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Newsline - March 13, 1998




YELTSIN SICK AGAIN, CANCELS ALL MEETINGS

The Kremlin press service said on 13 March that President Boris Yeltsin has an "acute respiratory infection" and has canceled all meetings for the day. ITAR-TASS reported that Yeltsin has not gone to a hospital and is being treated with antibiotics at his Gorky residence outside Moscow. The previous day, presidential spokesman Sergei Yastrzhembskii announced that Yeltsin's planned trip to Indonesia has been postponed from April to the second half of this year or early 1999. He gave no reason for the delay, saying only that it was by "mutual agreement." Yastrzhembskii did not mention Yeltsin's informal visit to Japan, which is set for 11-13 April. Yeltsin recently urged journalists to stop speculating about his health, saying he "would have said honestly" if any serious problems remained after his November 1996 open- heart surgery (see "RFE/RL Newsline," 10 March 1998). LB

REGIONAL LEADERS NOT HAPPY WITH BUDGET THEY APPROVED

Many members of the Federation Council voted for the 1998 budget on 12 March purely on the grounds that a bad budget is better than no budget, RFE/RL's Moscow bureau reported. Samara Oblast Governor Konstantin Titov, who also chairs the upper house's Budget Committee, told deputies before the vote that his committee was recommending passage because without a budget, government actions "could go out of control." In an interview with RFE/RL after the budget was adopted, Titov called for giving regional governments a freer hand over their own budgets and the proceeds from a proposed sales tax. ITAR-TASS quoted Federation Council Speaker Yegor Stroev as saying that he, too, is dissatisfied with the budget but that he voted in favor because rejecting the budget would have worsened the financial situation of regional governments. LB

UPPER HOUSE RATIFIES HUMAN RIGHTS CONVENTION

The Federation Council on 13 March voted 105 to zero to ratify the European Convention on Human Rights, Reuters reported. The upper house held no debate before approving the document, which is supported by Yeltsin. After the president signs the convention, Russian citizens will be allowed to seek redress at the European Court in Strasbourg if they believe their rights have been violated (see "RFE/RL Newsline," 20 and 23 February 1998). LB

ACTIVISTS UNIMPRESSED BY DRAFT PROGRAM ON HUMAN RIGHTS

Members of the human rights chamber of the president's Political Consultative Council have sharply criticized a draft program for protecting human rights in Russia from 1998-2002, RFE/RL's Moscow bureau reported. During a 12 March meeting, veteran activists including Valerii Borshchev, who is also a State Duma deputy from Yabloko, said the program was drafted without consulting the human rights community. Lidiya Grafova said discussing the program was a "waste of time." In interviews with RFE/RL, Grafova and other members of the chamber expressed pessimism about current trends in Russia. Viktor Cherepkov, who is also mayor of Vladivostok, argued that it is "impossible" to use the court system to defend human rights. Valerii Abramkin argued that torture is such a widespread problem in law-enforcement agencies that the police pose a greater threat to the population than do criminals. LB

DUMA SLAMS CONDUCT OF PRIVATIZATION AUCTIONS

The Duma on 11 March passed a non-binding resolution charging that "the interests of the country and state security were ignored" in the conduct of four controversial privatization sales last year, ITAR-TASS reported. The resolution deals with the sales of controlling stakes in the Sibneft oil company last May and in Norilsk Nickel last August as well as sales of shares in the Tyumen Oil Company and the telecommunications giant Svyazinvest last July. A company linked to Boris Berezovskii's business empire acquired the Sibneft stake, the Alfa group became owner of the Tyumen Oil Company shares, and firms linked to Oneksimbank successfully bid for Svyazinvest and Norilsk Nickel. The Duma's resolution also called for halting major privatization sales pending the passage of a law naming "strategic companies." The government is almost certain to ignore the Duma's resolution, just as it has ignored an Audit Chamber report on the same four auctions (see "RFE/RL Newsline," 12 December 1997 and 19 January 1998). LB

YABLOKO BOYCOTS DUMA OVER ZHIRINOVSKY SCANDAL

Grigorii Yavlinskii announced on 13 March that his Yabloko faction will boycott Duma sessions until either the Prosecutor-General's Office assesses the recent behavior of Liberal Democratic Party of Russia leader Vladimir Zhirinovsky or Zhirinovsky is denied the right to speak in the Duma, RFE/RL's Moscow bureau reported. Yabloko also favors lifting Zhirinovsky's immunity so he can be prosecuted for "hooliganism" and "insulting" other Duma members. The lower house voted to silence the LDPR leader for one day on 11 March, but Zhirinovsky subsequently stormed onto the podium and threw water on other deputies. On 13 March, Zhirinovsky apologized for his "unacceptable" behavior but said he was provoked by the Duma's vote to silence him, which he called a "procedural violation." Zhirinovsky's most notorious scuffle in the Duma occurred in September 1995, when he hooked his arm around the neck of a woman deputy and pulled her hair. LB

