I dream my painting, and then I paint my dreams. - Vincent van Gogh
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 1, No. 135, Part II, 9 October 1997



A daily report of developments in Eastern and Southeastern Europe,
Russia, the Caucasus and Central Asia prepared by the staff of Radio
Free Europe/Radio Liberty.

This is Part II, a compilation of news concerning Central, Eastern, and
Southeastern Europe.  Part I covers Russia,
Transcaucasia and Central Asia and is distributed simultaneously as a
second document.  Back issues of RFE/RL NewsLine and the OMRI
Daily Digest are online at RFE/RL's Web site:
http://www.rferl.org/newsline

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Headlines, Part II

*UKRAINE, HUNGARY OPEN NATO MISSIONS


*SFOR SEEKS TO RESTORE ORDER NEAR DRVAR


*PRO-PALE POLICE REPEL PRO-PLAVSIC OFFICERS

End Note
ONE HUNDRED DAYS OF BULGARIA'S CURRENCY BOARD
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EAST-CENTRAL EUROPE

UKRAINE, HUNGARY OPEN NATO MISSIONS. Ukraine and Hungary on
8 October became the first non-NATO countries to establish missions
accredited to the Western alliance, ITAR-TASS reported. Ukrainian
Ambassador Boris Tarasiuk presented his credentials to NATO
Secretary-General Javier Solana during a meeting of the alliance
council on 8 October. In his presentation speech, Tarasiuk reaffirmed
Ukraine's desire for gradual integration into European and Euro-
Atlantic institutions.

UKRAINIAN PARLIAMENT OVERRIDES KUCHMA VETO ON PENSIONS.
The Ukrainian parliament on 8 October voted to override a
presidential veto of a law that would increase the minimum pension
in that country to 70.9 hryvnas ($38) a month, ITAR-TASS reported.
President Leonid Kuchma had vetoed the bill saying the government
did not have the funds to pay for the increase and that it would "lead
the entire budget process into deadlock."

BALTIC ARMY CHIEFS DISCUSS ESTONIAN TRAINING TRAGEDY.
Estonian Defense Forces Commander in Chief. Major General Johannes
Kert met with his Latvian and Lithuanian counterparts in Riga on 8
October to inform them of the causes of the mid-September accident
in which 14 Baltic Peacekeeping Battalion (BALTBAT) troops died,
BNS reported. Kert argued that Second Lieutenant Jaanus Karm, the
commander of the ill-fated unit, must take responsibility for the
tragedy since he had misjudged conditions. Kert also pointed to lack
of supervision over the exercises and the violation of safety
provisions as the main reasons for the accident. The three army
chiefs concluded that control over the observance of discipline during
military maneuvers must be tightened. Meanwhile in Tallinn, the
security police has announced it considers Karm to be mainly
responsible for the deaths of the 14 peacekeepers.

BRITISH TROOPS HOLD MANEUVERS IN POLAND. Some 4,500 troops
from the U.K. are holding maneuvers in northwestern Poland, Polish
news agencies reported on 8 October. No Polish troops are taking part
in the exercise. On a visit to the site of the maneuvers, Britain's
junior Defense Minister John Reid reaffirmed London's commitment
for Poland to join NATO.

INFLATION RISES IN CZECH REPUBLIC. Consumer price inflation
exceeded 10 percent in September for the first time in 26 months,
according to the Czech Statistical Office. The rate was put at 10.3
percent, up 0.6 percentage points over August. "Hospodarske noviny"
on 9 October quoted a Czech National Bank spokesman as saying the
inflation rate is likely to remain around the 10 percent mark for the
rest of the year.

SLOVAK GOVERNMENT PROPOSES POLICE "HELPERS" CORPS. Prime
Minister Vladimir Meciar's cabinet on 8 October adopted a bill that
would establish a "helpers service" for the country's police force.
Opposition Christian Democrat and former Interior Minister Ladislav
Pittner has voiced his opposition to the bill, which is to be submitted
to the parliament. He told "Sme" that the "price of public security
should not be the emergence of a police state." Interior Minister
Gustav Krajci said the bill would enable designated civilians to wear
arm bands and carry special identity cards. He added that the
volunteers would be empowered to check identity documents and
confiscate weapons. They would be armed with tear gas and
truncheons and, in certain cases, would have the right to use
handcuffs. The government wants to hire 6,000 volunteers in 1998
and will pay them on an annual basis.

