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RFE/RL Newsline, Vol. 3, No. 97, 99-05-19

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. 97, 19 May 1999


CONTENTS

[A] TRANSCAUCASUS AND CENTRAL ASIA

  • [01] GEORGIAN PRESIDENT SAYS NATO MEMBERSHIP UNLIKELY BEFORE 2005
  • [02] GEORGIAN PARLIAMENTARY SPEAKER REJECTS ADJAR LEADER'S CHALLENGE
  • [03] RUSSIA TO PROPOSE NEW ABKHAZ PEACE PLAN
  • [04] AZERBAIJAN ACCUSES CHINA OF SELLING ROCKETS TO ARMENIA
  • [05] KAZAKHSTAN AGAIN CUTS OFF GAS SUPPLIES TO KYRGYZSTAN
  • [06] IMF, KYRGYZ GOVERNMENT REACH AGREEMENT
  • [07] TAJIK PRESIDENT PLEDGES TO EXPEDITE PARLIAMENTARY ELECTIONS
  • [08] TURKMEN PRESIDENT VISITS IRAN

  • [B] SOUTHEASTERN EUROPE

  • [09] FIRST BIG ANTI-WAR PROTESTS IN SERBIA
  • [10] CACAK PROTESTERS CALL FOR DEMOCRACY IN SERBIA
  • [11] WHERE ARE 225,000 MISSING KOSOVARS?
  • [12] ROBERTSON: VOJVODINA COULD BE NEXT
  • [13] RUGOVA: TALK TO MILOSEVIC
  • [14] UCK PROVISIONAL GOVERNMENT URGES BLAIR TO ARM GUERRILLAS
  • [15] COOK TO PRESS ON GROUND TROOPS...
  • [16] ...BUT FACES OPPOSITION
  • [17] U.S. PLEDGES ADDITIONAL $15 MILLION IN REFUGEE AID
  • [18] KOSOVARS FACE NEW HARDSHIPS
  • [19] CONCERN OVER END OF REFUGEE INFLUX TO ALBANIA
  • [20] ROMANIAN PARTY COMPLAINS ABOUT ETHNIC HUNGARIANS' COMMENTS
  • [21] LUCINSCHI DISCUSSES TRANSDNIESTER WITH CIS SECRETARY
  • [22] BULGARIAN SOCIALISTS CALL FOR NEW GOVERNMENT PROGRAM

  • [C] END NOTE

  • [23] TOWARD CONSOLIDATION OF LATVIA'S BANKING SECTOR

  • [A] TRANSCAUCASUS AND CENTRAL ASIA

    [01] GEORGIAN PRESIDENT SAYS NATO MEMBERSHIP UNLIKELY BEFORE 2005

    Speaking on NTV's "Man of the Day" program on 18 May, Eduard Shevardnadze predicted that Georgia will not join NATO while he is president, even if he is re-elected next year for a second five-year term, Caucasus Press reported. Shevardnadze admitted that Georgia is currently incapable of meeting membership requirements. Reuters on 18 May quoted a Georgian Defense Ministry spokesman as saying that for financial reasons, Defense Minister Davit Tevzadze has ordered the cancellation of the planned 26 May military parade to mark the 81st anniversary of Georgia's independence. The spokesman said the ministry is so short of funds it cannot even buy gasoline for its fleet of cars. LF

    [02] GEORGIAN PARLIAMENTARY SPEAKER REJECTS ADJAR LEADER'S CHALLENGE

    Zurab Zhvania has turned down a 17 May invitation by Adjar Supreme Council chairman Aslan Abashidze to take part in a televised debate, Caucasus Press reported on 19 May, citing "Dilis gazeti." A colleague of Abashidze's had accused Zhvania in 1997 of planning Abashidze's assassination, a charge that Zhvania denied (see "RFE/RL Newsline," 21 and 22 October 1997 ). At the same press conference on 17 May, Abashidze accused the central Georgian leadership of incompetence and called on its members to resign, according to "Rezonansi" on 18 May. He also criticized as undemocratic amendments to the existing election legislation drafted by Zhvania's Union of Citizens of Georgia. LF

    [03] RUSSIA TO PROPOSE NEW ABKHAZ PEACE PLAN

    Lev Mironov, who is the Russian Foreign Ministry's envoy for the Abkhaz conflict, told Caucasus Press on 18 May that as soon as the new Russian government has been formed, Moscow will advance a new initiative for kick- starting the deadlocked negotiations on a settlement of that conflict. Mironov accused both Tbilisi and Sukhumi of attaching greater importance to "upholding political prestige" than to seeking a compromise that would expedite the repatriation to Abkhazia of Georgian displaced persons. LF

    [04] AZERBAIJAN ACCUSES CHINA OF SELLING ROCKETS TO ARMENIA

    State foreign policy adviser Vafa Guluzade said in Baku on 18 May that Azerbaijan has formally protested Armenia's acquisition of eight Chinese Typhoon multiple rocket systems, AFP and Turan reported. He added that he does not believe the explanation of the Chinese ambassador in Baku, who said that Armenia bought the weapons from an unnamed foreign company involved in trading with China without the involvement of the Chinese authorities. Guluzade said the sale was agreed on last October when Armenian Defense Minister Vazgen Sargsian and his Russian counterpart, Igor Sergeev, visited Beijing. He accused Beijing of aspiring to prevent the export of Caspian oil via Azerbaijan. (Kazakhstan has signed s preliminary agreement with China on building an export pipeline.) Arguing that the sale is a violation of international norms and agreements, Guluzade demanded that China ask Yerevan to return the weapons. LF

    [05] KAZAKHSTAN AGAIN CUTS OFF GAS SUPPLIES TO KYRGYZSTAN

    Kazakhstan's Intergaz company on 18 May cut gas supplies to northern Kyrgyzstan, RFE/RL's Bishkek bureau reported, quoting the deputy director- general of the Kyrgyzgas state company. Toktosun Abduvaliev said his company owes Intergaz some $2.2 million for supplies received in 1997-1998. LF

    [06] IMF, KYRGYZ GOVERNMENT REACH AGREEMENT

    The Kyrgyz government has agreed to IMF conditions for resumption of financing under a three-year Economic Structural Adjustment Facility (ESAF- 2) program, Interfax reported on 18 May. Harry Trines, head of the IMF mission in Bishkek, said that over the next two years, Kyrgyzstan must implement tough monetary and financial policies, keep inflation below 20 percent in 1999, and increase budget revenues while cutting expenditures. The IMF initially allocated $88 million for the three-year program, of which the first $41 million was disbursed in 1998. It increased the total sum to $120 million last year. LF

    [07] TAJIK PRESIDENT PLEDGES TO EXPEDITE PARLIAMENTARY ELECTIONS

    Presidential spokesman Zafar Saidov told ITAR-TASS on 18 May that President Imomali Rakhmonov intends to expedite the drafting of amendments to the country's constitution that will pave the way for parliamentary elections early next year. Saidov added that presidential elections will take place by 6 November 1999, the day when Rakhmonov's term expires. LF

    [08] TURKMEN PRESIDENT VISITS IRAN

    At the invitation of Iranian President Mohammad Kharrazi, Saparmurat Niyazov paid a one-day visit to the Iranian province of Golestan on 17 May to attend the ceremonial inauguration of the mausoleum of the 18th- century poet and philosopher Makhtum Kuli, RFE/RL's Turkmen Service reported. LF

    [B] SOUTHEASTERN EUROPE

    [09] FIRST BIG ANTI-WAR PROTESTS IN SERBIA

    At least 3,000 people in Krusevac and a similar number in Aleksandrovac demonstrated on 17 May for the return of Yugoslav soldiers from Kosova, RFE/RL's South Slavic Service reported. Many of the protesters were relatives of soldiers and carried signs with slogans such as "We want our boys and not their coffins." The following day in London, British Defense Secretary George Robertson said that, "Yesterday there was a crack that appeared in the facade of the Yugoslav regime." In Krusevac, the Yugoslav army issued a statement saying that the protests there took place on 17 and 18 May. The statement charged that unnamed persons took advantage of soldiers' parents' feelings in order to promote "treason, undermine the defense of the country, and [promote] direct collaboration with the enemy." The statement added that the organizers will be prosecuted. Observers noted that the demonstrations were the first large ones against Belgrade's policies in Kosova to be reported since the NATO air strikes began in March. PM

