|Sunday, 26 January 2020|
RFE/RL Newsline, Vol. 2, No. 37, 98-02-24
From: Radio Free Europe/Radio Liberty <http://www.rferl.org>
Vol. 2, No. 37, 24 February 1998
[A] TRANSCAUCASUS AND CENTRAL ASIA
[B] SOUTHEASTERN EUROPE
[C] END NOTE
[A] TRANSCAUCASUS AND CENTRAL ASIA
 ZVIADISTS RULE OUT RELEASING MORE HOSTAGESGocha Esebua, who heads the band of some 20 supporters of former Georgian President Zviad Gamsakhurdia holding three UNOMIG observers and several Georgians hostage in the west Georgian village of Djikhaskari, announced on 23 February that he will not release any more hostages. Esebua accused the Georgian authorities of reneging on a 21 February agreement whereby one Uruguayan UN observer was released in return for the promise that CIS peacekeeping troops deployed along the border between Abkhazia and the rest of Georgia would be replaced by a UN force. But Georgian Security Minister Jemal Gakhokidze claimed that Esebua agreed to release the first hostage unconditionally, according to Caucasus Press. Also on 23 February, Czech presidential spokesman Jaroslav Kulisek rejected Esebua's proposal that President Vaclav Havel should mediate talks between the Georgian government and Gamsakhurdia's supporters. LF
 SHEVARDNADZE SETS CONDITIONS FOR TALKSSpeaking on Georgian radio on 23 February, President Shevardnadze said that negotiations on meeting the kidnappers' demands can begin only after a decision has been taken on which group of Gamsakhurdia's supporters is to participate and only after the unconditional release of the hostages. But Shevardnadze subsequently ordered Georgian Ambassador to Moscow Vazha Lortkipanidze to meet with Nemo Burchuladze to discuss the hostage-takers' demands, Caucasus Press reported. Burchuladze was deputy chairman of the Georgian parliament under Gamsakhurdia from 1990-1991 and has lived in Moscow since Gamsakuhurdia's ouster in January, 1992. But on 24 February, Burchuladze sent a representative to meet with Lortkipanidze in his place, RFE/RL's Tbilisi bureau reported. LF
 ARMENIAN OFFICIAL DETAILS ELECTION SAFEGUARDSSpeaking at a press conference in Yerevan on 23 February, Armenian Central Electoral Commission chairman Khachatur Bezirjian listed measures intended to minimize the possibility of fraud at the 16 March presidential elections and RFE/RL's Yerevan bureau reported. Bezirjian said voting protocols from individual precincts will be faxed to the commission immediately after the vote count is finished and will be made public before the votes are tabulated and added together by higher-level commissions. Bezirjian also announced that the commission will introduce transparent glass ballot boxes to ensure every voter casts only one ballot. He said the government has earmarked 180 million drams ($360,000) for organizing the ballot. Fourteen candidates have announced their intention of running. LF
 NO OBSTACLES TO KOCHARYAN'S CANDIDACY?Bezirjian also said he believes Prime Minister and acting President Robert Kocharyan fulfills the electoral law requirement that presidential candidates must be citizens of the Republic of Armenia and have lived there for ten years. He added, however, that a final decision on this issue will be taken by the entire Central Electoral Commission. Bezirjian pointed out that Kocharyan is treated as an Armenian citizen when given visas by foreign embassies. Also on 23 February, presidential candidate David Shahnazarian argued on Armenian Television that Kocharyan's candidacy is unconstitutional. But in an interview in "Aravot" the next day, Kocharyan pointed out that "the Republic of Armenia has not existed for 10 years. Besides, I was a deputy to the Armenian parliament for seven years. I have served as Armenian prime minister for one year. If I'm not eligible, then who is?" LF
 TURKMEN PRESIDENT IN BRUSSELSSaparmurat Niyazov signed a memorandum of understanding with the Anglo- Dutch company Shell during his visit to Brussels on 23 February, Interfax reported. Late last year, Shell was named to head a consortium that will build and maintain a pipeline from Turkmenistan to Turkey. Niyazov also met with NATO Secretary-General Javier Solana and Belgian Prime Minister Jean- Luc Dehaene. Also on 23 February in the Turkmen capital, Ashgabat, representatives of the Economic Cooperation Organization began discussing oil and gas pipeline routes. All 10 member nations sent representatives, except Azerbaijan. BP
