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Newsline - September 18, 1997


First Deputy Prime Minister Anatolii Chubais and Paris Club president Christian Noyer on 17 September signed a deal granting Russia full membership in the Paris Club of creditor nations. Speaking to journalists in Paris, Chubais said admission to the club will help Russia collect part of the $140 billion it is owed by countries that received loans from the Soviet Union. Some $52 billion in debt, owed to Russia by developing countries and based on an outdated exchange rate, will be reduced to $12 billion and payments rescheduled, he said. Russian officials and Noyer finalized the deal to grant Russia admission to the Paris Club during the Summit of Eight in Denver (see "RFE/RL Newsline," 23 June 1997). In June 1996, Russia rescheduled its $38.7 billion debt to Paris Club members.


Chubais said that joining the Paris Club "is a very significant political event. We will now be on an equal footing with the other industrialized countries in the world," Reuters reported on 17 September. He added that thanks to club membership, annual debt repayments to Russia may increase from $150-200 million to $500-700 million. Chubais and other Russian officials are to fly to Hong Kong on 19 September for meetings of the World Bank and the International Monetary Fund (IMF). As a Paris Club member, Chubais said, Russia will be able attend those meetings "for the first time as a contributor rather than a nation seeking aid."


Chubais also told journalists in Paris on 17 September that agreement has been reached on rescheduling repayment of the former Soviet Union's debts to the London Club of leading foreign commercial banks, ITAR-TASS reported. Representatives of those banks and the Russian government will sign an agreement in Moscow on 6 October on repayment of some $35 billion in overdue loans and interest, a spokesman for the Deutsche Bank told "Bloomberg Financial News" on 17 September.


President Boris Yeltsin told reporters in Orel Oblast that Russia will not seek to draw any loans from the IMF once a three-year, $10 billion loan expires in 1999, an RFE/RL correspondent reported on 18 September. First Deputy Prime Minister Chubais said earlier this year that Russia will not seek any major IMF credits when the current loan expires and that in the future, the World Bank will be a more important lender to Russia. Speaking to Interfax on 17 September, First Deputy Finance Minister Aleksei Kudrin said the IMF has already "fulfilled its main role" with respect to Russia. He added that Russia now plans to "become an active borrower" on the world capital market.


The Russian government on 17 September announced that the proposed oil export pipeline bypassing Chechnya will run through Dagestan and Stavropol Krai, parallel to the administrative border with Chechnya, Russian agencies reported. Government spokesman Andrei Pershin told journalists that the contractor for the bypass pipeline will be chosen by tender and a decision on funding will soon be taken. Also on 17 September, Chechen state oil company President Khazh-Akhmed Yarikhanov said the Chechen Finance Ministry has still not received the promised funds for repairing the Chechen sector of the Baku-Grozny-Tikhoretsk pipeline, "Rossiiskaya gazeta" reported on 18 September (see also "End Note" below).


In an article published in "Nezavisimaya gazeta" on 18 September, Sergei Rogov, the director of Russia's Institute for the U.S. and Canada, argued that while the START-2 treaty "is not ideal," its ratification is essential given Russia's present economic weakness. He conceded that ratification will necessitate considerable additional short-term expenditures but pointed out that it creates conditions for preserving approximate parity in strategic forces between Russia and the U.S. He also noted that the U.S. will have to destroy its most modern warheads. State Duma Foreign Affairs Committee Chairman Vladimir Lukin of Yabloko told ITAR-TASS that he will "do everything possible" to persuade Duma deputies to vote in favor of ratification. Duma Defense Committee chairman Lev Rokhlin, however, said that ratification "will complete the ruin of the Russian army."


Foreign Minister Yevgenii Primakov told journalists in Moscow on 17 September that he has no intention of quitting, Interfax reported. Primakov said media reports charging that he has already submitted his resignation are "fantasies of those who would like me to resign." Spokesmen for the president, government, and Foreign Ministry have also denied the reports (see "RFE/RL Newsline," 17 September 1997). Primakov is to travel to the U.S. on 20 September to attend the upcoming session of the UN General Assembly. He is scheduled to meet with U.S. President Bill Clinton on 22 September, a Foreign Ministry source told Interfax.


