RFE/RL NEWSLINE Vol 3, No. 93, Part II, 13 May 1999

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RFE/RL NEWSLINE Vol 3, No. 93, Part II, 13 May 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

* CZECH CABINET VOTES TO COMPLETE TEMELIN

* VOJVODINA ISSUE DOMINATES HUNGARIAN POLITICS

* SOLANA REASSURES REFUGEES THEY WILL RETURN TO KOSOVA

End Note: ESTONIA'S BUDGET CRISIS CASTS SHADOW OVER
ECONOMIC PERFORMANCE
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EAST-CENTRAL EUROPE

QUESTIONS RAISED ABOUT BELARUSIAN PRESIDENTIAL POLL
RESULTS. According to Belarus's Central Electoral
Commission, as of 11 May nearly 32 percent of the total
electorate took part in the early voting for the
opposition presidential elections. The Belarusian
Popular Front (BNF), whose leader, Zyanon Paznyak, is
running in the elections, says that figure is
"significantly exaggerated," RFE/RL's Belarusian Service
reported on 12 May. BNF Deputy Chairman Syarhey Papkou
said the central and regional electoral commissions are
falsifying turnout data. He also said that regional
commission members are being forced by the central
commission to sign blank election protocols. Papkou,
however, did not give any concrete examples to support
his claim. JM

BELARUSIAN OFFICIALS SEE PRIMAKOV'S OUSTER AS BAD FOR
INTEGRATION. Ivan Pashkevich, deputy chief of the
presidential staff, told Interfax on 12 May that the
dismissal of Russian Premier Yevgenii Primakov may have
a "negative impact" on the implementation of economic
projects within the framework of the Russian-Belarusian
union, "especially at the lower executive level." An
unidentified Belarusian senior government official told
the agency that the appointment of Sergei Stepashin as
acting prime minister will not change the "strategic
idea" of creating a Russian-Belarusian union state. But
he added that the ouster of Primakov may "tell
negatively" on the preparation of union documents and
the implementation of joint programs. JM

KUCHMA SIGNS LAW ON PEACEKEEPING OPERATIONS... President
Leonid Kuchma has signed a law on Ukraine's
participation in peacekeeping operations, which was
passed by the parliament last month, Interfax reported
on 12 May. The law allows Ukrainian troops to
participate in international actions sanctioned by the
UN Security Council, the OSCE, and other regional bodies
responsible for maintaining peace and security. Under
the law, the decision to sent Ukrainian troops abroad
must be taken by the president and subsequently approved
by an appropriate parliamentary bill. The participation
of Ukrainian citizens in any peacekeeping contingent
will be voluntary. JM

...SAYS PRIMAKOV'S DISMISSAL WILL INCREASE TENSIONS IN
RUSSIA. Kuchma said in Rivne on 12 May that the
dismissal of Russian Premier Primakov will intensify
tensions in Russia, Interfax reported. He added that
without Primakov in the government, Russia is likely to
sustain more economic damage. In Kuchma's opinion,
Primakov's dismissal may be used by conflicting
political forces in Russia to play "political games. If
these political games continue, there will be no
winners." JM

IMF ADVISES UKRAINE TO SEEK FOREIGN DEBT RESTRUCTURING.
The IMF representative in Ukraine said on 12 May that,
given Ukraine's low hard-currency reserves, the country
should try to persuade foreign creditors to postpone
some debt repayments. The IMF official added that
Ukraine should seek from lenders only voluntary debt-
restructuring schemes. According to Ukrainian Finance
Ministry data, Ukraine has to pay foreign creditors some
$1.9 billion in 1999 and $2.4 billion next year. The
Ukrainian National Bank's reserves totaled $896 million
at the end of April. JM

