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Poland, Belarus & Ukraine Report: April 20, 2004

20 April 2004, Volume 6, Number 14
LUKASHENKA RECOUNTS POLICIES IN ANNUAL ADDRESS TO LEGISLATURE. President Alyaksandr Lukashenka delivered his annual address to the National Assembly on 14 April, covering a wide range of political, socioeconomic, and sports topics. However, there were hardly any new ideas in Lukashenka's speech in comparison with his earlier annual addresses to the legislature. In short, Lukashenka once again stressed the need for the country's "unique" choice to pursue "market socialism" in economic policies and a "sovereign" foreign course which, following the recent outbreak of a gas war with Russia (see article below), has been sarcastically labeled by some Belarusian observers as "multidirectional isolation." He also reiterated his wish that Belarusian athletes win 25 medals at this year's Summer Olympics in Greece. But the general tone of Lukashenka's "state-of-the-union address" was less ferocious and populist than in previous years. The Minsk-based independent weekly "Nasha Niva" commented that this year Lukashenka seemed to direct his message to a better-educated segment of Belarusian society than on earlier occasions.

Lukashenka began his speech by stating that the dominant global problem is the struggle against terrorism. "The powers that be are underestimating the danger connected with this misfortune [terrorism], otherwise they would give up using the problem of terrorism as a pretext...for pursuing their selfish interests," Lukashenka said. According to the Belarusian president, the U.S.-led intervention in Iraq has not made the world "safer or more predictable." He pledged that Belarus will do everything possible to counteract terrorism but added that his country "does not intend to get involved in geopolitical games under the pretext of struggle against terrorism."

Lukashenka reconfirmed his negative attitude toward NATO's enlargement. "NATO's military structure is being deployed on the territory of new member countries," he said. "Our territory is being entirely swept by [NATO's] technical intelligence means. But not only ours! The Russian territory is also being swept by intelligence means up to the Kremlin. Have such things happened ever before?" On the other hand, Lukashenka assured the lawmakers that the Belarusian Army, even if its military potential is incommensurate with that of NATO, is capable of waging a "modern war."

The Belarusian president declared that Minsk is ready to make "serious decisions" regarding the delegation of powers to a body that would govern the Single Economic Space of Belarus, Kazakhstan, Ukraine, and Russia, Belapan reported. An accord on the creation of a unified economic zone was signed in September (see "RFE/RL Poland, Belarus, and Ukraine Report," 23 September 2003). Lukashenka urged the four states to enter into a comprehensive economic alliance without exception or reservation. Lukashenka said the current situation -- in which signatories to the common economic zone abide by some advantageous provisions in one agreement and refuse to respect others -- is in the worst traditions of the CIS. "In contrast to the dynamic, fast-developing European Union, our Commonwealth of Independent States looks absolutely languid, inert, and weak-willed. This structure is still breathing, but in the past year it has not resolved one single serious issue," Lukashenka said.

The integration with Russia was not a major topic in Lukashenka's annual address to the legislature this year. Lukashenka said there is no need to adopt a constitution of the Russia-Belarus Union via referendum if such a document fails to include "significantly stronger" provisions than those in the Union Treaty of 1999. He also reconfirmed his previous stance that the introduction of the Russian ruble as a single currency in Belarus is possible only as a final stage in the construction of a common state with Russia. "[First] we would like to implement those agreements and accords -- primarily in the economic and social spheres -- that we have already signed with the Russians," Lukashenka said. He warned Moscow that it is no use pressing on Minsk to privatize Belarusian enterprises. "[The Belarusian gas pipeline operator] Beltranshaz and all other joint stock companies are open for Russian capital, but they may be sold only at their real value. Attempts to press us with demands to give our assets at dumping prices -- and to link this to the state of Belarusian-Russian relations -- are useless and hopeless; what is more, they are very harmful." Lukashenka advised that Moscow stop looking at Minsk through the "gun sight of a gas pipeline."

Lukashenka told the National Assembly that, judging by the government's performance in the first quarter of 2004, the planned 10 percent annual economic growth is "achievable." He stressed that the country's economy is "in good running order" and is moving forward in "practically every respect." He credited his 10-year rule for decreasing the rate of Belarusian exports to Russia from 85 percent of their total volume to 50 percent. "This is a colossal victory of our economy," he emphasized. He promised that the country's economic successes will also translate into higher living standards for Belarusians -- the average wage in Belarus will reach an equivalent of $190-$200 by the end of 2004.

