You always pass failure on the way to success. - Mickey Rooney
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 10, Part II, 16 January 1998



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

* BALTIC PRESIDENTS SAY CHARTER WILL HELP TIES
WITH RUSSIA

* MONTENEGRO'S DJUKANOVIC WARNS MILOSEVIC

* PLAVSIC'S PRIME MINISTER CALLS IT QUITS

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REGIONAL AFFAIRS

BALTIC PRESIDENTS SAY CHARTER WILL HELP TIES
WITH RUSSIA. The presidents of the three Baltic States have
defended the partnership charter with the U.S., saying it will
help, not damage, their relations with Russia.  Speaking in
Washington on 15 January, Latvia's Guntis Ulmanis said the
document shows that Latvia, Estonia, and Lithuania support
attempts to increase mutual trust with Russia. Lithuania's
Algirdas Brazauskas said the charter is not directed against a
third country and that he does not believe it will worsen ties
with Russia. Estonia's Lennart Meri said his country wants to
look forward to improved relations with Russia in the future
and not dwell on the enmity of the past. U.S. President Bill
Clinton and his three Baltic counterparts are due to sign the
charter in Washington on 16 January. JC

RUSSIA RESPONDS CAUTIOUSLY TO CHARTER. Foreign
Ministry spokesman Valerii Nesterushkin told a news
conference in Moscow on 15 January that Russia welcomes any
steps aimed at establishing open, equal, and good neighborly
cooperation in the Baltics as part of the process of building a
new Europe without dividing lines. Nesterushkin said Moscow's
attitude to the U.S.-Baltic Charter will depend on the extent to
which its content meets that goal. He added that the Moscow
will renew its proposal to offer security guarantees to the
Baltics at international gatherings next week in Riga and
Sweden, Reuters reported. That proposal, first made by
President Yeltsin last fall, was rejected by all three Baltic
States. JC

ADAMKUS DENIES KALININGRAD STATEMENT.
Lithuanian President-elect Valdas Adamkus has denied he told
a Polish weekly that the status of Kaliningrad Oblast remains
an "international problem" (see "RFE/RL Newsline," 15 January
1998), Russian agencies reported. Adamkus's spokesman issued
a statement on 15 January saying that the president-elect had
not given an interview to "Wprost." Adamkus "regards the
question of Kaliningrad Oblast as  having been  settled long  ago
and  firmly stands  for  good relations with Russia," the
spokesman stressed. The Lithuanian Foreign Ministry told
Interfax that Adamkus considers the "Wprost" report to be a
"provocation." JC

EAST-CENTRAL EUROPE

ORTHODOX, CATHOLIC CHURCHES APPROVE MISSION TO
UKRAINE. Following closed-door meetings in Moscow, Russian
Orthodox and Roman Catholic officials have agreed to send a
delegation to Ukraine in an effort to resolve a dispute between
the Orthodox and Greek Catholic Churches, ITAR-TASS and dpa
reported on 15 January. The Russian Orthodox Church claims
the Greek Catholic Church has taken over Orthodox churches in
western Ukraine. The Greek Catholic Church follows Eastern
Orthodox rituals but is loyal to the Vatican. PB

TURKEY PROTESTS TO KYIV OVER SINKING OF FISHING
BOAT. Turkey on 16 January lodged an official protest with
the Ukrainian Foreign Ministry after a Turkish fishing boat
sank and two seamen drowned during an incident the previous
day that involved a Ukrainian coast guard ship, dpa reported.
Ukrainian border guards said 17 Turkish boats were fishing in
waters that Ukraine claims as its territory. They say that one of
those boats capsized only after it tried to ram a Ukrainian coast
guard vessel. Alp Karaosmanoglu, the Turkish ambassador in
Kyiv, said Turkey has the right to claim damages. PB

BUSINESSMEN PROTEST BELARUSIAN TAX LAW. More
than 500 small businessmen have signed a letter protesting a
new tax law that they say is destroying them, RFE/RL's
Belarusian service reported on 15 January. The law requires
small business owners to pay a retroactive tax on annual
income exceeding $450. This is in addition to a fixed monthly
tax. The signatories to the letter, which was sent to the
government, threatened to stop paying taxes altogether or
move to Russia if the new tax is not repealed. PB

ESTONIAN PARLIAMENT EXTENDS VALIDITY OF
PRIVATIZATION VOUCHERS. The parliament on 15 January
approved a bill extending the validity of privatization vouchers
by two years, until December 2000, BNS reported. The
government explained the move by pointing to the relatively
slow pace of privatization and  the large number of vouchers
still in circulation. So far, privatization vouchers worth 14.6
billion kroons (some $1 billion) have been issued, of which
only 58 percent have been cashed in. JC