Former presidential adviser Georgii Satarov, who was recently dismissed by presidential decree, says he informed Yeltsin and Presidential Chief of Staff Valentin Yumashev long ago of his intention to resign, RFE/RL's Moscow bureau reported on 17 September. Satarov told journalists that as head of an independent analytical center, he will continue to cooperate with the presidential administration. His first project will be to prepare Yeltsin's 1998 message to the parliament. Satarov said he will not write memoirs about his Kremlin experience but will cooperate with friends and former colleagues who plan to do so. Meanwhile, Mikhail Komissar, deputy head of the presidential administration, denied a "Kommersant-Daily" report suggesting that he had insisted on Satarov's ouster, Interfax reported. Komissar was director of Interfax before joining the presidential administration in August (see "RFE/RL Newsline," 15 August and 17 September 1997).


Russia's Catholic, Baptist, Seventh-Day Adventist and Pentecostal communities have issued a joint statement urging Yeltsin to reject the new version of the law on religious organizations, Interfax reported on 17 September. Yeltsin submitted a revised religion law to the Duma on 3 September, having vetoed an earlier version in July. The groups' statement argued that, except for the preamble, the new version is "practically unchanged" and still contains "discriminatory" and "unconstitutional" limits on minority religions. Presidential aide Andrei Loginov had claimed that Catholic and Protestant groups support the revised religion law, but representatives of various denominations told the Keston News Service on 11 September that Loginov misrepresented their stance. Meanwhile, ITAR-TASS reported on 17 September that a Duma vote on the revised religion law has been delayed for at least one week while more amendments are considered.


None of the seven candidates for federal human rights commissioner gained the necessary two-thirds majority (300 votes) in the State Duma on 17 September. Communist-backed candidate Oleg Mironov led the field with 265 votes, "Nezavisimaya gazeta" and "Rossiiskaya gazeta" reported on 18 September. He was also the leading candidate in the Duma's last unsuccessful attempt to elect a human rights commissioner (see "RFE/RL Newsline," 7 April 1997). Vladimir Isakov, the Agrarian faction's candidate, who chaired the Duma's Legislation Committee in 1994 and 1995, finished second with 198 votes, followed by Yabloko candidate Yelena Mizulina with 176. Duma faction leaders decided to postpone further attempts to elect a human rights commissioner for one month. The Duma sacked its last human rights commissioner, Sergei Kovalev, in March 1995.


"Nezavisimaya gazeta" on 18 September published a blistering attack on Oneksimbank, which it described as an "aggressive" actor on the Russian market that is seeking to establish monopolies in various sectors. Since a consortium involving Oneksimbank acquired a stake in the telecommunications giant Svyazinvest, "Nezavisimaya gazeta" has repeatedly criticized Oneksimbank and its president, Vladimir Potanin (see "RFE/RL Newsline," 29 July 1997). The newspaper is partly owned by Security Council Deputy Secretary Boris Berezovskii's LogoVAZ group. On 15 September, Yeltsin met with six leading bankers and said he had persuaded them to stop "quarreling with the government" and "slinging mud" at one another in the mass media. Berezovskii did not attend that meeting. "Nezavisimaya gazeta" on 16 September accused First Deputy Prime Minister Boris Nemtsov of exceeding his authority by attempting to prevent the bank SBS-Agro from issuing additional shares earlier this summer.


Federation Council Speaker Yegor Stroev has spoken out against "double standards" for Russian regions, saying the constitution guarantees equal rights to all regions. In an interview published in "Rossiiskaya gazeta" on 18 September, Stroev, who is also governor of Orel Oblast, expressed regret that Russia's 89 regions were no longer drawn on purely territorial lines. (Twenty-one republics, 10 autonomous okrugs, and the Jewish Autonomous Oblast are named after ethnic groups.) Stroev argued, "all peoples should get what they deserve, what they have earned, and not gain at each other's expense." (Of the more than 30 regions that have signed power-sharing agreements with the federal authorities, Tatarstan and Sakha [Yakutia] are among those that have obtained the most favorable terms.) Stroev met with Yeltsin during his visit to Orel Oblast on 18 September.


