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Newsline - February 19, 1997

Presidential spokesman Sergei Yastrzhembskii not only denied the report that President Boris Yeltsin's wife Naina asked him to step down for health reasons but also revoked the accreditation of Komsomolskaya pravda's journalist Aleksandr Gamov, whose report gained wide publicity throughout Russia, AFP reported on 18 February (see OMRI Daily Digest, 18 February 1997). Gamov admitted that he was simply spreading rumors. Other members of the Russian media expressed surprise at the drastic measures taken against him. Meanwhile, State Duma Speaker Gennadii Seleznev said Yeltsin's postponement of his annual address to the Federation Assembly has violated the constitution and complicated parliamentary and governmental work, NTV reported on 18 February. -- Nikolai Iakoubovski

German Foreign Minister Klaus Kinkel met Presidential Chief of Staff Anatolii Chubais and Foreign Minister Yevgenii Primakov on 18 February, agencies reported. The two sides concurred that Russia and NATO should sign an agreement before the NATO Madrid summit in July, at which the decision to accept new members is expected to be made. However, Russia is insisting on signing a legally binding treaty with NATO, which the latter resists. Reuters reported that Kinkel will not be given the opportunity to meet President Yeltsin during his two-day visit. Yeltsin did meet Palestinian leader Yasser Arafat on 18 February, however. Meanwhile, Russian Foreign Ministry spokesman Vladimir Andreev said recent Polish reports of a covert Russian anti-NATO campaign were "absolutely groundless." -- Peter Rutland

U.S. Secretary of State Madeleine Albright told NATO's North Atlantic Council in Brussels on 18 February that an accelerated timetable should see accession agreements signed with new NATO members by December of this year. Albright also announced several new concessions to Russia, such as a willingness to set country by country limits within the 1990 CFE treaty and a joint Russian-U.S. peacekeeping brigade. The day before, when Albright was in Germany, Kinkel affirmed German support for the French proposal for an April five-power summit with Russia, Britain, and the U.S. to seek agreement with Russia about NATO expansion. The U.S. is opposed to such a summit. -- Peter Rutland

The U.S. Commerce Department is investigating the sale to Russia of supercomputers to be used for simulating nuclear tests, AFP and the Wall Street Journal reported on 19 February. Atomic Energy Minister Viktor Mikhailov announced the purchase of four supercomputers on 13 January. A Silicon Graphics spokesman confirmed that his company sold the machines but said the firm thought they were going to a pollution monitoring laboratory and not to nuclear warhead design institutes. Meanwhile, Deputy Atomic Energy Minister Yevgenii Reshetnikov confirmed on 18 February that Russia will sell a nuclear reactor to Cuba, and said that the U.S. is only objecting because it wants to keep Russia out of the international market for nuclear power stations. He also said that the U.S. firm Westinghouse had been invited to join the project - something which U.S. law would not allow. -- Peter Rutland

Duma Security Committee Chairman Viktor Ilyukhin has redoubled his efforts to pressure President Boris Yeltsin into firing Security Council Deputy Secretary Boris Berezovskii. Ilyukhin wants Berezovskii removed on the grounds that he lied about his Israeli citizenship, lacks professional experience in handling security matters, and continues to engage in business activities while performing his state duties, Komsomolskaya pravda reported 19 February. NTV seemed to support the anti-Berezovskii effort by broadcasting a critical report on him, including comments from hardline Russian nationalist leader Aleksandr Sterligov noting that Berezovskii's position in the administration helps him attract more support for his political activities. -- Robert Orttung

Col. Viktor Baranets, deputy press spokesman for the Defense Ministry, is publishing his 2,000 page memoirs on goings-on at the ministry, Komsomolskaya pravda reported on 18 February. Last week, the tabloid Sovershenno sekretno published excerpts from the diaries, in which Baranets discussed ways to assassinate President Yeltsin. Baranets, who plans to leave the army, was demoted from his position as chief press spokesman in the wake of the controversy over the abortive firing of Ground Forces Commander Vladimir Semenov (see OMRI Daily Digest, 3 December 1996). When asked whether a coup was likely in Russia, Baranets commented: "I have had occasion to study the history of military coups in various countries of the world, and have analyzed our generals from this point of view. My conclusion is that the likelihood of a 'coup from the top' is extremely small in Russia today." -- Peter Rutland

