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Newsline - February 11, 1997


SAGALAEV EXITS WITH HEAD HELD HIGH.
President Yeltsin has appointed TV journalist Nikolai Svanidze chairman of state-run Russian TV (RTR), while former Chairman Eduard Sagalaev has announced that he will return to the private network TV-6, which he founded in 1992, Russian media reported on 10 February. Sagalaev will continue to host the Saturday evening RTR program "Otkrytye novosti." He told ITAR-TASS that resigning was "the most dignified step" he could take in the current situation, adding that he was leaving "with a clear conscience and a proudly raised head." Sagalaev told NTV that he still plans to sue current and former RTR journalists who accused him of destroying the network and using it for personal financial gain. Svanidze, whose appointment was favored by Sagalaev, had only praise for his predecessor, saying he was convinced a court would find that the accusations against Sagalaev were false, NTV reported. -- Laura Belin

WILL RTR'S EDITORIAL LINE CHANGE?
Rumors that Sagalaev would be forced out of his post at RTR first began to circulate last July, after Anatolii Chubais was appointed presidential chief of staff. Sagalaev told NTV that his enemies had long resented his journalistic independence, because he frequently said no to various politically-motivated "suggestions." (He apparently did not always resist such pressure: in October, an interview with former presidential bodyguard Aleksandr Korzhakov was pulled from an RTR program; see OMRI Daily Digest, 22 October 1996.) Meanwhile, Izvestiya noted on 11 February that Svanidze is known to have warm relations with Chubais. Svanidze told NTV that he will continue to host the Sunday analytical program "Zerkalo." Asked whether reporting the main events of the week while holding a high-ranking bureaucratic post might constitute a violation of journalistic ethics, Svanidze replied, "There are no independent people or independent commentators." -- Laura Belin

LUZHKOV CHANGES STAND ON CHECHEN INDEPENDENCE.
Moscow Mayor Yurii Luzhkov told Russian Public TV (ORT) on 10 February that there is no need to prevent Chechnya from leaving the Russian Federation. In a sharply-worded statement, Luzhkov said no free economic zones in Chechnya should be established and the border between Russia and Chechnya should be closed to prevent criminals, drugs, and weapons from moving into Russia. Earlier, Luzhkov had been an ardent critic of the Khasavyurt accords, which postponed a decision on Chechnya's status for five years and a strong advocate of keeping Chechnya within the Russian Federation. A few days earlier, Luzhkov met Grozny's deputy mayor, Mulayk Saydulayev, to discuss mutual cooperation and announced that the city of Grozny would soon send a representative to Moscow, Moskovskaya pravda reported on 8 February. -- Nikolai Iakoubovski

YELTSIN DETAILS RYBKIN TO ATTEND MASKHADOV INAUGURATION.
President Boris Yeltsin on 10 February met for 45 minutes with Security Council Secretary Ivan Rybkin to discuss the situation in Chechnya and the possible creation of a Russian State Committee for the North Caucasus, Russian media reported. Yeltsin also named Rybkin his personal representative at the 12 February inauguration of Chechen President-elect Aslan Maskhadov. Delegations from Morocco, Poland, and the Baltic states, as well as former Russian Vice President Aleksandr Rutskoi are also expected to attend the inauguration ceremony. Rybkin told Russian Public TV (ORT) that Yeltsin reiterated his commitment to continuing the search for a peaceful solution to the situation in Chechnya. -- Liz Fuller

TULA DEPUTY GOVERNOR ARRESTED.
Police have arrested Tula Oblast Deputy Governor and Oblast Property Commission Chairman Boris Shapovalov for abuse of public office, forgery, and misuse of state property, ITAR-TASS reported 10 February. Criminal proceedings were launched against Shapovalov in December, but he continued to carry out his official duties because Governor Nikolai Sevryugin refused to fire him. Sevryugin will stand for election later this spring since Tula is one of the few regions that has not yet elected a regional executive. -- Robert Orttung

