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RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 2, No. 235, Part II, 8 December 1998


________________________________________________________
RFE/RL NEWSLINE Vol 2, No. 235, Part II, 8 December 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
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Headlines, Part II

* SWISS JUDGE IN KYIV TO CONTINUE INVESTIGATION OF
LAZARENKO

* SERBIAN MINISTER WARNS MONITORS

* BOSNIAN SERB GENERAL PLEADS INNOCENT

End Note: NEW SLOVAK GOVERNMENT INHERITS DIFFICULT
ECONOMIC SITUATION
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EAST-CENTRAL EUROPE

SWISS JUDGE IN KYIV TO CONTINUE INVESTIGATION OF
LAZARENKO. Swiss law officials flew to Kyiv on 7
December to continue the criminal investigation of
former Ukrainian Premier Pavlo Lazarenko, AFP reported.
Judge Laurent Kasper-Ansermet will meet with the
Ukrainian Prosecutor-General's Office to look for
evidence that Lazarenko illegally deposited state money
into Swiss bank accounts (see "RFE/RL Newsline," 7
December 1998). Lazarenko, a parliamentary deputy and
head of the Hromada movement, is seen as a potential
candidate in next year's presidential election. Dozens
of Hromada deputies and party supporters protested
outside the Swiss embassy in Kyiv on 7 December. They
later met with the ambassador and called Lazarenko's
arrest a "planned action of reprisal against a
politician whose party is in the opposition." PB

KUCHMA BLASTS ENERGY MINISTRY AFTER NUCLEAR REACTOR GOES
DOWN. Ukrainian President Leonid Kuchma criticized
Energy Minister Oleksiy Shebertsov and his ministry on 7
December after a nuclear reactor was shut down for
safety reasons, AP reported. Kuchma said he will hold
energy sector leaders personally responsible for
continued problems. Reactor No. 2 at the Pivdeno-
Ukrainskaya nuclear power station was automatically shut
down by its safety system, said Nadezhda Shumak, a
spokeswoman for the state-run nuclear energy company
Energoatom. She said no radiation was released. The
station, which is located about 300 kilometers south of
Kyiv, had been running only for two days after
undergoing nearly five months of repairs. Shumak said
its shutdown is likely to cause brownouts. Meanwhile in
Sevastopol, the Ukrainian telephone company Ukrtelecom
shut off telephone lines to Russia's Black Sea fleet
because of unpaid bills of some 500,000 hryvna
($146,000). PB

KUCHMA VETOES BILL RAISING MINIMUM WAGE. President
Kuchma vetoed a bill on 8 December that would have
raised the country's minimum wage, AP reported. Kuchma
said the hike would force the government to lay off
workers and either print more money or raise taxes. The
legislature voted last month to nearly triple the
minimum monthly wage from 55 hryvna ($16) to 148 hryvna.
PB

LUKASHENKA WANTS NEW FOREIGN MINISTER TO SEEK EXPORT
MARKETS. Belarusian President Alyaksandr Lukashenka said
on 7 December that exports are one of the country's top
priorities, Belapan reported. After introducing his new
foreign minister, Ural Latypov, (see "RFE/RL Newsline,"
7 December 1998) to the staff of the Ministry of Foreign
Affairs, Lukashenka said "we should ensure an
aggressiveŠeconomic policy to champion our economic
interests and to sell our products [abroad]." Lukashenka
also praised Latypov as highly educated, honest, and
industrious. PB

IMF CONTINUES TALKS WITH BELARUSIAN OFFICIALS.
Representatives of the IMF and government officials met
in Minsk on 7 December to resume talks on a $100 million
emergency compensation loan, AP reported. Yulia Lyskova,
an IMF aide in Minsk, said the loan is contingent upon
Minsk's fulfilling IMF recommendations on economic
liberalization. She said the talks, which are expected
to last all week, will determine what Belarus is doing
to implement those plans. PB

