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Newsline - November 3, 1997




YELTSIN, HASHIMOTO PLEDGE TO SIGN TREATY BY 2000...

Russian President Boris Yeltsin and Japanese Prime Minister Ryutaro Hashimoto on 2 November agreed to sign a peace treaty by 2000, an RFE/RL correspondent in Krasnoyarsk reported. The pledge was the main achievement of the two-day "summit without neckties" in Krasnoyarsk Krai. Neither Yeltsin nor Hashimoto gave details on possible solutions to the territorial dispute over the four Kuril Islands seized by the Soviet Union near the end of World War II. That dispute prevented Japan and the Soviet Union from signing a treaty to end the war. According to ITAR-TASS, some 17,000 Russian citizens now live on the islands. First Deputy Prime Minister Boris Nemtsov, who held talks with Japanese officials in Krasnoyarsk, downplayed prospects that the islands will be returned to Japan, Reuters reported. He noted that the Russian president is the guarantor of the constitution, which protects Russia's territorial integrity. lb

...SEEK INCREASED ECONOMIC, POLITICAL COOPERATION

The previous day, Yeltsin and Hashimoto approved several initiatives on increasing Russian-Japanese trade and promoting joint projects in energy, transportation and business management training, Reuters reported. The two leaders also endorsed measures to boost Japanese investment in Russia. (Yeltsin's spokesman Sergei Yastrzhembskii announced on 31 October that direct Japanese investment in the Russian economy to date totals $227 million, Interfax reported.) In addition, Hashimoto expressed support for Russian membership in the Asian-Pacific Economic Cooperation forum. Yeltsin said Russia will back Japan's bid to become a permanent member of the UN Security Council, according to dpa. Russian Foreign Minister Yevgenii Primakov is to visit Japan in November to follow up on the Krasnoyarsk summit. lb

RUSSIA, FRANCE URGE IRAQ TO BACK DOWN

In a joint statement issued after their talks in Moscow in 1 November, Russian Foreign Minister Primakov and his French counterpart, Hubert Vedrine, said Iraq's refusal to cooperate further with UN weapons inspectors is "unacceptable" and violates UN Security Council resolutions. The two ministers called on Baghdad to reverse its decision and allow the UN commission in Iraq to continue its work, saying this would signal "de-escalating tensions." Noting that the lifting of the UN oil embargo is conditional on Iraq's full cooperation with the UN special commission, they affirmed support for UN Secretary-General Kofi Anna's plan to send a special UN mission to Baghdad to persuade the Iraqi leadership to cooperate. lf

PRIMAKOV PROPOSES MID-EAST PEACE CODE

Speaking at a news conference in Cairo on 31 October, Primakov again argued that Israel's failure to abide by agreements signed with the Palestinians is to blame for the present deadlock in the Middle East peace process. He proposed a 12 point peace and security code for the entire Middle East region, including Turkey, North Africa, Iran, and Iraq. The code affirms that the security of individual states in the region cannot be ensured in isolation from the peace process or solely by military and technical means. It also calls for "decisive counter-action to all forms of terrorism and extremism." Meeting in Moscow on 1 November, Primakov and French Foreign Minister Vedrine agreed to hold regular consultations to render their support for the Middle East peace process more effective, AFP reported. lf

IMF POSTPONES LOAN TRANCHE

The IMF has delayed issuing a $700 million tranche of a three-year $10.1 billion loan to Russia until at least early 1998, an RFE/RL correspondent in Washington reported on 31 October. A joint statement issued by the IMF and First Deputy Prime Minister and Finance Minister Anatolii Chubais said continuing poor tax collection in Russia has prevented the IMF from completing its planned quarterly review. According to data released by the Russian government the previous day, tax revenues totaled some 158.5 trillion rubles ($27 billion) during the first nine months of 1997, 40 percent below budget targets. "Kommersant-Daily" argued on 1 November that the IMF helped Chubais "save face" by delaying the loan tranche without officially refusing to grant it, which, the newspaper said, could have hurt Russia's credit rating. lb

