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Newsline - July 2, 1998




GOVERNMENT THREATENS TO LOWER BOOM ON GAZPROM...

Prime Minister Sergei Kirienko announced at a 2 July cabinet session that he has asked Deputy Prime Minister Boris Nemtsov to cancel the December 1997 agreement under which Gazprom chief executive Rem Vyakhirev manages a 35 percent state-owned stake in the gas monopoly, Russian news agencies reported. Nemtsov will chair a meeting of the state's representatives in Gazprom on 2 July. Kirienko also announced plans to hold an extraordinary meeting of Gazprom's board of directors and said the State Tax Service is to seize some property belonging to the monopoly. Fuel and Energy Minister Sergei Generalov told Interfax that the measures were prompted by Gazprom's failure to make a 2.45 billion ruble ($395 million) payment to the federal budget in June. During a recent meeting of Gazprom shareholders, Nemtsov indicated that the government is satisfied with the company's management (see "RFE/RL Newsline," 29 June 1998). LB

...UNLESS GAS MONOPOLY PAYS TAXES IN FULL

Deputy Prime Minister Nemtsov announced on 2 July that "if Gazprom pays its taxes, everything will be all right," ITAR- TASS reported. But Nemtsov confirmed that the government will carry out the steps outlined by Kirienko if the company fails to meet its financial obligations toward the budget. ITAR-TASS quoted unnamed government sources as saying the threats against Gazprom "may be directly related" to talks between Russian and IMF official over a possible $10-15 billion stabilization loan. The IMF has long said that further loans to Russia will depend in large part on the government's success in improving tax collection. Finance Minister Mikhail Zadornov told ITAR- TASS on 2 July that Gazprom provides some 15-20 percent of all federal tax revenues. LB

DUMA GIVES INITIAL APPROVAL TO PART OF ANTI- CRISIS PROGRAM...

The State Duma on 1 July gave at least initial approval to several draft laws in the government's anti-crisis program, Reuters and ITAR-TASS reported. In all three required readings, deputies approved a law to exempt imported industrial equipment from value-added tax this year and a law reducing excise duties on carbonated alcoholic beverages. Laws related to a plan to raise taxes on the games industry (such as lotteries and casinos) were approved in two readings. Several laws were passed in only the first reading and are expected to undergo substantial amendments before the Duma gives final approval: a law to reduce the profit tax from 35 percent to 30 percent; laws simplifying the taxation of small businesses; and a law that would allow enterprises to sell goods below the cost of production. LB

...REJECTS LAW ON TAXING GOODS BEFORE COMPANIES ARE PAID

As expected, the Duma on 1 July voted down by an overwhelming margin the government's proposal to force companies to pay value-added tax on goods at the time of shipment to customers rather than when payments are received. Gazprom was among those who lobbied against passage of that bill, the only part of the government's anti-crisis program so far that the Duma has rejected. Deputies on 1 July began debating a draft law to charge a single rate of value-added tax on almost all goods but postponed a vote. That law, along with nearly a dozen other important parts of the government's anti-crisis plan, will be considered either on 2 or 3 July. LB

DUMA RAISES CEILING FOR FOREIGN BORROWING

The Duma on 1 July approved the government's plans to raise allowable foreign borrowing in 1998 from $6.6 billion to $9.068 billion, with no more than $400 million of that amount coming from loans from foreign governments, Interfax reported. But Duma Speaker Gennadii Seleznev noted that deputies made several amendments to the program before approving it. For example, he said the Duma took out provisions that would have allowed funds borrowed from abroad to be used to pay for foreign consultants. Duma First Deputy Speaker Vladimir Ryzhkov of the Our Home Is Russia faction named that provision as one of the "many stupid things" the Duma removed from the foreign-borrowing program, ITAR-TASS reported. LB

OFFICIAL WARNS PARTIES OVER EARLY DUMA ELECTIONS

Central Electoral Commission Chairman Aleksandr Ivanchenko has reminded politicians that current legislation would not allow any of Russia's political parties to qualify for elections to the State Duma if early elections were held in the next few months, RFE/RL's Moscow bureau reported on 1 July. Under a 1997 law, political parties and movements must amend their charters and re-register with the Justice Ministry at least one year before parliamentary elections. The next elections are scheduled for December 1999 but could be held earlier if the Duma gave President Boris Yeltsin grounds to dissolve the lower house (either by voting no confidence in the government or by rejecting the president's prime ministerial nominee three times). Ivanchenko's remarks appear to be linked to recent speculation in some Russian media that conflict over the government's anti-crisis program could eventually lead to the Duma's dissolution. LB

