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Newsline - October 21, 1998




CENTRAL BANK TO AX ALMOST 300 BANKS...

According to a plan submitted to the State Duma, the Central Bank (CB) plans to eliminate roughly 275 of the nation's more than 1,500 commercial banks in the first half of 1999, Reuters reported on 20 October. The CB will also design and implement individual restructuring plans for 15 banks, including large ones unable to operate but allegedly too "socially important" to close. The CB will acquire stakes in the banks as collateral, which would eventually be transferred to new investors in the better-functioning, restructured banks. Roughly 860 banks are stable and have enough resources to survive without significant CB assistance, according to the plan. The CB would acquire stakes in a fourth group of almost 400 banks, including regional banks with large branch networks, on a three-year basis and would appoint the managers of those banks. JAC

...AS INKOMBANK'S FATE HANGS IN BALANCE

Inkombank President Vladimir Vinogradov on 16 October repeated an earlier suggestion that the Central Bank assume temporary administration of his bank. Analysts have interpreted this and earlier offers as an indication of just how badly off the bank must be. Once the third largest bank in Russia in terms of assets, Inkombank heavily invested in the short-term treasury bond market long after most banks deemed it prudent to do so. Nevertheless, it is likely to be included in the list of 15 "socially important" banks worth saving. JAC

PRIMAKOV, MASLYUKOV OFFER ECONOMIC NOSTRUMS...

Addressing the ninth congress of the Union of Russian Industrialists and Entrepreneurs on 20 October, Prime Minister Yevgenii Primakov outlined some new government measures, while First Deputy Prime Minister Yurii Maslyukov seemed to advocate a return to monopoly production of certain "vital goods." Primakov pledged to reduce value-added and profit taxes in the near future, according to "Rossiiskaya gazeta." In addition, he said that the government will spend 7 billion rubles ($410 million) to repay debts owed to power companies in part to ease the critical situation in the fuel and energy sector before the winter. Maslyukov said that "powerful concerns" should control the manufacture of other vital goods. For example, only one company should operate the entire aerospace industry. According to Interfax, Maslyukov added that "the dollar mass can be reduced only if the ruble mass grows." JAC

...AS VOLSKII RETURNS TO PUBLIC EYE

Industrialist Arkadii Volskii, leader of the union, whose name was once mentioned as often as Boris Berezovskii's, has returned to influence economic policy-making. Volskii told a union gathering on 20 October that the Primakov government "has started listening to the proposals of those working in the real sector." Earlier he told reporters that even given the country's current crisis, industrialists should not ask the ask the government to adopt harmful measures in their defense. Strong protectionism, he explained, makes sense only if applied to those items that compete with domestic goods and do not have to be imported, such as oil and gas equipment, according to "Rossiiskaya gazeta." JAC

GOVERNMENT SUBMITS BUDGET TO IMF

The government approved the main features of the a draft emergency fourth quarter budget, Finance Minister Mikhail Zadornov told reporters on 20 October. When preparing the budget, the Finance Ministry assumed an exchange rate of 17 rubles per dollar and revenues of 65 billion to 75 billion rubles and expenditures of some 130 billion rubles. According to Zadornov, money-printing will not exceed 20 billion rubles and the government still plans to cover the budget deficit with foreign loans. However, on 21 October, "Izvestiya" argued that the current IMF mission will review the budget only as a matter of "political ritual," labeling the current IMF mission to Moscow as "the most pointless in the entire history of relations between Russia and the fund." It also said that the Primakov government's eager welcome of IMF Managing Director Michel Camdessus's call for food aid is a strong sign of how bad the economy really is. JAC

UN APPEALS FOR FIRE-FIGHTING AID FOR FAR EAST

The UN called on the international community to provide assistance to combat forest fires that have already destroyed 15 million cubic meters of timber in Russia's Far East region . According to ITAR-TASS on 20 October, Russian fireman and specialists do not have enough specialized equipment, clothing, spare parts, or fuel. The UN said that $2.5 million is needed and emphasized that the fires could spread, threatening two oil and gas pipelines as well as neighboring China. Earlier, the UN called the fires a world ecological disaster with potential climactic consequences for the northern hemisphere, since the millions of tons smoke produced by the fires is likely to contribute to global warming. Until 14 October, when it finally began to rain, Khabarovsk "was periodically so enveloped in smoke that airplanes couldn't land, boats couldn't navigate the Amur River and cars drove with their headlights on during the day," the "Moscow Times" reported on 20 October. JAC

