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RFE/RL NEWSLINE Vol 3, No. 41, Part I, 1 March 1999
________________________________________________________ RFE/RL NEWSLINE Vol 3, No. 41, Part I, 1 March 1999 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 I, a compilation of news concerning Russia, Transcaucasia and Central Asia. Part II covers Central, Eastern, and Southeastern Europe 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 I * WHO'S MINDING THE KREMLIN? * MOSCOW URGING REGIONAL AUTHORITIES TO PRESSURE LOCAL MEDIA * ARMENIA CONDEMNS AZERBAIJAN'S KARABAKH APPEAL End Note: ARMENIA'S DEFICIT CONTINUES TO GROW, DESPITE BOOSTED TRADE WITH WEST xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx RUSSIA WHO'S MINDING THE KREMLIN? Only four days after his spokesman announced he had fully recovered from a bout with stomach ulcer, Russian President Boris Yeltsin returned to the hospital on 27 February complaining of stomach pains. Yeltsin's doctors announced on 1 March that Yeltsin's condition has stabilized but that he is likely to remain in the hospital for a week, RFE/RL's Moscow bureau reported. Prime Minister Yevgenii Primakov, who began a two-week vacation on 28 February, so far has no plans to return to Moscow, his spokeswoman, Tatyana Aristarkhova, told ITAR-TASS on 27 February. She noted that First Deputy Prime Minister Yurii Maslyukov will perform Primakov's duties during his absence. JAC CHINESE PREMIER ENDS VISIT TO RUSSIA. Zhu Rongji concluded his four-day visit to Russia on 27 February by visiting Saint Petersburg, Russian media reported. Zhu met with governor Vladimir Yakovlev and visited the local branch of the plant that is producing generators for the Lianyougan nuclear power station under construction in China's Jiangsu Province. During his trip, Zhu signed a total of 11 agreements, half of which dealt with trade between Chinese and Russian regions along the countries' common border and feasibility studies for natural gas fields in Siberia (see "RFE/RL Newsline," 26 February 1999). The latter agreements are expected to result in a pipeline transporting gas to Mongolia, China, and Japan. BP MOSCOW URGING REGIONAL AUTHORITIES TO PRESSURE LOCAL MEDIA. The State Committee for Publishing has recommended that local authorities actively use their authority with the local presses in the struggle against political extremism, "Vremya MN" reported on 26 February. Two means at local authorities' disposal, according to the newspaper, are withholding tax privileges or applying financial pressure to local newspapers that promote political extremism. About 20 percent of regional newspapers and journalists currently lack the necessary resources to survive, making them vulnerable to such economic pressure. "Vremya MN" notes that local authorities own significant chunks of the regional press, for example 45 percent in the Adygei Republic, 52 percent in Dagestan, 53 percent in Kalmykia, and 33 percent in Karelia. The newspaper notes that the definition of what constitutes political extremism is likely to vary widely from region to region. JAC DUMA DEPUTY MAKES NEW ALLEGATIONS AGAINST CENTRAL BANK. State Duma deputy (independent) and member of the Budget Committee Nikolai Gonchar told reporters on 26 February that the Central Bank used the Channel Island firm FIMACO not only to manage its foreign currency reserves but also to hide millions of dollars in profits made on treasury bill market. According to Gonchar, in September 1996 FIMACO earned a $38.9 million profit by investing in GKOs. By law, such profits should be directed to the federal budget, but they were not. Gonchar said that the Central Bank issued a special regulation allowing it not to show these amounts on its balance sheets. Instead, the profits were recorded in special accounts, to which the office of the Prosecutor-General was denied access. JAC OTECHESTVO CONTEMPLATES BRANCHING INTO TV BROADCASTING. Moscow Mayor Yurii Luzhkov told reporters on 26 February that his Otechestvo [Fatherland] political movement will announce its candidate for presidential elections in 2000 at its second congress, to be held on 24 April. The same day, Luzhkov told members of Otechestvo's Central Council that the movement will have to establish its own printing facilities and "consider the possibility of entering TV broadcasting" because Russian Public Television and Russian Television have received instructions not to "shed any light on the purposes or tasks of the movement," "Kommersant-Daily" reported on 27 February. According to the newspaper, the upcoming congress will be held outside Moscow. Members suggested the cities of Novosibirsk, Yekaterinburg, and Nizhnii Novogorod. One participant even jokingly suggested Sevastopol, the city in Crimea, the loss of which prompted Luzhkov to oppose the Russian-Ukrainian friendship treaty. In response, Luzhkov quipped, "Perhaps even Kiev...." JAC NEXT DUMA TO HAVE NAZI, HARDLINE COMMUNIST FACTIONS? President of the Politika think-tank Vyacheslav Nikonov told reporters on 25 February that the next Duma may have