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Newsline - December 10, 1997




ATTEMPTED HIJACKING OF RUSSIAN PASSENGER PLANE

There was an attempted hijacking of a Russian passenger plane flying from Magadan to Moscow on 10 December. First reports indicated three individuals aboard the plane were demanding passage to Switzerland and $10 million to release the 157 people, including the crew, on the Il-62 plane. On the ground at Moscow's Sheremetovo-1 airport, Russian security forces surrounded the plane but did not close the airport. After releasing 48 passengers, 59 year-old Gennadii Todikov came out to negotiate with Russian security agents and was captured. Todikov turned out to be the only hijacker and the bomb he claimed to have was fake. Todikov, a pensioner from Magadan, is described by ITAR-TASS as "a psychologically unbalanced person." BP

MINISTER PUTS DEATH TOLL OF PLANE CRASH AT 67

Minister for Emergency Situations Sergei Shoigu announced on 10 December that the recent crash of a military cargo plane into a residential area in Irkutsk claimed 67 lives, RFE/RL's correspondent in Irkutsk reported. Rescue operations were discontinued the previous day, and demolition of the buildings destroyed in the crash has begun. Shoigu estimated that the disaster caused some 1 trillion rubles ($170 million) in damages. He confirmed that three of the plane's four engines failed shortly after takeoff but said investigators have not yet determined why. ITAR-TASS on 9 December quoted an unnamed Defense Ministry official as speculating that a poor mixture of fuel may have caused the malfunction. Shoigu, Irkutsk Oblast Governor Boris Govorin, and Irkutsk Mayor Vladimir Yakubovskii attended a public mourning ceremony for the crash victims on 10 December. LB

SELEZNEV, STROEV ON GOVERNMENT FORMATION PROPOSAL

Following a meeting of the "Big Four" in the Kremlin, State Duma Speaker Gennadii Seleznev said President Boris Yeltsin agreed to consider a proposal on forming a government that would have the support of a parliamentary majority, RFE/RL's Moscow bureau reported on 9 December. Seleznev said the president noted that such procedures for the cabinet's formation are at odds with Russia's constitution and, even if approved, would not take effect until after the next presidential election. Meanwhile, Federation Council Speaker Yegor Stroev told Russian news agencies that he supports the idea of a "government of accord" rather than a coalition government, as some opposition leaders have demanded. Stroev said the president should retain the right to appoint ministers but should also be aware of parliament's opinion of his appointees. LB

SPEAKERS URGE CREATION OF COMMITTEE ON DEFENSE INDUSTRY

During their meeting with Yeltsin and Prime Minister Chernomyrdin, Seleznev and Stroev also called for the creation of a special committee to supervise the defense industry, ITAR-TASS reported on 9 December. Chernomyrdin said the government is considering that issue, according to Seleznev. The Ministry of the Defense Industry was eliminated during a cabinet reshuffle in March, and its duties were transferred to the Economics Ministry, which is headed by Yakov Urinson. Last month, the Federation Council voted to ask Yeltsin to remove the military-industrial complex from the competence of the Urinson's ministry and to appoint a deputy prime minister to coordinate defense industry issues, "Nezavisimaya gazeta" reported on 29 November. Seleznev and Stroev also raised the issue in a recent joint letter to Yeltsin, according to the 6 December "Nezavisimaya gazeta." LB

ZYUGANOV WANTS WEEKLY MEETINGS OF 'BIG FOUR.'

Communist Party leader Gennadii Zyuganov said on 9 December that the "Big Four" should meet every week, ITAR-TASS reported. In October, the Kremlin promised to call regular meetings of the president, prime minister and parliamentary speakers, a key demand of the Communist opposition. In return, the Communist Duma faction dropped a planned vote of no confidence in the government (see "RFE/RL Newsline," 21 October 1997). LB

MANEUVERING ON LAND REFORM AHEAD OF ROUNDTABLE TALKS

Zyuganov also said that during 11 December roundtable talks on land reform, the opposition will try to persuade Yeltsin to sign the Land Code passed by the Duma, Interfax reported on 9 December. Yeltsin vetoed that code in July because it would prohibit the purchase and sale of farm land. The Duma overrode his veto in September, and the Federation Council has postponed consideration of the issue pending the roundtable talks. On 9 December, Seleznev and Stroev encouraged Yeltsin to sign the Duma's version of the code. But State Land Committee Chairman Ilya Yuzhanov said that the government supports revising the code and in the meantime adopting a law on land relations that would allow regions to decide how to regulate the buying and selling of farm land on their territory, "Kommersant-Daily" reported on 10 December. LB

