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Poland, Belarus & Ukraine Report: March 26, 2003

26 March 2003, Volume 5, Number 11
WAR AT THE TOP? Prime Minister Leszek Miller on 24 March told Polish Radio that his government "continues to foster good, constructive cooperation with the president," adding that "he does not intend to submit the government's resignation." Miller's pronouncement apparently came in response to President Aleksander Kwasniewski's interview in the 22 March issue of "Rzeczpospolita" in which Kwasniewski said Miller must now answer the question of whether he is capable of "ruling the state in this crucial moment for Poland." Kwasniewski noted in this interview that even without the Peasant Party, the government led by the Social Democratic Alliance (SLD) has a chance to last its full term but that early parliamentary elections are also possible. Kwasniewski added that June 2004, the date of European Parliament elections, would a good time to hold such an early ballot.

In spite of the presidential office's denial that Kwasniewski is seeking Miller's resignation, for many Polish opposition politicians Kwasniewski's interview came as a clear signal that there is a growing tension between Kwasniewski and Miller and that the president wants his former party colleague out of the government and political spotlight. There has been much speculation in the Polish media about Kwasniewski's reasons for harboring such an intention. One of the most plausible explanations asserts that Kwasniewski, who ends his presidential term in 2005, is too young to retire from politics and purportedly wants to take the lead of a "refurbished" SLD after getting rid of Miller. The ongoing Rywingate case (see "RFE/RL Poland, Belarus, and Ukraine Report," 14 January and 18 February 2003), which has embroiled Miller in particular and the SLD in general in a bribery scandal, is allegedly a good opportunity for Kwasniewski to weaken Miller's stance and prepare grounds for a "generation change" in the party.

Kwasniewski also told "Rzeczpospolita" that he urged Miller in September-November 2002 to notify prosecutors about Lew Rywin's bribe offer to "Gazeta Wyborcza" (which Rywin reportedly made on behalf of Miller and a "group of people in power"). "The premier made a mistake.... It was necessary to immediately pass the [Rywingate] case to prosecutors," Kwasniewski noted. "But there is also a more important question: Who is behind Rywin's offer? This still remains unexplained."

According to the weekly "Wprost," during a meeting with the SLD parliamentary caucus earlier this month, Miller asked his colleagues what he has to do now, when he is running a minority cabinet and facing Rywingate: to opt for the current parliament's dissolution and an early election or to fight against all odds, including the tension on the government-president line. The SLD caucus reportedly advised Miller to fight and assured him of its unwavering support. (Jan Maksymiuk)

RUSSIANS IN THE BOARDROOM? The "union state" of Belarus and Russia has frozen its lending program to enterprises engaged in "union projects." These projects were envisaged as an important part of the "integration" of the economies of the two union "partners." However, the enterprises concerned are failing to service the loans. According to Igor Selivanov, deputy state secretary of the union state, the outstanding debts on the loans from the union-state budget currently amount to more than 300 million Russian rubles ($10 million), ITAR-TASS reported. The greatest amount of debt is that on loans to enterprises involved in union programs to develop the diesel-motor industry (including the Minsk Tractor Plant) and the production of radio and television equipment. No further loans will be granted under the union program, Selivanov told a Minsk news conference on 18 March; instead, the union budget will subsidize the interest on loans taken out by companies from commercial banks for implementing the most important union projects.

The end of union loans will not, however, mean the end of Russian loans to Belarusian industry and the consequent danger of a piecemeal Russian takeover of Belarusian assets. The Russian state investment company Gosinkor recently announced plans to open an office in Minsk that will offer generous loans to Belarusian enterprises, in particular, to the textiles industry. In return, however, it expects to take stakes in the companies in question, in order, it is explained, to be involved in management decisions. This makes good sense from the business point of view, with the creditor wanting to ensure that the debtor-company's policy is conducive to the repayment of the loan. In the case of companies failing to perform, it seems possible that yet a major tranche of the Belarusian textile industry could end up in Russian ownership through the backdoor of privatization rules, in spite of assurances that the Belarusian state will retain a controlling 51 percent stake.

The main Belarusian petrochemical plants -- the Naftan oil refinery and Palimir polymer plant in Navapolatsk, as well as the Azot fertilizer plant and Khimvalakno synthetic-fiber factory in Hrodna -- go up for privatization next month. The two Navapolatsk and two Hrodna plants have been combined into what Belarusian officials describe as "technology chains" that investors will not be permitted to "break" and strip away their assets. Another Khimvalakno plant (in Mahilyou) is also up for privatization. Although Belarusian officials stress that all "Russian, European and West European" companies are invited to take part, the offer is clearly targeted at Russia -- the initial announcement of terms was made at the Belarusian Embassy in Moscow. This raises the question: If Russian investors were to take up the maximum 43 percent stake permitted to foreigners, and the textile part of the chain fell into serious debt, would the government countenance a loan from Gosinkor, even if it meant handing over some of its "majority" holding?