BUSINESS COMES FIRST DURING FRENCH PREMIER'S VISIT

French businessmen who accompanied Prime Minister Lionel Jospin on his three-day visit to Moscow signed contracts on deals worth 4 billion francs ($680 million), AFP reported on 1 November. The car manufacturer Renault signed a letter of intent with the Moscow city government on a joint venture involving a $350 million investment from Renault. Russian Prime Minister Viktor Chernomyrdin told journalists that a 31 October session of a Russian-French cooperation commission discussed ways to increase bilateral trade generally and several joint projects in space exploration, aeronautics, oil and gas production, and the automobile industry, Interfax reported. At the same press conference, Jospin praised the prospects for Russian-French economic relations. He also said the U.S. should not put pressure on Russia's Gazprom and the French firm Total, which have signed a contract on developing a gas field in Iran. lb

RUSSIA WOULD USE NUKES TO COUNTER ATTACK ON "ALLIES"

Security Council Secretary Ivan Rybkin stressed that it is important that Russia preserves its ability to respond with a nuclear strike to aggression against either itself or its allies, whom he did not name, "Russkii telegraf" reported on 30 October. Rybkin was speaking the previous day at an unspecified Russian Defense Ministry research establishment. Earlier this year, Rybkin said Russia did not exclude the first use of either nuclear, chemical, or biological weapons to repel a conventional attack (see "RFE/RL Newsline," 30 April 1997). lf

ATTACK ON HQ OF CHECHEN ANTI-KIDNAPPING BRIGADE

Unidentified men on 31 October attacked the Grozny headquarters of the brigade that President Aslan Maskhadov set up to crack down on abductions, Russian media reported. The attackers succeeded in releasing four men who had been detained on suspicion of kidnappings. Also on 31 October, the EU announced it will release 700,000 ecus (more than $798,000) in humanitarian aid to Chechnya for war victims and infrastructure projects, according to ITAR-TASS. lf

YAVLINSKII STILL INSISTS ON WITHDRAWAL OF TAX CODE

Yabloko leader Grigorii Yavlinskii on 31 October sharply criticized the government for persuading Yeltsin to change his mind about withdrawing the proposed tax code from the State Duma, RFE/RL's Moscow bureau reported on 31 October. Yavlinskii again argued that the code is repressive and will prevent economic growth by failing to reduce the tax burden on the business sector. Yeltsin on 21 October instructed the government to withdraw the tax code from the Duma. However, government ministers and most Duma members, including leading Communists, opposed such a move. At a 30 October meeting with Prime Minister Viktor Chernomyrdin, Yeltsin announced he now doubts the wisdom of making "serious, essential concessions on the tax code" in return for a "formal show of accord" with the Duma, Interfax reported. lb

DUMA, MINISTERS ON REVOLUTION ANNIVERSARY

The Duma on 31 October adopted an appeal marking the 80th anniversary of the October Revolution, Interfax and Reuters reported. The Communist-sponsored motion, which was opposed by the Yabloko and Our Home Is Russia factions, states, "The ideals of the revolution...remain alive in the hearts of millions of our compatriots, and they are cherished by working people in many countries." Appearing on Russian Television on 2 November, Prime Minister Chernomyrdin noted that 7 November "is a special date, especially for the older generation," Reuters reported. "The 1917 events are part of our history and I think they should be respected and treated in what I would call a humane way," Chernomyrdin added. Meanwhile, Justice Minister Sergei Stepashin issued a statement on 31 October urging "all responsible political figures" to show restraint on 7 November (see "RFE/RL Newsline," 30 October 1997). lb

NEW HEAD OF SMALL BUSINESSES COMMISSION OUTLINES PRIORITIES

Irina Khakamada, the new head of the State Committee on Support and Development of Small Businesses, outlined her priorities in an interview with RFE/RL's Moscow bureau on 2 November. Khakamada said in her new cabinet post, she will support policies to alleviate three major obstacles facing small businesses in Russia: the heavy tax burden, pressure to pay criminal groups for protection, and high costs for office space and equipment. She also said she hopes to attract more media interest in small businesses, noting that Russian financially-oriented publications currently focus primarily on banking or industrial "giants." Yeltsin appointed Khakamada to head the committee on 30 October. Asked why she gave up her Duma seat to join the cabinet, Khakamada explained that she had virtually no influence on the lower house's legislative activities because she did not belong to any registered faction. lb