President Yeltsin on 18 February ordered Defense Minister Igor Rodionov to reduce the size of the armed forces by 200,000 men by the end of the year, ITAR-TASS reported. The establishment strength of the armed forces is currently 1.7 million. Yeltsin also ordered the government to set aside funds to carry out the force reduction and provide social benefits to soldiers facing unemployment. Rodionov estimated that the cuts would cost about 10 trillion rubles. The reduction was first announced at a joint press conference given by Rodionov and Defense Council Secretary Yurii Baturin on 7 February (see OMRI Daily Digest, 10 February 1996). -- Penny Morvant

In a sharp blow to the budget and a victory for business, the Constitutional Court on 18 February found unconstitutional a government edict of 28 February 1995 requiring firms to purchase licenses to produce, store, or sell alcohol on the wholesale market, Kommersant-Daily reported. The court said it is the prerogative of the parliament to pass tax legislation. The case was brought by the legislatures of Dagestan, Stavropol Krai, and Tula Oblast. Dagestan argued that the edict further hampered the republic's wine producers, who, it claims, have already suffered as a result of other federal policies. In order to minimize its impact on the budget, the ruling will not come into effect for six months. The court also instructed the Federal Assembly to consider legislation on license fees. It is far from certain, however, that the parliament will pass the required law before the six-month grace period is up. -- Penny Morvant

Gazprom chairman Rem Vyakhirev has called for the closure of the Cayman Islands-based Regent Gaz Investment Company, Nezavisimaya gazeta reported on 18 February. The Regent company is offering international investors a fund backed by $200 million worth of Gazprom shares, which are being bought by a Russian subsidiary, Rastri. Gazprom shares cannot be sold to foreigners without Gazprom's permission, but they are traded on the Russian domestic market. Last October, Gazprom made $429 million worth of shares available to foreigners last October, through the issue of American Depositary Shares, and they trade at four times the Russian domestic share price. -- Peter Rutland

Deputy Prime Minister Anatolii Kulikov said that although the government has no control over flows of financial resources, no emergency measures will be introduced to fight tax evasion, ITAR-TASS, NTV and Segodnya reported on 18-19 February. Kulikov said he will concentrate on coordinating the work of the tax police, the tax service, and the customs committee. Meanwhile, a top tax service official, Vladimir Popov, said that the authorities intend to transfer the accounts of large taxpayers to the most reliable commercial banks authorized to work with governmental accounts, Kommersant-Daily reported on 18 February. Although the measure can reduce delays in payment, it is likely to provoke another round of war among banks for large clients. At present, tax arrears due to delays in payment via commercial banks total 3 trillion rubles. -- Natalia Gurushina

The total volume of capital flight from Russia over the last five years is estimated at some $60 billion, Finansovye izvestiya reported on 18 February, citing a former partner in the Moscow branch of Coopers & Lybrand. Most of the money was deposited in banks in Switzerland and Cyprus. Some 41,000 industrial companies, 50% of banks, and over 80% of joint ventures are believed to have criminal connections. The shadow economy is estimated to account for up to 40% of the Russian economy. -- Natalia Gurushina

Following more than two months of debate, the Armenian National Assembly on 18 February adopted the 1997 budget, international media reported. The budget envisages expenditures of 151.9 billion drams ($325 million) with 30.5 billion drams to be spent on defense needs and 16.8 billion allocated for social welfare. According to Reuters, the budget projects a 10.5% inflation rate in 1997, and practically all of its 33.9 billion dram deficit will be covered by international financial institutions. Addressing the parliament, President Levon Ter-Petrossyan described it as a "budget of survival but not a budget of development." The Communist Party was the only faction that voted against the draft. The two other parliamentary opposition parties, the National Democratic Union and the National Self-Determination Union, have been boycotting the legislature since the 25 September post-election unrest. -- Emil Danielyan

A round table discussion involving the main Armenian opposition parties decided on 17 February to form a "united front" against the current government and to convene the new movement's founding congress soon, Noyan Tapan reported. According to the opposition leaders, the movement's only goal is to "establish democracy in Armenia." In particular, this involves holding fresh presidential, parliamentary, and local elections and adopting a new constitution. David Vartanyan, a representative of the National Democratic Union, said that the new organization will include Armenian NGOs and distinguished individuals who are unhappy with the current regime. Meanwhile, during a mass rally in Yerevan on 18 February to mark the 76th anniversary of the 1921 anti-Bolshevik revolt, the opposition reiterated its claims that the "illegitimacy of the Armenian leadership" is hindering a solution to the country's pressing problems. -- Emil Danielyan

