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Newsline - June 30, 1998




DUMA SCHEDULES SPECIAL SESSION TO CONSIDER GOVERNMENT PROGRAM

Following a meeting of the State Duma Council on 30 June, Duma Speaker Gennadii Seleznev announced that deputies will hold an extraordinary session on 15 and 16 July to consider the draft laws in the government's anti-crisis program in the second and third readings, ITAR-TASS reported. The laws are set to be considered in the first reading before the Duma finishes its spring session on 3 July. Finance Minister Zadornov expressed confidence that "all the draft laws have a chance of winning the Duma's approval" in mid-July, Reuters reported on 30 June. The previous day, Duma Budget Committee Chairman Aleksandr Zhukov of the Russian Regions said government estimates that the anti- crisis program will boost budget revenues by some 100 billion rubles ($16 billion) are "overly optimistic," Russian news agencies reported. LB

DUMA COMMITTEE APPROVES MOST TAX PROPOSALS...

The Duma Budget Committee on 29 June recommended that the lower house approve in the first reading most of the tax laws proposed by the government, RFE/RL's Moscow bureau reported. However, some laws may undergo substantial amendments. For instance, some Budget Committee members endorsed plans to charge a single rate of value-added tax on all goods except for bread, milk products, and children's food, but they also called for lowering VAT from the current rate of 20 percent. (Finance Minister Zadornov described as a "joke" proposals to reduce VAT, which accounted for nearly half of all federal revenues during the first four months of 1998, Interfax reported.) The committee postponed consideration of the proposed law on income tax, which some deputies slammed. Communist Yurii Voronin said giving the federal government 40 percent of income tax revenues would break the budgets of tens of thousands of cities. LB

...BUT OPPOSES LAW TAXING SERVICES NOT PAID FOR

Of the 12 government-backed tax laws considered by the Duma Budget Committee on 29 June, the committee recommended that the lower house reject in the first reading only one, "Kommersant-Daily" reported on 30 June. That proposal would force companies to pay taxes and excise duties on services and goods at the time they are shipped to the consumer, rather than when payment is received. Such a law would deal a major blow to companies with numerous non-paying customers, such as the gas monopoly Gazprom and the electricity giant Unified Energy System. LB

CHERNOMYRDIN CALLS FOR MORE EXPERIENCE IN GOVERNMENT

Former Prime Minister Viktor Chernomyrdin on 29 June called for reinforcing the government with "people who have experience and knowledge," Russian news agencies reported. He argued that "it is obvious that the laws submitted by the government to the State Duma were prepared in haste," adding that "there is an obvious lack of people who could understand what is going on." (Prime Minister Sergei Kirienko is 35 years old, and Oleg Sysuev, age 45, is the oldest of the three deputy prime ministers.) However, Chernomyrdin denied that he is seeking to return to the cabinet. He called for amendments to some of the government proposals, which, in his view, would harm the interests of the regions. By way of example, he named proposals to phase out agriculture subsidies, introduce a sales tax, and shift more responsibility for financing science and education to regional authorities. LB

COMMISSION ON IMPEACHMENT HOLDS FIRST MEETING

The Duma commission that will decide whether a motion to impeach President Boris Yeltsin is warranted convened for the first time on 29 June, Russian news agencies reported. Chairman Vadim Filimonov, a member of the Communist faction, announced that the commission will work through the Duma's summer recess. Filimonov declined to set a deadline for the completion of the commission's work. Duma First Deputy Speaker Vladimir Ryzhkov has charged that main goal of the commission is to protect the Duma against dissolution, "Pravda" reported on 30 June. The president cannot disband the lower house of the parliament if the Duma has adopted a motion on impeachment. Filimonov's commission could quickly draft such a motion and put it on the Duma's agenda if the threat of dissolution appeared imminent, "Kommersant-Daily" noted on 30 June. LB

YELTSIN SACKS REPRESENTATIVE AT CONSTITUTIONAL COURT

Yeltsin on 29 June sacked Sergei Shakhrai as his representative at the Constitutional Court, Russian news agencies reported. The presidential decree gave no reason for the dismissal, but Shakhrai claimed he was fired for remarks he made at a 27 June congress of his Party of Russian Unity and Accord (PRES). Addressing that congress, Shakhrai predicted that the Duma will support a motion to impeach Yeltsin by the necessary two-thirds majority. He also called for supporting Moscow Mayor Yurii Luzhkov in the next presidential election. But "Kommersant-Daily" and "Russkii telegraf" both suggested on 30 June that Shakhrai's dismissal has been in the works for several weeks. Yeltsin appointed Kremlin official Mikhail Mityukov to replace Shakhrai as his representative at the Constitutional Court, which will consider several cases important to the president later this year. LB

