|Monday, 27 January 2020|
RFE/RL Newsline, Vol. 2, No. 28, 98-02-11
From: Radio Free Europe/Radio Liberty <http://www.rferl.org>
Vol. 2, No. 28, 11 February 1998
[A] TRANSCAUCASUS AND CENTRAL ASIA
[B] SOUTHEASTERN EUROPE
[C] END NOTE
[A] TRANSCAUCASUS AND CENTRAL ASIA
 WORLD LEADERS CONDEMN SHEVARDNADZE ASSASSINATION BIDNumerous world leaders, including the U.S., Russian, Abkhaz, Turkish, Kazakh, and Armenian acting presidents, have telephoned with Georgian President Eduard Shevardnadze to express outrage over the 9 February attempt on his life. The Russian, Armenian, and Chechen Foreign Ministries issued statements condemning the assassination attempt. Shevardnadze himself said it was a "miracle" that he survived the second attempt on his life. At the same time, he confirmed his intention to serve Georgia "until the end." In a bid to qualify his 9 February accusation that "the hand of Russia" may have been involved, Shevardnadze said the attack was a "well planned and prepared military operation" by forces that "cannot forgive" the Soviet invasion of Afghanistan and the fall of the Berlin Wall" and are seeking to prevent both the export of Caspian oil via Georgia and the implementation of the TRACECA transport corridor project. LF
 ASSAILANTS' IDENTITY REMAINS UNCLEARGeorgian Security Minister Djemal Gakhokidze told Interfax on 10 February that the assassination attempt was prepared outside Georgia but that some Georgian citizens participated. Interior Minister Kakaha Targamadze said that the 10- 15 attackers arrived in Georgia separately and unarmed. The Georgian commission formed to investigate the attack has established that Visamudin Djangaliev, the Dagestani Chechen killed by one of Shevardnadze's bodyguards, was a member of the Confederation of Peoples of the Caucasus and had fought as a volunteer in the force that the confederation sent to support Abkhazia in its war against Georgia in 1992-1993, an RFE/RL correspondent reported from Tbilisi on 11 February. Meanwhile, Russian Foreign Ministry spokesman Gennadii Tarasov has rejected speculation that the assault was launched from the Russian military base at Vaziani, 30 kilometers outside Tbilisi, AFP reported. LF
 DASHNAK PARTY LEADER RELEASEDVahan Hovanissian, a leader of the opposition Armenian Revolutionary Federation (Dashnaktsutyun), was released from prison on 10 February, Armenian and Russian media reported. Hovanissian was sentenced in December 1997 to four years in prison on charges of calling for the violent overthrow of the Armenian leadership (see "RFE/RL Newsline," 15 December 1997). On 9 February, the Armenian Ministry of Justice lifted the ban that former President Levon Ter-Petrossyan imposed on the party in December 1994. Hovanissian told journalists following his release that the political situation in Armenia is "excellent [and] healthy" and added that his party will decide shortly whether to propose him as its candidate for the 16 March presidential elections, Noyan Tapan reported. But RFE/RL's Yerevan bureau reported on 10 February that the party is likely to back the candidacy of Prime Minister and acting President Robert Kocharyan. LF
 KAZAKHSTAN HALTS OIL, GAS PRIVATIZATIONPrime Minister Nurlan Balgimbayev on 10 February announced that his country will suspend privatization in the oil and gas industries, Interfax reported. Balgimbayev said the move is necessary until the government has selected a "strategic partner" for the national oil company. He denied that Kazakhstan is unable to fill quotas for oil to the Caspian Pipeline Consortium project, noting that the country last year produced a record 27 million tons of oil and expects that amount to grow to 170 million tons by 2020. He admitted that there are differences between the consortium's partners but said he hoped the 11-12 February meeting in Moscow will resolve some of them. BP
 KAZAKH GDP GREW 2 PERCENT LAST YEARYeryan Utembayev, the chairman of the Agency for Strategic Planning and Reform, said GDP grew 2 percent last year to reach 1.68 trillion tenge (about $22 billion), Interfax reported. Food production grew by 28 percent, ferrous metals by 24 percent, and natural gas by 20 percent. Inflation last year reached 11.2 percent (17 percent had been forecast). However, AFP reported on 2 February that the Finance Ministry released data showing production decreases of 17.5 percent in the oil refining sector, 14.7 percent in electricity, 29.8 percent in mechanical engineering, and 34.3 percent in the chemical industry. According to the same data, 55 percent of the country's industries made no profit in 1997. BP