OFFICIAL SAYS AMENDMENTS TO LAW ON GOVERNMENT AGREED

Aleksandr Kotenkov, Yeltsin's representative in the Duma, told ITAR-TASS on 9 December that presidential, government, and parliamentary officials have agreed on a package of amendments to the law on the government. In particular, Kotenkov said they agreed that since the president is the commander-in-chief, it should be his prerogative to determine who leads the armed forces and law enforcement agencies. According to "Kommersant- Daily" on 10 December, the current version of the law on the government would give the Duma the right to confirm presidential appointments of the foreign minister and the "power ministers" (defense, interior, security services). Kotenkov said Yeltsin will not sign the law until he receives written guarantees that parliament will adopt the amendments. Both the Duma and the Federation Council approved the law on the government in the spring LB

YELTSIN PLEASED WITH RUSSIAN-JAPANESE RELATIONS

Russian President Boris Yeltsin on 9 December praised the Japanese government for switching its emphasis in relations with Russia from political to economic, Russian media reported on the same day. Yeltsin said Japan's earlier insistence on solving the Kuril Islands territorial dispute kept the two countries from developing better relations but that Japan has realized "you will never get anywhere with Russia like that." Officials from both countries are still confident that a peace treaty ending Russian-Japanese hostilities from World War Two will be ready before the end of the century. Russian officials also say the next (13th) round of fishing talks with Japan may be the final round. In a related story, the Japanese government has raised 500 million yen ($4 million) to give Japanese language lessons to Russian inhabitants of the southern Kuril Islands BP

ROKHLIN SLAMS YELTSIN FOR STOCKHOLM PERFORMANCE

Speaking to supporters in St. Petersburg, Duma Defense Committee Chairman Lev Rokhlin charged that "only a sick person" could make mistakes such as those made by Yeltsin during his recent visit to Stockholm, RFE/RL's correspondent in St. Petersburg reported on 9 December. Rokhlin said "a healthy person" could not refer to Germany and Japan as nuclear powers or say that Russia will carry out a unilateral reduction in its nuclear arsenal. He accused the president of lacking a sufficient command of the Russian language and argued that Yeltsin's public remarks frequently have to be explained away by officials from the Foreign and Defense Ministries. LB

OIL COMPANY PROTESTS DECISION TO SEIZE PROPERTY OF SUBSIDIARY

Executives of the Sibneft oil company have vowed to fight attempts to seize and sell property of the Omsk Oil Refinery, owned by Sibneft, in order to pay tax debts, ITAR-TASS and Reuters reported on 9 December. The government's emergency commission for strengthening tax and budget discipline approved the seizure at an 8 December session chaired by First Deputy Prime Minister Anatolii Chubais. The Omsk refinery owes some 525.8 billion rubles ($88 million) to the budget. Sibneft is part of the business empire of former Security Council Deputy Secretary Boris Berezovskii, a leading opponent of Chubais. The government commission also ordered the seizure of assets of the Angarsk Petrochemical Company, which owes 766 billion rubles to the federal budget. That company is owned by the Sidanko oil company, which is controlled by Oneksimbank. Oneksimbank president Vladimir Potanin is considered close to Chubais. LB

YUKOS ACQUIRES CONTROLLING STAKE IN EASTERN OIL COMPANY

The oil company Yukos spent some 4.8 trillion rubles ($800 million) to acquire more than 44 percent of the Eastern Oil Company in a special cash auction of 50 percent minus one share in the company, "Kommersant-Daily" reported on 9 December. Since Yukos owned 9 percent of the Eastern Oil Company prior to the auction, it now has a controlling stake. Yukos is part of the Rosprom-Yukos group headed by Mikhail Khodorkovskii, the founder of the Menatep bank. According to the Russian Federal Property Fund, the special cash auction for shares in the Eastern Oil Company attracted a total of 5.188 trillion rubles. Ninety percent of the proceeds will go to the federal government and 10 percent to regional governments. LB