a Nazi faction, Interfax reported. He also predicted that the Movement in Support of the Army, led by Duma deputies Albert Makashov and Viktor Ilyukhin, will easily clear the 5 percent barrier and will sever themselves completely from the Communist Party if they are given much time "on the air." He concluded that Our Home is Russia will manage to survive until the September parliamentary elections only with the financial support of Gazprom. Nikonov told "Kommersant-Daily" on 26 February that unknown candidates will have to spend at least $150,000-$200,000 on their campaigns in order to have a decent chance of winning. JAC NEW 'MARGARET THATCHER' PARTY LAUNCHED. About 400 people gathered in St. Petersburg on 26 February to create a new conservative political party called "Thatcherites of Russia," based on the political and economic principles of the former British Prime Minister Margaret Thatcher. Part of the group's manifesto is to reduce taxes, establish a Russian House of Lords, and preserve the results of the country's past privatization efforts, Reuters reported. The new party will not participate in upcoming Duma elections, according to ITAR-TASS. JAC OIL TOWN ELECTS NEW MAYOR. Voters in Nefteyugansk in the Khanty-Mansi Autonomous Okrug on 28 February elected Vladimir Tkachev as mayor. Tkachev was the deputy of the previous mayor, Vladimir Petukhov, who was slain in an apparent contract killing last summer. Turnout was 64.2 percent. JAC CONFLICT BETWEEN RELIGIOUS SCHOOL, ST. PETERSBURG POLICE CONTINUES. A standoff between police, students, teachers, and parents at a school operated by a Dutch evangelical group in St. Petersburg continued for a fifth consecutive day on 26 February. The school is defying a court order requiring it to move; the city government maintains that the school is unlicensed, does not meet sanitary and fire safety standards, and is run by a group that is registered as a social rather than a religious organization, according to AP and Reuters. School and human rights group officials counter that the real conflict is over the right of religious groups to teach their faith. JAC ST. KSENIA ICON LEAKING FOR SECOND TIME. An icon of Saint Ksenia in the Yakovlevskoe village church in Kostroma Oblast starting oozing myrrh for the second time in three years, ITAR-TASS reported on 26 February. According to the village priest, the icon first started weeping tears of myrrh during the funeral service of a local woman much venerated for her kindness. JAC RUSSIAN SOLDIERS OF FORTUNE FIGHTING IN HORN OF AFRICA? Reports that some mercenaries fighting in the Ethiopia and Eritrea might be Russian citizens are difficult either to confirm or deny, "Izvestiya" reported on 25 February. A spokesman for the Ethiopian embassy in Moscow told the newspaper that his country has no foreign mercenaries at all, only Russian military specialists who have been invited to teach at higher educational institutions. Representatives of the Eritrean Embassy in Moscow said that Russian aircraft pilots are fighting with the Ethiopian army. An "expert" working on the Russian publication, "Soldier of Fortune," suggested that foreign soldiers may be members of other CIS countries who happen to speak Russian well and have therefore been mistaken for Russian citizens. JAC RUSSIA CRITICIZES GERMAN AID IN DE-MINING CHECHNYA. Russian Foreign Ministry spokesman Vladimir Rakhmanin told journalists on 26 February that his ministry has lodged a complaint with the German embassy over Bonn's failure to inform Moscow in advance that it is training Chechens to detect and defuse mines, Reuters and ITAR-TASS reported. Rakhmanin objected that such specialized knowledge can also be used to plant mines. LF RUSSIAN, CHECHEN OFFICIALS DISCUSS COORDINATING ANTI-CRIME MEASURES. Russian Interior Minister Sergei Stepashin met with Chechen Deputy Prime Minister Turpal Atgeriev in Dagestan on 26 February to discuss how to combat crime in Chechnya and the surrounding regions, Russian agencies reported. Stepashin explicitly denied that Moscow plans to designate the border between Chechnya and Dagestan an international one. LF CONVICTED CHECHEN TERRORISTS TO SERVE PRISON TERMS IN CHECHNYA? Chechen Prosecutor-General Magomed Magomadov told Interfax on 26 February that the two Chechen women sentenced earlier last month for involvement in a bomb blast at the Pyatigorsk railway station in April 1997 may be sent back to Chechnya under agreements between Moscow and Grozny. Chechen President Aslan Maskhadov appealed to Russian President Yeltsin to allow them to do so after Chechen militants had threatened reprisals in Stavropol Krai, where the trial took place (see "RFE/RL Newsline," 17 and 19 February 1999). A Russian Justice Ministry official had said in mid-February that the women would serve their terms in Vologda. LF TRANSCAUCASUS AND CENTRAL ASIA ARMENIA CONDEMNS AZERBAIJAN'S KARABAKH APPEAL... The Armenian Foreign Ministry on 25 February issued a statement criticizing Azerbaijani President Heidar Aliev's appeal to the French, Russian, and U.S. presidents to take