CHUBAIS CLOSES MOST BANK ACCOUNT

First Deputy Prime Minister Chubais has closed his personal account in Most Bank, citing unspecified "personal reasons," Russian news agencies reported on 31 October. Until this summer, Chubais had good relations with Most Bank founder Vladimir Gusinskii and almost always received favorable coverage in the media controlled by Gusinskii's company Media-Most, including the private network NTV, the radio station Ekho Moskvy and the newspaper "Segodnya." However, since a consortium involving Gusinskii failed to win an auction for a stake in the telecommunications giant Svyazinvest, Media-Most outlets have frequently criticized Chubais, his economic policies, and his main ally in the government, First Deputy Prime Minister Nemtsov. lb

NEW TV NETWORK BEGINS BROADCASTING

The state-run network "Kultura," which will feature cultural and educational programs but no advertisements, began broadcasting on 1 November. Kultura will be received by a potential audience of some 100 million in European Russia, using a frequency formerly used by St. Petersburg Channel 5 (see "RFE/RL Newsline," 27 August 1997). The first program shown on the network was an address by Yeltsin, who also chairs the Kultura board of trustees. Numerous prominent cultural figures are on the board, including theater director Mark Sakharov, academician Dmitrii Likhachev, cellist and symphony conductor Mstislav Rostropovich, writer Fazil Iskander, and film-maker Edvard Radzinskii. lb

NTV TO SHOW CONTROVERSIAL FILM

The private network NTV will broadcast Martin Scorsese's film "The Last Temptation of Christ" on 9 November, in accordance with the outcome of a televised mock trial on 1 November, ITAR-TASS reported. The network had twice cancelled plans to show the film following protests by the Russian Orthodox Church (see "RFE/RL Newsline," 27 October 1997). Various prominent political and religious figures offered "testimony" during a 1 November NTV program in which a lawsuit by the church against the network was played out. Although the "jury" of six experts was evenly divided, the case was decided in favor of the defendant, NTV. lb

LUZHKOV SLAMS TV VIOLENCE, PRAISES WOMEN

Moscow Mayor Yurii Luzhkov has charged that television programs depicting murders and violence damage the moral foundations of the family, ITAR-TASS reported on 30 October. Addressing a conference organized by the Union of Russian Women, Luzhkov advocated a "law on protecting morality, language, national traditions and culture" and criticized most popular music for failing to uphold family values. He also called on women to become more active in public life, since women are "by nature guardians of the household and incapable of taking extreme decisions that harm society." In particular, Luzhkov argued that women would be more cautious in deciding on radical economic changes. lb

CHITA GOVERNOR DECLARES STATE OF EMERGENCY

Chita Oblast Governor Ravil Geniatulin on 31 October declared a state of emergency to deal with a mounting energy crisis in the east-Siberian region, Russian news agencies reported. Unpaid workers at Chita's largest power plant went on strike on 12 October, leading to massive power cuts as the plant began to operate at half-capacity. Since temperatures dropped to sub-zero levels, heating systems in the oblast capital have been in danger of freezing. Leaders of trade unions representing energy workers agreed to end the strike on 31 October after the Chita administration allocated 10 billion rubles ($1.7 million), enough to pay half the wage arrears to the strikers. First Deputy Prime Minister Chubais announced the same day that the federal government will also take steps to help settle the energy crisis in Chita. lb

CHERNOMYRDIN APPROVES ENERGY SUBSIDIES FOR FAR EAST REGIONS

Prime Minister Chernomyrdin on 31 October signed a government directive on providing quarterly subsidies for Primorskii and Khabarovsk Krais to ensure uninterrupted heating supplies in those regions, Russian news agencies reported. Chernomyrdin signed the order following a meeting with Primorskii Krai Governor Yevgenii Nazdratenko. Strikes by unpaid energy workers have led to frequent power cuts in Primore. lb



ARMENIAN PRESIDENT ARGUES NEED FOR KARABAKH CONCESSIONS

In an article published by most Armenian dailies on 1 November, Levon Ter-Petrossyan castigated the opposition for responding with "insults, smear, and slander" to his 26 September statement that it is unrealistic for Armenia to demand independence for Nagorno-Karabakh, RFE/RL's Yerevan bureau reported. Ter-Petrossyan said it is neither possible nor desirable to maintain the status quo indefinitely and that "mutual concessions" are the only way to ensure that Armenians continue to populate Karabakh. He suggested that the "phased" and "package" options for resolving the conflict "may easily be combined." Ter-Petrossyan warned that "serious complications" may arise if a draft document that could serve as a basis for negotiations is not signed before the Organization on Security and Cooperation in Europe's foreign ministers meet in December. He called for the resumption of talks with Azerbaijan, which were put on hold in November 1996. lf