ESTONIAN PEOPLE'S PARTY APPROVES JOINT LIST WITH
MODERATES. The People's Party has approved running on a
joint list with another opposition party, the Moderates,
in the March 1999 elections, ETA reported on 7 December.
No decision has yet been taken on a possible merger of
the two parties. Toomas Hendrik Ilves, People's Party
chairman and former foreign minister, said the party
will have to wait for the Moderates' congress on 13
December before taking such a decision. Also on 7
December, ETA reported that three Russian parties--the
Social-Democratic Labor Party, the United Popular Party,
and the Russian Unity Party--intend to merge to form a
new left-wing organization. Last month, the parliament
voted to ban electoral alliances (see "RFE/RL Newsline,"
18 November 1998). JC

ESTONIAN LAWMAKERS AGAIN SUSPEND DEBATE ON ANTI-
CORRUPTION BILL. For the sixth time, the parliament has
suspended the debate on a new anti-corruption bill, ETA
reported on 7 December. Daimar Liiv, chairman of the
parliamentary Legal Commission, and Justice Minister
Paul Varul both denied that discussion of the draft law,
which was submitted to the parliament in March 1996, has
been postponed owing to the efforts of corrupt
officials. The bill does not fit into the Estonian legal
system, Varul argued, adding that a 1995 anti-corruption
law remains in place. On 8 December, the parliament is
expected to approve amendments to the citizenship law in
the third and final reading. Parliamentary group
chairmen say they have the necessary 51 votes for the
passage of the amendments, which provide for virtually
automatic citizenship for stateless children under 15
who were born after 26 February 1992. JC

LATVIAN PREMIER DECIDES ON SOCIAL DEMOCRAT FOR
AGRICULTURAL MINISTRY. Vilis Kristopans told journalists
on 7 December that he has chosen among the six
candidates proposed by the Social Democrats for the post
of agricultural minister, BNS reported. Kristopans
pointed out that under the coalition agreement, he
cannot make that decision unilaterally and will
therefore send letters to the coalition partners--
Fatherland and Freedom party and the New Party--to
approve his choice. He added that inviting a Social
Democrat candidate to take over the Agricultural
Ministry does not mean expanding the coalition. The
Social Democrats have said that receiving the
agricultural portfolio is a condition for supporting
Kristopans's minority government. Maris Grinblats, the
leader of the Fatherland and Freedom Party, which has
opposed including the Social Democrats in the ruling
coalition, said a decision on the matter will be taken
by both the party's leadership and parliamentary group,
RFE/RL's Latvian service reported. JC

LITHUANIAN SOCIAL DEMOCRATS WANT ECONOMY MINISTER
REMOVED. Vytenis Andriukatis, a member of the Social
Democratic parliamentary group, told journalists on 7
December that the party's presidium will seek to
initiate a motion of no confidence in Economy Minister
Vincas Babilius, BNS reported. Andriukatis said that
information collected over the past 18 months provides
"many sufficiently serious arguments" to remove Babilius
from his post. According to Andriukatis, that
information testifies to Babilius's incompetence in
heading the ministry and in dealing with the energy
sector and privatization. The minister's previous
economic activities are also questionable, Andriukatis
said. The Social Democrats are to seek support among
other parliamentary groups to launch a motion of no
confidence in Babilius. JC

POLISH PREMIER SAYS EU PLEASED WITH PREPARATIONS. Jerzy
Buzek said on 7 December that the European Commission
favorably received Warsaw's report on its preparations
for EU membership, PAP reported. Buzek made his comments
after Jan Kulakowski, the head of Poland's EU
negotiating team, met with the EU's European Integration
Committee. Among the main topics discussed were
corporate law, consumer protection, health, and customs
duties. Buzek said the commission is still concerned
about the effect EU legal norms would have on the Polish
legal system. In other news, a Polish court sentenced
four skinheads to prison terms ranging from two to 25
years for attacks that led to the deaths of three people
in Legionowo, just north of Warsaw. PB

