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Newsline - July 21, 1998




YELTSIN MOVES TO RAISE TAXES BY DECREE...

President Boris Yeltsin has made good on the Kremlin's promise that presidential decrees will be used to implement economic policies that are considered vital by the government but have not gained parliamentary approval. Aleksandr Livshits, deputy head of the presidential administration, announced on 19 July that Yeltsin has issued a decree raising the land tax, Russian news agencies reported. The decree calls for doubling the tax on plots of land that are in cities or are not being used for the declared purpose and quadrupling the tax on other categories of land. The State Duma recently rejected a draft law on increasing the land tax rate. Article 90 of the constitution states that the president may not issue decrees that contradict existing federal laws. LB

...VETOES SOME PARTS OF ANTI-CRISIS PLAN

Yeltsin on 19 July vetoed two laws that were approved by the Federation Council two days earlier. The laws would have reduced the profit tax for enterprises from 35 percent to 30 percent and more than halved excise duties on oil. Livshits noted that the laws would have reduced annual federal revenues by 8.7 billion rubles ($1.4 billion) and 7.7 billion rubles, respectively. He said Russia cannot afford such losses when the Duma has not approved other measures to augment revenues, Russian news agencies reported. Prime Minister Sergei Kirienko addressed the Duma on 17 July and said that the laws approved by the lower house would increase federal budget revenues by only 3.1 billion rubles and all budget revenues combined by only 28.2 billion rubles (the anti-crisis program called for corresponding increases of 71 billion rubles and 102 billion rubles, respectively). LB

GOVERNMENT WANTS TO CHANGE TAX RATES UNILATERALLY...

The government has issued a directive to revise the list of products that are subject to value- added tax below the standard rate of 20 percent, ITAR- TASS reported on 19 July. Effective 1 August, the discounted VAT rate of 10 percent will apply only to bread and milk products, along with some children's goods. A law to institute those changes was part of the government's anti-crisis program, but Finance Minister Mikhail Zadornov withdrew it from consideration by the Duma on 1 July, after many deputies harshly criticized the proposal. On 17 July, Prime Minister Kirienko brought the Duma a draft law that would give the government the authority to introduce changes in tax rates by up to 10 percent. Such tax hikes would go into effect as long as the Duma does not reject them within 10 days of when the government announces the planned changes. LB

...ORDERS HIKE IN IMPORT TARIFFS

Prime Minister Kirienko announced on 18 July that the government has issued a directive raising all import duties by 3 percent, Russian news agencies reported. He acknowledged that the measure is "harsh" and will lead to price increases, but he said it is necessary to boost budget revenues and support domestic industry. According to Interfax, the Economics Ministry estimates the increase in import duties will bring in 1 billion rubles ($160 million) in additional revenues. The increase will not apply to goods imported from CIS countries, ITAR-TASS reported on 20 July. Like the latest presidential decree and vetoes, the directives on VAT and customs duties are aimed at demonstrating the government's commitment to the anti-crisis plan that was the basis for Russia's recent negotiations with international financial organizations. The IMF board of directors is to meet on 20 July in Washington to make a final decision on a bailout package involving $11.2 billion in new loans to Russia this year. LB

MIXED REACTION TO INCREASE IN IMPORT DUTIES

Duma Speaker Gennadii Seleznev, a prominent member of the Communist Party, told Interfax on 18 July that he supports the government's plan to raise import duties, adding that the government should have done so "long ago." Seleznev said such a policy falls within the government's jurisdiction but warned against attempts to issue government directives that contradict legislation. Aleksandr Shokhin, leader of the Our Home Is Russia Duma faction, argued that raising import duties is "understandable and justified" in Russia's current circumstances, but he noted that such a policy "is at odds somewhat with our plan to join the World Trade Organization in the near future," Interfax reported. Duma Privatization Committee Chairman Pavel Bunich, also of Our Home Is Russia, criticized the directive during an interview with Ekho Moskvy, saying Russian consumers will be hurt by rising prices for imported goods. LB

FEDERATION COUNCIL APPROVES MANY LAWS IN ANTI-CRISIS PLAN

The Federation Council on 17 July approved a number of government-backed laws with minimal debate. Deputies passed the first part of a new tax code, which stipulates the rights and obligations of taxpayers and the tax authorities, ITAR-TASS reported. The Council also approved the following measures: a law allowing regional authorities to introduce a sales tax; a revised budget code; a revised law on gambling taxes; a law strengthening government regulation of alcohol production; a law to simplify taxation of small businesses; a law changing the allocation of land tax revenues between federal and regional budgets; a law lowering the profit tax, and a law allowing enterprises to sell goods at prices below production cost. LB

