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RFE/RL NEWSLINE Vol. 1, No. 151, Part II, 3 November 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 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part II * MINSK MARCH COMMEMORATES STALIN'S VICTIMS * HAVEL HOSPITALIZED, CZECH POLITICAL CRISIS DEEPENS * DISCORD AMONG ALBANIANS OVER KOSOVO QUESTION End Note : IS SLOVAKIA'S ECONOMIC REPUTATION ABOUT TO TARNISH? xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx EAST-CENTRAL EUROPE MINSK MARCH COMMEMORATES STALIN'S VICTIMS. Some 3,000 people marched in the Belarusian capital on 2 November in memory of the victims of Stalinism in Belarus and to warn against a return to authoritarianism in the country, RFE/RL's Belarusian Service reported. The march, organized by the Belarusian People's Front, took place without incident. Lyavon Burshchevskiy, the front's acting head, told the marchers that they have the power to prevent Belarusian President Alyaksandr Lukashenka from taking the country back to Stalinism. "Our society will unite against dictatorship," he said. pag KUCHMA SAYS ANTI-REFORM GROUPS THREATEN UKRAINE. At a 1 November press conference dealing with a wide range of issues, Ukrainian President Leonid Kuchma warned that support for anti- reform parties in the upcoming parliamentary election could threaten the country's future, Ukrainian media reported. Kuchma also said he will meet with Russian President Boris Yeltsin on 16-17 November to seek to end the trade war between the two countries and to sign a 10-year cooperation plan. He added that he will press to cut the size of the country's army. The next day, in an indication that anti-reform attitudes may be growing, Socialist leader and parliamentary speaker Mikhail Moroz pledged to push for new presidential elections, ITAR-TASS reported. pag UKRAINE'S PROBLEMS IN BOSNIA CONTINUE. The NATO-led SFOR forces in Bosnia continued to hold seven Ukrainian soldiers on smuggling charges and are calling on Kyiv to conduct a thorough investigation, Western agencies reported on 2 November. Ukraine has denied that the soldiers are guilty of smuggling, but Kyiv said on 31 October that it has uncovered facts suggesting the men were involved in the illegal use of military vehicles. pag LATVIAN PREMIER DECLINES RUSSIAN SECURITY OFFER. Responding to a journalist's question about Russia's offer of security guarantees, Guntars Krasts on 31 October stressed the "Baltic countries have never viewed themselves separately from the security structures of the EU." He added that a separate bloc of Baltic States is "unthinkable." But Krasts did say that some Russian proposals, particularly on economic cooperation, may be discussed. The previous day, the Lithuanian Foreign Ministry issued a statement expressing a similar position. Estonia is expected to respond to the offer on 3 November, while joint statements by the Baltics' foreign ministers and presidents are expected within the next week. jc ESTONIAN ECONOMY OUTPACES BALTIC NEIGHBORS. In the first six months of 1997, Estonia's gross domestic product was up 11.7 percent compared with the same period last year. The corresponding figures for Latvia and Lithuania were 4.6 percent and 2.5 percent, BNS reported on 31 October, citing the three states' statistics offices. In Estonia, the biggest growth during the second quarter was recorded in the financial sector. Some analysts are skeptical about whether Tallinn can sustain the pace of economic growth. Price Waterhouse economist Hardo Pajula points out that several factors-- including the recent fall on the stock market, rising interest rates, and stricter Central Bank requirements--are already cooling down the economy. jc BUTKEVICIUS REMAINS BEHIND BARS. A Vilnius court has ruled that Audrius Butkevicius, an independent deputy and a former defense minister, will remain in prison at least until 30 November, BNS reported on 31 October. Butkevicius, who is accused of accepting a bribe to use his influence to end a criminal investigation, has appealed to the Interior Ministry to guarantee his right to take part in legislative sessions and to meet with his electorate. Meanwhile, the Interior Ministry has launched an investigation into the attack on an aide to presidential candidate Valdas Adamkus. Raimundas Miezelis was beaten near his home outside Vilnius and hospitalized with concussion and severe facial injuries. jc NEW POLISH GOVERNMENT SWORN IN. Prime Minister Jerzy Buzek's government was sworn in by President Alexander Kwasniewski on 31 October, PAP reported. The two deputy premiers are Solidarity's Janusz Tomaszewski, who will also serve as interior minister, and the Freedom Union's Leszek Balcerowicz, who is also finance minister. Two other Union of Freedom leaders also took top posts: Bronislaw Geremek is foreign minister and Janusz Onyszkiewicz has the defense portfolio (see "RFE/RL Newsline," 