The Belarusian president praised the government for its choice of state ideology. "The government assumed the lead role in summarizing, systematizing, and promoting fundamental ideas that unite society," Lukashenka said. He said that rather than borrowing "foreign values," the state laid emphasis on "an established socioeconomic model, a reliable legal framework, and a strong, people-centered social policy." Lukashenka vilified "foreign-sponsored professional opposition activists" for "knowingly misleading people, especially youths, and misrepresenting the choice of values for state development."

Lukashenka also declared that he, as the guarantor of the Belarusian Constitution, will ensure "democratic" legislative elections that are due in the fall. He said he thinks opposition candidates stand little chance of being elected to the legislature but claimed that "no obstacles will be posed to them." He added, however, that the authorities will "orient" voters during the election campaign. "We will just tell people what questions they should pose to the opposition," Lukashenka elaborated. "[People should] ask opposition figures what their specific job is, what they do, where they take money from, who puts money in their suitcases, who are the couriers, where this money goes. If you [opposition figures] do not answer, we will." Lukashenka stressed that the newly elected legislature should include representatives of all groups aside from "businessmen, merchants, and capitalists."

Moreover, he validated and determined the quota for women in the national legislature. "Women should constitute no less than 30 percent -40 percent [of the deputy corps.]," the Belarusian president said. "[Then] the parliament will be stable, calm. Women always emit kindness. So the remaining guys will work well.... I will request that the local power bodies support all these processes and that the men who will find themselves in the same constituency with women give up.... I'm quite serious about that. I'll be glad if women constitute 40 percent of our future parliament."

Asked by a deputy why he does not want to change the Electoral Code so as to make the electoral process more transparent and allow monitors to watch over vote-counting, Lukashenka answered quite simply that irrespective of what electoral legislation Belarus may adopt, the opposition will be unable to come to power. "It is not that I don't want this [the opposition in power], it is because people won't let them come to power," Lukashenka said. "[Because] we will explain to people who they are. This is the point. And people will make the right decision."

Summing up Lukashenka's annual address, the "Nasha Niva" weekly wrote: "As before, the country has been proposed a corporate authoritarianism of a Mussolini type with the cult of an omnipresent leader, a single ideology, window-dressing and quota-based democracy, and strong state interference in every sphere of life." (Jan Maksymiuk)

GAS WAR WITH RUSSIA CONTINUES TO BUBBLE. Two months after the abrupt cessation of Russian gas deliveries to Belarus (see "RFE/RL Belarus and Ukraine Report," 2 March 2004), the "gas war" seems to be subsiding on the surface. No blockade attempts have been undertaken by Moscow since the short gas cutoff for Belarus on 18 February, and militant media rhetoric on both sides gave way to customary integration speeches and routine meetings between the two countries' officials. Gas deliveries are proceeding smoothly, as Belarus continues to purchase gas from independent suppliers. But this tranquility in Russia-Belarus relations may eventually turn out to be highly deceiving, as both sides quietly undertake series of steps indicating that new talks on the unresolved issues may be imminent.

First of all, the situation with gas delivery is far from being clarified. In the absence of an agreement with Gazprom, Belarus currently receives gas from two other traders, Transnafta and Sibur (Itera ceased deliveries on 12 February), with which it has to renegotiate contracts virtually every month. The entrance of Sibur to the Belarusian market since the second week of March is a particularly interesting event.

Sibur is one of the largest petrochemical companies in Russia, and it is controlled by Gazprom. Back in 2002-2003, Sibur was among the most interested potential buyers of assets in the Belarusian petrochemical complex, including the Belshyna tire manufacturer and the Khimvalakno conglomerates in Mahilyou and Svetlahorsk. Although its privatization collapsed last year as no prospective investor was willing to purchase minority stakes in Belarusian companies at a Lukashenka-mandated price, Sibur has not yet abandoned its hopes. The Belarusian government has recently hinted that it could be willing to reconsider the previous privatization conditions. Sibur may have an extra trump card to achieve the desired goal.