KIRIENKO WANTS DUMA TO HOLD SPECIAL SESSION IN AUGUST

Speaking in the Duma on 17 July, Prime Minister Kirienko urged deputies to convene a special session in August to consider new draft laws on economic and tax policy, RFE/RL's Moscow bureau reported. The premier told reporters that such a session may be held on 10 August. Although the Duma's summer recess is scheduled to run through early September, Duma Speaker Seleznev did not rule out holding a special session next month, ITAR-TASS reported. Although the Duma passed many government- backed laws in July, it voted down some key parts of the anti-crisis program. On 17 July, deputies rejected in the second reading a draft law on changing the income tax scale. That draft was already substantially different from the government's initial proposal on revising income tax rates (see "RFE/RL Newsline," 17 July 1998). LB

UPPER HOUSE APPROVES LAW ESTABLISHING BORDER TAX

The Federation Council on 17 July approved a law that would establish a tax for filling out documents when crossing the Russian border. The Duma approved the measure last month. The government sought to introduce a border tax last year, but the Constitutional Court ruled that taxes may be introduced only through legislation, not government directives (see "RFE/RL Newsline," 12 November 1997 and 23 June 1998). Also on 17 July, the Council passed a law on rescheduling debts to the federal budget, which would allow enterprises to pay back fines over four years and other penalties over 10 years, ITAR- TASS reported. But the upper house rejected a draft law on foreign investment, which was passed by the Duma two days earlier. LB

GDP DECLINED IN FIRST HALF OF YEAR...

Russia's GDP during the first six months of 1998 totaled some 1.182 trillion rubles ($190 billion), down 0.5 percent compared with the same period in 1997, according to data released by the State Statistics Committee on 17 July. Total industrial output during the first half of 1998 was calculated at 767 billion rubles, up 0.1 percent compared with the same period in 1997, Russian news agencies reported. However, industrial output declined in the second quarter of 1998 following gains in the first quarter of the year. LB

...AS WAGE ARREARS CONTINUE TO GROW

Wage arrears grew by 4.6 percent in June to reach 69.97 billion rubles ($11.2 billion), Russian news agencies reported on 17 July, citing the State Statistics Committee. Federal, regional, and local budgets combined owe 12.43 billion rubles to state employees, which accounts for 17.8 percent of the total wage arrears. Back wages declined in June in only seven of the 89 regions of the Russian Federation. Meanwhile, the State Statistics Committee has calculated the average monthly subsistence level in Russia for the first half of 1998 at 429 rubles per person, 19 rubles higher than the equivalent figure for 1997. The average nominal monthly salary in Russia during the first half of 1998 was 1,042 rubles, up 12.35 percent from the equivalent figure for 1997. However, that statistic only measures wages on paper, not wages that workers actually receive. LB

TRANS-SIBERIAN BLOCKADE LIFTED...

The blockade of the Trans-Siberian Railroad near the towns of Yurga and Anzhero-Sudhensk, Kemerovo Oblast, was lifted on 19 July following the arrival of Deputy Prime Minister Oleg Sysuev in the region. At a meeting between regional leaders, directors of industrial enterprises, and strike leaders, Sysuev admitted that protocols he signed in Kemerovo Oblast in May have not been fulfilled on schedule. He announced that all wage arrears until 15 July will be repaid on 22 July. The previous day, Prime Minister Kirienko warned that following a government investigation, charges will be made against organizers of the blockade. Regional trade union leader Anatolii Chekis vowed that unions will offer "special protection" to anyone who is charged in connection with the protests. BT

...WHILE GOVERNMENT PROMISES LONG-TERM SOLUTIONS

Sysuev promised that the government will stop addressing Kemerovo's problems as a matter of urgency and instead address the region's "deep systematic crisis." Another government commission is to arrive in Kemerovo by 22 July to prepare for a cabinet session devoted to the region's problems slated for August, Sysuev told journalists. He also said that the federal government will share power with oblast authorities "on a slightly different basis." Meanwhile, Kemerovo Prosecutor Valentin Simuchenkov said that more than 180 criminal cases have been opened against managers of mines, middlemen, and local administration officials in Kemerovo Oblast, ITAR-TASS reported on 19 July. Government officials have long blamed miners' economic woes on corruption and embezzlement at mining enterprises (see "RFE/RL Newsline," 3 June 1998). BT

FSB CHIEF IN ISRAEL

In an interview published in the 17 July issue of "Novye izvestiya," the director of Russia's Federal Security Service (FSB), Nikolai Kovalev, described talks he held with Israeli officials on 15-16 July. Kovalev said that during those talks, Israeli officials "constantly returned to" the topic of preventing the transfer from Russia to Iran of nuclear and rocket technology. Kovalev said he saw some "material" gathered by the Israelis on the subject. He did not deny such transfers are taking place but said they are being conducted by commercial firms, not the Russian government, and that the FSB has already begun operations aimed at stopping such transactions. Kovalev also said the FSB now has an official in Israel and that Israeli security agencies are exchanging information on terrorists and drug traffickers. BP

