To appreciate nonsense requires a serious interest in life. - Gelett Burgess
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 1, No. 180, Part II, 16 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

* MINSK COURT FINDS OPPOSITION LEADER NOT
GUILTY

* SERBS SENTENCE 17 KOSOVARS

* ALBANIA, CROATIA SAY NO BALKAN PEACE
WITHOUT KOSOVO

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EAST-CENTRAL EUROPE

MINSK COURT FINDS OPPOSITION LEADER NOT
GUILTY.  A Minsk court on 15 December found Belarusian
Popular Front deputy chairman Yuri Khadyka not guilty of
violating a presidential decree on anti-government
demonstrations, RFE/RL's Belarusian service reported.
Khadyka was charged with leading protesters away from the
officially approved route during a 23 November
demonstration.  The judge said there was insufficient
evidence to find Khadyka guilty. This unexpected conclusion
may embolden opposition groups to push their drive for the
removal of President Alyaksandr Lukashenka from office.
PG

PENTAGON SAYS NO MORE HELP TO BELARUS FOR
DISMANTLING BASES. U.S. Defense Department aide
Edward Warner told a Minsk press conference on 14
December that "Belarus will henceforth be required to
dismantle nuclear missile bases on its territory using its own
funds.  It can no longer rely on U.S. financial assistance in
this matter," RFE/RL's Belarusian service reported the next
day.  Warner said the U.S. was forced to take this decision
because Belarusian authorities have barred U.S. specialists
from inspecting the bases in question, despite having
pledged to allow such inspections.   PG

KUCHMA SAYS NATO MUST RESPECT UKRAINIAN,
RUSSIAN INTERESTS.  Speaking at a 15 December press
conference following his meeting with visiting Greek
President Konstantinos Stephanopoulos, President Leonid
Kuchma said "it is necessary to take into account the
interests of all sides, including Ukraine and Russia as NATO
expands," ITAR-TASS reported. Kuchma said the alliance
must act in ways that do "not divide Europe into two camps."
PG

UKRAINIAN TRADE RISES WITH GREECE, FALLS WITH
CHINA.  Ukraine's trade with Greece is likely to rise from
its current $110 million a year if Greece follows through on
its pledge to purchase ships built in Ukrainian yards, Kyiv
media reported on 15 December. But trade between Ukraine
and China fell 20 percent over the past year, amounting to
only $365 million in the first 10 months of 1997, ITAR-TASS
reported on 15 December.  Moreover, Ukraine's trade deficit
with China now exceeds $200 million annually. PG

EU WELCOMES YELTSIN'S PLEDGE TO CUT TROOPS IN
RUSSIA'S NORTHWEST... The EU on 15 December
welcomed Russian President Boris Yeltsin's recent pledge
to unilaterally cut troops in the northwest of Russia by more
than 40 percent, BNS reported. In a statement, the union
said it "strongly encourages" Estonia, Latvia, and Lithuania to
improve regional cooperation with Russia. Yeltsin made the
pledge earlier this month during an official visit to Sweden
(see "RFE/RL Newsline, 3 December 1997). JC

...AND TALLINN'S OFFER ON ALIENS' CHILDREN. Also
on 15 December, the EU welcomed the Estonian
government's decision to discuss an amendment to the
citizenship law whereby all children born in Estonia would
be granted citizenship if their parents had lived in the
country for at least five years (see "RFE/RL Newsline," 9
December 1997), according to ITAR-TASS. The union said
the decision was a constructive step toward the integration
of non-Estonian citizens. The same day, ETA reported that a
special government committee has drafted a policy
document aimed at making youths feel at home in Estonia.
Ethnic Affairs Minister Andra Veidemann, who heads the
committee, said the draft is to be presented to the
government  on 23 December. JC

LITHUANIAN PREMIER WANTS BUDGET WITHOUT
DEFICIT. Gediminas Vagnorius told journalists on 15
December that he will propose a  constitutional law
stipulating that the state budget must be balanced, BNS
reported. Vagnorius did not rule out the possibility that the
1999 budget would be without a deficit. This year's budget
deficit is estimated to total 1.9 percent of GDP and next
year's 1.6 percent. JC

