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Newsline - May 29, 2002


PUTIN LASHES OUT AT EU LEADERS OVER KALININGRAD...
At the 29 May opening of the ninth Russia-EU summit in Moscow, President Vladimir Putin was harshly critical of the EU's rejection of all Russia's proposals regarding visa-free travel for Russians traveling to and from Kaliningrad Oblast after the exclave is surrounded by EU member states, Russian news agencies reported. "I will put it even more sharply: They are trying to impose upon us an absolutely unacceptable solution," Putin told the EU delegation, which includes European Commission President Romano Prodi, EU foreign and security policy commissioner Javier Solana, and Spanish Prime Minister Jose Maria Aznar. Putin noted that residents of Kaliningrad would have to ask foreign countries for permission to visit their relatives living in other parts of Russia. "Today, when the funeral of the Cold War has already taken place, such a return to old positions is absolutely incomprehensible," Putin said. VY

...AS EU HAS ITS REASONS TO RESTRICT TRAVEL...
Prodi, though, told dpa before the summit opened that the EU will be as flexible as possible on the Kaliningrad issue, but that there will be no unrestricted travel for Russians through Poland and Lithuania after they accede to the EU. The BBC's Russian service reported on 28 May that the EU is primarily concerned about the threat of organized crime and drug traffickers from Kaliningrad. Last year, about 10 million Russian and Belarusian citizens visited Poland under the current visa-free regime, the BBC said. Meanwhile, RTR reported on 29 May that hard-liners are urging Putin to combine Kaliningrad Oblast and Leningrad Oblast into a single subject of the federation, virtually transforming the Baltic States into an enclave of the new entity. VY

...AND RUSSIA, EU SPLIT ON ENERGY TARIFFS...
Prodi also told journalists that energy issues are a main topic of the summit talks, dpa and other Western news agencies reported on 29 May. The EU believes that Russian domestic fuel prices should be increased and that domestic fuel subsidies are hampering Russia's effort to develop a full-fledged market economy, Prodi said. Lifting energy subsidies is necessary to gain EU consent to Russia's rapid accession to the World Trade Organization (WTO), strana.ru noted on 29 May. However, "we do not even want to discuss bringing domestic tariffs for electricity and gas to international levels," the deputy head of the Russian Union of Industrialists and Entrepreneurs, Igor Yurgens, told the website. Deputy Economic Development and Trade Minister Maksim Medvedkov added that Russia will not eliminate the price differences because the government considers them not a subsidy but a "natural advantage" vis-a-vis competitors. VY

...WHILE WTO HEAD PREDICTS RUSSIAN ACCESSION IN 2003
WTO Director-General Mike Moor predicted that Russia could join the organization before the next WTO ministerial forum in September 2003, ITAR-TASS reported on 29 May. Moor said that Russia has made more progress toward entry over the last year than in the preceding 10 years, according to the news agency. He named agricultural issues as the most difficult outstanding obstacle to membership. Moor also said that Azerbaijan, Armenia, Cambodia, Saudi Arabia, and Ukraine might qualify for membership by next year's meeting. RC

PUTIN AND ROBERTSON HAIL NATO-RUSSIA PACT
Speaking at a joint press conference with NATO Secretary-General Lord George Robertson after the 28 May signing of a new Russia-NATO cooperation agreement, President Putin stated that "since Russia is returning to the family of civilized countries, it only wants its interests taken into account and its voice heard." Putin also said that although Russia considers itself a part of Europe, its first priority is relations with the CIS and the East. He emphasized that Russia will conduct a balanced policy with both East and West. He then cited Winston Churchill, saying that "Russia was never so strong as it wants to be and never so weak as it is thought to be." Robertson said that without Russia, the alliance would be unable to cope with the problems of the new century and to respond to new challenges. VY

JUSTICE MINISTER CONDEMNS ANTI-SEMITIC EXPLOSION
Justice Minister Yurii Chaika called the 27 May explosion of an anti-Semitic booby trap near Moscow that caused a young woman to lose an eye (see "RFE/RL Newsline" 28 May 2002) an "extremist act that must be severly punished," Russian news agencies reported on 28 May. Chaika also called on the State Duma to immediately adopt a law on extremism. The Israeli Embassy in Moscow expressed its "indignation at the anti-Semitic incident" and said that it hopes the Russian authorities will make every effort to identify and punish the perpetrators. The embassy added that it will monitor the investigation closely. VY

LUKOIL MAKES BIG MOVE INTO CYPRUS OIL AND GAS
Vagit Alekperov, president of the Russian petrochemical giant LUKoil, said in Moscow on 28 May that his company has won a government tender to develop a network of gas stations in Cyprus and now controls over 25 percent of the island's oil market, Prime-TASS reported. Alekperov also said that LUKoil plans further expansion in the Cyprus oil market, including in the areas of oil storage and transportation. Finally, he reported that his company already owns 23 percent of the Greek state oil firm Hellenic Petroleum and has major shares of the oil markets in Eastern Europe, especially in Poland and Bulgaria. LUKoil also owns 1,500 gas stations in the United States. VY

PUTIN TO KEEP 14 MARCH 2004 AVAILABLE
Central Election Commission Chairman Aleksandr Veshnyakov told reporters on 28 May that the date for the next presidential election might be set for 14 March 2004, according to a draft bill the commission has submitted to the State Duma. Meanwhile, "Obshchaya gazeta" reported in its issue No. 21 that two campaign teams -- one run by the so-called Family and another by the "clan" of St. Petersburg chekists -- for Putin's re-election bid have already been established and spheres of responsibility assigned. According to the weekly, preparations are starting so early because the St. Petersburg "clan" took over control of the United Russia party from Vladislav Surkov, deputy head of the presidential administration. Surkov and his boss, presidential administration head Aleksandr Voloshin, are considered part of the so-called Family. Voloshin reportedly responded to the move by the St. Petersburg group by setting up a campaign team headed by another one of his deputies, Dmitrii Medvedev, who is from St. Petersburg. JAC

EMBATTLED WEEKLY FIGHTS BACK
In a column in "The Moscow Times" on 29 May, commentator Yulia Latynina writes that "Novaya gazeta," which recently lost a defamation lawsuit, has uncovered new information about the plaintiff. The plaintiff in the case, Mezhprombank, won damages of 15 million rubles ($482,000), an amount that would have ruined the weekly financially. However, Latynina discovered that Mezhprombank transactions -- which the bank claimed resulted in a loss of 15 million rubles because of an article in the weekly that cast doubt on the bank's stability -- were themselves illegal "interested-party" transactions. In fact, all of the companies were shell companies controlled by Mezhprombank or its shareholders. Shell companies are often used to launder money. Latynina writes that "by laying out the operations of its tiny partners in court documents, Mezhprombank exposed the darkest secret of any Russian bank -- the inner workings of its own 'washing machine.'" As a result of this discovery, the weekly has requested a new court hearing and asked that the authorities pursue criminal fraud charges against Mezhprombank. JAC