SHAKHRAI PUTS STAKE ON LUZHKOV

Shakhrai told "Kommersant-Daily" on 30 June that his Party of Russian Unity and Accord (PRES) will most likely compete in the next parliamentary elections as part of a coalition supporting Moscow Mayor Luzhkov. He predicted that such a coalition could gain one-third of the vote. Shakhrai believes that the next Duma elections will determine two leading candidates for the presidency: Luzhkov and Krasnoyarsk Krai Governor Aleksandr Lebed. In December 1993, when Shakhrai was in Yeltsin's inner circle and was a deputy prime minister, PRES gained 6.7 percent of the vote in Duma elections. In 1995, Shakhrai was an important figure behind the creation of Chernomyrdin's Our Home Is Russia movement. However, he parted ways with Chernomyrdin, and PRES competed alone in the December 1995 parliamentary election, gaining just 0.36 percent of the vote. LB

THREE CUSTOMS OFFICIALS TO BE FIRED OVER CONFLICT WITH MEDIA...

State Customs Committee head Valerii Draganov announced on 29 June that he has sent Prime Minister Kirienko a request to dismiss three deputy heads of the committee: Valerii Shpagin, Valerii Maksimtsev, and Nikolai Lyutov, Russian media reported. Draganov noted he did not make such a recommendation easily. His decision is a response to a recent open letter to Yeltsin signed by more than 15 editors of Russian publications who slammed the activities of customs officials. In February, the committee issued an order to charge value-added tax on print media published abroad. Journalists argued that the order violated the 1995 law on state support for the mass media, and the Supreme Court agreed on 15 June. Nevertheless, the following week customs officials held up issues of several Russian magazines, demanding proof that they are cultural, scientific, or educational in nature. LB

...BUT JOURNALISTS NOT CELEBRATING VICTORY YET

Sergei Parkhomenko, the editor of the weekly magazine "Itogi," told RFE/RL's Moscow bureau on 29 June that journalists welcome Draganov's remarks but are waiting for more concrete actions to ensure that the State Customs Committee will not interfere with shipments of print media to Russia. "Itogi," one of many Russian magazines published in Finland, was among the publications held up last week by customs officials. The law on state support for the mass media exempts all print media from paying value-added tax except for publications devoted to advertising or erotica. But according to Parkhomenko, customs officials now demand that magazines obtain documents with every edition to prove that they are neither advertising nor erotic publications. According to "Kommersant-Daily" on 30 June, customs officials on 29 June again held up editions of several Russian magazines at the border. LB

DEFENSE MINISTRY HIRES BACK FORMER BIGWIGS

The Defense Ministry has hired back many former prominent officers, "Nezavisimoe voennoe obozrenie" reported in its 26 June-2 July edition. Several months ago, former Defense Minister Pavel Grachev was hired as an adviser to the state-owned arms exporter Rosvooruzhenie. Earlier this month, officials announced the imminent appointment of former Soviet Defense Minister Dmitrii Yazov, one of the key figures in the August 1991 coup, as an adviser to Leonid Ivashov, head of the Defense Ministry's Main Directorate for International Military Cooperation. Former Ground Forces commander Vladimir Semenov and former General Staff chief Mikhail Kolesnikov have also joined the ranks of Defense Ministry advisers. "Nezavisimoe voennoe obozrenie" argued that the appointments reflect a strategy to "neutralize" potential leaders of political opposition in military ranks. LB

GOVERNMENT TRIES TO ASSUAGE FEARS OF EDUCATION REFORM

Prime Minister Kirienko told a 26 June meeting of higher-education directors that the government will not economize on education, "Kommersant-Daily" reported on 27 June. In a 19 June interview with "Izvestiya," Education Minister Aleksandr Tikhonov said that "the transformation of Russia into a country of paid education is a political and social myth." Their remarks aim to mollify widespread opposition among Duma deputies and educators to planned higher-education reforms, including the mergers of some institutions, the reduction of the number of teachers by one-fifth, the replacement of government stipends with means-tested "social assistance" to needy students, and government licensing of commercially operated schools (see "RFE/RL Newsline," 19 March and 21 May 1998). Viktor Sadovnichii, the principal of Moscow State University, charged that government under-funding of higher education threatens Russians' constitutional right to acquire an education, "Nezavisimaya gazeta" reported on 27 June. BT

FOURTH SUSPECT ARRESTED IN KALMYKIAN JOURNALIST'S MURDER

Police in Elista have arrested a fourth suspect in connection with the 7 June murder of Larisa Yudina, the editor of "Sovetskaya Kalmykia Segodnya," "Kommersant-Daily" reported on 30 June. Sergei Lipin was incriminated during an interrogation of one of the other three suspects in the case. He is accused of moving Yudina's body after the murder to the pond where it was discovered. According to "Kommersant- Daily," Lipin has already confessed to his part in the crime but insists that he does not know who gave the order to kill Yudina. Like the other suspects, he is being held in pre- trial detention in Stavropol Krai. LB