WARSAW PLANS MAJOR REFORM OF LOCAL
GOVERNMENT.  Interior Minister Janusz Tomaszewski told
a 15 December press conference that the Polish government
plans to restructure local government, PAP reported.  The
plans, to be considered by the central authorities in January
1998, call for the number of provinces to be reduced from
49 to 15 or fewer and for the creation of a new
administrative unit, the "powiat," which would be run by
locally elected officials and an administrative district
between the levels of municipal and provincial
governments. Such decentralization had been blocked by the
previous left-of-center government. PG

POLISH PROSECUTORS QUESTION TOP EDITOR. Polish
prosecutors called in for questioning the editor and two
other senior employees of the weekly "Wprost" on 15
December,  PAP reported. But all three were released by the
end of the day.  The authorities said they are investigating
possible financial mismanagement, while the editors issued a
statement arguing that the prosecutors' actions were
designed to intimidate a journal that has been outspoken in
its criticism of Polish officials. PG

POLAND SEEKS LIFTING OF U.S. BAN ON MEAT
PRODUCTS. The Agricultural Ministry on 15 December said
that  "for reasons of prestige," it will seek to have the U.S.
lift its ban on the importation of some Polish meat products,
PAP reported.  The U.S. recently imposed a ban on such
products from Poland and 20 other European countries until
it can be established whether there is any risk of the
products carrying  mad cow disease. PG

HAVEL TO ANNOUNCE NEW PRIME MINISTER.
President Vaclav Havel has said he will appoint the
country's new prime minister on 16 December. He hinted
that the next premier could be either a "man or a woman"
but will not be "a party head or directly proposed by a
political party." The same day, outgoing Premier Vaclav
Klaus told Czech state radio that the talks on forming the
new government had been going on" about us [but] without
us." He said nobody had talked to him after the recent
congress of his Civic Democratic Party (ODS), which re-
elected him leader on 14 December, and that he doubted the
talks on the new cabinet could be completed "in the next 48
hours." MS

CZECH COMMUNISTS HAVE OWN PRESIDENTIAL
CANDIDATE. Vojtech Filip, the chairman of the Communist
Party (KSCM) faction in the Chamber of Deputies,  told
reporters on 15 December that Havel will not be the only
candidate for president on 20 January, CTK reported. Filip
said Havel's 9 December speech to both houses of the
parliament showed he is not "sufficiently critical of himself."
The KSCM will nominate astrophysicist Stanislav Fischer as
its presidential candidate, Filip said. The extreme-right
Republican Party is also expected to announce soon its
candidate for president. MS

SLOVAK PRESIDENT BLAMES EU DECISION ON
GOVERNMENT. Michal Kovac on 15 December said the EU
decision not to include Slovakia among the countries with
which talks will begin next year is proof of its mistrust of
the ruling coalition, AFP reported. He said the decision
marked a victory for those Slovak leaders who are
struggling for respect of human rights and further
democratization. MS

AGREEMENT ON GABCIKOVO-NAGYMAROS TO BE
REACHED BY MARCH...  Slovak Prime Minister Vladimir
Meciar and his Hungarian counterpart, Gyula Horn, have
decided to reach an agreement over the Gabcikovo-
Nagymaros dam dispute by 25 March 1998, the deadline set
by the International Court of Justice in The Hague. Meciar
and Horn met with Austrian Chancellor Viktor Klima in
Vienna on 15 December, following what observers say was
the Slovak side's refusal to meet in Budapest. MS

...AS SLOVAKIA GIVES PARTIAL ANSWER TO
HUNGARIAN DAM PROPOSALS. Slovak officials on 15
December rejected Hungary's proposal to raise the bed of the
Danube but said they will study two other proposals by
Budapest. Peter Baco, head of the Slovak government
delegation, said Hungary's proposals to raise the water level
or build two smaller power plants need to be examined by
the Slovak side. He said unless Nagymaros or a similar plant
is completed, Slovakia will insist that Hungary pay
compensation for the shortage of electric power. The next
plenary session of the two delegations is to take place in
early January. MSZ

SOUTHEASTERN EUROPE

SERBS SENTENCE 17 KOSOVARS. A Serbian court in
Pristina on 16 December sentenced 17 ethnic Albanians to
prison terms ranging from four to 20 years. Two other
Kosovars were acquitted. The 19 were accused of
membership in the clandestine Kosovo Liberation Army. It
was the third large trial this year of ethnic Albanians on
what the Albanians claim are baseless political charges. PM

