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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 150 Part II, 6 August 1998


___________________________________________________________
RFE/RL NEWSLINE Vol. 2, No. 150 Part II, 6 August 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

* UKRAINE PREDICTS IMPROVED ECONOMIC PROSPECTS FOR 1999

* ZEMAN REPEATS CONTROVERSIAL SUDETEN GERMAN STATEMENT

* KOCHARYAN WINS ARMENIAN PRESIDENCY

End Note: TRANSITION NATIONS ACTIVE IN IMF LOANS
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EAST-CENTRAL EUROPE

UKRAINIAN PREMIER THREATENS TO LOCK UP MANAGERS FOR UNPAID
TAXES. In a desperate move to collect pension and budget-
payment arrears, Valeriy Pustovoytenko threatened to lock up
some 2,O00 managers in the Ukrayina palace in Kyiv until
they pay at least some of their debts. The managers were
taking part in an extended cabinet session at the palace
that addressed the problem of tax collection. "Only those
who pay 30 percent of their debts to the pension fund and 5
percent to the budget" will be allowed out of the hall,
Ukrainian Television quoted Pustovoytenko as saying. This
radical step immediately resulted in 500,000 hryvni
($240,000) being paid to the pension fund. The final results
of Pustovoytenko's initiative will be available on 7 August.
JM

UKRAINE PREDICTS IMPROVED ECONOMIC PROSPECTS FOR 1999.
Ukrainian Deputy Economy Minister Ihor Shumylo on 5 August
presented the government's forecast of basic economic
indicators for next year, Ukrainian Television and AP
reported. Ukraine expects economic growth to total 2 percent
of GDP in 1999, up from 0.5 percent planned for this year.
The budget deficit is expected to decrease to 1.5 percent of
GDP, down from 2.5 percent forecast for this year. Inflation
is envisaged to decrease to 7 percent from 12 percent
anticipated in 1998. Shumylo said the government's
optimistic economic prognosis stems from economic reform
measures taken recently by Ukraine to secure a large loan
from the IMF. JM

CONSTRUCTION OF GAS PIPELINE BEGINS IN CRIMEA. President
Leonid Kuchma on 5 August attended the inauguration of the
construction of a new gas pipeline in Crimea, Ukrainian
Television reported. The 269 kilometer pipeline will link
the Crimean cities of Dzhankoy, Feodosiya, and Kerch,
improving gas supplies to some 30 percent of the peninsula's
population. The construction will cost $100 million; 20
percent of that sum is to be paid by the Ukrnaftohaz
national oil and gas company and 80 percent contributed in
construction materials by domestic enterprises in repayment
of their debts to the state budget. JM

LUKASHENKA PLEDGES SUPPORT TO WRITERS ON 'RECIPROCAL BASIS.'
Some 30 members of the Union of Belarusian Writers met with
President Alyaksandr Lukashenka on 5 August to discuss the
situation of Belarusian literature and culture, RFE/RL's
Belarusian service reported. Lukashenka, who has a long
record of suppressing Belarusian media and writers critical
of his regime, pledged support to Belarusian writers on a
"reciprocal basis" or, in other words, their "loyalty" to
the president, as he put it. The president added that during
his four years in office he "has never dictated to the
intellectuals which course to choose." Union chairman
Uladzimir Nyaklyaeu said after the meeting that he notes
"some improvements" in the president's approach to
Belarusian literature and language. JM

LATVIA URGES BELARUS TO RESUME BORDER DEMARCATION TALKS.
Latvia is urging Belarus to resume talks on the demarcation
of their joint border, Latvian Foreign Ministry officials
told BNS on 5 August. The ministry has written twice asking
Minsk to reconvene the joint committee on demarcation
issues. It also stresses that Latvia is not to blame for the
delay in concluding the border agreement, adding that it
hopes Belarus will solve the financial problems hindering
the border demarcation talks. Last week, Riga announced it
will begin unilaterally demarcating its border with Russia.
JC

BUSINESS LOAN INSURANCE COMPANY TO BE SET UP IN LITHUANIA.
The Lithuanian administration has instructed the Economy
Ministry to found a Small and Medium-Sized Business Loan
Insurance Company, BNS reported on 5 August. No less than 51
percent of the stock of that company will be state-owned.
The company will insure loans provided by banks to small and
medium-sized businesses that sign loan insurance agreements
with the banks. Loan agreements will be signed only for
loans granted on the basis of a tender. JC

