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Newsline - June 4, 1999




RUSSIAN GOVERNMENT CAUTIOUS OVER KOSOVA PEACE PLAN

President Boris Yeltsin has declined to comment on the Yugoslav parliament's 3 June acceptance of the joint peace plan brought to Belgrade by Russian special envoy to Yugoslavia Viktor Chernomyrdin and his EU counterpart, Finnish President Martti Ahtisaari (see Part II). Russian Prime Minister Sergei Stepashin, for his part, repeated calls in Moscow for an end to NATO air strikes against Yugoslavia, RFE/RL's South Slavic Service reported. Chernomyrdin briefed Yeltsin in Moscow on 4 June about his talks in Belgrade before traveling to Helsinki for a scheduled meeting with Ahtisaari and U.S. Deputy Secretary of State Strobe Talbott, AP reported. On 3 June, Chernomyrdin's adviser Valentin Sergeev said in Belgrade that "NATO generals who will arrive in Belgrade under the auspices of the UN will have to start putting into practice the peace plan," Interfax reported. FS

RUSSIAN MILITARY OFFICIAL 'NOT HAPPY' WITH NATO

A Defense Ministry member of Chernomyrdin's delegation, Colonel-General Leonid Ivashov, said on arriving in Moscow from Belgrade that "we, the military, deep in our hearts are not happy about many provisions that have been reached during these talks, because a lot of things are left unclear.... We were not quite satisfied with the role of NATO that is being imposed and the diminished role of Russia," AP reported. He stressed, however, that "there were no differences within the Russian delegation during the talks," ITAR-TASS reported. In Minsk on 3 June, Russian Foreign Minister Igor Ivanov also denied reports that Chernomyrdin and his military advisers disagree over the peace plan for Kosova (see "RFE/RL Newsline," 3 June 1999). FS

ZHIRINOVSKII, COMMUNISTS SLAM CHERNOMYRDIN

Liberal Democratic Party of Russia leader Vladimir Zhirinovskii accused Chernomyrdin on 3 June of "surrendering Yugoslavia." "A man who specializes in gas should not be working in foreign policy," Zhirinovskii commented, in a reference to Chernomyrdin's former post of Gazprom head. Communist legislator Yurii Nikiforov said Chernomyrdin is "betraying the interests of Yugoslavia," Interfax reported. FS

RUSSIAN FOREIGN MINISTRY PROTESTS NATO PLANES IN HUNGARY

The Russian Foreign Ministry issued a statement on 3 June saying that the deployment of NATO planes in Hungary within the framework of NATO's air campaign against Yugoslavia violates the 1990 Paris Treaty on Conventional Forces in Europe and later agreements (see "RFE/RL Newsline," 25 May 1999). The statement said the agreement allows NATO to deploy the planes in Hungary only within the framework of peace-keeping missions that have a mandate from either the UN or the OSCE. Hungarian Foreign Ministry spokesman Gabor Horvath told MTI in Budapest that the deployment of the planes serve the "principles and values which the UN, the OSCE, and NATO were set up to protect." FS

STEPASHIN PRESENTS GOVERNMENT

Prime Minister Stepashin introduced the members of his government at a press conference on 3 June. First Deputy Prime Minister Nikolai Aksenenko will act on Stepashin's behalf during his absence and will also substitute for him as secretary of the committee responsible for urgent problems. Deputy Prime Minister Viktor Khristenko will work on budget policy and macroeconomic issues. Central Bank Chairman Viktor Gerashchenko, Academy of Sciences President Yurii Osipov, and special representative to international financial institutions Mikhail Zadornov will attend all government sessions. Stepashin stressed that one of the government's main tasks is to secure the State Duma's approval of at least 80 percent of the package of laws required to secure financial assistance from the IMF. DJ

BEREZOVSKII DENIES ROLE IN FORMING GOVERNMENT

Influential businessmen Boris Berezovskii has denied that he had any role in the formation of the new government, Interfax reported. "If I had taken part in [that process]," he said at a press conference on 4 June, "it would certainly look different than it does today." Berezovskii said Prime Minister Stepashin was not his choice to succeed President Yeltsin and that he supports Krasnoyarsk governor Aleksandr Lebed in the presidential elections next year. Berezovskii also praised former Prime Minister Yevgenii Primakov for "consolidating" the country's political elite but criticized him for accomplishing that "from the left"--a reference to Primakov's support in the Communist-dominated Duma. DJ

TOPOL MISSILE TESTED AGAIN

The Strategic Rocket Forces on 3 June successfully test-fired a Topol-M intercontinental ballistic missile (referred to by NATO as the SS-27), according to Russian media. The missile was launched from the Plesetsk test range in Arkhangelsk Oblast and landed on the Kamchatka Peninsula, in the Far East. It was the seventh launch of the missile in the past three years. Facing with severe financial constraints, which are also affecting the armed forces, the government has decided to concentrate defense spending on developing the Topol-M, which is designed to be fired from either a silo or a mobile platform. Russia plans to deploy 40 such missiles by the end of next year, replacing the current force of heavier, multiple-warhead missiles. A Topol-M system was deployed near Saratov last December. DJ

