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Newsline - July 29, 1997




NEMTSOV DEFENDS SVYAZINVEST SALE

Speaking in Novosibirsk, First Deputy Prime Minister Boris Nemtsov hailed the recent auction of 25 percent plus one share of the telecommunications giant Svyazinvest as an example of "honest privatization," Russian news agencies reported on 28 July. He also criticized those behind the unsuccessful bid for "going into hysterics on television." Russian Public Television (ORT) commentator Sergei Dorenko sharply criticized the Svyazinvest sale on 26 July (see "RFE/RL Newsline," 28 July 1997). Meanwhile, it has emerged that George Soros's Quantum Fund was part of the consortium that won the Svyazinvest auction. The "Financial Times" on 29 July quoted Soros as saying Quantum had put up $980 million, roughly half of the consortium's $1.875 billion offer. A press conference on the Svyazinvest sale, scheduled for 28 July, was canceled as neither State Property Committee Chairman Alfred Kokh nor First Deputy Prime Minister Anatolii Chubais turned up.

SOME MEDIA CONTINUE TO CRITICIZE DEAL...

The Svyazinvest privatization has been criticized on the radio station Ekho Moskvy and in the newspaper "Segodnya," both part of Vladimir Gusinskii's Most media empire, RFE/RL's Moscow bureau reported on 28 July. Most Bank was involved in the losing bid for Svyazinvest. "Nezavisimaya gazeta" on 29 July ran a lengthy, unflattering feature on Oneksimbank head Vladimir Potanin. The paper suggested that "political ambitions" lie behind Potanin's "wolf's appetite" for media outlets. In recent months, Oneksimbank has acquired large stakes in "Izvestiya" and "Komsomolskaya pravda." "Nezavisimaya gazeta" also charged that the consortium, in which an Oneksimbank affiliate was involved, acquired the Svyazinvest stake for an "undervalued" price. (However, Reuters on 28 July quoted financial analysts as saying the stake was sold for a fair price.) "Nezavisimaya gazeta" is partly financed by the LogoVAZ group of Security Council Deputy Secretary Boris Berezovskii. Berezovskii is rumored to have been involved in the losing bid for Svyazinvest. He and Potanin have been rivals in other recent privatization auctions.

...WARN OF REPRISALS AGAINST ORT

"Segodnya" warned on 28 July that some unnamed bankers are seeking to get rid of ORT commentator Dorenko and reorganize the 51 percent state-owned network. Ekho Moskvy has also reported that reprisals are being planned against ORT, and Dorenko told the radio station that a government official is in Potanin's "pocket." Meanwhile, Dorenko told "Kommersant-Daily" on 29 July that associates of First Deputy Prime Minister Chubais have asked to see ORT's founding documents, presumably to examine how the network's leadership can be changed. (Chubais recently returned to Moscow from a three-week vacation.) Dorenko vowed that the next edition of his weekly program will continue the investigative report on the privatization of a large factory in Cherepovets (Vologda Oblast). An ORT report on 26 July alleged that after acquiring a controlling stake in that factory, Oneksimbank transferred abroad $42 million that it had promised to invest in the factory.

IRKUTSK ELECTION VIEWED AS VICTORY FOR GOVERNMENT...

Deputy Presidential Chief of Staff Aleksandr Kazakov hailed Boris Govorin's convincing victory in the Irkutsk gubernatorial election as proof that the federal government can influence voters, Russian news agencies reported on 28 July. He did not specify how the government had influenced the outcome. An RFE/RL correspondent in Irkutsk reported on 17 July that some 9 billion rubles ($1.6 million) were transferred to the oblast during the campaign to help pay off wage arrears. "Nezavisimaya gazeta" on 29 July viewed the election result as a defeat for the Communist Party in general and for party leader Gennadii Zyuganov in particular. Zyuganov spent nearly a week campaigning for Sergei Levchenko, who finished a distant second. Meanwhile, Zyuganov told Interfax that the Irkutsk campaign had been the "dirtiest" he had ever seen. Anonymous leaflets spreading damaging allegations about various candidates were widely circulated during the campaign.

