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RFE/RL Newsline, Vol. 3, No. 109, 99-06-04Radio Free Europe/Radio Liberty: Newsline Directory - Previous Article - Next ArticleFrom: Radio Free Europe/Radio Liberty <http://www.rferl.org>RFE/RL NEWSLINEVol. 3, No. 109, 4 June 1999CONTENTS[A] TRANSCAUCASUS AND CENTRAL ASIA
[B] SOUTHEASTERN EUROPE
[C] END NOTE
[A] TRANSCAUCASUS AND CENTRAL ASIA[01] WORLD BANK CHAIRMAN IN ARMENIAJames Wolfensohn, who arrived in Yerevan on 2 June, met the following day with the two leaders of the Miasnutyun bloc that has emerged as the clear winner in the 30 May parliamentary elections, RFE/RL's Yerevan bureau reported. Wolfensohn told journalists on 4 June that he thinks it unlikely that the new Armenian government will retreat from the present policy of economic liberalization. He also said he saw no evidence to substantiate rumors of a rift between Miasnutyun's two leaders and President Robert Kocharian. On 3 June, Wolfensohn visited the northern town of Spitak, which was destroyed by the December 1988 earthquake and where the World Bank has funded several reconstruction projects. He also discussed with Prime Minister Armen Darpinian infrastructure projects funded by loans from his bank, including the construction of highways and irrigation systems. LF[02] AZERBAIJAN WANTS CHINA TO DEMAND RETURN OF ROCKETS FROM ARMENIAThe Azerbaijani Foreign Ministry issued a statement on 3 June expressing the hope that Beijing will demand the return of eight Typhoon rocket systems sold by a private Chinese company to Armenia, ITAR-TASS reported. In a diplomatic note made public in Baku the same day, the Chinese Foreign Ministry denied any government participation in the sale and undertook to ensure that no further such transactions take place, according to Interfax. Turan on 3 June quoted Azerbaijan's Ambassador to Beijing Tamerlan Karaev as saying he received assurances from a senior Chinese Foreign Ministry official that Beijing has recalled all its military instructors from Armenia. LF[03] ANOTHER ABKHAZ SECURITY OFFICIAL SHOT DEADOtar Gogia, deputy chief of President Vladislav Ardzinba's bodyguards, was shot dead in Gali Raion on 4 June and a second bodyguard was wounded, Caucasus Press reported. It was the second such ambush in four days (see "RFE/RL Newsline," 2 June 1999). At their regular meeting on 3 June, UN observers and the commander of the Russian peacekeeping force in Gali appealed to the Abkhaz not to increase their police presence in Gali in response to the earlier killings. Also on 3 June, Otar Kakalia, who is chairman of the Abkhaz Committee for Refugees and Missing Persons, told Caucasus Press that a total of 4,600 ethnic Georgians displaced persons have returned to Gali since the Abkhaz authorities unilaterally began a repatriation program on 1 March. LF[04] KAZAKH PARLIAMENT DEPUTIES JOIN PRESIDENTIAL PARTYOf the 67 deputies in the lower house of the Kazakh parliament, 44 have joined OTAN, the party created earlier this year as a support base for President Nursultan Nazarbaev, RFE/RL's Astana bureau reported on 4 June. Faction chairwoman Mariam Zhuyrikbaeva denied that pressure is being exerted on students and teachers to join OTAN. LF[05] KAZAKH PRESIDENT CALLS FOR JEWELRY DONATIONSPresident Nazarbaev has appealed to citizens of Kazakhstan to donate gold and silver jewelry to help shore up the country's gold and hard currency reserves, RFE/RL's Kazakh Service reported on 4 June. Net gold and foreign currency reserves in April were $1.01 billion. Some regional governors are imposing a $50 tax on families that refuse to comply with that appeal. Nazarbaev told the population that South Korea recently launched a similar campaign to counter its financial crisis. LF[06] KAZAKHSTAN TO AMNESTY 20,000 PRISONERSOne prisoner in four is to be released over a six-month period under a law passed on 2 June, Reuters reported. More than half of those to be amnestied are suffering from TB. Women, minors, and persons over 55 will also be freed. Kazakhstan's jails are over- crowded, and the measure will save the state budget one billion tenge ($7.6 million). LF[07] KYRGYZ GOVERNMENT DISCUSSES WAGE ARREARSAmangeldi Muraliev chaired a cabinet meeting in Bishkek on 3 June convened to discuss the economic situation, which he described as "very tense," Interfax and RFE/RL's Bishkek bureau reported. Muraliev expressed concern at the decline in value of the som, rising unemployment, and the government's failure to meet targets for tax collection or to pay salaries to state employees. The Kyrgyz government owes some 200 million soms (about $4.5 million) in overdue wages. LF[08] KYRGYZ PARLIAMENTARY DEPUTY ARRESTEDBusinessman and parliamentary deputy Boris Vorobev was arrested in a village near Bishkek on 2 June, RFE/RL's Bishkek bureau reported. He is suspected of tax evasion and embezzlement. Kyrgyz parliamentary deputies have immunity from arrest only while the parliament is in session. Also on 2 June, the wife of Taalaibek Duishembiev told RFE/RL's Bishkek bureau that he has written to President Askar Akaev requesting to be stripped of his Kyrgyz citizenship. Duishembiev has been held in pre-trial detention for 10 months on suspicion of having organized the assassination of deputy director-general of the LUK-Oil-Kyrgyzstan company. Duishembiev denies that charge. LF[09] UZBEKISTAN SEEKS TURKMEN SUPPORT FOR AFGHAN MEETINGUzbek Foreign Minister Abdulaziz Komilov met with Turkmen President Saparmurat Niyazov in Ashgabat on 3 June, Interfax reported. Komilov handed Niyazov a letter from Uzbek President Islam Karimov soliciting Niyazov's support for a meeting in Tashkent next month of the so-called 6 plus 2 contact group to discuss the situation in Afghanistan. That group comprises the six countries that border on Afghanistan as well as Russia and the U.S. under UN auspices. A source within the Turkmen presidential staff told Interfax that Niyazov said his country will send representatives to the talks only if all Afghan parties, including President Burhanuddin Rabbani, are invited to attend. Taliban leader Mullah Mohammad Omar had told Komilov in Kandahar on 1 June that the Taliban will attend such a meeting only if all other states represented formally recognize them as the legitimate government of Afghanistan (see "RFE/RL Newsline," 2 June 1999). LF[10] UZBEKISTAN SAYS SOME WANTED TERRORISTS IN TAJIKISTANUzbekistan's Russian-language official newspaper "Pravda Vostoka" has accused the Tajik opposition of supporting three men wanted by the Uzbek authorities in connection with the series of bombings in Tashkent in February, Interfax reported on 3 June. The newspaper said that there is water-tight evidence that the men are currently hiding in Tajikistan on territory controlled by the United Tajik Opposition. The trial of 22 people accused of participating in the bombings opened in the Uzbek capital on 2 June. LF[B] SOUTHEASTERN EUROPE[11] BELGRADE ACCEPTS PEACE PLANThe Yugoslav authorities and Serbian parliament on 3 June agreed to accept the G-8 peace plan that Russian special envoy to Yugoslavia Viktor Chernomyrdin and the EU's Martti Ahtisaari brought to Yugoslav President Slobodan Milosevic. Belgrade thereby accepted the "rapid" withdrawal of its own forces from Kosova, the entry into the province of an international force led by NATO and containing Russian troops, the return of refugees, and a "wide degree" of autonomy as described in the Rambouillet agreement. The UN Security Council will shortly pass a resolution establishing a mandate for the international force. Several hundred Serbian troops will be stationed in Kosova but only to guard international borders and Serbian "cultural monuments." Observers note that had Milosevic accepted the Rambouillet agreement before the bombing started in March, he would have been allowed to keep more than 10,000 troops in Kosova. PM[12] G-7 OFFICIALS DRAFT UN SECURITY COUNCIL RESOLUTIONSenior Foreign Ministry officials of the G-7 states, meeting at the EU summit in Cologne on 4 June, agreed to a draft UN Security Council resolution on Kosova. German Foreign Ministry spokesman Martin Erdmann said that senior German diplomat Guenther Pleuger will fly to Moscow later in the day to discuss the text with Russian officials. Pleuger will then proceed to Beijing, together with Ahtisaari, to seek Chinese support for the document. Erdmann said that once Russia and China accept the draft, the UN Security Council could adopt the document within hours, thereby formalizing the end of hostilities in Kosova. FS[13] NATO TO BOMB UNTIL MILOSEVIC WITHDRAWSBritish Prime Minister Tony Blair told the BBC on 4 June that the Atlantic alliance will continue its bombing campaign until Milosevic begins a "verifiable withdrawal" of his forces from Kosova. In Washington the previous day, President Bill Clinton stressed that "we must be cautious...until Serb forces begin a verifiable withdrawal." Secretary of State Madeleine Albright called Milosevic's acceptance of the peace plan only a "first step" toward ending