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Newsline - December 16, 1997




YELTSIN POSTPONES MEETINGS

Although Yeltsin's temperature, blood pressure, and heart rate are reported to be "normal," his meetings scheduled for this week have been postponed, Russian media and AFP reported on 16 December. Yeltsin had planned to attend the session of the Russian-Belarusian High Council on 17 December and meet with the presidents of Kazakhstan, Kyrgyzstan and Belarus on 18 December. According to Interfax, Yeltsin's 19 December meeting with Bulgarian President Pyotr Stoyanov has been rescheduled. BP

DUMA DELAYS SECOND READING OF BUDGET

The State Duma Council on 16 December approved a government request to postpone the second reading of the 1998 budget from 18 to 24 December, RFE/RL's Moscow bureau reported. Duma Budget Committee Acting Chairman Aleksandr Zhukov said deputies need more time to consider government-proposed amendments on planned 1998 expenditures. Finance Minister Mikhail Zadornov on 15 December told the Duma Budget Committee that the government has revised its estimate of debt servicing costs in light of recent developments on the Russian financial markets, which have made borrowing more expensive. The government wants planned 1998 spending on debt servicing to be increased by 10 billion new rubles ($1.7 billion), while projected spending on "international activities" and contributions to the Social Insurance Fund are to be cut by 7 billion and 3 billion rubles, respectively, "Nezavisimaya gazeta" reported. LB

CHERNOMYRDIN ISSUES DIRECTIVE ON 1998 SPENDING

Also on 16 December, Prime Minister Viktor Chernomyrdin signed a government directive stipulating that monthly expenditures in the first quarter of 1998 will be equal to one-twelfth of total 1997 expenditures, ITAR-TASS reported. Under the directive, federal spending in the early months of 1998 will be below the level foreseen in the draft 1998 budget, but that budget is unlikely to be adopted before late January or February. LB

CHERNOMRYDIN IN TURKEY FOR LANDMARK VISIT

Chernomyrdin arrived in Ankara on 15 December on the first ever visit by a Russian prime minister to Turkey. Chernomyrdin and his Turkish counterpart, Mesut Yilmaz, signed a major agreement whereby beginning in 2000, Russia will provide Turkey with 30 billion cubic meters of gas annually for a period of 25 years. Approximately half of that amount is to be exported via the planned pipeline from Dzhughba across the Black Sea to Samsun. Turkey will pay $105 per 1,000 cubic meters, the "Turkish Daily News" reported on 16 December. Chernomyrdin and Yilmaz acknowledged disagreements over restrictions on shipping through the Turkish straits and Russian deliveries of S-300 missiles to Greek Cyprus. At the same time, they affirmed their commitment to developing a friendly partnership in which neither bilateral political nor economic relations are dependent on external factors, ITAR-TASS reported. LF

RUSSIAN-CHECHEN-INGUSH TALKS ON NUCLEAR WASTE PROBLEM

Russian Minister for Emergency Situations Sergei Shoigu held talks in Grozny on 15 December with Chechen and Ingush Presidents Aslan Maskhadov and Ruslan Aushev on conditions at the Radon facility, north of Grozny, where hundreds of tons of nuclear waste are stored, Russian agencies reported. Also on 15 December, Chechen First Deputy Prime Minister Shamil Basaev expressed doubts that President Yeltsin's planned visit to Chechnya in January will take place. Basaev also dismissed further Russian-Chechen talks as pointless, arguing that Chechnya is already an independent state. Commenting on Basaev's statement, Russian presidential spokesman Sergei Yastrzhembskii told Interfax that no orders have been issued to cancel Yeltsin's Chechen visit. LF

VIETNAM TO RECEIVE RUSSIAN PLANES IN 1998

General Aleksei Fodorov, the director of the Sukhoi aircraft construction company, said two military planes will be sent to Vietnam next year to replace the two destroyed when a transport plane crashed in Irkutsk on 6 December, Interfax reported on 15 December. Fodorov said two Su-27s marked for delivery to India may be sent to Vietnam or two more modern Su-30s may be offered in their place. BP

CONFUSION OVER AIR FORCE COMMANDER'S RETIREMENT

"Nezavisimaya gazeta" on 16 December comments on Yeltsin's decision not to exempt air force commander General Petr Deinekin from the requirement that military personnel must retire on reaching the age of 60. The daily suggests that decision was not prompted solely by the need to find a scapegoat for the recent catastrophes involving Russian military aircraft. Deinekin was known to oppose various provisions of the planned reform and downsizing of the Russian armed forces, particularly the subordination of the air force to the new operative-strategic command. Moreover, his relations with the military-industrial complex are reportedly strained. Yeltsin, however, has not yet signed a decree releasing Deinekin from his post, Interfax reported on 15 December. LF