TWO LITHUANIAN MINISTERS TO RESIGN. Health-care
Minister Juozas Galdikas and Agriculture Minister Vytautas
Knasys have announced they will resign during the cabinet
reshuffle expected to take place after President-elect Adamkus
is sworn in, BNS reported on 15 January. The two ministers,
who have been sharply criticized over their performance,
announced their decision at board meeting of the ruling
Conservative Party. Conservative faction leader Arvydas
Vidziunas told the news agency  that the two ministers will
step down of their own accord. JC

RUSSIA'S GAZPROM THREATENS TO CUT OFF SUPPLIES
TO POLAND. Rem Vyakhirev, the head of Russian gas
producer Gazprom, said that if Poland does not pay a debt of
some $200 million, natural gas supplies may be cut off,
RFE/RL reported on 16 January. Polish Oil and Gas Company
President Janusz Zgorzyinski said that a contract with Gazprom
allows for payment rescheduling, and that there are no grounds
for cutting off supplies to Poland. Vyakhirev, who is due to
visit Warsaw on 18 January to discuss the debt, said Poland
could make partial repayment through goods and services. PB

KLAUS'S DEPUTY CHAIRMAN RESIGNS. Bohdan Dvorak,
elected deputy chairman of the Civic Democratic Party (ODS) on
17 December 1997, has resigned, saying he felt "it was not
possible to change the party's image in the media," Czech Radio
reported on 15 January. In a letter to ODS chairman Vaclav
Klaus, Dvorak hinted that he differed with other party leaders
on how to handle the investigation of the financial scandal that
had split the ODS, CTK reported. "Mlada Fronta Dnes" on 15
January cited Dvorak as saying that a 7.5 million crown
($209,000) secret donation to the ODS from a businessman,
which  sparked the dispute leading to the resignation of
Klaus's government and the split in his party,  had not been
paid to a flood relief program as party leaders promised,
because the ODS does not have the cash to do so. MS

SLOVAK POLLS SET FOR SEPTEMBER. A spokesman for
Premier Vladimir Meciar on 15 January announced that
parliamentary and local elections will be held on 25 and 26
September. Jozef Kroslak told Slovak Television that the
agreement was reached during a meeting with the ruling
coalition and other officials, which Meciar chaired. Meciar also
repeated his stand that the candidates proposed by the
opposition for the first round of the presidential elections, due
later this month, are unacceptable to his Movement for a
Democratic Slovakia. MS

MINORITIES' ELECTION TO PARLIAMENT POSTPONED IN
HUNGARY. The government on 15 January announced that
the election of 13 ethnic minority representatives to the
parliament will be postponed until October, Hungarian media
reported. It had originally been planned to hold the vote at the
same time as the May general elections. The relevant bills will
be withdrawn for redrafting. "The delay will allow sufficient
time for preparations, should the Constitutional Court request a
preliminary review of the legislation," Interior Minister Gabor
Kuncze explained. Most minority groups said the delay is
acceptable to them. Meanwhile, spokesmen for the
parliamentary parties have rejected a suggestion by Hungarian
Church leaders that Churches be granted representation in the
country's legislature.  MSZ

SOUTHEASTERN EUROPE

MONTENEGRO'S DJUKANOVIC WARNS MILOSEVIC... Milo
Djukanovic took office as president on 15 January in the former
royal palace in Cetinje. In his inaugural speech, he warned
Yugoslav President Slobodan Milosevic, who was not present,
that Montenegro will resist Milosevic's efforts to strengthen his
own powers at the expense of Montenegro: "Without equal
rights for both Serbia and Montenegro, there is no Yugoslavia....
Only the people of Montenegro, and no one outside Montenegro,
can decide on its status within Yugoslavia." The highest-ranking
Belgrade leader present at the inauguration was Yugoslav
Prime Minister Radoje Kontic. Serbian opposition leaders
Vojislav Seselj, Vesna Pesic, Zoran Djindjic, and Vuk Draskovic,
also were present. Army Chief-of-Staff General Momcilo Perisic
and Serbian President Milan Milutinovic had been expected to
attend but did not. PM