Mirzajon Islamov was removed from his post as administrative head of the Ferghana Wilayat on 14 February, Narodnoe slovo reported on 15 February. In a meeting chaired by Uzbek President Islam Karimov, Islamov was accused of "no longer answering the needs of the time," a charge levied against other regional hokims in 1996 (see OMRI Daily Digest, 17 December 1996). The president considered the pace of privatization and economic reform to have been too slow, noting that only 35 out of 73 registered joint ventures in the region were still in operation. In addition, light industries were operating at only 50% capacity and agricultural harvests for 1996 were a disappointing 77% of the required quota. His successor is Numonjon Mominov, a district head of administration from the same Ferghana apparatus as Islamov. -- Roger Kangas

The Uzbek Foreign Ministry protested to Dushanbe after three Uzbek customs officers were wounded in a 15 February attack on their outpost in Besharik, RFE/RL reported on 18 February. Uzbek authorities believe the assault from Tajik territory was well-planned and designed to aggravate tensions between the Leninabad region of Tajikistan and adjacent Uzbek areas. This is the second such incident to occur this year. -- Lowell Bezanis

Turkmen President Saparmurat Niyazov and Barnea Eli, president of the Dutch subsidiary of the Israeli concern Bateman, signed a $180 million deal to modernize Turkmenistan's aging pipeline system, RFE/RL reported on 19 February. The U.S. and South Africa are to provide capital for the undertaking. -- Lowell Bezanis

The Supreme Court of Kyrgyzstan changed the verdict handed down by a Bishkek municipal court to Topchubek TurgunAliyev on embezzlement charges early last month, RFE/RL reported on 18 February. The Supreme Court reduced a 10-year prison term to a three-year suspended sentence and one year deportation to the Issyk-Kul region; the other defendant in the case, Timur Stamkulov, had his sentence reduced from six to three years. Turgunaliev's lawyers declared their intention to appeal the latest decision in Kyrgyzstan's Constitutional Court. In other news, the presidential administration of Kyrgyzstan was shrunk by a 14 February presidential decree from 127 to 89, RFE/RL reported the same day. -- Naryn Idinov

The Russian intelligence service and the Tajik government orchestrated the recently concluded hostage taking crisis in Tajikistan in an attempt to bring another group into the inter-Tajik talks and set it against the opposition, according to a clandestine Tajik opposition radio report by the BBC monitored 15 February Interfax report. According to a Russian media report issued immediately after the hostages were released, Tajik Presidential Press Secretary Zafar Saidov was quoted as saying the Sadirov brothers declared their "loyalty" to Tajik President Imomali Rakhmonov and did not lay claim to the status of a "third force" in the Tajik peace talks. The next round of talks is scheduled to take place later this week in Meshed, Iran. -- Lowell Bezanis

President Leonid Kuchma has ordered a criminal investigation into the misuse of funds by Gradobank and a government foundation, international agencies reported on 18 February. Gradobank and the National Foundation for Understanding and Reconciliation are accused of embezzling more than $50 million from a $237 million German government grant intended for survivors of Nazi persecution. Gradobank's accounts have been frozen since it stopped dispersing the money in December. -- Oleg Varfolomeyev

Pension arrears stood at 1.33 billion hryvnyas ($707 million) on 15 February, UNIAN reported on 17 February. The first deputy head of the State Pension Fund, Volodymyr Onyshchuk, said the fund had failed to receive 544 million hryvnyas in 1996 and 103 million in January 1997. Onyshchuk blamed the banks, which do not demand that enterprises pay compulsory contributions to the Pension Fund, and local authorities, which exempt some enterprises from contributions. Onyshchuk said pension arrears are also caused by the payment of wages in goods rather than cash. Meanwhile, about 1,000 miners staged a demonstration in the Donbas to demand their wages, AFP reported on 18 February. The miners' union said wage arrears to miners amount to 1.4 billion hryvnyas. -- Oleg Varfolomeyev

The Estonian parliament on 18 February unanimously adopted a law on refugees that for the first time drafts the principles of Estonian refugee policy and creates the legal means to ask for asylum, ETA reported. Under the law, a refugee is someone who is persecuted in his home country on racial, religious, ethnic, or political grounds. The passage of the law is connected to the 1951 UN convention on refugees and the 1967 protocol on the status of refugees, both of which the parliament is scheduled to ratify today. The parliament will add a declaration that not all the clauses of the convention are binding for Estonia. Because of limited resources, Estonia does not want to be required to grant refugees the same state aid that is given to citizens. The ratifications should help Estonia gain visa-free travel with Nordic countries. -- Saulius Girnius

Compared with 1995, Latvia's exports increased by 15.5%, to 795 million lati ($1.4 billion), while imports grew by 33.2%, to 1.28 billion lati, BNS reported on 18 February. The share of exports to EU countries increased from 44.1% in 1995 to 44.7%, but that of exports to CIS countries fell from 38.3% to 35.8%. The share of imports to the EU fell from 49.9% to 49.35 and to the CIS from 38.3% to 35.8%. Timber (24.%), textiles (16.9%), and food products (11.8%) were the main export items, while mineral products (22.2%), machinery (16.8%), and chemical goods (11%) were the main import items. -- Saulius Girnius

Algirdas Brazauskas in his annual state of the nation report to the Seimas on 18 February said that the most important event of the past year was the parliamentary elections, Radio Lithuania reported. But the change in government did not, he said, alter the top foreign policy priorities: membership in NATO and the EU. Important economic achievements were raising the country's GDP by 3.5% in 1996 and decreasing annual inflation to 13.1%. He also said that the average monthly wage in Lithuania (in terms of purchasing power parity as calculated by the OECD) was $520 -- higher than in Latvia ($468) and Estonia ($429). -- Saulius Girnius

The leaders of the Agreement of the Right -- a subset of the some 30 center-right parties plus the Solidarity trade union which form the extra-parliamentary Solidarity Electoral Action (AWS) group -- have said they support the proposal of Marian Krzaklewski, Solidarity leader, to convert the AWS into a political party rather than a federation, Polish media reported on 18 February. Jaroslaw Kaczynski, leader of the Center Alliance, said a federation is more prone to splintering and internal competition. Aleksander Hall, a member of the recently formed Conservative-People's Party, is against Krzaklewski's proposal, saying the AWS parties' programs are too different. Meanwhile, AWS local branches have begun talks with the Movement for Poland's Reconstruction and the Freedom Union on cooperation in the fall parliamentary elections. -- Beata Pasek

Vaclav Klaus rejected the proposal made by far-right Republican Party leader Miroslav Sladek to attend a joint meeting of the chairmen of parliamentary parties on 21 February to deal with the standoff in the parliament's lower chamber, CTK reported. Sladek's Republicans obstructed parliamentary proceedings over the last few days and repeatedly offended members of Klaus's ruling coalition. Klaus said that he wants to dissociate himself from "the political practice and methods" used by the Republicans, which are "highly detrimental" to democracy. President Vaclav Havel recently called the Republicans and the Communists "enemies of democracy" in the Czech Republic. -- Jiri Pehe

Center-right opposition representatives on 18 February said they have collected the necessary 350,000 signatures to call a referendum on direct presidential election, Slovak media reported. The referendum campaign, which began on 9 January, will end on 23 February. The president is currently elected by the parliament, but the opposition fears the parliament will be unable to agree on a candidate when President Michal Kovac's term expires in March 1998, as a three-fifths majority is needed. That would allow the cabinet to take over many presidential powers. At the opposition's request, Kovac plans to hold the referendum simultaneously with that on NATO membership, which was recently demanded by the ruling coalition. The opposition's referendum is considered the first step in its campaign for the parliamentary elections, scheduled for next fall. -- Sharon Fisher

Association of Workers (ZRS) Chairman Jan Luptak on 18 February told Radio Twist that his party will insist on rejecting the privatization of Slovakia's four biggest banks. Luptak, whose party is a junior coalition partner, also said that the ZRS will not support early parliamentary elections. Early elections were proposed by Slovak National Party (SNS) Chairman Jan Slota after the parliament failed to agree on the "law on the protection of the republic." Some ZRS deputies voted against the law, signaling a conflict within the ruling coalition. Internal controversies have continued over bank privatization. Premier Vladimir Meciar recently said he might link another vote on the bill halting bank privatization with a confidence vote in his government. The fall of his government would cause problems for the ZRS and the opposition, both of which oppose early elections. -- Anna Siskova

