We are always the same age inside. - Gertrude Stein
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 1, No. 176, Part II, 10 December 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

* HAVEL CRITICIZES KLAUS WITHOUT NAMING HIM

* SERBS LEAVE BOSNIA CONFERENCE

* ETHNIC HUNGARIANS SUSPEND PARTICIPATION IN
ROMANIAN GOVERNMENT

* End Note:  UKRAINE IS OUT OF CAPITAL MARKETS:
WAS IT PUSHED?
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EAST-CENTRAL EUROPE

UKRAINIAN PARLIAMENT PREPARES FOR NO
CONFIDENCE VOTE. The Verkhovna Rada voted on 9
December to prepare a resolution of no confidence in the
government, Ukrainian media reported. 242 of the 450
deputies voted for the resolution that was proposed by the
Socialist and Agrarian factions.  If the parliament passes a
resolution of no confidence, the government must resign, but
the president has the final say on whether it has to leave office.
PG

UKRAINE'S FINANCE MINISTER CONFIDENT ABOUT
FUTURE. Finance minister Igor Mityukov told Itar-Tass on 9
December that the National Bank of Ukraine has sufficient
reserves to cope with financial challenges in the immediate
future.  He said that Kyiv's most important task is to adopt an
austerity budget that reduces both state expenditures and state
borrowing. In the same interview, Mityukov said that Ukraine
hoped Russia would participate in Ukraine's privatization effort
and thus inject new funds into the country.   PG

ESTONIA MAY REGISTER ILLEGAL RESIDENTS.  The
Estonian cabinet on 9 December approved a measure which, if
the parliament agrees, would allow currently illegal residents
to obtain residence permits after registering with the
authorities, BNS reported.  Under the terms of the draft bill, the
illegal resident must have arrived in Estonia before July 11,
1990, and then must register with the authorities. Tallinn
estimates that there are some 50,000 such people at the
present time.  PG

LATVIAN PM BOWS TO FACTIONS, DROPS CHALLENGE
TO GOVERNMENT. Prime Minister Guntars Krasts said on 9
December that he would bow to the current coalition partners
and drop his plans to try to reform the current government,
BNS reported. Instead, he indicated that he would seek to
improve discipline among the current ministers.  But this may
not be the end of the matter. Krasts said that "it is the first
time when I'm left alone, and I hope it is the last such occasion.
Should similar situations occur again, I won't see any
possibility of continuing in the post."  PG

LATVIAN GOVERNMENT APPROVES DRAFT BORDER
ACCORD WITH RUSSIA. The Latvian cabinet has approved
the draft border agreement with Russia, foreign minister Valdis
Birkavs told BNS on 9 December.  He said that Riga would
inform Russia about this decision and seek agreement on a
venue for signing the document.  PG

HAVEL CRITICIZES KLAUS WITHOUT NAMING HIM . . .
In a televised "state of the nation" speech before both houses of
parliament on 10 December, President Vaclav Havel harshly
criticized outgoing premier Vaclav Klaus, though he refrained
from naming him. Havel said it was pointless to name names,
but "some deserve blame more than others." He said that
"fascinated by our macro-economic data, we ... disregarded the
rules of the game, the rule of law, the moral order behind that
system of rules." He said there was a "cloak of liberalism
without adjectives" that concealed what in fact was a "Marxist-
like conception of base and superstructure." Havel said that
"morality, decency and solidarity" had been left to "the
superstructure" and were "slightly derided as a mere
'seasoning'--until we found there was nothing left to season,"
CTK reported.  MS

. . . AND KLAUS REJECTS CRITICISM. Reacting to Havel's
speech, which was greeted by a standing ovation by almost all
those present, Klaus told journalists the president showed a
"deep failure to understand the functioning of a market
economy and a free society eight years after the fall of
communism." He said Havel wanted to take the country back to
"a third way" between capitalism and communism. He also said
Havel's speech had been "confrontational" and accused him of
"inflaming the situation rather than calming it down." He added
that he considered the speech "a challenge, and I am ready to
continue to search for a constructive solution to our situation,"
Reuters and AFP reported.    MS