PASTUKHOV DISCUSSES CASPIAN IN TEHRAN

Russian First Deputy Foreign Minister Boris Pastukhov and his Iranian counterpart, Morteza Sarmadi, issued two joint statements on 19 July at the end of Pastukhov's three-day visit to Tehran, IRNA reported. The two deputy ministers affirmed that until the five Caspian littoral states reach agreement on a new document defining the status of the Caspian, the Soviet-Iranian treaties of 1921 and 1940 remain in force. They also said that any proposals for laying Trans-Caspian undersea oil or gas pipelines are potentially harmful to the Caspian eco-system. The two countries agree on the equal division of the Caspian sea- bed, but not the utilization of its waters and resources beneath the seabed. A second statement registered concern over delays in the implementation of the Tajik peace accord signed last summer but lauded the role of the UN in the peace process. LF

RUSSIA, IRAN SUPPORT NUCLEAR-FREE ZONE IN MID EAST

The directors of the Russian and Iranian Foreign Ministry Departments for disarmament, non-proliferation, and export control held talks in Tehran on 15-16 July, ITAR-TASS reported. Both sides affirmed their determination to meet their international obligations in those fields, according to a Russian Foreign Ministry communique summarized by Interfax. The Foreign Ministries also issued a joint statement calling on all countries to consider declaring the Middle East a nuclear- free zone. LF

COURT SAYS GOVERNMENT CAN'T ECONOMIZE ON JUDICIARY

The Constitutional Court on 17 July struck down an article from the 1998 budget empowering the government to reduce spending on the judicial system, "Kommersant-Daily" reported. Article 124 of the constitution stipulates that funding for courts comes solely from the federal budget and must provide for the "complete and independent" functioning of the judiciary. This year, the government cut spending on courts by 26.2 percent, despite appeals by the Federation Council and influential judges as well as presidential orders issued in July, which instructed the government to make the "normal functioning of the judicial system" a priority. Many courts now lack the funds for basic expenses such as electricity, telephone charges, and postage. "Kommersant-Daily" argued that even if the 1998 budget is implemented in full, planned spending of some 4.5 billion rubles ($723 million) on the courts is inadequate. LB

BASAEV NAMED DEPUTY COMMANDER OF CHECHEN ARMED FORCES

Chechen President Aslan Maskhadov has issued a decree naming former acting Premier Shamil Basaev deputy commander-in-chief of the republic's armed forces, ITAR-TASS reported on 20 July. On 17-18 July, Maskhadov signed orders on the expulsion from Chechnya of five foreign nationals suspected of creating illegal armed formations and disseminating Wahhabist ideology. He also extended for another 10 days the state of emergency declared on 23 July, and he mobilized some 5,000 reservists with the declared aim of continuing the ongoing crackdown on organized crime. On 19 July, Maskhadov abolished the Sharia Guard, which was involved in the 14-15 July fighting in Gudermes. Some of its members released 32 convicts from a prison in Grozny on 18 July. LF

TWO MORE CONTRACT KILLINGS IN DAGESTAN

The director-general of the Makhachkala port, Siradjudin Yusupov, was shot dead on the evening of16 July during a rendez-vous with his mistress, whom the killers then abducted, RFE/RL's North Caucasus correspondent reported. Yusupov was also a deputy in the Dagestani parliament and one of the leaders of Dagestan's ethnic Laks. "Nezavisimaya gazeta" on 18 July noted that Yusupov had jurisdiction over imports and the refining of Azerbaijani oil. Also during the evening of 16 July, the head of the Dagestani branch of Rospechat, Urudj Ibragimov, was shot in the courtyard of his house in Makhachkala. LF




ABKHAZ RELEASE GEORGIAN COMMANDER

Following negotiations between Abkhaz and Georgian intelligence officials and Chechen former Premier Shamil Basaev, the Abkhaz authorities have released Ruzgen Gogokhia, a Georgian battalion commander taken prisoner in Sukhumi in 1995 and sentenced to death the following year by an Abkhaz court, Caucasus Press reported. In other news, the EU has allocated 1.15 million ECUs ($1.265 million) in aid for the displaced persons forced to flee Abkhazia during the fighting in May, ITAR-TASS reported. LF