 LUKASHENKA PRAISES PRIMORSKII GOVERNORBelarusian President Alyaksandr Lukashenka highly praised Primorskii Krai Governor Yevgenii Nazdratenko during an visit to Vladivostok on the way home from the Olympics in Nagano, Japan, RFE/RL's correspondent in Vladivostok reported on 23 February. Lukashenka said he and Nazdratenko agree on privatization and border policy. (The governor has long been an opponent of First Deputy Prime Minister Chubais and has accused the government of planning to give up territory in Primore to China.) Lukashenka hinted that the Russian government's "young reformers" are secret opponents of integration with Belarus. But he cited an economic cooperation agreement signed in Vladivostok as evidence that Russian regional leaders are welcoming closer ties with Minsk. He also said he hopes Ukrainian President Leonid Kuchma loses a presidential election scheduled for 1999, because, he commented, Kuchma opposes integration with Russia and Belarus. LB
 UKRAINE SAYS TERRITORIAL DISPUTE WITH RUSSIA 'NON-EXISTENT'The Ukrainian Foreign Ministry said on 23 February that a territorial dispute between Moscow and Kyiv "never existed and cannot exist," ITAR-TASS reported on 23 February. The statement came in response to Moscow Mayor Yuri Luzhkov's recent claims to Crimea and its port city of Sevastopol (see "RFE/RL Newsline," 23 February 1998). The Foreign Ministry said that, as in Russia, "serious politicians in Ukraine" realize that good relations between Kyiv and Moscow are based on "mutual respect, sovereignty, and territorial integrity." The Ukrainian parliament has approved a bilateral treaty with Russia that guarantees current borders between the two countries. PB
 BALTIC SEA REGIONS SIGN ACCORD IN POLANDRegions from six countries bordering the Baltic Sea signed a cooperation agreement aimed at creating a "Baltic Euro- region," AFP reported on 22 February. "The Baltic Sea is becoming a sea of the European Union," Polish Foreign Minister Bronislaw Geremek said at the signing in the northern city Polish town of Malbork. Representatives from the Danish island Bornholm, Latvia's Liepaja and Lithuania's Klaipeda regions, the Russian exclave Kaliningrad Oblast, and the Swedish provinces Kalmar, Kronenburg, and Blekinge, and Polish provinces Elblag, Gdansk, Olsztyn, and Slupsk signed the accord, which promotes cooperation in economics, agriculture, transportation, environmental protection, and education. PB
[B] SOUTHEASTERN EUROPE
 ALBANIAN POLICE RETAKE CONTROL OVER SHKODERSpecial riot police on 23 February retook control of the northern Albanian city of Shkoder, "Dita Informacion" reported. Police overpowered a group of some 100 armed and masked men who had taken control of the bridge over the Drin River at the entrance to the city and had mined the bridge with dynamite. Police arrested 16 people, one of whom is a well-known local smuggler. Prime Minister Fatos Nano replaced local police chief Mithat Havari on the grounds that Havari failed to cope with the initial armed attack by the gang the previous day. Nobody was injured in the unrest, according to hospital spokesmen. FS
 MUTUAL RECRIMINATIONS OVER SHKODERSocialist Party Secretary Petro Koci put the blame for the unrest on the Democratic Party, saying that Democrats have become a "go-between linking [government] institutions and organized crime, which [in reality] governs the prefecture of Shkoder." He added that the unrest was preceded by a Democratic Party rally, which, he argued, "clearly proves the direct connection" between that party's activities and "public [criminal activities] that result in actions against the state," "Zeri i Popullit" reported. Democratic leader Sali Berisha countered that "the accusations...are proof of [the Socialists'] communist and Leninist mentality." He accused the government of having provoked the unrest to destabilize the city, according to "Rilindja Demokratike." FS
 ALBANIAN PARLIAMENTARY SPEAKER SUSPENDS CONSTITUTIONAL COURTParliamentary speaker Skender Gjinushi on 23 February said that all Constitutional Court decisions will be declared null and void until the court replaces three of its nine members by drawing lots. Gjinushi added that under current legislation law, the court should have replaced three judges in December 1997. but its nine members refused to do so. Meanwhile, the parliamentary lustration commission gave evidence to the legislature that Constitutional Court chief judge Rustem Gjata was a communist-era secret service agent. The commission proposed that the parliament dismiss him from office, "Gazeta Shqiptare" reported. FS
