Issue No. 306 - January 30, 2003


by Paulyuk Bykowski

by Slobodan Rackovic

by Petar Karaboev

by Paulyuk Bykowski

        At the January 20 meeting of the High State Council (HSC) in Minsk, it was determined that it will not be possible to introduce the Russian ruble in Belarus in 2004, but is still expected to take place in 2005. The session of the High State Council (HSC) and the visit of Russian President Vladimir Putin created mixed impressions among observers. The meeting of the two heads of state could be seen as an end to last year's "cold war" or simply a formal courtesy. The two presidents' press services made nearly identical statements: "In the course of the meetings that took place, it was confirmed that further progress should be based on complete and conscientious fulfillment of agreements reached earlier, especially of the Agreement on the Foundation of a Union State and the Program of Action to Realize its Provisions."

        There were ten items on the agenda of the HSC. One item, concerning the process for preparing a draft Concept of the Constitutional Act of the Union State, was of primary importance for the forms and mechanisms of building it. At the session, new membership of the bipartite commission for the draft Concept was confirmed. The chairman of the Belarusian House of Representatives, Vadim Popov, and the Russian speaker of the State Duma, Gennady Seleznev, head the commission. Since the function of the working group is still not clear, it is hard to evaluate the changes made in its membership. The document in question has been in preparation since the moment the Union State was established in December 1999. There are already three versions of the draft Constitutional Act. These were written by the Parliamentary Assembly of the Union of Belarus and Russia, by the Russian State Duma Committee on CIS Affairs and Relations with Fellow Countrymen Abroad, and by members of the joint Belarusian-Russian working group. None of these versions has been accepted by both states.

        At the first session of the new working group on January 15, Seleznev announced that the draft Constitutional Act could be submitted to the HSC in March. The decision was made to meet again on February 3 to discuss the contents of the document. That would indicate that the two sides have settled their main contentions: who will swallow up whom and who will rule whom in the Union State, although neither Belarus nor Russia have shed much light on those issues so far.  On January 20, in Minsk, Putin said that he is "very much counting on" the success of the Belarusian-Russian commission to prepare a Constitutional Act. He added that the heads of state, “changed the composition and raised the level" of the commission, thus giving reason to hope for its greater decisiveness. However, the deputy head of the presidential administration of the Russian Federation, Sergei Prikhodko, told journalists that the HSC set no time limit for the preparation of the Constitutional Act.  Members of the bipartite commission began work in Moscow on January 24. The Belarusian group is being headed by Igor Andreev, director of the President’s National Center for Law Drafting Activity, and the Russian group by Aleksei Avtonomov, section leader of the Institute for State and Law of the Russian Academy of Sciences. The experts are to reach concord by February 3. Lidiya Yermoshina, head of the Belarusian Central Election Commission and a member of the bipartite commission, told journalists last week that so far they have only "rough" drafts. She added that the proposals from both sides "differ in the system of organs of state authority and, as an alternative, suggest introducing the post of president of the Union State. But, at the moment, I think the documents are so rough that there is no common ground." That is the very question that has occupied the drafters of the Constitutional Act for years already.

        Concerning the ruble, it was announced at the session of the HSC that the Russian ruble will be introduced as the sole means of payment in the Union State as of January 1, 2005, a year later than politicians had promised earlier (see NIJ Weekly Service issue no. 290, September 30, 2002). "The introduction of the Russian ruble as the sole means of payment has been proposed for 2004, but that it is too short deadline, and we have missed it by a little," Putin stated
on January 20, adding that 2005 is a more realistic deadline.

        The National Bank of Belarus has refused to tie the Belarusian ruble strictly to the Russian ruble on July 1, 2003. Head of the Bank's administration Petr Prokopovich stated at a press conference on January 23 that the process of transition to the Russian ruble will begin on July 1 of this year in the dealings of Belarusian and Russian enterprises and that the exchange rate of the Belarusian ruble would be tied to the Russian ruble on January 1, 2004. Towards this end, the National Bank intends to rescind the mandatory sale of export receipts in Russian rubles. "Today, more than 60 percent of all accounts between the two countries are calculated in US dollars, and that situation is unnatural," he said.

        Prokopovich stated that tying the Belarusian ruble to the Russian ruble on January 1, 2004, is part of the plan to introduce a single currency in the Union State of Belarus and Russia. He continued that, in recent months, the National Bank of Belarus has been studying possibilities for speeding up the process in order to make that transition on July 1 of this year, but did not agree to any of them. "We considered all the possibilities and options and were convinced that, if we tie the Belarusian ruble to the Russian half a year early, many negative issues will arise in our economy," Prokopovich said. He did not specify what those negative consequences might be. That statement is surprising in light of the fact that there would seem to be sufficient resources to support the exchange rate of the Belarusian ruble if the National Bank tied it to the Russian ruble. Prokopovich admits that the credits extended to Belarus by the Central Bank of the Russian Federation in recent years to support the exchange rate of the Belarusian ruble have not been used-and, after the elimination of multiple exchange rates, the exchange rate of the Belarusian ruble has been loosely tied to the Russian ruble.

        "Of the 4.5 billion Russian rubles allotted as credits to Belarus by the Central Bank of the Russian Federation in 2001-2002 to support the exchange rate of the national currency of our country, not one ruble has been used," Prokopovich said. According to Prokopovich, the financial markets in Belarus have stabilized in the last three years. The National Bank supports the exchange rate of the Belarusian ruble on its own and continues to augment its currency reserves. In the last year, the National Bank has obtained US $49.5 million from various segments of the currency markets. Russian rubles extended as credit are in Belarusian accounts at the Russian Central Bank and in commercial banks there. "Nonetheless," says Prokopovich, "the presence of that credit strengthens the faith of the populace and economic subjects in the reliability of the Belarusian ruble and upholds the stability of the Belarusian banking system."

        Thus, the change in Russian plans, not by chance, coincides with the decision of the Belarusian National Bank to delay tying the Belarusian ruble to the Russian ruble, replacing clearing accounts between enterprises in the two countries and rescinding the mandatory sale of Russian rubles. Observers are linking all of this to politics. Putin does not want to undertake any risky financial moves before upcoming presidential elections in Russia. The latest session of the HSC rivals the traditionally unenlightening CIS summits in its dullness. The New Year's decorations were kept up in Minsk for Putin and the Russian visitors were shielded from Belarusian citizens, especially from the relatives of disappeared opposition activists. All approaches to the Palace of the Republic were closed off. But there were no bloody breakups of anti-integration pickets either. After the departure of the Russian president, summonses to appear in court were issued for several participants in unsanctioned demonstrations. Among those was Vyacheslav Sivchak, who, a week later, has yet to be served with his. He declared before the television cameras that "the goal of this demonstration is to demand an apology from the president of Russia for proposing to divide Belarus into pieces and incorporate it as a region of the Russian Federation."

• • •

by Slobodan Rackovic

        The U.N. Committee against torture with headquarters in Geneva passed verdict that Montenegro has to pay damages within 90 days for 65 Roma who were expelled "in an inhuman and humiliating manner" from their homes in the Bozova Glavica district of the town of Danilovgrad. The announcement was made a few days ago at a news conference in Podgorica organized by the Humanitarian Law Fund and the European Center for Roma Rights. The Humanitarian Law Fund’s president said that the decision of the U.N. Committee Against Torture was "an extraordinary event in the sphere of human rights' protection." She reminded the audience of the event in Danilovgrad that occurred eight years ago in which a whole Roma settlement with approximately 120 people was destroyed in an instant, burned to the ground. All of it happened in the center of Danilovgrad and was witnessed by police.

        "Today there is no sign that a human settlement ever existed, which is clear evidence of a severe infringement on human rights. The district attorney and courts did nothing to punish the perpetrators of such a heinous crime, nor did they protect exiled people who lived there," said Mrs. Kandic, emphasizing her shame and disgust.

        According to data of the U.N. Committee against Torture, the rape of a 15-year old girl by two Roma minors (who were immediately arrested) served as the motive for local racists and bullies to destroy the whole Roma settlement of Bozova Glavica. Gathered in a large group, they tried to deal with Roma, with whom they lived for decades, as brutally as possible. According to witnesses, among cries of "We will burn down your settlement", "We will tore it down", "We will expel them" and similar, group attacked Bozova Glavica in a violent stampede, with shots from firearms and detonations of various explosives. Numerous Molotov cocktails and other burning objects were thrown at Roma houses, cattle, cars, tractors, hay stocks and other property so that the flame became sky-high and the settlement quickly burnt down.

