When two men in business always agree, one of them is unnecessary. - Anonymous
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 2, No. 15, Part II, 23 January 1998


________________________________________________________
RFE/RL NEWSLINE Vol 2, No. 15, Part II, 23 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

* UKRAINIAN PRESIDENT PROTESTS PRIVATIZATION
BAN

* ALBANIAN KILLED IN KOSOVO SHOOT-OUT

* ALBANIAN DEPUTIES FACE INVESTIGATION OVER
SHKODER
 VISIT

End Note
VARIED ECONOMIC FORTUNES IN VISEGRAD AND
BALKANS
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REGIONAL AFFAIRS

YELTSIN "PLEASED" WITH CIS CUSTOMS UNION
SUMMIT. Meeting in Moscow on 22 January, the presidents of
Russia, Belarus, Kazakhstan, and Kyrgyzstan focused on "eight
global political problems." Their prime ministers, meanwhile,
discussed and signed documents on joint customs tariffs,
coordination of their  tax systems, forming a transport union,
and unified transit tariffs. But the four presidents failed to
reach agreement on  a draft proposal by Kazakh President
Nursultan Nazarbaev, who was chairing the meeting, to create a
"common economic space" modeled on the EU. That draft,
published by "Nezavisimaya gazeta" on 23 January,  will be
amended and resubmitted for discussion at the next Customs
Union summit on 3 April. Nazarbayev told journalists that
Yeltsin "resolutely supports" further integration among the four
Customs Union members. Yeltsin,. meanwhile, said he was
"pleased" by the "serious negotiations" at the summit,  adding
that "we must strive to make the CIS as a whole work in this
way." LF

RUSSIAN, BELARUSIAN PRESIDENTS PRAISE UNION.
Yeltsin and Alyaksandr Lukashenka  have hailed the results of
a 22 January session of the Supreme Council of the Russian-
Belarusian Union, Interfax and ITAR-TASS reported. Yeltsin
commented that cooperation between the two countries is
"serious, it is for a long time, and it is not to be played with."
The council  passed a union budget of 5 trillion old rubles
($830 million), and coordinated a common foreign policy for
1998 and 1999. Lukashenka, who is also chairman of the
council, said  he and Yeltsin are satisfied with the results of the
Union for the first time since it was founded. Russian State
Duma Speaker Gennadii Seleznev said the budget is for
financing joint programs "in priority spheres of cooperation."
He added that the introduction of a common currency is not
"too distant." PB

GOVERNMENT LEADERS IN RIGA FOR BALTIC COUNCIL
SUMMIT. Eleven heads of government from the Baltic and
Nordic countries have arrived in Riga for a summit of the
Council of Baltic Sea States, which aims to promote regional
cooperation. On the agenda for the 23 January talks are the
development of economic and trade relations, fighting crime,
and EU expansion eastward. EU Commission President Jacques
Santer is attending the talks. German Chancellor Helmut Kohl is
making his first visit to the Baltics since those countries gained
independence and is scheduled to hold separate meetings with
the Estonian, Latvian, and Lithuanian premiers. Russia's Viktor
Chernomyrdin is the first premier of that country to visit
Latvia since 1991. He  is to meet with Latvian President Guntis
Ulmanis. Latvian Foreign Minister Valdis Birkavs told BNS that
Riga hopes the meeting will bring about agreement on signing
the bilateral border accord. JC

POLISH PRIME MINISTER MEETS WITH CHERNOMYRDIN.
Jerzy Buzek met with Russian Premier Chernomyrdin in Riga on
22 January, Interfax reported. It was the first meeting between
the two men. Main topics discussed were the possibility of
building a gas pipeline across Poland, new border regulations
imposed by Poland that have angered Russians, and the
formation of a working group to help provide security for the
Brest to Warsaw railroad. PB

