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Newsline - September 24, 1997




YELTSIN CALLS FOR "NEW ECONOMIC ORDER"

President Boris Yeltsin says Russia needs a "new economic order," whereby the state has a stronger role, in order to achieve economic growth in 1998, RFE/RL's Moscow bureau reported on 24 September. In a 30-minute televised speech at the opening of the fall session of the Federation Council, Yeltsin said that while the government will not interfere in legal business activities, it will not tolerate any "attempts by businesses or banks to put pressure on it." Yeltsin added that businessmen "must serve society and work for the benefit of Russian citizens." The president also said the government has begun to "tackle the economic roots of corruption" by establishing "strict control" over state funds. In 1998, he pledged, all federal government accounts will be transferred from commercial banks to a Federal Treasury.

YELTSIN OFFERS TO DISCUSS BUDGET WITH REGIONS...

In his speech to the Federation Council, Yeltsin called on deputies to approve tax reform and a "realistic budget" for 1998, which, he said, will secure an economic "breakthrough." But he also offered regional leaders some concessions and promised that the government will consult them on revising the draft tax code and the 1998 budget. In the future, Yeltsin said, enterprises in the regions will pay their federal and regional taxes through regional branches of the Federal Treasury, rather than directly to Treasury offices in Moscow, an RFE/RL correspondent in the Russian capital reported. But Yeltsin confirmed that regional governments will bear half the burden for paying wage arrears to state employees, ITAR-TASS reported. Regions must raise 50 percent of the funds needed before the federal government transfers funds to settle the rest of the wage debts, the president said.

...BUT CITES POOR LEADERSHIP IN SOME REGIONS

Yeltsin also criticized unnamed regional leaders who, he said, are "creating 'pocket' [commercial] banks for servicing their own budgets" at a time when the federal government is moving away from authorized banks, ITAR-TASS reported on 24 September. The president also blamed regional leaders for periodic energy crises. "Russia produces enough electricity and fuel," he said, "but an intolerable energy situation is taking shape in some regions because of unsatisfactory leadership." Primorskii Krai has repeatedly suffered energy crises in recent years. An ongoing strike by unpaid coal miners has led to severe power cuts in the krai over the last ten days. In July, the Federation Council passed a resolution asking Yeltsin to rescind decrees whereby many powers had been transferred from Governor Yevgenii Nazdratenko to the president's appointed representative in Primore (see "RFE/RL Newsline," 8 July 1997).

GORE-CHERNOMYRDIN TALKS CONTINUE

Meeting in Moscow on 23 September, U.S. Vice President Al Gore and Russian Prime Minister Viktor Chernomyrdin reached an agreement whereby the U.S. will provide $70 million to fund the conversion of three plutonium-producing Siberian nuclear reactors for civilian use, an RFE/RL correspondent in Moscow reported. Chernomyrdin made clear, however, that despite U.S. reservations, Moscow will honor its commitment to supply Iran with some nuclear technology. The energy policy committee of the Gore-Chernomyrdin commission established a special body to protect investors' rights and resolve obstacles to U.S. investment in Russia's oil sector.

GORE, YELTSIN MEET

Gore and Yeltsin, meeting in Moscow on 23 September, expressed satisfaction at the current state of bilateral relations. The Russian president noted that many agreements reached at earlier U.S. - Russian summits have been successfully implemented. He praised the work of the Gore-Chernomyrdin commission and of the Russian-U.S. space program, which, he said, symbolized the "new relationship" between the two countries. At the same time, Yeltsin expressed concern over U.S. restrictions on the import of Russian goods. Gore rejected Yeltsin's complaint that the U.S. treats Russia as a "non-market economy." He predicted that new tax legislation will facilitate an upsurge of U.S. investment in Russia.

PRIMAKOV ADDRESSES UN ASSEMBLY...

Foreign Minister Yevgenii Primakov, addressing the UN General Assembly on 23 September, said the transition to a multipolar world does not solve all the problems confronting mankind. Noting there are many multinational states in the world, he called upon the UN to prevent their "forced disintegration" and to give "maximum rights to ethnic minorities." He added that no one country can assume the role of settling regional conflicts and cited the Middle East as an example, where broad-based international efforts could "undo the tight knot." He also noted that cooperation between the UN and Russia has led to a peaceful solution of problems in Tajikistan and that Russia's participation, along with the U.S. and France, was a positive factor in mediating the dispute over the unrecognized Nagorno-Karabakh Republic.