JOURNALIST BEATEN IN KIROV

Sergei Bachinin, the editor-in-chief of the newspaper "Vyatskii nablyudatel" in Kirov (Kirov Oblast), was hospitalized on 29 June with a severe concussion and other skull injuries, ITAR-TASS reported on 30 June. Colleagues at the newspaper, which is critical of the local authorities, became suspicious when Bachinin did not turn up for a work-related party on 27 June and did not come to the office two days later. They went to his apartment on 29 June and found him lying on his bed in a pool of blood. Colleagues believe the crime is linked to the editorial policy of "Vyatskii nablyudatel" and Bachinin's long-standing conflicts with the city authorities. According to ITAR-TASS, Bachinin ran for mayor of Kirov in 1996 and was the main rival of the candidate who won that election. LB

CHECHEN PRESIDENT, FOREIGN MINISTER AT ODDS OVER OSCE

Chechen Foreign Minister Movladi Udugov told journalists in Grozny on 29 June that his ministry has given the OSCE mission in the Chechen capital 15 days to apply to the government for an official mandate to continue its activities in Chechnya, Russian agencies reported. He said the mission will be asked to leave Chechnya if it fails to do so. Udugov argued that allowing the OSCE to remain in Chechnya under an agreement signed by the Russian government is tantamount to acknowledging Chechnya's subordination to Russia. And he added that the ultimatum had the approval of President Aslan Maskhadov. But Maskhadov's press spokesman, Mairbek Vachagaev, told Interfax that the president has no intention of expelling the OSCE mission from Chechnya, although he thinks it "correct" that the mission should coordinate its continued presence with the Chechen government. LF

CHECHNYA WANTS UN MEMBERSHIP

Also on 29 June, Udugov said that Chechnya will apply for UN membership, Interfax reported. He added that talks on diplomatic recognition currently being conducted with more than 10 countries would have brought "positive results" long ago but for the interference of the Russian Foreign Ministry. LF

TATARSTAN ABOLISHES LANGUAGE BONUS

The 15 percent wage increase granted to employees in the republic's culture and education sectors who are fluent in both Tatar and Russian is illegal and has been rescinded, according to a ruling by Tatar prosecutor-general cited in "Nezavisimaya gazeta" of 30 June. The increases had provoked a storm of criticism when they were introduced last year. LF




Aliyev ALLY TO CONTEND AZERBAIJANI PRESIDENTIAL POLL

Nizami Suleymanov, chairman of the pro- government Independent Azerbaijan Party, told a news conference in Baku on 29 June that he will run in the presidential elections scheduled for October, Turan reported. He explained his decision by saying that "only Allah is indispensable," and that alternatives exist to the incumbent, Heidar Aliev. At the same time, he added that he has no doubts that Aliyev will be re-elected. He said that the opposition parties' plan to boycott the poll was an acknowledgment of defeat. Suleymanov ran as a presidential candidate in June 1992, against Azerbaijan Popular Front chairman Abulfaz Elchibey. He won 38 percent of the vote on the strength of a pledge to end the war in Nagorno-Karabakh within three months. LF

EX-PRESIDENT SUMMONED BY AZERBAIJANI INTERIOR MINISTRY

Azerbaijan Popular Front Party chairman Abulfaz Elchibey was summoned to the Interior Ministry's Department to Combat Organized Crime on 29 June, Turan reported. Elchibey linked the summons to the criminal case recently opened against a member of the Azerbaijan Popular Front Party in connection with a draft document confiscated during a search of the editorial offices of the opposition newspaper "Chag." The authorities have termed the document subversive. LF

ARMENIA TO EXEMPT SMALL BUSINESSES FROM INCOME TAX

In a bid to boost budget revenues and preclude tax evasion, the Armenian government has drafted legislation extending the so-called system of "fixed payments" to more categories of small businesses, thereby exempting them from income tax, RFE/RL's Yerevan bureau reported. Under that law kiosks, open-air markets, and some services sector outlets will pay a fixed amount of money to the state, depending on their location and size. Finance and Economy Minister Eduard Sandoyan told the parliament on 29 June that the measure will not only increase budget revenues but will also expand the tax base by cracking down on tax evasion among owners of small businesses. Sandoyan also sought approval for a 25 percent increase in fixed payments for those businesses already operating under the system to bring their contributions into line with inflation. LF

