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Poland, Belarus & Ukraine Report: December 3, 2002

3 December 2002, Volume 4, Number 46
WARSAW SEEKS LAST-MINUTE FINANCIAL DEAL WITH BRUSSELS. Prime Minister Leszek Miller said on 2 December that Poland's final EU-entry negotiations will continue "until the very last minute" and are to be finalized at the European Union summit on enlargement in Copenhagen on 12-13 December. On 29 November, Miller's cabinet held a reportedly stormy debate on the financial conditions of Poland's EU membership, including on the recent proposal by Denmark, which is now holding the EU's rotating presidency, that Poland and other EU aspirants be given up to 40 percent of the EU's full farm subsidies in the first year of their EU membership instead of the previously proposed 25 percent.

Poland's chief EU negotiator, Jan Truszczynski, said after last week's cabinet meeting that the EU's current offer of direct farm subsidies for candidate countries would amount to 38-39 percent of the level EU farmers are to receive in 2004-2006. "These levels are nearly satisfactory but still need some more work," Reuters quoted Truszczynski as saying.

However, Deputy Prime Minister and Agriculture Minister Jaroslaw Kalinowski on 2 December told journalists that Truszczynski was "not precise enough" regarding the presentation of the government's official stance on EU financial aid. Kalinowski said the government on 28 November adopted a position demanding the reallocation of the proposed 25 percent in aid from the fund for agricultural infrastructure to direct subsidies for farmers. (The Danish proposal suggested the reallocation of only 20 percent of this aid.) Thus, together with a contribution from the domestic budget, direct subsidies to Polish farmers would amount to 42 percent of the EU's full subsidies in Poland's first three years of membership.

Kalinowski, who last week declared that Poland wants direct farm subsidies at the 60 percent level, this week suggested that the demand of 42 percent, jointly with that of higher agricultural-production limits, is supported by his Peasant Party (PSL), which is vying for countryside voters with the strongly Euroskeptical Self-Defense led by Andrzej Lepper. This would mean the PSL could support Poland's EU entry in next year's referendum.

Immediately after the 29 November cabinet sitting, Premier Miller set off on a vigorous diplomatic campaign to convince EU leaders to accept Poland's new position on financial aid and to find allies to defend such a position among EU aspirants. Later the same day, Miller met with German Chancellor Gerhard Schroeder at an informal dinner in Schroeder's house in Hannover. "Gerhard Schroeder will certainly do everything that is possible for Poland to gain the best-possible conditions. But the EU is not just Gerhard Schroeder. It also consists of the other European leaders, and these coming days must be filled with intensive consultations," Miller commented after the meeting.

Meanwhile, German Foreign Minister Joschka Fischer, who visited Warsaw on 29 November, said that Denmark has not consulted with the remaining EU countries on its financial proposals for EU aspirants. "This brings about a number of problems. It is difficult for me to predict at present how and if these problems will be solved," PAP quoted Fischer as saying.

On 1 December in Budapest, Miller met with the other premiers of fellow EU applicants allied in the Visegrad group of countries: the Czech Republic, Slovakia, and Hungary. The Polish leftist daily "Trybuna" commented on 2 December that the Visegrad group agreed to continue negotiations with the EU on the level of subsidies and the duration of transition periods. "They are playing for 2.5 billion euros [$2.48 billion]," the daily stressed, explaining that this is the difference between the sum projected for EU enlargement in 1999 and the money proposed during the EU summit in Brussels in October 2002. The recent Danish proposal restored 1.3 billion euros from the sum trimmed in October.

This week, Miller is going to make an intensive handshake tour of EU capitals, including Rome, Madrid, and Stockholm, in order to explain Poland's rationale for applying for higher EU subsidies. And Polish President Aleksander Kwasniewski is going to meet with his French counterpart Jacques Chirac to convey to him a similar message. (Jan Maksymiuk)

BOOK DETAILS BELARUS'S SHADY ARMS DEAL WITH PERU. As Belarus's role in arms trading with Iraq is now a matter of international concern, "The Mafia State," a book by anticorruption investigator Manuel Dammert Ego Aguirre (Ediciones El Virrey, Lima, November 2001), calls for particular attention. The book gives a substantiated and detailed account of the illegal purchase by Peru of air-force equipment from Belarus in 1996-98. Eighteen MiG-29 fighters, 18 Su-25 aircraft, a NEBO radar system, and Igla antiaircraft missiles made the deal arguably Belarus's largest. For Peru, it also had a major strategic effect: The country's entire air force, at a time when it was at war with its neighbor Ecuador, was completely rearmed with Belarusian hardware.