ISRAEL ASKS POLAND TO REMOVE CROSSES AT AUSCHWITZ. The
Israeli government has officially requested that Poland
remove crosses erected in a gravel pit near the former
Auschwitz death camp (see "RFE/RL Newsline," 3 August 1998),
Television Polonia reported on 5 August. The television
station quoted a statement by the office of Israeli Prime
Minister Benjamin Netanyahu as saying the crosses
"transgress the character of the place of murder of millions
of Jews." The following day, the Polish government said it
cannot make any decision on the crosses since they were
erected on private land. It added that according to the
Concordat signed by Poland and the Vatican, the Catholic
Church is the "correct addressee for demands related to the
conflict." Last week, a Polish Catholic group that has links
with the Radio Maryja Catholic station erected 52 crosses to
commemorate Poles shot by Nazis in the gravel pit. JM

CABINET MINISTER SAYS POLAND'S HEALTH CARE REFORM ON TRACK.
Health Minister Wojciech Maksymowicz on 5 August said his
ministry has already set up 16 health care funds to replace
the national budget as the health-care system's source of
financing, Reuters reported. Under a bill passed last month,
all citizens will contribute 7.5 percent of their income to
the funds, making the health care system independent of the
budget. The new system will begin operating on 1 January
1999, provided that the president signs the bill. The
opposition Democratic Left Alliance is appealing to the
president to veto the legislation. It argues that the
contribution to the funds is too small and should be
increased to 10 percent of an individual's income. JM

HAVEL TAKES SOLID FOOD. President Vaclav Havel, who suffered
a life-threatening heart problem during the night of 3-4
August, took solid food for the first time on 5 August and
is reading and writing notes, Reuters reported, quoting
members of the president's medical team. The head of the
doctor's team, Ilja Kotik, told journalists that Havel's
blood pressure is stable and that there are only occasional
signs of the rapid heart beat that had made doctors fear for
his life. Kotik added that the president's temperature is
still high and that the lung inflammation is "not completely
under control." Nonetheless, he said, the team hopes he will
respond better after changing the combination of antibiotics
he is receiving. MS

ZEMAN REPEATS CONTROVERSIAL SUDETEN GERMAN STATEMENT. Prime
Minister Milos Zeman on 5 August repeated his earlier
controversial statement about an organization representing
the Sudeten Germans, Reuters reported. He told journalists
that the Czech-German Discussion Forum must include only
people who supported the 1997 reconciliation agreement,
adding that "as on our side there are no Communists or
Republicans, I do not see any reason why there should be
representatives of the Landsmannschaft [the Sudeten German
organization] on the German side." Zeman also said he takes
the criticism of his comments made by German Chancellor
Helmut Kohl "with a dab of humor and a certain dab of
indulgent tolerance [because] I know only too well that some
sharp things are sometimes said in a pre-election campaign."
MS

CZECH CABINET APPROVES POLICY STATEMENT. The government on 5
August approved the final version of the its policy
statement, Zeman told journalists the same day. He said that
as a gesture to illustrate the "new kind of relations"
between his minority government and the parliament, deputies
will receive the statement before it is submitted to the
Chamber of Deputies for approval. MS

SOUTHEASTERN EUROPE

HOLBROOKE BLASTS MILOSEVIC. U.S. special envoy Richard
Holbrooke said in Washington on 5 August that Yugoslav
President Slobodan Milosevic has broken his recent pledge to
stop the offensive by his army and paramilitary police in
Kosova. Milosevic, Holbrooke continued, seems bent on
obtaining a military victory. As a result, the conflict has
entered an "extraordinarily dangerous new phase." The
diplomat warned the Yugoslav leader not to underestimate,
"as he has done before," the ability of democracies to
respond effectively to a threat to international stability
and order. Holbrooke added that U.S. Ambassador to Macedonia
Christopher Hill delivered a message "of a very forceful
nature" to Milosevic from Secretary of State Madeleine
Albright earlier on 5 August. Holbrooke said that a
continuing problem preventing a negotiated settlement is the
inability of the Kosovars to put together a delegation that
represents all parts of their political spectrum. PM

ALBANIA CALLS FOR ACTION. The Albanian Foreign Ministry said
in a statement in Tirana on 5 August that the time has come
"to use all measures to stop the repression against
thousands of innocent people who are [living rough] in the
mountains, hungry and defenseless." In Prishtina, shadow-
state President Ibrahim Rugova noted that "Serbian forces
attack and kill unprotected people, systematically destroy
and burn property of Albanians, which has led to the
displacement of tens of thousands of Albanians." In
Washington, a State Department statement charged the Serbian
police with looting and committing arson against Kosovar
homes and property. In Geneva, a spokesman for the United
Nations High Commissioner for Refugees put at more than
200,000 the number of displaced persons in Kosova since
Milosevic launched his crackdown in February . In London,
the "Financial Times" quoted Red Cross officials in Kosova
as saying that the danger there of epidemics such as cholera
is high. PM

