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Newsline - February 13, 1998




COHEN, SERGEEV HOLD TALKS IN MOSCOW

Russian Defense Minister Igor Sergeev and U.S. Secretary of Defense William Cohen, meeting in Moscow on 12 February, sought to emphasis their common position that Baghdad must allow UN inspectors access to suspect sites in Iraq. Nonetheless, differences emerged between the two leaders. Sergeev warned of the implications for Russian-U.S. relations should the U.S. attack Iraq. Such a development would put ties between the two countries "back several years," Sergeev said. The Russian official also stressed that the Persian Gulf crisis does not affect only Iraq and the U.S. but "involves the vital interests of Russia and other countries in the region." He posed the question of whether "America is ready for all the possible consequences" if it attacked Iraq and whether such an attack would "help to strengthen stability and security in the world." BP

RUSSIAN MINISTRY DENIES 'WASHINGTON POST' REPORT

At his 12 February meeting with U.S. Secretary of Defense Cohen, Sergeev rejected allegations in a "Washington Post" article the same day that in 1995 Russia had contracted to sell Iraq equipment that could be used for the production of biological weapons. Sergeev said "there was no agreement. We had no plans to reach such an agreement." Cohen added he had no knowledge of the allegations and therefore could neither confirm nor deny them. Meanwhile, Foreign Minister spokesman Gennadii Tarasov said "Russia has never struck any deal with Iraq contravening the existing [UN sanctions]." Tarasov denied the article's claim that Russia is informing Iraq about the UN Inspection Committee's activities. "We resolutely reject this misreporting," Tarasov said, adding that the article's timing "is not accidental." Meanwhile, Foreign Minister Yevgenii Primakov told reporters on 13 February the article is a "provocation." BP

CHUBAIS SAYS FINANCIAL CRISIS HAS PASSED

First Deputy Prime Minister Anatolii Chubais announced at a 12 February cabinet meeting that the "second wave of the financial crisis" that began last fall has subsided, Russian news agencies reported. He said the government and Central Bank managed to "rebuff" an attack on the ruble in late January and earlier this month, when the Central Bank raised the refinancing rate to 42 percent to stave off a ruble devaluation (see "RFE/RL Newsline," 30 January and 2 February 1998). Chubais also noted that yields on government treasury bills (GKOs) fell from 45 percent on 30 January to 34 percent in recent days. He said the government intends to meet the goal of bringing GKO yields down to 15-18 percent by year-end. That target was set in the government's 12 major tasks for 1998, recently approved by President Boris Yeltsin and Prime Minister Viktor Chernomyrdin. LB

YELTSIN CUTS KREMLIN STAFF

Yeltsin on 12 February issued a decree dismissing 100 officials in the presidential administration and reducing the total staff of the administration to 1,945, Russian news agencies reported. The casualties included Yurii Baturin, Yeltsin's adviser on security questions since spring 1993, and Boris Kuzyk, adviser on military-technical cooperation abroad since summer 1994. According to the 13 February "Rossiiskie vesti," the official newspaper of the presidential administration, the cutbacks are intended to eliminate duplication and competition within the administration, which, the newspaper said, has led to the president receiving conflicting information. "Kommersant-Daily" argued on 13 February that Kuzyk's dismissal is the final blow to the team of Aleksandr Kotelkin, which oversaw Russian arms exports from late 1994 until August 1997, when Yeltsin sacked Kotelkin as the head of the arms exporter Rosvooruzhenie (see "RFE/RL Newsline," 22 and 25 August 1997). LB

U.S. OFFICIAL DENIES REPORT ON YELTSIN CAMPAIGN FINANCING

"Nezavisimaya gazeta" on 13 February quoted an unnamed official in the U.S. embassy in Moscow as denying that U.S. funds were used to finance Yeltsin's 1996 presidential campaign. "Moskovskii komsomolets" recently alleged that the U.S. transferred $500 million to Moscow in March 1996 and that large Russian banks, many of which financed Yeltsin's campaign, acquired that money (see "RFE/RL Newsline," 11 February 1998). The U.S. embassy official told "Nezavisimaya gazeta" that the $500 million in new $100 bills were stored at the embassy because no Russian bank--not even the Central Bank--would guarantee the security of such a large sum. Russian banks purchased the new $100 bills for equivalent sums in old bank notes, the source said. LB

