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Newsline - July 22, 1998




GOVERNMENT TO TRIPLE INDIVIDUAL CONTRIBUTIONS TO PENSION FUND

The government has issued a directive increasing individual contributions to the Pension Fund from 1 percent to 3 percent of wages, ITAR-TASS reported on 22 July. Deputy Prime Minister Oleg Sysuev told journalists the directive was issued in accordance with a presidential decree "on urgent steps to fulfill the constitutional rights of Russian Federation citizens to receive state pensions." President Boris Yeltsin signed that decree on 21 July, ordering the government to take steps by 1 August to secure additional financing for the Pension Fund and to urge the parliament to pass legislation to increase contributions to the fund. The State Duma recently rejected a draft law to that effect and expressed outrage over a telegram from Sysuev and Pension Fund Chairman Vasilii Barchuk to regional leaders, instructing them to reduce the size of pensions (see "RFE/RL Newsline," 17 July 1998). LB

WORKING PENSIONERS TO KEEP PENSIONS FOR NOW

Sysuev told journalists that in the near future, the government will not eliminate pension payments to pensioners who continue to work, ITAR-TASS reported. He said such proposals "have not been studied in detail." Sysuev recently raised the possibility of ending or reducing payments to working pensioners (see "RFE/RL Newsline," 10 and 13 July 1998). Meanwhile, "Russkii telegraf" reported on 18 July that Sysuev and Labor Minister Oksana Dmitrieva are at odds over pension policy. The newspaper said Dmitrieva strongly objected to the proposal to reduce pension payments in light of the Pension Fund's financial difficulties. LB

KIRIENKO CLAIMS VICTORY ON IMF LOAN

Prime Minister Sergei Kirienko told journalists on 21 July that the Russian government scored an important victory in securing a new $11.2 billion stabilization loan from the IMF. Commenting on the decision by the IMF board of directors to reduce the first tranche of that loan by $800 million, Kirienko emphasized that the overall size of the loan remains the same, Interfax reported. The premier also claimed that recent steps by the president, government, and parliament will help Russia balance its budget by bringing in 105.2 billion rubles ($16.9 billion) in additional revenues next year, ITAR-TASS reported. Presidential decrees and government directives were used to implement some measures rejected by the State Duma last week (see "RFE/RL Newsline," 20 and 21 July 1998). Kirienko also said the government may introduce changes in how income tax is levied, which would take effect on 1 September. LB

KREMLIN OFFICIAL SAYS DECREES, DIRECTIVES ONLY TEMPORARY

Aleksandr Livshits, deputy head of the presidential administration, says the presidential decrees and government directives designed to increase budget revenues and cut expenditures are only temporary measures. In an interview with NTV on 22 July, Livshits said Russia "should live according to laws" and acknowledged that decrees and directives "are far from the best way out" of the current economic situation. But he expressed the hope that the Duma will pass government-backed anti- crisis legislation in August. On 20 July, Duma Security Committee Chairman Viktor Ilyukhin of the Communist faction called on Russian citizens "not to pay any taxes which are not approved by the parliament," Reuters reported. Ilyukhin argued that a decree increasing land tax rates is a "serious abuse" of the presidential powers. LB

SELEZNEV CRITICIZES PLAN TO INCREASE GOVERNMENT'S TAX POWERS

Duma Speaker Gennadii Seleznev on 22 July argued against giving the government the power to impose certain changes in tax legislation, provided that the parliament does not reject those changes within 10 days of when they were announced. A draft law to give the government such power for one year is to be submitted to the Duma for consideration in August (see "RFE/RL Newsline," 20 and 21 July 1998). Speaking to reporters in Istanbul, Seleznev said he has not seen the draft but finds the proposal "unacceptable," ITAR-TASS reported. "Nezavisimaya gazeta" argued on 22 July that giving the government extra powers would come at the expense of Yeltsin, not the parliament. The newspaper described the proposal as an "attempted constitutional coup." LB

YAVLINSKII CALLS FOR COMPETENT USE OF IMF MONEY

Yabloko leader Grigorii Yavlinskii on 22 July called on the government to use the funds from the latest IMF loan competently, ITAR-TASS reported. The IMF board of directors recently approved the disbursement of $4.8 billion, which is earmarked for bolstering the Central Bank's hard-currency reserves. Yavlinskii said spending the IMF money reasonably may improve the Russian economy but warned that "if the money taken from the IMF is spent on eating and drinking, we will get back to the same sad state in six or nine months." Meanwhile, Duma Speaker Seleznev on 22 July repeated the Duma's demand that the government make public the new loan agreement with the IMF and the conditions on which the loan was granted. LB

