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Newsline - September 3, 1999




BOMB SCARES CONTINUE IN MOSCOW

The Federal Security Service (FSB) said on 2 September that it has not yet arrested all those responsible for the 31 August bombing of the Manezh shopping center, adding that telephone calls to the service by the public have failed to give any real leads. Russian agencies reported. But Interior Minister Vladimir Rushailo took the unusual step of asking the press not to belabor suggestions that the Chechens were behind the bombing, Interfax said. Even as that investigation continued, a suspicious-looking object thought to be a bomb was discovered in a Moscow railroad station, but after the station was evacuated, the authorities announced there had been a false alarm. And in an apparently unrelated incident, a World War II landmine was found and then removed from near a Moscow Jewish school, Interfax reported. Caucasus Press on 2 September quoted AFP as reporting that the self-styled Liberation Army of Daghestan has claimed responsibility for the bombing and pledged to continue acts of terrorism in Russian until all Russian forces are withdrawn from Daghestan. PG/LF

MORE CHARGES, DENIALS IN SCANDAL STORY

The Bank of New York money-laundering scandal continued to reverberate through the Russian media as well as among Russian politicians. Russian Interior Minister Rushailo said the money-laundering scandal was political in both Russia and the U.S., Interfax reported on 2 September. Federation Council Speaker Yegor Stroev echoed his words, saying that the scandal reflects American politics more than the campaigns in Russia itself, ITAR-TASS reported. Meanwhile, former Prime Minister Sergei Kirienko said that the scandal is about theft rather than economics, adding that if crimes are uncovered, "steps must be taken, if [those crimes are] unconfirmed, apologies must be made." And Russian prosecutors said they may soon send a team to New York to expand their investigations. PG

U.S. WILL BACK MORE IMF LOANS TO RUSSIA, ITAR-TASS SAYS

The Russian news agency reported on 2 September that an anonymous U.S. Treasury Department official has said that Washington will continue to back IMF loans to Russia and that it is not going to block a future IMF tranche to Moscow. That comment comes on the heels of a statement by Treasury Secretary Lawrence Summers, who said Washington will not back more loans until there is "an adequate accounting" of how earlier monies have been spent. PG

FSB DIRECTOR SEES 'NO GROUNDS' FOR EMERGENCY RULE

Nikolai Patrushev told "Nezavisimaya gazeta" on 2 September that "there are no grounds" for introducing a state of emergency" in Russia. PG

MEDIA MINISTRY SUSPENDS ST. PETE TV COMPANY

Mikhail Lesin, the minister who oversees the media in Russia, on 2 September lifted the license of Petersburg Television after the latter broadcast a program that he said was pre- election propaganda, ITAR-TASS reported. The program had first appeared on Russian Public Television, for which ORT had received a warning from the ministry (see "RFE/RL Newsline," 31 August 1999). Lesin said the station will get its license back if it submits a written explanation of why and how it broadcast the offending program and what steps it has taken to prevent a repetition, Interfax noted. PG

ZADORNOV RESIGNS AS SPECIAL ENVOY TO INTERNATIONAL FINANCIAL ORGANIZATIONS

Mikhail Zadornov, President Boris Yeltsin's special envoy to the IMF and other financial organizations, told a Moscow press conference on 2 September that he is resigning from that post and will run for the Duma as part of the Yabloko movement. He said that he leaves the position satisfied with Moscow's work in implementing the IMF program but added that he believes he can do more for the country in politics. PG

RUSSIAN RUBLE FALLS, GDP DOWN, BUDGET DEFICIT STABLE

The Russian ruble fell to 25.87 against the dollar, Russian news agencies reported on 2 September. That was a record low for the Unified Trading Session, Interfax said, surpassing the rate of 25.29 to $1 registered on 9 August. Interfax experts said that a $400 million drop in Russia's gold and hard-currency reserves from 20-27 August had limited the ability of the Central Bank to intervene in the currency markets. Meanwhile, the Russian Statistics Agency said Russia's GDP shrank by 1 percent in the first half of 1999, compared with the same period the previous year. And the federal budget deficit was 45.5 billion rubles ($1.8 billion) for the first six months of 1999, compared with 46.2 billion in the same period of 1998. PG

STROEV SAYS BUDGET TO BE SIGNIFICANTLY REVISED

Federation Council Speaker Stroev told Interfax on 2 September that the parliament will significantly revise the government's draft budget. He suggested that there will have to be more money for agriculture and the military, among other changes. PG

ANTI-WESTERN ATTITUDES FADE IN RUSSIA

Yurii Levada, the director of the VTSIOM public opinion research center, told a Moscow press conference on 2 September that the wave of anti-Western feelings that were provoked by NATO's campaign in Kosova are now fading, Reuters reported. In March, 49 percent of Russians thought "badly" or "very badly" of the U.S., Levada said, while in August, 49 percent had a positive attitude and only 32 percent a negative view. PG

