US Department of State Dispatch Supplement
VOL. 2, NO 3, July 1991
Title: President's 29th CSCE Report, "Implementation of the
Helsinki Final Act, April 1, 1990-March 31, 1991
Bush
Source: President Bush
Description: Text submitted to Congress, Washington DC
Date: Jun 3, 19916/3/91
Category: Reports
Region: Europe, E/C Europe, Eurasia
Country: Albania, Bulgaria, Yugoslavia (former),
Czechoslovakia (former), Hungary, Poland,
USSR (former), Moldova, Georgia, Belarus, Ukraine,
Estonia, Latvia, Lithuania
Subject: Human Rights, Environment, Science/Technology,
Arms Control, Security Assistance and Sales,
Trade/Economics, Democratization
[TEXT]
Preface
This Implementation Report on the commitment of certain
member countries to principles of the Final Act of the Conference
on Security and Cooperation in Europe (CSCE), is the first since the
law mandating the report (Public Law 94-304) was passed in 1976
to appear on an annual, rather than a semi-annual, basis. The Report
reflects the changing realities of Europe and, for the first time,
extensively focuses on economic and environmental issues in the
countries examined. The countries treated have also changed:
during the reporting period the CSCE lost a member with the
unification of Germany and there is, thus, no discussion of the
German Democratic Republic. In addition, for the first time,
Albania is included in the report. Although it is not a member of
CSCE, Albania was granted observer status during the reporting
period and has requested full membership. [Note: Albania became a
full member of CSCE on June 19, 1991.]
Chapter One--DEVELOPMENTS IN THE CSCE PROCESS
Implementation of CSCE principles continued to improve in
Eastern Europe and the Soviet Union during the reporting period.
Bulgaria held its first multi-party election, introduced economic
changes aimed at the creation of a market economy and virtually
ceased previous repressive measures, particularly against ethnic
Turks. The Czech and Slovak Federal Republic built on the
achievements of the Velvet Revolution, with laws to implement
economic and political reforms. Germany was unified. Hungary held
democratic elections and began drafting and passing legislation to
help democracy put down roots. In Poland political groups competed
openly and democratically. Parliament asked President Lech Walesa
to call for parliamentary elections and began drafting a new
constitution based on democratic principles. The constitution will
likely be promulgated by the new parliament in late 1991. Despite
the country's hardships and a declining standard of living, the
government persisted in its economic reform efforts. Romania
moved haltingly toward a more open society with the loosening of
many controls, but the government's commitment to democracy and
its willingness to tolerate opposition was still in question. In
particular, the government used force against a June 1990
demonstration by miners and continued isolated beatings and forms
of harassment against the opposition. Yugoslavia, beset by internal
divisions and human rights abuses in Kosovo and Croatia,
nevertheless, attempted significant democratic and political
reform at both the republic and federal levels. The Soviet Union
took steps toward the withdrawal of its troops from Eastern and
Central Europe. However, advances in human rights were offset by
abuses in the Baltic states and elsewhere and the rolling back of
some press freedoms. Economic reform also remained problematic.
The CSCE process itself underwent vast changes during the
reporting period. The November 1990 Paris summit publicly
recognized the end of the Cold War and, for the first time, created
CSCE institutions. A busy schedule of experts meetings was
augmented with two additional specialized meetings for 1991. A
regular schedule of high-level political consultations among CSCE
states was inaugurated. For the first time ever the United States
hosted a CSCE meeting--the October 1990 ministerial in New York.
The Baltic states requested but did not receive observer status at
CSCE meetings due to a lack of consensus on the part of the member
states. Albania was granted observer status and sought, but did not
receive, full membership, as CSCE states continued to look for a
more consistent record of Albanian compliance with CSCE
standards.
Below is an overview of major CSCE activities, changes in the
CSCE process, and a summary of CSCE inter-sessional meetings
during the reporting period.
The Paris Summit
The highlight of CSCE activities for the reporting period was
the November 19-21 Paris summit, the first CSCE meeting at the
level of heads of state or government since the signing of the
Helsinki Final Act in 1975. President Bush led a US delegation of
more than 30 senior government officials and congressional
representatives, including Senator Claiborne Pell and US
Commission on Security and Cooperation in Europe Chairman
Representative Steny Hoyer and Commissioner Representative Don
Ritter.
The Paris summit included signature or endorsement of four
major agreements:
-- The Charter of Paris for a New Europe;
-- The Vienna Document on Confidence- and Security-Building
Measures (CSBMs);
-- The Treaty on Conventional Armed Forces in Europe (CFE--
negotiated within the framework of the CSCE process by members
of NATO and the Warsaw Pact); and
-- The Joint Declaration of Twenty-Two States, in which the
members of NATO and the Warsaw Pact welcomed the historic
changes in Europe and declared that they were no longer
adversaries.
The Treaty on Conventional Armed Forces in Europe and the
1990 Vienna Document on Confidence- and Security-Building
Measures established a secure foundation for relations among the
CSCE participating states. The summit, in turn, reaffirmed CSCE
principles and further enhanced the dignity of individuals and human
rights. It also focused on expectations for the new Europe in the
years ahead.
President Bush welcomed the summit as proof that "a
continent frozen in hostility for so long has become a continent of
revolutionary change." Looking to the future, the President
suggested that it was now time to "bring the CSCE down to earth,
making it a part of everyday politics, building and drawing on its
strength to address the new challenges."
Stressing the importance of balance among the three baskets
of the CSCE, he called for continued efforts in the areas of human
rights, security, and economics, and drew attention to the modest
but significant steps toward a new order which the CSCE
institutions represented. Other speakers shared the President's
reinforcement of CSCE principles and his expectations for the new
CSCE.
The Charter of Paris For a New Europe
Building upon the Helsinki Final Act, the Charter creates the
framework for a comprehensive European political dialogue. It is
the embodiment of President Bush's commitment to "a Europe whole
and free."
The 10-page Charter and its 14-page supplementary document
embrace an extraordinary range of subjects. The Charter is divided
into three parts: "a new era of democracy, peace and unity,"
"guidelines for the future," and "new structures and institutions of
the CSCE process." It calls for creation of a parliamentary
assembly for CSCE. The supplementary document sets out the new
institutional arrangements mandated by the Charter: a political
consultation process with a small administrative Secretariat in
Prague, a Conflict Prevention Center in Vienna, and an Office for
Free Elections in Warsaw. It also mandates two additional CSCE
Experts Meetings: a Seminar on Democratic Institutions (November
4-15, 1991 in Oslo), and an Experts Meeting on National Minorities
(July 1-19, 1991 in Geneva).
The Charter of Paris offers a powerful reaffirmation by the
participating states of the original Helsinki principles. The US
delegation to the Paris Summit Preparatory Committee which
negotiated the Charter worked to ensure that CSCE's traditional
emphasis on respect for human rights and fundamental freedoms
enjoyed pride of place in the document. The United States led the
effort to include the first-ever commitment by all CSCE heads of
state or government to democracy as "the only system of
government of our nations." Building upon commitments undertaken
at the Bonn Conference on Economic Cooperation in Europe to
replace command economies with market systems, the United
States advanced the concept of "economic liberty," which posits
individuals exercising their free will in a democratic society as the
"necessary basis for successful economic and social development."
In arms control, the Charter of Paris took a historic step
toward a new Europe. Building upon the CFE and CSBM negotiations,
the participating states agreed for the first time to establish new
negotiations on disarmament and confidence- and security-building
by 1992. The talks will be open to all member states.
Institutional Arrangements
The modest institutions created by the Charter of Paris, and
the parliamentary assembly, set up by parliamentarians of
participating states, complement CSCE's new processes for
political dialogue.
The Charter of Paris established a cycle of regular, political
consultations at the summit, ministerial and senior official levels.
Biennial summits, meetings of foreign ministers at least once a
year, and periodic meetings of senior officials--usually senior
ambassadors with CSCE responsibilities--are now a strong point of
the CSCE process. Follow-up CSCE meetings will now be held, as a
rule, every 2 years and will not exceed 3 months, unless otherwise
agreed. These changes will allow CSCE to serve as a principal forum
for nearly continuous political discussion of developments in post-
Cold War Europe.
The mandate for the new political consultative process is
broad. Conceptually, these consultations are designed to afford
every participating state regular opportunities to discuss issues of
political interest with all others. The supreme decision-making
body of the CSCE will continue to be the meeting of CSCE heads of
state or government. However, practical management of the
consultative process resides with the Council of Ministers. Annual
meetings of the Council are, in turn, prepared by the Committee of
Senior Officials. All substantive decisions by these bodies will
continue to be taken by consensus.
The CSCE states sent experts to a January 14-18, 1991,
meeting in Vienna to discuss administrative arrangements for the
three new CSCE institutions. The meeting took place against the
backdrop of violent actions by the Soviet military in Latvia and
Lithuania. The United States and many other delegations used the
occasion to condemn these actions and to call for a settlement of
outstanding issues between the Baltic states and Soviet authorities
through peaceful means. An Austrian-led call for the convening of
an additional ad hoc meeting devoted to the Baltic situation was
blocked by the Soviets, a move criticized by the United States and
26 other countries present. Turning to their administrative agenda,
experts formulated recommendations on questions of personnel,
budget, premises, and other matters, all of which were passed along
for final decision to the first meeting of the Committee of Senior
Officials later that month. At the experts' meeting, the United
States took the lead in pressing for a rationalization of CSCE
expenses to ensure the most effective use of scarce resources in
the face of an increasing CSCE workload.
The Committee of Senior Officials met for the first time on
January 28-29, 1991, in Vienna. The US Representative to the
Committee was Ambassador John J. Maresca (also head of the US
Delegation to the Negotiations on Confidence- and Security-Building
Measures in Vienna). The initial meeting of the Committee focused
on establishing a work program and other organizational matters.
However, the Committee also exercised its responsibility to review
current issues, and the situation in the Baltic states was
extensively discussed. The Committee's tasks include preparation
of the CSCE Council of Ministers meeting scheduled for June 19-20,
1991, in Berlin.
The CSCE Secretariat, which provides support to the political
consultation process, was opened in Prague on February 20, 1991,
by Czechoslovak President Vaclav Havel, Foreign Minister Jiri
Dienstbier, and the Secretariat Director Nils Eliasson of Sweden.
The responsibilities of the Secretariat include providing
administrative support to Ministers and Senior Officials meetings,
maintaining an archive of CSCE documentation, providing
information on CSCE to individuals and interested groups as well as
non-participating states, and providing support as appropriate to
the Executive Secretaries of other CSCE meetings.
The Conflict Prevention Center (CPC) was created to assist the
Council of Ministers in reducing the risk of conflict by promoting
openness and transparency in military matters. Its primary
function, as laid out in the Charter, is to facilitate the
implementation of agreed CSBMs, the annual exchange of military
information, and the maintenance of a communications network
between CSCE states. It will also serve as the venue for annual
CSBM implementation meetings and seminars on military doctrine
and such other seminars as may be agreed by the participating
states. A Consultative Committee, composed of representatives
from all participating states, supervises the center's activities.
Since its creation by CSCE leaders in the Charter of Paris, the CPC
Consultative Committee has met twice. The agenda of these
meetings have covered implementation of agreed CSBMs, discussion
of recent developments in the European military security situation,
and administrative matters. A small Secretariat, under Director
Bent Rosenthal of Denmark, manages the CPC and reports to the
Consultative Committee. Located in Vienna, the CPC Secretariat
was officially opened by Austrian Foreign Minister Mock on March
18, 1991.
The Charter of Paris also set up an Office for Free Elections,
to be established in Warsaw, with Ambassador Luchino Cortese of
Italy as its first director. The United States is providing the
Deputy Director for the office. The function of the office is to
facilitate contacts and the exchange of information on elections
among participating states. To this end, the office will be
compiling information and reports of election observations on
elections within CSCE states; serve to facilitate contact among
governments, parliaments, or private organizations wishing to
observe elections and competent authorities in states holding
elections; and organize and serve as the venue for seminars or other
meetings related to election procedures and the building of
democratic institutions.
To promote involvement of parliamentarians in the CSCE
process, parliamentarians from the CSCE states met in Madrid on
April 2-3, and agreed to create a CSCE Parliamentary Assembly, to
meet annually in a different CSCE country. The first meeting is
scheduled for early July 1992 in Budapest.