NAGORNO-KARABAKH TO HOLD LOCAL ELECTIONS

The government of the unrecognized Nagorno-Karabakh Republic has reaffirmed its intention to hold elections to local self-government bodies, RFE/RL's Stepanakert correspondent reported on 29 June. Those elections will take place on 27 September. A government directive specifically instructs local authorities to cooperate with the Nagorno-Karabakh Central Election Commission in ensuring a free and fair vote. Previous presidential and parliamentary elections in Nagorno-Karabakh were not deemed legitimate by the international community because the disputed region's ethnic Azerbaijani minority, who fled during the early years of the conflict, was unable to participate. LF

ARTICLE CLAIMS KARABAKH IS READY FOR UN MEMBERSHIP

An article published in "Nezavisimaya gazeta" on 30 June lists the reasons why the author considers Nagorno-Karabakh qualifies for UN membership. The article points out that the December 1991 referendum on independence from Azerbaijan took place in accordance with existing Soviet legislation. It also says that, as a non- UN member, Karabakh is deprived of the opportunity to defend itself by diplomatic, as opposed to military, means. An article published by the same author in "Nezavisimaya gazeta" in January similarly called for the "decolonization" of Karabakh and for the creation of a permanent security corridor linking the enclave with Armenia. That article argued that only international recognition could provide adequate security for the Karabakh population. LF

NATO CALLS KAZAKHSTAN 'RELIABLE PARTICIPANT'

Klaus Naumann, chairman of NATO's Military Committee, began a two-day visit to the Kazakh capital Astana on 29 June, RFE/RL correspondents and Interfax reported. Naumann met with Kazakh Defense Minister Mukhtar Altynbayev. Meeting with parliamentary deputies, Naumann said that NATO is interested in stability in Central Asia and that Kazakhstan is a "reliable participant" in the alliance's Partnership for Peace program. Naumann held discussions with Altynbayev on the military exercises scheduled for September in Kazakhstan, Kyrgyzstan, and Uzbekistan as part of the NATO program. BP

JAPAN TO HELP UPGRADE AIRPORT IN KAZAKH CAPITAL

Kazakh Foreign Minister Kasymjomart Tokayev on 29 June announced that Japan will lend Kazakhstan more than 22 billion yen (some $150 million) to improve the airport in the Kazakh capital, Interfax and ITAR-TASS reported. The Astana airport was built more than 30 years ago. According to ITAR-TASS, it "does not correspond to international standards of civilian aviation." BP

ISRAELI DELEGATION ARRIVES IN KAZAKHSTAN

An Israeli delegation led by Minister of Industry and Trade Natan Sharanskii arrived in Almaty on 29 June, RFE/RL correspondents and Interfax reported. Sharanskii, who is also the co-chairman of the Israeli-Kazakh Economic Commission, said he hopes trade between the two countries can be increased, Interfax reported that in recent years, Israel has exported farm produce worth $1 billion to Kazakhstan. Sharanskii said trade will improve once Kazakh producers have more information about "borrowing, business plans, or mortgage mechanisms." The Israeli delegation is scheduled to leave for Uzbekistan on 30 June. BP

GLASNOST FOUNDATION APPEALS TO UZBEK PRESIDENT OVER JAILED JOURNALIST

The Glasnost Defense Foundation has appealed to Islam Karimov to ask for a revision of the verdict against journalist Shadi Mardiev. A copy of the letter, obtained by RFE/RL's Uzbek Service, claims two of the five charges on which Mardiev was convicted are based on the former criminal code. Mardiev was accused of extortion and slander by the Samarkand regional deputy prosecutor following a broadcast the journalist made last November. A Syr-Darya district court sentenced him to 11 years earlier this month. The Glasnost Defense Foundation claims Mardiev was convicted because of his political criticism. It wants Karimov to ensure a full and unbiased investigation into his case. BP




RUSSIAN AMBASSADOR LEAVES RESIDENCE, NOT MINSK

After the Belarusian authorities cut off water and electricity to the Drazdy complex on 29 June, the Russian ambassador left his residence there, the Russian Foreign Ministry told Interfax. But whereas 11 other ambassadors were recalled as a result of the standoff between the diplomatic corps and the Belarusian government, ambassador Valerii Loshchinin has simply moved into an apartment elsewhere in the city. PG

KUCHMA SAYS COMMUNIST CAN BE PARLIAMENT SPEAKER

At a meeting with leaders of the parliamentary parties on 29 June, Ukrainian President Leonid Kuchma said that Pyotr Simonenko, head of the Communist Party caucus, would be acceptable if the parliament voted for him and if the right-of-center caucuses were allowed to control at least 10 of the 20 parliamentary committees, according to ITAR-TASS. The other candidate in the next round of voting on 30 June is Leonid Chernovetskiy, a member of Kuchma's own People's Democratic Party. The parliament has been seeking to elect a speaker since 12 May. Kuchma warned that the deadlock is having a negative impact on Ukraine's development. PG

