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Newsline - September 17, 1998




INFLATION PICKS UP SPEED

Consumer prices grew more than 43 percent in the first 14 days of September, Russian agencies reported. In August, inflation reached 15 percent. According to Otto Latsis writing in "Noviye izvestiya" on 16 September, consumer prices rose only 5.6 percent last year, and an increase like that witnessed so far this month was last seen in February 1992. "The 15 percent decline in the population's real income after Black Tuesday of 1994 will seem a trivial scratch compared with the social trauma that is shaping up today," Latsis predicted. "The main achievement of economic policy of the last six-and-a-half years--taming inflation--has been lost." On 16 September Bloomberg reported that Standard & Poor's lowered Russia's credit rating from CCC to CCC-, a level lower than that of Pakistan. JAC

PRIMAKOV FORMS 'MIXED' CABINET

Prime Minister Yevgenii Primakov on 16 September rounded out his cabinet by selecting two moderate reformers, Our Home is Russia deputy Vladimir Ryzhkov and acting Minister for Science and Technology Vladimir Bulgak, as deputy prime ministers. Although the division of labor between the deputy prime ministers has not yet been finalized, Bulgak will likely oversee communications and some industry ministries, while Ryzhkov will take over the post of deputy prime minister in charge of social issues from Oleg Sysuev, who will become first deputy director of the presidential administration, according to Interfax. ITAR-TASS reported that Ryzhkov's appointment won support from both Communist Party leader Gennadii Zyuganov and People's Power leader Nikolai Ryzhkov. Ryzhkov himself took more than a little persuading. According to "Moskovskii komsomolets" on 17 September, he had to be asked seven times to join the government. JAC

GOVERNORS TO JOIN GOVERNMENT

"Nezavisimaya gazeta" on 16 September concluded that the country's most recent economic crisis has given regional ruling elites new influence on the formation of national policy. The newspaper added that Primakov has already promised to include regional representatives in his cabinet's Presidium. According to Interfax, Primore Governor Yevgenii Nazdratenko is likely to be named deputy prime minister in charge of regional policy, while another regional governor is likely to become deputy prime minister in charge of agriculture. According to the newspaper, "if the presence of the regional leaders is not just for show..., then the real winner of the current crisis is not the State Duma or the Communist Party but the party of the governors." JAC

KREMLIN DIVIDED AGAINST ITSELF?

The Russian press has voiced some concern about the diverse composition of the Primakov cabinet. "Izvestiya," for example, on 17 September concluded that once the Duma begins debate on the 1999 budget, Russia will learn whether cabinet members with such opposing views--First Deputy Prime Minister Yurii Maslyukov and Deputy Prime Ministers Aleksandr Shokhin and Ryzhkov--will be able to quickly create effective policies and garner reliable political support. JAC

OTHER SPOTS FILLED

President Boris Yeltsin has named General Konstantin Totskii, until now head of the Federal Border Service Academy, as chief of the Federal Border Service. On 17 September, Interfax reported that Tatyana Paramanova, a former acting chair of the Central Bank and head of the Russian National Commercial Bank, has been named first deputy chair of the Central Bank, replacing Sergei Aleksashenko. Meanwhile, Deputy Secretary of the National Security Council Viktor Melnikov has been relieved of his duties, according to ITAR-TASS. JAC

TAX SERVICE TO FORCE BANKRUPTCY ON DEADBEATS

Interfax on 16 September reported that the Federal Tax Service will begin bankruptcy proceedings against 28 organizations that owe the government back taxes. Frustrated tax inspectors have reportedly exhausted all other methods to collect overdue taxes from these companies. JAC

INVESTORS GET EXTENSION

The Russian government on 17 December extended the deadline by one week (to 25 September) for investors to decide whether to accept ruble bonds or a combination of ruble and dollar bonds in exchange for the short-term treasury bonds on which Russia earlier defaulted. Bloomberg reported that some investors are reluctant to make a choice because they believe that Russia will offer local banks preferential treatment. According to ITAR-TASS on 16 September, 25 major Western banks, including Goldman Sachs, Deutsche Bank, Nomura, and Credit Suisse First Boston, set up a group to demand equal treatment and conduct joint negotiations with Russia over rescheduling its debts. The same day the president of the Association of Russian Banks, Sergei Yegorov, told reporters that Russia's money supply should be increased to at least 20 percent of GDP if the country's monetary system is to function properly. JAC

