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Newsline - September 26, 1997


President Boris Yeltsin has signed the law on freedom of conscience and religious organizations, Reuters and ITAR-TASS reported on 26 September. He vetoed an earlier version of the religion law in July. Critics have charged that the law is unconstitutional and will lead to persecution of some minority religions (see "RFE/RL Newsline," 22 September 1997). Cardinal Joseph Ratzinger, a Vatican official responsible for Catholic doctrine, argued on 25 September that the law "complicates" the situation of the Catholic Church in Russia, AFP reported.


Arriving in Moscow on 25 September on a three-day state visit, Jacques Chirac was presented by his Russian counterpart, Boris Yeltsin, with the Order for Services to the Fatherland. Chirac is the first foreign head of state to receive this award, which Yeltsin said is in acknowledgment of Chirac's help in promoting closer Russian ties with the West. Yeltsin specifically mentioned Russian participation into the G-7 and the Paris Club of creditor nations and the Russia-NATO Founding Act signed in Paris in May. Yeltsin praised Chirac as "a staunch supporter of closer Russian-French ties" and affirmed that bilateral relations "have risen to the level of a privileged partnership." On 26 September, Yeltsin and Chirac met again to discuss European security issues.


Also on 26 September, Chirac met with Russian Prime Minister Viktor Chernomyrdin to discuss Russia's relations with the EU and Russian-French economic relations, in particular joint ventures and investments. Chernomyrdin, too, thanked Chirac for "understanding Russia's problems" and termed France "a good friend and business partner." Shortly before Chirac's arrival, a senior Russian Ministry of Agriculture official announced that Russia will no longer designate brandy and sparkling wine for export as "cognac" and "champagne," although those terms will appear on bottles intended for the domestic market, AFP reported.


Yevgenii Primakov has met for the first time with his Iranian counterpart, Kamal Kharrazi, Russian media reported. The meeting took place on 25 September in New York The two ministers positively assessed their ongoing cooperation on Tajikistan, Afghanistan, and the Caspian and hailed the growth of bilateral trade. Primakov told Kharrazi it is imperative that Tehran pursue a balanced foreign policy that would expedite its emergence from international isolation, particularly in view of its imminent takeover of the Organization of the Islamic Conference chairmanship. Primakov and NATO foreign ministers are to attend the first full meeting of the Russia-NATO Permanent Joint Council on 26 September.


State Duma deputies on 26 September voted down an attempt to remove Lev Rokhlin as chairman of the Duma Defense Committee, RFE/RL's Moscow bureau reported. The Our Home Is Russia (NDR) faction, which recently expelled Rokhlin, sought to appoint Roman Popkovich to the post, claiming that the NDR has the right to appoint the Defense Committee head under a January 1996 agreement among all Duma factions. Rokhlin's ouster was supported by 190 deputies, representing the NDR, Yabloko and the majority of the Russian Regions and Liberal Democratic Party of Russia factions. However, 201 deputies, mostly from the Communist, Agrarian and Popular Power factions, backed Rokhlin. Responding to charges that he betrayed the NDR by denouncing the president and government and by forming an opposition movement to support the armed forces, Rokhlin told RFE/RL, "I didn't betray them--they betrayed me."


The Duma on 25 September rejected in the first reading all 15 government-backed draft laws and amendments to existing laws that would have reduced various social benefits. The package was a modified version of proposals that the Duma voted down in June (see "RFE/RL Newsline," 19 and 25 June 1997). They include measures to make some social benefits means-tested so that only low-income citizens would be eligible for them and to set ceilings for sick pay and maternity leave benefits. Other proposals would take benefits away from family members of veterans and of some state employees, such as judges, firefighters, and law enforcement officials. Those employees would continue to receive benefits such as free public transport and a 50 percent discount on rent and utilities, but they would have to pay the full rate for those services first and be reimbursed later.


