WASHINGTON, D.C. 20005 -- 202-347-2624 -- FAX 202-347-4631

Daily intelligence briefing on the former Soviet Union

Published every business day since 1993

Wednesday, September 11, 1996

Russian Federation


Chernomyrdin on Power Transfer

· Russian Prime Minister Viktor Chernomyrdin on Tuesday downplayed the issue of the transfer of powers for President Boris Yeltsin's upcoming heart operation, describing discussion of it as "both artificial and tactless," reported Interfax. "I see no need for either discussion of the issue of power transfer or exercises in devising various mechanisms on this account," he told the news agency, adding that "the president remains president both during the operation and in progress of the whole course of treatment."

Meanwhile, CHERNOMYRDIN has consolidated his power over economic decisionmaking in Russia, perhaps in an attempt the freeze out the Security Council and its new economic security department head, Sergei GLAZYEV, who has been seeking control over economic policy. CHERNOMYRDIN announced recently that his government will no longer hold weekly meetings, reported Tuesday's OMRI, citing Vek. All urgent economic management issues will now be handled by the Operational Headquarters for Urgent Measures to Stabilize the Economic Situation, which is headed by CHERNOMYRDIN and subordinate exclusively to him. Through this measure, according to Vek, CHERNOMYRDIN has assumed full responsibility for the country's economic development and excluded many Cabinet members from the decisionmaking process.

Yeltsin Begins Appointing Commission Chairs

· Russian President Boris Yeltsin on Tuesday signed a decree appointing First Deputy Prime Minister Vladimir Potanin as chairman of the government commission for payments and settlements. In the next few days, the chairmen of the eight other

government commissions are expected to be named. First Deputy Prime Minister Aleksei Bolshakov was appointed chairman of the government commission for current affairs last month.


Ruble = 5,382/$1.00 (NY rate)

Ruble = 5,364/$1.00 (CB rate)

Ruble = 5,344|5,384/$1.00 (buy|sell rates)

Yasin on Russia's Investment Needs

· Russian Economy Minister Yevgeny Yasin on Tuesday told a Moscow economic conference, organized by Euromoney, that the Russian economy needs about $2.5 trillion in investments during the next 15 years, three quarters of which will come from domestic sources. "The volume of foreign investments in Russia had reached about $2 billion by August 1, while the figure for the entire 1995 equaled only $2.8 billion," he said, according to Itar-Tass.

FAPSI to Exhibit its Wares

· A Russian intelligence agency has taken a booth at the Windows Expo/Moscow-96 international computer software exhibition, which opened in Moscow on Monday, reported today's Nezavisimaya Gazeta. The Scientific-Technical Center of Russia's Federal Government Communications and Information Agency (FAPSI) will exhibit software and hardware products for data protection in such operating systems as Windows NT, Windows-95, and others. They are

Today's News Highlights


Industry Ministry Duties

Audit Chamber on Privatization

Transcaucasia & Central Asia

Georgia to Create FEZs

Armenian Pres. Election Race

Azeri Parl. Speaker Resigns

Ericsson Gets Azeri Contract

Zervashan Mining Suspended

Updates Chechnya




September 11, 1996

Intercon's Daily

Verba, a cryptographic system to protect commercial information; an all-purpose protected subscribers' center; and identification support hardware.


Two Russian Telecom Companies Merge

· Russian communications companies BankNet Kft and Satcom-Tel have merged to create a new firm, Satnet, which will offer several voice and data services between Russia/CIS and Western Europe, reported Newsbytes. Satnet said it operates a voice and data gateway in Winchester, UK, as well as in Moscow, and plans to open gateways throughout Russia and the CIS as business grows. "The gateway in Moscow routes voice, data, and Internet calls into our Winchester gateway, from where it goes to the appropriate voice phone number, data destination, or Internet service provider (ISP) link," Satnet

spokesman Ron Chamberlain told Newsbytes, adding that Satnet operates as a reseller for Pipex in the UK and UUNet in the US. "We have 16 ISPs in Russia and the CIS who rely on us," he said.

