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Newsline - March 25, 1998


Acting Prime Minister Sergei Kirienko on 25 March met with Communist Party leader Gennadii Zyuganov for one hour to begin consultations with leaders of State Duma factions, RFE/RL's Moscow bureau reported. Kirienko had been expected to meet with Yabloko leader Grigorii Yavlinskii on the morning of 25 March, but their meeting was postponed at the last minute and no official reason was given. A spokeswoman for the Yabloko faction told ITAR-TASS that Yabloko had not requested the delay. At a 24 March press conference and in an interview with NTV the same day, Kirienko declined to name specific candidates for government posts, saying he will submit a list of nominees to President Boris Yeltsin within one week. LB


Although Kirienko was initially seen as a transitional figure following his 23 March appointment as acting prime minister, influential politicians are predicting that Yeltsin will seek to make the appointment permanent. Aleksandr Livshits, the deputy head of the presidential administration, has described Kirienko as a "great find" for the government, ITAR-TASS reported on 24 March . Livshits said Yeltsin is likely to propose Kirienko's candidacy to the Duma, which must confirm the appointment of the prime minister. Interfax on 25 March quoted Boris Berezovskii as saying Kirienko is an "energetic young man" who has a "realistic" chance of being appointed prime minister. Meanwhile, Russian news agencies reported on 24 March that Kirienko has moved into the offices of former First Deputy Prime Minister Anatolii Chubais. Former Prime Minister Viktor Chernomyrdin's offices will remain vacant until the Duma has confirmed his successor. LB


Yabloko leader Yavlinskii has denied rumors that he has been offered a post in the new government. In interviews with Ekho Moskvy and Russian Public Television on 24 March, Yavlinskii praised Yeltsin's decision to fire Chernomyrdin and his government but said Yabloko will decide whether to support the new cabinet only after it becomes clear how that government will be formed and what policies it will support. When he meets with acting Prime Minister Kirienko, Yavlinskii is expected to call on the government to implement policies Yabloko has long demanded. Those policies include tax reductions, plans for paying wages and pensions, protection of investors' rights, combatting corruption, and auditing natural monopolies. LB


Federation Council Speaker Yegor Stroev on 24 March called for some regional leaders to be included in the new government, Interfax reported. First Deputy Prime Minister Boris Nemtsov became the first regional leader to join the federal government last March, when he gave up the post of governor of Nizhnii Novgorod Oblast. Samara Mayor Oleg Sysuev also joined the government last March as a deputy prime minister. Speaking to journalists after meeting with Kirienko, Stroev said he and the acting prime minister have discussed "ways to restore the vertical power structure" and do away with "intermediaries" between the president, prime minister, governors, and mayors. Kirienko also agreed to attend a Federation Council session on 1 April in order to listen to suggestions from regional leaders. LB


Speaking to journalists after a 24 March meeting with Kirienko, Duma Speaker Gennadii Seleznev predicted that the appointment of the next prime minister will not lead to the dissolution of the Duma, ITAR-TASS reported. Yeltsin would have the right to dissolve the lower house and call new parliamentary elections if Duma deputies voted three times to reject the president's nominee for prime minister. Seleznev remarked that Duma deputies "are responsible people" and will not allow Yeltsin to rule by decree, which, he said, would occur if the Duma were disbanded. However, Seleznev declined to predict whether the Duma would support the candidacy of Kirienko if Yeltsin nominates him for prime minister. The Duma speaker again called on Yeltsin to meet with Duma leaders to discuss the composition of the new government. He added that he has been unable to reach the president by telephone over the last two days. LB


Moscow Mayor Yurii Luzhkov on 24 March said he supports Yeltsin's decision to sack the government, which "ended one of the shameful stages in the history of the state--that of [former acting Prime Minister Yegor] Gaidar, [First Deputy Prime Minister] Chubais, and monetarism," ITAR- TASS reported. Luzhkov called for annulling the results of "unjust" privatization sales conducted on Chubais's watch and returning to the state all property sold for vastly undervalued prices. At the same time, Luzhkov described the decision to fire Interior Minister Kulikov as a "mistake." He credited Kulikov with helping reduce the crime rate in the capital. The mayor reserved judgment on the acting prime minister, saying the Moscow city government will support Kirienko if he helps Moscow solve its problems. Luzhkov and Kirienko are expected to hold talks on 25 March. LB