SUPREME COURT HEARS PENSIONER'S CASE AGAINST GOVERNMENT

In the first case of its kind, the Supreme Court is hearing an appeal from a pensioner against the federal government, RFE/RL's Moscow bureau reported on 12 February. Zinaida Samokhina is protesting the government's decision to set 760,000 old rubles ($127) as the average wage for the fourth quarter of 1997. That estimate is used to calculate pensions distributed after 1 February 1998, and critics have said the government's estimate is far lower than the real average wage paid from October-December 1997 (see "RFE/RL Newsline," 22 January 1998). Nikolai Samokhin, who is representing his mother in the Supreme Court hearings, told RFE/RL that the government's action violated various Russian laws and international norms. Government officials have said adopting a higher wage estimate would bankrupt the Pension Fund and cause pension arrears to mount. LB

PENSION FUND CHAIRMAN SUING COMMERCIAL BANKS

Vasilii Barchuk has vowed to file lawsuits against commercial banks, including Sberbank and Menatep, for allegedly violating the civil code, "Kommersant-Daily" reported on 7 February. Barchuk charges that since the Constitutional Court struck down an article of that code giving wage payments precedence over tax payments (see "RFE/RL Newsline," 6 January 1998), the banks have attached a very low priority to paying contributions to the Pension Fund. Barchuk estimated that the fund received some 2 billion rubles ($330 million) less than it should have in January as a result of the court's decision. He has also asked the Prosecutor-General's Office to examine the legality of the commercials banks' actions. LB

AUDIT CHAMBER FINDS MASSIVE IRREGULARITIES AT RTR

The Audit Chamber on 12 February announced that it found massive financial irregularities in its audit of the fully state-owned network Russian Television (RTR), RFE/RL's Moscow bureau reported. The chamber found that the State Property Committee failed to monitor the finances of RTR, leading to huge losses for the state when property, precious metals, and funds were misappropriated. Nikolai Svanidze, the network's chairman since February 1997, said he entirely agrees with the Audit Chamber's conclusions. Most of the violations uncovered by the chamber occurred during Oleg Poptsov's tenure as chairman of the network, from 1990 until February 1996. The chamber's representatives cautioned against interpreting their findings as evidence in support of privatizing the network. They also spoke out against a law that would ban advertising on RTR, which the Duma recently passed in the first reading. LB

ORT APPROVES NEW BOARD OF DIRECTORS, CHARTER

Shareholders in the 51 percent state-owned network Russian Public Television (ORT) on 12 February approved a new board of directors and charter for the network, ITAR-TASS and "Kommersant-Daily" reported. Vitalii Ignatenko, the director of the state-run news agency ITAR-TASS, will chair the 11-member board of directors. The board will also include ORT general director Kseniya Ponomareva, her deputy Badri Patarkatsishvili, Yeltsin's daughter and adviser Tatyana Dyachenko, Deputy Prime Minister Oleg Sysuev, government spokesman Igor Shabdurasulov, presidential spokesman Sergei Yastrzhembskii, Gazprom-Media head Viktor Ilyushin, and Yurii Dubov, an executive from Boris Berezovskii's LogoVAZ business empire. Although Berezovskii will not serve on the board, he attended the 12 February meeting. The new ORT charter transforms the network from a closed to an open joint-stock company. LB

CHARGES FILED AGAINST SUSPECT IN JOURNALIST'S MURDER

The Prosecutor-General's Office has officially charged retired Colonel Pavel Popovskikh with planning and taking part in the murder of journalist Dmitrii Kholodov, Interfax reported on 12 February. Kholodov was killed by a booby-trapped briefcase in October 1994. Popovskikh formerly headed the intelligence department of the Airborne Troops. Aleksandr Zhilin, who reports on military topics for "Moskovskie novosti" and RFE/RL, told RFE/RL's Moscow bureau on 12 February that sources in the Airborne Troops say investigators searched Popovskikh's office last year. They reportedly uncovered documents listing the names of journalists who were particularly critical of former Defense Minister Pavel Grachev and suggested actions to be taken against those journalists. Grachev was defense minister when Kholodov, who reported on military corruption, was murdered. LB

SOLDIER APPEALS CONVICTION FOR ARMS DEPOT BLAZE

Sergei Chugaev, who was sentenced to 10 years in prison last month for starting a fire at an arms depot in April 1997, has appealed his conviction, "Kommersant-Daily" reported on 12 February. Chugaev allegedly started the blaze in Bira (Jewish Autonomous Oblast) by carelessly dropping a cigarette (see "RFE/RL Newsline," 29 April 1997 and 26 January 1998). He claims he was "set up" by officers who illegally sold weapons and ammunition and then deliberately set the fire in order to conceal their crime. However, Oleg Mikhailov, the presiding judge at the trial at which Chugaev was convicted, told "Kommersant-Daily" that law enforcement officials have found no proof to substantiate those allegations. LB