COMMISSION ORDERS FOUR LARGE TAX DEBTORS TO PAY UP

Deputy Prime Minister Viktor Khristenko announced on 1 July that an extraordinary commission on tax and budgetary discipline has given four companies until 1 August to pay their tax debts, RFE/RL's Moscow bureau reported. The decision affects the Severonikel nickel smelter (a unit of Norilsk Nickel that owes some 250 million rubles or $40 million), the Vostsibugol coal company (400 million rubles), the Chepetsk Mechanical Works (175 million rubles), and the state-owned Rosenergoatom nuclear energy company (329 million rubles), according to Interfax. If they do not meet the 1 August deadline, the first three companies face asset seizures and the management of Rosenergoatom will be replaced, Khristenko said. He also vowed that bankruptcy procedures will be initiated against several companies that have not complied with the commission's earlier order to pay their tax debts (see "RFE/RL Newsline," 1 June 1998). LB

KIRIENKO PROMISES SOLDIERS A RAISE--NEXT YEAR

Prime Minister Kirienko told journalists on 1 July that the government plans to raise the wages of military personnel as of 1 January 1999, Interfax reported. Last year, government officials promised to give soldiers a pay raise in 1998. The government's anti-crisis program calls for levying income tax on several types of income that are not currently taxed, including soldiers' wages. That proposal drew sharp criticism from Communist deputy Yurii Voronin during a 29 June meeting of the Duma Budget Committee, RFE/RL's Moscow bureau reported. But speaking to journalists on 1 July, Kirienko said soldiers will not be forced to pay income tax until after they have received pay raises. He did not specify the size of the pay increase but claimed that it will make up for the introduction of an income tax on soldiers' salaries, ITAR-TASS reported. LB

TRADE UNION LEADER SLAMS ANTI-CRISIS PROGRAM

Mikhail Shmakov, the leader of the Federation of Independent Trade Unions (FNPR), says the government's anti-crisis program will not solve the wage arrears problem but rather seeks to increase the tax burden on ordinary citizens, RFE/RL's Moscow bureau reported on 1 July. He told journalists that wage arrears have increased by more than 20 percent since the beginning of 1998 and continue to grow. Commenting on official claims that the government is responsible for only a small fraction of the wage arrears, Shmakov argued that the government is responsible for helping ensure prompt wage payments to all workers--not only to state employees. He warned that if no steps are taken to solve the problem, trade unions will cease to be the government's "social partners" and will organize a nationwide strike in November. LB

WILL BLOCKADE OF TRANS-SIBERIAN RESUME?

Some 100 coal miners from three towns in Kemerovo Oblast began picketing the Trans-Siberian Railroad on 1 July to protest wage arrears, ITAR-TASS reported. Trade unions claim that the region has received only 65 percent of the 1 billion rubles ($160 million) promised by the federal government in a protocol signed by Deputy Prime Minister Oleg Sysuev on 24 May. That protocol ended a 10-day blockade of the railways (see "RFE/RL Newsline," 25 May and 3 June 1998). Deputy Prime Minister Nemtsov told journalists the government has "fulfilled all its obligations" to miners, and he blamed the coal sector's problems both on consumers, who allegedly owe 8.6 billion rubles ($1.4 billion) to mines nationwide, and on the Federation Council. The upper house recently rejected a bill that would have cut spending in several areas and earmarked the funds saved for the coal industry. BT

RUSSIA EXPRESSES ANXIETY OVER U.S. MISSILE ATTACK IN IRAQ

A 1 July Foreign Ministry statement expressed concern over the U.S. missile attack on a site in southern Iraq the previous day , Russian news agencies reported. The statement mentions U.S. reports of a "defensive" attack on a functional air-defense radar in a no-fly zone and statements made by an Iraqi official that the missile attack was against a reservoir complex in the southern province of Basra, where no radars operate. On 30 June, Foreign Minister Yevgenii Primakov expressed hope to Prakash Shah, the UN secretary-general's special envoy in Iraq, that the UN's disarmament project will lead to the repeal of the UN oil embargo on Iraq, Interfax reported. BT