...DISCUSSES NATO, NUCLEAR ARMS

Primakov also criticized NATO enlargement, which, he commented, "does not proceed from existing reality" and creates "new division lines." He repeated Russia's promise to guarantee the security of the Baltic States. Primakov also pointed out that Russia and the U.S. have already agreed to "basic parameters" for START-III talks and that their nuclear arsenals would soon be cut by 80 percent, compared with the Cold War era. However, Primakov blasted countries such as Pakistan, India, and Israel for failing last year to sign the treaty on a comprehensive ban on nuclear tests. "They must understand that their own security is an integral part of universal security," he said.

FEDERATION COUNCIL APPROVES RELIGION LAW

The Federation Council unanimously approved the law on freedom of conscience and religious organizations at its opening fall session on 24 September, Russian news agencies reported. The previous day, presidential spokesman Sergei Yastrzhembskii announced that Yeltsin is happy with the revised religion law and that there is every reason to expect the president will sign the law once it has been approved by the Council. Yeltsin vetoed an earlier version, saying it violated the constitution and Russia's international commitments (see "RFE/RL Newsline," 23 July and 22 September 1997).

DUMA OVERRIDES VETO OF LAND CODE

The State Duma on 24 September voted by 304 to 52, with five abstentions, to override a presidential veto of the Land Code, ITAR-TASS and RFE/RL's Moscow bureau reported. Yeltsin vetoed the code primarily because it would ban the purchase and sale of farmland (see "RFE/RL Newsline," 12 June and 7 July 1997). Yeltsin's representative in the Duma, Aleksandr Kotenkov, denounced the vote as "falsified," saying only 184 deputies were in the chamber at the time. Kotenkov said the president may appeal to the Constitutional Court against parliamentary voting procedures he considers unconstitutional. In the summer, Yeltsin refused to sign two laws after both houses of parliament overrode his vetoes. The president objected to proxy voting in the Duma and to a procedure whereby Federation Council deputies who are not in Moscow may mail in ballots.

MUBARAK IN MOSCOW

On his first-ever official visit to Moscow, Egyptian President Hosni Mubarak met with Yeltsin on 23 September to discuss a broad range of issues, including bilateral ties, the situation in the Middle East, and Libya. The two presidents later issued a joint declaration affirming their commitment to creating a multipolar world. Russian presidential spokesman Yastrzhembskii told journalists that the two presidents had reached a "high level of mutual understanding." He characterized the atmosphere at the talks as "warm" and "excellent," according to ITAR-TASS. Mubarak also met with Russian Prime Minister Viktor Chernomyrdin and First Deputy Prime Minister Boris Nemtsov to discuss economic cooperation. Inter-government agreements on avoiding dual taxation, protection of investments, transportation, and legal issues were signed.

YELTSIN CRITICIZES ISRAEL FOR OBSTRUCTING MIDDLE EAST PEACE

Addressing reporters after his talks with Mubarak, Yeltsin blamed Israel for obstructing the Middle East peace process and called on the U.S. to be "more active" in trying to persuade Israel to resume negotiations. Yeltsin added, however, that Russia too should play a more active role in the peace talks. According to Interfax, he subsequently instructed the Russian government to prepare proposals on how best to accomplish that goal. Yeltsin also affirmed his commitment to the "land for peace" formula and rejected as "not serious" accusations that Palestinian leader Yasser Arafat was to blame for the recent terrorist bombings in Israel. Mubarak, for his part, said in an interview published in "Nezavisimaya gazeta" on 23 September that although Russia and U.S. are co-sponsors of the Middle East peace process, "we do not see any moves on the part of Russia."

IS CHECHNYA'S PRESIDENT IRRELEVANT?

"Segodnya" on 23 September claims that political developments in Chechnya are determined more by the interaction of traditional clans than by state structures. The daily suggested that Moscow's unswerving support for President Aslan Maskhadov, considered the most pragmatic and flexible politician with whom to conduct negotiations, may therefore be misguided and even counterproductive. It also claims that those persons who currently exercise real power in Chechnya have retreated from the limelight and that specific clans control foreign policy (except for ties with Russia) and the underground oil extraction and refining industry.

SVYAZINVEST DEAL PRONOUNCED LEGAL

The State Anti-Monopoly Committee, the Justice Ministry, and the Federal Service for Currency and Export Controls have submitted a joint report to the government declaring that no laws were broken in the July sale of a 25 percent plus one share in the telecommunications giant Svyazinvest, ITAR-TASS reported on 23 September, citing government spokesman Igor Shabdurasulov. Prime Minister Chernomyrdin ordered the probe following allegations that the Cyprus-based consortium Mustcom, Ltd., which submitted the winning bid for Svyazinvest, had broken laws on hard currency transactions (see "RFE/RL Newsline," 13 August 1997). Oneksimbank led the Mustcom consortium.

