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Newsline - August 16, 1999




YELTSIN, PUTIN PLEDGE NO STATE OF EMERGENCY...

Russian President Boris Yeltsin on 16 August ruled out imposing a state of emergency in Russia. He said that "in my capacity as president of the country I repeat, firmly and resolutely, that there will be no emergency rule." He added that "the situation [in the country] is calm, normal and there will be no emergency measures." Yeltsin also noted that his latest hospital check-up confirmed his "heart works like clockwork." The previous day, acting Prime Minister Vladimir Putin told Russian Television that "there are no domestic political conditions for introducing a state of emergency." The president's and prime minister's comments follow a number of recent articles in newspapers such as "Kommersant-Daily" and "Segodnya" saying that the Kremlin is contemplating imposing a state of emergency and using the situation in Daghestan as a pretext. JAC

...AS KREMLIN ASKS DUMA TO APPROVE LAW ON STATE OF EMERGENCY

Aleksandr Kotenkov, presidential envoy to the State Duma, recently called on deputies to "urgently adopt the law on a state of emergency, regulating all of its aspects" because "the situation in the North Caucasus suggests that this law is essential," "Izvestiya" reported on 14 August. According to the daily, Kotenkov said regional officials are currently appealing to central authorities "to introduce a state of emergency" in this or that region but it is hard to do so because the law has not yet been approved. However, the newspaper argues that under existing laws, a state of emergency can be introduced in any region, if a majority of Federation Council members supports its introduction. According to "The Moscow Times," the president can also declare a state of emergency by decree, which must then be confirmed by the Federation Council. But even if the upper chamber approves the decree, the Duma still cannot be dissolved. JAC

RUSSIAN FORCES BOGGED DOWN IN DAGHESTAN

Russian forces on 13-15 August carried out intense air and artillery bombardment of villages in Daghestan's Botlikh Raion controlled by Islamic militants but failed to dislodge those militants from Ansalta, Rakhata, Shadroda, and Tando, Interfax and Caucasus Press reported. The militants, for their part, have reportedly responded with guerrilla tactics, operating in small highly mobile groups that control mountain paths and cut off the retreat of advancing federal forces, according to ITAR-TASS. According to an unconfirmed Caucasus Press report, on 16 August, the guerrillas launched coordinated attacks on federal posts along virtually the entire length of the border between Chechnya and Daghestan. Russian Interior Ministry spokesmen on 14 August estimated Islamist losses at more than 200 killed and 300 wounded. There is no confirmation of reports that some 60 militants headed by Shamil Basaev's brother Shirvani were buried alive by a rockslide detonated by local inhabitants seeking to repulse an attack on the village of Gagatli during the night of 14-15 August. LF

AZERBAIJANI MUSLIM LEADER BLAMES DAGHESTAN FIGHTING ON RUSSIA

Sheikh ul-islam Allakhshukur Pasha-zade told Turan on 14 August that he believes the Russian authorities bear the responsibility for the conflict in Daghestan because they created the conditions for the spread of radical Islam in the North Caucasus. He added that "the military confrontation in Daghestan was planned in advance." Pasha-zade said he had begun talks in Baku the previous day with a Chechen religious leader, but he did not clarify whether the cleric in question represents the leadership of President Aslan Maskhadov or the rival body set up by Shamil Basaev and other field commanders. He expressed concern that Azerbaijan could be drawn into the events in Daghestan. But Movladi Udugov, who served as spokesman for Djokhar Dudaev from 1994-1996 and is currently aligned with Basaev, told Turan on 14 August that "those powers that struggle for the restoration of the Islamic idea in the Caucasus stand for the preservation of stability in Azerbaijan." LF

CHECHEN PRESIDENT DECLARES STATE OF EMERGENCY

Aslan Maskhadov on 15 August proclaimed a one-month state of emergency and called for heightened controls along Chechnya's borders, Interfax and AP reported. AP quoted Maskhadov's spokesman, Selim Abdulmuslimov, as saying that the move was in response to recent threats by Russian officials to use force against Chechnya. In Moscow, acting Premier Putin told RTR television on 15 August that while he does not believe there is any need to declare a state of emergency in Russia (see above), unspecified "special procedures" may nonetheless be needed in the conflict zone in Daghestan, where, he said, "the local authorities do not function any longer." Putin stressed that Moscow considers Maskhadov the legitimate Chechen leader and will continue to try to reach an agreement with him on future relations between Moscow and Grozny, based on "the priorities of Russia's statehood," ITAR-TASS reported. LF

PUTIN'S NOMINATION EXPECTED TO SAIL THROUGH DUMA

The candidacy of acting Prime Minister Putin was expected to win easy approval on 16 August. Putin needs only a simple majority in the 450-seat lower chamber, and leaders of most of the Duma's largest factions earlier declared their support for his nomination (see "RFE/RL Newsline," 10 and 11 August 1999). Political analyst Vyacheslav Nikonov told "Kommersant- Daily" on 14 August that he expects around 240 deputies to vote in favor of Putin, meaning he would be confirmed in the first vote. JAC

DISCUSSION OF TINKERING WITH CONSTITUTION CONTINUES...

