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Newsline - June 3, 1998




PRESIDENT, BUSINESS LEADERS AGREE TO COOPERATE

Anatolii Chubais, the chief executive of the electricity giant Unified Energy System, told journalists after a 2 June meeting between President Boris Yeltsin and 10 business leaders that "major Russian entrepreneurs are ready to lend a hand to the authorities, and the authorities...are ready to support the entrepreneurs," Russian media reported. Yeltsin invited the founders of six major Russian banks and chief executives of four leading companies in the energy sector to discuss the current financial crisis, among other issues. Presidential spokesman Sergei Yastrzhembskii told journalists that Yeltsin promised to consider policies proposed by the businessmen, but the spokesman declined to specify the nature of those proposals. "Kommersant-Daily" reported that Vladimir Potanin, the founder of Oneksimbank and now head of the Interros holding company, met separately with Yeltsin and Prime Minister Sergei Kirienko. LB

STOCK MARKET GAINS SOME GROUND

Share values on the Russian stock market rose on 2 June by more than 12 percent on average and prices for some of the most frequently traded shares increased by up to 20 percent, Interfax reported. The gains appear to reflect increasing confidence that Russia will receive a major stabilization loan from foreign governments, banks, or financial institutions. (Prime Minister Kirienko is to fly to Paris on 3 June and will reportedly hold talks on a possible bailout package.) The auction of government treasury bills (GKOs) on 3 June will be the next test of investor confidence. Massive selling of GKOs by foreign and then Russian investors has nearly tripled yields in recent weeks and has contributed to pressure on the ruble. Central Bank First Deputy Chairman Sergei Aleksashenko told "Vremya MN" on 29 May that foreign investors took $500 million-$700 million out of the GKO market last month. LB

IS GOVERNMENT KEEPING PROMISES TO COAL MINERS?

Kemerovo Oblast Governor Aman Tuleev on 1 June charged that the government is not honoring the pledges it made to persuade unpaid coal miners to end their blockade of the Trans-Siberian railroad, Interfax reported. Tuleev said that at the rate money is arriving in Kemerovo, debts to miners will be settled 10 days later than the 1 June deadline to which Deputy Prime Minister Oleg Sysuev agreed. Addressing a 2 June meeting in Moscow of the main Russian trade union for coal industry workers, Deputy Prime Minister Boris Nemtsov claimed that the government is fully meeting its obligations toward miners. But he noted that the federal authorities do not directly pay miners' wages. Once government assistance has been sent to coal enterprises, it is the responsibility of those companies' executives to pay their workers, Nemtsov said. LB

MIDDLEMEN KEEP ONE-THIRD OF PROCEEDS FROM COAL SALES

Moscow-based middlemen keep about one-third of the proceeds earned from sales in the coal industry, according to Federal Tax Police Deputy Director Andrei Przhezdomskii. He said investigations of coal enterprises have revealed widespread tax evasion and huge profits for middlemen, Russian news agencies reported. For instance, company managers often conclude barter agreements instead of selling coal for cash, and the value of the goods received in exchange for the coal is often far less than the market value of the coal. During the recent blockades of major railroads by unpaid miners, government officials repeatedly blamed coal enterprise managers and middlemen for the persistent wage arrears in the coal sector (see "RFE/RL Newsline," 21 May 1998). LB

ROUNDTABLE TALKS ON 'ANTI-CRISIS' MEASURES DELAYED

State Duma Speaker Gennadii Seleznev on 2 June announced that roundtable talks on the government's "anti- crisis program" have been postponed from 5 June to 23 June, Interfax reported. At the height of the recent wave of protests by unpaid coal miners, Yeltsin agreed to hold such talks during the first 10 days of June (see "RFE/RL Newsline," 22 May 1998). The delay may last longer than Seleznev suggested. Presidential spokesman Yastrzhembskii says all Federation Council members and some Duma deputies will be invited to the Kremlin on 30 June for a "big discussion." Meanwhile, the Duma has asked Prime Minister Sergei Kirienko to inform the chamber on 10 June about the government's plans for dealing with the economic crisis. Yeltsin is slated to discuss the government's policies during a 14 June session of the Federation Council, according to Council speaker Yegor Stroev. LB

