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Newsline - September 4, 1997


At the opening of its fall session on 3 September, the State Duma established a commission to probe the Svyazinvest and Norilsk Nickel privatization deals, Interfax reported. The commission will check whether the auctions were conducted in accordance with the law and investigate the role of government officials in the two deals. According to Interfax, the Duma said the commission was established following the public outcry over the controversial deals. Alfred Kokh resigned as deputy prime minister and head of the State Property Committee after he was accused of being linked with Oneksimbank, the winner of both sales of stakes in Svyazinvest and Norilsk Nickel.


Duma Speaker Gennadii Seleznev on 3 September called for constructive cooperation between the parliament and the government. He said legislators will consider some 400 bills during the fall session. The debate on the 1998 budget is one of the most important issues "on which the prospects of the Russian economy [and] the nearest future of education, science, culture and other subsidized spheres and progress of army reform depend," Interfax quoted him as saying. However, Seleznev criticized the 1998 government draft budget as continuing the "same destructive policy by the government.... It is not a policy; it is an offense to reason." The Communists and other parties in the Duma issued a joint statement on 1 September criticizing the draft budget. They said it fails to guarantee the rights of workers, rejects state regulation of vital branches of the economy, and promotes both the destruction of natural monopolies and the sale of state property.


Also on 3 September, Yabloko leader Grigorii Yavlinskii told Duma deputies that adoption of a new tax code will be the most pressing issue for legislators in the fall session, Interfax reported. Yavlinskii said adoption or rejection of the code will have far-reaching consequences for the economy and the budget. He added that the next most important issue for the Duma was debate on the budget and described the government's 1998 budget draft as realistic. (The previous day, Yavlinskii had told an RFE/RL correspondent that it was a "budget of stagnation.") Yavlinskii said Yabloko will continue what he called "its course of democratic opposition to those in power."


Russian and Chechen representatives have finally agreed on tariffs for the export of Azerbaijan's Caspian oil via Chechnya, Russian agencies reported on 3 September. Under the compromise agreement, proposed by Russian Security Council Secretary Ivan Rybkin, Chechnya will be paid the standard Russian rate of $0.43 per metric ton of oil transported. The Russian pipeline company Transneft will make up the difference between that amount and the $2.2 that the Chechens had demanded. Chechnya had rejected Rybkin's earlier suggestion that Chechnya receive a fixed sum in aid from the federal budget in lieu of the higher tariff. Khozh-Akhmed Yarikhanov, chairman of the Chechen state oil company, told Interfax that Chechen President Aslan Maskhadov initially rejected the compromise proposal but then reluctantly accepted. Speaking in Moscow on 3 September, Prime Minister Viktor Chernomyrdin argued that any concession by Russia on tariffs would be "misplaced."


First Deputy Prime Minister Boris Nemtsov has said that beginning 1 October, state-run enterprises will be restricted in their fuel and electricity use, RFE/RL's Moscow bureau reported on 3 September. Nemtsov, who is also fuel and energy minister, told journalists that Gazprom and United Energy Systems will cut off all energy supplies of those government-financed enterprises exceeding the new energy usage limits. Nemtsov also announced the government will issue bonds worth 3 trillion rubles ($517.2 million) to cover part of the energy sector's debt to the federal budget, according to ITAR-TASS. The energy sector is heavily indebted to the federal government, mostly because of the inability of Russian enterprises and other consumers to pay for fuel and electricity.


Communist Duma deputies appealed to visiting German President Roman Herzog on 3 September to intervene in granting clemency to jailed former East German leader Egon Krenz, Interfax and Reuters reported. In a statement, the Communists condemned the imprisonment of Krenz, calling it the "continuing persecution of former leaders of [East Germany,] a country that was a full member of the United Nations and different organizations and with which a majority of states had diplomatic relations." In July, a Berlin court found Krenz guilty on four counts of manslaughter for his role in the deaths of people trying to flee over the Berlin Wall. Krenz, who was East German leader for six weeks in late 1989, was sentenced to six-and-a-half years in prison.