...WHILE COMMUNIST OBSERVER CHARGES FALSIFICATION

The opposition paper "Sovetskaya Rossiya" argued on 29 July that widespread falsification was used to ensure a lopsided victory for Govorin. Although local opinion polls indicated that the race would be close, Govorin gained some 50 percent of the vote, while Levchenko took second place with less than 19 percent. Communist State Duma deputy Aleksandr Salii, an election observer in Irkutsk, told "Sovetskaya Rossiya" that computers were used to tally the vote count and transfer votes cast for other candidates to Govorin. He noted that the percentages gained by the candidates were almost identical in all four districts of the city of Irkutsk, despite vastly different socioeconomic conditions in those districts. Salii argued that "any sociologist will tell you" that such a result is impossible.

PRESIDENTIAL SPOKESMAN SAYS NO CONFLICT BETWEEN YELTSIN, CHURCH

Sergei Yastrzhembskii says that Yeltsin's recent veto of the law on religious organizations should not be considered evidence of a "crisis in relations" between the president and the Russian Orthodox Church. Yastrzhembskii said Yeltsin vetoed the law because many of its provisions violated the constitution, not because of appeals from abroad, according to Russian news agencies on 28 July. Citing unnamed Kremlin sources, Interfax reported that Yeltsin has instructed representatives of the presidential administration to discuss possible revisions to the law with Church officials. Meanwhile, Russia's chief rabbi Adolf Shaevich on 28 July admitted that the religion law was not "perfect" but argued that it did not contain any provisions against "traditional world religions," including Catholicism. Along with Russian Orthodoxy, Buddhism, and Islam, Judaism was one of four faiths listed in the law as "traditional" Russian religions.

CHECHEN PRESIDENT SUSPENDS TALKS WITH MOSCOW

Aslan Maskhadov on 29 July called for the suspension of all ongoing talks with the federal government until Russia approves a plan for economic reconstruction in Chechnya, AFP reported, citing Interfax. Maskhadov also instructed his ministers to refrain from maintaining contacts with their Russian counterparts and from traveling to Moscow. He accused the Russian leadership of not complying with earlier bilateral agreements. The previous day, Maskhadov met with the head of the Organization for Security and Cooperation in Europe mission in Grozny and asked that organization to consider increasing humanitarian aid to Chechnya. Also on 28 July, Maskhadov called for a treaty establishing formal diplomatic relations between the Russian Federation and the Chechen Republic Ichkeria.

RUSSIAN DEFENSE MINISTER VOWS CRACKDOWN ON EMBEZZLEMENT

Igor Sergeev has sent a telegram to military and naval commanders throughout the Russian armed forces demanding more stringent control of use of finances allocated by the state budget, ITAR-TASS reported. Sergeev said that "deliberate diversion of money set aside to finance troops will be considered as undermining the combat readiness of the armed forces." Sergeev recently dismissed a number of generals and senior officers for misuse of budget funds. They included three officers from the Volga Military District who had misappropriated 6.2 billion rubles ($1.1 million) intended to pay servicemen's wages.

OUR HOME IS RUSSIA MAY REPLACE DUMA FACTION LEADER IN SEPTEMBER

The State Duma faction of the pro-government movement Our Home Is Russia (NDR) may "strengthen its leadership" in September, according to Duma First Deputy Speaker Aleksandr Shokhin, RFE/RL's Moscow bureau reported on 28 July. Shokhin confirmed that Prime Minister Viktor Chernomyrdin is unhappy with Sergei Belyaev, who heads the NDR's Duma delegation. (Chernomyrdin announced Belyaev's imminent resignation on 3 July, but Belyaev has since denied that he will step down.) Also in September, Shokhin said, the NDR Duma faction will seek to remove Lev Rokhlin from the post of Duma Defense Committee chairman. Shokhin noted that Rokhlin's new movement to support the military has been joined by members of several "radical left" groups. Even if the NDR expels Rokhlin, he cannot be stripped of his committee chairmanship unless a majority of Duma deputies support such a move.

YAVLINSKII MAY NOT RUN FOR PRESIDENT IN 2000

Yabloko leader Grigorii Yavlinskii will not run for president in 2000 "if there is [another] acceptable candidate" in the race, according to State Duma deputy and Yabloko deputy chairman Vyacheslav Igrunov. However, Igrunov refused to clarify whether First Deputy Prime Minister Boris Nemtsov would be considered a worthy candidate, ITAR-TASS reported on 28 July. While Yabloko opposes the government's policies on the whole, Igrunov noted that Yavlinskii's movement will continue to support Nemtsov's efforts. Yavlinskii helped draft the economic reform program implemented in Nizhnii Novgorod when Nemtsov governed that oblast. In the 1996 presidential election, Yavlinskii gained about 7.3 percent of the vote. His prospects for advancing to the second round of a presidential election are considered poor.

