OMRI DAILY DIGEST
No. 90, 9 May 1996

SLOVAK PREMIER BACKS DOWN ON ANTI-SUBVERSION LAW. Vladimir Meciar on 8
May said the law on the protection of the republic will not be debated
again by the Slovak parliament at its May session, Pravda and Reuters
reported. Meciar told foreign journalists that "a wider democratic
discussion" is needed to ensure that the law complies with international
human rights conventions. The law has been widely criticized by the
Slovak opposition and from abroad as a quasi-totalitarian means of
stifling dissent. It was passed by the parliament in March, but
President Michal Kovac returned it to the parliament. Meciar also denied
that Slovakia was lagging behind other post-communist countries in
creating democratic structures, saying that any rapid enlargement of
NATO without Russia's prior agreement could lead to the creation of a
"Russian-Chinese-Arab grouping." Meciar also strongly criticized the
Czech Republic for its refusal to cooperate more closely with Slovakia,
Poland, and Hungary in preparing for admission to the EU and NATO. --
Steve Kettle

HUNGARIAN INTERIOR MINISTER TO VETO PREMIER'S PROPOSAL FOR INVESTIGATIVE
OFFICE? Gabor Kuncze has been authorized by the Alliance of Free
Democrats (SZDSZ), the junior coalition party to which he belongs, to
exercise his veto power if the cabinet decides to establish a central
investigative office, Hungarian media reported on 8 May. Prime Minister
Gyula Horn has long been promoting the idea of establishing such an
office to curb large-scale white-collar crime. However, he continues to
be at odds with his coalition partner over the issue. Magyar Hirlap
reported that the SZDSZ will only accept a solution whereby ad hoc
coordination groups are established at the initiative of the police to
investigate the most serious economic crimes. The Socialist Party is
divided over Horn's proposal but Socialist ministers are expected to
back the premier. According to recent polls, 62% of Hungarians consider
a permanent investigative office unnecessary. -- Zsofia Szilagyi

[As of 12:00 CET]

Compiled by Jan Cleave


Thursday, 09 May 1996
Volume 1, Issue 334

-------------
REGIONAL NEWS
-------------

> ---------------------------------------------------
Ukraine Defence Chair Concerned With NATO Expansion
> ---------------------------------------------------
  The chairman of Ukraine's parliamentary defence committee was
  quoted Wednesday as saying that NATO enlargement could make
  Ukraine a buffer zone between two Cold War-style blocs.

  "It seems that the Cold War period did not provide enough
  lessons for Europe, as two blocs are again emerging on the
  continent," Vladimir Muhin was reported as saying by the
  Hungarian news agency MTI.

  Muhin, Chairman of the Ukrainian Supreme Council's State
  Security and Defence Committee, was speaking to the Hungarian
  parliament's Defence Committee.

  "Ukraine does not want to become a buffer zone between NATO and
  Russia," he said.

  Muhin, who is heading a Ukrainian defence delegation on a
  two-day visit to Hungary, said NATO's enlargement in itself
  did not alarm Kiev since each country had the right to decide
  about membership.

  "However, European security is not possible if Russia is left
  out of the process," he said.

  Ukrainian leaders told visiting NATO Secretary-General Xavier
  Solana last month they wanted a closer relationship with the
  alliance but said Ukraine was not yet ready to join or to
  abandon its non-aligned status. Russia fiercely opposes any
  enlargement of NATO, saying such a move would threaten its
  vital security interests.


----------------------------------
Hungary Thinks of NATO Compromises
----------------------------------
  Hungary's defence minister, Gyorgy Keleti, claims a NATO
  commitment not to station nuclear weapons on the territories
  of former Warsaw Pact members who join the alliance could help
  placate Russia's opposition to enlargement.

  Keleti believes a compromise between maintaining good relations
  with Russia and welcoming new members into NATO must be found,
  adding he doesn't think NATO would want to station nuclear
  weapons in new member countries anyway, and thus it could be
  part of the compromise.