ALBANIA, CROATIA SAY NO BALKAN PEACE
WITHOUT KOSOVO. Albanian Foreign Minister Paskal Milo
said in Zagreb on 15 December that he and his host, Mate
Granic, agreed that "the situation in Kosovo is currently very
difficult, [explosive] and dangerous. We concluded that there
will not be peace in southeast Europe" until the Kosovo issue
is resolved. Milo added that "without democratization, the
situation in Serbia cannot be peaceful and there cannot be
cooperation and peace" in the Balkans. Meanwhile,
prominent Kosovo politician Azem Vllasi told the Belgrade
daily "Danas" that the outbreak of a "war in Kosovo is only a
matter of time." PM

WHY IS DINI IN BELGRADE? Italian Foreign Minister
Lamberto Dini said in Belgrade on 15 December that the
reason for his previously unannounced trip to the Yugoslav
capital is to promote ties between Yugoslavia and the EU. He
added that he also wants "to clarify" some matters regarding
Belgrade's policies in Bosnia. An RFE/RL correspondent
reported from the Serbian capital, however, that Italian
sources said Dini's main goal is to persuade Yugoslav
President Slobodan Milosevic to implement a 1996
agreement on Albanian-language education in Kosovo. An
Italian NGO sponsored the pact, which remains a dead letter.
PM

BOSNIAN SERBS BLOCK CITIZENSHIP AGREEMENT.
Serbian legislators in the joint Bosnian parliament refused in
Sarajevo on 15 December to accept the proposed law on
Bosnian citizenship because the text includes no reference to
the recent agreement between Pale and Belgrade on dual
citizenship. Representatives of the  Croatian-Muslim
federation and the international community say that the
Pale-Belgrade agreement is invalid (see "RFE/RL Newsline,"
15 December 1997). Earlier on 15 December, the parliament
passed a law regulating Bosnian passports for all three
ethnic groups despite Serbian efforts aimed at delaying the
vote. The international community at its conference in Bonn
on 9-10 December gave the lawmakers an ultimatum to pass
both the citizenship and the passport laws by 15 December.
PM

CLINTON TO VISIT BOSNIA. U.S. President Bill Clinton
said in Washington on 15 December that he will visit
Sarajevo and  U.S. SFOR troops in Tuzla on 22 December. He
is expected to meet top Bosnian leaders, including
presidency member Alija Izetbegovic. Clinton last visited
Bosnia in January 1996. PM

FRANCE DENIES ARBOUR CHARGES... Following a
meeting in Paris on 15 December between Foreign Minister
Hubert Vedrine and Louise Arbour, the chief prosecutor of
the Hague-based war crimes tribunal, a Foreign Ministry
spokeswoman said the French government is  "deeply
shocked by [Arbour's] scandalous allegations that [Bosnian]
Serb war criminals could feel safe in the French sector of
Bosnia" (see "RFE/RL Newsline," 15 December 1997). The
spokeswoman added that Vedrine told Arbour that "France
is cooperating with the [court] in its own way." In
Strasbourg, General Jean-Philippe Douin, France's armed
forces commander-in-chief, said that French troops in Bosnia
are "impartial." PM

...AS DOES NATO. In Brussels, a NATO spokesman said on
15 December that France follows the same rules of conduct
as any other NATO state that participates in SFOR. The
spokesman added that the situation has worsened for war
criminals in Bosnia over the past year. He noted that all
indicted Muslims and 14 indicted Croats have gone to The
Hague and that the hard-line Serbs have lost their
parliamentary majority. PM

RELATIONS COOL BETWEEN SLOVENIA, CROATIA.
Slovenian Prime Minister Janez Drnovsek said on 15
December that his government is disappointed at recent
amendments to the Croatian Constitution, which mention
several ethnic minorities by name but not a Slovenian one
(see "RFE/RL Newsline," 15 December 1997). Slovenian
authorities called off a meeting slated for 15 December to
deal with transportation questions, an RFE/RL correspondent
reported from Ljubljana. Spokesmen for the Transportation
Ministry said Slovenia is in no hurry to complete a highway
from Maribor to the Croatian border, which Zagreb badly
wants. According to official Croatian statistics, some 54,000
ethnic Slovenes live in Croatia. The new amendments do not
mention Muslims or Albanians by name, either. PM

