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Newsline - February 7, 1997


RODIONOV: RUSSIA IS LOSING CONTROL OF NUCLEAR FORCES.
In a sharp plea for a coherent military reform policy and increased defense spending, Defense Minister Igor Rodionov lamented the "horrifying state" of the Russian armed forces at a 6 February news conference, Russian and Western agencies reported. Rodionov said that as a result of insufficient funding, "no one can guarantee the reliability" of the Russian nuclear command-and-control system. If the current decay continues, he added, "Russia might soon reach the threshold beyond which its missiles and nuclear systems cannot be controlled." Complaining about chronic underfunding, an increasing officer suicide rate, and bloated and duplicative paramilitaries like the Border Guards and Interior Troops which are outside the control of the Defense Ministry, Rodionov argued military reform was making no progress because it "lacks consistency, a general concept, and political willpower." -- Scott Parrish

YELTSIN SEEKS TO REASSURE PENSIONERS.
In his first televised remarks of 1997, President Boris Yeltsin vowed that the government would never deprive pensioners who also work of their retirement benefits. During a meeting with Federation Council Chairman Yegor Stroev at the Kremlin on 6 February, Yeltsin sharply criticized Pension Fund head Vasilii Barchuk for "dropping a clanger, [saying] that pensions for working pensioners will be abolished." Yeltsin said no such measure was under consideration and promised to protect working pensioners' interests, NTV reported. Barchuk triggered a national outcry when he said in a television interview last week that the government had discussed proposals to raise the minimum pension age and abolish or reduce payments to Russia's 7 million working pensioners. Both the press and the opposition have slammed the idea of canceling such benefits, and government officials have been scrambling to reassure pensioners with jobs that they will not lose out, even if their pensions are adjusted. -- Penny Morvant

STROEV ON MEETING WITH YELT-SIN.
Speaking to journalists after his 25-minute meeting with Yeltsin, Stroev commented that the president appeared "energetic" and able to work, although "signs of the flu" are still visible, ITAR-TASS and NTV reported on 6 February. He said he and Yeltsin had not discussed attempts by the opposition to remove the president because of his poor health, but he did not specify whether the subject of his own suggestions on amending the constitution had been raised (see OMRI Daily Digest, 13 January 1997). Stroev also predicted that the upper house will approve the 1997 budget at its 12 February session, albeit "with great difficulty," Russian TV (RTR) reported. -- Laura Belin

CHERNOMYRDIN IN WASHINGTON.
Russian Prime Minister Viktor Chernomyrdin and U.S. Vice President Al Gore opened the eighth session of the bilateral economic cooperation commission, which they co-chair, in Washington on 6 February, Russian and Western agencies reported. Chernomyrdin earlier met with House speaker Newt Gingrich and Senate Majority Leader Trent Lott, to whom he re-emphasized Moscow's opposition to NATO expansion, urging, "don't expand NATO now." According to ITAR-TASS, Chernomyrdin added that Russia could accept expansion if Moscow were admitted to the NATO council as its 17th full member and the alliance transformed itself into a "political organization." Aside from commission sessions, Chernomyrdin will also discuss the timing and location of a planned U.S.-Russia summit, and may also face questions about Russian chemical weapons production, which have arisen as the U.S. Senate considers ratifying the 1993 Chemical Weapons Convention. -- Scott Parrish

CHERNOMYRDIN DISCUSSES OFFICIALS' PAY.
Responding to reports that the salaries of federal officials will soon be raised substantially, Chernomyrdin ruled out any increase until the debt to pensioners and workers in state-funded organizations has been reduced, Izvestiya reported on 7 February. On 5 February the paper said a presidential decree had been drafted that would raise the salaries of 31,000 high-ranking officials by 60%-80% at an annual cost of about 585 billion rubles ($104 million). It quoted proponents of the increase as saying the 900,000 rubles the average senior civil servant received in 1996 was far lower than wages in business and that many highly qualified officials were leaving as a result. Chernomyrdin also expressed sympathy for the idea of raising salaries but added that the current arrears in wages and pensions mean there is "no moral right" to take such a step. The issue will be reconsidered in two to three months. -- Penny Morvant

