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Newsline - August 30, 1999




MORE SCANDAL CHARGES, DENIALS...

Charges and denials about various Russian scandals continue. On 27 August, business magnate Boris Berezovskii said that accusations in the Western press that President Boris Yeltsin had bank accounts in the West are an "absolute provocation" organized by Moscow Mayor Yurii Luzhkov, Interfax reported. Luzhkov responded that he is pleased to learn that he has power even over the Western press. On 29 August, Democratic Choice of Russia leader Yegor Gaidar denied that former First Deputy Primer Minister Anatolii Chubais has had foreign bank accounts. Earlier, First Deputy Prime Minister Viktor Khristenko said Moscow has no "confirming information" that there has been any official involvement in the Bank of New York money- laundering affair, Russian agencies reported. Former Central Bank of Russia Chairman Sergei Dubinin denied that IMF money was channeled through that bank. PG

...WHILE KARAGANOV SEES WESTERN PLOT BEHIND BANK SCANDAL

Many Russians have suggested that the charges about money laundering at the Bank of New York are politically motivated. Such people include Konstantin and Natasha Kagalovskii, who are implicated in the affair. But Sergei Karaganov, a leading Russian political analyst and head of Russia's Foreign and Defense Policy Council, has gone further. In an interview with Interfax on 27 August, Karaganov said the scandal is "quite probably" part of "Western leading circles' desire to divorce [from] the current Kremlin leadership." He based that conclusion on the fact that the current scandal charges target people around Yeltsin rather than more junior figures. PG

MORE CASES MAY BE LAUNCHED

On 27 August, acting Prosecutor- General Vladimir Ustinov said he does not rule out criminal indictments in the Bank of New York money-laundering case, Interfax reported. But he said that "first everything has to be carefully examined, primarily by all special services, Russian and foreign." The U.S. authorities have offered to conduct a joint investigation, the Russian federal tax police said the same day. Meanwhile, the tax police have opened a criminal investigation into a number of former Rosneft oil company executives for tax evasion. PG

INVESTIGATORS OF HIGH PROFILE CASES REPLACED

Vladimir Minaev, chief of the main investigative department of the Prosecutor-General's Office, told Interfax on 27 August that several of the investigators looking into major cases have been replaced by "more experienced" officers. Among those replaced are investigators looking into the Mabatex case and the case of former St. Petersburg Mayor Anatolii Sobchak. The officials looking into the murder of journalist Dmitrii Kholodov, however, have been kept on the job. Minaev stressed that these shifts do not reduce the personal responsibility of those who launched the investigations. PG

RUSSIAN FOREIGN DEBT TO RISE

Russia's foreign debt will be $166.2 billion on 1 January 2000, up from $156.6 billion a year earlier, Interfax reported. But its foreign borrowing is scheduled to increase to $177.6 billion by 1 January 2001, Interfax reported on 27 August. Meanwhile, the government said that it will meet all its obligations on Treasury bills during 2000. Meanwhile, the Central Bank of Russia announced on 27 August that it is considering increasing its discount on gold purchases from 2 percent to 5-6 percent of the London quote, the Russian news agency reported. PG

AKSENENKO COMPLAINS GAS EXPORTS TOO CHEAP

First Deputy Prime Minister Nikolai Aksenenko told ITAR-TASS on 27 August that Gazprom is exporting its gas too cheaply and thus inflicting "big losses on the country." He said that middlemen are making enormous profits as a result. Meanwhile, the government commission on trade protection on 27 August recommended doubling the export duty on crude oil to 10 euros ($10.45) per ton beginning 1 October 1999. PG

YELTSIN BACKS HIGHER SOCIAL SPENDING TO CALM ELECTORATE

First Deputy Prime Minister Valentina Matvienko told ITAR- TASS on 27 August that the Russian president backs higher social spending and tough action against wage arrears. She said the authorities seek to stabilize the social situation lest Russia see "protest-type voting" that could harm the country. But Yeltsin's and the government's budgetary proposals may face tough opposition in the parliament, Konstantin Titov, the chairman of the Federation Council Budget Committee, told ITAR-TASS on 28 August. PG

AGRARIANS LINK UP WITH OVR BLOC

Some 275 of 390 delegates at a congress of the Agrarian Party on 27 August decided to end their alliance with the Communists and link up with Fatherland-All Russia (OVR) alliance, RIA reported. The remaining delegates left the session and said they will continue to work with the Communists. On 29 August, the Communist Party Central Committee agreed to form an election alliance with the 16 regional organizations of the Agrarian Party whose representatives bolted from that group when it tied itself to the OVR bloc, Interfax reported. PG

UNION OF RIGHTIST FORCES FORMED

The parties of former Prime Minister Sergei Kirienko (New Force), former Deputy Prime Minister Boris Nemtsov (Young Russia), former Prime Minister Yegor Gaidar (Democratic Choice of Russia), and Saratov Governor Konstantin Titov (Voice of Russia) officially formed the Union of Rightist Forces on 29 August, Russian agencies reported. In a related move, Nemtsov has asked that Kirienko not run for Moscow mayor lest he dissipate the energies of the group. PG

YABLOKO LIST ANNOUNCED

Grigorii Yavlinskii will top the State Duma election list of the Yabloko party, Interfax reported on 27 August. He will be followed by former Prime Minister Sergei Stepashin and Duma Foreign Affairs Committee Chairman Vladimir Lukin. Stepashin said he and the Yabloko party are ready to "assume responsibility for the country." He denounced all threats to the personal security of President Yeltsin, and he said that he is ready to run for president in 2000. PG