GOVERNMENT NIXES UNION WITH YUGOSLAVIA

Russian Foreign Ministry spokesman Vladimir Rakhmanin dismissed the proposal of some Duma deputies to invite Yugoslavia to join the union of Russia and Belarus, Interfax reported on 20 October. He called such an idea impractical "at this stage," saying it is mainly a "reflection of the friendly feelings between the Russian and Yugoslav peoples." Duma deputy speaker Sergei Baburin (People's Power), who led the Duma delegation to Yugoslavia, told reporters the previous day that "leaders of the Serbian radical party said that they will initiate the question of joining the union of Belarus and Russia in the Yugoslav parliament." JAC

SHAKHRAI'S BACK AND PRIMAKOV'S GOT HIM

Sergei Shakhrai, former presidential representative to the Constitutional Court, has been appointed Prime Minister Primakov's legal adviser, Interfax reported on 20 October. Yeltsin dismissed Shakhrai on 29 June without publicly giving a reason, but Shakhrai himself claimed that he was let go because of his prediction that President Boris Yeltsin would be impeached by the Duma. He also urged support for Moscow Mayor Yurii Luzhkov during the upcoming presidential race (see "RFE/RL Newsline," 30 June 1998). The same day, Yeltsin also appointed Nikolai Kulikov as deputy interior minister in charge of Moscow. And on 17 October, Yeltsin signed a decree appointing Aleksandr Avdeev first deputy foreign minister. JAC

MASLYUKOV PLAN TO HURT DEFENSE CONTRACTORS?

First Deputy Prime Minister Maslyukov's recently announced plan to manufacture 35-40 Topol-M missiles a year has received more criticism (see "RFE/RL Newsline," 8 October 1998). "Kommersant vlast" on 13 October argued that Maslyukov's plan to concentrate on strategic missiles "would spell doom" to the rest of the military industrial complex. According to the newspaper, experts estimate the cost of manufacturing a single Topol-M at between $35 million to $40 million," while the defense budget for 1998 amounts to only $7 billion. Therefore, "Maslyukov wants to pump all of the money in the budget set aside for weapons manufacture into manufacturing ICBMs." JAC

DEFENSE MINISTER IN VIETNAM

Igor Sergeev signed an intergovernmental agreement on military-technological cooperation with his Vietnamese counterpart, Pham Van Tra, on 21 October, ITAR-TASS reported. He also discussed future sales of weapons to Vietnam and the Russian Navy's use of Vietnam's Camranh Bay base until the year 2004. En route to Vietnam, Sergeev stopped over in New Dehli to discuss a military-technological cooperation agreement through the year 2010 with India. Sergeev said he hopes the document will be ready for signing when Yeltsin makes a scheduled visit in December. Sergeev departs for China on 21 October, the last stop of his tour of Asian countries. BP

RUSSIAN POLITICIANS APPEAL TO YOUTH

At the inauguration of the new mayor of Nizhnii Novgorod, former mayor and Deputy Prime Minister Boris Nemtsov, 39, called for the formation of political bloc called Young Russia, "Nezavisimaya gazeta" reported on 20 October. Nemtsov also posted an appeal on his web page on the Internet, calling for young people to become more involved in politics and overrule people of the past (see also http://www.nemtsov.ru/news/last/1998/10/08.htm). Meanwhile, Moscow Mayor Luzhkov announced that he plans to revive the Young Pioneer League of former Soviet days. The "Moscow Times" quoted Fatima Tsagalova of the city government's public relations department as saying that the political element of the former league would be discarded. Plans to revive the Young Octobrists have not been announced. JAC

PKK LEADER "NOT IN RUSSIA"

Russian Foreign Ministry spokesman Rakhmanin told journalists in Moscow on 20 October that he cannot confirm media reports that the leader of the Kurdistan Workers' Party, Abdullah Ocalan, is currently in Russia, Interfax reported. On 12 October, the Armenian Foreign Ministry denied a senior Turkish government official's claim that the PKK leader has left Syria for Armenia (see "RFE/RL Newsline," 12-13 October 1998). LF




GEORGIAN PRESIDENT SEES NO NEED FOR STATE OF EMERGENCY

Speaking on Georgian Television on 20 October, Eduard Shevardnadze said he will not impose a state of emergency because the mutiny by Georgian army units in western Georgia is over. A spokesman for the Georgian Defense Ministry told Caucasus Press that 80 percent of the servicemen who participated have returned to their barracks, and that their leader, Akaki Eliava, is on the run with several dozen supporters. The Georgian prosecutor-general has opened a criminal case against Eliava on charges of treason, which could carry a life sentence. Shevardnadze again named former Georgian deputy parliament speaker Nemo Burchuladze as a co- instigator of the revolt, but Security Minister Djemal Gakhokidze, who was temporarily held hostage by Eliava's men on 19 October, said he did not see Burchuladze with Eliava. LF

ELIAVA IN ABKHAZIA?

