16 November 1999, Volume
Will Coalition Pass Tax Reform By 30 November?
The ruling coalition of the Solidarity Electoral Action (AWS) and the Freedom Union (UW) is currently in a race against time in its bid to push its tax reform bill through the parliament and have that legislation signed by 30 November in order to introduce new tax rates on 1 January 2000.
After many weeks of tense negotiations, the coalition agreed in early October that personal income tax brackets will be lowered to 19 percent, 29 percent, and 36 percent in 2000; the following year, they will be set at 19 percent, 28 percent, and 35 percent, and in 2002, two rates of 18 percent and 28 percent will be introduced. Corporate tax is to be reduced to 30 percent next year from the current rate of 34 percent. At one stage during those talks, UW leader and Finance Minister Leszek Balcerowicz, the main proponent of the tax reform, threatened to step down if the AWS rejected his proposals. The zloty exchange rate fell by some 5 percent following Balcerowicz's threat and then improved after the coalition reached a compromise on tax reform.
Now it seems that the main enemy of the tax bill is time. In order to become effective on 1 January 2000, the bill must be approved by both parliamentary chambers and signed by the president by the end of this month. In theory, that task can be achieved, provided that both the parliament and the president do what is expected of them without any delays.
However, the opposition Democratic Left Alliance (SLD) has announced it will do everything possible to make sure the bill is not passed. Last week, the SLD showed how it might achieve that goal. After submitting a motion in the parliament on 10 November to reject the bill, the SLD did not take part in the voting, thus preventing the legislature from mustering a quorum (some 40 coalition deputies were absent from the parliamentary session at that time). The coalition voted down the SLD motion only two days later, and the Commission for Public Finances immediately began redrafting the bill in order to submit it to a second reading scheduled for 16 November. SLD deputies in the commission, meanwhile, have proposed numerous amendments, hoping to obstruct and delay as much as possible the legislative process.
The SLD believes that the tax bill is "socially harmful." SLD leader Leszek Miller commented that "Balcerowicz wants to get money from the poorest people and those with medium earnings and to give it to the people with high earnings," according to PAP.
KGB Purges Its Ranks.
On 8 November, Alyaksandr Lukashenka fired General Uladzimir Matsyushka, one of the deputy chiefs of the Belarusian KGB. According to an official report, Matsyushka had decided to retire. However, the Minsk-based, independent "Belorusskaya delovaya gazeta" and Moscow-based "Vremya MN" on 10 November revealed the true reasons behind Matsyushka's departure.
Matsyushka was promoted from the post of KGB directorate chief in Hrodna Oblast to that of KGB deputy chief after he had shown "firmness" in handling the case of Pavel Sheremet (a correspondent for Russian Public Television, who was arrested, along with his camera team, at the Belarusian-Lithuanian border in 1997). In Minsk, Matsyushka was in charge of the KGB department dealing with the political opposition.
According to "Vremya MN," Matsyushka sent Lukashenka a report warning him about anti-presidential sentiments among the KGB top leadership. In particular, he accused KGB chief Uladzimir Matskevich of sympathizing with oppositionists. He also charged one KGB deputy chief of having ties with a criminal group involved in alcohol smuggling and another of lobbying Russian criminal commercial interests.
Lukashenka set up a commission, headed by Foreign Minister Ural Latypau and State Control Committee Chairman Andrey Kabyakou, to investigate Matsyushka's allegations. The commission did not corroborate them and informed Matsyushka's colleagues about his report. KGB officials of all ranks then flooded Lukashenka with letters assuring him of their loyalty and simultaneously telling stories of misdeeds committed by Matsyushka himself. Anticipating that the whole affair would turn out badly, Matsyushka requested that he be allowed to leave the service. Lukashenka, however, rejected that request and fired the KGB deputy chief at a meeting of KGB senior staff.
