Vol 1, No. 65, Part I, 2 July1997

Vol 1, No. 65, Part I, 2 July1997

This is Part I of Radio Free Europe/Radio Liberty's Newsline.
Part I is a compilation of news concerning Russia, Transcaucasia and
Central Asia. Part II, covering Central, Eastern, and Southeastern
Europe, is distributed simultaneously as a second document.  Back
issues of RFE/RL NewsLine are available through RFE/RL's WWW
pages: http://www.rferl.org/newsline/search/

Back  issues of the OMRI Daily Digest are available through OMRI's
WWW pages: http://www.omri.cz/

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Headlines, Part I

* FORMER FSB CHIEF APPOINTED RUSSIAN JUSTICE MINISTER

* PRESIDENTIAL ADMINISTRATION DEFENDS DYACHENKO'S APPOINTMENT

* CHERNOMYRDIN DENIES SANCTIONING ARMS SHIPMENTS TO ARMENIA

End Note : REACTIONS TO DYACHENKO'S APPOINTMENT AS YELTSIN'S IMAGE ADVISER
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RUSSIA

FORMER FSB CHIEF APPOINTED JUSTICE MINISTER. President Boris Yeltsin has
appointed former Federal Security Service (FSB) director Sergei Stepashin
justice minister, Russian news agencies reported on 2 July, citing the
presidential press service. Yeltsin also sacked suspended Justice Minister
Valentin Kovalev, who "Sovershenno sekretno" recently alleged to have ties to
organized crime. Stepashin was removed as FSB head following the failed
attempt to resolve the hostage crisis in Budennovsk (Stavropol Krai) in June
1995. More than 100 people were killed in the effort to free the hostages and
capture the Chechen hostage-takers.

TULEEV APPOINTED GOVERNOR OF KEMEROVO. Yeltsin has appointed Aman Tuleev
governor of Kemerovo Oblast and simultaneously removed him as CIS affairs
minister, RFE/RL's Moscow bureau reported on 1 July. Tuleev was reportedly
appointed at his own request, after notifying government officials recently
that he plans to contest the gubernatorial election in Kemerovo scheduled for
19 October. Tuleev chaired the Kemerovo legislature before running for
president in 1996. He withdrew from the presidential race shortly before the
June election and backed Communist Party leader Gennadii Zyuganov. Tuleev
replaces Governor Mikhail Kislyuk, whom Yeltsin appointed in 1991. Tuleev is
likely to retain the post as governor in October; analysts give Kislyuk no
chance of winning his former job back. There was no word on whether trade
union leaders in Kemerovo will go ahead with an oblast-wide strike planned for
11 July.

PRESIDENTIAL ADMINISTRATION DEFENDS DYACHENKO'S APPOINTMENT. The presidential
press service released a statement on 1 July defending the recent appointment
of Yeltsin's daughter Tatyana Dyachenko as presidential adviser, Russian news
agencies reported. Duma Speaker Seleznev claimed that Dyachenko's appointment
violated the law on the civil service, which bans nepotism. However, the
official statement dismissed Seleznev's objection as "legally inadequate,"
noting that the president is technically not a civil servant and is therefore
not subject to restrictions on appointing close relatives. But in an interview
with Ekho Moskvy, Seleznev dismissed that argument as "legalistic evasion."
Meanwhile, Interfax reported on 1 July that an attorney who resides in Moscow
Oblast has filed a Supreme Court appeal challenging the legality of
Dyachenko's appointment (see also "End Note" below).

CHUBAIS ACCUSED OF RECEIVING SUSPICIOUS INTEREST-FREE BANK LOAN. "Izvestiya"
on 1 July charged that First Deputy Prime Minister Anatolii Chubais received a
loan from Aleksandr Smolenskii's Stolichnyi Savings Bank under suspicious
circumstances. The newspaper alleged that in February 1996, Stolichnyi Bank
extended a five-year, interest-free loan worth 14.5 billion rubles ($2.9
million) to the Center for the Defense of Private Property, which Chubais had
created shortly before. The center reportedly put up no collateral for the
loan, the stated goal of which was the "development of civil society." The
bank credits were allegedly used to speculate on the lucrative treasury bill
market. "Izvestiya" also claimed that Chubais helped Stolichnyi win a November
1996 competition to acquire Agroprombank and implied that Chubais's contacts
with international financial organizations have helped Stolichnyi to
participate in programs run by the European Bank for Reconstruction and
Development and the World Bank. Since 1991, "Izvestiya" has almost always
supported Chubais .