CZECH, SLOVAK FOREIGN MINISTERS POSTPONE
MEETING. A meeting between Czech Foreign Minister Jaroslav
Sedivy and his Slovak counterpart Zdenka Kramplova has been
postponed indefinitely, a spokesman for the Czech Foreign
Ministry said on 10 December. The meeting was scheduled to
take place on 12 December in the western Slovak spa resort of
Trencianske Teplice. No reason was offered for the
postponement but  CTK, citing "reliable sources," said it was
likely the meeting had been cancelled because of the
derogatory remarks made by Prime Minister Vladimir Meciar
about Havel (See "RFE/RL Newsline," 8 December 1997).
Bratislava's reply to a protest note from Prague was regarded
by the Czech officials as unsatisfactory. CTK also reported that
outgoing Justice Minister Vlasta Parkanova postponed her trip
to Slovakia, where she was due to meet her Slovak counterpart
Josef Liscak. A Justice Ministry spokesman said the cancellation
was due to the resignation of the Czech government.    MS

... WHILE SLOVAKIA POSTPONES HUNGARIAN VISIT.
Slovakia has postponed a one-day visit by Hungarian Minister
of Defense Gyorgy Keleti, scheduled for 10 December,
Hungarian media reported on the same day. A Defense Ministry
official in Bratislava said the visit would be rescheduled for
early next year. No explanation for the postponement was
offered but the daily "Nepszabadsag," citing anonymous
sources, says Slovak Defense Minister Jan Sitek would like to
host Keleti as lavishly as he was hosted in Budapest during his
visit there earlier this year. This would  have been impossible
with only half a day programmed for the event. Keleti and
Sitek were to sign two treaties, one on confidence building and
the other on the joint use of air space. MS

HUNGARIAN PARLIAMENT APPROVES 1998 BUDGET.
The parliament approved the 1998 budget on 9 December. The
vote was 209 in favor, 65 against, and two abstentions. The
budget provides for a deficit of 419 billion forints ($2.1 billion),
which is 4.4 percent of the GDP, Hungarian media reported.
Economic growth is expected to be 3-4 percent. In separate
news, the parliament elected Arpad Kovacs, chairman of the
board of the State Privatization and Holding Company, as
president of the State Audit Office for a period of 12 years. MSZ


SOUTHEASTERN EUROPE

SERBS LEAVE BOSNIA CONFERENCE. Yugoslav delegate
Dragomir Vucicevic walked out of the international Bonn
conference on Bosnia on 10 December to protest plans to
include references to Kosovo in the session's final documents.
Republika Srpska President Biljana Plavsic and Bosnian Serb
hard-line leader Momcilo Krajisnik also left the conference. The
previous day, Vucicevic demanded that Kosovo and Sandzak be
excluded from the conference's agenda because they are
"internal questions" of his country. Vucicevic added that
Belgrade might "distance itself" from the conference and its
final documents if Belgrade's wishes are not respected. The
Kosovo Albanians and Sandzak Muslims, for their parts, feel
that the only way to change Yugoslav President Slobodan
Milosevic's repressive policies toward his ethnic minorities is
for the international community to put pressure on him. PM

OUTSIDE FORCE THE KEY IN BOSNIA. Most participants at
the Bonn meeting agreed on 9 December that the presence of
foreign peacekeepers and the application of political and
economic pressure have been decisive in restoring peace and
stability to the region (see "RFE/RL Newsline," 9 December
1997). Speakers also said, however, that progress in
implementing the Dayton agreement has been very slow. A U.S.
diplomat pointed out that much of the problem stems from the
fact that the people who began and fought the war are still in
power. Also in Bonn, the Muslim, Serbian, and Croatian
members of the joint presidency agreed under international
pressure on a common citizenship, passport, and council of
ministers. Parliament must still approve the measure. PM

ALBANIA'S MILO WARNS OF "SECOND BOSNIA." Albanian
Foreign Minister Paskal Milo said during a visit to Moscow on 9
December that the situation in Kosovo has become "rather
explosive," Interfax reported. He said  the province might turn
into "another Bosnia in the Balkans unless the key rights of the
Kosovo population are fulfilled." His host, Russian Foreign
Minister Yevgenii Primakov, said that Russia opposes Kosovar
separatism and believes that "Kosovo is Yugoslav territory." He
nonetheless urged the Belgrade authorities to take "a number
of steps in order  to democratize  the situation there [in Kosovo]
and give local residents the opportunity to defend their
interests." PM