YELTSIN URGES INDIA TO SIGN NON-PROLIFERATION TREATY

Boris Yeltsin sent a letter to Indian Prime Minister Atal Behari Vajpayee on 1 July urging him to sign the Nuclear Non-Proliferation Treaty, ITAR-TASS and Interfax reported. Yeltsin said such a step would "elicit a positive response from the world community." However, Yeltsin's call is likely directed not only at the international community as a whole but also at Beijing. "Nezavisimaya gazeta" wrote on 30 June that Beijing received an "unfavorable impression" when Russia agreed last month to fulfill a contract for supplying nuclear reactors to India signed 10 years ago. The newspaper called India "China's worst enemy." BP

NEMTSOV, LEBED FAIL TO SIGN AGREEMENT ON FINANCES

Deputy Prime Minister Nemtsov and Krasnoyarsk Krai Governor Aleksandr Lebed met in Moscow on 1 July but failed to sign an agreement between federal and krai authorities concerning Krasnoyarsk's finances, Russian news agencies reported. Lebed explained that the krai is not yet ready to sign a comprehensive agreement with the federal government because "we have too many sins to go to paradise." Nemtsov agreed to give Krasnoyarsk officials more time to draft proposals concerning the agreement. He noted that the krai is in difficult financial straits, with large-scale wage arrears and backlogs in child allowance payments. Earlier on 1 July, Nemtsov and Aleksei Lebed, the leader of the Republic of Khakassia and younger brother of Aleksandr Lebed, signed an agreement on Khakassia's finances. LB

CHECHNYA WILL NOT SEND TROOPS TO KOSOVA

President Aslan Maskhadov told journalists on 1 July that Chechnya has had no contacts with the Kosova Albanian leadership and has not dispatched any military units to fight on the side of the Kosova Liberation Army, Interfax reported. Maskhadov admitted that "we identify with [the Albanians'] bid for independence" but said that Chechnya will not interfere in the internal affairs of another country unless asked. If such a request is made, Maskhadov continued, "the Chechen president and no one else" will decide how to respond. "Kommersant-Daily" on 26 June had quoted Chechen Foreign Minister Movladi Udugov as saying Chechnya is prepared to dispatch a peacekeeping contingent to Kosova if the international community decides to finance a peacekeeping operation there. He had denied allegations, however, that Grozny is preparing to send 10,000 men to fight alongside the UCK. LF

INGUSHETIAN EX-MINISTER RELEASED

Former acting Interior Minister Daud Korigov was released from detention in Moscow on 1 July as a result of pressure from the Ingushetian leadership, an RFE/RL correspondent in Moscow reported the following day. Korigov was arrested on 4 March and charged with exceeding his authority (see "RFE/RL Newsline," 10 and 17 March 1998.) Duma deputy speaker Mikhail Gutseriev, also an ethnic Ingush, has vouched that Korigov will not leave Moscow and will continue to cooperate with investigators. "Segodnya" reported on 14 May that the kidnappers of Russian presidential envoy Valentin Vlasov offered to release him if Korigov were freed from detention, but Ingushetian President Ruslan Aushev subsequently denied that such an exchange was being discussed. LF

NORTH OSSETIAN, INGUSHETIAN PRESIDENTS MEET

Meeting on 1 July on the administrative border between their respective republics, Aleksandr Dzasokhov and Ruslan Aushev discussed the recent rise in tensions in North Ossetia's disputed Prigorodnyi Raion (see "RFE/RL Newsline," 29 June 1998), Russian agencies reported. The Ingush population of that district was forced to flee ethnic cleansing in November 1992, but most have since returned. Dzasokhov and Aushev vowed to step up coordination between their Interior Ministries and to resume joint Ingushetian-Ossetian patrols in Prigorodnyi Raion in order to preclude any further deterioration of the situation there, "Nezavisimaya gazeta" reported. Also on 1 July, North Ossetians NGOs issued a statement proposing that a congress of representatives of all North Caucasus republics be convened to coordinate efforts to ensure political stability and combat crime, according to ITAR- TASS. LF




GEORGIAN OPPOSITION LEADER WANTS LAND PLOTS FOR FUGITIVES

Speaking at a press conference in Tbilisi on 1 July, the leader of the Laborist parliamentary group, Shalva Natelashvili, called on the government to distribute plots of land to the tens of thousands of Georgians who fled Abkhazia in 1992-1993, Caucasus Press reported. Many of those fugitives are still quartered in Tbilisi hotels. Natelashvili also called on the government to regulate payments of wages and pensions and to alleviate the tax burden on small and medium-sized business. Natelashvili expressed surprise at the Georgian leadership's negative reaction to last week's congress in Batumi of the Revival party, at which Adjar Supreme Council chairman Aslan Abashidze harshly criticized the Georgian government's policies. Praising Abashidze for having maintained political stability in Adjaria, Natelashvili said the congress constituted an attempt by various Georgian political forces to seek solutions to the country's problems within the framework of the constitution. LF

ARMENIA VALUES TIES WITH FRANCE...