Duma Labor and Social Policy Committee Chairman Sergei Kalashnikov of the Liberal Democratic Party of Russia argued that the Duma's rejection of the social benefits reductions was a victory for the government, which, he said, can now blame the Duma for the failures of its social policy, "Kommersant-Daily" reported on 26 September. Kalashnikov's committee had recommended that the Duma approve the legislation. Deputy Prime Minister Oleg Sysuev, who oversaw the negotiations with Duma deputies on the social legislation, told ITAR-TASS on 25 September that Duma deputies refused to take responsibility or to recognize the government's "real abilities." Government officials argue that if eligibility for social benefits is reduced, there will be enough funds to pay all eligible recipients. "Kommersant-Daily" quoted First Deputy Prime Minister Boris Nemtsov as saying that "senseless benefits" must be reduced if the government is to pay wages to teachers and doctors.


The Duma has asked its Legislation and Rules Committees to clarify whether deputies are allowed to vote on behalf of colleagues who are absent, Russian news agencies reported on 25 September. Aleksandr Kotenkov, Yeltsin's representative in the Duma, charged that the Duma "falsified" a recent vote to override the veto of the land code, because proxy voting was used to achieve the two-thirds majority (see "RFE/RL Newsline," 24 September 1997). Some Duma deputies have charged that Kotenkov exceeded his authority by expressing his own views rather than the president's. Meanwhile, Sergei Shakhrai, Yeltsin's representative in the Constitutional Court, has denounced proxy voting as "pure forgery," according to "Izvestiya" on 26 September. The same day, "Kommersant-Daily" quoted an unnamed Duma deputy as saying that when proxy voting is used to pass legislation the president supports, no one in the Kremlin complains.


The Duma on 25 September voted by 345 to one with three abstentions to create a commission to promote Armenia's accession to the Russia-Belarus union, ITAR-TASS reported. The commission is composed of 15 deputies, including former USSR Prime Minister Nikolai Ryzhkov, who has lobbied energetically in Armenia for this cause. The Communist Party of Armenia and the National Initiative Group supported by Ryzhkov and other Duma deputies claim to have collected 800,000 and more than 1 million signatures, respectively, in support of Armenia's joining the union.


Gennadii Seleznev, the speaker of the Duma, said on 25 September that Russia is very interested in cooperating with the Central Asian and Transcaucasian states, Russian media reported. Seleznev said Russian security "depends in many respects on the situation" in those two regions. Seleznev had just returned from Uzbekistan, where he met with President Islam Karimov. The two leaders agreed it was necessary to improve Uzbek-Russian relations, which both characterized as currently "unsatisfactory."


The State Property Committee has approved a plan for privatizing the Rosneft oil company during the fourth quarter of 1997 and the first half of 1998, Russian news agencies reported on 25 September. After legal questions surrounding Rosneft's ownership of the oil extracting company Purneftegaz have been settled, 63 percent of Rosneft shares will be divided into several blocks and sold at special cash auctions. A commercial tender will be held for a 33 percent stake, and the remaining 4 percent of shares will be distributed among members of the Rosneft workers' collective. The Rosneft privatization is expected to provoke a fierce conflict between rival Russian banking groups. Oneksimbank, which won auctions in the summer for stakes in the telecommunications giant Svyazinvest and Norilsk Nickel, has indicated that it will bid for Rosneft. Representatives of other banks have charged that Oneksimbank already has an unfair advantage over its competitors.


A Moscow municipal court declared Media-Most head Vladimir Gusinskii's lawsuit against Oneksimbank president Vladimir Potanin closed after lawyers revealed on 25 September that both sides had agreed to a settlement. Gusinskii sued Potanin for slander after Interfax's Financial Information Agency quoted Potanin as saying that Gusinskii and Security Council Deputy Secretary Boris Berezovskii tried to strike a back-room deal to keep Oneksimbank from bidding for a stake in Svyazinvest (see "RFE/RL Newsline," 30 and 31 July 1997). In the agreement, the plaintiff (Gusinskii) states he found the Financial Information Agency report "unethical," saying it contained slurs against him in both the headline and the text, "Kommersant-Daily" reported on 26 September. The defendant (Potanin) states he did not make any statements alleging that the plaintiff acted unethically during negotiations about the Svyazinvest auction.


