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Newsline - July 10, 1996


NEW FSB CHIEF APPOINTED.
President Boris Yeltsin on 9 July appointed acting Federal Security Service Director Col. Gen. Nikolai Kovalev as the service's new permanent head, Russian and Western agencies reported. Kovalev is the seventh man to head the KGB's successor service since August 1991. He succeeds Mikhail Barsukov, one of three hardliners sacked on 20 June. Kovalev was born in Moscow in 1949. He graduated from the Moscow Electro-chemistry Institute in 1972 and joined the KGB two years later. He served for two years in Afghanistan and worked in the Moscow City and Oblast branches of the security service. He became a deputy director in 1994 with responsibility for economic counterintelligence, including industrial espionage and the theft of Russian technology. According to NTV, Kovalev is a cautious man who shies away from the media. -- Penny Morvant

GENERALS DENY ROKHLIN'S CHARGES.
Former Defense Minister Pavel Grachev on 9 July dismissed Lev Rokhlin's allegations of widespread military corruption, telling Nezavisimaya gazeta that "Rokhlin has no hard facts, only general phrases." He said he had always helped Rokhlin, even giving him an apartment "illegally." Grachev contended that supporters of Aleksandr Lebed had forced Rokhlin's hand to secure the appointment of Gen. Igor Rodionov as defense minister. Gen. Konstantin Kobets, one of the men implicated by Rokhlin, also denied the charges against him but said he did not believe Lebed was behind the affair. He attacked Rokhlin for discrediting the Defense Ministry and the army. Kobets said he will not sue Rokhlin, but some of the other generals said they would. -- Penny Morvant

YELTSIN, CHERNOMYRDIN MEET TO DISCUSS NEW GOVERNMENT.
President Boris Yeltsin on 9 July announced that he will not take any vacation time in the near future so that he can continue working with Prime Minister Viktor Chernomyrdin on the formation of the new cabinet, Russian Public TV (ORT) reported. On the same day, the two leaders discussed the basic principles for choosing new cabinet members, ITAR-TASS reported. First Deputy State Duma Speaker Aleksandr Shokhin said the government would be composed of "professionals" who would form a united team and could include members of groups that did not support Yeltsin's reelection, Moskovskii komsomolets reported on 9 July. -- Robert Orttung

YABLOKO MAY JOIN GOVERNMENT.
Prime Minister Chernomyrdin met with Yabloko leader Grigorii Yavlinskii for three hours on 9 July, NTV reported. Yavlinskii said that it is likely that Duma Budget Committee Chairman Mikhail Zadornov, a Yabloko faction member, would take one of the economic posts in the new government. Chernomyrdin has been critical of the idea of Yavlinskii himself joining the cabinet (see OMRI Special Report, 5 July 1996). Yavlinskii said that negotiations over Yabloko's participation in the cabinet would continue next week. -- Robert Orttung

THE COMMUNIST CLIP THAT WAS NOT SHOWN ON TV.
On 1 July, the last night campaigning was allowed before the second round of the presidential election, Russian Public TV (ORT) refused to air a Communist Party political advertisement. Instead of a 10-minute video featuring filmmaker Stanislav Govorukhin, the station aired a five-minute monologue by Gennadii Zyuganov that had already been shown. ORT said Zyuganov's campaign had not paid for any additional air time, a claim the Communist Party denied (see OMRI Daily Digest, 2 and 3 July 1996). A copy of the video was obtained by OMRI and the complete transcript will be published as an OMRI Special Report later today. -- Laura Belin in Moscow

SELEZNEV: OPPOSITION READY TO COOPERATE.
Duma Speaker Gennadii Seleznev said opposition Duma members are ready to cooperate constructively with the president who he said has become more attentive to the opposition's concerns, ITAR-TASS reported 9 July. Seleznev noted, however, that there are "forces that are trying to artificially drive wedges" between the parliament and government. Before the election, some observers had predicted increasing tension between the president and Duma in the event of a Yeltsin victory. -- Robert Orttung

