I have learned that success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome while trying to succeed. - Booker T. Washington
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 3, No. 69, Part II, 9 April 1999


________________________________________________________
RFE/RL NEWSLINE Vol 3, No. 69, Part II, 9 April 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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Headlines, Part II

* FORMER BELARUSIAN PREMIER TO BE JAILED FOR THREE
MONTHS

* MACEDONIAN SOLDIER KILLED ON SERBIAN BORDER

* U.S., GERMANY HAVE EVIDENCE OF WAR CRIMES

END NOTE: Macedonian Economy Hammered By Side Effects Of
Kosova Conflict
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

EAST-CENTRAL EUROPE

LUKASHENKA LAUNCHES SOWING CAMPAIGN IN BELARUS.
Belarusian President Alyaksandr Lukashenka held a
televised conference on 8 April devoted to spring
sowing, calling the event a major economic and political
issue of the year. According to Lukashenka, the current
international situation "urgently dictates" that Belarus
must secure food stocks. "If we have bread, we will be
strong...Today almost the entire republic is getting
down to work in the field," he told agricultural
managers. Belapan reported that Lukashenka ordered
Deputy Premier Alyaksandr Papkou to inform every
collective farm--"without paying attention to any
democratic norms or principles"--"how much to sow and
how much to harvest." National Bank Chairman Pyotr
Prakapovich said on 8 April that Belarusian banks will
release 20 trillion Belarusian rubles ($84 million) and
$40 million in credits to finance the sowing campaign.
JM

FORMER BELARUSIAN PREMIER TO BE JAILED FOR THREE MONTHS.
Mikhail Chyhir, former prime minister and a candidate in
the 16 May opposition presidential elections, was
officially charged on 8 April with "grand larceny" and
"abuse of office." According to a court ruling, Chyhir,
who was arrested on 30 March, will stay in jail for
three months. Authorities say Chyhir is suspected of
embezzling $1 million during his tenure at
Belagroprombank, which he headed before Lukashenka
appointed him prime minister in 1994. The opposition
maintains that Chyhir's persecution is politically
motivated. Meanwhile, former National Bank Chairwoman
Tamara Vinnikava, who spent 10 months in a KGB prison
and has been under house arrest since November 1997, has
disappeared, according to official reports. No court
charges against Vinnikava have so far been made. JM

CRIMEAN TATARS PROTEST ALLEGED DISCRIMINATION. Some
3,000 Tatars held a rally in front of the Crimean
Supreme Council building in Simferopol on 8 April to
protest "discrimination" against them. The protesters
demanded a representative quota in Crimea's parliament,
official status for their language, and changes in the
Ukrainian and Crimean Constitutions, which they view as
discriminatory. They burned documents symbolizing
Crimea's Constitution and a 1783 manifesto in which
Catherine the Great declared Crimea to be part of
Russia. Protest actions will continue until 18 May, the
date of the deportation of Tatars from Crimea by the
Stalin regime. Out of the 260,000 Tatars who returned to
Crimea in the past decade, some 100,000 are still unable
to acquire Ukrainian citizenship. JM

PACE CHAIRMAN GETS MIXED RECEPTION IN UKRAINIAN
PARLIAMENT. "It is simply fantastic what you have done,"
Ukrainian Television quoted Lord Russell-Johnston,
chairman of the Parliamentary Assembly of the Council of
Europe (PACE), as saying at a Supreme Council session on
8 April, where he praised Ukraine's efforts to meet its
obligations to the Council of Europe. But when Johnston
criticized the parliament for denouncing NATO strikes in
Yugoslavia without mentioning Serb repression against
Kosova Albanians, left-wing deputies reacted with
indignant shouts, ITAR-TASS reported. When he called the
rule of Yugoslav President Slobodan Milosevic a fascist
regime, leftist deputies left the session hall in
protest. JM