SERBIA'S SESELJ EXPECTS TO WIN PRESIDENCY. The
Serbian Radical Party's Vojislav Seselj said in Belgrade on 9
December that he expects to win the 21 December presidential
runoff, BETA news agency reported. Seselj argued that Milan
Milutinovic, his Socialist opponent, peaked in the first round.
Seselj said that votes cast for other candidates in the first
round will go to him in the second (see "End Note," "RFE/RL
Newsline," 9 December 1997). Vuk Draskovic, who came in
third in the first round, has, however, urged his supporters to
boycott the runoff. PM

MONTENEGRO'S DJUKANOVIC WANTS COOPERATION
WITH HAGUE. Montenegrin President-elect Milo Djukanovic
said in Podgorica on 9 December that U.S. President Bill
Clinton's decision to keep sanctions on federal Yugoslavia for
another year proves that Milosevic's policies are responsible
for the country's continuing isolation (see "RFE/RL Newsline," 9
December 1997). Djukanovic added that Yugoslav leaders must
recognize that cooperation with international institutions,
especially with the Hague-based war crimes tribunal, is a
matter of top state interest. He added that Montenegro will do
all it can to move federal policy in that direction, an RFE/RL
correspondent reported from Podgorica. PM

PHONE LINES UP BETWEEN YUGOSLAVIA, BOSNIA.
Serbian authorities restored direct-dial telephone links
between federal Yugoslavia and the mainly Muslim and Croat
Bosnian federation on 9 December. Spokesmen for Yugoslav
Posts and Telecommunications said in Belgrade  that the
telephone system of the Republika Srpska will continue to be
an integral part of the Yugoslav one. PM

NATO WON'T LET WAR CRIMINAL TURN SELF IN. Dutch
NATO peacekeepers in central Bosnia refused in July to let
Miroslav Bralo surrender because he was not on their list of
indicted war criminals, the "Washington Post" reported on 9
December. Once the Hague-based tribunal subsequently asked
NATO to arrest Bralo at home, the peacekeepers refused. Bralo
is a self-confessed war criminal who committed atrocities
against Muslims in 1993. A senior U.S. official called the affair
"a minor blip on the screen." A spokesman for the war crimes
tribunal, however, said that the Bralo case is part of a pattern
in  which, "when push comes to shove [regarding catching war
criminals], NATO runs into a corner and cries." PM

CROATIAN OPPOSITION WANTS VAT CUT. Social
Democratic deputies introduced a bill in parliament on 9
December to exclude food, medicines, children's clothes, books,
and educational materials from the new VAT, an RFE/RL
correspondent reported from Zagreb (see "RFE/RL Newsline," 2
December 1997). The bill also called for cutting the VAT on
taxable goods from 22 to 15 percent. PM

TOP ALBANIAN COURT FILES CHARGES AGAINST
PARLIAMENT SPEAKER. Five judges of the constitutional
court, who were appointed during the former government of
President Sali Berisha,  filed criminal charges against Social
Democratic parliamentary speaker Skender Gjinushi on 9
December. They charge Gjinushi with slander, claiming that he
said in parliament on 7 December that "the constitutional court
of [Chief Justice] Rustem Gjata has broken the rules and serves
foreign interests." On the same day, Gjinushi charged that the
judges misquoted him. He claimed that he only said that
government policies in the first half of the year under Berisha
"served [to promote] the destruction and destabilization of
Albania. And a part of the Constitutional Court took decisions in
line with that policy and hence has served the same goal,"
"Koha Jone" reported. FS

ALBANIA INVESTIGATES RAMPANT SMUGGLING. The
state prosecutor's office on 9 December set up a special team to
investigate dealings in contraband. Prosecutor General Arben
Rakipi said that the specialists will reopen investigations into
every case of smuggling that police could not earlier solve for
lack of evidence, "Koha Jone" reported. Rakipi expressed hopes
that the new group will also be able to crack down on
corruption among police and customs officials (see "RFE/RL
Newsline" 9 December 1997). FS