  According to the defence minister, the question of whether
  Hungary will allow nuclear weapons on its soil is still an
  open one. He feels it is too early to speak of this issue The
  question so far hasn't been raised, he says, adding that when
  the time comes a solution will be found.

  Keleti also stated he will ask Romanian Defence Minister
  Gheorghe Tinca to clarify recent comments suggesting the two
  countries could enter an arms race if Hungary gains NATO
  membership ahead of Romania. According to a newspaper
  interview last month, Tinca claims that accepting Hungary into
  NATO before Romania could lead to an arms build-up because
  it would alter the balance of power in the region.


-------------
BUSINESS NEWS
-------------

> ------------------------------------------
Analysts Say Central Europe a Cheap Market
> ------------------------------------------
                                 According to an analyst team of London
based ICE Securities,
  The Czech, the Hungarian and the Polish stock markets are
  cheaper than most South East Asian and South American emerging
  markets.

  The report added that in aggregated market valuations, it would
  appear that Hungary and Poland are cheaper on the basis of
  price earning multiples than the Czech Republic.

  The stock markets of Hungary, Czech Republic, Poland and
  Slovakia gained strongly in the first four months of this
  year,  with Budapest's BUX index gaining more than 70 percent,
  while Warsaw's WIG gained more than 60 percent and Prague's
  PX50 gained 25 percent.

  ICE forecasts for this year that the earnings of major listed
  shares in Hungary will show an increase of 30 percent while
  Poland's listed companies will improve 25 percent on average,
  and the major Czech listed shares' earnings will increase by
  15 percent.


--------------------------------------
Korean Hanwa Plans Hungarian Expansion
--------------------------------------
  The Hungarian banking unit of South Korea's Hanwha group is
  looking to expand its operations in Hungary, the subsidiary's
  general manager said on Wednesday.

  "As with any business, we are looking at opportunities to
  expand our activities," S.H. Hwang told Reuters, adding that
  the unit has bought the privatisation tender documents for
  Hungary's Altalanos Ertekforgalmi Bank Rt (AEB). Hwang
  declined to comment further on the company's plans for AEB.

  The Hanwha group bought its Hungarian banking arm from the
  French Banque Indosuez three months ago. The purchase of the
  bank, which does not yet have a retail branch network, could
  be the first step in Hanwha's planned expansion into Central
  Europe, J.W. Kim, head of Hanwha group's international
  business planning department said earlier.

  If Hanwha decide to bid for 50 percent of AEB, offered by
  Hungary's privatisation agency APV, it may have to compete
  with the Dutch ABN Amro bank and the Russian gas monopoly
  Gazprom, the Hungarian daily Vilaggazdasag said on Wednesday.
  APV is expected to choose the investor by May 30, when AEB
  shareholders will hold their annual meeting, the paper
  added.

  Hungarian papers reported earlier that Gazprom also showed an
  interest in buying the 50 percent stake in AEB held by the
  Central European Development Corporation. Gazprom and ABN Amro
  were not immediately available for comment.

  According to preliminary figures, AEB's balance sheet total
  rose to 37 billion forints in 1995 from 31 billion in 1994.


-----------------------------
Inter-Europa Opens New Branch
-----------------------------
  Hungary's Inter-Europa Bank opened a new branch in Budapest
  yesterday, boosting its nationwide network to 14. According
  to a statement released by the Bank,  it plans to open a
  further two branches outside the capital later this year.

  In 1995, Inter-Europa Bank achieved better than expected
  results by posting a pre-tax profit of over 19 million dollars
  from a balance sheet total exceeding 625 million dollars, as
  well as realising pre-tax profits of 6.2 million dollars in
  the first quarter of 1996.

  Shares in Inter-Europa Bank, a member of Italy's San Paolo
  Group, closed at approximately 265 dollars on the Budapest
  Stock Exchange.


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