BOOK SCANDAL CASUALTY FINDS NEW JOB

Petr Mostovoi, whom Yeltsin sacked as Federal Bankruptcy Administration chairman in November, has been appointed first vice president of the diamond monopoly Almazy Rossiya-Sakha (Alrosa), Russian news agencies reported on 15 December. Mostovoi previously served as government representative on the Alrosa supervisory board and co-chairman of that board. In his new job, he will have far more authority at the company and will be in charge of Alrosa's financial and credit policy, according to "Kommersant-Daily" on 16 December. The newspaper added that the appointment of Mostovoi, an ally of First Deputy Prime Minister Anatolii Chubais, will increase Chubais's influence over Russian diamond exports, a major source of budget revenues. Mostovoi and Chubais were among several officials who received $90,000 each from a publisher linked to Oneksimbank for co-authoring a book on Russian privatization. LB

NTV CONTINUES TO BOOST CHERNOMYRDIN

The private network NTV devoted nearly 30 minutes of its 14 December analytical program "Itogi" to a flattering profile of Chernomyrdin on the fifth anniversary of his appointment as prime minister. NTV, which is mostly owned by Vladimir Gusinskii's Media-Most company, has devoted generally positive coverage to Chernomyrdin during the last several months. Since the July auction of a major stake in the telecommunications holding company Svyazinvest, NTV has regularly broadcast strong criticism of First Deputy Prime Ministers Chubais and Boris Nemtsov, who previously enjoyed mostly favorable coverage on the network. Also on 14 December, NTV's "Itogi" hardly mentioned the third anniversary of the Russian military intervention in Chechnya. NTV's hard-hitting coverage of the Chechen war earned the network a reputation for professionalism in late 1994 and 1995. LB

MOSCOW OBLAST HOLDS CONTROVERSIAL REFERENDUM...

The Moscow Oblast referendum on 14 December on whether half the deputies in the oblast Duma should also hold jobs outside the legislature was illegal, "Kommersant-Daily" argued on 16 December. The Moscow Oblast Court called the referendum, and its action was approved by the Supreme Court (see "RFE/RL Newsline," 14 November 1997). However, the Presidium of the Supreme Court on 10 December declared the vote illegal. "Kommersant-Daily" argued that the question asked in the Moscow referendum violates federal law on issues that may be resolved by referenda. In addition, oblast law grants the oblast legislature--not the oblast court--the right to set referenda. Preliminary results suggest that the referendum was passed. If not overturned by another court ruling, the vote is likely to strengthen Moscow Oblast Governor Anatolii Tyazhlov's influence over the region's legislature. LB

...WHILE OPPONENT SAYS STATED GOAL OF REFERENDUM ONLY PRETEXT

In an interview with RFE/RL's Moscow bureau on 13 December, State Duma deputy Aleksei Zakharov of Yabloko alleged that Moscow Oblast is "one of the most criminalized oblasts in Russia" and that Governor Tyazhlov sought to hold the referendum in order to increase his control over the oblast's budget spending. Although the plebiscite was ostensibly a cost- cutting measure allowing the oblast to save money on legislators' wages, Zakharov charged that holding the vote cost the oblast twice as much as the potential savings in wages. Zakharov also noted that while the oblast legislature has 316 employees (including all deputies and their staff), the oblast administration employees some 1,600 people. LB

ALTAI REPUBLIC ELECTS LEADER BY SLIM MAJORITY

State Duma deputy Semen Zubakin narrowly won the 14 December election for the head of government of the Altai Republic with some 23.5 percent of the vote in a field of seven candidates, ITAR-TASS reported on 16 December. The Altai electoral law requires the winner to gain only a plurality of the vote, not an overall majority. Zubakin's closest competitor, Yurii Antaradonov, finished a little more than 200 votes behind with 23.2 percent. He was supported by the first Kurultai [congress] of the Altai People. Communist State Duma deputy Viktor Romashkin finished third with 17.5 percent, followed by Our Home Is Russia candidate Vladimir Petrov (13.9 percent) and the incumbent, Vladilen Volkov (11.9 percent). Zubakin was elected to the Duma in 1995 representing an electoral bloc led by Yegor Gaidar's party, Russia's Democratic Choice. LB