U.S. NOT TO TIGHTEN IMMIGRATION POLICIES

Interfax reported on 1 September that US Consul General in Moscow Laura Clerici said Washington has no plans "to toughen" its immigration policies toward Russia as a result of the scandal over "Russian money-laundering" there. Clerici added that 11,000 Russians emigrated to the U.S. in 1998, and she added that in her estimation, most Russian emigrants are "quite law-abiding." PG

POLL FINDS PRIMAKOV NOT INCREASING FATHERLAND BLOC POPULARITY

Former Prime Minister Yevgenii Primakov's decision to join the Fatherland-All-Russia electoral bloc has not led to the increased popularity some had expected, according to a poll conducted by the All-Russian Public Opinion Center and reported by Interfax on 3 September. PG

STEPASHIN IMPLIES HE WON'T RUN FOR PRESIDENT NEXT YEAR

Former Prime Minister Sergei Stepashin told "Obshchaya gazeta" on 2 September that he is "not running for the [State] Duma symbolically, the way some election bloc leaders are," but rather to serve out his term there "if fate does not decree otherwise." While the last clause gives him an escape hatch, his assertion that he plans to serve a full term in the Duma would appear to rule out a run for president in 2000. PG

LUZHKOV SAYS DEMOCRACY IMPOSSIBLE WITH MASSIVE POVERTY

Moscow Mayor Yurii Luzhkov said that the creation of a democratic state will be impossible in Russia as long as half of the population lives below the poverty line, while 5-10 percent of the people account for 90 percent of the country's wealth, Interfax reported on 2 September. He said that new government policies could rectify the situation quickly. PG

GOVERNMENT OFFERS TO ASSUME MANAGEMENT OF SIDANKO DEBT

The Russian Fuel and Energy Ministry and the Federal Service for Financial Recovery and Bankruptcy have offered to assume management of Sidanko's debts, Interfax reported on 2 September. But the offer does not include any guarantee of repayment. PG

YELTSIN, LUCINSCHI AGREE ON TRADE PACT

Russian President Yeltsin and his Moldovan counterpart, Petru Lucinschi, met in Moscow on 2 September and signed a 10-year economic cooperation accord. They also agreed to work toward a pact that would hasten the implementation of the 1995 agreement on Russian withdrawal from the Transdniester region, ITAR- TASS reported. PG

MOVEMENT ON RAHOVEC?

The Kosova Temporary Council, a consultative body under the UN mission to Kosova, announced on 2 September that it will dispatch international policemen to Rahovec and decide "with the Russians what should be done next," ITAR-TASS reported. This decision appears to defuse somewhat the standoff between Russian forces and the Albanians in Rahovec. PG

SERGEEV SAYS MOSCOW'S MILITARY TIES NOT AGAINST THIRD PARTIES

Russian Defense Minister Igor Sergeev said in Seoul on 2 September that Russia's military-technical ties with other countries are in no way directed against third countries, Interfax reported. At the same time, Sergeev said that Moscow will work with South Korea to limit the impact of North Korea's missile program. PG

MOSCOW DENIES SALE OF SUBMARINES TO CHINA

The Russian Foreign Ministry told Interfax on 2 September that despite press reports to the contrary, "no talks are being held or could be held on the delivery of two Russian nuclear submarines to China. This is an absolute falsehood." But Rosvooruzhenie, the Russian state arms trading company, refused to comment on the reports that had appeared in Hong Kong the previous day. PG

MOSCOW PRESSES TEHRAN ON GUSINSKII VISIT

The Russian Foreign Ministry on 1 September told Iran's ambassador to Moscow that Moscow backs Russian Jewish Congress President Vladimir Gusinskii's request for a visa to visit Tehran in order to attend a trial there of 13 Iranian Jews charged with spying for Israel, Interfax reported. PG

RUSSIAN BORDER GUARDS FIRE ON TAIWANESE SHIP

Russian border guard units fired on a Taiwanese ship caught poaching near the Kuril Islands, Interfax reported on 2 September. Later the Russian guards boarded both boats and towed them into port. Meanwhile, Russian fishermen lodged a protest against the U.S. Coast Guard for its actions in limiting Russian fishing in what they called their economic zone, Interfax-Eurasia reported on 2 September. PG

RUSSIA TO SELL FIGHTER-BOMBERS TO ALGERIA

The Novosibirsk Aircraft-building Association told Interfax on 1 September that it will sell three Su-24 fighter-bombers to Algeria for $12 million. The contract was arranged by the Promeksport company. PG

RUSSIAN POPULATION SEEN DECLINING FURTHER

The population of the Russian Federation declined by 406,200 during the first six months of 1999, Interfax reported on 2 September, citing a report by the Russian Statistics Agency. That decline has led the agency to predict that the Russian population will fall by 8 million by 2016. At present, every 100 Russian women have only 124 children, 111 fewer than the rate needed to keep the population stable. PG