OPPOSITION PROTESTS KARABAKH POLICY

Some 10,000 people took part in an opposition demonstration in Yerevan on 31 October to denounce the leadership's Karabakh policy, RFE/RL's bureau in the Armenian capital reported. Rally organizers accused President Ter-Petrossyan of preparing for what they called Nagorno-Karabakh's surrender and capitulation to Azerbaijan. They also demanded that Armenia not sign any peace agreement subordinating Karabakh to Azerbaijan and that the details of a peace plan proposed by the OSCE's Minsk Group be disclosed. lf

UN SECRETARY-GENERAL ON ABKHAZ SITUATION

Kofi Annan has warned that the withdrawal of the CIS peacekeepers and UN observer mission stationed on the border between Abkhazia and the rest of Georgia could lead to a resumption of the conflict, ITAR-TASS reported on 1 November. The CIS heads of state summit in Chisinau on 23 October prolonged the mandate of the peacekeepers until 31 December1997, but Russian First Deputy Foreign Minister Boris Pastukhov warned five days later that the force will be withdrawn unless there is progress toward a political settlement of the conflict. Meanwhile, addressing the Georgian parliament on 31 October, Foreign Minister Irakli Menagharishvili implied that Tbilisi may reject further Russian mediation in favor of the peace talks that several Western countries and Russia initiated in August under the aegis of the UN, Interfax reported. lf

ECHIBEY CRITICIZES OSCE KARABAKH PEACE PLAN

Former Azerbaijani President Abulfaz Echibey told journalists in Baku on 31 October that the latest OSCE peace proposal is "unacceptable" because it fails to preserve Azerbaijan's territorial integrity, Russian agencies reported. The Azerbaijani leadership has agreed to that plan. Elchibey said Karabakh should have no more than "cultural autonomy" and that he advocates military action to resolve the Karabakh conflict if it proves impossible to do so by peaceful means. He added he has not yet decided whether to contend the 1998 presidential elections or to support an alternative opposition candidate such as Musavat Party chairman Isa Gambar. He noted he will advocate a boycott if the elections are not held under democratic conditions. lf

KAZAKHSTAN RESTRICTS ALCOHOL SALES

The Eastern Kazakhstan Oblast administration has banned street sales of alcohol, according to ITAR-TASS on 2 November. Over the past two years, 677 people are reported to have died from alcohol poisoning after drinking adulterated alcohol. So far this year, police have impounded 800 tons of inferior contraband alcohol from China. lf

TAJIK OPPOSITION FIGHTERS CONTINUE TO REGISTER

Tajik Prime Minister Yakhye Azimov and United Tajik Opposition leader Said Abdullo Nuri were in Garm on 31 October to monitor the registration of former opposition fighters who recently returned to the region from Afghanistan, Interfax reported. The two men will also study the economic situation in eastern Tajikistan in anticipation of a $10 million World Bank loan to help restore the region's economic infrastructure. The UTO and the Russian peacekeeping force in Tajikistan have recently disagreed over which border crossing the returning UTO fighters are to use, according to "Nezavisimaya gazeta" on 31 October. lf




MINSK MARCH COMMEMORATES STALIN'S VICTIMS

Some 3,000 people marched in the Belarusian capital on 2 November in memory of the victims of Stalinism in Belarus and to warn against a return to authoritarianism in the country, RFE/RL's Belarusian Service reported. The march, organized by the Belarusian People's Front, took place without incident. Lyavon Burshchevskiy, the front's acting head, told the marchers that they have the power to prevent Belarusian President Alyaksandr Lukashenka from taking the country back to Stalinism. "Our society will unite against dictatorship," he said. pag