LENINGRAD VOTERS SHUN CANDIDATES FROM PARTIES

No candidate representing a political party won a seat in the 14 December election to the Leningrad Oblast legislature, RFE/RL's correspondent in St. Petersburg reported two days later. The losers included 19 candidates representing Vladimir Zhirinovsky's Liberal Democratic Party of Russia, six candidates from Aleksandr Lebed's Honor and Motherland movement, and four candidates from the Communist Party. Directors of enterprises won 26 of the 48 districts in which elections were declared valid. Observers believe the results are explained partly by the electorate's distrust of political parties and partly by the complicated procedure for registering as a candidate from a political party, which prompted many would-be deputies to campaign as independents. Governor Vadim Gustov said he was pleased with the results and with the fact that the new legislature will have 50 deputies rather than 25, as in the previous legislature. LB

GOVERNOR'S MOVEMENT SWEEPS CHELYABINSK ELECTIONS

Candidates backed by the movement Revival of the Urals on 14 December won a majority of seats in the Chelyabinsk Oblast legislature and in several local legislatures, ITAR-TASS reported the next day. Chelyabinsk Governor Petr Sumin and Vladimir Utkin, the chairman of the regional government, head the Revival of the Urals movement. It was also reportedly supported by former Security Council Secretary Aleksandr Lebed and by politicians in the Communist Party and Yabloko. Also on 14 December, by-elections were held in Chelyabinsk Oblast for three seats to the State Duma. The winners were Aleksandr Chershintsev, chairman of the Chelyabinsk Oblast Property Fund; Vladimir Gorbachev, deputy mayor of the city of Snezhinsk; and factory director Valerii Gartung. Both Chershintsev and Gorbachev were backed by Revival of the Urals, while Gartung represented the Union of Industrialists and Entrepreneurs. LB

RUSSIA RUNS TRADE DEFICIT IN OCTOBER

Russia ran a foreign trade deficit of some $700 million in October 1997, the first month during the last three years that imports have exceeded exports, ITAR-TASS reported on 15 December, citing a joint report by the Russian-European Center for Economic Policy and the government's Working Center on Economic Reforms. The report says that Russian exports totaled some $6 billion in October 1997, down 28 percent on the October 1996 level. Russian imports totaled $6.7 billion in October 1997, a 28 percent increase over the previous October. The results are consistent with a trend that has seen Russia's monthly foreign trade balance shrink from $2.7 billion in January 1997 to $1 billion in September. LB

'ZAVTRA' EDITOR ATTACKED

Aleksandr Prokhanov, the editor in chief of the nationalist opposition weekly "Zavtra," was attacked while entering his apartment building on 11 December, "Nezavisimaya gazeta" reported on 16 December. Prokhanov was struck on the head and suffered concussion. Neither the identity of the assailant nor the motive for the attack is known. "Nezavisimaya gazeta" reported that Prokhanov had not received any threats related to recent publications in "Zavtra." In recent years, Prokhanov has been a close adviser to Communist Party leader Gennadii Zyuganov. LB

SUPREME COURT OVERTURNS BAN ON TRANSPORTING TSAR'S REMAINS

The Supreme Court on 15 December ruled that the Sverdlovsk Oblast Court acted illegally when it barred the transportation of the remains of Tsar Nikolai II and his family outside Yekaterinburg. Federal officials want further tests on the remains to be conducted in Moscow before Yeltsin decides whether they are to be buried in Moscow, St. Petersburg, or Yekaterinburg. Sverdlovsk Governor Eduard Rossel, who wants the burial to take place in Yekaterinburg, has vehemently opposed conducting further tests in Moscow, arguing that the bones could be damaged or stolen in transit. Sverdlovsk Oblast Court judge Valerii Romashkov told "Nezavisimaya gazeta" that he is unconvinced by the Supreme Court ruling and will appeal to the Supreme Court's Presidium and to the Constitutional Court if necessary. LB



KARABAKH FOREIGN MINISTRY APPEALS TO OSCE

The Foreign Ministry of the unrecognized Republic of Nagorno- Karabakh on 15 December addressed a statement to the Organization on Security and Cooperation in Europe ahead of the OSCE foreign ministers' meeting in Copenhagen, RFE/RL's Yerevan bureau reported. The statement called on the OSCE to formalize Nagorno-Karabakh's status as an equal participant in the conflict throughout the negotiating process. (At present, Karabakh will forfeit that status after the signing of a political agreement formally ending the armed conflict.) The statement calls on the Copenhagen summit to adopt a document fostering the resumption of negotiations and containing no "preconditions [that will] predetermine their results." The statement says Stepanakert is concerned that the priority currently given by the OSCE Minsk Group to "methodological issues" impedes the search for a lasting solution to the conflict. LF