SERBIAN POLICE DENY MASS GRAVE REPORT... Colonel Bozidar
Filic of the Serbian paramilitary police denied Austrian,
German, and Swedish press reports that a mass grave of
civilians exists in Rahovec (see "RFE/RL Newsline," 5 August
1998). Speaking in that town on 5 August, he called the
accounts "a pure lie and disinformation." He added that
"this is not a mass grave. These are the bodies of
terrorists, properly buried in accordance with the law in a
Muslim cemetery. These are terrorists, not civilians and not
women and children." The semi-official Media Center in
Prishtina took a group of journalists to visit graves in
Rahovec. The reporters counted about 33 small, marked graves
next to a rubbish dump. Nearby stood a small bulldozer that
local people said had been used to dig and cover the graves.
EU observers led by Austria's Walter Ebenberger visited the
same site and said that they could not confirm the reports
of mass graves. PM

...WHILE JOURNALISTS STICK TO STORY. The Vienna daily "Die
Presse," whose Erich Rathfelder was one of the journalists
to break the story of the mass graves, wrote on 6 August
that it is unclear whether the EU observers or the
journalists taken to Rahovec by the Media Center saw the
same site as Rathfelder and his Swedish colleague. The daily
added that a number of local eyewitnesses gave Rathfelder
similar accounts about the number of bodies that the Serbs
had ordered them to bury in mass graves. The foreign editor
of "Die Presse" told Austrian Radio that it is imperative
that an independent team of international forensic experts
receive unhindered access to the Rahovec area before the
bodies further decompose. PM

MORE KOSOVA REFUGEES ARRIVING IN ALBANIA. A UNHCR official
said in Tirana on 5 August that about 60 Kosovar refugees
crossed into Albania that day, bringing the number of
arrivals in the past 10 days to 404. The increase follows a
sharp drop in arrivals owing to the virtual closing of the
border by Serbian forces last month. The refugees came
through the Qafa e Prushit area, west of Gjakova. The total
number of registered Kosova refugees in Albania is currently
at 12,700. Meanwhile in Skopje, a spokesman for UN
peacekeepers said the UN has requested an explanation from
Belgrade of reports that Yugoslav forces have mined that
country's border with Macedonia, RFE/RL's South Slavic
Service reported. FS/PM

VOJVODINA HUNGARIANS RESIST CALL-UP. Serbian police in
Vojvodina are trying to round up ethnic Hungarian reservists
who recently refused to comply with orders to enlist for
military service in Kosova, Hungarian media reported on 6
August. An Alliance spokesman condemned the round-up and
called on authorities to stop what it called "an unlawful
police operation." Following a wave of call-ups on 1-2
August, the Alliance of Vojvodina Hungarians urged ethnic
Hungarian reservists to display civil disobedience and
refuse to accept their induction notices (see "RFE/RL
Newsline," 4 August 1998). MSZ

MONTENEGRO REJECTS WIDER BORDER SECURITY ZONE. Montenegrin
and Yugoslav federal authorities have agreed that Montenegro
will not be affected by the federal government's recent
decision to extend the security zone along the Albanian
frontier from a few hundred yards to 3 miles (see "RFE/RL
Newsline," 23 July 1998), the Belgrade daily "Danas" wrote
on 5 August. The Montenegrin authorities pledged that they
will "tighten controls" in the border area. Montenegro's
reform-minded government seeks to revive the economy, which
is based primarily on shipping and tourism, and to promote
good relations with all countries. The government includes
representatives of the ethnic Albanian minority, which lives
primarily in Ulcinj and in other communities near the
Albanian border. PM

BONN DENIES WASHINGTON'S CHARGES ON BOSNIAN REFUGEE RETURN.
Dietmar Schlee, who is Germany's commissioner for Bosnian
refugee affairs, said in Bonn on 5 August that there have
been "no mass expulsions" of Bosnian refugees in the runup
to the 27 September German elections. He added that of the
75,000 refugees who went back to Bosnia from Germany in
1998, only 1,200 were expelled. He told dpa that "the return
of Bosnian war refugees is running according to plan and has
in no way been speeded up." Schlee added that Germany is
still home to 140,000 of the 350,000 Bosnians who arrived
during the 1992-1995 war. An unnamed senior U.S. official
told dpa the previous day that President Bill Clinton
expressed concern at a cabinet-level meeting that Germany is
expediting deportations for domestic political reasons and
that the sudden influx of returnees threatens to undermine
the delicate Bosnian peace process. PM

