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Newsline - May 13, 1999


The State Duma Council will debate the candidacy of acting Prime Minister Sergei Stepashin on 19 May, Vladimir Ryzhkov, Our Home Is Russia faction leader told reporters on 12 May. Ryzhkov characterized Stepashin's chances of being confirmed as "fairly slim." Under the constitution, the president has the right to dissolve the Duma if it rejects his candidate for prime minister three times. Presidential envoy to Yugoslavia Viktor Chernomyrdin told NTV that the Duma should dissolve itself and new elections should be held immediately. Presidential Chief of Staff Dmitrii Voloshin told Interfax that "no one intends to dissolve the Duma in connection with the cabinet dismissal." He continued "how can we consider disbanding the Duma if we understand that the deputies are to adopt a package of very important draft laws, including the ones on which receipt of loans from the IMF depends?" JAC


Duma Budget Committee Chairman Aleksandr Zhukov said on 12 May that the Duma will not go ahead with debate of the economic bills prepared by Yevgenii Primakov's cabinet until a new government has approved them. Meanwhile, an IMF spokesman said that the fund will support "any economic program that envisages faster reforms," AFP reported. Former Our Home Is Russia faction leader and now independent deputy Aleksandr Shokhin predicted that prospects for negotiations with the IMF could become complicated unless a government is formed quickly, Interfax reported. He also predicted that Finance Minister Mikhail Zadornov will retain his position and that either former Prime Minister Sergei Kirienko or former State Tax Service chief Boris Fedorov might return to government as deputy prime minister in charge of economic issues. JAC


As Duma deputies began debating the impeachment of President Boris Yeltsin on 13 May, hundreds of demonstrators in support of the action gathered outside the parliamentary building. Impeachment Commission chairman Vadim Filimonov began the proceedings by outlining the five charges leveled against Yeltsin. Liberal Democratic Party of Russia (LDPR) leader Vladimir Zhirinovskii predicted that the maximum number of votes gathered for any charge will be 260, falling short by 40 of the 300 votes necessary for passage, ITAR-TASS reported. Yabloko leader Grigorii Yavlinskii told Interfax that his faction will vote for impeachment on the charge of initiating the war against Chechnya under any circumstances--even if Yabloko members were invited into the government. JAC


Meanwhile, a letter from 17 oblast governors and presidents of republics appealing to Duma members to discontinue the impeachment process was distributed in the Duma on 13 May, AFP reported. The letter was signed by Krasnoyarsk Krai Governor Aleksandr Lebed and the presidents of North Ossetia, Ingushetia, and Tatarstan among others. Although they oppose impeachment, Lebed and most other regional leaders expressed dismay over the removal of Prime Minister Primakov. Altai Krai Governor Aleksandr Surikov called Primakov's resignation the "most tragic mistake of a president in Russia in recent history," Interfax-Eurasia reported. Bashkortostan President Murtaz Rakhimov predicted that social tension in the country will only increase and the economic situation worsen, adding that the effort to impeach President Yeltsin will not succeed. Communist Party leader Gennadii Zyuganov called on the upper chamber to hold an emergency session in connection with the dismissal of the government. JAC


As he had earlier promised, Zyuganov called on the Russian public to take to the streets to protest Primakov's removal. He told reporters on 12 May that his party is "organizing mass demonstrations in all the large cities to demand the impeachment of Yeltsin and protest Primakov's dismissal." Yabloko leader Yavlinskii appeared more inclined to take the news of Primakov's departure in his stride, telling NTV that Primakov's government had exhausted its potential. He also cited the former premier's "refusal to combat corruption in the government" and "to admit to the absence of a governmental economic program." But he noted that Primakov "did many useful things and maintained a certain stability." LDPR leader Zhirinovskii and financial magnate Boris Berezovskii were among the few influential Russian opinion-makers to welcome the news of Primakov's departure. Zhirinovskii said that his faction will support acting Prime Minister Sergei Stepashin's candidacy and vote against impeachment. JAC


