Initiative prize for his contribution toward building a state based on the rule of law. Premier-designate Guntars Krasts, meanwhile, has said he will demand written verification from his ministers that they will comply with the anti-corruption law. He added that he hoped the new cabinet could be approved during an extraordinary session of the parliament on 7 August.

POLISH FINANCE MINISTER ON REBUILDING AFTER FLOODS

Marek Belka told journalists on 30 July he will propose spending cuts in many areas in 1998 to raise funds to rebuild areas devastated by the recent floods. "This will be a budget of modest spending in many areas...and real wage increases will be limited next year," he said. He declined to give more details. The cabinet is scheduled to debate the budget in September. Belka also said Poland may be forced to introduce a "flood tax" to meet the costs of repairing flood damage. He said the imposition of a 1 percent tax on incomes "would be a better solution" than the issue of a government bond. Meanwhile, the central bank has unveiled plans to increase official interest rates within the next several weeks to prevent credit action and domestic spending from accelerating even more because of the flood.

U.S. AMBASSADOR MEETS WITH SLOVAK DEPUTY PARLIAMENTARY CHAIRMAN

Ambassador to Slovakia Ralph Johnson on 30 July met with Slovak parliamentary deputy chairman Marian Andel, CTK reported. Andel said Johnson had initiated the meeting in order to discuss two lectures he gave in Bratislava on 14 July in which he explained why the U.S. could not support Slovakia as a candidate for the first round of NATO expansion. The lectures caused an angry reaction from Slovak government officials. Johnson and Andel also discussed the case of former deputy Frantisek Gaulieder, who was stripped by the parliament of his deputy's mandate after he quit Prime Minister Vladimir Meciar's Movement for a Democratic Slovakia. The Constitutional Court ruled on 25 July that the parliament had acted unconstitutionally. Johnson commented that the U.S. State Department would make an official statement on the case only after the parliament had make known its position.

HUNGARIAN ENVIRONMENTALISTS APPEAL TO PREMIER

Nineteen environmentalist groups concerned with the outcome of the Gabcikovo dam trial at the International Court of Justice in The Hague on 30 July wrote to Prime Minister Gyula Horn, asking him not to make a separate deal with his Slovak counterpart, Vladimir Meciar, at their meeting scheduled for 15 August, Hungarian media reported. The letter says that Hungary's aspirations toward European integration justify the "consistent pursuit" of the lawsuit at the International Court of Justice. Since State Secretary Janos Nemcsok's appointment as commissioner for Danube matters, suspicion has been growing that the two countries' leaders are preparing an agreement behind the scenes. Gyoergy Szenasi, Hungary's legal representative in The Hague, said he was not aware of any such deals.




ALBANIAN PREMIER GIVES PRIORITY TO CREATING JOBS

Bashkim Fino and six cabinet ministers held talks with top Italian officials in Rome on 30 July. Fino said the purpose of his trip, which includes attending an international donors' conference on 31 July, is to set priorities for the reconstruction of Albania's economy. He stressed that Tirana is not interested in simply attracting large sums of money from abroad but rather in setting up sound programs that will create jobs. Fino stated that the best thing his government can do is to create an economic environment in which citizens can save, invest, and prosper. He refused, however, to reimburse directly persons who lost their savings in collapsed pyramid schemes earlier this year. His Socialist Party had led people to believe during the recent election campaign that they would indeed be reimbursed for their losses.

ALBANIAN PARLIAMENT DEALS WITH PYRAMID IMBROGLIO

The legislature on 30 July approved a measure aimed at controlling the four pyramid investment schemes still functioning. The government now has the power to appoint an administrator for each of the four and to publish lists of the companies' assets. Anastas Angjeli, who heads the parliament's finance committee, said that another law will soon be passed to control how the four disburse money. The 30 July measure also permits investigations of collapsed pyramids to see if any lost investments can still be returned. Meanwhile, the Defense Ministry appealed on television to draft-age men who have not yet served in the military to report for duty and to recent veterans to return to active service. The new government is trying to revive the armed forces, which disintegrated in the anarchy following the collapse of the pyramids.

MONTENEGRINS BLOCK ROAD TO ALBANIAN TRUCKS

Local people set up barricades on the main highway near Virpazar in Montenegro in the night of 28-29 July, BETA reported on 30 July. Police intervened to secure passage for a convoy of about 100 trucks carrying scrap metal from Albania, but no further trucks crossed into Montenegro at an illegal border crossing near Ulcinj. The residents of Virpazar are angry about the effects on their environment and infrastructure from the constant stream of trucks. Meanwhile in Tetovo, Macedonia, a local court delayed until October the sentencing of top ethnic Albanian local officials in conjunction with recent unrest over the hoisting of the Albanian flag. And in Novi Pazar in Sandzak, Muslim leaders protested against what they called a systematic campaign by Belgrade to deny the Muslims basic democratic rights. Muslim leaders from Kosovo came to Novi Pazar to express solidarity.