ADMIRAL GETS SUSPENDED SENTENCE IN CORRUPTION CASE

The military court of the Pacific Fleet on 8 December convicted Admiral Igor Khmelnov, former chief of staff of the Russian Navy, of abusing his office and gave him a suspended sentence of four years in prison, plus two years of probation, Russian news agencies reported. The court lifted embezzlement charges against Khmelnov, who was commander of the Pacific Fleet between 1992 and 1995. Citing sources in the military prosecutor's office, "Russkii telegraf" reported on 9 December that investigators could not confirm allegations that Khmelnov illegally sold 64 ships from the Pacific Fleet to India and South Korea. Despite the relatively light sentence imposed, Khmelnov's attorney Boris Kuznetsov has vowed to appeal to the Supreme Court's Military Collegium in order to have all charges against his client dropped. LB

INGUSH PRESIDENT TO RUN FOR SECOND TERM

Speaking at a conference of the Daimokh (Motherland) Union on 9 December in Nazran, Ruslan Aushev announced that he will run, after all, for reelection in the 1 March 1998 presidential poll, Interfax reported. In late November, Aushev had told Ingush administration heads that he "had worked enough" and wanted "to make way for others," according to "Segodnya" of 25 November. To date, the republican Central Electoral Commission has registered six initiative groups which will collect the required number of signatures to register their respective candidates. LF



KAZAKH PARLIAMENT BEGINS WORK IN NEW CAPITAL

Kazakh President Nursultan Nazarbayev chaired the first session of parliament in the new capital of Kazakhstan, Akmola, on 10 December , RFE/RL correspondents there reported. The first order of business for the parliament was adopting the resolution which confirms the change of the capital from Almaty. Housing for many of the newly arrived government officials has not been completed, forcing deputies to temporarily live in hostels. About 150 local construction workers in Akmola staged a demonstration on 9 December over their working conditions, ITAR-TASS reported. BP

ARMENIAN PRIME MINISTER IN PARIS

On the second day of his official visit to France, Armenian Prime Minister Robert Kocharian met on 9 December with French President Jacques Chirac at the Elysee palace, a correspondent for RFE/RL's Armenian Service reported from the French capital. The meeting was scheduled to last 30-40 minutes, but continued for well over an hour. Kocharian subsequently told reporters that the two sides had discussed the Nagorno-Karabakh issue, and that the French president had presented his ideas on possible ways of peacefully resolving the conflict. Kocharian refused to give more details, but emphasized that France does not exert economic pressure on Armenia to make concessions. He characterized the talks as open and frank. LF

STEPS TO DEFUSE GEORGIAN-RUSSIAN TENSIONS

Speaking at a press conference in Tbilisi on 9 December after the second session of the Russian-Georgian Economic Commission, Georgian Minister of State Niko Lekishvili and Russian Deputy Prime Minister Valerii Serov announced that agreement had been reached on the joint control by Russian and Georgian border guards of goods vehicles wishing to enter the Russian Federation from Georgian territory, Russian agencies reported. Since the early summer of this year, Russian border guards had unilaterally refused to permit vehicles carrying alcohol to enter Russia. Two bilateral commissions on border issues will resume their work. Georgian and Russian officials also signed agreements on the mutual convertibility of their respective currencies. LF

OIC OFFICIAL AFFIRMS SUPPORT FOR AZERBAIJAN

In an exclusive interview with Turan on 9 December, Organization of the Islamic Conference General-Secretary Azeddine Laraki said that "The OIC will always come out in favor of the territorial integrity of Azerbaijan." On 8 December, Laraki met with Azerbaijani President Heidar Aliev, who expressed the hope that the ongoing eighth OIC summit in Tehran will adopt a resolution on "Armenian aggression against Azerbaijan." Laraki assured Aliyev that the OIC will provide "multi-lateral assistance and support" to Azerbaijan. Aliyev also met in Tehran on 8 December with PLO chairman Yasser Arafat. LF

CASPIAN MAIN EXPORT PIPELINE ROUTES UNDER DISCUSSION ...