PRIMAKOV OUTLINES PLANS

Former Prime Minister and now leader of the OVR bloc Yevgenii Primakov said on 28 August that he will work in the Duma if he is elected but will "never" become speaker of that body, Interfax reported. He rejected charges that his bloc colleague, Georgii Boos, said that a "Romanian variant" awaits Yeltsin. Such claims are a complete misreading of Boos's statement published in "Nezavisimaya gazeta," Primakov said. In other comments, Primakov said his bloc is prepared to unite all "centrist, patriotic, and democratic forces" and will not seek any redivision of property, even as it works to strengthen the state. Another of Primakov's bloc colleagues, Moscow Mayor Yurii Luzhkov, however, attacked the IMF, saying that "the country needs to correct its course. We cannot solve its problems only according to the prescriptions of the IMF, which regards Russia as a field for its experiments." PG

OUR HOME IS RUSSIA SEEKS INSTITUTIONALIZED GOVERNMENT

NDR Duma faction leader Vladimir Ryzhkov said on 28 August that "it is impossible to run the country via a politically helpless government, a politically irresponsible parliament, and a politically prevailing president" on whom the entire state must function, Interfax reported. At the same session, ITAR-TASS reported, NDR leader Viktor Chernomyrdin said the NDR is "shedding a shabby skin of the party of power" and that its future as a presidential party depends on the outcome of the parliamentary vote. Meanwhile, the NDR and Boris Fedorov's Forward Russia! movement agreed to cooperate in the upcoming elections, ITAR-TASS reported on 27 August. PG

PUTIN WELCOMES BLOCS, HAS LITTLE SUPPORT

Speaking in Makhachkala during a one-day visit to Daghestan on 27 August, Prime Minister Vladimir Putin said that he welcomes the formation of new electoral blocs because they represent the "development of civil society in Russia," ITAR-TASS reported. Meanwhile, a poll released by the Public Opinion foundation the same day showed that Putin himself has little support: Only 1 percent would vote for him if the presidential elections were held now, and only 10 percent think he has any real chance of becoming president. PG

ZHIRINOVSKII DENOUNCES ALL BLOCS AS 'PERVERSE'

Speaking on 27 August, Liberal Democratic Party of Russia leader Vladimir Zhirinovskii said that "all the coalitions are perverse," especially those involving Yabloko. "They found pensioner Stepashin, who was kicked out of the Kremlin," he commented. He denounced Moscow Mayor Luzhkov's Fatherland as "a crazy house" in which "all the world's gangsters, drug addicts, prostitutes, and thieves" have been gathered. And he denounced Primakov as "a sick man who should not be assuming such a heavy burden as competing in parliamentary elections." PG

COURT RULING TRIGGERS NEW PROTESTS IN KARACHAEVO-CHERKESSIA

Thousands of supporters of Cherkessk Mayor Stanislav Derev congregated on the town's central square on 27 August after the republic's Supreme Court ruled that the results of the 16 May presidential runoff are valid, Interfax and ITAR-TASS reported. Derev had appealed the official election results, according to which he received only 20 percent of the vote and his rival, former Russian Army ground troops commander Vladimir Semenov, more than 70 percent (see "RFE/RL Caucasus Report," Vol.2, No. 30, 30 July 1999). Derev's supporters attacked Semenov's jeep on 27 August as he was driving to a meeting with the republic's acting president, Valentin Vlasov. They continued their protest demonstration on 28 and 29 August in spite of a ban on such meetings issued by Vlasov on 27 August. Supporters of Derev, who is currently in Israel, met with Vlasov on 29 August in an attempt to defuse the situation. The next day, Caucasus Press reported that Derev's supporters will launch a campaign to split the republic into Karachai and Cherkess territories unless Vlasov's mandate is extended for four years. LF

PUTIN VISITS DAGHESTAN

During his one-day visit to Daghestan on 27 August, Prime Minister Putin traveled with State Council Chairman Magomedali Magomedov to Botlikh Raion to meet with Russian troops who participated in the military operation against Islamic militants and to see first-hand the extent of the damage to local villages. Putin presented medals to an unknown number of Russian servicemen and Daghestani volunteers, expressing gratitude on behalf of the Russian people. But he also warned of the possibility of further attacks by the militants, underscoring that Moscow will continue trying to negotiate peacefully with the Chechen leadership. On 27 August, the Russian government approved 100 million rubles ($4.1 million) in emergency reconstruction aid for Daghestan and 12 million rubles to assist displaced persons, ITAR-TASS reported. LF

RUSSIAN FORCES TARGET RENEGADE VILLAGES

Russian Interior Ministry troops in Daghestan engaged in what are euphemistically known as "mopping up" operations. They began confiscating weapons on the morning of 29 August from the inhabitants of the villages of Kara-makhi and Chaban-makhi in Daghestan's Buinaksk Raion. They then launched artillery and air strikes against the villages later the same day, apparently on the assumption that some of the Islamist guerrillas had taken refuge there. The inhabitants of the two villages are devout Muslims who proclaimed an independent Islamic territory in August 1998 but retracted that declaration after receiving assurances from the Daghestan leadership that they would not be punished for their proclamation (see "RFE/RL Newsline," 3 September 1998). They told journalists from "Nezavisimaya gazeta" at that time that they needed weapons to protect themselves against reprisals by Daghestani officials. LF

INCUMBENT AHEAD IN SVERDLOVSK BALLOT

According to preliminary results, incumbent Governor Eduard Rossel won 39 percent of the vote in the 29 August gubernatorial ballot in Sverdlovsk, ITAR-TASS reported the next day. Aleksandr Burkov, an oblast legislative assembly deputy and leader of the leftist regional movement May, came second with 18 percent, beating out Rossel's expected challenger in the run- off elections, Yekaterinburg Mayor Arkadii Chernetskii, who polled only 15.4 percent. Turnout was estimated at 41 percent. The oblast Election Commission chairman told reporters that the run-off is likely to take place on 12 September. JC

MOSCOW REMAINS CONCERNED ABOUT KOSOVA STANDOFF

Russian Foreign Minister Igor Ivanov told U.S. Secretary of State Madeleine Albright by telephone on 29 August that Moscow remains concerned about what he called "provocations against the Russian contingent of peacekeepers," Reuters reported. His comments follow a Russian Foreign Ministry statement on 27 August that Moscow will respond "properly" to armed provocations "regardless of who stages them," Interfax reported. Meanwhile, Russian, Dutch, and German officers failed to end the standoff between Albanian and Russian forces in the city of Orahovac, ITAR-TASS reported. PG

YELTSIN TO VISIT BEIJING IN FALL

The official Xinhua news agency said on 28 August that Russian President Boris Yeltsin will visit Beijing sometime this fall for meetings with Chinese leader Jiang Zemin. Meanwhile, "Kommersant-Daily" reported on 27 August that the Rosvooruzhenie arms exporting firm has reached agreement to sell 60 Su-30 fighters to the Chinese government. China bought 22 Su-27 planes in 1996. PG

RUSSIA PREPARED TO LEASE AIR DEFENSE SYSTEMS TO CIS COUNTRIES

General Anatolii Kornukov, Russia's air force commander in chief, told ITAR-TASS on 27 August that Moscow is now prepared to provide anti-aircraft systems and fighters to CIS countries on a "long-term lease" basis. He said that talks are already under way with Tajikistan, Turkmenistan, Georgia, Kyrgyzstan, and others. PG

'MIR' ENDS ACTIVE LIFE

On 27 August, the last regular crew of "Mir" shut down the space station's major systems and began their return to earth. The crew landed safely on 28 August. The victim of funding shortages, "Mir" will be programmed to crash into the Pacific in February 2000. PG

LIVSHITS SAYS G-8 SUMMIT MAY BE HELD IN RUSSIA IN 2003

Aleksandr Livshits, Moscow's envoy to the G-8, told NTV on 29 August that the leaders of the major industrialized countries now support holding one of their summits in Moscow or St. Petersburg, possibly in 2003, Interfax reported. PG

RUSSIANS REMAIN DIVIDED ON BURYING LENIN

According to a nationwide poll conducted by the Public Opinion foundation, 47 percent of Russians oppose burying Lenin, while 33 percent support that idea, Interfax reported. Supporters of Yabloko's Yavlinskii are most strongly in favor of burying Lenin and the others interred on Red Square (52 percent for, 35 percent against), while backers of Communist Party leader Gennadii Zyuganov are most opposed (13 percent for, 70 percent against). PG

HARE KRISHNA TEMPLE IN MOSCOW ATTACKED

Ten to 15 unidentified youths broke into the Hare Krishna temple in the Russian capital on 28 August and beat those who were inside praying, Interfax-Moscow reported. The news agency said that the police are currently looking for those responsible. PG

NIKITIN APPEALS TO EUROPEAN HUMAN RIGHTS COURT

Aleksandr Nikitin, a retired Russian navy officer who has been indicted for allegedly passing classified information to a Norwegian environmental group, has now appealed to the European Human Rights Court, ITAR-TASS reported on 28 August. In October 1995, the authorities charged Nikitin with high treason for allegedly divulging secret information about radiation leakages in the Russian Northern Fleet. In October 1998, a St. Petersburg court returned the case to prosecutors for further investigation. PG

RUSSIA MAY HAVE 2 MILLION HIV CASES BY 2002

Russian medical experts said that the AIDS epidemic in Russia is becoming a "national catastrophe," Interfax reported on 29 August. They said 5,000 new cases of HIV infection were reported in the first half of 1999, more than the total reported for 1998. And they added that under a worse case scenario, the number of people infected with HIV may rise to 2 million by 2002. PG




ARMENIAN PARLIAMENT APPROVES AUSTERITY MEASURES

Deputies voted overwhelmingly on 28 August to endorse the measures that Prime Minister Vazgen Sargsian proposed in late July to bridge an anticipated 31 billion dram ($58 million) budget shortfall, RFE/RL's Yerevan bureau reported. Those measures include higher excise duties on gasoline and cigarettes and cuts in some infrastructure projects and non-essential expenditures in the social and education sectors (see "RFE/RL Newsline," 29 July and 19 August 1999). In addition, the government needs to divert more than 17 billion drams toward paying state enterprises' debts to the energy sector. The IMF and World Bank have said that disbursement of some $55 million in new loans is contingent on that latter step. LF

DATE SET FOR TRIAL OF ARMENIAN FORMER INTERIOR MINISTER

The trial will begin in a Yerevan district court on 9 September of former Yerevan Mayor and Interior Minister Vano Siradeghian, RFE/RL's Yerevan bureau reported on 27 August. Siradeghian is charged with ordering several contract killings in 1994-1996 when he was interior minister. Some 229 people will be summoned as witnesses in the trial, which the presiding judge Samvel Torosian denies is politically motivated. The previous Armenian parliament voted in February to strip Siradeghian, chairman of the former ruling Armenian Pan-National Movement, of his deputy's immunity. The previous month, it had failed to raise the majority needed to do so (see "RFE/RL Newsline," 26 January and 18 February 1999). LF

ARMENIA SENDS EARTHQUAKE RELIEF TO TURKEY

The Armenian government dispatched a plane load of emergency supplies, including medication and mobile generating stations, to Turkey on 27 August for victims of the 17 August earthquake, RFE/RL's Yerevan bureau reported. The Turkish authorities failed to respond to the Armenian government's earlier offer to send a rescue team (see "RFE/RL Newsline," 18 August 1999). LF

AZERBAIJANI OPPOSITION SLAMS PRESIDENT'S KARABAKH POLICY...

The Movement for Democracy, which is composed of 23 opposition parties, issued a statement on 27 August announcing it will begin protest actions on 10 September against what it termed President Heidar Aliev's "defeatist policy" aimed at resolving the Karabakh conflict, Turan reported. The previous day, the opposition Democratic Congress had issued a statement in which it rejected as a "violation of national interests" the proposal contained in the most recent OSCE Minsk Group Karabakh peace plan whereby Azerbaijan and the unrecognized Nagorno-Karabakh Republic form a "common state." The statement called for Armenia's immediate compliance with four 1993 UN Security Council resolutions on Karabakh demanding the withdrawal of Armenian forces from occupied Azerbaijani territory. It also argued that autonomy for Nagorno-Karabakh should be balanced by autonomous status for the estimated 200,000 ethnic Azerbaijanis who fled Armenia in 1988. LF

...AS SUPPORT GROWS FOR HUNGER STRIKE

Some 180 members of Ashraf Mehtiev's Geyrat Party staged a one-day hunger strike on 28 August as a gesture of solidarity with nine members of the opposition Coordination Council on Karabakh who began fasting on 23 August to demand Armenia's compliance with the four UN Security Council resolutions, Turan reported. The hunger-strikers have also condemned the 22 August meeting in Geneva between President Aliyev and his Armenian counterpart, Robert Kocharian, and have demanded that Aliyev make public the content of those talks. Several opposition party leaders, editors of several independent and opposition newspapers, and the heads of two independent journalists' unions met with the hunger-strikers on 27 August. LF

GEORGIA DECIDES TO REQUEST EXTENSION OF CIS PEACEKEEPERS' MANDATE

Meeting behind closed doors on 29 August, Georgia's National Security Council approved extending the mandate of the Russian peacekeeping force deployed under a CIS mandate along the border between Abkhazia and the rest of Georgia, Caucasus Press reported. The force's mandate expired on 31 July and must be renewed by CIS heads of state at their next summit, scheduled for October. Revaz Adamia, chairman of the parliamentary committee on defense and security, had argued last week that the peacekeepers' withdrawal could precipitate a new outbreak of fighting. According to Tamaz Nadareishvili, chairman of the Abkhaz parliament in exile, the Security Council decision to approve an extension of the peacekeepers' mandate is conditional on their redeployment throughout Abkhazia's southernmost Gali Raion and the southern part of neighboring Ochamchire Raion. CIS heads of state had endorsed that deployment in March 1997, but the Abkhaz authorities opposed it (see "End Note," "RFE/RL Newsline," 29 April 1997). LF

FOUR HOSTAGES RELEASED IN KYRGYZSTAN

The Islamic militants who seized several villages in Kyrgyzstan's Osh Oblast last week released four of their hostages late on 28 August. The four released hostages confirmed that the Kyrgyz Interior Ministry general and the four Japanese geologists taken hostage on 22-23 August are still alive. On 27 August, Kyrgyz President Askar Akaev issued a decree on mobilizing reservists, some 2,000 of whom were sent the following day to fight the militants. Meeting with Kyrgyz Foreign Minister Muratbek ImanAliyev in Osh on 28 August, the defense, foreign, and security ministers of Kazakhstan, Uzbekistan, and Tajikistan offered assistance, including sending troops to neutralize the guerrillas. A Russian Defense Ministry spokesman had told ITAR-TASS on 27 August that the CIS Collective Security Treaty provides a legal basis for Russian participation in such an operation, but as of 28 August Moscow had not officially responded to Bishkek's appeal for Russian military assistance. LF

UZBEK PLANES KILL KYRGYZ VILLAGERS IN BOMBING RAID

President Akaev told journalists in Bishkek on 30 August that 12 Kyrgyz villagers were killed and 40 homes damaged in a bombing raid by Uzbek aircraft on villages in the Chong-Alai district of Osh Oblast on 29 August, RFE/RL's Bishkek bureau reported. Subsequent reports give a lower death toll. Uzbek aircraft had mistakenly bombed Kyrgyz territory two weeks earlier in a similar attempt to destroy the guerrilla band (see "RFE/RL Newsline," 17 and 18 August 1999). Akaev sent Prime Minister Amangeldy MurAliyev and Presidential Administration Defense and Security Department head General Bolot Djanuzakov to Osh to assess the situation. In Tokyo, a cabinet spokesman told journalists on 30 August that Prime Minister Keizo Obuchi has written to the presidents of Uzbekistan and Tajikistan requesting their assistance in locating and releasing the four Japanese hostages, ITAR-TASS reported. LF

U.S. WATCHDOG PROTESTS HARASSMENT OF KYRGYZ NEWSPAPER OWNER

The New York-based Committee to Protect Journalists has written to President Akaev to protest the harassment by the Kyrgyz State Tax Police of Aleksandr Kim, owner and chief editor of the independent daily "Vechernii Bishkek," RFE/RL's Bishkek bureau reported on 28 August, citing the Kyrgyz Committee for Human Rights. The State Tax police opened a criminal case against Kim last week (see "RFE/RL Newsline," 26 August 1999). LF

THREE KILLED IN TAJIK SHOOTOUT

Three people were killed and nine wounded on 29 August during a 10-minute gun battle in a Dushanbe market between Tajik Interior Ministry forces and guards to the Commission for National Reconciliation, Reuters and Interfax reported. The reason for the clash is not known. LF




BELARUSIAN TRADE UNIONS ANNOUNCE NATIONWIDE PROTEST

The Federation of Trade Unions will hold a nationwide protest on 30 September over deteriorating living standards, Belarusian media reported on 27 August. Valyantsina Palevikova, secretary of the federation, told "Zvyazda" that the government has failed to comply with its pledge to increase real wages in 1999. According to Palevikova, those wages dropped 4 percent from January-June, instead of increasing by 34 percent, as the government had promised. Trade unionists said on 27 August that the federation also opposes the presidential decree on labor discipline, which introduces limited-duration contracts for all categories of Belarusian workers. JM

BELARUSIAN OPPOSITION LEADER IN LITHUANIA GETS MORE SUPPORT

Former Supreme Soviet Chairman Stanislau Shushkevich, World Association of Belarusians Chairman Radzim Haretski, and Ivonka Survilla, chairwoman of the emigre Belarusian Democratic Republic, signed a document in Vilnius on 27 August repeating that Alyaksandr Lukashenka's term as Belarus's legitimate president is over. The document also pledges support for Supreme Soviet Chairman Syamyon Sharetski, who is now living in Lithuania and who de jure became Belarusian head of the state on 20 July. Meanwhile, Sharetski has unofficially met with German and U.S. diplomats in Vilnius, seeking to enlist their support in his effort to undermine Lukashenka's presidency in the international arena, dpa reported on 27 August. JM

KUCHMA EMPOWERS FINANCE MINISTRY WITH SHAPING TAX POLICIES

Ukrainian President Leonid Kuchma has signed a decree putting the Finance Ministry in charge of taxation policies, a key requirement for the IMF to resume its $2.6 billion aid program to Ukraine, AP reported on 27 August. The decree deprives the State Tax Administration of policy-making duties and orders the Finance Ministry to set tax collection targets and propose new taxes. The State Tax Administration retains the right to monitor tax collection. JM

UKRAINIAN INDEPENDENT TELEVISION CHANNEL SAYS IT FACES CLOSURE

Tax authorities in Kyiv on 26 August ordered that the bank account of the private STB television station be closed because of the station's failure to submit tax documents for examination, AP reported on 27 August. STB President Dmytro Prykordonnyy told journalists that his station cannot submit the required documents because they are being held by eight other state bodies. "I haven't dealt with television proper for the past two months. Instead, I've been working with the nine controlling agencies," Prykordonnyy commented. He added that the channel will have to close in September unless it is granted access to its money. STB has vowed to give equal air time to each of the leading candidates in the upcoming presidential ballot. JM

UN COMMITTEE CRITICISES LATVIA'S TREATMENT OF ALIENS...

The UN Committee on Racial Discrimination, while recognizing Latvia's efforts in achieving social stability and legislative reform, sharply criticized the country's treatment of its national minorities, LETA reported on 27 August. The report tagged Latvia for the country's sluggish naturalization process, which affects more than 25 percent of residents, and said Latvia should provide educational opportunities in minority languages. In addition, the committee urged Latvia to encourage its residents to rethink their understanding of "racial discrimination." MJZ

...LEAVES LATVIAN LAWMAKERS STEAMING ABOUT RUSSIAN INFLUENCE

LETA reported on 28 August that most Latvian lawmakers rejected the findings of the UN committee report. People's Party deputy Aleksandrs Kirsteins told LETA that "[the report] says nothing and means nothing... The reality is that more children are being educated in the Latvian language." Fatherland and Freedom deputy Juris Dobelis said the UN criticism is baseless, because "taking into account the reality of the situation in Latvia, it is impossible to implement all of the demands made by international organizations." Dobelis also criticized the country's "politicians who were unable to convince [others] in the international arena that another country is to a much greater extent responsible for the situation in Latvia," referring to Latvia's half-century of occupation by the Soviet Union. Latvia's Way deputy Edvins Inkens was surprised by the report's findings. "Until now, only Russia's UN representatives expressed such views," he commented. MJZ

NEW CONFLICT OF INTEREST CHARGES FOR VENTSPILS MAYOR

"Diena" reported on 28 August that new documents have been submitted to the Latvian Prosecutor-General's office linking Ventspils Mayor Aivars Lembergs to Multinord AG, which has holdings in major companies operating in Ventspils. This third set of documents includes checks paying dividends from Multinord AG to Lembergs. Lembergs is being investigated for conflict of interest and failure to make proper financial disclosures, as required by law. AB

FURTHER RUSSIAN REACTION TO COUP PLOTTERS' SENTENCING IN LITHUANIA

According to BNS on 27 August, the Russian Foreign Ministry believes that the verdict handed down to the 13 January 1991 coup plotters is political persecution. At the same time, the ministry acknowledged that the court's decision is "an internal affair of sovereign Lithuania." The Russian Foreign Ministry voiced special concern about the fate of 70-year-old Stanislav Mitskevich, who is a Russian citizen and received a four-year jail term, along with five other defendants. It is thought that Mitskevich may have fled the country because he failed to appear in court for the sentencing. AB

POLISH DEFENSE OFFICIAL RESIGNS OVER SUSPECTED TIES TO COMMUNIST SECRET SERVICES

Deputy Defense Minister Robert Mroziewicz resigned on 27 August after Lustration Prosecutor Boguslaw Nizienski had queried the accuracy of his lustration statement denying any collaboration with the Communist-era secret services (see "RFE/RL's Newsline," 27 August 1999). Meanwhile, "Rzeczpospolita" reported on 28 August, citing "unofficial sources," that Nizienski also queried the lustration statement by Deputy Premier and Interior Minister Janusz Tomaszewski. Tomaszewski told "Rzeczpospolita" that he does not know anything about such a step, while Nizienski, speaking to "Gazeta Wyborcza"on 29 August, refused to confirm the "Rzeczpospolita" allegation. JM

POLAND'S WALESA HOLDS CONFERENCE ON POVERTY...

Former President Lech Walesa invited 37 top politicians and economists of all political stripes to discuss poverty in Poland at the Lech Walesa Institute on 27 August. Some well- known politicians--including parliamentary deputy speaker Marek Borowski of the Left Democratic Alliance and Finance Minister Leszek Balcerowicz of the liberal Freedom Union-- failed to appear, claiming the conference was part of Walesa's presidential election campaign. Walesa is the first politician who announced his intention to run in the 2000 elections (see "RFE/RL Newsline," 16 August 1999). JM

...WHILE JARUZELSKI PLEDGES TO ATTEND TRIAL FOR 1970 MASSACRE

A district court in Gdansk has summoned another former Polish president, General Wojciech Jaruzelski, to appear in court in connection with the massacre of 44 people by the police and the army during the 1970 riots in Gdansk, Gdynia, Szczecin, and Elblag. The court ruled that because of his poor health, Jaruzelski will stand trial in Warsaw, where he lives. "I shall stand before the court without fear," the 76-year-old Jaruzelski told PAP. Jaruzelski, who was defense minister in 1970, is accused, along with 11 other communist decision-makers, of indirect involvement in the massacre. JM

CZECH PRESIDENT THREATENS TO QUIT

Vaclav Havel on 28 August said he will resign his post if the parliament approves constitutional amendments that would limit his prerogatives, CTK reported. Under changes currently being drafted by the Social Democratic Party (CSSD) and the Civic Democratic Party (ODS), the president would lose the power to name the premier after an election, appoint Central Bank members, or grant amnesties. Havel said that those changes would "turn the president into a mechanical puppet," adding that they are being drafted out of "intense hatred [for] or fear" of himself. Havel also rejected CSSD-ODS criticism of the new Impulse '99 civic initiative, saying that the reaction of people who believe that politics is only a matter for political parties shows "the misery of our public and social life" (see "RFE/RL Newsline," 26 July and11 August 1999). MS

INDEPENDENT CANDIDATE WINS CZECH SENATORIAL ELECTION

Vaclav Fischer, who owns a travel agency chain and a charter airline, won the 27-28 August by-election to replace the late ODS Senator Vaclav Benda. Fischer garnered 71.24 percent of the vote, well ahead of Jirina Jiraskova of the ODS, who came in second. His victory means that the CSSD and the ODS have lost their three-fifths majority in the 81-seat chamber and may now be unable to push through their envisaged constitutional changes. MS

BAHAMAS REINTRODUCE VISAS FOR SLOVAK CITIZENS

The Foreign Affairs Ministry on 27 August announced that the Bahamas have reintroduced visa requirements for Slovak citizens as of 15 September, SITA reported. The ministry said the decision was "a delayed reaction" to a similar step taken by the U.K. last fall. The Bahamas are a member of the Commonwealth. MS

HUNGARIAN PREMIER IN SLOVAKIA

Viktor Orban, meeting with his Slovak counterpart, Mikulas Dzurinda near Bratislava on 27 August, said the Hungarian government "views relations with Slovakia above all through the [eyes] of ethnic Hungarians" living there, Duna Television reported. Orban said that "the extent of our satisfaction [with these relations] depends on the extent to which Hungarians in Slovakia are able to say that they are all right, are not discriminated against, and can feel at home" in the country. Chairman of the Slovak Coalition Party Bela Bugar, who also participated in the meeting, said the recently passed law on the use of minority languages in contacts with the authorities is only "a gesture for the EU." MS

HUNGARY EXTENDS INVESTIGATION AGAINST RUSSIAN BUSINESSMAN

Officials from the Hungarian Tax Office said that tax authorities have extended an investigation into companies controlled by Semyon Mogilevich, who is suspected of being a leading figure in the international "Russian mafia," Hungarian media reported on 30 August. A U.S. official commented, however, that Hungarian authorities are putting up obstacles to cooperation between U.S. and Hungarian law enforcement agencies, noting that Mogilevich was able to leave Budapest before an investigation into his activities had ended there. A Hungarian government official expressed "shock" at that remark, pointing out that U.S. authorities have not issued an arrest warrant for Mogilevich. He added that there are no reasons to restrict Mogilevich's personal freedom in Hungary. MSZ




NORWAY CALLS FOR MACEDONIA TO FREE PEACEKEEPER

A vehicle driven by two Norwegian KFOR soldiers hit a car carrying Macedonian Minister without Portfolio Radovan Stojkovski, his wife, and daughter on 28 August southeast of Skopje. The Stojkovskis died in the crash. Their driver and the two soldiers were injured. The two soldiers, who had been driving on the left side of the highway, refused to take a breath test. Spokesmen for the Macedonian government and KFOR engaged in mutual recriminations over the incident. On 29 August, Macedonian police arrested the Norwegian driver in the hospital. The next day, Norwegian Foreign Minister Knut Vollebaek said on Norwegian television that Macedonian authorities violated their agreement with KFOR, which specifies that peacekeepers must be prosecuted in their home countries. Vollebaek demanded the driver's release. The second Norwegian has meanwhile arrived in Kosova. PM

RED CROSS: SERBS HOLD 2,000 KOSOVARS

A spokeswoman for the International Committee for the Red Cross said in Geneva on 30 August that the Serbian authorities are holding at least 2,000 ethnic Albanians from Kosova in Serbian prisons. She said that the prisoners include those who have been in Serbian jails for a long time, those taken to Serbia during the recent conflict, and those sent to Serbian jails when Serbian forces left Kosova in June. Among those held is student leader Albin Kurti (see "RFE/RL Newsline," 13 August 1999). On 27 August, several thousand people held a silent march through Prishtina to demand the prisoners' release. Among those participating was the UN's Bernard Kouchner. PM

HOLBROOKE: 'PROGRESS, PROBLEMS' IN KOSOVA

U.S. Ambassador to the UN Richard Holbrooke said in Prishtina on 29 August that "sometimes forging a peace is more difficult than winning a war." He added that "this place has been a mess for a long time, but a different kind of mess. The war was messy, the decade that preceded the war was messy, the history back to 1912 was messy...and the [current] task is immense." He praised the role of the UN and of KFOR. Holbrooke said after meeting with Serbian Orthodox Archbishop Artemije that any attack on cultural monuments is a "criminal, vandal act." Holbrooke noted that ethnic Albanian leader Hashim Thaci assured him that he would do "anything in his power" to make Kosova a pluralistic society. The ambassador stressed that "the most important thing is that Albanians now can decide about their own destiny and that NATO forces are here to provide security for everybody." PM

EXPLOSION DAMAGES MONUMENT IN PRISHTINA

A blast from an explosive charge weakened the foundations of the communist- era Brotherhood and Unity Monument in central Prishtina on 28 August. No one was injured. KFOR peacekeepers subsequently removed additional explosive charges from the monument. PM

DRASKOVIC DRAWS CLOSER TO MILOSEVIC

Vuk Draskovic's Serbian Renewal Movement issued a statement in Belgrade on 29 August accusing KFOR and the UN mission in Kosova of being "essentially in close cooperation with the [Kosova] Liberation Army." KFOR and the UN thereby "help accomplish the most monstrous plans of the Albanian terrorists and separatists," AP reported. The Serbian authorities made similar charges against the U.S. last week (see "RFE/RL Newsline," 27 August 1999). In an apparent reference to Draskovic, opposition leader Veran Batic said on 30 August that one of the foundations of Yugoslav President Slobodan Milosevic's rule is the group of opposition leaders who cooperate with him. The other sources of Milosevic's power are "electoral fraud, media manipulation, and repression," Batic added. PM

VEDRINE: SERBIA COULD LOSE CLAIM TO KOSOVA

French Foreign Minister Hubert Vedrine told "Le Figaro" of 28 August that Serbia must replace Milosevic if it wants to keep Kosova. The minister stressed: "If the regime does not change, the sovereignty of Yugoslavia...will be increasingly contested. Conversely, the installation of a democratic regime boosts the chances for a combination of Yugoslav sovereignty and an autonomous [Kosova]." In a warning to the ethnic Albanians, Vedrine said that "nothing will be possible if security is not assured for all. That is a precondition for [the broad- ranging self-government that] is to follow." He nonetheless rejected the Serbian proposal to set up ethnic Serbian "cantons" (see "RFE/RL Newsline," 26 August 1999). Vedrine argued that "we have to find other methods to ensure security and coexistence." PM

MONTENEGRIN MINISTER WARNS CLANS

Interior Minister Vukasin Maras said in Podgorica on 29 August that the government will firmly oppose any attempt by "tribes" to secede from Montenegro and attach the territory they inhabit to Serbia, RFE/RL's South Slavic Service reported. He was referring to a gathering of the Vasojevic clan in the north the previous day. Speakers at that meeting said that they will "defend Yugoslavia by all means" and secede from Montenegro should that republic withdraw from the Yugoslav federation. Observers note that clans form the basis of Montenegrin society and play a key role in political life. PM

DJILAS: MONTENEGRO KEY TO CHANGE

Sociologist and political commentator Aleksa Djilas, who is the son of leading communist-era dissident Milovan Djilas, said that the most serious threat to Milosevic comes from Montenegrin President Milo Djukanovic, the Frankfurt-based Serbian daily "Vesti" reported on 30 August. Djilas stressed that the Serbian opposition is not sufficiently united to challenge Milosevic successfully. Djilas argued that sooner or later Milosevic will have to agree to Djukanovic naming a new federal prime minister. That will mark the end of Milosevic's grip on power, the commentator continued. PM

BILDT: REFORM MUST ACCOMPANY BALKAN RECONSTRUCTION

Carl Bildt, who is UN Secretary- General Kofi Annan's senior envoy to the Balkans, said in New York that southeastern Europe needs thorough-going political and economic reforms in addition to development assistance. Bildt stressed that old- style communist systems remain in place in much of the region and that "crony capitalism" predominates in some post- communist societies like Croatia and Bosnia, the "International Herald Tribune" reported on 30 August. Bildt identified Serbia as the core of the problem. "It's such a big chunk of land in the middle of the Balkans that if it does not reform itself, it will be very difficult to do anything substantial with the rest. Serbia is the core nation of the region," Bildt concluded. PM

DID BOSNIAN SERB GENERAL RISK ARREST IN VIENNA?

Unknown persons leaked the secret list of war criminals indicted by the Hague-based tribunal to the Bosnian Serb authorities "weeks ago," Reuters quoted the Dutch daily "De Volkskrant" as saying on 30 August. The daily argued that General Momcilo Talic knew that he was on the list and risked arrest last week in Vienna (see "RFE/RL Newsline," 27 August 1999). The newspaper quoted an unnamed former Bosnian Serb military official as saying that Talic "was blinded by power and status.... He thought that his senior position in the army rendered him" immune from arrest. PM

CROATIA PREPARING TO EXTRADITE 'TUTA'?

A Zagreb county court may soon decide to extradite Mladen "Tuta" Naletilic to The Hague, where he is wanted for war crimes in conjunction with the 1993-1994 Croatian-Muslim conflict in Bosnia-Herzegovina, "Novi List" reported on 30 August. Croatia's failure to extradite Tuta has led to serious tensions in its relations with the tribunal and with Washington (see "RFE/RL Newsline," 27 August 1999). AP reported that some Croatian authorities are reluctant to extradite Tuta lest he implicate top officials in his testimony. PM

MOLDOVAN PREMIER IN ROMANIA

Ion Sturza unexpectedly arrived in Romania on 27 August on a visit scheduled to begin three days later. After meeting with President Emil Constantinescu the next day, Sturza said that prospects for improving relations "have never been better" because both countries are ruled by centrist coalitions. He added that Moldova is particularly interested in the development of the transportation links between the two countries and in energy deliveries. Romania, he said, must become a "main electricity supplier" for Moldova. He also said that Romania will assume a 51 percent stake in the Moldovan Tirex Petrol Company. With regard to the pending basic treaty between the two countries, Sturza said the governments must "take over [from experts] the finalization" of that document, adding that he hopes it will be ready for signing by year's end. On 30 August, Sturza is scheduled to meet with Prime Minister Radu Vasile and the chairmen of the parliament's two chambers. MS

MOLDOVAN PRESIDENT RE-WRITES HISTORY

Speaking at ceremonies marking Moldova's Independence Day on 27 August, President Petru Lucinschi said the day marks "the common denominator of our national history throughout the 640 years that passed since [the first declaration of] Moldovan statehood," RFE/RL's Chisinau bureau reported. For the first time since independence was declared in 1991, a military parade took place in Chisinau to mark the anniversary. MS

DIMITROV MAUSOLEUM DEMOLISHED IN SOFIA

Workers in Sofia on 28 August completed the dismantling of the mausoleum that housed the body of Communist leader Georgi Dimitrov, BTA reported. Dimitrov's body was removed from the tomb and cremated in 1990 (see "RFE/RL Newsline," 23 August 1999). MS

BULGARIAN PARTIES BRACE FOR LOCAL ELECTIONS

The two parties representing ethnic Turks--the Movement for Rights and Freedoms and the Party of Democratic Changes--have concluded an agreement on cooperation in the October local elections, BTA reported. leader Also on 28 August, the Liberal Democratic Alternative (LDS) and the Euro-Left signed an agreement on "pragmatic cooperation." LDS leader and former President Zhelyu Zhelev, said the agreement lays the foundation for a new liberal centrist formation. MS




BULGARIA'S ECONOMY ANAEMIC UNDER CURRENCY BOARD


By Michael Wyzan

In July 1997, in the aftermath of a severe economic crisis, Bulgaria introduced a currency board arrangement (CBA), under which the exchange rate is fixed to the Deutsche mark and the only changes in the money supply must arise from inflows and outflows of foreign currency.

Such an arrangement, which has also been adopted by transition countries Bosnia-Herzegovina, Estonia, and Lithuania, is designed to instill credibility in economic policy. It has been universally successful in bringing down inflation and interest rates to acceptable levels. A study by IMF economists found that countries employing CBAs have lower inflation and more rapid economic growth.

The Bulgarian experience corroborates the results of that study as far as inflation is concerned. After experiencing 578.6 percent consumer price inflation (December to December) in 1997 (242.7 percent in February 1997 alone), such inflation was just below 1 percent in 1998 and stood at 1.7 percent in the 12 months to July 1999. The fall in the national bank's annual base interest rate was equally dramatic, from a peak of 300 percent in September 1996 to the current 4.42 percent.

Bulgaria's experience with economic growth, however, has been less encouraging. While GDP was up by 18.9 percent in the first quarter of 1998 over the very depressed first quarter of 1997, the recovery quickly ran out of steam. For 1998 as a whole, the rate of GDP growth was only 3.5 percent, and this indicator fell by 0.7 percent in the first quarter of 1999, even before the effects of the Kosova crisis began to be felt. The official forecast is for GDP to grow by 1.5 percent this year, although many observers expect a decline. Industrial production was down by 16.2 percent in the first quarter, compared with the first three months of 1998.

Wages have recovered to pre-crisis levels under the CBA, even if production has yet to do so. The average monthly wage in the public sector, which had fallen to $25 in February 1997, recovered by May 1999 to $124--close to the post- communist peak of $128 in September 1993. The unemployment rate, at 13.04 percent in May, has moved in no particular direction during the CBA era.

The rapid rise in wages may not have led to higher unemployment, but some argue that it has played a role in Bulgaria's deteriorating current account balance. From January-May, the current account deficit was $433.5 million, up from $88.2 million a year earlier. This is a significant change for a country that has typically run surpluses or small deficits.

Behind the current account imbalance during the first five months stands a trade deficit of $357.4 million (up from $48.5 million a year earlier). While growing trade and current account imbalances are common after successful macroeconomic stabilizations, it is striking that in Bulgaria these deficits result from declines in exports, rather than increases in imports as the economy expands. Both exports and imports were lower during the period January-May, compared with the same period in 1998, but exports fell by 22.7 percent and imports by only 5.6 percent.

There are a number of factors that contributed to the export collapse. Some are related to the crisis in Kosova, which cut off trade with Yugoslavia and trade routes to the EU through that country (some 50 percent of Bulgarian exports were transported through Yugoslavia before the war). Another factor is the continuing effect of the Russian crisis, which has caused a significant drop in trade with that country. Exports to Russia were only $39.7 million from January-March, compared with $272 million during that period last year.

Under the CBA, there is not much scope for growth of the money supply when the country is running current account deficits and receiving relatively little foreign direct investment ($85.2 million in the first four months, down from $199.2 million during that period last year).

Moreover, only a small share of the credit generated has gone to enterprises. Banks, which were burned during the pre- CBA era by enterprises that never repaid loans, would rather lend to the government or foreigners. However, there has been improvement on this front. Whereas loans to enterprises accounted for 23.7 percent of banks' financial assets at the end of 1997, that figure had risen to 32.1 percent by the end of 1998.

Large persistent current account deficits will make the CBA difficult to sustain. To avoid such strains, Bulgaria will have to do a better job in placing its exports on Western markets and/or in attracting foreign investment. Estonia, whose economy has performed well under the CBA (which was introduced in 1992), has excelled in both respects. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria.


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