N E W S L E T T E R

from the Daily Bulletin of the Hungarian News Agency MTI
distributed by the Department for Press and International Information
Ministry of Foreign Affairs, Republic of Hungary

H-1394, Budapest P.O.B. 423.
Telephone: 36 (1) 156-8000
Telefax: 36 (1) 156-3801
No. 32/1995                                                     13 February 199
5

Luxembourg: Horn, Juncker - Press Conference


        Luxembourg, February 10 (MTI) - Luxembourg supports the Hungarian
view that negotiations on full membership should begin immediately after the
European Union's Inter-Governmental Conference, in 1996, and also that
admission be completed by the year 2000, Luxembourg's Prime Minister Jean-
Claude Juncker said at a press conference held jointly with Hungarian Prime
Minister Gyula Horn.

        Juncker also shares the Hungarian view that separate negotiations shoul
d
be held with each aspiring state. Luxembourg did not intend to handle these
countries as one bloc, he said.

        Horn arrived in Luxembourg on Friday and is the first Hungarian prime
minister to visit the Grand Duchy. After an audience with Grand Duke John, he
held talks with his host.

        At the joint press conference, the Hungarian premier said he was satisf
ied
with Luxembourg's approach to Hungary's efforts to join the European Union.

        Asked whether Luxembourg would be ready to share the financial burdens
imposed on the European Union by its expansion, Juncker said that when a stage
had been reached from which there was no turning back, the EU would do all it
could to create bridges between it and the states awaiting full membership. In
this,
Luxembourg would play its part, Juncker confirmed, adding that through this
sharing of burdens Luxembourg would become richer, not poorer.

        The Hungarian prime minister also briefed his hosts on Hungary's
privatization plans, asking Luxembourg's government to encourage its major
companies to participate in this process.

        He mentioned that Hungary had offered to allow the citizens of
Luxembourg in the future to enter Hungary without showing their passports -
they
would only be required to produce their identity cards. The two countries also
plan
to sign an agreement on tourism in the near future, the Hungarian prime
minister
said.

Horn Concludes Visit to Belgium, Luxembourg


        Brussels, February 11 (MTI) - Hungarian Prime Minister Gyula Horn
concluded his four-day official visit to Belgium and Luxembourg on Saturday
afternoon.

        On Saturday, Horn attended a festive session of the European Honorary
Senate. A member of the Senate since 1991, Horn today had the honorable task
of nominating Austrian Foreign Minister Alois Mock for membership.

        Horn arrived in Brussels on Wednesday morning. During the first three
days of his visit, he held talks with the King of Belgium and the Grand Duke of
Luxembourg, both countries" prime minister and foreign minister, the NATO
Secretary-General, the President of the European Commission, the Secretary-
General of the Western European Union, and the President of the European
Parliament. He met senior representatives of the business life of Belgium and
Luxembourg, and visited the Luxembourg-based European Investment Bank.

        The prime minister's visit was primarily aimed at confirming Hungary's
endeavour to join the European Union and NATO. During his bilateral meetings,
Horn outlined Hungary's strategic plans for privatization this year, and
encouraged
the two countries" investors to take part in the process. All his negotiating
partners
expressed their interest in concrete and detailed offers.

        Horn left Brussels for Budapest on Saturday.

President Goncz in Malta


        Valletta, February 10 (MTI) - On the second day of his official visit t
o
Malta,
Hungarian President Arpad Goncz laid a wreath at the monument to Maltese
Independence. Later he went to the historic capital Mdina, after which a sight-
seeing tour of Valletta, the present-day capital, followed. February 10th is a
national holiday in the Republic of Malta, commemorating Saint Paul the
Apostle's
shipwreck on the Maltese coast.

        The Hungarian president watched the beginning of a huge procession
which was part of today's celebrations. In the evening, he gave a gala dinner
in
honour of his host, Maltese President Ugo Mifsud Bonnici.

        President Goncz's thoughtful hosts had not forgotten that it was his 73
rd
birthday today and he was repeatedly congratulated on this.

Hungarian President Concludes Visit to Malta


        Valletta, February 11 (MTI) - Hungarian President Arpad Goncz concluded

his visit to Malta on Saturday.

        Before leaving Malta, Goncz told a news conference, "our talks focussed

on the two countries" accession to the European Union. We agreed that our
political and economic interests are identical in this field, so we should
support,
and not compete with, one another."

        During his two-day official visit, Goncz met his counterpart Ugo Mifsud

Bonnici repeatedly, and held talks with Prime Minister Edward Fenech-Adami, and
the leader of the opposition, Alfred Sant.

