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RFE/RL NEWSLINE Vol. 1, No. 74, Part II, 16 July1997
This is Part II of Radio Free Europe/Radio Liberty's Newsline. Part II is a compilation of news concerning Central, Eastern, and Southeastern Europe. Part I, covering Russia, Transcaucasia and Central Asia, is distributed simultaneously as a second document. Back issues of RFE/RL NewsLine are available through RFE/RL's WWW pages: http://www.rferl.org/newsline/search/ Back issues of the OMRI Daily Digest are available through OMRI's WWW pages: http://www.omri.cz/ xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part II *EUROPEAN COMMISSION RECOMMENDS SIX COUNTRIES FOR MEMBERSHIP TALKS *ANOTHER EXPLOSION IN REPUBLIKA SRPSKA *MILOSEVIC ELECTED FEDERAL YUGOSLAV PRESIDENT End Note Bulgaria's Currency Board Gets Off to a Good Start xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx EAST-CENTRAL EUROPE EUROPEAN COMMISSION RECOMMENDS SIX COUNTRIES FOR MEMBERSHIP TALKS. The European Commission has officially recommend that six countries be invited for talks on the first wave of EU expansion: Poland, the Czech Republic, Hungary, Slovenia, Estonia, and Cyprus. Commission President Jacques Santer presented the recommendation to the European Parliament on 16 July. EU leaders are due to make a final decision on which countries will be invited to early membership talks at a summit in Luxembourg in December. Also on 15 July, Danish Foreign Minister Niels Helveg Petersen said Denmark wants the EU to start entry talks with all East European candidates at the same time. REACTIONS IN EAST EUROPEAN COUNTRIES TO EU ANNOUNCEMENT. Jaroslaw Pietras, deputy head in Poland's government committee overseeing the EU membership drive, said his country feels like a business that has "received the approval of its auditors." Hungarian Foreign Ministry spokesman Gabor Horvath on 15 July told journalists in Budapest that the EU Commission decision is an indication that Hungary has met the criteria for accession. In Tallinn, Foreign Ministry spokesperson Ehtel Halliste said Estonia is very happy about the decision. Czech Foreign Ministry spokesman Vit Kurfuerst said his country is ready for "difficult" negotiations leading to EU membership. Meanwhile, the Slovenian parliament on 15 July overwhelmingly ratified an association agreement with the EU intended to speed the country's entry into the union. Romanian officials said any enlargement of the EU in waves would be "artificial and discriminatory." BELARUSIAN PRESIDENT, OPPOSITION REOPEN TALKS. Alyaksandr Lukashenka on 15 July started a second round of talks with opposition members of the parliament under the auspices of the EU, ITAR-TASS reported. The EU has called on Lukashenka to declare the November 1996 referendum void and to restore the democratically elected parliament that was dissolved after that vote. Meanwhile, Lukashenka on 15 July signed a decree on new appointments, Interfax reported. Vladimir Rusakevich, formerly deputy prime minister responsible for social affairs, was appointed first deputy head of the presidential administration. Vladimir Zametalin was appointed deputy prime minister. Until now, he was State Press Committee chairman. UKRAINIAN PREMIER-DESIGNATE WANTS TO COOPERATE WITH PARLIAMENT. Valery Pustovoitenko, who has been nominated by President Leonid Kuchma as prime minister, told Interfax on 15 July that the future premier must be able to ensure political agreement between the government and parliament. "Without agreement with the parliament, laws cannot be passed and economic problems cannot be solved," Pustovoitenko said. He also said that if he becomes the prime minister, he "will have to organize the drafting of tax laws in a way that will allow us to shape a 1998 budget to the benefit of the people, the state, and the entrepreneurs." Pustovoitenko said the policy of radical economic reform, announced by the president in 1994, will not be changed. The parliament is scheduled to discuss his candidacy on 16 July. UKRAINIAN PARLIAMENT REJECTS BAN ON NATO TRAINING. Lawmakers on 15 July rejected a motion by left-wing factions to ban NATO training on Ukrainian territory later this summer, dpa and ITAR-TASS reported. The motion was proposed by the Communist, Socialist, and Agrarian factions. The Sea Breeze exercises are scheduled at the end of August off Ukraine's Crimean peninsula. Some 20 ships and 300 marines from the U.S., Ukraine, Bulgaria, Turkey, Greece, Italy, Romania, and Georgia are expected to take part. The left-wing factions claimed that the exercises, as well as an earlier training exercise this month, were unconstitutional. Foreign Minister Hennady Udovenko assured deputies that the exercises did not run counter to the Ukrainian Constitution. He said the fact that Kyiv has not applied to join NATO does not mean it should not cooperate with the alliance. ALMOST HALF OF UKRAINIANS WANT TO JOIN RUSSIA-BELARUS UNION. A poll conducted by the Kyiv-based Social Monitoring Center in May shows that some 44 percent of Ukrainians support their country's joining the Russian-Belarusian union, Interfax reported on 15 July. The