ZYUGANOV STILL OPPOSED TO KIRIENKO
Communist Party leader Gennadii Zyuganov announced following roundtable talks on 7 April that he believes the next prime minister should be a "well-known" person with substantial political and managerial experience, RFE/RL's Moscow bureau reported. During the talks, President Boris Yeltsin repeatedly called on members of the parliament to support the candidacy of acting Prime Minister Sergei Kirienko. But Zyuganov expressed doubt that the State Duma will confirm Kirienko on 10 April. The Communist leader demanded that within the next two or three weeks, representatives of the government and both houses of the parliament draft and sign a program for digging Russia out of its economic crisis. LB
ROUNDTABLE LIMITED TO EXCHANGE OF OPINIONS
Most of the participants in the roundtable talks praised the opportunity to exchange opinions and make proposals directly to the president. Nikolai Kharitonov and Nikolai Ryzhkov, leaders of the Communist-allied Agrarian and Popular Power Duma factions, proposed alternative candidates for the premiership. However, officials made clear that the talks were merely consultative and did not alter Yeltsin's support for Kirienko. In this regard, the roundtable is a far cry from what Communist leaders demanded last October in exchange for dropping a planned vote of no confidence in the government. At that time, Yeltsin promised to hold a series of talks on important issues. But before 7 April, the president had convened only one roundtable, which took place in late December. The meeting ended with participants signing a protocol on land reform and promising to agree on a revised land code by the end of March. That deadline, however, has been missed. LB
KIRIENKO STRIKES CONCILIATORY NOTE
Acting Prime Minister Kirienko on 7 April described the roundtable talks as "very constructive" and said he will take into account many of the participants' recommendations, Russian news agencies reported. Reuters reported on 7 April that in his address to the Duma on 10 April, Kirienko is to offer to create several committees on which government and parliamentary representatives will coordinate policy. At the same time, Kirienko says he will hand over to Yeltsin a list of key government appointments within one week, even if he has not been approved by that time. LB
OUR HOME IS RUSSIA, LDPR WANT GOVERNMENT POSTS
Acting First Deputy Prime Minister Boris Nemtsov on 7 April announced that during the roundtable talks, Our Home Is Russia (NDR) representatives said they will support Kirienko's appointment only if NDR members receive key cabinet posts, RFE/RL's Moscow bureau reported. Aleksandr Shokhin, the leader of the NDR Duma faction, said his faction will decide whether to back Kirienko after the acting prime minister addresses the Duma on 10 April, Russian news agencies reported. Meanwhile, Liberal Democratic Party of Russia (LDPR) leader Vladimir Zhirinovsky told journalists that the LDPR is seeking two or three government posts in exchange for supporting Kirienko's candidacy. Zhirinovsky added that the portfolios offered to the LDPR need not be "key posts." LB
YAVLINSKII SKEPTICAL ON USEFULNESS OF TALKS
Yabloko leader Grigorii Yavlinskii has described the roundtable talks as a purely "formal measure" that does not address the problems to be faced by the new government. In an interview with RFE/RL's Moscow bureau on 7 April, Yavlinskii repeated that although Yabloko supported the president's decision to sack Viktor Chernomyrdin's government, Yabloko deputies will not support Kirienko. He said Yabloko is willing to take responsibility for implementing its own economic program if Yabloko members are included in the government. Yavlinskii has rejected past invitations to join the cabinet after concluding that Yabloko members would not be given sufficient authority to implement their policies (see "RFE/RL Newsline," 24 March 1998). LB
REGIONAL LEADERS SUPPORT KIRIENKO
The regional leaders who attended the 7 April roundtable talks all expressed varying degrees of support for Kirienko, RFE/RL's Moscow bureau reported. Federation Council Speaker Yegor Stroev, who has been proposed as a prime ministerial candidate by some opposition groups, praised Kirienko at a press conference. Stroev said Kirienko's youth (he is 35) will not prevent him from solving Russia's economic problems if his skills are "combined with the experience and wisdom of other people," Russian news agencies reported. Although the Federation Council does not have the authority to confirm or reject the president's nominee for prime minister, the views of regional leaders may persuade some Duma deputies to support Kirienko, if not on 10 April, then in a later vote. LB