Gyula Horn on 18 February began a two-day official visit to Norway to discuss European integration, international media reported. Horn said Hungary has proved its value to NATO by serving as a base for international peacekeeping forces in former Yugoslavia. Norwegian Prime Minister Thorbjoern Jagland refused to directly back Hungary's NATO integration efforts, emphasizing that the application must be reviewed in the spring by all NATO members. Also on 18 February, Hungarian Foreign Minister Laszlo Kovacs began a two-day official visit to Poland, Hungarian media reported. Talks between Kovacs and his Polish counterpart, Darius Rosati, focused on NATO and EU integration, regional cooperation, and bilateral ties. -- Sharon Fisher

A UN report on 18 February said Hungary continues to rank first in foreign investment in the former Soviet bloc, RFE/RL reported. Total direct foreign investment in the region topped $46 billion from late 1989 to mid-1996. Of that amount, Hungary received about $14 billion, Poland $9 billion, Russia $6.6 billion, and the Czech Republic $6 billion. About 70% of all direct foreign investment in the region has gone to Hungary, the Czech Republic, Poland, Slovenia, and Slovakia. In contrast, Moldova received just $104 million and Belarus $350 million. On a per capita basis, Ukraine ranked last with only $17 of direct foreign investment per person. -- Sharon Fisher

The UN's special envoy for human rights, Elisabeth Rehn, said in Vukovar on 18 February that there must be a continued international presence in eastern Slavonia after the region reverts to Croatian control in July. The current UN military mandate expires in mid-year, but Rehn said that military observers must remain to reassure the area's 120,000 Serbs. She also called for civilian representatives of the EU, OSCE, and other bodies to be present, Novi List reported. The UN has been trying to convince the Serbs to stay and has obtained pledges from the Zagreb authorities of fair treatment for Serbs who did not commit war crimes (see Pursuing Balkan Peace, 18 February 1997). Serbian nationalists have nonetheless urged people to leave, and the Association of Serbs Expelled from Croatia announced in Banja Luka that it expects up to 70,000 people to resettle in Bosnia's Republika Srpska. Eastern Slavonia is expected to top the agenda today when Croatian Foreign Minister Mate Granic visits Belgrade, AFP reported. -- Patrick Moore

Explosive devices were thrown by unknown persons at the homes of two UN policemen in Prijedor in the northwest corner of Bosnian Serb territory, the UN announced on 18 February. Violence seems to have abated in Mostar, however, although progress still needs to be made on enabling those expelled recently from their homes to return, Oslobodjenje wrote on 19 February. Meanwhile in Sarajevo, the hunt is on for a successor to the international community's High Representative Carl Bildt. His term runs out in April, and he is believed to be anxious to leave, AFP wrote. But the job requires a former head of government--Bildt is a former prime minister of Sweden--and no such person seems interested. Names mentioned have included Spain's Felipe Gonzalez and Britain's Margaret Thatcher. -- Patrick Moore

The Croatian government said it will not surrender to the Hague-based International Criminal Tribunal for Former Yugoslavia evidence against Tihomil Blaskic, a Bosnian Croat accused of commanding a massacre of Muslims during the Muslim-Croat war in 1993, Hina reported on 18 February. Tribunal Judge Gabrielle Kirk McDonald ordered that Croatian Defense Minister Gojko Susak and Bosnian Federation Defense Minister Ante Jelavic turn over transcripts, memos, and recordings of conversations dating four years back by 19 February; otherwise, the ministers must appear before the court and explain their refusal. The Croatian government said such demands were "inappropriate" and compliance with them could "jeopardize national security." A Croatian Defense Ministry spokesman said Susak would neither provide the requested documentation nor appear in court. -- Daria Sito Sucic

An estimated 90% of schools were shut down across Serbia as striking teachers and their unions demanded payment of salaries in arrears and pay increases. The government, meanwhile, said that an agreement on resolving the dispute has been reached but insisted that meeting teachers' demands would force the printing of more currency, cause inflation, and destabilize the dinar, Reuters reported on 18 February. Union officials have pledged to continue striking until their demands are met. -- Stan Markotich

Leader of the Democratic Party Zoran Djindjic is slated to become Belgrade's first non-communist mayor in over 50 years this week. But Danica Draskovic, wife of Serbian Renewal Movement head Vuk Draskovic, has signaled her intent to become the head of the greater Belgrade district government, an office that may rival the mayoralty for influence. Meanwhile, Vuk Draskovic told Dnevni Telegraf he would neither support nor tolerate his wife's bid for the position, as such an arrangement would evoke Serbian President Slobodan Milosevic and his wife and main political ally, Mirjana Markovic. Draskovic added that Djindjic's succession to the mayor's post is not a foregone conclusion. -- Stan Markotich

