RFE/RL NEWSLINE Vol. 2, No. 136 Part II, 17 July 1998

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RFE/RL NEWSLINE Vol. 2, No. 136 Part II, 17 July 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

* EUROPEAN PARLIAMENT SUPPORTS EU VISA BAN ON BELARUS

* DEPUTY HEAD OF SOLIDARITY COALITION RESIGNS

* NANO SAYS KOSOVA CRISIS THREATENS ALBANIA'S STABILITY

End Note: POLAND'S UNREGULATED TRADE WITH NEIGHBORS DECLINES
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EAST-CENTRAL EUROPE

EUROPEAN PARLIAMENT SUPPORTS EU VISA BAN ON BELARUS. In a
resolution adopted on 16 July in Strasbourg, the European
Parliament supported the EU Council's 13 July ban on visas
for Belarusian senior officials. The resolution calls on
President Alyaksandr Lukashenka "to immediately restore the
full and unimpeded use of the EU ambassadors' residences in
Minsk." It also appeals to the Belarusian government to take
the "necessary steps in the process of economic and
democratic reform" and to respect human rights. The European
parliamentarians also backed the OSCE's efforts in Minsk to
promote "the re-establishment of democratic structures" and
appealed to the OSCE to provide for "free and fair
presidential elections" in Belarus next year. JM

LUKASHENKA THANKS RUSSIA FOR STANCE IN DIPLOMATIC HOUSING
DISPUTE. Lukashenka has thanked Russian deputies and
senators for not joining the dispute over diplomatic housing
at Drazdy, near Minsk. "The West has launched a campaign of
vicious attacks on Belarus," Interfax quoted Lukashenka as
saying on 16 July. According to the Belarusian president,
his opponents "are trying to break Russia's backbone in an
attempt to make it put pressure on Belarus." The same day,
the Russian State Duma unanimously adopted an appeal to the
parliaments of OSCE member countries to revise their policy
toward Belarus and engage in a constructive dialogue. The
Duma thinks the West's reaction to the Drazdy conflict "is
absolutely inadequate to the essence of the issue," while
the conflict itself "has been blown up for purely political
reasons," Interfax reported. JM

KUCHMA COMMENTS ON FINANCIAL CRISIS... Ukrainian President
Leonid Kuchma, visiting Donetsk Oblast on 16 July, said that
Ukraine is facing a "severe financial crisis," Ukrainian
Television reported. He noted that monthly budget revenues
do not exceed 800-900 million hryvni ($400-$450 million),
whereas Ukraine's monthly foreign debt obligations amount to
1.8 billion hryvni. Kuchma again appealed to the parliament
to pass an amended version of this year's budget that would
reduce the annual budget deficit to 2.3 percent of GDP. Such
a budget would pave the way for a $2.5 billion loan from the
IMF, which "will automatically resolve our problems,"
Ukrainian Television cited Kuchma as saying. JM

... DEPLORES SITUATION IN COAL MINING, METALLURGY. Kuchma
also said that the situation of the coal mining industry
will not improve as long as the mines do not receive cash
payments for their output. He criticized the mines
themselves for the barter trade, which, he said,. amounts to
as much as 80 percent of business deals at some mines. He
also criticized the industry for allotting only one-sixth of
its budget subsidies for restructuring and spending the
remainder on wages and social benefits. The president also
noted a decline in the output of the metallurgical industry
and criticized the industry's management for its lack of a
"strategic line." JM

LATVIA'S ULMANIS BELIEVES NO MORE OSCE DEMANDS ON
CITIZENSHIP LAW. Returning from a visit to France, Latvian
President Guntis Ulmanis said he believes the OSCE will not
require that Latvia make any more changes to its citizenship
law, BNS reported on 16 July. He said that during his visit,
the opinion was voiced that it would be "unacceptable" to
make any more such requirements. "There are no grounds to
believe that the OSCE will exert such pressure," he
commented. Both Ulmanis and Prime Minister Guntars Krasts
have requested assurances from the OSCE that it will cease
to require changes in the country's citizenship law. JC