Representatives of the North Caucasus republics ended a two-day meeting in Pyatigorsk on 3 September without signing any of the four proposed documents on coordinating measures to combat crime, "Izvestiya" reported on 4 September. A North Ossetian official told the newspaper that the draft documents, which had been drawn up in Moscow, were "too far removed from reality" and that participants had suggested more than 120 amendments. Interior Minister Anatolii Kulikov on 2 September told the conference that crime and terrorism in the region constitute a direct threat to Russian security Deputy Prime Minister Ramazan Abdulatipov expressed concern at frequent alliances between criminal elements and local leaders.


During a meeting with Prince Hassan in Moscow on 3 September, Prime Minister Viktor Chernomyrdin said bilateral relations with Jordan are a top priority Interfax and ITAR-TASS reported. Chernomyrdin said Moscow intends to pursue closer trade, economic, and political ties with Jordan. In an earlier meeting with Foreign Minister Yevgenii Primakov, Hassan urged Russia not to limit its involvement in the Mideast peace process to Arab countries. He appealed to Russia to try to exert influence on Israel as well. Primakov said the views of Russia and Jordan on the Mideast settlement are close or coincide in many respects, according to Interfax.


Also on 3 September, Chernomyrdin stressed again Moscow's opposition to NATO membership for the three Baltic States, saying it would inevitably lead to "new sources of mistrust and suspicion" in their relations with Russia. Chernomyrdin said no one had been able to explain why Latvia, Lithuania, and Estonia should join NATO. He said that Kaliningrad, seized by Soviet troops from Germany at the end of World War Two, will always remain part of Russia. Chernomyrdin is due to arrive in Vilnius on 5 September for a 12-nation summit, where he will meet with Baltic and other East European leaders.


After meeting with President Boris Yeltsin on 3 September, Sergei Stepashin said Russia is still debating whether to abolish the death penalty. Moscow promised to ban capital punishment in January 1996 when it joined the Council of Europe. But Yeltsin's attempts to outlaw executions have been blocked by hard-liners in the parliament, who warn that crime in the country will only worsen if capital punishment is banned. Human rights activists say Russia executed 62 prisoners after joining the council, but Russian officials say there have been no executions since 1996. In July, Yeltsin sent a new bill to the parliament that would permit capital punishment only after approval by the chairman of Russia's Supreme Court, procurator-general, and the presidential Commission for Pardons.


The IMF board of directors on 3 September approved a $700 million tranche of its three-year loan to Russia, Reuters reported. The fund noted economic developments in Russia in the first six months of 1997 have been encouraging, adding that monetary policy is on track to keep inflation down and the ruble stable. However, Moscow needs to do more to settle its problem of budgetary arrears, according to the fund. Wage, pension, and tax arrears are one of Russia's most pressing social and economic problems. The IMF has delayed several disbursements of the three-year, $10 billion loan to Russia because of low tax revenues, a leading cause of the arrears problem.


Alfred Kokh has been elected chairman of the board of the Montes Auri investment firm, Interfax and "Kommersant-Daily" reported on 3 September. Board member Arkadii Yevstafev said that beginning this fall, Montes Auri will bid in auctions for shares in major enterprises, and Kokh will supervise the firm's largest investment projects. As a member of the State Property Committee for several years and its chairman from September 1996 to August 1997, Kokh was closely involved in preparing the government's privatization program. First Deputy Prime Minister Anatolii Chubais earned some 1.25 billion rubles ($250,000) from investments with Montes Auri between January and July 1996, when he held no official post. Yevstafev also heads the Fund for the Protection of Private Property, founded by Chubais. He gained fame in June 1996 as one of two men detained outside government headquarters carrying more than $500,000 in cash.


Yeltsin's Political Consultative Council has approved amendments to the controversial law on freedom of conscience and religious organizations, Interfax reported on 2 September. The new version is to be submitted to the Duma soon, although some Duma deputies advocate overriding Yeltsin's July veto of the original religion law. The amended law would expand the list of "traditional" Russian faiths. The original version recognized only Russian Orthodoxy, Islam, Buddhism, and Judaism as "traditional." Duma deputy Galina Starovoitova charged on 28 August that the new version retains major flaws and would still violate the constitutional guarantee that all religious groups are equal under the law, ITAR-TASS reported. Patriarch of Moscow and All Russia Aleksii II, a strong supporter of the law, announced on 2 September that the Russian Orthodox Church is satisfied with the amendments, which "have not changed [the law's] concept and essence."