U.S. PROTESTS THE PLANNED RUSSIAN REACTOR SALE TO INDIA.
Despite American protests, Moscow plans to sell India two nuclear power reactors, The New York Times reported on 6 February. Washington argues that the sale violates a 1992 agreement by the nuclear suppliers group, which Russia signed, not to sell nuclear technologies to non-declared nuclear weapons states which have not accepted international inspection of all their nuclear facilities. Although India is widely believed to have a nuclear weapons capability, having conducted a nuclear test in 1974, it is not a declared nuclear power, and has not signed the 1968 nuclear Non-Proliferation Treaty. Russian Deputy Minister of Atomic Energy Yevgenii Reshetnikov said that since Moscow and New Dehli had originally agreed on the sale in 1987, it was not prohibited by the nuclear suppliers agreement, which exempts deals concluded before 1992. He also pledged that the reactors would be placed under international monitoring, precluding military use. -- Scott Parrish

URALS GOVERNORS DENOUNCE FEDERAL GOVERNMENT.
Following Primorskii Krai Governor Evgenii Nazdratenko's open letter blasting Economics Minister Evgenii Yasin published in Nezavisimaya gazeta on 4 February, Sverdlovsk Governor Eduard Rossel and other Urals region governors have accused President Boris Yeltsin and his government of not solving the regions' problems, not fulfilling promises made during the presidential campaign, and not carrying out the government's own economic development program. The regional leaders are particularly concerned that government policies channel money away from investment in production to short-term state securities, Kommersant-Daily reported on 6 February. The governors demanded that the government change its policies by 20 February. The newspaper described the action as a "rebellion" by the regions against the center. It claimed that the governors are basically calling for a return to policies in which the economy essentially existed on the state's ability to print more money. -- Robert Orttung

JOURNALISTS DENOUNCE "WAR OF COMPROMISING MATERIALS."
Leaders of the Union of Journalists adopted a resolution warning the media not to allow "unscrupulous rivals in an ever more ruthless struggle for power" to manipulate journalists through the so-called "war of compromising materials." The resolution, published in Rossiiskaya gazeta on 7 February, said the media should inform the public about abuses of power by state officials, but claimed that recent publications of scandalous materials had little to do with investigative journalism. Since last summer, Russian newspapers have published numerous documents and transcripts aimed at tarnishing the reputation of controversial political figures. The main targets have been Presidential Chief of Staff Anatolii Chubais, Security Council Deputy Secretary Boris Berezovskii, and former Presidential Security Service head Aleksandr Korzhakov. -- Laura Belin

DUMA PASSES LAW ON FREE ECONOMIC ZONES.
The State Duma passed a law on free economic zones (SEZs) in Russia on its second reading, Kommersant-Daily reported on 6 February. The law allows the creation of six types of SEZs, as opposed to only two types mentioned in the first draft adopted by the Duma in June 1996. They include production and trade customs zones, special economic zones within regional borders, zones for technological research and development, zones for international provision of services, off-shore banking centers, and tourist and recreational zones. The law also introduces tax benefits for companies and firms operating in SEZs. Of 19 SEZs created in Russia so far, only the "Yantar" zone in Kaliningrad Oblast has begun operations. -- Natalia Gurushina

GOVERNMENT TO CONTINUE REGULATION OF NATURAL MONOPOLIES.
The government has issued a decree under which it will continue to limit increases in electricity rates, rail transport costs, and oil transport fees, tying them to the rate of wholesale price inflation in industry, ITAR-TASS and Radio Mayak reported on 6 February. A special working group will monitor the activities of natural monopolies. Speaking at a government meeting, First Deputy Prime Minister Vladimir Potanin supported Gazprom's suggestion to cut gas prices by 15% for consumers who pay their bills on time. Deputy Economics Minister Sergei Vasilev, however, expressed concern about excessive government subsidies of residential rates for gas, heat, and electricity. -- Natalia Gurushina