KREMLIN TO CHECK SOME INCOME DECLARATIONS

Yevgenii Savostyanov, the deputy head of the presidential administration, says the Kremlin is to establish a process for checking the veracity of bureaucrats' income and property declarations, Russian news agencies reported on 2 June. He said 1-2 percent of the more than 426,000 declarations submitted this year will be reviewed. The targets will be selected on the basis of information received from the tax police, law enforcement agencies, or other sources such as media reports. Savostyanov said the declarations show that most of Russia's "bureaucratic elite is poor." Others have argued that it is easy for officials to conceal the true size of their incomes and property holdings. LB

CONSTITUTIONAL COURT IN NO HURRY ON TROPHY ART, ELECTORAL LAWS

The Constitutional Court will not consider the trophy art law and the law on parliamentary elections until late 1998, court Chairman Marat Baglai announced on 2 June, following a meeting with Yeltsin. The court in April instructed Yeltsin to sign the trophy art law, but the president has questioned the constitutionality of provisions that prohibit the transfer abroad of cultural valuables seized by the Soviet Union during World War II. The challenge to the electoral law questions the proportional representation system currently used to elect half the State Duma. Both cases highlight sharp controversies between Yeltsin and his parliamentary opponents. But Baglai estimated that of the cases considered by the Constitutional Court, only 10 percent concern disputes between the legislative and executive branches, while some 60 percent concern individual rights and 30 percent deal with federalism issues or the constitutionality of regional laws, Interfax reported. LB

SUPREME COURT CHAIRMAN BEMOANS UNDERFUNDING OF COURTS

Vyacheslav Lebedev has warned that "there can be no talk of providing for the independence of the judicial system" given current levels of funding for Russia's courts, RFE/RL's Moscow bureau reported on 2 June. He said many raion courts have been forced to cease functioning. According to Lebedev, the Supreme Court requested 5.6 billion rubles ($909 million) in spending on the judicial system for this year. But the 1998 budget projected only 3.4 billion rubles, and the government later reduced that sum by more than 26 percent, Interfax reported. (Russia's Council of Judges has asked Yeltsin to instruct the government to reverse the planned spending cuts on the judiciary, ITAR-TASS reported on 29 May.) The Supreme Court has asked the Constitutional Court to consider the legality of budget targets that are insufficient for safeguarding the independence of the courts. LB

GOVERNMENT TO SIGN POWER-SHARING AGREEMENT WITH MOSCOW

Yeltsin has instructed the government to sign a power-sharing agreement this month between the federal authorities and the Moscow city government, presidential spokesman Yastrzhembskii announced on 2 June. Moscow Mayor Yurii Luzhkov met with Prime Minister Kirienko for two hours on 30 May to discuss various policy issues. Among other things, the mayor reminded Kirienko that the Moscow city government would like to buy a controlling stake in the Sheremetevo international airport, Russian news agencies reported. He called for lowering electricity tariffs by at least 30 percent in order to stimulate industry. Luzhkov also lobbied against plans to cut by nearly a third payments this year to compensate Moscow for the cost of maintaining federal facilities in the capital. LB

NIZHNII NOVGOROD MAKES MAYORAL RACES TWO- ROUND ELECTIONS

The Nizhnii Novgorod Oblast legislature on 2 June amended the law on local elections to introduce a two-round system for electing city mayors, Interfax reported. Runoff elections will be held if no candidate gains more than 50 percent of the vote in the first round. The new system will make it more difficult for extreme or highly controversial figures to win elections and was adopted in response to the victory of businessman Andrei Klimentev in a March mayoral race in Nizhnii Novgorod. If a two-round system had been in place, Klimentev would most likely have lost in the runoff. In any case, that election was quickly annulled, and Klimentev has since been sentenced to six years in prison (see "RFE/RL Newsline," 29 May 1998). LB




