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1 CET - 16 January 1995 (mind)  251 sor     (cikkei)
2 Ministry of Foreign Affairs - Newsletter (jan.13) (mind)  185 sor     (cikkei)
3 OMRI Daily Digest - 16 January 1995 (mind)  63 sor     (cikkei)

+ - CET - 16 January 1995 (mind) VÁLASZ  Feladó: (cikkei)

16 JANUARY 1995
Volume 2, Issue 11

**US to Improve Air Defense in Central Europe**
  The 4 Visegrad countries; Poland, Hungary, Slovakia and the Czech
  Republic took a big step toward NATO integration last week when they
  agreed to a Pentagon proposal for establishing a unified air defense
  and air traffic control system. In return the Pentagon is pledging as much
  as $25 million in aid. Senior defense and transport ministry officials from
  the 4 nations met in Trencin, Slovakia last week to map out a
  cooperative strategy for managing regional air traffic and air defense
  activities. The Regional Airspace Initiative, as it's being called, was
  originally proposed by President Bill Clinton during the Prague summit
  a year ago as part of the partnership for peace initiative. This joint
  project will produce a regional system for managing civil and military
  airspace which will be compatible with NATO equipment and consistent
  with European Air Tragic control standards. Speaking before the
  Conference, the Assistant US Secretary of Defense for Command
  Control Communications and Intelligence Emmet Paige said the
  Pentagon estimates it'll cost about $25 million to establish modern
  national command centers for each of the 4 nations. The Pentagon was
  prepared to contribute at least $10 million this year and will work with
  Congress to increase that to $25 million next year.
**Russia Finalizes Treaty With Hungary**
  The Russian legislature has now ratified a basic treaty between Moscow
  and Budapest. The treaty was signed in 1991, but still needs approval
  from the legislatures of both countries.Russian legislators have refused
  to ratify the basic treaty twice in the years since its signing because they
  don't want to include any mention of 1956 Hungarian revolt against
  Soviet rule. They finally accepted the document last week after
  compromising on a statement on 1956. In the statement, Russia doesn't
  apologize for invading Hungary, but merely says the military action can't
  be justified. The treaty now goes to the Hungarian legislature.
  Hungarian Foreign Minister Laszlo Kovacs says the Russian
  Parliament's approval is a positive development. Kovacs also stressed
  the importance of the fact that the disagreements over 1956 have been
  resolved. Once the Hungarian legislature has approved the treaty, it'll
  finally go into force. It was signed in December of 1991 by Russian
  President Boris Yeltsin and Hungarian President Jozsef Antall.

**Meciar Positive on Minority Issues**
  Slovak Prime Minister Vladimir Meciar is promising to adhere to what he
  calls European norm in government policies on minorities. After meeting
  a delegation of Hungarian members of parliament last week Meciar
  said, "the Slovak Republic will guarantee ethnic minority rights and we
  support the idea that the European norms would be a stable part of our
  policy". Slovakia plans to apply for European Union membership before
  the end of the year but Brussels has made clear that central European
  countries which want to join must first resolve any disputes with their

**Romanian-Hungarian Relations Improve**
  Romanian Foreign Minister Teodor Melescanu is hoping that a basic
  treaty between Romania and Hungary will be ready for signing by the
  end of March. That's when members of the European Union's Stability
  Pact will hold their next meeting in Paris. The Stability Pact is designed
  to help emerging democracies in the former Soviet bloc.  Ending ethnic
  squabbles is one of the Pact's key conditions. But Marko Bela, the
  leader of the Hungarian Democratic Union party in Romania is
  skeptical. Bela says Hungary and Romania still have to work out the
  status of Bucharest's Hungarian minority.