REACTION TO KORZHAKOV VICTORY.
In his first interview after winning a seat in the Duma, Aleksandr Korzhakov was quoted in Izvestiya on 11 February as saying that voters elected him because of the state's "impotence." He was vague about his previously advertised plans to release compromising information about those in power. NTV, one of Korzhakov's most vociferous critics, suggested that the results of the vote would be declared invalid because of irregularities in the financing of Korzhakov's campaign. Such a move is unlikely, however, since President Yeltsin's victory in the presidential election could be canceled on similar grounds. The co-chairman of the administration's coordinating council on regional elections and a long-time Korzhakov foe, Sergei Filatov, called him a "zero" as a legislator and a person "who does not respect the law." -- Robert Orttung

IZVESTIYA CRITICIZES CHERNOMYRDIN.
Prime Minister Viktor Chernomyrdin damaged his own reputation and that of the Russian authorities in general during his recent trip to the U.S., according to a commentary published in Izvestiya on 11 February. When the notoriously inarticulate Chernomyrdin was asked about Defense Minister Igor Rodionov's warnings that insufficient military funding is threatening the Russian nuclear command-and-control system (see OMRI Daily Digest, 7 February 1997), he asked the reporter whether Rodionov's comments were reported in a newspaper. When the answer was affirmative, Chernomyrdin asserted, "That means [Rodionov] did not say that." Izvestiya argued that Chernomyrdin was either in "blissful ignorance" of what was going on in his own country or was attacking the media to evade an unpleasant question. Either way, the prime minister acted badly, the paper said. -- Laura Belin

SHUMEIKO FOUNDS ORTHODOX RUSSIA MOVEMENT.
Delegates from 57 regions attended the founding conference of the new movement Orthodox Russia, which was organized by Vladimir Shumeiko and his Reforms-New Course movement, ITAR-TASS and RIA-Novosti reported on 9 February. Shumeiko said Orthodox Russia would focus on Russia's spiritual revival, whereas Reforms-New Course will concentrate on economic issues. He added that Orthodox Russia would not discriminate against citizens of other religions. Many army, police, and security officers were invited to the conference, and Shumeiko said the new movement was in part designed to encourage patriotism among officers. Shumeiko has close ties with President Yeltsin, who sent a message to the conference welcoming the new movement's creation. He is reputed to have presidential ambitions and has cultivated contacts among the regional elite since serving as Federation Council speaker from 1994 to January 1996. -- Laura Belin

BILL ON PORNOGRAPHY DRAFTED.
The Duma Culture Committee has drafted a bill regulating trade in pornographic materials, NTV and ITAR-TASS reported on 10 February. The new Russian Criminal Code that went into effect on 1 January forbids the illegal distribution of pornography, but there is as yet no legislation stipulating how such material can be traded legally. Under the new bill, porn magazines could be sold only in special retail outlets, sales would be subject to a new tax, and newspapers would have to purchase a license to publish ads offering sexual products and services. Committee chairman and film director Stanislav Govorukhin estimates that in Moscow alone the porn trade is worth about $5 million each month. Under the old Criminal Code, the distribution of pornography was punishable by up to three years imprisonment, but the legislation was almost never enforced. -- Penny Morvant

MOSCOW HOLDS FIRM ON REACTOR SALE TO INDIA.
First Deputy Prime Minister Viktor Ilyushin said during Indian Foreign Minister I. K. Gujral's visit to Moscow that Russia is planning to go ahead with its $2.6 billion sale of two light-water reactors to India, Reuters reported 10 February. The U.S. lobbied against the sale, saying it violates a 1992 treaty not to transfer nuclear technology to non-nuclear states. Russia claims that the reactors, which it is now building in Iran and planning to sell to China as well as India, cannot produce weapons-grade uranium or be put to any military use, ITAR-TASS reported. In addressing the Russian-Indian Commission on Trade, Scientific, and Cultural Cooperation, Ilyushin stressed that one of the main obstacles to trade between the two countries is that India does not accept the guarantees of Russian commercial banks. -- Robert Orttung