In an interview with "Segodnya" on 13 August, Sergei Shakrai, a former legal adviser to ex-Prime Ministers Yevgenii Primakov and Sergei Stepashin, predicted that the Russian Constitution will be significantly amended in the near future. Shakrai, who was one of the authors of the constitution, said that State Duma deputies and Federation Council members are likely to muster enough votes to curb presidential authority. On 14 August, Federation Council Chairman Yegor Stroev told reporters that the constitution needs to be amended to limit the power of the Russian president to reshuffle the government. He added that "we must make a correction to the constitution sooner or later, otherwise we shall not have a stable central authority." JAC

...AS ELECTION CHAIRMAN RULES OUT REFERENDUM FOR NOW

Aleksandr Veshnyakov, chairman of the Central Election Commission, said on 13 August that his commission does not support the proposal that a referendum on altering the constitution be held simultaneously with elections for the State Duma. New Force leader Sergei Kirienko proposed recently holding separate referenda to determine whether Russian citizens support limiting the power of the president and the parliament in favor of the cabinet (see "RFE/RL Newsline," 13 August 1999). According to Veshnyakov, four- and-a-half to six months are necessary to prepare for a referendum and a presidential decree on holding the referendum must be signed at least two months before the vote is to take place. Elections to the lower chamber are scheduled for 19 December. "Considering how little time is left before State Duma elections, it does not seem possible" to fulfill all the necessary requirements, he noted. JAC

PUTIN, LEBED CLASH AT GOVERNORS' MEETING...

Addressing a 14 August gathering of the interregional association Siberian Accord, acting Prime Minister Putin criticized Krasnoyarsk Krai Governor Aleksandr Lebed's attempt to retain control over the local coal company Krasugol, which is slated to be privatized under a World Bank-financed program to restructure Russia's coal sector. Putin said "the Krasnoyarsk administration sees the aim of the privatization of the region's coal industry as keeping the controlling stake. From the point of view of the international financial organizations, such privatization cannot raise the effectiveness of the region's coal industry," according to Prime-Tass. Lebed, for his part, called on governors to "develop their muscles," and he reminded "the visitors from Moscow" attending the meeting that "the Kremlin is a symbol of the country but the regions are a synonym," "Izvestiya" reported on 14 August. JAC

...AS PUTIN INDIRECTLY PRESSURES CHUBAIS?

The newspaper also reported on 14 August that Putin was received most cordially by other governors and showed an "almost surprising knowledge" of the regions' economic problems. According to the daily, Putin "appraised the policy of Finance Ministry [with regard to interbudgetary relations] most skillfully." "Kommersant-Daily" reported the same day that while Putin appeared to be supporting Unified Energy Systems (EES) head Anatolii Chubais in his clash with Governor Lebed over Krasugol, acting First Deputy Prime Minister Nikolai Aksenenko was arguing in Moscow in favor of lowering electricity tariffs received by Primorskii Krai's chief electricity supplier, Dalenergo. Chubais has argued that those tariffs should be raised in order to improve the company's finances. Workers at Dalenergo recently declared a strike to protest the growing backlog of unpaid wages (see "RFE/RL Newsline," 2 August 1999). JAC

GOVERNMENT TO START OVER AGAIN WITH BANK FOR AGRICULTURE?

The government is considering creating a new bank to service the agriculture sector that would take the place of the troubled SBS-Agro and Agroprombank, "Kommersant-Daily" reported on 14 August. Bankruptcy proceedings have been launched against Agroprombank. According to the daily, France's Credit Agricole made the proposal for the new bank, in response to which acting Deputy Prime Minister Vladimir Shcherbak ordered the Agriculture Ministry to draw up the necessary document for negotiating with the French company. The newspaper reports that the French bank may provide a long-term credit to establish the new financial institution. "Vremya MN" reported earlier that foreign creditors, along with officials from the World Bank and IMF, support declaring SBS-Agro bankrupt, since the bank has made little progress restructuring its debts (see "RFE/RL Newsline," 12 August 1999). JAC

STEPASHIN TO HEAD RIGHT-CENTRIST BLOC?

Former Prime Minister Stepashin announced on 14 August that he has no intention of taking a government post in the current cabinet, Interfax reported. Stepashin said he will make an announcement within days about his future political plans. One offer he is likely considering is that from former Prime Minister Kirienko, who told reporters on 12 August that he has given Stepashin the opportunity to head the right-centrist alliance composed of Right Cause, New Force, and Voice of Russia but has not yet received an answer. Kirienko heads New Force, while former First Deputy Prime Minister Chubais is leader of Right Cause and Samara Governor Konstantin Titov is the informal leader of Voice of Russia. With regard to the recent differences inside the Voice of Russia movement, Kirienko attributed those differences to growing pains (see "RFE/RL Newsline," 13 August 1999). JAC

PUTIN PLEDGES COOPERATION WITH NATO

Acting Prime Minister Putin said in an interview with Russian Television on 15 August that "Russia should be and will be an integral part of the civilized world and in this context we will cooperate with NATO," Reuters reported. Putin did not elaborate. He added that "we will also keep...relations [with Yugoslavia] and we will insist [that NATO respect] the position of our country. We have our geopolitical interests and we will stand up for them." Meanwhile, Colonel-General Georgii Shpak, who is commander of the Russian paratrooper units, told Interfax in Moscow that the situation in Kosova "will more or less normalize within half a year." He added that ethnic Albanians in Kosova are hostile not only toward Russian peacekeepers but also toward French and U.S. troops. An unidentified sniper shot and wounded a Russian soldier near Gjilane on 13 August, ITAR-TASS reported. FS