KLEIN PRAISES BOSNIAN SERB LEADERS. Jacques Klein, who is a
deputy to the international community's Carlos Westendorp,
said in Banja Luka on 4 August that the leadership headed by
Republika Srpska President Biljana Plavsic and Prime
Minister Milorad Dodik has returned the Bosnian Serbs to
membership in the international community after years of
isolation. Klein urged voters to cast their ballots on
behalf of this change in the September general elections,
"Danas" reported. He called on voters to ask themselves
whether they are better off now than they were six months
ago, shortly after Dodik took office. Klein added that he is
sure the answer will be positive. Plavsic, for her part,
stressed her main campaign theme, namely that implementing
the Dayton agreement is in the Bosnian Serbs' interest
because the treaty guarantees that the Republika Srpska will
not lose its identity in a unitary Bosnian state. PM

ROMANIA'S LIBERALS AGAINST HUNGARIAN UNIVERSITY IN CLUJ.
National Liberal Party (PNL) deputy chairman Valeriu Stoica
said after a meeting of the PNL's Standing Bureau on 5
August that the party opposes the establishment of a
Hungarian-language state university in Cluj. The PNL's
coalition partner, the Hungarian Democratic Federation of
Romania (UDMR), is demanding such a university. Stoica said
the existing "multi-cultural" Babes-Bolyai Cluj university
must be allowed to continue in its present form and that a
new university could be set up in another Transylvanian
town, such as Targu Mures. He said such a new university
need not be one where teaching is conducted only in
Hungarian. Rather, he argued, the new university should
introduce "multi-culturalism," with teaching in Hungarian,
German, and possibly other minority languages. MS

ROMANIA'S JOURNALISTS PROTEST SENTENCING OF COLLEAGUES. The
Romanian Journalists' Association on 5 August denounced the
sentencing of two journalists from Iasi for libel. It added
that it may ask the Parliamentary Assembly of the Council of
Europe to put Romania back onto its special list of
countries to be monitored. The journalists were sentenced to
one year in prison, deprived of their civil rights for one
year, and fined 1.5 billion lei ($170,000). The Supreme
Court has refused to review the sentence. In an article
published in May in the Iasi daily "Monitorul," the two
journalists questioned the legality of the fortune amassed
by a police officer who was eventually dismissed. They also
wrote that the police officer's wife, who is a magistrate,
presided as judge over cases investigated by her husband.
The former police officer's wife sued for libel following
that report. Justice Minister Valeriu Stoica said he may ask
the Prosecutor-General's Office to review the case. MS

CIGARETTE-SMUGGLING TRIAL OPENS IN ROMANIA. The trial of 19
people accused of involvement in the cigarette-smuggling
affair, which was uncovered in April, opened on 5 August at
a military court in Bucharest. The hearings, however, were
postponed because six of the defense lawyers did not show
up, RFE/RL's Bucharest bureau reported. Only three of the
defendants are being detained; the remainder are on bail.
The court turned down the prosecution's request to detain
those freed on bail as well as the defense's request to free
the three defendants still in detention. MS

TODOR ZHIVKOV DEAD. Former communist dictator Todor Zhivkov
died in a Sofia hospital aged 86, Reuters reported on 6
August. The agency quoted doctors as saying Zhivkov died in
the hospital's intensive care unit on 5 August. He had been
admitted in early July suffering from a viral infection,
fever, and pneumonia. His condition continued to
deteriorate, and he eventually entered a coma. Zhivkov was
in power from 1954 to 1989. MS

BULGARIAN WOMEN FORCED INTO SEX INDUSTRY ABROAD. A Bulgarian
non-governmental organization on 5 August said that more
than 10,000 Bulgarian women and girls are enslaved in the
west European sex industry. The Bulgarian branch of the
international La Strada project said many Bulgarian women
are being lured to western European countries (especially
Italy and Germany) by promises of decent jobs, only to have
their passports confiscated and to be forced to work as
prostitutes, AP and Reuters reported. La Strada recently
opened an office in Sofia. MS