RUSSIAN-GERMAN MANNED SPACE MISSION LAUNCHED.
A German-Russian manned space mission was successfully launched from the Baikonur cosmodrome in Kazakstan on 10 February, ITAR-TASS reported. German astronaut Reinhold Ewald is expected to stay at the Russian orbital space station Mir until the beginning of March. The German space agency will pay Russia $60 million for the flight. Some of this money will be used to finance Russia's work on the international space station Alfa, and in particular to reduce Russia's nearly one-year lag behind schedule. During last week's Gore-Chernomyrdin commission meeting, Prime Minister Chernomyrdin assured the U.S. side that Russia is committed to working on the Alfa station as a full partner. -- Natalia Gurushina

MORE ON U.S.-RUSSIAN COOPERATION.
The State Duma has supported a U.S. Congress initiative to use the resources of U.S. banks to finance housing construction in Russia, ITAR-TASS reported on 10 February. The Duma-Congress working group held in Washington, D.C. on 5-9 February came up with the suggestion to give Russia a 30-year $5 billion credit which will bear 6%-8% annual interest. The next meeting of the group is scheduled to take place in Moscow in April 1997. Meanwhile, the Russian oil giant LUKoil and the U.S. petroleum firm ARCO have announced that they will invest some $400 million in the development of oil projects in Russia in 1997. The projects will be carried out by their joint venture LUKARCO (See OMRI Daily Digest, 10 February 1997). -- Natalia Gurushina

ECONOMIC INDICATORS IN JANUARY.
The State Statistical Committee recorded a slight increase in both GDP and industrial output, which went up by 0.1% and 0.3%, respectively, in January 1997 in comparison with the same period a year earlier, ITAR-TASS reported on 10 February. According to the State Tax Service, there was also an improvement in tax collection in January, which reached 10.1 trillion rubles ($1.8 billion)--26.3% more than the expected level. The real disposable income of the population increased in January by 9% and the average wage by 33% compared with January 1996. The number of people with incomes below the official minimum subsistence level dropped by 14%. -- Natalia Gurushina


BLACK SEA ECONOMIC COOPERATION.
Foreign Ministers and other high-ranking officials from the 11 member-states of the Black Sea Economic Cooperation (BSEC) organization met in Istanbul on 7 February to discuss the creation of a free trade zone, AFP reported. The group includes Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine. Turkish Foreign Minister Tansu Ciller used the meeting to announce that the planned Black Sea Trade and Development Bank, to be based in Thessaloniki, will have $300 million in contributions from member-states at its disposal. She also expressed her hope that in the future the BSEC will be "integrated into Europe." -- Lowell Bezanis

TURKMENISTAN, IRAN COORDINATE CUSTOMS, BORDER PROCEDURES.
An agreement coordinating customs and border procedures for cargoes moving through Sarakhs railway station has been reached by Turkmen and Iranian railway officials, ITAR-TASS reported on 8 February. The Sarakhs station, which is being expanded to increase its capacity, opened in May 1996. It is the only rail link between the two countries, and is Iran's solitary connection to the larger Central Asian rail network. According to Turkmen Railway Minister Mered Kutliev, more than 123 million metric tons of cargo has passed through the station to date. -- Lowell Bezanis

NEW DEVELOPMENT IN TAJIK HOSTAGE CRISIS ...
Outlaw Tajik field commander Rezvon Sadirov, the subject of an ongoing hostage-taking crisis, has reportedly arrived in the Obigarm region of Tajikistan where the hostages are being held, international media reported. His brother, Bahrom Sadirov, is holding several hostages--including nine UN workers, five Russian journalists, and the Tajik security minister--and demanding that Rezvon Sadirov be granted free passage from Afghanistan to Tajikistan. It is not clear what Rezvon Sadirov's arrival in Obigarm means for the crisis, as negotiations appeared to continue on 10 February. Bahrom Sadirov has changed his demands several times, at one point insisting that his group be allowed to participate in the peace talks between the government and the opposition. The kidnapping has been condemned throughout the international community. -- Bruce Pannier

... BUT NEGOTIATIONS CONTINUE ...
Meanwhile, Russian Minster for the CIS Aman Tuleev arrived in the Tajik capital Dushanbe on a visit that will focus on the hostage crisis, rather than his originally scheduled series of meetings and visits, international media reported. Also, the commander of the Tajik presidential guard, Gafar Mirzoyev, held talks with Bahrom Sadirov over the release of the hostages. Earlier reports had indicated that Rezvon Sadirov was fighting alongside Afghan field commander Ahmed Shah Masoud against the Taliban movement and that he had no desire to return to Tajikistan. The hostages have been allowed to contact officials in Dushanbe and Moscow via satellite telephone. All of them say they are in good condition. -- Bruce Pannier