the crisis. Secretary of Defense William Cohen added that Milosevic has often broken "paper promises" he made in the past. Observers note that many details remain to be worked out before the plan can be implemented. CNN's Washington correspondent reported that in negotiating with Milosevic, "the devil is always in the details." PM[14] MIXED REACTIONS IN SERBIA...Parliamentary deputies belonging to Serbian Deputy Prime Minister Vojislav Seselj's Radical Party voted against accepting the peace plan on 3 June. Seselj later said his party will leave the government if NATO troops enter Kosova. The Serbian Renewal Movement's Vuk Draskovic, however, said that the acceptance of the peace plan constitutes "not only an end to the bombing but also a new beginning" for Serbia, the Belgrade daily "Danas" reported. The Serbian Civic League's Goran Svilanovic stressed that democracy and the rule of law must become the norm in Serbia. He added that Serbian diplomats must make "great efforts so that we can take part in [the international stability pact] for the reconstruction of the Balkans." Several international broadcasters quoted numerous Serbs as saying that they are glad that the bombing will stop but are angry at Milosevic for waiting so long to accept an agreement he could have had before the bombing started. Others said that Milosevic "capitulated" to NATO. PM[15] ...AND IN MONTENEGRO, MACEDONIAMontenegrin Justice Minister Dragan Soc told Reuters in Podgorica on 3 June that "the situation in Montenegro is potentially dangerous. It is part of Milosevic's logic that, in order to stay in power, he finishes one crisis and starts another.... We feel it will be our turn to suffer" once the crisis in Kosova is over. Deputy Prime Minister Dragisa Burzan added that he fears that Serbian forces "retreating" from Kosova could pose a "threat" to Montenegro. In Skopje, Foreign Minister Aleksandar Dimitrov hailed Belgrade's acceptance of the peace plan as the beginning of a political solution in Kosova. He stressed that an end to the crisis would greatly help Macedonia's economy and prompt many of the 250,000 Kosovar refugees in Macedonia to go home. PM[16] KOSOVAR OFFICIALS WARN AGAINST 'PREMATURE OPTIMISM'Bajram Kosumi, who is a member of the Kosovar provisional government of Prime Minister Hashim Thaci, told RFE/RL's South Slavic Service on 3 June that the document approved by the Serbian parliament is "unclear." He stressed that it "does not open the door to a political process [leading to a permanent solution] for Kosova." Nor, he said, does it offer the Kosovars as much as the Rambouillet agreement. Kosumi stressed that only "the five demands of NATO [to Milosevic]...can be a good basis for a just solution." Edita Tahiri, who is Kosovar leader Ibrahim Rugova's foreign- policy adviser, told RFE/RL's South Slavic Service that the parliament's acceptance of the peace plan "is a signal of the beginning [of the] surrender of Belgrade and of the victory of NATO against the criminal Serbian regime.... The international community has its own reservations and wants to see that the pledges of Belgrade are implemented because of its experience with [Milosevic] in other wars." FS[17] WORLD BANK APPROVES $69 MILLION TO ALBANIAWorld Bank officials in Washington on 3 June announced the approval of two loans to Albania. The first is a structural adjustment credit of $45 million, which will help the government complete privatization efforts and strengthen the judiciary and other state institutions. The second is a $24 million loan designed to improve irrigation facilities. Both credits are repayable over 40 years and include a 10-year grace period. FS[18] MILLIONS OF DOLLARS MISSING FROM BOSNIAN BANKThe office of the international community's Carlos Westendorp issued a statement in Sarajevo on 3 June saying that "millions of dollars...deposited with [Sarajevo-based BH] Banka, including funds for reconstruction projects and governmental monies, have repeatedly been diverted and are not available for use by depositors or beneficiaries." The statement also noted that several unspecified international organizations and private individuals have filed suits against the bank, which the Bosnian authorities are investigating. Westendorp's office noted that the missing funds amount to at least $11 million. The bank's newly appointed director, Fikret Pita, told Reuters: "We only have a problem with liquidity, which is the problem of the whole country." PM[19] CROATIAN INTERIOR MINISTRY TO SUE WEEKLY OVER SOCCER AFFAIRThe Interior Ministry issued a statement in Zagreb on 3 June saying that the ministry intends to sue the independent weekly "Nacional." The statement did not specify the charges. The weekly recently ran a story alleging that the ministry has repeatedly fixed games in favor of Croatia Zagreb, which is the favorite team of President Franjo Tudjman. "Nacional" charged that professional soccer in Croatia is rife with corruption. Also on 3 June, police officials in Zagreb summoned two journalists from "Nacional" for questioning in conjunction with the story, "Novi List" reported. PM[20] CROATIAN OPPOSITION LEADER ASSAULTEDStipe Suvar, who heads the small Socialist Workers' Party, told RFE/RL's South Slavic Service in Zagreb on 3 June that unidentified persons hit him in the head with a pistol, prompting him to seek hospitalization. Suvar added that this was "the fourth or fifth physical attack [on him] during the past year." PM[21] ROMANIAN PROTESTS 'SUSPENDED'Workers in Brasov "suspended" their protest after the government approved the 2 June agreements signed by the protesters' representatives and Finance Minister Decebal Traian Remes, Romanian Radio reported on 4 June. The workers warned they will resume their protest if agreements are not implemented. Violence broke out again on 3 June in Iasi, where workers from the Czech-owned Tepro factory clashed with the police after attempting to break into the building of the local prefecture. The government's Public Administration Department issued instructions to all prefects to "immediately approve" the intervention of police forces in cases "where there is a flagrant breach of the law." MS[22] MOLDOVAN PRESIDENT ACCUSED OF VIOLATING CONSTITUTIONDumitru Cecan, chairman of the parliament's Control and Petitions Committee, on 3 June accused President Petru Lucinschi of having violated the constitution, RFE/RL's Chisinau bureau reported. In a special report presented to the legislature, Cecan said that by having called the 23 May referendum on instituting a presidential system, Lucinschi ignored the constitutional provisions that plebiscites must be approved beforehand by the parliament and cannot take place 120 days before or after elections. Cecan also accused the commission of having agreed to an unconstitutional order from the head of state and of having misspent public funds while organizing the referendum. MS[23] BULGARIA SAYS VILLAGE HIT BY SERBIAN MISSILEDefense Minister Georgi Ananiev on 3 June said that the missile that landed near the village of Govezhda one day earlier was a ground-to-air rocket "most likely" fired by Serbian forces (see "RFE/RL Newsline," 3 June 1999), Reuters reported, citing BTA. MS[24] BULGARIAN PARLIAMENT CHAIRMAN SURVIVES NO-CONFIDENCE VOTEThe parliament on 3 June voted by 150 to 76 with one abstention to reject a motion to remove parliamentary chairman Yordan Sokolov from his position, BTA reported. The motion was submitted by 81 opposition deputies from the Euro Left, the Democratic Left, the Alliance for National Salvation and independent deputies. It was initiated by the Euro Left, following Sokolov's statement that by voting against the agreement to grant NATO the right to use Bulgarian air space, the Euro Left backed Slobodan Milosevic and "reverted to its communist past." MS[C] END NOTE[25] BULGARIAN CRISIS OFFERS LESSONS FOR ROMANIAN BANKSBy Ron SynovitzA panic run on Romania's troubled Bankcoop last week is the latest in a series of events highlighting the fragility of the country's bank sector. In March, the Romanian National Bank placed the large, state-owned BANCOREX under special supervision. The beleaguered Foreign Trade Bank has moved all its private accounts to another bank in an attempt to close branches. And the small private Albina bank also has been declared insolvent, forcing the government to compensate account holders for part of their losses. Romania's banking situation is reminiscent of conditions in Bulgaria in 1996, when the collapse of 14 banks brought that country to the brink of economic chaos. Bernd Klett, an Eastern European analyst for Deutsche Bank Research, says the Bulgarian example offers lessons not just for Romania but for Russia, the Baltic States, Slovakia and even the Czech Republic. "There is a shadow economy, of course, in all of these transition countries," he remarked. "In Bulgaria, part of the economy [has been] dominated by mafia. These are criminal circles who dominate sectors of the economy and also exert influence [on banks and their loan officers]." He added that he thinks there may be "something similar" in Romania. Klett said much of the pressure is rooted in the fact that large, loss- making state firms are part-owners of the very banks to which they apply for loans. He said another factor is corruption, which thrives where banking supervision is lax. As a result, Klett said, banks across Eastern and Central Europe continue to lend money to recipients who have either no ability or no intention of ever paying it back. Similarly, a 1997 U.S. Treasury-funded study on Romania's financial system found that "political pressure on banks" has been a main factor behind bad loans. The European Bank for Reconstruction and Development says bad debts in Romania have continued to increase during the last five years--from 19 percent of all bank loans in 1994 to more than 60 percent at the end of last year. And a recent European Commission report on Romania also is critical of the corporate governance of banks. The report, issued last November, complains that the government has failed to root out corruption. Bucharest's latest proposals on bank reform are based on recommendations by the World Bank and the IMF. They are the same kind of recommendations that Sofia had paid lip service to before the crisis there forced the resignation in early 1997 of Socialist Prime Minister Zhan Videnov's government-- namely, to stop the hemorrhaging caused by bad loans, to strengthen supervision, and to sell off state banks. Most important, the World Bank says bank reforms must go hand-in-hand with speedier privatizations in all sectors of the economy. The aim is to break the links between the banks, corrupt state managers, and the national budget. The Bulgarian crisis shows how systemic corruption can ruin a country's economy. Many Bulgarian banks were brought to insolvency in 1996 by what the World Bank calls "dubious relationships" with criminal business groups and state managers, who drained the profitable activities of state firms. Bank managers fueled these crony networks through risky loans, which kept the loss-making state firms running in the short term. Meanwhile, politicians linked to these crony networks helped slow reforms by arguing that privatization and other reforms would cause workers to lose their jobs. With no bankruptcy law in Bulgaria at the time of the crisis, state firm losses ultimately had to be paid by the national budget. That added to the government's difficulties in servicing foreign debts. A massive devaluation of the lev ensued when the problem became so widespread that central bank reserves were exhausted. The seeds of hyper-inflation had been planted, and many Bulgarian banks became trapped in a vicious circle partly of their own making. Ultimately, the casualties of the Bulgarian crisis included Videnov's government, a score of state and private banks, and millions of Bulgarians whose frozen savings accounts evaporated in the free fall of the lev. It took a new government and a strict, IMF-backed currency board regime to bring relative economic stability to Bulgaria. Since then, Prime Minister Ivan Kostov has had the political support to push privatization forward, start sacking corrupt state managers. and break up some financial groups operating on the fringes of the law. There are signs that Bucharest has learned a few lessons from Sofia's experience. The European Commission found progress in the strengthening of the authority and independence of Romania's National Bank. The legislative framework of the financial sector also has improved with the adoption of the Bank Insolvency Law in November 1997. That law gives courts the authority to close banks whose liabilities exceed assets and which have ceased payments for more than 30 days. At the end of last year, a new body was set up to help Romanian state banks recover their bad debts. According to the EBRD, that body will help speed bank restructuring and privatization. Bank privatization began at the end of last year with the sale of the Romanian Development Bank to France's Societe Generale, which paid about $200 million for a 51 percent stake. Bucharest also has pledged that it will sell off part of Banc Post by year's end. Meanwhile, the large and troubled state-owned BANCOREX and Banca Agricola are under restructuring programs ahead of privatization, due to start sometime this year. The author is an RFE/RL correspondent based in Prague. 04-06-99 Reprinted with permission of Radio Free Europe/Radio Liberty
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