Read the Schengen Convention (19 June 1990) A)? GHT="50">
Compact version
Today's Suggestion
Read The "Macedonian Question" (by Maria Nystazopoulou-Pelekidou)
HomeAbout HR-NetNewsWeb SitesDocumentsOnline HelpUsage InformationContact us
Monday, 20 January 2020
 
News
  Latest News (All)
     From Greece
     From Cyprus
     From Europe
     From Balkans
     From Turkey
     From USA
  Announcements
  World Press
  News Archives
Web Sites
  Hosted
  Mirrored
  Interesting Nodes
Documents
  Special Topics
  Treaties, Conventions
  Constitutions
  U.S. Agencies
  Cyprus Problem
  Other
Services
  Personal NewsPaper
  Greek Fonts
  Tools
  F.A.Q.
 

RFE/RL Newsline, Vol. 3, No. 40, 99-03-01

Radio Free Europe/Radio Liberty: Newsline Directory - Previous Article - Next Article

From: Radio Free Europe/Radio Liberty <http://www.rferl.org>

RFE/RL NEWSLINE

Vol. 3, No. 40, 1 March 1999


CONTENTS

[A] TRANSCAUCASUS AND CENTRAL ASIA

  • [01] ARMENIA CONDEMNS AZERBAIJAN'S KARABAKH APPEAL...
  • [02] ...AND ITS PROTEST OVER DEFENSE COOPERATION
  • [03] ARMENIAN PRESIDENT CONDEMNS ARMY HAZING
  • [04] FORMER ARMENIAN CP LEADER LAUNCHES NEW POLITICAL PARTY
  • [05] AZERBAIJAN MARKS ANNIVERSARY OF KHODJALY KILLINGS...
  • [06] ...AS OFFICIAL VERSION OF KILLINGS QUESTIONED
  • [07] GEORGIAN PRESIDENT VISITS TURKEY
  • [08] ANOTHER BOMB EXPLODES IN ALMATY
  • [09] RUSSIA INCREASES TRANSIT QUOTA FOR OIL FROM KAZAKHSTAN
  • [10] SUSPECT IN TASHKENT BOMBINGS CAPTURED...
  • [11] ...TO JOIN HUNDREDS OF OTHERS IN DETENTION?
  • [12] MONEY SUPPLY STEADILY INCREASING IN TURKMENISTAN
  • [13] KYRGYZSTAN, RUSSIA REPEAT CALLS FOR PEACE IN AFGHANISTAN
  • [14] HUMAN RIGHTS REPORTS RELEASED FOR CIS CENTRAL ASIAN STATES

  • [B] SOUTHEASTERN EUROPE

  • [15] KOSOVARS FLEE TO MACEDONIA
  • [16] OSCE CALLS RAHOVEC SITUATION 'EXPLOSIVE'
  • [17] KOSOVARS MARK FIRST ANNIVERSARY OF ARMED STRUGGLE
  • [18] GUERRILLAS CALL INVITATION TO WASHINGTON 'MILESTONE'
  • [19] SERBIAN BUILDUP AIMED AT 'DESTROYING' UCK?
  • [20] CHIRAC WARNS OF 'GRAVE CONSEQUENCES'
  • [21] ALBANIA BACKS KOSOVAR PROVISIONAL GOVERNMENT
  • [22] ALBANIAN ARMY STARTS EXERCISES NEAR KOSOVA BORDER
  • [23] BOSNIAN SOCIAL DEMOCRATS MERGE
  • [24] SLOVENIA PROTESTS MARITIME INCIDENT TO CROATIA
  • [25] FORMER ALBANIAN SUPREME COURT JUDGE DIES AFTER SHOOTING
  • [26] U.S. DONATES PATROL BOATS TO ALBANIA
  • [27] ROMANIAN PREMIER DEFEATS PARTY RIVALS, SECURES SUPPORT
  • [28] FORMER LIBERAL LEADER ELECTED CHAIRMAN OF NATIONALIST PARTY
  • [29] ROMANIA, BULGARIA TO MEDIATE IN KOSOVA CONFLICT?
  • [30] MOLDOVAN PARLIAMENT POSTPONES CONFIDENCE VOTE IN STURDZA CABINET

  • [C] END NOTE

  • [31] ARMENIA'S DEFICIT CONTINUES TO GROW, DESPITE BOOSTED TRADE WITH WEST

  • [A] TRANSCAUCASUS AND CENTRAL ASIA

    [01] ARMENIA CONDEMNS AZERBAIJAN'S KARABAKH APPEAL...

