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RFE/RL Newsline, Vol. 4, No. 159, 00-08-18

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. 4, No. 159, 18 August 2000


CONTENTS

[A] TRANSCAUCASUS AND CENTRAL ASIA

  • [01] PARTY ALLEGES 'BLACKMAIL' BY ARMENIAN GOVERNMENT
  • [02] ARMENIA, GEORGIA ASK UN FOR DROUGHT RELIEF
  • [03] GEORGIAN TRIAL OF JEHOVAH'S WITNESSES' ATTACKERS ADJOURNED
  • [04] AZERBAIJANI JOURNALISTS JOIN HUNGERSTRIKE TO PROTEST LAW SUIT AGAINST NEWSPAPER
  • [05] EXILED AZERBAIJANI EX-PARLIAMENT SPEAKER PLANS TO RUN FOR PARLIAMENT
  • [06] SUSPECTED MURDERER OF KAZAKH ARMS EXPORT OFFICIAL COMMITS SUICIDE
  • [07] KYRGYZ ROUNDTABLE POSTPONED
  • [08] JOURNALIST HOSPITALIZED AFTER INTERROGATION IN KYRGYZSTAN
  • [09] DEATH TOLL RISES IN FIGHTING IN KYRGYZSTAN
  • [10] UZBEK OFFICIAL SAYS FIGHTING 'NEARING COMPLETION'
  • [11] TAJIKISTAN ASSUMES SOLE CONTROL OF MINING COMPLEX

  • [B] SOUTHEASTERN EUROPE

  • [12] EXPLOSION RIPS KOSOVA'S CAPITAL
  • [13] BELGRADE WANTS UN MEETING ON KOSOVA MINE
  • [14] UN SEEKS TO CLEAR UP KOSOVA PROPERTY DISPUTES
  • [15] SERBIAN AUTHORITIES DETAIN UN POLICEMAN...
  • [16] ...AND OPPOSITION POLITICIANS
  • [17] ANOTHER PRIVATE SERBIAN RADIO STATION'S PROGRAMS BLOCKED
  • [18] U.S. DEFENDS BUDAPEST OFFICE AGAINST SERBIAN REGIME, OPPOSITION CRITICISM
  • [19] YUGOSLAV AUTHORITIES REJECT BRITISH PLEA OVER DETAINEES
  • [20] NORWEGIAN ASPHALT ARRIVES IN SERBIA
  • [21] MONTENEGRIN RIVALS AGREE ON NEED FOR PEACE
  • [22] THREE DEAD IN BOSNIAN MINE ACCIDENT
  • [23] IZETBEGOVIC HAVING SECOND THOUGHTS ABOUT LEAVING BOSNIAN PRESIDENCY?
  • [24] CROATIA SHIFTING STANCE ON PREVLAKA?
  • [25] CLEANERS MAKE DISCOVERY IN SLOVENIA
  • [26] ROMANIAN LIBERALS FACE TURMOIL IN CONGRESS
  • [27] ROMANIAN PRESIDENT BLAMES JUDICIAL SYSTEM FOR SLOW FIGHT AGAINST ORGANIZED CRIME
  • [28] OPINION POLL CONFIRMS ILIESCU'S DECREASING POPULARITY
  • [29] BULGARIAN PRESIDENT SACKS OFFICIAL OVER 'BUG GATE'
  • [30] GERMANY DAMPENS BULGARIAN HOPES ABOUT EARLY ENTRY TO EU
  • [31] BULGARIAN BUSINESSMAN SHOT

