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Newsline - February 8, 1999


Russian President Boris Yeltsin arrived in Amman, Jordan, on 8 February to attend the funeral of King Hussein. Film footage on Russian Public Television showed Yeltsin's wife, Naina, helping the president as he unsteadily made his way down the stairs of his plane. According to the president's press service, Yeltsin felt he had to go to Amman--against the advice of his doctors. Also attending the funeral are Foreign Minister Igor Ivanov and members of the presidential administration. Prime Minister Yevgenii Primakov earlier sent a personal message to Hussein's family saying he "deeply grieves" the "death of a great statesman" and that numerous meetings with Hussein have "enriched" him and "played a great role" in his life, ITAR-TASS reported. JAC


IMF Managing Director Michel Camdessus informed Prime Minister Primakov by letter that the fund will be withdrawing its mission from Moscow to return "no sooner than within two months," "Nezavisimaya gazeta" reported on 6 February. Interfax reported that Primakov had earlier asked Camdessus to extend the mission's visit until 15 February. But according to the newspaper, Camdessus thinks the government should submit a more realistic economic program first. First Deputy Prime Minister Yurii Maslyukov remains optimistic, telling Russian Television that he expects the government to reach an agreement with the fund this month, which would then be considered by the IMF board of directors in late April or early May. Maslyukov's press spokesman told reporters that the mission would return in mid-February and that Camdessus had accepted Primakov's invitation to come to Moscow himself. JAC


The State Duma on 5 February passed the 1999 budget in its fourth and final reading by a vote of 305 to 58 with six abstentions. The next day, Communist Party leader Gennadii Zyuganov suggested that the parliament should immediately start drafting the 2000 budget. In past years, the budget has required several months to pass the legislature. "Nezavisimaya gazeta" called the Duma's strong support for the budget "the first political victory of the government of the parliamentary majority." JAC


The good news is that Russia collected 17.6 percent more taxes than had been originally planned in January, Interfax reported on 5 February, citing the State Tax Service's press relations department. The service collected 20.35 billion rubles ($890 million) in January, with 92.3 percent of payments made in cash. The bad news is that the growth in taxes collected can be attributed primarily to Russia's growing inflation rate, "Izvestiya" reported on 6 February. "Tax income that disappeared after the mid-August economic crisis has been compensated for by inflation income," according to the daily. Another factor in the high rate of tax collection is the use of offsets, the practice by which companies reduce their tax payments using means other than paying in cash, according to the newspaper. JAC


According to the State Tax Service, two-thirds of all taxes in January came from two cities, Moscow and St. Petersburg, and two oblasts, Samara and Moscow. Moscow and St. Petersburg also experienced higher inflation than some regions, with 9.4 and 9.5 percent, respectively, registered in January, according to Prime Tass. Inflation was even higher in the Republics of Marii El and Buryatia, and the Sverdlovsk and Yaroslavl Oblasts, ranging from 11.9-12.2 percent, while in the Yamal-Nenets Autonomous Okrug, prices soared 16 percent. Inflation ranged between 3.6-4.8 percent in Kemerovo and Omsk Oblasts, the Khakassia Republic, Altai Krai, and the Koryak and Evenk Autonomous Okrugs. JAC


The Security Council on 5 February adopted a statement that all branches of the government will not initiate unilateral changes in the constitution or decide on the dismissal of the cabinet without consulting one another, deputy head of the presidential administration Oleg Sysuev told Russian Television on 7 February. The declaration was sent to the Duma and Federation Council, which will discuss it shortly, according to Sysuev. "Izvestiya" reported on 6 February that President Yeltsin did not attend the meeting but issued instructions to Primakov, who chaired it, not to give away any presidential powers. JAC


Central Bank Chairman Viktor Gerashchenko has responded to allegations by former Prosecutor-General Yurii Skuratov that the bank engaged in a variety of illegal activities (see "RFE/RL Newsline," 5 February 1999). Gerashchenko told the Duma that a Jersey- based offshore firm had been handling Russia's hard-currency reserves because "the Central Bank technically could not handle these in the early 1990s on its own," the "Moscow Times" reported on 6 February. The Central Bank and one of its foreign subsidiaries had set up the firm to maximize profits from investments and to hide assets from the London and Paris Clubs. Gerashchenko told Russian Public Television (ORT) that the prosecutor's office is trying to ruin the bank's reputation with unsubstantiated accusations. The Duma voted on 5 February to appoint Coopers & Lybrand as the official auditor of the Central Bank. JAC