BEREZOVSKII SAYS YELTSIN'S TIME IS UP

In an interview with BBC excerpted by "Komsomolskaya pravda" on 16 September, financial magnate and CIS Executive Secretary Boris Berezovskii said that the era of President Yeltsin is over and that he should go. He added "Of course, that is conditional on what the alternative is, but I think that today we have alternatives better than him." Berezovskii also said that Yeltsin's daughter Tatyana Dyachenko "agrees that many of the problems we have stem from the president's weakness." JAC

LEBED'S RECORD EXAMINED

Russian Television on 16 September evaluated the first three months of Krasnoyarsk Governor Aleksandr Lebed's administration. It reported that while Lebed promised to cut by 30 percent the number of staff employed in the territory's administration, the number of deputy governors and official cars has almost "doubled." The local elite has reportedly been offended by Lebed's preference for personnel from Moscow and other parts of Russia. JAC

RUSSIAN ICBM'S HITTING TARGETS

Russia completed its summer missile testing program with the successful launch of an intercontinental ballistic missile on 16 September. A RS-12M Topol missile, also known as a SS-25, took off from Plesetsk in northern Russia, hitting a target on the Kamchatka peninsula. ITAR-TASS quoted Strategic Missile Force Commander General Vladimir Yakovlev, who said that "all 57 launches of the Topol missiles have been successful." On 17 September, the "Moscow Times" reported that Russia has scored another success in its campaign to convert its ballistic missile fleet into commercial launch vehicles. According to the newspaper, the Moscow-based Kosmotras International Space Co. signed a contract with a British consortium for the launch of its commercial satellite on a converted RS-20 ballistic missile, also known as the SS-18 Satan rocket. The new name for the converted rocket is Dnepr. JAC

COSSACKS PERSECUTE PROTESTANTS

The UK-based Keston News Service on 16 September reported that two uniformed Cossacks in Anapa Krai broke up a group of Adventists who had been giving away bibles in a public park. They confiscated 60 bibles and detained the leader, reportedly giving him 20 lashes with an iron-tipped whip. Sergei Serebrov, a local Cossack commander, told Keston that if the Protestants continue to engage in public proselytism, then the Cossacks will whip them. JAC

SVR REFUSES TO DENY LEWINSKY IS ON STAFF

ITAR-TASS on 16 September reported that the Chinese magazine "Guandong Writer" has published an article alleging that former White House intern Monica Lewinsky is a Russian spy. When asked about the report, Russian Foreign Intelligence Services spokesman Yurii Kobaladze responded with some amusement, saying "we do not comment on allegations of whether individuals belong to Russia's intelligence services." JAC

NEW CHECHEN PROSECUTOR-GENERAL APPOINTED

Following a one-month debate, the Chechen parliament has named its speaker's aide for legal affairs, Mansur Tagirov, as acting prosecutor-general, ITAR-TASS reported on 16 September. That appointment must be endorsed by President Aslan Maskhadov, who is currently abroad. Tagirov replaces Khazavh Serbiev, whom Maskhadov dismissed for incompetence (see "RFE/RL Newsline," 18 August 1998). ITAR-TASS predicted that Tagirov will face difficulties in his new post as the staff of the Prosecutor-General's office are on strike to demand unpaid wages for the past two years. LF

CORRECTION:

"RFE/RL Newsline" on16 September quoted an incorrect Western agency report saying that "in the first eight months of 1998, Russian gold production dropped from 66.4 million tons during the same period last year to 59.4 million tons." The correct figures are 66.4 tons and 59.4 tons.




AZERBAIJANI OPPOSITION, POLICE PREPARE FOR NEXT DEMONSTRATION

Azerbaijan's opposition Movement for Democratic Elections and Electoral Reform has presented to the Baku Mayor's Office the planned route for its protest march on 20 September, Turan reported on 16 September. The route avoids the city's main Azadlyg Square, where demonstrators were forcibly prevented by police from convening on 12 September. Interior Minister Ramil Usubov said on 16 September that the would-be participants in that demonstration had been armed with bottles and stones. He warned that police would prevent the planned 20 September march. Also on 16 September, an anonymous spokesperson for the OSCE's Office for Democratic Institutions and Human Rights (ODIHR) told Turan that official Azerbaijani media had misquoted several statements by ODIHR director Gerard Stoudman on the opposition's activities. He denied that Stoudman had said the 11 October presidential elections will be democratic. LF

OSCE MINSK GROUP IN BAKU...