SUSPECT ARRESTED IN MONUMENT BOMBINGS

The Federal Security Service has formally charged 18-year-old Andrei Sokolov with the bombings of a monument to Tsar Nicholas II in a village near Moscow and the attempted bombing of a monument to Peter the Great, Russian media reported on 25 July. Sokolov has admitted his guilt. The case has angered young Communists, who have been blamed for the bombings. Sokolov has been linked to the Revolutionary Communist Union of Young Bolsheviks, whose leader is Pavel Bylevskii. But Bylevskii, who was also accused of the bombings, said no one in his organization takes part in terrorist actions. Some Russian media have mistakenly associated Bylevskii's group with the Komsomol, whose acronym is almost identical to that of Bylevskii's organization.

EXPLOSION LEVELS BUILDING IN PERM OBLAST

A building owned by the LUKoil Perm-Neft company in the town of Kueda (Perm Oblast) was destroyed in an explosion on 28 July, according to ITAR-TASS. Sixteen people died in the blast, which is thought to have been caused by a kitchen gas canister. Another 15 people were found alive in the rubble by rescue teams; several have been hospitalized in a serious condition. Meanwhile, rescue workers continue to search for more survivors.




GEORGIAN PRESIDENT OPPOSED TO PEACE-KEEPERS' WITHDRAWAL

In his weekly radio address, Eduard Shevardnadze on 28 July advised against the withdrawal of the CIS peacekeeping force deployed along the border between Abkhazia and the rest of Georgia when the force's mandate expires on 31 July. The Georgian parliament had adopted a resolution on 30 May demanding that the force leave Georgia after 31 July if a decision taken by the March CIS heads of state summit were not implemented. According to that decision, the force's mandate was to be broadened to enable the peacekeepers to protect those who are repatriated. Shevardnadze argued that the peacekeepers should remain in Georgia until a formal decision is taken on sending a UN force to replace them, according to ITAR-TASS. He said the CIS Heads of State Council should decide at its next session in September whether the peacekeepers' mandate should be prolonged.

TURKMEN PRESIDENT SAYS NO COMPROMISE ON CASPIAN OIL FIELD

Russian Deputy Prime Minister Valerii Serov met with Turkmen President Saparmurat Niyazov in Ashgabat on 28 July, Reuters and ITAR-TASS reported. Niyazov told Serov that the deal signed by Azerbaijan's state oil company SOCAR and Russia's LUKoil and Rosneft in early July to work the Kyapaz field in the Caspian Sea was unacceptable as the field belongs to Turkmenistan. Representatives from LUKoil and Rosneft were also at the meeting. Serov called the issue an "unfortunate misunderstanding" and said Russia was under the impression that Turkmenistan and Azerbaijan had settled the question prior to the contract's signing. Niyazov called on Russian President Boris Yeltsin to declare the agreement void. Niyazov will meet with Yeltsin in Moscow on 7 August.

KAZAKH DEPUTY PRIME MINISTER FIRED

President Nursultan Nazarbayev on 28 July signed a decree dismissing Nigmatjan Isingarin as deputy prime minister, according to RFE/RL correspondents in Kazakhstan. No reason was given for his dismissal. Isingarin remains the chairman of the inter-government council of the four-country union of Russia, Belarus, Kazakhstan, and Kyrgyzstan.

KAZAKH OPPOSITION MOVEMENT HOLDS CONFERENCE

The Kazakh opposition movement Solidarnost held a conference on human rights in Almaty on 28 July, according to RFE/RL correspondents in Kazakhstan. Leaders of the movement noted that while President Nazarbayev had named 1997 a year of commemoration for the victims of Stalin's repression, there had already been 10 registered cases of human rights violations in Kazakhstan so far this year. By way of example, they named Madel Ismailov, who served almost two months in jail for organizing a demonstration on 30 May even though Solidarnost had claimed that the demonstration was organized not by a single person but by the "deceived people of Kazakhstan."

