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Poland, Belarus & Ukraine Report: October 24, 2000

24 October 2000, Volume 2, Number 39
SWINDLER CONVICTED, BUT SWINDLE CLOAKED IN MYSTERY. A Warsaw court on 20 October found Boguslaw Bagsik guilty on five charges and sentenced him to nine years in prison, PAP reported. Bagsik was found guilty of cheating the Polish banking system out of 424 million zlotys ($94 million), defrauding a bank, bribing bank clerks, and carrying out financial misdeeds connected with his company, Art-B. Bagsik also was banned from holding any post at trading companies for five years and ordered to pay court costs and a fine of 5,000 zlotys.

"I reaffirm my position that I am innocent," Bagsik told Polish Radio after the verdict. He has repeatedly stressed he acted within the limits of law.

In 1989, Bagsik and his friend, Andrzej Gasiorowski, created Art-B, a company with a capital of some $100. One year later, the company increased its capital to 30 million zlotys and controlled several hundred other firms. In 1991, at the height of its success, Art-B became a corporation worth $300 million with 15,000 employees. It has since gone bankrupt and closed.

Bagsik's and Gasiorowki's practice was to transfer large sums of money between several different bank accounts to earn interest in several places at once--the so-called "oscillator" scheme. The procedure was successful owing to the slow accounting process and legal loopholes during Poland's largely uncontrolled transition from a command to a market economy.

After the financial scandal broke, Bagsik and Gasiorowski fled to Israel in July 1991, where they were granted a second citizenship. Gasiorowski still lives in Israel (Israel has no extradition agreement with Poland), while Bagsik was arrested in 1994 in Switzerland and extradited to Poland.

Prosecutor Marek Lopuszanski wanted Bagsik to receive a prison sentence of 14 years, but Judge Barbara Skoczkowska said the nine-year sentence is "commensurate with Bagsik's guilt and the effects of his crimes." The verdict means that Bagsik might not spend much time in prison since he has already spent 4.5 years in jail and can apply for an early release. He has been out of prison on 2 million zlotys bail since 1998.

However, many aspects of Bagsik's case remain shrouded in mystery. How did Bagsik and Gasiorowski manage to get their earnings out of Poland? From whom did they obtain capital in 1990 to start their successful "oscillator" scheme? The 15 October "Wprost" suggested that Art-B was given money from the liquidated foreign accounts of the Polish United Workers' Party. "Wprost" also quotes an unidentified Polish security service officer as saying that Art-B had links to Mosad, Israel's intelligence service, and that the oscillator idea might have been suggested to Bagsik and Gasiorowski by their Israeli friends.

Polish investigators estimate that Bagsik may still have some $40 million abroad and Gasiorowski twice that amount.

HOW LUKASHENKA STAGED 'BEAUTIFUL, ELEGANT' ELECTIONS. President Alyaksandr Lukashenka told journalists on 18 October that he is satisfied with the "absolutely democratic" elections to the Chamber of Representatives on 15 October. "These were beautiful and elegant elections in which the Belarusian people won," ITAR-TASS quoted him as saying.

However, the OSCE technical assessment mission, which was in Belarus for the four weeks leading up to the 15 October vote, expressed a very different opinion. Experts from the OSCE's Office for Democratic Institutions and Human Rights (ODIHR) said the elections did not meet international standards. The mission noted that the main abuses of the election process in Belarus included the executive branch's control over election commissions, the refusal to register nearly 50 percent of independent candidates, the authorities' monopoly on the media, and the widespread use of the early voting procedure.

The OSCE, the Parliamentary Assembly of the Council of Europe, and the European Parliament all refused to send a full-fledged observers' mission to Belarus, arguing that Minsk had not complied with the OSCE's four requirements: democratizing the country's electoral code, giving the opposition access to the state-controlled media, expanding the powers of the current legislature, and introducing a "period of peace" in the country by stopping political persecution.

However, the Belarusian authorities invited some 140 foreigners (including a large group from Russia) to whom the Central Electoral Commission gave the status of "international observers" during the 15 October vote. The Belarusian state-controlled media subsequently quoted some of those individuals as saying the vote was free and fair. Against the background of such praise from "international observers," official Minsk accused the OSCE of "double standards" in the latter's assessment of the election process in Belarus. The ODIHR experts were forced to issue a statement saying that, first, the ODIHR has nothing to do whatsoever with the conclusions of "international observers" and, second, the Belarusian authorities took measures to influence those conclusions by sponsoring the trip of the "international observers" to Belarus and covering some of their expenses.

Minsk responded sharply to the 16 October assessment of the U.S. State Department that the ballot was not free, fair or transparent and that the U.S. will continue to recognize the Supreme Soviet led by Syamyon Sharetski as Belarus's legitimate parliament. "The U.S. administration has once again ignored the democratic will of millions of Belarusians, which was clearly expressed in free and fair elections," Belarus's Foreign Ministry said on 17 October. The ministry added that the Supreme Soviet dissolved itself on 26 October 1996, that is, immediately after the controversial constitutional referendum (Lukashenka's supporters in the Supreme Soviet, who adopted a resolution to that effect, did not have a constitutional majority to do that, however).

