RADIO FREE EUROPE/RADIO LIBERTY, PRAGUE, CZECH REPUBLIC
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RFE/RL NEWSLINE Vol 2, No. 15,  23 January 1998


HUNGARY, SLOVAKIA FAIL TO AGREE ON MINORITIES.
Hungarian Foreign Minister Laszlo Kovacs and his Slovak
counterpart, Zdenka Kramplova, meeting in Budapest on 22
January, failed to agree on who should represent Slovakia's
ethnic Hungarians on a joint committee monitoring the
implementation of minority rights in the two countries.
Hungary refused to accept Slovakia's nominee, Istvan Gyorgy,
who heads an organization loyal to Slovak Prime  Minister
Vladimir Meciar. Kovacs said the nominee should enjoy the
confidence of all three Hungarian parliamentary parties in
Slovakia. Kramplova disagreed, saying those parties cannot be
considered the real representatives of the Hungarian minority
in Slovakia. She pointed out that Hungary's failure to guarantee
parliamentary representation for its ethnic minorities is an
"open  case of discrimination." MSZ

HUNGARY RECEIVES FIRST FRENCH MISSILES. France's
Matra Defense company has delivered the first 60 Mistral air
defense missiles and 15 Atlas launchers that Hungary ordered
last year, Hungarian media reported on 22 January. The
delivery is a result of a $100 million tender launched by the
Hungarian Defense Ministry last year. "Mistral missiles belong
to the most up-to-date missiles and are fully compatible with
NATO's air defense system," Hungarian Defense Minister
Gyorgy Keleti told reporters. Hungary intends to integrate the
missiles into its defense system  in April 1999, he added. The
French company is expected to deliver another 150 missiles by
the end of this year. MSZ


VARIED ECONOMIC FORTUNES IN VISEGRAD AND THE
BALKANS

by Michael Wyzan

        Last year saw a large divergence in economic
performance among the transition countries. That continued a
long-established trend whereby the Visegrad countries and
Baltic States are the leading performers and other countries
struggle to carry out the most basic economic reforms and
resume economic growth.
        The big story in the Visegrad countries was the  economic
plight of the Czech Republic. The country experienced a
currency crisis in the spring and a natural catastrophe--
flooding--in the summer. Gross domestic product GDP grew by
only 1.2 percent, down from 4.1 percent in 1996. The budget
deficit increased, while foreign investment inflows fell by 35
percent.
        A long period of political uncertainty and weak
government culminated in the December resignation of Vaclav
Klaus, prime minister since 1992, over a campaign-finance
scandal. Both his and the economy's fortunes were tied to the
premier's economic approach.  In the early years of his tenure,
his commitment to trade and price liberalization as well as to
austere macroeconomic policy stood the country in good stead.
Later, following his failure to comprehend such subtler issues
as government regulation of the economy and the transparency
of capital markets, Klaus became a liability.
        Slovakia's economy performed respectably in 1997,  even
though GDP growth was down and inflation up slightly.
However, serious problems are looming, including a ballooning
current-account deficit largely caused by the strength of the
Slovak crown, which is now worth more than its Czech
counterpart. The budget deficit was about 5.7 percent of GDP
and is expected to rise further this year. And the foreign-debt
burden  reached worrisome proportions.
        As in the Czech Republic, the quality of political
leadership is the main problem. Slovakia's incomplete
democratization has alienated the EU to such an extent that it is
only Visegrad land not invited to accession talks. Its insider-
dominated privatization methods have scared away foreign
investors. Moreover, matters are unlikely to improve this year,
given the disincentives to sound economic policy that are likely
to prevail until September's general elections.
        The other three Visegrad countries registered sound
performances. Hungary is reaping the benefits of the austerity
measures introduced in 1995 and political stability under the
Socialists. Virtually all its economic indicators are favorable
and improving, although inflation remains stubbornly high. The
economy is largely in private hands, and foreign investment
inflows remain enormous.
        Virtually the same could be said about Poland, although
the budget situation is worrisome. Many major enterprises
remain in state hands, and differences between the governing
coalition partners may hinder progress. Slovenia continues to
turn in respectable, if unspectacular, economic results but
needs to speed up privatization (especially of banks) and rein
in budget expenditure and wage growth.
        The year 1997 was even more troubled than usual in the
Balkans. In Albania, the entire social order imploded in the
wake of the failure of pyramid schemes, and GDP declined by
about 15 percent. In Bulgaria, the socialist government's failure
to deal with festering structural problems and to reach
agreement with the IMF led to a severe currency collapse in
the winter that damaged the economy (GDP fell by 7.4 percent).
Both countries have new leaderships; and particularly in
Bulgaria, where a currency board was introduced on 1 July,
there are grounds for optimism.
        Romania's situation is similar to Bulgaria's: a government
elected in November 1996 has embarked on radical reforms
with IMF support. Unlike in Bulgaria, however, the regime is a
weak coalition of feuding parties and the IMF has become
increasingly standoffish as the government has had trouble
meeting its commitments on structural reforms. Its economic
indicators in 1997 were unimpressive: GDP declined by about 5
percent and inflation remained more than 100 percent.
        The other former Yugoslav republics followed strikingly
diverse  patterns. Macedonia has enjoyed political stability
under the same prime minister since 1992, but relations
between Macedonians and Albanians have deteriorated while
ties with Greece (its only never-communist neighbor) are
disappointingly slow to improve. Still, GDP growth picked up
slightly in 1997 and inflation remained among the lowest in
the region.
        Croatia is in a unique position, with progress on reform
and the standard of living putting it among the leading
transition countries in many respects. Foreign-policy problems,
however, keep it in the EU's waiting room without even an
association agreement. Its economy is growing rapidly, and it
has extremely low inflation. But the current account deficit is
large and restructuring of industrial enterprises and banks is
slow.
        Federal Yugoslavia, meanwhile, has rapid growth and
moderate inflation, but will not emerge from the deep
economic hole dug by its leadership until it overcomes its
international isolation.

