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RFE/RL NEWSLINE Vol 2, No. 212, Part II, 3 November 1998
________________________________________________________ RFE/RL NEWSLINE Vol 2, No. 212, Part II, 3 November 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 Headlines, Part II * KWASNIEWSKI'S SKEPTICISM ABOUT REPRIVATIZATION SPARKS CRITICISM * GEORGIEVSKI VOWS CHANGES IN MACEDONIA * ALBANIAN CUSTOMS SEIZE KOSOVA-BOUND ARMS End Note: CROATIAN ECONOMIC GROWTH SLOWS xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx EAST-CENTRAL EUROPE UKRAINE PROTESTS RUSSIAN 'TERRITORIAL CLAIMS' ON SEVASTOPOL. The Ukrainian Foreign Ministry has protested what it called "territorial claims on Ukraine" made by the Russian State Duma last month, Reuters reported on 2 November. Georgii Tikhonov, head of the Duma Committee for CIS Affairs, had said during a debate on the Russian-Ukrainian treaty that "according to all domestic and international documents, Crimea's port of Sevastopol was never given to Ukraine." Other Duma deputies had supported that statement. "Ukraine decisively rejects any claims on the territorial unity of the state, in consideration of the fact that they do not contribute to creating an atmosphere of trust and mutual understanding between Ukraine and the Russian Federation," the ministry said in a statement. JM KUCHMA INSTRUCTS GOVERNMENT TO CUT WAGE ARREARS. Ukrainian President Leonid Kuchma on 2 November gave the government one week to draw up urgent measures to meet all current payments and cut wage arrears, ITAR-TASS reported. Meanwhile, some 500 coal miners from throughout Ukraine are expected in Kyiv on 3 November to picket the government building in order to protest unpaid wages. JM U.S. MAY CONSIDER BELARUS'S OFFER IN DIPLOMATIC HOUSING ROW. The U.S. embassy in Minsk said on 2 November that Washington may consider Belarus's offer to provide a new residence for its ambassador (see "RFE/RL Newsline," 29 and 30 October 1998), Reuters reported. The embassy said the U.S. will view the offer only if the Belarusian government presents a "reliable legal guarantee of immunity for any future residence." It added that Washington currently has no plans to send its ambassador back to Minsk. "The American side has made it clear to the Belarusian leadership that this is not an issue about housing but about principles," the agency quoted an unnamed U.S. embassy official as saying. JM BELARUSIAN OPPOSITION NEWSPAPER ROBBED. Belarus's opposition newspaper "Naviny" has been robbed of four computers and a fax machine, Belapan and AP reported on 2 November. The computers contained the newspaper's archives, files, databases, and some 2,000 photographs. "I do not exclude that it was the work of secret services. Some valuable and more sellable things-- monitor, compact disk player, and very expensive Japanese television set--were left intact," "Naviny" chief editor Ihar Hermyanchuk told AP. He said the staff is now looking for somebody to lend them new computers, adding that the newspaper will not be closed. Last year, the newspaper, which at the time published under the name of "Svaboda," was banned for articles presenting the views of political opponents of Belarusian President Alyaksandr Lukashenka. It resumed publication after two months under its current name. JM ESTONIAN GOVERNMENT READY TO COMPROMISE ON DRAFT BUDGET. The cabinet on 2 November said it is prepared to amend its 1999 draft budget in order to reach a compromise with the opposition, ETA reported. According to the news agency, the government is ready to make the draft "more conservative." Government spokesman Daniel Vaarik said the cabinet will consult economic experts and find a compromise with the opposition, which had rejected the draft as "overly optimistic," before making any decisions. Earlier on 2 November, Vaarik had denied press reports that the cabinet was to consider resigning over the parliament's rejection of the draft budget (see "RFE/RL Newsline," 2 November 1998). JC THREE LATVIAN PARTIES SIGN COALITION AGREEMENT. Latvia's Way, the Fatherland and Freedom party, and the New Party have signed an agreement on forming a coalition and supporting the prime ministerial candidate of Latvia's Way, Transport Minister Vilis Kristopans, BNS and Reuters reported on 2 November. "This deal is the core for a coalition--with 46 seats--which would work together to form a government," Andrejs Pantelejevs, chairman of Latvia's Way told journalists. He noted that "the worst case scenario would be a minority cabinet," adding that if the coalition cannot reach an agreement with the People's Party, which won last month's elections, it may turn to the leftist Social Democrats. President Guntis Ulmanis has said he will announce his