DAILY REPORT ON RUSSIA

AND THE FORMER SOVIET REPUBLICS

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

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Daily intelligence briefing on the former Soviet Union

Wednesday, October 29, 1997

Izvestia has reportedly been considering a partnership with Aeroflot, which became impossible after the story was published, said Golembiovsky.

Basayev Named Acting Chechen Premier

· Chechen President Aslan MASKHADOV has named Shamil BASAYEV as acting Prime Minister, reported RFE/RL Newsline. BASAYEV accepted and stated that he and MASKHADOV had now "...found some common ground." His primary responsibility will be to stabilize the internal situation in Chechnya which he believes will require implementing legislation on weapons control.

BASAYEV, a former field commander, led a rebel raid against the Russian town of Budyennovsk in June 1995, taking 1,000 people hostage in a local hospital. basayev served as a Deputy Prime Minister in the Chechen government formed last January, but quit after only a few months.

Duma Considering Security Agency Law

· The Russian State Duma today will consider a draft federal law on the structure of Russia's state security agencies, reported Russian television. The Duma will also discuss amendments to Russia's current Criminal Code, in particular the article which defines penalties for non-payment of salaries, wages, pensions, scholarships, and other allowances.

Furthermore, the Duma will consider a draft federal law on amending the existing law on general principles of local government and draft legislation on a supreme

Russian Federation

Politics

Austrian Chancellor Klima Arrives in Moscow

· Austrian Chancellor Viktor Klima arrived in Moscow with 40 leading Austrian businessmen today to discuss economic bilateral cooperation and Russia's relationship with the EU. The Chancellor will meet with President Yeltsin and members of the Russian government, and attend the opening of Moscow banks.

Russian-Austrian trade turnover has declined in the past several years. Austrian investments in the Russian economy have been small, totaling only $300-480 million.

Reporter Fired Over Berezovsky Story

· Journalist Leonid Krutakov told today's Komsomolskaya Pravda that he was fired from the new daily Noviye Izvestia because of a story which compromised Security Council Deputy Secretary Boris Berezovsky. According to KRUTAKOV, Noviye Izvestia editor Igor GOLEMBIOVSKY refused to publish a story which alleged that BEREZOVSKY took hundreds of millions of dollars from state carrier Aeroflot and laundered it abroad.

Noviye Izvestia began publishing just this month. Former Izvestia editor GOLEMBIOVSKY started the paper with some former Izvestia reporters, including KRUTAKOV, after he was dismissed from Izvestia by that paper's new owners. According to GOLEMBIOVSKY, KRUTAKOV was fired because had written a story for Moskovsky Komsomolets, but nothing for Noviye Izvestia.

However, it appears that Berezovsky has interests in Noviye Izvestia. He was spotted at the party for the pilot issue for Noviye Izvestia, but refuses to confirm his involvement in the paper. Moreover, Novye

Today's News Highlights

Russia

Basayev Named Premier

Duma Considers Legislation

Stock Market Rebounds

Iran-Russia Oil Contract

South Caucasus & Central Asia

Ukraine-Georgia Sign Accords

Peacekeepers from Abkhazia?

Baku on Karabakh & CIS

Azeri Co. Exports Oil

Kazakh Economy Growing

Politics-Economics-Business

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Wednesday

October 29, 1997

Intercon's Daily

council for ethics and moral standards in the movie industry. The lawmakers are also expected to discuss a draft federal law on combating money laundering.

Economy

Ruble = 5,883/$1.00 (NY rate)

Ruble = 5,885/$1.00 (CB rate)

Ruble = 5,856|5,914/$1.00 (buy|sell rates)

Russian Stock Market Rebounds

· The Russian stock market, in line with many markets worldwide, recovered from much of Tuesday's decline in prices today. The RTS index fell by 19 percent on Tuesday and the ruble lost one percent of its value, but traders were back buying shares and rubles today.

On Tuesday night, the Federal Securities Market Commission ruled that stock exchanges and trading systems not open trading if their opening is more than 15 percent below the previous levels. However, this did not happen and trading was held, according to Commission chairman Dmitri Vasilyev.

Business

Russia, Iran Sign Oil Contract

· Iran and Russia have signed a contract permitting Russia to build an oil and petrochemical refinery in the Chahbahar free trade and industrial zone of southeast Iran, reported the OPEC news agency on Monday. The two nations also agreed to cooperate in the areas of exports, imports, and joint investments in various industrial activities at the port of Chahbahar.

Russia is also prepared for cooperation in constructing rail links, and oil and gas pipelines in the free trade zone. Iran and Russia also pushed for an immediate partnership in the transit of goods to the Central Asian states, via Chahbahar.

In addition, Georgian and Ukrainian officials signed seven intergovernmental agreements on cooperation in the areas of geodesy, cartography, tourism, pharmaceuticals, communications, culture, and payment of mutual debts.

Under the Declaration, Kiev stated that it is prepared to take part in peacekeeping operations in Abkhazia. Ukraine has offered to send peacekeeping forces to the area of conflict, if it receives a UN mandate.