MOSCOW SAYS RUSSIA NOT RESPONSIBLE FOR WW2
EVENTS. Russian Foreign Ministry spokesman Valerii
Nesterushkin told RIA-Novosti on 22 January that "it would be
naive to hope that Russia could take all responsibility for the
acts committed by the pre-war Soviet Union." Nesterushkin
was answering a question about Baltic reactions to an alleged
letter from the Russian Foreign Ministry to the State Duma
denying that the USSR forcefully annexed the Baltic States in
1940 (see "RFE/RL Newsline," 20 and 22 January).
Nesterushkin commented that instead of digging up "pre-World
War Two events," more attention should be paid to future
Russian-Baltic relations and to concrete steps in increasing
trust and understanding in the Baltic Sea region. JC

PARLIAMENTARY ASSEMBLY OF ORTHODOX STATES IN
CHISINAU. Anti-Western and anti-NATO statements were
made at a meeting of the Parliamentary Assembly of Orthodox
Church States that took place in Chisinau on 21 January.
Russian philosopher Valerii Alekseev said that  NATO is a
"serious danger to mankind" and its eastward expansion will
bring about a division of Europe. Moldovan parliamentary
deputy Vlad Cubreacov told an RFE/RL Chisinau correspondent
that the meeting marked "the first serious attempt by Russia
since the dismemberment of the Soviet Union to re-establish
and expand its influence zone, taking advantage of the
Orthodox community of faith."  The meeting was attended by
representatives of Orthodox Churches from Russia, Ukraine,
Belarus, Armenia, Bulgaria, and Georgia. MS

EAST-CENTRAL EUROPE

UKRAINIAN PRESIDENT PROTESTS PRIVATIZATION
BAN. Leonid Kuchma on 22 January appealed to the
Constitutional Court over a ruling on a parliamentary resolution
that in effect bans privatization, Interfax-Ukraine reported.
The resolution, passed by the parliament last year following
the release of a report on the activities of the State Property
Fund, bars the fund from selling property until its chairman is
approved by the parliament, as stipulated by the constitution.
The parliament has twice rejected appointing Vladimir Lanovoi,
the acting chairman of the fund. PB

BELARUSIAN PRESIDENT DISCLOSES DEATH PENALTY
NUMBERS. Lukashenka said in Moscow on 22 January that
some  30 people were executed in Belarus in 1997, RFE/RL
reported. He added that since he came to power in 1994, he has
pardoned just one person facing the death penalty. The Council
of Europe bars executions and has threatened to expel Ukraine
from the organization if it does not abolish legislation providing
for capital punishment. PB

ESTONIA'S RURAL UNION TO COOPERATE WITH
CENTRISTS.  The junior coalition Rural Union  and the
opposition Center Party  have concluded a cooperation
agreement whereby they will seek to promote agriculture and
protect Estonia's domestic market, ETA and BNS reported on 22
January. The agreement states that each party will support the
other during voting in the parliament, according to a Center
Party deputy. The Center Party has 10 seats in the 101-seat
parliament and the Rural Union seven. The Centrists also  have
a cooperation agreement with the ruling Coalition Party, but
observers say that the accord  exists on paper only. JC

SOLANA SAYS POLAND DOES NOT HAVE TO
"OVERSPEND." NATO Secretary-General Javier Solana told the
Polish parliament on 22 January that the alliance will
guarantee Poland's security but that Warsaw will need to make
a substantial military contribution as well, RFE/RL reported. He
added that NATO and the Polish military are aware of the
deficiencies within the Polish armed forces (see "RFE/RL
Newsline," 20 January 1998) but that there is time for
improvement before Poland's planned accession to the alliance
in 1999. Solana added that Warsaw will not have to
"overspend" in order to upgrade its armed forces to NATO
standards. PB

HAVEL ON CHANCES OF NEW GOVERNMENT. After a
meeting on 22 January with the chairmen of the main
parliamentary parties, President Vaclav Havel said the
likelihood that Josef Tosovsky's cabinet will receive the
legislature's vote of confidence on 27 January seemed "greater
now," but he added "I cannot be sure about it." Havel said his
relative optimism derived from the government's draft policy
statement, which, he said, was "basically not at variance with
the Social Democrats' program," CTK and Reuters reported.
Social Democratic Party (CSSD) chairman Milos Zeman repeated
earlier statements that he will recommend to the party to vote
confidence in the cabinet if its program does not contradict that
of the CSSD. MS

