|Thursday, 19 July 2018|
RFE/RL Newsline, Vol. 2, No. 107, 98-06-05
From: Radio Free Europe/Radio Liberty <http://www.rferl.org>
Vol. 2, No. 107, 5 June 1998
[A] TRANSCAUCASUS AND CENTRAL ASIA
[B] SOUTHEASTERN EUROPE
[C] END NOTE
[A] TRANSCAUCASUS AND CENTRAL ASIA
 ABKHAZ TALKS CONTINUECIS Executive Secretary Boris Berezovskii returned from Tbilisi to Abkhazia for a second round of talks with Abkhaz President Vladislav Ardzinba in Gagra on 4 June, Russian agencies reported. Ardzinba told journalists that significant progress was made in preparing for a meeting between himself and Georgian President Eduard Shevardnadze, adding that "appropriate documents" will be drafted within the next few days. In Moscow, the head of the Russian Foreign Ministry task force that is mediating a settlement of the Abkhaz conflict said talks between the Georgian and Abkhaz special envoys are also making progress. But in Tbilisi, Georgian presidential adviser Levan Aleksidze said the Russian Foreign Ministry's rejection of a Bosnia-style peace enforcement operation in Abkhazia violates the document on additional measures for resolving the Abkhaz conflict adopted at the April CIS summit. LF
 U.S. AGAIN VETOES OIL EXPORT PIPELINE VIA IRAN...Meeting with President Heidar Aliev in Baku on 4 June, U.S. Special Envoy to the Newly Independent States Stephen Sestanovich said Washington supports a multi-variant approach to the transportation of Caspian hydrocarbons to world markets, Russian agencies reported. At the same time, he ruled out routing any pipeline through Iran. U.S. Energy Secretary Federico Pena, speaking at the "Crossroads of the World" conference in Istanbul last week, fully endorsed the Baku-Ceyhan route for the Main Export Pipeline and pledged to try to secure U.S. funding for it. ANS-Press on 3 June quoted Turkish Energy Secretary Cumhur Ersumer as affirming that Turkey is ready to fund the Baku-Ceyhan project if Azerbaijan drops its insistence on retaining the decisive vote in managing the new pipeline company. LF
 ...WHILE BAKU CONSIDERS ALTERNATIVESSpeaking at a press conference in Baku pegged to the Fifth Caspian Oil and Gas Exhibition, Natik Aliev, the president of Azerbaijan's state oil company SOCAR, said Baku is currently assessing 11 export pipeline routes. He described the Iranian route as economically attractive but said that export via Bulgaria and Greece to the Mediterranean is also an option. Aliev added that, in view of its superior quality, Azerbaijani oil could be refined in Ukraine, Bulgaria, and Romania. "Nezavisimaya gazeta" on 4 June reported that SOCAR and the Russian pipeline concern Transneft have concluded an agreement on the export of 9- 10 million metric tons of Azerbaijani oil from Baku to Novorossiisk when the current export agreement expires in 2001. LF
 EVACUATION OF BARSKOON BEGINSKyrgyz Deputy Prime Minister Boris Silayev on 4 June announced that 3,500 residents of the Barskoon area on the southern shore of Lake Issyk- Kul will be evacuated to the northern shore, RFE/RL correspondents reported. The village of Barskoon is located near the scene of the 20 May spill of sodium cyanide into the Barskoon River. More than 1,000 people received medical attention in the week following the spill, and one woman died from cyanide poisoning. Residents of the southern shore are demanding the Kumtor gold mining operation, which is responsible for the spill, be shut down. Concerns have also been raised about the storage of 2,000 tons of sodium cyanide in the town of Balykchy, on the western shore of Issyk-Kul. Despite mounting evidence of a major environmental disaster, government officials continue to say it is safe to swim in the lake. BP
 AKAYEV FAVORS ELECTORAL REFORMKyrgyz President Askar Akayev, addressing a 4 June conference on "Improving the Election System in Kyrgyzstan," said he wants to abolish the requirement of at least 50 percent turnout for an election to be valid, Interfax reported. Akayev said the cost of holding run-off elections is too high and that he favors "winner-takes-all" elections. An amendment has been drafted and is expected to be submitted to the parliament later this year. BP
 BLACK SEA ECONOMIC COOPERATION FORUM CONVENES IN YALTAAt a forum of the Black Sea Economic Cooperation (BSEC) organization in Yalta on 5 June, the BSEC leaders signed a joint declaration and a charter proclaiming the BSEC a regional economic organization, ITAR-TASS reported. Ukrainian President Leonid Kuchma said in his opening speech that "the BSEC is transforming into a major component of Europe's new security system." He added that Ukraine is in favor of creating a BSEC free-trade zone. The forum is attended by the presidents of Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Moldova, Romania, Turkey, and Ukraine as well as the prime ministers of Greece and Russia. JM
