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...WHILE BAKU CONSIDERS ALTERNATIVES. Speaking at a press conference in Baku pegged to the Fifth Caspian Oil and Gas Exhibition, Natik Aliev, the president of Azerbaijan's state oil company SOCAR, said Baku is currently assessing 11 export pipeline routes. He described the Iranian route as economically attractive but said that export via Bulgaria and Greece to the Mediterranean is also an option. Aliev added that, in view of its superior quality, Azerbaijani oil could be refined in Ukraine, Bulgaria, and Romania. "Nezavisimaya gazeta" on 4 June reported that SOCAR and the Russian pipeline concern Transneft have concluded an agreement on the export of 9-10 million metric tons of Azerbaijani oil from Baku to Novorossiisk when the current export agreement expires in 2001. LF

BLACK SEA ECONOMIC COOPERATION FORUM CONVENES IN YALTA. At a forum of the Black Sea Economic Cooperation (BSEC) organization in Yalta on 5 June, the BSEC leaders signed a joint declaration and a charter proclaiming the BSEC a regional economic organization, ITAR-TASS reported. Ukrainian President Leonid Kuchma said in his opening speech that "the BSEC is transforming into a major component of Europe's new security system." He added that Ukraine is in favor of creating a BSEC free-trade zone. The forum is attended by the presidents of Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Moldova, Romania, Turkey, and Ukraine as well as the prime ministers of Greece and Russia. JM

BEREZOVSKII DENIES PLANS TO MOVE CIS HQ. CIS Executive Secretary Boris Berezovskii told journalists on 4 June that allegations that he plans to transfer CIS headquarters from Minsk to Moscow are untrue, Interfax reported. Belarusian envoy to the CIS Sergei Posokhov had claimed on 3 June that Berezovskii and his staff had made preparations for such a move. Posokhov had expressed Belarus's strong opposition to such an intention. He added that Ukraine, Uzbekistan, Armenia, and Tajikistan had similarly expressed objections to that intention. LF

Turkmenistan's GDP and exports are dominated by gas and cotton. Its largely unreformed economy has been more affected by developments on these markets than by the trends that usually characterize transition economies.

The lack of reform extends to the statistical authorities. The country publishes less economic data than any other CIS member. Even now, the CIS's Interstate Statistical Committee still has virtually no 1997 figures on Turkmenistan. That makes it difficult to figure out from abroad what is happening there; visiting the country is not particularly helpful either in identifying macroeconomic trends, as the author learned in April.

What data are available show GDP falling by about 25 percent in 1997. Turkmenistan should also should be experiencing a balance-of-payments crisis, having run up an approximately $250 million trade deficit and $600 million current account deficit last year (an enormous 32 percent of GDP) following many years of surpluses on both accounts. While imports contracted last year by about 50 percent to some $1 billion, exports fell by more than 55 percent to around $750 million.

However, there is little indication so far of any crisis. Construction continues day and night on a number of large infrastructure or "prestige" projects, such as a congress hall and an arch commemorating the country's neutrality. All such construction is carried out by foreign contractors, who must be paid in foreign currency, and makes uses of imported machinery. For a city with some 400,000 inhabitants, Ashgabat has an unusually large number of hotels, with restaurants serving imported food.

Most important, Turkmenistan has yet to agree to a reform program with the IMF, making it one of only two postcommunist countries never to have done so (the other being Yugoslavia). Thus, there has been no lending from the IMF to support the balance of payments. Moreover, the absence of an IMF program means that the World Bank is unable to lend the country more than $100 million.

Despite the collapse in exports and GDP, certain other macroeconomic indicators were favorable in 1997: consumer price inflation (December-to-December) fell to 21 percent from 446 percent in 1996. The parallel market exchange rate (Turkmenistan maintained a multiple exchange rate system until April) was stable, while monetary policy was tight and the budget essentially balanced.

The large decline last year in GDP resulted chiefly from a collapse in gas exports. During the Soviet era, Turkmenistan exported about 70 billion cubic meters of gas annually; by 1997, this figure had fallen to 6.5 billion, down by 70 percent from 1996. Gas export revenues fell from $674 million in 1996 to $274 million last year.

The reason for last year's decline is clear: in March 1997, the government halted gas exports to its CIS partners-- namely, Armenia, Georgia, and Ukraine--because these countries had built up large arrears to it for earlier deliveries.