    [10] CACAK PROTESTERS CALL FOR DEMOCRACY IN SERBIA

    Local political leader Milan Kandic told the informal "citizens' parliament" in Cacak on 18 May that the war in Kosova must end and that the "true democratization" of Serbia must begin, Montenegrin Television reported. Kandic called for an investigation into the role of a local army colonel in recently deploying an unspecified number of "tanks and [other pieces of] military equipment...near civilian buildings, and thus for causing, as Cacak Mayor Velimir Ilic said, the death of four and the wounding of 12 citizens of Cacak." The "citizens' parliament" issued a statement condemning NATO air strikes and calling on Belgrade to negotiate a quick end to the conflict. Anti-war protests also took place in Kraljevo and Novi Sad, RFE/RL's South Slavic Service reported. PM/PB

    [11] WHERE ARE 225,000 MISSING KOSOVARS?

    U.S. Ambassador David Scheffer, whose responsibility is to investigate possible war crimes, said in Brussels on 18 May that Serbian forces have killed at least 5,000 civilians in Kosova since March. He added that the number of men unaccounted for has reached 225,000, RFE/RL's South Slavic Service reported. They are among the approximately 550,000 people displaced within Kosova. NATO spokesman Jamie Shea added that the Atlantic alliance has evidence that Serbian forces have recently begun digging up mass graves in several places in Kosova and reburying the bodies in order to hide evidence of atrocities. Two days earlier, U.S. Secretary of Defense William Cohen said in Washington that the number of Kosovars killed by Serbian forces may be as high as 100,000. PM/FS

    [12] ROBERTSON: VOJVODINA COULD BE NEXT

    British Defense Secretary Robertson told reporters on a 19 May flight from London to Budapest that "we have a seen a unique savagery [in Kosova] and there is no indication [Yugoslav President Slobodan Milosevic] will stop there." The secretary added: "I don't think it is scare-mongering to say Vojvodina would be next in the drive for ethnic purity. It would not stop [at Kosova]. Montenegro would be next." He did not elaborate. PM

    [13] RUGOVA: TALK TO MILOSEVIC

    Kosovar leader Ibrahim Rugova told the Hamburg-based weekly "Die Woche" of 19 May that the international community must negotiate with Milosevic if it wants a settlement in Kosova. Rugova urged that Western countries not arm the Kosova Liberation Army (UCK), which, he said, should be disarmed when Serbian forces leave the province. PM

    [14] UCK PROVISIONAL GOVERNMENT URGES BLAIR TO ARM GUERRILLAS

    Unnamed officials from the provisional Kosova government, led by the UCK's Hashim Thaci, told British Prime Minister Tony Blair in Tirana on 18 May that the West should either arm the UCK or send NATO ground troops into Kosova, Reuters reported. They stressed that the UCK is doing "its utmost to ease the suffering" of Kosovar civilians," noting that the UCK has about 50,000 soldiers on the ground. They added: "We have more volunteers than we can arm." Blair told a crowd of thousands that NATO will continue its air attacks until it achieves its objectives, an RFE/RL correspondent reported from Tirana. The British leader stressed that NATO is defending "democratic values" and added that "Milosevic and his policy belong to the past--we belong to the future." Blair also visited NATO troops and a refugee camp in Elbasan. FS

    [15] COOK TO PRESS ON GROUND TROOPS...

    British Foreign Secretary Robin Cook will use his visit to Washington on 20 May to urge top U.S. officials to join U.K. leaders in calling for deploying NATO ground troops to Kosova, the "Financial Times" reported on 19 May. In London, Cook told Parliament the previous day that the U.K. is "the only country facing up to the hard choices" on Kosova. He added that "we are not going to halt Milosevic from pursuing his violent repression by a dialogue in which we...point out to him the error of his ways. He will only abandon his plans if he knows that we are determined to maintain the military campaign and prevail." U.S. President Bill Clinton said in Washington that "we have not and will not take any option off the table" regarding possible military moves in the Kosova crisis. PM

    [16] ...BUT FACES OPPOSITION

    In Bari on 18 May, German Chancellor Gerhard Schroeder and Italian Prime Minister Massimo D'Alema repeated their opposition to sending in ground troops. Schroeder called such a move "unthinkable." In Paris, Foreign Minister Hubert Vedrine and his Canadian counterpart, Lloyd Axworthy, "responded coolly" to the British position that ground troops might be needed in Kosova in the near future, "The Daily Telegraph" reported. In Belgrade, a Yugoslav Foreign Ministry spokesman said that his government is ready to "cut a deal" on Kosova, but he did not elaborate. PM