... AND TAJIK OPPOSITION PROTESTS.
The United Tajik Opposition (UTO), which is currently involved in peace talks with the government, has complained that the authorities violated the ceasefire agreement when they allowed outlaw Tajik field commander Rezvon Sadirov and an armed band to enter the Obigarm region. The UTO is unofficially in control of the region. -- Bruce Pannier


RENEWED CONTROVERSY OVER FINANCING CHORNOBYL CLOSURE.
Ukrainian Nuclear Safety Minister Yurii Kostenko has voiced frustration over the possibility that the G-7 may decide not to fund the construction of new nuclear reactors in Rivne and Khmelnitsky, AFP reported. Kostenko said such a decision could mean that the Chornobyl nuclear plant would not be closed by 2000. Last year, Ukraine promised to keep to that timetable in return for a G-7 aid package worth some $3.1 billion to fund the closure and to finance alternate forms of energy. G-7 experts met in Washington yesterday to discuss the aid package. According to a recent EBRD report, Ukraine has failed to look at the energy sector as a whole, opting for two new nuclear reactors instead of improving existing thermal power plants. Kostenko countered that Ukraine proposed developing thermal power two years ago but that EBRD opted for nuclear power. -- Oleg Varfolomeyev

PRO-RUSSIAN GROUP BLASTS CRIMEAN TATARS FOR SEEKING PRIVILEGES.
The Russian Society of Crimea has claimed that the Crimean Tatar Assembly's recent appeal to the Ukrainian and Crimean authorities is "dictated by the desire to gain political privileges in accordance with ethnic origin," UNIAN reported on 8 February. Tatars leaders are collecting signatures to the appeal in order to draw attention in Ukraine and abroad to problems encountered by Tatars returning to Crimea after the mass-expulsion in the 1940s. The Russian Society said that, as a result of their actions, the Crimean Tatar leaders could aggravate interethnic tensions on the peninsula. It urged the Ukrainian president and parliament "not to be under the thumb of the [Crimean Tatar Assembly] and not to divide citizens into natives and non-natives." -- Oleg Varfolomeyev

FOREIGN INVESTMENT IN BELARUS.
Following a meeting with officials from the Ministry of Trade and the State Revenue Department on 8 February, the Ministry of Entrepreneurship and Investment reported that Belarus has been offered some $70 million in investments for various projects, Belarusian TV reported. The ministry has said it recognizes the need to set up a special body to monitor and facilitate the allocation of the funds, most of which are intended to support entrepreneurs. Priority will be given to those working in the production sector, who currently constitute 20% of the country's entrepreneurs. -- Sergei Solodovnikov

ESTONIAN PRIME MINISTER SURVIVES NO-CONFIDENCE VOTE.
Tiit Vahi remains in office following the failure on 10 February of a no-confidence motion proposed by the opposition Pro Patria Union, Moderates, Reform Party, and Rightists caucuses, Western agencies reported. Deputies voted by 46 to 45 with one abstention not to oust the premier. The no-confidence motion followed charges that Vahi helped privatize apartments in downtown Tallinn's center in an "unethical manner" while serving as Tallinn City Council chairman from 1993-1995 The decision of the nine members of the Center Party to back Vahi's ouster indicates his dwindling support in the parliament. -- Saulius Girnius

INFLATION IN BALTIC STATES.
According to the Lithuanian Statistics Department, inflation increased from 0.9% in December to 3% in January, BNS reported on 10 February. Higher value-added tax on some food products contributed to a 5.2% increase in food prices. Several days earlier, the Latvian State Statistical Committee announced that consumer prices in January rose by 1.9%, compared with a 0.6% rise in December. Food prices increased by 1.7% and services went up by 2.8%. The Estonian State Statistics Department, meanwhile, reported that consumer prices increased by 1.4% in January, double the figure for December. Food prices rose by 1.3% and services by 1.6%. Twelve-month inflation rates in all three countries, however, have declined. -- Saulius Girnius

