RUSSIA CONDEMNS LATEST INDIAN NUCLEAR TESTS...
Rashit Khamidulin, an official from the Russian Foreign Ministry's Asian Department, said India's decision to carry out two more nuclear tests on 13 May is cause for "deep sorrow," as it shows India "has not listened to the calls of international community" following the tests it conducted two days earlier, ITAR-TASS reported. An unnamed official from the Foreign Ministry expressed concern that by this means "India is pushing the world toward greater use of nuclear weapons." The same official said New Delhi's decision to conduct more tests "puts Russia in a very uncomfortable position." The previous day, the Foreign Ministry had released a statement saying India's nuclear testing "contradicts the efforts by the international community to strengthen the regime of non-proliferation of nuclear weapons," Interfax reported. Foreign Minister Yevgenii Primakov noted that it violates "the balance that has been created in the world" and is "totally unacceptable," "short-sighted," and "guided by regional rather than global" ideas. BP
...BUT OPPOSES SANCTIONS
While there were indications on 12 May that the Russian Atomic Energy Ministry may cancel a deal to provide India with nuclear reactors for power plants, Russia did not join the group of countries calling for sanctions to punish New Delhi. Russian President Boris Yeltsin said "I think we should use diplomatic tools" and said he would use his scheduled visit to India later this year "to solve this problem somehow." Primakov also said "Russia is very cautious about sanctions. They often have counterproductive results." Interfax asked an unnamed source at the Russian Foreign Ministry if Russia would recall its ambassador to India. The source responded "of course not," adding that the test "cannot but arouse our anxiety and regret, but not to such an extent." BP
PRIMAKOV ON START-2, IRAN
Foreign Minister Primakov told NTV on 12 May that the U.S. Congress will harm prospects for the ratification of the START-2 arms control treaty if it imposes sanctions on Russian companies that do business with Iran. Among others, the gas monopoly Gazprom, which is involved with a project to develop Iranian gas reserves, could be affected by such sanctions. As for allegations that Russia is transferring missile technology to Iran, Primakov said Russia has no reason to encourage Iran to build missiles with a range of 2,000 kilometers. Primakov said he and Defense Minister Igor Sergeev will work to persuade the State Duma to ratify START-2 and predicted that the "sensible" part of the Duma will support ratification. However, he said some Duma deputies will try to score political points during the debate over the treaty. LB
YELTSIN DISCOUNTS HEALTH RUMORS
Yeltsin on 12 May discounted speculation that he is in poor health, saying he feels good and keeps to a busy working schedule. During a live Internet session on MSNBC, Yeltsin challenged doubters to compete against him in sports. The English translation of Yeltsin's remarks appeared to leave the door open to a third presidential term: "As for the presidency, in the year 2000, we still have two years..., we'll see." But the Russian version of the Internet session, which was published in full in "Kommersant-Daily" on 13 May, did not include that comment. On several occasions the president has ruled out seeking a third term. Asked about a presidential bid by his daughter and adviser, Tatyana Dyachenko, Yeltsin said he has "never spoken about this." He added that in his view, Russian society has not yet matured enough to have a woman president. LB
COMMUNISTS SCHEDULE EMERGENCY CONGRESS
Communist Party leader Gennadii Zyuganov has announced his party will hold an extraordinary congress on 23 May, Russian news agencies reported on 12 May. The party must amend its charter in accordance with the September 1997 law on the electoral rights of citizens. (Political parties and movements that do not comply with the law will be barred from the next parliamentary elections.) In addition, the congress will outline the party's stance toward the new government, "Nezavisimaya gazeta" reported on 13 May. Zyuganov recently announced that his party no longer favors "dialogue" with the executive authorities (see "RFE/RL Newsline," 6 May 1998). Duma Speaker Gennadii Seleznev, also a Communist, told journalists on 12 May that no Duma faction is likely to propose a vote of no confidence in Prime Minister Sergei Kirienko's government before the summer recess, adding that October will be a "decisive" month for the government. LB
CHERNOMYRDIN SEEKS TO CHANGE MOVEMENT'S IMAGE
Former Prime Minister Viktor Chernomyrdin told Radio Mayak on 12 May that his Our Home Is Russia (NDR) movement will seek to shed the label of Russia's "party of power" in order to improve its prospects for the parliamentary and presidential elections in 1999 and 2000, Interfax reported. Chernomyrdin said the movement's image links it with "officials' offices and bureaucratic methods." In an interview with the latest edition of "Argumenty i fakty" (No. 19), Duma First Deputy Speaker Vladimir Ryzhkov admitted that the NDR is in a "difficult situation," since Chernomyrdin still "feels more like a prime minister" than a politician. He added that some members of the NDR political council and Duma faction have still not adjusted "psychologically" to the fact that their leader is "no longer the number two person in the country." LB