REACTIONS TO "TRIAL OF 31" VERDICTS

Two defense lawyers in the trial of 31 members and supporters of Armenia's banned Dashnak party (HHD) have condemned the 12 December court verdict as "unjust" and politically motivated and said they will appeal it, RFE/RL's Yerevan bureau reported. One defendant was sentenced to death, and others, including Dashnak party leader Vahan Hovannisian, to prison terms ranging from two-and-a-half to seven years for the murder of a policeman and calls for the violent overthrow of the government. Hovannisian's lawyer characterized his client as a "classical political prisoner." Similarly, the HHD Executive Council of Armenia issued a statement condemning the trial as based on "political considerations, innuendo, fabricated evidence and contradictory statements." It also said that the trial was aimed at "removing the political competition from the arena," Noyan Tapan reported. LF

AZERBAIJANI PRESIDENT CANCELS NETHERLANDS VISIT

Heidar Aliyev has indefinitely postponed a visit to The Netherlands scheduled for 15-16 December, ITAR- TASS reported on 15 December, quoting a Dutch government spokesman. Aliyev had been scheduled to meet with Prime Minister Wim Kok and sign several bilateral agreements. LF

TAJIK PLANE CRASHES IN MIDDLE EAST

A plane of the Tajik national airline crashed in the United Arab Emirates on 15 December killing 85 people. The Tu-154 airliner was en route from the Tajik city of Khujand to the city of Sharja, when it went down 13 kilometers from the Sharja runway. Most of the 77 passengers were Tajik citizens. The navigator is the only survivor and reportedly is in critical condition at a local hospital. BP

ONE TAJIK HOSTAGE RELEASED, ONE FOUND DEAD

Security forces seeking to hunt down the remaining members of the Rezvon Sadirov gang have found Nuriddin Tabarov, who was captured by the outlaws on 3 October, ITAR-TASS and Interfax reported. Tabarov was discovered in a house where he had been abandoned by the fleeing bandits. However, the body of Tabarov's father was found in an outlaw camp in the mountains 20 kilometers north of Dushanbe. The elder Tabarov had died of an unspecified illness. Presidential guard commander General Gafar Mirzoyev is a relative of the Tabarovs. BP

TAJIK GOVERNMENT TO CUT NUMBER OF CIVIL SERVANTS

President Imomali Rakhmonov has said the government will sack "superfluous" civil servants, Interfax reported on 15 December. Rakhmonov was referring to body guards for parliamentary deputies, some of whom have as many as 30 armed protectors. He noted that the Tajik people are "fed up with the brandishing of arms and escalating tension." He also called some of the guards "puppets of foreign special services," but he did not name any individuals or countries. BP

KYRGYZ STUDY REVEALS EVERY FIFTH CIVIL SERVANT "PROFESSIONALLY INADEQUATE

" A recently completed six-month study of the performance of government workers at the district, city, and regional levels has revealed that some 20 percent are "professionally inadequate," Interfax reported on 15 December. Of the 93 officials who failed to pass a test on the country's legal system, 33 are deputy governors or deputy mayors, some of whom will be required to pass another test. BP

SAUDI ARABIA WANTS RESULTS IN KAZAKH INVESTIGATION

Saudi Arabia's Foreign Ministry said on 15 December, it is certain Kazakh authorities "will do their best to uncover the circumstances" of the murder of the second secretary of the Saudi Embassy in Kazakhstan, according to AFP. However, Saudi Arabia is sending its own team of investigators to Kazakhstan to help discover who murdered Ahmad al-Sawi in his apartment on 10 December. The ministry also called on Kazakhstan to "guarantee the safety of all diplomats so they can carry out their mission." BP




MINSK COURT FINDS OPPOSITION LEADER NOT GUILTY

A Minsk court on 15 December found Belarusian Popular Front deputy chairman Yuri Khadyka not guilty of violating a presidential decree on anti-government demonstrations, RFE/RL's Belarusian service reported. Khadyka was charged with leading protesters away from the officially approved route during a 23 November demonstration. The judge said there was insufficient evidence to find Khadyka guilty. This unexpected conclusion may embolden opposition groups to push their drive for the removal of President Alyaksandr Lukashenka from office. PG

PENTAGON SAYS NO MORE HELP TO BELARUS FOR DISMANTLING BASES

U.S. Defense Department aide Edward Warner told a Minsk press conference on 14 December that "Belarus will henceforth be required to dismantle nuclear missile bases on its territory using its own funds. It can no longer rely on U.S. financial assistance in this matter," RFE/RL's Belarusian service reported the next day. Warner said the U.S. was forced to take this decision because Belarusian authorities have barred U.S. specialists from inspecting the bases in question, despite having pledged to allow such inspections. PG