POLL SHOWS RACIST ATTITUDES AMONG CZECHS. Almost
one-third of the Czechs are opposed to co-existence with the
Romani minority and 14 percent believe the Roma should be
expelled from the country, according to a poll conducted by the
Focus agency and released on 22 January. CTK reported that
the poll also shows that two-thirds of the respondents are
satisfied with the way the Roma community is presented in the
media. The same day, a petition entitled "Several Words"  was
handed to the Council for National Minorities and the Council
for Radio and Television. The document demands that the
electronic media devote more attention to creating a
democratic society that protects the ethnicity of minorities. It
also protests the way Roma are depicted in those media.
Senate Chairman Petr Pithart is among the signatories.  MS

HUNGARY, SLOVAKIA FAIL TO AGREE ON MINORITIES.
Hungarian Foreign Minister Laszlo Kovacs and his Slovak
counterpart, Zdenka Kramplova, meeting in Budapest on 22
January, failed to agree on who should represent Slovakia's
ethnic Hungarians on a joint committee monitoring the
implementation of minority rights in the two countries.
Hungary refused to accept Slovakia's nominee, Istvan Gyorgy,
who heads an organization loyal to Slovak Prime  Minister
Vladimir Meciar. Kovacs said the nominee should enjoy the
confidence of all three Hungarian parliamentary parties in
Slovakia. Kramplova disagreed, saying those parties cannot be
considered the real representatives of the Hungarian minority
in Slovakia. She pointed out that Hungary's failure to guarantee
parliamentary representation for its ethnic minorities is an
"open  case of discrimination." MSZ

HUNGARY RECEIVES FIRST FRENCH MISSILES. France's
Matra Defense company has delivered the first 60 Mistral air
defense missiles and 15 Atlas launchers that Hungary ordered
last year, Hungarian media reported on 22 January. The
delivery is a result of a $100 million tender launched by the
Hungarian Defense Ministry last year. "Mistral missiles belong
to the most up-to-date missiles and are fully compatible with
NATO's air defense system," Hungarian Defense Minister
Gyorgy Keleti told reporters. Hungary intends to integrate the
missiles into its defense system  in April 1999, he added. The
French company is expected to deliver another 150 missiles by
the end of this year. MSZ

SOUTHEASTERN EUROPE

ALBANIAN KILLED IN KOSOVO SHOOT-OUT. Serbian
police killed one man and wounded two women in Donji Prekaz
on 22 January. Radio Pristina said the police were pursuing
"terrorists" when the incident occurred. Spokesmen for a
Kosovo human rights organization said the police cut off
telephones and electricity to the village and then fired on it.
The village is in the Srbica area, where the Kosovo Liberation
Army (UCK) controls some communities. In Belgrade, Milomir
Minic, a leader of the governing Socialist Party of Serbia,
stressed the authorities "will not tolerate terrorism." He added
that ethnic minorities in Serbia enjoy more rights than do
minorities in many other European countries. A spokesman for
the opposition Citizens' League of Serbia said the Organization
for Security and Cooperation in Europe should urgently arrange
a dialogue between Serbs and Albanians, an RFE/RL
correspondent reported from Belgrade.  PM

FATWA ISSUED AGAINST MACEDONIAN MUFTI. Some
ethnic Albanian Muslim religious leaders in Macedonia recently
issued an edict calling for the death of Jakub Selimovski, the
head of a rival Islamic organization. The imams charged
Selimovski with misuse of funds. State-run media condemned
the imams' decision as an attempt to put themselves above the
law. Selimovski was the last head of the main Yugoslav-wide
Islamic organization before it broke up in 1992. An ethnic
Macedonian and a moderate who advocates religious and ethnic
tolerance, he has frequently been at odds with Islamic
fundamentalists and ethnic Albanian nationalists. PM