KUCHMA SAYS ANTI-REFORM GROUPS THREATEN UKRAINE

At a 1 November press conference dealing with a wide range of issues, Ukrainian President Leonid Kuchma warned that support for anti-reform parties in the upcoming parliamentary election could threaten the country's future, Ukrainian media reported. Kuchma also said he will meet with Russian President Boris Yeltsin on 16-17 November to seek to end the trade war between the two countries and to sign a 10-year cooperation plan. He added that he will press to cut the size of the country's army. The next day, in an indication that anti-reform attitudes may be growing, Socialist leader and parliamentary speaker Mikhail Moroz pledged to push for new presidential elections, ITAR-TASS reported. pag

UKRAINE'S PROBLEMS IN BOSNIA CONTINUE

The NATO-led SFOR forces in Bosnia continued to hold seven Ukrainian soldiers on smuggling charges and are calling on Kyiv to conduct a thorough investigation, Western agencies reported on 2 November. Ukraine has denied that the soldiers are guilty of smuggling, but Kyiv said on 31 October that it has uncovered facts suggesting the men were involved in the illegal use of military vehicles. pag

LATVIAN PREMIER DECLINES RUSSIAN SECURITY OFFER

Responding to a journalist's question about Russia's offer of security guarantees, Guntars Krasts on 31 October stressed the "Baltic countries have never viewed themselves separately from the security structures of the EU." He added that a separate bloc of Baltic States is "unthinkable." But Krasts did say that some Russian proposals, particularly on economic cooperation, may be discussed. The previous day, the Lithuanian Foreign Ministry issued a statement expressing a similar position. Estonia is expected to respond to the offer on 3 November, while joint statements by the Baltics' foreign ministers and presidents are expected within the next week. jc

ESTONIAN ECONOMY OUTPACES BALTIC NEIGHBORS

In the first six months of 1997, Estonia's gross domestic product was up 11.7 percent compared with the same period last year. The corresponding figures for Latvia and Lithuania were 4.6 percent and 2.5 percent, BNS reported on 31 October, citing the three states' statistics offices. In Estonia, the biggest growth during the second quarter was recorded in the financial sector. Some analysts are skeptical about whether Tallinn can sustain the pace of economic growth. Price Waterhouse economist Hardo Pajula points out that several factors--including the recent fall on the stock market, rising interest rates, and stricter Central Bank requirements--are already cooling down the economy. jc

BUTKEVICIUS REMAINS BEHIND BARS

A Vilnius court has ruled that Audrius Butkevicius, an independent deputy and a former defense minister, will remain in prison at least until 30 November, BNS reported on 31 October. Butkevicius, who is accused of accepting a bribe to use his influence to end a criminal investigation, has appealed to the Interior Ministry to guarantee his right to take part in legislative sessions and to meet with his electorate. Meanwhile, the Interior Ministry has launched an investigation into the attack on an aide to presidential candidate Valdas Adamkus. Raimundas Miezelis was beaten near his home outside Vilnius and hospitalized with concussion and severe facial injuries. jc

NEW POLISH GOVERNMENT SWORN IN

Prime Minister Jerzy Buzek's government was sworn in by President Alexander Kwasniewski on 31 October, PAP reported. The two deputy premiers are Solidarity's Janusz Tomaszewski, who will also serve as interior minister, and the Freedom Union's Leszek Balcerowicz, who is also finance minister. Two other Union of Freedom leaders also took top posts: Bronislaw Geremek is foreign minister and Janusz Onyszkiewicz has the defense portfolio (see "RFE/RL Newsline," 29 and 30 October 1997). pag

INCIDENT AT POLISH-GERMAN BORDER

German police used non-lethal force on 31 October to prevent some 50 people angry at customs delays from entering Germany at the Schwedt border crossing, PAP reported on 1 November. The Germans arrested 11 people and then released them, apparently in response to a diplomatic protest by Warsaw. pag

HAVEL HOSPITALIZED, CZECH POLITICAL CRISIS DEEPENS

Czech President Vaclav Havel is suffering from pneumonia and will spend at least eight days in the hospital, Czech Television reported on 2 November. Meanwhile, Deputy Prime Minister Josef Lux--the leader of the junior coalition Christian Democrats--has demanded that Czech Premier Vaclav Klaus either change direction or resign if he does not want to be ousted, "Mlada fronta Dnes" reported on 1 November. pag