OPPOSITION BOYCOTTS ROUND-TABLE TALKS. The Party of the
Democratic Left (SDL) was the only non-governing party to
participate in round-table talks with the three ruling coalition
members in Bratislava on 8 October. Following the parliament's
recent decision not to reinstate Frantisek Gaulieder as deputy, eight
opposition parties refused to participate in such talks until the ruling
coalition respects the Constitutional Court's decison calling on
lawmakers to return Gaulieder's mandate (see "RFE/RL Newsline," 1
October 1997). The agenda of the 8 October talks included the
election of the president, the next parliamentary elections, the
security situation in the country, and Slovakia's integration efforts.
SDL Chairman Jozef Migas said after the two-hour meeting that
holding round-table talks without defining goals is "wrong." He added
that "it makes no sense and we look ridiculous at home and in the
eyes of the world," RFE/RL's Slovak Service reported.

NEW NATO MEMBERS TO CONTRIBUTE 4 PERCENT OF BUDGET? Citing
unnamed NATO sources, the Hungarian daily "Vilaggazdasag" on 9
October reported that an agreement has been reached among NATO
members that the alliance's three new member countries--Hungary,
Poland, and the Czech Republic--will together contribute 4 percent of
the alliance's budget. The daily said this would amount to $12 million
annually for Budapest.

SOUTHEASTERN EUROPE

SFOR SEEKS TO RESTORE ORDER NEAR DRVAR... Canadian troops of the
NATO-led Stabilization Force were deployed on 7 October to guard a
western Bosnian village after Bosnian Croats attacked the homes of
Serbian returnees. SFOR said a Croatian official who hit a Canadian
soldier with his car was removed from the vehicle and physically
restrained by the troops guarding the village of Martin Brod, near
Drvar. UN High Commissioner for Refugees (UNHCR) spokesman Kris
Janowski said in Sarajevo on 8 October that the violence erupted
after the return of 27 Serbs who had fled the Bosnian Croat-held
village at the end of the Bosnian war. The UNHCR had organized their
return. Janowski said Croatian workmen claiming to have received
orders to repair the houses for Croats forced their way into the
houses, throwing out the Serbs' belongings and sending the returnees
fleeing to a single building in the village.

...AS MOSTAR RADIO SAYS AGREEMENT REACHED. Bosnian Croat
Mostar Radio quoted Bosnian Croat police in Drvar on 8 October as
saying SFOR troops had erected barbed wire barricades at the
entrance to Martin Brod and were barring access to everyone except
Drvar police. At a meeting in Drvar, local officials and the UNHCR
agreed that the local police will guarantee the security of all people
living in Martinbrod. They also agreed that SFOR checkpoints there
would be dismantled by 9 October and that the repatriation of
former residents will be carried out through agreement between all
interested parties. In addition, temporary residence permits for
displaced Croats will be canceled if the lists of returnees include the
Serbian owners of the homes in which the displaced Croats are
residing. The two sides stressed that all necessary conditions must be
fulfilled for the return of displaced Croats, mainly to Banja Luka.

SFOR LIFTS BAN ON BOSNIAN FEDERATION ARMY MOVEMENTS. SFOR
spokesman in Sarajevo Jan Joosten said on 8 October that following
the Muslim-Croatian federation's confirmation that there are no more
prisoners of war in the federation, SFOR has lifted its ban on the
movement and training of troops from the mainly Muslim Bosnia-
Herzegovina Army and from the Bosnian Croat Defense Council.
Sarajevo Radio also quoted Joosten as saying that during an SFOR
inspection of a civil police station in Mrkonjic Grad , SFOR troops
confiscated 10 automatic guns, as well as a considerable amount of
other arms and ammunition.

