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Newsline - July 31, 1998




GOVERNMENT STRIKES DEAL WITH GAZPROM ON TAXES

Government officials and Gazprom chief executive Rem Vyakhirev have agreed on a tax payment schedule, RFE/RL's Moscow bureau reported on 30 July. The gas monopoly was originally supposed to pay some 4 billion rubles ($640 million) in taxes this month. However, Fuel and Energy Minister Sergei Generalov told journalists that Gazprom's monthly tax bill will total 3.1 billion rubles. Of that figure, 2.5 billion rubles will come from Gazprom, and 600 million rubles will be paid to the company from the Finance Ministry and immediately relayed to the federal budget. (The Finance Ministry payments will help settle debts to Gazprom accrued by budget-funded organizations.) Earlier this month, ministers vowed to force Gazprom to pay its full tax bill and described as "illegal" a deal struck earlier this year allowing Gazprom to pay 2.45 billion rubles each month (see "RFE/RL Newsline," 3 and 7 July 1998). LB

KIRIENKO TELLS TAX CHIEF TO LEAVE GAZPROM ALONE FOR NOW

Prime Minister Sergei Kirienko on 30 July ordered State Tax Service chief Boris Fedorov to halt all punitive measures against Gazprom until the government and gas monopoly have signed an agreement on settling mutual debts, Russian news agencies reported, citing Fuel and Energy Minister Generalov. That agreement is expected to be signed during the first few days of August. Speaking at a cabinet meeting earlier the same day, Gazprom head Vyakhirev charged that tax officials are using "inappropriate" methods against his company, and he threatened that the company will cease production if those methods continue. In early July, Fedorov halted the seizure of Gazprom assets but has since warned Vyakhirev that the asset seizures will resume if Gazprom has not paid its July taxes in full by 1 August, "Izvestiya" reported on 31 July. LB

TOP OFFICIALS SEEK TO REASSURE FOREIGN INVESTORS...

Prime Minister Kirienko, Central Bank Chairman Sergei Dubinin, Finance Minister Mikhail Zadornov, Unified Energy System chief Anatolii Chubais, and State Tax Service head Fedorov were among the officials who met with representatives of foreign banks and investment firms in Moscow on 30 July, "Kommersant-Daily" reported. The officials briefed foreign investors on economic data and the government's policy plans but did not announce any new initiatives. At a press conference later the same day, Zadornov said tax revenues in cash during the first half of 1998 were 8 percent higher than the corresponding figure from 1997, RFE/RL's Moscow bureau reported. He added that tax revenues for July are expected to exceed 12 billion rubles ($1.9 billion). (In June the federal government collected 11.2 billion rubles in taxes.) Zadornov predicted that tax collection will continue to improve once new laws and government directives take effect in August. LB

...INSIST DEVALUATION OUT OF THE QUESTION

Central Bank Chairman Dubinin on 30 July dismissed speculation that the government will be forced to abandon the ruble corridor later this year, RFE/RL's Moscow bureau and Reuters reported. Independent economist Andrei Illarionov is among those who believe a sharp ruble devaluation is inevitable. But during a joint press conference with Finance Minister Zadornov, Dubinin said Illarionov either "does not understand how the market works or is deliberately misleading people." The Central Bank head even mentioned rumors that Illarionov is trying to drive down the ruble in order to make money on a futures contract, although Dubinin did not vouch for the accuracy of such allegations. During an interview with Ekho Moskvy on 30 July, Central Bank First Deputy Chairman Sergei Aleksashenko said "rumors of the ruble's death are premature." LB

CENTRAL BANK'S HARD-CURRENCY RESERVES INCREASE

The Central Bank's gold and hard-currency reserves rose from $13.6 billion to $19.2 billion from 17 to 24 July, ITAR-TASS reported on 30 July. During that week the bank received $4.8 billion in funds from an IMF credit. Several Eurobond issues helped bolster the Central Bank's reserves earlier this year, but Finance Minister Zadornov announced on 30 July that Russia plans no further sales of Eurobonds until late October, Interfax reported. He said Russia will borrow abroad again only once market conditions become more favorable. Turmoil on Russian financial markets and downgrades by international credit rating agencies have driven up the cost of foreign borrowing for the Russian government. LB

KIRIENKO WILL NOT TOLERATE RAILROAD BLOCKADES

Prime Minister Kirienko said at a 31 July conference at the Railroads Ministry that "the government will instill order" to bring an end to the railroad blockades, Interfax reported. Sakhalin Oblast's botched attempt to have Interior Ministry troops disperse miners blockading a power plant on 30 July drew strong criticism. The chairman of the nationwide coal miners' union said it will incite its 600,000 members to civil disobedience, including the blockade of highways and railroads if force is used against Sakhalin protesters. The management of a coal operation in Sakhalin warned that such force would trigger social unrest throughout Russia's mining regions, ITAR-TASS reported on 30 July. Sakhalin Deputy Governor Ivan Malakhov told reporters the next day that the regional authorities will not use force to disperse the picketers. Meanwhile, coal shortages caused by the blockade have led to further electricity outages in Sakhalinsk. Sakhalin's hospitals will have electricity for only 6 hours on 31 July. BT