SELEZNEV CONSIDERS NEW ALLIANCE...
The presidium of the Rossiya movement, which is headed by State Duma Speaker Gennadii Seleznev, decided on 28 May to participate in upcoming State Duma election separately from the Communist Party, "Kommersant-Daily" reported the next day. The movement may form a bloc with the Party of Workers' Self-Government, which is already registered with the Justice Ministry as a political party. Rossiya press-service head Vladimir Lebedev told ITAR-TASS on 28 May that Rossiya members had been discussing withdrawing from the People's Patriotic Union -- a coalition of leftist groups led by Communist Party leader Gennadii Zyuganov -- for more than a month and that the decision was not directly connected with Seleznev's 25 May ouster from the Communist Party (see "RFE/RL Newsline," 28 May 2002). Mikhail Shmakov, head of the Federation of Independent Trade Unions, was not optimistic about Rossiya's chances. He told "Kommersant-Daily" that while it is not impossible that Seleznev will take away part of the Communists' electorate, Seleznev "will need 10 years to create a strong party and become an independent politician,...but now he has no such chance." JAC

...AS MORE DEFECTIONS FROM COMMUNIST RANKS PREDICTED
Deputy Viktor Ilyukhin (Communist) told Interfax on 28 May that the majority of regional leaders of local Communist Party branches are dissatisfied with the party's current central leadership. He added: "I do not understand why Gennadii Zyuganov took such a harsh position, and I am afraid that it was primarily a product of his personal ambitions." He stressed that if Zyuganov raises the question of expelling Seleznev from the party's Duma faction, then several other members may leave along with him. Meanwhile, Mikhail Sokolov, a political observer with RFE/RL's Moscow bureau, noted that the voting pattern for the three party members who were dismissed is evidence that the Communist Party is not monolithic: Twenty-five people voted against ousting Seleznev, 35 against Svetlana Goryacheva, and 39 against Nikolai Gubenko. JAC

LESIN EXPLAINS FEDERAL MEDIA POLICY
Media Minister Mikhail Lesin told a conference of regional media editors on 28 May that the government is not planning to pull out of the Russian media market completely, Interfax reported. At the same meeting, Lesin denied that Russian Public Television [ORT] and Russian Television and Radio [RTR] are government-run channels. "ORT is a company in which the state owns 38 percent of the shares," he explained. And, according to the agency, All-Russia State TV and Radio Company head Oleg Dobrodeev said that beginning next season, ORT will not receive any money from the federal budget. The two-day conference was organized by the pro-Kremlin Unified Russia party. JAC

POTENTIAL GUBERNATORIAL CANDIDATE OFFERS TO HELP GET RESIDENTS IN HOT WATER
State Duma Deputy (People's Deputy) and former Governor of Krasnoyarsk Krai Valerii Zubov has volunteered to help the city of Krasnoyarsk sort out its hot-water-supply problems, Afontova-9 TV of Krasnoyarsk reported on 28 May. Some city residents have been without hot water for more than two weeks. Afontovo-9 TV reported on 20 May that Krasenergo believes the city owes it 600 million rubles ($18 million), while the city believes that it owes only 300 million rubles. Zubov's name, as well as the name of Krasnoyarsk Mayor Petr Pishmakov, have been cited as possible contenders in the 8 September gubernatorial election. Meanwhile, Unified Russia announced on 28 May that it will declare its candidate for the post on 29 June, Interfax reported. JAC

SIBERIAN TEACHERS ASK PUTIN WHAT HAS CHANGED
Around 12,000 teachers in the Altai Krai have signed an open letter to President Putin complaining that in the more than two years since he has taken office, the situation in the education sector has not changed, Interfax-Eurasia reported on 28 May. According to the teachers, reform measures suggested by the government have had virtually no effect on the increasingly difficult situation. The krai's education workers' union plans to continue collecting signatures for the open letter until 1 June. JAC

ANOTHER MUSCOVITE HEADS TO FEDERATION COUNCIL
Legislators in Penza Oblast have selected Andrei Vavilov, former first deputy finance minister, as their representative to the Federation Council, ITAR-TASS reported on 28 May. Vavilov was most recently director of the Moscow-based Institute for Financial Research. According to "Kommersant-Daily" on 29 May, Vavilov had no previous relationship with Penza Oblast, and one unidentified local politician said that Governor Vasilii Bochkarev's recent successful re-election effort was very expensive and alleged that the post of senator was put up for "tender." "And Vavilov won," the source said. Vavilov's name has frequently come up in recent years in connection with criminal corruption investigations (see "RFE/RL Newsline," 22 January and 22 May 2002 and 11 December 2001). JAC

GET YOUR KOUMISS HERE
In an interview with "Moskovskii komsomolets" on 28 May, Kalymkia's President Kirsan Ilyumzhinov announced that he intends to build a cosmodrome in the republic, RFE/RL's Russian Service reported. The cosmodrome would be a private project and would draw people to Elista to watch space launches, according to Ilyumzhinov. He added that he also plans to build a stadium where visitors could watch the launches while drinking local beverages such as koumiss (fermented mare's milk). JAC

SECOND ARMENIA-DIASPORA FORUM ENDS
Some 3,000 delegates from 45 countries attended the second Armenia-Diaspora Forum in Yerevan on 27-28 May, RFE/RL's Yerevan bureau reported. At the opening session on 27 May, several diaspora businessmen called into question pledges by Armenian President Robert Kocharian and government officials to crack down on corruption and red tape in order to facilitate foreign investment in the Armenian economy. On 28 May, four commissions created at the first forum in 1999 outlined proposals to expand cooperation between the Republic of Armenia and Armenians abroad. Participants adopted a draft declaration describing the "liberation" of Nagorno-Karabakh as the most significant achievement in Armenia's recent history and pledging full support for the unrecognized republic's right to self-determination and for its socioeconomic development. LF

AZERBAIJANI PRESIDENT LAUDS U.S.-RUSSIA SUMMIT
Heidar Aliev told journalists in Baku on 28 May that the various agreements signed during the U.S.-Russian Moscow summit will expedite significant positive changes in the global political situation, Turan reported. He particularly lauded the U.S.-Russian joint statement on the South Caucasus and Central Asia and the affirmed commitment by Presidents George W. Bush and Vladimir Putin to seek solutions to territorial conflicts in the former USSR (see "RFE/RL Newsline," 28 May 2002). Aliev said that commitment could result in the OSCE Minsk Group unveiling a new proposal to resolve the Karabakh conflict. LF

AZERBAIJAN TO SEND PEACEKEEPING CONTINGENT TO AFGHANISTAN
President Aliev and the Azerbaijani parliament have approved the dispatch of a platoon to Afghanistan to participate in peacekeeping operations, Defense Minister Colonel General Safar Abiev told journalists in Baku on 28 May, Turan reported. Abiev discussed that possibility earlier this month with his visiting Turkish counterpart Sabahaddin Cakmakoglu. Abiev also said that the U.S. military delegation that visited Azerbaijan last week inspected several airfields (see "RFE/RL Newsline," 23 May 2002). He did not explain for what purpose. LF