TRIAL ON POST-ELECTION UNREST BEGINS IN ARMENIA.
The trial of five men who took part in mass protests following the disputed 22 September presidential election has begun in Yerevan, Armenian and international media reported on 6 February. The five are charged with inciting mass disorders and attempting to seize the parliament building. Seven others are awaiting a separate trial on the same charges. The protests broke out and turned violent after the opposition accused the authorities of falsifying the vote. Several international election observer groups questioned the official results that secured a second five-year term for incumbent President Levon Ter-Petrossyan. Key opposition figures, including Vazgen Manukyan, the leader of the National Democratic Union and defeated presidential candidate, attended the trial. No opposition leaders are on trial, and all the defendants are rank-and-file opposition activists. Earlier, Manukyan said that he is ready to take "responsibility, but not guilt" for the post-election unrest. -- Emil Danielyan

SHEVARDNADZE: EU'S EASTWARD EXPANSION MORE PREFERABLE FOR GEORGIA.
Georgian President Eduard Shevardnadze said that the European Union's eastward expansion is "much more important for Georgia and, maybe, for the other Transcaucasian states" than NATO's enlargement, ITAR-TASS reported on 6 February. Commenting on NATO's possible enlargement, Shevardnadze said that the "situation should not be dramatized" as any country is free to decide its strategic priorities. Shevardnadze denied that the upcoming visit to Georgia by NATO Secretary-General Javier Solana is aimed at "pushing Georgia into NATO." -- Emil Danielyan

STRIKES AND THREATS IN KAZAKSTAN.
With more than 250 miners already on strike in northern Kazakstan because of unpaid wages, ITAR-TASS reported on 6 February that 1,500 teachers in the Semipalatinsk region also carried out their threat to strike. The teachers are demanding payment in full of 400 million tenge (about $5.3 million) in wage arrears. Unpaid wages and pensions in Kazakstan are now approaching the $1 billion mark, causing significant social tension. According to Reuters, on 6 February a bomb hoax nearly forced the evacuation of the northerneastern town of Pavlodar. The fake bomb, attached to a 50-ton chorine container, had a note attached, which read: "Pay me my salary!" -- Bruce Pannier

SOME HOSTAGES RELEASED ...
Two Red Cross workers captured by supporters of renegade field commander Rezvon Sadirov on 5 February near the town of Obigarm were freed on 7 February, Western media reported. The two were among 16 taken hostage by Saidirov's men in a 48-hour period. Sadirov's brother Bahrom said the Red Cross workers were only siezed in order to render medical aid to an Austrian UN military observer, who was abducted along with four colleauges on 4 February. One of the five Russian journalists also taken hostage by the group, Galina Gridneva of ITAR-TASS, was allowed to phone the agency's headquarters in Moscow. She said the group was in no danger. Her abductors claim the journalists are being held to cover negotiations with the government team sent to the area by President Imomali Rakhmonov. The group is demanding a corridor be created to permit Sadirov to return from Afghanistan. They also said they had planted 100 mines in Dushanbe and would explode them if their demands were not met. -- Bruce Pannier

... BUT RED CROSS PULLS OUT OF TAJIKISTAN.
The Red Cross in Tajikistan announced on 6 February it was removing the bulk of its personnel to neighboring Uzbekistan and had sent local staff home, according to RFE/RL and AFP. The Red Cross described the move, which came in response to the abduction of two of its workers, as "temporary." In a related story, the four UNHCR workers who were reported missing on 6 February are indeed captives of the same group which took the Red Cross workers hostage. Though a government negotiating team has been sent to the area, officials in Dushanbe call the kidnappers' demand for the safe passage of the outlaw group into Tajikistan from Afghanistan "unrealistic" and say "it would set an undesirable precedent." -- Bruce Pannier

RAPHAEL IN TASHKENT.
U.S. Assistant Secretary of State for South Asian Affairs Robin Raphael held talks with Uzbek President Islam Karimov and Foreign Minister Abdulaziz Komilov, Russian media reported on 6 February. During a press conference Raphael was quoted as saying Washington and Tashkent have similar views on Afghanistan and both sides continue to support Uzbekistan's proposal to impose an embargo on arms exports on the war-torn country. Raphael also reportedly discussed the impact of the civil war in Afghanistan on Tajikistan. -- Lowell Bezanis


CRIMEAN PARLIAMENT DISMISSES SPEAKER.
Vasyl Kyselyov was dismissed by 58 votes in the 96-member Crimean parliament, Ukrainian and international agencies reported on 6 February. The pro-Russian deputies accused him of "failing to fulfill his professional duties." After the vote, Kyselyov warned that the "situation in Crimea is getting to the point where the Ukrainian parliament will impose order here." Last month, Kyselyov opposed the Crimean parliament's censure motion against the pro-Ukrainian government; it was later annulled by Ukrainian President Leonid Kuchma. Kyselyov, who was elected speaker in October 1996, had backed closer economic ties with Russia but ruled out separation from Ukraine. -- Oleg Varfolomeyev

UKRAINIAN MINIMUM WAGE INCREASED.
Ukrainian lawmakers voted to increase the minimum monthly wage from 15 hryvnyas ($8) to 70.9 hryvnyas, Ukrainian and international agencies reported on 6 February. Labor Minister Mykola Biloblotsky warned the move would cost the state budget 32 billion hryvnyas this year. The average monthly wage for Ukraine's industrial workers is now 157 hryvnyas. Meanwhile, around 2,000 Ukrainian teachers gathered in downtown Kyiv to demand up to nine months' back pay. The state owes university and school teachers 260 million hryvnyas. The teachers threatened a national strike if the government does not abandon its plans this year to decrease budget expenditures on education by one-third. -- Oleg Varfolomeyev

BELARUSIAN TRADE DEFICIT REPORTED.
The country's trade deficit in 1996 was reported by the Ministry of Foreign Economic Relations to be $1.66 billion, Belarusian radio reported on 6 February. Such a trade deficit, according to ministry experts, resulted from a deterioration in trade with Western as well as CIS countries. Imports last year grew by some 12%, whereas exports increased by 24.4%. The most competitive goods for imports last year were tires, metals, refrigerators, and liquor. -- Sergei Solodovnikov

BALTIC PREMIERS MEET IN TALLINN.
At the semiannual session of the Baltic Council of Ministers, Gediminas Vagnorius (Lithuania), Andris Skele (Latvia), and Tiit Vahi (Estonia) on 6 February signed five documents directed at liberalizing economic and trade relations in the Baltics, ETA reported. The resolutions are on improving transit transport, on creating a Baltic customs union and airspace control, as well as statements on Baltic cooperation regarding EU integration and on creating an intergovernmental Baltic government database. They also stressed the necessity of becoming members of NATO. Skele and Vahi also signed a fisheries agreement regulating fishing in the Gulf of Riga. -- Saulius Girnius

CZECH RAIL WORKERS STRIKE ESCALATES.
Czech Transportation Minister Martin Riman refused to negotiate with striking railroad workers on 6 February after a Prague court had ruled that the strike, which stopped all rail traffic three days ago, was illegal, Czech media reported. Riman said the court's decision makes it possible for the government to fire striking workers, but it would not do so if they return to work voluntarily. Richard Falbr, chairman of the Czech Trade Unions, said the court's decision was flawed because it denied the railway workers their constitutional rights. Trade unions representing miners have declared they would go on a one-hour strike on 7 February in support of the striking railroad workers. -- Jiri Pehe

SLOVAK BANKING UPDATE.
The parliament on 6 February approved an anti-dumping law and a bill establishing an import-export bank, Slovak media reported. The opposition Christian Democratic Movement (KDH) protested the bank's establishment, warning that it will be fully subordinated to the cabinet, which will name all members of its banking council. KDH Deputy Mikulas Dzurinda said the bank will destroy the efforts of the National Bank of Slovakia (NBS) to maintain a stable currency. Meanwhile, the cabinet's move on 4 February to appoint Jozef Magula to the NBS board has also stirred controversy. Serving previously as finance ministry state secretary, Magula became known for his controversial steps against investment funds, allegedly "in the interest of small shareholders." Pravda on 6 February noted that although Magula's appointment alone cannot change NBS decisions, he will provide the cabinet a quick link to internal NBS information. -- Sharon Fisher

SLOVAK OPPOSITION REFERENDUM WINNING SUPPORT.
KDH Deputy Ivan Simko on 6 February announced that more than 300,000 signatures have been collected for the petition drive demanding a referendum on direct presidential elections, Slovak media reported. Just 50,000 more signatures will be needed to call a referendum, which the opposition hopes to hold by June. The petition drive has reportedly been supported by President Michal Kovac, the Trade Union Confederation, the Catholic and Protestant churches, the Association of Slovak Towns and Villages, and the "Save Culture" forum. The Party of the Democratic Left (SDL) is the only opposition party against the referendum. In other news, SDL Chairman Jozef Migas on 6 February claimed that he is being shadowed. Migas said both the ruling coalition and the opposition "blue coalition" are disturbed by the fact that under his leadership the SDL is adopting an independent opposition policy. -- Sharon Fisher

WILL TURKEY BLOCK NATO EXPANSION?
After a trip to Ankara on 6 February, NATO Secretary-General Javier Solana seemed less optimistic that Turkey would not block the organization's planned eastward expansion, Hungarian media reported. During a short meeting with Hungarian Foreign Minister Laszlo Kovacs at the Budapest airport on his way back from Turkey, Solana said he could not work wonders in only 12 hours. But he confirmed that the countries most likely to join NATO during the first round of enlargement will be invited to attend NATO's July summit in Madrid. In Ankara, Solana met with Turkish Deputy Prime Minister Tansu Ciller and President Suleyman Demirel. Demirel told Solana that Turkey would veto NATO's expansion if its endeavors to join the EU are not taken seriously. -- Zsofia Szilagyi


SERBIAN OPPOSITION CRITICAL OF PROPOSED LEGISLATION ...
Slobodan Vuksanovic, a representative of the Democratic Party (DS), has strongly criticized a proposed bill by the ruling Socialists that would allegedly recognize opposition wins from the 17 November runoff municipal elections. According to Vuksanovic, the introduction of the bill, slated for discussion in the Serbian legislature on 11 February, is little more than a ploy by the government "to deceive the international community and the citizens of Serbia once again," Beta reported. The legislation contains a list of districts where the authorities are prepared to recognize opposition wins, but fails to specify key areas won by the Zajedno opposition coalition, such as the districts of Novi Beograd in Belgrade and the Mladenovac area, observed Vuksanovic, hinting that such signs point to the government's lack of sincerity in recognizing opposition victories. -- Stan Markotich

... BUT SAYS DIALOGUE IS POSSIBLE.
Leaders of the Zajedno coalition met with French officials in Paris on 6 February, including Foreign Minister Herve de Charette. For his part, the leader of the Serbian Renewal Movement, Vuk Draskovic, said ongoing mass protests in Serbia would be called to a halt when the Serbian legislature passes a bill recognizing opposition wins in local run-off elections and open dialogue with the government. But Draskovic said ending the protests and entering talks would be contingent on the government's recognition of all opposition wins. Meanwhile, Vesna Pesic, head of the Serbian Civic Alliance, said entering talks with the government did not mean the opposition would stop pressing for reforms. "The moment we get all our mandates back, we shall launch our struggle for free media," Reuters reported her saying. -- Stan Markotich

FEDERAL YUGOSLAV PRESIDENT CALLS FOR DIALOGUE ON KOSOVO.
Zoran Lilic has called on the Kosovo Albanians to enter into talks with Belgrade, Nasa Borba reported on 7 February. Lilic, who visited the army corps in Pristina together with General Chief of Staff Momcilo Perisic, criticized "extremist nationalism" and said "our aim must be a strong civic state with a high degree of human and democratic rights, and not the unrealistic wishes of all peoples on the territory of the Federal Republic of Yugoslavia to get their own state." Elsewhere, the OSCE appointed the High Commissioner on National Minorities, Max van der Stoel, to a special mission to Kosovo. That would include investigating the possibility of launching a constructive dialogue between Belgrade and the Albanians in Kosovo, AFP reported. -- Fabian Schmidt

EXPLOSIONS IN BOSNIAN BORDER AREA.
Two explosions on the evening of 6 February rocked the village of Gajevi, situated just inside Serbian territory in northeastern Bosnia. One prefabricated house was destroyed and three others were damaged, Reuters reported. Muslims in Gajevi are rebuilding in keeping with their right under the Dayton agreement to go home. Their efforts began last August; since then the Muslims have completed a complicated UN-sponsored procedure to verify that they are indeed civilians from the area. The Republika Srpska authorities have pledged to find out who is responsible for repeated violent incidents against the refugees, but the problems continue. U.S. troops have surprised Bosnian Serb police setting explosive devices, and the Muslims maintain that Russian SFOR troops are aiding the Serbs. -- Patrick Moore

BOSNIA, WORLD BANK SIGN $32 MILLION CREDIT.
After a 50-day delay caused by disagreements within Bosnia's three-men presidency over who should sign international aid contracts, Presidency Chairman Alija Izetbegovic on 6 February signed three credit arrangements for the country's reconstruction, local and international media reported. The three loans include $7 million for local projects, $10 million for an emergency industrial restart project, and $15 million for hospital services, Onasa reported. Those credits for the first time allocate substantial reconstruction funds to the Bosnian Serb entity. Under the current deal, the Serbs, who had received thus far only two percent of international aid because of their leadership's boycott of a donors conference last year, will receive about one-third of the total. But an upcoming donors conference scheduled for 5 March might be postponed if the interethnic government fails to approve draft laws proposed by the IMF on a single central bank, a single currency, and a government budget, Reuters reported. -- Daria Sito Sucic

ALL-LEVEL GOVERNMENT CRISIS IN BOSNIA.
Bosnia's Council of Ministers failed on 6 February to adopt rules of procedure, because its Bosnian Serb member and co-premier, Boro Bosic, requested that deputy ministers be able to vote alongside the ministers on government actions, international media reported. Other council members argued that that would violate the country's new constitution. The other co-premier, Haris Silajdzic, a Muslim, said the government should resign if it is not able to resolve the issue. Meanwhile, the same day, Bosnian Croat representatives left the Muslim-Croat federation government session in a protest against Muslims' refusal to allow the establishment of several new municipalities with a Croat majority. Muslim officials fear further ethnic and territorial divisions if the ethnic criterion is adopted as the only one. Yet another session was disrupted that same day: the cantonal government in the southern city of Mostar was broken up, because the delegates could not agree over having one joint bank account. -- Daria Sito Sucic

INTERNATIONAL DIPLOMATS APPEAL TO SLAVONIAN SERBS.
Ambassadors of the Contact Group and EU countries posted to Croatia continued their diplomatic offensive to smooth the transition in eastern Slavonia from local Serb control to that of the Zagreb authorities, news agencies reported on 6 February (see OMRI Daily Digest, 6 February 1997). The diplomats met with local Serb leaders Vojislav Stanimirovic and Goran Hadzic and told them that the Serbs should take out Croatian citizenship and participate in the 16 March elections. The Serbs were also informed that Croatia has guaranteed them sufficient rights and that the international community will continue to monitor the situation. There has been a series of violent incidents recently in which hard-line Serbs have apparently tried to thwart the reintegration process, which is due for completion in July. -- Patrick Moore

SLOVENIAN PARLIAMENT REJECTS GOVERNMENT LINE-UP.
Slovenia's legislature on 6 February split down the middle, with 45 members voting for and 45 against Prime Minister Janez Drnovsek's proposed cabinet, Reuters reported. The prime minister, who must obtain at least a simple majority for parliamentary ratification, had formed a coalition including his own Liberal Democratic Party, the former communists or United List of Social Democrats, the pensioners' party, Desus, and the Nationalist Party. Drnovsek has ten days to present a new line-up. Parliamentary elections were held on 10 November. -- Stan Markotich

ROMANIA'S CURRENCY CONTINUES TO FALL.
The leu's exchange rate on 6 February dropped to 6,069 to the dollar, thus surpassing another "psychological threshold," Romanian media reported. Over the last years the leu has fallen steadily: in October 1993, it reached 1,000 lei to the dollar; in July 1995, 2,000; in June 1996, 3,000; in late December 1996, 4,000; and it hit 5,000 on 20 January 1997. The Romanian currency has depreciated slightly over 50% since the beginning of the year. Former Prime Minister Nicolae Vacaroiu criticized a recent statement by Labor Minister Alexandru Athanasiu disclosing that the country's budget was calculated at $1 to 7,500 lei. According to Vacaroiu, such indiscretion smacked of a lack of professionalism. He predicted that the minister's disclosure would lead to big difficulties on the local currency markets. -- Dan Ionescu

