О достоинствах человека нужно судить не по его хорошим качествам, а по тому, как он ими пользуется. - Ф. Ларошфуко
RFE/RL NEWSLINE

RFE/RL NEWSLINE Vol 3, No. 109, Part II, 4 June 1999


________________________________________________________
RFE/RL NEWSLINE Vol 3, No. 109, Part II, 4 June 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

* EYE-WITNESSES SAY OFFICIAL DEATH TOLL IN MINSK
STAMPEDE INCORRECT

* BELGRADE ACCEPTS PEACE PLAN

* MIXED REACTIONS IN SERBIA

End Note: BULGARIAN CRISIS OFFERS LESSONS FOR ROMANIAN
BANKS
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

EAST-CENTRAL EUROPE

EYE-WITNESSES SAY OFFICIAL DEATH TOLL IN MINSK STAMPEDE
INCORRECT. RFE/RL's Belarusian Service reported on 3
June that the official number of people killed in the
metro stampede in Minsk on 30 May is "at significant
variance" with eye-witness reports. According to the
authorities, 52 people died in that incident. A women
told RFE/RL that she did not find the names of her two
killed friends on the official list of those who died.
She also claimed to have seen a dead 10-year-old boy in
the metro passageway who was not included on the
official list. Meanwhile, Minsk Mayor Uladzimir
Yarmoshyn has tendered his resignation, claiming a
"moral burden" of responsibility for the tragic
stampede. Belarusian President Alyaksandr Lukashenka has
refused to accept his resignation, saying that society
as a whole might be responsible. JM

BELARUS SAYS 1999 CRUCIAL YEAR FOR TIES WITH TAJIKISTAN.
Belarusian Prime Minister Syarhey Linh told his Tajik
counterpart, Yakhye Azimov, in Minsk on 3 June that 1999
is likely to be a decisive year for bilateral relations,
Interfax reported. Linh pointed to political
stabilization in Tajikistan and its entry into the
customs union with Belarus, Russia, Kazakhstan, and
Kyrgyzstan. Last year, Belarus-Tajik trade turnover grew
by $4.3 million to $11.5 million. Belarus exports motor
vehicles, industrial equipment, chemical products, and
consumer goods to Tajikistan. The bulk of Belarusian
imports from Tajikistan consists of aluminum, cotton,
and agricultural products. JM

UKRAINIAN COMMUNISTS WANT TO OUST PREMIER, CHIEF BANKER.
Communist Party Chairman Petro Symonenko on 3 June
demanded that the parliament sack Prime Minister Valeriy
Pustovoytenko and National Bank Chairman Viktor
Yushchenko because of their efforts to privatize
Sberbank, a state savings bank. Symonenko accused both
of violating the law in privatizing Sberbank, arguing
that the bank should first compensate Ukrainians for all
the savings that have been lost owing to inflation since
1991. The parliament voted to schedule a debate on a
possible no-confidence vote in Pustovoytenko and
Yushchenko for 16 June. JM

KUCHMA TAKES CREDIT FOR NATIONAL STABILITY. Ukrainian
President Leonid Kuchma told journalists on 3 June that
the creation of a stable society is one of the main
achievements of his presidency, Interfax reported. " He
admitted, however, that Ukraine has failed to make the
economic progress "we had the right to expect." Also on
3 June, the Central Electoral Commission registered
parliamentary speaker Oleksandr Tkachenko as the 18th
candidate in the 31 October presidential elections. The
day before, the group collecting signatures for
President Leonid Kuchma announced that it has gathered
1.3 million. A presidential candidate needs to have 1
million signatures by 13 June in order to run in the
election. JM

UKRAINE CRITICIZES CZECH INTENT TO ABOLISH VISA-FREE
REGIME. Supreme Council Deputy Chairman Viktor
Medvedchuk has said the Czech Republic's plans to
introduce visa requirements for Ukrainians (see "RFE/RL
Newsline," 1 June 1999) are not in line with the Czech
leadership's declared intention to support Ukraine's EU
bid. According to Medvedchuk, such actions contribute to
strengthening the influence of leftist forces in Ukraine
and other CIS states, Ukrainian Radio reported on 3
June. JM