CHELYABINSK GOVERNOR GIVES PROTESTING MINERS ULTIMATUM

Petr Sumin announced that a state of emergency would be imposed in Chelyabinsk Oblast if miners did not lift their five-day blockade of the Trans- Siberian Railroad by the night of 30 July, "Kommersant- Daily" reported. Blockaders have begun to stop passenger trains in addition to freight trains, leading to fist fights between miners and train officials. The federal government recently sent 9.6 million rubles ($1.5 million) to pay wage debts, but the miners insist on 60 million rubles as a condition for lifting the blockade. BT

RUSSIAN-JAPANESE NAVAL EXERCISE 'BIG SUCCESS'

The first Russian-Japanese naval maneuvers have been dubbed a "big success " by both sides, ITAR-TASS and Interfax reported. Two destroyers from each country, along with Russian helicopters and Japanese airplanes, conducted a mock rescue of a Japanese ship in the northeastern part of the Sea of Japan, about 400 kilometers from Vladivostok. Bad weather forced the exercise to continue until 30 July. Meanwhile, Yeltsin and Kirienko sent letters of congratulations to the new Japanese Prime Minister Keidzo Obuchi on 30 July. Yeltsin's letter also contained an invitation to Obuchi to visit Russia this fall. The Russian president also sent a message to former Prime Minister Ryutaro Hashimoto thanking him for his part in the "history-making" developments in the two countries' relations. BP

NEW FSB CHIEF SAYS NO MAJOR PURGE DURING REORGANIZATION

Federal Security Service (FSB) Director Vladimir Putin told "Kommersant-Daily" on 30 July that there will be no "massive firings" during the reorganization of the FSB. He said the service's staff does not greatly exceed 4,000 people, the upper limit set by a recent presidential decree (see "RFE/RL Newsline," 27 July 1998). Putin said staff reductions will be carried out mostly by attrition. Commenting on reports describing him as a close ally of Unified Energy System head Anatolii Chubais, Putin said he and Chubais hardly knew each other in St. Petersburg. He added that it was Kremlin official Pavel Borodin who invited him to join the presidential administration in 1996 (when Chubais was Yeltsin's chief of staff). Writing in "Nezavisimaya gazeta" on 31 July, a correspondent from St. Petersburg also discounted reports characterizing Putin as "Chubais's man." LB

OFFICIAL WARNS OF POSSIBLE RADIATION THREAT IN NORTH

Deputy Atomic Energy Minister Nikolai Yegorov on 30 July warned that spent fuel removed from nuclear submarines could pose a radiation hazard in the Andreev Bay (Murmansk Oblast), Russian news agencies reported. Speaking to journalists following a meeting of a Russian- Norwegian commission on radiation safety, which he co- chairs, Yegorov said the radiation level is currently under control but noted that "the situation is getting worse with each passing year" and could eventually become a "catastrophe." He said Russia has decommissioned 157 submarines, 95 of which belong to the Northern Fleet. But whereas an estimated $1.5 billion is needed to dismantle decommissioned submarines and improve the way spent fuel is stored, Interfax said the Russian budget has earmarked only some $35 million for such projects. ITAR- TASS said Norway, Japan, and The Netherlands have promised a combined $53 million to help deal with the problem. LB

PROSECUTORS CHARGE FORMER DEFENSE MINISTRY OFFICIAL

Chief Military Prosecutor Yurii Demin announced on 30 July that his office has filed criminal charges against former Deputy Defense Minister Konstantin Kobets, RFE/RL's Moscow bureau reported. Kobets gained fame when he helped defend the White House during the August 1991 coup and later held high posts in the Defense Ministry. Duma Defense Committee Chairman Lev Rokhlin publicly accused Kobets of corruption in July 1996, but Kobets was fired and arrested only in May 1997. He is charged with taking bribes, abusing his official position, and illegal possession of firearms (see "RFE/RL Newsline," 19 and 20 May 1997). No trial date has been set, as Kobets will be given time to read documents related to the case against him. He denied the charges against him in an interview with "Kommersant-Daily" on 31 July. LB

OFFICIAL SAYS AMNESTY BENEFITS HIGH-RANKING MILITARY CRIMINALS

Chief Military Prosecutor Demin told journalists on 30 July that an amnesty declared by the State Duma has allowed the heads of some criminal groups to escape punishment, RFE/RL's Moscow bureau reported. Demin said 14 former high-ranking generals have been sentenced during the last two years, another 14 are under criminal investigation, and 13 have been freed under an amnesty (see "RFE/RL Newsline," 7 January 1998). He argued that the wording of the amnesty resolution has allowed highly decorated generals who masterminded some crimes to be freed, while the lower-ranking officers who carried out those crimes serve prison terms. The constitution grants the Duma alone the power to declare amnesties. LB

UNION OF RUSSIAN CITIES PROTESTS GOVERNMENT TAX LAWS

The Union of Russian Cities has issued a resolution protesting the anti-crisis program's budget and recent tax laws as infringements on "cities' financial independence," "Nezavisimaya gazeta" reported on 30 July. According to the union, new tax laws cut local governments' share of overall tax revenues while increasing municipalities' responsibility for spending on services like education and housing. Planned revenues to offset municipalities' losses, such as the sales tax, are to be implemented on a regional level, but the new system may make mayors more dependent on regional governors or republican presidents. "Nezavisimaya gazeta" points out that in many regions, mayors and governors are political opponents. The Union will appeal to the President to veto legislation passed by the parliament. It plans to "recall" deputies and regional leaders who are "destroying local self-government and deepening the country's crisis" through the legislation. However, the Union has no mechanisms to change federal laws or recall deputies. BT

