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18 October 1995

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Daily Report
Central Eurasia

FBIS-SOV-95-201 CONTENTS 18 October 1995

NOTICE: An * indicates material not previously disseminated in electronic form.
DUMA ELECTION ISSUES

Key Developments

FBIS Duma Election Report 18 Oct [FBIS Media Note] ........c..ccccscsssssssecessessessssssssescenencensenceeees
Daily Alleges Corruption Among NDR Ranks [SOVETSKAYA ROSSIYA 7 Oct] ........sc.ccsss0000
Electoral Commission Expresses ‘Doubts’ About LDPR Lists [INTERFAX]  .........cccscssssesessesees
Fedorov Proposes Coalition Government After Elections [INTERFAX]  ..........ssssssssscesseeseseeseeees
FITU Leader: Over ‘One Million Signatures’ Collected [INTERFAX]  .......c..ccscsssssssssesssssesseessees

Regional Activities
Chernomyrdin Seeks Support for ‘Our Home’ in Bashkiria [SEGODNYA I] Oct]  .........cc00000

Forecasts & Commentary

Zyuganov Argues for Review of Left’s Tactics [SOVETSKAYA ROSSIYA 14 Oct] — ....c..ccscs0000
Gaydar Foresees Strong Electoral Showing by Leftists [SEGODNYA 13 Oct]  ....c.ccccccscsssseseseees
Filatov Interviewed on Election Blocs, Campaigns [INTERFAX]  ..........scssssssssesssessesseseeseeseeseeees

INTERREGIONAL AFFAIRS

Delegations End Talks on Nagorno-Karabakh Conflict [ITAR-TASS] — ......cccccsesssssssssessessseesscsssseseesnesees
FEAR TAGS COGS FURR Cee Oe Oe | etetnintestetctcctecctiettentnststinvcterectsconeseeseenenevversescesceececeecsecsee

RUSSIA INTERNATIONAL AFFAIRS

Yeltsin Will ‘Never Allow’ NATO Nuclear Arms in E. Europe [AFP]  .......c.cccccccssssssesssessssesceesensensees
Yeltsin Warns He May Halt Cuts in Nuclear Force [London THE GUARDIAN 18 Oct]  .........s000s0000+
Russia ‘Flatly Refuses’ Bosnia Peacekeeping Command [KOMSOMOLSKAYA PRAVDA 18 Oct] _ ...
Ivanov: Moscow To Suspend Yugoslav Sanctions [ITAR-TASS]  ........csscssssssssssssesessssseeseessesenceccesseneeees
Ivanov Calls Moscow Contact Group Meeting ‘Productive’ [ITAR-TASS]  .......cc.ccsssesssssssessesseseeseeeeeees
Kozyrev on Formula For Bosnian Military Settlement [Moscow ORT]  .......ccssssccesessessessessesceneeseeeenees :
NATO’s Moltke Cited on Talks in Polish Capital [/KRASNAYA ZVEZDA 17 Oct] .....c.ccsccssessesesseseeees
Chirac Aide on Yugoslavia, European Security [ROSSIYSKIVE VESTI 18 Oct] ...ccccccccccsscsecssesnsesseeees
Kozyrev To Meet U.S. Envoy Talbott 18 Oct [INTERFAX] | ...........cccccsccsscssssssseeceecsesssessesseccescsecceneenses
Yeltsin Not To Attend U.S.-Russian Exercises [INTERFAX]  .........cccscscsssssssessessseesseseesesssesnssensceseeceneees
Yeltsin Awards U.S. Citizen Order of Friendship [ITAR-TASS]  ........cc.cccscsssssesssesessessnceesseseeceecenceecencees
Russia Will Observe Sanctions Against Iraq [INTERFAX]  ........c...scsscssssssssssssscesseseessenseseesenccnceeceeceecees
Zhirinovskiy Leaves Baghdad, Visits Cairo [Moscow Radio] ..........cccccsscssssscsscssescessessesseceeceeceeneeceneeees
COCROe TERS FUG. FRG ee Wee Me EE cetitertncctnrncirtnetrinecerecsesesecnecetcncccecsecsceretnecnenccseseescczes
Grachev Postpones Greece Visit for Court Appearance [INTERFAX]  ........ccsscsscssssessssessessesesceseseeeneses
Moscow Regrets Estonia’s Anti-Russian Stance [ITAR-TASS]  .....cc.sccscssssssessessssessessessessssescceseeceecenseeees
Karasin Urges Worldwide Efforts To Combat Terrorism [ITAR-TASS]  ...........csssssssssseseesessessesceseencenes
Karasin Urges Further Steps to Palestinian Autonomy [ITAR-TASS]  .........cccccssssscsscsscesecceserseseenceesseee
Fleet Commander Denies Sunken Submarine Reports [ITAR-TASS]  .........c.scsccssssscssssseeseesceceecencenceceeees
Britain Seeks To Limit Russian Banking Operations [IZVESTIYA 17 Oct] ...cc.ccccccscsssssessesseesesceseeceeces
Decree Text of Oil-for-Sugar Deal With Cuba [ROSSIYSKAYA GAZETA 14 Oct]  ...ccccccccscccsssseeseseeeee

SN AUs

FBIS-SOV-95-201

18 October 1995 2
Moldovan Envoy on Plan for Dniester Solution [ROSSIYSKIYE VESTI 17 Oct] .....ccssssssscsseseerereneees 24
RUSSIA NATIONAL AFFAIRS
Political Issues
Yeltsin, Chernomyrdin Discuss Economic, Personnel Issues [ITAR-TASS]  ..........scssescssessesessevees 26
Yeltsin Stresses ‘Unique’ Role of Udmurtia Within RF [INTERFAX]  ..........:..ssscssssesesseseseesseeees 26
Yeltsin Authorizes More Gubernatorial Elections [INTERFAX]  .........csscsssssssessrsssessesseseneesenereeee 26
Yeltsin Seen Aiming To Bring Regional Heads Into Line /KOMMERSANT-DAILY 12 Oct] __.... 27
Government To Stabilize Dagestan-Azeri Border Region [ITAR-TASS]  ..........scsscssssssssssesesesseeees 27
Cabinet Reshuffle Expected To Affect Low-Ranking Officials /KOMMERSANT-DAILY 13 Oct] 28
“Women of Russia’ Head Assesses Spread of Poverty [TRUD 17 Oct] ......cccccsscsesesseseesercesseeees 29
Panskov: Enterprises Owe RSO Trillion in Tax Debts [INTERFAX] — ........s0:cssssssssseesesssseseeeeseneees 30
Failure To Stop Terrorism Deplored in Wake of Hijacking /KRASNAYA ZVEZDA I7 Oct] _.... 30
Bank Chief Hospitalized After Being Shot [Moscow NTV] _ .......scscsssssecssssseeseesnsesenseecenenseesesencesees 31
Constitutional Court Rules on Prisoners’ Pensions /[NEZAVISIMAYA GAZETA I7 Oct] _........... 3)
Media Issues
Chernomyrdin: Government To Support State TV, Radio [INTERFAX]  ..........ccssssesssesseseeseeesees 32
Daily Uncovers Financial Abuses at ‘Ostankino’ [SOVETSKAYA ROSSIYA 14 Oct] — .......0.:00++- 32
Military Issues
Yeltsin Amends Statute on Exporting Military Arms [ROSSIYSKAYA GAZETA 17 Oct] _......... 35
Defense, Interior Ministries Demand More Money in 1996 [INTERFAX]  ........c.cccsscsesseseeeseeeees 36
Federal Assembly
Kokoshin Remarks on Defense Spending to Council [KRASNAYA ZVEZDA 17 Oct] ........s0000 36
Federation Council Hears of Agricultural Decline [JTAR-TASS]  ......cc.cccsccsscssssessesceseeessenseeseessees 36
Draft Budget Attacked in Federation Council [ITAR-TASS]  .......ccccssssssessssesessesesesnsesenscesecenceseees 37
Duma Refuses To Approve Key Budget Figures [ITAR-TASS]  ........scssescssssssssessssesessseeeeeeseeesneees 37
Duma Fails To Agree To Refer Back Budget Draft [IZVESTIYA 17 Oct]  ......cccsccsessssesesseseeneeees 38
Yeltsin’s Choice of New Prosecutor Applauded [ITAR-TASS]  ........cccsssssssessesseseesseesessenseneesnesenees 38
Rybkin Expects New Parliament To Be More Left-Wing [INTERFAX]  .........scssesssssssesseseeseeneees 39
Regional Affairs
Chechnya Reportage; Negotiations, Military, Terrorism — ............scccecsesessesssseesseseeeeseacensseseencesseses 39
Yarikhanov Halts Commission Meetings [INTERFAX]  ....c.ccccssssssssesscessesssecseesenceeeescensens 39
vera ; agresen Have Been Bombed’ [INFORMATSIONNOYE AGENTSTVO EKHO -
Shkirko Denies Russian Aircraft at Roshni-Chu [Moscow NIV] —seccsccwscsnsecenssensennees 40
Chechens Swear Revenge for Bombing [Moscow Radio]  .........s.scscscssssssssereessseeerssecceceeees 40
Avturkhanov Warns Against Detaining Dudayev [INTERFAX]  .........sccsesssessesenseeereenseeeees 40
Militants Sealed Off in Achkhoy-Martan {77AR-TASS] —.....cc.scccscsscssscsssesecensescenceeseeseacenees a
Leaders Cited at News Conference [Moscow RTV]  .....ccccccccsscscsecsssessecsecsecsscscsecescesesessesees 41
Maskhadov: Only SOC Can Control Republic [ITAR-TASS] —— .......ccsccssesssseseeseseeseeseeceseneaes 42
Shkirko Confirmed as Commission Cochair [ITAR-TASS] — ..c.cccccccsssssssssesssssesnsecssesceecensees 42
Russian Delegation Members ‘Ready To Resign’ [Moscow Radio }- abhnaninsscicniampitiniccinnnii 43
Volakiy Receives Death Tinreats [ITAR-TASS] — ..2.<cr.cocoesacsacescsccsssrenssecsscesarenssccscnsencceseccseses 43
Further on Chechen Delegation Move [INTERFAX]  ......cccccssccssssssssssssssseescescessenscessnsceensees 43
Opinions Vary on State of Emergency [INTERFAX]  ......ccccccscsscesssesseesseseessencessenesensseceneees 43

Army Paper Ponders ‘Chechen Problem’ [KRASNAYA ZVEZDA 17 Oct] ...cccccsccssesessesee a4

FBIS-SOV-95-201
18 October 1995 3 Central Eurasia
Federal Forces To Fund Rebel Hospital [ITAR-TASS] — .....scsscsssssssesssseseeseseerencereesereeseesnenees a4
Electoral Commission Invalidates Kalmykia Election [INTERFAX] _ ......:..cccsssssssssssssesssseeseereneeees 45
bare Explains Udmurtia Treaty of Delimitation /INFORMATSIONNOYE AGENTSTVO EKHO is
Gornyy Chemical Weapons Depot Debated at Conference [Moscow ORT] scscvccscsessnsn. 45
Funded, Altay Mines Intend 2 Tonnes of Gold Yearly /[NEZAVISIMAYA GAZETA 17 Oct] 46
Economic Issues
Yeltsin’s Signing of Foreign Trade Law Welcomed [IZVESTIYA 17 Oct] — ....ccscsosssssesseseeseseeneeees 46
Panskov Cited on Government Tax Law Liberalization [INTERFAX]  ......scccsssssesssesessesesseeseeses 46
Says Deficit To Be Within 4 Percent of GDP [NEZAVISIMAYA GAZETA 17 Oct] _ ......... 46
Moscow Starts New Talks With IMF on Credits [ITAR-TASS] — .....ccccscsscssssssseesseeseeseessesseeseeceesess 47
Foreign Loan To Cover Budget Deficit Hoped For [INTERFAX]  ........s.sssscssssssssssssesseseeseseseeeeeees 47
Moves To Control Liquor, Textile Imports Viewed [SEGODNYA 13 Oct]  ..cccccssssssessssssereeeeeeees 47
Power Sector Expected To Receive New Investments [ITAR-TASS] — .....csscscssssssesesesseseseeenseeenenees 48
Benefits of Ruble Band Outweigh Exporters’ Woes [FINANSOVYYE IZVESTIYA 17 Oct] _...... 48
UKRAINE
International Affairs
Kuchma Rules Out Military Bloc With Russia, CIS [ITAR-TASS]  .......ccsssssesssscssceseeceeecesseneeseeees 51
Ukraine, Belarus Unable To Meet CFE Deadline [INTELNEWS]  .0.......ccccsssesssssessscsecesceeseesensees 51
Concern Over NATO Deploying Nuclear Arms in Europe [INTERFAX]  ....s.scsssssssssssesssseseseeeees 51
Spokesman Sets Out Stance on NATO Membership [INTERFAX]  .....ccssescssssssesesesesneseneneeneseeees 51
Council of Europe To Examine Kiev’s Legal Norms [INTELNEWS] _ ........sssssssssseesssesesessneeseeeees 52
Legislation To Conform to Council of Europe Commitments [INTERFAX] _ .......:c:sssssseseesesesesees 53
National Affairs
IE SOO I SRR Es cnccucscssnsctnmnenapensenvniseunnnetinettinnsansenessnseveiennecenninens 53
Official Says National Guards May Be Disbanded [INTERFAX]  .......sssssssssessesssesesseesesesenseneneees 59
European Experts Examine Problems of Ukrainian Churches [INTERFAX] _ .....c.c.scssscsssesseeesesees 59
Explosion at Donetsk Stadium Staged by ‘Professionals’ [ITAR-TASS]  ......s.ccscsesssssseeeessereeeseees 60
Economic Issues
Minister Discusses Foreign Trade Policy [KIYEVSKIYE VEDOMOSTI 7 Oct]  .......ssscssesesssseeeees 60
WESTERN REGION
Belarus
Hryb Asks Court To Check Legality of Government Changes [INTERFAX]  ......s.sssssssesseseeeesees 64
National Front Protests Banning of Newspapers [Minsk TV] — ......c.scccsssssscssssscessesessnseeeseresecesenssess 64
Economics Minister Badzey Views Situation [SEM DNEY 14 Oct]  ..c.csccccsssssssssseeseecesssseeeneseeses 64
Moldova
Ministry Denies NATO Aircraft Landed at Military Base [INFOTAG] _ ...........ccsssssssssesseseeseseeees 66 '
Dniester Minister Calls Arms-Sales Story ‘Lie’ [INFOTAG]  ........c.sccccsssssssssescsssesesensceseesseeseecenes 66
Dniester’s Maracuta Fears Consequences of Labor Unrest [BASAPRESS] _ ......s..c.ssssssssseeseseeeeeees 66
CENTRAL ASIA
Kazakhstan
Washington Talks Mark Renewed Cooperation Commitment [KRASNAYA VEZDA 14 Oct] 68

FBIS-SOV-95-201
18 October 1995 4 Central Eurasia

President Appoints Kasymov as New Defense Minister [ITAR-TASS] — .......-ssssseseerssseeesesesereeeneees 68
‘Gloomy’ Outlook for Radioactive Waste Disposal [KARAVAN-BLITZ 12 Oct] — ......ccsesessssseeess 68
CAUCASUS
Azerbaijan
Two Oil Routes Seen as Stabilizing Factor [VEZAVISIMAYA GAZETA 14 Oct] — ....s..ssseeeseeeee 69
Turkish Embassy Denies Policy Change on Georgian Pipeline [Baku TV] — ........cscssssessesssereeeees 69
Georgia
Defense Minister Says CIS Military Bloc ‘Inevitable’ [ITAR-TASS]  .....s...sscscscssessssssereeesereseeeees 69
Russian Troop Command Denies Backing Coup Attempt [KRASNAYA ZVEZDA 17 Oct] _....... 79
Parliament Signs New Constitution Into Law [AFP]  .......ccsccssssosssssereerserensesensersesceneenseesenseeecenes 70
Shevardnadze Speaks on New Constitution [TDilisi RAGiO] — ........ccsscssessssssseessersessseersceeneeeneeeenes 71
Republic Boosts Foreign Reserves to $20 Million [IZVESTIYA 17 Oct] — ....sssccsesssssssesssesssesenensees 72
Central Bank Chief on Launch of New Currency [ROSSIYSKAYA GAZETA 14 Oct] — ....s..c00000 72
Abkhaz Defense Minister Fears Provocations by Georgia [INTERFAX]  ........s.csscsssscssssssesesesees 73
BALTIC STATES
Estonia
President Asks Vahi To Form New Government [Tallinn TV]  ....cccccccccccsssscescessecessrecesssneessseeees 75
Latvia
Parliamentary Parties Sign Declaration on Joining EU [Riga Radio] — .......:.scscsssssssesseserereeeneseeees 75
Lithuania

Parliament Ratifies Nuclear Safety Convention [Vilnius RAdiO] — ......sscccssccssssssessessesessesseeseaseseees 75

FBIS-SOV-95-201
18 October 1995

Key Developments

FBIS Duma Election Report 18 Oct
WA1810011695

(FBIS Media Note] This is the fifth in a weekly series
of reports that FBIS will produce on the campaign for
the 17 December Russian Duma elections. It is based
solely on Russian media reporting.

Recent Developments

Signatures Pouring In for Major Parties The Central
Election Commission (CEC) today certified three more
parties as having obtained the 200,000 signatures nec-
essary to appear on the ballot: The Congress of Russian
Communities (KRO) led by Yuriy Skokov, Vladimir
Zhirinovskiy’s Liberal Democratic Party (LDPR), and
the Women of Russia (INTERFAX, 17 October). With
less than a week before the deadline, the CEC has reg-
istered four parties, including the Communist Party of
the Russian Federation (CPFR) registered earlier.

At least six other parties appear to have collected
sufficient signatures to be certified before the deadline:

¢ Agrarian Party (APR) Chairman Mikhail Lapshin
announced on 14 October that his party has col-
lected two million signatures and would submit
them on 16 October (ITAR-TASS).

* Russia Is Our Home (NDR) Executive Committee
Deputy Chairman Vladimir Ryzhkov asserted that
the NDR has collected 1.7 million signatures
(ITAR-TASS, 12 October).

¢ Ivan Rybkin said that his bloc has already garnered
600,000 signatures and planned to submit 300,000
of them to the CEC on 17 October (INTERFAX,
16 October).

¢ Russia’s Democratic Choice-United Democrats
has collected 200,000 signatures, but “as few as
80,000 signatures" had come into the Yabloko
bloc’s headquarters, according to KOMMER-
SANT-DAILY (10 October).

¢ Derzhava and the Unions and Industrialists of
Russia have also collected enough signatures to
register, according to SELSKAYA ZHIZN (17
October).

Yeltsin, NDR Leaders Hold Meeting President Boris
Yeltsin met with Premier Viktor Chernomyrdin and
other key leaders from NDR election bloc on 11
October to discuss the bloc’s campaign. State Property
Committee chief Sergey Belyayev, NDR’s campaign
director, told ITAR-TASS (11 October) that Yeltsin
set a "clear task" for the bloc: "Form a democratic
majority."

DUMA ELECTION ISSUES 1

While noting that as the "guarantor" of social accord
the president cannot openly state a "preference" for any
party, Belyayev asserted that Yeltsin “expressed his own
political sympathies" during the meeting and that it was
“easier to list all those whom the president does not
accept.” According to Belyayev this list includes the
CPRF and all other communist fragments, the Agrarian
Party, and Vladimir Zhirinovskiy’s LDPR, which he
said Yeltsin “has never supported." As for the KRO,
led by Yuriy Skokov and General Aleksandr Lebed,
Belyayev said "we did not touch on it during the course
of our meeting.”

Grachev Not a Candidate Defense Minister Pavel
Grachev announced on 12 October that he “never
intended to stand" and is “not planning" to stand
as a Duma candidate (ITAR-TASS), directly refuting
Gen. Boris Gromov, one of his chief antagonists, who
claimed several days earlier that Grachev would stand
for election in one of Saratov Oblast’s single-seat
districts (see "FBIS Duma Election Report 10 Oct").

IZVESTIYA Details Campaign Costs Noting that the
cost of an election campaign is "a very well-kept
secret," IZVESTIYA published an article on 14 October
outlining the price range of several key components of
an average campaign:

¢ Signature collection by “professional services"
costs from $500-$5,000 per month, and the fee
“doubles” if a candidate wins. Taking into account
the support staff working under a professional
“consultant,” the campaign to win a single-seat
race “could cost the candidate $25,000-$150,000"
and “cases are known where candidates have paid
out up to $300,900."

¢ The price for the services of a "consultant psy-
chologist" are typically $40-$60 per hour and some
charge up to $200 per hour; “lecturers” who "in-
struct” parties and candidates on “all the subtleties
of election campaigning” earn $20-$40 per hour.

* Polling is calculated on the basis of $6-$12 per
questionnaire and sample sizes generally range
between 800-1,500 respondents. An average poll
“without analysis" costs approximately $6,000,
“with analysis" $9,000, and "in certain cases" the
price can reach $30,000.

¢ An average 30-second film “plug” costs $8,500;
a "film" of the same duration but with computer
graphics costs $5,000. An “information film"
or “feature item" lasting 3-10 minutes costs
$1,500-$2,500 if shot in Moscow, $2,000-$3,500
if shot in other Russian cities.

¢ One minute of airtime on Public Russian Televi-
sion (ORT) or “Channel 1" starts at $1,500 and

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is prohibited without permission of the copyright owners.

2 DUMA ELECTION ISSUES

tops out at $30,000 per minute during "prime time"
on Friday evenings (see item below in "The Me-
dia Beat" section). Direct advertising on radio costs
$150-$350.

¢ Direct advertising in newspapers reportedly is “not
often used" because it is “ineffective” and rela-
tively expensive. Publication of campaign items
through “semi-official channels" is approximately
one-third the cost of standard advertising rates.
However, there is "no point" for parties to resort
to “direct political advertising" because it is "sim-
pler and cheaper" to pay a journalist a "so-called
fee" to "get the desired result," but this approach
is "much more difficult" in "popular newspapers
with a good circulation and [good] reputations."

¢ Publicity posters, fliers, and leaflets generally cost
between 60 cents and $3 apiece.

According to IZVESTIYA’s unidentified "interlocu-
tors," the “closer to power a prospective deputy is,
the 'ess he pays. The most generous fees are guaran-
teed by candidates from commercial structures or those
candidates whose election campaign is singled out for
support by specific commercial structures." Taking the
costs listed above into account, "experts" were adamant
that the legal campaign spending ceiling for parties—
approximately $2.4 million—is "in no way sufficient."

In the Provinces

Nozhikov Shuns Rossel’s Party Irkutsk Governor Yuriy
Nozhikov announced on 10 October that he will not join
Sverdlovsk Governor Eduard Rossel’s Transformation
of the Fatherland party. Nozhikov was reported to
be among the top three on its as yet unpublished
candidate list, but following an official visit to South
Korea with Prime Minister Chernomyrdin to discuss
a future project to deliver gas from Irkutsk, Nozhikov
announced that he “is not, was not, and will not be" a
member "of any bloc.” He added, however, that he will
support candidates from Rossel’s party and from the
Party of Russian Unity and Accord (SOVETSKAYA
MOLODEZH, 12 October).

NDR Experiencing Problems in Stavropol According
to SEVERNYY KAVKAZ, the NDR faces an uphill
election battle in Stavropol Kray. The weekly reported
on 7 September that Stavropol voters have an “active
dislike" for the bloc, which they blame for the war in
Chechnya, the economic "breakdown" in the country,
and the “bloody” events in the kray town of Buden-
novsk. As a result, the NDR "invariably" finishes “if
not last, then next to last" in opinion polls in the kray,
according to the paper.

FBIS-SOV-95-201
18 October 1995

Moreover, the party has suffered several recent defec-
tions locally. Its candidate in Stavropol Kray’s Petro-
vskiy single-seat district (Electoral District No. 54),
Vladimir Moroz, announced that he is running as an
APR candidate, and the NDR candidate in Stavropol
Kray’s Georgiyevskiy single-seat district (Electoral Dis-
trict No. 52) "simply withdrew his candidacy." In addi-
tion, the council of atamans of the Stavropol Cossack
Army demanded that Petr Fedosov resign from his post
as head of the kray’s office of Cossack affairs after he
appeared as the number three candidate on the NDR’s
Stavropol regional list. Earlier, the deputy head of the
kray branch of the bloc resigned, claiming that NDR
leaders in Moscow were dictating decisions to regional
branches and attempting to coerce him into dropping his
own independent campaign (INTERFAX, 5 October).

SEVERNYY KAVKAZ also reported that all parties,
with the exception of the CPRF, have experienced
difficulties collecting signatures in the kray. Local
residents are apparently unwilling to stand in line to
offer their signatures as "they had two years before,"
and are actually “struggling in every way possible to
avoid this procedure." Even going door-to-door does
not appear to be working for signature collectors, one of
whom was reportedly beaten by an “emotional voter."
The difficulty in collecting signatures has, according to
the weekly, whittled down the number of announced
candidates in Stavropol Kray’s Stavropolskiy single-seat
district (Electoral District No. 55) from 19 to nine.

Parties Garnering Support in Kemerovo Mines Sev-
eral parties appear to be gaining political capital out
of mining strikes in the Kuzbass region of Kemerovo.
NEZAVISIMAYA GAZETA reported on 12 October
that the Independent Miners’ Trade Union is canvassing
striking miners in the region and holding election meet-
ings in support of Svyatoslav Fedorov’s Party of Work-
ers’ Self-Government. The union’s chairman, Sayetgali
Sharipov, is the party’s candidate in Kemerovo Oblast’s
Prokopyevskiy single-seat district (Electoral District No.
91). SEGODNYA reported on 11 October that “propa-
gandists" from the CPRF and the KRO have also been
“extremely active among the region’s miners."

A poll conducted by the Institute of Comparative Stud-
ies of Labor Relations and reported by NEZAVISI-
MAYA GAZETA seems to demonstrate that such ef-
forts have borne fruit. While Women of Russia led the
poll with 11.7 percent, the CPRF came in second with
6.2, and the Party of Workers’ Self-Government came
in third (no figure given). The same study showed Amar:
Tuleyev, chairman of the oblast’s legislature and num-
ber three on the CPRF candidate list, as the most popu-
lar political figure with 36.5 percent, followed by Svy-
atoslav Fedorov with 9.7 percent, and the KRO’s Alek-

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

sandr Lebed with 4.9 percent. One bloc that is unlikely
to benefit from the strike is NDR—the deputy direc-
tor of the Sibruda company, which owns the Kemerovo
mines, heads the NDR’s Kemerovo Oblast regional list
(ROSSIYSKAYA GAZETA, 26 September).

Yavlinskiy Seeks To Boost Support in Krasnodar
Yabloko leader Grigoriy Yavlinskiy was on the cam-
paign hustings in Krasnodar Kray in early October in
hopes of improving his party’s standing in the popu-
lous region in southern Russia. Citing "preliminary" data
from a recent local poll, NEZAVISIMAYA GAZETA
(10 October) reported that Yabloko is tied for fourth
among Krasnodar’s voters with NDR behind the front-
running CPRF, the Agrarian Party, and the LDPR (no
specific figures were given).

According to NEZAVISIMAYA GAZETA those most
likely to vote for Yabloko in the kray are the "most
efficient people" between the ages of 30 and 50, who "as
a tule" are "state apparatus staffers, heads of privately-
owned structures, and specialists in the humanities" with
advanced degrees earning between 200,000 and 500,000
rubles [R]. Yavlinskiy reportedly said that Yabloko’s
electoral platform is "geared precisely to this audience."

Payment for Signatures Varies by Region Observing
that “no one has succeeded yet in gathering signatures
absolutely for free," KOMMERSANT-DAILY (10 Oc-
tober) reported that the amount paid to those willing to
sign varies depending on the region and party or bloc
involved. ‘The paper cites, for example, that in Tula
Oblast, the LDPR pays $1—about R4500 at the cur-
rent exchange rate—per signature, the CPRF—R4,000,
KRO—R1,500-R2,000, and Yabloko—R3,000.

According to KOMMERSANT-DAILY, the LDPR is
"thought to be the most generous of all" because of
“objective necessity;" namely, that Zhirinovskiy’s party
has “weak organization structures" in the regions. The
paper claimed that the bloc headed by Ella Pamfilova,
Aleksandr Gurov, and Vladimir Lysenko "seems to be
managing on the lowest budget" because "activists"
from Lysenko’s Republican Party, which reportedly has
an "extensive network of organizational structures but
modest financial resources," are bearing the brunt of
the signature collection campaign. Citing the "general
opinion of the hard work of signature gathering,"
KOMMERSANT-DAILY observed that "it is much
harder” to collect signatures "today than it was in 1993:
the general weariness and apathy of the population are
having an affect."

Signature Collectors in Kaluga Run Afoul of LDPR
ITAR-TASS (15 October) reported that two signature
collectors in Kaluga Oblast have “petitioned” the local
police department for "protection" from the local branch

DUMA ELECTION ISSUES 3

of the LDPR. Reportedly "lured" by the "promised" fee
of R1,000 per signature, the two purported signature
collectors submitted lists to LDPR representatives with
names “spun out of thin air" and after being "exposed,"
they refused to return the money paid to them. Accord-
tag to ITAR-TASS, LDPR "militants" took the "fraud-
sters" to a nearby forest and "forced" them to "give back
the money under the penalty of physical violence." Af-
ter securing the R500,000 paid to the two signature col-
lectors, the LDPR "militants" then allegedly sought to
collect $5,000 from them for "material damage."

The Media Beat

ORT Sets Price for Campaign Spots ORT General
Director Sergey Blagovolin has reportedly approved a
price list for paid campaign advertising on Russia’s
most widely-viewed television network between 15
November and 15 December. According to ITAR-
TASS (11 October) and KOMMERSANT-DAILY (12
October), prospective parties and candidates will have to
pay between $1,500 and $30,000 for one minute of air
time "depending on the time of the day and week." The
"cheapest" per-minute rate—$1,500—will be Monday
through Friday from 01:00-05:00 Moscow time. "Prime |
time" minutes—19:00-22:00 Moscow time—are priced
at $20,500 Monday through Thursday, $24,500 on
Saturday and Sunday, and Friday “prime time" will cost
a “record” $30,000 per minute. According to ITAR-
TASS, an unidentified ORT spokesman claimed that
rates for campaign advertisements are "lower than those
for commercials."

Plug Pulled on Borovoy’s Radio Station "Boomerang"
On 10 October, only two weeks after Economic Free-
dom Party leader Konstantin Borovoy took over the
Moscow-based shortwave radio station "Boomerang"
(see "FBIS Duma Election Report 4 Oct"), the Min-
istry of Communications took the station off the air.
Igor Ivanov, the head of the ministry’s licensing direc-
torate, told EKHO MOSKVY (11 October) that "we
did not issue" Borovoy a broadcasting license and that
unidentified communication workers "broke the law" by
providing his party with "services’: allowing it to "broad-
cast some kind of program." Borovoy claimed that he
told the communication workers it was "possible" for
him to pay the radio station’s debts, but they "refused
to take the money and closed down the radio station."
Valeriya Novodvorskaya, the party’s "chief ideologist,"
told EKHO MOSKVY that the radio station was closed
down on "ideological grounds” even though her "first
talk" on the air was “accepted.” She claimed that her
“second talk" was scheduled to include an "analysis" of
the "latest events” in Chechnya.

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a DUMA ELECTION ISSUES

Elections Credo for NTV Journalists |gor Malashenko,
president of the independent television company NTV,
told IZVESTIYA (10 October) “we do not intend to
make air time available to anyone to set out election pro-
grams or proclaim political manifestos" and that NTV
will cover the elections "only within the framework of
news programs, observing a certain balance here and
giving preference to no one.” Malashenko also provided
IZVESTIYA with a copy of the following "instruction"
to NTV journalists entitled "Careful: Elections":
"During the election campaign the journalist must
remember not so much what he has the right to do as
what he MUST NOT do on the air.

"To wit:
"— take the side of a particular party, bloc, or candidate;

". make generalizations or conclusions that go far
beyond the framework of the episode of the election
struggle he is covering or replace information about it
with an account of his own understanding of what is
happening;

“—— treat uncritically the opinions of experts, many of
whom are servicing the election campaigns of specific
candidates or parties;

"— use deliberately positively or negatively ‘charged’
definitions, ideological labels, and offensive epithets
(‘the odious figure of the slow-witted extremist so and
so’).”

Published Lists of Candidates

Official candidate lists for the following parties and
blocs were published in ROSSIYSKAYA GAZETA
(unless noted otherwise) from 10-17 October (see pre-
vious issues of "FBIS Duma Election Report" for lists
published earlier in ROSSTYSKAYA GAZETA or else-
where). Each entry below lists the party’s 12 core fed-
eral list candidates in order and gives the date when the
list was published. If the party’s list of candidates in the
single-seat districts was published, the entry notes that
date as well.

Prominent Parties

Congress of Russian Communities (Kongress russkikh
obshchin} Yuriy Skokov, Aleksandr Lebed, Sergey
Glazyev, Lyudmila Vartazarova, Dmitriy Rogozin,
Yuriy Kalmykov, Vasiliy Romanov, Mikhail Kolchev,
Oleg Denisov, Tatyana Malyutina, Sergey Goncharov,
Sergey Burkov (Federal and single-seat lists published
17 October).

Ivan Rybkin’s Bloc (Blok Ivana Rybkina) Ivan Rybkin,
Yuriy Petrov, Artur Chilingarov, Vyacheslav Nikonov,
Aleksandra Ochirova, Aleksandr Sergeyev, Vyacheslav

FBIS-SOV-95-201
18 October 1995

Lashchevskiy, Valeriy Kirpichnikov, Sergey Rodionov,
Sergey Trakhirov, Igor Shichanin, Pavel Borodin (Fed-
eral and single-seat lists published 12 October).

Other Parties

Stanislav Govorukhin’s Bloc (Blok Stanislava Gov-
orukhina] Stanislav Govorukhin, Oleg Rumyantsev,
Viktor Aksyuchits, Andrey Golovin, Valentin Kotlyar,
Yuriy Leonov, Igor Muravyev, Sergey Polozkov, Va-
leriy Krasnov, German Karelin, Vitaliy Nasedkin, Va-
leriy Kondratyev (Federal and single-seat lists published
10 October).

League of Independent Academics of Russia (Liga
nezavisimykh uchenykh Rossii] Vyacheslav Potemkin,
Irina Prostakova, Yevgeniy Galichanin, Aleksandr
Loidis, Sergey Bagayev, Valeriy Revo, Aleksey
Ilyichev, Svetlana Vorobyeva, Arkadiy Shcherbakov,
Vitaliy Vasilkov, Viktor Kucherov, Yevgeniy Vlasov
(Federal and single-seat lists published 11 October).

Union of Workers of Housing and Municipal
Services of Russia (Soyuz rabotnikov zhilishchno-
kommunalnovo khozyaystva Rossii} Leonid
Chernyshov, Petr Surov, Valeriy Avdeyev, Magomed
Bagandaliyev, Viktor Tyumentsev, Vyacheslav Ko-
valevskiy, Aleksandr Luppov, Yuriy Nefedov, Valeriy
Zagaynov, Tatyana Utanova, Boris Furmanov, Vladimir
Shemyakin (Federal and single-seat lists published 11
October).

Communists—Working Russia—For the Soviet
Union (Kommunisty—Trudovaya Rossiya—Za Sovet-
skiy Soyuz] Viktor Tyulkin, Anatoliy Kryuchkov,
Viktor Anpilov, Aleksey Prigarin, Vladimir Zapol-
skikh, Sergey Novikov, Aleksey Sergeyev, Boris
Kurashvili, Frol Ananin, Yelena Zaytseva, Viktor
Gamov, Oleg Shein (Federal and single-seat lists
published 14 October).

List of Single-Seat Electoral Districts

The list of the 225 single-seat districts for the 17
December elections was published in ROSSIYSKAYA
GAZETA (22 August) and ROSSIYSKIYE VESTI (24
August). It lists each district's name and number; the
total number of voters; the district's center; and other
Cities, towns, and rayons in the district.

Election Schedule—Key Dates

22 October: Deadline for submitting 200,000 signatures
in support of party lists, with no more than 7 percent
coming from a single republic or region. Single-seat
candidates must collect signatures equaling at least |
percent of a district's voters (Federal electoral law
published in the 28 June ROSSIYSKAYA GAZETA).

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

Although 22 October is also the deadline for registering
party lists and single-seat nominations, parties and
candidates cannot begin collecting signatures until after
they are registered. Registration of party and single-
seat lists began after the list of electoral districts was
published in ROSSITYSKAYA GAZETA on 22 August.

5 November: Parties and candidates can begin running
campaign advertisements in state-owned federal and
regional newspapers (ITAR-TASS, 20 September).

15 November-15 December: Equal and free access for
airtime on state-owned federal and regional television
and radio channels granted for all candidates; 30-minute
blocs of free airtime from 7:00-10:00 and 18:00-23:30
to be drawn by lots.

On a Lighter Note...

You Mean We Need Their Permission? The People’s
National Party (NNP) nominated as its candidate for
Kabardino-Balkaria’s Kabardino-Balkarskiy single-seat
district (Electoral District No. 13) symphony conductor
Igor Rasteryayev, whom they described as “a leader of
the party’s regional office.” The nomination, however,
came as a complete surprise to Rasteryayev, who said
that he “had never been a member much less a leader”
of the party and that he is not interested in politics
and does not have time to run for office (GAZETA
YUGA, 13 October). Rasteryayev asked the CEC to
remove him from the party’s list. Similarly, a colonel
nominated by NDR in Smolensk Oblast’s Smolenskiy
single-seat district (Electoral District No. 169) wrote a
letter to a local paper saying that he had "never agreed”
to be a candidate and that he did not wish to temporarily
suspend his military activities to run in the elections
(RABOCHIY PUT, 13 September).

Daily Alleges Corruption Among NDR Ranks

964F0069A Moscow SOVETSKAYA ROSSIYA
in Russian 7 Oct 95 p2

[Article by S. Filimonov, candidate of technical sci-
ences: "A Continuation of the Conversation. It Smells
of Thievery In Our Home")

{[FBIS Translated Text] The slightly changed words to
the popular song, alas, could not be more appropri-
ate to today’s situation in our country. And this espe-
cially applies to privatizaiion. More than two months
have passed since the day of the publication of the ar-
ticle “Stealing by Bid’ (SOVETSKAYA ROSSIYA, 13
July), in which were cites specific facts of abuse (which
have already inflicted enormous damage to our econ-
omy) during privatization by means of investment auc-
tions. Even specific managers of the Russian Federal

DUMA ELECTION ISSUES | 5

Pronerty Fund (RFFI) were indicated, who were mixed
up in this to one degree or another.

Naturally, questions arise: "What has changed in that
time? What measures have been taken?” Perhaps the
chairman of the RFFI has been relieved of his post for
the deliberate disintegration of the work on control over
the meeting by the purchasers of packets of shares of
their investment commitments? Perhaps, appeals have
been made to the arbitration court for the annulment
of contracts with the purchasers named in the article?
Or perhaps the leadership of the RFFI has wrathfully
appealed to the ordinary courts with a suit to defend
its “honor and dignity"? Nothing of the kind! Silence.
Wherein lies the reason for this inadequate reaction, as
if there had never been any abuses?

The elections.

This, in our view, is one of the basic reasons! It
is necessary for the Russia Is Our Home [NDR]
government bloc in the time remaining before the
elections at ali costs to "save face"!

But before we develop this idea further, we will make
a small note. RFFI chairman V.V. Sokolov, as is
known, came from Yekaterinburg. All of his deputies
(except I.B. Lipkin) as well. Several other persons
were “extracted” from Yekaterinburg, including the
chief of the legal department. In this way, a team was
formed of people who knew one another well and who
occupied key posts in the RFFI. Another such well-knit
team, evidently, is the leadership of the State Property
Committee, which rejects any “foreign body," including
even former chairman of the State Property Committee
Polevanov.