CENTRAL BANK CUTS REFINANCING RATE AGAIN

The Central Bank on 13 March announced the third reduction in its annual refinancing rate (at which it lends to commercial bank) in less than a month. The rate reduction from 36 percent to 30 percent will take effect on 16 March. The bank is aiming to bring the refinancing rate down to 16-18 percent by year's end. The rate was raised from 21 percent to 28 percent last November and hiked again in early February to 42 percent. Meanwhile, Central Bank Chairman Sergei Dubinin announced on 12 March that the bank has some $16 billion in gold and hard-currency reserves--roughly the same as the level of April and May 1997 but down from a peak of some $23 billion last September. Efforts to support the ruble in recent months substantially depleted those reserves. LB

DOWNGRADE NOT TO AFFECT RUSSIA'S BORROWING PLANS

Finance Minister Mikhail Zadornov on 12 March announced that the decision by Moody's to downgrade Russia's sovereign debt rating will not affect government plans for Russia's next Eurobond issue, Russian news agencies reported. Zadornov did not specify how much Russia plans to raise from a Eurobond to be floated in late March and early April. During a meeting with Yeltsin on 12 March, First Deputy Prime Minister Anatolii Chubais suggested that Moody's may have lowered Russia's credit rating in the interest of competition with another leading agency, Fitch IBCA, which has left Russia's rating unchanged (see "RFE/RL Newsline," 11 and 12 March 1998). He added that international ratings agencies may now be "trying to compensate" for their failure to predict last year's crisis in Asia. LB

CHERNOMYRDIN WINDS UP U.S VISIT

At the end of his visit to the U.S., Prime Minister Viktor Chernomyrdin on 12 March toured the Lockheed Martin Missiles and Space plant in Silicon Valley, together with U.S. Vice President Al Gore. Lockheed Martin Intersputnik Ltd., a U.S.- Russian joint venture, announced its first satellite will be launched in December. During a visit to the Sun Microsystems company, Chernomyrdin said some restrictions in trade between the U.S. and his country should be dropped, including those on "supercomputers." Earlier this week, the "Washington Times" reported that Russia has obtained U.S. made supercomputers and is using them in nuclear weapons research facilities (see "RFE/RL Newsline," 11 March 1998). BP

NORWAY EXPELS RUSSIAN DIPLOMATS

Oslo on 12 March declared five Russian diplomats persona non grata and accused them of attempting to recruit Norwegians to work for Russian intelligence. Valerii Kochkarev, attache for the Russian embassy in Oslo, and embassy adviser Yevgenii Serebryakov were asked to leave Norway as soon as possible. The other three diplomats declared persona non grata formerly worked in Norway, the only NATO country to share a border with Russia. Also on 12 March, Norwegian Prime Minister Kjell Magne Bondevik postponed a trip to Russia scheduled for 17-18 March. The Russian Foreign Ministry on 13 March issued a statement saying Russia "reserves the right to take corresponding measures regarding Norwegian representatives," ITAR-TASS reported. In May 1996, Russia and the U.K. each expelled four of the other's diplomats. LB

CHECHEN PRESIDENT MEETS FAMILIES OF HOSTAGES

President Aslan Maskhadov on 12 March with the families of two British subjects who have been held hostage in Chechnya for eight months. He told them that he is doing all he can to locate them. In a related development, British Foreign Office Deputy Undersecretary Francis Richards told Maskhadov that British assistance to Chechnya can be discussed only after those hostages have been released, ITAR-TASS reported. PG

CONSTITUTIONAL COURT TO CONSIDER ELECTORAL LAW

The Constitutional Court on 12 March decided to hear an appeal by the Saratov Oblast legislature against the proportional representation system currently used to elect half of the 450 State Duma deputies, ITAR-TASS reported on 12 March. The court has twice refused to hear cases on the matter: once in November 1995, less than a month before Duma elections were held, and again in November 1997. Saratov Governor Dmitrii Ayatskov is among those who advocate changing the electoral law so that all Duma deputies must win their seats in single-member districts. Sergei Shakhrai, Yeltsin's representative in the Constitutional Court, told "Rossiiskaya gazeta" on 28 February that he believes the proportional representation system violates voters' rights. Others in the presidential administration have suggested that abolishing proportional representation would merely create a new set of problems in the Duma (see "RFE/RL Newsline," 10 February 1998). LB

