Russian Corruption Leads to Questions for White House

By JANE PERLEZ, September 1, 1999
http://www.nytimes.com/library/world/europe/090199russia-us.html

WASHINGTON -- The Clinton Administration, pressed by investigations into money laundering and capital flight out of Russia, is being forced anew to justify its policies of bold economic assistance to Moscow during the last seven years.

This time the reassessment has raised questions of what the Administration knew about Russian corruption and what should have been done differently, officials said.

Some figures in the Administration, as well as outside critics, said the indications of corruption were put aside to insure President Boris N. Yeltsin's support for American security interests, including the safekeeping of Russia's nuclear arsenal.

Those officials also assert that the Administration played down what it knew about corruption at the top levels of the Government and chose instead to trumpet success stories as Russia limped toward a free-market system.

Early last year, when the Administration asked Congress for $18 billion in new payments for the Interational Monetary Fund at a time the fund was considering increasing its loans to Russia, the Administration knew about the corruption problems in Russia but was reluctant to disucss it on Capitol Hill, Administration officials said.

Deputy Secretary of State Strobe Talbott, who through his close relationship with President Clinton is considered the architect of much of the Russia policy, said in an interview, "There are legitimate questions about how much and by what mechanisms the money left Russia."

He acknowledged that a result of the secret flight of money out of the country was the impoverishment of many Russians.

A former American diplomat who was in Moscow until recently said the Administration had consistently failed to criticize the corruption out of fear that doing so would jeopardize Russian cooperation on security interests, including Russian behavior toward Iran and Iraq.

Instead of explaining that tradeoff, the former diplomat said the Administration had tried to oversell the "success" of Russian reform and the "partnership" relationship that United States Treasury officials and others boasted about.

An Administration economist said his agency was often asked by the State Department for success stories in Russia that could be cited to Congress and elsewhere.

At the heart of the Clinton policy was the decision to help Russia through loans from the I.M.F. and other sources to lift itself out of Communism and privatize the economy as quickly as possible.

When a handful of Russians emerged almost overnight as the newly rich owners of major natural resources and industrial enterprises -- some by questionable means -- they were acceptable to the Clinton Administration, because they largely backed Yeltsin against the threat of a Communist comeback.

With the assistance of campaign contributions from the so-called oligrachs, some of whom are under investigation in the West, Yeltsin was victorious in 1996 over a Communist candidate, Gennady A. Zyuganov.

The United States recognized the assistance that the oligarchs provided in re-electing Yeltsin, a senior Administration policy maker said, but chose to play down their dark side and their manuevers intended to strip the country of many natural resources.

In another indication of reluctance to face the corruption problem, Vice President Al Gore was shown evidence by the Central Intelligence Agency in 1995 of what it considered the personal corruption of Prime Minister Viktor S. Chernomyrdin, with whom Gore led a joint American-Russian commission.

Intelligence officials said late last year that Gore rejected their report, a move that those analysts said had led them to understand that Gore was not interested in further information on the topic.

One official who worked on economic changes in Russia said that as it became clear that the I.M.F.'s conditions for macro-economic reforms were not working, it also became clear that efforts by the Clinton Administration to introduce small-scale changes were not working, either.

Last month, a report by PricewaterhouseCoopers concluded that the Central Bank lied to the I.M.F. in 1996 about the level of its foreign-exchange reserves to encourage the fund to continue lending to the country. The report said the Central Bank had channeled assets through
cobi
Fimaco, a company based in the Channel Island tax haven of Jersey. The first deputy managing director of the fund, Stanley Fischer, said after the audit had been released that the Central Bank reserves were overstated by $1.2 billion in mid-1996.

Since the report was released, several Administration officials said there was now a serious question of trust with senior Russian officials.

In another effort that went awry, Washington tried to help Russia develop a money-laundering law. Again, experts from the Comptroller of the Currency and the Federal Bureau of Investigation were sent to Moscow. They worked on a bill intended to enable prosecutors to investigate laundering. The legislation passed the Parliament twice, but was vetoed two times by Yeltsin, most recently last month.

Asked how the Administration had expressed its disappointment about the veto, Talbott said, "We did the obvious." He added that he could not provide the details. Talbott asked a deputy, Stephen Sestanovich, Ambassador at Large for the Newly Independent States, to do so.

Sestanovich said Secretary of State Madeleine K. Albright had urged Foreign Minister Igor S. Ivanov of Russia to restart the process of enacting the bill. Administration officials have acknowledged in the past that Ivanov has little influence with Yeltsin.

As it became clear last year that the Russian Government was not receiving the necessary tax revenue, the Gore-Chernomyrdin commission was used by the Administration as a vehicle for trying to deal with corruption, officials said. An official knowledgeable with the workings of the panel said that Gore's people had raised the corruption issue but that they could not find any interlocuters in Russia with whom they could regularly follow up. That effort, too, frittered away, the official said.

