RFE/RL NEWSLINE Vol. 2, No. 172 Part II, 7 September 1998

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RFE/RL NEWSLINE Vol. 2, No. 172 Part II, 7 September 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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SPECIAL REPORT: HOW RUSSIA IS RULED--1998
As the string of crises continue in Russia, the question
remains: Who is in charge? This in-depth report analyzes
the country's power structure.
http://www.rferl.org/nca/special/ruwhorules/index.html

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Headlines, Part II

* IMF APPROVES $2.2 BILLION LOAN TO UKRAINE

* U.S. OFFICIALS REPORT 'HORRENDOUS' CONDITIONS IN
KOSOVA

* EU BANS YUGOSLAV FLIGHTS
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EAST-CENTRAL EUROPE

IMF APPROVES $2.2 BILLION LOAN TO UKRAINE. The IMF Board
of Directors on 4 September approved a three-year $2.2
billion loan to Ukraine. The first tranche of the loan,
worth some $260 million, will be released "within days,"
Ukrainian News reported on 5 September. The disbursement
of the other tranches will depend on Ukraine's
compliance with the reform program for 1998-2001 agreed
by the IMF and the Ukrainian government. That program
aims at increasing state finances and continuing
structural reforms as well as tightening fiscal policies
to control government spending. The program foresees GDP
growth at 4 percent by 2001, compared with -0.3 percent
in 1997. Inflation is expected to drop from 10 percent
to 7 percent, and hard currency reserves are slated to
increase to the equivalent of seven weeks' imports,
compared with 6.3 weeks in 1997. JM

UKRAINE INTRODUCES NEW HRYVNYA EXCHANGE CORRIDOR.
Following its announcement last week (see "RFE/RL
Newsline," 2 September 1998), the Ukrainian government
has de facto devalued its currency by introducing a new
hryvnya exchange rate corridor.  On 5 September, the new
exchange rate corridor of 2.5-3.5 hryvni to $1 dollar
replaced the previous band of 1.8-2.25 hryvni to $1. A
joint statement by the cabinet and the Ukrainian
National Bank said the move is aimed at maintaining
export-import operations, ensuring the competitiveness
of exports on foreign markets, averting  capital outflow
from Ukraine, and reducing the number of barter
operations. The value of the Ukrainian hryvnya has
declined almost 30 percent since January 1998, when the
currency band was established. The central bank's
reserves have dwindled to some $800 million following
the bank's unsuccessful attempts to maintain the hryvnya
within the previous exchange range. JM

LUKASHENKA OFFERS TO ADVISE MOSCOW ON FINANCIAL
CRISIS... Belarusian President Alyaksandr Lukashenka on
4 September offered to advise Moscow how to deal with
the current economic crisis in Russia, Interfax and
Reuters reported. Addressing a rally in Rechytsa,
Lukashenka argued that the Russian crisis has political
rather than economic roots. He told journalists after
the rally that he is ready to discuss the crisis with
Russian President Boris Yeltsin "to the extent that
Boris Nikolayevich himself needs it. I think that
consultations with Belarus wouldn't hurt him."
Lukashenka suggest that Russia opt for  "all the best
things which have been tested in Belarus and already
shown to work," Interfax quoted him as saying. JM

...SAYS HE WILL NOT ATTEND CIS CUSTOMS SUMMIT. Speaking
in Mahilyou the previous day, the Belarusian president
said  he will not attend the CIS customs summit
scheduled for 10 September in Astana, Kazakhstan,
Belapan reported. Lukashenka said he consider it
inappropriate to schedule at the same time Russian
President Yeltsin's visit to Kazakhstan and the summit
of the CIS Customs Union heads of state. "Who needs this
mess?" he commented. Lukashenka added that the second
reason for his refusal to visit Astana is the lack of
support among the CIS Customs Union member states for
the agreement on a CIS single economic area and for
Kazakhstan President Nursultan Nazarbayev's program
entitled "On Ten Simple Steps To Meet Ordinary People."
The 4 September "Russkii telegraf" suggests that the
true motive behind Lukashenka's decision is his
unwillingness to support Yeltsin at the summit. JM

BELARUSIAN RUBLE PLUMMETS ON INTERBANK CURRENCY
EXCHANGE. The Belarusian ruble decreased significantly
on 4 September in response to Russia's crisis, Belapan
and AP reported. The exchange rate for non-cash
operations on the Interbank Currency Exchange plunged to
some 300,000 Belarusian rubles to $1, down from 80,000
Belarusian rubles to $1 in mid-August. According to
commercial bank experts quoted by Belapan, the ruble
plunge shows that "Belarus has begun to reap the harvest
of its integration with Russia." Among the domestic
reasons for the ruble collapse, they cited numerous
administrative restrictions on financial operations in
Belarus and a recent large credit emission reportedly
undertaken  by the National Bank. The unofficial
exchange rate on 4 September was some 100,000
Belarusian rubles to $1, while the official exchange
rate stood at 50,400 Belarusian rubles to $1. JM

IMF SAYS ECONOMIC OUTLOOK FOR ESTONIA REMAINS POSITIVE.
In a press release on 4 September, the IMF argued that
the outlook for Estonia's economy remains positive,
despite the financial crisis in Russia, ETA reported.
The fund noted that in the medium term, there may be
some adverse impact on GDP growth and  balance of
payments. But "given Estonia's commitment to market-
oriented reforms, its stable macroeconomic environment,
and the discipline instilled by the currency board
arrangement and strict bank supervision," the impact
could remain limited. In a program drawn up last year
with the IMF, Estonia is seeking to reduce inflation to
below 9 percent and achieve GDP growth of 8 percent this
year. According to the IMF, the program's targets for
the end of 1997 and the first half of this year have
been largely met. JC

CLINTON URGES LATVIA TO SUPPORT CITIZENSHIP AMENDMENTS.
In a letter to his Latvian counterpart, Guntis Ulmanis,
U.S. President Bill Clinton stressed that granting
citizenship to Latvia's Russian-speaking minority is
essential for the country's integration into Euro-
Atlantic institutions. According to Ulmanis' office on 4
September, Clinton pointed out that Latvia's handling of
the issue will be watched closely in the West and will
affect its efforts to join such institutions as the EU
and NATO.  He added that the U.S will not support
further attempts by the international community to
suggest new recommendations on amending the citizenship
law, nor will it support any amendments that  are not in
compliance with OSCE recommendations. Ulmanis backs the
amendments to the citizenship law, but the nationalist-
inclined Fatherland and Freedom Party successfully
pushed for a referendum on the issue. That vote is
scheduled for 3 October. JC

OSCE CONFIRMS CLOSURE OF SKRUNDA. OSCE inspectors have
confirmed that the early-warning anti-missile radar
station at Skrunda ceased operations on 31 August, in
accordance with a 1994 Latvian-Russian agreement, BNS
reported on 4 September.  The dismantling of the Soviet-
era station was begun on 1 September and is scheduled to
be completed by 29 February 2000. During the period in
which the station is dismantled, Russia will continue to
pay Latvia rent for the site. JC

POLAND REJECTS COMPENSATION CLAIMS BY GERMAN EXPELLEES.
Polish Foreign Minister Bronislaw Geremek told Polish
Radio on 6 September that Poland rejects compensation
claims  by ethnic Germans who resettled to Germany after
World War II. Geremek added that such payments should be
made by the German government. Noting that Poland  paid
compensation to Poles expelled from areas annexed during
the war by the Soviet Union, Geremek said "let the
German government do likewise." Geremek's statement was
in response to a renewed claims by Erika Steinbach,
leader of Germany's Alliance of Expellees, at a rally in
Berlin earlier the same day. "One would be satisfied
with symbolic compensation," Reuters quoted Steinbach as
saying. It is estimated that German expellees from
Eastern Europe and their descendants make up some 20
percent of the German population. JM

POLAND, GERMANY, DENMARK SET UP JOINT MILITARY CORPS.
Janusz Onyszkiewicz, Volker Ruehe, and Hans Haekkerup,
defense ministers of Poland, Germany, and Denmark, met
in Szczecin on 5 September to sign an agreement on the
creation of a joint NATO military corps, PAP and dpa
reported. The 60,000-strong corps will consist of three
mechanized divisions, one in each country, which will
train soldiers for peacekeeping missions and rescue
operations during natural disasters. The corps staff
will be located in Szczecin. "The corps here in Szczecin
does not mean a German or Danish expansion into the
East, but a reunification of Europe," dpa quoted Ruehe
as saying. JM

CZECH REPUBLIC ALLOWED ILLEGAL  ARMS EXPORTS TO NORTH
KOREA. The Czech Republic continued to allow exports of
arms to North Korea and other communist countries
between 1992 and 1997, although such exports were
illegal, "Lidove Noviny" reported on 5 September. The
newspaper said a Czech company run by a Russian
businessman, identified as "A.K.," exported a total of
365 military vehicles and other weapon systems to North
Korea, China, and Slovakia. In October 1997, the
businessman was accused of illegal export activity and
taken into custody. Chief of Staff General Jiri Sedivy
told "Lidove Noviny" that the exports may turn out to be
" a big problem" for the Czech Republic. The Defense
Ministry refused to comment, saying it will issue a
statement "within a few days," AP reported. MS

POLL SHOWS STRONG SUPPORT FOR NEW OPPOSITION COALITION.
An opinion poll conducted on behalf of Czech state
television indicates that the new opposition coalition
will receive almost a quarter of the vote in the
elections to the Senate scheduled for 13-14 November,
CTK reported on 6 September. The new coalition--composed
of the Freedom Union, the Christian Democratic Party,
the Democratic Union, and the Civic Democratic Alliance-
-received 24 percent backing. The poll also indicates
that the governing Social Democrats (CSSD) will receive
35 percent support and the main opposition Civic
Democratic Party (ODS) 26 percent. The CSSD and the ODS
are partners in the so-called "opposition agreement,"
which allows the CSSD to rule as a minority government.
MS

EXODUS OF SLOVAK ROMA TO BRITAIN INCREASES. The exodus
of Slovak Roma from eastern Slovakia who apply for
asylum in Great Britain is increasing, AP reported on 4
September, citing Slovak newspapers. The agency said
1,256 members of the Roma minority in Slovakia have
applied for asylum, most of them from the Michalovce
area. MS

HUNGARIAN SOCIALISTS ELECT NEW LEADER. At its congress
on  5 September, the opposition Hungarian Socialist
Party (MSZP) elected former Foreign Minister Laszlo
Kovacs as party chairman, Hungarian media reported.
Kovacs, who is also the party's parliamentary group
leader, won by a vote of 384 to 144 over former trade
union leader Sandor Nagy. Kovacs replaces ex-Premier
Gyula Horn, who after the party's defeat in the May
general elections announced that he will step down. "The
MSZP can succeed only if it becomes a modern social
democratic party," Kovacs said. The congress also
elected Peter Kiss as executive deputy chairman and
Gyorgy Foldes as chairman of the party's National Board.
MSZ

