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Ukraine: State Snags Crimea Purse Strings

Kyiv, 5 June 1998 (RFE/RL) -- Ukraine's Constitutional Court has declared Crimea's 1998 budget illegal.

Justices yesterday ruled overwhelmingly that a finance bill passed in March by the Crimean parliament that set value-added tax and excise rates different from the rest of Ukraine, was unconstitutional.

The decision came at the instigation of President Leonid Kuchma, who argued that Crimea's status as an autonomous republic does not give its lawmakers the right to conduct financial policy independent of Kyiv.

Legislators in Simferopol claimed that local purse strings belong to them because the peninsula possesses the right of self-government. The Constitutional Court did not agree.

The court said that members of the Verkhovna Rada of Crimea are not lawmakers. "The President of Ukraine considers that the adoption of a legal document by the Crimean Parliament in the form of a law contradicts...the constitution," said Court Chief Justice Pavlo Evgrafov speaking for the majority in a 14 to 1 ruling. "Which means that the Verkhovna Rada of the Republic of Crimea has the right to create legal documents (only) in the form of decisions and resolutions."

A "decision or resolution" is not the same thing as a law of Ukraine, he concluded. The court also ruled that the Ukrainian Constitution places the right of tax collection for all of Ukraine specifically in the hands of the national parliament. Crimean lawmakers and their representatives boycotted arguments.

Although justices took pains to emphasize that the decision was "independent and not politically-motivated," the decision is particularly useful for the Kuchma administration. It was directed against a troublesome province, and it strengthened Kyiv's policy of austerity.

Heavily populated by ethnic Russians, largely antagonistic to the national government, Crimea has given Kyiv headaches on issues ranging from national minority rights to the status of the former Soviet Black Sea fleet. The ruling put it once again in its place within the national legal framework.

Facing ballooning government paper redemption this month, Ukraine's rulers are now scrambling to reduce deficits. A keystone of the tighter Ukrainian fiscal management has been a campaign, intensified last month, to squeeze more cash out of recalcitrant provinces.

In recent weeks the national government has replaced the heads of the Odessa and Poltava Oblasts. Particularly truculent local mandarins, like the mayors of Yalta, Kyiv, and Odessa, have in recent months been removed from office.

The decision on the Crimean continued the trend of the central government to reassert its control. Justices said the legal precedent should be well-considered by those inclined towards greater provincial independence.

"This decision has major importance for all regions, cities, and villages in Ukraine," Evgrafov warned. "No part of the country has special rights before the law... we have one law for all."