Shares on the Russian stock market crashed 18 percent at one point on 12 May, while the benchmark index RTS closed 16.2 percent lower than the previous day, AFP and Reuters reported. The market had only recently recovered, its index rising to more than 100 for the first time since the mid-August devaluation of the ruble on 5 May (see "RFE/RL Newsline," 6 May 1999). "Izvestiya" reported that the value of the ruble by mid-day on 12 May slipped 2 percent against the dollar on forward contracts, while in exchange offices throughout Moscow the rate slipped to 23.80- 24.20 rubles per dollar. Some traders predicted on 13 May that the ruble will fall to 30 rubles per dollar by the end of the month, Interfax reported. By 11:00 a.m. local time, the ruble had already fallen to 26-26.3 rubles per dollar. JAC


President Yeltsin on 12 May appointed Sergei Zverev as deputy chief of staff of the presidential administration. According to ITAR-TASS, Zverev is expected to oversee Kremlin relations with the Duma, political parties, and public and religious organizations. Zverev, a former executive with Gazprom and Most, is considered a highly effective lobbyist (see "RFE/RL Newsline," 6 May 1999). The same day, Yeltsin also appointed Vyacheslav Khizhnyakov, a former deputy governor from Rostov Oblast and ataman of the Don Cossacks military society, as his representative to the Federation Council, according to Russian Television. Yeltsin also dismissed several high- ranking officials in the Federal Tax Police Service, including its first deputy director and deputy director. JAC


Citing anonymous high-ranking Kremlin sources, Interfax reported that most ministers, with the exception of First Deputy Prime Minister Maslyukov and Deputy Prime Minister Gennadii Kulik, will be asked to stay on in the new government. Kulik, however, did not exclude the possibility that he would stay if offered the chance, telling ITAR-TASS that "one must wait and see who will join the government." JAC


President Yeltsin on 12 May threatened to end Russia's mediation efforts in the Kosova crisis, telling the Russian Security Council that "we are not taking part in this war, it is not our country that started it." Referring to unspecified Western leaders, he said that "some people obviously aren't understanding our repeated proposals," AP reported. Yeltsin warned that if NATO does not take these proposals into consideration, Russia will halt its mediation. Yeltsin has demanded an end to NATO air strikes as a precondition for peace talks, but NATO officials have reaffirmed their resolve to continue with the air campaign until Belgrade withdraws its troops from Kosova (see Part II). Alexander Pikaev, defense analyst at the Carnegie Moscow Center said that by threatening to end mediation efforts, "Yeltsin is clearly trying to earn points with the military." FS


Yeltsin and French President Jacques Chirac, meeting in Moscow on 13 May, held two rounds of talks on Kosova. At the start of the talks, Yeltsin said that "in Kosova we are facing the most serious challenge to Europe in recent times." He called Chirac's visit "very timely and important." But he did not repeat his threat to end Russia's mediation efforts. FS


After meeting with U.S. Deputy Secretary of State Strobe Talbott in Moscow on 12 May, Yeltsin's special envoy to Yugoslavia Viktor Chernomyrdin said "we have moved closer to a solution." He added that "I am ready to fly anywhere this issue can be resolved," AP reported. Talbott praised Chernomyrdin's diplomatic efforts but stressed that NATO's strategy has not changed. Later, Talbott met with Finnish President Martti Ahtisaari in Helsinki but gave no details of the meeting. State Department spokesman James Rubin said Talbott's mission has three main objectives: to discuss a detailed timetable for the withdrawal of Serbian troops, the composition of an international peace-keeping force, and setting concrete steps toward a political solution to the crisis, RFE/RL's South Slavic Service reported. Rubin added that Ahtisaari has "indicated a willingness to play an advisory role as a friend of this process." FS


Federal Security Service (FSB) chief Vladimir Putin said in Moscow on 12 May that Russia "is not satisfied with its role as a technical courier...who merely transports proposals from one country to another," Interfax reported. Meanwhile, the Duma decided to set up a commission to investigate alleged NATO war crimes against Yugoslavia. In a resolution, it called the NATO air campaign "a military crime." The commission is expected to submit before 1 December a report to the Duma, which will then forward it to the International Criminal Tribunal on the former Yugoslavia. The resolution also called on the commission to discuss with the parliaments of OSCE member states the setting up of an international commission to investigate "NATO aggression." FS


The chief of staff of the Saratov Oblast's legislative assembly is threatening to strip local journalists of their accreditation to chamber sessions if they are found to be "distributing incorrect information, insulting the honor and dignity of the Duma members or employees," "EWI's Russian Regional Report" reported on 13 May. According to the publication, journalists already face a possible loss of accreditation for "repeatedly distorting information" in a special order signed by Saratov Oblast Governor Dmitrii Ayatskov in September 1998. But local authorities are attempting to tighten controls over already limited press access in anticipation of upcoming elections, local media allege. JAC