 TAJIK GOVERNMENT FREES OPPOSITION PRISONERSThe Tajik government on 11 February released from jail170 people, mostly opposition supporters, RFE/RL correspondents in Dushanbe reported. The United Tajik Opposition claims there are still more than 1,000 of its supporters in government jails. It also stresses that it has released all its government captives. Meanwhile Tajik President Imomali Rakhmonov and UTO leader Said Abdullo Nuri met on 11 February in an attempt to finalize which ministries will be allocated to UTO members. BP
[B] SOUTHEASTERN EUROPE
 ALBANIA CALLS FOR PEACEFUL SOLUTION IN KOSOVOForeign Minister Paskal Milo said in Ljubljana on 10 February that Albania wants a peaceful resolution of the Kosovo dispute. "We hope it will not come to an armed conflict in Kosovo as that would have catastrophic consequences that would weigh upon all of the Balkans.... Pressure [by the Yugoslav authorities] on the Albanians in Kosovo proves that Belgrade is sticking to its old policy and mentality and that it lacks the will to find a new approach.... We do not support any armed groups that want to start a fight in Kosovo and are against all terrorism, be it Serbian or Albanian." PM
 TENSIONS CONTINUE IN SRBICASpokesmen for the Democratic League of Kosovo, the main ethnic Albanian political organization in the province, have said Serbian police try to intimidate or provoke Albanians in Srbica on a daily basis, BETA reported on 10 February. Serbian police have resumed patrols on the Srbica-Klina road, but regular bus traffic has not resumed. Local Serbs also told BETA that the situation in Srbica and nearby Kosovska Mitrovica is tense. In recent weeks, the clandestine Kosovo Liberation Army has maintained a strong presence in the area. PM
 IZETBEGOVIC SLAMS FRANCEAlija Izetbegovic, the Muslim member of the joint presidency and its current chairman, protested to the French government on 10 February over the reception received by Republika Srpska President Biljana Plavsic the previous day (see "RFE/RL Newsline," 10 February 1998). Izetbegovic charged that Plavsic was treated like a head of state, which, he added, showed that France favors the Serbs over Bosnia's other ethnic groups. Izetbegovic stated that France has displayed "arrogant behavior typical of a great power toward a state that is fighting for its survival." PM
 BRCKO LOBBYISTS IN VIENNAThe Bosnian Serbs cannot afford to lose Brcko, Prime Minister Milorad Dodik told the Vienna international arbitration commission on that strategic town on 10 February. He has said repeatedly in recent days that Brcko must remain in Bosnian Serb hands if his government is to survive. Also on 10 February, Plavsic told the Vienna commission that Brcko is vital for the survival of the Bosnian Serb state. Ejup Ganic, the president of the mainly Croatian and Muslim federation, said in Vienna, however, that the international community "cannot reward genocide by bringing in [Dodik] and saying "yes, there was genocide here, but here is a nice guy.'" Brcko had a Muslim and Croatian majority before the 1992-1995 war but is now almost completely Serbian owing to "ethnic cleansing." PM
 MILOSEVIC PROMOTES ECONOMIC LINKS TO BOSNIAYugoslav President Slobodan Milosevic, Dodik, and a number of Serbian and Bosnian business leaders agreed in Belgrade on 10 February to promote cooperation in metallurgy. Some $20 million in unspecified foreign loans will be used to develop a partnership between Serbia's Sartid mills in Smederevo, the iron mill in Zenica in the mainly Muslim and Croat federation, and the Ljubija mines near Prijedor in the Republika Srpska. Milosevic recommended that Montenegro's Nis iron mill be included in the partnership in the future. Elsewhere in Belgrade, workers in 14 metallurgical plants went on strike, an RFE/RL correspondent reported from the Serbian capital. PM
 ARBOUR SEEKS EXTRADITIONSLouise Arbour, the Hague-based war crimes court's chief prosecutor, called upon Yugoslav Justice Minister Zoran Knezevic in Belgrade on 10 February to change legislation in order to permit the extradition of indicted war criminals to The Hague. PM
 BECHTEL TO FINANCE CROATIAN HIGHWAYNegotiations have been completed between the Croatian government and the U.S. Bechtel Corporation on the financing of the key Zagreb-Dubrovnik highway, an RFE/RL correspondent reported from the Croatian capital on 10 February. Work will begin this fall on the first segment, which will connect Zagreb and Sisak. The highway will then cut across northwestern Bosnia to the coast. PM
 EU TO PROMOTE INDEPENDENT MEDIA IN CROATIAAn EU official said in Zagreb on 10 February that Brussels has increased its support for the independent media from $1.76 million in 1997 to $2.94 million in 1998. The official said that goals include setting up a nationwide independent television network and establishing a newspaper distribution system independent of the governing Croatian Democratic Community (HDZ). The HDZ currently controls all television broadcasting, most radio stations, most periodicals, and the newspaper distribution system. PM
