|Friday, 15 November 2019|
RFE/RL Newsline, Vol. 1, No. 158, 97-11-12
From: Radio Free Europe/Radio Liberty <http://www.rferl.org>
Vol. 1, No. 158, 12 November 1997
[A] TRANSCAUCASUS AND CENTRAL ASIA
[B] SOUTHEASTERN EUROPE
[C] END NOTE
[A] TRANSCAUCASUS AND CENTRAL ASIA
 HILLARY CLINTON IN KAZAKHSTANU.S. first lady Hillary Clinton arrived in the Kazakh capital on 11 November on the first leg of her tour of five CIS countries. Addressing a group of young people, Clinton said she is impressed with "what has been accomplished in just six years [of independence]." She also attended the opening of a women's health care center that was built under a sister-city program between Almaty and Tucson, Arizona. The next day, Clinton visited the Kazakh Academy of Sciences, where she addressed a "Women in Politics" conference. "A country's progress depends on the progress made by women." Later on 12 November, she arrived in the Kyrgyz capital. BP
 GEORGIAN PRESIDENT IN ALMATYDuring Eduard Shevardnadze's first official visit as president to Kazakhstan on 10-11 November, Georgian and Kazakh leaders signed 16 cooperation agreements on trade, economic, scientific, and military cooperation, Russian agencies reported. Shevardnadze and his Kazakh counterpart, Nursultan Nazarbayev, discussed prospects for building a pipeline beneath the Caspian to facilitate the export of Kazakh oil via Georgia. They also discussed Kazakhstan's possible accession to the 1996 Sarakh agreement between Azerbaijan, Georgia, and Turkmenistan on transport and communications, according to "Nezavisimaya gazeta" of 12 November. That accord would enable Kazakhstan to participate as a full member in the TRASECA transport project. LF
 GEORGIA ABOLISHES DEATH PENALTYThe parliament on 11 November passed a draft law proposed by President Shevardnadze abolishing capital punishment, Russian agencies reported. Mikhail Saakashvili, the chairman of the parliamentary committee for constitutional and legal problems, told CAUCASUS PRESS that Georgia is the second former Soviet republic to abolish the death penalty, after Moldova. Shevardnadze declared a moratorium on executions in December 1996. LF
 GEORGIAN OPPOSITION CLOSES RANKSAddressing a congress of Georgian displaced persons from Abkhazia in Tbilisi on 11 November, radical Georgian opposition leaders proposed that nationalist forces should jointly contend the next parliamentary elections, CAUCASUS PRESS reported on 12 November. Nodar Natadze said the parties should demand Georgia's withdrawal from the CIS and the withdrawal of Russian troops from Georgia. He also urged that Tbilisi reject the confederation model of resolving the Abkhaz and South Ossetian conflicts. Meanwhile, former parliamentary speaker Vakhtang Goguadze has joined the new For Georgia's Salvation bloc, led by the United Communist Party of Georgia, according to "Nezavisimaya gazeta" of 12 November. Goguadze quit the ruling Union of Citizens of Georgia in 1995 to form the Tanadgoma union, which won 3 seats in parliamentary elections that year. LF
 UPCOMING GEORGIAN-ABKHAZ TALKS IN JEOPARDY?CAUCASUS PRESS on 12 November quotes Georgian Ambassador to Moscow Vazha Lortkipanidze as saying that Abkhazia is trying to postpone the talks scheduled to open in Geneva on 17 November on resolving the Abkhaz conflict. Lortkipanidze said that the Abkhaz leadership objects to the so- called Friends of Georgia (which include the U.S., France, Germany, and the U.K.) participating as mediators rather than observers. He said that Georgia rejects that restriction. LF
 KARABAKH DEBATE CONTINUESAndranik Hovakimian, the deputy chairman of the board of the ruling Armenian Pan-National Movement, has suggested that the key to resolving the Karabakh conflict is to "work out a new type of status for Karabakh" that entails neither outright independence nor autonomy, Noyan Tapan reported on 11 November. Meanwhile former presidential adviser Ashot Manucharyan has claimed that President Levon Ter-Petrossyan is acting under instructions from "certain international centers" in advocating a compromise solution to the conflict. Manucharyan, who is political secretary of the recently established Union of Socialist Forces , warned that a "phased" solution to the conflict would lead to civil war because the majority of Armenia's population rejects that option. LF
 US ENERGY SECRETARY IN YEREVANFederico Pena arrived in Yerevan on 11 November from Ankara, where he discussed Turkey's role as a transit country for Central Asian oil and gas and expressed the U.S.'s support for the planned Baku-Ceyhan export pipeline, the "Turkish Daily News" and ARMENPRESS reported. Pena met with Ter-Petrossyan and Armenia's foreign and energy ministers to discuss Armenia's role in the planned east-west transport corridor. In a statement issued by the U.S. Embassy in Yerevan on 11 November, Pena affirmed that the "time is right to think seriously about creating or improving electrical power, oil, and natural gas infrastructure linkages among Armenia, Georgia, Turkey and Azerbaijan." LF
 AZERBAIJAN RATIFIES ANOTHER OIL CONTRACTThe parliament on 11 November ratified a $4 billion contract signed by Chevron and the Azerbaijani state oil company SOCAR in August, Turan and Russian agencies reported. Chevron has a 30 percent stake to develop the Apsheron (formerly Zeinalabdin Tagiev) field, which has estimated reserves of 120 million metric tons. SOCAR has 50 percent stake, while France's Total later acquired 20 percent. Also on 11 November, Aleksandr Zhirov, the director-general of Chernomortransneft, said shipment of Azerbaijan's Caspian oil by tanker from Novorossiisk will begin on 10 December, according to ITAR-TASS. Speaking in Syktyvkar, Russian Prime Minister Viktor Chernomyrdin affirmed that the northern route via the Russian Federation is commercially the best one for the export of Azerbaijan's Caspian oil. LF
[B] SOUTHEASTERN EUROPE
 PLAVSIC WANTS TO JOIN U.S. MILITARY PROGRAMRepublika Srpska President Biljana Plavsic told the SRNA news agency in Banja Luka on 11 November that the Bosnian Serb army (VRS) should join the U.S.-sponsored "Train and Equip" program, provided no preconditions are attached. She warned Bosnian Serb hard-liners that the Republika Srpska cannot isolate itself: "[regional] integration processes have started and whoever rejects them has no sense of reality." Some of the VRS leadership supports Plavsic's view and argues that the army must join "Train and Equip" in order not to fall behind the Muslim and Croatian forces, which participate in the program. PM
 ZUBAK TO DISCUSS TUDJMAN'S PROPOSALKresimir Zubak, the Croatian member of the Bosnian joint presidency, said in Sarajevo on 11 November that the Muslims do not have the right to decide for the entire presidency on Croatian President Franjo Tudjman's proposal for closer links between the two states (see "RFE/RL Newsline," 11 November 1997). Zubak added that he will put Tudjman's proposal on the agenda of the next meeting of the presidency, an RFE/RL correspondent reported from the Bosnian capital. PM
 BOSNIAN SHADOW CABINET APPEALS TO CROATIASejfudin Tokic, who heads the shadow government formed by non-nationalist parties, appealed to the Croatian parliament to send a delegation to discuss with his shadow cabinet future relations between the two states. He said in Sarajevo on 11 November that Bosnian-Croatian relations are of strategic importance for the entire region. Tokic added that any proposal to tighten links between the two states must be submitted to a referendum, an RFE/RL correspondent reported from the Bosnian capital. PM
 U.S. ENVOY WARNS OF NEW WAROutgoing U.S. Ambassador to Croatia Peter Galbraith said in Zagreb on 11 November that "there's a good chance that a precipitous withdrawal [by NATO from Bosnia] could lead to a situation where war would break out." He added that he believes that Croatia may play less of a role in Bosnia in the future than it has to date: "I think most Croatians would prefer to disengage from Bosnia. Croatia has achieved its national objectives of reunifying its country and would now like to be on the Slovenia track into NATO and Europe. A continued major role in Bosnia is a potential albatross." Tudjman and prominent Herzegovinians, such as Defense Minister Gojko Susak, nonetheless favor an active role for Croatia in Bosnia. PM
 BOSNIA TO GET UNIFIED CURRICULUMBosnian Federation Education Minister Fahrudin Rizvanbegovic announced in Sarajevo on 11 November that Croatian and Muslim pupils and students will soon study from the same textbooks and that those books will stress Bosnia is a single, multi-ethnic state. Croatian schools now use texts from Croatia, while Muslim schools have their own books. Critics charge that both sets of texts are nationalist and that maintaining separate education programs helps promote the division of Bosnia along ethnic lines (see "RFE/RL Bosnia Report," 29 October 1997). PM
 SREBRENICA WOMEN PROTESTSeveral hundred women from Srebrenica and the Drina valley region of eastern Bosnia marched through Sarajevo on 11 November to demand that the international community provide more information about the 8,000 or so missing men believed to have been massacred by the Serbs after the fall of Srebrenica in 1995. The women also demand the release of three Muslim males now held prisoner by the Serb. PM
 FIRST TRAIN BETWEEN CROATIA, SERBIALocal trains began running between the two former Yugoslav republics on 11 November for the first time since 1991. The line connects Vinkovci with Sid. Direct trains between Zagreb and Belgrade will start in May 1998 (see "RFE/RL Newsline," 22 October 1997). Meanwhile in Podgorica, the Montenegrin Helsinki Committee demanded that local border traffic be restored between Croatia and Montenegro. The committee also called for the two former Yugoslav republics to open consulates on each other's territory. Committee President Slobodan Franovic claimed that Belgrade supports the restoration of direct links with Croatia for Serbia but not for Montenegro. PM
 CONFLICT DEEPENS BETWEEN ALBANIAN CENTRAL, LOCAL GOVERNMENTSDeputy Prime Minister Bashkim Fino on 11 November charged that Democratic Party-controlled local governments are preventing central government agencies from functioning properly (see "RFE/RL Newsline," 10 November 1997). Fino urged citizens to demonstrate against obstructionist local officials, "Dita Informacion" reported. He added that the Interior Ministry will organize local elections between December and January in some areas where the local government has collapsed. Meanwhile, Albert Brojka, the head of the Association of City Mayors, challenged a Council of Ministers' decision to sack 420 centrally appointed local officials, "Gazeta Shqiptare" reported. FS
 ALBANIAN DAILIES THREATEN STRIKEThe publishers of nine dailies and two weeklies demanded on 11 November that the government lower taxes levied on the press or face a shutdown of news publishing on 15 November. The publishers claim that newspapers are threatened with bankruptcy, largely owing to an increase in value-added tax to 20 percent in September. Taxes on newspaper sales, paper imports, and advertising are also problematic, "Koha Jone" reported. FS
 ONE-THIRD OF ALBANIANS LIVE IN POVERTYPrime Minister Fatos Nano said in Tirana on 11 November that more than 1 million Albanians live below the poverty line. Some 40 percent of those people are pensioners, who receive between $7 and $22 a month. Most of the poor live in urban areas. Nano promised to launch a new program in 1998 aimed at taking people off welfare rolls and having them work on public projects. FS
 ROMANIAN COALITION LEADERS ON UPCOMING RESHUFFLEFollowing a secret meeting in Bucharest on 11 November, several leaders of the governing coalition parties said on Romanian state television that a new Council of Reform will be set up as a result of the upcoming reshuffle. Premier Victor Ciorbea will head that body. The idea of setting up a new Ministry of Privatization has been abandoned, but it has been agreed to merge the State Property Fund, the Agency for Development, and the Agency for Privatization. The head of the new structure will have ministerial rank. Also on 11 November, President Emil Constantinescu met with leaders of the main trade unions to discuss both the reshuffle and economic reform. MS
 ETHNIC HUNGARIANS ON ROMANIAN EDUCATION LAWThe Hungarian Democratic Federation of Romania (UDMR) on 11 November warned that it will draw the "appropriate consequences" if there is any deviation from the "agreed government program." The statement, which was made by an ad-hoc body that meets only to discuss emergencies, came after negotiators representing the UDMR and the National Peasant Party Christian Democratic failed to reach an agreement on amendments to the Education Law. In another development, the Chamber of Deputies on 11 November rejected a motion of the three opposition parties criticizing the government's policies in the industrial sector, RFE/RL's Bucharest bureau reported.
 BULGARIA RETURNS FORESTS TO PRE-COMMUNIST OWNERSThe parliament on 11 November passed a law providing for the return of forests nationalized during the communist era. Foreign citizens are not eligible either for restitution or for compensation, AFP reported. The legislation will affect 15-18 percent of forests now belonging to the state. Local government authorities, monasteries, and mosques will be able to apply for the restitution. Owners whose forests were destroyed are to be compensated. MS
[C] END NOTE
 RUSSIAN GOVERNMENT MOVES TO PROTECT RUBLEby Stephanie Baker
Reacting to persistent jitters on world financial markets, Russia's Central Bank announced on 10 November that it will raise interest rates and alter its ruble policy next year to ward off any speculative attacks on the currency.
Central Bank chairman Sergei Dubinin said the temporary interest rate hike, combined with a more flexible exchange-rate policy, would shore up investor confidence in Russia, following the crisis on world financial markets over the past two weeks.
Dubinin said at a joint news conference with First Deputy Prime Minister Anatolii Chubais that, as of 11 November, the Central Bank will raise its key refinancing rate, which guides interest rates, to 28 percent from 21 percent. He said the tightening of monetary policy is a temporary move designed to protect the ruble, which has come under pressure owing to recent upheavals on the financial markets.
Dubinin added that the Central Bank's decision to change its ruble policy in 1998 will bolster trust in the currency. Under the new policy, the Central Bank will abandon its ruble corridor, allowing the currency to fluctuate by 15 percent in either direction of a so-called pivot rate. That rate will be set at 6.1 rubles to the U.S. dollar and will inch up to 6.2 rubles to the dollar from 1998-2000.
The new policy coincides with the government's plans to lop three zeroes off the ruble beginning on 1 January 1998, making 1,000 old rubles equal to one new ruble.
Russia has kept to a crawling-peg exchange-rate policy since 1995, allowing the ruble to devalue gradually against the dollar in line with inflation. The government, which has successfully brought down rampant inflation, is targeting a rate of 5-7 percent in 1998.
Dubinin said he expected the ruble to devalue by 2-5 percent in 1998, depending on inflation. He tried to dispel fears that the new ruble policy would lead to major fluctuations in the exchange rate, saying the Central Bank's hard-currency reserves stood at a healthy $22.6 billion as of 1 November. "No leaps of the currency-exchange rate will be allowed," he said. "Neither today, nor tomorrow, nor on New Year's Eve will there be a dramatic devaluation."
But a Central Bank statement acknowledged that the ruble could come under pressure, alluding to trends in other emerging markets such as Brazil and South Korea. Analysts said the bank's decision essentially to widen the band in which the ruble trades could lead to greater volatility but that the move to a more flexible exchange rate regime would send the right signal to speculators.
Peter Boone, an economist at Brunswick Capital Management, said the wider band means the Central Bank may allow the ruble to depreciate in the case of a speculative attack. But he said given Russia's strong economic fundamentals, the ruble would withstand any such attack and quickly bounce back.
Boone said Russia's decision to adopt a more flexible ruble policy is a response to currency problems in other emerging markets, such as Southeast Asia, where rigid exchange rate regimes have attracted the attention of speculators. "It spells the end of very tightly controlled exchange-rate regimes in countries open to foreign capital flows," he commented.
In addition to raising the refinancing rate, the Central Bank also said it would increase its Lombard rates, used for lending to commercial banks, and increase the hard-currency reserve requirements for commercial banks to 9 percent from 6 percent, beginning on 12 November.
The move contradicts the government's previously stated aim of reducing interest rates to free up funds for desperately needed investments in the economy. But Dubinin and Chubais said the temporary interest rate hike is necessary to help lure back funds into the government treasury bill market, which has been hard hit by the worldwide flight from emerging market assets.
As Chubais put it: "Russia is not an island cut off from the rest of the world." He said the hike is a temporary measure designed to shield Russia from the crisis on international financial markets and will be reassessed once markets stabilize.
Economists applauded the government's decision to raise interest rates, saying it will help stem the flow of funds out of treasury bills. Brigitte Granville, chief Russia economist at J.P. Morgan in London, said a currency crisis might have occurred if the Central Bank had not tightened monetary policy. Foreign investors, who want to leave the treasury bill market, need to sell rubles and buy dollars, putting pressure on the ruble to devalue.
Several emerging market economies, such as Brazil and Ukraine, raised interest rates, making Russian treasury bills look less attractive to foreign investors. Although the interest rate hike caused treasury bill prices to plummet, the government hopes the higher yields will tempt investors back, when it issues new bills.
The author is a Moscow-based RFE/RL correspondent.
Reprinted with permission of Radio Free Europe/Radio Liberty