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Hard on the heels of a humiliating political defeat in the presidential election in Ukraine, the Kremlin is now facing another serious crisis, this one even closer to home. For weeks now, the country has been wracked by growing social unrest in opposition to the government's reform to convert most in-kind social benefits to cash payments, which has been widely criticized as ill considered and poorly implemented.

According to media reports, more than two-thirds of the subjects of the federation have seen protests and demonstrations by pensioners, the disabled, public-sector workers, and other benefits recipients. In some cases, protestors blocked highways and rail lines or took over regional-administration buildings. In many cases, the protests were apparently spontaneous, but the Communist Party has claimed to be organizing the demonstrations.

In addition, speaking to journalists in Moscow on 27 January, Communist Party leader Gennadii Zyuganov said that his party has collected the 90 Duma deputy signatures required to force the chamber's leadership to include a motion of no confidence in the government in the Duma's agenda, gazeta.ru and other Russian media reported. Zyuganov said that in addition to Communist deputies, the Motherland faction is backing the initiative, as well as 15-18 independent deputies.

Although a no-confidence measure has no chance of passing without the support of the pro-Kremlin Unified Russia party, which controls a majority of the seats in the chamber, holding such a vote would put Unified Russia in the awkward position of having openly to support the unpopular benefits reform, gazeta.ru commented on 27 January.

At a recent meeting of the government's Council on Competitiveness and Entrepreneurship, participants concluded that the main reason for the unrest and for the slowdown in economic growth generally is a crisis of confidence, a loss of public trust in the government, "Vremya novostei" reported on 28 January. A similar view was expressed by Higher Economics School head and former Economy Minister Yevgenii Yasin, who was quoted by the daily as saying, "We are seeing a textbook example of how economic growth that seemed to be working so well can be destroyed."

Economist and Institute of Globalization Director Mikhail Delyagin said he thinks the present situation, including the widespread unrest, is the result of infighting between the so-called siloviki, or people connected to the security apparatus, and such liberal ministers as Finance Minister Aleksei Kudrin and Economic Development and Trade Minister German Gref. Delyagin called the latter "liberal fundamentalists" in a 14 January interview with RosBalt. Delyagin added that the dismantling of the social safety net "is not only the result of liberal reforms, but also of the blind aggression of the silovik oligarchy, an aggression that is spreading from the business community to society as a whole." "It is an open secret that a considerable portion of those agencies that we more and more often call 'siloviki' and less and less often call 'law enforcement organs' perceive the citizenry of Russia as a legitimate target for looting," Delyagin said.

Delyagin said that the Putin regime has declared war not only on business and society, but also on the regional elites, which it has stripped of political influence without giving them anything in return. "I think the protests which are continuing all over the country are partly generated by regional administrations, which feel that they have been robbed by the benefits-reform process," Delyagin said. "Since they are afraid to confront Moscow openly, they pretend that the protests are only the voice of the people and are in no hurry to silence it."

National Strategy Institute Director Stanislav Belkovskii told APN on 27 January that the unrest is evidence of a systemic crisis confronting the Putin regime. He said the protests demonstrate how illusory and ephemeral the Russian system of power is, and prove that the authorities can neither govern the people nor communicate with them. He added that the regime has already demonstrated this inability in the cases of the August 2000 sinking of the "Kursk" nuclear submarine, the October 2003 hostage taking at a Moscow theater, and the September 2004 hostage drama at a school in Beslan, North Ossetia. However, he added, the current unrest even more graphically demonstrates that the Putin regime is not unshakable.

Belkovskii added that the response to the protests proves that the regime fears only direct actions of this sort. It is not possible to outmaneuver the country's oligarchic-bureaucratic machine, but only to pressure it, Belkovskii said.

Belkovskii said that in October, a member of the Communist Party of the Russian Federation told him that if Ukrainian presidential hopeful Viktor Yushchenko could bring at least 100,000 people out onto the streets of Kyiv, the issue of power in Ukraine would be settled regardless of other factors. Time has shown that he was right, Belkovskii said, adding that anyone who can bring 300,000 people out onto the streets of Moscow can similarly take power in Russia. Therefore, he concluded, the street will remain the main tool of the political struggle in Russia for the next two years.