...URGES HIM TO RESPECT DAYTON AGREEMENT.
President Djukanovic also said in Cetinje on 15 January that
"throughout their history, the Serbian people and Serbia have
had no more sincere or sure a friend than Montenegro. It will
remain so during my mandate." But he added that Milosevic
must honor the international commitments he made when he
signed the Dayton agreement just over two years ago.
Djukanovic warned that if Milosevic does not, "it is certain that
Serbia and Montenegro will regress more and more, with
unforeseeable, even tragic consequences." Djukanovic has
frequently blamed Milosevic's policies, especially on Bosnia, as
being responsible for the continuation of international
sanctions against Yugoslavia. Djukanovic argues that Yugoslavia
must have the sanctions lifted if Montenegro's key shipping
and tourism sectors are to prosper. PM

U.S. WELCOMES DJUKANOVIC INAUGURATION. A State
Department spokesman congratulated Djukanovic on his
inauguration. The spokesman repeated earlier U.S. criticism of
Milosevic and of his ally, outgoing Montenegrin President
Momir Bulatovic, for the recent riots in Podgorica  (see "RFE/RL
Newsline," 15 January 1998). The spokesman added that
Washington expects Milosevic to restrain Bulatovic and his
supporters from resorting to violence in the future. PM

GELBARD TALKS TOUGH TO MILOSEVIC. Robert Gelbard,
the U.S. special envoy to the former Yugoslavia, told Milosevic
in Belgrade on 15 January that unless Serbia and its political
leaders accept "international standards of behavior and
democratic processes..., the outer wall of sanctions will not be
lifted." Those sanctions are linked to Belgrade's policy toward
Bosnia and Kosovo as well as to progress on democratization in
Yugoslavia itself. The Gelbard-Milosevic talks lasted nearly 12
hours and ended without a planned press conference taking
place. PM

PLAVSIC'S PRIME MINISTER CALLS IT QUITS. Mladen
Ivanic has returned to Republika Srpska President Biljana
Plavsic the mandate she had given him in late December to
form a government, BETA news agency reported on 16 January.
A statement released by Plavsic's office in Banja Luka said that
Ivanic was unable to find a majority in the  parliament for his
proposed national-unity government of technocrats. The ultra-
nationalist Serbian  Democratic Party and its ally, the Serbian
Radical Party, which together hold the largest bloc of seats in
the parliament, opposed Ivanic. PM

EASTERN SLAVONIA RETURNED TO CROATIA. William
Walker, the chief UN administrator in eastern Slavonia,
presented a UN flag on 15 January to Hrvoje Sarinic, an aide to
President Franjo Tudjman, in the former front-line village of
Borovo Naselje near Vukovar. The ceremony marked the return
of eastern Slavonia to full Croatian control. Sarinic said that
Croatia's priority is the return of Croatian and other non-Serb
refugees to the region, which has had a Serbian majority since
the Serbs took control of the area in 1991. Observers noted that
the problem is that most of the refugees' homes have been
damaged, destroyed, or taken over by Serbs, who have
nowhere else to go. The Croatian authorities have been under
strong international pressure recently not to further alienate
the local Serbs by staging a triumphal celebration in Vukovar.
Tudjman instead marked the reincorporation of eastern
Slavonia by attending a special concert in Zagreb. PM

U.S. URGES ZAGREB TO RESPECT MINORITY RIGHTS. U.S.
special envoy Gelbard brought a letter from President Bill
Clinton to Vukovar on 15 January. Clinton noted that Croatia
has observed the agreements that it signed on eastern Slavonia
and that, in so doing, "Croatia has acknowledged that it could
not be whole and united unless it was also tolerant and
diverse." Clinton said he expects "Croatia to fulfill its
responsibilities to   guarantee equal treatment and full
protection of the rights of all Croatia's citizens. We look to you
to prove that people of different ethnic groups can resolve
their differences and live together in peace." PM

CROATIA SEIZES SLOVENIAN SPY VAN. Officials from the
Slovenian Defense and Foreign Ministries confirmed on 15
January that Croatian police recently arrested and expelled two
Slovenian intelligence agents. The men had crossed into Croatia
in a van full of electronic listening devices. The two men
admitted that they had crossed the border between Maribor
and Varazdin illegally in order to better pick up an unspecified
radio signal. Croatian authorities charged the men only with
illegally crossing the border, and both sides sought to play
down the incident. PM

ALBANIA'S NANO DISCOURAGES SEPARATISM. Albanian
Prime Minister Fatos Nano signed eight cooperation agreements
in Skopje on 15 January, "Koha Jone" reported. The agreements
provide for reducing customs tariffs, ending double taxation,
launching joint investment projects in agriculture and
transportation, and promoting cooperation in legal matters.
Nano invited Macedonian President Kiro Gligorov to Tirana to
sign a  mutual friendship and cooperation agreement later this
year. In the largely ethnic Albanian city of Tetovo, Nano
attempted to discourage separatism by telling local people that
the "only future of all citizens in the Balkans, wherever they
live...is their integration into a new Europe." Albanian
nationalists clashed with police last summer in Tetovo and
Gostivar. FS