Satnet's BankNet division has a TDMA (time division multiplex) VSAT (very small aperture terminal) hub in Budapest, which routes voice and data calls across the Eutelsat IIF4 satellite, which covers all of Europe and Russia to the Urals. Satcom-Tel focuses on voice links in and out of the CIS across the Gorizont 53 satellite, which reaches into Russia to Lake Baikal. Under the new merger, plans call for Satcom-Tel to market BankNet's services is Russia, while BankNet will offer the use of Satcom-Tel's voice gateways in Russia and the UK to its customers. Satnet will market these services to Western organizations that need to communicate with Eastern Europe, Russia, and the CIS.

When you need to know it as it happens




September 11, 1996

Intercon's Daily

Transcaucasia and Central Asia

Georgia Plans Three FEZs

· The Georgian Economy Ministry said last week that it will create free economic zones in Poti, Batumi, and probably near the Tbilisi air terminal, reported Segodnya. The draft law on the zones' creation will be considered by the parliament at its fall session. Under the law, the area of a zone must be not more than 40 or 50 hectares, while at least 50 percent of the jobs created must be filled by local residents. The zone in Georgia's republic of Adzharia will occupy the Batumi seaport and the Chorokhi river delta. Revenues from this economic zone are expected to reach $100-150 million in the next five years.

Armenian Pres. Poll on September 22

· Three contenders will face off in Armenia's presidential elections, scheduled for September 22. Incumbent President Levon Ter-Petrosyan is favored in the race. Communist Party leader Sergei Badalyan and Armenian National Democratic Union head Vazgen Manukyan are the other main candidates. Manukyan, an assistant professor of physics and mathematics at Yerevan State University, got a boost today when the political opposition, except for the Communist Party, nominated him as their united candidate. He is currently a member of parliament, served as prime minister in 1990-1991, and as state minister in 1992. Three other opposition candidates, registered to run for the presidency, have reportedly dropped out in favor of MANUKYAN.

Registration was closed on August 23 and campaigning has begun. TER-PETROSYAN's platform emphasizes the economic stabilization achieved over the past two years and promises to continue economic and social reforms, with an emphasis on the growing middle class. MANUKYAN has pledged to crack down on corruption and the shadow economy, introduce more equitable social and economic policies, and curtail presidential powers.

Azeri Parliament Head Resigns Under Criticism

· During a special session of Azerbaijan's legislature (Milli Mejlis) today, parliamentary speaker Rasul Guliyev said he was resigning because of poor health. However, his announcement comes amid rising criticism and accusation of corruption from within his own political organization, the ruling New

Azerbaijan party. A statement released by the party's political council Monday charged that Guliyev "put his ambitions above national interests and attempted to preserve the economy under the control and influence of Mafia structures," reported United Press International (UPI). The resignation was approved by a vote of 98-8, with four abstentions, in the 110-seat legislature. According to unnamed sources, cited by Interfax, Guliyev has been offered the post of ambassador to Norway.

Ericsson Wins GSM Order in Azerbaijan

· Swedish telecommunications firm LM Ericsson Telefon said on Tuesday that it had won a Global System for Mobile (GSM) communications order, which includes the provision of new switches and radio base station equipment, of an unspecified value from Azerbaijan, reported Reuters. The first delivery will be made in the fall to Baku, Gence, Apsaron, and Nakhichevan in order to serve 5,000 subscribers, said an Ericsson statement. The new equipment will be installed by Ericsson engineers and experts from Turkey. The order was received by Ericsson Radio Systems AB and the company's Turkish subsidiary and signed with Turkcell. This is Ericsson's first order in Azerbaijan.

Gold Firm Ceases Tajik Operations

· Nelson Gold Corp. Ltd. announced on Monday that the mining operations of its Zeravshan Gold Project in Tajikistan have been suspended, said a company press release. Operations will resume following the finalization of negotiations between Nelson and the Tajik government regarding the export and sale of refined gold. The refining of gold produced at the Zeravshan milling complex has been carried out at the Vostokredmet refinery in Chkalovsk. The continuing negotiations with the Tajik government are related to the mechanics of gold exports and sales including transportation, insurance, and payment arrangements. To date, the Zervashan venture is holding over 18,000 ounces of gold for sale, representing about three months production.