YELTSIN'S PRIMORE REPRESENTATIVE OFFERS TO GIVE UP SPECIAL POWERS

Viktor Kondratov, the presidential representative in Primorskii Krai, on 11 February informed the krai Duma that he plans to ask Yeltsin to rescind a May 1997 decree granting him special powers, ITAR- TASS reported. The decree, issued during a protracted energy crisis in the krai, transferred to Kondratov many powers previously wielded by Governor Yevgenii Nazdratenko, including the authority to supervise how federal funds are spent in Primore. Nazdratenko claimed the decree was unconstitutional, and the Federation Council appealed to Yeltsin to rescind it last July (see "RFE/RL Newsline," 9 June and 8 July 1997). In his message to the krai Duma, Kondratov explained that he no longer needs the expanded authority because the legislature can monitor the activities of the Primore administration, "Kommersant-Daily" reported on 13 February. Many opponents of Nazdratenko were elected to the krai Duma last December. LB

WOULD-BE CANDIDATES DENOUNCE CAMPAIGN IN MORDOVIA...

Nikolai Merkushkin, the head of the Republic of Mordovia, appears poised for an easy victory in a 15 February election to retain his post. However, would-be challengers say they were excluded from the campaign so that Merkushkin would have no genuine competition. The only other registered candidate is Aleksei Sharov, a little-known director of a macaroni factory. Local observers consider Sharov a "back-up" for the incumbent, RFE/RL's Moscow bureau reported on 5 February. (Russian law forbids candidates from running unopposed.) Among the seven candidates denied registration by the Mordovian Electoral Commission are State Duma deputy Nikolai Medvedev, a well-known local figure and member of the Russian Regions faction, and Duma deputy Yevgenii Kosterin, the leader of the Communist Party branch in Mordovia. LB

...WHILE MORDOVIAN PRESIDENT DENIES FOUL PLAY

In an interview with an RFE/RL correspondent in Mordovia, Merkushkin denied that he used his political influence to bar prominent opponents from the campaign. Saying he would prefer Medvedev and Kosterin to be in the race, he accused them of not wanting to run so as not to reveal the low level of their support. Medvedev has called for a criminal investigation into recent events in Mordovia. He told an RFE/RL correspondent in Moscow that his longtime supporters have been threatened and intimidated. He also charged that there is no legal basis for holding an election this month in Mordovia. For his part, Kosterin appealed to the Mordovian Supreme Court after the electoral commission denied him registration. After losing that court case, he appealed to the Russian Supreme Court and sent a complaint to the Prosecutor-General's Office. LB




RADUEV CLAIMS RESPONSIBILITY FOR SHEVARDNADZE ASSASSINATION BID

Speaking on his private Chechen Television channel on 12 February, radical field commander Salman Raduev claimed that his Caucasian Home organization was responsible for the failed 9 February attempt to assassinate Georgian President Eduard Shevardnadze, Interfax reported. Georgian Interior Minister Kakha Targamadze and two senior Chechen officials have expressed skepticism about Raduev's claim. But Russian Security Council Secretary Ivan Rybkin told an RFE/RL correspondent in Moscow on 13 February that it cannot be ruled out that Raduev is speaking the truth. Georgian investigators on 12 February located the Tbilisi apartment used by the attackers. That apartment had been rented by a Chechen woman, according to Caucasus Press. LF

THREE MORE CONTENDERS FOR ARMENIAN PRESIDENCY...

Congresses of the Union for Self-Determination and the Democratic Party of Armenia have proposed their chairmen, Paruir Hairikian and Aram Sargsian, as candidates for the 16 March presidential elections. Both men registered as candidates in the September 1996 presidential ballot but withdrew their candidacies in support of Vazgen Manukyan. Hairikyan said he is confident that, if elected, he could solve Armenia's most pressing problems within a year. Sargsian said he would hold the Armenian Pan-National Movement responsible for its policies, according to Noyan Tapan. Meanwhile, former presidential adviser Davit Shahnazarian has announced that he will contend the election as an independent candidate, RFE/RL's Yerevan bureau reported on 12 February. LF

...BUT DEFENSE MINISTER DECLINES TO RUN

Vazgen Sargsian has rejected a request by the majority Yerkrapah parliamentary group to run as its presidential candidate, Caucasus Press reported on 13 February, citing Noyan Tapan. Yerkrapah leader Albert Bazeyan said Sargsian considers his primary responsibility to be strengthening the army and that his candidacy would substantiate Western assertions that the "party of war" has come to power in Armenia. LF