Inter-sessional Meetings
The reporting period included four meetings of CSCE experts:
the Conference on Economic Cooperation in Europe, held in Bonn
from March 19 to April 13, 1990; the second Meeting of the
Conference on the Human Dimension, held in Copenhagen June 5-29,
1990; a meeting on the Mediterranean, held in Palma de Mallorca
from September 24 to October 19, 1990; and a meeting of Experts
on the Peaceful Settlement of Disputes, held in Valletta, from
January 14 to February 8, 1991.
Bonn. The Bonn Conference marked a revolutionary point in
East-West economic relations. It saw the formal renunciation of
the old communist system of planned economies by Eastern Europe
and the Soviet Union in a final document elaborating free market
principles. The Bonn Document, for the first time, gives real
content to Basket II and offers a foundation on which all member
states can build stronger economic relations based explicitly on
market economics. Politically, the document commits CSCE states
to multi-party democracy based on free elections, rule of law and
non-discrimination, and the right of workers to engage in union
activity. Economically, the document endorses fiscal and monetary
policies to enhance the functioning of the market; expansion of the
free flow of trade, repatriation of profits in convertible currencies;
prices based on supply and demand; policies that promote social
justice; environmentally sustainable growth; recognition and
protection of intellectual and private property; prompt and fair
compensation for expropriation; and direct contact between
suppliers and consumers in domestic and international markets.
The US delegation was headed by Ambassador Alan F. Holmer
and included representatives the US Commission on Security and
Cooperation in Europe and the business community. The United
States played an important role in fashioning the conference's
outcome through its proposed "Bonn Principles for Economic
Cooperation," which became an integral part of the Final Document.
Copenhagen. The Copenhagen meeting adopted an historic
document placing the CSCE process unequivocally at the forefront of
efforts to make democracy the common possession of all
participating CSCE states. Most noteworthy was the document's
inclusion of language on free and fair elections: all CSCE states
committed themselves to hold genuinely free elections on a multi-
party basis and to admit government and non-governmental
organizations (NGO) observers to national-level elections. Another
major gain was in the rule of law. CSCE states affirmed that the
protection of human rights and fundamental freedoms is one of the
basic purposes of government and set forth the fundamental
principles of justice that form the basis of the rule of law in a
democracy. These principles include the inalienable rights of man,
representative government, measures against torture, and the
rights of national minorities.
Other sections of the document encourage CSCE states to allow
for foreign states and NGO observers at trials. Copenhagen also
produced agreement to impose time limits within which
governments must respond to other states' human rights inquiries
raised through the CSCE's Human Dimension Mechanism.
The US delegation to the Copenhagen meeting was headed by
Max Kampelman and included public members, members of the US
Commission on Security and Cooperation in Europe, and members of
the US Government's executive branch.
Palma. In the midst of worldwide concern over the
environment, the CSCE meeting on the Mediterranean was a useful
opportunity for member states to discuss environmental problems
affecting the Mediterranean. The meeting adopted a final document
promoting environmental cooperation in the region among CSCE
states and with the non-participating Mediterranean States
(Algeria, Egypt, Israel, Lebanon, Libya, Morocco, Syria, and Tunisia).
The final report stressed the desire of participating states to
promote favorable political, cultural, and economic conditions in
the region and emphasized the shared responsibility to protect the
environment. It also noted the need to enhance trade and economic
cooperation in order to promote development in the Mediterranean
region. The largest portion of the document sets out areas of
potential cooperation on the environment, including energy, cultural
preservation, water use, pollution, the fight against
desertification, prevention of forest fires, tourism, and information
exchanges.
The United States, while not a Mediterranean littoral state,
shared its expertise on issues relevant to the Mediterranean. US
presentations underscored areas in which Mediterranean littoral
states could benefit from American experience in handling water
and air pollution. Of special note was a presentation on US
cooperation with Canada to resolve problems involving the Great
Lakes. The US delegation also stressed the utility of market
principles in environmental decision-making. The Palma Final
Report included a US proposal that CSCE member states establish
toxic emissions reporting programs modeled after the US Toxic
Release Inventory.
The United States delegation was headed by Ambassador John
R. Davis, Jr., and included experts on pollution, tourism, and
reforestation and members of the US Commission on Security and
Cooperation in Europe.
Valletta. The Valletta meeting took place amidst hopes that
CSCE might play a greater role in preserving stability in a changing
Europe. During the meeting, war broke out in the Persian Gulf, and
the Soviet Union cracked down on the Baltic states, provoking
formal protests from many of the meeting's participants, including
the United States. Despite this, Valletta was able to make a useful
contribution to ongoing efforts within CSCE to find ways of
managing conflicts and their sources. The Valletta Final Document
reinforces the commitment of CSCE states to try to prevent,
manage, and settle disputes by peaceful means. It contains two
parts: general principles on dispute settlement and a CSCE-specific
dispute settlement procedure. The general principles address the
prevention, management, and resolution of disputes. The dispute
settlement procedure calls for mandatory third-party involvement
should CSCE states be unable to settle a dispute among themselves
or to agree on a settlement method. In the first stage of the
procedure, the CSCE third party--selected from a CSCE roster of
mediators--helps disputants find an appropriate settlement method.
If this is unsuccessful, either party can invoke the second stage and
ask the CSCE third party to assist in finding a substantive
settlement. The procedure calls for a "nominating institution" to
maintain the CSCE roster of mediators and to select the mediators
when the parties are unable to do so. The Valletta meeting left to
the Berlin ministerial to decide whether the nominating institution
should be the CPC, the Secretariat or another body.
The US delegation was headed by Michael K. Young, a Deputy
Legal Adviser at the State Department, and included a leading public
expert in dispute settlement, as well as a member of the US
Commission on Security and Cooperation in Europe.
Chapter Two--GENERAL ASSESSMENT OF CSCE IMPLEMENTATION
The 10 principles of the Helsinki Act and additional
commitments elaborated over the years define the basic code of
conduct that CSCE states have adopted. These Helsinki principles,
reaffirmed in the Charter of Paris, include:
-- Sovereign equality, respect for the rights inherent in
sovereignty;
-- Refraining from the threat or use of force;
-- Inviolability of frontiers;
-- Territorial integrity of states;
-- Peaceful settlement of disputes;
-- Non-intervention in internal affairs;
-- Respect for human rights and fundamental freedoms,
including the freedom of thought, conscience, religion, or belief;
-- Equal rights and self-determination of peoples;
-- Co-operation among states; and
-- Fulfillment in good faith of obligations under international
law.
The following general assessments provide an overview of
certain member countries and Albania where further progress on
meeting CSCE standards appears necessary or where remarkable
progress has recently been achieved.
Albania
During the reporting period Albania, which refused the
invitation to participate in CSCE in the early 1970s, requested and
was granted observer status. It is, therefore, significant that
Albania took some cautious but important steps toward
implementing the Helsinki principles, including the holding of
multi-party legislative elections on March 31, 1991--the first
since 1920. The electoral process fell short in several key areas of
CSCE standards for free and fair elections, including limited access
to the media for opposition parties, intimidation of opposition party
candidates and activists, and delayed issuance of election results.
Much remains to be done to ensure Albania's complete and
continuing observance of the Helsinki principles. During the
reporting period, the ruling Albanian Party of Labor (PLA) declared
its intent to depoliticize the army, security forces, and courts and
took measures to decentralize the economy and reform the penal
code and electoral law. In December 1990, the Albanian leadership
announced that the formation of independent political organizations
would be permitted and that a number of political parties and
organizations would be allowed to register officially. Some of
these groups also were allowed to publish their own newspapers.
In human rights, the Albanian Government took some initial
steps to correct past repressive practices. In 1990, Albanian
authorities eased some restrictions on citizens' right to travel
abroad but, at the same time, reportedly shot asylum seekers.
Albania eased its persecution of religious activity, which resulted
in the celebration of some religious services without official
interference. Amendments to the penal code adopted in 1990
include the right to counsel, the right of appeal, and the right to a
speedy trial. The government also re-established the Ministry of
Justice, which had been abolished in 1967, as part of a judicial
reform program. The government has published drafts for a new
constitution incorporating safeguards, in principle, of many basic
human rights, including freedom of religion, press, movement,
association, and the presumption of innocence. The new multi-party
legislature will begin debate on the constitution in late 1991. The
government stopped jamming foreign broadcasts, including those of
the Voice of America. The UN Secretary General visited Albania in
1990 to discuss human rights, among other topics.
Albania, which is not a member of the CSCE, was granted
observer status at each of the CSCE meetings held in the reporting
period since June 1990. In October 1990, Albania hosted a
gathering of Balkan foreign ministers. On March 15, 1991, the
United States and Albania resumed relations. On March 20, 1991, an
official US delegation arrived in Tirana to lay the foundations for
this new relationship.
Bulgaria
Bulgaria's adherence to Helsinki principles dramatically
improved during the reporting period. The current reporting period
was a year of significant political transformation, including the
country's first free and democratic elections in June 1990, and the
implementation of wide-ranging political and economic reform.
The Bulgarian Socialist Party (BSP), as the Communist Party was
renamed, won the June parliamentary elections, with a small
majority over the opposition coalition Union of Democratic Forces
(UDF). In August, Bulgaria's Parliament elected Zhelyu Zhelev, the
former UDF chairman, as president. The main political forces
entered into a coalition government in December, after a general
strike brought down the second all-socialist government of Andrey
Lukanov. Political reforms begun in the fall were followed by an
ambitious economic reforms in January and February. A new
constitution is to be drafted by the Grand National Assembly during
the spring of 1991. New local and parliamentary elections will be
held sometime thereafter.
The Bulgarian Government made great strides in the area of
human rights. The human rights abuses for which the former
communist regime was criticized virtually disappeared. The
government claimed that all monitoring of mail and telephone
conversations had stopped, although some opposition activists
charged abuses continued during and after the election campaign. A
wide array of opposition and independent newspapers emerged
despite frequent shortages in newsprint and the state-run printing
and distribution networks. Freedom of speech and association were
no longer challenged. Additionally, the Bulgarian Government made
progress in redressing human rights violations committed during
the forced assimilation campaign aimed against Bulgaria's ethnic
Turkish and Pomak (ethnically Bulgarian Muslim) minorities during
the late 1980s. Freedom of religion also blossomed, as semi-
official bans on church attendance were lifted and Bulgarians could
freely attend church services and ceremonies. Several of the
measures taken to prevent or discourage the practice of Islam were
ended. A school for Imams was opened as was an Islamic cultural
center. Several Protestant and evangelical churches were
registered and have established offices and begun importing Bibles
written in the Bulgarian language.
Although many of the reforms have only recently been set in
motion, a clear pattern of democratization and a new openness of
Bulgarian society was established during the reporting period.
Nationalism remains a difficult problem for Bulgaria, however, and
tensions on this question are still high. Moreover, the need to
overhaul totally the societal structure imposed by the communist
regime requires a massive amount of work. That process, while
well underway, was not yet complete, and remnants of the
totalitarian system had still to be overcome.
Czechoslovakia
At the end of the reporting period, Czechoslovakia made
significant progress in establishing democratic institutions and
civil liberties since November 1989. Economic reform moved more
slowly, hampered by bureaucratic caution and public fears of
inflation and unemployment. Problems during the reporting period
included the controversy over vetting public servants who may have
collaborated with the old regime; the devolution of power from the
federal government to the Slovak and Czech Republic Governments;
and the knotty economic challenge of property rights (restitution),
privatization, and elimination of distortions in the economy. In the
longer term, Czechoslovakia, led by President Vaclav Havel and his
allies, has an excellent chance of maintaining the advances it has
made in the last year and of forging closer political and economic
ties with the West.
Czechoslovakia is strongly committed to the CSCE process, not
only because many of its current leaders were active in monitoring
CSCE compliance in the past, but also because the Czechs and
Slovaks, hoping to establish themselves as a constructive presence
in the heart of Europe, see the CSCE process as serving an
integrative function for Europe and North America. The CSCE
Secretariat is located in Prague, and the Czechoslovak government
has been particularly active in presenting proposals to enhance and
expand the CSCE's role in multi-lateral politics.