PRO-PALE POLICE REPEL PRO-PLAVSIC OFFICERS. Police loyal to the
hard-line Bosnian Serb leadership in Pale early on 8 October foiled
attempts by forces loyal to President Biljana Plavsic to seize Interior
Ministry facilities in the northern Bosnian towns of Bijeljina,
Derventa, Teslic, and Bosanski Brod, SRNA reported. The Pale-based
news agency said that "legitimate" Interior Ministry forces were
given a timely tip-off from a leader of the "renegade" Banja Luka
Public Security Center who did not want to see "fraternal" Serbian
blood being shed.

NEW MINES IN JAJCE, EXPLOSIONS IN PRNJAVOR. Banja Luka Srpski
Radio on 8 October quoted a local SFOR spokesman as saying new
mines have been laid in the Bosnian Croat-held Jajce area. One
person lost both legs when one of the mines exploded, the seventh
such casualty in recent weeks. A UN International Police Task Force
spokesman said that another explosion occurred in the village of
Luzani, near Prnjavor, on 4 October following two explosions in the
area in September. He confirmed that the bridge over the Sava River
to Croatia at Bosanska Gradiska was reopened on 26 September but
noted the issue of visas and insurance of vehicles has not been
resolved yet. As a result, he said, the reopening of the Bosanska
Gradiska border crossing to vehicles has been postponed until final
agreement is reached.

OSCE TO POSTPONE ANNOUNCING BRCKO ELECTION RESULTS? Banja
Luka's independent Big Radio has reported that the official results of
the local elections in Brcko will be postponed again. The Organization
for Cooperation and Security in Europe had announced that the final
tally would be announced on 8 October. Teodor Gavric, president of
the local electoral commission, said all the votes have been counted
and that the reason for the postponement may be the "large number
of complaints that the OSCE has received in the meantime."

BOSNIAN CROATS PLEAD NOT GUILTY. All 10 Croats from central
Bosnia who handed themselves over to the International Criminal
Tribunal for the Former Yugoslavia in The Hague pleaded innocent at
their first hearing on 8 October. Four are charged with crimes against
humanity and war crimes for heading the Bosnian Croat troops who
allegedly killed and tortured Muslim men, women, and children and
drove hundreds more from 14 towns in the central Lasva Valley in
1992-1993. The six other suspects are charged with participating in
a massacre in the mostly Muslim village of Ahmici, in central Bosnia.
If convicted, the 10 face up to life imprisonment (the tribunal does
not have a death sentence).

ALBANIA ASKS YUGOSLAVIA TO REOPEN BORDER WITH
MONTENEGRO. At an 8 October meeting with Yugoslav charge
d'affaires in Tirana Stanimir Vukicevic, Albanian Interior Minister
Neritan Ceka requested that Yugoslavia reopen the border crossing
point of Hani i Hotit on the shore of Lake Skadar, ATA reported. Ceka
informed Vukicevic of measures taken by the Albanian police to
strengthen border controls and reestablish order. Vukicevic
responded that he would forward Ceka's request to the competent
authorities. They also discussed the possibility of opening other
border crossing points between Albania and Yugoslavia. Hani i Hotit,
the only border crossing point between Albania and Montenegro, was
closed as a result of nationwide unrest in Albania last March.

ALBANIAN MAYORS DEMAND MORE INDEPENDENCE FROM CENTER.
More than 60 mayors from around the country, meeting in Tirana on
8 October, demanded greater independence from the central
government, ATA reported. Albert Brojka, the Mayor of Tirana and
the chairman of the National Association of the country's Mayors,
proposed that a percentage of income from value-added tax, which
was recently raised from 12.5 percent to 20 percent, be transferred
to local governments. Meanwhile, workers at the Albanian-Polish
shipyard Durres-Gdansk staged a strike on 7 October to demand
wage hikes. The Albanians say they are being discriminated against
since their Polish counterparts earn 10 times more than they do,
ATA reported.