Media baron Rupert Murdoch is reportedly negotiating with Boris Berezovskii to acquire a 20 percent stake in ORT from the influential businessman, "Kommersant-Daily" reported on 6 February. In December, "Argumenty i Fakty" reported that the Russian government was preparing to sell 10 percent of the government's shares in the company to "a serious investor" and that Rupert Murdoch was allegedly interested in acquiring the stock so that he would possess a truly global network (see "RFE/RL Newsline," 22 December 1998). After hearing that talks with Murdoch were under way, Duma deputy and member of the Our Home Is Russia faction Gennadii Volkov drafted legislation that would bar foreigners from acquiring stakes in ORT, "Kommersant-Daily" reported. JAC


Deputy Foreign Minister Yevgenii Gusarov told reporters on 7 February that no ground troops would be needed in Kosova to enforce a peace deal. He said if an agreement is accepted by both sides, then "I fail to see at this time what a ground force can do." He added that political, not military, assistance is more important. Citing anonymous Defense Ministry sources, Interfax reported on 4 February that Russia will not be able to send a "sizable military force" to Kosova in the event a decision is reached on Russian participation in an international peace-keeping operation. The reason, "Izvestiya" concluded on 6 February, "is not hard to guess-- lack of money." JAC


First Deputy Prime Minister Vadim Gustov said on 6 February that he opposes the imposition of a state of emergency in oblasts neighboring Chechnya, because the situation is not critical enough, ITAR- TASS reported. Gustov was taking part in a behind-closed- doors meeting in Sochi on 6 February of the Association for Economic Development of the North Caucasus, convened to discuss how to deal with the situation along the borders of Chechnya. Earlier the Federation Council had recommended that a state of emergency be declared in Stavropol Oblast to assist local policemen in their fight against growing crime particularly in the area bordering Chechnya (see "RFE/RL Newsline," 28 January 1999). According to the Stavropol branch of the federal Interior Ministry, special detachments made up of local residents would roam border areas where small terrorists mobs can access via dirt roads, bypassing checkpoints, ITAR-TASS reported on 7 February. JAC


Trade between Russia and China declined by 10 percent in 1998, totaling $5.5 billion, ITAR-TASS reported on 6 February. The two countries had agreed in April 1997 to increase bilateral trade to $20 billion by the year 2000. While that now seems unlikely, Aleksandr Karpich, head of the Russian Trade Ministry's department on trade and economic cooperation with countries in Asia, Africa, and South America, said that in the coming years, there "is potential for some growth" in trade with China. Also on 6 February, Japan's Ministry of Finance released a report showing that trade between Japan and Russia sunk by 16.7 percent last year, totaling 504.4 billion yen ($4 billion). Particularly hard-hit were Russian imports to Japan, which fell by 22 percent. BP


Aslan Maskhadov abolished the post of vice president on 5 February, Reuters reported. Vakha Arsanov, who had occupied that post and was Maskhadov's running mate in the 1997 presidential elections, said on Chechen Television the same day that he intends to raise a personal "peacekeeping-force" numbering some 300 men. Arsanov has the reputation of being sympathetic to radical Islam. In a press conference on 7 February, Arsanov noted that the office of the president will also be abolished under Shariah law and that the country will be governed by an imam. Meanwhile, the Chechen parliament on 5 February issued a statement claiming that Maskhadov's imposition of Islamic law two days earlier violates the constitutional rights of the Chechen people. Maskhadov had also issued a decree stripping the parliament of its legislative powers, which lawmakers indicated on 6 February that they will ignore. LF/PG


Three men were wounded in a clash on 7 February between Dagestani policemen and several car passengers at the Gerzel checkpoint, ITAR-Tass reported. The driver of the car had refused to allow the police to inspect his vehicle. PG


Deputies approved the new election code in the third and final reading on 5 February, RFE/RL's Yerevan bureau reported. The opposition has repeatedly sought to increase the number of mandates allocated under the proportional system from the present 56 (out of a total of 131), arguing that the predominantly single-mandate constituencies in conducive to vote-rigging. Addressing tens of thousands of supporters at a rally in Yerevan later the same day, leading members of the opposition National Democratic Union, including chairman Vazgen Manukian, urged voters to prevent irregularities during the poll, tentatively scheduled for mid-May. LF