MEDIA GROUP SAYS SLOVAK TAX COULD KILL FREE MEDIA

Johann Fritz, the director of the Vienna-based International Press Institute, has called on Bratislava to postpone a planned increase in value-added tax, Western media reported. Fritz said the new tax would force many independent newspapers to close and would effectively kill press freedom in Slovakia. pag




DISCORD AMONG ALBANIANS OVER KOSOVO QUESTION

Albanian President Rexhep Meidani said in Geneva on 1 November that the "international community must intervene" to persuade the Serbian authorities to implement the 1996 agreement with the Kosovars on restoring Albanian-language education. He warned that violence may erupt in Kosovo if the agreement is not implemented. But in Tirana the next day, Prime Minister Fatos Nano said a solution to the Kosovo question can be found only through direct dialogue between Serbs and Kosovars. Kosovo insists on U.S. or EU participation in such talks. Kosovar shadow-state President Ibrahim Rugova told Albanian dailies of 2 November that Nano should not attempt to make an agreement on Kosovo with Yugoslav President Slobodan Milosevic when the two meet on Crete for the 3-4 November Balkan summit. He added that the Kosovars should have been invited to the meeting. pm

DISARRAY CONTINUES IN ALBANIAN JUDICIAL SYSTEM

The Prosecutor-General's Office is investigating numerous cases in which judges and state prosecutors are suspected of having links to criminal gangs in Kruja, Tirana, Lac, and Gjirokaster. In particular, the justices are suspected of having illegally freed many criminals from prison this year, "Gazeta Shqiptare" reported on 2 November. Meanwhile, judges, prosecutors and court clerks who took part in a six-month training course in 1993 are threatening to go on strike on 3 November to protest planned sackings and demotions of some 175 graduates of the course. They are also demanding that the authorities examine the professional qualifications of all judges and prosecutors. Critics charge that the Democratic Party sent its loyalists to the six-month course so that they could take control of the judicial system. fs

PLAVSIC WON'T RUN FOR PRESIDENT IF FOES WIN PARLIAMENTARY VOTE

Republika Srpska President Biljana Plavsic has said she will not take part in the 7 December presidential vote if her hard-line rivals win the 22-23 November legislative elections. Plavsic added, however, that she believes that "Serbs are not suicidal" and that voters will not support her enemies. Also in Banja Luka, a presidential spokesman said Plavsic feels it is imperative that the Bosnian Serb army participate in the U.S.-sponsored "Train and Equip" program. He added that the alternative for the Serbs is isolation. pm

BANJA LUKA TV BEAMED THROUGHOUT REPUBLIKA SRPSKA

Plavsic's television broadcasts reached all Bosnian Serb territory on 31 October after SFOR had repaired a transmitter in eastern Bosnia. Pale hard-liners deliberately damaged the facility to prevent peacekeepers from using it to broadcast Plavsic's programs (see "RFE/RL Bosnia Report," 22 October 1997). pm

BOSNIAN OFFICIAL DENIES CORRUPTION CHARGES

Mirsad Kurtovic, the head of Bosnia's Agency for State Reserves, said in Sarajevo on 1 November that Carlos Westendorp, the international community's chief representative in Bosnia, was wrong the previous day when he reported widespread fraud by Bosnian authorities. Kurtovic rejected the charge that his own office has misappropriated more than $13 million since January. Westendorp claimed that top Muslim and Croatian officials have redirected tax and aid money to agencies that should have been dismantled under the Dayton agreements. Westendorp said that if the Bosnian government does not end the practice within two weeks, he will publish evidence on the alleged fraud. pm

BOSNIAN GENERAL SAYS ARMY WILL BE MULTI-ETHNIC

Army commander General Rasim Delic said in Sarajevo on 1 November that he is looking for 35,000 recruits under the "Train and Equip" program. He added that he wants to enlist young men from mixed marriages as well as Muslims, Croats, Serbs, and Albanians. Delic was responding to recent speculation in the Muslim press that recruits from mixed marriages would be banned from enlisting on the grounds they might prove disloyal. Observers noted that the Sarajevo government retired most of its top Serbian and Croatian officers following the signing of the Dayton agreements at the end of 1995. pm