ESTONIAN GOVERNMENT MAY CUT BUDGET EXPENDITURES BY 1
BILLION KROONS. Finance Minister Siim Kallas has said
that the government is considering cutting budget
expenditures by up to 1 billion kroons ($71.4 million),
ETA reported on 8 April, citing "Eesti Paevaleht."
Kallas was unable to say which government institutions
will be targeted, but he noted that the reductions will
be made by cutting operating expenses. The final figure
will become available at the end of this month, when the
Finance Ministry submits a negative supplementary budget
to the government. The volume of this year's budget,
which must be balanced by law, is 18 billion kroons. JC

ALBRIGHT PRAISES KRISTOPANS FOR STANCE ON 16 MARCH. U.S.
Secretary of State Madeleine Albright has sent a letter
to Vilis Kristopans praising the Latvian premier for his
stance on Latvian Soldiers' Day, LETA reported on 8
April. Albright wrote that Kristopans's "condemnation of
Nazism and the ban" on representatives of the government
and armed forces taking part in the 16 March ceremonies
revealed Riga's position on "human rights and civil
society." Albright also expressed satisfaction that the
Latvian parliament is to consider changing the date of
Latvian Soldiers' Day to a more "appropriate" one.
Veterans of the Latvian Waffen SS mark 16 March as the
anniversary of the unit's first battle against Soviet
forces. JC

ADAMKUS APPOINTS NEW ENVIRONMENT MINISTER. Lithuanian
President Valdas Adamkus has signed a decree appointing
Danius Lygis as environment minister, BNS reported on 8
April. Lygis, a member of the ruling Conservative Party,
had served as deputy minister of the environment since
1996. He replaces Algis Caplikas, a member of the Center
Union, who resigned early last month. Also on 8 April,
Finance Minister Algirdas Semeta survived a vote in the
parliament following an interpellation initiated by the
opposition. The vote was 71 to 26 with one abstention.
JC

POLISH PARLIAMENT BACKS GOVERNMENT'S FOREIGN POLICY.
Foreign Minister Bronislaw Geremek presented the key
goals of Poland's foreign policy to the parliament on 8
April. "Poland is safe as never before in this century,"
Geremek said. The main goals of Poland's foreign policy
include integration with the EU and full EU membership
in 2002, more active participation in NATO decision-
making, developing relations with Poland's strategic
partners (U.S., Germany, France), developing a strategic
partnership with Ukraine, and good-neighborly relations
with Russia. All of the parliamentary caucuses approved
Geremek's report. All major parliamentary caucuses,
except for the Peasant Party and a small group of right-
wing Catholic deputies, spoke in support of NATO's air
campaign in Yugoslavia. JM

POLAND'S EXPORTS TO RUSSIA PLUNGED IN 1998. Poland's
exports to Russia plunged by 25.9 percent to $1.6
billion, down by $557 million from 1997, AP reported on
8 April, citing the Main Statistical Office. Most of the
decrease came after the devaluation of the Russian ruble
last August. Economists say that due to the Russian
crisis Poland's economic growth slowed in the last
quarter of 1998 to 2.9 percent, compared to 4.9 percent
in the third quarter. One benefit of the Russian crisis
for Poland was low inflation. In the wake of the crisis
exporters were forced to dump goods on the Polish
market, forcing prices down. In February 1999 the
inflation rate fell to 5.6 percent, compared to 11.3
percent in August 1998. JM

KLAUS CRITICIZES NATO STRIKES AGAIN... Vaclav Klaus, the
chairman of the Chamber of Deputies and leader of the
opposition Civic Democratic Party (ODS), said in an
interview with "Lidove noviny" on 8 April that "the mass
displacement of Albanians from Kosova occurred only
after the NATO strikes." He added that it did not please
him to conclude that his earlier statement that the
strikes "were not the right policy" had been correct,
since "the suffering in Kosova has since increased
manifold." Klaus also said the strikes had not been
prompted by the wish to prevent the mass displacement of
Albanians, but by the "inconsiderate" and harsh
treatment of some representatives of the Kosovars by
Serbian police. He also said the rich countries were
"somewhat hypocritical" in wanting to solve the refugee
problems by sending money, "so that, God forbid, it does
not affect us," CTK reported. MS