Georgian parliament speaker Zurab Zhvania told Caucasus Press on 20 October that Eliava and his men left the west Georgian region of Mingrelia to join forces with other "illegal armed detachments" in Abkhazia's Gali raion. The chairman of the Abkhaz parliament in exile, Tamaz Nadareishvili, told the daily newspaper "Rezonansi" that Eliava, a former supporter of deceased president Zviad Gamsakhurdia, is a member of an elite Abkhaz security unit. LF

GAMSAKHURDIA SUPPORTERS ROUNDED UP IN GEORGIA

Several known Gamsakhurdia supporters, including Giorgi Kervalishvili, the president of the Human Rights Protection Organization, were arrested in Tbilisi in connection with the failed insurrection, Caucasus Press reported on 20 October, citing "Rezonansi." LF

GEORGIAN PIPELINE CONSTRUCTION RESUMES

The Azerbaijan International Operating Company has resumed reconstruction of the export oil pipeline from Baku to the Georgian Black Sea port of Supsa, Interfax reported on 20 October. Work was suspended for security reasons the previous day when news of the Eliava mutiny became known. LF

ARMENIAN, KARABAKH PRESIDENTS MEET

Robert Kocharian and Arkadii Ghukasian met in Yerevan on 20 October for " a routine exchange of information," primarily on economic issues, RFE/RL's Yerevan bureau reported. Ghukasian told journalists later that he and Kocharian also discussed the Karabakh conflict and that they agreed that its solution should include the granting of "non- conventional" status to the unrecognized Nagorno- Karabakh Republic. That status will fall short of full independence, Ghukasian said. He added that he can see "no reasons" for a resumption of hostilities with Azerbaijan, according to Interfax. LF

AZERBAIJANI PARLIAMENT TO BOYCOTT COUNCIL OF EUROPE TALKS ON KARABAKH?

Ghukasian told journalists on 20 October that he has accepted an invitation to attend hearings on Karabakh organized by the Parliamentary Assembly of the Council of Europe in Strasbourg in early November, RFE/RL's Yerevan bureau reported (see "RFE/RL Newsline," 19 October 1998). The foreign ministers and parliament speakers of Armenia and Azerbaijan are also invited to those talks. But the Azerbaijani parliament has refused to send a delegation to the talks if Ghukasian is present, Turan reported on 20 October. LF

AFTERMATH OF AZERBAIJANI PRESIDENTIAL ELECTIONS

Eleven opposition lawmakers on 20 October proposed that the parliament debate violations of the election law during the presidential election campaign and vote count, Turan reported. Parliamentary speaker Murtuz Alesqerov suggested that the issue be discussed by one of the parliament's committees. Meanwhile, the leaders of the several dozen organizations aligned in the Movement for Electoral Reform and Democratic Elections initialed a document entitled "Charter 98" condemning the falsification of the election. The signatories pledged to launch a peaceful campaign for the ouster by legal means of Heidar Aliev, whom they do not recognize as the legitimate president. Also on 20 October, a Baku district court sentenced six supporters of defeated presidential candidate Etibar Mamedov to three to five days in prison for jeering and whistling at Aliyev when he arrived at Baku's Palace Hotel on 18 October for his inauguration ceremony. LF

KAZAKH PRESIDENT TO RUN IN JANUARY ELECTIONS

Nursultan Nazarbayev announced on 20 October that he will run in the January presidential elections, Russian and Kazakh media reported. Early elections were announced on 8 October. At the time, numerous reports claimed Nazarbayev was "undecided" about running in the elections. Interfax quotes the president as saying his decision to run was made after receiving telegrams "from about a million Kazakh citizens" requesting he take part in the elections. BP

NO OPPOSITION CANDIDATES REGISTER TO DATE...

The head of Kazakh Central Electoral Commission, Zagipa Baliyeva, said that as of 19 October, no one has requested the necessary forms for registering as a candidate, Interfax reported. Potential candidates have until 10 November to be nominated. They then have until 30 November to collect 161,000 signatures, pay an election registration fee of nearly 2.5 million tenge (about $30,000) from their own funds, produce a mental health certificate, and pass a Kazakh language test. Nazarbayev passed his language proficiency test the same day he announced his candidacy. BP

...WHILE ONE POTENTIAL CANDIDATE APPEARS OUT OF RACE ALREADY

A Kazakh court on 20 October found former Kazakh Prime Minister Akezhan Kazhegeldin guilty in absentia for participating in "mass gatherings and sessions of an unregistered organization," RFE/RL correspondents in Almaty reported. Kazhegeldin left Kazakhstan after the alleged assassination attempt against him on 13 October. The next day, he announced his intention to run for the presidency. Under a recently passed Kazakh law, Kazhegeldin will be unable to run in the presidential elections following his conviction of a crime. BP

