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Newsline - November 12, 1997




GOVERNMENT APPROVES DRAFT AGREEMENT WITH CHINA

The government has approved a draft agreement with China on joint economic use of some islands located in border rivers, Russian media reported on 11 November. No details have been released on which islands are covered by the accord. President Boris Yeltsin and Chinese leaders discussed the issue during Yeltsin's recent visit to China. Meanwhile in Japan, visiting Chinese Prime Minister Li Peng discussed with five former Japanese premiers the possibility of four-way talks (involving Russia, the U.S., China, and Japan) on promoting peace and stability in the Pacific. BP

COUNCIL OF EUROPE DELEGATION IN GROZNY

A special commission of the Parliamentary Assembly of the Council of Europe held talks in Grozny on 11 November with Vice President Vakha Arsanov, acting Prime Minister Shamil Basaev, and parliamentary deputies, Russian agencies reported. The deputies asked the commission to recognize Chechnya's political independence and argued that adherence to Islamic law is the only way to combat crime in Chechnya. The delegation advised, however, that Chechnya's political status can be decided only jointly by Moscow and Grozny. It advised the Chechens to seek "a reasonable compromise" with Russia. Some deputies walked out of the talks to protest that advice, according to Interfax. LF

CHECHEN PRESIDENT FLIES TO U.S.

Aslan Maskhadov on 11 November flew from Turkey to the U.S., Russian media reported. An unnamed ministry spokesman told Interfax that the trip was not coordinated with the Russian Foreign Ministry, nor did the U.S. inform the ministry about it. Chechen First Deputy Foreign Minister Movladi Udugov said it was a private visit and denied Maskhadov will meet with any U.S. officials. "Izvestiya," however, reported the next day that the Chechen president will meet with State Department Special Adviser for the Newly Independent States Stephen Sestanovich. Asked in Grozny whether Maskhadov plans to remain in the U.S. as "honorary president in exile," Maskhadov's press spokesman Kazbek Khadzhiev said the Chechen president is the most influential leader in Chechnya, and "will never desert his people," Interfax reported. LF

MINISTERS INSIST WAGE ARREARS TO BE PAID

First Deputy Finance Minister Vladimir Petrov announced on 11 November that the government will pay all wage arrears to state employees by the end of this year, Russian news agencies reported. Petrov said such wage arrears currently total some 9.3 trillion rubles ($1.6 billion). Meanwhile, Prime Minister Viktor Chernomyrdin announced during a visit to the Komi Republic that once the back wages have been paid, the government will begin to raise wages, pensions, and stipends paid out of the federal budget. The same day, Chernomyrdin said the government has allocated 250 billion rubles toward paying back wages to coal miners in the Vorkuta area of Komi. LB

TAX SERVICE CHIEF OPTIMISTIC ON NEW COLLECTION EFFORTS

State Tax Service chief Aleksandr Pochinok predicted that new measures to boost tax collection will significantly increase the government's intake of "real money," RFE/RL's Moscow bureau reported. Pochinok praised a recent presidential decree prohibiting the government from canceling debts to enterprises against taxes owed (see "RFE/RL Newsline," 10 November 1997). Pochinok said the 10 largest Russian taxpayers have frequently used offsets but will now be forced to come up with cash to pay their taxes. Pochinok also said some oil companies, among the country's largest tax debtors, will be allowed to export more oil if they stick to a schedule for paying tax arrears. Speaking in Komi on 11 November, Chernomyrdin said he will sign a "radical" government plan on improving tax collection within a few days. He gave no details except to say the plan does not introduce any new taxes. LB

MINISTER OUTLINES PRIVATIZATION PLANS

State Property Minister Maksim Boiko announced on 11 November that privatization brought more than 12 trillion rubles ($2 billion) to the federal budget during the first 10 months of 1997, RFE/RL's Moscow bureau reported. Although that figure exceeds total planned revenues from privatization for 1997, the state hopes to acquire another 10 trillion rubles from privatization sales before the end of the year. (Privatization proceeds will make up part of the shortfall caused by low tax collection rates.) Before the end of the year, Boiko said, the state will sell a 16 percent stake in the regional utility Lenenergo as well as stakes in four oil companies: 0.96 percent of LUKoil; 48 percent of the Tyumen Oil Company;19.68 percent of Slavneft (a Russian-Belarusian company); and 34 percent of the Eastern Oil Company. LB