According to the Russian ambassador to Belarus, Aleksandr Blokhin, Russian businessmen are somewhat wary of the privatization offer. Belarus, by not breaking up the giant industries of the Soviet period, has "preserved them from being plundered"; however, he said, "it has yet to create conditions for their effective operation." This sounds like diplomatic parlance for management methods that remain antiquated and Soviet-style! And even if some facilities have been upgraded in preparation for sale (there has been much talk of a $60 million reconstruction at Naftan last year), it has been specifically stated that the income is required for further modernization (suggesting that much still remains to be done).

Moreover, the terms that potential purchasers must meet have not been spelled out, while those that have been, e.g., a minimum wage of $250 per month by 2005, seem liable to vitiate what Blokhin identified as one of the main attractions of Belarus for Russian investors, i.e., cheap labor. If Belarus continues to drag its feet over privatization, he said at a news conference in Minsk on 7 March, Russian businesses might decide to build plants of their own or else do deals with other countries.

Those "other countries," it seems, may well lie outside the Commonwealth of Independent States. During a recent visit to Warsaw, Russian Prime Minister Mikhail Kasyanov said his government intends to encourage Russian businessmen to participate in privatization in Poland, mentioning specifically LUKoil�s intentions to buy into a Polish oil refinery and those of the Severstal group regarding the privatization of a steel mill.

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

PARLIAMENT APPROVES SENDING NBC UNIT TO PERSIAN GULF. The Verkhovna Rada on 20 March voted 253 to 129 with seven abstentions to endorse President Leonid Kuchma's motion to send a Ukrainian anti-nuclear, -biological, and -chemical (NBC) protection battalion to Kuwait "for rendering help in the protection of Kuwaiti civilians from the consequences of the possible use of weapons of mass destruction." There were 401 deputies registered for the session; 12 of them refused to participate in the vote.

The motion to send the battalion to Kuwait was supported by deputies from the nine pro-presidential caucuses (Ukraine's Regions, Party of Entrepreneurs-Labor Ukraine, Social Democratic Party-united, Democratic Initiatives, European Choice, People's Power, Agrarians, Popular Democratic Party, People's Choice), 44 deputies from Our Ukraine, and nine nonaligned legislators. Since the approval of the motion required at least 226 votes, the support from the 44 Our Ukraine deputies was quite crucial for its passing. Our Ukraine leader Viktor Yushchenko refused to participate in the vote.

The possibility to redeploy Ukraine's NBC battalion from Sambor in western Ukraine to the Persian Gulf region was first mentioned by President Kuchma during his meeting with U.S. Ambassador to Ukraine Carlos Pascual on 17 February. "Ukraine is ready to take part in a UN mission on the territory of countries neighboring Iraq by assigning to the UN authority an anti-chemical, anti-bacteriological, and anti-nuclear protection battalion," Kuchma said at that meeting. The next day, Pascual told journalists that he delivered a note from the U.S. government to President Kuchma and Foreign Minister Anatoliy Zlenko inquiring about the possibility of sending the NBC battalion to the Persian Gulf. On 20 February, Ukraine's National Security and Defense Council responded positively to the U.S. request. The council's head, Yevhen Marchuk, told journalists the same day that the decision to dispatch the battalion is in no way dependent on the UN Security Council.

The result of 20 March vote in the Verkhovna Rada came as a surprise to many Ukrainian commentators. They apparently expected that the parliament would oppose sending the NBC unit to the Persian Gulf or at least approve it by a very narrow margin, particularly since many parliamentary caucus leaders, including Valeriy Pustovoytenko (Popular Democratic Party) and Mykola Hapochka (People's Choice) from the so-called pro-presidential majority, spoke against the redeployment and what they saw as Ukraine's engagement on the U.S. side in a then-anticipated war against Iraq. Besides, the Razumkov Center for Economic and Political Studies found in a poll conducted from 27 February to 5 March that 90.5 percent of Ukrainians do not support the military action in Iraq.

President Kuchma held consultations with the leaders of pro-presidential caucuses before the vote and spoke with Yushchenko on the morning of 20 March, after it was already known that the Iraq war had begun. There have been no reports on the arguments Kuchma presented during these meetings to make lawmakers approve his motion. An unsigned memo that was attached to the motion and distributed among lawmakers said the dispatching of the NBC battalion to Kuwait would add to "the strengthening of Ukraine's international authority and enhancing its image as a participant in complex international processes," according to "Ukrayinska pravda." The memo also hinted at the economic benefits Ukraine could derive from sending the NBC unit: "As regards the economic aspect, Ukraine is interested in reducing the price for oil, and this, in the opinion of most international experts, is a major goal of the U.S. action against Iraq. Moreover, rendering assistance to civilian population in the region, our state will have a considerable chance to be engaged in the restoration of Iraq's economy in the post-conflict period."