CHERNOMYRDIN, SELEZNEV DISCUSS CONVENING SPECIAL DUMA SESSION. After meeting
with State Duma Speaker Gennadii Seleznev on 1 July, Prime Minister Viktor
Chernomyrdin announced that some Duma committees and a conciliatory commission
of government and parliamentary representatives will continue to work on
proposals to cut 1997 budget spending and social benefits, Russian news
agencies reported. Chernomyrdin said that if a compromise on the proposed cuts
is reached, the government will formally request that the Duma interrupt its
summer recess to consider the proposals. Meanwhile, Seleznev told journalists
that a final date for convening a special Duma session cannot be set until the
government revises the proposed legislation and submits it to the relevant
Duma committees. The Duma rejected the government-backed budget cuts and
reductions in social benefits in the final days of its spring session (see
"RFE/RL Newsline," 24 and 25 June 1997).

LUZHKOV CRITICIZES GOVERNMENT'S PRIORITIES. Moscow Mayor Yurii Luzhkov has
again criticized the government's domestic policy priorities. In a 1 July
interview with RFE/RL's Moscow bureau, he said First Deputy Prime Minister
Chubais and his allies have mistakenly made reform of housing and municipal
services their top priority. Luzhkov believes the government's main goal
should be reviving domestic industry, which he said will make it easier to
address other issues, including housing reform. Luzhkov also repeated his
opposition to Russian policy toward Ukraine. In particular, he objects to
"renting our own city" by leasing port facilities in Sevastopol, where the
Black Sea Fleet is based. With regard to Duma Defense Committee Chairman Lev
Rokhlin's recent appeal to the president, Luzhkov said he highly respects
Rokhlin and understands the hardships in the armed forces but would not
"dramatize the situation."

YAVLINSKII CONDEMNS "CORPORATE CAPITALISM," TAX CODE. Yabloko leader Grigorii
Yavlinskii says the government's policies are creating "corporate capitalism"
in Russia, which "has nothing in common with a democratic state, open society
and free market economy," RFE/RL's Moscow bureau reported on 1 July. In
particular, Yavlinskii criticized the draft tax code, which the Duma recently
passed in the first reading. He described the proposed code as a "repressive
document" containing many provisions that violate citizens' rights guaranteed
in the constitution, the civil code, and the family code. For instance, he
said the tax code would allow the tax police to carry out interrogations and
would impose a presumption of guilt against those suspected of tax evasion.
Yavlinskii also argued that the government's "superficial economic activity"
would not prevent declines this year in GDP by 2%-3%, industrial production by
4%-5%, and agricultural output by up to 10%, Interfax reported.

MINISTER ORDERS INSPECTION OF ALL NUCLEAR RESEARCH REACTORS. Atomic Energy
Minister Viktor Mikhailov has ordered thorough inspections of all Russian
nuclear reactors used for research to be conducted over the next several
months, Interfax and AFP reported on 1 July. The order was prompted by the
recent fatal accident at the Arzamas-16 center in Nizhnii Novgorod Oblast (see
"RFE/RL Newsline," 18, 23, and 30 June 1997). An investigative commission has
already concluded that human error and flawed procedures at the center caused
the accident. Ministry spokesman Georgii Kaurov said the inspections will
involve a "complete verification, from the instruction booklets to the
equipment." Mikhailov's order does not apply to reactors at ordinary nuclear
power plants.