TAJIK PRESIDENT SIGNS DECREE ON NATIONAL COMMISSION

Imomali Rakhmonov on 28 July signed a decree ordering the government to determine the responsibilities of members of the National Reconciliation Commission as well as the commission's structure and budget. The commission will aid in the process of reunifying the country and preparing amendments to the constitution for elections in late 1998. The second meeting of the commission, scheduled for 27 July, was postponed because Said Abdullo Nuri, the chairman of the commission and the United Tajik Opposition (UTO) leader, is still in Tehran. Nuri is scheduled to travel to the Tajik capital once 460 UTO fighters are stationed there as protection for the UTO members of the commission. But the UTO "body guards" are unlikely to arrive until after the Tajik parliament passes the law on a general amnesty, which it is scheduled to do at its 1 August session.




BELARUSIAN PRESIDENT SAYS RUSSIAN MEDIA ARE WAGING INFORMATION WAR

Alyaksandr Lukashenka on 28 July warned Russian media to stop waging an "information war" against Belarus, ITAR-TASS reported. Speaking to journalists in Minsk, Lukashenka said his government is losing its patience. He noted that it has already allowed certain foreign journalists, among them Russian ones, to get away with too much. Lukashenka said that Pavel Sheremet, a reporter for Russia's ORT television network, and two of his colleagues had violated the law and would have to meet the consequences. The three were arrested on 27 July and have been charged with illegally crossing the Belarusian border with Lithuania while shooting footage for a report on Belarus's border guards. Earlier, Belarusian security agents searched ORT's Minsk offices and confiscated documents belonging to Sheremet. Meanwhile, the Russian Foreign Ministry issued a statement acknowledging that Sheremet and his colleagues may have violated some regulations, but it called for their status as journalists to be taken into consideration.

TWENTY DEMONSTRATORS ARRESTED IN MINSK AFTER RALLY

Belarusian Popular Front secretary Vyachasluv Siuchuk told RFE/RL on 28 July that the authorities in Minsk arrested about 20 people following a rally the previous day protesting President Lukashenka's autocratic rule. Siuchuk said the deputy leader of the front, Stanisluv Husak, was among those arrested and was scheduled to appear in court on 29 July. Some 10,000 protesters took part in the rally, chanting anti-Lukashenka slogans and burning Soviet-era flags to mark the anniversary of Belarus's independence from the Soviet Union.

UKRAINE CRITICIZES EU FOR DELAYS IN FINANCIAL ASSISTANCE

President Leonid Kuchma on 28 July criticized the EU for "unfair delays in providing assistance" to help boost Ukraine's struggling economy. Kuchma spoke to journalists in Kyiv after meeting with Belgian Prime Minister Jean-Luc Dehaene, who arrived for a two-day official visit. Kuchma said European countries have demanded too many conditions in exchange for financial assistance, including the closure of the Chornobyl nuclear power plant and the elimination of Ukraine's tactical and strategic nuclear weapons. He said the U.S. has surpassed the EU in investments and financial assistance to Ukraine. The Ukrainian government owes workers and pensioners the equivalent of some $2.5 billion in back wages and subsidies. Prime Minister Valery Pustovoitenko told journalists on 28 July that Ukraine will try to pay off the backlog within four months.

LOOMING CRISIS IN ESTONIAN POLICE FORCE?

Harry Tuul, the acting director-general of the police force, has warned that low salaries have started to affect the performance of the force and that the situation is becoming critical, ETA and BNS reported on 28 July. Tuul told the daily "Postimees" daily that it is "quite unjustified that the pay of employees at the prosecutor's office, for example, is four times as high as that of policemen." He complained that the police are constantly being given new duties without receiving additional money. He added that the Police Department has considered sacking one-fifth of policemen to give the others a wage increase but said the total strength of the force is already too close to the minimum.

LATVIAN ECONOMICS MINISTER NAMED AS PRIME MINISTER

President Guntis Ulmanis on 28 July named Economics Minister Guntars Krasts as prime minister. Krasts replaces Andris Skele, who resigned following corruption scandals among his ministers and increasing disagreement between himself and the seven coalition parties (see "RFE/RL Newsline," 28 July 1997). Krasts, who is an economist and a member of the right-of-center Fatherland and Freedom party, said he anticipated only minor changes in the government's composition. The parliament could vote on Krasts's appointment on 6 August (see also "End Note" below).