Russian Public Television (ORT) Director-General Sergei Blagovolin has been working for the last two months as president of the Financial-Industrial Corporation, a Moscow bank, "Izvestiya" and "Kommersant-Daily" reported on 18 September. During that time, Blagovolin has hardly shown up at ORT, but the board of directors of Russia's Channel 1 network has still not accepted his resignation. Appointed head of ORT in March 1995, Blagovolin has occasionally criticized his own network's news coverage. For instance, in February he described ORT's unflattering coverage of Moscow Mayor Yurii Luzhkov as "stupid" and "dangerous." In a June interview with the Russian Television network, which was never aired, Blagovolin charged that ORT's weekly analytical program is "extremely dangerous" (see "RFE/RL Newsline," 6 August 1997). Security Council Deputy Secretary Boris Berezovskii is believed to be the most influential figure at 51 percent state-owned ORT.


Former Russian Security Council Secretary Aleksandr Lebed, who is currently in Japan on a private visit, said the problem of the Kurile Islands must be resolved, Russian media reported on 17 September. Lebed said it is impossible to have a peace treaty with Japan without settling territorial issues. But he noted that it would take "at least 20 years" to conclude an agreement on turning over the islands to Japan and that a referendum would first have to be held among the people living on the islands. He also said Russia's strategic and defense interests must be kept in mind and that any talks on returning the islands would have to involve the U.S., which has defense treaties with Japan.


Armenian Defense and Foreign Ministry spokesmen have rejected Azerbaijani claims that Armenia is developing nuclear weapons at secret bases, RFE/RL's Yerevan bureau reported on 17 September. Azerbaijani Foreign Minister Hasan Hasanov made the allegations the previous day at a conference on nuclear non-proliferation in Tashkent. Armenian Foreign Ministry spokesman Arsen Gasparyan said Yerevan fully adheres to its obligations under the Nuclear Non-Proliferation Treaty and uses its nuclear potential "only for peaceful purposes." He said Armenia's Medzamor nuclear power plant is regularly inspected by the International Atomic Energy Agency, which, he stressed, has found no violations. Hasanov had called for the closure of Medzamor and for the declaration of the South Caucasus as a nuclear-free zone, according to Interfax.


Armenian First Deputy Foreign Minister Vartan Oskanian told an RFE/RL correspondent in Yerevan on 17 September that he believes the co-chairmen of the Organization for Security and Cooperation in Europe's Minsk Group will make changes in their latest peace proposals for Nagorno-Karabakh. The co-chairmen are scheduled to arrive in the Armenian capital on 19 September. The unrecognized Nagorno-Karabakh Republic has already rejected the draft plan proposed by the Minsk Group in early June, and Armenia has expressed reservations. Oskanian said Yerevan has made alternative proposals, but he declined to reveal them. Karabakh President Arkadii Ghukasyan said on 17 September that Yerevan and Stepanakert have differing approaches to resolving the conflict but that they have the same strategic goal, Interfax reported.


Two members of the UN observer mission in western Georgia were abducted on 16 September by unidentified persons, RFE/RL's Tbilisi bureau reported citing BS-Press. The two mission members were released the following day. A UN spokesman confirmed the abduction but gave no further details. The nationality of the abductors is not known.


Turkmen Minister for Foreign Economic Relations Toyli Kurbanov says none of the international oil companies interested in developing 11 oil and gas deposits in the Turkmen sector of the Caspian Sea has questioned the legality of Turkmenistan's ownership of the Serdar (Kyapaz in Azerbaijani) field, "Nezavisimaya gazeta" reported on 18 September. Kurbanov reaffirmed Turkmenistan's claim to ownership of the Chirag and Azeri fields, which are being developed by a major Western consortium. He said that Turkmenistan will not prevent the consortium from developing the deposits in question but will insist that the Azerbaijani government give Ashgabat a share of the profits.