TURKMEN TV CHIEF SACKED, RUSSIAN BROADCASTS SHORTENED

Turkmen President Saparmurat Niyazov on 20 October fired Klychmurad Kakabayev, head of Turkmen Television, after criticizing the standard of programming, "Nezavisimaya gazeta" reported on 21 October. Kakabayev was accused of serious financial violations and replaced by Annageldy Nurgeldyev. Niyazov also announced that the rebroadcasting of Russian Public Television programs will be cut to five hours daily. Niyazov said the move is necessary because of the cost of such broadcasts and because their contents often contradict the moral standards of Turkmen society. Niyazov called for Turkmen Television and Radio to become advocates of patriotism and a high standard of morality. BP

CONFISCATED WEAPONS HEAD BACK TO IRAN

The Kyrgyz parliament held a special session on 20 October to decide what to do with 700 tons of weapons seized on a train earlier this month (see "RFE/RL Newsline," 13 October 1998), Interfax and ITAR-TASS reported. According to RFE/RL correspondents, the Iranian ambassador to Kyrgyzstan attended the session and told lawmakers his country has obtained clearance from Uzbekistan and Turkmenistan to allow the train to return to Iran with its cargo. The train originated in Iran and traveled through Turkmenistan and Uzbekistan before Uzbek customs officials noticed that two of the 20 railway cars, designated as carrying "humanitarian aid" bound for Afghanistan, contained weapons. Customs officials in Kyrgyzstan then impounded 16 of the railway cars outside Osh, while the other two remain unaccounted for. The Erkin Kyrgyzstan Party favored giving the weapons to the Kyrgyz armed forces. BP




UKRAINIAN PRESIDENT CONDEMNS COMMUNIST OPPOSITION

Speaking on Ukraine's Television on 20 October, President Leonid Kuchma sharply criticized the 122 Communist parliamentary deputies who staged a walkout to protest the government's failure to produce a budget on time. Kuchma said their action, as well as that of 68 other deputies who supported the protest but did not walk out, represented "a war against" the Ukrainian people. Parliamentary speaker Oleksandr Tkachenko the same day said that the government has promised to submit the draft by 22 October, one week after it was due. Meanwhile, Kuchma told an international forum that Ukraine has entered a new stage of reforms intended to speed economic growth, Interfax reported. PG

UKRAINE EASES CITIZENSHIP REQUIREMENTS FOR CRIMEAN TATARS

Ukrainian authorities in Crimea told a news conference in Simferopol on 20 October that Kyiv has simplified its naturalization rules to make it easier for Crimean Tatars who returned from deportation to Uzbekistan to become Ukrainian citizens, Reuters reported. While few Crimean Tatars took advantage of the new rules on the first day of the program, officials said that they expect many more to do so, thus easing what has been a serious political problem in the region. Because nearly 250,000 Crimean Tatars only returned to Ukraine after 1991, many of them are technically citizens of Uzbekistan or one of the other post-Soviet states and are in effect stateless in Ukraine. PG

BELARUSIAN PRESIDENT SEES COMECON AS MODEL FOR FUTURE

President Alyaksandr Lukashenka told reporters in Minsk on 20 October that he believes economic cooperation among some CIS countries should be modeled on the Soviet-era Council for Mutual Economic Assistance (COMECON), Interfax reported. In other comments, Lukashenka said that he hopes the standoff between his country and foreign diplomats can be resolved by buying land in Minsk and building ambassadorial residences to last "for centuries." On 21 October, Lukashenka is scheduled to leave for Omsk and Kemerovo to promote economic exchanges. PG

ESTONIAN GOVERNMENT PROPOSES HIGHER EXCISE TAXES TO HELP FARMERS

The government has submitted to lawmakers a bill that would increase excise taxes on alcohol and tobacco in order to compensate farmers following this year's adverse weather conditions, ETA reported on 20 October. The bill calls for compensation totaling 227 million kroons (some $17.5 million). The opposition, however, opposes the draft legislation, which, it says, would result in increased sales of illegally imported or counterfeit alcohol and tobacco products. JC

LATVIAN COALITION TALKS DRAG ON

Following another round of coalition talks on 20 October, Andris Skele, leader of the People's Party, said proposals for a government program cannot be submitted yet since it remains unclear which parties will form the new cabinet, BNS reported. "Latvia's Way should decide whom they want to work with: either the Social Democrats or the People's Party," he commented, adding that his party will not work with the Social Democrats or any other leftist forces. Latvia's Way chairman Andrejs Pantelejevs argued that the issues of the government program and the "leading personalities" should be resolved simultaneously. "It is important to determine at the very start who will form the government," he said. Since Transport Minister Vilis Kristopans has the guaranteed support of 29 lawmakers, Latvia's Way's demand that he be appointed the next premier is fully legitimate, Pantelejevs added. JC

