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RFE/RL NEWSLINE Vol 2, No. 68 Part II, 8 April 1998
___________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 68 Part II, 8 April 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 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIAN MEDIA EMPIRES II Businessmen, government leaders, politicians, and financial companies continue to reshape Russia's media landscape. This update of a September report identifies the players and their media holdings via charts, tables and articles: http://www.rferl.org/nca/special/rumedia2/index.html xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part II * YELTSIN BACKS ECONOMIC PRESSURE ON LATVIA * KOSOVARS SAY SHELLING CONTINUES * RUSSIA STILL SHIPPING ARMS TO BELGRADE? End Note: ESTONIA'S ECONOMY SLOWS, EASING FEARS OF OVERHEATING xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx REGIONAL AFFAIRS YELTSIN BACKS ECONOMIC PRESSURE ON LATVIA. Russian presidential spokesman Sergei Yastrzhembskii on 8 April announced that Boris Yeltsin supports economic measures to encourage Latvia to end its "unceasing policy of discrimination" against Russian-speakers, Interfax reported. Yastrzhembskii denied that the measures would be tantamount to economic sanctions. Meanwhile, Kemerovo Oblast Governor Aman Tuleev told ITAR-TASS that he has asked managers of enterprises in his region to halt deliveries of goods, including coal, to Latvia. Tuleev is a member of a Russian Federation Council commission on protecting the rights of Russian-speakers in Latvia. In recent days, Saratov Governor Dmitrii Ayatskov, Yaroslavl Governor Anatolii Lisitsyn, and Moscow Mayor Yurii Luzhkov have all called on the Russian government to increase pressure on Latvia. LB LATVIAN POLICE CHIEF FIRED OVER SYNAGOGUE BOMBING... The government on 7 April fired national police chief Aldis Lieljuksis, whom Interior Minister Ziedonis Cevers has blamed for the 2 April bombing of the Riga synagogue. Cevers says that his orders to install video cameras at the building were not carried out. Also on 7 April, Juris Dalbins, commander of the armed forces, handed in his resignation to President Guntis Ulmanis. The day after the synagogue bombing, the National Security Council had called for the dismissal of both officials (see "RFE/RL Newsline," 3 April 1998). JC ...WHILE SEARCH FOR BOMB CULPRITS CONTINUES. "Diena" reported on 8 April that according to the Ministry of Internal Affairs, the search for those responsible for the Riga bombings has been narrowed down to two individuals. The police operation in the wake of the two explosions is described as the largest in Latvia in 20 years, involving some 2,200 policemen. A total of 265 people were taken into custody, of whom 40 were wanted in relation to other crimes. Meanwhile, many government buildings and religious sites in the capital are under constant police surveillance. JC ITALY'S DINI SAYS LATVIA'S EU CHANCES IMPAIRED. Italian Foreign Minister Lamberto Dini has said that recent problems over Latvia's ethnic Russian community will not help Latvia's case for EU membership, Reuters reported. Speaking at a joint press conference with Russian Foreign Minister Yevgenii Primakov in Moscow on 7 April, Dini said that Latvia's membership in EU is "not near at hand." He added that "events like those of recent days distance Latvia further from the process of preliminary membership." Latvian President Guntis Ulmanis said on the weekend that recent events have greatly damaged Latvia's prospects of prompt EU entry. JC EAST-CENTRAL EUROPE MINSK INTRODUCES TOUGH ECONOMIC MEASURES. The Belarusian Finance Ministry has introduced tough measures aimed at stabilizing the country's economy, ITAR-TASS reported, citing the 8 April "Zvyazda". The ministry is demanding that managers do not import goods if comparable products are available on the domestic market. It also demands that more rigorous control be imposed over budget allocations for administrative purposes. JM BELARUSIAN OPPOSITION DEFENDS RELIGIOUS HOLIDAYS. The opposition has called on religious believers not to obey Belarusian President Alyaksandr Lukashenka's decree last month canceling the Catholic and Orthodox Easter and All Saints' Day as public holidays, Belapan reported on 7 April. The same decree retained the 7 November holiday commemorating the 1917 Bolshevik revolution. Yury Khadyka, deputy chairman of the opposition Belarusian Popular Front, told journalists that the decree is "an openly declared return to the past" and may exacerbate tensions between religious groups. JM GOVERNMENT BANS CONTACTS WITH