Ukraine also pledged to help Georgia build up its navy and coastal defense forces. Ukraine has given Georgia one coast guard cutter and has promised to deliver four more.

The two presidents also discussed the planned Euro-Asian transport corridor which will bring Azeri Caspian Sea oil across Georgia to Ukraine. The first one million tons of oil are due to be delivered this year by ferry from Georgia's Black Sea port of Poti to Ukraine port of Ilyuchevsk near Odessa.

Peacekeepers to Leave Abkhazia?

· Russian First Deputy Foreign Minister Boris Pastukhov told reporters on Tuesday that Russian peacekeepers will withdraw from Georgia's separatist region of Abkhazia, unless there are "shifts in the political plane," reported Itar-Tass. The recent CIS summit in Kishinev extended the mandate of the Russian peacekeeping force until January 1, 1998.

"We are continuing our work to settle the conflict. However, we have firmly stated that we cannot be there infinitely," said Pastukhov.

Baku Rejects CIS Peacekeepers in Karabakh

· An unidentified Azeri government official told Interfax on Monday that Baku has rejected a proposal to send a CIS peacekeeping force to Nagorno-Karabakh, said today's RFE/RL Newsline. The official also said that Azerbaijan will not participate in any attempt to achieve greater integration with the CIS until a "just solution" of the Karabakh conflict is found. Arguing that all CIS states should be considered equal, the official accused Russia of seeing the CIS as an organization that is superior to its individual states.

Baku's newly-articulated stance on the CIS and its attempts link integration with the resolution of the Karabakh conflict are another indication of many CIS

South Caucasus & Central Asia

Ukraine, Georgia Sign Cooperation Deals

· Georgian President Eduard SHEVARDNADZE and his Ukrainian counterpart Leonid Kuchma on Tuesday signed a "Declaration of Two" in Tblisi promoting the development of cooperation between the two countries outside the framework of the CIS and other regional alliances.

When you need to know it as it happens

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Wednesday

October 29, 1997

Intercon's Daily

leaders impatience with Russia. Whereas in the past, CIS leaders gave lip service to CIS integration, in large part to appease Russia, they are now starting to loudly and publicly criticize the CIS as unproductive and ineffective. They are also beginning to use Russian desires for greater integration to push Moscow on certain issues.

Azeri Co. Develops New Oil Export Route

· Private Azeri company Transchart Co. Ltd. has received permission from the Azeri government to begin transporting Central Asian oil to western markets from a reconstructed oil terminal in the Baku port, reported Turan news agency this month. Transchart has modernized the Lesnoy terminal, which had been out of operation for 10 years.

In addition, the company built a pipeline connecting the terminal to railway lines and an oil cargo pier has been built to international standards. This will allow oil to be pumped into 20 tanker cars simultaneously.

Transchart Co. Ltd. was established in July 1995, according to Turan. It owns three oil-loading vessels and transports oil products for export and import along the Turkmenbashi-Baku-Batumi route.

In September, the company transported 106,000 tons of Azeri state oil company SOCAR oil products to the world market. These exports are expected to grow to about 500,000 tons.

Transchart is the general agent for a number of foreign companies and it charters vessels to transport cargoes. It has representative offices in Astrakhan (Russia), Batumi (Georgia), Turkmenbashi (Turkmenistan), and Tehran (Iran).

Transchart President Fuad Rasulov told Turan that the company had decided to expand its business and get involved in the shipment of oil and oil products from tankers to railway tanker cars to take advantage of the rapid increase in cargo traffic along the Transcaucasian corridor.

The capacity of the new oil cargo pier is 500 tons per hour. The port has been leased for five years with the possibility of an extension.

In the future, Transchart is planning to build storage facilities with a total capacity of 10,000-15,000 tons. This will allow Transchart to transport 600,000-700,000 tons of oil per year.

"Our task is to receive oil from tankers and load it into railway tanker wagons, then deliver this to Boyuk Kasik on the Azeri-Georgian border," RASULOV is quoted as saying.

The company is now preparing to receive its first tanker from Turkmenistan. "We have already signed a contract with the Swiss company Glencore to deliver oil and oil products via the route Turkmenbashi-Baku-Batumi," said Rasulov.

The first tanker carrying diesel (4,600 tons) will soon arrive from Turkmenistan, then the transportation of Kazakh crude oil will begin. The company initially plans to transport about 30,000-50,000 tons of Central Asian oil via Azerbaijan every month.

Kazakh Economy Growing

· According to the Kazakh State Statistics Bureau, the Kazakh economy grew steadily in the first nine months of 1997, with industrial and agricultural output rising 3.6 percent and 1.5 percent, respectively, compared the same period in 1996, reported Xinhua. Industrial production reached 593 billion tenge (about $7.8 billion) during January-September. Agricultural output amounted to 230 billion tenge (about $3.03 billion) during January-September.

However, Kazakhstan's trade turnover during the first eight months of this year declined one percent to $6.673 billion, compared with the same period last year. The decline was mainly attributed to a decrease in trade with CIS countries. Kazakhstan's trade with CIS states in January-August accounted for 53 percent of its total, dropping from 74 percent in the same period of last year.

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

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