The author is an economist living in Austria.

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RFE/RL NEWSLINE Vol 2, No. 16, 26 January 1998


LULL IN ROMANIAN COALITION TENSIONS. National
Peasant Party Christian Democratic chairman Ion Diaconescu
and Democratic Party chairman Petre Roman have agreed that
their parties will refrain from making statements to the press
while they seek to find a solution to the coalition crisis,
RFE/RL's Bucharest bureau reported on 23 January. Two days
later, National Liberal Party leader Mircea Ionescu-Quintus,
who is mediating the conflict, said the Democrats may decide to
withdraw their cabinet ministers but remain in the coalition
while supporting a minority government of the Democratic
Convention and the Hungarian Democratic Federation. Minister
of Research and Technology Bogdan Teodoriu, a Democrat, said
that postponing the party's decision to withdraw from the
government is "possible," depending on the negotiations. MS

ROMANIAN FOREIGN MINISTER REFUTES ANTI-
HUNGARIAN ALLEGATIONS. Andrei Plesu, in an interview
with the Hungarian daily "Nepszabadsag" cited by Mediafax on
25 January, refuted recent allegations in the Romanian media
that Hungarian investments in Romania are very large and
prove there is a plan to take over Transylvania. Plesu, who is
accompanying President Emil Constantinescu on an official two-
day visit to Hungary from 25-26 January, said that at the end
of 1997, total Hungarian investments in Romania amounted to
only  $38 million or 1.1 percent of total foreign investments.
Plesu also said he saw no reason why a Hungarian university
should not be set up in Romania , which, he said, would help
the ethnic Hungarian minority "preserve its identity." He added
that the "joint enemy" of both countries is "extreme
nationalism." MS

ROMANIAN EXTREME NATIONALISTS ALLEGE ATTACKS.
Gheorghe Funar, the extreme nationalist mayor of Cluj,  has
claimed that a stone was thrown at him while he sat in a
restaurant in the town center and that it barely missed its
target. Local police investigating the incident said the stone was
probably thrown by children, Mediafax reported on 25
January. The same day, Corneliu Vadim Tudor, the leader of the
extremist Greater Romania Party (PRM), accused President
Constantinescu of "complicity in an assassination attempt." The
PRM press office said a leaflet saying "I was looking for you"
and signed by Laszlo Toekes, the honorary chairman of the
Hungarian Democratic Federation of Romania, was found on the
windshield of his car. In December 1997, the special guards
provided for Tudor were withdrawn. Tudor had protested that
move, claiming he is the target of an assassination plot. MS

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RADIO FREE EUROPE / RADIO LIBERTY, PRAGUE, CZECH REPUBLIC
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RFE/RL NEWSLINE Vol 2, No. 17, 27 January 1998

EU TO OPEN ENLARGEMENT TALKS ON 31 MARCH. British Foreign Secretary Robin
Cook announced in Brussels on 26 January that the EU enlargement process
is to begin in London on 12 March with a European Conference attended by
premiers and heads of state of the 11 countries invited to open membership
negotiations. The talks will then shift to Brussels on 30 March, where the
11 will again present their EU credentials. The enlargement process will
begin on 31 March, when negotiations will open with the six main
candidates--the Czech Republic, Cyprus, Estonia, Hungary, Poland, and
Slovenia. MS

HUNGARY, SLOVAKIA AGREE TO SPEED UP DAM TALKS. Hungarian and Slovak
delegations, meeting in Budapest on 26 January, agreed to hold weekly
plenary sessions in order to end their dispute on the unfinished Danube
dam, Hungarian media reported. A joint statement released by the two
delegations said their positions have come closer on whether to put an
existing Slovak dam at Cunovo into operation and on how to make use of the
Hungarian reservoir at Dunakiliti. They agreed to set up a monitoring team
to assess the environmental effects of those facilities.  MSZ

ROMANIAN PRESIDENT IN HUNGARY.  Romanian President Emil Constantinescu  met
with his Hungarian counterpart Arpad Goncz and  Prime Minister Gyula Horn
in Budapest on 26 January. Constantinescu assured his hosts that the
government crisis in Bucharest will not affect Hungarian-Romanian
relations. Horn complained that cooperation has slowed down in a number of
areas since last fall, when the two countries' premiers signed a memorandum
in Bucharest. Constantinescu responded by vowing to speed up dialogue and
saying that three Hungarian colleges will be opened in Transylvania. MSZ

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