TATARSTAN ACQUIRES CONTROLLING STAKE IN KAMAZ. The board of directors of the
truck manufacturer KamAZ on 1 July voted to transfer 43% of the company's
shares to the government of the Republic of Tatarstan and to appoint First
Deputy Prime Minister Ravil Muratov as chairman the KamAZ board, the Kazan
bureau of RFE/RL's Tatar-Bashkir service reported. President Mintimer
Shaimiev, who attended the meeting, said his government is entitled to the
shares because it assumed more than 3 billion rubles ($520,000) in KamAZ's
debts. He also pledged that his government will guarantee loans and
investments in KamAZ to turn around the loss-making company. In October,
Shaimiev negotiated a reduction in KamAZ's back taxes with high federal
government officials. A special government commission on tax collection had
threatened to force the company into bankruptcy (see "OMRI Daily Digest," 16,
24, 25, and 31 October 1996).

KOZYREV PROTESTS FALSE MEDIA REPORTS. State Duma deputy and former Foreign
Minister Andrei Kozyrev has claimed that someone in the Interior Ministry is
trying to discredit him by leaking false reports to the media, RFE/RL's Moscow
bureau reported on 1 July. In news coverage of the recent murder of
Rosinterbank deputy president Stanislav Alymov, major Russian television
networks and the Interfax news agency reported that Alymov was an assistant to
Kozyrev. However, Kozyrev told RFE/RL that he had no contact either with
Alymov or Rosinterbank, adding that the murdered man was an assistant to Duma
deputy Aleksandr Kozyrev of Vladimir Zhirinovsky's Liberal Democratic Party of
Russia (LDPR). (In the last year, several assistants to LDPR Duma deputies
believed to have links to organized crime have been murdered.) Andrei Kozyrev
said he has asked the Procurator-General's Office to investigate the source of
the media reports.

TRANSCAUCASUS AND CENTRAL ASIA

CHERNOMYRDIN DENIES SANCTIONING ARMS SHIPMENTS TO ARMENIA. Russian Prime
Minister Viktor Chernomyrdin on 1 July told journalists that neither he nor
any other member of the Russian government approved arms supplies to Armenia,
ITAR-TASS reported. "Izvestiya" the same day claimed to possess documentation
proving Chernomyrdin sanctioned arms shipments to Armenia between 1994-1996
(see "RFE/RL Newsline," 1 July 1997). Russian government spokesman Igor
Shabdurasulov told Interfax that in March the government had submitted to the
Chief Military Prosecutor's office documentary evidence that it complied with
a directive issued by Russian President Boris Yeltsin on 9 September 1993 to
suspend all arms deliveries to both Armenia and Azerbaijan pending a peaceful
solution of the Karabakh conflict. (At the time, Karabakh Armenian forces had
just launched a major offensive.) Shabdurasulov said the "unauthorized
activities of numerous ministries or officials" are still being investigated.

GEORGIAN COMMANDOS KILLED IN ABKHAZIA. Five members of a Georgian commando
unit allegedly subordinate to the Georgian security service and one Abkhaz
soldier were killed in a skirmish early on 1 July near the border between
Abkhazia's Gulripsh Raion and the rest of Georgia, Interfax reported, quoting
an Abkhaz Interior Ministry official. Also on 1 July, Russian Security Council
deputy secretary Boris Berezovskii proposed "new ideas" about a possible
solution of the Abkhaz conflict during talks with President Eduard
Shevardnadze in Tbilisi, according to Reuters.

RUSSIAN-ARMENIAN ECONOMIC AGREEMENTS SIGNED. At the first session of the
Russian-Armenian intergovernmental commission on economic cooperation on 1
July in Yerevan, Russian Deputy Prime Minister Valerii Serov and Armenian
Premier Robert Kocharyan signed seven agreements, including one on
restructuring Armenia's debt to Russia, Armenian agencies reported. Serov
termed the agreements "pragmatic" and said that Russia believes economic
relations with Armenia should be "mutually supplementary and mutually
beneficial," Noyan Tapan reported. Following parallel talks with Armenian
government officials, Gazprom chairman Rem Vyakhirev said agreement was
reached on resuming Russian gas supplies to Armenia and that talks on the
export of Russian gas to Turkey via Georgia and Armenia are continuing.