AZERBAIJAN SEEKS TO ALLAY GAS-EXPORT FEARS
Ilham Aliev, who is a senior vice president of Azerbaijan's state oil company SOCAR, has rejected as groundless concerns expressed at a recent press conference in Baku by a senior BP executive that Turkey may renege on an agreement signed in March 2001 to purchase 89.2 billion cubic meters of natural gas from Azerbaijan's offshore Shah Deniz field between 2004 and 2018, Turan reported on 28 May (see "RFE/RL Newsline," 13 March 2001). Gas-sector analysts say Turkey has committed itself to buy far more natural gas than it actually needs. Aliev said that even if Turkey declines to purchase gas from Shah Deniz, Azerbaijan could switch to buying gas from the BP-led consortium exploiting Shah Deniz rather than continue buying natural gas from Russia. He said other countries too would be interested in buying gas from Shah Deniz in the light of the ongoing decline in natural-gas extraction in Russia. LF

GEORGIA'S AZERBAIJANI MINORITY PROTESTS ITS CANDIDATES' EXCLUSION FROM LOCAL ELECTIONS
Residents of Georgia's southeastern Bolnisi Raion, the population of which is overwhelmingly ethnic Azerbaijani, have blocked the highway linking the district with Tbilisi to protest the local authorities' refusal to register 420 Azerbaijanis as candidates in the local elections scheduled for 2 June, Turan reported on 28 May, quoting the independent daily "Zerkalo." LF

GEORGIAN PRESIDENT HAILS NATO-RUSSIA COUNCIL...
Speaking at his weekly press conference in Tbilisi on 28 May, Eduard Shevardnadze hailed the creation of the NATO-Russia Council, which he said could minimize Russia's objections when the issue of NATO membership for Georgia is eventually raised, Caucasus Press reported. He said his eight-minute telephone call with President Putin the previous day was devoted to a review of the U.S.-Russia summit and to defining the obstacles to improving Russian-Georgian relations. LF

...CALLS FOR SMALL BUT EFFICIENT ARMY, RULES OUT BUDGET SEQUESTER...
Shevardnadze also argued that it makes more sense for Georgia to reduce the size of its armed forces to four battalions of 2,000 well-trained and efficient service personnel than to continue trying to maintain 30,000 poorly equipped and badly trained soldiers, Caucasus Press reported. He said Georgia will not have a problem raising the 5 million laris ($2.26 million) needed to pay the salaries of U.S. instructors participating in the "Train and Equip" program for selected units of the Georgian armed forces. Shevardnadze ruled out the budget sequester that some officials have warned is inevitable (see "RFE/RL Newsline," 6 May 2002), explaining that this year's anticipated 30 million laris budget shortfall will be compensated by grants from the Netherlands and other European states. LF

...AND SAYS SOLUTION TO ABKHAZ CONFLICT CLOSER THAN EVER BEFORE
Shevardnadze further predicted on 28 May that a settlement of the Abkhaz conflict on the basis of the UN-drafted document "Basic Principles for the Division of Competences between Tbilisi and Sukhumi" is closer than ever before, Caucasus Press reported. The Abkhaz authorities have said repeatedly, however, that they will not accept that draft as a basis for discussion because it does not recognize Abkhazia's self-proclaimed and unrecognized independent status. LF

UN NAMES NEW ENVOY FOR ABKHAZIA
Dieter Boden, who authored the "Basic Principles," is completing his 2 1/2-year tenure as UN Secretary-General Kofi Annan's special envoy for the Abkhaz conflict. Boden paid a farewell visit to Abkhaz leaders in Sukhum who praised his commitment to resolving the conflict, Caucasus Press reported on 29 May. Boden's successor is Swiss diplomat Heidi Tagliavini, who was a member of the first OSCE Assistance Group in Chechnya in 1995 and in 1998-99 served as deputy head of the UN Observer Mission in Georgia. LF

GEORGIAN OPPOSITION LEADER HOLDS PRE-ELECTION RALLY, FLIES TO STRASBOURG
Some 8,000 people attended a rally in Tbilisi on 28 May convened by the opposition National Movement-Democratic Front (EMDP), whose slogan for the 2 June local elections is "To Tbilisi Without Shevardnadze," Caucasus Press reported. The Tbilisi municipal authorities reportedly suspended traffic on the metro line to the sports stadium where the rally was to be held in a bid to prevent people from attending. Opinion polls in recent weeks have consistently rated the EMDP as the most popular political party with between 15-29 percent support -- followed by the Labor Party, the "New Rightists," and "Industry Will Save Georgia." On 29 May, EMDP Chairman Mikhail Saakashvili left for Strasbourg for meetings with Council of Europe officials, whom he intends to alert to the possibility that the outcome of the 2 June elections will be falsified. LF

CORRECTION
An item in "RFE/RL Newsline" on 28 May misstated the dates of the presidency of former Georgian President Zviad Gamsakhurdia. It should have said that he was ousted in January 1992.

KAZAKH COURT RULES ON CLOSURE OF FIREBOMBED NEWSPAPER
The Almaty City Economic Court ruled on 27 May that the independent newspaper "Delovoe-Obozrenie-Respublika," whose editorial offices were destroyed by a firebomb on 22 May (see "RFE/RL Newsline," 23 May 2002), should cease publication and be closed, RFE/RL's Kazakh Service reported on 28 May. According to the court's verdict, the editorial board of "Delovoe Obozrenie-Respublika" failed to comply with a court ruling handed down in April to suspend its operations due to its alleged failure to show the exact days it is published. The newspaper had continued publication in spite of that ruling. LF

KYRGYZ PRESIDENT OFFERS TO SHARE POWER...
At a 27 May meeting with members of the Communist and Kyrgyzstan parliament factions, Askar Akaev offered to share power with the government and parliament, Kyrgyzstan faction member Ishenbai Kadyrbekov told RFE/RL's Bishkek bureau the following day. Kadyrbekov suggested that either the parliament could rule on a narrowing of presidential powers, or the issue could be put to a national referendum in the fall. LF

...SIGNS BORDER TREATY INTO LAW...
President Akaev has signed into law the controversial and widely protested 1999 treaty under which Kyrgyzstan cedes some 95,000 hectares of its territory to China, RFE/RL's Bishek bureau reported on 28 May, quoting the presidential press service. LF

...AS KYRGYZ PARLIAMENT CONSIDERS CANDIDATES FOR PREMIER
At that meeting with Akaev, the two factions proposed three alternative candidates to head the new government, RFE/RL's Kyrgyz Service reported. They are Usen Sydykov, who is Kyrgyz representative to the CIS permanent secretariat; Kadyrbekov; and Adaham Madumarov, who is also a member of the Kyrgyzstan parliamentary faction. LF