This week, as the State Department, Treasury and the National Security Council reviewed yet again their Russia policies, one paradox was apparent. Yeltsin's jettisoning of the money-laundering measure means that there is no serious law against laundering. American law-enforcement officials who are investigating money flows through the Bank of New York will not have a legal basis on which to work with Russian law-enforcement agencies, officials said.

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GLOBAL VIEWPOINT North Korea's missile menace

By Kim Dae Jung, September 1, 1999 Washington Times
http://www.washtimes.com/opinion/ed3.html

SEOUL - Today, the Korean Peninsula remains the last area of Cold War tensions. The ostensible peace on the peninsula dangles precariously from the armistice agreement (that dates to the end of the Korean War).

To find a solution to the situation, I made a three-point pledge to North Korea as soon as I was sworn in as president of the Republic of Korea. First, any armed provocations by North Korea will not be tolerated. Second, South Korea will not try to absorb North Korea. Third, the republic will seek reconciliation and cooperation with North Korea.

A test of my pledge came in June when the republic's navy in the Yellow Sea had to fend off intruding North Korean navy ships. As tensions rose, I gave clear instructions to my navy commanders to firmly defend the republic's Northern Limit Line but not to open fire first under any circumstances. I further instructed them to respond resolutely if the North Korean gunboats started shooting but to use wisdom in not escalating the situation into a war. The navy faithfully followed the guidelines I set down, and the result was the avoidance of a potentially greater tragedy.

Even in the face of such armed conflicts and warlike crisis, I made decisions based on my vision for the long-range development of friendly relations with North Korea. As a result, we made substantial advances in the North-South Korean relationship.

However, the fact remains that, despite our genuinely friendly gestures, North Korea has not shown much indication that it is changing its hostile ways in any fundamental sense. A case in point is the suspicion that North Korea is preparing to test fire a long-range missile soon. Pyongyang's missile development must be dealt with seriously because it affects peace on the peninsula and in all of Northeast Asia.

Since it is known that North Korea recently repaired its missile launch pad and tested its rocket engines, the international community is quite apprehensive. There is no solid evidence that a test firing is imminent, but there is no denying the fact that Pyongyang is well equipped with the technology and capability to launch a long-range missile.

North Korea has all along been stressing that it has a "lawful right as an independent sovereign state" to develop missiles. But its claim misses the point because its missiles can reach far beyond its territory over the Pacific Ocean, disturbing peace in the Asia-Pacific region.

Considering the ramifications of the North Korean plan, I feel it is incumbent upon us to wage a diplomatic effort to preclude the missile launch. To deter the test firing, we have to try to both persuade and pressure the North Koreans. We are making it clear to the authorities in Pyongyang that such provocations will be repaid with severe pain and a high price while, on the other hand, if they shift their attitudes to reconciliation and cooperation, it would bring them more benefit.

In close coordination with the United States and Japan, South Korea is in the forefront of the effort to preclude test firing by the North Koreans. In the Korea-U.S. summit talks on July 2, President Clinton and I issued a warning to North Korea that the missile scheme would cause a serious, negative consequence to itself and agreed to try to dissuade Pyongyang jointly and resolutely. Upon returning home from the United States, I talked with Prime Minister Keizo Obuchi of Japan on the telephone concerning this issue.

I also pointed out to President Jiang Zemin of China and President Boris Yeltsin of Russia the grave impact that North Korea's test firing would exert on the international community and asked them to dissuade Pyongyang.

Since then, China has been taking the view that it opposes proliferation of weapons of mass destruction on the Korean Peninsula and has said publicly that Beijing would play a constructive role in maintaining peace and stability in the region. Russia, too, supports our gradual engagement policies toward Pyongyang.

Quite recently, North Korea has given some positive response to our offer to talk, and that is a very desirable change. Nonetheless, we have to prepare countermeasures to take when and if North Korea actually launches its missile.

When that happens, South Korea, the United States and Japan will have to come up with strong and effective diplomatic as well as economic sanctions against Pyongyang, including suspension of material support. The heat generated by the international outcry will be unbearable, and the pain of being further isolated from the outside world be deeply felt.

We do not ever want to have a confrontation with North Korea. We are willing to reward Pyongyang accordingly when it ceases production of weapons of mass destruction and stops pursuing military conflict with us.

When and if North Korea decides to take a course toward peace, first, there will be a guarantee of North Korea's security. Second, its economic reconstruction will be actively supported. Third, it will be treated as a respected member of the international community.

This will bring Pyongyang security and benefits. I have a sincere desire to help our brethren in the North emotionally and materially and to end the threat of another war on the peninsula once and for all.

We will do everything we can to prevent Pyongyang from launching its missile. However, if they do proceed with the launch, our efforts to freeze nuclear development on the peninsula will continue through the Korean Peninsula Energy Development Organization. We will maintain our efforts to talk North Korea out of developing missiles. We will keep trying to engage Pyongyang constructively in the peace process. We are determined to dismantle the last vestige of the Cold War.

We will not give up under any circumstances. I am firmly convinced that the two Koreas will eventually be reconciled, grow together and eventually contribute to world peace.

