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Newsline - September 15, 1998


President Boris Yeltsin on 14 September appointed Yurii Zubakov, a retired rear admiral who was Prime Minister Yevgenii Primakov's deputy at the Foreign Intelligence Service as well as at the Foreign Ministry, to head of the government administration. Robert Markarian, chief of the Secretariat at the Foreign Ministry, became chief of the prime minister's Secretariat. JAC


Yeltsin appointed General Nikolai Bordyuzha, head of the Federal Borderguard Service as secretary of the National Security Council, which was occupied by Andrei Kokoshin until his removal on 10 September. Yeltsin also transferred Sergei Prikhodko from the post of presidential aide on foreign affairs to deputy chief of the presidential staff. Dmitrii Yakushin, a television journalist, was appointed press secretary for the Russian president on 15 September. According to ITAR-TASS, Andrei Bugrov, Russia's executive director at the World Bank, will assume Anatolii Chubais's old responsibilities as presidential envoy to international financial institutions. Explaining that he differed ideologically with other members of the government, Yabloko leader Grigorii Yavlinskii rejected an offer to become deputy prime minister on 14 September. The next day, Aleksandr Shokhin, leader of the Our Home is Russia faction, accepted the post of deputy prime minister with responsibility for finance. JAC


The official ruble rate jumped 24 percent from 11.43 rubles to 8.67 rubles to $1 on 15 September. "Nezavisimaya gazeta" the same day argued that Prime Minister Primakov has apparently decided to use the limited funds available to the Russian government to prop up the ruble and save Russian banks rather than pay off Russia's loans to foreign creditors. The newspaper concluded that soon there will again be two exchange rates in Russia: an official and a market one. "The real or market rate will fall sharply as soon as the cabinet and the Central Bank carries out a significant enough emission," it commented. On 14 September, acting Finance Minister Mikhail Zadornov expressed his hope that it will be possible to ease the country's crisis "without an emission." JAC


Communist Party leader Gennadii Zyuganov told NTV on 14 September that the "main motif" of the general strike scheduled for 7 October will be the resignation of President Yeltsin. At a meeting of the People's Patriotic Union, a bloc of left opposition groups, Zyuganov said that the work of the impeachment committee will continue. However, an impeachment committee session on 14 September had to be canceled when key witnesses failed to appear. According to ITAR-TASS, committee chair Vadim Filimonov said that one of those witnesses, former Defense Minister Pavel Grachev, is ill but willing to testify when he recovers. The session has been rescheduled for 28 September. On 10 September, head of the Federation of Independent Trade Unions Mikhail Shmakov said that if the union's main demand for payment of back wages is met, the all-Russian protest action may be canceled. JAC


A one-day meeting of G-7 senior officials in London to which Russia sent representatives concluded on 14 September with the industrial nations expressing political support for the new Russian government but continuing to link additional financial assistance to new economic reform measures. Within 10 days, British Prime Minister Tony Blair will decide whether to convene an emergency summit of the world's top leaders to continue discussions of Russia's economic crisis. JAC


"Moskovskii komsomolets" reported on 15 September that Prosecutor-General Yurii Skuratov has sent a letter insisting on a thorough investigation of Deputy Prime Minister Boris Fedorov's activities. The newspaper links the letter to the activities of one of Fedorov's subordinates, Ivan Moskovskii, and a U.S. company called Golden ADA, whose owner, Andrei Kozlenok, was recently extradited to Russia from Greece. According to the newspaper, Moskovskii organized a deal between the Russian Federation's Precious Metals and Gems Committee and Golden ADA, which turned out to be a dummy corporation. "Moskovskii komsomolets" concludes that Fedorov might be charged with abuse of power or neglect of duties resulting in considerable losses to the Russian state. JAC


Like their larger national counterparts, regional banks are also considering mergers to survive, according to the "Russian Regional Report" of the Institute for EastWest Studies. Irkutsk Deputy Governor Valentin Mezhevich recommended that banks consolidate in order to weather the current crisis. In Nizhnii Novgorod, Governor Ivan Sklyarov and a group of local bankers are developing their own anti-crisis program to compensate banks for losses stemming from the collapse of the short-term treasury bond market. One idea is for the oblast to issue new securities that "would be used in the place of money." JAC