And now we will list several basic facts, our respected
reader.

1. The leader of the NDR bloc, V.S. Chernomyrdin,
has declared more than once that there are more than
enough people who wish to give money to this bloc’s
election campaign.

2. As is known, S.G. Belyayev—chairman of the State
Property Committee of the Russian Federation—has
been appointed the second “resident” of NDR.

3. It is precisely for the autumn that the sale at auction
and investment tenders of the bulk of the pa «ets of
shares of lucrative enterprises is planned. Let us note
right away that the question of why it is necessary to
rid oneself of shares bringing in high income (thinking
of the budget for 1996 and subsequent years, a real
manager would not act in such a way), and why it is
necessary to sell them practically simultaneously (when

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is prohibited without permission of the copyright owners.

6 DUMA ELECTION ISSUES

their price will inevitably fall), again go beyond the
scope of this article.

4. Investment programs are approved by S.G.
Belyayev’s department. What kind of “gifts” can
at this time be made to future investors can be seen
quite well from an example cited in the article "Steal-
ing by Bid,” where a 50-percent packet of shares
in the joint-stock company Optyuvelir was sold at
face value (usually hundreds of times lower than the
market price) for 610 million rubles [R], while the
volume of the investments (which can be regarded as
compensation for shares purchased dirt cheap) made
up only R950 million. Let us recall that a competition
winner (needless to say, with only one participant) was
the closed-type joint-stock company Alpha-Eko (Aven
is a former minister of the Government of the Russian
Federation).

5. The RFFI’s control department, which is called upon
to control the purchasers’ fulfillment of their investment
commitments, has been eliminated (experienced work-
ers have been transferred, with a demotion in position
to other subdivisions). In what way control will now be
exercised in the RFFI was frankly demonstrated by the
recently appointed adviser-consultant to the chairman of
the RFFI, V.V. Mukhachev. In a conversation with the
observer of the newspaper RABOCHAYA TRIBUNA,
he acknowledged only the episode with Procter and
Gamble; as for the other incidents cited in the article
"Stealing by Bid,” he asserted, notwithstanding the doc-
uments in possession of the RFFI, that there had been
no violations.

Taking into account all that has been said, all the rest,
as they say, is a technical matter—give money to the
election campaign, purchase a packet of shares for next
to nothing and without subsequent control. Both this
side and the other come out the winners. But who
comes out the loser? Why, all the rest of the Russia—
pensioners, workers at budget-financed organizations
who do not receive their salaries for months at a time,
the unemployed.

In conclusion, I would like to remind our readers
that theft differs from robbery, as is written in the
Criminal Code, by the fact that it is conducted in
secret from its victim. Privatization abuses, in particular,
those connected with investment auctions, have in
recent times taken on a frankly open character. So the
retraining of the “housebreakers” (that is what the NDR
electoral bloc is sometimes jokingly called) to some
other “specialty” is not so very unlikely.

FBIS-SOV-95-201
18 October 1995

From the Editorial Office

In July of this year, the RFFI was inspected by
the General Procuracy of the Russian Federation; the
contents of the article “Stealing by Bid" were known
to it. But it was not interested by such "trifles.” At one
meeting with journalists, Prime Minister Chernomyrdin
stated that there would be no review of the results of
privatization. And that can signify only that neither will
there be a review of the privatization deals committed
in violation of existing legislation.

Electoral Commission Expresses ‘Doubts’ About
LDPR Lists

LD1710182595 Moscow INTERFAX in English
1602 GMT 17 Oct 95

(FBIS Transcribed Text] MOSCOW, Oct 17 (INTER-
FAX) — The Central Electoral Commission may not
register parliamentary candidates of the Liberal Demo-
cratic Party of Russia (LDPR) at its Tuesday meeting,
commission secretary Aleksandr Veshnyakov told IN-
TERFAX Tuesday. "There have emergec. doubts about
the authenticity of information submitted by the LDPR
on its candidates for the State Duma,” |ie added. The
meeting was to consider the registration of three elec-
tions associations: Congress of Russian Communities,
Russia’s Women and LDPR.

Veshnyakov underlined that it was his personal opinion.
However, he added that examination of the LDPR fed-
eral election list "aroused question; about the authentic-
ity of some would-be candidates’ indicated positions."

The commission started to preliminarily examine a
package of documents submitted by the public move-
ment Our Home Is Russia (NDR) Tuesday. This exam-
ination which lasts for many hours precedes the accep-
tance of an election association’s lists of signatures in
support of its candidates, he added. "Since the NDR fed-
eral list features 261 candidates, it is necessary to look
for a written document from each of them on their will-
ingness to run for the State Duma, information about
them required by the law and corresponding signatures,
including those of competent persons,” he said.

If the preliminary examination is successfully accom-
plished Tuesday, the commission may possibly accept
the NDR lists of signatures on the same day, Vesh-
nyakov said.

Veshnyakov remarked that election associations plan-
ning to submit their documents to the commission Sun-
day [22 October] afternoon “have very few chances to
be admitted to the election campaign.”

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FBIS-SOV-95-201
18 October 1995

Veshnyakov recalled that the commission will stop
accepting lists of signatures from election associations
at midnight of October 22.

Fedorov Proposes Coalition Government After
Elections

LD1710162095 Moscow INTERFAX in English
1415 GMT 17 Oct 95

(FBIS Transcribed Text) YAROSLAVL, Oct 17 (IN-
TERFAX) — Forming a workable coalition government
of six to seven targe parties would be the best thing a
new parliament could do for the country, leader of the
Forward Russia movement and former finance minister
Boris Fedorov told a voters’ meeting in Yaroslavl on
Tuesday.

He believes this can include members of the Forward
Russia, Yabloko and Our Home is Russia movements,
Congress of Russian Communities and the Party of
Russian Unity.

Asked who was likely to head such a government,
Fedorov said "who could be a better prime minister than
me?" If not, he said he would settle for the post of head
of the Bank of Russia.

Fedorov said his first step as prime minister would
be “an elementary fight against corruption, particularly
within the finance ministry." As the next step, he said
he would immediately overhaul the currency corridor
which is causing substantial damage to many export
producers, and reject the idea of large foreign borrow-
ings.

In his view, General Boris Gromov of My Fatherland
group and Grigoriy Yavlinskiy of the Yabloko move-
ment could be appointed in charge of the defense and
finance ministries with the latter also acting as deputy
prime minister. Fedorov named Governor of Sverdlovsk
region Eduard Rossel and Parliament Speaker Ivan Ry-
bkin among other possible cabinet members.

FITU Leader: Over ‘One Million Signatures’
Collected

LD1610194995 Mescow INTERFAX in English
1851 GMT 16 Oct 95

(FBIS Transcribed Text] MOSCOW, Oct 16 (INTER-
FAX) — About five million people are jobless in Russia.
Latent unemployment, including those forced to go on
vacation or work shorter hours may increase the figure
to 12 million, said chairman of the Federation of Inde-
pendent Trade Unions [FITU) Mikhail Shmakov.

He recalled that the Russian trade union movement,
which will turn 90 this year, has always sought to
protect the interests of hired workers and that FITU,

DUMA ELECTION ISSUES 7

with a membership of more than 50 million, follows
that tradition.

Shmakov said it is necessary to influence social and
economic policies at legislative level and for that
reason FITU has decided to take an active part in the
forthcoming parliamentary elections. It has formed an
alliance with the Russian industrial party, called Trade
Unions and Industrialists of Russia — Labor Union.

The FITU leader said more than one million signatures
have already been collected in support of the alliance.
Two hundred and fifty thousand of them have been
thoroughly checked. "The lists will be submitted to the
Central Election Commission on Tuesday,” Shmakov
said.

Regional Activities

Chernomyrdin Seeks Support for ‘Our Home’ in
Bashkiria

MKI1710065595 Moscow SEGODNYA in Russian
11 Oct 95 p2

(Report by Yelena Tregubova: “Viktor Chernomyrdin
Has Arrived in Ufa for Bashkirian Holiday. Bashkirian
President Persists in His Refusal To Reform System of
Kolkhozes and Sovkhozes"]

([FBIS Translated Text] The fifth anniversary of pro-
claiming “sovereignty within the framework of Russia”
is being celebrated in Bashkiria.

Russian Prime Minister Viktor Chernomyrdin arrived
in Ufa yesterday specially to participate in the Republic
Day festivities. Right on the steps of the airplane, he
told the local leaders greeting him that “the Bashkirian
example can be cited when speaking of how the Feder-
ation components ought to strengthen their sovereignty
and along what lines federalism must develop." The pre-
mier mentioned "the highly positive role” of the bilateral
agreement between the federal and republican bodies of
power, "which accorded Bashkiria greater independence
and at the same time consolidated the Federation.”

Meanwhile, Bashkirian President Murtaza Rakhimov, in
his address aired on local radio, conveyed his congrat-
ulations to “all working people of the republic,” de-
scribing the anniversary of proclaiming sovereignty as
"a blessed holiday.” Mr. President pointed out that he
considers "an independent economic policy" to be one
of the main gains of “sovereignty.” As Murtaza Rakhi-
mov elaborated in an interview with your SEGODNYA
correspondent, he perceives economic independence,
above all, as an opportunity to preserve the kolkhoz
and sovkhoz system in the villages, discarding a con-
siderable part of the market reforms. Even his joining

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8 DUMA ELECTION ISSUES

the "Russia Is Our Home” electoral bloc, whose leader
Viktor Chernomyrdin recently proposed a referendum
on private landownership, did not prompt the Bashkirian
president to revise his negative stand on land reform.
"In our republic, this trick won’t work," warned Mur-
taza Rakhimov.

However, with the elections approaching, “Our Home’s"
leader is obviously pinning too many hopes on provin-
cial leaders to be fastidious about their economic bi-
ases. In response to Moscow’s pointed attention, Mr.
Rakhimov has pledged "to work in the republic for the
victory of Chernomyrdin’s bloc." Despite all expecta-
tions, in yesterday’s “address to the working people,"
as some Ufa residents noticed, he did not once men-
tion "Our Home.” On the contrary, President Rakhimov
reproached the Russian Government for being “roman-
tic,” insistently claiming that only an economic policy
independent of Moscow makes it possible "not to mess
up the economy.” Similar declarations, however, were
somewhat watered down with assurances of the indis-
soluble unity of Bashkiria and Russia, according to the
local audience.

Viktor Chernomyrdin was welcomed with all the
grandeur of the "old traditions." According to Ufa
residents, the main streets of the Bashkirian capital
were blocked off by the police for half a day yesterday,
and the city "was buried in national flags." Yesterday
night was devoted to “informal contacts" between the
Bashkirian leaders and their Moscow guest. Today [11
October] the premier will be offered traditional jubilee
events: horse races at the “Akbuzat" hippodrome, fairs
in the city squares, and festive cross-country races.

Forecasts & Commentary

Zyuganov Argues for Review of Left’s Tactics

MMI1610131195 Moscow SOVETSKAYA ROSSIYA
in Russian 14 Oct 95 p 3

[Article by Gennadiy Zyuganov: "Stalingrad Autumn")

[FBIS Translated Text] The autumn session of the State
Duma, which opened 4 October, will be dominated, one
way or another, by the rapidly approaching parliamen-
tary elections. The Duma hall of sessions will inevitably
be used as an arena for the election contest, but you
would have to be either very naive or else an inveterate
political hypocrite to be upset or indignant about this.

In a state which has — I will not say a democratic form,
but even a representative form of government — any
political force must gain its share of influence on state
affairs exclusively by means of free elections. Conse-
quently the elections are not some kind of “diversion,”
but a central component of the functioning of the state

FBIS-SOV-95-201
18 October 1995

mechanism. Their preparation and holding and the im-
plementation of their results give political life its chief
content. Any step in the political arena constitutes a di-
rect or indirect influence on voters, an appeal for their
support. That is elementary democracy.

So why all these calls not to turn the Duma platform
into a platform for propaganda and agitation, why the
renewed talk of postponing or canceling the elections?
The whole point is that elections are by their very
nature a peaceful, nonviolent way of retaining power
or conceding it to one’s political opponents. But the
events of recent years, particularly the "Black October"
of 1993, demonstrate unequivocally that the present
ruling regime and the president who heads it are not
capable of retaining power by nonviolent means, but
still less do they intend to concede it to anyone, in any
circumstances. After all, the next stage in the destruction
of the Russian State is in full swing — selling off
and placing under foreign control enterprises that play
a key role in the functioning of leading sectors of
industry, such as "Rybinskiye Motory," for instance.
A study of Chubays’ list of 29 major state enterprises
offered for sale leaves not the slightest doubt: The fate
of strategically important sectors is being placed in
foreign hands. For some reason, figures like Chubays
or Kozyrev remain “unsinkable" amid all the reshuffies
in court circles. Here interests and forces are involved
for which the principles of democracy and the rule-of-
law state are mere words.

Hence the attempt to discredit the very idea of elections,
the very principle of free expression of the people’s will.
Hence the feverish search for the slightest pretext or
excuse to cancel the elections — from the deterioration
of the Chechen crisis to integration with Belarus.

So the main problem for us today is not going to be the
question how the voter will vote on 17 December, but
the question whether he will be able to vote at all, and
whether the results of the voting will not be trampled
underfoot by jackboots and crushed by tank tracks.

How people will vote is becoming increasingly clear.
It would be wrong to indulge in victory euphoria, but
it is a fact that the public mood is patently moving
leftward. The elections to the Volgograd City Duma
have already been dubbed the "Battle of Stalingrad,"
and not for nothing. The Communists’ victory in 22
electoral districts is certainly equivalent, in terms of
its moral and psychological significance, to the routing
of 22 divisions of [German commander] Paulus’ army.
And as you know, the Battle of Stalingrad was followed
by the Battle of Kursk....

But what must be done to ensure that a possible victory
for left-wing and patriotic forces is not stolen away, that

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FBIS-SOV-95-201
18 October 1995

the transitional period of the handover of the levers of
state management passes off peacefully? To be honest,
any hopes that the regime is prepared even to comply
with the Constitution that was written by the regime to
suit itself, are minimal. These gentlemen have grown
used to a different language, not the language of law.
Therefore it is very important right now to determine
whether a force (or forces) exists that is strong enough
to paralyze the dictatorial regime’s desire to derail
the elections or ignore their results. And if such a
force exists, how and at what point can it be utilized
most effectively, without allowing it to get out of the
people’s control and establish a new dictatorship? These
questions, which go far beyond the bounds of election
procedure as such, are nonetheless, in our situation,
vital pre-election problems that require careful study
and discussitn by all interested parties. I believe that
the discussion of this group of problems must certainly
continue. But for the moment let us return to our first
thesis: The sittings of the last Duma session will be
decked in the colors of the election contest.

The only question is what methods will prevail in
this contest — short-term populist demagoguery, or the
accurate examination of the main political issues and the
detailed presentation to society of one’s own political
line for the immediate and longer term.

It is not hard to predict that the temptation to follow
the first path will prove very strong. There is, after all,
fertile soil for this: the mass nonpayment of wages and
pensions (which are anyway miserly), the dire situation
in the entire budget-funded sphere, the unpreparedness
of entire regions for the winter, etc. All these are
urgent problems which must be tackled immediately.
But tackled how? That is where the trap lies.

An orgy of socioeconomic populism, an auction of
meaningless promises, a torrent of impracticable pledges
to anyone and everyone, irresponsible draft laws and
resolutions costing trillions, even quadrillions, of rubles
— that is exactly what is expected from the Duma in
general, and from all its factions, by the "democratic"
and pro-government mass media, which are preparing
to enjoy themselves deriding the upcoming comedy, the
purpose of which is to discredit parliamentarianism once
and for all in the population’s eyes, as a futile talking
shop. The country is being psychologically prepared for
the advent of a “firm hand."

It is a matter of political dignity for the Communists
not to allow themselves to be drawn into these games.
We say beforehand to the gentlemen from the print
and electronic media: Yes, you're absolutely right —
it will be a comedy, a vulgar farce. But why a farce?
Because all its participants know very well that within

DUMA ELECTION ISSUES 9

the framework of the existing regime and the course it is
pursuing, it is impossible to do anything to alleviate the
people’s situation or rectify the economic situation. No
trillions of rubles, even if by some miracle they could be
found, will rectify the situation as long as conditions are
being imposed in the country that make productive labor
disadvantageous in those key sectors of the national
economy that ensure independent and stable economic
development in future. As long as society’s cultural and
intellectual resources are being destroyed by attrition,
as long as the country’s fundamental national-state
interests in the international arena are being betrayed.

Therefore the CPRF [Communist Party of the Russian
Federation] and its Duma faction are still convinced that
the key to overcoming the crisis and avoiding disaster
lies in the nature of the authorities and the need for a
replacement. And the composition of the government
is not the crucial question, in a situation where one
person exercises uncontrolled and absolute power. The
renunciation of office by the present president — that is
the point of intersection at which all problems converge
at this juncture. Our faction has not forgotten its own
summer initiative on this point, and has resumed the
collection of deputies’ signatures in favor of the creation
of a commission to bring charges against the president.

People might object that we should not inflame the
situation, since it is only a couple of months to the Duma
elections, and then the presidential elections will not be
far off. Our answer is that even a couple of months
could play a decisive role here, since the scientific,
technical, cultural, and moral potential for the future,
the potential for development accumulated by the
country in previous decades is being swept away, lost
on the wind, with disastrous rapidity. Until such time
as it is finally lost we can look forward with hope,
but its loss will mean that Russia is struck off the
list of countries capable of autonomously tackling the
exceptionally complex problems that the 21st century
has in store for mankind. The key task of preserving and
augmenting that potential and creating the conditions to
ensure its freest possible exploitation is the basis of the
CPRF’s election platform.

As for the government, at this Duma session it must
without fail report on the results of the first three
quarters of the year, first and foremost on the problems
of defaults, the debt in the budget sphere, delays to
wages and pensions, and the status of food supplies and
preparations for winter. The government is hardly likely
to be sincere on these points, but all the same a report
— and particularly the discussion of it — will help to
reveal the true picture and the true cost of so-called
"stabilization." Then it will become clearer what this

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10 DUMA ELECTION ISSUES

year’s budget is worth and what should be expected
from the 1996 budget.

Today’s government financial policy is built on two
disingenuous ruses. First, specious methods of "combat-
ing" inflation, whereby commodity producers and work-
ers in the social sphere are simply not paid for work al-
ready done, so that overt inflation is turned into hidden
inflation, which is significantly more dangerous, with
the risk of an uncontrolled explosion at any moment.
Second, the blatant exaggeration of "successes" in this
struggle and the formulation of unjustifiably optimistic
predictions which then become the basis of the new
draft buciget. It is not hard to grasp that attempts to
Stay within the framework of bogus predictions at all
cosis will once again generate specious methods of re-
ducing inflation, and so the vicious circle is repeated.
But what we do not know is whether the country’s high
technologies and defense, science and culture, education
and health care, and social protection will survive this
next round. The hearings held in the Duma the other day
into the draft 1996 budget took a very uncomplimentary
view of it. One of the findings is characteristic: No bud-
getary (read: monetarist) contrivances will help as long
as the present economic policy continues, because the
budget is only an instrument of policy, not vice versa.

Those who talk about the desirability of having the
budget approved this year by the existing Duma are
clearly trying to preserve a course that has proved
bankrupt and to impose it on the country even in a
period in which the correlation of forces in the political
arena will tolerate substantial changes, that is to say,
they are trying to turn policy into an instrument of and
hostage to the budget.

This attempt is hardly likely to culminate in success. But
even if it does, nothing can stop the sensible majority
in the new Duma, when approving the premier’s candi-
dacy, from setting as a condition a substantial change in
financial policy and a review of the principles of budget
planning.

The changes should emphasize two interconnected
points: incentives for the Russian commodity producer
and commodity turnover; and social support for the
poorly off — which means basically expanding the
market for those same Russian commodity producers.
In the first case, apart from the establishment of elemen-
tary payments discipline, this presupposes a reduction
in the ruinous taxation, the adoption of protectionist
measures in foreign trade, and the fixing of energy
prices and transport tariffs; in the second, legislation to
set the parameters of the minimum consumer “basket,”
the linkage of wages, grants, and all forms of social
payments to those parameters, and state guaranteed

FBIS-SOV-95-201
18 October 1995

Tt
prices for essentials: #read, milk, baby food, apartment
rents, and mail and transport tariffs.

But all this is for the future and will only happen in the
event that, not only in the two chambers of the Federal
Assembly, but also in the regions’ representative bodies,
left-wing and patriotic forces have a solid majority
capable of markedly influencing the executive power’s
line, if the executive powers themselves are reelected
centrally and in the regions. Judging by the statements
of a number of authoritative leaders, the prerequisites
exist for the formation of a coalition of left-wing and
patriotic forces in the State Duma and in the regions.

But, I repeat, that is precisely what the present ruling
group is most afraid of, and it is trying to derail the
normal democratic process of alternation of power. The
most characteristic illustrations are the postponement by
presidential edict of elections to regional legislative or-
gans and of heads of administrations, and the president’s
freezing of the law on the procedure for forming the
Federation Council, which was approved by both houses
of parliament. The motives are absolutely clear. In the
first case it was the desire to prevent the formation of
local organs of power capable of ensuring honesty in
the holding of presidential elections and the summing
up of their results. In the second, it was the president's
wish to have a Federation Council that is in his pocket,
appointed by him personally, as a counterweight to the
new State Duma and an obstacle in its path.

It is in this sphere that the present Duma could do much
in its remaining two months of work. At the opening of
the Duma session our faction proposed that efforts be
concentrated on the formation of a legal base for real,
not illusory, people’s power. Apart from the problems
just mentioned, concerning which deputies have already
submitted questions to the Constitutional Court, our pro-
posals envisage the creation of a medical commission
to investigate the state of health of contenders for top
State posts, amendments to the concept of parliamen-
tary immunity so that a deputy’s mandate cannot be a
shield for criminal elements, and the compulsory decla-
ration of officials’ income. These are rather modest but
realistic proposals, and it is certainly within the pow-
ers of the present Duma to implement them. But the
more decisive steps — the introduction of amendments
to the Constitution to widen the control functions of the
legislative power and increase the executive’s account-
ability — must be taken by the newly elected deputies.

The CPRF election platform states that the upcoming
parliamentary and presidential elections may be the last
chance to change by peaceful democratic means the
present political and socioeconomic course, which has
led our Fatherland into dreadful tragedy. Our tactics are

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FBIS-SOV-95-201
18 October 1995

entirely within the framework of the course of peaceful
development. But it is well known that it is no use
begging for peace on your knees. It takes strength,
too. That strength is the strength of the cohesion and
organization of all society’s sound, patriotic forces,
the strength of the combination of parliamentary and
various extraparliamentary forms of political struggle
— up to and including a general political strike, the
prerequisites for which are developing slowly but surely.
Finally, it is the strength of flexible tactics innocent
of both appeasement of the Fatherland’s destroyers and
adventurism.

We must be fully aware that the left-patriotic opposition
could very soon cease to be pure opposition in the
people’s eyes, at least in parliamentary terms. It will
bear an even greater responsibility for the country’s
fate, and protestations of parliament’s impotence are not
going to impress anyone any longer. In these conditions
a major review of the tactics followed hitherto is needed.
The experience of past years has taught us much, but
we still have even more to learn.

Gaydar Foresees Strong Electoral Showing by
Leftists

MK1810105895 Moscow SEGODNYA in Russian
13 Oct 95 p2

[Report by Viktor Khamrayev: "Yegor Gaydar Has
Found a Way To ‘Plug the Little Holes’ Through Which
Federal Money Is Leaking Out. Leader of “Russia’s
Choice" Thinks a Return to Socialism Is Easy To
Implement”)

{FBIS Translated Text] The view that it is impossible
for Russia to return to socialism is considered by
Yegor Gaydar to be "a striking illusion." "A leap
backward" is quite feasible, and can be made “easily,”
the chairman of the “Russia’s Democratic Choice" party
assured Moscow reporters invited to yesterday’s news
conference.

Everything will go almost along the lines of “the
story of NEP [New Economic Policy] being curtailed."
The "Russia’s Democratic Choice" leader forecasts "a
radical change" in the Russian political situation in the
event 226 seats in the new parliament are gained by “the
nationalist-socialist coalition,” which, according to the
advocate of liberalism, includes the blocs of nationalists,
Communists, and Agrarians.

After winning a majority in parliament, according to
Mr. Gaydar, the leftists and radical leftists, in order to
fulfill their election campaign promises, will first pass
a few populist laws — raising pensions, supporting the
military and the military-industrial complex, repaying
savings deposits, etc. To implement the laws, the

DUMA ELECTION ISSUES 11

“printing press" will be switched on, and the “empty”
money will fuel inflation, triggering thereby, in Mr.
Gaydar’s opinion, "a breakdown mechanism," which in
accordance with the well-known chain of “necessity for
state regulation — inevitability of state norm-setting and
distribution — automatic revival of state planning —
inevitability of a rationing system," will take Russia to
socialism.

At the same time, the head of “Russia’s Democratic
Choice" is apprehensive that "the breakdown mecha-
nism" may be launched by the president and the gov-
ernment even before the elections. The former deputy
premier, however, hopes that the executive power will
not succumb to the temptation of using populist meth-
ods to win over the voter, who for the time being likes
the Left, as Mr. Gaydar regretfully admits.

The cause of the “leftist bent" among voters is seen
by “one of the architects of reform" as being the
"nomenklatura capitalism" formed in Russia following
"the suspension of reforms after 1992." In view of this,
Gaydar’s faction, as media workers were informed, has
worked out a number of draft laws which, when passed,
“will make it possible to sever the close connection
between private property and the power structures,”
the Duma faction leader argues. The purchasing code,
the laws on abolishing tax and import privileges, the
law on defending taxpayers’ rights, as well as other
projects, according to the party chairman, are apt "to
plug the little holes through which federal money is
being redistributed into private pockets." When the
system brought to life by the above laws takes effect,
it will turn out to be more powerful, in Mr. Gaydar’s
estimate, than all the edicts and laws against corruption.

The widespread idea that only "a strict general carrying
a big, knotty stick" can cope with corruption, makes
Mr. Gaydar smile — first, because having seen ana-
lytical reviews of relevant “world experience,” Yegor
Timurovich [Gaydar] has found out that: “Topping the
list of corrupt officials are the military;" and, second,
that a single person — "even a very good one” — can-
not overcome the "state machinery," the more so be-
cause the current Russian "state machinery" is making
"the market work in the interests of the bureaucracy,"
the "Russia’s Democratic Choice” leader is convinced.

Filatov Interviewed on Election Blocs, Campaigns

LD1710182095 Moscow INTERFAX in English
1715 GMT 17 Oct 95

[From the "Presidential Bulletin" feature]

{[FBIS Transcribed Text] [no dateline as received] Rus-
sian president's Chief of Staff Sergey Filatov has been

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12 DUMA ELECTION ISSUES

interviewed by INTERFAX correspondent Vyacheslav
Terekhov on the beginning of the election campaign and
correlation of political forces in the run-up to the par-
liamentary elections.

IF: What do you make of widespread speculations
of a possible rescheduling of general elections and
allegations saying the administration was working on
such plans?

FILATOV: Although there is much talk to this end, I
can see no reason why the December election should
be postponed until a later date. Voices opposing new
elections could be heard even before the publication of
the presidential decree on the December poll. A variety
of reasons were given in favor of cancelling the next
election, but many of them referred to the country’s
economic plight and the need to establish tougher rule
first.

However, the president appointed the date of new
elections and a signature collection campaign is now in
full swing with new candidates and election alliances
being registered by the central election commission

every day.

As for the administration, we would like the election to
be held in an organized way and ensure a high turnout
on the polling day. This will help elect a parliament
reflecting the genuine balance of forces.

Allowing only the most disgruntled and by definition,
politicised part of the society is unacceptable. For its
part, the administration would like to open contacts with
various movements, youth, intellectuals, servicemen and
Cossacks to learn what their demands and grievances are
and to try to drive home what voting results will be if
they fail to turn up at the polling stations on December
17. President Boris Yeltsin is keeping an eye on this
work.

Clearly, an open election campaign must be arranged
for the poll to be a success. But a number of problems
would have to be resolved for this to happen. One is
how to share out equally air time on television between
different rival groups at a time when the number of
parties alone runs at about 300. There will not be enough
time even if the candidates are allowed to appear in
round table programs. Nor will the viewers be able to
remember either their programs or what makes them
different.

Nonetheless, all effort must be taken to help voters judge
candidates on their merit.

IF: Don’t you think we may have shifted to forming a
legislature on partisan principles much too early?

FBIS-SOV-95-201
18 October 1995

FILATOV: The formation of a State Duma on a party
basis is a must. It won't be long before the existing 300
parties shrink to a handful.

If not, we are most likely to revert to a department-style
parliament of the past. The military will be out to win
seats in order to defend the military budget while health
workers will press for their own corporate interests. The
laws approved by such a parliament will be the result
of a successful lobbying by department representatives
but will hamper the country’s dynamic development.

I think the December poll will show up who is who
and which of the parties and movements does reflect
genuine public interests. The electorate will rally around
the winners and the process will help us approach the
next year presidential poll in a more organized way.

IF: What do you make of the electoral chances of the
Our Home is Russia movement?

FILATOV: Clearly, the movement has been enhancing
its rating by the day after a false start initially caused
by the preponderance of government bureaucrats in its
ranks. This caused certain mistrust which is now gone
after the movement has emerged as a new party whose
election platform is attractive to the electorate.

I think the other bloc led by Ivan Rybkin will at last
be formed and will show well enough in the December
poll though not necessarily winning as many as seats as
expected before.

IF: Almost all registered blocs are newcomers in the
country’s political arena. Many of those which were
active in previous elections of two years ago are no
longer on the list of favorites apart from communists
whose expectations for an election victory are greater
than before.

FILATOV: Those whom we called democrats before
are no longer popular today which does not mean that
democratic values have become less attractive.

Internal rifts within what used to be a broad pro-
democracy movement led to negative results because the
electorate hates to support those locked in wrangles. But
this in itself should not be taken as failure by democratic
values to take root in the society and that democratic
trends will be defeated.

As for the communists, and here I mean the Russian
Communist Party, its leadership has managed to show
that the party has rid itself of extremists and scandalous
or odious figures. The communists still demonstrate the
habitual unity of party ranks though this has always
been a smokescreen hiding differences of views and
even programs as shown by what happened after the
break up of the Soviet Communist Party.

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FBIS-SOV-95-201
18 October 1995

IF: Given the absence of a strong partisan movement,
the new Duma may become a heaven for career seekers
or members of criminal rings. President Yeltsin has
repeatedly voiced concern about this.

FILATOV: The danger is there but full information can
help avert it.

It is up to the voter to decide whether or not he lays
trust in this or other candidate or his program. The press
also has a specific role to play.

IF: Don’t you think that criminals will have no incentive
to run for the State Duma if parliamentary immunity is
withdrawn?

FILATOV: I should think the immunity provision will
have to be amended even if for the sole reason of being
unconstitutional. The constitution vests deputies with
immunity for a lengthy period but there is no indication
that it cannot be lifted temporarily in cases such as
police investigation. If a deputy commits a crime, he
must be made accountable as any one else.

I should think our analysts made a mistake by advising
the president to endorse a law granting full parliamen-
tary immunity.

DUMA ELECTION ISSUES 13

IF: Don’t you think that those under investigation m..st
also have their electoral rights curtailed?

FILATOV: This is not as simple as it seems either. Let
me quote you an example from the previous election
campaign in Penza region where one of the candidates
for governorship was arrested by local security services
to prevent him from standing in elections. There is no
certainty this won’t happen again. Candidates can be
arrested until the registration campaign is over and then
released, let alone given apologies.

There is no ready-made answers to such problems and
that is where the public and lawyers must work together.
Legislation must be improved and experience gained
by other countries examined. And of course, it is the
legislator’s job to try to make laws which can defend
his honor and dignity on the one hand while creating
an instrument which can help check his own integrity
before the law.

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14 INTERREGIONAL AFFAIRS

Delegations End Talks on Nagorno-Karabakh
Conflict

LD1710200495 Moscow ITAR-TASS in English
1936 GMT 17 Oct 95

(By Vladimir Mostovets]}

(FBIS Transcribed Text] HELSINKI, October 17
(ITAR-TASS) — Two-day consultations ended in
Helsinki today, summing up Armenian-Azerbaijani
talks on an accord to cease the Nagorno-Karabakh
conflict.

The talks were held on the Aland Islands from October
9 to October 15 under the aegis of the Minsk group on
Nagorno-Karabakh co-chaired by Russia and Finland.

The Minsk group of the Organisation for Security and
Cooperation in Europe was represented at the Helsinki
consultations by its co-chairmen — the Finnish For-
eign Ministry’s special envoy Rene Nuberg and Rus-
sian presidential envoy for Nagorno-Karabakh Vladimir
Kazimirov.

Apart from delegations of Armenia, Azerbaijan and
Nagorno-Karabakh, the consultations were attended by
delegates of the U.S., Turkey, France, Germany, Hun-
gary, Sweden, Italy, Switzerland and Belarus.

The talks were difficult, but there is ground for opti-
mism, Kazimirov told ITAR-TASS.

He said the talks were successful in that opinions were
exchanged on the phraseology of the peace accord and
an understanding was reached on major military and
technical aspects of the truce.

Strain remains over military-political issues, such as
liberation of territories occupied by the conflicting
parties in the period of hostilities.

Although controversies persist, there has been more
consensus between the sides, Kazimirov said.

He described the outcome of the talks as encouraging.
The next round of the talks is due to be held in Moscow
in November.

ITAR-TASS Carries Press Review for 18 Oct
LD1810083895 Moscow ITAR-TASS in English

0748 GMT 18 Oct 95

["Press Review" — ITAR-TASS headline]

(FBIS Transcribed Text] MOSCOW October 18 (ITAR-
TASS) — IZVESTIYA on the election campaign.

The newspaper carries an article headlined “The buying
of voters’ signatures turns dollar-wise". The newspa-
per’s parliamentary news analyst examines electorate

FBIS-SOV-95-201
18 October 1995

manipulating methods to which political parties and
movements resort in order to secure the election of their
representatives to the State Duma at the December 17
elections. The analyst focuses on a “new kind of busi-
ness" — the sale of signatures by citizens to parties’
signature-collectors.

"Professional signature-collectors do not canvass the
district any longer but seek to get access to databases.
They keep prepared packages of signatures, awaiting
a market price quotation. But this is only a warming-
up session in the run-up to Presidential elections when,
experts predict, the starting price of one signature will
be five U.S. dollars," IZVESTIYA points out.

KRASNAYA ZVEZDA on the situation in Chechnya.

The newspaper asks: “Will a political way out of the
‘Chechnya deadlock’ be found or will the army have to
shoulder all the burden again?"

Analysing the situation in the Republic, the newspaper
writes: "There can be two ways out of the deadlock:
a strongarm one when the obstructing wall is broken
through, and a pullout. The latter scenario — a with-
drawal of Federal troops from the areas which they con-
trol now — would immediately result in the restoration
of the pro-Dudayev power there.”

KOMSOMOLSKAYA PRAVDA on the need of accord
between Chechen leaders.

The newspaper runs an interview with Ramazan Abdu-
latipov, Deputy Speaker of Russia’s Federation Council,
who believes that it is essential to ensure accord, first
of all, between Chechen leaders in order to set the ne-
gotiating process in Chechnya going and overcome the
crisis.

IZVESTIYA on a "third force" in Chechnya.

"The sharp aggravation of the situation in Chechnya has
again drawn the attention of both politicians and the
military to the so-called third force, by which people in
the Republic mean the entire anti-Dudayev opposition
and the Moscow ‘party of war’.

"However, the war in Chechnya will not end even
if Moscow decides to withdraw troops completely.
To begin with, winners in the internecine strife will
begin to settle scores with ‘traitors to their people’ and
launch score-settling between field commanders. The
Situation would start to develop according to the Afghan
scenario,” the newspaper concludes.

ROSSIYSKIYE VESTI on Ministerial cutbacks in Rus-
sia.

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

Gennadiy Melikyan, Russian Minister of Labour, de-
scribes problems connected with a reduction in the num-
ber of Russia’s Ministries and departments, of which
there are more than 75 at the Federal level now.

Melikyan is of the opinion that "the path of mechanical
staff cuts in Ministries and departments has already ex-
hausted itself. The only real possibility now to reduce
the outsize bureaucracy is to restructure the manage-
rial system." The Minister of Labour believes that "this
means eliminating primarily the parallel entities resul-
tant of merging those of them which perform similar
functions or duplicate one another."

ROSSIYSKAYA GAZETA on a State regulation of the
prices of the products of natural monopolies.

Under the rubric "The glad news to the housewives"
the newspaper runs a Government resolution ‘On a
State regulation of the prices of the products of natural
monopolies’. The resolution sets a moratorium on an
increase in the prices of gas and petroleum products,
electric and thermal energy, and railway transportation
of goods until January 1, 1996.

INTERREGIONAL AFFAIRS 15

ROSSIYSKAYA GAZETA on the problem of provid-
ing housing for Russian servicemen.

The author of an article headlined “You have no
housing accommodation — file an application" points
out that less than a half of the 1993-1995 State Housing
Programme has been implemented due to inadequate
financing.

However, a 1996 budget plan envisages the allocation
of only 79,000,000 million roubles for Defence Ministry
spending, with the army’s minimal requirements being
estimated at 134,000,000 million roubles. If this budget
item is not amended, the military will have to forget
about getting apartments for a long time ahead, the
writer of the article observes.

IZVESTIYA on the nomination of Yuriy Skuratov for
the post of Russia’s Prosecutor-General.

Commenting on the nomination, the newspaper notes
that this proved utterly unexpected for the staff of the
Office of the Prosecutor-General because the President
was given a list of 20 candidates for the position.

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16 RUSSIA INTERNATIONAL AFFAIRS

Yeltsin Will ‘Never Allow’ NATO Nuclear Arms in
E. Europe

AU1810135895 Paris AFP in English

1354 GMT 18 Oct 95

{Embargoed by AFP until 1845 GMT 18 Oct]

{(FBIS Transcribed Text] Moscow, Oct 18 (AFP) —
President Boris Yeltsin on Wednesday [18 October]
warned that Russia would never allow nuclear arms
to be deployed in eastern Europe as part of NATO’s
expansion.

In an interview with the French state television network
France 2 broadcast on Russian TV, Yeltsin said such
a move would be as “madness” saying: "They want to
take the countries of eastern, western and central Europe
and stuff them with nuclear arms.

"Will Russia permit this? No and no again."

Yeltsin Warns He May Halt Cuts in Nuclear Force

MS1810081795 London THE GUARDIAN in English
18 Oct 95 p 16

(Report on interview with Russian President Boris
Yeltsin, by David Hearst, in Moscow, 17 Oct: "Yeltsin
May Stop Nuclear Arms Cut"}

(FBIS Transcribed Text] President Boris Yeltsin warned
yesterday that Russia may be forced to halt cuts in its
strategic nuclear force if the United States administra-
tion acts on a Senate decision last month to develop a
national missile defence system.

Mr Yeltsin’s statement to the Guardian is the first
official response to the Senate’s decision and lays down
a clear marker for his summit with President Clinton in
New York next week.

The Russian president said: "At (my) meeting in May
with President Clinton we confirmed the significance of
the Anti-Ballistic Missile treaty for strategic stability.
But today the mood of the U.S. Congress is leading to
the practical breaking of this treaty.

"If such a mood becomes the official line of the U.S.,
Strategic stability would without doubt be blown up. it
is not excluded that, in this ease, the continuation of the
reduction of strategic offensive weapons would be put
into question."