LUZHKOV EXPLAINS STAND ON RESIDENCE PERMITS

Moscow Mayor Yurii Luzhkov on 13 March sought to downplay differences between his government and the Constitutional Court over the use of residence permits ("propiski") in the capital. The Constitutional Court has warned Luzhkov not to defy a recent ruling, which struck down the "propiska" system as an unconstitutional limitation on citizens' right to choose their place of residence (see "RFE/RL Newsline," 11 and 12 March 1998). Luzhkov argued that the court's ruling is at odds with current Russian legislation, which allows authorities to issue residence permits, ITAR-TASS reported. He claimed Moscow has no choice but to operate in accordance with current legislation pending the adoption of new laws on the matter. Luzhkov again said residence permits are essential to keep Moscow from being overwhelmed by new arrivals seeking generous social benefits. LB

RUSSIA SNUBS LATVIAN FOREIGN MINISTER...

Russian Foreign Ministry spokesman Gennadii Tarasov on 12 March said a proposed visit to Moscow by Latvian Foreign Minister Valdis Birkavs "can hardly add anything new to our relations," Russian news agencies reported. Birkavs proposed the trip to discuss the 3 March pensioners' rally in Riga and the future of Russian-Latvian trade. But Tarasov said those topics do not address "the main cause of the current state of affairs in our relations with Latvia: disrespect for the rights of our compatriots." He added that Russia hopes for "practical deeds," rather than promises, in order "to ensure the basic rights and freedoms in Latvia in line with recommendations by the Organization for Security and Cooperation in Europe and other international organizations." Meanwhile, the press attache of the Russian embassy in Riga, Vladimir Ivanov, on 12 March denied that Moscow has overreacted to the 3 March incident, as some Latvian officials have charged, Interfax reported. LB

...AS RUSSIAN FEDERATION COUNCIL SLAMS LATVIA

The Russian Federation Council on 12 March passed a non-binding resolution calling on the government to freeze trade and economic ties with Latvia if "discrimination against the Russian-speaking population" there continues, Russian news agencies reported. The resolution condemned the breakup of the pensioners' rally in Riga and the 8 March desecration of Soviet graves in Liepaja. Addressing the Council, Moscow Mayor Yurii Luzhkov charged that Latvian authorities "are permitting a policy of genocide and discrimination against our former compatriots," Interfax reported. Speaking to journalists later the same day, Luzhkov argued that Russian-speakers in Latvia are in effect treated like "slaves," RFE/RL's Moscow bureau reported. He said the Russian government has not done enough to combat discrimination against Russian-speakers in the Baltics. LB

LITHUANIA DEFENDS LATVIA'S HANDLING OF PENSIONERS' RALLY

The Lithuanian Foreign Ministry on 12 March issued a statement saying the Latvian authorities' handling of the 3 March pensioners' rally in Riga did not "contradict Latvian law," ITAR-TASS and Interfax reported. The ministry said it is following "with concern" the developments since the rally. It also urged Russia and Latvia to settle their differences through a "constructive dialogue." JC

RIGA TO TAKE NEWSPAPER TO COURT OVER ANTI-RUSSIAN ARTICLES

The Latvian Prosecutor-General's Office has launched criminal proceedings against the newspaper "National Independence," the mouthpiece of the Fatherland and Freedom party, for publishing anti-Russian articles, BNS reported on 12 March. Those articles reportedly described Russians as "savage" and argued that "Russia has always brought evil to its neighbors and has never recognized democracy and universal human values." The newspaper "National Independence" is accused of violating laws on ethnic equality. According to BNS, the criminal code provides for a prison sentence of up to 10 years in cases where nationalist propaganda has grave consequences. JC

RUSSIA KEEPS UP CRITICISM OF ESTONIA

Russian Foreign Ministry spokesman Tarasov on 12 March criticized the Estonian parliament for rejecting amendments to the country's citizenship law earlier this week. Tarasov said the parliament "again showed a stubborn unwillingness" to abide by recommendations of the OSCE and other international organizations, ITAR-TASS reported. He added that "stable relations of trust" between Estonia and Russia will not be possible unless conditions for Russian-speaking residents of Estonia improve. Addressing the Russian Federation Council on 12 March, Russian First Deputy Foreign Minister Igor Ivanov said Moscow may urge the international community to isolate Latvia and Estonia so that those countries "will be forced to take measures to improve their human rights record," Interfax reported. LB