The U.S., Russian, and French co- chairmen of the OSCE Minsk Group held talks with Azerbaijani President Heidar Aliyev in Baku on 15 September, ITAR-TASS reported. Azerbaijani President Heidar Aliyev said that he regrets the hiatus in the settlement talks, which he said is in the interest of neither Azerbaijan nor Armenia. No further details of the talks were disclosed. LF

...AND YEREVAN

Following what he termed "fruitful and constructive" talks with President Robert Kocharian and Foreign Minister Vartan Oskanian on 16 September, French co-chairman Georges Vaugier told journalists in Yerevan that he and his two colleagues have brought new proposals for resolving the conflict, RFE/RL's Yerevan bureau reported. While he gave no details about those proposals, Vaugier suggested that the Azerbaijani leadership may be prepared to retreat from its previous insistence that the best it can offer Nagorno-Karabakh is the highest possible degree of autonomy within Azerbaijan. Oskanian had told journalists on 15 September that Yerevan will insist neither on independence for the disputed enclave nor on its unification with Armenia, but he excluded any subordination of Karabakh to the central Azerbaijani authorities, according to ITAR-TASS. Armenian Foreign Ministry spokesman Arsen Gasparian told RFE/RL that the Armenian side stressed Yerevan is prepared to restart negotiations without any preconditions. LF

ARMENIAN PARLIAMENT APPROVES PROPOSED AMNESTY

The Armenian parliament on 15 September approved an amnesty proposed by President Robert Kocharian to mark the seventh anniversary of Armenia's independence from the USSR, RFE/RL's Yerevan bureau reported. Under the amnesty, some 920 prisoners, or 15 percent of the prison population, will be released. Another 240 will have their sentences shortened, according to Justice Minister David Harutiunian. The amnesty does not extend to persons jailed for murder, rape, or other violent crimes or to repeat offenders who have been amnestied in the past. LF

FORMER ARMENIAN MINISTER SENTENCED FOR EMBEZZLEMENT

Former Light Industry Minister Rudolf Teymurazian was sentenced to eight years in prison on 15 September. A Yerevan court found him guilty of embezzling a $4.1 million Chinese government loan in the early 1990s, "Azg" reported The court also ruled that Teymurazian must pay $500,000 in fines. LF

GEORGIA, AZERBAIJAN, UKRAINE SIGN BORDER PROTECTION AGREEMENT

The commanders of the Georgian, Azerbaijani, and Ukrainian border guard troops signed a cooperation agreement in Tbilisi on 16 September, Interfax and Caucasus Press reported. That agreement falls within the parameters of the Economic Consultation Agreement concluded by Georgia, Ukraine, Azerbaijan, and Moldova. Georgian Border Guard Commander Valeri Chkheidze told journalists that the Tbilisi meeting was not directed against other states, nor does the signed agreement run counter to CIS agreements on border cooperation. He added that Moldova will sign the agreement at a later date. LF

MESKHETIANS STAGE PROTEST IN TBILISI

Some 40 Meskhetians on 16 September demonstrated outside the state chancellery in Tbilisi to demand a meeting with President Eduard Shevardnadze, Caucasus Press reported. The Meskhetians have been lobbying for decades for the right to return to the villages in southwestern Georgia from where they were deported en masse to Central Asia in November 1944. At Shevardnadze's initiative, a few hundred families were repatriated in the mid-1980s. Konstantin Kokoev, chairman of the Georgian parliamentary commission for human rights, said that the implementation of a program to repatriate 5,000 Meskhetian families by 2000 has been halted because of problems in resettling and housing ethnic Georgians forced to flee conflicts elsewhere in Georgia. LF