'NEZAVISIMAYA' WARNS ABOUT FALL IN LIVING STANDARDS

"Nezavisimaya gazeta" on 22 July argued that policies adopted in order to secure a new $11.2 billion loan from the IMF will cause the standard of living in Russia to drop by nearly 20 percent. The newspaper argued that various measures in the government's anti-crisis plan, such as the introduction of a sales tax, will lead to price increases of 10-12 percent. In addition, the government plans to save 6.5 billion rubles ($1 billion) through downsizing, which will lead to job losses for many employees of budget-funded organizations, "Nezavisimaya gazeta" charged. The newspaper concluded that the IMF loan saved Yeltsin, Prime Minister Kirienko, and Central Bank Chairman Sergei Dubinin. CIS Executive Secretary Boris Berezovskii is the main financial backer of "Nezavisimaya gazeta." LB

GAZPROM, OIL COMPANIES DENOUNCE PRESSURE FROM ABROAD

The gas monopoly Gazprom and six oil companies, which account for a combined 90 percent of Russia's oil output, on 22 July warned Yeltsin and the government that the government's policies will worsen the economy and could spark a "social explosion" within two to three months, Russian news agencies reported. A statement issued by the companies argues that "the economic policy of international financial organizations concerning the key sectors of the [Russian] economy is unreasonable and irresponsible." Shortly before the IMF board of directors met to discuss a new loan for Russia, Yeltsin vetoed a law that would have more than halved excise duties for oil (see "RFE/RL Newsline," 20 July 1998). Interfax quoted Gazprom head Rem Vyakhirev as denying his company signed the statement. But a copy of the statement distributed at LUKoil's headquarters included a signature on behalf of Gazprom. LB

KIRIENKO DENIES GAZPROM DEBTS WILL BE SETTLED THROUGH OFFSETS...

Speaking to journalists on 21 July, Prime Minister Kirienko denied that part of Gazprom's debts to the federal budget will be canceled against the state's debts to the company, RFE/RL's Moscow bureau reported. He said Gazprom will pay its tax debts in cash, and budget-funded organizations will settle their debts to the gas monopoly in cash. "Kommersant-Daily" reported on 22 July that during his recent meeting with Kirienko, Gazprom head Vyakhirev agreed that offsets will not be used to settle the company's debts. However, the newspaper argued that the agreement between the government and company (see "RFE/RL Newsline," 21 July 1998) is likely to involve offsets in reality if not in name, at least for Gazprom's tax debts from 1997. Kirienko has suggested there may be "adjustment of debts and a synchronized procedure of their restructuring," the newspaper noted. LB

...SAYS GOVERNMENT WILL SELL MORE SHARES IN ELECTRICITY GIANT

At the same press conference, Kirienko said the government will sell some of its shares in the electricity monopoly Unified Energy System (EES), Russian news agencies reported on 21 July. The state currently owns 52.7 percent of EES shares, and Kirienko said that the government's privatization plan for this year involves reducing that stake to 50 percent plus one share. He said the sale will be consistent with a presidential decree requiring the state to retain at least one share more than a 50 percent stake. Kirienko did not mention a federal law on EES shares, which was adopted earlier this year. That law sets the minimum state-owned stake in the electricity giant at 51 percent. Yeltsin was forced to sign the law in May after both houses of the parliament overrode his veto. LB

TULEEV WANTS MORE POWERS FOR KEMEROVO

Prime Minister Kirienko met with Kemerovo Oblast Governor Aman Tuleev on 21 July to discuss the region's socio- economic situation, ITAR-TASS reported. The same day, Tuleev said that during Deputy Prime Minister Oleg Sysuev's 19 July negotiations with officials and strikers in Kemerovo Oblast, Tuleev gave the deputy premier a draft of a new power-sharing agreement that would transfer large amounts of federal property to the oblast's control, "Nezavisimaya gazeta" reported on 22 July. "We also propose to keep 70 percent, instead of 10 percent, of the earnings from the coal industry in [Kemerovo Oblast]," Tuleev said. The governor has consistently blamed the federal government for recent protests by coal miners. Meanwhile, coal miners' strike committees in Chelyabinsk Oblast announced that they will block the Trans-Siberian Railroad on 27 July to protest non-payment of wages, ITAR-TASS reported. BT

CONTRACT KILLERS CONFESS TO MANEVICH'S MURDER

Four ethnic Russians arrested earlier this month have confessed to the August 1997 murder of St. Petersburg Deputy Governor and privatization chief Mikhail Manevich, Russian news agencies reported on 21 July. Three were arrested in the Osh region of Kyrgyzstan and the fourth in Uzbekistan. Vladislav Selivanov, the head of the Interior Ministry's crime-fighting division, said the four have been charged with a series of contract killings in numerous Russian cities from 1993-1997. The group was flown to Moscow on 21 July under tight security conditions. In the Russian capital, Interior Ministry investigators, the Prosecutor-General's Office, and the Federal Security Service are preparing evidence, "Kommersant-Daily" reported. Selivanov told a press conference there is "no objective evidence" suggesting the involvement of the group in the March 1995 killing of influential television journalist Vladislav Listev, but he added "there is a basis for this supposition," "Nezavisimaya gazeta" reported on 22 July. BT

