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RFE/RL Newsline, Vol. 2, No. 68, 98-04-08Radio Free Europe/Radio Liberty: Newsline Directory - Previous Article - Next ArticleFrom: Radio Free Europe/Radio Liberty <http://www.rferl.org>RFE/RL NEWSLINEVol. 2, No. 68, 8 April 1998CONTENTS[A] TRANSCAUCASUS AND CENTRAL ASIA
[B] SOUTHEASTERN EUROPE
[C] END NOTE
[A] TRANSCAUCASUS AND CENTRAL ASIA[01] AZERBAIJAN WANTS KARABAKH MEDIATION STEPPED UPThe Azerbaijani National Security Council, meeting on 6 April under the chairmanship of President Heidar Aliev, called on the Organization for Security and Cooperation in Europe's Minsk Group to intensify its efforts aimed at mediating a political settlement of the Karabakh conflict, Turan reported. The Minsk Group co-chairmen are due to travel to Armenia and Azerbaijan later this month following the inauguration of Armenian President-elect Robert Kocharyan. Last fall, Azerbaijan unconditionally approved the "phased" draft peace plan proposed by the Minsk Group co- chairmen. Armenia has accepted that plan as a basis for further negotiations, but the leadership of the unrecognized Republic of Nagorno- Karabakh has rejected it. LF[02] ARMENIAN PRESIDENT-ELECT ON KARABAKHIn a lengthy interview in "Izvestiya" on 8 April, Kocharyan absolved the Minsk Group co-chairmen of responsibility for the failure to resolve the Karabakh conflict. Kocharyan said the Karabakh leadership must decide on its future status vis-a-vis the Azerbaijani government, but he warned that the Azerbaijani leadership's offer of autonomy for Karabakh is "unacceptable." Instead, he proposed either "horizontal relations" between Baku or Stepanakert or "federative or confederative relations." He also insisted on security guarantees for the Karabakh population. On another subject, Kocharyan said he believes the CIS is capable of evolving, provided that the Russian leadership makes clear that it is not planning to "restore its hegemony" over the former republics. And he assessed Armenian-Russian relations as problem free and close to the level of an alliance. LF[03] AZERBAIJAN TO DEMAND EX-PARLIAMENT SPEAKER'S EXTRADITIONThe Azerbaijani parliament on 7 April voted to strip its former speaker Rasul Guliev of his immunity, Reuters reported. The parliament deprived Guliev of his deputy's mandate last December on the grounds that he had not attended a single parliament session since his resignation as speaker in September 1996. Prosecutor-General Eldar Gasanov told deputies that Baku will demand Guliev's extradition from the U.S., where he has lived for the past 18 months. Guliev is wanted on charges of embezzlement of state property valued at $12 million and of involvement in irregularities in exporting oil that caused losses to the state estimated at $23 million. LF[04] AZERBAIJAN'S OIL EXTRACTION INCREASES IN FIRST QUARTERThe state oil company SOCAR extracted 2,240,000 metric tons of oil from January to March, slightly more than during the same period last year, Turan reported on 7 April. But the country's two largest oil refineries have incurred losses of more than 34 billion manats ($8.8 million) as a result of fall in oil prices on world markets. Shipments of Azerbaijani crude to Novorossiisk for export have been temporarily discontinued, according to SOCAR Vice President Natik Aliev. LF[05] ARMENIAN-ADJAR TRANSPORT TALKSArmenian Prime Minister and President-elect Robert Kocharyan held talks in Yerevan on 7 April with a delegation from Georgia's autonomous Republic of Adjaria, RFE/RL's Yerevan bureau reported. The talks focused on how Armenia can make more effective use of Georgian port facilities, including those in the Adjar capital, Batumi, which handles the bulk of Armenia's imports and exports. LF[06] GEORGIA, RUSSIA AT ODDS OVER DEFENSE FACILITIESIn a 6 April statement, the Georgian Foreign Ministry criticized the Russian State Duma's proposal to debate the legitimacy of Moscow's 24 March decision to hand over to Tbilisi some Russian facilities in Georgia, Russian agencies reported. The statement pointed out that the facilities in question are Georgian state property and that since 1991 Russia has paid no rent for the some 18,000 hectares of land it uses. It added that Russia still owes Tbilisi several billion dollars for military equipment withdrawn from Georgia after the collapse of the USSR. The Russian Foreign Ministry responded on 7 April by denouncing what it called the "irresponsible" Georgian campaign aimed at portraying Russia as the "external enemy" responsible for all Georgia's internal problems, Interfax reported. LF[07] KAZAKH OPPOSITION LEADER JAILEDMadel Ismailov, the leader of Kazakhstan's Workers' Movement, has been found guilty of insulting the president and sentenced to one year in jail, RFE/RL correspondents reported on 7 April. Ismailov is alleged to have made insulting comments