Gold Project in Kazakhstan Progresses

· Canada's Central Asia Goldfields Corp. announced on Tuesday that its initial drill program on its 70 percent owned Ashiktas gold prospect in central Kazakhstan had encouraging results, said a company press release. Twelve holes of a planned

When you need to know it as it happens




September 11, 1996

Intercon's Daily

twenty-one hole program are completed and assay results from seven holes have been received. Assay results from the seven holes within the Southern Askiktas region in general confirm previous results as reported by Russian drilling and trenching.

Uranium Conference in Kazakhstan

· A seven-day international conference on problems of working uranium mines, organized by the International Atomic Energy Agency (IAEA) and Kazakhstan's Ministry of Science, Academy of Sciences and the national joint-stock company of atomic energy and industry, opened in Almaty on Monday. Kazakhstan joined the IAEA in 1993. The London-based Uranium Institute has estimated that Kazakhstan has about 25 percent of the world's known reserves of uranium ore.

Kazakhstan to Issue State Bonds

· Kazakstan began a subscription of state bonds today for the first time in its history. Kazakh Finance Minister Aleksandr Pavlov told a press conference that Kazakh citizens can purchase state bonds by sending applications to departments of the Kazakh national bank or the Kazakh Kommerzbank over the next ten days, reported Itar-Tass. After that period, the bonds will be put into circulation. The bonds will mature within a year. The overall emission of state bonds is worth around one billion tenge. As of September 10, the official exchange rate was 68.68 tenge to the US dollar.


Chechnya: A Grozny congress of more than 20 Chechen political and public groups on Tuesday adopted a resolution which supports the peace deal struck by Russian Security Council chief Aleksandr Lebed and rebel military commander Aslan Maskhadov on August 31. The some 300 delegates at the meeting also adopted proposals on the formation of an interim coalition government and on holding new elections in Chechnya. Congress participants also decided to ask the UN and the Organization for Security and Cooperation in Europe (OSCE) to help carry out these measures "under strict international monitoring."

The congress was attended by Maskhadov, Chechen rebel vice president Said-Khasan Abumuslimov, leaders of various political movements, and religious activists. Tim Guldimann, head of the OSCE mission in Grozny was also in attendance. However, Chechen rebel leader Zelimkhan Yandarbiyev did not participate for unknown reasons. The head of the pro-Moscow Chechen government, Doku ZAVGAYEV, refused to take part in the meeting.

Meanwhile, Zavgayev circulated a statement in Moscow, which described the Grozny congress as a rebel attempt to set up illegal power structures to prepare for future secession from Russia. "What kind of government will that be if most of it consists of criminal elements," Interfax quoted Zavgayev as saying. Zavgayev said none of his ministers would join the new government, despite invitations from the rebels. Interfax reported, however, that Yandar-biyev had signed a decree offering three Zavgayev ministers positions in the coalition government.

In other news, the Council of Europe announced on Monday that LEBED and MASKHADOV will travel to Strasbourg on September 23 to discuss their peace agreement, reported Reuters.

Daily Report on Russia is published Monday-Friday (excluding holidays), by Intercon International, USA. Subscription price for Washington, D.C. Metro area: $895.00 per year. A discount is

available for non-profit institutions.

Paul M. Joyal, President, Editor in Chief Clifton F. von Kann, Publisher Ellen Shapiro, Managing Editor

Alycia S. Draper, Rebecca Martin, Contributing Editors

Daily Report on Russia is for the exclusive use of the subscriber only. Reproduction and/or distribution is not permitted without the expressed written consent of Intercon. Daily Report on Russia Ó copyright 1996, Intercon International, USA.

When you need to know it as it happens



Paul M. Joyal, President, Editor in Chief Clifton F. von Kann, Publisher Ellen Shapiro, Managing Editor

Alycia S. Draper, Rebecca Martin, Contributing Editors