Speaking on Armenian Television on 6 February, President Robert Kocharian said he will dissolve the parliament if it continues to refuse to allow the arrest and prosecution of former Interior Minister Vano Siradeghian on murder charges, RFE/RL's Armenian Service reported. On 26 January, deputies refused to lift Siradeghian's immunity, but the former minister has since left the country. PG


In what could prove a landmark case, the Yerevan newspaper "Oragir" is suing Interior and National Security Minister Serzh Sarkisian, a key ally of President Kocharian, for what it claims is defamation, chief editor Nikol Pashinian said on 6 February. On 30 January, Sarkisian told another newspaper that "everything published in 'Oragir' is slander." Pashinian told RFE/RL that a Yerevan court has agreed to begin hearing the case--the first of its kind in Armenia--on 16 March. No senior Armenian government official has been taken to court in Armenia. PG


Armenian Statistics Minister Stepan Mnatsakanyan told ITAR-TASS on 6 February that some 600,000 people left his country between 1992 and 1998. As a result, Armenia's population stood at 3,798,200 on 1 January 1999. Mnatsakanyan also noted that because of a lack of funds, Yerevan has put off a census planned for later this year until 2001. PG


Speaking in Bonn on 5 February, Azerbaijani Foreign Minister Tofik Zulfugarov said that "it is unlikely that Azerbaijan will join the CIS Collective Security Treaty," ITAR-TASS reported. Azerbaijan has ratified the treaty but has not deposited the necessary ratification instruments. Zulfugarov said that the primary reason for this is Armenia's membership in the security grouping. In other comments, the Azerbaijani foreign minister called for reforming the CIS so that it would reflect the interests of all its members. He added that "integration into European and Trans-Atlantic institutions is Azerbaijan's undisputed priority," noting that he will meet with the foreign ministers of Georgia and Armenia in Luxembourg before the middle of 1999. PG


State Minister Vazha Lordkipanidze told ITAR-TASS on 7 February that Tbilisi plans to build a new port at Anaklia. He said the project will be approved by the end of this year and that he hopes to attract nearly $1 billion in foreign and domestic investment. Construction is estimated to take at least seven-and-a-half years. PG


The New York-based Human Rights Watch sent a letter to the Turkmen government on 5 February complaining about the treatment of one of its workers in Turkmenistan (see "RFE/RL Newsline," 5 February 1999). The letter noted that Turkmen state security agents "detained" Aleksandr Petrov in his hotel room, "accused him of breaking the law, and held him incognito refusing to allow him to notify his colleagues...that he was being forced out of the country." It added that "Turkmenistan has an open-door policy when it comes to receiving billions of dollars in U.S. investment but slams the door on any effort to bring to light its shameful human rights record." BP


Under an amnesty declared by Saparmurat Niyazov, another 3,00 prisoners were released from jail on 6 February, ITAR-TASS reported. The amnesty is the fourth declared by Niyazov since the beginning of this year. Some 17,000 prisoners are expected to be freed or have their sentences reduced during 1999. Niyazov told a meeting of agricultural producers that the Turkmen state has "strengthened plans for developing democracy and the rights of the individual and today can allow itself to be humane in its relationship toward fellow citizens." BP


At a meeting on 6 February, Police Day in Tajikistan, Imomali Rakhmonov said Russia "is the only reliable partner and [guarantor] of stability and security in Tajikistan," ITAR- TASS reported. Rakhmonov applauded Russia's role in Tajikistan "even though somebody does not quite like it," alluding to comments made by the Uzbekistan Foreign Ministry last week (see "RFE/RL Newsline" 3 February 1999). Rakhmonov also hinted that during his April visit to Moscow "very important documents for both countries" will be signed, but he did not elaborate. BP


At the same meeting, Tajik Interior Minister Khumdin Sharipov said the police are geared to start a "total war" on criminal organizations, ITAR-TASS reported. Sharipov pointed to law-enforcement successes in 1998, saying more than 40 criminal groups were "neutralized." At the same time, he noted that the effectiveness of law-enforcement agencies remains "rather low." In 1997-1998, some 300 policemen were charged with a criminal offense and another 500 were relieved of their duties for violating the law. President Rakhmonov called on the police to step up their efforts to combat organized crime during 1999, which he called an especially important year. A referendum on changes to the constitution is planned later this year, as are parliamentary and presidential elections and the 1100th anniversary of the Samanid Dynasty--"the first Tajik state," according to Rakhmonov. BP