        "Although our geopolitical situation is different, we have a shared int
erest
in
joining the European Union. There exists some fear in the EU with regard to
opening the door. Malta and Hungary have a common interest in dispelling this
fear and confirming that they are not rivals and do not think that their
security
interests are more important than those of others," Goncz said.

        Deputy Prime Minister and Foreign Minister Guido de Marco and
Hungarian Parliamentary State Secretary of Foreign Affairs Istvan Szent-Ivanyi
surveyed the process of joining the EU.

        Szentivanyi told MTI, "the Maltese side proposed that the two foreign
ministers should meet once a year, and the two countries set up a joint
committee
to survey bilateral ties regularly. Hungary will consider the proposal in
awareness
of the advantages of dialogue."

        President Goncz returned home on Saturday.

Hungarian Foreign Minister Ends Swedish Visit


        Stockholm, February 10 (MTI) - Hungarian Foreign Minister Laszlo Kovacs

held talks with his host, Swedish Foreign Minister Lena Hjelm-Wallen, on the
last
day of his visit to Sweden. Kovacs proposed that Hungary and Sweden should
sign an agreement on the fight against terrorism, crime, and drug trafficking.
This
accord might also include a clause on the protection of military secrets, which
might be necessary eventually if cooperation between the Swedish and Hungarian
armed forces develops.

        The two sides discussed the timetable of high-level visits to their cou
ntries:
Hungarian President Arpad Goncz will visit Sweden after the Swedish general
election and Prime Minister Ingvar Carlsson is due to visit Hungary in the
second
half of this year.

        Consultations between experts from the two foreign ministries will cont
inue
to examine agreements previously signed by Hungary and Sweden to decide
whether any of them should be renegotiated in the light of Sweden's entry to
the
European Union.

        Sweden supports Hungary in its attempt to join the EU, Hjelm-Wallen
reiterated during today's talks. Kovacs outlined Hungary's foreign policy
priorities,
including EU and NATO membership.

        The Hungarian foreign minister also gave an account of Hungary's recent

efforts to normalize bilateral relations with Romania. The Swedish Foreign
Minister praised Hungary's work as current chairman of the OSCE, and especially
its efforts to try to settle the crisis in Chechnya. The two ministers agreed
that
diplomatic channels should also be used actively in the future in order to
resolve
the conflict in Chechnya.

        Kovacs returned to Hungary via Copenhagen.

Hungarian Parliamentary Delegation in Zagreb


        Zagreb, February 10 (MTI) - On the last day of their three-day official
 visit
to Zagreb, the delegation from the Foreign Affairs Committee of the Hungarian
Parliament held talks with Croatian Deputy Foreign Minister Smiljan Simic, as
well
as with the President of the Croatian parliament.

        Committee chairman Matyas Eorsi, head of the Hungarian delegation, told

MTI that their talks with Simic covered recent developments in the conflict in
the
former Yugoslavia, including the possible consequences of the ending of
UNPROFOR's mandate.

        The Hungarian delegation and the leader of the Zagreb Local Authority
discussed possible forms of cooperation between the two capitals, such as the
establishment of a Hungarian cultural center in Zagreb, Eorsi said. All the
proposals made by the Hungarian delegation were positively received, he
continued. The two sides agreed that relations between Hungary and Croatia are
exemplary. There are several economic areas in which the two countries would
like to cooperate when Croatia is no longer threatened by war, Eorsi said.

Regular Flights Can Start Between Budapest and Belgrade


        Budapest, February 10 (MTI) - A memorandum signed in Belgrade, on
Thursday, hopefully removes obstacles from a resumption of regular flights
between Yugoslavia and Hungary. Under the agreement, the Hungarian Airline,
MALEV, can start flights with commercial licenses to Belgrade from Friday,
Andras Hardy, head of the International Department at the Ministry of
Transport,
Communications and Water Management, told MTI today.

        In October 1994, the UN Security Council partially lifted the ban it ha
d
imposed on Yugoslavia, thus leaving the way open for all countries to start
passenger flights to Yugoslavia.

        MALEV and the Yugoslav airline, JAT, are still negotiating to decide on
 the
number of flights.

Tension in Coalition at Standstill, Peto Says


        Budapest, February 12 (MTI) - Two weeks ago the Alliance of Free
Democrats (AFD) parliamentary deputies were of the view that the governing
coalition arrived at a watershed, but now they believe that tension has come to
a
standstill and, after the nomination of the new central bank president and the
new
finance minister, there is a good chance for the government programme to be
implemented more consistently, AFD Chairman and parliamentary leader Ivan
Peto told a news conference in Budapest today.

        The Free Democrat MPs met at Visegrad this weekend to survey the work
done by the government in its first six months in office.