 U.S. CALLS TUDJMAN SPEECH UNACCEPTABLE...U.S. special envoy Robert Gelbard has said in Belgrade that it is unacceptable that Croatian President Franjo Tudjman had questioned the territorial integrity of Bosnia in a speech two days earlier (see "RFE/RL Newsline," 23 February 1998). "We are profoundly angered by the speech given by President Tudjman. His historical allusions are outrageous, dangerous, and ridiculous.... This violates the Dayton peace accords.... Tudjman needs to watch his language," Gelbard added. Tudjman regards the Bosnian Muslims as a political and cultural threat to Europe and favors a partition of Bosnia between Serbs and Croats. Foreign pressure led Tudjman into making a tactical alliance with the Muslims against the Serbs in 1994 and into signing the Dayton peace agreement for a united Bosnia nearly two years later. PM
 ...EASES SANCTIONS ON MILOSEVICGelbard also said in Belgrade on 23 February that the government of Yugoslav President Slobodan Milosevic has shown "good will" and "a significant positive influence" in helping bring the moderate government of Prime Minister Milorad Dodik to power in the Republika Srpska. In return, Gelbard said that Washington will allow Belgrade to open a consulate in New York and to increase the size of its diplomatic staff accredited to the UN there. The Yugoslav airline JAT will have landing rights in the U.S., and Yugoslavia will be invited to join the U.S.- sponsored Southeastern European Cooperation Initiative. Gelbard added, however, that the "outer wall" of sanctions against Belgrade will remain until Yugoslavia makes more progress in promoting democracy, resolving the Kosovo dispute, and sending indicted war criminals to The Hague. The "outer wall" bars Yugoslavia from full membership in the UN, the IMF, and the World Bank. PM
 DODIK UPBEAT ON WORLD BANK LOANSAfter returning from Washington, Dodik said in Banja Luka on 23 February that he had "agreed with World Bank representatives on a favorable $20 million loan to the Republika Srpska, to be paid over the next 35 years and with a 10-year grace period.... The realization of [this and other] financial assistance agreements will put the Republika Srpska in a much better position." The loan is aimed primarily at helping small and medium- sized businesses. Dodik added that he expects the World Bank to "grant another loan of $33 million" for the Republika Srpska government budget" in March or April. PM
 BRCKO HARBOR OPENEDSix ships that had been trapped in the Serbian port of Smederevo since the Bosnian war broke out in 1992 arrived in the Serb-held Sava River port of Brcko on 23 February. The previous week, transport ministers from the Republika Srpska and the mainly Croatian and Muslim federation reached an agreement to open the port temporarily to allow the ships to return. A permanent agreement to reopen the harbor has not been concluded. The disputed town of Brcko is a key transportation hub connecting Bosnia, Croatia, and Yugoslavia. PM
 DRIVERS BLOCK BELGRADE STREETSTaxi and truck drivers blocked roads in and around the Serbian capital on 24 February to demand lower taxes and higher fares. The previous day, several thousand pensioners demonstrated outside the Serbian parliament to urge payment of back pensions and improved living conditions. Pensioners in particular are affected by poverty across the former Yugoslavia. PM
 SERBIAN KINGPIN ARRESTEDSpokesmen for the Serbian Interior Ministry on 23 February confirmed media reports that police have arrested Nenad Djordjevic for embezzling $10 million from the Serbian Health Insurance Service, which he headed until recently. Djordjevic is a key political ally of Milosevic's wife, Mirjana Markovic, and a deputy chairman of her United Yugoslav Left party. Djordjevic is widely regarded as one of the richest men in Serbia, an RFE/RL correspondent reported from Belgrade. PM