LITHUANIAN LAWMAKERS BACK ADAMKUS OVER LUSTRATION LAW. In a
surprise move, the parliament on 16 July voted by 101 to one
to approve a proposal by President Valdas Adamkus that the
lustration law not be enacted until 1 January 1999, BNS
reported. Parliamentary chairman Vytautas Landsbergis, who
initiated the controversial law, described the president's
recent veto of the legislation as "10 times dubious." But
Landsbergis called for "granting the president an
opportunity to be together" with the parliament over the
issue. He added that he is determined not to "fight" with
the head of state but to seek to agree on the law. Lawmakers
also decided to postpone until the fall any debate on the
president's proposal that the parliament turn to the
Constitutional Court for a ruling on whether the bill is
constitutional. JC

NATO PEACEKEEPING EXERCISES LAUNCHED ALONG LITHUANIAN COAST.
Some 5,000 troops from the Baltic States, Hungary, Poland,
the U.S. and western Europe are taking part in training
exercises along the Lithuanian coast. Code-named "Baltic
Challenge 98," the maneuvers are being coordinated by NATO
as part of its Partnership for Peace program. Among those
taking part are more than 2,000 U.S. soldiers as well as
troops from the Baltic Battalion, whose members are trained
specifically for NATO peacekeeping duties. Russian,
Belarusian, and Ukrainian observers also reportedly are
present. JC

DEPUTY HEAD OF SOLIDARITY COALITION RESIGNS. Adam Slomka has
resigned as deputy leader of the ruling Solidarity Electoral
Action (AWS), PAP reported on 16 July. Slomka is head of the
Confederation for an Independent Poland, a junior partner of
the AWS. Slomka's resignation follows an agreement on
setting up 16 administrative provinces that the AWS and the
leftist Democratic Left Alliance has concluded (see "RFE/RL
Newsline," 16 July 1998) "This is suicide for [rightist
forces]," he commented. In a letter to AWS Chairman Marian
Krzaklewski, Slomka argued that the AWS has departed from
the fundamental goals of Poland's center-right. Meanwhile,
President Aleksander Kwasniewski has announced he will sign
the bill providing for 16 provinces. JM

POLAND, UKRAINE TO FIGHT SEX SLAVE INDUSTRY. Poland and
Ukraine agreed on 16 July to cooperate in fighting
prostitution and sex slave trafficking to the West, Reuters
reported. "The Mafia has got engaged in [the trafficking of
women].... We must take preventive measures together," a
Ukrainian Interior Ministry representative commented on the
agreement. According to the International Organization for
Migration, more than 100,000 Ukrainian women are being
forced to work as prostitutes in the West. JM

ZEMAN SAYS HAVEL ACCEPTS CABINET LINEUP. Social Democratic
leader Milos Zeman said on 16 July that President Vaclav
Havel accepts his list of proposed cabinet members, CTK
reported. Zeman, who made his comments after meeting with
Havel, said the president will appoint him as premier on 17
July. Zeman said he could not say that "the president had no
objections." He added that it is the president's duty to
check on the "suitability" of the cabinet ministers. Havel
has said he does not support the appointment of Jan Kavan as
foreign minister and Vaclav Grulich as interior minister .
The Supreme Court ruled the same day that the daily "Mlada
fronta Dnes" must apologize to Kavan for writing that he is
persona non grata in Britain, but not for saying that he is
"a convicted liar." As a dissident in Britain, Kavan
regularly met with a Czechoslovak Secret Service agent but
says he was unaware of the agent's identity. PB

SLOVAKIA BLAMES PRESS, 'DOUBLE STANDARDS' FOR EXCLUSION. The
Slovak Foreign Ministry said on 16 July that the ignorance
of the international media and Western "double standards"
are the reasons why the country has been kept out of EU and
NATO accession talks, Reuters reported. Deputy Foreign
Minster Jozef Sestak said that Slovakia has been
"undervalued" and "systematically hurt" by ignorant foreign
media reports. Both the EU and NATO have named Bratislava's
poor democratic record as the main reason for not inviting
the country to expansion talks. PB

MECIAR WANTS PLEBISCITE ON PRIVATIZATION. Slovak Prime
Minister Vladimir Meciar said on 16 July that he plans to
call a referendum on excluding energy utilities from
privatization, AFP reported. Meciar said if he is unable to
get parliamentary support for such a measure he will start a
petition drive to call a referendum on the issue. Opposition
deputies say the move is a ploy to deflect attention away
from questionable privatization deals already concluded. PB