Hungary
Hungary continued its implementation of CSCE principles by
taking further steps to consolidate the political and economic
reforms of the past few years. The Antall Government made genuine
progress in creating democratic institutions, in re-orienting its
foreign policy toward the West, and in moving toward a free market
economy. Hungary is now a working parliamentary democracy and is
embarking on the second stage of its political transformation--the
drafting and passage of numerous pieces of legislation to help
establish democracy. In February 1991, the government presented a
4-year economic reform program aimed at reducing constraints on
private business, accelerating privatization, continuing economic
liberalization, and reducing inflation. Hungary continues to play an
active role in the CSCE and views its participation as a way to
strengthen ties with the West and help influence the shape of a new
Europe.
Poland
April 1, 1990 to March 31, 1991, witnessed sustained and
significant progress in Poland's implementation of its CSCE
commitments. The two governments in power during this period
continued Poland's democratic and free market transformation and
moved the country toward full compliance with CSCE standards.
During the reporting period, Poland transformed itself from a one-
party state into a functioning democracy in which the legal scope
for private ownership and initiative approaches that of Western
parliamentary democracies.
Poland's political and economic transition is, by no means,
complete. The parliamentary process for dismantling the
legislative framework of the previous era has proven tedious.
Poland has yet to hold fully free parliamentary elections, but the
Polish Parliament and President Walesa agreed to hold elections
before October 31. The government remains committed to the rule
of law, arguing that democracy assures the durability of economic
and other reforms.
Romania
Romania made some progress in implementing CSCE provisions
in the current review period. Restrictions on travel and emigration
were lifted; there are no longer bars to the free practice of
religious belief; and the rights of free speech, association and
political expression generally are respected. The internal security
apparatus was scaled down but still plays a troubling role in
society. Progressive reforms of the legal code, designed to ensure
the rights of the individual vis-a-vis the state, were adopted or
proposed. There were, however, some notable exceptions to these
positive developments. An outbreak of violence in June 1990 left
several dead. Hundreds were injured as coal miners rampaged
through the streets of Bucharest in response to an official appeal to
counteract anti-government protests. This and other events marred
Romania's progress toward greater compliance with CSCE standards.
On May 20, 1990, Romania held its first multi-party election
since 1946. Ion Iliescu, the candidate of the National Salvation
Front (NSF, the successor to the Communist Party) was
overwhelmingly elected president, while NSF candidates won about
two-thirds of the seats in each of the new parliament's two
chambers. The voting was judged by domestic and international
election observers to have been essentially free and unfettered.
The same was not true of the campaign, which was marred by
violence, intimidation, state control of the media, and the
overwhelming imbalance of state resources in favor of the ruling
party. Citizens remain unable to express their political opinions
through the ballot at a sub-national level, as local elections have
been repeatedly delayed, and local officials are appointed by the
central government.
Romania has continued to make progress under Basket II during
the past year. The government has promulgated an extensive array
of laws that form a legal basis for private agricultural land
ownership, creation of private-sector economic units, privatization
of the bulk of state-owned enterprises, foreign investment,
expansion of foreign trade, and a new social security system. Under
an economic stabilization program negotiated with the
International Monetary Fund (IMF), prices were raised substantially.
Measures also were taken to restrain inflation, make the national
currency partially convertible, halt the decline in gross national
product, and restrain the current account deficit. Romania's post-
revolution buying spree contributed to a $148-million US trade
surplus with Romania in 1990, after several years of large deficits.
Romania has been opened to foreign businessmen and investors.
However, the changing legal environment, political uncertainty, and
economic decline have left most foreign investors cautious about
the country.
Inter-ethnic tensions remain high, particularly between ethnic
Hungarians, who constitute approximately 8% of the population, and
ethnic Romanians. The violent clashes between these two groups
that took place in March 1990, were not repeated in the reporting
period, but the treatment of Hungarians and other minorities,
including Gypsies, is a potentially explosive issue.
Freedom of religion and expression is now unhindered. The
print media is not censored, but complaints continued to be made
about government manipulation of newsprint supplies and
distribution. Television remains essentially under government
control, although a smattering of independent television stations,
limited by poor equipment, lack of financing, and very limited
access to the airwaves, were established. The official decision to
reduce television air time for political parties and for minority
language programing was greeted with skepticism.
USSR
In its external relations, the Soviet Union generally sought to
abide by the Helsinki principles, at a time when dramatic changes in
Eastern Europe seriously challenged all CSCE signatories, but
especially the USSR. The Soviet Union largely respected the
sovereignty of neighboring CSCE states--although the Soviets
removed former German Democratic Republic (GDR) leader Erich
Honecker from Germany in March 1991--refrained from official
threats of force, and supported the inviolability of existing borders
and the peaceful settlement of disputes arising between states. It
took steps to withdraw its forces from Eastern Europe, although
negotiations on withdrawal continue with some countries.
There has been continued progress in Soviet respect for human
rights and fundamental freedoms, though that trend stalled
momentarily beginning in the fall of 1990. Landmark religious and
press freedom laws were passed in 1990, and a new emigration law
continued to move forward in the Soviet legislature as the review
period drew to a close. Trade declined during the review period,
hampered by the inconvertibility of the ruble and the absence of
private property rights. Cultural exchanges expanded but were
impeded by the poor state of the Soviet economy.
The forced annexation of Estonia, Latvia, and Lithuania in 1939
by the Soviet Union, never recognized by the United States, led to
tensions and escalating violence in the area. The Soviet Union's
observance of the Helsinki principles was marred by actions in the
Baltic states, prompting invocation of the CSCE Human Dimension
Mechanism by a majority of CSCE states. In January 1991 the
Soviets used force, leaving at least 14 dead in Lithuania and five
dead in Latvia. There also was violence in Azerbaijan, and
accusations of participation by Soviet army forces in actions
against Armenians in disputed areas in Azerbaijan. In other
respects, however, the Soviet Union has been an active and
constructive participant in a variety of European and international
fora.
Yugoslavia
During the reporting period, Yugoslavia suffered a deepening
political crisis, significantly affecting its performance under the
Helsinki principles. While in many parts of the country, there was a
significant broadening of the democratic process, rising ethnic
tensions, most notably in Serbian-dominated Kosovo, led to
repression and violence. Overall, Yugoslavia's adherence to Helsinki
principles expanded during the reporting period, but in Kosovo the
reverse was true, leading fellow CSCE states to invoke the Human
Dimension Mechanism. The one-party communist system that ruled
Yugoslavia since World War II largely disappeared in 1990. For the
first time since before World War II, Yugoslavia experienced multi-
party elections in all six constituent republics. Balloting
procedures in most republics generally were fair, but in Serbia, the
ruling Communist Party used its control of the media and financial
resources to the detriment of the opposition parties. The federal
government, under Prime Minister Ante Markovic, attempted a
sweeping program of political and economic reforms. After initial
progress, this program fell afoul of inter-republican differences,
which have, for example, blocked a number of proposed amendments
to the federal constitution intended to eliminate remnants of the
one-party system and allow multi-party elections at the federal
level.
Rising ethnic tensions and the persistence of old anti-
democratic structures in Yugoslavia reached the point where they
threatened the existence of a unified federal state. Conflict
deepened, especially in parts of Croatia and Bosnia. Ethnic conflict
in Kosovo between majority Albanians and Serbs, who consider the
province the "heart of Serbia," has led to massive violations of
human rights, including scores of deaths at the hands of police,
thousands of arrests for the expression of political opinions, and
the firing of tens of thousands for political strikes. Serbian/Croat
tension also reached dangerous levels.
The Yugoslav military is highly secretive and provides little
information about its activities to the Yugoslav government or
public, let alone the country's CSCE partners. As the Yugoslav crisis
deepened, the Yugoslav military played an increasingly assertive
political role, feeding concerns that it would not act impartially in
support of federal objectives if events led to conflict.
Chapter Three--IMPLEMENTATION OF SECURITY-RELATED
PRINCIPLES AND OF BASKET I
(CONFIDENCE-BUILDING MEASURES AND CERTAIN ASPECTS OF
SECURITY AND DISARMAMENT)
The security aspects of the CSCE process, known as Basket I,
were first enshrined in Section 2 of the Helsinki Final Act, entitled
the "Document on Confidence-Building Measures and Certain Aspects
of Security and Disarmament." CSCE participating states agreed to
prior notification of major military maneuvers and movements,
exchanges of observers and other confidence-building measures.
Subsequent to Helsinki, the 34 CSCE states endorsed two additional
agreements--the Stockholm Document of 1986 and the Vienna
Document of 1990--which expanded and deepened the CSBMs regime.
The 34 also have, under various principles and agreements,
committed to promoting disarmament. Following are assessments
of the performance of certain CSCE member states.
Bulgaria
The overall improvement in relations between Bulgaria and the
United States and Western Europe was reflected in Bulgaria's
approach to security issues. The Bulgarian People's Army has been
receptive to the idea of increased military contacts but currently is
constrained by severe economic problems from responding favorably
to proposals in this area offered by the United States. Bulgaria has
accepted, in principle, a US naval ship visit (originally scheduled
for the summer of 1990, but, subsequently, canceled due to the
Persian Gulf crisis), a US military band visit, an Air Force Academy
cadet exchange, a visit to the United States by eight mid-level line
officers, and increased medical team visits. The Deputy Surgeon
General of the US- European Command visited Bulgaria in July 1990,
as part of a humanitarian support mission and established contact
with the Bulgarian Minister of Health and Bulgarian People's Army
military medical academy-hospital.
The Bulgarian Government and People's Army have repeatedly
voiced their eagerness to fulfill all requirements of the 1990
Vienna Document, including military inspections, and have provided
detailed information regarding their force structure and equipment,
as required by the Vienna Document. Particularly since the current
coalition government came to power in December 1990, Bulgaria has
expressed deep interest in closer relations with NATO.
In an attempt to establish a dialogue facilitating a decrease in
traditional tensions, better understanding of each other's military
forces, and resolution of other longstanding problems, the Bulgarian
Government and People's Army have initiated significant new
contacts with their Turkish counterparts, to include exchange visits
with chiefs of the general staffs. This dialogue also will
encompass exchanges of instructors from military academies,
sports teams, medical personnel, and possibly naval vessels. Sofia
also has called on its Greek and Turkish neighbors to implement
aspects of the CFE verification regime, even before the treaty
enters into force as a confidence-building measure in the Balkans.
The new Bulgarian Government has expressed its willingness
to cooperate bilaterally with the United States and other states to
combat international terrorism. It worked closely with the United
States and other Western countries in the prevention of terrorism
during the Persian Gulf crisis. Stringent measures were taken to
protect diplomatic missions and residences against potential
threats. Bulgaria's relations with states that support terrorism
have declined markedly under the new political system, though it
maintains relations with the Palestine Liberation Organization,
Iran, and Libya, among other traditional Bulgarian allies.
The Bulgarian Government has initiated investigations into
allegations of Bulgarian involvement in the 1981 assassination
attempt against the Pope and the 1978 London killing of dissident
writer Georgi Markov, and is cooperating with international
authorities in these investigations.
Bulgaria ratified the Montreal Convention for the Suppression
of Unlawful Acts Against the Safety of Civil Aviation on January 5,
1991.
Romania
Romania has moved from its position prior to the revolution in
which it actively helped train and support international terrorists
within its borders, to acting in relative harmony with Western
governments to stop the movement of terrorists. The official
Romanian training of terrorists affiliated with radical Arab groups
appears to have stopped. The government also has entered into
limited, but cooperative information-sharing arrangements with
several neighboring states to combat the movement of terrorists
and associated support, including arms, across its borders. Some
informal counter-terrorist information-sharing arrangements also
have been entered into with Western countries. Because of the
presence of a large number of students from countries that support
international terrorism and the relaxation of border controls, the
movement of terrorists within Romania is often difficult to detect,
control, and interdict. This difficulty is compounded by the
continuing existence of remnants of the support structure
terrorists had established in East European countries.
A possible exception to Romania's new anti-terrorist stance is
the reported continuation of sales of Romanian-made armaments to
states that have traditionally supported terrorism.
In May, Romania concluded a bilateral Open Skies agreement
with Hungary to build mutual confidence, and the Romanian military
has had a useful and growing dialogue with its Hungarian
counterparts.
USSR
The Soviet Union has continued to support means for settling
disputes in the CSCE region. In its relations with the Baltics and
with Soviet republics, the All-Union Government has expressed its
desire to resolve tensions through dialogue. However, the behavior
of its organs has not always reflected this commitment in practice:
in the Baltic states, the Soviet Government instigated or acquiesced
in the use of deadly force in January 1991.
During the last reporting period, the Soviet Union maintained a
constructive approach toward terrorism. Assistance to states
linked to terrorist activities has declined during the past year,
albeit for economic as well as political reasons. The Soviet Union
also increased its level of cooperation with the United States and
other nations, and bilateral counter-terrorism policy discussions
have been increasingly constructive. Soviet representatives have
expressed particular concern over the linkage between international
terrorism, narcotics trafficking, and organized crime, and have
sought increased international cooperation to address these
problems. Soviet authorities cooperated closely with the United
States to counter the terrorist threat posed by the Persian Gulf
crisis.
Yugoslavia
Yugoslavia continues to try to shed its old image as a terrorist
crossroads, both in its public pronouncements in support of the
battle against international terrorism and in growing cooperation
with foreign police services. The Yugoslav policy of granting entry
to citizens of nearly all countries without visas, combined with
relatively inefficient frontier controls, limits its effectiveness in
stopping terrorists from transiting Yugoslavia, but authorities
seem increasingly inclined to discourage or expel those seeking to
establish support infrastructure there. During the Gulf war,
numerous diplomatic representations established new relationships
with the internal security service to discuss the protection of
embassies from terrorist attacks. The United States worked with
Yugoslav security services closely throughout the crisis. Although
the results were uneven in terms of the actual effectiveness of the
extra security provided, the dialogue between Yugoslav terrorist
specialists and foreign embassies has expanded.
Yugoslavia adheres to the Tokyo Convention on Offenses and
Certain Other Acts Committed On Board Aircraft; the Hague
Convention for the Suppression of Unlawful Seizure of Aircraft; the
Montreal Convention for the Suppression of Unlawful Acts Against
the Safety of Civil Aviation; the 1987 Protocol to the Montreal
Convention; and the Convention on the Physical Protection of
Nuclear Materials.
The Yugoslav military's traditional obsession with secrecy
with regard to military contacts, can be seen in its approach toward
the foreign military attaches in Belgrade. The Yugoslav National
Army (JNA) does not encourage contacts between senior Yugoslav
military leaders and attaches, and provides foreign attaches with
very little information about its activities. It limits access to
military facilities to a small number of carefully stage-managed
visits for attaches each year. Foreign military attaches are
required to inform the JNA 48 hours in advance about travel outside
Belgrade.
Conference on Confidence- and Security-Building Measures and
Disarmament in Europe (CSBMs)
The Conference on Confidence- and Security-Building Measures
and Disarmament in Europe was originally mandated in 1983 by the
Madrid CSCE Follow-Up Meeting as an integral part of the CSCE
process. The aim of the CSBM talks was to establish concrete
measures to increase military transparency and predictability as a
means of achieving greater security and military stability in
Europe.
The first CSBM talks--from 1984 to 1986, in Stockholm--
produced the Stockholm Document; a set of CSBMs that called for
forecasts, notifications, and observations of major military
exercises; and established on-site inspections to assist in verifying
compliance. In accordance with the terms of the Madrid Mandate
that governed these talks, the Stockholm CSBMs were militarily
significant, politically binding, and verifiable. Further, the CSBMs
were to apply only to land-based military exercises taking place
within the whole of Europe as defined in the mandate. The
provisions of the Stockholm Document follow.
Forecasting. The exchange of annual forecasts of all notifiable
military activities, with large-scale activities (more than 40,000
troops) prohibited unless announced 1 year in advance and activities
over 75,000 prohibited unless forecast 2 years in advance.
Notification. Forty-two-day advance notification of activities
when these involve at least 13,000 troops or 300 tanks, if
organized into a divisional structure or at least two
brigades/regiments. In the case of amphibious and airborne
activities, the notification threshold is 3,000 troops.
Observations. Invitations to observe must be extended when
notifiable military activities meet or exceed 17,000 troops. In the
case of amphibious and airborne activities, the observation
threshold is 5,000 troops.
Inspection. On-site inspections from the air or ground, or
both, to verify compliance with the agreed measures, with no right
of refusal. No country need accept more than three inspections on
its territory per calendar year nor more than one from any one
participating state.
As agreed at the Vienna Follow-Up Meeting, a new set of CSBM
negotiations began in 1989 to expand the measures of the
Stockholm Document. These talks, guided by the Madrid Mandate,
will continue until the Helsinki Follow-Up Conference in March
1992 under the same mandate as the one governing the Stockholm
Document. In July 1990, NATO leaders at the London summit called
for a meaningful package of CSBMs to be ready for endorsement by
the 34 CSCE nations at the Paris summit in November 1990. This
call quickened the pace of negotiations and helped produce a new,
expanded CSBM agreement--the Vienna Document of 1990--which
leaders of the 34 CSCE nations endorsed in Paris. The Vienna
Document builds upon the Stockholm Document and entered into
force January 1, 1991 (its provisions on the military data exchange
enter into force on April 15, and the evaluation visits to verify this
data enter into force on July 1). The Vienna Document adds the
following measures to the Stockholm Document:
-- Military data exchange requires yearly exchange of data on
military forces, equipment, and budgets. Military force and
equipment data will be verified by on-site evaluation visits.
-- Risk reduction permits any state to require an explanation
from any other state of unusual and unscheduled military activities
that cause security concerns and establishes points of contact to
report or receive information on hazardous military incidents to
prevent misunderstandings, and mitigate the effects of such
incidents.
-- Contacts call for increased military contacts among the 34
nations at all levels and for visits to air bases once in a 5-year
period. Sets up a CSBM communication network for the states to
transmit and receive required and relevant information.
-- The annual assessment meeting establishes a yearly
implementation review of the Vienna Document CSBMs.
Implementation
The implementation record for the reporting period
demonstrates a reduction in the level of CSBM-related activity as
compared with earlier years. This is largely due to the fact that
1990 activity forecasts (submitted by NATO, East European states,
neutral and non-aligned states (NNA) and the USSR) included a
limited number of notifiable military activities. Furthermore,
during the year, a number of these activities were subsequently
canceled or reduced below notifiable levels.
East European and Soviet practices were in accord with the
provisions of the Stockholm Document. Most East European states
now have open and constructive approaches to CSBM
implementation. For the most part, the Soviet Union maintains a
narrow interpretation of the Stockholm provisions.
As of March 31, 1991, 45 inspections--under CSBM and
Disarmament in Europe (CDE) terms-- had been conducted. Of these,
44 were carried out under the 1986 Stockholm Document, and one
was carried out under the 1990 Vienna Document. During 1990, 10
CDE inspections were carried out. Inspections have been viewed by
both East and West not only as an element of verification but as an
instrument that can make a contribution to confidence-building.
Eastern states, the GDR, and the Soviet Union forecast six
activities for 1990, three of which were national and three
combined. Three of these forecast activities met the notification
threshold. During the year, one was canceled, and one was reduced
below notification thresholds. As a result, four activities were
notified: USSR/GDR on February 5-11, 1990 in the GDR, with 16,000
troops; USSR on March 16-23, 1991 in the Kiev Military District,
with 17,000 troops; USSR/GDR in the GDR on August 10-17, 1991,
with 15,000 troops; and USSR on September 10-15, 1990, within
the Byelorussia Military District, with 9,800 troops. There also
was one observation program in Kiev in March.
The Soviet Union forecast four notifiable activities for 1991,
two of which will require observation programs. East European
states provided notice that they had no notifiable military
activities planned for 1991.
The NNA states forecast a total of five notifiable military
activities for 1990, one of which met the observation threshold.
Consequently, two of these activities were canceled, and two were
reduced below notification thresholds. As a result, one activity
(not observable) was notified in 1990. Of the NNA states, only
Sweden submitted an activity forecast (including one activity) for
1991.
For 1990, NATO states forecast 10 notifiable activities, eight
of which met the observation threshold. Subsequently, five of these
activities were canceled, and one was reduced below notification
thresholds. As a result, four activities were notified in 1990; two
of these included observation programs. NATO states forecast five
activities for 1991, one of which will require an observation
program.
During the reporting period, East European countries notified
two activities under the Stockholm Document. One of these was a
combined activity in the GDR, and one was a national activity in the
USSR; neither met the threshold for observation. NATO countries
notified four military activities. Two of them included observation
programs. One activity, an amphibious exercise in Norway called
"Adger 91," was notified under the Vienna Document. Among the
NNA states, Finland provided notification of its military activity
"Harjoitus 90." Sweden provided a notification and observation
program, under the Vienna Document, for its activity "Nordanvind
91."
During the reporting period, seven inspections were conducted.
The Soviet Union conducted four inspections: in Italy in May 1990;
in the United Kingdom in September 1990; in the Federal Republic of
Germany in October 1990; and in Norway in March 1991. The Soviet
inspection in Norway was carried out under the provisions of the
Vienna Document.
NATO members conducted three inspections during the
reporting period. The United Kingdom conducted an inspection of an
unnotified activity that took place in the GDR in April 1990, as well
as a previously notified activity in the Soviet Union in September
1990. Norway inspected an unnotified activity in the Soviet Union
in September 1990.
Bulgaria did not forecast activities for 1990 and did not
receive or conduct CDE inspections in 1990.
Czechoslovakia did not forecast activities for 1990, nor did it
receive or conduct any CDE inspections.
Hungary did not forecast activities for 1990, nor did it receive
or conduct any on-site inspections in 1990.
Poland did not forecast activities for 1990, nor did it receive
or conduct any CDE inspections in 1990.
Romania did not forecast activities for 1990, nor did it
receive or conduct any CDE inspections. To date, Romania has not
implemented any agreed CSBMs, other than sending observers to
observable exercises (a practice that only started in 1988).
USSR has carried out its obligations under the CSBMs of the
Stockholm Document, as well as the recently adopted Vienna
Document. During the reporting period, the Soviet Union provided
notification of two activities, one of which took place in the GDR
and the other on the territory of the USSR. The latter was provided
on a voluntary basis as the activity was scaled back below
notification levels.
The notifications were provided in a timely manner and
included, at least the minimum information required under
notification provisions. The exercise calendar for 1991 also was
provided in a timely manner and included all required information on
four ground force exercises scheduled for the last half of the year.
The Soviet Union conducted four inspections and received two
during the reporting period.
Yugoslavia forecast one activity, "Pester '90," but the exercise
was canceled in January 1990. Yugoslavia did not receive or
conduct any CDE inspections in 1990.
Chapter Four--IMPLEMENTATION OF BASKET II
(ECONOMICS, SCIENCE AND TECHNOLOGY, ENVIRONMENT)
Basket II of the Helsinki Final Act calls for the promotion of
cooperation in economics, science and technology, and the
environment. During this reporting period, Basket II activities made
the most significant advances since CSCE's launching in 1973. The
Bonn Document committed member states to market economic
principles and opened the way for true economic cooperation among
CSCE countries. Its signature occurred at a time when such
cooperation became critical to the successful transition to
democracy among the reforming states of Central and Eastern
Europe. The Sofia Document on the Protection of the Environment,
negotiated in 1989 and formally adopted at Vienna in 1990,
provided guidance on the need to protect both the environment and
environmentalists. Following are assessments of the performance
of certain CSCE countries and Albania in Basket II.
Albania
Faced with a declining growth rate in what is already the
poorest country in Europe, the Albanian leadership in 1990 moved in
a very limited way to decentralize the economy by encouraging the
emergence of small-scale private enterprises, providing some
agricultural workers with larger plots of land for private use, and
granting enterprises the power to set their own wage levels and
bonuses for workers who exceed production targets. Hoping to
attract outside assistance to save its failing economy, the
government removed the ban on foreign credits and liberalized the
foreign investment law to provide for repatriation of profits by
foreign investors. While some foreign businesses have expressed an
interest in Albania, most still are wary of investing substantial
amounts until the country has made a stronger commitment to
creating a stable economy backed by a democratic government.
Moreover, the lack of an adequate infrastructure for conducting
business may discourage the development of commercial ties.
Bulgaria
Economic, Trade, and Commercial Issues. An economic reform
program, introduced in early 1991, is designed to move Bulgaria
rapidly in the direction of a market-oriented economy. As a part of
that reform, the government introduced, and the National Assembly
adopted, a budget aimed at a smaller deficit funded by borrowing
rather than by issuing new money. Excess government spending is
being trimmed, and subsidies to enterprises and consumers are
being sharply reduced. As of February 1, 1991, all prices were
liberalized, with the exception of several energy sources (coal,
electricity, heat, gasoline). Prices of 14 basic foodstuffs are under
observation, and the government may intervene to counter sharp
rises in prices. Interest rates were readjusted to a more realistic
rate. A foreign investment law draft is before the National
Assembly, and a revision in the economic statutes allows all firms
to engage in international economic activity, provided they register
with the Bulgarian Chamber of Commerce and Industry.
Trade unions have operated more vigorously in the last year,
and three trade union groups now exist. The two larger
confederations participate with representatives of government and
employers in considering some economic measures, although they
are now entirely independent of the government and varied in their
political sympathies. A general strike led by the "Podkrepa" trade
union brought down the all-Socialist government of Andrey Lukanov
in late November 1990.
The new agricultural land law, passed February 22, 1991,
recognized the rights of former owners of rural land to receive
equivalent amounts of land again if they wish. Full implementation
will likely take several years, but the law is the first step toward
reprivatizing property.
Commercial exchanges have been facilitated by more liberal
rules for foreign businessmen. For example, US businessmen and
tourists no longer require a visa for stays up to 30 days.
Businesses are allowed to open their own offices, and a number
have done so. Foreign trade statistics published for 1990, for the
first time in many years, included data on import and export of
crude oil and some petroleum products. Balance-of-payments
information has become more accessible, and a new accounting
convention was established to make government data conform more
closely to international standards.
Science and Technology. Bulgaria continued to encourage
expansion of free exchange of scientists and information with the
United States and other developed Western nations during the
reporting period. In mid-1990, Bulgaria hosted the International
Council of Scientific Unions Conference and invited representatives
of the US National Science Foundation to visit Bulgaria.
Bulgarian scientists have made a concerted and consistent
effort to expand contacts at all levels, both privately and through
governmental organizations (chiefly the Ministry of Science and
Higher Education and the National Academy of Sciences), and to
encourage development of joint projects in a variety of fields.
Environment. Environmental issues were of primary concern to
the government throughout 1990-91. It continued to permit a
variety of environmental organizations to operate unhindered and
invited international environmental inspection teams to visit the
country. Numerous representatives of Ecoglasnost and the Green
Party were elected to Parliament and have become prominent
national political leaders. There is an active parliamentary
commission on environmental policy, led by a member of
Ecoglasnost.
The government has actively pursued contacts and cooperation
with international entities regarding environmental protection.
Bulgaria signed the Charter of the Regional Environmental Center
based in Budapest and is pursuing the possibility of establishing
two or three sub-centers of that organization in Bulgaria. In
November 1990, Bulgaria invited international inspections by the UN
Environmental Program of the Ruse-Georghiu region, and by the
International Atomic Energy Agency of the Kozlodui nuclear power
station on the Danube, in an effort to resolve conflicting claims of
environmental negligence between Bulgaria and Romania. The
Bulgarians also are pursuing possible cooperation with other states
on resolving pollution problems in the Black Sea and the Danube, and
have agreed to form a joint commission with Greece to study
pollution in the Mestos River system. Bulgaria participated in the
Inter-governmental Panel on Climate Change and in the first session
of the International Negotiating Committee for a Framework
Convention on Climate Change. Bulgaria is a signatory to the
Montreal Protocol.
In early 1991, Bulgaria hosted the visit of a high-ranking
official of the US Environmental Protection Agency to discuss
future cooperation and assistance in environmental issues. The
European Community (EC) has agreed to assist in the establishment
of a national environmental monitoring system.
Czechoslovakia
Economic, Trade, and Commercial Issues. Czechoslovakia is
moving steadily toward a free market economy. To keep the
economy balanced during the difficult transition period, the
government is pursuing a stringent fiscal and monetary policy. To
soften the effects of rising prices and unemployment, the
government has enacted social legislation, including an increase in
the minimum wage, increased pensions, and an unemployment
benefits program. Unions are free and are consulted by the
government on social and economic issues. Major economic reform
legislation which has been passed include:
-- Legalization of private enterprise;
-- Liberalization of foreign investment to allow both joint
ventures and wholly owned foreign subsidiaries in virtually all
sectors of the economy;
-- Liberalization of foreign trade to remove obstacles for
private individuals and organizations to engage in foreign trade;
-- Privatization of small and state-owned enterprises;
-- Restitution of businesses and other personal property
nationalized by communist authorities beginning in 1948;
-- Price liberalization (covers 80% of prices);
-- Foreign exchange liberalization ;
-- Safeguards legislation to prevent illegal transfer of
sensitive technology; and
-- Strengthening protection of intellectual property rights.
The Government of Czechoslovakia welcomes and encourages
foreign investment, cooperation, and trade. Working-level officials
are open and accessible to business representatives. Economic
statistics are published, but at times are difficult to find and are
not all calculated according to Western standards. Economic
legislation and business information is available, often in English,
but due to the rapid changes that the Czechoslovak economy is
undergoing, businessmen often have difficulty obtaining timely and
accurate information. Numerous trade fairs are held annually, and
businesses can freely organize seminars, exhibitions, and other
promotional events as well as advertise in local newspapers.
However, because of the tremendous increase of interest in
Czechoslovakia, the availability of local facilities--hotel space,
conference rooms, and office space--has not kept up with demand.
Finally, bureaucratic reform in Czechoslovakia is incomplete. The
competencies of various federal or republic offices have not yet
been definitively decided. Thus, some businesses have had plans
stymied by red tape and indecision.
Czechoslovakia welcomes foreign investment and trade. Both
joint ventures and wholly owned foreign subsidiaries are permitted;
joint ventures with private CSFR partners or wholly owned foreign
subsidiaries no longer need government permission to be
established. The Foreign Exchange Act permits repatriation of
dividends and profits and allows Czechoslovak businesses (including
joint ventures and foreign subsidiaries) to exchange local currency
for hard currency for ordinary business transactions. However,
capital account transactions are still regulated and some
businesses have complained about delays in obtaining foreign
exchange. A new law on intellectual property rights increases some
protections. With the completion of the Bilateral Investment
Treaty, American investors will have other investment guarantees
in place. The treaty is expected to be signed in mid-1991.
Science and Technology. The United States and Czechoslovakia
initialed a science and technology agreement that was signed in
mid-1991. The agreement provides for joint research by US and
Czechoslovak scientists across a broad range of disciplines
including basic science, energy, health and medicine, the
environment, engineering research, earth and atmospheric sciences,
mining research, and agriculture. Joint research will be funded by
contributions from both governments. Cooperation in a number of
these areas is already taking place between the US National Science
Foundation, the US Environmental Protection Agency, the US
Department of Agriculture, and others with their Czechoslovak
counterparts. A science attache position at the American Embassy
in Prague has been added in recognition of the expanding interest in
both countries of closer collaboration in science and technology.
Environment. The Government of Czechoslovakia has signed
and ratified the Convention on Long-Range Transboundary Air
Pollution and its subsequent protocols, as well as the Vienna
Convention on Protecting the Ozone Layer and the Montreal Protocol
to it. Czechoslovakia is interested in cooperating with its
neighbors on specific regional environmental projects and,
generally, in exchanging information and cooperating with the
international community. Specifically, the Governments of
Czechoslovakia and Poland have agreed to work together to address
regional air pollution problems in the northern Bohemian region of
Czechoslovakia, the Upper Silesian region of southern Poland, and
the former German Democratic Republic. Czechoslovakia attended
the first session of the International Negotiating Committee for a
Framework Convention on Climate Change.
In early 1991, a joint environmental study was carried out in
cooperation with the federal and republic governments in
Czechoslovakia with the active participation of the US
Environmental Protection Agency, the US Agency for International
Development, and the World Bank, to create a strategic plan and set
priorities for environmental assistance to Czechoslovakia. The
mission was the first such joint assistance effort in Central and
Eastern Europe, and was designed to avoid duplication and maximize
the efficient use of foreign assistance.
Hungary
Economic, Trade, and Commercial Issues. In 1990-91,
Hungary's economy continued the process of transformation from
state to private market regulation. Government leaders committed
themselves to privatization and economic restructuring along
market lines, while struggling with the mechanics of those
processes.
Major external issues were Hungary's $21-billion external
gross debt and the radical re-orientation of its trade from its
former Council for Mutual Economic Assistance (CEMA) partners to
Western countries, in part, as a result of a switch on January 1
from CEMA clearing arrangements to hard-currency accounting.
Internally, the government grappled to control the budget deficit,
rising inflation fueled by subsidy cuts, and the specter of
increasing unemployment as inefficient state industries were shut
down or privatized.
In September 1990, the government announced its new 3-year
economic program for national renewal. The program emphasizes
privatization, import liberalization, deregulation, curbing inflation,
achieving currency convertibility, reforms in public finance,
welfare reform, as well as encouraging increased foreign
investment.
To facilitate privatization efforts, in 1990, the government
created the State Property Agency. This body supervises the
privatization process and can also initiate the privatization of
enterprises unable or unwilling to privatize on their own. Ten
percent to 15% of state assets already have undergone
privatization, with a government goal of reaching 50% by the end of
1992. Additionally, a government announcement in February 1991
described the establishment of a new organization called the
Privatization Holding--which will concentrate on purchasing
unprofitable and inefficient companies from the State Property
Agency--with the aim of restructuring them for resale to investors.
The government considers foreign investment to be one of the
most important means of encouraging economic development,
modernization, and competitiveness. In May 1990, a law on
securities was passed, and on June 21, the first stock exchange in
East-Central Europe officially opened. Parliament has passed
several acts to facilitate foreign investment, of which the
Economics Association Act, the Companies Act, and the Investment
Act are the most noteworthy. All three concentrate on developing
the framework for foreign direct investment in Hungary.
The Investment Act, which came into effect in January 1989
and was amended by Parliament in January 1991, deals with the
establishment and operation of joint ventures with foreign
participation. According to government statistics, as of January
1991, approximately 5,000 joint ventures were in operation, of
which 2,000 were formed in 1990. To further encourage foreign
investment, generous tax reductions are available to joint ventures
that involve a substantial level of capital and foreign participation.
Although the forint is not yet convertible, (the government plans to
make it convertible between 1992 and 1994) foreign investors may
repatriate both profits and capital in hard currency.
The poor state of the transport and telecommunications
infrastructures, as well as the housing and general real estate
situation, are among the most serious barriers to foreign
investment. Recognizing that these weaknesses undermine
Hungary's endeavors to attract foreign investment, the government
is undertaking costly improvements.
In general, the tax structure is designed to promote private
business. The tax on profits in 1990 decreased from 50% to 40%,
while taxes on small businesses are only 30%. State enterprises
pay an additional 25% tax for the use of state assets. In the autumn
of 1990, the Small Business Administration was created to help
foster private business.
Hungary's estimated budget deficit for 1991 is 78 billion
forints, an estimated 4% of gross domestic product. The
government has drastically cut back subsidies in areas such as
housing and agriculture (40% from 1989 levels). It also has
initiated several price increases on food, gas, electricity,
transportation, and household items. As of January 1, 1991, free
market prices apply to 90% of goods.
In the past year, foreign trade has been liberalized
substantially. CEMA--and its ruble clearing account trading
system--has been abolished, and Hungary now conducts all of its
foreign trade on a hard currency basis using world prices. Beginning
in January 1991, all Hungarian companies could conduct their own
foreign trade without the assistance of state trading companies.
The number of products subject to import licensing has been greatly
reduced. As of this year, 93% of imported products can be imported
without prior approval, with a government goal set for abolishing
all import licenses by 1992.
In 1990, the EC provided Hungary with several concessions,
such as the lifting of discriminatory barriers, suspension of non-
discriminatory barriers, extension of Generalized System of
Preferences benefits, and the lifting of all self-restraint quotas. It
is expected that during 1991, Hungary's relationship with the EC
will progress further. The EC and Hungary are negotiating an
association agreement which could become effective as early as
January 1, 1992.
Hungary is a contracting party to the General Agreement on
Tariffs and Trade (GATT). In February 1991, the government
announced that Hungary would maintain its GATT obligations and
would reduce the average tariff to around 8%. Following this
announcement, however, the government proceeded to raise the
tariffs on automobiles from 10% to 18% (13% on environmentally
less harmful automobiles).
In the area of intellectual property, Hungary provides process
patent protection but not product patent protection. This has been a
particular problems in the pharmaceutical sector. Hungary is
drafting a new patent law, but enactment could be delayed
depending on other parliamentary business and pressure from the
politically powerful pharmaceutical industry.
A controversial issue which remains unresolved is the
question of ownership of assets and compensation for properties
seized during the communist period. The government is preparing a
bill for parliamentary approval through which it hopes to settle this
aspect of ownership rights. It seeks to remove one of the major
areas of uncertainty that has, hitherto, hampered the sale of real
estate and businesses and the transition to a genuine market
economy.
The field of labor relations remains unsettled. While workers
are free to join labor unions, the independent trade unions allege
that workers feel pressured to join or maintain membership in the
successor unions to the former communist unions. Additionally, the
dispute among unions over how to divide property formerly owned
by the communist unions remains unresolved.
Nevertheless, major labor unrest is rare, in part due to
consultations held at the Interest Coordinating Council (ICC) among
the representatives of the employers, labor, and the government.
Legislation passed in 1990 gives all workers, excluding judicial,
military, and police personnel, the right to strike. Unions are free
to form confederations and affiliate with international labor
organizations. Hungarian unions now maintain extensive
relationships with such bodies as the International Confederation of
Free Trade Unions.
The legal minimum wage was raised in 1991 to approximately
$100 per month, and the average work week is 40 hours, with
workers receiving overtime and a minimum of 15 days paid leave
per year, free health care, and pensions. Federal labor courts
enforce occupational safety standards for work places, but specific
safety conditions are not always up to internationally accepted
standards.
Science and Technology. Hungary continues to expand its
scientific and technical contacts, eagerly seeking new sources of
cooperation and funding in Western Europe and the United States. In
late March 1991, the second annual board meeting of the US-Hungary
Science and Technology Agreement convened in Washington to
approve 28 joint research projects in such areas as the
environment, energy, agriculture, basic science, engineering
research, and earth and atmospheric sciences. Joint research is
funded by contributions from each government. At this meeting the
Hungarians emphasized how significant the joint research program
was in promoting the concept of a competitive scientific peer
review and the grants process in Hungary.
The Hungarian science community also is cementing
participation in such cooperative European scientific activities as
EUREKA and the programs supported by the Council of Europe. There
also is keen interest in taking advantage of science and technology
programs that Italy is sponsoring under the aegis of the
"Pentagonale" group of countries (Austria, Czechoslovakia, Hungary,
Italy, and Yugoslavia). The Pentagonale is seen as a bridgehead to
more active participation in future EC programs.
Environment. The Regional Environmental Center for Central
and Eastern [Europe], based in Budapest, began operations in
September 1990, with support from the United States, the EC, and a
number of other countries. Although the center is physically
located in Hungary, it has a regional constituency. Through
activities such as information collection and dissemination,
institution-building, environmental education, and clearinghouse
functions, the center will work in environmental health, energy
efficiency, pollution prevention, and the environmental effects of
agriculture. The center has awarded nearly 50 grants to
environmental organizations in the region and has sponsored several
important conferences that have brought experts together to
discuss important issues and address common environmental
problems.
During the reporting period, the Hungarian Ministry of
Environment was reorganized and began a review of its legislation
and ways to implement an environmental assessment requirement
for new investment. Although Hungary has limited research and
personnel resources to follow a wide range of world environmental
problems, government representatives attended both the Second
World Climate Conference in November 1990 and the first session
of the Inter-governmental Negotiating Committee for a Framework
Convention on Climate Change in February 1991. Hungary also is a
member of the Montreal Protocol.
With the introduction of democracy and the formation of
political parties, environmental organizations have lost some of
their status as mass pressure groups on behalf of political change.
Support for environmental causes, within the various political
parties, is more individualized now. More dedicated
environmentalists are now settling down to work on basic problems.
Industries and local governments also are seeking direct assistance
in tackling long-neglected environmental disasters that can no
longer be overlooked. At the same time, international exchanges
with the United States and Western Europe are expanding and
increasingly are supported by private organizations.
Poland
Economic, Trade, and Commercial Issues. Poland's former
centrally planned economy is undergoing a profound, historically
unprecedented, and difficult transformation to a market economic
system based on private ownership and full integration with the
international trading system. The government's economic
transformation program aims to stabilize and restructure an
economy plagued in 1989 and early 1990 by near hyper-inflation,
severe consumer goods shortages, a highly unstable currency, and
inefficient industrial monopolies. The government managed to rein
in inflation by withdrawing subsidies and limiting wage increases
while balancing the budget and restricting money supply growth;
inflation now hovers around 4%-6% a month. Poland's currency, the
zloty, is internally convertible and remained stable in 1991, while
goods and services are much more widely available.
After an initially slow start, privatization of the Polish
industrial sector has begun, with the first five companies
privatized by public offer and many more due for privatization in
1991. A stock market is getting underway, which will further
support the government's privatization policies. The real standard
of living fell in 1990. Measured production declined as well.
Unemployment, previously disguised, has grown to nearly 1.5
million persons, about 7% of the industrial work force, and is
continuing to rise. The average family now spends about 75% of its
income on food and shelter. Major bright spots in the Polish
economy include an export boom and a rapidly growing (23%-26% in
1990) private non-agricultural sector. Despite the hardships
outlined above, Poland has been free of prolonged and/or massive
worker protests, although strikes have occurred. However, public
grumbling about rising economic hardship has been growing.
The Polish Government welcomes and encourages both direct
and indirect foreign investment and trade. President Walesa has
made the attraction of foreign trade and investment a central pillar
of his presidency. The government is committed to improving the
flow of information available to foreign businesses in Poland.
Senior Polish officials routinely make themselves available to
visiting businessmen and frequently travel abroad on trade and
investment missions.
Poland's decision to unify the exchange rate and to make the
Polish zloty convertible has greatly clarified the business climate
for foreign investors and traders. Poland also has substantially
reduced tariff rates and has worked to liberalize the overall trading
regime, including eliminating most non-tariff barriers.
Science and Technology. US scientific and technical
cooperation takes place with Poland under a Scientific and
Technological Cooperation Agreement signed in 1987. It provides
for cooperation across a number of disciplines, including basic
science, earth, and atmospheric sciences; engineering research;
agriculture; health and medicine; the environment; energy, forestry,
and wildlife; and mining research. Poland established a new State
Committee for Scientific Research in January 1991 to oversee the
organization and funding of all scientific research in the country.
Environment. Poland's air and water environment was greatly
damaged during the decades under communism. In view of the
critical need to address such environmental degradation, the
Support for East European Democracy (SEED) Act of 1989 authorized
the US Environmental Protection Agency to establish an air-
monitoring network and provide equipment for monitoring, analysis,
and treatment of wastewater and drinking water in Krakow. Initial
shipments of equipment for both the air and water projects are
expected in the first half of 1991.
Since 1989 and especially in 1990, the Polish Government has
moved aggressively to sign and ratify international agreements
such as the Montreal Protocol and Vienna Convention on Protecting
the Ozone and the Convention on Long Range Transboundary Air
Pollution. Poland attended the first session of the Inter-
governmental Negotiating Committee for a Framework Convention
on Climate Change. It is working with the United States to assess
emissions of greenhouse gases from Poland. Poland also is working
closely with other countries in the region, including
Czechoslovakia, Hungary, Germany, and the Scandinavian countries
to address common environmental problems caused by industrial
waste.
Romania
Economic, Trade, and Commercial Issues. Romania's
performance under Basket II has continued to improve over the past
year. Shortly after the May 20, 1990, elections, the Romanian
Government prepared an extensive package of economic reform
legislation to create a legal basis on which to build a market
economy. The highlights of the legislation are the laws on land
reform, privatization of state enterprises, private enterprise
creation and foreign investment. The reform package addresses
liberalization of internal prices, convertibility of the leu, budget
deficit control, and external account balance. Bureaucratic
obstructionism and legal ambiguities, however, have impeded
implementation of significant reforms and private sector
development. Consequently, this has raised questions about the
sincerity of the government's commitment to the establishment of a
true market economy.
Romania is in a state of transition from a highly centralized,
public sector-dominated economy to a market economy, with
expanding private sector activity. In September 1990, Parliament
passed a privatization law which established that all state
enterprises, excluding the railroad; post office;
telecommunications; and enterprises in the defense, nuclear,
extractive, and energy-producing sectors should be reformed as
corporations. These corporations will have autonomous
management and will be privatized via the distribution and sale of
shares to Romanian citizens and foreign investors. How to assure
equality of access to newly privatized enterprises (especially to
prevent unfair access by members of the former nomenklatura)
remains a subject of concern. In November 1990, Parliament passed
the Commercial Societies Law which established the legal basis for
the formation of corporations, partnerships, and sole
proprietorships. Most state enterprises, including foreign trade
companies, have now reconstituted themselves as corporations,
though the government still owns all the shares. A law governing
the implementation of the initial distribution to Romanian citizens
of the first 30% of the shares, as well as subsequent sale of the
remaining shares, currently is under consideration.
In addition to the recognition of private property in the draft
constitution, a land reform law was promulgated in February 1991,
which established private ownership of agricultural land. Romanian
citizens--but not foreigners--are now theoretically able to have
title to, sell, buy, will, and inherit land, but there are still
restrictions on the amount of land that can be owned and how it can
be used.
The monopoly on foreign trade previously held by state-owned
foreign trade organizations has been abolished. Import and export
licenses are now granted automatically to all importers/exporters
unless they want to trade in shortage commodities such as
processed foods or in items controlled for non-proliferation
reasons. The tariff system has been revised to conform to GATT
rules and the use of quotas has been abolished except for instances
in which temporary quotas can be justified to protect infant
industries. Government procurement practices have been changed as
well. Now tenders are published and competitive bids are solicited.
The most important stimulus to private sector development
has been price liberalization. In February 1990, prices for food
products produced on individual plots were decontrolled. On
November 1, 1990, prices of all but essential commodities--basic
food items and residential energy and communications--were
liberalized. Prices were decontrolled for those goods for which
there exist three or more competing suppliers. However, prices for
most goods were raised to cover what the government deemed to be
reasonable production costs plus some profit.
Romania has adopted an IMF stabilization program with
stringent monetary and fiscal policies in order to try to reverse the
post-revolution decline in GNP. In addition to raising domestic
prices in order to stay within budget deficit limits, the government
has removed controls on interest rates, imposed money supply and
credit growth ceilings in order to avoid dangerous levels of
inflation, and devalued the leu for the third time to help stimulate
Romanian exports. It also has launched an inter-bank exchange rate
system in order to facilitate the importation of raw materials and
capital goods, and to squeeze the black market. The plan is to
expand the range of transactions carried out on this market until
the leu can be made fully convertible. Inconvertibility of the leu
has been a major disincentive to the foreign investment needed to
rebuild an economy run down after 10 years of harsh austerity
imposed by the Ceaucescu regime in order to repay all of Romania's
foreign debt.
The Romanian Government is committed to minimizing the
social costs associated with economic restructuring. A new social
security system, funded by a payroll tax, has been created to
finance expanded retirement and disability benefits. Over the past
year, unemployment benefits have been paid to people who lost their
jobs due to enterprise closings and layoffs. A new worker
retraining program is being developed. Both the November 1990 and
the April 1991 price increases were accompanied by salary and
pension increases. In April 1991, student allowances, new mothers,
and families with children, also were increased. However, in order
to avoid an inflationary spiral, these payments are taxable and are
not indexed to the consumer price index. Unfortunately, the
government has used the issue of social responsibility to move
slowly in dismantling its dominant position as the producer and
distributor of both consumption and production goods.
Romanian receptivity to foreign businesses continued to
improve during the reporting period. As a general rule, businessmen
are treated well, as Romania seeks to expand its commercial ties
internationally. Although most foreign visitors, including all those
from Western Europe and the United States, are still required to
obtain entry visas, these may be obtained without difficulty at
Bucharest's international airport. Visas are not, however, issued to
travelers entering the country by train. Businessmen are free to
travel anywhere in Romania and visit factories and places of
business at will. Since September 1990, Chambers of Commerce
have been established in many provincial cities and are slowly
starting to develop programs to attract foreign businessmen.
There are no laws that prohibit the establishment and
operation of foreign businesses in Romania. There are, however,
practical impediments that hinder the efficient operation of such
businesses. Access to Romanian officials and private businessmen
is virtually unlimited, and business discussions are open and
detailed. On the other hand, Romanian commercial laws, as well as
the persons administering them, are constantly changing, and it is
difficult to get concise answers to such questions as how to open a
checking account. Legal interpretations of more technical issues
vary widely. The Chamber of Commerce in Bucharest is technically
the organization to which foreign businessmen should turn to obtain
assistance, but the Chamber has proved to be an inept player in
business development. No general system for locating rental space
yet exists, and rents and means of payment vary, although payments
from foreign businessmen generally are demanded in hard currency
instead of Romanian lei. Visiting American businessmen have been
the subject of direct and indirect bribery solicitations in order to
rent offices.
The Romanian Government has taken steps to improve its
statistical economic reporting. Work is being done to correct the
false data presented during the Ceaucescu years. The National
Commission for Statistics publishes a monthly review of key
economic indicators, and a 1990 statistical yearbook was published
in February 1991. Bilateral trade statistics are available upon
request from the Ministry of Trade and Tourism.
As the government works to put into place a market economy,
Romanian businesses are beginning to recognize the benefits of
advertising and promotion, both of which were ignored under the
Ceaucescu regime. Romanian television now carries commercial
advertisements for foreign and domestic businesses as well as spot
promotions for government and privately sponsored events. The
amount of print and billboard advertising continues to increase. The
Bucharest Chamber of Commerce continues to organize the
Bucharest International Fair, which, held annually in October, is the
nation's premier trade show event. A spring fair, devoted to
consumer goods, will be reinstated in 1991 after an 11-year hiatus.
Approximately 12 smaller, specialized trade exhibits also are
planned for 1991. Publicom, the advertising arm of the Chamber, is
responsible for promoting all these events and is approaching the
task in a more sophisticated, Western-style.
The Romanian Government is eager to receive management
training assistance. The most frequently expressed desire is for
mid-level management training, but government representatives
also show a keen interest in technical business skills, finance and
banking, trade administration, and similar subjects. Romanian
invitees to government or privately sponsored programs and events
in the United States now appear to have no problems receiving
permission to attend, and American sponsors of programs in
Romania are openly encouraged.
In March 1990, Romania revised its 1972 foreign investment
law to make it more attractive. The changes, however, were not
sufficient to attract the desired level of foreign business. As a
result, in October a new organization to promote foreign
investment, the Romanian Agency for the Promotion of Foreign
Investment and Coordination of Economic Assistance (ARPIS), was
created and charged with drafting a new foreign investment law.
The new version will increase the amount of annual local currency
profit that may be repatriated in hard currency from a flat 8% of
capital investment to between 8% and 15%, depending upon industry
sector. Agriculture, food processing, and tourism are priority
sectors receiving the highest benefits. The law also provides tax
benefits to investors.
The government states that 700 new joint ventures have been
established since the revolution, 132 of them with US participation.
The vast majority of these, however, are small operations with
limited capital participation. No major American companies have
concluded equity joint ventures in Romania since the revolution,
although many Fortune 500 companies have expressed interest in
investing in Romania. Most potential American investors are
reluctant to commit resources to operations in Romania due to the
uncertainty of the Romanian political and economic situation and
the inconvertibility of the leu.
The situation in regard to small- and medium-sized
enterprises is somewhat brighter. Since the passage in February
1990 of a law authorizing the creation of small companies (those
employing 20 persons or less), some 50,000 such enterprises have
been registered, but most are service oriented, have limited
financial means, and have yet to make any substantial in-roads into
the state-dominated production or distribution systems. Business
operating conditions in Romania are still far from ideal.
Business amenities such as hotels, restaurants, vehicle
rentals, foreign- language newspapers, typing and copying services,
and telecommunications facilities have improved little since the
revolution, and foreigners are still generally charged dollars for
these services. As of November 1990, air travel within Romania by
foreigners has to be paid for in hard currency as well. Availability
of office space, equipment and furnishings also is limited, making
the setting up and supplying of an office difficult.
Science and Technology. An agreement between the US
National Science Foundation and Romania's National Committee for
Science and Technology (NCST) expired. Since then, the NCST has
been abolished. The Ministry of Education and Science has
expressed interest in negotiating a new agreement. Romanian
scientists have been active in re-establishing international
contacts. Currently, scientific exchanges are made by a variety of
non- and quasi-governmental organizations. Exchanges and contacts
are free from interference by the Romanian government.
In early 1991, agreement was reached to convert the US-
provided Triga research reactor from highly enriched uranium to
low enriched uranium fuel use. The agreement calls for the US
Department of Energy to convert the fuel and to provide technical
assistance for reloading the reactor.
Environment. Environmental groups have formed several
ecological political parties and are represented in the Parliament.
The new Ministry of Environment is an active participant in regional
and global environmental meetings. Romania is active in both the
Inter-governmental Panel on Climate Change and the International
Negotiating Committee for a Framework Convention on Climate
Change.
The Ecological University of Bucharest, the first of its kind in
Eastern Europe, opened in September 1990. A private academic
institution, it will grant degrees in medicine, engineering, natural
sciences, and law, and will carry out scientific research in relevant
environmental fields.
USSR
Economic, Trade, and Commercial Issues. Until recently, the
Soviet Union had no free, democratically organized trade unions.
The official trade union movement, which officially embraced
nearly all Soviet workers, acted largely as a "transmission belt" for
management, rather than representing workers' interests. The
unions were effectively controlled by the Communist Party and
included as members both management and workers. As a result,
workers' wage, health, and safety interests were poorly served.
In response to this situation, Soviet coal mines in 1989 staged
several long-running strikes and organized a loose network of
strike committees to represent their interests. These strike
committees have since coalesced into the first major free,
independent, and democratic trade union in Soviet history--the
Independent Miners' Union (Russian initials: NPG), founded in October
1990 at the Second Independent Congress of Soviet Miners in the
Ukrainian coal mining center of Donetsk. The Soviet authorities
have, to date, permitted this new union to organize, develop, and
establish contacts with trade unions abroad.
In addition, the coal miners of the Western Siberian Kuzbass
region have joined with workers in other industries there and in
several other regions of the Russian republic to form the
Confederation of Labor (COL), an independent labor movement
espousing economic reform and democratic political change. The
NPG and COL are closely linked and cooperate with each other. In
addition, several other smaller independent labor movements exist.
Forced labor is not a major element of the Soviet economy,
although Siberian convicts are reported to work in the logging
industry and perform other tasks. Employment discrimination on
the basis of race and language is not presently a serious problem,
although exacerbated ethnic tensions in some republics may
influence hiring practices. Job discrimination on the basis of
gender is a more serious problem, and there are very few women on
the higher rungs of the economic and political ladders.
Until recently, religious believers reported significant
discrimination in the work place. While anti-religious prejudice
continues to exist, the strong revival of religious activity has
apparently lessened harassment of believers. While not an official
requirement for holding a leading position in trade or industry,
Communist Party membership remains a de facto requirement for
advancement in many cases, and the upper ranks of key branches of
the Soviet economy are still dominated by party members.
Currently, Soviet fiscal and monetary policies do not
encourage workable, sustainable economic growth, due to the
inability and refusal of the Soviet Government to take meaningful
steps away from centralized planned economy. Repeated attempts
by the government to devise a balanced economic reform program
have failed, with the economy entering a severe recession in 1990,
according to official Soviet economic statistics. Important sectors
such as coal and petroleum showed decline in output, while much of
the best harvest in years went uncollected due to poor organization
and lack of resources. Due to a severe housing shortage, labor
mobility in the Soviet Union is very low, making it difficult to
allocate labor resources from old, outmoded industries and
industrial centers to areas and industries of potential growth. As
in the past, the Soviet industrial economy remains dominated by the
military-industrial complex. Efforts at conversion of defense
industrial capacity to civilian production have been fitful,
uncoordinated, and largely ineffective so far.
Although the Soviet leadership is publicly committed to
adopting policies designed to stimulate trade and foreign
investment, in fact, only limited progress has been achieved in this
area. Moreover, Soviet economic legislation regulating foreign
investment, which appears to be evolving in the right direction,
still contains ambiguities. Regulation of capital flow is complex
and contradictory. Laws in both areas are subject to constant
change on both the national and republic level. The quick succession
of impractical and poorly conceived economic reform plans also has
damaged the investment climate.
The Soviet currency, the ruble, is inconvertible externally and
increasingly inconvertible internally. As a result, internal barter
trade has been growing rapidly, while the increasing internal
inconvertibility of the currency has pushed individual regions,
cities, and even enterprises into economic autarky and isolation.
This has further strengthened the tendency toward economic
contraction. In the absence of an externally convertible currency,
the Soviet Government has been hard-pressed to define effective
and meaningful policies on the repatriation of profits. Essentially,
companies establishing manufacturing operations in the USSR can
achieve a hard-currency profit only by exporting a portion of their
output to Western markets. Given this state of affairs, significant
foreign investment is unlikely outside the energy sector, where
hard currency profits can easily be generated by oil and gas exports.
Despite several years of attempted economic reform, most
prices in the Soviet economy are set by the central government,
rather than by the market place. Prices on mostly unregulated
farmers markets are high and effectively beyond the reach of most
Soviet consumers. Heavy monopolization of industry, trade, and
services and excess liquidity make price decontrol difficult in the
case of many industries and sectors.
Although social equity is a prime official concern of the Soviet
government's economic policy, its inability, so far, even to stabilize
the economy has led to declining living standards for most Soviet
citizens. Consequently, this has helped to generate great
frustration, rising social tensions, and a growing number of strikes
and disturbances.
Despite the passage of landmark legislation on property and
land in 1990, private ownership of most productive assets, land,
and housing remains insignificant. Most land is considered state
property under the jurisdiction of local councils of people's
deputies. Recent reform legislation allows small-scale, long-term
leasing of farm land and of plots for cottage construction. The
concept of intellectual property rights is undeveloped in the Soviet
economy.
While the top Soviet leadership has repeatedly stated its
intention to open the country to foreign investment, progress in this
area has been slow. The inconvertibility of the ruble is one major
obstacle, since it hinders arrangements for the orderly repatriation
of profits earned by foreign investors. Yet another key obstacle to
greater foreign investment is the continued absence of legally
recognized land ownership rights in the Soviet economy.
Both the central and republic governments continue to assert
that most key industrial assets and natural resources should be
state property, and that their exploitation should be regulated by
state bureaucracies rather than the market place. The center and
the republics are struggling for control of key resources and this
"war of laws" has had a chilling effect on the development of
foreign investment in the USSR. For example, the division of hard-
currency profits derived from the exploitation of mineral resources
between the central and republic governments has been a subject of
intense controversy. In such a confused environment, it has been
difficult for a foreign investor to know which signature makes a
contract valid.
The absence of land ownership rights also means that foreign
investment by private firms in the USSR acquires the character of
an enclave within the Soviet economy, rather than fitting
organically into the economic scene, as is the case in free market
countries. Moreover, Soviet commercial legislation on foreign
investment, in general, and joint ventures, in particular, has often
been criticized for vagueness, impracticality, and a lack of internal
consistency.
Soviet commercial legislation has been in a state of constant
flux in recent years due to numerous legislative revisions in the
all-union and republic legislatures. In addition, the attempted
assertion of greater economic sovereignty by union and autonomous
republics in the USSR has meant that republic and local regulations
and laws regarding business activity can differ from all-union
legislation.
Some steps have been taken improve the access of foreign
businessmen to Soviet businessmen. Some US businessmen not
resident in Moscow have been given Soviet multiple-entry visas.
However, it is still necessary for most US businessmen applying for
a business visa to receive support from a sponsoring Soviet
organization. This naturally hampers most US businessmen wishing
to enter the Soviet market for the first time and who have no
established Soviet contacts.
The Ministry of Foreign Economic Relations maintains that it
has already implemented a promise made in connection with the
new US-Soviet trade agreement to afford US businessmen an
accelerated process in applying for accreditation for a
representative office in the USSR, which should lead to a decision
on accreditation within 60 days of application. During the past
year, a number of US firms have received accreditation and,
currently, there are 43 US firms with accredited offices in Moscow.
A number of additional US firms have applications for accreditation
pending.
Current statistics published by the Soviets are readily
accessible but are inadequate for use in making commercial
decisions and business judgment, primarily because they lack
enough detail. Other types of commercial information, such as lists
of Soviet enterprises and identification of their activities, are still
their infancy. For example, more than 20,000 firms have been
authorized to enter into foreign trade, but the list of such firms
published by the Ministry of Foreign Economic Relations mentions
only several thousand.
Access to business contacts and commercial officials
continues to be without official hindrance. Due to poor
communications and Soviet business practices, however, attempts
to reach and set up appointments are frequently frustrating.
Poor international telecommunications links make it
especially difficult to arrange meetings on short notice from the
United States. The hotel infrastructure in Moscow and other Soviet
cities is still inadequate, and it is frequently difficult to obtain
hotel reservations. Any major improvement in this situation and in
the present unavailability of suitable office and residential space
for Western businessmen will depend on further Western
investment in the Soviet infrastructure and, thus, will take time.
The Soviet transport system is a complex mixture of
economically available air transport--tickets are very cheap, if a
reservation can be had; an inadequate road system; and an aging rail
network which is the principal cargo carrier for the country. The
dimensions of the problem are so large that speedy progress is
unlikely.
Trade promotion and other marketing activities, including
advertising, consulting, and other business services, as well as the
organizing of seminars, fairs, and exhibitions, are now possible,
although very expensive. A number of Western trade fair
authorities and other firms specializing in trade fairs and exhibits
have been able to organize trade fairs and exhibits in the USSR.
Numerous seminars also are now being organized to take place in
the Soviet Union.
Science and Technology. The Soviet Government continues to
make available increasing amounts and types of scientific and
technical data, and the trend appears to be to allow such decisions
to be made at a lower bureaucratic level. Generally, cooperation is
willing and open; however, in the effort to find hard currency to
supplement diminishing budgets, Soviet science organizations of all
kinds are trying to market their data and may require pre-payment.
No incidents were reported during the period under review of
deliberate, official denial to Soviet scientists of the freedom to
establish and maintain direct contacts with professional colleagues
in other countries. Indeed, access to computer "bit-net" and "E-
mail" - type networks, for example, may be becoming easier, even
for non-official groups.
However, continued official requirements for exit approval,
and logistical and technical--computer, telephonic, and postal--
communications difficulties, ensure that Soviet scientists cannot
establish and maintain direct contacts with their colleagues in the
same sense as their Western counterparts. To the extent that exit
permission is speeded by bribes and the judicious use of influence,
corruption is also a hindrance. However, obstacles to free
scientific interchange appear to be primarily technical and
logistical, rather than political.
Environment. The USSR is a party to the Convention on Long-
Range Transboundary Air Pollution, the Vienna Convention For the
Protection of the Ozone Layer and the Montreal Protocol on
Substances that Deplete the Ozone Layer. The Soviets participate in
the Inter-governmental Panel on Climate Change and are active in
the International Negotiating Committee for a Framework
Convention on Climate Change.
The responsible Soviet organizations have stepped up their
participation in numerous multi-lateral fora and continue to give
international environmental issues a high profile. The Soviet
Government has recently raised the State Committee for
Environmental Protection to the level of a ministry, the Ministry for
Utilization of Natural Resources and Environmental Protection.
However, more significant than this elevation in status will be the
type of environmental legislation passed by the Supreme Soviet. In
the past, organizations have been beset by funding problems and
lack of legislation defining jurisdiction or enforcement
mechanisms; should this situation continue, the elevation of the
environmental organization will not make a difference.
Similarly, while the USSR is party to about 50 international
environmental agreements, the country's lead environmental agency
has direct responsibility for only a small number of them. A well-
functioning mechanism for effective environmental policy-making
and enforcement is lacking. At present, the USSR is unprepared to
implement pollution reduction targets and accelerated reductions in
the production or consumption of various pollutants, including
chloroflouro-carbons (CFCs) and will not be able to meet
international environmental commitments while experiencing
political and economic changes and crises.
Soviet authorities generally tolerate and encourage
independent environmental activism. A semi-formal "public"
council, sponsored by the governmental body responsible for
environmental protection--and chaired by a prominent
environmental activist who is the incumbent deputy chairman of the
Supreme Soviet Ecology Committee--serves as a clearinghouse for
citizen and community concerns about the environment. A number
of other, less "official" organizations exist and function without
apparent governmental hindrance; during recent official bilateral
environmental discussions, both US and Soviet environmental NGO's
freely participated. Moscow was the site in late March of an
international non-governmental environmental conference.
Environmental data, which began to be published in 1988, continues
to become more and more available to the public.
A large proportion of members of the Soviet and republic
parliaments campaign on environmental issues, but the strength of
these sentiments has not yet been truly tested against economic
and political concerns. In the case of the Aral Sea, for example, the
various republic officials concerned appear unable to formulate a
cohesive environmental strategy in the face of economic concerns
(agricultural irrigation demands) and inter-ethnic rivalry.
Environmental concerns appear to carry the most weight when they
are allied with other forces, such as nationalism, in the various
republics.
Yugoslavia
Economic, Trade, and Commercial Issues. Yugoslavia has long
been an active participant in world markets, although the internal
political problems of the reporting period adversely affected the
Yugoslav economy and business activity. Since the Yugoslav-Soviet
split in 1948, Yugoslavia has followed a fundamentally different
course than the other socialist countries in the region. This is most
evident in the breadth of the country's international economic
relations. Yugoslavs have traveled, worked, and studied in the West
for more than 30 years, providing them with a generation of
exposure to Western business practices, education, culture, and
products. Such exposure has influenced Yugoslavia's decentralized
economic system, within which enterprises make independent
business decisions on all matters, including those dealing with
foreign investors and exporters. In the agricultural sector, private
farmers own 85% of the country's agricultural land, and there has
always existed an active, if small, private sector economy. No
other East European socialist republic in the region could claim
these market credentials.
The Yugoslav Government's 2- year-old economic reform
program has focused on eliminating hyper-inflation, introducing a
convertible dinar, rehabilitating the banking system, and privatizing
enterprises. To reach these goals, the government of Prime
Minister Ante Markovic devoted its efforts in 1989 to laying the
legislative groundwork for the transformation of a socialist
economy to one based on market principles. In 1989, the Federal
Assembly enacted legislation that opened the way for greater
foreign investment in the country, liberalized trade, established a
program of ownership restructuring, and loosened restrictions on
private sector businessmen. The fruits of these efforts were
realized in 1990 as foreign businessmen concluded more than 2,000
new investments with Yugoslav firms and Yugoslavs established
some 50,000 new private companies. In fact, the first half of 1990
saw the Yugoslav Government reach significant economic
achievements, including the virtual elimination of inflation, strong
growth in foreign exchange reserves, and the establishment of an
internally convertible dinar that increased public confidence in the
economy.
A June 1990 loosening of monetary controls and wage
restraints, however, released a new surge in wage bills and
inflation. A double blow from Gulf war sanctions (damaging to
Yugoslav firms working in Iraq and Kuwait, and to Yugoslav oil
supplies) and a drought that severely reduced agricultural output
took even more air out of the federal government's reform program.
By December 1990, foreign exchange reserves were falling by $1
billion each month, forcing the National Bank of Yugoslavia to pull
out of the foreign exchange market. Controls put on withdrawals
from Yugoslavia's foreign currency accounts have led to a sharp
decline in remittances from workers employed abroad, while
political instability has destroyed the country's normally lucrative
tourist industry. Privatization was slowed by conflicting
republican policies which, in practice, overrode federal law. The
pillars of the reform program--convertibility, privatization, and
control of inflation--were seriously damaged. Further national
reform awaits a political consensus among the country's six
republics, though some progress is being made on reform issues at
the republican level.
Although the federal government's reform program is stalled,
the government remains committed to a prudent economic strategy
that includes cutting public expenditures and maintaining control
over the monetary system, efforts that are vital to economic
reform and securing Western assistance. Furthermore, the
government has stressed freer pricing of goods and a more open
trade policy that has greatly expanded access to Yugoslavia's
markets. All types of property now have equal legal status in
Yugoslavia, and increased protection of intellectual property has
been the result of amendments to existing legislation made in early
1990.
Science and Technology. US science and technology
cooperation with Yugoslavia is carried out under a bilateral
scientific and technological cooperation agreement signed in 1988.
The United States and Yugoslavia have had a joint research program
in effect continuously since 1972. Each government contributes in
generally equal amounts to fund joint research activities. The joint
program provides for cooperation across a number of disciplines,
including basic science, earth and atmospheric sciences engineering
research, agriculture, health and medicine, the environment, energy,
and mining research. The scientific and technical cooperation
program is structured particularly to respond to the interests of
each of Yugoslavia's republics, and joint work proceeded during the
reporting period without significant interruption despite political
and ethnic tensions.
Environment. In January 1991, the United States participated
in a Group of 24 (G-24) environmental fact-finding mission to
Yugoslavia organized by the European Community to identify
programs and projects in the environment sector that could be
considered for possible funding by the G-24 and/or the PHARE (EC)
program. Projects in three main categories (policy/institution-
building, feasibility studies for large investment projects, and pilot
projects with near-term mitigation impact) were submitted to the
mission by the Yugoslav authorities. The numerous senior Yugoslav
participants from various republics representing government,
academia, and the private sector reflected a strong interest in
environmental issues.
Yugoslavia is a signatory to the Montreal Protocol. It attended
the first session of the International Negotiating Committee for a
Framework Convention on Climate Change and participated in the
Inter-governmental Panel on Climate Change.
Chapter Five--IMPLEMENTATION OF HUMAN RIGHTS-RELATED
PRINCIPLES AND OF BASKET III
(HUMAN RIGHTS AND OTHER FIELDS OF COOPERATION)
Cooperation in humanitarian and other fields is covered under
Basket III of the Helsinki Final Act. In this Basket, CSCE states
have committed themselves to respect human rights and to further
human contacts, information flow, and cooperation and exchanges in
the fields of culture and education. The Document of the
Copenhagen Meeting of the Conference on the Human Dimension
marked a significant step forward in Basket III, elaborating
freedoms such as free and fair elections and rule of law as part of
basic human rights. Copenhagen reflected the changing climate in
Eastern Europe and the Soviet Union, as well as the continuing
improvement in East-West relations. Following are assessments of
the performance of certain CSCE countries and Albania regarding
Basket III commitments.
ALBANIA
Human Rights
Freedom of Religion or Belief. In May 1990 the legislature,
declaring that religion was separate from the state and that the
question of religious belief would be a matter of conscience for
every individual, amended the 1967 ban on all religious practices.
The law permits Albanians to practice their religion individually
but left a ban on collective worship. The government also
decriminalized "religious propaganda," thereby allowing some
religious services to be held without official interference. While in
1990, Albanian officials told a US delegation that nobody in Albania
wanted to open places of worship, an increasing number of mosques
and churches have been re-opened and reportedly are being used
with or without official approval.
Freedom of Expression. During 1990, all news media continued
to be government-controlled, and the government prohibited
criticism of the state and party leadership or their policies.
However, there were indications that media criticism of some
aspects of Albanian society, such as the pervasive problem of
corruption, did increase. In December 1990, the government
announced that newly registered political parties would be able to
publish their own newspapers; both the Democratic Party of Albania
and Republican Party began publishing papers in early 1991.
Nonetheless, these papers only received limited allocations of
newsprint and encountered problems with circulation. Journalists
and opposition figures also contended with threats, intimidation,
and physical violence attributable to the government. During the
spring 1991 election campaign, the opposition parties were allowed
only limited access to the government-controlled media.
Art and literature remained subject to state control and
censorship, and the authorities continued to manipulate scholarly
inquiry and publications for political purposes.
Freedom of Association and Peaceful Assembly. On July 31,
1990, a legislative decree established the freedom to assemble but
with strict limits on meetings and sanctions against violators. A
few independent associations and organizations began to organize in
December. On December 9, 1990, Tirana University students
demonstrated against electricity shortages and demanded political
liberalization. The government responded by agreeing to the
formation of independent political organizations. In mid-December,
the Democratic Party of Albania, comprised mostly of intellectuals,
students, and urban workers, was founded and legally registered.
Other parties and organizations have since been allowed to form.
Participation in these groups, however, has not been without
retribution or free of threats and intimidation.
The government reacted more harshly against other
demonstrators in other areas of the country. Reports indicated that
in Kavalje, Elbasan, and other cities, the army was used to stop
demonstrations. Some demonstrations reportedly included attacks
on public buildings, the looting of stores, and the burning of police
cars and other vehicles; others we