Yeltsin and Patriarch Aleksii II attended the opening on 3 September of the rebuilt Christ the Savior Cathedral. "From now on this path [leading to the cathedral] will welcome hundreds and thousands of pilgrims coming here, as in earlier times to worship the Lord," the Patriarch said. The original cathedral was intended to commemorate the defeat of Napoleon's army in 1812 but was not completed until 1883. It was blown up on Stalin's orders in 1931, and the site was later turned into an enormous public swimming pool. The opening coincided with the 850th anniversary of Moscow's founding.


President Heidar Aliyev on 3 September issued a decree instructing cabinet ministers, the Foreign Ministry, and the National Bank to intensify dialogue and cooperation with their U.S. counterparts, Turan and Interfax reported. The Foreign Ministry was also ordered to maintain closer contacts with France and Russia. Those two countries and the US are the co-chairs of the Organization for Security and Cooperation in Europe's Minsk Group, which is mediating a settlement of the Karabakh conflict. Aliyev also charged the Foreign and Defense Ministries to expand military cooperation with the U.S. under the aegis of NATO's Partnership for Peace program and the North Atlantic Cooperation Council and to work more closely in the fields of security and arms control. The "Turkish Daily News" on 4 September reported that Azerbaijan, the U.S., and Israel are supplying intelligence data to Turkey on the planned transfer of Russian S-300 missiles to Greek Cyprus.


Speaking at a press conference in Moscow on 2 September, Russian Foreign Ministry spokesman Valerii Nesterushkin denied that the 29 August Russian-Armenian Treaty on Friendship, Cooperation, and Mutual Assistance is "aimed at a third party, notably Azerbaijan," Interfax reported. On 1 September, Azerbaijani Foreign Minister Hasan Hasanov had told Moscow's ambassador to Baku that he was "concerned" and "bewildered" at the treaty. Hasanov also responded to Armenian President Levon Ter-Petrossyan's statement that the treaty provides for military assistance if one of the signatory states is attacked. Hasanov said the statement is an "open challenge to Azerbaijan, which is itself the victim of aggression by Armenia," according to "Nezavisimaya gazeta" on 4 September. Azerbaijani state foreign policy adviser Vafa Gulu-Zade told the newspaper that if Azerbaijan tries to reconquer territories currently occupied by Armenian forces, it will be drawn into a war with Russia.


Niels Helveg Petersen, the Danish foreign minister who is also OSCE chairman-in-office, has said the prospects for resolving the Abkhaz conflict are "encouraging," ITAR-TASS reported on 3 September. Petersen was in Tbilisi in late August for talks with the Georgian leadership on both Abkhazia and South Ossetia. On 2 September, the first day of the fall session of the Georgian parliament, speaker Zurab Zhvania said the attitude of the Russian leadership toward resolving the Abkhaz conflict has improved, according to Interfax. Parliamentary deputies from several factions, however, consider the Georgian government's Abkhaz policy has resulted in "deadlock." They intend to create a coalition to restore Georgian hegemony over the region, the Caucasian Institute for Peace, Democracy and Development reported on 3 September, citing "Rezonansi".


Presidential press secretary Vakhtang Abashidze said on 4 September that Eduard Shevardnadze has canceled his planned visit to Moscow to take part in the city's 850th anniversary celebrations, Interfax reported. Shevardnadze's decision was taken in response to a statement on 1 September by Col.-Gen. Andrei Nikolaev, the Russian Federal Border Service director. Nikolaev said that his men will use "all available means" to prevent some 300 trucks carrying alcohol from entering the Russian Federation. The convoy has been halted for several weeks at the Georgian-Russian frontier. Gen. Valerii Chkheidze, Nikolaev's Georgian counterpart, said on Georgian Radio on 3 September that Russian prohibition is an "attempt to discredit Georgia."