Romano Prodi met with Uzbek President Islam Karimov in Tashkent on 17 September to sign a friendship and cooperation agreement, Reuters and Interfax reported. At a joint press conference, Prodi said there is a "huge potential to expand our relations," while Karimov noted that bilateral trade was up 60 percent in the first half of 1997 compared with the same period last yar. The same day, an agreement was signed on setting up a joint venture between the Italian company Stet and the Uzbek government to form the telephone communications firm Udinet. The Italian oil company Agip is currently negotiating with Uzbekistan's state oil and gas corporation Uzbekneftegaz for rights to explore Uzbek fields.


At the 17 September press conference with visiting Italian Premier Prodi, Karimov said problems in Uzbek-Russian relations were due to forces inside Russia that had not "renounced the imperial vision with regard to former USSR republics." Karimov said he wanted relations developed "on an equal basis" but added that relations in the CIS were being developed "according to Russia's desire." With regard to Afghanistan, Karimov said the problems there needed to be solved by the Afghan people. He objected to the Russian press's portrayal of General Abdul Rashid Dostum as an "Uzbek general." Dostum is an ethnic Uzbek who recently returned to Afghanistan. Meanwhile, ITAR-TASS on 18 September cited Taliban militia sources as saying they had captured the town of Khairaton on the southern bank of the Amu-Darya River, opposite the Uzbek city of Termez.


Madel Ismailov, a leader of the Almaty's Workers Movement, has been sentenced to one year's hard labor, RFE/RL correspondents reported. Ismailov was found guilty of organizing "events that could cause mass unrest in the capital" in connection with his role in a 30 May demonstration in Almaty. Ismailov had been imprisoned while an investigation into the incident had taken place. During the trial proceedings, the judge asked the police chief investigator, Talghat Iskakov, if he was aware that under Article 2 of Chapter 170 of the criminal code, a person not considered dangerous cannot be imprisoned while an investigation is under way. Iskakov replied he had received his orders "from above" and had never read the relevant chapter of the criminal code.


Kazakhstan and China have delimited another 11 kilometer stretch of their common border, near the Khan-Tengri peak, Interfax reported on 17 September. An agreement on that section of the border is expected to be signed when Chinese Premier Li Peng visits Kazakhstan on 25 September. Sections on the 1,700 kilometer border east of Almaty and in the far eastern part of Kazakhstan have still be determined.


A group of deputies on 17 September launched a campaign to initiate impeachment proceedings against Leonid Kuchma, whom they accuse of compromising Ukraine's independence. Members of the Ukrainian Republican Party and an informal grouping of lawmakers called Nation and State signed the resolution calling for Kuchma's ouster. They point to deals with Russia on the division of the former Soviet Black Sea fleet as compromising the country's independence. Some two weeks earlier, a parliamentary committee urged Kuchma's impeachment over his refusal to sign a law on local government after lawmakers had twice overruled his veto. Observers say this latest impeachment bid is unlikely to succeed.


South Korea's Daewoo Group on 17 September signed a deal creating a joint venture with Ukrainian car maker Avtozaz. The venture, which will also involve the U.S. company General Motors, is to produce 255,000 cars a year, half of which will be for export and the other half for the domestic market. Some $1.3 billion will be invested over the next six years to modernize the Avtozaz plant in Zaporizhia, increase production capacity, and build a sales and service network in Ukraine. An Avtozaz official told the Interfax-Ukraine news agency that Daewoo will put up half of the venture's $300 million starting capital, and the 85 percent state-owned Avtozaz will offer the other half in property. The Daewoo Corp. also has factories in Poland, Romania, and the Czech Republic.


Prime Minister Mart Siimann has said that Defense Minister Andrus Oovel and commander of the armed forces Johannes Kert will remain in office for the time being, ETA and BNS reported on 17 September. Siimann was speaking after a meeting of the National Defense Council, convened to discuss Oovel's and Kert's tendered resignations over the deaths of 14 soldiers during maneuvers off Estonia's northwestern coast. The premier said that no decision on the resignations will be taken until the government commission investigating the accident has reported its findings on 29 September.