ITAR-TASS on 15 September reported that workers at power station in Vladivostok have taken their managers hostage until back wages are paid in full. On 12 September, ITAR-TASS reported that 44 workers at the station had been on a hunger strike for 10 days. Company management then described the situation as "close to a social explosion" and blamed wage arrears on their energy customers not paying bills. Primore Governor Yevgenii Nazdratenko sent workers a telegram on 12 September asking them to be patient and perform to their best ability so that the industry would be ready for winter. On 14 September, ITAR-TASS reported that more than 15,000 teachers in Primore would participate in an all-Russian protest action of teachers planned for 15 September. JAC


Recently deposed acting Prime Minister Viktor Chernomyrdin has apparently decided to make his debut in electoral politics in the Yamal-Nenets district, where he will run for the State Duma deputy slot once occupied by Vladimir Goman, who joined the government. According to ITAR- TASS, local experts expect Chernomyrdin to win the elections, which are scheduled for 27 September. JAC


Citing a source in the Defense Ministry, ITAR- TASS reported on 14 September that some of the Russian Armed Forces' regular food suppliers have stopped providing supplies because of unpaid bills totaling 1.5 billion rubles ($131 million). "Nezavisimaya gazeta" reported on 11 September that long food lines are visible outside food stores at a majority of units. According to the newspaper, the Finance Ministry provided only 8.3 million rubles on 31 August, which is enough "to feed only 300,000 men for one month." The newspaper added that the government is devising a system in which oblasts and republics with developed agricultural sectors supply food to military units stationed on their territory. This would allow the regions to pay off outstanding debts to the federal government. JAC


Fifteen men stole 37 weapons in a dawn attack on a police post in Dagestan's Agul Raion on 14 September, "Nezavisimaya gazeta" reported. One police officer and two of the attackers were killed in the ensuing shoot-out. LF


Salman Raduev told journalists in Grozny on 14 September that he knows the whereabouts in Chechnya of two abducted British aid workers and Russian presidential envoy Valentin Vlasov, Russian agencies reported. He added that he also knows who is holding them captive. ITAR-TASS quoted Raduev as predicting that the unconditional release of all three prisoners is imminent, but Interfax reported that Raduev has said Vlasov's release is being delayed by Russian Interior Minister Sergei Stepashin's refusal to pay a $5 million ransom. LF


Meeting on 14 September, leaders of the 37 political parties and organizations aligned in the Movement for Democratic Elections and Electoral Reform voted to convene a march in Baku on 20 September to demand that the 11 October presidential poll be free and fair. Also on 14 September, representatives of the National Democratic Institute issued a statement condemning police brutality during several hours of clashes on 12 September between police and demonstrators in Baku. The U.S. State Department has also issued a statement deploring the violence, AP reported. Azerbaijani Prosecutor-General Eldar Hasanov claimed on 13 September that the opposition's actions are tantamount to "an attempt to seize power by force," Turan reported. LF


'Vano Siradeghian, chairman of the board of the Armenian Pan-National Movement (HHSh), told RFE/RL's Yerevan bureau on 14 September that a newspaper report claiming that the party's leaders recently held a secret meeting to discuss their return to power through discrediting and causing splits within the present leadership is "absolutely nonsensical." Another HHSh leader, former parliamentary speaker Babken Ararktsian, also refuted the claim, saying he has not participated in high-level party meetings for several months. The Dashnak party daily "Hayots ashkhar" published a report of the alleged meeting on 12 September. The newspaper's editor, Gagik Mkrtchian, told RFE/RL on 14 September he is confident that the source of the information is reliable but that he will reveal it only if taken to court. LF


On the first day of the fall parliamentary session, deputies from the HHSh and its rival, the National Democratic Union (AZhM) pledged to continue to pressure President Robert Kocharian to convene the parliament to debate the sale of the Yerevan Cognac Factory to France's Pernod Ricard, RFE/RL's Yerevan bureau reported. Opponents of the sale argue that the sell-off price of $30 million was too low. They also say that Kocharian is breaking the law by refusing to organize a debate on the issue. According to the Armenian Constitution, he is bound to do so if more than one-third of all parliamentary deputies request such a debate. LF


