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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol. 2, No. 216, Part II, 9 November 1998


___________________________________________________________
RFE/RL NEWSLINE Vol. 2, No. 216, Part II, 9 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

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Headlines, Part II

* IMF POSTPONES DECISION ON NEXT LOAN TRANCHE TO UKRAINE

* U.S. SAYS HAGUE TRIBUNAL MUST HAVE ACCESS TO KOSOVA

* SERBIAN MEDIA CLAMPDOWN CONTINUES

End Note: RUSSIAN CRISIS FUELS LATVIAN ECONOMIC WORRIES
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EAST-CENTRAL EUROPE

IMF POSTPONES DECISION ON NEXT LOAN TRANCHE TO UKRAINE. An
IMF mission that arrived in Kyiv last week to examine
Ukraine's implementation of the $2.2 billion loan program has
reached "negative" conclusions, Ukrainian News reported on 9
November. While citing Ukraine's successes in stabilizing the
national currency and restructuring foreign debts, the IMF
said major setbacks are decreasing budget revenues, too
strict controls on state prices, the lack of administrative
reform, and the slow pace of reform in the energy and
agricultural sectors. The IMF also warned the government
against a money emission, saying it might lead to higher
inflation and aggravate the situation on the financial
market. The IMF mission left Ukraine without signing any
accord on the provision of the next loan tranche. An unnamed
IMF representative told the agency that the decision on the
tranche "depends on further negotiations" and may be made in
late November. JM

UKRAINE ASKS FOR UN, EU HELP TO FLOOD VICTIMS. Foreign
Minister Borys Tarasyuk has sent letters to the UN and EU
asking for humanitarian help to victims of the floods in
Ukraine's Transcarpathian region, dpa reported on 8 November.
Heavy rains have caused five mountain rivers to inundate some
120 settlements in Zakarpatska Oblast, forcing some 25,000
people to leave their homes. The Ukrainian government has
provided $600,000 for rescue efforts, while neighboring
Hungary donated $250,000 to help the flooded area. JM

UKRAINIAN COMMUNISTS MARK OCTOBER REVOLUTION ANNIVERSARY...
Some 4,000 people led by Communist leaders marched through
Kyiv on 7 November to celebrate the 81st anniversary of the
Bolshevik revolution in Russia, AP reported. Communist Party
Secretary Petro Symonenko told the crowd that "those in power
in Ukraine are waging war against their own people and living
on the money that was stolen from us." The Kiev demonstrators
called for Ukraine's reunion with Russia and Belarus as the
first step toward creating "a new union of brotherly
independent Soviet republics." Rallies were also held in
other Ukrainian cities, drawing 5,000 people in Kharkiv and
2,000 in Sevastopol. JM

...AS DO THEIR BELARUSIAN COUNTERPARTS. Some 4,000 people
took part in a 7 November demonstration in Minsk to mark the
anniversary of the 1917 Bolshevik revolution, Belarusian
Television reported. Viktar Chykin, secretary of the
Communist Party of Belarus, told the crowd that Belarus has
maintained "the achievements of the October Revolution" to a
greater degree than any other former Soviet republic, Belapan
reported. According to Chykin, this explains why Belarusian
Communists support Lukashenka's policies "so actively."
Elsewhere in Belarus, some 5,000 people took part in a 20-
minute rally in Homel and 1,000 in a meeting in Hrodna. JM

LUKASHENKA CALLS ON WEST TO ABANDON 'DOUBLE STANDARDS.'
Belarusian President Alyaksandr Lukashenka said at a 6
November meeting with Robert Antretter, vice president of the
Parliamentary Assembly of the Council of Europe, that the
West should abandon its policy of double standards with
regard to Belarus, Belarusian Television reported. Lukashenka
added that Belarus meets all standards applied to nations
represented in the assembly. "The level of democracy, the
protection of our people's rights is not one bit lower than
in the countries that have recently joined this respected and
very influential organization," Lukashenka told Antretter.
Belarus was excluded from the assembly after the 1996
referendum, which virtually abolished the division of powers
and the independence of the judiciary in Belarus. Antretter
said he visited Belarus "to determine whether any grounds
have appeared for the start of a dialogue" between the EU and
Belarus, Reuters reported. JM