ZYUGANOV STANDS BY CRITICISM OF YELTSIN

Communist Party leader Gennadii Zyuganov has said there is "nothing illegal" about his recent criticism of the authorities, and he will not take back any of his statements, ITAR-TASS reported on 23 September. Addressing the founding congress of Duma Defense Committee Chairman Lev Rokhlin's Movement in Support of the Army on 20 September, Zyuganov had called Yeltsin the "ringleader" of a regime that is carrying out a "criminal policy" and "destroying the country." Yeltsin slammed Zyuganov's remarks as "political blackmail" and told Interior Minister Anatolii Kulikov on 22 September that "those who shout from the podium that the leaders are gangsters must be made to answer," Interfax reported. The same day, the Justice Ministry released a statement saying comments made by Communist Party figures at the 20 September congress are "unacceptable and beneath the dignity of politicians of such a level."

LUZHKOV RESPONDS TO CRITICISM BY NEMTSOV

Moscow Mayor Yurii Luzhkov has dismissed recent criticism of his city's policies by First Deputy Prime Minister Nemtsov as "unfounded" and "poorly thought-out," Russian news agencies reported on 23 September. Nemtsov argued that subsidies for rents and for municipal services in the capital are too "extravagant" and that Moscow is spending too much on the construction of a ring road (see "RFE/RL Newsline," 19 September 1997). Luzhkov said Nemtsov's remarks did not take into account the capital's unique characteristics. He added that Nemtsov knows little about road construction and that the ring road costs less than equivalent projects in other countries. He called on Nemtsov to make "responsible" statements and vowed not to keep silent when city leaders "are accused of incompetence." Luzhkov and Nemtsov are both likely to contest the next Russian presidential election.

FEDERAL COMMISSION TO INVESTIGATE AUTHORITIES IN SIBERIAN CITY

A special commission has arrived in Leninsk-Kuznetskii, Kemerovo Oblast, to investigate allegations that Mayor Gennadii Konyakhin is a convicted criminal and is allowing criminal associates to run the city, ITAR-TASS reported on 24 September. During meetings with Interior Minister Anatolii Kulikov and Federal Security Service (FSB) director Nikolai Kovalev on 22 September, Yeltsin ordered the Interior Ministry, the Procurator-General's Office, and the FSB to form a joint commission to investigate charges published in "Izvestiya" on 17-19 September. The president said the commission should try to prevent the "further criminalization of power" in Leninsk-Kuznetskii and also investigate whether similar events have taken place in other cities, Interfax reported. He criticized law-enforcement bodies for not informing the authorities early enough about the situation in Leninsk-Kuznetskii.



MINSK GROUP CO-CHAIRMEN IN BAKU

Meeting with the three co-chairmen of the Organization for Security and Cooperation in Europe's Minsk Group in Baku on 23 September, Azerbaijani President Heidar Aliyev said Azerbaijan accepts the plan proposed by the co-chairmen on 18 July as a basis for resolving the Karabakh conflict, Turan and Interfax reported. He argued that the two-month delay since then does not "promote our common purpose." He also expressed the hope that "important steps" toward resolving the Karabakh conflict will be taken before the end of this year. Turan quoted Russian co-chairman Yurii Yukalov and Azerbaijani Foreign Minister Hasan Hasanov as saying Armenia has accepted a "phased resolution" of the conflict whereby a decision on the future status of the unrecognized Nagorno-Karabakh Republic will be postponed. The republic's leadership has rejected the peace plan and wants all aspects resolved simultaneously.

AZERBAIJAN'S DEPUTY PARLIAMENTARY CHAIRMAN IN TEHRAN

Yashar Aliyev met with Iranian President Mohammed Khatami in Tehran on 21 September, IRNA reported. The deputy speaker handed over a letter from Azerbaijani President Heidar Aliyev to Khatami, who described Azerbaijan as a "friendly, brotherly country". Khatami called for a negotiated settlement to the Karabakh conflict in the interests of regional stability and security. Yashar Aliyev commented that bilateral relations are "gaining momentum." Those ties have been strained for more than a year following the arrest and sentencing for espionage of several members of the pro-Iranian Islamic Party of Azerbaijan.

AZERBAIJAN, TURKMENISTAN TO DISCUSS CASPIAN DISPUTE

Hasan Hasanov told journalists on 23 September that legal and oil experts from Azerbaijan and Turkmenistan will meet in October to discuss dividing the Caspian into national sectors, ITAR-TASS reported. Hasanov told LUKoil President Vagif Alekperov in Baku two weeks earlier that Turkmenistan has agreed to an Azerbaijani proposal to divide the Kyapaz/Serdar oil field, according to "Nezavisimaya gazeta." Both countries claim ownership of that field.

AZERBAIJANI EARLY OIL COUNTDOWN

Visiting Baku on 23 September, Transneft Vice President Oleg Gordeev assured the leadership of Azerbaijan's state oil company SOCAR that work began that day on repairs to the Baku-Grozny-Novorossiisk pipeline through which Azerbaijan's "early" Caspian oil is to be exported, Russian and Azerbaijani agencies reported. Gordeev said the repairs will be completed within 22 days and that the first tanker-load of oil could leave Novorossiisk in December, according to "Nezavisimaya gazeta" on 24 September. Meanwhile, Russian First Deputy Premier Boris Nemtsov, who is also fuel and energy minister told Reuters that the alternative Baku-Novorossiisk pipeline bypassing Chechnya can be completed in nine months and that Russia will issue Eurobonds to meet the cost. "Trud" on 23 September reported, however, that Novorossiisk Mayor Valerii Prokhorenko categorically opposes construction of the alternative pipeline on ecological grounds.

ARMENIAN PARLIAMENT ELECTS CHAIRMAN OF KEY COMMITTEE

The National Assembly on 23 September elected Vigen Khachatryan as chairman of its State and Legal Affairs Committee, RFE/RL's Yerevan bureau reported. Khachatryan is the leader of the small Liberal Democratic Party, one of the five members of the ruling Hanrapetutyun bloc. The committee's previous chairman, Eduard Yegoryan, was removed on 10 September after quitting the Hanrapetutyun bloc to form an opposition parliamentary faction. Khachatryan, who is also governor of Armenia's northern Lori province, vowed to continue Yegoryan's efforts to "form a basic legal framework in Armenia." The Armenian Pan-National Movement had originally claimed the right to nominate the committee's new chairman but reversed that decision on 20 August at the request of President Levon Ter-Petrossyan and parliamentary speaker Babken Ararktsyan (see "RFE/RL Newsline," 22 September 1997).

BELARUSIAN PRESIDENT IN KAZAKHSTAN

Alyaksandr Lukashenka, who is on a three-day official visit to Kazakhstan, met with his Kazakh counterpart, Nursultan Nazarbayev, on 23 September to discuss boosting bilateral trade. Compared with the same period last year, Belarusian-Kazakh trade was down 40 percent in the first half of 1997. Lukashenka said, however, that by year's end, trade figures would at least equal those for 1996. Agreements were signed on trade, air links, and protection for the rights of one country's citizens working in the other country. Belarus will also open an embassy in Kazakhstan. Lukashenka said he favored Nazarbayev to take over as head of the four-country customs union, which also includes Russia and Kyrgyzstan. The Belarusian president currently occupies that position.

NAZARBAYEV SUPPORTS BELARUS ON ORT JOURNALIST

Nazarbayev gave his full support to Belarus's position in its dispute with Russia over Russian Public Television (ORT) reporter Pavel Sheremet, an RFE/RL correspondent in Almaty reported. Sheremet has been under arrest in Minsk since mid-July on charges of having violated the Belarusian-Lithuanian border. Interfax quotes Nazarbayev as saying each country has the "right to insist that its citizens implement the country's laws." He called on the media "to contribute to the rapprochement between peoples rather than sow discord between them or ignite tension between countries." Nazarbayev also criticized the fact that while Russian television channels are available in other CIS countries, no television programming from those countries is available in Russia. "The Russian people therefore only know one position," he added.

JAPAN TO HELP BUILD TURKMEN RAIL LINE

Japan's Itochu Corporation has agreed to help form a consortium to build a rail line running from the Kazakh city of Yeralievo to the Turkmen city of Turkmenbashi, on the eastern shore of the Caspian Sea, ITAR-TASS reported on 23 September. Japanese experts are reviewing a feasibility study carried out by Russia's Mosgiprotrans. The 450-kilometer rail line may eventually be linked to Russian lines in the Urals and Siberia and to the Turkmen-Iran line.




LUKASHENKA SAYS NO RUSSIA-BELARUS MERGER IN PROSPECT...

Belarusian President Alyaksandr Lukashenka told an assembly at Almaty State University 23 September that "speculation on the full merger of Belarus and Russia was dreamed up by politicos who have nothing better to do," Interfax-Kazakhstan reported. Lukashenka stressed his country will never give up its sovereignty. The union the two countries have agreed to, Lukashenka continued, reflects "the aspirations" of both peoples but not does represent either a "return to empire" or the subversion of the CIS. He added that any slowdown in the rapprochement between the two countries is not the fault of Belarus.

...REMAINS UNREPENTANT ON JOURNALIST'S ARREST

Speaking to journalists in Almaty on 23 September, Lukashenka stressed his position that the Belarusian courts will have to decide the fate of Russian Public Television reporter Pavel Sheremet, who has been under arrest since mid-July on charges of having violated the Belarusian-Lithuanian border. Lukashenka repeated his charge that Sheremet had engaged in a "political act" but added he might "amnesty" the arrested journalist after the courts reached a verdict.

UKRAINIANS SAID TO BACK DEATH PENALTY

Ukrainian parliamentary chairman Oleksandr Moroz told Interfax on 23 September that "Ukrainian society is not ready for the legislative repeal of the death penalty." When Ukraine joined the Council of Europe in 1995, Kyiv committed itself to abolishing the death penalty, but the parliament has been unwilling to pass the necessary legislation. As a result, President Leonid Kuchma is likely to be subjected to close questioning on the issue when he attends the Council of Europe summit in Strasbourg on 10-11 October.

UKRAINE WANTS TO HOST 1999 BALTIC-BLACK SEA SUMMIT

Ukrainian President Kuchma told the UN General Assembly on 23 September that his country wants to promote good relations with all its neighbors, ITAR-TASS reported. To that end, Kuchma said, Kyiv now seeks to hold a summit of countries in the Baltic-Black Sea region in 1999. That meeting would be a follow-up to the summit earlier this month in Vilnius. As he had promised before leaving Kyiv, the Ukrainian president called for East European representation on the UN Security Council (see "RFE/RL Newsline," 23 September 1997).

UKRAINE TO HELP IRAN SET UP AIRCRAFT INDUSTRY

An unnamed Ukrainian aircraft industry official told ITAR-TASS on 23 September that the Ukrainian Antonov Aviation Research Complex has won a bid to build 100 An-140 planes over the next eight years. The Ukrainian firm will transfer technologies to Iran to enable that country to manufacture planes on its own in the future. Initially, The planes, which can be used for both civilian and military purposes, will be built in Iran with parts produced in Ukraine. In addition, Tehran has purchased 10 An-74T-200 military transport aircraft for its ground forces.

UKRAINE WANTS TO SUPPLY TURKISH ARMY

The Ukrainian arms trading company Ukrspetseksport is displaying firearms and its latest T-80UD tank at the international arms exhibition in Ankara, Interfax reported. Ukraine is one of several participants in a tender to provide military equipment for the Turkish army. Turkish Defense Minister Ismet Sezgin told Reuters on 22 September that his country allocates $2.5 billion annually to the modernization of its armed forces.

"ESTONIA" CREW TO BE CRITICIZED IN FINAL REPORT

According to the Swedish newspaper "Svenska Dagbladet" on 23 September, the final report of the three nation-commission investigating the 1994 sinking of the "Estonia" passenger ferry will strongly criticize the Estonian crew for not responding quickly enough when the vessel began to sink. The newspaper report came one day after a Swedish expert resigned from the investigation, claiming that commission members had been too protective of the crew (see "RFE/RL Newsline," 23 September 1997). The commission's report has been delayed repeatedly and is expected to be released in November.

TALLINN REJECTS U.S. BID FOR POWER PLANTS

The Estonian government has rejected the current version of a business plan drawn up by NRG Energy whereby the U.S. power utility would buy a 49 percent stake in Estonia's two largest power stations. The rejected plan was criticized for giving the U.S. company "monopolistic rights" to generate power in Estonia and for including a steep increase in electricity prices. Counselor to the Ministry of Economics Arvi Hamburg said more negotiations will soon take place with NRG, which is likely to offer a new plan within two months. He added that in the event NRG rejects the government's conditions, a public tender will be held, "Sonumileht" reported. NRG has pledged $67 million for its stake in the power stations and $1.1 billion in investments until the year 2005. This would be the largest single investment in Estonia.

BALTICS URGE EU TO START TALKS WITH ALL THREE

Speaking to the annual meeting of the IMF and the World Bank on behalf of the Baltic States, Lithuanian Finance Minister Algirdas Semeta called on the EU to begin accession negotiations with all three countries, instead of just Estonia, RFE/RL's correspondent in Hong Kong reported on 24 September. Semeta said the Baltics welcomed the fact that Estonia has been invited to begin negotiations but added that Latvia and Lithuania have made "strong progress" this year and are now ready to start the process. He also said the Baltics have asked the World Bank to step up technical assistance in preparing them for EU membership.

AUSTERITY BUDGET FOR POLAND?

Leszek Balcerowicz-- the leader of the Freedom Union party, which is a probable partner in a new coalition government with Solidarity Electoral Action--told journalists in Warsaw on 23 September that Poland must reduce its budget deficit next year or face a serious financial crisis. The strong, third-place showing of Balcerowicz's party has been greeted by financial analysts worldwide (see also "End Note" below).

CZECH REPUBLIC OPENS NATO MEMBERSHIP TALKS

The Czech Republic opened membership talks with NATO in Brussels on 23 September. Deputy Foreign Minister Karel Kovanda is leading the Czech delegation in the talks, which are to focus on the political, legal, and practical aspects of the Czech Republic's membership in the Atlantic alliance. Hungary and Poland have already opened similar talks with NATO. Meanwhile in Prague, the Czech trade union federation (CMKOS) has voted down demands by leaders of the miners' and railway workers' unions to stage a general strike. Instead, CMKOS will organize a mass rally in Prague on 8 November to protest the government's economic and social policies.

SLOVAK FOREIGN MINISTRY REJECTS HORN'S COMMENTS

The Slovak Foreign Ministry on 23 September issued a statement "unequivocally" rejecting comments that Hungarian Prime Minister Gyula Horn made to the parliament in Budapest the previous day, Bratislava's Radio Twist reported. The ministry criticized Horn's remarks that the Slovak government's minorities policy does not comply with European standards and international obligations undertaken by Bratislava. It called on Hungary to "ensure a higher standard of minority rights to...at least come closer to the level of minority rights in Slovakia, instead of making unjustified, one-sided, and unfounded criticism."

SLOVAKIA NEGOTIATES ARMS COOPERATION WITH TURKEY

Slovak Defense Minister Jan Sitek held talks in Ankara on 23 September with his Turkish counterpart, Izmet Sezgin, on possible cooperation in producing the T-72 tank and the "Suzana" self-propelled cannon, "Sme" reported. Both weapons are on view at an international weapons trade fair in Ankara. Sitek's spokesman said the two ministers are due to sign a cooperation agreement on weapons production when they meet in Bratislava in October. Meanwhile, Slovak Prime Minister Vladimir Meciar traveled unexpectedly to Croatia, allegedly for economic talks. "Pravda" reported on 24 September, however, that Meciar is holidaying in Dubrovnik.

HUNGARIAN, ROMANIAN JUSTICE MINISTRIES SIGN ACCORD

Minister of Justice Pal Vastagh and his Romanian counterpart, Valeriu Stoica, met in Budapest on 23 September and signed an agreement on cooperation between their ministries, Hungarian media reported. Under the accord, the two ministries will regularly exchange information and will pay special attention to their experience in bringing nationality laws into line with EU legislation. Vastagh said that despite some negative trends, it cannot be denied that Hungarian-Romanian relations are on the whole positive, Radio Bucharest reported.




SERBIAN OPPOSITION MOVES TO RECALL DJINDIC OVER ELECTION BOYCOTT

The opposition Serbian Renewal Movement (SPO) has launched procedures to recall Belgrade Mayor Zoran Djindjic. The SPO accuses Djindjic, who is head of the Democratic Party, of having advocated boycotting the 21 September parliamentary and presidential elections. Djindjic told BETA he will not resist the call to resign if a sufficient number of city council members demand his ouster. But he said the SPO's call for his replacement is an attack on the entire opposition Zajedno movement. The boycott was intended to invalidate the poll by reducing turnout to less than 50 percent. The Serbian Electoral Commission has said 62 percent of the electorate turned out. The Democratic Party, however, claims turnout was 49.12 percent. Final election results are due on 25 September.

BOSNIAN SERBS CLASH WITH SFOR

The NATO-led Stabilization Force clashed with several hundred Bosnian Serbs on roads leading to Doboj on 23 September. The protesters, opposed to increased SFOR patrols and check points, threw Molotov cocktails and stones at SFOR members. No injuries were reported. Also on 23 September, police loyal to Bosnian Serb President Biljana Plavsic took control of the city of Prijedor, and SFOR erected checkpoints around Prnjavor, where pro-Plavsic forces took control two days earlier. RFE/RL's South Slavic service reports Doboj is now the westernmost town in the Republika Srpska controlled by the hard-line leadership in Pale.

PALE TV SAYS SFOR, UNHCR CONNIVING WITH RETURNING REFUGEES

Pale TV on 23 September reported that Muslim refugees are returning to settle in the Doboj suburb of Makljenovac, contrary to what it called a "signed agreement." The television station also accused SFOR and UNHCR of conniving with the Muslims to repair some 150 houses during daylight hours. The Muslims spend the night across the inter-entity boundary line in Tesanj in the Muslim-Croatian Federation.

CROATIA APPROVES TRANSIT OF TANKS FOR BOSNIA

The Croatian government on 23 September granted approval for a Ukrainian cargo ship to dock at Ploce and unload ten T-55 tanks, a gift from Egypt to the Bosnian Federation Army, RFE/RL's South Slavic service reported. Zagreb had blocked the shipment since early August arguing that documentation was lacking. Meanwhile, Croatian Prime Minister Zlatko Matesa said in Zagreb on 23 September during a visit by Turkish President Suleyman Demirel that Croatia and Turkey intend to open talks shortly on forming a free trade zone.

ALBANIAN PROSECUTOR REDUCES CHARGES AGAINST GENOCIDE SUSPECTS

The Prosecutor-General's office has changed charges of genocide and crimes against humanity against six former senior communist officials to "abuse of office." The prosecutor-general dropped all charges against three other former officials, ATA reported on 23 September. The previous day, the Supreme Court opened a trial of all nine officials. The court is due to make a ruling on 29 September.

FIRE RAVAGES COASTAL FOREST

A forest fire that broke out on 22 September and burned itself out the following day destroyed thousands of pine trees in the woods overlooking the southern seaside resort of Saranda. ATA quotes forestry police as saying the blaze was set deliberately by citizens who want to construct buildings illegally in the area. The town's only fire engine was destroyed during the unrest earlier this year.

ROMANIAN COALITION UNDER THREAT

Bela Marko, the chairman of the Hungarian Democratic Federation of Romania (UDMR), said on 23 September said the UDMR's continued participation in the ruling coalition is doubtful, RFE/RL's Bucharest bureau reported. He made the statement after the Senate's Commission on Education had for the third time changed the text of the law education (which has to be submitted to the parliament) and had reinstated the provision stipulating that history and geography are to be taught in the Romanian language. The ruling coalition leaders met later but were unable to reach a compromise. Marko said it is unacceptable for coalition representatives to break earlier agreements. The coalition leadership also decided that the issue of the education law is to be reexamined in consultations between the UDMR and the National Peasant Party Christian Democratic.

ROMANIAN FOREIGN MINISTER ASKED TO SUBSTANTIATE SPY ALLEGATIONS

At a meeting of the Supreme Council of National Defense on 23 September, President Emil Constantinescu demanded that Adrian Severin substantiate his allegations that some heads of political parties and leading journalists are foreign agents (see "RFE/RL's Newsline," 23 September 1997), RFE/RL's Bucharest bureau reported. Severin said he has submitted and will continue to submit the evidence to the appropriate authorities, adding that his source of information was not the Romanian Intelligence Service (RIS). The RIS has denied receiving any such information. Premier Victor Ciorbea said Severin was "personally responsible" for the allegations, which, he said, do not represent the views of the government. Ciorbea said the matter will be discussed by the government when Severin returns from New York, where he is attending the session of the UN General Assembly. Democratic Party leader Petre Roman said that Severin's allegations do not reflect the position of the party and must be clarified by Severin himself. Severin is deputy leader of the Democrats.

RUSSIAN DEPUTY PREMIER SAYS CHISINAU-TIRASPOL COMPROMISE REACHED

Valerii Serov and Transdniester leader Igor Smirnov met with President Petru Lucinschi in Chisinau on 23 September. Serov said later that he succeeded in bringing about a compromise between the two sides, RFE/RL's Chisinau bureau reported. Lucinschi told journalists that a protocol was signed providing for weekly meetings at which negotiations will continue. The meetings will be held at "presidential" level (meaning Lucinschi and Smirnov) as well as at government and expert levels. An agreement was also reached on drafting an economic treaty between Chisinau and Tiraspol. However, the fate of the assets of the Russian army stationed in the Transdniester remains unclear. Smirnov said this is a "Russian-Transdniestrian problem" and that he will oppose the "unilateral withdrawal of the arsenal."