MANUKYAN CALLS FOR NEW CONSTITUTION, PARLIAMENTARY ELECTIONS

Addressing a rally of some 20,000 people in Yerevan on 12 February, presidential candidate Vazgen Manukyan said the upcoming presidential poll must be free and fair to ensure that the former leadership is prevented from returning to power, Noyan Tapan reported. Manukyan affirmed that, if elected, he would hold pre-term parliamentary elections and amend the country's constitution. Manukyan said the Karabakh conflict should be resolved through "peace talks and compromises" rather than unilateral concessions, according to Interfax. LF

OSKANIAN HOPES FOR NEW KARABAKH PROPOSALS

Acting Foreign Minister Vartan Oskanian says he hopes that when the three co- chairmen of the Organization for Security and Cooperation in Europe's Minsk Group meet in Paris on 17 February, they will try to come up with a revised peace plan for Nagorno-Karabakh acceptable to both Yerevan and Stepanakert. But he added that it will be difficult for the co-chairmen to modify the existing proposals without retreating too far from their original position. In an interview published in "Hayastani Hanrapetutyun" on 11 February, Oskanian said the current proposals contain both positive and negative points but that the negative points relate to issues of principle. He said that to accept those points as a basis for negotiations would be to predetermine the outcome of the talks and would therefore be unacceptable to Nagorno-Karabakh. LF

ARMENIA REJECTS AZERBAIJANI REPORT OF FRONTIER SHOOTING

The Armenian Defense Ministry on 12 February denied a report by its Azerbaijani counterpart claiming an Azerbaijani soldier was wounded when Armenian forces opened fire on Azerbaijani territory two days earlier, Russian and Armenian agencies reported. Noyan Tapan pointed out that the distance between the Armenian and Azerbaijani locations named in the Azerbaijani report is more than 6 kilometers. Such a distance is far greater than the range of the sub-machine guns reportedly used by the Armenian attackers, the agency pointed out. LF

AZERBAIJAN, LEBANON SIGN COOPERATION AGREEMENTS

Azerbaijani and Lebanese government ministers signed agreements on encouraging and protecting investments, trade and economic cooperation, customs cooperation, and air travel during the 11-12 February visit to Baku of Lebanese Prime Minister Rafik Hariri, Turan and ITAR-TASS reported. Hariri met with his Azerbaijani counterpart, Artur Rasi-zade, parliamentary speaker Murtuz Alesqerov, and President Heidar Aliyev to discuss the prospects for Lebanese investments in Azerbaijan and for purchasing Azerbaijani oil exported via the planned Baku-Ceyhan pipeline. LF

IRAN ENDORSES AZERBAIJANI-TURKMEN STAND ON CASPIAN

Iranian President Mohammad Khatami has written to his Turkmen counterpart, Saparmurad Niyazov, to express his support for the 5 February agreement signed by the Azerbaijani and Turkmen foreign ministers on dividing the Caspian Sea into national sectors, Turkmen Foreign Minister Boris Shikhmuradov told Interfax on 12 February. Khatami said that the agreement does not contravene Tehran's principles for Caspian cooperation, but he added that general decisions must be endorsed by all five littoral states. Iranian Foreign Minister Kamil Kharrazi is expected to discuss the status of the Caspian during his visit to Moscow later this month. Russian President Boris Yeltsin told "Corriere della Sera" on 9 February that a new agreement is needed on the Caspian's legal status before its resources can be developed. Yeltsin complained that some European countries engaged in developing Caspian hydrocarbons are infringing on Russia's national interests. LF




GAZPROM THREATENS TO CUT GAS SUPPLIES TO UKRAINE

Gazprom head Rem Vyakhirev on 12 February warned Ukraine that its debt to the Russian gas giant must be paid soon or fuel deliveries will cease, AFP reported. Vyakhirev said Ukraine must pay its nearly $1.1 billion debt by the end of March. At the same time, he acknowledged that there are "no realistic guarantees" that this can be done. Gazprom reduced gas supplies to Ukraine last summer in a bid to collect unpaid bills (see "RFE/RL Newsline," 24 July 1997). PB

TURKISH PREMIER IN KYIV, CRIMEA

Mesut Yilmaz and his Ukrainian counterpart, Valery Pustovoitenko, met in Kyiv on 12 February and signed three accords, including one on the Black Sea, AFP reported. Pustovoitenko noted that Turkey is an "influential partner" in the region. The Black Sea agreement is aimed at preventing conflicts between Turkish fishermen and the Ukrainian coast guard, such as the one last month in which two people drowned (see "RFE/RL Newsline," 16 January 1998). Yilmaz, who is to visit a Crimean Tatar village on the last day of his two-day trip, said the Tatars are a "cultural bridge" between the two countries. He expressed satisfaction with Kyiv's efforts in protecting the rights of the Tatars. PB