AZERBAIJAN SIGNS NEW OIL, GAS CONTRACTS

Azerbaijan's state oil company SOCAR on 2 June signed two contracts with international consortia to explore and develop off-shore Caspian oil fields. A $2.5 billion agreement provides for production-sharing at the Kyurdashi field, whose reserves total an estimated 100 million metric tons. The participants are SOCAR (50 percent), Italy's Agip (25 percent), Japan's Mitsui (15 percent), Turkey's TPAO (5 percent), and Spain's Repsol (5 percent). The other agreement applies to the South-West Gobbustan field, with estimated reserves of 50 million metric tons. The partners are SOCAR (40 percent), the British-Canadian Commonwealth Oil and Gas (40 percent), and Union Texas Petroleum (20 percent). An accord was also signed on exploration rights for the onshore Kyursangi and Karabaghli oil and gas deposits. SOCAR has a 50 percent stake in the undertaking, Frontera Resources 30 percent, and the Saudi-U.S. Delta-Hess 20 percent. LF

ABKHAZ, GEORGIAN ENVOYS MEET

Abkhaz presidential envoy Anri Djergenia and Georgian ambassador to Russia Vazha Lortkipanidze began talks in Moscow on 2 June to prepare for a meeting between President Eduard Shevardnadze and his Abkhaz counterpart, Vladislav Ardzinba, Interfax reported. The previous day, Lortkipanidze said it is hoped such a meeting could take place later this month. But this is unlikely, since Tbilisi insists such a meeting is contingent on the repatriation of the 30,000-40,000 ethnic Georgians forced to flee Abkhazia's southernmost Gali Raion during last month's fighting. LF

GEORGIAN ARMY "NOT COMBAT-READY"

Meeting with journalists in Tbilisi on 2 June, President Shevardnadze said that the Georgian armed forces are not combat-ready because Russia has not yet fulfilled agreements on providing Georgia with arms to replace those withdrawn from the country in 1991-1993, Interfax reported. Shevardnadze said the low level of combat-readiness was one of the reasons why the Georgian armed forces were not sent into Abkhazia to protect the Georgian population during last month's fighting. Georgian human rights activists, however, claim that the reason for the low level of combat-readiness within the Georgian army are the appalling conditions under which conscripts serve. A platoon of Georgian cadets left for the U.S. on 2 June to participate in maneuvers within the framework of NATO's Partnership for Peace program. LF

ARMENIAN PRESIDENT SAID TO OPPOSE PRE-TERM PARLIAMENTARY ELECTIONS

Armenian parliamentary speaker Khosrov Harutiunian told journalists on 2 June that President Robert Kocharian is opposed to pre-term parliamentary elections and wants the current National Assembly to complete its four-year term, which expires in summer 1999, RFE/RL's Yerevan bureau reported. Harutiunian said both he and Kocharian believe that the parliament should be dissolved only if there is a "political crisis" in the country. He added that it is unlikely the parliament will pass new a new election law before the summer recess. The majority Yerkrapah group wants a maximum of 40 seats in the 131-member parliament allocated on the basis of proportional representation, but other parties want the majority of seats allocated under that system. LF

TAJIK COMMISSION FORMED TO DEAL WITH CONTROVERSIAL LAW

Following a meeting with United Tajik Opposition leader Said Abdullo Nuri on 2 June, President Imomali Rakhmonov signed a decree forming a "conciliation commission" tasked with resolving the problems arising from the passage last month of a law banning religious political parties, ITAR-TASS reported. The commission has 20 days to find an acceptable compromise after complaints by the UTO, the UN Security Council, the Iranian and Russian Foreign Ministries, and the U.S. State Department that the law contravenes the Tajik peace accord signed last year. Nuri said that he hopes the prohibition will be lifted and does not believe it will take 20 days to do so. Russian Ambassador to Tajikistan Yevgenii Belov responded to the formation of the commission by saying that "a light has appeared at the end of the tunnel." BP

RUSSIAN INTERIOR MINISTER SAYS FUNDAMENTALISM "A CIS PROBLEM"

Sergei Stepashin, attending a conference of CIS interior ministers in the Uzbek capital of Tashkent, said "expressions of fundamentalism...or Wahhabism...have become a serious issue throughout the CIS," Interfax reported. He said an agreement has already been reached with Azerbaijan on "studying expressions of Wahhabism in Dagestan" and that Uzbekistan has shown interest in participating in that project. He added that a data base has been set up that lists criminal groups with connections in other countries. He said the data base already has 250,000 entries. Stepashin also stressed the need to cooperate in combating drug trafficking. BP

WOMAN DIES FROM CYANIDE POISONING IN KYRGYZSTAN...