Russian border guards on 3 September stopped eight men from crossing into Tajikistan from Afghanistan, killing five of the intruders, ITAR-TASS and Reuters reported. One border guard was wounded during the brief exchange of fire. The three men who survived fled back to Afghanistan. The incident comes one day after an ethnic Tajik serving in a Russian border guard unit near the Pyanj border crossing was killed. Authorities said that the 2 September attack was a "terrorist action." The amount of drugs confiscated in Central Asia has increased recently, likely because of the advent of winter and the accompanying snowfalls that will block the major routes from Afghanistan to its northern neighbors.


Nursultan Nazarbayev on 3 September ended his tour of several Arab states in the Persian Gulf area, TAR-TASS and Interfax reported. Nazarbayev left Oman, his last stop, having signed agreements on cooperation between the two countries' Foreign Ministries. He also discussed with Omani officials how to bring Kazakh oil to the Persian Gulf. Oman has invested in Kazakhstan's Tengiz oil field. Previously, Nazarbayev was in Bahrain, where he signed agreements on avoiding double taxation and on investments. Bahrain also raised the possibility of opening an embassy in Kazakhstan soon. The main goal of Nazarbayev's tour, which started in Kuwait, was to encourage the Gulf states to invest in Kazakhstan.


Uzbekistan on 3 September opened an embassy in Israel, ITAR-TASS reported. From 1992, Uzbekistan had a consulate in Tel-Aviv. Acting Uzbek ambassador to Israel is Rustam Isayev, who was the former consul. At the opening ceremony, Isayev said the friendship between Israel and Uzbekistan is much older than five years. He recalled that Jews have been living in Uzbekistan for centuries and that many found refuge in Uzbekistan during World War Two.


Hungarian-born U.S. financier and philanthropist George Soros on 3 September said he is closing down the Soros Foundation in Minsk, RFE/RL's Belarusian Service reported. In a statement, the foundation said the closure is the result of harassment by tax authorities in Minsk, including "politically motivated investigations, unjustified and exorbitant fines, and the seizure of its bank account." The statement accused Belarusian President Alyaksandr Lukashenka of conducting a campaign to destroy civil society and independent mass media. Soros denies accusations by Belarusian authorities that the foundation has been involved in opposition political activities. Foreign Minister Ivan Antonovich told state television on 3 September that the closure is an attempt to provoke a "sensational" political reaction. Soros's Open Society Institute has donated hundreds of millions of dollars to former Communist countries to promote democracy and a free press.


The EU's Executive Commission on 3 September proposed 100 million ECU in aid ($92.6 million) to help Ukraine repair the concrete sarcophagus around the damaged nuclear reactor at Chornobyl, RFE/RL reported. That sum is the EU's share of an aid package promised at the June summit of the Group of Seven leading industrial nations. An EU commission spokesperson told RFE/RL that safety precautions and the plant's eventual closure are expected to dominate talks between top EU officials and Ukrainian President Leonid Kuchma in Kyiv on 5 September. Disbursement of the EU aid requires formal approval from EU finance ministers. The cost of making the Chornobyl reactor safe in the aftermath of the 1986 explosion has been estimated at $750 million. G-7 countries have pledged support worth $300 million.


Gediminas Vagnorius has requested that the Supreme Court and the Prosecutor-General's Office speed up the process of revoking the rehabilitation of persons suspected of involvement in the Nazi-led genocide of Jews, BNS reported on 3 September. "Neither at home nor abroad should there be any doubt about the resolution of the Lithuanian people to create a just state," Vagnorius commented. Shortly after Lithuania regained independence, a universal rehabilitation for those who had resisted occupying forces was declared. International Jewish organizations protested that hundreds of people who had assisted the Nazis in killing Jews were among those rehabilitated. Since then, the rehabilitation of several war criminals has been revoked, but the Supreme Court still has to make a ruling in 17 cases.


Polish and German military leaders are taking part in a two-day meeting at the Drawsko military training ground, some 500 kilometers north of Warsaw, to discuss cooperation between the Danish, German, and Polish armies. The meeting follows the recent decision by the three countries' defense ministers to establish a joint military force following Poland's entry into NATO in 1999 (see "RFE/RL Newsline," 1 September 1997). The joint unit will have three divisions of up to 10,000 troops each and may have its headquarters in Szczecin, on the Baltic coast near the German border. The joint force will aim, among other things, to improve cooperation on humanitarian missions, such as flood relief.