DISPUTE OVER ABKHAZ ELECTIONS HEATS UP

Abkhaz leader Vladislav Ardzinba on 12 March dismissed the objections of both Moscow and Tbilisi over plans to hold local elections on that territory, ITAR-TASS reported. Ardzinba said that he does not see how a move to democracy can prove destabilizing, as the Russian and Georgian governments have argued. Meanwhile, Russian Deputy Prime Minister Ivan Rybkin told a group of Georgian parliamentary deputies that Tbilisi must not use force to resolve the Abkhaz situation. And the command of the CIS peace-keepers in that region asked Georgia to pull back some of its armored units from the border between Abkhazia and the rest of Georgia. PG

OSCE WORRIED ABOUT ARMENIAN ELECTION PROCEDURES

Christopher Shields, the coordinator of OSCE observer mission in Armenia, said on 12 March that Yerevan has not yet addressed several worrisome procedures, RFE/RL's Armenian Service reported. Shields said his group is especially concerned about the use of mobile ballot boxes in remote areas and the willingness of the Central Election Commission to allow Armenian citizens abroad to vote without having registered beforehand. Some 160 OSCE monitors are currently in Armenia. PG

Aliyev MAY NOT ATTEND CIS SUMMIT

RFE/RL correspondents in Baku reported on 13 March that Azerbaijani President Heidar Aliyev will not attend the 19 March CIS summit in Moscow because of Russian shipments of weapons to Armenia's and Moscow's failure to respond to an Azerbaijani request to extradite Shakhin Musaev. Musaev is suspected of plotting terrorist attacks against Aliev. However, ITAR-TASS reported the same day that there is no confirmation Aliyev will not attend the summit. BP

SIX SENTENCED TO DEATH IN TAJIKISTAN

The Tajik Supreme Court has handed down sentences on 19 men allegedly involved in the assassination attempt on President Imomali Rakhmonov in the northern Tajik city of Khujand last April. Six received the death penalty, while the others were sentence to between one and 14 years in jail. Among those condemned to death is Abdulkahfiz Abdullayev, the brother of Abdumalik Abdullajonov, who is head of Tajikistan's National Revival Movement and a former prime minister. Amnesty International has already appealed the death sentences. Under the Tajik Constitution, the president can pardon those sentenced to death . BP

TURKMEN PRESIDENT OPENS NEW INDUSTRIAL FACILITIES

Saparmurat Niyazov on 12 March attended the opening of the Malai-Charjou pipeline, which will provide up to 7.5 million cubic meters of natural gas for domestic use. In his address, Niyazov noted that the Turkmen population receives 5 billion cubic meters of gas free of charge each year. The president also opened a factory producing parts for agricultural machinery and a soap factory, the first of its kind in Turkmenistan. BP

MINIMUM WAGE TO BE LOWERED IN KAZAKHSTAN?

The Kazakh government has resubmitted to the parliament a proposal to suspend the law on the minimum wage until the year 2004, ITAR-TASS reported on 13 March. The government claims it can provide only 67 percent of the amount required by that legislation. The monthly minimum wage currently stands at 3,109 tenge ($40). Leonid Martynov, the deputy chairman of Kazakhstan's Federation of Trade Unions, called the plan a "rude violation" of the agreement between the executive, the trade unions, and employees. The lower house has already voted down the proposal. BP




BELARUSIAN PRESIDENT UPSET BY RUSSIAN MEDIA COVERAGE

Belarusian state television on 12 March reported that Alyaksandr Lukashenka is upset with the Russian media's coverage of Belarus. The program said Lukashenka is unhappy with the "pure lies and slander regarding the president," which, he says, are endorsed by "Russian officialdom." The program singled out the independent television channel NTV and described the newspapers "Izvestiya" and "Noviya Izvestiya" as "offensive publications." It said Lukashenka has told Belarusian Foreign Minister Ivan Antonovich to "rebuff the liars who try to slander the policy of the president." In other news, a CIS Customs Union meeting scheduled to take place in Minsk on 3 April will now be held in Moscow on 18 March. No reason was given for the change, which was made at Kazakhstan's request. PB

UKRAINIAN MEDIA SHARPLY CRITICIZES DETENTION OF BUSINESSMAN

The arrest of a businessman who is running in the 29 March elections has been widely criticized in Ukraine as politically motivated, an RFE/RL correspondent in Kyiv reported on 12 March. Mykhailo Brodsky was detained earlier this week on charges of illegal trade deals. Brodsky, a member of the Kyiv city council, is running for mayor of Kyiv as well as for a seat in the parliament. Several prominent newspapers have said his arrest just before the 29 March elections is an attempt by President Leonid Kuchma to curtail the criticism of political rivals. Volodymyr Horbulin, secretary of the National Security Council, denied those charges. Brodsky is one of Ukraine's wealthiest businessmen, although his main enterprise, Dendi, reportedly owes its depositors millions of hryvna. PB