...AND MEETS HARSH CRITICISM. In reaction, the Freedom
Union on 9 April called on the Chamber of Deputies to
dismiss Klaus from his position as chairman. In a
statement, the Union said Klaus "severely damaged the
Czech Republic's credibility and prestige within NATO,"
CTK reported. Jan Kasal, acting chairman of the
Christian Democratic Party, said Klaus is adopting the
arguments used by Slobodan Milosevic. In other news, CTK
reported on 8 April that a monument to U.S. soldiers in
Cheb was defaced the night before. The vandals sprayed
the monument with swastikas and phrases denouncing NATO
and the U.S. MS

SLOVAK PARLIAMENT STRIPS LEXA OF IMMUNITY. Ivan Lexa,
former head of the Slovak Counter-Intelligence Service,
was stripped of his parliamentary immunity on 8 April,
CTK reported. This opens the way for the launching of
legal procedures against Lexa on five counts, including
his alleged participation in the abduction of former
President Michal Kovac's son in 1995. Lexa is also
accused of masterminding the fictitious sale of a
triptych as a provocation against the Catholic Church,
of ordering the planting of an explosive device at an
opposition rally, of bugging mobile telephones and of
failure to report the theft of a vehicle. In other news,
Defense Minister Pavol Kanis said on Slovak television
that so far only two NATO bombers have used Slovak air
space but "dozens" of transport and refueling planes
have overflown Slovakia. MS

NATO CONTROLS HALF OF HUNGARY'S AIR SPACE. In line with
the Hungarian parliament's earlier authorization, NATO
has taken control of about half of the country's air
space since 24 March, Hungarian media reported on 8
April. In other news, Foreign Minister Janos Martonyi
said in Luxembourg that Hungary intends to set up an air
corridor between Budapest and Tirana, as well as extend
humanitarian aid for victims of the Kosova conflict.
Istvan Dobo, director of the Office for Refugees and
Migration, said that temporary shelters will soon have
to be opened to cope with the refugee influx. He said
that 387 Yugoslav citizens have sought "protection" in
Hungary since the beginning of NATO operations. MSZ

SOUTHEASTERN EUROPE

MACEDONIAN SOLDIER KILLED ON SERBIAN BORDER. A Defense
Ministry spokesman said in Skopje on 9 April that a
soldier was found dead near a watchtower 100 meters
inside Macedonian territory in the Blace area. The
spokesman added that the soldier was killed by a shot
fired from the Yugoslav side of the border. The
soldier's patrol had challenged an unidentified man to
stop. The man fled into nearby woods, after which the
shot that killed the Macedonian soldier was fired, AP
reported. A NATO spokesman said that the incident took
place the previous afternoon. Reuters added that two
Macedonian soldiers were also wounded in the incident.
The Serbian military machine dwarfs Macedonia's
fledgling army. PM

SHOOTOUT ON SERBIAN-ALBANIAN FRONTIER. A spokesman for
the OSCE said in Tirana on 9 April that a shootout took
place near Tropoja around 6 a.m. local time. He added
that it probably involved Serbian forces and the Kosova
Liberation Army (UCK), which is strong in the area. It
is not clear whether Albanian forces were involved. PM