"Nezavisimaya gazeta" charged on 26 September that First Deputy Prime Minister Anatolii Chubais "fulfills the recommendations of the U.S. Finance Ministry [sic] much better than the decrees of the Russian president." The newspaper, which recently accused Chubais of "striving for complete control over Russia" (see "RFE/RL Newsline," 15 September 1997), published a letter allegedly sent to Chubais in April by U.S. Deputy Treasury Secretary Lawrence Summers. The newspaper argued that the letter contains "instructions on Russia's domestic and foreign policy" aimed toward improving the climate in Russia for U.S. companies. "Nezavisimaya gazeta" noted that Chubais apparently discussed Russian economic affairs with Summers before rejoining the government in March and that Chubais has implemented many of the policies suggested by Summers. It added that the letter provides grounds for reflection on "just who is whose agent." Chubais recently said the Paris Club became "Russia's agent" when it admitted Russia.


Yeltsin's weekly radio address on 26 September focused on crime and corruption, which he called "Russia's most serious problem." Yeltsin said criminals are concentrating on gaining access to public office in order to get "closer to federal and municipal coffers." Yeltsin said more than 2,500 officials are currently under investigation for corruption. The Russian president blasted parliamentary deputies, who he said "are not hurrying to adopt the necessary laws to combat crime." Yeltsin listed officials already caught engaging in corruption, though he named them by office only. He criticized rigged sales of state enterprises, illegal production and sales of alcohol, and illegal trade that avoided customs regulations.


The Russian-Chechen joint commission charged with drafting an agreement on relations between Moscow and Grozny began its fourth session on 25 September amid mutual criticism and recriminations, Russian media reported. Russian Security Council Secretary Ivan Rybkin submitted to the Chechen delegation a draft power-sharing treaty, but the Chechens continued to insist they will discuss only their draft of an interstate treaty and agreements on economic and defense cooperation. Chechen delegation member Said-Hassan Abu-Muslimov told RFE/RL's Grozny correspondent that the defense pact has been almost completely agreed on and may be adopted with very few changes. Also on 25 September, a spokesman for the Council of Europe announced that it will send a delegation to Chechnya on 11 November to assess the human rights situation there following the recent public executions of four convicted murderers in Grozny, Reuters reported.


The Primorskii Krai Duma voted to suspend Vladivostok Mayor Viktor Cherepkov, charging that his administration has poorly managed the city and violated federal and regional laws, RFE/RL's correspondent in Vladivostok reported on 26 September. Cherepkov is currently visiting North Korea. His suspension must be confirmed by a krai court. The krai Duma is dominated by supporters of Primore Governor Yevgenii Nazdratenko, a longtime political opponent of Cherepkov. The governor managed to oust Cherepkov as mayor once in 1994. Following a Moscow court ruling, Yeltsin reinstated Cherepkov by decree in September 1996. Meanwhile, 120 billion rubles ($20 million) in federal funds have been transferred to Primore to pay wage arrears to striking coal miners and power plant workers, RFE/RL's correspondent reported on 25 September. However, the funds will cover only two months of back wages. The workers have vowed to continue their strike until all wage arrears are paid.


The U.S. space shuttle "Atlantis" has lifted off from Cape Canaveral and will dock with the Russian space station "Mir" on 27 September. The shuttle is carrying a new computer for the station, along with other supplies. U.S. astronaut Michael Foale is due to be replaced by David Wolf. NASA officials had approved rotating another U.S. astronaut only hours before lift-off. Many had previously expressed skepticism about saftey standards following a series of problems aboard the station. The computer on "Mir" went down again on 22 September but has since been repaired.


A bomb went off in on the second floor of the building that houses the Tajik state news agency, Khovar, on 25 September, RFE/RL correspondents in Dushanbe reported. Several people sustained minor injuries, and there was large damage to the first two floors of the building. It is suspected that the blast is the work of groups within the country opposed to the peace process there. The headquarters of the National Reconciliation Commission and the Pakistani Embassy are located near Khovar's office.


National Democratic Union (AZhM) leader Vazgen Manukyan on 25 September announced the beginning of a "mass resistance movement" that will seek to change the country's leadership, RFE/RL's Yerevan bureau reported. Manukyan called for the creation of "strong structures" at grass-roots level to exert constant pressure on the authorities to hold free and fair elections and improve living conditions. He said the new AZhM-led movement will be open to other political parties, labor unions, and NGOs. He added that his party is ready to engage in a dialogue with the authorities on improving Armenia's electoral system. Manukyan was addressing an estimated 15,000 supporters in Yerevan on the first anniversary of the storming of parliament following the disputed 1996 presidential elections.


The National Assembly on 24 September ratified the Convention on Nuclear Safety, aimed at ensuring the safe use of nuclear power and prevention of nuclear catastrophes, Noyan Tapan reported. Energy Minister Gagik Martirossian told deputies that the 1998 budget earmarks $2 million for improving the safety system at the Medzamor nuclear power station. Azerbaijani Foreign Minister Hasan Hasanov recently called for the closure of Medzamor, claiming that it failed to meet world safety standards.


General Dolya Babenkov, the commander of the CIS peacekeeping forces in western Georgia, has warned Georgians forced to flee Abkhazia during the 1992-1993 war not to proceed with a protest planned for 27 September, "Nezavisimaya gazeta" reported. The Georgian displaced persons intend to cross the Inguri bridge separating Abkhazia from the rest of Georgia and stage a march through Abkhazia's southern-most Gali Raion, where many of them previously lived. Babenkov has requested the assistance of the UN observer mission in Georgia to prevent the planned protest from taking place. The Georgian government has designated 27 September--the anniversary of the capture of Sukhumi in 1993 by Abkhaz forces--a day of mourning.


The Belarusian Foreign Ministry on 25 September announced it will not give temporary accreditation to Russian Public Television (ORT) correspondent Vladimir Fosenko, ITAR-TASS reported. It added that it has denied permanent accreditation to the ORT crew of Pavel Sheremet, who remains under arrest on charges of illegally crossing the Belarusian-Lithuanian border in late July. Also on 25 September, Belarusian prosecutors announced they are extending by 30 days the investigation into the cases of Sheremet and two other ORT journalists, Belarusian media reported. The announcement came shortly before the deadline for holding Sheremet without trial is due to expire. A spokesman for the Belarusian KGB said the trial of the three journalists will begin as soon as the lawyers say they are ready.


The EU on 25 September issued a 100 million ECU loan ($110 million) to Kyiv to help improve the country's balance of payments situation, ITAR-TASS reported. This is the second tranche of an EU credit to Ukraine for this purpose. The first installment was paid out in November 1996.


Lennart Meri on 25 September met with Vladimir Velman, editor-in-chief of the daily "Estonia," and other representatives of the Russian minority, ETA reported, citing "Postimees." The meeting came one day after "Estonia" had handed over to the president a petition with more than 10,000 signatures calling for Russian-language secondary education to continue beyond the year 2007. Under a recent law, the transition to instruction in Estonian is take place within the next 10 years. Velman said later that Meri understands the concern of the Russian-speaking population but recommends that no measures be taken for the time being.


Gediminas Vagnorius told journalists in Frankfurt on 25 September that Vilnius will do whatever it takes to become a member of the EU, dpa and Reuters reported. He noted that privatization in Lithuania is 95 percent complete, with only sectors such as transport, energy, and telecommunications remaining to be privatized. He also said Vilnius wants to end the currency board and give the Central Bank direct control over the litas, adding that the process is proceeding "step by step." Vagnorius was in Frankfurt to attend the opening of the first foreign office of the Lithuanian Economic Development Agency, intended to promote investment in Lithuania. Germany is Lithuania's largest trade partner within the EU.


Premier Wlodzimierz Cimoszewicz has resigned following the defeat of his Democratic Left Alliance in the 21 September elections, PAP reported on 25 September. The leaders of Solidarity Election Action (AWS), which won the election and has 201 of the 450 parliamentary seats, announced they will form a new party called the Social Movement for Solidarity Electoral Action. They are continuing talks with other groups about the possibility of a coalition. Meanwhile, AWS leader Marian Krzaklewski said his group has yet to decide which of its members should become prime minister. He told journalists in Warsaw that "there are 10 to 15 candidates" for that job.


The government on 25 September unanimously agreed on a final version of a balanced budget for 1998. Expenditures are reduced from 30.9 percent to 29.2 percent of GDP or 1.1 billion crowns ($33 million), mainly in the area of agriculture and pensions. An increased tax on cigarettes is expected to boost revenues by 1.2 billion crowns ($36.2 million). Funding from the EU's PHARE program is saving the budget 400 million crowns in outlays for repairing damage from the July floods. The opposition Social Democrats and Communists have pledged to vote against the budget in the parliament.


The 25 September ruling by the International Court of Justice in the Hague on the Gabickovo-Nagymaros hydropower project has been welcomed by Bratislava. The Slovak government called the Hague decision a "legal victory and a success for Slovak diplomacy." It said it hopes that it will be possible to restore cooperation with Hungary over the use of the Danube River. The court ruling, which is final and cannot be appealed, said that both states had violated international law (see "RFE/RL Newsline," 25 September 1997)


The Hungarian government said it accepts the Hague verdict, but political state secretary Janos Nemcsok said the ruling was "slightly" below expectations. "Magyar Hirlap" on 26 September commented "we have no alternative except to find a mutually acceptable solution.... We must negotiate..., billions of dollars are involved." Leader of the environmentalist Danube Circle group Janos Vargha expressed disappointment, saying the judgment did not give sufficient weight to environmental considerations.


The Civic Association of Roma Self-Administration in the town of Prievidza is urging local Roma to return to the professions their forebears traditionally practiced. The move is a bid to reduce unemployment among the local Romani population, currently 60-80 percent. Traditional Romani crafts include making troughs and brooms, basket weaving, and blacksmithing. Roma activist Marek Balaz told "Sme" that requalification courses in traditional Romani crafts are being organized beginning next month in cooperation with municipal authorities.


Democratic Forum chairman Sandor Lezsak has confirmed reports of an agreement between his party and the Alliance of Free Democrats (see "RFE/RL Newsline," 25 September 1997). Meanwhile, Smallholders' Party chairman Josef Torgyan and Christian Democrat leader Gyorgy Giczy signed an agreement whereby the Smallholders will "provide every assistance" to the Christian Democrats in the 1998 parliamentary elections. The two parties will field joint candidate lists if an amendment to the electoral law, currently under discussion in the parliament, is passed. That amendment would do away with the provision requiring each party running on joint lists to receive 5 percent support in order to gain representation.


A Dusseldorf court on 26 September sentenced Bosnian Serb extremist Nikola Jorgic to life imprisonment for committing genocide, murder, kidnapping, and assault in the former Yugoslavia. The trial was held in Germany at the request of the International War Crimes Tribunal in The Hague. The court found Jorgic, 50, responsible for two massacres in the Bosnian villages of Grapska and Sevarlije, where 29 Bosnian Muslims were found slaughtered in 1992. He was convicted on 11 counts of genocide and 30 counts of murder. Jorgic, who lived in Germany for 23 years, was arrested at Dusseldorf airport in 1995 upon returning from Bosnia. He has dismissed the charges as "lies" and claims to be the victim of mistaken identity.


Kresimir Zubak, the Bosnian Croat member of Bosnia's tripartite presidency, filed a written complaint on 25 September with the international community's high representative, Carlos Westendorp, on the upcoming elections in the Republika Srpska. The previous day, Bosnian Serb President Biljana Plavsic and Momcilo Krajisnik, the Muslim member of the Bosnian presidency, recently reached an agreement with Yugoslav President Slobodan Milosevic on early parliamentary elections and on a vote for both Plavsic's and Krajisnik's posts (see "RFE/RL Newsline," 25 September 1997). Zubak said that elections in the republic can be organized only by all-Bosnian agencies, not on the basis of an agreement between officials in one of the two entities.


According to the final results of the first round of the 21 September presidential elections, Zoran Lilic, Socialist candidate and ally of Yugoslav President Milosevic, won 35.7 percent of the vote. Ultra-nationalist Vojislav Seselj received 27.28 percent and opposition leader Vuk Draskovic 20.64 %. Lilic will face Seselj in a run-off on 5 October.