HUNGARIAN PRIME MINISTER IN PARIS. After meeting with French
President Jacques Chirac in Paris on 16 July , Hungarian
Prime Minister Viktor Orban said that EU internal reforms
are not expected to hinder EU enlargement. In talks with
French Prime Minister Lionel Jospin, Orban said Hungary will
"not offer areas and industries for colonization but will
present economic opportunities" for EU countries. Trade
between the two countries totaled nearly $1.7 billion last
year, 23 percent more than in 1996, "Napi Gazdasag"
reported. Orban also said that joining the EU by 2000 is
"ambitious" but "realistic." This was Orban's his first trip
abroad as premier. MSZ

SOUTHEASTERN EUROPE

NANO SAYS KOSOVA CRISIS THREATENS ALBANIA'S STABILITY. Prime
Minister Fatos Nano told his national security advisers on
16 July that the international community has not been able
to come to grips quickly with the crisis in Kosova and that
its failure to act will place a great burden on his
government, "at least for the medium-term." He added that
the refugees in particular will place a strain on the state
budget, Reuters reported. He said that whereas 13,000
refugees are officially registered, the real number of
refugees could be as high as 20,000. Nano urged Kosovar
leaders to set up a single representative institution and
speak with only one voice to the outside world. He warned
that their failure to do so would work to the advantage of
Yugoslav President Slobodan Milosevic. The prime minister
concluded that "all these factors increase the danger to
Albania's stability and threaten the work we are doing to
rebuild." PM

SERBIAN POLICE BREAK UP KOSOVAR PARLIAMENT. Some 90 members
of the Kosovar shadow-state legislature attended its first
session in eight years in Prishtina on 16 July. Deputies
took an oath of loyalty to the shadow state and elected a
speaker. Police then arrived and told the legislators to
hand over any documents and to disperse. The deputies left
peacefully, and police took away several boxes of documents.
Kosovar President Ibrahim Rugova called the session a
success and told Reuters: "we have done it." One legislator
added: "it is a very historic day, marking the start of a
new free, democratic and independent state of Kosova." Some
observers noted, however, that the meeting may prove to be
too little, too late, since the government does not
represent all political parties and has been steadily losing
influence among Kosovars to the Kosova Liberation Army (UCK)
in recent months. PM

ANNAN WANTS MORE TROOPS FOR MACEDONIA. UN Secretary-General
Kofi Annan said on 16 July in New York that the world
organization should add 350 soldiers to the current 800 who
make up the UN peace-keeping operation in Macedonia
(UNPREDEP). He also called for extending UNPREDEP's mandate
by another six months, which would be until February 1999.
Annan said that the force is stretched too thin to be able
to monitor effectively Macedonia's borders with Albania and
Yugoslavia. UNPREDEP is the first mission in UN history that
seeks to prevent a conflict from spreading rather than
keeping the peace in a war-torn area. PM

MONTENEGRO HAS NEW GOVERNMENT. Some 47 deputies in the 78-
member legislature on 16 July approved the new cabinet of
Filip Vujanovic, an ally of reformist President Milo
Djukanovic. Supporters of pro-Milosevic Yugoslav Prime
Minister Momir Bulatovic boycotted the session. Vujanovic
promised to promote economic reforms and criticized
Milosevic's efforts to curb Montenegro's autonomy. He said
that "the destiny of Montenegro and its citizens can be
decided only in Montenegro.... We cannot give up Montenegrin
statehood, national identity, tradition, and culture." The
government represents a coalition of anti-Milosevic parties
and includes representatives of the ethnic Albanian
minority. PM

BOSNIAN PRIME MINISTER BLAMES FOREIGNERS FOR REFUGEE DELAY.
Bosnian federal Prime Minister Edhem Bicakcic told RFE/RL's
South Slavic Service in a telephone interview on 16 July
that refugees are currently returning to many parts of the
mainly Muslim and Croatian federation. He added, however,
that the number of Croats and Serbs who have returned to
Muslim-controlled Sarajevo remains too low. Bicakcic said
that a major problem preventing refugees from going home is
that the international community has not fulfilled its
promises to construct houses and apartments. He singled out
the office of the United Nations High Commissioner for
Refugees and the European Commission for special criticism.
Bicakcic charged that some unnamed foreigners "deliberately
find excuses" for delaying promised aid. PM

