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Newsline - August 6, 1997




COMPANY LINKED TO ONEKSIMBANK WINS NORILSK NICKEL AUCTION

The closed joint-stock company Svift, which is affiliated with the Oneksimbank financial empire, on 5 August won an auction for a 38 percent stake in Norilsk Nickel. Svift's winning bid was for 236.18 million Ecus (about $250 million). The terms of the sale require the winner to invest an additional $300 million and also pay back a $170 million loan Oneksimbank extended to the government in November 1995. (In exchange for that loan, Oneksimbank gained management rights over the 38 percent Norilsk stake.) Within five business days after the deal is signed, Svift must transfer 400 billion rubles ($69 million) to Norilsk Nickel. Only one other bid was submitted for the stake, for 171 million Ecus. It is not yet known what companies were behind the losing bid.

AUCTION GOES AHEAD DESPITE LAST-MINUTE PROTESTS

A six-member commission on 5 August decided to go ahead with the Norilsk auction despite a last-minute appeal from Prime Minister Viktor Chernomyrdin that the sale be postponed (see "RFE/RL Newsline," 5 August 1997). Five members of that commission--representing Norilsk Nickel, Oneksimbank, the Oneksimbank affiliate International Finance Corporation, the Finance Ministry, and the State Property Committee--voted to conduct the auction as scheduled, while the commission member representing the Russian Federal Property Fund abstained, according to ITAR-TASS. The commission vote was expected to be closer after State Property Committee Chairman Alfred Kokh was reported to have agreed that the sale should be postponed. But State Property Committee Deputy Chairman Sergei Molozhavyi told ITAR-TASS that Kokh's committee and the Procurator-General's Office had in the end agreed that there were no legal grounds for postponing the auction. Chernomyrdin has not yet commented on the Norilsk sale.

"KOMMERSANT-DAILY" ON HOW AUCTION WENT AHEAD

Citing unnamed sources in the State Property Committee, "Kommersant-Daily" reported on 6 August that on the morning of 5 August, Oneksimbank President Vladimir Potanin and State Property Committee Chairman Alfred Kokh met with Procurator General Yurii Skuratov and persuaded him that the Norilsk sale should go ahead as scheduled. (Prime Minister Chernomyrdin cited an appeal from the procuracy when he ordered the Norilsk sale to be postponed.) Following that meeting, Potanin reportedly brought a letter signed by Kokh and Skuratov to a secret meeting with Chernomyrdin. However, "Kommersant-Daily" noted that Oneksimbank's competitors are already planning to contest the Norilsk auction in court. Meanwhile, "Nezavisimaya gazeta" on 6 August slammed the machinations surrounding the Norilsk auction and charged that Chernomyrdin's subordinates in the government "ignored his orders." "Nezavisimaya gazeta" has sharply criticized Oneksimbank recently (see "RFE/RL Newsline," 29-30 July 1997).

YELTSIN CONCERNED ABOUT ATTACKS ON NEMTSOV

President Boris Yeltsin on 6 August said he is concerned by the recent media attacks against First Deputy Prime Minister Boris Nemtsov, ITAR-TASS reported. The president expressed hope that there will be "no more pressure of that kind." Nemtsov has recently been criticized both by political opponents and by media outlets that had previously devoted mostly favorable coverage to him (see "RFE/RL Newsline," 29-31 July, 4-5 August 1997). Yeltsin returned to Moscow on 5 August, ending a four-week vacation in the Republic of Karelia and Samara Oblast. He has not yet commented on the Norilsk Nickel auction. He did not comment directly on the recent controversial auction of 25 percent plus one share of the telecommunications giant Svyazinvest, although First Deputy Prime Minister Anatolii Chubais told journalists that Yeltsin was satisfied with the way that auction was conducted.

GOVERNMENT CONSIDERING STRENGTHENING STATE ROLE IN MANAGING ORT

The government is considering changes in how the state's 51 percent stake in the Russian Public Television (ORT) network is managed, Russian news agencies reported on 5 August, citing an unnamed government source. The source said the measures being considered would not involve personnel or programming changes at ORT, which broadcasts on Channel 1. ORT's news coverage has long been considered slanted in favor of the president and government. However, since the Svyazinvest auction, the network has broadcast sharp criticism of some government officials. Meanwhile, in an open letter published in "Nezavisimaya gazeta" on 5 August, ORT news director Andrei Vasilev responded to criticism of the network's news coverage voiced on 2 August by presidential spokesman Sergei Yastrzhembskii. Yastrzhembskii had accused ORT of ignoring important stories in its newscasts.