WHY HAS BELGRADE CLOSED THE BORDER? British Secretary of
State for International Development Clare Short told a
press conference in London on 8 April that Serbian
forces closed the border with Macedonia and Albania,
forcing back into Kosova thousands of refugees who were
waiting to cross (see "RFE/RL Newsline," 8 April 1999).
She added: "We don't know whether [the refugees] are
being driven back to their homes or elsewhere in
[Kosova]...They have all been turned back...We don't
know where they are, and we are very concerned about
them." She spoke of a "worrying change in Serb
tactics...Our message to [Yugoslav President Slobodan]
Milosevic is: 'The forcible movement of people in any
direction is not acceptable.' Milosevic and his henchmen
will be held accountable for war crimes." Short stressed
that "there will be no compromise, no fudge and no
partition." The BBC reported that the Serbian forces may
be planning to use the displaced persons as human
shields around military targets in Serbia to deter NATO
attacks. PM

OR HAS IT? Some 800 Kosovars arrived at the Kumanovo
crossing in Macedonia on 9 April. One refugee told
Reuters that "Serbian police kicked us out [of our
village], burning cars and houses." Serbian forces then
held the refugees for up to four days at the border and
robbed them. PM

ALBANIAN TV: DRENICA IS STARVING. Albanian public
television reported on 8 April that "tens of thousands"
of people in the Drenica area of Kosova have no food or
medicine, Reuters noted. The Albanian broadcast added
that the people of Drenica hope that "the international
community will open a corridor urgently and bring in
food and medicine, because the population is threatened
with starvation." The broadcast said that Serbian forces
in the area are using heavy artillery to keep "tens of
thousands of inhabitants displaced from their homes
under iron-like siege" and that "Serbian military
gangs... have executed...defenseless civilians,
especially the elderly and sick." Serbian snipers
prevent people from moving about freely, the broadcast
added. The contents of the broadcast have not been
independently confirmed. Pope John Paul II recently
called for the establishment of an aid corridor into
Kosova. PM

U.S., GERMANY HAVE EVIDENCE OF WAR CRIMES. State
Department spokesman James Rubin said in Washington on 8
April that "independently we've been able to confirm
that the Serb forces are conducting this type of ethnic
cleansing," pointing to aerial photographs of damage
before and after the entry of Serbian forces into four
towns in Kosova, AFP reported. He added that Washington
is also tracking "credible" reports of summary
executions or "mass killings" in eight towns, including
one in which 200 people may have been killed. In Bonn,
German Defense Minister Rudolf Scharping told a press
conference that "near the town or village of Pastric, a
massacre has taken place in the last 24 hours. Near the
village of Sopi, 35 unarmed civilians were executed." PM

UNHCR FINDS MISSING REFUGEES. A spokeswoman for the
United Nations High Commissioner for Refugees said at
Stankovic, Macedonia, on 9 April that the missing 10,000
Kosovar refugees have been accounted for (see "RFE/RL
Newsline," 8 April 1999). She said that the latest
figures from camps in Macedonia and Albania include the
missing 10,000, Reuters reported. PM

ALBANIA CRITICIZES MACEDONIA. Prime Minister Pandeli
Majko said in Tirana on 8 April that the forced
expulsion of Kosovars from Macedonia is straining
relations between that country and Albania (see "RFE/RL
Newsline," 8 April 1999). Majko told Greek Foreign
Minister Georgios Papandreou and Macedonian Foreign
Minister Aleksandar Dimitrov in Tirana that "Albania is
passing through a difficult time. I am convinced that
Greece is standing closely by us, but I cannot say the
same for Macedonia." Majko stressed that Macedonia has a
duty to provide shelter for the refugees. He added,
however, that "we will welcome them in Albania if you
can't guarantee them accommodations." Opposition leader
Sali Berisha called the expulsions "inhumane."
Elsewhere, President Rexhep Meidani criticized as
"chauvinistic" remarks by Macedonian President Kiro
Gligorov to the effect that the homeland of Albanians is
only Albania. FS

MACEDONIA REJECTS FOREIGN CRITICISM. Many Macedonian
officials and citizens are angry over what they regard
as totally unjustified criticism from NATO countries and
other foreigners, the "Daily Telegraph" reported on 9
April. The Macedonians charge that they were left to
cope with a massive refugee influx without sufficient
help from the countries that are now criticizing. PM

NAUMANN: GROUND TROOPS MAY BE NEEDED. General Klaus
Naumann, who heads NATO's military committee, said in
Bonn on 9 April that there is a "theoretical
possibility" that NATO will send ground troops into
Kosova. He added that "any conflict is ultimately
decided on the ground." Naumann stressed that it will be
"very, very difficult" for the Atlantic alliance to
bring peace to Kosova without sending in troops. In
Rome, "L'Unita" quoted Meidani as saying that NATO
ground troops will be essential to ensure the safe and
secure return of the refugees and displaced persons. FS

GERMANY'S CONTRADICTORY REFUGEE POLICY. As during the
Croatian and Bosnian wars, Germany is preparing to take
in the largest single number of refugees of any country
outside the region, namely 40,000. But the authorities
have announced a policy that may put undue burdens on
the state while preventing recourse to the least
expensive and most humane form of refugee care, the
"Berliner Zeitung" reported on 8 April. The authorities
plan to assign a specific number of refugees to each
state on a pre-determined basis. The Kosovars will live
in camps or other institutional centers. But Kosovars
will not receive entrance visas that would enable them
to stay with relatives in those people's homes. For
political reasons, the authorities want a policy that
shows voters that the refugees are under tight
supervision and unlikely to stay in Germany any longer
than necessary. PM

PAVLE SLAMS ROCK CONCERTS. Serbian state-run media
reported on 8 April that the death toll from NATO air
strikes has reached 300. The report could not be
independently confirmed. That night, hundreds of people
gathered on bridges in Belgrade and elsewhere in an
effort to discourage NATO from bombing them. Public
opinion across Serbia and Montenegro is growing
increasingly angry over the bombings, "Die Presse" and
the BBC reported on 9 April. Two days earlier, Serbian
Orthodox Patriarch Pavle spoke in Belgrade of civilian
deaths and "our present suffering." He also criticized
the recent rock concerts, which the authorities have
organized as a protest against the air strikes. Pavle
warned against "manifestations at which people sing,
dance, and shout sacrilegious and blasphemous words,"
even though this weekend is Orthodox Easter. He added
that "our people can and should defend themselves from
this evil [of the bombings] through prayer and
repentance, just as our holy ancestors defended and
succeeded in defending...our homeland and people," the
non-state Beta news agency reported. PM

CROATIA WARNS OF ECONOMIC LOSSES. The Croatian
government said in a statement on 8 April that it is
concerned that NATO's attacks on Serbian targets will
damage the Croatian economy by discouraging tourists
from visiting the region. The government also noted that
unspecified foreigners have already cancelled contracts
with Croatian shipyards. Tourism and shipping are key
earners of hard-currency for Croatia. The cabinet also
approved a package of aid for Kosovar refugees in
Albania and Macedonia, RFE/RL's South Slavic Service
reported from Zagreb. PM

ROMANIAN RULING PARTY TO SPLIT? Former Premier Victor
Ciorbea on 8 April told members of the leadership of the
National Peasant Party Christian Democratic (PNTCD) that
he will join a new splinter Christian Democratic
political formation headed by Senator Matei Boila and
his brother Ioan, who is a member of the PNTCD Standing
Committee, Mediafax reported. The new party is likely to
be set up later this month. The Boila brothers called in
March for the PNTCD to leave the government in order to
be able to remain faithful to its "historic values."
Senator Serban Sandulescu and Standing Committee member
Liviu Petrina are likely to join the new party. PNTCD
spokesman Remus Opris said the party has advanced
Ciorbea to a leadership position and his intentions to
leave it are "incorrect." MS

ROMANIAN GOVERNMENT APPROVES FURTHER AGRICULTURAL
PRIVATIZATION. The government on 8 April approved a
draft law providing for the privatization of land owned
by the state, by local administration and other public
organizations, RFE/RL's Bucharest bureau reported.
Agriculture Minister Ioan Muresan said the law would
also make it possible to determine by 2000 which
agricultural properties confiscated by the communists
can be returned to former owners. The government also
approved raising the minimum monthly wage from 350,000
to 450,000 lei ($30). MS