The Ministry of Justice on 8 February registered the Equality and Development Party, ITAR-TASS reported. Party chairman Rakhmatullo Zoirov said his group will seek to have its own candidate in the presidential elections and to win seats in the parliamentary elections. BP


Ukrainian President Leonid Kuchma sharply criticized the parliament on 5 February after it voted overwhelmingly to reject a privatization plan, AP reported. Despite that rejection, Kuchma had earlier decreed the legislation, which is due to take effect on 16 February. The legislature voted 227 to 48 against the plan, which would privatize 455 large and medium-sized enterprises and some 5,500 smaller firms. Many deputies are against the use of domestic state bonds as privatization payments and others want the parliament rather than the government to handle the privatization of strategic companies. Kuchma said "everything proposed by the president or cabinet is adamantly opposed." He said the parliament does not understand the urgency in "giving economic laws top priority." PB


Boris Tarasyuk on 7 February again endorsed NATO expansion and argued that Moscow should not speak for Soviet successor states on matters related to the alliance, an RFE/RL correspondent reported. Tarasyuk, speaking at a security conference in Munich, made his comments after Russian Deputy Foreign Minister Yevgenii Gusarov criticized NATO enlargement. Tarasyuk said Kyiv rejects Moscow's attempt to draw a "red line" around the former Soviet Union by speaking for the successor states. Gusarov said later that Russia has no veto over the opinions of other countries. Tarasyuk said the alliance is an "essential instrument" for maintaining peace and stability. He added that closer political and military ties between Kyiv and Brussels will not damage Russian-Ukrainian relations. PB


German Foreign Minister Joschka Fischer urged Ukraine on 6 February to close down the Chornobyl nuclear power plant, ITAR-TASS reported. Fischer made his plea at a ceremony in Bonn creating the German-Ukrainian Forum, which was also attended by his Ukrainian counterpart, Tarasyuk. Fischer said Germany will assist Kyiv in integrating into Western European structures. The previous day in Kyiv, Chornobyl officials said the last operational reactor at the plant will remain idle at least until 2 March owing to a delay in repairs. Ukrainian energy officials are holding talks in Kyiv with the European Bank for Reconstruction and Development about financing construction of two new reactors at the Khmelnytsky and Rovno plants so that it can permanently close down Chornobyl. PB


Three leading Belarusian human rights activists on 6 February said that they were beaten by members of the Russian Nationalist Unity group, Reuters reported. Ondrihj Sannykov, a member of the Khartiya-97 human rights group, received concussion and a broken nose in the incident, in which some 20 people attacked the three men after a heated argument. Many of the attackers were wearing Russian Nationalist Unity armbands, Sannykov said, adding that "the Belarusian regime is closing its eyes to Russian fascists, who are growing more active in Belarus." PB


The Belarusian Ministry of Statistics and Analysis on 6 February reported that GDP rose by 8.3 percent in 1998, Belapan reported. It said GDP totaled 662 trillion rubles at current prices. The following day, it said that in adjusted prices, industrial output increased by 11 percent last year. The greatest increases were in light industry (22.2 percent) and the timber industry (21.2 percent). PB


Meeting in Vilnius City Hall on 5 February, the prime ministers of Estonia, Latvia, and Lithuania signed a consular cooperation agreement whereby all citizens of the Baltic States are guaranteed diplomatic aid and representation in countries where not all of those states have consular facilities, ETA and LETA reported. The three leaders also discussed, among other things, drawing up an agreement on the free movement of services. Premiers Vilis Kristopans (Latvia) and Mart Siimann (Estonia) protested Lithuania's decision to impose minimum prices on Latvian and Estonian imports of agricultural goods (see "RFE/RL Newsline," 1 February 1999). Lithuania has said it will revoke the measure on 1 January 2000, but both Tallinn and Riga are pressing for its speedy removal, arguing that it violates both the Baltic free trade agreement and the norms of the World Trade Organization. JC


The Tallinn City Court on 5 February declared Evea Pank bankrupt, ETA reported. Founded in 1989, Evea Pank is the country's oldest commercial bank. Bank officials have already announced that they will appeal the decision. Evea Pank's license was revoked last October. Two U.S. financial institutions, Swiss Credit & Saving Union Inc. and Morgan Nationwide Depository Inc., have said they are ready to buy a 67.8 percent stake in the bank for 5 million kroons (some $385,000). JC


Returning from a two-day visit to Moscow on 4-5 February, Latvian Foreign Ministry State Secretary Maris Riekstins said that his talks with Russian Deputy Foreign Minister Aleksandr Avdeev were "positive" but did not mark a "turning point" in Latvian-Russian relations, BNS and "Diena" reported on 6 February. Riekstins welcomed Avdeev's promise to submit to the Russian government in the near future a list of candidates for the post of co-chairman of the Russian-Latvian intergovernmental committee. That committee has not convened for more than year because of the failure to appoint a new Russian co-chairman following the dismissal of Viktor Chernomyrdin's cabinet. After the meeting, the Russian Foreign Ministry issued a statement repeating its position that an improvement in bilateral relations depends on Riga's taking "practical steps" to improve the situation of its national minorities, ITAR-TASS reported. JC


Gediminas Vagnorius on 5 February welcomed the agreement reached in Moscow earlier that day whereby crude oil supplies were to be resumed to the Mazeikiai Nafta refinery, LETA reported. Vagnorius commented that the ability of the two sides to quickly come to agreement testifies to the "business-like bonds forged by the Lithuanian and Russian governments." According to AP, the refinery issued a statement on 5 February saying it had reached a deal with unnamed Russian sources to receive an additional 300,000 tons of crude, with deliveries to start later that day and full operations at the refinery expected to restart within three to four days. Meanwhile, BNS's "Baltic Business Weekly" reports that Russia's LUKoil may soon sign a letter of intent on participating in the construction of a new oil pipeline to the Latvian port of Ventspils. LUKoil head Vagit Alekperov is scheduled to visit Ventspils this week to discuss the pipeline project. JC


The leaders of several Polish farmers' unions signed a protocol with the government on 8 February, AP reported. Under the agreement, a committee is to be set up composed of farmer leaders and government officials to propose reforms in the agricultural sector by mid-March. The committee will address alleviating farmers' debts and subsidizing meat, grain, and dairy products. The protocol also acknowledged that the 11 days of protests by farmers were justified, thereby freeing from prosecution the farmers that had blocked roads. Premier Jerzy Buzek said that "the times when agriculture was underestimated are over." Andrzej Lepper, head of the radical Self Defense farmers group, tore up the agreement at a press conference. He had walked out of the talks two days earlier. PB


Top Polish politicians in Warsaw on 6 February marked the anniversary of talks between Communist officials and the Solidarity-led opposition in 1989 that eventually led to the end of communist rule, AP reported. Absent from the meeting, which was organized by President Aleksander Kwasniewski, a former Communist, were former President Lech Walesa and former dissidents Adam Michnik and Jacek Kuron. Kwasniewski said the round-table talks were "a time of breakthrough, a time that changed Poland and a turning point in the history of this part of Europe." The talks led to elections in June 1989 and the formation of a Solidarity-led government. Former President General Wojciech Jaruzelski participated in the meeting. PB


Civic Democratic Party (ODS) Chairman Vaclav Klaus has said the ODS is prepared to participate in a new majority cabinet together with the Christian Democratic Party (KDU-CSL), CTK reported on 7 February. He told Nova Television that a "reasonable compromise" could be reached between the two parties' programs, adding that the "radical steps" taken by the Social Democratic Party's (CSSD) government are bringing the ODS and the KDU-CSL closer together. Klaus added that talks between the ODS, the KDU-CSL, and the Freedom Union on forming a new coalition cannot be expected in the near future and the ODS will "not be the first" to initiate them. Prime Minister Milos Zeman said that he recently talked with Klaus and received "no indication" that the agreement between the CSSD and the ODS on the CSSD minority government might be revoked. MS.