ADAMKUS SAYS LITHUANIAN ECONOMY SHIELDED FROM RUSSIAN CRISIS

Addressing the Mid-America Committee in Chicago on 19 October, Lithuanian President Valdas Adamkus said the Russian financial crisis has not directly affected Lithuania's "dynamically developing" economy, BNS reported the next day. "Despite the crisis in Russia, the Lithuanian financial system functioned stably and reliably--the litas was not endangered since all litas in circulation are covered up to 180 percent by hard currency reserves," he was quoted as saying. Adamkus also stressed Lithuania's desire to join NATO and the EU, arguing that Russia's current opposition to NATO "partly stems from a psychological background" and can be "best modified by changes in Russia itself." JC

KOHL RECEIVES POLAND'S HIGHEST HONOR

Polish President Aleksandr Kwasniewski on 20 October presented outgoing German Chancellor Helmut Kohl with the Order of the White Eagle, the first time since World War II that Warsaw has given this award to a German leader, PAP and other agencies reported. In conferring the award, Kwasniewski said that his country is "grateful" for Kohl's support of Polish efforts to join NATO and the EU. Polish Prime Minister Jerzy Buzek praised Kohl for his support of Poland before the collapse of communism. In response, Kohl said that "Europe without Poland is not complete." PG

POLISH GOVERNMENT APPROVES DRAFT NATO BILL

The cabinet on 20 October gave its approval to a draft bill that will facilitate Warsaw's entry into NATO, PAP reported. Prime Minister Busek said NATO Secretary- General Javier Solana indicated recently that Poland should move as quickly as possible to get ready for inclusion in the alliance. Buzek said that Poland might be included "two or three months" earlier than scheduled, an indication that the first round of NATO expansion may take place before the Washington summit next spring. PG

CZECHS URGE BRITAIN NOT TO IMPOSE VISA REGIME

Czech Foreign Minister Jan Kavan and Human Rights Commissioner Petr Uhl said on 20 October that they have been assured that Britain has no immediate plans to require Czechs to have visas before entering Britain, Reuters reported. They made their comments after a meeting with British Premier Tony Blair in London. Kavan said such a move would be a "black spot" on the Czech Republic in its bid to join the EU. Uhl said the government plans to improve education and employment conditions for Roma in the Czech Republic. He added that it will also seek to add an anti-discrimination clause to the employment law and boost protection for Roma against racist attacks. PB

HAVEL SAYS CZECHS NEED TO FOLLOW NORTHERN IRISH EXAMPLE

Czech President Vaclav Havel, during his four-day visit to Great Britain, said in Belfast that reconciliation is not only a topic for residents of Northern Ireland but also for Czechs, CTK reported. Havel said they have to come to terms with the 40-year communist dictatorship as well as find ways to heal their feelings toward Germans and Germany. In Bonn, German Foreign Minister-designate Joschka Fischer assured Poland and the Czech Republic that Germany would not "burden the (EU integration) talks with the past." He said "we consider the common future as our criterium." PB

DISAGREEMENTS OVER POSTS MAR SLOVAK COALITION TALKS

Bela Bugar, the chairman of Slovakia's Hungarian Coalition Party (SMK), has complained about infighting over the distribution of ministerial posts among the four parties involved in coalition talks, TASR reported. Bugar, speaking after negotiations among party leaders on 20 October, said "some parties, such as the [Party of the Democratic Left] ... think that they merit more than the proportional results from the election." The Austrian daily "Der Standard" reported that the SMK wants three ministerial posts but has so far been offered only the agriculture portfolio. The daily said Eduard Kukan of the Slovak Democratic Coalition is the favored candidate for foreign minister, a post he held in the 1994 interim government. PB

CARNOGURSKY SEES IMPORTANT ROLE FOR RUSSIA

Jan Carnogursky, a leading offical in the Slovak Democratic Coalition, said that Russia must not be excluded from European integration processes, ITAR-TASS reported on 21 October. Carnogursky, a leading candidate for the post of justice minister, said in an interview with the Slovak biweekly "Euroreport" that it is in the interest of all European countries to aid Russia during its difficult periods. He said that "a strong Russia strengthens Europe" and that Russia "protects the southern borders of European civilization." Carnogursky added that because of their common Slavic ancestry, Russia is a natural partner for Slovakia. PB