INDEPENDENT MEDIA. The Belarusian government has issued a document introducing restrictions on contacts with the independent media, Belapan reported on 7 April. The document, which is described as for official use only, refers to a directive issued earlier by Lukashenka "to step up counterpropaganda against the opposition press." The document prohibits state bodies from passing official materials to the independent media and warns officials against making comments on state documents in the opposition press. In addition, the government bans official advertising in a number of independent newspapers, including "Naviny," "Belorusskaya Delovaya Gazeta," and "Narodnaya Volya." JM PARLIAMENTARY ELECTIONS IN BELARUS IN 1998? Henadz Karpenka, former parliamentary deputy speaker and head of the opposition shadow cabinet, told journalists on 7 April that Lukashenka has decided to call parliamentary elections for November 1998, Belapan reported. According to Karpenka, the decision was made under pressure from European organizations and following acting Russian Deputy Prime Minister Ivan Rybkin's visit to Minsk. JM EIGHT PARTIES WIN SEATS IN UKRAINIAN PARLIAMENT. The Central Electoral Commission has announced the final results of the 29 March parliamentary elections for party-list mandates, Ukrainian Television-1 reported on 7 April. The 4 percent vote threshold was overcome by eight parties and blocs: the Communists (84 mandates), the Popular Rukh (32), the Socialists/Peasants (29), the Greens (19), the Popular Democratic Party (17), the Hromada party (16), the Progressive Socialists (14), and the United Social Democrats (14). JM COALITION EXPANSION TALKS CONTINUE IN ESTONIA. The ruling Coalition Party has rejected a proposal by the Reform Party to form a coalition composed of itself, the Coalition Party, and the United Opposition (an alliance of several right-wing parties), ETA reported on 7 April. The previous day, the Reformists had refused to join the current coalition, saying it would be unable to work with the bloc of rural parties that constitute the junior coalition partner in the government. Coalition Party leader and Prime Minister Mart Siimann said his party and the Reformists have reached a "gentleman's agreement" whereby the government will consult the opposition before making key decisions and the opposition will refrain from becoming "obstructionist or destructive." In the meantime, the ruling coalition will begin expansion negotiations with Foreign Minister Toomas Hendrik Ilves's People's Party and the Progressive Party. JC ADVISER SAYS HAVEL WOULD NAME ZEMAN PREMIER. An adviser to President Vaclav Havel says that if the Social Democrats win the June elections and are able to form a majority government, party leader Milos Zeman is likely to be chosen to head the new government, the Czech daily "Mlada fronta Dnes" reported on 8 April. Jiri Pehe, Havel's political adviser, denied rumors among the media that Havel would seek not to name Zeman. The previous day, "Pravo" had reported that Havel wants Jan Ruml, head of the newly formed Freedom Union, to be nominated as prime minister. Pehe said that Havel has no special preference for Ruml and that the newspaper report was "totally false." PB PROPOSAL FOR DIRECT ELECTION OF SLOVAK PRESIDENT FAILS. The parliament on 7 April rejected a bill calling for a referendum on the direct election of the president, RFE/RL's Slovak Service reported. Of the 119 deputies present, 50 voted for the measure and 44 abstained. A majority of those present (in this case 60 votes) would have been necessary for the passage of the bill, which was proposed by the Party of the Democratic Left. The parliament will try for a fifth time to elect a president on 16 April. Opinion polls show that a majority of Slovaks favor direct presidential elections. PB SOUTHEASTERN EUROPE KOSOVARS SAY SHELLING CONTINUES. Some 14 buses, 10 vans, and 10 trucks filled with Serbian special police troops arrived in Kosova from Serbia proper on 6 April, the Albanian news agency Enter reported the following day, quoting Kosovar sources. Within Kosova, police reinforcements, tanks, and armored vehicles arrived in the Skenderaj and Fushe-Kosova areas on 6-7 April. Also on 6 April, Serbian artillery shelled the village of Kopiliq near Skenderaj, wounding two people, the Kosovar shadow-state's KIC news agency reported. PM SESELJ BLASTS 'PLAN FROM HELL.' The Serbian parliament on 7 April voted 193 to four to approve Yugoslav President Slobodan Milosevic's proposal to hold a referendum on 23 April on whether to allow foreign mediation in the Kosovo dispute. Serbian