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

Monday, March 16, 1998

ber 1996 and ends June 3, Russia is to ship to Iraq goods worth $257.2 million. France's share is $110.7 million of food and medical supplies. Both Russia and France support the lifting of sanctions against Iraq to resume their lucrative trade with Baghdad and in hopes that Iraq will pay off its massive debts.

Anniv. Of Dept. for Combating Organized Crime

· In connection with the fifth anniversary of the Moscow Regional Department for Combating Organized Crime (RDCOC), Chief Police Major-General Nikolai KLIMKIN announced that the RDCOC, "under the Russian Interior Ministry have disclosed 9,871 crimes in the period from 1993 to 1998." KLIMKIN noted that the special organization for combating organized crime was, "modeled after the FBI, whose duty is to disclose the active members, leaders and bosses of various criminal rings, to investigate all the details of their crimes." The RDCOC has cut short the criminal doings of 2,827 organized bandit gangs, numbering more than 9.5 thousand men. It has confiscated four thousand pieces of firearms, 1,053 kilograms of explosives, and 571 kilograms of drugs. RDCOC men's main efforts are concentrating on liquidating criminal rings and gangs that specialize in extortion, including those from commercial structures, thefts, robberies, illegal weapons trade, drug trafficking, organization of fictitious firms, and contract murders, or are endeavoring to establish corrupt contacts within the governing bodies. RDCOC devotes much attention to combating organized groups in economy and corruption in general,

Russian Federation

Politics

Russia and Czech Sign Agreements

· Russia and the Czech Republic on Friday signed several intergovernmental agreements to increase their economic and trade relations with specific cooperation projects. The Czech-Russian Economic and Technological Cooperation Commission signed an international car communication agreement, two interdepartmental agreement, as well as the regulations of the commission's work, transferring its work to a permanent basis. The two sides worked out 15 joint projects ranging from exploration of oil and gas to science and technological cooperation. The cooperation agreements were signed between the Russian and Czech ministries of industry and trade, the ministries of economics and foreign economic relations. Executive secretary of the Russian side in the commission Alexander MAZILOV said the next session is to be held in Moscow in 1999. Though commission sessions have been held annually since 1994, only this one has defined a mechanism of the commission's work on a permanent basis.

Fed. Council Rejects Iraq Cooperation Law

· The Federation Council on Friday rejected a law on expanding cooperation with Iraq in a vote of 70 against to 30 with three abstentions. Federation Council deputy speaker Vasilii LIKHACHEV said that the vote does not signify that the council has changed its position on cooperation with Iraq, but that any bilateral cooperation must correspond to UN resolutions, RFE/RL Newsline reported. According to UN documents made public on Friday, Russian has replaced France as Iraq's leading trade partner under the oil-for-food deal, the exception to UN trade sanctions imposed on Iraq. Russia is the main importer of Iraqi crude oil worth $2 billion. Under the current phase of the oil deal, which started Decem

Today's News Highlights

Russia

Court Reviews Legist. Process

Russia-Iran Continue Talks

Thatcher Heads Rus-Chechen

IMF Reviews Loan in May

European Republics

Crimean Tatars Demand Vote

South Caucasus & Central Asia

Georgia-TurkeyConfirm Pipeline

Kazakh-Iranian Agreements

Kazakh-Bulgaria Agreements

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KLIMKIN said. The RDCOC Chief said that the activities of 14 organized gangs, dealing in firearms, were cut short in a matter of only one year. Nineteen channels for delivering weapons to Moscow were liquidated. KLIMKIN noted, that the success did come at the cost of eighteen RDCOC men, who were killed from 1993 to 1998.

Constit. Court Reviews Legistlative Process

· The Russian Constitutional Court met today for a hearing on presidential responsibilities of signing into law the bills passed by the Russian State Duma and the Federation. President Boris YELTSIN summoned his representative to the Constitutional Court, Sergei SHAKHRAI for a, "report on the situation which has emerged in the court with inquiries of the Russian President and on the progress with deliberating cases with participation of the presidential side." The Duma and Federation Council had filed with the Constitutional Court an inquiry on the restitution law after YELTSIN refused to sign it. The law declaring the Soviet Union's trophy art staying in Russia to be national property was passed by the parliament but vetoed by the President.

The Constitutional Court will not address the issue of trophy art at today's meeting, but will consider the parliamentary procedure of passing the law. The parliament said in its inquiry that YELTSIN failed to meet his constitutional responsibilities by refusing to sign the law. YELTSIN vetoed the restitution law in March of the last year on the grounds that it contravened international law and had technical faults. SHAKHRAI admitted that the President is obliged to sign laws within seven days if both houses of parliament override his veto. However, SHAKHRAI notes that both houses of parliament used illegal balloting procedure in order to override YELTSIN's veto. In April of 1996, the Constitutional Court ruled that YELTSIN may return laws unsigned to the parliament, if he concludes there are procedural flaws in the adoption of those laws.