Kim Dae Jung is the president of South Korea and on the eve of an expected long-range missile test by North Korea wrote this exclusive article for Global Viewpoint.

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U.S. Soldier Charged in S. Korea

By The Associated Press, September 1, 1999
http://www.nytimes.com/aponline/i/AP-SKorea-US-Soldier-Charged.html

SEOUL, South Korea (AP) -- An American soldier stationed in South Korea has been charged with killing a military policewoman, the U.S. Command said today.

Pfc. Jacob M. Bowley, 20, of Hillsboro, N.H., was charged with murder, aggravated assault and five other charges in the Aug. 21 fatal shooting of Sgt. 1st Class Jeanne M. Balcombe, 33, of McMinnville, Ore., at a unit deployed near the North Korean border.

Both were members of the 55th Military Police Company at Camp Red Cloud north of Seoul.

The U.S. Command did not release further details. U.S. soldiers accused of crimes have often been tried in a U.S. military court in Seoul.

Bowley allegedly seized a pistol from a South Korean soldier assigned to serve in the U.S. military, shot Balcombe and fled the post with the weapon, triggering a manhunt by thousands of South Korean police and U.S. investigators.

South Korean police caught up with him eight hours later as he tried to withdraw cash from a bank in Pusan, 200 miles southeast of Seoul.

According to initial investigations by South Korean police, Bowley admitted he consumed large quantities of beer hours before the killing and was believed to be drunk when he shot Balcombe.

Bowley was angry because Balcombe ordered a blood test on one of his friends to determine whether he consumed alcohol while he was off the base without permission, said Yonhap, South Korea's national news agency.

Camp Red Cloud is a major U.S. military base in Uijongbu, 30 miles north of Seoul. Some 37,000 U.S. soldiers are stationed in South Korea under a defense treaty.

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North Korea woos Europe
Pyongyang is under pressure over its missile programme

August 25, 1999 Published at 18:19 GMT 19:19 UK World: Asia-Pacific
http://news2.thls.bbc.co.uk/hi/english/world/asia%2Dpacific/newsid%5F430000/430127.stm
http://news2.thls.bbc.co.uk/olmedia/430000/images/_430127_pyongyang300.jpg

North Korea is reported to be trying to improve its relationship with Europe.

It has proposed holding meetings with European foreign ministers during the United Nations general assembly meeting in New York next month, according to South Korean officials.

The move has prompted speculation that North Korea could be considering a change in its isolationist policy.

"We can confirm the North sent letters, in the name of Foreign Minister Paek Nam-Sun, to the European countries making the offer," said a South Korean foreign ministry official.

The recipients are understood to be the UK, France, Germany, Austria, Norway and Denmark.

Britain 'lukewarm'

"There could be more," said the official. "But Britain seems to remain lukewarm to the North's offer, while others are still reviewing it."

North Korea did hold a political dialogue with the European Union in Brussels last year, but it achieved little.

Pyongyang wanted more humanitarian assistance, while the EU wanted North Korea to improve human rights.

Bargaining tool

Pyongyang is coming under growing international pressure not to carry out a test of a new long-range missile.

Some observers believe the proposed launch is a bargaining tool to gain more concessions, a strategy that has worked before.

In return for North Korea giving up a nuclear programme which was capable of producing weapons-grade plutonium, America and its allies are building it two light-water reactors.

The US is currently drafting a new policy towards North Korea, which could eventually lead to fresh economic aid and to trade sanctions being lifted.

But in the meantime, there has been a spat over work on the reactors. Pyongyang has accused the US of dragging its feet over the project, a charge denied by Washington.

As the North puts out feelers with other nations, South Korea's Foreign Affairs Minister, Hong Soon-young, is convinced it must eventually accept the US package.

"What we want from North Korea is its promise to abandon its military programme that threatens peace and stability in the region and to stop provocations against South Korea so that both sides could live in peaceful co-existence," he said.

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Jordan Moves to Expel Local Hamas Leaders

By WILLIAM A. ORME JR., September 1, 1999
http://www.nytimes.com/yr/mo/day/news/world/jordan-hamas.html

JERUSALEM -- In a crackdown welcomed by Israelis but condemned by dissident Palestinians, the government of Jordan has closed the local offices and effectively expelled resident leaders of the region's largest Palestinian opposition faction.

Jordanian authorities issued arrest warrants Tuesday for four prominent Amman-based members of Hamas, the radical Islamist group that has in the past claimed responsibility for terrorist bombings in Israel. At least three of the four are reportedly visiting Iran, including Khalid Mashal, who survived a botched Israeli assassination attempt two years ago in Amman.

The arrest orders are generally expected to preclude the Hamas members' return, sparing the government of King Abdullah the problem of jailing representatives of an organization with a deep-rooted following in the Palestinian refugee camps of Jordan, Gaza and the West Bank.