TAJIK OPPOSITION ASSESSES WORK OF NATIONAL RECONCILIATION COMMITTEE

United Tajik Opposition leader Said Abdullo Nuri has reviewed the work of the National Reconciliation Commission since its foundation exactly one year earlier, ITAR-TASS reported on 15 September. Both the Tajik government and the opposition are represented on the commission, which was formed to monitor implementation of last year's agreement ending the civil war. Nuri noted progress in registering the opposition's armed units and integrating them into the Tajik armed forces as well as in expediting the repatriation of refugees from Afghanistan. But he blamed the Tajik leadership for failing to deliver on its commitment to reform the government and amend the constitution. On 16 September, Habib Sanginov, chairman of the National Reconciliation Commission's military sub-committee, told ITAR- TASS that the repatriation from Afghanistan of the last remaining 250 UTO fighters has been delayed for unknown reasons. LF

KAZAKHSTAN'S FOREIGN DEBT RATING LOWERED

Standard and Poor's has lowered Kazakhstan's long-term foreign currency debt rating from B+ from BB- and its long-term local currency debt from BB+ to BB- , Bloomberg reported on 16 September. The rating agency said that the decision reflects Kazakhstan's "heightened vulnerability to an extremely negative environment," noting the slow pace of privatization, a high budget deficit, and the fact that Russia is Kazakhstan's largest trading partner. Kazakh Prime Minister Nurlan Balghymbayev has said several times over the past month that the financial crisis in Russia has had no affect whatsoever on Kazakhstan. LF

SVERDLOVSK GOVERNOR IN BISHKEK

Eduard Rossel met with Kyrgyz President Askar Akayev and Prime Minister Kubanychbek JumAliyev in Bishkek on 16 September, RFE/RL's bureau in the Kyrgyz capital reported. Akayev expressed support for Rossel's proposal that the 8-9 October CIS summit be held in Yekaterinburg as a gesture of moral support for embattled Russian President Boris Yeltsin. In meetings with Kyrgyz government officials on 17 September, Rossel is expected to sign several economic cooperation agreements, including one that provides for Sverdlovsk to supply Kyrgyzstan with railroad carriages, spare parts for trolley-buses, and equipment for the mining industry. Rossel has also promised to supply turbo-generators for the Bishkek heating and power plant. LF

U.S. TO MEDIATE CASPIAN DISPUTE?

U.S. Energy Secretary Bill Richardson said at an oil and gas industry congress in Houston earlier this week that Washington may offer to mediate in the dispute between Azerbaijan and Turkmenistan over ownership of at least one Caspian oil field, the "Financial Times" reported on 16 September. Richardson said that he had discussed the issue of settling the dispute between Ashgabat and Baku with his Turkmen counterpart and is planning to continue that discussion during his upcoming trip to the Caspian, according to ITAR-TASS. The dispute between Baku and Ashgabat over ownership of the Kyapaz/Serdar field is a major obstacle to an agreement between all five Caspian littoral states on how to divide the sea's resources. LF




UKRAINE TO USE WORLD BANK LOAN FOR PRIVATIZATION, BANKING REFORM

Roman Shpek, head of the Ukrainian National Agency for Development and European Integration, has said Ukraine will spend its World Bank loan on boosting privatization and restructuring the banking sector (see "RFE/RL Newsline," 16 September 1998), dpa reported. Shpek called the World Bank loan "an extremely important decision that came at an extremely important time." He added that the loan underscored the World Bank's confidence in Ukrainian reforms. JM

KYIV CITY AUTHORITIES TO REIN IN PRICES ON STAPLE FOODS

The Kyiv city administration has introduced limits on the prices on a number of staple foods produced by domestic firms, Reuters reported on 16 September. The decision prohibits increasing the retail price of bread by more than 15 percent above its wholesale price. Retail prices for oats, pasta, butter, and milk are not allowed to increase by more than 25 percent over their wholesale prices. The move intends to soften the impact on consumers of the de facto devaluation of the hryvnya earlier this month. JM

BELARUSIAN PARENTS PROTEST INCREASING NUMBER OF RUSSIAN SCHOOLS

Some 200 parents and public activists rallied in Minsk on 16 September to protest the increasing use of Russian as the main language of instruction at Belarusian schools, RFE/RL's Belarusian Service reported on 16 September. The demonstrators pointed out that the number of Belarusian schools has fallen significantly under the presidency of Alyaksandr Lukashenka. In 1993, 58 percent of the first-graders in Minsk began their education in Belarusian, while in 1998 that figure had plummeted to 7 percent. The corresponding figures for Belarus as a whole are 76 and 28 percent. The protesters believe that the main reasons for the declining Belarusian-language education are the state policy of promoting education in Russian and the lack of Belarusian-language universities in Belarus. JM