        The Roma fortunately escaped their homes because they had been informed by a policeman about the upcoming attack and there were no fatal victims of this racist attack, although many cattle were killed and burnt. In a panic to save their lives, Roma fled to nearby woods and roads, finding a safe haven after many hours of walking in the Roma settlement Konik in the capital of Podgorica. It is where they live today in severe poverty. Almost all of them live in poorly built houses, in very hard conditions, forced to work at Podgorica garbage dump or beg in order to survive. They had nice homes and other property in Danilovgrad, and many of them were employed in city-owned utility company and other firms.

        Peace in Podgorica was only temporary—attacks on them continued even several months afterwards. A few days after the disaster, remains of the Roma settlement Bozova Glavica were completely removed with bulldozers, thus erasing every trace of the decades-long presence of Roma in Danilovgrad. In this incident, it is noteworthy that only 30 meters from the devastated settlement is a police station on one side of the road and a police academy on the other side, so that it is truly incomprehensible that policemen did nothing to prevent the expulsion and beating of their Roma neighbors. Neither were firefighters called, indicating that this terrible action against Roma was started with at least the tacit approval of city authorities. Indeed, the former mayor, Kadi Kadic, approved of the action the following day saying that "Danilovgrad citizens once again proved that they know how to punish those who attack their honor"!! The Montenegrin independent daily newspaper Monitor described the event several days later: "Montenegrin policemen wearing American-bought uniforms, a fire burning all 'colored'
property, the panicked escape of Roma, and the silent approval of many Danilovgrad citizens—all of this has reminded many people of American movies about the Ku-Klux-Klan and atrocities caused by racial hate."

        The Montenegrin judicial system also failed. Although police later identified almost all the most prominent perpetrators in this terrible human drama, as well as all the policemen who allowed such a mass exodus due to their passivity, the state attorney indicted only one person, the nineteen-year-old Veselin Popovic, who was quickly absolved of all guilt by the Prosecutor’s Office in Podgorica due to a "lack of evidence."

        The Roma did not give up, however, and went to the Podgorica attorney Dragan Prelevic. On November 11, 1999, sixty-five Roma victims from Danilovgrad signed a document addressed to the U.N. Committee Against Torture asking for protection from Montenegro and Yugoslavia.

        "Two procedures were initiated, first related to the utility firm’s dismissal of the residents because they did not show up for work, and second related to the much larger issue to compensate the victims for their destroyed property. According to Montenegrin laws, the country has an objective responsibility to repay all material and non-material damage caused by acts of terror and violence. My clients have been inflicted huge material and non-material damage: following that day, all Roma children from Danilovgrad stopped going to school and were unable to return afterwards. All employed Roma lost their jobs. Those people became refugees in their own county, and no one protected them. They have shown a strong will and managed to survive all these hard years and to finally defeat their own country," said Prelevic. He added that the arrival of the U.N. High Commissioner for Human Rights, Elizabeth Renn, in Montenegro in 1997 and her talks with the highest state officials started the procedure under the U.N.  committee’s rules. The committee definitively affirmed what happened in Danilovgrad on
April 15, 1995.

        At the end of 2002, the Committee brought a decision asking all countries that signed the Convention against Cruel, Inhuman or Degrading Punishment or Torture to ask the Federal Republic of Yugoslavia to initiate a just investigation regarding the incident, to arrest and punish all responsible for atrocities, to compensate Roma for destroyed property, and to inform the Committee within 90 days of the announcement of the decision of all steps it made.

        NGO representatives at the press conference stated that the decision of the U.N. Committee Against Torture in the Danilovgrad case was the most important decision in its history. Not only was the decision important to Roma, but it also has a wider application in other instances of human rights' infringement. In its decision regarding this scandal, the U.N. Committee Against Torture emphasized that all countries were bound not only to abstain from cruel, inhuman, and humiliating activities, but also to prevent their citizens from infringing on human rights, as well as being obliged to offer legal assistance to all victims of such abuse.

• • •

by Petar Karaboev

        Last week Bulgaria invented a new and strange kind of privatization. Usually, a business deal appears rather simple; one side sells, other people make their offers and the best offer wins. This was supposed to be the way the privatization of Bulgartabak Holding—a state-owned monopoly tobacco company—was to take place. But it has not gone that way. The privatization process in Eastern Europe especially tends to be more complicated and it is more complicated the larger the company being privatized, especially one covering a huge economic sector, employing hundreds of thousands people, and feeding money to mainstream political parties and interests. In the case of Bulgartabak (BTH), the issue is complicated even more by the fact that its employees are mainly people from Bulgaria’s Turkish minority. In the Balkans, such considerations still count.