more resolute measures to resolve the Karabakh conflict, Noyan Tapan reported (see "RFE/RL Newsline," 24 February 1999). The statement said it is "especially distressing" that Baku, which rejected the most recent peace plan proposed by the OSCE Minsk Group, is calling on the mediators to demonstrate a more constructive approach. The statement termed Azerbaijan's position "unconstructive," adding that it is the primary obstacle to a settlement of the conflict. It also criticized Azerbaijan's "refusal to recognize Nagorno- Karabakh as a full party to peace talks" and its attempts to "place the conflict in the broader context of Russian-Turkish relations." French President Jacques Chirac has responded to Aliev's appeal, Turan reported on 26 February but did not elaborate. LF ...AND ITS PROTEST OVER DEFENSE COOPERATION. In a separate statement issued on 26 February, the Armenian Foreign Ministry dismissed as "unfounded" and "illogical" Azerbaijani allegations that Armenia's ongoing military cooperation with Russia threatens to destabilize the Caucasus, RFE/RL's Yerevan bureau reported. It stressed that both UN and OSCE statutes recognize the right of any member state to choose how to ensure its security. The statement also rejected Baku's claims that transfers of Russian arms to Russian bases in Armenia constitute a violation of the limits imposed by the Treaty on Conventional Forces in Europe. Azerbaijan has itself exceeded its CFE arms ceilings, imports arms, and is engaged in the production of offensive weapons, the statement argued. LF ARMENIAN PRESIDENT CONDEMNS ARMY HAZING. Meeting on 25 February with a group of mothers whose sons died as a result of violence at the hands of their army superiors, Robert Kocharian vowed a "serious struggle" to eradicate criminal violence and non-combat deaths within the armed forces, Noyan Tapan reported. In January, Human Rights Watch had published extensive data on such crimes, claiming that they disqualify Armenia from full membership in the Council of Europe. Armenian officials have rejected that argument, claiming that some of the Human Rights Watch data is inaccurate (see "RFE/RL Newsline," 22 January 1999). LF FORMER ARMENIAN CP LEADER LAUNCHES NEW POLITICAL PARTY. Hundreds of delegates attended the 27 February founding congress in Yerevan of Karen Demirchian's center-left People's Party of Armenia (HZhK), RFE/RL's Yerevan bureau reported. In a 90-minute speech, Demirchian, the runner-up to Robert Kocharian in the 1998 presidential elections, vowed to establish "democratic and popular socialism" if his party comes to power. Deploring what he termed the "deindustrialization" of Armenia under the failed liberal economic policies of successive post-Soviet governments, Demirchian called for comprehensive state programs to revive both industry and agriculture. He said he favors a state- regulated and socially-oriented market economy. The HZkK currently claims some 25,000 members throughout Armenia. LF AZERBAIJAN MARKS ANNIVERSARY OF KHODJALY KILLINGS... Azerbaijanis on 26 February commemorated the 1992 killings by Russian and Karabakh Armenian troops of several hundred Azerbaijani civilians in the Karabakh village of Khodjaly. Aliev termed those deaths "one of the most terrible tragedies of the 20th century," adding that the Azerbaijani leadership bore part of the blame for them. He vowed that if necessary, Azerbaijan will use force to liberate those regions currently occupied by Karabakh Armenian troops, Turan reported. LF ...AS OFFICIAL VERSION OF KILLINGS QUESTIONED. But the chairman of the commission on human rights and national minorities of the parliament of the unrecognized Nagorno- Karabakh Republic told Noyan Tapan on 26 February that Azerbaijani claims that the Khodjaly killings constituted a deliberate massacre are unfounded. He said the attack on Khodjaly was necessitated by the concentration in the village of huge quantities of armaments and that the Azerbaijani leadership was warned in advance of the attack in order to enable it to evacuate the civilian population. He also quoted then President Ayaz Mutalibov as confirming that the Armenians had announced that they would leave a corridor for Azerbaijani civilians to leave the village unharmed before the attack. LF GEORGIAN PRESIDENT VISITS TURKEY. During his two-day visit to Ankara and Istanbul on 26-27 February, Eduard Shevardnadze held talks with his Turkish counterpart, Suleymen Demirel, and with Prime Minister Bulent Ecevit on the prospects for resolving regional conflicts and expanding economic and transport cooperation, including the planned Kars-Tbilisi railway. In a joint communique released following Shevardnadze's meeting with Demirel, the two presidents called for the swiftest possible implementation of the Baku- Ceyhan oil export pipeline project. Shevardnadze told journalists on his return to Tbilisi on 27 February that Turkey will bear part of the estimated $3 billion cost of building that pipeline, ITAR-TASS reported. Shevardnadze also said Demirel would not object if part of Azerbaijan's Caspian oil were