INFLATION RATE SLOWS

Inflation registered 2.2 percent last month, the State Statistics Committee announced on 4 June. Following the August 1998 economic collapse, inflation surged to 84 percent for 1998 as a whole but has slowed this year. Prices were up 3 percent in April and 2.8 percent in March. Overall, prices have risen 22 percent in the first five months of this year. DJ

STEEL NEGOTIATIONS AT IMPASSE

Negotiations between Russia and the U.S. over on Russian steel exports are on the verge of breaking off, according to ITAR-TASS A source close to the negotiations told the news agency on 4 May that Russia last week asked the U.S. Department of Commerce to delay until 10 July a decision on anti-dumping tariffs for Russian steel exports but that request has so far gone unanswered (see "RFE/RL Newsline," 25 May 1999). If the U.S. does not meet the request by 10 June, permanent anti-dumping tariffs on Russian steel exports will be imposed and the U.S. market closed to Russian steel, in accordance with U.S. law. DJ

STEPASHIN FORESEES INCREASED RUSSIAN ROLE IN MID- EAST PEACE PROCESS

At his 3 June news conference in Moscow, Premier Stepashin said that Russia intends to increase its efforts as a "co-sponsor" in the Middle East peace process, Interfax reported. Referring to recent meetings with former Israeli Premier Benjamin Netanyahu and PLO leader Yasir Arafat in his former capacity as Russian interior minister, Stepashin said that both had privately expressed the desire that "Russia play a more active role in the Middle East." Also on 3 June, the Russian Foreign Ministry issued a statement urging Israel to withdraw its forces from southern Lebanon. The statement follows the death earlier this week of a UN peacekeeper in the region. JC

SOBCHAK TO RUN FOR DUMA. Former St

Petersburg Mayor Anatolii Sobchak intends to run as an independent for a Duma seat from that city in the December elections, according to "Nezavisimaya gazeta." He added that he will also consider standing as a member of a party list. Sobchak has been living abroad since charges of corruption and abuse of power were brought against him last year. Duma members enjoy immunity from criminal prosecution. DJ

CARGO TRANSPORT ON NORTHERN SHIPPING ROUTE EXPECTED TO INCREASE

Vladimir Mikhailichenko, head of the Transport Ministry's department for the Northern Shipping Route, told Interfax on 3 June that the volume of cargo transport on the Arctic waterway could rise by 1.5 times this year to some 2 million tons. Mikhailichenko pointed to the expected increase in cargo transport between Asia and Europe as well as from oil and gas deposits along the Arctic coast. He noted that last year, two experimental tanker routes were opened along which 28,000 tons of gas condensate intended for export were transported from Yamal to Europe. In the near future, he said, such routes will become "regular." JC

RUSSIANS CELEBRATE PUSHKIN'S BIRTHDAY

Events marking the 200th anniversary of the birth of Aleksandr Pushkin are planned throughout Russia this weekend. In Moscow, the celebrations get under way on 4 June with the annual Pushkin assembly at the State Museum A. S. Pushkin, ITAR-TASS reported. The festivities in the capital are to culminate on 6 June with a gala concert on Red Square, dubbed "Golden Voices of Russia--Pushkin," featuring Russian conductor Valerii Gergiev and Spanish tenor Placido Domingo. The Moscow city government is reported to have spent more than $2 million on events commemorating the poet. Pushkin was born in Moscow on 27 May 1799 (6 June according to the new calendar). He died aged 37 as a result of a duel with a French nobleman. JC

PIPELINE GUARD KILLED BY BOMB IN NORTH OSSETIA

One security guard was killed and two injured on 3 June when their car hit an anti-tank mine close to the border between North Ossetia and Ingushetia, ITAR-TASS reported. The three men were inspecting the North Ossetian sector of the Baku-Novorossiik oil export pipeline. LF




WORLD BANK CHAIRMAN IN ARMENIA

James Wolfensohn, who arrived in Yerevan on 2 June, met the following day with the two leaders of the Miasnutyun bloc that has emerged as the clear winner in the 30 May parliamentary elections, RFE/RL's Yerevan bureau reported. Wolfensohn told journalists on 4 June that he thinks it unlikely that the new Armenian government will retreat from the present policy of economic liberalization. He also said he saw no evidence to substantiate rumors of a rift between Miasnutyun's two leaders and President Robert Kocharian. On 3 June, Wolfensohn visited the northern town of Spitak, which was destroyed by the December 1988 earthquake and where the World Bank has funded several reconstruction projects. He also discussed with Prime Minister Armen Darpinian infrastructure projects funded by loans from his bank, including the construction of highways and irrigation systems. LF

AZERBAIJAN WANTS CHINA TO DEMAND RETURN OF ROCKETS FROM ARMENIA

The Azerbaijani Foreign Ministry issued a statement on 3 June expressing the hope that Beijing will demand the return of eight Typhoon rocket systems sold by a private Chinese company to Armenia, ITAR-TASS reported. In a diplomatic note made public in Baku the same day, the Chinese Foreign Ministry denied any government participation in the sale and undertook to ensure that no further such transactions take place, according to Interfax. Turan on 3 June quoted Azerbaijan's Ambassador to Beijing Tamerlan Karaev as saying he received assurances from a senior Chinese Foreign Ministry official that Beijing has recalled all its military instructors from Armenia. LF

ANOTHER ABKHAZ SECURITY OFFICIAL SHOT DEAD

Otar Gogia, deputy chief of President Vladislav Ardzinba's bodyguards, was shot dead in Gali Raion on 4 June and a second bodyguard was wounded, Caucasus Press reported. It was the second such ambush in four days (see "RFE/RL Newsline," 2 June 1999). At their regular meeting on 3 June, UN observers and the commander of the Russian peacekeeping force in Gali appealed to the Abkhaz not to increase their police presence in Gali in response to the earlier killings. Also on 3 June, Otar Kakalia, who is chairman of the Abkhaz Committee for Refugees and Missing Persons, told Caucasus Press that a total of 4,600 ethnic Georgians displaced persons have returned to Gali since the Abkhaz authorities unilaterally began a repatriation program on 1 March. LF

KAZAKH PARLIAMENT DEPUTIES JOIN PRESIDENTIAL PARTY

Of the 67 deputies in the lower house of the Kazakh parliament, 44 have joined OTAN, the party created earlier this year as a support base for President Nursultan Nazarbaev, RFE/RL's Astana bureau reported on 4 June. Faction chairwoman Mariam Zhuyrikbaeva denied that pressure is being exerted on students and teachers to join OTAN. LF

KAZAKH PRESIDENT CALLS FOR JEWELRY DONATIONS

President Nazarbaev has appealed to citizens of Kazakhstan to donate gold and silver jewelry to help shore up the country's gold and hard currency reserves, RFE/RL's Kazakh Service reported on 4 June. Net gold and foreign currency reserves in April were $1.01 billion. Some regional governors are imposing a $50 tax on families that refuse to comply with that appeal. Nazarbaev told the population that South Korea recently launched a similar campaign to counter its financial crisis. LF

KAZAKHSTAN TO AMNESTY 20,000 PRISONERS

One prisoner in four is to be released over a six-month period under a law passed on 2 June, Reuters reported. More than half of those to be amnestied are suffering from TB. Women, minors, and persons over 55 will also be freed. Kazakhstan's jails are over- crowded, and the measure will save the state budget one billion tenge ($7.6 million). LF

KYRGYZ GOVERNMENT DISCUSSES WAGE ARREARS

Amangeldi MurAliyev chaired a cabinet meeting in Bishkek on 3 June convened to discuss the economic situation, which he described as "very tense," Interfax and RFE/RL's Bishkek bureau reported. MurAliyev expressed concern at the decline in value of the som, rising unemployment, and the government's failure to meet targets for tax collection or to pay salaries to state employees. The Kyrgyz government owes some 200 million soms (about $4.5 million) in overdue wages. LF

KYRGYZ PARLIAMENTARY DEPUTY ARRESTED

Businessman and parliamentary deputy Boris Vorobev was arrested in a village near Bishkek on 2 June, RFE/RL's Bishkek bureau reported. He is suspected of tax evasion and embezzlement. Kyrgyz parliamentary deputies have immunity from arrest only while the parliament is in session. Also on 2 June, the wife of Taalaibek Duishembiev told RFE/RL's Bishkek bureau that he has written to President Askar Akaev requesting to be stripped of his Kyrgyz citizenship. Duishembiev has been held in pre-trial detention for 10 months on suspicion of having organized the assassination of deputy director-general of the LUK-Oil-Kyrgyzstan company. Duishembiev denies that charge. LF

UZBEKISTAN SEEKS TURKMEN SUPPORT FOR AFGHAN MEETING

Uzbek Foreign Minister Abdulaziz Komilov met with Turkmen President Saparmurat Niyazov in Ashgabat on 3 June, Interfax reported. Komilov handed Niyazov a letter from Uzbek President Islam Karimov soliciting Niyazov's support for a meeting in Tashkent next month of the so-called 6 plus 2 contact group to discuss the situation in Afghanistan. That group comprises the six countries that border on Afghanistan as well as Russia and the U.S. under UN auspices. A source within the Turkmen presidential staff told Interfax that Niyazov said his country will send representatives to the talks only if all Afghan parties, including President Burhanuddin Rabbani, are invited to attend. Taliban leader Mullah Mohammad Omar had told Komilov in Kandahar on 1 June that the Taliban will attend such a meeting only if all other states represented formally recognize them as the legitimate government of Afghanistan (see "RFE/RL Newsline," 2 June 1999). LF

UZBEKISTAN SAYS SOME WANTED TERRORISTS IN TAJIKISTAN

Uzbekistan's Russian-language official newspaper "Pravda Vostoka" has accused the Tajik opposition of supporting three men wanted by the Uzbek authorities in connection with the series of bombings in Tashkent in February, Interfax reported on 3 June. The newspaper said that there is water-tight evidence that the men are currently hiding in Tajikistan on territory controlled by the United Tajik Opposition. The trial of 22 people accused of participating in the bombings opened in the Uzbek capital on 2 June. LF




EYE-WITNESSES SAY OFFICIAL DEATH TOLL IN MINSK STAMPEDE INCORRECT

RFE/RL's Belarusian Service reported on 3 June that the official number of people killed in the metro stampede in Minsk on 30 May is "at significant variance" with eye-witness reports. According to the authorities, 52 people died in that incident. A women told RFE/RL that she did not find the names of her two killed friends on the official list of those who died. She also claimed to have seen a dead 10- year-old boy in the metro passageway who was not included on the official list. Meanwhile, Minsk Mayor Uladzimir Yarmoshyn has tendered his resignation, claiming a "moral burden" of responsibility for the tragic stampede. Belarusian President Alyaksandr Lukashenka has refused to accept his resignation, saying that society as a whole might be responsible. JM

BELARUS SAYS 1999 CRUCIAL YEAR FOR TIES WITH TAJIKISTAN

Belarusian Prime Minister Syarhey Linh told his Tajik counterpart, Yakhye Azimov, in Minsk on 3 June that 1999 is likely to be a decisive year for bilateral relations, Interfax reported. Linh pointed to political stabilization in Tajikistan and its entry into the customs union with Belarus, Russia, Kazakhstan, and Kyrgyzstan. Last year, Belarus-Tajik trade turnover grew by $4.3 million to $11.5 million. Belarus exports motor vehicles, industrial equipment, chemical products, and consumer goods to Tajikistan. The bulk of Belarusian imports from Tajikistan consists of aluminum, cotton, and agricultural products. JM

UKRAINIAN COMMUNISTS WANT TO OUST PREMIER, CHIEF BANKER

Communist Party Chairman Petro Symonenko on 3 June demanded that the parliament sack Prime Minister Valeriy Pustovoytenko and National Bank Chairman Viktor Yushchenko because of their efforts to privatize Sberbank, a state savings bank. Symonenko accused both of violating the law in privatizing Sberbank, arguing that the bank should first compensate Ukrainians for all the savings that have been lost owing to inflation since 1991. The parliament voted to schedule a debate on a possible no-confidence vote in Pustovoytenko and Yushchenko for 16 June. JM

KUCHMA TAKES CREDIT FOR NATIONAL STABILITY

Ukrainian President Leonid Kuchma told journalists on 3 June that the creation of a stable society is one of the main achievements of his presidency, Interfax reported. " He admitted, however, that Ukraine has failed to make the economic progress "we had the right to expect." Also on 3 June, the Central Electoral Commission registered parliamentary speaker Oleksandr Tkachenko as the 18th candidate in the 31 October presidential elections. The day before, the group collecting signatures for President Leonid Kuchma announced that it has gathered 1.3 million. A presidential candidate needs to have 1 million signatures by 13 June in order to run in the election. JM

UKRAINE CRITICIZES CZECH INTENT TO ABOLISH VISA-FREE REGIME

Supreme Council Deputy Chairman Viktor Medvedchuk has said the Czech Republic's plans to introduce visa requirements for Ukrainians (see "RFE/RL Newsline," 1 June 1999) are not in line with the Czech leadership's declared intention to support Ukraine's EU bid. According to Medvedchuk, such actions contribute to strengthening the influence of leftist forces in Ukraine and other CIS states, Ukrainian Radio reported on 3 June. JM

JOINT TAX AUDITS IN BALTICS

The heads of the Estonian, Latvian, and Lithuanian tax authorities signed a cooperation agreement in Tallinn on 3 June allowing for joint audits. The three departments will form working groups of auditors. "If necessary we can now make fast raids to Latvia or Lithuania," chief Estonian tax inspector Enriko Aava said, according to ETA. MH

ESTONIAN FINANCE MINISTER WARNS OF 'UNPRECEDENTED' BUDGET CRISIS

Siim Kallas has issued his harshest warning yet about the state of the budget. The Finance Ministry on 3 June estimated that the budget deficit could reach 2.5 billion kroons ($165 million) by the end of June. The ministry is drawing up plans to cut spending beyond the 1 billion kroons negative supplementary budget being considered now in the parliament. For the first time, the former central banker reluctantly advocated the use of the reserve fund, saying that "unless we get spending under control, there will be a major deficit at the end of the year and 2000 will be very hard for us," according to "Eesti Paevaleht." MH

LITHUANIAN PARLIAMENT APPROVES OIL INDUSTRY SALE

Lawmakers on 3 June approved amendments on relinquishing majority control of the country's oil industry. The amendments allow the state to sell another 33 percent of Mazeikiai Oil, which includes the Mazeikiai Oil Refinery and Butinge Oil Platform, to Williams International. Williams will now be able to gain a total of 66 percent of Mazeikiai because the state agreed earlier on the sale of a 33 percent stake to the company. The hotly debated amendments passed by a 71 to 14 vote. The opposition Social Democratic Party and Democratic Labor Party both failed to attend the vote, while the Center Union voted against the measure, according to "Lietuvos Rytas." Opposition parliamentary deputies have asked the president to veto the amendments and plan to challenge them in the Constitutional Court. MH

LITHUANIAN ALLEGED NAZI COLLABORATOR CLAIMS INNOCENCE

Kazys Ciurinskas, stripped of his U.S. citizenship in 1997 and forced to leave the U.S. last month, told Lithuanian prosecutors that he was not involved in genocide during World War II. At a meeting with a Special Investigations Department official, the 81-year old Ciurinskas did not deny collaboration with the Nazi occupation regime, according to BNS. MH

HOLOCAUST MUSEUM APOLOGIZES TO LITHUANIA

The Holocaust Museum in Washington has apologized to Lithuania for issuing a compact disc that includes a parody of the Lithuanian national anthem. The CD is a collection of songs from the Kaunas ghetto. ELTA quoted the following from the parody: "Let your cities and villages and fields burn. Die like you killed us over centuries." MH

CZECHS, SLOVAKS RESPOND TO KOSOVA AGREEMENT

A spokesman said on 3 June that Czech Foreign Minister Jan Kavan "welcomes" Serbia's acceptance of the peace plan for Kosova and believes NATO bombing can be only stopped after Belgrade accepts the UN resolution laying down all the agreement's points, including the withdrawal of Serbian forces from the region. The spokesman also said that Kavan hopes that when formulating his peace plan, Finnish President Martti Ahtisaari "also used ideas included in Czech-Greek initiative" of last month. Slovak Foreign Minister Eduard Kukan, who is also the UN secretary-general's envoy for the Kosova crisis, told journalists that "the main condition is to deploy peacekeeping units that would safeguard" the return of the refugees, CTK reported. MS

SLOVAK MINORITY WANTS REPRESENTATION IN CZECH PARLIAMENT

Jan Mlynarik, chairman of the Union of Slovaks in the Czech Republic, said at a 3 June meeting between Slovak minority members and Slovak Deputy Premier Pal Csaky that it is "scandalous" that the largest ethnic minority in the country is not represented in the parliament, CTK reported. He also said it is "regrettable" that the Czech authorities "ignore the problem of Slovak education." Nada Vokusova, head of the Czech-Slovak Club and chief editor of "Slovenske dotyky," said at the meeting that the most pressing problem faced by the 280,000-strong minority is that of dual citizenship. Slovaks had to renounce their citizenship if they opted for the Czech one following the breakup of Czechoslovakia. MS

EU URGES SLOVAKIA TO PASS MINORITY LANGUAGE LAW

EU ambassador to Slovakia Walter Rochel on 3 June said the union considers it "very important" for Slovakia to pass the law on minority languages and that this is the "only political criterion" that Bratislava has failed to fulfill in order to be invited to accession talks, CTK reported. Finance Minister Brigitta Schmognerova assured journalists the same day in Zurich that the parliament will soon pass the law, Reuters reported. But according to CTK, there is still disagreement in the ruling coalition about the law. It quoted Robert Fico, a popular Democratic Left Party politician, as saying there is no need for such a law and that the issue has already been solved "by other legal means." MS

FORMER SIS OFFICIAL WITHDRAWS DENIAL OF INVOLVEMENT IN KOVAC JR.'S ABDUCTION

Jaroslav Svechota, a former senior Slovak Counter-Intelligence (SIS) official who confessed in April to having been involved in the abduction of former President Michal Kovac's son but later retracted the confession, has again admitted to involvement in the abduction. Chief investigator Jaroslav Ivor told journalists in Bratislava that Svechota has now "widened" his earlier testimony, on the strength of which another former SIS official was detained and taken into custody, CTK reported. Interior Minister Ladislav Pittner said that since Svechota has asked for a pardon, he probably realizes that he has to give investigators "full and thorough information." MS

HUNGARIAN MAGAZINE, TV PROGRAM CLOSES UNDER STATE PRESSURE

The crime-reporting weekly "Kriminalis" is ceasing publication due to "impossible working conditions," chief editor Laszlo Juszt announced on 3 June. Earlier this week, police launched criminal proceedings against Juszt on suspicion of breaching state secrets by publishing classified documents. The published materials carried information on the so-called "data-gathering case" against senior FIDESZ officials. Hungarian state television has canceled his popular television show, which takes the name of the magazine. MSZ




BELGRADE ACCEPTS PEACE PLAN

The Yugoslav authorities and Serbian parliament on 3 June agreed to accept the G-8 peace plan that Russian special envoy to Yugoslavia Viktor Chernomyrdin and the EU's Martti Ahtisaari brought to Yugoslav President Slobodan Milosevic. Belgrade thereby accepted the "rapid" withdrawal of its own forces from Kosova, the entry into the province of an international force led by NATO and containing Russian troops, the return of refugees, and a "wide degree" of autonomy as described in the Rambouillet agreement. The UN Security Council will shortly pass a resolution establishing a mandate for the international force. Several hundred Serbian troops will be stationed in Kosova but only to guard international borders and Serbian "cultural monuments." Observers note that had Milosevic accepted the Rambouillet agreement before the bombing started in March, he would have been allowed to keep more than 10,000 troops in Kosova. PM

G-7 OFFICIALS DRAFT UN SECURITY COUNCIL RESOLUTION

Senior Foreign Ministry officials of the G-7 states, meeting at the EU summit in Cologne on 4 June, agreed to a draft UN Security Council resolution on Kosova. German Foreign Ministry spokesman Martin Erdmann said that senior German diplomat Guenther Pleuger will fly to Moscow later in the day to discuss the text with Russian officials. Pleuger will then proceed to Beijing, together with Ahtisaari, to seek Chinese support for the document. Erdmann said that once Russia and China accept the draft, the UN Security Council could adopt the document within hours, thereby formalizing the end of hostilities in Kosova. FS

NATO TO BOMB UNTIL MILOSEVIC WITHDRAWS

British Prime Minister Tony Blair told the BBC on 4 June that the Atlantic alliance will continue its bombing campaign until Milosevic begins a "verifiable withdrawal" of his forces from Kosova. In Washington the previous day, President Bill Clinton stressed that "we must be cautious...until Serb forces begin a verifiable withdrawal." Secretary of State Madeleine Albright called Milosevic's acceptance of the peace plan only a "first step" toward ending the crisis. Secretary of Defense William Cohen added that Milosevic has often broken "paper promises" he made in the past. Observers note that many details remain to be worked out before the plan can be implemented. CNN's Washington correspondent reported that in negotiating with Milosevic, "the devil is always in the details." PM

MIXED REACTIONS IN SERBIA...

Parliamentary deputies belonging to Serbian Deputy Prime Minister Vojislav Seselj's Radical Party voted against accepting the peace plan on 3 June. Seselj later said his party will leave the government if NATO troops enter Kosova. The Serbian Renewal Movement's Vuk Draskovic, however, said that the acceptance of the peace plan constitutes "not only an end to the bombing but also a new beginning" for Serbia, the Belgrade daily "Danas" reported. The Serbian Civic League's Goran Svilanovic stressed that democracy and the rule of law must become the norm in Serbia. He added that Serbian diplomats must make "great efforts so that we can take part in [the international stability pact] for the reconstruction of the Balkans." Several international broadcasters quoted numerous Serbs as saying that they are glad that the bombing will stop but are angry at Milosevic for waiting so long to accept an agreement he could have had before the bombing started. Others said that Milosevic "capitulated" to NATO. PM

...AND IN MONTENEGRO, MACEDONIA

Montenegrin Justice Minister Dragan Soc told Reuters in Podgorica on 3 June that "the situation in Montenegro is potentially dangerous. It is part of Milosevic's logic that, in order to stay in power, he finishes one crisis and starts another.... We feel it will be our turn to suffer" once the crisis in Kosova is over. Deputy Prime Minister Dragisa Burzan added that he fears that Serbian forces "retreating" from Kosova could pose a "threat" to Montenegro. In Skopje, Foreign Minister Aleksandar Dimitrov hailed Belgrade's acceptance of the peace plan as the beginning of a political solution in Kosova. He stressed that an end to the crisis would greatly help Macedonia's economy and prompt many of the 250,000 Kosovar refugees in Macedonia to go home. PM

KOSOVAR OFFICIALS WARN AGAINST 'PREMATURE OPTIMISM'

Bajram Kosumi, who is a member of the Kosovar provisional government of Prime Minister Hashim Thaci, told RFE/RL's South Slavic Service on 3 June that the document approved by the Serbian parliament is "unclear." He stressed that it "does not open the door to a political process [leading to a permanent solution] for Kosova." Nor, he said, does it offer the Kosovars as much as the Rambouillet agreement. Kosumi stressed that only "the five demands of NATO [to Milosevic]...can be a good basis for a just solution." Edita Tahiri, who is Kosovar leader Ibrahim Rugova's foreign-policy adviser, told RFE/RL's South Slavic Service that the parliament's acceptance of the peace plan "is a signal of the beginning [of the] surrender of Belgrade and of the victory of NATO against the criminal Serbian regime.... The international community has its own reservations and wants to see that the pledges of Belgrade are implemented because of its experience with [Milosevic] in other wars." FS

WORLD BANK APPROVES $69 MILLION TO ALBANIA

World Bank officials in Washington on 3 June announced the approval of two loans to Albania. The first is a structural adjustment credit of $45 million, which will help the government complete privatization efforts and strengthen the judiciary and other state institutions. The second is a $24 million loan designed to improve irrigation facilities. Both credits are repayable over 40 years and include a 10-year grace period. FS

MILLIONS OF DOLLARS MISSING FROM BOSNIAN BANK

The office of the international community's Carlos Westendorp issued a statement in Sarajevo on 3 June saying that "millions of dollars...deposited with [Sarajevo-based BH] Banka, including funds for reconstruction projects and governmental monies, have repeatedly been diverted and are not available for use by depositors or beneficiaries." The statement also noted that several unspecified international organizations and private individuals have filed suits against the bank, which the Bosnian authorities are investigating. Westendorp's office noted that the missing funds amount to at least $11 million. The bank's newly appointed director, Fikret Pita, told Reuters: "We only have a problem with liquidity, which is the problem of the whole country." PM

CROATIAN INTERIOR MINISTRY TO SUE WEEKLY OVER SOCCER AFFAIR

The Interior Ministry issued a statement in Zagreb on 3 June saying that the ministry intends to sue the independent weekly "Nacional." The statement did not specify the charges. The weekly recently ran a story alleging that the ministry has repeatedly fixed games in favor of Croatia Zagreb, which is the favorite team of President Franjo Tudjman. "Nacional" charged that professional soccer in Croatia is rife with corruption. Also on 3 June, police officials in Zagreb summoned two journalists from "Nacional" for questioning in conjunction with the story, "Novi List" reported. PM

CROATIAN OPPOSITION LEADER ASSAULTED

Stipe Suvar, who heads the small Socialist Workers' Party, told RFE/RL's South Slavic Service in Zagreb on 3 June that unidentified persons hit him in the head with a pistol, prompting him to seek hospitalization. Suvar added that this was "the fourth or fifth physical attack [on him] during the past year." PM

ROMANIAN PROTESTS 'SUSPENDED'

Workers in Brasov "suspended" their protest after the government approved the 2 June agreements signed by the protesters' representatives and Finance Minister Decebal Traian Remes, Romanian Radio reported on 4 June. The workers warned they will resume their protest if agreements are not implemented. Violence broke out again on 3 June in Iasi, where workers from the Czech-owned Tepro factory clashed with the police after attempting to break into the building of the local prefecture. The government's Public Administration Department issued instructions to all prefects to "immediately approve" the intervention of police forces in cases "where there is a flagrant breach of the law." MS

MOLDOVAN PRESIDENT ACCUSED OF VIOLATING CONSTITUTION

Dumitru Cecan, chairman of the parliament's Control and Petitions Committee, on 3 June accused President Petru Lucinschi of having violated the constitution, RFE/RL's Chisinau bureau reported. In a special report presented to the legislature, Cecan said that by having called the 23 May referendum on instituting a presidential system, Lucinschi ignored the constitutional provisions that plebiscites must be approved beforehand by the parliament and cannot take place 120 days before or after elections. Cecan also accused the commission of having agreed to an unconstitutional order from the head of state and of having misspent public funds while organizing the referendum. MS

BULGARIA SAYS VILLAGE HIT BY SERBIAN MISSILE

Defense Minister Georgi Ananiev on 3 June said that the missile that landed near the village of Govezhda one day earlier was a ground-to-air rocket "most likely" fired by Serbian forces (see "RFE/RL Newsline," 3 June 1999), Reuters reported, citing BTA. MS

BULGARIAN PARLIAMENT CHAIRMAN SURVIVES NO-CONFIDENCE VOTE

The parliament on 3 June voted by 150 to 76 with one abstention to reject a motion to remove parliamentary chairman Yordan Sokolov from his position, BTA reported. The motion was submitted by 81 opposition deputies from the Euro Left, the Democratic Left, the Alliance for National Salvation and independent deputies. It was initiated by the Euro Left, following Sokolov's statement that by voting against the agreement to grant NATO the right to use Bulgarian air space, the Euro Left backed Slobodan Milosevic and "reverted to its communist past." MS




BULGARIAN CRISIS OFFERS LESSONS FOR ROMANIAN BANKS


By Ron Synovitz

A panic run on Romania's troubled Bankcoop last week is the latest in a series of events highlighting the fragility of the country's bank sector.

In March, the Romanian National Bank placed the large, state-owned BANCOREX under special supervision. The beleaguered Foreign Trade Bank has moved all its private accounts to another bank in an attempt to close branches. And the small private Albina bank also has been declared insolvent, forcing the government to compensate account holders for part of their losses.

Romania's banking situation is reminiscent of conditions in Bulgaria in 1996, when the collapse of 14 banks brought that country to the brink of economic chaos.

Bernd Klett, an Eastern European analyst for Deutsche Bank Research, says the Bulgarian example offers lessons not just for Romania but for Russia, the Baltic States, Slovakia and even the Czech Republic. "There is a shadow economy, of course, in all of these transition countries," he remarked. "In Bulgaria, part of the economy [has been] dominated by mafia. These are criminal circles who dominate sectors of the economy and also exert influence [on banks and their loan officers]." He added that he thinks there may be "something similar" in Romania.

Klett said much of the pressure is rooted in the fact that large, loss-making state firms are part-owners of the very banks to which they apply for loans. He said another factor is corruption, which thrives where banking supervision is lax. As a result, Klett said, banks across Eastern and Central Europe continue to lend money to recipients who have either no ability or no intention of ever paying it back.

Similarly, a 1997 U.S. Treasury-funded study on Romania's financial system found that "political pressure on banks" has been a main factor behind bad loans. The European Bank for Reconstruction and Development says bad debts in Romania have continued to increase during the last five years--from 19 percent of all bank loans in 1994 to more than 60 percent at the end of last year. And a recent European Commission report on Romania also is critical of the corporate governance of banks. The report, issued last November, complains that the government has failed to root out corruption.

Bucharest's latest proposals on bank reform are based on recommendations by the World Bank and the IMF. They are the same kind of recommendations that Sofia had paid lip service to before the crisis there forced the resignation in early 1997 of Socialist Prime Minister Zhan Videnov's government-- namely, to stop the hemorrhaging caused by bad loans, to strengthen supervision, and to sell off state banks.

Most important, the World Bank says bank reforms must go hand-in-hand with speedier privatizations in all sectors of the economy. The aim is to break the links between the banks, corrupt state managers, and the national budget.

The Bulgarian crisis shows how systemic corruption can ruin a country's economy. Many Bulgarian banks were brought to insolvency in 1996 by what the World Bank calls "dubious relationships" with criminal business groups and state managers, who drained the profitable activities of state firms. Bank managers fueled these crony networks through risky loans, which kept the loss-making state firms running in the short term. Meanwhile, politicians linked to these crony networks helped slow reforms by arguing that privatization and other reforms would cause workers to lose their jobs.

With no bankruptcy law in Bulgaria at the time of the crisis, state firm losses ultimately had to be paid by the national budget. That added to the government's difficulties in servicing foreign debts. A massive devaluation of the lev ensued when the problem became so widespread that central bank reserves were exhausted.

The seeds of hyper-inflation had been planted, and many Bulgarian banks became trapped in a vicious circle partly of their own making. Ultimately, the casualties of the Bulgarian crisis included Videnov's government, a score of state and private banks, and millions of Bulgarians whose frozen savings accounts evaporated in the free fall of the lev.

It took a new government and a strict, IMF-backed currency board regime to bring relative economic stability to Bulgaria. Since then, Prime Minister Ivan Kostov has had the political support to push privatization forward, start sacking corrupt state managers. and break up some financial groups operating on the fringes of the law.

There are signs that Bucharest has learned a few lessons from Sofia's experience. The European Commission found progress in the strengthening of the authority and independence of Romania's National Bank. The legislative framework of the financial sector also has improved with the adoption of the Bank Insolvency Law in November 1997. That law gives courts the authority to close banks whose liabilities exceed assets and which have ceased payments for more than 30 days.

At the end of last year, a new body was set up to help Romanian state banks recover their bad debts. According to the EBRD, that body will help speed bank restructuring and privatization.

Bank privatization began at the end of last year with the sale of the Romanian Development Bank to France's Societe Generale, which paid about $200 million for a 51 percent stake.

Bucharest also has pledged that it will sell off part of Banc Post by year's end. Meanwhile, the large and troubled state-owned BANCOREX and Banca Agricola are under restructuring programs ahead of privatization, due to start sometime this year. The author is an RFE/RL correspondent based in Prague.


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