KUCHMA SAYS NATO MUST RESPECT UKRAINIAN, RUSSIAN INTERESTS

Speaking at a 15 December press conference following his meeting with visiting Greek President Konstantinos Stephanopoulos, President Leonid Kuchma said "it is necessary to take into account the interests of all sides, including Ukraine and Russia as NATO expands," ITAR-TASS reported. Kuchma said the alliance must act in ways that do "not divide Europe into two camps." PG

UKRAINIAN TRADE RISES WITH GREECE, FALLS WITH CHINA

Ukraine's trade with Greece is likely to rise from its current $110 million a year if Greece follows through on its pledge to purchase ships built in Ukrainian yards, Kyiv media reported on 15 December. But trade between Ukraine and China fell 20 percent over the past year, amounting to only $365 million in the first 10 months of 1997, ITAR-TASS reported on 15 December. Moreover, Ukraine's trade deficit with China now exceeds $200 million annually. PG

EU WELCOMES YELTSIN'S PLEDGE TO CUT TROOPS IN RUSSIA'S NORTHWEST...

The EU on 15 December welcomed Russian President Boris Yeltsin's recent pledge to unilaterally cut troops in the northwest of Russia by more than 40 percent, BNS reported. In a statement, the union said it "strongly encourages" Estonia, Latvia, and Lithuania to improve regional cooperation with Russia. Yeltsin made the pledge earlier this month during an official visit to Sweden (see "RFE/RL Newsline, 3 December 1997). JC

...AND TALLINN'S OFFER ON ALIENS' CHILDREN

Also on 15 December, the EU welcomed the Estonian government's decision to discuss an amendment to the citizenship law whereby all children born in Estonia would be granted citizenship if their parents had lived in the country for at least five years (see "RFE/RL Newsline," 9 December 1997), according to ITAR-TASS. The union said the decision was a constructive step toward the integration of non-Estonian citizens. The same day, ETA reported that a special government committee has drafted a policy document aimed at making youths feel at home in Estonia. Ethnic Affairs Minister Andra Veidemann, who heads the committee, said the draft is to be presented to the government on 23 December. JC

LITHUANIAN PREMIER WANTS BUDGET WITHOUT DEFICIT

Gediminas Vagnorius told journalists on 15 December that he will propose a constitutional law stipulating that the state budget must be balanced, BNS reported. Vagnorius did not rule out the possibility that the 1999 budget would be without a deficit. This year's budget deficit is estimated to total 1.9 percent of GDP and next year's 1.6 percent. JC

WARSAW PLANS MAJOR REFORM OF LOCAL GOVERNMENT

Interior Minister Janusz Tomaszewski told a 15 December press conference that the Polish government plans to restructure local government, PAP reported. The plans, to be considered by the central authorities in January 1998, call for the number of provinces to be reduced from 49 to 15 or fewer and for the creation of a new administrative unit, the "powiat," which would be run by locally elected officials and an administrative district between the levels of municipal and provincial governments. Such decentralization had been blocked by the previous left-of-center government. PG

POLISH PROSECUTORS QUESTION TOP EDITOR

Polish prosecutors called in for questioning the editor and two other senior employees of the weekly "Wprost" on 15 December, PAP reported. But all three were released by the end of the day. The authorities said they are investigating possible financial mismanagement, while the editors issued a statement arguing that the prosecutors' actions were designed to intimidate a journal that has been outspoken in its criticism of Polish officials. PG

POLAND SEEKS LIFTING OF U.S. BAN ON MEAT PRODUCTS

The Agricultural Ministry on 15 December said that "for reasons of prestige," it will seek to have the U.S. lift its ban on the importation of some Polish meat products, PAP reported. The U.S. recently imposed a ban on such products from Poland and 20 other European countries until it can be established whether there is any risk of the products carrying mad cow disease. PG

HAVEL TO ANNOUNCE NEW PRIME MINISTER

President Vaclav Havel has said he will appoint the country's new prime minister on 16 December. He hinted that the next premier could be either a "man or a woman" but will not be "a party head or directly proposed by a political party." The same day, outgoing Premier Vaclav Klaus told Czech state radio that the talks on forming the new government had been going on" about us [but] without us." He said nobody had talked to him after the recent congress of his Civic Democratic Party (ODS), which re-elected him leader on 14 December, and that he doubted the talks on the new cabinet could be completed "in the next 48 hours." MS