A woman on 3 June died in a hospital in the eastern town of Karakol from cyanide poisoning, RFE/RL correspondents reported. She is the first person to die as a result of the spill last month of 1.7 tons of sodium cyanide into the Barskoon River, which flows into the southern part of Lake Issyk-Kul. More than 1,000 people have received medical treatment following the accident. The full extent of the damage is still unknown. RFE/RL correspondents report that at the end of May, tourists on the north shore of Issyk-Kul received little, if any information, about the toxic spill and were still swimming in Issyk-Kul. BP

...CAMECO PRESIDENT SAYS CONTAMINATION REPORTS EXAGGERATED

Michel Bernard, the president of Canada's CAMECO Corp., said on 3 June that the spill into the Barskoon River does not pose a serious threat to residents of the area or nearby Lake Issyk-Kul. CAMECO is the foreign partner of Kyrgyzstan's Kumtor Gold Mining Company. Bernard said reports in the Kyrgyz and CIS media have exaggerated the seriousness of the spill. He argued that "well-respected experts" say the leak will not endanger the Issyk-Kul environment as most of the chemical has settled at the bottom of the river which feeds into Issyk- Kul. A special government commission supported Bernard's claim, saying the amount of sodium cyanide in the lake does not exceed the norm. BP

NEW UZBEK LAND LAW PUBLISHED

Uzbekistan's new land law was published on 2 June, Reuters reported. According to that legislation, land is the property of the state and cannot be sold, bought, traded, presented as a gift, or used as collateral. Land may be leased to Uzbek citizens engaged in agriculture or wishing to construct a private house after obtaining permission from the local authorities; foreigners, however, require special permission from the government to lease land. Reuters quotes a World Bank official as saying the free purchase and sale of land, as well as its use as collateral, may still be "premature" issues for Uzbekistan. The law takes effect on 1 July. BP




UKRAINIAN GOVERNMENT TO PAY CURRENT WAGES TO MINERS

Deputy Prime Minister Anatoliy Holubchenko told the Supreme Council on 2 June that the government will pay current wages to miners, Ukrainian Television reported. According to a protocol signed by the government and some miners trade unions, the government will allot 400 million hryvni ($200 million) from the budget and take out a 400 million hryvni loan from the National Bank to pay wages for May through the end of the year. Holubchenko added that the government is currently unable to pay Ukraine's total wage arrears, which amount to 6 billion hryvni. Also on 2 June, the Supreme Council passed a resolution instructing the Cabinet of Ministers and the National Bank to report by 9 June on the country's financial situation. JM

UKRAINIAN LEFT-WING DEPUTIES WANT TO UNSEAT CABINET

Left-wing parliamentary deputies have collected 191 signatures supporting a motion of no confidence in Valeriy Pustovoytenko's government, Reuters reported on 2 June. Under parliamentary rules, a third of the 450-seat parliament must agree to table a motion, while a simple majority is enough to pass it. The final decision on whether the vote will take place will be made on 10 June. Reuters suggest the motion is a political maneuver by left-wing deputies trying to bring pressure on parliamentary parties that support President Leonid Kuchma. Those parties have blocked three attempts to elect a leftist speaker. JM

BELARUSIAN LAWYER STRIPPED OF LICENSE

The Justice Ministry on 2 June took away the license of Hary Pahanyayla, a prominent lawyer known for defending critics and opponents of the Belarusian government, Belapan reported. The ministry said the lawyer forfeited his right to practice law in Belarus when he quit the Minsk City Collegium of Lawyers and joined a Russian bar association. Pahanyayla said the ministry's ruling contradicts international law and Belarus's obligations under the union treaty with Russia. He said he will appeal the decision in court. Most recently, Pahanyayla defended Pavel Sevyarynets, the 21-year-old leader of the Belarusian Youth Front, who was arrested in April for taking part in the 2 April rally protesting the Russia-Belarus union. JM