Deputy Prime Minister Vojislav Seselj said that the referendum will give Serbs an opportunity to reject what he called the foreign "plan from hell for the breakup and destruction of Serbia and the Serbian people," RFE/RL reported. A deputy from Seselj's Serbian Radical Party argued that the U.S. has always "supported our enemies, and now it wants to destroy the Serbs. If we accept mediation, we will be signing [our own] surrender." PM KINKEL CALLS REFERENDUM MEANINGLESS. German Foreign Minister Klaus Kinkel told the "Frankfurter Rundschau" of 7 April that "the referendum is an evasion maneuver...being carried out only to support Milosevic's position. [The referendum] cannot influence our political actions." The minister said the question of deploying foreign troops around Kosova's international borders is "complicated." He suggested that the UN might extend the mandate of its troops in Macedonia, and that the WEU might deploy forces in Albania. He added that "there is probably no majority in the Security Council for a UN mandate" in Albania with NATO participation. Kinkel stated that "it is known who supplies weapons" to Belgrade and that the embargo will make it easy to block such sales. He added that "at present, the main problem is that weapons must no longer get to Kosova across the Macedonian or Albanian borders." PM RUSSIA STILL SHIPPING ARMS TO BELGRADE? Russian Foreign Ministry spokesmen on 7 April denied a report in the Moscow daily "Russkii telegraf" that Russia is continuing to supply weapons to Yugoslavia, despite the UN Security Council's embargo on such sales, RFE/RL reported. The daily wrote that spare parts are continuing to arrive in Montenegrin ports. It also quoted unnamed Defense Ministry sources as denying recent Western press reports that Moscow and Belgrade concluded a $1.5 billion deal for MiG fighters and other weapons in December (see "RFE/RL Newsline," 26 March 1998). Meanwhile in Belgrade, Yugoslav and Russian trade officials signed a $80 million annual barter agreement on 6 April whereby Yugoslavia will supply meat, butter, fruit, vegetables, and edible oil in return for Russian gas. PM PRIMAKOV GIVES WARNING ON KOSOVA. Russian Foreign Minister Yevgenii Primakov said in Moscow on 7 April that "for us, two things are absolutely inadmissible: to separate the Kosova region from Serbia --this is not acceptable to the Serbs, or anybody else, and can lead to a massacre --and to send troops to the area, under whatever flag they would be deployed." PM CHIRAC PLEDGES AID FOR MOSTAR BRIDGE. French President Jacques Chirac said in Sarajevo on 7 April that Paris will work with its allies to ensure that Kosova is spared the violence that tore Bosnia apart from 1992 to 1995. He urged Bosnia's Muslim, Croatian, and Serbian leaders to work together in the spirit of reconciliation as the French and Germans learned to do after World War II, the Belgrade daily "Danas" reported. Later in Mostar, Chirac added that France will help finance the ongoing reconstruction of the historical Mostar bridge. PM WHERE IS KARADZIC? Guards are no longer posted near the apparently empty home of indicted war criminal Radovan Karadzic in Pale, AFP reported on 7 April. The news agency added that rumors have long been rife that Karadzic is in Russia, a possibility that the Russian Foreign Ministry has repeatedly denied. AFP stated that Sarajevo-based diplomats say that NATO knows where Karadzic is at any given time and that the Atlantic alliance hopes to work through the Banja Luka-based Bosnian Serb leadership to arrest him. PM BAN PROPOSED ON ZAGREB DEMONSTRATIONS. The city government, which is dominated by President Franjo Tudjman's Croatian Democratic Community, said in a statement on 7 April that it will soon send a bill to the city council to ban demonstrations at street intersections and on squares, including central Jelacic Square, RFE/RL reported. Opposition groups usually try to stage their protests on Jelacic Square. There have been numerous demonstrations in Zagreb and elsewhere in Croatia since the introduction of a value-added tax in January. PM ALBANIAN PRESIDENT PRAISES RELIGIOUS COMMUNITIES. Speaking on the Muslim holiday of Kurban Bajram during a meeting with the head of Albania's Sunni community, Rexhep Meidani praised the role of all religious communities "on the Albanian people's road toward spiritual revival and material progress." He commented that religious communities "are close to the people [and stand] above political parties." And he stressed that "our joint efforts for Albanians to put behind themselves the evil of a year ago, in the name