As for the state media, they were apparently ordered to suggest that the U.S. assessment of the Belarusian vote was the private opinion of U.S. State Department spokesman Philip Reeker. A comment on Belarusian Television on 17 October is characteristic of that stance:

"Possibly, there has been no more impertinent document in the history of international relations. A minor U.S. clerk [Philip Reeker] took the liberty of voicing assessments that not only are inadmissible in tone but also directly insult the Belarusian people and grossly interfere in the domestic affairs of a sovereign European state. The Americans, who did not send observers and already on the eve of the elections announced that they do not recognize them, surpassed [even] themselves this time. According to the logic of the State Department spokesman, free, fair, and transparent elections are not determined by unobstructed voting--end of quote."

The next day, Belarusian Television quoted presidential staff head Mikhail Myasnikovich as saying that Minsk "has every reason to demand explanations from official Washington" in connection with Reeker's statement, which he described as "insulting." "The deputy spokesman of the U.S. State Department, in essence a third-rate clerk, assumes the posture of a global sheriff and threatens Belarus with severe punishment for disobedience," Myasnikovich noted.

Since the Belarusian democratic opposition parties did not participate in the elections and called for a boycott, the Belarusian authorities had to deal only with one unpredictable circumstance--election turnout. Lukashenka needed turnout to be comfortably higher than 50 percent in order to show that the opposition's tactic had failed and that his rule enjoys broad popular support. Central Election Commission Chairwoman Lidziya Yarmoshyna said two hours before the end of the voting that turnout had cleared the 50 percent threshold in 82 out of the 110 constituencies (in fact, in all Minsk constituencies turnout was below 35 percent). But thereafter she fell silent and only spoke again on the morning of 16 October to inform the country that the overall election turnout had exceeded 60 percent. It turned out that in Minsk the elections were valid in 15 out of the 18 constituencies. (By strange coincidence, the elections were declared invalid in the constituencies where three prominent opponents of the Lukashenka regime sought to win legislative mandates: Social Democratic Party leader Mikalay Statkevich, Liberal Democratic Party leader Syarhey Haydukevich, Belarusian Party of Communists leader Syarhey Kalyakin.)

The Central Coordinating Council for Election Observation, an NGO that fielded more than 5,500 monitors to observe the vote, publicized its findings on 18 October. Council Chairman Mechyslau Hryb said the most widespread violation among local electoral commissions was shortening the lists of registered voters in order to obtain turnout of more than 50 percent. According to Hryb, it was easy to falsify election results because half of the election commission members represented the authorities. Election violations were also facilitated by the early voting procedure, in which monitoring was virtually impossible, he added. The Central Electoral Commission said 10 percent of the electorate voted ahead of 15 October, but in some constituencies, according to the Central Coordinating Council for Election Observation, this figure exceeded 45 percent. Overall, council monitors reported some 5,000 election irregularities. According to Hryb, turnout was below 50 percent in 31 constituencies, not 13, as announced by the Central Electoral Commission.

RFE/RL's Belarusian Service, Belapan, and some Russian newspapers reported numerous examples of dubious election practices in the legislative ballot. Some are presented here:

1. In a bid to counter the opposition's call for an election boycott, the Belarusian authorities began urging early voting and threatening reprisals if voters fail to go to the polls. RFE/RL's Belarusian Service reported that the Homel authorities took advantage of their leverage over the management of state-run factories. "People! You all are obliged to cast your ballots by Friday [13 October], in order to produce results on Friday. Vote as you like, but get moving. You all are allowed to quit after lunch, go and vote," an RFE/RL correspondent quoted a manager in the Homselmash machinery building plant as telling workers. Asked what would happen to those who do not obey, the manager said: "They will get no good from it. The plant is to lay off thousands by year's end."

2. Independent trade union leader Henadz Bykau caught the chairman of the electoral commission at the No. 545 polling station in Minsk in the act of dropping a number of ballots into the ballot-box. (RFE/RL's Belarusian Service on 16 October)

3. United Civic Party Deputy Chairman Alyaksandr Dabravolski saw electoral commissions at some Minsk polling stations take protocols listing the ballot results to the City Executive Committee for "approval" before making them public after the vote count, as stipulated by the electoral code. (RFE/RL's Belarusian Service on 16 October)

4. In Baranavichy (Minsk Oblast), some voting-precinct commissions sent their protocols to district electoral commissions either completed in pencil or left blank but nonetheless signed by all commission members. (RFE/RL's Belarusian Service on 16 October)

5. At polling station No. 31 in Pinsk (Brest Oblast), the authorities brought all the patients at a clinic for alcoholics and drug addicts to vote in the evening in order to improve turnout.