The ironic consequence of the "gas war" for Belarus is that its ruling elite is starting to work on the problems it deliberately ignored in the era when the flow of Russian privileges was far more generous. Thus, the search for how to decrease Belarus's dependence upon Russian energy resources is underway. Since gas accounts for 80 percent of the national energy balance, measures to diversify the sources of energy are being considered.

For example, the Belenerha concern has recently invited investors to participate in the construction of a hydroelectric station in Polatsk (Vitsebsk Oblast) and a thermal power station in Zelva (Hrodna Oblast). The former project would require $40 million of investment, the latter $990 million.

The Belarusian government is also developing programs of utilizing the wood product waste as energy sources. The programs assisted by the United Nations and the World Bank may allow to increase the share of wood in the energy balance to 10 percent in 2010, up from the current 3 percent.

Belarus has also declared its intention to enter negotiations with Poland on the possibility of providing transit for alternative gas import routes. But since the gas delivered from Norway would cost twice as much as Belarus currently pays to Russia, this seems to be the least feasible variant (at least for as long as Russia's price is not raised to the world level). Moreover, as Valery Dashkevich, an expert at the Independent Institute of Socioeconomic and Political Studies, noted, "Our energy security problem is least caused by the fact that we receive energy resources from the single supplier. The main problem is that the chances of the Belarusian companies to pay for its energy consumption are limited. If the problem was solved, then we could talk about diversification of deliveries. But when enterprises are insolvent, it is hardly the time to talk about oil and gas deliveries from Europe."

With the search for longer-term energy security solutions underway, Minsk seems to be even more concerned with ad-hoc budget patching. Thus, Belarus has begun to carry out its old threats of withdrawing transit privileges for Russia. The government declared in March that it could abandon all the value-added tax (VAT) privileges for the transit of Russian goods, including gas, through Belarusian territory. Once the decision is made, 18 percent VAT will be slapped on transit fares. The Belarusian parliament refused to withdraw tax privileges for Russian transit last year, but the government may make this decision by its own resolution instead.

The government officials have declared that this step may be abandoned if Russia switches from the country-of-origin to the country-of-destination principle in levying VAT on goods exported to Belarus. But this change will require the reinstatement of a full-fledged Belarus-Russia customs border in order to make registration of goods possible.

Meanwhile, the Belarusian Customs Committee has recently declared that it will tighten policies for registration of Russia-bound goods shipped through Belarus's western border, officially for combating shadow exports and smuggling. In reality, this may lead to a further increase in confiscations made by Belarusian customs officers, a profitable state-controlled business that reached $60 million in the first eight months of 2003.

And Russia, too, is preparing few surprises for Belarus. First, it is contemplating a series of steps to reduce its dependence upon Belarus in its transit of gas and oil. Thus, apart from a longer-range project of constructing a pipeline along the bottom of the Baltic Sea, Gazprom intends to increase transit over the Yamal-Europe pipeline that goes through Belarus but is owned by the Russian gas monopoly, not by Belarus's Beltranshaz gas pipeline operator. This year, Yamal-Europe will absorb two-thirds of the 31 billion cubic meters of gas pumped through Belarus.

Furthermore, Gazprom has reportedly decided to modernize the reserve pipeline through which gas may be delivered to Kaliningrad bypassing Belarus as an alternative to the Minsk-Vilnius-Kaliningrad facilities. According to media reports, Gazprom is also negotiating the construction of a new gas storage facility in the south of Poland with the Polish company PGNiG. The new facility will more than double the total Polish gas storage facilities (theoretically, this may reduce Poland's exposure to the conflicts like the one that broke in February and brought a short halt of gas deliveries).

Likewise, Belarus's share of oil transit is decreasing as well. While the southern pipeline going through the Mazyr oil refinery is not threatened, the northern one can soon be brought to a standstill. Russia's Transneft company has recently increased the capacity of its Baltic transit system by one-third, and will further raise it by one-fifth in 2005. As a result, Russian oil is no longer shipped through Navapolatsk to the Latvian port of Ventspils.