As if to underline Russia’s seriousness, the first deputy
prime minister, Oleg Soskovets, flew to Cuba last week
to renew co-operation agreements, ending a four-year
freeze in relations.

Mr Yeltsin’s statement, with its reference to the pos-
sibility that the START I and START II arms agree-

FBIS-SOV-95-201
18 October 1995

ments could be jeopardised is a further sign of the cool-
ing in bilateral relations between the two superpowers.
NATO’s expansion plans and Washington’s policy on
Bosnia have both added to the strain in relations. but
the nuclear disarmament issue is potentially the most
damaging.

The US Congress’s decision to develop a multi-site
ABM system was the result of a compromise with
Republican senators, who argued that the 1972 treaty
was dead and did not protect the U.S. from rogue states
possessing ballistic missiles.

In deferring a decision on deployment, the compromise
said that should Washington fail to convince Moscow
that the U.S. was still acting within the ABM treaty,
the US should formally withdraw from the treaty. With
yesterday’s statement from Mr Yeltsin, the stage is
set for another superpower clash. The 1972 treaty is
a sacred cow to Moscow and is still regarded as the
cornerstone of Russia’s commitments in START I and
START II to first limit, and then destroy, all Russia’s
land-based multi-warheaded missiles (MIRVs), the stars
of the rocket fleet.

The treaty limits each side to one ABM site of no more
than 100 interceptors. Under START I, Russia is bound
to destroy half of its heavy SS-18 missiles, and under
START II, all of its land-based MIRVs, by the year
2003.

Mr Yeltsin’s military advisers are arguing that it would
be folly to destroy Russia’s best missiles on the as-
sumption that the U.S. would develop but not deploy
its Counter-system.

Major-General Vladimir Byelous, professor at the Acad-
emy of Military Science, said: "The reduction of the
offensive means of Russia would be simultaneously ac-
companied by an increase in the defensive capabilities
of the US, in conditions where Russia’s economy can’t
do the same. This asymmetry would inevitably lead to
a radical destruction of the balance of strategic arms in
favour of the U.S.."

Russia ‘Flatly Refuses’ Bosnia Peacekeeping
Command

MMI1710170195 Moscow KOMSOMOLSKAYA
PRAVDA in Russian 18 Oct 95 p7

[Report by Yelena Kalyadina: "Moscow Battle for the
Balkans")

(FBIS Translated Text] The Contact Group session held
in Moscow yesterday on settling the Yugoslav conflict
was a kind of tribute to Russia for its all-out contribution
to the peace process. The idea put forward by President

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

Yeltsin to hold an international conference in the capital
could not, alas, be put into effect. But this conference,
journalists were informed by Contact Group members,
is not far off.

To what extent is this organizational optimism justi-
fied? It is not reinforced by the reports of violations of
the cease-fires on the Bosnian fronts. Furthermore, the
Contact Group members themselves by no means feel
even the slightest satisfaction. Igor Ivanov, Russian first
deputy foreign minister, admitted that in Moscow, in-
stead of providing answers, they had made the problems
more acute.

For example, one such problem is NATO’s implementa-
tion of the peacekeeping operation in Bosnia following
the withdrawal of UN troops from there. Russia flatly
refuses to participate in it under NATO command. Ac-
cording to Richard Holbrooke, U.S. assistant secretary
of state, the Moscow conference did not eliminate these
differences of opinion. The talks will be continued in
Brussels, specifically tomorrow, at a NATO Council
session under the "16 plus 1" formula.

Ivanov: Moscow To Suspend Yugoslav Sanctions

LD1710154095 Moscow ITAR-TASS in English
1424 GMT 17 Oct 95

{[FBIS Transcribed Text) MOSCOW, October 17
(ITAR-TASS) — Russia insists that international
sanctions imposed on Serbia and Montenegro must
be suspended from the beginning of an international
conference on the former Yugoslavia and must be lifted
with the signing of a peace treaty, Russian Deputy
Foreign Minister Igor Ivanov said on Tuesday after a
meeting of the international Contact Group.

Ivanov admitted that Russia’s standpoint is not shared
by all other members of the Contact Group. "But we
are determined to defend our stance during further
negotiations within the Contact Group," he stressed.

Ivanov Calls Moscow Contact Group Meeting
‘Productive’

LD1710222895 Moscow ITAR-TASS World Service
in Russian 2122 GMT 17 Oct 95

[By ITAR-TASS correspondent Ivan Ivanov]

(FBIS Translated Text] Belgrade, 18 Oct (ITAR-TASS)
— "We would like to take to the leaders of Yugoslavia,
Croatia, and Bosnia-Herzegovina the decisions made on
Tuesday [17 October] at the Moscow meeting of the
Contact Group.” This is how Igor Ivanov, Russian first
Deputy foreign minister, explained the aim of his visit to
Belgrade with Richard Holbrooke, assistant to the U.S.
secretary of state, and European Union mediator Carl

RUSSIA INTERNATIONAL AFFAIRS 17

Bildt. The representatives of this delegation are expected
to go to Sarajevo today after talks with Slobodan
Milosevic and then to Zagreb for a meeting with the
Muslim and Croatian leaders, Alija Izetbegovic and
Franjo Tudjman.

Ivanov said the Moscow meeting of the Contact Group
was extremely productive. A wide range of problems
connected with bringing about a settlement in the
Balkans was considered at the meeting. He particularly
singled out the initiative put forward by Moscow at
the meeting: the beginning of talks on a comprehensive
resolution to the crisis between the sides in the conflict
should mean that all international sanctions with regard
to Yugoslavia are suspended, and that the signing of a
peace treaty should mean they are lifted in full. Ivanov
admitted it was true that "a general consensus on this
initiative was not expressed among the members of the
Contact Group; however only doubts of a general nature
were expressed." "In any case, Russia will continue to
insist on its proposal,” the diplomat stressed.

Replying to a question as to how the international
mediators expect to resolve the issue of fixing borders
in Bosnia-Herzegovina, Ivanov said that, as far as
Russia was concerned, the previous formula "remains
valid: 51 percent for the Muslim-Croat federation; 49
percent for the Bosnian Serb Republic." "This formula
of the contact group was even signed in Geneva
and representatives of all three Bosnian peoples on 8
September,” he recalled.

Moreover, the diplomat did not give a direct answer to
the question of whether the Muslims and Croats would
give back to the Bosnian Serbs the territory in the west
of Bosnia seized over the last month and a half. Now,
after the aggression of the troops of the Muslim-Croat
coalition, the Serbs are only in control of 44 percent of
Bosnia-Herzegovina. "A specific mechanism for fixing
borders will be the subject of the forthcoming talks
between the presidents of Serbia, Croatia, and Bosnia-
Herzegovina in the United States," said Ivanov.

Having touched upon the problem of the agreement on a
cease-fire in Bosnia-Herzegovina which came into force
on 12 October not being observed by the Croats and
Muslims, Ivanov reported that the Russian delegation
had also raised this issue quite firmly at the sitting of
the Contact Group and had received the support of all of
its members. "We consider that if the violations of the
cease-fire agreement continue and if the Croats attempt
to redraw the map by force, then all of the efforts of
the Contact Group may be cancelled out and this will
wreck the peace process,” he stressed.

Ivanov noted that all violations of the cease-fire agree-
ment in Bosnia, irrespective of from which side they

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18 RUSSIA INTERNATIONAL AFFAIRS

originated, "should be punished." Despite the fact that
there are no international guarantors of this truce agree-
ment who could forcibly "punish" violators, the Russian
diplomat stated: "I think that the Contact Group member
countries have sufficient political mechanisms at their
disposal to force the sides to observe the agreement.”

Kozyrev on Formula For Bosnian Military
Settlement

LD1710200095 Moscow Russian Public Television
First Channel Network in Russian
1800 GMT 17 Oct 95

(From the "Vremya” newscast]

([FBIS Translated Text] Assessing the results of the
Moscow meeting of the Contact Group, Andrey
Kozyrev noted in an exclusive interview with the
Vremya program that a general formula for the military
aspect of the next stage in the Bosnian settlement was
developed for the first time today.

[Begin recording] [Kozyrev] The operation will net be
successful if it is just a NATO operation. It will be
successful if it includes both NATO and Russia and
so on. We have now managed to get recognition for
the formula: NATO, Russia, and other participants. This
principle has now been recognized and, incidentally, at
the meeting in Moscow. The Moscow meeting signals a
turning point, a move away from attempts to act alone,
which patently do not bring the desired results, toward a
recognition of the need to act jointly and to unite efforts.
And it is not for nothing that the three which — as you
may remember — we suggested several weeks ago will
be working in Yugoslavia tomorrow. That is Ivanov
from Russia, Holbrooke from the United States, and
Bildt from the European Union. Together, together for
the first time, they will approach the presidents of these
republics. This is the embodiment of this qualitative
change. [end recording]

NATO’s Moltke Cited on Talks in Polish Capital

MMI1710120895 Moscow KRASNAYA ZVEZDA
in Russian 17 Oct 95 p 3

(ITAR-TASS report: "NATO Elaborates Latest Program
To ‘Appease’ Russia”)

(FBIS Translated Text] Warsaw, 16 Oct — The doc-
ument on the expansion of NATO recently presented
in Brussels "does not contain any demand on the new
member states of the bloc as regards the stationing
of nuclear weapons on their territory." Gebhardt von
Moltke, the NATO secretary general’s aide for politi-
cal questions, stated this following talks in Warsaw. He
is the head of a delegation from NATO headquarters

FBIS-SOV-95-201
18 October 1995

which is concluding its consultations in the Polish cap-
ital.

The aim of the consultations was "an extensive analysis
of the problems” connected with the expansion of
NATO, which was conducted by representatives of
the alliance together with leaders and experts from
the Polish militay and diplomatic departments. But,
diplomats in Warsaw are stressing, the Polish side has
told its NATO partners that the significance of the
aforesaid document “will not depend on its intellectual
perfection but on its practical implementation."

When the talks had ended, Von Moltke said that the
process of the construction of a new Europe not broken
up into opposing blocs is currently under way. From
what he said, if this aim is to be achieved, then it is
necessary not only to eliminate the dividing lines but
also to form relations between NATO and other states,
one of which is Russia. “Therefore no one should be
surprised,” he noted, “that this process requires time."
From what he said, work is in progress within NATO
on a program “which will convince Russia that the
expansion of NATO is not aimed against it and does
not present any danger.”

Chirac Aide on Yugoslavia, European Security

MM1810090395 Moscow ROSSIYSKIYE VESTI
in Russian 18 Oct 95 p 3

{Interview with Pierre Lellouche, secretary of French
National Assembly Commission for National Defense,
by Kirill Privalov in Paris; date not given: "Moscow-
Paris: Cooperation for the Sake of Peace. On Russian
Federation President’s Visit to France" — first para-
graph is introduction]

[FBIS Translated Text] Pierre Lellouche is a deputy
in the French National Assembly, secretary of the
Commission for National Defense, and Jacques Chirac’s
adviser. He witnessed the first meeting between Boris
Yeltsin and Jacques Chirac. What is more, he organized
it! And it is no coincidence that it is Mr. Lellouche, the
well-known politician, political scientist, and journalist
whom we have turned to now, on the eve of the Russian
and French presidents’ next meetings in Rambouillet
and Paris.

{Lellouche] Let us begin by clarifying that this will be
Jacques Chirac’s and Boris Yeltsin's first meeting as
presidents. I remember Boris Yeltsin coming to Paris
in 1991. But Francois Mitterrand, who was president
of France at the time, refused to receive him officially.
Mayor of Paris Jacques Chirac willingly met the Russian
leader. That was when their friendship began.

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

Jacques Chirac and Boris Yeltsin are alike. They are
sincere, passionate people, committed to their jobs.
President Chirac knows the difficulties now being faced
by democratic Russia and its first president, and he
wants to help your country without at the same time
interfering in its internal affairs.

The French president is well informed of the state of
affairs in Russia and is concerned about the outcome
of the upcoming parliamentary elections. What changes
will there be in Russian policy if the Duma majority
is made up of “Communists and nationalists"? How
confidently will Boris Yeltsin’s control of power be
then?

[Privalov] What hopes are you personally pinning on
the upcoming visit?

{Lellouche] I am very glad that Yeltsin will once again
be meeting with Jacques Chirac. We Gaullists have
always attached particular significance to Russia’s role
in Europe. Both under Communism and during the years
of Gorbachev's perestroyka.... That is also our view now
that your country has embarked on the road of true
democracy and is not experiencing the best of times.
Our presidents’ meeting marks an opportunity to raise
the ties between France and Russia to a new level.

[Privalov] General de Gaulle was certainly always
talking about the special role played by France and
Russia in establishing Europe “from the Atlantic to the
Urals.” But judging by what is happening in the Balkans
our countries find it extremely hard coping with the role
of “guarantors of peace” on the continent.

{Lellouche] The France-United States-Russia triangle
that has formed in connection with events in and around
Bosnia indicates that our countries are perhaps the only
ones to have maintained a strong, confident voice amid
the international political choir. The continuing war in
the former Yugoslavia is our common tragedy. Since it
is partially due to disagreements among us Europeans.
Had we, from the outset of the collapse of Communist
Yugoslavia, espoused a clearer, tougher stance toward
nationalists as Jacques Chirac wanted when he urged
Europe in June 1991 to react with greater authority to
events in the Balkans, we would not now be witnessing
such terrible carnage.

How has this happened? The West Europeans fell
out among themselves since they did not know who
should do what. Russia, overcome by its own internal
problems, could not do anything. France under Socialist
control merely confined itself to "humanitarian actions.”
Elements in a tragedy that was not long in unfolding.
And now the world community is making incredible
efforts in a belated attempt to unravel this Gordian knot.

RUSSIA INTERNATIONAL AFFAIRS 19

[Privalov] But this is being done in accordance with the
U.S. scenario! And when U.S. domestic political events
required.

{Lellouche] I do certainly feel, how can I put it, embar-
rassed that the establishment of peace in Yugoslavia is
linked with U.S. plans. The theory of a “united Bosnia,"
albeit divided hypothetically between the Serbs and
Croats, seems risky to me. Are we not creating a Mus-
lim "Bantustan" in the center of Europe? An enclave of
Islamic fundamentalism two hours by air from Paris?

[Privalov] A pressing problem for France, which knows
from its own experience the nature of Islamic fanati-
cism!

[Lellouche] But the point is that the longer this war goes
on, the more active Muslim fundamentalists become in
Bosnia! Five years ago the Yugoslav Muslims were
not Koran fanatics at all. During the war they have
felt that the religion of their forebears represents an
opportunity for them to assert their identity... I can
perfectly well understand the Russian sympathy for the
Serbs. But rabid pan-Slavism in Russia could give rise
to an upsurge of Muslim fundamentalism in response.

[Privalov] So, can we Europeans only advocate “rabid
Americanism"?

{Lellouche] The Europeans have assumed the bulk of
the "Yugoslav burden,” yet the Americans have today
won the chief peacemaker’s laurels. A “united Europe"
still only exists on paper, and Russia is weakened by
internal conflicts. Figuratively speaking, the Americans
were the first to reach the finishing line because their
rivals had not even gotten to the start. But do not think
that I intend to cry when viewing the achievements of
U.S. diplomacy! I am just sad that a "pax Americana”
is being created in Europe because we West Europeans
and you Russians are unable to build our “common
European peace.”

But, no matter what, I am happy that the peace process
in Yugoslavia has begun. Maybe not on the basis that
we would have liked, but it has begun! For comparison’s
sake: Look how Israeli-Palestinians relations are being
established. The peacemaking between the Israelis and
Palestinians began with positions that did not suit
either side. Then came an opportunity for compromise
and mutual accords. Trust was born. In itself the
negotiating process creates the energy for construction.
The dynamics of war are giving way to the dynamics
of peace, and that is the main thing! I would like to
believe that the same is also going to happen in the
former Yugoslavia.

[Privalov] You have spoken of mutual trust. Does that
principle not run counter to the very exis'cnce of the

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20 RUSSIA INTERNATIONAL AFFAIRS

NATO bloc? Especially to its expansion via the addition
of Russia’s neighbors?

[Lellouche}] Russia and NATO represent a clash of
principles. First, Russia does not have the right to
control its former satellites: If Slovakia, say, wants
to enter European and international institutions, its
president has no need to ask Moscow’s permission to
do so.

[Privalov] Wait a minute! European institutions are one
thing: The EU, for instance. The NATO military bloc
is another.

{Lellouche] We can perfectly understand Russia’s new
strategic position. For the first time since the 16th
century your country sees Western borders approaching
its center. What is more, millions of Russians have
found themselves in the near abroad. Communists
and nationalists are stirring things up. We realize the
danger, for the West among others, of NATO’s arbitrary
expansion up to Russia’s borders. But on the other
hand, this military bloc has in itself ceased to be the
machine of confrontation to East Europe. The bloc is not
aimed against anyone specifically today; it is necessary
to ensure stability in Europe. Is your country really not
interested in the same thing? At one time Gorbachev
said: "Yes to German unification, but outside the NATO
bles!" But that is nonsense! Is that not dangerous: A
united Germany outside NATO?! If there are no U.S.
soldiers left in Europe, nor any U.S. nuclear warheads,
it is in Russia’s interests to stabilize Central Europe by
having its former satellites join the EU and (why not?)
the system of collective European security.

It is necessary for both of us to be calmer and more
patient. Then it will be easier for Europeans to talk to
one another and reach mutual understanding. Is that not
how the dynamics of peace are attained?

Kozyrev To Meet U.S. Envoy Talbott 18 Oct

LD1710195395 Moscow INTERFAX in English
1852 GMT 17 Oct 95

(FBIS Transcribed Text] MOSCOW, Oct 17 (INTER-
FAX) — Moscow hopes for a reasonable compromise
on the issue of Russia’s role in the multinational force
to be deployed in Bosnia after the rival factions con-
clude peace, Russia’s Deputy Foreign Minister said on
Tuesday.

Nikolay Afanasievskiy, who earlier in the day took part
in a meeting held by Russia’s First Deputy Foreign Min-
ister Igor Ivanov with two assistants of the US Secretary
of State, Strobe Talbott and Richard Holbrooke, said it
was too early to sum up the results of the discussion.
“The sides keep working," he said.

FBIS-SOV-95-201
18 October 1995

Afanasievskiy said that the Russian Foreign Minis-
ter Andrey Kozyrev would meet with Strobe Talbott
tonight.

Reliable sources in the Foreign Ministry said that
the meeting would be held in private. "By mutual
agreement only broadcast media were invited to attend
the beginning of the meeting. The issue to be discussed
is very sensitive and neither Kozyrev nor Talbott are
going to make any statements afterwards," a source said.

Afanasievskiy said that Mr Talbott’s meeting with
Russian Defence Ministry officials was scheduled for
Wednesday.

Earlier Kozyrev made it quite clear that Russia, which
was not a member of NATO, could not let its military
contingent in a future multi-national force in Bosnia be
placed under NATO’s command.

Meanwhile, after the end of the Moscow meeting of
the contact group on Bosnia R. Holbrooke said that the
United States would not agree with the idea that NATO
and Russian Generals should take turns as multi-national
force commanders.

Mr Holbrooke said that the principle of subordination
and one-man-command must be observed to the full.
He made it quite clear that Russia would be able to
take part in the military operation in Bosnia only on
that condition.

Yeltsin Not To Attend U.S.-Russian Exercises

LD1710195095 Moscow INTERFAX in English
1852 GMT 17 Oct 95

[FBIS Transcribed Text] MOSCOW, Oct 17 (INTER-
FAX) -— The tight schedule of President Boris Yeltsin's
visit to the U.S. does not include a visit to the Russian-
U.S. Peacekeeper-95 exercise, his press secretary Sergey
Medvedev told INTERFAX Tuesday night.

Earlier on Tuesday INTERFAX quoted a Defense
Minist:y official as saying that this visit is possible.

Yeltsin Awards U.S. Citizen Order of Friendship

LD1810092795 Moscow ITAR-TASS in English
0856 GMT 18 Oct 95

{[FBIS Transcribed Text] MOSCOW, October 18
(ITAR-TASS) — For the immense contribution in the
development of cooperation between American and
Russian public organizations, Russian President Boris
Yeltsin has issued a decree, awardering the Order of
Friendship to Alan Cole, Chairman of the Chkalov
Transpolar Memorial Committee in Vancouver city of
Washington state, U.S.A.

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

The text of the decree has been circulated by the Russian
President’s office.

Russia Will Observe Sanctions Against Iraq

LD1710150695 Moscow INTERFAX in English
1347 GMT 17 Oct 95

{[FBIS Transcribed Text] MOSCOW, Oct 17 (INTER-
FAX) — Russia is not planning to unilaterally lift sanc-
tions against Iraq, a high-ranking Russian diplomat told
INTERFAX.

He said Russia maintains “regular political contact" with
the Iraqi leaders.

"However, as long as the international sanctions against
Iraq are in force, there can be no talk about cooperation
with it in other spheres," he said.

Commenting on the results of the national referen-
dum held in Iraq last Sunday and prolonging Saddam
Husayn’s powers by another seven years, he said that
"it is Iraq’s internal affair."

“The most important thing for us is to ensure that
relations between Russia and Iraq develop for the benefit
of both nations,” he said.

He also noted that Moscow was determined to continue
dialogue with Baghdad.

Zhirinovskiy Leaves Baghdad, Visits Cairo

LD1710231995 Moscow Radiostantsiya Ekho Moskvy
in Russian 1900 GMT 17 Oct 95

{[FBIS Translated Text] Today [17 October] Vladimir
Zhirinovskiy, leader of the Liberal Democratic Party
of Russia, visited the Egyptian capital. Konstantin
Drobyshev [as heard] has the details.

[Correspondent] Vladimir Vulfovich arrived in Cairo
Straight from Baghdad for a referendum on a confi-
dence vote of Saddam Husayn. Zhirinovskiy assured
Husayn of his support. In Egypt the leader of the Lib-
eral Democratic Party of Russia was accorded the at-
tention due him. However, this did not stop Vladimir
Zhirinovskiy from making a written appeal to the peo-
ple of Egypt. Among its main theses was the statement
that the country is governed by Israeli-American impe-
rialists, because Egypt left the sphere of influence of
the [former] USSR. This was the reason for all Egypt’s
troubles.

However, according to the ITAR-TASS correspondent
in Cairo, Aleksandr Shumilin [as heard], it is hardly
likely that the Egyptians understood what the leader of
the Liberal Democrats had in mind.

The Egyptians ignored the visit of the newly announced
prophet not wishing to have anything to do with him.

RUSSIA INTERNATIONAL AFFAIRS 21

The Russian embassy naturally welcomed the guest in
an honorable manner, promising to inform the country’s
population of the appeal.

Grachev Has No Plans To Visit Iran

LD1810132495 Moscow INTERFAX in English
1146 GMT 18 Oct 95

[FBIS Transcribed Text) MOSCOW, Oct 18 (INTER-
FAX) — Russian Defense Minister Pavel Grachev does
not plan to visit Iran in the near future, the Defense
Ministry’s spokesman told INTERFAX Wednesday.

He refuted press reports claiming Grachev’s intention
to visit Tehran before the end of this year.

"The minister does not plan a trip to Iran for this year,"
said the spokesman.

Grachev Postpones Greece Visit for Court
Appearance

LD1710170095 Moscow INTERFAX in English
1602 GMT 17 Oct 95

[FBIS Transcribed Text] MOSCOW, Oct 17 (INTER-
FAX) — The visit of Russian Defense Minister Pavel
Grachev to Greece was postponed from October 30 to
November | "with the mutual agreement of the parties,"
Grachev’s aide Yelena Agapc-va told INTERFAX today.

When asked about Grachev’s possible appearance
in the Krasnopresnenskiy Municipal Court, Moscow,
Agapova said the legality of the court’s decision
(obliging Grachev to come to the court — IF) was
currently being examined. "The minister’s lawyer has
revealed violations in the proceedings," Agapova said.

Agapova said: "If the court fails to accept the arguments
advanced by lawyers, the defense minister, as a citizen
who abides by law, will come to the court."

The Krasnopresnenskiy Municipal Court is to hold its
next session on October 25.

Grachev applied to the Russian Prosecutor General’s
Office on October 19, 1994, requesting that a crimi-
nal case be instigated against Moskovskiy Komsomo-
lets journalist Vadim Poegli. Grachev took action fol-
lowing the publication by the Moskovskiy Komsomolets
newspaper of an article titled "Pasha-Mercedes: the thief
should be in prison rather than be the defense minister."
The article concerned corruption in the Western Group
of Troops earlier deployed in Germany.

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22 RUSSIA INTERNATIONAL AFFAIRS

Moscow Regrets Estonia’s Anti-Russian Stance

LD1710160995 Moscow ITAR-TASS in English
1544 GMT 17 Oct 95

[By Yuriy Kozlov]

(FBIS Transcribed Text) MOSCOW, October 17
(ITAR-TASS) — "Recent statements made by Estonian
President Lennart Meri in Sweden and Finland who
made clear his negative attitude to Russia, mistrust of
its foreign policy and exaggerated a non-existent Rus-
sian threat, have, mildly speaking, perplexed Moscow,"
Russian Foreign Ministry spokesman Grigoriy Karasin
said in an interview with ITAR-TASS today.

"It is even more surprising to hear such statements from
the president who has put every third resident of his own
country in a discriminatory position and whose country,
contrary to generally acknowledged international norms
and principles, continues to make territorial claims on
its neighbour," Karasin said. "Do they really believe in
Tallinn that confrontation with Russia is the Estonian
‘contribution’ to general European security and stability
or is this a means by which Estonia seeks to get an
access to NATO?" the spokesman said.

"It is not Russia, but Estonia which creates problems
by its attitude to Russia and ethnic Russians living on
the Estonian territory. No matter what is going on, we
firmly come out for a progressive advance made by our
countries and people towards good neighborly relations,
friendship and mutual cooperation," the spokesman said.

"The Russian diplomacy is making persistent and pain-
staking efforts to this end. Recently, encouraging signs
of possible progress have appeared," the spokesman
said. He stressed that Russia welcomed such develop-
ments. But, unfortunately, "the Estonian leadership of-
ten remains deaf to Russia’s efforts, and moreover, it
occurs at a top level,” Karasin said.

Karasin Urges Worldwide Efforts To Combat
Terrorism

LD1710115795 Moscow ITAR-TASS in English
1146 GMT 17 Oct 95

[By Yuriy Kozlov]

[FBIS Transcribed Text] MOSCOW October 17 (ITAR-
TASS) — Russia called on all countries to join efforts
in fighting terrorism following the hostage drama with
25 South Korean tourists at the Kremlin wall Saturday.

The incident "proves the necessity to join efforts of all
countries in the fight against terrorism", official Russian
Foreign ministry spokesman Grigoriy Karasin told a
briefing Tuesday.

FBIS-SOV-95-201
18 October 1995

He said Russian commandos acted professionally while
storming the bus with hostages and praised the seized
South Koreans for "self-control". He also expressed
gratitude to the South Korean embassy for “the spirit
of cooperation" during the drama.

A lone masked terrorist seized a bus with South
Korean hostages close to the Kremlin demanding a one-
million dollar ransom. After nine hours of talks Russian
commandos stormed the bus, killed the hijacker and
freed all hostages unharmed.

Karasin said the South Korean Foreign ministry ex-
pressed “gratitude to the Russian authorities for the suc-
cessful freeing of Korean citizens”.

Karasin Urges Further Steps to Palestinian
Autonomy

LD1710125895 Moscow ITAR-TASS in English
1245 GMT 17 Oct 95

[By Aleksandr Zhudro]

{[FBIS Transcribed Text] MOSCOW, October 17
(ITAR-TASS) — "Russia has actively contributed to
the signing of the Israeli-Palestinian agreement on the
expansion of Palestinian self-government. Now the
main thing is to ensure its consistent implementation,"
a spokesman for the Russian Foreign Ministry, Grigoriy
Karasin, told a briefing here today.

The Russian spokesman pointed to a deep concern of
the Palestinians over delays in implementation of the
agreement on the release of Palestinian prisoners from
Israeli jails, particularly the freeing of Palestinian female
prisoners, which had been agreed long ago but is still
being delayed.

"We believe," Grigoriy Karasin stated, “that a prompt
Positive solution to the problem will strengthen mutual
understanding between Israel and Palestinians and a
favourable atmosphere for the peace process."

The Russian stance on the issue will be brought to the
notice of Israeli Deputy Foreign Minister Eli Dayan,
who is due to arrive in Moscow on Tuesday.

The Israeli diplomat will take part in the second session
of the joint Russian-Israeli Committee on the Middle
East.

On Wednesday, Dayan will meet Russian Foreign
Minister Andrey Kozyrev, the spokesman announced.

This report may contain copyrighted material. Copying and dissemination
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FBIS-SOV-95-201
18 October 1995

Fleet Commander Denies Sunken Submarine
Reports

LD1810083195 Moscow ITAR-TASS in English
0751 GMT 18 Oct 95

[By Yevgeniya Lents]

(FBIS Transcribed Text] VLADIVOSTOK, October 18
(ITAR-TASS) — Commander of the Russian Pacific
Fleet admiral Igor Khmelnov has officially denied
reports alleging that a Chinese submarine was drowned
in the area of Vladivostok in 1983.

A sensation reports about an incident of 12 years ago
was published yesterday by the Tokyo Shimbun with
reference to Russian sources. The newspaper said that in
1983, a Victor III-class Soviet submarine collided with
a Han-class Chinese submarine a hundred kilometers
Southeast off Vladivostok. According to the newspaper,
the Chinese submarine sank near the island of Askold
and was left lying at the depth of 800-1000 meters.

In 1989, experts of the Far Eastern branch department
of the Russian Academy of sciences allegedly detected
strong radioactivity in this region, measuring around
1,000 Roentgen per hour, the newspaper said.

Experts of the Maritime department for environmental
protection have denied these reports saying that they
have no data about any such incident which might have
caused perpetual radioactive contamination of the sea in
the indicated area.

"Such a strong radiation level has not been registered
even in the Chazhma bay where an accident occurred
at a Russian nuclear submarine in 1992," experts
of the Maritime Environment Department said. "The
maximum level of radioactive contamination in the
epicenter immediately after the explosion measured 117
milli Roentgen per hour, " the experts said.

Britain Seeks To Limit Russian Banking Operations

MMI1710144295 Moscow IZVESTIYA (Financial
Section) in Russian 17 Oct 95 p 3

{ITAR-TASS report: "Britain Refuses To Let Russian
Banks Open in City")

(FBIS Translated Text] The Bank of England is trying to
restrain the rapid expansion of Russian banks in Britain.
Several dozen Russian banks which had intended to
open branches in London have recently been advised
not to apply. The Bank of England is proposing instead
that they open offices which, however, will not be able
to conduct deposit operations. Seven Russian banks
have already opened offices in London, and another
four applications are being examined. We have learned
from confidential city sources that the main obstacle

RUSSIA INTERNATIONAL AFFAIRS 23

to Russian commercial bank’s opening branches in
Britain is the fact that the British consider them to be
inadequately controlled by the Central Bank of Russia.

Decree Text of Oil-for-Sugar Deal With Cuba

MMI1710114195 Moscow ROSSIYSKAYA GAZETA
in Russian 14 Oct 95 p4

[Decree No. 977 of the Russian Federation Government
“On the Signing of a Protocol on Trade Turnover and
Payments Between the Russian Federation Government
and the Government of the Republic of Cuba for 1996-
1998," dated Moscow, 9 October 1995 and signed by
Chairman of the Russian Federation Government V.
Chernomyrdin]

{[FBIS Translated Text] The Russian Federation Gov-
ernment decrees that:

1. The proposal of the Russian Federation Ministry of
Foreign Economic Relations and the Russian Federation
Ministry of Economics, which has been agreed with the
Russian Federation Ministry of Foreign Affairs and the
Russian Federation Ministry of Agriculture and Food,
for the signing of a Protocol on Trade Turnover and
Payments Between the Russian Federation Government
and the Government of the Republic of Cuba for 1996-
1998, which stipulates specifically the purchase in the
Republic of Cuba for state needs of approximately
750,000 tonnes of raw sugar in 1996, and approximately
1.5 million tonnes and 1.75 million tonnes in 1997
and 1998 respectively, as a reciprocal delivery for
an equivalent value of Russian oil on the basis of
extrabudgetary financing, be adopted.

The draft of this Protocol (attached) (not published) be
approved.

The Russian Federation Ministry of Foreign Economic
Relations and the Russian Federation Ministry of Eco-
nomics are to hold negotiations with the Cuban Side
and specify the volumes of reciprocal deliveries of oil
and raw sugar.

The Russian Federation Ministry of Foreign Economic
Relations be charged with signing the aforementioned
Protocol on behalf of the Russian Federation Govern-
ment after agreement is reached, having allowed amend-
ments and additions of a minor nature to be made to the
proposed draft.

2. The Russian Federation Ministry of Foreign Eco-
nomic Relations, the Russian Federation Ministry of
Economics, the Russian Federation Ministry of Finance,
the Russian Federation Ministry of Fuel and Energy, and
the Russian Ministry of Agriculture and Food, together
with other interested ministries and departments, submit

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24 RUSSIA INTERNATIONAL AFFAIRS

to the Russian Federation Government. within a month
of the signing of the Protocol indicated in Point | of this
decree, an agreed proposal for a mechanism for its im-
plementation, with reference to effecting the reciprocal
deliveries of oil and raw sugar in the quantities stip-
ulated by the Protocol on the basis of extrabudgetary
financing.

[Signed] Chairman of the Russian Federation Govern-
ment V. Chernomyrdin

Moldovan Envoy on Plan for Dniester Solution

MM1810100695 Moscow ROSSIYSKIYE VESTI
in Russian 17 Oct 95 pp 1, 3

(Unattributed interview with Moldovan Ambassador
Extraordinary and Plenipotentiary to the Russian Feder-
ation Valeriu Pasat; date and place not given: "En Route
to Genuine Partnership" — first paragraph is introduc-
tion]

(FBIS Translated Excerpt] Our Information: Valeriu Ion
Pasat was born in 1958. He is a candidate of historical
sciences, he graduated from Chisinau State University,
completed postgraduate and doctoral studies at the Rus-
sian Academy of Sciences Institute of Russian History,
and is also an alumnus of the Russian Federation For-
eign Ministry Diplomatic Academy. He worked as a se-
nior researcher at the Moldovan Communist Party Cen-
tral Committee Institute of Sociopolitical Research and
was chief of the Chisinau City Communist Party Com-
mittee’s Ideology Department. He has been engaged in
diplomatic work since 1991. He has served as Moldovan
ambassador to Russia since August 1994. He is the au-
thor of numerous scholarly articles on the problems of
building a national state and national relations and the
book "Difficult Pages in Moldova’s History 1940-1950."
[passage omitted]

[ROSSIYSKIYE VESTI] How are relations between
Chisinau and Tiraspol shaping up today?

(Pasat] Sometimes Moscow journalists cite the conflict
in the Dniester region as an example of the violation of
Russians’ rights. In this regard, in order to avoid return-
ing to this topic, I would like to say in all responsibility
that we regard the conflict on the banks of the Dniester
as having been political in nature. Tiraspol’s wish to
pretend that the Dniester region is the sole defender of
Moldova’s Russian-speaking population is far from the
truth. First, because the majority of Russians and citi-
zens of Moldova who mainly speak Russian live on the
left bank of the Dniester, outside the Dniester region
of the republic. Second, Moldovans, Russians, Ukraini-
ans, and representatives of other nationalities took part
in the combat operations in the spring and summer of

FBIS-SOV-95-201
18 October 1995

1992 on both sides. Third, the Dniester region’s lead-
ers presented their separatist movement as a reaction to
the granting of state language status to Moldavian and
to statements by leaders of the people’s front about re-
unification with Romania. But the language problem for
the whole territory of Moldova is being tackled in a fair
manner, while the attitude to reunification with Roma-
nia was determined by a republic opinion poll in which
90 percent of those who participated voted in favor of
an autonomous Moldovan state.

More than three years have now passed since the
cessation of hostilities in the Dniester region. A great
deal has been done during this time, specially during the
last 18 months, to settle the Dniester region conflict. A
joint statement by the opposing sides on the principles
of a peace settlement was signed in April 1994 as a
result of long and difficult negotiations. This agreement
also bears the signatures of Russia and the Organization
for Security and Cooperation in Europe [OSCE]. A plan
relating to the Dniester region’s status has been drawn

up.
[ROSSIYSKIYE VESTI] Could you talk about this in
a little more detail?

{Pasat] Under the plan the Dniester region obtains
broad rights to autonomy within the unified republic of
Moldova. Under the plan, the Dniester region is given
the right to have its own local self-government bodies —
a parliament and a government. Moreover, the Dniester
region will have its own state symbols (flag, coat of
arms) alongside the common national ones. Three state
languages — Moldovan, Russian, and Ukrainian —
will function in the Dniester region on equal terms.
However, it is natural that, as in any other state, foreign
policy, the army, finances and credit, customs, and the
police should remain within the sole competence of the
common state authorities of the Republic of Moldova.

The Tatarstan model of dispute resolution is widely
known. Under it the Army, the Internal Forces, and
finances are transferred to the competence of the federal
government.

I can assure you that all the sociopolitical conditions
necessary for a most rapid and conclusive resolution of
the conflict have been created.

[ROSSIYSKIYE VESTI] Mr. Ambassador, everything
that you say is pretty convincing. But what guarantees
are there that all this will not be changed?

{Pasat] Everything is stipulated in the plan concerning
the status of the Dniester region. One of the main
points in the plan stresses that the Dniester region
obtains the right to self-determination if the status of
the Republic of Moldova as an independent state and

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FBIS-SOV-95-201
18 October 1995

a UN member changes. And I am still sure that the
problem will be resolved by peaceful means, particularly
as some experience in resolving similar complex issues
in respect of Gagauzia has already been built up.

The elections of deputies to the legislative assembly
and of the bashkan (head) of the autonomous formation
were held there after the adoption of the Law "On the
Juridical Status of Gagauz-Eri (Gagauzia)." Politicians
who support constructive links with Chisinau came
into the leadership as a result of those elections.
A commission to assess the autonomous formation’s
economic state and the help which it needs to be given
has been set up by the Moldovan government.

The Republic of Moldova leadership is promoting the
expansion of economic ties between Gagauzia and the
components of the Russian Federation in every way
possible.

{[ROSSIYSKIYE VESTI] Russian citizens are con-
cerned about the fate of the former 14th Army, its per-
sonnel, military pensioners, military equipment....

(Pasat] For us this is also a very important and very
difficult question. I would remind you that, under the
agreement signed 21 October 1994, the withdrawal of
troops was to proceed simultaneously with the political
settlement of the Dniester region conflict. The Moldovan
leadership has in the last two years put the maximum
effort into tackling the Dniester region problem. It
seems that the hullabaloo and acute, even unhealthy
attention paid to the problem of the former 14th Army
are gradually abating. This hullabaloo was to a large
extent linked to the struggle surrounding the name of
the former commander, General Lebed. I do not regard
myself as entitled to make any political assessments of
Gen. Lebed, but I do want to stress that his courage,
energy, and resolve when commander of the army,
particularly in stopping the theft of weapons from army
depots, are recognized in Moldova.