SUPREME COURT AFFIRMS RIGHT TO LIVE ANYWHERE IN RUSSIA

The Supreme Court on 20 July upheld an appeal by Andrei Inozemtsev, a native of Lipetsk Oblast, against the Moscow law enforcement authorities' refusal to grant him long-term residency, RFE/RL's Moscow bureau reported. The Constitutional Court has ruled that local authorities may register Russian citizens' addresses but may not grant or deny citizens permission to live in a particular city (see "RFE/RL Newsline," 3 February 1998). However, the Moscow authorities sought to limit Inozemtsev's residency to six months. A Moscow district court denied Inozemtsev's appeal, upholding Interior Ministry regulations. The Moscow City Court then delayed consideration of the case and even advised Inozemtsev to take other steps to secure permission to live permanently in Moscow (such as marry a Muscovite). The Interior Ministry has since amended its rules in accordance with the Constitutional Court ruling. LB

CHECHEN PROSECUTOR, MUFTI WARN YANDARBIEV...

Speaking on Chechen television on 20 July, Khavazh Serbiev warned former Chechen acting President Zelimkhan Yandarbiev against "spontaneous steps that could lead to bloodshed," Interfax reported. Members of the disbanded Special Purpose Islamic Regiment and Shariah guard had congregated near the village of Starye Atagi (not Novye Atagi, as erroneously reported in "RFE/RL Newsline" on 21 July) and had appealed to Yandarbiev to lead an uprising against the current Chechen leadership. Mufti Ahmat-Hadji Kadyrov likewise warned Yandarbiev, whom he accused of propagating Wahhabism, to desist from "illegal activities." The situation in Chechnya on 22 July is "stable," according to RFE/RL's Grozny correspondent. LF

...AS RUSSIAN POLITICIANS PREDICT CIVIL WAR

Krasnoyarsk Krai Governer Aleksandr Lebed told Interfax on 21 July that he believes Chechnya is headed for a new civil war and that Dagestan, North Ossetia, Ingushetia, and Stavropol Krai will also be drawn into the conflict. Federal Security Service Director Nikolai Kovalev said that "all the preconditions" for a renewed conflict exist, but he expressed the hope that tensions can be defused and that "common sense will prevail." Kovalev said he is "confident" that former Chechen acting Premier Shamil Basaev was not involved in the 1 May abduction of Russian Presidential Envoy Valentin Vlasov, whose whereabouts remain unknown. Russian Deputy Prime Minister Ivan Rybkin argued that Chechnya's problems cannot be resolved from a distance. He said the situation in the North Caucasus should be monitored by "a person possessing special abilities and the rank of deputy premier." Rybkin called for mediation by neighboring republics in order to ensure stability in Chechnya. LF

RUSSIAN BANK TO SPONSOR MISSION TO 'MIR'

The cosmonauts who undertake the last trip to the 'Mir' space station will be sponsored by Russia's Menatep Bank, ITAR- TASS reported. A unidentified bank spokesman said "our bank decided to reach for the stars in the literal sense of the word." Menatep has close ties to the authorities. Fuel and Energy Minister Sergei Generalov was deputy head of the bank before joining the government in May. Leonid Nevzlin, deputy director of the official news agency, ITAR- TASS, since last September, is a former high-ranking executive in the Rosprom group, which includes Menatep. The bank official said the bank "hopes to help a revival of interest of Russians in the space theme." There was no mention of how much money the bank will spend on sponsorship. LB/BP




UN OBSERVERS MURDERED IN TAJIKISTAN

Four members of the UN observers mission in Tajikistan have been found murdered in a mountainous area about 170 kilometers from Dushanbe, RFE/RL correspondents reported on 21 July. The two military observers (from Poland and Uruguay), one civilian affairs officer (from Japan), and their Tajik driver/translator had last been heard from the previous day. Their car was found overturned in a gorge, which prompted initial reports saying that they died in an accident. However, an examination of their bodies revealed gunshot wounds. Authorities have launched a search for the perpetrators of the crime. All UN personnel in Tajikistan have been recalled to Dushanbe. BP