ORT GENERAL DIRECTOR RUMORED TO BE ON THE WAY OUT

Rumors that ORT General Director Sergei Blagovolin will soon step down or be dismissed have again been circulating in Moscow following a recent meeting between Blagovolin and Prime Minister Chernomyrdin. ITAR-TASS reported on 5 August that Blagovolin, currently on vacation, has neither confirmed nor denied those rumors. An ORT spokesman quoted by "Izvestiya" on 6 August said Blagovolin has not resigned but did not rule out the possibility that he will step down soon. "Kommersant-Daily" on 6 August quoted Blagovolin as saying he had told the ORT board of directors that he would decide his future plans during his summer holiday. Blagovolin was appointed general director of ORT in March 1995, a few weeks before the network began broadcasting on Channel 1. During the last year, he has periodically criticized the network's news coverage, leading to numerous previous rumors of his impending departure.

PROGRAM FEATURING ORT GENERAL DIRECTOR NOT AIRED ON CHANNEL 2

Nikolai Svanidze, chairman of the fully state-owned Russian Television (RTR) network that broadcasts on Channel 2, on 5 August decided not to air the latest edition of the program "Moment Istiny" (Moment of Truth), "Kommersant-Daily" reported on 6 August. That show featured an interview with ORT General Director Blagovolin, in which he criticized the way ORT is managed and said he believes the weekly analytical program hosted by ORT journalist Sergei Dorenko is "extremely destructive." The interview was recorded on 20 June, long before Dorenko's recent criticism of Oneksimbank and various government officials (see "RFE/RL Newsline," 28, 29 July 1997). Svanidze told "Kommersant-Daily" that he pulled the program because he did not want RTR to appear to be attacking ORT. "Moment Istiny" host Andrei Karaulov slammed what he described as a "political" decision not to air his program.

GRACHEV EXPECTS NEW APPOINTMENT SOON

Former Defense Minister Pavel Grachev says Yeltsin recently told him that "your days of relaxation are coming to an end." In an interview published in "Komsomolskaya pravda" on 5 August, Grachev predicted that he will be appointed to a new post sometime this autumn. Asked whether he might become Russian ambassador to NATO, Grachev said such rumors had some foundation, adding that he would accept that post if it were offered to him. Yeltsin sacked Grachev in June 1996, two days after the first round of the presidential election. In June of this year, presidential spokesman Sergei Yastrzhembskii denied Russian media reports that Grachev was being considered for the ambassadorship to NATO (see "RFE/RL Newsline," 6 June 1997).

ZYUGANOV ON OPPOSITION PLANS

Speaking to journalists in St. Petersburg, Communist Party leader Gennadii Zyuganov said the left opposition will again present the government with 11 demands, including the dismissal of First Deputy Prime Minister Chubais, RFE/RL's correspondent in St. Petersburg reported on 5 August. Communists first issued those demands last December as a condition for their support of the 1997 budget. Zyuganov confirmed that his party will lead nationwide protests this autumn demanding Yeltsin's resignation and changes in government policies. He also advocated changing the State Duma's rules to allow factions to revoke the mandates of deputies who were elected to the Duma on party lists (see "RFE/RL Newsline," 1 and 4 August 1997). Regarding recent criticism of Duma Speaker Gennadii Seleznev by Communist Duma deputy Vladimir Semago, Zyuganov said Semago should concentrate on investigating the accuracy of income declarations submitted by government officials.

STRIKE BY VLADIVOSTOK MUNICIPAL WORKERS CONTINUES

Garbage continues to pile up in the streets of Vladivostok as a strike by municipal workers enters its third week, RFE/RL's correspondent in Vladivostok reported on 5 August. Mayor Viktor Cherepkov, who has blamed the protests on "political intrigues" (see "RFE/RL Newsline," 23 July 1997), still refuses to meet the strikers' demands, which include payment of wage arrears and a contract with the city on providing services. The municipal workers also have called on Cherepkov to resign. Primorskii Krai Governor Yevgenii Nazdratenko, a longtime bitter political foe of Cherepkov's, has now entered the fray. Nazdratenko recently invited representatives of the striking garbage collectors to sign a contract with the krai administration rather than with the Vladivostok authorities. Meanwhile, doctors and local health officials have warned of possible outbreaks of epidemics in Vladivostok if the garbage is not cleared away.