CHINESE SECURITY MINISTER VISITS TAJIKISTAN
China's Minister for Public Security Jia Chung-Wang held talks in Dushanbe on 27 May with Tajikistan's Interior Minister Colonel General Khumiddin Sharipov, Prime Minister Oqil Oqilov, and President Imomali Rakhmonov, Interfax and Asia Plus-Blitz reported. Sharipov and Jia signed an agreement on cooperation in the fight against terrorism, extremism, and drug trafficking that envisages the exchange of information and the provision by China of material and technical assistance -- including uniforms -- for Tajikistan's Interior Ministry troops. LF

EXTENT OF ILLEGAL TAJIK LABOR MIGRATION ESTIMATED
At a roundtable held in Dushanbe on 23 May by the local International Organization for Migration (IOM) office, IOM mission head Igor Bosc noted that some 500,000 Tajiks leave the country each year in search of seasonal employment, Asia Plus-Blitz reported on 27 May. That figure represents 12.5 percent of Tajikistan's total population. Some 10,000 mainly young people leave the Rasht district alone each year to seek work, Asia Plus-Blitz reported last month. More would do so but for the difficulties involved in purchasing train tickets to Astrakhan (see "RFE/RL Newsline," 7 and 22 May 2002). Bosc noted that 82 percent of the Tajik migrants travel to Russia, where their status is neither defined nor protected by any bilateral agreements. Tajikistan has signed such an agreement only with Kyrgyzstan. LF

KGB ACCUSES OSCE MISSION HEAD OF UNDERMINING BELARUS'S TIES WITH WEST
Belarus's KGB said in a statement on 28 May that Hans-Georg Wieck, the former head of the OSCE Minsk Advisory and Monitoring Group, has placed a "time bomb" under Belarus's relations with the West, Belapan reported. The KGB statement said the United States exercised "extremely intense pressure" on the group with the aim of changing Belarus's "foreign-policy priorities and encouraging internal reforms beneficial to the West and the United States." According to the KGB, Wieck succumbed to this pressure by reporting to the OSCE primarily on human rights violations in Belarus in order to increase the country's international isolation. The KGB also charged Wieck with transforming the OSCE group into a coordination center of the Belarusian opposition and with interfering in Belarus's "political processes" during parliamentary elections in 2000 and the presidential election in 2001. JM

BELARUSIAN INTERIOR MINISTER DEFENDS DEATH PENALTY
Interior Minister Uladzimir Navumau said on 28 May that he considers it premature to abolish the death penalty, Belapan reported. Navumau added that last year Belarusian courts handed down 40 sentences of life in prison compared to just seven death sentences. "This shows that [the death penalty] is applied as an exception," he noted. Navumau spoke at a meeting with members of the Chamber of Representatives, who visited a prison in Hlybokaye, northern Belarus. The Chamber of Representatives is expected to hold a hearing on the death penalty on 30 May. Abolition of the death penalty has been named by the Parliamentary Assembly of the Council of Europe as one of the preconditions for restoring Belarus's guest status in the organization. JM

UKRAINIAN PRESIDENT'S MAN BECOMES PARLIAMENTARY SPEAKER...
The Verkhovna Rada on 28 May elected former presidential administration chief Volodymyr Lytvyn as speaker, Ukrainian media reported. A parliamentary leadership package consisting of Lytvyn (United Ukraine) for speaker, Hennadiy Vasilyev (United Ukraine) for first deputy speaker, and Oleksandr Zinchenko (Social Democratic Party) for deputy speaker was endorsed by 226 votes, the minimum number required for approval. The approval was assured when seven deputies from Our Ukraine and former Prosecutor-General Mykhaylo Potebenko from the Communist Party parliamentary caucus cast their votes for the package. Our Ukraine and the Communist Party caucuses expelled the dissenting lawmakers from their ranks. JM

...CAUSING CRIES OF FOUL PLAY AMONG OPPONENTS
Our Ukraine said in a statement that the authorities resorted to "pressure, blackmail, bribery, and threats" to force some lawmakers to vote for the pro-presidential parliamentary leadership, UNIAN reported on 29 May. "The greatest tragedy is the fact that democracy has been left outside the parliament," Our Ukraine leader Viktor Yushchenko commented, adding that the Verkhovna Rada has been transformed into a "subsection of the presidential administration." Yuliya Tymoshenko, who heads the eponymous parliamentary bloc, called on Our Ukraine, the Communist Party, and the Socialist Party to endorse a no-confidence vote in the parliamentary leadership and, in the event the vote fails, to "appeal to the Ukrainian people for an action of civic disobedience." On 29 May, deputies from Our Ukraine, the Yuliya Tymoshenko Bloc, the Communist Party, and the Socialist Party "marked the burial of democracy in Ukraine with a minute of silence" in the parliament, the agency reported. JM

AUSTRIAN ARMY CHIEF LAUDS ESTONIA'S DECISION TO INCREASE DEFENSE SPENDING
The commander of the Austrian armed forces, General Horst Pleiner, told members of parliament's National Defense Committee in Tallinn on 28 May that Estonia's commitment to devote 2 percent of GDP for defense is important because it will allow better national-defense planning, BNS reported. Pleiner and the lawmakers also discussed NATO enlargement, European integration, and cooperation combating international terrorism. Earlier that day, Pleiner traveled to the Peace Operations Center in Paldiski and the BALTBAT airspace-monitoring center in Amari. The previous day, he met with his Estonian counterpart, Vice Admiral Tarmo Kouts, and senior officers of Estonia's army and navy in Tallinn. He also visited Estonia's Integrated War College and the Baltic Defense College in Tartu. SG

EUROPEAN PARLIAMENT CHAIRMAN ADDRESSES LATVIAN PARLIAMENT
In a speech to parliament on 28 May, Patrick Cox affirmed that EU accession will not endanger Latvia's national identity and culture, LETA reported. Cox rejected comparisons between the USSR and the EU, asserting that the EU is based on the "power of conviction and reason and not the strength of military power." He said that order within the EU is ensured through negotiations and not by political diktat. Cox said that the EU will give Latvia not only military security, but also security guaranteed by economic stability and progress. During a working brunch with Prime Minister Andris Berzins, Cox discussed the operations of the Latvian government and the Latvia's Way party, which Berzins heads. In July 2001, Cox visited Latvia in his capacity as the head of the Liberal Democrats in the European Parliament. SG