ISRAEL WON'T ALLOW WAR CRIMES SUSPECT TO POLAND. Israel
refused a Polish extradition request for a Jewish man
accused of atrocities against German prisoners during
World War II, AP reported on 7 December. Solomon Morel,
who commanded a camp for German prisoners in
Swietochlowice, southern Poland, is alleged to have
tortured inmates there and to have been responsible for
more than 1,500 deaths. Orit Shemesh, an Israeli Justice
Ministry spokeswoman, said the statute of limitations in
the case has run out. Morel, whose parents and two
brothers died during the war, moved to Israel in 1994.
PB

HAVEL, ZEMAN WARN AGAINST RACISM. President Vaclav
Havel, meeting on 7 December with Premier Milos Zeman
and other members of the cabinet to discuss racism and
xenophobia, warned that the situation in the Czech
Republic is "serious" owing to "growing apathy toward
racist violence here," AP reported. Zeman said that
while in opposition he had demanded the outlawing of the
skinhead movement, adding that he has not changed his
views since then. He said the movement is "a
continuation of fascism in this country." Zeman also
said the Czech secret service will monitor the movement
and a special police unit will be formed to prevent
racist attacks. Some 30 racist-motivated murders have
been registered in the Czech Republic since 1989. MS

SLOVAK GOVERNMENT WANTS 'POSITIVE SIGNAL' FROM EU
SUMMIT. Prime Minister Mikulas Dzurinda told journalists
in Bratislava on 7 December that his government expects
the EU to signal its willingness to bring Slovakia back
among the front runners for EU membership at the EU
Vienna summit on 11 December. Dzurinda said his cabinet
has already taken steps to overcome several of the
stumbling blocks identified by the EU in Slovakia's
membership bid. In this connection, he mentioned
improving the situation of national minorities,
including the opposition in the work of parliamentary
committees, and ending political control over state
television and radio, Reuters reported. Dzurinda said,
"We need a positive signal, such as the one we received
from the European Parliament". MS

WASHINGTON PRAISES HUNGARIAN PROGRESS. Hungarian Foreign
Ministry State Secretary Zsolt Nemeth on 7 December said
his recent talks with U.S. Undersecretary of State
Stuart Eisenstat and former Undersecretary of State
Richard Holbrooke confirmed that Washington sees Hungary
as "a bridgehead of democracy and market economics."
Nemeth told reporters at the end of his U.S. visit that
Hungary will most probably be admitted to NATO in the
second half of February or early March. One day earlier,
the Hungarian news agency quoted Defense Minister Janos
Szabo as saying that according to the latest reports,
Hungary will be a full member of NATO in March. MSZ

SOUTHEASTERN EUROPE

SERBIAN MINISTER WARNS MONITORS... Serbian Deputy Prime
Minister Tomislav Nikolic said in Belgrade on December 7
that "if the peace process [in Kosova] is established no
one will be jeopardized, including the verifiers. But if
Albanian terrorists are allowed to strut around, murder,
kidnap we shall have to conduct the same action again as
this summer but this time we shall go to the end
regardless of what others think.... If the West, the
Americans, Germans, French, British think there should
be peace in [Kosova], then they should not send their
troops to Macedonia." PM

...RECEIVES REBUKE FROM SOLANA. When asked about
Nikolic's remarks, NATO Secretary-General Javier Solana
said in Brussels on 7 December that a decision by the
alliance that authorized air strikes against Serbia
remains in effect. He added, "We are not going to
tolerate statements like the ones...that have been made
today." Solana discussed the deployment of NATO troops
to Macedonia with Prime Minister Ljubco Georgievski (see
"RFE/RL Newsline," 7 December 1998). The Macedonian
leader said that "the mandate of these forces is quite
clear: they are peace forces and they are to react only
if the life of verifiers is in danger. And we do not
treat [the deployment] at all as a hostile act towards a
neighbor." The following day, NATO foreign ministers in
a statement called on both the Serbs and the Kosovars
not to exacerbate tensions in Kosova. PM