Ilham Aliev, son of the Azerbaijani president and deputy president of the state oil company SOCAR, told journalists on 8 December that Baku "cannot consider" routing the main export pipeline for its Caspian oil via Armenia, "no matter what concessions Armenia makes over Nagorno-Karabakh," Interfax reported. Ilham Aliyev added that Baku will begin negotiations in January 1998 with all countries through which the main export pipeline may be routed. The decisive factors in the final choice of route will be transit tariffs and security guarantees. The Azerbaijan International Operating Company that is currently exploiting three Azerbaijani Caspian oil fields declared earlier this year that the economic factor would be decisive. LF

INCLUDING GEORGIA, ROMANIA OPTIONS

Following a meeting on 9 December with Georgian President Eduard Shevardnadze, Lukoil President Vagit Alekperov, who travelled to Tbilisi with the Russian government delegation, said that his company plans to invest $15 million in Georgia in the near future, Interfax reported. He said Lukoil is interested in participating in construction of an oil export pipeline via Georgia, and in building a network of gas stations in Georgia and other countries in the Eurasian transport corridor. Also on 9 December, Romanian Presidential envoy Dan Capatine met in Baku with Deputy Foreign Minister Albert Salamov and handed him a proposal from Romanian President Emil Constantinescu on shipping Azerbaijani oil exported via the Georgian Black Sea port of Supsa via the Danube port of Constanta to Trieste, ITAR- TASS reported. LF

AZERBAIJANI, TURKMEN PRESIDENTS SEEK TO RESOLVE OIL DISPUTE

Meeting in Tehran on 8 December on the eve of the OIC summit, Heidar Aliyev and Saparmurat Niyazov agreed to set up a bilateral commission jointly headed by the two countries' foreign ministers to delineate the border between their sectors of the Caspian Sea, Turan and Russian agencies reported. The commission will hold its first meeting in late December. In July, Turkmenistan had protested a contract concluded between Azerbaijan and two Russian oil companies to develop the Kyapaz (Serdar) deposit, to which both Azerbaijan and Turkmenistan lay claim. Azerbaijan Foreign Minister Hasan Hasanov said that Azerbaijan and Kazakhstan have already reached agreement on the median and horizontal divisions between their respective sectors of the Caspian. LF




UKRAINIAN PARLIAMENT PREPARES FOR NO CONFIDENCE VOTE

The Verkhovna Rada voted on 9 December to prepare a resolution of no confidence in the government, Ukrainian media reported. 242 of the 450 deputies voted for the resolution that was proposed by the Socialist and Agrarian factions. If the parliament passes a resolution of no confidence, the government must resign, but the president has the final say on whether it has to leave office. PG

UKRAINE'S FINANCE MINISTER CONFIDENT ABOUT FUTURE

Finance minister Igor Mityukov told Itar-Tass on 9 December that the National Bank of Ukraine has sufficient reserves to cope with financial challenges in the immediate future. He said that Kyiv's most important task is to adopt an austerity budget that reduces both state expenditures and state borrowing. In the same interview, Mityukov said that Ukraine hoped Russia would participate in Ukraine's privatization effort and thus inject new funds into the country. PG

ESTONIA MAY REGISTER ILLEGAL RESIDENTS

The Estonian cabinet on 9 December approved a measure which, if the parliament agrees, would allow currently illegal residents to obtain residence permits after registering with the authorities, BNS reported. Under the terms of the draft bill, the illegal resident must have arrived in Estonia before July 11, 1990, and then must register with the authorities. Tallinn estimates that there are some 50,000 such people at the present time. PG

LATVIAN PM BOWS TO FACTIONS, DROPS CHALLENGE TO GOVERNMENT

Prime Minister Guntars Krasts said on 9 December that he would bow to the current coalition partners and drop his plans to try to reform the current government, BNS reported. Instead, he indicated that he would seek to improve discipline among the current ministers. But this may not be the end of the matter. Krasts said that "it is the first time when I'm left alone, and I hope it is the last such occasion. Should similar situations occur again, I won't see any possibility of continuing in the post." PG

LATVIAN GOVERNMENT APPROVES DRAFT BORDER ACCORD WITH RUSSIA

The Latvian cabinet has approved the draft border agreement with Russia, foreign minister Valdis Birkavs told BNS on 9 December. He said that Riga would inform Russia about this decision and seek agreement on a venue for signing the document. PG

HAVEL CRITICIZES KLAUS WITHOUT NAMING HIM ...

