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Poland, Belarus & Ukraine Report: June 22, 2004

22 June 2004, Volume 6, Number 23

The next issue of "RFE/RL Belarus and Ukraine Report" will appear on 7 July.
POLAND'S FIRST EUROPEAN ELECTIONS: EVERYBODY'S HAPPY, FOR NOW. On 13 June, Poles took part in their first elections to the European Parliament (EP) for the recently expanded European Union. Eight political parties cleared the 5 percent voting threshold, thus obtaining the right to participate in the distribution of 54 mandates ascribed to Poland. Turnout in the Polish ballot, 20.87 percent, was the second-lowest in the EU, after Slovakia.

"Such turnout makes our presence in the European Parliament less legitimate to some extent," commented Jacek Saryusz-Wolski, a new European parliamentarian elected from the list of the Civic Platform. Saryusz-Wolski was minister for European integration in Prime Minister Jerzy Buzek's cabinet in 2000-01, and he seemed to be worried about this drastic decline of interest in EU affairs on the part of Polish voters, of whom nearly 60 percent took part in Poland's EU referendum only a year before.

But for most Polish politicians across the political spectrum the 13 June elections were primarily a popularity contest before parliamentary elections that may take place as soon as in August if the Sejm fails to approve a new prime minister this month. From this point of view, the EP elections were a fairly reassuring experience for them -- six current parliamentary parties and one bloc seem to be poised to make it to the next Sejm, in addition to one extraparliamentary party.

The elections were won by the opposition centrist Civic Platform with 24.10 percent of the vote, which translated into 15 EP seats. The Civic Platform was followed by the League of Polish Families with 15.92 percent, or 10 seats; Law and Justice with 12.67 percent, seven seats; Self-Defense with 10.78 percent, six seats; the ruling Democratic Left Alliance-Labor Union bloc with 9.35 percent, five seats; the Freedom Union with 7.33 percent, four seats; the Peasant Party with 6.34 percent, four seats; and the Social Democracy of Poland with 5.33 percent, three seats.

Repeating a wider European pattern, Poles in the European elections severely punished the ruling coalition for its poor performance in managing matters at home. Poland's jobless rate stands firmly at almost 20 percent, roughly the same figure as in autumn 2001, when the Democratic Left Alliance-Labor Union bloc won the parliamentary election with 41 percent of the vote. Since then, the popularity of the government has been steadily waning, not only because of its inability to deliver on its election promises, but also due to a long record of high-profile corruption scandals involving government and party officials. Prime Minister Leszek Miller stepped down in May, effectively leaving the country without a functioning government. The new nominee for the post of prime minister, Marek Belka, has so far been unable to muster sufficient support for his confirmation in parliament.

The victory of the liberal Civic Platform is not a surprise. Its election result quite accurately reflects the party's current popularity measured by various surveys. Besides, the Civic Platform is a staunchly pro-European party, so it was expected that it would mobilize its electorate for a European ballot better than other groupings. "There is a chance that the Civic Platform will win the next parliamentary election," Civic Platform leader Jan Rokita commented on preliminary election results publicized on 13 June, immediately after the conclusion of the EP vote. Many see Rokita as a future prime minister. But some also predict that if the results of the next parliamentary elections were to reflect those in the 13 June European vote, chances for forming a stable government would be very slim.

The Civic Platform's most likely partner in an anticipated future ruling coalition is the right-of-center Law and Justice party led by two brothers, Jaroslaw and Lech Kaczynski. But Law and Justice's result of less than 13 percent in the 13 June ballot does not suggest that the two parties will be able to run a government on their own. On the other hand, it is already clear that the most vociferous Euroskeptics in Poland, the populist Self-Defense of Andrzej Lepper and the far-right, nationalist League of Polish Families led by Roman Giertych, will have sizeable representations in the next Sejm.

The showing of the League of Polish Families, which has consistently opposed Poland's integration with the EU in the past several years, is the biggest surprise of the 13 June ballot. The League of Polish Families on 13 June doubled its gain from the 2001 parliamentary election, when it obtained less than 8 percent of the vote. Polish commentators suggest that the League of Polish Families owes its political successes primarily to campaigning by Radio Maryja, an enormously influential media outlet among the ultra-Catholic, nationalist-minded electorate. This time, too, such commentators argue, Radio Maryja mobilized its listeners to vote for its "political arm," notwithstanding the fact that the vote was for the institution that both Radio Maryja and the League of Polish Families deem detrimental to the country's interests.

The result of Self-Defense was well below its recent level of popularity in opinion polls, which fluctuates around 20 percent, but this can be explained by the fact that the party's hard-core supporters -- primarily jobless people, farmers, and artisans -- are not very interested in European matters and mostly stayed at home on 13 June. But it is widely believed that in a domestic parliamentary election the showing of Lepper's party will be much stronger. In the past two years Lepper has begun to conspicuously dissociate from the image of a firebrand populist he built in the 1990s. According to media reports, his party has recently been joined by many young, university-educated people, for whom the association with Self-Defense would be a blasphemy just a year ago.

The election to the European Parliament has raised from political oblivion the centrist Freedom Union, a party much-respected and much-criticized in the 1990s, when it participated in Solidarity-rooted ruling coalitions. The Freedom Union lost the 2001 election and most Polish commentators believed it would sink into history. Its current result -- more than 7 percent of the vote -- bodes well for the party as regards the next parliamentary election. The Freedom Union's two major icons -- Bronislaw Geremek and Janusz Onyszkiewicz -- became EP deputies.

It is noteworthy that the largest number of votes in the 13 June ballot -- 173,000 -- was obtained by former Prime Minister Jerzy Buzek (Civic Platform), who just three years ago left the political scene amid general criticism of and disappointment with the performance of his cabinet. Buzek's showing is a good illustration of the thesis that voters in Poland on 13 June rather punished the current government than showed their enthusiasm for the opposition. Polish President Aleksander Kwasniewski, with a view to the next parliamentary election, commented that the European elections "have resolved nothing." "[The situation after the European elections] is clear as regards the support of the electorate, and completely unclear as regards the reaction of the enormous part of society that did not go to vote," Kwasniewski added. For the time being, however, both the opposition and the ruling coalition seem to be satisfied with what has been made clear and what has not been by the European Parliament elections. (Jan Maksymiuk)

KOLKHOZES GO PRIVATE, BUT IS IT FOR REAL? The decision of the Belarusian government to privatize loss-making collective farms (kolkhozes) may raise eyebrows with anyone who follows the country's attempts at shirking from the economic reforms since the rise of President Alyaksandr Lukashenka to power in 1994. In reality, however, the plans have very little to do with letting market forces govern the country's agricultural sector.

The farm-privatization campaign began in March, when Lukashenka preliminarily approved a decree mandating the sale of loss-making companies to private businesses until the end of the second quarter of 2004. The decision was clearly motivated not by some reformist swing in the thinking of the Belarusian policy makers but rather by bare necessity. In fact, Belarusian agriculture has been bankrupt for most of the last decade, and steps to revitalize it have long been overdue. The situation did not change for the better in the beginning of 2004, when 1,400 kolkhozes, or 63 percent of the total, remained in the red.

The collective farms annually receive around $1 billion of state subsidies, while managing to produce only $1.2 billion worth of agricultural products (although it may rightly be argued that the government price-setting policy forced many of them into bankruptcy). In 2003 alone, 2,088 lawsuits were filed by creditors against kolkhozes for a total sum of 495 billion Belarusian rubles ($230 million).

According to calculations by independent economists, all the assets of kolkhozes, if sold, would cover only one-third of their debts. In fact, collective farming is losing its position as the principle supplier of food to the private farming sector (mostly represented by dachas and farmers' private plots), which is already responsible for the production of 80 percent of vegetables and 90 percent of potatoes grown in Belarus.

Under a presidential decree issued last week, a legal entity may purchase a collective farm at a price as low as $9 if the farms' debts are higher than the value of its assets. New owners will be free from paying off the debts until 2009, and if they invest more than $150,000, they will enjoy tax privileges (see "RFE/RL Newsline," 16 June 2004).

Explaining this new policy to the government in April, Lukashenka promised that "representatives of private business should become owners of everything what is left in the loss-making kolkhozes, once they invest their money in them." "It is their private property, except for the land," Lukashenka stressed. "They have to put the functioning of kolkhozes in order, appoint the personnel, and oversee it." However, the suggestion to invest in unprofitable farms was not an invitation but an order. As Lukashenka specified in his annual address to the National Assembly on 15 April, the private sector has good profits nowadays, and "this money has to be invested not into Mercedes cars or dubious undertakings, but into our land."

Predictably, Lukashenka's call found an immediate response among the companies that tend to conspicuously manifest their loyalty to the president (such as the Minsk-based soft-drink manufacturer Triple) or those set up by the presidential property administration (for example, the cigarette manufacturer Tabak-Invest). Other potential investors had to be attracted by administrative means. For example, 70 companies in Minsk Oblast were simply forced to purchase kolkhozes.

The lack of enthusiasm among potential buyers can be easily explained by the fact that the state wants to impose liabilities of collective farms on new reluctant owners without giving up control over the farms' land, which makes the transfer of property rights to other assets of the farms meaningless.

The second problem is that the legal basis for privatization has not been worked out properly, and it is not clear how well the property rights are guaranteed. Therefore, many of the new owners will simply finance the current operation of the farms without undertaking any serious investment.

The third problem is that new owners are not freed from maintaining the social infrastructure of kolkhozes. Lukashenka himself specified that the companies that buy loss-making kolkhozes will have to fulfill "social conditions." "The state expects from entrepreneurs that the people [in kolkhozes] do not suffer, especially veterans and pensioners who worked there all their lives," the Belarusian president stressed.

Finally, it turns out that the privatized farms are not freed from meeting the state-mandated production targets and are not at liberty to change the profile of production without the consent of the authorities. Revoking his promise that the new owners will be given a free hand in running the farms, Lukashenka publicly ordered on 25 May that arable land not be withdrawn from crop production. "This land cost us dear," Lukashenka said. New owners will also have to live with the state reserving the right to introduce "golden shares" in their farms, rules for export quotas, procurement at low prices, etc.

Last but not least, new owners will be responsible for repaying the debts of the old kolkhozes (approximately $500 million in total) once the grace period expires (only those who will manage to continuously ensure an increase in production will be eligible for a partial waiver). But this itself will happen only if those owners remain solvent. In reality, 44 percent of industrial companies operated at a loss in the first quarter of the year, and, according to former National Bank head Stanislau Bahdankevich, "many of them are in no better situation than the kolkhozes."

And once this happens, the state will have no other choice but to spread the loss on to someone else. The government has already "requested" that the banks authorized to oversee state-mandated investment programs offer 100 billion rubles in preferential loans to collective farms this year. "This worsens the balance of the banks, and if the economic situation worsens, the banks themselves will become the first candidates for bankruptcy," noted Valery Dashkevich, an executive of a private bank in Minsk.

The current farm "privatization" campaign is not the first attempt to revitalize the agricultural sector with the help of city businesses. The first revitalization wave was planned in the late 1990s, when large state-owned industrial conglomerates were supposed to take the lead. However, many of them had their own financial difficulties and the idea quietly faded. It was resurrected in 2001, with eyes put on the few successful private businesses that survived (or were encouraged to survive and thrive) under Lukashenka's rule.

Viktar Chynevich, head of the Barysau-based ice-cream manufacturer Borisovdetspetsproduct, was one of the first businessmen who volunteered in 2001 to take over a loss-making kolkhoz in order to "help it and help the president at the same time." The experiment turned out to be a complete disappointment, he told the "Natsionalnaya ekonomicheskaya gazeta" newspaper. "My business has exhausted so much for the last two years that it cannot help itself, to say nothing about the kolkhoz."

Borisovdetspetsproduct witnessed a decrease in profit from 400 million rubles in 2001 to just 8 million in 2003. Chynevich said the main reason for this was that a local milk-processing plant, an intermediate link in his business, was mandated by the authorities to process milk at preferential prices for just six out of 27 kolkhozes in Barysau District, whereas the others, including his own kolkhoz, had to sponsor these subsidies. He tried to convince the regional authorities to sell the plant, but, predictably, was not heeded.

Apart from this, Chynevich listed several other conditions that have to be met in order to make privatization of kolkhozes successful. These include guarantees against renationalization of collective farms; noninterference by the authorities in the business activities of new owners; separation of production from the social infrastructure of kolkhozes, which should remain in the state; and one-off transformation of subsidies to the agricultural sector into loans to new owners.

However, the probability that the government will meet these conditions is slim. Instead, the "privatization" campaign looks like yet another attempt by the government to extort money from private businesses to boost the public sector.

It may also be said that the state forcefully delegates the duty to provide subsidies to agriculture to the private sector. While this money may provide some alleviation to collective farms for some period, it is not likely that Lukashenka will ever allow capitalism to thrive in the countryside. After all, the rural population remains the core of his electorate, and the president will not want to make it angry. (Vital Silitski)

YUSHCHENKO MAKES FIRST MOVE IN PRESIDENTIAL CAMPAIGN. Our Ukraine head Viktor Yushchenko has chosen deputy parliamentary speaker Oleksandr Zinchenko as manager of his 2004 presidential campaign, Ukrainian media reported on 14 June. According to Yushchenko, Zinchenko's main task will be to coordinate the campaign staffs of the parties constituting the Our Ukraine bloc as well as the forces that will form an election-campaign coalition with Our Ukraine. "The election-campaign manager will organize the work of analytical services, special projects, and react appropriately to those events taking place during the presidential race," Yushchenko told Hromadske Radio on 15 June. "In other words, [he will be in charge of] a rapid-reaction force."

Zinchenko's path to the opposition Our Ukraine bloc was a curious one. In 1996 Zinchenko joined the Social Democratic Party-united (SDPU-o) led by current presidential-administration chief Viktor Medvedchuk, one of the most bitter political opponents of Yushchenko. In 1998 Zinchenko became first deputy chairman of the SDPU-o. He was elected a Verkhovna Rada deputy in 1998 and re-elected in 2002 (both times from the SDPU-o list). In May 2002 he was elected a deputy speaker, under the "quota" of parliamentary posts ascribed by the pro-government parliamentary majority to the SDPU-o. Zinchenko was regarded as one of the most vigorous contributors to voting Viktor Yushchenko out of his post of prime minister by the Verkhovna Rada in April 2001.

Zinchenko's position in the SDPU-o became visibly upset in 2002, when he failed to reform the television channel Inter, which is controlled by the SDPU-o. Zinchenko resigned as Inter president in mid-2002, because of a standoff with Medvedchuk, who reportedly objected to his plans to transform Inter into a channel that could be less dependent on the political affiliations of its sponsors.

In mid-2003 Zinchenko formally asked the SDPU-o leadership to be released from the post of deputy chairman of the party as well as from the duties of a member of the SDPU-o leading bodies -- the Political Council and the Political Bureau. Zinchenko reportedly justified his request by saying that he does not share the position of the party leadership on "many social and political issues" and differs with them as to "the understanding of ethical norms of life." His request was immediately satisfied.

In September 2003 Zinchenko was expelled from the SDPU-o, reportedly for failing to back a constitutional-reform bill prepared by Medvedchuk in cooperation with the Communist Party and the Socialist Party. He has not joined any other party and so far remained in the post of deputy speaker.

In April, Zinchenko headed an ad hoc parliamentary commission that went to Mukacheve in Transcarpathian Oblast to investigate Our Ukraine's allegations that the local authorities manipulated and falsified the mayoral election in the town on 18 April in favor of a candidate supported by the SDPU-o. Subsequently, Zinchenko reported to the Verkhovna Rada that "in Mukacheve, the principles of Joseph Vissarionovich [Stalin] are in action" and demanded the dismissals of regional officials over the controversial election.

The selection of Zinchenko as the manager of Yushchenko's election campaign was unanimously approved by the leaders of all political parties in the Our Ukraine bloc. Yuliya Tymoshenko, the most probable coalition partner of Yushchenko in the 2004 presidential campaign, has also reportedly expressed her approval. And some Ukrainian political commentators and analysts have praised Yushchenko for making this choice as well.

First, there have been media reports alleging that some prominent Our Ukraine activists and party leaders have become utterly dissatisfied with the performance of Roman Bezsmertnyy, head of the Our Ukraine staff, and demanded that Yushchenko fire him. Yushchenko, who apparently did not want to upset the delicate political balance within the bloc, introduced Zinchenko, an additional player, who is to take over a lot of Bezsmertnyy's responsibilities in the election campaign and thus lessen the reportedly deep frustration of Our Ukraine activists over their chief of staff.

Second, many see the recruitment of Zinchenko by Yushchenko as a clear and intentional sign that the Our Ukraine leader does not harbor any grievance against those politicians that have been hostile and adverse to him in the past. In this way, some observers argue, Yushchenko is inviting further defections from the "party of power" to his side, which is a prudent move, especially as Yushchenko has not yet got a political foothold in eastern Ukraine. Zinchenko is one of those politicians who are perceived in the east of Ukraine without hostility, because he is remembered there as the organizer of the Russian-language Inter television channel, jointly with Russia's ORT, at the time when ORT retransmission was forbidden in Ukraine.

It is expected that Yushchenko's second major move, after the appointment of an election-campaign manager, will be to sign a coalition accord with the Yuliya Tymoshenko Bloc. Some predict that the document may be signed even this week. "We will clearly define what personnel responsibility is being sought by each of the teams forming the coalition," Yuliya Tymoshenko said on 11 June, when asked whether the coalition accord will determine the distribution of government posts after an anticipated Yushchenko's victory in the 31 October presidential election.

However, Yushchenko told Hromadske Radio on 15 June that the accord will not include any clauses pertaining to specific names or government posts but only determine a general principle for allocating "quotas" of government posts among coalition members. According to Yushchenko, those quotas should be based on the showing of coalition members in the 2002 parliamentary election. (In particular, Our Ukraine received 23.5 percent of the vote in the nationwide constituency in which parliamentary mandates were contested under a proportional, party-list system, while the Yuliya Tymoshenko Bloc got 7.3 percent of the vote.)

Yushchenko said the coalition accord with the Yuliya Tymoshenko Bloc will be open for joining by any other parties. In particular, Yushchenko stressed, the name of Socialist Party leader Oleksandr Moroz will be placed under the text of the accord with a blank space for Moroz's signature. (Jan Maksymiuk)