 BEREZOVSKII DENIES PLANS TO MOVE CIS HQCIS Executive Secretary Boris Berezovskii told journalists on 4 June that allegations that he plans to transfer CIS headquarters from Minsk to Moscow are untrue, Interfax reported. Belarusian envoy to the CIS Sergei Posokhov had claimed on 3 June that Berezovskii and his staff had made preparations for such a move. Posokhov had expressed Belarus's strong opposition to such an intention. He added that Ukraine, Uzbekistan, Armenia, and Tajikistan had similarly expressed objections to that intention. LF
[B] SOUTHEASTERN EUROPE
 SERBIAN OFFENSIVE CONTINUES IN KOSOVAThe Decan region of western Kosova remains sealed off, as Serbian paramilitary and army forces continue assaults on ethnic Albanian villages, Western agencies reported on 4 June. Electricity and phone lines remain cut in the area, and reporters, international observers, and humanitarian workers are being kept out. Serbian officials said some 40 people, including two Serbian policemen, were killed in the latest operation, which, they added, rooted out fighters from the Kosova Liberation Army (UCK) and secured roads from Prishtina to Pec and from Pec to Djakovica. Several sources in Belgrade estimate casualties to be much higher, although no independent figures are available. Serbian forces are reported to be amassing near Glodjane and Jablanica, reputed to be a UCK stronghold. A Serbian provincial administrator in Kosova told B-92 radio in Belgrade that "talk of expelling people is speculation" and that ethnic Albanians have "cleansed entire villages" of Serbs. About 50,000 people are estimated to have been displaced by the military action. PB
 REFUGEES FLOOD ALBANIA, MONTENEGROSome 12,000 Kosovar refugees were reported to have entered northern Albania by 4 June, with another 7,000 entering Montenegro. Albanian Television reported on 4 June that over the past several days, only 4,000 refugees have officially registered in Albania. It appealed to all other refugees to do so. The UNHCR in Geneva said some 6,500 refugees had arrived in Albania by 4 June, but some Albanian media reports cite figures of up to 15,000. According to a Red Cross spokesman in Tirana, some 80 percent of the refugees are women and children and about half of them are under 15 years of age, "Koha Jone" reported. FS
 KINKEL CALLS FOR NATO FORCE ON KOSOVA-ALBANIA BORDER...German Foreign Minister Klaus Kinkel said NATO must decide quickly whether to send NATO troops to Albania to prevent the violence from spreading. Kinkel, speaking at a conference in Palermo, said the alliance's first option is to create a "cordon sanitaire." Kinkel warned Yugoslav President Slobodan Milosevic that once there, NATO troops could intervene in Kosova if the situation became "absolutely chaotic." Albanian Foreign Minister Paskal Milo, speaking at the Black Sea Economic Cooperation conference in Yalta, said Kosova is on the brink of an "open war" and that the West has given Milosevic more of a "carrot than a stick." PB
 ...BUT MOSCOW PREFERS UN MONITORSRussian Foreign Ministry deputy spokesman Valerii Nesterushkin told Interfax on 4 June that Russia has proposed that a UN force now operating in Macedonia should be used to monitor the border between Albania and Kosova. He added that the Russian government opposes the use of NATO troops because it "could set a dangerous precedent of using the alliance's troops outside the scope of the organization's activity, without authorization by the UN Security Council." PG
 KOSOVARS CALL OFF TALKS WITH BELGRADEEthnic Albanian leaders suspended talks with Serbian officials scheduled for 5 June, citing the recent Serbian offensive and the flight of refugees to Albania, Reuters reported. Fehmi Agani said the "escalation of force" is in "contradiction with the spirit of the talks." Serbian sources said the delegation from Belgrade will arrive in Prishtina as scheduled, despite the Kosovars' announcement. The U.S. envoy to the region, Robert Gelbard, said he will attempt to reinstate the talks so that the situation does not "unravel further." Kosovar Albanian shadow state President Ibrahim Rugova canceled a visit to various European cities and returned to Prishtina because of the worsening situation. PB
 MONTENEGRIN PRESIDENT REFUSES TO SEND SOLDIERS TO KOSOVAMilo Djukanovic told the Madrid daily "El Mondo" recently that if the federal Yugoslav army takes part in fighting in Kosova, he will request a Montenegrin parliament vote banning the participation of Montenegrin soldiers. Albanian Television quoted Djukanovic as saying that "I consider this a private war of [federal Yugoslav President Slobodan] Milosevic, and for his private wars, we will not sacrifice the lives of our Montenegrin soldiers." As of 3 June, some 150 Montenegrin soldiers had refused orders to go to the region since the current crisis began in February. FS