BRITISH FOREIGN SECRETARY TALKS TOUGH ON DAYTON

Robin Cook said after meeting with President Franjo Tudjman on 30 July in Zagreb that "the patience of the international community is running out over the slow progress in implementing the Dayton agreement." Cook added that the international community has "set deadlines" for the return of refugees to their homes and for handing over indicted war criminals to The Hague. In recent days, Cook delivered a similarly tough message to Serbian and Muslim officials in his tour of the region. Cook also said in Zagreb that Croatia can join European institutions "only if it embraces standards of a modern European state." He added that "there is no plot, no conspiracy by the international community to create a south-eastern political union. Former Yugoslavia is finished, nobody is attempting to rebuild it."

KARADZIC TO TALK TO WAR CRIMES TEAM?

Momcilo Krajisnik, the Serbian member of the Bosnian joint presidency, has urged the Hague-based war crimes tribunal to send representatives to Pale to question Radovan Karadzic, BETA reported from Belgrade on 30 July. Krajisnik added that he was sure Karadzic would cooperate with the investigators to clear his name and that "all of [the Bosnian Serbs'] documents and institutions" would be at the investigators' disposal. Krajisnik said Karadzic could easily clear up the war crimes charges against him and that Karadzic's testimony would put an end to what Krajisnik called an international campaign to ascribe to all Serbs a collective guilt for war crimes. Meanwhile in The Hague, the indicted Bosnian Serb Milan Kovacevic appeared before the court for the first time and denied he is guilty of war crimes.

CROATIAN UPDATE

Foreign Minister Mate Granic said in Zagreb on 30 July that "a group" of Bosnian Croats is willing to go the war crimes tribunal in The Hague if they have assurance that their cases will be processed within three months, an RFE/RL correspondent reported from the Croatian capital. Granic's ministry, meanwhile, issued a statement accusing Yugoslavia of trying to force its Croatian minority out of cities, especially Zemun. But Zagreb's soccer club Croatia defeated by a score of 5:0 Belgrade's Partizan, which had won a politically charged match the previous week (see "RFE/RL Newsline," 24 July 1997). Both matches took place without any serious incidents. And on the island of Hvar, more than 1,000 firemen and numerous volunteers fought a losing battle with a fire that has swept over 3,000 acres.

NEW FOREIGN INTELLIGENCE CHIEF IN ROMANIA

Presidential counselor Catalin Harnagea on 30 July was appointed director of the Foreign Intelligence Service, RFE/RL's Bucharest bureau reported. His predecessor, Ioan Talpes, recently resigned from that post (see "RFE/RL Newsline," 25 July 1997). Harnagea, aged 39, has no experience in intelligence work and no party affiliation. He is an engineer by training and worked as a journalist after 1989. In 1997, he graduated from the National Defense College, having written a thesis on "Crisis Management and the Secret Services." Harnagea was Prime Minister Victor Ciorbea's campaign manager when Ciorbea ran for and won the Bucharest mayoralty in the 1996 local elections.

ROMANIAN REFORM MINISTER CRITICIZES ECONOMIC SITUATION

Ulm Spineanu told journalists on 30 July that a list of 12 state-owned enterprises slated for immediate liquidation is to be submitted to the government. He said that paying the debts of those companies would require some nine years. Spineanu criticized the general economic situation, saying that although production is steadily decreasing, supply still far exceeds demand on the domestic market. He added that there is a demand for some of those products on foreign markets but that those managers who are incapable of responding must be replaced, RFE/RL's Bucharest bureau reported. In other news, the World Bank on 30 July announced that it is lending Romania $70 million to promote educational reform. The project will cost $130 million. The remainder of the costs will be covered by the Council of Europe ($14 million) and the Romanian government ($46 million).

UNFOLDING SAGA OF HUNGARIAN FLAG IN CLUJ

Gheorghe Funar, the nationalist Cluj mayor, on 30 July again ordered the Hungarian national flag hoisted at Budapest's Cluj consulate to be taken down. The same day, he went to the consulate at a head of a team that included the three persons who recently stole the flag (see "RFE/RL Newsline," 28 July 1997). The deputy head of the local police ordered the group to leave. The mayor claimed that the hoisted flag was not that of Hungary but one that bore the Hungarian symbols of Transylvania. That allegation was denied by the Hungarian consul in Cluj, RFE/RL's correspondent there reported.