TALLINN STOCK EXCHANGE PLUNGES FOR SECOND DAY

The Tallinn stock exchange plunged for the second consecutive day on 16 September, resulting in a two-day combined loss of 17.8 percent of its value. Analysts attributed the fall to uncertainty over several major banking mergers and acquisitions taking place in Estonia, combined with the effects of the Russian economic crisis, according to dpa. A local dealer told ETA that the trend can be reversed only by renewed interest among foreign investors. JC

RURAL PARTIES THREATEN TO FORM ELECTORAL BLOC WITH CENTER PARTY

Estonia's rural parties, which form the ruling coalition with the Coalition Party, are threatening to set up an electoral bloc with the Center Party unless the Coalition Party agrees to consider farmers' interests, ETA reported on 16 September. According to a member of the Center Party's parliamentary caucus, the Centrists are opposed to the idea but may review their position if a right- wing electoral bloc is formed for the March 1999 general elections (see "RFE/RL Newsline," 16 September 1998). Leaders of the Coalition Party and the rural parties have been negotiating for several months about reviving their electoral bloc but have not yet reached an agreement. JC

RUSSIAN BALTIC FLEET READY TO ACCEPT LITHUANIAN AID?

Citing a Kaliningrad newspaper on 16 September, BNS reported that the Russian Baltic Fleet is ready to accept humanitarian aid from Lithuania. The head of the fleet's food service is quoted as saying that Lithuanian suppliers have sent food worth $1 million to the fleet but that the fleet has been unable to pay for those supplies because it is no longer receiving funds from Moscow. He said that the fleet will now accept humanitarian aid in order to settle its debt to Lithuanian suppliers. JC

POLISH DAILY SLAMS 'CLUMSY' OFFER OF AID TO RUSSIA

The 16 September issue of "Rzeczpospolita" criticized the government for making a "clumsy" offer of food aid to Russia (see "RFE/RL Newsline," 14 September 1998). The offer, which the government published beforehand in the media, was to be officially made by Polish Interior Minister Janusz Tomaszewski during his 14-15 September visit to Moscow. Russian Interior Minister Sergei Stepashin said after talks with Tomaszewski on 15 September that Russia does not need humanitarian aid from Poland. Tomaszewski hinted that the proposal of aid was not even discussed during his visit. "Rzeczpospolita" commented that if the proposal had been made with greater discretion and through official channels, it could have been viewed differently in Moscow. JM

CZECH PRESIDENT WELCOMED AT WHITE HOUSE

Welcoming his Czech counterpart to the White house on 16 September, President Bill Clinton said that Vaclav Havel is a "voice of dazzling eloquence" for freedom and that the world "owes a great deal...to the inspiration provided by a single man...who for years spoke when it mattered, often at enormous personal costs." The two presidents discussed regional security issues, the Czech Republic's impending membership in NATO, the fight against terrorism, the Kosova crisis, and the situation in Russia, dpa reported. Havel told journalists at a joint press conference after the talks with Clinton that the economic and political situation in Russia in "complicated" and will probably still be so "in 50 and in 100 years." Despite the ongoing crisis in the country, he said he does not see "anything dangerous" in it and believes it is "better to have an ill Russia than a healthy Soviet Union." MS

PROTESTS CONTINUE OVER DISMISSALS AT SLOVAK PRIVATE TV...

Former President Michal Kovac, addressing a rally in Bratislava protesting the dismissal of staff at the private Markiza television station (see "RFE/RL Newsline," 16 September 1998), praised the courage of the station's director-general, Pavol Rusko, and his colleagues, saying they showed the world that the country's citizens will not "give in to anti-democratic, mafia- like tactics," RFE/RL's Bratislava bureau reported. The demonstrations began on 15 September and spread to other cities as well. Speakers for the opposition said the dismissals are aimed at stemming criticism of the HZDS just 10 days before the parliamentary elections. Premier Vladimir Meciar told a rally of his supporters on 15 September in Trnava that "the government is not involved in what is happening at Markiza." MS