OPPOSITION ORGANIZATIONAL COMMITTEE FORMED.
Representatives of the largest organizations from Gennadii Zyuganov's electoral "popular-patriotic bloc" on 9 July agreed to set up an organizational committee for the Union of Popular-Patriotic Forces of Russia (SNPSR), which will replace the electoral bloc, NTV and Russian Public TV (ORT) reported. The committee will prepare documents for the union's registration with the Justice Ministry. The SNPSR plans to avoid extremism and none of the bloc's radical organizations, both communist and nationalist, were invited to join the committee. -- Anna Paretskaya

DUMA COMMITTEE CALLS FOR INDEPENDENT MILITARY POLICE.
Citing the sharp crime rate increase in the armed forces, the Duma Defense Committee has drafted a bill calling for an independent military police force with broad powers, according to an article by the committee's chairman, retired Lt. Gen. Lev Rokhlin, in the 9 July issue of Rabochaya tribuna. The bill calls for such a force to be "detached from the armed forces" and accountable to the president and the Federal Assembly. It would investigate crimes committed by service personnel and civilian employees while on duty or on a military installation. The proposed legislation stipulates that the appointment of an officer to the post of regimental commander or higher "should take into account the opinion of the head of the corresponding military police structure." -- Doug Clarke

MORE FIGHTING IN CHECHNYA.
Six Russian soldiers and some 20 Chechen civilians were killed on 9 July when Russian forces backed by air and artillery power attacked the village of Gekhi in southern Chechnya, Western agencies reported. Acting Chechen President Zelimkhan Yandarbiev demanded a formal explanation from Russia for the renewal of hostilities. The spokesman for the Russian state committee on Chechnya, Sergei Slipchenko, accused the Chechen side of torpedoing the peace agreements and argued that Russia has the right "to take the toughest measures" in response, according to AFP. In an interview with the Italian newspaper La Repubblica cited by AFP, Russian Security Council Secretary Aleksandr Lebed said he is prepared to discuss Chechnya's "possible secession" from Russia, but also said that he is "doubtful about the viability of an independent Chechnya." Lebed met in Moscow on 9 July with pro-Moscow head of state Doku Zavgaev, while Lebed's representative in Chechnya, Sergei Drogush, met with Chechen Chief of Staff Aslan Maskhadov, Russian TV (RTR) reported. -- Liz Fuller

CONSTITUTIONAL COURT TO INSPECT KALMYK LAWS.
President Yeltsin has asked the Constitutional Court to examine two laws passed by the Kalmyk legislature, ITAR-TASS reported on 10 July. The presidential press service announced that two of the republic's laws are unconstitutional. One of the laws gives the local legislature's edicts the highest juridical power on the territory of the republic; federal law states that the Russian Constitution has priority over all laws in the country. Another law in the republic enables presidential candidates to run for office unopposed, which is prohibited by federal law. If the court rules that the laws are unconstitutional, the legitimacy of the current republican president, Kirsan Ilyumzhinov--who won reelection unopposed in November 1995--may be thrown into question. -- Anna Paretskaya

TALBOTT MEETS MAMEDOV.
Deputy Secretary of State Strobe Talbott met Russian Deputy Foreign Minister Georgii Mamedov in Washington on 9 July, in the first high-level meeting since the Russian election, ITAR-TASS reported. At the top of their agenda was the need to press ahead with a comprehensive nuclear test ban treaty and the ratification of START II, which has been approved by the U.S. Senate but not by the Russian Duma. -- Peter Rutland

DIVISIONS IN FOREIGN POLICY ELITE.
A survey of Russian foreign policy experts by the Ebert Foundation found them to be divided over Russia's future status, according to Ekspert no. 25. About one-third of them said they see NATO expansion as a threat and favor tough responses, such as increased troop deployments, work on new generation nuclear weapons, or a closer alliance with China. Half the polled experts oppose such measures, however. Only 26% think that Russia can regain superpower status, 57% think the most it can aim for is to stay in the top five powers. -- Peter Rutland

RUSSIA CONCERNED OVER PRESSURE ON KARADZIC.
Foreign Affairs Ministry spokesman Grigorii Karasin has expressed "serious concern" over the "so-called Radovan Karadzic problem," ITAR-TASS reported on 9 July. He complained that there are no "juridical or political grounds" for refusing to register Serbian Democratic Party candidates for the 14 September Bosnia-Herzegovina election simply because Karadzic remains the leader of the party. He also stressed that making demands only against the Serbs was "hardly productive." The OSCE has expressed its support for measures against Karadzic and his party. -- Robert Orttung

RUSSIAN-JAPANESE RELATIONS.
Deputy Foreign Minister Aleksandr Panov dismissed speculation in the Japanese press that Russia has tightened its stance with regard to signing a peace treaty with Japan, and stressed that Russia remains committed to good relations with Tokyo, ITAR-TASS reported on 9 July. Meanwhile, Japanese Prime Minister Ryutaro Hashimoto said he will attend Yeltsin's inauguration, but if the ceremony is held on 9 August, as now planned, he would have to skip it to attend ceremonies marking the atomic bombing of Nagasaki. In other news, the Japanese destroyer Kurama will become the first warship from that country to visit a Russian port in 70 years when it takes part in the Russian navy's 300th anniversary celebrations in Vladivostok later this month, Reuters reported on 9 July. -- Robert Orttung and Doug Clark

RUSSIA TO OPEN UNOFFICIAL MISSION IN TAIWAN.
Deputy Foreign Minister Aleksandr Panov said that the Moscow-Taipei Coordination Commission on Economic and Cultural Cooperation will soon be able to open a permanent mission in Taiwan, ITAR-TASS reported on 9 July. The Taiwanese unofficial mission opened in Moscow in July 1993 in compliance with a September 1992 presidential decree. According to this decree, Russia will not maintain official relations with Taiwan since it considers Taiwan to be an inseparable part of China. -- Anna Paretskaya

GERMAN CHANCELLOR TO SEEK TALKS WITH YELTSIN OVER TROPHY ART LAW.
Bonn announced on 9 July that Helmut Kohl wants to discuss with President Yeltsin the passage of a draft law making artworks seized from Germany by Soviet troops during World War II the legal property of Russia, international agencies reported. The bill, which the Duma approved last week by a vote of 303-0 with two abstentions, still has to be confirmed by the Federation Council and the president. Earlier this year, Yeltsin stressed his commitment to finding a mutually acceptable solution to the trophy art issue. UNESCO has offered to mediate in the dispute. -- Jan Cleave

YAPONCHIK FOUND GUILTY OF EXTORTION.
A New York court found Vyacheslav Ivankov (nicknamed Yaponchik) and three other men guilty of attempting to extort $3.5 million from an investment firm run by Russian emigres, ITAR-TASS and Reuters reported on 9 July. Ivankov, a Russian "godfather," is facing up to 40 years in prison. His lawyers intend to appeal. Ivankov is believed to have started his criminal group in Russia about 16 years ago. He served 10 years in a Siberian prison. After his release in 1991 he reportedly moved his operations to the U.S. -- Penny Morvant



NINE CANDIDATES TO CONTEST ARMENIAN PRESIDENTIAL ELECTION.
The Armenian Central Electoral Commission on 9 July formally registered nine candidates for the 23 September presidential election, Noyan Tapan reported. One person was refused registration for failing to submit the required minimum of 1,000 nomination signatures. Of the nine candidates, Rafael Hambartsoumian of the Society for National Unity, and Paruir Hairikyan of the Union for National Self-Determination have both said they doubt the election will be free and fair. Hairikyan has called for an emergency parliament session to amend the election law and may withdraw his candidacy if this is not done. -- Liz Fuller

TAJIK PRESIDENT, OPPOSITION LEADER TO MEET IN MOSCOW.
Russian Foreign Minister Yevgenii Primakov on 9 July announced that Tajik President Imomali Rakhmonov and opposition leader Said Abdullo Nuri have accepted his proposal that they meet face-to-face in Moscow, ITAR-TASS and AFP reported. The idea was proposed at the Tajik peace talks, currently under way in Turkmenistan, but no date has been set. One opposition leader at the talks, Ali Akbar Turajonzoda, said the two sides need time to prepare for the meeting. The two leaders have met twice before. -- Bruce Pannier



UKRAINIAN COMMUNISTS DOUBT NEW CONSTITUTION'S VALIDITY.
Leaders of sizable Communist caucus in parliament appealed to that body's ethics commission to review their claims about voting violations during parliament's adoption of the constitution on 28 June, Radio Ukraine reported on 9 July. Communist chief Petro Symonenko said some 35 lawmakers, including 10 from his caucus, were absent during voting on each article, but their votes were included in final tallies. He said such violations cast doubt on the constitution's legitimacy. He also said deputies were forced to vote under duress during an all-night session after President Leonid Kuchma decreed a referendum on an unamended draft that would have given him more powers. Petro Sheyko, head of the ethics commission, said the voting was legitimate because the draft as a whole garnered a solid absolute majority. Other lawmakers said the Communists' actions reveal how difficult implementation of the new constitution will be--it requires the adoption of 50 new laws. -- Chrystyna Lapychak

UKRAINIAN-KAZAKH TALKS FOCUS ON TRADE.
Kuchma met with Kazakhstan's first deputy prime minister, Nigmatzhan Isingarin, in Kyiv on 9 July, Ukrainian radio reported. Talks focused on economic relations and the work of a Ukrainian-Kazakh commission for economic cooperation. Both leaders noted a mutual drop in trade. In 1992, trade with Kazakhstan made up 10 percent of Ukraine's total trade. Last year, it accounted for only 2 percent, amounting to $312 million. Kuchma proposed signing a free-trade agreement with Almaty and lifting trade barriers. -- Ustina Markus

PAKISTAN TO BUY UKRAINIAN TANKS.
Pakistan's Defense Minister Aftab Shahban Mirani said Islambalad is close to an agreement with Ukraine to purchase 330 T-80 tanks, ITAR-TASS reported on 10 July. The deal is worth $650 million. Mirani said military cooperation with Ukraine is necessary for Pakistan to ensure its security in its region. -- Ustina Markus

ESTONIA EXTENDS VALIDITY OF SOVIET PASSPORTS.
The non-travel passports of the former Soviet Union will remain valid for non-citizens until all Estonian residence permits are issued--not the previously set 12 July date--Prime Minister Tiit Vahi said on 9 July, BNS reported. He said all eligible applicants should receive their residence permits by the end of the year. Vahi said the Soviet passport loses its validity when a person obtains an Estonian residence permit or leaves Estonia. -- Saulius Girnius

ZHIRINOVSKY VODKA TO BE BOTTLED IN LATVIA.
The Rubins distillery in Bauska will bottle vodka named for Russian Liberal Democratic Party leader Vladimir Zhirinovksy, said Rubins president Leon Osipov, BNS reported on 9 July. Osipov said Zhirinovsky extended the bottling license, and was motivated by the need to refill his party's treasury, emptied during the election campaign. Osipov said Zhirinovsky pledged to help Latvian businessmen expand to the Russian market with the help of "his people" in parliamentary committees. Zhirinovsky this spring had sent proposals to several distilleries in Latvia and Lithuania, but Lithuanians showed no interest. -- Saulius Girnius

CROATIAN PRIME MINISTER IN POLAND.
Croatian Prime Minister Zlatko Matesa met on 9 July with his Polish counterpart Wlodzimierz Cimoszewicz, Polish and international media reported. Cimoszewicz said Poland will help reconstruct Croatian regions damaged by the war, and the two reaffirmed their wish to expand economic relations. Matesa thanked Poland for contributing troops to NATO-led Implementation Force (IFOR) troops in the former Yugoslavia. Poland and Croatia last year traded goods worth $94 million. It was the first official visit to Poland by a Croatian prime minister since the country broke away from Yugoslavia five years ago. -- Jakub Karpinski

KWASNIEWSKI ON POLISH-JEWISH RELATIONS.
Polish President Aleksander Kwasniewski, on a U.S. visit, presented on 9 July a plan to protect the site of the Auschwitz Nazi concentration camp, international agencies reported. The plan would organize zones--the camp itself would have no commercial activity, but outside it there would be a zone for tourism and business. He also pointed out that in the last presidential election in Poland the candidate that used anti-Semitic slogans finished last with only 7,000 votes. "If in each country in the world, there would be only 7,000 anti-Semites, we would be very satisfied," he said. Kwasniewski also said the parliament soon will consider a bill that would restore Jewish communal property to Jewish organizations. -- Jakub Karpinski

POLISH-UKRAINIAN MILITARY TALKS.
A Polish military delegation led by Gen. Zenon Bryk arrived in Lviv for talks with the high command of the Carpathian military district on the creation of a joint Ukrainian-Polish peacekeeping battalion. The 600-strong combat unit will join peacekeeping forces in the Middle East, Itar-Tass reported on 9 July. Ukrainian and Polish troops trained together in last month's international military exercises "Peace Shield-96" near Lviv. -- Jakub Karpinski

ACTIVISTS BLOCKADE CZECH NUCLEAR PLANT.
Environmental activists, who for several days have been demonstrating at the Temelin nuclear power plant, entered the plant on 9 July and smuggled out a copy of the plant's blueprint, Czech media reported. That evening, they set off fireworks at the plant's cooling tower. A spokesman for the activists said those actions were to prove that the nuclear plant is insufficiently guarded. On 8 July, police arrested about 40 activists who were blockading plant entrances. Various ecological groups say the plant will soon become unsafe and should be closed down. -- Jiri Pehe

SLOVAK PRESIDENT ON WESTERN INTEGRATION.
Attending the first Central and East European Economic Summit in Salzburg, Michal Kovac on 9 July said Slovakia must make changes if it wants to gain NATO and EU membership, Slovak and international media reported. Kovac said political infighting could have a negative impact on Slovakia's integration efforts and on its economy. He said if Slovakia falls from the first tier of East European countries in line for EU membership, "the responsibility will lie with Prime Minister Vladimir Meciar and his government." Upon returning to Bratislava, Kovac said he might pardon his son to enable him to travel to Munich and defend himself in the fraud case involving the Slovak trade firm, Technopol. The president questioned whether his son would receive a fair trial in Slovakia and noted that "in Munich, laws and evidence apply." -- Sharon Fisher

SLOVAK GOVERNMENT ATTACKS HUNGARIAN DEMANDS...
Foreign Minister Juraj Schenk on 9 July criticized the recent Hungarian minority summit on Slovak Radio. Schenk expressed "surprise and concern" over the summit's communique, which pushed for ethnic autonomy and self-government on the territory of other states where Hungarians live. Schenk said the government regards it "a step against the trend of positive development of mutual relations" marked by the ratification of a bilateral treaty. The calls for autonomy have not been adopted by the Slovak government or by international organizations, such as the Council of Europe and the OSCE. Since there is no relevant international document that codifies the idea of ethnic autonomy, it is misleading to talk about "the spirit of international norms," Schenk said. The ruling Movement for a Democratic Slovakia said the communique marked an effort to revive "Hungarian nationalist revisionism and iredententism." -- Sharon Fisher

... WHILE HUNGARIAN GOVERNMENT DEFENDS THEM.
The ethnic Hungarian summit's final communique did not mention "collective rights"--a term that has caused controversy in the past--only the term "autonomy," which is in accord with Western European practice, the Foreign Ministry spokesman said on 9 July, Hungarian media reported. The communique reads, "The establishment of local governments and autonomy--in line with the current European practice and the spirit of international norms--is vital to preserving the identity of Hungarians beyond the borders, their survival and development..." The ministry said the document has no legal basis and was not intended to cause friction with neighboring countries. -- Zsofia Szilagyi



BOSNIAN SERBS AGAIN DEFY INTERNATIONAL COMMUNITY.
The Pale parliament on 9 July voted to set up a consultative senate after the 14 September elections. It also elected indicted war criminal Radovan Karadzic as president of that new body, the BBC reported. The Dayton agreement bars those indicted from holding public office, but Karadzic has resisted the international community's attempts to force him out of public life. He has handed over his duties as president of the Republika Srpska to his deputy, and he will not run for president in the September elections. But he continues to lead his Serbian Democratic Party and will hold government office as president of the senate. Meanwhile, the international community's High Representative Carl Bildt dared Karadzic to appear before the Hague-based war crimes tribunal, Onasa reported. -- Patrick Moore

CLINTON LAUNCHES "EQUIP AND TRAIN" PROGRAM FOR BOSNIA.
The U.S. will begin a $100 million military program to enable the Croat and Muslim federation to defend itself, U.S. President Bill Clinton announced on 9 July. The Dayton agreement calls for establishing a military balance in the region, but so far the Serbs heavily outgun Bosnian government forces. Communications equipment, small arms and ammunition, main battle tanks, armored personnel carriers, light anti-tank weapons, and utility helicopters will be provided, AFP reported. Clinton said the program can begin in a few days, now that foreign Islamic fighters have left the country and the Croats and Muslims have agreed on a defense law setting up a joint defense ministry and joint command. American mediator James Pardew clinched the agreement on 5 July and the parliament passed it on 9 July. An additional $40 million will be provided by countries such as Saudi Arabia, Malaysia, Kuwait, and the U.A.E. -- Patrick Moore

BOSNIAN UPDATE.
Serbian President Slobodan Milosevic has indirectly criticized OSCE election commissioner Robert Frowick's plans to ban Karadzic's party from the elections as long as the indicted war criminal remains its leader. Milosevic said, "It is vital that all parties be able to compete equally in the elections," Tanjug reported on 9 July. Meanwhile, near Srebrenica, experts continued to exhume a mass grave believed to contain the remains of Muslim males killed almost a year ago, international media reported. In Split, a Croatian tribunal said Bosnian Croat Zlatko Aleksovski will be sent to The Hague to answer charges of crimes against Muslims in the Lasva valley in 1993. The Muslims have meanwhile arrested five Bosnian Croats for alleged war crimes; some Croats say this could be the start of a wave of arrests, Slobodna Dalmacija reported on 10 July. -- Patrick Moore

SERBS AND CROATS STILL BLOCKING MOSTAR ELECTION COMMISSION.
The president of the election commission on 9 July asked the EU administration to announce the official election results, Onasa reported. The Croat and Serb commission members continue to block the commission's work by filing complaints about ballot irregularities in western European cities. The Muslim-dominated List of Citizens for a United Mostar gained an overwhelming majority in ballots in Bonn, Stockholm, Oslo, and Bern. The Croats criticized a decision by ombudsman Konstantinos Zepos to declare the ballot valid despite discrepancies in the Bonn ballot box. -- Fabian Schmidt

ACCUSED SERB WAR CRIMINAL HEADS "PEACE" PARTY.
Accused war criminal and internationally wanted felon Zeljko Raznatovic, known as "Arkan," said his political party is a "centrist" organization with "a European orientation," Onasa reported on 5 July. The news agency, citing Beta reports, quotes Arkan, "We stand for peace because we know well what war is." His Party of Serbian Unity (SSJ) plans to field candidates in Republika Srpska's September elections. -- Stan Markotich

BELGRADE TO RESTORE PHONE LINKS WITH SARAJEVO.
The rump Yugoslav telecommunications agency PTT is expected to restore phone links with Sarajevo, severed by Bosnian Serb forces during the 43-month siege of the Bosnian capital, SRNA reported on 9 July. PTT said the communications links could be restored within a few days. Some diplomatic observers say "restoration of phone links with Yugoslavia would be a small step toward reconciliation between Serbs, Muslims, and Croats," Reuters reported. -- Stan Markotich

ROMANIA SEES "PLOT" IN U.S. CONGRESS DELAY.
The government newspaper Vocea Romaniei on 10 July reported an "anti-Romanian plot" in the U.S. Congress's decision to postpone discussions on granting Romania permanent most-favored-nation status. The daily printed an article from the Budapest-based Uj Magyarorszag that reported on a campaign allegedly staged by the Hungarian lobby in the U.S. Vocea Romaniei said the "U.S. Congress and America in general are the victims of a horrible anti-Romanian informational war, conducted from Budapest with the direct help of the Hungarian Democratic Federation of Romania." Evenimentul zilei noted a letter from 25 congressmen addressed on 26 June to the chairman of the House of Representatives demanding that the MFN debate be delayed until after Romania's presidential elections this fall. -- Dan Ionescu

MOLDOVAN PRESIDENT PRAISES IFES WORK.
Mircea Snegur on 9 July said the International Foundation for Electoral Systems (IFES) has helped the democratic process in the Republic of Moldova, BASA-press and Infotag reported. Snegur spoke with IFES Chairman Richard Soudriette, who is visiting Chisinau. Snegur recalled IFES's assistance in the February 1994 parliamentary elections, the country's first on a multi-party basis. Snegur also praised the organization's contribution to preparations for the upcoming presidential elections, scheduled for 17 November. Those elections will be a "political maturity test" for the Moldovan electorate, he said. -- Dan Ionescu

INFLATION SOARS IN BULGARIA.
Consumer price inflation soared to 20.3% in June, the second highest level since March 1991, Pari reported on 10 July. The inflationary burst is a result of the lev's collapse--the Bulgarian National Bank's (BNB) fixing fell from 70.7/dollar at end-1995 to 181.36 on 10 July, a 61% decline. Some 5% of June's inflation is due to May's increase in liquid fuel prices. The average monthly wage is now about $65, its lowest level since October 1991, and the real value of personal savings has been halved in the last three months. The immediate cause of the lev's decline is the BNB's inability to intervene in the market to support it. The bank's foreign reserves had dwindled to $600 million by 31 May, with large foreign debt service payments looming, including $150 due on 17 July. -- Michael Wyzan

ALLEGED BULGARIAN CRIME BOSS ARRESTED.
Dimitar Dzhamov, head of the "Zora nis" insurance company and "Zora" holding, was arrested on 9 July, Kontinent and Standart reported. Dzhamov is considered one of the founding fathers of crime rings controlled by "the wrestlers," mostly former athletes and secret policemen. He worked with Ivan Iliev, who headed "insurance" and "security" firms and was killed last year under unclear circumstances. Zora holding controls two reservoirs leased from the state; fishermen complain they are forced to pay "taxes" to wrestlers. Newspapers connect Dzhamov's arrest to the seizure of six tons of marijuana in Varna on 7 July. Zora nis allegedly was hired to guard the drugs through Bulgarian territory. Dzhamov's lawyer said his client was arrested for car theft, illegal possession of firearms, and possession of a forged passport. -- Stefan Krause

SOUTH BALKAN COUNTRIES TRY TO CONTAIN HOOF-AND-MOUTH DISEASE.
Macedonian authorities have slaughtered about 1,400 cattle to contain a further spread of hoof-and-mouth disease, local and international media reported. Several hundred animals will be killed this week. Meanwhile, Macedonia received some 240,000 EU vaccines to protect cattle. In Albania, where the epidemic is believed to have originated, several thousand cattle have been slaughtered and 130,000 vaccinated. Rump Yugoslavia has tightened its border controls for goods from Albania, Macedonia, and Bulgaria. At the only one of three border-crossings between Macedonia and rump Yugoslavia that remains open, all vehicles and passengers coming from Macedonia are being disinfected. Macedonia has stepped up security on its border with Albania. -- Stefan Krause

OSCE FAVORS NEW ALBANIAN ELECTIONS.
The OSCE parliamentary assembly on 9 July recommended that Albania consider new elections, "in better conditions and in the presence of international observers." The suggestion was included in a declaration on global security at the request of the U.S. and Sweden. The Albanians opposed that and said the next elections will take place in 2000, Rilindja Demokratike reported on 10 July. According to Koha Jone, delegation head Genci Pollo said the U.S. delegation was linked to the "Greek extremist lobby." OSCE parliamentary assembly president Javier Ruperez said he would seek talks with the Albanian authorities to pursue the matter. -- Fabian Schmidt

RUMP YUGOSLAV PRIME MINISTER CONSIDERS TALKS ON KOSOVO.
Radoje Kontic said his government should meet with Albanian representatives in Kosovo, but ruled out a role for the Albanian government, Reuters reported on 9 July. He reacted to Albanian President Sali Berisha's calls for three-party talks between Serbia, Kosovo. and Albania. However, Kontic said Kosovo is an internal matter, "a problem of separatism and not one of national minorities." -- Fabian Schmidt

ALBANIAN SOCIALIST SPOKESMAN FACING GENOCIDE CHARGES?
Kastriot Islami was detained and interrogated by police on suspicion of participating in "communist genocide," Albania reported on 10 July. Reportedly, the charges are based on testimony from former president Ramiz Alia and deputy Interior Minister Zylyftar Ramizi. After his release, Islami went to an embassy of a "friendly country" and requested political asylum, the daily reported. Border controls have been ordered to prevent him from leaving the country. Meanwhile, the Socialist Party agreed to hold a party congress on 24 August. -- Fabian Schmidt

[As of 1200 CET]

Compiled by Victor Gomez and Maura Griffin Solovar





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