RFE/RL NEWSLINE Vol 3, No. 48, Part II, 10 March 1999

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RFE/RL NEWSLINE Vol 3, No. 48, Part II, 10 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 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

* SLOVAK NATIONALIST LEADER FACES INVESTIGATION

* BEFORE TALKS WITH MILOSEVIC, HOLBROOKE WARNS OF
TRAGEDY

* SERBIAN OFFICIALS ISSUE MORE ARREST WARRANTS, STEP UP
FIGHTING ALONG BORDER

End Note: BOSNIA'S TWO-ENTITY ECONOMY GROWING BUT STILL
WEAK
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EAST-CENTRAL EUROPE

BELARUSIAN OPPOSITION ACCUSES OSCE MINSK MISSION OF
'INACTIVITY'Ö Members of the opposition Central
Electoral Commission have sent a letter to OSCE Chairman
in Office Knut Vollebaek accusing the OSCE Minsk mission
and its head, Hans Georg Wieck, of "inactivity,"
RFE/RL's Belarusian Service reported on 9 March. The
oppositionists said Wieck "expresses opinions that
contradict the OSCE official position on Belarus." In
particular, they said that Wieck expresses "the need" to
recognize the constitution adopted in the 1996
controversial referendum. "We have already ceased to
count on Mr. Wieck's help and are forced to [directly]
address the OSCE leadership," the oppositionists said.
JM

ÖWARNS AGAINST MOSCOW 'POLITICAL PROJECT' IN BELARUS.
Zyanon Paznyak, exiled leader of the Belarusian Popular
Front (BNF), has issued a statement saying that the
participation of former Prime Minister Mikhail Chyhir in
the opposition election campaign this year is a
"political project" stage-managed by Russia's special
services. According to Paznyak, the project aims at
creating a pro-Moscow opposition to President Alyaksandr
Lukashenka in Belarus and at moving the BNF and the
"Belarusian national liberation movement" to the
"sidelines of politics." Paznyak and Chyhir are two
candidates who have announced their intent to run in the
16 May presidential elections scheduled by the
opposition Supreme Soviet in accordance with the 1994
constitution. Mikhail Chyhir resigned from the post of
prime minister before the 1996 referendum, which
abolished the 1994 constitution and considerably
expanded Lukashenka's powers. JM

BELARUSIAN COMMUNISTS URGE RESTORATION OF 'PEOPLE'S
DEMOCRACY.' At its 6-8 March congress, the Belarusian
Party of Communists criticized policies pursued by the
president and the government as "oriented toward
pauperizing the working people," Belapan reported on 9
March. The party's main goal, as stated in an appeal to
the Belarusian people, is to restore a "people's
democracy in the form of soviets of deputies of the
working people." The party sees Belarus's future in a
voluntary union state of "brotherly nations" based on
"equality, people's democracy, and socialism." JM

UKRAINIAN COURT LIFTS BAN ON PRICE HIKES FOR UTILITIES,
TRANSPORTATION. The Constitutional Court on 9 March
overturned a law that temporarily banned increases in
the price of utilities and public transportation. The
Supreme Council passed the law in July 1998, stating
that it would remain in effect until the government has
repaid all wage and pension arrears. The court ruling
said the law is unconstitutional and allowed the
government to raise utilities and transportation rates.
So far, Ukrainians have paid only 80 percent of the cost
of water, heating, and electricity supplies. The
abolition of utilities subsidies was an IMF requirement
to resume releasing tranches of a $2.2 billion loan,
which was frozen last fall. JM