CZECH COMMUNISTS HAVE OWN PRESIDENTIAL CANDIDATE

Vojtech Filip, the chairman of the Communist Party (KSCM) faction in the Chamber of Deputies, told reporters on 15 December that Havel will not be the only candidate for president on 20 January, CTK reported. Filip said Havel's 9 December speech to both houses of the parliament showed he is not "sufficiently critical of himself." The KSCM will nominate astrophysicist Stanislav Fischer as its presidential candidate, Filip said. The extreme-right Republican Party is also expected to announce soon its candidate for president. MS

SLOVAK PRESIDENT BLAMES EU DECISION ON GOVERNMENT

Michal Kovac on 15 December said the EU decision not to include Slovakia among the countries with which talks will begin next year is proof of its mistrust of the ruling coalition, AFP reported. He said the decision marked a victory for those Slovak leaders who are struggling for respect of human rights and further democratization. MS

AGREEMENT ON GABCIKOVO-NAGYMAROS TO BE REACHED BY MARCH...

Slovak Prime Minister Vladimir Meciar and his Hungarian counterpart, Gyula Horn, have decided to reach an agreement over the Gabcikovo- Nagymaros dam dispute by 25 March 1998, the deadline set by the International Court of Justice in The Hague. Meciar and Horn met with Austrian Chancellor Viktor Klima in Vienna on 15 December, following what observers say was the Slovak side's refusal to meet in Budapest. MS

...AS SLOVAKIA GIVES PARTIAL ANSWER TO HUNGARIAN DAM PROPOSALS

Slovak officials on 15 December rejected Hungary's proposal to raise the bed of the Danube but said they will study two other proposals by Budapest. Peter Baco, head of the Slovak government delegation, said Hungary's proposals to raise the water level or build two smaller power plants need to be examined by the Slovak side. He said unless Nagymaros or a similar plant is completed, Slovakia will insist that Hungary pay compensation for the shortage of electric power. The next plenary session of the two delegations is to take place in early January. MSZ




SERBS SENTENCE 17 KOSOVARS

A Serbian court in Pristina on 16 December sentenced 17 ethnic Albanians to prison terms ranging from four to 20 years. Two other Kosovars were acquitted. The 19 were accused of membership in the clandestine Kosovo Liberation Army. It was the third large trial this year of ethnic Albanians on what the Albanians claim are baseless political charges. PM

ALBANIA, CROATIA SAY NO BALKAN PEACE WITHOUT KOSOVO

Albanian Foreign Minister Paskal Milo said in Zagreb on 15 December that he and his host, Mate Granic, agreed that "the situation in Kosovo is currently very difficult, [explosive] and dangerous. We concluded that there will not be peace in southeast Europe" until the Kosovo issue is resolved. Milo added that "without democratization, the situation in Serbia cannot be peaceful and there cannot be cooperation and peace" in the Balkans. Meanwhile, prominent Kosovo politician Azem Vllasi told the Belgrade daily "Danas" that the outbreak of a "war in Kosovo is only a matter of time." PM

WHY IS DINI IN BELGRADE?

Italian Foreign Minister Lamberto Dini said in Belgrade on 15 December that the reason for his previously unannounced trip to the Yugoslav capital is to promote ties between Yugoslavia and the EU. He added that he also wants "to clarify" some matters regarding Belgrade's policies in Bosnia. An RFE/RL correspondent reported from the Serbian capital, however, that Italian sources said Dini's main goal is to persuade Yugoslav President Slobodan Milosevic to implement a 1996 agreement on Albanian-language education in Kosovo. An Italian NGO sponsored the pact, which remains a dead letter. PM

BOSNIAN SERBS BLOCK CITIZENSHIP AGREEMENT

Serbian legislators in the joint Bosnian parliament refused in Sarajevo on 15 December to accept the proposed law on Bosnian citizenship because the text includes no reference to the recent agreement between Pale and Belgrade on dual citizenship. Representatives of the Croatian-Muslim federation and the international community say that the Pale-Belgrade agreement is invalid (see "RFE/RL Newsline," 15 December 1997). Earlier on 15 December, the parliament passed a law regulating Bosnian passports for all three ethnic groups despite Serbian efforts aimed at delaying the vote. The international community at its conference in Bonn on 9-10 December gave the lawmakers an ultimatum to pass both the citizenship and the passport laws by 15 December. PM

CLINTON TO VISIT BOSNIA

U.S. President Bill Clinton said in Washington on 15 December that he will visit Sarajevo and U.S. SFOR troops in Tuzla on 22 December. He is expected to meet top Bosnian leaders, including presidency member Alija Izetbegovic. Clinton last visited Bosnia in January 1996. PM

FRANCE DENIES ARBOUR CHARGES...