Russian Continues Nuclear Plans with Iran

· The Russian Atomic Energy Ministry expects the president of the Iranian Organization for Atomic Energy Golyam AGAZADE to visit Moscow in May for discussion of the Busher nuclear power plant project, in which Russia is a party. Russian atomic energy minister's press secretary Georgy KAUROV said today, "We [Russia] shall never refuse this contract

because it is very beneficial for us." KAUROV said the invitation had been sent to AGAZADE by former atomic energy minister Viktor MIKHAILOV and was reaffirmed by the new minister, Yevgeny ADAMOV, during his recent meeting with Asadulla SABURI, vice president of the Iranian Organization for Atomic Energy. ADAMOV assured SABURI that Ukraine's refusal to export a turbine for the Busher plant, "will not have a marked influence," on the project, as Russia will contract for manufacturing the turbine. Russia and Iran reached an accord in February, under which Russia undertakes turn-key construction of the plant, since Iranian specialists are lagging behind their part of schedule. The Busher nuclear power plant is expected to be complete in the middle of 1999. The plant's initial power unit will be one Russian-made light water reactor VVER. The contract is worth $780 million.

Rus-Chechen Agree on International Airport

· Russia and Chechnya on Friday in Nazran held the tenth session of the joint negotiating commission on drafting a comprehensive treaty. Russian Deputy Prime Minister Ivan RYBKIN, who heads the commission for Russia, said that the talks focused on the implementation of earlier agreements over the past 18 months, and the two side agreed to existing accords largely sufficed for an uninterrupted restoration process in Chechnya. However, there was no progress on the sovereign status of Chechnya. RYBKIN informed Chechen negotiators about specific measures taken by Moscow, including a governmental draft resolution to grant the Sheikh Mansur airport in Grozny international status within the framework of the CIS. The Chechen side accepted the proposal and the airport will be refurbished by Russian and Chechen structures. RYBKIN and Chechen negotiator Movladi UDUGOV discussed a draft agreement on the payment of pensions to Chechens and other documents dealing with improvement of living conditions in Chechnya. The deputy prime minister declared that the instruction issued by President Boris YELTSIN last year to set 475 billion old rubles aside for Chechnya must be implemented without delay; only 112 billion rubles of the sum has been released. The program to rebuild Chechnya is estimated at almost 5 billion new rubles. Russia agrees to spend some $2 million on Chechen children. The sides considered the need to sign a new agreement on the transportation of Caspian oil

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from Baku to Novorossiisk via Grozny which is due to expire with the transportation of 200,000 tons of oil via the pipeline going trough Chechnya. UDUGOV noted that the main condition of further meetings between Russia and Chechnya is fulfillment of the accords reached earlier. However, in the commission's opinion, there is no need to hold regular meetings in future. RYBKIN said that the legal basis formed by the commission is enough to solve key problems in the Moscow-Grozny relations.

Thatcher to Head a Rus-Chechen Review Group

· Chechen President Aslan MASKHADOV said that former British Prime Minister Margaret THATCHER has agreed to head a group that will review relations between Russia and Chechnya. MASKHADOV met with THATCHER during his private trip to England. THATCHER's group will examine all legal documents and agreement between Russia and Chechnya before and after the civil war. MASKHADOV is confident that the examinations will show that Chechnya never joined the Russian Federation or the Soviet Union voluntarily. MASKHADOV also met with political and business leaders in an effort to convince them to invest in the Chechen economy. He said he achieved all he had planned during his visit.

Economy

Ruble = 6,088/$1.00 (NY rate)

Ruble = 6,090/$1.00 (CB rate)

Ruble = 6,067|6,113/$1.00 (buy|sell rates)

IMF To Review Russia's Next Installment in May

· Head of the International Monetary Fund's (IMF) permanent mission in Russia Martin GILMAN said the IMF will consider another installment of the $10.2 billion extended finance loan to Russia no earlier than in May. The installment may exceed the normal quarterly limit of $700 million. The IMF directors will meet in Washington in two months to discuss the IMF mission's report which visited Moscow in February. The Mission reviewed the Russian economy's performance in the fourth quarter of 1997 as well as the general condition of monetary, credit and tax policies as of the end of March. A decision to extend another EFF tranche to Russia may be made only at that time. GILMAN explained that the IMF linked the tranche with the program for cooperation with Russia in 1998, which has not yet been approved. The Russian government and the Central Bank have already

drafted their version of the agreement and dispatched it to the IMF leadership. The document may be approved soon and then must be signed by Prime Minister Viktor CHERNOMYRDIN and Central Bank Chairman Sergei DUBININ. GILMAN said it had been agreed with the Russian government that the current loan agreement would be prolonged for another twelve months.