UKRAINE DISMISSES EU DEMAND TO CLOSE CHORNOBYL. Deputy
Energy Minister Hennadiy Yaroslavtsev has shrugged off a
demand by the European Commission to close the Chornobyl
nuclear power plant as soon as possible, Reuters
reported on 9 March. Energy Commissioner Christos
Papoutsis urged Ukraine to reconsider last week's
decision to restart the only operational reactor at
Chornobyl and to expedite the plant's closure, pointing
to safety considerations. Yaroslavtsev said the
commission's demand is "an attempt to exert political
pressure on Ukraine." The Chornobyl plant "is the safest
of all similar nuclear power plants in the former Soviet
Union," he argued. Ukraine has pledged to shut down
Chornobyl by 2000 in exchange for Western assistance to
complete the construction of another two nuclear
reactors. JM

ESTONIAN INSPECTORATE SAYS NO LEAK IN TELEKOM TENDER.
The Securities Inspectorate has announced it will not
launch an investigation into an alleged leak about the
distribution terms of Eesti Telekom shares during last
month's tender, ETA reported on 9 March 1999. Uhispank
was accused by "several sources" of having leaked
information among its clients about the distribution
terms of Eesti Telekom shares. The inspectorate said it
has investigated all bids ranging from 300,000 kroons to
1 million kroons and found them to have been divided
equally. There is no evidence that Uhispank clients were
given preferential treatment, it concluded. JC

RIGA WANTS RUSSIAN-LATVIAN COMMITTEE TO RESUME FULL
DIALOGUE. Latvian President Guntis Ulmanis told
journalists in Riga on 9 March that Russia continues to
pursue "incorrect diplomacy practices" toward Latvia by
proposing to resume a dialogue with that country only on
socio-humanitarian issues, "Diena" reported on 9
February. The previous day, Riga rejected a proposal to
hold a meeting of experts of the Latvian-Russian
intergovernmental committee's working group on socio-
humanitarian issues in Moscow next week. Instead, it is
proposing that the committee resume all its activities,
not just those focusing on certain issues. Also on 9
March, Latvian Foreign Minister Valdas Adamkus commented
on national radio that the proposal to discuss only
socio-humanitarian issues casts doubt on Russia's
declared wish to resume a dialogue with Latvia. JC

LITHUANIAN PRESIDENT SAYS 'NOTHING CLARIFIED' WITH
PREMIER. Valdas Adamkus told journalists on 9 March that
Prime Minister Gediminas Vagnorius failed to provide
answers to questions that "cause concern" at an
unofficial meeting between the two leaders the previous
day, according to BNS and ELTA. "Almost nothing was
clarified" at that meeting, the president commented,
adding that he quizzed Vagnorius about transparency in
the privatization process, problems in the energy
sector, failure to meet budget revenue targets, and
growing unemployment. Vagnorius responded that Adamkus's
interpretation of the meeting was not only strange and
incomprehensible, but also misleading." JC

POWER BRIDGE GROUP INTRODUCES STRATEGIC INVESTOR AT
ELEVENTH HOUR. Representatives of the U.S. Power Bridge
Group have officially informed Lithuanian Economy
Minister Vincas Babilius that the U.K. company National
Power will be a strategic investor in the project to
link Lithuania's power grid to that of Poland, ELTA
reported on 9 March. The Power Bridge Group won a tender
for that project last year but owing to "financial
difficulties" had failed to launch the project. It was
required to find a strategic investor and to set up an
energy company to carry out the project by 10 March. A
government commission recently asked the Finance
Ministry to determine whether the U.S. consortium is
financially capable of realising the project. JC

POLAND WORRIED ABOUT SITUATION IN BELARUS. Polish
Defense Minister Janusz Onyszkiewicz said on 9 March
that the situation in Belarus raises "serious concerns,"
Reuters reported. He stressed the need to restore
"democratic values" in Belarus, adding that the
Belarusian leadership's policies "do not lead to
conditions which benefit its neighbors." Onyszkiewicz
also accused Belarus of trying to renegotiate the
Conventional Forces in Europe Treaty in order to
increase by 20 percent the deployment ceiling of
Belarusian troops. Marek Siwiec, head of the
presidential National Security Bureau, told Polish Radio
the same day that one of the conditions for limiting
conventional arms in Poland is that Russia and Belarus
do the same. In Siwiec's opinion, Belarus has to make
arms cuts because owing to its relations with Russia,
"transferring a sizable number of troops from one
country to another [takes] a matter of hours." JM