COMMISSION ENDORSES MINOR AMENDMENTS TO ARMENIAN CONSTITUTION

The commission tasked with proposing amendments to the Armenian Constitution has rejected options that would drastically curtail the sweeping powers currently given to the president. On 17 July, 15 commission members approved a set of principles nominally providing for a "semi-presidential republic" but in effect maintaining the existing system of government. The remaining three members advocated a parliamentary system. President Robert Kocharian had warned against a "revolutionary" revision of the constitution but had proposed giving the cabinet greater latitude and limiting the president's power to dissolve the parliament. No amendments have been proposed for the areas of defense, national security, and foreign policy; changes in those areas are the president's prerogative under the constitution. The commission also voted down a motion by the opposition National Democratic Union to scrap the present constitution, which it claims was "illegally adopted," and start drafting a new basic law. LF

FEW RESULTS AT CENTRAL ASIAN UNION SUMMIT

The presidents of Kazakhstan, Kyrgyzstan, and Tajikistan as well as the prime minister of Uzbekistan met in the Kyrgyz resort town of Cholpon-Ata on 17 July, RFE/RL correspondents reported. As a result of Uzbek President Islam Karimov's absence owing to illness, the planned signing of several documents has been delayed until October, when the next summit is scheduled. However, the participants did agree on changing the name of the union to the "Central Asian Economic Community." Kyrgyz President Askar Akayev and Kazakh President Nursultan Nazarbayev signed an agreement delimiting their countries common borders. And they also became in-laws the following day when Akayev's son married Nazarbayev's daughter. BP

ISRAELI COMPANY TO HELP DEVELOP KAZAKH COMMUNICATIONS

The Israeli firm Gilat has signed a $6.2 million deal with Kazakhtelekom to provide 250 cities and towns in Kazakhstan with satellite communications, Interfax reported on 17 July. BP

UZBEKISTAN ASKS FOR INTERNATIONAL AID IN WAKE OF FLOOD

Uzbekistan has appealed for international aid to alleviate the effects of flooding in the eastern part of the country, Reuters reported on 17 July. Melting snow in the mountains of neighboring Kyrgyzstan caused reservoirs to overflow on 8 July and resulted in a major flood in the Uzbek section of the Fergana Valley. ITAR- TASS reported on 18 July that the death toll has reached 115. But, as the search continues for more bodies, Uzbek Interior Minister Zakir Almatov says "that number is sure to change." BP




LUKASHENKA BRIEFS MOSCOW MAYOR ON DIPLOMATIC STANDOFF...

Belarusian President Alyaksandr Lukashenka has sent a letter to Moscow Mayor Yurii Luzhkov to explain his stance on the diplomatic conflict over the Drazdy residential compound, Interfax reported on 19 July. Lukashenka said he believes the EU ban on visas for Belarusian officials aims at undermining the Belarusian- Russian Union. He argued that the EU is attempting to win over Russia by hinting Moscow will receive financial aid if it persuades Belarus to change its position in the row. And he said that the EU is threatening to sever diplomatic relations with Belarus in order to make it assume "the role of a mere executor of other decisions." Lukashenka assured Luzhkov that Belarus does not recognize the EU's right to dictate "when to conduct referendums, which constitution to live by, and when to renovate its own house." JM

...WHILE LUZHKOV BACKS LUKASHENKA'S 'LOGICAL' STANCE

Luzhkov responded to Lukashenka's letter by saying the actions of the Belarusian president over the diplomatic housing conflict are "quite legitimate and logical," ITAR-TASS reported on 19 July. Luzhkov said the EU's punitive measures against Belarus were provoked not by violations of the Vienna Convention on Diplomatic Relations but by Lukashenka's efforts toward reuniting former Soviet republics. On 17 July, the Russian Federation Council described the EU visa ban against Belarusian officials as an "inappropriate and destructive reaction." It appealed to European parliaments "to take constructive practical steps" to normalize relations with Belarus, according to Interfax. JM

KUCHMA UPBEAT ON RECEIVING $2.5 BILLION LOAN FROM IMF

Ukrainian President Leonid Kuchma has said he is hopeful that an IMF mission expected in Ukraine on 23 July will recommend the release of a $2.5 billion loan to Kyiv, Ukrainian Television reported on 19 July. He said that the IMF mission "is coming with the wish to make a final review of the [loan] program and approve it." Kuchma added that the World Bank, which, like the IMF, suspended cooperation with Ukraine, has promised him it will release more than $1 billion in credits following "the very first telephone call from the IMF." Meanwhile, Kuchma has once again appealed to the Supreme Council to approve an amended 1998 budget with a reduced deficit equal to 2.3 percent of GDP. "The refusal to make a decision on this issue will threaten Ukraine's national interests," Ukrainian Television quoted the president as saying. JM