The larger, longer-term decline set in 1994, when a dispute with Gazprom resulted in the company's refusal to allow Turkmen gas into its pipeline for sale to European customers. The issues in dispute largely concern the price of the gas and the share of the payment that is to be made in currency (rather than by barter).

In any case, since a large amount of gas has not been paid for, the positive entry in the current account under gas exports has had to be netted out in the capital account. Last year, both the positive and negative entries fell, which meant that the decline in gas exports had a smaller impact on the balance of payments than would normally be the case.

Cotton production rose last year to 630 million tons, from 436 million tons in 1996, although it remains far below the Soviet-era peak of 1.4 billion tons. Even with the increase in production, however, cotton exports fell last year, when the harvest remained unsold due to a price disagreement with Turkish and Pakistani buyers.

Another factor restraining imports is the authorities' use of administrative methods to achieve precisely that end. Access to foreign exchange is severely restricted, with most such currency made available through auctions. And those wishing to import consumer goods are not ordinarily allowed to participate in those sales.

Finally, Turkmenistan has weathered its balance-ofpayments problems partly because it has unusually large foreign reserves, amounting to almost $1 billion at the end of 1997. This is equivalent to 15 months of imports, easily the highest such figure in the CIS. These reserves even grew slightly in 1997.

Much of the reserves are directly under the president's control. If, as feared, the country registers another $500- 600 million current account deficit this year, maintaining macroeconomic stability will depend on whether the president decides to release some of "his" reserves. This is a matter about which observers can only speculate.

BLACK SEA ECONOMIC COOPERATION FORUM CONVENES IN YALTA. At a forum of the Black Sea Economic Cooperation (BSEC) organization in Yalta on 5 June, the BSEC leaders signed a joint declaration and a charter proclaiming the BSEC a regional economic organization, ITAR-TASS reported. Ukrainian President Leonid Kuchma said in his opening speech that "the BSEC is transforming into a major component of Europe's new security system." He added that Ukraine is in favor of creating a BSEC free-trade zone. The forum is attended by the presidents of Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Moldova, Romania, Turkey, and Ukraine as well as the prime ministers of Greece and Russia. JM

BEREZOVSKII DENIES PLANS TO MOVE CIS HQ. CIS Executive Secretary Boris Berezovskii told journalists on 4 June that allegations that he plans to transfer CIS headquarters from Minsk to Moscow are untrue, Interfax reported. Belarusian envoy to the CIS Sergei Posokhov had claimed on 3 June that Berezovskii and his staff had made preparations for such a move. Posokhov had expressed Belarus's strong opposition to such an intention. He added that Ukraine, Uzbekistan, Armenia, and Tajikistan had similarly expressed objections to that intention. LF

UKRAINIAN MINERS CONTINUE PROTEST. Miners continue to picket the buildings of the Presidential Administration, the Supreme Council, and the Cabinet of Ministers in Kyiv, Ukrainian Television reported on 4 June. Trade unionists have announced the pickets will remain until the authorities meet the coal miners' demands that all wage arrears be paid. Miners picketing the oblast administration building in Luhansk blocked the traffic in the city center for one hour. The Coal Miners Independent Trade Union said on 4 June that 45 mines are on strike, while the Ministry of Coal Mining put the figure at 30. Meanwhile, the parliament has passed a resolution ordering the government to increase subsidies to the coal industry by 400 million hryvni ($200 million). According to a government official quoted by ITAR-TASS, the government is now drafting a resolution on reducing coal imports from Russia and Poland. JM

KYIV DAILY LOSES LIBEL CASE AGAINST INTERIOR MINISTER. The opposition daily "Kiyevskiye vedomosti" has lost a libel case filed by Interior Minister Yuriy Kravchenko, Ukrainian Television reported on 4 June. The court ruled that the newspaper has to pay 5 million hryvni ($2.5 million) in damages to the minister for falsely accusing him of corruption. In addition, two journalists are to pay the minister 27,000 hryvni in damages for writing "incriminating articles." "This is simply another attempt to stifle the independent press," a "Kiyevskiye vedomosti" representative told Ukrainian Television, adding that the newspaper will appeal the verdict in the Supreme Court. JM