STATE WILL NOT SELL MORE SHARES IN ORT

Boiko also said the state will not sell any of its shares in Russian Public Television (ORT) once the network is transformed from a closed to an open joint-stock company. He noted that the transformation, which is expected to be approved at a 13 November shareholders' meeting, will permit private companies to sell their shares in ORT if they wish. However, he said the state will keep its 51 percent stake in the network. Boiko also explained that a new council of government representatives at ORT, which he chairs, is intended to coordinate the policy of various government ministries and agencies toward ORT (see "RFE/RL Newsline," 4 November 1997). LB

CONSTITUTIONAL COURT RULES BORDER TAX LEGAL

The Constitutional Court on 11 November ruled that forcing citizens to pay a tax for filling out documents upon crossing the Russian border does not violate the constitutional right to leave and enter the country freely, "Nezavisimaya gazeta" and "Kommersant-Daily" reported. Khabarovsk Krai Governor Viktor Ishaev filed the court appeal, saying the border tax violates constitutional and international norms and would harm the local economy in Khabarovsk. The judges rejected arguments that the border tax is illegal but agreed with Ishaev's claim that taxes may be established only by federal law. (The current law on the state border permits the government to determine the level of the border tax.) Consequently, although a government resolution sought to impose the border tax as of 1 November, that tax cannot be levied until a specific law has been adopted by the parliament and signed by the president. LB

KHAKAMADA SEEKS FUNDING TO SUPPORT SMALL BUSINESSES

Irina Khakamada, who heads the State Committee on Support and Development of Small Businesses, is seeking 218 billion rubles ($37 million) in budget funding for her committee next year, "Kommersant-Daily" and "Izvestiya" reported on 12 November. The committee did not receive any budget funding in 1997 and was not included in the expenditures foreseen in the original draft budget for 1998. But Khakamada noted the Duma has proposed a budget amendment that would provide funding for the committee. She added that money will not be given directly to businesses but will be used to create regional centers where entrepreneurs can seek information and legal advice. LB

PROSECUTOR-GENERAL ON FIGHTING HATE CRIMES

Prosecutor General Yurii Skuratov says his office, the Justice Ministry, and the Federal Security Service will set up an interdepartmental group to combat hate crimes, Russian news agencies reported on 11 November. Attending a board meeting of the Russian Jewish Congress, Skuratov said that during the last two years, the Prosecutor-General's Office has opened 49 criminal cases on charges of inciting ethnic, racial, or religious hatred. But he said law enforcement agencies have had trouble investigating such crimes, in part because Russian law lacks a precise definition of fascism. LB

JUSTICE MINISTRY SEEKS RIGHT TO REGISTER PRINT MEDIA

Justice Minister Sergei Stepashin supports amending the law on the mass media to force publications to register with his ministry as well as with the State Press Committee, "Izvestiya" reported on 12 November. Stepashin said his ministry would exclude publications that promote fascism or other radical ideologies. He added "this is in no way control over the mass media. It will not affect respectable newspapers and magazines, it will affect primarily small papers and fascist leaflets, the majority of which are printed underground." LB

CONFUSION OVER SOBCHAK

The condition and whereabouts of former St. Petersburg Mayor Anatolii Sobchak remain unknown following conflicting media reports. Sobchak's wife, Duma deputy Lyudmila Narusova, told Interfax on 10 November that heart surgery had been performed on Sobchak. Speaking to ITAR-TASS the next day, she said her husband is still in the hospital and is preparing to undergo unspecified medical treatment. Also on 11 November, representatives of the American Hospital in Paris confirmed Sobchak sought treatment at the hospital but denied he has undergone heart surgery. AFP quoted American Hospital representatives as saying Sobchak checked out of that hospital after a series of tests showed "everything was fine." Some Russian observers believe Sobchak has used his heart problems as a pretext to escape questioning by law enforcement authorities. LB