HUNGARY RESPONDS TO ROMANIAN COMPLAINTS OVER SOCCER VIOLENCE

The Hungarian Foreign Ministry said in a statement that the uproar in the Romanian media and certain political circles in Bucharest following last week's Hungary-Romania soccer match is yet another manifestation of the anti-Hungarian campaign conducted by extremist groups in Romania. The statement came in response to allegations by the Romanian ambassador to Hungary, Herman Podgoreanu, that the Hungarian police did not take appropriate action against physical attacks on Romanian supporters by chauvinist Hungarian fans. The ministry said Hungary condemns all forms of violence both inside and outside stadiums as well as attempts to over- politicize sporting events. MSZ




SERBIAN PARLIAMENT PASSES MEDIA LAW

The legislature on 21 October overwhelmingly approved a law that sharply restricts the freedom of the media. The measure incorporates into law and expands on the principles set down in a recent government decree that led to the banning of three independent dailies, several independent broadcasters, and the rebroadcast of foreign programs in Serbo-Croatian, including those of RFE/RL (see "RFE/RL Bosnia Report," 14 and 21 October 1998). The government's supporters in the parliament said that the law is necessary to preserve Serbia's sovereignty in the face of "foreign pressures" and efforts by foreigners and their "local servants to spread defeatism." Information Minister Aleksandar Vucic argued that the law will serve to "improve and develop human rights and freedoms [including]...the freedom of access to public information." PM

INDEPENDENT MEDIA SLAM NEW LEGISLATION

In Belgrade on 20 October, spokesmen for the Association of Independent Electronic Media (ANEM) said that the new law is "part of an overall strategy [by the authorities]...to prevent any kind of free or critical expression." The spokesmen added that the legislation is the "most restrictive on media freedom in Serbian history." ANEM's representatives charged that the law presumes journalists to be guilty until proven innocent and establishes "ruthless trial procedures" for those charged with violating the new restrictions. The law, ANEM continued, "introduces a ban on listening to foreign stations that broadcast in Serbian. A similar ban existed only during the fascist occupation of Serbia during World War II. ... [The law also] introduces an absolute and open dictatorship and an information black- out, which will result in an inevitable decay of the state and nation." PM

CONCERN IN BOSNIA OVER SERBIAN LAW

A spokesman for the international community's Carlos Westendorp said in Belgrade on 20 October that the Serbian legislation curtails freedom of speech and violates the democratic principles that the international community is working hard to implement in Bosnia. The spokesman mentioned unconfirmed reports that engineers from Serbia have recently removed from Bosnia's Mt. Kozara equipment for the broadcast of independent NTV He also pointed out that some Serbian television stations have begun using frequencies that enable them to drown out signals from stations within Bosnia. PM

DEMACI CLAIMS NO INFORMATION ON JOURNALISTS

Adem Demaci, who is a senior Kosovar politician and the political spokesman for the Kosova Liberation Army (UCK), said in Prishtina on 20 October that he has no information about the two journalists from Serbia's Tanjug news agency who disappeared recently in Kosova (see "RFE/RL Newsline," 20 October 1998). Demaci added that "there is hope" that the men may still be alive if they have fallen into the hands of armed guerrillas, RFE/RL's South Slavic Service reported. International journalists' organizations have called upon the Kosovar authorities to obtain the men's release. Local Serbs have frequently told foreign journalists in Kosova that Serbs who fall into the UCK's hands "are never seen again." PM

MONTENEGRO DEMANDS ROLE IN KOSOVA DECISIONS

U.S. Ambassador to Macedonia Christopher Hill, who is also Washington's chief negotiator for Kosova, discussed the latest developments in that province with Montenegrin President Momir Bulatovic in Podgorica on 20 October. After the meeting, Montenegrin spokesmen said that the Belgrade authorities must consult with their Montenegrin counterparts on matters regarding Kosova. The spokesmen added that the federal institutions currently implementing the agreement between Yugoslav President Slobodan Milosevic and U.S. special envoy Richard Holbrooke "do not represent the political interests of the citizens of Montenegro," an RFE/RL correspondent reported from Podgorica. PM

CLARK WARNS MILOSEVIC...

