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

Daily intelligence briefing on the former Soviet Union

Monday, November 10, 1997

Central Bank Drops New Ruble Rate

· The government and the Central Bank of Russia have announced that they will support an average exchange rate of 6.1 rubles to $1 during 1998, and an average rate of 6.2 ruble to $1 from 1998-2000, reported Reuters. From 1998-2000, the exchange rate will be allowed to fluctuate no more than 15 percent in either direction of the average rate, from 5.25-7.15 rubles to the dollar. The ruble's exchange rate does not mean a devaluation of the Russian monetary unit. Russian Prime Minister Viktor CHERNOMYRDIN said, "Determination of the policy of currency rate for the next three years is a sign of our confidence in prospects for economic development and confidence in our forces."


Gazprom Deal in Ilyushin's Hands

· Viktor ILYUSHIN, former First Deputy Prime Minister and presidential aide ousted in March by CHUBAIS, is the chief of public relations for Russian gas monopoly Gazprom. He is responsible for information and investor relations. Gazprom officials confirm he was appointed to the company's management board in May. Mr. ILYUSHIN will be one of the company's board members to decide whether or not to continue the controversial oil project with France and Iran.

The US threatened sanctions have put pressure on American companies involved in the deal but has failed to deter them, particularly Goldman Sachs who is preparing the necessary financing.

Russian Federation


Yeltsin Appoints New Navy Commander

· Russian President Boris YELTSIN on Saturday appointed Admiral Vladimir KUROYEDOV to Navy Commander-in-Chief, after Yeltsin removed Admiral Feliks GROMOV from that position with no explanation. Leading speculation is that GROMOV was sacked because of corruption allegations, explosions at naval arms depots in the Far East, and his lack in moving efficiently toward naval reform. KUROYEDOV has the reputation of being a take charge, "...charismatic officer willing to initiate a deep shake-up of his service," reported the Financial Times.

Russia to Invest in ASEAN Cooperation

· Russia Foreign Ministry spokesman Gennady TARASOV announced on Thursday that Moscow will invest in cooperation with the Association of Southeast Asian Nations (ASEAN), reported Xinhua. He said that Russia can offer resources and technologies in the cooperation. TARASOV said the fund adds an important aspect to the emerging infrastructure of Russia-ASEAN cooperation. "Its main task is the advancement of Russian economic interests in this dynamically developing region of the world, the pooling of efforts of business circles and official organizations in that direction," said TARASOV. Deputy Foreign Minister Grigory KARASIN stressed that deepening the relation with the ASEAN by forming the National Russia-ASEAN Cooperation Fund is as important to Russia as building up the cooperation with China, Japan and India.


Ruble = 5,892/$1.00 (NY rate)

Ruble = 5,898/$1.00 (CB rate)

Ruble = 5,888|5,908/$1.00 (buy|sell rates)

Today's News Highlights


Gazprom Deal Ilyushin Decides

European Republics

Qualcomm Inc. in Ukraine

Ukrain-Austria Military Coop.

Baltic Asssmebly Documents

South Caucasus & Central Asia

Armenia-Bulgaria Discuss BSEC

Georgia-Bulgaria Cooperation

Kazakh Oil to Persian Gulf

Turkmen-Turkey Oil Via Iran




November 10, 1997

Intercon's Daily

President Boris YELTSIN commented, "Russia, France, and Iran are independent, freedom-loving states, and interference from any other state is not to be tolerated." The Journal of Commerce noted that YELTSIN's harsh criticism of the US sanctions could be the result of his past closeness with ILYUSHIN.

three special resolutions concern cooperation between the Baltic states with the European Union and NATO and their relations with Russia. Another document explained the Baltic states' view on Russian security guarantees. "The Baltic Assembly welcomes the Russian Federation's initiative to improve relations with the three Baltic countries and states that Lithuania, Latvia and Estonia see their security within the framework of European security system and EU and NATO membership," stated the measure. As reported earlier by Intercon, all three Baltic states rejected the Russian proposal for security. Latvia's Foreign Minister Valdis BIRKVAS commented on the security guarantee, "We see no reason, at this point, or in the foreseeable future, to alter course on national foreign policy geared toward integration with NATO," reported the Financial Times.

The resolution on the Baltic states' trans-Atlantic integration called on the parliaments and governments of 16 NATO member countries "to immediately move on to the next stage of Alliance enlargement and include Lithuania, Latvia and Estonia, not later than 1999, in the second group of countries invited to begin accession talks with NATO." The Baltic Assembly's next session will be held in Latvia in 1998.

South Caucasus & Central Asia

Armenia-Bulgaria Discuss BSEC

· Armenian President Levon TER-PETROSYAN and Bulgarian Foreign Minister Nadezhda MIKHAILOVA met on Friday to discuss ways to deepen economic cooperation and develop closer ties within the Black Sea Economic Cooperation forum (BSEC), reported Itar-Tass. The Bulgarian foreign minister said that 15 interstate agreements signed by both countries laid a foundation for bilateral relations. The talks led to the signing of a protocol on cooperation and several agreements calling for the development for furthering political and economic relations, including in such areas of fighting organized crime and terrorism, boosting trade and exchanging services.

MIKHAILOVA, accompanied by 20 businessmen engaged in the industries of construction, power production, transport, and pharmacy, signed an agreement on cooperation and mutual assistance with the Union of Businessmen and Industrialists of Armenia. The restoration of economic cooperation with the newly

European Republics

Qualcomm Inc. in Ukraine

· San Deigo based Qualcomm Inc. announced today a signed agreement with Telesystems of Ukraine Ltd. to supply and finance a turnkey Code Division Multiple Access (CDMA) wireless local loop (WLL) network to Ukraine. Qualcomm expects to supply in excess of $200 million of equipment and services in the initial phase of system deployment.