CHERNOMYRDIN SAYS POLICY ON FAR NORTH TO CHANGE

Speaking to students in Komi, Chernomyrdin said the government will become more selective in its support for industry in the far north, ITAR-TASS reported on 11 November. Unprofitable enterprises, including some coal mines, will be closed, he said. In addition, residents of cities and villages that have poor economic prospects will be moved to more southern regions. Deputy Prime Minister Ramazan Abdulatipov, who recently visited Magadan Oblast, has also argued that current government policy toward the far north is inefficient, "Izvestiya" reported on 12 November. Rather than dividing Russia into northern and southern regions and giving more financial support to the north, Abdulatipov says, the government should provide more help to all regions in need. Abdulatipov is from the North Caucasus republic of Dagestan, which is one of the poorest Russian regions. LB

TULEEV APPOINTS NEW MAYOR OF SIBERIAN TOWN

Kemerovo Oblast Governor Aman Tuleev on 11 November appointed Bakhtiyar Mamaev as the acting mayor of Leninsk-Kuznetskii, "Kommersant-Daily" reported. Up to now, Mamaev has been first deputy mayor of the city, whose elected mayor, Gennadii Konyakhin, is in custody awaiting trial on corruption charges. Before his arrest, Konyakhin appointed deputy Mark Guskov as acting mayor. Tuleev's action is in apparent conflict with the law on local government, which says that regional authorities can terminate the authority of an elected local leader and appoint a replacement only following a court ruling (see "RFE/RL Newsline," 21 October 1997). Konyakhin told "Kommersant-Daily" that he plans to contest Mamaev's appointment in court. LB

DAGESTAN ENCOUNTERS PROBLEMS IN CREATING SELF-DEFENSE FORCES

The Russian Prosecutor-General's Office has tasked its Dagestani counterpart with determining whether the Dagestani government's decision to create a 5,000-strong volunteer militia to patrol the border with Chechnya violates the Russian Constitution, ITAR-TASS reported on 11 November. The issue is still being discussed by the Dagestani Security Council, since the new militia would necessitate legalizing illegal and criminal armed bands, according to "Nezavisimaya gazeta" on 12 November. Meanwhile, Dagestani Security Council Secretary Magomed Tolboev has said spiraling tensions between Dagestan and Chechnya are the direct consequence of Chechnya's aspiration to act as leader of the North Caucasian peoples, Interfax reported. LF



HILLARY CLINTON IN KAZAKHSTAN

U.S. first lady Hillary Clinton arrived in the Kazakh capital on 11 November on the first leg of her tour of five CIS countries. Addressing a group of young people, Clinton said she is impressed with "what has been accomplished in just six years [of independence]." She also attended the opening of a women's health care center that was built under a sister-city program between Almaty and Tucson, Arizona. The next day, Clinton visited the Kazakh Academy of Sciences, where she addressed a "Women in Politics" conference. "A country's progress depends on the progress made by women." Later on 12 November, she arrived in the Kyrgyz capital. BP

GEORGIAN PRESIDENT IN ALMATY

During Eduard Shevardnadze's first official visit as president to Kazakhstan on 10-11 November, Georgian and Kazakh leaders signed 16 cooperation agreements on trade, economic, scientific, and military cooperation, Russian agencies reported. Shevardnadze and his Kazakh counterpart, Nursultan Nazarbayev, discussed prospects for building a pipeline beneath the Caspian to facilitate the export of Kazakh oil via Georgia. They also discussed Kazakhstan's possible accession to the 1996 Sarakh agreement between Azerbaijan, Georgia, and Turkmenistan on transport and communications, according to "Nezavisimaya gazeta" of 12 November. That accord would enable Kazakhstan to participate as a full member in the TRASECA transport project. LF

GEORGIA ABOLISHES DEATH PENALTY

The parliament on 11 November passed a draft law proposed by President Shevardnadze abolishing capital punishment, Russian agencies reported. Mikhail Saakashvili, the chairman of the parliamentary committee for constitutional and legal problems, told CAUCASUS PRESS that Georgia is the second former Soviet republic to abolish the death penalty, after Moldova. Shevardnadze declared a moratorium on executions in December 1996. LF