LITHUANIAN LAW ON REFUGEES GOES INTO FORCE

The 1995 law on refugee status and the 1951 Geneva Convention on Refugee Status have gone into effect in Lithuania, BNS reported on 28 July. Under the new legislation, persecuted citizens of other countries are entitled to request political asylum. The director of the Interior Ministry's Migration Department, told the news agency that political asylum can be claimed only by refugees who are residing in the country. He added that he expected Lithuania would grant political asylum for the first time later this year. Some 70 refugees currently residing in Lithuania are reported to be interested in applying for political asylum.

POLISH PRIME MINISTER ON FLOODS

A Council for Programming Reconstruction and Modernization met for the first time on 28 July, RFE/RL's Warsaw correspondent reported. The council has been formed to deal with the consequence of the floods that recently hit Poland. It consists of representatives of 24 institutions, including the Academy of Sciences and the National Economic Chamber. Prime Minister Wlodzimierz Cimoszewicz said professional associations will help to build thousands of apartments for families that were hardest-hit by the floods. He ruled out for the time being the possibility of issuing special government bonds to help the flood victims. The German reinsurer Munich Re estimates losses caused by the floods in Poland and the Czech Republic as totaling DM 3-5 billion in each country. Insurance companies will have to pay out some DM 500 million in each country, according to Munich Re.

POLISH GOVERNMENT'S DWINDLING POPULARITY IN WAKE OF FLOODS

An opinion poll carried out by the Warsaw-based PBS Institute in mid-July indicates that the popularity of the ruling left-wing coalition has plunged in the wake of the recent floods. Less than 9 percent of the respondents support the former communist Democratic Left Alliance (SLD) and its coalition partner, the Polish Peasant's Party. By contrast, 19 percent of those polled backed a center-right alliance headed by the Solidarity Union, and more than 18 percent said they would support a coalition of social democrats and liberals from the non-communist left.

SLOVAK JEWS DISAGREE WITH MECIAR OVER WARTIME GOLD

The Slovak Jewish Community issued a statement on 28 July saying it is "unable to agree" with Premier Vladimir Meciar's comment several days earlier that "the Czech government has no right to decide on Slovak assets." Meciar was referring to the Czech government's decision to pay some $580,000 to a Jewish foundation to settle a claim on gold taken from Slovak Jews during World War II and transferred after the war to the Czechoslovak National Bank in Prague. Meciar argues the gold belongs to Slovakia. "This is not the Slovak government's property but gold and jewelry belonging to Slovak victims of the Holocaust," the statement says. "If the Slovak government really wants to find a constructive solution to this problem, it should finally say when there will be a bill on compensation for the victims of the fascist regime and [of] Nazi persecution in Slovakia," according to the statement.

HUNGARY CRITICIZES SLOVAK RELUCTANCE TO SIGN MILITARY COOPERATION ACCORDS

Hungarian Defense Minister Gyoergy Keleti said the texts of two agreements on cooperation between the Hungarian and Slovak armies are ready but that Hungary "has been waiting two years for the Slovak party to sign them," according to "Magyar Nemzet" on 29 July, citing Keleti's interview with the Bratislava daily "Narodna Obroda". The treaties cover air space and information exchange between the two defense ministries. Commenting on the development of Slovak-Hungarian relations now that Hungary has been invited to NATO accession talks, Keleti said it is in nobody's interest to isolate Slovakia.




NEW ALBANIAN GOVERNMENT PRESENTS PROGRAM

Prime Minister Fatos Nano told the parliament in Tirana on 28 July that his government's first priority is to combat lawlessness and restore order. He intends to eliminate gangs, organized crime, and smuggling and to disarm the population. Nano wants to coordinate economic policy with the World Bank and IMF and will aim at speeding up privatization, curbing corruption, and promoting a market economy. His chief foreign-policy priority is good relations with the U.S., but he will also devote attention to ties to the EU and neighboring countries. Referring to Kosovo, the prime minister said that "the realization of the legitimate rights of the Albanians of Kosovo...could be of advantage to the whole region." Nano also pledged to revamp the armed forces with an eye toward his chief policy goals of joining NATO, the EU, and regional bodies.

ITALY WANTS ALBANIAN ARMY TO RESTORE SECURITY

Italian Defense Minister Beniamino Andreatta said in Rome on 28 July that "before the end of the year, we must try to bring some regiments of the Albanian army back into service. The Defense Ministry is studying a plan to reconstruct at least a few mobile regiments that could act as an element of internal security." In Tirana, Italian Chief-of-Staff Gen. Guido Venturoni did not rule out that Italy might keep some troops on in Albania in order to help train the Albanian military. Operation Alba is slated to end on 12 August. Elsewhere in Albania, total deaths in gang violence in central town of Berat since 24 July now stand at 20. The Interior Ministry said that police killed a highly wanted criminal in a shoot-out on 27 July in the far north, where smuggling to Montenegro remains lucrative. And in Lushnja, south of Tirana, an explosion destroyed the mayor's house.