SOLANA PREDICTS MORE ARRESTS IN BOSNIA. A State
Department spokesman said in Washington on 22 January that
the arrest and extradition to The Hague of indicted war
criminal Goran Jelisic was another step toward a lasting peace
in Bosnia (see "RFE/RL Newsline," 22 January 1998). The
spokesman added that Jelisic's arrest should serve as a warning
to other war criminals. In Warsaw, NATO Secretary-General
Javier Solana predicted that there will be further such arrests.
PM

EU GIVES $110 MILLION FOR REFUGEES. EU officials have
approved a $110 million aid package to facilitate the return of
Bosnian refugees, an RFE/RL correspondent reported from
Brussels on 22 January. EU spokesmen said they hope that the
money will enable "several tens of thousands" of people to go
home. In Ankara, Turkish and Bosnian officials signed a $3.8
million agreement to improve agriculture and transportation in
Bosnia. And in Bonn, Foreign Minister Klaus Kinkel said in a 23
January statement that the international community should
show its support for the moderate Bosnian Serb government of
Prime Minister Milorad Dodik by speeding up economic aid to
the Republika Srpska. PM

MILOSEVIC WELCOMES DODIK. Yugoslav President
Slobodan Milosevic said in Belgrade on 22 January after
meeting with Dodik and other Bosnian Serb officials that
"Yugoslavia will support all efforts aimed at realizing the main
objectives of the Republika Srpska, especially to reinforce its
unity and overcome divisions which have led to a crisis."
Milosevic last met with the top Bosnian Serb leadership on 16
January, one day before Dodik's election. In related news,
outgoing Bosnian Serb Prime Minister Gojko Klickovic said he
will hand over power peacefully to Dodik, even though he does
not consider Dodik's election  legal (see "RFE/RL Newsline," 22
January 1998), the Belgrade daily "Danas" reported. PM

STILL NO GOVERNMENT IN SERBIA. Vojislav Seselj, the
leader of the Serbian Radical Party (SRS), said in Belgrade on
22 January that his party will not form a coalition Serbian
government with Milosevic's supporters, nor will the SRS
tolerate a minority cabinet, "Danas" reported. Vuk Draskovic of
the Serbian Renewal Movement (SPO) has demanded the
Serbian premiership and several key ministries in both the
Serbian and Yugoslav governments for the SPO as a condition
for his participation in a Serbian coalition, AFP wrote.
Milosevic's backers lost their absolute majority in
parliamentary elections in September 1997. Serbian law does
not set a deadline by which a government must be formed,
"Nasa Borba" noted. PM

BLIZZARDS WRECK HAVOC IN CROATIA. Storms and gale-
force winds crippled transportation and disrupted  the electric
power system across much of Croatia on 21 and 22 January.
Bus services between Zagreb and the coast and ferry services
between the islands were canceled. PM

ALBANIAN DEPUTIES FACE INVESTIGATION OVER
SHKODER VISIT.  A spokesman for the Prosecutor-General's
Office has said that the office will question legislators who were
recently in Shkoder about their role in the disturbances there.
He added that the office may ask the  parliament to lift the
immunity of some of those deputies. Parliamentary Vice
Parliament Jozefina Topalli, who belongs to the opposition
Democratic Party,  tried to mediate between rebel policemen
who occupied the local prefecture from 19-21 January and
special police forces from Tirana. Meanwhile, local police have
reestablished control over the city. Local police have arrested
two of the dozen or so rebel policemen and charged them with
staging a rebellion, "Koha Jone" reported. In related news, the
Council of Ministers has appointed Ali Lacej from the
Democratic Alliance Party as  prefect in the northern town. FS

TURKISH ARMY TO REBUILD ALBANIAN PORT. The
Turkish army will reconstruct the southern naval base of Pasha
Liman, "Gazeta Shqiptare" reported on 22 January. Investments
totaling some $5 million will also be used to upgrade the naval
academy in Vlora. Both the port and the school were largely
destroyed during unrest in March 1997. Pasha Liman is
Albania's oldest developed harbor, dating back to the Roman
Empire. It became a military port during the Ottoman Empire
and served the Soviet Union as its only base on the Adriatic
before Albania's break with the Soviet bloc in the early 1960s.
FS

