GOVERNORS ASK DUMA TO REJECT BUDGET
The Federation Council adopted an appeal on 23 December asking the State Duma to reject the 1999 budget in its first reading so that a tripartite commission can be set up to draft a version acceptable to both the Duma, the Federation Council and the government, Ekho Moskvy reported. Federation Council Chairman Yegor Stroev told Reuters that "the interests of the regions were not included in the present budget" and that "none of the governors will vote for the budget unless he knows how much money his region will receive." Altai Krai Governor Aleksandr Surikov said that the government is cutting expenditures at the regions' expense and that 12 regions have disappeared from the list of recipients of subsidies without explanation. The Duma is to consider the budget on 24 December. JAC
DUMA FALLS TO PASS LAND CODE
The Duma on 23 December twice rejected a draft Land Code that had been reworked to incorporate Russian President Boris Yeltsin's recommendations, Interfax reported. During the first vote, only 217 deputies voted in favor of the bill, while 96 opposed it. The second time, only 178 deputies were in favor, with 127 opposed, according to Interfax. Earlier, Duma Deputy Speaker Vladimir Ryzhkov said that continued failure to pass the legislation, which had been languishing in the Duma for some five years, poses a significant obstacle to market reform in the country, ITAR-TASS reported on 9 December. The Duma will now have to prepare a new bill. JAC
PRIMAKOV PLEDGES NO DEFAULT, AS DEBT DEADLINE LOOMS
During an official visit to Kazakhstan (see below), Prime Minister Yevgenii Primakov pledged on 23 December that "Russia will pay all of its debts, both on domestic and foreign markets." He added that Russia is "interested in restructuring its debts" and "has already held talks with the London Club, which ended successfully." The previous day, however, Deputy Finance Minister Mikhail Kasyanov told reporters that Russia has secured the support of only 72 percent of the members of the London Club, while 95 percent are needed for final approval of any deal. Kasyanov added that if the necessary amount is not achieved by the 29 December deadline, then Vnesheconombank may be declared in default. Russian officials are reportedly pessimistic that the 95 percent support can be gathered in time, but they believe that the resulting default would be that of Vnesheconombank and not the Russian government, AFP reported. JAC
MOSCOW TO CRACK DOWN ON ANTI-SEMITISM IN REGIONS...
Representatives from the Main Military Inspectorate and the Security Council were sent to several Russian regions on 21 December to check whether those regions are complying with President Yeltsin's instruction on combating political extremism, "Kommersant- Daily" reported on 22 December. According to the daily, Krasnodar and Stavropol Krais top the list of the most problematic regions in terms of political extremism and ethnic intolerance. Also likely to be investigated is Kaluga Oblast, where anti-Semitic literature is being openly distributed, the newspaper reported. JAC
The same day, Prosecutor-General Yurii Skuratov reported that 17 regions in Russia have engaged in unauthorized spending of budget funds, according to ITAR-TASS. In addition to not paying wages, some of these regions are granting either low-interest or interest-free loans to favored local enterprises. "Kommersant-Daily" reported that chief of the presidential administration Nikolai Bordyuzha has promised to send investigative teams to several regions to study individual cases of official corruption. JAC
GOVERNMENT TO TRY TO SELL SVYAZINVEST AGAIN
In 1999, the Russian government plans to sell packages of shares in six large enterprises: Gazprom, Svyazinvest, Onako, Sovkomflot, Aeroflot, and the Moscow River Steam Navigation Company. The government hopes to raise 15 billion rubles ($718 million) from the sale of state property, "Segodnya" reported on 22 December. An earlier attempt to sell 25 percent minus two shares in Svyazinvest was abandoned. Eleven international firms have been hired to appraise the value of the six companies to be sold. JAC
IRAQI RAIDS LABELED SERIOUS DIPLOMATIC ERROR...