poll was conducted among 2,007 Ukrainian citizens over the age of 15 and representing all regions of the country. Of the respondents, 32 percent said they were against Ukraine joining the Russian-Belarusian union, while 24 percent said they were undecided. ESTONIAN AUTHORITIES INVESTIGATE ALLEGED SALE OF KGB FILES. Estonian security forces are investigating the alleged sale of two KGB files reported to contain information on the links of two Estonian parliamentary deputies to the former communist secret service, BNS reported on 14 July. Clock collector Mati Zerel claims to have obtained the two files at a Russian immigrant's antique shop in the U.S. and to have offered them for sale in a Tallinn daily newspaper. Zerel also claimed that one of the implicated deputies bought both files from him. Under Estonian law, persons in possession of KGB files are obliged to hand them over to the security forces. ESTONIAN POLICE SEIZE SUSPECTED TERRORIST ACTIVE IN LATVIA. The Tallinn police have arrested a 35-year-old Estonian businessman accused of threatening to carry out terrorist acts in Latvia under the codename "Viktor," BNS and ETA reported on 15 July. The accused is suspected of threatening terrorist attacks on various buildings in the Latvian capital, including department stores and hotels, and of blackmail. In May, some 200 grams of TNT were found in a Riga store after "Viktor" had warned that a bomb had been placed there. He was detained on 11 July while attempting to cross the Latvian- Estonian border in possession of voice transformation equipment. Negotiations on his extradition to Latvia are under way. LITHUANIAN WAR CRIMES CASE SUSPENDED INDEFINITELY. The case against alleged war criminal Alexandras Lileikis has been suspended indefinitely because of the accused's failing health, Reuters reported on 15 July. Ninety-year-old Lileikis is charged with genocide in Nazi- occupied Lithuania in his capacity as head of the Vilnius branch of the security police. He returned to Lithuania last year after he was stripped of his U.S. citizenship. A spokesman for the Prosecutor- General's Office said a medical commission had determined that investigation procedures had to be halted. He did not say whether they would be resumed in the future. CENTRAL EUROPEAN FLOODS UPDATE. The worst of the flooding in Poland, the Czech Republic, and Slovakia seems to be over, according to media throughout the region. A spokesman for the Polish Red Cross told journalists on 15 July that many people are destitute after the flooding and that the organization has sent over 500 tons of food, clothing, and water to affected regions. Polish Finance Minister Marek Belka said that the government will need to borrow hundreds of millions of dollars for reconstruction and that a temporary additional tax may have to be imposed on Poles. In the Czech Republic, people have donated some $3.5 million for flood victims. The Czech army says more than 30,000 people were rescued in all by its helicopters and other means. More than 80 people are reported to have lost their lives in Poland and the Czech Republic. Some areas in both countries are still experiencing rising waters. Slovak President Michal Kovac on 15 July visited the village of Brodske, on the lower part of the Morava River, which is threatened with flooding, as flood waters move downstream along the river. REFERENDUM ON POLISH CONSTITUTION DECLARED VALID. The Supreme Court on 15 July upheld the validity of the 25 May referendum, which approved the country's first post-communist constitution, PAP reported. Opponents of the constitution had challenged the outcome because turnout for the referendum was only 42 percent. Under Polish law, a plebiscite generally is valid only when more than 50 percent of eligible voters take part. The Supreme Court ruled that the requirement did not apply to the referendum on the constitution because it took place under a separate regulation that did not specify turnout. SLOVAK PRESIDENT, PARLIAMENTARY SPEAKER RESPOND TO U.S. AMBASSADOR'S SPEECH. Michal Kovac told CTK on 15 July that the U.S. has given "clear and definite" reasons why Slovakia was not invited to join NATO and that the Slovak government should think about them. The president was responding to a speech by U.S. Ambassador Ralph Johnson saying his government had not supported the entry of Slovakia into NATO because of unsatisfactory and anti- democratic developments in two areas--the intolerant and unjust treatment of people whose opinions differ from those of the government and the growing centralization of power (see "RFE/RL Newsline," 15 July 1997). Ivan Gasparovic, chairman of the Slovak parliament, told Slovak Radio on 15 July that "it should be seriously considered whether it is possible for a foreign diplomat in Slovakia to speak about things in [such] a way." He argued that "these are [only] his opinions." HUNGARIAN PARLIAMENT UNANIMOUSLY ENDORSES NATO MEMBERSHIP. Lawmakers on 15 July adopted a declaration backing the country's accession to NATO. All 312 deputies present in the 386- seat legislature voted in favor and none abstained. Prime Minister Gyula Horn reaffirmed the government's intention to hold a referendum on joining NATO by the end of November. In other developments, the Prosecutor-General's office on 15 July ordered the Budapest Military Prosecutor's Office to press charges against several individuals involved in so-called "Operation Birch Tree," overruling the military prosecutor's decision to close the investigation on grounds of insufficient evidence (see "RFE/RL Newsline," 12 June 1997). HUNGARIAN OPPOSITION PARTY LEADER QUITS FACTION. Gyoergy Giczy, the chairman of the Christian Democratic Party (KDPN) and two other members of the KDPN faction in the Hungarian parliament, voluntarily left the faction on 15 July. Earlier that day, the faction had voted to expel three of Giczy's supporters. Faction leader Tamas Isepy said the group wished to distance itself from the policies of the party's national leadership. He said the three expelled members "share the burden of responsibility for the revocation of the KDNP membership in the European Union of Christian Democrats" (see "RFE/RL Newsline," 15 July 1997). The faction also voted to amend its charter, freeing itself from the obligation to follow policies laid out by the KDPN national leadership. SOUTHEASTERN EUROPE FOREIGN ASSISTANCE FOR ALBANIA? Italian officials said in Rome on 15 July that an international conference on Albania will take place on 31 July in the Italian capital. Representatives of individual countries and international organizations will participate in the gathering, which will prepare the agenda for an aid donors' conference in October. In Tirana, foreign diplomats and economists said that the IMF is in contact with those Albanian officials who are expected to form a new government shortly. The IMF is ready to send a delegation to Albania as soon as the security situation permits. It insists that all remaining pyramid schemes be closed down before it approves new loans. The Albanian authorities have been trying to convert the remaining pyramids into legitimate businesses to allow the companies to generate income that could be used to repay pyramid investors. ANOTHER EXPLOSION IN REPUBLIKA SRPSKA. A grenade exploded on 16 July near the offices of international police monitors in Prijedor. It was the third such explosion in as many days following the funeral of Simo Drljaca, a former police chief of Prijedor and concentration camp commander killed by NATO troops on 10 July. Also on 16 June, a U.S. soldier was stabbed by a civilian in Kladanj. U.S. President Bill Clinton the previous day had warned the Bosnian Serbs that "it would be a grave mistake" for them to seek revenge for Drljaca's death and for the arrest and removal to The Hague of Milan Kovacevic, another indicted war criminal. In The Hague, spokesmen for the war crimes tribunal said that Kovacevic is undergoing medical observation to see if he is fit to stand trial. The spokesmen said Kovacevic is suffering from what they called "pathological problems." MILOSEVIC ELECTED FEDERAL YUGOSLAV PRESIDENT. Both houses of the federal parliament voted overwhelmingly on 15 July to elect Slobodan Milosevic as president of Yugoslavia for a four-year term (see "RFE/RL Newsline," 15 July 1997). The Belgrade opposition said the vote was a sham because Milosevic, who is currently Serbian president, was unopposed. In Novi Pazar, Muslim opposition leader Rasim Ljajic commented that the vote means the political and economic crises will continue. Observers note that Milosevic will now have to rewrite legislation if he wants to transform the hitherto ceremonial federal presidency into a real locus of political power at the expense of the Serbian presidency. It is unclear whether his enemies could seriously hope to win the powerful Serbian presidency in the September elections. KOSOVAR ELECTION BOYCOTT ANGERS SERBIAN OPPOSITION. Kosovo's ethnic Albanian political parties have decided not to participate in the Serbian elections scheduled for September, an RFE/RL correspondent reported from Pristina on 14 July. The decision could seriously hurt the presidential candidacy of former Yugoslav Prime Minister Milan Panic, who hoped to put together an election coalition that would include the Albanians. In Belgrade, the opposition Serbian Renewal Movement said the Albanians' boycott plays into the hands of the governing Socialists, "Danas" reported on 16 July. The previous day, the same Belgrade daily cited a new poll suggesting that 99% of the Kosovo Albanians want only independence from Serbia. ETHNIC TENSIONS CONTINUE IN MACEDONIA. Macedonian police on 15 July hauled down an Albanian flag flying over the Debar town council office building and replaced it with a Macedonian one. Mayor Kemal Xhafa then removed the Macedonian flag in line with a council decision. BETA reported later that day that the situation in Debar was peaceful and that the council remained in session. Elsewhere, Arben Xhaferi of the Democratic Party of Albanians said recent ethnic tensions in Macedonia suggest there will be no peace until the Albanians receive territorial autonomy (see "End Note," "RFE/RL Newsline," 15 July 1997). He charged that the Macedonian