  • [C] END NOTE

  • [32] SLOWER GROWTH DELAYS ARMENIA'S ECONOMIC RECOVERY

  • [A] TRANSCAUCASUS AND CENTRAL ASIA

    [01] PARTY ALLEGES 'BLACKMAIL' BY ARMENIAN GOVERNMENT

    A member of the governing board of the People's Party of Armenia (HZhK) told RFE/RL's Yerevan bureau on 17 August that the party considers the recent dismissal of several of its members from government positions as official retaliation for the party's criticism of the government's economic policy. The HZhK forms the majority Miasnutiun parliamentary faction in tandem with Prime Minister Andranik Markarian's Republican Party of Armenia but is widely believed to be considering leaving Miasnutiun and aligning with the opposition Right and Accord bloc (see "RFE/RL Caucasus Report," Vol. 3, No. 31, 3 August 2000). A senior Republican on 16 August admitted political motives behind the sackings and accused the HZhK of thwarting government efforts to implement the bloc's 1999 electoral platform. LF

    [02] ARMENIA, GEORGIA ASK UN FOR DROUGHT RELIEF

    UN officials said in Geneva on 17 August that both countries have requested aid in the form of flour, seed grain, and diesel fuel to counter the effects of this summer's drought, the worst in Georgia in almost 4O years. In eastern Georgia, grain and sunflower crops covering almost 100,000 hectares have perished. A UN official told Reuters that while Georgia does not face imminent food shortages, aid is nonetheless needed to prevent the threat of hunger in the next few months. LF

    [03] GEORGIAN TRIAL OF JEHOVAH'S WITNESSES' ATTACKERS ADJOURNED

    A Tbilisi district court on 17 August adjourned the trial of followers of a Georgian unfrocked priest who are accused of assaulting Jehovah's Witnesses in Tbilisi last fall. That action came after sympathizers of the accused assaulted a Georgian human rights activist, a lawyer for the Jehovah's Witnesses, and a correspondent for RFE/RL's Tbilisi bureau (see "RFE/RL Newsline," 17 August 2000). The trial is scheduled to resume on 18 September. LF

    [04] AZERBAIJANI JOURNALISTS JOIN HUNGERSTRIKE TO PROTEST LAW SUIT AGAINST NEWSPAPER

    Journalists from 10 publications have joined in the hunger strike begun earlier this week by four journalists with the independent newspaper "Uch nogte," Turan reported on 17 August. They are protesting the legal action taken against the newspaper by Azerbaijan's Information Minister Siruz Tebrizli. Tebrizli is demanding the newspaper's closure in accordance with a provision of the media law that requires the closure of publications taken to court three times over a 12-month period for publishing erroneous information (see "RFE/RL Newsline," 16 August 2000). Newspaper editors have applied to the Baku municipal authorities for permission to picket the Ministry of Information on 23 August and to convene a demonstration on 25 August to protest the planned closure of "Uch nogte." LF

    [05] EXILED AZERBAIJANI EX-PARLIAMENT SPEAKER PLANS TO RUN FOR PARLIAMENT

    The Democratic Party of Azerbaijan will nominate its chairman Rasul Guliev to contest the 5 November parliamentary poll in the Khatai district of Baku, from which he was elected to the parliament in 1995, Caspian Press reported on 17 August. Guliev has lived in the U.S. since resigning as parliamentary speaker in September 1996. The Democratic Party has compiled a list of 81 candidates who will run in single mandate constituencies. The party was formally registered with the Ministry of Justice in February 2000 and is thus ineligible to contest the 25 mandates to be allocated under the proportional system. LF

    [06] SUSPECTED MURDERER OF KAZAKH ARMS EXPORT OFFICIAL COMMITS SUICIDE

    Amangeldy Amanghaliev, a suspect in the April murder in Almaty of Talghat Ibraev (see "RFE/RL Newsline," 18 April 2000), shot himself late on 16 August when police tried to arrest him in an Almaty restaurant, RFE/RL's bureau in the former capital reported. Amanghaliev was the son of a senior KGB official and graduated from Moscow State University after serving with the Soviet Army in Afghanistan from 1984-1986. Four other people, including the president of Kazakhstan's state arms export company and a colonel in the Kazakh intelligence service, have also been arrested in connection with the death of Ibraev (see "RFE/RL Newsline," 22 May and 6 June 2000). LF