29 and 30 October 1997). pag INCIDENT AT POLISH-GERMAN BORDER. German police used non- lethal force on 31 October to prevent some 50 people angry at customs delays from entering Germany at the Schwedt border crossing, PAP reported on 1 November. The Germans arrested 11 people and then released them, apparently in response to a diplomatic protest by Warsaw. pag HAVEL HOSPITALIZED, CZECH POLITICAL CRISIS DEEPENS. Czech President Vaclav Havel is suffering from pneumonia and will spend at least eight days in the hospital, Czech Television reported on 2 November. Meanwhile, Deputy Prime Minister Josef Lux--the leader of the junior coalition Christian Democrats--has demanded that Czech Premier Vaclav Klaus either change direction or resign if he does not want to be ousted, "Mlada fronta Dnes" reported on 1 November. pag MEDIA GROUP SAYS SLOVAK TAX COULD KILL FREE MEDIA. Johann Fritz, the director of the Vienna-based International Press Institute, has called on Bratislava to postpone a planned increase in value- added tax, Western media reported. Fritz said the new tax would force many independent newspapers to close and would effectively kill press freedom in Slovakia. pag SOUTHEASTERN EUROPE DISCORD AMONG ALBANIANS OVER KOSOVO QUESTION. Albanian President Rexhep Meidani said in Geneva on 1 November that the "international community must intervene" to persuade the Serbian authorities to implement the 1996 agreement with the Kosovars on restoring Albanian-language education. He warned that violence may erupt in Kosovo if the agreement is not implemented. But in Tirana the next day, Prime Minister Fatos Nano said a solution to the Kosovo question can be found only through direct dialogue between Serbs and Kosovars. Kosovo insists on U.S. or EU participation in such talks. Kosovar shadow-state President Ibrahim Rugova told Albanian dailies of 2 November that Nano should not attempt to make an agreement on Kosovo with Yugoslav President Slobodan Milosevic when the two meet on Crete for the 3-4 November Balkan summit. He added that the Kosovars should have been invited to the meeting. pm DISARRAY CONTINUES IN ALBANIAN JUDICIAL SYSTEM. The Prosecutor-General's Office is investigating numerous cases in which judges and state prosecutors are suspected of having links to criminal gangs in Kruja, Tirana, Lac, and Gjirokaster. In particular, the justices are suspected of having illegally freed many criminals from prison this year, "Gazeta Shqiptare" reported on 2 November. Meanwhile, judges, prosecutors and court clerks who took part in a six-month training course in 1993 are threatening to go on strike on 3 November to protest planned sackings and demotions of some 175 graduates of the course. They are also demanding that the authorities examine the professional qualifications of all judges and prosecutors. Critics charge that the Democratic Party sent its loyalists to the six- month course so that they could take control of the judicial system. fs PLAVSIC WON'T RUN FOR PRESIDENT IF FOES WIN PARLIAMENTARY VOTE. Republika Srpska President Biljana Plavsic has said she will not take part in the 7 December presidential vote if her hard-line rivals win the 22-23 November legislative elections. Plavsic added, however, that she believes that "Serbs are not suicidal" and that voters will not support her enemies. Also in Banja Luka, a presidential spokesman said Plavsic feels it is imperative that the Bosnian Serb army participate in the U.S.-sponsored "Train and Equip" program. He added that the alternative for the Serbs is isolation. pm BANJA LUKA TV BEAMED THROUGHOUT REPUBLIKA SRPSKA. Plavsic's television broadcasts reached all Bosnian Serb territory on 31 October after SFOR had repaired a transmitter in eastern Bosnia. Pale hard-liners deliberately damaged the facility to prevent peacekeepers from using it to broadcast Plavsic's programs (see "RFE/RL Bosnia Report," 22 October 1997). pm BOSNIAN OFFICIAL DENIES CORRUPTION CHARGES. Mirsad Kurtovic, the head of Bosnia's Agency for State Reserves, said in Sarajevo on 1 November that Carlos Westendorp, the international community's chief representative in Bosnia, was wrong the previous day when he reported widespread fraud by Bosnian authorities. Kurtovic rejected the charge that his own office has misappropriated more than $13 million since January. Westendorp claimed that top Muslim and Croatian officials have redirected tax and aid money to agencies that should have been dismantled under the Dayton agreements. Westendorp said that if the Bosnian government does not end the practice within two weeks, he will publish evidence on the alleged fraud. pm BOSNIAN GENERAL SAYS ARMY WILL BE MULTI-ETHNIC. Army commander General Rasim Delic said in Sarajevo on 1 November that he is looking for 35,000 recruits under the "Train and Equip" program. He added that he wants to enlist young men from mixed marriages as well as