COMMUNISTS, GREENS TOP IN UKRAINIAN POLLS

The Communist and Green parties are the most popular in Ukraine, according to a poll released on 11 March, Reuters reported. The survey, published by the independent Democratic Initiatives group and Socis-Gallup, gives the Communists 14 percent support and the Greens 6 percent The nationalist Rukh party followed with 5.8 percent. Elections are to be held on 29 March. PB

WORLD BANK SAYS POLAND SHOULD WORK TO ACHIEVE STABILITY

The World Bank on 12 March said Poland should work toward quick economic growth and stability in order to meet standards for EU entry, Reuters reported. World Bank official Daniel Oks said in Warsaw that the country still has to address an overhaul of its pension system, more rapid privatization, and greater decentralization. A World Bank report, which Oks co-authored, said urgent reforms are needed in the Polish agricultural sector noting that while 25 percent of the work force is in farming, that sector accounts for only 6 percent of GDP. Poland begins EU accession talks on 31 March. PB

POLAND MAKES IT CHEAPER TO CROSS EASTERN BORDER

The government on 12 March announced that it will lower the cost of visas for people crossing its eastern borders, an RFE/RL correspondent in Warsaw reported. The Interior Ministry said a single-entry visa will cost roughly $5 and a multi-entry one some $20--down from the $25 charged for a single- entry visa since the beginning of the year. PB

CZECH PARLIAMENTARY COMMITTEE APPROVES NATO ACCESSION

The parliamentary Foreign Relations Committee on 12 March voted 14 to one to approve the Czech Republic's accession to NATO, CTK reported. The only vote cast against was that of Communist deputy Miroslav Ransdorf. But Social Democratic leader Milos Zeman said he still favors a referendum on accession, despite the fact that the Social Democratic parliamentary faction has approved supporting accession in the debate scheduled for 14 April. Zeman told journalists that "one [option] does not rule out the other." MS

SLOVAK PREMIER QUESTIONS VALIDITY OF HAVEL'S ELECTION

Prime Minister Vladimir Meciar told journalists in London, where he was attending the 12 March EU conference of member states and candidates, that he has doubts about the legality of Czech President Vaclav Havel's election for a second term in January, Reuters reported. Meciar's comment follows Havel's recent criticism of developments in Slovakia since Michal Kovac's term as Slovak president ended. Meciar noted that the Czech president had been elected by a majority of a single vote at a time when one member of the parliament, far-right Republican Party leader Miroslav Sladek, was held in prison. If that had happened in Slovakia, "what kind of response would it invite?" Meciar asked. MS

SLOVAKIA TO ADOPT NEW LAW ON MINORITY LANGUAGES?

Slovakia may adopt a new law on the right to use minority languages in response to international criticism of its treatment of ethnic Hungarians, Reuters reported on 12 March, citing Peter Burian, a senior Foreign Ministry official. Following talks with experts from the Council of Europe, the European Commission, and the Organization for Security and Cooperation in Europe, Burian said that it had been suggested at that meeting that a law be passed summarizing "all the rulings into one single law on national minority languages." He said it is "unclear" whether such a law can be passed this year because of the September general elections. Under a 1995 law, Slovak is the country's only official language. Both Slovakia's ethnic Hungarians and the EU have criticized that legislation. MS

SLOVAKIA 'SHOCKED' BY HUNGARIAN DECISION ON DAM

Foreign Ministry spokesman Milan Tokar on 12 March expressed "shock" over the Hungarian government's decision to postpone again the signing of a framework agreement settling the conflict over building the Gabcikovo- Nagymaros dam. Tokar said Slovakia cannot understand the need for supplementary studies on the environmental effects of building alternative dams because "dozens of thorough and deep analyses have already been made," RFE/RL's Bratislava bureau reported. MS

HUNGARY POSTPONES DECISION ON MINORITY REPRESENTATION

The parliament on 10 March voted against amendments to the electoral law making possible the guaranteed representation of the country's 13 ethnic minorities. But earlier the same day, it approved a law setting up the 13 parliamentary seats and providing for minority representation after the May general elections. The two motions "can only work together, otherwise there is a constitutional incoherence," Pero Lasztyity, head of the Serbian minority, told Hungarian media. The parliament is to vote again on the issue next week. MSZ




U.S., KOSOVARS SLAM SERBIAN "PROPAGANDA EXERCISE"...

A State Department spokesman in Washington said that the Serbian invitation to Kosovars for talks in Pristina on 12 March is a "propaganda exercise" (see "RFE/RL Newsline," 12 March 1998). He added that "it seems like the Belgrade authorities are proposing things that are designed to fail." In Pristina, Parliamentary Party leader Adem Demaci said the Serbian government ministers "came as lords to their servants, to ask if the servants have any complaints." No Kosovars attended the talks. PM

...BUT BELGRADE TRIES AGAIN

Following the Kosovo Albanians' refusal to attend the 12 March open-invitation talks, the Serbian government issued individual invitations to prominent Kosovo politicians to attend a discussion the following day. Fehmi Agani of the Democratic League of Kosovo and other prominent Kosovars said, however, that they will not attend those talks because the Serbs continue to attach conditions. Luljeta Pula-Beqiri, the Social Democratic candidate for the Kosovar shadow-state presidency, said the Kosovars cannot sit down with the people responsible for the recent killings in Drenica. PM

KOSOVARS TO GO AHEAD WITH VOTE

Shadow-state President Ibrahim Rugova announced the formation in Pristina on 12 March of an election commission to supervise the 22 March presidential and parliamentary vote. Elsewhere, student representatives said a mass demonstration will take place near the U.S. cultural center on 13 March. Women have been holding candle-light vigils in Pristina for several days. Meanwhile, the Kosovo Committee for the Defense of Human Rights and Freedoms, has issued a statement that puts the Albanian death toll at over 90. The text added that most of the victims are women, children or elderly. And spokesmen for the Kosovar Red Cross stated that 14,000 people have fled the Drenica region since the Serbian assault began two weeks ago. PM

BELGRADE TURNS DOWN MEDIATOR

Ivica Dacic, a spokesman for the governing Socialist Party of Serbia, said in Belgrade on 12 March that Serbia will deal with Kosovo "without an international mediator." He added that the "internal issues of Serbia cannot be internationalized." Spanish former Prime Minister Felipe Gonzales was recently asked by the international Contact Group to mediate in the Kosovo crisis but said he will do so only if Yugoslav President Slobodan Milosevic approves. The Kosovars, for their part, seek to involve the international community in the Kosovo question and have asked for foreign mediation in any talks they hold with the Serbs. PM

TALBOTT SEEKS SOUTHEAST EUROPEAN SUPPORT

Deputy Secretary of State Strobe Talbott left Washington on 12 March to visit Slovenia, Albania, Macedonia, Bulgaria, and Romania. He will seek to coordinate those countries' policies on Kosovo with that of the U.S.. It is unclear why Croatia was not included on his itinerary, although Zagreb regularly refuses to be drawn into any diplomatic initiative that centers on the Balkans. Before leaving, Talbott said: "We absolutely must show resolve... to get ahead of the vicious cycle underway on the ground. If Kosovo truly blows, it could be worse than Bosnia with the risk of spreading in all directions, including south and east." He added it is important that Albania and Macedonia "do nothing to rile the situation further." PM

MORE PEACEKEEPERS FOR BALKANS?

A State Department spokesman said in Washington on 12 March that enlarging the UN peacekeeping force in Macedonia and expanding its mandate "is something that's under discussion right now.... We are looking at what...mix of capabilities and missions will best serve a situation that has gotten worse.... We're trying to make sure that we take all the steps we can to enhance the stability of the region, to give confidence to the countries in the region, and to make sure that there are no miscalculations ... so that if the situation does deteriorate further, the risk of it spreading is limited." The spokesman added that Washington is considering providing additional military training to countries in the region under NATO's Partnership for Peace program. PM

EUROPEAN PARLIAMENT IN FAVOR OF PEACEKEEPERS

The European Parliament on 12 March passed a resolution calling on the UN, EU, NATO, the OSCE, and the Western European Union to send a preventive deployment force to the Balkans. Dutch Liberal leader Gijs de Vries told the assembly that "the lesson still has not been learned...that violence can only be combated by military means." He was alluding to the international community's reluctance to act after Serbia launched wars in Croatia in 1991 and in Bosnia the following year. "Take off your blinkers. The conflict in Kosovo is more dangerous than the others were," De Vries added. PM

SOLANA SAYS KOSOVO WON'T AFFECT BOSNIA

NATO Secretary-General Javier Solana said in Banja Luka on 12 March that he hopes that the crisis in Kosovo will not have any affect on Bosnia. He said it is necessary to "separate both issues." Later in Tirana, he said that "in the current situation, we are opposed to the deployment of an international force, either in Kosovo or in Albania," which Albania has requested (see RFE/RL Newsline, 12 March 1998). His host, Prime Minister Fatos Nano, urged "our brothers in Kosovo" to refrain from violence and "understand...that dialogue cannot take place in the presence of gunfire." PM

CROATIA TO RESTORE SERBIAN PROPERTY RIGHTS

Deputy Prime Minister Ljerka Mintas-Hodak said in Zagreb on 12 March that the government has prepared legislation to repeal wartime laws under which the homes and property of Croatian Serbs who fled the country were confiscated. The international community has long demanded that Croatia enable the Serbs to return to their homes. The government also decided to ban all political demonstrations in eastern Slavonia until 1 August (see "RFE/RL Newsline," 12 March 1998). PM

WESTENDORP RULES ON TOWN COUNCILS

A spokesman for the international community's Carlos Westendorp said on 12 March in Sarajevo that his office has ruled on the composition of eight town councils over which local officials had been unable to agree. The composition of a further eight, out of a total of 136 town councils, remains disputed. Elsewhere, the mainly Croatian and Muslim federal parliament approved a bill restoring ownership rights to prewar owners of apartments, an RFE/RL correspondent reported from Sarajevo. PM

HARMONY BETWEEN ALBANIAN RIVALS?

Pandeli Majko, who heads the Socialist Party faction, and parliamentary speaker Skender Gjinushi met with the local Democratic Party leadership in the Democratic stronghold of Shkoder on 11 March. Majko said that they discussed the 22 February clashes in Shkoder and that the local Democrats distanced themselves from any responsibility for the incidents, according to "Dita Informacion." The daily pointed out that the meeting was a surprise for most observers because of the polarized political scene in Albania and because the Socialists and Democrats have consistently blamed each other for the Shkoder clashes. FS

CONSTANTINESCU SAYS DIPLOMATIC OFFENSIVE IN LONDON SUCCESSFUL

Returning from the London conference of EU states and candidates, President Emil Constantinescu on 13 March said Romania's "diplomatic offensive" for "equal treatment of all candidates" for EU membership was successful. He said negotiations with all 11 candidates will begin at foreign minister level in Brussels on 30 March. "Screening" of their performance to date will start several days later, he added. Constantinescu said this was a "last minute" decision adopted by the London conference, according to Romanian state radio. His statement has not yet been confirmed by an official EU source. MS

ARE DEMOCRATS STILL PART OF RULING COALITION?

Ion Diaconescu, the chairman of the National Peasant Party Christian Democratic, said on 13 March that the Democratic Party has "placed itself outside the coalition," RFE/RL's Bucharest bureau reported. Diaconescu spoke after Democratic parliamentary deputies voted against a change in the Civil Code proposed by the cabinet. He said that if the Democrats wish to rejoin the coalition, a "new protocol" must be negotiated. Democratic Party chairman Petre Roman said in reaction that the ending of the coalition can not be "decreed unilaterally." Democratic Party deputy chairman Victor Babiuc said the same day that President Constantinescu must intervene "as soon as possible" to resolve the government crisis in such a way as to make it possible for the Democrats to return to the executive. MS

TIRASPOL CHALLENGES MOLDOVA'S COMMUNISTS...

According to the Department of State Security of the separatist Tiraspol region, the Party of Moldovan Communists (PCM) has set up an electoral headquarters in Rybnitsa in defiance of the "sovereignty" of the "Moldovan Transdniestrian Republic." The department said it has recently confiscated more than 1,000 electoral leaflets distributed by the PCM. It added it will not allow campaigning for the 22 March Moldovan parliamentary elections on the territory of the "independent republic." The department also accused PCM leader Vladimir Voronin of trying to take over Communist Party organizations in the Transdniester, adding that the attempt has been "severely condemned" by most Transdniestrian Communists, RFE/RL's Chisinau bureau reported. MS

...WHILE UKRAINIAN COMMUNISTS BACK MOLDOVAN COMRADES

In a joint appeal published in the Russian-language government daily "Nezavisimaya Moldova" on 12 March, PCM leader Voronin and Petr Simonenko, the head of the Ukrainian Communist Party, called on Moldovan and Ukrainian voters to back the Communists in the upcoming elections in both countries, saying the "future of the next generations" is "very much dependent" on how they vote. The two leaders said the "destruction of the Soviet Union and its flourishing economy" had been accomplished "with the help of foreign stage directors." They also argued that "only the Communists have a clear conception about rebuilding a Union of Independent States on a new basis," BASA-press reported. MS