ESTONIAN RIGHT-WING PARTIES DISCUSS ELECTION ALLIANCE. The
leaders of three small right-wing parties--the Moderates, the
People's Party, and the Fatherland Union--met on 8 November
to discuss cooperation during the election campaign, ETA
reported. Agreement was reached on a program for a possible
election alliance, which focuses on education and family
policies. The previous day, Prime Minister and Coalition
Party leader Mart Siimann and Center Party head Edgar
Savisaar failed to reach an agreement on the abolition of
election alliances. The Centrists have sought to do away with
such alliances, while the Coalition Party opposes such a
move. The parliament is due to discuss a bill that would ban
election blocs on 17 November. JC

IMF URGES TALLINN TO ADOPT RULES ON STABILIZATION FUND. IMF
representative to Estonia Dimitris Demekas told BNS on 6
November that Tallinn should adopt as soon as possible
regulations for using the country's economic stabilization
fund. He added that it is to be expected that suggestions
will be made about the fund's use as long as no rules are in
place. "I think the first priority would be to establish the
rules what the funds should be used for and then we can start
discussing whether it should be used for agriculture, for
building roads, or for bailing out Maapank or whatever," he
said. The IMF advised establishing the 1.3 billion kroon
(some $100 million)) stabilization fund one year ago to avoid
the overheating of the economy and to accumulate resources in
the event of a macroeconomic downturn. JC

POLISH COALITION THREATENED BY DISPUTE OVER TAX LAW. The
ruling coalition of the Solidarity Electoral Action (AWS) and
the Freedom Union (UW) appears to be in crisis after the AWS
voted against the UW on 6 November to push through tax breaks
in the 1999 income tax law, Polish media reported. Under the
AWS tax plan, families with three children will receive tax
exemptions in 1999, those with two children in 2000, and
those with one child in 2001. Finance Minister Leszek
Balcerowicz commented that the AWS voted "against their own
government, their own prime minister, and their own budget."
The UW asked for a recess and demanded that the AWS reject
the passed law and quickly introduce a new one without
exemptions for families. A UW spokesman said the stability of
the coalition "depends on the AWS," adding that the UW does
not intend to defend the coalition "at any price." JM

HAVEL CRITICIZES SENATE'S RECORD... One week ahead of the
elections for the Senate, President Vaclav Havel has
criticized the chamber's performance for failing to gain
enough prestige and authority during its two-year existence,
AP reported on 8 November. In an interview on Czech
Television, Havel said he had hoped the upper chamber would
not be "merely a body passing laws" but one "thinking about
them in broad terms." Owing to its failure to perform such a
role, the Senate is viewed by many people as "the lower,
number two chamber, which is redundant and costs money," he
said. MS

...VISITS BRATISLAVA. The previous day, Havel was in
Bratislava to meet with new Slovak Prime Minister Mikulas
Dzurinda and members of his cabinet. Havel proposed that the
Visegrad group be revived at a meeting of its premiers and
presidents in Bratislava, "where this regional cooperation
began". He added that such a meeting will become possible
"when Slovakia has a president." Dzurinda welcomed "the idea
of a restoration of the Visegrad Four," according to CTK.
With regard to the still unsolved problem of the division of
former federal property between the two countries, Havel said
he considers this a matter for the two governments to solve,
noting that he recommends that the Czech cabinet be "as
generous as possible." Accompanied by former Slovak President
Michal Kovac, Havel also visited the grave of Prague Spring
leader Alexander Dubcek. MS

SLOVAK PREMIER MEETS AUSTRIAN CHANCELLOR. Dzurinda met with
Austrian chancellor Viktor Klima on 6 November in Vienna to
discuss, among other things, the disputed Mochovce nuclear
plant. Dzurinda expressed confidence that an understanding
can be reached, while Klima said he believes that under the
new government, there will be "a new era of openness" in
Slovakia. In an interview with Reuters on 6 November,
Dzurinda said his government intends to move quickly to meet
two concerns expressed during talks he had at EU headquarters
in Brussels one day earlier, namely that a law on national
minority languages be drawn up and that an investigation into
the 1995 abduction of former President Kovac's son be
launched. MS

HUNGARY REJECTS EXTENSION OF EU ADMISSION DATE. Hungarian
Foreign Minister Janos Martonyi told reporters in Stockholm
that there is no reason to amend his country's "ambitious,
but not unrealistic expectations" that it will be granted EU
membership in 2002. Martonyi said "competent officials of the
European Commission do not speak about major delays in
membership," adding that Hungary will firmly argue its own
goals regarding enlargement. The foreign minister was
responding to a statement by German Parliamentary Assembly
member Otto Graf Lambsdorff that Hungary's admission may be
delayed until 2005. MSZ

