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RFE/RL Newsline, Vol. 2, No. 122, 98-06-29Radio Free Europe/Radio Liberty: Newsline Directory - Previous Article - Next ArticleFrom: Radio Free Europe/Radio Liberty <http://www.rferl.org>RFE/RL NEWSLINEVol. 2, No. 122, 29 June 1998CONTENTS[A] TRANSCAUCASUS AND CENTRAL ASIA
[B] SOUTHEASTERN EUROPE
[C] END NOTE
[A] TRANSCAUCASUS AND CENTRAL ASIA[01] GEORGIAN PARLIAMENT SPEAKER WARNS OF 'CATASTROPHE'Speaking on the last day of the spring parliamentary session, Zurab Zhvania warned that Georgia is headed for "catastrophe" and that he may resign if the country's leadership does not substantively change its present policies, RFE/RL's Georgian Service reported on 27 June. Zhvania did not specify the nature of the changes he considers necessary. Opposition parties have intensified their criticism of Georgian President Eduard Shevardnadze following the fighting in Abkhazia in late May, which led to the exodus of some 35,000 ethnic Georgians from the region. LF[02] ARMENIAN FOREIGN MINISTER WANTS KARABAKH TALKS TO RESUMEVartan Oskanian told journalists on 26 June that adverse international reaction to his recent remarks on Karabakh (see "RFE/RL Newsline," 19 and 24 June 1998) is the result of pressure by Azerbaijan on the international community, Noyan Tapan and RFE/RL's Yerevan bureau reported. Oskanian pointed out that he had proposed direct talks between Yerevan, Stepanakert, and Baku but that Azerbaijan ignored that offer. Oskanian added that Armenia sets no preconditions for a resumption of talks and that Azerbaijan should refrain from doing so in order to break the present deadlock in negotiations. A French Foreign Ministry spokesman told the Armenian ambassador in Paris on 25 June that France "regards negatively" Oskanian's statement on the possibility of reunification between Armenia and the unrecognized Nagorno-Karabakh Republic. LF[03] CENTRAL ASIAN PREMIERS SIGN ACCORDS IN BISHKEKAt an energy summit in Bishkek on 26 June, the prime ministers of Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan signed an agreement on further economic integration between their countries, RFE/RL correspondents reported. They also signed accords on an inter-governmental commission dealing with economic integration, on joint scientific-technical programs, on guaranteeing sanitary conditions in the region, and on providing medical services to one another's citizens. Documents on forming a hydro-power consortium and integrating the four countries' energy systems will be signed at the next meeting in Astana, Kazakhstan, at the end of September. BP[04] TAJIKISTAN CELEBRATES ONE YEAR OF "OFFICIAL PEACE"Tajikistan celebrated the "Day of National Unity" on 27 June, one year after the signing of the Tajik Peace Accord in Moscow, ITAR-TASS reported. In a speech on nationwide radio the previous day, Tajik President Imomali Rakhmonov called the accord " an important and valuable document which has entered the history of the Tajik people." The same day, 100 members of the United Tajik Opposition (UTO) based in the Kofarnikhon and Romit Gorge areas were sworn into the Tajik army. Meanwhile, in an interview in the 26 June edition of "Krasnaya Zvezda," UTO leader with Said Abdullo Nuri praised the peace process in Tajikistan and said Tajikistan will maintain good relations with Russia. He described the presence of Russian border guards in the country as "a necessity." BP[05] NAZARBAYEV TO GO TO MOSCOWThe Russian presidential press service on 27 June announced that Kazakh President Nursultan Nazarbayev will be in Moscow on 6-7 July, ITAR-TASS reported. Yeltsin was scheduled to visit Kazakhstan beginning 30 June for meetings with the heads of the CIS Customs Union and to review the five- country CIS-China border treaty with the leaders of the signatory countries. Russian Foreign Minister Yevgenii Primakov will go to Kazakhstan instead of Yeltsin. Many of the documents Yeltsin was to have signed in Almaty on Russian-Kazakh relations will be brought to Moscow for signing there. According to ITAR-TASS, they include a treaty of "eternal friendship and alliance for the 21st century" as well as an agreement on delimitation of the northern Caspian Sea bed. BP[06] WORLD BANK GIVES $28 MILLION CREDIT TO UZBEKISTANThe World Bank has extended a $28 million loan to Uzbekistan to support the privatization process, ITAR-TASS reported on 26 June. The loan will be used to provide consulting services to increase profits and production efficiency, help privatize large government enterprises, and develop market capital. The total cost of the project is put at $47.7 million. The Uzbek government will pay the difference of $19.7 million. BP[B] SOUTHEASTERN EUROPE[07] HOLBROOKE SAYS WAR IS NEAR...U.S. envoy Richard Holbrooke said on 27 June that the situation in Kosova is "only a few steps away from a general war," an RFE/RL correspondent in Crans-Montana reported. Holbrooke, speaking at the Crans-Montana forum in Switzerland, said an observer mission made up of diplomats would be arriving in Kosova "as quickly as possible." Holbrooke said the U.S. lays the blame for the "tragedy" in Kosova on Belgrade and said a change in Kosova's status is essential to resolving the conflict. PB[08] ...AS YUGOSLAV PREMIER WALKS OUT OF CONFERENCEMomir Bulatovic left the Crans-Montana economic forum on 28 June after a session on security in Europe was abruptly canceled, Reuters reported. The session was to include Holbrooke and Albanian Prime Minister Fatos Nano. Nano refused to attend the session, saying it was pointless "because they continue to massacre the civilians." A Yugoslav Foreign Ministry official called the incident "scandalous." PB[09] U.S. MEETS WITH REBEL KOSOVAR LEADERSHolbrooke on 28 June said that Washington has held its first official talks with leaders of the Kosova Liberation Army (UCK), Reuters reported. Holbrooke said that Robert Gelbard met with UCK officials on 26 June at an undisclosed location. He added that ethnic Albanian leader Ibrahim Rugova was told of the meeting and supported it. Holbrooke said talks with UCK leaders will continue if those officials prove they have control over their own military forces. In Belgrade, Russian Deputy Foreign Minister Nikolai Afanasievskii said after meeting with Yugoslav President Slobodan Milosevic that the Yugoslav president has kept "all of the promises" he had made to Russian President Boris Yeltsin in Moscow last week. PB[10] ALBANIAN PREMIER CLARIFIES POSITION ON KOSOVANano said in Crans Montana on 26 June that he does not support independence for Serbia's Kosova province but added that it should be given the status of a republic within Yugoslavia, an RFE/RL correspondent reported. Nano called on Yugoslav President Slobodan Milosevic to withdraw his forces from Kosova and on the Kosova Liberation Army to halt its armed uprising. Nano said that Kosova shadow state President Ibrahim Rugova "is a figure without real authority" and that "the UCK should understand that behaving like civilians is the best solution." He called for NATO air strikes against Serbian military targets but said that a UN mandate would be a precondition for such a step. FS[11] ITALY, GREECE, GERMANY, ANNAN WANT UN MANDATE FOR NATO ACTIONItalian and Greek Prime Ministers Romano Prodi and Kostas Simitis, meeting on Corfu on 28 June, said that they want a UN mandate as a precondition for NATO action in the federal Yugoslavia. UN Secretary- General Kofi Annan and German Foreign Minister Klaus Kinkel, who met in London on 28 June, expressed the same view. Annan said military action without the mandate would constitute a "dangerous precedent." Meanwhile, the international community's high representative to Bosnia- Herzegovina, Carlos Westendorp, has rejected a proposal by Bosnian co-Premier Haris Silajdzic to allow NATO to use bases there for air strikes against Yugoslavia, RFE/RL's South Slavic Service reported on 26 June. FS[12] FIGHTING CONTINUES IN KOSOVAHeavy fighting was reported between ethnic Albanians and Serbian police around the village of Pantina, in central Kosova, dpa reported on 27 June. Belgrade Radio reported that UCK forces captured the town the previous day. No casualty figures are available. Armed ethnic Albanian forces are also reported to be maintaining a cordon around the predominantly Serbian village of Kijeva, between Prishtina and Peja. Serbian forces, in turn, have encircled the Albanian forces and are attacking them with Yugoslav army helicopters, RFE/RL's South Slavic Service reported. The village has about 200 Serbian inhabitants. There were also numerous reports of clashes along the Kosova border with Albania and along roads leading to Prishtina. PB/FS[13] UNHCR ALLOWED INTO KOSOVAThe UN High Commissioner for Refugees, Sadako Ogata, said that UNHCR and UN World Food Program aid teams were allowed into Kosova for the first time on 25 June, Reuters reported. Ogata said they were able to bring food to some 600 refugees in the village of Junik. She said the refugees, mainly women and children, are in "pretty bad physical shape" and are living in makeshift shelters. PB[14] MACEDONIA PROTESTS YUGOSLAV AIR INCURSIONSThe Macedonian Defense Ministry on 26 June sent a letter of protest to the Yugoslav embassy in Skopje over violations of its airspace by Yugoslav fighter planes, AFP reported. A Defense Ministry spokesman said two Yugoslav MiG-21s flew over Macedonia on 19 and 23 June. He called the flights intentional and provocative. PB[15] WAR CRIMES SUSPECT FOUND DEAD AT HAGUESlavko Dokmanovic, a Serb who was awaiting the verdict in his war crimes trial at The Hague, was found hanged in his jail cell on 29 June, AP reported. Dokmanovic was charged with playing a key role in the massacre of some 200 Croats in Vukovar in 1991. PB[16] BOSNIAN CROATS FOUND NEW PARTYNearly 200 representatives from all of Bosnia-Herzegovina's cantons have officially formed the New Croatian Initiative, Hina reported on 27 June. Most of the party founders are former members of the Croatian Democratic Community in Bosnia- Herzegovina (HDZ-BH). Kresimir Zubak, the Croatian member of the Bosnian presidency and the leader of the New Croatian Initiative, said the party has a "Christian Democratic orientation." Zubak complained that the HDZ-BH was favoring the interests of Croats from Herzegovina over those of Croats from other parts of Bosnia who want to live peacefully with Muslims and Serbs. He added that the Herzegovinian Croats of the HDZ-BH still support separation, RFE/RL's South Slavic Service reported. FS[17] BALKAN DEFENSE MINISTERS AGREE TO CREATE MULTINATIONAL FORCEThe Defense Ministers of Italy, Turkey, Greece, Bulgaria, Romania, Macedonia and Albania agreed on 26 June in Athens to create a multinational force. They scheduled a meeting for the fall in Skopje to draw up a document establishing such a force, RFE/RL's South Slavic Service reported. FS[18] CROATIAN PARLIAMENT APPROVES GOVERNMENT PLAN FOR REFUGEE RETURNThe Croatian government on 26 June approved a government plan providing for the return of Serbian refugees and other displaced persons. Zagreb has been under pressure from the international community to allow the return of Serbs. The plan was crafted with the help of Western envoys. Foreign Minister Mate Granic said legislators helped the government make "a great step toward the EU and Western integration," RFE/RL's South Slavic Service reported. The law provides for the unconditional return of those displaced by Croatia's battles against rebel Serbs from 1991-1995. FS[19] ROMANIA'S HUNGARIAN ALLIANCE TO REMAIN IN RULING COALITIONThe Council of Representatives of the Hungarian Democratic Federation of Romania (UDMR), meeting in Cluj on 27-28 June, voted against a proposal to leave the ruling coalition now. At the same time, the council set a timetable for the government and the parliament to approve legislation meeting the demands of the UDMR, saying the executive must take "concrete measures" to set up a Hungarian-language state university and the parliament must approve the regulation amending the education law by 31 October, an RFE/RL correspondent in Cluj reported. MS[20] TOKES REJECTS ALLEGATION OF COLLABORATION WITH SECURITATEAt the same meeting, the council decided to set up a special commission to examine how to tackle allegations that UDMR leaders collaborated with the Securitate. Responding to the publication last week in "Adevarul" alleging he was a collaborator, honorary chairman Laszlo Tokes did not deny the authenticity of a document he signed pledging to inform if "national security" were at stake. He stressed, however, that he was forced to sign that document and never acted as an informer. He added that the latest public revelations were orchestrated by Romanian Intelligence Service employees who were seeking to retain control over the files and trying to discredit genuine former dissidents. On 26 June, the military branch of the Prosecutor-General's Office announced it has opened an investigation against a SRI employee who leaked to the press the document that attested to former Health Minister Francis Baranyi's links with the Securitate. MS[21] MOLDOVA TO PRIVATIZE ENERGY SECTORThe parliament on 25 June approved a "Concept for Privatizing Enterprises in the Energy Sector," RFE/RL's Chisinau Bureau reported. The document stipulates that the majority share in three power plants and five energy distribution companies is to be offered to foreign investors in an international tender. Deputy Prime Minister Ion Sturdza said the privatized companies' debts will be covered by the state budget. He said the energy sector is in need of urgent investments totaling some $700 million and that the state budget "simply cannot cover that huge amount." MS[C] END NOTE[22] OIL PRICE DECLINE FAILS TO DAMPEN AZERBAIJAN'S RECOVERYby Michael WyzanThe Azerbaijani economy was one of the best performers in the CIS in 1997 and continues to hold that position this year. The prices that Azerbaijan receives for its oil have been declining steadily, falling from $20.10 barrel in the first quarter of 1997 to $13.40 a year later. So far, however, this decline has not had a significant adverse effect on the economy. The first place to look for the effects of the price decline is in the state budget. Indeed, during the first three months of this year, oil revenues fell by 8.3 percent compared with the same period last year, accounting for 43 percent of total revenues (52 percent in 1997). But total tax revenues were more or less unchanged, as the authorities were able to improve tax collection. Unusually low oil prices are nonetheless expected to persist at least until the end of this year and the government is discussing with the IMF ways to cut expenditures, especially social ones. Local economists point out that it would be better to extract more taxes from illegal importers--who often have close relations with state officials--than to cut social benefits. Foreign direct investment (FDI) topped $1 billion in 1997, and the 10 biggest oil contracts, which typically run for 30 years, entail investment of $33-34 billion. But despite its oil wealth and the large inflow of foreign capital, Azerbaijan remains impoverished. The average monthly wage in the fourth quarter of last year was only $36, and households currently spend about 80 percent of their incomes on food, beverages, and tobacco, compared with 61 percent when the country gained independence. Another reason why the fall in oil prices has had modest effects on the country is that annual oil production is only about 10 million metric tons, compared with 21 million tons in the mid-1960s and to an expected 50-60 million tons by 2005. In 1997, oil export revenues were only $480 million, less than half of FDI that year. Accordingly, for the next few years, low oil prices will have a big impact on the economy only if they slow down or discourage FDI, either by making oil companies more pessimistic or because they simply do not have the funds to invest. So far, there are no signs of a slackening of investment activity. As recently as 2 June, Azerbaijan signed three new production-sharing agreements worth $4 billion with major oil companies. Last year's strong economic performance seems to be continuing this year. In 1997, Azerbaijan's GDP grew by 5.8 percent, faster than all CIS member states, except Belarus, Georgia, and Kyrgyzstan. GDP growth accelerated further to 8.5 percent during the first four months of 1998. Industrial production, however, remains flat, rising by only 0.3 percent last year and increasing by just 0.4 percent during January-April 1998. Nonetheless, the oil sector is doing well so far in 1998. After falling from 12.5 million tons in 1990 to 9 million in 1997, first-quarter production--at 2.24 million tons--was well ahead of the pace necessary to attain the 10.1 million tons targeted for 1998. Inflation has all but disappeared, with consumer prices rising by only 0.4 percent in 1997 (on a December-to- December basis) and falling by the same percentage during the first quarter of 1998 compared with the same period last year. These are the lowest figures among transition countries. Low inflation has resulted largely from tight fiscal and monetary policy: budget deficits in the last two years have been under 3 percent of GDP and heavily financed by IMF credits. Another reason for the low level of inflation is that the manat has been appreciating against the dollar. Since reaching 4,440 manats to $1 at the end of 1995, the exchange rate strengthened to 3,806 at the beginning of June. An appreciating currency reduces inflation by making imports cheaper, other things being equal. Such an appreciation would generally raise concerns about potential balance- of-payments imbalances. Indeed, in 1997, Azerbaijan had a current account deficit exceeding $915 million, a very high 29 percent of GDP. Much of that red ink was accounted for by a trade deficit of $567 million. However, the current account deficits have been more than compensated for by capital account surpluses. In 1997, that surplus was $1.2 billion, 87 percent of which was generated by FDI. Current account deficits are likely in the next few years, since imports of oil-related equipment and services will far exceed exports of crude oil. In the medium term, Azerbaijan will need to worry less about these deficits than about the effects of capital inflows, which will likely keep the exchange rate strong, probably making it difficult to export other goods. The author is a research scholar at the International Institute for Applied Systems Analysis in Laxenburg, Austria. 29-06-98 Reprinted with permission of Radio Free Europe/Radio Liberty
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