REACTION TO MURDERS

Both Tajik President Imomali Rakhmonov and the United Tajik Opposition branded the killing of the four UN employees as "an act of terrorism," ITAR-TASS reported on 22 July. Rakhmonov said those responsible are "traitors." UN special envoy to Tajikistan Jan Kubis said the murders are "a tragedy which is unmatched in the UN annals." In New York, UN Secretary- General Kofi Annan said the four "were ambushed and ruthlessly executed" in what he called a "cold-blooded murder." Meanwhile, Rakhmonov has fired Deputy Defense Ministers Abdullo Habibov and Sodik Bobojanov in the wake of the murders. Abdurakhmon Azimov, who heads the government's power structures, and Defense Minister Sherali Khairulloyev were reprimanded. Following the murders, both the UN and the Japanese government have complained about security for UN employees. BP

DRIVER IN KYRGYZ CYANIDE SPILL CHARGED

The driver of the truck that spilled sodium cyanide into the Barskoon River on 20 May has been charged with violating rules for transporting chemicals, Interfax reported on 22 July. He faces a maximum of 10 years in prison if found guilty. All other drivers who transported that chemical the same day as the accident have been fired. The Kyrgyz parliamentary commission investigating the spill reports that the management of the Kumtor Gold Mining project has not repaired bridges leading to the mining site, which were built 20 years ago and are not intended for cargoes exceeding 13 tons. The company's trucks regularly transport 40 ton cargoes across such bridges. BP

AZERBAIJAN SIGNS NEW OIL CONTRACTS

Azerbaijani President Heidar Aliev, who is on an official visit to Britain, has signed exploration and production-sharing agreements worth $5 billion with three British oil companies to develop separate Caspian oil fields. The companies in question are British Petroleum, Ramco, and Monument Oil and Gas. Aliyev also signed an agreement with the European Bank for Reconstruction and Development, which will provide $20 million for the development of Azerbaijan's banking sector and private businesses, according to ITAR-TASS on 21 July. LF

ALIEV'S PRESIDENTIAL CANDIDACY PROPOSED

The Central Electoral Committee has registered an initiative group composed of voters from four cities and seven raions, which has proposed Aliyev as a candidate for the 11 October presidential elections, Caucasus Press reported on 22 July, citing ANS. The previous day, Musavat Party chairman Isa Gambar said that he and the other four opposition candidates who have vowed to boycott the poll might reconsider that decision if the opposition were allowed to nominate six of the 24 members of the Central Electoral Commission, Turan reported. Also on 21 July, a Turkish Foreign Ministry spokesman denied that exiled former Azerbaijani parliamentary speaker Rasul Guliev, who arrived in Istanbul on 13 July, has been asked to leave Turkey. LF

ARMENIA, IRAN SIGN ECONOMIC COOPERATION AGREEMENT

Iranian Minister of Finance and Economic Affairs Hussein Namazi and Armenian Chief of Government Staff Shahen Karamanoukian signed an economic cooperation agreement in Tehran on 20 July, IRNA reported. The agreement includes a $5 million credit from Iran's Export Promotion Bank for the purchase of Iranian consumer goods and cooperation on expanding transport arteries linking Iran, Armenia, Georgia, and Russia. Iran also expressed an interest in purchasing molybdenum and copper concentrate from Armenia. On 18 July, Karamanoukian met with Iranian President Mohammad Khatami, to whom he delivered a message from Armenian President Robert Kocharian. LF

NEW ARMENIAN POLITICAL PARTY CREATES INFRASTRUCTURE

The People's Party of Armenia, founded by former Communist Party First Secretary and defeated presidential challenger Karen Demirchian, has almost completed setting up branches throughout the country, RFE/RL's Yerevan bureau reported on 21 July. A spokesman for the party said local "organizing committees" have already received thousands of membership applications. The party will hold its founding congress in the fall. LF




UKRAINIAN GOVERNMENT APPROVES 1999 ECONOMIC TARGETS...

The government on 21 July approved economic targets for 1999, Interfax reported. GDP growth next year is expected to be 2 percent and the budget deficit 1.5 percent of GDP. Inflation is predicted to remain below 8 percent, while the hryvnya will be allowed to fall no more than by 18 percent against the dollar by the end of 1999. The number of registered unemployed people is expected to total 1.7 million, while the monthly average wage is forecast at 189 hryvni ($90), 9.2 percent up on this year's figure. JM

...WHILE PREMIER URGES BUDGET DISCIPLINE IN 1998

Ukrainian Prime Minister Valeriy Pustovoytenko told his cabinet on 21 July that observing budget discipline is the most important condition for maintaining economic stability in the country, Ukrainian Television reported. Pustovoytenko denied rumors that the government will write off the tax debts accumulated this year by enterprises. He added that since the beginning of this year, the budget has failed to receive 5.9 billion hryvni ($2.9 billion) because of tax arrears or evasion. He threatened to apply administrative sanctions and bring criminal charges against those who fail to pay their taxes. JM