In an article published in "Nezavisimaya gazeta" on 22 December, Aleksandr Bessmertnykh, president of the Foreign Policy Association, argued that historians will regard the U.S.'s decision to launch air strikes against Iraq as a serious diplomatic error. According to Bessmertnykh, the U.S.'s posture as the world's "lone policeman" has caused serious distrust of Washington and "an alarming feeling that America is not always able to control itself." In addition, the action resulted in serious discord among the world's great powers (which he identified as the U.S., China, France, and Russia) and caused significant long-term damage to the UN, Bessmertnykh contended. JAC
...FOR WHICH RUSSIA WILL DEMAND BUTLER'S DISMISSAL
Bessmertnykh went on to argue that if the U.S. continues to insist on weapons inspections, then "this will signal that the bombings raids were pointless" since they failed to achieve their aim, namely the elimination of Iraqi biological and chemical weapons production. Bessmertnykh concluded that it is up to Russia to come up with a new approach to Iraq and help Washington out of its diplomatic "quagmire." The same day, "Segodya" and "Kommersant-Daily" wrote that Russia will demand the dismissal of UN weapons inspector Richard Butler as the price for renewed U.S.-Russian ties. According to one Russian diplomatic source quoted by "Kommersant-Daily," "Russia is not intent on protracting confrontation with the U.S. and Britain[and] Moscow will not ask much for reconciliation-- only the dismissal of Richard Butler." According to "Segodnya," the strikes were "predetermined and all Butler had to do was churn out his report at the right time." JAC
START-II STILL ON 1999 DUMA AGENDA
Duma Defense Committee Chairman Roman Popkovich (Our Home Is Russia) told ITAR-TASS on 22 December that ratification of the START-II treaty might be considered as early as the second half of February and that the delay in consideration of the treaty resulted because new documents had to be reviewed--not because of U.S.-U.K. airstrikes against Iraq. However, Duma Deputy Speaker and member of Our Home is Russia Vladimir Ryzhkov told reporters the same day that ratification is not guaranteed. Inclusion of the treaty on the agenda only showed that "the Duma will continue to work in the direction of ratification," he said. Meanwhile, Duma Chairman Gennadii Seleznev repeated his assertion that the bombings of Iraq have "raised a serious obstacle in the path to ratification of START-II." JAC
ANOTHER REGION IMPOSES FOOD RESTRICTIONS
The government of the Republic of Marii El Republic has restricted food exports without its prior permission, ITAR-TASS reported on 22 December. The oblast's Interior Ministry will step up security at border posts, according to the agency. However, Marii El President Vyacheslav Kislitsin told angry local producers that they can continue exporting but not without first creating a reserve of products. Kursk Oblast Governor Aleksandr Rutskoi told residents in his region that the only way to control rapidly increasing food prices is to close the oblast's borders and declare independence from Russia. However, he added that this is not a realistic option. Egg prices in the oblast have doubled in one week, according according to "EWI Russian Regional Report" on 22 December. JAC
IMPRISONED JOURNALIST TO RUN IN VLADIVOSTOK ELECTIONS
President Yeltsin has ordered Central Election Chairman Aleksandr Ivanchenko, presidential representative to Primorskii Krai Viktor Kondratenko, and Primorskii Krai Governor Yevgenii Nazdratenko to personally oversee the 17 January municipal elections in Vladivostok, ITAR-TASS reported on 22 December. Previous elections were declared invalid because the name of the incumbent mayor was struck from the ballot in some districts. The agency reported that nine candidates for mayor have been registered; Russian Television had reported earlier that only six candidates would run (see "RFE/RL Newsline, 22 December 1998). Grigorii Pasko, the journalist charged with espionage for revealing environmental hazards associated with Russia's nuclear submarines, has registered as a candidate for Vladivostok's municipal assembly, ITAR-TASS reported. Pasko is still in jail awaiting trial in mid-January and hopes to draw attention to his case. JAC
WEAPONS DESIGNER RECEIVES NATION'S TOP HONOR
President Yeltsin has bestowed one of the nation's top honors, the Order of Saint Andrei, on weapons designer Mikhail Kalashnikov, ITAR-TASS reported on 22 December. According to Yeltsin, Kalashnikov had "dedicated his life to strengthening the defense ability of his country." Russian writer Aleksandr Solzhenitsyn recently turned down the same honor (see "RFE/RL Newsline," 14 December 1998). JAC
KYRGYZ PRESIDENT CALLS FOR GOVERNMENT'S RESIGNATION
At a Security Council session on 23 December, Askar Akayev expressed his disappointment in the work of the government and called for it to resign, RFE/RL correspondents in Bishkek reported. Akayev had just heard reports on the economy from Finance Minister Taalaibek Koichumanov and chairman of the National Bank Marat Sultanov. After asking several questions, he said it is clear that no one has any answers and that the government has no real program. Akayev's press secretary, Kanybek Imanaliev, told journalists that since Kubanychbek JumAliyev was named prime minister in April, "the government has not fulfilled one task given it by Askar Akayev," ITAR- TASS reported. He added that "during this time, the Kyrgyz som has fallen in value, industry is in decline, and the standard of living has dropped as a result." ImanAliyev laid the blame on the government and the National Bank. To date, there are no reports that the government has resigned. BP
PRIMAKOV MEETS WITH KAZAKH PREMIER...
Russian Prime Minister Yevgenii Primakov met with his Kazakh counterpart, Nurlan Balgimbayev in Astana on 22 December, ITAR-TASS reported. The two signed documents on cooperation in the fields of information, border security, fuel and energy, and education. Primakov also met with President Nursultan Nazarbayev. After their meeting, Primakov told journalists that the two countries "are progressing along the path of joint action that is based on the common interests of the two countries." He also stressed that Russia and Kazakhstan are working together to solve the economic crisis affecting both countries. Nazarbayev said "there are no problems in Russian-Kazakh relations. We will enter the 21st century as partners and allies." BP
...COMMENTS ON UPCOMING ELECTIONS
Responding to questions about the 10 January presidential elections in Kazakhstan, Primakov said, "We support the [incumbent] president of Kazakhstan." ITAR-TASS reported. He added that "Russia is not one of those governments that is trying to pry into the internal affairs of Kazakhstan." This is likely an allusion to U.S. criticism of both the decision by the Kazakh parliament to hold early elections and a later decision by the Kazakh Supreme Court to bar two candidates from participating because of minor legal infractions. BP
NAZARBAYEV CALLS FOR LAW ON LAND OWNERSHIP
Kazakh President Nursultan Nazarbayev on 22 December ordered the country's legislators to draft a law on private land ownership within two weeks. Nazarbayev said he wants the law to be in effect by spring 1999, Interfax reported. BP
RUSSIAN PEACEKEEPERS DENY RESPONSIBILITY FOR DEATH OF GEORGIAN SOLDIER
An officer with the Russian peacekeeping force deployed under CIS auspices along the border between Abkhazia and the rest of Georgia has denied that his troops opened fire on Georgian positions during the night of 21-22 December, Caucasus Press reported. He said that his men had responded in self-defense to shots from those positions. One member of the Georgian Interior Ministry forces stationed in the region was killed during the exchange of fire. LF
ARMENIAN PARLIAMENT SUSPENDS ELECTION LAW DEBATE
The Yerkrapah majority group postponed the debate on the draft election law shortly after it began on 22 December, RFE/RL's Yerevan bureau reported. The law had been passed in the first reading in November, after which Yerkrapah bowed to opposition pressure and proposed minor amendments that would increase the number of seats in the 131-member legislature to be allocated under the proportional system from 51 to 56. Most opposition parties want the majority of seats allocated on that basis, and for that reason several opposition parties boycotted the 22 December debate. Yerkrapah chairman Albert Bazeyan said that his group wants more time for "political consultations" with the opposition before the debate resumes on 25 January. LF
ARMENIA RECEIVES NEW LOANS FROM IMF, WORLD BANK
Armenia has received approval for loans from the World Bank and the IMF totaling some $124 million, an RFE/RL correspondent in Washington reported on 23 December. The IMF third-year credit of approximately $59 million is intended to boost privatization and banking banking as well as to revive the energy sector. The $65 million structural adjustment loan from the World Bank will be used to help Armenia ease the social costs of adjustment and to accelerate the development of the private sector and increase domestic savings. The loans include an additional $26 million to compensate for the spillover effect from the financial crisis in Russia. LF
GEORGIA FINALIZES SECURITY ARRANGEMENTS FOR OIL EXPORT PIPELINE
The Georgian Governmental Guard Service signed an agreement on 22 December with the Georgian Pipeline Company on guarding the Georgian sector of the Baku-Supsa oil export pipeline, which is to begin operation shortly, Caucasus Press and Interfax reported. Azerbaijani officials have held talks with NATO on deploying a NATO force to guard the Azerbaijan stretch of that pipeline (see "RFE/RL Newsline," 30 January 1998). LF.
UKRAINE TO PRINT MONEY TO PAY BACK WAGES
Prime Minister Valeriy Pustovoytenko said on 22 December that Ukraine will print money next year to cover its mounting wage arrears, AP reported. He added that the cabinet plans a monetary emission of 1 billion hryvni ($290 million), but he did not say how he expects the money emission to affect the 1999 inflation rate, which has been forecast at 19 percent. JM
UKRAINIAN PARLIAMENT DECREES CUTBACK IN ARMED FORCES
The Supreme Council on 22 December passed a bill reducing the current 320,000 servicemen by 10,000 and the army's 100,000 civilian staff by the same amount in 1999, Ukrainian media reported. The Ukrainian government has said it can spend only some 1 billion hryvni ($290 million) on the army next year. The Defense Ministry, however, maintains that the armed forces need at least three times that amount. JM
KUCHMA CANCELS FINES TO ENCOURAGE TAX COLLECTION
President Leonid Kuchma has signed a decree canceling fines on companies that pay all their 1998 taxes by February 1999, Ukrainian News reported on 22 December. Kuchma's decision is seen as a measure to improve poor tax collection. The nationwide tax debt skyrocketed from 2.3 billion hryvni in January ($1.1 billion at the then exchange rate) to 10.2 billion hryvni ($3 billion) as of 1 December. JM
BELARUSIAN NEWSPAPER WINS LAWSUIT OVER SPELLING
The Higher Economic Court on 22 December ruled in favor of the Belarusian-language biweekly "Nasha Niva," which defied warnings by the State Press Committee by continuing to use the traditional, non-Russified Belarusian orthography banned by the Soviet regime in 1933 (see "RFE/RL Newsline End Note," 10 August 1998), RFE/RL's Belarusian Service reported. "Nasha Niva" editor Syarhey Dubavets sued the committee after it had warned the newspaper not to "distort the generally accepted norms of the language." A panel of linguists assembled by the court found that no "generally accepted norms of the language have ever been determined." The court accepted that view and fined the committee 2.5 million Belarusian rubles ($24). Dubavets said the verdict "provided a very positive result for the Belarusian language itself...and those discriminated in Belarus from time immemorial for using this language." JM
BELARUSIAN OPPOSITIONIST RELEASED FROM PRISON, FACES ANOTHER TRIAL
Valery Shchukin, a deputy of the Supreme Soviet dissolved by President Alyaksandr Lukashenka in 1996, was released from prison on 22 December after serving a 15-day sentence for participating in an unsanctioned workers' demonstration last month (see "RFE/RL Newsline," 6 November 1998), RFE/RL's Belarusian Service reported. He must now appear in court on 28 December in connection with participating in a Belarusian Popular Front demonstration earlier this month (see "RFE/RL Newsline," 7 December 1998). Shchukin, who has been repeatedly tried and imprisoned for his opposition activities, scored two successes in his struggle for prisoners' rights while in prison. By threatening to organize a picket in the prison yard, he forced the administration to rid his cell of mice. He also made the administration provide him with a real spoon, while other prisoners were given "a sort of thimble" with which to eat. JM
ESTONIA'S MERI NAMED 'EUROPEAN OF THE YEAR'
An international jury chaired by former European Commission President Jacques Delors has named Estonian President Lennart Meri the "European of 1998." Delors said in a letter that the jury wanted to pay tribute to Meri's "indefatigable struggle" for the rebirth of Estonia and for his commitment to the unity of Europe. Meri will receive the award, which is organized by the French magazine "La Vie," from French President Jacques Chirac in Paris in February. JC
MOSCOW BERATES TALLINN OVER LANGUAGE REQUIREMENTS FOR DEPUTIES
Speaking to journalists in Moscow on 22 December, Russian Foreign Ministry spokesman Vladimir Rakhmanin criticized amendments passed by Estonian lawmakers last week that stipulate language requirements for elected officials (see "RFE/RL Newsline," 16 December 1998). Interfax quoted Rakhmanin as saying that this is a move aimed at forcing ethnic minorities out of the country's political life," adding that some "renowned experts" consider the amendments run counter to the Estonian Constitution. He added that if the amendments are signed into law by the Estonian president, they may "seriously complicate" the participation of non-Estonians in the local elections next fall. Under the amendments, members of the parliament and local governments must have sufficient knowledge of Estonian to take part in the work of those bodies and to understand the contents of legislative acts. JC
LATVIAN COALITION PARTNER TO ACCEPT SOCIAL DEMOCRAT AS AGRICULTURE MINISTER?
Fatherland and Freedom chairman Maris Grinblats told reporters on 22 December that the party's council may approve Social Democrat Peteris Salkazanovs as agriculture minister but rejects the idea of any larger involvement of the Social Democrats in the government, BNS reported. Grinblats said it is not the aim of the Fatherland and Freedom party to trigger a government crisis, especially when the budget for next year has not been approved. Prime Minister Vilis Kristopans has appointed Environment Protection and Regional Development Minister Vents Balodis as acting agriculture minister until the Fatherland and Freedom party makes a decision on Salkazanovs's nomination. JC
LITHUANIA ANNOUNCES CHRISTMAS AMNESTY
The Lithuanian parliament on 22 December granted amnesty to some 2,000 convicted prisoners, mostly youths, women, and men over 65. Under the amnesty, pregnant women and single mothers who have children under 18 will be released unconditionally, BNS reported. This is the fifth amnesty in Lithuania over the past eight years. The previous amnesties were in 1990, 1993, 1995, and 1996, according to the news agency. JC
POLISH MINERS CONTINUE TO PROTEST NEW PENSION LAW
Representatives of the government, employers, and striking miners held talks on resolving the dispute over the new pension law (see "RFE/RL Newsline," 21 and 22 December 1998) but failed to work out a clear agreement, PAP reported on 22 December. Wojciech Kornowski, head of the Confederation of Polish Employers, said miners who have performed 25 years' service will receive so-called bridge pensions equal to 70 percent of their monthly wage. However, Henryk Nakonieczny, leader of Solidarity's coal mining section, said the talks resulted in no written agreement and therefore the strike will continue. According to Solidarity, 95 percent of miners supported a general strike in a vote held in 40 mines on 21 December. "On 23 December. we shall determine how to continue the protest," Nakonieczny said. JM
NON-SOLIDARITY TRADE UNIONS AGREE TO PROTEST GOVERNMENT POLICIES
Eighteen trade unions that work in opposition to Solidarity have established a committee to protest government socioeconomic policies, PAP reported on 22 December. Members of the committee include representatives of the leftist National Trade Union Alliance, the rightist August '80 Free Trade Union, and the ultra-radical Farmers' Self-Defense. The committee's first joint action will be to protest the 1999 draft budget. JM
HAVEL LEAVES FOR VACATION
President Vaclav Havel left Prague on 22 December for the Canary Islands, where he will spend the Christmas holidays as a guest of Spanish King Juan Carlos, Reuters reported. The holiday is officially described as "recuperative," and Havel will continue receiving treatment for the respiratory infection that caused him to cancel his work schedule last week. A presidential adviser told "RFE/RL Newsline" the same day that Havel's 21 December reference to the possibility of his resignation "merely meant that he is not the kind of politician who would continue holding office at any costs, if he is no longer wanted." The adviser stressed, however, that Havel "did not in any way imply he intended to resign." MS
SLOVAK FOREIGN MINISTER APOLOGIZES TO KOVAC JR
Eduard Kukan on 22 December publicly apologized to Michal Kovac Jr., for his ministry's passiveness over Kovac's abduction to Austria in 1995. In September 1996, the Constitutional Court ruled that the former president's son's right to re-enter Slovakia, enshrined in the constitution, had been violated by the ministry's lack of action after the abduction to Austria. Also on 22 December, Kukan told journalists that either former Foreign Minister Zdenka Kramplova must return home by 23 December or her diplomatic passport will be declared invalid. Kramplova was appointed ambassador to Canada at the end of the mandate of Vladimir Meciar's cabinet. She was dismissed by the new government in November but failed to obey orders to return to Bratislava, CTK reported.
FINAL RESULTS OF SLOVAK LOCAL ELECTIONS ANNOUNCED
The final results of the 18-19 December local elections show that Vladimir Meciar's Movement for a Democratic Slovakia (HZDS) remains the strongest single party but has less support than the combined forces of the government coalition, AP and Reuters reported. The coalition won in more than 800 mayoral races. Independent candidates won 816 districts, the HZDS 602, and the opposition Slovak National Party (SNS) 114. Of the 35,465 local councilors elected, the HZDS has 8,140 and the SNS 2,136. Among ruling coalition members, the Party of the Democratic Left gained 5,793 seats, the Christian Democrats 4,276, the Hungarian Coalition 3,773, and the Party of Civic Understanding 1,041. 3,177 councilors are independents. MS
HUNGARIAN OPPOSITION FOILS NATO-RELATED AMENDMENT IN FINAL VOTE...
The parliament on 22 December rejected in the final vote a constitutional amendment that would have transferred from the legislature to the government the power to approve the movement of foreign troops on Hungarian territory. The vote was 184 to 17 with 101 abstentions and thus failed to produce the necessary two-thirds majority. As was the case last week, the coalition parties voted for the amendment, the Socialists abstained, and the Free Democrats did not participate in the vote. The Justice and Life Party voted against the amendment. Socialist chairman Laszlo Kovacs told journalists that his party will submit a motion that transfers to the cabinet the power to approve foreign troop movements related to humanitarian goals and disaster relief, while the legislature will still have to approve by a two-thirds majority the transit of peacekeepers, Hungarian media reported. MS
...APPROVES OTHER NATO-RELATED LEGISLATION
The parliament did, however, pass amendments to the law on the secret service that are a pre-condition for NATO membership (which the failed constitutional amendment is not). It also passed a bill setting up a National Security Supervision Office, also a pre- condition for joining the alliance. MS
UCK WANTS POLICE OUT OF CENTRAL KOSOVA
Adem Demaci, who is the political spokesman for the Kosova Liberation Army (UCK), said in Prishtina on 22 December that the guerrillas will attack the Serbian paramilitary police "everywhere" unless the police leave mainly ethnic Albanian areas of central Kosova. He added that the police are not welcome in areas where no Serbs live. In a statement, the UCK added that the Serbs must dismantle all checkpoints that they have set up since the crackdown began at the end of February or risk attacks by the UCK. The guerrillas also called for freedom of movement for all citizens, RFE/RL's South Slavic Service reported. PM
U.S. DIPLOMATS TALK WITH UCK
Lawrence Rossin, who is director of the State Department's Office for South and Central Europe, and other U.S. diplomats met with representatives of the UCK in a remote Kosovar village on 22 December in an effort to end the spiral of violence in the province. A UCK spokesman said later that the guerrillas had nothing to do with the recent slayings of Serbian civilians and that the UCK targets only military and police personnel. Meanwhile in the Peja area, Serbian forces killed one Kosovar and arrested six others in a raid on a suspected guerrilla stronghold. Serbian spokesmen in Prishtina said the police killed the man after Kosovars opened fire on the police. The Kosovar news agency KIC said in a statement that the man was killed "in cold blood" in front of his home. PM
WALKER CALLS BELGRADE 'UNCOOPERATIVE'
The head of the international monitors in Kosova, U.S. diplomat William Walker, told independent Belgrade Radio B-92 on 22 December that the Serbian "authorities are generally uncooperative with the [monitoring] mission." Walker added that most of his requests to those officials "have drawn a negative response." He also criticized the Serbian authorities for preventing the Prishtina Albanian-language daily "Bujku" from publishing (see "RFE/RL Balkan Report," 23 December 1998). The envoy blasted the UCK for "irresponsiblycarrying out provocative missions" against Serbian targets. PM
OGATA CALLS FOR 'CONFIDENCE-BUILDING MEASURES'
UN High Commissioner for Refugees Sadako Ogata completed a three-day trip On 22 December that took her to Kosova and Belgrade (see "RFE/RL Newsline," 21 December 1998). In the Serbian capital, she called for "further confidence-building measures" in Kosova and appealed, in particular, to Yugoslav President Slobodan Milosevic to implement the amnesty he agreed to in his October agreement with U.S. special envoy Richard Holbrooke. She noted that "people are arrested [by Serbian police] on the way to their villages or once they return homeand this does not contribute to rebuilding confidence in the province." Ogata also praised the cooperation of the Serbian authorities in enabling displaced persons to return to their homes. PM
KADARE WANTS KOSOVARS TO FOLLOW ALBANIAN EXAMPLE
Paris-based Ismail Kadare, who is the most prominent living Albanian writer, told the VOA's Albanian service on 23 December that the recent opening of a dialogue between Albania's government and opposition is "the most encouraging news" he has heard from Albania this year (see below). He stressed that the Kosovars also need to find a common platform among themselves in order to negotiate a political settlement with the Serbs. Albanian Prime Minister Pandeli Majko said in Tirana the previous day that he and opposition leader Sali Berisha found much "agreement" and "[common] orientation regarding Kosova and the national issue in general" at their recent meeting. Since the Socialists took office in 1997, the opposition has repeatedly charged them with abandoning the Kosovars in their fight for independence. FS
LEADING MONTENEGRIN PARTY REAFFIRMS SUPPORT FOR YUGOSLAVIA
Misko Vukovic, who is a top aide to President Milo Djukanovic, told RFE/RL correspondents in Podgorica on 22 December that his Democratic Socialist Party does not support a proposal by a junior member of the governing coalition aimed at considerably weakening Montenegro's links to Serbia (see "RFE/RL Newsline," 22 December 1998). Vukovic added that Montenegro will observe the terms of its 1992 federation agreement with Serbia "as long as there remains a real chance of defeating the totalitarian regime of Slobodan Milosevic." PM
PANGALOS STRESSES POSITIVE TRENDS IN SKOPJE
Greek Foreign Minister Theodoros Pangalos said in Skopje on 22 December that the new Macedonian government consists of "people who mean business." He stressed that the two neighboring countries should stress their common Orthodox bonds and "make love, not war." He nonetheless added that Greece "will never recognize a Slavic minority" in the part of the historic region of Macedonia that belongs to Greece. Pangalos and his hosts stressed the importance of cooperation in transportation, energy and telecommunications. Greece imposed a crippling trade embargo on Macedonia from 1994 to 1995 but has since sought to expand its economic presence there. Greece is now Macedonia's third largest trading partner and the largest source of foreign investments. PM
SFOR OUSTS CROATIAN POLICE FROM BOSNIAN TOWN
Croatian police peacefully left the Bosnian border town of Martin Brod on 23 December after Canadian peacekeepers told them to do so on the orders of the international community's Carlos Westendorp. Police from the Bosnian federation then took up posts in the town, which belongs to Bosnia but which Croatian forces occupied in 1995 (see "RFE/RL Newsline," 17 December 1998). In Sarajevo, a spokesman for Alija Izetbegovic, who is the Muslim member of the joint presidency, praised SFOR's action. The previous day, Croatian President Franjo Tudjman and Bosnian leaders opened a bridge linking Zupanja in eastern Croatia and Orasje across the Sava River in Bosnia. PM
HAGUE COURT INDICTS TWO BOSNIAN CROATS
The Hague-based war crimes tribunal on 22 December indicted Mladen Naletilic, also known as "Tuta," and Vinko Martinovic, also known as "Stela," for numerous war crimes against Muslims in the Mostar area in 1993. The two could face life imprisonment if convicted. AP reported that Croatian police have arrested the men in Zagreb but added that it is not clear when they will be transferred to The Hague. PM
UN POLICE SACK TWO BOSNIAN SERBS
The Sarajevo-based International Police Task Force fired Momir Vukovic and Spasoje Camur from high-ranking jobs in the Republika Srpska police for their involvement in the forced detention and torture of 14 persons in connection with the August slaying of leading Bosnian Serb police official Srdjan Knezevic. Knezevic supported the moderate leadership based in Banja Luka. Many observers suggested he was killed by hard-liners loyal to Radovan Karadzic. PM
ALBANIAN STUDENTS END HUNGER STRIKE
Student leader Besnik Jaku and Education Minister Ethem Ruka on 22 December signed an agreement on ending the 13-day student hunger strike (see "RFE/RL Newsline," 22 December 1998). Ruka agreed to increase student scholarships by 17.5 percent after 1 April 1999, "Albanian Daily News" reported. He also pledged to improve living conditions in dormitories within a mutually agreed timeframe. The accord also provides for increased university autonomy and a special legal status for the university campus. The negotiations took place at the dean's office under the mediation of OSCE Ambassador to Albania Daan Everts. Everts praised the accord as the result of the Albanians' attempts to try "to find a common language," adding that "a new wind is blowing for the ruling [Socialists] and the opposition." FS
POSITIVE REACTIONS TO ALBANIAN RIVALS' MEETING
Albanian and international observers have praised a 21 December meeting between opposition leader Sali Berisha and Prime Minister Pandeli Majko as an important step toward overcoming Albania's political polarization (see "RFE/RL Newsline," 22 December 1998). Majko told public television that it was "Albanian citizens...who benefited from the newly begun dialogue" rather than any politicians. Senior Democratic Party legislator Ylli Vejsiu said the meeting opened "a new chapter in defusing the political tensions," adding that "dialogue, tolerance, and compromise triumphed in the end." The U.S. State Department issued a statement calling the meeting "an extremely positive first step in healing the political cleavages that have stymied Albania's reform process." It also urged "all parties to maintain the positive momentum from this encounter" and the Democratic Party to end its boycott of the parliament. FS
FORMER ROMANIAN PRESIDENT ON 1989 UPRISING
Former President Ion Iliescu told a 22 December joint session of the parliament marking the ninth anniversary of the anti-communist uprising that those who "watched television" in 1989 are now accusing those who led the uprising of having "stolen the revolution." In an obvious allusion to the country's present leaders, Iliescu added that a "campaign is under way to tarnish the revolution's heroes, including its leaders and the army." MS
FRENCH OIL COMPANY INVESTS IN ROMANIAN BLACK SEA DRILLING
France's oil giant Elf Aquitaine has signed an agreement in Bucharest with the national oil company Petrom to explore 10,000 square kilometers of the Black Sea over the next 30 years, AP reported on 22 December. The company will pay $10 million initially, and if oil is found, it will pay up to $500 million on development projects. Also on 22 December, the Turkish Akmaya Sanayi Ve Ticaret holding company bought a 65 percent majority stake in the Petromida oil refinery for $725 million. And Petrom director-general Ioan Popa announced that 30,000 employees will be laid off next year. MS
ZHIRINOVSKY VISITS TIRASPOL
Vladimir Zhirinovsky, arriving in Tiraspol on 22 December, said that the Transdniester is "part of the Russian Federation" and that his Liberal Democratic Party of Russia "will be happy if it officially becomes one of Russia's provinces," Infotag reported. Zhirinovsky is scheduled to meet with Igor Smirnov and other Transdniester officials. Russia's ambassador to Chisinau, Alexander Papkin, told journalists that the visit is "unofficial." Zhirinovsky said the Russian Constitution obliges Moscow to "defend and protect our compatriots" and that he will demand that President Boris Yeltsin "undertake resolute action to recognize the Transdniester and establish direct economic ties with it." In an interview with Tiraspol Television the same day, Zhirinovsky said he does not rule out the possibility that the Transdniester will become a third member of the Russian-Belarus union. At the same time, he called on Transdniestrians to take up Russian citizenship in order to make it "easier for us to protect you." MS
NEW ELECTORAL ALLIANCE IN BULGARIA
The recently-formed Social Democracy Union and the Euroleft Party on 21 December signed an agreement to cooperate and run joint lists in the fall 1999 local elections, BTA reported. Euroleft leader Alexander Tomov said the agreement "forms the nucleus of an essentially new opposition" and is "a model to be followed in the next general elections." MS
FORMER KING SPENDS CHRISTMAS IN BULGARIA
Simeon II arrived in Bulgaria on 22 December and will spend the Christmas holidays there for the first time since he was forced to leave the country in 1946, AP reported. The former monarch will stay at the Czarska Bistritsa palace, which is part of his former estate. He will pay for his stay at the palace, because legal procedures for returning him both the palace and other properties, as approved by a court earlier this year, are still under way. MS
GEORGIA'S FINANCIAL CRISIS REFLECTS DOMESTIC ECONOMIC PROBLEMS
by Michael Wyzan
Georgia's economy recently entered a period of financial instability. The lari, introduced in October 1995 at 1.25 to the dollar, had weakened only to 1.30 at the end of last year. But the exchange rate was 1.62 lari to the dollar on 3 December and 2.21 on 7 December (although it has strengthened to below 2 to $1 since then). Meanwhile, the National Bank has decided to stop using its rapidly depleting international reserves to prop up the currency.
While the prices of most consumer goods are reported to have risen recently by 30-80 percent, it is too early to know the magnitude of the effects of the currency crisis on the macroeconomy. Nonetheless, it seems certain that the crisis has brought at least a temporary halt to a period in which Georgia had combined the fastest-growing economy in the CIS with low and declining inflation. GDP rose by 8.6 percent in 1996, 11.3 percent in 1997, and 7.3 percent in January- September 1998. Consumer prices grew by 7.9 percent in 1997 and only 3.6 percent during January-September 1998.
Although the immediate cause of the country's problems is the Russian financial crisis, there are also significant domestic causes, in particular poor fiscal performance. Other domestic factors cited in the Georgian press include the recent uprising in western Georgia and the need to import fuel before the onset of winter.
Financial crises triggered by speculative attacks on currencies often occur in countries with large fiscal and external imbalances (generally associated with a currency that is appreciating in real terms) and that have received substantial inflows of short-term capital.
Although Georgia's budget deficit has not been enormous in recent years (it was only 2.5 percent of GDP on a cash basis in 1997), tax collections as a share of GDP remain among the lowest in the world. In 1997, the central government managed to collect only 10.3 percent of GDP in budget revenue, compared with 25.9 percent in Russia and 16.5 percent in Kyrgyzstan. That trend has continued this year: as early as April, it was clear that collections from value-added taxes and excise duties were beginning to fall well short of targets.
Georgia's foreign trade has been highly unbalanced (in 1997, imports were 3.7 times exports). This has resulted in current account deficits of more than 10 percent of GDP in recent years. However, those deficits have been financed by loans from international financial institutions, workers' remittances from abroad, and, increasingly, foreign direct investment (which totaled $242 million in 1997). There have been only minor short-term inflows.
The IMF recently changed its tune on how well the Georgian authorities are doing in reforming the economy. In July, when its executive board approved the release of the third annual loan under a facility awarded in February 1996, it praised Georgia's accomplishments in the second half of 1997. Those accomplishments included acceleration of the privatization of medium-sized and large enterprises, enactment of a law aimed at establishing a competitive market in electricity generation and distribution, further progress on land privatization, and improved control over budget expenditures through a treasury system.
However, earlier this month an IMF official said that Georgia will receive the support of international financial institutions only if the government adopts a stronger economic policy. As a result of the fiscal crisis, targets have not been reached for government borrowing from the Central Bank, health spending, expenditure arrears, and sales of treasury bills. The government has not met other fiscal targets because of failings of an administrative nature.
It is hard to say how severe and prolonged a downturn Georgia will suffer. Economy Minister Vladimer Papava argued in mid-October that the absence of securities markets precluded the spread of the world economic crisis to the country. Tacis experts argued at that time that Georgia's diversified exports, large value-added tax in transit trade, and small budget deficits made a Russia-type crisis unlikely.
In reality, it is very difficult to predict the timing and severity of currency crises, especially in such small, fragile economies as Georgia's. The absence of significant short-term capital inflows means there is little protection against such crises, as demonstrated by Bulgaria's experience in 1996 and 1997, when Bulgarians dumped leva for foreign currencies.
The key question is whether the Georgian state will be able to restore the credibility of its macroeconomic policies; in Bulgaria, this required both a change of government and policy regime under a currency board. On the other hand, the IMF's decision last week to offer $200 million to bolster the foreign reserves of Georgia and five other countries (which the fund described as the "poorest countries neighboring Russia which have been hardest hit by the Russian crisis") should help stabilize the situation. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria.