|Thursday, 22 August 2019|
RFE/RL Newsline, Vol. 2, No. 188, 98-09-29
From: Radio Free Europe/Radio Liberty <http://www.rferl.org>
Vol. 2, No. 188, 29 September 1998
[A] TRANSCAUCASUS AND CENTRAL ASIA
[B] SOUTHEASTERN EUROPE
[C] END NOTE
[A] TRANSCAUCASUS AND CENTRAL ASIA
 TAJIK OPPOSITION TO RESUME COOPERATION WITH GOVERNMENTAgreement was reached on 28 September at a nine-hour meeting between President Imomali Rakhmonov, United Tajik Opposition leader Said Abdullo Nuri, and all members of the National Reconciliation Commission representing both camps that the opposition will resume its work in the government and the commission, Russian agencies reported. The opposition had suspended their participation on 26 September pending the arrest of the killers of prominent opposition figure Otakhon Latifi. Rakhmonov and Nuri signed a 10-point program of measures intended to stabilize the situation in the country. Those measures include creating a government-opposition commission to investigate Latifi's murder and expediting the reform of the cabinet that will provide opposition representatives with 30 percent of government posts. LF
 INDEPENDENT KAZAKH NEWSPAPER PREMISES BOMBEDThe offices in Almaty of the independent Russian-language newspaper "21-iy vek" were destroyed on 26 September by two bombs, RFE/RL 's Almaty bureau reported. The newspaper has regularly printed materials criticizing the Kazakh leadership. Recently, publishing houses have refused to print it. Editor Bigeldy Gabdullin told RFE/RL on 29 September that police have sealed off the burned-out premises and refused him and his staff entry. LF
 KYRGYZ OPPOSITION CALLS FOR CANCELLATION OF PLANNED REFERENDUMMeeting in Bishkek on 28 September, the leaders of the Communist, Socialist, Agrarian, and Democratic Parties called on President Askar Akaev to cancel next month's planned referendum on proposed constitutional amendments and private land ownership, Interfax reported. They reasoned that given the acute economic situation, Akaev should instead concentrate on social and economic issues. The opposition leaders also appealed to Akaev to dismiss the present government and to halt what they termed the cabinet's persecution and discrediting of parliament deputies. During a roundtable discussion broadcast by an independent Bishkek television station on 26 September, Central Electoral Commission chairman Sultan Imanbaev said that Akaev decided to put the planned changes to a referendum because the parliament would have rejected those amendments curtailing its own powers, RFE/RL's Bishkek bureau reported. LF
 AZERBAIJANI OPPOSITION CONVENES MARCH IN BAKUAzerbaijani opposition supporters marched in Baku on 27 September to demand the postponement of the 11 October presidential poll, Russian agencies reported. Earlier, they had reached a compromise agreement with Baku Mayor Rafael Allakhverdiev over the route of the march. The participants also demanded a meeting with incumbent President Heidar Aliev, parliamentary chairman Murtuz Alesqerov, and Constitutional Court chairman Khanlar Gadjiev to discuss their election-related demands. The organizers estimated the number of marchers at 100,000, while the Azerbaijani Interior Ministry said they numbered only 4,000. Police escorted the marchers but took no action against them. Meeting with voters in Sumgait on 26 September, Aliev accused the opposition of attempting to destabilize the country. He affirmed his readiness to meet with representatives of any political parties, but only if they impose no preconditions for such a meeting, according to Turan. LF
 AZERBAIJAN DENIES CFE VIOLATIONSAzerbaijani presidential adviser Vafa Gulu-zade has rejected a statement by Armenian President Robert Kocharian in his 25 September address to the UN General Assembly as "invention," Turan reported on 26 September. Kocharian said that Azerbaijan has exceeded the maximum limit set by the 1990 Treaty on Conventional Forces in Europe in three categories of armaments for land forces. Gulu-zade accused Armenia of violating the treaty and of having acquired from Russia both S-300 and Scud missiles. Gulu-zade also denied that Azerbaijan is setting preconditions for resuming talks on resolving the Karabakh conflict. And he accused Armenia of obstructing such talks by rejecting the principles endorsed at the 1996 OSCE summit in Lisbon. LF
 KARABAKH HOLDS LOCAL ELECTIONSNo major incidents or violations were reported during the local elections held in the unrecognized Nagorno-Karabakh Republic of 27 September, RFE/RL's Stepanakert correspondent reported. Voter participation exceeded 80 percent in rural areas but was only 51 percent in the capital, where the unrecognized republic's former interior minister, Karen Babayan, polled 87 percent of the vote to defeat his sole rival, Georgi Petrosian of the Dashnak party's (HHD) Karabakh organization. Petrosian's campaign manager had issued a statement on the eve of the poll claiming that Nagorno- Karabakh state television could not be impartial in its coverage of the vote as its chief director is one of Babayan's proxies. The international community has not commented on the outcome of the elections, which Azerbaijan has termed illegal (see "RFE/RL Newsline," 18 September 1998). LF
 BOMB EXPLODES IN TBILISI ON EVE OF SOLANA VISITA bomb that exploded 100 meters from the Georgian parliament building in Tbilisi during the night of 28-29 September shattered windows in neighboring buildings but injured no one, Caucasus Press reported. It is unclear whether there is any connection between the explosion and the fifth anniversary on 28 September of the fall of the Abkhaz capital, Sukhumi, or the two-day visit to Tbilisi by NATO Secretary-General Javier Solana, which begins on 29 September. On 28 September, four more members of the Russian peacekeeping force in Abkhazia were injured when their armored vehicle hit an anti-tank mine in Abkhazia's Gali Raion, Interfax reported. LF
[B] SOUTHEASTERN EUROPE
 ALBANIAN PREMIER, INTERIOR MINISTERS RESIGN...Socialist Prime Minister Fatos Nano resigned that office on 28 September. Earlier the same day, Interior Minister Perikli Teta of the Democratic Alliance Party quit his post. Both resignations came after the five governing coalition parties failed to agree on unspecified government changes. In a letter to President Rexhep Meidani, Nano said that he stepped down because squabbling within the ranks of his party and the coalition had made it impossible to form a new cabinet. He added that "I am not receiving any credible signal of solidarity either from parts of the Socialist Party or from the coalition partners." Teta told journalists that "the Albanian political [elite] is unable to bring the country out of the current grave political crisis." He described the country's leadership as "corrupt and incompetent," the BBC reported. A BBC reporter suggested that Teta was unhappy with Nano's "disappearance" from public view during the recent unrest. FS
 ...WHILE BERISHA HAILS MEIDANIGunfire erupted in several parts of Tirana on 28 September as word of Nano's resignation spread. Political commentator Fatos Lubonja told the BBC that opposition supporters celebrating the resignation apparently fired the shots. Police stepped up patrols in the capital, fearing a repetition of the unrest there earlier this month (see "RFE/RL Newsline," 16 September 1998). Opposition Democratic Party leader and former President Sali Berisha said that Nano's resignation "opens the way for dialogue" between the opposition and the governing coalition. He added that Meidani played an unspecified role in Nano's resignation and added that "the president has paved the way for a political solution [of the] deep crisis." Berisha urged the creation of a government of technocrats and stressed that the new interior minister should be "honest and [not] work with gangs and smugglers." FS
 MAJKO TO REPLACE NANO?Meidani asked Nano to stay on until a new government can be formed. Socialist Party legislator Musa Ulqini said on 28 September that the party will propose its secretary- general, Pandeli Majko, as Nano's replacement, but he gave no indication that the Socialists will consider new elections, which the opposition Democrats demand. Widely regarded as a reformer, the 31-year-old Majko began his political career in the student protests that toppled the communist dictatorship in 1990. Majko recently tried unsuccessfully to end the feud between Nano and Berisha. Lubonja, however, questioned whether Majko has the experience and authority to fill the current power-vacuum. He suggested that Meidani, whose position has been largely ceremonial, will have to play a greater political role in the future. FS
 COHEN SAYS NO EVIDENCE OF CEASE-FIRE IN KOSOVA...U.S. Secretary of Defense William Cohen said in Rabat, Morocco, on 28 September that Washington has no evidence that the Serbian forces have stopped their offensive in Kosova, despite Serbian Prime Minister Mirko Marjanovic's statement to the parliament that the fighting has ended (see "RFE/RL Newsline," 28 September 1998). Cohen added that Marjanovic's claim "may be another rhetorical declaration without any intent to match those words with concrete steps. We have seen no evidence that there has been any strategic drawback at this point, and we will insist that whatever words [Yugoslav President Slobodan Milosevic] issues will be followed up by deeds." PM
 ...AS DO KOSOVARSEthnic Albanian spokesmen said in Prishtina on 28 September that the Serbian offensive is continuing in several areas to the west of the provincial capital, RFE/RL's South Slavic Service reported. The spokesmen added that the Serbian authorities have "declared war not only on the Kosova Liberation Army [UCK] but on the entire Albanian nation." The BBC reported on 29 September that at least 15 villages west of Prishtina are either being shelled by Serbian forces or are still burning as a result of previous attacks. It added that Kosovar civilians are continuing to flee their homes in those areas where the offensive is in progress. In Prishtina, the presidency of the moderate Democratic League of Kosova (LDK) issued a declaration saying that Marjanovic's statement is aimed at manipulating international public opinion, an RFE/RL correspondent reported from the provincial capital. The LDK called on NATO to intervene quickly to end the crisis. PM
 MARJANOVIC SAYS 'PEACE REIGNS'Marjanovic also told the parliament on 28 September that UCK fighters will be granted an amnesty provided that they turn in their weapons to the authorities within 10 days, RFE/RL's South Slavic Service reported. He named Zoran Andjelkovic to head a new provisional Supreme Council to govern the province and called on ethnic Albanian leaders to start a dialogue with the Serbian authorities. Marjanovic added that "peace reigns [in the province] and life is returning to normal.... There is no humanitarian catastrophe.... All assertions to that effect are lies.... As of today, anti-terrorist activities [against the UCK] have ended. They will be renewed only if any new bandit and terrorist activity reappears," "Nasa Borba" wrote. PM
 CROATIAN OPPOSITION WANTS INVESTIGATION OF SECRET SERVICESLeaders of six opposition parties agreed in Zagreb on 28 September to call for a parliamentary discussion of possible misuse of the secret services for political purposes by the governing Croatian Democratic Community. The opposition leaders also demanded that the parliament set up a special committee to investigate the charges, RFE/RL's South Slavic Service reported. In New York, the UN Security Council agreed that Croatian local police have become more professional recently but noted that ethnically motivated violence has been on the rise. The council also agreed that the judiciary has been lax in dealing with ethnically related incidents and that the government has not done enough to promote reconciliation between Serbs and Croats. PM
 DUTCH MINISTRY CLEARED ON SREBRENICA CHARGESJos van Kemenade, who heads the independent commission investigating accusations that the Defense Ministry covered up evidence on the role of Dutch peacekeepers in the fall of Srebrenica, said that the charges are unfounded (see "RFE/RL Newsline," 13 August 1998). Speaking in Amsterdam on 28 September, he added that "there are no indications from this investigation that information was deliberately withheld or got rid of by the Ministry of Defense or by others, in other words there is no question of a cover-up." He added, however, that cooperation was poor between several government agencies in response to public criticism of the Dutch role during and after the Serbian attack on the eastern Bosnian town, Reuters reported. PM
 ROMANIAN PRESIDENT REACTS TO 'FEDERALIZATION' INCIDENT...Emil Constantinescu on 28 September asked the cabinet to file an official complaint with the Austrian government about the demand made last week by an Austrian citizen of Hungarian descent for Romania's federalization. He said that he will also write to his Austrian counterpart about the incident. Eva Maria Barki had told a Hungarian forum in Transylvania that the problems of Romania's ethnic Hungarians can be solved only if Romania is federalized. Constantinescu said the declaration infringed on Article 30 of the constitution, which forbids "territorial separatism and incitement to public violence." Barki was declared "persona non grata" by the government of Nicolae Vacaroiu in 1994, but that status expired three years later. MS
 ...WHILE OPPOSITION SAYS IT MAY START SUSPENSION PROCEDURES AGAINST HIMThe opposition Party of Social Democracy in Romania (PDSR) has announced that it may start procedures for Constantinescu's suspension from office. This follows similar statements by the Party of Romanian National Unity and the Greater Romania Party. All three parties said Constantinescu failed to defend Romania's territorial integrity by not reacting to the Barki incident. The PDSR also said Constantinescu undermined the independence of the judiciary in a statement made last week on the struggle against corruption, RFE/RL's Bucharest bureau reported. MS
 NATO SECRETARY-GENERAL IN MOLDOVAJavier Solana met with President Petru Lucinschi, Premier Ion Ciubuc, parliamentary chairman Dumitru Diacov, and Foreign Minister Nicolae Tabacaru in the Moldovan capital on 28 September, RFE/RL's Chisinau bureau reported. After meeting with Lucinschi, Solana said the problem of the withdrawal of Russian troops from Transdniester cannot be solved by negotiations between NATO and Russia and must be dealt with "multilaterally, through negotiations." Solana also said he discussed with Lucinschi the conflict with the Tiraspol separatists and praised Moldova's contribution to the Partnership for Peace program. Lucinschi said that Moldova is a neutral state but that does not hinder close military and other types of relations with NATO. He added that he had discussed with Solana plans for a reform of Moldova's military. MS
 BULGARIAN PRESIDENT VETOES MEDIA LAWFor the first time, Petar Stoyanov has exercised his presidential veto right, blocking the media law approved by the parliament (see "RFE/RL Newsline," 24 September 1998), an RFE/RL correspondent in Sofia reported on 28 September. Stoyanov told journalists that he objects to the government's appointment of representatives on state television and radio managerial boards, saying political neutrality may be affected. He also objected to the provision in the law allowing broadcasts in languages other than Bulgarian on regional, but not on national frequencies. A third ground for the veto is the stipulation depriving state television of the right to broadcast prime time advertising until the creation of privately owned national stations. Finally, Stoyanov took issue with the provision imposing a new tax on all households for the financing of state television and radio, regardless of whether they own a television set. MS
[C] END NOTE
 BULGARIA'S CURRENCY BOARD CEMENTS MACROECONOMIC STABILITYby Michael Wyzan
Since Bulgaria introduced a currency board arrangement on 1 July 1997, the lev has been trading at 1,000 to the Deutsche mark and has been fully backed by the Bulgarian National Bank's (BNB) foreign reserves.
Under a currency board, the only permissible increases in the domestic money supply are those resulting from converting foreign currency inflows into domestic currency. In principle, the monetary authorities may no longer finance government budget deficits or offer credits to commercial banks. In practice, a BNB department is entitled to serve as a lender of last resort to such banks. It has yet, however, to avail itself of that option.
The Bulgarian experience with the currency board arrangement is relevant for other struggling transition economies, especially Russia, which recently considered introducing one. In such cases as Argentina, Estonia, and Lithuania, the arrangement is designed as a way to instill confidence in macroeconomic policy-making.
While that motivation existed in Bulgaria, establishing the board was driven primarily by the need to end practices that were impeding structural reform. Banks made loans to enterprises, which frequently did not repay them. The BNB then "refinanced" (lent money to, often without collateral) the banks or the government replaced those loans with government debt. With the introduction of the currency board--and even several months before it-- such practices abruptly ended.
Based on short-term macroeconomic indicators, the board is an unqualified success some 15 months after its introduction. Consumer prices have fallen in each of the last three months, and inflation was only 6.1 percent in the year to August (as recently as August 1997, the monthly rate was 5.5 percent). The three-year loan agreement worked out with the IMF projects 9 percent inflation for 1998.
The fixed exchange rate under the currency board has restored confidence in the lev, as evidenced by the rise in the BNB's foreign reserves from $381 million in January 1997 to $2.9 billion in June 1998 and by the low level of interest rates (the BNB's base rate is just over 5 percent). The fiscal situation is better than expected: on 1O September, the government announced that there will be a 190 billion leva ($112 million) surplus this year, compared with a projected deficit of 2.7 percent of GDP.
While it is evident that the currency board has ushered in an era of macroeconomic stability, the question remains as to whether it will promote sustained, rapid economic growth. In Estonia, where the board was introduced in June 1992, GDP growth did not resume until 1995, although much of this lag resulted from the after-effects of the breakup of the USSR. By 1997, Estonia was the fastest growing transition country, with the exception of Bosnia-Herzegovina.
Little information is available to date on GDP growth in Bulgaria this year. For the first quarter, growth was an enormous 18.5 percent, but that figure reflects the collapse of the economy in the first quarter of last year. The program for the year projects growth at 4 percent. Other indicators suggest that the economy is picking up: unemployment fell to 11.4 percent in June, its lowest level since October 1996, while the average monthly wage reached $111 in June, the highest since April 1996.
At the same time, there is concern about rising (dollar) labor costs and a deterioration in some balance of payments items, both associated with a fixed exchange rate under continuing inflation. The trade surplus in the first quarter was $61.8 million, down from $305.7 million during the same period of 1997. The current account has swung into the red, reaching $17.2 million in the first quarter, compared with a surplus of $151.8 million from January to March 1997.
Although some observers are raising red flags over those labor-market and external-sector tendencies, such concerns seem premature. At $111, the monthly wage is well below those in Central Europe (including Macedonia) and below its previous peak of $128 in September 1993. Moreover, current account deficits far larger than what Bulgaria seems to be experiencing have accompanied rapid economic growth in many successful transition countries.
Attracting foreign direct investment, which enhances productivity, will be crucial to withstanding the effects on the current account balance of the fixed exchange rate under the currency board. There was a major increase in such investment last year (to $498 million, compared with $109 million in 1996). This year, the government is putting up an increased number of enterprises for sale to foreign investors, and several large deals have made headlines. The success of the currency board experiment will hinge as much on its privatization efforts as on improvements in macroeconomic indicators.
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