LUKASHENKA PRAISED ON FOURTH ANNIVERSARY AS PRESIDENT

Belarusian Television on 21 July said that during his four years as president, Alyaksandr Lukashenka has been able to fulfill "a lot of what was expected of him by Belarusian society." Lukashenka was praised for taking "considerable steps" toward restoring the "flourishing Belarusian economy of the late 1980s and early 1990s." According to a recent poll, Lukashenka's foreign policy is supported by 72.4 percent of the population, Belarusian Television reported. And the television station claimed that the West began exerting political pressure on Belarus after the Belarusian leadership announced its policy of rapprochement with Russia, citing the diplomatic conflict over the Drazdy compound as a recent example of such pressure. JM

LUKASHENKA WANTS TO STABILIZE BELARUSIAN RUBLE

At a meeting with National Bank Chairman Pyotr Prakapovich on 20 July, Lukashenka demanded that the National Bank step up efforts to "stabilize the Belarusian ruble exchange rate and accelerate the transition to a single exchange rate," Belapan reported. Lukashenka ordered the bank and the government "to take additional measures" to increase by 5-8 percent this year the foreign currency revenues of enterprises He also instructed Prakapovich to repay all debts to Gazprom before "the beginning of the heating season." JM

SIIMANN REJECTED INTERIOR MINISTER'S RESIGNATION

Estonian Prime Minister Mart Siimann turned down an offer by Interior Minister Olari Taal to resign over the scandal surrounding a loan granted last year to Hoiupank by Japan's Daiwa Bank, ETA and BNS reported on 21 July. Siimann said that it is "unfair" of the press to blame Taal for remaining in his post, adding that he is a "very good interior minister" and that there is "no one better" to reorganize that ministry. Taal, who was chairman of the board of Hoiupank at the time the loan was granted, submitted his resignation in May in a bid to avoid accusations against him that would be harmful to the government, according to the news agencies. More recently, he said he sees no reason why he should step down (see "RFE/RL Newsline," 15 July 1998). JC

EU URGES LITHUANIA TO BE PATIENT

European Commissioner for External Affairs Hans van den Broek has said Lithuania is making good economic progress but must remain "somewhat patient" about joining the EU, Reuters reported. Van den Broek made the remarks after talks in Vilnius on 21 July with Lithuanian President Valdas Adamkus and other top officials. He praised Lithuania for speeding up privatization and for economic growth estimated to exceed 5 percent this year. But he added that Lithuania still needs to make progress "in the modernization of enterprises and in achieving a clear, transparent, and predictable economic environment," according to AP. JC

POLISH, GERMAN LAWMAKERS PLAY DOWN RESETTLEMENT ROW

Bundestag speaker Rita Suessmuth visited the Polish parliament on 21 July in an attempt to play down Polish-German discord over the expulsion of Germans from Poland after World War II. In May, the Bundestag issued a resolution calling upon Poland to acknowledge the right of German exiles to settle in areas they inhabited before the war. The Polish parliament responded with a statement criticizing the resolution (see "RFE/RL Newsline," 7 July 1998). Suessmuth explained to Sejm speaker Maciej Plazynski that the Bundestag resolution does not demand that Poles living in the former German territories of Silesia and Eastern Prussia be deprived of their property. According to PAP, Plazynski said after his meeting with Suessmuth that "the matters are clear now." JM

POLAND NOT TO SEEK EU TRANSITION PERIODS IN SEVEN AREAS

Jan Kulakowski, Poland's chief negotiator for EU entry, said in Brussels on 21 July that Poland will not seek transition periods in seven negotiation areas, PAP reported. Those transition periods are designed to allow non-member countries to adapt to EU standards. According to Kulakowski, this means Poland must pledge that by 2002 it will allow 100 percent shares of foreign capital in audiovisual media or telecommunications companies. The other five negotiation areas are scientific research, education, small and medium-sized enterprises, industrial policy, and foreign policy. JM

HAVEL TO UNDERGO SURGERY

President Vaclav Havel will undergo surgery on 26 July to remove a tube inserted into his colon in April, when he underwent surgery in Austria for acute peritonitis, AP reported citing CTK. Havel is scheduled to appoint the new government on 22 July, before entering the hospital. Doctors expect him to remain in the hospital for two weeks and to convalescence for another six weeks. MS