GEORGIAN OPPOSITION CLOSES RANKS

Addressing a congress of Georgian displaced persons from Abkhazia in Tbilisi on 11 November, radical Georgian opposition leaders proposed that nationalist forces should jointly contend the next parliamentary elections, CAUCASUS PRESS reported on 12 November. Nodar Natadze said the parties should demand Georgia's withdrawal from the CIS and the withdrawal of Russian troops from Georgia. He also urged that Tbilisi reject the confederation model of resolving the Abkhaz and South Ossetian conflicts. Meanwhile, former parliamentary speaker Vakhtang Goguadze has joined the new For Georgia's Salvation bloc, led by the United Communist Party of Georgia, according to "Nezavisimaya gazeta" of 12 November. Goguadze quit the ruling Union of Citizens of Georgia in 1995 to form the Tanadgoma union, which won 3 seats in parliamentary elections that year. LF

UPCOMING GEORGIAN-ABKHAZ TALKS IN JEOPARDY?

CAUCASUS PRESS on 12 November quotes Georgian Ambassador to Moscow Vazha Lortkipanidze as saying that Abkhazia is trying to postpone the talks scheduled to open in Geneva on 17 November on resolving the Abkhaz conflict. Lortkipanidze said that the Abkhaz leadership objects to the so-called Friends of Georgia (which include the U.S., France, Germany, and the U.K.) participating as mediators rather than observers. He said that Georgia rejects that restriction. LF

KARABAKH DEBATE CONTINUES

Andranik Hovakimian, the deputy chairman of the board of the ruling Armenian Pan-National Movement, has suggested that the key to resolving the Karabakh conflict is to "work out a new type of status for Karabakh" that entails neither outright independence nor autonomy, Noyan Tapan reported on 11 November. Meanwhile former presidential adviser Ashot Manucharyan has claimed that President Levon Ter-Petrossyan is acting under instructions from "certain international centers" in advocating a compromise solution to the conflict. Manucharyan, who is political secretary of the recently established Union of Socialist Forces , warned that a "phased" solution to the conflict would lead to civil war because the majority of Armenia's population rejects that option. LF

US ENERGY SECRETARY IN YEREVAN

Federico Pena arrived in Yerevan on 11 November from Ankara, where he discussed Turkey's role as a transit country for Central Asian oil and gas and expressed the U.S.'s support for the planned Baku-Ceyhan export pipeline, the "Turkish Daily News" and ARMENPRESS reported. Pena met with Ter-Petrossyan and Armenia's foreign and energy ministers to discuss Armenia's role in the planned east-west transport corridor. In a statement issued by the U.S. Embassy in Yerevan on 11 November, Pena affirmed that the "time is right to think seriously about creating or improving electrical power, oil, and natural gas infrastructure linkages among Armenia, Georgia, Turkey and Azerbaijan." LF

AZERBAIJAN RATIFIES ANOTHER OIL CONTRACT

The parliament on 11 November ratified a $4 billion contract signed by Chevron and the Azerbaijani state oil company SOCAR in August, Turan and Russian agencies reported. Chevron has a 30 percent stake to develop the Apsheron (formerly Zeinalabdin Tagiev) field, which has estimated reserves of 120 million metric tons. SOCAR has 50 percent stake, while France's Total later acquired 20 percent. Also on 11 November, Aleksandr Zhirov, the director-general of Chernomortransneft, said shipment of Azerbaijan's Caspian oil by tanker from Novorossiisk will begin on 10 December, according to ITAR-TASS. Speaking in Syktyvkar, Russian Prime Minister Viktor Chernomyrdin affirmed that the northern route via the Russian Federation is commercially the best one for the export of Azerbaijan's Caspian oil. LF