Yeltsin on 24 March warned officials in the presidential administration that they will face dismissal if they fail to implement his decrees, Reuters and AFP reported. In remarks that were broadcast on nationwide television, Yeltsin told aides that they "must create an environment in which everyone knows and feels that a failure to fulfill orders means death." A few days before Yeltsin sacked the entire government, his spokesman Sergei Yastrzhembskii said the president was concerned about the lobbying efforts of some government officials (see "RFE/RL Newsline," 20 March 1998). At that time, Yeltsin instructed then Prime Minister Chernomyrdin to crack down on the offenders. LB


Foreign Minister Yevgenii Primakov told journalists and government representatives in Bonn on 24 March that he will retain his position and that Russia's foreign policy will not change in the wake of the government shake-up. In answer to a reporter's question about his future, Primakov said "I'll disappoint you...I haven't been fired." Speaking later with visiting U.S. Secretary of State Madeleine Albright, Primakov conveyed a message on behalf of Yeltsin that Russia's foreign policy will "remain unchanged and will not be affected by the change in government." Yeltsin has already expressed satisfaction with the work of Primakov and Defense Minister Igor Sergeev. Primakov is in Bonn to attend a meeting of the international Contact Group on the former Yugoslavia to discuss the situation in Kosovo. BP


Colonel-General Leontii Shevtsov, commander of the Interior Ministry's troops, announced on 24 March that those troops will be downsized from 257,000 to 220,000 in 1998 and 1999, ITAR-TASS reported. He said that by July, Interior Ministry guards will be removed from some 50 enterprises that have been either privatized or converted from defense to civilian production. Shevtsov's announcement came just one day after Yeltsin fired Interior Minister Anatolii Kulikov without giving a reason. (Kulikov was sacked in a separate decree from the one dismissing the rest of the government, making clear that he will not be in the new cabinet.) "Russkii telegraf" on 24 March quoted Duma deputy Vladimir Lopatin, a member of the Russian Regions faction and longtime opponent of Kulikov, as criticizing the "unjustified growth" of the Interior Ministry's troops on Kulikov's watch. LB


There is no consensus on the reasons for the surprise dismissal of Kulikov. "Nezavisimaya gazeta" suggested on 24 March that Kulikov may have "paid for a [presidential] campaign alliance" with Moscow Mayor Luzhkov (see above) or for his involvement in alleged preparations to transfer power to opponents of Chubais. "Kommersant-Daily" noted on 24 March that last fall, Kulikov sought to unite the law enforcement agencies and security services under his leadership--a plan Yeltsin rejected. Kulikov then gained supervisory authority over investigations conducted by other "power agencies," according to "Kommersant-Daily." The leaders of those agencies subsequently "used any convenient event" to point out "deficiencies in the Interior Ministry's work." Reuters noted that Defense Minister Igor Sergeev--whose government post is considered secure--recently criticized Kulikov for speaking out against various military reform plans (see "RFE/RL Newsline," 10 and 12 February 1998). LB


Russia placed a seven-year, DM 1.25 billion ($682 million) Eurobond on 24 March, Reuters and Interfax reported. It was the government's fourth Eurobond issue and the first since last June. Deputy Finance Minister Mikhail Kasyanov said demand for the bonds was so high that the issue exceeded the planned total by DM 250 million. The Eurobond was scheduled to be floated on 23 March but was postponed by one day because of the market turmoil associated with the surprise dismissal of the government. Earlier this year, the government halted foreign borrowing because instability on Russian markets drove up borrowing costs. Finance Minister Mikhail Zadornov announced on 19 March that Russia will borrow some $3.5 billion abroad in 1998, Interfax reported. LB