SOUTHEASTERN EUROPE

U.S. SAYS HAGUE TRIBUNAL MUST HAVE ACCESS TO KOSOVA. David
Scheffer, who is Washington's chief envoy dealing with war
crimes, said in Belgrade on 7 November that "it is the
unanimous view of all the Security Council members that the
[Hague-based war crimes] tribunal investigators should have
full authority to do their job" in Kosova. He added that the
question of access to Kosova for the investigators "is not a
debatable issue." He spoke at a conference on war crimes
sponsored by non-government organizations in the Serbian
capital on 7-8 November. The previous week, Yugoslav
authorities denied visas to top officials of the Hague court
to go to Kosova (see "RFE/RL Newsline," 5 November 1998). On
7 November, the Yugoslav Justice Ministry issued a statement
stressing that Kosova is Yugoslavia's internal affair and
outside the court's jurisdiction. PM

SERBIAN MEDIA CLAMPDOWN CONTINUES. A Belgrade court ended
hearings against the independent daily "Dnevni Telegraf" on 8
November, RFE/RL's South Slavic Service reported. Bratislava
Morina, who heads the Serbian government's refugee program
and who belongs to the hard-line United Yugoslav Left,
brought the case against the newspaper, which the Belgrade
authorities recently shut down and which is now published in
Montenegro. Morina sued the paper for publishing an
advertisement by the opposition student movement
"Resistance." In related news, Resistance issued a press
release on 6 November in which it reported that police
arrested four students in Belgrade two days earlier for
writing anti-government graffiti. The statement added that
the students went on trial "immediately" and received 10 days
each in prison. Resistance called for their release. PM

MONTENEGRO ISSUES DECREE ON MEDIA FREEDOM. The Montenegrin
government issued a decree on 6 November guaranteeing full
freedom to local and foreign media. The document pledges that
foreign news agencies and journalists will be able to work
unhindered and that local radio stations may rebroadcast
foreign programs if they do not exceed 30 percent of the
local station's programming. The Montenegrin government
strongly opposes many policies of Yugoslav President Slobodan
Milosevic, which it regards as anti-democratic and against
Montenegro's fundamental political and economic interests.
Several publications recently banned in Serbia are now based
in Montenegro. Critics of the Montenegrin government charge,
however, that the Montenegrin media are not free to criticize
President Milo Djukanovic or to write about corruption. PM

INCIDENTS CONTINUE IN KOSOVA. Two Serbian policemen went
missing in southwestern Kosova on 6 November. Their police
colleagues have since been conducting a search for them. Also
on 6 November, some five Kosovar guerrillas died in a shoot-
out with police in southwestern Kosova. It is unclear if the
incidents were linked, AP reported. In Prishtina on 7
November, representatives of Kosovar Serbs insisted that any
future autonomy for Kosova include autonomy for Serbs from
local ethnic Albanian rule. The Serbian representatives said
that there can be no political settlement in Kosova without
the Serbs' approval and that Milosevic does not have the
right to sign agreements in their name. Also in the Kosovar
capital, some 11 British monitors "with military backgrounds"
arrived on 6 November, Reuters noted. PM

HILL MEETS WITH UCK FIGHTERS. U.S. Ambassador to Macedonia
Chris Hill, who is also Washington's chief envoy in the
Kosova crisis, held what Reuters described as "secretive
talks...[in a] cloak-and-dagger atmosphere" with
representatives of the Kosova Liberation Army (UCK) in
Dragobilj on 6 November. UCK spokesman Jakup Krasniqi said
afterward that the talks were "fruitful" but gave no details.
Hill "avoided" journalists and left immediately after the
meeting, Reuters added. PM

MACEDONIAN COALITION TALKS TO BEGIN. A spokesman for the
Democratic Party of the Albanians (PDSH) said in Skopje on 6
November that party leader Arben Xhaferi will begin
discussions this week with Ljubco Georgievski, who is most
likely to be the next prime minister, on the PDSH's joining
the new government (see "End Note," "RFE/RL Newsline," 6
November 1998). The PDSH spokesman said that his party noted
that Georgievski and his ally Vasil Tupurkovski "created a
positive climate in the [recent] election campaign and did
not instigate inter-ethnic hatred." The spokesman stressed
that the PDSH believes that improving interethnic relations
is the "key to economic development." Georgievski and
Tupurkovski campaigned on a platform of ending corruption and
promoting economic growth. PM