In a televised "state of the nation" speech before both houses of parliament on 10 December, President Vaclav Havel harshly criticized outgoing premier Vaclav Klaus, though he refrained from naming him. Havel said it was pointless to name names, but "some deserve blame more than others." He said that "fascinated by our macro-economic data, we ... disregarded the rules of the game, the rule of law, the moral order behind that system of rules." He said there was a "cloak of liberalism without adjectives" that concealed what in fact was a "Marxist-like conception of base and superstructure." Havel said that "morality, decency and solidarity" had been left to "the superstructure" and were "slightly derided as a mere 'seasoning'--until we found there was nothing left to season," CTK reported. MS

... AND KLAUS REJECTS CRITICISM

Reacting to Havel's speech, which was greeted by a standing ovation by almost all those present, Klaus told journalists the president showed a "deep failure to understand the functioning of a market economy and a free society eight years after the fall of communism." He said Havel wanted to take the country back to "a third way" between capitalism and communism. He also said Havel's speech had been "confrontational" and accused him of "inflaming the situation rather than calming it down." He added that he considered the speech "a challenge, and I am ready to continue to search for a constructive solution to our situation," Reuters and AFP reported. MS

CZECH, SLOVAK FOREIGN MINISTERS POSTPONE MEETING

A meeting between Czech Foreign Minister Jaroslav Sedivy and his Slovak counterpart Zdenka Kramplova has been postponed indefinitely, a spokesman for the Czech Foreign Ministry said on 10 December. The meeting was scheduled to take place on 12 December in the western Slovak spa resort of Trencianske Teplice. No reason was offered for the postponement but CTK, citing "reliable sources," said it was likely the meeting had been cancelled because of the derogatory remarks made by Prime Minister Vladimir Meciar about Havel (See "RFE/RL Newsline," 8 December 1997). Bratislava's reply to a protest note from Prague was regarded by the Czech officials as unsatisfactory. CTK also reported that outgoing Justice Minister Vlasta Parkanova postponed her trip to Slovakia, where she was due to meet her Slovak counterpart Josef Liscak. A Justice Ministry spokesman said the cancellation was due to the resignation of the Czech government. MS

... WHILE SLOVAKIA POSTPONES HUNGARIAN VISIT

Slovakia has postponed a one-day visit by Hungarian Minister of Defense Gyorgy Keleti, scheduled for 10 December, Hungarian media reported on the same day. A Defense Ministry official in Bratislava said the visit would be rescheduled for early next year. No explanation for the postponement was offered but the daily "Nepszabadsag," citing anonymous sources, says Slovak Defense Minister Jan Sitek would like to host Keleti as lavishly as he was hosted in Budapest during his visit there earlier this year. This would have been impossible with only half a day programmed for the event. Keleti and Sitek were to sign two treaties, one on confidence building and the other on the joint use of air space. MS

HUNGARIAN PARLIAMENT APPROVES 1998 BUDGET

The parliament approved the 1998 budget on 9 December. The vote was 209 in favor, 65 against, and two abstentions. The budget provides for a deficit of 419 billion forints ($2.1 billion), which is 4.4 percent of the GDP, Hungarian media reported. Economic growth is expected to be 3-4 percent. In separate news, the parliament elected Arpad Kovacs, chairman of the board of the State Privatization and Holding Company, as president of the State Audit Office for a period of 12 years. MSZ




SERBS LEAVE BOSNIA CONFERENCE

Yugoslav delegate Dragomir Vucicevic walked out of the international Bonn conference on Bosnia on 10 December to protest plans to include references to Kosovo in the session's final documents. Republika Srpska President Biljana Plavsic and Bosnian Serb hard-line leader Momcilo Krajisnik also left the conference. The previous day, Vucicevic demanded that Kosovo and Sandzak be excluded from the conference's agenda because they are "internal questions" of his country. Vucicevic added that Belgrade might "distance itself" from the conference and its final documents if Belgrade's wishes are not respected. The Kosovo Albanians and Sandzak Muslims, for their parts, feel that the only way to change Yugoslav President Slobodan Milosevic's repressive policies toward his ethnic minorities is for the international community to put pressure on him. PM

OUTSIDE FORCE THE KEY IN BOSNIA

Most participants at the Bonn meeting agreed on 9 December that the presence of foreign peacekeepers and the application of political and economic pressure have been decisive in restoring peace and stability to the region (see "RFE/RL Newsline," 9 December 1997). Speakers also said, however, that progress in implementing the Dayton agreement has been very slow. A U.S. diplomat pointed out that much of the problem stems from the fact that the people who began and fought the war are still in power. Also in Bonn, the Muslim, Serbian, and Croatian members of the joint presidency agreed under international pressure on a common citizenship, passport, and council of ministers. Parliament must still approve the measure. PM

ALBANIA'S MILO WARNS OF "SECOND BOSNIA."