CHECHEN PRESIDENT IN BAKU. Aslan Maskhadov on 1 July was in Baku on a "working
visit" for talks with Azerbaijani President Heidar Aliev, RFE/RL's Baku bureau
reported. The two presidents refused to speak to journalists after their
meeting. Chechen press spokesman Kazbek Akhmedov said that they had not signed
any agreements. He added that the question of exporting Azerbaijan's Caspian
oil via Chechnya was not discussed but said a trilateral agreement between the
Russian Fuel Ministry, the Chechen oil company Yunko, and the Azerbaijani
state oil company SOCAR would be signed in Moscow after the successful
conclusion of Russian-Chechen accords on customs and banking. Chechen First
Deputy Prime Minister Movladi Udugov told Interfax on 1 July that talks with
Russian officials in Moscow had yielded consensus on almost all points of both
accords.

AZERBAIJANI PRESIDENT ASSESSES NATIONAL SECURITY MINISTRY. Speaking at a
ceremony in late June to mark the anniversary of the National Security
Ministry, Heidar Aliev said that body's primary tasks are to liberate
"occupied territories" and to gather information about Armenia, according to
Turan on 30 June and the "Turkish Daily News" on 1 July. Aliev said that at
least one political party in Azerbaijan is controlled by a foreign
intelligence service. He accused the intelligence services of Russia, Iran,
Turkey, and Georgia of interference in Azerbaijan's internal affairs. He also
called for strengthening control over the country's borders to prevent drug
trafficking via Azerbaijan. "Akhali taoba" on 1 July quoted a senior
Azerbaijani frontier official as claiming that Georgia is illegally selling
Armenia part of the crude oil it receives from Azerbaijan.

KYRGYZ FOREIGN MINISTER REPLACED. President Askar Akayev dismissed Roza
Otunbayeva as foreign minister on 1 July, according to RFE/RL correspondents
in Bishkek. Otunbayeva is replaced by Muratbek Imanaliyev, who until now was
the head of the International Department of the presidential administration.
He served as foreign minister from 1990-91 and was later ambassador to China.
Otunbayeva, who was previously ambassador to Canada and then the U.S, was
named as ambassador to Great Britain; however, there is no Kyrgyz embassy in
London. According to Interfax, she requested to be relieved of her duties as
foreign minister.

TAJIK PRESIDENT IN SAUDI ARABIA. Imomali Rakhmonov arrived in Saudi Arabia on
30 June at the start of a four-day visit, according to ITAR-TASS. Rakhmonov
and a delegation of Tajik businessmen and government officials held talks in
Jeddah on 1 July with the chairman of the Islamic Development Bank and the
secretary-general of the League of the Islamic World. Discussions centered on
ways to improve cooperation following the official end of the civil war in
Tajikistan. Rakhmonov met with King Fahd on 2 July to discuss Saudi-Tajik
relations. The Tajik president is also scheduled to visit Mecca to make the
"umra" or little Hajj.

UN EXPRESSES CONCERN OVER DRUG TRADE IN KAZAKSTAN. A UN official monitoring
the drug trade in Kazakstan voiced alarm at increasing drug use in Kazakstan
and at the country's role as a transit point for narcotics heading westward,
Reuters reported on 1 July. The official cited marijuana cultivation as the
leading problem in Kazakstan's fight against the drug trade. He also said
Kazakstan has the potential to become the leading producer of marijuana in the
world. Nurlan Abdirov, the head of Kazakstan's State Drug Control Committee,
said marijuana is currently being cultivated on at least 138,000 hectares of
land, mostly in the Chu Valley region of southeastern Kazakstan. Abdirov
pointed out that law enforcement officials in 1996 confiscated 12 tons of
drugs being shipped westward via Kazakstan. In the first five months of 1997,
officials have already seized more than 17 tons. Abdirov also noted that other
drugs have made their way into Kazakstan, including opium, LSD, and heroin.

KAZAK PRESIDENT PRAISES PARLIAMENT. Nursultan Nazarbayev, addressing the
parliament at the close of its second session, has expressed satisfaction with
the progress toward implementing reforms, according to Interfax. Nazarbayev
noted that during the nine-month session, the parliament adopted more than 150
draft laws. He added that the overhaul of the civil service has saved the
country about 3 billion tenge ($40 million) to date. He cited an Economics and
Trade Ministry report predicting a 0.5% growth in GDP in the first six months
of 1997 and 2% industrial growth. By year's end GDP may have increased by 2%,
the president predicted.