 EU CALLS FOR DIALOGUE IN KOSOVOEU foreign ministers issued a statement in Brussels on 23 February appealing to "all parties concerned [with the Kosovo issue] to exercise restraint and refrain from all acts of violence to achieve political goals." The ministers said they will support any settlement acceptable to the Serbs and Albanians. The statement added that the most likely solution would be to establish broad autonomy for Kosovo within Yugoslavia. PM
 ROMANIAN BUDGET TO BE SUBMITTED IN MARCHEmil Constantinescu on 23 February said an agreement has been reached to submit the draft budget to the parliament "by end of March." That agreement was reached at a meeting of ministers in charge of the economic sector and members of parliamentary economic commissions, RFE/RL's Bucharest bureau reported. For the first time, opposition members of the parliamentary commissions participated in such a meeting. Earlier, Prime Minister Victor Ciorbea said that an IMF decision not to disburse the third tranche of the approved stand-by loan would not have any influence on the budget, because the country's monetary reserves are very large. He added, however, that it would negatively impact on Romania's image in the eyes of foreign investors. Mediafax said Ciorbea's dismissal was "imminent" in view of the failure of the negotiations with the IMF. MS
 MOLDOVAN PREMIER WITHDRAWS PARLIAMENTARY CANDIDACY....Dumitru Diacov, the leader of the pro- presidential For a Democratic and Prosperous Moldova Bloc, told journalists in Chisinau on 23 February that Prime Minister Ion Ciubuc has withdrawn his candidacy for the 22 March parliamentary elections. Ciubuc had planned to run as the number two candidate on the bloc's lists. Last week, the parliament ruled that members of the executive must suspend their government activities if they run for a seat in the legislature. Diacov said it is "more important" that Ciubuc remain as head of the cabinet. He said the premier will continue to be a member of the pro-presidential party, which bears the same name as the bloc. An RFE/RL correspondent in Chisinau said Ciubuc's withdrawal is thought to considerably diminish the electoral chances of the bloc. Several ministers belonging to various parties have announced they have suspended their government activities. MS
 ...WHILE LUCINSCHI ASKS ELECTORATE TO SUPPORT PREMIER'S PARTYIn his weekly televised address to the nation, President Petru Lucinschi on 22 February called on the electorate to support political parties willing to cooperate with him, saying he would like Ciubuc to stay on as premier. Lucinschi said he would not single out any party but added that the actions of parties like the center-right Democratic Convention of Moldova demonstrate that they are bent on not cooperating with him. He said if the elections are won by parties that would "struggle against the president," this would lead to conflicts with Moldova's neighbors and inter- ethnic strife in what he called a repetition of the "Transdniestrian blunder." Lucinschi said he is "unhappy" with the constitution and with the electoral system and will strive to have both changed after the elections in order to better "promote cooperation between the branches of the government." MS
 BULGARIA SEES NATO AS KEYForeign Minister Nadezhda Mihailova told the annual meeting of Germany's Suedosteuropa Gesellschaft in Munich on 21 February that achieving NATO membership is the main aim of Bulgarian foreign policy. She stressed that there is no security in Europe without security in the Balkans and that Balkan stability requires Bulgarian participation in "security- generating structures." Mihailova noted that the sound development of bilateral relations with each of Bulgaria's immediate neighbors is possible only within a broader European, multilateral framework. With reference to Russia, she said that Bulgaria's desire for membership in NATO is not directed at any third country, but she stressed that Sofia will not allow any third country a veto right over Bulgaria's security policy. Mihailova added that Bulgaria's second priority is to secure membership in the EU. PM
[C] END NOTE
 GEORGIA'S FAST-GROWING ECONOMYby Michael Wyzan
In 1997, the Georgian economy continued to dig itself out of the hole that resulted from the political turmoil and poor economic policy-making during the early years of independence. The decline in gross domestic product (GDP) from 1991-1994 was nearly 73 percent, the largest collapse in the former USSR.