The U. S. Congress's Commission on Security and Cooperation in Europe on 5 February expressed "profound regret" at the Czech parliament's rejection last week of a proposed amendment to a law that would have abolished the stipulation that Czech citizenship is a condition for property restitution claims (see "RFE/RL Newsline," 4 February 1999). The commission said the parliament has "missed an opportunity to resolve a long- standing and contentious issue" between the Czech Republic and the U.S. It also said it is "alarmed" over recent statements by Premier Zeman and Deputy Premier Pavel Rychetsky questioning the legitimacy of property returns to the Catholic Church. On 5 February Rychetsky accused Cardinal Miroslav Vlk of a "lack of loyalty" to the state for having complained about the return of property to the EU. MS


Slovak Television on 5 February apologized to former President Michal Kovac for having accused him in 1996 of complicity to fraud. The state-run television claimed at that time that President Kovac abused his power to hinder the investigation into the so-called "Technopol affair," in which his son was alleged to have been involved. It had also reported that the abduction of Michal Kovac Jr. in August 1995 was orchestrated by the president to divert attention from the investigation. It now acknowledges that the allegations were "untrue" and "aimed at discrediting the then president in the eyes of the public." MS


U.S. Secretary of State Madeleine Albright said in Washington on 7 February that NATO will not limit possible air strikes against Serbian targets to those in Kosova if the Atlantic alliance deems Serbia responsible for any breakdown in the peace talks, which began in Rambouillet, France, the previous day. She added that the Kosovars "will lose the support of the international community" if they prevent the talks from succeeding. She stressed that the Kosovars cannot "operate without the international community." U.S. ground troops will go to Kosova only if fighting has stopped, she noted (see "RFE/RL Newsline," 5 February 1999). Albright added that the Bosnian experience in setting withdrawal dates for peacekeepers shows that it is better to identify a series of "benchmarks" to be achieved than to set firm deadlines that often cannot be met. PM


French President Jacques Chirac told the Serbian and Kosovar delegations on 5 February that "the world is watching and waiting" for a settlement of the Kosova dispute. He stressed that "peace is in your hands. I call on your sense of responsibility and your courage. Not the courage that leads to war, to revenge and an endless cycle of violence, but to true courage...the courage to accept negotiations and make peace." The French leader stressed that "there are rare moments when history is in the hands of only a few men. This is the case today as you take your places at the negotiating table." PM


The two delegations agreed on 7 February to accept 10 basic principles on the future of the province. An unnamed Western mediator told AP, however, that "the devil is in the details." French Foreign Minister Hubert Vedrine and his British counterpart, Robin Cook, are co-chairs of the conference. U.S. mediator Chris Hill, the EU's Wolfgang Petritsch, and Russian envoy Boris Mayorskii will play key roles. Reuters quoted Hill as saying that "there is not going to be any free time." Cook remarked that posturing by both sides could lead to "daily dramas." The Serbs prevented the Kosova Liberation Army (UCK) representatives from leaving Prishtina airport on 5 February until last-minute telephone calls from Chirac ensured that they would arrive in Rambouillet on time. Once the talks began, the UCK refused to place its arms under NATO control and demanded the same legal status as the Bosnian Serb army. PM


In Rambouillet on 7 February, both delegations endorsed a statement condemning a bomb attack in Prishtina the previous day. Deutsche Welle reported from the Kosovar capital that unidentified "extremists" may try to disrupt the talks through further acts of violence in the province. In the village of Rogova, near the Albanian border, some 5,000 Kosovars attended the funeral of nine men killed by Serbian security forces (see "RFE/RL Newsline," 1 February 1999). PM


Macedonian Prime Minister Ljubco Georgievski said in Washington on 5 February that his discussions with Albright and Secretary of Defense William Cohen centered on Kosova and on Macedonia's role in the crisis. He noted that Albright was concerned that Macedonia's recent decision to recognize Taiwan could prompt China to attempt to link that recognition with extending the mandate of the UN peace-keeping force in Macedonia (see "RFE/RL Newsline," 4 February 1999). Georgievski stressed that recognition of Taiwan is likely to greatly benefit the Macedonian economy. PM


Talks lasting up to 10 days on the future of the disputed northeastern Bosnian town of Brcko are slated to open on 8 February in Vienna. U.S. mediator Roberts Owen has the option of postponing a decision for a third time, declaring Brcko neutral district, or assigning Brcko to the Republika Srpska or to the mainly Croatian and Muslim federation. Reuters quoted unnamed Western diplomats in Sarajevo as saying that Owen is likely either to postpone the decision or to opt for the neutral district model. Control of Brcko is vitally important to the Serbs, since it and the surrounding "corridor" link the two halves of the Republika Srpska. The Muslims and Croats argue that they together constituted the majority in the town before the war and that to deny them Brcko would be to endorse the results of "ethnic cleansing." Brcko was the one territorial issue so thorny that it was not settled in the 1995 Dayton agreement. PM


