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Balkan Crisis Report No. 363

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    WELCOME TO IWPR S BALKAN CRISIS REPORT, No. 363, August 30, 2002 MACEDONIA: AHMETI ARREST THREAT. The nationalist government has angered the West by
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      WELCOME TO IWPR'S BALKAN CRISIS REPORT, No. 363, August 30, 2002

      MACEDONIA: AHMETI ARREST THREAT. The nationalist government has angered
      the West by threatening to detain an ethnic Albanian leader. IWPR team
      reports from Skopje and London.

      SERBIA: SOLANA TO PUSH FOR UNION DEAL. Election fever holds up progress
      on linking Serbia with Montenegro. Daniel Sunter reports from Belgrade
      and Boris Darmanovic reports from Podgorica.

      ALBANIA: JOBLESS FLOCK TO RIVERIA. The country's fledgling tourist
      industry is being bolstered by the influx of impoverished northerners.
      Denisa Xhoga reports from Vlore.

      COMMENT: 500 DAYS OF DJINDJIC. Allegations of corruption and
      mismanagement have obscured some very real progress by the post-Milosevic
      administration. Biljana Stepanovic reports from Belgrade.

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      MACEDONIA: AHMETI ARREST THREAT

      The nationalist government has angered the West by threatening to detain
      an ethnic Albanian leader.

      By IWPR team in Skopje and London

      Macedonia Friday risked confrontation with the West after the government
      confirmed it had issued an arrest warrant for a prominent ethnic Albanian
      opposition figure, in defiance of last year's Ohrid peace deal.

      NATO's ambassador to Macedonia, Nicholaas Biegman, said any move to
      apprehend Ali Ahmeti, a former rebel leader now heading one of the
      country's biggest political parties, contradicted the terms of the deal,
      which included an amnesty for former fighters.

      After last year's Ohrid agreement curbed secessionist violence in western
      Macedonia, Ahmeti became the leader of Democratic Union of Integration
      DUI, now the largest opposition party, alongside the Social Democratic
      Alliance of Macedonia, SDSM. The DUI espouses a moderate programme that
      supports the unity of Macedonia.

      In spite of his moderation, Macedonian protesters have been calling for
      his arrest since the recent killing of two ethnic Macedonian policemen.

      The arrests threaten to unravel the West's painstakingly assembled peace
      strategy that centered on drawing Albanian militants into the political
      process.

      If the government, comprising the nationalist Internal Macedonian
      Revolutionary Organisation - Democratic Party for Macedonian National
      Unity, VMRO-DPMNE, the Liberal Democratic Party, Democratic Party of
      Albanians, DPA and Party for Democratic Prosperity, PDP, does seize
      Ahmeti, it will almost certainly trigger a new revolt in the mostly
      Albanian west of the republic.

      Some analysts believe VMRO and its partners are counting on a return to
      violence, and the subsequent cancellation of the election, as part of
      their strategy for retaining power.

      As tension threatened to spiral out of control on Friday, heavily armed
      police sealed off an ethnic Albanian village where five Macedonians
      kidnapped by Albanian gunmen are apparently being held.

      Police said the gunmen stopped a bus on the Gostivar highway in western
      Macedonia and seized several Macedonian civilians, threatening to kill
      them if Albanians arrested for the murder of the two Macedonian policemen
      were not freed. The kidnappers said they would kill their five hostages
      by a Friday morning deadline, a police source in Tetovo said.

      Large numbers of police with a dozen armoured personnel carriers were seen
      outside the village of Zerovjane, halfway between Tetovo and Gostivar.

      The two policemen were killed on August 26 in Gostivar. Danail Jankovski,
      47, and Aleksandar Nikolic, 39, died when drivers of a car with foreign
      license plates fired at the checkpoint where they were on duty, leaving
      the scene at great speed.

      The militant Albanian National Army, ANA, said it was responsible for the
      killing. Although the group is in conflict with Ahmeti, protesters began
      demanding the latter's arrest.

      Within 12 hours of the Gostivar killings, Macedonians from the suburbs
      were blocking roads into the city, building barricades of cars, and buses.
      At a rally that followed, protesters carried placards bearing the
      messages, "Stop Ahmeti and his murderers", and "Ahmeti, we'll catch you".

