OMRI DAILY DIGEST
No. 68, 4 April 1996

RUSSIA, UKRAINE REACH AGREEMENT ON OIL TRANSIT FEE. According to the
Ukrainian State Oil and Gas Industry Committee, the Russian Fuel and
Energy Ministry has finally accepted the new terms for shipping oil
through the Druzhba pipeline, ITAR-TASS and RFE/RL reported on 3 April.
Ukraine on 1 January unilaterally increased the fee by 60 cents to $5.2
for each metric ton of oil transiting Ukraine en route to Central
Europe. The Russian government is now willing to pay the new tariff,
which is subject to change if the volume falls below or rises above 16-
19 million tons this year. Only last week it was reported that supplies
of oil to Slovakia and Hungary had been interrupted because of the fee
dispute. -- Peter Rutland

HUNGARY TO SELL FURTHER STAKE IN FOREIGN TRADE BANK. The Hungarian State
Privatization and Holding Co. (APV Rt.) on 3 April announced it is ready
to sell its 26.8% share in the Hungarian Foreign Trade Bank (MKB) to the
Bayerische Landesbank, Magyar Hirlap reported. If the deal goes ahead,
the German bank will own 51% of MKB. The APV Rt. invited the German
Investment and Development Co., the EBRD, and the Bayerische Landesbank-
-the three foreign joint owners of MKB--to make an offer, but only the
last-named expressed interest. In 1994, the MKB was the first Hungarian
commercial bank to be privatized. The bank's after-tax profits soared
from 487 million forints in 1994 to 2.6 billion forints in the first six
months of the following year. -- Zsofia Szilagyi

ROMANIAN PRESIDENT ON BASIC TREATY WITH HUNGARY. Ion Iliescu on 3 April
accused Hungary of delaying the signing of a bilateral basic treaty,
Romanian and Hungarian media reported. He stressed that Romania was not
prepared to make any concessions on including in the treaty Council of
Europe Recommendation 1201, which is on ethnic minorities. Hungary is
demanding that the recommendation be included. Iliescu said that if
Hungary drops that demand, "we will immediately sign the basic treaty."
He said ethnic groups that once formed a majority but are now a minority
find it hard to give up their former privileges. -- Matyas Szabo

[As of 12:00 CET]

Compiled by Jan Cleave


Tuesday, 4 April 1996 Volume 1, Issue 323


REGIONAL NEWS
_____________


> ------------------------------------------
EU CRITICISES CHANGES TO SLOVAK PENAL CODE
> ------------------------------------------
The European Union voiced its concern on Wednesday at new
anti-subversion legislation passed in Slovakia which opposition
and church leaders have compared with laws used to crush dissent
before the fall of communism.  An EU statement said certain
provisions in the amendments to the penal code "appear to affect
the freedom of expression and other democratic rights".  The
Union expected the changes to be "carefully considered with a
view to finding solutions in accordance with democratic
principles and in a way which is compatible...with the EU
membership for which Slovakia has applied".

Slovak Prime Minister Vladimir Meciar's three-party coalition
government rammed the law through parliament on March 26.  It
allows imprisonment of people who are found to have organised
certain anti-government rallies and spread false information
abroad, or who are accused of subversion and the intention to
subvert. Slovakia's fractious opposition parties have announced
plans for a rare joint offensive to try to kill the legislation.
 Critics of Meciar say the legal changes are the price he paid
to win over far-right supporters to a treaty of friendship and
cooperation with neighbouring Hungary.

The EU statement welcomed ratification of the treaty at the same
March 26 session of parliament, saying its enactment would help
strengthen stability and security in the region. The statement
was issued by Italy, which holds the EU presidency.  The treaty,
signed in March 1995 in Paris, is a prerequisite for Slovak
ambitions to join the European Union and NATO. Its ratification
was postponed several times in Slovakia, which has a
500,000-strong Hungarian minority.


> -------------------------------------------------
HUNGARIAN MINISTER DOES U-TURN AND STAYS IN PARTY
> -------------------------------------------------
Hungarian Privatisation Minister Tamas Suchman said on Wednesday
he had reversed his decision to leave the Socialist Party and
would continue his policy of promoting economic growth.  Suchman
shocked the congress of the senior coalition party on Sunday
when he said he would resign his membership following his
failure to be elected to the party's 15-member presidium.  In an
interview, Suchman said that since his resignation he had
received expressions of support from fellow Socialist MPs and
had been told by Prime Minister Gyula Horn that he had his full
confidence as privatisation minister.  Horn, who is also
Socialist Party chairman, is reported to have put particular
pressure on him to reverse his decision to forego his party
membership.

In his speech on Saturday, Suchman urged the government to take
steps to fuel economic growth as a means of increasing
government revenues and transferring the burden of reform away
from ordinary people.  His failure to garner enough votes to
gain a place on the presidium was interpreted not only as a
rejection of the speech but also as a snub to his role last year
in boosting privatisation revenues to more than $3 billion.
Suchman said his left-leaning beliefs were still an important
part of his approach to government.  Suchman said there had been
positive change in the government and described new Finance
Minister Peter Medgyessy as someone who would continue the
stabilisation policies of his predecessor Lajos Bokros, but who
had "more empathy and solidarity with society".

Suchman's apparent rebuff by the Socialist Party delegates was
his second public defeat recently, having argued unsuccessfully
in January with then finance minister Lajos Bokros to use a
substantial portion of the 1995 privatisation proceeds to boost
growth instead of paying off debts. Suchman confirmed that he,
Horn and Medgyessy had agreed that any extra revenues this year
would go towards infrastructural development and job creation,
while interest saved on not having to borrow would go towards
welfare. He added that he and Medgyessy would put a detailed
programme for the use of an expected 227 billion forints ($1.55
billion) of privatisation revenues to the government on April
30.  He added that the events of the last few days would have no
effect on the government's continuing privatisation programme.


BUSINESS NEWS
_____________

> -------------------------------------------------
HUNGARY REVIEWING FOREX FUTURES BAN ON FOREIGNERS
> -------------------------------------------------
Hungarian government and stock exchange officials said on
Wednesday they were pursuing plans to let foreigners trade in
the foreign exchange futures market. They also said they hoped
to have regional cross listings of shares, including EU issues.
Finance Minister Peter Medgyessy, speaking to Reuters during the
first official visit to the Budapest Stock Exchange by Prime
Minister Gyula Horn, said the government was actively reviewing
regulations that now bar foreigners from investing in the
Hungarian futures market.  Medgyessy, who took over last month
following the resignation of Lajos Bokros, reiterated the
Socialist Party-led government's intention to maintain austerity
policies that have won Hungary an IMF standby loan of $387
million and membership in the OECD.

Janos Szaz, the outgoing chairman of the BSE council, said
Hungary is negotiating with the Warsaw bourse on cross-listings
of share issues but wants to ensure that funds so invested do
not end up appearing as a net capital export.  The same issue
has also been mentioned to officials at the Prague and Ljubljana
bourses, he said.  Szaz said the BSE also wanted to list shares
in some western companies, probably Austrian or German, "just to
give the flavour and to boost savings".  He said issues in car
manufacturers or food and beverage companies would generate the
most interest on the local market.


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