government has received help from Serbia in preparing for what Xhaferi called the current clamp down on the Albanians. His charges have not been independently substantiated. MONTENEGRIN REFORMISTS ON THE RISE. The Montenegrin Ministry of Justice on 15 July confirmed the recent move by the anti- Milosevic wing of the governing Democratic Socialist Party to oust President Momir Bulatovic as party leader. The ministry added that Milica Pejanovic-Djurisic of the anti-Milosevic faction is now the party's legal chairman. Some observers wrote that Bulatovic, who is Milosevic's main ally in the tiny mountainous republic, has now completely lost the power struggle. On 16 July, security guards prevented him from entering the building where the Socialists' steering committee was meeting. The building also houses government offices. NEWS FROM FORMER YUGOSLAVIA. The Sandzak-based Muslim National Council on 16 July sent a letter to all foreign diplomatic missions in Belgrade urging them to use their influence to persuade the Serbian authorities to end repression of the Sandzak Muslims. "The New York Times" reported on 16 July that France has balked at a proposed new mission to arrest indicted war criminals. The previous day, some 2,000 UN peacekeepers began their withdrawal from eastern Slavonia. PROTEST AGAINST ROMANIAN AMENDED EDUCATION LAW. Several hundred people on 15 July demonstrated in Bucharest against the amended Education Law. The protest was organized by the main opposition formation, the Party of Social Democracy in Romania (PDSR). RFE/RL's Bucharest bureau reported that PDSR First Deputy Chairman Adrian Nastase said Romanians may soon be forced study their own history and geography in the Hungarian language. A PDSR delegation handed over a written protest, signed by PDSR chairman Ion Iliescu, to Education Minister Virgil Petrescu. Efforts by the PDSR to have the Senate debate the amendments the same day failed because the chamber's commission has not formulated its position on the issue. The amended law is to be enforced by government order and will be debated in the parliament in the fall. ROMANIAN JUDGES CHALLENGE TREATY WITH UKRAINE. Half of the judges serving on Romania's Supreme Court have challenged the treaty signed with Ukraine in an appeal to the Constitutional Court. RFE/RL's Bucharest bureau reported on 15 July that the 17 judges say the treaty violates the country's constitution, which stipulates its territory is "indivisible." A spokesman for the Constitutional Court told Reuters the challenge is likely to be rejected by the court because it was submitted after President Emil Constantinescu promulgated the treaty following ratification by the parliament. MOLDOVAN PRESIDENT ON NATO. Petru Lucinschi says "allegations about debates in Moldova on whether to join NATO or not are inventions," as the issue is not on any one's agenda. Summing up his visits to Madrid and Salzburg at a press conference in Chisinau on 15 July, Lucinschi said Moldova intends to remain a neutral country and all the states that recognized its sovereignty also recognized its "permanent neutrality." Lucinschi said "a kind of Marshal plan" was necessary to overcome discrepancies between the economically strong Western Europe and an Eastern Europe "still dominated by the chaos of transition, where people are losing confidence in a better life," BASA-press reported. PROTEST AGAINST SLAVIC UNIVERSITY IN MOLDOVA. The Socialist Agrarian faction in the parliament, as well as leaders of the Russian, Ukrainian, Belarusian, and Bulgarian national minorities, have criticized the foundation of a private Slavic university in Chisinau (see "RFE/RL Newsline" 14 July 1997). They said the move aims at making university education in the Russian language dependent on students' ability to pay for it. In a message to President Lucinschi, they said he should "use his authority" to persuade Russia to finance the setting up of a state Slavic University in the academic year 1997- 1998. The rector of the private university, Oleg Babenko, told BASA- press that the institution has been founded legally by "a group of persons who have nothing to do with political parties or ethnic organizations." BULGARIAN POLICE PROTECT FARMERS. Agriculture Minister Ventseslav Varbanov says roads in Bulgaria are under police control in an effort to stop criminal groups from forcing peasants to sell grain below the market price. Prime Minister Ivan Kostov said he will not allow a repeat of the bread shortage that occurred last year and in early 1997. Bulgarian farmers told RFE/RL that they prefer to leave the fields fallow rather than have their profits siphoned by firms run by the former communist nomenklatura, as was the case in the past. Former Prime Minister Zhan Videnov and several of his ministers are under investigation for granting special export rights to their associates in 1995 and 1996. TODOR ZHIVKOV'S " WORST MISTAKE." In an autobiography published on 15 July, Bulgaria's former communist leader says the "worst mistake" of his political career was his failure to resist the reforms imposed by Mikhail Gorbachev and to prevent "Bulgaria's