PROSECUTORS INVESTIGATING POSSIBLE FRAUD IN NIZHNII

The Prosecutor's Office in Nizhnii Novgorod is investigating allegations that officials falsified the results of the March mayoral election, which was later annulled, RFE/RL's correspondent in Nizhnii Novgorod reported on 31 July. Yurii Lebedev, who resigned as presidential representative in Nizhnii Novgorod Oblast after the mayoral election, alleged during a recent appearance on local television that Governor Ivan Sklyarov phoned election officials, asking them how many votes they shaved off Andrei Klimentev's total. The official tally indicated that Klimentev won the race by just 2 percent of the vote, but Lebedev says Klimentev's real margin of victory was 10 percent. Prosecutors have questioned Lebedev and the former chairman of the city electoral commission in connection with the allegations, and are expected to question the governor soon. Sklyarov, a former mayor of Nizhnii Novgorod, supported Vladimir Gorin, who finished second to Klimentev in the March election. LB

DUMA DEPUTY MAY TAKE KLIMENTEV'S PLACE IN NIZHNII ELECTION

Communist Duma deputy Vladimir Semago told ITAR-TASS on 30 July that he may compete in the Nizhnii Novgorod mayoral election this September in place of Klimentev, who is currently serving a prison sentence. Semago assisted Klimentev's mayoral campaign earlier this year and criticized the cancellation of the election. He later defended Klimentev in court. He has been collecting signatures to register as a candidate in the September election in case Klimentev is unable to compete or withdraws his candidacy. Semago, a wealthy businessman who owns a casino and other properties in Moscow, has been a thorn in the side of the Communist leadership since his election to the Duma. He has periodically criticized the party's strategy and has suggested that top officials may be involved in corruption (see "RFE/RL Newsline," 7 August and 23 October 1997). LB

KRASNODAR LEGISLATURE SEEKING TO LIMIT GOVERNOR'S POWERS

The Krasnodar Krai legislature has passed an amendment to the regional law on the budget, which would limit the governor's control over regional expenditures, ITAR-TASS reported on 30 July. Governor Nikolai Kondratenko has slashed some budget items this year without obtaining approval from the legislature, and cuts have not affected all programs equally. Education programs have been especially hard hit. Legislators also charge that the governor has used his power over budget allocations to benefit well-connected firms. LB

LUZHKOV OVERSPENDS ON WORLD YOUTH GAMES BUDGET

The city of Moscow spent 240 million rubles ($40 million) on July's World Youth Games, some five times the planned amount, Moscow finance head Serafim Yarnykh told reporters on 30 July. The city constructed an Olympic Village for the 7,000 participating teenage athletes, bought 200 new buses for the event, and stationed 32,000 police in Moscow for the duration of the games, Reuters reported. In September 1997, Mayor Yurii Luzhkov's government staged elaborate and expensive festivities for Moscow's 850th birthday. BT

DETAILS OF KIRIENKO-MASKHADOV MEETING STILL UNCLEAR

The venue and agenda for the planned 1 August meeting between Russian Prime Minister Kirienko and Chechen President Aslan Maskhadov is still unclear, RFE/RL's Grozny correspondent reported on 31 July. Maskhadov's press spokesman Mairbek Vachagaev declined to confirm that the talks will take place in the Ingushetian capital, Nazran, while a senior Russian Interior Ministry official told ITAR-TASS on 31 July that the probable venue will be the Dagestani capital, Makhachkala. The talks are likely to focus on economic aid for Chechnya rather than political issues. Viktor Ilyukhin, chairman of the Duma Security Committee, told ITAR-TASS on 30 July that Kirienko should demand the disarming of all Chechen forces that have not pledged loyalty to Maskhadov, adding that the Russian premier should offer the assistance of federal forces in achieving that objective. LF




TAJIK OFFICIAL DIES FROM INJURIES

Ali Imomnazrov, the deputy head of the Tajik Customs Committee, died on 31 July from injuries sustained when a bomb planted in his car exploded the previous day, ITAR-TASS reported. The Tajik Interior Ministry has so far not commented on the investigation. BP

TAJIK OPPOSITION RECEIVES GOVERNMENT POSTS

President Imomali Rakhmonov met with United Tajik Opposition (UTO) leader Said Abdullo Nuri on 30 July to discuss appointments of UTO members to posts in the government, RFE/RL correspondents reported. Rakhmonov approved Shodi Kabirov as minister of agriculture, Salamshah Muhabbatov as chairman of the State Committee for Oil and Gas, Muhammadjon Davlatov as chairman for the State Committee for Precious Stones, Muhammadruzi Iskandarov as chairman of the State Committee on Emergency Situations and Civil Defense, and Dovudkhoja Islomov as chairman of the State Committee for Milk and Meat. However, Rakhmonov rejected the leader of the Islamic Renaissance Party, Muhammadsharif Himmatzoda, as deputy prime minister and UTO field commanders Mirzo Ziyoyev as defense minister and Amirkul Shukurov as chairman of the State Committee of Industry. The rejection of the last three will be discussed again by the two leaders in the near future. BP