LUZHKOV EXPRESSES 'CAUTIOUS OPTIMISM'
Following the roundtable talks, Moscow Mayor Yurii Luzhkov said he feels "cautious optimism" and is willing to back Kirienko's candidacy for prime minister, Russian news agencies reported. Yeltsin announced during the talks that he had considered Luzhkov's candidacy, among others, before deciding to nominate Kirienko. The Moscow mayor said he is "flattered" by Yeltsin's comment but said he will not agree to serve as prime minister if offered the job. Addressing the roundtable, Luzhkov proposed changes in economic policy and advocated forming a commission, which would be chaired by Yeltsin, to draft a new tax code. Presidential spokesman Sergei Yastrzhembskii told Interfax that Yeltsin liked Luzhkov's proposal concerning a commission on tax policy. The government has already submitted a revised tax code to the Duma, but various politicians have put forward their versions of the code (see "RFE/RL Newsline," 26 January and 3 February 1998).
TRADE UNION LEADER BACKS KIRIENKO
Mikhail Shmakov, the head of the Federation of Independent Trade Unions (FNPR), announced on 7 April that he supports Kirienko's nomination for prime minister, RFE/FL's Moscow bureau reported. Speaking at a meeting between trade union and business leaders on 7 April, Shmakov noted that Kirienko has discussed the problem of wage arrears with union leaders and has instructed the Finance Ministry to pay debts to state employees (see "RFE/RL Newsline," 6 April 1998). At the same time, Shmakov said the FNPR is going ahead with plans to stage rallies nationwide on 9 April to protest persistent wage delays. He noted that 80 percent of estimated wage arrears are owed by employers rather than by the government. LB
BEREZOVSKII CALLS ON BUSINESS TO BACK CHERNOMYRDIN
Former Security Council Deputy Secretary Boris Berezovskii has called on business leaders to support former Prime Minister Viktor Chernomyrdin "not only as a candidate for president in 2000 but also as a person who is able to consolidate democratic and reformist forces in Russia around him." Speaking to Interfax on 7 April, Berezovskii said Chernomyrdin demonstrated his ability to unite different forces during his tenure as prime minister. In an interview with NTV broadcast on 22 March, the night before Yeltsin sacked Chernomyrdin, Berezovskii criticized the government and expressed doubt that Chernomyrdin would be an "electable" presidential candidate. Those comments fueled speculation that Berezovskii instigated the government dismissal (see "RFE/RL Newsline," 24 March 1998). LB
DEFENSE INDUSTRY WORKERS PICKET GOVERNMENT HEADQUARTERS
Some 3,000 defense enterprise workers and representatives of defense industry trade unions picketed the government headquarters on 7 April, "Nezavisimaya gazeta" reported. Some of the protesters made political demands as well as long-standing calls for the government to meet its financial obligations toward the defense industry. Following a similar picket last September, First Deputy Prime Minister Boris Nemtsov promised that the government would settle all debts to the defense industry by April 1998. In February, officials pledged that this year the government will pay some 10 billion rubles ($1.7 billion) it owes to defense enterprises (see "RFE/RL Newsline," 25 September 1997 and 16 February 1998). On 4 April, acting Prime Minister Kirienko said the government is still drafting plans for settling those debts. LB
NEW LAW ON MILITARY SERVICE GOES INTO FORCE
According to "Krasnaya Zvezda" on 4 April, the new law on military service in Russia exempts from the draft all people with criminal records, university students, and workers in industries providing services for the military or for the security the country. The law, which went into effect on 2 April, also limits the period of time that members of the armed forces can serve; in most cases, this means retirement at age 45, but for high ranking officers such as admirals and generals is extended to age 60. The death of an immediate family member is also cause for exemption from the draft. "Izvestiya" on 8 April cites the example of an officer who has gone unpaid for several months and is now seeking early discharge from the military on the grounds that his contract has been violated. This precedent may quickly deplete the ranks of officers, "hundreds of whom are in the same position," the daily argues. BP
NIZHNII VOTERS FACE LONG WAIT TO ELECT NEW MAYOR...
