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...WHILE WTO HEAD PREDICTS RUSSIAN ACCESSION IN 2003. WTO Director-General Mike Moor predicted that Russia could join the organization before the next WTO ministerial forum in September 2003, ITAR-TASS reported on 29 May. Moor said that Russia has made more progress toward entry over the last year than in the preceding 10 years, according to the news agency. He named agricultural issues as the most difficult outstanding obstacle to membership. Moor also said that Azerbaijan, Armenia, Cambodia, Saudi Arabia, and Ukraine might qualify for membership by next year's meeting. RC
UKRAINIAN PRESIDENT'S MAN BECOMES PARLIAMENTARY SPEAKER... The Verkhovna Rada on 28 May elected former presidential administration chief Volodymyr Lytvyn as speaker, Ukrainian media reported. A parliamentary leadership package consisting of Lytvyn (United Ukraine) for speaker, Hennadiy Vasilyev (United Ukraine) for first deputy speaker, and Oleksandr Zinchenko (Social Democratic Party) for deputy speaker was endorsed by 226 votes, the minimum number required for approval. The approval was assured when seven deputies from Our Ukraine and former Prosecutor-General Mykhaylo Potebenko from the Communist Party parliamentary caucus cast their votes for the package. Our Ukraine and the Communist Party caucuses expelled the dissenting lawmakers from their ranks. JM
...CAUSING CRIES OF FOUL PLAY AMONG OPPONENTS. Our Ukraine said in a statement that the authorities resorted to "pressure, blackmail, bribery, and threats" to force some lawmakers to vote for the pro-presidential parliamentary leadership, UNIAN reported on 29 May. "The greatest tragedy is the fact that democracy has been left outside the parliament," Our Ukraine leader Viktor Yushchenko commented, adding that the Verkhovna Rada has been transformed into a "subsection of the presidential administration." Yuliya Tymoshenko, who heads the eponymous parliamentary bloc, called on Our Ukraine, the Communist Party, and the Socialist Party to endorse a no-confidence vote in the parliamentary leadership and, in the event the vote fails, to "appeal to the Ukrainian people for an action of civic disobedience." On 29 May, deputies from Our Ukraine, the Yuliya Tymoshenko Bloc, the Communist Party, and the Socialist Party "marked the burial of democracy in Ukraine with a minute of silence" in the parliament, the agency reported. JM
LITHUANIA TO EXPAND CONSULATES IN CIS COUNTRIES. The European Integration Commission approved a consular-service development program on 28 May that calls for the expansion of consulates in Kaliningrad, Minsk, Kiev, Moscow, and St. Petersburg, as well as for the opening of new consulates in Sovetsk in Kaliningrad Oblast and Hrodno, Belarus, BNS reported. As part of its drive to harmonize its visa policy with that of the EU, Lithuania intends to cancel visa privileges on 1 January 2003 for certain groups of Ukrainian and Belarusian citizens, as well as for train passengers and truck drivers traveling to Kaliningrad Oblast through Lithuania. Kaliningrad Oblast residents will also lose their privilege of visa-free entry into Lithuania on 1 July 2003. The Foreign Ministry estimates that the number of Lithuanian visas will quadruple from 190,000 in 2001 to 760,000 in 2003. The ministry is also suggesting that Russia and Belarus establish consulates in Taurage and Druskininkai. SG
Since the first round of the tender for Bulgartabak Holding ended at the beginning of May, questions regarding the privatization of one of Bulgaria's largest state enterprises have multiplied.
Not only have journalists begun to investigate the backgrounds of various bidders, they have also called into question the government's privatization strategy. They wonder whether the privatization of Bulgartabak will have political consequences and, if so, what those consequences might be.
Only one week after the present government took office, Economy Minister Nikolay Vasilev announced on 1 August 2001 that the government would try to sell the state tobacco company. He added that he hoped the sell-off would bring in between $100 million and $500 million. "We would hardly get $500 million; it's too much. [But] $100 million is too low. So we hope to get something between those two," Vasilev said.