Guntars Krasts has announced he will supervise the work of the European Integration Bureau, whose task is to coordinate the activities of the various agencies involved in country's bid to join the EU. The previous head of the bureau was a cabinet representative with the rank of minister-envoy, a post that Krasts eliminated when he became premier in July. An adviser to Krasts said the prime minister was "very disappointed over the negative assessment by the European Commission" and had decided to raise the status of the bureau, ITAR-TASS reported. The European Commission did not include Latvia among those countries it recommended to begin talks on EU membership. In other news, the government has approved a balanced budget for 1998. The draft predicts that GDP will grow by 5 percent.


Deputy Minister of Internal Affairs Romas Kilikauskas has said that security on Lithuania's state borders will be increased significantly next year, BNS reported on 17 September. He noted that significantly more funds will be requested for that purpose and that the number of draftees serving on the border will be reduced by 20 percent each year. Kilikauskas also stressed that demarcation of the country's frontiers is a top priority, commenting that "we cannot speak of violations of the border if the border is unmarked."


BNS reported on 17 September that a parliamentary commission set up to examine whether deputies had ties with foreign secret services will investigate allegations that parliamentary speaker Vytautas Landsbergis cooperated with the Soviet-era KGB. The allegations were made in a book by former KGB General Vyacheslav Shironin, who maintained that Landsbergis offered to provide the KGB with information in return for permission to visit his father abroad. Landsbergis has confirmed he asked the KGB for a travel permit, but he says he withdrew his request when the KGB demanded information in exchange for the permit. Algimantas Sejunas, the chairman of the commission, noted that Shironin's book contains "many mistakes and nothing new" but added that the commission wants nonetheless to check the allegations.


Wlodzmierz Cimoszewicz on 17 September told private Radio Zet said that Western confidence in the Polish economy would be damaged if the Solidarity-led opposition won the 21 September parliamentary elections. Citing what he said were intelligence sources, Cimoszewicz said there is concern in the West that a Solidarity-led government would undermine reform efforts. Also on 17 September, the government's press office announced that Health Minister, Jacek Zochowski, had died, aged 56, following a long battle with cancer. He had served as health minister since 1993.


At a meeting in Trencianske Teplice, Slovakia, on 17 September, the Czech and Slovak army chiefs-of-staff agreed on a schedule for joint military exercises in 1998. The Czech Republic's Jiri Nekvasil and Slovakia's Jozef Tuchyna told journalists that the two armies will conduct 43 joint exercises next year. Tuchyna said the idea of creating a joint Czech-Slovak unit was rejected as unnecessary.


The government on 17 September announced that a parliamentary committee for monitoring the secret service will be set up and that opposition deputies will be represented on the commission. The move is being taken to comply with the political criteria set for Slovakia's invitation to EU entry talks. The government also announced it will prepare a bill on the protection of languages of ethnic minorities and reopen political dialogue with the opposition, Slovak media reported. A report released by the European Commission in July did not recommend Slovakia as a candidate for the first round of talks on EU membership, saying Slovakia had failed to meet political criteria laid down by the EU 1993 Copenhagen summit. The government said it "considered the report unbalanced." But it added that Slovakia is seeking entry to the union and must therefore accept all EU objections.


The Slovak government has accused Hungary of conducting a campaign to discredit Slovakia. The Slovak Foreign Ministry on 17 September issued a statement saying it had summoned Hungarian ambassador to Bratislava Jeno Boros to hand him a note protesting the "broad and intensive discrediting campaign" against Slovakia. A meeting between Slovak Foreign Minister Zdenka Kramplova and her Hungarian counterpart, Laszlo Kovacs, scheduled for 20 September has been canceled. Relations between the two countries deteriorated sharply after Hungarian Prime Minister Gyula Horn accused his Slovak counterpart, Vladimir Meciar, of having proposed Slovakia's 600,000-strong Hungarian minority return to Hungary. Meciar says he merely noted that those ethnic Hungarians who want to return to Hungary should be allowed to do so.


The Hungarian Foreign Ministry on 17 September said it accepts "with regret" Bratislava's decision to cancel the planned meeting of the two countries' foreign ministers. The ministry said the arguments listed in the diplomatic note were "untrue and absurd." Hungarian Foreign Minister Laszlo Kovacs said as far as Hungary is concerned, the invitation to Kramplova still stands. He said Budapest sees no reason to make a unilateral gesture, still less to apologize, as demanded in the diplomatic note. The same day, the Slovak Foreign Minister Kramplova rejected the statement by the Hungarian parliament that the Slovak government was suffering from an "inferiority complex."


