DAILY REPORT ON RUSSIA

AND THE FORMER SOVIET REPUBLICS

INTERCON INTERNATIONAL USA, INC., 725 15th STREET, N.W., SUITE 908,

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

Thursday, August 28, 1997

Russian Federation

Politics

Yeltsin Talks to Lukashenko

· Russian President Boris Yeltsin told reporters today that he had a telephone conversation with Belarussian President Aleksandr Lukashenko, who said he was going to order the release of Russian Public Television (ORT) journalists currently held in Belarus, reported Itar-Tass. Yeltsin said his talk with Lukashenko was "normal, pressure-free, as between two presidents."

He said that Russian Foreign Minister Yevgeny Primakov, who is visiting Minsk, was currently drafting a legal document on the agreement for Lukashenko to sign.

Yeltsin said the telephone conversation had led him to the decision to receive Lukashenko during his visit to Moscow to attend the celebrations for the 850th anniversary.

Meanwhile, Russian presidential spokesman Sergei Yastrzhembsky today denied a suggestion made by LukaShenko about the possible removal of Primakov, reported Itar-Tass. The Russian "President is satisfied with the activities of the Russian Foreign Ministry and the Minister himself," he said.

"As for the statement by the president of the Union member-state, one would like to recall that it is not customary in the practice of international interstate relations to characterize representatives of the authorities of other states," said Yastrzhembsky.

Lukashenko publicly stated on Wednesday that certain forces in Russia specifically sent Primakov to Belarus for a visit while knowing in advance that he would not achieve the desired results and planning to make use of that to remove the Minister.

Armenian President Arrives in Moscow

· Armenian President Levon Ter-Petrosyan arrived in Moscow today for an official visit. He will discuss bilateral relations with Russian President Boris Yeltsin, Prime Minister Viktor Chernomyrdin, the speakers of both houses of parliament, and other officials.

Two major agreements are expected to signed during TER-PETROSYAN's visit to Moscow: a Russian-Armenian friendship and cooperation treaty and an agreement on the export of Russian natural gas to and through Armenia.

Armenian Energy Minister Gagik MARTIROSSYAN and Russian gas monopoly Gazprom chairman Rem VYAKHIREV are expected to sign an accord on the creation of a joint venture to export Russian gas via Georgia and Armenia to Turkey, said RFE/RL Newsline. The agreement provided Russian gas to Armenia for domestic consumption at prices lower than it currently pays for Turkmen gas.

New Russian Government Changes

· Russian President Boris YELTSIN today removed Yuri BATURIN as secretary of the Defense Council, but will keep him on as a presidential advisor, reported Reuters. Deputy Defense Minister Andrei KOKOSHIN, the only civilian in the top ranks of the Defense Ministry, has been named to replace him. No reason for the removal of BATURIN, an architect of the current military reform program, was given.

Today's News Highlights

Russia

Patriarch on Amer. Standards

Lebed to Visit Japan

Foreign Investment in Russia

1998 Privatization Program Out

Kuwait in Murmansk Port Project

MD. Co. Sells Tech. to Russia

South Caucasus & Central Asia

Ramco Progress in Georgia

Azeri Aliyev Visits Poland

Turkmen Niyazov in Germany

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Also today, YELTSIN removed Culture Minister Yevgeny SIDOROV from his post, naming former director of the St. Petersburg Historical Museum, Natalya DEMENYEVA to replace him, reported Russian independent television (NTV).

In addition, the president has removed Russia's Ambassador to Great Britain Anatoly ADAMASHIN from his post and named him Minister for CIS Relations, said NTV.

Primakov to Head NATO Commission

· Russian President Boris Yeltsin on Wednesday appointed Foreign Minister Yevgeny Primakov to head the interagency commission for interaction with NATO and implementation of the Russia-NATO Founding Act, signed in Paris on May 27, 1997, said the presidential press service.

Patriarch Rails Against Amer. Religious Norms

· The head of the Russian Orthodox Church Patriarch Aleksei II said on Wednesday that "North American standards" of freedom of religion should not be applied to Russia, reported Reuters. "We must completely bar proselytizing," of "non-traditional" faiths, Aleksei said after a meeting with the Archbishop of Vienna. He called proselytizing "an attempt by unworthy means to lure people to another faith from the religions of their ancestors."

Russian Prosecutor-General's Office official Viktor Navarnov told Itar-Tass on Wednesday that about 250,000 families have been destroyed by exposure to sects active in Russia. He added that a similar number of children have been abandoned by parents who went into the fold of sects.

NavarNov said cults are winning over increasingly more Russians, noting that many cults include murder and suicide as part of their ideology.

Navarnov cited the Church of Scientology, founded by L. Ron Hubbard, as one of the most aggressive cults in the world, whose code teaches among other dicta that one's self-determination and honor are more important than one's current life and to never hesitate to harm the other for a fair cause. Navarnov said the Hubbard proselytizing methods are seen in Russia as pernicious and a danger to the public.

According to the Russian Health Ministry, a variety

of cults in Russia have attracted three to five million people, with 70 percent at ages of 18 to 27 years.

Lebed to Travel to Japan

· Former Russian Security Council secretary and presidential hopeful Aleksandr Lebed will visit Japan on September 13, Kyodo news agency confirmed with a Lebed aide today. According to a weekly Russian magazine, Lebed plans to outline a new foreign policy strategy for Russia during the trip. Lebed believes Russia should shift the focus of its foreign policy from the US and the International Monetary Fund (IMF) to countries in East Asia, including Japan, China, and South Korea.