DNIESTER PARLIAMENT APPROVES NEW GOVERNMENT STRUCTURE.
After weeks of heated debates, the Supreme Soviet of the self-declared Dniester Moldovan Republic on 4 February approved the new government structure proposed by its president and prime minister, Igor Smirnov, BASA-press reported on 6 February. The structure provides for 10 ministries, 10 state committees, four departments, and a state service. The former government comprised 17 portfolios. Sources in Tiraspol said the staff was cut by 30%. Smirnov is expected to renounce the prime minister post as soon as the constitution is changed. The most probable candidate for premier is the person who will take over the newly created post of cabinet's first deputy chairman in charge of the economy. Smirnov was re-elected president of the breakaway region last December. -- Dan Ionescu

BULGARIA'S MARKET CONTINUES TO COLLAPSE.
The lev continued its free fall as the Bulgarian National Bank set the exchange rate for 7 February to 2,608 leva to the dollar, up from 1,638, Pari reported. In early January, the exchange rate was around 500 leva to the dollar. Basic staples have disappeared from store shelves. Only "two of every 10 stores are still working," 24 chasa cited Deputy Director of the State Price Commission Stefko Popov as saying. Restaurants, shops, and wholesale suppliers still in business prefer payments in dollars, despite the official ban of trading in hard currency. "The only thing that could be done now is to lift price controls and remove administrative trade restrictions in foreign currency," said Krassen Stanchev, director of the independent Institute for Market Economy. -- Maria Koinova

BULGARIAN POLITICAL ROUNDUP.
In a letter to the Bulgarian Socialist Party's (BSP) Control Commission, former BSP leader Zhan Videnov on 6 February demanded that Nikolay Dobrev be expelled from the party's ranks at the plenary meeting scheduled for 7 February for returning the mandate to form a new BSP-led government, Kontinent reported. Videnov accused Dobrev and BSP Chairman Georgi Parvanov of "betrayal and treason." Parvanov will ask for a confidence vote at that plenary meeting. If the delegates vote against him, a party congress must elect a new leader, according to BSP statutes. The Socialists continued their parliamentary boycott on 7 February, forcing a second session to be called off because the necessary quorum was not reached. Meanwhile, Sofia Mayor Stefan Sofiyanski confirmed that he was asked unofficially by President Petar Stoyanov to head the caretaker government, which will conduct the early parliamentary elections set for April. -- Stefan Krause

DAILY PROTESTS IN VLORA.
Some 15,000 protesters gathered in Vlora on 7 February, the third day of anti-government protests following the collapse of the Gjallica pyramid scheme, Reuters reported. The previous day, up to 30,000 demonstrated there, laying siege to a police station, jostling police forces, and hurling stones at riot police. The protesters demanded the release of some 30 people arrested late on 5 February after battles with police in which gunfire was exchanged and about ten people were injured. The situation in Vlora remained tense during the night. The interior ministry vowed that any attacks on official buildings would be met with force. Port authorities ordered all docked boats--four foreign vessels and six Albanian--to move out to sea, fearing protesters might try to storm them. Police gave up unsuccessful attempts to contain and disperse demonstrators. -- Fabian Schmidt

ALBANIAN HELSINKI COMMITTEE CONDEMNS POLICE VIOLENCE.
The Helsinki Human Rights Committee said the police should show restraint and tolerance over the protests. It also denounced the alleged mistreatment of people being held at police stations and the mistreatment and arrest of journalists. Last week, a Koha Jone journalist was arrested but was later released. Over 150 suspected demonstrators and opposition figures were arrested since the protests started more than one week ago. Elsewhere, VEFA President Vehbi Alimucaj warned the government not to interfere in his and three other companies' activities, saying "we are the basis of economic development of Albania." VEFA and three other companies--Kamberi, Cenaj & Co., and Silva--have formed a "financial union" to protect their interests following the freezing of other investment companies' assets by the national bank. -- Fabian Schmidt

[As of 1200 CET]

Compiled by Steve Kettle and Valentina Huber



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