ETHNIC ALBANIANS CHARGED IN KOSOVO

The District Prosecutor's office in Pristina on 28 July charged 21 ethnic Albanian men with setting up the Kosovo Liberation Army (UCK) and carrying out terrorist activities. The prosecutor's office said in a statement that the group sought to use an illegal and violent organization in order to secede from Serbia. The statement added that the UCK has claimed responsibility for several terrorist acts. Some 18 of the 21 individuals are under arrest. The UCK has increased the number of its attacks since late last year and has singled out specific targets rather than continue its earlier practice of carrying out random violence. But ethnic Albanian activists have charged that those whom the government has placed on trial have been scapegoats and that the evidence against them has been manufactured.

MONTENEGRIN PROTESTERS STONE MILOSEVIC'S LIEUTENANTS...

Some 3,000 demonstrators hurled rocks and eggs at the cars of four top officials of Yugoslav President Slobodan Milosevic's Socialist Party of Serbia (SPS) in Podgorica on 28 July. Montenegrin President Momir Bulatovic, who held talks with the Serbs and who is Milosevic's main ally in the mountain republic, criticized the anti-Milosevic Interior Ministry for failing to keep order. The ministry replied that it would have been "too risky" to try to disperse such a large crowd. The demonstration was called to register opposition to what the organizers said was Milosevic's colonialist attitude and behavior toward Montenegro, an RFE/RL correspondent reported from Podgorica.

...WHO, IN TURN, HUMILIATE MONTENEGRO

SPS Vice President Zoran Lilic, who is also his party's candidate for the Serbian presidency, said after talks with Bulatovic that Serbia will go ahead with plans to change the Yugoslav Constitution, despite the fact that not a single Montenegrin political party agrees with the move. Milosevic is anxious to increase the powers of the federal presidency at the expense of the individual republics. In Belgrade, the pro-Milosevic media said that the SPS delegation spoke to Bulatovic in his capacity as president of the Democratic Socialist Party (DPS). The media thereby ignored the fact that the reformist majority in the DPS earlier voted Bulatovic out of that office. The SPS also said it will be sending a delegation from the Belgrade party organization to talk to the Podgorica chapter of the DPS, although the reformists earlier dissolved that branch organization, the RFE/RL correspondent from Podgorica added.

MONTENEGRO TO HELP HAGUE COURT

Public Prosecutor Vladimir Susovic said in Podgorica on 28 July that the Justice Ministry will assist the Hague-based war crimes tribunal in its request for evidence in one specific case (see "RFE/RL Newsline," 28 July 1997). Susovic added that the crime involved deporting Montenegrin Muslims to Bosnia and returning Bosnian Muslim refugees to Bosnian Serb forces in May and June 1992, an RFE/RL correspondent reported from Podgorica. Susovic did not name the individual wanted by the court. He added, however, that the investigation will involve the highest officials and that the interior minister in 1992 was Pavle Bulatovic, the present Yugoslav defense minister. President Momir Bulatovic previously told the parliament that the deportations were "our tragic mistake."

WESTENDORP CALLS FOR FINANCIAL MEASURES AGAINST WAR CRIMINALS

Carlos Westendorp, the international community's chief representative in Bosnia, urged the UN Security Council on 28 July to pass a resolution calling for the freezing of all bank accounts belonging to indicted war criminals and the confiscation of their property. Westendorp argued that this would be a good way to put pressure on the war criminals, who, he said, are still blocking the implementation of the Dayton agreement. Radovan Karadzic and other indicted Bosnian Serb war criminals are believed to have accumulated huge fortunes in war profiteering and sent much of the money to Switzerland or Cyprus.