European Republics

Crimea Tatars To Block Parliament Elections

· Crimea Tatars intend to block the local parliamentary election, scheduled to be held on March 29, because they are not satisfied with the election law which does not provide for their, "guaranteed and effective" representation in the parliament of the peninsula. Leader of the Crimea Tatars' Majlis Mustafa DZHEMILEV did not rule out a possibility of mass civil disobedience actions to be staged on election day. However, he said that the plans would be finalized after the Ukrainian Parliament decides on the Crimea Tatars' demands on March 24. To exert pressure upon the Ukrainian parliament on March 24, Crimea Tatars plan to picket the building of the parliament. They will also place pickets at the OSCE and UN missions in Kiev. The Crimea Tatars were offered a single-term quota of 14 seats in the parliament of Crimea. DZHEMILEV believes that quoting should be extended for another parliamentary term. It is highly doubtful that the Ukrainian parliament will decide in favor of extending the Tatar quota for another parliamentary term. To complicate matters further, many Tatars have no Ukrainian citizenship, and consequently, cannot take part in the vote. The parliament is likely to grant voting rights to all the Crimea Tatars with permanent residence in Crimea, notwithstanding their citizenship.

South Caucasus & Central Asia

Shevardnadze Decides to attend CIS Summit

· Georgian President Eduard SHEVARDNADZE announced today that he will attend the CIS summit in Moscow on March 19-20th. Both SHEVARDNADZE and Azerbaijan President Geidar ALIYEV's security council had advised them not to attend. However, SHEVARDNADZE said he would attend, "out of respect for my colleagues." SHEVARDNADZE said his, "participation in the Moscow sum

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mit will be useful only if to consider the issue of refugee return to Abkhazia." He added that, "Georgia should not be left out of those processes that are happening in the territory of the former USSR, we should pool efforts to ensure a stable development and independence in our countries, and this is well understood by most presidents of the CIS countries."

Georgia and Turkey Agree on Pipeline Route

· Georgian President Eduard SHEVARDNADZE and Turkish Prime Minister Mesut YILMAZ concluded a "historic" visit in which the two sides agreed on the Baku-Ceyhan pipeline. Georgian Foreign Minister Irakly MENAGARISHVILI hailed the document because it unveiled the implementation of a global project to transport Azerbaijan oil from Baku to Turkey's Ceyhan, via Georgia. SHEVARDNADZE said oil and gas from Baku to Ceyhan will be transported through Georgia, there by avoiding tanker congestion in the Bosphorous. This route is favored by the US, since it avoids transit of oil through Iran. The two sides signed six documents, including a program of educational, scientific and cultural relations, an agreement on cooperation in such areas as coast guard and energy, a document on contacts between the two patent departments and a consular convention. Ankara and Tblisi agreed to open the third checkpoint Cyldyr-Aktash, launch an air service between Trabzon and Tblisi, use jointly an airport in Batumi, and build a motor highway Cyldyr-Tblisi and a railway line from Kars, eastern Turkey. The two sides also reached an agreement to build a high voltage power line from Azerbaijan to Turkey via Georgia. SHEVARDNADZE said, "this visit is especially important given the prospects for cooperation which are reflected in the intergovernmental documents we signed." YILMAZ described Turkish-Georgian talks as very useful. He expressed the hope that bilateral negotiations will help give a new impetus to the development of trade and economic relations between the two countries.

Iran-Kazakh Discuss Oil Cooperation

· Iranian Foreign Minister Kamal KHARRAZI and his

visiting Kazakh counterpart Kasymzhomart TOKAYEV met Friday to discuss the importance of oil cooperation between the two countries. KHARRAZI stressed the need for practical steps towards oil cooperation and called for exploring new fields of cooperation. Kazakhstan intends to export some of its oil through Iran. The Kazakh government has been receiving pressure from the US to avoid Iran. Referring to the status of the Caspian Sea, KHARRAZI urged for speedy formulation of its legal regime based on the consensus of the five littoral states. As long as the Caspian Sea legal regime has not been adopted, any unilateral exploitation of its resources will be detrimental to the interests of other neighboring states, he said. TOKAYEV said that promotion of cooperation with Iran topped on the agenda of Kazakhstan's foreign policy, adding that Almaty has made extensive efforts to further expand relations with Tehran. Regarding the three Iranians arrested in Kazakhstan on charges of espionage, the Kazakh foreign minister expressed the hope that with their release in the coming days, misunderstandings between the two countries would be removed.

Kazakh-Bulgaria Sign Treaties

· Kazakhstan's Labor and Social Security Minister Natalia KORZHOVA and Bulgarian Transport Minister Wilhelm KRAUS on Friday signed a package of treaties on cooperation in oil and gas supply, and in the construction industry, at the end of the first session of the Kazakhstan-Bulgaria inter-governmental commission for trade, economic, scientific and technological cooperation. The inter-governmental session also examined possibilities of long-term bilateral cooperation in the export of Kazakh oil to Bulgaria and through it to eastern and central-western European countries. Trade between Bulgaria and Kazakhstan has declined by $4 million from 1996 figures to only $12 million in 1997. Kazakhstan President Nursultan NAZARBAYEV and his Bulgarian counterpart Petar STOIANOV, in an effort to increase bilateral trade, agreed to establish the commission last month while attending the World Economic Forum in Davos, Sweden.

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

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