ALBANIAN PARLIAMENT SOFTENS LUSTRATION LAW.
The parliament on 15 January softened a 1995 lustration law,
officially called the genocide law, to  allow lower-ranking
employees of the communist-era Interior Ministry to apply for
jobs in the civil service, "Koha Jone" reported. The law had
previously banned all communist-era Interior Ministry staff
from state jobs. The lustration law remains in force for
informers and others who collaborated with the secret service.
It also applies to high-ranking Interior Ministry officials,
former Politburo members, and people sentenced by any
postcommunist court for criminal offenses. FS

ROMANIA'S DEMOCRATS ASKED TO RECONSIDER
COALITION DECISION. The Democratic Convention of
Romania (CDR) on 15 January called on the Democratic Party,
its coalition partner, to reconsider its decision to withdraw
support for Premier Victor Ciorbea. It said the Democrats have
until 19 January to do so. Ciorbea's offer to step down as prime
minister in order to resolve the crisis was rejected by the
convention. CDR leader Ion Diaconescu said  the alliance is not
looking for other possible coalition partners and that if the
Democrats do not reverse their decision, the outcome  is likely
to be early elections, RFE/RL's Bucharest bureau reported.
Presidential counselor Petru Breteanu said President Emil
Constantinescu will "initiate consultations" with the coalition
partners to "do away with the tensions." Constantinescu will
speak on television about the crisis on 17 January. MS

DEMOCRATS HINT THEY MAY COMPROMISE.  Democratic
Party chairman Petre Roman on 15 January said the CDR's
reaction should not be viewed only in its negative light, as the
media are inclined to do. He said the CDR's call for a
reconsideration is showing that "we are together, we have a
joint pledge, and we want to solve the situation," Radio
Bucharest reported on 16 January. Earlier, Democratic Party
deputy chairman Traian Basescu said no other coalition can
offer Romania the "external credibility" it needs. He called on
President Constantinescu to mediate in the conflict. National
Liberal Party Leader Mircea Ionescu-Quintus said the
resignation of Premier Ciorbea would be "a bad thing for the
country" but early elections are a "worse alternative, because
they harbor a long period of instability." Meanwhile, the
Bucharest stock exchange  dropped by nearly five percent in
response to the crisis. MS

IMF POSTPONES VISIT TO ROMANIA. John Hill, the IMF's
representative in Bucharest, announced on 15 January that the
fund is  postponing a planned visit to Bucharest until the
political situation there is clarified.  The fund was to review the
1998 budget with the government. On 14 January, a  delegation
of the World Bank led by Kenneth Lay, the bank's chief
negotiator for Europe,  met with  Ciorbea and members of his
cabinet, RFE/RL's Bucharest bureau reported. Lay told
journalists that the bank will continue to extend support to
Romania for privatization and restructuring. In other news, an
RFE/RL correspondent in Washington reported on 14 January
that three Romanian and three U.S. firms have signed a $180
million accord to build and operate a liquefied petroleum gas
terminal at the Black Sea port of Constanta (see "End Note"
below). MS

MOLDOVAN PRESIDENT MARKS ONE YEAR IN OFFICE. At
a press conference marking his first year in office, Petru
Lucinschi on 15 January counted among his main foreign policy
achievements the resumption of the dialogue with Tiraspol and
the economic agreement reached with the separatists, RFE/RL's
Chisinau bureau reported. Lucinschi said he has Russian
President Boris Yeltsin's "clear promise" to withdraw the forces
from the Transdniester whenever Moldova wishes, adding that
this was now a matter of "time sequence." The withdrawal of
troops before arms would mean that weapons would "be
stolen," he argued. "Logically, armament is first withdrawn, and
only then the troops," Lucinschi said. He also noted  that
Ukraine has agreed to the arms transit and that now "all we
need is a timetable." MS