Economy

Ruble = 5,824/$1.00 (NY rate)

Ruble = 5,826/$1.00 (CB rate)

Ruble = 5,818|5,834/$1.00 (buy|sell rates)

Foreign Investment in Russia Increasing

· The Russian State Statistics Committee (Goskomstat) announced on Wednesday that foreign investment in Russia is maintaining a good momentum with the recovery of Russia's economy this year, reported Xinhua. Foreign investment for the first half of this year reached $6.67 billion, up $4.66 billion from the same period last year. Goskomstat figures show that Russia had received $17.8 billion in foreign investment by July 1 of this year.

Major Privatization Planned for 1998

· Russian privatization minister Maxim Boiko this week submitted the government's privatization program for 1998 to the State Duma for approval, reported RIA Novosti. The Duma also received a preliminary list of 29 state enterprises slated for sale next year as well as a list of 37 state enterprises to be transformed into open stock companies next year.

Included on the list are such major enterprises as telecommunication holding company Svyazinvest, several oil companies, such as Lukoil, Transneft, and Rosneft oil companies, and Aeroflot airlines.

The State Property Management Committee head noted that the 1998 budget target figures for privatization revenues were set at 6.1 billion new rubles. The total proceeds from the sell-off of all enterprises on the list are estimated at 30 billion rubles.

When you need to know it as it happens

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Business

Kuwait to Help Refurbish Murmansk Port

· Kuwait has earmarked $66 million to contribute to the restoration of the Port of Murmansk in northwestern Russia, reported Compass news. The Kuwait Fund for Social and Economic Development has entered final consultations with the Russian side to finance the port project.

Fund chairman Bader al-Humaidhi said that Kuwaiti involvement in the project was a first step on the road to investment in the Commonwealth of Independent States and the Baltic states. The Kuwait Fund had signed a gas pipeline agreement with Lithuania, an agreement to construct roads with Azerbaijan, and a third to establish a irrigation network with Uzbekistan.

Baltimore Co. Sells Tech. to Russia

· Baltimore, Maryland-based Environmental Elements Corp. (EEC) announced today the signing of a long-term license for electrostatic precipitator technology with Fingo Ltd. of Semibratovo, Russia, said a company press release. The agreement with Fingo Ltd. also includes Fingo Engineering, a privately held engineering company in Moscow which provides engineering services to Fingo Ltd. Fingo owns a large fabrication facility in Semibratovo, a town northeast of Moscow near Rostov, which has produced most of the air pollution control equipment installed in the former Soviet Union.

The agreement, along with another licensing agreement with Finland's SF Cleanair, provides for the establishment of a joint venture to manufacture the EEC precipitator internals at the Semibratovo fac

When you need to know it as it happens

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tory. EEC's technology will permit Fingo to significantly reduce its precipitator weight which constitutes the bulk of the precipitator manufacturing cost.

EEC's technology will be applied primarily by the pulp and paper and power generation industries to meet clean air requirements.

Cameco Signs Uranium Processing Deal

· Canada's Cameco Corp. on August 18 announced that it has signed an agreement in principle to purchase uranium resulting from the dismantlement of Russian nuclear weapons, said a company statement. The agreement covers the purchase by Cameco, France's Cogema, and US uranium trader Nukem Inc. of the majority of the uranium becoming available through 2006 as a result of the dilution in Russia of weapons grade highly enriched uranium (HEU) to commercial grade low enriched uranium for delivery to the US Enrichment Corp. (USEC).

In conjunction with the purchase, Cameco, Cogema, and Nukem will advance to the Russian Atomic Energy Ministry (Minatom) up to one-half of each year's aggregate purchase price to a maximum of $100 million against deliveries.

The purchase agreement with Cameco, Cogema, and Nukem is for at least 10 years.

Azerbaijan's Aliyev in Poland

· Azeri President Geidar Aliyev signed six cooperation agreements during a three day visit to Poland this week, the first such visit of an Azeri leader since the country became independent in 1991. The agreements covered the economy, trade, civil aviation, mutual support and protection of investments, as well as culture, science, and tourism.

During the three days, Aliyev held talks with Polish President Alexander Kwasniewski, the prime minister, foreign minister, and chairmen of both chambers of parliament, as well as meeting with Polish businessmen. During the talks, Aliyev said that Azerbaijan would support Poland in its entry into NATO. The two sides also agreed to set up representative offices in each other's capitals.

Turkmen President to Germany

· Turkmen President Saparmurat Niyazov arrived in Germany on Wednesday for a four-day official visit, during which the two sides are expected to sign several bilateral documents including agreements on mutual protection of investments, cooperation in air service and culture. NIYAZOV met with his German counterpart Roman Herzog Wednesday and with Chancellor Helmut Kohl today.

Niyazov is scheduled to visit Cologne, Munich, and Berlin, where he will meet the heads of a number of the major German companies and banks of Germany, including Siemens, Mannesmann, Daimler-Benz, Ruhr Gas, and Deutsche Bank.

Mannesmann to Built Turkmen Plant

· Germany's Mannesmann Demag AG said today that it signed a contract with the government of Turkmenistan to build a $100 million petrochemical plant in the Central Asian country, reported Reuters. Mannesmann said the plant would produce ethylene and polyethylene plastics used in consumer products. The plant would be the first of its kind in Turkmenistan and would use natural gas from the Caspian Sea region for energy.

South Caucasus & Central Asia

Ramco Says Progress in Georgia

· Britain's Ramco Energy Plc. today announced that it has signed an agreement with US IMC Geophysics Ltd. to undertake a 2D seismic survey of Block 10 within the Kaheti District of Georgia and that work has now commenced on the Block, said a Ramco press release. Ramco, an independent energy company focused on the former Soviet Union and Eastern Europe, signed a Production-Sharing Contract for Block 10 with Georgian state oil company Saknavtobi on June 6, 1997. A presidential decree ratifying the contract was signed August 17.

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

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

Svetlana Korobov, Contributing Editor

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