RUSSIAN, YUGOSLAV OFFICIALS DENY ARMS SMUGGLING

Foreign Ministry officials told Interfax on 13 August that "Russia did not send any weapons or their components to Yugoslavia.... Russia strictly observed and continues to observe the embargo on arms deliveries to Yugoslavia, imposed by...UN Security Council resolutions." The officials argued that a report in "Jane's Defence Weekly" of 2 August saying that Russia delivered rocket components to Yugoslavia was intended "only to justify the...arming of the Kosova Liberation Army (UCK), which...led to the failure of the negotiations for a [peaceful] settlement in the area" (see "RFE/RL Newsline," 3 August 1999). Yugoslav Ambassador to Moscow Borislav Milosevic, a brother of the Yugoslav president, called the report "misinformation and absolute rubbish." FS

ONE IN SIX COMPANIES DODGING TAXES

Seventeen percent of Russian companies violate Russia's tax laws, Tax Minister Aleksandr Pochinok told reporters on 13 August. The Federal Tax Police estimated earlier that only 1 percent of individuals pay their taxes in full (see "RFE/RL Newsline," 19 July 1999). The same day, Pochinok repeated his pledge to review the tax payments of the country's largest taxpayers, Gazprom and EES. JAC

CABINET DISMISSAL DELAYS PLANNED PRIVATIZATIONS

The planned sale of shares in Rosneft, the Tyumen Oil Company, and LUKoil, which was announced in July by the Stepashin government, is now likely to be delayed, Interfax reported on 13 August. Prior to his dismissal, Stepashin was poised to sign ordinances setting investment conditions as well as the starting price for 9 percent of shares in LUKoil. Now, those documents have been returned to the State Property Ministry for revision at the request of presidential administration officials, according to the agency. Tender terms for the sale of shares in Rosneft and the Tyumen Oil Company were also to have been announced in August. JAC




AZERBAIJANI AUTHORITIES RULE OUT CHANGES TO MUNICIPAL ELECTIONS LAW

Senior Azerbaijani presidential administration official Ali Hasanov told Turan on 14 August that the amendments to the law on municipal elections proposed by the U.S. National Democratic Institute and the Azerbaijani opposition Movement for Electoral Reform and Democratic Elections are "belated" and counter-productive. Hasanov argued that the present version of the law gives local councils a greater degree of independence than they would have if the amendments were adopted. He added that the proposal that half the seats on local councils should be allocated under the proportional system is inappropriate since not all political parties have branches in all localities. Therefore, Hasanov concluded, there is no need to convene the emergency session of the parliament demanded by the opposition to debate the proposed amendments. The previous day, President Heidar Aliyev chaired a meeting to discuss preparations for the elections, "Azerbaycan" reported on 14 August. LF

AZERBAIJANI CONNECTION CLAIMED IN UZBEK BOMBINGS

"525- gazeti" reported on 13 August that Azerbaijan's National Security Ministry has confirmed that the organizers of the 16 February bombings in Tashkent held secret consultations in Baku several days prior to that attack. Uzbek officials have claimed that the organizers of the attack include former Uzbek dissidents currently living in Turkey. LF

DEADLINE SET FOR RUSSIAN BORDER GUARDS TO LEAVE GEORGIA

Meeting in Tbilisi on 13 August, commander of Georgia's border troops Lieutenant-General Valerii Chkheidze and Russian deputy border guard commander Aleksandr Manilov agreed that the remaining Russian border guards deployed in Abkhazia and Adjaria will leave Georgian territory by 1 November, AP and ITAR-TASS reported. They also agreed that the Russian border troops' weapons and facilities will be divided on a 50:50 basis between Russia and Georgia. The following day, Manilov traveled to Abkhazia for talks with the breakaway republic's President Vladislav Ardzinba, who opposes the withdrawal of the Russian border troops, Caucasus Press reported. The Abkhaz authorities refused admission to Chkheidze's deputy, Gela Khutsishvili, and to Georgian journalists accompanying Manilov, Caucasus Press reported. LF

RUSSIAN EXPERTS CONCLUDE INSPECTION OF BOMBED GEORGIAN VILLAGE

A Russian military delegation confirmed on 14 August that the cluster bombs dropped on the village of Zemo Omalo in northeastern Georgia's Akhmeta Raion were Soviet- manufactured and of a type banned by international conventions, AP and Caucasus Press reported (see "RFE/RL Newsline," 10 August 1999). It failed to confirm, however, that the two aircraft that dropped the mines belonged to the Russian air force. LF

POPE TO VISIT GEORGIA THIS FALL

Pope John Paul II will visit Georgia this fall, Vatican envoy Giovanni Battista Re announced in Tbilisi on 15 August, following talks with Georgian Foreign Minister Irakli Menagharishvili and the head of the Georgian Orthodox church, Catholicos Ilia II, Reuters and AP reported. The date of the visit has still to be determined. The pontiff postponed a planned visit to Armenia last month because of the terminal illness of Catholicos Garegin II. LF

THREE GEORGIAN POLICE SHOT DEAD

Three senior police officers, including the heads of the Zugdidi anti-drug trafficking department and the local special purpose troops, were shot dead "while fulfilling their duties" on 13 August, Caucasus Press reported, citing the Georgian Interior Ministry. LF

KAZAKHSTAN WANTS NORTH KOREA TO RETURN MIGS

Kazakhstan's ambassador to Japan, Tleubek Kabdrakhmanov, told the Japanese Foreign Ministry on 13 August that Astana has asked North Korea to return some of the MiG-21 fighter jets that it purchased from Kazakhstan at a cost of $40 million, Reuters reported. It is unclear whether North Korea has agreed to that request. On 12 August, South Korea officially complained to the Kazakh embassy in Seoul over the sale (see "RFE/RL Newsline," 13 August 1999). In Astana, Kazakhstan's Foreign Minister Kasymzhomart Tokaev said on 13 August that his country will issue an official statement on the sale of the MiGs to North Korea once the criminal investigation into that transaction is completed, Interfax reported. Under an international convention that Kazakhstan has signed, it has pledged not to sell arms to North Korea. LF