BELARUSIAN OPPOSITION LEADER DETAINED

Andrei Klimov, a member of the parliament disbanded by President Alyaksandr Lukashenka in 1996, has been arrested on fraud and corruption charges in Minsk, Belarusian television reported on 12 February. Klimov was a member of a legislative committee of the disbanded parliament that had been investigating constitutional violations by Lukashenka. Another former deputy, Anatoly Lebedko, said the government has been auditing Klimov's company for several months but has found no evidence of wrongdoing. Lebedko claims the arrest is strictly for political reasons. PB

ESTONIAN PRESIDENT AGAIN VETOES CLEMENCY LAW

Lennart Meri has again rejected the clemency law, saying the legislation is at odds with the president's constitutional rights, ETA and BNS reported on 12 February, citing a statement issued by the president's office. Under the proposed legislation, a clemency committee would be created to advise the president. Meri, who rejected the law for the first time in October 1997, argued that the constitution provides for no such committee. If the parliament returns the law to the president without any changes, the Supreme Court will decide the issue. JC

LATVIAN LAWMAKERS REJECT AMENDMENT TO CITIZENSHIP LAW

The parliament on 12 February rejected an amendment to the citizenship law whereby children born to non-Latvians after 1991 would automatically receive Latvian citizenship, BNS reported. The vote was 31 to 20 with 10 abstentions. A government coalition agreement rules out amending the citizenship law, but both Latvia's Way and Democratic Party Saimnieks are in favor of the coalition's Cooperation Council seeking a solution to the issue. The same day, lawmakers returned to the standing committees the controversial amendments to the labor code, which President Guntis Ulmanis had vetoed the previous day (see "RFE/RL Newsline," 12 February 1998). And in Moscow, Russian Foreign Ministry spokesman Gennadii Tarasov expressed satisfaction with Ulmanis's veto as well as the hope that the Latvian parliament will "take public opinion into account" and revise the labor code amendments. JC

LITHUANIANS PROTEST PHONE CHARGES

Some 5,000 mainly elderly people protested in Vilnius on 12 February against new charges for local telephone calls and the privatization of the state telecommunications company, Reuters reported. The government recently decreed a charge equivalent to 1.75 U.S. cents per minute for local calls, thereby ending the decades-long practice of telephoning locally free of charge. Government spokesman Albinas Pilipauskas told the news agency that the phone charges are lower than in neighboring Latvia and Estonia and do not cover all expenses incurred by Lithuanian Telecom. JC

EU SUPPORTS TIGHTER SECURITY ON POLISH BORDER

European Commissioner Hans van den Broek has praised Warsaw's decision to tighten security on its eastern border, an RFE/RL correspondent in Warsaw reported on 12 February. Van den Broek said that imposing stricter visa regulations is a "difficult measure" but that the EU supports the new measures. Poland stepped up visa requirements at the start of the year, despite severe criticism from Russia and Belarus. It recently decided to ease some requirements after Polish traders complained of losses in cross-border trade (see "RFE/RL Newsline," 12 February 1998). Van den Broek also said Poland's heavy industry must be restructured and privatized. He urged Warsaw to lower import tariffs on steel. PB

GRAVES DESECRATED AT SOVIET CEMETERY IN POLAND

Vandals have uprooted tombstones at a cemetery for Soviet soldiers in Lodz, ITAR-TASS reported on 11 February. An investigation into the incident has begun. Some 120 Soviets are buried in the cemetery. According to the news agency, vandalism of Soviet graves in Poland is rare. PB

CZECH PREMIER THREATENS TO DISMISS COALITION ASSOCIATE

Josef Tosovsky has warned Jiri Skalicky that he will demand Skalicky's resignation both as Civic Democratic Alliance (ODA) leader and environment minister if he does not reveal the identity of the anonymous donors who in 1995 contributed to his party's funding, "Mlada Fronta Dnes" reported on 13 February. The daily says Skalicky has already met with representatives of the secret sponsors and tried to persuade them to reveal their identity. The previous day, Skalicky told journalists that he would "fulfill his civic duty" if police asked him to disclose the identity of the donors. In other news, President Vaclav Havel has been hospitalized again after running a high temperature. His spokesman, Ladislav Spacek, told CTK that the temperature was probably caused by a viral disease. MS

POLL SHOWS RACIAL INTOLERANCE AMONG CZECHS

A public opinion poll published on 12 February by the Public Opinion Research Institute shows 25 percent of Czechs admitting they have feelings of racial intolerance, while 16 percent say they are intolerant toward others on grounds of nationality. According to the study, racial and national intolerance is most often directed against the Romani minority. The institute says resentment on grounds of nationality dropped five percentage points in 1997, compared with 1996. Resentment on racial grounds was lower in 1997 than at any time during the last seven years and down seven percentage points on 1996. MS

SLOVAK PRESIDENT TO CALL REFERENDUM?