President Alberto Fujimori's Peru was never a rogue state, and few arms deals are ever transparent. So what made the Belarusian deal illegal? According to Aguirre, it was the role the deal played in enriching the mafia-like group of notorious presidential adviser and manipulator Vladimiro Montesinos's cronies, who subdued the state of Peru for their own interests. The group devised a scheme of diverting public wealth into their own hands through corrupt privatization, drug trafficking, and weapons purchases. Weapons were paid for by proceeds from privatization, thus avoiding the budget appropriation with its parliamentary scrutiny. As opposed to legal, government-to-government transactions, arms were acquired via chains of intermediaries, who booked the proceeds and then partly repatriated them to personal accounts of officials in charge. Over a span of three years, Peru spent more than $600 million on weapons, including more than $400 million on weapons from Belarus, which made this country central to the scheme.

Negotiations began in 1995, when tensions on the Peruvian-Ecuadorian border intensified, and it became obvious that Fuerza Aeria del Peru (FAP), with is fleet of aircraft made in the 1960s, was not fit for combat with Ecuadorian fighters freshly purchased from NATO countries. In June 1995, two FAP generals met with Peter Jeney, who arranged the connection with Minsk. Based in the town of Zug, Switzerland's main financial haven, Jeney always acted as Montesinos's external financier.

In 1996, Economy Minister Jorge Camet, accompanied by General Rolando Magni of the FAP, traveled to Belarus and held negotiations with Beltekheksport, Belarus's official weapons dealer. Between 1996 and 1998, Beltekheksport made several deliveries to Peru, but its name is absent from the contract, invoices, and shipping documents. Instead, a network of intermediary firms was established in offshore jurisdictions especially for this deal. The center of the network was in Panama, another banking hub, where the funds were moved between the account of the Peruvian Banco de la Nacion and accounts of intermediary firms in Banco Export de Panama (BEP), which has since been acquired by a Spanish multinational, Banco Argentaria de Viscaya.

At the center of the network stood an outfit called Treves Intora Association, directed by Jaime Aleman, a shadowy figure with Colombian drug connections and a brother of a former Peruvian minister of foreign affairs. Intora played the most important role in Belarusian transactions, acting as the issuer of all invoices and the recipient of payment for deliveries. The company was set up in the Bahamas in October 1995. The founding capital of the firm that was to run more than $600 million in transactions was a mere $5,000. It has been proven that fakes names were used for the registered owners of the company. The general manager was Jeney, and the legal counsel, Aleman.

Despite being the recipient of payments, however, Treves Intora was not a formal party to the contract, which was signed by another firm, W-21 Intertechnique S.A., also established in the fall of 1995, also with a minimum capital of 44,000 soles (less than $10,000). Unlike any signatory of a contract in a legal transaction, the firm did not issue a single invoice.

This elaborate system, masterfully assembled by Montesinos, made the role of Belarus as the weapons supplier almost invisible. Though the jets supplied by Beltekheksport undoubtedly originated in Belarus, where FAP pilots underwent training and where Peru keeps a military attache despite the absence of an embassy, all financial flows were taking place between various creations of Montesinos without touching any Belarusian entity. Even the security deposit, a percentage of the sum that the contract required the suppliers to provide prior to receiving payment as a guarantee of the delivery and quality of goods, was arranged without Beltekheksport's participation. Instead, in violation of the contract and at a financial risk to Peru, the payment was made first, from which Treves Intora later financed the deposit.

When the flow of payments from Peru began in 1996, the firms started diverting funds to other foreign accounts held by members of the scheme, many of whom are now under investigation by Peruvian authorities. Their testimonies state that more than $120 million (out of $600 million) was transferred from Panama to accounts in several countries as commissions. These payments, according to Aguirre, are the very reason why the transaction was organized in the first place: to channel public funds gained from privatization to Montesinos's criminal organization.