about the president at a rally last November marking the 80th anniversary of the October Revolution. Supporters of Ismailov have called for the verdict to be overturned, and the Workers' Movement has said it will hold a rally on 17 April to protest the ruling. Meanwhile, Yuri Venkov, the deputy leader of the movement, is scheduled to appear in court on 13 April on charges of organizing unsanctioned rallies. BP[B] SOUTHEASTERN EUROPE[08] KOSOVARS SAY SHELLING CONTINUESSome 14 buses, 10 vans, and 10 trucks filled with Serbian special police troops arrived in Kosova from Serbia proper on 6 April, the Albanian news agency Enter reported the following day, quoting Kosovar sources. Within Kosova, police reinforcements, tanks, and armored vehicles arrived in the Skenderaj and Fushe-Kosova areas on 6-7 April. Also on 6 April, Serbian artillery shelled the village of Kopiliq near Skenderaj, wounding two people, the Kosovar shadow- state's KIC news agency reported. PM[09] SESELJ BLASTS 'PLAN FROM HELL'The Serbian parliament on 7 April voted 193 to four to approve Yugoslav President Slobodan Milosevic's proposal to hold a referendum on 23 April on whether to allow foreign mediation in the Kosovo dispute. Serbian Deputy Prime Minister Vojislav Seselj said that the referendum will give Serbs an opportunity to reject what he called the foreign "plan from hell for the breakup and destruction of Serbia and the Serbian people," RFE/RL reported. A deputy from Seselj's Serbian Radical Party argued that the U.S. has always "supported our enemies, and now it wants to destroy the Serbs. If we accept mediation, we will be signing [our own] surrender." PM[10] KINKEL CALLS REFERENDUM MEANINGLESSGerman Foreign Minister Klaus Kinkel told the "Frankfurter Rundschau" of 7 April that "the referendum is an evasion maneuver...being carried out only to support Milosevic's position. [The referendum] cannot influence our political actions." The minister said the question of deploying foreign troops around Kosova's international borders is "complicated." He suggested that the UN might extend the mandate of its troops in Macedonia, and that the WEU might deploy forces in Albania. He added that "there is probably no majority in the Security Council for a UN mandate" in Albania with NATO participation. Kinkel stated that "it is known who supplies weapons" to Belgrade and that the embargo will make it easy to block such sales. He added that "at present, the main problem is that weapons must no longer get to Kosova across the Macedonian or Albanian borders." PM[11] RUSSIA STILL SHIPPING ARMS TO BELGRADE?Russian Foreign Ministry spokesmen on 7 April denied a report in the Moscow daily "Russkii telegraf" that Russia is continuing to supply weapons to Yugoslavia, despite the UN Security Council's embargo on such sales, RFE/RL reported. The daily wrote that spare parts are continuing to arrive in Montenegrin ports. It also quoted unnamed Defense Ministry sources as denying recent Western press reports that Moscow and Belgrade concluded a $1.5 billion deal for MiG fighters and other weapons in December (see "RFE/RL Newsline," 26 March 1998). Meanwhile in Belgrade, Yugoslav and Russian trade officials signed a $80 million annual barter agreement on 6 April whereby Yugoslavia will supply meat, butter, fruit, vegetables, and edible oil in return for Russian gas. PM[12] PRIMAKOV GIVES WARNING ON KOSOVARussian Foreign Minister Yevgenii Primakov said in Moscow on 7 April that "for us, two things are absolutely inadmissible: to separate the Kosova region from Serbia --this is not acceptable to the Serbs, or anybody else, and can lead to a massacre --and to send troops to the area, under whatever flag they would be deployed." PM[13] CHIRAC PLEDGES AID FOR MOSTAR BRIDGEFrench President Jacques Chirac said in Sarajevo on 7 April that Paris will work with its allies to ensure that Kosova is spared the violence that tore Bosnia apart from 1992 to 1995. He urged Bosnia's Muslim, Croatian, and Serbian leaders to work together in the spirit of reconciliation as the French and Germans learned to do after World War II, the Belgrade daily "Danas" reported. Later in Mostar, Chirac added that France will help finance the ongoing reconstruction of the historical Mostar bridge. PM[14] WHERE IS KARADZIC?Guards are no longer posted near the apparently empty home of indicted war criminal Radovan Karadzic in Pale, AFP reported on 7 April. The news agency added that rumors have long been rife that Karadzic is in Russia, a possibility that the Russian Foreign Ministry has repeatedly denied. AFP stated that Sarajevo- based diplomats say that NATO knows where Karadzic is at any given time and that the Atlantic alliance hopes to work through the Banja Luka-based Bosnian Serb leadership to arrest him. PM[15] BAN PROPOSED ON ZAGREB DEMONSTRATIONSThe city government, which is dominated by President Franjo Tudjman's Croatian Democratic Community, said in a statement on 7 April that it will soon send a bill to the city council to ban demonstrations at street intersections and on squares, including central Jelacic Square, RFE/RL reported. Opposition groups usually try to stage their protests on Jelacic Square. There have been numerous demonstrations in Zagreb and elsewhere in Croatia since the introduction of a value-added tax in January. PM[16] ALBANIAN PRESIDENT PRAISES RELIGIOUS COMMUNITIESSpeaking on the Muslim holiday of Kurban Bajram during a meeting with the head of Albania's Sunni community, Rexhep Meidani praised the role of all religious communities "on the Albanian people's road toward spiritual revival and material progress." He commented that religious communities "are close to the people [and stand] above political parties." And he stressed that "our joint efforts for Albanians to put behind themselves the evil of a year ago, in the name of peace and understanding [and] the country's stability and consolidation, are also indispensable for the solution of our national issue" (see "RFE/RL Bosnia Report," 25 March 1998). FS[17] WEU EXTENDS ALBANIA MANDATEMeeting in Brussels on 7 April, the Western European Union Council extended the mandate of its Multinational Albanian Police Element (MAPE) mission until April 1999. The council also decided to expand the force from 60 to 100 men. MAPE is helping reorganize the Albanian police force and provides training in administration and professional ethics. FS[18] VASILE PRESENTS NEW CABINET...Prime Minister- designate Radu Vasile named his government lineup on 7 April, Reuters reported. The proposed cabinet, which was formed after five days of talks with the four coalition parties, has 11 new ministers and 13 holdovers from former Prime Minister Victor Ciorbea's last cabinet. Ten members of the National Peasant Party Christian Democratic have been named, and six from the Social Democratic Party. Two independents will keep their key posts: Daniel Daianu as finance minister and Andrei Plesu as foreign minister. PB[19] ...PLEDGES "DYNAMIC REFORMS"Vasile pledged that the new cabinet would institute "dynamic and extremely rapid reforms with a modern social dimension," Reuters reported. Vasile, who will have to resolve conflicts within his government over such issues as property restitution and privatization, said his aim will be to convince foreign investors that "things are moving" in the government. He said the cabinet will strive to accomplish three goals immediately: increasing the authority of the premier, eliminating the dysfunctional components of the previous government, and achieving greater efficiency in the government's work. PB[20] MOLDOVAN PRESIDENT UNDERGOES SURGERY IN GERMANYPetru Lucinschi has had surgery to alleviate the effects of a spinal disease, Infotag reported on 7 April. The operation, which was carried out in Frankfurt, was successful and his condition is reported to be satisfactory. Lucinschi had spent 10 days in a Chisinau hospital before the operation for treatment of lumbago. In other news, Dumitru Diakov, the leader of the centrist For a Democratic and Prosperous Moldova Bloc (PMDP), said that cooperation between his party and the Communists is unlikely. Diakov said that he is unhappy with statements made by the Communists about the PMDP. The Communist Party won 40 of the 101 parliamentary in the 22 March elections. PB[21] BULGARIAN PRESIDENT CALLS FOR END TO ACCUSATIONSPetar Stoyanov appealed for calm on 7 April after Prime Minister Ivan Kostov said corruption in the country could jeopardize integration with Western institutions, AFP reported. Kostov had told the daily "Trud" the previous day that the country's judiciary is "inefficient and corrupt" and that a lack of respect for the law is hurting foreign investment. He added that if the country is not successful in fighting corruption, it will not be allowed to join either NATO or the EU. Stoyanov later called on legislators, cabinet members, and judges to devise a joint strategy to tackle corruption. He called for an end to the inter-government accusations, saying they only encourage criminals. PB[22] BULGARIA TO ADOPT PROGRAMS FOR ROMAGovernment officials said they are planning a program to help educate and employ the country's impoverished Romani citizens, Reuters reported on 7 April. Petar Atanassov, the head of the National Ethnic and Demographic Council, said it will draft a program in coordination with Romani leaders that will aim to improve the opportunities available for Bulgaria's some 500,000 Roma. Atanassov added that he is aware that "centuries-old prejudices" cannot be changed in a few years. PB[C] END NOTE[23] ESTONIA'S ECONOMY SLOWS, EASING FEARS OF OVERHEATINGby Michael WyzanLast year, gross domestic product (GDP) growth of about 9 percent made Estonia one the world's fastest growing economies, with only Bosnia and Georgia among transition economies displaying greater dynamism. Such rapid growth has brought with it unwanted side effects, including widening trade and current account deficits and a tightening of the labor market. Under the currency board arrangement introduced in June 1992, all foreign currency flowing into the country must be converted into kroon at the fixed rate of 8 kroon to the German mark. This means Estonia's considerable success in attracting foreign direct investment (FDI) and other capital inflows has led to relatively high inflation; consumer prices rose by 12.5 percent in 1997, compared with 7.0 percent in Latvia and 8.4 percent in Lithuania. Estonia received more than $1 billion in cumulative FDI through September 1997. Other sources of capital inflows, which are becoming increasingly important, include local government borrowing, portfolio investment, and medium- term bank credit lines. Portfolio investment has largely gone into the Tallinn Stock Exchange (TSE), which since opening in May 1996 has become unusually large and liquid for an economy in transition. The TSE's stock index grew by 280 percent in 1996 and 50-70 percent in the first half of 1997 before nose-diving in the fall during the East Asian financial crisis, partly because of higher interest rates late in 1997 in response to a rise in inflation in the summer. Annual interest rates on commercial bank loans in kroon rose from 7.9 percent at the end of July to 18.3 percent at the end of the year. Capital inflows may spark inflation and fuel unsustainable stock market booms but are nonetheless necessary to finance Estonia's current account deficit, which was $315 million from January to September 1997, compared with $301 million during the same period the previous year. Last year's trade deficit was $1.4 billion, up from $1.1 billion in 1996. The fact that the current account imbalances are so much smaller than the trade deficits reflects the large net service inflows resulting mainly from tourism. The current account deficit was about 10 percent of GDP for the year as a whole, one of the highest figures among transition and developing countries. Moreover, the deficit is growing more rapidly than the dollar figures suggest: measured in terms of the German mark, to which the kroon is pegged, it was up by 59 percent from January to September 1997 relative to the same period in 1996. However, there are several factors suggesting that the pegging of the kroon to the mark will not be endangered in the near future. First, the Bank of Estonia's foreign reserves continue to grow rapidly, reaching about $825 million at the end of 1997, compared with around $700 million a year earlier. In German marks, they grew by almost 35 percent over that period. Second, despite the rising importance of portfolio and other volatile forms of foreign investment, FDI remained about half of capital inflows in the first three quarters of last year. FDI is usually considered to be of a longer-term nature than other flows and is thus less likely to flow out again during crises and thereby destabilize the foreign exchange market. Third, much depends on whether exporters can withstand a situation whereby the exchange rate is fixed for years to a foreign currency while inflation remains high. In such cases, rising labor costs are an indicator of declining international competitiveness. In Estonia from December 1996 to December 1997, unemployment as a share of the labor force declined from 5.5 percent to 4.6 percent and the average monthly wage rose from $295 to $302, both worrying signs from the standpoint of the country's ability to compete on international markets. However, privatization is virtually complete, based largely on sales to both citizens and foreigners willing and able to restructure enterprises and improve corporate government. Many firms, especially those benefiting from FDI, may be able to withstand upward pressure on labor costs. There are also signs that as of fall 1997, the economy is slowing down. The decline in the stock market, higher interest rates, and a rise in the banks' capital ratios from the 8 percent recommended by the Bank for International Settlements to 10 percent are contributing to that trend. The 1998 budget, which was passed on 17 December, assumes a GDP growth rate of 5.5 percent for the year. The same day, the IMF approved a $22 million loan to the country. One of the conditions attached to that loan is that the budget surplus total1.8 percent of GDP this year, compared with 0.4 percent in 1997. Such strict fiscal policy will help slow the economy and discourage capital inflows. The author is an economist living in Austria. 08-04-98 Reprinted with permission of Radio Free Europe/Radio Liberty
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