NATO peacekeepers on 18 September began to recover the bodies of 12 people killed when a UN helicopter crashed the previous day into a remote mountain in central Bosnia in heavy fog. The helicopter's four-man Ukrainian crew survived the crash. Among the dead are German diplomat Gerd Wagner, who was a deputy to Carlos Westendorp, the international community's chief representative in Bosnia. Westendorp said that Wagner was one of many dedicated foreigners who had sacrificed much time and effort to help bring peace to Bosnia.


A State Department spokesman said on 17 September that Washington "strongly supports" the decision by U.S. envoy Robert Frowick not to disqualify Radovan Karadzic's Serbian Democratic Party (SDS) from the ballot in Pale in the 13-14 September local elections (see "RFE/RL Newsline," 17 September 1997). The spokesman stressed that any move to disqualify the SDS should have been made well before the elections and not afterward, as a court tried to do. To ban the SDS from the ballot after the elections, the spokesman continued, would disenfranchise voters who cast their ballots for that party. Meanwhile in Sarajevo, two legal advisers to the Organization for Security and Cooperation in Europe, which organized the elections, resigned to protest Frowick's decision.


Police officials announced in Zagreb on 17 September the arrests of seven military men and four civilians for involvement in an auto theft ring, an RFE/RL correspondent reported from the Croatian capital. The gang operated both in Croatia and in Bosnia, where car-theft is particularly lucrative business. In related news, the Croatian government on 16 September identified Petar Petric and Sretan Juric as the two top officials in the Economics Ministry arrested on 13 September for corruption (see "RFE/RL Newsline," 16 September 1997). The government said that the two had accepted a bribe of $90,000 from a businessman in return for offering to sell to the public $1.3 million worth of unspecified goods from state reserves. The businessman tipped off police, who then arrested the two officials.


In Zagreb, Development Minister Jure Radic on 17 September told Metropolitan Jovan Pavlovic, the head of the Serbian Orthodox Church in Croatia, that the Church will get back all its property that the Communists nationalized 50 years ago. Across Serbia, campaigning is coming to an end for the presidential and legislative elections slated for 21 September. Police have recently used force against demonstrators opposed to Yugoslav President Slobodan Milosevic in Cacak, Kraljevo, and Nis, an RFE/RL correspondent reported from Belgrade on 17 September. Some 2,500 candidates will compete for 250 parliamentary seats, but most of the Serbian opposition and all ethnic Albanian parties are boycotting the vote. Leading presidential candidates are Milosevic aide Zoran Lilic, ultra-nationalist Vojislav Seselj, and opposition figure Vuk Draskovic.


A court in Skopje sentenced Rufi Osmani, the ethnic Albanian mayor of Gostivar, to 13 years and 8 months in jail for "fanning national, racial, and ethnic intolerance, inciting rebellion, and disregarding [the decisions of] the Constitutional Court." The Skopje court also sentenced Gostivar City Council President Refik Dauti to three years in jail. Osmani had allowed Albanian and Turkish flags to fly from the town hall in July after the court ruled that only the Macedonian flag could be flown from public buildings under most circumstances. Violent protests ensued when the Macedonian authorities ordered the flags taken down. Ethnic Albanians make up 23 percent of Macedonia's population.


Foreign Minister Pascal Milo said in Tirana on 17 September that Serbian officials must speak directly to representatives of the Kosovar Albanians and not expect the Albanian government to act as an intermediary. Milo was responding to speculation in the media that his upcoming talks in New York with Yugoslav Foreign Minister Milan Milutinovic will center on Kosovo. Meanwhile, the parliament passed an amendment to the press law in order to guarantee the opposition access to the state-run media (see "RFE/RL Newsline," 9 September 1997).