Environment ministers from Poland, Belarus, Bulgaria, Estonia, Lithuania, Latvia, Moldova, Romania, Slovakia, and Ukraine on 4 September gathered in the Polish city of Torun, RFE/RL's Warsaw correspondent reported. The ministers are expected to sign a cooperation agreement on environmental preservation, waste processing, ecological education, and soil and air pollution.


Leading intellectuals, writers, religious leaders, and politicians began gathering in the Czech capital on 3 September for informal discussions on humanity and its future. Forum 2000 is taking place at Prague Castle under the auspices of Czech President Vaclav Havel and Nobel Peace Prize winner Elie Wiesel. In a recent statement, Havel commented that the "task of participants in Forum 2000 [is] to review what we have learned about ourselves and each other and to propose alternatives for the future." Among the eight other Nobel Peace laureates taking part are the Dalai Lama, former Israeli Foreign Minister Shimon Peres, and former South African leader F. W. de Klerk. Other prominent participants include Jordanian Crown Prince Hassan, former German Chancellor Helmut Schmidt, and former German President Richard von Weizsaecker. Forum 2000 closes on 6 September.


Vladimir Meciar told Slovak Television on 3 September that his Movement for a Democratic Slovakia (HZDS) will seek to hold presidential elections in December, some three months earlier than planned. He declined to name a candidate but said that the head of state "should not be a political president." Meciar also said that the HZDS is conducting talks about the next president with other parties. Incumbent President Michal Kovac officially ends his term of office in March 1998. He and the premier have been at loggerheads since 1994, when Kovac helped bring down a previous Meciar government. Kovac, who has the support of the opposition, has not yet announced whether he will seek re-election but has said he is considering it. Under the constitution, the president is elected by a three-fifths majority of the parliament.


A presidential spokesman told an RFE/RL correspondent on 3 September that Kovac will not attend the upcoming summit of heads of state in Vilnius because of a "very busy schedule that cannot be changed." Slovak officials have denied speculation that Kovac turned down the invitation because of the participation of Belarusian President Alyaksandr Lukashenka. Czech President Vaclav Havel is also unable to attend because of the Forum 2000 international conference. The Czech ambassador in Vilnuis will participate instead.


Visiting Turkish President Suleyman Demirel told his Hungarian counterpart, Arpad Goencz, that his country backs Hungary's NATO membership, Hungarian media reported on 3 September. Earlier this year, Turkey hinted that it might veto the admission of new NATO members unless its own application to join the EU was not treated more favorably. Goencz told Demirel that Hungary supports Turkey's drive to join the EU. Accompanied by a 130-strong business delegation, Demirel said the volume of bilateral trade could reach some $100 million in the future. Demirel is scheduled to address the parliament on 4 September.


Gabor Kuncze has criticized the Satoraljaujhely local council for its recent decision to expel a group of Gypsies on charges of endangering law and order in the town, Hungarian media reported on 4 September. In a meeting with Mayor Karoly Laczko, Kuncze said the council should pass a new resolution on the issue. He added that it is regrettable that an "ethnic debate has developed in public over a serious social problem." Laczko countered that "from a distance of 270 kilometers, the minister sees many things differently from how we see [them] on the spot." Meanwhile, the government's minority ombudsman has accused the town of "local apartheid."


The Zagreb District Court on 3 September opened war crimes proceedings against four former members of a special police unit who were recently arrested (see "RFE/RL Newsline," 3 September 1997). The four exercised their right to remain silent in response to the court's questions, an RFE/RL correspondent reported from the Croatian capital. The Split-based weekly "Feral Tribune," in which the story of the crimes against Serbian civilians first appeared, has received at least one bomb threat in connection with the article. Croatian independent media noted that Tomislav Mercep, a politician and the former commander of the police unit, has not been arrested. The independent journalists added that the four accused might be able to shed light on the role of some high-ranking officials in covering up war crimes. The war crimes tribunal in The Hague has requested that Croatia provide it with information about the case of the four policemen.