BULGARIAN PREMIER ON RISK OF FANNING FUNDAMENTALISM IN TURKEY

Ivan Kostov told journalists in London on 12 March , where he attended the EU conference, that the isolation of Turkey from the EU risks igniting Islamic fundamentalism in that country, AFP reported. Addressing the conference, Kostov said that there is "no alternative to the EU for European countries" and that exclusion from the group will result in "raising crime, extremism, and economic ruin." MS




SLOVENIAN ECONOMY STAGNATES AMID RESISTANCE TO REFORM


by Michael Wyzan

Slovenia occupies an odd position among transition countries. Included in the first wave of countries invited to begin accession talks with the EU, it is often praised for having risen above the turmoil in the rest of former Yugoslavia and joined "Central Europe." In the EU's eyes, the distance between Slovenia and its erstwhile fellow republics is such that no other component of the former Yugoslavia is officially considered even a candidate for EU membership.

Nonetheless, Slovenia's economy is somewhat stagnant, especially the industrial sector, and resistance to reform is strong among industrial workers and bankers. Those working in industry are often unwilling to part with features of the old Yugoslav self-management system, under which their representatives held as many as half of the seats on enterprise supervisory boards.

Macroeconomic policy was nearly paralyzed in 1997 by the failure of the government--which was formed in February, several months after the November 1996 general elections--to pass the annual budget before December. Macroeconomic indicators were respectable and rather similar to 1996's. GDP grew by 2.9-3.3 percent, compared with 3.1 percent in 1996. Industrial production grew by only 1.3 percent, slightly up on 1996's 1.0 percent but down from 6.4 percent in 1994.

Weak industrial performance results partly from slow restructuring of enterprises. Even after privatization, companies are frequently held hostage to pressure against layoffs from workers' representatives on supervisory councils, which have sometimes fired managers who had advanced restructuring plans. Before the major foreign investment deal of 1997--the U.S. tire-maker Goodyear's purchase of the Sava rubber company--Sava employees had concluded a deal with the Slovenian company expanding their participation in management. Banks are also resisting reform and have taken the government to court over a tax on financial institutions aimed at forcing banks to consolidate and increase lending to enterprises.

The budget deficit was 1.2-1.4 percent of GDP, low by international standards but the highest since independence. This deterioration resulted from increased transfers to the pension fund, wage payments agreed to in late 1996, reductions in employers' social security contributions, and import tariffs.

The government succeeded somewhat in slowing the growth of wages last year: wages in November were up 8.0 percent over November 1996 (compared with a 15.9 percent in November 1996 over November 1995). But even with slower growth, dollar gross wages--at $890 in November 1997--remain by a wide margin the highest among transition countries. With such high labor costs, real wage growth in excess of productivity increases sparks fears about the country's international competitiveness.

Retail price inflation in 1997 (December-to- December) was 9.4 percent, up 8.8 percent on the previous 12 months, partly owing to hikes in administered electricity and oil prices.

According to official statistics, the unemployment rate was 14.5 percent in October, although a survey conducted by the International Labour Organization found a rate of only 7.1 percent in May. Neither of those figures had changed much over 1996.

Foreign sector developments were generally favorable in 1997, with a trade deficit of $874 million through November, compared with $1.04 billion in the first nine months of 1996. Calculated in German marks--a good yardstick since most of Slovenia's trade is with the EU - exports and imports were both up almost 15 percent in the first 10 months of 1997.

Throughout the same period, the current account was in surplus ($76.3 million). The Bank of Slovenia's foreign exchange reserves (excluding gold) reached a comfortable $3.4 billion in November, up from $2.3 billion at the end of 1996. Foreign direct investment rose in 1997, with inflows of $246 million during the first nine months, compared with $186 million for 1996 as a whole. Those favorable external sector trends occurred despite the fact that the tolar depreciated only slightly against the German mark last year, from 91.0 at the end of 1996 to 94.4 at the close of 1997.

The government took various steps in 1997 to align its legislation with EU standards, ahead of the beginning of accession talks at the end of this month. A document submitted to the parliament in October outlined the government's priorities in this regard as the reform of taxation, pensions, the financial sector, and government service provision, as well as further price liberalization.

New legislation calls for removing barriers to foreign direct investment, except in defense industries and health and pension insurance, and allowing foreigners to become the sole owners of local firms. But the trade unions, already unhappy about the slowdown in wage growth and plans to limit workers' representation on supervisory boards to one-third of the seats, will probably resist some of those reforms, particularly in the pension sphere. The author is an economist living in Austria.


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