ESTONIA'S RULING COALITION MOVES TOWARD RESTORING ELECTORAL ALLIANCE

Meeting at Toompea on 17 July, leaders of the ruling coalition partners--the Coalition Party, the Country People's Party , the Rural Union, and the Pensioners Party--agreed to start negotiations on restoring the electoral alliance formed by those groups in 1995, ETA reported. Arnold Ruutel, the chairman of the Country People's Party, said that despite differences of opinion over some matters, the ruling coalition is agreed on the most important issue--the "stabilized development of the country." Ruutel's party, in particular, has strongly criticized the Coalition Party's positions on social policy. Parliamentary elections are scheduled to take place in March 1999. JC

VAN DER STOEL SAYS NO NEW RECOMMENDATIONS ON LATVIAN CITIZENSHIP LAW

OSCE High Commissioner on National Minorities Max van der Stoel has said he will make no more recommendations on Latvia's citizenship law, BNS reported. In a statement issued to the press on 17 July, Van der Stoel noted that since making recommendations on that law, "I have not changed my position on this subject, and I do not see the need to do so in the future." He added that the basic elements of his proposals--the removal of the "naturalization windows," granting citizenship to children born to non-Latvians after independence in August 1991, and simplifying citizenship examinations on Latvia's constitution and history--have been worked into the recently passed amendments. Earlier on 17 July, Latvian Prime Minister Guntars Krasts, during a visit to Finland, had called on the OSCE to guarantee it will make no new demands on easing Latvia's citizenship laws. JC

LITHUANIAN CONSERVATIVES NOT TO APPEAL TO COURT OVER LUSTRATION LAW

Deputy parliamentary chairman Andrius Kubilius told reporters on 17 July that the ruling coalition will not appeal to the Constitutional Court for a ruling on the recently passed lustration law, BNS reported. Neither will the Conservatives support the initiation of such an appeal in the parliament, he added. "It is my personal conviction that the law can take effect such as it is now. But we want broader consensus of state institutions on the issue," Kubilius said. President Valdas Adamkus has vetoed the law and proposed that the parliament turn to the Constitutional Court to rule whether the legislation is constitutional (see "RFE/RL Newsline," 17 July 1998). JC

POLISH PARLIAMENT APPROVES 16 NEW PROVINCES...

Following a compromise between the ruling coalition and the Democratic Left Alliance (see "RFE/RL Newsline," 16 and 17 July 1998), the Sejm voted by 326 to 29 with 41 abstentions to pass a bill providing for 16 new provinces in Poland. The bill has to be reviewed by the upper house and signed by the president, who has already declared his support for the 16-province administrative plan. JM

...PASSES HEALTH SYSTEM REFORM BILL

The parliament also passed legislation on reforming the health care system. The bill sets up "patient funds" that are to be financed directly by mandatory contributions from employees equaling 7.5 percent of their income. Accordingly, employees' income tax payments are to be reduced by 7.5 percent. Contributors to the "patient funds" will be entitled to free-of-charge treatment in hospitals and health centers, basic dental services, and some health examinations. The 20 July "Zycie" reported that opponents of the bill said the mandatory contribution should be no less than 11 percent of employees' income in order to adequately support the health care system. The bill is to go into effect on 1 January 1999. JM

POLAND INTRODUCES CHEAPER VISAS FOR BELARUSIANS, RUSSIANS

The Polish Foreign Ministry has resolved to reduce the price of visas for Belarusian and Russian nationals, PAP reported on 17 July. As of 1 August , a multiple-entry visa will cost $14 and a single-entry visa $5. According to the ministry, the decision is aimed at facilitating entry for Belarusians and Russians "coming to Poland for trade and economic reasons." Tougher restrictions introduced into Poland's law on foreigners last year have affected mostly traders from Russia and Belarus (see also "End Note" in "RFE/RL Newsline," 16 July 1998). JM

ZEMAN NAMED PREMIER, KLAUS ELECTED SPEAKER

Czech President Vaclav Havel formally named Social Democratic leader Milos Zeman prime minister on 17 July, CTK reported. Earlier that day, Havel accepted the resignation of caretaker Premier Josef Tosovsky. In a brief ceremony, Havel said he hopes Zeman's government will have the parliament's trust during its four-year term. Zeman said his government will allow people to create wealth through honest work, not through fraud. The same day, former Premier Vaclav Klaus was elected speaker of the lower house of parliament. Klaus and Zeman have signed an "opposition" agreement in which Klaus promises not to initiate a confidence vote in Zeman's minority government in return for the speakers of both chambers of the parliament and the heads of key committees. PB