Installation is already underway in Kiev with the commercial launch scheduled for early 1998. Expansion of the system will soon follow in other regions. The network is expected to serve over 1.5 million subcribers throughout Ukraine. "CDMA wireless local loop technology is an optimal solution to rapidly provide high-quality, reliable telephone service to the population of the Ukraine, where over two million people are on a waiting list for telephone service," said senior vice president of strategic marketing Chris SIMPSON for Wireless Infrastructure Products Divison.

Qualcomm is a leader in commercial CDMA wireless local loop deployment systems with networks installed in Chelyabinsk and Rostov, Russia and New Delhi, India. Qualcomm develops, maufactures, markets, licenses and operates advanced communications systems and products based on its proprietary digital wireless technologies.

Ukraine-Austria Military Cooperation

· Ukraine and Austria will sign a program of cooperation between their defense ministries during an Austrian military delegation's visit to Kiev on Monday, reported Itar-Tass. The agreement is to be signed by Austrian Chief Military Inspector Karl MAIZEN and Ukrainian First Deputy Defense Minister Alexander ZATINAIKO.

Baltic Assembly Adopts Documents

· The Baltic Assembly ended its two-day session Saturday in Vilnius with the adoption of 10 documents, Itar-Tass reported. Among the documents signed,

When you need to know it as it happens




November 10, 1997

Intercon's Daily

independent states is a strategic priority of Bulgaria's foreign policy. Foreign Minister MIKHAILOVA hopes to gain further understanding as to whether the implementation of international oil and gas contracts on the Caspian shelf and in western Kazakhstan might reduce Bulgaria's dependency on Russian supplies.

Armenian Prime Minister Robert KOCHARYAN and MIKHAILOVA noted the importance of trilateral cooperation among Armenia, Georgia and Bulgaria

Georgia- Bulgaria Ratify Cooperation Agreement

· Georgian Foreign Minister Irakly MENAGARISHVILI and his Bulgarian counterpart Minister Nadezhda MIKHAILOVA Saturday signed a protocol on the exchange of notes on the ratification of the treaty of friendship and cooperation between the two countries, reported Xinhua. The agreement was signed by the two countries in Sofia on January 19, 1996. Georgian President Eduard SHEVARDNADZE also met MIKHAILOVA on bilateral relations.

Kazakhstan Oil to Reach the Persian Gulf

· Turkmenistan and Iran are planning a major pipeline project to allow Kazakh oil to reach the Persian Gulf for shipment to international markets. "The Persian Gulf pipeline, which could carry oil from Kazakhstan's vast Tengiz and Uzen oil fields in the north represents a Central Asian effort to breakout of the vise of isolation that has resulted from geography and political conflicts in the region," reported The Journal of Commerce. Turkmenistan has been in a dependent relationship with Russia, because Russia refuses to deliver its oil to European customers.

Shell Deal for Turkmen-Turkey Oil Via Iran

· Royal Dutch Shell announced on Wednesday plans to export Turkmenistan's natural gas to Turkey via Iran, reported Reuters. Last May the presidents of Turkey, Turkmenistan and Iran agreed to build a 3,000 kilometer gas pipeline from Turkmenistan through Iran and on to Turkey. The cost of the project is estimated at $1.5-2.5 billion. The pipeline is crucial to improving the economic outlook of former soviet nations, who are still dependent on Russia for oil.

Turkmenistan's current export of gas travels north through Russian controlled pipelines, which charges high prices for its gas. US executives agree that the shortest route from the landlocked territory to international markets in the west is through Iran. However, the US faces a tough political balancing act as it decides which is more important: sanctions against Iran or developing economic stability in former soviet nations.

Oil Flows From Chirag Deposit

· The Azerbaijan International Operations Company (AIOC) has begun to extract early oil at the Chirag deposit, one of the three contract oil fields in the Caspian Sea, reported RFE/RL Newsline. The first producing well is expected to give 5,000-10,000 barrels a day, or more than 1,000 tons.

The oil extracted in Chirag goes through a 176-kilometer underwater pipeline that connects the field with the Caspian coast. It comes to a terminal connected to the Baku-Grozny-Tikhoretsk-Novorossiisk oil pipeline with a length of 1,411 kilometers. The oil project's implementation has cost over $1.3 billion, or one sixth of all investments in the development of the Azeri, Chirag and Gyuneshli fields

Azerbaijan to Explore Oguz Oil Field

· Azerbaijan's parliament on Friday ratified the $2 billion agreement between Azerbaijan's state oil company SOCAR and Mobil to explore the Oguz oil field in the Caspian sea, reported Itar-Tass. The field is located about 80 kilometers south-east of the Apsheron Peninsula. The agreement was signed in Washington on August 1 during Azerbaijan President Geidar ALIYEV's first official visit to the US. President of the Aseri oil company Natik ALIYEV said that the agreement was the most profitable agreement for his country, since the share of his company accounted for 50 percent for the first time. The company has signed nine contracts totaling $30 billion. The exploration, which will take about three years, will take place at a depth of 50 to 300 meters in an area of 430 square kilometers. Experts estimate about 100 million tons of oil at the site.

Paul M. Joyal, President, Editor in Chief Clifton F. von Kann, Publisher Jennifer M. Rhodes, Principal Editor

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.

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 1997, Intercon International, USA Inc.

When you need to know it as it happens