 U.S. URGES MEIDANI TO OVERCOME POLARIZATIONUndersecretary of State Thomas Pickering urged visiting Albanian President Rexhep Meidani on 10 February to "utilize the non-partisan nature of his office to reach out to all Albanian political forces, promoting constructive dialogue and opposition participation in the affairs of government and development of a constitution," a spokesman said in Washington. The Albanian president then left for Turkey, where he will spend three days accompanied by a large political and economic delegation. PM
 NANO APPEALS FOR FOREIGN EXPERTISEAlbania seeks foreign advice as well as investment, Prime Minister Fatos Nano told foreign ambassadors and representatives of the World Bank and the IMF in Tirana on 10 February. "We want to know your ideas, advice, and suggestions about what we should improve quicker, do better or differently...so that we lose no more time--and funds." Nano added that his country appreciates the aid it has received, but he stressed that "direct private investments are the injections that will revive this country more quickly and better." Representatives of the World Bank said the bank will provide a $10.25 million credit to provide guarantees to foreign investors against "political risks." PM
 ROMANIAN PARLIAMENT APPROVES FIVE NEW MINISTERSA joint session of the Romanian parliament on 10 February approved the nomination of five new ministers proposed by Premier Victor Ciorbea, RFE/RL's Bucharest bureau reported. A sixth minister, Mihai Sorin Stanescu, who was originally nominated by the premier, withdrew his candidacy after two parliamentary commissions recommended against approving his nomination as secretary of state with ministerial rank at the Ministry of Defense on grounds of his unfamiliarity with military affairs. Stanescu, a National Liberal Party (PNL) member, said he had to withdraw owing to pressure from the National Peasant Party Christian Democratic (PNTCD). In a related development, 15 PNL senators sent an open latter to PNL Chairman Mircea Ionescu-Quintus protesting PNTCD "dictates" on nominating new ministers and demanding that the relations between the two parties be discussed at a PNL National Council meeting on 21 February. MS
 U.S.-MOLDOVAN NEGOTIATIONS ON MILITARY EQUIPMENT DELIVERIESSources at the Moldovan Ministry of Defense have told an RFE/RL Chisinau bureau correspondent that negotiations are under way with the U.S. on the delivery of military equipment to Chisinau. The deliveries are to be part of the second installment of payments for the U.S. purchase last year of 21 Moldovan MiG-29 planes. The second installment totals $40 million, as did the first installment. Moldova will also receive medical equipment, computers for its educational institutions, and "special equipment" for the Interior and Security Ministries. In other news, Lieutenant-General Nicholas Kehoe, the deputy chairman of NATO's Military Committee, ended a three-day visit to Moldova on 10 February. He met with Defense Ministry officials to discuss cooperation within the Partnership for Peace Program. MS
 BULGARIAN PRESIDENT MEETS WITH CLINTONPetar Stoyanov on 10 February met with President Bill Clinton at the White House, an RFE/RL correspondent reported. Clinton later told journalists that "historic changes" have taken place in Bulgaria over the last year and that Stoyanov has played a "key role" in them." Under Stoyanov's leadership, Clinton said, Bulgaria has "aligned itself firmly" with "the family of democratic nations" and "moved forward" in implementing "difficult economic reforms," strengthened civil institutions, and stepped up its fight against organized crime. Stoyanov said he and Clinton discussed the role of Bulgaria in the Balkans. He expressed hope that Bulgaria will be a strong candidate for NATO second-wave expansion and pledged that his country will be an "equal, reliable and stable partner" of the U.S. MS
 CLINTON LAUNCHES 'ACTION PLAN FOR SOUTHEAST EUROPE'Following his 10 February meeting with Bulgarian President Stoyanov, Clinton launched what he called the "Southeast Europe Action Plan," an RFE/RL correspondent in Washington reported. The plan is designed to expand U.S. relations with Bulgaria, Romania, Macedonia, and Slovenia and aims at closer economic, political-military, and law- enforcement cooperation between the U.S and those countries. A statement issued by the White House said the plan will promote greater regional cooperation and will aim at setting up bilateral and multilateral groups among those states as well as with the EU. MS
[C] END NOTE
 DONETSK STEEL MILL FORGES AHEADby Stefan Korshak In Ukraine, conventional wisdom has it that managers of enterprises must thoroughly re-educate themselves in capitalist ways before foreign investors will come up with cash. But the recently privatized Donetsk Iron and Steel Works (DISW) enterprise has found another way.