YOUNG BELARUSIAN OPPOSITIONIST TO STAY IN JAIL FOR ANOTHER MONTH

Meanwhile, the prosecution has ordered that Sevyarynets remain in jail for another month, Belapan reported on 2 June. According to witnesses interrogated in connection with Sevyarynets's case, the prosecution has been unable to substantiate the charges of "malicious hooliganism" and is now seeking another indictment. One investigator reportedly admitted to a witness that some articles in "Maladzyovy vesnik," which Sevyarynets edits, may be regarded as "stirring up interethnic dissension." The prosecution has denied a request by Sevyarynets's parents to defend their son, despite the provision of the penal code allowing the defendant to choose his defense. JM

EESTI TELEKOM SHARES TO BE FLOATED IN NEW YORK, LONDON

An international group advising the government on the sale of shares in Eesti Telekom, the state-owned telecommunications company, has said it will float 49 percent of the shares in the U.S. and U.K. in the second half of this year, ETA reported on 2 June. Only 10 percent of the shares will be floated on the Tallinn stock exchange. The flotation will be the largest international share issue from the Baltic States. Also on 2 June, the government approved a bill increasing excise duties on tobacco, alcohol, and luxury goods. Finance Minister Mart Opmann said the move is aimed at reducing the current accounts deficit and improving macro-economic figures. The government plans to introduce the higher rates on 1 December. Meanwhile, share prices on the Tallinn stock exchange plunged 12 percent on 1 June, having lost one-third of their value last month. Corrections over the past 48 hours have helped the exchange regain some ground. JC

LATVIAN PARLIAMENT TO VOTE ON SINGLE DOCUMENT AMENDING CITIZENSHIP LAW

The parliament's Legal Affairs Committee on 2 June announced that all three proposals submitted to the parliament on amending the citizenship law will be considered as one draft document, BNS and "Diena" reported. It explained that move by pointing to the urgency of the issue. Lawmakers will vote on the removal of the so-called naturalization windows, which would make it easier for non-citizens to gain citizenship and would grant citizenship to all children born to non-citizens since 21 August 1991 should their parents request it. The coalition parliamentary parties, however, have thrown their support behind alternative amendments that would grant citizenship to those children only after they reach the age of 16 and are able to prove sufficient knowledge of the Latvian language. Calls for the Latvian parliament to amend the citizenship law in line with OSCE recommendations have intensified recently ahead of the 4 June vote on the issue. JC

ADAMKUS URGES UNDERSTANDING FOR KREMLIN'S ANXIETY OVER NATO EXPANSION

Lithuanian President Valdas Adamkus said in Stockholm on 2 June that aspiring NATO members must understand Moscow's anxiety over the alliance's possible eastward expansion to include former Soviet states. That statement came one day after Russian Foreign Minister Yevgenii Primakov repeated that NATO membership for former Soviet states such as Lithuania is "unacceptable." Adamkus said Primakov's comment came as "no surprise" and that he expected the attitude in Russia toward NATO would change as the Kremlin learns the alliance has "no designs on Russia." JC

POLISH GOVERNMENT TO APPOINT 'CASHIER' FOR EU FINANCIAL AID

The Polish government on 2 June announced it will appoint a special plenipotentiary to manage EU aid funds to Poland, "Rzeczpospolita" reported. The decision follows the recent slash of 34 million ecus in EU aid because of the "irrelevant" projects Poland proposed in its bid for such assistance (see "RFE/RL Newsline," 26 and 27 May 1998). However, the Committee for European Integration will retain its function of determining targets for EU funds. In this way, Poland complies with EU requests to separate those two functions. Meanwhile, a Dutch radio journalist has caused a stir among cabinet members by announcing last week that one Polish minister called the European Commission to congratulate it on cutting aid to Poland. "This slap in the face should sober up Warsaw," the minister allegedly commented. JM

CZECH ROMA PROTEST PLAN TO WALL THEM IN

A delegation of Czech Roma on 2 June handed over to the mayor of Usti nad Labem a protest against a plan to isolate a tenement block of Romani families behind a wall. A spokesman for the Association of Roma in the Czech Republic said the plan is an "insult" to all the Roma in the country. He added that if the plan is implemented, other towns will follow suit and "then you will have ghettos, followed by ovens, and that will be the end of the Roma." Mayor Ladislav Hruska said the wall is "not racially motivated" but just intended to "separate the decent people from those who are not," Reuters reported. MS

IAEA OFFERS TO FACILITATE SLOVAK-AUSTRIAN TALKS ON MOCHOVCE

A spokesman for the International Atomic Energy Commission (IAEA) on 2 June said the commission is willing to "facilitate talks" between Slovakia and Austria over the controversial Mochovce nuclear plant, AFP reported. The spokesman said the agency can offer "technical advice and a venue for the talks" but added that the IAEA is not prepared to "chair the meeting or mediate between the sides." Also on 2 June, the Slovak Nuclear Supervision Bureau said it has told the EU that the Mochovce plant "is ready to start operating" and is "safe from the technical and safety point of view." The bureau said the operation will actually begin "only after a detailed review of individual procedures have been completed." MS

HORN TO RESIGN AS HUNGARIAN SOCIALIST PARTY LEADER

Outgoing Prime Minister Gyula Horn on 2 June announced his intention to resign as Socialist Party chairman, executive deputy chairwoman Magda Kovacs Kosa told Hungarian media after a meeting of the party's steering board. She said that Horn has headed the party for "an eight-year period of historic significance" and that his decision requires no explanation. A party congress to elect a new chairman will be convened in late August or early September. Outgoing Foreign Minister Laszlo Kovacs is likely to be Horn's successor. He was quoted as saying he would not turn down such an offer. In other news, President Arpad Goncz on 2 June told Viktor Orban, chairman of the Federation of Young Democrats-Hungarian Civic Party, that he will ask him to form the new government at the inaugural session of the new parliament. MSZ




SHELLING DIES DOWN, EXODUS TO ALBANIA CONTINUES

The concentrated shelling by Serbian forces of several villages in western Kosova is reported to be winding down, according to AFP and Reuters on 2 June. The Serbian Interior Ministry said police have "eliminated a large terrorist group of Albanian separatists" near the village of Crnobreg, Tanjug reported. It added that one policeman was killed in a clash with ethnic Albanians on a road between Decani and Djakovica. Kris Janowski, a spokesman for the UN High Commissioner for Refugees, said that thousands of people have been displaced or left homeless within Kosova and that Serbian forces are denying UN aid workers access to the area. An Austrian military attache in Tirana, Wilhelm Figl, told Austrian Radio on 2 June that he observed from the Albanian border how Serbian forces systematically destroyed villages. No independent casualty figures from the area are available. PB

ALBANIA EXPECTS TENS OF THOUSANDS OF REFUGEES

Refugees continue to pour into the northern Albanian Tropoja district. According to an Interior Ministry spokesman, more than 3,000 refugees have arrived in that district but up to another 20,000 are expected, "Koha Jone" reported. The same day, Prime Minister Fatos Nano told the government Albania is considering breaking diplomatic ties with Yugoslavia and asking the international community to further increase its pressure on Belgrade. FS

RUGOVA ASKS UN FOR NO-FLY ZONE OVER KOSOVA

UN Security Council President Antonia Monteiro said in New York on 2 June that Kosovar shadow-state President Ibrahim Rugova has requested that a "no-fly zone" be established over Kosova, AFP reported. Rugova explained his request by pointing to the heavy use of Serbian helicopters in the ongoing violence in ethnic Albanian towns in the northwestern part of Kosova. Rugova also repeated an appeal that a UN human rights office be established in Prishtina. Belgrade has so far refused to allow such an office to open there. On 1 June, Rugova met with UN Secretary-General Kofi Annan. PB

MONTENEGRIN PRESIDENT LOOKS FOR REACTION FROM MILOSEVIC

Milo Djukanovic called on Yugoslav President Slobodan Milosevic to respond positively to the victory of Djukanovic's coalition in the Montenegrin parliamentary elections, dpa reported on 2 June. Djukanovic told Belgrade's Radio Index that Milosevic must recognize the "new Montenegrin political reality." He said Yugoslavia could "crumble from within" if Milosevic continues to subjugate Montenegro to Serbia. Predrag Bulatovic, the deputy chairman of Montenegro's Socialist People's Party, which supports Milosevic, said that Djukanovic and his supporters will be given" 100 days to prove it can fulfill promises." Yugoslav Premier Momir Bulatovic, a Djukanovic rival, was summoned to Belgrade the same day for talks with Milosevic. PB

CROATIAN, BOSNIAN SERB PREMIERS DISCUSS REFUGEES

Croatian Prime Minister Zlatko Matesa and Bosnian Serb Premier Milorad Dodik, meeting in Zagreb on 2 June, agreed that refugees have the right to choose to return to their pre-war homes or to sell or even exchange their property and settle elsewhere, SRNA reported. The meeting aimed to help resolve the situations of tens of thousands of ethnic Serbian refugees who fled Croatia in 1995. Some 50,000 relocated to the Republika Srpska. Many Bosnian Croats driven from the Republika Srpska now live in vacated Serbian homes in Croatia. The same day in the strategically located town of Brcko, Dodik met with Ejup Ganic, the Croatian member of the Bosnian presidency, and Robert Farrand, the international community's supervisor of Brcko. The meeting, which Farrand described as "historic," also centered on the return of refugees. PB

GERMAN DEFENSE MINISTER TO SUPPORT REFUGEE RETURN

Volker Ruehe said in Sarajevo on 2 June that Bonn will encourage more investment in Bosnia-Herzegovina to aid the return of refugees from Germany, Reuters reported. Ruehe made his comments after talks with Edehem Bicakcic, a Bosnian deputy prime minister. Some 150,000 Bosnian refugees still live in Germany. In other news, Milojica Kos, a Bosnian Serb accused of committing crimes against humanity at the Omarska prison camp in northwestern Bosnia, pleaded innocent at The Hague to all 11 charges against him. PB

ALBANIAN PRESIDENT DECREES DISMISSAL OF 15 GENERALS

Rexhep Meidani has issued a decree dismissing 15 army and police generals in accordance with a proposal by his adviser and former Defense Minister Sabit Brokaj and current Defense Minister Luan Hajdaraga. Brokaj accused the generals of having ordered troops to use violence to put down the March 1997 anti-government rebellion. The troops refused to obey the orders, which were issued at a time when anarchy reigned in the country. Among those dismissed are former Police Chief Agim Shehu and former General Chiefs of Staff Adem Copani and Sheme Kosova. FS

MACEDONIAN FOREIGN MINISTER IN ROMANIA

Blagoj Handziski and his Romanian counterpart, Andrei Plesu, said in Bucharest on 2 June that they support a "U.S. [military] presence in southeastern Europe under NATO auspices" in order to prevent "the possible extension of the crisis in Kosova." They added that they also support "an extended [form of] autonomy" for Kosova "within the Yugoslav Federation," RFE/RL's Bucharest bureau reported. Plesu later announced that the two countries are to conclude a basic treaty and a free trade agreement in the near future. A military accord will also be signed following Defense Minister Victor Babiuc's visit to Macedonia in June. Prime Minister Radu Vasile praised Macedonia's policy toward the Vlach minority, which is closely related to the Romanians. MS

ROMANIAN PROSECUTOR-GENERAL APPOINTED CHIEF JUSTICE

Sorin Moisescu on 2 June was appointed by presidential decree chief of the Supreme Court of Justice , Mediafax reported. Also on 2 June, the Chamber of Deputies approved a law on combating money laundering. The law, which has yet to be debated in the Senate, stipulates the setting up of a National Office for Combating Money Laundering that would be subordinate to the government and would have control over banks, insurance companies, and casinos. Banks would have to inform the office of any deposit exceeding 10,000 ecu ($11,600). Concealing information from the office would constitute a criminal offense punishable by between three and 12 years in prison. MS

MOLDOVAN PREMIER ON ECONOMIC SITUATION

In a televised address on 2 June, Ion Ciubuc said that the five months that preceded the March elections damaged the country's economy beyond "the blackest expectations." Ciubuc, who also headed the previous government, said that during that period, the executive had "worked just formally" and "ties with the IMF and the World Bank were practically disrupted, while foreign investments ceased." He also said the government unjustifiably forgave "huge debts" of many state enterprises and made "populist reductions of tariffs for energy consumption," BASA-press reported. Under these circumstances, he said, public spending must now be "radically cut." MS

BULGARIAN ROM SETS HIMSELF ON FIRE

A Bulgarian Rom on 2 June set himself on fire after a two-week protest fast over discrimination and unpaid social benefits, RFE/RL's Sofia bureau reported. The man, one of the 17 Roma who are staging a hunger strike in Lom, suffered only slight injuries, as police put out the fire. Minister of Public Administration Mario Tagarinski later arrived in Lom for talks with the protesters, who threatened to set themselves ablaze one after the other every hour. Meanwhile, AFP reported on 2 June that exiled Princess Marie-Louise, sister of former King Simon II, has arrived for a 17-day visit of her homeland at the invitation of President Petar Stoyanov. She is scheduled to tour the country and visit orphanages, monasteries, and hospitals. MS




UNCERTAINTY PERSISTS ABOUT UKRAINE'S ECONOMIC PROSPECTS


by Viktor Luhovyk

The Ukrainian government last week announced its intention to cut the planned budget deficit for 1998, saying the move marks the beginning of a new wave of reforms. But the announcement stopped short of providing details, leading to doubt whether the measures will ever be fully implemented.

The 29 May announcement said that the deficit will be cut to 2.3 percent, down from the 3.3 percent level approved by the parliament in December. Officials said more reforms will follow immediately, as the cash- strapped government tries to qualify for a three-year $2.5 billion loan from the IMF.

The decision to cut the deficit was prompted by the rapidly worsening financial situation. The IMF and the World Bank suspended their aid programs in April, after the budget deficit in the first three months of this year doubled the planned target of 3 percent.

Most affected has been the market for Treasury bills (T-bills), issued by the Finance Ministry to finance the budget deficit. The ministry's payments for maturing T- bills have exceeded the funds raised from issuing the new debt this year, reflecting foreign investors' reluctance to purchase the T-bills. Last year, foreign investors had held half of Ukraine's T-bill market but were purchasing only 10-25 percent of the securities in recent months.

Unable to restore foreign investors' interest in the T- bill market, the government borrowed more than $1 billion internationally in February and March at a high 16 percent interest rate to cover budget losses and pay off some wage arrears in the run-up to 29 March parliamentary elections. The exodus of foreign investors from the T-bill market forced the National Bank to spend up to $1 billion to prevent the hryvna from falling.

But many observers say the government must start now raising more than $2.5 billion to pay off mature T-bills and foreign debt in the next three months. This could lead to a drop in the value of the hryvna after 20 June, when first debt payments have to be made. The Finance Ministry can now sell only T-bills whose maturity period does not go beyond 1998, and analysts say that the government may again try to borrow at a high interest rate to cover its outstanding obligations amid growing concerns that the country may eventually go bankrupt. "The government behaves like the passengers of the 'Titanic,'" said Volodymyr Dubrovsky of the Harvard Institute for International Development, alluding to the government's persistent policy of acquiring new loans to pay off old debt.

Meanwhile, serious structural reforms are still only being talked about. "We started talking about liberalization of foreign trade, bankruptcy regulations, and new taxation policies five years ago," said Vitaly Migashko of ING Bank Ukraine. "Can anyone say today that at least some of these measures were introduced adequately?"

At the beginning of the year, the government announced plans to lay off thousands of government employees by the end of the year to reduce budget expenditures and implement a number of deregulation measures. However, many of these measures are still to be put into effect months after they were first discussed.

"What dominates the current cabinet is concern with its own interests," said former Economy Minister Viktor Suslov. Having won election to the parliament, Suslov resigned from the cabinet last month, after criticizing the anti-reform stance of its many departments.

The situation may be further exacerbated by tense relations between the government and the legislature. "The newly elected parliament is not likely to be more friendly toward the government than the previous one," says liberal lawmaker Serhy Teryokhin, who was among the proponents of a radical tax reform discussed by the previous legislature. "And with the government being politically and professionally weak, there are no reasons to believe in financial stability."

The government measures aimed to avert the financial crisis have to be approved by the parliament. But the legislature so far seems unwilling to do anything of the kind. The author is a Kyiv-based RFE/RL correspondent.


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