Albanian Foreign Minister Paskal Milo said during a visit to Moscow on 9 December that the situation in Kosovo has become "rather explosive," Interfax reported. He said the province might turn into "another Bosnia in the Balkans unless the key rights of the Kosovo population are fulfilled." His host, Russian Foreign Minister Yevgenii Primakov, said that Russia opposes Kosovar separatism and believes that "Kosovo is Yugoslav territory." He nonetheless urged the Belgrade authorities to take "a number of steps in order to democratize the situation there [in Kosovo] and give local residents the opportunity to defend their interests." PM

SERBIA'S SESELJ EXPECTS TO WIN PRESIDENCY

The Serbian Radical Party's Vojislav Seselj said in Belgrade on 9 December that he expects to win the 21 December presidential runoff, BETA news agency reported. Seselj argued that Milan Milutinovic, his Socialist opponent, peaked in the first round. Seselj said that votes cast for other candidates in the first round will go to him in the second (see "End Note," "RFE/RL Newsline," 9 December 1997). Vuk Draskovic, who came in third in the first round, has, however, urged his supporters to boycott the runoff. PM

MONTENEGRO'S DJUKANOVIC WANTS COOPERATION WITH HAGUE

Montenegrin President-elect Milo Djukanovic said in Podgorica on 9 December that U.S. President Bill Clinton's decision to keep sanctions on federal Yugoslavia for another year proves that Milosevic's policies are responsible for the country's continuing isolation (see "RFE/RL Newsline," 9 December 1997). Djukanovic added that Yugoslav leaders must recognize that cooperation with international institutions, especially with the Hague-based war crimes tribunal, is a matter of top state interest. He added that Montenegro will do all it can to move federal policy in that direction, an RFE/RL correspondent reported from Podgorica. PM

PHONE LINES UP BETWEEN YUGOSLAVIA, BOSNIA

Serbian authorities restored direct-dial telephone links between federal Yugoslavia and the mainly Muslim and Croat Bosnian federation on 9 December. Spokesmen for Yugoslav Posts and Telecommunications said in Belgrade that the telephone system of the Republika Srpska will continue to be an integral part of the Yugoslav one. PM

NATO WON'T LET WAR CRIMINAL TURN SELF IN

Dutch NATO peacekeepers in central Bosnia refused in July to let Miroslav Bralo surrender because he was not on their list of indicted war criminals, the "Washington Post" reported on 9 December. Once the Hague-based tribunal subsequently asked NATO to arrest Bralo at home, the peacekeepers refused. Bralo is a self-confessed war criminal who committed atrocities against Muslims in 1993. A senior U.S. official called the affair "a minor blip on the screen." A spokesman for the war crimes tribunal, however, said that the Bralo case is part of a pattern in which, "when push comes to shove [regarding catching war criminals], NATO runs into a corner and cries." PM

CROATIAN OPPOSITION WANTS VAT CUT

Social Democratic deputies introduced a bill in parliament on 9 December to exclude food, medicines, children's clothes, books, and educational materials from the new VAT, an RFE/RL correspondent reported from Zagreb (see "RFE/RL Newsline," 2 December 1997). The bill also called for cutting the VAT on taxable goods from 22 to 15 percent. PM

TOP ALBANIAN COURT FILES CHARGES AGAINST PARLIAMENT SPEAKER

Five judges of the constitutional court, who were appointed during the former government of President Sali Berisha, filed criminal charges against Social Democratic parliamentary speaker Skender Gjinushi on 9 December. They charge Gjinushi with slander, claiming that he said in parliament on 7 December that "the constitutional court of [Chief Justice] Rustem Gjata has broken the rules and serves foreign interests." On the same day, Gjinushi charged that the judges misquoted him. He claimed that he only said that government policies in the first half of the year under Berisha "served [to promote] the destruction and destabilization of Albania. And a part of the Constitutional Court took decisions in line with that policy and hence has served the same goal," "Koha Jone" reported. FS

ALBANIA INVESTIGATES RAMPANT SMUGGLING

The state prosecutor's office on 9 December set up a special team to investigate dealings in contraband. Prosecutor General Arben Rakipi said that the specialists will reopen investigations into every case of smuggling that police could not earlier solve for lack of evidence, "Koha Jone" reported. Rakipi expressed hopes that the new group will also be able to crack down on corruption among police and customs officials (see "RFE/RL Newsline" 9 December 1997). FS

ETHNIC HUNGARIANS SUSPEND PARTICIPATION IN ROMANIAN GOVERNMENT...