CZECH SENATOR TO LOSE PARLIAMENTARY IMMUNITY? The
Prosecutor-General's Office has asked the Senate to lift
the parliamentary immunity of Vaclav Benda, who
represents the opposition Civic Democratic Party, CTK
reported on 10 March, citing the daily "Pravo." The
office wants to launch legal proceedings against Benda,
the former director of the Office for the Documentation
and Investigation of Communist Crimes, for "unauthorized
handling of personal data" in connection with Benda's
claim that former Vienna Mayor Helmut Zilk had been a
communist-era secret police informer. According to the
daily, he could face a two-year prison sentence. Benda
told "Pravo" that he is convinced he will not lose his
immunity and that he is "not obliged to reveal the
sources of information I received as a Senator." MS

SLOVAK GOVERNMENT REACHES DECISION ON RUSSIAN ANTI-
MISSILE SYSTEM. The government on 9 March reached a
decision on whether to proceed with the agreement,
signed by its predecessor, on receiving a Russian S-300
anti-missile system. However, it will not release
details on that decision before informing the Russian
government, government spokesman Ladislav Lengyel told
CTK. Under the agreement, the system was intended as
part payment for Russia's debt to Slovakia. Sources
close to governmental circles earlier said the
transaction might harm Slovakia's efforts to join NATO.
MS

SLOVAK NATIONALIST LEADER FACES INVESTIGATION. The
Prosecutor-General's office has opened an investigation
into the statements recently made by Slovak National
Party leader Jan Slota on Hungarians and Roma (see
"RFE/RL Newsline," 9 March 1999), CTK reported. If the
parliament agrees to lifting his immunity, he could be
charged with instigating racial and national hatred and
with promoting the suppression of individual rights and
freedoms. In the case of a guilty verdict, he could face
up to eight years in prison. Slota, who is also chairman
of the legislature's committee that monitors the secret
services, told Radio Twist on 9 March that he refuses to
apologize for his statements and is not afraid of losing
his immunity. MS

FORMER HUNGARIAN DEFENSE MINISTER ACCUSED OVER MISSING
FILES. A group of veterans of the 1956 Hungarian
uprising suspects Gyorgy Keleti, former defense minister
in Gyula Horn's cabinet, of involvement in the
disappearance of the files of the former premier,
Hungarian media reported on 9 March. The group claims
that Horn was involved in the shooting of civilians
following the crushing of the Budapest uprising. They
have informed the Military Prosecutor's Office that they
suspect Keleti of having ordered Jozsef Csaradi, head of
the Defense Ministry Archives, to hide Horn's file. The
veterans say Keleti later promoted Csaradi to the rank
of colonel. Keleti dismissed the accusations, saying a
court has already concluded that those files were
removed from the archives before 1994, under a
Democratic Forum government. MSZ

SOUTHEASTERN EUROPE

BEFORE TALKS WITH MILOSEVIC, HOLBROOKE WARNS OF TRAGEDY.
U.S. diplomat Richard Holbrooke, speaking before his
meeting with Yugoslav President Slobodan Milosevic on 10
March, said that Belgrade is on a "collision course"
with the West if it does not agree to the Kosova
autonomy deal, AFP reported. Holbrooke, who was
accompanied to the meeting by U.S. envoy Chris Hill,
said "we are only a few days away from a tragedy of even
greater dimensions," referring to NATO threats to bomb
Yugoslavia if the latter fails to agree to the Kosova
peace plan, which was forged at Rambouillet, France.
Talks are due to resume there on 15 March. Holbrooke
added that the "threat of greater war is ever present."
Holbrooke met with other Western envoys and ambassadors
of the six-country Contact Group before leaving for
Milosevic's presidential palace. PB