ARGENTINA TO HELP UKRAINE ENCASE CHORNOBYL

During an official visit to Kyiv on 29 June, Argentinean President Carlos Saul Menem said his country will provide financial assistance to help build a more environmentally safe container for the Chornobyl nuclear power station, ITAR-TASS reported. Meanwhile, Ukrainian officials have shut down reactor no. 2 for repairs at the country's Yuzhnaya atomic energy station. Seven of Ukraine's 14 nuclear power reactors are now undergoing repairs. PG

ESTONIAN RURAL BANK DEPOSITORS TO RECEIVE MONEY FROM FUND

The parliament has approved a government plan whereby money from the stabilization fund will be used to compensate depositors with the recently liquidated Rural Bank, ETA reported on 29 June. Some 266 million kroons ($17.7 million) will be taken from the fund as a seven-year, interest-free loan. Deposits of private individuals with the bank total 271 million kroons and corporate deposits 167 million. The government, which is the largest depositor with some 500 million kroons, will be the last to receive compensation. The parliament, for its part, has allocated 100 million kroons from the supplementary budget to partially compensate depositors. The Rural Bank was closed this spring after it lost some 200 million kroons on the stock market last year. JC

POLISH PRESIDENT IN MOSCOW

On a private visit to the Russian capital on 29 June, Aleksander Kwasniewski met with Russian President Boris Yeltsin, Russian and Polish agencies reported. The two leaders discussed NATO expansion, over which the two adhered to their respective positions; Kosova, with Kwasniewski describing Russia's position as "rational"; and Belarus, where the two agreed not to try to isolate Minsk. Yeltsin accepted an invitation to visit Warsaw in mid-December, his first trip there since August 1993. And the two presidents agreed to meet before 2000 to open a memorial monument at Katyn to the Polish officers killed by Stalin during World War II. PG

POLAND TO PUSH FOR ACCELERATED EU ENTRY TALKS

Jan Kulakowski, Warsaw's chief negotiator with the EU, and Ryszard Czarnecki, minister for European integration, said on 29 June that Poland will seek to begin concrete talks later this year on joining the EU, PAP reported. The announcement came in response to the EU's decision to delay such talks until sometime in 1999. Kulakowski said the move would be coordinated with the other candidate countries at a meeting in Ljubljana in mid-July. PG

POLISH TROOPS TO PATROL WARSAW STREETS

Responding to popular demands for a crackdown on crime, the Polish Interior Ministry announced on 29 June that soldiers will be patrolling Warsaw streets this summer, Reuters reported. This is the first time troops will be on duty there since the introduction of martial law in 1981. The ministry denied that the recent murder of former national police chief Marek Papala has anything to do with the decision (see "RFE/RL Newsline," 26 June 1998). PG

NO PROGRESS IN CZECH COALITION TALKS

President Vaclav Havel on 29 June met with Freedom Union chairman Jan Ruml and leader of the Christian Democratic Party (KDU-CSL) Josef Lux. Both party leaders said after the meeting that no progress has been made in discussions on a new coalition government. Lux stressed that the KDU-CSL is not ready to agree to a minority government composed of the Social Democratic Party and his own formation that would be tolerated in the parliament by the Communists. He also said the Freedom Union's recent announcement that it is ready to form a coalition with Vaclav Klaus's Civic Democratic Party (ODS) and the KDU-CSL under certain conditions was "premature," CTK reported. ODS deputy chairman Miroslav Macek told CTK that he is "disappointed" that the Freedom Union is talking about "preliminary conditions" even before starting coalition talks with the ODS. MS

SLOVAK PRESIDENTIAL ELECTIONS LIKELY TO STALL AGAIN

Forty-five deputies from Prime Minister Vladimir Meciar's Movement for a Democratic Slovakia (HZDS) have nominated Banska Bystrica university rector Otto Tomecek as their candidate in the latest round of presidential elections, scheduled for 9 July, Reuters reported on 29 June. As in the previous rounds, the opposition parties said they will block the HZDS candidate. Without their support Tomecek cannot obtain the minimum 90 votes needed for election. Attorney Peter Tomka, who was backed by the Party of Democratic Left, withdrew from the race over the weekend, saying he has no chance of winning and that there is no point in running. MS

SLOVAKIA, RUSSIA TO SWAP ARMS QUOTAS

Slovakia and Russia on 29 June agreed to exchange their arms quotas established by the Treaty on Conventional Forces in Europe, ITAR-TASS reported. Under the agreement, Slovakia will acquire another 15 fighter helicopters and Russia another 15 combat aircraft. Defense Ministry spokesman Jaroslav Tomas told journalists that the exchange will take place within the next three months. He added that NATO countries frequently redistribute quotas among themselves. MS