RUSSIAN GAS RETURNS TO BOSNIA

Russian gas deliveries to Bosnia resumed on 31 October after a break of seven months. The state-owned Sarajevogas recently reached an agreement with Gazprom on terms for repaying the mainly Muslim and Croatian federation's share of Bosnia's outstanding $16.2 million debt to Gazprom. Some $4.7 million out of the federation's total debt of $7.3 million will be paid by the Dutch government via a grant to the World Bank. The Bosnian Serbs have not reached a deal with Gazprom on repaying their part of the debt and consequently remain cut off from Russian gas supplies. pm

DRASKOVIC, SESELJ TO RUN FOR PRESIDENCY

In Belgrade on 2 November, the leadership of the Serbian Renewal Movement named Vuk Draskovic as its candidate in the 7 December Serbian presidential elections. The governing body of the Serbian Radical Party chose Vojislav Seselj as its standard bearer. Both men ran for the presidency in the inconclusive 21 September vote. They will face the Socialist candidate, Milan Milutinovic, in the December race. The key question is whether the moderate opposition will select a joint candidate (see "RFE/RL Newsline," 31 October 1997). pm

ALLEGED SERBIAN AGENTS REMAIN IN MONTENEGRIN JAIL

A Podgorica court on 1 November ruled that 11 men from Belgrade and Novi Sad will remain in custody and that police investigations of their case will continue. Security forces arrested the men on charges of attempting to disrupt the Montenegrin presidential vote (see "RFE/RL Newsline," 18 October 1997). pm

ISRAELI LEGISLATORS SAY TUDJMAN UNWELCOME

Yossi Sarid, head of the Meretz Party, and Labor deputy Yossi Beilin said in Jerusalem on 2 November that Croatian President Franjo Tudjman will not be welcome if he comes to Israel on a planned visit in December. Sarid added that he has introduced legislation in the parliament to ban Tudjman's trip. Sarid and Beilin claim Tudjman denies that the Holocaust took place. Tudjman, for his part, says he wants to visit Israel to apologize for Croatia's role in the Holocaust. pm

ROMANIAN PREMIER IN ISRAEL

Victor Ciorbea on 2 November paid a one-day "unofficial visit" to Israel to meet with Prime Minister Benjamin Netanyahu and several of his cabinet ministers. Among the topics discussed were improving trade relations, Israeli investments in Romania, the problem of Romanian guest workers in Israel, and the restitution of Jewish property, an RFE/RL correspondent in Tel Aviv reported. Ciorbea also met with former opposition leader Shimon Peres. ms

ROMANIAN LIBERALS SEEK TO UNIFY

The National Liberal Party (PNL) on 31 October called on the Liberal Party, the Party of Civic Alliance (PAC), and the Alternative for Romania party to merge with the PNL. Liberal Party executive chairman Dinu Patriciu said his party favors such a merger. Meanwhile, the PAC on 2 November decided to rejoin the Democratic Convention of Romania, which it quit in June 1996. A PNL spokesman said that decision is a "step toward liberal unification," Mediafax reported on 2 November. ms

ROMANIA'S COMMUNIST PARTY REBORN

At its congress in Bucharest on 1-2 November, the extra-parliamentary Romanian Workers' Party voted to change its name to the Romanian Communist Party (PCR), "Libertatea" reported. PCR leader Cristian Ion Niculae said the party wants to "oust the incumbent government and participate in forming the next one." The PMR was set up in 1995 and claims 17,000 members in 31 county branches. Meanwhile, Corneliu Vadim Tudor, the leader of the extremist Party of Greater Romania, announced that since 1993, membership has increased fourfold and now stands at 72,000, Radio Bucharest reported on 31 October. ms

MOLDOVAN PARLIAMENT POSTPONES BUDGET DEBATE

The parliament has postponed the first reading of the government's 1998 draft budget, RFE/RL's Chisinau bureau reported on 31 October. A majority of deputies believe the projected 6 percent growth in GDP is "unrealistic" given that GDP sunk 8 percent in 1996 and shows the same tendency this year. The government foresees a 19.5 percent increase in tax revenues and a 23 percent rise in expenditures. Responding to a parliamentary motion to return the draft to the government, Prime Minister Ion Ciubuc said no "essential modifications" are possible, adding that the budget must "mobilize" the country's economic forces. ms




IS SLOVAKIA'S ECONOMIC REPUTATION ABOUT TO TARNISH? by Michael Wyzan


According to the Western view, Slovakia's economy is a solid performer and only political factors have kept the country out of European institutions and NATO. Indeed, the European Commission said as much when it explained its decision in mid-July not to recommend Slovakia among the five postcommunist countries to be invited to accession negotiations.