JOINT TAX AUDITS IN BALTICS. The heads of the Estonian,
Latvian, and Lithuanian tax authorities signed a
cooperation agreement in Tallinn on 3 June allowing for
joint audits. The three departments will form working
groups of auditors. "If necessary we can now make fast
raids to Latvia or Lithuania," chief Estonian tax
inspector Enriko Aava said, according to ETA. MH

ESTONIAN FINANCE MINISTER WARNS OF 'UNPRECEDENTED'
BUDGET CRISIS. Siim Kallas has issued his harshest
warning yet about the state of the budget. The Finance
Ministry on 3 June estimated that the budget deficit
could reach 2.5 billion kroons ($165 million) by the end
of June. The ministry is drawing up plans to cut
spending beyond the 1 billion kroons negative
supplementary budget being considered now in the
parliament. For the first time, the former central
banker reluctantly advocated the use of the reserve
fund, saying that "unless we get spending under control,
there will be a major deficit at the end of the year and
2000 will be very hard for us," according to "Eesti
Paevaleht." MH

LITHUANIAN PARLIAMENT APPROVES OIL INDUSTRY SALE.
Lawmakers on 3 June approved amendments on relinquishing
majority control of the country's oil industry. The
amendments allow the state to sell another 33 percent of
Mazeikiai Oil, which includes the Mazeikiai Oil Refinery
and Butinge Oil Platform, to Williams International.
Williams will now be able to gain a total of 66 percent
of Mazeikiai because the state agreed earlier on the
sale of a 33 percent stake to the company. The hotly
debated amendments passed by a 71 to 14 vote. The
opposition Social Democratic Party and Democratic Labor
Party both failed to attend the vote, while the Center
Union voted against the measure, according to "Lietuvos
Rytas." Opposition parliamentary deputies have asked the
president to veto the amendments and plan to challenge
them in the Constitutional Court. MH

LITHUANIAN ALLEGED NAZI COLLABORATOR CLAIMS INNOCENCE.
Kazys Ciurinskas, stripped of his U.S. citizenship in
1997 and forced to leave the U.S. last month, told
Lithuanian prosecutors that he was not involved in
genocide during World War II. At a meeting with a
Special Investigations Department official, the 81-year
old Ciurinskas did not deny collaboration with the Nazi
occupation regime, according to BNS. MH

HOLOCAUST MUSEUM APOLOGIZES TO LITHUANIA. The Holocaust
Museum in Washington has apologized to Lithuania for
issuing a compact disc that includes a parody of the
Lithuanian national anthem. The CD is a collection of
songs from the Kaunas ghetto. ELTA quoted the following
from the parody: "Let your cities and villages and
fields burn. Die like you killed us over centuries." MH

CZECHS, SLOVAKS RESPOND TO KOSOVA AGREEMENT. A spokesman
said on 3 June that Czech Foreign Minister Jan Kavan
"welcomes" Serbia's acceptance of the peace plan for
Kosova and believes NATO bombing can be only stopped
after Belgrade accepts the UN resolution laying down all
the agreement's points, including the withdrawal of
Serbian forces from the region. The spokesman also said
that Kavan hopes that when formulating his peace plan,
Finnish President Martti Ahtisaari "also used ideas
included in Czech-Greek initiative" of last month.
Slovak Foreign Minister Eduard Kukan, who is also the UN
secretary-general's envoy for the Kosova crisis, told
journalists that "the main condition is to deploy
peacekeeping units that would safeguard" the return of
the refugees, CTK reported. MS

SLOVAK MINORITY WANTS REPRESENTATION IN CZECH
PARLIAMENT. Jan Mlynarik, chairman of the Union of
Slovaks in the Czech Republic, said at a 3 June meeting
between Slovak minority members and Slovak Deputy
Premier Pal Csaky that it is "scandalous" that the
largest ethnic minority in the country is not
represented in the parliament, CTK reported. He also
said it is "regrettable" that the Czech authorities
"ignore the problem of Slovak education." Nada Vokusova,
head of the Czech-Slovak Club and chief editor of
"Slovenske dotyky," said at the meeting that the most
pressing problem faced by the 280,000-strong minority is
that of dual citizenship. Slovaks had to renounce their
citizenship if they opted for the Czech one following
the breakup of Czechoslovakia. MS