TIRASPOL REFUSES TO ALLOW CHISINAU OFFICIAL TO VISIT ALLEGED TERRORIST

The authorities in Tiraspol refused to allow Moldovan presidential counselor Anatol Taranu to visit Ilie Ilascu, who has been sentenced to death for alleged acts of terrorism in December 1993 after being arrested by the Tiraspol authorities in June 1992. Ilascu, who on 30 July celebrated his 45th birthday, is being detained in the Hlinoaia prison. Three other members of the so-called "Ilascu group" are also in prison. The leader of the breakaway region, Igor Smirnov, said he had received no "official request" from Chisinau for the visit, while the chairman of the breakaway region's Supreme Soviet, Grigore Markutsa, said Ilascu is regularly visited by members of his family but other people "may be denied permission" to visit him. Romanian President Emil Constantinescu, the extreme nationalist mayor of Cluj Gheorghe Funar, and the Bucharest Mayor Viorel Lis sent birthday messages to Ilascu, whom many Romanians view as a national hero.

BULGARIAN PARLIAMENT APPROVES LAW ON OPENING COMMUNIST POLICE FILES

The parliament on 30 July approved a bill allowing communist secret police files to be opened (see "RFE/RL Newsline," 8 July 1997). The opposition Socialist Party deputies walked out of the chamber in protest, saying the bill harmed national security and was anti-constitutional. They said they will contest it in the Constitutional Court, Reuters reported. Deputies representing the third-largest faction in the parliament, the Union for National Salvation, abstained. Under the new law, the files of all members of the parliament, senior government officials, and high-ranking judges will be immediately opened and screened to find out whether they worked for the communist secret services. Within a year, all Bulgarian citizens will have access to their own files.




NO LIGHT AT THE END OF THE PIPELINE


by Paul Goble

Washington's decision not to oppose Western involvement in an Iranian pipeline project fundamentally changes the geopolitical situation in Eurasia even if it is unlikely to lead to a new outflow of natural gas anytime soon. U.S. officials said recently that Washington has concluded it has no legal basis for objecting to Western participation in the development of a pipeline system to carry Turkmenistan natural gas across Iran to Turkey. They argued that the principle beneficiaries of the pipeline would be Turkmenistan and Turkey, rather than Iran. Therefore, a White House spokeswoman said, the decision in no way represents a change in policy or any signal regarding that policy."

But despite such denials, the decision is likely to be seen across the region as a major shift away from the U.S. policy of seeking to isolate Iran, long identified as a sponsor of international terrorism, by imposing sanctions on any firm doing business there. That perception, in itself, will have a significant, if sometimes contradictory, impact on Iran, on Iran's relations with its neighbors, and on Russian relations with the Caucasus and Central Asia and with the U.S.

For Iran, Washington's decision represents both an important concession from its chief opponent on the international scene and an equally strong stimulus to continue the more moderate path it has pursued since presidential elections last spring. While explicitly limited to the current case, the decision will inevitably trigger expectations that Washington will become even more forthcoming and will curtail further the U.S. effort to keep the Europeans in line on the issue of isolating Iran. If such expectations prompt Iranian leaders to move toward a more moderate course, the decision could herald a fundamental change in relations between Iran and the rest of the world on a broad range of issues.

Even more significant than its likely impact on the Iranians themselves is the effect the decision is bound to have on Iran's relationship with other countries in the region. Few countries in the Middle East, Central Asia, or the Caucasus have been willing to follow Tehran's ideological lead, but all the countries in those regions have wanted to maintain good relations with Iran because of both its size and its location. Many have felt constrained in pursuing such ties by the vehemence of U.S. opposition to the Iranian authorities. The latest U.S. decision is likely to encourage some countries to step up their efforts in that direction.

But perhaps the most important consequence of Washington's decision will be its impact on Moscow's ability to maintain its influence over the former Soviet republics that are now independent countries in the Caucasus and Central Asia.

Many experts have pointed out that those eight countries would be far more independent of Moscow today if they had been able to export across Iran. But the radicalism of the Iranian authorities and U.S. opposition to it has limited their ability to do so. Thus, U.S. efforts to isolate Tehran, unintentionally had the effect of blocking efforts by those countries to pursue a more independent line. That served Moscow's geopolitical purposes and also helped explain why the Russians have provided military and even nuclear technology to the Iranian authorities, despite repeated U.S. objections.

Consequently, this shift in U.S. policy, reflecting Washington's desire to gain access to the enormous oil and gas reserves of the Caspian Sea basin, may appear to some in Moscow to be a direct challenge to Russian geopolitical interests. Past and present Russian aid to Tehran may give Moscow the leverage in Iran to block the flow of Central Asian or Caucasian oil and gas across that country to the West. But any Russian efforts in that direction are likely to exacerbate divisions within the Iranian leadership. Iranian radicals who will see the construction of such a pipeline and any further rapprochement with the West as a threat to their vision of the future may agree with the Russians.

Such conclusions may thus presage a number of shifts in the road and the pipeline before any gas begins to come across Iran to the West.


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