CEPA HEAD PRAISES ESTONIA'S LANGUAGE POLICY. Lord
Russell-Johnston, the president of the Council of
Europe's Parliamentary Assembly, told students at
Tallinn's Concordia University on 12 May that during a
visit the previous day to a mostly ethnic Russian-
populated region of Estonia's northeast, he had heard
"no complaints" about discrimination against Russian-
speakers, Baltic news agencies reported. "I'm not an
expert in this field, but Estonian is the official
language in Estonia and I don't see any reason why
people here shouldn't be able to speak it," he
commented, adding that "in some places in Ida-Virumaa
(County), ethnic Estonians make up about 30 percent of
the population, and it would be rather difficult for
them to discriminate against the remaining 70 percent."
The CEPA head also called on the Estonian government to
focus on combating unemployment in the northeast,
according to an RFE/RL correspondent in Tallinn. JC

LATVIA'S NEW PARTY PONDERS OWN FATE... Following a
meeting with Prime Minister Vilis Kristopans on 12 May,
leaders of the New Party said their formation will
remain in the ruling coalition for at least one week to
ponder what action to take following the dismissal of
its economy minister, Ainars Slesers (see "RFE/RL
Newsline," 11 May 1999). The party, which is the junior
partner of the three-member coalition, will make its
decision one day before the parliament is expected to
hold a confidence vote in the government. Meanwhile, the
parliamentary confirmation of four new state ministers,
scheduled for 13 May, has been postponed until next week
at the request of the New Party. JC

...WHILE KRISTOPANS ASSUMES NEW DUTIES. Also on 12 May,
the Latvian Privatization Agency was informed that until
further notice, Premier Kristopans will hold the new
office of minister responsible for privatization and
will also be "state proxy" to the agency, LETA reported.
The latter post had been held by ousted Economy Minister
Slesers. Meanwhile, Ventspils Mayor Aivars Lembergs has
denied allegations that he has "enormous influence" over
the Latvian government, saying that his cooperation with
Kristopans is "just the same" as with previous premiers.
Slesers has claimed that Lembergs is the "real" head of
the current government (see "RFE/RL Newsline," 11 May
1999). JC

VILNIUS MAYOR ACCEPTS POST OF PREMIER--CONDITIONALLY.
Rolandas Paksas, a member of the ruling Conservatives,
has accepted the post of prime minister but reserves the
right to refuse that position if consultations with
parliamentary parties over the formation of a new
cabinet prove difficult. Paksas informed journalists of
his decision after a meeting with President Valdas
Adamkus and Conservative Party chairman and
parliamentary speaker Vytautas Landsbergis. He said that
he believes the next premier should continue the
policies of Gediminas Vagnorius, who resigned from that
post last week in a dispute with the president.
Landsbergis said he "fully backs" Paksas as a candidate
for the premiership, while a group of some 20
parliamentary deputies from the Conservative Party who
support ousted Premier Vagnorius pledged not to obstruct
Paksas's nomination. JC

POLISH COALITION REDUCES CORPORATE TAX. Following a
lengthy discussion on taxation, the coalition of the
Solidarity Electoral Action and Freedom Union (UW) on 12
May announced it will reduce corporate income tax by 6
percent, to 28 percent in 2000. UW Secretary-General
Miroslaw Czech told journalists that as of 2000,
corporate tax will be lowered by two percent every two
years until it reaches 22 percent. The coalition also
resolved to introduce a two-tier personal income tax
system instead of the current three-tier one. JM

POLISH OFFICIAL CRITICIZES LITHUANIA FOR 'EGOTISTIC'
DECISION. Marek Siwiec, chief of the presidential
National Security Bureau, on 12 May termed the decision
to incorporate communes mainly inhabited by ethnic Poles
into the greater Vilnius area as "incomprehensible and
egotistic," PAP reported. The cabinet of Lithuanian
former Premier Vagnorius took that decision last week.
As a result, the inhabitants of those communes will be
subordinated to the Vilnius local government dominated
by Lithuanians. ELTA reported that Polish President
Aleksander Kwasniewski on 11 May called his Lithuanian
counterpart, Adamkus, to warn that the step may harm
bilateral relations. JM