The Hungarian Democratic Federation of Romania (UDMR) on 10 December announced it has suspended its participation in Victor Ciorbea's coalition cabinet, RFE/RL's Bucharest bureau reported. The decision followed the vote in the Senate on the government regulation that amended the 1995 Education Law. Representatives of the National Peasant Party Christian Democratic (PNTCD) voted in favor of opposition amendments, limiting the teaching of Romanian language with special manuals for national minorities to grades I-IV, instead of all school grades, as provided in the regulations. PNTCD senators also supported an amendment that forbids separate universities of the national minorities. They also supported forbidding separate minority sections in existing universities, which the 1995 law permitted. The UDMR said this was in breach of a protocol of 3 December, signed before the reshuffle of the cabinet. MS

... AND INTER-ETHNIC TENSION RISES IN TRANSYLVANIA

Police are guarding an orphanage in the Transylvanian town of Odorheiul Secuiesc run by Greek- Catholic nuns and the local government council is threatening to resign, the media in Romania reported on 9- 10 December. The police were deployed at the orders of government secretary general Remus Opris, after he visited the town on 10 December. The local council is suspecting that the orphanage will serve as a means to bring about the "Romanization" of the town, which is inhabited by Hungarian Szeklers (see "RFE/RL Endnote, 15 August 1997). Earlier on 10 December, the local mayor refused to allow a truck that brought furniture to the orphanage to unload. The locks that were placed at the mayor's order on the building were dismantled. The UDMR protested the measure, saying matters should be left to the decision of a court of justice. MS

MONARCHY AGAIN TROUBLING ROMANIAN POLITICS

Premier Victor Ciorbea has summoned Minister of Culture Ion Caramitru, Information Minister Sorin Botez and Agriculture Minister Dinu Gavrilescu, demanding that they clarify a declaration they signed in support of the return of a constitutional monarchy, Romanian media reported. Earlier on 9 December, a press release of President Emil Constantinescu's office said the ministers, like any other Romanian citizens, had a right to express their views, but once they have taken an oath on the Constitution, they must respect its provisions. The presidential press release said the three ministers must "opt between the freedom of expressing their opinion and their ministerial obligations under the constitution." MS

WORLD BANK APPROVES LOAN TO ROMANIA

The World Bank on 10 December approved a $25.5 million loan to support Romania's privatization program, Romanian television reported. Citing a World Bank release, Reuters said "the money will be used to consolidate economically inefficient farms and to facilitate the operation of the land market necessary for a market-based economy." In other news, several hundred journalists on 10 December marched in Cluj to protest legislation making libel a criminal offense punishable by large fines and imprisonment. The protest came after a local newspaper was fined for allegedly slandering the town's nationalist mayor, Gheorghe Funar. MS

POLISH PRESIDENT IN MOLDOVA

Aleksander Kwasniewski on 10 December began a two-day visit to Moldova, the RFE/RL Chisinau bureau reported. He met his Moldovan counterpart Petru Lucinschi, the chairman of the parliament Dumitru Motpan and leaders of the parliamentary factions. Lucinschi said Poland was for Moldova a "model for the transition to a market economy." He said Poland's road to market reforms started a long time ago. "We are only half-way on this road and need the Polish experience." Kwasniewski assured the Moldovans of Warsaw's support for finding a peaceful solution to the Transdniester conflict. He also said Poland was interested in further developing its commercial ties with Moldova and was ready to share its experience with Chisinau. Trade between the two countries has grown by 50 percent in 1997 in comparison with 1996. The two sides are to sign accords on cooperation in transportation and cultural affairs. MS

MOLDOVAN SUPREME COURT RULES AGAINST BESSARABIAN METROPOLITAN CHURCH

The Moldovan Supreme Court on 10 December turned down the appeal of the Bessarabian Metropolitan Church against the government's refusal to register it. The Chisinau Court of Appeal ruled in August that the government should register the church, which is subordinated to the Bucharest patriarchate, saying it could co-exist with the Moldovan Orthodox Church, which is subordinated to the Moscow patriarchate. The Supreme Court ruled that the Bessarabian church had not appealed against the government's refusal to register it within the time specified by the letter of the law. Parliament deputy Vlad Cubreacov, who represented the Bessarabian Church in court, said the grounds for the rejection were unjustified and emphasized that the appeal would not have been heard by the Court of Appeals if the church had really failed to respect the legal provisions. Cubreacov said the Bessarabian Church would now appeal to the European Court for Human Rights. MS

