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Newsline - November 9, 1998


In an address to Stanford University on 6 November, Deputy Secretary of State Strobe Talbott suggested the U.S. and the West adopt a realistic but not pessimistic perspective on events in Russia. He asserted that Russia is not necessarily "a troika-wreck waiting to happen" and called for "realism about the complexity of the challenges and uncertainty Russia faces." He said it is still "too early to proclaim Russian democratization irreversible" since "the longer the economic meltdown continues," the harder it will be for Russia to sustain the institutions and habits required for "political normalcy." While he cautioned that the U.S. and Russia "may be in for heightened tensions over security and diplomatic issues," he also noted that "virtually every issue between [the U.S. and Russia] can be boiled down to matters of mutual interest and mutual benefit." JAC


Talbott also concluded that Russia will "never again be a monolith" because of its pattern of regional differentiation with "oases of liberalization" in Nizhnii Novgorod, Samara, Leningrad, and Sverdlovsk Oblasts and other "Jurassic-like theme parks of Soviet-era policies and personalities," such as Kursk, Krasnodar, Belgorod, Pskov, and Volgograd Oblasts. He noted that while aid from institutions such as the IMF will have to wait until Russia appears willing "to make difficult structural adjustments," the U.S. will remain engaged in key areas. He said that Western energy companies continue to want to invest into Russia's oil sector, which will need close to "$15 billion a year for the next seven or eight years just to get back to 1988 production levels." JAC


Foreign creditors and Russian government negotiators agreed not to link a restructuring of the Russian government's debt on short-term treasury bonds to the unfulfilled forward currency contracts of Russian commercial banks. According to ITAR-TASS on 6 November, creditors also accepted a Russian government proposal for a new kind of ruble- denominated bond. Deputy Finance Minister Mikhail Kasyanov explained that as a result of this agreement, Russia's foreign debt will not grow. Kasyanov added that at least one or two more rounds of talks are needed to work out the precise conditions for issuing the new ruble bonds. On 7 November, the "Moscow Times" quoted bank analysts as saying the Russian government has apparently decided that it can no longer afford to protect Russian banks from their creditors. Those creditors are likely to try to seize assets held outside Russia. JAC


Japanese Prime Minister Keidzo Obuchi told his Russian counterpart, Yevgenii Primakov, in a telephone conversation on 6 November that the first tranche of a $1.5 billion loan will soon be released, Interfax reported. The first tranche, worth $800 million, is to be granted by Japan's Export-Import Bank. The same day, Russia's Trade Ministry announced that trade with Japan will likely decrease this year. Figures for January-June 1998 showed the volume of trade at $1.9 billion, down14.5 percent on the 1997 level. Russian exports to Japan dropped by 28 percent, to $1.34 billion, in the first half of 1998, while imports from Japan increased by 43.3 percent, to $606 million during the same period. The volume of trade between the two countries last year was about $5 billion. BP


Russian and U.S. officials on 6 November reached agreement on food aid to Russia, despite a last minute dispute over taxation of the shipments (see "RFE/RL Newsline," 6 November 1998). Russian officials agreed not to levy taxes on the aid at the border, while the procedure for taxing the goods once they are on Russian territory will be determined later, according to Deputy Prime Minister Gennadii Kulik. The U.S. had insisted that any proceeds from the food aid be directed to the Pension Fund. Kulik said that Russia is "ready to give the money to the Pension Fund and spend it on social programs." Expanding on this point, Kulik told Interfax on 7 November that part of the earnings "will go to support national poultry breeding and other agribusinesses." He added that the U.S. is ready to continue talks on a second installment of food aid. JAC


U.S. and Russian negotiators to food talks focused in part on providing food to Russia's more remote regions in the North, Siberia, and the Far East, where food and other commodities are in short supply, "Rossiiskaya gazeta" reported on 5 November. Because of shortages of both food and electricity, more than 1,000 residents of Chukotka, located in the extreme north of the Far East, have been evacuated, Russian Public Television reported the next day. At least another 2,000 are scheduled to be moved out of the area. Meanwhile, according to official data, 800,000 residents of northern regions of the Far East--more than 10 percent--have moved to other parts of Russia permanently since the early 1990s, ITAR-TASS reported on 9 November. JAC


The Interior Ministry estimated that more than 270,000 people took part in rallies in 949 cities and towns on 7 November, the 81st anniversary of the Bolshevik Revolution, ITAR-TASS reported. Interior Minister Sergei Stepashin and Moscow Mayor Yurii Luzhkov both claimed that the event attracted fewer people than in past years. In Moscow, roughly 10,000 gathered to mark the anniversary with a procession to Lubyanskaya Square; that is about half of the reported turn-out of the previous year. However, sponsors of the event had a different tally, reporting that 350,000 people participated (some 50,000 more than had been predicted by Aleksandr Kuvaev, first secretary of the Communist Party's Moscow City Committee on 4 November). The city of Krasnodar marked the occasion by unveiling a monument to soldiers from both the Reds and the Whites who died during the civil war. JAC


In a television broadcast on 7 November, President Boris Yeltsin used the holiday, which two years ago he renamed by decree as the "Day of Accord and Reconciliation," to criticize recent Communist Party policies, particularly with regard to the press. He also pointed out that the Communist Party program now calls for "democracy and private ownership, freedom of enterprises and financial markets." He declared a victory for forces of reform, saying that they "have not only changed the course of history but have also changed people's mindset from one of hostility and hatred to that of tolerance and dialogue." The next day, Yeltsin unexpectedly returned to Moscow from Sochi, where he was on vacation reportedly to recover from fatigue. JAC


Russian First Deputy Foreign Minister Aleksandr Avdeev held talks on 7 November with Turkish Foreign Ministry officials on the role of the OSCE in Europe's future security architecture and on the deadlocked Cypriot problem, ITAR-TASS reported. The previous day, British Foreign Secretary Robin Cook had appealed to his Greek Cypriot counterpart, Iannakis Kassulides, to cancel the imminent planned deployment on Cyprus of Russian S-300 anti-air missiles, the "Turkish Daily News" reported. The newspaper also quoted a Greek Cypriot publication as claiming that the planned November deployment of the S-300s has been postponed until 1999. In Washington on 5 November, U.S. State Department spokesman James Rubin said the U.S. has asked the Russian government to investigate Turkish allegations that Kurdistan Workers' Party leader Abdullah Ocalan is in Russia and to expel him immediately if he is, according to AP. LF


CIS Executive Secretary and influential businessman Boris Berezovskii called for banning the Communist Party during an interview with Ekho Moskvy on 8 November. The prohibition is justified, according to Berezovskii, because the party has tried to "stir up inter-ethnic discord." He told Interfax that "by expressing their solidarity with [State Duma Deputy and Communist Party faction member Albert] Makashov," the Communists place themselves beyond Russian law. Last week, the Duma rejected a resolution condemning Makashov for his repeated anti-Semitic public statements. Of the Communist faction, only Duma speaker Gennadii Seleznev voted in favor of the bill. Seleznev labeled Berezovskii's call as "one more fit of hysteria" and "an extremist statement." Former Prime Minister Yegor Gaidar also called for the Communist Party to be banned because of its support for Makashov. Earlier, President Yeltsin issued a statement condemning "any attempt to insult ethnic groups." JAC


Moscow Mayor and likely Russian presidential contender Yurii Luzhkov told reporters on 6 November that he favors Yugoslavia joining the Union of Russia and Belarus. Luzhkov added that Yugoslavia's effort to join the union must be supported and that he will fly to Minsk to discuss the issue with Belarusian President Alyaksandr Lukashenka soon. The same day, Luzhkov met with Vojislav Seselj, deputy prime minister of Yugoslavia and leader of the Serbian Radical Party. Seselj also met with Patriarch Aleksii II of Moscow and All-Russia and Interior Minister Sergei Stepashin. In addition to conducting foreign policy for Moscow, Luzhkov concluded a commercial agreement with Nizhnii Novgorod Governor Ivan Sklyarov, establishing a joint company for cutting and selling diamonds. JAC


Tajik government troops have forced rebels from the district of Aini and have cleared the highway from Dushanbe to the main northern city of Khujand. Aini was the last pocket of rebel resistance after government troops stormed the old fortress in Khujand on 7 November, freeing "dozens" of Interior Ministry troops held captive by the rebels. Latest reports suggest the rebels have broken up into small bands and are attempting to make their way to Uzbekistan. The Tajik government has reinforced border guards along the Tajik-Uzbek border. Leninabad Region administrative head Kasym Kasymov appeared on national television on 7 November saying at least 70 government soldiers and civilians have been killed and more than 300 wounded since fighting broke out on 4 November. BP


The whereabouts of rebels whom the Tajik government hold responsible for the fighting are unknown. Presidential spokesman Zafar Saidov said they may have already crossed the border into Uzbekistan. The government has named former army Colonel Mahmud Khudaberdiyev, former deputy Transportation Minister Narzullo Dustov, as well as former Prime Minister Abdumalik Abdullojonov and his brother, former Khujand Mayor Abdughani Abdullojonov, as the masterminds behind what Dushanbe calls an attempted coup. The Prosecutor-General's Office launched criminal proceedings against the four on 8 November, noting that Khudaberdiyev and Abdumalik Abdullojonov are already wanted on earlier charges. BP


Kazakh President Nursultan Nazarbayev said on 7 November he welcomes other candidates in the 10 January presidential elections and has nothing against former Prime Minister Akezhan Kazhegeldin taking part in that race, ITAR-TASS reported. Nazarbayev's press secretary, Asylbek Bisembayev, said the previous day that in order to be eligible to run, Kazhegeldin must have a court ruling against him overturned in a higher court before 30 November. However, Bisembayev also said Kazhegeldin needs to show more respect for the Medeu Court, which found him guilty of attending an unsanctioned meeting in early October. He added that Kazhegeldin "three times ignored the Medeu court sessions" held to consider his case. BP


Nurlan Balgimbayev on 6 November said that inflation has been kept at 2.3 percent since the beginning of this year, Interfax reported. Balgimbayev said this is an improvement over last year, when inflation reached more than 7 percent. ITAR-TASS reported on 9 November that Kazakhstan has the highest average monthly pension (some $36) among the CIS countries. BP


Police resorted to violence against opposition leaders and their supporters in Baku on 7 and 8 November, Reuters and Interfax reported. On 7 November, dozens of people were injured and many more detained temporarily when police intervened to prevent an unsanctioned march by 3,000- 4,000 supporters of Azerbaijan National Independence Party chairman Etibar Mamedov. The marchers were protesting the falsification of the results of the 11 October presidential elections. Mamedov claims his share of the vote was large enough to warrant a runoff between himself and Heidar Aliev, who according to official returns received 76 percent of the vote. On 8 November, police attacked and beat Liberal Party leader Lala Shovket Gadjieva and Democratic Party chairman Ilyas Ismailov following a sanctioned rally in Baku attended by between 10,000 and 15,000 people. The demonstrators similarly protested the falsification of the presidential election results. LF


Meeting in Istanbul on 6 November, Azerbaijani and Turkish government officials finalized draft agreements on construction of the proposed Baku-Ceyhan export pipeline for Azerbaijan's Caspian oil, AP and ITAR- TASS reported. Those agreements are to be signed by the respective heads of state later this month. Also on 6 November, Turkish State Minister for Maritime Affairs Burhan Kara said Ankara may increase transit fees for tankers passing through the Turkish straits in a move that would make the export of oil via that route "irrational," AP reported. LF


At a government session on 6 November chaired by President Aliev, Azerbaijani Prime Minister Artur Rasi-zade criticized the failure of the state oil company SOCAR to reverse the ongoing decline in gas extraction, despite an increase in oil production, Turan reported. Rasi-zade also expressed concern at the decline in the export of oil products, but he did not estimate to what degree that decline is the result of the oil price slump on world markets. President Aliyev gave an overall positive assessment of the country's economic performance during the first nine months of 1998, noting GDP growth of 8.5 percent. Aliyev also said that Azerbaijan's per capita foreign debt ($73) is one of the lowest of any former Soviet republic. LF


Aliyev told government ministers that 80 percent of small state-owned enterprises and 20 percent of smaller ones have been privatized. He added that 51 percent of GDP is currently generated by the private sector. "Azadlyg" in late October reported that plans have been drawn up to privatize SOCAR and several other strategic enterprises. Those plans allegedly provide for members of Azerbaijan's ruling elite to acquire those enterprises under cover of fake foreign companies. LF


Viktor Dallakian of the Yerkapah group, the largest in the Armenian parliament, told journalists on 6 November that he does not believe the minority factions within the parliament are interested in resolving the current dispute over the country's proposed new election law, RFE/RL's Yerevan bureau reported. Dallakian said that Fatherland group leader Eduard Yegorian, the author of one of the two drafts currently under discussion, failed to attend a planned meeting convened in the hope of reaching a compromise agreement. The Yerkrapah want 60 percent of the 131 seats in the new parliament to be allocated in single-mandate constituencies. Opposition parties reject that scheme, arguing that it facilitates gerrymandering. They have said they may boycott the poll if the Yerkrapah draft is voted into law (see "RFE/RL Newsline," 5 November 1998). LF


Armenian Pan-National Movement (HHSh) chairman Vano Siradeghian told a Yerevan press conference on 6 November that he thinks the HHSh will be represented in the next parliament but is unlikely to make a strong showing in the elections due next summer, RFE/RL's Yerevan bureau reported. He predicted that those elections will not be fair, observing that "the opposition can close only one third of all vote-rigging loopholes." Siradeghian dismissed as "a witch-hunt" calls by the Armenian Revolutionary Federation (HHD) for the present leadership unequivocally to condemn corruption by members of former President Levon Ter-Petrossian's leadership team, many of whom still hold key positions. . He criticized Ter-Petrossian's successor, Robert Kocharian, for what he termed the new leadership's hard-line foreign policies toward Turkey and on resolving the Karabakh conflict. LF


Henrikh Lolua, deputy head of the United Military Academy of Tbilisi, was arrested on 9 November on suspicion of involvement in last month's insurrection by army units in western Georgia sympathetic to deceased President Zviad Gamsakhurdia, Caucasus Press reported. LF


In his weekly radio address, Eduard Shevardnadze on 9 November declined to condemn outright the 3 November ruling by Georgia's Constitutional Court that a law enacted earlier this year introducing a new professional examination for all judges is unconstitutional, Caucasus Press reported (see "RFE/RL Newsline," 6 November 1998). Shevardnadze commented that "no reform has ever been painless," adding that Georgian society supports the new measures aimed at minimizing corruption within the legal system. Parliamentary majority leader Mikhail Saakashvili, who drafted the new law, described the Constitutional Court's ruling as "absurd and anti-legal." LF


An IMF mission that arrived in Kyiv last week to examine Ukraine's implementation of the $2.2 billion loan program has reached "negative" conclusions, Ukrainian News reported on 9 November. While citing Ukraine's successes in stabilizing the national currency and restructuring foreign debts, the IMF said major setbacks are decreasing budget revenues, too strict controls on state prices, the lack of administrative reform, and the slow pace of reform in the energy and agricultural sectors. The IMF also warned the government against a money emission, saying it might lead to higher inflation and aggravate the situation on the financial market. The IMF mission left Ukraine without signing any accord on the provision of the next loan tranche. An unnamed IMF representative told the agency that the decision on the tranche "depends on further negotiations" and may be made in late November. JM


Foreign Minister Borys Tarasyuk has sent letters to the UN and EU asking for humanitarian help to victims of the floods in Ukraine's Transcarpathian region, dpa reported on 8 November. Heavy rains have caused five mountain rivers to inundate some 120 settlements in Zakarpatska Oblast, forcing some 25,000 people to leave their homes. The Ukrainian government has provided $600,000 for rescue efforts, while neighboring Hungary donated $250,000 to help the flooded area. JM


Some 4,000 people led by Communist leaders marched through Kyiv on 7 November to celebrate the 81st anniversary of the Bolshevik revolution in Russia, AP reported. Communist Party Secretary Petro Symonenko told the crowd that "those in power in Ukraine are waging war against their own people and living on the money that was stolen from us." The Kiev demonstrators called for Ukraine's reunion with Russia and Belarus as the first step toward creating "a new union of brotherly independent Soviet republics." Rallies were also held in other Ukrainian cities, drawing 5,000 people in Kharkiv and 2,000 in Sevastopol. JM


Some 4,000 people took part in a 7 November demonstration in Minsk to mark the anniversary of the 1917 Bolshevik revolution, Belarusian Television reported. Viktar Chykin, secretary of the Communist Party of Belarus, told the crowd that Belarus has maintained "the achievements of the October Revolution" to a greater degree than any other former Soviet republic, Belapan reported. According to Chykin, this explains why Belarusian Communists support Lukashenka's policies "so actively." Elsewhere in Belarus, some 5,000 people took part in a 20-minute rally in Homel and 1,000 in a meeting in Hrodna. JM


Belarusian President Alyaksandr Lukashenka said at a 6 November meeting with Robert Antretter, vice president of the Parliamentary Assembly of the Council of Europe, that the West should abandon its policy of double standards with regard to Belarus, Belarusian Television reported. Lukashenka added that Belarus meets all standards applied to nations represented in the assembly. "The level of democracy, the protection of our people's rights is not one bit lower than in the countries that have recently joined this respected and very influential organization," Lukashenka told Antretter. Belarus was excluded from the assembly after the 1996 referendum, which virtually abolished the division of powers and the independence of the judiciary in Belarus. Antretter said he visited Belarus "to determine whether any grounds have appeared for the start of a dialogue" between the EU and Belarus, Reuters reported. JM


The leaders of three small right-wing parties-- the Moderates, the People's Party, and the Fatherland Union--met on 8 November to discuss cooperation during the election campaign, ETA reported. Agreement was reached on a program for a possible election alliance, which focuses on education and family policies. The previous day, Prime Minister and Coalition Party leader Mart Siimann and Center Party head Edgar Savisaar failed to reach an agreement on the abolition of election alliances. The Centrists have sought to do away with such alliances, while the Coalition Party opposes such a move. The parliament is due to discuss a bill that would ban election blocs on 17 November. JC


IMF representative to Estonia Dimitris Demekas told BNS on 6 November that Tallinn should adopt as soon as possible regulations for using the country's economic stabilization fund. He added that it is to be expected that suggestions will be made about the fund's use as long as no rules are in place. "I think the first priority would be to establish the rules what the funds should be used for and then we can start discussing whether it should be used for agriculture, for building roads, or for bailing out Maapank or whatever," he said. The IMF advised establishing the 1.3 billion kroon (some $100 million)) stabilization fund one year ago to avoid the overheating of the economy and to accumulate resources in the event of a macroeconomic downturn. JC


The ruling coalition of the Solidarity Electoral Action (AWS) and the Freedom Union (UW) appears to be in crisis after the AWS voted against the UW on 6 November to push through tax breaks in the 1999 income tax law, Polish media reported. Under the AWS tax plan, families with three children will receive tax exemptions in 1999, those with two children in 2000, and those with one child in 2001. Finance Minister Leszek Balcerowicz commented that the AWS voted "against their own government, their own prime minister, and their own budget." The UW asked for a recess and demanded that the AWS reject the passed law and quickly introduce a new one without exemptions for families. A UW spokesman said the stability of the coalition "depends on the AWS," adding that the UW does not intend to defend the coalition "at any price." JM


One week ahead of the elections for the Senate, President Vaclav Havel has criticized the chamber's performance for failing to gain enough prestige and authority during its two-year existence, AP reported on 8 November. In an interview on Czech Television, Havel said he had hoped the upper chamber would not be "merely a body passing laws" but one "thinking about them in broad terms." Owing to its failure to perform such a role, the Senate is viewed by many people as "the lower, number two chamber, which is redundant and costs money," he said. MS


The previous day, Havel was in Bratislava to meet with new Slovak Prime Minister Mikulas Dzurinda and members of his cabinet. Havel proposed that the Visegrad group be revived at a meeting of its premiers and presidents in Bratislava, "where this regional cooperation began". He added that such a meeting will become possible "when Slovakia has a president." Dzurinda welcomed "the idea of a restoration of the Visegrad Four," according to CTK. With regard to the still unsolved problem of the division of former federal property between the two countries, Havel said he considers this a matter for the two governments to solve, noting that he recommends that the Czech cabinet be "as generous as possible." Accompanied by former Slovak President Michal Kovac, Havel also visited the grave of Prague Spring leader Alexander Dubcek. MS


Dzurinda met with Austrian chancellor Viktor Klima on 6 November in Vienna to discuss, among other things, the disputed Mochovce nuclear plant. Dzurinda expressed confidence that an understanding can be reached, while Klima said he believes that under the new government, there will be "a new era of openness" in Slovakia. In an interview with Reuters on 6 November, Dzurinda said his government intends to move quickly to meet two concerns expressed during talks he had at EU headquarters in Brussels one day earlier, namely that a law on national minority languages be drawn up and that an investigation into the 1995 abduction of former President Kovac's son be launched. MS


Hungarian Foreign Minister Janos Martonyi told reporters in Stockholm that there is no reason to amend his country's "ambitious, but not unrealistic expectations" that it will be granted EU membership in 2002. Martonyi said "competent officials of the European Commission do not speak about major delays in membership," adding that Hungary will firmly argue its own goals regarding enlargement. The foreign minister was responding to a statement by German Parliamentary Assembly member Otto Graf Lambsdorff that Hungary's admission may be delayed until 2005. MSZ


David Scheffer, who is Washington's chief envoy dealing with war crimes, said in Belgrade on 7 November that "it is the unanimous view of all the Security Council members that the [Hague-based war crimes] tribunal investigators should have full authority to do their job" in Kosova. He added that the question of access to Kosova for the investigators "is not a debatable issue." He spoke at a conference on war crimes sponsored by non-government organizations in the Serbian capital on 7-8 November. The previous week, Yugoslav authorities denied visas to top officials of the Hague court to go to Kosova (see "RFE/RL Newsline," 5 November 1998). On 7 November, the Yugoslav Justice Ministry issued a statement stressing that Kosova is Yugoslavia's internal affair and outside the court's jurisdiction. PM


A Belgrade court ended hearings against the independent daily "Dnevni Telegraf" on 8 November, RFE/RL's South Slavic Service reported. Bratislava Morina, who heads the Serbian government's refugee program and who belongs to the hard-line United Yugoslav Left, brought the case against the newspaper, which the Belgrade authorities recently shut down and which is now published in Montenegro. Morina sued the paper for publishing an advertisement by the opposition student movement "Resistance." In related news, Resistance issued a press release on 6 November in which it reported that police arrested four students in Belgrade two days earlier for writing anti-government graffiti. The statement added that the students went on trial "immediately" and received 10 days each in prison. Resistance called for their release. PM


The Montenegrin government issued a decree on 6 November guaranteeing full freedom to local and foreign media. The document pledges that foreign news agencies and journalists will be able to work unhindered and that local radio stations may rebroadcast foreign programs if they do not exceed 30 percent of the local station's programming. The Montenegrin government strongly opposes many policies of Yugoslav President Slobodan Milosevic, which it regards as anti-democratic and against Montenegro's fundamental political and economic interests. Several publications recently banned in Serbia are now based in Montenegro. Critics of the Montenegrin government charge, however, that the Montenegrin media are not free to criticize President Milo Djukanovic or to write about corruption. PM


Two Serbian policemen went missing in southwestern Kosova on 6 November. Their police colleagues have since been conducting a search for them. Also on 6 November, some five Kosovar guerrillas died in a shoot-out with police in southwestern Kosova. It is unclear if the incidents were linked, AP reported. In Prishtina on 7 November, representatives of Kosovar Serbs insisted that any future autonomy for Kosova include autonomy for Serbs from local ethnic Albanian rule. The Serbian representatives said that there can be no political settlement in Kosova without the Serbs' approval and that Milosevic does not have the right to sign agreements in their name. Also in the Kosovar capital, some 11 British monitors "with military backgrounds" arrived on 6 November, Reuters noted. PM


U.S. Ambassador to Macedonia Chris Hill, who is also Washington's chief envoy in the Kosova crisis, held what Reuters described as "secretive talks...[in a] cloak-and-dagger atmosphere" with representatives of the Kosova Liberation Army (UCK) in Dragobilj on 6 November. UCK spokesman Jakup Krasniqi said afterward that the talks were "fruitful" but gave no details. Hill "avoided" journalists and left immediately after the meeting, Reuters added. PM


A spokesman for the Democratic Party of the Albanians (PDSH) said in Skopje on 6 November that party leader Arben Xhaferi will begin discussions this week with Ljubco Georgievski, who is most likely to be the next prime minister, on the PDSH's joining the new government (see "End Note," "RFE/RL Newsline," 6 November 1998). The PDSH spokesman said that his party noted that Georgievski and his ally Vasil Tupurkovski "created a positive climate in the [recent] election campaign and did not instigate inter- ethnic hatred." The spokesman stressed that the PDSH believes that improving interethnic relations is the "key to economic development." Georgievski and Tupurkovski campaigned on a platform of ending corruption and promoting economic growth. PM


The international community's Carlos Westendorp ordered "suspended" a recent regulation issued by the government of the mainly Muslim and Croatian Bosnian federation to govern property rights, RFE/RL's South Slavic Service reported on 6 November. Westendorp said that the measure would impede the right of refugees to return to their former homes, which is a fundamental right guaranteed in the Dayton agreement. In Zagreb, Croatian officials said on 7 November that Bosnian federal President Ejup Ganic, a Muslim, canceled a meeting of top Bosnian and Croatian officials originally slated for 9 November in Zagreb. The new date for signing an agreement on bilateral relations is 19 November. Federal Vice President Vladimir Soljic, an ethnic Croat, said that he doubts that the signing will take place even on that later date. PM


On 6 November in New York, the UN Security Council issued a statement calling on Croatian officials to provide better security for Serbs in eastern Slavonia. The next day in Belgrade, the transportation section of the Yugoslav Chamber of Commerce asked the Transportation Ministry to approve setting up 65 new bus routes to Croatia. Twenty-one Yugoslav firms expressed an interest in participating. The Belgrade authorities rejected a similar request by the Montenegrin Chamber of Commerce to connect Montenegro with Croatia by bus via the still- closed border crossing of Debeli Brijeg, RFE/RL's South Slavic Service reported. PM


Claude Cheik Ben Abdel Kader, who is a French citizen of Algerian origin and on trial for murder in Albania, told a Tirana court on 7 November that he came to Albania as "a man" of suspected Islamist terrorist Osama Bin Laden." Albanian police arrested Kader in August for allegedly killing his Albanian translator (see "RFE/RL Newsline" 19 October 1998). Kader said that he had wanted to "organize a group of 300 people to...fight in Kosova against the Serbs," adding that he considers this year's Serbian offensive "a war against Islam." Kader claimed that his translator was also a member of the Islamist group and died in an unspecified accident, AP reported. Bin Laden, who reportedly visited Albania in April 1994, is the key suspect in the bombing of the U.S. embassies in Tanzania and Kenya in August. FS


The Albanian-based Foundation for Enterprise Financing and Development (FEFAD) celebrated its transformation into a full-fledged bank on 6 November, the "Albanian Daily News" reported. The German Bank for Reconstruction and Development founded FEFAD in 1996. Since then, it has given some 750 credits worth a total of $ 5.5 million to small and medium-sized enterprises. The transformation will allow the FEFAD-Bank to receive deposits, offer bank accounts to customers, and make transfers. FS


Acting Mayor Viorel Lis, running on the Democratic Convention of Romania ticket, has narrowly defeated Sorin Oprescu, the candidate of the Party of Social Democracy in Romania, in the runoff elections to the Bucharest mayoralty, Mediafax reported on 8 November. With nearly all votes counted, Lis received 50.5 percent of the vote, compared with 49.5 percent for Oprescu. Turnout was 37.8 percent. In other news, the IMF delegation that visited Romania last week said it will return for further talks in January and that the possibility of resuming loans to Romania will be examined in March, after the 1999 budget has been approved by the government. MS


For the second time in three months, Moody's Investment Service has downgraded Romania's country risk classification, citing political instability and doubts about the country's capability to meet its $2.26 billion foreign debt servicing in 1999. Standard & Poor's downgraded Romania's risk rating last month, Mediafax reported on 8 November. The previous day, the government announced that Greece's OTE has won the bid to purchase a 35 percent stake in RomTelcom. OTE paid $675 million and will invest another $400 million over the next three years if operations grow. MS


The Party of Moldovan Communists on 6 November moved a no confidence motion in the cabinet, citing the government's responsibility for the ongoing economic crisis, BASA-press reported. The motion must be debated within three days. Communist leader Vladimir Voronin has said his party is ready to participate in setting up a new cabinet on condition that it be allowed to appoint the prime minister. Also on 6 November, the parliament passed a new law on local administration that provides for the appointment of prefects as government representatives at the local level. The autonomous Gagauz-Yeri region will also have a prefect. MS


The state-run Russian arms exporting company Rosvooruzhenie has sued the Armimex company, and a Sofia court has ordered the seizure of state-owned Armimex's bank accounts, ITAR-TASS reported on 7 November, citing Bulgaria's "Standard." Rosvooruzhenie says Armimex has defaulted on a $3 million debt for exports to a machine tool plant, adding that the debt dates back three years. The Bulgarian Defense Ministry's engineering directorate guaranteed the debt. Armimex is the successor of that directorate. MS


by Katya Cengel

Russia's continuing economic crisis is causing problems for those countries with which it has significant trade links . That is certainly true of neighboring Latvia. Russia is Latvia's second-largest market, and many Latvian companies are now feeling the strain.

Official statistics show that before the crisis, some 15 percent of Latvia's exports went to Russia and almost 12 percent of its imports came from that country. It is widely expected that newer numbers will show a drop in trade, the effect of which is already being seen in unemployment figures.

In August, Latvia's unemployment rate was officially listed as 7.4 percent, but according to the State Employment Service, it had climbed to 7.6 percent one month later. Much of the increase is being linked to the situation in Russia, as higher-than-average unemployment is being registered in those districts where exports to Russia are highest. This applies, in particular, to areas dealing with food and fish products.

At a press conference last month, Latvian Welfare Minister Vladimirs Makarovs said he expects another 10,000 people to lose their jobs owing to the closure of Latvian companies as a result of the Russian crisis. He said that he expects official unemployment to reach 8.6 percent in the coming months and that "even highly qualified and well paid workers are in danger".

Among the companies most severely affected are 70 that have scaled down their business or manufacturing operations. Of these, 14 have halted work altogether and 46 have partly closed. Some 2,000 employees have been laid off and another 5,000 sent on unpaid leave.

Auto Elektroaparatu Rupnicas [Riga Auto Electric Apparatus Plant] is an example of a company that has been forced to reorganize. With 70 percent of its business involving shipments to Russia, the company recently reduced its 1,200 employees to 700.

Arnis Ermanis Shemins, president of the company, said his firm was unable to make severance payments to its former employees, adding that further lay-offs are expected. The company has suspended exports to Russia and sales have declined by half.

Some companies are encountering difficulties making other payments as well. Maiga Dzervite, deputy director- general of the State Revenue Service, says 50 companies have requested extensions for making tax payments. Of those, 15 are linked to the fishing industry, nine to the transport sector, and eight to the food and beverages industry. Latest available figures put the export of food products at 8.7 percent down on last year's level, while the export of machinery and electrical equipment has declined by 6.8 percent.

Dzervite warns that worse is to come for the economy as a whole: "Revenue is decreasing, the economy is distorted, and the gross national product is going down." She added that Latvia "will survive but it will not be such a nice picture as we originally drew for 1998."

Dzervite describes the effects of the Russian crisis as occurring in three stages. The first affects companies selling directly to Russia. The second hits those supplying goods to companies that export to Russia. And the third involves firms from all sectors of the economy supplying goods to Latvian consumers, since higher unemployment means smaller demand for goods and services.

Some companies are resorting to barter to continue trade with Russia. OlainFarm pharmaceuticals, which formerly sold 60 percent of its products to Russia, has just signed a contract to exchange medicine for Russian coal. Currently, about 30 percent of their production is going to Russia in barter trade.

The company's advertising director, Egils Grikis, credits the Russian government with the barter idea, which will allow OlainFarm to retain all its employees. The arrangement has lowered the need to find new markets, which, in itself, is a difficult process.

Agris Skuja, director of the industry department for the Latvian Economics Ministry, acknowledged that Latvian products are generally "not of a sufficiently high quality for the European market," adding that "it is expensive to meet European standards."

He added that the situation is "very bad" and can be improved only through a long, expensive program. Worker training needs to be enhanced, the government must provide a better legislative framework for business, companies must better explore other markets and develop marketing strategies, and Latvia must gain increased political and economic support from the EU, he argues.

Some officials hope Latvia's entrance into the World Trade Organization will help provide a way forward. Latvia was accepted as a WTO member last month, and ratification by the Latvian parliament is expected within the next few weeks. The author is a Riga-based contributor to RFE/RL.