      The public prosecutor, Stavre Dzikov, and controversial hard line interior
      minister, Ljupce Boskovski, have backed the arrest calls.

      The aim of the protesters was to prevent the DUI leader from reaching
      Skopje and addressing a pre-election rally scheduled for Saturday.

      The headquarters of two Albanian political parties in Skopje were attacked
      on Thursday and the headquarters of the People's Democratic Party, NDP,
      led by Kastriot Haxhirexha, was set on fire. A bomb went off in front of
      Ahmeti's house in Skopje and a Molotov cocktail was also thrown at it.
      There were no injuries.

      Ahmeti's party described the assaults as pressure organised by the
      authorities. In a letter to the international community, the party
      spokesman, Agron Buxhaku, said "certain circles" in the government were
      trying to "organise sabotage, media blockades and arrests of party
      leaders".

      The NDP complained that police did not even investigate the arson attack
      on their headquarters. They said the fire was organised by the ruling
      parties who were jealous of their popularity.

      However, the police suggested the blaze was the work of other ethnic
      Albanians. The interior ministry blamed terrorist groups trying to
      destabilise the country two weeks before the election.

      Dzikov, a VMRO member, backed the call for Ahmeti's arrest, saying if
      charges were brought against any citizen "they should be arrested so that
      law and order will be respected". Dzikov claimed the
      internationally-brokered amnesty for rebel fighters did not apply to
      anyone charged with terrorism.

      Leaders of the four biggest Albanian parties on Friday, including the DUI
      and rulling DPA, strongly condemned the kidnapping of Macedonian civilians
      near Gostivar and the recent increase in violence.

      VMRO and its Liberal Democratic Party partners have used the crisis to
      demand that the opposition Social Democratic Alliance of Macedonia sign an
      agreement, politically isolating Ahmeti. They want all Macedonian parties
      to promise not to form a coalition with the DUI after the election. "This
      is not pre-election marketing, but a serious proposal for protecting the
      national interests," the VMRO said.

      Some of the smaller parties are deeply sceptical of the motives for such
      an agreement, suggesting the killing of the two policeman was organised by
      government agents to increase tension.

      Incidents resulting in injuries have, however, become an almost daily part
      of Macedonia's pre-election life. On 15 August, two soldiers were lightly
      wounded in an attack on a barracks in Skopje. The attackers fired from
      automatic guns and threw a bomb at the troops. On the same day, an ethnic
      Albanian from the village of Aracinovo wounded a member of Ahmeti's party
      in a fight.

      On 16 August, a car full of weapons exploded on the Skopje-Blace road. On
      the same day, a bomb destroyed a pastry shop in the Kumanovo region, while
      in a separate incident the police said one of its checkpoints was attacked
      near the village of Opae.

      Various gangs on the Tetovo-Gostivar highway have been erecting placing
      blockades and robbing drivers.

      The pre-election violence has raised concern for the future of the peace
      agreement in international circles. They fear the killing of the
      policemen, the attacks on the offices of Albanian parties and the road
      blockades herald a potentially dangerous escalation of tension.


      SERBIA: SOLANA TO PUSH FOR UNION DEAL

      Election fever holds up progress on linking Serbia with Montenegro.

      By Daniel Sunter in Belgrade and Boris Darmanovic in Podgorica

      Javier Solana, the EU's foreign and security policy chief, is due in
      Belgrade next week to wring agreement from squabbling politicians on a new
      union between Serbia and Montenegro and pave the way for admission of
      Yugoslavia into the Council of Europe, CoE.

      In some quarters, his chances of success are rated high, despite
      politicians in both countries who were until now less concerned with
      reaching agreement than on posturing before voters in the run up to
      national elections.

      Solana's visit comes at a time when a constitutional commission comprising
      representatives of the Serbian, Montenegrin and Yugoslav authorities
      stands deadlocked over what shape the new union should take.

      None of the five drafts - by the DOS coalition in Serbia, the Democratic
      Party of Serbia, DSS, headed by federal president Vojislav Kostunica, the
      Montenegrin and Serbian governments, the Coalition for Yugoslavia in
      Montenegro and the Venice commission set up by the CoE - have met with
      general agreement.