TRANSDNIESTER SEPARATISTS DENY ENTRY TO INSPECTION TEAM

Transdniestrian border guards on 10 December blocked a team of military observers from the U.S., France and Germany from entering the territory, BASA-press and ITAR-TASS reported. The team was to carry out an inspection of the Russian contingent stationed in Bendery-Tighina, in line with the CFE treaty. The team was accompanied by Moldovan Defense Ministry officers. The guards said the entry of the Moldovans was not "coordinated in advance." The international team refused to proceed without the officers and returned to Chisinau. In other news, committees of the State Duma on 10 December began debating the Russian-Moldovan basic treaty, initialed in 1990. A delegation of the Transdniester Supreme Soviet is attending the debates, but the State Duma has not invited a Moldovan parliamentary delegation to attend. MS




UKRAINE IS OUT OF CAPITAL MARKETS: WAS IT PUSHED?


by Robert Lyle

Ukraine has decided to stay out of world capital markets until sometime in the next year, but the question in global financial circles is whether Kyiv was pushed back by the International Monetary Fund or stepped back on its own volition as a prudent business decision.

The question is being asked by international investors who are reassessing the countries where they have money in the wake of the Asian financial crisis. This is one of the normal ripple effects of any financial crisis and the investors who are re-examining their investments say it could make a difference if Kyiv is still dependent on the IMF to keep out of trouble or is beginning to make some of these choices on its own.

The Financial Times newspaper last week said it was the IMF which brought a halt to Ukraine's plans to issue several hundred million dollars in Eurobonds, but denominated in Ukrainian hryvnya.

To protect foreign investors from devaluation of the hryvnya, the bonds were being designed with a special feature that protected the purchaser, but left Ukraine open to a large risk of very high costs.

The IMF refused to comment in any way on the story, but a spokeswoman for the Ukrainian embassy in Washington said it wasn't the IMF at all, it was the Kyiv government which had stopped.

She said Finance Minister Ihor Mityukov last week announced the postponement of all Ukrainian operations in international financial markets, including both Eurobonds and Samarai (Asian) bonds, because costs were just too high.

One byproduct of the Asian financial crisis has been a sharp rise in the interest rates developing and emerging market countries must pay to borrow money globally.

Russia has suffered a particularly large outflow of money as foreign investors began withdrawing from government bonds and notes. Moscow was forced to raise its rates significantly in the past week to prevent the situation from getting worse even as it began talking with major global commercial banks about loans totaling around 2,000 million dollars to help the country get through the current difficulties.

Ukraine had been much slower getting into global bond and note markets, but had intended to begin issuing bonds first on Asian, and then on European and North American markets.

Sources in global securities markets say the Ukrainian government may also have acted to keep its sovereign credit ratings secret. Kyiv got its ratings from the three private firms which make the ratings world-wide -- IBCA, Standard & Poors, and Moodys -- early last week, but declined to reveal them. Since most countries are anxious to have their ratings known, the suspicion is the ratings are much lower than was expected and lower than that of neighboring countries.

The sovereign credit ratings are necessary before any country can sell bonds or government notes on capital markets in other countries.

While the IMF would not comment, market sources said the advice sounded like something the fund would say in Ukraine's situation. When it agreed to release two monthly tranches totaling about 103 million dollars from Ukraine's stand-by loan, the fund said it was releasing the drawing because of Kyiv's "renewed commitment to speed up structural reforms, particularly in the areas of privatization and deregulation."

The fund also praised Ukrainian authorities for moving quickly to increase interest rates and reserve requirements to contain pressures on the foreign exchange market during the Asian crisis. But they said it was important the country preserve the gains that had been achieved, and that would mean, importantly, keeping borrowing costs within bounds.

The experts point out that while the feature the financial firm Merrill Lynch was designing into the bonds would expose Kyiv to the possibility of unexpected high costs, it would have been a feature necessary to attract foreign investors in current market conditions.

Whether Kyiv jumped or was pushed will not be as important after the markets see how Ukraine does handle itself when it decides to go back into the world capital markets.


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