WEST STILL BETTING ON KOSOVAR ALBANIAN ACCEPTANCE... EU
envoy Wolfgang Petritsch reassured Holbrooke on 10 March
that Kosova's ethnic Albanians will soon agree to the
peace accord, AP reported. Petritsch said they are
"very, very close to signing..., up to 95 percent is a
done deal and they want to make sure that their last
commander is on board." Albanian Foreign Minister Paskal
Milo said the previous day in Tirana that it is "very
important that the leaders of the Kosova Liberation Army
(UCK) sign the agreement as soon as possible...today or
tomorrow." Milo was speaking after meeting with his
German counterpart, Joschka Fischer, and EU Human Rights
Commissioner Hans van den Broek. Fischer said the ethnic
Albanians committed a "big" mistake by not signing the
accord at Rambouillet. Fischer said it will be
"impossible to put pressure" on Belgrade if the Kosovar
Albanians do not sign the agreement. PB

...ALTHOUGH UCK STILL LEAVES ROOM FOR DOUBT. Jakup
Krasniqi, the UCK spokesman, told the Albanian-language
newspaper "Kosova Sot" that the chances of the UCK
leadership signing the peace agreement are "50-50," AP
reported. He said the details of the agreement are still
being discussed. Krasniqi also said that only the head
of the ethnic Albanian delegation at the Rambouillet
talks, Hashim Thaqi, can sign the accord. Thaqi was last
seen in Albania (see "RFE/RL Newsline," 8 March 1999),
and his current whereabouts are unknown. Serbian
officials have issued an arrest warrant for him. Thaqi
is also the prime minister-designate of the Kosova
interim government. PB

SERBIAN OFFICIALS ISSUE MORE ARREST WARRANTS... Serbian
police have issued arrest warrants for eight UCK
members, including three who are on the Kosovar Albanian
peace negotiating team, AFP reported on 9 March. The
three--Thaqi, Krasniqi, and Ram Buja--are described as
"terrorists" and are said to be "armed and inclined to
use arms," the Serbian Interior Ministry said in a
statement. Six of the eight have already been sentenced
to prison terms of up to 20 years after being tried in
absentia. In other news, the Serbian Prosecutor-
General's Office said on 10 March that no charges will
be filed against police officers involved in an alleged
massacre of 45 Kosovar Albanians at Recak. The office
said the Albanians were killed in combat. PB

...STEP UP FIGHTING ALONG BORDER. Tank-backed Yugoslav
forces continued to battle UCK fighters in both the
north and south of the province on 9 March, according to
AP. Reporters said the village of Ivaja, near the
Macedonian border, was in ruins after sustaining
artillery attacks. Dead animals littered the streets,
houses had been torched, and a mosque destroyed. The 400
or so citizens of the town were rounded up and the men
separated from the women and children. On the morning of
10 March, aid workers said about 35 men are still being
held. Fighting is also reported in Trpeza and near
Vucitrn, north of Prishtina, as well as in several other
villages nearby. Hundreds of people have fled the
fighting. PB

REPUBLIKA SRPSKA PRESIDENT REMAINS DEFIANT. Nikola
Poplasen said on 9 March in Banja Luka that the decision
to sack him was a "senseless and unfounded" move and
that he will remain in office, Reuters reported.
Poplasen said that "not only do I feel like the
president, I act like one." Poplasen was dismissed from
his post last week by Carlos Westendorp, the
international community's high representative (see
"RFE/RL Newsline," 8 March 1999). Westendorp's spokesman
said Poplasen "is finished" and that the "international
community does not recognize him [as president]."
Westendorp has said that Poplasen will be removed from
office by force if necessary. Poplasen also lashed out
at Milorad Dodik, the Bosnian Serb premier, saying he is
working for "the destruction of the Serb Republic." PB