    The Armenian Foreign Ministry on 25 February issued a statement criticizing Azerbaijani President Heidar Aliev's appeal to the French, Russian, and U.S. presidents to take more resolute measures to resolve the Karabakh conflict, Noyan Tapan reported (see "RFE/RL Newsline," 24 February 1999). The statement said it is "especially distressing" that Baku, which rejected the most recent peace plan proposed by the OSCE Minsk Group, is calling on the mediators to demonstrate a more constructive approach. The statement termed Azerbaijan's position "unconstructive," adding that it is the primary obstacle to a settlement of the conflict. It also criticized Azerbaijan's "refusal to recognize Nagorno- Karabakh as a full party to peace talks" and its attempts to "place the conflict in the broader context of Russian-Turkish relations." French President Jacques Chirac has responded to Aliev's appeal, Turan reported on 26 February but did not elaborate. LF

    [02] ...AND ITS PROTEST OVER DEFENSE COOPERATION

    In a separate statement issued on 26 February, the Armenian Foreign Ministry dismissed as "unfounded" and "illogical" Azerbaijani allegations that Armenia's ongoing military cooperation with Russia threatens to destabilize the Caucasus, RFE/RL's Yerevan bureau reported. It stressed that both UN and OSCE statutes recognize the right of any member state to choose how to ensure its security. The statement also rejected Baku's claims that transfers of Russian arms to Russian bases in Armenia constitute a violation of the limits imposed by the Treaty on Conventional Forces in Europe. Azerbaijan has itself exceeded its CFE arms ceilings, imports arms, and is engaged in the production of offensive weapons, the statement argued. LF

    [03] ARMENIAN PRESIDENT CONDEMNS ARMY HAZING

    Meeting on 25 February with a group of mothers whose sons died as a result of violence at the hands of their army superiors, Robert Kocharian vowed a "serious struggle" to eradicate criminal violence and non-combat deaths within the armed forces, Noyan Tapan reported. In January, Human Rights Watch had published extensive data on such crimes, claiming that they disqualify Armenia from full membership in the Council of Europe. Armenian officials have rejected that argument, claiming that some of the Human Rights Watch data is inaccurate (see "RFE/RL Newsline," 22 January 1999). LF

    [04] FORMER ARMENIAN CP LEADER LAUNCHES NEW POLITICAL PARTY

    Hundreds of delegates attended the 27 February founding congress in Yerevan of Karen Demirchian's center-left People's Party of Armenia (HZhK), RFE/RL's Yerevan bureau reported. In a 90-minute speech, Demirchian, the runner-up to Robert Kocharian in the 1998 presidential elections, vowed to establish "democratic and popular socialism" if his party comes to power. Deploring what he termed the "deindustrialization" of Armenia under the failed liberal economic policies of successive post-Soviet governments, Demirchian called for comprehensive state programs to revive both industry and agriculture. He said he favors a state-regulated and socially-oriented market economy. The HZkK currently claims some 25,000 members throughout Armenia. LF

    [05] AZERBAIJAN MARKS ANNIVERSARY OF KHODJALY KILLINGS...

    Azerbaijanis on 26 February commemorated the 1992 killings by Russian and Karabakh Armenian troops of several hundred Azerbaijani civilians in the Karabakh village of Khodjaly. Aliev termed those deaths "one of the most terrible tragedies of the 20th century," adding that the Azerbaijani leadership bore part of the blame for them. He vowed that if necessary, Azerbaijan will use force to liberate those regions currently occupied by Karabakh Armenian troops, Turan reported. LF

    [06] ...AS OFFICIAL VERSION OF KILLINGS QUESTIONED

    But the chairman of the commission on human rights and national minorities of the parliament of the unrecognized Nagorno-Karabakh Republic told Noyan Tapan on 26 February that Azerbaijani claims that the Khodjaly killings constituted a deliberate massacre are unfounded. He said the attack on Khodjaly was necessitated by the concentration in the village of huge quantities of armaments and that the Azerbaijani leadership was warned in advance of the attack in order to enable it to evacuate the civilian population. He also quoted then President Ayaz Mutalibov as confirming that the Armenians had announced that they would leave a corridor for Azerbaijani civilians to leave the village unharmed before the attack. LF