KOMI REPUBLIC TO JOIN BARENTS SEA COUNCIL

A Finnish official told Interfax on 1 September that the Barents Euro-Arctic Council will admit the Republic of Komi at one of its future sessions. The council, an intergovernmental body, currently includes Denmark, Iceland, Finland, Norway, Sweden, and the Russian Federation. PG




ARMENIA, KAZAKHSTAN PLEDGE TO BOOST ECONOMIC TIES

On a one-day visit to Astana on 2 September, Robert Kocharian met with his Kazakh counterpart, Nursultan Nazarbaev, to discuss bilateral relations, Interfax and Noyan Tapan reported. Both presidents noted that there are no outstanding political differences between their countries but agreed on the need to expand bilateral trade, which currently totals less that $1.5 million annually. Kocharian noted that Armenia could supply food products and equipment to Kazakhstan, purchasing grain and raw materials in return. He also said Armenia is interested in gaining observer status within the Central Asian Cooperation Organization. A friendship and cooperation agreement and an agreement to establish a joint commission for economic cooperation were signed during the visit. LF

AZERBAIJANI PRESIDENT WILLING TO AMEND LOCAL ELECTION LAW

Meeting in Baku on 1 September with Gerard Stoudmann, director of the OSCE Office for Democratic Institutions and Human Rights, Heidar Aliyev expressed willingness to accept the OSCE's recommendations for amendments to the controversial law on municipal elections, which opposition parties claim is undemocratic. But Aliyev predicted that problems might occur during the municipal elections, which are scheduled for 12 December. Azerbaijan parliamentary speaker Murtuz Alesqerov told Stoudmann earlier that day that the law takes account of recommendations by the OSCE and other international organizations and complies with international standards (see "RFE/RL Newsline," 2 September 1999). Also on 2 September, the political parties represented in the Movement for Electoral Reform and Democratic Elections said they will monitor the municipal elections, Turan reported. LF

GEORGIAN MINISTERS MEET WITH CHECHEN VICE PRESIDENT

Minister of State Vazha Lortkipanizde and Georgian Intelligence chief Avtandil Ioseliani met on 31 August in Tbilisi with Chechen Vice President Vakha Arsanov, who is recuperating in Tbilisi from spinal surgery, Caucasus Press and Interfax reported on 2 September. The talks focused on allegations made by Arsanov last week that Russian special services are recruiting Chechens who will be sent to destabilize Georgia's Black Sea autonomous republic of Adjaria in order to create a pretext for Russian military intervention there. Arsanov said the Chechen leadership will do all in its power to thwart those plans. Speaking at a press conference in Batumi on 31 August, Adjar Supreme Council Chairman Aslan Abashidze downplayed Arsanov's statement, commenting that Russia has no interest in destabilizing the situation in his republic, according to Caucasus Press. LF

RUSSIAN FOREIGN MINISTER VISITS AZERBAIJAN

On the first leg of a three-day tour of the South Caucasus, Igor Ivanov held talks in Baku on 2 September with his Azerbaijani counterpart, Tofik Zulfugarov, Prime Minister Artur Rasizade and President Aliev. Ivanov tried hard to convince his interlocutors that Russia "is taking very seriously criticism of its Caucasus polices by the Azerbaijani leadership" and wants to develop equitable relations with all three South Caucasus states, according to Interfax. Aliev, for his part, criticized Moscow's military cooperation with Armenia and the failure of the OSCE Minsk Group, of which Russia is a co-chairman, to make progress toward resolving the Karabakh conflict. But Aliyev characterized relations between the two countries as "friendly," despite their disagreements. Rasizade said relations with Russia "will remain a priority" for Baku. LF

OSCE TO MONITOR PARLIAMENTARY ELECTIONS IN KAZAKHSTAN

Senior OSCE official Linda Edgeworth told journalists in Almaty on 2 September that the organization will send a full mission to monitor the parliamentary elections on 17 September and 10 October, Reuters and Interfax reported. The OSCE had declined to send such a mission to monitor the January 1999 presidential elections on the grounds that the election law did not create equal conditions for all candidates. Edgeworth noted improvements to that law to ensure the accuracy of the vote tally. But she expressed concern over the practice of invoking administrative offenses to bar potential candidates from running and over restrictions on freedom of speech. Edgeworth stressed that sending an observers' mission does not constitute approval of the conditions under which the elections are held. LF

KAZAKHSTAN STILL PLANS TO SELL TENGIZCHEVROIL STAKE...