A new stage in reforming the military contingent
began with the change of commander of the group of
Russian forces in the Dniester region. The ammunition
which was long past its operational life and was
dangerous to store or transport began to be destroyed
with the agreement of the Moldovan side and the
local administration. Unfortunately, many people in

RUSSIA INTERNATIONAL AFFAIRS 25

Russia still think that Russia’s influence in the region is
being substantially weakened with the withdrawal of the
former 14th Army. I regard that as a contentious claim.
The withdrawal of the troops presupposes first and
foremost the settlement of contentious issues, which will
ultimately afford Russia the opportunity to represent its
economic and political interests in this important region
in a more energetic way. Moldova's persistence on the
question of the Russian contingent of troops is due in
no way to a desire to limit Russia’s influence in the
region but to the need to comply with the Republic
of Moldova's fundamental law — the Constitution —
which stipulates the country’s neutral status. Moldova
regards with understanding the Russian public’s concern
over the former 14th Army and its personnel. The
concern for the troops’ future is above all concern for
people’s future. And the process of withdrawal will
undoubtedly lead to a change in the prevailing way of
life of many people. As of today around 6,000 Russian
servicemen are stationed on the territory of Moldova.
The Moldovan side considers it feasible to offer work
to those officers who are ready to serve the Republic
Of Moldova: Some servicemen will, of course, prefer
retirement, while others — this is inevitable — will
have to go to the new place of duty to which their
units are withdrawn. Moldova is ready to share in the
construction of accommodations for the troops who
are withdrawn. We see no problems at all as regards
questions of pension provision for former servicemen
and their families. A special bilateral agreement exists
on this score. Goodwill, real adherence to the principles
of democracy, and respect between our countries are
important, in my view. [passage omitted]

([ROSSIYSKIYE VEST] Mr. Ambassador, you say that
your country is developing good relations with your
neighbors, including Romania. Could you comment,
then, on the statements frequently made in the press by
Romanian leaders who advocate that the consequences
of the Molotov-Ribbentrop pact be eliminated — which
is virtually tantamount today to making territorial claims
on Moldova and Ukraine.

[Pasat} Okay, here I will reply briefly but officially —
Moldova has no territorial claims on Romania. [passage
omitted]

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is prohibited without permission of the copyright owners.

26 RUSSIA NATIONAL AFFAIRS

Political Issues
Yeltsin, Chernomyrdin Discuss Economic,
Personne! Issues

LD1710170395 Moscow ITAR-TASS in English
1630 GMT 17 Oct 95

(FBIS Transcribed Text) MOSCOW, October 17
(ITAR-TASS) — Russian President Boris Yeltsin met
Prime Minister Viktor Chernomyrdin today.

Such meetings are traditionally held on Tuesday.

Yeltsin and Chernomyrdin discussed ways of perfecting
the Russian government structures, social and economic
problems, finance, as well as personnel problems, the
Russian president’s press service said.

Today, Yeltsin met in the Kremlin with a group
of experts within the framework of the preparation
for the president’s planned visits to France and the
United States. They discussed some aspects of the
United Nations activity and its place in the world, and
exchanged on matters that may crop up during meetings
of the Russian President with the French president and
the U.S. President.

Yeltsin Stresses ‘Unique’ Role of Udmurtia Within
RF

LD1710191395 Moscow INTERFAX in English
1715 GMT 17 Oct 95

[From the “Presidential Bulletin" feature]

(FBIS Transcribed Text] [no dateline as received] Rus-
sian President Boris Yeltsin at the signing ceremony of a
power sharing deal with Udmurtia on Tuesday said the
country withstood a test of strength remaining united
and in one piece despite the difficulties of a transitional
period.

He spoke of business as usual in building a new
federation with Moscow’s policy of devolving more
power on the ground playing its role. Yeltsin said the
fundamentals of this policy were laid down in the
federal treaty and later in the new constitution. He
believes power sharing deals is a follow up of the
process.

He warned against fears that some regions might
establish special relations with Moscow saying it was
the task of responsible politicians to lay down in legal
terms the status and specifics of each region. It is
this approach, he believes, that will create additional
guarantees for the observance of the common principles
of a federal state and by definition, the guarantees of a
strong multi-ethnic Russia.

Yeltsin said Russia was a versatile state and any attempt
to try to trim them down equally was unacceptable.

FBIS-SOV-95-201
18 October 1995

He described as unique and profound the role that
Udmurtia was playing within the Russian Federation
[RF]. He said Udmurtia was one of the main workshops
of small firearms and its contribution to the development
of Russian missiles and other weapons should not be
underestimated.

Yeltsin pledged help to the republic’s defense industry,
now in recession.

On Udmurtian candidates running to the State Duma,
Yeltsin said these could be genuine representatives of
their republic who would not throw glasses at each
other.

For his part, Udmurtia President Aleksandr Volkov
described the latest deal with Moscow as being a
contribution to the promotion of federal relations in
Russia. He said President Yeltsin’s federalist policy
would help consolidate Russia and improve living
standards.

Ten other agreements were also signed. These relate
to environment protection, defense-related plants and
the use of Udmurtia’s forests as well as customs
relations, the agro-industrial complex, law and order,
State property and a relationship between the central and
republican budgets.

However, the agreement on the ownership, use and
disposal of Udmurtia’s oil resources was not signed
with Prime Ministers of Russia and Udmurtia Viktor
Chernomyrdin and Pavel Vershinin saying this would
be finalized in the near term.

Other officials taking part in the ceremony include
Vice Speaker of the Federation Council Ramazan Abdu-
latipov, Vice Speaker of the State Duma Alevtina Fed-
ulova, Kremlin Chief of Staff Sergey Filatov and Deputy
Prime Minister Sergey Shakhray.

Yeltsin Authorizes More Gubernatorial Elections

LD1710174795 Moscow INTERFAX in English
1641 GMT 17 Oct 95

{(FBIS Transcribed Text) MOSCOW, Oct 17
(INTERFAX-Eurasia) — Russian President Boris
Yeltsin has authorized gubernatorial elections in five
more Russian regions, Sergey Samoylov, deputy head
of the presidential administration's department in
charge of work with regions and autonomies, told
INTERFAX-Eurasia Tuesday.

He said that Yeltsin signed a decree on the issue Mon-
day evening. The decree authorizes gubernatorial elec-
tions in the Primorye territory, Belgorod, Novosibirsk,
Tver and Yaroslavl regions.

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

Earlier, gubernatorial elections were authorized in the
Sverdlovsk and Nizhnyy Novgorod regions.

Yeltsin Seen Aiming To Bring Regional Heads Into
Line

MKI1710130495 Moscow KOMMERSANT-DAILY
in Russian 12 Oct 95 p 3

[Report by Dmitriy Kamyshev: "If You Want Peace,
Prepare for War"}

{[FBIS Translated Text] The battle on the regional play-
ing field, which was loudly announced by the presi-
dent’s September edict postponing elections in Federa-
tion components, continues. After listening condescend-
ingly to criticism from his opponents, Boris Yeltsin
fired another salvo: "On Measures To Ensure Interac-
tion Between Federal State Power Agencies and State
Power Agencies of Federation Components in Imple-
menting Constitutional-Legal Reform in Russian Feder-
ation Components." The power of the new salvo could
turn out to be so substantial that the majority of legisla-
tive fortifications erected by regional leaders to defend
against the “diktat from the center" will be wiped out.

In spite of the elaborate name, the essence of the edict
is extremely simple: Federation components are invited
to bring their charters and laws fully in line with the
Constitution and henceforth to proceed in their activity
exclusively based on the provisions of the Fundamental
Law. The president also recommended that regional au-
thorities refrain from issuing their own normative enact-
ments in this field pending promulgation of a federal law
on the general organization principles for local power
bodies. Yeltsin entrusted oversight over the legislative
process in the regions to a special commission for li-
aison between federal state power agencies and power
agencies in the Federation components.

The new document logically follows up on the recent
edict postponing the elections. But whereas in Septem-
ber the president only asked the federation components
kindly not to jump the gun in forming their power struc-
tures, now he indicated in no uncertain terms that he is
ready to be "unkind" toward the most implacable re-
gional leaders. Because decisions to hold elections to
executive and representative bodies in the regions were
made on the basis of local laws, which often seriously
deviate from the Constitution, the legitimacy of such
elections is seriously in question. And the absence of a
federal law on the system of power bodies of federation
components will allow Moscow a priori to consider all
analogous local laws as failing to correspond to fed-
eral legislation. If the local authorities try to ignore "the
president’s last warning,” the new commission will get
down to work, called upon to identify troublemakers

RUSSIA NATIONAL AFFAIRS 27

and punish them with all the harshness of the demo-
cratic reign.

Incidentally, the identification of dissenters has already
begun, largely prompted by the president’s military cun-
ning. Having sustained a meaningful pause after his first
edict, Yeltsin gave the regions a chance either to show
their loyalty to the Kremlin and fulfill the recommenda-
tions on postponing elections or to reject them and thus
show themselves up as oppositionists. The first option
was preferred by the majority: According to Igor Zara-
menskiy, the president’s proxy in Yaroslav! Oblast, the
edict has already been approved by 42 out of 55 krays
and oblasts. Opposition on the part of those regions
where the lawmakers decided to fight to the end was
clearly no news for Moscow. At any rate, it would be
simply unreasonable to expect unquestioning obedience
to the center from the Kemerovo Duma, led by Aman
Tuleyev, or the freedom-loving, Rossel-style Sverdlovsk
parliament.

True, Moscow will probably find it even easier to fight
outright oppositionists than their "moderate" associates:
In a bid to make the most trouble for the hateful regime,
the deputies usually forget about the legal substantiation
of their far-reaching initiatives. For instance, the anti-
Yeltsin fervor led the Kemerovo deputies to restore
the Soviet of People’s Deputies and the executive
committee appointed by it (instead of the current
administration), which naturally cannot possibly fit
into the framework of federal legislation. Even the
Constitutional Court, tired of criticism over its excessive
politicization, will finally be able to unburden its heart,
shattering self-styled regional laws to pieces with full
legal justification.

True, it seems that in most cases things will not reach the
court because Moscow has other — primarily financial
— levers to make regional leaders toe the line. But if
individual local bosses still take up all-round defensive
positions in the hope that the necessary law will be
adopted soon. the October salvo from the president's
large-caliber guns is sure to be followed by other
salvos — this time against individual, especially guilty
“targets.”

Government To Stabilize Dagestan-Azeri Border
Region

LD1810093295 Moscow ITAR-TASS World Service
in Russian 0856 GMT 18 Oct 95

{[FBIS Translated Text] Moscow, 18 Oct (ITAR-TASS)
— The Russian Government decided to adopt urgent
measures to stabilize the sociopolitical and economic
situation in regions of Dagestan (an autonomous repub-
lic within the Russian Federation) bordering on Azer-

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is prohibited without permission of the copyright owners.

28 RUSSIA NATIONAL AFFAIRS

baijan. This is set out in a special resolution by the
Russian Government, the text of which was received by
ITAR-TASS today.

The resolution stipulates in particular that the Russian
Interior Ministry must give "practical help" to the Gov-
ernment of the Republic of Dagestan in strengthening
law and order and reducing crime in the southern border
regions of Dagestan.

It also envisions allocating funds from the federal bud-
get for the construction and reconstruction of industrial
enterprises and public amenities in this region. It is also
suggested that funds should be made available to fi-
nance housing construction by refugees, displaced per-
sons, and other groups of the population lacking social
protection.

The Russian Foreign Ministry, together with other
interested departments, has been instructed to take
measures to complete talks and conclude agreements
with Baku on settling the problems arising from setting
up installations on the border between Russia and
Azerbaijan.

Cabinet Reshuffle Expected To Affect Low-Ranking
Officials

MK1810111795 Moscow KOMMERSANT-DAILY
in Russian 13 Oct 95 pp 1, 3

[Report by Vladislav Borodulin under the "Russian
Government Meeting" rubric: "Premier To Ponder for
Another Week Whom To Dismiss"]

(FBIS Translated Text] During the two hours of yes-
terday’s cabinet meeting, which was devoted, among
other things, to executive discipline in the government,
the prime minister only once uttered the word "“dis-
missal," dreaded by any bureaucrat. The premier has so
far managed to restrain himself from drawing decisive
conclusions regarding personnel matters, but this does
not mean at all that tension no longer lurks in the house
overlooking the Moscow River. It is not ruled out that
in a week, by next Thursday [19 October], until which
the premier postponed consideration of the question of
executive discipline in government agencies, some of
its residents might be fired.

Strictly speaking, the tense atmosphere in the audience
was created by two items on yesterday’s agenda —
on the process of carrying out the president’s message
to the parliament, and on the executive discipline of
government agencies in general. The degree of tension
can be illustrated by the fact that right before the
meeting rumors emerged that Petr Mostovoy, director
of the Federal Bankruptcy Administration, had already
been fired, and that Alfred Kokh, acting chairman of the

FBIS-SOV-95-201
18 October 1995

State Property Committee, had tendered his resignation,
but that the head of government had turned it down. This
speculation turned out not to be true — both officials
were present at the meeting and afterward they, as usual,
engages in lively conversation with their colleagues in
the hall. But still...

"The current consideration by the government of the
state of implementing the presidential message and the
government program for this year, in my view, gives
no grounds for personnel changes, but after discussing
the question of discipline in government agencies,
such grounds may emerge," Deputy Economy Minister
Sergey Vasilyev said at a news conference after the
meeting. The premier, too, spoke about that during the
meeting: "Vladimir Stepanovich (Babichev, government
chief of staff — KOMMERSANT-DAILY), by the next
meeting it is necessary to submit a detailed — with
specific names — report on those who are breaching
discipline. We must take the strictest possible measures,
up to dismissal." Let us cite yet another quotation:
"There is gicaning all over Russia, it is impossible to
meet with people, but they, you see, have no time to
draw up documents. I have for some reason not seen
anyone suffering from a hernia," was how the head
of government commented on the zeai his subordinates
have been displaying in drawing up various regulations.

So distinct a border between the two items — one
gives grounds for practically massive layoffs, while the
other does not — appears to be fairly artificial. The
thing is that the quantitative indicators of government
bureaucrats’ laziness and sloppiness are approximately
the same in both cases. For instance, government
bureaucrats have officially failed to meet the plan for
drawing up documents in furtherance of the presidential
message by 8 percent. This is the worst indicator
in the memo on government employees’ discipline,
which was prepared by the government staff. Moreover,
the explanatory note states: "Realization of the key
provisions of program documents in 1995 faces the
threat of disruption." The indicators of the bureaucrats’
diligence on the whole look much better. In particular,
the government failed to carry out just 0.5 percent of
all assignments provided for in presidential edicts “on
economic reform." But the premier chose as a litmus
test to search for candidates for dismissal precisely the
"general" disciplinary question. Why?

There is no clear answer to the question — maybe
the issue is the ambiguous phrasing of the second
problem. But this is not that important. What is much
more important is why on Earth the eternal problem of
executive discipline of government agency employees
has evolved into "grounds for personnel reshuffles?"
The premier holds such meetings every year (or even

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

several times a year), bangs on the table, yells, hardly
restraining himself from using unprintable expressions
— so what, such things do happen, but they are settled
one way or another.

Of course, all this can be ascribed to the upcoming
elections. Against the backdrop of, let’s say, mixed
economic performance, it is extremely advantageous
for the government to emerge before the voters as a
dynamic structure that has not lost its ability to renew
itself. But the low effectiveness of this technique is just
as evident — if things really go as far as dismissals,
it is mid- and low-level bureaucrats, virtually unknown
to the man in the street, who will be hit in the first
place. Decisions on removals at the upper part of the
hierarchical ladder are hardly based on the percentage of
unfulfilled "assignments of Russian Federation President
B.N. Yeltsin (marked “presidential"). By the way, it is
the Economy and Finance Ministries that turned out to
be most undisciplined. As before, these ministries top
all the government's black lists: The Economy Ministry
did not carry out 9 assignments that were to have been
finished by 1 October (against the Finance Ministry's
5), while the Finance Ministry won the contest in the
number of assignments carried out behind schedule (39
against the Economy Ministry’s 34).

Still, the ratcheting up of tension over rumors of possible
dismissals has been aided not only by frankly innocuous
bureaucratic negligence. Russia is not Germany. Why
should one be surprised by this? Looming as a sword
of Damocles over many officials is the promise recently
dropped by Sergey Belyayev that "personnel purges are
bound to follow, including for reasons of corruption."
But even in this case the government’s top persons can
feel relatively secure — for those same propaganda rea-
sons the White House stands to gain absolutely nothing
from letting the voter form a conviction that "if the
bosses are like that, then all of them are bribetakers and
thieves.” Therefore, the government will demonstrate its
ability to purge its ranks on lower-ranking bureaucrats
— such as a deputy health minister, who is already un-
der investigation on corruption charges.

Hence, the threat of dismissals is realistic only for mid-
level officials. “Everything is really too serious, but no
one will tell you anything now,” was how a high-ranking
ministry official commented on the situation. The utter
secretiveness is attributable not only to traditions —
the dismissals of “deputy chiefs" who belong to the
teams of one high-ranking official or another, which
make absolutely no sense from the propaganda point
of view, may have a serious impact on the overall
balance of forces between groups vying for dominance
in the government. This is already a serious factor in

RUSSIA NATIONAL AFFAIRS 29

the electoral struggle, for which reason showing one’s
cards early would simply be dangerous.

‘Women of Russia’ Head Assesses Spread of
Poverty

MM1810102495 Moscow TRUD in Russian

17 Oct 95 p3

{Interview with Yekaierina Lakhova, chairman of the
"Women of Russia" Duma faction, by I. Arkhipov;
place and date not given: “Is Poverty the Price of
Stabilization?"]

{[FBIS Translated Text] [Arkhipov] Yekaterina Filip-
povna, how do you, as a politician with a six-year record
of parliamentary activity, rate the government’s state-
ments on socioeconomic stabilization?

{Lakhova] If we assess the government's activity on
the dynamics of macroeconomic indicators, we can
detect definite grounds for optimism, although claims
of stabilization strike me as premature, to say the least.
With the best will in the world, we will not notice any
signs of success in the sphere of social policy. Official
Statistical data attest to a reduction in the real wages of
the working population and in social payments and to
an increase in the proportion of the population whose
income is below the subsistence minimum.

Let me quote some specific figures that are of great
concern to us deputies in the “Women of Russia”
faction: This year the average wage has increased
140 percent, with inflation running at 180-190 percent.
Constant delays over paying wages are today causing
10-15 million working people to suffer — which, taking
the members of their families into account, means up
to 30-40 million Russians. Employees in the budget-
funded sphere are having a particularly hard time. In
many parts of the Russian Federation now there are
delays over paying pensions — which condemns many
pensioners to a dire material position.

[Arkhipov] So it turns out, does it, that economic
stabilization measures are not improving the situation
of the ordinary working person?

{Lakhova] Indeed. Moreover, stabilization in its present
form is largely being carried out by lowering people’s
living standards. The number of poor and needy people
is continuing to grow. Many have been forced to
economize on everything still more than before —
above all, on buying food and necessities. The Economy
Ministry is forecasting a reduction in retail commodity
turnover in 1996 too.

In such a situation a person values every kopek.
Women are constantly ringing and writing our faction,

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is prohibited without permission of the copyright owners.

w” RUSSIA NATIONAL AFFAIRS

for example, from Moscow and all parts of Russia.
They complain of constant delays over paying child
allowances. The amounts are not particularly large, but
for many they play no small role. Since 1 August 1995
the monthly allowance for a child up to the age of 16
has been 38,500 rubles [R]. But Moscow Oblast is still
paying out just R14,300 for this allowance, based on a
minimum wage of R20,500. On the other hand, not even
this is being paid in many parts of Russia. The persistent
debtors include Amur, Chita, Kurgan, and Voronezh
Oblasts.

[Arkhipov] So does it turn out, Yekaterina Filippovna,
that our state is the most undisciplined debtor? Is it
possible to obtain satisfaction from it?

{Lakhova] The citizen really is regularly fined abso-
lutely everywhere: for a delay in paying for municipal
services, for the smallest violation of road traffic regu-
lations, etc. Absurd situations arise very frequently. For
example, the state itself does not pay wages, allowances,
or pensions, and yet it fines those to whom it is in debt
and who have been unable, through its fault, to pay
rent or charges for municipal services on time. I would
suggest extending such a mechanism for paying fines
to those state structures that are responsible for timely
wage and social payments.

{Arkhipov] Yekaterina Filippovna, the government has
sent the Duma the draft federal budget for 1996. Does
it make it possible to count on changes for the better?

{Lakhova] To all appearances, the government has no
intention of seriously changing anything in the sphere of
social policy. Unemployment is expected to increase to
6 million in 1996. The rate of increase in the minimum
wage will manifestly continue to lag behind the price
rise index. It is proposed to freeze the pension for
working pensioners and to levy a new tax on incomes,
ie. effectively on wages, for small businesses which
create jobs. I am afraid that the decline in many people’s
living standards will not stop.

[Arkhipov] The "Women of Russia" faction devotes
a lot of attention to questions of social policy. What
specifically have you achieved?

{Lakhova] What can a deputy realistically do? Make
certain changes to the budget, draft a law, put a question
to the government. We use these and other levers
to influence the executive. In particular, we secured
the allocation of money to fund child allowances and
the “Russia’s Children" federal program as a separate
protected line in the 1995 federal budget. Additional
funds were allocated on our initiative for the support
of light industry and the textile industry and also
for the construction of youth housing complexes. In

FBIS-SOV-95-201
18 October 1995

recent weeks the faction has appealed repeatedly to the
president and the government, drawing their attention to
problems of pension provision, the position of working
people in the budget-funded sphere, the timely payment
of social benefits, etc.

The deputies of the "Women of Russia” faction intend
to secure an amendment to the draft 1996 budget which
will make it possible to substantially reduce the social
costs of the reforms, so that poverty is no longer the
reverse side of economic stabilization.

Panskov: Enterprises Owe R50 Trillion in Tax
Debts

LD1710124595 Moscow INTERFAX in English
1103 GMT 17 Oct 95

(FBIS Transcribed Text} MOSCOW, Oct 17 (INTER-
FAX) — The tax debt of Russian enterprises to the state
budget has exceeded 50 trillion rubles [R], Russian Min-
ister of Finance Vladimir Panskov told an extraordinary
meeting of the Federation Council Tuesday. The upper
parliament chamber was discussing the concept of the
1996 federal budget.

A major aspect of the budget concept submitted by
the government is “better tax collection,” said the
minister. It is planned to ease the taxation burden,
but the government will be tough with unscrupulous
businessmen, said Panskov. For instance, the procedure
of tax collection will be changed, and taxes will be
levied at the time of goods dispatch instead of the time
money is received in the enterprise’s account.

The government is planning to cancel enterprises’ right
to reserve money for salary payment since January
1, 1996. This right will be an exception needing:
official permission, including that of heads of local
administrations. The right to reserve money for payroll
is now a major reason for non-payment of taxes, said
Panskov.

Failure To Stop Terrorism Deplored in Wake of
Hijacking

MMI1710154095 Moscow KRASNAYA ZVEZDA
in Russian 17 Oct 95 pl

[Report by Petr Karapetyan: “Lone Terrorist Neutral-
ized. How Many Special Services Are Needed To Beat
Crime Completely?"}

([FBIS Translated Text] The operation to free the South
Korean hostages seized by a terrorist in the center of
Moscow was successfully completed on the night of
14-15 October. The terrorist was killed and the South
Korean citizens did not receive so much as a scratch
during the operation. The "Alfa" group that stormed

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

the bus also avoided losses. It is relevant to recall
that this is maybe the first case in the most recent
history of combating domestic terrorism in which the
special subunits have operated so efficiently. In the
recent past there has been the storming of a helicopter
on the outskirts of Makhachkala, the storming of another
helicopter at Mineralnyye Vody Airport, and, of course,
our common and open wound — Budennovsk. In all
three cases the special subunits’ actions provoked such a
storm of criticism that, I confess, to my shame I thought
at one time: Have we got any structures left capable of
effectively countering increasingly audacious terrorists?
At the end of the day can the state protect us from both
lone terrorists and "Robin Hoods" and their merry men,
who have sent some 150 completely innocent people
into the next world?

The last case (one would like to believe that it is
indeed the last) did not, alas, remove all questions but
added to the headache. As far as the man in the street
is concerned, this is precisely because he has again
seen for himself that even outside the Kremlin walls
his personal security is just words. What about the
authorities? What else has to be done to make those
above realize the seriousness of the threat of terrorism
to Russia? What else does it take to make people
understand that the fight against terrorism has nothing
to do with the frisking which the police carry out every
day and every hour at subway stations and on the streets
of Moscow, checking bags and suitcases belonging to
people of a certain nationality?

I am in no way belittling "Alfa’s" feat — those
people risked their lives and did their stuff. All credit
to them! But let us note something else: Essentially
they were up against a dilettante. A man who was
unbalanced and who easily changed his demands, and
consequently who was incapable of really dictating his
will.... Nevertheless in a situation in which we are
ready to applaud an operation brilliantly executed by
the Russian special services, Yuriy Baturin, assistant to
the president for national security, stated at a meeting
with journalists: One in four groupings is being assisted
by bribed officials. While 785 organized criminal groups
were operating in our country in 1990, there are now
several thousand. They control 40,000 enterprises and
organizations of all forms of ownership. If this is not
triumphant terrorism then what is?

Another thing. At the same time as we are reveling
in the victory in Vasilyevskiy Spusk, in Chechnya, in
Shalinskiy Rayon, which is ostensibly controlled by
federal forces, Shamil Basayev is chairing a roundtable
with a demonstration of radioactive containers, during
which he states that they have already been delivered to
Moscow....

RUSSIA NATIONAL AFFAIRS 31

I freely admit that this may be the case. I understand the
chief of police, who is urging Muscovites to be vigilant.
Evidently we will now shy away from people whom we
see Carrying baggage measuring 60 cm by 20 cm — this,
it was explained to us, is what the ill-starred container
could look like....

Of course we will be vigilant. Of course, when the
opportunity arises let us tell whoever needs to be told
that we just want to live in peace. Of course, we
understand everything. Everything except one thing —
why has Basayev, who is wanted, not been caught yet?
Why is Dzhokhar Dudayev still at liberty? Why have
other, no less notorious, terrorists not been very hard
pressed by the law enforcement agencies? We can still
tie up a lone terrorist and can even make a spectacle of
it — not only the best police forces but even the winner
of the Miss Russia contest was prepared to do battle
with the creep.

But what if, tomorrow, it was Basayev?

What if, tomorrow, it was not a spectacle but a bloody
massacre?

What if, tomorrow, it was not a bus or helicopter but a
city?

It seems that Saturday’s [14 October] incident in Vasi-
lyevskiy Spusk is forcing all of us to think and think
again about the scale of the calamity, to think in order
to find a solution.

Bank Chief Hospitalized After Being Shot

LD1710172095 Moscow NTV in Russian
1600 GMT 17 Oct 95

{From the "Segodnya” newscast]

{[FBIS Translated Text] The head of Mosstroybank, a
major Russian bank, is in hospital with serious head
wounds after being shot near his home in Moscow this
morning.

Mosstroybank president Mikhail Zhuravlev was on his
way to work when two shots were fired at him. His
bodyguards, who were walking behind him, were unable
to help him.

Constitutional Court Rules on Prisoners’ Pensions
MKI1710145295 Moscow NEZAVISIMAYA GAZETA
in Russian 17 Oct 95 pl

(K.K.-signed report: "Imprisoned Pensioners Satisfied")

(FBIS Translated Text] Yesterday, the Russian Constitu-
tional Court acted on complaints from pensioners Gen-
nadiy Arderikhin, Georgiy Bobyrev, Nikolay Popkov,

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is prohibited without permission of the copyright owners.

32 RUSSIA NATIONAL AFFAIRS

and Nikolay Kotsyubka, who were placed in confine-
ment, for which reason they forfeited the right to draw
the pensions due them. All other imprisoned pensioners
have found themselves in a similar situation because so-
cial security agencies were guided by Article 124 of the
RSFSR law "On State Pensions in the RSFSR,” which
ruled that "the payment of pensions shall be suspended
for the duration of a pensioner’s imprisonment in accor-
dance with a court sentence." The Constitutional Court
recognized this article as not being in keeping with the
part of the Russian Federation Constitution that deals
with old-age pensions. The question of whether it is ex-
pedient to suspend the payment of disability pensions
to prison inmates "is subject to being resolved by the
legislator, taking account of the special purpose and
the essence of this type of pension." Presumably, the
amendment that the members of the Russian Federation
Federal Assembly ought to make to the pension law
will make it possible to deduct from imprisoned per-
sons’ pensions their maintenance expenses, as well as
the sums determined by the courts of law to make up
for the material damage caused their victims. Instead of
disability pensions, prisoners will have free meals and
a roof over their heads.

Media Issues

Chernomyrdin: Government To Support State TV,
Radio

LD1710182495 Moscow INTERFAX in English
1602 GMT 17 Oct 95

([FBIS Transcribed Text] MOSCOW, Oct 17 (INTER-
FAX) — The Russian government "will not leave with-
out attention" the state TV and radio broadcasting in
Russia, Prime Minister Viktor Chernomyrdin said at a
meeting of the directors of the national state-owned TV
and radio companies today.

Chernomyrdin said the government was currently draft-
ing a resolution to develop Russian President Boris
Yeltsin’s decree on developing TV broadcasting in Rus-
sia. "Probably, several documents will be needed to
Carry out all of the decree’s provisions,” he said.

Chernomyrdin said 94 state-owned Russian TV and ra-
dio companies had serious financial problems because
of their insufficient funding from the federal budget. In
particular, Russian TV and radio companies currently
owe over 600 billion rubles to communications enter-
prises and 100 billion rubles to energy suppliers.

Chernomyrdin said the government would continue
providing "possible support to state-owned TV and
radio companies." He said "both the president and the
government believe that TV and radio companies should
retain the status of federal state organizations.” "Nobody

FBIS-SOV-95-201
18 October 1995

is going to shut regional state-owned TV and radio
companies or reduce the number of their employees,"
he said.

Concerning the measures for liquidating the Ostankino
TV and radio companies due to the creation of the Pub-
lic Russian Television, Chernomyrdin said this involved
“difficult social problems."

“Legislation provides for all necessary measures. The
main task now is to protect and support people,” he
said.

With regard to pending parliamentary elections in De-
cember, Chernomyrdin stressed that the law on elections
must be respected by TV and radio companies cover-
ing the election campaign. He said the decision to hold
the elections “confirms the commitment of our state and
president to the spirit of the Constitution."

Daily Uncovers Financial Abuses at ‘Ostankino’

MMI1610160795 Moscow SOVETSKAYA ROSSIYA
in Russian 14 Oct 95 p8

(Unattributed report: "How They Make a Mint Out of
the Small Screen. Russian Federation Comptroller’s Of-
fice Sums Up Results of A.N. Yakovlev’s ‘Reformism’
at ‘Ostankino’ TV and Radio Company" — first para-
graph is SOVETSKAYA ROSSIYA introduction]

(FBIS Translated Text] The State Duma Committee on
Information Policy and Communications has ordered
that the results of the check by the Russian Federation
Comptroller’s Office on the financial and economic
activity of the "Ostankino" television and radio company
be referred for examination to the Russian Federation
Prosecutor’s Office.

He Came, He Saw, He Inherited

The detailed report several times mentions the name of
A.N. Yakovlev, who became head of the “Ostankino"
Russian State Television and Radio Company under
Yeltsin’s edict of 22 December 1993. In fact the
results of the check on the company’s financial and
economic activity draw a line under his short but
turbulent and, as usual, extremely destructive time in
his new role. The check covered the period from
early 1994 through the end of the first quarter of
1995 and uncovered, as the report notes, “serious
shortcomings in the use of budget funds, including
hard currency.” The leadership of “Ostankino" and
ORT [Public Russian Television] are also accused
of major failures in organizing commercial activity,
unlawful laxity in the use of funds earmarked for capital
investment, failing to fulfill their commitments to the
budget, violations in forming the incorporation capital

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

of the ORT closed joint-stock company, and so forth. As
far as commercial activity is concerned, it first lacked
controls, and second was directed toward a specific
purpose — mostly the sale of airtime for advertising via
middlemen. Calculations based on the minimum rates
demonstrated that during the period of the check the
company strangely failed to receive advertising fees of
115 billion rubles (R}, or 62 percent of the due amount.

Nothing vanishes without trace. The meticulous inspec-
tors indicate in their report precisely where the money
missed out on by the state "melted away”:

“The clearly understated cost per unit of advertising time
allowed ‘agents’ to make a mint out of reselling it to ad-
vertisers and other commercial structures, some of them
foreign. Furthermore, the company largely uses budget
funds to pay for the services of the Russian Ministry of
Communications enterprises ensuring the dissemination
of advertising and the Television Technical Center."

Administration of Troubled Waters

The Comptroller's Office papers contain an interest-
ing analysis of methods of administrative activity un-
der A.N. Yakoviev’s leadership. As is well known,
Saltykov-Shchedrin’s [19th century satirist) hero was
sincerely convinced that the best administration is a lack
of administration. It looks as though this was the ul-
timate goal of the numerous reorganizations based on
the inspired proposals of the chief theoretician of Gor-
bachev’s perestroyka, who received an opportunity to
put some cherished ideas into practice. The Comptrol-
ler’s Office testifies:

“Throughout the inspection period the company was
subjected to organizational transformations, which re-
sulted in the elimination of the only internal control or-
gan — the control and auditing department.... During the
period of these transformations in 1994 the number of
company staffers was reduced by 922 and as of the start
of 1995 was 4,296. As a result of the reductions the pro-
portion of administrative and management personnel in-
creased by 6 percent, the proportion of creative person-
nel was down 1.6 percent and the proportion of service
personnel was down 3.8 percent. At the same time ex-
penditure on wages went up from 11 percent of the com-
pany’s allocated budget funds in 1994 to 19.4 percent
in 1995. In violation of the statute on the ‘Ostankino’
Russian State Television and Radio Company...and the
government decree...with the advent of A.N. Yakovlev
the 19-member company board of directors (the collec-
tive organ determining the blueprint for the development
of television and radio) ceased its activity and was abol-
ished in October 1994, being replaced by a nine-member
administrative council, which has not met once. From
the dismissal of A.N. Yakovlev in March 1995 to the

RUSSIA NATIONAL AFFAIRS 33

present neither the chairman nor even an acting chair-
man of the ‘Ostankino’ Russian State Television and
Radio Company has been appointed. Only two mem-
bers of the administrative council are left."

"You Scratch My Back and I'll Scratch Yours"

The most universal method of making a fortune out
of the small screen was not especially original and
was entirely consonant with the main principle of the
shadow economy, which has now been adopted as
a fundamental principle by the Russian "reformers":
“You scratch my back and I'll scratch yours." In the
context of the television and radio company consistent
implementation of this principle was ensured by a clever
ploy: The company’s main activity was directed not
toward making programs by its own resources, as was:
the case before the advent of A.N. Yakovlev, but toward
purchasing them from commercial structures. This not
only saved the administration worry and hassle, but
opened up colossal opportunities to make money. The
point is that in 1994 the cost of an hour’s airtime using
the company’s own programs was under R9.3 million.
But with purchased programs this indicator reached
R125.8 million plus $2,200. At the start of the current
year it cost between R9 million and R24 million to
make a single program in-house, while the cost of a
single purchased program varies between R49 million
and $60,000. Was this wasteful? Yes, but the money
came from the exchequer and, most importantly, the
cofounders of the commercial structures from which
programs were purchased were usually...people holding
leading posts inside "Ostankino” itself!

From the Comptroller’s Office report:

“Most television programs were purchased from a com-
paratively narrow range of TV companies — ‘VID,’
‘REN-TV,’ ‘ATV,” ‘AMiK,” the ‘Association To Pro-
mote the Development of Children’s Television Ltd,’
‘InterVID,’ “Video ART,’ and others — whose co-
founders are usually people who hold leading posts
in components of the ‘Ostankino’ Russian State Tele-
vision and Radio Company. The ‘Experiment’ studio,
for instance, bought programs (“Topic,” ‘Field of Mira-
cles,’ ‘Peak Hour,” ‘Politburo,’ and others) mostly from
the ‘Telekompaniya VID’ closed joint-stock company,
whose founders include, besides A.M. Lyubimov, A.V.
Politkovskiy, and others, the former director of this stu-
dio A.L. Razbash, currently deputy chairman of the pro-
grams working group (according to the chief accoun-
tant of the ‘VID’ television company, he later withdrew
from the founders), and also from the ‘Intervid’ cor-
poration, whose founders include the “Telekompaniya
VID’ closed joint-stock company, A.M. Lyubimov, and
others. The children’s studio, with its staff of 144, pur-

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is prohibited without permission of the copyright owners.

ot RUSSIA NATIONAL AFFAIRS

chased programs from the ‘Association To Promote
the Development of Children’s Television Ltd’ limited
company, whose founders are V.G. Selennov, director
of the studio, and his deputies V.T. Gladilin, L.I. Za-
ytseva, and M.N. Anisenko. And there are many such
examples. As a rule, programs were bought from these
private television companies at the highest prices. For
instance, in January 1995 the program “The White Par-
rot’ was purchased at the cost of $35,000 for a single
program, “The "Field of Miracles" Capital Show’ was
purchased for $60,000, and ‘Politburo’ and ‘Peak Hour’
were purchased for $17,500 each...."

"You Can’t Help Doing a Friend a Good Turn!"

The check by the Comptroller’s Office revealed the tele-
vision and radio company’s partners who enjoyed most-
favored commercial status. Thus in violation of the Rus-
sian Federation law "On the Mass Media” and the statute
on licensing activity in the communications sphere in
the Russian Federation, some of the airtime on channel
one was granted in July 1994 to the "Global Media Sys-
tems" ("GMS") commercial television company, which
has no licenses for television broadcasting and activity
in the communications sphere. The most-favored status
granted to this company extended so far that "the money
(about $427,000) due to the ‘Ostankino’ Russian State
Television and Radio Company from advertising dur-
ing ‘GMS’ period of broadcasting and the dividends of
50 percent of its revenue were not received.” Further-
more, the Comptroller’s Office report notes, "the Min-
istry of Communications levied payment for communi-
cations services granted to ‘GMS’ not at commercial
prices but at state prices." The company felt so favored
by fortune that it thought it natural simply not to pay
for the services it had received: "As of 1 April ‘GMS’
owed the Television Technical Center...$181,100."

The explanation of the truly boundless and global love
shown by the "Ostankino” administration for "GMS" is
extremely simple and prosaic. The Comptroller’s Office
voiced the following inevitable conjecture:

“This probably was possible because, in addition to
Ye.V. Yakovlev, former chairman of the ‘Ostankino’
Russian State Television and Radio Company, A.A.
Belyayev, president of the ‘Democracy’ fund, and V.N.
Gorokhov and A.V. Sokolov, director and chief engineer
of the Television Technical Center, the founders of
‘GMS’ included the son-in-law of the Russian minister
of communications — O.N. Andreyev. The latter is at
present also deputy general director of the ‘ORT’ closed
joint-stock company.”

FBIS-SOV-95-201
18 October 1995

Operation "Right, I’m Off"

In a newspaper article it is simply impossible to list
all the abuses uncovered at the television and radio
corporation during A.N. Yakovlev’s period as leader.
But there is one more detail that is worth noting. As is
well known, the fathers of Russian "democracy," who
came to power on the crest of the wave of the demagogic
"fight against privileges" campaign and accusations
that the party nomenklatura was exploiting its official
position ior personal ends and in particular was fond,
of foreign travel at state expense, are themselves by
no means models of personal modesty, to put it mildly.
The Comptroller’s Office attests that A.N. Yakovlev and
other representatives of the "Ostankino" television and
radio company “top brass" were eager to travel abroad
at state expense and take their households with them
and did not trouble to explain the official necessity for
these travels. Here are a few illustrations of this:

“Company Chairman A.N. Yakovlev went to France in
April on the topic of ‘Urban Freedoms’ and in Feb-
ruary 1995 traveled to Portugal and France (with N.I.
Yakovieva and A.A. Ignatyev, who do not work for
the company) for the ‘Fourth Session of the Indepen-
dent Commission on Questions of Population and Liv-
ing Standards.’ In view of the absence of any advance
report on the first trip or trip report it appeared impossi-
ble to establish the total expenditure on the trip and its
expediency.... In violation of Russian Federation presi-
dential edict 981 of 2 July G.I. Zolotov, who is not a
staffer of the ‘Ostankino’ Russian State Television and
Radio Company and is not mentioned in the travel au-
thorization, traveled with A.N. Yakovlev to the United
States 6 through 26 June 1994 for ‘New Russian Ini-
tiatives.” G.I. Zolotov’s travel expenses were $2,444.
Senior personnel of the Russian Ministry of Finance
traveled abroad at the company’s expense. Travel costs
for them so far discovered were 1,284 pounds sterling
and 7,036 French francs."