CZECH CABINET VOTES TO COMPLETE TEMELIN... The Czech
cabinet has decided to complete the construction of the
Temelin nuclear power plant, Czech media reported on 13
May. Eleven out of 19 ministers supported the decision
at a five-hour cabinet meeting. The cabinet does not
expect the cost of completing the plant to exceed 98.6
billion crowns ($2.8 billion). Prime Minister Milos
Zeman said the first block of the plant should be
finished by September 2000 and the second by December
2001. The cabinet also announced that plans for the
privatization of CEZ, Temelin's chief investor, will be
drawn up by September. Austrian Chancellor Viktor Klima
phoned Zeman shortly before the cabinet meeting in a
last-ditch attempt to prevent Temelin's completion, CTK
reported on 13 May. After the decision, Austrian
government officials said they will continue to fight
against the completion of Temelin. VG

...WHILE HAVEL'S INTERVENTION SPARKS DEBATE. A few hours
before the Czech cabinet started to debate the Temelin
issue, President Vaclav Havel made known his opposition
to the construction of the plant, Czech media reported.
Havel reminded Prime Minister Milos Zeman's government
that it had called for a referendum on the plant when it
was in opposition. He also said he does not trust the
CEZ company to fulfill its obligations with regard to
Temelin. "We didn't fight against the communist
government, only to have it replaced by some sort of
strange, more hidden, less noticeable dictatorship of
one single company," he commented. Zeman rejected
Havel's criticism and said the president had several
opportunities to criticize Temelin over the past decade.
House of Deputies chairman Vaclav Klaus said the
president overstepped the bounds of his presidential
authority. VG

KOVAC FAVORS SCHUSTER IN SLOVAK ELECTION. Former Slovak
president Michal Kovac said he dropped out of the 15 May
presidential elections in favor of former Kosice Mayor
Rudolf Schuster's candidacy, TASR reported on 12 May,
citing TV Markiza. Kovac, who had garnered between 5
percent and 7 percent backing in recent polls, asked his
supporters to vote for Schuster in order to prevent
former Prime Minister Vladimir Meciar from winning the
election. The Movement for a Democratic Slovakia (HZDS),
which backs Meciar, accused Slovak Television of casting
doubt on the credibility of the entire election campaign
by allowing Kovac to criticize its candidate during a
televised debate (see "RFE/RL Newsline," 12 May 1999).
The HZDS has filed official complaints with the Slovak
Council for Radio and Television Broadcasting and the
Central Electoral Commission. Meanwhile, Finance
Minister Brigita Schmognerova called on Magda Vasaryova,
who is running third in the polls, to drop out of the
race in favor of Schuster. VG

VOJVODINA ISSUE DOMINATES HUNGARIAN POLITICS. Hungarian
Foreign Minister Janos Martonyi and representatives of
all six parliamentary parties agreed on 12 May that
autonomy for Vojvodina should not be linked to the
resolution of the Kosova crisis, Hungarian media
reported. Martonyi said the government is preparing a
comprehensive concept on the issue. Independent
Smallholder deputy chairman Zsolt Lanyi said cabinet
members share his view on Vojvodina's independence but
"do not dare to say so." He said no cabinet member has
reproached him for his earlier statements (see "RFE/RL
Newsline," 11 May 1999). Laszlo Jozsa, deputy chairman
of the Federation of Vojvodina Hungarians, said the
possible transformation of the province into an
independent state has no basis in reality. Prime
Minister Viktor Orban on 11 May told Hungarian Radio
that Budapest will help Vojvodina's ethnic Hungarian
minority regain autonomy as the international situation
changes. MSZ

SOUTHEASTERN EUROPE

SOLANA REASSURES REFUGEES THEY WILL RETURN TO KOSOVA...
NATO Secretary-General Javier Solana told refugees in
Elbasan, Albania, and Cegrane, Macedonia, on 12 May that
NATO is determined to make sure that everybody will be
able to return to their homes. He stressed that NATO
must continue its air campaign against Yugoslavia until
it reaches its objectives, an RFE/RL correspondent
reported from Tirana. Solana said that newly arrived
NATO troops have begun setting up more refugee camps in
Albania. He reassured President Rexhep Meidani in Tirana
that NATO will protect Albania in the event of Yugoslav
aggression, adding that U.S. Apache helicopters will be
deployed "very soon." Meidani told Solana that the
Albanian authorities are ready to fulfill any request of
NATO to help its mission. Solana also said "I am sure
that whatever the final result of the change of
government in Russia is, the diplomatic process will
continue," Reuters reported. FS