A new mayoral election in Nizhnii Novgorod may be a long way off, RFE/RL's correspondent in the city reported on 7 April. After the local electoral commission annulled the 29 March election, officials suggested that a new vote would be held within three months. However, Andrei Klimentev, the apparent winner of the 29 March race, has filed a lawsuit against the annulment. New elections cannot be set until after the courts have ruled on his case, which could take months or years, taking into account the appeals process. LB
...AS CANDIDATE CLAIMS LEGAL FLAWS IN DECISION TO ANNUL ELECTION
Dmitrii Bednyakov, who placed third in the 29 March race, believes there are strong legal grounds for contesting the decision to annul the election. In an interview with RFE/RL's correspondent, Bednyakov said the Nizhnii Novgorod Oblast law under which the election results were canceled contradicts federal legislation. According to Bednyakov, federal law permits elections to be annulled only if a court has ruled to that effect, if turnout was below the required level, or if procedural violations during the voting or vote counting cast doubt on the accuracy of the result. Bednyakov said federal law does not allow electoral commissions to cancel results because of alleged violations committed by candidates during campaigns (see "RFE/RL Newsline," 1 and 2 April 1998). LB
AZERBAIJAN WANTS KARABAKH MEDIATION STEPPED UP
The Azerbaijani National Security Council, meeting on 6 April under the chairmanship of President Heidar Aliev, called on the Organization for Security and Cooperation in Europe's Minsk Group to intensify its efforts aimed at mediating a political settlement of the Karabakh conflict, Turan reported. The Minsk Group co-chairmen are due to travel to Armenia and Azerbaijan later this month following the inauguration of Armenian President-elect Robert Kocharyan. Last fall, Azerbaijan unconditionally approved the "phased" draft peace plan proposed by the Minsk Group co-chairmen. Armenia has accepted that plan as a basis for further negotiations, but the leadership of the unrecognized Republic of Nagorno-Karabakh has rejected it. LF
ARMENIAN PRESIDENT-ELECT ON KARABAKH
In a lengthy interview in "Izvestiya" on 8 April, Kocharyan absolved the Minsk Group co-chairmen of responsibility for the failure to resolve the Karabakh conflict. Kocharyan said the Karabakh leadership must decide on its future status vis-a-vis the Azerbaijani government, but he warned that the Azerbaijani leadership's offer of autonomy for Karabakh is "unacceptable." Instead, he proposed either "horizontal relations" between Baku or Stepanakert or "federative or confederative relations." He also insisted on security guarantees for the Karabakh population. On another subject, Kocharyan said he believes the CIS is capable of evolving, provided that the Russian leadership makes clear that it is not planning to "restore its hegemony" over the former republics. And he assessed Armenian-Russian relations as problem free and close to the level of an alliance. LF
AZERBAIJAN TO DEMAND EX-PARLIAMENT SPEAKER'S EXTRADITION
The Azerbaijani parliament on 7 April voted to strip its former speaker Rasul Guliev of his immunity, Reuters reported. The parliament deprived Guliev of his deputy's mandate last December on the grounds that he had not attended a single parliament session since his resignation as speaker in September 1996. Prosecutor-General Eldar Gasanov told deputies that Baku will demand Guliev's extradition from the U.S., where he has lived for the past 18 months. Guliev is wanted on charges of embezzlement of state property valued at $12 million and of involvement in irregularities in exporting oil that caused losses to the state estimated at $23 million. LF
AZERBAIJAN'S OIL EXTRACTION INCREASES IN FIRST QUARTER