exported through the alternative pipeline from Baku to Georgia's Black Sea port of Supsa. Adjar President Aslan Abashidze failed to accompany Shevardnadze because of poor health, "Akhali toaba" reported on 27 February. LF ANOTHER BOMB EXPLODES IN ALMATY. A home-made bomb exploded outside the Russian Orthodox cathedral in the former Kazakhstani capital, Almaty, on 26 February, ITAR-TASS reported. Four people were injured and required medical attention as a result of the blast, which also caused substantial damage to the building, Police have taken a 43- year-old man into custody in connection with the bombing. The man had recently been released from jail, and it remains unclear what his motive might have been. There are no reports that he is linked to the bombing that took place in downtown Almaty on 21 February (see "RFE/RL Newsline," 23 February 1999). BP RUSSIA INCREASES TRANSIT QUOTA FOR OIL FROM KAZAKHSTAN. The press service of Kazakhstan's national oil and gas company said on 26 February that an agreement has been signed on increasing the amount of oil Kazakhstan can ship via Russia to countries outside the CIS, Interfax reported. The agreement, signed the previous day, allows Kazakhstan to ship 6 million tons of oil annually via Russian pipelines. Russia had agreed in December to increase the volume of oil transiting its territory from 3.5 million tons to 5 million. A spokesman for the national oil company said the increase "meets the export potential of Kazakhstan." BP SUSPECT IN TASHKENT BOMBINGS CAPTURED... ITAR-TASS reported on 27 February, that one of six men sought by Uzbek authorities in connection with the 16 February bombings in Tashkent, has been take into custody. Ravshan Salijanov, 27, is from the Uzbek city of Namangan and was apprehended in Tashkent. BP ...TO JOIN HUNDREDS OF OTHERS IN DETENTION? The acting director of the Moscow-based Society for Assistance of Human Rights in Central Asia, Vitaly Ponomarev, told a news conference on 26 February, that more than 500 people have been arrested in Uzbekistan since the 16 February bombings, Reuters reported. A statement released by the organization claims that among those arrested are "Islamic activists, members of their families, supporters of religious groups not loyal to the regime, and several opposition activists." Many are reported to still be in jail. Ponomarev commented that while it is unclear how many people have been arrested, "at least 200 is absolutely certain, just in Tashkent." He added that his figures are based on information received from various human rights organizations in Uzbekistan. BP MONEY SUPPLY STEADILY INCREASING IN TURKMENISTAN. Turkmenistan's Central Bank reported that the amount of money in circulation increased by 5.4 percent a month last year, Interfax reported on 25 February. The bank said this is an improvement over the 6.9 percent monthly increase recorded in 1997. Although the official rate of exchange for the Turkmen national currency, the manat, remains steady, at 5,200 to $1, unofficial reports indicate it is trading illegally at more than double that rate. BP KYRGYZSTAN, RUSSIA REPEAT CALLS FOR PEACE IN AFGHANISTAN. Consultations between officials from the Kyrgyz and Russian Foreign Ministries took place in Bishkek on 26 February and resulted in a call for "UN-supervised negotiations," Interfax reported. Both parties said they felt "a degree of moral responsibility" for events in Afghanistan, and both agreed that negotiations that were conducted in the Turkmen capital, Ashgabat, last month by representatives of the Taliban and the northern alliance are an encouraging sign. Both also said their countries are "always ready" to help settle the conflict. BP HUMAN RIGHTS REPORTS RELEASED FOR CIS CENTRAL ASIAN STATES. A human rights report conducted by the U.S. State Department and released on 26 February indicates that the five CIS Central Asian states have changed little since the 1997 survey was conducted. Kyrgyzstan faired the best but came under criticism for its citizens' inability to change their government through the electoral process. Kazakhstan, too, was complimented on respecting human rights, but early presidential elections and irregularities in the campaigning process were noted. Tajikistan and Uzbekistan continued to have "poor" human rights records but were eclipsed by Turkmenistan, whose record was deemed "dismal." Freedom of speech and of the press was deemed insufficient in all five countries, as were conditions in jails. The report also noted that violence against women in those countries is a major problem. BP END NOTE ARMENIA'S DEFICIT CONTINUES TO GROW, DESPITE BOOSTED TRADE WITH WEST by Emil Danielyan Armenia's huge trade deficit increased last year, despite robust economic growth, according to recently released government data. The growing imbalance was accompanied by declining economic ties with former Soviet republics, which accounted for just a quarter of Armenia's foreign trade. Net exports fell by 3.9 percent to a meager $223.4 million, while imports were almost unchanged at $812.1 