While "Vremya MN" offers a factual report based on information obtained from a "KGB worker," "Belorusskaya delovaya gazeta" presents a hazy narrative (twice as long as that in "Vremya MN"), which appears to be based more on rumor than fact. Citing "informed sources" (but not mentioning any source from the KGB), the newspaper says that in his letter to Lukashenka, Matsyushka tried to compromise some KGB leaders, but it fails to mention either the names of those leaders or their positions. The following passage gives a flavor of reporting on "politically sensitive" issues in Belarus:
"The existence of [Matsyushka's] message was confirmed by our sources, which allows us to assume--while sticking to the principle that 'there's no smoke without fire'--that this fact actually took place. As regards its contents, the document allegedly mentions some issues connected with the author's disagreement over the KGB's methods of work and with the position of individual leaders on intelligence, counterintelligence, combating organized crime, and the protection of the constitutional system. One of our sources said the message to the president included materials compromising individual KGB leaders. In order to avoid possible accusations of being tendentious, we will intentionally not give any names of the KGB leaders who were mentioned in [Matsyushka's] report."
The two reports on Matsyushka's case provide an instructive glimpse into how much liberty Belarus's independent press can risk compared with the Russian media. The Belarusian independent press is under constant threat of receiving a warning from the State Committee Press about inappropriate reporting (three warnings suffice to ban a publication) or being sued for libel by officials demanding high damages. The opposition newspaper "Naviny" closed in September after it was ordered by a court to pay a $50,000 fine--exorbitant in Belarus's economic conditions--in damages to State Security Secretary Viktar Sheyman.
It should be added that the report in the Moscow-based "Vremya MN" was signed by "Belorusskaya delovaya gazeta" staff writer Andrey Makhouski, while that in the Minsk newspaper was attributed to the "Belorusskaya delovaya gazeta" information department.
Kuchma Wins Presidential Elections.
With nearly all votes counted in the 14 November runoff, Leonid Kuchma had obtained 56.31 percent of the vote, while Communist Party leader Symonenko had garnered 37.76 percent, according to Reuters the next day. Interfax reported that some 27.6 million people (73.8 percent) took part in the ballot.
According to preliminary data, Symonenko beat Kuchma in 10 eastern and central regions: Crimea, Vynnytsya, Zaporizhzhya, Kirovohrad, Luhansk, Mykolayiv, Poltava, Kherson, Cherkasy, and Chernihiv (Kuchma's native oblast).
Kuchma's best results were in Western Ukraine: Ivano-Frankivsk Oblast (92.30 percent), Ternopil Oblast (92.18 percent), Lviv Oblast (91.55 percent), and Transcarpathia (83.82 percent).Symonenko Dispels Fears Of Communist Return.
On 8 November, Petro Symonenko, leader of the communist Party of Ukraine and the incumbent president's rival in the 14 November runoff, spoke with RFE/RL correspondent Askold Krushelnycky and RFE/RL's Ukrainian Service. Below are excerpts from that interview:
RFE/RL: Why do you think a new Communist government would be good for Ukraine, when 70 years of communism brought economic ruin?
SYMONENKO: Concerning the years of ruin--and there were tragic mistakes--I have to hope that many who are not against us will look to the future and not to the past. Ukraine, after all, used to be one of the top four countries in Europe. Today, some organizations rank Ukraine as number 102 in the world. What's more, various foreign organizations say Ukraine has the most corrupt government. That is why I propose that a new government be composed of professional, honest, decent people, regardless of whether they are members of the Communist Party or not.
RFE/RL: If you win the runoff, will non-Communists have a role in your government?
SYMONENKO: We stand for a genuine patriotic upbringing for our youth, not for some mongrel idea that prevails today in Ukraine. We are for the defense of common interests and the defense of our national culture. We are for the defense of mass media. You, as a citizen of Ukraine, know that freedom of information has been destroyed here. Therefore, there are very many problems that unite us. But this is the most important thing: We communists have shown that we are ready to enter into principled agreements with others to resolve our common problems.
RFE/RL: What kind of union with Russia do you promote?
SYMONENKO: In my [electoral] manifesto, I set out in precise terms that I am for a union of independent states. Nobody in Europe is against such unions. Why then do the [so-called] national-patriots, who speak out against my programs as a Communist Party candidate, not talk about the fact that the rest of Europe has already gone down that [union] path. The European Union now has a single currency, [its own] parliament, its own security council. [Its 15 members] jointly resolve questions of customs and industrial production. Such is the planning and development of society in [Western] Europe.
RFE/RL: What kind of "fraternal union"--to use your term--could Ukraine have with a chaotically capitalist Russia and a Belarus that is still stuck in Soviet times?
SYMONENKO: We are nations that emerged from the same root. We have one common Church, [the Orthodox Church]. That is a short answer to what the phrase "fraternal nations" means. We are from one root, we have a common destiny and a common history.
RFE/RL: In Soviet times, the Communists destroyed millions of Ukrainians and the country's elite. Communism took away freedom of information, forbade foreign travel, and was responsible for many other forms of repression. Why should voters believe the same will not happen again?
SYMONENKO: I openly say that we, as a party, condemn the tragic mistakes of the past. But we have to look to the future. I want today to know, if the current system is so open and there are no more dissidents, why Ukrainian literature has disappeared and where has the Ukrainian cinema gone? Why don't I see any new ideas or breathe new, fresh creative air that would inspire artists to new, high-quality work? In the past there were, shall we say, tragic mistakes. We discussed these at the 20th congress of the CPSU. But today we should not scare people but, while giving them access to the full truth about our lives, we should work toward resolving those problems that will improve the quality of life for everyone.... Therefore, I propose a completely different model for the development of the country and different mechanisms that will today bring about the rebirth of our country.
RFE/RL: How would you handle the economy?
SYMONENKO: Let us examine a phrase that Zbigniew Brzezinski used. He said that in the years following the breakup of the Soviet Union [the United States] had gained 10 times more than it expended on its destruction. He said that today Russia does not interest [the U.S.], [which is] more concerned about China. Why? Because the Communist Party of China used the theoretical knowledge and experience acquired by the Communist Party of the Soviet Union and put it into practice. For 10 years they examined appropriate ways to put reforms into practice and then they embarked upon those reforms. I was in China this year at the invitation of the Communist Party of China and acquainted myself with these reforms and their consequences and I can assure you that there is much from their experience that we can use in our country.Orthodox Church (Kyiv Patriarchate) Backed Kuchma.
Metropolitan Filaret, head of the Ukrainian Orthodox Church (Kyiv Patriarchate) issued a statement calling on all democratically orientated political parties and public organizations to support the candidacy of incumbent President Leonid Kuchma in the 14 November runoff, "Fakty" reported on 12 November. The statement says that the Church "in no way interferes with politics" but adds that the country's believers are "not completely indifferent as to who will be Ukraine's president for the next five years." For this reason, Filaret appeals to the Church's members as well as all believers "to show civic responsibility, state-oriented thinking, Christian piety, [and] patriotism and elect for themselves, for their families, [and] for Ukraine a future, not a return to the worse past."Some Offshore Banks Unwelcome.
Ukraine's National Bank has prohibited commercial banks from establishing various correspondent accounts in banks that are registered in Nauru and Vanuatu (island republics in the Western Pacific) and in Antigua and Barbuda, in the Caribbean. Moreover, the central bank ordered those Ukrainian banks that had earlier established correspondent relations with banks in the above-mentioned countries to cease using such accounts and to break relations with those banks altogether.
Quoting an unidentified source, Interfax reported on 11 November that 28 Ukrainian banks maintain correspondent accounts in offshore banks now prohibited by the central bank. According to the same source, Ukraine's National Bank introduced the ban because of the "lack of information about central banks in the said countries and about the state of banking oversight in them."
The decision came on the heels of the disclosure that former Ukrainian Premier Pavlo Lazarenko laundered a total of $80 million in an Antiguan bank. The government of Antigua and Barbuda said on 8 November that it has uncovered links between Lazarenko's accounts in that country and those he maintained in Switzerland and Ukraine. It also alleged that the money had been moved between those accounts to conceal its origin. The Antigua and Barbuda government advised the governments of Ukraine, Switzerland, and the United States about its findings, thus meeting their requests for such information.
Lazarenko, against whom Ukraine and Switzerland are conducting money-laundering investigations, is now in the United States, where he has applied for political asylum.
In an effort to trace Lazarenko's financial operations, Ukraine has supplied some governments with a list of companies owned by him and allegedly used to launder money. Lazarenko's companies were registered in Great Britain, the Bahamas, the U.S., the Cayman Islands, and the Virgin Islands.
"Poles must now decide a number of basic questions, including their attitude to the post-Communists' nihilism and hypocrisy. The post-Communists have poisoned life in Poland. We must decide whether we want to build our future on Christian values and liberty or [on] post-communist lies." -- Marian Pilka, leader of the rightist Christian National Union, while proposing a referendum on decommunization (that would prohibit former Communists from exercising power) in Poland. Quoted by PAP on 11 November.
"The economic collapse that is going to happen in Ukraine after the elections of the head of state will force this republic to join the Union of Belarus and Russia." -- Lukashenka on 9 November. Quoted by "Nezavisimaya gazeta" on 11 November.
"In general, there is nothing extraordinary in this. There is no difference between a report on harvest progress in Brest Oblast and one on the opposition." -- Lukashenka's aide Mikhail Sazonau on the government's consent to admit the opposition to the state-controlled media. Quoted by the 10 November "Belorusskaya delovaya gazeta."
"I do not know to what extent we will be admitted to [state-run] television and press. Three weeks ago I sent an article to 'Sovetskaya Belorussiya' (ed.: Lukashenka's main press organ). I asked them to publish it. The piece was called 'A Battle for the Ruble.' I was told that it may be published. True, provided that I cut it by half, remove some expressions, and stop calling by their proper names ignorance and state-sponsored counterfeiting of money." -- Former Belarusian chief banker Stanislau Bahdankevich, leader of the opposition United Civic Party. Quoted by the 10 November "Belorusskaya delovaya gazeta."
"Sometimes [IMF and Belarusian officials] meet and negotiate new credits because of the impact of the Russian crisis on Belarus. But the fundamental economic policy in Belarus--fiscal policy, monetary policy, structural policy--is so different that the IMF is simply not in a position to support these policies. Another thing is the question of whether Belarusian economic policies will change. We don't really think so, frankly speaking. We've noticed some signals of compromise from Belarus in recent weeks. But a fundamental change--stability-oriented fiscal and monetary policy--is not on the agenda for the next months. That is quite sure." -- Juergen Conrad, Eastern European coordinator for the Deutsche Bank Economic Research Unit in Frankfurt, in a comment to RFE/RL on 10 November.
"I want to tell you, bankers and government [ministers], that I do not intend to tolerate your work [yielding] such results in the new year 2000. I repeat once again: I told you long ago to put a boot under the wheels of the locomotive that is named price hikes, inflation, and the decline of the Belarusian ruble. You have approximately one-and-a-half months to stop this locomotive.... I don't know in what other state [the population] is able to quietly tolerate such pressure. I mean inflation and the devaluation of our national currency. You cannot probably name such a state. I feel the population has approached the line beyond which it will make a decision, most likely without us." -- Lukashenka at a government meeting on 10 November. Quoted by Belarusian Television.
"Somebody is stubbornly trying to persuade the Russian public that Ukraine intends to become a [NATO] member. However, neither Ukraine nor NATO is ready for it. This is understood perfectly well in Kyiv, Brussels, and, I think, in Moscow". -- Kuchma in an interview with the 10 November "Izvestiya."
"Possibly, Ukraine has seen the birth of the European tradition of political compromises. I am interested in extending this tradition to all authority levels." Kuchma's rival in the 31 October elections, Yevhen Marchuk, commenting on 10 November on his appointment as secretary of the National Security and Defense Council by the incumbent president. Quoted by the 11 November "Den."
"Today Ukraine has been drawn into the Baltic-Black Sea [alignment]. Do we not realize that by this, they tear away our Slavic unity, ruin our common spiritual heritage, destroy our Orthodoxy? And I, a Communist, [have to] struggle to defend the canonical Orthodoxy in Ukraine." -- Petro Symonenko in an interview with the 11 November "Vremya MN."
"The entire world has held its breath and is waiting for election results [in Ukraine]." -- Kuchma on 11 November in Donetsk Oblast. Quoted by Interfax.