LITHUANIA TO EXPAND CONSULATES IN CIS COUNTRIES
The European Integration Commission approved a consular-service development program on 28 May that calls for the expansion of consulates in Kaliningrad, Minsk, Kiev, Moscow, and St. Petersburg, as well as for the opening of new consulates in Sovetsk in Kaliningrad Oblast and Hrodno, Belarus, BNS reported. As part of its drive to harmonize its visa policy with that of the EU, Lithuania intends to cancel visa privileges on 1 January 2003 for certain groups of Ukrainian and Belarusian citizens, as well as for train passengers and truck drivers traveling to Kaliningrad Oblast through Lithuania. Kaliningrad Oblast residents will also lose their privilege of visa-free entry into Lithuania on 1 July 2003. The Foreign Ministry estimates that the number of Lithuanian visas will quadruple from 190,000 in 2001 to 760,000 in 2003. The ministry is also suggesting that Russia and Belarus establish consulates in Taurage and Druskininkai. SG

POLISH CENTRAL BANK CUTS INTEREST RATES BY 0.5 PERCENT
The National Bank on 29 May trimmed its intervention rate from 9.5 percent to 9 percent, the discount rate from 11 percent to 10.5 percent, and the Lombard rate from 12.5 percent to 12 percent, PAP reported. The decision means that the bank has cut key interest rates by a total of six percentage points since Prime Minister Leszek Miller took office last October. Miller's cabinet has repeatedly demanded deep cuts to stimulate exports and economic growth. Government spokesman Michal Tober commented that the latest cuts are a move "in the right direction," but added that "with such low inflation and the difficult situation of Polish companies, there is room for much more radical rates reductions." JM

CZECH PRESIDENT SAYS NATO-RUSSIA COOPERATION MUST NOT BECOME 'NORTHERN DOMINATION'
Addressing the NATO summit in Rome on 28 May, Vaclav Havel welcomed growing cooperation within the restructured NATO-Russia Council but warned against creating the impression that the richer northern hemisphere is uniting against the poorer south. "I believe that if the current planetary civilization is to succeed in averting the major threats looming over it," he said, all the regions of the world "must work closely as equal partners." Havel said that "one way or another, the entire planet should move toward unity," since "all inhabitants of the Earth desire to live in peace, freedom, and prosperity." He said that "differences between cultures and civilizations should be viewed as an impulse to promote better mutual understanding...and respect, and not as a reason for enmity or even a pretext for confrontation." MS

U.S. EMBASSY SAYS CZECH REPUBLIC SHOULD EXAMINE COSTS OF FIGHTERS PURCHASE
The United States is of the opinion that the Czech Republic should choose the most cost-effective option if it decides to purchase supersonic fighters for its air force, CTK reported on 28 May, citing a written statement from the U.S. Embassy in Prague. The statement came in reaction to the latest Belgian offer to sell 24 decommissioned F-16 fighters to the Czech Republic, which was rejected by the government (see "RFE/RL Newsline," 28 May 2002). CTK cited the statement as saying that, "The U.S. government position has consistently been that we believe the Czech Republic should focus its limited defense resources on military reform and meeting NATO force goals. Only then should it undertake major new acquisitions. This position has not changed." MS

PRAGUE MAYOR RESIGNS, LEAVES ODS PARTY
Prague Mayor Jan Kasl resigned on 28 May and announced he is leaving the Civic Democratic Party (ODS), CTK and AP reported. Kasl said he was "disappointed" with the way Prague's city council carries out its duties, and accused his ODS colleagues on the council of being preoccupied more "with their personal interests than with the interests of citizens." He also said that the councilors had not endorsed his proposals to fight corruption, saying he "came to the conclusion [they]...prefer pseudo-changes." In March, the council criticized Kasl for having told a group of U.S. investors that he apologizes for corruption among officials at the mayoralty, saying Kasl should provide specific examples of corruption. The mayor was briefly hospitalized after his clash with the councilors, suffering from what was diagnosed as "exhaustion." ODS Chairman Vaclav Klaus reacted by saying that Kasl's failure to serve out his term "is tantamount to gambling with the operation of a city of 1 million residents" and "an extreme case of human failure and cowardice." Observers have regarded Kasl as a potential rival to Klaus for the party leadership. MS

CZECHS WORRIED ABOUT CORRUPTION
A survey carried out by the Center for Public Opinion Research shows that 73 percent of Czechs believe corruption is a "very urgent" problem in their country, dpa reported. Twenty-two percent are of the opinion that it is a "fairly urgent" problem. Corruption is placed first among the problems considered as serious by the respondents. It is closely followed by organized crime, which 70 percent consider to be "very urgent." MS

CZECH REPUBLIC, VATICAN AGREE ON DECLARATION
Representatives of the Czech government and the Vatican announced on 28 May they have agreed on the wording of a declaration on the position of the Catholic Church in the Czech Republic, CTK reported. Czech Bishops' Conference spokesman Daniel Herman said he expects the document to be approved soon. The negotiations on the agreement lasted more than two years. Deputy Foreign Minister Pavel Voslaik said the agreement does not settle the question of property restitution to the Catholic Church but makes mention of it. At the beginning of the negotiations, the Vatican demanded that property restitution and church financing be settled in the agreement. The Czech Republic is among the last postcommunist countries not to have signed an agreement with the Vatican. MS

CZECH COURT SENTENCES FORMER SECRET POLICE OFFICERS
A court in Prague on 28 May sentenced Jiri Simak and Zbynek Dudek, former officers in the communist-era secret police, to five years in prison for abuse of power. They were found guilty of torturing dissidents as part of the 1978-84 "Asanace Operation" aimed at causing regime opponents to move into exile. The two were sentenced by a lower court to three years in jail on the same charge but appealed the sentence. The court said it found the previous verdict to be "inappropriately lenient." MS

AMNESTY INTERNATIONAL CRITICIZES CZECH POLICE...
Amnesty International in its 2001 annual report says Czech police abuse detainees, CTK reported. It also says the police offer insufficient protection to the Romany minority, which continues to be the target of racially motivated violence and even abuse by police. Interior Ministry spokeswoman Marie Masarikova reacted by saying: "We may respect the opinions of Amnesty International, but we do not agree with them." The Czech Helsinki Committee backed the report's findings. MS

...AND SLOVAK TREATMENT OF ROMA
Amnesty International's report also says Slovak police use torture against the Roma, leading to at least one death, CTK reported. As in the Czech case, the report points out that police refuse to extend protection to Roma who are threatened with violence. MS

SLOVAKIA SHOWS NEGATIVE POPULATION GROWTH
According to data released by the Slovak Statistical Office, Slovakia experienced negative population growth for the first time in 2001, with the number of deaths higher than that of births, CTK reported. Peter Mach, head of the Statistical Office, said Slovakia has also joined the list of countries with an aging population, with the number of those not yet in the work force or retired exceeding those who are employed. Every fifth newborn Slovak child in 2001 was born out of wedlock. MS