million. The resulting $588.7 million deficit was up 2 percent on 1997. Economists have long wondered how a country can get by when it is importing 3.6 times more than it exports. One of the reasons is that Armenia has an enormous shadow economy. The government estimates that its volume equals official GDP. Money transfers from thousands of Armenians working abroad is another important source of unaccounted foreign earnings. Also bridging the gap is continuing humanitarian aid--which totaled $83.6 million in 1998--as well as international loans. Last year saw some $210 million in direct foreign investments, more than the combined total for the previous several years. These mitigating factors notwithstanding, analysts say that without a sharp rise in exports, Armenia will find it increasingly difficult to cope with its foreign debt, let alone achieve a major improvement in living standards. Within the next couple of years, servicing of that debt, which currently stands at $740 million, will become an even heavier burden on the state budget as the government starts repaying the bulk of the money. "We live off future generations. Our children will bear the brunt of our huge current account deficit," Bagrat Asatrian, president of the Armenian Bank Association, told RFE/RL. One of the consequences of this situation is the precariousness of the relative macroeconomic stability that Armenia has enjoyed since 1996. It has been maintained to a large extent by regular financial injections from the IMF and World Bank. The Armenian economy grew by 7.2 percent in 1998, which witnessed 1.3 percent consumer price deflation. This growth rate becomes less impressive when seen against the backdrop of the economic collapse of the early 1990s, when the country's GDP plummeted by 60 percent. Low inflation contrasts with unusually high interest rates, which Asatrian attributes to weak exports. Last month, the bank raised its re-financing rate to 53.5 percent, following a 3 percent drop in the value of the national currency, the dram. Asatrian, himself a former Central Bank chairman, believes the "artificial" maintenance of the dram's exchange rate in 1998 only added to the trade deficit, paving the way for much cheaper Russian imports. GDP growth mainly resulted from a big boost in the agricultural and construction sectors, which offset a 2.5 decrease in industrial output. Figures show that industrial output started falling in August, when the Russian financial crisis erupted. The fall in exports occurred in the second half of the year, as large Armenian enterprises, heavily dependent on the Russian market, were hit by the turmoil there. Exports to Russia, until now the biggest source of external earnings, plummeted by 36.5 percent. That the Russian crisis was responsible for the growing deficit is evidenced by the fact that Armenian exports to countries outside the former USSR increased slightly. About three- quarters of foreign trade was with countries outside the CIS. In a major development, the EU pulled ahead of the CIS as Armenia's leading trade partner, with a $334.4 million turnover in 1998. By contrast, economic ties with neighboring Iran further decreased. Iran even lagged behind the US's $110 million share (including U.S. aid). On a country basis, Russia was still Armenia's main partner, however. But Russian natural gas supplies accounted for $92 million in their $222.6 million trade volume. One consequence of the EU's greater importance for Armenia was a six-fold hike in the volume of trade with Britain. In 1998, the U.K. became the number one European importer of goods from Armenia, receiving products worth roughly $70 million. Another consequence was that the value of Armenia's exports to Belgium exceeded that of its exports to Russia last year, refined diamonds being the main product. Precious stones and metals, made up the biggest share of all Armenian exports., accounting for one quarter. Other exports included machines, scrap metal, food, and chemical products. More than the half the imports to resource-poor Armenia was food and raw materials. The new pattern of foreign trade suggests that land- locked Armenia is finding ways to break its geographical isolation from Western markets. That isolation is aggravated by the unresolved Nagorno-Karabakh conflict and other ethnic disputes in the region. But economists say that openness to the world must involve a corresponding growth in exports. And they argue that higher growth rates are needed and must be export-oriented. This, in turn, will require substantial capital and modern technology--neither of which is currently available in Armenia. Attracting more foreign investment thus becomes all the more necessary. The author is an RFE/RL correspondent based in Yerevan. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Copyright (c) 1999 RFE/RL, Inc. All rights reserved. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx HOW TO SUBSCRIBE Send an email to email@example.com with the word subscribe as the subject of the message. 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