Last year's economic performance was especially impressive in view of continuing domestic tension surrounding the failure to resolve the stalemate over the fate of Abkhazia and ongoing problems in political and economic relations with Russia. Since last fall, Moscow has refused entry to hundreds of trucks transporting Turkish- produced alcohol to Russia via Georgia.
For the second consecutive year, Georgia was the fastest-growing economy within the CIS and second only to Bosnia among transition economies. GDP grew by 11.3 percent in 1997, following an 11 percent increase the previous year. Despite an acceleration late in 1997, consumer price inflation on a December-to-December basis was 7.9 percent, compared with 13.8 percent the previous year.
The exchange rate against the dollar remains one of the most stable among transition countries, having moved only to 1.32 from 1.25 at the lari's introduction in October 1995. Wages continue to grow. The average monthly wage in the third quarter of 1997 was some $50, twice the amount a year earlier.
Progress was made in several areas of economic policy. On the fiscal front, a new tax code was introduced, the Ministry of Finance was reorganized, the first treasury bill auctions were held, and the 1998 budget was introduced in the parliament far earlier than in previous years and with more realistic revenue projections. Those developments followed on the heels of the appointment as finance minister of Mikhail Chkuaseli, who, at age 26, is undoubtedly the youngest person in the world to hold that position. (His Armenian counterpart, Armen Darbinian is 32.)
Headway was also made in strengthening the banking system, with three former state banks being certified in accordance with international standards. Privatization, though seemingly stalled in the first half of 1997, advanced in July, when all shares in 266 enterprises were sold at "zero cash auctions." At those auctions, bidders were offered shares in companies whose stock had remained unsold at two previous cash auctions There was no reserve price, and shares were distributed in proportion to the amounts offered by bidders (instead of the usual practice of seeing how many bids are made for shares at a fixed price).
In addition, foreign investors bought controlling stakes in three promising enterprises: a brewery, a bottler, and a producer of sparking wines. And in August, President Eduard Shevardnadze rescinded a May 1996 decree that had suspended the privatization of 51 companies deemed of strategic importance.
However, a closer look at macroeconomic and foreign sector performance shows that Georgia still has a long way to go before it is on its feet economically. While the budget deficit has fallen from 4.4 percent of GDP in 1996 to a projected 2 percent this year, revenue collection remains among the worst in the world. From January to September 1997, revenue was only 8 percent of GDP. The authorities have managed to keep deficits small by limiting expenditures and by running arrears, particularly on education in rural areas.
Moreover, given that the lari has weakened only slightly and inflation continues at a faster rate than in Georgia's main Western partners, there is increasing concern about rising foreign sector imbalances. Unfortunately, data on exports and imports are unreliable, since a large percentage of trade is unregistered owing to problems with the customs service, especially in Adzharia, on the border with Turkey.
Available data suggest a large trade imbalance: in January, Economy Minister Vladimir Papava cited a figure of $600 million for all of 1997. Meanwhile, the IMF and World Bank, along with the EU and the U.S., continue to help finance Georgia's current account deficit. That level of support will not last indefinitely, making such large imbalances unsustainable in the long run.
Another worrisome indicator is a foreign debt totaling $1.485 billion as of 1 October 1997. Much of that debt is owed to international bodies: $220 million to the IMF, $250 million to the World Bank, and $125 million to the EU. But Turkmenistan is Georgia's largest creditor, with Tbilisi having accumulated about $460 million in outstanding debts for natural gas shipments. Ashgabat suspended such shipments in March 1997, which led to a worsening of the energy situation in Georgia. And the two sides failed to agree on debt rescheduling during Shevardnadze's visit to Turkmenistan in December.
Registered cumulative foreign investment as of 1 October was only $105.3 million, the leading investors being Israel, Ireland, the U.S., South Korea, and Germany. Many factors constrain business development (both foreign and domestic) and drive businesses into the shadow economy. Those factors include irregular energy supplies, poor transportation links and telecommunications, problems with the banking system, and an often corrupt and inefficient bureaucracy.
The author is an economist living in Austria.
Reprinted with permission of Radio Free Europe/Radio Liberty