|Thursday, 21 November 2019|
RFE/RL Newsline, Vol. 1, No. 123, 97-09-23
From: Radio Free Europe/Radio Liberty <http://www.rferl.org>
Vol. 1, No. 123, 23 September 1997
[A] TRANSCAUCASUS AND CENTRAL ASIA
[B] SOUTHEASTERN EUROPE
[C] END NOTE
[A] TRANSCAUCASUS AND CENTRAL ASIA
 MINSK GROUP CO-CHAIRMEN IN ARMENIAArmenian Foreign Ministry spokesman Arsen Gasparyan told journalists on 22 September that the three co-chairmen of the Organization for Security and Cooperation in Europe's Minsk Group did not make any new proposals during their talks with Armenian leaders two days earlier, RFE/RL's Yerevan bureau reported. Gasparyan said the discussions focused on the "methodology" of resolving the conflict. The unrecognized Nagorno-Karabakh Republic advocates a "package" solution whereby all contentious issues are resolved in a single document, while Armenia prefers a step-by-step approach that would postpone a decision on the future political status of Nagorno- Karabakh. The co-chairmen also met with the Karabakh leadershipin Yerevan on 22 September before leaving for Baku, according to Interfax.
 ARMENIAN LEADERS MEET AGAIN WITH DASHNAK PARTYParliamentary speaker Babken Ararktsyan, Foreign Minister Alexander Arzoumanian, and other senior officials met with representatives of the Armenian Revolutionary Federation--Dashnaktsutyun (HHD) on 20 September, Armenian agencies reported. President Levon Ter-Petrossyan suspended the party in December 1994, accusing its members of terrorist activities and preparing a coup. In April 1997, he initiated contacts with the Dashnak party to discuss its possible relegalization (see "RFE/RL Newsline," 4 and 7 April, 1997). HHD bureau member Martun Matevosyan told RFE/RL's Yerevan bureau on 22 September that the talks focused on relegalizing the party in Armenia, its possible contribution to resolving the Karabakh conflict, and domestic political stability.
 ARMENIA'S NATIONAL ACCORD DEFUNCTNational Democratic Union leader Vazgen Manukyan told journalists on 22 September that the National Accord bloc of opposition parties created last year to support his presidential candidacy is "dead," RFE/RL's Yerevan bureau reported. Manukyan said National Accord fell apart because of unspecified differences of opinion between its constituent members. Speculation about the bloc's imminent breakup has grown since two of its member parties, the Union for Self-Determination and the banned Dashnak party, recently embarked on a dialogue with the Armenian leadership. Manukyan said the National Democratic Union is currently increasing its membership and will focus on improving living standards. He added that the authorities are "retreating" from the platform of self-reliance in foreign policy, democracy, and the protection of human rights on which the 1988 pro- democracy movement came to power.
 AZERBAIJAN CONTINUES TO CRITICIZE ARMENIAN-RUSSIAN COOPERATIONPresidential adviser Vafa Gulu-Zade told Interfax on 21 September that the 29 August Russian-Armenian treaty on friendship, cooperation, and mutual assistance does not correspond to the interests of Russia or the Russian people. He suggested that Russian President Boris Yeltsin was unaware of the contents of the treaty when he signed it and that it had been drafted by the Russian Foreign Ministry, where, he claimed, Armenians are "strongly represented." Gulu-Zade added that he hoped the Russian parliament will refuse to ratify the treaty. Turan on 22 September claimed that a group of Armenian officers is currently being trained in Smolensk to use sophisticated anti-aircraft systems, including some technology illegally supplied to Armenia by Russia since 1994.
 AZERBAIJANI SOLDIER SENTENCED FOR ESPIONAGEAzerbaijan's Supreme Court on 22 September sentenced Tengiz Suleimanov to 12 years' imprisonment for espionage, Interfax and AFP reported. Suleimanov was arrested earlier this year while attempting to pass classified military information to the Iranian intelligence service. He was also convicted of theft of state property from the military unit in which he served.