Chevron Oil Company President Richard Matzke told journalists in Atyrau on 2 September that Kazakhstan's government has informed Chevron of its intention to proceed with the planned sale of part of its 25 percent stake in the Tengizchevroil consortium, Interfax reported. That consortium was created in 1994 to exploit the country's largest oilfield. LF

...DESPITE GROWING OPPOSITION

Meanwhile, more senior Kazakh officials have expressed reservations over the planned sale. Uzaqbay Qarabalin, acting president of the state oil company KazakhOil, whose predecessor Nurlan Qapparov was fired 10 days ago for opposing the sale, said on 2 September that the sell-off is "shortsighted" and will weaken KazakhOil. At the same time, he admitted that KazakhOil has no choice but to bow to the government's decision (see "RFE/RL Newsline," 25 August and 1 September 1999). Marat Ospanov, chairman of the lower house of the parliament, said that selling part of the stake in Tengizchevroil is not the right way to solve Kazakhstan's financial problems, according to Interfax on 2 September. He pointed out that the value of the 10 percent stake in question may double within 2-3 years from the present $1- 1.5 billion. On 1 September, Kazakhstan's Energy, Industry, and Trade Minister Mukhtar Ablyazov told Interfax that the value of Kazakhstan's stake in Tengizchevroil is likely to increase significantly. But he pointed out that the country must repay about $900 million in foreign debts this year. LF

KAZAKH OPPOSITION CLAIMS MORE STATE COMPANIES TO BE SOLD OFF

Leaders of the Democratic Azamat (Freedom) Party told a press conference in Almaty on 2 September that the planned sale of part of Kazakhstan's stake in Tengizchevroil is only the first step in what they termed the distribution of state property among the ruling class, RFE/RL's bureau in the former capital reported. Party chairman Ghalym Abelseitov said government sources have informed him that the Aqtobe-Munay and Aqtau-Munay oil companies, the Qazaq-Mys copper smelter, the National Bank of Kazakhstan, and KazTeleCom will also be put up for tender. LF

KAZAKHSTAN'S STATE PUBLISHING HOUSE REFUSES TO PRINT SOME LOCAL NEWSPAPERS

Following last month's decision by the Kazakh government to suspend financing most official newspapers, the state publishing house in Almaty is refusing to publish some local newspapers, RFE/RL correspondents in the former capital reported on 2 September (see "RFE/RL Newsline," 5 August 1999). Although some newspapers have secured alternative sources of funding, they cannot find another publisher. LF

KYRGYZ LEADERSHIP DISCUSSES HOSTAGE CRISIS

President Askar Akaev chaired a meeting with power ministers on 2 September to discuss how to deal with the threat posed by ethnic Uzbek militants still holding some 13 hostages in southern Kyrgyzstan. Akaev insisted that those hostages must be freed unharmed. He ordered the army to set up road blocks to prevent the militants advancing further north and charged the government with providing all necessary assistance to villagers who fled or have been evacuated. Also on 2 September, First Deputy Prime Minister Boris Silaev told journalists in Bishkek that preparations are being made for a protracted standoff with the guerrillas. Silaev, who held talks in Moscow with Russian government officials earlier this week, said that promised military hardware, including planes and helicopters, will arrive in Kyrgyzstan soon. LF

KYRGYZ OFFICIALS DISCUSS DEBT RESTRUCTURING

Also on 2 September, Akaev met with a visiting U.S. delegation to discuss strengthening bilateral economic ties, RFE/RL's Bishkek bureau reported. The delegation also held talks with Prime Minister Amangeldi Muraliev. At that meeting it was disclosed that in 2000 Kyrgyzstan will have to meet foreign debt repayments equal to 40 percent of the annual budget. The lion's share consists of a $130 million Russian loan. Talks are under way with the governments of Russian and Pakistan on restructuring those loans. LF

TAJIKISTAN SETS DATE FOR PRESIDENTIAL ELECTIONS

Meeting on 3 September, Tajikistan's parliament scheduled presidential elections for 6 November, AP and dpa reported. But AP noted that the presidential poll may not take place if the electorate votes in a 26 September referendum to endorse a proposed amendment to the country's constitution that would extend the presidential term from five to seven years. Incumbent Imomali Rakhmonov was elected president in November 1994. LF




BELARUSIAN AUTHORITIES START TALKS WITH OPPOSITION

Four- strong delegations representing the authorities and the opposition began consultations at the OSCE Minsk mission office on 3 September, Belapan reported. The talks are focusing on the opposition's access to the state media. JM

UKRAINIAN CABINET SETS MAIN 2000 BUDGET TARGETS...

