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RFE/RL NEWSLINE Vol 2, No. 90 Part II, 13 May 1998
___________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 90 Part II, 13 May 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 COMMUNIST HOUSING: A FLAW IN THE DESIGN More than 170 million people in Eastern Europe and the former Soviet Union live in decaying housing complexes. This five-part series examines the issues, compares East Berlin's rehabilitation success story with Prague's less than successful efforts, and describes the state of U.S. public housing. http://www.rferl.org/nca/special/housing/ xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Headlines, Part II * HUNGARIAN OPPOSITION UNITES FOR RUN-OFF * HOLBROOKE ANNOUNCES MILOSEVIC, RUGOVA MEETING * MILOSEVIC TO STAGE COUP IN MONTENEGRO? End Note: TENSIONS WITH RUSSIA OVERSHADOW LATVIA'S ECONOMIC PERFORMANCE xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx EAST-CENTRAL EUROPE UKRAINIAN PARLIAMENT ELECTS PRESIDIUM. At its first session, which opened on 12 May, the new parliament elected a temporary presidium to supervise the legislative process until the election of a speaker. The presidium consists of Petro Symonenko, head of the Communist Party; Oleksandr Moroz, chief of the Socialist Party; Anatoliy Matviyenko, leader of the Popular Democratic Party; Yuriy Kostenko, former minister of environment and nuclear safety; and Pavlo Lazarenko, head of the Hromada party. Also on 12 May, the Communist faction abstained from repeating the oath of office, which was read by 78-year-old Yaroslava Stetsko, leader of the ultra-right Congress of Ukrainian Nationalists, RFE/RL's Kyiv Bureau reported. JM KUCHMA CALLS ON PARLIAMENT TO BACK SPENDING CUTS. Addressing the opening session of the Supreme Council, President Leonid Kuchma called on lawmakers to support reducing budgetary subsidies, which account for one-fifth of Ukraine's budget. The reduction is a key condition for obtaining an IMF loan worth $2.5 billion. The president added that the cabinet is to submit a new version of the 1998 budget in which the deficit is reduced to 2.5 percent of GDP. At the same time, Kuchma appealed for the tax burden on the wage fund to be eased to 35 percent in the second half of this year. JM MOROZ SAYS SYMONENKO HAS 'BEST CHANCES' OF BECOMING SPEAKER. Oleksandr Moroz, head of the Socialist Party and former parliamentary speaker, has said Communist Party First Secretary Petro Symonenko has "best chances to head the republic's new parliament," ITAR-TASS reported. Moroz also said the Socialists and the Agrarians will demand that the government present a report in June on implementing the law on minimum wages and pensions. He warned that if the law's targets are not met, there will be a good reason to demand the cabinet's resignation. JM JAPANESE COMPANY TO INVEST $2 BILLION IN UKRAINE. Japan's Mitsui company is to invest some $2 billion in the Ukrainian economy, ITAR-TASS reported. The company's financial director told President Kuchma on 12 May that the company is primarily interested in the joint construction of electric power stations and mineral fertilizer plants. JM WILL YUGOSLAVIA JOIN RUSSIA-BELARUS UNION? Tomislav Nikolic, head of the Yugoslav parliamentary Committee for Foreign Affairs and Foreign Trade and deputy chairman of the ultranationalist Serbian Radical Party of Vojislav Seselj, told the Parliamentary Assembly of the Russia-Belarus Union in Homel on 4 May that Yugoslavia is halfway toward joining the Belarusian-Russian union. In an interview with the Belarusian daily "Zvyazda" published on 12 May, Nikolic confirmed Yugoslavia's desire to obtain an "official status" at the Belarusian-Russian legislature. Stressing the common cultural and religious roots of Yugoslavia, Belarus, and Russia, Nikolic said that Yugoslavia seeks protection from attacks by "imperialistic forces from the West and Islam from the East." JM BALTIC PRESIDENTS CONDEMN RUSSIAN PRESSURE ON LATVIA... Following their summit in Riga on 12 May, the presidents of Estonia, Latvia, Lithuania issued a joint statement condemning Russian political and economic pressure on Riga, which, they said, is dangerous for the whole of Europe. They stressed that this time Baltic unity has been clearly demonstrated, and they pledged to increase trade and cooperation between the three states. The presidents also agreed to establish investigative commissions in all three countries that will look into the atrocities committed from 1939 to 1991, and especially during World War II. JC ...WHILE YELTSIN LAUDS MOSCOW'S STANCE. In his speech to the Russian Foreign Ministry earlier the same day, President Boris Yeltsin praised Russian diplomats for their "firm and fruitful stance" aimed at protecting the rights of ethnic Russians in the Baltic countries, Russian and Baltic agencies reported. He added that Russia is proving by its deeds that it cannot be ignored and that it has sufficient means to protect the rights of "compatriots abroad." JC ESTONIAN FOREIGN MINISTER IN BEIJING. Toomas Hendrik Ilves, currently on a five-day visit to China, met separately with his Chinese counterpart, Tang Jiaxuan, and Vice President Hu Jingtao in Beijing on 12 May, BNS and ETA reported. Both meetings focused on economic issues. The same day, Ilves and the head of the Chinese Tax Board signed an agreement on avoiding double taxation and tax evasion. China is the first Asian country with which Estonia has signed such an accord. JC ADAMKUS TO PAY EQUAL ATTENTION TO U.S., RUSSIA. In an interview with the Russian weekly "Moskovskie Novosti," Lithuanian President Valdas Adamkus said he is planning to pay equal attention to relations with the U.S. and Russia in his foreign policy, BNS reported on 12 May. Adamkus stressed that Lithuania considers itself a European state and intends to "officially coordinate" all its actions with the other states on the Continent. He added that "the U.S. will also participate in this process." At the same time, Adamkus said he does not intend to pay "any special attention" to the U.S. "Washington will receive as much attention as, for instance, our eastern neighbor, that is, democratic Russia," Adamkus said. JC DOES POLISH GOVERNMENT INCLUDE COMMUNIST-ERA COLLABORATORS? Private Radio Zet on 11 May alleged that a minister in the current Solidarity-led cabinet collaborated with the communist-era secret services, unleashing rumors about possible ties of senior government officials to the former secret police. Under a 1997 law, all senior officials have to submit declarations on whether they collaborated with the security police. Those declarations are to be examined by a special court that has not been set up yet because not enough judges volunteered to sit on it. Prime Minister Jerzy Buzek told journalists that all his ministers have denied collaboration in their declarations. He declined to comment on the rumors. "Rzeczpospolita" reported on 13 May that Buzek has ordered that the declarations of some 290 senior government officials be published immediately in "Monitor Polski," the government's official mouthpiece. JM CZECH PARLIAMENT OVERTURNS PRESIDENTIAL REJECTION. With a comfortable majority of 128-43, the Chamber of Deputies on 12 May overturned President Vaclav Havel's rejection of a controversial drug bill that bans possession of narcotics. Havel believes that the draft law provides harsher penalties for drug users than for dealers and manufactures. The law goes into effect in January 1999. In other news, 15 political parties and three movements submitted lists of candidates before the 10 May deadline for taking part in the early elections scheduled for mid-June, CTK reported on 11 May. MS GERMAN OFFICERS TAKE PART IN CZECH ARMY MANEUVERS. For the first time, officers of the German armed forces are taking part in a Czech army maneuver aimed at coordinating cross- border cooperation, dpa reported on 12 May citing CTK. Meanwhile, Jaroslav Sedivy on 12 May became the first Czech foreign minister to meet with a representative of the organization of Sudeten Germans, who were forced to leave Czechoslovakia after World War II. The meeting was initiated by President Havel, who was unable to participate owing to ongoing recovery from surgery. MS SLOVAKIA EXAMINES EXCHANGE SYSTEM AHEAD OF EURO INTRODUCTION. Marian Jusko, deputy governor of the Slovak National Bank, told a meeting of the European Bank for Reconstruction and Development in Kyiv on 11 May that his country is considering changes in its foreign-currency exchange mechanisms in preparation for the introduction of the European currency in early 1999. Jusko said Slovakia will finalize those changes "within one month" and introduce the new system next year. He declined to provide further details, an RFE/RL correspondent in Kyiv reported. Slovakia's fixed exchange rate is calculated in terms of a "currency basket" based 60 percent on the German mark and 40 percent on the U.S. dollar. MS HUNGARIAN OPPOSITION UNITES FOR RUN-OFF. The Federation of Young Democrats-Hungarian Civic Party (FIDESZ-MPP) and the Hungarian Democratic Forum (MDF) on 12 May agreed to withdraw candidates in favor of those who fared best in the first round of parliamentary elections. The Democratic People's Party also announced that it will withdraw its 