"Argumenty i Fakty" reported in its April edition that Moscow-based political leaders are seeking alliances with TV and radio broadcasting channels. According to the journal, Right Cause member and Unified Energy Systems president Anatolii Chubais is increasing his contacts with Russian Public Television, while Moscow Mayor Yurii Luzhkov is courting NTV. The publication claims that Luzhkov helped arrange the transfer of state money to Most Bank, which owns NTV. In addition, Luzhkov suddenly appeared on NTV's "Itogi" program. On 12 May, State Duma deputies adopted a resolution condemning Russian television channels for their "pro-NATO" coverage of events in Yugoslavia, ITAR-TASS reported. The Duma advised the president and government to "substantially limit" the use of "television and agency material from the aggressor states." JAC


Speaking at a joint news conference in Yerevan on 12 May, Presidents Robert Kocharian and Constantine Stefanopoulos characterized political relations between their two countries as "just excellent," with their approaches to most issues "almost identical," RFE/RL's Yerevan bureau and Interfax reported. But they stressed that their expanding bilateral ties, which include military cooperation, "should not be viewed as an alliance against any other country," meaning Turkey. The two presidents said future cooperation will focus on the economic sphere. At a separate meeting with Armenian parliamentary deputies, Stefanopoulos pledged his country's support for Armenia's aspiration to be granted full membership in the Council of Europe. Three inter-governmental economic agreements were signed during Stefanopoulos's three-day visit, which ends on 13 May. LF


In a 12 May statement pegged to the fifth anniversary of the signing of a Karabakh cease-fire agreement, Heidar Aliyev pledged that his country will continue to honor that truce, ITAR-TASS reported. The signatories to that accord were Armenia, Azerbaijan, Russia, and the unrecognized Nagorno-Karabakh Republic. Aliyev noted that the cessation of hostilities enabled Azerbaijan to consolidate its statehood and build an army. He said Baku will continue to strive for a peaceful settlement of the conflict that will entail the liberation of occupied territories and enable displaced persons to return to their homes. But Azerbaijan Popular Front Party chairman Abulfaz Elchibey criticized the cease-fire as Aliev's most egregious mistake, while Musavat Party chairman Isa Gambar deplored the fact that the last five years were not used to implement democratic reforms and prepare for a new war to liberate the occupied territories, according to Turan. LF


In a coordinated campaign over the past two months, the Russian and Azerbaijani Interior Ministries have eradicated two criminal gangs operating on the border of the two countries and have seized arms, ammunition, seven stolen cars, 2,500 liters of contraband alcohol, and more than four tons of sturgeon and 30 kilos of caviar, ITAR-TASS reported. A total of 55 wanted criminals have been arrested. LF


In a 7 May letter, the UN Security Council called on the Georgian and Abkhaz leaderships to display the "necessary will" to achieve a breakthrough in ongoing talks on a settlement of the Abkhaz conflict, dpa and Caucasus Press reported. The letter underscored the "imprescriptible right" of displaced persons to return to their homes in a secure environment. But on 13 May, Caucasus Press quoted Anri Djergenia, Abkhaz President Vladislav Ardzinba's envoy, as describing the talks as deadlocked. Djergenia blamed that deadlock on the Georgians who, he said, have proposed no further meeting since the 29 April talks in Sukhumi under UN auspices (see "RFE/RL Caucasus Report," Vol. 2, No. 18, 6 May 1999). Djergenia also said a preliminary investigation has refuted Georgian allegations that Russian peacekeepers were responsible for the deaths of four Georgians killed in the Abkhaz village of Bargebi on 12 May. LF


Energy executives and officials from Kazakhstan, Russia, the U.S., and Oman gathered in Novorossiisk on 12 May to witness the start of construction of a marine terminal for the planned 1,580 kilometer oil export pipeline from Kazakhstan's Tengiz field, Reuters reported. The $2.2 billion project, in which Chevron is the major shareholder, is scheduled for completion in mid-2001. LF


Industry, Trade, and Energy Minister Mukhtar Ablyazov told Interfax on 12 May that unless the state grain policy is changed, Kazakhstan may have to begin importing grain. He said that last year's harvest of 7.6 million metric tons was down 44 percent on the 1997 figure. In late April, an Agriculture Ministry official told Reuters that although the area sown this year will probably be smaller than in 1998, the country could theoretically harvest 10 million tons of grain and export some 3 million tons. LF