HUNGARIAN FOREIGN MINISTER IN ROMANIA. Laszlo Kovacs and his
Romanian counterpart, Adrian Severin, headed the first meeting of
the joint commission supervising the implementation of the 1996
basic treaty, RFE/RL's Bucharest bureau reported. The meeting took
place in the Romanian capital on 8 October. The commission agreed
that representatives of the ethnic Hungarian and Romanian
minorities should participate in discussions of the sub-commission
supervising the implementation of the treaty's provisions on national
minority rights. The nine sub-commissions discussed the "strategic
partnership" between the two countries, integration into Euro-
Atlantic structures, and the fight against organized crime. Kovacs also
met with President Emil Constantinescu.

ROMANIAN GOVERNMENT, MINERS REACH AGREEMENT. Marin
Condescu, the leader of the largest miners' trade union, said after his
8 October meeting Prime Minister Victor Ciorbea that a solution has
been found to all the miners' grievances (see "RFE/RL Newsline," 7
October 1997). He noted that funding for the six state-owned mining
companies has been ensured to the end of 1997 and that a national
mining agency overseeing mines still in operation will be set up. Ten
mining areas will be turned into "special economic zones." Condescu
did not mention the miners' demand for a wage hike, Radio
Bucharest reported.

FORMER ROMANIAN PRESIDENT BACKS DEMANDS OF
"REVOLUTIONARIES." Some 500 members of associations
representing those who took part in the December 1989 uprising
demonstrated in downtown Bucharest on 8 October to protest the
government's decision to limit privileges for those claiming to be
"revolutionaries," RFE/RL's Bucharest bureau reported. The
demonstrators said they will "occupy" one of the capital's main
squares until their meeting with Senate Chairman Petre Roman on 9
October. The law on privileges for "revolutionaries" was passed
during the presidency of Ion Iliescu, who took part in the 8 October
demonstration and denounced the government's intention as a
"political diversion." The government argues that many of those
enjoying the privileges are not entitled to them. Meanwhile, two
former deputy ministers are under investigation for complicity in
falsifying "revolutionary certificates."

MOLDOVAN PARLIAMENT DEBATES ELECTORAL LAW. The
parliament on 8 October approved the electoral law in its first
reading, Infotag reported. The new legislation provides for a
proportional system whereby a single nationwide constituency would
elect a 101-member parliament. The elections would be held within
three months of the expiration of the outgoing legislature's mandate.
Parties would have to collect at least 20,000 signatures to register
with a new central electoral commission. To gain entry to the
parliament, a party would have to receive at least 4 percent of valid
votes cast. The law must be approved in its second and third
readings by the end of this year, when the mandate of the current
parliament ends.

CHISINAU CONSIDERS ENERGY OPTIONS. Deputy Prime Minister Ion
Gutu on 8 October said that Moldova's participation in the
construction of the Cernavoda nuclear energy complex in Romania is
not viable from an economic point of view, RFE/RL's Chisinau bureau
reported. An official from the Economics and Reform Ministry told
journalists that participation in the Cernavoda complex would
involve an investment totaling $ 500 million, which, he said, Moldova
does not have. He added that Chisinau would have to pay a higher
price for electricity from Cernavoda than that produced in Moldova
or imported from other countries. In related news, Infotag reported
that Russia's Gazprom company has warned that Moldova will
receive only the gas supplies it can afford without applying for
credits. Cibotaru said a Moldovan delegation will soon go to Russia for
"difficult negotiations" aimed at ensuring "normal supplies" during
the coming winter.

BULGARIA ACCUSES RUSSIA OF 'FREE INTERPRETATIONS' IN
DIPLOMATIC ROW... Bulgarian Foreign Ministry spokesman Radko
Vlaikov on 8 October accused Russian officials of making "rather free
interpretations of some facts while withholding other facts." Vlaikov
was responding to Russian Foreign Ministry spokesman Gennadii
Tarasov's statement on 7 October that Foreign Minister Yevgenii
Primakov's schedule was already full when Bulgarian Foreign
Minister Nadezhda Mihailova asked to meet with him at the UN
General Assembly Session in New York (see "RFE/RL Newsline," 2
October 1997). Vlaikov said that the meeting had been arranged in
advance and that Bulgarian officials had tried repeatedly to confirm
it, Reuters reported. Also on 8 October, the Russian Foreign Ministry
announced that talks between Russian and Bulgarian diplomats
scheduled to take place in Moscow that day have been canceled,
Interfax reported.