NEW HUNGARIAN GOVERNMENT SURPRISED AT SIZE OF INHERITED BUDGET DEFICIT
New Finance Minister Csaba Laszlo on 28 May said he was surprised to read in outgoing Minister Mihaly Varga's report that the budget deficit will be 678 billion forints ($2.58 billion), or 172.5 billion forints ($655 million) higher than the targeted figure outlined in the previous government's two-year budget. Laszlo said the former government always shunned calls for drafting a supplementary budget, and as a result the new government did not expect such a high deficit. Nevertheless, Laszlo stressed, the new cabinet will go ahead with its 100-day program, which according to latest estimates will cost around 180-185 billion forints and raise the deficit by one percentage point. For his part, Varga said the deficit target is still within reach and accused the new government of inflating the deficit to finance campaign promises while blaming its predecessor, Hungarian media reported. MSZ

FIDESZ SWIFT WITH CRITICISM OF DAY-OLD SOCIALIST GOVERNMENT
Varga and FIDESZ Chairman Zoltan Pokorni on 28 May called an extraordinary press conference to criticize the new Socialist-led government. Pokorni said that after only a few hours in office, the government dismissed the commander of the Republican Guard and sent senior Foreign Ministry officials packing. Pokorni added that the government has also implemented "humiliating or major personnel changes" at the Education Ministry, the Tax Office, the Finance Ministry, and the Hungarian Development Bank. For his part, Varga criticized the new government for violating the law through executive changes at the State Privatization and Holding Company. Pokorni recommended that the opposition set up a parliamentary working group to offer assistance to civil servants who are fired without justification. In related news, new Interior Minister Monika Lamperth initiated the dismissal of National Police Commander Peter Orban, Hungarian dailies reported. MSZ

MEDGYESSY MAKES INTERNATIONAL DEBUT AS HUNGARY'S PREMIER
Prime Minister Peter Medgyessy addressed the NATO-Russia summit in Rome on 28 May and later met briefly with Italian Prime Minister Silvio Berlusconi, U.S. President Bush, and Russian President Putin. In his address to the summit, Medgyessy emphasized his government's commitment to NATO, describing the alliance as a milestone of the 21st century. Bush later thanked Medgyessy and his wife for the reception given recently to Bush's wife, Laura, in Budapest, and invited the Hungarian prime minister to visit the United States. Putin and Berlusconi also invited Medgyessy to visit their respective countries. Medgyessy also met with Czech President Vaclav Havel and Polish President Aleksander Kwasniewski and agreed that a Visegrad Four summit should be held soon in order to coordinate tasks related to EU-accession talks. MSZ

AMNESTY INTERNATIONAL CITES ILL TREATMENT OF ROMA IN HUNGARY
In its annual report, Amnesty International criticizes Hungarian police treatment of Roma, mentioning several specific examples of abuse, "Nepszabadsag" reported. These include a February 2001 incident in which 80 police officers attacked Roma attending an all-night funeral wake in the village of Bag, Pest County. The report also cites instances of discrimination against Afghan refugees in Hungary. In other news, Budapest police on 28 May evicted the last Romany family from a Seventh District flat they occupied with other, previously evicted squatters. Socialist District Mayor Zoltan Szabo began removing the squatters three years ago. Budapest Mayor Gabor Demszky has offered to provide a special subsidy to the evicted family. MSZ

NATO RAIDS HEADQUARTERS OF BOSNIAN SERB AIR FORCE
SFOR spokesman Major Scott Lundy said in Sarajevo on 29 May that about 50 NATO-led peacekeepers staged a raid on the headquarters of the Bosnian Serb air force near Banja Luka the previous day, AP reported. He said that they confiscated an unspecified quantity of computers and documents, adding that "the evidence that was removed will be analyzed to determine whether or not the headquarters was directing the electronic monitoring of SFOR and NATO aircraft." Peacekeepers discovered the previous week that two Republika Srpska radar stations were engaged in such monitoring, which is banned under the 1995 Dayton peace agreement. SFOR commander General John Sylvester has meanwhile suspended from duty General Milan Torbica, the head of the Bosnian Serb air force, while NATO carries out its investigation. Sylvester wants the Bosnian Serbs to reveal "any and all" electronic warfare or surveillance operations directed against NATO and to stop all training exercises or other movement during the investigation. The air force has 18 fighter aircraft and 33 helicopters, only some of which are operational. PM

UN SACKS MORE BOSNIAN POLICE
UN spokesman Stefo Lehmann said in Sarajevo on 28 May that the UN has fired eight local policemen for their involvement in crimes against civilians during the 1992-95 conflict, AP reported. Four are Serbs and four are Muslims, including one Muslim who sided with Serbian forces. The UN, which heads civilian police operations in Bosnia, regularly sacks any police officer found to have concealed criminal behavior (see "RFE/RL Newsline," 15 May 2002). PM

BOSNIAN FEDERAL PARLIAMENT APPROVES MILITARY BILL
The upper house of the Muslim-Croat federation's legislature approved a military affairs bill on 28 May, RFE/RL's South Slavic and Albanian Languages Service reported. The bill, which has already been approved by the lower house, includes a provision reducing the time that conscripts must serve to six months. PM

BOSNIAN SERB COMES HOME FROM THE HAGUE
On 28 May, army Colonel Dragan Jokic returned from the Netherlands to Banja Luka where he will remain until his trial for war crimes in The Hague, RFE/RL's South Slavic and Albanian Languages Service reported. He turned himself in to the tribunal in 2001. PM

ASHDOWN TAKES HIS MESSAGE TO HERZEGOVINA
Paddy Ashdown, who is the international community's new high representative in Bosnia, said in Mostar on 28 May that he will implement the decisions of his predecessor, Wolfgang Petritsch (see "RFE/RL Newsline," 28 May 2002). Ashdown stressed again that politicians in Bosnia are paid too much. He appealed to Herzegovinian Croats to participate fully in state institutions. PM

MONTENEGRIN GOVERNMENT TALKS UNDER WAY
As was widely expected, President Milo Djukanovic asked outgoing Prime Minister Filip Vujanovic on 28 May to begin talks with political leaders on forming a new cabinet, RFE/RL's South Slavic and Albanian Languages Service reported from Podgorica. Djukanovic stressed that Vujanovic is a man of integrity who distinguished himself during the recent negotiations on revising the legal basis of the Serbian and Montenegrin joint state. Immediately after Djukanovic's announcement, Vujanovic told RFE/RL that the new government's first order of business will be to implement the agreement with Belgrade. He added that he will offer cabinet posts to the Social Democrats (SDP) and the pro-independence Liberal Alliance (LSCG). The Liberals have said that they will not join the government. The last cabinet consisted of Djukanovic's Democratic Party of Socialists (DPS) and the SDP. It was supported by the LSCG in the legislature until the Liberals withdrew their backing to protest the agreement with Belgrade (see "RFE/RL Newsline," 15 April and 3 May 2002). PM