On Monday, the Jordanian police raided houses and offices reportedly used by Hamas figures and arrested 12 Jordanians accused of working for the group. Hamas has taken responsibility for terrorist bombings in Israel and vehemently opposes the negotiation efforts of the Palestine Liberation Organization chairman, Yasser Arafat. Israeli officials applauded Jordan's action.

In Gaza City, Sheik Ahmed Yassin, the frail, nearly blind Hamas founder, attributed the crackdown to the impending visit to Amman and other regional capitals by Secretary of State Madeleine Albright. "What happened in Jordan is part of a U.S. plan to pressure Hamas to join the peace process, and of course we see that process as an attempt to liquidate the Palestinian cause," The Associated Press reported him as having said.

Albright is due in Egypt on Thursday for talks with Arafat, Israeli Prime Minister Ehud Barak and Egyptian President Hosni Mubarak, before traveling to Israel, Jordan and Syria.

Islamist leaders in Amman also criticized the crackdown. The Muslim Brotherhood, the largest party in Jordan and a critic of peace deals with Israel, issued a strong statement of support for Hamas, saying most local members are Jordanian citizens who espouse legitimate viewpoints.

In closing Hamas offices in Amman, officials cited the reportedly illegal use of commercially licensed business premises for unauthorized political activity. Using the country's strict laws to control the news media, Jordanian officials also shut a Hamas-linked magazine, Islamic Palestine, and warned Hamas leaders against making public statements that might strain relations between Jordan and Arafat's Palestinian Authority.

In recent comments certain to have irked Arafat, Hamas officials in Amman lambasted conciliatory meetings between Arafat and leaders of breakaway Syria-based factions of the PLO and threatened to start an "alternative" group implacably opposed to both Arafat and Israel.

Jordan, with a majority population of Palestinian origin, has long tried to steer clear of internal Palestinian factional disputes.

In Beirut, Lebanon, a Hamas spokesman pledged Tuesday that the group would persist in its campaign against a peace accord with Israel. But with the Syrian government's indicating to Palestinian groups in Damascus that they should eschew terrorism and guerrilla training, at least while in Syria, Arafat's most militant Palestinian critics have few regional havens left, Palestinian observers noted.

One experienced observer of Jordanian-Palestinian intrigue, Ehud Yaari, the Israeli journalist and author, said Tuesday that Jordanian officials were attributing their move against Hamas to a specific request from Arafat. If so, that would be yet another full turn of the Middle Eastern wheel, as Arafat was himself expelled from Jordan along with the rest of the PLO leadership three decades ago.

Arafat, who has been traveling in North Africa and Europe, said nothing publicly about the Jordanian move.

Arafat had a relationship with the late King Hussein of Jordan that evolved from defiant rivalry to uneasy partnership -- with the monarch's insisting on a formal role in negotiations with Israel and the Palestinians on sensitive issues like water rights, refugees and the final status and boundaries of Jerusalem.

Under King Abdullah, however, Jordan appears to be taking a more indirectly supportive approach, signaling a willingness to aid Arafat and Barak in their effort to deal with the conflict bilaterally.

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[I wonder why they don't talk about Egypt's president coming to hide in Washington DC's Blair House several times during the Clinton administration? Word from one police officer was that he had a death threat at home. Interestingly, the first time it happened was when Clinton, raw and new in his first year, was at the Group of 8 economic summit for the first time in Canada. Meanwhile full security was set up for the entire time Clinton was gone, and Pennsylvania Avenue became Mubarek's personal domain. Even more so in later years, after Pennsylvania Avenue had been closed.]

Egypt: Model of Mideast Peace

By The Associated Press, September 1, 1999
http://www.nytimes.com/aponline/i/AP-Egypt-First-in-Peace.html

CAIRO, Egypt (AP) -- Here's one window on the state of the Middle East: An Egyptian entrepreneur who speaks proudly of the business he's built with Israel, and fondly of the Jewish business contacts who call with greetings on Muslim holidays.

Here's another: A summer movie, just one among the latest of many Egyptian releases with a similar theme, that depicts an Israeli seductress nearly succeeding at luring a trusting young Egyptian into her father's plot to rule the world.

Both views are worth studying now that other Arab states at last appear ready to follow the lead of Egypt. Two decades ago, Egypt was the first Arab country to sign a peace treaty with Israel. The Palestinians and Israelis reached an interim agreement in 1993, and Jordan signed a peace treaty with the Jewish state a year later.

First in peace -- albeit a strained and fitful one -- Egypt is the model for the Middle East as it faces the challenge of turning its back on decades of violence and distrust to forge a new relationship. Secretary of State Madeleine Albright heads here Thursday at the start of a Mideast tour.

Since buying a fertilizer company six years ago, Egyptian entrepreneur Amr Waly has viewed the future partly in terms of the basic elements of the same desert soil Egyptians and Israelis struggle to make bloom.

Egypt produces nitrogen, Israel produces potassium and phosphate. Waly mixes the three in his factory in the southern Egyptian city of Fayum, and sells the soil additive to small farmers and backyard gardeners.