WESTENDORP REJECTS BOSNIAN HOUSING MEASURE. The international
community's Carlos Westendorp ordered "suspended" a recent
regulation issued by the government of the mainly Muslim and
Croatian Bosnian federation to govern property rights,
RFE/RL's South Slavic Service reported on 6 November.
Westendorp said that the measure would impede the right of
refugees to return to their former homes, which is a
fundamental right guaranteed in the Dayton agreement. In
Zagreb, Croatian officials said on 7 November that Bosnian
federal President Ejup Ganic, a Muslim, canceled a meeting of
top Bosnian and Croatian officials originally slated for 9
November in Zagreb. The new date for signing an agreement on
bilateral relations is 19 November. Federal Vice President
Vladimir Soljic, an ethnic Croat, said that he doubts that
the signing will take place even on that later date. PM

MIXED RESULTS ON SERBIAN-CROATIAN RELATIONS. On 6 November in
New York, the UN Security Council issued a statement calling
on Croatian officials to provide better security for Serbs in
eastern Slavonia. The next day in Belgrade, the
transportation section of the Yugoslav Chamber of Commerce
asked the Transportation Ministry to approve setting up 65
new bus routes to Croatia. Twenty-one Yugoslav firms
expressed an interest in participating. The Belgrade
authorities rejected a similar request by the Montenegrin
Chamber of Commerce to connect Montenegro with Croatia by bus
via the still-closed border crossing of Debeli Brijeg,
RFE/RL's South Slavic Service reported. PM

DID BIN LADEN TRY TO SEND FIGHTERS TO KOSOVA? Claude Cheik
Ben Abdel Kader, who is a French citizen of Algerian origin
and on trial for murder in Albania, told a Tirana court on 7
November that he came to Albania as "a man" of suspected
Islamist terrorist Osama Bin Laden." Albanian police arrested
Kader in August for allegedly killing his Albanian translator
(see "RFE/RL Newsline" 19 October 1998). Kader said that he
had wanted to "organize a group of 300 people to...fight in
Kosova against the Serbs," adding that he considers this
year's Serbian offensive "a war against Islam." Kader claimed
that his translator was also a member of the Islamist group
and died in an unspecified accident, AP reported. Bin Laden,
who reportedly visited Albania in April 1994, is the key
suspect in the bombing of the U.S. embassies in Tanzania and
Kenya in August. FS

GERMAN-ALBANIAN FOUNDATION BECOMES BANK. The Albanian-based
Foundation for Enterprise Financing and Development (FEFAD)
celebrated its transformation into a full-fledged bank on 6
November, the "Albanian Daily News" reported. The German Bank
for Reconstruction and Development founded FEFAD in 1996.
Since then, it has given some 750 credits worth a total of $
5.5 million to small and medium-sized enterprises. The
transformation will allow the FEFAD-Bank to receive deposits,
offer bank accounts to customers, and make transfers. FS

BUCHAREST MAYORAL RACE NARROWLY DECIDED. Acting Mayor Viorel
Lis, running on the Democratic Convention of Romania ticket,
has narrowly defeated Sorin Oprescu, the candidate of the
Party of Social Democracy in Romania, in the runoff elections
to the Bucharest mayoralty, Mediafax reported on 8 November.
With nearly all votes counted, Lis received 50.5 percent of
the vote, compared with 49.5 percent for Oprescu. Turnout was
37.8 percent. In other news, the IMF delegation that visited
Romania last week said it will return for further talks in
January and that the possibility of resuming loans to Romania
will be examined in March, after the 1999 budget has been
approved by the government. MS

ROMANIA'S COUNTRY RISK RATING DOWNGRADED AGAIN. For the
second time in three months, Moody's Investment Service has
downgraded Romania's country risk classification, citing
political instability and doubts about the country's
capability to meet its $2.26 billion foreign debt servicing
in 1999. Standard & Poor's downgraded Romania's risk rating
last month, Mediafax reported on 8 November. The previous
day, the government announced that Greece's OTE has won the
bid to purchase a 35 percent stake in RomTelcom. OTE paid
$675 million and will invest another $400 million over the
next three years if operations grow. MS

MOLDOVAN OPPOSITION MOVES NO CONFIDENCE MOTION. The Party of
Moldovan Communists on 6 November moved a no confidence
motion in the cabinet, citing the government's responsibility
for the ongoing economic crisis, BASA-press reported. The
motion must be debated within three days. Communist leader
Vladimir Voronin has said his party is ready to participate
in setting up a new cabinet on condition that it be allowed
to appoint the prime minister. Also on 6 November, the
parliament passed a new law on local administration that
provides for the appointment of prefects as government
representatives at the local level. The autonomous Gagauz-
Yeri region will also have a prefect. MS