CROATIAN OPPOSITION TO UNITE? Vlado Gotovac, the leader of
the Liberal Party, told Reuters on 16 July that chances are
good that opposition parties will form a coalition and
defeat President Franjo Tudjman. "We are trying to find a
joint political platform with which we would present
ourselves at the elections and a program that we would make
sure we fully implement once the elections are over."
Gotovac said that the laws governing elections and the media
must be changed if Croatia is to become a truly democratic
country. He added that there is no chance of reforming that
legislation so long as the HDZ remains in power. Observers
noted that the failure of the opposition to close ranks has
been a major factor in the HDZ's maintaining its grip on
power since 1990. Legislative elections are due by October
1999 and a presidential vote in 2002. PM

BAD YEAR FOR CROATIAN TOURISM. A drop in the number of
foreign tourists may have a significant effect on the
government's projected figures for economic growth in 1998,
"Vecernji list" reported on 16 July. Two main tourist areas-
-Istria and Dalmatia -- report declines of 22 percent and 11
percent, respectively, in the number of visitors in the
first days of July, compared with the same period in 1997.
The crisis in Kosova and the World Cup in France may have
prompted some potential visitors not to go to Croatia, but
the main reason for the drop is that prices have risen
without a corresponding increase in the quality of services.
Expanding privatization is the key to reviving tourism,
Reuters wrote. Government experts had projected a 15 percent
growth in the number of tourists this year. Tourism and
remittances from Croatian workers abroad are Croatia's two
main traditional sources of hard-currency income. PM

ALBANIAN GOVERNMENT ORDERS INVESTIGATION INTO INVESTMENT
COMPANIES. The government on 16 July authorized pyramid-
scheme investigator Farudin Arapi to audit the records of
another eight investment firms. They include one of
Albania's largest companies, namely 2K, which is owned by
businessman Koco Kokedhima. Independent legislator Nikolle
Lesi recently urged the government to investigate 2K, and he
published a series of articles in his daily, "Koha Jone," in
which he called 2K a pyramid scheme. Some observers charged
that Lesi's motive was to get rid of a competitor.
Kokedhima's daily, "Shekulli," lowered its sales price to
one-fifth of that of "Koha Jone" in May and quickly tripled
its circulation to 17,000. "Koha Jone's" circulation during
the same period fell from more than 20,000 to 9,000 copies.
Also on 16 July, 70 legislators endorsed Lesi's proposed
draft law to ban publishers from selling newspapers below
production costs. FS

CONSTANTINESCU MEETS WITH CLINTON. Romanian President Emil
Constantinescu met with his U.S. counterpart, Bill Clinton,
in Washington on 16 July and praised the expanding ties
between the two countries, an RFE/RL correspondent reported.
Talks in the White House focused on bilateral relations,
regional cooperation, security in southeastern Europe, and
Bucharest's aspirations to join NATO. Clinton said that
Romania's general progress has been "very impressive," but
he did not elaborate. Constantinescu urged U.S. businesses
to expand investments in Romania. He is due to meet with
Defense Secretary William Cohen on 17 July. PB

ROMANIA TO INVESTIGATE MISSING PRIVATIZATION REVENUES.
Romanian Prime Minister Radu Vasile requested on 16 July
that Privatization Minister Sorin Dimitriu investigate
revenue shortfalls from the sale of state assets, Reuters
reported. Vasile asked for the investigation after an
official report showed that $160 million in revenues are
missing from privatization sales. PB

MOLDOVAN DEPUTIES APPROVE NEW BUDGET. The Moldovan
parliament on 16 July passed a more austere 1998 budget but
rejected a new tax on bread and milk, Reuters reported.
Communist deputies left the chamber before the vote to
protest the revised budget, which they called "anti-social."
The previous budget, passed before parliamentary elections
in March, was based on unrealized projections. Valeriu
Muravschi, chairman of the parliament's budget commission,
said Moldova needs to accelerate reforms and increase tax
collection in order to deal with a "very complicated"
economic situation. PB

TRANSDNIESTER AUTHORITIES TO CLOSE ROMANIAN-LANGUAGE SCHOOL.
The Tiraspol City Council said on 15 July that the only
secondary school in the city to offer instruction in
Romanian will lose its license to operate in November,
Infotag reported. Ion Iovchev, the director of the school,
said that the school is alleged to have broken Transdniester
laws on education and "languages spoken in Transdniester."
PB

BULGARIAN ARMY ANNOUNCES PERSONNEL CUTS. Colonel General
Mikho Mikhov, the head of the Bulgarian army's General
Staff, announced on 16 July that more than 1,000 officers
will be cut from the armed forces, Bulgarian Radio reported.
Mikhov said that by 2000 the army will be reduced to 85,000
men, of whom 20,000 will be officers. Mikhov said the
planned cuts are being made to conform to NATO standards. In
other news, the Interior Ministry said that seven policemen
were arrested on 16 July for accepting bribes from
international drug traffickers, AP reported. Interior
Minister Bogomil Bonev said the policemen will be fired and
prosecuted. PB

