Poland, Belarus & Ukraine Report: October 16, 2001

RULING COALITION OUTLINES TASKS. On 9 October, the Democratic Left Alliance (SLD) signed a coalition deal with its election bloc partner Labor Union (UP) and the Polish Peasant Party (PSL). The SLD-UP-PSL coalition has 258 votes in the 460-seat Sejm elected on 23 September.

The leftist ruling coalition pledges to implement a "difficult and bold rescue plan" in order to tackle "the catastrophic condition of the state, the ruin of the public finances, and the disorganization of the fundamental spheres of the activity of the state." In particular, the coalition partners declare that the maximum budget deficit in 2002 will not exceed 40 billion zlotys ($9.2 billion).

The key tasks of a new government -- as formulated in the coalition accord -- include lowering unemployment (currently at 16 percent), making access to education easier, ensuring economic growth, downsizing government bureaucracy, stepping up the fight against crime, and completing EU membership talks.

Although subscribing to the general aim of "seeking economic development opportunities associated with privatization," the PSL insisted on a clause in the accord that says the state will retain control over the as yet unprivatized banks (the Polish Savings Bank, the Food Economy Bank, the Post Office Bank, the National Economy Bank) and "other strategic branches of the economy."

In the agricultural sector, Poland�s greatest problem in EU talks, the coalition deal puts forward the following aims: increasing the profitability of agricultural production; putting the agricultural market in order, including through the use of intervention prices; guaranteeing a real increase in budget outlays on agriculture within the next two years; linking Poland�s EU membership with the full inclusion of Polish agriculture under the EU�s Common Agricultural Policy; the maintenance of the present rates of VAT on food, agricultural means of production, and construction materials until the end of 2002; and the "statutory regulation" of issues concerning turnover in agricultural assets and land.

On 10 October, SLD leader and Prime Minister designate Leszek Miller named a new cabinet lineup: Deputy Premier and Agriculture Minister Jaroslaw Kalinowski (PSL), Deputy Premier and Infrastructure Minister Marek Pol (UP), Deputy Premier and Finance Minister Marek Belka, Interior and Administration Minister Krzysztof Janik, Foreign Minister Wlodzimierz Cimoszewicz, Defense Minister Jerzy Szmajdzinski, Treasury Minister Wieslaw Kaczmarek, Economy Minister Jacek Piechota, Education Minister Krystyna Lybacka, Science Minister Michal Kleiber, Culture Minister Andrzej Celinski, Justice Minister Barbara Piwnik (no party affiliation), Health Minister Mariusz Lapinski, Labor Minister Jerzy Hausner, and Environment Minister Stanislaw Zelichowski (PSL). Miller also appointed Michal Tober as government spokesman, Marek Wagner as head of the prime minister's office, and Jan Truszczynski as chief negotiator with the EU.

"I intend to rule efficiently and without any unnecessary hesitations," Prime Minister designate Miller said on 11 October, following a first, informal meeting of his cabinet, which is expected to be sworn in this week. Miller said the priority task for the new cabinet in the coming weeks will be drafting a 2002 budget bill. He added that his ministers will also review the laws that recently came into effect or will come into effect in the near future in order to slash "unfounded" budget expenditures. "We will seek to annul such laws or to delay their implementation," PAP quoted Miller as saying.

On 13 October, Miller said he expects the Monetary Policy Council (RPP) to cut interest rates after his government is sworn in, and to reduce them further in the following months. "I expect the council to lower the rates just after the government is sworn in by, for example, one percentage point, as a goodwill gesture. In line with what [Finance Minister designate] Marek Belka says, the rates should be cut by five percentage points on an average annual basis," Miller told "Gazeta Wyborcza." Miller added that if the rates are not lowered, the Sejm may curb the RPP's independence.

Miller denied the allegation in the 12 October "Rzeczpospolita" that the SLD and the PSL concluded an informal deal to limit independence of the National Bank.

LUKASHENKA SUGGESTS ECONOMIC LIBERALIZATION. While introducing Henadz Navitski, his nominee for prime minister, to the Chamber of Representatives on 10 October, President Alyaksandr Lukashenka said the new cabinet must ensure macroeconomic and financial stability, reform the state economic sector, and develop entrepreneurship.

Lukashenka promised to liberalize economic relations and support private businesses, adding that the state will regulate the economy with "other, more flexible and efficient" means. "The new government will have to learn managing with primarily economic methods and to reduce to the minimum direct interference in the activity of economic entities," Belarusian Television quoted Lukashenka as saying. He announced that he will meet Belarusian businessmen on 24 October to discuss the country's economic course following the 9 September presidential election.

However, the Belarusian Association of Entrepreneurs (BAP) remains skeptical about Lukashenka's real intentions. BAP President Alyaksandr Patupa told Belapan on 12 October that he fears Lukashenka's announced meeting with businesspeople may "boil down to yet another monologue" on the part of the Belarusian leader. Patupa believes that the meeting will make no sense unless the government "gives a clear answer as to what is behind the declared liberalization."

Patupa warned that with the "election boom" over, the country is on the verge of "investment hypercrisis," because Belarus's "market environment no longer wants barter." In Patupa's view, economic liberalization should entail increased legal guarantees for entrepreneurs and investors and a revision of "more than 120 legislative acts" such as, for instance, a presidential decree allowing seizures of property without court authorization. Patupa stressed that the president should focus on "political decisions" rather than determining tax percentages or issuing business licenses. Patupa added that the best "political solution" for Belarus would be to resume its transition to a market economy, which was interrupted by the 1996 retreat to an administrative command economy.

KYIV ADMITS DOWNING RUSSIAN AIRLINER. Ukrainian Defense Minister Oleksandr Kuzmuk told journalists in Kyiv on 13 October that the 4 October crash of a Russian Tu-154 jetliner with 78 people (mostly Russian-born Israelis) aboard was caused by an errant missile fired by Ukrainian antiaircraft defense troops from the Crimean Peninsula. Kuzmuk's statement came after Russian Security Council Secretary Vladimir Rushailo said earlier the same day that, according to an expert conclusion, the crash was caused by an S-200 missile exploding some 15 meters from the plane. The missile unleashed a warhead of shrapnel at the airliner after flying some 250 kilometers from the area where it was fired. A recorded radio transmission made public late last week revealed that the pilot's last words before the plane plunged into the Black Sea were "Where are we hit?"

Kuzmuk did not explain how the missile came to miss the drone it was targeted on and instead zeroed in on the plane, saying only that further investigation is needed. "I offer my apologies to the families and relatives of the tragically deceased, as well as to the president, the government, the Supreme Council, and the Ukrainian people for harming the prestige of the state," Interfax quoted Kuzmuk as saying.

Kuzmuk was speaking at a news conference during which Ukrainian Air-Defense Forces commander Volodymyr Tkachov announced that he and his deputy have tendered their resignations over the crash. As for Kyiv's previous denials of its responsibility for the crash (see "RFE/RL Poland, Belarus, and Ukraine Report," 9 October 2001), Tkachov said that "we were sure that it was not our guilt. At that time [in the first days after the crash], we had the full right to say so -- a lot of evidence, including data from an objective inspection as well as technical parameters of the firing, added to our confidence."

This is the second time in 18 months that Ukraine's armed forces have lost control of a live missile. In April 2000, four people were killed in the town of Brovary near Kyiv, when a rocket hit their apartment block. The Defense Ministry denied responsibility for several days until rescue workers found missile parts in the rubble.

In a press statement released on 13 October, President Leonid Kuchma expressed his condolences to Russia, Israel, and the families of the 78 people who died on board the Russian airliner brought down by the Ukrainian missile. "Our pain is especially acute because people died due to the tragic and unintentional coincidence. This is something that we cannot repair," the statement said.

However, the world will most likely remember another Kuchma statement he made three days earlier, while apparently trying to downplay Kyiv's anticipated guilt for the crash. At that time, the Ukrainian president said that "mistakes happen everywhere, not only of this scale but also of a larger one" (see quote below). A spokesman for Israeli Prime Minister Ariel Sharon responded that such remarks are easy to make when the 78 victims are from another country.

Moscow has so far avoided an open diplomatic conflict with Kyiv over the crash. Yevhen Marchuk, the secretary of Ukraine's Council of National Security and Defense, commented on 13 October that the inadvertent downing of the Russian plane will not negatively affect Ukrainian-Russian relations. Meanwhile, Russian State Duma speaker Gennadii Seleznev said on 15 October that the Tu-154 disaster will entail "heavy moral, material, and political consequences" for Kyiv, Interfax reported. Seleznev said Ukraine will have to pay a "huge sum" in compensations to the Sibir airline that owned the downed aircraft as well as to families of the victims.

"Are we the first ones or the last ones? One shouldn't make a tragedy out of it if there has been a mistake. Mistakes happen everywhere, not only of this scale but also of a larger one, of a global scale." -- Leonid Kuchma on 10 October, commenting on the allegations that a stray Ukrainian missile downed a Russian airliner with 78 people aboard on 3 October; quoted by Ukrainian media.