OMRI DAILY DIGEST
No. 66, 3 April 1995

BULGARIA, GREECE CALL FOR LIFTING OF YUGOSLAVIA SANCTIONS. Bulgarian
Foreign Minister Georgi Pirinski and his Greek counterpart, Karolos
Papoulias, meeting in Sofia on 1-2 April, called for an end to the
international sanctions against rump Yugoslavia, AFP reported. They
proposed a conference of the region's main countries to press for the
sanctions to be lifted. Pirinski asked neighboring countries hit by
trade losses resulting from the embargo to appeal jointly to the United
Nations and other international organizations for compensation.
Papoulias proposed that Bulgaria, Belarus, Hungary, Romania, Ukraine,
and possibly Russia hold a conference in Athens later this month to
discuss a common strategy. Pirinski suggested that Albania, Austria,
Italy, Macedonia, and Slovenia also attend. He added that Bulgaria is
ready to accept $3 million from the International Monetary Fund in
compensation for trade losses due to the sanctions. -- Stefan Krause,
OMRI, Inc.

[As of 12:00 CET]

Compiled by Jan Cleave

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Monday, 03 April 1995
Volume 2, Issue 66


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

**BUDAPEST BANK TAKES A BACK SEAT TO BARINGS**
  The Dutch-owned ING Bank has bowed out of the running for
  Budapest Bank.  Budapest Bank is Hungary's sixth largest and
  scheduled to be its next major bank privatization.  ING says
  its main priority now is the Britsh merchant bank Barings,
  which it acquired last month.  But it still plans to consider
  expanding to Central Europe in the future.  ING is the second
  major player to pull out of buying Budapest Bank in the last
  month.  The Dutch bank was considered a favorite, after Credit
  Suisse withdrew from the bidding in March.  Analysts had
  suspected that ING's interest in Barings would hamper the deal
  for Budapest Bank.


**HUNGARY'S MOL SEEKS ARAB INVESTMENT**
  Hungary's state-owned oil company MOL is seeking investment
  from the Persian Gulf.  MOL's Chief Executive Officer, Gyrogy
  Szabo, says investors in the United Arab Emirates are
  interested in the company.  He says US firms Conoco and Amoco
  are also looking at MOL.  MOL's privatization plan calls for
  Budapest to keep 26 percent of the company's shares and sell
  the rest to foreign and local investors.  Szabo is among 35
  Hungarian businessmen visiting the Gulf region along with
  Hungarian President Arpad Goncz.


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

**CENTRAL EUROPE'S MARKETS REMAIN FLAT**
  Interview with Nick Wergen, an investment analyst with Smith
  New Court, London
  By David Fondler

  Foreign investors continue to stay away from the region's stock
  markets.  Wergen begIns our weekly stock market analysis with
  a broad assessment of last week's trading:

  Wergen:  They were entirely flat.  Flat markets in every term of
  the word.  There was some domestic interest and some domestic
  trading in each, but the internationals were entirely absent.

  CET:  Really, why is that?

  Wergen:  I think they just have too many excuses not to look at
  the markets at the moment.  There without doubt has been a
  re-definition of risk since the whole of the Mexico crisis,
  which I think has brought in peoples' willingness to slightly
  stretch their reasons for looking at emerging markets, if
  there was any trading risk, if there was any political risk,
  if there was any economic risk, then the markets have to be on
  a discount that justifies all those risks.

  CET:  But doesn't the mere definition, the mere term "emerging
  markets," imply some risk?

  Wergen:  Yeah, but to be honest, European emerging markets are
  pre-emerging markets.  We're not at the situation yet where we
  see any emerging market operational leverage.  That will come
  in the second half of this year.  It's exceptional earnings
  largely cash earnings on portfolios from either buying or
  selling companies on the stock exchange or investing in
  T-bills.  That doesn't compare well to Latin or South America
  or even to the Pacific Rim, where you're actually seeing the
  operational earnings of the emerging markets coming through.

  CET:  Let's look at some specific changes that have occurred or
  announcements that have occurred in the past week, we could
  start with Poland, we see a firming of the monetary policy,
  words of a tax stabilization plan being discussed by the
  government.  Is it going to take a while for those to kick in
  as far as turning around some investment there?

  Wergen:  Yes, I think it is.  I think the considerations that
  you have around the currency and in particular either the full
  convertibility of the currency or the question of revaluation
  actually points to the fact that there is an independent
  central bank in Poland and that is protected.  It means
  whatever the political wrangling, monetary policy will remain
  tight.

  CET:  And in the Czech Republic, also talk of revaluation of the
  currency, talk of introducing a commodities exchange.  Are
  either of those viable, and will they make a difference?

  Wergen:  The latter to an extent I think will.  The commodities
  exchange will just add to the visibility and if you like
  give an example to the equities board that you can actually
  have trading on the market rather than on the OTC, and if
  you're ever intending to access the likes of US mutual funds,
  you need to get that trading visibility, and at the moment
  that is absent in Czech.

  CET:  What about the revaluation?

  Wergen:  The revaluation I don't think will happen in terms of a
  one-off step, the Czech currency, amongst all the currencies
  in Central Europe is clearly regarded, to an extent, as
  overvalued.  Post Mexico, that means we can be slightly more
  relaxed.

  CET: In Hungary, we see the introduction of a futures market,
  futures trading, on the stock exchange, to in a sense rival
  the futures trading that already exists on the commodities
  exchange.  What's that going to do for investors there?

  Wergen:  I think that's going to help in terms of the
  sophistication of the market.  I would add to that the fact
  that in Hungary, you're going to see the OTC market becoming
  more regulated, and moving on to the mainstream market.  Given
  the fact that I would argue that OTC volumes are greater than
  on the market volumes, the combination of the two I think will
  be beneficial.

  CET:  And in Hungary, as in the Czech Republic, I think a lot of
  the most attractive, popular stocks are on the OTC market.

  Wergen:  Absolutely, out of our top six stocks, the first three
  are all OTC, we'd buy Matav, MOL and Kerkot.  After that we'd
  look at Pick, Zalakeramia and Pannonplast.

  CET:  Any chance of these moving off the OTC market, to the
  main market, to improve volumes there?

  Wergen:  I don't think there any rush, the volumes are fine on
  the OTC market.  And I think that is a testament to Hungary
  overall.  The situation will change.  Talking to you in one
  year's time, I think we'll find a very different market.



ABOUT CET ON-LINE
-----------------

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


**CET On-Line** is a Word Up! New Media Publication.  For more
  information on other E-publications published by Word Up! New
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  On-Line should be addressed to > and
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Alapitvany tamogatja.

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Tuesday, 04 April 1995
Volume 2, Issue 67


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

**HUNGARIAN SECURITY CHIEF PLEDGES TO UNCOVER CORRUPTION**
  Hungary's new minister for secret services Istvan Nikolits took
  office over the weekend announcing that he's going to set up a
  task force to investigate links between politicians and
  organized crime.  Nikolits's predecessor warned shortly before
  resigning last month that organized crime had established
  "bridgeheads" in Hungary's political establishment.  Hungary's
  deputy national police chief has said his men are already
  looking into cases of organized criminals threatening or
  bribing mid-level officials in the hope of influencing
  privatization or other public service decisions.  Nikolits
  says one of the new force's main jobs will be to check out
  large transfers of money.  But he says privatization is
  already monitored by the Interior Ministry and so will fall
  largely outside his mandate.  But the new task force will also
  work with other police and secret service units to investigate
  organized crime in general.  It'll include members of the
  police, customs and secret services.  To ensure its
  independence, it won't answer to the usual leadership of those
  three organizations.


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

**ANALYSTS SAY BUDAPEST BOURSE WILL BOUNCE BACK**
  A report by the investment bank CS First Boston predicts
  Hungarian shares will rebound strongly in the coming months.
  Shares on the Budapest bourse have slumped 20 percent so far
  this year.  But the report says investor confidence will be
  renewed as the government implements its new austerity plan.
  It suggests that investing in Hungarian shares could yield
  good returns in the next year or year and a half.  It
  particularly recommends investments in pharmaceutical and
  construction companies.


**BUDAPEST INVESTORS TIMID**
  Traders on the Budapest bourse are playing down yesterday's
  slight rise in share prices.  The BUX index rose 4.24 points,
  closing at 1,230.17.  The increase came after a seven-session
  slump.  Trading was still marked by the low demand that has
  plagued the bourse all year.  This lack of confidence was also
  reflected on the new Budapest futures market, but exchange
  chief Jozsef Rotyis says investors will slowly get used to
  trading in futures, stimulating the entire market.  Futures
  trading was introduced last week on the bourse.


**HUNGARIANS NERVOUS ABOUT HARD CURRENCY ACCOUNTS**
  Hungary's daily newspaper Vilaggazdasag is reporting that
  Hungarians withdrew about 3 percent of their personal hard
  currency savings during a recent run on the country's banks.
  The run was provoked by rumors that the government planned to
  dip into the country's hard currency savings to pay off its
  huge foreign debt.  By the end of February, hard currency
  accounted for a sixth of all Hungarian savings amounting to
  some $3 billion.


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

**MONEY LAUNDERING THE OLD FASHIONED WAY**
  By David Fondler

  The lure of entrepreneurship brought Istvan Flesh home.  Now,
  he's making a clean living in the hills of Budapest.

  Last year, Flesh was in the United States, working as a
  marketing manager at Johnson and Johnson.  But this summer, he
  gave it all up, and brought his American MBA home.  Now he's
  working with his mother in the home laundry service she
  started a year ago.

  "After we saw that it took off, and there was sense in
  continuing it, then I thought that this was a good time for me
  to fulfill an old dream, basically that I could run my own
  business."

  Gaby Flesh, Istvan's mother, had dabbled in small business
  since 1985.  She says the idea behind the home laundry was to
  cater to foreigners, English speakers, who were having trouble
  finding decent service.  It's located in Budapest's hilly
  second district, home to a lot of ex-pats on business.  Her
  son says the family has empathy for those living away from
  home.  He grew up in Japan, where his father was a foreign
  correspondent for the Hungarian news agency.

  "We spent a good many years abroad, so we understand what it is
  like to be abroad, to be a foreigner in a strange country."

  From the US, he helped from the start of the laundry service.
  They began with capital from the family's own savings, and
  Gaby Flesh explains how she kept the business operating:

  "There hasn't been anyone who gave me any advice.  I feel the
  economy is like a household, but on a bigger scale, and one
  has to run their business economically, like one runs their
  house.  So this makes sure the business can operate."

  So, to Gaby Flesh and her son, it's basic household economics
  that have brought this home laundry home.



ABOUT CET ON-LINE
-----------------

* CET On-Line - copyright (c) 1995 Word Up! Inc. All rights reserved.
  This publication may be freely forwarded, archived, or
  otherwise distributed in electronic format only so long as
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  publication or the information contained herein is strictly
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Foreign Journal High Art and Little Actors

  JOHN POMFRET (WASHINGTON POST FOREIGN SERVICE)
  
  (C) 1995 THE WASHINGTON POST (LEGI-SLATE ARTICLE NO. 225871)


 BUDAPEST, Hungary

 "I have 28 dwarves. About half are okay. The rest -- well, we can still make
money off of them."
       Gyorgy Klapka leaned back in an overstuffed black leather chair and
cracked a self-satisfied grin. So, how goes the life of an impresario in
Eastern Europe?
        "Divine," Klapka opined, holding court on a recent spring day in a
leather-and-chrome office tucked away in the exclusive Buda Hills. "I've
always ridden the ferris wheel and always hoped it stopped at the top."
         Ex-ballet dancer, former smuggler of aliens and now theater
director, Klapka, 67, a millionaire who claims to support three wives in two
countries, encapsulates the ambiguity of artistic life in the post-Communist
East. Disenchanted with the paltry profits gleaned from one theater devoted
to serious works, the director is planning to reopen Budapest's (and
Europe's) first theater of dwarves and midgets since Hungary's Lilliputian
Theater was shut down by Communist authorities in 1949.
        Set to begin performing in May at an abandoned auditorium in a
Budapest park, Klapka's troupe of 28 dwarves and midgets will concentrate on
attracting an audience of children and their parents. Acrobatics, tales of
adventure and love stories will dominate the show, he said.
        The reemergence of such performances in Hungary tells much about the
state of popular art in the former Eastern Bloc almost six years after the
fall of communism.
       Suffering from ever-diminishing government subsidies and ever
increasing competition from television, theater in these countries has gone
from subtle examinations of life under socialism, constricted by the censor's
red pen, to a flamboyant appeal to the lowest common denominator -- not for
art, but for profit.
      In Poland, traveling circuses, boasting handicapped people, have
captured the imagination of folk in the countryside again after years of
disfavor. In the Czech Republic, Western-style rodeos have replaced serious
drama as the live art form of choice.
             In Budapest, several theaters have been transformed into strip
joints. Last May, for the first time since it opened in 1982, the country's
most famous playhouse, the Jozsef Katona Theater, stopped staging a show
every night to save money -- the price its directors are paying for
maintaining their high artistic standards. While every show continues to play
to a packed house, ticket prices, which do not go above $3 because Hungary's
intellectuals are too poor to spend more, cannot pay the theater's costs.
             Klapka views those struggling with higher art as fools, bad
businessmen or both.
             "People have problems at home; they want lighter things now," he
contended. "And with TV, it's much easier to switch on the box, sit back and
drink a beer than it is to go out. But my dwarves will force people to go to
the theater because you only can see them there."
             Klapka's point about television is well taken. Since 1989, an
explosion in the number of TV stations available to viewers throughout
Eastern Europe has changed forever entertainment in this region once known
for its tedious, Soviet-inspired exposes on ball-bearing production and
harvests of wheat.
             Today, most Hungarian viewers, for example, can tune in to 34
stations, including MTV, CNN and several international movie channels
featuring action-packed kung fu flicks from Hong Kong. An estimated 1.2
million households are hooked up to the country's 821 cable TV channels.
Indeed, cable connections outnumber private telephones 2 to 1.
             "Before, when we had no money and little freedom, the Ministry
of Culture decided what was art," Klapka said. "Now we have some money, we
have freedom, so the market will decide."
             While few in the theater business long for a return to the old
days, some do worry that the relentless growth of the market economy will end
up by leveling Hungary's theatrical world.
             Gabor Zsambeki, one of Hungary's most famous directors, is among
them.
             Zsambeki was part of a wave of young Hungarian directors who
spurned Budapest in the 1960s and chose relative freedom running a theater
group in an out-of-the-way town over the tougher censorship that accompanied
working in the capital.
             After establishing a reputation for bold drama, Zsambeki
returned to Budapest and the directorship of the Hungarian National Theater.
Walking the tightrope between official censorship and artistic freedom,
Zsambeki ran afoul of conservative Communists. He lost his job, but as a
compromise, he was allowed to set up the Jozsef Katona Theater in a little
playhouse with 370 seats.
            There, censorship was tempered by the smallness of the theater.
Some plays were first banned and then reopened after Zsambeki found the ear
of a sympathetic politician. Other plays had to begin at 8 instead of the
usual 7 p.m. as a sign that the state disapproved of them.
             "It was very funny, although at the time it wasn't funny at
all," Zsambeki recalled. "Now it seems quite amazing."
             Throughout the battles, however, the Ministry of Culture
continued to subsidize the theater, providing 90 percent of its funds. Then
came the revolution of 1989, fiscal austerity and free-market reforms. The
Katona's subsidy fell by more than half.
             The theater experimented with raising alternative sources of
revenue. It looked for corporate sponsors, but businesses were more
interested in associating with the likes of Klapka than with the Katona.
Zsambeki tried raising ticket prices, but that emptied the theater.
             "In the past, we had lots of fights with censors but no problems
with money," Zsambeki said. "Now we are free or we may be free, but we feel
very poor."
             Zsambeki sees the rise of types such as Klapka as a sign that
serious theater is dying in Hungary.
             "Of course, I would never want to ban them from doing what they
do -- I've had enough experience with that in my life -- but the fact that
someone is going to put dwarves back on the stage at the same time as serious
theaters are suffering problems shows me that times are hard," he said.
             Klapka said he doesn't worry that some people will accuse him of
exploiting dwarves and midgets for profit.
             "They're just jealous of my ideas," he said.
             Gabor Hrisafis, a 24-year-old dwarf, said he agrees with Klapka
and supports the idea of a Lilliputian Theater.
             "I like his ideas," said the aspiring actor. "Children like
little men and women, and adults, seeing us, remember their childhood."
             Asked if he would be bothered if people laughed at him, he
replied: "That makes me happy. I am a natural clown, and it's much better if
people laugh at me instead of crying. Anyway, I hope that Klapka's new
theater will have a good company and that I will become world-famous."

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A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
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