RUSSIA, MOLDOVA CONCLUDE AGREEMENTS

Serov and his Moldovan counterpart, Valeriu Bulgari, signed an agreement providing for deliveries of Moldovan agricultural goods in exchange for Russian gas supplies. They also agreed to cooperate in military modernization and conversion technologies.

BULGARIANS SHOW LITTLE INTEREST IN JOINING PROFESSIONAL ARMY

Chief of Staff General Miho Mihov told journalists in Sofia on 23 September that Bulgaria's effort to transform its army of conscripts into a professional one is encountering difficulties because of the low pay offered. A well-publicized campaign to hire 120 trainees in the use of high-technology military equipment has produced only five applications. The deadline has now been extended to 22 October. A military spokesman said applicants are offered a three-year contract and monthly wages ranging from 128,000 leva ($72) in the ground forces to 194,000 leva ($110) in the navy, Reuters reported.




NEW POLISH GOVERNMENT TO FACE URGENT ECONOMIC TASKS


by Breffni O'Rourke and Chris Klimiuk

Finance experts say the new Polish government--whatever its eventual composition--will have some major problems to tackle quickly if it is to maintain the country's prosperity.

The right-of-center Solidarity Electoral Action (AWS), which emerged with the strongest hand from the 21 September parliamentary elections, is expected to open contacts almost immediately with its most probable partners, the centrist Freedom Union and the rightist Movement for Renovation of Poland. The negotiations are likely to be difficult, as the parties have differing programs. In addition, some AWS leaders favor an even broader coalition that would include parties of a very different complexion.

According to financial specialists, there are two major priorities facing the new ruling coalition. The first and overriding task is to bring the rapidly-increasing current account deficit under control before it threatens the value of the zloty. The second is to make progress in the socially-explosive task of privatizing the inefficient state-owned heavy industries.

Bernd Klett, the Poland specialist at Deutsche Bank Research, told RFE/RL on 23 September that the current account last year registered a deficit of only about 1 percent of GDP, some $1.4 billion. In 1997, the deficit is set to reach almost 5.5 percent of GDP, or $7 billion. If present trends continue, it may reach a full 7 percent of GDP in 1998. Klett says this problem must be tackled quickly if the Polish economy is not to be exposed to major dangers.

Pavel Demczuk, senior analyst with Wood & Co investment advisers in Warsaw, agrees with Klett's analysis, saying the government has until about the end of this year to act. Both stress that the strong consumer demand among Poles must be dampened.

The Central Bank has already taken measures to achieve that goal, raising its interest rates several times in recent weeks and offering the public the opportunity to deposit money in accounts at an interest rate higher than that offered by commercial banks. That has had the effect of removing liquid money that might otherwise fuel consumer demand.

But experts say that is not enough. They believe the incoming government must also run a tight fiscal policy aimed at cutting demand for imported consumer goods, which has a negative impact on the trade balance.

Another priority of the new government must be to continue privatization, which has stalled in recent years as the authorities have shied away from the difficult task of tackling problem-industries such as coal mining.

The Freedom Union, which seems set to be an indispensable partner in any coalition, has a radical plan aimed at fully privatizing the economy by the year 2000. The head of the union is Leszek Balcerowicz, author of the postcommunist "shock therapy," which in no uncertain terms started the country along the road to free enterprise

In an interview with RFE/RL on September 23, Jerzy Osiatynski, the Freedom Union's senior economic adviser, said his party wants to see an end to public ownership of coal mining, ship building, and the steel industry. Given Poland's illustrious tradition of political activism among workers in those industries, a rigorous policy of privatization could result in a flash point for social unrest. Such a development would clearly not be in the interests of the new government.

Klett notes that the AWS has a more moderate policy on privatization. He believes that the Freedom Union will have to tone down its ambitious plans. Any move to restructure the heavy industries will have to be handled carefully and social security measures put in place for those who lose their jobs.

According to Klett, there are two routes to a market economy: through creating the right conditions for individuals to start their own business ventures and through privatization of existing state-owned enterprises. He says that all Polish post-communist governments have created a good climate for private enterprise and investment. And he notes that there has been progress toward privatization, although the process is far from complete.

Klett also notes that the coal mining industry will apparently have a future even after it has been restructured. He recalls that visiting EU experts expressed the opinion earlier this year that the Polish coal industry would be a viable business proposition after modernization.

Breffni O'Rourke is a senior RFE/RL correspondent. Chris Klimiuk is RFE/RL's Warsaw correspondent.


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