BULGARIAN OPPOSITION TO MOVE NO CONFIDENCE
VOTE. The opposition Socialist Party announced on 15 January
it will move a no-confidence vote in the government over
Prime Minister Ivan Kostov's health policy, BTA reported. The
government recently introduced measures requiring patients to
pay for out-patient treatment in state clinics, medical check-
ups,  and hospitalization if they seek treatment outside their
area of residence. Medical aid has thus far been free of charge
in state hospitals, and the government says the health
insurance system can no longer finance the effective
functioning of hospitals. In other news, in a 15 January letter
to the Bulgarian Energy Commission and Bulgargas, Gazprom
warns that it will stop deliveries if a new contract is not signed,
ITAR-TASS reported.  MS

END NOTE

ROMANIAN-U.S. PROJECT SEEN AS START OF ENERGY
HUB

by Robert Lyle

        A Romanian-U.S. joint venture in liquefied petroleum gas
(LPG) is expected to have an impact far beyond the relatively
modest $180 million investment it will  make in Romania over
the next four years.
        Romanian President Emil Constantinescu says the project
will make Romania an energy and raw material hub for Central
and East European imports from  Central Asia.
        The Black Sea LPG joint venture, which was formally
signed into existence last week in Bucharest, will jump-start its
operations with immediate construction of a new 1 million ton
capacity LPG import terminal in the Black Sea port of
Constanta.
        LPG is a gaseous paraffin hydrocarbon found in crude oil
and natural gas. It is made up primarily of propane and
butane. It is used as a fuel itself, as an easily transportable
source of propane gas for cooking and heating, and as a raw
material for chemical synthesis.
        Romania has been critically short of natural gas for
heating and cooking for several years. Romanian officials have
proposed their country as a natural gateway for ships carrying
petroleum and natural gas from the newly developing fields in
the Caspian Sea. But major oil flows remain a long way off,
dependent on the contentious decisions on pipeline routes for
the oil out of the land-locked states around the Caspian.
        Romania's Black Sea port of Constanta is, however, a
natural for receiving LPG from ocean tankers and distributing
it within Romania and beyond into the Danube basin region.
        The three U.S. companies involved in the Black Sea LPG
joint venture--UGI Corporation, the largest U.S. marketer of
propane gas, Energy Transportation Group, and North American
World Trade--say world demand for LPG is expanding rapidly
and that the Romanian venture is at a strategically important
area to supply the local needs and to export efficiently and
economically using the Danube and the region's extensive
transportation network into the rest of East and Central Europe.
        The new import terminal will be built at the entrance to
the Cernavoda-Constanta Canal, which connects the deep-water
port of Constanta to the Danube.
        The first phase of the project will be completed by the
end of 1998 so that Romania will be able, for the first time in
many years, to meet the peak winter demand for gas.
        By 2001, the entire project should be finished, including a
210 kilometer LPG pipeline to Bucharest and the construction
of propane facilities in the capital and several other cities.
        ROMGAZ, Romania's natural gas authority and one of the
three Romanian partners, will mix propane from the LPG with
air and inject it into Bucharest's gas grid to help satisfy winter
peak gas demand. Renel, the state-owned electricity authority
and the second Romanian partner, will use the LPG as another
source of clean fuel for its generating plants in and around
Bucharest.
        ROMPETROL, the state-owned oil and gas holding
company, is the third Romanian partner and will be involved in
building and expanding facilities to use the LPG around
Romania.
        When completed, the facilities are expected to provide
600,000 tons of LPG to serve 85 million people in the Danube
Basin.
        ROMGAZ General Director Emil-Constantin Blaga says the
import terminal is important because it will help the country
diversify its sources of imported fuel. Renel Director-General
Aureliu Leca says the electric utility is pleased to be involved
because the additional fuel delivery infrastructure will make
the privatization of Renel easier.
        Brad Hall, the President of UGI Enterprises in the Central-
Atlantic U.S. state of Pennsylvania, says his company considers
the project is an outright winner. The "geography is compelling
and the market potential is large," he says.
        The co-chairman of Energy Transportation Group in New
York, Kimball Chen, says his company believes that Romania is
capable of tremendous economic growth and will be a "key
player in the Black Sea region."
        The U.S.-Romanian LPG joint venture is not the first to
see the potential for Constanta. A recent study by Britain's
Ocean Shipping Consultants says Romania is "ideally located to
serve as transit gateway for many Central Asian bulk
commodities such as crude oil, steel, aluminum, and steam
coal."
        Japan only last month agreed to lend Romania $194
million to upgrade the port's facilities, including road
improvements. Last week, the European Bank for
Reconstruction and Development approved a $13 million loan
for construction of new grain-handling and storage facilities in
Constanta.
        Financing for the Black Sea LPG joint venture is expected
to come from the World Bank and a group of commercial banks.

The author is a Washington-based RFE/RL correspondent.

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