Opposition spokesman Mikulas Dzurinda on 12 February said the opposition parties have appealed to President Michal Kovac to set a date for a new referendum on electing the president by popular vote, RFE/RL's Bratislava bureau reported. Presidential spokesman Vladimir Stefko told Reuters that Kovac is currently studying the recent ruling by the Constitutional Court that the government violated the constitution by refusing to include in the May plebiscite a question on electing the president by popular vote. He added that the president will reach a decision within the next few days. MS

SLOVAK OFFICIAL EXPLAINS COUNTRY'S 'DISTORTED IMAGE'

Dusan Slobodnik, the chairman of the Slovak parliament's Foreign Affairs Commission, on 12 February said the blame for his country's "distorted image" abroad must be put on both the opposition, which is "betraying the country," and Czech President Havel, who "is inciting his friend Mrs. Albright to stir up anti-Slovak feelings," CTK reported, citing Germany's "General-Anzeiger." MS

HUNGARIAN PREMIER CALLS FOR CRACKDOWN ON CRIME

"What prevails in Hungary today is not public safety," Gyula Horn told a 12 February news conference in response to the brutal killing of media magnate Janos Fenyo (see "RFE/RL Newsline," 12 February 1998). Horn said the police and the Prosecutor-General's Office are unable to keep pace with the spread of crime. He noted that 80 percent of robberies and murders in Hungary are committed by foreigners, and he asked Interior Minister Gabor Kuncze to submit a proposal to the government on introducing tougher entry rules for foreigners. The cabinet has drawn up a five-point plan to improve public safety, and a special unit has been set up to investigate Fenyo's murder, Hungarian media reported. MSZ




PLAVSIC SAYS NEW GOVERNMENT HAS INTERNATIONAL SUPPORT

On returning to Banja Luka from visits to France and Austria, Bosnian Serb President Biljana Plavsic said that international support for the new Bosnian Serb government is "guaranteed," AFP reported on 12 February. Plavsic, whose warm reception in Paris caused anger in Sarajevo (see "RFE/RL Newsline," 11 February 1998), said European leaders told her they are pleased the Republika Srpska has decided to "find its place" in Europe. Earlier the same day, Plavsic warned that the peace process in Bosnia would fall apart if the strategic town of Brcko is not allowed to remain a part of the Republika Srpska. PB

SOLANA SAYS TROOP WITHDRAWAL FROM BOSNIA POSSIBLE THIS YEAR

NATO Secretary-General Javier Solana said that Bosnia-Herzegovina's improved political situation could lead NATO to make substantial cuts in the number of troops stationed there, AFP reported on 12 February. Solana, speaking in Washington, said the apparent acceptance of the new Bosnian Serb government and the presidential elections scheduled for September could pave the way to a small reduction in NATO-led Stabilization Forces immediately and a significant cut back by the end of the year. PB

BOSNIAN SERBS INJURED BY MUSLIM CROWD

Two Bosnian Serbs were injured, one seriously, when a Muslim crowd stoned three relief agency vehicles, a UN spokesman said on 13 February. Representatives of the Swedish aid agency Crossroads International were traveling with several local Bosnian Serb officials when the crowd stopped the two cars near Jablanica and began stoning them. The crowd accused one of the Serbs of involvement in the deaths of Muslims during the wars of the Yugoslav succession. Members of Crossroads International and Danish SFOR troops were driving the cars. One of the injured remains in hospital, while the other passengers were taken back to Republika Srpska by SFOR troops. PB

WAR TRIBUNAL NEEDS MORE RESOURCES TO AVOID LENGTHY DELAYS

Judge Gabrielle McDonald, the president of the UN War Crimes Tribunal for former Yugoslavia, has appealed to the UN Security Council for additional resources, Reuters reported on 13 February. McDonald, a U.S. citizen, said in New York that the tribunal urgently needs to implement a witness protection program, acquire additional jail cells, appoint another judge, and set up a court with room for three judges. She said that if additional resources are not forthcoming, it will take years to bring to trial the 20 suspects currently in custody. PB

MONTENEGRO APPROVES FOREIGNER OWNERSHIP OF MEDIA OUTLETS

The Montenegrin parliament has adopted a law permitting foreigners to own media enterprises in the Yugoslav republic, AFP reported on 12 February. The Organization for Security and Cooperation in Europe aided deputies in drafting the law. The legislature also passed a law on voter registration providing for a data bank of registered voters to be created 20 days before an election. Changes to the list can be made only by the Montenegrin Supreme Court. PB

CROATIAN GOVERNMENT REVOKES CONTROVERSIAL HOUSING DECREE

The cabinet on 12 February annulled a January 1998 decree that would have permitted the eviction of thousands of Serbs from state-owned apartments in Eastern Slavonia that had been formerly occupied by Croats. Those former occupants would have then been entitled to return to their former homes. A spokesman for the OSCE, which criticized the decree, welcomed the government's decision and pledged to try to expedite the two-way return of refugees. Eastern Slavonia reverted to Croatian control on 15 January after being administered by the UN for two years (see "RFE/RL Newsline," 16 January 1998). LF

ALBANIAN OPPOSITION REJECTS PARLIAMENT COMMISSION'S REPORT

"Rilindja Demokratike," the mouthpiece of the opposition Democratic Party, published a statement by the party's leadership on 12 February rejecting the findings of the parliamentary commission on what prompted the violent unrest that swept Albania last spring. The commission, which had submitted its report to the parliament the previous day, concluded that the Democratic Party had armed its supporters in order to provoke a civil war and that the crisis could have been averted if then Prime Minister Alexander Meksi had resigned earlier. The Democratic Party leadership described the unrest as a "Communist-led armed rebellion" aimed at destroying democracy in Albania and bringing the Socialist Party to power. More than 1,500 people were killed during the unrest. LF

ALBANIA, TURKEY SIGN COOPERATION AGREEMENTS

Albanian President Rexhep Meidani and his Turkish counterpart, Suleyman Demirel, signed several cooperation agreements in Ankara on 12 February, dpa reported. The two presidents favorably evaluated the state of bilateral relations and pledged closer cooperation in the political, economic, and cultural spheres. Meidani, for his part, pointed out the importance of military cooperation, adding that the two sides agree that stability in Kosovo is essential to security in the Balkans, according to the "Turkish Daily News" on 13 February. The two presidents also discussed the planned transport corridor from the Adriatic coast to the Bulgarian port of Varna. LF

ROMANIAN PRESIDENT ON 'TRANSITION AND MORALITY'

Addressing an international colloquium in Bucharest on "Morality and government in the transition period," Emil Constantinescu on 12 February said Western investors have no right to talk about Romanian corruption as long as they do not dare to officially complain about it. He claimed that those investors in fact engage in "tacit collaboration" with those who are corrupt. Constantinescu said that totalitarian structures have been replaced by "democratic hybrids" rather than genuine democratic structures and that the "pillars" of the former system work hand in hand with organized crime to take over the new "fragile structures." He added that attempts to set up "facades of democracy" may lead to either anarchy or a dictatorship that exploits and exacerbates the "national communist" version of nationalism. MS

ROMANIAN PARAMEDICALS ON STRIKE

Some 150,000 members of the Sanitas federation of nurses and other medical staff went on strike on 12 February following the failure of talks with Premier Victor Ciorbea the previous day. Sanitas is demanding a 100 percent increase in wages, while the government says it cannot approve more than 25 percent. MS

LUCINSCHI-SMIRNOV MEETING CANCELED

A meeting between Moldovan President Petru Lucinschi and separatist leader Igor Smirnov that was scheduled to take place on 12 February has been canceled, ITAR-TASS reported. The two leaders were to have discussed economic cooperation. Moldovan presidential adviser Anatol Taranu said the "Transdniester authorities and far-right [pro-Romanian] nationalist forces in Moldova are compromising the proposals for a settlement [made by] the Russian Federation [and] trying to force Moldova out of the CIS." Relations between the sides have deteriorated since Chisinau imposed a tax on Transdniester goods as of 1 February and the Transdniester authorities retaliated by levying a similar tax on Moldovan goods. MS

U.S. COMPANY SUES MOLDOVA OVER SALE OF MIGS

Virtual Defense Development International Inc. (VDI) is suing the Moldovan government for not paying a $9 million commission in connection with the sale of 21 MiG-29 planes to the U.S. last October, BASA-press reported on 12 February, citing CNN. VDI says the sale was facilitated after a contract was signed between the Moldovan government and itself. The government in Chisinau refused to comment. MS

BULGARIA, RUSSIA REMAIN DEADLOCKED OVER GAS SUPPLIES

Gazprom chief Rem Vyakhirev says Bulgaria has "too many claims" in the dispute with Moscow over Russian gas deliveries and the transit of gas through Bulgarian pipelines to third countries. Vyakhirev told journalists it was "difficult" to envisage how and when the problems between the two sides will be solved, ITAR-TASS reported. He added that Bulgaria "is the only European state that no one can understand." MS




TER-PETROSSYAN LEAVES A MIXED ECONOMIC PICTURE


by Michael Wyzan

When Armenian President Levon Ter-Petrossyan resigned on 3 February, local and world attention focused on the implications of his action for attempts to resolve the conflict over Nagorno-Karabakh. But there has been little discussion, at least outside the country, of the economic implications of his resignation.

One reason for optimism is that the government of Prime Minister Robert Kocharyan has scored a number of successes in economic policy- making and enjoyed satisfactory relations with the IMF and World Bank.

The government's achievements include a shift toward market privatization from a variant based on vouchers, which failed to inject new capital into enterprises or change the way they are managed. That change in approach is already paying off. Ninety percent of Armentel, the national telecommunications company, was sold to a Greek consortium in December, and the prospects for large-scale investment in mining are improving (a Canadian company has agreed to invest $200 million in gold mining). Russian investment is set to flow into the energy sector, and the famous Yerevan cognac factory is up for tender.

The regime's other achievements include liberalizing the banking system, making the country the first CIS state to allow only courts access to information on bank accounts, improving tax collection, and passing legislation on tax reform (for example, broadening the base of the value- added tax).

At the same time, however, most economic indicators deteriorated in 1997, following three years in which Armenia registered one of the best performances within the CIS. GDP growth for the first 11 months of 1997 was 2.7 percent, compared with a projected 6 percent for the year as a whole (and with 5.4-6.9 percent over the previous three years). Growth was fueled by trade and services, while industrial output stagnated.

Although the growth figures are respectable by CIS standards, Armenia is no longer the most dynamic member; the economies of Azerbaijan, Georgia, and Kyrgyzstan are all growing faster. Another disappointment is consumer price inflation, which was 21.1 percent for the first 11 months, compared with a projected 10 percent for the year (and 5.7 percent in 1996).

The trade deficit for the first 11 months was $608 million, meaning that the figure for the whole year almost certainly exceeded the 1996 level of $571 million. Both those figures and the current account deficits of about $500 million are large for an economy the size of Armenia's. However, inflows from the Diaspora, international financial institutions, and foreign countries, especially the U.S., have prevented the imbalances from destabilizing the economy. Virtually the same could be said for the budget deficit; while it remained high at 6.8 percent of GDP in 1997, it is nonetheless declining.

Last November, the World Bank announced it would provide $200 million in 1997-1998 to finance the budget deficit and infrastructural investment. The IMF has been a bit more standoffish, delaying the release of the first of two annual tranches of a three-year loan agreed in February 1996 until the second half of 1997 out of concern over tax collection and public debt. The fund, concerned about the worsening macroeconomic indicators, energy pricing policy, and the management of privatization, did not approve release of the second tranche until early February of this year.

In late 1997, the government acknowledged that the year had been a disappointment but nonetheless projected major improvements for 1998: 5.2 percent GDP growth, 9 percent inflation, a stable exchange rate, and a budget deficit of 5.5 percent of GDP.

In the wake of Ter-Petrossyan's resignation, the most important factor for the fate of the economy is the identity of the next set of policy-makers. Vazgen Manukyan, who narrowly lost the disputed president elections in September 1996, announced on 5 February that he would campaign for the presidency on a ticket favoring democracy and industrial development.

Based on Manukyan's campaign pledges from 1996, industrial development may mean protectionism in foreign trade, activist industrial policy (including subsidization of failing enterprises), and closer economic ties with Moscow. At the more extreme end of the political spectrum, the communist party claimed last September to have collected 1 million signatures for a petition demanding that Armenia join the Russia-Belarus union. The Communists have urged a halt to privatization and a large increase in social welfare payments.

Armenia, along with other transition nations such as Moldova, is experiencing "reform fatigue." Generally good economic policy and, at least until last year, satisfactory macroeconomic statistics have failed to assuage popular frustration with high levels of poverty and socio-economic inequality. Despite encouraging signs, total foreign investment remains tiny and interest among private investors is growing only slowly.

Kocharyan differs from Ter-Petrossyan in that he argues good economic policy and reforms aimed at wiping out corruption will suffice to ensure satisfactory economic performance even without progress on Nagorno-Karabakh. Armenia's economic results in 1997 leave some doubt about that argument. If the next government lacks Kocharyan's commitment to fundamental reform, the country's economic future will look rather cloudy. The author is an economist based in Austria.


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