END NOTE

TRANSITION NATIONS ACTIVE IN IMF LOANS

by Robert Lyle

	Of the 183 member nations of the IMF, the countries of
the former Soviet Union and its East European allies account
for only 14 percent. Yet among the 61 active programs listed
by the fund, more than one quarter are with the nations in
transition.
	Last month, new loans worth $11.2 billion were
approved as part of an IMF-led Russian rescue package. A
first drawing of $4.8 billion was released immediately,
while a $6.4 billion trance will be available in September
if Russia implements the required reforms.
	IMF First Deputy Managing Director Stanley Fischer was
in Moscow recently to review program implementation, a trip
one IMF official privately described as part of Fischer's
"war against complacency" by Russian officials. Afterward,
Fischer said that "the agreed measures are being
implemented" and that if this continues, the September
tranche should be available on time as well.
	In Kyiv, another IMF team reached tentative agreement
with Ukrainian officials on a projected three-year extended
fund facility loan of $2.2 billion. The head of the IMF
delegation, Mohammad Shadman-Valavi, said the new Ukrainian
loan would go to the fund's Board of Directors in late
August. The long-term loan will replace a one-year $585
million stand-by arrangement that was suspended last spring
after the Ukrainian government missed a number of key
economic targets.
	The new program contains a long list of reforms that
the government must implement. Thirty-three of those
reforms, including a new reduced-deficit budget, had to be
in place before the loan could be approved. The IMF had
insisted upon parliamentary passage of the entire package
but accepted the assurances of speaker Oleksandr Tkachenko
that the parliament will stand behind President Leonid
Kuchma's decree putting the new budget into effect.
	Yet another IMF team was in Sofia last week and
reached agreement with Bulgarian officials on a new, three-
year extended loan program worth around $800 million. Anne
McGuirk, head of the IMF delegation, said the loan would be
part of overall foreign funding totaling $1.6 billion that
should be available to Bulgaria over the next three years.
	McGuirk said that a key part of the large reform
program underlying this proposed new loan is the
privatization of state enterprises. The new long term loan
will follow up what was begun under a regular stand-by
facility of around $502 million. When Sofia drew the final
tranche of that loan in May, the IMF praised Bulgaria for
its "good track record" of stabilization and reform.
	Romania, whose last one-year stand-by loan of around
$414 million expired in May with only two of five tranches
drawn, has made no noticeable progress on putting together a
new IMF program. Fund officials say they are still waiting
for details on how Romania proposes to proceed with a new
loan program.
	A number of other countries continue to work through
their IMF reform programs and draw their loans:
	Bosnia, which received its first stand-by loan of
around $81.8 million at the end of May, has drawn nearly $33
million so far.
	Estonia, which received a stand-by loan of nearly $22
million last December, has not drawn any of the money, as
planned. But it has used the IMF technical guidance, which
is part of the program.
	Latvia, similarly, has not drawn any of its loan of
around $44.5 million, approved last October. Like Tallinn,
Riga took the loans merely to have IMF experts provide
advice and guidance.
	In addition to Ukraine, countries in the region with
extended fund facility loans are:
	Azerbaijan, which has drawn around $43.4 million of
its $79 million three-year program approved in December
1996;
	Croatia, which has drawn about $38.8 million from its
$477 million loan, approved in March;
	Kazakhstan, which has drawn the entire $417.6 million
of its loan, which was granted in July 1996;
	And Moldova, whose $182 million loan, first approved
in May 1996, has been suspended since last year owing to the
failure of the government to meet the goals to which it had
agreed. An IMF team was in Chisinau in June and worked out a
memorandum on economy policy which, if fully implemented,
could reopen the loan this fall, perhaps in October. Moldova
agreed to revise its budget, tighten fiscal discipline and
speed up privatization as pre-conditions for resuming the
loan. It had drawn around $50.6 million of the loan before
it was suspended.
	Seven East European or former Soviet nations have loan
programs under the fund's Enhanced Structural Adjustment
Facility, a special program of subsidized loans for poorer
nations:
	Albania, which has drawn only the first tranche of
about $7.9 million from its $47.6 million loan, approved in
May;
	Armenia, which has drawn $91 million from its $136.6
million three-year loan, approved in February 1996;
	Azerbaijan, which has drawn $75 million from its $126
million long-term loan adopted in December 1996;
	Georgia, which received approval last week for the
latest $37 million drawing from its $224.7 million three-
year loan, approved in February 1996. Georgia had previously
drawn about $150 million;
	Kyrgyzstan, which has not yet taken the first drawing
on its $87 million loan, approved in late June;
	Macedonia, which has drawn about $36.8 million of its
$73.6 million three-year loan, approved in April 1997;
	And Tajikistan, which has drawn $24 million from its
$130 million loan, approved in early June.

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

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