The state oil company SOCAR extracted 2,240,000 metric tons of oil from January to March, slightly more than during the same period last year, Turan reported on 7 April. But the country's two largest oil refineries have incurred losses of more than 34 billion manats ($8.8 million) as a result of fall in oil prices on world markets. Shipments of Azerbaijani crude to Novorossiisk for export have been temporarily discontinued, according to SOCAR Vice President Natik Aliev. LF
ARMENIAN-ADJAR TRANSPORT TALKS
Armenian Prime Minister and President-elect Robert Kocharyan held talks in Yerevan on 7 April with a delegation from Georgia's autonomous Republic of Adjaria, RFE/RL's Yerevan bureau reported. The talks focused on how Armenia can make more effective use of Georgian port facilities, including those in the Adjar capital, Batumi, which handles the bulk of Armenia's imports and exports. LF
GEORGIA, RUSSIA AT ODDS OVER DEFENSE FACILITIES
In a 6 April statement, the Georgian Foreign Ministry criticized the Russian State Duma's proposal to debate the legitimacy of Moscow's 24 March decision to hand over to Tbilisi some Russian facilities in Georgia, Russian agencies reported. The statement pointed out that the facilities in question are Georgian state property and that since 1991 Russia has paid no rent for the some 18,000 hectares of land it uses. It added that Russia still owes Tbilisi several billion dollars for military equipment withdrawn from Georgia after the collapse of the USSR. The Russian Foreign Ministry responded on 7 April by denouncing what it called the "irresponsible" Georgian campaign aimed at portraying Russia as the "external enemy" responsible for all Georgia's internal problems, Interfax reported. LF
KAZAKH OPPOSITION LEADER JAILED
Madel Ismailov, the leader of Kazakhstan's Workers' Movement, has been found guilty of insulting the president and sentenced to one year in jail, RFE/RL correspondents reported on 7 April. Ismailov is alleged to have made insulting comments about the president at a rally last November marking the 80th anniversary of the October Revolution. Supporters of Ismailov have called for the verdict to be overturned, and the Workers' Movement has said it will hold a rally on 17 April to protest the ruling. Meanwhile, Yuri Venkov, the deputy leader of the movement, is scheduled to appear in court on 13 April on charges of organizing unsanctioned rallies. BP
MINSK INTRODUCES TOUGH ECONOMIC MEASURES
The Belarusian Finance Ministry has introduced tough measures aimed at stabilizing the country's economy, ITAR-TASS reported, citing the 8 April "Zvyazda". The ministry is demanding that managers do not import goods if comparable products are available on the domestic market. It also demands that more rigorous control be imposed over budget allocations for administrative purposes. JM
BELARUSIAN OPPOSITION DEFENDS RELIGIOUS HOLIDAYS
The opposition has called on religious believers not to obey Belarusian President Alyaksandr Lukashenka's decree last month canceling the Catholic and Orthodox Easter and All Saints' Day as public holidays, Belapan reported on 7 April. The same decree retained the 7 November holiday commemorating the 1917 Bolshevik revolution. Yury Khadyka, deputy chairman of the opposition Belarusian Popular Front, told journalists that the decree is "an openly declared return to the past" and may exacerbate tensions between religious groups. JM
GOVERNMENT BANS CONTACTS WITH INDEPENDENT MEDIA
The Belarusian government has issued a document introducing restrictions on contacts with the independent media, Belapan reported on 7 April. The document, which is described as for official use only, refers to a directive issued earlier by Lukashenka "to step up counterpropaganda against the opposition press." The document prohibits state bodies from passing official materials to the independent media and warns officials against making comments on state documents in the opposition press. In addition, the government bans official advertising in a number of independent newspapers, including "Naviny," "Belorusskaya Delovaya Gazeta," and "Narodnaya Volya." JM
PARLIAMENTARY ELECTIONS IN BELARUS IN 1998?