...WHILE NATO CONTINUES AIR CAMPAIGN. NATO planes on 12
and 13 May attacked military airports in Prishtina and
Belgrade and destroyed five aircraft on the ground. It
also attacked military positions in Prishtina, Prizren,
Gjakova, Decani, and Ferizaj, AP reported. Inside
Serbia, NATO hit targets in Milosevic's hometown of
Pozarevac, Sabac, Pancevo, and elsewhere. Serbian Radio
reported strikes against Serbian Television headquarters
and a transmitter station near Novi Sad. Beta said a
tobacco factory was hit in Nis. Yugoslav President
Slobodan Milosevic in a message carried by Tanjug on 12
May admitted heavy losses. Without giving figures, he
said that "during this struggle, many members of the
police and security forces died courageously." He said
that "their sacrifice is a shining example of bravery
and devotion to one's people and fatherland." And he
commented that the members of those forces "suppressed
the enemy and disabled it from undermining the power of
our defense." FS

ALBANIAN MAYORS URGE MORE ASSISTANCE FOR BORDER
VILLAGES. Mayors from Albanian villages along the border
with Yugoslavia, meeting in Tirana on 12 May, issued a
statement saying that the situation in the border area
is critical. The officials said they did not receive
sufficient government support to cope with the problems
created by the influx of refugees and continued shelling
by Serbian forces. In some villages, dozens of buildings
have been destroyed by Serbian troops who briefly
entered Albania or shelled the villages from across the
border. UNHCR officials in Tirana, meanwhile, have
expressed concern about food supplies for refugees in
the northern Albanian areas. Elsewhere, several Serbian
artillery shells exploded near Bajram Curri. FS

RUGOVA TAKES UP RESIDENCE IN GERMANY. Rugova, along with
16 of his relatives and advisers, took up residence near
Bonn on 12 May, Reuters reported. Rugova, after meeting
with German Foreign Minister Joschka Fischer, said that
"the most important thing is to help those [Kosovars]
who have been driven from their land to return." A
spokesman said that the German minister stressed during
the talks that Kosovar politicians should try to better
coordinate their activities and stop arguing among
themselves. The spokesman added that Rugova plans to
hold talks with the foreign ministers of Britain and
France at a meeting of the 15 EU foreign ministers in
Brussels on 17 May. FS

DONORS SAY BOSNIAN CROATS SABOTAGE RECOVERY. The office
of the international community's Carlos Westendorp has
charged the Bosnian Croat leadership with obstructing
Bosnia's economic recovery, AP reported on 12 May. A
statement released at the end of an international
donors' conference in Sarajevo said "the forum was
sabotaged by Deputy Prime Minister Dragan Covic, who
chose...to raise a number of blatantly immaterial
objections." It had been expected that the Bosnian
Muslim, Croatian, and Serbian leaderships would agree on
measures aimed at building a unified country that would
qualify the federation to receive the last $1 billion
installment out of a $5.1 billion foreign aid package.
The statement stressed that "it appears that...the old
spirit of distrust and refusal to compromise is alive
and well among some Bosnian Croat leaders." The donors
said the government of the Republika Srpska must approve
the budget and fulfill several other conditions in order
to qualify for international assistance. FS

OSCE AMBASSADOR CALLS INVESTMENTS IN BOSNIA 'CRAZY.'
Robert Barry told Reuters in Sarajevo on 12 May that
"you've got to be crazy to invest in this country where
it is a given that if you obey the laws you're gonna
lose money." He accused Bosnia's ruling nationalist
parties of not being interested in economic reform and
warned of an economic tailspin. Barry added that "if the
reform doesn't come...if I were a donor, I wouldn't be
putting money down a rat hole.... Unless there is
economic reform no jobs will be created and after the
international community goes the economy will fall back
to where it was in 1995." FS