Kazakh President Nursultan Nazarbayev attended a ceremony in the capital, Astana, on 14 September at which representatives of U.S. and Japanese oil companies signed agreements with Kazakhoil, the national oil company, RFE/RL correspondents reported. The deals cover exploration of Kazakhstan's portion of the Caspian Sea, extraction of gas condensate, and the reconstruction of the refinery in the western city of Aktau and several other industrial complexes in the area. Represented were Japan's National Oil Agency, Mitsubishi, Mitsui, and the U.S. company Philip's Petroleum. The Japanese are prepared to invest $2.4 billion. The U.S. company will invest $500 million in the gas condensate project. BP


Kazakh Foreign Minister Kasymjomart Tokayev on 14 September urged Kazakhstan's official representatives abroad to encourage trade with the countries in which they work, Interfax reported. Tokayev also commented that no serious problem in the CIS or Central Asia can be solved without Kazakhstan's participation. BP


The Kazakh National Bank closed 46 currency exchange bureaus on 14 September, RFE/RL correspondents reported. The bank cited different rates used in trading hard currency. Meanwhile in northern Kazakhstan, Russian citizens were reportedly crossing the border to trade Russian rubles for Kazakh tenge and U.S. dollars. BP


Five soldiers in western Turkmenistan stole automatic weapons, handguns, and bullet-proof vests on 12 September and went on a rampage that left seven people dead, ITAR-TASS and RFE/RL correspondents in Ashgabat reported. After stealing a truck, the five soldiers headed for the main highway, where they opened fire on a car that followed them, killing two people. They then drove to the village of Garagan and took seven people hostage. A Turkmen police anti- terrorist unit arrived to negotiate with the soldiers, but in the ensuing shoot-out, one policeman and four of the soldiers were killed. Turkmen President Saparmurat Niyazov has ordered that an investigation into the incident be completed within three days and that the armed forces and law enforcement agencies take steps to improve discipline. BP


The Independent Miners' Union has called for Ukrainian Prime Minister Valeriy Pustovoytenko and his cabinet to resign and has asked the parliament to consider the demand, AP reported on 14 September. Union leader Mykhaylo Volynets said that a June government resolution to pay wage arrears is not being honored. Ukrainian miners are owed some 2.2 billion hryvni ($860 million) by the state. Volynets said the decision to call for the government's resignation was made because the union fears money earmarked for the miners will be spent on next year's presidential elections and on servicing the foreign debt. PB


Aleksandr Volkov, the governor of Russia's Udmurtiya Republic, met with Belarusian President Alyaksandr Lukashenka and Premier Syarhey Linh in Minsk on 14 September, Belapan reported. With regard to the current economic crisis in Russia, Lukashenka told Volkov that it is important to "hold the steering-wheel firmly during a storm." Volkov and Lukashenka are to sign a cooperation agreement during the visit. The same day, a delegation of Polish parliamentary deputies led by Wit Majewski, deputy chairman of the Sejm Committee on Relations with the Polish Diaspora, arrived in Minsk to familiarize themselves with the situation of the Polish community in Belarus. PB


Stanislau Bohdankevich, the chairman of the United Civic Party, said Belarus's own economic crisis is dulling the negative effect of the Russian crisis, Belapan reported on 14 September. Bohdankevich, the former head of the National Bank of Belarus, said he was surprised by a letter sent by the lower house of the Belarusian parliament to the Russian State Duma offering Moscow "a helping hand." Bohdankevich said the Belarusian deputies "apparently do not realize what situation their own country is in." He added that wages, pensions, prices, and individual savings are currently 3 to 5 times greater in Poland and Lithuania than in Belarus. Bohdankevich said the public's lack of confidence in Belarusian government officials and their "primitive monetary policy" will lead to a worsening of the crisis. PB