        "We considered the conclusion of a recent poll, saying that although
people are not satisfied with the work of the governing coalition, they do not
find
the opposition parties more attractive. Instead, they turn away from politics
disappointedly," Peto said.

        Concerning the privatization bill, Peto said the document was drafted o
n
the basis of compromises. Although minor technical corrections are still
conceivable, the AFD has an unambiguous position on privatization: it should be
restarted and even intensified. The Free Democrats press for the bill to be
approved as soon as possible, he said.

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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
No. 32, 14 February 1995

HORN SAYS NATO MEMBERSHIP POSSIBLE IN 1996. Hungarian Prime Minister
Gyula Horn said during his visit last week to Brussels that Hungary
could become a member of NATO as early as 1996, Reuters reports on 14
February. "The relevant NATO decision, even if of merely orientational
character, could come at the end of this year or in the first half of
next year." Horn said. "In this case it is not completely excluded that
we will be members of the North Atlantic Organisation as early as 1996."
NATO is expected to complete its year-long study on the requirements for
membership in December. Horn said meeting the European Union's
requirements would be tougher and only under an optimistic scenario
would Hungary join before the year 2000. * Michael Mihalka

GROWING PUBLIC DISSATISFACTION WITH HUNGARIAN GOVERNMENT. An opinion
poll, conducted by the National Marketing Institute in the week
following the resignation of Finance Minister Laszlo Bekesi, registered
for the first time since September 1994 a significant drop in public
satisfaction with the work of the government, Nepszava reports on
14 February. Public satisfaction with the government's work, which was
not high to begin with, dropped by 6% to 26 points on a scale of 100,
and trust in the government dropped by 7% to 35 points. The poll showed
that the president of the republic continues to enjoy the highest public
trust with 68 points followed by the Constitutional Court with 55
points. * Edith Oltay

CRIME NEWS FROM THE YUGOSLAV AREA. War is not the only source of news in
the former Yugoslavia, and recent days have featured crime in the
limelight. The Croatian media have been reporting at length about a
weekend drug-bust, in which police confiscated some 30 kilograms of
heroin. It was one of the biggest drug seizures ever reported in
Croatia. Elsewhere, Nasa borba notes on 14 February that the Hungarian
airline Malev has sacked 11 employees for stealing money from airmail
letters being sent by citizens of rump Yugoslavia via Malev. The full
extent of the thefts is still being investigated. * Patrick Moore

ROMANIAN PARLIAMENT CONDEMNS HDFR STATEMENTS. Romania's Senate on 13
February adopted by a 103-1-5 vote a declaration voicing "perplexity and
concern" over statements made by Bela Marko, chairman of the Hungarian
Democratic Federation of Romania, during a recent visit to London. The
declaration, of which large excerpts were broadcast by Radio Bucharest,
said that Marko's statements on the current status and situation of
Romania's Hungarian minority were in "evident contradiction" to reality
and were trying to "spread untruths." Marko was quoted as rejecting the
1991 Constitution's definition of Romania as a "national state" as
detrimental to ethnic minority rights. Also on 13 February, the Chamber
of Deputies adopted a separate declaration on the same issue. In another
development, a spokesman for the National Peasant Party-Christian
Democratic, one of the main forces in Romania's opposition, said on 13
February that the decision to withdraw the party's representatives from
a planned seminar on interethnic relations in Atlanta, Georgia, had been
made by NPP-CD Chairman Corneliu Coposu. The spokesman said Coposu
opposed the idea of having "a dialogue between Romanians and Hungarians
staged abroad," since "this could convey the impression of arbitration
by a foreign power." * Dan Ionescu

[As of 1200 CET]

Compiled by Steve Kettle

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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.
*****************************************************************



N E W S L E T T E R

from the Daily Bulletin of the Hungarian News Agency MTI
distributed by the Department for Press and International Information
Ministry of Foreign Affairs, Republic of Hungary

H-1394, Budapest P.O.B. 423.
Telephone: 36 (1) 156-8000
Telefax: 36 (1) 156-3801
No. 33/1995                                                     14 February 199
5

Hungarian Press Review


        Budapest, February 13 (MTI) - The following is a summary of
articles carried on Monday by Hungarian national dailies:

        Nepszabadsag - In Prime Minister Gyula Horn's view, NATO
could make a decision on Hungary's admission before the end of the
year. He also believes there is a possibility that Hungary will become a
member next year, according to an interview given to the paper. In the
light of Hungary's current economic situation, membership of the
European Union cannot be expected before the year 2000. /pages 1 and
3/