DJINDJIC PUBLISHES NAMES OF TRUANT DEPUTIES
On 29 May, Belgrade dailies published a list of 23 members of the Serbian parliament who received full pay for little work, Reuters reported (see "RFE/RL Newsline," 28 May 2002). The 23 belong to the Democratic Party of Serbia (DSS) of Yugoslav President Vojislav Kostunica. The list was provided by Serbian Prime Minister Zoran Djindjic's Democratic Party (DS), which noted that the truants collected a total of $33,620 over the past three months while putting in very few hours. The DS announcement included the amount of time each legislator spent in the parliament, down to the minute. The absent deputies each took home nearly $500 per month in a country where the average wage is about $186 per month. A spokesman for Kostunica called the report "a naked political manipulation and a pack of lies." PM

MACEDONIAN PARLIAMENT ISSUES DECLARATION ON BORDER WITH KOSOVA
Reacting to a resolution of the Kosovar parliament of 23 May that questioned the legitimacy of a January 2001 Macedonian-Yugoslav border agreement, the Macedonian parliament on 28 May issued a declaration maintaining the validity of the country's borders, "Utrinski vesnik" reported (see "RFE/RL Newsline," 28 May 2002). The parliament passed the declaration with the votes of ethnic Macedonian legislators, while ethnic Albanian lawmakers abstained. President Boris Trajkovski called the declaration unnecessary. He argued that Michael Steiner, who heads the UN administration in Kosova (UNMIK), has already declared the Kosovar parliament's decision invalid. UB

ROMANIAN PARLIAMENT APPROVES PARTICIPATION IN UNSFA
A joint meeting of the two chambers of the Romanian parliament on 29 May heeded President Ion Iliescu's request to approve the country's participation in the UN Standby Forces Agreement (UNSFA), Mediafax reported. Some 500 Romanian soldiers will be sent to Afghanistan to participate in UNSFA operations. MS

ROMANIAN CHIEF OF STAFF COMPLAINS OF MEAGER RESOURCES
Chief of Staff General Mihail Popescu said on 28 May that the Defense Ministry "must walk with hat in hand begging for the necessary funds the army needs for the current military reform," Mediafax reported. Popescu said Romanian politicians, who pledged to bring the country into NATO, must realize that they must also make available the funds needed for the necessary reforms. He said that for military modernization to be finalized in the period from 2004-07, the army must be allocated between 2.4 and 2.5 percent of GDP through 2005. Popescu concluded by saying that if NATO membership is achieved, it will be due to the army, "which fulfilled all its missions over the last 10 years, regardless of which political party was in power." MS

ROMANIAN CONSTITUTIONAL COURT TO EXAMINE DEMAND TO OUTLAW UDMR
Hungarian Democratic Federation of Romania (UDMR) Senator Gyorgy Frunda told Mediafax on 28 May that the demand by the Greater Romania Party (PRM) to outlaw the UDMR will be examined by the Constitutional Court. Frunda said that the Bucharest Second District Tribunal has accepted the UDMR argument that the examination of the demand is not within the jurisdiction of this court and only the Constitutional Court is entitled to deal with the matter. The PRM asked the Bucharest court in December to outlaw the UDMR, describing it as "a terrorist organization" and claiming that the Hungarian ethnic formation should be disbanded in line with the international struggle against terrorism. MS

FOREIGN MINISTER SAYS U.S. SHOULD FREE ROMANIA FROM UNDESERVED PRESSURE
Foreign Minister Mircea Geoana said on 28 May that the case of suspected war criminal Nikolaus Schiffer has brought Romania undeserved international pressure after Schiffer was granted an entry visa, RFE/RL's Bucharest bureau reported. Geoana said it is the duty of the U.S., which expelled Schiffer, to "establish a direct dialogue with [presumably Jewish] international organizations that display an interest in the case." He said Romania has cooperated with the U.S. in accepting the Romanian-born Schiffer after his expulsion, but any documents related to the case are in the United States, not in Romania, and if international action is warranted against Schiffer, it is the United States that must take the lead (see "RFE/RL Newsline," 21, 23, and 24 May 2002). MS

ROMANIAN ROMA SEEK ASYLUM IN FINLAND
Finland on 29 May took in 39 of 50 Romanian Romany asylum seekers who arrived on a passenger boat from Germany and sent the rest back to Rostock, Reuters reported, citing a customs official at the port of Hanko. The group arrived in Hanko late on 28 May, the official said. MS

AMNESTY INTERNATIONAL DECRIES POLITICIZATION OF ROMANIAN JUDICIARY
In its annual report released on 28 May, Amnesty International says the ruling party in Romania is influencing judicial decisions and issuing instructions to judges on how to rule in sensitive cases, Mediafax reported. It says Romania has not only failed to solve the issue of abandoned children, but government officials have been implicated in irregularities linked to international adoptions which may turn adopted children into victims of trafficking and other abuse. The organization also says Romanian police continue to abuse detained persons and to torture and make "questionable use" of firearms. Detainees are denied proper medical care and in one case this had led to death; and detainees are also denied proper legal counseling, Amnesty charges. MS

CUBREACOV INTERVIEWED ON RFE/RL
Vlad Cubreacov, who was released by apparent kidnappers on 25 May, said in an interview with RFE/RL's Romanian-Moldovan Service on 28 May that this might have been the first in a series of similar kidnappings that could soon follow. Cubreacov said he has "some hypotheses" about the reasons for his abduction but does not want to make them public before the investigation is concluded. But he added that the presumptions reflected in the investigators' questions as posed to him are "erroneous and absurd." He said he fully rejects the scenario, backed by the Party of Moldovan Communists (PCM), according to which the abductors were members of Cubreacov's own Popular Party Christian Democratic. MS

MOLDOVAN PREMIER SAYS BESSARABIAN CHURCH REGISTRATION MUST BE ANCHORED IN LAW
Prime Minister Vasile Tarlev said on Moldovan radio on 28 May that in order to follow the recommendations of the Council of Europe and register the Bessarabian Metropolitan Church, the government needs the necessary legislation that would allow it. Tarlev said the problem is "highly sensitive" and he does not want to create a situation whereby "satisfying the demands of one side would cause damage to the other side," meaning the Moscow Patriarchate. He said the government will do all it can to "mobilize the healthy forces from both camps and negotiate in search for a solution." MS

MOLDOVAN INTERIOR MINISTRY SAYS YOUNGSTERS DESECRATED JEWISH CEMETERY
An Interior Ministry official said on 28 May that three young people, all aged 14, were detained the previous day as suspects in the 23 February desecration of a Jewish cemetery in Chisinau, Flux reported. The ruling PCM claimed after the incident that the desecration was a "political provocation." The cemetery was again vandalized on 31 March, and after that incident the PPCD claimed that the PCM ordered the desecration in order to place the responsibility for it on organizers of antigovernment demonstrations at the time. MS