31 candidates for the sake of FIDESZ. Independent Smallholders' chairman Jozsef Torgyan has urged that a "reasonable agreement" be reached with FIDESZ, which, he said, is playing a "tactical power game "in refusing to hold talks with his party. Socialist Party chairman Gyula Horn warned that a government of moderate-right, radical, and extreme right-wing parties could endanger political and economic stability as well as delay Hungary's EU and NATO integration. MSZ SOUTHEASTERN EUROPE HOLBROOKE ANNOUNCES MILOSEVIC, RUGOVA MEETING... U.S. special envoy Richard Holbrooke said in Belgrade on 13 May that Yugoslav President Slobodan Milosevic has agreed to meet with Kosovar shadow-state President Ibrahim Rugova in the Serbian capital on 15 May without preconditions and without foreign mediators. Holbrooke added that the session "will be followed within one week by a series of meetings to take place at least once a week between the delegations of both sides. These meetings will take place in Prishtina. They will alternate between sites chosen by both sides." Holbrooke made the announcement after five days of shuttle diplomacy between Belgrade and Prishtina, plus one stop in Tirana. The Kosovars made a major concession to Milosevic by agreeing to meetings without foreign mediation. PM ...BUT ADVISES CAUTION. Holbrooke, who was the architect of the 1995 Dayton agreements, said in Belgrade on 13 May that the meeting between Milosevic and Rugova is "only the first step for a political solution." The diplomat cautioned that "the vast differences between the two sides remain as wide as ever [and the crisis] could escalate into something worse than Bosnia before Dayton." He praised Milosevic for "taking personal responsibility" in calling for the talks. Milosevic's office said in a statement that the meeting of the two leaders is necessary to end "unnecessary" delays in establishing a dialogue. PM YUGOSLAVIA SHUTS LAST CROSSING TO ALBANIA. Yugoslav border guards on 11 May closed the border checkpoint between Shkodra and Podgorica, "Koha Jone" reported on 13 May. It was the last open checkpoint between Albania and Yugoslavia and was used by primarily Albanian citizens of Montenegrin origin, who do not need visas to visit Montenegro. The Yugoslav army also tightened security along the border and recently began to deploy regularly four patrol boats on Lake Shkodra. Last month, Yugoslavia closed two border checkpoints linking Albania and Kosova. FS WEU PLEDGES SECURITY AID TO ALBANIA. Meeting on Rhodes on 12 May, defense and foreign ministers from the member states of the West European Union adopted a British proposal to increase the number of WEU police in Albania from 60 to 90. The WEU police will help train Albanian border guards as well as police. The delegates did not act on Albanian calls for a stronger foreign military presence along the border with Kosova. Germany and Greece, in particular, were reluctant to adopt any tough measures, AFP reported. Meanwhile in Washington, the World Bank approved $44 million worth of credits to improve health care, sanitation, roads, and the power supply in Albania. One of the credits will go to modernize the port of Durres. PM MILOSEVIC TO STAGE COUP IN MONTENEGRO? The leadership around Milosevic intends to oust federal Prime Minister Radoje Kontic, a Montenegrin, on 18 May and replace him with a Montenegrin whom Milosevic considers more loyal, RFE/RL's South Slavic Service reported on 12 May. The new prime minister will then declare a state of emergency in Montenegro, which is under the leadership of reformist President Milo Djukanovic, a political enemy of Milosevic. Leaders of the Socialist People's Party of Momir Bulatovic, who is Milosevic's main ally in Montenegro, and Vojislav Seselj's Serbian Radical Party said on 12 May in Belgrade that they will introduce a measure in the parliament calling for Kontic's removal "on grounds of incompetence." PM DJUKANOVIC SAYS MILOSEVIC PREPARING STATE OF EMERGENCY. President Djukanovic said in Podgorica on 12 May that Kontic's ouster will be a prelude to Belgrade's declaring a state of emergency in Montenegro. He added that the name of the new prime minister will be made known shortly. RFE/RL's South Slavic Service reported that Bulatovic is likely to be appointed to that post. In Belgrade, spokesmen for the United Yugoslav Left, which is headed by Milosevic's wife Mira Markovic, hailed the move by Bulatovic's and Seselj's parties. Representatives of Vuk Draskovic's Serbian Renewal Movement did not say how they will vote but indicated that the party is unhappy with the government. PM BELGRADE MOVES AGAINST ELECTRONIC MEDIA. The