Henadz Karpenka, former parliamentary deputy speaker and head of the opposition shadow cabinet, told journalists on 7 April that Lukashenka has decided to call parliamentary elections for November 1998, Belapan reported. According to Karpenka, the decision was made under pressure from European organizations and following acting Russian Deputy Prime Minister Ivan Rybkin's visit to Minsk. JM
EIGHT PARTIES WIN SEATS IN UKRAINIAN PARLIAMENT
The Central Electoral Commission has announced the final results of the 29 March parliamentary elections for party-list mandates, Ukrainian Television-1 reported on 7 April. The 4 percent vote threshold was overcome by eight parties and blocs: the Communists (84 mandates), the Popular Rukh (32), the Socialists/Peasants (29), the Greens (19), the Popular Democratic Party (17), the Hromada party (16), the Progressive Socialists (14), and the United Social Democrats (14). JM
COALITION EXPANSION TALKS CONTINUE IN ESTONIA
The ruling Coalition Party has rejected a proposal by the Reform Party to form a coalition composed of itself, the Coalition Party, and the United Opposition (an alliance of several right-wing parties), ETA reported on 7 April. The previous day, the Reformists had refused to join the current coalition, saying it would be unable to work with the bloc of rural parties that constitute the junior coalition partner in the government. Coalition Party leader and Prime Minister Mart Siimann said his party and the Reformists have reached a "gentleman's agreement" whereby the government will consult the opposition before making key decisions and the opposition will refrain from becoming "obstructionist or destructive." In the meantime, the ruling coalition will begin expansion negotiations with Foreign Minister Toomas Hendrik Ilves's People's Party and the Progressive Party. JC
ADVISER SAYS HAVEL WOULD NAME ZEMAN PREMIER
An adviser to President Vaclav Havel says that if the Social Democrats win the June elections and are able to form a majority government, party leader Milos Zeman is likely to be chosen to head the new government, the Czech daily "Mlada fronta Dnes" reported on 8 April. Jiri Pehe, Havel's political adviser, denied rumors among the media that Havel would seek not to name Zeman. The previous day, "Pravo" had reported that Havel wants Jan Ruml, head of the newly formed Freedom Union, to be nominated as prime minister. Pehe said that Havel has no special preference for Ruml and that the newspaper report was "totally false." PB
PROPOSAL FOR DIRECT ELECTION OF SLOVAK PRESIDENT FAILS
The parliament on 7 April rejected a bill calling for a referendum on the direct election of the president, RFE/RL's Slovak Service reported. Of the 119 deputies present, 50 voted for the measure and 44 abstained. A majority of those present (in this case 60 votes) would have been necessary for the passage of the bill, which was proposed by the Party of the Democratic Left. The parliament will try for a fifth time to elect a president on 16 April. Opinion polls show that a majority of Slovaks favor direct presidential elections. PB
KOSOVARS SAY SHELLING CONTINUES
Some 14 buses, 10 vans, and 10 trucks filled with Serbian special police troops arrived in Kosova from Serbia proper on 6 April, the Albanian news agency Enter reported the following day, quoting Kosovar sources. Within Kosova, police reinforcements, tanks, and armored vehicles arrived in the Skenderaj and Fushe-Kosova areas on 6-7 April. Also on 6 April, Serbian artillery shelled the village of Kopiliq near Skenderaj, wounding two people, the Kosovar shadow- state's KIC news agency reported. PM
SESELJ BLASTS 'PLAN FROM HELL'
The Serbian parliament on 7 April voted 193 to four to approve Yugoslav President Slobodan Milosevic's proposal to hold a referendum on 23 April on whether to allow foreign mediation in the Kosovo dispute. Serbian Deputy Prime Minister Vojislav Seselj said that the referendum will give Serbs an opportunity to reject what he called the foreign "plan from hell for the breakup and destruction of Serbia and the Serbian people," RFE/RL reported. A deputy from Seselj's Serbian Radical Party argued that the U.S. has always "supported our enemies, and now it wants to destroy the Serbs. If we accept mediation, we will be signing [our own] surrender." PM
KINKEL CALLS REFERENDUM MEANINGLESS
German Foreign Minister Klaus Kinkel told the "Frankfurter Rundschau" of 7 April that "the referendum is an evasion maneuver...being carried out only to support Milosevic's position. [The referendum] cannot influence our political actions." The minister said the question of deploying foreign troops around Kosova's international borders is "complicated." He suggested that the UN might extend the mandate of its troops in Macedonia, and that the WEU might deploy forces in Albania. He added that "there is probably no majority in the Security Council for a UN mandate" in Albania with NATO participation. Kinkel stated that "it is known who supplies weapons" to Belgrade and that the embargo will make it easy to block such sales. He added that "at present, the main problem is that weapons must no longer get to Kosova across the Macedonian or Albanian borders." PM
RUSSIA STILL SHIPPING ARMS TO BELGRADE?
Russian Foreign Ministry spokesmen on 7 April denied a report in the Moscow daily "Russkii telegraf" that Russia is continuing to supply weapons to Yugoslavia, despite the UN Security Council's embargo on such sales, RFE/RL reported. The daily wrote that spare parts are continuing to arrive in Montenegrin ports. It also quoted unnamed Defense Ministry sources as denying recent Western press reports that Moscow and Belgrade concluded a $1.5 billion deal for MiG fighters and other weapons in December (see "RFE/RL Newsline," 26 March 1998). Meanwhile in Belgrade, Yugoslav and Russian trade officials signed a $80 million annual barter agreement on 6 April whereby Yugoslavia will supply meat, butter, fruit, vegetables, and edible oil in return for Russian gas. PM
PRIMAKOV GIVES WARNING ON KOSOVA
Russian Foreign Minister Yevgenii Primakov said in Moscow on 7 April that "for us, two things are absolutely inadmissible: to separate the Kosova region from Serbia --this is not acceptable to the Serbs, or anybody else, and can lead to a massacre --and to send troops to the area, under whatever flag they would be deployed." PM
CHIRAC PLEDGES AID FOR MOSTAR BRIDGE
French President Jacques Chirac said in Sarajevo on 7 April that Paris will work with its allies to ensure that Kosova is spared the violence that tore Bosnia apart from 1992 to 1995. He urged Bosnia's Muslim, Croatian, and Serbian leaders to work together in the spirit of reconciliation as the French and Germans learned to do after World War II, the Belgrade daily "Danas" reported. Later in Mostar, Chirac added that France will help finance the ongoing reconstruction of the historical Mostar bridge. PM
WHERE IS KARADZIC?
Guards are no longer posted near the apparently empty home of indicted war criminal Radovan Karadzic in Pale, AFP reported on 7 April. The news agency added that rumors have long been rife that Karadzic is in Russia, a possibility that the Russian Foreign Ministry has repeatedly denied. AFP stated that Sarajevo- based diplomats say that NATO knows where Karadzic is at any given time and that the Atlantic alliance hopes to work through the Banja Luka-based Bosnian Serb leadership to arrest him. PM
BAN PROPOSED ON ZAGREB DEMONSTRATIONS
The city government, which is dominated by President Franjo Tudjman's Croatian Democratic Community, said in a statement on 7 April that it will soon send a bill to the city council to ban demonstrations at street intersections and on squares, including central Jelacic Square, RFE/RL reported. Opposition groups usually try to stage their protests on Jelacic Square. There have been numerous demonstrations in Zagreb and elsewhere in Croatia since the introduction of a value-added tax in January. PM
ALBANIAN PRESIDENT PRAISES RELIGIOUS COMMUNITIES
Speaking on the Muslim holiday of Kurban Bajram during a meeting with the head of Albania's Sunni community, Rexhep Meidani praised the role of all religious communities "on the Albanian people's road toward spiritual revival and material progress." He commented that religious communities "are close to the people [and stand] above political parties." And he stressed that "our joint efforts for Albanians to put behind themselves the evil of a year ago, in the name of peace and understanding [and] the country's stability and consolidation, are also indispensable for the solution of our national issue" (see "RFE/RL Bosnia Report," 25 March 1998). FS
WEU EXTENDS ALBANIA MANDATE
Meeting in Brussels on 7 April, the Western European Union Council extended the mandate of its Multinational Albanian Police Element (MAPE) mission until April 1999. The council also decided to expand the force from 60 to 100 men. MAPE is helping reorganize the Albanian police force and provides training in administration and professional ethics. FS
VASILE PRESENTS NEW CABINET...
Prime Minister- designate Radu Vasile named his government lineup on 7 April, Reuters reported. The proposed cabinet, which was formed after five days of talks with the four coalition parties, has 11 new ministers and 13 holdovers from former Prime Minister Victor Ciorbea's last cabinet. Ten members of the National Peasant Party Christian Democratic have been named, and six from the Social Democratic Party. Two independents will keep their key posts: Daniel Daianu as finance minister and Andrei Plesu as foreign minister. PB
...PLEDGES "DYNAMIC REFORMS"
Vasile pledged that the new cabinet would institute "dynamic and extremely rapid reforms with a modern social dimension," Reuters reported. Vasile, who will have to resolve conflicts within his government over such issues as property restitution and privatization, said his aim will be to convince foreign investors that "things are moving" in the government. He said the cabinet will strive to accomplish three goals immediately: increasing the authority of the premier, eliminating the dysfunctional components of the previous government, and achieving greater efficiency in the government's work. PB
MOLDOVAN PRESIDENT UNDERGOES SURGERY IN GERMANY
Petru Lucinschi has had surgery to alleviate the effects of a spinal disease, Infotag reported on 7 April. The operation, which was carried out in Frankfurt, was successful and his condition is reported to be satisfactory. Lucinschi had spent 10 days in a Chisinau hospital before the operation for treatment of lumbago. In other news, Dumitru Diakov, the leader of the centrist For a Democratic and Prosperous Moldova Bloc (PMDP), said that cooperation between his party and the Communists is unlikely. Diakov said that he is unhappy with statements made by the Communists about the PMDP. The Communist Party won 40 of the 101 parliamentary in the 22 March elections. PB
BULGARIAN PRESIDENT CALLS FOR END TO ACCUSATIONS
Petar Stoyanov appealed for calm on 7 April after Prime Minister Ivan Kostov said corruption in the country could jeopardize integration with Western institutions, AFP reported. Kostov had told the daily "Trud" the previous day that the country's judiciary is "inefficient and corrupt" and that a lack of respect for the law is hurting foreign investment. He added that if the country is not successful in fighting corruption, it will not be allowed to join either NATO or the EU. Stoyanov later called on legislators, cabinet members, and judges to devise a joint strategy to tackle corruption. He called for an end to the inter-government accusations, saying they only encourage criminals. PB
BULGARIA TO ADOPT PROGRAMS FOR ROMA
Government officials said they are planning a program to help educate and employ the country's impoverished Romani citizens, Reuters reported on 7 April. Petar Atanassov, the head of the National Ethnic and Demographic Council, said it will draft a program in coordination with Romani leaders that will aim to improve the opportunities available for Bulgaria's some 500,000 Roma. Atanassov added that he is aware that "centuries-old prejudices" cannot be changed in a few years. PB
ESTONIA'S ECONOMY SLOWS, EASING FEARS OF OVERHEATING
by Michael Wyzan
Last year, gross domestic product (GDP) growth of about 9 percent made Estonia one the world's fastest growing economies, with only Bosnia and Georgia among transition economies displaying greater dynamism. Such rapid growth has brought with it unwanted side effects, including widening trade and current account deficits and a tightening of the labor market.
Under the currency board arrangement introduced in June 1992, all foreign currency flowing into the country must be converted into kroon at the fixed rate of 8 kroon to the German mark. This means Estonia's considerable success in attracting foreign direct investment (FDI) and other capital inflows has led to relatively high inflation; consumer prices rose by 12.5 percent in 1997, compared with 7.0 percent in Latvia and 8.4 percent in Lithuania.
Estonia received more than $1 billion in cumulative FDI through September 1997. Other sources of capital inflows, which are becoming increasingly important, include local government borrowing, portfolio investment, and medium- term bank credit lines.
Portfolio investment has largely gone into the Tallinn Stock Exchange (TSE), which since opening in May 1996 has become unusually large and liquid for an economy in transition. The TSE's stock index grew by 280 percent in 1996 and 50-70 percent in the first half of 1997 before nose-diving in the fall during the East Asian financial crisis, partly because of higher interest rates late in 1997 in response to a rise in inflation in the summer. Annual interest rates on commercial bank loans in kroon rose from 7.9 percent at the end of July to 18.3 percent at the end of the year.
Capital inflows may spark inflation and fuel unsustainable stock market booms but are nonetheless necessary to finance Estonia's current account deficit, which was $315 million from January to September 1997, compared with $301 million during the same period the previous year. Last year's trade deficit was $1.4 billion, up from $1.1 billion in 1996. The fact that the current account imbalances are so much smaller than the trade deficits reflects the large net service inflows resulting mainly from tourism.
The current account deficit was about 10 percent of GDP for the year as a whole, one of the highest figures among transition and developing countries. Moreover, the deficit is growing more rapidly than the dollar figures suggest: measured in terms of the German mark, to which the kroon is pegged, it was up by 59 percent from January to September 1997 relative to the same period in 1996.
However, there are several factors suggesting that the pegging of the kroon to the mark will not be endangered in the near future. First, the Bank of Estonia's foreign reserves continue to grow rapidly, reaching about $825 million at the end of 1997, compared with around $700 million a year earlier. In German marks, they grew by almost 35 percent over that period.
Second, despite the rising importance of portfolio and other volatile forms of foreign investment, FDI remained about half of capital inflows in the first three quarters of last year. FDI is usually considered to be of a longer-term nature than other flows and is thus less likely to flow out again during crises and thereby destabilize the foreign exchange market.
Third, much depends on whether exporters can withstand a situation whereby the exchange rate is fixed for years to a foreign currency while inflation remains high. In such cases, rising labor costs are an indicator of declining international competitiveness. In Estonia from December 1996 to December 1997, unemployment as a share of the labor force declined from 5.5 percent to 4.6 percent and the average monthly wage rose from $295 to $302, both worrying signs from the standpoint of the country's ability to compete on international markets.
However, privatization is virtually complete, based largely on sales to both citizens and foreigners willing and able to restructure enterprises and improve corporate government. Many firms, especially those benefiting from FDI, may be able to withstand upward pressure on labor costs.
There are also signs that as of fall 1997, the economy is slowing down. The decline in the stock market, higher interest rates, and a rise in the banks' capital ratios from the 8 percent recommended by the Bank for International Settlements to 10 percent are contributing to that trend.
The 1998 budget, which was passed on 17 December, assumes a GDP growth rate of 5.5 percent for the year. The same day, the IMF approved a $22 million loan to the country. One of the conditions attached to that loan is that the budget surplus total1.8 percent of GDP this year, compared with 0.4 percent in 1997. Such strict fiscal policy will help slow the economy and discourage capital inflows. The author is an economist living in Austria.