End Note: WORLD BANK CONFIDENT UKRAINIAN PARLIAMENT WILL
AGREE TO LOANS
UKRAINIAN NUCLEAR PLANT WORKERS THREATEN GENERAL STRIKE. The Atomic Energy Sector Employees' Trade Union announced on 5 March that it will launch a strike over unpaid wages at Ukraine's five nuclear power plants on 22 March, the "Eastern Economist Daily" reported on 9 March. Valeriy Matov, deputy head of the union, said the strike will include all employees, except for a small number of support workers who will maintain essential operations. Some 12,000 nuclear plant workers demonstrated on 6 March to demand back wages. Some 2,000 employees continue their protest in tent camps built around nuclear power plants. Prime Minister Valeriy Pustovoytenko has promised to set up a government commission to oversee payments for electricity consumption. The commission will be given the right to cut off electricity supplies to debtors. JM
CORRECTION: Citing AP, "RFE/RL Newsline" on 8 March incorrectly reported that the Ukrainian parliament has ratified a $22 million loan from the World Bank. That money is in fact a grant, not a loan. JM
KWASNIEWSKI REASSURES INVESTORS OVER POLAND'S DEVELOPMENT. Polish President Aleksander Kwasniewski told foreign investors on 8 March that Poland's major achievements since 1989 were sustained dynamic growth, inflation curbed below the planned 9.75 percent, and a budget deficit less than 2 percent of GDP, AP reported. He added that Poland's most important tasks are to ensure the competitiveness of Polish products in the West and to restructure state-owned industries. According to Kwasniewski, Poland will be ready for EU membership by the end of 2002. Meanwhile, a European Commission report published the same day advising Poland to take measures to compensate for the loss of its markets in crisis-stricken Russia, Belarus, and Ukraine. The commission said that Poland should seek to maintain its current financial stability by increasing exports to the West. That step, it added, requires significantly improving the quality of Polish products and support for Polish small firms. JM
WORLD BANK CONFIDENT UKRAINIAN PARLIAMENT WILL AGREE TO LOANS
World Bank officials say they are confident that Ukraine's parliament will reverse itself this week and ratify agreements on two major loans with the World Bank.
The bank's country director for Belarus and Ukraine, Paul Siegelbaum, says the two loans--one to buy a new computer system for the Ukrainian Treasury department, the other to modernize Kyiv's district heating system--were rejected by the Ukrainian parliament last week because the loan approval measures got caught up in the heated political fight over whether Kyiv should join the CIS Parliamentary Assembly.
The parliament voted to make that move and to override a vetoed bill on Ukrainian elections, two controversial measures that pushed a number of items on the parliament's agenda into the abyss.
Siegelbaum, in an interview with RFE/RL in Washington, said the bank's loans to Kyiv got "hit by flying elbows" in bitter political fights that had nothing to do with the World Bank or its programs with Ukraine.
"I don't think that the parliament in Ukraine is fundamentally a body in opposition to the types of things the World Bank and the [European Bank for Reconstruction and Development] want to do," he commented. "In the past, they haven't been our enemies. There is no reason to believe they are now."
Siegelbaum said that while it is not normal for national parliaments to reject World Bank programs, it has happened before, including among countries that were once part of the ex-USSR.
Now, however, Siegelbaum says he is confident that when those two loans -- and two others -- are presented to the Ukrainian parliament this week, they will be approved.
"The total volume of potential lending under those operations is around $600 million, " he said. "Some of them will be taken up quickly, including the treasury systems project that involves computer equipment to improve the treasury process, and another loan to improve the district heating system in Kyiv. Others are going to be taken up in a slightly more extended schedule, including a loan to accelerate the closure of coal mines, and some other things."
More important, according to Siegelbaum , clearing the way for these loans could open up what has been a log-jam at the World Bank in dealing with Ukraine: "We told the Ukrainians that if we could put this problem behind us, we can now begin to accelerate the preparation of a whole bunch of other loans--seven or eight of them--which are at various stages of our processing, but which we've had to hold up because we couldn't rush ahead knowing 'the wall' was there. Because it would make no sense to continue to present loans to the parliament when it was in the mood to reject them."
Siegelbaum said even as the parliament was rejecting the two loans, it did manage--on a second try- -to accept a $22 million grant from the bank to finance the modernization of plants that use ozone-depleting substances. That was a real embarrassment for Ukrainian officials, Siegelbaum explained, because it is an outright grant and will cost Kyiv nothing.
Siegelbaum noted that while the loans are extremely important to Ukraine, the help with reforms that goes along with the money is actually far more significant: "The money's the least important part of these loans, it's the reform. Every one of these loans reforms a different part. Whether it's the water system in Odessa or some district heating system in another city or insulating government buildings for energy efficiency, those reforms are going to create value for Ukraine far in excess of the dollars involved in the loan."
He added that he would "love it" if he could give the reforms without the money because, he explains, Ukraine would have a "healthier economy that wasn't in debt to the World Bank." But since that won't work, he said, it's best that Ukraine borrow the money and get the reform help, in effect, thrown in for free.