EU URGES SLOVAKIA TO PASS MINORITY LANGUAGE LAW. EU
ambassador to Slovakia Walter Rochel on 3 June said the
union considers it "very important" for Slovakia to pass
the law on minority languages and that this is the "only
political criterion" that Bratislava has failed to
fulfill in order to be invited to accession talks, CTK
reported. Finance Minister Brigitta Schmognerova assured
journalists the same day in Zurich that the parliament
will soon pass the law, Reuters reported. But according
to CTK, there is still disagreement in the ruling
coalition about the law. It quoted Robert Fico, a
popular Democratic Left Party politician, as saying
there is no need for such a law and that the issue has
already been solved "by other legal means." MS

FORMER SIS OFFICIAL WITHDRAWS DENIAL OF INVOLVEMENT IN
KOVAC JR.'S ABDUCTION. Jaroslav Svechota, a former
senior Slovak Counter-Intelligence (SIS) official who
confessed in April to having been involved in the
abduction of former President Michal Kovac's son but
later retracted the confession, has again admitted to
involvement in the abduction. Chief investigator
Jaroslav Ivor told journalists in Bratislava that
Svechota has now "widened" his earlier testimony, on the
strength of which another former SIS official was
detained and taken into custody, CTK reported. Interior
Minister Ladislav Pittner said that since Svechota has
asked for a pardon, he probably realizes that he has to
give investigators "full and thorough information." MS

HUNGARIAN MAGAZINE, TV PROGRAM CLOSES UNDER STATE
PRESSURE. The crime-reporting weekly "Kriminalis" is
ceasing publication due to "impossible working
conditions," chief editor Laszlo Juszt announced on 3
June. Earlier this week, police launched criminal
proceedings against Juszt on suspicion of breaching
state secrets by publishing classified documents. The
published materials carried information on the so-called
"data-gathering case" against senior FIDESZ officials.
Hungarian state television has canceled his popular
television show, which takes the name of the magazine.
MSZ

SOUTHEASTERN EUROPE

BELGRADE ACCEPTS PEACE PLAN. The Yugoslav authorities
and Serbian parliament on 3 June agreed to accept the G-
8 peace plan that Russian special envoy to Yugoslavia
Viktor Chernomyrdin and the EU's Martti Ahtisaari
brought to Yugoslav President Slobodan Milosevic.
Belgrade thereby accepted the "rapid" withdrawal of its
own forces from Kosova, the entry into the province of
an international force led by NATO and containing
Russian troops, the return of refugees, and a "wide
degree" of autonomy as described in the Rambouillet
agreement. The UN Security Council will shortly pass a
resolution establishing a mandate for the international
force. Several hundred Serbian troops will be stationed
in Kosova but only to guard international borders and
Serbian "cultural monuments." Observers note that had
Milosevic accepted the Rambouillet agreement before the
bombing started in March, he would have been allowed to
keep more than 10,000 troops in Kosova. PM

G-7 OFFICIALS DRAFT UN SECURITY COUNCIL RESOLUTION.
Senior Foreign Ministry officials of the G-7 states,
meeting at the EU summit in Cologne on 4 June, agreed to
a draft UN Security Council resolution on Kosova. German
Foreign Ministry spokesman Martin Erdmann said that
senior German diplomat Guenther Pleuger will fly to
Moscow later in the day to discuss the text with Russian
officials. Pleuger will then proceed to Beijing,
together with Ahtisaari, to seek Chinese support for the
document. Erdmann said that once Russia and China accept
the draft, the UN Security Council could adopt the
document within hours, thereby formalizing the end of
hostilities in Kosova. FS

NATO TO BOMB UNTIL MILOSEVIC WITHDRAWS. British Prime
Minister Tony Blair told the BBC on 4 June that the
Atlantic alliance will continue its bombing campaign
until Milosevic begins a "verifiable withdrawal" of his
forces from Kosova. In Washington the previous day,
President Bill Clinton stressed that "we must be
cautious...until Serb forces begin a verifiable
withdrawal." Secretary of State Madeleine Albright
called Milosevic's acceptance of the peace plan only a
"first step" toward ending the crisis. Secretary of
Defense William Cohen added that Milosevic has often
broken "paper promises" he made in the past. Observers
note that many details remain to be worked out before
the plan can be implemented. CNN's Washington
correspondent reported that in negotiating with
Milosevic, "the devil is always in the details." PM