Serbian police, in an apparent bid to put stop to the traditional evening promenade of ethnic Albanians on the main street of the Kosovar capital, directed vehicles to drive down the main street, despite an evening ban on traffic. Numerous young people, nevertheless, continued to congregate on the sidewalks, the Kosovo Information Center reported on 25 September. Uniformed and plainclothes police harassed and beat at least two students. Meanwhile, some 300 Serbian police, backed by armored personnel carriers and helicopters, harassed dozens of ethnic Albanians in four villages in central Kosovo on 23-24 September. Several villagers were beaten. The action followed reports of an alleged attack on a police patrol near Glina.


The parliament in an extraordinary session on 25 September appointed Boris Frlec, currently ambassador in Bonn, as foreign minister, RFE/RL's South Slavic service reported. Frlec says he sees Slovenia's foreign policy priorities as improving ties with its neighbors and joining the EU. Frlec is a member of Prime Minister Janez Drnovsek's Liberal Democratic Party. He is Slovenia's seventh foreign minister since Ljubljana declared independence in June 1991.


Criminal police in the southern seaside resort have launched criminal proceedings against 40 Albanians accused of murder, rape, robbery, and kidnapping during unrest earlier this year, ATA reported on 25 September. So far, only six alleged perpetrators are in custody. The prosecutor's office and the courts have yet to join in the crackdown. Meanwhile, Italian police returned 119 Albanians lacking documents to the Albanian port of Durres on 24-25 September. Half of those sent back were young women detained for alleged prostitution. In September alone, Italy has deported some 2,500 Albanians to Durres.


Albanian Foreign Minister Paskal Milo asked his Macedonian counterpart, Blagoi Handziski, during talks in New York on 24 September to help ensure that Albanian citizens are not shot when trying to cross the border illegally. He said the border crossing at Bllata, closed due to unrest earlier this year, should be reopened. The two ministers agreed on holding negotiations at expert level to continue work bilateral agreements of an economic nature and on the free movement of citizens. Milo also expressed his government's concern over problems facing Macedonia's ethnic Albanian population


A joint commission of representatives of the National Peasant Party Christian Democratic (PNTCD) and the Hungarian Democratic Federation of Romania (UDMR) on 25 September agreed to draw up a "mutually acceptable" version of the amended education law. The commission was created the previous day. PNTCD chairman Ion Diaconescu said the commission's decisions will be binding on all coalition members, RFE/RL's Bucharest bureau reported. Diaconescu said that if Senate Education Commission chairman George Pruteanu continues to stick to his position on the law, he will have to "face the consequences." UDMR chairman Bela Marko said several PNTCD representatives have displayed extreme nationalist positions similar to those of the opposition. The commission will also examine the amended Law on Public Administration, which allows bilingual street signs, and the draft law on the national minorities.


The Chamber of Deputies on 25 September adopted an amendment to the law on political parties aimed at promoting representation of women in the legislature. The amendment stipulates that subsidies for each party will be increased proportional to the number of its women members of the parliament. The amended law will go into effect if the entire text of the law is adopted by the chamber and subsequently approved by the Senate. Also on 25 September, Foreign Minister Adrian Severin met with his Russian counterpart, Yevgenii Primakov, in New York. They agreed that in October, the two sides will resume at the level of expert the talks on a bilateral basic treaty.


Russian Deputy Foreign Minister Boris Pastukhov and his Ukrainian counterpart, Boris Gudyma, met in Moscow on 25 September to discuss how to advance the dialogue between Chisinau and Tiraspol, ITAR-TASS reported. The Russian Foreign Ministry released a statement saying that Russia and Ukraine fundamentally agree on how to settle the conflict between the breakaway Transdniestr region and Moldova. The statement said that Moscow and Kyiv believe in "granting a special status to the region on condition of observing the principle of the territorial integrity of the Republic of Moldova."