FLOODS VICTIMS IN SLOVAKIA

At least 23 people, five of them children, were killed in flooding in northeastern Slovakia during the night of 20-21 July, TASR and AP reported. About 60 people are missing. Some 3,000 people had to be evacuated. In other news, AP reported on 21 July that Interior Minister Gustav Krajci survived a no confidence vote in the parliament initiated by the opposition, which fears he may abuse his powers in the elections scheduled for September. To succeed, the no- confidence vote had to enlist the support of 76 out of the 150 deputies. Out of the 78 deputies who voted, only 48 cast their ballot against Krajci, 13 supported him, and two abstained. MS

ORBAN CONCERNED ABOUT PROSPECTS FOR EU EXPANSION

Prime Minister Viktor Orban, in an interview with the daily "Napi Magyarorszag" on 21 July, said he is concerned about differences of opinions among EU members on the organization's expansion. Orban said some EU countries, such as France, insist that new members be admitted only after internal reforms have been carried out, while others take the opposite view. These differences, he said leave Central European candidates for membership fearing that accession may be delayed by years. Orban also said he attaches "outstanding importance" to relations with Romania and will pay an unofficial visit there on 25 July. According to protocol, it is the Romanian premier's turn to visit Hungary. MS




UN RENEWS MANDATE FOR MACEDONIAN PEACEKEEPERS

The Security Council voted unanimously in New York on 21 July to extend the mandate of UNPREDEP until 28 February 1999. The leading UN body also agreed to add about 350 soldiers to the current nearly 750-strong mainly U.S. and Scandinavian contingent. Norway will supply most of the additional troops. The vote came hours after three bombs exploded in three different locations in Macedonia (see "RFE/RL Newsline," 21 July 1998). On 16 July, UN Secretary-General Kofi Annan said in New York that UNPREDEP is stretched too thin to be able to monitor effectively Macedonia's borders with Albania and Yugoslavia. UNPREDEP is the first mission in UN history that seeks to prevent a conflict from spreading rather than keep the peace in a war-torn area. PM

MACEDONIA TIGHTENS BORDER SECURITY

Defense Minister Lazar Kitanovski said in Debar on 21 July that the government is closely monitoring events in Kosova and that "because of possible movements of groups from Albania into Macedonia, we will additionally reinforce" troops along the Albanian border. Debar is near one of the main border crossings between the two countries. In Skopje, Kitanovski's spokesman told Reuters that "there have been 30 armed incidents along the border with Albania in the past three months, in which Albanians tried to enter Macedonian territory to smuggle weapons" bound for Kosova. "So far there have been no casualties on the Macedonian side but two Albanians were killed and over 10 wounded in these incidents," he added. Ethnic tensions run high in Macedonia between the Macedonian majority and the ethnic Albanian minority. PM

FIGHTING CONTINUES IN RAHOVEC

Serbian forces clashed with the Kosova Liberation Army (UCK) in Rahovec on 21 July for the fourth straight day. The town was "in flames and smoke" and the fighting left a total of 36 ethnic Albanians dead, the Kosovar KIC news agency. In a statement, shadow-state President Ibrahim Rugova's Democratic League of Kosova (LDK) criticized "violence and massacres by Serbian forces in Rahovec" and urged the international community to react "forcefully." The LDK called on foreign governments to bring the Belgrade authorities before the Hague-based war crimes tribunal because of what Serbian forces have done in Kosova. Rugova discussed the situation in the province with Christopher Hill, who is U.S. ambassador to Macedonia and who met the previous day in Belgrade with Yugoslav President Slobodan Milosevic. PM

SERBIAN PRIEST COMFORTS KOSOVARS, SERBS

A humanitarian aid worker from Kosova told Reuters on 21 July in Prishtina that fighting in western Kosova near the Albanian border has left great material destruction. He added that in many places quantities of human and animal remains lie unburied. The aid worker said that his work is difficult because "the Serbs hate us, and the Albanians are very disappointed in us." He noted that "there is a Serbian Orthodox priest there, a remarkable man called Sava, who is doing all he can to help the Albanians against the odds." Father Sava is a deputy of Bishop Artemije. Both men are committed to the welfare of ordinary Serbs and to reconciliation between Serbs and Albanians. The two men blame Yugoslav President Slobodan Milosevic for the current conflict. PM

UNHCR COMPLAINS ABOUT ALBANIAN ORGANIZED CRIME

A representative of the UN High Commissioner for Refugees told journalists in Tirana on 20 July that local gunmen in northern Albania continue to hamper aid efforts. He said that thefts of cars and aid supplies by "organized local criminal groups are a major problem" and that criminals are trying to make money from the crisis situation. He noted that they "steal aid shipments and even pressure us to employ them." The spokesman pointed out that there is a constant risk of UNHCR personnel being caught in crossfire in random shooting. Another aid worker stressed that "people are armed and police are reluctant to intervene and restore law." Northeastern Albania has traditionally been considered lawless. Tirana has been unable to fully restore law and order there since the country succumbed to anarchy in early 1997. FS

OSCE OPENS NEW FIELD OFFICE IN NORTHERN ALBANIA

The OSCE opened a field office in Koplik on 21 July, its fifth such office in the north. The bureau is part of an effort to expand monitoring of the border region. Meanwhile in Tirana, Socialist Party legislator Spartak Braho told "Koha Jone" that he will go to Kosova later this week to join the UCK. Braho said he wants to help the guerrillas with logistics, but he did not rule out eventually taking part in military operations. Braho also called on legislators, "intellectuals, and [former] soldiers to make their contribution to Kosova." He criticized Albanian politicians for what he called their "idleness" with regard to the conflict. FS

ALBANIA DEPORTS REPUTED TERRORIST

The authorities on 21 July deported suspected Egyptian terrorist Muhamed Hasan Mahmud to the U.S. Mahmud had worked as director of the Islamic Revival charity organization in Tirana until his arrest on 17 July. The FBI helped Albanian police identify Mahmud, whom the U.S. suspects of being behind the 1990 murder of Egyptian parliament speaker Rifaat el Mahgoub in Cairo as well as attacks on an aircraft and a supermarket in the U.S. Albanian authorities expelled two other suspected Egyptian terrorists to the U.S. last month. FS

BOSNIAN POLITICIANS DECLARE ASSETS

Candidates in the September general elections have filed declarations of their assets with the election commission. That move is in keeping with a ruling by the OSCE, which is supervising the vote, "Oslobodjenje" reported on 20 and 21 July. The wealthiest politician is Fikret Abdic, the controversial kingpin of the Bihac pocket, who declared property worth $250,000. Kresimir Zubak, who is the Croatian member of the joint presidency, and his Serbian counterpart, Momcilo Krajisnik, both own what the paper called "an impressive amount of real estate." Alija Izetbegovic, their Muslim opposite number, declared savings of $50,000. Republika Srpska President Biljana Plavsic reported her salary of $200 per month plus two garages in Sarajevo, although the newspaper states that she also owns an apartment in the Muslim-controlled capital. Observers say that many politicians on all sides amassed great wealth during the 1992-1995 war. PM

ROMANIAN FINANCE MINISTER THREATENS TO RESIGN

Daniel Daianu on 21 July told journalists in Bucharest that he will resign if his proposal to raise taxes in August is rejected or if the government upholds the controversial deal to purchase 96 helicopters. Under the proposed deal, Bell Helicopters Textron is to purchase a majority stake in the Gimbav aircraft company, which would produce the helicopters. The deal involves a $1.45 billion loan, which Daianu says would increase budget expenditures by more than $ 150 million annually. He also said the envisaged property tax cannot be applied before 1999 for logistical reasons. MS

MOLDOVAN-TRANSDNIESTER SUMMIT FAILS TO BRIDGE MAIN DIFFERENCES

President Petru Lucinschi and Transdniestrian leader Igor Smirnov, meeting in Chisinau on 21 July, failed to reach an agreement on the "common state" envisaged in the memorandum signed in May 1997 in Moscow, RFE/RL's Chisinau bureau reported. The two leaders did, however, reach an understanding on the continuation of energy deliveries from the Cuciurgan (Dnestrovsk) power plant in the Transdniester. Lucinschi acknowledged that Moldova owes Tiraspol $21 million, but he said the debt cannot be settled for the time being. The two leaders also agreed that the bridge over the Dniester at Dubasari, which has been reconstructed following its destruction in 1992, will be reopened on 3 August. The Transdniester authorities previously opposed the recommissioning of the bridge, citing security reasons. MS

ROMANIAN DEPUTY FOREIGN MINISTER IN MOLDOVA

Razvan Ungureanu, on a two-day visit to Chisinau, told journalists on 21 July that the pending Romanian-Moldovan basic treaty has been "finalized in great part" and that only the preamble to the treaty and its concluding articles remain to be negotiated. Ungureanu conducted talks with Deputy Foreign Minister Ceslav Ciobanu, the independent Flux agency reported. Before departing from Bucharest, Ungureanu said he would raise during the talks the problem of the Bessarabian Metropolitan Church, which Chisinau refuses to recognize. MS

SPANISH PREMIER IN BULGARIA

Jose Maria Aznar and his host, Ivan Kostov, on 21 July told journalists in Sofia at the end of the Spanish premier's two-day visit that the two countries have signed accords on cooperation in tourism and on combating organized crime, BTA reported. They also reached an agreement to work for the settling of Bulgaria's $30 million debt to Spain by giving Spanish companies stakes in Bulgarian enterprises. Aznar praised Bulgaria's economic and social reforms but said the country still has a long way to go before being able to join the EU, adding that this goal must be achieved by consensus in Bulgarian society. At a meeting with President Petar Stoyanov, Aznar said Spain will continue to support Bulgarian efforts to join the EU and NATO. MS

BULGARIAN OPPOSITION TO BACK IMF DEAL

Rumen Ovcharov, a leading member of the opposition Socialist Party, told Reuters on 21 July that his party will support a three-year loan now being negotiated with the IMF on condition that the deal secures "stable economic growth, employment, and development." Ovcharov spoke after meeting with the chief IMF representative in Bulgaria, Anne McGuirk. The government supported that meeting in a bid to soften resistance to painful restructuring and expected lay-offs under the program coordinated with the IMF. MS




EU PUNISHES BELARUSIAN LEADERSHIP


by Jan Maksymiuk

The EU Council on 13 July formally approved a decision to ban EU visas for Belarusian government officials. President Alyaksandr Lukashenka topped a list of 130 Belarusian cabinet ministers, deputy ministers, presidential administration officials, and state committee heads, all of whom are now prohibited from traveling to the EU's 15 member states.

The decision was communicated to the Belarusian Foreign Ministry by charges d'affaires of five EU states-- France, Germany, Greece, Italy, and the U.K.--on 10 July, the fourth anniversary of Lukashenka's presidency. A Russian newspaper reported that Foreign Minister Ivan Antanovich was shocked to receive such a note and tried to dismiss it on the pretext that it was poorly prepared--the names of some officials were misspelled or their official positions incorrectly identified. Four days later, the US State Department followed suit, imposing similar restrictions on Belarusian senior officials wanting to travel to the U.S., except those visiting the UN headquarters. Ten non-EU states in Europe have also joined the visa ban.

Minsk obviously did not expect such a turn of events in the ongoing diplomatic scandal over the eviction of Western ambassadors from the Drazdy residential compound, near Minsk. In fact, Deputy Foreign Minister Uladzimir Herasimovich, appointed by Lukashenka to negotiate a solution to the conflict with Western diplomats, announced on 9 July that Belarus had reached some kind of arrangement with Germany and France on moving their ambassadors to other accommodation. He also said Minsk had backed off from its ultimatum ordering Western diplomats to remove their belongings from Drazdy.

But the West seemed finally to realize that whatever the Belarusian Foreign Ministry says need not correspond to what Lukashenka does or intends to do. The EU visa ban was the first serious setback suffered by Lukashenka in his six-week battle to empty the diplomatic compound and to have it for himself alone. The recalling of Western ambassadors for consultations was not enough to shake Belarus's authoritarian leader. "Let them know that they may return to Belarus only following our permission," Lukashenka commented on the withdrawal of Western diplomats. But the visa restrictions have hit hard, for three reasons.

First, by imposing the ban on Lukashenka and his administration officials, the EU and the U.S. have unmistakably demonstrated who is really responsible for the infamous "sewer war." Belarus has been generally portrayed by international media as a country trying to find its way "back to the USSR." Lukashenka's views of various economic and political issues are presented as reflecting "the people's will" or, at least, enjoying immense popular support.

The Drazdy conflict, however, shows this is not necessarily the case. Protesting declining living standards in Minsk on 15 July, some 5,000 workers adopted a resolution saying that Lukashenka's policy "threatens the country with political and economic isolation." The West appears to have realized that it would be counterproductive to punish the Belarusian people for the actions taken by its government.

Second, the visa ban may help the fragmented and weak Belarusian opposition to consolidate itself, assuming that it is willing and able to do so. Lukashenka is vulnerable: that is the main lesson that the opposition can learn from the current diplomatic standoff. And his regime will become more vulnerable as Russia--Minsk's closest ally among the former Soviet republics--continues to press for the repayment of outstanding debts for gas and oil.

Russia under Sergei Kirienko's government is becoming more and more reluctant to provide its "sisterly republic" with energy resources free of charge or in exchange for Belarusian antiquated tractors and television sets. With no international financial aid in sight, Lukashenka will find it very hard to cope with mounting problems in the virtually unreformed Soviet economy he controls. He will be forced to make political concessions if his is not a suicidal case. And it will be up to the Belarusian opposition to decide whether and how to take advantage of that vulnerability.

Third, by imposing visa restrictions and not severing diplomatic relations with Belarus, the West has prudently left room for diplomatic maneuvering. It has also confirmed that it still sees Belarus as a sovereign country and wants it to retain that status. With NATO's eastern border flanking Belarus in six months or so, it is doubtless preferable to have a stretch of non-Russian territory between NATO and Russian tanks. No European government, including the Kremlin, wants to recreate the barbed-wire dividing line that characterized Cold-War Europe.


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