SHEVARDNADZE TRIES CONCILIATION IN AJARIA; KEY OIL PIPELINE AT STAKE.

Georgian president Eduard Shevardnadze told the country on radio that he and his ministers held "extremely serious meetings" in Batumi with the Ajarian Autonomous Republic’s Supreme Soviet chairman Aslan Abashidze and other Ajarian officials. Shevardnadze stated that he and the central government agreed to allow Ajaria to retain revenues from customs and value-added taxes rather than having to turn those revenues over to Tbilisi. The Georgian president indicated that the central government may also transfer some budgetary funds to the Ajarian budget, subject to parliamentary approval in Tbilisi. Shevardnadze evidenced optimism that these steps would defuse the recent tensions between the central and the Ajarian governments. (Radio Tbilisi, December 30)

Those tensions, which involved Ajarian and Russian military moves last month, had erupted unexpectedly and featured Ajaria-based Russian border troops in a prominent role in Batumi. (see Monitor, December 10, 19, 20, and 24) Abashidze’s demand for a free economic zone touched a raw nerve in Tbilisi because in the late- and post-Soviet period such demands have often formed the first rung on the ladder of Moscow-encouraged separatism. Shevardnadze has moved cautiously in managing the situation so as to avoid a third regional conflict, which in turn could render the Abkhaz and South Ossetian conflicts even more intractable. Ajaria, moreover, is the envisaged route for the Baku-Batumi (Supsa) oil pipeline that would carry "future" Azerbaijani and possibly Kazakh oil to international markets via Turkey. Separatist-induced instability in Ajaria could either jeopardize that plan or result in de facto Russian control of the pipeline route and the Batumi/Supsa oil terminal. Either outcome could also strengthen Moscow’s hand in its efforts to divert the oil flow in the opposite direction — to Novorossiisk.

IMF Unhappy with Armenian Economic Performance.