TUDJMAN, ACCUSED WAR CRIMES SUSPECT REPORTED ON THE
MEND. The weekly "Nacional" reported on 9 March that
President Franjo Tudjman was recovering well following
the removal of a cancerous brain tumor, AP reported.
"Nacional" has close ties to the government and said
sources within the ruling party disclosed the
information. Tudjman and his doctors have denied that he
has ever had cancer. Meanwhile, the prison doctor of
Dinko Sakic, who has been accused of war crimes,
reported on 10 March that Sakic is feeling better and
may be able to attend his trial, which was postponed
last week (see "RFE/RL Newsline," 4 March 1999) and
rescheduled for 15 March. PB

SLOVENE FOREIGN MINISTER DENIES STALEMATE IN TALKS WITH
CROATIA. Boris Frlec denied on 9 March that talks with
Croatian officials on border issues have broken down,
Slovene radio reported. Frlec said the talks have been
ongoing for more than two years and that great progress
has been made. He said the sides are working on four
"difficult" issues, the most difficult one being the
status of Piran Bay. PB

ROMANIAN INTERIOR MINISTER SAYS JANUARY CLASHES
CONSITUTE FAILED COUP D'ETAT. Constantin Dudu Ionescu on
9 March said he can "more or less" confirm that the
clashes between the police and striking miners in
January constituted part of a failed coup d'Ètat.
Ionescu said the conclusion was reached by an
investigation carried out by the ministry and was based
on "informative briefs" of the Romanian Intelligence
Service (SRI), RFE/RL's Bucharest bureau reported. The
daily "Evenimentul zilei," citing those "briefs,"
reported on 9 March that the miners aimed at
overthrowing both the government and President Emil
Constantinescu and at replacing them with administration
led by the Greater Romania Party, which was promised the
support of the Chinese Communist Party if the attempt
succeeded. The Chinese Embassy in Bucharest denied the
allegation. The SRI said that the "briefs" were cited
"out of context" and that the daily's report is
"exaggerated in places." MS

VATICAN DENIES PAPAL ITINERARY ESTABLISHED. A spokesman
for the Vatican said the itinerary of Pope John Paul
II's visit to Romania has not been finalized and that a
special papal envoy will travel to Bucharest for this
purpose next week, AFP reported on 9 March. The same
day, the Romanian Catholic Bishops' Conference called on
the Orthodox Church to enable "Catholic clergy and
believers" to "rejoice in seeing the pope all over the
country," Mediafax reported. MS

LUCINSCHI RE-NAMES STURDZA AS PREMIER. President Petru
Lucinschi on 9 March re-named Ion Sturdza as premier-
designate, RFE/RL's Chisinau bureau reported. Sturdza
has 15 days in which to form a government. Lucinschi
urged the parliament to approve the new government by
the end of the week, warning that if the legislature
again fails to vote confidence in the cabinet, he will
have to dissolve the parliament. Lucinschi also noted
that early elections would plunge Moldova into a
situation where it will have "neither a parliament nor a
government" for three months. MS

BULGARIA TO SEEK REVISION OF KOZLODUY AGREEMENT. Deputy
Premier Evgeni Bakardzhiev told journalists on 9 March
that Bulgaria will seek to have its 1993 agreement with
the EU revised. Under that agreement, Sofia was to close
down by 1998 four old reactors at the Kozloduy nuclear
plant. Bulgaria wants the reactors to continue operating
until the end of their operational life: 2005-2006 for
two reactors and 2010 for the other two. Bakardzhiev
said the negotiations must aim at meeting "both the
European requirements and standards, as well as
Bulgaria's national interest," Reuters reported. MS