 GEORGIAN MILITARY UPDATEGeorgian Defense Minister Vardiko Nadibaidze told journalists in Tbilisi on 22 September that Georgian, NATO, and U.S officials are discussing the possibility of military exercises in southeastern Georgia, possibly under the aegis of NATO's Partnership for Peace program, Interfax reported. At the same time, Nadibaidze, who is widely regarded by the Georgian opposition as Moscow's stalking horse, affirmed that "Russia was and remains Georgia's major partner in military cooperation," according to ITAR- TASS. Meanwhile, the Georgian parliament has enacted legislation whereby Georgians eligible for military service who live outside Georgia may pay 2500 lari [$1,900] to avoid the draft. The law also provides for deferment of induction for students under the age of 24 and for village doctors and teachers, "Nezavisimaya gazeta" reported on 20 September.
 UZBEKISTAN SAYS AFGHAN PROBLEMS ARE INTERNAL AFFAIRThe Uzbek Foreign Ministry released a statement on 22 September calling problems in Afghanistan "an internal affair" of that country, ITAR-TASS reported. The statement also said the Uzbek government made the correct decision in closing the bridge that connects the Uzbek city of Termez to the Afghan town of Khairaton, which is currently under siege by or in the hands of the Taliban religious movement. The Uzbek Foreign Ministry also called for an international contact group to be created that included representatives of the sides involved in the conflict, neighboring states, the U.S., and Russia. Uzbekistan also advocates negotiations aimed at forming a coalition government. It proposes such discussions be held under the aegis of the UN, with the participation of the Organization of the Islamic Conference.
 KAZAKH PREMIER ABROAD FOR MEDICAL TREATMENTAkezhan Kazhegeldin is currently "abroad" for medical treatment, Russian media and Reuters reported on 22 September. His duties will temporarily taken over by First Deputy Prime Minister Akhmetzhan Yesimov. According to Reuters, Kazhegeldin has been receiving treatment for "traumatic phlebitis." Interfax reported that Kazhegeldin is in Europe but did not specify where. Earlier this month, he revealed he had worked for the KGB during the Soviet era. Shortly after, parliamentary deputy Zamanbek Nurkadilov accused Kazhegeldin of using his position to acquire large shares in the Shymkent oil refinery. Yesimov said Kazhegeldin's trip does not mean he is resigning and that "there will be no government reshuffle."
[B] SOUTHEASTERN EUROPE
 SERBIAN SOCIALISTS LEAD IN ELECTION TALLY...The left-wing coalition headed by the Socialist Party is leading in vote counting for the 21 September parliamentary election. Despite boycotts by Kosovo Albanians and part of the Serbian opposition, turnout has been confirmed at 62 percent. The Serbian Statistical Office said on 23 September that the left-wing bloc will have 98 seats in the 250-strong parliament, the Serbian Radical Party (SRS) 80, and the Serbian Renewal Movement 45. The final election results are expected on 25 September.
 ...WHILE PRESIDENTIAL CANDIDATES FACE RUNOFFNone of the candidates in the 21 September presidential election won a majority, forcing a runoff between Slobodan Milosevic's ally Zoran Lilic and SRS leader Vojislav Seselj. With nearly 85 percent of the presidential vote counted, Lilic won 37 percent support, Seselj 28.5 percent and opposition leader Vuk Draskovic nearly 23 percent, "Nasa Borba" reported on 23 September. Opposition Democratic Party chairman and Mayor of Belgrade Zoran Djindic called for a boycott of the runoff elections Meanwhile, Draskovic has rejected any suggestion of resigning from the party leadership and said his Serbian Renewal Movement will not support any candidate in the second round, BETA reported on 22 September.
 WORLD BANK DELAYS RESCUE PROGRAM FOR ALBANIAJohannes Linn, the World Bank's Vice President for Central and Eastern Europe, said in Hong Kong on 22 September that a rapid rescue program for Albania has been delayed, RFE/RL reported. Linn said that as part of the international donor effort, the bank has drawn up a $6 million program to audit, shut down, and dispose of the last of Albania's pyramid schemes. But he added that the approach envisioned in that program has been challenged in Albania's courts. He says, however, that the government is "absolutely committed" to getting rid of the schemes and will meet any necessary requirements. The IMF is currently working on a post-conflict assistance program, but one of its requirements is that the pyramid schemes first be shut down.
 BERISHA APPEALS FOR PROTESTS TO CONTINUEOpposition Democratic Party leader Sali Berisha has appealed for Albanians to continue their nationwide protests against the Socialist-led government, the "Albanian Daily News" reported on 23 September. Berisha said Albanians must organize protests across the country because "their children, property, and future have never been so threatened as now" by hefty taxes, poverty, smuggling, and the "physical elimination of political opponents."
 ROMANIAN FOREIGN MINISTER MAKES ESPIONAGE CHARGESIn an interview with the daily "Azi" on 22 September, Foreign Minister Adrian Severin said that "two or three directors of large circulation dailies are agents of foreign countries and [that] two leaders of political parties...are also being financed from abroad." Severin noted that a few people posing as "great fighters for human rights are former informers of the Securitate." Some of those combating corruption are involved in illegal dealings, he added. Severin went on to say that as a member of the government, he has had access to documents substantiating those accusations. But he refused to mention names, saying only that they will "not remain confidential for long." Severin repeated those comments at a press conference the same day. The directors of the Romanian Intelligence Service and the Foreign Intelligence Service both responded to Severin's comments by denying having such information, RFE/RL's Bucharest bureau reported.
 RUSSIAN LEGISLATORS "NOT OPPOSED" TO ROMANIAN-MOLDOVAN REUNIFICATION?Ion Diaconescu, the chairman of the Chamber of Deputies, told journalists in Bucharest on 22 September that State Duma deputies with whom he recently met in Moscow would not necessarily oppose a possible reunification of Romania and Moldova, RFE/RL's Bucharest bureau reported. Diaconescu said the deputies condition such a step on a referendum carried out on both banks of the River Dniester, which separates the breakaway region of Transdniester from the rest of Moldova. Diaconescu said Russian Foreign Minister Yevgenii Primakov made clear that Moscow supports the territorial integrity of Moldova. Diaconescu also said reunification between Romania and Moldova will be possible only when Romania is an "economically attractive alternative" for the Moldovans. Observers note that the Transdniestrian leadership and its Russian supporters have used the "reunification danger" as an argument for promoting Tiraspol's independence.
 RUSSIAN DEPUTY PREMIER IN MOLDOVAValerii Serov, arriving in Moldova on 22 September for a three-day visit, told reporters that the main purpose of his visit is to prepare the ground for a meeting of the joint Moldovan-Russian commission, RFE/RL's Chisinau bureau reported. He also said the time has come to fully clarify the problem of ownership of the assets of the Russian army in the Transdniester before the planned withdrawal of the army. Tiraspol claims it is entitled to a share of those assets. Serov met with President Petru Lucinschi, parliamentary chairman Dumitru Motpan, and Defense Minister Valeriu Pasat. On 23 September, he is scheduled to travel to Tiraspol and meet with the breakaway region's leader Igor Smirnov and Valerii Yevnevich, the commander of the Russian troops stationed there.
 MOLDOVAN PRESIDENT WANTS EXTENDED POWERSPetru Lucinschi told journalists in Chisinau on 22 September that the powers of the presidency should be extended to allow intervention in the economic reform process. Lucinschi also said he supported a mixed electoral system for the 1998 parliamentary elections. He warned that if the system of party lists used in the 1994 elections is retained, there will be no link between deputies and those whom they are supposed to represent. Lucinschi also said his recent visits to France and Italy should be regarded as an "integral part of Moldova's strategy of integration into a united Europe," Infotag reported.
 BULGARIAN CONSTITUTIONAL COURT APPROVES OPENING POLICE FILESThe Constitutional Court on 22 September rejected an appeal lodged by 52 opposition parliamentary deputies to declare the law on opening communist- era secret police files unconstitutional, RFE/RL's Sofia bureau reported. The Socialist deputies claimed the law contravened the constitution and violated citizens' right. But the court did support the Socialists' claim that the law could jeopardize the ability of the president, the vice president, and members of the Constitutional Court to carry out their duties. It ruled that the files of the holders of those posts should not be opened. Under the law, the files of top officials--including deputies, cabinet ministers, court officials, and state media directors--will be made public, while citizens can apply to see their own files.
 FREEMASONRY RELEGALIZED IN BULGARIAFreemasonry has been legalized again in Bulgaria after a 57-year ban imposed by the then fascist government, the Grand Master of the Bulgarian Lodge Ivan Stavrev said on 22 September. Citing Bulgarian media, AFP reported that a recent closed-door ceremony brought together some 200 Bulgarian freemasons.
[C] END NOTE
 CZECH FLOODS TO HAVE MIXED EFFECT ON ECONOMYby Michael Wyzan
The July floods in the Czech Republic have had major economic consequences. In addition to damage to lives and property, the disaster and the government's response to it will have unfortunate short-term macroeconomic ramifications. However, in the medium and long term, not all those ramifications will be negative.
Expandia Finance, a Prague-based brokerage, has done a detailed analysis of the effect of the floods on the Czech economy. In a report published in August, Expandia estimated flood damage at 50 billion crowns ($1.5 billion, or 3.5 percent of gross domestic product). Of that sum, 25 billion crowns accounted for damage in industry, 12 billion crowns in agriculture and forestry, 5.4 billion crowns in roads and railways, and 5 billion crowns in housing.
When assets used in production are destroyed or damaged, output will be reduced in the future, but the macroeconomic consequences of such reductions may be small and limited in duration. While Expandia estimates that 13-15 billion crowns worth of industrial production was lost (which could reduce GDP 0.9 percent to 1.1 percent), it adds that faster production growth in later months will make up for part of that loss.
Expandia expects crop damage to be slight, since overall foodstuff production will be higher than in 1996. The building industry will probably benefit later in the year from a surge in activity. Expandia is even more optimistic about the prospects in the medium term (the next three years), forecasting an increase in renovation of plant and equipment that is likely to add 0.7 percent to GDP annual growth.
However, it points out that much depends on how reconstruction activity is financed. If the government increases its expenditures--as it did by earmarking some 3 billion crowns for rebuilding infrastructure, assisting damaged enterprises, and subsidizing apartment building,--it will move the budget further into deficit. Expandia estimates that government will also have to increase its spending by 700 million crowns in 1998 to cover interest on the five-year "flood bonds," which went on sale on 1 August. Those increases in expenditures follow budget revenue losses totaling 10 billion crowns due to unpaid taxes from industrial companies and payments by state insurance companies.
Although the Czech Republic ran budget surpluses through 1995 and had only a tiny deficit in 1996, the state of the budget is a sensitive issue there. The Czech National Bank is concerned that attempts to fight inflation-- still running at 9-10 percent annually-by tightening monetary policy will raise interest rates and attract increased financial inflows. Such inflows and outflows were a contributing factor to the turbulence in the foreign exchange market in the spring. Accordingly, the bank is pushing the government to run budgetary surpluses, which would lower interest rates, in order to fight inflation.
To an outsider, the Czech Republic's fiscal problems do not seem overly worrisome. Large capital movements are a fact of life for many countries in Central Europe, Latin America, and Southeast Asia, especially the most successful ones. Attempts to stave off such difficulties by running large budget surpluses will likely lead to a political backlash. Recent attempts in the Czech Republic to levy a special 13 percent income tax to help balance the 1998 budget have failed to gain support among deputies.
Expandia argues that the floods are unlikely to give a long-term boost to economic growth comparable to that in The Netherlands in the 1950s (after the dikes broke), since Czech products are not as competitive as Dutch ones. But the opposite may, in fact, prove the case. The gap between the productivity of old equipment destroyed in the floods and that of new machinery replacing it will inevitably be larger than in a normal market economy and will therefore provide a bigger growth boost.
In the short-run, jobs have been lost in companies that went out of business; but in the medium term, jobs in construction will increase. However, newly installed plant equipment is likely to require a smaller work force than did its predecessors. Accordingly, if the flooding expedites the process of replacing outdated equipment, it may accelerate the still moderate upward trend in Czech unemployment rates.
Expandia expects the foreign trade deficit to worsen slightly this year owing to increased imports of capital goods needed for reconstruction. However, it sees no long-term effects on the trade balance, since newly installed equipment producing export goods will be more efficient.
Expandia's view that the floods, especially in the medium and long terms, will have both positive and negative economic consequences is in accordance with economists' findings about one-time disasters of this type in developing countries.
The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria.
Reprinted with permission of Radio Free Europe/Radio Liberty