        To make things even more intriguing, the most avid appetite shown for BTH has been shown by a controversial Russian businessman who now lives in Israel, Mikhael Chorny. He was extradited two years ago from Bulgaria as a threat to its national security. Indeed, Chorny is suspected to be one of the bosses of the Russian mafia and a significant player in international organized crime. At the same time he still owns major Bulgarian football club, daily newspaper with nation-wide circulation and who knows what else.

        And this is just the tip of the iceberg. Some people closely connected to economic ministers from the Bulgarian government are managing the bid that at first was chosen as the best offer but later was dismissed by the High Administrative Court. Furthermore, Russia, claiming that Bulgartabak was leased to Bulgaria in late 1940s under a post-war agreement, entered the game with aims for obtaining the best parts of the tobacco holding company (its most profitable plants, the headquarter building, and other parts of the company infrastructure). The company used to work for Nazi Germany and was confiscated by the USSR at the end of World War II. Bulgaria now claims that Bulgartabak was returned to the state in the early 1950s, but the case still hangs in the balance of bilateral diplomacy. If Moscow’s claims are accepted, the eventual buyer may be forced to give away the best parts of the acquired company. When the knot is so tied up, a court is usually needed to rule to assist in the decision. Bulgaria’s courts, however, are highly politicized, a result of the ongoing reform of the judiciary system.

        Suddenly the responsibility for large-scale privatizations hangs in the no-man's land between different government institutions. The same fate threatened the privatization of another state monopoly, the Bulgarian telecom company (BTC), but at the last moment it was taken off the hook and will eventually be closed sometime in April. The case of Bulgartabak is different in part because the ethnic Turk political party, the Movement for Rights and Freedoms, is junior partner in the Socialist ruling coalition.

        As a last resort, the government decided to untie the tobacco knot with an exotic amendment to the privatization law. In brief, the idea is to include BTH, BTC, plus 2 arms producers and weapon traders, and 7 power companies in a list firms "related to the national security" and thus requiring approval by both the government and parliament—away from court control. In the draft text of the amendment it is said that privatization procedures that are in the ongoing stage of negotiations with a selected buyer—such as the case of BTH—will proceed and be finished under the amended terms. In fact, this means that the ministers will make the final decision and MPs will confirm it in a parliament in which the government holds a comfortable majority.

        One of the authors of the amendment, Minister of Interior Georgi Petkanov, said that one of the motives behind the draft is that the "wrong sale could produce high social tension.". Six other ministers co-authored the draft amendment, including those of energy, defense, and agriculture. An influential local business weekly called the draft "the big privatization twist" by which the Government overcame the BTH problem and the blockade of the judiciary. It was reported that the IMF and World Bank are interested in closing BTH and BTC privatizations and that the President, Georgi Purvanov, will not use his right to impose a veto on the amendment. The opposition is split, the previous ruling party UDF promised to vote for any law keeping Mikhael Chorny out of Bulgaria, but it does not like the amendment’s limitations on the rights of the courts to decide on privatization matters. Behind all of this maneuvering is a huge institutional shift. Right now, the secret service reports on privatization bidders are gaining new force. Their reports are meaningful but their impact is known only to a closed circle of government and parliamentary leaders. Another problem concerns the privatization agency, which will announce the competitions, accept offers, and follow and execute the
procedures, but the final decision will be taken by ministers and MPs. Which means that the driving force will be not the economic criteria but political intrigues.

        The draft amendment is not without precedent in Bulgaria. The previous government closed some deals using ministerial decision, even without a national security consideration. Now, the MPs will be included in the final decision, perhaps creating a blur of collective irresponsibility. The government-as-agency-for-privatization formula means every bidder who enters the political fray, every company that comes to invest can be attacked by the opposition at least on political grounds. This can keep foreign strategic investors away from Bulgaria. Winners will be forced to enter local politics because it would be in their best interest to keep the current government on power because their business depends on it. And this isn't yet proved to be for the good of the national economy and business environment.

        Moreover, each vote on the twelve privatizations included in the new list will be a form of confidence vote in the government. Some analysts are calling this a threat of permanent destabilization and a huge potential for corruption. To let privatization stay in the hands of a Balkan politician is equivalent to making a member of Parliament a local custom agent.