General Wesley Clark, who is NATO's supreme commander in Europe, told Milosevic in Belgrade on 20 October that the Yugoslav leader must speed up his troop withdrawals from Kosova or risk NATO air strikes after the expiration of the 27 October deadline. Clark also talked with General Momcilo Perisic, who heads the general staff, about clarifying which Yugoslav military units must be withdrawn from Kosova under the Milosevic- Holbrooke agreement and which may stay (see "RFE/RL Newsline," 20 October 1998). In Vienna, the OSCE named veteran U.S. diplomat William Walker to head the 2,000- strong civilian verification mission in Kosova. PM

...AS DOES UCK

State-run Albanian Television on 20 October broadcast a statement by the UCK charging that Milosevic has not fulfilled a single promise he made to Holbrooke one week earlier. The UCK pledged to continue its recent self-declared cease-fire but added: "If the cruelties of Milosevic's gangs against the [Kosovar] Albanian population and the UCK positions continue, then the UCK reserves the right to...self-defense." The Serbian authorities claim that the UCK cease-fire is a fiction. A BBC reporter said on 21 October in northern Kosova that Serbian forces are shelling Kosovar villages in the area. PM

CROATIAN JOURNALISTS SET UP FUND

Members of the Croatian Journalists' Association agreed in Zagreb on 20 October to set up a fund to support the family of Ankica Lepej, the bank employee who recently leaked information to the press about the account balance of President Franjo Tudjman's wife (see "RFE/RL Newsline," 20 October 1998). Lepej's husband has been unemployed since 1991, and she now faces a prison sentence of up to five years. Elsewhere, Ivo Pukanic, the editor of the independent weekly "Nacional," said that the newspaper's distribution agency has paid its back debts, which will enable Pukanic to pay his printer. The editor charged that distributor and printer, which are both close to the government, were working in collusion to force "Nacional" out of business. The Croatian authorities have often used financial pressures to silence independent voices in the media. PM

SLOVENIAN MINISTER QUITS

Defense Minister Alojz Krapez resigned as defense minister on 20 October in the wake of a corruption scandal (see "RFE/RL Newsline," 15 October 1998). His predecessor quit in February following an incident in which Croatian authorities arrested two Slovenian intelligence agents in a van full of surveillance equipment (see "RFE/RL Newsline," 26 February 1998). PM

SENIOR ALBANIAN DEMOCRAT CRITICIZES CONSTITUTION BOYCOTT

Tirana Mayor Albert Brojka told the "Albanian Daily News" of 21 October that he wants the Democratic Party to take part in the process of drafting the new constitution. He warned his fellow Democrats that the country needs a new constitution and that they should not hold things up any longer. On 20 October, for the second consecutive day, the Democratic Party leadership postponed a decision on whether to participate in the drafting process. FS

ALBANIAN PRESIDENT WANTS COUNTRY'S OIC STATUS CLARIFIED

Rexhep Meidani on 20 October urged the legislature and government to take a clear stand on whether Albania is a member of the Organization of the Islamic Conference (OIC), the "Albanian Daily News" reported. The government of former President Sali Berisha joined the OIC in 1992, but current Foreign Minister Paskal Milo claims that he found no proper documentation of that membership in the archives of the Foreign Ministry when he took office in August 1997. Since then, the Albanian government has claimed that Albania never belonged to the OIC. Berisha often stressed Albania's links to the Muslim world, but the current Socialist-led government emphasizes links to Euro-Atlantic institutions and has launched a crackdown on Islamic terrorism. FS

ROMANIAN CREDIT RATINGS DOWNGRADED

Standard & Poor's has downgraded Romania's credit rating and criticized its politicians for "petty politicking," Rompres reported on 20 October. The agency cut Bucharest's long- term foreign currency debt rating from B plus to B minus and its long-term currency debt was cut from BB to B plus. Standard & Poor's said in a statement that its hopes have been dashed that the appointment of Prime Minister Radu Vasile earlier this year would spur the government to move quicker on reforms. It said government infighting "is again prevalent and distracts the cabinet from addressing privatization and restructuring." An IMF delegation is to arrive in Bucharest next week for talks on a new stand-by loan. PB

MOLDOVAN BANKERS BOYCOTT EXCHANGE SESSION

Commercial banks boycotted the 20 October session of the Moldovan Interbank Currency Exchange, Infotag reported. No transactions were made, even though the National Bank of Moldova (NBM) offered to buy dollars at a lower exchange rate. The current rate, 5.74 lei to the dollar, is considered artificially strong, owing to the NBM's intervention. Commercial banks are also upset at the NBM's order that they increase their reserves from 8 percent to 25 percent of borrowed funds. NBM Governor Leonid Talmaci said if the commercial banks do not comply with that order, the NBM could "delegate our auditors to the banks or replace their leaderships." PB

COOK HAS LITTLE HOPE OF SOLVING MARKOV SLAYING

British Foreign Secretary Robin Cook said on 20 October that there is little chance that the London slaying of RFE/RL correspondent Gyorgy Markov will be solved, AFP reported. Cook made his comments after meeting with President Petar Stoyanov and Foreign Minister Nadejda Mikhailova in Sofia. Markov was killed 20 years ago after being pricked with a poison pellet at a bus stop in London. The pellet is alleged to have been injected into him by means of an umbrella. PB

EBRD TO OPEN BUSINESS LOAN BANK IN SOFIA

The European Bank for Reconstruction and Development will fund a bank that will provide credit to small-and medium- sized businesses in Bulgaria, BTA reported on 19 October. The announcement was made by Finance Minister Muravey Radev after a meeting with the EBRD board of directors. Radev complained to the board that Bulgaria is one of the largest investors in the EBRD but that the funds it has received from the bank are proportionately small. PB




UZBEKISTAN'S ECONOMY PERFORMING RESPECTABLY DESPITE SLOW REFORMS


by Michael Wyzan

Uzbekistan has chosen a gradual path to economic reform, arguing that the conditions prevailing in the Central Asian country militate against a radical move to a market economy. Indeed, the macroeconomic effects of the break-up of the USSR and the move away from central planning have been mild in Uzbekistan. Observers disagree on whether there is some inherent merit in gradualism or whether the country's agrarian structure and reliance on a few commodities (especially cotton, gold, and natural gas) easily sold on world markets account for the relatively good performance.

Whatever the explanation, Uzbekistan's gross domestic product (GDP) declined less in the early years of the transition than in any other former Soviet republic. Uzbekistan's GDP this year is expected to be 91.1 percent of the 1990 level; comparable figures are 34.7 percent for Russia and 44.6 percent for Kazakhstan. By 1996, Uzbekistan's GDP was growing, albeit at a modest 1.6 percent rate. In 1997, it grew by 5.2 percent and in the first half of this yea by 4 percent.

Agriculture has traditionally dominated production and exports. In 1997, the sector accounted for 26.8 percent of GDP, with cotton fiber alone responsible for 36 percent of export earnings. Cotton harvests, which remain the most important statistic to watch, fluctuate from year to year between 3.5 million and 4 million metric tons. This is down from the 4.6 million tons harvested in 1990, although the decline is to a certain extent the result of a policy to diversify agriculture by increasing production of grain, fruits, and vegetables.

The service sector has grown sufficiently rapidly to become the largest of the economy (producing 30.7 percent of GDP last year). Industry, which is dominated by textiles, machinery, fuels, and non-ferrous metals (especially gold), has performed relatively well, registering positive growth in every year since 1994.

Consumer price inflation has fallen from its peak of 1,117 percent in 1994 to only 13 percent in the 12 months to June 1998. However, it is too early to tell whether inflation in 1998 will be much lower than the projected 22 percent (or 1997's 27.6 percent). As a rule, the central bank significantly increases the money supply in the fall, as farmers and agricultural enterprises are paid by the state for fulfilling state orders for cotton and other crops. Another pro-inflationary factor is the 50 percent raise granted to public sector workers on 1 July.

The use of state orders is not the only aspect of the economy that has remained virtually the same since the fall of the USSR. Officially, unemployment was only 0.4 percent in June. The average monthly wage, calculated at the official exchange rate, was $53 in the second quarter, up from $48 in December 1997. This gives Uzbekistan the second highest dollar wage in Central Asia after Kazakhstan, where the figure was $129 in June.

In most years, Uzbekistan has run trade surpluses or small deficits, although 1996, with its poor cotton and wheat harvests, was an exception. Last year, there was a modest $143 million trade deficit, while from January-June 1998, there was a $203 million surplus. Exports and imports have been diverted away from the CIS, which accounted for 25 percent of exports and 31 percent of imports in the second quarter (compared with 62 percent and 54 percent, respectively, in 1994).

The current account deficit in 1997, according to the IMF, was 4.6 percent of GDP, below the level at which alarm bells usually ring. Uzbekistan's ability to run up external imbalances is limited by the fact that it has not received support from the IMF since December 1996, when the fund suspended disbursements under a $185 million loan.

The IMF took this action in response to the government's introduction of foreign-exchange controls in the aftermath of the 1996 poor harvests. There continue to exist two separate exchange rates for the sum--one determined on the Republican Currency Stock Exchange, where the central bank regulates transactions by limiting the number of participants, and another "market" rate determined on other exchanges, which are less tightly regulated. Since November 1996, the second rate (against the dollar) has generally been about twice the official one. For example, the official rate in June was 89.7 sum to the dollar, while market rate was 169.5 sum. During the crisis in Russia, the official rate has weakened considerably, reaching 105.4 sum on 15 October.

It is tempting to see Uzbekistan's economic statistics as similar to Belarus's insofar as they reflect significant economic growth in a state that has avoided serious reform. However, Uzbekistan's economy is clearly less distorted than Belarus's in that the commodities that dominate the former's exports would presumably do so regardless of which economic system it had. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria.


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