Muslims, Croats, Serbs, and Albanians. Delic was responding to recent speculation in the Muslim press that recruits from mixed marriages would be banned from enlisting on the grounds they might prove disloyal. Observers noted that the Sarajevo government retired most of its top Serbian and Croatian officers following the signing of the Dayton agreements at the end of 1995. pm RUSSIAN GAS RETURNS TO BOSNIA. Russian gas deliveries to Bosnia resumed on 31 October after a break of seven months. The state- owned Sarajevogas recently reached an agreement with Gazprom on terms for repaying the mainly Muslim and Croatian federation's share of Bosnia's outstanding $16.2 million debt to Gazprom. Some $4.7 million out of the federation's total debt of $7.3 million will be paid by the Dutch government via a grant to the World Bank. The Bosnian Serbs have not reached a deal with Gazprom on repaying their part of the debt and consequently remain cut off from Russian gas supplies. pm DRASKOVIC, SESELJ TO RUN FOR PRESIDENCY. In Belgrade on 2 November, the leadership of the Serbian Renewal Movement named Vuk Draskovic as its candidate in the 7 December Serbian presidential elections. The governing body of the Serbian Radical Party chose Vojislav Seselj as its standard bearer. Both men ran for the presidency in the inconclusive 21 September vote. They will face the Socialist candidate, Milan Milutinovic, in the December race. The key question is whether the moderate opposition will select a joint candidate (see "RFE/RL Newsline," 31 October 1997). pm ALLEGED SERBIAN AGENTS REMAIN IN MONTENEGRIN JAIL. A Podgorica court on 1 November ruled that 11 men from Belgrade and Novi Sad will remain in custody and that police investigations of their case will continue. Security forces arrested the men on charges of attempting to disrupt the Montenegrin presidential vote (see "RFE/RL Newsline," 18 October 1997). pm ISRAELI LEGISLATORS SAY TUDJMAN UNWELCOME. Yossi Sarid, head of the Meretz Party, and Labor deputy Yossi Beilin said in Jerusalem on 2 November that Croatian President Franjo Tudjman will not be welcome if he comes to Israel on a planned visit in December. Sarid added that he has introduced legislation in the parliament to ban Tudjman's trip. Sarid and Beilin claim Tudjman denies that the Holocaust took place. Tudjman, for his part, says he wants to visit Israel to apologize for Croatia's role in the Holocaust. pm ROMANIAN PREMIER IN ISRAEL. Victor Ciorbea on 2 November paid a one-day "unofficial visit" to Israel to meet with Prime Minister Benjamin Netanyahu and several of his cabinet ministers. Among the topics discussed were improving trade relations, Israeli investments in Romania, the problem of Romanian guest workers in Israel, and the restitution of Jewish property, an RFE/RL correspondent in Tel Aviv reported. Ciorbea also met with former opposition leader Shimon Peres. ms ROMANIAN LIBERALS SEEK TO UNIFY. The National Liberal Party (PNL) on 31 October called on the Liberal Party, the Party of Civic Alliance (PAC), and the Alternative for Romania party to merge with the PNL. Liberal Party executive chairman Dinu Patriciu said his party favors such a merger. Meanwhile, the PAC on 2 November decided to rejoin the Democratic Convention of Romania, which it quit in June 1996. A PNL spokesman said that decision is a "step toward liberal unification," Mediafax reported on 2 November. ms ROMANIA'S COMMUNIST PARTY REBORN. At its congress in Bucharest on 1-2 November, the extra-parliamentary Romanian Workers' Party voted to change its name to the Romanian Communist Party (PCR), "Libertatea" reported. PCR leader Cristian Ion Niculae said the party wants to "oust the incumbent government and participate in forming the next one." The PMR was set up in 1995 and claims 17,000 members in 31 county branches. Meanwhile, Corneliu Vadim Tudor, the leader of the extremist Party of Greater Romania, announced that since 1993, membership has increased fourfold and now stands at 72,000, Radio Bucharest reported on 31 October. ms MOLDOVAN PARLIAMENT POSTPONES BUDGET DEBATE. The parliament has postponed the first reading of the government's 1998 draft budget, RFE/RL's Chisinau bureau reported on 31 October. A majority of deputies believe the projected 6 percent growth in GDP is "unrealistic" given that GDP sunk 8 percent in 1996 and shows the same tendency this year. The government foresees a 19.5 percent increase in tax revenues and a 23 percent rise in expenditures. Responding to a parliamentary motion to return the draft to the government, Prime Minister Ion Ciubuc said no "essential modifications" are possible, adding that the budget must "mobilize" the country's economic forces. ms END NOTE IS SLOVAKIA'S ECONOMIC REPUTATION ABOUT TO TARNISH? by Michael Wyzan According to the Western view, Slovakia's economy is a solid performer and only political factors have kept the country