        Nepszabadsag - A Szonda-Ipsos survey carried out in January
shows declining popularity ratings for three Socialist politicians:
outgoing Finance Minister Laszlo Bekesi (down 8 points to 43), Prime
Minister Gyula Horn (down 5 points to 56), parliamentary group leader
Imre Szekeres (down 5 points to 50), as well as for Sandor Nagy,
chairman of the National Confederation of Hungarian Trade Unions
who won a seat in Parliament on the Hungarian Socialist Party list
(down 5 points to 49). The popularity ratings are led by President
Arpad Goncz (unchanged at 78 points), in second place is Mayor of
Budapest, Gabor Demszky (up one point at 68), and in third place
Defence Minister Gyorgy Keleti (unchanged at 65 points) /pages 1 and
5/

        Nepszava - Friction between the coalition partners (the
Hungarian Socialist Party and the Alliance of Free Democrats) would
be reduced if the problems of personnel could be resolved, Minister of
the Interior Gabor Kuncze says in an interview. Some recent well-
publicized disagreements have damaged the government"s standing in
the eyes of the public. For this reason problems that can be resolved
by internal discussions between the coalition partners should not be
aired in public, the minister suggests. /page 2/

        Budapest, February 13 (MTI) Magyar Hirlap - After a long period
of constant decline, the size of the working population finally dropped
below 5 million in 1994 (Hungary has a total population of 10.3
million). According to the Central Statistical Office, in 1993 there were
5,015,000 people of employment age in Hungary, while last year only
4,768,000 workers and unemployed were registered. /page 4/

        Nepszava - Hungary has both won and lost in recent mass
population movements which have also involved the exchange of
highly qualified people. (In 1991 27,000 research scientists were living
in Hungary, but in 1993 there were 2,000 less.) The tendency is for
Hungary's professionals to leave for the West, while Hungary is the
target of those emigrating from Transylvania, Sub-Carpathia, Ukraine,
and Russia. The paper publishes an article discussing the dangers of
this two-way phenomenon. /pages 1 and 46/

        Nepszabadsag - A 43-km section of the M1 motorway, between
Gyor and Hegyeshalom (on the Austrian border) will be opened at the
end of December. Private cars will have to pay a toll of HUF 500, and
trucks almost HUF 1,800 to use the road /page 5/

        Nepszabadsag - According to surveys by Hungary's Department
of Health and Social Security, hospitals and clinics treated as many as
2.2 million patients, with 104,657 beds, from July 1, 1993 to June 30,
1994. The use rate of beds did not exceed 67 per cent. If the utilization
of beds reached 80 per cent, 37,700 less beds would be needed, the
Department says. /page 17/

Hungarian-British Defence Talks


        Budapest, February 13 (MTI) - Defence Minister Gyorgy Keleti of
Hungary and British Undersecretary of State for Defence Sir
Christopher France today discussed arrangements for the joint
Hungarian-British-German exercise to be held in Hungary this autumn
as part of NATO's Partnership for Peace plan. Sir Christopher reached
Budapest on Monday, invited by counterpart Jozsef Feher.

        Keleti said he had great hopes for his spring visit to London.

        Keleti told Sir Christopher how Hungary hopes to join NATO and
meet its standards. He said the British official agreed that Hungary's
army should work mainly on intellectual compatibility, such as
teaching of foreign languages to Hungarian officers.

        A good chance for language practice for military officers will be
the Hungarian-British-German manoeuvres, with participants also to
be invited from Romania, Slovakia, and Slovenia in the spirit of the
Partnership for Peace programme, Keleti said.


Hungary and Slovenia Sign Border Agreement


        Budapest, February 13 (MTI) - In the last three years, freight
traffic and passenger waiting time have grown sharply on the about
70-km-long border section between Hungary and Slovenia.

        To improve this, an agreement was signed in Lenti on Monday
by Brigadier General Balazs Novaky, National Commander of the
Hungarian Border Guards, Deputy Secretary of State Alojz Kuralt,
Commander of the Slovenian Police, as well as Brigadier General
Mihaly Arnold, National Commander of Hungary's Customs and Excise
Office, and Franc Kosir, Director of the Slovenian Customs
Administration.

        By the agreement, the time and mode of operation of several
border posts will be changed, and passenger traffic will be rerouted if
needed, with only freight transport allowed across at Redics.

        If waiting time exceeds 30 minutes for passenger traffic and
three hours for freight transport, coordinated steps will be taken to
ensure passage of at least 10 lorries an hour on each side.

        It was announced that building a truck terminal, to take one and
a half years, will begin at Redics in June with PHARE support.


Hungarian-Polish Trade Talks


        Budapest, February 13 (MTI) - Hungary and Poland would like to
introduce more liberal regulations to ease agricultural exports and
imports between the two countries. Hungary regards Poland as a
major trading partner, Attila Karoly Soos, state secretary at the
Hungarian Ministry of Industry and Trade, said today when reviewing
the talks he held in Warsaw last week.

        The two sides agreed that bilateral trade is developing well,
Soos continued. Trade between the two countries totalled USD 415.3
million last year - 33.6 per cent more than in 1993.

        Hungary's exports to Poland totalled USD 222 million - a rise of
36.4 per cent on the previous year, and imports amounted to USD
193.3 million, which was 30.5 per cent more than in 1993.

        One third of Hungary's exports were agricultural products, and
another third was made up of chemical and pharmaceutical products.
The proportion of machinery and equipment exported increased to 20
per cent. The bulk of Hungary's imports were raw materials and energy
sources.

        During last week's talks, it was agreed that a Polish-Hungarian
Economic Forum would be held in early April, to lay the foundation for
lasting cooperation. At this meeting future strategies will be discussed
under the direction of the Hungarian and Polish ministers of industry
and trade and with the participation of businessmen, civil servants and
representatives from the respective chambers of commerce.


Foreign Military Observers in Hungary


        Budapest, February 13 (MTI) - Under the Vienna agreement on
the reduction of conventional armed forces in Europe, a Belgian-led
multinational team of observers will stay in Hungary from February 13
to 16 and an another group under Spanish command between
February 14 and 16, Defence Ministry press officers told MTI on
Monday.

        The Belgian controllers will monitor the destruction of artillery
pieces in Tapioszecso on Tuesday, and the Spanish group will check a
military facility on Wednesday.

        Italian observers will pay a review visit to Kecskemet on
February 16.

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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.
*****************************************************************




Wednesday, 15 February 1995
Volume 2, Issue 33


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

**MINORITIES MAY BENEFIT FROM EU EFFORTS**
  Slovak Foreign Minister Juraj Schenk says Bratislava could
  apply for full European Union membership as soon as late June
  and will, in the meantime, work on improving frayed ties with
  fellow-applicant Hungary.  Slovakia, which became an associate
  member of the EU on February first, is one of several former
  communist countries in eastern and central Europe which want
  to join the E.U.  Poland and Hungary have already submitted
  applications while the Czech Republic plans to apply in 1996.
  Brussels has made it clear that would-be members must resolve
  any disputes with neighboring countries before joining.
  Bratislava has long had strained relations with Budapest over
  Slovakia's 600,000-strong ethnic Hungarian minority.
  Yesterday Schenk stressed the importance of a long-awaited
  friendship treaty which Slovakia and Hungary are due to sign
  on March 21st.  But leaders of Slovakia's Hungarian community
  doubt the treaty will bring any significant changes for
  minorities, who say their cultural and educational rights are
  under threat from the new administration of Prime Minister
  Vladimir Meciar.


 **ETHNIC TENSIONS PERSIST IN ROMANIA**
  Romania is facing similiar charges from its Hungarian
  minority, especially in light of a motion adopted late
  Monday night by parliament.  The Senate has accused the
  Hungarian Democratic Union of Romania, which represents the
  country's one-point-six million ethnic Hungarians, of
  alleging that Romania is trying to assimilate its  Hungarian
  minority.  The Democratic Union wants limited self-government
  and controls over language and education.  Bucharest says its
  treatment of ethnic minorities is in line with Western
  standards.  Disagreements between Bucharest and Budapest have
  delayed a key bilateral treaty.  E.U. assistance and
  membership for both countries depends on that agreement.
  Bucharest has announced plans to officially apply for E.U.
  membership by June.


**NOW THAT YOU'VE HAD YOUR MORNING COFFEE**
  Hungarian officials say they've found high levels of a natural
  carcinogen in several shipments of coffee, mostly from Africa.
  The carcinogen is produced by a mold-like fungus that attacked
  coffee bean crops because of wet weather.  Coffee originating
  in Burundi and Uganda has been affected, as have exports from
  other African and Asian countries.   The Hungarian National
  Institute of Nutritional Science is warning that the
  contaminated coffee probably went to other European countries,
  because it came though big ports like Hamburg.



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

**HUNGARY'S FOREIGN INVESTMENT DOWN**
  Hungary lost more than a billion dollars in foreign investment
  last year.  Budapest reports that in 1994, the country
  attracted nearly $1.4 billion in foreign investment.  That was
  down from nearly $2.5 half billion in 1993.  The Ministry of
  Industry and Trade blames the drop on the election of a new
  government last year, and on a slowing down of privatization.
  In a separate report, the ministry says the country's trade
  deficit rose $300 million in 1994 to a total of $3.9 billion.


**HUNGARY CREATES NEW ECONOMIC POST**
  Hungary's coalition partners, the Socialist Party and the
  Alliance of Free Democrats, agreed to create the new post of
  privatization minister last night. Prime Minister Gyula Horn
  has been pushing for the new position since the failed
  HungarHotels privatization last month.  Free Democrat Member
  of Parliament Peter Hack says the privatization minister will
  be part of the economic cabinet headed by Finance Minister
  Designate Lajos Bokros.  The agreement gives the finance
  minister veto power over economic proposals, a key Free
  Democrat demand.  But the Free Democrats don't like Horn's
  reported choice for the privatization post, Socialist Member
  of Parliament Tamas Suchman.  They say Suchman's not qualified
  because he belongds to political party, the Socialists.
  Suchman also doesn't speak english and has no international
  business experience.  He's now the manager of a branch of the
  Budapest Bank in the small southwestern town of Marcali.  The
  parties will meet later this week to try to agree on a nominee
  for the post. --David Fink


**BUDAPEST STOCKS DON'T RESPOND TO FORINT DEVALUATION**
  Hungarian stock prices did not respond to this week's forint
  devaluation, falling slightly in light trading.  The Budapest
  index lost 4.24 points yesterday, closing at 1,177.42.  The
  two- percent currency devaluation came into effect yesterday.
  Traders thought a lower forint would make shares more
  attractive to foreigners.  But now they say the devaluation
  wasn't big enough to make a difference.  Many say investors
  are still cautious.


BUSINESS FEATURE
----------------

**VENTURE CAPITAL FIRMS CHANGE FOCUS IN GROWING MARKET**
  By David Fondler, in conjunction with Business Central
  Europe magazine.

  As Central Europe's business climate matures, a new breed of
  venture capitalist is moving in, supplying small businesses
  with money they need to grow.  Venture capital isn't used
  solely to start up new businesses anymore.

  Funding through venture capitalists can be attractive, because
  repayment can be deferred.  But you have to read the fine
  print. In some cases, if you accept money you have to accept a
  partner - - a new boss, or even a new mind-set.  Delia
  Meth-Cohn is finance editor for Business Central Europe
  magazine.

  "Suddenly this company which you have created is no longer
  yours.  Suddenly there's somebody else that takes over control
  of your company.  And at some point when they sell the
  company, you may just become an employee in it."

  But many Central European entrepreneurs have taken that risk --
  and profited from vital assistance in building their
  businesses. According to regional venture capital
  associations, 600 million dollars in investment capital is
  floating around Poland, there's 300 million in Hungary and
  about 180 million in the Czech Republic and Slovakia combined.
  Most of that money comes from American Enterprise Funds. These
  funds were among the first major players in the region --
  playing with American taxpayer money, allocated by the U-S
  congress. Hungarian American Enterprise Fund Vice President
  Francis Skrobiszewski was there at the start -- helping kick
  off the Polish fund in 1990.

  "We were starting off at the very cutting edge of a market
  economy.  Many of the institutions and disciplines for a
  market economy weren't established yet.  So it was a little
  bit like cutting a path through a wilderness."

  Now, five years later, many people have followed that path.  So
  much so that venture capitalists today have changed their
  focus. Many new private funds are shying away from start-up
  companies. Instead, they want to invest so-called
  "development" capital -- money to help a proven, successful
  business grow. B-C-E's Meth-Cohn explains that the philosophy
  of the private groups is quite a bit different from that of
  the Enterprise Funds:

  "The Venture Capitalists that are coming in, the private ones,
  have a mandate that has nothing to do with support or aid.
  They're trying to find those companies that are going to grow
  quickly and bring a good return and be sellable within a few
  years."

  But these capitalists are not only selling -- they're buying.
  And prices are going up as private companies grow and become
  more profitable.  And it's this investment climate that'll
  ensure that Central Europe's free market stays open for
  business.



SURVEY
------

**BALANCING ACT NEW IN CENTRAL EUROPE**
  By David Fink

  There's an old joke that Hungary has a Swedish welfare system
  with a Balkan standard of living.  That's never been quite
  true. Under communism Hungary did have an enormous system of
  government subsidies that made life easier for a lot of
  citizens.  Those subsidies extended to big industrial
  factories, they guaranteed workers a job, students an
  education and families food.  But the subsidy bonanza was on
  borrowed foreign money.  Now Hungary must pay the price and
  deep cuts in spending are needed.  Subsidies are all ready
  worth less because of inflation and the devaluation of the
  forint.  Analyst Judit Bartha of GKI Economic Research Company
  in Budapest says the real value of subsidies has fallen by 50
  percent since 1990.  Expenditures for industry, culture,
  higher education and agriculture have all dropped.  But Bartha
  says the cuts in consumer price subsidies for milk, bread,
  utilities and public transportation have had the biggest
  impact on people's lives.