Another destination of transit through Navapolatsk, the Mazheikiai refinery and the Butinga port in Lithuania, may also be lost within a year once the Baltic transit system develops to allow oil shipments to Mazheikiai by sea from the Primorsk terminal in the Kaliningrad region. All this transit rerouting may bring the Navapolatsk refinery to the brink of bankruptcy, which will increase chances for its eventual privatization by Russian monopolies.

If Russia implements all the above-mentioned projects, it will have far more leverage on Lukashenka than it currently has. There is little doubt that Russia accumulates leverage to pressure Belarus even harder on privatization and single-currency issues and, if it chooses, to erode Lukashenka's political position. It remains to be seen what Lukashenka's response will be and whether he will be able to continue backtracking from the previously agreed-on integration plans.

It should be noted here that Minsk has successfully used the February gas cutoff for a propaganda campaign, which was helped by its consolidation of control over the media through a gradual withdrawal of Russian broadcasters from Belarus in 2002-2003. Most Belarusians have heard only the official interpretation of the gas war and accepted Lukashenka's version that the conflict was exclusively caused by the greed of Gazprom and other Russian monopolies. Lukashenka boosted his newly acquired image as a defender of Belarusian sovereignty, and this helped increase his approval rating to 33 percent in March, up from 26 percent a year earlier.

However, the recent round of the gas war was carried out more in the media than in reality, as the short stoppage of gas deliveries has hardly affected the national economy. Belarus's agreement to receive gas at $50 for 1,000 cubic meters only formalized what was already paid since the beginning of the year. If the conflict grows more serious, however, and Belarus finds no way of beating Russia's new trump card, Lukashenka's enthusiasm for independence and his anti-Russian rhetoric may quickly fade. (Vital Silitski)

PRO-GOVERNMENT COALITION PROPOSES YANUKOVYCH AS JOINT PRESIDENTIAL CANDIDATE. The leaders of pro-government groups in the Verkhovna Rada decided at a meeting on 14 April to field Prime Minister Viktor Yanukovych as their joint candidate in the presidential election slated for 31 October. The decision was communicated to the public by Stepan Havrysh, coordinator of the parliamentary pro-government coalition.

"There were no long discussions, and the decision was made unanimously," Havrysh said, adding that the meeting was attended by Yanukovych and President Leonid Kuchma, along with the leaders of the Agrarian Party, the Popular Democratic Party, the Party of Regions, the Industrialists and Entrepreneurs/Labor Ukraine caucus, the Social Democratic Party-united, the Democratic Initiatives group, the Popular Choice group, and the People's Power group. Havrysh also said Yanukovych was appointed as the joint candidate of "democratic forces" on the condition that he will finalize the constitutional reform that suffered a setback in the Verkhovna Rada on 8 April (see "RFE/RL Belarus and Ukraine Report," 13 April 2004).

The rather inconspicuous nomination of Yanukovych has spawned a lot of disparate comments in the Ukrainian media, all of which, however, include the same explicit or implicit question: is this true? Has President Kuchma really decided to throw his support behind Yanukovych in the presidential race? Have other heavyweights of the pro-Kuchma camp really decided to squash their political ambitions and back the presidential bid of the "Donetsk don," as some nonstate media refer to the Ukrainian prime minister?

One explanation for Kuchma's move may be his intention to react in a politically impressive manner to the discouraging rejection of the constitutional-reform bill by the Verkhovna Rada on 8 April. By fielding Yanukovych for the presidential race and making him pledge to push for a political reform despite the recent failure, Kuchma may have wanted to show that he still knows what to do and remains in control of the political game in Ukraine.

Likewise, by making Yanukovych a "guarantor" of further reformist efforts Kuchma may want to prevent the pro-government parliamentary coalition from splitting up and, possibly, fielding an uncoordinated number of presidential candidates to challenge Our Ukraine leader Viktor Yushchenko. The threat of such a split became clearly visible on 8 April, when the constitutional-reform bill promoted by Kuchma was supported by 212 deputies from the pro-government opposition, which was significantly below the majority of 226 votes required to adopt most decisions in the Verkhovna Rada. Besides, Ukrainian media have reported that an unspecified number of pro-government coalition lawmakers elected under a first-past-the-post system in 2002 decided to set up a separate caucus in the legislature.