The government was unprepared for the protests and chose to treat its own citizens like "cattle," Belkovskii said. He quoted a Unified Russia Duma deputy as saying that "the tougher the laws are that the government adopts, the less people protest against them." Belkovskii said the regime placed its stake on public apathy and was convinced that there would be no massive protests. For this reason, the government is responsible for the crisis and should be dismissed.

Belkovskii added, though, that President Putin does not consider the benefits reform itself a mistake. Therefore, Kudrin, Gref, and Health and Social Development Minister Mikhail Zurabov will remain in government in one capacity or another. However, the president will most likely have to make some sort of gesture to quell the unrest, and the most likely victim will be the cabinet of Prime Minister Mikhail Fradkov.

Demonstrators have already been seen carrying signs calling for Putin to resign and even bearing slogans such as "Putin Is Worse Than Hitler." Although Putin often tries to avoid tough personnel decisions, Belkovskii said, he will need to do something to appease the public. The most likely scapegoat will be Fradkov, Belkovskii said, not because of the reform fiasco itself, but because he has avoided taking public responsibility for the crisis and has thereby exposed Putin to criticism.

RADIO FREE EUROPE/RADIO LIBERTY, PRAGUE, CZECH REPUBLIC

RFE/RL Belarus and Ukraine Report
Vol. 7, No. 5, 4 February 2005

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

LUKASHENKA SEEKS WAYS TO REDUCE ENERGY DEPENDENCE ON RUSSIA. President Alyaksandr Lukashenka's long-standing flirtation with nuclear power is beginning to take on a more practical aspect. Following yet another row with Russia over fossil-fuel prices (see "RFE/RL Newsline," 12 January 2005), he told a meeting of his Security Council on 21 January that he intends to raise the percentage of the country's energy needs met by domestic resources -- from the current 15 percent to 30 percent. Imported energy, he said, costs Belarus up to $2 billion a year, and with 95 percent of the country's energy needs met by gas, Belarus is at the mercy of the Russian "monopolistic supplier" Gazprom, with whom its relations are "unstable." The possibility of gas supplies being used as a weapon of political pressure poses "a grave threat to our security and independence," and the provision of alternative sources of energy "lies outside the purely economic domain and takes on a special significance."

Lukashenka did not make clear how the doubling of domestic output is to be achieved. He implied, however, that nuclear power was not an immediate option -- construction of a nuclear power plant would be considered only after the 30 percent target had been achieved. Nevertheless, one must look to the future; hence "At present Belarus cannot but conduct nuclear power research." But that future may not be so far ahead.

Only four days after the president's Security Council speech, Pyotr Vitsyaz, a deputy chairman of the Belarusian National Academy of Sciences, told a news conference in Minsk that a survey to decide a suitable site for a nuclear power plant had been in progress since 1997 and a feasibility study carried out, which indicated the Mahilyou region as the most likely location. No final decision had yet been reached, he said, since that would depend on finance, which expert estimates put at around $3 billion. However, "from the point of view of strategic development of Belarus's energy system, scientists see no other alternative to...nuclear energy."

Somewhat ironically, in view of Lukashenka's assertion that the provision of alternative sources of energy is needed to minimize the risk of Russian energy blackmail, Vitsyaz revealed that proposals are under consideration for a cheaper option -- the joint Belarusian-Russian construction of a further generating unit at an existing station in Russia -- in Smolensk or Kursk. (Significantly, at both these stations there is a partly built reactor, where construction has been suspended for lack of finance to proceed). Such a deal, Vitsyaz noted, would of course need a top-level decision "since it is not only an economic and strategic issue but also a political one."

In Belarus, "top-level" means Lukashenka personally. And his interest in nuclear power is well known. At one point he offered to buy from Lithuania the Ignalina nuclear station which is located close to the Lithuanian-Belarusian frontier (see "RFE/RL Poland, Belarus, and Ukraine Report," 14 January 2003). But the Lithuanians turned him down and, in accordance with their accession agreement to the European Union, have begun the phased closure of Ignalina. On 1 January, this year, reactor No.1, which produced electricity for export, was permanently shut down -- undoubtedly a contributing factor to Lukashenka's present concerns about energy.