ZEMAN ANNOUNCES CABINET LINEUP

Zeman on 18 July named the four deputy prime ministers and 15 ministers in the cabinet of his minority government, CTK reported. Senator Jan Kavan has been named foreign minister, Vladimir Vetchy defense minister; Supreme Court chairman Otakar Motejl justice minister; Vaclav Grulich interior minister; Ivo Svoboda finance minister; and Egon Lansky deputy prime minister for coordinating policy with the EU. There are no women in Zeman's government. PB

SLOVAK GOVERNMENT MAKES GAINS ON OPPOSITION IN POLL

A poll released on 17 July shows support for Prime Minister Vladimir Meciar's government slightly gaining on support for the combined opposition, Reuters reported. The poll, taken by the independent Focus agency, shows 35.9 percent of respondents voicing support for the government and 55.1 percent for the four main opposition parties. Last month, the government had 33.3 percent and the opposition 59.3 percent. Meciar's Movement for a Democratic Slovakia (HZDS) was the most popular party, favored by 25.9 percent in the poll. The opposition Slovak Democratic Coalition came second with 21.2 percent. Slovaks elect a new parliament in September. PB

MECIAR'S PARTY UNVEILS CANDIDATE LIST, PLATFORM

The HZDS released in Trnava on 18 July its list of candidates and its party platform for parliamentary elections in September, CTK reported. Some 17,000 people, many arriving on special trains from throughout Slovakia, gathered at the soccer stadium in this western Slovak town for the announcement. Premier Vladimir Meciar and parliamentary speaker Ivan Gasparovic top the list of 150 candidates, which includes 29 women. The party's election manifesto pledged to secure EU membership for the country by 2005. PB




SERBS, UCK CLASH IN RAHOVEC

Serbian security forces and the Kosova Liberation Army (UCK) fought for control of the town of Rahovec in southwestern Kosova over the weekend of 18-19 July. The current situation there remains unclear. Meanwhile, Christopher Hill, who is U.S. ambassador to Macedonia and has conducted talks with the UCK, told RFE/RL's South Slavic Service in a telephone interview on 17 July that the "main problem" for diplomats involved in the Kosovar crisis is that the Kosovars have not agreed on who can represent both the UCK and the political parties in negotiations. In Bonn on 19 July, UCK spokesman Jakup Krasniqi told German SAT 1 television that his organization has chosen its political leaders and will soon make their names public. And in Prishtina, unknown gunmen tried to kill Enver Maloku, who heads the Kosovar news agency KIC, an RFE/RL correspondent reported from the Kosovar capital. PM

HEAVY FIGHTING ALONG KOSOVAR-ALBANIAN BORDER

The UCK also clashed with Serbian security forces near the Albanian border at Padesh on 18 July, "Koha Jone" reported. The Albanian daily says that fighting began after a large number of UCK fighters crossed into Kosova from Albania. Namik Dokle, who is deputy speaker of the parliament, told Albanian state television on 20 July that approximately 70 Kosovars died when Serbian forces shelled the border area two days earlier; 19 UCK fighters were injured and fled to Albania. Local authorities flew some of the injured by helicopter to hospitals in Tirana. Another 80 civilians fled to Albania from the area near Padesh, where some were injured by mines and mortar shells as they sought to flee. FS

TIRANA CLAIMS BORDER VIOLATION...

The Albanian government issued a statement on 18 July charging that Serbian forces fired shells 500 meters into Albanian territory during the fighting. The statement said that "today's Serbian military actions have directly threatened the integrity and sovereignty of...Albania." It continued that "the government...severely denounces these actions, considering them clear provocations aimed at engulfing Albania in the flames of a regional conflict." The statement stressed that Albania remains committed to a peaceful solution but is ready to respond to aggression. "The escalation of Serbian aggressive acts in Kosova against innocent people demonstrates once again that the military machine of Serbian chauvinism cannot be stopped by statements and resolutions but only by concrete, determined, and unequivocal actions." FS

...BUT BELGRADE ISSUES DENIAL

The Yugoslav Foreign Ministry issued a protest on 19 July accusing Albania of being responsible for several recent border violations. The note also stated that Albania has been "indulgent" toward the UCK. Since Yugoslav President Slobodan Milosevic launched the crackdown in Kosova at the end of February, Tirana and Belgrade have accused each other on several occasions of border violations. In Prishtina, the Yugoslav Third Army issued a statement charging that the infiltrators on 18 July included "five Albanians from Macedonia, six citizens of Saudi Arabia, and one Yemeni national. Four had German documents issued to persons with Arabic names." There has been no independent confirmation of this or other periodic Serbian reports that "Islamic fundamentalists" are fighting on the side of the UCK, which is a secular, nationalist organization. PM