At that time, the government had not yet decided which option for the sell-out it would choose. The first option was to sell the company as a whole -- with its 22 factories, including three in Russia and one each in Ukraine and Romania. This option would allow for Bulgartabak to be sold to a multinational company, but it would also mean a lower price, since the buyer would also have to take over the less profitable branches. The second option was to sell only Bulgartabak's most attractive factories, such as those in Sofia and the southwestern town of Blagoevgrad. In that case, the government could expect a higher price. But from the very beginning, Vasilev made the government's priorities clear: "The most important thing now is not the price, but whether we are going to have a deal or not," he said, alluding to the failed attempt to sell 51 percent of Bulgartabak's shares one year earlier.
By May 2002, several bidders had submitted their offers for the whole company, but as far as one can judge, the "strategic investor" that the government was looking for is not among them, especially after the tobacco giants British-American Tobacco and Imperial Tobacco withdrew their initial bids.
In an interview with the daily "Standart," the director of the Privatization Agency (AP), Apostol Apostolov, said: "The big companies told us that if we sell them the factories in Blagoevgrad and Sofia, they would be first to bid for them. But we must not think only about the price [of the company], but also about the people who make their living from tobacco. The agreed amounts of tobacco have to be bought up by the new owner of Bulgartabak, and that is one of the preconditions for the candidates."
The remaining bidders are either financial consortiums with little or no experience in the tobacco trade and cigarette manufacturing, or business groups whose background is unclear. The only tobacco and cigarette manufacturer among them is the small Hungarian Vi Tabak, hardly a promising "strategic investor."
The biggest problem for the Bulgarian government is that Mikhail Chernyi participated in the tender. Chernyi, a Russian businessman and former owner of the Bulgarian cell-phone operator Mobiltel, has been barred from entering Bulgaria since 2000 due to his alleged connections with organized-crime structures in Bulgaria and Russia. Chernyi has a large stake in the Russian Consortium Metatabak, and there are allegations that he may be involved in a second consortium called Tobacco Holding, which consists of the Austrian Raiffeisen Investment, the U.S. Invesco fund, and the Greek Michaelidis tobacco company.
In what seems to be an insurance policy against allegations that the Bulgarian government is conducting business with Chernyi, the Interior Ministry is already screening bidders for possible connections to him. Some observers, however, say that screening the bidders at the current stage does not make sense, as they can change their partners before the second and final round of the tender.
Chernyi's participation is not only endangering the tender -- as other companies fear the process will lose its credibility -- it may also damage Bulgaria's international reputation and its chances for EU and NATO accession. Without naming Chernyi, U.S. Ambassador to Bulgaria James Pardew made it clear on 17 May that Bulgaria is unlikely to be invited to join NATO if its government allows persons who are believed to have links to international organized crime to return.
One of the more promising bidders appears to be the consortium Tobacco Capital Partners, which will presumably be financed by Deutsche Bank. One of the consortium's advisors is Bozhan Stoyanov, who attended Budapest University of Economic Sciences and Public Administration with both Economy Minister Nikolay Vasilev and Bulgartabak Director Georgi Popov. Nevena Mircheva of the daily "Standart" on 20 May leveled serious accusations against the three friends, whom she called the "Hungarian connection." In her view, the screening of investors can be seen as an attempt to get rid of Tobacco Capital Partners' competitors. The fact that Popov did little or nothing to reform Bulgartabak could be interpreted as an attempt to drive the company into bankruptcy in order to make it as inexpensive as possible for Tobacco Capital Partners, she suggested.
Popov is also facing corruption charges. The Bulgarian lawyer Georgi Tasev of Sojuzkontrakt Tabak -- a member of the consortium Metatabak -- accused Popov in a letter to Prime Minister Simeon Saxecoburggotski of having demanded a $500,000 bribe during an informal meeting in Sofia. Popov says Chernyi and his partners are behind the attempt to blackmail him.
Moreover, the whole privatization process also has a political dimension. As self-proclaimed representative of the Turkish minority in Bulgaria, Saxecoburggotski's junior coalition partner Movement for Rights and Freedoms (DPS) is closely monitoring the privatization process. As most tobacco is grown by ethnic Turkish farmers, the DPS will hardly approve any deal that appears to be disadvantageous for its supporters.
Under these circumstances, it is doubtful whether the government can meet its promise to make the privatization process as transparent as possible. Indeed, it seems quite likely that the deal will be called off altogether. And even if it goes ahead, whatever the outcome, many more questions will be asked.