...AS ALLEGATIONS OF RUSSIAN SPYING ACTIVITIES CONTINUE.
Major General Radoslav Peshleevsky, commander of the Bulgarian
engineering troops, has denied press reports that he has been
recruited by the Russian intelligence services, BTA reported on 7
October. Peshleevsky threatened to sue publications that printed
such allegations.

END NOTE

ONE HUNDRED DAYS OF BULGARIA'S CURRENCY BOARD

by Petko Bocharov

        One hundred days after Bulgaria introduced a currency board
as an emergency measure to restore discipline to monetary policy,
officials in Sofia are cautiously optimistic about the effects on the
country's economy.
        There have been major improvements, explaining why, in
contrast to the gloom of three months ago, the prevailing view now is
that better times are coming. Even the IMF, which maintains a
notoriously austere profile, has expressed satisfaction. Assistant
executive director Stanley Fisher recently called Bulgaria's financial
stabilization "impressive."
        Lost confidence in the country's banks is returning, and private
and company deposits in bank accounts are growing. And the foreign
currency reserve has tripled to almost 3,8 billion German marks.
        Moreover, at the end of September, meetings took place in
Sofia between representatives of the government and Moody's, one
of the leading consulting companies that define the credit rating of
securities and countries. Moody's classification of Bulgaria in 1996
was B-3, which is the lowest grade and in effect means "payment
first, then delivery." Now, according to the French bank Paribas and
the German investment bank Deutsche Morgan Grenfell, there are
strong expectations that Moody's will raise Bulgaria's credit rating to
B-1, thus listing it ahead of countries like Turkey, Romania, or
Ukraine.
        The positive developments strengthen perceptions among the
public that the Union of Democratic Forces (ODS), which won a
decisive victory over the former communists in the April
parliamentary elections, is leading the country in the right direction.
Yet no one believes the crisis is over. The wounds inflicted by the
former Socialist Party government through its long neglect of
reforms are too deep for that.
        Bulgarians are bracing for the hardships that are still to come
in the reform process. Emil Harsev, a prominent financier who
opposed the Currency Board before its implementation, told RFE/RL
that the crucial period will be this winter. He says the Bulgarian
economy runs in cycles: summer is the season of income, winter the
season of expenses. If the board endures the hardship of the cold
months, its standing as an instrument of policy will be strengthened
for the years ahead, he commented.
        The Currency Board was introduced on 1 July, amid high
inflation and a deepening economic crisis. It essentially took
currency matters out of the hands of the Central Bank.
        Harsev, a former deputy governor of the National Bank, says
inflation under the currency board has not dropped as low as had
been hoped. In January, prices had been rising at a level near hyper-
inflation. After the ODS government took power and the currency
board was put in place, inflation was about 3.5 percent in July and
5.5 percent in August, instead of the predicted rate of 2 percent.
        Prices of consumer goods continue to rise. One reason for this is
that privatization has not yet reached the big state monopolies in
power supply. Those monopolies deal with the imports of oil, natural
gas, and coal; they also own refineries and electrical plants and
distribute the products. The result is a "supplier's market" that
pushes up inflation.
        But Martin Zaimov, the head of the currency board, argues that
there is nothing to worry about. Zaimov, who is also vice president of
the National Bank, said inflation is and will remain under control. He
predicted that the inflation rate will soon fall significantly.
        The World Bank apparently shares his optimism. Kenneth Lay,
the head of the bank's South-East Europe department, arrived in
Sofia at the end of September. His arrival followed the decision,
reported at the Hong Kong meetings of the IMF and World Bank, to
open negotiations with Bulgaria for a considerable loan.

The author writes regularly for RFE/RL.

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