Importing materials from neighboring Israel instead of Europe saves time and money. But Egyptians who lost sons or were wounded themselves in Egypt's 1967 and 1973 wars with Israel have rejected his product. Waly was just a child during those conflicts, and wants to keep history out of business.

``Business has no religion, no nationality,'' he said.

Egyptian-Israeli trade, excluding Israeli oil imports, totaled a paltry $74 million in 1998, said Reuven Azar, economic officer at the Israeli embassy in Cairo.

He hopes for improvement, and was encouraged by the interest he saw Egyptians taking in the Israeli leadership elections earlier this year, when moderate Ehud Barak trounced Benjamin Netanyahu.

While Waly can speak of friendship with Israeli businessmen he has known for years, all many Egyptians know of their Israeli neighbors is what they see in movies like ``The Girl from Israel.'' That summer thriller ended with the too-trusting Egyptian saved by elders whose wisdom has been sharpened in war.

Egypt has proven it is possible to make peace with Israel without giving up the right to criticize it, and that has made it easier for other Arabs to consider coming to terms with the Jewish state, said Kenneth Stein, director of Emory University's Middle East Research Program.

Egypt also set the pattern for dealing pragmatically with Israel, said Stein.

Egypt contends the Camp David agreement was the first step toward a comprehensive peace that would address the concerns of Palestinians and other Arabs. But Stein said Egyptian President Anwar Sadat signed the 1979 agreement chiefly to retrieve the Sinai Peninsula, and get better relations with and financial aid from the United States.

Thanks to Camp David funding provisions, Israel and Egypt receive more U.S. foreign aid than any other country in the world. It has meant clean drinking water, electricity and immunizations for millions of Egyptians.

``Sadat was interested in helping Egypt first. That idea ... has now captured most of the Arab world,'' Stein said.

Syria, for instance, appears ready to strike a deal with Israel to get territory back, rebuffing Egyptian efforts to mediate. But the most populous country in this corner of the world, with one of the region's most powerful armies, will certainly continue to be an influence as Arabs make peace with Israel and learn to live with the Jewish state.

As for the pragmatic world of business, fertilizer entrepreneur Waly is exporting his Israeli-Egyptian mix to other Arab countries.

``We have to face reality,'' Waly said. ``Israel is real.''

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[Have you ever noticed how media so often describe Kurds as victims, underdogs, or terrorists? This sure looks like they're ordinary folk, and good neighbors too!]

Kurds Sending Aid to Turkey

By The Associated Press, September 1, 1999
http://www.nytimes.com/aponline/i/AP-Turkey-Quake-Kurds.html

ISTANBUL, Turkey (AP) -- Kurds in the war-ravaged southeast and in poor Istanbul neighborhoods are sending food and medicine to quake-stricken areas of Turkey -- charity that some hope will ease tensions between Turks and Kurds.

The aid comes as Kurdish guerrillas are trying to reshape their movement into a political force and is being spearheaded by the People's Democratic Party, a legal pro-Kurdish group that many Turks suspect is a front for the militants.

The aid ``makes for a warm atmosphere,'' said Mahmut Yesilok, a party official in Istanbul, adding that ``political change will only be possible if there is pressure from below.''

But Turkey has rejected any political talks with the guerrillas and is deeply suspicious of the pro-Kurdish party.

Kurds, for their part, fear that the economic destruction wrought by the Aug. 17 earthquake will lead the government to abandon proposals to pump desperately needed funds into the largely Kurdish southeast, already the country's poorest region.

``There are two earthquakes in Turkey,'' Yesilok said, referring to 15 years of fighting between Kurdish guerrillas and the Turkish army that left thousands of towns and villages in ruins. ``If the government doesn't consider those earthquakes equally, the people will suffer.''

After Turkish commandoes captured Kurdish guerrilla leader Abdullah Ocalan earlier this year, Prime Minister Bulent Ecevit called for low-cost loans, free state land and other incentives to spark economic development in the largely Kurdish areas.

But most of the aid has not come through and prospects for its approval are even more remote as the government faces a bill that could top $20 billion to repair quake damage.

``The quake relief and reconstruction will obviously take priority over the southeast,'' said Alan Makovsky of the Washington Institute for Near East Policy.

But some experts say that with Turkey in desperate need for foreign funding to repair shattered homes and factories, the West might be in a position to nudge the country toward approving an aid package for the southeast.

``If Ecevit explains to foreign governments that he is trying to keep the aid package on track, it will be an incentive to Western governments to be more generous than they otherwise would have been,'' Makovsky said.

In southern Turkey, municipalities controlled by the pro-Kurdish party filled dozens of trucks with blankets, food, medicine and tents and drove them to the quake area to distribute to victims of the tremor, which has killed more than 14,000 people.

At least one shipment from the largely Kurdish town of Siirt was confiscated by police, but officials of the pro-Kurdish party said that was likely part of a new policy mandated that all aid be channeled through the state.

``Police said they would give the goods to a crisis center,'' said Ridvan Erdem, who has helped bring several aid shipments to the area.