Carlos Westendorp, the international community's chief representative in Bosnia, and his deputy Jacques Klein told Yugoslav President Slobodan Milosevic in Belgrade on 3 September that the Bosnian local elections must go ahead on 13-14 September. The two diplomats rejected Milosevic's call for a presidential and parliamentary vote at the same time in the Republika Srpska (see "RFE/RL Newsline," 2 September 1997). The same day, Milosevic told three of the leading Bosnian Serb hard-liners -- Bosnian joint presidency member Momcilo Krajisnik, Prime Minister Gojko Klickovic, and parliamentary speaker Dragan Kalinic -- not to boycott the local elections.


The U.S. State Department on 3 September announced that SFOR will retake the television transmitter near Bijeljina if the hard-line Serbs break the agreement whereby SFOR recently returned the facility to police loyal to Radovan Karadzic (see "RFE/RL Newsline," 2 September 1997). In Bern, the Swiss government stated that Karadzic has no bank account in Switzerland. In Sarajevo, a bomb exploded near Roman Catholic Church offices, but no injuries were reported. And in the east Slavonian town of Vukovar, a bomb went off near the post office.


All parties in the parliament voted for the new press law on 4 September, Albanian state television reported. The new law states simply that "the press is free" and "the freedom of the press is protected by law." The October 1993 press law had restricted journalists' access to information, allowed for confiscation of publications on vague grounds, and provided for large fines on editors publishing "punishable material." Meanwhile, U.S. and Albanian jurists told RFE/RL that the recent changes in the statutes of state radio and television on regulating use of news air time are not clearly formulated and hence will allow much room for interpretation (see "RFE/RL Newsline," 3 September 1997).


Pjeter Arbnori was taken to the hospital in a critical condition on 3 September, some two weeks after launching a hunger strike, "Dita Informacion" reported. Doctors said, however, that his life is not in danger. Arbnori is demanding that the opposition be legally guaranteed one-third of political news air time. Meanwhile, a bomb went off outside a lawyers' office in Tirana and destroyed a small shop on 3 September, but nobody was injured, "Koha Jone" reported. There is no information yet about the possible motive. Eye witnesses told RFE/RL that another bomb exploded later that day in central Tirana, but there are no reports of injuries or damage. Also on 3 September, police found a cache of arms, including machine guns and hand grenades, in the house of a former presidential guard who committed suicide after committing a murder, "Gazeta Shqiptare" reported.


The government has sacked a number of high-ranking officers and is expected to appoint replacements soon. Defense Minister Sabit Brokaj recently asked the country's 25 generals to resign. A NATO military adviser, however, told RFE/RL on 4 September that Western governments have urged the Albanian government not to conduct political purges in the military. The advisor added that the Albanian army is too large and that a similar-sized NATO country would have only one general.


The "Wall Street Journal Europe" reported on 3 September that Romania may limit the amount of its debt that foreigners can purchase. The newspaper cited what it called an "advance copy" of a government decree. It said stockbrokers would have exclusive rights to sell Treasury bills to non-resident foreigners and that the Finance Ministry could impose limits on the amount sold to them. The decree reportedly would impose a 1.5 percent tax on foreign purchases of Bucharest's three-month and six-month Treasury bills. The "Wall Street Journal Europe" said the decree is likely to be enacted within the next few days.


The Moldovan Ministry of Foreign Affairs has condemned parliamentary deputies from other countries who joined in Tiraspol's 2 September Independence Day celebrations. In a statement issued 3 September, the ministry said leftist politicians from Russia, Belarus, and Ukraine have complicated the situation in the breakaway region by encouraging the idea of independent statehood for the self-proclaimed Transdniestr Republic. The statement singled out Oleg Mironov, a Communist Party deputy in the Russian State Duma, who was quoted by the Infotag news agency as saying that "Russia is interested in the Transdniestrian Republic's existence and will promote its international recognition."