      The general aim is for the two republics that currently comprise
      Yugoslavia to link up and later become the new Union of Serbia and
      Montenegro. Failure to reach an agreement could block Yugoslavia's bid for
      Council of Europe, CoE, membership at the council's parliamentary assembly
      on September 23.

      The two deadlines set so far by the international community have been
      broken and a third, which expires at the beginning of September, has also
      been thrown into question. The big stumbling block is the approach of
      Serbian presidential ballot on September 29 and an early general election
      in Montenegro on October 9. Politicians in both republics fear a
      willingness to compromise might go down badly with voters.

      The proposal for union was advanced by Solana in the Belgrade Agreement,
      signed by Montenegrin and Serbian top-rank officials on March 14, under
      strong EU pressure. Montenegrin president Milo Djukanovic had up to then
      campaigned vigorously for outright independence but, having failed to
      gather enough political support, embraced the deal.

      On June 19 a commission representing the parliaments of Serbia, Montenegro
      and Yugoslavia was set up to devise a draft constitutional charter based
      on the Belgrade Agreement, to ask for a common market, harmonisation of
      economic systems and shared federal institutions.

      The option advocated by Djukanovic's Democratic Party of Socialists, DPS,
      called for a loose federation of the two republics. The Montenegrin
      president faced problems at home from his former pro-independence allies -
      and now must also deal with a strong pro-Yugoslavia opposition, bolstered
      by the defection of his former supporters the Liberal Alliance, in the
      October 9 elections.

      To mollify the disgruntled pro-independence voters, Djukanovic's
      government came up with a programme that steered clear of federal
      institutions and budgets. For a while, it seemed Djukanovic might have
      found an ally in the Serbian prime minister, Zoran Djindjic, Kostunica's
      main rival.

      Djindjic's government presented a draft that tallied closely with the
      ideas of the Montenegrin leader and both authorities accepted it on August
      26. Djukanovic's opponents, the coalition Together for Yugoslavia,
      immediately opposed the idea, as did Kostunica's DSS in Serbia.

      The Serbian prime minister wanted to play down the idea of a federal
      structure, which he feared would improve Kostunica's chances of becoming
      president of Serbia. Kostunica has presented himself to voters as the
      champion of maintaining Yugoslavia as a firm federation. Djindjic argued
      that the solution lay in the hands of the Serbian and Montenegrin
      governments.

      According to Andrija Mandic, one of the leaders of the pro-Yugoslavia Serb
      People's Party in Montenegro, Djukanovic and Djindjic wished to present
      themselves as serious political figures while at the same time
      jeopardising the status of all their rivals - even at the cost of breaking
      up the state.

      The two governments agreed to submit their text of the constitutional
      charter to the DOS coalition for adoption and then offer it to the
      constitutional commission as the final solution. However, things took a
      different turn on August 28 when, under pressure from his partners within
      the DOS, Djindjic was forced to back away from his agreement with
      Djukanovic.

      DOS members such as Nebojsa Covic's Democratic Alternative and Dragoljub
      Micunovic's Democratic Centre, whose backing is crucial to Djindjic,
      concluded the text offered by the two governments differed from the
      requirements of the Belgrade Agreement.

      To prevent rifts within the DOS, the text was modified to define the state
      as a federation and envisaged that federal deputies would be directly
      elected, a formula taken to imply a unitary state. The Montenegrins found
      themselves in disarray.

      The coordinator of the Montenegrin delegation, Dragan Kujovic, said the
      new DOS version could once again slow down the search for a constitution.
      "The text adopted by DOS introduces a few new things that were defined
      differently in the text adopted by the two governments," Kujovic told a
      press conference in the Montenegrin parliament.

      Criticising the proposal for direct elections, Kujovic said, "The state
      union is not a union of citizens, but a union of member-states. Direct
      elections would mean the union had become a unitary state."

      Many DPS politicians concluded on Thursday that it is not possible for
      Djukanovic to accept direct elections to a federal parliament, if he wants
      to win the forthcoming ballot.