**Hungarhotels Looking for a Home**
  The Hungarian daily newspaper Nepszabadsag is reporting
  that Budapest has received a new $240 million offer from a
  Swiss company for 51% of the Hungarhotel chain. This is more
  than 4 times the amount offered by American General
  Hospitality, which had the deal slip through its fingers last
  week. However, to further complicate matters, former
  Hungarian Privatization Commissioner, Ferenc Bartha, says
  the new offer is not serious. Bartha was removed from office
  by Hungarian Prime Minister Gyula Horn shortly after the deal
  with American General Hospitality fell through. The new
  offer reportedly comes from a firm called Refalia and was
  passed onto the government by a lawyer for the company.
**Hungarian Bungles Garner Attention**
  The implications of the stalled Hungarhotels deal are not lost
  on western investors looking east to Hungary, even from
  across the Atlantic. Robert Kneupfer, President of the
  American Chamber of Commerce in Hungary, attended the
  White House conference on investment and trade in central
  Europe last week. He spoke to us from the confernce site in
  Cleveland, Ohio.
  "When you have a situation where the rules have been set
  forth, in this case a bidder met those rules and made an offer
  which was accepted and then subsequent to that acceptance
  the rules change, I think it's important that the Hungarian
  government take steps to clarify the situation and put
  investors' minds at ease."
  At the conference, hosted by the US State Department of
  Commerce, 14 central European countries met with 350
  international business representatives. The keynote address
  was given by President Bill Clinton and Kneupfer spoke to us
  immediately afterward:
  "His speech emphasized the importance of economic
  prosperity in the region as the keys to peace and political
  security in the region. He reminded us what President Walesa
  from Poland had said that what Poland needs are more
  American Generals: specifically General Motors and General
**Call the Hungarian Dental Association!**
  Hungary's Competition Office has fined the country's Proctor
  and Gamble subsidiary more than $89,000 for false
  advertising. The office says the company's claim that the
  fluoride in its toothpaste fights cavities has not been
  scientifically proven. The government was acting on a
  complaint from the local unit of Colgate Palmolive.
**Mexican Crash Unnerves Markets**
  by David Fondler in Budapest

  It was a big week for the global emerging market picture,
  with economic events in Central America influencing Central
  Europe. CET's David Fondler spoke with Nick Wergan,
  analyst with Smith New Court in London, about that and more
  beginning with a rundown of last week's local stock market
  Wergan:  Certainly the worst performance clearly coming
  from Hungary, off by 7.5% over the week, the Czech Republic
  only off by 1.4% so doing better by comparison. Clearly the
  favorite, Poland, up by just over 1%, 1.9% in dollar terms.
  Fondler:  What do you see driving the markets through this
  Wergan:  This week we are without doubt in a post Mexico
  environment, Mexico clearly showing us that investor
  enthusiasm and the practical realities, or certainly the macro
  realities of the market will hit head on eventually. I think
  that clearly has been driving Hungary, Poland and Czech. Its
  highlighted those areas in emerging markets on a global basis
  where there are some concerns from a macro point of view.
  Certainly that's what's been going on in Hungary.
  Fondler:  Is it a question of the euphoria wearing off in
  emerging markets or are investors holding back, waiting to
  see how Mexico resolves this?
  Wergan:  It's established a period of pause, reflection and
  repatriation of emerging market funds. I do believe it's
  international money that's been driving the Central European
  market this week. The bubble has burst if you like, there has
  been excitement and enthusiasm in emerging markets which
  has been misplaced in investment terms.
  Fondler:  This year anyway?
  Wergan:  Certainly throughout 1994. The pause may well be
  leading to a repatriation of funds from emerging markets
  other than those in Europe, but the money that is being
  returned will more likely come out of Latin America and Hong
  Kong. So the bubble is not necessarily a European emerging
  market bubble that has burst, it's a global emerging market
  bubble and that has fed back in positive and negative ways
  into Central Europe.
  Fondler:  Let's talk about specific activities in various
  countries. We saw the Czech Republic start the new year with
  3 up days and proceed to go back to its downward cycle that
  we saw concluding last year.
  Wergan:  I would expect that to continue, I think Czech, being
  upgraded in many people's opinion, we as a house are
  upgrading it above Hungary, I think the real time to be looking
  to buy is not quite here yet.
  Fondler:  OK, turning to Hungary, the big news in the business
  community was the conclusion, not favorably, of the
  Hungarhotels privatization. Has that affected your analysis of
  Hungary as a foreign investment opportunity?
  Wergan:  I think the ramifications of the Hungarhotels deal
  are very serious. I still think you'll get $3.5 billion into
  Hungary in terms of strategic investment this year and say
  $1.5 billion in institutional investment, but it should and
  could have been bigger than that. The delay in Hungarhotels
  and the quibbling over price certainly makes people question
  the pragmatism of the government about their determination
  to get privatization money in quickly.
  Fondler:  I don't think American General Hospitality is very
  comfortable with Hungary right now.
  Wergan:  I'm sure. And I wouldn't be if I was considering
  strategic investments in Hungary. I would wonder whether
  the goal posts are being move.
  Fondler:  Any observations about Poland in this past week?
  Wergan:  Politicking is clearly going on. The positive side for
  Poland has been ignoring that. There is a very small amount of
  global emerging markets money currently invested in Central
  Europe and any switching of international portfolio is bound
  to be to the benefit of somewhere like Poland. Whereas
  previously we'd been looking to the second half of the year. I
  think the more positive mood is coming sooner in the year
  than expected.

* CET On-Line - Copyright (c) 1995 Word Up! Inc..
  All rights reserved.  This publication may be freely forwarded, 
  archived, or otherwise distributed in electronic format only so 
  long as this notice, and all other information contained in this 
  publication is included.  For-profit distribution of this 
  publication or the information contained herein is strictly 
  prohibited.  For more information, contact the publishers.