candidate for premier on 3 November, when the new parliament is scheduled to convene. JC LITHUANIAN DEPUTIES URGE CREATION OF IGNALINA COMMISSION. Some 28 parliamentary deputies of various political stripes have signed an appeal to set up a commission that, among other things, would study alternative sources of energy to the Ignalina nuclear power plant, BNS reported on 2 November. Christian Democrat Jonas Simenas told a news conference that Lithuania would be able to produce as much electric and thermal energy as it needs without the Ignalina plant. While admitting that it is much cheaper and more "useful" to use atomic energy, he urged that preparations for closing Ignalina be started. Meanwhile at another news conference, Democratic Labor Party leader Ceslovas Jursenas said Lithuania is not ready to close the plant, which, he argued, is not "the real hindrance" to Lithuania's bid to join the EU. He suggested that European criticism of Ignalina stems from the perception that "we are their competitors with our cheap electric energy." JC KWASNIEWSKI'S SKEPTICISM ABOUT REPRIVATIZATION SPARKS CRITICISM. Polish President Aleksander Kwasniewski told the Berlin daily "Tagesspiegel" on 1 November that he is "skeptical" about the possibility of "total reprivatization" (meaning returning or compensating former owners for property confiscated by the state after the war). "Rzeczpospolita" reported on 3 November that Kwasniewski's statement has provoked criticism from politicians of the Solidarity-led coalition. "This is a very bad signal for the EU. We must remember that reprivatization is one of the conditions of our entry [to the EU]," commented Jan Lewandowski of the Freedom Union. Solidarity Electoral Action spokesman Piotr Zak said the statement was "improper," adding that Poland must return confiscated property "in kind, if possible...or in other forms." "Rzeczpospolita" suggests that Kwasniewski was mainly skeptical about satisfying compensation claims by German postwar expellees from Poland. JM IRAQ SAYS RFE/RL BROADCASTS WILL HARM CZECH RELATIONS. Iraqi Foreign Minister Mohammed Said al-Sahaf told the Iraqi parliament on 2 November that Prague has been warned that the decision to allow RFE/RL broadcasts to Iraq "will have a [negative] impact on economic and trade relations between the two countries," Reuters reported. RFE/RL began broadcasting to Iraq and Iran on 30 October. Both governments have criticized the new services as "interference" in their internal affairs. RFE/RL President Tom Dine has stressed the broadcasts will reflect the radios' core values of democracy: free expression, the rule of the law, and respect for human rights. MS HUNGARIAN PRIME MINISTER GREETS SLOVAK COUNTERPART. In a letter addressed to new Slovak Prime Minister Mikulas Dzurinda, Viktor Orban wrote "we hope that the inauguration of the cabinet headed by you will open new perspectives for the many-sided development of Hungarian-Slovak relations," Hungarian media reported on 3 November. Orban also wrote that the inclusion of ethnic Hungarian representatives in the Slovak government will facilitate ensuring the rights and needs of the Hungarian minority. Orban expressed his readiness to meet with Dzurinda in the near future. MSZ SOUTHEASTERN EUROPE GEORGIEVSKI VOWS CHANGES IN MACEDONIA. Ljubco Georgievski, whose coalition won both rounds of the recent Macedonian parliamentary elections, said in Skopje on 2 November that his main goal as prime minister will be to promote "serious changes" in the domestic economy by ending corruption, encouraging private enterprise, and attracting foreign investment (see "RFE/RL Newsline," 2 November 1998). Georgievski added that he plans "no radical changes" in foreign policy. Vasil Tupurkovski, his coalition partner, said that the government will include ethnic Albanians and will therefore have a broad base for governing. He added that the government will work to improve inter-ethnic relations and that there will be "equal rights for all." It is unclear which ethnic Albanians he intends to include in the cabinet. Some 23 percent of Macedonia's population is ethnic Albanian. There are also sizable communities of Turks, Roma, and Serbs. PM HILL BEGINS TALKS WITH KOSOVARS. U.S. Ambassador to Macedonia Christopher Hill, who is Washington's chief envoy in the Kosova crisis, arrived in Prishtina on 3 November for talks with the Kosovar leadership. The previous day, he discussed a draft political settlement for Kosova with Serbian President Milan Milutinovic in Belgrade. Hill told reporters that the 2 November date mentioned in the agreement between Yugoslav President Slobodan Milosevic and U.S. special envoy Richard Holbrooke is not a "deadline" for obtaining a settlement, adding that