    [17] U.S. PLEDGES ADDITIONAL $15 MILLION IN REFUGEE AID

    Hillary Rodham Clinton said in Washington on 18 May that the U.S. will provide another $15 million to the UN, Red Cross, and unspecified non- governmental organizations for humanitarian relief in the Kosova crisis. She added that part of the money will go to help the 20,000 Kosovar refugees expected to come to the U.S. She noted that an internet information center will be set up at Fort Dix, New Jersey, to help Kosovars find missing relatives. The total U.S. aid package for Kosova now exceeds $200 million, AP reported. PM

    [18] KOSOVARS FACE NEW HARDSHIPS

    UN officials said in Geneva on 18 May that Serbian forces in Kosova are increasingly using ethnic Albanian civilians as human shields. The officials added that refugees who recently arrived in Macedonia told aid workers that Serbian troops forced them to flee to the mountains one day and then to come back down the next, the "Frankfurter Allgemeine Zeitung" reported. In Skopje, aid workers told Reuters that hunger has become a major factor prompting Kosovars to flee abroad. In Podgorica, male refugees recently released by the Yugoslav army said that Serbian troops humiliated and badly beat them during their brief captivity, AP noted (see "RFE/RL Newsline," l8 May 1999). PM

    [19] CONCERN OVER END OF REFUGEE INFLUX TO ALBANIA

    No refugees arrived in Albania via the Morina border crossing on 18 May, AP reported. An OSCE official in Kukes said that "based on what [some] refugees have told us, we think the Serbs are probably stopping" Kosovars from fleeing to Albania. Some refugees who arrived recently reported that "thousands" more were behind them. In recent days, NATO heavily bombed Serbian military positions along the valley of the White Drin River, which links Prizren with Kukes, but refugees said that the air strikes did not deter them from fleeing. FS

    [20] ROMANIAN PARTY COMPLAINS ABOUT ETHNIC HUNGARIANS' COMMENTS

    The Romanian National Unity Party (PUNR) has lodged a complaint with the Prosecutor- General's Office against five members of the Hungarian Democratic Union of Romania (UDMR) because of recent comments by the latter, Romanian Radio reported on 18 May. PUNR argues that the five UDMR members, including Laszlo Tokes, violated the Romanian Constitution by disparaging the country and making statements against the nation. At the UDMR congress on 15 May, Tokes said Kosova is a model of autonomy for Romania's ethnic Hungarians and called for the "end of the national Romanian state," AP reported. VG

    [21] LUCINSCHI DISCUSSES TRANSDNIESTER WITH CIS SECRETARY

    Moldovan President Petru Lucinschi told visiting CIS Executive Secretary Yurii Yarov that he believes the Transdniester dispute can be resolved with the help of Ukraine and Russia. He said the Transdniester could be granted "broad autonomy." In other news, the Moldovan parliament approved an amendment to the law on social insurance that will allow the state to pay up to 50 percent of pensions and benefits it owes with Moldovan-made industrial goods and foodstuffs, Infotag reported on 18 May. Such payments may be offered in lieu of cash only if the recipient agrees. Moldova's pension arrears now total almost 300 million lei ($27 million). VG

    [22] BULGARIAN SOCIALISTS CALL FOR NEW GOVERNMENT PROGRAM

    The Bulgarian Socialist Party (BSP) has said the government should come up with a new policy program because the war in Yugoslavia has changed the situation in Bulgaria, BTA reported on 18 May. BSP spokesman Angel Naydenov also said government representatives are now touring the country to prepare the public for a possible ground operation in Yugoslavia. The previous day, the Bulgarian and Greek defense ministers called for a diplomatic solution to the Kosova conflict. VG

    [C] END NOTE

    [23] TOWARD CONSOLIDATION OF LATVIA'S BANKING SECTOR

    by Jan Cleave

    Following last August's financial crisis in Russia, many observers feared the fallout would be particularly damaging to the Latvian banking sector. According to information released by the Bank of Latvia, Latvian commercial banks had invested 10.6 percent of their total assets in Russia (with 3.1 percent of all assets in short-term treasury bonds, or GKOs). By comparison, the exposure of Lithuanian banks to Russia was estimated at only 1.8 percent and that of the Estonian banking sector at less than 1 percent.

    In the event, three out of a total of some 30 commercial banks in Latvia have gone bankrupt since last summer. The Latvijas Kapital and Viktorija banks, both conducting much of their business in Russia, folded in late 1998, while the Rigas Komercbanka--the country's third-largest commercial bank, with the European Bank for Reconstruction and Development as main share-holder--was declared insolvent in mid-March, having lost 29 million lats ($49 million) in Russia last year. Since then, a rehabilitation plan for the Rigas Komercbanka has been approved by the central bank.

    Despite concerns that Latvian banks remain at risk, many in Riga are far more optimistic about the situation in the sector than they were at the end of last year. While Latvian commercial banks (including those declared bankrupt) posted total losses of some 120 million lats in 1998, the annual audit of those banks showed that only one that was still operating last month--the Latvijas Kredit Bank--did not have the required minimum capital of 2 million lats. Moreover, the banks' combined paid-in share capital rose from 154 million lats to 200 million lats. Those results, some analysts argue, indicate that the sector has withstood the Russian crisis.

    Regardless of whether that assessment is correct (reserve requirements, however high, offer no protection against heavy investment losses), Latvian banks are now facing new challenges as a direct result both of the Russian crisis and of Latvia's desire for integration with the West. First, there is increased competition at home following the loss of the Russian market (as well as investing heavily in Russia, Latvian banks have also relied on Russian depositors). Commercial banks find themselves competing for a smaller pool of customers, while no longer able to offer low-price services covered by profits accumulated in neighboring Russia. To be successful under such conditions, banks must be able to improve services while keeping operating costs down.

    Second, by the end of this year, all commercial banks operating in Latvia must have a minimum capital of 5 million ecus (some 3.5 million lats). That requirement, announced in 1995 by the Bank of Latvia, is aimed at meeting European banking norms as part of the country's overall bid to gain entry to the EU. According to the central bank, some 10 banks in Latvia currently do not meet that requirement.

    Ludmila Vojevoda, head of the Banking Regulations and Analysis Division of the Bank of Latvia, told "RFE/RL Newsline" that both challenges are forcing small banks to consider merging with other small banks or being taken over by larger partners. She points out that while Latvia, with a population of some 2.4 million, has no fewer than 26 banks still operating, the top 10 banks account for 80 percent of the sector's total assets. She predicts that by year's end, the number of banks continuing to function will be cut by about one-third as a result of consolidation.

    (Estonia, whose population totals 1.4 million, has already witnessed the consolidation of its banking sector and now has only six commercial banks. Lithuania, with some 3.7 million residents, has 10.)

    As an alternative to a merger or take-over, some banks are reported actively seeking a foreign strategic investor. Over the past year, several Scandinavian banks have entered the Latvian market: Sweden's Skandinaviska Enskilda Banken has bought nearly half of Latvia's largest bank, Unibanka, while Swedbank is represented by Hansabank and MeritaNordenbanken recently bought out the small Latvian Investment Bank. Vojevoda comments that judging by the number of queries the Bank of Latvia has received from abroad, more Western investments could be forthcoming.

    Such a development might help meet another, and possibly even more difficult, challenge: regaining Latvian residents' faith in the banking sector. That faith was shattered in 1995 when the country's largest bank-- Banka Baltija--went bankrupt, triggering a chain reaction throughout the sector. Over the past several years, confidence had been slowly increasing until the August 1998 crisis in Russia prompted a run on Latvia's banks, with an estimated 14 percent of Latvian residents withdrawing their money for fear of a repeat of the 1995 scenario.

    In an interview with "RFE/RL Newsline," Aigars Laizans, the marketing manager of MeritaNordenbanken's Latvian subsidiary, pointed to the importance of overcoming the psychological impact of the Russian crisis. "Clients feel insecure in the present environment," he said, "and therefore one of the banks' main tasks must be to seek to boost confidence" in the sector. Above all, he argues, banks must assume the role of a "glass-house, " showing the public that they are both "stable and safe." At the same time, he admits that many Latvian depositors are likely to have more trust in a bank that has Western backers, even though this is no guarantee against insolvency, as the case of Rigas Komercbanka amply demonstrated.

    19-05-99


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


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