Branko Salaj resigned on 5 February as director of the state news agency Hina. He charged that the government forced him to appoint a chief editor who has no journalistic experience and that the parliament failed to pass a law making Hina a public agency rather than a state institution. Also in Zagreb, AP obtained a copy of the latest OSCE report on democratization in Croatia. The document concluded that "conditions for the independent press have deteriorated..., no effective efforts have been made...[to remove] the flaws in the administration of justice..., no progress in improving human rights, minority rights and the rule of law." Elsewhere, the parliament appointed Milan Vukovic to one of the 11 seats on the Constitutional Court. Some five of the 11 judges protested the appointment of Vukovic, whom they regard as too close to the governing Croatian Democratic Community. PM


Police arrested Leka Zogu and at least three other Albanian nationals near Johannesburg, South Africa, on 5 February for illegal possession of weapons. Police confiscated more than 70 fire arms and 14,000 rounds of ammunition. Reuters reported that Leka came to South Africa in the 1970s and received diplomatic status and immunity from the Apartheid-era National Party government. A police spokesman said the authorities recently lifted Leka's diplomatic immunity but did not indicate why. In Tirana, monarchist Legality Party spokesman Murat Basha told "Gazeta Shqiptare" of 6 February that Leka bought the weapons in 1979 in Spain in the hope of launching an attack against the regime of communist dictator Enver Hoxha. Leka never staged the assault but added the weapons to his collection, Basha noted. Leka faces prison in Albania for allegedly having organized a coup attempt in July 1997. FS


A spokesman for the government's anti-corruption agency said on 5 February that preliminary results of an investigation into the state-owned company Albanian Mobile Communications (AMC) suggest that the firm is short of some $1.3 million because of unpaid bills from individual customers. The collapsed Vefa pyramid scheme accounts for the largest portion of the debt. Agency officials added that AMC did not conduct all its business in a transparent fashion, which makes auditing difficult. Elsewhere, Pirro Xhixho, who heads the government's privatization agency, told "Koha Jone" that AMC will be privatized by the end of April. FS


Prime Minister Radu Vasile, addressing a joint session of the two chambers of the parliament on 7 February, expressed the hope that the IMF delegation expected to arrive in Bucharest on 8 February will approve his cabinet's "austerity budget" and resume lending in order to avoid defaulting on the country's nearly $3 billion external debt. Vasile said that if this does not happen, the opposition, which negotiated the loans now due for repayment, must "share responsibility." The budget envisages a deficit of 2.4 percent of GDP, but Vasile said this may be reduced to 2 percent following the debate in the parliament. It also envisages a 25 percent inflation rate, compared with 40 percent in 1998. The premier said that unemployment is expected to grow from 1 million to 1.2 million. MS


Victor Babiuc, addressing an international security conference in Munich on 7 February, warned that NATO might "lose credibility" if no new countries are invited to join the organization, an RFE/RL correspondent reported. He suggested that as a first step, Romania and Slovenia be granted a "special position" at the April NATO Washington summit and that specific conditions and a timetable for their fulfillment be agreed on in order to distinguish those two countries from other candidates. President Emil Constantinescu, in an interview with the "Frankfurter Rundschau" on 6 February, deplored the fact that "the iron curtain has been replaced by a velvet one" discriminating among former communist states over the integration of those states into Euro-Atlantic structures. He said Romania has "never asked for Western gifts" but expects the West to support the reform process in its own interest, because "the only alternative to reform is national communism." MS


Premier-designate Serafim Urecheanu told reporters in Chisinau on 5 February that he wants to head a cabinet of experts that will not be proportional to parliamentary representation, RFE/RL's Chisinau bureau reported. He said that he intends to ask the parliament to grant the government the right to rule by decree for at least two years. Urecheanu also said that currently, the possible participation of the Party of Moldovan Communists in his cabinet is "being examined" just to ensure "the best solution for the country's most pressing problems." MS


The leaders of the three political formations that make up the ruling coalition said on 7 February that they do not support the idea of a government of technocrats and that "extra- parliamentary solutions" that do not reflect the composition of the parliament are unlikely to provide a solution to the problems Moldova is facing. Taking part in a round-table discussion broadcast by RFE/RL, Dumitru Diacov, parliamentary chairman and For a Democratic and Prosperous Moldova Bloc leader, Mircea Snegur, who heads the Party of Revival and Conciliation, and Iurie Rosca, leader of the Christian Democratic Popular Front, said Urecheanu's demand to allow the government to rule by decree for two years is unconstitutional. They said the parliament could approve legislation allowing the government to rule by "emergency regulations" but that the legislature's necessary approval would be a long and cumbersome process. MS


by Michael Wyzan

Moldovan Prime Minister Ion Ciubuc blamed his resignation last week on the difficulty of consolidating his cabinet owing to its diverse composition. Some local observers, for their part, pointed to his "incompetence." But regardless of the Ciubuc government's internal structure and competence, Moldova is beset by severe economic problems that would daunt any cabinet.