The Education Ministry on 24 March announced that owing to federal budget constraints, the number of students able to enter higher education establishments for free this year will be cut by 10 percent, ITAR-TASS reported. Sergei Belyakov, director of the ministry's economic department, noted that projected budget spending for education this year is down 6-7 percent from the 1997 level. Since those figures are not adjusted for inflation, the real spending cuts are even greater. Government officials recently announced that various cost-cutting measures will be introduced in the education sector (see "RFE/RL Newsline," 19 March 1998). LB


The Health Ministry has endorsed legislation to prohibit tobacco sales to minors and tobacco advertising targeted at minors, Interfax reported on 22 March, citing the ministry's press service. Nearly 40 percent of boys in high school and some 25 percent of girls the same age smoke regularly. Smoking rates are considerably higher among teenagers at vocational training schools. An estimated 57 percent of adult men and 48 percent of adult women in Russia smoke. ITAR-TASS reported on 17 February that two laws aimed at reducing smoking have been drafted by the State Duma's Health Committee. Among other things, the proposed laws would ban sales of tobacco products near schools, health clinics, and sports facilities. They would also introduce a tax on tobacco producers. Smokers would receive lower sick pay compensation than non-smokers and would be forced to make contributions toward medical insurance. LB


At least 20 government soldiers were killed in fighting near Kofarnikhon on 24 March, RFE/RL correspondents reported. The government sent troops to the area, about 20 kilometers east of Dushanbe, following the killing of six policemen there on 23 March. Fighting broke out between those troops and an armed group whose loyalties are still unclear. Some 50 government soldiers have been captured by the group, and there are unconfirmed reports that the group has surrounded another 180. Members of the National Reconciliation Commission and UN observers attempted to talk to the group, but Interfax reported they were fired upon, despite the fact their vehicles displayed the UN flag. Meanwhile, some 10 people drowned attempting to cross a river to escape the fighting. The total number of civilian casualties is unknown. No fighting was reported during the night, and new efforts are reported under way to find a peaceful resolution. BP


Less than 24 hours after Apas Jumagulov resigned as prime minister, the parliament approved Kubanychbek JumAliyev as his replacement, RFE/RL correspondents in Bishkek reported. Until recently, the 42-year-old Jumaliev, who is a physicist by training, was the head of the presidential administration. It is rumored that Jumagulov, who resigned of his own accord, will soon be appointed an ambassador. But a scandal has been growing around Jumagulov since the Kyrgyz daily newspaper "Vecherny Bishkek" reported on 13 and 20 March that Jumagulov is a founding member of an obscure Austrian company now handling the sale of Kyrgyz gold. That company reportedly stands to make profits totaling $80-100 million over the next three years. BP


The Kazfosfor joint-stock company was sold on 24 March to the Hong Kong-based TEXUMA company, RFE/RL correspondents in Almaty reported. Kazfosfor owns and operates several phosphorus and super-phosphate plants in Kazakhstan, including the Janatas plant in Shymkent Oblast. Workers at that plant have staged protests and demonstrations since the fall 1997 to demand payment of wage arrears, which in some cases date back to 1996. TEXUMA has promised to pay all back wages to employees. BP


Azerbaijani parliamentary speaker Murtuz Alesqerov on 24 March said Azerbaijan's ambassador to Iran Aliyar Safarli has been declared persona non grata by Tehran, Turan reported. An Iranian newspaper claimed last week that Azerbaijani President Heidar Aliyev fired Safarli for incompetence and for making offensive remarks about Iran's sizable ethnic Azerbaijani community. Safarli had repeatedly criticized the Iranian government's failure to implement an agreement on opening an Azerbaijani consulate in the north Iranian city of Tabriz. Safarli's car was searched by border guards and customs officials at the Iranian-Azerbaijani frontier on 20 March. LF


The Union of Constitutional Rights, headed by Hrant Khachatryan, has called on its supporters to vote for Prime Minister and acting President Robert Kocharyan in the 30 March runoff vote, Noyan Tapan reported on 24 March. Khachatryan polled only 0.21 percent of the vote in the 16 March Armenian presidential election. The Armenian Popular Initiative, which is campaigning for Armenia's accession to the Russia-Belarus Union, has also endorsed Kocharyan, according to RFE/RL's Yerevan bureau. Two other defeated presidential candidates, Union for Self-Determination chairman Paruir Hairikyan and Democratic Party of Armenia chairman Aram Sarkissyan, have already pledged their support for Kocharyan. New Path chairman Ashot Bleyan, who polled 0.11 per cent, will back former Armenian Communist Party First Secretary Karen Demirchyan in the runoff, Noyan Tapan reported. LF