    [07] KYRGYZ ROUNDTABLE POSTPONED

    The roundtable discussion between representatives of the Kyrgyz leadership, opposition, media and NGOs, originally scheduled for 26 August (see "RFE/RL Kyrgyz Report," 14 August 2000) has been postponed because of the fighting in the south of the country, a presidential administration spokesman told RFE/RL's Bishkek bureau on 17 August. The discussion will now take place next month. Also on 17 August, Central Electoral Commission Chairman Suleiman Imanbaev told ITAR-TASS that the 29 October presidential election will not be postponed because of the fighting. He added that such a postponement is possible only if the Kyrgyz parliament votes to introduce martial law or a state of emergency. LF

    [08] JOURNALIST HOSPITALIZED AFTER INTERROGATION IN KYRGYZSTAN

    Svetlana Krasilnikova, who is deputy editor of the independent weekly "Delo Nomer," was hospitalized with cardiac pains in Bishkek on 17 August, the day after being subjected to an eight-hour interrogation by the Kyrgyz Security Ministry, RFE/RL's Bishkek bureau reported. The Prosecutor- General's Office opened a court case against the newspaper earlier this month on charges of divulging state secrets in its reporting of the trial of former Security Minister Feliks Kulov. LF

    [09] DEATH TOLL RISES IN FIGHTING IN KYRGYZSTAN

    The secretary of the Kyrgyz Security Council, General Bolot Djanuzakov, told journalists in Bishkek on 17 August that another seven Kyrgyz troops were killed in clashes with invading Islamic militants the previous day, Reuters and RFE/RL's Bishkek bureau reported. Interfax quoted him as saying that Kyrgyz forces have regained control of areas of Batken Oblast earlier taken by the invaders. Djanuzakov said that fighting is continuing near the Ak-Tubek glacier, which is located close to the Toeroe pass on the Kyrgyz-Tajik border. He said two Kyrgyz pilots suffered burns, but managed to make an emergency landing after their helicopter came under fire in Batken. LF

    [10] UZBEK OFFICIAL SAYS FIGHTING 'NEARING COMPLETION'

    Uzbek Defense Ministry official Major General Yurii Filonenko told Russian agencies on 17 August that the military phase of the operation to neutralize the Islamic militants is almost over. He said that border guards and Interior Ministry troops will comb the border regions to round up militants and any who avoid capture will be starved out. Meanwhile, Human Rights Watch released a press statement in New York on 17 August calling on both the governments of the Central Asian states and the Islamic insurgents to respect the rules of armed conflict and to try to avoid civilian casualties. HRW also warned against intensified repression against religious believers and opponents of the regime in Uzbekistan. LF

    [11] TAJIKISTAN ASSUMES SOLE CONTROL OF MINING COMPLEX

    Following a government resolution of 19 July, Tajikistan's Committee for Precious Metals has taken over the administration and exploitation of the Altyn-Topkan zinc and lead mine, Asia Plus-Blitz reported on 17 August. The mine, which located on Tajik territory, had been jointly worked with Uzbekistan since before the collapse of the USSR in 1991. The two countries had begun negotiations in 1996 on Tajikistan's assuming full responsibility for the mine. LF

    [B] SOUTHEASTERN EUROPE

    [12] EXPLOSION RIPS KOSOVA'S CAPITAL

    An explosion on 18 August damaged a building in central Prishtina used by the OSCE for its program to promote democracy. The building is home to several ethnic Albanian and Serbian political parties. It also houses a restaurant, some trade union offices, and the offices of Belgrade's representatives in Kosova. A NATO spokesman said that one person was injured and several are in shock. He added that the explosion appears to have been caused by a bomb. Bernard Kouchner, who is the UN's chief civilian administrator in the province, said the bomb was planted by "enemies of democracy. A bomb is a very undemocratic means" of expressing one's views, AP reported. PM

    [13] BELGRADE WANTS UN MEETING ON KOSOVA MINE

    Vladislav Jovanovic, who is Serbia's chief diplomatic representative at the UN, said in New York on 17 August that his government demands that the Security Council condemn the UN mission in Kosova's recent takeover of an environmentally dangerous mining complex (see "RFE/RL Newsline," 17 August 2000). Jovanovic dismissed Kouchner's expressions of concern about lead poisoning from the plant, calling his remarks "another cynical and transparent attempt to hoodwink world public opinion and the Security Council," AP reported. PM