ETHNIC HUNGARIANS SUSPEND PARTICIPATION IN
ROMANIAN  GOVERNMENT... The Hungarian Democratic
Federation of Romania (UDMR) on 10 December announced it
has suspended its participation in Victor Ciorbea's coalition
cabinet, RFE/RL's Bucharest bureau reported. The decision
followed the vote in the Senate on the government regulation
that amended the 1995 Education Law. Representatives of the
National Peasant Party Christian Democratic (PNTCD) voted in
favor of opposition amendments, limiting the teaching of
Romanian language with special manuals for national
minorities to grades I-IV, instead of all school grades, as
provided in the regulations. PNTCD senators also supported an
amendment that forbids separate universities of the national
minorities. They also supported forbidding  separate minority
sections in  existing universities,  which the 1995 law
permitted. The UDMR said this was in breach of a protocol of 3
December, signed before the reshuffle of the cabinet.  MS

... AND INTER-ETHNIC TENSION RISES IN
TRANSYLVANIA. Police are guarding an orphanage in the
Transylvanian town of Odorheiul Secuiesc run by Greek-
Catholic nuns and the local government council is threatening
to resign, the media in Romania reported on 9-10 December.
The police were deployed at the orders of government
secretary general Remus Opris, after he visited the town on 10
December. The local council is suspecting that the orphanage
will serve as a means to bring about the "Romanization" of the
town, which is inhabited by Hungarian Szeklers (see "RFE/RL
Endnote, 15 August 1997). Earlier on 10 December, the local
mayor refused to allow a truck that brought furniture to the
orphanage to unload. The locks that were placed at the mayor's
order on the building were dismantled. The UDMR protested
the measure, saying matters should be left to the decision of a
court of justice. MS

MONARCHY AGAIN TROUBLING ROMANIAN POLITICS.
Premier Victor Ciorbea has summoned Minister of Culture Ion
Caramitru, Information Minister Sorin Botez and Agriculture
Minister Dinu Gavrilescu, demanding that they clarify a
declaration they signed in support of the return of a
constitutional monarchy, Romanian media reported. Earlier on
9 December, a press release of President Emil Constantinescu's
office said the ministers, like any other Romanian citizens, had
a right to express their views, but once they have taken an
oath on the Constitution, they must respect its provisions. The
presidential press release said the three ministers must "opt
between the freedom of expressing their opinion and their
ministerial obligations under the constitution." MS

WORLD BANK APPROVES LOAN TO ROMANIA. The World
Bank on 10 December approved a $25.5 million loan to support
Romania's privatization program, Romanian television reported.
Citing a World Bank release, Reuters said "the money will be
used to consolidate economically inefficient farms and to
facilitate the operation of the land market necessary for a
market-based economy." In other news, several hundred
journalists on 10 December marched in Cluj to protest
legislation making libel a criminal offense punishable by large
fines and imprisonment. The protest came after a local
newspaper was fined for allegedly slandering the town's
nationalist mayor, Gheorghe Funar. MS

POLISH PRESIDENT IN MOLDOVA. Aleksander Kwasniewski
on 10 December began a two-day visit to Moldova, the RFE/RL
Chisinau bureau reported. He met his Moldovan counterpart
Petru Lucinschi, the chairman of the parliament Dumitru
Motpan and leaders of the parliamentary factions. Lucinschi
said Poland was for Moldova a "model for the transition to a
market economy." He said Poland's road to market reforms
started a long time ago. "We are only half-way on this road and
need the Polish experience." Kwasniewski assured the
Moldovans of Warsaw's support for finding a peaceful solution
to the Transdniester conflict. He also said Poland was interested
in further developing its commercial ties with Moldova and
was ready to share its  experience with Chisinau. Trade
between the two countries has grown by 50 percent in 1997 in
comparison with 1996. The two sides are to sign accords on
cooperation in transportation and cultural affairs. MS

MOLDOVAN SUPREME COURT RULES AGAINST
BESSARABIAN METROPOLITAN CHURCH. The Moldovan
Supreme Court on 10 December turned down the appeal of the
Bessarabian Metropolitan Church against the government's
refusal to register it. The Chisinau Court of Appeal ruled in
August that the government should register the church, which
is subordinated to the Bucharest patriarchate, saying it could
co-exist with the Moldovan Orthodox Church, which is
subordinated to the Moscow patriarchate. The Supreme Court
ruled that the Bessarabian church had not appealed against the
government's refusal to register it within the time specified by
the letter of the law. Parliament deputy Vlad Cubreacov, who
represented the Bessarabian Church in court, said the grounds
for the rejection were unjustified and emphasized that the
appeal would not have been heard by the Court of Appeals if
the church had really failed to respect the legal provisions.
Cubreacov said the Bessarabian Church would now appeal to
the European Court for Human Rights. MS