PRAGUE, SOFIA DENY INVOLVEMENT IN RADAR SALE TO IRAQ

Speaking in Washington on 11 November, Czech Premier Vaclav Klaus denied any Czech involvement in attempts to sell military equipment to Iraq. Klaus said the claims are a "provocation" and noted that Czech regulations on exporting sensitive equipment bar such a deal. The same day, the Ministry of Trade in Sofia denied that any Bulgarian firms or individuals are involved in such attempts, BTA reported. Such assertions "undermine Bulgaria's international prestige," the ministry commented. An article published on 12 November in "The Washington Times" says a group of Bulgarian arms dealers is working secretly with Czech military officials to arrange the sale to Baghdad of five "Tamara" electronic warfare systems. Those systems are capable of detecting and shooting down radar-evading U.S. stealth bombers. MS

UKRAINE-EBRD SIGN FRAMEWORK DEAL ON CHORNOBYL

The Ukrainian government and the European Bank for Reconstruction and Development on 11 November signed an agreement defining how the international community will help provide some $750 million to make the Chornobyl reactor safe and ultimately to close it, Interfax reported. President Leonid Kuchma has repeatedly said that Kyiv will not close the plant without help, but the latest agreement does not necessarily mean that Western assistance will arrive in sufficient quantities to meet Ukraine's needs. PG

MORE BELARUSIAN OFFICIALS CHARGED WITH CORRUPTION

The Belarusian Security Council has ordered the arrest of Agricultural Minister Vasiliy Leonov and a senior agricultural manager, Vasiliy Starovoitov, for corruption and embezzlement, Belarusian state television reported on 11 November. The council charged the two with "theft of property on an especially large scale." PG

ESTONIAN BANKS MOVE TO HALT STOCK MARKET SLIDE

Four of Estonia's largest commercial banks announced on 11 November that they will no longer require investors to sell repurchase portfolios, ETA reported. Some analysts have blamed recent steep declines in share prices on investors' having to sell those portfolios in order to meet loan payments. However, Hansapank, the largest commercial bank in Estonia, declined to take such action, saying it must protect the interests of its shareholders. Following an initial slump, the TALSE index rallied in response to the banks' decision to close 1.72 percent down on the previous day. Meanwhile, top bank directors, meeting in Tallinn on 11 November, concluded that neither the kroon nor the banking sector is in crisis. JC

LATVIA'S RUBIKS PLANS RETURN TO POLITICS

At his first press conference since being released from prison, former Communist Party leader Alfreds Rubiks said he will try to consolidate the country's leftist forces, BNS reported on 10 November. Stressing he is still a Communist, the 62-year-old Rubiks said he wants to "unite" the poor, the unemployed, and the Russian minority. He added that he plans to visit Moscow in the near future to meet with State Duma Speaker Gennadii Seleznev, Duma Deputy Speaker Sergei Baburin, and Communist Party leader Gennadii Zyuganov. JC

SOLIDARITY TO REGISTER AS POLITICAL PARTY

Solidarity Electoral Action leader Marian Krzaklewski told reporters on 11 November that his movement, which won the recent parliamentary elections, will register as a political party on 13 November. Krzaklewski said the new party will seek to promote market economics and Christian principles. PG

CZECH OFFICIAL SAYS NO END TO BUD WARS

Czech Agricultural Minister Josef Lux told the daily "Hospodarske Noviny" on 11 November that he is now opposed to settling a trademark dispute between the Czech Budvar brewery and the Anheuser-Busch brewery in the U.S. Earlier Lux had backed an arrangement whereby the U.S. firm would be able to use its Bud trademark in various markets in exchange for an agreement to purchase hops from Czech farmers. But Budvar officials have opposed any such deal, and Lux has now bowed to their position. PG

CZECH PARLIAMENT APPROVES SECURITIES MONITOR

On 11 November, the parliament voted to establish a capital markets commission to supervise the activities of these bodies, much as the Securities and Exchange Commission does in the United States, CTK reported. But in contrast to the U.S. and to original plans, the Czech body, expected to begin operations sometime in early 1998, will be subordinated to the Finance Ministry. PG