RUSSIAN ROCKET LIFTS OFF

The Soyuz TM-26 spacecraft successfully lifted off from the Baikonur launch site on 5 August, according to Russian media. Cosmonauts Anatolii Solovev and Pavel Vinogradov are due to dock with the Mir space station on 7 August. Aboard the station, the two Russians and one American are still trying to repair an oxygen generating system which failed last week. Russian cosmonauts Vasilii Tsibliev and Aleksandr Lazutkin are scheduled to return to Earth on 14 August. On 20 August, Solovev and Vinogradov will attempt to make repairs on Mir's spektr module, which was damaged in a collision with a cargo ship on 25 June. The third man aboard Mir, U.S. astronaut Michael Foale, is scheduled to leave the space station in late September.

MOSCOW TO EXPEDITE FUNDING FOR CHECHNYA

Russian Security Council Secretary Ivan Rybkin told Interfax on 5 August that Moscow will transfer 700 billion rubles ($120.7 million) in budget funds to Chechnya by the end of this year. Rybkin also said that millions of dollars worth of frozen Chechen assets would be released. Rybkin and Russian Prime Minister Chernomyrdin had discussed financing reconstruction in Chechnya on 4 August. Also on 5 August, Chechen Deputy Prime Minister Akhmed Zakaev flew to Moscow to prepare for a meeting between Yeltsin and Chechen President Aslan Maskhadov. No date has yet been set for that meeting. Chechen First Deputy President Movladi Udugov told ITAR-TASS that Maskhadov will propose signing a fully-fledged inter-state treaty between Russia and Chechnya and also will raise the issue of financial compensation, estimated at 1,500 trillion rubles ($25.8 billion), to Chechnya.

CHECHNYA OPENS PERMANENT REPRESENTATION IN KAZAN

On 4 August Chechnya's permanent representative in Kazan, Umar Aiupov, met with Tatarstan's president Mintimer Shaimiev, RFE/RL's Kazan bureau reported citing Tatarstan Television. Shaimiev said that Tatarstan is ready to broaden mutually advantageous economic, technological and cultural ties with Chechnya, and advocated "the most extensive possible economic independence from the center." Tatarstan, which Shaimiev noted is "one of only 12 Russian regions that pay more into the state budget than they receive from the center in subsidies," has concluded an agreement with Moscow that the goods and services which it supplies to Chechnya will be considered as part of its tax obligation to Moscow.

FOUR FRENCH AID WORKERS MISSING IN DAGESTAN

Police in Makhachkala have launched a search for four French aid workers who disappeared in the city on the evening of 2 August, Russian media reported on 6 August. "Nezavisimaya gazeta" on 6 August quoted unnamed Dagestani officials as expressing concern at a marked increase in violent crime, abductions and thefts of cattle in the regions of Dagestan that border on Chechnya and the alleged formation of a Chechen "fifth column" in Dagestan. The newspaper quotes OSCE officials in Chechnya as warning that the Chechen leadership is deliberately provoking a crisis in relations with Dagestan.

UNIKOMBANK EXECUTIVE REAPPEARS

Unikombank deputy chairman Andrei Gloriozov has reappeared in Moscow after being missing for several days, "Kommersant-Daily" reported on 5 August. The paper said Gloriozov had been kidnapped on 30 July, along with his driver and a bodyguard. The three men were apparently released three days later, but "Kommersant-Daily" said there are conflicting stories as to whether the kidnappers were demanding a ransom of $17 million or compromising information on various bankers or state officials. It appears that no ransom was paid. Unikombank was at the center of a recent scandal involving alleged fraudulent use of government funds (see "RFE/RL Newsline," 4 August 1997).




IMF TEAM SAYS GEORGIA'S SOCIAL SAFETY NET "UNSUSTAINABLE"

A team of experts from the International Monetary Fund (IMF) has told Georgian authorities that the country's social support system is "unsustainable" because it is not providing adequate protection to the most vulnerable, an RFE/RL correspondent in Washington reported on 5 August. The Georgian safety net currently costs the equivalent of about 3 percent of GDP (gross domestic product, the size of the economy) or about one-third of the state budget, but the standard monthly benefit level of 9.8 lari (7.70 dollars) is equal to only one-tenth the official minimum subsistence level. The IMF experts said that many people in Georgia have managed to maintain living standards at about subsistence levels with support from relatives and by depleting their assets which in the long term is "unsustainable".

THREE CANDIDATES REGISTERED FOR KARABAKH PRESIDENTIAL ELECTIONS

On 5 August the Central Election Commission of the self-proclaimed Republic of Nagorno-Karabakh registered three candidates for the presidential elections to be held on 1 September, an RFE/RL correspondent reported from Stepanakert. They are the current Nagorno-Karabakh Foreign Minister Arkadii Ghukasyan, parliament speaker Artur Tovmasyan, and parliament deputy Boris Arushanyan. Acting president Leonard Petrossyan is not running as a candidate. Observers expect that the vote will be a race between Ghukasyan and Arushanyan. The post of president became vacant in March 1997, when incumbent Robert Kocharyan was appointed Prime Minister of Armenia. Kocharyan received a majority of more than 86 percent in the November 1996 presidential elections. The elections were not recognized as valid either by Azerbaijan or by the international community. His closest rival, Boris Arushanyan, polled 6.9 percent.