 NATO TEAM IN MACEDONIAA 40-member team of NATO experts arrived on 4 June in Macedonia to assess the border situation there, AFP reported. Macedonian Defense Minister Lazar Kitanoski told reporters that NATO's presence in the country "would depend on the UN Security Council." The team is expected to travel to Albania in a few days, a Pentagon spokesman said. PB
 ALBANIAN DEMOCRATIC PARTY LEGISLATORS SHOT ATUnidentified gunmen shot at a car carrying legislators Azem Hajdari and Vili Minarolli in the city of Bajram Curri on 3 June. The two lawmakers were unhurt, but another passenger, Bardhyl Pollo, the former director- general of Albanian Radio and Television, was injured. Also traveling in the car was the wife of former President Sali Berisha. "Rilindja Demokratike" said the Albanian government and the federal Yugoslav secret service were behind the attack, but "Gazeta Shqiptare" quoted unnamed observers as saying the gunmen were from an unspecified large northern clan that is fighting with the Hajdari clan for control over the city. FS
 WORLD BANK APPROVES CREDIT FOR BOSNIA...The World Bank approved a $63 million loan for Bosnia- Herzegovina on 4 June after the IMF approved the country's macroeconomic program, dpa reported. The money is to be used to reform public finances and help Bosnia keep up with foreign debts. Christian Portman, the World Bank director in Bosnia, said the loan marks the move from "reconstruction to consolidating institutions." PB
 ...AS U.S. SUSPENDS ARMY TRAINING PROGRAMThe U.S. State Department has suspended part of the "Train and Equip" program for the Muslim-Croat Federation army, dpa reported on 4 June. The Bosnian government refused to confirm that report, but diplomats are quoted as saying that the Bosnian Croats' refusal to accept joint state symbols, neutral license plates, or the integration of the Muslim-Croat police are the reasons for the stoppage. Officials are also upset with Bosnian officials' weak efforts in allowing non-Muslims to return to Sarajevo. Those parts of the program suspended are reported to include training of new soldiers and the allocation of military equipment. PB
 TEACHERS STRIKE IN CROATIAElementary and high- school teachers nationwide staged a one-day strike on 4 June to protest the government's refusal to raise their salaries. It was the second strike in two weeks and occurred during end-of-year examinations. Croatian government officials originally approved a 12.5 percent pay raise but then backed down on 3 June citing a lack of funds. Teachers unions are threatening to extend the strike if the government does not keep its pledge. PB
 ETHNIC HUNGARIANS THREATEN TO LEAVE ROMANIAN COALITIONBela Marko, chairman of the Hungarian Democratic Federation of Romania (UDMR), said on 4 June his formation will leave the ruling coalition if the parliament fails to approve during the current session demands that the UDMR had earlier agreed on with its partners. He pointed to amendments to the laws on education and local administration, as well as the setting up of a Hungarian-language university, RFE/RL's Bucharest bureau reported. Marko also criticized the slow pace of reform and the absence of a permanent coordination body where coalition party leaders could discuss differences. The UDMR chairman said his formation "is not engaging in blackmail but in a realistic assessment of the tasks ahead." MS
 ROMANIAN SOCIAL DEMOCRATIC PARTIES QUARRELSergiu Cunescu, leader of the Social Democratic Party of Romania (PSDR), said on 4 June that his party has "absolutely no intention" of leaving the government. The previous day, a spokesman for the Alliance for Romania (APR) party had urged to PSDR to take that move. Cunescu said that from the start, the agreement between the PSDR and the APR was on cooperation within the parliament and not on a merger between the two formations (see "RFE/RL Newsline," 4 June 1998). Meanwhile, Paula Ivanescu, deputy chairwoman of the Democratic Party, has told journalists that the Social Democratic Union, which her party and the PSDR formed before the November 1996 election, has "in practice" ceased to function, RFE/RL's Bucharest bureau reported on 4 June. MS
 BULGARIA TO RETURN ROYAL ASSETSThe Constitutional Court on 4 June ruled that the state must return property and assets confiscated from the country's royal family in 1947, AFP reported. The ruling comes as Princess Marie-Louise, sister of former King Simeon II, is paying a visit to her homeland. The assets include a palace in Sofia, a villa, the winter resort of Borovetz, three chalets, a farm,. and a house. In other news, 86-year-old former communist dictator Todor Zhivkov has been released from hospital, where he was treated for three weeks following a "diabetes crisis," dpa reported, citing the daily "24 Chasa." MS
[C] END NOTE
 LITTLE SIGN OF BALANCE-OF-PAYMENTS CRISIS IN TURKMENISTANby Michael Wyzan
Turkmenistan's GDP and exports are dominated by gas and cotton. Its largely unreformed economy has been more affected by developments on these markets than by the trends that usually characterize transition economies.
The lack of reform extends to the statistical authorities. The country publishes less economic data than any other CIS member. Even now, the CIS's Interstate Statistical Committee still has virtually no 1997 figures on Turkmenistan. That makes it difficult to figure out from abroad what is happening there; visiting the country is not particularly helpful either in identifying macroeconomic trends, as the author learned in April.
What data are available show GDP falling by about 25 percent in 1997. Turkmenistan should also should be experiencing a balance-of-payments crisis, having run up an approximately $250 million trade deficit and $600 million current account deficit last year (an enormous 32 percent of GDP) following many years of surpluses on both accounts. While imports contracted last year by about 50 percent to some $1 billion, exports fell by more than 55 percent to around $750 million.
However, there is little indication so far of any crisis. Construction continues day and night on a number of large infrastructure or "prestige" projects, such as a congress hall and an arch commemorating the country's neutrality. All such construction is carried out by foreign contractors, who must be paid in foreign currency, and makes uses of imported machinery. For a city with some 400,000 inhabitants, Ashgabat has an unusually large number of hotels, with restaurants serving imported food.
Most important, Turkmenistan has yet to agree to a reform program with the IMF, making it one of only two post-communist countries never to have done so (the other being Yugoslavia). Thus, there has been no lending from the IMF to support the balance of payments. Moreover, the absence of an IMF program means that the World Bank is unable to lend the country more than $100 million.
Despite the collapse in exports and GDP, certain other macroeconomic indicators were favorable in 1997: consumer price inflation (December-to- December) fell to 21 percent from 446 percent in 1996. The parallel market exchange rate (Turkmenistan maintained a multiple exchange rate system until April) was stable, while monetary policy was tight and the budget essentially balanced.
The large decline last year in GDP resulted chiefly from a collapse in gas exports. During the Soviet era, Turkmenistan exported about 70 billion cubic meters of gas annually; by 1997, this figure had fallen to 6.5 billion, down by 70 percent from 1996. Gas export revenues fell from $674 million in 1996 to $274 million last year.
The reason for last year's decline is clear: in March 1997, the government halted gas exports to its CIS partners--namely, Armenia, Georgia, and Ukraine-- because these countries had built up large arrears to it for earlier deliveries.
The larger, longer-term decline set in 1994, when a dispute with Gazprom resulted in the company's refusal to allow Turkmen gas into its pipeline for sale to European customers. The issues in dispute largely concern the price of the gas and the share of the payment that is to be made in currency (rather than by barter).
In any case, since a large amount of gas has not been paid for, the positive entry in the current account under gas exports has had to be netted out in the capital account. Last year, both the positive and negative entries fell, which meant that the decline in gas exports had a smaller impact on the balance of payments than would normally be the case.
Cotton production rose last year to 630 million tons, from 436 million tons in 1996, although it remains far below the Soviet-era peak of 1.4 billion tons. Even with the increase in production, however, cotton exports fell last year, when the harvest remained unsold due to a price disagreement with Turkish and Pakistani buyers.
Another factor restraining imports is the authorities' use of administrative methods to achieve precisely that end. Access to foreign exchange is severely restricted, with most such currency made available through auctions. And those wishing to import consumer goods are not ordinarily allowed to participate in those sales.
Finally, Turkmenistan has weathered its balance-of- payments problems partly because it has unusually large foreign reserves, amounting to almost $1 billion at the end of 1997. This is equivalent to 15 months of imports, easily the highest such figure in the CIS. These reserves even grew slightly in 1997.
Much of the reserves are directly under the president's control. If, as feared, the country registers another $500-600 million current account deficit this year, maintaining macroeconomic stability will depend on whether the president decides to release some of "his" reserves. This is a matter about which observers can only speculate.
The author is an economist living in Austria.
Reprinted with permission of Radio Free Europe/Radio Liberty