Despite the continued economic decline, the government has approved rather optimistic guidelines for the 2000 budget. It predicts 2 percent growth in GDP to 150.8 billion hryvni ($34.3 billion). Budget revenues are foreseen as exceeding expenditures by 500 million hryvni. According to UNIAN, this latter guideline was adopted to prevent the budget deficit from impacting on the "overall economic situation" and to provide funds to repay the country's foreign debt. Annual inflation is predicted at 12 percent, down from this year's envisaged rate of 19.1 percent. The hryvnya exchange rate is expected to fall from the current 4.4 to $1 to 5 hryvni to $1. The government indents to submit the budget draft to the parliament by 15 September. JM

...VOWS TO FULFILL IMF CONDITIONS FOR NEXT TRANCHE

The government has sent a letter to the IMF confirming that it has met all requirements necessary to receive the next IMF loan tranche. A final decision on the last major requirement--an increase in tariffs on public utilities--is to be taken before the IMF Board of Directors meeting on 7 September. Deputy Premier Serhiy Tyhypko, who is heading a Ukrainian delegation to talks with the IMF in Washington, said that "the only thing Ukraine needs to show are good incomes from natural gas auctions because we are searching for a way to pay off our social payments which is the only stressful issue for us," according to the 3 September "Eastern Economic Daily." JM

LATVIAN PARLIAMENT DEFEATS GOVERNMENT'S AMENDMENT TO PORT LAW

By a vote of 34 to 40 with 13 abstentions, lawmakers on 2 September defeated a government-supported amendment to the law on ports, LETA reported. The controversial measure would have restricted Riga, Ventspils, and Liepaja in disputes with the government over appointments to the boards of those municipalities' ports. The measure, which the government had passed by decree during a parliamentary recess, was heavily criticized by Ventspils Mayor Aivars Lembergs. Lembergs is widely considered an arch-enemy of Prime Minister Andris Skele. MH

LITHUANIAN CENTRAL BANK TO LIQUIDATE FAILED BANK

The Lithuanian Central Bank on 2 September announced it will begin bankruptcy proceedings against the failed Litimpeks Bank (see "RFE/RL Newsline," 16 August 1999). The Central Bank has asked the Vilnius District Court to revoke the banking license of Litimpeks and for a receiver to assume control of the bank's operations, ELTA reported. The Deposit Insurance Fund said it may need to pay out some 24 million litas ($6 million) if Litimpeks is indeed declared bankrupt. BNS added that an audit conducted in mid-August showed the bank's liabilities exceed assets by almost 10 million litas ($2.5 million). Litimpeks accounts for only 2.2 percent of Lithuania's banking market. MH

POLISH CABINET APPROVES RESTITUTION LAW DRAFT

The government on 2 September approved a draft law that will partly compensate people whose property was confiscated by the Communist regime from 1944-1962. The government estimates that there will be some 170,000 property restitution claims totaling 130 billion zlotys ($32.5 billion) once the bill is adopted by the parliament and signed by the president. Under the draft, successful claimants will receive compensation to the tune of 50 percent of the value of their former assets. Such compensation will take the form of either the property itself or stock in state-owned companies undergoing privatization. JM

POLISH DEPUTY PREMIER RESIGNS OVER LUSTRATION

Deputy Premier and Interior Minister Janusz Tomaszewski tendered his resignation on 2 September, following his sacking by Premier Jerzy Buzek (see "RFE/RL's Newsline," 2 September 1999). Tomaszewski said he resigned in keeping with his former pledge to step down if the Lustration Court decided to check the accuracy of his lustration statement. The same day, Polish Television confirmed the widespread rumor that the court has begun examining whether Tomaszewski collaborated with the Communist secret services. On 3 September, President Aleksander Kwasniewski approved Tomaszewski's dismissal/resignation. JM

CZECH OPPOSITION LEADER EVASIVE ON POLITICAL FUTURE

Civic Democratic Party leader Vaclav Klaus told "Hospodarske noviny" on 3 September that the continuation of the present social and economic stagnation is a "horrible thought," CTK reported. Klaus admitted that the so-called "opposition agreement" with the Social Democratic minority government has been "a failure" but said that for the time being there is no alternative. Klaus said he wants early elections under a new electoral law that would make it possible for one party to create a majority in the parliament. But he added that he doubts whether the necessary 120 signatures in favor of early elections could be gathered in the Chamber of Deputies. MS

CZECH DEPUTY PREMIER SAYS HE WILL NOT RESIGN

Egon Lansky on 2 September said on Frekvence 1 Radio that he will not tender his resignation over having opened an account in Austria in violation of current regulations, CTK reported. He said he has committed a misdemeanor comparable to "parking a car improperly" and that he did not commit it "as a member of the cabinet." He added that he will ask the Senate's Immunity Committee to strip him of parliamentary immunity so that the case can be properly investigated. MS

HOLOCAUST SURVIVORS MEETING IN PRAGUE

Hundreds of Jewish children who survived the Holocaust in Nazi concentration camps are meeting in Prague on 3 September. This is their 12th meeting and the first to take place in a former communist country, CTK reported. Some of the events will take place in the former concentration camp of Theresienstadt. The conference is organized by the Hidden Child Praha organization in cooperation with the Federation of Jewish Child Survivors of the Holocaust. Roma representatives are among the honorary guests. MS