CONFUSION OVER LUKOIL'S PARTICIPATION IN KYAPAZ/SERDAR

On 5 August the Russian Foreign Ministry issued a statement confirming that the Russian oil companies Rosneft and Lukoil have withdrawn from the contract they signed in early July with the Azerbaijani state oil company SOCAR to develop the Kyapaz (Serdar) Caspian oil field, ITAR-TASS reported. Turkmenistan had immediately protested that the oilfield in question lies in Turkmenistan's sector of the Caspian. On 31 July, a spokesman for Rosneft President Yuri Bespalov told Interfax Rosneft would withdraw from the contract. The "Financial Times" on 6 August, however, quoted a spokesman for Lukoil as saying that Lukoil will not withdraw. Also on 5 August, Iranian deputy foreign minister Mahmud Vaezi criticized the signing by Azerbaijan of four new major oil contracts with U.S. companies, AFP reported. Vaezi said the contracts "ignore the rights and interests of other countries" and risk precipitating a crisis in the Caspian region.

JAILED KYRGYZ JOURNALIST RELEASED

The Kyrgyz Supreme Court on 5 August overturned a decision by a Bishkek municipal court and acquitted the editor of the Kyrgyz independent weekly newspaper "Res Publica," Zamira Sydykova, of slander charges, according to RFE/RL correspondents in Bishkek. Sydykova had been sentenced to 18 months in a prison colony after the head of the Kyrgyz state gold company, Dastan Sarygulov, filed suit charging several articles in Res Publica had slandered him. Sydykova was found guilty on 23 May and has been serving her sentence, doing janitorial work at the colony, since that time.

KAZAKHSTAN PLANS TO INSTALL NUCLEAR REACTORS

The Kazakh government has approved a plan to install six nuclear reactors at its first nuclear power plant by the year 2030, according to a 5 August ITAR-TASS report. The new Russian-made VVER reactors will be installed at a power plant on the southern shore of Lake Balkhash. Kazakhstan is heavily dependent on Russian and Uzbek supplies of energy and is deep in debt to both countries as a result. The project is estimated to cost about $5 billion.

JAPANESE TRAINING CENTER TO OPEN IN TASHKENT

The Japanese company "NEC" will open a communication's training center in the Uzbek capital of Tashkent, this October, ITAR-TASS reported on 6 August. The center will offer instruction by "highly qualified experts" from NEC in the use of modern communications equipment. NEC and Mitsiu Bissan are already helping Uzbekistan reconstruct its telephone exchange infrastructure. The Japanese company also has already established a similar center in St. Petersburg.




BELARUSIAN PRESIDENT ON RELATIONS WITH RUSSIA

Alyaksandr Lukashenka told Interfax on 5 August that integration with Russia would go ahead despite a row with Russia over the arrest of a Russian television crew in Belarus. Lukashenka argued that influential political critics in Russia would not distract him or Russian President Boris Yeltsin from their plans for unity enshrined in a treaty signed in May. "Neither he nor I will abandon the politics of integration," Lukashenka said. Yeltsin had threatened to review the union treaty if the two-man crew, charged with illegally crossing the border from Lithuania, were not released. Two of the three face a possible five-year sentence. Lukashenka said he was ready to meet Yeltsin to discuss problems relating to integration, though he added that it was not he who had started the argument.

CRIMEAN ORGANIZATIONS APPEAL TO UKRAINIAN PRESIDENT'S WIFE

Several public associations in the Crimean city of Sevastopol, grouped under the umbrella of the so-called Bastion Bloc, have released an open letter calling on Ukrainian President Leonid Kuchma's wife to use her influence so as not to allow the Sea Breeze-97 exercise to be held in Crimea, Interfax reported on 4 August. The exercise is scheduled to be held off Crimea's cost at the end of August in the framework of NATO's Partnership for Peace program. It would involve Ukrainian, U.S. and other countries' naval ships. Sevastopol Bastion also has called on Lyudmila Kuchma "to take the rapprochement of Ukraine, Russia and Belarus under her patronage." The League of Crimean Women has sent a similar letter to Kuchma's wife.