      One foreign analyst in Montenegro said, "I presume Djukanovic will tell
      Solana that it won't be possible to reach an agreement before the
      elections and that the constitutional charter could be defined only after
      the trial of strength in Montenegro. I believe Solana will be forced to
      accept this because a compromise is impossible at this time."

      Some analysts in Serbia also believe Solana's efforts are doomed because a
      compromise simply cannot be reached in the heat of an election campaign.
      Belgrade political analyst Ognjen Pribicevic told Radio B92 on August 28
      that the constitutional charter is being used as a political football
      rather than as a vehicle to achieve a solution.

      But there is a growing impression that the EU is strongly determined to fi
      nish the job of defining a new union, and will try to force all sides to
      accept a joint formula.

      The president of the CoE's parliament, Peter Schieder, expressed hope that
      all parties will reach agreement before the assembly's next session from
      September 23 to 27 in Strasbourg.

      Following the DOS decision taken on August 28, Djindjic is also optimistic
      that the issue of the constitutional charter has been resolved. He
      believes the CoE's request that an agreement be reached by September 2 and
      3 will be fulfilled.

      Facing pressure from the international community, similar optimism is
      coming today from Montenegro, despite some reservations. The prime
      minister of Montenegro, Filip Vujanovic, said on Friday that both Serbia
      and Montenegro are ready to accept the conditions for CoE membership, "If
      the constitutional chapter is not accepted by September 23, all economic
      and other aid for Montenegro and Serbia will be cancelled, and we will be
      the only country beside Belarus not to be members of the council."

      The challenge Solana faces is great but one should not forget that he
      managed to achieve the impossible back in March when he talked the
      Montenegrin political elite into giving up on independence.

      Daniel Sunter is IWPR's coordinating editor in Belgrade. Boris Darmanovic
      is an IWPR representative in Montenegro and a journalist with the
      Podgorica daily Publika.


      ALBANIA: JOBLESS FLOCK TO RIVERIA

      The country's fledgling tourist industry is being bolstered by the influx
      of impoverished northerners.

      By Denisa Xhoga in Vlore

      Families seeking to escape poverty in the remote north are boosting the
      tourist industry in the southern Riviera.

      Over the last decade, around 200 families have left decimated mining
      districts in the north, such as Kukes, Has, Diber, Mirdite and Lezhe, in
      search of work in the southern 150-kilometre long Albanian Riviera.

      Rumours of north-south rivalries have been scotched by the warm welcome
      the newcomers receive - with many being given the use of houses left by
      people who've emigrated to Greece.

      "It's enough they take care of my home because there should be someone
      there to look after it," said Ko├žo Dhimitri, an emigrant who comes back
      each summer to open up his bar in the Riviera town of Himare.

      There is no sign of the friction that sometimes accompanies internal
      migration. "If there is any quarrel, it does not happen with the newcomers
      from the north but from the people coming from Vlore for a vacation here,"
      said another Vlore resident, who has built a hotel in Himare.

      After the fall of communism, a large number of Albanians rushed abroad,
      legally or illegally, many of them from the Riviera.

      About half a million Albanian migrants live in Greece - the most popular
      destination - whose remittances boost investment in the Riveria area.

      "There is much construction along the Ionian coastline, bars, restaurants,
      motels, roads," said Himare mayor Viktor Mato. "Consequently there is a
      need for working people."

      Indeed, the newcomers mainly work in construction and have built nearly
      all the new bars that are springing up from Sarande to Butrint.

      Originally from Peshkopia in the north-eastern Diber district, Bekim, who
      did not want to give his full name, has operated a refrigerator repair van
      in the area for the last five summers. "The summer months are good for me.
      People want to rent out their properties - and this provides a lot of
      work," he told IWPR.

      Local attitudes to the newcomers appear fairly relaxed. Agim Shorti, who
      works at the local Butrint museum, said, "There is enough work for
      everyone", adding that the jobs go to those who have the best skills,
      regardless of where they come from.

      Museum head Auron Tare has employed 35 of the newcomers at the area's
      UNESCO-recognised archaeological site, to act as guards, cleaners and help
      in the restoration and maintenance of the castle and its amphitheatre.

      Tare describes the northerners as good, hard working people. "They should
      feel themselves at home because they take care of Butrint. It has visitors
      only in summer and in winter they are the guards of this museum," he said.

      One group of Catholic families from the north has even created a new
      village called Shendelli, beside the 28 km-long Butrint Lake.

      Tare added that with the help of a Japanese grant, they have built an
      elementary school that's one of the best in the area.

      Life may not always be easy for the newcomers, but they are slowly turning
      their quest for a better life into reality.

      Denisa Xhoga is an editor with the Albanian Shekullli newspaper.


      COMMENT: 500 DAYS OF DJINDJIC

      Allegations of corruption and mismanagement have obscured some very real
      progress by the post-Milosevic administration.

      By Biljana Stepanovic in Belgrade

      While many criticisms can be levelled at the government of prime minister
      Zoran Djindjic, it does represent an undeniable break with the past and a
      move towards democracy and free markets.

      >From the ruins left by former leader Slobodan Milosevic, the new
      government has laid a basic foundation for economic reform and for the
      country's eventual accession to the European Union in its first 500 days.

      This worthy achievement has often been overshadowed by an incessant feud
      between Djindjic and his political rival, Yugoslav president Vojislav
      Kostunica.

      According to Kostunica's Democratic Party of Serbia, DSS, and opposition
      parties - who are former Milosevic supporters - the Serbian government has
      not made a single step towards promised reforms; is solely preoccupied
      with its own political image; and is mired in corruption.

      Another of the Djindjic's problems is the legacy of poverty bequeathed by
      the former regime. According to 2000 study, more than a third of the
      population were on or below the poverty line and 18 per cent lived in
      absolute destitution.

      Under Milosevic's rule, the average monthly salary was 107 German marks
      (53 euro) and the average pension 75 marks (37 euro) - an 80 per cent
      decline compared to 1990. The average monthly salary today remains low
      but has increased to around 130 euro, with the average pension at 100
      euro.

      Pensions have fallen ten per cent compared with December, as they are no
      longer tied to salary increases - but at least they are paid regularly.

      It is difficult for the public to let go of the illusion that there is a
      quick fix to Serbia's economic crisis and that living standards could soon
      return to 1990 levels, when Yugoslavia enjoyed a Gross Domestic Product,
      GDP, of 2,700 US dollars per capita. By the end of the Milosevic era, per
      capita GDP barely reached 1,000 dollars.

      Faced with waves of criticism in the run-up to Serbian presidential
      elections scheduled for September 29, Djindjic has argued that his
      government has ushered in an indisputable rise in living standards.

      He has also pointed towards international support for his government's
      reforms, which has generated crucial loans and financial assistance.

      Economic analysts agree that the Djindjic government has pushed through
      three vital laws - on taxes, privatisation and the labour market - in a
      timely manner. These reforms, alongside the issue of cooperation with The
      Hague tribunal, were crucial to persuading the international community to
      start negotiating aid and loans for Serbia's economy.

      A whole host of revenue legislation was overhauled in March and April last
      year, only two months after the government was formed. Tax is now paid on
      total revenue, closing the loophole that allowed evasion through
      fictitious reporting of minimal earnings and profits. Moreover, all budget
      income is publicly documented and no citizen is exempt, which was most
      certainly not the case during the corrupt Milosevic era.

      The Serbian government also adopted a ground-breaking law on privatisation
      at the end of June last year that enabled the scrapping of "socially-owned
      property", an unworkable form of ownership created in the old Yugoslavia
      and unknown anywhere else in the world.

      The primary goal of the privatisation legislation is to see firms managed
      by their real owners. Up 'til now, a firm's workforce was formally in
      control, but in reality the system gave rise to incompetent executives who
      carried no responsibility. That bizarre arrangement saw many factories
      effectively pillaged by unaccountable managers, leading to the virtual
      collapse of the industrial system.

      Foreign investors were not ready to enter the Serbian market as long as
      they were prevented from sacking a single employee - even those who had
      been given permanent leave.

      The new government has mustered the courage to lay off 15,000 workers from
      the Kragujevac-based Zastava car factory. Some 10,000 were made redundant
      as a result of the National Bank of Yugoslavia's decision to liquidate
      four of the country's biggest banks.