FORMER KAZAKH PREMIER MAY RUN IN PARLIAMENTARY ELECTIONS

Akezhan Kazhegeldin told Reuters in a telephone interview summarized on 13 August that he may soon return to Kazakhstan and participate in the 10 October elections to the lower house of the Kazakh parliament. But Kazhegeldin added that he does not anticipate any letup in the official campaign to compromise him. The Prosecutor-General's Office has charged him with tax evasion. Kazhegeldin rejects those charges. Also on 13 August, Interior Minister Kairbek Suleimanov claimed to have information that some opposition leaders plan to provoke mass disturbances on the eve of the polls, according to ITAR- TASS. He said that police will be placed on alert a few days before the 10 October election to the lower chamber of the parliament. LF

HOSTAGES RELEASED IN KYRGYZSTAN

The presidential press service on 14 August announced that the four hostages being held by a group of 21 guerrillas from neighboring Tajikistan in southern Kyrgyzstan's Batken district were released unharmed the previous evening, RFE/RL's Bishkek bureau reported. Kyrgyz government officials declined to release any information on the whereabouts of the kidnappers or the circumstances of the hostages' release. But Interfax on 14 August quoted "unofficial sources" as saying that the Kyrgyz leadership had complied with the kidnappers' demand for a ransom. And a police official from Batken told RFE/RL's Bishkek bureau that Kyrgyz authorities are continuing talks with the guerrillas in the hope of persuading them either to surrender their weapons or to leave Kyrgyz territory. The country's top law enforcement officers remain in Batken. LF

TAJIK PRESIDENT IN CHINA

During a four-day working visit to China, Tajikistan's President Imomali Rakhmonov met on 12 August with Premier Zhu Rongji for talks that focused on bilateral trade and economic relations. The following day, Rakhmonov and Chinese President Jiang Zemin signed an agreement on the demarcation of one section of their disputed common border but failed to resolve Chinese territorial claims on parts of Tajikistan's Gorno-Badashkhan Autonomous Oblast, ITAR-TASS reported. They also signed a joint declaration on combating drug trafficking and an inter- governmental agreement on automobile travel between the two countries. The joint declaration affirmed the two presidents' concern at the deteriorating situation in Afghanistan and their rejection of "national separatism, religious extremism, and international terrorism." Tajik Foreign Minister Talbak Nazarov told ITAR-TASS that China is worried by Islamic extremism, which it views as a "global problem," according to ITAR-TASS. LF

UN WELCOMES LIFTING OF BAN ON TAJIK OPPOSITION PARTIES

In a statement released on 13 August, UN Secretary-General Kofi Annan termed the lifting by the Tajik Supreme Court of its 1993 ban on four Tajik opposition parties and movements a "significant step" toward implementation of the 1997 peace accord, Reuters and AP reported. ITAR-TASS on 13 August quoted Tajik Justice Minister Shavkat Ismoilov as promising that there will be no delay in reregistering those parties. LF

CORRECTION:

"RFE/RL Newsline" on 13 August cited the "Frankfurter Allgemeine Zeitung" as reporting that the U.S. Defense Ministry experts currently inspecting the Nukus chemical plant in northwest Uzbekistan will also survey an island in the Aral Sea where germ warfare cultures are believed to be buried. The FAZ report is incorrect. The bilateral agreement under which the U.S. team operates covers only the Nukus facility.




BELARUSIAN PRESIDENT FORMS TEAM FOR TALKS WITH OPPOSITION...

Alyaksandr Lukashenka has formed a group to discuss with political parties and public organizations preparations for the 2000 parliamentary elections, Belarusian Television reported on 13 August. The group is headed by presidential aide Mikhail Sazonau, who said the consultations will begin later this week. Meanwhile, Lukashenka has said the opposition Supreme Soviet is a "rotten" group of some 30 former deputies who do not represent "the opposition as such." According to him, the authorities are obliged to talk with representatives of "some 10 percent of the population," which, in his opinion, currently constitutes the opposition in Belarus. JM

...WHILE OPPOSITION HAGGLES OVER ITS REPRESENTATION

The memorandum empowering the Supreme Soviet to form an opposition delegation that will hold talks with the regime under the aegis of the OSCE (see "RFE/RL Newsline," 11 and 12 August 1999) has caused protests among opposition parties. Social Democratic Party leader Mikalay Statkevich told RFE/RL's Belarusian Service on 13 August that his party did not agree to delegate full powers to the Supreme Soviet with regard to the talks. Liberal Democratic Party leader Syarhey Haydukevich, who did not sign the memorandum, appealed to the OSCE to hold a dialogue in Belarus in accordance with the principles laid down at the OSCE Parliamentary Assembly session in St. Petersburg on 10 July. According to Haydukevich, the opposition should be represented by leaders of opposition parties and NGOs, not by the Supreme Soviet alone. JM

UKRAINE LOOKS FOR MORE WESTERN MONEY AS HRYVNYA STABILIZES

A government delegation headed by Deputy Prime Minister Serhiy Tyhypko left for Washington on 15 August for two day of talks with the IMF, the "Eastern European Daily" reported. The main goal of the visit is to discuss the disbursement of an IMF loan tranche to Ukraine. It is thought that Tyhypko may agree with the World Bank on the date for releasing a $100 million tranche under the so-called Financial Sector Adjustment Loan program. Meanwhile, the Ukrainian hryvnya has stabilized and returned below the government exchange limit of 4.6 to $1. On 13 August, the hryvnya was trading at $4.54 to $1. JM