WORLD BANK APPROVES LOAN TO TAJIKISTAN

The World Bank announced on 30 July that it has approved a $50 million loan to Tajikistan, ITAR-TASS reported. The loan is part of $165 million loan package over three years and is to be used for economic reform. BP

LORTKIPANIDZE ACCEPTS POST OF GEORGIAN STATE MINISTER

Vazha Lortkipanidze told journalists in Tbilisi on 30 July that he has accepted the post of minister of state offered him by Georgian President Eduard Shevardnadze on 27 July. He said his first priority would be to expedite economic reform. Lortkipanidze rejected the allegations of opposition politicians that he is "pro- Russian." He said both Georgia and Russia need to take steps to elevate bilateral relations to a new level. Lortkipanidze declined to name possible candidates for his new cabinet but did not rule out creating a coalition government, according to Caucasus Press. LF

UN EXTENDS OBSERVERS' MANDATE IN GEORGIA

The UN Security Council has extended until 31 January 1999 the mandate of the UN Observer Mission in Georgia, which expires on 31 July, Reuters reported on 30 July. The Security Council also adopted a resolution condemning the "deliberate destruction of houses by Abkhaz forces with the apparent motive of expelling people from their home areas." It stopped short, however, of complying with the Georgian leadership's request that it condemn the punitive measures against ethnic Georgians in Abkhazia's Gali Raion as genocide. LF

RUSSIA WANTS GEORGIAN DECISION ON CIS PEACEKEEPERS

Russia's special envoy for the Abkhaz conflict, Lev Mironov, told Interfax on 30 July that Moscow wants the Georgian leadership to state clearly whether or not it wishes the mandate of the CIS peacekeeping force deployed along the border between Abkhazia and the rest of Georgia to be extended. That mandate expires on 31 July. Abkhaz President Vladislav Ardzinba has written to Russian President Yeltsin to request that the peacekeepers' mandate be prolonged. But several prominent Georgian political figures have argued that there is no sense in doing so if the peacekeeping force is unwilling or unable to protect the Georgian population in Gali. LF

RUSSIA, AZERBAIJAN ISSUE JOINT STATEMENT ON CASPIAN

A statement issued on 30 July summarizing Russian First Deputy Foreign Minister Boris Pastukhov's talks with Azerbaijani leaders notes that Moscow and Baku have moved closer to an agreement on dividing the sea bed of the Caspian but continue to differ over dividing the waters and surface area of the sea, ITAR-TASS reported. Pastukhov told journalists before leaving Baku on 29 July that the agreement concluded between Russia and Kazakhstan earlier this month on delineating the northern sector of the sea will take effect only after all five littoral states have signed a convention on the Caspian's status. LF

AZERBAIJAN PLEDGES TO ABOLISH CENSORSHIP

Meeting in Washington on 29 July with National Democratic Institute personnel, Shahin Aliev, a legal adviser to Azerbaijani President Heidar Aliev, announced that within seven to 10 days an official decree will be passed abolishing censorship, Turan reported the next day. LF

DASHNAK PARTY CRITICIZES ARMENIAN PRESIDENT

Meeting with journalists on 30 July, Dashnak Party (HHD) leaders said that the party approves most, but not all aspects of President Robert Kocharian's policy, RFE/RL's Yerevan bureau reported. Vahan Hovanissian, who also is an aide to Kocharian, and Armen Rustamian criticized Kocharian's personnel policy, with the latter claiming that 22 "discredited" officials who served under the previous leadership still occupy prominent positions. Hovanissian took issue with Kocharian's assertion that there are no longer any political prisoners in Armenia, noting that several persons convicted in two notorious trials in 1996- 1997 remain in prison. The HHD was one of several parties that aligned in the Justice and Unity bloc to support Kocharian's candidacy in the March presidential election. On 27 July, a two-week congress of the HHD's Armenia-based organization concluded with the election of a new nine- member "supreme body." LF




PENTAGON TO PROLONG SUBSIDIES FOR UKRAINIAN DISARMAMENT

The U.S. Defense Department will continue to provide financial assistance to Ukraine to destroy its mass destruction weapons, ITAR-TASS reported on 30 July. Ukraine will receive $76.7 million to destroy SS-19 missiles, some 40 strategic bombers, and some 1,000 cruise missiles. The Pentagon will also allocate $630,000 to help tighten Ukraine's control over nonproliferation of arms outside its borders and $73 million for conversion of defense enterprises. Over the past six years, Ukraine has received $520 million in such aid. JM

MINISTER SAYS IMF TO APPROVE $2.5 BILLION LOAN TO UKRAINE

Economy Minister Vasyl Rohoviy has said the IMF is expected to approve a $2.5 billion loan to Ukraine, Interfax and AP reported on 30 July. According to Rohoviy, an IMF mission currently in Kyiv agrees that Ukraine has met most preliminary conditions for the loan. IMF experts welcomed the government's steps to draft a realistic budget, increase budget revenues, and reduce tax breaks. If their recommendation is positive, the IMF board will make a final decision on the loan in late August or early September, Rohoviy told Interfax. Two days earlier, the IMF mission chief said there are "significant successes" in Ukraine's economic reform but several issues must still be resolved. JM