HUNGARIAN PARLIAMENT ELECTS CONTROVERSIAL DEPUTY SPEAKER

By a vote of 164 to 53, Independent Smallholders deputy Sandor Kavassy has been elected as deputy speaker of the parliament, despite controversy over his irredentist views (see "RFE/RL Newsline," 10 November 1997), Hungarian media reported on 11 November. The Free Democrats boycotted the vote, objecting to Kavassy's statements in favor of amending the Trianon treaty. The governing Socialist Party was divided over his election. MSZ

HUNGARY, UKRAINE BOOST COOPERATION

Visiting Ukrainian Prime Minister Valery Pustovoytenko on 11 November signed agreements with Hungary on liberalization of trade, border-zone cooperation, and rapid notification of nuclear accidents. In talks with his Hungarian counterpart, Gyula Horn, Pustovoytenko said there is no reason for Hungary to be concerned about Kiev's new bill on minority languages, which has been submitted to the parliament. The bill will not restrict Hungarian-language education in Transcarpathia, he explained. Pustovoytenko also said that Kyiv welcomes Hungary's invitation to join NATO. MSZ




PLAVSIC WANTS TO JOIN U.S. MILITARY PROGRAM

Republika Srpska President Biljana Plavsic told the SRNA news agency in Banja Luka on 11 November that the Bosnian Serb army (VRS) should join the U.S.-sponsored "Train and Equip" program, provided no preconditions are attached. She warned Bosnian Serb hard-liners that the Republika Srpska cannot isolate itself: "[regional] integration processes have started and whoever rejects them has no sense of reality." Some of the VRS leadership supports Plavsic's view and argues that the army must join "Train and Equip" in order not to fall behind the Muslim and Croatian forces, which participate in the program. PM

ZUBAK TO DISCUSS TUDJMAN'S PROPOSAL

Kresimir Zubak, the Croatian member of the Bosnian joint presidency, said in Sarajevo on 11 November that the Muslims do not have the right to decide for the entire presidency on Croatian President Franjo Tudjman's proposal for closer links between the two states (see "RFE/RL Newsline," 11 November 1997). Zubak added that he will put Tudjman's proposal on the agenda of the next meeting of the presidency, an RFE/RL correspondent reported from the Bosnian capital. PM

BOSNIAN SHADOW CABINET APPEALS TO CROATIA

Sejfudin Tokic, who heads the shadow government formed by non-nationalist parties, appealed to the Croatian parliament to send a delegation to discuss with his shadow cabinet future relations between the two states. He said in Sarajevo on 11 November that Bosnian-Croatian relations are of strategic importance for the entire region. Tokic added that any proposal to tighten links between the two states must be submitted to a referendum, an RFE/RL correspondent reported from the Bosnian capital. PM

U.S. ENVOY WARNS OF NEW WAR

Outgoing U.S. Ambassador to Croatia Peter Galbraith said in Zagreb on 11 November that "there's a good chance that a precipitous withdrawal [by NATO from Bosnia] could lead to a situation where war would break out." He added that he believes that Croatia may play less of a role in Bosnia in the future than it has to date: "I think most Croatians would prefer to disengage from Bosnia. Croatia has achieved its national objectives of reunifying its country and would now like to be on the Slovenia track into NATO and Europe. A continued major role in Bosnia is a potential albatross." Tudjman and prominent Herzegovinians, such as Defense Minister Gojko Susak, nonetheless favor an active role for Croatia in Bosnia. PM

BOSNIA TO GET UNIFIED CURRICULUM

Bosnian Federation Education Minister Fahrudin Rizvanbegovic announced in Sarajevo on 11 November that Croatian and Muslim pupils and students will soon study from the same textbooks and that those books will stress Bosnia is a single, multi-ethnic state. Croatian schools now use texts from Croatia, while Muslim schools have their own books. Critics charge that both sets of texts are nationalist and that maintaining separate education programs helps promote the division of Bosnia along ethnic lines (see "RFE/RL Bosnia Report," 29 October 1997). PM

SREBRENICA WOMEN PROTEST

Several hundred women from Srebrenica and the Drina valley region of eastern Bosnia marched through Sarajevo on 11 November to demand that the international community provide more information about the 8,000 or so missing men believed to have been massacred by the Serbs after the fall of Srebrenica in 1995. The women also demand the release of three Muslim males now held prisoner by the Serb. PM