BULGARIAN PRIME MINISTER, PRESIDENT ADDRESS NATO PARLIAMENTARY ASSEMBLY
On 28 May, the last day of the NATO Parliamentary Assembly's (NATO PA) spring meeting in Sofia, Prime Minister Simeon Saxecoburggotski and President Georgi Parvanov addressed the plenary session, BTA reported. Saxecoburggotski told the assembly: "My government is resolved to carry out the reforms required for Bulgaria's Euro-Atlantic future, and Bulgarian society has rallied behind the idea of its Euro-Atlantic project." Parvanov stressed the strategic position of Bulgaria and Romania. "The admission of Bulgaria and Romania will contribute to the security of the entire region.... It will consolidate the southern flank and will enhance the capability of the alliance to generate stability toward the eastern Black Sea basin and the Caucasus region," Parvanov said. UB

NATO PARLIAMENTARY ASSEMBLY ADOPTS ENLARGEMENT DECLARATION, NAMING CANDIDATE COUNTRIES...
The NATO PA on 28 May adopted a final declaration on NATO enlargement that names seven candidate countries (Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia), BTA reported. The declaration recognizes and appreciates "the efforts made by all aspirant countries toward NATO membership" and expresses "gratitude to these countries for the solidarity shown and for their contribution to the fight against terrorism and NATO efforts following 11 September." The naming of candidate countries was opposed by the U.S. delegation, as the U.S. Congress and government fear the mentioning of names could lead to a slackening of the reform efforts of candidate countries. UB

...WHICH ASSEMBLY PRESIDENT PUTS INTO PERSPECTIVE
NATO PA President Rafael Estrella told a press conference that the declaration will go down in history as the Sofia Declaration on NATO Enlargement, BTA reported. Estrella added that the naming of the seven countries by no means represented interference in the work of the NATO Council. "We only noted the fact that there are seven countries that have made progress toward NATO membership," Estrella said. Foreign Minister Solomon Pasi welcomed the declaration, saying the "remaining distance between Bulgaria and NATO was halved over the past week." President Parvanov added "that our efforts should by no means slacken and that we have quite a lot to do before the autumn, when the final decisions will be made." UB

THE BULGARTABAK PRIVATIZATION SAGA
Since the first round of the tender for Bulgartabak Holding ended at the beginning of May, questions regarding the privatization of one of Bulgaria's largest state enterprises have multiplied.

Not only have journalists begun to investigate the backgrounds of various bidders, they have also called into question the government's privatization strategy. They wonder whether the privatization of Bulgartabak will have political consequences and, if so, what those consequences might be.

Only one week after the present government took office, Economy Minister Nikolay Vasilev announced on 1 August 2001 that the government would try to sell the state tobacco company. He added that he hoped the sell-off would bring in between $100 million and $500 million. "We would hardly get $500 million; it's too much. [But] $100 million is too low. So we hope to get something between those two," Vasilev said.

At that time, the government had not yet decided which option for the sell-out it would choose. The first option was to sell the company as a whole -- with its 22 factories, including three in Russia and one each in Ukraine and Romania. This option would allow for Bulgartabak to be sold to a multinational company, but it would also mean a lower price, since the buyer would also have to take over the less profitable branches. The second option was to sell only Bulgartabak's most attractive factories, such as those in Sofia and the southwestern town of Blagoevgrad. In that case, the government could expect a higher price. But from the very beginning, Vasilev made the government's priorities clear: "The most important thing now is not the price, but whether we are going to have a deal or not," he said, alluding to the failed attempt to sell 51 percent of Bulgartabak's shares one year earlier.

By May 2002, several bidders had submitted their offers for the whole company, but as far as one can judge, the "strategic investor" that the government was looking for is not among them, especially after the tobacco giants British-American Tobacco and Imperial Tobacco withdrew their initial bids.

In an interview with the daily "Standart," the director of the Privatization Agency (AP), Apostol Apostolov, said: "The big companies told us that if we sell them the factories in Blagoevgrad and Sofia, they would be first to bid for them. But we must not think only about the price [of the company], but also about the people who make their living from tobacco. The agreed amounts of tobacco have to be bought up by the new owner of Bulgartabak, and that is one of the preconditions for the candidates."

The remaining bidders are either financial consortiums with little or no experience in the tobacco trade and cigarette manufacturing, or business groups whose background is unclear. The only tobacco and cigarette manufacturer among them is the small Hungarian Vi Tabak, hardly a promising "strategic investor."

The biggest problem for the Bulgarian government is that Mikhail Chernyi participated in the tender. Chernyi, a Russian businessman and former owner of the Bulgarian cell-phone operator Mobiltel, has been barred from entering Bulgaria since 2000 due to his alleged connections with organized-crime structures in Bulgaria and Russia. Chernyi has a large stake in the Russian Consortium Metatabak, and there are allegations that he may be involved in a second consortium called Tobacco Holding, which consists of the Austrian Raiffeisen Investment, the U.S. Invesco fund, and the Greek Michaelidis tobacco company.

In what seems to be an insurance policy against allegations that the Bulgarian government is conducting business with Chernyi, the Interior Ministry is already screening bidders for possible connections to him. Some observers, however, say that screening the bidders at the current stage does not make sense, as they can change their partners before the second and final round of the tender.

Chernyi's participation is not only endangering the tender -- as other companies fear the process will lose its credibility -- it may also damage Bulgaria's international reputation and its chances for EU and NATO accession. Without naming Chernyi, U.S. Ambassador to Bulgaria James Pardew made it clear on 17 May that Bulgaria is unlikely to be invited to join NATO if its government allows persons who are believed to have links to international organized crime to return.

One of the more promising bidders appears to be the consortium Tobacco Capital Partners, which will presumably be financed by Deutsche Bank. One of the consortium's advisors is Bozhan Stoyanov, who attended Budapest University of Economic Sciences and Public Administration with both Economy Minister Nikolay Vasilev and Bulgartabak Director Georgi Popov. Nevena Mircheva of the daily "Standart" on 20 May leveled serious accusations against the three friends, whom she called the "Hungarian connection." In her view, the screening of investors can be seen as an attempt to get rid of Tobacco Capital Partners' competitors. The fact that Popov did little or nothing to reform Bulgartabak could be interpreted as an attempt to drive the company into bankruptcy in order to make it as inexpensive as possible for Tobacco Capital Partners, she suggested.

Popov is also facing corruption charges. The Bulgarian lawyer Georgi Tasev of Sojuzkontrakt Tabak -- a member of the consortium Metatabak -- accused Popov in a letter to Prime Minister Simeon Saxecoburggotski of having demanded a $500,000 bribe during an informal meeting in Sofia. Popov says Chernyi and his partners are behind the attempt to blackmail him.

Moreover, the whole privatization process also has a political dimension. As self-proclaimed representative of the Turkish minority in Bulgaria, Saxecoburggotski's junior coalition partner Movement for Rights and Freedoms (DPS) is closely monitoring the privatization process. As most tobacco is grown by ethnic Turkish farmers, the DPS will hardly approve any deal that appears to be disadvantageous for its supporters.

Under these circumstances, it is doubtful whether the government can meet its promise to make the privatization process as transparent as possible. Indeed, it seems quite likely that the deal will be called off altogether. And even if it goes ahead, whatever the outcome, many more questions will be asked.

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