TRANSDNIESTER SEPARATISTS DENY ENTRY TO
INSPECTION TEAM. Transdniestrian border guards on 10
December blocked a team of military observers from the U.S.,
France and Germany from entering the territory, BASA-press
and ITAR-TASS reported. The team was to carry out an
inspection of the Russian contingent stationed in Bendery-
Tighina, in line with the CFE treaty. The team was accompanied
by Moldovan Defense Ministry officers. The guards said the
entry of the Moldovans was not "coordinated in advance." The
international team refused to proceed without the officers and
returned to Chisinau. In other news, committees of the State
Duma on 10 December began debating the Russian-Moldovan
basic treaty, initialed in 1990. A delegation of the
Transdniester Supreme Soviet is attending the debates, but the
State Duma has not invited a Moldovan parliamentary
delegation to attend. MS


UKRAINE IS OUT OF CAPITAL MARKETS: WAS IT
PUSHED?

by Robert Lyle

          Ukraine has decided to stay out of world capital markets
until sometime in the next year, but the question in global
financial circles is whether Kyiv was pushed back by the
International Monetary Fund or stepped back on its own
volition as a prudent business decision.
        The question is being asked by international investors
who are reassessing the countries where they have money in
the wake of the Asian financial crisis. This is one of the normal
ripple effects of any financial crisis and the investors who are
re-examining their investments say it could make a difference
if Kyiv is still dependent on the IMF to keep out of trouble or is
beginning to make some of these choices on its own.
        The Financial Times newspaper last week said it was the
IMF which brought a halt to Ukraine's plans to issue several
hundred million dollars in Eurobonds, but denominated in
Ukrainian hryvnya.
        To protect foreign investors from devaluation of the
hryvnya, the bonds were being designed with a special feature
that protected the purchaser, but left Ukraine open to a large
risk of very high costs.
        The IMF refused to comment in any way on the story, but
a spokeswoman for the Ukrainian embassy in Washington said
it wasn't the IMF at all, it was the Kyiv government which had
stopped.
        She said Finance Minister Ihor Mityukov last week
announced the postponement of all Ukrainian operations in
international financial markets, including both Eurobonds and
Samarai (Asian) bonds, because costs were just too high.
        One byproduct of the Asian financial crisis has been a
sharp rise in the interest rates developing and emerging
market countries must pay to borrow money globally.
        Russia has suffered a particularly large outflow of money
as foreign investors began withdrawing from government
bonds and notes. Moscow was forced to raise its rates
significantly in the past week to prevent the situation from
getting worse even as it began talking with major global
commercial banks about loans totaling around 2,000 million
dollars to help the country get through the current difficulties.
        Ukraine had been much slower getting into global bond
and note markets, but had intended to begin issuing bonds first
on Asian, and then on European and North American markets.
        Sources in global securities markets say the Ukrainian
government may also have acted to keep its sovereign credit
ratings secret. Kyiv got its ratings from the three private firms
which make the ratings world-wide -- IBCA, Standard & Poors,
and Moodys -- early last week, but declined to reveal them.
Since most countries are anxious to have their ratings known,
the suspicion is the ratings are much lower than was expected
and lower than that of neighboring countries.
        The sovereign credit ratings are necessary before any
country can sell bonds or government notes on capital markets
in other countries.
        While the IMF would not comment, market sources said
the advice sounded like something the fund would say in
Ukraine's situation. When it agreed to release two monthly
tranches totaling about 103 million dollars from Ukraine's
stand-by loan, the fund said it was releasing the drawing
because of Kyiv's "renewed commitment to speed up structural
reforms, particularly in the areas of privatization and
deregulation."
        The fund also praised Ukrainian authorities for moving
quickly to increase interest rates and reserve requirements to
contain pressures on the foreign exchange market during the
Asian crisis. But they said it was important the country
preserve the gains that had been achieved, and that would
mean, importantly, keeping borrowing costs within bounds.
        The experts point out that while the feature the financial
firm Merrill Lynch was designing into the bonds would expose
Kyiv to the possibility of unexpected high costs, it would have
been a feature necessary to attract foreign investors in current
market conditions.
        Whether Kyiv jumped or was pushed will not be as
important after the markets see how Ukraine does handle itself
when it decides to go back into the world capital markets.

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