MIXED REACTIONS IN SERBIA... Parliamentary deputies
belonging to Serbian Deputy Prime Minister Vojislav
Seselj's Radical Party voted against accepting the peace
plan on 3 June. Seselj later said his party will leave
the government if NATO troops enter Kosova. The Serbian
Renewal Movement's Vuk Draskovic, however, said that the
acceptance of the peace plan constitutes "not only an
end to the bombing but also a new beginning" for Serbia,
the Belgrade daily "Danas" reported. The Serbian Civic
League's Goran Svilanovic stressed that democracy and
the rule of law must become the norm in Serbia. He added
that Serbian diplomats must make "great efforts so that
we can take part in [the international stability pact]
for the reconstruction of the Balkans." Several
international broadcasters quoted numerous Serbs as
saying that they are glad that the bombing will stop but
are angry at Milosevic for waiting so long to accept an
agreement he could have had before the bombing started.
Others said that Milosevic "capitulated" to NATO. PM

...AND IN MONTENEGRO, MACEDONIA. Montenegrin Justice
Minister Dragan Soc told Reuters in Podgorica on 3 June
that "the situation in Montenegro is potentially
dangerous. It is part of Milosevic's logic that, in
order to stay in power, he finishes one crisis and
starts another.... We feel it will be our turn to
suffer" once the crisis in Kosova is over. Deputy Prime
Minister Dragisa Burzan added that he fears that Serbian
forces "retreating" from Kosova could pose a "threat" to
Montenegro. In Skopje, Foreign Minister Aleksandar
Dimitrov hailed Belgrade's acceptance of the peace plan
as the beginning of a political solution in Kosova. He
stressed that an end to the crisis would greatly help
Macedonia's economy and prompt many of the 250,000
Kosovar refugees in Macedonia to go home. PM

KOSOVAR OFFICIALS WARN AGAINST 'PREMATURE OPTIMISM.'
Bajram Kosumi, who is a member of the Kosovar
provisional government of Prime Minister Hashim Thaci,
told RFE/RL's South Slavic Service on 3 June that the
document approved by the Serbian parliament is
"unclear." He stressed that it "does not open the door
to a political process [leading to a permanent solution]
for Kosova." Nor, he said, does it offer the Kosovars as
much as the Rambouillet agreement. Kosumi stressed that
only "the five demands of NATO [to Milosevic]...can be a
good basis for a just solution." Edita Tahiri, who is
Kosovar leader Ibrahim Rugova's foreign-policy adviser,
told RFE/RL's South Slavic Service that the parliament's
acceptance of the peace plan "is a signal of the
beginning [of the] surrender of Belgrade and of the
victory of NATO against the criminal Serbian regime....
The international community has its own reservations and
wants to see that the pledges of Belgrade are
implemented because of its experience with [Milosevic]
in other wars." FS

WORLD BANK APPROVES $69 MILLION TO ALBANIA. World Bank
officials in Washington on 3 June announced the approval
of two loans to Albania. The first is a structural
adjustment credit of $45 million, which will help the
government complete privatization efforts and strengthen
the judiciary and other state institutions. The second
is a $24 million loan designed to improve irrigation
facilities. Both credits are repayable over 40 years and
include a 10-year grace period. FS

MILLIONS OF DOLLARS MISSING FROM BOSNIAN BANK. The
office of the international community's Carlos
Westendorp issued a statement in Sarajevo on 3 June
saying that "millions of dollars...deposited with
[Sarajevo-based BH] Banka, including funds for
reconstruction projects and governmental monies, have
repeatedly been diverted and are not available for use
by depositors or beneficiaries." The statement also
noted that several unspecified international
organizations and private individuals have filed suits
against the bank, which the Bosnian authorities are
investigating. Westendorp's office noted that the
missing funds amount to at least $11 million. The bank's
newly appointed director, Fikret Pita, told Reuters: "We
only have a problem with liquidity, which is the problem
of the whole country." PM