of peace and understanding [and] the country's stability and consolidation, are also indispensable for the solution of our national issue" (see "RFE/RL Bosnia Report," 25 March 1998). FS WEU EXTENDS ALBANIA MANDATE. Meeting in Brussels on 7 April, the Western European Union Council extended the mandate of its Multinational Albanian Police Element (MAPE) mission until April 1999. The council also decided to expand the force from 60 to 100 men. MAPE is helping reorganize the Albanian police force and provides training in administration and professional ethics. FS VASILE PRESENTS NEW CABINET... Prime Minister-designate Radu Vasile named his government lineup on 7 April, Reuters reported. The proposed cabinet, which was formed after five days of talks with the four coalition parties, has 11 new ministers and 13 holdovers from former Prime Minister Victor Ciorbea's last cabinet. Ten members of the National Peasant Party Christian Democratic have been named, and six from the Social Democratic Party. Two independents will keep their key posts: Daniel Daianu as finance minister and Andrei Plesu as foreign minister. PB ...PLEDGES "DYNAMIC REFORMS." Vasile pledged that the new cabinet would institute "dynamic and extremely rapid reforms with a modern social dimension," Reuters reported. Vasile, who will have to resolve conflicts within his government over such issues as property restitution and privatization, said his aim will be to convince foreign investors that "things are moving" in the government. He said the cabinet will strive to accomplish three goals immediately: increasing the authority of the premier, eliminating the dysfunctional components of the previous government, and achieving greater efficiency in the government's work. PB MOLDOVAN PRESIDENT UNDERGOES SURGERY IN GERMANY. Petru Lucinschi has had surgery to alleviate the effects of a spinal disease, Infotag reported on 7 April. The operation, which was carried out in Frankfurt, was successful and his condition is reported to be satisfactory. Lucinschi had spent 10 days in a Chisinau hospital before the operation for treatment of lumbago. In other news, Dumitru Diakov, the leader of the centrist For a Democratic and Prosperous Moldova Bloc (PMDP), said that cooperation between his party and the Communists is unlikely. Diakov said that he is unhappy with statements made by the Communists about the PMDP. The Communist Party won 40 of the 101 parliamentary seats in the 22 March elections. PB BULGARIAN PRESIDENT CALLS FOR END TO ACCUSATIONS. Petar Stoyanov appealed for calm on 7 April after Prime Minister Ivan Kostov said corruption in the country could jeopardize integration with Western institutions, AFP reported. Kostov had told the daily "Trud" the previous day that the country's judiciary is "inefficient and corrupt" and that a lack of respect for the law is hurting foreign investment. He added that if the country is not successful in fighting corruption, it will not be allowed to join either NATO or the EU. Stoyanov later called on legislators, cabinet members, and judges to devise a joint strategy to tackle corruption. He called for an end to the inter-government accusations, saying they only encourage criminals. PB BULGARIA TO ADOPT PROGRAMS FOR ROMA. Government officials said they are planning a program to help educate and employ the country's impoverished Romani citizens, Reuters reported on 7 April. Petar Atanassov, the head of the National Ethnic and Demographic Council, said it will draft a program in coordination with Romani leaders that will aim to improve the opportunities available for Bulgaria's some 500,000 Roma. Atanassov added that he is aware that "centuries-old prejudices" cannot be changed in a few years. PB END NOTE ESTONIA'S ECONOMY SLOWS, EASING FEARS OF OVERHEATING by Michael Wyzan Last year, gross domestic product (GDP) growth of about 9 percent made Estonia one the world's fastest growing economies, with only Bosnia and Georgia among transition economies displaying greater dynamism. Such rapid growth has brought with it unwanted side effects, including widening trade and current account deficits and a tightening of the labor market. Under the currency board arrangement introduced in June 1992, all foreign currency flowing into the country must be converted into kroon at the fixed rate of 8 kroon to the German mark. This means Estonia's considerable success in attracting foreign direct investment (FDI) and other capital inflows has led to relatively high inflation; consumer prices rose by 12.5 percent in 1997, compared with 7.0 percent in Latvia and 8.4 percent in Lithuania. Estonia