A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
Alapitvany tamogatja.

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Reposting is supported by Hungarian Human Rights Foundation News
and Information Service.

+ - Ministry of Foreign Affairs - Newsletter (jan.13) (mind) VÁLASZ  Feladó: (cikkei)

N  E  W  S  L  E  T  T  E  R

Republic of Hungary                             Budapest, 1394 . 423
Ministry of Foreign Affairs                     Telephone:36(1)156-8000
Press Department                                        Telefax: 36(1) 156-3801
8/1995.                                 Budapest, January 13, 1995

Privatization of HungarHotels Chain - Government Statement

        Budapest, January 12 (MTI) - The Hungarian government has
proposed that the State Property Agency (SPA) Board of Directors declare
its previous talks on the sale of the HungarHotels chain as null and void,
and inform the American General Hospitality firm accordingly, Andras Toth,
parliamentary state secretary at the Prime Minister's Office, said quoting a
government statement at a news conference today.

        During its Thursday session, the government instructed the finance
minister and the minister of Industry and Trade, and asked the presidents
of the Hungarian Tourism Association, the Tourism Chamber and the Hotel
Federation to form a proposal by March 31 for utilization of the chain with
national economic interests taken into account, the statement runs.

        On January 11, American General Hospitality rejected the SPA's
proposal to raise the price of the 15 hotels in question to USD 67 million.
The U.S. firm would have only accepted the former offer, which involved 14
hotels for USD 57.5 million.

        The statement says that today the government ended its
investigation into the privatization of HungarHotels, concluding that there
had been cases of negligence and professional shortcomings in the affair.
According to the Justice Ministry, the assets of the chain should have been
appraised, as stipulated by law, before bids were invited for its
privatization. This negligence unfavourably influenced conditions of the

        The construction applied in the invitation of bids considerably
reduced the potential revenues for the state from the transaction. It can be
established that those exercising the proprietary rights of the state failed to
appropriately consider national economic interests and act with
professional prudence.

* * *

        Budapest, January 12 (MTI) - Drawing conclusions from the affair, the
government considers all transactions that may cause serious loss in
property to the country as unacceptable. It is particularly unacceptable if
profitable companies are privatized without due circumspection and
professionalism, the statement says.
        The view that the investigation into the HungarHotels affair has
discouraged foreign investors is unfounded. Since the investigation began,
a number of foreign companies have unambiguously indicated their
interest in purchasing the hotel chain, and many firms have assured the
government of their unwavering confidence in privatization in Hungary, the
statement says.

        Government Spokeswoman Evelyn Forro announced that Prime
Minister Gyula Horn and Ferenc Bartha, government commissioner of
privatization, had agreed that Bartha would quit his post as of today.

OSCE Envoy to Visit Chechnya

        Vienna, January 12 (MTI) - During its session on Thursday in Vienna
the Organization for Security and Cooperation in Europe (OSCE) Permanent
Council authorized Chairman-in-Office Laszlo Kovacs, Hungarian foreign
minister, to delegate his special envoy, accompanied by experts, to

        The mission will have to gain on-the-spot knowledge necessary in
reaching a settlement to the conflict - a priority task of the OSCE.

        Before making its decision, the Permanent Council heard a report by
Hungarian Ambassador Istvan Gyarmati on his Tuesday talks in Moscow.
The ambassador said Russia itself would support the mission and the
OSCE's involvement in searching for a solution to the conflict.

        The 52 ambassadors meeting in camera approved a resolution,
expressing regret over the events in Chechnya, calling for an immediate
cease-fire, and pressing for a settlement on the basis of the territorial
integrity and Constitution of the Russian Federation, but in line with OSCE
principles. The resolution did not condemn Russia.

        During a subsequent press conference, Gyarmati spoke in terms of
satisfaction with the session which reflected the Council's choice for a
cooperative rather than confrontational approach.

        Russia has undoubtedly violated some basic principles of the OSCE
in Chechnya, but, for lack of precise information, the degree of such
violations is still unknown, he said.

        The principles in question are included in the Budapest declaration
and oblige the member states to respect human rights when settling their
internal conflicts, and display self-constraint in the use of military force.
        Gyarmati welcomed the fact that Moscow was prepared to give its
formal consent in sending an OSCE mission to Chechnya. The ambassador
underlined that this would be the first time the organization has played a
role in efforts at settling a conflict within Russia. He said he hoped the
mission would leave for Chechnya next week.

        "The OSCE mission will not mediate in the conflict for it is an interna
affair of Russia, but it will have a chance to pave the way for a cease-fire
and following that, a political settlement. The latter would be promoted by
free and democratic elections in Chechnya, the ambassador said.

        The Hungarian diplomat returns to Moscow on Sunday to hold talks
in the Defence Ministry and with MPs. During his recent visit, he met only
with Foreign Ministry officials.

Energy Import, New Satellite - Government Spokesperson

        Budapest, January 12 (MTI) - At its Thursday session, the Hungarian
government resolved to provide a state guarantee for the importation of 5.5
million tonnes of crude oil, 6.2 billion cubic metres of natural gas and 3.4
billion kWh of electricity this year, Government Spokesperson Evelyn Forro
told reporters today.

        In an information sheet distributed during the news conference, the
Hungarian government expressed its interest in establishing a national
regional satellite on an entrepreneurial basis. Since the project would be
unique in East Central Europe, the government is prepared to share the risk
with entrepreneurs.

        The MAGYARSAT project, including a Hungarian communication
satellite, would establish a comprehensive and profitable
telecommunications network in Hungary and the region.

        To carry out the project, Antenna Hungaria Rt. and Israel Aircraft
Industries Ltd. would set up a common business organization, which would
launch two satellites with identical technical features. The Israeli AMOS
satellite would begin operation early next year, and MAGYARSAT in 1997.
The latter would transmit 16 TV programmes in better quality than ASTRA-

        The government instructed the ministers of finance and transport to
hold talks on the project with the Israeli partner.
        In preparation for joining the European Union, the government
discussed plans to draw Hungarian laws in line with those of the EU. It
instructed the justice minister to work out a five-year law harmonization
plan by May 15.

Hungarian Minister of Industry in Cleveland

        Washington, January 12 (MTI) - On approaching the European Union,
Hungary does not wish to discriminate against U.S. traders, Hungarian
Minister of Industry and Trade Laszlo Pal said in Cleveland today.

        Pal addressed the plenary session of a two-day conference on
investment and trading opportunities in Eastern and Central Europe,
convened by the White House.

        The minister said Hungary had undergone sweeping political
changes and transformed the bulk of its legal system. "Hungary has
become a democratic market economy, in which the private sector
contributes more than half of the GNP and, within that, 15 per cent is
generated by companies with foreign capital involvement. Last year the
country increased both its economic performance and export," the minister

        As for investments, Pal said that Hungary had no reason to
complain: to date almost USD 8.5 billion worth of foreign capital has been
invested in the country, mainly from the United States.

        On Wednesday, Pal informed a group of businessmen in Chicago
about the prospects of, and investment opportunities in, the Hungarian

A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
Alapitvany tamogatja.

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Reposting is supported by Hungarian Human Rights Foundation News
and Information Service.

+ - OMRI Daily Digest - 16 January 1995 (mind) VÁLASZ  Feladó: (cikkei)

Vol. 1, No. 11, 16 January 1995

MINORITIES. Meeting in Bratislava on 13 January with
delegations from three of Hungary's opposition parties,
Slovak Premier Vladimir Meciar stressed that relations
with Hungary are of high priority and promised that
Slovakia "will guarantee ethnic minority rights" based on
European norms, Reuters and TASR reported. Meciar has
accepted an invitation from his Hungarian counterpart
Gyula Horn to visit Budapest, but an exact date has not
yet been set. Speaking at a press conference on 13
January, Slovak National Party Chairman Jan Slota accused
Slovakia's ethnic Hungarian minority of wanting
separation and noted that if he were prime minister, the
meeting with the Hungarian opposition parties would not
have taken place. -- Sharon Fisher, OMRI, Inc.

Hungarian government spokeswoman Evelyn Forro told MTI on
13 January that the government has set a schedule for
harmonizing the country's legislation with that of the
European Union. She said that the country's association
agreement with the EU divides this process into two five-
year periods starting in 1994, and during the first
period basic economic legislation would have to come into
line with EU standards. Forro announced that in the first
half of 1995 the government will discuss draft
legislation on customs duties, patent rights, insurance
companies, foreign exchange, public purchases, technical
standards, and environmental protection. The government's
schedule this year includes a long-awaited bill on
customs clearance procedures and customs administration,
which will include regulations on immediate duty payments
and duty-free zones. A draft law on insurance, which has
been discussed since last February, would allow foreign-
based insurance companies to open permanent
representative offices in Hungary without, however,
permitting them to be involved in insurance, insurance
brokerage or professional advisory activities. -- Edith
Oltay, OMRI, Inc.

[As of 1200 CET]

Compiled by Pete Baumgartner and Steve Kettle.

A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
Alapitvany tamogatja.

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Reposting is supported by Hungarian Human Rights Foundation News
and Information Service.