UPDATE ON "MEDICAL AFFAIR" IN POLAND.
Waldemar Krupa, head of a public clinic in the northern city of Bialystok, has been dismissed for accepting expensive medical equipment free of charge, Polish media reported on 11 February. Krupa is the third clinic head to be dismissed in an affair that, according to Health Minister Jacek Zochowski, involves at least 68 hospital heads and has cost the state 30 million zloty ($10 million). According to unofficial estimates, that figure could be as high as 300 million. In late 1995, Krupa signed documents purchasing ultra-sound equipment for above-average prices but accepted the apparatus free of charge. The clinic's debt, plus interest, was then sold to a company that used the owed money to cover its tax obligations. According to the Health Ministry, the debt of the health-care sector totaled 1.5-1.7 billion zloty in 1996. The opposition Freedom Union has submitted a no-confidence vote against Zochowski. -- Beata Pasek

CZECH PREMIER, OPPOSITION LEADER DISCUSS CZECH-GERMAN DECLARATION.
Vaclav Klaus and parliamentary Chairman Milos Zeman have announced that the parliament may adopt an accompanying statement to the Czech-German declaration, Czech media reported on 10 February. According to Klaus, the statement would be neither a preamble nor an interpretation of the declaration. Until now, Klaus has strongly opposed the adoption of any such statement. The German parliament approved the declaration last month without any additional text. The two Czech leaders also discussed the current impasse in the lower chamber of the parliament, where the extremist parties have virtually stopped proceedings through filibusters and obstructions, Czech media reported. Klaus and Zeman agreed that it may be necessary to amend the rules governing parliamentary sessions. -- Jiri Pehe

BELATED CRITICISM OF SLOVAK INFORMATION SERVICE.
Jozef Migas, chairman of the Party of the Democratic Left (SDL), told Novy cas on 8 February, that "official and unofficial intelligence services" are trying to discredit him. Migas is known for his neutral stand toward both the governing coalition and the opposition. Sme suggested on 11 February that Migas's criticism might be an attempt to conceal the fact that he has visited the
home of the deputy director of the Slovak Information Service (SIS). The daily claimed that Migas has been seen there several times. It also reported that the SIS is cultivating contacts with Slovak TV director Igor Kubis and Eva Zelenayova, a deputy of the Movement for a Democratic Slovakia. -- Anna Siskova

HUNGARIAN PREMIER READY TO TESTIFY IN PRIVATIZATION SCANDAL CASE.
Premier Gyula Horn has told the parliament that he is ready to testify in the privatization scandal case, although he himself is not implicated in the scandal, Hungarian media reported on 11 February. "I am prepared to appear before the House committee and to testify," Horn said, adding that "the guilty must be punished but the insinuations must stop." He also said that it is in the "vital interest" of politicians to keep public life "clean." He noted that after the scandal had broken, he dismissed the top management of the State Privatization and Holding Company (APV) as well as the minister in charge of privatization. But a subsequent investigation showed that individuals closely associated with the two governing parties had pressured a consultant working for the APV to share her record-high commission. Opposition deputies said that if the scandal had not been uncovered, the money would have been used for the 1998 election campaign. -- Zsofia Szilagyi


RIOTS IN VLORA CLAIM TWO MORE LIVES ...
In clashes with police that left about 81 people injured--many seriously--30-year-old Arthur Rustemi died after being shot in the back, international media reported on 10 February. Rustemi's assailant was not identified. Another victim was the 51-year-old Maliq Banushi--the second person to die of a heart attack during demonstrations since 9 February. Vlora residents beat police officers and burned their uniforms, guns, and shields in a display of uncontrolled rage against the authorities. Some 20,000 people accompanied Rustemi's coffin today to a local cemetery, shouting anti-government slogans and setting fire to the local headquarters of the Democratic Party. -- Fabian Schmidt