RACIALIST LEAFLETS DISTRIBUTED IN EASTERN SLOVAKIA

Jozef Cervenak, chairman of the Roma-Gemer civic association in Roznava, said on 2 September that racialist leaflets have been placed in Roma mailboxes in the town. The leaflets called on "the white man" to stand up and defend what is his "by right in the name of [his] ancestors," CTK reported. Meanwhile, CTK cited the Finnish FNB agency as reporting that the Finnish authorities have processed and turned down all 300 out of the 1,100 requests for political asylum received from Roma who arrived in Finland over the last two months. MS

POLICE RAID EDITORIAL OFFICE OF BUDAPEST DAILY

Hungarian police on 2 September raided the offices of the financial daily "Vilaggazdasag" to search for the original of a list of "VIP account-holders" who received preferential loans from Hungary's Postabank. Detectives also searched the car and home of chief editor Andras Banki and Laszlo Illisz, the journalist who published the list in the 30 August issue of the daily. Banki said the original list, which gave the names and loan amounts of more than 100 politicians and other prominent personalities, has been destroyed. MSZ




UCK TO BECOME CIVILIAN CORPS OR NEW ARMY?

"The New York Times" on 3 September reported that officials of NATO, the UN, and the Kosova Liberation Army (UCK) have agreed that some 3,000 guerrillas will soon become a "lightly-armed civilian emergency force." Western officials described the new corps as a civilian force that will deal with emergencies such as "forest fires, earthquakes, mountain rescue, and reconstruction." The corps will have a military organization, however, as well as uniforms and "sidearms to protect equipment," the daily continued. It will also have helicopters. UCK officers "see it as a potential core of a national army, and are selling it to their followers as such." General Agim Ceku, who is the UCK's chief of staff, said: "We will build a new army in the future, and the Kosova Corps will be one part of it." A KFOR spokesman stressed, however, that the corps is not a new army but rather a form of "uniformed public service." PM

THACI APPEALS TO SERBS

The UCK's Hashim Thaci said in London on 2 September that Kosova's Serbs should return "because we are interested in establishing in Kosova a multi-ethnic society." The UNHCR previously estimated that 170,000 of Kosova's 200,000 Serbs fled the province during or since the recent conflict (see "RFE/RL Newsline," 12 August 1999). Also on 2 September, Serbian Deputy Prime Minister Vojislav Seselj said in Belgrade that Serbian police must return to Kosova "as soon as possible" to ensure the safety of local Serbs. He stressed that "if there are no peaceful means available, we shall have to find other ways" to enable Serbian forces to return to the province. PM

UN 'REMOVES' KOSOVA FROM YUGOSLAV CURRENCY SYSTEM

A spokeswoman for Bernard Kouchner, who is the UN's chief civilian administrator in Kosova, said on 3 September in Prishtina that he has issued an order allowing currencies other than the Yugoslav dinar to legally circulate Kosova. She added that Kouchner's own office will use German marks. It will accept dinars only for an additional fee, dpa reported. Observers note that since KFOR forces entered Kosova in June, local ethnic Albanians have generally refused to use dinars, which they regard as a symbol of Serbian rule. The Serbian authorities are certain to protest Kouchner's decision as a violation of Yugoslav sovereignty in Kosova. In practice, the German mark has been the second currency throughout the former Yugoslavia for decades. PM

AUSTRALIAN SAYS SERBS TORTURED HIM

Steve Pratt, who is one of the two Australian aid workers just released from prison by Yugoslav President Slobodan Milosevic, said in Sydney on 3 September that he confessed to spying under duress (see "RFE/RL Newsline," 2 September 1999). He said that he made the confession in April after his Serbian captors told him "to cooperate or be strangled," Reuters reported. Australian Prime Minister John Howard said that he will investigate Pratt's charge, which he said he has not heard before. PM

U.S. AIR FORCE: DOWNED PILOTS RESCUED FROM SERBIA SWIFTLY

An Air Force spokesman said in Hurlburt Field, Florida, on 2 September that the military used highly sophisticated technology in order to rescue two U.S. airmen downed in Serbia on 26 March and 2 May, respectively. In each case the pilots were rescued within hours of crashing. The helicopters that picked them up spent "less than one minute" on the ground. PM

PARTY MEMBERSHIP A KEY TO SERBIAN JOBS?