he hopes to have a cut-off date "within weeks." Western diplomats believe that the first step toward that goal will be for diplomats to assist the various Kosovar groups in formulating a common policy among themselves, the "Financial Times" wrote on 3 November. Observers noted, however, that the plans that U.S. and Yugoslav officials have discussed fall far short of the minimum that most Kosovars are willing to accept (see "RFE/RL Bosnia Report," 21 October 1998). PM DID FRENCH NATO OFFICER SPY FOR SERBIA? French police arrested on suspicion of espionage Major Pierre Bunel, who worked at NATO headquarters in Brussels as a liaison officer between the alliance's Military Committee and the civilian authorities to whom the military report. The arrest took place in Paris on 1 November. The French authorities believe he provided Serbian agents with information about likely NATO targets in Serbia in the event that the Atlantic alliance launched air strikes against that country. It is unclear how Bunel's superiors came to suspect him of espionage, the "International Herald Tribune" wrote. He reportedly told French investigators that he spied out of sympathy for Serbia and not for money, according to "The Guardian." The incident is the latest in a series in which French military and diplomatic personnel have been suspected of abusing their positions to help the Serbs, the London- based daily added. PM MONTENEGRO APPEALS TO PERISIC. Deputy parliamentary speaker Rifat Rastoder appealed on 2 November in Podgorica to General Momcilo Perisic, who heads the Yugoslav army's general staff, to stop taking legal measures against young Montenegrins who ignored their induction notices during the recent conflict in Kosova. Rastoder also called on Perisic to issue an amnesty for those youths, RFE/RL's South Slavic Service reported (see "RFE/RL Newsline," 30 October 1998). Meanwhile in Ulcinj, U.S. Assistant Secretary of State for Population, Refugees, and Migration Julia Taft visited a refugee camp for refugees from Kosova. She had earlier observed the conditions facing displaced persons in the Serbian province. PM WORLD BANK WARNS BOSNIA. Rory O'Sullivan, who heads the World Bank's mission to Bosnia, said on 2 November in Sarajevo that smuggling and customs evasion remain a "serious issue" in that country. He noted that officials in the mainly Croatian and Muslim federation as well as in the Republika Srpska have recently taken unspecified moves to crack down on smugglers, but he added that much smuggling still goes unpunished. O'Sullivan argued that international aid donors are unlikely to offer additional funds to Bosnia as long as corruption and smuggling remain rampant. Much of the illegal activity is carried out by mafia-like structures linked to the political and military establishments of the two entities. PM SARAJEVO LAUNCHES ZOO PROJECT. SFOR peacekeepers completed work on restoring the grounds of the Sarajevo zoo and clearing the area of mines on 2 November. Bosnian officials will finish rebuilding the zoo by next spring and have received offers of animals from several European zoos. Director Safet Harbinja told Reuters that the zoo will contain only animals indigenous to the Balkans. All pre-war animals died or were killed during the three year-long Serbian siege of the capital, and a sniper killed one keeper in a well-publicized incident. PM ALBANIAN CUSTOMS SEIZE KOSOVA-BOUND ARMS. Customs officials in the port of Durres on 1 November found sophisticated sniper rifles, communications equipment, and ammunition in two containers that arrived from Switzerland aboard a Croatian ship, dpa reported. The containers were bound for northern Albania and also contained clothes, blankets, and mattresses for Kosovar refugees. Customs officials discovered the arms when, after one week, nobody had arrived to collect the goods. Albanian and Swiss authorities have started joint investigations. FS WORK ON DURRES FERRY PORT BEGINS. The Italian company Cosmar has begun work on upgrading the Durres ferry terminal, ATSH reported on 1 November. The World Bank is financing the project to the tune of $11 million. World Bank Deputy President Johannes Linn said in Tirana the following day that the World Bank plans to grant Albania a total of $150 million over the next three years. It has already provided $300 million since 1992. FS ITALIAN CUSTOMS START PATROLLING ALBANIA'S COAST. Italian customs speed boats arrived at the southern Albanian island of Sazan on 1 November as part of an 80- strong Italian police force that will patrol the southern Albanian coast(see "RFE/RL Newsline," 29 October 1998). Last month, the Italian and Albanian interior ministers signed an agreement providing for such a force. The patrols aim at