Addressing the parliament at the opening of its fall session on 14 September, Lennart Meri stressed that amending the law on citizenship is one of the legislature's most important tasks in the coming months, ETA reported. Under proposed amendments to the law, some 8,000 children who were born to non-citizens in Estonia after the country regained independence would be able to apply for citizenship. Applications would be accepted from parents who have resided in Estonia for at least five years and do not have citizenship of another country. Meri pointed out that the proposed bill is based on the UN convention on the rights of children, to which Estonian has acceded. To "disregard" that convention, according to Meri, would "obliterate the reputation of Estonia as a law-governed state." JC


In his bi-weekly radio address, Guntis Ulmanis said on 14 September that Russian Prime Minister Yevgenii Primakov will play a "stabilizing" role in Russia and that the current "frosty" relations between Riga and Moscow could improve, BNS and Reuters reported. Ulmanis also commented that "the pressure that Russia has exerted on Latvia over the last half year has produced no gain to either Russia or Latvia.... [Under Primakov], ways for compromises will be sought to normalize relations and to make political dialogue more active." He described Primakov as "a man with, no doubt, a wide outlook," according to BNS. JC


BNS on 14 September quotes the Russian embassy in Vilnius as saying the Russian members of the Lithuanian-Russian governmental cooperation commission are determined to expedite the conclusion of bilateral economic agreements. In particular, the Russian side is interested in a long-term cooperation accord between Lithuania and Kaliningrad Oblast. It also hopes that draft agreements on cooperation in the fishing and tourism industries will be finalized at the commission's next session. No date for that meeting has been set. JC


Jaroslaw Sellin, the Polish government spokesman, said on 14 September that the country is beginning "an economic miracle" similar to the prosperous economic growth experienced by West Germany in the early 1950s, Reuters reported. Sellin said the economy is "growing at a fast pace" that will continue. He said that improved living standards for rural Poles will be fueled by the economy's massive growth, not from government handouts. Sellin added that the government has defied predictions that it would be deadlocked owing to differences among coalition partners. He said the main task now is to "implement ambitious reforms" in the administrative, health, social security, and education sectors. The government has been criticized for formulating but failing to act on its far-reaching reform plans. PB


The opposition Democratic Left Alliance was favored by 30 percent of respondents in a poll released on 14 September, Reuters reported. The Solidarity bloc, the largest member of the ruling coalition, was the favorite of 23 percent of those polled. Its ally, the Freedom Union, tallied 15 percent. Nationwide local elections will be held on 11 October. In other news, Portuguese President Jorge Sampaio said in Warsaw that his country's parliament is expected to approve Poland's application for NATO membership this week. Portugal is one of three NATO countries that has yet to formally approve Warsaw's accession to the alliance. PB


Jan Kavan on 14 September told journalists in Prague that he is "personally convinced" that the Czech cabinet will approve the planned RFE/RL broadcasts to Iraq. He said he will discuss the broadcasts with U.S. officials during President Vaclav Havel's visit to the U.S. The visit begins on 15 September and Kavan will be accompanying Havel. Also on 14 September, the Iraqi government newspaper "Al-Jumhouriya" urged the Czech government to turn down the U.S. request to allow the broadcasts, saying Iraq is ready to expand ties with the Czech Republic if the broadcasts do not go ahead. MS


Ivan Langer, deputy chairman of the Civic Democratic Party, on 14 September told CTK that the 1999 deficit budget proposed by Milos Zeman's minority cabinet has "no real chance of making it through the parliament" and that the house is likely to amend the bill. Deputy Miroslav Kalousek of the Christian Democratic Party said it is "improbable" that his party will support the draft budget, saying the deficit is "too high" and "bad news for the Czech economy." Former Finance Minister Ivan Pilip, who represents the Freedom Union in the Chamber of Deputies, said the draft budget is "a step in the wrong direction" and that his party will not support it. MS


A public opinion poll conducted by the independent MVK institute shows that the ruling coalition parties continue to trail the combined opposition. Meciar's Movement for a Democratic Slovakia (HZDS), however, continues to lead the field and scored its best result in polls so far, with 28.2 percent support. The opposition Slovak Democratic Coalition is backed by 23 percent. The Slovak National Party and the Workers Party (both HZDS coalition partners) are backed by 5.6 and 2.5 percent, respectively. The opposition Party of Civic Understanding is supported by 15.3 percent, the Party of the Democratic Left by 12.6 percent and the Hungarian Coalition by 7.2 percent. MS


The EU will start membership negotiations with Hungary in November, Austrian Chancellor Viktor Klima told visiting Hungarian Prime Minister Viktor Orban on 14 September. Austria currently holds the rotating chairmanship of the EU. Klima said the planned expansion is "a unique chance to create a common, peaceful Europe," but he noted that Austrians are "concerned about the possible inflow of cheap labor from Hungary." Orban said the fears are "partly exaggerated" because "those wanting to work in Austria are already" in that country. The two sides also urged action for a "more effective" handling of the refugee problem and closer collaboration among EU members in fighting organized crime. MSZ


CNN reported on 15 September that several opposition supporters held a silent march through the center of the capital, despite an earlier police ban on the protest. CNN added that security forces kept a low profile during the march and that both sides seemed interested in ending the current tensions through talks. Earlier that day, some 200 opposition supporters gathered outside Democratic Party headquarters, having acquired two tanks and several dozen machine guns. Police began negotiating with the men, trying to convince them to hand over their weapons, AP reported. The Interior Ministry had issued a statement in Tirana the previous day saying that police are under orders to "shoot without warning" if they encounter opposition. It also called on the "Democratic Party to distance itself from [armed] individuals," adding that "otherwise, it will bear responsibility for subsequent developments." FS


Albanian special police forces on 14 September recaptured the buildings of state radio and television, the offices of Prime Minister Fatos Nano, and the parliament building. Opposition protesters had occupied them earlier that day during unrest throughout the city, in which at least three people died and 14 were injured (see "RFE/RL Newsline," 14 September 1998). In the afternoon, crowds of armed opposition supporters had roamed the streets and fired in the air with machine guns, but they dispersed when special police forces arrived. Interior Minister Perikli Teta said on state television that "the attempt at a coup d'tat today failed." Teta told Reuters on 15 September that most of those killed were police officers. According to Interior Ministry spokesman Artan Bizhga, "there was a small battle [around the television building] and those who had occupied it fled." FS


Former President Sali Berisha told VOA's Albanian-language service on 15 September that he did not try to stage a coup d'etat the previous day. He called Teta's accusations "crazy and absurd" and stressed that he has called on his supporters to remain peaceful. Berisha charged government guards with provoking the clashes during the funeral that day of Democratic Party legislator Azem Hajdari, whom unidentified gunmen killed on 12 September (see "RFE/RL Newsline," 14 September 1998). Berisha also repeated his call for Nano's government to resign, but Socialist parliamentary leader Pandeli Majko rejected the demand. Nano's spokesman Ben Blushi told Reuters on 15 September that "we blame Berisha [for the unrest], because all the trouble started at the Berisha rally." He also claimed that Berisha's "bodyguards and political collaborators" played key roles in the violence that followed. Blushi said that Nano--who has not appeared in public since the riots started--has resumed working. FS


State Department spokesman James Rubin on 14 September urged the Albanian government to work with President Rexhep Meidani to draft "constructive proposals that will end the current upheaval." He stressed that "leaders of all political parties...must take responsibilities for the behavior of their followers," warning that otherwise the leaders must "bear the consequences." Meanwhile, Italian Prime Minister Romano Prodi advised Defense Ministry officials to draw up evacuation plans for Italian citizens in Albania. FS


Several hundred refugees remain stranded in the area where Kosova borders Montenegro and Albania, RFE/RL's South Slavic Service reported on 14 September. Montenegro had earlier refused to admit several thousand recently arrived refugees--citizens of federal Yugoslavia, to which Montenegro belongs--and sent them by bus to Albania (see "RFE/RL Newsline," 14 September 1998). The office of the United Nations High Commissioner for Refugees in Prishtina sent a letter to Montenegrin President Milo Djukanovic on 13 September appealing to him to keep his country's borders open. In other news, the Kosovar news agency KIC reported the following day that Serbian forces shelled the village of Sferka near Klina and later set fire to Kosovar homes there. PM


Hans van den Broek, who is the EU's chief official dealing with Eastern Europe, recently sent a confidential letter to EU foreign ministers warning that continued inaction over Kosova is not "compatible with vital EU interests," the "Financial Times" reported on 15 September. Van den Broek added that "the time has come for the EU to make a clear ultimatum to [Yugoslav President Slobodan] Milosevic to stop military operations [in Kosova] and thereby pave the way for negotiations." The diplomat added that time has come for the EU to distance itself politically from the international Contact Group, which has been unable to formulate a clear and effective policy because of Russian reluctance to oppose Milosevic. Officials from Germany and some other EU member states recently criticized the U.K. and Greece for refusing to implement the EU ban on landing rights for Belgrade's airline, JAT. PM


State Department spokesman James Rubin said on 14 September that the recent general elections in Bosnia-Herzegovina were "the freest and fairest elections in Bosnian history." He stressed that Washington will be waiting to see what policies the victors pursue and that the U.S. will help those politicians who actively back the Dayton peace agreement. In Sarajevo, Robert Barry, who led the OSCE mission to supervise the vote, warned against taking seriously unnamed politicians' claims of victory before official results are in (see "RFE/RL Newsline," 14 September 1998). "We haven't the slightest idea who has won, and anybody who claims victory at this point is no doubt blowing a little bit of air," he said. Another OSCE official noted in Banja Luka that tens of thousands of absentee ballots from outside Bosnia have not yet arrived at counting stations in that country. PM


The office of the OSCE in Zagreb said in a report to the Croatian government on 14 September that Croatia has not met its international commitments aimed at winning the confidence of the ethnic Serbian minority and encouraging Serbian refugees to return home. The text added that Croatia must take "urgent measures" aimed at encouraging pluralism in the media and reforming its electoral laws if it is to achieve further integration into Euro-Atlantic structures. PM


The leaders of the ruling coalition, meeting on 14 September, are reported to have reached a compromise in the dispute about the setting up of a Hungarian state university. The precise nature of the compromise is unclear, but Bela Marko, chairman of the Hungarian Democratic Federation of Romania, told reporters after the meeting that the decision of the Chamber of Deputies' Education Commission will have to be changed into one that is "more permissive" on university education in the languages of national minorities. He also said a special law will deal with the setting up of a Hungarian language state university. The Chamber of Deputies Education Commission is meeting on 15 September to discuss the coalition leaders' proposal. MS


At their 14 September meeting, the coalition leaders also decided that the Bucharest mayoralty elections will be held in October. The date of the ballot will be set by the government this week. The decision came after protests from opposition parties following Prime Minister Radu Vasile's statement that holding the elections may be "too costly." The Party of Social Democracy in Romania has threatened to move a motion of no confidence in the parliament and to appeal to the Council of Europe. MS


Bulgaria will shut down its four aging nuclear reactors at the Kozloduy nuclear plant between 2004 and 2012 and will consider installing a new nuclear unit after 2005. Ivan Shilyashki, the country's top energy official, was cited by AP as saying on 14 September that units 1 and 2 at the reactor will be shut down in 2004-2005 and units 3 and 4 between 2008 and 2012. During a visit to Sofia on 11 September, European Commissioner Hans van den Broek urged Bulgaria to close down the two oldest reactors at Kozloduy in 2002 and the remaining two reactors by 2010. Van den Broek also urged the Bulgarian government to speed up the reform process, restructure or close down loss-making companies, and reform the state administration. MS


Police sealed a compact disc plant in Sofia after seizing 200,000 pirate CDs there, the Interior Ministry announced on 14 September. AP quoted the ministry as saying that the SMC company had a license to record only Serbian folk music but produced discs featuring Whitney Houston and other internationally-known singers. MS


By Emil Danielyan

The picturesque landscape of Martakert is fascinating to all visitors. Beautiful mountains covered with vast forests, fertile land, and a mild climate reveal the splendor of the northern Nagorno-Karabakh district. Only the foundations of demolished houses are a reminder that the district was the scene of the heaviest fighting during the bitter war with Azerbaijan that was halted by a cease-fire agreement four years ago.