UKRAINIAN PRESIDENT MEETS UZBEKISTANI COUNTERPART

Leonid Kuchma on 5 August met Uzbekistan President Islam Karimov, who is vacationing in Crimea, UNIAN reported. The Presidential Press Service said that a "wide specter of issues in relations between the two countries was discussed" during the meeting. Both presidents said they are satisfied with relations between Ukraine and Uzbekistan.

ESTONIAN PRESIDENT IN FINLAND

Lennart Meri finished a visit to Denmark on 5 August and arrived in Finland for a private visit, BNS reported. A presidential aide declined to say whom the president will meet during his visit. Meri is scheduled to return to Tallinn on 6 August. Meri spent five days in Denmark where he addressed Danish politicians about Estonian views on NATO and EU enlargement.

ESTONIAN EXPERTS SAY RUSSIA DELAYING BORDER AGREEMENT

Chief topographer of the Estonian Border Guard Department Tonu Raid, who heads the Estonian team of experts at the border talks with Russia, told journalists on 5 August that Russia is inventing reasons to delay an agreement on border maps which is necessary for the signing of a border treaty between the countries. He said that while the parties have reached agreement on the borderline and its marking on the map, Russia keeps arguing about technical parameters. Meanwhile, the next round of border talks between Russia and Latvia are scheduled to begin on 6 August in Riga. The Latvian Foreign Ministry said the delegations have agreed on a draft border treaty and are now working on maps and other technical aspects.

LATVIAN AIR FORCE COMMANDER KILLED IN CAR CRASH

Karlis Kins, the commander of the Latvian air force, was killed on 4 August when his car collided with a truck on a highway outside Riga, BNS reported on 5 August. Kins was declared dead at the scene of the accident. An unidentified passenger in his car also was killed. Four other passengers, including Kins' wife, were hospitalized with injuries. Kins was on vacation and driving a personal car.

FOUR LATVIAN FACTIONS TO SIGN DRAFT GOVERNMENT DECLARATION

Latvia's four largest parliament factions are set to sign on 6 August a draft government declaration and an agreement on cooperation, BNS reported. The signing will make it possible for the government formed by Guntars Krasts to start working. The draft documents were finalized on 5 August. Unlike the previous government, the new coalition does not include the National Reform Party and the Green Party faction. However, Indulis Emsis of the Green Party will keep a post in the new government. Krasts has described integration into Europe, economic development and continued reforms as the main tasks of his government.

POLISH GOVERNMENT ACCUSED OF KEEPING SECRET ACCOUNTS

Poland's central auditing office (NIK) said on 5 August it had discovered secret government accounts in Poland and Germany holding a million marks (540,500 dollars), PAP reported. The funds belong to the government and lay in two separate mark accounts, one Polish and the other in an unidentified German bank in Berlin. Under Polish law, "the existence of these accounts is illegal and unjustified as all government spending must appear in the state budget and be submitted to parliament," NIK spokesman Przemyslaw Szustakiewicz told AFP. He said some of the funds helped equip dental surgery for government officials. Top government officials claim they did not know of the accounts' existence.

POLISH PEASANT PARTY THREATENS COALITION PARTNER

Deputy Premier and Agriculture Minister Jaroslaw Kalinowski of the co-ruling Polish Peasant Party (PSL) left the cabinet meeting on 5 August in protest against Prime Minister Wlodzimierz Cimoszewicz's refusal to discuss Kalinowski's idea to pay in advance for cereals bought from farmers, RFE/RL's Warsaw correspondent reported. The agriculture ministry in May came up with the project under which the government's Agriculture Market Agency would pay in advance for cereals bought from farmers. The premier supported the project but asked the ministry to present an analysis of cereals market before the project is discussed by the government. The government's spokesperson said Cimoszewicz refused to discuss the project because Kalinowski did not present the requested analysis. PSL leaders said that if Cimoszewicz does not accept the plan by 12 August, PSL will demand the prime minister's resignation.

CZECH REPUBLIC'S MARRIAGE AND BIRTH RATES DECLINE SHARPLY

Marriages and births have fallen dramatically in the Czech Republic since the fall of the communist regime in 1989, according to data released to the media from the Central Statistical Office. During the six years between 1990 and 1996, marriages fell by 41 percent while registered births dropped by almost a third. In 1990, there were 90,953 recorded marriages, a figure slightly higher than the year before, but by 1996 this level had fallen to 53,896. Similarly, births registered in 1990 were 130,564 while six years later in 1996, the number was just 90,446. In 1996, for a third year in a row, more people died than were born. The country's population in 1995 was 10,321 000 while it was 10,309 000 last year.