The National Democratic Union, whose chairman, Vazgen Manukyan, polled 12.24 percent of the vote in the 16 March vote, has decided not to endorse either of the candidates who will contend the 30 March runoff, RFE/RL's Yerevan bureau reported. In a statement released on 24 March, the NDU said it has no "convincing grounds" for believing that either Kocharyan or Demirchyan is capable of expediting democratization in Armenia. The statement again charged that the results of the first round of voting were falsified and called on Manukyan's supporters to "vote in accordance with their conscience." He said no effort should be spared to ensure that the second round of voting is free and fair. On 23 March, Kocharyan had ruled out an alliance with Manukyan, according to Interfax. LF


U.S. Defense Secretary William Cohen and visiting Georgian Defense Minister Vardiko Nadibaidze signed an agreement on military and security cooperation on 24 March, an RFE/RL correspondent in Washington reported. In addition, the U.S. will grant Georgia some $1.35 million to finance the purchase of U.S. military radios for a Georgian infantry company that will regularly participate in maneuvers under NATO's Partnership for Peace program, AFP reported. The U.S. will also provide Georgia with two patrol boats to guard its Black Sea borders, Cohen said. LF


Republican Party chairman David Berdzenishvili told journalists in Tbilisi on 24 March that recent legislation enacted by the Supreme Council of the Republic of Adjaria testifies to the separatist intentions of the region's leader, Aslan Abashidze, Interfax reported. Berdzenishili was particularly critical of a law on the direct election of the Adjar Supreme Council chairman, which he claimed violates the Georgian Constitution. But Abashidze's legal adviser Valerii Gelbakhiani argued that the new legislation is necessary because the Georgian Constitution, adopted in August 1995, in effect invalidates the Adjar Constitution. Also on 24 March, Georgian Finance Minister Mikhail Chkuaseli denied Abashidze's claim that Adjaria has not received 2 million Georgian lari ($1.5 million) allocated in the Georgian budget and that his republic contributes more to the national budget than the other 10 regions combined, according to Caucasus Press. LF


Several thousand Tatars clashed with police in the Crimean capital of Simferopol on 24 March, Interfax reported. The Tatars began their protest in the central Lenin square and then blocked railway tracks and a key highway after the Ukrainian parliament took no action on their request for suffrage rights. Police then intervened. Eight policemen were hospitalized and an unspecified number of Tatars were also injured in the confrontation. The protest ended when Tatar leader Refat Churbarov announced he had reached an agreement with President Leonid Kuchma's office to discuss the issue. Several hundred thousand Tatars have returned to the Crimea from Central Asia since 1991 but many have not been granted Ukrainian citizenship and therefore cannot vote in the 29 March elections. Crimean Tatar leaders fear that as a result, they will not be properly represented in the local, regional, or national legislatures. PB


Two candidates for the Ukrainian parliament were injured in separate attacks on 24 March, Reuters reported. Vasyl Koryak, mayor of the central city of Lubny, was seriously injured when his car was attacked by gunmen. Koryak, a member of the United Social Democratic party, is running for a seat in the national parliament. In the Black Sea port of Sevastopol, Vasyl Kalytyuk, a top official in the Crimean branch of the Social Democrats, was also shot at while driving his car. He suffered light injuries. PB


Leonid Kuchma said on 24 March that the outlook for pro-reform parties in the 29 March parliamentary elections is "gloomy," ITAR-TASS reported. Kuchma, who is in Sofia for a two-day visit, fears that many Ukrainians are apathetic about the vote, which, he says, can only benefit the Communists and other parties on the Left. Kuchma said a return to Communist-era socialism is "comparable to attempts to get sick again." The Communist Party, which holds the largest number of seats in the parliament, tops all opinion polls. PB


New restrictions by the Belarusian Central Bank are being blamed for another devaluation in the Belarusian ruble, BelaPAN reported. The currency fell to 64,000-69,000 against the dollar on 24 March, one day after the central bank put restrictions on all payments by foreign economic entities. Banks, mostly Russian ones, are now prevented from exchanging their Belarusian rubles for a more stable currency. In response, the Moscow Interbank Currency Exchange has halted trading in the Belarusian ruble. The currency was trading at 60,000 to $1 on 19 March and has lost about 30 percent of its value since the beginning of the year. PB


The Grodno regional court has rejected an appeal filed by Russian Television journalist Pavel Sheremet and his cameraman Dmitry Zavadsky, BelaPAN reported on 24 March. Both were given suspended sentences of 2 years and 18 months, respectively, for illegally crossing the Belarusian-Lithuanian border last summer. Defense attorneys said they will file an appeal with the International Human Rights Court based in The Hague. PB


Belarusian President Alyaksandr Lukashenka arrived in the Arctic port of Murmansk on 24 March for talks with local political and business leaders, BelaPAN reported. Lukashenka met with Murmansk Governor Yurii Yevdokimov, Admiral Oleg Yerofeyev, the commander of the Northern Fleet, and Vladimir Grigoryev, Belarus's ambassador to Russia. Lukashenka told journalists that the union treaty between Belarus and Russia is more successful at the regional than the national level. The city of Murmansk is holding an exhibition called "Days of Belarus," which is aimed at promoting Belarusian goods. PB


The United Opposition, the strongest opposition force in the parliament, has expelled the four members of the Right-wingers faction following their recent decision to merge with the Farmers' Party, ETA reported on 24 March. The United Opposition said the Right- wingers cannot participate in the work of the opposition because they have allied themselves with a party of which Foreign Minister Toomas Hendrik Ilves is a leader. The departure of the four deputies means that the United Opposition now has 32 members in the 101-seat parliament. JC


Russian ambassador to Estonia Aleksei Glukhov told the daily "Postimees" on 24 March that Russian policy toward Estonia will not change after a new government is formed in Moscow, ETA reported. Glukhov said that Estonian-Russian relations "depend mostly on the work of the bilateral intergovernment commission," which is due to convene for the first time in June. He also commented that Estonian Prime Minister Mart Siimann's visit to Moscow requires "thorough preparations" will be probably not take place before summer or the fall. JC


The cabinet has extended until 31 October the validity of former Soviet foreign passports for Latvian residents traveling to CIS states, BNS reported on 24 March. Under the amendments to government regulations, holders of former Soviet domestic passports will be entitled to return to Latvia by 1 July. Only 3 percent of the 700,000 or so non-citizens residing in Latvia hold former Soviet foreign passports, while 74 percent have Soviet internal passports. Some 15 percent have received non-citizens' passports from the Latvian authorities. JC


An opinion poll conducted by the independent Institute for Public Affairs shows that 62 percent of Slovaks would participate in a referendum on electing the country's president by popular vote. Of those, 92 percent would approve the direct election of the president, RFE/RL's Bratislava bureau reported on 24 March. MS


The Slovak National Party (SNS), a junior partner in the ruling coalition, says it has started collecting signatures for a petition on declaring Slovakia a neutral state and barring its possible membership in NATO. The petition is also to call for a return of the death penalty, which would be a breach of one of the conditions for EU membership. A spokesman for Prime Minister Vladimir Meciar's Movement for a Democratic Slovakia dismissed the SNS initiative as one aimed at "boosting its popularity before the elections," Reuters reported on 24 March. RFE/RL's Bratislava bureau added that the SNS also expressed "full brotherly support for the Serbian nation" and called on the international community to "revise its support of irredentist efforts of the Kosovo Albanians." MS


Serbian special police attacked at least four villages north of Djakovica with mortars, armored vehicles, and helicopter gunships on 24 March. Serbia's Tanjug news agency reported that the police action was in response to a "terrorist" ambush of a police patrol. Some of the dozens of local Kosovars who fled to nearby villages told Reuters, that they do not know why the police attacked them. The fighting left several persons dead, but exact figures are not available. In Tirana, "Koha Jone" reported that "hundreds" of soldiers were sent to northern Albania on 24 March to reinforce units along the border with Serbia. "Shekulli" wrote that the latest fighting in Kosovo is "only 10 kilometers" away from the Albanian frontier. PM/FS


Jakob Selebi, who is chairman of the UN Human Rights Commission, has criticized the violence in Kosovo and called on the Serbian authorities to stop human rights abuses there immediately. Speaking in Geneva on 24 March, Selebi said that the Commission "condemns the excessive and brutal use of force by the Serbian police." Selebi added that the Serbian authorities have a duty to protect the rights of all citizens and "to ensure that public security forces act with restraint and in full respect of internationally agreed norms and standards." Selebi also said the commission "calls on the leaders of the Kosovo Albanian community to make clear their total rejection of terrorism." PM


U.S. Secretary of State Madeleine Albright said in Rome on 24 March that "Belgrade is still ignoring the Contact Group's key demands" that diplomats from the U.S., U.K., Germany, Russia, Italy, and France formulated on 9 March in London. Albright added that "Serbian security police are digging in, [and] not pulling out" as the Contact Group requested. She said the international community "will need to maintain credible pressure on Belgrade to end repression and restore autonomy" to Kosovo. U.S. diplomats accompanying Albright on her way to the 25 March Contact Group meeting in Bonn told Reuters, however, that she is unlikely to find support for additional sanctions on Belgrade. The diplomats noted that Russia supports Serbia and that the four Western European countries are reluctant to impose sanctions on Belgrade just two days after the Serbian government signed an agreement on education with the Kosovars. PM


Kosovar shadow-state President Ibrahim Rugova announced in Pristina on 24 March that the Kosovar leadership has appointed 15 prominent persons to negotiate with the Serbian authorities if Belgrade agrees to unconditional talks. The members of the Kosovar team represent a wide variety of political views, RFE/RL reported. Negotiators include Rugova's adviser Fehmi Agani, shadow-state Prime Minister Bujar Bukoshi, communist-era leader Mahmut Bakalli, and Parliamentary Party President Adem Demaci. PM


Ramiz Alia, Albania's last communist-era president, told "Koha Jone" on 25 March that the major powers should recognize Kosovo as a sovereign and independent state. He added that "Europe has been slow to act, as it was in the case of Bosnia," and that "now is the time for action and not for words. Kosovo needs solutions and not declarations and promises." Concerning the education agreement signed on 23 March between Serbian and Kosovo Albanian officials, Alia said that holding talks and signing agreements "are well-known tactics of [Yugoslav President Slobodan] Milosevic, which he also used in the case of Bosnia" (see "RFE/RL Newsline," 24 March 1998). FS


The Serbian parliament on 24 March approved a new 35-member government consisting of Milosevic's Serbian Socialist Party, United Yugoslav Left, led by his wife Mirjana Markovic, and Vojislav Seselj's Serbian Radical Party. Seselj becomes a deputy prime minister. Spokesmen for the opposition parties Vojvodina Coalition, Union of Vojvodina Hungarians, New Democracy, and the Muslim List for Sandzak said the government "will lead the country to disaster and to new conflicts with the international community," RFE/RL reported. PM


Serbian Prime Minister Mirko Marjanovic told the parliament on 24 March that his government's priorities include "preserving Kosovo as an inseparable part of Serbia." In Pristina, Milazim Krasniqi, who is a spokesman for Rugova's Democratic League of Kosovo, said the Radicals' participation in the government is a "bad sign" for the future of peace and stability in the Balkans. Krasniqi added that "the arrival of Seselj and his people could lead to an even further radicalization of the situation in Kosovo and to an upsurge in the anti-Albanian campaign in Serbia," RFE/RL reported. The ultranationalist Seselj led paramilitary forces in Croatia and Bosnia, where he is widely regarded as a war criminal. PM


Martin Garrod, the international community's chief representative in Mostar, said on 24 March that the international community cannot support the demilitarization of Bosnia, as Croatian President Franjo Tudjman recently proposed (see "RFE/RL Bosnia Report," 25 March 1998). Garrod stressed that any regional demilitarization would have to include Croatia and Serbia as well as Bosnia in order to be effective. Meanwhile near Ploce, some 2,300 SFOR troops from six countries began a two-day exercise to "demonstrate the peacekeepers' military readiness," RFE/RL reported. PM


Social Democratic leader Ivica Racan said in Zagreb on 24 March that early parliamentary elections are the only way out of what he called Croatia's general crisis. Racan also slammed Tudjman's rejection of Western criticism of Croatia's record on implementing democracy. The leader of the largest opposition party added that Croatia must meet Western democratic standards if it wants to be considered part of Europe. PM


A government spokesman said in Ljubljana on 24 March that Slovenia is withdrawing its permanent mission to the Brussels negotiations aimed at dividing the former Yugoslavia's debts and assets. The spokesman said Serbia has long obstructed the talks and hence made it "a waste of time and the taxpayers' money" for Slovenia to maintain a permanent mission there. The Foreign Ministry will assume direct responsibility for representing Slovenia at future negotiating sessions. PM


President Emil Constantinescu has demanded that the government set up a commission to investigate German charges that Romanian diplomats in Bonn have been involved in issuing forged passports, dpa reported on 24 March. Earlier the same day, a German prosecutor said the diplomats issued the forged passports to gangsters who used them to bring children into Germany, where they were trained to work as pickpockets. German investigators say that some 100 children aged 8-13 were beaten up by their "keepers" if they did not bring in enough "loot." They add that the children are expected to make some 2,000-3,000 German marks a day. MS


By a vote of 77 to 51, the Senate on 24 March rejected an opposition motion to debate the privatization of the state-owned RomTelcom company. The motion was submitted by the Party of Social Democracy in Romania and supported by the Greater Romania Party and the Party of Romanian National Unity. The government envisages selling a 35 percent share in the company to a foreign investor that has not yet been selected, RFE/RL's Bucharest bureau reported. MS


The Democratic Convention of Moldova (CDM), For a Democratic and Prosperous Moldova Bloc, and the Party of Democratic Forces (PFD) are negotiating to establish a coalition government, RFE/RL's Chisinau bureau reported on 24 March. PDF leader Valeriu Matei said that "at this stage, it is clear only that none of these parties will form a coalition with the Communists." A spokesman for the CDM said that the accession of the Communists to power would be tantamount to a "return to the totalitarian past." He said the three parties must now "set aside all differences" because "opposing the Communists is only possible by joining forces." President Petru Lucinschi held talks on 24 March with Matei and with CDM co-chairman Mircea Snegur. MS


The Helsinki Committee- Moldova says its observers have concluded there was widespread ignorance of electoral rules among many members of electoral commissions, observers sent to the commissions by competing political parties, and the electorate itself. It adds that this resulted in some irregularities. Committee chairman Stefan Uratu also said the authorities were unable to ensure conditions for the Transdniester Moldovan electorate to freely participate in the ballot, mainly due to obstacles set by the Tiraspol authorities, BASA-press reported. Observers from the European Institute for Media (EIM) also said Transdniester voters did not have free access to information and were thus unable to fully exercise their electoral rights. The EIM observers also criticized the political partisanship of the Moldovan mass media. MS


Visiting Ukrainian President Leonid Kuchma and his Bulgarian counterpart, Petar Stoyanov, signed several agreements on 24 March, including a declaration on a "strategic partnership" for strengthening political and economic ties, RFE/RL's Sofia bureau reported. Kuchma also met with Prime Minister Ivan Kostov. He said it is "sad" that trade turnover between the two states totals only some $300 million but noted that prospects have improved since the pro- reform government came to power in Bulgaria. MS


Deputy Premier Evgeni Bakardzhiev on 24 March said that under the preliminary agreement reached last week in Moscow (see "RFE/RL Newsline, 23 March 1998), Gazprom has agreed to take over full control of the controversial Topenergy company, AFP reported. Topenergy had acted as an intermediary between Gazprom and Bulgaria. Also on 24 March, a consortium composed of Germany's Siemens, France's Framatom, and Russia's Atomenergoexport signed a $100 million contract for upgrading two reactors at the Kozloduy atomic power plant. The signing ceremony was attended by visiting German Economics Minster Gunther Rexrodt, who pledged continued German support for Bulgaria's integration into Euro-Atlantic structures, Reuters reported. MS


by Lavon Zlotnikau

Last year, the Belarusian government claimed the highest rate of economic growth in Europe--some 10 percent of GDP. That growth had nothing to do with genuine, market-economy factors such as job creation, increased investments, and price liberalization. Rather, it was artificially stimulated by Soviet-era methods of a command economy.

State control over the Belarusian economy is virtually total. The private sector's share in industry is less than 1 percent and in trade and services 4 percent. Under President Alyaksandr Lukashenka, private business is subject to constant regulation and steep taxation. Foreign investments in 1997 totaled only $40 million, and the per capita figure was 10 times lower than in the neighboring Baltic states or Poland. And while the employment situation looks deceptively good (official unemployment figure stands at 2.8 percent), many people without work choose not to register as unemployed, engaging instead in private commerce or trade.

One of the reasons for the "Belarusian economic miracle" is the high level of Russian indirect subsidies. In March 1996, Russian President Boris Yeltsin and Lukashenka signed an agreement on the "satisfaction of mutual claims of Belarus and Russia.". Under that agreement, Belarusian debts for Russian gas supplies totaling $1.3 billion (or 6.5 percent of Belarusian GDP) are converted into long-term credits. Moreover, Belarus imported Russian oil and gas at prices lower than those on world markets. Whereas Lithuania and Ukraine, for example, pay $80 per 1,000 cubic meters, Belarus pays only $50. Paying lower prices for energy resources results in indirect Russian subsidies totaling some $400-450 million a year.

In addition, Belarus pays for some Russian goods by means of barter. Prices for bartered Belarusian goods are fixed at high or even world-market levels. For example, Russia imported sugar from Belarus in 1997 at a price of $513 per ton and from other countries at $307-320. Similar price differences exist for Russian imports of Belarusian butter, synthetic fibers, and other goods.

Taking into account all forms of indirect Russian subsidies, Andrei Illarionov, former economic adviser to Yeltsin, concluded that those subsidies were equal to $1.52 billion in 1997. By comparison, the Belarusian state budget is only $3.5 billion.

Another reason for the "Belarusian economic miracle" is the depletion of the country's national assets. Minsk inherited a large amount of arms from the former USSR, which are now being sold off. In 1996, armaments sales generated more than $400 million, and last year, Belarus gained a place on the list of the top 10 arms exporting countries in the world.

Statistical data show that the total savings of the population are decreasing at a rate of $180-200 million a year. And last year, current assets of Belarusian enterprises decreased by 10 percent. With inflation rising, all enterprises were prohibited from increasing their prices by more than 2 percent a month.

Last year witnessed an increase of production volumes at a large number of unprofitable enterprises. If capital turnover and inflation are taken into account, the share of unprofitable enterprises in Belarus is approximately the same as in Russia --47-50 percent. In Belarus, those companies were simply ordered to produce more and export (mainly to Russia) at prices below production costs.

A final reason for Belarus's economic growth is protectionism. High import duties imposed within the framework of the Russia-Belarus customs union make certain Belarusian manufactured goods competitive on the Russian market. For example, Russian import of car tires from Belarus for the first nine months of1997 increased 2.6 times over the same period last year, while the production volume of Belarusian television sets increased by 60 percent and their export to Russia by 27.3 percent. Such trends are taking place at the expense of per capita consumption by the Belarusian population..

Thus rather than introducing genuine reforms, the Belarusian government artificially stimulates its economy by relying on Russian subsidies, the depletion of the nation's wealth, and trade protectionism. It also engages in increased deficit spending. The total budget deficit (including soft credits) was equal to 4.9 percent of GDP. That deficit is financed by credits from the Belarusian National Bank. Such soft-credit monetary policy leads to high inflation and to a redistribution of resources in favor of unprofitable enterprises. The author is an adviser to the 13th Supreme Soviet of Belarus and to the World Bank.