END NOTE

REACTIONS TO DYACHENKO'S APPOINTMENT AS YELTSIN'S IMAGE ADVISER

by Floriana Fossato

        The Moscow press showed relief, rather than surprise, over the 30 June
decision of Russian President Boris Yeltsin to name his younger daughter,
Tatyana Dyachenko, as his official image adviser. Two influential
pro-government newspapers, "Segodnya" and "Kommersant-Daily," ran front-page
articles on 1 July saying Dyachenko's appointment had long been expected. They
said it helps to clarify Dyachenko's role at a time when her public profile is
increasing, particularly during Yeltsin's foreign trips.
        Those comments echo Dyachenko's own statement following her appointment.
After the official announcement by Yeltsin's press secretary Sergei
Yastrzhembskii at a Kremlin news briefing, Dyachenko said her appointment
"removes the whole ambiguity of my situation." The Russian media have
consistently reported that the 37-year-old Dyachenko has played an influential
political role behind the scenes at least since last year's presidential
election campaign.
        In a commentary titled "Legalization," "Kommersant-Daily" reminds reader
 s
that at the first press conference following Yeltsin's re-election, Viktor
Ilyushin, then presidential first aide, said Yeltsin's advisory election team
would be preserved. He praised Dyachenko for her role as a "communication
channel" to the president. At her first news briefing, Dyachenko said that for
her "it is easier to tell the president unpleasant things, since it is easier
for him to hear them from me than from others." "Kommersant" concludes that
"even after her appointment, Dyachenko remains Yeltsin's daughter and this is
her main strong point."
        Dyachenko, who for months has been named in opinion polls as one of most
influential figures in Russian politics, was already rumored to have an office
in the Kremlin and to control access to the president. Since Yeltsin resumed
his political activities following the heart ailment that disrupted his first
months in office after re-election, Dyachenko has become increasingly visible,
particularly during official foreign trips. She was in Baden-Baden, Germany,
in April, when Yeltsin met with German Chancellor Helmut Kohl. And she was
part of the Russian delegation in Paris in May, when Yeltsin signed the
Founding Act defining relations with NATO.
        Yastrzhembskii declined to say why Yeltsin made the appointment now, say
 ing
only that the president took the decision "when he considered it necessary."
But "Segodnya" commented that after the recent trips abroad, it was imperative
to clarify Dyachenko's role. The newspaper added that it was also becoming
increasingly difficult to explain to the public her inclusion in official
Russian delegations.
        Meanwhile, some observers say Dyachenko's appointment is likely to provo
 ke
angry reactions from Yeltsin's opponents, especially in the Communist- and
nationalist-dominated parliament. Those opposed to the president have
constantly criticized Dyachenko for allegedly supporting their main enemy,
First Deputy Prime Minister Anatolii Chubais, and for manipulating the
president since his re-election, particularly during his long illness.State
Duma Chairman Gennadii Seleznev, a Communist, told the Interfax news agency
that Dyachenko's appointment violates the law on the civil service, which
prohibits appointing close relatives of officials to top state positions.
        Dyachenko said at her news briefing that she "does not have personal
ambitions" and that she has assured her husband--who, she said, opposed her
appointment--that she will work in the Kremlin only for the next three years,
until the end of her father's second and, under the constitution, last term.
        "Kommersant-Daily" said that this may indeed prove to be the case, judgi
 ng
from what it called the unusual openness with which Dyachenko answered
journalists' questions. The paper commented that Dyachenko looks "too
candid...in comparison with experienced politicians." But it also noted that
after obtaining a Kremlin post, Dyachenko may well acquire the "political
clout" she does not seem to have now.
        Some observers also point out that many Russians will likely disapprove
 of
the appointment and may be concerned that it signals the onset of a wave of
nepotism. Recently, Yeltsin appointed the husband of his elder daughter to
head the state airline, Aeroflot.
        Muscovites questioned by RFE/RL's Moscow bureau said that Dyachenko appe
 ars
to be a "sincere and strong woman" and may prove effective in her new job. But
others criticized her appointment, saying it "diminishes Yeltsin's authority."

The author is an editor at RFE/RL's Moscow bureau.

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