SLOVAK PREMIER'S PARTY DISASSOCIATES ITSELF FROM LE PEN'S VISIT

A statement released to the media by Slovak Prime Minister Vladimir Meciar's Movement for a Democratic Slovakia (HZDS) on 5 August says French National Front Chairman Jean-Marie Le Pen has not been invited to visit Slovakia either by the Slovak parliament, the government or the HZDS. The ultra-right politician has been invited by the Slovak National Party (SNS), which is an independent and sovereign political subject, the statement says. The SNS announced on 4 August that Le Pen is scheduled to visit Slovakia 18-21 September at the SNS invitation (see RFE/RL Newsline, 5 August). A spokesman for the HZDS told journalists on 5 August that the HZDS announced "a long time ago that there will be no meeting [of HZDS politicians] with Le Pen."

HUNGARIAN MILITARY TO BECOME PROFESSIONAL

Defense Minister Gyoergy Keleti said on 5 August that at Prime Minister Gyula Horn's request, his ministry will work out a long-term project to establish a professional army, Hungarian media reported. Professional soldiers will receive an average salary increase of 23.5 percent next year, and mandatory military service will cease within eight to 10 years. A decision on fighter aircraft purchases will be made after upcoming NATO negotiations. Some 300 billion forints ($1.55 billion) have been earmarked for buying 30 fighter jets, together with weaponry and the necessary ground instruments.




GREECE TO LEGALIZE ALBANIAN MIGRANTS' STATUS

Greek Foreign Minister Theodoros Pangalos said in Tirana on 5 August that his country will help Albania restore its economy, military, and police. Some 100 Greek troops will stay in Albania, together with a group of military experts. Greece is anxious to curb an influx of drugs, arms, and criminals from across the border. Pangalos added that Albanian migrant workers in Greece will receive temporary work permits. Many of the Albanians have been working there illegally and are subject to immediate deportation. There are perhaps 300,000 such migrants, who often live and work under poor conditions, but whose presence has become essential to some branches of the Greek economy. Their remittances home are a mainstay of the Albanian economy.

HOLBROOKE STARTS BALKAN MISSION TO SAVE DAYTON AGREEMENT

U.S. envoys Richard Holbrooke and Robert Gelbard arrive in Split on 6 August for meetings with Croatian President Franjo Tudjman and his Bosnian counterpart Alija Izetbegovic. The diplomats want the two leaders to put into effect long-standing agreements regarding the Croat-Muslim Federation in Bosnia. On 8 August Holbrooke is expected to tell Yugoslav President Slobodan Milosevic in Belgrade that his country could face new sanctions if it does not observe its obligations under the Dayton agreement and "ideally" send Bosnian Serb leader Radovan Karadzic to the Hague-based war crimes tribunal. In Novi Pazar, Sandzak Muslim leader Sulejman Ugljanin said on 5 August that he wants to tell Holbrooke personally about Serbia's persecution of its Muslim minority. Ugljanin also appealed to Bosnian Co-Prime Minister Haris Silajdzic to make the Sandzak Muslims' plight known, an RFE/RL correspondent reported from Novi Pazar.

RIFT GROWS BETWEEN U.S., WESTENDORP

Carlos Westendorp, the international community's chief representative in Bosnia, has refused to meet Holbrooke, news agencies reported from Sarajevo on 5 August. Westendorp's spokesman said in the Bosnian capital that Westendorp "is in Spain. He is on holiday. He'll be back at the end of the week." The former Spanish foreign minister's apparent decision not to meet the U.S. envoy comes in response to recent negative remarks about Westendorp made by an unnamed U.S. diplomat (see "RFE/RL Newsline," 5 August 1997). Westendorp's spokesman added that "some of the statements which I've seen attributed to various diplomats are extraordinary. Anonymous briefings to the press are unhelpful in this context." Among the criticisms of Westendorp is that he spends too much time away from Bosnia.

BOSNIAN UPDATE

Westendorp's office announced in Sarajevo on 5 August that Muslim and Croat representatives have agreed that Muslim villagers may soon return to their homes near Jajce (see "RFE/RL Newsline," 4 August 1997). German officials said in Bonn that Germany has suspended all aid to the Croat-held Jajce region until the Muslims are allowed to go home. Elsewhere, Switzerland and Russia have joined at least 12 other countries in following Westendorp's call for a freeze on contacts with Bosnian diplomats until the three Bosnian sides agree on new ambassadorial appointments.

U.N. POLICE FREE TWO ILLEGALLY HELD SERBS

Members of the International Police Task Force (IPTF) on 5 August found and obtained freedom for two Serbs whom the Bosnian authorities were holding in a prison in Zenica in violation of the Dayton agreement. The IPTF paid an unannounced visit to the facility and found Nenad and Dusan Skrbic, whom the police had not seen on previous, announced visits. The two were on the list of missing persons of the International Committee of the Red Cross, but the Bosnian authorities at first refused to free them. The men were taken to Banja Luka and reunited with their families, who had alerted the IPTF to their plight.