Some 400 members of the disbanded Kyrgyz Committee for Human Rights picketed the government building in Bishkek on 12 May to demand the resignation of Justice Minister Nelly Beishenalieva and the re-registration of the committee by the Ministry of Justice, RFE/RL's Bishkek bureau reported. The ministry had revoked the 1996 registration of the committee in October 1998, claiming that the original documentation contained errors, and had rejected subsequent applications to re-register the committee. But in April 1999, the ministry registered a committee of the same name headed by the deputy chairman of the dissolved committee. Three senior members of the government and presidential administration met with the protesters and undertook to form a commission to investigate the case. LF


During Taliban Deputy Foreign Minister Abdur Rahman Zahid's visit to Ashgabat last week, the Turkmen government and the Taliban signed agreements on the start of commercial flights by Ariana Afghan Airlines to Turkmenistan and on the sale of low-priced Turkmen gas to that country, Reuters reported from Kabul on 12 May. Other agreements provide for the restoration by Turkmenistan of two Afghan power plants and the sale to Afghanistan of tar to resurface highways. LF


"RFE/RL Newsline" on 10 May incorrectly reported that in late 1998, Unocal withdrew from a project to build a gas export pipeline from Turkmenistan via Iran. That pipeline will run from Turkmenistan via Afghanistan to Pakistan.


The Uzbek parliament has voted to amend the Criminal Code to provide for prison sentences of between five and 15 years and confiscation of property of those belonging to religious, extremist, or prohibited organizations, Interfax and Reuters reported on 12 May. Membership in such organizations that commit serious crimes is punishable by 15-20 years' imprisonment. LF


According to Belarus's Central Electoral Commission, as of 11 May nearly 32 percent of the total electorate took part in the early voting for the opposition presidential elections. The Belarusian Popular Front (BNF), whose leader, Zyanon Paznyak, is running in the elections, says that figure is "significantly exaggerated," RFE/RL's Belarusian Service reported on 12 May. BNF Deputy Chairman Syarhey Papkou said the central and regional electoral commissions are falsifying turnout data. He also said that regional commission members are being forced by the central commission to sign blank election protocols. Papkou, however, did not give any concrete examples to support his claim. JM


Ivan Pashkevich, deputy chief of the presidential staff, told Interfax on 12 May that the dismissal of Russian Premier Yevgenii Primakov may have a "negative impact" on the implementation of economic projects within the framework of the Russian-Belarusian union, "especially at the lower executive level." An unidentified Belarusian senior government official told the agency that the appointment of Sergei Stepashin as acting prime minister will not change the "strategic idea" of creating a Russian- Belarusian union state. But he added that the ouster of Primakov may "tell negatively" on the preparation of union documents and the implementation of joint programs. JM


President Leonid Kuchma has signed a law on Ukraine's participation in peacekeeping operations, which was passed by the parliament last month, Interfax reported on 12 May. The law allows Ukrainian troops to participate in international actions sanctioned by the UN Security Council, the OSCE, and other regional bodies responsible for maintaining peace and security. Under the law, the decision to sent Ukrainian troops abroad must be taken by the president and subsequently approved by an appropriate parliamentary bill. The participation of Ukrainian citizens in any peacekeeping contingent will be voluntary. JM


Kuchma said in Rivne on 12 May that the dismissal of Russian Premier Primakov will intensify tensions in Russia, Interfax reported. He added that without Primakov in the government, Russia is likely to sustain more economic damage. In Kuchma's opinion, Primakov's dismissal may be used by conflicting political forces in Russia to play "political games. If these political games continue, there will be no winners." JM


The IMF representative in Ukraine said on 12 May that, given Ukraine's low hard-currency reserves, the country should try to persuade foreign creditors to postpone some debt repayments. The IMF official added that Ukraine should seek from lenders only voluntary debt-restructuring schemes. According to Ukrainian Finance Ministry data, Ukraine has to pay foreign creditors some $1.9 billion in 1999 and $2.4 billion next year. The Ukrainian National Bank's reserves totaled $896 million at the end of April. JM