stemming illegal migration and smuggling across the Otranto straits, ATSH reported. Elsewhere, Albanian authorities have expelled 62 illegal immigrants including 32 Iraqi and 25 Turkish citizens as well as five Palestinians. They had entered Albania last week from Greece and were arrested in a village near Fier, dpa reported. Albanian police, meanwhile, have increased road controls around the port of Vlora to catch illegal immigrants before they have a chance to embark. FS FRANCE INTERESTED IN ROMANIAN AIRCRAFT COMPANY. Prime Minister Radu Vasile, who is on a three-day visit to France, said on 2 November that France's Eurocopter company is interested in acquiring a stake in the Ghimbav IAR aircraft company in Brasov. He said the French company, under whose license the PUMA helicopter was produced in Brasov between 1974 and 1996, wants to modernize and resume production of the PUMA military aircraft as well as produce helicopters for civilian purposes. Vasile said France's interest gives "a new dimension" to the talks now under way with Bell Textron Helicopters on the privatization of Gimbav-IAR, which must be concluded by 31 December. Also on 2 November, the government announced that final offers have been received from Italy' STET and Greece's OTE companies for stakes in RomTelcom. MS DEMOCRATS DENY ISSUING 'ULTIMATUM' TO COALITION. Democratic Party chairman Petre Roman on 2 November said that his party has not "issued an ultimatum" to the ruling coalition but added that the coalition pledged to implement "concrete reforms" within six months of Radu Vasile's cabinet taking office. Roman said this was "the last chance" for the coalition to fulfill its mandate. The government on 2 November announced that the law on the restitution of nationalized housing and the protection of tenants will be debated in the parliament under regular procedure rather than under the "emergency procedure," to which the Democrats object. In turn, the Democrats said their draft on setting up a state company for the management of state-owned land will be withdrawn from the Senate's agenda "for two weeks." MS SHARP FALL IN MOLDOVAN CURRENCY'S VALUE. The Moldovan national currency has dropped from 6.4 lei to 10 lei to the U.S. dollar, Infotag reported on 2 November. The devaluation came after National Bank chairman Leonid Talmaci announced at a meeting of a newly created government commission that the bank will no longer intervene to support the leu. Talmaci said that intervention by the National Bank since early September has resulted in the country's hard currency reserves dropping from $300 million to $200 million. He also said the decision to stop intervention is a "temporary measure." AP reported that the National Bank also decided to require commercial banks to sell 25 percent of their U.S. dollars to the central bank, up from 8 percent, as previously required. MS BULGARIA PROTESTS MACEDONIAN TREATMENT OF JOURNALISTS. Foreign Minister Nadezhda Mihailova on 2 November summoned Macedonian ambassador to Sofia Nikola Todorchevsky to protest against Macedonia's refusal to allow the entry of two Bulgarian journalists who intended to cover the 1 November elections, an RFE/RL correspondent in the Bulgarian capital reported. Mihailova said Macedonia was duty-bound to allow observers and journalists to monitor the democratic course of the ballot. BTA reported that the Macedonian authorities also barred former Bulgarian consul to Skopje Rumen Elenski from entering Macedonia on 31 October. MS TURKEY BACKS PLODVIV AS BASE FOR BALKAN PEACEKEEPING FORCE. National Assembly Chairman Yordan Sokolov, returning from Turkey on 31 October, said Prime Minister Mesut Yilmaz now backs Plodviv, southern Bulgaria, as the base for the Balkan peace keeping force. Sokolov said Turkey is insisting only that the command of the force be rotated among participants, BTA reported. Speaking before a visit to Turkey scheduled for 4-6 November, Prime Minister Ivan Kostov expressed concern over the illegal immigration of Bulgarian Turks to Turkey, which he said was prompted by economic reasons, the Turkish Anatolia agency reported. He added that the influx into Turkey will stop in the near future if Bulgaria's economic situation continues to improve and if the country gains EU membership. MS END NOTE CROATIAN ECONOMIC GROWTH SLOWS by Michael Wyzan The growth of Croatia's GDP has slowed markedly this year, after soaring by about 6 percent annually during the previous three years. In the first half of 1998, GDP grew by 3.4 percent, compared with 6.5 percent in 1997 as a whole. Forecasters are predicting that economic growth for the entire year will be at about the same rate as in the first half. However, the growth of industrial production has accelerated this year, with such production increasing at an annual rate of 6.9 percent during January-August, compared with 3.9 percent last year. The slowdown reflects a conscious tightening of monetary and fiscal policy in an attempt to reduce the current account deficit, which rose from 4.5 percent of GDP in 1996 to a very high 12.5 percent last year. It is also a result of the turbulence on world markets, which will limit the growth of exports and make capital flows more volatile. While GDP growth has slowed, retail price inflation is higher: the twelve-month rate to September was 5.8 percent, compared with 3.6 percent at the end of 1997. This increase does not reflect a rise in underlying inflationary trends, since it is due largely to the 2.4 percent inflation in January that resulted from the introduction of a 22 percent value-added tax (VAT) that month. In a statement on the Croatian economy issued in July, the IMF identified rapid growth of wages and bank credit as well as an easing of fiscal policy as contributing to the surge in the current account imbalance in 1997. The fund is especially concerned about a lack of discipline among public enterprises, which have borrowed heavily at home and abroad, increased wages rapidly, and accumulated large overdue payables and receivables. The authorities have had varied success in dealing with such matters this year. In terms of the local currency (the kuna), gross monthly wages in August were 14.5 percent higher than a year earlier. Although gross dollar wages are up only slightly over a year ago, at about $620 they remain the second highest among transition economies (after Slovenia). The unemployment rate remains very high at around 16 percent. A broad measure of the money supply grew by less than 17 percent in the year to August, compared with almost 38 percent from December 1996 to December 1997. Tightened monetary policy early this year failed to slow banks' lending activities. And the Central Bank in April mandated that banks taking out foreign loans (or making loan guarantees for foreign loans) deposit with it a percentage of the loan (or guarantee) in kuna. These developments resulted in a slowdown in credit growth. In response to more difficult borrowing conditions on international markets, these measures were abolished on 14 October for loans with maturities of more than one year. A strong revenue performance by the new VAT and growth in privatization revenues have contributed to an increase in central government budget revenues by 42 percent during January-July over the same period in 1997. During the same period, budget expenditures rose by only 25 percent. As a result, last year's deficit of about 1 percent of GDP has turned into a small surplus. The motivation behind these fiscal and monetary measures was to rein in domestic demand and reduce the current account deficit. Those goals appeared to have been achieved: the deficit is currently projected to be 7-8 percent of GDP, after falling in the first half of the year by 8.9 percent, compared with January-June 1997. During the first half of 1998, exports were $3.8 billion, virtually identical to the level from January- June 1997, while imports totaled $5.4 billion, down from $5.6 billion. While the trade deficit fell by 4 percent during the first seven months, it is expected to be down by 14 percent for 1998 as a whole. December 1997 saw a large surge in imports as part of a consumption boom that occurred immediately before the introduction of VAT in January. So far, the authorities have not contemplated dealing with external imbalances by letting the kuna weaken. Between September 1997 and September 1998, it fell only from 3.55 to 1 German mark to 3.68. With a small foreign debt and little foreign portfolio investment, Croatia is seen by observers as not being particularly vulnerable to attacks on its currency. Achieving sustainable rapid growth will depend on progress in various areas of structural reform, including improving bank supervision, privatizing large banks and enterprises, and completing trade reform in line with Croatia's application to join the World Trade Organization. An exercise in voucher privatization has just been completed, with seven investment funds and 11,500 individuals identified as "victims of war" bidding for shares in 471 companies. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1998 RFE/RL, Inc. All rights reserved. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx HOW TO SUBSCRIBE Send an email to firstname.lastname@example.org with the word subscribe as the subject of the message. HOW TO UNSUBSCRIBE Send an email to email@example.com with the word unsubscribe as the subject of the message. 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