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RFE/RL NEWSLINE

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

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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?

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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.

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