Vitsyaz's news conference implied that the "final decision" was on hold, pending finance. However, according to Uladzimir Parfyanovich, a former member of the Chamber of Representatives, the go-ahead has already been given: on 17–19 January, he says, the "top leadership" of Belarus approved "in secret from our people" plans to construct a nuclear power station, starting as early as this year. Lukashenka, he said, had not had the courage to tell the Belarusian people, "millions of whom suffered from the Chornobyl nuclear plant accident" in 1986, that he has given orders to begin the construction. He simply had told the Security Council that "if necessary...we will persuade our people" of the need to build a nuclear power plant. In an appeal to the public (carried by the Charter 97 human rights website on 24 January), he called on the Belarusian people to form an antinuclear front to resist the president's plans.

These plans, according to Parfyanovich, see nuclear power not only as an energy source but also as a means of "blackmailing our neighbors and the whole world" and "turning Belarusians into nuclear hostages." Belarus, he said, would become a "North Korea in Europe." Lukashenka, he said, wants a nuclear power station to use as a "nuclear shield," it would be an "insurance policy for Lukashenka to avoid the fate of [former Yugoslav President Slobodan] Milosevic and [former Iraqi President] Saddam [Hussein], and a reason for permanent reprisals against the internal political opposition under the pretext of "security." "Not a single month passes without Lukashenka's public condemnation of the withdrawal of Russian nuclear weapons from our territory in the middle of the 1990s. The Belarusian president is sure that if he had missiles with nuclear warheads, he would have been able to impose on the world his opinions on the Belarusian system of government, Belarusian-style democracy, and the Belarusian version of human rights," Parfyanovich said.

Parfyanovich did not explicitly accuse Lukashenka of wanting to produce nuclear bombs (though it may be noted that all three power stations in which he has shown interest -- Ignalina, Smolensk, and Kursk -- have reactors of the plutonium-producing RBMK type). But Lukashenka seems to have interpreted his words in this way. The president issued a vehement denial: not only was he not planning any banned nuclear developments, he said, but the latest meeting of the Security Council had discussed signing with the International Atomic Energy Agency the additional protocol to the guarantees agreement of the Nuclear Non-proliferation Treaty, even though ratification could (in Lukashenka's opinion) lead to the leak of information on Belarusian nuclear-related research and development. The press service of Belenerha, the state-owned energy supplier, likewise called Parfyanovich's statement "spurious," and said that a nuclear project could never be developed "secretly," although sooner or later a nuclear power plant would undoubtedly have to be built in Belarus.

Meanwhile, the trauma of the Chornobyl disaster in Belarusian public consciousness has been reinforced by Lukashenka's decision, at the beginning of January, banning schoolchildren from the contaminated areas from going abroad on health-boosting holidays (see "RFE/RL Newsline," 23 November and 6 December 2004). According to Lukashenka, the children come back from these trips contaminated with "consumerism," and in any case, he told the National Assembly on 17 November 2004, Belarus can take care of its own. However, according to the Uladzimir Tsalko, head of the Belarusian government's Chornobyl Committee, it is failing to do so: the medical care and recuperation of children living in the Chornobyl-contaminated areas has been inefficient, with only 40 percent of them receiving treatment from properly equipped children's health establishments, and morbidity rates from cancer and endocrine diseases in these areas was significantly above the national average (see "RFE/RL Newsline," 26 January 2005).

Significantly, perhaps, Yury Bandazheuski, the scientist who challenged the official statements of the Belarusian government on the medical consequences of the Chornobyl disaster, and who is currently serving a five-year prison sentence on politically trumped-up charges of bribery, was last month refused the release on parole to which, having completed two-thirds of his sentence, he would normally be entitled. Bandazheuski's wife told RFE/RL's Belarus Service that the refusal, according to the parole authorities, was the result of "great pressure from above." (Vera Rich)

UKRAINE

WHAT BENEFITS HAS YUSHCHENKO PROMISED UKRAINIANS? There had been four or five "serious" candidates for the post of the Ukrainian prime minister and at least as many "potential" ones mentioned in the Ukrainian media before President Viktor Yushchenko designated Yuliya Tymoshenko for the job on 24 January, shortly before his trip to meet Russian President Vladimir Putin in Moscow.

Many have seen this nomination as Yushchenko's gesture of defiance in the face of Moscow's apparent dislike of Tymoshenko (she is still on Russian prosecutors' list of wanted people). However, there were also analysts who argued that Tymoshenko is the best person to run a new Ukrainian cabinet because of her immense working energy and political optimism.

Indeed, judging by the massive load of Yushchenko's election promises, the new government will have to possess first and foremost extraordinary vigor and self-confidence in order to begin delivering on what Yushchenko promised his compatriots in last year's presidential campaign.

To make his election manifesto -- "Ten Steps Toward the People" -- more comprehensible and digestible for ordinary Ukrainians, in November Yushchenko publicized a dozen draft decrees that he pledged to sign immediately after his inauguration. Propagandistically, it proved to be a very good move, which was subsequently emulated by his main presidential rival, then Prime Minister Viktor Yanukovych. The texts of these decrees are still available at Yushchenko's personal website (http://www.yuschenko.com.ua). They have also been recently republished or summarized by many Ukrainian media outlets, primarily those unsympathetic to or critical of Yushchenko, with ironic comments suggesting that he now may not be so eager to remember them. True or not, Ukraine's new president indeed seems to be presently concerned more with decrees appointing and sacking state officials than those shaping a new socioeconomic system in the country.

What has Yushchenko pledged to change in the socioeconomic sphere in order to make people feel that his presidency will contribute to a palpable and fast improvement of their lives? First of all, Yushchenko pledged to maintain the lavish increase in pensions made in September 2004 by then Prime Minister Yanukovych. The move, which was clearly intended to win over pensioners, doubled the minimum monthly pension from 137 hryvnyas to 284.6 hryvnyas ($53.6) and appropriately increased all other pensions for more than 11 million people. At that time, the pension jump increased the pension fund's monthly expenses by 1.1 billion hryvnyas ($207 million) to 4.1 billion hryvnyas.

Yushchenko promised that his first presidential decree will establish the subsistence minimum for 2005 at 423 hryvnyas ($80) per month, additionally stipulating that the minimum monthly wage and pension should not be lower than the subsistence minimum. In fact, this promise was already endorsed by the Verkhovna Rada in October, when 250 lawmakers voted to pass a bill increasing the average monthly subsistence minimum from 362 hryvnyas to 432 hryvnyas as of 2005. The bill will put an additional burden on the 2005 budget, comparable to that connected with the pension hike in September.

Moreover, Yushchenko pledged to compensate Ukrainians for their Soviet-era savings that were lost or devalued after the breakup of the Soviet Union. According to one of Yushchenko's draft decrees, the state is to immediately recognize those savings as its internal debt and begin repaying it with "additional budget revenues" and money obtained after a review of some dishonest privatizations. The list of dishonest privatizations is unknown but this review is sure to include the notorious privatization of the Kryvorizhstal metallurgical giant; the state is expected to obtain an additional $500 million either from the current owners of Kryvorizhstal -- oligarchs Viktor Pinchuk and Rynat Akhmetov -- or from new investors if the previous privatization deal is canceled altogether.

Last but not least, Yushchenko promised to increase the onetime social payment to the parents of a newborn child, from the current 725 hryvnyas to 8,460 hryvnyas (that is, almost 12-fold). If Ukraine's Orange Revolution is followed by a baby boom -- as some Ukrainian commentators have already predicted -- the parents are likely to remain sympathetic to Yushchenko for more than one political season.

Where is Yushchenko going to get the money to finance his generous social payments? An exact economic plan of the new government has not yet been revealed but there are some indications to this in his election manifesto. According to Yushchenko, some 55 percent of the country's economy remains in the shadow sector. Therefore, Yushchenko intends to stimulate the process of reducing this sector as much as possible. The stimulation may include extensive tax amnesties and tax-burden reductions. Second, Yushchenko intends to cancel preferences in paying value-added tax by investors in the so-called free economic zones. Yushchenko expects that this move will bring an additional 5 billion hryvnyas ($940 million) into the state coffers annually.

Yushchenko and Tymoshenko have already proven that their cooperation in the government can be fruitful and appreciated by ordinary voters. When Yushchenko was prime minister and Tymoshenko his deputy for energy issues in 2000, they managed to divert some "additional revenues" from the shadow economy by skillful fiscal and administrative management -- the results of this were immediately felt by millions of Ukrainians. They will now have to use their skills, as well as their enhanced political prerogatives, to a much greater extent. The stakes -- which include not only the political fate of a new cabinet, but also the geopolitical destiny of the country as a whole -- are now incomparably higher. (Jan Maksymiuk)

"Ukrainians have shown that European values unite people on the orange square in Kyiv just as they did during the Velvet Revolution on Wenceslas Square in Prague. If we believe that the history of mankind is the history of freedom then Ukraine is beginning the third millennium. Ukraine has shown that it belongs to the civilization of European nations. We are not on the way to it and not on the sidelines. We are in the center of Europe. We are on a straight path now. Ukraine's European choice was made in the hearts and minds of Ukrainians." -- Ukrainian President Viktor Yushchenko, addressing the World Economic Forum in Davos, Switzerland, on 28 January; quoted by Channel 5.

"My country has long been a wise and powerful, but sleeping elephant. Today it is awakening. Democracy paves the way to realizing its potential." -- Yushchenko, addressing the World Economic Forum in Davos, Switzerland, on 28 January; quoted by Channel 5.

"Dear friends, the time of missed chances is over. We, together with you, are starting the time of realized opportunities. Our goal is to turn the Ukrainian economy into a social and market-oriented system that will ensure its stable growth. This is our first strategic goal. To achieve this goal we are going to take a number of steps soon. First, eliminating the black economy. About 55 percent of the national economy is in the black sector now. Taxes will be cut, but everybody will pay them. Privileges for the selected few will be cancelled soon. Taxation will be transparent and stable. The second step is renewing the foundation of macroeconomic stability. The budget will be balanced and its stabilizing role will be increased by using tough budget restrictions and stricter principles for state loans. The third step is the fight against corruption. My government will not steal. Local governments will not steal. Business will be separated from politics. We will remove excessive obstacles and excessive regulation, which is the origin of corruption. Administrative reform will make the authorities at all levels transparent. The fourth step is the establishment of honest justice. We will establish an independent judiciary and complete judicial reform. Courts will become effective legal means to resolve conflicts. The fifth step is attracting investment. We are interested in modern technology and business culture coming to our country. We will promote investment using legislation and economic incentives. Privatization will be transparent. Competition of investors for lucrative companies will be honest. A few days ago a court froze the accounts of the Kryvorizhstal plant, the privatization of which was quite dubious." -- Yushchenko, addressing the World Economic Forum in Davos, Switzerland, on 28 January; quoted by Channel 5.

"I would like to reassure you that I, as president of Ukraine, will do all I can to make sure that the democratic transformations in my country are irreversible, that the fundamental principles of the Council of Europe prevail, that human rights, pluralistic democracy, and the rule of law are protected." -- Yushchenko, addressing the Parliamentary Assembly of the Council of Europe in Strasbourg on 25 January; quoted by Channel 5.

"I have a clear plan for transformations in Ukraine for the next five years, and I have a team capable of fulfilling it. I will not dwell on it in detail. I will only note that it is based on achieving a strategic foreign-policy goal: membership in the European Union. This is a simple and understandable formula for the wellbeing and security of Ukrainians. Bodies of state power inside the country will be reorganized to give a real, rather than declarative, dimension and content to the process of integration into the European Union." -- Yushchenko, addressing the Parliamentary Assembly of the Council of Europe in Strasbourg on 25 January; quoted by Channel 5.

"RFE/RL 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.

KYRGYZ PRESIDENT ADDRESSES YOUTH IN RUNUP TO ELECTIONS. President Askar Akaev addressed participants in a youth-oriented patriotic event called "I Am Kyrgyzstan" in Bishkek on 3 February, telling them that the 27 February parliamentary elections are a "test" and warning them against the dangers of revolution, RFE/RL's Kyrgyz Service reported. The president said, "February's parliamentary elections and October's presidential elections will be a test of the country's democratic development in which I hope for the support of young people." In a reference to Georgia's so-called Rose Revolution, Ukraine's Orange Revolution, and recent demonstrations in Bishkek (see "RFE/RL Newsline," 10 and 20 January 2005), Akaev stressed that Kyrgyzstan's young people "have already demonstrated their immunity to the sickly foreign rose, orange, and yellow viruses that some homegrown opposition figures are trying to implant in our soil." More than 3,000 young people were present at the event, Kabar news agency reported. DK

END NOTE: WHAT HAS YUSHCHENKO PROMISED UKRAINIANS? xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

UKRAINIAN PARLIAMENT CONFIRMS TYMOSHENKO AS PRIME MINISTER... The 450-seat Verkhovna Rada on 4 February approved Yuliya Tymoshenko as Ukraine's new prime minister with 373 votes in favor, Channel 5 reported. To comply with the constitution, Tymoshenko immediately gave up her parliamentary mandate to assume her new job. JM

UKRAINIAN PREMIER-DESIGNATE PRESENTS GOVERNMENT PROGRAM IN PARLIAMENT. Prior to the vote approving her as prime minister, Yuliya Tymoshenko addressed the Verkhovna Rada on 4 February, presenting the "Toward the People" program that she wants to implement with her new cabinet, Channel 5 reported. The program includes no economic indicators or operational time frames but outlines a general vision of reforms to boost the welfare of Ukrainians, meet European standards in state institutions, and create a civil society. Tymoshenko appealed to the lawmakers to vote on the program shortly after her anticipated approval as prime minister and the announcement of the composition of a new cabinet of ministers by President Viktor Yushchenko. The approval of a cabinet's program protects the prime minister from being dismissed by a parliamentary vote of no confidence during the following year. JM

UKRAINIAN PRESIDENT PLEDGES TO RUN HONEST GOVERNMENT. Ahead of a parliamentary debate on the approval of Tymoshenko as prime minister on 4 February, President Yushchenko told the Verkhovna Rada that the country's new government will neither "steal" nor give or accept bribes, Channel 5 reported. "We will conduct a transparent, honest, and responsible policy," Yushchenko said, stressing that there will be "nationwide monitoring" of governmental officials on a monthly basis. He also promised to conduct honest privatization. "Those properties that were stolen will be returned to the state, starting with the Kryvorizhstal [metallurgical giant]," Yushchenko said. He called on the lawmakers to endorse his nomination of Tymoshenko as the new prime minister. "I trust her and I believe that she will be able to organize the work of a national government. I trust her as millions of people [in Ukraine] trust her," Yushchenko said. JM

UKRAINIAN LAWMAKERS CONTINUE TO REGROUP. Parliamentary speaker Volodymyr Lytvyn announced on 4 February that one deputy left the Social Democratic Party-united (SDPU-o) parliamentary caucus while two others joined the Socialist Party caucus, Interfax reported. Lawmakers in the Verkhovna Rada have been regrouping for the past several weeks, eroding the caucuses that supported former Prime Minister Viktor Yanukovych's cabinet, most notably the SDPU-o faction led by Viktor Medvedchuk and the Ukraine's Regions faction representing the Party of Regions headed by Yanukovych. The biggest beneficiary of these moves is the People's Agrarian Party led by Lytvyn, whose caucus has almost doubled in the past two months. On the morning of 4 February the array of forces in the Verkhovna Rada was as follows: Our Ukraine -- 101 deputies; the Communist Party -- 59; Ukraine's Regions -- 54; the People's Agrarian Party -- 33; SDPU-o -- 23; the Socialist Party -- 24; United Ukraine -- 22; the Yuliya Tymoshenko Bloc -- 19; Democratic Ukraine -- 16; Soyuz -- 15; Industrialists and Entrepreneurs/People's Will -- 15; Democratic Initiatives -- 14; Center -- 12; and People's Democratic Party-Republic -- 10 deputies. JM

WHAT HAS YUSHCHENKO PROMISED UKRAINIANS?

There had been four or five "serious" candidates for the post of the Ukrainian prime minister and at least as many "potential" ones mentioned in the Ukrainian media before President Viktor Yushchenko designated Yuliya Tymoshenko for the job on 24 January, shortly before his trip to meet Russian President Vladimir Putin in Moscow.

Where is Yushchenko going to get the money to finance his generous social payments? An exact economic plan of the new government has not yet been revealed but there are some clues in his election manifesto. According to Yushchenko, some 55 percent of the country's economy remains in the shadow sector. Therefore, Yushchenko intends to stimulate the process of reducing this sector as much as possible. The stimulation may include extensive tax amnesties and tax-burden reductions. Second, Yushchenko intends to cancel preferences in paying value-added tax by investors in the so-called free economic zones. Yushchenko expects that this move will bring an additional 5 billion hryvnyas ($940 million) into the state coffers annually.