Friday, 19 April 1996 Volume 1, Issue 332
REGIONAL NEWS
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BOSNIA ROLE BOOSTS HUNGARY AS NATO CHIEF VISITS
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NATO Secretary-General Javier Solana, touring prospective new
members, arrived on Thursday in Hungary which has made fast
friends with the United States by providing a support base for
Bosnian peacekeeping forces. The success of the operation at
Taszar and Kaposvar, bases for U.S. troops serving in Bosnia,
shows the Hungarian military can work with Western armies and
improves Hungary's prospects for joining NATO, analysts and
diplomats said. Solana, on a tour of east European and Baltic
states, flew to from Warsaw and will meet Prime Minister Gyula
Horn, Foreign Minister Laszlo Kovacs, Defence Minister Gyorgy
Keleti and President Arpad Goncz.
Government and diplomatic sources, while not foreseeing a
breakthrough announcement, expected Solana to confirm at least
privately that Hungary was in the first tier of prospective NATO
members. Western diplomats noted that a steady stream of U.S.
generals passing passed through the region had had nothing but
praise for the Hungarian military. Mainstream Hungarian
political parties are united in backing Hungary's entry into
NATO and for the most part dismiss Russian objections to the
military alliance's expansion plans. Russia's ambassador to
Budapest, Ivan Aboimov, caused a stir when the Hungarian news
agency quoted him as saying on Wednesday that Russia would be
forced to take countermeasures if Hungary joined NATO.
Diplomats and analysts said Russia had made similar statements
about Poland and the Czech Republic, but Aboimov's comments were
harsher than Russia's usual public tone towards Hungary.
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HUNGARY SAYS JAIL CONDITIONS IMPROVED SINCE REPORT
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Hungary said on Thursday it accepted the findings of a Council of
Europe report criticising conditions in its jails and was
implementing recommendations. A report by the Council's
committee for the prevention of torture accused Hungary on
Wednesday of ill-treating prisoners in Budapest. Conditions in
some jails, it said, were inhuman and some inmates were beaten.
Miklos said the Kerepestarcsa detention centre for illegal
migrants, the focus of much of the committee's criticism, had
been closed down and its inmates moved to other centres.
Another 20 detention centres have been closed down while other
centres are being upgraded, Miklos said. Miklos said that since
the committee's visit in 1994 the ministry had investigated
allegations of police brutality and a number of officers had
been dismissed. Miklos added that Interior Minister Gabor Kuncze
introduced new stricter guidelines for the treatment of
detainees on January 1 this year.
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MAJOR FOCUSES ON CENTRAL EUROPE FOR NATO EXPANSION
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British Prime Minister John Major said on Thursday the Czech
Republic and some of its neighbours should be first in line for
early NATO membership, breaking a code of silence among Western
leaders. Speaking at a joint airport news conference with Czech
Prime Minister Vaclav Klaus after a brief visit to Prague, Major
said the broader expansion of NATO would not come rapidly but
the first in line should be in central Europe. NATO, which is
expected to define its expansion plans later this year, has yet
to say which former Soviet-bloc candidates would be included or
when, and top NATO leaders have made great efforts not to
publicly single out a country or region.
Western diplomats however say privately that the Czech Republic,
Poland, and Hungary are front-runners for faster membership of
the North Atlantic Treaty Organisation. In the Latvian capital
Riga, once an unwilling part of the former Soviet Union, NATO
Secretary-General Javier Solana on Wendesday sought to ease
fears in Baltic countries that they would be left out of NATO's
expansion to appease Russia, which is opposed to the alliance's
growth to the east. Continuing a swing through the region on
Thursday, Solana reassured Polish leaders that NATO's expansion
was on track, but he gave no specific date for a decision on
Polish entry.
While the British leader did not elaborate on conditions for NATO
entry, among the most sensitive would be the deployment of
nuclear weapons on members' territories. Opinion polls show
Czechs narrowly favour joining NATO, but a solid majority oppose
nuclear arms deployment on Czech soil. NATO, which has commited
to expanding its membership in some form, has also not yet
defined what nuclear commitments new members would have. The
Czech Prime Minister Vaclav Klaus, referring to nuclear weapons
deployment, has said his country could not be "free riders" on
the NATO bus. While NATO membership is a key element of Czech
foreign policy, Klaus, a conservative economist, has made early
entry into the European Union a top priority. Major, who
discussed expansion of both organisations with Klaus on
Wednesday, said the European Union had to seize the moment and
expand its membership.
BUSINESS NEWS
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HUNGARY'S PANNON GSM RECEIVES E. EUROPE'S LARGEST PRIVATE LOAN
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Eastern Europe's largest ever private sector project financing
loan agreement was signed by Hungary's Pannon GSM
Telecommunications company. The agreement was arranged by ING
Bank, and consists of an international consortium of a dozen
banks. The syndicated loan agreement involves a total of 175
million dollars. ING Bank was mandated with the full
organisation and completion of the loan deal. Pannon GSM's
General Director, Emri Gussi, intends to use the syndicated loan
to pay off an earlier debt of 115 million dollars as well as to
complete nation-wide coverage and finance related background
developments. Gussi, believes this agreement makes Pannon GSM
one of the best-equipped Hungarian enterprises in terms of
financial stability.