    [14] UN SEEKS TO CLEAR UP KOSOVA PROPERTY DISPUTES

    The UN civilian administration opened an office in Prishtina on 17 August to deal with some 100,000 property disputes that are an impediment to foreign investment in the province, Reuters reported. The problem of wartime destruction and dislocation is compounded by the fact that pre-1999 Serbian legislation discriminated against ethnic Albanians in matters regarding property sales and ownership. Since the conflict ended in June 1999, moreover, many Serbs and even Albanians have been forcibly evicted from their homes and flats. Several Kosovar Albanians have told "RFE/RL Newsline" in recent months that their flats were forcibly occupied by armed gangs from Albania. PM

    [15] SERBIAN AUTHORITIES DETAIN UN POLICEMAN...

    A UN spokesman said in Prishtina on 17 August that Serbian authorities in Bujanovac are holding a UN policeman from an unnamed Asian country and his ethnic Albanian interpreter. Reuters reported that it is not unusual for foreign personnel in Kosova to stray across the border into Serbia and that the Serbian authorities usually release such individuals after a "short period of time." PM

    [16] ...AND OPPOSITION POLITICIANS

    Police at a toll station on a highway in Vojvodina detained Miodrag Isakov and Petar Petrovic from the opposition Reformist Party of Vojvodina on 17 August and took them to the police station in Novi Sad. Their party said in a statement that police freed the two men only after "holding them for three hours without any reason or explanation," AP reported. PM

    [17] ANOTHER PRIVATE SERBIAN RADIO STATION'S PROGRAMS BLOCKED

    Serbia's Association of Independent Electronic Media (ANEM) said in a statement from Belgrade on 17 August that "the signal of Radio Jasenica in Smederevska Palanka has been [blocked] since the night of 16 August. Radio Jasenica is a member of ANEM.... Radio Jasenica technicians have determined that a new transmitter located near Smederevska Palanka is illegally broadcasting state media's first program on Jasenica's frequency. Listeners from Palanka, Pozarevac, Petrovac, and Veliko Gradiste have reported jamming [of Jasenica].... Radio Jasenica will urgently undertake all necessary legal remedies for protection from the appropriate state bodies. The Federal Ministry of Telecommunications has displayed enviable efficiency in closing ANEM television and radio stations which it claims have been operating illegally. ANEM demands that the Ministry act with equal efficiency to protect the legal broadcasting of Radio Jasenica and immediately remove the source of disruption on 88.3 MHz in order for Radio Jasenica to resume its operations undisturbed." PM

    [18] U.S. DEFENDS BUDAPEST OFFICE AGAINST SERBIAN REGIME, OPPOSITION CRITICISM

    State Department spokesman Philip Reeker said in Washington on 17 August that the main purpose of the State Department's newly opened Budapest office is to "support the full range of democratic forces in Serbia and coordinate [those support activities] in Budapest" (see "RFE/RL Balkan Report," 18 August 2000). Both Serbian opposition presidential candidate Vojislav Kostunica and Deputy Prime Minister Nikola Sainovic have called the office an example of "gross interference" in Serbia's internal affairs. Reeker said: "We believe that Mr. Kostunica is indeed a genuine democratic leader, and he is entitled to his opinions. That doesn't mean that we have to agree with him in all of those opinions." Referring to Sainovic, Reeker noted that he is an indicted war criminal who, "like his cohort, [Yugoslav President Slobodan] Milosevic, and others, belongs in The Hague rather than trying to make comments about the opposition or democracy in Serbia," Reuters reported. PM