CROATIAN INTERIOR MINISTRY TO SUE WEEKLY OVER SOCCER
AFFAIR. The Interior Ministry issued a statement in
Zagreb on 3 June saying that the ministry intends to sue
the independent weekly "Nacional." The statement did not
specify the charges. The weekly recently ran a story
alleging that the ministry has repeatedly fixed games in
favor of Croatia Zagreb, which is the favorite team of
President Franjo Tudjman. "Nacional" charged that
professional soccer in Croatia is rife with corruption.
Also on 3 June, police officials in Zagreb summoned two
journalists from "Nacional" for questioning in
conjunction with the story, "Novi List" reported. PM

CROATIAN OPPOSITION LEADER ASSAULTED. Stipe Suvar, who
heads the small Socialist Workers' Party, told RFE/RL's
South Slavic Service in Zagreb on 3 June that
unidentified persons hit him in the head with a pistol,
prompting him to seek hospitalization. Suvar added that
this was "the fourth or fifth physical attack [on him]
during the past year." PM

ROMANIAN PROTESTS 'SUSPENDED.' Workers in Brasov
"suspended" their protest after the government approved
the 2 June agreements signed by the protesters'
representatives and Finance Minister Decebal Traian
Remes, Romanian Radio reported on 4 June. The workers
warned they will resume their protest if agreements are
not implemented. Violence broke out again on 3 June in
Iasi, where workers from the Czech-owned Tepro factory
clashed with the police after attempting to break into
the building of the local prefecture. The government's
Public Administration Department issued instructions to
all prefects to "immediately approve" the intervention
of police forces in cases "where there is a flagrant
breach of the law." MS

MOLDOVAN PRESIDENT ACCUSED OF VIOLATING CONSTITUTION.
Dumitru Cecan, chairman of the parliament's Control and
Petitions Committee, on 3 June accused President Petru
Lucinschi of having violated the constitution, RFE/RL's
Chisinau bureau reported. In a special report presented
to the legislature, Cecan said that by having called the
23 May referendum on instituting a presidential system,
Lucinschi ignored the constitutional provisions that
plebiscites must be approved beforehand by the
parliament and cannot take place 120 days before or
after elections. Cecan also accused the commission of
having agreed to an unconstitutional order from the head
of state and of having misspent public funds while
organizing the referendum. MS

BULGARIA SAYS VILLAGE HIT BY SERBIAN MISSILE. Defense
Minister Georgi Ananiev on 3 June said that the missile
that landed near the village of Govezhda one day earlier
was a ground-to-air rocket "most likely" fired by
Serbian forces (see "RFE/RL Newsline," 3 June 1999),
Reuters reported, citing BTA. MS

BULGARIAN PARLIAMENT CHAIRMAN SURVIVES NO-CONFIDENCE
VOTE. The parliament on 3 June voted by 150 to 76 with
one abstention to reject a motion to remove
parliamentary chairman Yordan Sokolov from his position,
BTA reported. The motion was submitted by 81 opposition
deputies from the Euro Left, the Democratic Left, the
Alliance for National Salvation and independent
deputies. It was initiated by the Euro Left, following
Sokolov's statement that by voting against the agreement
to grant NATO the right to use Bulgarian air space, the
Euro Left backed Slobodan Milosevic and "reverted to its
communist past." MS

END NOTE

BULGARIAN CRISIS OFFERS LESSONS FOR ROMANIAN BANKS

By Ron Synovitz

	A panic run on Romania's troubled Bankcoop last
week is the latest in a series of events highlighting
the fragility of the country's bank sector.
	In March, the Romanian National Bank placed the
large, state-owned BANCOREX under special supervision.
The beleaguered Foreign Trade Bank has moved all its
private accounts to another bank in an attempt to close
branches. And the small private Albina bank also has
been declared insolvent, forcing the government to
compensate account holders for part of their losses.
	Romania's banking situation is reminiscent of
conditions in Bulgaria in 1996, when the collapse of 14
banks brought that country to the brink of economic
chaos.
	Bernd Klett, an Eastern European analyst for
Deutsche Bank Research, says the Bulgarian example
offers lessons not just for Romania but for Russia, the
Baltic States, Slovakia and even the Czech Republic.
"There is a shadow economy, of course, in all of these
transition countries," he remarked. "In Bulgaria, part
of the economy [has been] dominated by mafia. These are
criminal circles who dominate sectors of the economy and
also exert influence [on banks and their loan
officers]." He added that he thinks there may be
"something similar" in Romania.
	Klett said much of the pressure is rooted in the
fact that large, loss-making state firms are part-owners
of the very banks to which they apply for loans. He said
another factor is corruption, which thrives where
banking supervision is lax. As a result, Klett said,
banks across Eastern and Central Europe continue to lend
money to recipients who have either no ability or no
intention of ever paying it back.
	Similarly, a 1997 U.S. Treasury-funded study on
Romania's financial system found that "political
pressure on banks" has been a main factor behind bad
loans. The European Bank for Reconstruction and
Development says bad debts in Romania have continued to
increase during the last five years--from 19 percent of
all bank loans in 1994 to more than 60 percent at the
end of last year. And a recent European Commission
report on Romania also is critical of the corporate
governance of banks. The report, issued last November,
complains that the government has failed to root out
corruption.
	Bucharest's latest proposals on bank reform are
based on recommendations by the World Bank and the IMF.
They are the same kind of recommendations that Sofia had
paid lip service to before the crisis there forced the
resignation in early 1997 of Socialist Prime Minister
Zhan Videnov's government--namely, to stop the
hemorrhaging caused by bad loans, to strengthen
supervision, and to sell off state banks.
	Most important, the World Bank says bank reforms
must go hand-in-hand with speedier privatizations in all
sectors of the economy. The aim is to break the links
between the banks, corrupt state managers, and the
national budget.
	The Bulgarian crisis shows how systemic corruption
can ruin a country's economy. Many Bulgarian banks were
brought to insolvency in 1996 by what the World Bank
calls "dubious relationships" with criminal business
groups and state managers, who drained the profitable
activities of state firms. Bank managers fueled these
crony networks through risky loans, which kept the loss-
making state firms running in the short term. Meanwhile,
politicians linked to these crony networks helped slow
reforms by arguing that privatization and other reforms
would cause workers to lose their jobs.
	With no bankruptcy law in Bulgaria at the time of
the crisis, state firm losses ultimately had to be paid
by the national budget. That added to the government's
difficulties in servicing foreign debts. A massive
devaluation of the lev ensued when the problem became so
widespread that central bank reserves were exhausted.
	The seeds of hyper-inflation had been planted, and
many Bulgarian banks became trapped in a vicious circle
partly of their own making. Ultimately, the casualties
of the Bulgarian crisis included Videnov's government, a
score of state and private banks, and millions of
Bulgarians whose frozen savings accounts evaporated in
the free fall of the lev.
	It took a new government and a strict, IMF-backed
currency board regime to bring relative economic
stability to Bulgaria. Since then, Prime Minister Ivan
Kostov has had the political support to push
privatization forward, start sacking corrupt state
managers. and break up some financial groups operating
on the fringes of the law.
	There are signs that Bucharest has learned a few
lessons from Sofia's experience. The European Commission
found progress in the strengthening of the authority and
independence of Romania's National Bank. The legislative
framework of the financial sector also has improved with
the adoption of the Bank Insolvency Law in November
1997. That law gives courts the authority to close banks
whose liabilities exceed assets and which have ceased
payments for more than 30 days.
	At the end of last year, a new body was set up to
help Romanian state banks recover their bad debts.
According to the EBRD, that body will help speed bank
restructuring and privatization.
	Bank privatization began at the end of last year
with the sale of the Romanian Development Bank to
France's Societe Generale, which paid about $200 million
for a 51 percent stake.
	Bucharest also has pledged that it will sell off
part of Banc Post by year's end. Meanwhile, the large
and troubled state-owned BANCOREX and Banca Agricola are
under restructuring programs ahead of privatization, due
to start sometime this year.

The author is an RFE/RL correspondent based in Prague.
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