In an interview with Interfax on 25 September, Valerii Serov said that during his recent visit to Chisinau and Tiraspol, it was agreed to destroy or sell that part of the Russian arsenal that will not be wihdrawn from the Transdniester region. He rejected the Transdniestrian claim to ownership of the assets but said that "proceeds from sales to third countries will be divided among the three [Russian, Moldovan, and Transdniestrian] sides." He added this would "compensate" Tiraspol for the stationing of Russian troops in the region. He also said it was "important that the weapons not be taken over by the Transdniestrians or the Moldovans or be...purchased by dubious commercial organizations."


Interior Minister Bogomil Bonev on 25 September accused Russia of trying to blackmail Bulgaria with threats to cut off natural gas supplies unless it pays what he suggested are unfair high prices. Bonev said Russia must overcome its "imperial attitude" toward Sofia. Other Bulgarian officials noted that the Russian company Gazprom wants to charge prices higher than those for deliveries to other European countries, RFE/RL's Sofia bureau reported. Also on 25 September, AFP reported that Russia has filed an official protest for having been omitted from a list of countries invited to attend a security meeting in Sofia on 3 October. NATO and Partnership for Peace countries are to attend the meeting.


by Robert Lyle

At the annual meeting of the World Bank and IMF in Hong Kong, Romania has made a bid to improve its image in the global financial community. Taking the opportunity offered by seminar sponsored by those two economic institutions, officials from Bucharest told global investors that the country now has its basic finances in order and will be forging ahead with a revised and improved privatization program.

Romanian National Bank Governor Mugur Isarescu told the seminar that while the country has been "lagging behind" the rest of the region in shifting to a market economy (private business accounted for just 52 percent of the national economy in 1996), it is now rapidly catching up. The private sector should account for at least two-thirds of Romanian gross domestic product by next year. Similarly, while Romania has been slow in drawing foreign direct investment--it totaled around $624 million dollars in 1996, according to the UN World Investment Report -- Isarescu says that he expects it to jump to $1 billion by the end of this year.

The country has set up a new privatization program, reorganized and redrawn by the State Ownership Fund. The fund's director, Adriana Miron, told the seminar that the organization is taking a market-oriented approach, valuing enterprises at their market value rather than at book value, and then offering the "largest and most attractive" first. The shift from book to market value makes a critical difference in the program. Some firms will sell for a lot more than book value because they have attractive futures. Older, worn-out heavy industry firms, which were costly to build but have little value on today's market, will be priced far lower.

Miron said authorities learned many lessons from the first program, which managed to privatize only 3,000 enterprises--mostly small and medium-sized--in three years. She points out they privatized another 1,300 at the end of August and expect to have the total privatized to nearly 5,000 by the end of this year. "Our goal is to privatize 50 companies each week," she said.

Miron said the first response to the changes has been very encouraging. The fund has begun to run advertisements in international finance and business publications about some of its first major offerings and is already receiving a large number of inquiries.

Isarescu says that state-owned banks will to be among the firms privatized. Of the five major state banks, which currently control 70 percent of the banking sector in Romania, three are being prepared for privatization. He said he expects at least two to been sold off by the middle of next year. The rest of the banking sector in Romania is filled by around 30 licensed banks and 15 foreign banks. Isarescu says the central bank and the government are reviewing what further reforms might be needed for the country's banking system, including a commercial banking supervisory agency similar to those in Western nations.

A private investment banker, Antonius van der Heijden, head of the Dutch ING Barings bank operation in Romania, told the seminar that for the first time since the end of Nicolae Ceausescu's regime, Bucharest seems headed in the right direction. "There is a good team in the government and they are doing a good job," he said. For the first time, there is a "totally changed perception of Romania." The country could be the "next European tiger," he said.

The owner of a Canadian textile company which has had joint ventures in Romania since 1965, J. A. Seroussi, echoed Van der Heijden's endorsement. He said while nothing is ever perfect, he is more optimistic now than he has ever been about investing in Romania.

Former World Bank treasurer Donald Roth, managing partner of a European investment group, acted as moderator at the seminar. He said there is no question that Romania is at "a crossroads." Which path it follows into the future depends on Bucharest's making good choices now, he added.

The author is a Washington-based RFE/RL correspondent.