HUNGARIAN PEOPLE'S PARTY ELECTS NEW LEADER

The 28 June national congress of the Hungarian Democratic People's Party (MDNP) elected Erzsebet Pusztai as the party's new leader. Former party chairman Ivan Szabo, who resigned after the party's failure to enter the parliament in the May elections, became MDNP honorary president for life. Pusztai said it is essential that the MDNP conclude an alliance with other civic forces before the local elections scheduled for this fall. MSZ




SERBS LAUNCH OFFENSIVE TO RETAKE MINE

Serbian security forces launched an offensive on 29 June to retake the strategic mining town of Belacevac, near the Kosova capital of Prishtina. Fighting initially centered around the town's coal mine, which supplies two nearby power plants and has been controlled by Kosova Liberation Army (UCK) forces since last week. Detonations and gunfire continued on 30 June. The area around the town was sealed off, and Serbian police and Yugoslav army troops, backed up by armored personnel carriers, moved into the area. Several buildings in the town were reported to be ablaze. Hundreds of civilians from Belacevac and the nearby towns of Hade and Lismir have fled the area. There are no independent reports of casualties. The situation in the central Kosovar town of Kijeva is unchanged (see "RFE/RL Newsline," 29 June 1998). PB

EU WAITING FOR COMPLIANCE FROM BELGRADE

EU foreign ministers have called on Yugoslav President Slobodan Milosevic to immediately implement the pledges he made in Moscow (see "RFE/RL Newsline," 16 June 1998), including an halt to offensives against civilians, Reuters reported on 30 June. The statement, issued after a meeting in Luxembourg, stressed support for Kosova to be given "a large degree of autonomy" by Belgrade. The foreign ministers also adopted a ban on flights by the Yugoslav state airline, JAT, to EU countries. However, a date for the ban was not agreed upon. The foreign ministers were divided over whether to allow UCK members to take part in peace negotiations. British Foreign Secretary Robin Cook said negotiations should be held with ethnic Albanian leader Ibrahim Rugova, the "legitimate elected leader." PB

ANNAN URGES ACTION WITH UN MANDATE

UN Secretary-General Kofi Annan on 29 June urged the international community to move swiftly in Kosova in order to avoid a "second Bosnia." Annan, speaking in Vienna, said the UN Security Council would have to approve any military action in the Serbian province. He also said he is willing to travel to Yugoslavia if the situation calls for it. In Moscow, the Russian Foreign Ministry said that it cannot support NATO military action in Kosova and that Moscow expects efforts to find a political solution to "bear fruit." PB

UCK SPOKESMAN SAYS RUGOVA OUT OF TOUCH WITH PEOPLE

Jakup Krasniqi, a spokesman for the UCK, said on 28 June that Kosova shadow state President Ibrahim Rugova does not have enough "political capital" to assume control over the UCK, Belgrade-based Radio B92 reported. Krasnici said that Rugova has lost touch with Kosovar Albanians and that the UCK will never be controlled by a man who has made so many accusations against it. Rugova recently told Western officials that he will seek to gain some influence over the UCK (see also "RFE/RL Newsline," 22 June 1998). Krasniqi said the UCK has some 30,000 troops organized into three brigades. PB

RUGOVA ADVERSARY SAYS UCK CONTROLS HALF OF KOSOVA

Adem Demaci, leader of the Parliamentary Party of Kosova and a rival of Rugova, said on 27 June that UCK forces control 50 percent of Kosova, the independent news agency Beta reported. Previous reports have estimated that the UCK has control over 30-40 percent of the province. Demaci, in an interview published in the Croatian newspaper "Jutarnji List," said the UCK troops control all of the main roads in Kosova. He added that UCK forces are not attempting to take over towns. Demaci said Rugova's policy of non-violence has failed. Rugova and his supporters "follow fiction" but the UCK "is a factor that has helped us return to reality," he commented. PB

MACEDONIAN PREMIER GLOOMY ABOUT KOSOVA

Branko Crvenkovski said in Washington that there is "not much room for optimism" over the crisis in Kosova, an RFE/RL correspondent reported. Speaking after a meeting with U.S. Deputy Secretary of State Strobe Talbott, Crvenkovski said that there is still hope for finding "a political solution" and that Belgrade must give ethnic Albanians "substantive autonomy." Ethnic Albanians make up some 25 percent of Macedonia's population. Crvenkovski is to meet with U.S. Vice President Al Gore, Defense Secretary William Cohen, as well as World Bank and IMF officials during his visit. PB

MONTENEGRO ASKS PRIVATE BROADCASTERS NOT TO SIGN CONTRACTS WITH BELGRADE

The Montenegrin government on 27 June asked all private radio and television stations not to sign any contracts with the federal Yugoslav authorities. The government's Information Office issued a statement saying that "Montenegrin radio and television stations have no obligation toward the federal government." It added that Belgrade's recent demand that they sign contracts to rebroadcast a federal program was "yet another unconstitutional attempt to centralize the information environment in the federal Yugoslavia," RFE/RL's South Slavic Service reported. FS