...AS HUMAN RIGHTS GROUP ACCUSES STATE TV OF CAMPAIGN ABUSES

The Vienna-based International Helsinki Federation (IHF) said on 16 September that Slovak Television's pro-government bias in covering the elections has been "egregious." The human rights group cited the findings of the Memo 98 independent monitoring organization (see "RFE/RL Newsline," 11 September 1998). The IHF said this kind of campaign coverage violates the European Convention on Human Rights and Slovakia's commitments to the UN and the OSCE. It also criticized Slovakia's failure to grant accreditation to some domestic and international observers who applied for it. MS




ALBANIAN PARLIAMENT TO CONSIDER LIFTING BERISHA'S IMMUNITY

The Albanian parliament announced on 16 September that it will discuss the issue of lifting former President Sali Berisha's immunity as a deputy, Reuters reported. Prime Minister Fatos Nano has accused Berisha of leading an attempt to overthrow the government and says he should be arrested. Spartak Braho, the head of the parliamentary commission investigating the case, said that Berisha will have the opportunity to appear before the full assembly and respond to the charges against him. Berisha called attempts to take legal action against opposition leaders "an act of madness." He said he does not want to "preserve any immunity" for himself "in this state without laws." Berisha repeated claims that Nano is responsible for the murder of Democratic Party deputy Azem Hajdari (see "RFE/RL Newsline," 14 September 1998). PB

NANO INSISTS ALBANIANS SUPPORT HIS GOVERNMENT

Albanian Premier Fatos Nano said on 16 September that the majority of Albanians consider his government to be "legitimate," AFP reported. Nano made his comments in response to calls from opposition leader Berisha for him to resign (see "RFE/RL Newsline," 16 September 1998). PB

OPPOSITION DEFIES GOVERNMENT, HOLDS RALLY

A march by several thousand supporters of the opposition, led by Berisha, in Tirana on 16 September passed without incident, AFP reported. After police prevented the demonstrators from moving to the central Skanderbeg Square, a rally was held in front of the opposition Democratic Party headquarters. As many as seven people have died and 76 have been wounded in violence on the streets of Tirana since 13 September. Berisha described the Nano government as a "dictatorship" and called for a national day of protest to be held on 18 September. PB

THOUSANDS MORE KOSOVARS FLEE SERBIAN ATTACKS

Several thousands of ethnic Albanians have left their homes northeast of Prishtina after the shelling of several villages by Serbian forces, AP reported on 16 September. Officials of the UN refugee agency said they saw houses burning in some of the villages. Renewed attacks in the central region of Drenica were also reported. There were no independent reports on casualties in either area. Northeast Kosova is considered to be one of the last refuges of the Kosova Liberation Army (UCK). PB

HILL, TALBOTT AT NATO MEETING ON KOSOVA

U.S. Ambassador to Macedonia Christopher Hill flew from Prishtina to Brussels on 16 September to brief NATO ambassadors on the situation in the Serbian province, Reuters reported. U.S. Deputy Secretary of State Strobe Talbott also attended the meeting. Hill, Washington's top envoy for Kosova, told officials that the continued military action by Serbian forces is complicating his efforts to forge a political accord aimed at ending the violence and allowing Kosova some form of interim autonomy. The UCK condemned Hill's attempts to secure the interim accord, saying it considers such an agreement "national treason." In London, British Foreign Secretary Robin Cook ordered an immediate ban on Yugoslav airline flights to Britain, citing the "sharply deteriorating humanitarian situation" in Kosova. The U.K. had previously said it could not join an EU ban on such flights. PB

HARD-LINE SERBIAN PARTIES DEMAND RELEASE OF PRELIMINARY RESULTS

The Bosnian Serb Radical Party and the Serbian Radical Party released a joint statement on 16 September calling on the OSCE to issue the preliminary results of the Bosnian general elections, Beta reported. "The results are known but [the] OSCE is silent," said the statement. The previous day, the OSCE canceled the planned release of preliminary results. OSCE spokeswoman Nicole Szulc said "the people have spoken in this country. Bosnia and the OSCE will respect what they said--regardless of what they said." She said final results will be issued in four to seven days. Several observers are predicting victories for hard-line candidates contesting many of the key posts. PB

HUMAN RIGHTS GROUP CONDEMNS MONTENEGRO

The U.S.-based Human Rights Watch has criticized the Montenegrin government for not allowing ethnic Albanian refugees to remain in Montenegro, an RFE/RL correspondent in Washington reported on 16 September. The organization said the closing of Montenegrin borders to the refugees in effect trapped them. She also condemned the expulsion of some 3,200 ethnic Albanians to Albania. In Sarajevo, the UNHCR said that about 3,000 refugees from Kosova have been registered and are being cared for in Bosnia-Herzegovina. A spokesman said that as many as 15,000 Kosovar Albanians have fled to Bosnia but that not all have registered with the authorities. PB

OSCE OFFICIAL PRAISES, ENCOURAGES CROATIA

Tim Guldimann, the head of the OSCE mission in Croatia, said on 16 September that Zagreb had gained "positive momentum" both in its political development and in its cooperation with the international community, AP reported. Guldimann welcomed the steady return of Serbs to Croatia though he said the flow could be increased. He also said there is a severe need on the part of the government to reform state-controlled television and to rectify the parts of electoral legislation that favor the ruling party. Also in Zagreb, Croatian President Franjo Tudjman awarded former British Prime Minister Margaret Thatcher the Grand Order of King Dmitar Zvonimir for her contributions in helping secure the "establishment of a free and independent...Croatian state." PB

ROMANIAN FOREIGN MINISTER ON MINORITY IN UKRAINE

Andrei Plesu on 16 September appealed to journalists to display more "seriousness and responsibility" when reporting on the situation of the Romanian minority in Ukraine, RFE/RL's Bucharest bureau reported. Referring to the campaign in the media on alleged infringements of that minority's rights, Plesu said reports are often "exaggerated, based on insufficient evidence, and even groundless." He said that the Romanian minority in Ukraine is "unfortunately divided into numerous rival factions" and that it was one of those groups that proposed changing the official designation of its language from "Romanian" to "Moldovan." The Ukrainian authorities, he noted, have not acted on that proposal. In other news, Valeriu Tabara, leader of the nationalist Party of Romanian National Unity, said on 16 September that Hungarian Premier Viktor Orban must be declared "persona non grata" in Romania for allegedly backing demands for Szekler autonomy in Transylvania. MS

ROMANIAN FINANCE MINISTER STILL OPPOSED TO HELICOPTER DEAL

Daniel Daianu on 16 September said that his opposition to the deal with Bell Helicopters Textron is "unchanged." Daianu said the company's readiness to accept part of the payment in Romanian currency "does not reduce the deal's costs," RFE/RL's Bucharest bureau reported. In other news, Romania on 16 September joined the EU boycott on flights to and from Yugoslavia. MS

MOLDOVAN PARLIAMENT BUREAU REJECTS NO-CONFIDENCE MOTION

The Permanent Bureau of the Moldovan parliament on 16 September voted against placing the no-confidence motion submitted by the Party of Moldovan Communists (PCM) on the legislature's agenda, the independent Flux agency reported. PCM deputy Viktor Zlachevsky said the decision was "arbitrary," as the initiative had met all the constitutional provisions on initiating a no-confidence motion (see "RFE/RL Newsline," 15 September 1998). MS

MOLDOVAN PRESIDENT IN BULGARIA

Petru Lucinschi met with Bulgarian Prime Minister Ivan Kostov, Sofia Mayor Stefan Sofiyanski, and parliamentary chairman Yordan Sokolov in Sofia on 16 September, the independent Moldovan Infotag agency reported. The previous day, Lucinschi and President Petar Stoyanov signed agreements on avoiding double taxation as well as on cooperation in transportation, fighting organized crime, terrorism prevention. MS

FIRST TRANSPORT OF KOZLODUY NUCLEAR WASTE LEAVES BULGARIA

The first train carrying nuclear waste from the Kozloduy plant left Bulgaria on 16 September, Infotag reported. The cargo will be transferred to a special vessel on the River Danube and will transit Moldovan and Ukrainian territory en route to Russia. The four countries had agreed to the transit in agreements signed several months ago. The Moldovan parliament approved the transit after an acrimonious debate last month. In other news, the Bulgarian parliament on 16 September approved an article in a draft law that would ban tobacco advertising from radio and television and through sponsorship of televised sports events. The ban is part of a law restricting the advertising of addictive substances, including alcohol, which the parliament expects to finalize later this year, AP reported.




MACEDONIAN ECONOMIC RECOVERY IMPERILED BY INTERNATIONAL CRISES


Michael Wyzan

This year has finally seen an invigorated Macedonian economy, with industrial production up by 9.3 percent during January-July relative to the same period in 1997, and gross domestic product (GDP) projected to rise by 5 percent this year. Such rapid growth follows an unusually prolonged stagnation. GDP declined from independence in 1991 through 1995, before rising by only 0.8 percent in 1996 and 1.5 percent in 1997. At the end of last year, GDP was less than 73 percent of the 1990 level.

Inflation is virtually nonexistent, with retail prices rising by a mere 0.85 percent in the year to August 1998, far below the 4.6 percent achieved in 1997 and the 3 percent projected for 1998 (both figures for December-to-December). The money supply, broadly defined, grew by 21 percent in the year to March 1998, after falling by 1.4 percent in the preceding 12 months. The combination of faster money growth and slower inflation is a good sign, showing that Macedonians are increasingly willing to hold onto denars.

The government budget remains nearly balanced. The government attributes this year's strong revenue performance to the improved economy, a reduction in tax rates (which has decreased the incentive for tax evasion), and improved tax administration.

The economic upturn is one of the reasons for a widening of the trade deficit from $147 million in the first half of 1997 to $260 million in January-June 1998: imports rose from $723 million to $890 million over this period, while exports increased only from $576 million to $630 million.

This trend is worth watching, since it may suggest a growing current account deficit, which was $277 million, a relatively high 7.3 percent of GDP, in 1997. However, the IMF argues that the current account imbalance is overstated because of under- reporting of remittances from abroad.

One sector of the economy that, at least as of the end of 1997, shows no signs of improvement is the labor market. Unemployment rose from 175,526 in November 1993 to 257,666 in December 1997. A labor force survey in April 1997 found a staggering 36 percent unemployment rate.

This year, the government has yet to publish unemployment data, although the MILS news agency has reported a figure of 268,900 for March. Considerable publicity has been given to a 1997 law on employment creation, which went into effect on 1 January. That law, among other things, exempts employers from paying social insurance contributions for new workers hired.

The IMF's executive board approved in mid-June release of the second annual loan (worth $24 million) under a three-year, $73.2 million facility agreed to in November 1996. The fund noted the progress made on macroeconomic stabilization but stressed the need to promote share trading and encourage ownership of enterprises by outsiders, tighten prudential regulation of banks, introduce a value-added tax, remove barriers to trade and foreign investment, and increase social assistance payments and better target them at the needy.

Business circles are less happy with the situation than the IMF, concerned about the high level of enterprise illiquidity, which they blame on the high interest rates charged by banks. The average rate charged on bank credits in 1997 was 21.4 percent, while inflation was in the low single digits. The national bank has kept rates high in order to defend the denar's fixing to the German mark and encourage capital inflows.

The debate in Macedonia about whether another devaluation of the denar is necessary (the national currency was devalued by 14 percent against the German mark in July 1997) will be reinvigorated by the first half's foreign trade figures and by the reverberations of the crises in Russia and East Asia. Further, the Chamber of Commerce is asking for antidumping measures to protect the economy from cheap imports from countries whose exchange rates have plummeted.

Macedonia's newfound economic dynamism is fragile for reasons beyond macroeconomics and international finance. General elections are scheduled for 18 October, with polls putting the nationalist Internal Macedonian Revolutionary Organization- Democratic Party for Macedonian National Unity (VMRO-DPMNE) and its coalition partners well ahead of the Social-Democratic Union of Macedonia (SDSM). The formerly communist SDSM has ruled Macedonia in coalition with other parties, including one representing ethnic Albanians, since independence.

The SDSM's economic policy is highly regarded--at least by the IMF--and has been implemented by a stable group of technocrats, some of whom are ethnic Albanian, including Finance Minister Taki Fiti. A government led by the VMRO-DPMNE would mean wholesale personnel changes, bringing in inexperienced officials and probably ending the practice of awarding ministries to ethnic Albanians. With the turmoil in Kosova continuing, and the Kosova Liberation Army putting down deeper roots in Macedonia, this is the most alarming prospect of all. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria.


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