DIRECTOR OF BELARUSIAN-LANGUAGE LYCEE SACKED

The Belarusian Education Ministry has replaced Uladzimir Kolas, the director of the Belarusian Lycee for the Humanities, with a ministry appointee, RFE/RL Belarusian Service informed on 30 July. The lycee is the only high school in Minsk in which all subjects are taught in Belarusian. Over the past two years, students and their parents have protested the government's plan to merge the lycee with another high school. They suspect the government's real intent is to abolish the school. On 14 July, the government changed the status of the school but pledged to leave its staff intact. The lycee's deputy director, Lyavon Barscheuski, who is also acting chairman of the opposition Belarusian Popular Front, said Kolas's replacement by someone "more obedient to the government" is a step toward closing down the school. JM

BELARUS TO ENCOURAGE BEST HARVEST WORKERS...

The Belarusian government will hold a competition this year aimed at rewarding the best harvest workers, ITAR- TASS reported. A 31 July resolution says 12 automobiles, 24 motorcycles, 24 refrigerators, and 138 television sets will be awarded to the best harvester operators and truck drivers. The government will also give medals, diplomas, and money awards to outstanding kolkhoz workers. The Finance Ministry is to allocate 16 billion Belarusian rubles ($380,000) in incentives for harvest workers. JM

...TO ADOPT 'SPECIAL OPERATION MODE' FOR HARVEST TIME

Belarusian President Alyaksandr Lukashenka told a televised nationwide conference on 31 July that beginning 3 August, the country will switch over to a "special operation mode." "All forces will be thrown into the battle for harvesting crops," ITAR-TASS quoted Lukashenka as saying. According to the president, the battle will continue until 1 September, when "basic agricultural crops" are expected to be harvested. Lukashenka said "it's is necessary to have bread" in order to preserve the country's sovereignty. "We know what is going on around the republic: we are being perpetually kicked everywhere; everybody is trying to suppress Belarus," he commented. Lukashenka announced that his special representatives will be sent to Belarusian regions on 3 August to directly oversee the harvest. JM

BIRKAVS SAYS RUSSIA CANNOT OBJECT TO BORDER DEMARCATION

Speaking to BNS on 30 July, Latvian Foreign Minister Valdis Birkavs said Russia can have no objections to Riga's decision to begin the unilateral demarcation of their joint border (see "RFE/RL Newsline," 30 July 1998). He stressed the demarcation will go ahead along those parts of the border that are not contested by either country. In addition, he said, the "strengthening of the border" will be advantageous to both Latvia and Russia as the main goals of that move are to eliminate smuggling and illegal immigration. Meanwhile, Russian Foreign Ministry officials declined to comment on Birkavs's statement, saying they do not have "full or accurate" information. The ministry has asked the Russian embassy in Riga to make a detailed report on the Latvian minister's remarks. JC

AMONG BALTS, LITHUANIANS MOST SUPPORTIVE OF NATO MEMBERSHIP

According to a survey carried out by the Saar Poll company in March, Lithuania is the most enthusiastic of the Baltic States about NATO membership, Interfax reported on 30 July. Some 55 percent of respondents in Lithuania welcomed government efforts to join the alliance, while the corresponding figures for Estonia and Latvia are 54 percent and 47 percent. Andres Saar, the head of the Saar Poll company, said Lithuania is more upbeat about joining NATO owing to a successful campaign on clarifying the issue and the "more homogeneous" composition of the population. In Estonia, there is more enthusiasm for simultaneous membership in NATO and the EU (30 percent) than in Latvia (26 percent) and 23 percent (Lithuania). Support for a referendum on joining NATO totaled 51 percent in Lithuania, 43 percent in Estonia, and 37 percent in Latvia. JC

LITHUANIAN GOVERNMENT FIXES MINIMUM GRAIN PRICES

The Lithuanian government has approved the minimum prices at which processing companies can purchase grain from farmers, BNS reported on 29 July. It also allocated 40 million litas ($10 million) from the Privatization Fund to subsidize purchases at the new prices. Another 5 million litas in subsidies will come from the Countryside Support Fund. Last week, farmers had threatened nationwide protests if their demand for minimum purchase prices were not met. JC

GDANSK SHIPYARD APPEALS COURT DECISION ON SALE

The bankrupt Gdansk shipyard has filed an appeal against a court ruling whereby the shipyard would be sold to a consortium that includes the Gdynia shipyard (see "RFE/RL Newsline," 24 July 1998), AP reported. The court ruling said the Gdansk shipyard board failed to prove it can pay off the shipyard's debt of 628 million zloty ($182 million) and that the Gdynia shipyard's offer is the "most profitable and credible." The consortium has reportedly pledged to pay $29 million for the Gdansk shipyard and spend $100 million by 2010 on modernization and creating 1,500 new jobs. The decision drew criticism from the ruling Solidarity Electoral Action, six of whose deputies quit the parliamentary caucus to protest the government's failure to bail out the cradle of the Solidarity movement. JM

CZECH-GERMAN TENSIONS OVER ZEMAN REMARKS

Czech government spokesman Libor Roucek on 30 July said Prime Minister Milos Zeman has "no reason to apologize" over remarks made on 25 July criticizing the participation of the Sudeten German Expellee Organization in the Czech- German Discussion Forum, established under the 1997 Czech-German declaration. Zeman said that the organization was not among those that supported the declaration and that he can see "no reason" why it should be represented in the forum, "just as there are no representatives of the Communists or the Republicans [who also opposed the declaration] on our side." German Finance Minister Theo Waigel demanded an apology from Zeman, and Foreign Minster Klaus Kinkel said in Berlin after meeting with his Czech counterpart, Jan Kavan, that he finds Zeman's comparison "unacceptable", CTK reported. MS

MECIAR SAYS ETHNIC HUNGARIANS HAVE ENOUGH RIGHTS IN SLOVAKIA

Slovak Prime Minister Vladimir Meciar said on 30 July that ethnic minorities in Slovakia, including Hungarians, enjoy more widespread rights than the average minority in Europe, Hungarian media reported, citing an interview broadcast on Slovak Television. Meciar told two British journalists that "the survival of the Hungarian minority is guaranteed by the high birth rate of Gypsies, who consider themselves Hungarian." In other news, visiting Italian Prime Minister Romano Prodi on 30 July told journalists in Bratislava that he will support Slovakia's bid to join the EU no matter who wins the parliamentary elections in September. Asked whether he agreed with the U.S. and EU concerns over the elections, Prodi said in the presence of Meciar that during visits abroad, his main principle is "never to interfere in the internal affairs" of the other country. MSZ/MS

FIDESZ ELECTS BUDAPEST MAYORAL CANDIDATE

The Budapest board of the Federation of Young Democrats- Hungarian Civic Party (FIDESZ-MPP) on 30 July elected Janos Latorcai as mayoral candidate in the fall local elections. Latorcai was recommended by the FIDESZ-MPP national board and the party's steering committee. Tamas Tirts, chairman of the Budapest board, said the Hungarian Christian Democratic Alliance, the Hungarian Democratic Forum, and the Independent Smallholders' Party had also expressed support for Latorcai. MSZ




SEARCH UNDER WAY FOR REFUGEES IN KOSOVA

Teams from the office of the UN High Commissioner for Refugees and other international relief workers searched remote areas of Kosova for refugees on 30 July. Investigators found one group of 500 Kosovars, including women and children, in the hill country near Malisheva, an RFE/RL correspondent reported from Prishtina (see "RFE/RL Newsline," 30 July 1998). Another large group of civilians took refuge in a railroad tunnel, CNN noted. Wolfgang Ischinger, who is the German member of a EU delegation visiting the region, said that Yugoslav President Slobodan Milosevic promised to help the refugees go home but Ischinger added that Milosevic will first need to implement "additional confidence-building measures." Ischinger said that he and his EU colleagues found a "wasteland" in Kosova and were "shocked" at what they saw. In Geneva, the UNHCR's Sagato Ogata told CNN that the Kosovar refugee situation is quickly becoming "catastrophic." PM

ANOTHER SREBRENICA IN THE MAKING?

The Kosova Helsinki Committee said in a statement issued in Prishtina and Vienna on 31 July that it is concerned about "reports of victims and other casualties of the Serbian offensive and reported massacres of the [ethnic] Albanian civilian population in the towns of Rahovec...[and] Malisheva." The text added that "a wave of reprisals" has already taken place in Rahovec, "with the basic message that [ethnic] Albanian civilians will die wherever UCK guerrilla fighters achieve a foothold." The committee and International Helsinki Federation for Human Rights, the statement continued, fear that the ongoing Serbian siege of Junik near the Albanian border could lead to "a Srebrenica-like situation, with massive killings of besieged [ethnic] Albanian civilians." PM

RUBIN SAYS MILOSEVIC HOLDING UP KOSOVAR TALKS. U.S.

State Department Spokesman James Rubin said on 30 July that recent negotiations between U.S. diplomats and representatives of various Kosovar groups have resulted in an agreement that the Kosova Liberation Army (UCK) will be "directly or indirectly" represented in any future negotiations on the province's future. Rubin added that it is Milosevic's fault that the Kosovars have not yet agreed on the exact composition of their team. "We hold the Serbian authorities responsible for the civilian casualties and the civilian disruptions and murders...resulting from these military operations. And we hold [Milosevic specifically] responsible. And whether he is trying to sabotage the negotiating process [by continuing his armed crackdown] is a question only he can answer." Milosevic said in Belgrade on 30 July that the Serbian offensive is over, but Kosovar and Western news media reported that it is continuing. PM

KINKEL WARNS UCK

German Foreign Minister Klaus Kinkel told the "Berliner Zeitung" of 31 July that the UCK's continuing military actions could cost the Kosovars the sympathy of the international community that they currently enjoy. He warned the UCK to drop its "three illusions," namely that it can obtain independence, NATO support, and a military victory over the Serbs. The minister added that NATO could help to guarantee any future agreement on Kosovar autonomy because "Milosevic is not in a position to restore peace and order" to Kosova. Kinkel said that NATO is considering a possible "preventive deployment" of forces to Albania within the framework of the Partnership for Peace Program. He did not elaborate. PM

ANOTHER EXPLOSION IN BOSNIA

An explosive device went off in Muslim-controlled Travnik on 31 July across the street from a joint Muslim and Croatian police station. The blast killed an ethnic Croat policeman and injured a child. Police are investigating. It is the fifth explosion in Bosnia in recent days, AP reported (see "RFE/RL Newsline," 30 July 1998). Meanwhile in Sarajevo, spokesmen for SFOR said that a contingent of 350 troops and 100 vehicles will arrive in the Croatian port of Ploce on 2 August. The new forces will be based in Sarajevo and have been trained in ensuring public order and facilitating the return of refugees. PM

SERBS RETURN TO CROATIA

An initial group of 26 Serbs returned on 30 July from federal Yugoslavia to the Dvor na Uni region of Croatia near the Bosnian frontier. A Croatian government spokesman said in Sisak that some 300 Serbs have gone home from Yugoslavia recently and that an additional 5,300 have registered with the office of the UNHCR in Yugoslavia to do so. The international community has repeatedly made it clear to Croatia that its future integration into Euro-Atlantic structures will depend on increased democratization and on the ability of refugees to go home. PM

CROATIA PROTESTS SLOVENIAN POWER CUT

In Zagreb, officials of the state power company said on 30 July that the Croatian economy will not be seriously affected by the Slovenian authorities' move earlier that day to stop electricity supplies to Croatia from the nuclear power facility at Krsko. The Croatian officials called the Slovenian decision "illegal and unauthorized," Croatian media reported. Slovenian officials claim that Croatia owes about $15 million for previous deliveries from Krsko. Under communism, Croatia helped finance the construction of the facility, which is the former Yugoslavia's only nuclear power plant. Slovenia recently recognized Croatia's right to 50 percent co-ownership of Krsko, but tensions over its financing and use have continued. PM

ALBANIAN PREMIER ORDERS ACTION AGAINST ORGANIZED CRIME

Fatos Nano, at a meeting of the government's National Security Committee on 31 July in Tirana, ordered Interior Minister Perikli Teta to prepare a detailed plan by 20 August for fighting organized crime. Nano stressed that the government must pay special attention to corruption within the police, which he said was in some cases "at the center of organized crime." Nano urged the Ministries of Interior and Defense and the secret service to cooperate more closely in fighting crime, especially in the northeast, "Gazeta Shqiptare" reported. In particular, the northeastern regions of Tropoja, Bajram Curri, and Kukes have become notorious for lawlessness. Armed gangs, arms smugglers, and soldiers of the UCK operate freely there. FS

FBI TIRANA OFFICE ROBBED

Unidentified individuals broke into the office of the U.S. Federal Bureau of Investigation and stole one passport and more than $2,500 in cash on 29 July, "Shekulli" reported on two days later. A police spokesman said that the FBI uses the office, located in central Tirana's Palace of Congresses, only for translating Albanian newspapers. The FBI also helps train Albanian police and assisted its Albanian counterpart in investigating an influx of forged $100 bills earlier this year. FS

ROMANIAN EDUCATION MINISTER STILL OPPOSED TO HUNGARIAN UNIVERSITY

Andrei Marga said in a press release on 30 July that the debate on setting up a Hungarian-language university in Transylvania has been "regrettably transformed into a state problem." Marga said he is still opposed to the idea and that "multi-culturalism", as promoted by the Babes-Bolyai Cluj university when he was its dean has proved a "viable solution" for meeting the requirements of ethnic minority education. In an apparent response to the Hungarian announcement that Budapest is ready to finance the Hungarian-language university, Marga said that higher education in Romania is in accordance with the decisions of the parliament. He also said that no international institution has stated it favors "educational separatism" in Romania. MS

MOLDOVAN DISPUTE OVER BULGARIAN NUCLEAR WASTE TRANSIT

The Moldovan government says it supports the Bulgarian request to approve the transit of nuclear waste from the Bulgarian Kozloduy plant to Russia via Moldova and Ukraine, but a majority among the parliamentary deputies are opposed to such an arrangement, RFE/RL's Chisinau bureau reported on 30 July. Deputy Premier Nicolae Andronic said that the nuclear waste accumulated at Kozloduy might "lead to a nuclear disaster" at a site located only some 600 kilometers from Chisinau. Environment Protection Minister Arcadie Capcelea opposes the transit, saying it would be in breach of Moldovan legislation. In other news, the parliament on 30 July approved the resignation of Prosecutor-General Dumitru Postovan, submitted in early July. Parliamentary chairman Dumitru Diacov submitted the candidacy of Chisinau Prosecutor-General Valeriu Catana, but the proposal met with opposition from the Democratic Convention of Moldova and the Party of Democratic Forces. MS

BULGARIA OPPOSES KOSOVA INDEPENDENCE

President Petar Stoyanov on 3O July said in Toronto that an escalation of the conflict in Kosova might negatively impact on Bulgarian reform, AP reported. Foreign Ministry spokesman Radko Vlaikov said the previous day that Bulgaria "shares the views of the international community" about the need to solve the conflict in Kosova, "including the granting of a broad autonomy" to the region. "At the same time," he added, "we agree with the international community that there can be no question of granting independence," BTA reported. Vlaikov said that the Kosova Albanians' demands for independence are "indefensible" from the point of view of international law and a "redrawing of borders is inadmissible." MS

BULGARIA, IMF REACH LOAN ACCORD

The IMF and the Bulgarian government on 30 July reached a "general agreement" on a three-year loan to Bulgaria, AP reported. The amount has yet to be announced. Chief IMF negotiator Anne McGuirk told journalists she hopes a memorandum of understanding will be signed on 31 July. That memorandum will have to be approved by the IMF board at its meeting in September. In other news, Reuters reported on 30 July that Yordan Sokolov, chairman of a parliamentary commission on crime and corruption, has opened an investigation into Air Sofia. Sokolov said that the investigation was necessary because of numerous accidents in which the company has been involved and accusations that Air Sofia was involved in a cigarette smuggling scandal in April. MS




KLAUS-ZEMAN PACT COULD END CZECH INSTABILITY


by Juergen Herda

The anger in some political circles over the agreement between Milos Zeman's Social Democrats (CSSD) and the Civic Democratic Party (ODS) of Vaclav Klaus is largely unjustified. Many critics have nobody but themselves to blame that the two rivals closed a deal allowing Zeman to form a government with the toleration of his conservative rival.

As the head of the party that won the most votes in the June elections, Zeman received a mandate from President Vaclav Havel to form a government. The Social Democrat then did everything in his power to try to form a workable coalition with two smaller parties: Josef Lux's Christian Democrats (KDU-CSL) and the Freedom Union (US) of Jan Ruml and Vladimir Mlynar. When it was clear that Lux would agree to such a coalition, Zeman's hopes of forming a government backed by a majority in the parliament hinged on the Freedom Union. Ruml and Mlynar, however, turned down all his proposals. Zeman had already gone out of his way to accommodate the smaller parties by offering to give the prime minister's job to Lux, four cabinet jobs to the Union , and a veto right on all major issues to each of his two coalition partners.

The reason for the Freedom Union's stance was not-- as the party's leaders claimed--because of the party's conservative ideological principles but rather because of a miscalculation. The Union leadership expected that Zeman would fail to form a government and that Havel would then give Klaus the mandate to do so. That would open the way for a revival of the former Klaus government, albeit with some new faces around the cabinet table. But that did not happen, and the Union leadership missed an opportunity to advance its program through bargaining within a three- party coalition in which Zeman had promised that all policies would be negotiable.

Once Zeman's efforts to cut a deal with the KDU-CSL and the Freedom Union had failed, the leaderships of the CSSD and ODS signed a document on 9 July, called the Agreement on Establishing Stable Political Relationships in the Czech Republic. The pact set down the basic rules for an arrangement in which the CSSD would form a minority government tolerated by the ODS.

The deal gave Klaus's party the chairmanship of both houses of the parliament plus a pledge that the two parties would divide up legislative committee chairmanships among themselves. The CSSD and ODS agreed in the interest of political stability not to support a vote of no confidence in the government and not to change coalition partners.

The centerpiece of the agreement--and its most controversial aspect--was a pledge to introduce constitutional changes within one year. The most important of these would be to replace the current electoral system, which is based on proportional representation, with one based on the principle of first-past-the-post. The leaders of the ODS and CSSD noted that the results of the June vote made it impossible to easily form a government backed by a parliamentary majority and argued that the wrangling over possible coalitions gave undue influence to the smaller parties and to Havel. The changes, the ODS and CSSD leaderships added, would give power only to those who win the most votes.

Lux and Ruml were naturally alarmed by this agreement, which would mean that their parties could be completely shut out of the parliament. And the new cabinet did not meet with universal approval. Critics noted that the average age of its members is rather high and that it contains no women. The two most popular Social Democrats, namely Petra Buzkova and Stanislav Gross, were not included in the government and took prominent jobs in the parliament instead. The president's office, in particular, raised objections to the appointment of Jan Kavan as foreign minister on the grounds that many suspect him of having had contacts with the former Czechoslovak secret service during his years as a political in exile in the U.K. Zeman, for his part, rejected all the criticism and pointed out that there is no evidence against Kavan that could lead to opening a court case against him.

Supporters of the Zeman-Klaus pact, moreover, argue that it will provide stability and hence facilitate the processes of political and economic transformation and the integration of the Czech Republic into Euro-Atlantic structures. With a clear majority in the parliament, the two ideological rivals will be able to join forces to tackle a host of sensitive issues that no one party would want to take on alone.

Once they have instituted the planned constitutional changes, the ODS and CSSD can end their agreement and call new elections. Then the voters will be able to choose between social democratic and conservative alternatives. Pluralism will be served because different interest groups will be able to advance their causes as factions within the large parties, as is the case in the U.S. and other countries with a two-party system. And the key to a healthy democracy lies in a functioning arrangement of checks and balances, not in the number of parties that sit in the parliament. Translated from the German by Patrick Moore. The author is an editor of the weekly "Prager Zeitung" and a writer on Central European political affairs.


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