Following a meeting in Paris on 15 December between Foreign Minister Hubert Vedrine and Louise Arbour, the chief prosecutor of the Hague-based war crimes tribunal, a Foreign Ministry spokeswoman said the French government is "deeply shocked by [Arbour's] scandalous allegations that [Bosnian] Serb war criminals could feel safe in the French sector of Bosnia" (see "RFE/RL Newsline," 15 December 1997). The spokeswoman added that Vedrine told Arbour that "France is cooperating with the [court] in its own way." In Strasbourg, General Jean-Philippe Douin, France's armed forces commander-in-chief, said that French troops in Bosnia are "impartial." PM

...AS DOES NATO

In Brussels, a NATO spokesman said on 15 December that France follows the same rules of conduct as any other NATO state that participates in SFOR. The spokesman added that the situation has worsened for war criminals in Bosnia over the past year. He noted that all indicted Muslims and 14 indicted Croats have gone to The Hague and that the hard-line Serbs have lost their parliamentary majority. PM

RELATIONS COOL BETWEEN SLOVENIA, CROATIA

Slovenian Prime Minister Janez Drnovsek said on 15 December that his government is disappointed at recent amendments to the Croatian Constitution, which mention several ethnic minorities by name but not a Slovenian one (see "RFE/RL Newsline," 15 December 1997). Slovenian authorities called off a meeting slated for 15 December to deal with transportation questions, an RFE/RL correspondent reported from Ljubljana. Spokesmen for the Transportation Ministry said Slovenia is in no hurry to complete a highway from Maribor to the Croatian border, which Zagreb badly wants. According to official Croatian statistics, some 54,000 ethnic Slovenes live in Croatia. The new amendments do not mention Muslims or Albanians by name, either. PM

SERB KILLED IN SLAVONIAN SHOOT-OUT

Eastern Slavonia's multi-ethnic police shot and killed a Serb in Beli Manastir on 15 December as he was trying to break into a police station. Earlier that day, the region's police administration came under Croatian control. PM

BOMB BLASTS ENVER HOXHA'S HOUSE

A bomb heavily damaged the Gjirokaster home of late Albanian communist dictator Enver Hoxha and surrounding buildings on 15 December, "Dita Informacion" reported. Sabrie Hoxha, his distant relative, was injured in the blast. The house is used as a museum for Hoxha's World War II partisan movement. Nearby are offices of the OSCE and Mother Teresa's Sisters of Charity. It was the third explosion in the city within three days. Nobody has claimed responsibility for the attacks. FS

ROMANIAN PRESIDENT AT NATO HEADQUARTERS

Emil Constantinescu on 15 December met with NATO Supreme Allied Commander Gen. Wesley Clark at the alliances headquarters in Brussels, an RFE/RL correspondent in Brussels reported. In other news, the private television channel Pro TV reported the same day that the Timisoara Prosecutor-General's office has completed its investigation into the role of Generals Victor Stanculescu and Mihai Chitac in the suppression of the December 1989 uprising in that town. The office will indict both Stanculescu and Chitac, who held the defense and interior portfolios, respectively, from 1990-1991. MS

INTERNATIONAL FINANCIAL ASSISTANCE FOR MOLDOVA TO CONTINUE

International financial organizations offering assistance to Moldova decided on 15 December to continue backing Moldova's economic reform and efforts to accelerate economic growth and reduce inflation, RFE/RL's Chisinau bureau reported, citing a World Bank statement. The organizations agreed that in 1998- 1999, Moldova will receive credits totaling $600 million. Prime Minister Ion Ciubuc, who attended the meeting in Paris, said most of the funds will come from the World Bank and the IMF. He added that the loans are conditional on budget restructuring and the passage of legislation on various social issues, including a law raising the retirement age. MS.

U.S. OFFICIAL SAYS RELATIONS WITH MOLDOVA IMPROVING

Stephen Sestanovich, special adviser to U.S. Secretary of State Madeleine Albright on matters related to the Newly Independent States, told reporters in Chisinau on 15 December that Moldovan-U.S. relations have been improving of late, particularly since the conclusion of the agreement on the sale of the 21 MiG-29C aircraft to the US. Sestanovich noted that Moldova has recently made a "fundamental choice--that of belonging to the European Union," RFE/RL's Chisinau bureau reported. He emphasized that the U.S. "recognizes Moldova's territorial integrity." MS

GEORGIAN PRESIDENT IN BULGARIA

Speaking at a joint press conference marking the end of Eduard Shevarnadze's two-day visit to Bulgaria, President Petar Stoyanov said Sofia "fully backs Georgia's desire to restore its territorial integrity." Shevardnadze said Georgia is willing to provide transshipment of oil from Azerbaijan to Bulgaria as an alternative to Russian supplies. The two presidents reached an agreement on training Georgian border guards in Bulgaria and establishing a regular ferry link between their Black Sea ports. Similar agreements were concluded with Romania during Shevarnadze's visit there on 10-11 December. MS