MONTENEGRO DEFIES BELGRADE OVER PREVLAKA

Montenegrin Foreign Minister Branko Perovic told the daily "Pobjeda" on 26 June that his government is ready to open a border checkpoint with Croatia on Prevlaka Island even without a final settlement over the island's border. He added that Belgrade rejected an offer to open the checkpoint but had not consulted Podgorica over the issue. Meanwhile, the UN General Assembly has appointed Graham Roger Williams from New Zealand as commander of the 28- member monitoring mission on Prevlaka, RFE/RL's South Slavic Service reported. FS

BOSNIAN SERB PARTY ELECTS NEW LEADER

The Serbian Democratic Party's General Assembly on 28 June elected Dragan Kalinica as chairman. Kalinica replaces Aleksa Buha, who resigned the previous day. Buha, a close associate of indicted war criminal and Bosnian Serb leader Radovan Karadzic, said he resigned because the party has "not supported his model of party leadership." Tanjug quoted party members as saying that Buha is unsatisfied that his party nominated Momcilo Krajisnik, rather than him, as a candidate for the presidency of Bosnia- Herzegovina, RFE/RL's South Slavic Service reported. FS

EUROPEAN OFFICIALS PUSH FOR ALBANIAN CONSTITUTION COMPROMISE

Representatives of the Council of Europe's Parliamentary Assembly, the European Parliament, and the OSCE's Parliamentary Assembly were in Tirana on 29 June to push for closer cooperation between the government and the opposition in drafting a new constitution. After meeting with those officials, Democratic Party Deputy Chairman Genc Pollo admitted that his party has not kept an earlier promise to become actively involved in the drafting process. His party has demanded a veto in the parliamentary drafting commission, but commission chairman Sabri Godo of the Republican Party has rejected that proposal, "Koha Jone" reported. FS

ALBANIAN PRESIDENT DEMANDS PARLIAMENT ACTION OVER CONTRABAND

Rexhep Meidani on 29 June presented to the parliament the results of an investigation into customs evasion and smuggling, which show a considerable drop in revenues from customs duties in the first four months of 1998 compared with the last four months of 1997 (see "RFE/RL Newsline," 25 June 1998). Parliamentary speaker Skender Gjinushi demanded that the parliamentary commissions for finance and the interior launch investigations into the matter and make recommendations to restructure the customs, police, and judicial systems, "Koha Jone" reported. FS

ROMANIAN PREMIER SKEPTICAL ABOUT SPEEDY NATO MEMBERSHIP

Prime Minister Radu Vasile, addressing a forum of his party's youth organization in Calimanesti on 27 June, said it is "unlikely" that Romania will be invited to join NATO next year and "more realistic" to view membership as "possible" between 2000 and 2003. He said that NATO membership remains a "major target" of Romanian policy but that "the hysteria" that accompanied Romania's bid for membership in 1997 must be avoided. Vasile added that he does not believe his National Peasant Party Christian Democratic (PNTCD) is able to win the next elections on its own and that statements by PNTCD members in favor of early elections are "inopportune." He argued that the PNTCD must accept the idea that in the year 2000 it will also need a coalition in order to rule, RFE/RL's Bucharest bureau reported. MS

FORMER SECURITATE AGENTS SOUGHT IN TOP LEADERSHIP

The Supreme National Defense Council on 29 June announced it has asked the Romanian Intelligence Service (SRI), the Foreign Intelligence Service (SIE), the Interior Ministry, and the Defense Ministry to report within 10 days whether any member of the council had links with the communist secret police. The same day, the Chamber of Deputies unanimously passed a resolution demanding that the SRI do the same for its members within two weeks. Also on 29 June, Democratic Party deputy Adrian Vilau, whose former links with the Securitate were recently revealed, resigned as chairman of the chamber's commission overseeing the activity of SIE. MS

ROMANIA TO REDUCE MILITARY FORCES

Defense Minister Victor Babiuc told journalists on 29 June that Romania's military forces will be cut this year by some 10,000 troops. At the end of the process, he said, the total number of troops will be reduced to150,000. In other news, on 29 June the parliamentary group of the Hungarian Democratic Federation of Romania in the Chamber of Deputies submitted a draft law for setting up a Hungarian- language university in Cluj. MS

YELTSIN RECONFIRMS RUSSIAN POSITION ON TRANSDNIESTER

In a message to his Moldovan counterpart, Petru Lucinschi, Russian President Boris Yeltsin has reconfirmed that Moscow wants the sides involved in the Transdniester conflict to "strictly abide by the May 1997 memorandum on normalizing relations between Moldova and the Transdniester and the March 1998 Odessa summit accords," Infotag reported on 29 June. Yeltsin's message was delivered to Lucinschi by Igor Morozov, the Russian representative at the Chisinau- Tiraspol negotiations. MS