The opposition parliamentary caucuses -- the Communists, the Socialists, and the Yuliya Tymoshenko Bloc -- voted against the motion. Socialist Party leader Oleksandr Moroz spoke for many when he said in the Verkhovna Rada that Ukraine has no interest whatsoever in sending the NBC battalion to Kuwait and that the approval of the motion would only benefit President Kuchma, who is seeking to repair his tarnished relations with Washington in the wake of the Kolchuga allegations and the killing of journalist Heorhiy Gongadze. Moroz advised lawmakers not to step into the U.S.-Iraq conflict, stressing that Ukraine has to "sort [things] out" with "its own Hussein."

Commenting on the vote in the 23 March issue of "Zerkalo nedeli," Moroz said: "The point is that if the outcome of the operation planned by the U.S. depended on the participation or nonparticipation of the Ukrainian battalion, then we could speak about pluses. Then America's respect for Ukraine could provide grounds for gaining such pluses. But since the president thrust himself [upon Washington] with his proposal only for one reason -- to make them forget about the sale of Kolchugas and about some other things -- what benefits will [Ukraine reap] in the event the U.S. concludes its operation successfully? None. It is an exclusively personal, not even political, initiative.... [And the vote showed one more time that] lawmakers from the majority are fully dependent on the presidential administration.... In order to save one man's skin, they gave up the interests of the state in general."

In his speech to the Verkhovna Rada before the vote, Yushchenko did not appeal either to reject or support the motion. But, according to press reports, the "general impression" he produced was that he was in support of sending the Ukrainian troops to Kuwait. "The fact [of the U.S. attack on Iraq] took place at 4 a.m. Every man, while choosing between war and peace, will choose peace. But the fact did take place," he said.

Commenting on the vote to "Zerkalo nedeli," Yushchenko said: "Because of the foreign-policy course pursued by Ukraine in recent years, we always find ourselves sitting on two chairs. We do not like the dictatorship. We do not like the [anti-Iraq] coalition. What do we like? Tell me, is it we who made a decision about war or peace? Nothing of the sort. We have not been asked about this. But we have been asked about something else: What is our attitude to victims of the conflict, people lying on the streets and needing our assistance? Will we extend our helping hand to these people or not? It is necessary to proceed from this. I call it politics."

Former Foreign Minister Hennadiy Udovenko, a prominent politician from Our Ukraine, commented that the support of 44 Our Ukraine lawmakers (including himself) for the motion "will not add votes to the bloc," UNIAN reported. "Even if Yushchenko's popularity is high, he needs 16 million votes to win the presidential election, while we have [only] 6 million. We need to fight for the votes of Ukrainian pacifists, while in this case we have put ourselves in opposition to them," Udovenko said.

Other observers of the Ukrainian political scene tend to agree that Our Ukraine's support for the motion to send the NBC unit to the zone of the Iraq conflict may backfire on Yushchenko, resulting in a diminished electoral backing. "The nation, which does not want the war, dispatched to a blazing desert its own battalion at its own costs, without having clearly understood for what purpose and why," Olena Zvarych from the pro-Yushchenko "Ukrayina moloda" wrote in "Ukrayinska pravda" on 24 March.

It is not clear for the time being who will bear the costs connected with the deployment of the Ukrainian battalion in Kuwait. "Ukrayinska pravda," referring to the above-mentioned memo, reported that the United States is expected to finance the deployment, paying $5.8 million to ship the Ukrainian troops and equipment to Kuwait, $50,000 for feeding them while in transit, and $700,000 to support the battalion for every month it spends in the Persian Gulf.

Furthermore, the weekly "Grani" reported on 24 March that President Kuchma's decree of 21 March ordering the redeployment of the NBC battalion to Kuwait includes an interesting provision instructing the government "to prepare the Odesa-Brody oil pipeline for transporting Iraqi and Middle Eastern oil to Europe." (Jan Maksymiuk)

"The United States has been shocked...after the capture of nearly 50 U.S. POWs [prisoners of war] and the killing of nearly 25 U.S. Marines [by Iraqi troops] in combat near an [Iraqi] city this past night. I think that the United States and Great Britain need today to look for an honorable way out of the existing situation before it's too late. I am convinced, Syarhey Mikalayevich [Martynau] and Mikhail Mikhaylavich [Khvastou], that we can play a principal and significant role in steering them out of the existing situation." -- Belarusian President Alyaksandr Lukashenka to newly appointed Foreign Minister Syarhey Martynau and newly appointed Belarusian Ambassador to the United States Mikhail Khvastou on 24 March, quoted by Belarusian Television.

"We could normalize relations with the United States fairly soon by joining the common ranks and adopting an as-you-wish policy, as some of our neighbors have done. However, we cannot lose our dignity, and we should have normal relations with America on the basis of mutual respect." -- Lukashenka on 24 March, quoted by Belarusian Television.