The state owned-electric power company faces a deficit of $ 43 million due to unpaid bills, "Dita Informacion" reported on 17 September. Robert Lalo, the company's investment director, told "Dita Informacion" that government funds for modernizing the outdated grid have been withheld for the last three months, which could endanger the winter power supply to the north. The World Bank is currently preparing a $50 million loan to upgrade five hydroelectric power plants. Lalo, however, indicated that Albania may soon have to import electricity.


The government on 17 September decided to submit a new draft law on foreign investment that would put foreign and local investors on an equal footing, RFE/RL's Bucharest bureau reported. Since June, foreign investment has been regulated by a government ordinance that amended the 1991 law on foreign investment. Local investors and several parties in the ruling coalition protested what they considered to be discriminatory provisions in the amended law. The new law will be drafted by 20 October, coalition leaders said. Until then, the government ordinance remains in force.


Addressing a three-day conference in Bucharest on crime in the Balkans and the Black Sea region, Calin Mateescu, head of the Romanian police unit for combating organized crime and corruption, urged East European countries to set up a regional body to combat the growth in organized crime. Mateescu said drugs and arms smuggling, money laundering, prostitution, and terrorism are spreading rapidly through the region. He also complained of the lack of a legal framework and a shortage of specialists and equipment to prevent crime, Reuters reported on 17 September.


Speaking at an international investors' forum in Chisinau on 17 September, Ion Ciubuc said that Moldova has passed legislation to facilitate foreign investment. He also pointed to the country's low rate of inflation and stable national currency, legislation on the protection of private property, and Moldova's location at the crossroads between Eastern Europe and the CIS. Ciubuc noted that in 1996, the private sector accounted for 50 percent of GDP and that 60 percent of the country's industry has already been privatized, Infotag reported.


Valeriu Matei, the leader of the Party of Democratic Forces (PFD), has denied that his party intends to set up an alliance with the pro-presidential For a Democratic and Prosperous Moldova (PMDP). Matei told journalists in Chisinau on 17 September that, despite the understanding reached between the PFD and the Democratic Convention of Romania (CDM) to refrain from mutual attacks, CDM leaders continue to accuse the PFD of obstructing the formation of a right-wing alliance and of serving the interests of the Left. Matei said those "absurd accusations" rule out the possibility of an agreement with the CDM. He said the PFD will continue negotiations with the Liberal Party and the National Peasant Party on running joint lists in the 1998 parliamentary elections, RFE/RL's Chisinau bureau reported.


Anne McGuirk, the IMF mission chief in Sofia, says economic reforms "appear to be on track" for Bulgaria. In an interview with "Bloomberg Financial News," McGuirk said she did not anticipate problems when an IMF review team arrives in Bulgaria in October to recommend whether Sofia should receive the next installment of a $647 million loan aimed at helping the transition to a market economy. McGuirk said Bulgaria's budget is now in better condition than had been expected several months ago. She recommended that proposed tax privileges for foreign investors be included in new tax legislation rather than a new foreign investment law. A proposed foreign investment law under consideration by the parliament calls for foreigners who invest more than $5 million to receive a 50 percent tax exemption for 10 years.


The National Bank of Cyprus on 17 September announced it has granted the First Investment Bank of Bulgaria an offshore banking license, dpa reported. The Arab Bank PLC of Jordan has also received a license permitting it to participate in the $2 billion offshore Cypriot market. In other news, five Bulgarian local branch bankers and four currency dealers who worked for brokerage houses went on trial in Plodviv on charges of embezzling and illegally channeling abroad the equivalent of $6.3 million in state funds and depositors' savings. A prosecutor said that in 1994-1995, the defendants transferred money of unknown origin to 11 firms in Austria, Hong Kong, and Dubai, an RFE/RL corespondent in Sofia reported.


by Liz Fuller

In recent weeks, Russian and Chechen leaders have engaged in a high-stakes exercise in brinkmanship over the planned export from Azerbaijan via Chechnya of Azerbaijan's Caspian oil. This has highlighted dissent in Moscow both over the importance of the pipeline and over support for the present Chechen leadership.

The first "early" oil from Azerbaijan's Chirag Caspian field is scheduled to be exported through the sole available pipeline, which runs from Baku via Grozny and Tikhoretsk to the Black Sea terminal of Novorossiisk. The export is scheduled to begin on 1 October, but extensive repairs and modifications to the pipeline are required before that date to make it operational.