      Economists estimate that out of 1.5 million people officially employed in
      the country, around a third are holding "surplus" jobs that are
      unnecessary and obsolete. According to some reports, about 350,000 to
      500,000 people work unofficially in the so-called "grey economy".

      With presidential elections scheduled for September and early
      parliamentary elections in sight, it is difficult to imagine the
      government taking the risk of allowing more redundancies, no matter how
      much sense it makes for economic reform.

      On taking office, the Serbian government defied a powerful lobby that had
      grown rich through petrol imports, by issuing a decree on the oil
      derivatives trade. This permitted only crude oil imports and obliged
      importers to use local refineries, eliminating petrol smuggling.

      The authorities also made significant changes to construction laws,
      threatening prison sentences of up to three years for owners of buildings
      built without valid permits.

      Permit fraud was a visible example of the lawlessness of the Milosevic
      years, depriving the state of tax revenue and enabling the growth of a
      powerful "construction mafia".

      The government has yet to succeed in defeating a chronic and corrupt
      bureaucracy that deliberately prolongs the granting of building permits.

      Another success for the Djindjic government has been reducing the rate of
      inflation that grew to lethal proportions under Milosevic.

      At least part of the credit for controlling price rises belongs to the
      governor of the National Bank of Yugoslavia, Mladjan Dinkic, who has
      reformed the system, shut down the worst banks, provided for the dinar's
      convertibility and ensured that the exchange rate has remain static for
      two years.

      A firm hand on monetary policy is crucial for a country that has lived for
      years under the constant threat of hyperinflation. In 1993, Serbian
      citizens survived inflation of several million per cent. This year its
      forecast to reach just 20 per cent.

      Djindjic's government has brought international financial assistance into
      Serbia for the first time in more than a decade. From October 2000 until
      the end of June 2002, the country received and spent around 1.2 billion
      dollars of aid.

      The authorities have secured a new three-year standby arrangement with the
      International Monetary Fund, new loans from the World Bank and 280 million
      euro for the overhaul of the energy sector. Thanks to this international
      injection, Serbia has survived two winters without serious power
      restrictions.

      But along with the successes of the past 500 days, Djindjic's government
      has made some serious mistakes.

      Many of the opposition's criticisms are valid. For instance, the
      government has failed to convincingly fend off accusations of corruption,
      which has cast a long shadow over the leadership and frustrated its
      progress.

      Djindjic has been unable to account for the decline in industrial
      production, which has fallen by 0.8 per cent in comparison to last June.
      Nor can it explain why exports are up only ten per cent and are worth 882
      million dollars, while imports have shot up by 30 per cent to 2.4 billion
      dollars.

      Opponents claim the authorities lack the political will to enforce
      legislation designed to tax profits made illegally under Milosevic's rule.
      In May last year, an ambitious law was adopted to do so, amid claims it
      would secure a billion euro worth of revenue. Only 50 million euro has
      been collected so far.

      Foreign investors say the judiciary is the weakest link in economic reform
      efforts. Inefficient, outdated and still favouring debtors over creditors,
      the courts are far from the kind of fair arbiter needed in a competitive
      marketplace.

      There are other missing pieces in the reform puzzle. The government has
      failed to adopt a number of laws needed to complete the economic reforms
      already launched, including legislation on mortgages, bankruptcy,
      denationalisation and the financing of political parties.

      Considering the mess that it inherited and the economic reforms it has put
      in place, Djindjic's government has no reason to fear the early
      parliamentary elections that the DSS and the opposition are insisting on.
      This government has secured concrete results that should be presented to
      voters in a clear, convincing manner.

      If the government acknowledges that it has fallen short on some promises
      but explains why, Djindjic's adversaries may find the ground shifting
      under their feet, as the opposition is yet to show what it would have done
      differently or more efficiently.

      Kostunica's DSS decided to hand over its role in decision making and
      resigned from the government. As for the other opposition parties, they
      were in power for the last decade, and they left the former Yugoslavia in
      ruins.

      Biljana Stepanovic is an economics analyst with the Belgrade weekly NIN

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      BALKAN CRISIS REPORT No. 363
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