UKRAINIAN MINERS CONTINUE PROTESTS OVER WAGE ARREARS

The Independent Miners' Trade Union has threatened to suspend coal supplies to consumers beginning in September and to stage a large-scale protest unless the government reduces its wage debt to coal miners, AP reported on 13 August. More than 2,000 miners are on strike in the Donetsk region, while hundreds of miners' wives and children continue to demonstrate in Luhansk. First Deputy Prime Minister Anatoliy Kinakh met with the protesters last week. According to the Independent Miners' Trade Union, however, "miners' hopes for a positive resolution of their problems have not been fulfilled." The government owes the miners more than 2 billion hryvni ($435 million) in back wages, including 145 million hryvni for 1999, according to trade union leaders. JM

ESTONIAN ECONOMIC MINISTRY FORECASTS DISASTROUS 1999

In an interview with the daily "Postimees" on 14 August, the Economic Ministry's chief economic policy specialist, Indrek Jakobson, predicted that Estonia's GDP will drop by 3 percent this year. Jakobson said the prediction is based on the 5.6 percent GDP drop in the first quarter of 1999 and a predicted 5-8 percent drop in the second quarter. This contradicts the Finance Ministry's forecast of 0.4 percent GDP growth this year. MH

SUICIDE RATE REMAINS HIGH IN ESTONIA

Nearly 600 people commit suicide annually in Estonia, according to the suicide prevention service Lifeline, BNS reported. Some 40 people out of 100,000 commit suicide annually, which is much higher than the 10-20 out of 100,000 that international organizations usually cite. Lifeline said that during the three years it has been operating, about 3,000 people have called the suicide prevention line. MH

JOINT BALTIC DOCUMENTARY PROJECT ON OCCUPATION

Freyja Film of Estonia, F.O.R.M.A. of Latvia, and Studioa KOPA of Lithuania signed an agreement on 14 August to produce a documentary, entitled "History Denied," on the occupation of the three Baltic countries, "Postimees" daily reported. The three-part series will span the period from the Molotov- Ribbentrop Pact in 1939 to the withdrawal of Russian troops in 1994. According to "Postimees," the text of the Estonian section will be the responsibility of four historians, including Prime Minister Mart Laar. MH

TROUBLED LITHUANIAN BANK CLOSED

The Bank of Lithuania has ordered a halt to nearly all activities at the troubled Litimpeks Bank, which ceased operating on 13 August. The small bank, which accounts for only 2.6 percent of the banking market, faces liquidity, being unable to cover some 30 million litas ($7.5 million) of debt, ELTA reported. The central bank stated that several foreign investors are interested in Litimpeks. However, they warned that if investors do not materialize soon, the bank could be liquidated. MH

POLISH PEASANT LEADERS SHARPLY CRITICIZE GOVERNMENT

Zdzislaw Podkanski, speaker of the Polish Peasants' National Assembly, called on the parliament to dissolve itself and the government to resign because of the two bodies' "anti-peasant policy," Polish media reported on 15 August. The same day, Peasant Party leader Jaroslaw Kalinowski criticized the government for "forgetting the farmer," implementing "an extremely liberal economic model," and putting off the resolution of "farmers' real problems indefinitely." And on 14 August, the leader of the Self-Defense farmers' union, Andrzej Lepper, threatened a nationwide strike "no later than this October." JM

POLAND'S WALESA SAYS HE IS 'FORCED' TO RUN FOR PRESIDENCY

Former President Lech Walesa said on 14 August that the situation in the country "forces" him to run for the presidency once again. "After what [Self-Defense leader Andrzej] Lepper and others have said, I have no choice. I am 99.9 percent sure that I will run," Walesa said. He added that early parliamentary elections in Poland cannot be ruled out because of the government's inability to cope with various problems, including the farmers' woes. JM

CZECH POLICE LAUNCH INVESTIGATION INTO NEW ODS IRREGULARITIES ALLEGATIONS

Police have launched an investigation into the most recent allegations of financial irregularities linked to the opposition Civic Democratic Party's (ODS)1996 election campaign, CTK reported on 13 August, citing IDnes (the Internet version of the daily "Mlada fronta Dnes"). Earlier, the daily had reported that the ODS failed to report to the Finance Ministry that it had received two donations totaling 7.3 million crowns ($214,000), which were used to print election billboards and campaign brochures. According to the daily, the director-general of Zeleznicni stavitelstvi Brno, Michal Stefl, confirmed that the donations were made so that his company would receive orders from the Transportation Ministry for the construction of railway tracks. Stefl later denied the allegation, but "Mlada fronta Dnes" says it stands by its report. MS

SLOVAK FOREIGN MINISTER 'NOT INTERESTED' IN PREMIERSHIP

Eduard Kukan on 13 August told journalists that he is "not interested" in taking over the post of premier from Mikulas Dzurinda "either now or after the EU summit at the end of the year." Kukan was responding to a report in the daily "Sme" saying that Kukan's popularity made him the most likely candidate to replace Dzurinda. Kukan said he believes everyone "should fulfill that task for which they are best prepared, which they most enjoy, and to which they can bring the best results." For him, he added, this means the position that he now has. Dzurinda is the "right man in the right place," he argued. Kukan also said that the dispute between Dzurinda and other leaders of the Slovak Democratic Coalition (SDK) on reshaping the SDK into a five-party coalition "must not be escalated," CTK reported. MS

HUNGARIAN CHURCHES CONDEMN PUBLICATION OF ANTI-SEMITIC FORGERY

The Hungarian Calvinist Church expressed "solidarity" with members of the Hungarian Jewish Community who have protested the recent publication of the "Protocols of the Elders of Zion," Hungarian media reported on 14 August. The same day, Hungarian Catholic Bishops condemned the publication of the book, saying it could foment hatred on racial or religious grounds. They expressed concern over the "increasingly frequent manifestations" of "a lack of respect and tolerance" toward various religious communities. The Ministry of National Cultural Heritage on 13 August said it condemns "any defamation of religions" and expressed solidarity with "those offended" in this way. The ministry added that it supports a call by the Federation of Hungarian Jewish Religious Communities to publish a scholarly work dealing with the book's false claims. MS

HUNGARIAN FAR RIGHT LEADER INSISTS ON VOJVODINA REFERENDUM

Hungarian Justice and Life Party chairman Istvan Csurka told Hungarian Radio on 15 August that Budapest must insist on a UN-supervised referendum on northern Vojvodina's re- annexation to Hungary. Asked to comment on the fact that the region's Hungarian minority has made no such demand, Csurka said that, like most Hungarians living outside Hungary's borders, Vojvodina's Magyars "have a bayonet pointed at their back" and are thus unable to express their true aspirations. Csurka said that Hungary must act to save "the southern region"--a term referring to the historical borders of Greater Hungary--and that a "tiny border alteration" would save 300,000-500,000 Hungarians. He added that the "principle of the inviolability of borders" is a "lie" and is "violated by the great powers all the time." MS




SERBIAN PREMIER CALLS OPPOSITION 'TERRORIST'

Mirko Marjanovic told the state-run daily "Politika" of 15 August that the members of the opposition Alliance for Change are "representatives of the aggressive policy of NATO" and "paid killers." He charged that the alliance seeks the violent overthrow of the government of Yugoslav President Slobodan Milosevic. Marjanovic added that the government therefore considers the alliance to be a "terrorist" one. As proof of his assertion, he cited recent remarks by opposition leader Vesna Pesic that the Serbian people might get rid of Milosevic by using the "Romanian method" unless he goes voluntarily. Her remarks were an allusion to the violent overthrow of Romanian dictator Nicolae Ceausescu in December 1989. PM

OPPOSITION LEADER SAYS REGIME BELONGS IN THE HAGUE

Alliance leader Vladan Batic said at a demonstration in Trstenik that the Milosevic regime has committed the "most monstrous terrorist acts" against the Serbian people during Milosevic's 10 years in office. Batic added that the only place for the regime's leaders is the international war crimes tribunal in The Hague. He noted that "the alliance has no armed forces, paramilitary troops, or criminal gangs--all of which the regime has." Several thousand people attended anti-Milosevic protests in Trstenik and Krusevac on 15 August. Elsewhere, opposition politician and former General Momcilo Perisic told Belgrade's Studio-B Television the previous day that the army will not support Milosevic if he tries to crack down violently on the opposition. PM

REGIME ATTACKS PERISIC

The state-run daily "Politika" slammed Perisic on 16 August as a weak commander who was sacked in November 1998 for incompetence. "It's no wonder why this tiny-statured, weak, and treacherous general was not able to resist strains of possible NATO intervention against Yugoslavia... He is now trying to compensate for his loser personality and become [U.S. President Bill] Clinton's lieutenant and a Serbian Pinochet," AP reported. PM

WHAT DOES 19 AUGUST MEAN FOR SERBIA?

Zivorad Djordjevic, who heads the state-run daily "Borba," said on 15 August that the opposition has chosen 19 August as the date for its big rally in Belgrade because that is Clinton's birthday (see "RFE/RL Newsline," 11 August 1999). Serbian Renewal Movement leader Vuk Draskovic dismissed the charge, pointing out that 19 August is the Serbian Orthodox Feast of the Holy Transfiguration. He added that "the Communists [in the regime] do not know that because they are atheists. We hope that 19 August will mark the beginning of a transfiguration of Serbia into a democratic society," AP reported. PM

VEDRINE: NO AID FOR MILOSEVIC

French Foreign Minister Hubert Vedrine told Belgrade's "Vecernje novosti" of 15 August that the international community will give no reconstruction aid to Serbia so long as Milosevic remains in power. Any such assistance would only help prop up the regime, Vedrine added. He stressed that the time has come to break the "cycle of violence in the Balkans" by ousting Milosevic. PM

GENERAL WANTS SERBIAN FORCES BACK IN KOSOVA

General Nebojsa Pavkovic, whose Third Army's zone of operations includes Kosova, said that KFOR troops have not fulfilled their obligations under the June peace agreement, RFE/RL's South Slavic Service reported on 16 August. He demanded that NATO troops leave the province and that the UN allow his forces to return. PM

SERBIAN RESERVIST CONTINUES HUNGER STRIKE

Miodrag Stankovic said on 15 August in Nis that he has decided to continue his hunger strike for back pay, which has entered its fourth week. He added that he will move his protest from the city center to the Sveti Jovan monastery, where a local monk blessed him. Stankovic said that the government claims it cannot pay him or his fellow soldiers, but he noted that it provides General Pavkovic with a large apartment and luxury cars. Several other reservists recently stopped their hunger strike for back pay at the urging of doctors and Serbian Orthodox priests. PM

SERBIAN OPPOSITION LEADER OPPOSED TO HUNGARIAN AUTONOMY IN VOJVODINA

Nenad Canak, who heads the League of Social Democrats of Vojvodina, said in an interview with Hungarian Radio on 15 August that he opposes granting territorial autonomy to Vojvodina's ethnic Hungarians. He charged that providing autonomy "would only facilitate the spread of Serbian nationalism in Vojvodina and lead to new disputes." Canak added that he opposes the concept of "personal autonomy" because it would involve a "redistribution of budget funds" based on the numerical strength of ethnic communities, meaning that "the small Ruthenian and Ukrainian minorities would get practically nothing." In an interview with the Belgrade weekly "NIN" on 15 August, Alliance of Vojvodina Hungarians chairman Joszef Kasza said that as long as the Yugoslav authorities "struggle for their own survival," they will have "neither the strength nor the means to deal with minority issues." MS

MONTENEGRIN POLICE CHIEF PROMISES VIGILANCE

Interior Minister Vukasin Maras said in Podgorica on 15 August that Yugoslav Prime Minister Momir Bulatovic and his Socialist People's Party seek "at any cost to destabilize" the Montenegrin government of President Milo Djukanovic. Maras rejected a recent charge by Bulatovic's supporters that the government plans to discredit the Yugoslav army by staging a fake coup attempt involving men dressed in Yugoslav army uniforms. The interior minister said that Bulatovic himself is behind the accusation. Magas pledged that the police will firmly resist anyone who tries to start a civil war in Montenegro, RFE/RL's South Slavic Service reported. PM

UNHCR SEEKS MORE AID FOR SERBIAN REFUGEES

Dennis McNamara, who is the UNHCR's special envoy for the Balkans, said in Prishtina on 15 August that he will seek an additional $20 million for his office's 1999 budget. This will bring the total to $60 million. He said that the continuing exodus of Serbs and Roma from Kosova prompted him to seek the increase. In Kraljevo, refugees told Reuters that Serbian police "stopped us in each town and did not want to let us through." On 14 August, the private Beta news agency reported that a Serbian convoy of more than 100 vehicles left Gjilan for Serbia proper the previous day. PM

DINI URGES KFOR TO BE 'MORE VIGOROUS'

Italian Foreign Minister Lamberto Dini told "La Repubblica" of 14 August that "the Serbian population [of Kosova] is suffering a repression that is much smaller but just as brutal and repugnant as that suffered previously by Albanians," Reuters reported. He stressed that "KFOR [must take] more vigorous action. Violence against the Serbian population must be prevented." He urged the Kosova Liberation Army (UCK) to show a "responsible attitude." Dini stressed that the international community must give "no aid for reconstruction if we don't see a commitment to combat crime and drug trafficking" on the part of the Albanians. He noted that the international community did not launch its bombing campaign against Serbia in order to put the UCK in power, adding that independence for Kosova could destabilize the Balkans. The following day, the UCK's General Agim Ceku stressed that an independent Kosova will be a "factor of stability in the Balkans," RFE/RL's South Slavic Service reported. FS

ALBANIAN PREMIER VISITS KOSOVA, RECOGNIZES RUGOVA AS PRESIDENT

Pandeli Majko arrived in Prishtina on 13 August for a two-day visit--the first ever by an Albanian head of government to Kosova. Majko condemned ethnic Albanians who are harassing Serbs, saying that "if the Albanians do that, then they will play a part in Milosevic's survival. Albanians must know how to work in calm and peace," AFP reported. Majko also met with moderate Kosovar leader Ibrahim Rugova, whom he addressed as "president." During his meeting with Rugova, Majko proposed the construction of a highway linking Durres with Prishtina and announced plans for opening a diplomatic representation in Kosova. Majko also met with UCK leader Hashim Thaci, OSCE Ambassador Daan Everts, UN Special Representative Bernard Kouchner, and U.S. diplomats. FS

THACI VISITS ALBANIA

Thaci met with President Rexhep Meidani in Durres on 15 August. Meidani's spokesman Mentor Nazarko told RFE/RL's South Slavic Service that Meidani pledged to provide university teachers and other experts for Kosova. Both sides urged the international community to establish international control over the divided town of Mitrovica. Thaci warned that there is a "heavy presence of Serbian paramilitaries and agents" in the north of the city, who are trying to partition the town, dpa reported. FS

ALBANIAN POLICE SMASHES INTERNATIONAL PROSTITUTION NETWORK

Albanian police have cracked a network smuggling prostitutes from Russia, Moldavia, Ukraine, and Romania via Albania to Italy, dpa reported on 15 August. Police detained 13 prostitutes and three men in a motel near Shkodra on 15 August. The detainees had apparently entered Albania from Montenegro. Several days earlier, police detained 12 prostitutes in Shkodra. Also on 15 August, Prosecutor-General Arben Rakipi said that Italian Mafia bosses are active in Albania. Three weeks ago, he said, Albanian police arrested Giuseppe Muolo of Sacra Corona Unita, a Mafia group from Puglia. In other news, police found three members of the notorious gang of the Gerdhuqi brothers killed in their car near Vlora on 13 August, AP reported. The three had been released from jail in July for lack of evidence. They had been charged with various crimes ranging from robbery to murder. FS

ROMANIAN FINANCE MINISTER EXPLAINS TERMS OF AGREEMENT WITH IMF

Decebal Traian Remes on 13 August said the IMF will not disburse any more tranches of its $547 million stand-by loan to Romania until Bucharest meets the terms of agreement it signed with the fund earlier this month. Remes added that the IMF will not agree to the 2000 budget being an "election- oriented" one, adding that in accordance with the April agreement, the IMF will review its implementation in September and December 1999 and in February 2000. The agreement does not allow the government to make any interest- rate or tax cuts without the fund's prior permission and without measures being taken to compensate losses in budget revenues. Remes said macroeconomic policy will concentrate on fiscal consolidation and wage restrictions in order to reduce domestic demand, RFE/RL's Bucharest bureau reported. MS

MOLDOVAN RADIO GOES OFF AIR DUE TO UNPAID ELECTRICITY BILLS

Moldovan Radio went off the air for two hours on 13 August when its electricity supplies were cut off, RFE/RL's Chisinau bureau reported. Supplies were restored after the management promised that the company's 600,000 lei (some $55,000) debt to the government will be paid this week. Ion Verbenciuc, deputy chairman of Teleradio-Moldova, said that "what happened is quite normal in a market economy." The same day, the independent Flux agency reported that electricity supplies to prisons in Balti and Rezina were also cut off owing to the nonpayment of bills. MS

CZECH COURT ORDERS EXTRADITION OF SUSPECT IN BULGARIAN EX- PREMIER'S MURDER

A Prague court has ordered the extradition of Angel Vasiliev, who is suspected of having murdered former Bulgarian Prime Minister Andrei Lukanov in October 1996, BTA reported on 13 August, citing Bulgarian Radio. Vasiliev, chief executive of the Prague-based Colonel construction company, was arrested on 4 June. Vasiliev's wife told Bulgarian Radio that the extradition order will be appealed because her husband will not have "a fair trial in Bulgaria." MS




LATVIA'S NEW GOVERNMENT INHERITS DEPRESSED ECONOMY


by Michael Wyzan

Recent weeks have been eventful on the Latvian political scene. Vaira Vike-Freiburga, a politically independent former emigre to Canada, was elected by the parliament to the post of president on 17 June. One month later, on 16 July, Andris Skele of the former opposition People's Party (who was prime minister from December 1995 to July 1997) formed a new government.

With regard to the economic sector, Skele's government has its work cut out for it. Hit hard by the Russian economic crisis that broke out in August 1998, Latvia's economy is beset by declining GDP, rising unemployment, and falling foreign trade volumes (especially exports to Russia).

Latvia's GDP contracted by 2.3 percent in the first quarter of 1999, following a 1.9 percent decline in the final quarter of 1998, which demonstrates that the economy is technically in recession. Latvia has been dealing with the effects of a collapse in Russian trade for longer than has Estonia or Lithuania. Trade with Russia began to decline in spring 1998, when relations between the countries worsened following events surrounding the March demonstration by mostly Russian-speaking pensioners in Riga.

Industrial production was down by 15.8 percent during the first five months of 1999, compared with the same period in 1998. Latvia's official unemployment rate was 10 percent in June, just shy of the record 10.2 percent registered the previous month and up from 7.2 percent a year earlier. Unofficial estimates put that rate as high as 16-17 percent.

Inflation is low, with consumer prices rising by 2.8 percent on a December-to-December basis in 1998 and by only 1.9 percent in the 12 months to June. The average monthly gross wage in the public sector was $257 in May, up from $235 a year earlier. The wage in lats was up by 9 percent over this period, while GDP fell, employment declined slightly, and inflation was minimal. Thus, wage growth seems high, given the depressed state of the economy

Latvia's fiscal position deteriorated this year, and expenditure cutbacks may have to be made in the fall. The 1999 budget, passed in February, foresaw a deficit of about 3 percent of GDP. On 5 August, the parliament approved amendments to the 1999 budget that cut spending by 64.4 million lats ($109 million) to take into account a shortfall in expected revenues of 93.1 million lats.

There has been one positive consequence of the declining economy: the current account deficit fell from a very high 11.5 percent of GDP in 1998 to 8.7 percent of GDP in the first quarter of 1999. The poor external sector results in 1998 show that Latvia was not particularly successful (compared with Estonia, for example) in compensating for lost trade with Russia by boosting commercial ties with the EU. Total exports rose from $1.673 billion in 1997 to just $1.812 billion last year, while total imports rose from $2.724 billion to $3.189 billion over the same period. As a result, the trade deficit increased.

This year, while the trade volume has declined, the fall in imports has exceeded that of exports. This means that the trade deficit has contracted from $383 million in January- April 1998 to $318 million over the same period this year.

Behind the slow growth of total exports has been the collapse of the Russian market. Exports to that country decreased from 21 percent of the total in 1997 to 12.1 percent in 1998. Imports fared better, declining by 10.4 percent and accounting for 11.8 percent of the total, compared with 13.3 percent the previous year. The decline in trade with Russia has continued this year: exports to that country constituted 7.1 percent of the total in January-April 1999 and imports from there were 9.3 percent of the total over the same period.

The share of exports to the EU has risen from 48.9 percent of the total in 1997 to 64.3 percent in January-April 1999, while for imports the EU share has increased from 45.4 percent to 56.1 percent over this period.

Despite all the gloomy statistics, Latvia may be over the worst effects of the Russian crisis, with some observers forecasting a strengthening of the economy in the second half of 1999. However, there are still too many banks in Latvia (24, compared with only five in Estonia), many of which are exposed to developments in Russia. A wave of bank failures and consolidations seems likely, which would prolong and deepen the economic downturn. Another key policy issue is the fixed exchange rate of the lats. Maintaining that rate necessitates a particularly stringent fiscal policy, another factor that would keep the economy from turning around quickly. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria.


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