Kuchma, citing Parliament's paralysis, issues 39 decrees on the economy (07/04/99)

Kuchma, citing Parliament's paralysis, issues 39 decrees on the economy

by Roman Woronowycz
Kyiv Press Bureau

KYIV - In a Constitution Day address to the nation on June 28, President Leonid Kuchma derided the country's Parliament for its paralysis and political populism, and announced that recently he had issued more than three dozen presidential decrees to revitalize the economy.

"A country cannot be a prisoner of parliamentary passivity in the legislative process caused by the lack of desire to create a legal basis for the economy," said President Kuchma.

The June 28 date marked the third anniversary of the adoption of the country's Constitution, as well as the end of the special term that Ukraine's basic law had given the president to issue special executive decrees on economic reforms in areas that the Verkhovna Rada had yet to address. In that time the president had issued 120 economic decrees, only 18 of which have been rejected by the Parliament. The 39 he issued in the last 10 days of his mandate were the most by far in such a short period of time.

Pavlo Haidutskyi, President Kuchma's chief economic aide, said that, for the most part, the executive orders are replicas of bills that already have been sent to the Verkhovna Rada for examination and approval, some of which have languished there for a year.

"It was simply no longer possible to wait for the Verkhovna Rada to act," said Mr. Haidutskyi at a June 30 press conference. "The possibility existed that the Verkhovna Rada could reject [the bills], by which time the presidential mandate [to issue decrees] would have run out."

In his Constitution Day address President Kuchma blamed the Verkhovna Rada for the slow and stumbling manner in which Ukraine has proceeded on economic reform and accused its members of working on agendas that are not always in the national interest.

"You have had more than one opportunity to witness that the national deputies are not set on constructive work, that many simply do not attend the Verkhovna Rada sessions or committee meetings," the president told a national audience on UT-1, the government-controlled network. "More often than not, the parliamentary rostrum is turned into a tool of political conflict, in which open demagoguery and populism have become customary methods."

Mr. Kuchma said that some 700 bills on economic and social matters have yet to be addressed by the Verkhovna Rada. He noted that at least 50 deal with the practical implementation of Constitutional statutes, such as land and administrative reform.

"This is not the first year that the civil, civil procedure, criminal, criminal procedure and administrative codes, as well as other codes, are awaiting examination. The legal basis for reform of the judicial system is being created at an inadmissibly slow pace," said President Kuchma, who blamed both this Parliament and the preceding one for failing to act.

Many of the 39 economic decrees that the president issued in the last days of his constitutionally mandated right to do so are seen as political in nature - although their outward aim ostensibly is to improve the social situation in the country. Decrees, such as one that will raise the minimum monthly pension from 16.60 hrv to 24.90 hrv, are bound to find favor with the older segment of Ukraine's population, which historically has voted with the Communists.

Another decree, which will impose a 1 percent tax on real estate, a 5 percent tax on tobacco and a 6 percent tax on mobile telephones, is meant to replenish Ukraine's pension fund and help pay wage arrears.

For pensioner farmers, the president ordered an increase in the minimum amount of rent they can collect when leasing their government-distributed plots of land to collective farms. He also gave them the right to retrieve that land to use as extended garden plots.

Other executive orders deal with tax changes and business stimulants long sought by the International Monetary Fund and Ukraine's business interests, such as a graduated tax subsidies for new businesses.

The latter will allow newly formed medium-size businesses to pay only 25 percent of their assessed tax in their first year of operation, 50 percent in their second year and 75 percent in their third.

The president also ordered special tax and customs incentives for the Mykolaiv shipyards and the port of Odesa, two areas through which Ukraine hopes to stimulate its international trade.

The president was far from shy in taking credit in his speech for the adoption of the Constitution, as well as for the few accomplishments that his management of the economy has produced.

Mr. Kuchma noted that the "Constitutional Night," during which the national deputies sequestered themselves in the Verkhovna Rada Building and did not emerge until a new Constitution had been adopted the following morning, was the result of his signing of a decree the previous day calling for a national referendum on adoption of the Constitution.

"After that the Verkhovna Rada adopted it in one night," said President Kuchma.

He stated that his use of the economic decree tool had allowed the government to withstand the aftershocks of the economic collapse of the Russian market that resulted from the Asian crisis.

He also took credit for bringing 1 billion hrv into government coffers to help pay pension and wage arrears of the past.

The president's speech was followed by a 30-minute live studio hook-up with groups of Ukrainian citizens in various regions of Ukraine, which gave the president the ability to further expound on his goals and aims in a very politicized manner.

National deputies in the Verkhovna Rada were quick to react to the president's assertions and derisions. Many called his actions and statements just as populist and overtly political as those of which he had accused them.

National Deputy Yurii Kostenko, leader of the splinter faction of Rukh, criticized the scatter-shot manner used in targeting the decrees. He noted that it would have been much more effective from an economic point of view for a wide-ranging decree on foreign investment stimulation, which could have leveled the legal playing field for foreigners and brought in much-needed foreign business and hard currency.

He also questioned the president's decision not to address the problem of huge government subsidies to failing joint ventures involving the government and the private sector.

"Today the lack of stability in the market is due to the government," said Mr. Kostenko. "The government pays for electricity to cover the outstanding bills of private industry. This is money that is not being returned to government coffers. About 40 percent of industries, according to unofficial figures, are not profit-making, yet the government supports them."

The day after the president's speech, National Deputy Hryhorii Omelchenko, who is not aligned with any faction, criticized the general way in which President Kuchma organized his Constitution Day address. "Yesterday's political theatrics with the single actor Kuchma are proof of the complete paralysis of the executive branch and the inability of the president to guide the nation," Mr. Omelchenko told a session of the Verkhovna Rada to roaring applause. "But it doesn't matter because the end of the Kuchma regime in Ukraine is only 140 days away."

With presidential elections scheduled for October 31 and 15 of the presidential aspirants being members of the Verkhovna Rada, some political observers here have said the president's action was an overtly political strategic move to dump large amounts of economic legislation on the Verkhovna Rada just prior to the summer break. When the national deputies return to work in September, six weeks before the elections, hopelessly bogged down in the political maneuvering of the campaign season and unable to pass anything of substance, the president will portray himself as the only candidate actively working to reform the economy and improve the lives of Ukraine's citizens.

Other political observers agree with Mr. Haidutskyi that the 39 executive orders were needed to circumvent continued stalling by the leftist-dominated Verkhovna Rada on economic issues, which is meant to portray the president as politically impotent and unworthy of re-election.

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