Association of Independent Electronic Media in Yugoslavia (ANEM) said in a statement in Belgrade on 12 May that the government has committed "the most flagrant breach of media freedoms in Yugoslavia to date" by imposing stiff fees for radio and television frequency licenses. The government made the decision on 7 April but "kept it secret until now," the statement continued. The new monthly fees of $35,000 are prohibitively high for private broadcasters in Yugoslavia. "It is obvious that the aim of this decision is to stifle media freedoms by economic measures, in view of the fact that administrative" measures have failed to do so, the statement concluded. PM CROATIA YIELDS ON REFUGEE RETURN. U.S. ambassador to Croatia William Montgomery told RFE/RL's South Slavic Service on 12 May that the Croatian government has accepted all demands made by the international community to liberalize policies regarding the return of Serbian refugees. Montgomery added that the government will issue a statement on its new policies on 15 May, and that the measure will go into force immediately. PM IZETBEGOVIC SLAMS KLEIN. Alija Izetbegovic, the Muslim member of the Bosnian joint presidency, sharply criticized recent remarks on the late Croatian Defense Minister Gojko Susak made by Gen. Jacques Klein, who is a deputy to the international community's Carlos Westendorp in Bosnia. Izetbegovic wrote in an open letter to Klein: "I was amazed at your arrogance. The [Dayton] peace accords did not establish a protectorate in Bosnia, and you are not the protector.... Our people like foreigners as friends but not as tutors. Don't try to be one," "The Los Angeles Times" of 12 May quoted Izetbegovic as saying. Klein praised Susak, who worked closely with Klein when the general was the UN administrator in eastern Slavonia in 1996 and 1997, as a "man of vision." Most Bosnian Muslims regard Susak as a warmonger who would have gladly partitioned Bosnia between Croatia and Serbia. PM JEWISH CEMETERY DESECRATED IN ROMANIA. Unidentified persons have desecrated the Jewish cemetery in the Transylvanian town of Targu Mures, Mediafax reported on 12 May. Anti- Semitic inscriptions such as "Death to the Jews" and " Jews to Israel!" were scrawled on the cemetery's walls. A local police officer said the incident occurred two days earlier. In 1994, several tombstones were overturned by unidentified vandals in the same cemetery. The Jewish community in Targu Mures today numbers fewer than 100. Of the 7,500 Jews deported to Auschwitz by the Hungarian fascist regime in May-June 1944, only 1,197 survived. MS LUCINSCHI WANTS TO 'DE-POLITICIZE' GOVERNMENT. Speaking on national television on 11 May, Moldovan President Petru Lucinschi said Prime Minister Ion Ciubuc must form a government of "genuine professionals" that will not be an "arena for political battles." Lucinschi said the new cabinet must be "as de-politicized as possible" because its main task is that of coping with the country's economic problems. Among the main problems facing the government he listed the de-monopolization of the energy sector, the reform of local government, and speeding up privatization, Infotag reported. MS WORLD BANK ON BULGARIAN ECONOMY. The World Bank believes Bulgaria's economic prospects have "improved significantly" in the last year but warns that economic reform is still in its early stages and that the greatest threat to it is complacency. The bank's views are included in a recently adopted "country strategy" document made available to an RFE/RL correspondent in Washington. According to that document, if the government continues to pursue reform, the bank will consider granting over the next three years structural-adjustment loans of up to $300 million and so- called investment financing of up to $400 million. MS BULGARIAN DEPUTY PREMIER ON ECONOMY. Alexander Bozhkov told the meeting of the European Bank for Reconstruction and Development in Kyiv on 12 May that his country will meet the criteria for membership in the EU currency union by the year 2001. Bozhkov said this increases Sofia's chances of joining the EU in the not too distant future, an RFE/RL correspondent in the Ukrainian capital reported. He attributed the upswing in Bulgaria's economy during the last year largely to the currency board set up at the insistence of the IMF. MS END NOTE TENSIONS WITH RUSSIA OVERSHADOW LATVIA'S ECONOMIC PERFORMANCE by Michael Wyzan Latvia has recently been buffeted by Moscow's threats to impose unilateral economic sanctions. Russia has sought to justify those threats by citing what it considers to be anti-Russian activities in Latvia and Riga's incorrect treatment of the