out of European institutions and NATO. Indeed, the European Commission said as much when it explained its decision in mid-July not to recommend Slovakia among the five postcommunist countries to be invited to accession negotiations. But this year, there have been indications of looming economic problems, especially growing foreign sector imbalances. Until now, however, fiscal--and especially monetary--policy has been run competently, resulting in low inflation and rapid economic growth. Some indicators suggest 1997 is shaping up to be another satisfactory year for the Slovak economy. Consumer prices rose by 6 percent in the 12 months to July, compared with 9.3 percent in the Czech Republic, 18.2 percent in Hungary, and 15.0 percent in Poland. Gross domestic product (GDP) grew by 6.2 percent in the first half, while industrial output was up 3.7 percent in the first seven months. Among transition economies, only Estonia and Poland are growing more rapidly. On a less positive note, the unemployment rate remained high at 12.8 percent in July, compared with 12.5 percent a year earlier. Recent declines in Polish unemployment rates mean that Slovakia now has Visegrad's highest jobless figures. Slovakia also has a large and growing budget deficit, predicted to reach between 4.6 and 5.7 percent of GDP this year. That figure is much higher than in Poland or the Czech Republic and is similar to Hungary's. It reflects a steady increase from 4.4 percent last year and 1.6 percent in 1995. But the main cause for concern is the foreign sector. The first seven months of the year revealed a current account imbalance of $1.006 billion and a trade deficit of $986 million. Predictions for the size of the former for all of 1997 range from 10.4 to 15 percent of GDP, the highest among the Central European and Baltic economies. Moreover, Slovakia is a relatively unattractive country for foreign investors. As of mid-1996, Slovakia's per capita foreign direct investment stood at $152, compared with $1,299 in Hungary, $586 in the Czech Republic, and $265 in Poland. With so little foreign investment and such large current account deficits, it is not surprising that Slovakia's official foreign exchange reserves declined from $3.47 billion at the end of 1996 to $3.181 billion in August. Reserves of approximately the current level would cover 2.7 months worth of imports, while the equivalent figures for the Czech Republic, Hungary, and Poland are 3.8, 4.4, and 5.6, respectively. Such low reserves mean that Slovakia is ill prepared to defend the crown against speculative attack. Pegged to a currency basket that includes the U.S. dollar, it has strengthened recently against the German mark and the Czech crown. Whereas in January 1996 one Slovak crown was worth 90 percent of a Czech one, that figure is now 99.24 percent following the economic turmoil in the Czech Republic earlier this year The Slovak situation resembles that in Mexico in 1994 or in Thailand last year, when both countries were on the verge of currency crises that turned into macroeconomic disasters. When "The Economist" magazine examined a number of macroeconomic indicators for the Visegrad and Baltic nations, it gave Slovakia 10 points on a scale from 1 to 12, with 12 representing the greatest risk. Only Lithuania was rated riskier, with 11 points (pre-crash Mexico scored 10 points). Many analysts hold that a significant weakening of the crown is virtually inevitable, resulting in higher inflation and slower growth. The key to Slovakia's prospects is the quality of policy-making. As in Southeast Asia this year, inadequate responses to the first alarming signs sharpen and prolong subsequent crises. Slovakia is especially worrisome because policy-makers have responded to troubling indicators by resorting to counterproductive actions. To reduce the budget deficit, Bratislava has raised value-added tax, slapped a 7 percent surcharge on most imports, and is discussing levying a tax on portfolio investment. The leadership remains opposed to following the Czech lead and devaluing the crown, which in Slovakia is defended with high interest rates and tight money. Pulling in the opposite direction from the fiscal standpoint, recent "economic revitalization" measures allow firms in high- unemployment areas to apply for debt forgiveness from the state and to defer tax, excise duty, and social security payments. Another source of budget revenue loss are the tax holidays for foreign investors who meet certain conditions. Slovakia's relatively good figures for inflation and economic growth have obscured an important fact. Slovakia's economic policy-makers are often as heavy-handed as the Bulgarian Socialists under Zhan Videnov, who by February 1997 had brought the Bulgarian economy to the verge of total collapse. 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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