Yeltsin Admits Aid Misses Chechnya

More than $100 million of Russian aid destined for reconstruction projects in war-shattered Chechnya has disappeared this year, Russian President Boris Yeltsin charged yesterday in the first official acknowledgment of wide-scale official corruption in reparations payments.

"The devil only knows where the money is going," Mr. Yeltsin said after a 90-minute meeting with Chechen President Aslan Maskhadov in the Kremlin.

Chechen officials have often complained that Moscow has done little to help rebuild the breakaway republic that its warplanes and artillery reduced to rubble during 20 months of fighting. Before yesterday's presidential meeting, top Chechen negotiator Movladi Udugov said his government would present demands totalling a massive $260 billion, more than half Russia's annual income.

Yeltsin said that while Moscow had allocated $138 million to Chechnya this year, only $21 million had reached the National Bank of Chechnya. "Thorough work must be done to establish where the rest of the sum was lost," the Russian president warned.

Yesterday's meeting, the first since the two presidents signed a peace treaty last May, was "a step towards one another," Yeltsin told reporters afterwards. But the two leaders appeared to have made no progress on the crucial issue that divides them - Chechnya's independence.

Mr. Maskhadov had come to Moscow insisting that the Russians should recognize his republic's sovereignty. "Our relations should be equal, based on a full-scale interstate treaty which would envisage mutual recognition, establishing embassies, and noninterference in one another's internal affairs," he said.

That, the Russians have repeatedly pointed out, would violate the terms of the truce signed a year ago that ended the 21-month war. Under the terms of that cease-fire, the question of Chechnya's status - part of the Russian Federation or not - was left deliberately unanswered until 2001.

A new treaty is to be drawn up, creating a "common economic, defense, and air space," Yeltsin announced Monday. But he said nothing about Moscow's key economic interest in Chechnya: an oil pipeline.

Chechnya has Russia over a barrel when it comes to Moscow's ambitions to keep a grip on regional oil exports, since Moscow depends on a 95-mile stretch of oil pipeline that runs through Chechnya.

Russia is desperate to ensure that as much of Azerbaijan's newly discovered oil as possible should be pumped to the outside world through Russian territory, rather than through neighboring Georgia. The first "early" oil is due to come on stream later this year, and Russia has already signed a deal to carry it to the Black Sea port of Novorossisk.

To fulfill the deal, it needs to make use of a stretch of pipe in Chechnya, but Grozny has been demanding 10 times as much in transport fees as Moscow says it is ready to pay.

And in a dispute that goes to the heart of the conflict over sovereignty, Russian Security Council chief Ivan Rybkin's proposal that Russia should both repair and guard the pipeline clashes with Chechyna's insistence that its troops ensure security.