President Robert Kocharian described France as "Armenia's strategic partner" at a 1 July meeting with a group of visiting French parliamentary deputies and businessmen, according to Noyan Tapan. Kocharian also called for more French investment in the Armenian economy, stressing that "all necessary conditions for normal business" are being created in his country, RFE/RL's Yerevan bureau reported. The two sides also discussed the 29 May recognition by the lower house of the French parliament of the 1915 Armenian genocide. Delegation head Senator Jacques Oudin told Interfax that "an overwhelming majority" in the Senate will support the resolution when it is debated in the fall. LF

...AND RUSSIA

"Respublika Armeniya" on 1 July quoted Armenian presidential adviser on foreign policy Aram Sargsian as predicting that Russian-Armenian relations will become more dynamic in the near future, given that "Moscow's political beau monde realizes that Armenia plays an almost pivotal role in the Transcaucasus," RFE/RL's Yerevan bureau reported. Sargsian held talks in Moscow last week with senior Russian Foreign Ministry and Security Council officials. He noted that Yerevan is keen to "develop serious relations not just with Russia but with Europe, the U.S., China, and Iran, because it is in our national interests." And he stressed that Armenia is ready to resume talks with Azerbaijan on a settlement of the Karabakh conflict but that any agreement must include iron-clad security guarantees for all parties to the conflict. LF

FORMER PREMIER, YEREVAN MAYOR TRADE ACCUSATIONS

Azatutiun, the political party founded last year by former Prime Minister Hrant Bagratian, has issued a statement categorically denying allegations by Vano Siradeghian, former Yerevan mayor and chairman of the board of the Armenian Pan-National Movement, "Aravot" reported on 1 July. Siradegian claimed that Bagratian secretly acquired 25 percent of the shares in the Ararat winery. The statement charges that Siradeghian's accusations are an attempt to avoid imprisonment for murders that he had plotted, to safeguard the "unimaginable wealth" he has acquired, and to escape responsibility for "setting the country's development back 20 years," Noyan Tapan reported. Azatutiun says Bagratian's return to active politics is inevitable. LF

DOES KYRGYZ PARLIAMENT HAVE SPEAKER?

Usup Mukambaev told an RFE/RL correspondent in Bishkek on 1 July that he has not resigned his post. The daily "Vechernii Bishkek" wrote the same day that Mukambaev had submitted his resignation at a 30 June closed session of the Legislative Assembly the previous day. Mukambaev is at the center of a scandal following a 22 June vote by the assembly to raise the retirement age in Kyrgyzstan beginning 1 July. Although the Assembly passed the draft law on 22 June, they approved a final version on 26 June that changed the date it goes into effect to 1 January 1999. Between 22 and 26 June, Mukambaev met with Kyrgyz President Askar Akayev, who signed the draft law into effect, but had not consulted the assembly about that meeting. The Assembly harshly criticized Mukambaev at the closing summer session on 30 June. BP

WAGES, PRICES GO UP IN UZBEKISTAN

President Islam Karimov has issued a decree raising the average minimum monthly wage in Uzbekistan from 750 som (about $9.5) to 1,100 som as of 1 July, ITAR-TASS and Interfax reported. Pensions and benefits for the disabled have also been increased. However, the same day the price of electricity and rents for housing doubled, while municipal transportation fares rose by 50 percent, bread by 42 percent, and gasoline by 25 percent. BP

TAJIK PRESIDENT PAYS ONE-DAY VISIT TO UZBEKISTAN

Tajik President Imomali Rakhmonov was in Tashkent on 30 June to take part in the "Tajikistan days" celebrations in the Uzbek capital, Interfax reported. His Uzbek counterpart, Islam Karimov, spoke of "how close our two peoples are," adding that "Uzbeks and Tajiks are the same people speaking two different languages." Karimov said his country will help Tajikistan to restore normalcy after its five-year civil war. Rakhmonov thanked Karimov, saying "We are starting a new page in our relations." BP




KUCHMA ORDERS ANTI-CRISIS MEASURES

Ukrainian President Leonid Kuchma ordered his cabinet on 1 July to prepare measures to halt the country's economic decline, AP reported. Presidential spokesman Oleksandr Maydannyk said the measures, which are to be issued as decrees due to the standstill in the parliament, seek to stabilize the economic situation in the country. Maydannyk said Kuchma's measures will reduce taxes, give tax breaks to large foreign investors, lower the need for foreign credit, and attract international investment. Other possible steps include increased support for farmers and an amnesty for Ukrainians abroad who left with large amounts of money. Also on 1 July, the parliament failed yet again to elect a speaker. Oleksandr Moroz received the most votes in the balloting. PB