The steel it makes is in demand around the world. After coming through the Soviet collapse in better shape than most other steel mills, DISW now has a foreign backer helping it plan for the future.
The mill has been operating for more than 100 years. The present directors took over in 1994, when enterprise after enterprise in Ukraine's "smokestack sector" was going under. Immediately after independence, DISW not only kept afloat but thrived by supplying enterprises throughout the CIS.
Geography helped DISW. The iron ore, coke, pellets, concentrates, and refractors needed to convert iron ore into pressed sheets and rolled pipe are available in abundance in surrounding regions of the country. Thus, when CIS borders went up and customs duties were imposed, DISW did not need to pay such duties to import raw materials. Just about the only input that the Ukrainian steel industry, in general, and DISW, in particular, have lacked in recent years is power. The situation was stable until 1994, when the state began phasing out electricity subsidies. About the same time, hyper-inflation hit, meaning that not only did the company have to draw down its financial resources to maintain production but the economy in which it operated was thrown into chaos.
Imposition of new tariffs and value-added tax in CIS countries cut into earnings as well. Worse still, smaller operators in the West began to complain about the volume of cheap Ukrainian steel pouring into their home markets. European and U.S. politicians began talking about "level playing fields" and "dumping."
The approved business school solution in 1996 would have probably been to sell everything, downsize 80 percent of the employees, and either open a smaller, more efficient mill, or invest capital resources into government Treasury bills. But since at the time the government owned DISW, liquidation was not an option for top managers.
Ukraine's State Property Fund (SPF) has applied several approaches toward converting a government company into a private one. Usually, the bigger the company and the more likely its product could have a military application, the larger the stake the SPF orders the government to maintain. DISW qualified on both counts for a large government stake.
In 1996, the SPF handed down a privatization decision for the plant whereby ordinary citizens got 40 percent of shares and the government 20 percent. The remaining 40 percent went onto the market as a single-share bloc. The competition winner was Autoaliance-Doverie, whose majority shareholder is British MetalsRussia Ltd. For $50 million, the Hong-Kong-based steel manufacturer and trader got 40 percent of the Donetsk works. Already a provider of investment money for Russian steel plants, MetalsRussia has, so far, pumped operating capital totaling $9 million in equipment and $17 million into DISW.
The task for both DISW and MetalsRussia management has been to find a niche on the international market for a large-capacity steel factory, relatively inefficient in energy and raw materials usage.
The restructured enterprise altered its approach to foreign markets, focusing on export to Southeast Asia. Manufacturers in places like Singapore and Bangkok, who have no domestic steel industries to protect, want cheap steel.
One portion of the MetalsRussia cash investment is going into machines to make Donetsk steel more marketable. But besides making better steel, DISW must make its product cheaper, which, above all, means reducing the energy cost per ton of steel. Smaller Western mills make competitive steel largely because their energy costs are relatively low. Such an operation in Ukraine would not only throw a lot of workers onto the unemployment line but would put miners of raw materials out of work.
Part of MetalsRussia's investment has gone into energy-saving projects, like overhauling and upgrading DISW's Electric Furnaces. That leaves the problem of finding markets for DISW's cheaper, better-quality product.
A global company with steel interests worldwide, MetalsRussia, through its parent company Sakhavria Group Thailand, has opened up an existing market for DISW products. Owning factory shares in sites like Pakistan, Russia, India, and Ukraine, the foreign interest links DISW's products into the international market for steel. In theory, the future for DISW, and firms like it, looks rosy. The product is competitive. Foreign capital has been tied into domestic manufacturing. Salaries are paid on time. And the Ukrainian government is interested in the company's success.
The author is a Kyiv-based journalist who regularly contributes to RFE/RL.
Reprinted with permission of Radio Free Europe/Radio Liberty