Issue No. 238. - September 7,  2001

            By Zvezdan Georgievski

            By Paulyuk Bykowski

            By Peter Karaboev

    By Zvezdan Georgievski

    The past few days have definitely tested the fragile
Macedonian state, especially because of obstructions among state
officials and the ruling party VMRO-DPNE to the NATO struggle to
voluntarily disarm Albanian extremists, an operation known as
"Essential harvest".
    Obstruction can be seen within the Macedonian parliament which
ought to have ratified the so-called 'general framework' about changes
to the Macedonian constitution to give more rights to Albanians, in
exchange for guerrilla disarmament. The President of the Macedonian
parliament Stojan Andov said that the highest law-giving
institution cannot work under pressure of displaced persons and
occupied territory. Prime minister Ljupce Georgievski said that
the agreement was signed because of tremendous Western pressure,
and that the Macedonian state was punished with a complete military
and economic blockade. Also, endless parliamentary discussions are
signals enough that there is not enough political goodwill to
adopt the agreement.
    So the alternative is war, the end of the Macedonian state, as well as
a possible beginning of a long-term regional crisis with local,
maybe even regional conflicts, Which has happened before.
    Macedonia was the only country besides Slovenia that has left
the former Yugoslavia without the luggage of border expansion.
Macedonia was the only country that succeeded in not fighting the
army of the former joint state. This peace has saved the Macedonian
state. However, the oasis of peace, as Macedonia was known, was
needed to the world as a calm centre of turbulent region, but not
to the local appetite for destruction. It was a thorn in the side to
it from the beginning.
    The embargo by Greece on Macedonian name and introduction of
"humiliating name" to the new state (FYROM - Former Yugoslav
Republic Of Macedonia) accepted by the West has become a wound
that has encouraged other opponents, especially those from Kosovo.
The wound could have healed, perhaps, but in 1998 the elections
were won by ultra-nationalist party VMRO-DPMN and the Macedonian state
began crumbling from the outside and from the inside, becoming more and
more of a dangerous hot spot.
    Invasion from Kosovo (which will always remain as a shade on
Albanians) was prepared when the duo of Georgievski (current
prime minister and president of the ruling Macedonian nationalist
party) and Arban Djaferi (president of the most influential
Albanian party in Macedonia) left the north-western Macedonian border
unsecured and allowed Macedonian territory to become a KLA
springboard. Then minister of interior Pavle Trajanov was
expediently discharged at the end of 1999, when he began to
discover KLA camps to the TV cameras.
    The current government (prime minister Georgievski) wants to turn
a big fraud into a total war against the whole Albanian community, and
if possible also against NATO alliance. Anti-USA sentiment produced
by the government is spreading over Macedonia like wildfire.
The current government which has perverted all functions of the state,
as well as law and moral principles a modern government cannot do
without, is now using that sentiment to hide results of its
devastating rule. The same government is now spreading rumours
about an American scenario to spur regional crisis in order to
secure control of Caspian oil pipeline through war. Such stories
are only the culmination of a cynism, based on naivety, making it
a dangerous way to collect votes for the next elections from the
people who are rightfully concerned that their state is in danger.
    Basically, any unrest in the region can only mean the defeat of
western politics. And only a twisted mind could think that the
rational politics of the West could work against itself.
    Macedonia has never made political overtures towards Albanians
;"like the
Serbs", as Pristina says, but one might say that it was the
Serbian model which Kosovars used to invade Macedonia. No European
constitution is perfect, but if they were to be changed with
AK-47s, then Europe would be in a permanent state of war. The idea of a
Greater Albania, fed by Kosovar criminal structures and the
indoctrinated diaspora, has produced war in Macedonia, not the
alleged discrimination of Albanians as has often been claimed.
Warmongers have quickly forgotten that Macedonia was practically
an ally of NATO Alliance during the war in Kosovo and also a host to
hundreds of thousands Albanian refugees from Kosovar territory.
Albanian nationalism is cruel and unscrupulous, and has risen
after the defeats of Serbian and Croatian nationalism, increasing
instability in the region that could, according to some estimates,
spill over to Romania and Montenegro, perhaps even Epyr in Greece.
One gets the impression that extremists from Kosovo are aware of the
situation they have caused, of the possibility to have all the
world against them, and so now they want to disarm as soon as possible
and forget that anything ever happened, which isn't acceptable to the defeated
Macedonian extremism.