RUSSIAN ARMS EXPORTER SUES BULGARIAN COMPANY. The state-run
Russian arms exporting company Rosvooruzhenie has sued the
Armimex company, and a Sofia court has ordered the seizure of
state-owned Armimex's bank accounts, ITAR-TASS reported on 7
November, citing Bulgaria's "Standard." Rosvooruzhenie says
Armimex has defaulted on a $3 million debt for exports to a
machine tool plant, adding that the debt dates back three
years. The Bulgarian Defense Ministry's engineering
directorate guaranteed the debt. Armimex is the successor of
that directorate. MS

END NOTE

RUSSIAN CRISIS FUELS LATVIAN ECONOMIC WORRIES

by Katya Cengel

	Russia's continuing economic crisis is causing problems
for those countries with which it has significant trade links.
That is certainly true of neighboring Latvia. Russia is
Latvia's second-largest market, and many Latvian companies
are now feeling the strain.
	Official statistics show that before the crisis, some 15
percent of Latvia's exports went to Russia and almost 12
percent of its imports came from that country. It is widely
expected that newer numbers will show a drop in trade, the
effect of which is already being seen in unemployment
figures.
	In August, Latvia's unemployment rate was officially
listed as 7.4 percent, but according to the State Employment
Service, it had climbed to 7.6 percent one month later. Much
of the increase is being linked to the situation in Russia,
as higher-than-average unemployment is being registered in
those districts where exports to Russia are highest. This
applies, in particular, to areas dealing with food and fish
products.
	At a press conference last month, Latvian Welfare
Minister Vladimirs Makarovs said he expects another 10,000
people to lose their jobs owing to the closure of Latvian
companies as a result of the Russian crisis. He said that he
expects official unemployment to reach 8.6 percent in the
coming months and that "even highly qualified and well paid
workers are in danger."
	Among the companies most severely affected are 70 that
have scaled down their business or manufacturing operations.
Of these, 14 have halted work altogether and 46 have partly
closed. Some 2,000 employees have been laid off and another
5,000 sent on unpaid leave.
	Auto Elektroaparatu Rupnicas [Riga Auto Electric
Apparatus Plant] is an example of a company that has been
forced to reorganize. With 70 percent of its business
involving shipments to Russia, the company recently reduced
its 1,200 employees to 700.
	Arnis Ermanis Shemins, president of the company, said
his firm was unable to make severance payments to its former
employees, adding that further lay-offs are expected. The
company has suspended exports to Russia and sales have
declined by half.
	Some companies are encountering difficulties making
other payments as well. Maiga Dzervite, deputy director-
general of the State Revenue Service, says 50 companies have
requested extensions for making tax payments. Of those, 15
are linked to the fishing industry, nine to the transport
sector, and eight to the food and beverages industry. Latest
available figures put the export of food products at 8.7
percent down on last year's level, while the export of
machinery and electrical equipment has declined by 6.8
percent.
	Dzervite warns that worse is to come for the economy as
a whole: "Revenue is decreasing, the economy is distorted,
and the gross national product is going down." She added that
Latvia "will survive but it will not be such a nice picture
as we originally drew for 1998."
	Dzervite describes the effects of the Russian crisis as
occurring in three stages. The first affects companies
selling directly to Russia. The second hits those supplying
goods to companies that export to Russia. And the third
involves firms from all sectors of the economy supplying
goods to Latvian consumers, since higher unemployment means
smaller demand for goods and services.
	Some companies are resorting to barter to continue trade
with Russia. OlainFarm pharmaceuticals, which formerly sold
60 percent of its products to Russia, has just signed a
contract to exchange medicine for Russian coal. Currently,
about 30 percent of their production is going to Russia in
barter trade.
	The company's advertising director, Egils Grikis,
credits the Russian government with the barter idea, which
will allow OlainFarm to retain all its employees. The
arrangement has lowered the need to find new markets, which,
in itself, is a difficult process.
	Agris Skuja, director of the industry department for the
Latvian Economics Ministry, acknowledged that Latvian
products are generally "not of a sufficiently high quality
for the European market," adding that "it is expensive to
meet European standards."
	He added that the situation is "very bad" and can be
improved only through a long, expensive program. Worker
training needs to be enhanced, the government must provide a
better legislative framework for business, companies must
better explore other markets and develop marketing
strategies, and Latvia must gain increased political and
economic support from the EU, he argues.
	Some officials hope Latvia's entrance into the World
Trade Organization will help provide a way forward. Latvia
was accepted as a WTO member last month, and ratification by
the Latvian parliament is expected within the next few weeks.

The author is a Riga-based contributor to RFE/RL.

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