WESTERN EUROPEAN UNION OFFICIALS IN BULGARIA

Parliamentary chairman Yordan Sokolov on 29 June told a WEU delegation that Bulgaria will comply with any decision taken by the international community on the Kosova conflict, an RFE/RL correspondent in Sofia reported. The delegation is also scheduled to meet with Foreign and Defense Ministry officials and tour military installations in Plodviv and Karlovo. The WEU is the military arm of the EU. MS




CHUBAIS TRIES TO JOLT ELECTRICITY SECTOR


by Stephanie Baker

With its glass walls and high-tech security, the new headquarters of Komienergo, the regional electricity company in Russia's Far North, seem extravagant for a company saddled with debts and struggling to make ends meet. But the company's management said looks are deceiving. Ivan Medvedev, Komienergo's financial director, says: "We built this place through barter."

Since the company was collecting only 10 percent of its bills in cash, building a new headquarters through bartered goods made sense. The local timber mill could not pay its electricity bill in cash but had plenty of wood to spare. Cement and other construction materials acquired through such creative barter transactions also were used.

Although the building continues to raise eyebrows among locals, it stands as a symbol of Russia's cashless economy, which has given rise to inefficiencies and financial abuses. It is also a symptom of the company's messy financial state, where barter reigns supreme and debts pile up. Komienergo's accounts receivable as of 1 June 1 stood at a staggering $1.7 billion rubles ($280 million) or about half of total sales, with federal and local budgets the biggest debtors by far. But the company owes almost as much to its suppliers and to the government in taxes.

Like many in Russia, managers at Komienergo are counting on the country's best-known reformer, Anatolii Chubais, to pull out his financial wand.

After being fired as first deputy prime minister in March, Chubais was appointed in late April to take over as chief executive of Russia's giant electricity company Unified Energy Systems (EES), which owns a controlling stake in Komienergo and almost all of the country's regional utilities. The appointment came after months of behind-the-scenes wrangling and intense opposition from the State Duma, which balked at Chubais's running a company that allows him to wield political influence over the regions in the run-up to parliamentary elections.

At the helm of Russia's largest company by sales and its most traded stock, Chubais would seem to have his hands full. But Russia's financial crisis has pulled him back into the government yet again to negotiate an emergency stabilization loan from the IMF.

The job of running state-controlled EES puts Chubais at the center of the biggest structural problem facing the Russia: non-payments. EES is at the hub of a vicious circle of unpaid bills totaling some $96 billion, which is choking the economy and putting a break on investments. EES and its subsidiaries are owed roughly $21 billion, including massive unpaid bills by government-funded organizations. It, in turn, has built up unwieldy debts to state budgets and suppliers, such as gas monopoly Gazprom.

EES currently owns the national electricity grid, operates 34 power plants, and holds controlling stakes in 70 regional utilities that have a monopoly on local distribution. Under reforms outlined in a presidential decree, Russia's power generating facilities will be separated from transmission, but Chubais has said the transformation will take two to three years.

At present, competition is being smothered. Instead of independent power stations competing to supply power on a national grid, prices are set by local regulators. While a wholesale market for power exists at the national level, regional utilities often block industries from tapping other cheaper sources of electricity by charging high transmission fees. There is also a web of opaque financial deals carried out in barter and unregulated promissory notes.

If Chubais can sort out the company's financial mess and make EES more transparent, it could help spur economic growth. In his words: "All transformations in EES will directly affect the Russian economy as a whole." If he fails to make headway at EES, economists say, Russia is more likely to remain stuck in first gear, dragged down by insolvent companies that cannot pay their bills.

Chubais is relying on devising a new strategy for implementing a restructuring plan that languished under his predecessor, Boris Brevnov, who was pushed out by the company's Soviet-era directors after less than a year on the job.

Analysts said that unlike Brevnov, Chubais has the political muscle to push through reforms, such as raising electricity tariffs for households, breaking up regional monopolies, and turning off non-paying customers. While many of the proposals are not new, Chubais has for the first time outlined a blueprint for restructuring the electricity sector and distributed it to investors and regional leaders for comments and suggestions.

His strategy to implement the plan relies heavily on the political and administrative skills he honed in the government. Using both a carrot and stick, Chubais has said he will force the federal government to pay its bills to local utilities that agree to implement tough reforms.

Given Russia's overall economic difficulties, the task is huge and time is short. Prime Minister Sergei Kirienko has given Chubais until the fall to make palpable improvements at EES. But most analysts say he cannot be expected to turn around the lumbering electricity giant in six months. The author is an RFE/RL Moscow-based correspondent.


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