END NOTE

BOSNIA'S TWO-ENTITY ECONOMY GROWING BUT STILL WEAK

by Michael Wyzan

	The economy of Bosnia-Herzegovina is a unique case
among transition countries, its most striking feature
being its division into the economy of the Croatian and
Muslim-dominated Federation of Bosnia-Herzegovina and
that of the Republika Srpska.
	There has been slow progress on trying to integrate
the economies of the two entities. The Central Bank of
Bosnia-Herzegovina, which functions as a currency board
and is headed by IMF-appointed Peter Nicholl, put the
convertible mark (KM) into circulation on 22 June 1998,
supposedly for use in both entities.
	However, in mid-January, Nicholl observed that
"four currencies [the KM, the Deutsche mark, the
Yugoslav dinar, and the Croatian kuna] are still in use
here. The KM is developing well and is used all over all
the country, but its use is still uneven and we have a
long way to go in Herzegovina and the Republika Srpska
before the KM can be described as the dominant currency
of the whole country."
	The economies of the two entities display different
trends, with the Republika Srpska generally performing
worse. However, the two entities share the feature that
economic growth has slowed from the rapid rates
displayed beginning in 1995, as the immediate
reconstruction tasks have been completed. Industrial
production in the federation rose by 25.6 percent during
January-September 1998, compared with the same period in
1997.
	This figure is less impressive when one takes into
consideration the extent of the country's economic
collapse in the early 1990s and the fact that such
production grew by 341 percent in 1995 and 30 percent in
1997. Industrial production in the Republika Srpska grew
by 26.3 percent during January-September compared with
the same period in 1997, down from 34 percent in all
1997. However, Republika Srpska has not experienced as
rapid an industrial recovery as the federation.
	In 1994, the monetary authorities in both entities
agreed to avoid using central bank credit to finance
budget imbalances. This policy, along with the
successful pegging of the federation's former currency,
the Bosnia-Herzegovina dinar (since replaced by the KM),
to the Deutsche mark and increased imports of consumer
goods financed by foreign credits, have brought
inflation down, especially in the Federation.
	Inflation is running faster in the Republika Srpska
than in the Federation. Retail prices in January-
September 1998 were 5.9 percent higher in the Federation
than on average in 1997, compared with 13.4 percent in
1997 (December-to-December). The equivalent figures for
the Republika Srpska were 26.1 percent for January-
September 1998 and 12.8 for 1997, so inflation is
accelerating there, in keeping with developments in the
Federal Yugoslavia, whose currency is still used heavily
in the Republika Srpska.
	The labor market is more depressed in the Republika
Srpska than in the Federation, where employment has
risen from 244,488 in December 1996 to 289,922 in
September 1998. The numbers "waiting," that is, workers
who are not working but for whom social contributions
are made, have fallen over this period from 94,168 to
71,598. Fully 246,341 individuals were seeking work in
September, although the IMF estimates that the
unemployment rate has fallen from 70-80 percent to 30-40
percent since the end of hostilities. The unemployment
rate is higher in Republika Srpska.
	Net monthly wages are larger in the Federation,
although they are rising faster in the Republika Srpska.
Those wages came to DM 339 ($200) in the Federation in
September 1998, compared with DM 206 a year earlier and
DM 14 in November 1994. The equivalent figures for the
Republika Srpska are DM 180 in September 1998, DM 64 in
September 1997 and DM 49 in November 1994.
	Foreign trade has been highly unbalanced, with
trade and current account deficits financed by
multilateral and bilateral inflows. Inflows have been
large enough that the Central Bank's foreign reserves
have been growing, reaching DM 280 million on 15
January, up from DM 144 million at the end of 1997.
	During January-September 1998, the Federation
exported goods worth just $73 million (up from $63
million in the same period of 1997), while its imports
came to $674 million (down from $1.1 billion). Thus, the
trade deficit last year was likely far smaller than the
$1.2 billion racked up in both 1996 and 1997, but this
is hardly good news, since it results almost entirely
from an import collapse.
	Imports and exports were down by about the same
amount in the Republika Srpska during January-September
1998 compared with a year earlier, yielding deficits of
about $280 million during each period. This suggests
that the entity's international borrowing ability is
constrained to a relatively small fixed amount each
year.
	While economic growth rates may remain impressive
by the usual standards in both entities, genuine
recovery must await economic reintegration between the
two entities and with at least some other parts of the
former Yugoslavia as well.

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