While securing the long-term financial stability of Pannon GSM,
this loan agreement, in the eyes of bank and Pannon officials,
also highlights the commitment of international financing
circles to the future of the Hungarian economy. What a
difference a year makes. Near this time last year there was a
great deal of speculation in financial circles that Hungary was
going to expereince a debt crisis similar to Mexico. Many
investors feared that Prime Minister Gyula Horn's intervention
in the Hungar Hotels privatisation deal and his selection of
Tamas Suchman as Privitasation Minister were signs of a retreat
on the path to economic reform. But, according to ING's
managing director in Budapest, Tibor Rejto, the austerity
measures of former Finance Minister Lajos Bokros and the
leadership of National Bank President Gyory Surnayi, bolstered
the international community's confidence in Horn's cabinet, and
partly paved the way for the signing of the agreement.
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EBRD TO INVEST IN HUNGARIAN TELECOMMUNICATIONS
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The European Bank for Reconstruction and Development (EBRD) is
providing $65 million in loans and equity to Digitel 2002 Rt to
modernise telecommunications in Hungary's northern Vac and
Godollo regions. The total project will cost $190 million. The
EBRD loan is $62 million, of which $42 million has been
syndicated to Banque Nationale de Paris and Dresdner Bank
Luxembourg SA. Digitel, a subsidiary of Cie Generale des Eaux,
started operations last December.
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HUNGARY DETAILS AUSTERITY PLAN CHANGES
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Hungary will fight further increases in energy prices and will
take other steps to combat inflation as part of revisions to its
austerity programme, Finance Minister Peter Medgyessy said on
Thursday. He said Hungary would keep the current 1.2 percent
crawling peg for devaluation of the forint. He declined to give
an updated prediction for inflation, saying he would wait until
June to do so. He also said that the government, which has
previously announced steps to scrap an eight percent customs
surcharge imposed by his predecessor Lajos Bokros, would abolish
the surcharge only in stages. He said the surcharge which took
effect last March will be cut by one percentage point on July 1
and by another point on October 1.
Three reductions of two points each are planned for January 1,
April 1 and June 30, 1997. The surcharge was introduced by
Bokros as part of a package of austerity measures which brought
the country's current account deficit down from $3.9 billion in
1994 to $2.5 billion by the end of last year. But he said the
budget deficit target of around four percent of the GDP is
realistic, adding that interest rates should not fall below
inflation figures. Medgyessy declined to predict inflation for
1996.
The government plans to withstand the energy lobby's pressure for
more substantial energy price rises, Medgyessy said, adding that
the government will ask the tax office to verify whether price
rises already agreed are realistic. The government also plans
to set up an ad-hoc comittee of energy users to monitor prices.
The Fair Competiton Office could not only penalise strikingly
high prices, but prevent offenders from bidding for procurement
tenders, Medgyessy said.
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FULL DANUBE TRAFFIC SEEN RESUMING THROUGH SLOVAK DAM
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Transport through the right lock of Slovakia's Gabcikovo dam on
the Danube River will resume next week, after being shut for
nearly two years, a senior dam official said on Thursday. The
gates of the lock were damaged by a Ukranian barge in 1994. On
further inspection, the doors were found to be sub-standard,
said Julius Binder, general manager of Vodohospodarska Vystavba,
the state hydro-construction company which built the dam and
carried out the repairs. With the end of the conflict in former
Yugoslavia and the lifting of U.N. sanctions against Serbia,
river traffic on the Danube has increased significantly.
The multi-million dollar Gabcikovo water project consisting of a
concrete navigation canal, dam and hydroelectric power plant
into which part of the Danube River was diverted, was completed
in 1992. It was originally part of a two-dam project with
Nagymaros in Hungary, aimed at improving navigation in the
middle part of the Danube, one of Europe's busiest waterways.
Hungary pulled out of the project under pressure from
environmentalists in 1989, leaving Slovakia to complete its part
of the project at an additional cost of several million dollars.
Both countries are now embroiled in a legal battle with Hungary
accusing the Slovaks of diverting a large part of the Danube
waters and ruining the eco-system, while Bratislava is seeking
damages for breach of contract. The dispute is now before the
International Court in The Hague.
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US CHEVRON, HUNGARY'S MOL WIN QATAR OIL CONCESSION
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Hungarian oil company MOL Rt and U.S. petroleum producer Chevron
have won the right to explore for oil off the coast of Qatar,
MOL announced in a statement on Thursday. Under the terms of the
bid submitted to the Qatar National Oil Company in mid-1995,
Chevron, through its Chevron Petroleum Africa-Middle East Ltd,
will take a 60 percent interest in the project and will be the
operator, the statement said. The two companies signed the
concession contract with representatives of Qatar's Ministry of
Energy and Industry on Thursday. The first exploration period
in Qatar's 1 NW block in the Arabian Gulf is for four years and
includes 2D and 3D seismic data acquisition and the drilling of
two exploratory wells. If successful, the production period of
the concession is for 25 years, with an opportunity to extend it
for a further five years.
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HUNGARY SEEKS ADVISOR FOR ANTENNA HUNGARIA SELLOFF
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Hungarian privatisation agency (APV Rt) is to announce a
one-round, public tender for an advisor to the privatisation of
broadcast operator Antenna Hungaria Rt, APV said on Thursday.
The deadline for applications will be two weeks from the
publication of the tender, and APV said the successful bidder is
to be chosen within 30 days after the applications have been
accepted. Antenna Hungaria, in which APV has a 83.2 percent
stake, broadcasts all transmissions of Hungarian state
television and radio. APV declared unsuccessful the first tender
to sell a 50 percent plus one stake in Antenna Hungaria last
November, thereby rejecting the sole bid, by the French company
Tele Diffusion de France (TDF).
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