... WHILE PARLIAMENT PREPARES TO DECLARE STATE OF EMERGENCY.
The Albanian government is to submit legislation to the parliament imposing a state of emergency there. In late January, the legislature passed a law allowing for the use of the military to protect public buildings and roads, but the government has pledged not to use soldiers against protesters. Troops, however, are reported to have arrived in Vlora. According to newspaper reports on 11 February, the Interior Ministry has also mobilized about 1,000 students and peasants from northern Albanian and sent them to join anti-riot police in Vlora. Greek Foreign Minister Theodoros Pangalos has called for an emergency meeting of EU foreign ministers to discuss the situation in Albania. -- Fabian Schmidt

U.S. SECRETARY OF STATE URGES MILOSEVIC TO RECOGNIZE ELECTION RETURNS.
Madeleine Albright, in a letter to Serbian President Slobodan Milosevic dated 8 February, has appealed to the Serbian authorities to recognize municipal returns and to enter into dialogues with the opposition parties, Reuters reported on 10 February. Washington is concerned that the legislation would limit the authority of local councils by stripping them of revenue sources. State Department spokesman Nicholas Burns commented that "the only result that will satisfy the United States is if the people who won the November 17 elections actually take their seats and have sufficient powers to do their job--meaning the powers haven't been stripped away in some back room deal, which is another option that we've heard about, another option available to the anti-democrats in Belgrade." -- Stan Markotich

SERBIAN OPPOSITION SEES "HOT" TIMES AHEAD.
A parliamentary legislative committee on 10 February ratified a draft law allegedly recognizing opposition wins in the November municipal runoffs, Tanjug reported. The legislation is slated to be discussed in the parliament today. Leaders of the opposition Zajedno coalition responded by warning that the bill's passage will not signal the end of demands for reform. Democratic Party leader Zoran Djindjic, speaking to demonstrators in Belgrade on 10 February, said that "ahead of us is a long hot spring and summer, not to mention a fight against those who have not surrendered and who view their own people as dupes of foreign [powers]." Zajedno leaders also vowed they would continue the mass demonstrations at least until opposition municipal mandates are recognized. -- Stan Markotich

MUSLIMS, SERBS STEP UP MILITARY PRESSURE ON BRCKO.
SFOR officials said that the armies of both the Federation and the Republika Srpska have made additional requests recently to hold exercises near Brcko, AFP reported on 10 February. SFOR called for calm and pointed out that neither side will be allowed to bring big guns into the area. The fate of the strategic region will be announced by a U.S. mediator later this week. The Brcko issue was the only one that proved too thorny to be resolved at Dayton, and both sides have said that its loss would mean war. The Serbs want to keep it to provide a link between the eastern and western halves of their territory. For the Muslims and Croats, its return to them is a crucial symbol of the need to reverse the effects of ethnic cleansing. -- Patrick Moore

VIOLENT MUSLIM-CROAT CLASHES IN MOSTAR.
Some 500 Muslims who were headed for the cemetery in the Croatian half of Mostar on 10 February to mourn their dead were attacked by some 700 Croats taking part in a Roman Catholic carnival parade, Reuters reported. Major Tony White, spokesman for the NATO-led Stabilization Force (SFOR) in Bosnia, said there were 22 injured, two seriously, and one dead. All casualties were Muslims who had wanted to visit their family graves on the second day of the Islamic religious holiday of Bajram. Mike Fabbro, SFOR spokesman in Mostar, said that Croats, including policemen, had opened fire on the crowd. But Mostar Mayor Ivica Prskalo, a Croat, blamed Muslim extremists, saying the visit to the graveyard was a "provocation." A curfew was imposed on both halves of the city. But according to Reuters on 11 February, a new wave of evictions of Muslims from the Croatian half followed during the night. -- Daria Sito Sucic

CROATIA TO RECONSIDER DATE FOR LOCAL VOTE.
The Croatian authorities have announced that they will either confirm or postpone the date of the local elections by Wednesday, according to Vjesnik on 11 February. The vote has been slated for 16 March, but the government may move the date into April so that balloting can go ahead smoothly everywhere. The problem is that voting will also take place in eastern Slavonia, which is still in Serb hands, and that distribution of citizenship papers there is proceeding slowly. The Croatian government is determined to have eastern Slavonia vote at the same time as the rest of the country to underscore its reintegration. The UN's administrator for the region, Jacques Klein, met with President Franjo Tudjman on 10 February and will speak today to Serbian President Milosevic about the elections. -- Patrick Moore

MACEDONIAN, GREEK HUMAN RIGHTS GROUPS CRITICIZE LAW DISCRIMINATING AGAINST NON-GREEKS.
Eleven Greek and Macedonian human rights and refugee groups issued a statement in Skopje on 9 February urging Athens to repeal a law that prevents non-Greeks who fled the country 50 years ago from returning, AFP reported. Greece passed a law in 1982 welcoming back citizens who fled after the civil war in 1946-49 but excluding those who were not of Greek origin. The law, in effect, discriminated against people of Macedonian-Slav origin in the north of the country. Athens does not recognize the existence of a Macedonian-Slav minority. -- Fabian Schmidt

ROMANIAN GOVERNMENT PLEDGES TO INDEX SALARIES.
The cabinet on 10 February has proposed to the trade unions to index salaries, Radio Bucharest reported. The average monthly wage would increase by more than 30%, from 329,000 lei ($53) to 430,000 lei ($70). The offer came after several rounds of talks with union leaders amid growing popular dissatisfaction over recent price hikes. The new cabinet has launched radical reformist policies leading to a drastic devaluation of the national currency and increases in prices. It hopes that the wage increase will compensate for some 75% of the price hikes. In a first reaction, a union leader was quoted as saying that the proposals could be a basis for further negotiations. -- Dan Ionescu

NATO SECRETARY-GENERAL IN MOLDOVA.
Javier Solana, on the first day of his fact-finding visit to Chisinau, met with President Petru Lucinschi, Premier Ion Ciubuc, Foreign Minister Mihai Popov, Defense Minister Valeriu Pasat, and parliamentary leaders. Moldovan and Western media reported. The hosts seized the opportunity to re-affirm Moldova's neutrality--as stipulated in the constitution--stressing that the country does not intend to join any military alliance. Chisinau, however, is seeking closer cooperation with NATO and is eager to serve as a bridge between the alliance and Russia, which remains opposed to NATO enlargement. Solana told journalists that NATO wants to build "solid bilateral relations with Russia and a special relation to Ukraine." He suggested that Moldova could serve as an intermediary in those efforts. -- Dan Ionescu

BULGARIAN POLITICAL PARTIES REACH CONSENSUS ...
At a meeting with President Petar Stoyanov on 10 February, consensus was reached among all parties represented in the parliament on how to resolve the country's economic crisis, international media reported. Parliamentary elections are scheduled to be held on 19 April, and the current parliament is to be dissolved in the coming days. Until the next parliament has been installed, the Consultative Council for National Security, which is headed by Stoyanov, will oversee all talks on national security. Privatization is to be speeded up and insolvent enterprises liquidated. In addition, measures are to be taken to fight corruption and accountability demanded from those responsible for the current economic crisis. Meanwhile, Stoyanov wrote IMF Director-General Michel Camdessus that both still to be named interim government and the national bank will be willing to meet with high-level IMF officials immediately. -- Maria Koinova

... BUT FUEL CRISIS DEEPENS, HYPERINFLATION THREATENS.
Neftochim, the country's main oil refinery, is experiencing its most serious crisis in seven years, Bulgarian media reported on 8 February. Because of high inflation, the company cannot make a profit and thus is unable to buy crude. Almost all of Sofia's gas stations are closed, and public transport services were significantly reduced last weekend in both Sofia and Plovdiv. The authorities on 10 February released 150 metric tons of diesel fuel from reserves to secure Sofia's public transport until the end of this week. Meanwhile, Pari reported on 11 February that Bulgarian consumer prices rose by 43.8% in January, the highest rate since February 1991 and just under the 50% barrier for hyperinflation. High inflation has been caused largely by the collapse of the lev. The Bulgarian National Bank has intervened to try to stabilize the national currency, reducing its foreign reserves to $415 million. Foreign-debt servicing for 1997 alone totals some $857 million. -- Maria Koinova and Michael Wyzan

[As of 1200 CET]

Compiled by Victor Gomez and Jan Cleave




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