OSCE SAYS IT WILL NOT MONITOR SERBIAN VOTE

A spokesman for the OSCE said in Vienna on 5 August that his organization will turn down Serbia's invitation to monitor the September local elections there unless Belgrade removes some conditions it wants to place on the operation. The Serbian authorities seek to determine which countries may send monitors, which the OSCE calls "unacceptable." The spokesman added that Belgrade has failed to implement recommendations that the OSCE made late last year to improve the democratic process in Serbia.

SLOVENIA LOSES KEY COURT BATTLE

A court in Nicosia, Cyprus, ruled on 5 August that Slovenia has no claim to money deposited in Beogradska Banka Cyprus for the former Yugoslav National Bank (NBJ). The court lifted an injunction that Slovenia obtained last year against the Serbian offshore bank and charged Slovenia for costs. Slovenia, Bosnia, Croatia, and Macedonia object to federal Yugoslavia's claim to be the sole legal successor to Tito's state and hence entitled to its assets. Acting on the principle that former Yugoslav property should be divided equitably among all the successor states, Slovenia charged that some of the NBJ's money on deposit in Cyprus actually belongs to Slovenian citizens.

ROMANIAN GOVERNMENT AGREES ON RESTRUCTURED BUDGET

At a meeting that ended in the early morning hours of 6 August, the government agreed on the details of the restructured budget, Radio Bucharest reported. Details will be presented by Prime Minister Victor Ciorbea at a press conference later on 6 August. Deputy Minister of Finance Dan Rusanu said the restructured budget continues to be one of "austerity" and that it reflects the priority given to social protection, health and education. He said the 4.5% deficit agreed on with the IMF will be respected and predicted that in 1998 the deficit will be between 2.2 and 2.5 percent of the GDP. Earlier, Ciorbea met leaders of the main trade unions, RFE/RL's Bucharest bureau reported. After the meeting, they said it was agreed that salaries will be indexed by 17 percent in the third quarter of 1997 and by 6 percent in the last quarter.

ROMANIAN INTERIOR MINISTER ENDS TRANSYLVANIAN TOUR

Ending a tour of Transylvania on 5 August, Minister of Interior Gavril Dejeu told a press conference that he found inter-ethnic Romanian-Hungarian relations to be "reasonable." But he complained that Romanian ethnics living in the countryside in counties with a Hungarian majority are being subjected to "inadmissible efforts" of assimilation, Radio Bucharest reported on 6 August.

EUROPEAN UNION URGES IMPROVEMENT OF TREATMENT OF ROMAS IN ROMANIA

A European Commission official on 5 August urged Romania and other CENTRAL AND EASTERN EUROPEan countries to crack down on discrimination and violence against their Roma minorities, the media reported on the same day. Steffen Skovmand, a member of the European Commission's delegation in Romania, said in a news conference that the situation of the Roma is "still a weak point" in Romania's record of respect of human rights and in the rest of the region. Roma rights activist Nicolae Gheorghe told reporters that Roma are subject to harassment and aggression in CENTRAL AND EASTERN EUROPE. He cited violence against Roma by "skinhead" youth gangs in the Czech Republic and Slovakia, police brutality against them in Romania and Bulgaria, and labor and education discrimination in Hungary.

FIVE DIE IN ROMANIAN FLOODS

Two men trying to cross a small Romanian river in a horse-drawn cart drowned when they were swept away by a sudden torrent of water. A police spokesman said on 5 August that the accident occurred in the town of Zarnesti, 50 kilometers southwest of Brasov. Police in the eastern Danube river port of Tulcea said the bodies of three men were found in one of the tributaries of the Danube. The three were washed away by floodwater following heavy rains late last month.

EVACUATION OF RUSSIAN MILITARY EQUIPMENT FROM TRANSDNIESTER POSTPONED

The evacuation of the first dispatch of Russian military equipment from the breakaway Transdniester region, scheduled for August 3, has been postponed, BASA-press reported on 4 August, citing "reliable sources" close to the Tiraspol authorities. No new date for the beginning of the evacuation was mentioned. The military convoy carrying the equipment should have transited the Moldovan territory. The breakaway region's leadership opposes the evacuation and claims ownership of the equipment. Stefan Chitac, a military adviser of Transdniester leader Igor Smirnov, told BASA-press that he knows nothing about the evacuation but noted that the problem of ownership of the assets will be the subject of separate negotiations between Transdniester and Russia.