IZETBEGOVIC PROMISES INVESTIGATION INTO CORRUPTION CHARGES

Alija Izetbegovic, the Muslim member of the Bosnian joint presidency, suggested in Sarajevo on 28 July that the World Bank, Westendorp's office, and the EU each name a member of a new commission to probe corruption charges. Izetbegovic said that he will arrest anyone found guilty of the charge. He added that, if the charges prove false, foreigners who have spread what he called "such lies" will be asked to leave Bosnia. British Foreign Secretary Robin Cook was quoted by "The "Sunday Times" on 27 July as saying corrupt Bosnian officials have taken millions of dollars of reconstruction money and put it into their private accounts.

ROMANIAN NEGOTIATIONS WITH IMF TO CONTINUE

Following talks with Premier Victor Ciorbea and members of his cabinet in Bucharest on 28 July, the IMF chief negotiator for Romania, Poul Thomsen, refused to make a statement on the progress of reforms in the country. He said only that the discussions were "useful" and will continue shortly after the government proposals on restructuring the current budget have been examined (see below), RFE/RL's Bucharest bureau reported. Before meeting with Thomsen, Ciorbea admitted that the pace of privatization and restructuring was not as quick as had been expected, but he stressed that the government has succeeded to bring about "macrostabilization." After Thomsen's visit, the IMF is to decide whether to release the second $86 million installment of a $430 million standby loan approved earlier this year.

ROMANIAN CABINET DEBATES BUDGET RESTRUCTURING

The government on 28 July discussed the restructuring of the current budget but failed to reach an agreement, Radio Bucharest reported. Finance Minister Mircea Ciumara agreed to supplement the budgets of the Ministry of Education and of the Ministry of Labor and Social Protection. But he said that no other ministries will benefit from budget supplements in the second half of the year. Minister of Health Stefan Dragulescu said that the health system will collapse if no additional funds are provided. The IMF has said the budget deficit must not exceed 4.5 percent of gross domestic product.

FLOODS IN ROMANIA, MOLDOVA

One person is reported dead in the Vaslui area, in the eastern Romanian province of Moldavia, and hundreds had to be evacuated after swollen rivers flooded several regions in the country, RFE/RL's correspondents reported. The hardest-hit areas are the western region of Banat, the Crisana region near the border with Hungary, central Transylvania, and the eastern regions of Moldavia. The Ministry of the Environment announced that 1,000 hectares of farmland are under water. But government officials said this year's grain harvest will not be affected. In the neighboring Moldovan Republic, floods, hail storms, and strong winds have caused the death of nine persons this month, three of whom are children, BASA-press reported. Damage is estimated at 198 million lei ($43 million).

NEW MOLDOVAN FOREIGN MINISTER APPOINTED

Presidential counselor Nicolae Tabacaru was appointed as foreign minister on 28 July, RFE/RL's Chisinau bureau reported. Tabacaru replaces Mihai Popov, who resigned on 25 July on health grounds and was appointed ambassador to France. Before his appointment as presidential counselor in 1996, the 42-year-old Tabacaru served at different Moldovan diplomatic representations abroad and was director of the Europe and North America Department in the Foreign Ministry.

MOLDOVAN DEFENSE MINISTER IN RUSSIA

Visiting Moldovan Defense Minister Valeriu Pasat and his Russian counterpart, Igor Sergeev, met in Moscow on 28 July and signed an agreement on military cooperation, ITAR-TASS and Radio Bucharest reported. The agreement provides for the training of Moldovan officers in Russia beginning 1 September and for conducting joint maneuvers of peacekeeping forces. The first such maneuvers are to be held in Moldova in October. Pasat also met with Premier Viktor Chernomyrdin, with whom he discussed the withdrawal of the Russian troops from the breakaway Transdniester region. Pasat is also scheduled to meet with Defense Council Secretary Yurii Baturin.

BULGARIAN PRESIDENT IN TURKEY

Petar Stoyanov, at the start of a three-day visit to Turkey, met with his Bulgarian counterpart, Suleyman Demirel, on 28 July. Turkish dailies report that Stoyanov asked Demirel to use his influence to bring about the removal of Bulgaria from the list of countries deemed by the Organization of Islamic Conference (OIC) to mistreat Muslims. Bulgaria had been placed on the list in the late 1980s, after the campaign by Todor Zhivkov regime's against the Turkish minority. Turkish officials said the OIC decision will be made after a team of rapporteurs visits Bulgaria to prepare a report. Also on 28 July, Turkey and Bulgaria signed cooperation agreements on the protection of the environment, transportation, tourism, and nuclear safety. Demirel said Turkey was willing to participate in efforts to achieve peace and stability in the Balkans.