country's Russian minority. Russian officials have suggested that their country develop new ports to avoid having to use Latvian ones on the Baltic Sea. Russian border guards have refused entry to Latvian drivers who cannot produce notarized Russian translations of their driver's licenses. And Russia's Transportation Ministry has threatened to limit the number of entry permits issued to Latvian truckers. The threats have already had an affect on Latvia. The cabinet on 6 May approved legal amendments granting citizenship to all children born in Latvia after 21 August 1991. That change may well be for the best (it was recommended by the Organization for Security and Cooperation in Europe). But meanwhile the economic effects of Russian pressure are proving harmful. Since early April, there has been a significant decline in freight traffic on Latvian railroads and through its ports. And the Dow Jones Riga Stock Exchange Index fell from 336 on 16 March to 275 on 23 April (before recovering slightly more recently). These shock waves have hit a rather healthy and well- managed economy. In mid-April, the IMF Executive Board lauded Latvia for its excellent performance and "prudent financial policies," although it stressed the need for further progress on large-scale privatization, tax collection and administration, and making the budget process more transparent. Last year's achievements followed the 1996 strong recovery from the downturn of 1995 (which was sparked by a banking crisis). GDP grew by 5.9 percent in 1997, compared with 2.8 percent in 1996, and the growth of industrial production accelerated from 1.4 percent in 1996 to 6.1 percent in 1997. Unemployment fell from 7.2 percent in December 1996 to 7.0 percent one year later, while the average monthly wage in the public sector rose from $242 in December 1996 to $272 last December. Consumer price inflation sank to 7.0 percent from 13.1 percent in 1996 (in both years, it was the lowest in the Baltic States). It declined further to 6.1 percent in the 12 months to February 1998. Last year, the state budget was in surplus for the first time since 1993. The lats has been pegged to the IMF's Special Drawing Right since 1994, so it has not depreciated in tandem with inflation, which, though low for a transition country, remains higher than in Latvia's Western trading partners. The trade deficit rose from $877 million in 1996 to $1.1 billion last year, while the 1997 current account imbalance is projected at $460 million, similar to 1996's and a high 9 percent of GDP. The foreign reserves rose from $729 million at the end of 1996 to $778 million one year later. Thus, a capital account surplus was sufficient to cover the current account deficit. A rise in cumulative foreign direct investment from $645 million at the end of 1996 to $850 million on 30 September contributed to that surplus. How much would Russian sanctions hurt Latvia? Russia remains the leading destination for Latvia's exports, accounting for 21 percent in 1997. By the same token, Russia accounted for 15.6 percent of imports, slightly less than the 16.0 percent supplied by Germany, Latvia's leading import source. Latvia's exports to Russia in 1997 were worth more than $350 million. A special feature of Latvian trade with Russia is the fact that its ports are important entrepots for Russian exports to third countries. Some of this trade is reflected in the goods worth $425 million that Latvia officially imported from Russia last year. Another factor is Latvia's total reliance on Russia for its natural gas, for which it pays world market prices. Latvia is not in arrears in paying for that gas, and Gazprom is a shareholder in the Latvian gas company. Thus, it would appear that Gazprom, an important foreign policy actor in its own right, is unlikely to favor sanctions against the country. Russia is also a significant investor in Latvia, accounting for 10.4 percent of the total foreign direct investment stock in September 1997, second only to Denmark. Nonetheless, recent events suggest that Latvia will probably be forced to follow the example of those CIS states that seek to reduce their economic dependence on Russia. If Moscow persists in thwarting the normal economic intercourse between states--for example, by refusing to use Latvian ports or denying Turkmenistan access to its gas pipeline to Europe--for political ends, it will increasingly be seen as an unreliable partner. Developing such a reputation is in no one's interest, least of all Russia's. The author is an economist living in Austria. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. 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