ROMANIAN COALITION CRISIS CONTINUES.  Romanian
media reported on 22 January that Premier Victor Ciorbea has
offered  the Democratic Party  the first deputy premiership in
charge of reforms and Minster of Reform Ilie Serbanescu has
resigned in protest. According to those reports, Ciorbea has not
accepted Serbanescu's resignation. Mircea Ionescu-Quintus, the
leader of the National Liberal Party (PNL), said he does not
believe the offer to the Democrats will solve the crisis. On 22
January, the PNL Standing Bureau again delegated Ionescu-
Quintus to mediate between the Democrats and the National
Peasant Party Christian Democratic, both of which say they
want the coalition to continue. The next day, however, the PNL
Standing Bureau announced it will withdraw its ministers from
the government  on 28 January if negotiations on Ciorbea's
replacement have not begun by then. MS

ROMANIAN INCOME TAX TO BE REDUCED. The government
on 22 January approved a draft regulation that will reduce the
income tax imposed on wages from a maximum of 60 percent
to 45 percent, RFE/RL's Bucharest bureau reported. Incomes
below 250,000 lei (some $30) a month will not be taxed. Also
on 22 January, the Senate approved a banking law providing
for the National Bank's increased control over the country's
banks. The law differs in part from legislation approved earlier
by the Chamber of Deputies. In line with parliamentary
regulations, a mediation commission will now have to seek to
reconcile those differences.  MS

MOLDOVAN CUSTOM AUTHORITIES ENGAGE IN
'LANGUAGE WAR.' The Moldovan custom authorities are
prohibiting  the transit of trucks from CIS states unless the
documents presented at the border are filled out in the
Romanian language, which is Moldova's "state language." Radio
Bucharest said on 22 January that similar measures have been
instituted by Russia, Ukraine, and Belarus. In other news, the
authorities in the Transdniester breakaway republic have
reduced electricity to Moldova by 10 percent, RFE/RL's
Chisinau bureau reported. Chisinau owes Tiraspol $15 million
for energy supplied by the Dnestrovsk power station, which
accounts for some 40 percent of Moldova's electricity
consumption. The Tiraspol authorities rejected a Moldovan
offer to pay 30 million lei (some $6.5 million) and insist on the
full settlement of the debt. MS

BULGARIAN PRESIDENT MARKS INAUGURATION
ANNIVERSARY. President Petar Stoyanov, marking first
anniversary of his inauguration on 22 January, told Bulgarians
they must continue to support market reforms. Stoyanov said
on national radio that reform "is not a single act after which we
can stop and rest." He said Bulgarians must make a permanent
effort if they want to participate in global markets and take a
share of prosperity, Reuters reported.  Meanwhile in Bonn,
German Foreign Minister Klaus Kinkel told visiting Bulgarian
Prime Minister Ivan Kostov that Germany wants Sofia to join
the EU and NATO as soon as possible. But Kinkel rejected calls
to lift visa requirements for Bulgarians who want to visit
Germany, dpa reported. MS

BULGARIAN OPPOSITION MOVES NO CONFIDENCE
MOTION. The Socialist Party on 22 January moved a no-
confidence motion against Ivan Kostov's cabinet, blaming it for
the rising costs of health care, Reuters reported. The motion is
the first no-confidence move against the nine-month-old
government, but is certain to be defeated owing to the Union of
Democratic Forces' absolute majority in the legislature. MS