Although the quake hit the northern Aegean coast of Turkey, hundreds of miles from the Kurdish areas, many of those killed or left homeless were impoverished Kurdish migrants from the southeast who have flocked to the more economically developed west.

At least 2,000 Kurds were killed in the quake, Yesilok said.

They mostly lived in poorer neighborhoods, where buildings made of cheap cement crumbled during the temblor.

Officials of the People's Democratic Party stressed that their aid was given to Turks and Kurds as a humanitarian gesture and was not steered toward Kurdish areas.

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U.S. Said Spied on Panama Official

By The Associated Press, September 1, 1999
http://www.nytimes.com/aponline/a/AP-Alien-Smuggling.html

MIAMI (AP) -- By eavesdropping on conversations of top Panamanian officials, American agents were able to uncover an immigrant smuggling ring allegedly operated by some of that country's government officials, a newspaper reported today.

Operating from the U.S. embassy, agents bugged top officials and associates of President Ernesto Perez Balladares and discovered at least five other government officials suspected of smuggling people, The Miami Herald reported, citing unnamed sources.

In one conversation, Panama's intelligence chief, Samantha Smith, is allegedly heard discussing the arrangement of visas for Chinese immigrants bound for the U.S., the newspaper reported.

The report did not indicate what kind of bugging equipment was used.

``We had intercepts on a whole bunch of conversations,'' a senior U.S. official told the Herald on the condition of anonymity.

The U.S. Justice Department is investigating whether government officials sold Panamanian visas to Chinese immigrants for illegal entry into the United States, the Herald said.

Perez Balladares has denied he pressured officials to approve visas for Chinese citizens.

Three Panamanian government officials suspected of involvement in alleged smuggling ring were fired in June, after Perez Balladares learned of the investigation.

The fired officials include Smith, a CIA-trained intelligence officer, Cesar Martans, director of Tocumen International Airport, and Luis Arauz Chang, head of the national police's aviation service.

Panamanian immigration records show that only 135 legal visas have been issued to Chinese immigrants this year, but community leaders say substantially more have arrived.

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Panamanian President To Step Down

By The Associated Press, September 1, 1999
http://www.nytimes.com/aponline/i/AP-Panama-Overshadowed-President.html

PANAMA CITY (AP) -- Ernesto Perez Balladares steps down today as president of Panama with his economic achievements overshadowed by a failed attempt to seek re-election and the alleged sale of illegal visas to Chinese citizens.

Perez Balladares, who led a steady economic recovery for Panama during his five-year term, has been in a slump since last August, when voters rejected his attempt to change constitutional limits barring him from seeking a second consecutive term.

That was followed by his party's crushing defeat in the presidential elections last May. He was also eased out of the party's top position, and two days ago, the party lost the majority in the national assembly when a small allied party joined the Arnulfista Party of President-elect Mireya Moscoso.

A dispute over protocol caused Perez Balladares to refuse to attend today's inauguration ceremony. Instead, he delivered his outgoing speech Tuesday before the national assembly.

He accused Moscoso of being rude and said he would not attend the ceremony unless his party got half the tickets, ``so we can both be booed.''

The most recent and damaging scandal was sparked by his former chief of intelligence, who accused him and his private secretary of asking her to sign hundreds of illegal visas for Chinese citizens.

The newspaper La Prensa said visas were sold for as much as $15,000 each.

Samantha Smith, the former chief of Public Security and National Defense, had her U.S. visa revoked in June at the request of the U.S. Embassy in Panama on charges she was involved in the sale of illegal visas.

This week, Smith broke her silence and accused Perez Balladares and his secretary, Romulo Abad, of selling the visas. She was quoted by La Prensa as saying she was told by Abad that the money was needed because the presidential budget was short.

Stung by Smith's testimony on the eve of the president's departure, the Justice Ministry released a statement Tuesday saying Smith was ``the only person mentioned by the State Department in connection with this scandal.''

The ministry added that the Panamanian government asked the U.S. State Department, Justice Department and President Clinton for evidence of the charges against Smith. ``To this date,'' the statement added, ``there has been no answer.''

The ministry denied any presidential involvement in the sale of illegal visas and added that Smith's statements could only help ``conservative'' groups in the United States who resent Panama's refusal to allow U.S. military bases in Panama after December, when Panama takes full control of the U.S.-built Panama Canal.

Perez Balladares came to power as an economist who said he would prepare the country to take over administration of the Panama Canal.

He focused largely on the economy during his administration, reducing protectionism, changing the labor laws and engaging in a public works program that included the construction of several hundred miles of a four-lane highway, part of the Pan American highway and wide expressways that helped alleviate the capital's traffic problems.

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Poland, Germany Remember WWII

By The Associated Press, September 1, 1999
http://www.nytimes.com/aponline/i/AP-Poland-World-War-II.html

GDANSK, Poland (AP) -- With a handshake at the border, the presidents of Poland and Germany heralded reconciliation between their countries today, the 60th anniversary of the Nazi invasion of Poland that started World War II.