FIRST TRAIN BETWEEN CROATIA, SERBIA

Local trains began running between the two former Yugoslav republics on 11 November for the first time since 1991. The line connects Vinkovci with Sid. Direct trains between Zagreb and Belgrade will start in May 1998 (see "RFE/RL Newsline," 22 October 1997). Meanwhile in Podgorica, the Montenegrin Helsinki Committee demanded that local border traffic be restored between Croatia and Montenegro. The committee also called for the two former Yugoslav republics to open consulates on each other's territory. Committee President Slobodan Franovic claimed that Belgrade supports the restoration of direct links with Croatia for Serbia but not for Montenegro. PM

CONFLICT DEEPENS BETWEEN ALBANIAN CENTRAL, LOCAL GOVERNMENTS

Deputy Prime Minister Bashkim Fino on 11 November charged that Democratic Party-controlled local governments are preventing central government agencies from functioning properly (see "RFE/RL Newsline," 10 November 1997). Fino urged citizens to demonstrate against obstructionist local officials, "Dita Informacion" reported. He added that the Interior Ministry will organize local elections between December and January in some areas where the local government has collapsed. Meanwhile, Albert Brojka, the head of the Association of City Mayors, challenged a Council of Ministers' decision to sack 420 centrally appointed local officials, "Gazeta Shqiptare" reported. FS

ALBANIAN DAILIES THREATEN STRIKE

The publishers of nine dailies and two weeklies demanded on 11 November that the government lower taxes levied on the press or face a shutdown of news publishing on 15 November. The publishers claim that newspapers are threatened with bankruptcy, largely owing to an increase in value-added tax to 20 percent in September. Taxes on newspaper sales, paper imports, and advertising are also problematic, "Koha Jone" reported. FS

ONE-THIRD OF ALBANIANS LIVE IN POVERTY

Prime Minister Fatos Nano said in Tirana on 11 November that more than 1 million Albanians live below the poverty line. Some 40 percent of those people are pensioners, who receive between $7 and $22 a month. Most of the poor live in urban areas. Nano promised to launch a new program in 1998 aimed at taking people off welfare rolls and having them work on public projects. FS

ROMANIAN COALITION LEADERS ON UPCOMING RESHUFFLE

Following a secret meeting in Bucharest on 11 November, several leaders of the governing coalition parties said on Romanian state television that a new Council of Reform will be set up as a result of the upcoming reshuffle. Premier Victor Ciorbea will head that body. The idea of setting up a new Ministry of Privatization has been abandoned, but it has been agreed to merge the State Property Fund, the Agency for Development, and the Agency for Privatization. The head of the new structure will have ministerial rank. Also on 11 November, President Emil Constantinescu met with leaders of the main trade unions to discuss both the reshuffle and economic reform. MS

ETHNIC HUNGARIANS ON ROMANIAN EDUCATION LAW

The Hungarian Democratic Federation of Romania (UDMR) on 11 November warned that it will draw the "appropriate consequences" if there is any deviation from the "agreed government program." The statement, which was made by an ad-hoc body that meets only to discuss emergencies, came after negotiators representing the UDMR and the National Peasant Party Christian Democratic failed to reach an agreement on amendments to the Education Law. In another development, the Chamber of Deputies on 11 November rejected a motion of the three opposition parties criticizing the government's policies in the industrial sector, RFE/RL's Bucharest bureau reported.

BULGARIA RETURNS FORESTS TO PRE-COMMUNIST OWNERS

The parliament on 11 November passed a law providing for the return of forests nationalized during the communist era. Foreign citizens are not eligible either for restitution or for compensation, AFP reported. The legislation will affect 15-18 percent of forests now belonging to the state. Local government authorities, monasteries, and mosques will be able to apply for the restitution. Owners whose forests were destroyed are to be compensated. MS




RUSSIAN GOVERNMENT MOVES TO PROTECT RUBLE


by Stephanie Baker

Reacting to persistent jitters on world financial markets, Russia's Central Bank announced on 10 November that it will raise interest rates and alter its ruble policy next year to ward off any speculative attacks on the currency.