“The Moment of Truth Has Not Yet Arrived"

The abuses uncovered by the Comptroller’s Office
are so glaring that even MOSKOVSKIY KOMSOMO-
LETS, a newspaper that is very sympathetic toward
A.N. Yakovlev, published material about the sensational
disclosures in its pages under the scathing headlines:
"Easy Money, Dirty Tricks, Brilliant Swindlers." In-
deed, the scale of the corruption is impressive even
against the backdrop of the other similar records set
by our exceedingly “democratic” times: The "GMS"
swindle alone caused losses to the tune of R80 billion
and $1.5 million. It is not often that SOVETSKAYA
ROSSIYA has to express solidarity with the “demo-
cratic” press, but on this occasion we can only agree

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

with MOSKOVSKIY KOMSOMOLETS’ pessimistic
conclusions: “No measures have been taken, and we
would venture to claim that no measures will be taken";
"the moment of truth has not yet arrived" at "Ostank-
ino." Changes leading to financial disclosures should be
expected there no sooner than the end of the presiden-
tial elections at the very least." [no opening quotation
mark as published]

There is no getting away from the truth! The current
president, the well-informed Radio Liberty reports,
familiarized himself with the results of the financial
inspection by the Comptroller’s Office. And he took
no measures, unless you count the elimination of the
“Ostankino” state television and radio company which
competes with ORT. In complete accordance with the
wishes of the still unsinkable A.N. Yakovlev.

Military Issues
Yeltsin Amends Statute on Exporting Military Arms

MMI1710121595 Moscow ROSSIYSKAYA GAZETA
in Russian 17 Oct 95 p 3

(Russian Federation Presidential Edict No. 1008 "On
Russian Federation Military-Technical Cooperation
With Foreign Countries," signed by Russian Federation
President B. Yeltsin in the Kremlin, Moscow, on 5
October — from the "Documents" section]

(FBIS Translated Text] In view of improving further
the Russian Federation’s military-technical cooperation
with foreign countries and stepping up state control in
this sphere, I decree that:

1. Amendments are to be made to the Statute on Rus-
sian Federation Military-Technical Cooperation With
Foreign Countries ratified by Russian Federation Pres-
idential Edict No. 507 of 12 May 1992 "On Russian
Federation Military-Technical Cooperation With For-
eign Countries" and the new version ratified. (Foot-
note) (The Statute will be published in ROSSIYSKAYA
GAZETA’s "Departmental Supplement")

2. It is laid down that arms, military hardware, and
military work (services) are to be exported (imported)
solely by the "Rosvooruzheniye” State Company for the
Export and Import of Arms and Military Hardware and
by enterprises developing and manufacturing arms and
military hardware which have also obtained the right to
do so in accordance with the procedure laid down by
the Russian Federation president.

The Russian Federation Ministry of Defense is autho-
rized to provide foreign countries with services in train-
ing national military cadres and technical personnel.

3. Russian Federation Presidential Directive No. 818 of
24 December 1992 is ruled invalid.

RUSSIA NATIONAL AFFAIRS

4. The Russian Federation Government is to:

— formulate and submit for ratification within a month
a statute regulating the procedure for enterprises devel-
oping and manufacturing military output to be given
the right to take part in military-technical cooperation. '
The statute is to make provision for a mechanism for
the Russian Federation State Committee for Military-
Technical Policy to monitor the export (import) of arms
and military hardware and also accountability for viola-
tions of the procedure governing the implementation of
Russian Federation military-technical cooperation with
foreign countries;

— make changes within two weeks to Russian Feder-
ation Government Directive No. 562 of 23 April 1994,
which envisages depriving the "“Aviaeksport" Joint-
Stock Company of the right to conduct export-import
operations involving dual-use aircraft purpose with spe-
cial equipment enabling arms to be fitted;

— bring previous decisions on questions of Russian
Federation military-technical cooperation with foreign
countries into line with this edict.

5. The Russian Federation State Committee for Military-
Technical Policy and the Russian Federation State
Committee for Defense Sectors of Industry are to
monitor the fulfillment of pledges in respect of the
following previously concluded contracts:

— "Promeksport" foreign economic association — to
supply arms and military hardware, carry out work, and
provide military services;

— the "Aviaeksport" Joint-Stock Company — to supply
dual-use aircraft with special equipment enabling arms
to be fitted.

6. The Russian Federation Presidential State-Legal Ad-
ministration is to submit proposals regarding changes to
Russian Federation presidential decisions in connection
with the entry into force of this edict.

7. The Russian Federation Ministry of Foreign Affairs
and the Russian Federation Ministry of Foreign Eco-
nomic Relations are to brief foreign states on this deci-
sion in accordance with prescribed procedure.

8. This edict comes into force on the day it is signed.

{Signed] Russian Federation President B. Yeltsin
[Dated] The Kremlin, Moscow, 5 October 1995
No. 1008

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is prohibited without permission of the copyright owners.

% RUSSIA NATIONAL AFFAIRS

Defense, Interior Ministries Demand More Money
in 1996

LD1710154595 Moscow INTERFAX in English
1347 GMT 17 Oct 95

(FBIS Transcribed Text] MOSCOW, Oct 17 (INTER-
FAX) — Representatives of the Defense and Interior
ministries on Tuesday at a special session of the Federa-
tion Council demanded more budget allocations than the
amount currently envisioned by the government draft
budget for 1996.

Deputy Defense Minister Konstantin Kobets ssid that
the allocations planned by the 1996 draft budget "are
not enough to provide housing for servicemen, to buy
armaments ordered by the state or to adequately train
personnel.”

He described as “inadmissible and discrediting" the
practice used by the Finance Ministry, or Minfin, for
setting aside money on defense on the basis of relevant
expenditures in the previous year. He demanded that
Minfin earmark more money for the Defense Ministry
in general and that it set aside separately funds for
maintaining federal troops in Chechnya, as well as a
separate amount of money for repaying the Defense
Ministry’s debt, estimated by the Defense Ministry at
5.4 trillion rubles.

Deputy Interior Minister Vladimir Strashko made a sim-
ilar demand. He said that the Ministry needs additional
allocations for maintaining interior troops in Chechnya,
for the improvement of the system of corrective labor
camps and for other needs.

Commenting on the statements by the Defense and Inte-
rior ministries’ representatives, Vyacheslav Lyubimov,
member of the Federation Council, said that "if the gov-
ernment department criticizes the government draft bud-
get and there are disagreements within the Cabinet on
the money distribution, there is no point in debating the
submitted document.”

Federal Assembly

Kokoshin Remarks on Defense Spending to Council

MMI1710124495 Moscow KRASNAYA ZVEZDA
in Russian 17 Oct 95 pl

(Unattributed report under the “Own Information"
rubric: “Andrey Kokoshin: Expenditure on Defense
Must Be Increased" ]

(FBIS Translated Text) On 16 October Andrey
Kokoshin, Russian Federation first deputy defense
minister, addressed a conference discussing the draft
Federal Law on the 1996 Federal Budget in the
Federation Council. He stated the need to increase

FBIS-SOV-95-201
18 October 1995

expenditure on defense in 1996 and stressed the need
for full financial provision for defense needs this year,
including by means of a certain increase in this year’s
expenditure through the adoption of a relevant law.

The decision recently adopted by the government on the
full funding of purchases of weapons, military hardware,
and military research and development in accordance
with the Law on the 1995 Budget requires resolute
— even tough — action on the government’s part to
implement it, Kokoshin noted.

Boosting the Armed Forces’ level of technical equip-
ment and questions of financial provision for combat
training and the repair and modernization of hardware,
as well as its operation, require special attention. It is
only thanks to the unbelievable efforts of our native
science and industry that a number of state-of-the-art
models of aviation equipment, antiaircraft missile sys-
tems, air-launched missiles, and so on have emerged
in Russia in recent times. However, these achievements
cannot be consolidated without increasing the relevant
allocations.

In his address Andrey Kokoshin emphasized the need
to adopt at legislative level clear-cut parameters for
military expenditure over a five-to-seven year period.
Without this it is impossible to develop either a weapons
program or plans for the organizational development of
the Armed Forces as a whole. The Ministry of Defense
has proposed to set defense expenditure in this period at
5.3-6 percent of GDP. This proposal is currently being
examined by the government and the State Duma.

But in the draft budget being proposed today, defense
expenditure is planned to constitute 3.76 percent of
GDP.

Federation Council Hears of Agricultural Decline

LD1710193495 Moscow ITAR-TASS in English
1844 GMT 17 Oct 95

[By Lyudmila Yermakova]

([FBIS Transcribed Text] MOSCOW, October 17
(ITAR-TASS) — "Society is now giving less attention
to the agro-industrial complex, which is expressed in
cutting its financing,” Vyacheslav Zvolinskiy, Chairman
of the Federation Council Committee for the Agrarian
Policy, said on Tuesday at a meeting of the Federation
Council discussing the 1996 draft budget.

More tian 30 per cent of branches of the country’s in-
dustry are linked with agrarian production. The con-
sumer market is formed to over 70 per cent of food
produce and goods manufactures form agricultural raw
materials, Zvolinskiy said.

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

However, as a result of the government policy gross
agricultural output in enterprises of all kinds dropped
last year by 28 per ceri as compared with indexes
for 1986-1990. The output of agricultural enterprises
decreased by 45 per cent. The decline continued this
year. The draft budget for next year does not envisage
the necessary investment to remedy the situation in the
agrarian sector, Zvolinskiy said.

Proposals to increase spending on the needs of other
branches, including defence production, the social
area, science, education, health services were made in
speeches of chiefs of other committees of the Federa-
tion Council. Summing up deputies’ proposals, Nikolay
Gonchar, the Chairman of the Budget Committee, said
that at the initial stage of debating the draft budget “it
is important to define expenditures, revenues and ways
of covering the budget deficit."

The discussion of the government document indicates
that deputies do not agree on any of these sections.
They believe the budget is being based on “deliberately
undervalued rates of inflation growth, which can lead to
serious miscalculations in estimating the revenues, and
also to the aggravation of the overall economic situation
in the country.”

Vladimir Panskov, the Finance Minister, agreed that
“the draft budget is far from perfect, although the
government tried to take into account the drawbacks
of the 1995 budget.” “The Cabinet of Ministers had
difficulty giving acceptable answers to some questions,"
he said. Panskov urged deputies for jointly refining the
draft budget.

Draft Budget Attacked in Federation Council

LD1710193295 Moscow ITAR-TASS in English
1857 GMT 17 Oct 95

[By Lyudmila Yermakova]

{FBIS Transcribed Text) MOSCOW, October 17
(ITAR-TASS) — The Russian Federation Council, the
upper house of parliament, met in an extraordinary
plenary today to discuss the 1996 draft budget, with 14
items put on the agenda in a preliminary hearing.

However, a flood of proposals and criticism has not
yielded any resolutions.

Deputies commissioned the budget committee to draft
the Federation Council’s draft resolution on the budget
to be passed at the regular session next week.

A conciliatory commission is to handle the budget
resolution if the State Duma, the lower house of
parliament, rejects it on a first reading.

RUSSIA NATIONAL AFFAIRS 37

The Federation Council thinks that government mem-
bers and officials of the Central Bank of Russia should
be placed on the commission together with deputies.

Summing up today’s session, Federation Council
speaker Vladimir Shumeyko said the government's
version of the budget did not adequately reflect the
principle of budgetary federalism.

This principle is of major importance for Russia’s
component states, of whose interests the upper house
is a mouthpiece, Shumeiko said.

Budget Committee Chairman Nikolay Gonchar told
ITAR-TASS that the Federation Council’s disagreement
with the government’s draft “does not mean confronta-
tion."

He said the house only wanted to polish the crucially
important document to help it pass through the parlia-
ment before the start of the new year, without the long
stalling of the last year.

Duma Refuses To Approve Key Budget Figures

LD1810100495 Moscow ITAR-TASS in English
0954 GMT 18 Oct 95

[By Pavel Kuznetsov]

{[FBIS Transcribed Text] MOSCOW October 18 (ITAR-
TASS) — The Russian State Duma refused to approve
the key 1996 budget figures on Wednesday and urged
the government to increase the envisaged monthly
inflation rate and forecast revenues.

129 lawmakers voted to pass the draft budget under the
first reading, while 138 opposed and one refrained. 226
votes were necessary for the approval.

The Duma decided to send the draft budget to a rec-
onciliatory government-legislative commission to agree
on the key figures and also passed a resolution urging
the government "to revise the key figures of the draft
1996 budget taking into account the real inflation rate
and an increase in the level of income collection".

The government proposed a 1.2 per cent monthly
inflation rate, while legislators believe the achievable
figure is from 3 to 5 per cent.

This September Russian inflation rate was the lowest
at 4.5 per cent, however well-above the budget-fixed

figures.

The 1996 draft budget envisages a deficit of 3.9 per
cent of the Gross Domestic Product. Expenses would be
410.8 trillion roubles (74.6 billion USD), revenues —
329 trillion roubles (59.8 billion dollars, leaving a deficit
of 81.8 trillion roubles (14.8 billion dollars) at 5,500

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is prohibited without permission of the copyright owners.

38 RUSSIA NATIONAL AFFAIRS

roubles per dollar average exchange rate compared to
4,500 at present.

The biggest appropriations of 79 trillion roubles (14.3
billion dollars) go to defence, however the military
reportedly claim 111 trillion roubles.

Also on Wednesday the Duma passed the budget of the
Pension fund which is now to be approved by the upper
house. Revenues are planned at 92 trillion roubles (16.7
billion dollars), expenses at 89.8 trillion roubles (16.3
billion dollars) with a balance of 2.2 trillion roubles (400
million dollars) in the black.

Duma Fails To Agree To Refer Back Budget Draft

MM1710135295 Moscow IZVESTIYA (Financial
Section) in Russian 17 Oct 95 pl

{Report by Yevgeniya Pismennaya and Yelena Fe-
dorova: "The Forecast of Growth in Prices and the 1996
Draft Budget Will Be Revised"]

(FBIS Translated Text] Addressing State Duma deputies
at the hearings on the 1996 draft budget, Prime Minister
Chernomyrdin stated that the draft is not dogma, that it
can and must be worked with. The government is ready
to make compromises. Viktor Chernomyrdin described
the government’s view of the economic situation. The
beginning of financial stabilization in the country is the
main achievement, in his opinion.

Mikhail Zadornov, chairman of the Committee for the
Budget, Banks, Taxes, and Finances, does not regard
the economic situation so optimistically. He thinks that
financial stabilization is being achieved only by slashing
expenditure on all the basic budget items. In 1994 total
federal budget expenditure represented 22.5 percent of
GDP; this year the government expects it to be a little
over 17 percent of GDP.

Real state income has fallen by 5 percent. Only 30
percent of investment has been financed to date this
year. Tax arrears have reached around 30 trillion rubles
[R]. Not only have last year’s budget loans (R2.5
trillion) not been repaid yet, but more than RS trillions’
worth of budget loans have additionally been granted.
Expenditure on the Chechnya restoration program is
being carried out by authorized banks underwritten by
Ministry of Finance guarantees. The State Duma has
not yet seen a single official document concerning the
financing of Chechnya.

President Yeltsin brought the arguments over the 1996
inflation forecast to an end by pointing out that the
government must revise on a more realistic basis.

It was also pointed out in the recommendations of the
conference of Federation Council deputies on the drait

FBIS-SOV-95-201
18 October 1995

Federal Law "On the Federal Budget for 1996" that
the government’s inflation forecast employs patently
understated growth rates for inflation which are more
what it wants them to be than what they actually are.

Both the Federation Council and the State Duma reject
the government-proposed changes to tax legislation as
unnecessary. These changes are designed to increase
budget revenue by R31.5 trillion, but many of them
cannot be regarded as economically advisable.

The majority of speeches by representatives of the
State Duma’s factions and committees proposed that
the budget be referred to the conciliation commission
without rejecting it on the first reading. The speakers
stressed their readiness to adopt the budget before the
end of the year.

However, the State Duma was unable to make any
decision whatsoever on 13 October. Neither the budget
committee’s draft resolution to refer the draft law on the
1996 federal budget to the conciliation commission for
the basic budget indicators to be refined nor the Yabloko
faction’s proposal to turn down the 1996 draft budget
on its first reading and then refer it to the conciliation
commission was adopted.

Yeltsin’s Choice of New Prosecutor Applauded

LD1710213995 Moscow ITAR-TASS in English
2134 GMT 17 Oct 95

[By Ivan Novikov]

{[FBIS Transcribed Text] MOSCOW, October 18
(ITAR-TASS) — Influential Duma deputies of various
political orientation believe Russian President Boris
Yeltsin made the right choice when he suggested
the candidature of Doctor of Law, Professor Yuriy
Skuratov as Russian Prosecutor-General. As is known,
the president sent on Monday the official message to
the Federation Council suggesting that Skuratov be
appointed to the post.

Here are the assessments of deputies interviewed by
ITAR-TASS:

Boris Zolotukhin: "Many jurists, myself included, be-
lieve that the post of Prosecutor-General is a political
post in Russia. Therefore I welcome the appointment to
this post of the scientist who had no political prefer-
ences, being chief of the Institute on problems of con-
solidating legality at the Prosecutor-General’s office.

"When Aleksey Ilyushenko was dismissed, I said in the
media that I would like the post of Prosecutor-General
to be filled by a person from the world of science who
would also have a definite view on justice. I believe
Skuratov is just such a man."

This report may contain copyrighted material. Copying and dissemination
is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

Vyacheslav Nikonov: "I believe Yuriy Skuratov is the
best choice the president could make. I have been
acquainted with Skuratov for many years. We worked
together in Vadim Bakatin’s office when Skuratov was
his adviser and I his assistant. Skuratov is a man of
formidable erudition, broad knowledge in the realm of
law and, what is of no little importance for the position
of Prosecutor-General, a man of exceptional integrity.
He has never been involved in any shady dealings.

"Skuratov has vast practical experience, also in the
area of consolidating law as member of the collegium
of the Prosecutor-General’s Office. I believe Yeltsin
is right in his presentation to the Federation Council
when he asserts that Skuratov’s knowledge as scientist
with the experience of work in high posts creates good
conditions for decisive and well-considered approach to
the strengthening of the role of the Prosecutor-General’s
Office.”

Vasiliy Lipitskiy: "As a politician, I believe the presi-
dent has made a very good choice. Yuriy Skuratov is
a high professional, a man of faultless moral qualities
and a true intellectual.

"I worked together with Skuratov and I could always
rely on his judgement on legal matters and experience
in dealing with them. In the recent years he made
remarkable contribution to working out legislation on
the Prosecutor’s Office, and now he has an opportunity
to translate this into life.

"Skuratov’s rich practical experience warrants hoping
for changes for the better in the work of the entire
system of the Prosecutor’s Office toward wiping out
crime.”

Rybkin Expects New Parliament To Be More
Left-Wing

LD1710161895 Moscow INTERFAX in English
1347 GMT 17 Oct 95

(FBIS Transcribed Text] MOSCOW, Oct 17 (INTER-
FAX) — The new parliament will be more left-wing
than the present one, said State Duma speaker Ivan Ry-
bkin answering questions from local news media. The
speaker believes that "left-centrist" democrats will have
better chances for success, if in their choice the voters
"use their commonsense and show cautiousness.”

"We have broken and ruined much, while we should
have acted without haste, gradually dismantling old
structures and making replacements in the state, in the
economy, in politics, ensuring succession," he said.

The Ivan Rybkin Bloc, led by him, has already formed
“a shadow Cabinet of top professionals,” he said.

RUSSIA NATIONAL AFFAIRS 39

“The past cannot be reversed, of course, but we should
be sure of tomorrow again and use all means to return
to our social gains," said Rybkin.

Regional Affairs

Chechnya Reportage; Negotiations, Military,
Terrorism

Yarikhanov Halts Commission Meetings

LD1810143895 Moscow INTERFAX in English
1425 GMT 18 Oct 95

[FBIS Transcribed Text] GROZNYY, Oct 18 (INTER-
FAX) — There is no discussion on resuming the Spe-
cial Observer Commission’s activities in Chechnya yet,
head of the Dudayev delegation to the settlement talks
Khozh-Akhmed Yarikhanov told INTERFAX Wednes-
day [18 October].

The Chechen side plans to wait for the results of an
investigation started by the Military Prosecutor’s Office
in connection with the bombing of the Roshni-Chu
settlement on October 7, he said. Yarikhanov called
for Russian guarantees of no more federal bombing or
shelling of Chechen settlements.

"I told the Russian side today: Even if we resume the
work of the Special Observer Commission it will last
only till the first bombing,” noted Yarikhanov.

A meeting of Commission experts was held in Groznyy
today only to discuss a possible location for the Du-
dayev camp’s headquarters. The Russian side urges a
location outside Groznyy.

Yarikhanov confirmed the Dudayev camp’s stand that
their residence and the Special Observer Commission
meeting site must be in Groznyy.

Yarikhanov indicated that these locations have not been
coordinated. However, he spoke against the view that
further Commission activities depend on location of the
Dudayev representatives.

Yarikhanov thinks that people trying to force the
Commission outside Groznyy want to discredit it and
make it a secondary body. He said the Commission is
tackling the main problem of today: fulfiliment of the
military agreement signed on July 30.

Volskiy: ‘Settlements Have Been Bombed’

LD1710192095 Moscow INFORMATSIONNOYE
AGENTSTVO EKHO MOSKVY in Russian
1830 GMT 17 Oct 95

[FBIS Translated Text] “Chechen settlements have been
bombed — that is a fact, not just according to Udugov,

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is prohibited without permission of the copyright owners.

w RUSSIA NATIONAL AFFAIRS

but the OSCE [Organization for Security and Cooper-
ation in Europe] mission has visited these settlements.
I have seen the photographs,” Arkadiy Volskiy, deputy
head of the Russian delegation at the talks in Chech-
nya, told Moscow Echo radio station. “The large scale
of destruction, the killed and wounded — everything in-
dicates that targeted bombings were carried out against
military targets, although many civilians suffered."

According to Arkadiy Volskiy, if the Russian Armed
Forces refuse to admit that the bombing was carried
out by Russian Federation aircraft, "if aircraft belonging
to some foreign states fly over our Russian Federation
territory, then it is incomprehensible what sort of forces
guard us, and what our air defense is worth. It is
becoming positively frightening."

Shkirko Denies Russian Aircraft at Roshni-Chu

LD1710175895 Moscow NTV in Russian
1600 GMT 17 Oct 95

[Video report by unidentified correspondent, includ-
ing recorded comments by Lieutenant-General Anatoliy
Shkirko, commander of the Federal Troops in Chech-
nya; from the "Segodnya” newscast]

(FBIS Translated Excerpt] [passage omitted] [Corre-
spondent] It is still not known how many people died
in Dargo. The numbers that can be quoted are unlikely
to be correct, but people have been injured and killed,
and bodies are still being sought. The question of who
is to blame for what happened will evidently not be an-
swered yet, just the same as it was with the village of
Roshni-Chu, which was bombed a week earlier.

[Shkirko] So, we have no fresh new information about
the aircraft that, according to the information from
the Chechen side, carried out strikes in the Roshni-
Chu area and other areas there. According to reports
from the military air commanders, not a single Russian
Federation aircraft took off from the airfields under
their control to carry out strikes. Furthermore, they have
announced this officially and are ready to confirm it in
writing.

A criminal case has been opened in respect of the air
raid on Roshni-Chu. The investigation is being carried
out by the military prosecutor. [passage omitted]

Chechens Swear Revenge for Bombing

LD1810110395 Moscow Radiostantsiya Ekho Moskvy
in Russian 0900 GMT 18 Oct 95

(FBIS Translated Text] The Russian military procura-
tor’s office has instituted a criminal case on the bomb-
ing of Roshni-Chu village, where over 30 civilians were
killed.

FBIS-SOV-95-201
18 October 1995

Movladi Udugov, Dudayev’s press representative, noted
that Chechens believe the commander in chief of the
Russian Air Force is to blame for the air raid.

[Begin Udugov recording] On the demand of the
inhabitants of the village of Roshni-Chu, the military
tribunal of the Chechen Republic has been instructed to
Start a special investigation of the activities of General
Deynekin, commander of the Russian Air Force. He is
accused of a mass killing of civilians. And I am afraid
that spontaneous meetings of citizens, relatives of the
killed people, are taking place already, and these people
are formally announcing that they will take revenge on
the general, his family, and his offspring. I think the
only thing Deynekin has managed to do is to make the
whole Chechen people his enemy. [end recording]

Avturkhanov Warns Against Detaining Dudayev

LD1810144395 Moscow INTERFAX in English
1426 GMT 18 Oct 95

(FBIS Transcribed Text] MOSCOW, Oct 18 (INTER-
FAX) — Russian forces are unable to isolate either
Dzhokhar Dudayev or Shamil Basayev, a Chechen high-
ranking official said.

In an interview with INTERFAX on Wednesday, Umar
Avturkhanov, Chairman of the Chechen National Ac-
cord Committee, said Dudayev could have been "“de-
stroyed some time ago" when he was staying in the
village of Roshni-Chu, but at that time the sides were
involved in negotiations on peace settlement and mili-
tary issues.

Where Dudayev had been staying before that remains
a mystery to everyone because he “was rushing back
and forth across the republic like an old wolf and it was
impossible to detect him," he said.

Avturkhanov claims that Dudayev and Basayev have
“very tight security,” and are backed up by desperate
militants “who have nothing to lose" and “criminal
financial elements" which need Dudayev as a “banner
and symbol.”

He warned that all attempts to detain him would result
in massive casualties.

At the same time, he denied allegations that the "federal
authorities connive with Dudayev and Basayev.”

Avturkhanov also said that peace talks between the
Chechen side and the Russian authorities started in the
summer “were conducted in the wrong way." Russian
troops were “influenced by numerous statements about
peace talks and just didn’t know how to act when mil-
itants appeared, including Basayev and other criminal

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

elements," he noted. "They did not receive any clear or-
ders," he added.

Avturkhanov believes that Basayev’s threats to carry
out terrorist acts involving nuclear weapons are nothing
but a bluff. At the same time, he did not rule out the
possibility of “usual and even serious terrorist acts on
his part."

Militants Sealed Off in Achkhoy-Martan

LD1810114895 Moscow ITAR-TASS in English
1129 GMT 18 Oct 95

{By Mikhail Shevtsov]

(FBIS Transcribed Text] MOSCOW October 18 (ITAR-
TASS) — The situation in the Chechen district centre of
Achkhoy-Martan, about 40 km south-west of Groznyy,
remains complex. A rather large group of Dudayev
militants has concentrated there and are unwilling to
comply with the demands of the Command of the
Combined Group of Federal forces in Chechnya to turn
in weapons and withdraw from the township, Salambek
Khadzhiyev, Head of the National Revival Government
of Chechnya, told ITAR-TASS here on Wednesday.

Khadzhiyev recalled that the militants entered the town-
ship and occupied the District Enlistment Office about
two months ago, hindering the functioning of the district
administration of the National Revival Government, the
Department of Internal Affairs and the District Prose-
cutor’s Office.

The situation in Achkhoy-Martan was further aggra-
vated by the seizure of an officer of Russian Interior-
Ministry troops by the militants, Khadzhiyev said. Fol-
lowing that, the township was completely sealed off by
units of Federal forces that urged the militants to re-
move their posts on the approaches to Achkhoy-Martan.
In view of the militants’ failure to meet the demands,
Federal units fire on the populated area. The firing also
affects civilians, Khadzhiyev said.

The Head of the National Revival Government of
Chechnya expressed hope that the situation would be
eased through negotiations and without the use of force.

Leaders Cited at News Conference

LD1710222495 Moscow Russian Television Network
in Russian 2000 GMT 17 Oct 95

[From the "Vesti" newscast]

(FBIS Translated Text] A meeting between Viktor Cher-
nomyrdin and Avturkhanov, Chairman of the Commit-
tee of National Salvation of Chechnya, and Khadzhiyev,
chairman of the republic’s Government of National Re-

RUSSIA NATIONAL AFFAIRS 41

vival, ended about two hours ago. Judging by every-
thing, the talks were not simple. The news conference
held by the Chechen representatives began after a two-
hour delay.

[Correspondent R. Babayan — identified by caption]
The journalists who were waiting have been told that
the meeting will be delayed because Avturkhanov and
Khadzhiyev are having a meeting with Russian Prime
Minister Viktor Chernomyrdin. And naturally the first
question asked at the news conference was about which
subjects were discussed at this meeting.

(Begin recording] [Avturkhanov] No questions were
set, no tasks were set which should be implemented
in future, or so on. We had a simple, ordinary and
businesslike conversation. We discussed what should
be done and what has been done. How much money
is needed; how much has been allocated and how much
money is left; 2.6 trillion rubles [R] are left. We said
that this money should be sent precisely for the republic.
{end recording]

[Babayan] According to Salambek Khadzhiyev, in fact
R340 billion has been paid to the accounts of the
government of Chechnya. I can account for every ruble,
he stressed. At present using this money the extraction
of oil is being restored and the movement of freight and
passenger trains have been fully resumed in the republic,
Khadzhiyev stated. And the most important thing to his
opinion, is that it has become possible finally to pay
off pensions of nearly all pensioners who are living in
Chechnya, including debts for 1993.

[Begin recording] [Khadzhiyev] No other money has
been paid into the accounts of the Government of
National Revival of Chechnya. This is my answer about
those trillions which we are not receiving and not using.
{end recording]

[Babayan] Later, the forthcoming elections and the cur-
rent situation in Chechnya were discussed. Avturkhanov
and Khadzhiyev consider that it is necessary that these
two issues should be considered exclusively together.
They said that honest elections are impossible in the
republic where the situation is unstable; and dishonest
elections will lead to a sharp aggravation of the sit-
uation. Here journalists noted that many people con-
sider bodies led by Avturkhanov and Khadzhiyev in
the present Chechnya as illegal. Umar Avturkhanov an-
swered this question for the two.

{Begin recording] [Avturkhanov] I think that we were
not brought here by Russian bayonets and we are not
Russian puppets. No one will remove us or put us
outside of Russia. [end recording}

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is prohibited without permission of the copyright owners.

42 RUSSIA NATIONAL AFFAIRS

Maskhadov: Only SOC Can Control Republic

LD1710175295 Moscow ITAR-TASS in English
1715 GMT 17 Oct 95

(By Nikolay Zagnoyko]

([FBIS Transcribed Text) GROZNYY, October 17
(ITAR-TASS) — Chechen military commander Aslan
Maskhadov on Tuesday said that the Special Observer
Commission [SOC], a special joint body established
to monitor the implementation of the June 30 military
accord, alone can take under control the situation in the
rebel republic.

"The Special Observer Commission is the only body
able to take under its control the situation in the Chechen
Republic. It is beyond capacities of (leaders of the
Moscow-backed government Salambek) Kadzhiyev and
(Umar) Avturkhanov,” Maskhadov told ITAR-TASS.

According to Vladimir Zorin, deputy head of the federal
administration in Chechnya, he discussed on Tuesday
possibilities of the resumption of the commission’s
work with Maskhadov and chief international mediator
Sandor Meszaros. The consultations took place in the
OSCE mission in Groznyy.

Zorin said that all participants in the consultations
expressed their will to follow the path of peacefui
settlement of the Chechen conflict. He added that the
sides have not determined a future location of the
commission.

Apparently it will be a settlement outside the Chechen
Capital since the situation is tense there and provocations
cannot be excluded. However, according to Zorin "it
does not matter where we meet. What really matters, is
the result of such meetings."

The OSCE suspended its work last week after an
assassination attempt against commander of federal
troops in Chechnya Anatoliy Romanov. The general is
still in a deep coma in the Moscow Burdenko military
hospital.

Vyacheslav Mikhaylov, Russia’s top negotiator at the
Groznyy peace talks, said on Monday that the commis-
sion is likely to resume work "in the near future.”

"We say now (to Chechens), start working to fulfill the
schedule (of disarmament) and the peace process will
go on,” he said.

TASS learnt that Mikhaylov and another Russian ne-
gotiator, Arkadiy Volskiy, were planning to leave for
Moscow tonight for consultations on the resumption of
peace talks.

FBIS-SOV-95-201
18 October 1995

Shkirko Confirmed as Commission Cochair

LD1710132195 Moscow ITAR-TASS World Service
in Russian 1108 GMT 17 Oct 95

[By ITAR-TASS special correspondent Nikolay Zag-
noyko}

[FBIS Translated Text] Groznyy, 17 Oct (ITAR-TASS)
— Answering questions from journalists at a news con-
ference in Groznyy today, Lieutenant-General Anatoliy
Shkirko, commander of the joint group of federal forces
in Chechnya, said that he is to be cochairman of the
Special Supervisory Commission monitoring compli-
ance with the agreement on a package of military issues
in Chechnya. Anatoliy Shkirko emphasized that he will
continue the work done by Lt-Gen Anatoliy Romanov,
since that is the position taken by the president and the
Government of Russia.

Anatoliy Shkirko admitted that he experienced some
doubts of an ethical nature about his appointment as
cochairman of the Special Supervisory Commission but
said that the decision follows from a precise stipulation
in the agreement on a package of military issues that the
commission should be cochaired on the Russian side by
the commander of the joint group of federal forces in
Chechnya.

Answering a question about the Chechen side’s reaction
to his appointment as commander of the joint group
of federal forces in Chechnya, Gen Shkirko said that
he does not know what the reaction is, but for his
own part he will strive to keep the dialogue going
and point the peace talks in a practical direction,
and while maintaining consultations will get down to
implementing all the accords enshrined in the 30 July
agreement.

"The resumption of talks on a peace settlement depends
on the willingness of the Chechen side," the commander
said. But he stressed that meetings are continuing to
take place on a working basis. Specifically, there was
one such meeting on Monday, with the Russian side
represented by Gen Vlasenkoy. Tactical matters and
plans for further action are being discussed.

Asked his attitude to the events in the village of Roshni-
Chu, Anatoliy Shkirko replied: "The situation needs
detailed investigation; the military prosecutor's office
is holding an inquiry. An inquiry team left yesterday
for the scene of the events and is now working on the
spot.”

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

Russian Delegation Members ‘Ready To Resign’

LD1810054495 Moscow Radiostantsiya Ekho Moskvy
in Russian 0001 GMT 18 Oct 95

(FBIS Translated Text] Members of the Russian Gov-
ernment delegation in Chechnya are ready to resign.
As we were told by Arkadiy Volskiy, deputy head of
the delegation, they are indignant at the Russian mili-
tary denying that it was privy to the latest bombings in
Chechnya.

Volskiy Receives Death Threats

LD1810092495 Moscow ITAR-TASS in English
0854 GMT 18 Oct 95

[By Vitaliy Makarchev]

(FBIS Transcribed Text] LONDON October 18 (ITAR-
TASS) — A top Russian peace negotiator in Chechnya
received intimidation telephone calls from unidentified
Chechens who threatened to kill him, according to his
election comrade-in-arms. [sentence as received]

Arkadiy Volskiy, who was man No. 2 at Chechen peace
talks which resulted in a military agreement in summer,
“had to change all his telephone numbers, other means
of communication, and mount security several days ago
because he received a threat from an unknown group of
Chechens that he would become the next assassination
victim", Vladimir Scherbakov told TASS Wednesday.

In Chechnya assassination attempts were staged on
presidential envoy Oleg Lobov, who escaped unharmed,
and on federal troops commander Anatoly Romanov,
who is still in coma in a Moscow hospital.

Scherbakov, who heads the “Labour Union" election
bloc, in which Volsky is No. 3 man, arrived in Lon-
don for political consultations with Conservative party
representatives.

He stressed that Federal Security Service officers, sev-
eral participants in peace talks in Groznyy and other
independent sources confirmed that the assassination at-
tempt was indeed planned.

Volskiy heads the group for conflict settlement in the
Public council at the Russian president. Scherbakov said
he often flies to the Chechen capital for consultations
on the peace settlement.

Further on Chechen Delegation Move

LD1710170695 Moscow INTERFAX in English
1641 GMT 17 Oct 95

(FBIS Transcribed Text] GROZNYY, Oct 17 (INTER-
FAX) — Russian and Chechen negotiators failed to
agree on accommodations for the pro-Dudayev delega-
tion to bilateral peace talks Tuesday.

RUSSIA NATIONAL AFFAIRS 43

The Special Supervising Commission met in the OSCE
mission in Groznyy to discuss this and other issues
this afternoon. The first assistant head of Russian civil
administration in Chechnya, Vladimir Zorin, attended
the meeting from the Russian side. Chief of Staff of
rebel forces Aslan Maskhadov represented pro-Dudayev
rebels. OSCE Mission Head Sandor Meszaros was also
present at the meeting.

Both sides remained on their initial positions, IN-
TERFAX learned. Russia insists on the location of
Chechen negotiators being outside of Groznyy, while
pro-Dudayev rebels demand their representatives in the
Special Supervising Commission and the peace talks be
based only in the Chechen capital.

Meszaros told journalists after the meeting that he hoped
that the issue will be solved very soon. Several possible
locations are under consideration. However, he declined
once again to name them.

Meszaros said the commission will meet at 10 a.m.
Wednesday [18 October] to discuss the same issue.

Opinions Vary on State of Emergency

LD1710202795 Moscow INTERFAX in English
1852 GMT 17 Oct 95

(FBIS Transcribed Text] GROZNYY, Oct 17 (INTER-
FAX) — The current prevailing point of view is that it is
inexpedient to declare a state of emergency in Chech-
nya, Vladimir Zorin, first deputy head of the federal
civilian administration in Chechnya, told journalists in
Groznyy Tuesday evening.

He said that there are different opinions in Groznyy as
to whether the state of emergency must be declared. The
“round table" of political parties and movements reacted
negatively to the prospect, while the National Revival
Government's reaction was reserved.

The federal civilian administration as a body working
directly with the population has also taken a reserved
stand on the issue because when a state of emergency
is declared it is most important to protect the interests
of the population, said Zorin. We have spoken in favor
of a more detailed study of the issue, he said.

Zorin stressed that all sides are unanimous in the need
to "tame crime and gangsterism." However, there are
disagreements as to what measures must be used to
reach the goal, he stated. Zorin said that the Chechen
Interior Ministry must work out such measures and
present its plan to the National Revival Government by
October 25.

"Constitutional order in Chechnya must be restored only
by constitutional means," stressed Zorin.

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is prohibited without permission of the copyright owners.

at RUSSIA NATIONAL AFFAIRS

Army Paper Ponders ‘Chechen Problem’

MM1710153995 Moscow KRASNAYA ZVEZDA
in Russian 17 Oct 95 pl

[Report by Vitaliy Strugovets: "While Discussions
About Peace Are Going On, Russian Servicemen Are
Continuing To Die in Chechnya"]

{(FBIS Translated Text] Events of recent days have
exacerbated the "Chechen problem" more than ever
before in terms of the past few months.

