UKRAINIAN PARLIAMENT AGAIN DECLINES TO BREAK TIES WITH NATO. The Supreme Council on 20 April failed to pass a motion calling on the government to suspend cooperation with NATO. The legislature voted six times on the communist-proposed motion, but the leftists were unable to muster the required 226 votes. This was the second time this month the Council tried to pass such a bill. Foreign Minister Borys Tarasyuk said the same day that Ukraine's foreign policy of integration into European and Transatlantic structures remains unchanged. Tarasyuk added that Yugoslavia has so far not responded to either Ukraine's peace proposals for Kosova or Kyiv's invitation to Albanian leader Ibrahim Rugova (see "RFE/RL Newsline," 16 and 19 April 1999). JM
RENATIONALIZATION OF ENERGY SECTOR IN UKRAINE? The Ukrainian Prosecutor-General's Office has asked the judiciary to revoke privately owned stakes in six regional energy companies and return them to the state, AP reported on 20 April. "As a lawyer, I ascertain that gross violations were made during the privatization of these companies," Deputy Prosecutor-General Olha Kolinko said. The demand follows President Leonid Kuchma's decision last week to fire senior government officials over alleged abuses of authority in the energy sector. Ukraine's 27 regional energy companies are considered to be among the country's most attractive properties, since each has a monopoly or near monopoly on electricity supplies in its region. JM
The European Bank for Reconstruction and Development (EBRD) is taking a new tougher approach to lending and investing in Eastern Europe and the former Soviet republics.
The approach, a reaction to Russia's financial collapse in August, became apparent at the EBRD's board meeting in London even before plenary sessions began on 19 April.
The EBRD was set up in 1991 to aid the market transition of the former communist states of Eastern Europe and the Soviet Union. It has already adopted a conservative lending strategy, and bank funds are being used as leverage to influence government policies.
But EBRD governors meeting in London this week are sharpening the strategy. They say they hope to instill financial discipline, better corporate governance, and long-overdue banking reforms in the 25 countries in which the EBRD operates.
Leading the new strategy is EBRD President Horst Koehler, a former private-sector banker and state secretary in the German Finance Ministry.
Koehler took the top post at the EBRD in September- -just weeks after Russia devalued its currency, defaulted on domestic government debt, and declared a moratorium on debt servicing to foreigners.
The Russian crisis caused the EBRD last year to declare its first loss in six years--more than $225 million. More important, Koehler says, it taught the EBRD that its investments cannot be effective without macroeconomic stability, together with a reasonable legal and regulatory environment.
On a country-to-country basis, that means governments must move their reform programs forward or forget about receiving money from the EBRD--one of the last remaining institutions willing to invest across the crisis-plagued region.
Ukraine is a case in point. Koehler met with President Leonid Kuchma and other senior officials in Kyiv late last year to present the Bank's complaints about slow reforms there.
At stake are four EBRD projects, worth nearly $200 million, that have been stalled in the Ukrainian parliament for more than a year. The EBRD also says it will not approve Ukrainian railroad and water management investments, worth another $70 million, until the bureaucratic barriers to the earlier projects are cleared.
Lars Larsson, the director of the EBRD-administered Nuclear Safety Account, also is taking a tougher stance on aid recipients. Larsson says disbursements will go only to projects that expedite the closure of hazardous reactors in Russia, Ukraine, Bulgaria, and Lithuania.
Lithuanian Finance Minister Algirdas Semeta admitted there is increased pressure from the EBRD on the closure of the Ignalina nuclear plant. But Semeta, who opposes a shutdown without massive Western financial support, attributes Larsson's harder line to what he called "political pressure" from the EU
"I don't think the EBRD, as such, is the decisionmaking authority concerning the Ignalina power station," he commented. "Actually, the owners of the [Nuclear Safety] Account itself, and other European Union countries, are the major political forces which dictate policies concerning Ignalina."
In the telecommunications sector, the EBRD is trying to coax several governments to create the proper regulatory framework within which privatized firms can operate.
Legal assistance was provided last year to Belarus, Bosnia-Herzegovina, Lithuania, and Poland. A contract for regulatory assistance has been finalized with Albania, and similar assistance is moving forward in Armenia, Kazakhstan, Ukraine, and Georgia.
EBRD projects that develop capital markets and improve corporate governance have been approved for the Czech and Slovak republics.
Plans also have been finalized to work with the Russian Federal Commission for the Securities Market. That project will focus on developing capital market regulations and company laws. The aim is to increase the transparency of markets and improve corporate governance. Meanwhile, the EBRD is still trying to resolve a dispute over the privatization of the Slovnaft oil and gas monopoly in Slovakia. That dispute arose in 1995 when Slovnaft's state managers bought shares of the firm at a fraction of the price paid by the EBRD and other investors.
EBRD officials cite Slovnaft as a classic example of how insider deals and the lack of transparency can damage the confidence of global investors in an emerging market economy.
...AND BAKU, KYIV. Chernomyrdin flew from Tbilisi to Baku on 20 April to continue talks on Kosova with President Heidar Aliev, who welcomed the Russian initiative to resolve the conflict, Interfax reported. Aliev and Chernomyrdin both condemned "separatist extremism, ethnic cleansing, and military intervention." The Azerbaijani leadership, like that of Georgia, has a vested interest in forestalling a solution to the Kosova crisis that would entail independence for the region, since such a model would set a precedent they would not wish to see applied to Nagorno-Karabakh or Abkhazia. Chernomyrdin then proceeded to Kyiv for talks with President Leonid Kuchma, whose three-point peace plan for Kosova is very similar to Shevardnadze's (see "RFE/RL Newsline," 16 April 1999). LF