The first shots of what was called the Second Great War were fired in Poland on Sept. 1, 1939. Fighting eventually spread through 61 countries on four continents before ending six years later, with 50 million people dead and the world order changed forever.

Polish President Alexander Kwasniewski shook hands with his German counterpart, Johannes Rau, in the middle of a bridge over the Oder River separating their nations. Flowers and flags marked the spot where a white line used to signify the border.

They then walked to the Polish side and greeted a small crowd, some of whom applauded, with Rau calling it ``a great day for both countries.''

Later in Gdansk, an air raid siren sounded at noon in this Baltic port at the towering concrete monument that marks where a German war ship opened fire on the Westerplatte depot to begin the war. With flags fluttering under clear skies, Kwasniewski and Rau each pledged cooperation and friendship at a ceremony attended by veterans of both sides.

``The century that is ending now was a century of war,'' Rau said. ``Let us work together from this day forward so that at the end of the next century, Poles, Germans and all Europeans can say: The 21st century was a century of peace.''

Kwasniewski, a former communist, noted Gdansk was where the war began, but also where the Solidarity movement that toppled communism in Poland was founded. He added that Poland's defeat of communism helped spur the subsequent reunification of Germany.

``We meet in an entirely different country, a different world, and those who used to be our enemies we consider good neighbors and close partners,'' he said. ``For the first time in our history we have been allies, and I'm proud that I can say more -- we are friends.''

Poland was one of the war's biggest casualties, losing two decades of independence, 6 million of its people and 40 percent of its national wealth. Decades of communist rule established by the Yalta agreement followed the fighting.

Now the Poles have democracy 10 years after toppling the communists, but the bitter memories remain. An April survey of 1,092 adults by the state Center for Polling Public Opinion found one in four Poles -- mostly the elderly who lived through the war -- doubted reconciliation with the Germans could ever happen. The poll had a 3 percent margin of error.

After the war, communist rulers cultivated the Poles' enmity toward Germany to strengthen the nation's isolation from Western countries. But since Poland and the former East Germany shed their communist systems, the reunified Germany has been Poland's strongest foreign investor and was a key supporter for its membership to NATO in March. It also has supported Poland's bid to join the European Union.

The reconciliation began with former West German Chancellor Willy Brandt, who knelt in penance at the memorial for victims of the Warsaw Ghetto uprising during a 1970 visit. Brandt also signed a treaty with Poland renouncing claims to 40,000 square miles of former German territory incorporated into Poland at the end of the war.

Poles who survived the German invasion retain vivid memories of the first day. At 4:45 a.m., the German armored ship Schlezwig-Holstein, on a friendly visit to Gdansk, fired at the Westerplatte depot and its 182-strong garrison headed by Maj. Henryk Sucharski. Within hours, German tanks rumbled across the border and the battle against Polish defenders began.

It took just over a month for the Germans to fully prevail, with Hitler holding his victory parade in Warsaw on Oct. 5.

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Waldo Cohn, a Developer of Plutonium for the Atom Bomb, Dies at 89

By NICK RAVO, September 1, 1999
http://www.nytimes.com/yr/mo/day/news/national/obit-cohn.html

Dr. Waldo Cohn, a biochemist involved in building the world's first nuclear bomb and later a pioneer in using radioactive isotopes for medical research, died on Friday at a hospital in Oak Ridge, Tenn., where he lived. He was 89.

During World War II, Cohn worked on the Manhattan Project in Oak Ridge and helped create plutonium for the bomb dropped on Hiroshima by using a process known as ion exchange chromatography in the splitting of uranium atoms.

At the same time, he founded a symphony orchestra that is still performing today.

After the war, the technique Cohn used to create plutonium was used to identify the components of the nucleic acids DNA and RNA, and it became crucial in understanding how genetic material transferred its information into protein molecules.

"Cohn's method enabled biochemists to clarify the structure as well as function of the RNA," said Dr. Alvin M. Weinberg, a friend and a former director of the Oak Ridge National Laboratory. "In those days, it was not clear what the functions of nucleic acids were."

Cohn was also the first scientist to organize, promote and distribute radioactive isotopes produced in nuclear reactors for use in medical research and treatment.

"The widespread use of these isotopes is perhaps the most important scientific byproduct of the Manhattan Project," Weinberg said.

Waldo Cohn was born in San Francisco. He received bachelor's, master's and doctoral degrees from the University of California at Berkeley. He was doing postdoctoral research at Harvard Medical School in 1943 when he joined the Manhattan Project at the Metallurgical Laboratory at the University of Chicago. He moved to Oak Ridge the next year.

After the atomic bomb was dropped, Cohn joined many other scientists in calling for the weapon to be controlled by the United Nations.

In 1953, Cohn was elected chairman of the town advisory council in Oak Ridge. As chairman, he pushed through a resolution urging the federal government to include the town and its schools in an order desegregating military bases that had just been signed by President Dwight D. Eisenhower.

Opponents, however, mounted a drive to remove Cohn, and eventually he stepped down from the post of chairman but served out his two-year term on the council.