Did the Belarusian side accept these commissions as a fair payment for the prime price it received for inferior secondhand goods and for clever financing by Montesinos and Jeney? Possibly. It is also possible, however, that this sum of $120 million represents some of the transfers of the sale proceeds to secret destinations required by the seller. Quoting banking-secrecy laws, the government of Panama denied a plea from Peru to open the BEP accounts of Treves Intora for investigation. Jeney's Swiss nationality protects him from investigation, and Aleman has some strange judicial cover that so far has also saved him from prosecution. From the Peruvian investigation, we know about the criminal nature of the Peruvian side of the deal. To learn how the Belarusian side used the proceeds from the sale, we will have to wait until the two financiers and their accounts are open to investigators.

(This report was written by Siarhej Karol, a graduate of the Johns Hopkins University's School of Advanced International Studies who currently works at AIG, a global financial-services company.)

PARLIAMENT TO MULL RATIFICATION OF MINORITY-LANGUAGE CHARTER. On 29 October, President Leonid Kuchma again submitted the 1992 European Charter for Regional or Minority Languages for ratification by the Ukrainian parliament. The manner in which the charter would be applicable would be important to Ukraine's largest minority, Russians, as well as to smaller ethnic groups, such as Romanians, Hungarians, Poles, Tatars, and Jews.

President Kuchma has backed ratification of 42 paragraphs of the charter, although only 35 are needed for it to be adopted. The 42 paragraphs contain provisions for protecting and promoting the linguistic and cultural rights of minorities in courts, as well as in cultural, educational, and state institutions.

Ukraine joined the Council of Europe in 1995 and promised to ratify the charter within 12 months. It was finally ratified by the parliament in December 1999, but the Constitutional Court declared its provisions unconstitutional. One constitutional clash concerned the question of which languages could be used by state officials.

One expert in attendance at a Council of Europe seminar held in Kyiv on 18-19 October tried to dissuade the fears of Ukrainian speakers that the charter would primarily promote Russian. According to that expert, Council of Europe officials claimed at the seminar "that the language charter is called to protect all languages. The bigger the ethnic group, the greater protection liabilities the state should assume to protect its language."

Nevertheless, opposition to the charter is again likely to come from national democrats who now possess the largest faction in the Verkhovna Rada: Viktor Yushchenko's Our Ukraine. Especially as the new presidential push to ratify the charter follows a move allegedly instigated by the head of the presidential administration, Viktor Medvedchuk, during the Council of Europe seminar to make Russian a state language. In addition, protests will inevitably be submitted to the Constitutional Court.

Although the Council of Europe seminar claimed that the Ukrainian language would also benefit from the charter, this is unlikely. The newly submitted charter for ratification by Kuchma only refers to non-Ukrainian ethnic groups, although Ukrainians are designated constitutionally as the "titular nation." Ukrainophones often feel that they have a minority status in eastern Ukraine and Crimea where their linguistic rights are ignored. The Council of Europe and the Organization for Security and Cooperation in Europe do not apply national-minority and linguistic rights to the titular nation, assuming that it is the duty of the state to promote its own dominant ethnic group. This, of course, is true theoretically, but in the case of Ukraine and, to an even greater extent, Belarus, this is not always the case.

The charter also promotes the use of minority languages by state officials, whereas the Constitutional Court ruled in December 1999 that all state officials should use only Ukrainian. Official documents produced in Kyiv, including during elections by the Central Election Commission, are only in Ukrainian regardless of whether they are sent to Lviv or Crimea.

Ukraine is not alone in debating the role of the charter as the entire subject of national-minority and linguistic rights is highly charged both in the West and in the East. The Council of Europe and the OSCE have de facto adopted the widely shared assumption that Western, "civic" states are consolidated, mature democracies and do not require active intervention in minority and ethnic problems.

The opposite is held to be true of the East, which is assumed to be less democratically advanced and more prone to ethnic discrimination and conflict. The EU has only demanded that postcommunist states that desire EU membership uphold good minority policies, a demand not made to Western European states that were invited to join earlier. The OSCE has only intervened in ethnic conflicts in postcommunist states, despite the fact there exist more and longer-running conflicts in the West. The United Kingdom, Spain, and Turkey have refused to sanction intervention by the OSCE because they have defined their ethnic conflicts as "terrorism."