DUMA PUTS OFF CONSIDERATION OF PRIVATIZATION PLAN
The State Duma Council on 12 May postponed by one week debate on the government's 1998 privatization program, which was scheduled to be considered at a 14 May plenary session, ITAR-TASS reported. According to Aleksandr Shokhin, leader of the Our Home Is Russia Duma faction, the Communist faction called for the postponement to give the Audit Chamber more time to complete an investigation into past privatization sales. Meanwhile, Duma Speaker Gennadii Seleznev predicted on 12 May that the Duma is unlikely to approve in its entirety the government's list of enterprises to be privatized this year. Under a law that went into effect last August, the government must seek parliamentary approval for its privatization program. LB
GOVERNMENT DRAFTS DECREE ON STRATEGIC ENTERPRISES
Deputy Prime Minister Boris Nemtsov announced on 12 May that the government is drafting a presidential decree that would define the criteria for determining which enterprises are "of strategic importance," Russian news agencies reported. The decree will list "natural monopolies" in the energy and transportation sectors, as well as defense enterprises and other companies with know-how that could potentially threaten national security if it were lost. Strategically important enterprises may not be privatized pending the adoption of a special law on the matter. Deputy State Property Minister Aleksandr Braverman advocated putting 765 companies on the list. But "Kommersant-Daily" reported on 13 May that the Defense Ministry opposes the State Property Ministry's proposal. Currently some 3,000 enterprises are considered "strategically important," the newspaper said. LB
KULIKOV FOE RETURNS TO HIGH POST IN INTERIOR MINISTRY
Yeltsin has appointed Vladimir Rushailo as head of the Interior Ministry's Main Administration on Organized Crime (GUOP), "Kommersant-Daily" reported on 12 May. Rushailo was the longtime head of the Moscow Regional Organized Crime Administration (RUOP). He was transferred to the post of first deputy head of the GUOP in October 1996, but then Interior Minister Anatolii Kulikov fired him within two weeks for criticizing his superior at the GUOP and his successor at the RUOP. Since December 1996, Rushailo has been an adviser to Federation Council Speaker Yegor Stroev (see "OMRI Daily Digest," 23 October and 10 December 1996). Meanwhile, Interior Minister Sergei Stepashin announced on 12 May that Yeltsin will soon appoint Leontii Shevtsov as deputy interior minister for the North Caucasus, Interfax reported. Shevtsov was recently replaced as commander of the Interior Ministry troops (see "RFE/RL Newsline," 11 May 1998). LB
PATRIARCH SPEAKS OUT AGAINST CAPITAL PUNISHMENT, ABORTION
Patriarch of Moscow and All Russia Aleksii II says capital punishment is tantamount to premeditated murder and violates the biblical commandment "Thou shalt not kill," Interfax reported on 12 May, citing an interview the head of the Russian Orthodox Church gave to the newspaper "Ochnaya stavka" (published by the Prosecutor-General's Office, the Interior Ministry and the Federal Security Service). Russia is required to abolish capital punishment as a condition of membership in the Council of Europe, but the parliament has refused to ban the death penalty. In the same interview, Aleksii argued that abortion is also murder "because a mother kills her child and her own soul." Although the abortion rate in Russia has dropped in recent years, it still remains among the highest in the world at 60.5 per 1,000 women of child- bearing age. LB
ZYUGANOV ENDORSES KRASNOYARSK INCUMBENT
Communist Party leader Zyuganov announced on 12 May that the Presidium of his party's Central Committee is calling Krasnoyarsk Krai residents to vote "for a government of popular trust" and against former Security Council Secretary Aleksandr Lebed in the 17 May election, Russian news agencies and NTV reported. Governor Valerii Zubov faces an uphill battle to defeat Lebed. He has promised to form a coalition government and has offered posts to several well-known Communists, including a Soviet-era secretary of the krai party committee, a prominent deputy in the current krai legislature, and State Duma deputy Petr Romanov, who finished third in the first round of the Krasnoyarsk election. Zyuganov said his party supports Zubov's plans. (Yeltsin has repeatedly refused to create a coalition government on the federal level.) Zyuganov added that a Lebed victory "would be a great misfortune for the country." LB
ZUBOV CAMPAIGNS ON OPPONENT'S TURF
Zubov has visited the far-northern city of Norilsk, where Lebed gained some 80 percent of the vote in the first round of the election, an RFE/RL correspondent in Krasnoyarsk reported on 12 May. The governor claimed that the World Bank has agreed to give a $500 million loan to fund the resettlement of pensioners from Norilsk to other parts of Russia. The Russian government is to guarantee that loan. Meanwhile, the famous pop singer Alla Pugacheva arrived in Krasnoyarsk on 13 May to campaign on behalf of Zubov. LB
LEBED DISMISSES COMMUNIST APPEAL, COALITION PLANS...