Central Bank chairman Sergei Dubinin said the temporary interest rate hike, combined with a more flexible exchange-rate policy, would shore up investor confidence in Russia, following the crisis on world financial markets over the past two weeks.

Dubinin said at a joint news conference with First Deputy Prime Minister Anatolii Chubais that, as of 11 November, the Central Bank will raise its key refinancing rate, which guides interest rates, to 28 percent from 21 percent. He said the tightening of monetary policy is a temporary move designed to protect the ruble, which has come under pressure owing to recent upheavals on the financial markets.

Dubinin added that the Central Bank's decision to change its ruble policy in 1998 will bolster trust in the currency. Under the new policy, the Central Bank will abandon its ruble corridor, allowing the currency to fluctuate by 15 percent in either direction of a so-called pivot rate. That rate will be set at 6.1 rubles to the U.S. dollar and will inch up to 6.2 rubles to the dollar from 1998-2000.

The new policy coincides with the government's plans to lop three zeroes off the ruble beginning on 1 January 1998, making 1,000 old rubles equal to one new ruble.

Russia has kept to a crawling-peg exchange-rate policy since 1995, allowing the ruble to devalue gradually against the dollar in line with inflation. The government, which has successfully brought down rampant inflation, is targeting a rate of 5-7 percent in 1998.

Dubinin said he expected the ruble to devalue by 2-5 percent in 1998, depending on inflation. He tried to dispel fears that the new ruble policy would lead to major fluctuations in the exchange rate, saying the Central Bank's hard-currency reserves stood at a healthy $22.6 billion as of 1 November. "No leaps of the currency-exchange rate will be allowed," he said. "Neither today, nor tomorrow, nor on New Year's Eve will there be a dramatic devaluation."

But a Central Bank statement acknowledged that the ruble could come under pressure, alluding to trends in other emerging markets such as Brazil and South Korea. Analysts said the bank's decision essentially to widen the band in which the ruble trades could lead to greater volatility but that the move to a more flexible exchange rate regime would send the right signal to speculators.

Peter Boone, an economist at Brunswick Capital Management, said the wider band means the Central Bank may allow the ruble to depreciate in the case of a speculative attack. But he said given Russia's strong economic fundamentals, the ruble would withstand any such attack and quickly bounce back.

Boone said Russia's decision to adopt a more flexible ruble policy is a response to currency problems in other emerging markets, such as Southeast Asia, where rigid exchange rate regimes have attracted the attention of speculators. "It spells the end of very tightly controlled exchange-rate regimes in countries open to foreign capital flows," he commented.

In addition to raising the refinancing rate, the Central Bank also said it would increase its Lombard rates, used for lending to commercial banks, and increase the hard-currency reserve requirements for commercial banks to 9 percent from 6 percent, beginning on 12 November.

The move contradicts the government's previously stated aim of reducing interest rates to free up funds for desperately needed investments in the economy. But Dubinin and Chubais said the temporary interest rate hike is necessary to help lure back funds into the government treasury bill market, which has been hard hit by the worldwide flight from emerging market assets.

As Chubais put it: "Russia is not an island cut off from the rest of the world." He said the hike is a temporary measure designed to shield Russia from the crisis on international financial markets and will be reassessed once markets stabilize.

Economists applauded the government's decision to raise interest rates, saying it will help stem the flow of funds out of treasury bills. Brigitte Granville, chief Russia economist at J.P. Morgan in London, said a currency crisis might have occurred if the Central Bank had not tightened monetary policy. Foreign investors, who want to leave the treasury bill market, need to sell rubles and buy dollars, putting pressure on the ruble to devalue.

Several emerging market economies, such as Brazil and Ukraine, raised interest rates, making Russian treasury bills look less attractive to foreign investors. Although the interest rate hike caused treasury bill prices to plummet, the government hopes the higher yields will tempt investors back, when it issues new bills. The author is a Moscow-based RFE/RL correspondent.


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