    [07] GEORGIAN PRESIDENT VISITS TURKEY

    During his two-day visit to Ankara and Istanbul on 26-27 February, Eduard Shevardnadze held talks with his Turkish counterpart, Suleymen Demirel, and with Prime Minister Bulent Ecevit on the prospects for resolving regional conflicts and expanding economic and transport cooperation, including the planned Kars-Tbilisi railway. In a joint communique released following Shevardnadze's meeting with Demirel, the two presidents called for the swiftest possible implementation of the Baku-Ceyhan oil export pipeline project. Shevardnadze told journalists on his return to Tbilisi on 27 February that Turkey will bear part of the estimated $3 billion cost of building that pipeline, ITAR-TASS reported. Shevardnadze also said Demirel would not object if part of Azerbaijan's Caspian oil were exported through the alternative pipeline from Baku to Georgia's Black Sea port of Supsa. Adjar President Aslan Abashidze failed to accompany Shevardnadze because of poor health, "Akhali toaba" reported on 27 February. LF

    [08] ANOTHER BOMB EXPLODES IN ALMATY

    A home-made bomb exploded outside the Russian Orthodox cathedral in the former Kazakhstani capital, Almaty, on 26 February, ITAR-TASS reported. Four people were injured and required medical attention as a result of the blast, which also caused substantial damage to the building, Police have taken a 43-year-old man into custody in connection with the bombing. The man had recently been released from jail, and it remains unclear what his motive might have been. There are no reports that he is linked to the bombing that took place in downtown Almaty on 21 February (see "RFE/RL Newsline," 23 February 1999). BP

    [09] RUSSIA INCREASES TRANSIT QUOTA FOR OIL FROM KAZAKHSTAN

    The press service of Kazakhstan's national oil and gas company said on 26 February that an agreement has been signed on increasing the amount of oil Kazakhstan can ship via Russia to countries outside the CIS, Interfax reported. The agreement, signed the previous day, allows Kazakhstan to ship 6 million tons of oil annually via Russian pipelines. Russia had agreed in December to increase the volume of oil transiting its territory from 3.5 million tons to 5 million. A spokesman for the national oil company said the increase "meets the export potential of Kazakhstan." BP

    [10] SUSPECT IN TASHKENT BOMBINGS CAPTURED...

    ITAR-TASS reported on 27 February, that one of six men sought by Uzbek authorities in connection with the 16 February bombings in Tashkent, has been take into custody. Ravshan Salijanov, 27, is from the Uzbek city of Namangan and was apprehended in Tashkent. BP

    [11] ...TO JOIN HUNDREDS OF OTHERS IN DETENTION?

    The acting director of the Moscow-based Society for Assistance of Human Rights in Central Asia, Vitaly Ponomarev, told a news conference on 26 February, that more than 500 people have been arrested in Uzbekistan since the 16 February bombings, Reuters reported. A statement released by the organization claims that among those arrested are "Islamic activists, members of their families, supporters of religious groups not loyal to the regime, and several opposition activists." Many are reported to still be in jail. Ponomarev commented that while it is unclear how many people have been arrested, "at least 200 is absolutely certain, just in Tashkent." He added that his figures are based on information received from various human rights organizations in Uzbekistan. BP

    [12] MONEY SUPPLY STEADILY INCREASING IN TURKMENISTAN

    Turkmenistan's Central Bank reported that the amount of money in circulation increased by 5.4 percent a month last year, Interfax reported on 25 February. The bank said this is an improvement over the 6.9 percent monthly increase recorded in 1997. Although the official rate of exchange for the Turkmen national currency, the manat, remains steady, at 5, 200 to $1, unofficial reports indicate it is trading illegally at more than double that rate. BP

    [13] KYRGYZSTAN, RUSSIA REPEAT CALLS FOR PEACE IN AFGHANISTAN

    Consultations between officials from the Kyrgyz and Russian Foreign Ministries took place in Bishkek on 26 February and resulted in a call for "UN-supervised negotiations," Interfax reported. Both parties said they felt "a degree of moral responsibility" for events in Afghanistan, and both agreed that negotiations that were conducted in the Turkmen capital, Ashgabat, last month by representatives of the Taliban and the northern alliance are an encouraging sign. Both also said their countries are "always ready" to help settle the conflict. BP

    [14] HUMAN RIGHTS REPORTS RELEASED FOR CIS CENTRAL ASIAN STATES

    A human rights report conducted by the U.S. State Department and released on 26 February indicates that the five CIS Central Asian states have changed little since the 1997 survey was conducted. Kyrgyzstan faired the best but came under criticism for its citizens' inability to change their government through the electoral process. Kazakhstan, too, was complimented on respecting human rights, but early presidential elections and irregularities in the campaigning process were noted. Tajikistan and Uzbekistan continued to have "poor" human rights records but were eclipsed by Turkmenistan, whose record was deemed "dismal." Freedom of speech and of the press was deemed insufficient in all five countries, as were conditions in jails. The report also noted that violence against women in those countries is a major problem. BP

    [B] SOUTHEASTERN EUROPE

    [15] KOSOVARS FLEE TO MACEDONIA

    Up to 3,000 Kosovar civilians tried to flee to Macedonia on 28 February to escape a Serbian assault on their homes in the Hani I Elezit area, near Kosova's southern border. Serbian forces prevented the civilians from crossing the frontier, saying they lack the necessary papers. Reuters reported on 1 March that some 350 civilians took shelter in a nearby snow- covered forest, but it is unclear where the other displaced persons are at present. In nearby Kacanik, at least one Serbian policeman died in fighting on 28 February. The BBC said that the continuing incidents are "part of a daily pattern of instability." The broadcast added that the strong Serbian police presence in many parts of the province has prevented Kosova Liberation Army (UCK) representatives from visiting their followers to explain the terms of the proposed Rambouillet settlement. PM

    [16] OSCE CALLS RAHOVEC SITUATION 'EXPLOSIVE'

    In the Rahovec area, four Serbian civilians were kidnapped in two separate incidents on 27 February. The UCK freed two of the Serbs unharmed, but its spokesmen at first denied any knowledge of the fate of the other two. The following day, UCK spokesman Jakup Krasniqi said the guerrillas had captured them as well and killed one of them. OSCE monitors told AP on 1 March that the situation is "explosive" and that they are investigating. The UCK kidnapped several dozen Serbian civilians in that area last year. PM

    [17] KOSOVARS MARK FIRST ANNIVERSARY OF ARMED STRUGGLE

    Some 4,000 Kosovars in the Drenica area attended a ceremony on 28 February to mark the first anniversary of the slaying of 24 civilians by Serbian police, which was in revenge for the killing of two Serbian security personnel by the UCK. Even larger crowds are expected on 6 March to commemorate the first anniversary of the slaying of UCK leader Adem Jashari and many members of his clan in the Prekaz area (see "RFE/RL Newsline," 9 March 1998). Supporters of the UCK regard the clashes in the Drenica region in February and March 1998 as the beginning of the guerrillas' armed struggle for independence. PM

    [18] GUERRILLAS CALL INVITATION TO WASHINGTON 'MILESTONE'

    RFE/RL's South Slavic Service reported on 26 February that unspecified representatives of the U.S. government have invited leading officials of the UCK to Washington to discuss the Rambouillet settlement. The UCK's General Staff said in a statement on 1 March that the "preliminary official invitation" came from the State Department and that "the delegation is expected to travel soon to the U.S.... The visit is proof of the acceptance of the UCK [as a legitimate force] and of the internationalization of the Kosova problem." PM

    [19] SERBIAN BUILDUP AIMED AT 'DESTROYING' UCK?

    A spokesman for the UCK said in Prishtina on 28 February that the guerrillas have unspecified information that indicates that the Serbian military buildup in and around Kosova is aimed at "destroying" the UCK before peace talks reconvene on 15 March , RFE/RL's South Slavic Service reported (see "RFE/RL Newsline," 26 February 1999). A Pentagon spokesman noted on 27 February that Serbian security forces are continuing their buildup in Serbia proper near the border with Kosova. U.S. President Bill Clinton said on 26 February that Yugoslav President Slobodan "Milosevic should understand that this is a time for restraint, not repression. And if he does not, NATO is prepared to act." NATO Secretary-General Javier Solana told Spanish Television that "we cannot allow a Serbian offensive that changes the situation on the ground." PM

    [20] CHIRAC WARNS OF 'GRAVE CONSEQUENCES'

    French President Jacques Chirac told 1,200 French troops in Kumanovo, Macedonia, on 28 February that the Serbs and Kosovars "should choose wisdom and peace, because this is in the interest of the people of the region. The side that does not sign the agreement will bear responsibility for the grave consequences that will ensue." He did not elaborate. Earlier, Chirac discussed the political situation in the Balkans with President Kiro Gligorov and Prime Minister Ljubco Georgievski. In Belgrade the previous day, Serbian Prime Minister Vojislav Seselj warned Macedonia against continuing to play host to NATO forces. He said that "nothing will remain of Macedonia if any foreign army attacks Serbia from Macedonia." PM

    [21] ALBANIA BACKS KOSOVAR PROVISIONAL GOVERNMENT

    Foreign Minister Paskal Milo told the "Albanian Daily News" of 27 February in Tirana that the Albanian government supports Kosova's new provisional government (see "RFE/RL Newsline," 25 February 1999). Milo said that the government "will lead the [ethnic] Albanians through the transitional period." Milo's spokesman Sokol Gjoka expressed the hope that the UCK's political representative Adem Demaci will drop his objections to the provisional government, to which other UCK leaders now belong. He added that Tirana will invite unspecified Kosovar leaders to a meeting in Tirana on 3 March. FS

    [22] ALBANIAN ARMY STARTS EXERCISES NEAR KOSOVA BORDER

    Albania's army began maneuvers in the Tropoja and Has regions on 26 February, Reuters reported. Defense Minister Luan Hajdaraga, who was visiting the troops, said the border situation is "really tense" and the army remains in a state of "high readiness," AP reported. Elsewhere, Foreign Minister Milo told Albanian public television that "NATO forces are welcome in Albania if that is necessary." He repeated earlier offers of ports and air facilities to NATO troops for a possible Kosova deployment. He expressed the hope that "NATO's presence...will help settle the [Kosova conflict and] restore security in the whole region," dpa reported. FS

    [23] BOSNIAN SOCIAL DEMOCRATS MERGE

    Delegates from the opposition Social Democratic Party (SDP) and the Social Democrats of Bosnia- Herzegovina (SDBH) agreed in Sarajevo on 27 February to form the Social Democratic Party of Bosnia-Herzegovina (SDPBH). The president is the SDP's Zlatko Lagumdzija. The SDBH's Selim Beslagic heads the steering committee, RFE/RL's South Slavic Service reported. The merger marks the end of months of efforts by several Social Democratic parties from Western Europe to persuade the two parties to sink their differences and oppose the governing nationalist parties, which control 68 out of 140 seats in the federation's lower house. The SDPBH holds 25 seats. It is the heir to the former League of Communists, and its main support bases are Sarajevo and Tuzla. PM

    [24] SLOVENIA PROTESTS MARITIME INCIDENT TO CROATIA

    A Slovenian government spokesman said in Ljubljana on 27 February that the Slovenian authorities will lodge a formal protest with the Croatian authorities following an incident in the Gulf of Piran earlier that day. A Croatian patrol boat stopped an unspecified number of Slovenian fishing boats and warned them that they were in Croatian waters. For eight years, Croatia and Slovenia have been negotiating--without success--the delineation of their maritime boundary in the Gulf of Piran. PM

    [25] FORMER ALBANIAN SUPREME COURT JUDGE DIES AFTER SHOOTING

    Kleanthi Koci died on 27 February as he was travelling to Italy for treatment of injuries he suffered in an assassination attempt several days earlier (see "RFE/RL Newsline," 25 February 1999). Koci was Supreme Court chief judge in the early 1990s. He later became chairman of the Albanian lawyers' professional association, ATSH reported. He defended communist-era President Ramiz Alia during his 1994 trial on charges of crimes against humanity. In recent years, there has been a sharp increase in apparently unrelated bombing attacks and assassination attempts against representatives of the judiciary. FS

    [26] U.S. DONATES PATROL BOATS TO ALBANIA

    U.S. military officials formally presented two patrol vessels to the Albanian coast guard near Durres on 27 February. The boats will help to stem the illegal trafficking of immigrants across the Otranto Straits and will also be used for search-and-rescue operations, ATSH reported. FS

    [27] ROMANIAN PREMIER DEFEATS PARTY RIVALS, SECURES SUPPORT

    An enlarged meeting of the Steering Committee of the ruling National Peasant Party Christian Democratic (PNTCD) has voted by 43 to four with two abstentions to approve the policies of Radu Vasile's cabinet, RFE/RL's Bucharest bureau reported on 27 February. Former Premier Victor Ciorbea, who heads the group of PNTCD dissidents, said that while GDP is decreasing, "we are lectured about the relaunching of the economy." He added that Vasile is responsible for the cabinet's failure to secure an urgently needed accord with the IMF. Meanwhile, IMF chief negotiator for Romania, Emmanuel Zervoudakis, said at the end of a two-week visit to Bucharest on 26 February, that Romania's request to renew loans cannot be considered before June. "Despite some progress" in market reforms, he said, "there is still need to develop detailed plans in the area of structural policy," Reuters reported. MS

    [28] FORMER LIBERAL LEADER ELECTED CHAIRMAN OF NATIONALIST PARTY

    In a move that took many observers by surprise, Viorel Catarama, former deputy chairman of the National Liberal Party, was elected interim chairman of the extra-parliamentary Romanian National Party (PNR) on 28 February. One day earlier, former PNR chairman Mihai Berca said he was ready to step down in Catarama's favor. PNR Secretary-General Virgil Magureanu, former director of Romanian Intelligence Service, is reported to have engineered the move, which he called " a huge step forward for the PNR." Catarama told the PNR National Council that the party must win the 2000 elections by representing the middle class and pursuing a "national policy," one of whose main objectives would be to ensure Transylvania remains part of Romania. MS

    [29] ROMANIA, BULGARIA TO MEDIATE IN KOSOVA CONFLICT?

    Bulgarian Premier Ivan Kostov, at the end of a one-day visit to Romania on 27 February, said he discussed with his Romanian counterpart, Vasile, the possibility of sending to Belgrade and Pristina a joint parliamentary delegation to examine ways of contributing to a peace accord in the region. Vasile said the proposal was "useful" but needs the prior approval of Romania's parliament, RFE/RL's Bucharest bureau reported. The two premiers also discussed bilateral economic problems. Kostov proposed that Bulgaria build and finance a bridge over the River Danube between Vidin and Calafat. The Romanian government is to examine that proposal. MS

    [30] MOLDOVAN PARLIAMENT POSTPONES CONFIDENCE VOTE IN STURDZA CABINET

    The parliament on 26 February postponed until 2 March its vote of confidence in the cabinet headed by Premier-designate Ion Sturdza after Iurie Rosca, leader of the Christian Democratic Popular Front (FPCD) announced at the last minute that the FPCD will not support the government. The ruling coalition parties had agreed on 25 February to support the cabinet, but Rosca announced that the FPCD is not satisfied with having just two ministers in the cabinet and that it objects to the predominance of the For a Democratic and Prosperous Moldova bloc, Infotag reported. Without the votes of the nine-strong FPCD parliamentary group, the government would be one vote short of the 51 majority needed for the cabinet's approval. MS

    [C] END NOTE

    [31] ARMENIA'S DEFICIT CONTINUES TO GROW, DESPITE BOOSTED TRADE WITH WEST

    by Emil Danielyan

    Armenia's huge trade deficit increased last year, despite robust economic growth, according to recently released government data. The growing imbalance was accompanied by declining economic ties with former Soviet republics, which accounted for just a quarter of Armenia's foreign trade. Net exports fell by 3.9 percent to a meager $223.4 million, while imports were almost unchanged at $812.1 million. The resulting $588.7 million deficit was up 2 percent on 1997.

    Economists have long wondered how a country can get by when it is importing 3.6 times more than it exports. One of the reasons is that Armenia has an enormous shadow economy. The government estimates that its volume equals official GDP. Money transfers from thousands of Armenians working abroad is another important source of unaccounted foreign earnings. Also bridging the gap is continuing humanitarian aid--which totaled $83.6 million in 1998- -as well as international loans. Last year saw some $210 million in direct foreign investments, more than the combined total for the previous several years.

    These mitigating factors notwithstanding, analysts say that without a sharp rise in exports, Armenia will find it increasingly difficult to cope with its foreign debt, let alone achieve a major improvement in living standards. Within the next couple of years, servicing of that debt, which currently stands at $740 million, will become an even heavier burden on the state budget as the government starts repaying the bulk of the money.

    "We live off future generations. Our children will bear the brunt of our huge current account deficit," Bagrat Asatrian, president of the Armenian Bank Association, told RFE/RL.

    One of the consequences of this situation is the precariousness of the relative macroeconomic stability that Armenia has enjoyed since 1996. It has been maintained to a large extent by regular financial injections from the IMF and World Bank.

    The Armenian economy grew by 7.2 percent in 1998, which witnessed 1.3 percent consumer price deflation. This growth rate becomes less impressive when seen against the backdrop of the economic collapse of the early 1990s, when the country's GDP plummeted by 60 percent. Low inflation contrasts with unusually high interest rates, which Asatrian attributes to weak exports.

    Last month, the bank raised its re-financing rate to 53.5 percent, following a 3 percent drop in the value of the national currency, the dram. Asatrian, himself a former Central Bank chairman, believes the "artificial" maintenance of the dram's exchange rate in 1998 only added to the trade deficit, paving the way for much cheaper Russian imports.

    GDP growth mainly resulted from a big boost in the agricultural and construction sectors, which offset a 2.5 decrease in industrial output. Figures show that industrial output started falling in August, when the Russian financial crisis erupted. The fall in exports occurred in the second half of the year, as large Armenian enterprises, heavily dependent on the Russian market, were hit by the turmoil there. Exports to Russia, until now the biggest source of external earnings, plummeted by 36.5 percent. That the Russian crisis was responsible for the growing deficit is evidenced by the fact that Armenian exports to countries outside the former USSR increased slightly. About three-quarters of foreign trade was with countries outside the CIS.

    In a major development, the EU pulled ahead of the CIS as Armenia's leading trade partner, with a $334.4 million turnover in 1998. By contrast, economic ties with neighboring Iran further decreased. Iran even lagged behind the US's $110 million share (including U.S. aid). On a country basis, Russia was still Armenia's main partner, however. But Russian natural gas supplies accounted for $92 million in their $222.6 million trade volume.

    One consequence of the EU's greater importance for Armenia was a six-fold hike in the volume of trade with Britain. In 1998, the U.K. became the number one European importer of goods from Armenia, receiving products worth roughly $70 million. Another consequence was that the value of Armenia's exports to Belgium exceeded that of its exports to Russia last year, refined diamonds being the main product. Precious stones and metals, made up the biggest share of all Armenian exports., accounting for one quarter. Other exports included machines, scrap metal, food, and chemical products. More than the half the imports to resource- poor Armenia was food and raw materials.

    The new pattern of foreign trade suggests that land-locked Armenia is finding ways to break its geographical isolation from Western markets. That isolation is aggravated by the unresolved Nagorno-Karabakh conflict and other ethnic disputes in the region. But economists say that openness to the world must involve a corresponding growth in exports. And they argue that higher growth rates are needed and must be export-oriented. This, in turn, will require substantial capital and modern technology-- neither of which is currently available in Armenia. Attracting more foreign investment thus becomes all the more necessary.

    The author is an RFE/RL correspondent based in Yerevan.

    01-03-99


    Reprinted with permission of Radio Free Europe/Radio Liberty
    URL: http://www.rferl.org


    Radio Free Europe/Radio Liberty: Newsline Directory - Previous Article - Next Article
    Back to Top
    Copyright 1995-2016 HR-Net (Hellenic Resources Network). An HRI Project.
    All Rights Reserved.

    HTML by the HR-Net Group / Hellenic Resources Institute, Inc.
    rferl2html v1.01 run on Monday, 1 March 1999 - 14:33:11 UTC