From 1962 to 1997, he was editor of the annual series of monographs Progress in Nucleic Acid Research, and for many years he helped name new biochemicals. He also received two Guggenheim Fellowships and a Fulbright Research Scholarship. He wrote scores of scientific papers, and he was a fellow of the American Association for the Advancement of Science and the American Academy of Arts and Sciences.

Cohn retired from the Oak Ridge National Laboratory in 1975 but continued as a consultant for several years. He is survived by his wife, Charmian; a brother, Roy, of Berkeley; two sons, Marcus, of Hood River, Ore., and Dunell, of St. Louis, and four grandsons.

Cohn was also an amateur cellist who continued to perform until two years ago. Shortly after arriving in Oak Ridge, he founded Tennessee's oldest continuing symphony orchestra, the Oak Ridge Symphony, which is now 55 years old.

Perhaps his best known musical accomplishment was the conducting of the symphony in its 1952 performance of the premiere of the first serious musical composition inspired by the atomic age: "Overture to a Dedication of a Nuclear Reactor," composed by Arthur Roberts.

The piece was dedicated to Cohn.

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Holbrooke Speaks, But Who Listens?

By The Associated Press, September 1, 1999
http://www.nytimes.com/aponline/i/AP-Kosovo-Whos-Listening.html

VIENNA, Austria (AP) -- During his first Balkan tour since becoming U.N. ambassador, Richard Holbrooke delivered a forceful message: Washington and its partners demand a multiethnic, multicultural and democratic Kosovo.

But those are not the primary goals of Holbrooke's ethnic Albanian interlocutors. Their goal is independence from Serbia, the main republic of Yugoslavia.

Therein lies the dilemma facing the United States and its partners in building a peaceful, tolerant society in a province that has known neither in recent years.

A June peace agreement halted the 18-month Serb crackdown that killed 10,000 people -- mostly civilians -- and forced more than 800,000 ethnic Albanians to flee their homes.

But the agreement did not resolve the issue that caused the war: ethnic Albanian aspirations for independence.

In order to win Russian and Chinese support for the peacekeeping mission in the U.N. Security Council, Washington accepted the principle that Kosovo remains an integral part of Serbia, albeit under international control.

For the time being, the United States can avoid the independence question in favor of more pressing matters, including the demilitarization of the Kosovo Liberation Army by Sept. 19.

At some point, however, the issue must be faced. Ethnic Albanians constituted 90 percent of Kosovo's prewar population of 2.1 million, and the flight of Kosovo Serbs, Gypsies, Montenegrins and Turks has doubtless raised that percentage.

Kosovo's Albanians agitated for nearly a decade for independence before the crackdown. The recent bloodshed has only served to heighten their expectation that Kosovo will never revert to Belgrade's control.

The KLA and its moderate ethnic Albanian rival, Ibrahim Rugova, are content to mollify Washington by issuing statements affirming their support for Western ideals and deploring revenge attacks on Serbs.

For them, however, the real issue is power. Both Rugova, twice chosen president of Kosovo in elections never recognized by Serbia, and KLA political leader Hashim Thaci are competing for leadership.

Following a meeting with Holbrooke, who left Tuesday for Bosnia, the KLA's military chief, Agim Ceku, promised to meet the Sept. 19 deadline to disband and disarm. But he also made clear the KLA would not disappear.

``The KLA will transform in several directions, not just into a military guard,'' Ceku said. ``One part will become part of the police, one part will become civil administration, one part will become the army of Kosovo. And another part will form a political party.''

That would give the levers of power to an organization that suffered defeat after defeat against the Serbs until NATO intervened.

Bitterness against Serbs runs deep in KLA ranks and is unlikely to disappear even if Serbia's opposition topples Yugoslav President Slobodan Milosevic. Milosevic exploited -- but did not create -- the ethnic conflict, which dates from 1912, when Serbs captured the territory and ended 500 years of Ottoman domination.

Before that, Kosovo was Serb, the center of their medieval kingdom and the site of some of their most treasured monasteries.

Multiculturalism itself runs against the tide of recent history in the Balkans.

Since the breakup of Yugoslavia in 1991, the goal of the region's Slovenes, Croats, Serbs and Albanians has been to live apart and to promote cultural, national and linguistic identities they believe were denied under communism.

Minorities are tolerated but not accepted as equals.

Tellingly, the most stable country of the former Yugoslavia -- Slovenia -- is the one with the smallest minority communities. More than 90 percent of Slovenia's 2 million people are ethnic Slovenes.

``The Western pacifists and multiculturalists should finally keep their mouths shut and not interfere any more,'' Slovenian Prof. Slavoj Zizek told Germany's Sueddeutsche Zeitung newspaper. ``If Serbs and Albanians could say to one another, `Let's throw out the stupid pacifists and multiculturalists,' then there would be hope for the Balkans.''

EDITOR'S NOTE -- AP Vienna bureau chief Robert H. Reid regularly reports on the Balkans.