SOUTHEASTERN EUROPE

U.S. OFFICIALS REPORT 'HORRENDOUS' CONDITIONS IN
KOSOVA... U.S. Assistant Secretary of State John
Shattuck said on 6 September that he and former U.S.
Senator Bob Dole have seen evidence of "horrendous"
rights violations after a tour of central Kosova,
Reuters reported. Shattuck said he and Dole--the
chairman of the International Commission on Missing
Persons--saw "violations of humanitarian law and acts of
punitive destruction." Dole is investigating reports
that missing Serbs and ethnic Albanians are being held
prisoner by either side. Shattuck said reports of
Serbian security forces separating men and boys at
gunpoint from groups of refugees will be a topic of
discussion when he and Dole meet with Yugoslav President
Slobodan Milosevic in Belgrade on 7 September. Shattuck
also warned that many ethnic Albanians were in danger of
dying of starvation and exposure if the wholesale
destruction of villages by Serbian forces continues. PB

...DEMAND THAT BELGRADE INCREASE ACCESS TO KOSOVA.
Shattuck said that the U.S. wants forensic experts
allowed into the Serbian province to investigate alleged
atrocities by both Serbs and ethnic Albanians, AP
reported. Dole said they have heard "chilling" accounts
of atrocities and that despite Western promises not to
allow crimes against humanity to occur in Kosova, like
those that took place in Bosnia, "such crimes are
already happening." Shattuck said Serbian claims of
crimes against humanity will be in doubt if experts are
not allowed to verify the claims. That Yugoslav
officials continue to deny visas to such experts is
"absurd," Shattuck said. PB

KINKEL REJECTS U.S. ENVOY'S CRITICISM. German Foreign
Minister Klaus Kinkel on 6 September strongly refuted
allegations  by U.S. Ambassador to Macedonia Christopher
Hill that Europe is indifferent to solving the Kosova
crisis, Reuters reported. Kinkel, speaking on the
sidelines of an EU foreign ministers' meeting in
Salzburg, called Hill's comments "cynical and
condescending" and said that the EU is  "not the world's
policeman." At the same time, Kinkel said the EU should
appoint its own special envoy to Kosova, such as the
U.S. has done with Hill. Hill said in a speech in the
U.S. on 4 September that the EU is content on forging a
united Europe that conveniently does not include the
Balkans. PB

EU BANS YUGOSLAV FLIGHTS. The EU on 6 September
announced it will prohibit Yugoslav national airline
(JAT) flights to the EU, AP reported. The move was
announced at the EU foreign ministers' meeting in
Salzburg after Athens dropped its reservations against
the ban. The sanction on JAT will be in force until
Belgrade halts its crackdown on ethnic Albanians in
Kosova, officials said. PB

SERBS SAID TO HAVE CAPTURED 450 SUSPECTED REBELS.
Serbian police reportedly detained some 450 suspected
members of the Kosova Liberation Army (UCK), dpa
reported on 6 September. The Serbian Media Center said
some 250 men were captured near Klina and another 200 in
the central Kosova region of Orahovac, both areas the
scene of heavy fighting between Serbian and UCK forces
recently. Kosovar Albanian sources claim many of the men
are civilians and are not members of the UCK. PB

UCK SPOKESMAN WARNS ABOUT DEALING WITH MILOSEVIC. Adem
Demaci, the political representative of the UCK, said on
5 September that he has no faith in an interim peace
accord between Yugoslav President Milosevic and Kosova
"shadow state" President Ibrahim Rugova, AP reported.
Demaci told the Albanian-language daily "Bujku" that he
does not believe Milosevic, who, he added, is
"constantly lying." Demaci said although the accord is
at a preliminary stage, he fears Rugova "will make a
mistake." He said Serbia uses one hand to "simulate
dialogue" and the other "to exert force against our
population." Milosevic and Rugova have agreed in
principle to a U.S. formula granting Kosova some degree
of autonomy (see "RFE/RL Newsline," 3 September 1998.).
PB

CROATIAN CANDIDATES BANNED FROM BOSNIAN ELECTIONS. The
OSCE's Electoral Appeals Commission has disqualified 15
candidates of a Croatian nationalist party from taking
part in the 12-13 September Bosnian elections, AP
reported on 5 September. The members of the Croatian
Democratic Union of Bosnia-Herzegovina (HDZ BiH) were
banned because they allegedly received unfair and
blatant support from Croatian television, which is
controlled by Croatia's ruling HDZ party. The HDZ BiH
has protested the action and said in a statement that
the OSCE is trying to rig the election. It said it will
consider boycotting the election if the OSCE's decision
is not reversed. Croatian President Franjo Tudjman said
the next day that the ban of ethnic Croats from the
Bosnian elections is detrimental to the democratic
process and the peace process in Bosnia-Herzegovina, AP
reported. PB

CROATIAN ELECTRIC COMPANY DEMANDS COMPENSATION FROM
SLOVENIA. The Croatian Electric Power Company has
formally asked  the Krsko nuclear power plant in
Slovenia to reimburse it for losses incurred when the
plant cut off power to Croatia, HINA reported on 5
September. The company is asking for $8.6 million for
outages that occurred between 30 July and 1 September.
The director of the Slovenian utility company, Ivo
Banic, said the request has no legal basis. Slovenia has
sporadically turned off power to Croatia from the plant-
-which Zagreb says is jointly owned by both countries--
because it has failed to pay its bills. PB

ROMANIAN GOVERNMENT APPROVES REVISED BUDGET... The
cabinet headed by Radu Vasile on 5 September approved
Finance Minister Daniel Daianu's proposal to cut this
year's budget by 8 trillion lei ($890 million) and to
increase budget revenues by raising duties on imports
and taxes on tobacco and alcohol. The cabinet also
decided to impose a wage freeze and to apply an 11
percent value-added tax on newsprint, and it approved a
decree whereby debts of loss-making state companies will
be covered by selling shares in those companies on the
bourse or through direct negotiations between
prospective buyers taking over the debt and the
companies' management. On 4 September, at a meeting
called by President Emil Constantinescu, the leaders of
the ruling coalition parties agreed to put aside
differences in order to expedite reform. MS

...BUT WILL CABINET SURVIVE? The chairman of the
Hungarian Democratic Federation of Romania (UDMR), Bela
Marko, said after the meeting with President
Constantinescu that he failed to extract from the
coalition partners a promise to pass through the
parliament the amendment to the education law allowing
the setting up of a Hungarian-language state university.
Marko added that the UDMR will support in the parliament
only those economic reform measures with which it
agrees. At a meeting of the UDMR's Council of
Representatives on 5 September, the UDMR decided that
agreement on the proposed amendment must be reached by
30 September or it will leave the ruling coalition. Such
a scenario could mean the  cabinet will not longer have
sufficient votes to pass laws that require a special
majority. MS

CHIRAC PROMISES HELP AMID MOLDOVAN ECONOMIC CRISIS.
French President Jacques Chirac, on a one-day visit to
Moldova on 4 September, said  France will help Moldova
overcome the difficulties arising from the financial
crisis in Russia, ITAR-TASS reported. President Petru
Lucinschi said he had appealed to Chirac to intervene in
order to secure assistance from the IMF and the World
Bank. Lucinschi said that as a result of the Russian
financial crisis, Moldova's monthly losses amount to 5
percent of GDP. The Moldovan leu has dropped by more
than 25 percent against the U.S. dollar, and the
National Bank has intervened to stop it falling further.
National Bank governor Leonid Talmaci told AP on 4
September that the bank will not allow the devaluation
to exceed 5 lei to the dollar. The parliament will
convene in an emergency session on 11 September to
discuss the crisis.  MS

BULGARIA ALLOWS CIRCUMCISION OF MUSLIM BOYS. For the
first time in 50 years, the Bulgarian authorities have
allowed circumcision ceremonies for Muslim boys, dpa
reported on 4 September, citing BTA. More than 30 Muslim
boys were circumcised on 6 September in the Teke mosque
in Dobrich, northeastern Bulgaria. The circumcisions
were carried out by Fawzy Ibraiamov, who was jailed
under the former communist regime for illegally carrying
out circumcisions. MS

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