UZBEKISTAN TO JOIN GUAM. Speaking at a press conference in Tbilisi on 19 April, Georgian President Eduard Shevardnadze said the presidents of the four GUAM states (Georgia, Ukraine, Azerbaijan and Moldova) will formally announce the accession of Uzbekistan to that alignment in Washington later this week. Shevardnadze added that the five members have drafted documents redefining the nature and objectives of that organization. He declined to give details, however, other than to say that the draft does not include military cooperation, according to ITAR-TASS and Interfax. LF

Several recent developments in the southern Caucasus may fundamentally change power relationships not only in that region but also across a much larger portion of the world as well. Precisely because of that possibility, some of the players both within the region and beyond appear to be positioning themselves to respond with new moves.

On 17 April, leaders from the Caucasus and Central Asia marked the opening of a 515-mile pipeline that will carry oil from the Caspian basin to the West. The same day, Ukraine, Georgia, and Bulgaria signed a treaty creating a new Black Sea rail ferry route. Both of these moves, which have been widely welcomed in the West, will allow the countries of this region to reach Europe without passing through either Russia or Iran.

Together, these moves on the chessboard of the Caucasus may come to transform the geopolitical environment of both this region and Eurasia as a whole. As one senior Azerbaijani official put it, these steps mean "the world to us," giving Baku "direct access to the West" and thus allowing it to free itself from Russia "after 200 years."

Indeed, if both this pipeline and ferry arrangement work out, Russian leverage over these countries will decline still further. And as if to underline the decline in Russian power there, approximately 100 soldiers from Georgia, Azerbaijan, and Ukraine last week held four-day military maneuvers at Krtsanisi, just east of Tbilisi.

While the number of troops involved was small, such a joint exercise highlights the continuing decay of the Russian-backed CIS as the chief security organization of the post-Soviet region. And it gives new content to GUAM, an organization that includes Moldova as well as the three countries that took part in the maneuvers.

Indeed, many Russian officials are likely to view the exercise as a direct challenge to Moscow, particularly because it came on the heels of a decision by several CIS states not to continue to participate in the Commonwealth's defense agreement. Even more, officials in other countries in this region are certain to be following this exercise as a test of what may now be possible for them as well.

But precisely because so much is at stake, not only for these countries but for others as well, several states have moved some pieces on this chessboard as well. On 14 April, Russia and Iran signed an agreement to cooperate in the exploitation of oil and gas resources in the region, a direct response to the new Azerbaijan-Georgian pipeline.

Russian Oil Minister Sergei Generalov and his Iranian opposite number, Bijan Namdar Zanganeh, initialed an accord that will expand the already large degree of cooperation between the two states from which many in the Caspian basin seek to become more independent.

Whether this accord will give the two states more opportunities to counter the new east-west corridor in the southern Caucasus remains to be seen. But on 14 April, Moscow took another step designed to defend or even expand its influence there.

In Yerevan to mark Armenia's expanded participation in CIS air defense, General Anatolii Kornukov, the commander of the Russian Federation air force, announced that Moscow will send more fighter jets to its military base in the Caucasus country.

Kornukov went out of his way to say that this new buildup was in no way a threat to Azerbaijan, with which Armenia has been locked in a dispute over Nagorno-Karabakh for more than a decade. But few in Baku or elsewhere are likely to see this latest Russian move as anything but precisely that.

Indeed, when Moscow recently deployed advanced S-300 missiles and MiG-29 fighters to Armenia, Azerbaijanis from President Heidar Aliev down protested that move as inherently destabilizing. They are almost certain to raise their voices again now that Moscow has introduced still more weaponry into Armenia, with which the Russian Federation maintains extremely close ties.

Such moves and countermoves serve as a reminder not only of how complicated this region remains and how much is at stake for how many people but also of how difficult it is for any of the participants in this geopolitical game to make a move that the other side cannot quickly move to counter. Thus neither side is likely to be able to move into an endgame anytime soon.
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EBRD POSTPONES DECISION ON NUCLEAR INDUSTRY LOANS TO UKRAINE. The European Bank for Reconstruction and Development (EBRD) has postponed a decision on whether to finance the completion of two nuclear reactors in Ukraine to compensate Kyiv for energy loss following the expected closure of the Chornobyl power plant. EBRD Deputy Chairman Charles Frank said that while the cost of finishing the two reactors, located in Khmelnytskyy and Rivne, meets bank criteria, Ukraine must also meet international nuclear safety requirements and reduce barter payments for electricity before receiving an EBRD loan, an RFE/RL correspondent in London reported. Frank added that other criteria include the "real privatization" of energy distribution firms and the availability of financing from other institutions. JM

PUSTOVOYTENKO PREDICTS FINANCIAL STABILITY FOR 1999. Ukrainian Premier Valeriy Pustovoytenko told journalists on 19 April that the hryvnya exchange rate will remain stable at some 4 hryvni to $1 this year, the "Eastern Economist Daily" reported. Pustovoytenko confirmed that Ukraine will meet its 1999 macroeconomic targets. He added that inflation in the first quarter of 1999 stood at 3.5 percent, while the budget deficit and credit rates were also kept within projected limits. However, Pustovoytenko also noted that from January to March, the state budget was able to collect only 15.9 percent of planned revenues. JM

UKRAINE, SWITZERLAND TO COOPERATE IN COMBATING CRIME. Ukrainian Prosecutor-General Mykhaylo Potebenko and his Swiss counterpart, Carla del Ponte, met in Kyiv on 19 April to sign an agreement on fighting organized crime and money-laundering. "We have prepared this agreement in a fairly short time, thanks to the joint investigation we're already conducting," Del Ponte commented, referring to the Ukrainian-Swiss probe into former Premier Pavlo Lazarenko. "Switzerland has a developed banking system which certain scoundrels from Ukraine use to hide their illegal revenues," AP quoted Potebenko as saying. JM