Martakert is the largest of Nagorno-Karabakh's six administrative districts. As a result of its size and fertile land, the district accounted for 40 percent of the agricultural output of the former Nagorno-Karabakh Autonomous Oblast, which was part of Soviet Azerbaijan. In 1989, its population numbered 46,300, of whom 87 percent were Armenians and 12 percent Azerbaijanis.

Martakert did not escape the fighting that broke out in Karabakh in late 1991. A successful Azerbaijani offensive the following summer resulted in the occupation of more than 80 percent of its territory, prompting the Armenian population to flee. But an Armenian counter-offensive in February 1993 reversed the situation and culminated in the re-capture several months later of the town of Martakert. It was not until after the May 1994 cease-fire that refugees began to return to their homes en masse. Six out of the district's 60 towns and villages remain under Azerbaijani control. Today, there are no Azerbaijanis living in Armenian-controlled territory, nor do Armenians inhabit the land controlled by Azerbaijan.

In addition to heavy casualties, the war has dealt a severe blow to Martakert's economy and infrastructure. With 27 villages completely destroyed during the war, the district's GDP in 1997 was a mere 5 percent of its 1989 level. The district administration estimates war damage at $360 million, but only $3.6 million has been spent on reconstruction since 1993.

Housing is the number one problem in Martakert. Stone walls are all that remain of the houses in many villages. More than 500 families currently reside in temporary shelters. The authorities say they have re-built 1,336 houses to date, while the people themselves have done the rest. With existing funds, they are able to reconstruct only 50 houses a year.

Education is next on the list of Martakert's priorities. With 30 schools already repaired, almost all villages provide primary or secondary schooling. But the lack of teachers and textbooks, which are identical to those used in Armenia, is a major problem. Many parents, however, cannot afford to pay 1,500 to 2,000 drams ($3-4) for a textbook.

A common feature of all Karabakh schools is a special board featuring photographs of local soldiers who were killed in the "Goyamart" [fight for survival], Karabakh Armenians' reference to the war against Azerbaijan. The school in Haterk has 47 such photographs posted on its board. A Karabakh school is typically named after the local fallen war hero.

Some 690 Martakert soldiers paid with their lives for the military victory over Azerbaijan. Stepan Kalashian, a journalist from Yerevan currently based in Martakert, is collecting information about them to publish a book containing their photos and biographies. He says the book, sponsored by his "friends in Yerevan," will come out soon.

Agriculture remains the main source of income in Martakert. Grain is the primary crop, thus fertilizers and irrigation are important for local farmers. Karabakh's largest reservoir is located in the district, and the authorities hope to complete the repair of the water distribution system to irrigate thousands of hectares of land next spring. Some 5,300 hectares of agricultural land are not cultivated owing to numerous anti- personnel mines. De-mining the area will require substantial funding. Other tracts of land are left uncultivated owing to a lack of tractors and harvesters.

According to Sevak Ardzrouni, governor of the Martakert district, more assistance is needed from the Diaspora and Armenia. Ardzrouni, an ethnic Armenian from France, says the emphasis should be shifted from humanitarian aid to business programs. He is pinning his hopes on $12 million earmarked by the U.S. Congress last year in direct assistance to Karabakh

Adequate roads, which Karabakh lacked even before the war, would give a strong boost to the local economy by facilitating trade with other regions. The newly built 80- kilometer highway between Armenia and Nagorno-Karabakh begins in the Armenian border town of Goris, runs through Lachin (the administrative center of a district in Azerbaijan proper), and extends northward to the Karabakh capital, Stepanakert. The project, financed by the U.S. Diaspora, cost $8.85 million; virtually the entire sum was raised at a telethon in Los Angeles in May 1996. For Karabakh Armenians, control over the Lachin corridor is a non-negotiable issue.

In Lachin itself, the demographic situation is changing. Deserted of the Azerbaijani population that fled in 1992, the area has witnessed the settlement of ethnic Armenians from Karabakh, many of whose villages remain under Azerbaijani control, as well as Armenians from Armenia proper. Lachin's population may already number as many as several thousand, although there are no reliable statistical data. The territory is under the jurisdiction of a district administration appointed by the government in Stepanakert. With the construction of the new highway through Lachin, the resettlement is likely to gather momentum. The author is a Yerevan-based RFE/RL correspondent.