Renovating the pipeline was a top priority of both the Russian and Chechen governments following the signing in May of a treaty formally ending Moscow's undeclared war against Chechnya. In July, Russian First Deputy Prime Minister Boris Nemtsov (who is also fuel and energy minister), Chechen President Aslan Maskhadov, and Natik Aliev, the president of Azerbaijan's state oil company SOCAR, signed a document providing for the annual export via Chechnya of 5 million metric tons of Azerbaijani oil. In addition, Moscow undertook to finance necessary repairs to the 153 kilometer sector of the pipeline that runs through Chechnya. Yarikhanov estimated that those repairs could be accomplished within 20-30 days at a cost of $2 million.

Within weeks, however, Yarikhanov complained that Moscow was sabotaging the agreement by failing to release the required funds for repairs. In early August, Russian Deputy Fuel and Energy Minister Sergei Kirienko said Grozny was making "impossible" tariff demands. He noted that his ministry had conducted feasibility studies on six routes for an alternative export pipeline through Dagestan, bypassing Chechen territory.

On 27 August, Kirienko resumed talks with the Chechen leadership on the question of transport tariffs. Under the July agreement, Russia was to receive $15.67 in transit fees per metric ton of oil and Chechnya $4-5. But Moscow apparently backtracked on that agreement and offered the standard rate--$0.43--for the transport of oil within the Russian Federation, instead of the $4.27 demanded by the Chechens.

In early September, Russian Security Council Secretary Ivan Rybkin tried to break the deadlock over tariffs by advocating that Chechnya be paid a lump sum from the federal budget to compensate for the lower tariff rate. The Chechen delegation rejected that suggestion but accepted Rybkin's proposal that Transneft pay the difference between the standard $0.43 and the $2.20 subsequently demanded by the Chechens. Nemtsov, however, rejected that option.

On 9 September, Nemtsov and Yarikhanov finally reached agreement on the terms for the export of 200,000 metric tons of oil in 1997. Chechnya is to be paid $0.43 per ton and receive from the federal budget an additional $854,000 to cover the cost of repairs to the pipeline. While professing at the time of signing to be satisfied with the compromise, each side threatened to abrogate the accord the following day unless the other agreed to additional conditions. Nemtsov said Russia would "tear up" the agreement if Grozny could not ensure the safety of members of the Russian repairs team, two of whom were injured in an explosion on the border between Chechnya and Dagestan on 9 September. Chechen First Deputy Prime Minister Movladi Udugov, for his part, said implementation was contingent on Moscow paying wage arrears to teachers and doctors in Chechnya.

Three days later, Nemtsov raised the stakes even higher by announcing that Russia will proceed with plans to build an alternative pipeline, bypassing Chechen territory. He explained that the throughput capacity of the existing pipeline is inadequate for the huge volumes of oil that will begin to be exported within several years. He added, however, that Russia will honor its commitment to the Chechens to repair the existing pipeline. Nemtsov predicted that the 283 kilometer bypass pipeline could be built within one year at a cost of $220 million. This would make it considerably cheaper than the proposed "main export pipeline" from Baku to the Turkish Mediterranean terminal at Ceyhan.

The decision to build a second Baku-Novorossiisk pipeline not only confirms Russian aspirations to exercise maximum control over the export of both Azerbaijani and Kazakh Caspian oil. It also appears to be a compromise between two camps within the Russian leadership. Nemtsov and Prime Minister Viktor Chernomyrdin both opposed concessions to the Chechens and therefore advocated a bypass pipeline, regardless of the consequences for the Chechen leadership.

President Boris Yeltsin and Rybkin, on the other hand, argued that Moscow should abide by its commitment to Maskhadov to provide funds for repairing the existing pipeline in order to enable Grozny to benefit from the transit tariffs. Maskhadov is currently under considerable pressure from rivals in Grozny, including maverick field commander Salman Raduev. In early September, Raduev threatened to prevent the recommissioning of the existing pipeline unless Russia officially recognizes Chechnya as an independent state.