Lebed on 12 May predicted that Communist efforts to block his election will backfire. He told Interfax that recent events surrounding the confirmation of Prime Minister Sergei Kirienko have exposed the Communists' "policy of compromises." As for Zubov's promise to appoint a coalition government in the krai if re-elected, Lebed borrowed a phrase recently used by Kirienko, saying "professional" rather than "political" criteria should be used when handing out government posts, RFE/RL's correspondent in Krasnoyarsk reported. Some local observers believe Zubov's effort to attract Communist support will displease voters who backed the incumbent in the first round. LB
...PROMISES TO HELP SITUATION IN NORTH CAUCASUS
Also on 12 May, Lebed announced that if he wins the gubernatorial election, he will use his seat in the Federation Council to work toward a peaceful settlement in the North Caucasus, Interfax reported. As Security Council secretary, Lebed negotiated the August 1996 Khasavyurt accords with then Chechen field commander and current Chechen President Aslan Maskhadov. He charged that federal authorities have made no progress in settling the Chechen crisis since then. Lebed has been campaigning in the krai's capital city, Krasnoyarsk, where Zubov gained more than 50 percent of the vote in the first round of the election, RFE/RL's correspondent there reported. LB
IMO REJECTS RUSSIAN SHIPPING PROPOSALS
The International Maritime Organization's Security Committee on 11 May declined to debate or vote on a Russian report calling for the relaxation of restrictions on shipping passing through the Turkish Straits, according to the "Turkish Daily News" two days later. The report, which was supported by Greece, Bulgaria, and southern Cyprus, advocated increasing the number of tankers allowed to traverse the straits and rejected a Turkish requirement that all vessels take aboard a guide captain when using those waters. LF
RUSSIA INCREASES STAKE IN TATAR TRUCK FACTORY
At a meeting of the board of the KamAZ truck factory on 12 May, shareholders agreed to increase the company's registered capital from 125 million rubles ($20 million) to 6.25 billion rubles, RFE/RL's Kazan bureau reported. The nominal price of individual shares is to be increased and additional 300 million shares issued. The measures are intended to reduce the plant's debts, currently estimated at 8.5 billion rubles. Russia and Tatarstan will increase their holdings in KamAZ, while the stake of the U.S. company KKR, which failed in its bid last year to find new investors for the company, is reduced to no more than11 percent. The meeting also elected a new board, which is headed by First Deputy Prime Minister Ravil Muratov and includes seven representatives of the Russian federal government and four from Russian commercial creditor banks. LF
BEREZOVSKII IN YEREVAN
CIS Executive Secretary Boris Berezovskii held talks in Yerevan on 12 May with President Robert Kocharian and Prime Minister Armen Darpinian, Russian and Armenian agencies reported. Berezovskii described Armenia as one of the most important members of the CIS. Discussing options for reforming that body, he and Kocharian agreed that economic cooperation should take precedence over political integration but that normal economic development is impossible as long as conflicts remain unresolved. They also agreed that the CIS can be transformed into a functioning structure only after "the stereotype that the CIS exists under Russian sponsorship" is dispelled. Berezovskii told journalists that he and Kocharian had discussed the Karabakh conflict, but he gave no details, according to RFE/RL's Yerevan bureau. But he did say that his personal experience mediating between Moscow and Chechnya could be of value in the Karabakh context. LF
ARMENIAN PRIME MINISTER UNVEILS GOVERNMENT PROGRAM
Armen Darpinian on 12 May submitted to the parliament the government's program for socio-economic development based on the transition from stability to economic growth, Noyan Tapan and RFE/RL's Yerevan bureau reported. The program aims to ensure annual GDP growth of 6 percent and low inflation. Taxation will be lowered, with the aim of stimulating investment and creating new jobs, but tax evasion will be targeted even more rigorously than before. The program estimates that privatization of remaining state enterprises will bring more than $1 billion in private investment over the next five years. It also pledges to complete reconstruction by 2001 of the areas of northern Armenia devastated in the 1988 earthquake. LF
ARMENIAN EDITORIAL APPOINTMENT SPARKS CONTROVERSY
The staff of Armenia's Russian-language government-funded daily "Respublika Armeniya" have made clear their opposition to the proposed appointment of Shamiram Aghabekian as the newspaper's editor, RFE/RL's Yerevan bureau reported on 12 May. Aghabekian was selected by the Armenian parliament, which is a co- founder of the paper, to replace acting editor Ashot Gazazian. The newspaper's staff say they were not consulted over Aghabekian's appointment. Gazazian, meanwhile, has refused to quit, arguing that Aghabekian is not competent to take over his duties. LF
GEORGIAN PARLIAMENTARY DEPUTY QUITS TO JOIN GUERRILLAS
Germane Patsatsia, head of the minority Abkhazeti faction in the Georgian parliament, told journalists on 12 May that he will give up his "senseless" legislative activity to join the ranks of Georgian guerrillas fighting in Abkhazia, Caucasus Press reported. Patsatsia claimed that Abkhazia's southernmost Gali Raion is already under the control of the Georgian informal paramilitaries. He said the district's Georgian population is on the verge of revolt and argued that the guerrilla formation should be legalized and provided with state funding and medical care since 90 percent of its members suffer from tuberculosis. LF
AZERBAIJAN DECLARES MASS AMNESTY
The parliament on 12 May passed a law proposed one week earlier by President Heidar Aliyev granting an amnesty to some 10,000 people convicted of minor crimes. The amnesty, which does not extend to those convicted of murder, treason, terrorism, or theft, marks the 80th anniversary of the May 1918 founding of the Azerbaijan Democratic Republic. Also on 12 May, a Baku district court sentenced Meshadi Panakhov, a member of the board of the opposition Azerbaijan Popular Front, to five years' imprisonment on charges of illegal possession of weapons during a state of emergency, Turan reported. LF
SENTENCES HANDED DOWN TO UZBEK TERRORISTS
Four men found guilty in connection with the violence that broke out in the eastern city of Namangan last December were sentenced to between five and eight years in prison, Interfax reported. Vali Egamberdyev, Mukhtor Mannonov, and the brothers Abdullo and Zhobir Shakhbiddinov had pleaded guilty last week in Namangan to charges of terrorism, attempting to undermine the country's constitution, and seeking to promote Wahhabism. Another eight men are scheduled go on trial in Namangan and 15 in Tashkent on similar charges. BP
IRAN COMPLAINS ABOUT UZBEK CAMPAIGN AGAINST ISLAM
A Tehran IRIB Television broadcast on 12 May criticized the "anti-Islam stance" of Islam Karimov, saying the Uzbek president has for some time been trying to form an anti-Islamic alliance with Russia and Tajikistan. The broadcast said that only Karimov seems to be stressing the need for such an alliance. It also claimed that Karimov is attempting to draw the attention of the U.S. and the West to himself "through recourse to an old and meaningless slogan of combating Islam in a region where all nations are Muslim." BP
POLYGAMY TO BE REINTRODUCED IN KAZAKHSTAN?
RFE/RL correspondents in the Kazakh capital, Astana, reported on 12 May that the parliament has begun discussing amending the laws on family and marriage to allow Kazakhs to have more than one wife. Before the Soviet era, polygamy was common among the people of the Kazakh steppe. BP
UKRAINIAN PARLIAMENT ELECTS PRESIDIUM
At its first session, which opened on 12 May, the new parliament elected a temporary presidium to supervise the legislative process until the election of a speaker. The presidium consists of Petro Symonenko, head of the Communist Party; Oleksandr Moroz, chief of the Socialist Party; Anatoliy Matviyenko, leader of the Popular Democratic Party; Yuriy Kostenko, former minister of environment and nuclear safety; and Pavlo Lazarenko, head of the Hromada party. Also on 12 May, the Communist faction abstained from repeating the oath of office, which was read by 78-year-old Yaroslava Stetsko, leader of the ultra-right Congress of Ukrainian Nationalists, RFE/RL's Kyiv Bureau reported. JM
KUCHMA CALLS ON PARLIAMENT TO BACK SPENDING CUTS
Addressing the opening session of the Supreme Council, President Leonid Kuchma called on lawmakers to support reducing budgetary subsidies, which account for one-fifth of Ukraine's budget. The reduction is a key condition for obtaining an IMF loan worth $2.5 billion. The president added that the cabinet is to submit a new version of the 1998 budget in which the deficit is reduced to 2.5 percent of GDP. At the same time, Kuchma appealed for the tax burden on the wage fund to be eased to 35 percent in the second half of this year. JM
MOROZ SAYS SYMONENKO HAS 'BEST CHANCES' OF BECOMING SPEAKER
Oleksandr Moroz, head of the Socialist Party and former parliamentary speaker, has said Communist Party First Secretary Petro Symonenko has "best chances to head the republic's new parliament," ITAR-TASS reported. Moroz also said the Socialists and the Agrarians will demand that the government present a report in June on implementing the law on minimum wages and pensions. He warned that if the law's targets are not met, there will be a good reason to demand the cabinet's resignation. JM
JAPANESE COMPANY TO INVEST $2 BILLION IN UKRAINE
Japan's Mitsui company is to invest some $2 billion in the Ukrainian economy, ITAR-TASS reported. The company's financial director told President Kuchma on 12 May that the company is primarily interested in the joint construction of electric power stations and mineral fertilizer plants. JM
WILL YUGOSLAVIA JOIN RUSSIA-BELARUS UNION?
Tomislav Nikolic, head of the Yugoslav parliamentary Committee for Foreign Affairs and Foreign Trade and deputy chairman of the ultranationalist Serbian Radical Party of Vojislav Seselj, told the Parliamentary Assembly of the Russia-Belarus Union in Homel on 4 May that Yugoslavia is halfway toward joining the Belarusian-Russian union. In an interview with the Belarusian daily "Zvyazda" published on 12 May, Nikolic confirmed Yugoslavia's desire to obtain an "official status" at the Belarusian-Russian legislature. Stressing the common cultural and religious roots of Yugoslavia, Belarus, and Russia, Nikolic said that Yugoslavia seeks protection from attacks by "imperialistic forces from the West and Islam from the East." JM
BALTIC PRESIDENTS CONDEMN RUSSIAN PRESSURE ON LATVIA...
Following their summit in Riga on 12 May, the presidents of Estonia, Latvia, Lithuania issued a joint statement condemning Russian political and economic pressure on Riga, which, they said, is dangerous for the whole of Europe. They stressed that this time Baltic unity has been clearly demonstrated, and they pledged to increase trade and cooperation between the three states. The presidents also agreed to establish investigative commissions in all three countries that will look into the atrocities committed from 1939 to 1991, and especially during World War II. JC
...WHILE YELTSIN LAUDS MOSCOW'S STANCE
In his speech to the Russian Foreign Ministry earlier the same day, President Boris Yeltsin praised Russian diplomats for their "firm and fruitful stance" aimed at protecting the rights of ethnic Russians in the Baltic countries, Russian and Baltic agencies reported. He added that Russia is proving by its deeds that it cannot be ignored and that it has sufficient means to protect the rights of "compatriots abroad." JC
ESTONIAN FOREIGN MINISTER IN BEIJING
Toomas Hendrik Ilves, currently on a five-day visit to China, met separately with his Chinese counterpart, Tang Jiaxuan, and Vice President Hu Jingtao in Beijing on 12 May, BNS and ETA reported. Both meetings focused on economic issues. The same day, Ilves and the head of the Chinese Tax Board signed an agreement on avoiding double taxation and tax evasion. China is the first Asian country with which Estonia has signed such an accord. JC
ADAMKUS TO PAY EQUAL ATTENTION TO U.S., RUSSIA
In an interview with the Russian weekly "Moskovskie Novosti," Lithuanian President Valdas Adamkus said he is planning to pay equal attention to relations with the U.S. and Russia in his foreign policy, BNS reported on 12 May. Adamkus stressed that Lithuania considers itself a European state and intends to "officially coordinate" all its actions with the other states on the Continent. He added that "the U.S. will also participate in this process." At the same time, Adamkus said he does not intend to pay "any special attention" to the U.S. "Washington will receive as much attention as, for instance, our eastern neighbor, that is, democratic Russia," Adamkus said. JC
DOES POLISH GOVERNMENT INCLUDE COMMUNIST-ERA COLLABORATORS?
Private Radio Zet on 11 May alleged that a minister in the current Solidarity-led cabinet collaborated with the communist-era secret services, unleashing rumors about possible ties of senior government officials to the former secret police. Under a 1997 law, all senior officials have to submit declarations on whether they collaborated with the security police. Those declarations are to be examined by a special court that has not been set up yet because not enough judges volunteered to sit on it. Prime Minister Jerzy Buzek told journalists that all his ministers have denied collaboration in their declarations. He declined to comment on the rumors. "Rzeczpospolita" reported on 13 May that Buzek has ordered that the declarations of some 290 senior government officials be published immediately in "Monitor Polski," the government's official mouthpiece. JM
CZECH PARLIAMENT OVERTURNS PRESIDENTIAL REJECTION
With a comfortable majority of 128-43, the Chamber of Deputies on 12 May overturned President Vaclav Havel's rejection of a controversial drug bill that bans possession of narcotics. Havel believes that the draft law provides harsher penalties for drug users than for dealers and manufactures. The law goes into effect in January 1999. In other news, 15 political parties and three movements submitted lists of candidates before the 10 May deadline for taking part in the early elections scheduled for mid-June, CTK reported on 11 May. MS
GERMAN OFFICERS TAKE PART IN CZECH ARMY MANEUVERS
For the first time, officers of the German armed forces are taking part in a Czech army maneuver aimed at coordinating cross-border cooperation, dpa reported on 12 May citing CTK. Meanwhile, Jaroslav Sedivy on 12 May became the first Czech foreign minister to meet with a representative of the organization of Sudeten Germans, who were forced to leave Czechoslovakia after World War II. The meeting was initiated by President Havel, who was unable to participate owing to ongoing recovery from surgery. MS
SLOVAKIA EXAMINES EXCHANGE SYSTEM AHEAD OF EURO INTRODUCTION
Marian Jusko, deputy governor of the Slovak National Bank, told a meeting of the European Bank for Reconstruction and Development in Kyiv on 11 May that his country is considering changes in its foreign- currency exchange mechanisms in preparation for the introduction of the European currency in early 1999. Jusko said Slovakia will finalize those changes "within one month" and introduce the new system next year. He declined to provide further details, an RFE/RL correspondent in Kyiv reported. Slovakia's fixed exchange rate is calculated in terms of a "currency basket" based 60 percent on the German mark and 40 percent on the U.S. dollar. MS
HUNGARIAN OPPOSITION UNITES FOR RUN-OFF
The Federation of Young Democrats-Hungarian Civic Party (FIDESZ-MPP) and the Hungarian Democratic Forum (MDF) on 12 May agreed to withdraw candidates in favor of those who fared best in the first round of parliamentary elections. The Democratic People's Party also announced that it will withdraw its 31 candidates for the sake of FIDESZ. Independent Smallholders' chairman Jozsef Torgyan has urged that a "reasonable agreement" be reached with FIDESZ, which, he said, is playing a "tactical power game "in refusing to hold talks with his party. Socialist Party chairman Gyula Horn warned that a government of moderate-right, radical, and extreme right-wing parties could endanger political and economic stability as well as delay Hungary's EU and NATO integration. MSZ
HOLBROOKE ANNOUNCES MILOSEVIC, RUGOVA MEETING...
U.S. special envoy Richard Holbrooke said in Belgrade on 13 May that Yugoslav President Slobodan Milosevic has agreed to meet with Kosovar shadow-state President Ibrahim Rugova in the Serbian capital on 15 May without preconditions and without foreign mediators. Holbrooke added that the session "will be followed within one week by a series of meetings to take place at least once a week between the delegations of both sides. These meetings will take place in Prishtina. They will alternate between sites chosen by both sides." Holbrooke made the announcement after five days of shuttle diplomacy between Belgrade and Prishtina, plus one stop in Tirana. The Kosovars made a major concession to Milosevic by agreeing to meetings without foreign mediation. PM
...BUT ADVISES CAUTION
Holbrooke, who was the architect of the 1995 Dayton agreements, said in Belgrade on 13 May that the meeting between Milosevic and Rugova is "only the first step for a political solution." The diplomat cautioned that "the vast differences between the two sides remain as wide as ever [and the crisis] could escalate into something worse than Bosnia before Dayton." He praised Milosevic for "taking personal responsibility" in calling for the talks. Milosevic's office said in a statement that the meeting of the two leaders is necessary to end "unnecessary" delays in establishing a dialogue. PM
YUGOSLAVIA SHUTS LAST CROSSING TO ALBANIA
Yugoslav border guards on 11 May closed the border checkpoint between Shkodra and Podgorica, "Koha Jone" reported on 13 May. It was the last open checkpoint between Albania and Yugoslavia and was used by primarily Albanian citizens of Montenegrin origin, who do not need visas to visit Montenegro. The Yugoslav army also tightened security along the border and recently began to deploy regularly four patrol boats on Lake Shkodra. Last month, Yugoslavia closed two border checkpoints linking Albania and Kosova. FS
WEU PLEDGES SECURITY AID TO ALBANIA
Meeting on Rhodes on 12 May, defense and foreign ministers from the member states of the West European Union adopted a British proposal to increase the number of WEU police in Albania from 60 to 90. The WEU police will help train Albanian border guards as well as police. The delegates did not act on Albanian calls for a stronger foreign military presence along the border with Kosova. Germany and Greece, in particular, were reluctant to adopt any tough measures, AFP reported. Meanwhile in Washington, the World Bank approved $44 million worth of credits to improve health care, sanitation, roads, and the power supply in Albania. One of the credits will go to modernize the port of Durres. PM
MILOSEVIC TO STAGE COUP IN MONTENEGRO?
The leadership around Milosevic intends to oust federal Prime Minister Radoje Kontic, a Montenegrin, on 18 May and replace him with a Montenegrin whom Milosevic considers more loyal, RFE/RL's South Slavic Service reported on 12 May. The new prime minister will then declare a state of emergency in Montenegro, which is under the leadership of reformist President Milo Djukanovic, a political enemy of Milosevic. Leaders of the Socialist People's Party of Momir Bulatovic, who is Milosevic's main ally in Montenegro, and Vojislav Seselj's Serbian Radical Party said on 12 May in Belgrade that they will introduce a measure in the parliament calling for Kontic's removal "on grounds of incompetence." PM
DJUKANOVIC SAYS MILOSEVIC PREPARING STATE OF EMERGENCY
President Djukanovic said in Podgorica on 12 May that Kontic's ouster will be a prelude to Belgrade's declaring a state of emergency in Montenegro. He added that the name of the new prime minister will be made known shortly. RFE/RL's South Slavic Service reported that Bulatovic is likely to be appointed to that post. In Belgrade, spokesmen for the United Yugoslav Left, which is headed by Milosevic's wife Mira Markovic, hailed the move by Bulatovic's and Seselj's parties. Representatives of Vuk Draskovic's Serbian Renewal Movement did not say how they will vote but indicated that the party is unhappy with the government. PM
BELGRADE MOVES AGAINST ELECTRONIC MEDIA
The Association of Independent Electronic Media in Yugoslavia (ANEM) said in a statement in Belgrade on 12 May that the government has committed "the most flagrant breach of media freedoms in Yugoslavia to date" by imposing stiff fees for radio and television frequency licenses. The government made the decision on 7 April but "kept it secret until now," the statement continued. The new monthly fees of $35,000 are prohibitively high for private broadcasters in Yugoslavia. "It is obvious that the aim of this decision is to stifle media freedoms by economic measures, in view of the fact that administrative" measures have failed to do so, the statement concluded. PM
CROATIA YIELDS ON REFUGEE RETURN
U.S. ambassador to Croatia William Montgomery told RFE/RL's South Slavic Service on 12 May that the Croatian government has accepted all demands made by the international community to liberalize policies regarding the return of Serbian refugees. Montgomery added that the government will issue a statement on its new policies on 15 May, and that the measure will go into force immediately. PM
IZETBEGOVIC SLAMS KLEIN
Alija Izetbegovic, the Muslim member of the Bosnian joint presidency, sharply criticized recent remarks on the late Croatian Defense Minister Gojko Susak made by Gen. Jacques Klein, who is a deputy to the international community's Carlos Westendorp in Bosnia. Izetbegovic wrote in an open letter to Klein: "I was amazed at your arrogance. The [Dayton] peace accords did not establish a protectorate in Bosnia, and you are not the protector.... Our people like foreigners as friends but not as tutors. Don't try to be one," "The Los Angeles Times" of 12 May quoted Izetbegovic as saying. Klein praised Susak, who worked closely with Klein when the general was the UN administrator in eastern Slavonia in 1996 and 1997, as a "man of vision." Most Bosnian Muslims regard Susak as a warmonger who would have gladly partitioned Bosnia between Croatia and Serbia. PM
JEWISH CEMETERY DESECRATED IN ROMANIA
Unidentified persons have desecrated the Jewish cemetery in the Transylvanian town of Targu Mures, Mediafax reported on 12 May. Anti-Semitic inscriptions such as "Death to the Jews" and " Jews to Israel!" were scrawled on the cemetery's walls. A local police officer said the incident occurred two days earlier. In 1994, several tombstones were overturned by unidentified vandals in the same cemetery. The Jewish community in Targu Mures today numbers fewer than 100. Of the 7,500 Jews deported to Auschwitz by the Hungarian fascist regime in May-June 1944, only 1,197 survived. MS
LUCINSCHI WANTS TO 'DE-POLITICIZE' GOVERNMENT
Speaking on national television on 11 May, Moldovan President Petru Lucinschi said Prime Minister Ion Ciubuc must form a government of "genuine professionals" that will not be an "arena for political battles." Lucinschi said the new cabinet must be "as de-politicized as possible" because its main task is that of coping with the country's economic problems. Among the main problems facing the government he listed the de-monopolization of the energy sector, the reform of local government, and speeding up privatization, Infotag reported. MS
WORLD BANK ON BULGARIAN ECONOMY
The World Bank believes Bulgaria's economic prospects have "improved significantly" in the last year but warns that economic reform is still in its early stages and that the greatest threat to it is complacency. The bank's views are included in a recently adopted "country strategy" document made available to an RFE/RL correspondent in Washington. According to that document, if the government continues to pursue reform, the bank will consider granting over the next three years structural-adjustment loans of up to $300 million and so-called investment financing of up to $400 million. MS
BULGARIAN DEPUTY PREMIER ON ECONOMY
Alexander Bozhkov told the meeting of the European Bank for Reconstruction and Development in Kyiv on 12 May that his country will meet the criteria for membership in the EU currency union by the year 2001. Bozhkov said this increases Sofia's chances of joining the EU in the not too distant future, an RFE/RL correspondent in the Ukrainian capital reported. He attributed the upswing in Bulgaria's economy during the last year largely to the currency board set up at the insistence of the IMF. MS
TENSIONS WITH RUSSIA OVERSHADOW LATVIA'S ECONOMIC PERFORMANCE
by Michael Wyzan
Latvia has recently been buffeted by Moscow's threats to impose unilateral economic sanctions. Russia has sought to justify those threats by citing what it considers to be anti-Russian activities in Latvia and Riga's incorrect treatment of the country's Russian minority.
Russian officials have suggested that their country develop new ports to avoid having to use Latvian ones on the Baltic Sea. Russian border guards have refused entry to Latvian drivers who cannot produce notarized Russian translations of their driver's licenses. And Russia's Transportation Ministry has threatened to limit the number of entry permits issued to Latvian truckers.
The threats have already had an affect on Latvia. The cabinet on 6 May approved legal amendments granting citizenship to all children born in Latvia after 21 August 1991. That change may well be for the best (it was recommended by the Organization for Security and Cooperation in Europe). But meanwhile the economic effects of Russian pressure are proving harmful. Since early April, there has been a significant decline in freight traffic on Latvian railroads and through its ports. And the Dow Jones Riga Stock Exchange Index fell from 336 on 16 March to 275 on 23 April (before recovering slightly more recently).
These shock waves have hit a rather healthy and well- managed economy. In mid-April, the IMF Executive Board lauded Latvia for its excellent performance and "prudent financial policies," although it stressed the need for further progress on large-scale privatization, tax collection and administration, and making the budget process more transparent.
Last year's achievements followed the 1996 strong recovery from the downturn of 1995 (which was sparked by a banking crisis). GDP grew by 5.9 percent in 1997, compared with 2.8 percent in 1996, and the growth of industrial production accelerated from 1.4 percent in 1996 to 6.1 percent in 1997. Unemployment fell from 7.2 percent in December 1996 to 7.0 percent one year later, while the average monthly wage in the public sector rose from $242 in December 1996 to $272 last December.
Consumer price inflation sank to 7.0 percent from 13.1 percent in 1996 (in both years, it was the lowest in the Baltic States). It declined further to 6.1 percent in the 12 months to February 1998. Last year, the state budget was in surplus for the first time since 1993.
The lats has been pegged to the IMF's Special Drawing Right since 1994, so it has not depreciated in tandem with inflation, which, though low for a transition country, remains higher than in Latvia's Western trading partners. The trade deficit rose from $877 million in 1996 to $1.1 billion last year, while the 1997 current account imbalance is projected at $460 million, similar to 1996's and a high 9 percent of GDP.
The foreign reserves rose from $729 million at the end of 1996 to $778 million one year later. Thus, a capital account surplus was sufficient to cover the current account deficit. A rise in cumulative foreign direct investment from $645 million at the end of 1996 to $850 million on 30 September contributed to that surplus.
How much would Russian sanctions hurt Latvia? Russia remains the leading destination for Latvia's exports, accounting for 21 percent in 1997. By the same token, Russia accounted for 15.6 percent of imports, slightly less than the 16.0 percent supplied by Germany, Latvia's leading import source. Latvia's exports to Russia in 1997 were worth more than $350 million.
A special feature of Latvian trade with Russia is the fact that its ports are important entrepots for Russian exports to third countries. Some of this trade is reflected in the goods worth $425 million that Latvia officially imported from Russia last year.
Another factor is Latvia's total reliance on Russia for its natural gas, for which it pays world market prices. Latvia is not in arrears in paying for that gas, and Gazprom is a shareholder in the Latvian gas company. Thus, it would appear that Gazprom, an important foreign policy actor in its own right, is unlikely to favor sanctions against the country. Russia is also a significant investor in Latvia, accounting for 10.4 percent of the total foreign direct investment stock in September 1997, second only to Denmark.
Nonetheless, recent events suggest that Latvia will probably be forced to follow the example of those CIS states that seek to reduce their economic dependence on Russia. If Moscow persists in thwarting the normal economic intercourse between states--for example, by refusing to use Latvian ports or denying Turkmenistan access to its gas pipeline to Europe--for political ends, it will increasingly be seen as an unreliable partner. Developing such a reputation is in no one's interest, least of all Russia's. The author is an economist living in Austria.