SERB KILLED IN SLAVONIAN SHOOT-OUT. Eastern
Slavonia's multi-ethnic police shot and killed a Serb in Beli
Manastir on 15 December as he was trying to break into a
police station. Earlier that day, the region's police
administration came under Croatian control.  PM

BOMB BLASTS ENVER HOXHA'S HOUSE. A bomb heavily
damaged the Gjirokaster home of late Albanian communist
dictator Enver Hoxha and surrounding buildings on 15
December, "Dita Informacion" reported. Sabrie Hoxha, his
distant relative, was injured in the blast. The house is used
as a museum for Hoxha's World War II partisan movement.
Nearby are offices of the OSCE and Mother Teresa's Sisters of
Charity. It was the third explosion in the city within three
days. Nobody has claimed responsibility for the attacks. FS

ROMANIAN PRESIDENT AT NATO HEADQUARTERS.
Emil Constantinescu on 15 December met with NATO
Supreme Allied Commander Gen. Wesley Clark at the
alliances headquarters in Brussels, an RFE/RL correspondent
in Brussels reported. In other news, the private television
channel Pro TV reported the same day that the Timisoara
Prosecutor-General's office has completed its investigation
into the role of Generals Victor Stanculescu and Mihai Chitac
in the suppression of the December 1989 uprising in that
town. The office will indict both Stanculescu and Chitac, who
held the defense and interior portfolios, respectively, from
1990-1991. MS

INTERNATIONAL FINANCIAL ASSISTANCE FOR
MOLDOVA TO CONTINUE. International financial
organizations offering assistance to Moldova decided on 15
December to continue backing Moldova's economic reform
and efforts to accelerate economic growth and reduce
inflation, RFE/RL's Chisinau bureau reported, citing a World
Bank statement. The organizations agreed that in 1998-
1999, Moldova will receive credits totaling $600 million.
Prime Minister Ion Ciubuc, who attended the meeting in
Paris, said most of the funds will come from the World Bank
and the IMF. He added that the loans are conditional on
budget restructuring and the passage of legislation on
various social issues, including a law raising the retirement
age. MS.

U.S. OFFICIAL SAYS RELATIONS WITH MOLDOVA
IMPROVING. Stephen Sestanovich,  special adviser to U.S.
Secretary of State Madeleine Albright on matters related to
the Newly Independent States, told reporters in Chisinau on
15 December that Moldovan-U.S. relations have been
improving of late, particularly since the conclusion of the
agreement on the sale of the 21 MiG-29C aircraft to the US.
Sestanovich noted that Moldova has recently made a
"fundamental choice--that of belonging to the European
Union," RFE/RL's Chisinau bureau reported. He emphasized
that the U.S. "recognizes Moldova's territorial integrity." MS

GEORGIAN PRESIDENT IN BULGARIA. Speaking at a
joint press conference marking the end of Eduard
Shevarnadze's two-day visit to Bulgaria, President Petar
Stoyanov said Sofia "fully backs Georgia's desire to restore
its territorial integrity." Shevardnadze said Georgia is willing
to provide transshipment of oil from Azerbaijan to Bulgaria
as an alternative to Russian supplies. The two presidents
reached an agreement on training Georgian border guards in
Bulgaria and establishing a regular ferry link between their
Black Sea ports. Similar agreements were concluded with
Romania during Shevarnadze's visit there on 10-11
December. MS

REGIONAL AFFAIRS

OECD PREDICTS ECONOMIC GROWTH. The Organization
for Economic Cooperation and Development released a report
on 15 December saying that Russia's economy is likely to
expand by 0.5 percent in 1997,  3 percent in 1998, and 5
percent in 1999. The OECD expects GDP in Poland and
Hungary to grow by 4-5 percent in the next two years. But it
says the Czech economy is unlikely to expand by more than
2  percent in the same period. Slovakia is a cause for concern
because of what the OECD calls a "twin deficit" problem--a
current account deficit of 10 percent of GDP and a deepening
fiscal gap. The OECD says Romania's GDP is likely to grow by
1 percent in 1998, after a 4 percent fall in 1997. Bulgaria is
also expected to see a 2 percent growth in its GDP, following
a 6 percent decline this year. MS