ROMANIA'S HUNGARIANS CALL ON POPE TO VISIT TRANSYLVANIA.
Bela Marko, chairman of the Hungarian Democratic
Federation of Romania (UDMR), told journalists on 8
April that the UDMR "would like Pope John Paul II to
include Transylvania in his visit" scheduled for 7-9
May, Mediafax reported. Most of Romania's Roman
Catholics, a large part of whom are ethnic Hungarians,
live in Transylvania, but the Romanian Orthodox Church
is reported to have opposed a visit by the pontiff to
the region. Hungarian Premier Viktor Orban, in a letter
sent to the Vatican in mid-March, also called on the
pope to include Transylvania in his visit, MTI reported
on 6 April. MS

MOLDOVAN ELECTORAL COMMISSION OUTLAWS REFERENDUM. The
Central Electoral Commission on 8 April said a
referendum scheduled for 25 April, which was enforced by
the Tiraspol authorities on the local administration of
Varnita village, was "illegal and contravenes the law on
local administration referenda." The village is in the
vicinity of Bendery/Tighina, a town controlled by the
separatists. The town is a Transdniestrian outpost on
the Chisinau-ruled right bank of the Dniester River.
Varnita is part of Chisinau county and the
Bendery/Tighina town soviet wants to move it under its
own jurisdiction. The town soviet threatens to cut
Varnita off from electricity and gas supplies unless the
villagers vote in favor of the change, RFE/RL's Chisinau
bureau reported. The Chisinau authorities view the
referendum as an attempt by Tiraspol at territorial
expansion. MS

BULGARIA IMPOSES ENTRY RESTRICTIONS ON YUGOSLAV
CITIZENS... Interior Minister Bogomil Bonev on 8 April
announced that Bulgaria has imposed entry restrictions
on Yugoslav citizens in response to similar measures
imposed by Belgrade on the entry of Bulgarians, BTA
reported. The restrictions do not apply to members of
the Bulgarian minority in Yugoslavia. Bonev said
Yugoslavs applying for political asylum will be granted
that status. Kosovar Albanians will be allowed to enter
Bulgaria only in transit to Turkey and will be escorted
to the border, he said, but those Kosovars who entered
Bulgarian territory illegally can get refugee status if
they apply for it. "Unlike other countries, we do not
pay lip service" to the Kosovar refugee problems while
"deploying troops at borders to prevent their entry," he
said. MS

...AND OFFERS MACEDONIA A FIELD HOSPITAL. Foreign
Minister Nadezhda Mihailova on 8 April told journalists
that Bulgaria is prepared to set up a military field
hospital in neighboring Macedonia to serve Kosovar
refugees, BTA and Reuters reported. She also said Sofia
was ready to "provide two airplanes to transport
seriously ill refugees for treatment in Bulgarian
hospitals," but will send them back when they recover.
Also on 8 April, the parliament approved Bulgaria's
military doctrine, which is focused on the country's
determination to gain admission to NATO, AP reported.
The government allocated 41.4 billion leva ($23 million)
for accession preparations. The document will be
presented at NATO's summit later this month. The
opposition Socialist Party voted against. MS