Three other problems have rested on the question of how to define "national minorities" and whether migrants and linguistic groups also have rights. No common definition of "national minorities" exists in Europe among states or the OSCE, and each state has been left to its own devices either to define them or to deny their existence. The legislation of some states, such as the United States, France, Germany, the United Kingdom, Spain, Turkey, and Greece, denies that national minorities exist and prefers to support only civic rights provided to individuals, rather than collective rights to ethnic groups.

Most states deny that migrants, especially economic ones, should be able to claim state assistance to protect their cultures. Russia has defended the rights of Russian-speaking "compatriots" in the former Soviet Union, not Russians, although linguistic groups are not traditionally afforded protection as a group.

Ukraine is therefore not alone in having reservations about the Charter for Regional or Minority Languages. As of July 2001, only 15 states had ratified the charter. France refused to ratify it because it contradicted its constitution, which provides rights to individuals, regardless of ethnicity, language, or religion. Belgium, Greece, Ireland, Portugal, and Turkey had not even signed the charter while other Western European states ratified it with heavy revisions.

Most states have opposed any concept of collective rights, such as separate ethnic universities (which Albanians have demanded in Macedonia) and have allocated quotas in parliaments. They have also demanded that all citizens should learn the official (state) language. Some have opposed granting provisions to nonterritorial languages, such as Roma, and some states have insisted that they have a right to define to which languages the charter applies.

Most states have adopted a compromise policy of integration, in contrast to the provision of collective rights through multiculturalism (as in Canada) or full-blown assimilation, which was the most commonly held policy prior to the 1960s.

The dividing line between "integration" and moderate "assimilation" is, however, hazy. Moderate assimilation "is opposed not to difference but to segregation, ghettoization. and marginalization," the well-known U.S. scholar Rogers Brubaker concludes in the July 2001 issue of "Ethnic and Racial Studies." Integration of minorities into mainstream society, while providing for their rights, has always been the policy implemented by Ukraine.

(This report was written by Taras Kuzio, a resident fellow at the Centre for Russian and East European Studies and adjunct staff in the Department of Political Science, University of Toronto.)

THE WAY OF THE POLISH-UKRAINIAN STRATEGIC PARTNERSHIP. A book review by Vera Rich of Kateryna Wolczuk's and Roman Wolczuk's "Poland and Ukraine -- a Strategic Partnership in a Changing Europe," The Royal Institution of International Affairs, London, 2002, 134 pp., ISBN 1-86203-137-1.

Poland and Ukraine, as the two largest states in the "new" Central and Eastern Europe of postcommunist transformation, are becoming increasingly important for European politics overall. They have also been perceived, particularly in the early 1990s, as being of vital importance for one other. For Kyiv, Poland was seen as a major "gateway to Europe"; for Warsaw, a pro-Western Ukraine would act as Europe's bulwark against a still-unreconstructed Russia. Yet the much lauded "strategic partnership" between the two has failed to yield fruit, not only due to contemporary political and economic developments but also because the amity and commitment to "reconciliation" proclaimed by the two governments has failed to overcome historical grievances and enmities among the population at last. With the imminent accession of Poland to the EU and its consequent separation from Ukraine by a "hard" Schengen frontier, this analysis of the history and future prospects of the "partnership" is particularly timely.

The analysis begins by distinguishing three periods in the post-1991 relations of Poland and Ukraine. During the first period (1991-1994), both sides formally announced their commitment to priority relations with the other, with President Leonid Kravchuk of Ukraine averring that the "degree of cooperation with Poland will be higher than [with] any country in the CIS, including Russia," and Polish President Lech Walesa reiterating Jozef Pilsudski's dictum that "without an independent Ukraine, there cannot be an independent Poland." These sentiments were highlighted by the signing of the Treaty on Good-Neighborly Relations and Cooperation (1992) and the Agreement on the Legal Regime on the Ukrainian-Polish State Boundaries, Cooperation, and Mutual Support on Border Issues (January 1993). These declarations, however, were matched neither by economic ties nor by political developments. Poland's eastern policy of the period was ill-defined, tended (like that, incidentally, of the West) to be Russocentric, and in any case took second place to the Polish desire for progress westward.

The start of the second period (1994-1997) coincided with, and was in part fueled by, the election of new presidents in both countries. Although Ukraine's Kuchma had been elected on a platform of a foreign policy focused on Russia, his personal view that Poland must be Ukraine's "number-one state" and his long-term aim of EU membership, matched with a similar economic pragmatism, gave a considerable boost to cooperation, both economic (particularly in the "strategic" field of energy supplies) and political, while at the same time, both countries (though at very different rates) were set on a course toward NATO and the EU. The culmination was the signing of the Declaration of Understanding and Reconciliation of May 1997, which was the high point of this period.

In the subsequent period (1997 onward), however, the deterioration of the Polish economy, scandals in Ukrainian domestic politics (in particular the Heorhiy Gongadze affair), and, on the international scene, the increasing assertiveness of President Vladimir Putin's Russia and the EU's failure to grasp that Russia will strive to fill any gap that the West leaves open, retarded Polish efforts to "drag Ukraine westward" and as a result diminished Poland's own self-esteem as an international player.

The analysis of these fluctuations (the subject of the first main chapter) would have been sufficient for many commentators. The Wolczuks, however, look deeper. Parallel to and, in most cases, opposed to the attitudes of the governments are the deeply ingrained attitudes and prejudices of the population. Historical conflicts and the memories of 20th-century clashes and abuses (events often, in the latter half of the century, deliberately exploited by Soviet and Polish communist propagandists) had left a deep mark in the communal memory of both countries.

Two major chapters address these prejudices and perceptions, past and present, and, in particular, their all too resonant echoes in border areas. Many of the individual foci of discontent and how, on occasion, they have vitiated the policy initiatives of the governments will be familiar to students of the area: the dispute over the former Ukrainian Greek Catholic Cathedral in Przemysl or the Polish Eaglets Cemetery in Lviv, for example. This book, however, is not aimed at the specialist in East European history but rather at the planners and politicians (Western and in particular EU/NATO) who have to try to come to grips not only with the overt problems of the area but with the centuries of grievances that underlie them. And, although over the past 10 years a number of Anglophone authors have addressed the problems of the "kresy" (the long-disputed borderlands between Poles and their eastern neighbors), those works have been at best "sentimental tourism" and at worst one-sided and more likely to exacerbate than heal past sores. The Wolczuks' analysis of these emotive issues, calm, insightful, and impartial, cannot be commended too highly.

In the next chapter, the discussion moves into the future: the new strains that Poland's EU membership will impose on its already complex relationship with Ukraine. Although a purist may consider this section already outdated at the time of publication (for shortly before the launch of the book, Poland's EU accession date of 2004 was confirmed), it was clearly written with Polish accession in mind. Issues addressed include the human and microeconomic consequences of a strict visa regime on Poland's eastern frontier and the larger questions of how to avoid Poland's future Schengen frontier forcing Ukraine into a sense of isolation from Europe. The lack, to date, of an EU consensus in policy toward Ukraine; the problems, present and future, of the still-open border between Ukraine and Russia; trade figures between Ukraine and the EU candidate states; and the effects of the security situation following the 11 September 2001 terrorist attacks on the United States on cross-border activities are just some of the topics addressed in this context.

The final chapter, devoted to "the way forward," may be summarized as follows: Since, to date, the EU has proposed no adequate solution to the problems of preserving ties between applicant and nonapplicant neighbors, Poland and Ukraine will have to solve their dilemmas alone. Efforts to overcome old animosities in both countries have been largely confined to politicians and intellectuals, yet the level of cooperation between Poland and Ukraine is "unmatched" elsewhere in the area. It would be a "grave cause of concern" if this were to be replaced by renewed alienation, yet this seems an all too likely consequence of EU enlargement, at least in the short term. The success (or failure) of the Polish-Ukrainian "strategic partnership" under these conditions, the Wolczuks conclude, will be a "crucial test for subregional stability and security" and "a testing-ground for the future relationship between" EU members and nonmember neighbors in general.

One can only hope that, with the imprint of the Royal Institution of International Affairs and the backing of its worldwide distributor, the Brookings Institution, this book will become required reading for all who have a hand in shaping Europe's future -- in Brussels and elsewhere.

(Vera Rich is a London-based freelance researcher.)

"Taking into account your thunderous applause, I will, without fail." -- Belarusian President Alyaksandr Lukashenka at a meeting with students in Minsk on 29 November, answering a question about whether he will run for the post of president for a third time; quoted by "Izvestiya."