Those who are in Chechnya — mainly servicemen from
the Russian Federation Ministry of Defense and the
Ministry of Internal Affairs Internal Troops, who are
bearing the whole brunt of the war — believe that the
solution to the problem lies primarily in the effective
implementation of the Agreement on the Military Block
of Questions, which ordered the disarmament of the
unlawful armed formations. By any methods! And it is
hard to argue with their stance. When one in four of the
republic’s inhabitants is armed, it is very difficult to talk
about political and economic methods of working with
them. As for the weapons, practice has shown that these
aze not being voluntarily handed in and are unlikely to
be so. Instead there is constant provocation, shooting,
and terrorist acts. The Integrated Group of Federal
Forces in the Chechen Republic lost approximately a
battalion in September. The figures for losses have
not only not fallen in the first half of October, they
are rising. Indeed, can we expect anything else if, for
example, on 14 October a singular kind of record for the
past three months was set: The federal troops’ positions
came under fire 48 times in the space of a day. On
15 October the figure was slightly lower — 40 times.
And this was literally a few days after the statement by
the group of field commanders of the unlawful armed
formations that they are prepared to continue talks on
the military block of questions.

Now something about the talks themselves. Officially,
they were suspended by Dudayev’s side last Wednesday
“until international observers arrive in Groznyy." The
activity of the OSCE mission, which has been in
Chechnya for four months now, does not meet with
the satisfaction of Dudayev’s side, according to Aslan
Maskhadov, leader of the Chechen Armed Formations
staff. The reason for this kind of statement may only lie
in its rejection of the position occupied by the OSCE,
which is increasingly dissatisfied with the actions of
Dudayev’s men, who have been blatantly disrupting
the Agreement on the Military Block of Questions
and continuing their sabotage and terrorist acts against
the federal troops and the local administration. A few
days ago, for example, the prefect of Vedenskiy Rayon

FBIS-SOV-95-201
18 October 1995

and the prefect and deputy police chief of Nozhay-
Yurtovskiy Rayon were abducted and killed....

All this has forced the federal authorities to raise
the question of billeting Dudayev’s delegation outside
Groznyy. But even irrespective of events of the past
few days — the attempt on General Romanov, the
firing at the OSCE mission, the gunmen’s galvanization
into action — Russian President Boris Yeltsin has
not yet agreed to the proposal to introduce a state of
emergency in Chechnya. As Colonel General Anatoliy
Kulikov, Russian Federation minister of internal affairs,
explained, the idea of introducing a state of emergency
was justified primarily by the military-technical problem
of settling the conflict. But the president has added a
political, international aspect.

It is possible that the aspiration toward a purely political
settlement to the Chechen conflict will bring Russia
certain dividends at the international level. But the lives
of Russian soldiers, including the two who died last
Sunday, cannot be restored.

Federal Forces To Fund Rebel Hospital

LD1710193895 Moscow ITAR-TASS in English
1824 GMT 17 Oct 95

[By Nikolay Zagnoyko]

(FBIS Transcribed Text] GROZNYY, October 17
(ITAR-TASS) — Federal forces in Chechnya will fund
the project to build in neighbouring Ingushetia a hospi-
tal for Chechen fighters injured in the ten month-long
armed stand-off, deputy territorial department head
Vladimir Zorin told a news conference today.

He said this initiative was “the wish to heal wounds of
the war sooner, to ensure real progress on the road to
peace and accord."

Many of Chechens who fought the federal troops are
staying in mountains now, tens of them in need of
treatment and rehabilitation for wounds and contusions,
Zorin said.

Russian presidential envoy to Chechnya Oleg Lobov
called to Ingushetia’s President Ruslan Aushev before
leaving for Moscow today about the hospital project.

Zorin said Aushev agreed to have the hospital in
Ingushetia.

The Russian delegation to the Groznyy peace talks today
had an informal meeting over the matter with Chechen
senior negotiator Khozh-Akhmed Yarikhanov and top
military commander Aslan Maskhadov.

The Russians proposed to them to make arrangements
for transportation of injured rebels to the future hospital.

This report may contain copyrighted material. Copying and dissemination
is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

Surrender of arms is the only condition for admission
to the hospital, Zorin said.

Electoral Commission Invalidates Kalmykia
Election

LD1710203495 Moscow INTERFAX in English
1852 GMT 17 Oct 95

(FBIS Transcribed Text) MOSCOW, Oct 17 (INTER-
FAX) — The Russian Central Electoral Commission
does not recognize the results of the presidential elec-
tions in Kalmykia (a Russian republic in Povolzhye),
Central Election Commission Chairman Nikolay
Ryabov told INTERFAX today.

Ryabov said the legislation on elections and basic
human rights had been grossly violated during the
presidential elections in Kalmykia.

He said Kalmyk President Kirsan Ilyumzhinov, the
Kalmyk Election Commission and Legislative Assem-
bly had been notified of the Central Electoral Commis-
sion’s decision.

Kirsan Ilyumzhinov, 33 years old, was re-elected as the
Kalmyk president during early presidential elections on
October 15.

Shakhray Explains Udmurtia Treaty of Delimitation

LD1710173995 Moscow INFORMATSIONNOYE
AGENTSTVO EKHO MOSKVY in Russian
1230 GMT 17 Oct 95

(FBIS Translated Text] A treaty on delimiting the
subjects of jurisdiction and the powers between the
federal authorities of executive power and the state
bodies of power of Udmurtia was signed in the Kremlin
on 17 October.

"This document is the fruit of all the experience, all
the mistakes and achievements of the two years that the
new Russian Federation constitution has been in force,"
Russian Deputy. Prime Minister Sergey Shakhray said
in an interview to Ekho Moskvy radio station. "It is a
document concise in content and and very pragmatic,
and we therefore hope it will yield results straightaway
and will yield returns for the simple population of the
republic."

"In essence, the Udmurt treaty puts an end to the period
when treaties were signed only with the republican
bodies of power," Sergey Shakhray thinks. "Now the
principle of equality of the component parts of the
federation will operate."

"If such a scheme had been found previously with the
Baltic republics, with the Transcaucasian republics, and
if an individual approach had been found, it would

RUSSIA NATIONAL AFFAIRS 4s

have been possible to preserve the country," Shakhray
reckons.

According to Shakhray, "a number of agreements,
including one on settling interbudgetary relations, were
signed at the same time as the treaty, which provides
the mechanism for them to operate."

“Huge sums of federal taxes are gathered on the territory
of Urdmurtia, whilst the republic is receiving state
subsidies," Shakhray said. "Now these taxes — 500
billion rubles — stay on the territory of Udmurtia, in
the hands of the territorial directorate of the federal
exchquer, and do not go backward and forward."

Gornyy Chemical Weapons Depot Debated at
Conference

LD1810102995 Moscow Russian Public Television
First Channel Network in Russian
0900 GMT 18 Oct 95

[From the "Novosti" newscast]

[FBIS Translated Text] International public hearings on
the problems of eliminating chemical weapons started
in Saratov today.

Special precautionary measures for handling chemical
weapons must be taken in this military site in Gornyy.
About 1,500 tonnes of chemical weapons have been
amassed here, including mustard gas, lewisite and
different mixtures of these toxic substances. In breech of
the Versailles Convention, a so-called military chemical
center was set up here in strict secrecy in the 1930's.
War gases were developed and tried out with assistance
from German specialists there. For how long these
experiments went on is anybody’s guess. The fact is,
however, that over the last few years the incidence of
various diseases among the local population has shot up
compared to the neighboring regions.

How can the ecological situation be improved and what
can be done with such a considerable stock of chemical
weapons? In accordance with a government decision
the Region is to build a weapons-eliminating facility.
But feasibility studies have not been carried out. The
population is against the project.

So what should be done? A solution is expected to
be found at the first international hearings which have
opened in Saratov at the initiative of Green Cross. The
meeting stressed the need for international cooperation
in chemical disarmament and more efficient control over
the implementation of the convention banning chemical
weapons which was signed by 165 countries in Paris
two years ago.

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is prohibited without permission of the copyright owners.

7 RUSSIA NATIONAL AFFAIRS

Funded, Altay Mines Intend 2 Tonnes of Gold
Yearly

MK1810063795 Moscow NEZAVISIMAYA GAZETA
in Russian 17 Oct 95 p4

(Unattributed AEN report: "Gold Potential of the Al-
tay")

{[FBIS Translated Text] They intend to mine up to
300 kilograms of gold this year in Altay. By the
most conservative expert estimate, Altay’s reserves
of precious metals stand at 200 to 210 tonnes. At
present, more than 40 deposits of placer gold have been
discovered in Southern Siberia. All of them are mainly
located in interior areas difficult to access and have not
been studied well enough yet, according to specialists of
the Altay branch of the "Yuzhsibgeolkom" joint-stock
company. They think in the kray administration that
considerable funds — up to $15 million — are needed
today to develop the sector. If the funds are found, they
forecast that gold in Altay will be produced at the rate
of 1.5 to 2 tonnes a year.

Economic Issues
Yeltsin’s Signing of Foreign Trade Law Welcomed

MM1710135995 Moscow IZVESTIYA (Financial
Section) in Russian 17 Oct 95 p 1

(Report by Aleksey Portanskiy: "Law on Foreign Trade
Activity Signed")
(FBIS Translated Text} President Yeltsin signed the law
"On State Regulation of Foreign Trade Activity" 13
October.

The adopted law has finally filled the legal vacuum in
such an exceptionally important sphere as foreign trade,
Yevgeniy Tikhonov, deputy chief of the Ministry of For-
eign Economic Relations Economics and Information
Department, said in a brief conversation with "Finan-
cial IZVESTIYA.”

The law provides a legal basis and the proper legitimacy
for decisions made in the sphere of foreign economic
activity. The law lays down permanent ground rules
in the foreign economic sphere for both Russian and
foreign economic operators — which is exceptionally
important under Russian conditions.

Russian business will get legislative protection against

the dumping of imported goods. It is no less important
for attracting foreign investors to Russia.

Experts believe that the law "On State Regulation of
Foreign Economic Activity" should provide impetus to
deputies to more rapidly pass such necessary documents
as laws on the division of output, on concessions, and
on foreign investment.

FBIS-SOV-95-201
18 October 1995

Panskov Cited on Government Tax Law
Liberalization

LD1710162295 Moscow INTERFAX in English
1347 GMT 17 Oct 95

([FBIS Transcribed Text) MOSCOW, Oct 17 (FIA-
INTERFAX) — The Russian government is determined
to improve the current tax system, ease the tax burden,
create “favorable conditions for paying taxes and liber-
alize the tax laws," Russia’s Finance Minister Vladimir
Panskov told a conference on Russia’s tax system in
Moscow Tuesday.

He said that “the present-day tax system, as a combina-
tion of taxes, mechanisms of their calculation and con-
trol over their payment, will not undergo any cardinal
changes.”

He noted, however, that “the current tax system does
not ensure an equal and fair approach to all tax-payers,”
which is its main drawback. Given this, “the tax burden
should be evenly spread to all,” he said. To attain this
goal, “inefficient and unjustified tax privileges should
be done away with, and measures taken to control all
tax-payers and prevent tax-evasion.”

Causing no decrease in tax revenues, these measures
might ease the position of enterprises which carry the
main tax burden, he continued.

Beginning January |, 1996, the Finance Ministry will
renounce the "non-market tax on excessive salary funds
and the special tax, and take other measures easing the
tax burden,” said Panskov.

However, a real reform of the tax system may be carried
out only if a tax code is introduced “as a comprehensive
document governing relations between the government
and the tax-payer,” he said.

Says Deficit To Be Within 4 Percent of GDP

MK1810063495 Moscow NEZAVISIMAYA GAZETA
in Russian 17 Oct 95 p4

(Unattributed report under the "In Brief" rubric: “Deficit
Will Not Exceed 4 Percent of GDP”"]

[FBIS Transiated Text] This forecast was made by
Russian Finance Minister Vladimir Panskov in his
address to the Federation Council meeting devoted to
the 1996 draft budget in Moscow on Monday [16
October]. The minister said that according to the results
of the first nine months of this year, targets for collecting
budget revenues were exceeded by 19 percent. Thus,
the state received an extra 20 trillion rubles. “This
success,” he noted, “has been achieved first of all
because production volumes have shrunk less than

This report may contain copyrighted material. Copying and dissemination
is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

planned this year." Panskov said that the government
nonetheless encountered difficulties in paying off the
budget deficit, because an IMF loan was received behind
schedule owing to the late passage of the law on the
budget. Still, in Panskov’s view, the deficit will be kept
within 4 percent of GDP until the year’s end despite
the need for extra expenditures, such as on restoring the
Chechen economy, giving loans to certain Federation
components, and so forth.

Moscow Starts New Talks With IMF on Credits

LD1710165695 Moscow ITAR-TASS in English
1452 GMT 17 Oct 95

(By Aleksandr Samozhnev]

{(FBIS Transcribed Text) MOSCOW, October 17
(ITAR-TASS) — The Russian side started on Tuesday
talks with a mission of the International Monetary Fund
On appropriating new financial resources to Russia for
1996-1998 under a programme of expanded crediting,
BUSINESS-TASS learnt at the Russiar Finance Min-
istry.

The fund can appropriate 12 billion U.S. dollars to
Russia under this programme.

Bilateral consultations with the IMF on granting th’c
credit were held in Moscow late in September. Accx *s-
ing to preliminary estimates by IMF experts, the main
indicators of economic development in Russia conform
to the fund’s requirements.

Finance Ministry experts reporied that the sides at the
talks plan to discuss Russia’s foreign economic policy,
the balance of payments, various aspects of the tax
policy and ability to collect taxes.

Macroeconomic indicators of the forecast for the 1996
fiscal year will be key initial data for determining the
size of expanded crediting.

IMF experts will hold, at the same time, a monthly
monitoring of the state of the Russian economy, which
is one of the main conditions for allocating to Russia
another part of the credit to support the economy, the
total sum of which was set at about 6.2 billion dollars.

The Russian side can hope for receiving the September

tranche of the credit from the IMF to a sum of 550
million dollars, the Finance Ministry reported.

Foreign Loan To Cover Budget Deficit Hoped For

LD1710161795 Moscow INTERFAX in English
1414 GMT 17 Oct 95

(FBIS Transcribed Text] MOSCOW, oct 17 (FIA-
INTERFAX) — A senior Finance Ministry official said
on Tuesday Russia might well be able to obtain $9.2

RUSSIA NATIONAL AFFAIRS 47

billion from abroad to close a national budget deficit
next year.

Mikhail Kasyanov told the Financial Information
Agency international financial bodies had already
shown support for Russia’s economic reforms and
were generally satisfied with the Russian government's
program for 1996. He said the Finance Ministry had
taken this into account in drawing up the national
budget for that year.

“The annual meeting of the International Monetary Fund
and the World Bank which ended last week and the
resolutions on Russia that were passed there give us a
certain sense of optimism,” Kasyanov said.

Yet the IMF “directly links” the release of a first $4
billion tranche of an expanded loan to “the process of
passing the budget by the State Duma (lower house of.
parliament) and to alterations that may be made in the
inflation and deficit indicators in the draft budget,” the
official said.

He said the government, in searching for means to fill in
the next year’s budget deficit without fueling inflation,
planned to obtain most of the money for this from
domestic sources.

According to Financial Information Agency data, the
government proposes limiting the sum to be borrowed
from abroad next year to $9.2 billion (32.4 trillion
rubles), with $4 billion being loans with no conditions
attached, $2 billion being a bonded loan and $3.2 billion
being money obtained to buy equipment not made in
Russia.

Moves To Control Liquor, Textile Imports Viewed

MK1810063895 Moscow SEGODNYA in Russian
13 Oct 95 p2

[Report by Elmar Murtazayev: "Government Intends To
Set Liquor Import Quotas. Decision on Limiting Imports
of Textiles Will Be Made Following Talks With EC")

{FBIS Translated Text] Liquor import quotas will likely
be established by the government before the year ends.
As Andrey Kushnirenko, deputy head of the Department
for Foreign Trade Control, said in an interview with
SEGODNYA, the department has already been tasked
by the government to limit liquor imports, and a draft
resolution is being worked on by federal agencies. For
instance, the Economics Ministry is now considering the
amount of imports to be allowed.

Thus, a fight over the privilege to import liquor granted
to the National Sports Fund has for the first time been
documented. It will be recalled that at one of the latest
meetings of the operational commission for improving

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is prohibited without permission of the copyright owners.

as RUSSIA NATIONAL AFFAIRS

payments and settlements, First Deputy Premier Ana-
toliy Chubays stated that the budget was annually un-
derpaid up to $50 billion owing to the preferential liquor
import regime. Moreover, according to the State Cus-
toms Committee, the importation of vodka in the second
quarter of 1995 grew by a factor of four as against the
same period last year. In an attempt to place the impor-
tation of “booze” under control, the operational commis-
sion for payments proposed introducing a fixed excise
duty for exporters of liquor, toughening some Criminal
Code articles on the illegal production of alcohol, and
setting liquor import quotas. The latter move has, to all
appearances, passed the discussion stage. Nonetheless,
control over alcohol imports from Belarus, which be-
longs to the Customs Union, is still on the agenda. It is
not quite clear how quotas or restrictions can be placed
on exports from Belarus, since the customs agreement
provides for the absence of any border or customs con-
trols.

Import restrictions will probably also affect textiles, for
somewhat different reasons, however. Russia’s imports
of textiles and clothing from EC countries throughout
the whole of 1994 totaled $580 million, whereas the
total value of exports amounted to only $140 million.
To a great extent, this situation is caused by EC quotas
for the importation of Russian textiles. At the talks in
Brussels on 14-16 September, the EC did not agree
to cancel the quotas despite all efforts by the Russian
delegation. Experts of the Ministry of Foreign Economic
Relations believe that now Russia has all legal grounds
to use protectionist measures in response. A final
decision, however, is to be made by the commission for
protectionist measures after the closing round of talks
scheduled for early November.

Power Sector Expected To Receive New Investments

LD1710174595 Moscow ITAR-TASS in English
1624 GMT 17 Oct 95

(By Igor Ivantsov]

(FBIS Transcribed Text) MOSCOW, October 17
(ITAR-TASS) — Investment in the Russian electric
power sector is expected to total some two billion
dollars by the end of this year and 3.5 billion dollars
next year, Vitaliy Gorin, an executive of the joint-stock
company Integral Power System of Russia, said in an
interview with ITAR-TASS.

Gorin held the floor at an international conference on
prospects of the Russian power sector which opened
today as part of Energoprogress °95 power exhibition
which has been working 7t Moscow’s exhibition centre
Sokolniki since Monday.

FBIS-SOV-95-201
18 October 1995

Gorin said the power sector’s annual need in investment
would be three to five billion dollars in the period before
2000.

With the start of the new millennium, the investment
requirement will grow to five-seven billion dollars,
Gorin said.

The need for ever-expanding investment relates to
predictable growth of power consumption requiring
increasingly more power capacities.

Intergral Power System of Russia has compiled a
programme for the construction of new power capacities
within the nearest decade.

The programme envisions the building of 44 electric
power stations and some 10,000 kilometres of power
lines by 2005.

Gorin said foreign investment had been trickling into
Russia very slowly, with only eight small investment
projects in progress now.

Foreign investors are wary and waiting for clearer
prospects of getting their money back, Gorin said.

Benefits of Ruble Band Outweigh Exporters’ Woes

MM1810093795 Moscow FINANSOVYYE IZVESTIYA
in Russian 17 Oct 95 p Ill

[Article by Aleksandr Zakharov, general director of
the Moscow Interbank Currency Exchange: "Exchange-
Rate Band Leading to Restructuring")

[FBIS Translated Text] The abandonment of inflationary
budget deficit funding methods has noticeably altered
the macroeconomic situation in the country. Inflation
has fallen throughout the year — from 18 percent a
month in January to 4.6 percent in September. The
pace of the recession has slowed. The positive balance
of trade has become one of the factors behind the
strengthening of the ruble.

At the same time, the budget financing problem remains
acute and it is hard to overcome the inertia of inflation-
ary expectations, which are promoted by the uneven re-
duction in the inflation rate — wholesale price growth
has been running ahead of retail price growth. The fall
in inflation has also laid bare some structural problems
in industry and the banking sphere. Nonetheless, the
country is really closer to financial stabilization.

The foreign exchanges’ reaction to the fall in inflation
was not immediate. It was only in the second half of
the year that the ruble stabilized. Many people consider
this a consequence of the introduction of the exchange
rate “band,” not wishing to recognize the fact that it is

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is prohibited without permission of the copyrighi owners.

FBIS-SOV-95-201
18 October 1995

not the “band” that determines the rate, but the rate that
determines the width of the “band.”

The “band” has brought nothing new to the rate-
formation process. But it has helped to reduce specula-
tive interest in foreign exchange operations, and foreign
economic operations have come to the fore among the
factors determining rate dynamics.

Throughout the existence of the "band" the rate has not
attempted to approach either the upper or lower limits.
This confirms that it reflects relatively objectively the
macroeconomic equilibrium. Consequently, the current
criticism of the exchange rate “band” policy looks
strange to say the least — particularly if we recall the
reaction from the same critics to the situation of a year
ago which ended in "Black Tuesday." Back then the
tuble would lose up to 5 percent of its value on certain
days, and on “Black Tuesday” it slumped 27.4 percent.

A special commission assessed these events as "posing
a threat to national security" — and the critics of the
previous policy were in solidarity with that assessment.
But now those who had previously advocated rate
stability have become zealous opponents of that policy.
Where is the logic in that? Of the two opposing claims
only one can be true. So just what is the truth?

The truth is that it is impossible to stabilize the economy
and the national currency in the context of a liberal
credit and monetary policy. That conclusion is also
suggested by experience.

It was an understanding of this fact that dictated the
measures taken in particularly by the foreign exchanges
this year. As of 1 January a maximum level for ruble
fluctuation against the dollar in a single trading session
— 10 percent — was introduced. This was already
a kind of exchange rate “band” in Moscow Interbank
Currency Exchange trading. The principle of “delivery
on payment” began to operate as of 19 June. In other
words, the exchange began delivering rubles only after
confirmation had been received that the dollars had
entered its clearing account. Limits on net operations in
a single trading session were introduced as of 1 August.
These did not restrict the work of the banks, but all the
players, in the event of exceeding their set limits, would
now have to deposit the surplus amount of currency in
the exchange’s clearing account. These limits average
70-100 percent of a bank’s own resources.

The final stage will be the conclusion of an agreement
between the exchange and participants, regulating the
actions of the exchange and the banks in the event
of settlement being delayed or of any player refusing
to meet his obligations. The agreement is planned
to come into force 1 November. It also envisages

RUSSIA NATIONAL AFFAIRS au

the creation out of participants’ funds of a reserve
fund to cover the exchange’s losses in the event of
participants failing to meet their obligations. These
changes to the trading regulations are part of the general
policy of strengthening finances and have promoted the
stabilization of the ruble.

The main argument used by current critics of the
exchange rate policy is the fact that at the present rate
the stable ruble is creating difficulties for exporters.
But the interests of nonexporters are not covered by
the analysts. Yet import-export patterns over the past
few years clearly show that we have to all intents
and purposes “consumed” our resources — mainly our
fuel, energy, and raw-material resources — whereas
our scientific potential and the production of machinery
and equipment have been doomed to degradation. Their
share of exports has declined steadily, and the levels of
raw-material exports have been ensured by a reduction
in domestic consumption due to the severe recession.

Yes, the stable ruble has made life harder for exporters,
setting them the problem of maintaining their compet-
itiveness by cutting costs and improving the qual''y of
their product. That last point takes time and money.
Consequently, in order to ease the pressure on exporters,
export duty was reduced as of 1 September. Other deci-
sions are also in the pipeline. But at any rate one nega-
tive consequence of the exchange rate policy cannot be
a basis for abandoning it. This is a complex problem.
And we should be thinking not about how to “push the
ruble down,” but about how to support exporters in the
context of a stable national currency, thereby differenti-
ating between the interests of direct producers and those
of intermediaries.

Finally, we need to differentiate between the end and the
means. If the end is to get inflation down, the exchange
rate "band" is only one of the means to achieve that
end. A means which, incidentally, results in exporters
cutting their costs as well as reduced inflation. Not to
mention the fact that when inflation is high there can be
no question of restructuring or of investment activity.

Yet the exchange-rate “band” has ultimately prompted
the banks to seriously restructure, to address their
clients, and to shift their sights from the financial sector
to the real sector. And this is the first tentative step
toward industrial restructuring. There is still a great deal
more required in order to achieve this end. For instance,
the creation of a capital market able to ensure a transfer
of resources between sectors is proceeding slowly. The
infrastructure for a corporate securities market and so
forth is at the formation stage. Most of these problems
are ultimately the result of the lack of regulation in
ownership relations and the lack of a mechanism for

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
50 RUSSIA NATIONAL AFFAIRS 18 October 1995

bankruptcies, mergers, and takeovers. But it remains a _— soon to be talking about specific successes in this area,
fact that as a result of the ruble stabilization policy _ but the trend is clear. A weakening of the ruble to meet
the financial sector, which had hitherto been inward- exporters’ current demands would reverse that trend.
looking, has started to look for opportunities to apply

its strengths in the real production sector. It is still too

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

International Affairs

Kuchma Rules Out Military Bloc With Russia, CIS

LD1710164195 Moscow ITAR-TASS in English
1631 GMT 17 Oct 95

[By Mikhail Melnik and Larisa Stetsyura]

{[FBIS Transcribed Text] KIEV, October 17 (Itar-Tass)
- Ukraine is not going to enter a political and military
bloc of the Commonwealth of Independent States (CiS),
President Leonid Kuchma said on Tuesday.

Speaking to a delegation from the Parliamentary As-
sembly of the Council of Europe, Kuchma stressed
that Ukraine "resolutely opposes Europe’s split into two
camps.”

Touching upon a problem of NATO's eastward expan-
sion, the Ukrainian president stressed that “no state has
the right to veto any other country’s intention to enter
any international organisation,” admitting that Ukraine
would be unhappy “to become a buffer between NATO
and CIS."

Ukraine, Belarus Unable To Meet CFE Deadline

WS1810085095 Kiev INTELNEWS in English
0306 GMT 18 Oct 95

[By Halia Pavliva, INTELNEWS Staff Writer]

{FBIS Transcribed Text] Kiev, Oct 17 — Ukraine and
Belarus both confirmed Tuesday that they will be unable
to meet the Nov. 16 deadline for reducing non-nuclear
weapons specified by the 1989 Conventional Forces in
Europe pact.

The official Ukrainian announcement was made by
a Mykola Makarevych, the country’s ambassador to
Austria, at a Vienna conference attended by all the
signatories to the pact.

According to the treaty, Ukraine was supposed to
destroy 1,974 tanks, 1,545 armored personnel carriers
and 550 combat aircraft by that date. The Ukrainians
are now claiming that they can’t meet this goal until
the division of the Black Sea Fleet with Russia is
settled. This is true because many of the items slated
for destruction are part of the BSF, which is under the
joint administration of the two former Soviet republics.

Russia had earlier indicated its inability to meet its own
arms reduction deadline for the same reason.

In the meantime, Belarus resumed destruction of some
of its weapons on Monday, but said it would be unable
to meet its Tashkent Treaty deadline without substantial
Western help.

UKRAINE 51

Concern Over NATO Deploying Nuclear Arms in
Europe

LD1710171495 Moscow INTERFAX in English
1602 GMT 17 Oct 95

{(FBIS Transcribed Text] KIEV, Oct 17 (Interfax) -
Ukrainian leaders are corcerned about the possible de-
ployment of nuclear arms _n the territory of Central Eu-
ropean countries if they join NATO, Vasiliy Durdinets,
Deputy Ukrainian Prime Minister in charge of security
and emergency situation issues, said Tuesday.

Meeting with the delegation of the Committee on
Legal Issues and Human Rights of the Parliamentary
Assembly of the Council of Europe in Kiev today,
Durdinets said that Ukraine is taking all possible steps to
maintain stability in Central Europe. The region “must
be a nuclear-free zone," he said.

Durdinets stressed that Ukraine demonstrates under-
standing of the NATO documents that favor the grad-
ual expansion of the Alliance depending on the will of
member states and of the pretenders. However, Ukraine
wants to cooperate with NATO to a certain degree “in
the interests of the country’s security and taking into
consideration the neutral status of Ukraine," said the
deputy prime minister.

Spokesman Sets Out Stance on NATO Membership

LD1710183595 Moscow INTERFAX in English
1705 GMT 17 Oct 95

[FBIS Transcribed Text] Kiev, October 17 (Interfax -
Ukraine) - In the course of consultations with repre-
sentatives of the North Atlantic alliance, which were in
session in Kiev last week, Ukraine proposed that NATO
draw up and adopt a new paper - "Research into expan-
sion of NATO - 2”.

Yuriy Serhiyev, head of the Information Department of
the Ukrainian Foreign Ministry, told a news-briefing at
the Ministry that, in the opinion of the Ukrainian side,
the above-said paper should take into account proposals
and opinions of the East European countries and other
member-countries of the NATO “Partnership for Peace"
program, which were set forth during consultations
between NATO and those countries.

Within the past fortnight, Assistant to NATO Secre-
tary General Gebhardt von Moltke was holding consul-
tations with foreign ministries of some of “Partnership
for Peace" member-countries. In the course of the con-
sultations, he expounded the NATO stand in passing the
“Research into expansion of NATO".

Ukraine opposes possible deployment of nuclear
weapons in the territory of East European countries —

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is prohibited without permission of the copyright owners.

52 UKRAINE

potential NATO members, Serhiyev said. Statements on
possible deployment of nuclear weapons were earlier
made by the leaders of Poland and the Czech Republic.

"In this case, Ukraine may find herself on the watershed
of confrontation; but we do not favour it", Serhiyev said.

According to him, Ukraine is unlikely to give up her
non- nuclear status in the near future.

Speaking about possible cooperation with the North
Atlantic Alliance in the settlement of the situation in
Yugoslavia, Serhiyev expressed the view that Ukraine’s
role in NATO forces, which are to replace shortly the
UN peace-keeping force in Bosnia, will most likely
consist in participation in non-military operations, in
particular, those of humanitarian character.

Council of Europe To Examine Kiev’s Legal Norms

WS1710125795 Kiev INTELNEWS in English
0110 GMT 17 Oct 95

[Report by Oksana Hasiuk]

{[FBIS Transcribed Text] Kiev, Oct. 16 — In what may
prove to be the finai hurdle to leap if Ukraine is to join
the Council of Europe next month, a delegation of the
CE Parliamentary Assembly’s Legal and Human Rights
Committee arrived in Kiev Monday [16 October] to ask
hard questions about the country’s constitutional and
legal setup.

The delegation headed by Lydie Err, who chairs the
committee, is to spend four days satisfying itself that
Ukraine’s legal situation is acceptable for membership
in the CE.

The CE’s Parliamentary Assembly approved in late
September Ukraine’s petition on admission in the or-
ganization. The final decision must still be authorized
by the CE’s Cabinet of Ministers, the executive body
that includes the foreign ministers of member nations.

The Cabinet is scheduled to meet Nov. 8 in Strasbourg
to decide on Ukraine’s application.

The CE, founded in 1949 to protect human rights and
strengthen national democratic institutions, now has 36
member nations.

"The CE Parliamentary Assembly’s Legal and Human
Rights Committee authorized me to speak out against
the speed up of Ukraine’s admittance to the organi-
zation after the committee’s meeting in the beginning
of September, due to legal aspects," said Err on Mon-
day during the committee’s meeting with Parliament
Speaker Oleksandr Moroz.

While the CE’s Political Committee approved Ukrainian
membership, the Legal Committee still has reservations,

FBIS-SOV-95-201
18 October 1995

according to Err, adding that the two bodies have
different concerns.

While the Legal Committee endorsement, which paved
the way for the Parliamentary Assembly’s positive vote,
is “one thing,” Err said, “another thing is the more
detailed analysis of legal issues."

Members of the CE’s Legal Committee have expressed
reservations about the constitutional agreement signed
between the Ukrainian president and Parliament in
June, due to its contradictions with Ukraine’s current
constitution, which is inherited from the Soviet Union.

“The agreement’s provisions have being used during the
preparation of the draft of a new Ukrainian constitu-
tion,” said Volodymyr Stretovych, head of the Legal
Committee in Ukrainian Parliament and a member of
the Constitutional Committee, said during his meeting
with the CE officials on Monday.

However, Stretovych admitted, the agreement’s provi-
sions may "require correction" if they are to be success-
fully used as the basis for a new constitution.

While CE’s Legal Committee members noted that a
mixed system of government is confusing, Stretovych
said that “implementation of the agreement showed
that we are not ready for a full presidential style of
government."

"We think that relations between the executive and
legislative branches of power must be clearly outlined
by the constitution and the judge in all disagreements
between power branches should be a constitutional
court,” said Stretovych.

Viktor Shyshkin, also a member of both the legal and
constitutional committees, said most Parliament’s Legal
Committee members think the constitutional court must
be formed only after a new constitution is approved.

Shyshkin also said that "the majority of the parliamen-
tary Legal Committee think prosecutor’s office should
be included into the executive power structure or, prob-
ably, in the Justice Ministry structure."

Serhiy Holovatiy, Ukraine’s justice minister, said during
his Monday meeting with the CE legal experts that
“capital punishment is a very complicated problem for
Ukraine," arguing that “the increase in organized crime
has being used as the main reason for (its) retention."

Complying with European conventions, however, would
necessitate the abrogation of Ukraine's capital pun-
ishment statutes. “Solution of the capital punishment
issue in compliance with CE demands," Holovatiy
said, “depends on Ukrainian leadership's political will,

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

on Ukraine’s. president, prime minister and parliament
speaker’s readiness to do everything this way."

According to Holovatiy, Ukraine’s Internal Affairs Min-
istry and his ministry are working on a plan to change
the jurisdiction of Ukraine’s prisons from Internal Af-
fairs to the Justice Ministry.

Legislation To Conform to Council of Europe
Commitments

LD1710184295 Moscow INTERFAX in English
1707 GMT 17 Oct 95

(FBIS Transcribed Text] Kiev, October 17 (Interfax -
Ukraine) - Whatever difficulties Ukraine may have to
overcome, she will consistently meet the commitments,
which she made in joining the Council of Europe,
Ukrainian Vice Premier Vasyl Durdynets told a meeting
with members of the delegation of the Committee for
legal issues and human rights of the Parliamentary
Assembly of the Council of Europe in Kiev on Tuesday.

Ukraine "is consistently proceeding along the path of
building a law-obedient democratic state" since the day
of proclamation of her independence (Ukraine’s State
Sovereignty Act was adopted on August 24, 1992, -
"IF-U" note). Serious work is underway in the country
to perfect her legislation, the Vice Premier emphasized.

Thus, he said, the Ukrainian government intends to table
in Parliament ten packages of laws on various aspects
of criminal, state and civic law.

Speaking on the possibility of repeal of death penalty
in the country as one of the terms for Ukraine's
admission to the CE, V. Durdynets expressed the view
that "this problem cannot be removed overnight". Yet,
he stressed, "the government’s stand is absolutely clear
- it is necessary to comply with the demands of the
CE". Yet, he predicted that it would take two or three
years in order "to prepare public opinion” and create the
necessary legal basis for meeting these commitments.

Speaking with members of the PACE delegation, V.
Durdynets said that "Ukraine not only proclaims the
observance of the rights of the national minorities in
the state". In his words, "the government is doing its
utmost to affirm and develop the culture, languages
and traditions of all the 128 nationalities resident in
Ukraine”.

UKRAINE

National Affairs

Government’s Action Plan Assessed

WS1710145495 Kiev VYBIR in English
1010 GMT 17 Oct 95

{Article by Yuriy Vyshnevskyy: "A New Attainment
in the Art of Political Compromise" — from the
“Ukrainian News" feature]

(FBIS Transcribed Text}
Making Headway in All Directions

This heading of an editorial dating to the acme of Gor-
bachev’s perestroika perhaps best describes the modus
operandi of the governments of different countries, con-
cerned above all with remaining in office. Give all kinds
of promises, and keep none. This technique of political
survival proved invariably more effective, in any part
of the world, than attempts to act proceeding from eco-
nomic realities. And so, after Leszek Balcerowicz in
Poland, and Yegor Gaydar in Russia, no more political
kamikazes have been registered.

And nor does the Kuchma-Marchuk government show
any suicidal trends. At the same time, it cannot afford
to become yet another big political liar. The Ukrainian
President, elected by the entire nation, has almost
four years of office ahead. Under the Constitutional
Agreement, the Verkhovna Rada [Supreme Council]
will refrain from interfering into the Cabinet's affairs
for one year, provided it approves of its Program of
Action. If this Program is bungled within the year, there
is a fair chance that Leonid Kuchma will have to step
down from the stage in disgrace, even in the middle of
his term.

The government is taking this big risk in its search
for a combination of realism and pluralism, quite an
extraordinary thing in itself. It cannot promise “headway
in all directions”, but nor can it say that there will be
no headway, period. To promise a little bit of progress
in every sphere would be even worse. So which way
to go? The government found an answer, otherwise the
Program of Action would not have been published.

Born in Pain...

The story of how the Program of Action was submitted
for consideration by the Verkhovna Rada is very much
like that of how the government was formed. The
latest Cabinet appointments were made literally days
ago - in other words, three months after the signing of
the Constitutional Agreement, and six months after the
dismissal of the previous Cabinet, headed by Vitaliy
Masol. With the Program, too, all time-limits were

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is prohibited without permission of the copyright owners.

<4 UKRAINE

broken. At first, it was promised to supply the text
to the MPs on the opening day of the 4th Session
of Parliament (September 5), then in a week’s time
(September 12), so as to start the hearing procedures
a week later (September 19). In reality, the text (the
third, final draft) became available - to a limited number
of People’s Deputies, including several copies for each
of the commissions - on September 26. The Prime
Minister’s report was put off till October 10.

This delay seems best explained by Valeriy Pus-
tovoytenko, Minister of the Cabinet of Ministers of
Ukraine. Almost one month ago he stated: "We have
once again selected people, and now we are using them
to build a structure, although we should have taken
a different course. First make a structure, and then
select people to man it." Symbolically, this came from
one of Leonid Kuchma’s “oldest and most dedicated
comrades-in-arms" holding the key post in the selection
of Cabinet manpower, even when Kuchma was still
Premier. By the way, he concluded the above statement
with, “the government’s presentation [in Parliament],
which has been put off on several occasions, will take
place in the nearest future." Well, a month passed
before it did, on October 3. This makes his own words,
about first selecting the structure and then manning it,
sound like a court verdict.

Sure enough, formed in this manner, the government
turned out doomed to build its Program using the same
principle. The result (and many of the MPs who have
had the time to study the document stress it) is a
program of action of not the government as a whole,
but of separate Cabinet members who are not bound by
any single plan. The President took his time appointing
Vice Premiers, and just as unhurriedly, together with
the Prime Minister, proceeded to distribute among them
their realms - i.e., Ministries, State Committees, and
other agencies under their direct control. (Actually, he
may well be still at it, because to the best of our
knowledge the layout of structural links within the
Cabinet of Ministers is yet to be approved by the Chief
Executive.) "Acting within the limits of their respective
authority, tentative as it was, the Vice Premiers agreed
among themselves on proposals received from the
ministries, whereupon the notes brought by the Vice
Premiers were simply sewn together, using thick linen
threads." This hypothesis, voiced on more than one
occasion in Parliament, may well be close to the truth.

Compromise - To Benefit the Strong

And yet the above does not in any way belittle the im- -

portance of the document presented for approval by the
Verkhovna Rada. The Program lacks a single plan, but
one can clearly see its aim, which those that composed

FBIS-SOV-95-201
18 October 1995

its separate sections tried to adhere to. "The main thing
about the government’s Program is that it envisages
tremendous work aimed at restructuring the industries,"
notes Vasyl Hureyev, Minister of Economy of Ukraine.
“This will be accomplished by combining macroeco-
nomic transformations with microlevel reforms, which
is a very responsible move, because we are very late
with microlevel reforms." The said goal - restructur-
ing the industries - is precisely the government’s op-
tion of solving the promise-no-promise-give-never-give
dilemma.