    Aggression on a tiny country living in poverty and hostile
environment has caused massive damage to the Albanian cause in the
world, and has perhaps stalled the notion of an independent Kosovo
indefinitely. NATO will also be ashamed because it let the war
spill from its protectorate in Kosovo, but also Macedonian
government which well-prepared terrain for the escalation of
crisis. During the crisis, the government was constantly on the defensive
and it became evident that it could not handle the Albanian extremists.
In a situation like that, Macedonia had to strive for huge support
from the West and NATO alliance. It leads to a conclusion that
violence pays, which could send a bad signal to the whole region
and wider. If, because of the final "showdown" with Albanians the
parliament didn't adopt the framework of the agreement, the war
wouldn't be allowed, but it would unavoidably lead to separation
of confronted forces and practical division of the country, with
ethnic cleansing on both sides, under the aegis of a new
NATO protectorate.

    By Paulyuk Bykowski

    There are now three candidates left in the struggle for the presidency of
Belarus as the elections sheduled for Septemeber 9 approach.
The candidates are : Siarhej Hajdukevich, 47, the head of the Liberal Democratic Party;
Uladzimer Gancharyk, chairman of the Belarussian Federation of Trade
Unions, and Alaksandar Lukashenka, 47, the current president of Belarus.
    Everything would be fine had the government committed to following the rules
of the game.  But state media are conducting a frenzied propaganda
campaign in support of the current president and against the other
candidates.  Among the more brazen steps in this direction has
been the claim that Gancharyk has intentions of depriving
Russian of its status as state language, even though he is in
favor of retaining two state languages (Belarussian and the more
widespread Russian).  Part of Hajdukevich's appearance on
Belarussian radio was "lost."  In addition, the state newspapers
"Soviet Belarus" (published by the presidential administration)
and "The Republic" (published by the Council of Ministers) devoted
space on their front pages to the text of Lukashenka's
pre-election speech in dimensions that exceeded by several times that which
is permitted by the Central Elections Commission (CEC).  When the
president's opponents demand equal treatment, the newspapers
refused them and then somehow failed to find any violations in
those acts.
    Even Lukashenka's gesture of giving up his legally allotted
television time has been put to use.  The other candidates are given time
slots when the majority of the voters are on their way home from
work and their presentations are later criticized during the breaks
by pro-Lukashenka voices.  Prime minister Viacheslau Kebich used similar
tactics in 1994.  His propaganda tried to portray him as a modern
Piotar Masherau, a popular leader of the Belarussian Soviet
Socialist Republic.  The voters got fed up with him, however, and
elected Lukashenka instead.
    The candidates are not competing on the basis of their
economic and development programs.  Practice has shown that people
do not read such documents, even though they think that there
should be such programs.  Therefore, the three candidates
announced that they have programs, but did not make them
available.  This correspondent spent much of time trying to obtain
the texts of those programs from the campaign offices, but only
short condensed texts (so-called "theses") and quotations about
economic reform could be obtained. The Democratic candidate Gancharyk
was most honest about his programs.  He stated at one of the very
first of his press conferences that he has no such
all-encompassing documents and instead has a platform statement
containing his views on the major problems facing Belarus today.
That text is available on Gancharyk's Internet site
( and in his official
publications in the state media.
    Last week, a working group of Coordinating Council of
Democratic Forces, headed by Pavel Danejka, made public its
Socio-Economic Reform Program for Belarus.  That document was, as
Danejka informed, prepared for Gancharyk and will be of interest
mainly to specialists.  The program has little chance of playing
any role in the last two weeks of election campaigning, however.
Even if Gancharyk finds the time to acquaint himself with the
lengthy text, he will not be able to introduce the voters to it.
But it is pleasant to note that, in his "theses," Gancharyk has
not only outlined general principles, but also made some concrete
plans for economic reform.
    President Lukashenka's pre-election program is for some reason
not posted on the head of state's official site (,
but was published in "Soviet Belarus" and "The Republic."
He uses many words to say very little in specific. His
campaign strategists use frequently paradoxical tactics.
Opponents' slogans, symbols and so on are appropriated and the
opponent accused of being dishonest.  That always creates a
sensation, but it is a double-edged sword.
    As was the case with the other candidates, it was unable to
obtain Hajdukevich's economic program, but some impression of it
can be gotten from his television appearances.  Many questions
arise on examination of Hajdukevich's "theses."  "Realistic and
proven programs for economic and social reform in Belarus and
abroad were formulated long ago," the Liberal Democratic Party
leader claims.  "Thanks to my efforts alone, those programs have
been implemented in many branches of the state and private sectors
of our economy."  Since he does not cite any examples, the
question of how he was able to achieve that without holding any
office or having any representation in parliament will remain a
secret.  But he supports his claim that "even today, monthly
salaries equivalent to US$350-400 are possible."  How?
Hajdukevich answers, "I have repeatedly introduced state budget
proposals that include such high salaries. The supplementary
resources needed could be raised by CES budget expenditures or
from supplemental sources."
    How can the salaries of employees paid with state funds be
raised while still reducing budget expenditures?  Hajdukevich's
suggests tax reductions; tax benefits for investors; reduction of
transshipment fees; transition to a smaller, professional army;
reorganization and reduction of state agencies; land reform,
including the introduction of property ownership for Belarussian
citizens; increased arms exports and exports at dumping prices;
and development of eco-tourism.  Even an economic layman can find
fault with those measures.  Hajdukevich, however, claims that they
will raise state budget income by 50%, thus enabling an increase
in state-paid salaries of 350-400%.  Leaving aside the dubiousness
of massive product dumping or eco-tourism in Chernobyl-blighted
Belarus, it is clear that such a salary increase would be possible
only by increasing the already high rate of unemployment.  In
short, it can be concluded that Hajdukevich has no economic
    It is not surprising that Gancharyk's "theses" are more cogent
and attractive, since he holds degrees from the Kuibyshev
Institute of the People's Economy in Minsk and the Academy of
Social Sciences of the Central Committee of the Communist Party of
the Soviet Union.  "The current state economic policy is based on
the principle that whoever does the most has the most taken from
him, whoever fails to meet his quota is punished and whoever is
dissatisfied with that risks his freedom and his life," Gancharyk
states.  He then promises that "that will come to an end."
    Gancharyk places main emphasis for economic recovery on
"restoration of the primacy of the Law, including presidential
decrees; and the elimination of extra-judicial confiscation of
property."  Many will find those principles abstract, but it still
seems like a good start.  Further, Gancharyk promises to establish
equal conditions for business and organizations of all types of
ownership, including small business; to introduce registration
upon request for economic activities; to establish a healthy
competitive atmosphere in a structured market with credit,
currency and stock markets; guarantee the independence of the
banking and stop the issue of emission credits; and establish an
optimal exchange rate for the Belarussian ruble.
    The democratic candidate considers the state, as well as its
citizens, responsible for "living within its means" and therefore
considers it expedient to cut unnecessary government expenses,
entailing restructuring government agencies, reassessing major
building and road projects and their financing, and so on.  He is
also giving prominent place to tax cuts and the simplification of
the taxation system, licensing and control and verification.  In
light of Belarus's geopolitical situation, Gancharyk wants to
reduce customs procedures and tariffs, especially for
    Gancharyk does not deny the need for state support of
agricultural producers, but opposes the current practice of
"battling for the harvest."  He has stated that, if elected,
support for agriculture will be provided not through the
distribution of credits with no expectation of their repayment but
through "targeted financial programs observing the parity of
prices for agricultural and industrial products."
    While Hajdukevich is in favor of private land ownership for
Belarussian citizens, and Lukashenka is fully opposed to it,
although willing to give control of land to foreign investors,
Gancharyk takes a middle course.  "The inclusion of land in
economic turnover requires strict legal limits in the interests of
citizens and corporations and society as a whole," one of his
"theses" state.  He is straightforward about his opposition to the
dissolution of collective farms, but willing to give the farmers
themselves the right to decide their forms of organization.  On
salary reform, Ganacharyk states that "there should not be wage
leveling...rather social recovery, increased aid to the needy,
restoration of cancelled benefits for veterans, pensioners and
victims of political repression and Chernobyl."
    The voters are already familiar with current president
Lukashanka's economic records, and its effects on them.  But his
official statements on that topic give quite another impression.
All the candidates of course have a stated goal of increasing the
prosperity, but that is not to be found in Lukashenka's official
statements.  He states that "the strategy for the future of the
Belarus state has been defined in the Program for the
Socio-Economic Development of Belarus for 2001-2005, approved by
the Second All-Belarus People's Assembly."  But what exactly was
passed by the quasi-parliament?