Lord Russell- Johnston, the president of the Council of Europe's Parliamentary Assembly, told students at Tallinn's Concordia University on 12 May that during a visit the previous day to a mostly ethnic Russian-populated region of Estonia's northeast, he had heard "no complaints" about discrimination against Russian-speakers, Baltic news agencies reported. "I'm not an expert in this field, but Estonian is the official language in Estonia and I don't see any reason why people here shouldn't be able to speak it," he commented, adding that "in some places in Ida-Virumaa (County), ethnic Estonians make up about 30 percent of the population, and it would be rather difficult for them to discriminate against the remaining 70 percent." The CEPA head also called on the Estonian government to focus on combating unemployment in the northeast, according to an RFE/RL correspondent in Tallinn. JC


Following a meeting with Prime Minister Vilis Kristopans on 12 May, leaders of the New Party said their formation will remain in the ruling coalition for at least one week to ponder what action to take following the dismissal of its economy minister, Ainars Slesers (see "RFE/RL Newsline," 11 May 1999). The party, which is the junior partner of the three-member coalition, will make its decision one day before the parliament is expected to hold a confidence vote in the government. Meanwhile, the parliamentary confirmation of four new state ministers, scheduled for 13 May, has been postponed until next week at the request of the New Party. JC


Also on 12 May, the Latvian Privatization Agency was informed that until further notice, Premier Kristopans will hold the new office of minister responsible for privatization and will also be "state proxy" to the agency, LETA reported. The latter post had been held by ousted Economy Minister Slesers. Meanwhile, Ventspils Mayor Aivars Lembergs has denied allegations that he has "enormous influence" over the Latvian government, saying that his cooperation with Kristopans is "just the same" as with previous premiers. Slesers has claimed that Lembergs is the "real" head of the current government (see "RFE/RL Newsline," 11 May 1999). JC


Rolandas Paksas, a member of the ruling Conservatives, has accepted the post of prime minister but reserves the right to refuse that position if consultations with parliamentary parties over the formation of a new cabinet prove difficult. Paksas informed journalists of his decision after a meeting with President Valdas Adamkus and Conservative Party chairman and parliamentary speaker Vytautas Landsbergis. He said that he believes the next premier should continue the policies of Gediminas Vagnorius, who resigned from that post last week in a dispute with the president. Landsbergis said he "fully backs" Paksas as a candidate for the premiership, while a group of some 20 parliamentary deputies from the Conservative Party who support ousted Premier Vagnorius pledged not to obstruct Paksas's nomination. JC


Following a lengthy discussion on taxation, the coalition of the Solidarity Electoral Action and Freedom Union (UW) on 12 May announced it will reduce corporate income tax by 6 percent, to 28 percent in 2000. UW Secretary-General Miroslaw Czech told journalists that as of 2000, corporate tax will be lowered by two percent every two years until it reaches 22 percent. The coalition also resolved to introduce a two-tier personal income tax system instead of the current three-tier one. JM


Marek Siwiec, chief of the presidential National Security Bureau, on 12 May termed the decision to incorporate communes mainly inhabited by ethnic Poles into the greater Vilnius area as "incomprehensible and egotistic," PAP reported. The cabinet of Lithuanian former Premier Vagnorius took that decision last week. As a result, the inhabitants of those communes will be subordinated to the Vilnius local government dominated by Lithuanians. ELTA reported that Polish President Aleksander Kwasniewski on 11 May called his Lithuanian counterpart, Adamkus, to warn that the step may harm bilateral relations. JM


The Czech cabinet has decided to complete the construction of the Temelin nuclear power plant, Czech media reported on 13 May. Eleven out of 19 ministers supported the decision at a five-hour cabinet meeting. The cabinet does not expect the cost of completing the plant to exceed 98.6 billion crowns ($2.8 billion). Prime Minister Milos Zeman said the first block of the plant should be finished by September 2000 and the second by December 2001. The cabinet also announced that plans for the privatization of CEZ, Temelin's chief investor, will be drawn up by September. Austrian Chancellor Viktor Klima phoned Zeman shortly before the cabinet meeting in a last- ditch attempt to prevent Temelin's completion, CTK reported on 13 May. After the decision, Austrian government officials said they will continue to fight against the completion of Temelin. VG


A few hours before the Czech cabinet started to debate the Temelin issue, President Vaclav Havel made known his opposition to the construction of the plant, Czech media reported. Havel reminded Prime Minister Milos Zeman's government that it had called for a referendum on the plant when it was in opposition. He also said he does not trust the CEZ company to fulfill its obligations with regard to Temelin. "We didn't fight against the communist government, only to have it replaced by some sort of strange, more hidden, less noticeable dictatorship of one single company," he commented. Zeman rejected Havel's criticism and said the president had several opportunities to criticize Temelin over the past decade. House of Deputies chairman Vaclav Klaus said the president overstepped the bounds of his presidential authority. VG


Former Slovak president Michal Kovac said he dropped out of the 15 May presidential elections in favor of former Kosice Mayor Rudolf Schuster's candidacy, TASR reported on 12 May, citing TV Markiza. Kovac, who had garnered between 5 percent and 7 percent backing in recent polls, asked his supporters to vote for Schuster in order to prevent former Prime Minister Vladimir Meciar from winning the election. The Movement for a Democratic Slovakia (HZDS), which backs Meciar, accused Slovak Television of casting doubt on the credibility of the entire election campaign by allowing Kovac to criticize its candidate during a televised debate (see "RFE/RL Newsline," 12 May 1999). The HZDS has filed official complaints with the Slovak Council for Radio and Television Broadcasting and the Central Electoral Commission. Meanwhile, Finance Minister Brigita Schmognerova called on Magda Vasaryova, who is running third in the polls, to drop out of the race in favor of Schuster. VG


Hungarian Foreign Minister Janos Martonyi and representatives of all six parliamentary parties agreed on 12 May that autonomy for Vojvodina should not be linked to the resolution of the Kosova crisis, Hungarian media reported. Martonyi said the government is preparing a comprehensive concept on the issue. Independent Smallholder deputy chairman Zsolt Lanyi said cabinet members share his view on Vojvodina's independence but "do not dare to say so." He said no cabinet member has reproached him for his earlier statements (see "RFE/RL Newsline," 11 May 1999). Laszlo Jozsa, deputy chairman of the Federation of Vojvodina Hungarians, said the possible transformation of the province into an independent state has no basis in reality. Prime Minister Viktor Orban on 11 May told Hungarian Radio that Budapest will help Vojvodina's ethnic Hungarian minority regain autonomy as the international situation changes. MSZ


NATO Secretary-General Javier Solana told refugees in Elbasan, Albania, and Cegrane, Macedonia, on 12 May that NATO is determined to make sure that everybody will be able to return to their homes. He stressed that NATO must continue its air campaign against Yugoslavia until it reaches its objectives, an RFE/RL correspondent reported from Tirana. Solana said that newly arrived NATO troops have begun setting up more refugee camps in Albania. He reassured President Rexhep Meidani in Tirana that NATO will protect Albania in the event of Yugoslav aggression, adding that U.S. Apache helicopters will be deployed "very soon." Meidani told Solana that the Albanian authorities are ready to fulfill any request of NATO to help its mission. Solana also said "I am sure that whatever the final result of the change of government in Russia is, the diplomatic process will continue," Reuters reported. FS


NATO planes on 12 and 13 May attacked military airports in Prishtina and Belgrade and destroyed five aircraft on the ground. It also attacked military positions in Prishtina, Prizren, Gjakova, Decani, and Ferizaj, AP reported. Inside Serbia, NATO hit targets in Milosevic's hometown of Pozarevac, Sabac, Pancevo, and elsewhere. Serbian Radio reported strikes against Serbian Television headquarters and a transmitter station near Novi Sad. Beta said a tobacco factory was hit in Nis. Yugoslav President Slobodan Milosevic in a message carried by Tanjug on 12 May admitted heavy losses. Without giving figures, he said that "during this struggle, many members of the police and security forces died courageously." He said that "their sacrifice is a shining example of bravery and devotion to one's people and fatherland." And he commented that the members of those forces "suppressed the enemy and disabled it from undermining the power of our defense." FS


Mayors from Albanian villages along the border with Yugoslavia, meeting in Tirana on 12 May, issued a statement saying that the situation in the border area is critical. The officials said they did not receive sufficient government support to cope with the problems created by the influx of refugees and continued shelling by Serbian forces. In some villages, dozens of buildings have been destroyed by Serbian troops who briefly entered Albania or shelled the villages from across the border. UNHCR officials in Tirana, meanwhile, have expressed concern about food supplies for refugees in the northern Albanian areas. Elsewhere, several Serbian artillery shells exploded near Bajram Curri. FS


Rugova, along with 16 of his relatives and advisers, took up residence near Bonn on 12 May, Reuters reported. Rugova, after meeting with German Foreign Minister Joschka Fischer, said that "the most important thing is to help those [Kosovars] who have been driven from their land to return." A spokesman said that the German minister stressed during the talks that Kosovar politicians should try to better coordinate their activities and stop arguing among themselves. The spokesman added that Rugova plans to hold talks with the foreign ministers of Britain and France at a meeting of the 15 EU foreign ministers in Brussels on 17 May. FS


The office of the international community's Carlos Westendorp has charged the Bosnian Croat leadership with obstructing Bosnia's economic recovery, AP reported on 12 May. A statement released at the end of an international donors' conference in Sarajevo said "the forum was sabotaged by Deputy Prime Minister Dragan Covic, who raise a number of blatantly immaterial objections." It had been expected that the Bosnian Muslim, Croatian, and Serbian leaderships would agree on measures aimed at building a unified country that would qualify the federation to receive the last $1 billion installment out of a $5.1 billion foreign aid package. The statement stressed that "it appears that...the old spirit of distrust and refusal to compromise is alive and well among some Bosnian Croat leaders." The donors said the government of the Republika Srpska must approve the budget and fulfill several other conditions in order to qualify for international assistance. FS


Robert Barry told Reuters in Sarajevo on 12 May that "you've got to be crazy to invest in this country where it is a given that if you obey the laws you're gonna lose money." He accused Bosnia's ruling nationalist parties of not being interested in economic reform and warned of an economic tailspin. Barry added that "if the reform doesn't come...if I were a donor, I wouldn't be putting money down a rat hole.... Unless there is economic reform no jobs will be created and after the international community goes the economy will fall back to where it was in 1995." FS


An official from the Croatian Justice Ministry said on 12 May that a county court in Rijeka will have to rule on the possible extradition of former Bosnian Muslim warlord Fikret Abdic, Reuters reported. Interpol has issued an arrest warrant against Abdic, whom the Bosnian government has charged as a war criminal (see "RFE/RL Newsline," 12 May 1999). The official said that "Croatia has made commitments to investigate and prosecute war criminals, but not in terms of extradition, especially not for its own citizens." Abdic received Croatian citizenship in 1995. FS


The Romanian government has frozen Yugoslav assets on its territory and imposed a travel ban on Yugoslav President Slobodan Milosevic, his family, and other Belgrade officials, AP reported on 12 May. The steps were taken in line with the EU's sanctions against Yugoslavia. Meanwhile, the Romanian parliament approved NATO-led maneuvers on Romanian territory this winter. Some 150 NATO personnel and 100 Romanians will be trained in peacekeeping and humanitarian missions. VG


Petru Lucinschi has replaced Tudor Botnaru with Valeriu Pasat as national security minister Infotag reported on 12 May. The president noted that Botnaru had requested to be relieved of his duties. Pasat, who until now was defense minister, will be replaced by Colonel Boris Gamurari. Vasile Nedelciuc of the Party of Democratic Forces speculated that the president made the changes in order to have a "handful of more loyal ministers" at his disposal in the event of a "possible confrontation" with the parliament, BASA-press reported on 12 May. Vladimir Reus of the Democratic Convention said he doesn't understand why the president needs to organize a non- binding referendum on expanding presidential powers when he already has enough power to "sack and name ministers." VG


Igor Smirnov, the leader of the breakaway region of Transdniester, has received the Star of the Soviet Union, the former USSR's highest award, BASA-press reported on 12 May. Smirnov received the award from former Soviet deputy Saji Umalatova, who describes herself as a follower of Josef Stalin. Umalatova also awarded the Transdniester security and defense ministers the Stalin Order. In other news, Moldova on 11 May announced that it will pull out of the CIS Aviation Conference, Interfax reported. Moldovan Civil Aviation Administration head Victor Copa said the CIS standards are substantially different from those of the European Civil Aviation Conference, of which Moldova is also a member. VG


Bulgarian President Petar Stoyanov on 12 May said Yugoslavia should be surrounded by a "security belt" of democratic countries with parallel economic development, according to a BTA report cited by the BBC. As part of this strategy, Stoyanov said the countries surrounding Yugoslavia should be relieved of their external debts in proportion to the losses their economies suffered as a result of the Kosova conflict. He also said EU accession talks should be started with Bulgaria and Romania. Meanwhile, the opposition Bulgarian Socialist Party called on the parliament to reject any NATO requests for permission to use Bulgarian territory for ground operations against Yugoslavia. The Euro-Left has called for the removal of parliamentary chairman Yordan Sokolov in response to his comparisons of the Euro-Left with Yugoslav President Slobodan Milosevic. VG


by Michael Wyzan

Estonia, which has long had one of the best performing transition economies, has uncharacteristically made news recently because of a budget crisis. The government on 4 May approved a "negative supplementary budget," under which expenditures this year would be cut by 1.03 billion kroons ($71 million). The document foresees reductions in government investment and subsidies to the private sector. The IMF promptly warned that cuts of at least twice that level are required.

The emergence of these fiscal problems contrasts with the good news about economic policy and performance that typically emanates from Tallinn. Estonia has weathered the Russian financial crisis far better than the other two Baltic States. It has also succeeded in cooling off the economy, which overheated in 1997, and reorienting its exports to EU markets.

The budget problems result, to a certain extent, from a slowdown in economic growth, as value-added and excise tax receipts have been disappointing. GDP growth slowed from 11.4 percent in 1997 to about 4 percent last year. Although the 1999 budget was based on a growth forecast of 5.5 percent, the IMF now predicts that the economy will grow by 2.5 percent this year. Sales of industrial production rose by 0.8 percent in 1998 and fell by 11.4 percent in January-March 1999, compared with the same period in 1998.

Nonetheless, the most obvious fiscal problems are occurring on the expenditure side. While total consolidated budget revenues at the end of February were 3.238 billion kroons, up by 26.4 percent (in nominal terms) over the same period in 1997, expenditures were 4.063 billion, an increase of 58.2 percent. Indeed, the share of government expenditures in GDP is projected to rise to 42 percent of GDP this year (even after the budget cuts) from about 36 percent in 1996.

Increased spending is related to promises made in 1998 by a centrist coalition government (which was replaced by a right-wing coalition after the elections of March 1999) that included a party representing rural interests. In the wake of the Russian crisis--which hit the agricultural and food sectors hard--and of weather-related poor harvests, promises were made to increase agricultural subsidies and raise agricultural procurement prices. In the end, farmers received 227 million kroons in subsidies. There have also been problems with controlling extra-budgetary spending in such areas as pensions.

Nonetheless, the situation is not as alarming as it appears. The sale of stakes in Eesti Telekom to Telia of Sweden and Sonora of Finland will bring more than $300 million to the budget this year.

More broadly, many economic indicators show that the economy continues to perform well, if somewhat worse than before the outbreak of the Russian crisis. The slowing of GDP growth last year was helpful in reducing the current account deficit from a high 12 percent of GDP in 1997. The deficit was down to a less worrying 8.6 percent last year.

Especially encouraging is the fact that exports grew from $2.2 billion in 1997 to $3.2 billion in 1998, at a time when Latvian and Lithuanian exports fell. Estonia has been successful in reorienting its exports toward the EU. In 1998, the EU bought 55 percent of Estonian exports, compared with 48 percent in 1993. Finland and Sweden together took 36 percent of Estonia's exports last year.

The importance of Russia as a trading partner has declined, with exports and imports falling from 23 percent and 17 percent of the respective totals in 1993 to 13 percent and 11 percent in 1998. By January 1999, that country accounted for only 8.7 percent of Estonian exports.

Estonia's strong export performance is especially impressive in the light of the rapid growth of wages, as expressed in dollars or constant kroons. The gross monthly wage reached $363 in December (compared with $321 a year earlier), higher than in all other transition countries except Croatia, the Czech Republic, Hungary, Poland, and Slovenia.

Real wages in kroons grew by about 4 percent last year, an increase that was approximately matched by labor productivity. This contrasts with Latvia and Lithuania, where real wage growth far outstripped productivity in 1998. The coexistence of healthy export growth and rising real wages suggests that significant restructuring is occurring at the enterprise level.

Estonia's budget problems do not suggest that the country is no longer a stellar economic performer. They do imply, however, that the era of exemplary policy-making, as reflected in balanced budgets, has been replaced by a political process more similar to those of other transition countries. Reports last week that the government is working on a bill that would for the first time since independence impose import tariffs is another indicator of this trend. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria.