Kuchma blasts prime minister, Verkhovna Rada (03/30/97)

Kuchma blasts prime minister, Verkhovna Rada

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Leonid Kuchma gave his state of the nation speech before a full house in the Verkhovna Rada on March 21 and came down hard on the work of his prime minister, Pavlo Lazarenko, and the legislative body before which he spoke.

President Kuchma blamed the prime minister, who was present for failing to present a reasonable and workable budget to the Verkhovna Rada. "By what were the government and Pavlo Lazarenko guided when they submitted to the Parliament an absolutely unrealistic budget for 1997?" he asked. "It has long been clear that the budget was supposed to be based on a new tax code." He said that as far back as April 1995 he had instructed the ministers to develop budgets with tax reform in mind.

"Thus, we are now faced with the continuation of one of our worst traditions," the president continued. "Again the state begins the new year without a budget, and lives in uncertain conditions and a lack of revenues for several months. We are faced with financial chaos whose consequences we will very likely be unable to eliminate until the end of the year."

It was a speech long on criticism of economic reform shortcomings, as well as party and corporate politics, and short - very short - on foreign policy. The only mention of international affairs was a statement referring to Ukraine as being at the bottom of the list of countries in terms of per capita foreign investment. Mr. Kuchma cited a figure of $25 (U.S.) per capita. There was not a single mention of NATO, or Russia, or the United States, or Crimea and Sevastopol for that matter.

During the nearly one-and-a-half-hour speech before a Parliament audience that included most national deputies, the Cabinet of Ministers, Supreme Court and Constitutional Court judges and foreign diplomats, the president also criticized the Cabinet of Ministers' handling of back wages and pensions owed to millions of Ukrainians. Some people haven't been paid since August of last year.

"The enormous back pay is an economic crime ... There is only one way out of the situation: to make the government accountable. If urgent steps are not taken, I will have to force the government to step down," said Mr. Kuchma.

He called the work of the ministers "unsatisfactory." He underlined, "Let there be less promises and decisions reached, if that must be, but by all means they should be abided by." He asked that a pension reform bill be ready to be submitted to the Verkhovna Rada by July 1 of this year.

He said it was time that the people in government showed their true colors. "Opposition within the government - isn't this nonsense? Whoever does not agree with the government's direction should leave for the opposition," said President Kuchma. He also criticized that opposition. "A civilized opposition is normal and needed. But it cannot be that one side is responsible for everything and the opposition for nothing."

He emphasized that the political ambitions of individuals or corporate interests would be frustrated by the legal norms that have been established in the country.

The oil and gas industry, to which Prime Minister Lazarenko is closely tied, was not spared the president's venom. Neither were the sugar and alcohol industries. He said that these industries pay barely a smidgen of their fair share of the tax burden, using legal and illegal loopholes. "If they paid their amount we could pay wages and pensions. You do not think that the government knows or sees this. It knows it, and it sees it," said Mr. Kuchma.

He said Ukrgazprom, the energy conglomerate, alone owes $99.6 million in taxes. He said the government is owed some 3 billion hrv from dividends on its share of ownership of semi-privatized firms such as AvtoZAZ, the Zaporizhian auto-builder.

He blasted the Verkhovna Rada equally for doing all in its power to upset the budgetary process and said he had not eliminated the option of dismissing the legislative body if it eventually proved unable to pass a 1997 budget. "The price of such political games is extremely high," the president underscored. He said he would not be cornered into putting a budget into place by presidential decree. "They will not be able to instigate me into resorting to an unconstitutional action. Everyone is responsible for fulfilling his duties and will remain accountable for failure to do so. The Constitution will put everything into its rightful place."

In the economic sphere, President Kuchma said 1996 was not an outright economic success in terms of reforms, but neither was it a total failure. He cited the almost completed process of privatization, monetary stabilization and the introduction of the hryvnia. He said the immediate needs in 1997 are a new tax system that will bring firms out of the gray market and a balanced budget.

He said that if reforms were properly completed, economic growth could hit 4.8 percent in 1998.

The president also called land reform an essential ingredient for attracting foreign investment. "I understand the complexities involved here. But we must allow foreign investors to purchase the capital and the land," he emphasized, to jeers from some deputies.

He also blamed the Verkhovna Rada deputies for placing party politics over state politics and put the blame for the failure of economic reform thus far at their feet. He said most of the 23 bills he vetoed last year had played only to individual party or corporate interests.

The reactions from the national deputies to President Kuchma's speech were predictable and often severe. Viktor Suslov, the chairman of the Finance and Banking Committee, said that as far he was concerned Mr. Lazarenko and the current Cabinet of Ministers are through.

"I, personally, have drawn the conclusion that it is inevitable this government will be fired," Mr. Suslov told a group of reporters outside the Parliament chambers after the Friday morning speech. "It seems to me that contradictions inside the executive branch and between the president and the prime minister have been exacerbated to the utmost."

Leonid Kravchuk, the national deputy and former president, said Mr. Kuchma's threat to fire the Cabinet is the correct and moral thing to do should wage and pension arrears not be settled soon.

However, an arch-rival of the president, Natalia Vitrenko of the Progressive Socialist Party, said she did not foresee the sacking of Prime Minister Lazarenko. She said it was simply the executive branch "letting off steam."

Her partner in the Verkhovna Rada, Volodymyr Marchenko, said the text of the speech supports his belief that Mr. Kuchma is a puppet of the International Monetary Fund. "He does not pursue an independent policy in the best interests of an independent state," he said.

The president's speech was delivered as part of his responsibility as delineated within the Constitution to annually inform the Verkhovna Rada and the people of Ukraine of the status of the government. The full text of the report runs to more than 100 pages. It was submitted to the Verkhovna Rada along with a more than 500-page text on the status of Ukraine's economy prepared by Mr. Lazarenko.

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