    On May 16, "Soviet Belarus" published the text of the "Basic
Clauses of the Program for the Socio-Economic Development of
Belarus for 2001-2005 (Proposed)."  It was reported in evasive
language that the delegates to the assembly had approved and
passed it without changes.  It now plays the role of an expanded
pre-election program for the current president.  It promises to
establish the conditions for steady economic development, lower
transport taxes; retool and restructure industry; raise the
average salary to US$250 within five years; raise pensions 48% of
the average wage and stipends to 25-30%; and aid regional
    Lukashenka's "theses" are repetitious and vague.  He states
the following economic goals: set up effective mechanisms for
investment; integrate Belarus into international economic
organizations; speed up extra-governmental development of the
housing construction industry; and increase state support for
business.  Those are the policies of the ruling regime
independently of the elections.  In the last week, "Soviet
Belarus" and "The Republic" have added only a promise for price
control by "increasing the quantity of high-quality products."  It
is interesting that, immediately after that promise, in a section
on "liberalization of the economy," there is a truly revolutionary
promise.  "The process for registering business structures and
services will be simplified...The number of types of business
requiring licensing will be reduced to 10-12."
    It is comforting to note that all the candidates one way or
another mention establishing Belarus's place in the world economy.
That is no easy task.  In a year or two, all of Belarus's
neighbors will have joined the World Trade Organization, which
means that Belarus cannot lag behind them for long.  That implies
a market economy in Belarus eventually no matter what.  The
presidential election will only effect the length of the wait and
who gets Belarus's property.
                               * * *
    By Peter Karaboev

    The wave of huge popular support that rocketed former
Bulgarian king Simon up to the power this June is slowly turning
to disappointment. Great expectations and Simeon's promise to help
Bulgarians live much better after 800 days were faced on 19 August
with announcement of Premier's first steps of "radical" economic
reforms. But few days later it turned out that reforms are not so
radical, the plan raised eyebrows at the IMF and some basic calculation
showed that benefits are going to the rich Bulgarians not to the
mass of poor common few millions.  And to make things more
complicated, Simeon's team of leading members of his
administration (who are supposed to implement his plans) is still
under construction more than 2 months after the elections.
    So, what measures did Simeon Saxe Coburg-Gotha promise?
Speaking to the nation he said that he is expecting the package of
tax and social measures to lead to a significant increase in
investments, accelerate economic growth, and create new jobs. The
package starts with "radical tax reform from 1 January 2002,
customs restructuring, some changes in certain laws and in the
privatisation process. The lowest month salary rises with 17% to
100 leva (1 Bglev=1 DEM) and it will be free from income tax.
There will be lowering of the income tax from current 20-38% to
18-29%, zero tax on money used for re-investment, zero tax on
capital income from bonds trade. New structure of national custom
control will include foreign inspectors called by the Government
for better control and fighting the corruption. In the name of the
speed there'll be no "negotiations with eventual biers" during the
privatisation and the whole process will go through the Agency for
Privatisation. New 20 mln. leva Micr dit Fund will be established
to help starting or small business. State help for children is
doubling (but it's - no joke - a funny 17 DEM per month). So far
"the good news".
    The "bad" ones were that since 1 October 2001 there will be
less budget spending and 10% of state administration will loose
there jobs (close to 6 thousand people).  Starting with 1 October
the prices of power and heating are rising with 10% and IMF is
asking for more. The 10-per-cent increase in heating and electric
power will apply both to companies and citizens, and will
encompass both the day and night rates for electricity. Budget
wages (covering more than 400 thousand people) will not be
increased on 1 October because inflation is lower than that
initially incorporated in the national budget, and consequently,
real income has not decreased, Deputy Prime Minister and Minister
of Labour and Social Affairs Lidiya Shuleva explained later.
According to Minister of Finance Milen Velchev, the calculations
of the Finance Ministry suggest that, as a result of the reform,
tax revenues will decrease by almost 500m leva. The savings
resulting from cuts in the state administration, decrea in capital
expenses, and restructuring of other state budget expenditures are
expected to amount to the same sum. Minister Velchev is expecting
a significantly higher income from customs and fees and a higher
percentage of taxes collected, which was understood as eventually
new and higher customs and fees.
    All these measures are still a promise at least because there
is no Budget-2002 to give some base for analysis. But the very
first calculations showed that - if it is going to be in today's
frame - tax lowering in fact TAKES MONEY AWAY from millions of
Bulgarians. Most benefits are going to people with high wages, but
officially they are no more than 4 thousand Bulgarians. Many
people with small business or wishing to start one were allured by
Simeon's pre-election promise for tax free 5 thousand leva
credits. Now his party explains that money will go to the regions
with highest unemployment and the program will cover only 4
thousand people without permanent job, who can offer credible
business plan (if they ever have seen how to fill one). This
"help" is considered by analysts as a compensation for
unemployment because it's just 1/13-1/14 of Bulgaria's GDP for
2002 and about 3 times less in volume than the existing credit
programs. The benefits will go to administration that distr es
these loans rather than to the people in need. The rest will have
to look to other credit sources, meaning that for them nothing
will be changed. Because if the Government is working on social
base, banks are following only the rules of the market and profit,
not investments in risky "low level" enterprises. Up to 73% of
small business start-ups in village regions are still counting on
family help and non-formal credits. Banks in Bulgaria are asking
for guaranties of nearly 200% of the credit they are asked for. In
almost 65% of the cases banks are asking for guaranties from a
third part.