    [19] YUGOSLAV AUTHORITIES REJECT BRITISH PLEA OVER DETAINEES

    Rade Drobac, who is Belgrade's chief diplomatic representative in London, told the BBC on 18 August that the Yugoslav courts will not allow themselves to be rushed in dealing with the cases of two Britons and two Canadians recently arrested while on vacation in Montenegro (see "RFE/RL Newsline," 15 August 2000). Drobac thereby indirectly rejected demands by the Foreign Office that the Yugoslav authorities either charge the four or release them. Drobac said: "It is a simple case in which [the men] were found without papers. They were found with detonators and wires for explosives. I believe that everyone with a lot of sense will understand that something is essentially wrong." The detonation equipment was in the car of one of the Canadians, who is a construction contractor. In Belgrade, British diplomat Robert Gordon told reporters that he hopes nonetheless that "something happens and that [the men] are released soon." He did not elaborate, AP reported. PM

    [20] NORWEGIAN ASPHALT ARRIVES IN SERBIA

    Some 98,000 tons of asphalt arrived in Novi Sad as a gift of the Norwegian government, RFE/RL's South Slavic Service reported on 18 August. The gift is part of the EU-sponsored "Asphalt For Democracy" program aimed at helping opposition-run towns repair roads. PM

    [21] MONTENEGRIN RIVALS AGREE ON NEED FOR PEACE

    Several leading officials of the Democratic Party of Socialists (DPS), which supports Montenegrin President Milo Djukanovic, and of the Socialist People's Party (SNP), which backs Milosevic, discussed the current political situation in and around Montenegro in Podgorica on 17 August, Montena-fax reported. The participants agreed on the importance of continuing their frank discussions and on preserving peace. The members of DPS delegation were Vice Presidents Filip Vujanovic and Svetozar Marovic, President of the Executive Board Miodrag Vukovic, and legislative faction leader Dragan Djurovic. The members of the SNP delegation were Vice Presidents Zoran Zizic, Predrag Bulatovic, and Srdja Bozovic, as well as party political affairs director Vuksan Simonovic. PM

    [22] THREE DEAD IN BOSNIAN MINE ACCIDENT

    A Swedish expert on land mines, a Bosnian member of a de-mining team, and a Bosnian policeman were killed at Rogatica east of Sarajevo on 17 August as they tried to remove the bodies of two other men from a minefield left from the 1992-1995 conflict. Reuters notes that "around 1,200 mine accidents were reported between the end of the war and March this year, 40 percent of them fatal and 20 percent involving children." PM

    [23] IZETBEGOVIC HAVING SECOND THOUGHTS ABOUT LEAVING BOSNIAN PRESIDENCY?

    "Oslobodjenje" of 18 August quoted unnamed sources "close to Izetbegovic's office" as saying that Alija Izetbegovic, who is the Muslim member of the joint presidency, is "reconsidering" his earlier decision to resign his post (see "RFE/RL Newsline," 7 June 2000). PM

    [24] CROATIA SHIFTING STANCE ON PREVLAKA?

    Defense Minister Jozo Rados said in Dubrovnik that he intends to turn over several military recreation centers on the Prevlaka peninsula to the civilian authorities, "Jutarnji list" reported on 18 August. In response to a reporter's question about the future of other military facilities on the peninsula, Rados said that the area might eventually have a "special status, " by which he seemed to mean that it might be demilitarized. The governments of Croatia and Montenegro are anxious to end the dispute over the peninsula, which is Croatian territory and on which UN monitors are present. It controls access to Kotor Bay, which is the home of Yugoslavia's only deep-water naval base. Belgrade has shown little interest in ending the stand- off. PM

    [25] CLEANERS MAKE DISCOVERY IN SLOVENIA

    Economics Minister Joze Zagozen told a press conference in Ljubljana on 17 August that cleaners recently discovered several listening devices in his offices. He said he will wait until he has more information before drawing any firm conclusions. The discovery appears to be but the latest chapter in an ongoing affair involving the ministry, state-run companies, and the police, "Dnevnik" reported. PM

    [26] ROMANIAN LIBERALS FACE TURMOIL IN CONGRESS

    An extraordinary congress of the National Liberal Party (PNL) on 18 August is to approve the party's strategy for the upcoming parliamentary and presidential elections, Romanian media reported. Congress delegates are likely to support the nomination of Theodor Stolojan as the party's presidential candidate, although several PNL leaders have contested that decision. PNL branch leaders on 17 August called on Finance Minister Decebal Traian Remes to resign from the party owing to his staunch criticism of the party leadership and his support for Premier Mugur Isarescu. The previous day, the party's Senate, composed of the party's eldest members, announced it will support Isarescu instead of Stolojan. Party first deputy chairman and Justice Minister Valeriu Stoica had previously "shown the door" to all those disagreeing with Stolojan's nomination. ZsM

    [27] ROMANIAN PRESIDENT BLAMES JUDICIAL SYSTEM FOR SLOW FIGHT AGAINST ORGANIZED CRIME

    At the a meeting of the Romanian Supreme Defense Council on 17 August, Romanian President Emil Constantinescu criticized the judicial system for dragging its feet on cases against organized crime suspects and those accused of corruption, Ziua reported. Observers note that Constantinescu's remarks were directed primarily at Justice Minister Valeriu Stoica. The minister, who did not participate in the meeting, denied the charges, saying that a minister "cannot influence justice and the magistrates are independents." The council discussed measures aimed at cracking down on corruption and analyzed a report on the fight against organized crime since 1997. It also decided to set up a National Security Authority. ZsM

    [28] OPINION POLL CONFIRMS ILIESCU'S DECREASING POPULARITY

    An opinion poll released on 17 August confirms declining support for Party of Social Democracy in Romania chairman and former President Ion Iliescu, Romanian media reported. According to the poll, Iliescu has 31 percent backing, while Prime Minister Mugur Isarescu, who has not yet announced his candidacy, has the support of 22 percent. PNL candidate Theodor Stolojan received only 17 percent backing. The poll also revealed that both Isarescu and Stolojan would beat Iliescu in a runoff. On 16 August, Iliescu harshly attacked Stolojan, who was prime minister in 1991-1992 when Iliescu was president. ZsM

    [29] BULGARIAN PRESIDENT SACKS OFFICIAL OVER 'BUG GATE'

    Petar Stoyanov signed a decree on 17 August dismissing General Bozhidar Popov from his post as chief secretary of the Interior Ministry for his part in the "Bug Gate" scandal, AP reported. That scandal is related to listening devices found in July in the apartment of the country's chief prosecutor. Popov directed a unit that was to remove secret eavesdropping devices from sensitive buildings. Stoyanov called for Interior Ministry officials "to regain Bulgarian citizens' trust in their institutions." Bulgarian Prime Minister Ivan Kostov had last week called for Popov to be sacked, and the government recently urged Stoyanov to dismiss the general (see "RFE/RL Newsline," 17 August 2000). Popov's post will be filled by Slavcho Bosilkov, who previously worked as Kostov's national security adviser. PB

    [30] GERMANY DAMPENS BULGARIAN HOPES ABOUT EARLY ENTRY TO EU

    German Finance Minister Hans Eichel said after meeting with Bulgarian Premier Kostov and Finance Minister Muravey Radev on 17 August that countries aspiring to join the EU, including Bulgaria, should not expect to join before their economies are prepared for competition, dpa reported. Eichel said: "It is in the interest of the prospective members," as well as current members, "that the accession process...does not weaken the union but strengthens it." Bulgaria owes Germany--the leading investor in Bulgaria--some $215 million. PB

    [31] BULGARIAN BUSINESSMAN SHOT

    Encho Stoev, the former director of Bulgaria's main oil refinery, was shot and injured by two men in Burgas on 17 August, AP reported. Stoev was the chief executive officer of the LUKoil Neftochim oil refinery. Stoev was able to shoot and kill one of the assailants. PB

    [C] END NOTE

    [32] SLOWER GROWTH DELAYS ARMENIA'S ECONOMIC RECOVERY

    By Emil Danielyan

    The Armenian economy, still in a deep post-Soviet slump, expanded in the first half of this year at the lowest rate registered in the last five years, bringing little alleviation of enormous hardships suffered by the vast majority of the population.

    Official statistics that show Gross Domestic Product (GDP) at 2.6 percent higher than during the same period in 1999 confound the government's growth projections and are not anywhere near enough to comfort the body politic, analysts say. The continuing lack of investments and other chronic problems, they say, hamper the kind of upswing that would have a noticeable impact on low living standards.

    Armenia has boasted single-digit growth rates since the virtual industrial collapse of the early 1990s. Strict monetary discipline may have led to relative macroeconomic stability, but has yet to generate economic recovery.

    The latest growth figure is hardly encouraging for the government of Prime Minister Andranik Markarian which will increasingly need at least signs of a major socioeconomic improvement to justify its continued presence in office.

    "This is not quite an indicator," said Sevak Lalayan, an economic analyst at the International Center for Human Development (ICHD), a Yerevan-based think-tank. "For Germany, for example, a one percent growth means billions of dollars. For Armenia, it's just a few million dollars. These percentage points are therefore misleading." "This country will get on its feet if its economy grows by at least ten percent for several years in a row," he told RFE/RL on 18 August.

    The previous cabinet had forecast six percent growth for the year 2000. But even that projected rate will be unachievable if the current trends continue. Lalayan was more categorical when he said: "This year one should expect a three percent growth at best. Not more." This suggests that major change in the dire economic situation is unlikely to come about at least before the end of the year.

    The authorities, however, hope that positive implications of the stabilization of the political situation in Armenia will begin to manifest themselves in the coming months. Last October's shock assassinations in the Armenian parliament and the ensuing turmoil in the country's leadership are thought to have undermined the trust of the domestic business community and potential foreign investors. The end of the power struggle in Yerevan last May definitely bodes well for economic activity.

    Still, the existing situation is a source of concern, with unemployment still extremely high and public sector salaries and pensions not paid for months. The wage arrears may be a prelude to a serious budgetary crisis. The government said in June that that the shortfall in budget revenues could total 45 billion drams ($85 million) by the end of this year if the situation with tax collection does not improve.

    A senior World Bank expert, Lev Freinkman, wrote in a recent report on Armenia that "the quality and sustainability of growth remains of major concern." "The main evidence of weaknesses in the existing growth pattern are inter-related and include: low investment rate and thus weak capacity to create new jobs,...low export, slow rate of enterprise restructuring in core manufacturing, underdeveloped financial system, and high income inequality," according to Freinkman.

    ICHD's Lalayan singled out the lack of foreign direct investments (FDI) as the first and foremost problem preventing economic development. The total volume of such investments was less than $100 million last year.

    Widespread corruption and the unfavorable investment climate are widely blamed for the low FDI rate in Armenia. More important, it appears, is the fact that Western firms are wary of doing business in Armenia and elsewhere in the South Caucasus because of uncertain prospects for the settlement of regional conflicts. The unresolved Nagorno- Karabakh dispute still hangs ominously over regional peace and stability. In addition, high transportation costs resulting from the closed borders with Azerbaijan and Turkey place a heavy burden on the Armenian economy.

    Lalayan argued that the monetary policy of the Armenian Central Bank is excessively tight and also strangles the economy. Inflation was virtually non-existent in the first half, with the consumer price index rising by just 0.2 percent between December and June. For a country like Armenia this is an "awfully small" figure, he said.

    There are, however, some bright spots in the overall grim economic picture. For the first time a surge in industrial output accounted for a large share of the growth. Armenian output (excluding energy production) was 7.4 percent up from the same period last year. Particularly strong was the growth in the production of consumer goods.

    The country's huge trade deficit fell by 10 percent to $284.2 million, helped by a nearly 17 percent rise in exports. The government's program submitted to the parliament in June envisages that Armenian exports will grow by "at least 25 percent" beginning next year.

    The government also set an ambitious goal of doubling Armenia's GDP in the next "seven to eight years." But with the current rate of growth that seems utopian.

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

    18-08-00


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


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