In response to an "initiative" by Milosevic's Socialist Party of Serbia, local employers in Pozarevac have signed contracts with 105 young professionals, the Frankfurt-based Serbian daily "Vesti" reported on 3 September. The local branch of the opposition Democratic Party said in a statement that it is "immoral" that a powerful party uses its influence to win jobs for its young members at the expense of other job seekers. Pozarevac is Milosevic's home town and power base. Among the firms giving jobs is the Bambi cookie company, which recently helped finance an amusement park built by Milosevic's son Marko. PM

HOLBROOKE LAUDS DODIK

U.S. Ambassador to the UN Richard Holbrooke said in Banja Luka on 2 September that Republika Srpska caretaker Prime Minister Milorad Dodik is "the most promising leader of his generation in his country," Reuters reported. Referring to Dodik's hard-line opponents, Holbrooke added: "Throughout this area there are people who are separatists, racists, criminals, and crooks. These are people not only trying to destroy the [1995] Dayton peace accords but to walk the Serb people of Bosnia-Herzegovina back to the dark ages of six years ago" when Bosnia was still torn by war. Holbrooke proceeded the same day to Mostar, which he called "the most broken city in Europe, a city whose failures exemplify the tragedy of the Balkans." The U.S. diplomat met on 3 September in Zagreb with Croatian President Franjo Tudjman, who assured Holbrooke that Croatia will cooperate with the Hague-based war crimes tribunal. PM

PLAVSIC ON HAGUE LIST?

Republika Srpska Justice Minister Milan Trbojevic, citing unspecified "sources," said the Hague-based tribunal has prepared a list of 10 past or present Bosnian Serb officials whom it wants to question in conjunction with a case being prepared against Milosevic for war crimes he allegedly committed in Croatia and Bosnia before the Dayton agreement, "Vesti" reported on 3 September. Trbojevic added that his "sources" tell him that some or all of the 10 might face indictment themselves by the tribunal. The minister noted that he himself is on the list, as are former President Biljana Plavsic, and Momcilo Krajisnik, the former ethnic Serbian representative on the Bosnian joint presidency (see "RFE/RL Newsline," 30 August 1999). PM

CROATIAN PARTIES REAFFIRM PACT

Representatives of six opposition parties signed an agreement in Zagreb on 2 September pledging to continue their alliance against the governing Croatian Democratic Community at least until after the upcoming parliamentary elections, RFE/RL's South Slavic Service reported. The ceremony was intended to dispel rumors that the coalition is about to break up. The coalition includes all significant opposition parties except those on the far right. PM

ITALY DEMOLISHES ALBANIAN BUNKERS

Albanian officials formally thanked Italian military engineers in Durres on 2 September for demolishing 32 of the country's 300,000 concrete bunkers, Reuters reported. Local soccer teams will use the reclaimed space, and the broken concrete will be used to build a marina. Former dictator Enver Hoxha built the bunkers in the 1970s to defend the country against a foreign invasion. The attack never came, but the bunkers continue to litter the landscape. Removing them is a costly and time-consuming task. PM

ROMANIA INVESTS IN MOLDOVA'S ENERGY SECTOR

Romania intends to "invest heavily" in Moldova's energy sector, Prime Minister Ion Sturza told journalists in Chisinau on 2 September on returning from that country. Sturza said Bucharest has agreed to write off Chisinau's $13 million electricity debt in exchange for a 51 percent stake in Moldova's Tirex-Petrol state company, RFE/RL's bureau in the Moldovan capital reported. Sturza added that he and President Emil Constantinescu agree that the Moldovan- Romanian basic treaty must be concluded by the end of 1999. MS

MOLDOVAN PARLIAMENTARY CHAIRMAN ATTACKS PRESIDENT LUCINSCHI

In an interview with the governmental Russian- language daily "Nezavisimaya Moldova" on 2 September, parliamentary chairman Dumitru Diacov said President Petru Lucinschi's drive to change the Moldovan system to a presidential one has "tarnished the country's image" abroad. Diacov, who heads the formerly pro-presidential Movement for a Democratic and Prosperous Moldova Bloc, said the changes proposed by Lucinschi have nothing in common with the U.S. Constitution; rather, it resembles the constitutions of "under-developed countries, with all their dictatorships and authoritarian rulers." Diacov said that some of Lucinschi's proposals, such as changing the electoral system for parliamentary elections and reducing the number of seats in the legislature, are designed to "deflect attention...from the essence of the draft," which, he said, is "aimed at imposing an authoritarian regime in Moldova of the likes existing in some CIS, African, and Asian countries." MS

BULGARIAN VICE PRESIDENT EXPECTS POLITICAL CLIMATE TO IMPROVE

In an interview with BTA on 2 September, Todor Kavaldjiev said he expects the country's political climate to improve after the October local elections because, he said, the "democratic community" will gain access to local government structures. Most of these structures are now dominated by the opposition Bulgarian Socialist Party. Kavaldjiev added that his "optimism" is nonetheless "limited" because an "undemocratic" provision in the amended local election law abolished the right of inhabitants of places with a population of fewer than 500 to elect mayors directly. He also said he supported demolishing the mausoleum of communist leader Georgi Dimitrov, noting that Dimitrov opponents such as Nikola Petkov or Krustyu Pastouhov are "not even buried in proper graves where friends and relatives can pay [their] respects." MS

PARTIES GALORE IN BULGARIAN LOCAL ELECTIONS

A spokeswoman for the Central Electoral Commission on 2 September said 87 parties and coalitions of parties have so far registered for the October local elections, BTA reported. A total of 94 parties and coalitions have applied for registration. Also on 2 September, controversial Business Bloc leader George Ganchev told journalists that if the Republican Party wins the U.S. presidential elections next year, it will back him if he decides to run for the Bulgarian presidency. MS




REFORMING THE BULGARIAN MILITARY


By Michael Shafir

When General Mikho Mikhov criticized the government in an interview with "Standart" late last month, military observers must have wondered whether his days as Bulgarian chief of staff were numbered. Mikhov spoke of "tensions" and "insecurity" among the armed forces stemming from government plans to substantially reduce their number in a bid to achieve integration into NATO. Saying that the plan is "increasingly demoralizing and infuriating" the officer corps, Mikhov noted that the Ministry of Defense's plans to close down military schools would "reduce us to the state of many African and Asian countries." He added that the ministry has no plans to help those discharged under the envisaged reform.

Judging by past practice, Mikhov is unlikely to see the reform through. Similar criticism, for similar reasons, triggered the dismissals in 1998 of commander of the construction troops General Radoslav Peshleevsky, commander of the missile and artillery forces General Angel Marin, and two deputy defense ministers, Simeon Petkovski and Rumen Kunchev. On one of those occasions, Prime Minister Ivan Kostov commented that "the fairest way for all officers who do not accept the reform of the army is to resign."

It is not difficult to see why these officers are opposed to the envisaged reforms. Schooled in Warsaw Pact doctrine, with its stress on numbers rather than quality, the Bulgarian commanders have no reason to welcome the gradual transformation of the country's armed forces into a significantly smaller and, eventually, professional army that can subsist on a reduced budget.

The Kostov government has obstinately pursued the goal of joining NATO ever since it took office, defining that goal as a "strategic" one in its "Bulgaria 2001" program. That plan is based on recommendations that NATO made in its "Plan for Activities of the Candidates for Membership in NATO," issued earlier this year, and outlines the first of two stages envisaged by the military reform. Covering the period 2000-2001, the first stage is viewed by the government as decisive for securing an invitation to join the alliance. The second stage, extending from 2002- 204, aims at ensuring that the talks with NATO will be successfully concluded.

According to Deputy Defense Minister Velizar Shalamanov, who presented the plan on 19 August, it is estimated that by 2004, Bulgaria will need no more than 300-400 graduates from military academies annually. Hence, it is unrealistic to continue financing five military educational establishments. Rather, a new National Higher Military School is to be founded to train officers and sergeants.

Detailing the plan (which must be approved by the government and the parliament) Defense Minster Georgi Ananiev on 31 August said that by 2004, the armed forces will be reduced from their present number of 93,100 to 45,000, and a total of 10,620 officers and 12,530 sergeants will be discharged. Contrary to Mikhov's claim that no help is foreseen for those about to become unemployed, Deputy Defense Minister Zdravko Zafirov said "social adaptation centers" are to be set up in major towns, where training and retraining courses will be offered to such individuals. These are to be paid the equivalent of 20 monthly wages on being released from duty.

Military equipment is also to be drastically reduced. By 2004, the number of tanks is to decrease from 1,475 to 750, air defense radars from 230 to 100, "aviation equipment" from 665 to 225 pieces, and "navy equipment" from 149 to 120 pieces. Out of the current 94 army garrisons and 178 other units, only 49 and 71, respectively, will remain by 2004. This will save some 75 million leva (nearly $41 million), according to Ananiev. Further savings of some 40 million leva will be made from the sale of Defense Ministry housing.

Another source of revenue is to be the privatization of the country's defense industry. By 2004, according to the plan, the assets of the army's trade companies are to be transferred to private hands. As early as 2002, the ministry expects some 30-40 million leva to be generated as a result of that transfer. The income is to be partly used toward updating the country's arsenal, although in view of Bulgaria's economic situation, purchases of modern technology are not expected before 2010.

The privatization of the defense in industry has already been launched, with several companies formerly owned by the ministry being privatized in management- employee buy-outs. The Arsenal company in Kazanluk, the Beta company in Cherven Bryag, and the Optielecton company in Panagyurishte have all been privatized this way, and the VMZ ordnance factory in Sopot may soon follow suit. That, however, may necessitate converting at least part of the production from military to civilian. It also poses problems with regard to licensing and competing on foreign markets, since it is clear that a downsized Bulgarian army is unlikely to become a prospective client. For the time being, the state has kept a 34 percent stake in such major military-industrial plants as Arsenal. Whether it continues to do so will likely depend on both military priorities and on the pace of reform.


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