KYIV WANTS CASPIAN OIL TRANSPORT TO TRANSIT UKRAINE

Uladislau Toroshevskiy, the acting chairman of Ukraine's Committee for the Oil and Gas Industry, said on 1 July that Kyiv is trying to ensure that oil will be transported through Odessa and along the Odessa-Brody pipeline, ITAR-TASS reported. Toroshevskiy was speaking at an oil conference in Kyiv. He said the government has adopted a resolution to expedite the establishment of an international consortium that would promote and improve conditions for the transport of Caspian oil through Ukraine. PB

EU, LITHUANIA CRITICIZE MINSK OVER DIPLOMATIC DISPUTE

The EU issued a statement on 1 July expressing its "strong disapproval" of the Belarusian government's handling of the dispute over the ambassadors' residences in Drazdy, Belapan reported. The EU's General Affairs Council, meeting in Luxembourg, said it will restart a dialogue with Minsk when the latter is ready to "respect its international obligations." In Vilnius, Lithuanian President Valdas Adamkus said Belarusian officials have "ignored all standards of diplomacy and international cooperation." He said he hopes that "logic and common sense will prevail." PB

CHINA, BELARUS PLEDGE CLOSER COOPERATION

Belarusian Foreign Minister Ivan Antonovich and his Chinese counterpart, Tang Jiaxuan, said on 1 July that their countries are committed to boosting relations, ITAR-TASS reported. Antonovich, speaking in Beijing during a five-day visit to China, said both sides "have similar positions on key international issues." He said stronger relations with China is a major priority for Minsk. Tang commented that the two countries are ready to develop long-term, stable relations. PB

SIGNATURE-COLLECTING CAMPAIGN TO BEGIN MID- JULY IN LATVIA

The Central Election Committee on 1 July announced that the campaign to collect signatures in support of a referendum on the citizenship law amendments will take place from 20 July to 18 August, BNS reported. Signatures will have to be counted by 30 August, when the two-month period in which the law is suspended expires. The chairman of the commission estimated that the cost of holding the referendum may total 150,000 lats (some $300,000). JC

LITHUANIANS MORE KEEN TO JOIN NATO THAN BALTIC NEIGHBORS

According to a poll carried out by the Baltic Surveys company in March, Lithuanians are more keen than either Estonians or Latvians to join NATO, BNS reported on 1 July. Fifty-five percent of Lithuanians supported their government's efforts to gain entry to the Atlantic alliance, compared with 54 percent of Estonians and 47 percent of Latvians. The figures for those expressing opposition to NATO membership were 26 percent in Lithuania, 31 percent in Estonia, and 32 percent in Latvia. BNS reported that in evaluating the influence of NATO membership on their country, Lithuanians are most optimistic while Latvians are most skeptical. JC

POLISH PARLIAMENT APPROVES PLAN FOR 15 PROVINCES

The Sejm passed legislation on 1 July that would reduce the number of provinces from 49 to 15, AP reported. President Aleksander Kwasniewski is expected to veto the bill, which has also been approved by the Senate. Prime Minister Jerzy Buzek said he hopes the president will approve the plan so that parliament can move on to "other elements of [administrative] reform." The rightist governing coalition would be unable to muster the three-fifths majority needed to override the veto. Kwasniewski has said he favors having 17 provinces and has campaigned to retain the northwestern province of Koszalin and the central Kielce province. Critics say he is grandstanding in order to gain electoral support from those regions in future elections. PB

YELTSIN'S PRESENCE MAY ACCELERATE NATO EXPANSION

Polish Defense Minister Janusz Onyszkiewicz said on 1 July that Poland, Hungary, and the Czech Republic may be admitted to NATO earlier than planned in order to allow Russian President Boris Yeltsin to attend the alliance's 50th anniversary celebrations in Washington, Reuters reported. Because of Moscow's ardent opposition to NATO expansion, Onyszkiewicz said it would be difficult for Yeltsin to attend the 26 April summit if formal accession ceremonies took place. The Polish newspaper "Zycie" suggested that the aspiring countries could be admitted as early as January. PB

CZECH GOVERNMENT ORDERS REASSESSMENT OF TEMELIN PROJECT

The government on 1 July decided to hire a team of local and foreign experts to reassess the construction of the controversial Temelin nuclear power plant, in southern Bohemia, CTK and Reuters reported. The government expressed dissatisfaction at the growing costs of and repeated delays in completing construction at Temelin. Industry and Trade Minister Karel Kuhnl told journalists that the cabinet wants the experts to recommend whether the construction should be continued, halted temporarily, or abandoned altogether. The state- controlled power company CEZ estimates the plant will cost $3 billion. Austria opposes the completion of the Soviet-designed facility, which is some 70 kilometers from its border. MS

SLOVAK OPPOSITION APPEALS TO CONSTITUTIONAL COURT

The Slovak opposition parties on 1 July asked the Constitutional Court in Kosice to rule ahead of the 25-26 September elections whether an amendment to the election law passed by the parliament in May contravenes the country's basic law, RFE/RL's Bratislava bureau reported. The opposition says the amendment disadvantages smaller parties by establishing a threshold of 5 percent for each party running in an alliance. It also says the provisions including state officials in election commissions and allowing the Supreme Court to reconsider the Central Electoral Commission's decisions also contravene the constitution. Also on 1 July, the parliament approved an amendment to the law on local elections, while the opposition Slovak Democratic Coalition said it will examine the amendment to establish whether it is in keeping with the constitution. MS

NEW CABINET'S ATTITUDE TO MINORITIES CRITICIZED IN HUNGARY

Csaba Tabajdi, outgoing political state secretary at the Prime Minister's Office in charge of minority affairs, has said he is concerned about the new cabinet's program on minorities in Hungary as well as ethnic Hungarians abroad. He told journalists on 1 July that the program is a "step backward" in terms of political autonomy for minorities as it lists the Roma population not as a minority group but as "socially handicapped" people. According to Tabajdi, that designation implies some kind of "assimilation drive". He observed that the minority issue is important for the new government only inasmuch as it serves the cause of ethnic Hungarians abroad. MSZ




U.S. CONTINUES DIPLOMATIC OFFENSIVE OVER KOSOVA...

State Department spokesman James Rubin said on 1 July that U.S. officials are continuing talks with officials of the Kosova Liberation Army (UCK) in an effort to bring about a cease-fire by talking to those who are fighting, VOA reported. He added that talks with the UCK are a "practical matter" and do not constitute formal recognition of the guerrillas. Rubin stressed that Washington still regards shadow-state President Ibrahim Rugova as the legitimate Kosovar leader. Rubin added that U.S. diplomats, including Ambassador to the UN Richard Holbrooke, will continue to be "engaged in an intensive effort...for some time." U.S. special envoy Robert Gelbard will visit Bosnia later this week, and U.S. Ambassador to Macedonia Christopher Hill goes to Albania. Russian and EU officials have stressed recently that only Rugova can represent the Kosovars internationally. PM

...BUT SHIFTS STANCE

Rubin also said on 1 July that Washington no longer insists on an immediate withdrawal of Serbian forces from Kosova. He added that a cease-fire must precede a withdrawal "as a practical matter." Observers noted that this new position corresponds to the view of Belgrade and Moscow that Serbia cannot withdraw its forces as long as an armed insurgency is in progress. Elsewhere, State Department officials said that at least 88,000 Kosovars are now homeless, AP reported. Of these, 60,000 to 85,000 remain in Kosova, 15,000 are in Montenegro, and 13,000 have crossed into Albania. PM

ALBANIAN FOREIGN MINISTER CALLS FOR 'REALISM' IN KOSOVA...

Paskal Milo told a press conference in Tirana on 1 June that many Albanians confuse their desire for Kosova's independence with political realities. He stressed that Albania is part of the international community and has to respect the inviolability of international borders. Milo added that Albania is continuing to work for a peaceful solution to the Kosova conflict, which, he said, will take time. He warned, however, that time is running out and that negotiations will have to start next week or else the armed conflict could spread further. FS

...WANTS KOSOVARS TO HAVE JOINT NEGOTIATOR

Milo said that the UCK has become an important factor in determining developments in Kosova and must be part of negotiations, along with Rugova. Milo added that the UCK is not a terrorist group but consists of people defending their homes in the face of massacres by Serbian forces. Milo called on all political forces in Kosova, including the UCK, to appoint a joint "authorized and competent" negotiator for talks with Belgrade. It was unclear if he meant one person or a team, such as the one that Rugova appointed in March (see "RFE/RL Newsline," 25 March 1998). FS

KOSOVAR POLITICIANS FAIL TO AGREE ON UCK ROLE

Established political leaders reached no agreement in Prishtina on 1 July on how to integrate the UCK into political structures, RFE/RL's South Slavic Service reported. Rugova and his Democratic League of Kosova (LDK) want to convene the LDK-controlled shadow-state parliament so that it can "provide sponsorship" for the LDK. Opposition parties want to set up a new National Council that would represent politically the UCK. Amid the growing violence in recent weeks, the leading role of the moderate LDK has been under challenge from Adem Demaci of the Parliamentary Party and other radical politicians, who seek recognition for themselves as the political wing of the increasingly influential UCK. PM

KINKEL SAYS INTERVENTION A MATTER OF 'WEEKS, MONTHS'

German Foreign Minister Klaus Kinkel said on 1 July that the Kosovars should "not be under any illusions" that NATO will intervene to stop the violence at any time soon. He added that any military intervention in Kosova could be a matter of "weeks or months" because of opposition from Russia and China, the "Frankfurter Allgemeine Zeitung" wrote. Kinkel suggested that "an appropriate means to contain the conflict" could be to send an OSCE observer mission to Kosova. Such missions, however, proved totally ineffective in the Croatian and Bosnian conflicts, where locals dubbed them "ice-cream men" because of their ineffectiveness and their white uniforms and vehicles. PM

SERBS RELY EVER MORE ON ARMY

The Yugoslav army has recently become more active in the interior of Kosova, the "Frankfurter Allgemeine Zeitung" wrote on 2 July, citing unnamed Western diplomatic sources in Belgrade. Previously, the army limited its activities largely to the border region with Albania. Meanwhile in the Drenica region, UCK fighters regrouped following their loss of the coal mine at Belacevac (see "RFE/RL Newsline," 1 July 1998). Elsewhere, fighting continued around the besieged Serbian-held town of Kijeva, which Holbrooke recently called "the most dangerous place in Europe." PM

UN INVESTIGATES ALLEGED PROSTITUTION RING

UN police spokesmen said in Sarajevo on 1 July that they have launched an investigation into charges that Bosnian Serb police are running an organized prostitution ring involving women from Eastern Europe and the former USSR. In Zagreb, customs officials found 16 tons of marijuana in two ship containers during a routine inspection. A police spokesman said that one man was arrested and added that this is the single largest drug bust in Europe this year. Also in Zagreb, the government has approved a program for the restructuring of Croatian Railways, according to which 7,000 workers will lose their jobs, "Jutarnji list" wrote on 2 July. PM

INTELLIGENCE SERVICE CANNOT REVEAL DEPUTIES LINKS TO FORMER SECURITATE

Responding to the Chamber of Deputies' resolution of 29 June, Romanian Intelligence Service Director Costin Georgescu on 1 July told the parliamentary commission supervising the service's activities that under existing legislation, the service is prohibited from making public the links of parliamentary deputies to the former secret police. In order for the chamber's request to be met, legislation prohibiting the disclosure of information from Securitate files for 40 years since the legislation's enactment would have to be changed, RFE/RL's Bucharest bureau reported. MS

ITALIAN FOREIGN MINISTER IN ROMANIA

Lamberto Dini on 1 July met with his Romanian counterpart, Adrian Plesu, to discuss bilateral relations, Italian support for Romania's quest to accede to NATO, and the conflict in Kosova, RFE/RL's Bucharest bureau reported. Dini said that the Kosova Albanians' demands for full independence may result in a war affecting the entire region. Both he and Plesu advocated a "large [measure of] autonomy" for the Kosova Albanians within Yugoslavia's existing borders. Dini was also received by Premier Radu Vasile and by the chairmen of the two houses of the parliament, Petre Roman and Ion Diaconescu. MS

LUCINSCHI ON TRANSDNIESTER CONFLICT

President Petru Lucinschi on 30 June told the OSCE Secretary- General Giancarlo Aragona that Moldova is willing to solve the conflict with the Transdniester by granting the separatist region a special status with a large degree of autonomy, BASA-press reported the next day. He said this position coincides with that of the OSCE and the two mediating countries, Russia and Ukraine. He also said Moldova "counts" on OSCE support in its quest to solve the conflict. Aragona is participating in a OSCE-organized seminar on relations between central and local authorities. Separatist leader Igor Smirnov declined an invitation to attend the seminar. He wrote to OSCE mission chief in Moldova John Evans that "Moldova is not a central authority" for the Transdniester region. MS