MOLDOVA'S ECONOMY STILL STRUGGLING DESPITE
SOLID REFORMS

by Michael Wyzan

        Since the breakup of the Soviet Union, Moldova has
more consistently pursued sound macroeconomic policies
and political democratization than most CIS states. Freedom
House in 1997 gave it the third-highest ranking in the CIS
(behind Russia and Kyrgyzstan and tied with Armenia) on
economic reforms. Those reforms have resulted in low
inflation and a stable currency.
        Nonetheless, the economy has declined longer and
further than many others in the CIS. Moldova remains
dependent on an agricultural sector vulnerable to weather
patterns and to hindrances to its foreign trade arising from
the dispute with the breakaway Transdniester region.
Relations between the country and international financial
institutions have worsened lately, as the parliament has
balked at passing legislation to accelerate structural
reform.
        Moldova was displaying favorable economic indicators
by 1994. Retail prices rose by 105 percent from the end of
1993 to the end of the following year; within the CIS, only
Kyrgyzstan had lower inflation. In 1995, Moldovan retail
prices increased by 24 percent, the lowest inflation of all
15  former Soviet republics.
        Another early indicator of sound policy-making was
the stability of the leu against the dollar. The currency unit
fell from 4.06 to the U.S. dollar in April 1994 to only 4.27 at
the end of that year and to 4.53 at the end of 1995. That
stability posed a potential threat to exports, since inflation
was faster than the leu's decline against Western
currencies.
        Still, such stability under a floating exchange rate
regime indicated confidence in fiscal and monetary policy
and expectations of low inflation. Fiscal deficits have been
modest by CIS standards, with the consolidated budget
showing deficits of 5.9 percent of gross domestic product
(GDP) in both 1994 and 1995.
        Despite those achievements, the economy has been
slow to turn around. GDP fell by 8 percent in 1996, making
for a cumulative decline of 64 percent from 1991 to 1996,
one of the largest falls in the CIS. Aggregate production
appears sensitive to weather-driven agricultural
performance, with years of large GDP declines--1994 and
1996--characterized by meager grain, vegetable, and fruit
harvests.
        However, TACIS experts argue that the apparent GDP
fall in 1996 may be only temporary--the result of a surge in
imports and the failure to record a significant volume of
exports, especially to the CIS. Such exports typically
transit the Transdniester region, and Chisinau cannot record
them at Moldova's border with Ukraine. GDP is reportedly
declining again this year, while industrial output was down
12 percent from January to June compared with the same
period last year.
        Other economic indicators have been stagnating or
even deteriorating. Disinflation is slow: the 15 percent
inflation rate in 1996 was bettered by all three
Transcaucasian states, which started reforming later. In
November, the National Bank of Moldova raised its 1997
inflation estimate to 13 percent. The budget deficit, which
reached 10 percent of GDP in 1996, is about 7 percent of
GDP, compared with an IMF-agreed target of 4.5 percent.
        The trade regime has been fairly liberal since the end
of 1993, and the parliament further liberalized it in late
June. A Generalized System of Preferences scheme--which
provides a duty-free regime for "non-sensitive"
goods--is in force with the EU. Moldova is the only CIS state
whose textile exports to the EU are not subject to quotas.
        Even so, Moldova's external relations are troubled.
Moldova owes Gazprom $500 million, of which $332 million
is owed by the Tiraspol authorities. Gazprom warned early
this month of a cut-off in supplies unless that debt is
settled.
        Ukraine applies country-of-destination rules to its
tariffs and excise duties, as sanctioned by the World Trade
Organization. Consistent with such rules, and out of concern
that goods supposedly transiting Ukraine's territory may
illegally be sold there, Kyiv imposes tax deposits on transit
exports. This has caused problems for Moldovan exporters;
at mid-year, trade with the CIS was down on 1996 levels.
Furthermore, the EU treats Moldova's all-important exports
of wine and fresh fruit and vegetables as "sensitive"
sectors subject to tariffs.
        In earlier years, the IMF supported Moldova's reform
efforts, providing $71 million in 1994, $65 million in 1995,
and $41 million in 1996. However, the  IMF postponed from
June until July the release of a $21 million tranche under a
three-year $195 million loan agreed to in May 1996; the
fund cited unfulfilled conditions, especially on
privatization. And in November, it delayed until early 1998
the next tranche release out of concern over the
parliament's suspension of energy-price hikes and the
growing budget deficit.
        Despite those setbacks, Moldova remains one of the
most reform-minded CIS states. Accordingly, its failure so
far to resume economic growth is worrisome.

The author is an economist living in Austria.

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