BULGARIA, VIETNAM TO EXPAND COOPERATION

Bulgarian Prime Minister Ivan Kostov says his country and Vietnam plan to expand bilateral cooperation, BTA reported. He said the two countries are working on a plan for the settlement of mutual debts, but he did not give any details. Kostov spoke after talks with Vietnamese Defense Minister Doan Khue, who ended a three-day visit to Bulgaria on 28 July. Khue expressed a strong interest in cooperation with the Bulgarian arms industry.




Government Crisis in Latvia


by Peter Zvagulis

The government crisis in Latvia, which began to intensify some two months ago, culminated with Prime Minister Andris Skele's resignation on 28 July. When Skele announced his intention to resign several days earlier, some Latvian leaders responded with sharp criticism of his performance as premier. Foreign Minister Valdis Birkavs of Latvia's Way commented that "there is only one person in the country who would not admit his mistakes," meaning Skele. President Guntis Ulmanis sounded a more conciliatory note, saying that "the Latvian government [would have had] broad opportunities to continue to work under the leadership of Prime Minister Andris Skele."

The reasons for the government crisis are to be found within the government rather than in its performance on economic or social issues. The confrontation between the seven government parties and the prime minister had deepened signficantly of late. There were shady financial deals involving the state-owned companies Latvenergo and Ventspils Nafta as well as the Banka Baltija, which has since gone bankrupt. And it was alleged that Skele himself was involved in the misappropriation of G-24 credits, although he was later cleared of any involvement following an investigation. Even the recent European Commission's decision not to include Latvia among those countries invited to begin EU membership talks may have helped exacerbate the crisis (Latvia's foreign policy was sharply criticized at home in the wake of that decision).

To make matters worse, five ministers have resigned over the past two months, four of whom were accused of violating the anti-corruption law: Roberts Dilba (agriculture), Rihards Piks (culture), Juris Vinkelis (health care), and Vilis Kristopans (transportation). Some of the accused had failed to state all their assets and business activities when filling out income declarations. None, however, was charged with any crime; and statements issued by the Prosecutor-General's Office failed to make clear whether or not the ministers were guilty. The fifth minister, Dainis Turlais, resigned the internal affairs portfolio over the fatal accident in the western town of Talsi on 28 June in which eight children were killed and 22 injured during a fire fighters' show.

In December 1995, Skele was appointed head of the coalition government largely because he did not belong to any political party. Now, his non-affiliation is being cited as the reason why he came under pressure to step down. It may well be that Skele's political influence had grown to such an extent that political parties no longer considered him to be as neutral as he was in 1995. Moreover, they may have seen him as concentrating too much political power in his own hands.

Over the past year, some parliamentary deputies had expressed dissatisfaction with what they called the "undemocratic tendencies" of Skele's government methods. Skele, for his part, pointed out that his reform-oriented economic program was extremely successful. During his term in office, the country's budget deficit of 90 million lats (some $158 million) changed into a budget surplus totaling 30 million lats.

As a politician, Skele has a record of making unexpected moves. In January, he surprised his supporters and opponents alike by tendering his resignation following opposition within the cabinet to his candidate for finance minister. That move proved successful, since Skele was able to increase his popular support and form a new government. When the scandal over violations of the anti-corruption law began to emerge, he surprised everyone again by his reaction. Instead of threatening to resign, he went on national television to express his moral stance and to make clear that he would not cover up for any minister who had broken the law. The announcement last week of a government recovery plan was his last surprise move as prime minister. It was designed to gain time for himself and to test the will of the coalition parties to save the government.

Following negotiations between the ruling parties and consultations with President Guntis Ulmanis, Economics Minister Guntars Krasts of the right-of-center Fatherland and Freedom party was nominated as Skele's successor. Born in 1957, Krasts graduated from the Economics Faculty of the University of Latvia. He has held several research posts and was a Riga municipal official before becoming minister of economics in December 1995.

Some analysts speculate that one of the reasons for nominating Krasts as premier is that the ruling parties consider him less ambitious than his predecessor. The Economics Ministry seems likely to go to the left-of-center Democratic Party Saimnieks in return for its support of Krasts's candidacy as prime minister. Krasts has already said that the government lineup is likely to remain more or less unchanged. In any case, it seems a relatively safe bet that Birkavs will remain foreign minister.

The author is director of RFE/RL's Latvian Service.


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