  "The citizens could see or feel the difference imediately and
  it was very difficult and it's still very difficult to
  accustom to it.  As our wages become, slightly, to market
  wages I suppose all the prices must be real market prices as
  well."

  Bartha says these price increases are coming at a time when most
  Hungarians are unsure about their futures.  Many companies
  went bankrupt in the early 1990s because of cuts in subsidies
  they received from the government.  But, according to Free
  Democrat Member of Parliament Marton Tardos, more steep
  reductions in company and consumer subsidies aren't likely
  soon and agriculture will continue to get state support.
  Besides, Tardos says Hungary's production and consumer
  subsidies are low already and aren't out of line with those in
  other countries.

  "I don't think you will find a single economy where there is
  zero subzidization. So I think that Hungary will
  remain in the future in a condition that is  not differing
  from the European Union's conditions in this respect."

  But some argue that Hungary will deviate from European norms in
  education if the government follows through on planned cuts in
  subsidies for university tuition.  Right now, students get a
  monthly subsidy of at least $28. But the government wants to
  actually start charging students $18 a month to make up for
  budget shortfalls.  It might not seem like much, but student
  Eszter Szabo says it is.

  "The idea of introducing a tuition fee, well, the principle
  wouldn't be bad if it were introduced gradually. If students
  at the same time are assured that they can go on studying and
  living as humans, then I wouldn't disagree with the tution
  fee. To students this is an enormus financial burden."

  University administrators admit it might be hard on students at
  first.  Eotvos Lorand University Managing Director Laszlo
  Cseresnyes would like to see banks offer low-cost loans.
  Still he says it's good for students to pay for their
  education.

  "If something is free of charge then it's not so valuable.  But
  things you have to pay for and things that are a long term
  financial burden you appreciate more."

  If that's true Hungarians must have a greater appreciation for
  many things. They're now paying more for goods and services
  they took for granted under communism. It's a tough time for
  many, but it's the only way the country can keep from drowning
  in red ink.



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Rich and Poor Women Postpone Childbearing in Eastern Europe

  JOHN POMFRET (WASHINGTON POST FOREIGN SERVICE)
  
  (C) 1995 THE WASHINGTON POST (LEGI-SLATE ARTICLE NO. 222619)


     WARSAW -- With a high-paying job at a multinational corporation, lots of
travel, her own house and two cars, Agnieszka is a living, breathing
advertisement for the good life in Eastern Europe now that the countries of
the former East Bloc have embraced free market reforms.

        Agnieszka's high-flying reality appears to have little in common with
the arduous existence of Ioana Stoenescu, a Romanian peasant who labors on a
farm on the outskirts of Bucharest. Since Romania's revolution in 1989,
Stoenescu and her family have seen subsidies for workers on state farms
evaporate with inflation. While their land now belongs to them, it lies
fallow. Late last year their television set broke, and there's no money to
buy a new one.
       But Agnieszka, 36, and Stoenescu, 29, share one thing. Neither wants
children, at least now.
      Throughout Eastern Europe, from the haves, like Agnieszka, to the have
nots, like Stoenescu, women are having fewer babies than ever before. Last
year the total fertility rate for Eastern Europe plummeted to the lowest
point this century. According to the latest U.N. population survey, many
countries, including Hungary, Bulgaria and Romania, are losing people -- not
only to emigration but because of smaller families.
      "Nothing of this nature has ever been seen in Europe even during
wartime conditions," said Miroslav Macura, chief of the Population Activities
Unit for Europe at the United Nations, who is completing a report on the
subject.
      The reasons for Eastern Europe's "baby bust" are as varied as the roads
taken by the 95.7 million people of this region following their revolutions
of 1989.
      In Hungary and the Czech Republic, two of the richer nations in the
region, couples increasingly have Western attitudes toward childbirth and
marriage. Fertility rates, which started falling in the 1980s, were down to
1.8 per woman for the Czech Republic and 1.7 for Hungary in 1994, and the
drop has been accompanied by a decline in abortions. In the Czech republic,
the number of abortions has dropped 48 percent since 1989 as more couples use
modern contraceptive techniques. The fertility rate measures the average
number of children born to women of child-rearing age; a country needs a rate
of 2.1 to maintain its population.
       The number of marriages also is down. Ferenc Kamaras, a Hungarian
demographer, has charted a huge rise in the number of unmarried couples
living together in Hungary, double that of 1980 and three times the number in
the 1970s, paralleling trends in the West.
       "No one is getting married anymore," he said.
        In Romania and Bulgaria, however, the fall in fertility rates to 1.5
from more than 2 before 1989 seems to be a result of increasing poverty
caused by a troubled transition to a market economy.
        Modern contraception is out of reach for most people in those
countries. Stoenescu, unable to afford such a "luxury," as she put it, has
avoided motherhood by having abortions -- three over the last two years.
Indeed, since abortion was decriminalized in Romania following the end of the
Nicolae Ceausescu regime in 1990, the practice has boomed. In 1991, there
were three abortions for every live birth in Romania. Although the figure has
since fallen somewhat, it is still among the highest in the world. Bulgaria's
abortion rate also is high.
             "What can I do but go to the doctor," Stoenescu said, referring
to abortions, which are almost free. "We can't even buy fertilizer for our
fields."
              Agnieszka, on the other hand, who did not want her full name
used, protects herself against unwanted pregnancy by taking birth-control
pills despite the directives of Poland's powerful Catholic Church.
Ironically, the church's success at pushing legislation to ban abortions in
1992 has galvanized the market for contraceptives.
             Agnieszka's reasons for postponing childbirth find an echo among
the growing number of young, ambitious women in Eastern Europe riding a wave
of foreign investment and economic growth.
             "I am a modern woman," she said unabashedly. "I am not ready yet
to have children. I have too much to do."
             In the early 1990s, she took a job at a public relations firm.
Her current employer noticed her and within months recruited her, offering a
substantial raise. Now she makes more than 10 times the average Polish
monthly salary of $250.
             For the first six months of her new job, Agnieszka recalled, "I
virtually didn't unpack," traveling between Warsaw and the firm's
headquarters in a West European country.
             Despite the ticking of her biological clock, Agnieszka said
she's confident she will have a child, but probably only one.
             "Is my job my life? Yes and no," she said. "But having a child
is one of the elements of life to be enjoyed . . . at some point."
          Often in poorer countries, fertility rates skyrocket as the economy
declines, U.N. official Macura noted. One explanation for the response of the
Stoenescu family and others like them is that they have lost most of the
subsidies, tax breaks and low-interest loans that the countries of the former
East Bloc used before 1989 to encourage couples to have children.
             Poland's fertility rate shot up in 1983 to around 2.5, for
example, three years after the government had announced that it would pay
working women the same salary if they stayed home and had children. During
those three years, the number of women taking advantage of the benefit jumped
from 80,000 to 800,000, according to Jerzy Holzer, Poland's top demographer.
Another factor, he said, might have been the onset of martial law in 1981,
which "maybe encouraged people to stay inside." Since then, as inflation has
eroded family benefits in Poland, the fertility rate has dropped to 1.8 last
year.
             In Romania, Ceausescu's population policies are legendary. He
banned abortions and encouraged women to have children they could not hope to
support. Thousands of youngsters were then handed over to the state. After
1989, the horrendous conditions in Romanian orphanages became a symbol for a
policy gone wild.
             "We know now if we have a baby, we'll have to bring it up
ourselves," Stoenescu said over coffee in a grim, one-story wood-frame house
that she, her husband and his parents call home. "How could we raise a baby
here?"
             With the revolutions of 1989, the substantial social programs of
many of the communist governments collapsed. While many of the subsidies
remain, only one country, Hungary, has adjusted them to keep up with
inflation.
             In January 1992, the Budapest government introduced new
subsidies granting money to pregnant women, mothers with children under 3,
allowances for families with a child under 18 and a special $10,000 grant
toward the purchase of a house for families with three children or more.
             Demographer Kamaras said the government's program helped slow
Hungary's population decline. Before 1989, Hungary had the lowest fertility
rate in Eastern Europe; now it's fourth.
             But pressure is building to drop the program. Officials from the
International Monetary Fund, in a recent visit to Budapest, lobbied the
government to cut the inducements. It wasn't contributing to a balanced
budget, they said.
             Western influence in other ways also has contributed to the baby
bust.
             Several women contacted for this report said that during job
interviews their prospective employers, including well-known American
pharmaceutical and beauty products companies, had asked them if they would be
willing to wait at least five years to have a child.
     None of the companies put the request in writing, but "it's a common
practice of the multinationals," Agnieszka said, adding that she chose her
current job partly because the company did not raise that subject.
            Western pharmaceutical companies back sex education programs in
schools and universities. In Hungary, several doctors said Western drug
companies were vying to participate in a sex education program that is
planned to begin next year.

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