CROATIAN COURT TO RULE ON ABDIC EXTRADITION. An official
from the Croatian Justice Ministry said on 12 May that a
county court in Rijeka will have to rule on the possible
extradition of former Bosnian Muslim warlord Fikret
Abdic, Reuters reported. Interpol has issued an arrest
warrant against Abdic, whom the Bosnian government has
charged as a war criminal (see "RFE/RL Newsline," 12 May
1999). The official said that "Croatia has made
commitments to investigate and prosecute war criminals,
but not in terms of extradition, especially not for its
own citizens." Abdic received Croatian citizenship in
1995. FS

ROMANIA FOLLOWS EU LEAD ON YUGOSLAV SANCTIONS. The
Romanian government has frozen Yugoslav assets on its
territory and imposed a travel ban on Yugoslav President
Slobodan Milosevic, his family, and other Belgrade
officials, AP reported on 12 May. The steps were taken
in line with the EU's sanctions against Yugoslavia.
Meanwhile, the Romanian parliament approved NATO-led
maneuvers on Romanian territory this winter. Some 150
NATO personnel and 100 Romanians will be trained in
peacekeeping and humanitarian missions. VG

MOLDOVAN PRESIDENT RESHUFFLES CABINET. Petru Lucinschi
has replaced Tudor Botnaru with Valeriu Pasat as
national security minister Infotag reported on 12 May.
The president noted that Botnaru had requested to be
relieved of his duties. Pasat, who until now was defense
minister, will be replaced by Colonel Boris Gamurari.
Vasile Nedelciuc of the Party of Democratic Forces
speculated that the president made the changes in order
to have a "handful of more loyal ministers" at his
disposal in the event of a "possible confrontation" with
the parliament, BASA-press reported on 12 May. Vladimir
Reus of the Democratic Convention said he doesn't
understand why the president needs to organize a non-
binding referendum on expanding presidential powers when
he already has enough power to "sack and name
ministers." VG

TRANSDNIESTER LEADER AWARDED SOVIET MEDAL. Igor Smirnov,
the leader of the breakaway region of Transdniester, has
received the Star of the Soviet Union, the former USSR's
highest award, BASA-press reported on 12 May. Smirnov
received the award from former Soviet deputy Saji
Umalatova, who describes herself as a follower of Josef
Stalin. Umalatova also awarded the Transdniester
security and defense ministers the Stalin Order. In
other news, Moldova on 11 May announced that it will
pull out of the CIS Aviation Conference, Interfax
reported. Moldovan Civil Aviation Administration head
Victor Copa said the CIS standards are substantially
different from those of the European Civil Aviation
Conference, of which Moldova is also a member. VG

BULGARIAN PRESIDENT CALLS FOR BALKAN SECURITY BELT.
Bulgarian President Petar Stoyanov on 12 May said
Yugoslavia should be surrounded by a "security belt" of
democratic countries with parallel economic development,
according to a BTA report cited by the BBC. As part of
this strategy, Stoyanov said the countries surrounding
Yugoslavia should be relieved of their external debts in
proportion to the losses their economies suffered as a
result of the Kosova conflict. He also said EU accession
talks should be started with Bulgaria and Romania.
Meanwhile, the opposition Bulgarian Socialist Party
called on the parliament to reject any NATO requests for
permission to use Bulgarian territory for ground
operations against Yugoslavia. The Euro-Left has called
for the removal of parliamentary chairman Yordan Sokolov
in response to his comparisons of the Euro-Left with
Yugoslav President Slobodan Milosevic. VG