FRENCH SEND MILITARY EQUIPMENT TO MACEDONIA. The
transport ship "Ouragan" left Toulon for Thessaloniki on
6 December, Reuters reported the next day. On board the
ship are 128 vehicles, including "many" armored
personnel carriers, and 160 ground troops, who will
travel to Macedonia by land. An advance party for the
French-led NATO rapid reaction force arrived in
Macedonia by air on 6 December (see "RFE/RL Newsline," 7
December 1998). PM

KOSOVARS CALL NEW HILL PLAN 'UNACCEPTABLE.' Fehmi Agani,
who heads the negotiating team appointed by shadow-state
President Ibrahim Rugova, told a press conference in
Prishtina on 7 December that U.S. envoy Chris Hill's
latest plan for a settlement in Kosova is "almost
identical to the Serbian proposal for Kosova...[and]
cannot be considered a basis for...future negotiations."
Agani stressed that Hill's plan is unacceptable because
it anchors Kosova in the Serbian legal system rather
than offering broad autonomy (see "RFE/RL Newsline," 7
December 1998). He added that Adem Demaci, who is the
political spokesman for the Kosova Liberation Army
(UCK), also rejects Hill's proposal, an RFE/RL
correspondent reported from the Kosovar capital. PM

ALBANIAN MINISTRY REJECTS SERBIAN CHARGES. The Foreign
Ministry issued a statement in Tirana on 8 December
denying repeated claims by Serbian officials that
Albania is providing training facilities for the UCK and
is seeking to establish a "greater Albania." The
statement added that "behind these unfounded
accusations...is hidden the well-known aim of Belgrade
to hamper and turn back the process of finding a real
political solution to the Kosova problem." FS

SERBIAN MEDIA SITUATION CALLED 'WORST IN EUROPE.' Robert
Menard, who heads Reporters without Borders, said in
Belgrade on 7 December that Serbia is the worst country
"in all of Europe" with regard to freedom of the media,
an RFE/RL correspondent reported from the Serbian
capital. He called on the Serbian authorities to repeal
the recent press law, under which several periodicals
have been shut down and radio stations forbidden to
rebroadcast programs in Serbo-Croatian from abroad. PM

GELBARD SAYS POPLASEN BLOCKING DAYTON. Robert Gelbard,
who is President Bill Clinton's special envoy for the
former Yugoslavia, said in Banja Luka on 7 December that
Republika Srpska President Nikola Poplasen's "actions
and his words have shown us that he is against the
Dayton agreement," which ended the Bosnian war in 1995.
Gelbard added that Poplasen "appears to be using
democratic mechanisms for anti-democratic purposes."
Poplasen, for his part, said in a statement that he is
"ready to accept any argument about the violation of the
Dayton agreement and, if it happens, do everything to
put a stop to it." Poplasen, who belongs to Vojislav
Seselj's Serbian Radical Party, defeated moderate former
President Biljana Plavsic in elections in September. PM

BOSNIAN SERB GENERAL PLEADS INNOCENT. General Radislav
Krstic told the Hague-based war crimes tribunal on 7
December that he is innocent of charges of genocide in
connection with the massacre of some 7,000 Muslim men
and boys following the fall of Srebrenica in the summer
of 1995 (see "RFE/RL Newsline," 3 December 1998). The
VOA quoted international forensics experts as saying
that they have examined mass graves in the Srebrenica
area and that the evidence suggests the victims were
executed. Many persons were mutilated and some had their
hands bound with wire. Krstic commanded the Drina Corps
in the area at the time. PM

BOSNIA TO LAUNCH PRIVATIZATION. The mainly Croatian and
Muslim federation will start privatization within the
next two months, Privatization Agency director Adnan
Mujagic said in Sarajevo on 7 December. He added that
before the process can begin, the international
community's Carlos Westendorp must confirm that Bosnia's
privatization laws are in order and a privatization
agency for Mostar Canton must be set up. Tensions
between Muslims and Croats are at their highest in the
Mostar area. PM

CROATIA, BOSNIA BEGIN WORK ON BORDER ISSUES. Members of
the border commissions from the two neighboring
republics agreed in Banja Luka on 7 December on the
order in which they will seek to resolve questions
regarding their common frontier. First on the agenda for
the next session is the region around Martin Brod, in
western Bosnia. It is unclear when or where that meeting
will take place. PM

TUDJMAN BLASTS 'DARK FORCES.' Croatian President Franjo
Tudjman told the opening session of the Central
Committee of the governing Croatian Democratic Community
(HDZ) in Zagreb on 7 December that he firmly rejects
what he called unwarranted demands by unnamed "centers"
abroad on "the sovereign Croatian state." Tudjman
stressed that he will "not allow" anyone to establish a
"different Croatia" that will "serve outside interests"
and regard itself as part of the Balkans, rather than a
Central European country. The president added that the
media in Croatia are much freer than their counterparts
in many of the countries that criticize Croatia. Tudjman
said that Croatia will not follow anyone's orders and
urged other countries to mind their own business,
RFE/RL's South Slavic Service reported. He did not
specify which countries he meant. PM

GANG ROBS TIRANA-ATHENS BUS, KILLS POLICEMAN. A group of
armed men robbed the Tirana-Athens bus at Kthesat e
Greshices, near Tepelena, on 6 December and killed a
policeman riding on the bus, ATSH news agency reported.
Four of the robbers reportedly trapped the policeman by
surrounding him inside the bus while other robbers
ambushed the vehicle. Police have recently begun to
travel in passenger buses to protect them against
robberies. The Tirana-Athens line is particularly
important because it takes migrant workers to jobs in
Greece and brings them back. Buses are the mainstay of
public transportation in Albania. FS

ROMANIAN OPPOSITION ENDS PARLIAMENTARY BOYCOTT. The
leaders of the Party of Social Democracy in Romania, the
Party of Romanian National Unity, and the Greater
Romania Party--Ion Iliescu, Valeriu Tabara, and Corneliu
Vadim Tudor--have agreed with Senate Chairman Petre
Roman to set up three committees to discuss a
parliamentary relations code and legislative priorities
and to re-examine the opposition's move to debate a law-
based state, Romanian media reported on 7 December.
Representatives of both the ruling coalition and the
opposition would belong to those committees. The
coalition's rejection of such a move led to the
parliamentary boycott that began in mid-November.
Iliescu, Tabara, and Tudor said they might renew the
boycott if the committees' decisions or the
implementation of those decisions are unsatisfactory. MS

RENAULT TO HAVE MAJORITY STAKE IN ROMANIAN CAR FACTORY.
The State Property Fund on 7 December received a bid
from the French Renault firm for a 51 percent stake in
the Dacia car producer of Pitesti, RFE/RL's Bucharest
bureau reported. The French firm was the only bidder to
make the deadline set by the fund, although other
foreign automakers had earlier expressed an interest.
Dacia produced Renault vehicles under license from 1968-
1979. A spokesman for the fund said Renault plans to
make large investments in the Romanian automaker and
that the talks are expected to last no longer than
several weeks. MS

FORMER BULGARIAN PREMIER SUED FOR LIBEL, INSULT. Zhan
Videnov, who was Bulgarian premier from 1994-1996, on 7
December appeared in a Sofia court to face charges of
libel and insult, AP reported. Atanas Tilev, a
Bulgarian-born German businessman, sued Videnov for 15
million leva (some $9,000), after Videnov accused him of
shady dealings in Bulgaria. If found guilty, Videnov
could be sentenced to up to three years in prison. A
bank owned by Tilev went bankrupt at the end of
Videnov's tenure as premier, and Tilev has since accused
a group of people close to Videnov of illegally
siphoning money out of his bank. Two of the group's
members were charged with embezzlement after fleeing
abroad in 1997. MS