MOLDOVA'S ECONOMY STILL STRUGGLING DESPITE SOLID REFORMS


by Michael Wyzan

Since the breakup of the Soviet Union, Moldova has more consistently pursued sound macroeconomic policies and political democratization than most CIS states. Freedom House in 1997 gave it the third-highest ranking in the CIS (behind Russia and Kyrgyzstan and tied with Armenia) on economic reforms. Those reforms have resulted in low inflation and a stable currency.

Nonetheless, the economy has declined longer and further than many others in the CIS. Moldova remains dependent on an agricultural sector vulnerable to weather patterns and to hindrances to its foreign trade arising from the dispute with the breakaway Transdniester region. Relations between the country and international financial institutions have worsened lately, as the parliament has balked at passing legislation to accelerate structural reform.

Moldova was displaying favorable economic indicators by 1994. Retail prices rose by 105 percent from the end of 1993 to the end of the following year; within the CIS, only Kyrgyzstan had lower inflation. In 1995, Moldovan retail prices increased by 24 percent, the lowest inflation of all 15 former Soviet republics.

Another early indicator of sound policy-making was the stability of the leu against the dollar. The currency unit fell from 4.06 to the U.S. dollar in April 1994 to only 4.27 at the end of that year and to 4.53 at the end of 1995. That stability posed a potential threat to exports, since inflation was faster than the leu's decline against Western currencies.

Still, such stability under a floating exchange rate regime indicated confidence in fiscal and monetary policy and expectations of low inflation. Fiscal deficits have been modest by CIS standards, with the consolidated budget showing deficits of 5.9 percent of gross domestic product (GDP) in both 1994 and 1995.

Despite those achievements, the economy has been slow to turn around. GDP fell by 8 percent in 1996, making for a cumulative decline of 64 percent from 1991 to 1996, one of the largest falls in the CIS. Aggregate production appears sensitive to weather-driven agricultural performance, with years of large GDP declines--1994 and 1996--characterized by meager grain, vegetable, and fruit harvests.

However, TACIS experts argue that the apparent GDP fall in 1996 may be only temporary--the result of a surge in imports and the failure to record a significant volume of exports, especially to the CIS. Such exports typically transit the Transdniester region, and Chisinau cannot record them at Moldova's border with Ukraine. GDP is reportedly declining again this year, while industrial output was down 12 percent from January to June compared with the same period last year.

Other economic indicators have been stagnating or even deteriorating. Disinflation is slow: the 15 percent inflation rate in 1996 was bettered by all three Transcaucasian states, which started reforming later. In November, the National Bank of Moldova raised its 1997 inflation estimate to 13 percent. The budget deficit, which reached 10 percent of GDP in 1996, is about 7 percent of GDP, compared with an IMF-agreed target of 4.5 percent.

The trade regime has been fairly liberal since the end of 1993, and the parliament further liberalized it in late June. A Generalized System of Preferences scheme--which provides a duty-free regime for "non-sensitive" goods--is in force with the EU. Moldova is the only CIS state whose textile exports to the EU are not subject to quotas.

Even so, Moldova's external relations are troubled. Moldova owes Gazprom $500 million, of which $332 million is owed by the Tiraspol authorities. Gazprom warned early this month of a cut-off in supplies unless that debt is settled.

Ukraine applies country-of-destination rules to its tariffs and excise duties, as sanctioned by the World Trade Organization. Consistent with such rules, and out of concern that goods supposedly transiting Ukraine's territory may illegally be sold there, Kyiv imposes tax deposits on transit exports. This has caused problems for Moldovan exporters; at mid-year, trade with the CIS was down on 1996 levels. Furthermore, the EU treats Moldova's all- important exports of wine and fresh fruit and vegetables as "sensitive" sectors subject to tariffs.

In earlier years, the IMF supported Moldova's reform efforts, providing $71 million in 1994, $65 million in 1995, and $41 million in 1996. However, the IMF postponed from June until July the release of a $21 million tranche under a three-year $195 million loan agreed to in May 1996; the fund cited unfulfilled conditions, especially on privatization. And in November, it delayed until early 1998 the next tranche release out of concern over the parliament's suspension of energy-price hikes and the growing budget deficit.

Despite those setbacks, Moldova remains one of the most reform-minded CIS states. Accordingly, its failure so far to resume economic growth is worrisome. The author is an economist living in Austria.


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