AGREEMENT ON REDUCTION OF FORCES IN TRANSDNIESTER BUFFER ZONE

The Joint Control Commission supervising the truce in the buffer zone announced on 2 July that the two conflicting sides will each reduce their number of "truce observers" by 500 over the next weeks, Infotag and BASA-press reported. At present, there are some 800 Moldovan, 900 Transdniestrian, and 500 Russian troops in the zone. The agreement is in line with the accord signed last March in Odessa by Lucinschi, Smirnov, and Russian President Boris Yeltsin. MS

SLOVENIAN PRESIDENT IN BULGARIA

Janez Drnovsek, on the second day of an official visit to Sofia, told journalists in Varna on 1 July that Bulgaria could become "Slovenia's bridge" to other countries and regions, an RFE/RL correspondent in the Bulgarian capital reported. Prime Minister Ivan Kostov praised Slovenia's backing of Bulgaria's drive to join the Central European Free Trade Agreement. Last week, Bulgarian officials said Sofia will join CEFTA in mid-July. Drnovsek and Kostov signed four accords, including a memorandum on mutual protection of investments and an agreement on transport links between their countries. Drnovsek discussed the conflict in Kosova with both Kostov and President Petar Stoyanov. Drnovsek said both sides, but particularly Belgrade, must accept the need for a compromise solution. Stoyanov said a new embargo against Yugoslavia will be detrimental to reform in the entire region. MS




MOLDOVA, UKRAINE SQUABBLE OVER OIL TERMINAL


by Stefan Korshak

Plans to build an oil transfer terminal in Moldova are stirring opposition in Ukraine, which is worried about an adverse environmental impact.

The $38 million project is scheduled for completion next year. The European Bank of Reconstruction and Development (EBRD) is providing a $25.5 million credit for the construction of the terminal, which will allow Moldova to transfer petroleum to and from tankers plying the Danube, bringing considerable savings for the small landlocked country.

"This is just the kind of project we need," noted Moldova Deputy Premier Minister Ion Gutsu at a recent EBRD conference. "It will create critical infrastructure...and enable our economy to grow."

But Ukraine sees the terminal in a very different light. "Our experts recently went to the site and inspected the project," Odessa Regional Administration spokesman Yuri Shiroparov told RFE/RL. "And they found many things wrong with it."

Situated on the Danube's left bank south of the village of Dzhurdzhulesht and snug up against the Ukrainian border, the terminal could transfer 2.1 million tons of oil annually, giving Moldova an alternative to Russian energy deliveries.

Ukraine has no problem with that. But Kyiv is arguing that because the terminal is only a few kilometers upstream in the middle of Europe's largest wetland, the project endangers the environment. "One of the most important problems our experts found is that [the terminal] threatens our ecology and vulnerable wetlands," Shiroparov said. "We need to make sure that our interests are protected."

The Danube Commission, composed of representatives from countries bordering the river, could have been a forum to iron out differences about the environmental impact of development in the basin. This proved, however, not to be the case.

The Ukrainians charge that the Moldovans may have misled them and brought to near-completion a major industrial project without providing full information on the scope of the work.

But Moldovan project managers counter that Kyiv has had ample opportunities to learn about the Dzhudzhulesht Terminal, as far back as 1994.

"Ukrainian and Moldovan commissioners met in Chisinau on 3 November 1994 to discuss the problems of the terminal," said Deputy General Director of the Terminal S.A., Yakov Mogorian, in a recent newspaper article. "Results of [an independent Dutch] study were presented in Chisinau on 9 December 1994...[and] on 23 November the Moldovan side invited [Ukrainian ecological representatives]...but no one came and no one made any comments."

There were several permutations of the project before it was finalized into a Greek/Moldovan/EBRD joint venture. The first funds were obtained in late 1996, and by 1997 Dutch general contractor Fredric R. Harris had begun construction.

Kyiv demands now that Harris's blueprints be approved by its Ministry of Ecological Protection. Protests have been made to the Danube Commission and, more recently, Ukraine has tightened border control near the frontier town of Reni. Dotted with woodlands, lakes, and swamps, the Danube frontier near Reni and Dzhurdzhulesht used to be a place where hunters could shoot ducks and fishermen hook pike, without too much attention paid to passports. Not any more.

"The Ukrainian border troops' defensive works and barbed wire opposite the terminal construction site are more intense than what you would see on the Tajik-Afghan border," said Mogorian. And there is little prospect that the dispute will end any time soon. The author is an RFE/RL correspondent based in Kyiv.


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