ALBANIAN PREMIER WANTS UCK BROUGHT INTO SHADOW STATE

Fatos Nano wrote in an article published in "Zeri i Popullit" on 17 July that the Kosovar shadow state should work to integrate the UCK into their negotiating team, which is authorized to talk to the Serbs and the international community. He stressed, however, that the UCK still has yet to select its political leaders. Meanwhile, the Albanian parliament issued a statement welcoming the first session in years of the shadow state parliament (see "RFE/RL Newsline," 17 July 1998). The statement says that the Albanian legislature "supports the will of the Kosovar population for self-determination through dialogue and peaceful means." FS

U.S. SENATE CALLS MILOSEVIC 'WAR CRIMINAL'

The upper house of Congress passed a non-binding resolution on 18 July urging the Hague-based war crimes tribunal to take action against Milosevic on charges of "war crimes, crimes against humanity, and genocide," an RFE/RL correspondent reported from Washington. The text added that Milosevic is the man most responsible for the wars on the territory of the former Yugoslavia. Meanwhile in Kladanj in eastern Bosnia, some 5,000 Muslims attended a prayer service on 18 July to honor those killed in the Srebrenica massacres three years earlier. Participants included Alija Izetbegovic, who is the Muslim member of the Bosnian joint presidency, and Mustafa Ceric, who heads the main Muslim religious organization. PM

PLAVSIC SAYS 'SPIRIT OF DAYTON' BIGGEST THREAT TO DAYTON

Republika Srpska President Biljana Plavsic said in Banja Luka that she hopes that the new Bosnian Serb government that takes office after the September elections can be elected in the parliament entirely on the votes of Serbian legislators, "Oslobodjenje" wrote on 20 July. (The current government needs Muslim backing.) Plavsic added that the main threat to what she called the substance of the Dayton agreement is attempts by the international community to make Bosnia a multi-ethnic society again, as it was before the war. She described this foreign commitment to multi-ethnicity as "the spirit of Dayton." And she warned that the Serbs must insist instead on the implementation of what she called the letter of the agreement, which grants specific rights to each ethnic group and to each of the two separate entities, including the Republika Srpska. PM

CONCERN IN ALBANIA ABOUT TEENAGE PROSTITUTION

Several representatives of Albanian non- governmental organizations told a recent Tirana conference on trafficking in Albanian women and children that more than 14,000 Albanian women are currently working as prostitutes in west European countries. Between 8,000 and 9,000 are working in Italy, of whom an estimated 2,500 are teenagers., while of the 5,000 or so Albanian prostitutes in Greece, some 700 are under 18. Hundreds of others are working in Austria, France, Holland, Germany, and Britain. Most of the prostitutes come from Albania's rural areas. Speakers said that traffickers often lure girls by false promises of jobs in Western countries, but there have also reports of kidnappings of young girls who are then forced to become prostitutes. FS

ROMANIAN PRIME MINISTER UPSET OVER PRIVATIZATION DELAYS

Radu Vasile said on 19 July that he will demand explanations from cabinet ministers about delays in the privatization process in the country, Reuters reported. Vasile said little progress has been made to privatize and restructure industry. He said that Privatization Minister Sorin Dimitriu will be given 30 minutes at the next cabinet meeting to explain the shortcomings and say what he will do to correct them. Vasile said he is "serious" about privatizing the telecommunications utility by September and two large banks by end of the year. In other news, 11 people were jailed on 18 July for their parts in the murder of three Roma in the village of Hadareni in 1993. Three of the defendants were found guilty of murder and the others of destruction of property. PB

CONSTANTINESCU KEEPS BEATING NATO DRUM

Romanian President Emil Constantinescu stressed during a meeting with U.S. business leaders in Washington that his country is ready to join NATO, an RFE/RL correspondent reported on 17 July. He said that Romania should have been in the first wave of NATO expansion announced last year and that it has received only a "pat on the back" for its cooperation in military activities with the West. Constantinescu made similar arguments in a meeting earlier that day with U.S. Defense Secretary William Cohen. PB

MOLDOVAN, UKRAINIAN FOREIGN MINISTERS DISCUSS BORDER ISSUES

Moldovan Foreign Minister Nicolae Tabacaru met with his Ukrainian counterpart, Borys Tarasyuk, in Chisinau on 17 July to discuss disputed border issues, BASA-press reported. Tabacaru said the talks were constructive and that the three separate disputes over their common border would be resolved simultaneously rather than separately. Tabacaru said Ukraine's proposals are being studied, but he gave no details about those proposals. Tarasyuk also met with Moldovan President Petru Lucinschi, who said Chisinau will work to "consolidate its traditional relationships with Ukraine." PB