MALFUNCTION AT BULGARIAN NUCLEAR PLANT. Operators said that
a technical "malfunction" at the Kozloduy nuclear power
plant caused radiation levels at the facility to double, AP
reported on 16 July. The failure occurred at one of the
plant's four older reactors. The Bulgarian government has
spent tens of millions of dollars to upgrade the plant in
the past several years and rejects calls by the EU to turn
off the reactors. PB

END NOTE

POLAND'S UNREGULATED TRADE WITH NEIGHBORS DECLINES

by Jan de Weydenthal

	Unregulated cross-border trade, once the mainstay of
commercial relations between many Central and East European
countries, is declining.
	That development was perhaps inevitable, given changes
in the economies of the region. But it also reflects
conscious moves by various governments to introduce stable
rules into commercial activities, to tax profits, and to
control the flow of currencies between countries.
	The result has been a shift toward wholesale, large-
scale operations between big companies. This, however,
adversely affects the interests of many small businesses and
numerous individuals throughout the region.
	The apogee of the unleashed cross-border commerce was
in the years 1994-1996, following revolutionary upheavals in
Eastern Europe and the subsequent dissolution of the Soviet
Union.
	The activity focused on Poland, the crossing point
between the Germans, the Russians, the Lithuanians, the
Belarusians, the Ukrainians, the Slovaks, and the Czechs. It
led to the establishment of large, mostly private trading
centers--the bazaars--on all Polish borders as well as in
the country's center.
	To illustrate the economic magnitude of this activity,
it is sufficient to note that by 1997, the turnover of the
15 largest bazaars reached an officially confirmed figure
equivalent to some $2.2 billion, with unofficial estimates
putting that figure 25 percent higher.
	More than half of the turnover came from the export of
Polish-made products. In this way, the bazaar commerce,
partly untaxed and unregulated, was a major source of
Poland's export earnings. More than 120,000 people were
employed last year by the 15 largest bazaars, while hundreds
of thousands profited from businesses linked with the
commercial activity itself (suppliers, hotels, restaurants,
travel companies, and so forth).
	According to a recent study by the Polish Institute of
Market Research (IBGR), the scope and volume of trade at
almost all bazaars have been declining during the last two
years. And the institute says this decline is not only
likely to continue but will almost certainly accelerate.
This assessment is shared by the traders themselves.
	The IBGR says that the decline has been prompted by
economic changes in Poland and the neighboring countries.
The Polish currency, the zloty, has been gradually gaining
strength in relation to both the U. S. dollar and the German
mark. This strength has also been a factor in the rapidly
declining value of the Russian and Belarusian rubles as well
as the Ukrainian hryvna. As a result, Polish products have
become more and more expensive for the country's eastern
neighbors.
	At the same time, there has been growing demand for
better and more sophisticated products, which can hardly be
supplied by small firms catering to traditional bazaar
clientele.
	The IBGR says that policy decisions by several
governments constitute another factor affecting trade.
Belarus has introduced a steep duty on imported furniture,
for example, while Russia has imposed higher duties on
imports of almost all foreign-made products. Poland,
meanwhile, enacted a law last year making it more difficult
for Easterners to enter the country.
	Recent figures on cross-border travel confirm the
trend: a 37 percent decline on both the Polish-Russian
(Kaliningrad) and the Polish-Belarusian borders. The
Lithuanian and Ukrainian crossings have been less affected,
but the trend is downward there as well.
	The decline in the bazaar commerce has been
particularly painful for small businesses and individual
traders. They have constituted a large majority of suppliers
(the IBGR estimates that about 65 percent of products sold
at the bazaars came from small or medium-sized firms).
	Public protests have been staged in Poland, Belarus,
and the Russian exclave of Kaliningrad this year. But to no
avail. The downward trend continues.
	By contrast, large scale, tax-paying, and strictly
regulated supermarkets and department stores are likely to
profit from that trend. Networks of such supermarkets have
recently appeared in the eastern parts of Germany, in
Poland, and in border regions of the Czech Republic. There
is every reason to assume that more will appear.

The author is an RFE/RL senior correspondent.

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