END NOTE

NEW SLOVAK GOVERNMENT INHERITS DIFFICULT ECONOMIC
SITUATION

by Michael Wyzan

	The government of Slovak Prime Minister Mikulas
Dzurinda, which took office on 30 October, has found the
country's economy beset by serious problems.
	On 1 October, five days after the elections, the
National Bank of Slovakia abandoned the first exchange
rate for the Slovak crown, which had been introduced in
1993, in the face of a rapidly rising current account
deficit. On 12 November, the cabinet doubled the
projected 1998 budget deficit to 19.2 billion crowns
($549 million), 2.7 percent of GDP (compared with a
projected 0.7 percent). The higher deficit figure is not
alarming, but the true budget picture is far worse when
losses at state-owned enterprises are taken into
account.
	Like its Romanian counterpart after November 1996,
the new Slovak coalition government, committed to
political and economic reform as well as rapprochement
with Western institution, will likely find that economic
performance deteriorates at the beginning of its term in
office. And as in Romania and the Czech Republic, the
question arises as to what extent and for how long the
economy (and perhaps the new government's popularity)
will pay the price for its predecessor's transgressions.
	Slovakia's economic performance has always been
puzzling. In terms of economic growth, Slovakia is one
of the stars of the post-communist world, with GDP
increasing by 6.5-7 percent annually from 1995-1997.
Rapid growth continued in the first half of 1998, with
GDP up by 6.1 percent.
	For years, observers queried whether such GDP
growth figures could be sustained in a country where
little economic restructuring seemed to be taking place
and which had received relatively little foreign direct
investment (a cumulative $1.3 billion from 1993 through
June 1998, based on balance-of-payments data). Both of
these problems result largely from a non-transparent
method of privatization that favored elements
politically allied to the former government.
	It would be expected that fast economic growth in a
small open economy would be driven by rapid growth of
exports. However, exports of goods and services grew at
average annual rate of 2.8 percent (in constant crowns)
from 1995-1997, less than half the GDP growth rate.
	It is now clear that economic growth has been
driven by a boom in state-sector infrastructure
investment in projects like the Mochovce nuclear power
station and the Gabcikovo hydroelectric power plant.
Such investments contributed to an overheated economy
and did little to reduce unemployment, which reached
13.8 percent in August (compared with 12.8 percent a
year earlier), by far the highest figure among the four
original Visegrad countries.
	The investment boom contributed to the fact that
imports in constant crowns grew over the last four years
almost twice as fast as GDP. The result has been sizable
trade and current account deficits, which after falling
somewhat in 1997--owing to special measures to restrain
imports taken by the authorities, which refused to
devalue the crown--are up again substantially this year.
The current-account imbalance for the first three
quarters was about $1.6 billion, compared with $1.1
billion during the period January-September 1997. This
means that the deficit will be around 10 percent of GDP
for 1998.
	It is clear that the economy will have to be slowed
down to ensure that external imbalances are under
control. Slovakia has relied heavily on short-term
borrowing (more than 40 percent of the growing foreign
debt is short term) and interest rates on such loans are
high--especially since several rating agencies have
lowered Slovakia's credit ratings during 1998 and
international lenders have re-evaluated their relations
with transition countries after the Russian debt
default. Letting the National Bank's foreign reserves
decline, from $3.7 billion in July to $3.0 billion in
October, is hardly a sustainable substitute for foreign
borrowing.
	What is less certain is how steep a decline the
Slovak economy will undergo. Given the rapid growth in
the first half of the year, GDP will probably grow by 4-
5 percent this year. Growth projections for next year
run as low as 0 percent, although most forecasts are
closer to 2.5-3 percent.
	There are two key issues that will determine the
Slovak economy's medium-term growth prospects. The first
is how depressed the economy must become in order to
have the current account deficit within acceptable
limits. Although the government can do little about
conditions on international capital markets, it could
reduce the severity of the necessary contraction by a
wave of cash privatizations of public utilities, which
remain in state hands.
	The second issue is whether the coalition
government will prove sufficiently cohesive to make
tough economic decisions on such questions as wage
policy and privatization. The paralysis that has saddled
Romania with a collapsing economy two years after
electing a reformist coalition government must be
avoided at all costs.

The author is a research scholar at the International
Institute for Applied Systems Analysis in Laxenburg,
Austria.

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