6. Observers at a polling station in Salihorsk received an official protocol on 15 October saying that turnout was 42 percent. However, the next day another protocol appeared, stating turnout was 51 percent. ("Novye izvestiya," 17 October)

7. At a polling station in Stolin Raion (Brest Oblast), the local authorities organized a banquet for the electoral commission during the voting. Some commission members had to be replaced by new hands because they became so intoxicated that they were unable to carry out their commission duties. (Belapan, 16 October)

RUSSIA'S DOUBLE BYPASS. Russia's Gazprom, Germany's Ruhrgas and Wintershall, Italy's SNAM, and Gaz de France signed a memorandum of understanding in Moscow on 18 October to study and develop a new section of the planned Yamal-Europe gas pipeline. The project calls for the Yamal-Europe gas pipeline--currently under construction--to be linked to Slovakia, where it would connect with a network of gas pipelines to Germany, Italy, and France. Such a link, while traversing Polish territory, would bypass Ukraine.

It remains to be seen if the project is feasible. In the meantime, all gas experts agree that the main goal of the agreement--regardless of whether it can be implemented--is to intimidate Ukraine into ceasing to siphon off Russian gas transiting Ukrainian territory and into paying for Russian gas more efficiently. According to some Russian estimates, Ukraine's debt for Russian gas stands at $2.5 billion (Kyiv admits to owing some $1.4 billion). Gazprom, however, says Ukraine stole 15 billion cubic meters of transit gas in 1999-2000 (worth some $900 million).

Gazprom chief Rem Vyakhirev commented that the bypass pipeline scheme will enable it to increase Russian gas supplies to the EU. But it remains a mystery how this can be done by simply constructing a pipeline to Slovakia through Poland without completing the entire Yamal-Europe pipeline. Most likely, Ukrainian President Leonid Kuchma was aware of this when on 19 October he shrugged off the deal by saying that "it takes a lot of time [to proceed] from the project to its practical implementation." At the same time, Kuchma stressed that the capacity of Ukraine's existing gas pipeline network can be increased by 30 percent.

The estimated cost of the part of the Yamal-Europe pipeline that would be built to avoid Ukraine is $1 billion. It is not unfeasible that Gazprom and its Western partners could invest such a sum immediately after the project's feasibility study is completed in favor of the Slovak connection. For Russia, the implementation of the project would mean obtaining great political leverage in Ukraine. Without Russian gas supplies in payment for transit, Ukraine would become a country as politically and economically dependent on the Kremlin as Belarus.

Warsaw is well aware of all the consequences connected with the bypass pipeline project. That's why a number of top Polish officials hastened to assure Kyiv earlier this year--when the bypass pipeline project became known to the public--that Poland would not support any gas supply scheme that would be to the detriment of Ukraine, Poland's "strategic partner."

Many Polish politicians believe that the survival of sovereign and independent Ukraine is a guarantee that Poland itself will not return to "the Russian sphere of influence" and that the political changes that took place in Eastern and Central Europe a decade ago are irreversible. Given Poland's complicated and tragic fate in the 20th century, one should not dismiss such fears among Poles as trivial or groundless.

Europe wants more Russian gas in order to become more independent in terms of energy consumption from OPEC countries, while Poland wants to be in Europe, that is, in the EU, as soon as possible. Moscow has calculated that these two strivings can be utilized to exert pressure on Ukraine. According to this line of reasoning, Poland will not oppose the bypass pipeline project too strongly if Berlin or Paris (both of which have a powerful voice in Brussels)--ask Warsaw to come to its senses and agree. For this reason, Gazprom signed a deal with its Western partners on building the pipeline even without securing the permission of the country across which the pipeline is supposed to run. Moscow bypassed Poland in its political maneuvering, just as it wants to bypass Ukraine in gas transit.

From an economic point of view, Gazprom's project offers Poland more revenues for Russian gas transit. Some Ukrainian commentators say it is only a matter of time until Poland, pressed by its Western allies, will say "yes" to Gazprom's offer. For the time being, Poland has called for an international conference of all countries interested in the construction of a gas pipeline linking Russia's Yamal peninsula with Western Europe. Last week, Russian President Vladimir Putin put Deputy Prime Minister Viktor Khristenko in charge of negotiations with Poland on building a gas pipeline stretch to bypass Ukraine. Can Ukraine prevent the bypass pipeline scenario from being implemented? In an attempt to do so, Kyiv has proposed to Moscow that the latter jointly manage Ukraine's gas transport network. Putin reportedly showed interest in the proposal during his recent meeting with Kuchma in Sochi. But Khristenko has noted that "currently our position is that joint management is only possible if 51 percent of a consortium controlling Ukraine's gas transport system is in the hands of Gazprom." It seems that Kyiv is not yet ready to accept this technical parameter as the starting point for talks with Moscow on Russian gas supplies.

"A politician never says never." -- Lech Walesa answering the question whether he will run in presidential elections in 2005. Quoted by PAP on 16 October.

"Everyone has understood, including the Russians,...that Belarus is not a banana republic. [In Belarus] we see the absolute unity of our people. They are supporting the current authorities, and this means that it is possible to work and invest in Belarus." -- Alyaksandr Lukashenka commenting on the 15 October elections in Belarus. Quoted by Belarusian Television on 21 October.

"In Belarus everything happens one hour earlier [than in Russia]--Belarus is a more western country." -- Former Russian State Duma deputy Olga Beklemishcheva in the 19 October "Novaya gazeta."