The price of fuel, electricity, public transport, and telecommunications surged on 18 February, Romanian and Western media reported. The price hikes went into effect less than one day after Premier Victor Ciorbea announced a shock therapy package for the ailing Romanian economy. Gasoline and diesel prices, which had already doubled in early January, rose again by some 50%, the price of rail tickets by 80%, of telecommunications by 100%, and of electricity by up to 500%. The surge followed the government's decision to withdraw subsidies for those goods. A chain reaction is expected on the market, including the staples market. Long queues reportedly formed outside bread shops; some people bought up to 50 loaves. The IMF's chief negotiator for Romania, Poul Thomsen, praised Ciorbea's proposal for reforms but warned against further subsidizing energy-intensive enterprises. -- Dan Ionescu

Petru Lucinschi on 17 February said that the struggle against crime and corruption was a top priority for the current administration, along with paying pension and salaries arrears, BASA-press and Infotag reported the following day. Lucinschi announced that the Interior Ministry will soon set up a special department to deal with crime and corruption. He expressed confidence that, in a small country such as Moldova, order could be restored within six months. According to data released on 18 February by the Interior Ministry, organized crime is on the rise in Moldova, where 122 criminal groups operate. A ministry spokesman said that ties between the underworld and the state bodies are closest in the banking system and in the institutions in charge of privatizing industry and agriculture. -- Dan Ionescu

The council of EU finance and economy ministers agreed in Brussels on 18 February to lend Macedonia ECU 40 million ($46 million), Nova Makedonija reported the next day. Greece and Great Britain had on 27 January blocked such a decision, the former due to its objection to Macedonia's name and the latter on technical grounds (see OMRI Daily Digest, 29 January 1997). Part of the money is the EU's contribution to the donors' conference on 25 and 26 February which will settle Macedonia's $30 million debt to the European Investment Bank; the failure to pay off that debt has held up the signing of the trade and cooperation agreement reached with the EU in June 1996. The EU's decision paves the way for additional contributions from the international financial institutions to cover a projected $85 million balance-of-payments shortfall this year. -- Michael Wyzan

The caretaker government's announcement that Bulgaria will apply for full NATO membership (see OMRI Daily Digest, 18 February 1997) met with mixed reactions. The Russian Foreign Ministry on 18 February said that only the parliament, not the government, has the right to decide on the issue, but it said it sees Sofia's move "as a declaration" rather than a concrete step toward membership, Kontinent reported on 19 February. Meeting with interim Bulgarian Foreign Minister Stoyan Stalev, the ambassadors of the NATO members asked whether Sofia's new position will be permanent and what future relations with Moscow will be like. Turkish observers reacted favorably. Bulgarian Socialist Party Chairman Georgi Parvanov said his party is considering asking for a referendum on the issue alongside the 19 April parliamentary elections, Duma reported. -- Stefan Krause

Petar Stoyanov on 18 February vetoed changes in the electoral law, saying they could result in political instability, Reuters and Bulgarian media reported. The Socialist majority in the outgoing parliament last week lowered the threshold needed to gain parliamentary representation from 4% to 3%. A meeting of the parliamentary Judicial Commission was called by outgoing Parliamentary Speaker Blagovest Sendov for the same day but had to be canceled for lack of a quorum. Sendov then decided not to call a plenary meeting. He accused Stoyanov of humiliating the parliament. A presidential decree dissolved the parliament on 19 February, which some experts interpreted as midnight between 18 and 19 February. -- Stefan Krause

Sali Berisha told carefully selected supporters in Lushnje on 18 February that he had made errors in handling the pyramid crisis, but he added: "The people are also to blame." He repeated that the government would not pay compensation for money lost in the schemes but pledged to support badly hit regions by declaring them free-trade zones. Strikingly, Berisha said he had "ordered the finance minister to lift taxes for two years in Lushnje to help farmers and citizens out of this crisis," AFP reported. Moreover, he promised to help out the local soccer team, which was sponsored by Pellumb Xhaferri, a detained pyramid scheme manager. The Socialists, meanwhile, turned down an invitation to talk with the Democrats, saying that before any dialogue can be established the government must lift its ban on peaceful demonstrations and release people arrested during recent riots. Elsewhere, in Tirana, thousands of Albanians queued at foreign embassies, especially Italy's and Greece's, to obtain visas. -- Fabian Schmidt

[As of 1200 CET]

Compiled by Victor Gomez and Susan Caskie