END NOTE

VARIED ECONOMIC FORTUNES IN VISEGRAD AND THE
BALKANS

by Michael Wyzan

        Last year saw a large divergence in economic
performance among the transition countries. That continued a
long-established trend whereby the Visegrad countries and
Baltic States are the leading performers and other countries
struggle to carry out the most basic economic reforms and
resume economic growth.
        The big story in the Visegrad countries was the  economic
plight of the Czech Republic. The country experienced a
currency crisis in the spring and a natural catastrophe--
flooding--in the summer. Gross domestic product GDP grew by
only 1.2 percent, down from 4.1 percent in 1996. The budget
deficit increased, while foreign investment inflows fell by 35
percent.
        A long period of political uncertainty and weak
government culminated in the December resignation of Vaclav
Klaus, prime minister since 1992, over a campaign-finance
scandal. Both his and the economy's fortunes were tied to the
premier's economic approach.  In the early years of his tenure,
his commitment to trade and price liberalization as well as to
austere macroeconomic policy stood the country in good stead.
Later, following his failure to comprehend such subtler issues
as government regulation of the economy and the transparency
of capital markets, Klaus became a liability.
        Slovakia's economy performed respectably in 1997,  even
though GDP growth was down and inflation up slightly.
However, serious problems are looming, including a ballooning
current-account deficit largely caused by the strength of the
Slovak crown, which is now worth more than its Czech
counterpart. The budget deficit was about 5.7 percent of GDP
and is expected to rise further this year. And the foreign-debt
burden  reached worrisome proportions.
        As in the Czech Republic, the quality of political
leadership is the main problem. Slovakia's incomplete
democratization has alienated the EU to such an extent that it is
only Visegrad land not invited to accession talks. Its insider-
dominated privatization methods have scared away foreign
investors. Moreover, matters are unlikely to improve this year,
given the disincentives to sound economic policy that are likely
to prevail until September's general elections.
        The other three Visegrad countries registered sound
performances. Hungary is reaping the benefits of the austerity
measures introduced in 1995 and political stability under the
Socialists. Virtually all its economic indicators are favorable
and improving, although inflation remains stubbornly high. The
economy is largely in private hands, and foreign investment
inflows remain enormous.
        Virtually the same could be said about Poland, although
the budget situation is worrisome. Many major enterprises
remain in state hands, and differences between the governing
coalition partners may hinder progress. Slovenia continues to
turn in respectable, if unspectacular, economic results but
needs to speed up privatization (especially of banks) and rein
in budget expenditure and wage growth.
        The year 1997 was even more troubled than usual in the
Balkans. In Albania, the entire social order imploded in the
wake of the failure of pyramid schemes, and GDP declined by
about 15 percent. In Bulgaria, the socialist government's failure
to deal with festering structural problems and to reach
agreement with the IMF led to a severe currency collapse in
the winter that damaged the economy (GDP fell by 7.4 percent).
Both countries have new leaderships; and particularly in
Bulgaria, where a currency board was introduced on 1 July,
there are grounds for optimism.
        Romania's situation is similar to Bulgaria's: a government
elected in November 1996 has embarked on radical reforms
with IMF support. Unlike in Bulgaria, however, the regime is a
weak coalition of feuding parties and the IMF has become
increasingly standoffish as the government has had trouble
meeting its commitments on structural reforms. Its economic
indicators in 1997 were unimpressive: GDP declined by about 5
percent and inflation remained more than 100 percent.
        The other former Yugoslav republics followed strikingly
diverse  patterns. Macedonia has enjoyed political stability
under the same prime minister since 1992, but relations
between Macedonians and Albanians have deteriorated while
ties with Greece (its only never-communist neighbor) are
disappointingly slow to improve. Still, GDP growth picked up
slightly in 1997 and inflation remained among the lowest in
the region.
        Croatia is in a unique position, with progress on reform
and the standard of living putting it among the leading
transition countries in many respects. Foreign-policy problems,
however, keep it in the EU's waiting room without even an
association agreement. Its economy is growing rapidly, and it
has extremely low inflation. But the current account deficit is
large and restructuring of industrial enterprises and banks is
slow.
        Federal Yugoslavia, meanwhile, has rapid growth and
moderate inflation, but will not emerge from the deep
economic hole dug by its leadership until it overcomes its
international isolation.

The author is an economist living in Austria.

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