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RFE/RL Poland, Belarus, and Ukraine Report Vol. 4, No. 43, 12 November 2002

A Survey of Developments in Poland, Belarus, and Ukraine by the Regional Specialists of RFE/RL's Newsline Team

LUKASHENKA CRIES FOUL OVER RUSSIAN GAS-SUPPLY CUT. President Alyaksandr Lukashenka on 6 November blasted Moscow for applying "incredible" and "unprecedented" pressure on Minsk to force the sale of Belarus's Beltranshaz gas-transport company to Russia's Gazprom, Belarusian Television reported. Lukashenka's unusually emotional tirade against the Kremlin was provoked by Gazprom's decision as of 1 November to cut Russian gas supplies to Belarus by 50 percent (see "RFE/RL Newsline," 4 and 5 November 2002). Gazprom said it has already met its 2002 target of subsidized gas exports to Belarus and added that it would resume full supplies if Belarus paid higher prices for additional deliveries. Gazprom simultaneously reminded Minsk that it owes some $250 million in unpaid gas bills.

While there have been comments in both Belarus and Russia asserting that the Kremlin may have wanted to punish Lukashenka for his reluctance to bend to the integration scenario preferred by Moscow, other analysts suggest that Russia's decision to cut gas supplies to Belarus was more likely prompted by demands from the European Union. These analysts argue that the EU wants Russia to somewhat equalize foreign and domestic gas tariffs as Moscow seeks to join the World Trade Organization. Currently, Gazprom charges Belarus $24.60 per 1,000 cubic meters of gas (the same price as for domestic consumers in Smolensk Oblast). At the same time, Gazprom sells gas to the West at $90-$130 per 1,000 cubic meters. These tariff discrepancies do not go well with the EU's decision last week to award Russia the status of a "market economy." The status gives Russian producers greater access to EU markets, but it could also lead to anti-dumping suits if their products are seen as subsidized by cheap gas.

Lukashenka seems to anticipate serious problems with warming some Belarusian homes during the upcoming winter because of Gazprom's gas-supply cut. Therefore, last week he mobilized all his eloquence to explain to his compatriots just who, in his opinion, may be responsible for possible problems during the winter heating season in Belarus. "I want people to understand me, so I will say this frankly: This [cut] is a political decision by the Kremlin," the Belarusian president said. "I was told point-blank: 'If you don't give away your property, we will have a different talk.' And they demanded that we immediately privatize Beltranshaz, that is, the pipelines that go across Belarus that we inherited from the Soviet Union. [They demanded] that we immediately privatize [Beltranshaz] and pass its shares to Gazprom."

Lukashenka said he will not allow Russia to deal with Belarus in such a way. "We will privatize [our national properties] in accordance with our legislation.... In history, our people have opposed much greater pressure [than now], [so] they will cope with this [pressure] too.... But I want the Russians and the Belarusians to know that there is no economics, there is only unprecedented pressure on our country.... Our economy is much smaller than that of Russia. But Belarus is inhabited by proud and independent people who will not allow anybody to kick us, from either the West or the East."

Lukashenka did not miss the opportunity to present his traditional arithmetic in which Belarus's debt to Gazprom is far outweighed by Russia's liabilities to Belarus -- the $175 million in tax breaks granted by Lukashenka to Gazprom during the construction of the Yamal-Europe gas pipeline, and the $500 million for what the Belarusian president called "unregulated relations on the collection of indirect taxes." Somewhat inconsistently, Lukashenka declared that Belarus can repay $200 million to Gazprom by taking money from 200,000 war veterans in Belarus "who were rotting together with Russians in trenches of World War II" and by curtailing investments in the construction of health centers for curing people affected by the Chornobyl disaster. This populist rhetoric, however, was sarcastically offset by some Russian and independent Belarusian media suggesting that the Belarusian president should look for spending cuts among the bloated police and secret-service forces rather than among octogenarian war veterans who live on paltry pensions.

Lukashenka also instructed his ministers to use energy resources sparingly and ordered them to cut gas supplies to those consumers who do not pay. "Belarusians will never be without heat, whatever relations we have with whomever. It will be warm and cozy in our homes and families during the winter, as in previous years," the Belarusian leader promised.

Since Gazprom is demanding not the repayment of Belarus's total gas debt but of some $30 million by the end of this year in order to resume full gas exports, Minsk will actually have no problems in complying with this demand and averting an energy crisis -- according to official reports, the Belarusian National Bank's foreign-currency reserves now exceed $200 million. However, Lukashenka's fiery anti-Kremlin and populist rhetoric last week clearly indicates that Minsk has already exhausted any reasonable arguments in support of its favorable way of doing business with Moscow, which was unofficially labeled by the phrase "Russian gas and oil for Belarusian kisses." By reducing the gas supplies to Belarus, the Kremlin under President Vladimir Putin has persuasively confirmed that it prefers money to Lukashenka's endearments. (Jan Maksymiuk)


Two recent political events have revealed that there is a deep crisis within the present system of political power in Ukraine.

After many failed attempts by lawmakers to vote efficiently at a plenary meeting of the Verkhovna Rada on 24 October, parliamentary speaker Volodymyr Lytvyn publicly admitted that the pro-presidential parliamentary majority is politically incapable.

The next day, the latent governmental crisis took a new turn. Pro-Kuchma parliamentary groups proposed to the president four candidates for the post of prime minister: Prime Minister Anatoliy Kinakh (backed by the Medvedchuk-Surkis economic-political group), First Deputy Prime Minister Oleh Dubyna (allegedly supported by President Leonid Kuchma), State Tax Administration head Mykola Azarov, and Donetsk Oblast Governor Viktor Yanukovych, who is supported by Donetsk economic and political clans.

Why do the pro-presidential parties intend to change the government? The official reason voiced by these parties is their attempt to form a coalition government that would take political responsibility for the country. But do the pro-presidential parties, which represent less than a quarter of Ukrainian voters, have a political and moral legitimacy to form a government? The present government already includes representatives of these pro-presidential political groups. Besides, no one can ensure that the next, would-be ninth, cabinet in independent Ukraine will be better or more responsible than the present one or all the previous ones.

Many observers believe, however, that the real explanation for the current political rush toward forming a new cabinet lies in the emerging context of presidential elections that will take place at the end of 2004. President Kuchma has recently confirmed this belief, accusing the political opposition of initiating the presidential race almost two years before it actually should begin.

The governing clans clearly understand that they have now to think seriously about how to secure their economic and political leverage in Ukraine in the future. During two years of the ongoing "Kuchmagate" scandal, their hopes to prolong the "comfortable" rule of President Kuchma for one more presidential term have been completely buried. This can be seen as one of the real successes of Ukraine's democratic opposition.

Ukraine's ruling clans face an enormous challenge in determining a successor to the presidency. The current quest for the post of prime minister, which is widely believed to be the best springboard for launching the presidential race, indicates that nothing has been decided in this regard. According to many observers, the absence of a real successor to the presidency among oligarchic groups and the fear that Viktor Yushchenko might become Ukraine's next president were the real motives behind Kuchma's declared intention to reform the system of power in Ukraine, aimed at diminishing the constitutional prerogatives of the head of state.

The deep crisis that has infected all the branches of power is a characteristic feature of Ukraine's current political situation. The governing elite cannot rule the country efficiently. However, new political leaders have not yet obtained sufficient support among the population in order to be able to replace the old ones. According to a recent analysis by Oleksandr Razumkov of the Center for Political and Economic Studies in "Zerkalo nedeli" on 26 October, the dominant part of the Ukrainian population is still a "silent majority" that is reluctant to participate in political activities, let alone political protests against the government. And public opinion in Ukraine, which mistrusts current political leaders in general and Kuchma in particular, has not yet turned into a significant factor influencing political decision making in the country.

Thus, there is a shaky balance of powers in Ukraine: "The rulers" cannot rule, and "the masses" do not want them to rule but are still unprepared to change the situation. Such a political deadlock is a characteristic of a revolutionary situation.

There are some signs of hope, though. This hope is connected with a recent decision by the Constitutional Court to recognize as constitutional a draft bill proposed by the opposition to introduce amendments to the constitution (see "RFE/RL Newsline," 30 October 2002). The draft intends to increase the role of the parliament by giving it the right to form the Cabinet of Ministers and to appoint key state officials, including the prosecutor-general. The draft also provides for forming the parliamentary majority based on the results of parliamentary elections under a proportional-election system and for specifying rights of parliamentary opposition.

In fact, this draft, which was first proposed in February 2001, envisages some steps of the political reforms announced by the president in August 2002. The near future should show whether the Kuchma-proposed political reform, which is broadly advertised in state media, is only an empty declaration or a true intention of the head of state.

Viktor Stepanenko is a senior research fellow at the Institute of Sociology, National Academy of Sciences of Ukraine, and director of the Center for Public Policy Development.

"RFE/RL Poland, Belarus, and Ukraine Report" is prepared by Jan Maksymiuk on the basis of a variety of sources including reporting by "RFE/RL Newsline" and RFE/RL's broadcast services. It is distributed every Tuesday.

UKRAINE'S SUPREME COURT ELECTS CHAIRMAN. Vasyl Malyarenko was elected by secret ballot on 11 November to chair the Ukrainian Supreme Court, UNIAN reported. Malyarenko on 28 October requested that his name not be put forward as a candidate to the post, saying that "some groups intend to hinder, slander, and blackmail me, including a threat to kill," according to UNIAN. However, Ukrainian President Leonid Kuchma on 1 November supported his candidacy and qualified Malyarenko's statement as a "moment of weakness." AM

UKRAINIAN GOVERNMENT FALLING SHORT ON TAX COLLECTION. According to the Finance Ministry and the State Tax Administration, the Ukrainian government may fail to collect as much as 16 billion hryvnyas ($3 billion) in taxes this year, UNIAN reported on 11 November. Volodymyr Parnyuk from the Finance Ministry told the agency that uncollected taxes currently comprise some 13.2 billion hryvnyas. UNIAN reported that the fuel and energy sector is of particular concern, accounting for nearly 60 percent of tax arrears. In particular, the agency said state-run Naftohaz Ukrayiny and Ukrenerho paid just 5 percent of their value-added and income taxes due in August and September. AM

MTS MOVES IN ON UKRAINIAN CELLULAR MARKET Russian cellular giant Mobile Telesystems (MTS) announced on 5 November that it acquired a 57.7 percent stake in Ukrainian Mobile Communications (UMC), "Kommersant" reported on 6 November. MTS paid a total of $194.2 million, acquiring 16.3 percent stakes from Dutch operator KPN and German Deutsche Telekom for $55 million each, and a 25 percent stake from Ukrtelecom for $84.2 million. Options agreements with Dutch TDC and Ukrtelecom might allow MTS to pick up the remaining shares as early as next year. With 1.5 million subscribers and revenues of $215.8 million in 2001, UMC is the second largest Ukrainian mobile operator, "The Moscow Times" reported on 6 November. Renaissance Capital analyst Aleksandr Kazbegi told "Vedomosti" on 6 November that MTS got a bargain, paying only $275 for each new subscriber. Similar acquisition by MTS and Vimpelcom this year cost them $350-$500 per new subscriber. With only 6.7 percent of its 49.3 million population wired into cellular networks, Ukraine represents an expansion-ready market. The addition of 1.5 million subscribers brings MTS' total to 7.2 million, shoring up the company's standing as Eastern Europe's largest cellular operator. DK