received more than $1 billion in cumulative FDI through September 1997. Other sources of capital inflows, which are becoming increasingly important, include local government borrowing, portfolio investment, and medium-term bank credit lines. Portfolio investment has largely gone into the Tallinn Stock Exchange (TSE), which since opening in May 1996 has become unusually large and liquid for an economy in transition. The TSE's stock index grew by 280 percent in 1996 and 50-70 percent in the first half of 1997 before nose-diving in the fall during the East Asian financial crisis, partly because of higher interest rates late in 1997 in response to a rise in inflation in the summer. Annual interest rates on commercial bank loans in kroon rose from 7.9 percent at the end of July to 18.3 percent at the end of the year. Capital inflows may spark inflation and fuel unsustainable stock market booms but are nonetheless necessary to finance Estonia's current account deficit, which was $315 million from January to September 1997, compared with $301 million during the same period the previous year. Last year's trade deficit was $1.4 billion, up from $1.1 billion in 1996. The fact that the current account imbalances are so much smaller than the trade deficits reflects the large net service inflows resulting mainly from tourism. The current account deficit was about 10 percent of GDP for the year as a whole, one of the highest figures among transition and developing countries. Moreover, the deficit is growing more rapidly than the dollar figures suggest: measured in terms of the German mark, to which the kroon is pegged, it was up by 59 percent from January to September 1997 relative to the same period in 1996. However, there are several factors suggesting that the pegging of the kroon to the mark will not be endangered in the near future. First, the Bank of Estonia's foreign reserves continue to grow rapidly, reaching about $825 million at the end of 1997, compared with around $700 million a year earlier. In German marks, they grew by almost 35 percent over that period. Second, despite the rising importance of portfolio and other volatile forms of foreign investment, FDI remained about half of capital inflows in the first three quarters of last year. FDI is usually considered to be of a longer-term nature than other flows and is thus less likely to flow out again during crises and thereby destabilize the foreign exchange market. Third, much depends on whether exporters can withstand a situation whereby the exchange rate is fixed for years to a foreign currency while inflation remains high. In such cases, rising labor costs are an indicator of declining international competitiveness. In Estonia from December 1996 to December 1997, unemployment as a share of the labor force declined from 5.5 percent to 4.6 percent and the average monthly wage rose from $295 to $302, both worrying signs from the standpoint of the country's ability to compete on international markets. However, privatization is virtually complete, based largely on sales to both citizens and foreigners willing and able to restructure enterprises and improve corporate government. Many firms, especially those benefiting from FDI, may be able to withstand upward pressure on labor costs. There are also signs that as of fall 1997, the economy is slowing down. The decline in the stock market, higher interest rates, and a rise in the banks' capital ratios from the 8 percent recommended by the Bank for International Settlements to 10 percent are contributing to that trend. The 1998 budget, which was passed on 17 December, assumes a GDP growth rate of 5.5 percent for the year. The same day, the IMF approved a $22 million loan to the country. One of the conditions attached to that loan is that the budget surplus total1.8 percent of GDP this year, compared with 0.4 percent in 1997. Such strict fiscal policy will help slow the economy and discourage capital inflows. The author is an economist living in Austria. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. All rights reserved. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx HOW TO SUBSCRIBE Send an email to email@example.com with the word "subscribe" as the subject or body of the message. HOW TO UNSUBSCRIBE Send an email to firstname.lastname@example.org with the word "unsubscribe" as the subject or body of the message. HOW TO RETRIEVE BACK ISSUES VIA EMAIL (1) Send an email to email@example.com with the letters "ls" as the subject or body of the message. This will retrieve a list of available files. 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