TRANSDNIESTER DECLARES ITSELF "CUSTOMS CONTROL ZONE"

A decree signed on 5 August by the leader of the breakaway Transdniester region, Igor Smirnov, stipulates that the region is setting up a separate "custom control zone" on all its territory. The decree says the measure "corresponds to custom legislation and similar practice in the CIS," BASA-press reported on 5 August. The Transdniestrian custom service is headed by Igor Smirnov's son, Vladimir Smirnov. In other news, in the wake of the "motorcade incident" during which Moldovan Defense Minster Valeriu Pasat was barred from entering the territory under the separatists' control (see RFE/RL Newsline," 4 August 1997), the Joint Control Commission which oversees the truce between Chisinau and Tiraspol has ordered the commandment of the three peace-keeping forces (OSCE, Russia and Ukraine) to work out within two weeks a mechanism aimed at removing obstacles for crossing the security zone dividing the two conflicting sides.




RUSSIA: THREE ZEROS TO GO OFF RUBLE BILLS


By Stephanie Baker

Declaring an end to the era of inflation, Russian President Boris Yeltsin on 4 August announced that the Central Bank will lop three zeros off the ruble next year with the introduction of a new ruble note. He also said that the bank will bring back the kopek, which will be one one-hundredth of a ruble.

Analysts said Russia's decision to issue a new ruble note was a mostly cosmetic confidence building exercise. But they say it is significant for being the first time Russia will revamp its currency without wreaking havoc and robbing the population of hard-won savings.

Starting January 1, 1998, the Central Bank is to issue new notes and coins, including a shiny new kopek, which will be used in parallel with the old bills for one year. An old 1,000 ruble note will be equal to a new 1 ruble note. By the start of 1999, the government plans to phase out use of the old notes, but old rubles can be exchanged for new notes until 2002.

Yeltsin said in a nationwide address that over the last 50 years, monetary reform had hit the "common people" particularly hard. But now the government is determined to prevent any suffering. As he put it: "Nobody is going to lose anything as a result of the reform. Nobody's interests will be trampled on -- the reform will not amount to confiscation." By announcing plans to introduce the new bills a full five months in advance, the Central Bank hopes it will have enough time to persuade Russians not to panic. It has even set up a hot-line to field inquiries.

During previous currency reforms in 1991 and 1993, many Russians lost their savings when they were forced to switch old notes for new ones virtually overnight. The government hopes to avoid the characteristic chaos this time by introducing the new notes gradually.

In Yeltsin's words: "I want everyone to be well-prepared for it, so that there will be no haste or stress."

After weathering hyperinflation and several botched attempts at monetary reform, most Russians hold their savings in dollars. On the streets of Moscow, most people greeted the announcement calmly, noting that the exchange rate to the dollar is unlikely to fluctuate.

The reforms should slim down the average consumer's wallet by getting rid of worthless bills, such as the hated 100 ruble note. The new notes, which look almost identical to the rubles currently in circulation but minus three zeros, will be issued in five denominations: 5, 10, 50, 100, 500.

Coins will be revived with the introduction of 1, 2 and 5 ruble denominations. Kopeks will be issued in 1, 5, 10 and 50 denominations.

Central Bank Chairman Sergei Dubinin said the new notes would help boost public confidence in what he called a "new heavy and firm ruble." He added that redenomination would not affect Russia's monetary policy next year.

Dubinin said the decision to introduce the new notes signals an end to inflation and the economic slump of years past. Once rampant inflation, which peaked in 1992, has been largely brought under control, with the government forecasting a 12 percent rate this year.

Dubinin dismissed speculation that the cost of printing new notes would drain the Central Bank's resources or put added pressure on the government's cash-strapped budget. He said there is constant demand to replace old notes with crisp new bills, spurred by the proliferation of automatic teller machines.

Pavel Teplukhin, an economist at Troika Dialog, said previous attempts at monetary reform had essentially amounted to a confiscation money from the population. As he put it: "This time people will not suffer."

Others said the decision to knock of three zeros from the ruble only signals that the government has the muscle and confidence to stick to a stable ruble and low inflation.

Rumors of a re-denomination first surfaced last February, but the government waited until now to announce the reforms, apparently cheered by upbeat news on the economic front and increased political stability.

The move could give a boost to the government's economic reforms by removing inflationary expectations and persuading Russians to choose rubles over dollars, luring some of the so-called "mattress money" into ruble bank accounts.

As Roland Nash, an economist at the Moscow investment bank Renaissance Capital, put it: "It should encourage people to hold their savings in rubles, which should free up some capital to invest in the real economy."

The author is an RFE/RL correspondent based in Moscow.


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