This option has nothing to do with either the ill-famed
give-each-a-little-bit method cherished by all those gov-
ernments of popular unity (confidence, concord, you
name it), best suiting those given to fishing in muddy
waters, or with the more resolute stand (a very seldom
occurrence), when a government knows exactly when
to turn down a tearful petition, risking condemnation by
contemporaries but believing in descendants’ apprecia-
tion. Speaking at the ceremony of opening the storage
battery plant in Dnepropetrovsk, September 29, Leonid
Kuchma dotted the i’s and crossed the t’s: “All the min-
istries and regional administrations have been instructed
to examine in detail every enterprise within their juris-
diction, and decide whether or not it could survive in
market conditions; whether or not this enterprise was
needed by Ukraine, and by its economy. Proceeding
from this, they are to determine whether or not to sup-
port this enterprise using the federal budget. Today, I
am convinced that toward the end of this year we will
have a full picture of every region, every city, every
district."

In other words, several months later all those begging
for federal support will be divided into categories with
strictly defined access to the national purse. Without
doubt, a major purpose of the Program of Action was
to determine the principles of this division, to at least
outline these categories, and then secure and objectively
control this socially painful process. And it was for pre-
cisely this purpose that the Vice Premiers were selected
and appointed. All this considered, should one wonder
at the carefulness with which these people were cho-
sen, the scrupulousness with which their powers were
delimited, the caution with which the Program was com-
posed? The variant of division offered by the Program
is supposed to reflect, most accurately, the membership
of this “elite club" in the Ukrainian economy, all those
who must be supported and kept afloat, because the only
alternative would be endangering the political future of
the government, and the President.

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

An Appendix?

Of the 24 Chapters of the Program of Action, Chapter
2 is titled Social Policy, following the Main Clauses
(which fact requires little, if any, comment). However,
to comprehend the document’s logic, one ought to con-
centrate on Chapter 12 Structural and Industrial Pol-
icy. Words like “structural perestroika" and "“institu-
tional transformations” seem well rehearsed by the Cab-
inet members, Victor Pynzenyk being, perhaps, the only
exception (until recently he was adamant about finan-
cial stability coming first, saying time and again that
only after achieving such stability could one decide who
showed good business results). In fact, he is still often
quoted as saying something like, "Macroeconomic sta-
bility is the necessary precondition of getting the econ-
omy out of crisis and embarking on the road to progress"
(this thesis was included in the part of the Program de-
scribing the tools of the economic policy [Chapter 1]),
adding quickly, as though under his breath, "provided,
of course, one doesn’t idolize the monetary policy", and
then, his voice back to normal, “which policy must be
continued, no matter what.” And finally, his voice drop-
ping almost with every word, "Wherever possible, this
policy should be supplemented by controlled structural
perestroika." As for the latter, the results of its uncon-
trolled process are self-evident: in 1994, the fuel indus-
try’s share in gross production output was 11.2 percent,
against 5.7 percent in 1990; that of ferrous metallurgy,
19.9 percent and 11.0 percent, respectively. At the same
time, the ratio of machine-building and metalworking
dropped from 30.5 percent to 17 percent over the same
period; and that of light industry, from 10.8 percent to
4.4 percent. The economic structure looks increasingly
like a raw materials appendix of the world division of
labor. Ukrainian enterprises turned out ill-equipped in
the struggle for their old traditional and new consumer
markets. And all the while they were losing their own,
domestic market. Estimates show that in 1990, 80 per-
cent of the retail turnover consisted of domestic output;
in 1994, it was less than 50 percent. There had appeared
the threat of Ukraine becoming a market for foreign
companies and cheap labor pool.

The industrial policy is geared to turn the structural
perestroika if not backward then at least sideways, so
as not to drift toward the “banana republics", but move
in the direction of the “young tigers" (and then, who
knows, some “economic miracle" might be worked).
There was no such notion previously, but now it is going
to set in, because Anatoliy Kinakh agreed to become
Vice Premier to handle precisely this department. As
for that which was, it is referred to unambiguously
as the economic reform, and it will remain under the
watchful eye of Victor Pynzenyk, still Vice Premier.

UKRAINE 5s

Only not the First but one of the Vice Premiers. Not
only industries, but even separate enterprises are now
divided between and included in the jurisdiction of the
two Vice Premiers. Those which Anatoliy Kinakh did
not want to control stayed under Victor Pynzenyk, to
atone for others’ sins.

Investments Paradise

Paradise is known to hold the door open for saints, for
all those that were the most dedicated believers, and
who suffered the worst because of their faithfulness. In
Ukraine, as in all the other former socialist countries,
workers of enterprises manufacturing consumer goods
formed the most ardent adherents of market economy
reforms. In Ukraine, they also suffered the worst,
because nowhere else had the leaders of independent
textiles labor unions and similar structures suffered
such losses, learning the hard way that the benefits of
market economy were preceded by practically complete
economic fiasco. In particular, they suffered so because
of their staggering dependence on foreign supplies of
raw materials and completing units.

The Program reads: “The principal trend (of the in-
dustrial policy - Yu. V.) will be the preferential de-
velopment of industries with quick capital turnovers,
including primarily the food and light industries", and
goes on to promise that, "In order to lessen the depen-
dence of the light industry on polyester raw materials
(threads and fibers) imported from Belarus and ‘remote
foreign countries’, 50,000 tons of which are required
every year, one of Ukraine’s chemical enterprises will
be reequipped to manufacture polyester. It is also en-
visaged to produce facilities capable of manufacturing
synthetic nitron fibers, 15,000 tonnes of which are re-
quired per annum. Solving these problems will yield an
economy effect of $187,000,000 a year. A comprehen-
sive program on the production of equipment for the
light industry till the year 2000 will be implemented,
providing for the development of new models and mas-
tering the serial output of 96 most important types of
basic equipment, along with six types of equipment for
the production of textile, knitted wear, sewing, leather
and textile fancy goods. This will allow to supply en-
terprises with domestically made equipment by 15-20
percent against the 2 percent of such equipment manu-
factured by Ukraine’s machine-builders.”

The Program also broaches the needs of textile manu-
facturers: “The textile industry is completely dependent
on imported cotton. At present studies are underway to
resume cotton-growing in Ukraine’s southern regions,
so as to supply the industry with domestic raw materi-
als. Cotton import could also be reduced by using cot-
ton in combination with cottonized flax fiber. Ukraine's

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56 UKRAINE

flax fiber resources produce over 80,000 tonnes a year,
whereas the enterprises in this industry handle only
30,000 tonnes of flax fiber. Processing flax at cotton-
spinning enterprises and its use in the manufacture of
competitive fabrics requires special equipment made in
France and Germany. In order to introduce modern tech-
nologies at cotton-spinning enterprises, efforts will be
made to receive hard currency credits worth $17 mil-
lion to purchase 10 production lines in 1995-96. This
will make it possible to detach some 10,000 t of cotton
a year, and economize more than $10,000 a year. Hard
currency credits will be returned by enterprises at the
expense of returns from export transactions." In gen-
eral, according to the Program, “work will begin (in the
light, textile and leather industries), aimed at attracting
foreign investments under specific business plans, worth
a total of $250,000,000," and export from the said indus-
tries will "increase almost twofold in 1995, amounting
to some $190,000,000. In order to enhance the export
potential, the government will increase the quotas of
textile export to CIS countries 1.5-2 times."

The Program further promises to attract bigger foreign
investments to the food industry, which will make it
possible to “restore the output of foodstuffs to the 1990
level over the next three years, by essentially improving
the efficiency of production." As for enterprises in
other industries, which had the nerve to offer their own
alternatives to the market economy way of development,
they will have to undergo much more complicated
metamorphoses. Before they can receive tangible sums
in US dollars, they will have to become entities worth
tangible sums in Russian rubles.

Industrial-Financial Group Purgatory

Maybe some prefer to call it "financial-industrial purga-
tory", in which case they ought to blame the Verkhovna
Rada, not the Cabinet. Otherwise the government as-
sumes full responsibility, declaring in the Program: "The
second principal guideline of the industrial policy is the
development of science-intensive industries, which in-
cludes modernization of mechanical engineering, metal-
lurgy, and chemistry.” It would be useless to try to find
out why the authors of Chapter 12 of the Program invari-
ably associate the notions "science-intensive" and "mod-
ernization” with the acronyms FPG [financial-industrial
groups] or PFG. A. Kinakh did not have much of a
choice. Therefore, the Program stakes mostly on coop-
eration with Russia and other countries, while declaring
the intention to develop Ukraine’s mining complex, cre-
ate a domestic raw materials base of non-ferrous met-
allurgy, develop the extraction of gold, rare-earth met-
als and precious stones, create a complete complex of
sugar-refining machines in 1996-97, which will allow to

FBIS-SOV-95-201
18 October 1995

stop importing them, renovate the tractor pool, launch
new sowing machines into serial production, increase
the output of buses, trolley buses, streetcars, automo-
biles, etc. In regard to metallurgy, the Program men-
tions the “establishment of joint production facilities by
metallurgical enterprises in CIS countries, to increase
the output of competitive products.” In mechanical engi-
neering, it envisages "reorganization of such branches as
agricultural machine-building, heavy mechanical engi-
neering, machine-tool construction, instrument-making;
in electrical engineering, the setting up of three hold-
ing companies and four financial-industrial groups."
In the chemical industry, it will be the "creation of
financial-industrial groups to unite the material and fi-
nancial resources of enterprises in Ukraine, the Rus-
sian Federation, and other countries... along the fol-
lowing lines: mineral fertilizer; light-sensitive materials;
magnetic data carriers; chemical fibers; production and
transportation of ammonia; chemical agents; glass-fiber-
reinforced plastics and glass fibers; tires and industrial
rubber products; synthetic detergents.”

Perhaps there is a point in what Reforms MPs Olek-
sandr Yelyashkevych and Fedir Sudnytsky are saying,
namely that the draft Law of Ukraine On Industrial-
Financial Groups in Ukraine, adopted by the Verkhovna
Rada in the second reading (September 14) is a “replace-
ment of the good, necessary idea of creating multina-
tional corporations and holding companies by an as-
sociation of dying monsters of the public sector, in
order to appropriate public property, and to receive a
most favored operating status, compared to the oth-
ers." Anyway, it is hardly likely that Russia cares so
much for those “dying monsters" of the Ukrainian in-
dustries, even if it could get hold of them, in their dy-
ing glory. Without doubt, Russia will not be averse
to making money using Russian-Ukrainian industrial-
financial/financial-industrial groups, provided this in no
way harms its own enterprises and banks being partners
of Ukrainian "zombies."

It would be an altogether different story if these
potential group partners, supposedly dying or already
dead, turned out alive and kicking. Russia would then
try to outsmart Ukraine, but then it would have to
take the risk of Ukraine doing the same. However,
there must be something for which both sides would
be willing to struggle, and this something requires
considerable efforts, so much so that far from all
contenders will measure up. Those that don’t will end
in the gutter, among them those that had no illusions
about their own capacities, even with help from the
chief industrial politician heading the Interdepartmental
Commission responsible for the formation of financial-
industrial groups. These failures, without hopes for

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

greenback and ruble subsidies, will be given one last
chance: karbovantsi. Alas, the rate of exchange will be
to no avail, because if America doesn’t give, and Russia
doesn’t buy, Ukraine will surely give nothing. It is like
stamping the final Checked [as received]. No use.

Vice Premier for Economic Reform, Simple as That

The Program has everything worded so neatly and
unambiguously that separate passages in the 130 pages
deserve to be quoted.

"The third principal guideline of the industrial policy
will be in the restructuring of unviable production
capacities (industries).” It is a beauty, because it is the
only statement mentioning some action in regard to such
unviable enterprises. The other three proposals are about
inaction: “The government will abandon the practice
of artificial and hopeless support of noncompetitive
enterprises." "Support of physical production volumes
of all types will not be among the basic tasks of the
industrial policy. Reducing the output of products which
are not and will not be in demand will make it possible
to detach resources and use them for more important
purposes.” Actually, the authors could have put it even
more laconically: “The government does not give a
damn about the rest of the enterprises." But perhaps
they could not choose between “does not give a damn"
and “could not care less."

This third guideline in the industrial policy must be
taken seriously. The government cannot afford even to
close down most of these unviable enterprises (including
gratuities on discharge, etc.) And so efforts will continue
to be made to encourage such hopeless enterprises to
close of their own accord, and their work force to
give notice before being served one. Here the main
stimulus has remained the workers’ abominably low
pay level (which becomes nil, compared to consumer
prices). On the other hand, the government cannot admit
that minimum wages are actually the living wage (as
the unions demand), because it would mean assuming
responsibility before 2.2 million working people on
“unpaid leaves", and | million working “short hours."

Actually, backing the miserable minimum pay standard
is not the only task which Victor Pynzenyk is willing
to tackle. And nor was it coincidental that the Vice
Premier for Economic Reform headed the Social Policy
Section at the All-Ukrainian Conference of Economists
(September 14-15). Addressing the conference, he once
again reminded those present of several ways in which
people unwilling to resign from hopeless enterprises
could be made to look for better jobs. To begin with, it
is the good old method of raising prices and tariffs for
fuel, housing and communal services, and city transport,
which (so the Program says) constitute 30-60 percent

UKRAINE $7

of their actual costs. Free rides will be canceled for
most categories of citizens previously entitled to this
privilege. Toward the end of 1995, housing-communal
prices will amount to some 60 percent of their actual
costs, and about 80 percent by the end of 1996.

In addition, the government will take even more radical
steps toward enterprises persistently refusing to close. In
view of drastic shortages of energy resources, in order
to secure central heating in the autumn-winter period,
enterprises found to be habitual defaulters in terms of
unpaid electricity and natural gas bills will be cut off
from supply lines. Try to picture a man willing to leave
a warm apartment to work in a frozen shop! Of course,
needs must when the devil drives, so before one knows
it, looking for daily bread will drive away all thoughts
of one’s good old factory.

Outside Three Circles

Actually, after laying down three principal guidelines
the government could have put the final dot. Instead,
it put a comma, singling out a special category of
activities "with strong regional concentration", “which
the country cannot abandon for fear of endangering
its independence." Few will have to be explained
that what is meant here is, primarily, the Military
Industrial Complex, and miners. Indeed, should workers
from military plants in Kharkov, Dnepropetrovsk and
Lvov, together with miners from Donetsk, Lugansk
and Chervonohrad gather in front of the Cabinet [of
Ministers] building in Kiev, even if under different
banners, hardly anyone on the government would be
eloquent enough to convince the communist adherents
that all evil in the country came from UNSO, and vice
versa.

Now such emergency situations will be the headache
of not only A. Kinakh, but also P. Lazarenko, recently
appointed first vice premier, and V. Yevtukhov, vice
premier for fuel and energy complex. “Conversion of
enterprises no longer of defense importance, as well as
creation and development of appropriate closed~ ycle
military enterprises” are referred to in the Program as
the “fourth important component of the industrial pol-
icy.” It is expected to “form viable and competitive civil
or mixed civil-military production structures, on the ba-
sis of military-oriented enterprises, adapted to market
development conditions.” Among the most promising
industries are listed aircraft, space rocket manufacture,
shipbuilding, as well as electronics, and last but not
least, microelectronics. The still effective defense enter-
prise are promised “measures aimed at expanding for-
eign clientele and searching for new nontraditional busi-
ness partners.”

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is prohibited without permission of the copyright owners.

58 UKRAINE

Together with the rest of the fuel-energy complex, the
coal industry is allocated a separate Chapter. The min-
ers are offered two variants of quick and very quick
changes. The first begins with the integration of cur-
rently operative production associations (something the
Coal Ministry is already busy with). After that, “pro-
posals concerning state-controlled joint-stock coal com-
panies will be prepared, based on an analysis of the
experience of integrated associations." The second vari-
ant (it was absent in the initial draft of the Program)
takes a short cut: "five state holding companies, two in
Donetsk Oblast, and three in Lugansk Oblast, Pavlohrad,
and Sokil", based on all coal mining and processing pro-
duction associations, plus two more holding companies
based on three mine construction integrated works. As
for the ancillary (servicing) subdivisions (enterprises)
they are to be made “completely independent, subse-
quently io be reorganized as joint stock companies, and
privatized." Both variants envisage discarding the sys-
tem of inner-branch redistribution of revenues between
profitable and unprofitable mines, and closing hopeless

enterprises.

Enterprises of the Military Industrial Complex and
coal mines are the only ones to be spared Pynzenyk’s
attention. However, it does not mean that they are
granted the VIP status. It is simply that military plants,
unlike enterprises in most other industries, operate
comparatively modern equipment, so it wouldn’t serve
the government to let them fall into decay and close
by themselves. Instead, they are to be encouraged to
adapt their capacities to the output of at least something
marketable. As for mines, they cannot be allowed to
close by themselves. They are either operated, even if
at small profit, or closed, spending huge budget sums

FBIS-SOV-95-201
18 October 1995

on it. Otherwise, the approach to these enterprises and
mines will be absolutely objective, no different from
the other sectors. The more so that Pavio Lazarenko,
former chairman of a kolkhoz, cannot but share the
corporate interests of the MIC [Ministry of Industry
and Conversion] enterprises, Vasyl Yevtukhov, former
director of the Ore Mining Equipment Plant in Kryvyy
Rih, has every right to consider himself a member of the
coal-and-energy lobby, Anatoliy Kinakh, ex-foreman
at the Okean Shipyard in Mykolayiv, is regarded as
a colleague by directors of Ukrainian enterprises, and
Victor Pynzenyk, former head of chair, Lvov University,
specialist in mechanical engineering quality control, is
as devoted an adherent of state economic sponsorship in
regard to all categories of citizens as Leonid Kuchma
was when running for presidency to save his beloved
Pivdenmash Plant.

Schedule Left Out of the Program

Structural policy of wages must directly reflect that in
the sphere of industrial output. Actually, it is underway.
By its recent decree the government returned to regu-
lating the consumption funds of enterprises (canceled
in February 1995). The Program explains this approach
by the fact that enterprises, using the right to indepen-
dently determine their wage funds without in any way
restricting its growth, and the right to refer all expenses
involved in the payment of basic and additional wages
to product costs, “began to step up expenditures on
wages without adequately increasing production output
and revenue receipt, securing their growth by increas-
ing the prices of their products.” In fact, prices rose the
highest at monopoly enterprises.

Average monthly income Level of prices (percent) in the | Average monthly take-home

(thousand karbovantsi) of Ist quarter of 1995 revenues (percent of workers

workers and office employees and office employees) in Ist

quarter of 1995

1995 Ist qu. 4618 100 100
2nd qu. 6251 125 108
3rd qu. 8215 146 122
4th qu. 11056 165 145
1996 Ist qu. 11200 178 136
2nd qu. 11426 194 128
3rd qu. 11772 204 125
4th qu. 12360 211 12

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

Such wage abuses, which the government intends to
correct by regulating consumption funds, are impres-
sive indeed. However, there is yet another abuse, char-
acteristic of all industries: a more than two-fold drop
in the share wages in product costs. Several days ago,
V. Hureyev declared that this share will be raised to
34.4 percent in 1995. Earlier, Leonid Kuchma stressed
on several occasions that it was necessary to stimulate
highly productive labor, without which it will be impos-
sible to uphold even the most promising industries. As
for the Program, it seems content with offering a chart
of prognosticated average monthly incomes of workers
and office employees, as per quarters of 1995-96, with-
out even mentioning planned real incomes - i.e., rev-
enues calculated with regard to price increment rates.

This chart is based on actual and planned incomes and
inflation indices. It is meant to show exactly why the
government had to assume that little "silent stance:"
In 1995, the take-home wages of workers and office
employees were on a steady upward curve. In the last
quarter of this year the Cabinet intends to show a further
sharp increment - 1.5 times, if all goes well - compared
to the Ist quarter. Should the New Year come, however,
it plans to practically freeze them, so that over the first
six months these take-home revenues will be back to the
current level. In the 4th quarter of 1996 no such upsurge
as in the 4th quarter of 1995 is envisaged. In other
words, the reason is not that people will consume more
food and energy in winter. Seasonal factors aside, the
only reason for the government’s sudden willingness tc
substantially increase average take-home wages is this:
according to Kuchma’s statement (mentioned above),
enterprises will have to "count themselves first, second,
third, fourth..." On the other hand, judging enterprises
by the poor performance of their work force would mean
risking too many mistakes. But a clean experiment calls
for sacrifice...

Official Says National Guards May Be Disbanded

LD1710184195 Moscow INTERFAX in English
1611 GMT 17 Oct 95

{(FBIS Transcribed Text] Kiev, October 17 (Interfax
- Ukraine) - Ukraine’s National Guards have fulfilled
the tasks set to them and can be disbanded with their
functions to be turned over to the Defence Ministry,
the Ministry of the Interior, the Security Service and
Civic Defence, “IF-U" has been told by Ukrainian MP
Valentyn Nedryhailo, former first deputy minister of the
interior.

In his view, as member of the parliamentary committee
for justice, law and order, the Presidential Decree of
October 6, 1995, on re-subordination of the National

UKRAINE 59

Guards '« the President "shall not touch off a political
confror’asen between the branches of power."

Ukraine's Verkhovna Rada (Supreme Council] is plan-
ning to examine the question of the presidential decree
on October 19. At the meeting on Monday [17 Octo-
ber], the Presidium of the Parliament proposed that the
deputies veto that decree, since, by issuing it, the Pres-
ident, as the members of the Presidium feel, has ex-
ceeded his powers and acted in contravention of the
laws in effect.

Under the law of the National Guards adopted in
October 1991, the Ukrainian President is entitled to
decide upon the structure, strength and stationing of the
National Guards’ units, while the Cabinet is in charge
of their material and technical supply, V. Nedryhailo
recalled. "This, as a matter of fact, implied operational
control of the National Guards", the MP emphasized.

In his view, the forming of the National Guards on the
basis of the Interior Ministry "has considerably weak-
ened the Ministry, especially as regards the discharge
of the functions imparted to the home troops”.

A majority of members of the parliamentary committee
for jaw and order, V. Nedryhailo said, share his view
that an end should be put to the duplication by the
National Guards of other law-enforcement bodies, hence
the National Guards’ units shall be places under the
Interior Ministry, the Defence Ministry and Ukraine’s
Security Service.

European Experts Examine Problems of Ukrainian
Churches

LD1710164495 Moscow INTERFAX in English
1352 GMT 17 Oct 95

{[FBIS Transcribed Text] KIEV, Oct 17 (Interfax -
Ukraine) — The Ukrainian state shall turn over religious
facilities to churches as their property, said Metropoli-
tan Filaret, Locum Tenens of the Ukrainian Orthodox
Church - Kiev Patriarchate (UOC-KP). He was address-
ing a meeting with the delegation of the Committee for
Legal Issues and Human Rights of the Parliamentary
Assembly of the Council of Europe (PACE).

In his words, “the church property which was taken
away by the former Communist regime is today returned
only for use, but not as property of churches”.

Metropolitan Filaret believes that "it is necessary to pass
in Ukraine a special law sealing the right of ownership
for religious organizations”.

The leaders of the Ukrainian religious confessions, who
attended the meeting, touched upon other problems,

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is prohibited without permission of the copyright owners.

6 UKRAINE

which, in their view, hamper normal activities of
churches.

According to Yakov Bleich, the Chief Rabbi of Kiev
and Ukraine, the high taxes and rates of pay for the
use of premises and utilities are in the way of a normal
revival of spiritual values in Ukraine.

Yuriy Boyko, Archpriest of the Ukrainian Autocefallous
Orthodox Church said that "the state is as before trying
to influence through its idelogical structures church life
in our country”.

In his view, "it is necessary to liquidate immediately the
government structures administering religious organiza-
tions, and turn their legal functions to Ukraine’s Justice
Ministry".

Vasiliy Sereda [name as received], deputy minister
for nationalities and migration noted that the “rapid
revival of religious organizations prevents the state from
giving them adequate assistance because of a shortage of
funds". Yet, the Deputy Minister emphasized, “the state
wishes to give equal assistance to all the 70 religions in
Ukraine".

"The Ukrainian leadership is very much concerned over
the sharp politicizing of religious life in the country
and interference of political forces in the activities of
religious organizations”.

The 25-men PACE delegation arrived in Ukraine to
analyze a number of laws for their correspondence
to international standards before the final decision is
passed on Ukraine’s admission to the Council of Europe.

Explosion at Donetsk Stadium Staged by
‘Professionals’

LD1710133195 Moscow ITAR-TASS in English
1207 GMT 17 Oct 95

[By Anatoliy Gordeyev}

[FBIS Transcribed Text} DONETSK, October 17 (Itar-
Tass) — The explosion that shook the Shakhtar stadium
in Donetsk, was staged by top-class professionals, police
colonel Arkadiy Boldovskiy from the Donetsk Interior
Department said. According to Boldovskiy, local and
Kiev specialists came to this conclusion on the basis
of results of the examination right at the scene of the
crime. The explosive device was laid so carefully that
the explosion affected only those against whom it was
directed, specifically, Akhat Bragin, director-general of
the trade firm Lux, one of the biggest in Donetsk, and
president of the Shakhtar football club, as well as his
bodyguards. Five of them were torn to pieces, and the
sixth one died of numerous wounds and injuries on
the way to a hospital. A woman from the stadium's

FBIS-SOV-95-201
18 October 1995

personnel, who happened to be in the zone of explosion,
was thrown aside by a shock wave, was gravely injured
and is now at an intensive-care unit of the regional
Kalinin Hospital.

The pub’. prosecutor's office of the city instituted crim-
inal proceedings on the incident. The case is being in-
vestigated. Senior officials from the Ukrainian Interior
Ministry and, according to the unconfirmed informa-
tion, from the security service, came to Donetsk. Rep-
resentatives of the law enforcement agencies are sure
already that the crime has nothing to do with football.
Yevgeniy Lemeshko, commissar of the match of the re-
publican championship between Shakhtar from Donetsk
and Tavriya from Simferopol, that was cancelled after
the explosion, said as much on Sunday in his report to
the Ukrainian Football Federation.

The Ukrainian Football Federation in Donetsk ex-
pressed condolences to the families of the deceased, a
spokesman for the Shakhtar football club told Tass.

Economic Issues

Minister Discusses Foreign Trade Policy

WS1710113395 Kiev KIYEVSKIYE VEDOMOSTI
in Russian 7 Oct 95 p6

[Interview with Serhiy Osyka, minister of foreign eco-
nomic relations and trade, by Petro Serhiyenko; place
and date not given: “New Priorities of Ukraine's Foreign
Trade: First Russia, Then Europe" — first paragraph is
KIYEVSKIYE VEDOMOSTI introduction]

(FBIS Translated Text] At the end of September, the
Ukrainian Cabinet of Ministers submitted its action
plan to the Supreme Council for consideration. It is
thus interesting to listen to, as the saying goes, first-
hand opinion — that of the Ukrainian minister of
foreign economic relations and trade, Serhiy Osyka.

[Osyka] According to the president's program, the
Strategic goal of foreign trade policy is to balance
imports and exports by the end of 1996. This task will
be resolved by achieving a positive balance of foreign
payments by increasing exports and simultaneously
reducing imports.

[Serhiyenko] Are there currently preconditions to ac-
complish this task in Ukraine?

{Osyka] During the process of liberalizing foreign trade,
a swift transition from completely non-tariff regulations
to a system of foreign economic regulations was carried
out with the help of purely economic levers. Given the
evident decline in domestic production, we achieved
an increase in the volume of exports, opened new

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

markets, and managed to expand the circle of exporters
and reduce the number of domestic brokers in foreign
economic operations. True, a significant portion of our
export earnings is still not returning from abroad, the
effectiveness of exports is falling, and a tendency to
conclude barter deals is growing. I personally consider
this to be a negative consequence of the excessively
rapid liberalization of the export system.

Unfortunately, the Ukrainian economy still maintains
quite a high level of import-intensiveness. This indicator
exceeds the $7-billion mark as regards certain sorts
of energy sources and raw materials alone (except for
Kazakh nonferrous metals and Middle Asian cotton).
If deliveries of essential imports are insufficient, our
export capabilities will proportionally decrease.

Proceeding from this, we must take a number of
measures in two directions. The first direction is to
stimulate an increase in exports. This includes a long-
term program for targeted assistance for exporters, as
well as medium-term programs for assisting producers
of goods and technologies that can replace imports,
which we are going to draft by the end of this year.

Along with the program for financial assistance, it is
also essential to draft legislative acts aimed at decreas-
ing the taxation burden on producers-importers on the
one hand, and at reducing exemptions and the unjustified
number of current restrictions and prohibitions expand-
ing the taxation basis and, as a result, reducing budget
deficit, on the other hand. We also consider it to be quite
important to set up special non-budgetary funds to sup-
port export operations. They would grant commercial
loans to the most efficient exporters.

The second direction is to conduct a flexible import
policy based on a system of tariff regulations. The
purpose of this is to let goods enter the market while
proceeding from the principle of protecting domestic
producers. We are also going to apply unilateral import
restrictions, increase duties on certain products, and
take other measures not prohibited by the GATT/WTO

program.

[Serhiyenko] What will be the priorities of Ukraine’s
foreign economic development?

[Osyka] The economic ties with CIS countries, whose
share in Ukraine’s trade exceeds 65 percent (in terms of
exports — over 55 percent, and in terms of imports —
approximately 75 percent), will play a dominating role
for Ukraine. Ukraine, however, sees the functions of
CIS bodies as coordinating ones, and not supranational.
The government believes that it is more advisable to
conduct economic relations within the framework of the
CIS at the interstate level. This can be confirmed by our

UKRAINE 61

country’s associate membership in the CIS Economic
Council.

In the area of foreign economic activities, our relations
with the Russian Federation remain a priority, and this
particularly refers to the establishment of a free trade
system. Unfortunately, the free trade agreement signed
between Ukraine and Russia on 26 June 1993 offers
us virtually no preferences. Just the opposite, duties,
the VAT (20 percent), and a special tax (3 percent)
have been levied on the Russian Federation’s exports to
Ukraine. As a result, up to 80 percent of raw materials
are shipped to Ukraine at prices 50 percent — and in the
case of oil, 70 percent — higher than Russia’s domestic
prices. The result of this policy is an importation of
inflation from Russia, meaning that our products are
becoming uncompetitive on the Russian market. The
introduction of a free trade system, according to a long-
term plan that envisions the signing of a package of
intergovernmental agreements in the course of the next
two-four years, may improve the situation.

The EU market is also a priority of our foreign trade
policy. The primary task is to implement the temporary
trade agreement we have already concluded. It is
necessary to take measures for improving Ukrainian
goods’ access to European markets. This relates to such
exports as nuclear materials, textiles, mineral fertilizers,
and metallurgical and agricultural products. Ukraine’s
integration with the EU requires that we set one excise
tax and eliminate the differences between the lists of
restricted imports and exports in Ukraine and the EU.

The government is going to contribute to the deepening
of trade and economic relations with Near and Middle
East countries as well.

[Serhiyenko] Which of our domestic problems repre-
sents the largest obstacle to the implementation of the
plan?

[Osyka] First of all, it is the inadequacy between the
pace of liberalization of foreign economic operations
and the pace and scale of privatization of companies
producing export goods. This does not allow us to bal-
ance our foreign trade, and at the current stage, requires
more efficient management of state-owned enterprises,
including harsh sanctions for violating economic legis-
lation.

In light of our excessively open import policy, the
government intends to take measures concerning both
tariff and non-tariff regulations.

We have developed a system of numerated customs
labels which will soon be introduced, in addition to
the excise stamp on imported alcohol and tobacco
products. According to preliminary estimates, if the

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is prohibited without permission of the copyright owners.

62 UKRAINE

volume of imports of these products is maintained
at the current level, the budget revenues resulting
from the introduction of excise taxes will amount to
approximately 12 trillion karbovantsi. Last year, imports
of these goods to Ukraine totalled around $645 million,
which represented more than 5 percent of total trade.

To protect domestic industry, the government will
present the draft Ukrainian Law "On Protection Against
Imports That Represent Dumping Practices by Other
Countries, Customs Unions, or Economic Groupings."

{Serhiyenko] How much attention does your ministry
attach to the issue of returning hard currency earnings?
What is your stance on the current hard currency
legislation?

[Osyka] Hard currency earnings coming from exports
do not return to the country for the following reasons:
importer’s insolvency or refusal to return the earnings;
deliberate failure by residents to return hard currency;
and, adding hard currency earnings to the property or
authorized capital of joint ventures set up abroad. This
can be confirmed by statements on hard currency as-
sets remaining outside Ukraine’s borders. The foreign
hard currency assets of 82.3 percent of economic entities
that have presented such statements amount to US$2.3
billion, 202 million German marks, and 1,079 billion
rubles. But this money should have been working for
the Ukrainian economy! This is why standard payment
conditions for foreign economic agreements (contracts)
and standard forms attached to foreign economic agree-
ments envisioning payments in hard currency have been
introduced. We also hope that the Presidential Edict
"On a System of Obligatory Insurance on Foreign Eco-
nomic Operations," which has recently been drafted by
the Cabinet of Ministers, will also help us resolve this
problem.

The issue of transferring or investing hard currency
abroad as contribution to the authorized capital of joint
ventures set up abroad remains open. On the one hand,
this implies concealing hard currency, and on the other
hand, this is export of business capital and establishment
of branches and sister companies abroad. This makes
it possible for Ukrainian companies to avoid customs
barriers by expanding markets for their own products in
countries in which their branches are established.

I think the issue of returning hard currency must not
be resolved merely by imposing control and making
someone responsible without taking into account the
objective economic and legal situation. The excessive
taxes, the lack of an efficient banking system and
guaranteed right to possess hard currency, the great
number of economically unfounded restrictions, the bad
climate for investment, and the constant changes in the

FBIS-SOV-95-201
18 October 1995

investment legislation that do not take into account the
interests of investors themselves bring about the escape
of capital from Ukraine for purely economic reasons.

[Serhiyenko] Will the negative tendency to dominate
foreign economic operations by barter deals be over-
come?

[Osyka] In 1994 and early 1995, the most competitive
goods were objects of barter operations. As a result of
the disruption of price parity in many barter deals, the
effectiveness of trade dramatically declined.

The first step toward state regulation of barter trade was
the Presidential Edict "On Regulating Barter Operations
in the Area of Foreign Economic Activities." An im-
provement has already been observed since the edict
was adopted. Thus, the share of barter deals as of the
end of March was 41.5 percent, as of the end April —
38.9 percent, and in May — 36.8 percent, which raises
hopes that the outflow of domestic capital in the form
of goods will be reduced.

However, given that a mn jority of our products are
uncompetitive at the world market, our businessmen will
continue to use barter trade for a certain period of time.

The government is therefore going to draft a package of
normative acts which would fully secure state regulation
over barter operations. This, in turn, will positively
affect the expansion of the hard currency market,
strengthen the national currency, and reduce the budget
deficit.

[Serhiyenko] Is the importance of Ukraine’s member-
ship in GATT/WTO not exaggerated compared with
membership in other international economic organiza-
tions?

[Osyka] While the IMF and the World Bank played an
important role at the initial stage of reforms, the mem-
bership in GATT/WTO is one of the most important
long-term conditions for stable and predictable devel-
opment. Ukraine’s accession to the GATT/WTO sys-
tem will ensure our economic security, success of eco-
nomic reforms, and our attractiveness for domestic and
foreign businessmen. This also means guaranteed ac-
cess to world markets for goods, labor, and services
through corresponding rights to protect our interests in
world markets, as well as positive trade and payment
balances, a lower budget deficit, more opportunities to
attract foreign investors, and the protection of domestic
producers’ interests.

Thanks to the common harmonization of the foreign
economic and investment system, an indirect effect of
foreign investments alone may amount to the $10 billion
Ukraine needs to carry out structural transformations.

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FBIS-SOV-95-201
18 October 1995

[Serhiyenko] What will be the first steps in the process
of Ukraine joining the GATT/WTO?

[Osyka] Talks on a mutual access to commodity mar-
kets, that is, negotiations on tariffs and concessions con-
cerning tariffs, are supposed to be held in November
1995. We have thus decided to develop a concept of
transforming Ukraine’s tariff system during the period
of 1996-2005 for talks with the GATT/WTO, prepare
a timetable for concessions corresponding with the re-
quirements and principles of the Uruguay Round of
GATT talks for the period up to the year 2010, and draft
legislative acts on issues concerning the jurisdiction of
the GATT/WTO system, including a procedure for ex-
amining these drafts’ compliance with GATT norms and
principles.

The national economy will receive qualitatively new
systems of customs controls and tariff and non-tariff
regulations, as well as systems of export and import li-
censes, standards, identification of the origin of goods,
Statistics, subsidies for branches of the national econ-
omy, and protection of domestic producers (particularly
those of textiles, steel, agricultural products, and the avi-
ation industry’s products) against losses that may result
from imports.

[Serhiyenko] How are our relations with the most devel-
oped countries, primarily with G-7 countries, expected
to develop?

[Osyka] These countries are potentially the most im-
portant source of new technologies and high-technology

UKRAINE 63

products, as well as the largest source of foreign invest-
ment. The priority spheres of cooperation with them are
the agroindustrial complex, power engineering, telecom-
munication, the space industry, conversion of the de-
fense industry, and the health care sector.

In light of the need to find alternative energy sources
and diversify imports, the government will contribute
to the deepening of trade and economic relations with
Near and Middle East countries. Countries from this
region have one of the largest free capital in the world,
and represent a large arms market. The establishment
of a treaty basis, which would make it possible to
develop trade and economic relations with countries
from this region, is one of the most important tasks for
the government.

The potential market of industrialized: Asian countries
is very important to sell Ukrainian traditional industrial
products (rolled metal, heavy machines, intermediate-
technology machine-tools, mineral fertilizers, and other
chemical products) and receive relatively inexpensive,
though high-technology products.

The markets of South Africa and certain African and
Latin American « ountries are particularly important to
ensure the development of Ukraine’s national economy,
all the more so since for many years Ukraine has
exported goods to these countries.

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F3BIS-SOV-95-201

ook WESTERN REGION 18 October 1995

Belarus inated 62 candidates, and as Leon Barshchewski said,
Hryb Asks Court To Check Legality of the BNF’s activities in the majority of electoral districts
Government Changes are coordinated with other democratic parties. After the

LD1710202295 Moscow INTERFAX in English
1852 GMT 17 Oct 95

{[FBIS Transcribed Text] MINSK, Oct 17 (Interfax-
West) — Belarusian Parliamentary Chairman Mechys-
law Hryb asked the republic’s Constitutional Court to
check the legality of a presidential decree on govern-
ment reshuffles Tuesday. The court had already accepted
five presidential decrees for consideration.

President Alyaksandr Lukashenka has recently ap-
pointed two deputy prime ministers, a defense minister
and an acting interior minister to replace the ones he
sacked.

Hryb told a news conference in Minsk Tuesday that
such reshuffles must have been authorized by the
parliament under the Belarusian Constitution. However,
Lukashenka had not requested Supreme Soviet approval
of his candidates, he said.

The chairman of the parliamentary commission for
legislation, Dmitriy Bulakhov, told the same news
conference that his commission was preparing another
request to the Constitutional Court on a number of other
presidential decrees.

Commenting on the referendum on Russian-Belarusian
political and economic integration initiated by Russia's
Federation Council, Hryb said that this referendum runs
counter to the Belarusian Constitution. Such rash actions
which do not consider the other side’s opinion may
only lead to negative consequences for both nations,
he added.

Asked about the Belarusian parliament’s plan of action,
Hryb said that the Supreme Soviet will resume plenary
meetings when Prime Minister Mikhail Chyhir and
Finance Minister Pavel Dik present a draft budget for
1996 and report on the performance of this year’s
budget.