END NOTE

Macedonian Economy Hammered By Side Effects Of Kosova
Conflict

By Michael Wyzan

	Concern about the impact of the conflict in Kosova
on Macedonia has centered on the acute problems
surrounding the country's enormous refugee burden. Less
attention has been devoted--at least outside Macedonia--
to the conflict's economic effects on the country, which
give every indication of being prolonged and
catastrophic.
	Before the NATO bombing campaign and Kosovar
refugee influx began on 24 March, Macedonia was looking
forward to a good year on the economic front. GDP was
projected to grow by 5 percent in 1999, up from last
year's respectable 4 percent, the first solidly
positively growth figure since independence.
	Foreign direct investment (FDI) was finally picking
up, reaching $118 million in 1999, after being
negligible in previous years. The government has been
hoping for a substantial inflow of FDI from Taiwan (the
figure of $200 million over four years was frequently
mentioned), with which Macedonia established diplomatic
relations in 27 January. The upturn was sorely needed in
an economy with Europe's highest unemployment rate.
	Unfortunately, any prospects for economic growth
this year and possibly for the next several years have
now been snuffed out. The most obvious problem is the
cost of handling a refugee influx that is already on the
order of 200,000 people, an enormous burden for a
country with 2 million people and a GDP per capita of at
most $1,700 (similar to Bulgaria and Romania).
	However, international assistance and the fact that
in the end relatively few of the refugees may stay in
Macedonia will perhaps keep the costs borne by Skopje
from being catastrophic.
	The bulk of the costs will come from broken trade
ties with Yugoslavia, severed transport links with EU
trading partners, and the perception on the part of
those and other partners that the risks of doing
business in Macedonia have become unacceptably high.
Already on 1 April, Foreign Minister Aleksandar Dimitrov
announced that the economy had endured losses of over
$100 million (annual GDP is about $3.5 billion).
	Federal Yugoslavia has remained a major trading
partner of Macedonia's, accounting for 5 percent of its
exports (in fifth place) and 11 percent of its imports
(in second place) in the first half of 1998. Trade
turnover between the countries, last year worth about
$500 million, is expected to be less than one-third of
that this year.
	Individual Macedonian firms, especially the large
metallurgical and chemical producers inherited from
Yugoslav times, are much more dependent on Federal
Yugoslavia than these figures apply. For them, that
country accounts for as much of 70 percent of export
markets and a similar percentage of raw materials. Much
of that trade consists of barter-like "compensation
deals" that allow Macedonian firms to unload goods not
salable on other markets. In other cases, Federal
Yugoslavia is the only source of a given raw material.
	Moreover, despite having access to the Greek port
of Thessaloniki in recent years, 90 percent of exports
and imports with the EU go by land through Serbia;
rerouting such trade will cost $20 million this year.
	Perhaps most damaging of all, EU and other Western
trading partners and banks are backing out of agreements
with Macedonian firms due to increased risk. In such
sectors as textiles and leather goods, enterprises have
engaged in "outward processing trade," whereby they
import raw materials, process them, and then re-export
the finished products. Since the crisis began, in the
leather industry alone, Western partners have backed out
of 20 such contracts, worth over $20 million. Banks have
removed guarantees from foreign companies on joint
investments with Macedonian companies.
	The severity of these effects has been noticed by
the international community. On 6 April, it was
announced that the World Bank would provide a $40
million credit under favorable conditions. The World
Bank and the IMF will organize an international donors'
conference aiming to raise $50-100 million. According to
the government, the bank is also recommending that
Macedonia ask the Paris Club of sovereign creditors to
write off $170 million in debt to that grouping.
	Whatever assistance is forthcoming, the tiny
Macedonian economy, still so dependent on trade with and
through Federal Yugoslavia, is in for a terrible time.
Its vulnerability to developments in that country can be
substantially reduced only by a complete economic
restructuring. However, such can occur only via FDI
which creates new productive capacity oriented toward
exports of high-value products to European markets, and
recent events will scare off such investment.
	In the end, as long as Slobodan Milosevic rules in
Belgrade, the Balkans will remain unstable, and
sustained economic development in Macedonia and other
small countries in the region will remain elusive.

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

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FREE-LANCE AND OCCASIONAL CONTRIBUTORS
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Jolyon Naegele, Fabian Schmidt, Matyas Szabo, Anthony
Wesolowsky

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Natasha Bulashova, Greg Cole
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Updated: 1998-11-

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