Two parliamentary deputies from the Bulgarian Business Bloc were expelled from the party on 3 September by party leader George Ganchev, RFE/RL's Sofia bureau reported. The Business Bloc now has 10 deputies in the National Assembly, the minimum stipulated by law for the existence of a parliamentary group. Ganchev accused one of the expelled deputies, Christo Ivanov, of having worked as a secret agent in the Soviet-era Security Service. Ivanov told a press conference after his expulsion that Ganchev had accepted a $100,000 campaign contribution earlier this year from the controversial business group Orion, which reportedly has close links to Socialist ex-Prime Minister Zhan Videnov. Ivanov and the other expelled member of parliament, Christo Petrov, have become independent deputies.


by William Echikson

The European Union set up its TACIS and PHARE programs five years ago to aid the countries of CENTRAL AND EASTERN EUROPE and the former Soviet Union. When the two programs were launched, they focused on providing emergency food and transport aid. Since then, they have expanded and evolved to embrace hundreds of separate projects in 25 countries. Recent reports, however, criticize their effectiveness.

Under a mandate from the European Parliament, independent consultants prepared so-called interim evaluations in August. At the same time, the EU's Luxembourg-based Court of Auditors carried out audits of the two programs. Significant overlap was uncovered in the two aid programs. In theory, PHARE helps CENTRAL AND EASTERN EUROPE, while TACIS is designed for the former Soviet Union, except for the Baltics. But in practice, the two often duplicate each other.

Worse, almost two-thirds of the aid money goes to highly paid Western consultants, including wealthy multi-national consulting and accounting groups. Those expensive consultants do not even record their working hours, the Court of Auditors complained. In particular, consultants working in Ukraine did not bother "to warn their superiors of the alarming situation in the nuclear-power stations."

The auditors found that, because of the heavy use of consultants, the aid money produced few concrete, lasting results. "About 80 percent of PHARE projects managed on a decentralized basis are spent on contracts for services, supplies, or work," the report concluded. Also, EU officials prefer to stay in comfortable Brussels rather than resettle in the countries receiving the aid.

The supposed benefactors of the EU's are furious. One Russian member of parliament told EU investigators. "TACIS programs are supervised now by foreign specialists whose work is paid at the expense of funds allocated for our country.... In fact, TACIS [is helping solve] the problem of unemployment in the EU."

Bureaucratic bumbling means that much money approved by the EU's political leaders is never spent. PHARE still has not managed to disburse $2.2 billion. Nonetheless, PHARE's budget is scheduled to rise from $1.4 billion in 1997 to $1.76 billion in 1999.

TACIS's budget is about half that amount, even though the countries in TACIS are more backward than their neighbors in PHARE. But the EU Court of Auditors noted in its report that only a third of the $180 million allocated to improve Ukrainian nuclear safety has been disbursed.

Months are needed to get EU programs up and running, but many of the countries receiving the aid are moving fast toward market economies. The EU's TACIS Interim Evaluation report acknowledged that "most projects are outdated even before the tenders make their bids and strategy proposals." At the same time, it notes that "poor projects are rarely terminated." Only 10 TACIS projects were canceled owing to poor performance. But 80 programs were able to run their full course, despite signs they had failed to reach their interim objectives. The two programs are funding too many separate projects, the report concluded.

PHARE and TACIS official are pledging to change their ways in response to such criticism. "This is a wake-up call," an unnamed PHARE official admitted. "We realize that our program has to be revised." PHARE officials say that in the future only projects costing more than $2.2 million will be approved in the hope that fewer larger projects will be easier to control than numerous smaller ones.

Instead of continuing to divide funds into 13 areas, PHARE will focus on funding infrastructures. For example, the main Berlin to Warsaw highway will be improved. Up to 70 percent of the overall program will be spent on such projects. A second priority will be preparing CENTRAL AND EASTERN EUROPEan recipients to join the EU. Money will go toward computerizing customs facilities and upgrading other public institutions to meet EU standards.

The poor -- or even nonexistent -- image of the two programs has also been sharply criticized. Some PHARE and TACIS officials would like to change the programs' names to something more recognizable, such as "Europa." When the Rowland Company's contract to promote the two programs ran out this summer, a new public relations firm was hired for the job.

The author runs the Brussels-based East-West news agency.