If Kuchma is quite serious about promoting Yanukovych as a joint candidate of the pro-government coalition, not as a tactical figurehead who may be dumped at some moment in the future, then of course Kuchma has made a reasonable choice. Yanukovych, with surveys giving him nearly 15 percent support among the electorate, is by far the most popular politician in the Kuchma entourage. And the post of prime minister is widely believed to be the best springboard for launching and conducting a highly efficient election campaign in Ukraine.

The behavior of Yanukovych's potential allies -- oligarchs from the pro-Kuchma and, in theory, pro-Yanukovych coalition -- is a different question. One of them, former Prime Minister Valeriy Pustovoytenko, has already announced that he does not like Yanukovych as a presidential candidate. Pustovoytenko, who leads the Popular Democratic Party, suggested on 19 April that his party may field a different presidential candidate. "I think that a joint candidate [of the pro-government coalition] should be the one who is supported not by individual party leaders and political figures but by the overwhelming majority of Ukrainian citizens," Pustovoytenko said in a public statement on 19 April.

Thus, there is a big question mark hovering over Yanukovych's political fate. Most parties forming the pro-government coalition will reportedly decide whether to support Yanukovych in the presidential election during their congresses planned for June. And they may simply refuse such support if they are instructed by Kuchma to do so.

By supporting the government's action plan for 2004 last month (see "RFE/RL Belarus and Ukraine Report," 23 March 2004), the pro-government parliamentary coalition has stripped itself of the right to vote Yanukovych out of his office within the following year and thus deprive him of administrative leverage in the presidential election campaign in the event he decides to run on his own, without the support of coalition allies. But Kuchma may sack both Yanukovych and his cabinet any time he likes, without consulting anyone on such a step. In other words, Kuchma still remains the crucial political figure in the country, which determines the rules of the game, despite an apparent glitch in his constitutional-reform efforts.

Earlier this year, Yanukovych reportedly asked Kuchma to replace several regional governors. This is quite understandable -- the premier wants to have his own people in the provinces for the upcoming election campaign. Kuchma has so far not reacted to Yanukovych's request. That may be an indicator that he has not yet decided whether Yanukovych is the right man for the presidential job. At any rate, closely watching Kuchma's behavior in the following month or two seems to be a more sensible and enlightening task than reading a plethora of speculations, assumptions, and rumors carried by the Ukrainian press in connection with political reform and the upcoming presidential ballot. For the time being, nobody seems to know anything for sure in Ukraine, Kuchma included. (Jan Maksymiuk)

"The main point for me is not staying in power further but in avoiding reproaches for giving up power." -- Belarusian President Alyaksandr Lukashenka in an annual address to the legislature on 14 April, quoted by Belapan.

"After the darkness over the [rejected] constitutional amendments dispersed and the commotion around them has begun to subside, we saw on the political proscenium a psychologically broken [President] Leonid Kuchma. He has finally decided to accept guarantees of security for his family and capital from certain circles in the United States. Understandably, not just like that, but in exchange for abandoning power of his own will and opening the way for the victory of Viktor Yushchenko.

To make such a decision, Kuchma was given a final term, which was limited by a specific date. And he abided by this term. He accepted the ultimatum following advice from his son-in-law Viktor Pinchuk. The reasons for such compliance of the Ukrainian president are quite obvious: tons of compromising materials that were pragmatically shown to him (in contrast to the 'romantic' compromising materials from Mykola Melnychenko, these materials provide for direct repressive actions of the U.S. administration), a threat to block [Kuchma's] foreign bank accounts, and a possible arrest in foreign countries. Accordingly, a sort of anarchy has now established itself in Ukraine. However, one has to give Kuchma his due -- he has fought in a downright and self-sacrificing manner for remaining in power further. But his forces and resources -- particularly in comparison with capabilities of the world's mightiest superpower -- has proven to be insufficient. He has broken down and actually agreed to a Yeltsin-type scenario of political succession. The day of 14 April -- when [Ukrainian Prime Minister] Viktor Yanukovych was proposed as a presidential candidate -- may be deemed the official conclusion of the Kuchma era, which lasted in Ukraine for nearly 10 years." -- Yuliya Tymoshenko, leader of the eponymous opposition bloc, in an article published by the "Ukrayinska pravda" website on 16 April.