But this year, there have been indications of looming economic problems, especially growing foreign sector imbalances. Until now, however, fiscal--and especially monetary--policy has been run competently, resulting in low inflation and rapid economic growth. Some indicators suggest 1997 is shaping up to be another satisfactory year for the Slovak economy. Consumer prices rose by 6 percent in the 12 months to July, compared with 9.3 percent in the Czech Republic, 18.2 percent in Hungary, and 15.0 percent in Poland. Gross domestic product (GDP) grew by 6.2 percent in the first half, while industrial output was up 3.7 percent in the first seven months. Among transition economies, only Estonia and Poland are growing more rapidly. On a less positive note, the unemployment rate remained high at 12.8 percent in July, compared with 12.5 percent a year earlier. Recent declines in Polish unemployment rates mean that Slovakia now has Visegrad's highest jobless figures. Slovakia also has a large and growing budget deficit, predicted to reach between 4.6 and 5.7 percent of GDP this year. That figure is much higher than in Poland or the Czech Republic and is similar to Hungary's. It reflects a steady increase from 4.4 percent last year and 1.6 percent in 1995. But the main cause for concern is the foreign sector. The first seven months of the year revealed a current account imbalance of $1.006 billion and a trade deficit of $986 million. Predictions for the size of the former for all of 1997 range from 10.4 to 15 percent of GDP, the highest among the Central European and Baltic economies. Moreover, Slovakia is a relatively unattractive country for foreign investors. As of mid-1996, Slovakia's per capita foreign direct investment stood at $152, compared with $1,299 in Hungary, $586 in the Czech Republic, and $265 in Poland. With so little foreign investment and such large current account deficits, it is not surprising that Slovakia's official foreign exchange reserves declined from $3.47 billion at the end of 1996 to $3.181 billion in August. Reserves of approximately the current level would cover 2.7 months worth of imports, while the equivalent figures for the Czech Republic, Hungary, and Poland are 3.8, 4.4, and 5.6, respectively. Such low reserves mean that Slovakia is ill prepared to defend the crown against speculative attack. Pegged to a currency basket that includes the U.S. dollar, it has strengthened recently against the German mark and the Czech crown. Whereas in January 1996 one Slovak crown was worth 90 percent of a Czech one, that figure is now 99.24 percent following the economic turmoil in the Czech Republic earlier this year The Slovak situation resembles that in Mexico in 1994 or in Thailand last year, when both countries were on the verge of currency crises that turned into macroeconomic disasters. When "The Economist" magazine examined a number of macroeconomic indicators for the Visegrad and Baltic nations, it gave Slovakia 10 points on a scale from 1 to 12, with 12 representing the greatest risk. Only Lithuania was rated riskier, with 11 points (pre-crash Mexico scored 10 points). Many analysts hold that a significant weakening of the crown is virtually inevitable, resulting in higher inflation and slower growth. The key to Slovakia's prospects is the quality of policy-making. As in Southeast Asia this year, inadequate responses to the first alarming signs sharpen and prolong subsequent crises. Slovakia is especially worrisome because policy-makers have responded to troubling indicators by resorting to counterproductive actions. To reduce the budget deficit, Bratislava has raised value-added tax, slapped a 7 percent surcharge on most imports, and is discussing levying a tax on portfolio investment. The leadership remains opposed to following the Czech lead and devaluing the crown, which in Slovakia is defended with high interest rates and tight money. Pulling in the opposite direction from the fiscal standpoint, recent "economic revitalization" measures allow firms in high-unemployment areas to apply for debt forgiveness from the state and to defer tax, excise duty, and social security payments. Another source of budget revenue loss are the tax holidays for foreign investors who meet certain conditions. Slovakia's relatively good figures for inflation and economic growth have obscured an important fact. Slovakia's economic policy-makers are often as heavy-handed as the Bulgarian Socialists under Zhan Videnov, who by February 1997 had brought the Bulgarian economy to the verge of total collapse. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria.


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