END NOTE

ESTONIA'S BUDGET CRISIS CASTS SHADOW OVER ECONOMIC
PERFORMANCE

by Michael Wyzan

	Estonia, which has long had one of the best
performing transition economies, has
uncharacteristically made news recently because of a
budget crisis. The government on 4 May approved a
"negative supplementary budget," under which
expenditures this year would be cut by 1.03 billion
kroons ($71 million). The document foresees reductions
in government investment and subsidies to the private
sector. The IMF promptly warned that cuts of at least
twice that level are required.
	The emergence of these fiscal problems contrasts
with the good news about economic policy and performance
that typically emanates from Tallinn. Estonia has
weathered the Russian financial crisis far better than
the other two Baltic States. It has also succeeded in
cooling off the economy, which overheated in 1997, and
reorienting its exports to EU markets.
	The budget problems result, to a certain extent,
from a slowdown in economic growth, as value-added and
excise tax receipts have been disappointing. GDP growth
slowed from 11.4 percent in 1997 to about 4 percent last
year. Although the 1999 budget was based on a growth
forecast of 5.5 percent, the IMF now predicts that the
economy will grow by 2.5 percent this year. Sales of
industrial production rose by 0.8 percent in 1998 and
fell by 11.4 percent in January-March 1999, compared
with the same period in 1998.
	Nonetheless, the most obvious fiscal problems are
occurring on the expenditure side. While total
consolidated budget revenues at the end of February were
3.238 billion kroons, up by 26.4 percent (in nominal
terms) over the same period in 1997, expenditures were
4.063 billion, an increase of 58.2 percent. Indeed, the
share of government expenditures in GDP is projected to
rise to 42 percent of GDP this year (even after the
budget cuts) from about 36 percent in 1996.
	Increased spending is related to promises made in
1998 by a centrist coalition government (which was
replaced by a right-wing coalition after the elections
of March 1999) that included a party representing rural
interests. In the wake of the Russian crisis--which hit
the agricultural and food sectors hard--and of weather-
related poor harvests, promises were made to increase
agricultural subsidies and raise agricultural
procurement prices. In the end, farmers received 227
million kroons in subsidies. There have also been
problems with controlling extra-budgetary spending in
such areas as pensions.
	Nonetheless, the situation is not as alarming as it
appears. The sale of stakes in Eesti Telekom to Telia of
Sweden and Sonora of Finland will bring more than $300
million to the budget this year.
	More broadly, many economic indicators show that
the economy continues to perform well, if somewhat worse
than before the outbreak of the Russian crisis. The
slowing of GDP growth last year was helpful in reducing
the current account deficit from a high 12 percent of
GDP in 1997. The deficit was down to a less worrying 8.6
percent last year.
	Especially encouraging is the fact that exports
grew from $2.2 billion in 1997 to $3.2 billion in 1998,
at a time when Latvian and Lithuanian exports fell.
Estonia has been successful in reorienting its exports
toward the EU. In 1998, the EU bought 55 percent of
Estonian exports, compared with 48 percent in 1993.
Finland and Sweden together took 36 percent of Estonia's
exports last year.
	The importance of Russia as a trading partner has
declined, with exports and imports falling from 23
percent and 17 percent of the respective totals in 1993
to 13 percent and 11 percent in 1998. By January 1999,
that country accounted for only 8.7 percent of Estonian
exports.
	Estonia's strong export performance is especially
impressive in the light of the rapid growth of wages, as
expressed in dollars or constant kroons. The gross
monthly wage reached $363 in December (compared with
$321 a year earlier), higher than in all other
transition countries except Croatia, the Czech Republic,
Hungary, Poland, and Slovenia.
	Real wages in kroons grew by about 4 percent last
year, an increase that was approximately matched by
labor productivity. This contrasts with Latvia and
Lithuania, where real wage growth far outstripped
productivity in 1998. The coexistence of healthy export
growth and rising real wages suggests that significant
restructuring is occurring at the enterprise level.
	Estonia's budget problems do not suggest that the
country is no longer a stellar economic performer. They
do imply, however, that the era of exemplary policy-
making, as reflected in balanced budgets, has been
replaced by a political process more similar to those of
other transition countries. Reports last week that the
government is working on a bill that would for the first
time since independence impose import tariffs is another
indicator of this trend.

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

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