BULGARIAN PREMIER ANNOUNCES ECONOMIC PROGRAM

Ivan Kostov said on 17 July that the government will tighten fiscal policy and accelerate privatization in an effort to secure an IMF loan, AP reported. Kostov said support from the IMF is necessary to make the transition process "painless" and to maintain a growth rate of 4.5-5 percent over the next three years. IMF mission head Anne McGuirk said after arriving in Sofia on 18 July that talks with the government on securing a three-year, $1.55 billion loan will be complicated. She said Sofia must introduce greater reforms in the social sphere and in its investment program. PB

BULGARIA TO BECOME CEFTA MEMBER

Bulgaria on 17 July announced it will join the Central European Free Trade Agreement on 1 January 1999, AP reported. CEFTA includes the Czech Republic, Hungary, Poland, Romania, Slovakia, and Slovenia. The organization plans to phase out tariffs between member states by 2002 and is seen as a stepping stone to membership in the EU. In other news, Deputy Foreign Minister Antoaneta Pramatarova met with EU ambassadors in Sofia and requested that visa requirements for Bulgarians traveling to the EU be eased. Bulgaria and Romania are the only associate EU members whose citizens need visas to enter the EU. PB




DIPLOMACY WITHIN RUSSIA


by Paul Goble

A dramatic increase in the number and intensity of ties between Russia's regions and various foreign countries has prompted the central Russian government to set up a special department within the Foreign Ministry to deal with such contacts.

Established earlier this year to "regulate rather than forbid" such contacts, the new department has yet to receive full parliamentary approval. The State Duma approved the measure last month, but the Federation Council--in which the regions are represented directly-- has yet to back it.

On the one hand, many people in Moscow approve such expanded contacts between the regions and foreign countries. Not only do such ties help to promote economic development, but they are widely viewed in Europe and the U.S. as entirely natural. The EU, for example, has institutionalized sub-state representation at a variety of forums. Any number of American states maintain special liaison offices in key foreign trade partners. And the Russian authorities themselves have openly pushed ties between regions within the Commonwealth of Independent States as a means of promoting the integration of that organization's 12 member countries.

On the other hand, even more officials in the Russian capital are concerned about the negative impact that such contacts may have on Russian foreign policy, Russian political development, and even the stability of the Russian state. Representatives of the Foreign Ministry noted several weeks ago that Moscow was extremely unhappy when several Russian regions entered into direct economic contacts with Abkhazia, a breakaway region in Georgia. Such contacts undercut Moscow's efforts to promote ties with Tbilisi, they argued.

The Russian Foreign Ministry was even more upset when representatives of Bashkortostan, Dagestan, Sakha, Tatarstan, and several other regions participated in an Istanbul conference that formally recognized the Turkish Republic of Northern Cyprus. Not only did that declaration contradict Russian policy vis-a-vis that island, but it inevitably raised questions in the Greek half of the island about just how reliable a partner the Russian government will prove to be.

And the Russian Foreign Ministry openly complained to the press in June that Saratov Governor Dmitrii Ayatskov's efforts to promote ties with German Chancellor Helmut Kohl crossed the line between what Moscow considers permissible and what it does not.

The Russian government is also concerned about the ways in which such ties between its regions and foreign countries could affect domestic political development. While the central authorities seem pleased by the economic aspect of such contacts, they are less happy about the way in which such an independent source of wealth allows the regions to act with respect to Moscow. Regions with significant foreign ties often negotiate with the relatively weak central government from a position of strength, giving the regions rather than Moscow the upper hand on such issues as tax collection and the implementation of centrally adopted laws.

Finally, many in Moscow are nervous about the way in which such ties could help to power secessionist movements within the Russian Federation. Many of the most independent-minded regions of the country, populated by ethnic Russian and non-Russian alike, are actively pushing to have representatives abroad, just as some union republics did in the Soviet period. Several recent Russian commentaries have recalled the symbolic importance for Ukrainians and Belarusians of the missions to the UN that those two republics maintained from 1945 until the end of Soviet power.

Tatarstan, for example, now has representatives of various kinds in more than 15 countries. Chechnya is actively pursuing such contacts. And even regions like Leningrad, Pskov, and Karelia are entering into special relationships with foreign states.

In most countries around the world, such ties between regions and foreign countries would not seem to be a serious problem. Both the central governments and the regions recognize that there is a more or less natural division between their powers and responsibilities.

But that is not the case in Russia. From the viewpoint of both Moscow and the regions, their relationship is one in which the gains of Moscow appear to the regions like a return to hypercentralization and the gains of the regions look to Moscow like the first step toward secession.

For this reason, the contacts Russian regions now have with foreign countries could prove explosive. But the creation of a new department at the Russian Foreign Ministry suggests that Moscow may now be preparing to institutionalize something that has long been common in other countries.


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