National Front Protests Banning of Newspapers

WS1710120195 Minsk BTK Television Network
in Belarusian 1900 GMT 14 Oct 95

[Video report by A. Lukashevich]

[FBIS Translated Text] Sessions of the Belarusian Popu-
lar Front [BNF] Council and of the BNF Party were held
in Minsk today. The meeting was closed for journalists
given that internal policy issues were discussed. As we
have found out, the issues of the elections and of fielding
candidates for Supreme Soviet deputies were addressed
during the first half of the session. The BNF Party nom-

recess, a statement was drafted protesting the banning
of such publications as NARODNAYA VOLYA, BE-
LARUSSKAYA DELOVAYA GAZETA, and IMYA.

Economics Minister Badzey Views Situation

WS1710153295 Minsk SEM DNEY in Russian
14 Oct 95 pp 1,2

{Interview with Economics Minister Heorhiy Badzey,
by Anzhela Zhylach; place and date not given: "Nobody
Will Maintain Belarus" — first paragraph is SEM
DNEY introduction]

(FBIS Translated Text] Belarus is quagmired in debts,
its hard currency “eaten away,” economic reforms are
too slow — these are statements that have been made
by some U.S. and Polish economists studying processes
that are now under way in CIS countries, including
Belarus. How justified are these statements and what is
the real condition of the Belarusian economy? The SEM
DNEY correspondent directed these and some other
questions to Belarusian Economics Minister Heorhiy
Badzey.

[Badzey} Although I would not like to give you an ex-
plicit answer, the economic situation is complicated...
On the one hand — and this has been noted by experts
— the economy has reached a certain degree of stabil-
ity at the macroeconomic level, which is very important
for the Republic. This allows economic entities and en-
trepreneurs to feel more confident, predict their actions,
and work on projects connected with production. I can-
not help but note the rapidiy decreasing pace of infla-
tion. It was 3.8 percent this September despite the fact
that forecasts made at the beginning of this year were
pretty pessimistic. It was expected that inflation would
reach 40 percent, or even more, by the end of this year.
Also important for our economy is the stability of the
Belarusian ruble — it may be even too stable! After all,
when the ruble was very shaky, no one needed it. Now,
however, an opposite thing is happening — everyone
reckons with this currency, asking themselves where it
can be earned and how it can be spent. Considering all
this, one can say that the overall economic situation is
becoming more favorable.

On the other hand, industrial and agricultural production
is continuing to decline. The Republic is [sing its
traditional markets on which the products manufactured
by Belarusian enterprises used to be widely sold. A
good example is the Minsk Tractor Plant. This enterprise
was built based on the needs of a large state. While
practically all former Soviet republics needed tractors

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FBIS-SOV-95-201
18 October 1995

produced at this plant in the past, even waiting in line
to buy them, we are now faced with a totally different
situation — demand for our tractors has dramatically
fallen. Confronted with such a reality, enterprises surely
find it very difficult to work as they did in the past,
without problems. Consequently, they are faced with
the need to retool their productions to turn out different
and more competitive kinds of products. But this
requires funds and investments, and not just them. The
enterprises need new specialists who would make new
and creative decisions.

[Zhylach] But another reason why production brings no
profits for our enterprises today is that most of their
sales income is decimated by taxes. Besides, they have
to make payments to the budget, suppliers...

[Badzey] We have already prepared a new draft law on
taxes. It is planned that it will be activated in 1997.
We have also prepared changes intended to gradually
decrease tax brackets from 50 percent to 44 percent
by the year 2000. It is, however, a matter of not only
taxes but also enterprises themselves, particularly when
it comes to the sphere of production. The Minsk Re-
frigerator Plant and the “Integral” Production Amalga-
mation [manufacturing electronic equipment] are main-
taining their production at a high level. These enterprises
are oriented toward both the domestic and foreign mar-
kets, earning money and making timely payments to
the state budget. But if you just sit around and wait for
the tax system, or something else, to change, without
undertaking any active and resolute measures, you will
surely get nowhere, particularly in the market economy.
All states in the world put major emphasis on produc-
tion. But taxes were and will always be necessary.

[Zhylach] How much attention did the new Program of
the Social and Economic Development of Belarus by the
Year 2000 attach to enterprises? What are the priority
development directions that it specified?

[Badzey] This program sort of picks up where the "Pro-
gram of Urgent Measures To Deliver the Belarusian Re-
public From the Crisis" left off. This document is also
known as the anticrisis program, devised in 1994. A dis-
tinctive feature of this new program is that it has been
developed in a more detailed way. It reflects and projects
a long-term development of economic processes in the
Republic related to the activities of enterprises and in-
dustry in general and state reconstruction, curtailment
of budget expenditures, taxes, credit and financial poli-
cies, privatization, stopping the decline in production,
and support for private initiative in particular.

In compliance with this program, the non-state eco-
nomic sector will represent about 50 percent of the
national economy in the year 2000. By 1997, we are

WESTERN REGION 65

planning to complete the certificate privatization and
transform enterprises operating in the light, food, and
wood-processing industries into joint-stock companies.
Of course, we also considerthe current economic devel-
opment priorities: food, exports, investments. It stands
to reason that a lot will depend on those who will im-
plement projects in the above industries and the Min-
istry of Economy in the first place. But it is too early
to talk about the program's implementation, as it has
so far only been approved at the Cabinet of Ministers
collegium, and it should be finally adopted by the pres-
ident.

{Zhylach} Belarus has accumulated considerable debts.
Its debt to Russia’s "Gazprom" alone amounts to $70
million — a sum that sooner or later will have to be
repaid...

{[Badzey] One way or another, we will repay all of our
debts — by earning or taking credits from someone.
Such practices are only too natural and applied through-
out the world. No state has ever gone bankrupt because
it borrowed a reasonable amount of money. Belarus is
the last state that is threatened by this. Such fears are
absolutely ungrounded. Speaking about commitments to
Russia — concerning oil supplies, for example — Be-
larus always settles payments on time. Things are worse
when it comes to gas supplies. But in this sphere, too, we
do better than Ukrainian and Russian debtors. We cover
about 90 percent of our payments, while they cover only
40 percent.

Speaking about foreign credits in general, especially
those for enterprises, the government is planning to
introduce some changes here that are warranted by
time and intended to improve the mechanism of their
approval and timely repayment. In the future, it will be
economic entities themselves which will have to repay
credits they borrowed. It is possible that repayment of
such credits will be guaranteed by the state, but the
enterprises will assume most of the risk...

[Zhylach] Many economists pin great hopes on privati-
zation, which is one of the factors determining the coun-
try’s economic well- being. What do you think about
this.

{[Badzey] From the very beginning, our country did not
conduct it correctly and systematically. This particularly
applies to the state property. The process of its destatiza-
tion was not regulated clearly enough. Today we need to
adopt a completely different approach, even though we
had certain achievements in the past, too. The current
practice of auctioning off facilities selected for priva-
tization is still acceptable. Auctions are necessary first
of all to attract investors. We have long sought to find
an owner — the owner who would put his money in a

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is prohibited without permission of the copyright owners

66 WESTERN REGION

privatized enterprise and make this capital "work" for
the future.

[Zhylach}] Is there a visible correlation between the
increasing dollar exchange rate and the inflation rate?
Is it possible that inflation will again significantly jump
toward the end of this year?

{Badzey] There is no direct correlation between the
dollar and inflation rates. But they are related to some
extent. As for the rising inflation rate, I can positively
State that this will not happen. I can make another
absolute prediction: Inflation may even go down.

{Zhylach] Economic reforms are vitally important and
warranted by time. What if at some point Belarus slows
their pace, taking a waffling position? What will happen
to the national economy?

[Badzey] In this case, Belarus will face bleak prospects,
worst of which are pauperization and declining stan-
dards of living. Should this happen, no one will be will-
ing to maintain Belarus. To head off such an outcome,
every individual should care about the well-being of his
country. Nobody should count on charity from anywhere
or beg the state for different things. We must work, be-
Cause it is not only about reforms, but also about people
who implement them.

Moldova

Ministry Denies NATO Aircraft Landed at Military
Base

AU1810081895 Chisinau INFOTAG in English
1930 GMT 13 Oct 95

{(FBIS Transcribed Text] Chisinau, October 13 (INFO-
TAG) — The Moldovan Ministry of Defence has re-
futed rumours that NATO aircraft had landed at the
military airdrome in Marculesti. These rumours are be-
ing actively spread by Tiraspol. INFOTAG correspon-
dent was informed in the Dniester administration that
NATO’s 3 cargo planes and several jet fighters had
landed in Marculesti.

"No foreign aircraft landed at the republic’s main mili-
tary airdrome, and no such flights were even planned,"
the Moldovan Defence Ministry told INFOTAG.

Such rumours could appear due to the current visit to
Moldova of Major General Gunnar Lange, Director of
the Partnership for Peace Coordination Cell, a ministry
Official said.

“But the NATO General arrived in Chisinau with a
regular international passenger flight, and the rumours
coud have appeared because the Tiraspol administration
believes Moldova is seeking to join NATO. Let me
remind once again that Moldova’s cooperation with

FBIS-SOV-95-201
18 October 1995

NATO is restricted only to the Partnership for Peace
programme, which does not yet mean we are already in
NATO," a high-ranked ministry official said.

Dniester Minister Calls Arms-Sales Story ‘Lie’

AU1810082395 Chisinau INFOTAG in English
1930 GMT 13 Oct 95

{[FBIS Transcribed Text] Chisinau, October 13 (INFO-
TAG) — The defence minister of the self-proclaimed
Dniester Republic, Lieutenant General Stanislav
Khazheyev, has refuted information about his selling
arms.

Last Saturday [7 October], the Russian television's
programme "Top secret" announced that the defence
minister was trading weapons overtly.

“This is a monstrous lie, an information made to order,
and aimed at undermining Dniester’s image and at
liquidating the republic as such. To export arms from
Dniester one has to be not just an idiot, but a full idiot,"
Khazheyev stated over the Dniester radio.

The minister has explained that the contract with
an Odessa-based company, mentioned by the Russian
television, was concluded not for sales but for the
purchase of weapons and munition for Dniester special-
purpose army units. Tiraspol purchased from Odessa
carbines, pistols, paratroopers’ knives and helmets, and
other special-purpose items.

He also refuted the Russian TV’s information that the
ministry received 100 vehicles and 7 army personnel
carriers from the Dniester-deployed Russian troops.

"I hereby plead with full responsibility that I have never
received even a single rotten nail from the 14th Army.
And, most probably, will not receive anything in the
observable future,” the General stated.

Dniester’s Maracuta Fears Consequences of Labor
Unrest

AU1710182195 Chisinau BASAPRESS in English
1930 GMT 16 Oct 95

{FBIS Transcribed Text] Chisinau 16/10/1995 (BASA-
press) — Tiraspol thinks the anti-governmental protest
actions on the right bank of the Dniester may affect
the process of negotiations regarding the settlement
of the Dniester conflict. Grigore Maracuta, speaker of
the Supreme Soviet of the self-proclaimed Dniester
Republic, told BASA-press that "Moldova like any other
State may have domestic problems, but any protest
action will influence negatively on the talks." In his
opinion, a possible dismissal of Premier Sangheli’s
government might complicate the talks, because there is

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

some cooperation links with this government. Another
government will have to start everything from the very
beginning. He stated that “the present government will
find a possibility to satisfy the economic demands of
the strikers."

Referring to the economic situation in Dniester, he did
not exclude similar protest actions here. “All the more

WESTERN REGION 67

so as there are some forces which would like to seize
the opportunity of the complicated economic situation
in Dniester before the elections in the Supreme Soviet,”
Maracuta said. At the same time he stressed that “the
present situation in Dniester is stabilizing and a possible
economic take-off is not far away.”

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is prohibited without permission of the copyright owners

CENTRAL ASIA

Kazakhstan

Washington Talks Mark Renewed Cooperation
Commitment

MM1610132095 Moscow KRASNAYA ZVEZDA
in Russian 14 Oct 95 p2

[Report by Anatoliy Ladin: “United States Promises
Additional Aid to Kazakhstan")

(FBIS Translated Text] The results of the latest session
of the joint Kazakhstani-U.S. committee in Washing-
ton indicate the sides’ intention of continuing their co-
operation in a number of spheres. Thus, contacts will
become closer in strengthening the mandate of the Nu-
clear Nonproliferation Treaty, in the policy of security,
in defense-industry conversion, and in the control of nu-
clear materials in Kazakhstan. Acknowledging the im-
portance of Almaty’s refusal to have nuclear weapons,
Washington reaffirmed its commitment to give Kaza-
khstan additional aid in 1996 "to strengthen security."

The United States and Kazakhstan have decided to con-
duct joint exercises in eliminating the aftermath of nat-
ural disasters within the framework of the “Partner-
ship for Peace" program. Kazakhstani Defense Minis-
ter Sagadat Nurmagambetov is scheduled to visit the
United States this November.

President Appoints Kasymov as New Defense
Minister

LD1610153695 Moscow ITAR-TASS World Service
in Russian 1506 GMT 16 Oct 95

(FBIS Translated Text] Almaty, 16 Oct (ITAR-TASS)
— Kazakh President Nursultan Nazarbayev has ap-
pointed General Alibek Kasymov, 41 years old, as the
new defense minister of the Republic of Kazakhsian.
Earlier, he worked as the first deputy head of the mil-
itary department as head of the General Staff of the
Kazakh Armed Forces.

The rank of general was conferred this year. Kasymov
graduated from the Frunze Military Academy, served in
the military districts in the Baltics and Caucasus and,
since 1992, he has been serving in the Kazakh Army.

The previous minister, General Saghadat Nurmagham-
betov, a hero of the Soviet Union and of Kazakhstan,
who has turned 70, has become a presidential adviser.

‘Gloomy’ Outlook for Radioactive Waste Disposal

LD1710123895 Almaty KARAVAN-BLITZ in Russian
12 Oct 95 p2

(FBIS Translated Text} Almaty — Many enterprises
(about 120, to be precise) work with radioactive sources

FBIS-SOV-95-201
18 October 1995

on the territory of our capital. These are radioisotope
devices, gamma-directoscopes, and very powerful irra-
diation installations. Upon expiry of its period of use,
each device is supposed to be buried in a special burial
place or at radioactive waste storage sites.

As of today, there is not a single special site for burying
radioactive waste in our republic. At ihe same time,
in Almaty alone, over 4,000 sources that have outlived
their usefulness already need to be buried. Their number
is increasing every month. If we take the republic
as a whole, then the picture is quite gloomy, Tuseyn
Ozhakhliyev, head of the Radiation Hygiene Division
of the city Sanitary and Epidemiological Directorate,
says.

It turns out that a special burial place on the territory
of the Institute of Nuclear Physics has been closed
for already three years. Radioactive waste, as it is
accumulated, presents a potential danger. Naturally,
supervision of it is weakening. This could lead to a
radiation accident, contamination of equipment, and
even to irradiation.

As we have managed to find out, on the territory of the
Semipalatinsk test site, there is the Baykal-1 complex,
which is intended for reception and long-term storage
of used radioactive sources (until a special burial piace
is built). As Tuseyn Ozhakhliyev told us, the problem
is that an excessively high price has been set there for
storage and that today not a single organization can use
the services of the complex.

Whereas in the past (roughly until last year) it was
possible to bury radioactive waste in the former Union
republics, now they do not take this waste. It is hardly
worth holding this against them. After all, the period
of decay of some sources is hundreds of thousands and
even millions of years — that is, it is impossible simply
to destroy them. As far back as 1979, a decision was
taken by the former Council of Ministers [not further
specified] to build waste burial sites in three Regions
of Kazakhstan. Unfortunately, it was never fulfilled.
For example, the industrial structures erected for a
burial site in Akmola Region were leased to commercial
organizations and in the other two Regions building did
not start at all.

This report may contain copyrighted material. Copying and dissemination
is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

Azerbaijan

Two Oil Routes Seen as Stabilizing Factor

MK1710065695 Moscow NEZAVISIMAYA GAZETA
in Russian 14 Oct 95 p 3

(Commentary by Mekhman Gafarly: "*Oil Contract’ as
an Integrating Factor. Transcaucasus on Threshold of
Long-Awaited Peace"}

{(FBIS Translated Text] The decision by the steering
committee in charge of the contract on joint develop-
ment of three [oil] fields in Azerbaijan's Caspian Sea
sector to make use of Russian and Georgian routes to
pipe early Azerbaijani oil to world markets could bring
long-awaited political stability and help revive the idea
of a "Common Caucasus Home." As we all know, this
idea conceived by the late Zviad Gamsakhurdia was
buried at the conceptual stage by a lack of political sta-
bility in the region. It is unthinkable to speak of any
home before the single economic space that existed in
the Soviet years has been restored. The practical expe-
rience of recent years indicates that the armed ethnic
conflicts going on in Nagorno-Karabakh, South Osse-
tia, and Abkhazia have only brought the economic col-
lapse and disintegration of these countries. The Geor-
gian pipeline route that will bring Tbilisi many millions
in profits will mark the first step in restoring the for-
mer single economic space, whereas the Russian route
will ensure political stability in the region. The final
decision by the international oil consortium on using
the Russian route alongside the Georgian route was
made in consideration of Russia’s national interests in
the region, which will end the fundamental differences
between Russia and Western countries participating in
this project. Following long political maneuvering, the
Western oil barons became convinced that the key to
resolving the armed ethnic conflicts in the Transcauca-
sus is to be found in Moscow. Therefore, one should
also expect genuine progress in solving the Karabakh
conflict.

As never before, Russia is interested today in stabil-
ity taking h?ld in the Transcaucasus. Continued con-
flicts in Transcaucasian republics could bury not?only
the Georgian, but also the Russian route, because insta-
bility could spill over at any moment into the Northern
Caucasus, where the Russian oil pipeline runs. There-
fore, the international oil consortium’s decision is more
likely of an exploratory nature, and for the time being
these routes will be used to pipe only early Azerbaijani
oil. Should there be instability in the Northern Caucasus,
the idea could again crop up of using alternate routes
to pipe oi! not only from Azerbaijan, but also from the
Central Asian republics. The Russian oil pipeline would

CAUCASUS 69

enable Moscow in the future to control the flow of oil
from Azerbaijan, Kazakhstan, and Turkmenistan.

Growing stronger against this background are the posi-
tions of Georgia’s head Eduard Shevardnadze and Azer-
baijani President Geydar Aliyev, who blamed the latest
terrorist acts and coup d’etat attempts on some Moscow
forces. The former showed, in connection with the con-
sortium decision, that he still enjoys international pres-
tige, while the latter once again demonstrated his ability
to maneuver between the West and Russia, hurting no
one’s interests. Clearly, it is better for Moscow to have
as a neighbor today’s stable, "pro-Western" Azerbaijan,
rather than an unstable country with a ‘pro-Moscow
regime.” Tajikistan’s experience indicates that under the
present circumstances instability anywhere in the "\?ar
abroad" [as received] does not benefit Moscow either
economically or politically.

Turkish Embassy Denies Policy Change on
Georgian Pipeline

NC1710190595 Baku Azerbaycan Radio Televiziyasi
Television Network in Azeri 1600 GMT 17 Oct 95

([FBIS Translated Text] The Turkish Embassy press ser-
vice reports that in its 14 October issue, the newspa-
per AYNA [Mirror] published an article which quoted
KHABAR SERVICE [News Service] agency as saying
that following the decision to simultaneously operate
two oil pipelines Turkey has reneged on its promise to
finance the export of Azerbaijani early oil through the
Georgian pipeline.

The Embassy’s press service announced that this report
in no way conforms with reality. It said that Turkey
had advanced two different proposals to facilitate the
export of the early oil through Georgia. The first
proposal was for Turkey to finance this pipeline, and the
second proposal envisaged its construction by forming
a joint enterprise of the participating countries. Both
of Turkey’s proposals are still available, and talks will
begin soon on getting the Georgian route into operation.

Georgia

Defense Minister Says CIS Military Bloc
‘Inevitable’

LD1710181295 Moscow ITAR-TASS in English
1747 GMT 17 Oct 95

[By Tengiz Pachkoriya]
{FBIS Transcribed Text] TBILISI, October 17 (Itar-
Tass) - Georgian Defence Minister Vardiko Nadibaidze

on Tuesday supported an idea to set up a military bloc
of the Commonwealth of Independent States (CIS).

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is prohibited without permission of the copyright owners.

70 CAUCASUS

"I believe that a military bloc of CIS countries is in-
evitable. It will be created, since no military coopera-
tion between CIS countries is possible without it," the
minister told a news conference.

According to the minister, Georgia’s military doctrine
has been approved by the leadership of the Defence
Ministry and will be made public after November
presidential and parliamentary elections.

After that, the doctrine will be submitted for endorse-
ment by the parliament and the president, Nadibaidze
said.

Nadibaidze rejected statements of some politicians that
officers from Russian troops stationed in Georgia had
been allegedly involved in an assassination attempts
against Georgian leader Eduard Shevardnadze staged on
August 29.

Nadibaidze said that he and Interior Minister Shota
Kviraia join in conviction that such allegations are
nothing but a slander.

Russian Troop Command Denies Backing Coup
Attempt

MM1810105195 Moscow KRASNAYA ZVEZDA
in Russian 17 Oct 95 p 3

[Article by Vitaliy Denisov under the "Events and
Commentaries Postscriptum" rubric: "Hand of Moscow
Appears. Group of Russian Forces in Transcaucasus
Command Refutes Allegations That It Is Preparing To
Establish “Russian Military Freedom’ in Georgia"]

([FBIS Translated Text] Discussion of the existing and
possible consequences of the 29 August explosion out-
side the republic parliament building, when an attempt
was made on the life of Georgian head of state Eduard
Shevardnadze, continues in Georgia. Passions have not
abated following the arrest of the perpetrators of this and
other terrorist acts and the publication of their organiz-
ers’ names. The campaign demanding that the Russian
side extradite Lieutenant General Igor Giorgadze, for-
mer chairman of the Georgian security service, who is
wanted and whom certain circles in Moscow are ap-
parently trying to harbor from justice, is becoming in-
creasingly hysterical. Moreover, it is those forces which
would like a change of Georgia’s foreign and domestic
policy which are sheltering the “terrorist on an inter-
national scale," as Giorgadze has been dubbed by the
Georgian press.

But certain politicians in Tbilisi are not confining them-
selves to making claims against their northern neighbor
just in connection with Giorgadze’s name. Thus Irakliy
Batiashvili, former chief of the Information and Intelli-

FBIS-SOV-95-201
18 October 1995

gence Service (later renamed the State Security Service),
stated that terrorist acts in Georgia are the result of a
clash of geopolitical interests and the 29 August explo-
sion was not solely aimed at eliminating Shevardnadze.
In the retired general’s opinion it was an attempted coup
d’etat and the putschists were relying on the Group of
Russian Forces in the Transcaucasus [GRFT] command,
which was allegedly prepared to order units and subunits
to help the new authorities establish a state of emer-
gency throughout Georgian territory. "The coup was
coordinated with certain Russian military-political cir-
cles, therefore in the event of Shevardnadze’s elimina-
tion the country would unequivocally have come under
Moscow’s sphere of geopolitical influence and Russian
military freedom would have been established in Geor-
gia," Batiashvili concluded.

The desire to see the actions of "Kremlin agents"
behind Georgia’s own troubles and problems is not new.
People in Georgia itself have become so accustomed
to it that it is viewed in the same way as good
seasoning for a kebab. But the specific allegations
against the GRFT cannot fail to put us on our guard.
They could be followed by a wave of outpourings
against the Russian presence on the republic’s territory,
which are unlikely to take civilized forms. The situation
concerning Russia’s military bases is not very good as
it is. For example, while not one case involving an
attack on GRFT facilities was recorded in 1994, this
year the GRFT headquarters alone has been fired on
twice, and once a powerful explosive device went off
at the entrance to the building. Last year the number
of casualties among Russian servicemen was five, this
year it is already 17....

Commenting on Batiashvili’s statement, Lieutenant
General Pavel Labutin, chief of staff and first deputy
commander of the GRFT, stated: "The allegations
against the GRFT command concerning its readiness
to support an attempted coup d’etat in Georgia are
absolutely groundless and, moreover, are provocative.
I state that Russian military personnel in the region are
Carrying out clear and specific missions to ensure the
security of both Russia and Georgia and in no way
are influencing or will influence a friendly country’s
internal affairs. We are interested in a peaceful and
stable Georgia, which has been repeatedly stated by the
Russian Federation leadership."

Parliament Signs New Constitution Into Law

AU1710152595 Paris AFP in English
1027 GMT 17 Oct 95

{[FBIS Transcribed Text] Tbilisi, Oct 17 (AFP) —
Georgian parliamentarians signed their country’s new
constitution into law Tuesday after a six-week delay

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

caused by a car bomb attack on the country’s leader
Eduard Shevardnadze.

Shevardnadze was on his way to sign the constitution
on August 29 when a car bomb exploded near his
motorcade, lightly wounding him, another government
official and several bodyguards.

The signing ceremony was re-scheduled several times
before finally taking place Tuesday in the country’s
recently reopened parliament building.

“Today is a very significant day, marking a beginning
for democratic development,” Shevardnadze said at the
ceremony.

"The constitution provides a basis for a lawful state," he
said, declaring August 24, the day the constitution was
ratified by parliament, a national holiday.

He also said the constitution would act as a “stimulus
to step up the war against the criminal world.”

A new law-and-order campaign has been the theme
of many of Shevardnadze’s public speeches since the
bombing attack. A massive police crackdown after the
bombing netted hundreds of suspects.

Former security chief Igor Giorgadze has been charged
with leading a group of conspirators who plotted the
August attack and three other political assassinations
over 19 months.

Giorgadze is now believed to be hiding in Moscow, and
Georgian officials are trying to negotiate his extradition
from Russia.

The adoption of the constitution by Georgia’s notori-
ously fractious parliament was seen over the summer as
a major step toward a less confrontational political en-
vironment. But even the signing ceremony did not pass
without a hitch.

Deputies bristled at a suggestion by Shevardnadze that
those who voted in favour of the document in August
be allowed to sign it first.

In the end, the deputies filed up in alphabetical order.

The new constitution restores the post of president,
which was abolished in a 1992 coup, and provides for
a 222-member, single-chamber parliament.

Shevardnadze, who now rules Georgia as its parliament
speaker and head of state, is widely expected to win
presidential elections scheduled for November.

The simultaneous parliamentary polls should be more
evenly matched, with opposition parties that are not
fielding presidential candidates expected to win seats.

CAUCASUS

Shevardnadze Speaks on New Constitution

LD1710204395 Tbilisi Radio Tbilisi Network
in Georgian 1800 GMT 17 Oct 95

(FBIS Translated Text] Seventeen October 1995 has be-
come a historic day. On this day MPs and members of
the constitutional commission signed the new Georgian
constitution. The head of state and chairman of parlia-
ment, Eduard Shevardnadze, delivered a speech at the
signing ceremony. We present to you an excerpt from
this speech.

[Begin Shevardnadze recording] The new constitution
was the result of historic cooperation between parlia-
ment and the people as well as the result of a sound
compromise and constructive consensus reached by po-
litical forces. By adopting this constitution the Georgian
Parliament will earn a prominent place in the country’s
history.

The constitution lays down the requisite conditions
for the creation of a state based on the rule of law,
an open civil society and socially orientated market
economy. New legislative, executive, and judicial power
structures as well as a strong parliament and presidency
envisaged by the constitution reflect to the maximum
extent the national and world ideals of constitutionalism
and make the implementation of major reforms an
irreversible process. There is now a full guarantee
that the totalitarian state system will be completely
and finally replaced with a democratic one. The road
leading to the restoration of the past has been cut
off forever. This puts an end to any demagoguery or
genuine apprehensions about the danger of a return to
dictatorship and the old regime.

The constitution has given us the strength to declare
war on the criminal world. We have dealt lethal blows
to terrorism, racketeering, murderers, and bandits. We
have put an end to the rule of armed people on the
streets, after which the population has heaved a sigh of
relief. An uncompromising and unrelenting struggle has
begun against mafiosos in state structures and corrupt
groups which have been sucking the blood of the people,
businessmen, entrepreneurs and bankers. The country is
throwing off - I am saying this without exaggeration -
the yoke of mafiosos and corrupt officials.

In effect, the state and the people are already living by
the new constitution. At the centre of the constitution
are people, citizens and their internationally recognized
rights and freedoms. This, of course, also includes uni-
versally recognized norms concerning ethnic minorities.
These norms are protected and guaranteed by the con-
stitution.

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is prohibited without permission of the copyright owners.

72 CAUCASUS

The forthcoming parliamentary and presidential elec-
tions will be held in accordance with the new constitu-
tion and the new election law which reflects this con-
stitution. I would not be an exaggeration to say that the
new constitution of Georgia is the greatest legacy which
20th Century Georgia will hand down to the country en-
tering the third millennium and to future generations.

I propose that we pass a resolution declaring 24 August,
which is the day when our parliament approved the
constitution, Constitution Day. I congratulate you, dear
friends, citizens of Georgia, on Constitution Day. I wish
you further victories and success in the struggle for the
wellbeing of the homeland and the people. I wish you
success in the forthcoming elections. God be with us.
{end recording]

Republic Boosts Foreign Reserves to $20 Million

MM1710133395 Moscow IZVESTIYA [Financial
Section] in Russian 17 Oct 95 p. 1

[PRAYM report: "Georgian National Bank Increases
Foreign Reserves to $20 Million")

(FBIS Translated Text] Over the past week the National
Bank of Georgia has increased its foreign reserves by
$1.2 million as a result of exchanging dollars for lari,
the Georgian Government Press Service reports. The
National Bank’s foreign reserves have thus reached $20
million.

Central Bank Chief on Launch of New Currency

MM1710085795 Moscow ROSSIYSKAYA GAZETA
in Russian 14 Oct 95 p 12

{Interview with Nodar Javakhishvili, president of the
Georgian Central Bank, by unnamed correspondent;
date and place not given: “Requiem for Coupon Was
Short-Lived. National Currency Introduced in Georgia.
Nodar Javakhishvili, President of the Republic’s Central
Bank, Discusses Problems Caused by This Event")

{[FBIS Translated Text] [ROSSIYSKAYA GAZETA]
Mr. President, Georgia has officially introduced its own
national currency — the lari. Could you tell us how the
republic approached this event, what problems it had to
face, and what the future benefits will be for its citizens?

(Javakhishvili] When we introduced the lari 2 October,
it was not just the emergence of a new attribute of
sovereign Georgia; other goals were being pursued
as well. We were asked just what was happening
— monetary reform or an exchange of old notes for
new ones. I would call it monetary reform. A major
reform which began not 25 September this year but
more than 18 months ago, when the Central Bank
leadership and the government embarked on major

FBIS-SOV-95-201
18 October 1995

radical transformations of our economy and radical steps
to establish financial stabilization in the republic.

Naturally I will be dwelling on issues in the financial
sphere. Although I can briefly state that over the past
18 months-two years we have accomplished a very great
deal in the sphere of political stabilization as well as in
reducing crime. As for the financial sphere, as soon as
the Central Bank leadership changed we rejected the
so-called liberal policy and immediately switched to a
tough strategy in the sphere of emission and lending. We
stopped providing any inflationary [emissionnyy] loans
to the national economy.

In July 1994 we transferred all budget accounts to the
Central Bank and thereby shut off budgetary channels,
because, under the old Soviet-era habit, budget funds
were spent any which way during the year and we had
forgotten that by the year’s end it was necessary to draw
up a balance sheet. Transferring all our foreign reserves
to the Central Bank was a significant step.

Of course, price deregulation played its part as well. The
coupon had strengthened steadily since 1 September last
year. And we finally stabilized it as of 14 January and
did not deviate from our choice of maintaining a steady
rate for the coupon. The IMF program coincided with
this period. Back in December last year we received
our first tranche of a fund of around $40 million. This
June we received the second tranche, and the question
of allocating us another $25 million from the IMF has
been examined since the end of September.

We have learned a lot this year, I think. This is shown by
the fact that we kept the coupon rate stable without any
problem. Both our own skeptics and, in certain cases,
uninformed people think and believe that we maintained
the rate solely with outside help. Some 80 percent of
the currency intervention which we carried out was
done through the 32-percent compulsory sales of foreign
exchange. Only 20 percent of the funds used were made
good by the IMF.

We have now reached a time and a a level of reform
at which the state can no longer go on without its own
currency.

[ROSSIYSKAYA GAZETA] Could you please tell us
specifically how the coupons are being exchanged for
lari?

[Javakhishvili] The exchange process is entirely free.
There are no restrictions on the amounts of coupons
exchanged, we are not differentiating between cash
and noncash funds, and we are not demanding to see
any documentation. Nobody will be asking citizens
anywhere about the provenance of even very large
amounts of coupons. And I would also like to stress that

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

we have conducted purposeful information work about
the aims and tasks of the monetary reform. We have
thereby won the population’s undoubted confidence
both in us as financiers and in the new currency. We are
satisfied that the lari is a very well-protected currency.
Large-denomination notes boast 17 security features.

{[ROSSIYSKAYA GAZETA] Mr. President, in Russia
financiers and, in particular, Central Bank leaders often
encounter pressure from certain groups calling for
additional appropriations throughout the financial year
— calls which boost inflation. Have you in Georgia
encountered similar problems?

(Javakhishvili] Yes, of course, but not on the same scale
as in Russia. Although I have to say that at certain stages
the pressure was strong. Three times we showed society
what such demands could lead to. In November 1993
I told parliamentary deputies that, if they forced us to
print coupons, it would lead to serious inflation. They
did not heed us. The second instance was in January-
February 1994, when the coupon had stabilized and
had even begun to strengthen. A decision was made
to issue additional appropriations. I, as bank president,
knew what this would lead to, but I make no secret of
the fact that I wanted people to see for themselves the
results of their demands on the financiers. Once again
our economy suffered a most grievous blow, prices
shot up, and inflation was rampant. The last time this
happened was in July 1994. Parliament had spent a long
time debating additional appropriations. Then, entering
the debate, I stated that if this decision were adopted the
coupon would once again fall a certain number of points
and hyperinflation would take off. But the decision came
down in favor of additional appropriations, and society
saw for itself for the umpteenth time that this is no way
to be running our financial affairs. I will not say that
there is currently no pressure on the Central Bank. But
both the head of state and the prime minister are now
turning down people who ask for additional expenditure
— perhaps even more severely than the Central Bank
president.

[ROSSIYSKAYA GAZETA] Mr. President, how will
the problem of reciprocal transactions within the CIS
and, in particular, with Russia be resolved in light of
the introduction of the national currency?

(Javakhishvili] We have had and still have problems
with reciprocal transactions with a whole series of CIS
countries, in particular with Russia. Although Prime
Minister V. Chernomyrdin’s visit increased hope that
this issue might be settled. The Russian Federation
Central Bank has applied all the funds entering our
correspondent account in Moscow toward paying off
Georgia’s debt, even though this was not stipulated

CAUCASUS 73

under our agreements. We were promised that they
would not do this any more and that our correspondent
account wuld operate normally. We even received
a promise that whatever had been withdrawn would
be repaid. Most importantly, this is laid down in
the documents signed by V. Chernomyrdin and E.
Shevardnadze — the Russian banks were to accept
Russian cash rubles from our banks in Georgia to
strengthen their correspondent accounts. This means that
the huge mass of Russian rubles which is still isolated
in a small republic and is giving rise to quite a big
difference in the ruble-dollar rate compared with Russia
will find that the road to Russia has been opened for it.
Then a basis for noncash transactions will emerge.

I would go further — the question of opening branches
of the Georgian banks in Russia and of the Russian
banks in Georgia has been worked out at the legislative
level.

[ROSSIYSKAYA GAZETA] Mr. President, our readers
would be interested to know what funds the Georgian
Central Bank will be using to maintain a stable rate for
the new currency.

{Javakhishvili} For a certain period we can use mon-
etarist methods to maintain a stable rate for the lari,
which will in itself help the economy to get on its feet.
The IMF program is due to last one year from the time
the first tranche is received. But as of next year — if
not sooner — we will be switching to the next stage of
our relationship with the Fund. This will be a three-year
program. It means that for three years we will have a
balance of payments, a budget, and real revenues set for
us and we will not be allowed to alter them.

Lari transactions will make everyone build their rela-
tionship on a legal basis. There will be increased con-
trols in the sphere of fiscal policy. Tax revenue to the na-
tional treasury will increase and there will be increased
bank liquidity and great opportunities for lending. Loans
will become cheaper. By the year’s end it will even be
possible to cut tax rates.

Abkhaz Defense Minister Fears Provocations by
Georgia

LD1710200795 Moscow INTERFAX in English
1946 GMT 17 Oct 95

{[FBIS Transcribed Text] SUKHUMI, Oct 17 (Interfax)
- Abkhazian Defense Minister Sultan Sosnaliyev told
Interfax that Georgia could stage new provocations in
Abkhazia’s Gali district. Abkhazian Defense Ministry
officials had earlier spoken of the possibility that Rus-
sian peacekeeping units will take part in the hostilities.

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is prohibited without permission of the copyright owners.

74

A senior ministry official told Interfax that Abkhazia
was worried by the departure of General Vasiliy Yaku-
shev, commander of the CIS peacekeeping force, to
Tbilisi where he was summoned by General Fedor Reut,
commander of the Russian Army — in Transcauca-
sia.

CAUCASUS

FBIS-SOV-95-201
18 October 1995

The source believes that the two men could discuss the
capture of the Gali district with the help of Yakushev’s
units that are part of the RAGT.

An officer in the peacekeeping force command con-
firmed that Yakushev left for Tbilisi but declined to
comment on the aim of his trip.

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is prohibited without permission of the copyright owners.

FBIS-SOV-95-201
18 October 1995

Estonia

President Asks Vahi To Form New Government

LD1710172395 Tallinn Estonian Television Network
in Russian 1645 GMT 17 Oct 95

([FBIS Translated Text] President Lennart Meri invited
Tiit Vahi, leader of the Party of Consolidation and acting
head of the government which has just resigned, to come
to Kadriorg Palace [presidential residence] by 1800
hours [1600 GMT] today. The president has officially
charged Tiit Vahi with the formation of a new cabinet
of ministers.

Latvia

Parliamentary Parties Sign Declaration on Joining
EU

LD1510161495 Riga Radio Riga Network in Latvian
1000 GMT 15 Oct 95

([FBIS Translated Text] The chairmen of the political
parties elected to the sixth Saeima signed a declaration
on the joining of the European Union by Latvia at a
meeting with State President Guntis Ulmanis yesterday.

BALTIC STATES 75

The document states that joining the European Union is
one of the most significant tasks of Latvian foreign pol-
icy that is to be implemented by continuing and speed-
ing up economic and social reforms and transforming
economic and social foundations in the country.

The representatives of the parties elected to the sixth
Saeima believe that a final say on the issue of Latvia
joining the European Union should rest with the people,
who should be asked in a referendum.

Lithuania

Parliament Ratifies Nuclear Safety Convention

LD1710185195 Vilnius Radio Vilnius Network
in Lithuanian 1700 GMT 17 Oct 95

{[FBIS Translated Text] Today the Lithuanian Seimas
ratified the nuclear safety convention, ELTA reported.

The convention is aimed at maintaining high standards
of nuclear safety in the world, to setting up effective
safety measures at nuclear installations in order to pro-
tect the environment and the public against dangerous
radiation and to block the way to accidents.

This report may contain copyrighted material. Copying and dissemination
is prohibited without permission of the copyright owners.

This is a U.S. Government publication produced by the Foreign Broadcast
Information Service (FBIS). Its contents in no way represent the policies,
views, or attitudes of the U.S. Government.

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