In 1998, for the second time in three years, positive economic growth was forecast but failed to materialize, largely because of factors beyond the government's control. GDP fell by 7.8 percent in 1996, after observers had predicted positive growth that year. The decline was generally attributed to the poor harvest.

Last year, the most visible problem was the Russian financial crisis, which began in August. While the government originally forecast GDP growth of 6 percent for 1998 (revised to 3 percent in June), it announced in December that it expected a GDP decline of fully 10 percent. That would make it the only one of the nine smaller CIS countries (that is, excluding Kazakhstan, Russia, and Ukraine) where GDP declined last year.

However, the Russian crisis was not the only factor that negatively affected Moldova's economic growth. GDP fell by 5.3 percent during January-June 1998. Pre-crisis Western forecasts for GDP growth ranged between -2 and +2 percent.

Moldova's economic problems reflect both its geopolitical environment and a period of retreat from reformist economic policy that began in 1997, after a solid start in the earlier post-independence years. Early achievements included relatively low inflation and a stable currency. Consumer prices increased by 23.8 percent in 1995 (December-to-December), the lowest inflation among the former Soviet republics, while the leu fell only slightly against the U.S. dollar, from 4.06 in April 1994 to 4.75 in July 1998.

That stability has been undermined by the Russian crisis. While consumer prices fell by 2 percent from January through August 1998, they rose by 8.6 percent in November alone and increased by about 10 percent for the year. Exchange rate movements have been particularly alarming, with the leu falling to 6.2 to the dollar on 30 October and 8.55 on 1 February. In a losing battle to prop up the currency unit, the national bank saw its international reserves fall from almost $365 million at the end of 1997 to about $150 million at the close of 1998.

The leu's nosedive has resulted in the collapse of the monthly wage from its June 1998 peak of $52. Even those low wages are often not paid: state sector wage arrears reached a record 638.2 million lei ($76.9 million) in December. While the official unemployment rate is only about 2.5 percent, the numbers on unpaid leave and working part-time are five times the number of unemployed.

Moldova is also behind on its payments to Russia's Gazprom, to which it owed $439 million at the end of 1998. Attempts to ameliorate this problem--for example, by giving Gazprom a controlling stake in Molodovagaz in October 1998 or paying off debt by transferring state-guaranteed bonds to the company (against the IMF's wishes) in September--have improved matters only temporarily.

The country had a trade deficit of $366.3 million during January-November 1998, compared with $284.8 million in the same period of the previous year. Especially worrisome is Moldova's continued trade dependence on Russia and the CIS, the former accounting for 60 percent and the latter 74 percent of its exports. Total exports were 22.5 percent lower in January-November 1998 than in the same period in 1997, with big declines in the export of food, beverages, and tobacco.

The current account imbalance was $176 million (about 16 percent of GDP) during January-June 1998, compared with $149 million during the same period in 1997. Moldova attracts little foreign direct investment ($265 million cumulatively through 1997), and attempts to sell large firms to international investors proceeded fitfully in 1998, although enterprises producing cement, pharmaceuticals, and leather were sold. It is thus no wonder that Moldova has the second- largest foreign debt as a share of GDP in the CIS (after Tajikistan).

But there is one important positive indicator: relations with the IMF and World Bank are back on track. In mid-1997, the IMF had halted disbursements under a $190 million loan approved in May 1996 owing to concern over a growing budget deficit, slow privatization, and the failure to raise energy prices.

But on 11 January, the IMF announced the resumption of lending to Moldova, agreeing to disburse that month a $35 million tranche, and the World Bank is providing the same amount in support of privatization and structural reform. The IMF was pleased by both the passage of an austere 1999 budget and with the parliament's approval in December of the privatization of Moldtelcom and energy sector companies. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria.