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Poland, Belarus & Ukraine Report: February 11, 2003

11 February 2003, Volume 5, Number 5
EU PROPOSES TRANSIT FACILITIES BETWEEN RUSSIA AND KALININGRAD. On 5 February, the European Commission presented two proposals regarding transit facilities between "continental" Russia and the Kaliningrad exclave. At present, the proposals apply only to Lithuania, which handles the greater part of the transit traffic. However, the official daily of the European Union, "Bulletin Quotidien Europe," notes that there is nothing to prevent them from being applied later to transit to Kaliningrad via Poland.

The proposals are intended to implement the agreement between the EU and Russia concluded on 13 November 2002 that pertains to transit traffic to Kaliningrad Oblast after Poland and Lithuania join the EU. This agreement was meant to reconcile two principles: that Russia should continue to maintain its flow of citizens between Kaliningrad and the rest of Russia and that Lithuania (and Poland) should retain the sovereign right to decide who crosses their territory.

According to that agreement, on 1 January 2003, Lithuania was to put into place border controls on the transit routes "in a flexible manner," while from 1 July 2003 all transit passengers will require a special transit document. For passengers in possession of such a document, the Lithuanian authorities would accept an internal Russian passport until 31 December 2004. After that date, an international passport would be required.

The agreement and the new proposals envisage two kinds of document. The first, the Facilitating Transit Document (FTD), will cover an unlimited number of trips by all forms of transportation and will be valid for three years. The European Commission proposes that this document should cost 5 euros ($5.37) and that it will be issued by the consular authorities of the member state (Lithuania or Poland) through which the transit will take place. The applicant for an FTD will have to provide evidence of the need to make frequent trips.

For a single trip by rail, there will be a Facilitating Rail Transit Document (FRTD), issued free, and obtainable from the consular authorities of any EU member state. Its validity will not exceed that of the train ticket, and transit time will be limited to a maximum of six hours. Neither FTDs nor FRTDs will be issued at the border, and applicants for either document must be in possession of a passport or travel document valid for the entire period of the transit document's validity. Member states retain the right to refuse to grant transit documents to people who they think pose a danger to public order or security.

The announcement of the proposals came a few days after Lithuania had "strengthened" its border controls in accordance with the November 2002 agreement. (The new restrictions, scheduled to come into force on 1 January, actually began on 1 February.) Since then, there have been numerous complaints about Russians being refused transit (35 in the first two days). Among those claiming to have been denied transit are several academics from the St Petersburg Agricultural University who regularly commute to the university's Kaliningrad campus.

It also coincided with talks between Russian Prime Minister Mikhail Kasyanov and Polish Foreign Minister Wlodzimierz Cimoszewicz on a number of issues of border and cross-border cooperation, with particular reference to the Kaliningrad issue after Poland's accession to the EU. Meanwhile, back in Moscow, Russian Foreign Minister Igor Ivanov told a meeting of the Russian-Polish Committee for Strategic Cooperation that there had been "considerable progress" on the Kaliningrad issue. Ivanov said a new highway is planned from Kaliningrad to Elblag in Poland. He also pointed out that Russian-Polish trade continues to grow, adding that last year Poland's exports to Russia rose by 25 percent and that 10 percent of the total turnover between the two countries is accounted for by Kaliningrad and Moscow oblasts.

This report was written by Vera Rich, a London-based freelance researcher.

LUKASHENKA ADVERTISES SUPPORT FOR IRAQ. It may be cold comfort, but Iraqi President Saddam Hussein has at least one ally in Europe: Belarus.

On 3 February, Belarusian President Alyaksandr Lukashenka formally accepted credentials from Iraq's new ambassador to Minsk, Salman Zeydan. During the ceremony, Lukashenka said his country supports Iraq "as much as is possible in the situation that has arisen." He also noted that it was "not by chance" that he was accepting credentials from the Iraqi diplomat at a time when the United States is pressing its case for a military campaign to depose Saddam Hussein and rid Iraq of its alleged weapons of mass destruction.

Lukashenka stressed, however, that his country's support for Baghdad does not extend to military cooperation, something that would represent a violation of United Nations sanctions. Last summer, Minsk vehemently denied allegations that Belarus had sold weapons to Iraq.

So what does Lukashenka's public vow of support for Iraq really mean? Very little, say analysts, at least in terms of material aid for Baghdad. Lukashenka's words, they say, are aimed more at bolstering the Belarusian president's popularity for his audience at home.

Alyaksandr Klaskouski, who edits "Novosti," a Belarusian Internet publication, told RFE/RL that Lukashenka is trying to project a commanding image at home. "Such challenging declarations are likely to be directed toward [Belarusian] voters and seek to solidify the image of a strong politician who is not afraid of anyone, not afraid of America, and so on. This is a very important part of Lukashenka's image at home. He always presents himself as a brave politician who is not afraid to challenge the strongest states in the world," Klaskouski said.

Valery Karbalevich, an analyst with the Strategic Center, an independent Minsk-based think tank, agrees. He said that such public statements of support for Iraq are typical of Lukashenka's Soviet-style leadership. "I think it won't make him less popular; it won't harm him. Lukashenka addresses voters with a Soviet mentality, with the mentality of Sovietized Belarusians who think they're still living in the Soviet Union. They still have the same Soviet-style attitudes toward the world. In the Soviet Union, the West was accepted as an enemy and the Third World as being exploited and friendly. [Lukashenka] is trying to continue along this path of Soviet propaganda," Karbalevich said.

A survey conducted last December by the private Minsk-based Independent Institute for Socioeconomic and Political Studies indicates that 30 percent of Belarusians would vote for Lukashenka in new presidential elections, a decrease of nearly 20 percentage points in comparison with a similar poll conducted a year earlier.

Technically, the poll is hypothetical. The Belarusian Constitution limits to two the number of terms a president can serve. But last year, Lukashenka suggested he might seek a third term as president and was ready to push for the constitutional changes necessary for such a move to be possible.

His recent support of Hussein may be motivated by a desire to boost his popularity ratings ahead of a third-term bid in 2006. At the same time, however, analysts say Lukashenka's pro-Iraq stance is consistent with Belarusian foreign-policy goals. "This statement is not completely unexpected, because the relations between Baghdad and Minsk have been rather close in recent years. The cooperation between Minsk and Baghdad has been political and possibly also military. We also know that the relations between the United States and Belarus have always been tense. It is completely logical that in this conflict, Belarus is on the side of Iraq. It would have been a surprise if things were otherwise," Karbalevich said.

Klaskouski said that Lukashenka is seeking friends where he can find them. "In one of his last speeches, made last Friday [31 January] during a press conference summing up the results of the informal Kyiv summit of CIS countries, Lukashenka took the opportunity to outline his political agenda. He spoke about Iraq there. He also spoke about North Korea, saying there is no need to taunt people who have nuclear weapons. Some note of compassion could be felt in his words. The implication was that [Belarusians] are also small but proud. Similar sentiments were voiced several times about Cuba and Libya. It's a known fact that representatives from Libya, Iraq, and Cuba can be seen at various diplomatic receptions in Minsk," Klaskouski said.

But Lukashenka's foreign-policy agenda often puts him at odds with Belarus's closest ally, Russia. The Russia-Belarus Union -- first outlined in 1996 and aimed at merging the country's financial, economic, and political systems -- has remained a key policy goal of Lukashenka's administration.

Dmitrii Orlov, deputy general director of the Moscow-based Center of Political Technologies think tank, said that Lukashenka's recent declarations may sully Russia's reputation abroad. "Of course it does. I think it's one more strike against Russia's image, but this stab is not very powerful because everyone knows the relations between Russia and Belarus. Everybody knows the peculiarities of Belarus, [and the peculiarities] of the leader of Belarus. It's not the first time Lukashenka has had a negative impact on Russian politicians, on Russian policy. But I don't think his statement can do any serious harm," Orlov said.

Orlov admitted that Lukashenka might have intended for his public support of Iraq to resonate with Russian voters as well. But such sentiments, he added, would likely find a receptive audience only among supporters of nationalist Vladimir Zhirinovskii and his Liberal Democratic Party of Russia, i.e., Hussein's most ardent advocates in Russia.

RFE/RL correspondent Valentinas Mite wrote this report.

KYIV HIT BY INTERNATIONAL SANCTIONS FOR MONEY LAUNDERING. In December, a normally inconspicuous organization named the Financial Action Task Force on Money Laundering (FATF) hit the headlines of news agencies reporting on Ukraine. The FATF recommended that its members apply "countermeasures" to Ukraine in response to the country's failure "to enact anti-money-laundering legislation that meets international standards." This was yet another mighty blow to Ukraine's tarnished international image, following the much publicized and unsolved case of the killing of independent journalist Heorhiy Gongadze (2000) and the U.S. allegations (2002) that Kyiv might have sold early-warning radar systems to Baghdad in contravention of UN sanctions.

The FATF is an independent international body with headquarters based in Paris. It has 29 member countries and governments -- including the United States, the United Kingdom, Australia, Canada, France, Germany, Hong Kong, China, and Japan -- and two international organizations: the European Commission and the Gulf Cooperation Council. South Africa and Russia have the status of observes in the FATF.

After reviewing Ukraine's anti-money-laundering regime in June 2001, the FATF placed Ukraine on its blacklist of "noncooperative countries and territories" that fail to adopt and/or apply efficient legal measures to combat money laundering. Formerly, the FATF blacklisted only two other states -- Nauru and Nigeria -- for their failure to deal efficiently with money laundering. The FATF also applied Recommendation 21 out of its set of 40 recommendations constituting the "basic framework for anti-money-laundering efforts." Recommendation 21 advises that financial institutions of the FATF members "give special attention to business relations and transactions" of persons and companies from blacklisted ("noncooperative") countries. It also calls for the examination and recording of transactions that "have no apparent economic or visible lawful purpose" in order to make the findings available to auditing and law-enforcement bodies.

On 20 December, the FATF recommended that its members apply additional "countermeasures" against Ukraine, finding the "Law of Ukraine on the Prevention and Counteraction of the Legalization (Laundering) of Proceeds from Crime" enacted on 7 December insufficient. In particular, these additional countermeasures call on FATF members to apply "stringent requirements" for identifying clients before establishing business relationships with individuals and companies from Ukraine; to enhance reporting mechanisms regarding financial transactions with Ukrainian clients; to be more considerate in establishing subsidiaries, branches, and representative offices of Ukrainian banks in FATF countries; and to warn non-financial-sector businesses that transactions with Ukrainian entities may run the risk of money laundering.

According to media reports, the United States and Canada in mid-January were the first countries to heed the FATF recommendations with regard to Ukraine. Other FATF members reportedly followed suit. It still remains to be seen what impact the FATF sanctions have on Ukraine's financial and business sector. According to an estimate by the Kyiv-based weekly "Zerkalo nedeli" on 25 January, foreign banks have suspended some $300 million worth of transactions with Ukrainian clients, while checking to see who is paying with what money. However, apart from such immediate barriers erected by the FATF to Ukrainian businesses, it seems that the FATF recommendations will also have long-term consequences by gravely eroding the trustworthiness of world financial circles in Ukrainian financial and business partners even beyond the date when the FATF decides to strike Ukraine off its blacklist.

It is noteworthy that Kyiv, knowing for more than a year that it is considered internationally to be "noncooperative" in combating money laundering, reacted to this disgraceful categorization only after the FATF called for harsher international sanctions. In January and February, the Verkhovna Rada hastily passed a number of bills introducing amendments to the Criminal Code and banking laws intended to curb money laundering in line with FATF requirements. In particular, the legislature reduced the minimum sum subject to financial monitoring to 80,000 hryvnyas ($15,000). Another major legislative change prohibited banks from opening anonymous bank accounts and obliged them to identify customers who perform banking operations exceeding 50,000 hryvnyas and not involving bank accounts. In addition, Interfax reported on 7 February that President Leonid Kuchma recently signed a decree on "strengthening the fight against organized crime and corruption."

According to some Ukrainian commentators, the international focus on financial transactions involving Ukrainian individuals and financial institutions may influence the presidential campaign in Ukraine in 2004 to the extent that it will be much more difficult to use election slush funds -- which are purportedly used on an increasingly extensive scale in every election campaign -- from offshore banks. Therefore, those observers argue, the role of covert funds from Russia will become dominant in the 2004 election. Some have even implied that the ruling regime may use the newly adopted anti-money-laundering legislation as a convenient tool to harass those businessmen who support a challenger to the presidential candidate proposed by the "party of power."

This week, the FATF is going to hold a conference where its experts are expected to discuss the compliance of Ukraine's fresh anti-money-laundering legislation with international standards. Although some Ukrainian government officials have declared that the country's legislature did everything necessary to meet the FATF requirements, it is rather unlikely that the organization will automatically withdraw its recommendations of a tougher course toward Ukraine by international financial institutions. Ukraine has repeatedly proved to the world community in the past that writing laws is one thing and obeying them is another. (Jan Maksymiuk)

"The world is moving toward unification. Russia has nearly joined the World Trade Organization. Can you imagine -- Ukraine, Russia? The Balts have joined it fully. Are we going to remain an islet outside the WTO? We will suffer from remaining an islet. We cannot be an islet. Our path leads into this world of economic ties. But everything is clearly [defined] for everybody there -- just compete! If you can compete, good; if not, you're dead. Such is the way of the world, do you understand? [The world] has changed. I am ready to defend you somehow, protect, erect barriers, and so on, but this is not efficient. This does not depend on me anymore. That is why we should adapt ourselves to what is going on." -- Belarusian President Alyaksandr Lukashenka on 7 February, pledging to liberalize policies in the agricultural sector; quoted by Belarusian Television.