    In recent weeks it was announced that some other prices will
go up - 20% increase in telephone services, new high taxes on
tobacco, fuel and alcohol... So where all king's promises went to?
    Maybe the most confused situation developed around relations
with International Monetary Fund (IMF) - the main Bulgaria's
foreign creditor and guardian of the currency board. First
reaction came only hours after Simeon's reform plan. Talking to
"Dnevnik" (  daily IMF mission head for Bulgaria
Gerald Schiff said on 21 August that "International Monetary Fund
is strongly concerned about the tax reforms recently proposed by
the Bulgarian government". The planned tax reforms will make it
difficult to register a minimum budget deficit, necessary for the
functioning of the currency board, Schiff said in his statement.
Schiff praised solely the proposed changes in the privatisation
process and the promised reduction in state administration
    Finance Minister Milen Velchev said just before Schiff's
statement that IMF was warned in advance, and has not opposed
reducing taxes and increasing certain groups of incomes. Than,
speaking agin to "Dnevnik" Velchev said "the Bulgarian government
is more concerned about planned tax reforms in the country than
the International Monetary Fund". The government is ready to take
steps to reduce expenses, thus keeping 2002 budget deficit below
1.5 pct, Velchev said.
    But it was too late to silence IMF concern. BULGARIA'S
MINISTERS SEEN TAMED BY IMF, was Dow Jones headline on 29 August.
"Bulgaria's top ministers (...)seem to have bowed to the fact that
their country is still beholden to the International Monetary
Fund. The government, which has been extremely outspoken in the
last couple of months with regard to its intention to change
things around in the small South-eastern European country - often
without consulting key multilateral institutions such as the IMF -
has now adopted a much more cautious approach." DJ's CAPITAL
MARKET REPORT said. "We need the stamp of approval of the IMF in
one form or another. This has a powerful signalling effect and it
is important for us as well, domestically," Krassimir Katev, newly
appointed head of Treasury and Debt Management in Bulgaria, said
in an interview with Dow Jones Newswires. "They have to realise
that Bulgaria is a small country with no strategic importance to
anyone. Remove the IMF support and lev will crumble, rates rise
sharply and the prices of Brady instruments plummet," said local
Western financial advisor to several Bulgarian companies. The
government has grown quiet in recent weeks about its original
plans to issue a debut Eurobond in the near future, conduct debt
buybacks and debt swaps.
    Bulgaria issued $5.16 billion worth of Brady bonds in 1994 to
restructure an $8.1 billion commercial debt. The country bought
back some $200 million of Discount Brady bonds last year as part
of efforts to reduce its foreign debt burden. "We seek to reach a
funding agreement with the IMF of between $100 million and $150
million, which means the chances of a buyback operation will be
less," Velchev said in an interview with Reuters few days later.
Bulgarian bonds already underperformed their emerging market
counterparts in August after traders decided an outright buyback
of Brady bonds was less likely than previously hoped, analysts
said on Wednesday.
    Then on 3 September came the reaction by Piritta Sorsa - permanent
IMF representative in Sofia. She said that minimum wage increase
may lead to more unemployment. We are ready to negotiate on 1-2
years stand-by agreement instead of extended 3-years program that
closed in July 2001, Sorsa said to local Internet-based news
service Mediapool ( . This statement showed that
IMF is more interested in short term programs. But there is still
concern about fiscal results of Simeon's plans on budget deficit
balance, she said. We don't know the details but we see some
income gaps, some measures are pushing away foreign investors, tax
burden remains too heavy for Bulgarians. It's in the field of the
guessing how quickly improved customs can fill the gap because
it's well known that it takes some time to feel the real effect.
And - of course - Bulgaria should not forget the global (almost)
recession that means decreasing in Bulgaria's export and import
volumes, Sorsa said.
    The IMF mission is coming to Bulgaria on 11th of September and will
work with the Government until 27 September. Too much depends on the
outcome of these negotiations. But there is already a question
popping up - What was the reason to sweep the former
ruling coalition away with king's populist agenda if it's already
clear that Bulgaria's "fairy tale" promises can't be fulfilled in
short term or at least until IMF writes down its part?  For there
are no fairy tales with both the King and the IMF.