withdrawal from the socialist path," Reuters reported . He says he was opposed to "Gorbachev's theory and to its Bulgarian admirers, who introduced in Bulgaria the same chaos [as elsewhere in the former communist bloc] in order to keep their posts and benefits." Zhivkov was sentenced in September 1992 to seven years for mismanaging state funds, but he never served the sentence on medical grounds and was kept under house arrest. In 1996, the Supreme Court overturned the sentence. He remains under house arrest because he has since been indicted on other charges. END NOTE Bulgaria's Currency Board Gets Off to a Good Start by Michael Wyzan On 1 July, Bulgaria became the third country in transition--after Estonia and Lithuania--to adopt a currency board. For an indefinite period, the lev will trade at 1,000 to the German mark and be fully backed by the Bulgarian National Bank's (BNB) foreign reserves. Those reserves consist of foreign currency, precious metals, and securities denominated in foreign currency. Under a currency board, the exchange rate of the domestic currency against a specified world currency (the German mark or U.S. dollar) is fixed. The only increases in the domestic money supply that are allowed are those resulting from converting foreign-currency inflows into domestic currency. In principle, the monetary authorities may no longer finance government budget deficits. In the fall of 1996, as Bulgaria's economy plunged into the deepest economic crisis faced by any European member of the former Soviet bloc, the IMF made renewed lending conditional on introducing a currency board. Gross domestic product declined by almost 11 percent in 1996, after rising modestly in the two previous years. Consumer prices rose by 243 percent in February 1997 alone, after increasing by only 33 percent in 1995 as a whole. The lev fell from 79 per $1 in April 1996 to almost 3,000 in mid-February 1997, and the monthly wage plunged from $126 in April 1996 to about $35 in February 1997. The deterioration in macroeconomic performance that began in spring 1996 was triggered by a decline in the BNB's foreign reserves, which left the central bank unable to defend the lev against speculative attacks. Such attacks were inevitable in an economy where the currency unit's nominal value remained unchanged for long periods, in the face of inflation much higher than in the country's main trading partners. Behind this instability lay unreformed enterprises and banks, whose interaction generated bad debt. When budget subsidies to enterprises fell to low levels, firms kept operating by borrowing from banks. Firms often had no intention of repaying the loans, and most of the larger banks apparently did not object. The banks were expecting refinancing--that is, lending from the BNB, increasingly without collateral--and government programs to convert bad debt into government bonds. In December 1995, fewer than 26 percent of commercial bank loans were likely to be serviced in a timely manner, and losses state by enterprises totaled 4 percent of GDP in 1993 (down from 30 percent in 1993). Moreover, aggregate banking losses stood at 2-3 percent of GDP. The currency board is aimed at addressing such fundamental problems. Neither direct subsidies from the budget--which may now run only a small deficit--nor BNB refinancing of commercial banks will be possible. Does adopting a currency board imply a loss of sovereignty? States have adopted all manner of monetary regimes. Those include use of a common currency, as in the case of the 12 CFA countries in West Africa, or of another country's. Some observers, however, do not believe that the currency boards established by transition countries are "true" ones. The national bank continues to exist and operates "windows" where citizens can exchange foreign currency. It can still influence the money supply via reserve requirements. And there is also a banking department at the BNB that is to act as a lender as a last resort. For now, all macroeconomic indicators are favorable, with inflation at 0.8 percent in June and the BNB's foreign reserves at record levels. The credibility of government policy is high, with people rushing to turn German marks into leva during the board's first days. Interest rates on the government security market have fallen to under 7 percent a level that neither Estonia nor Lithuania reached until two or three years after the introduction of their currency boards. Currency market players now seem excessively optimistic, after having experienced the opposite for a long period. In the medium term, however, problems are bound to emerge. The Baltic experience suggests that inflation will remain rather high (20- 30 percent) for several years. Other factors remain indeterminate. Who will provide credit to viable enterprises? And will banks concentrate on buying government securities and eschew lending to firms? Moreover, it is uncertain what the political consequences of the inevitable shutdown of enterprises and rising unemployment will be. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1997 RFE/RL, Inc. 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