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Poland, Belarus & Ukraine Report: December 28, 1999

28 December 1999, Volume 1, Number 30
Post-Communist Businesses. The transition from socialism to capitalism in Poland has produced a thin stratum of nouveaux riches and a much thicker one of those who have to struggle everyday to make both ends meet. That transition has also created the demand for and supply of specialists in jobs and crafts that were virtually unknown in the communist era. As a rule, those people operate in the gray economic zone. The 18 December "Polityka" carries three reports on peculiar businesses that developed in Poland following the systemic transformation in the early 1990s.

Forcing Out Debt Repayment. They are called executors in their business. In the initial period, they were gangsters from the post-Soviet Mafia, communist-era security service officers who were not accepted to serve for new Poland and consequently fired, and Polish gangsters. Recently, there has been an inflow of young people from suburban areas, who have no jobs where they live and want easy money in the city. Old executors are gradually retreating to other jobs, giving way to this new wave of people ready to intimidate, torture, and kill in order to force out debt repayment.

"The debt collecting market emerged after people had begun to have big [and illegally earned] money. They were afraid to go with it to a bank or disclose it to a notary. They were also afraid of the tax office. So they loaned money on interest. For example, to their acquaintances for starting business." -- Arkadiusz Z., a former police officer and an executor, told the weekly. Arkadiusz Z. was a consultant to the Polish movie "Debt"--about collecting bad debts--which has become a big financial and artistic success. One of his debt collecting cases was reflected in the movie's script.

According to Arkadiusz Z., the simplest way of forcing out debt repayment is to take the debtor to a wood and order him at gunpoint to dig his grave. It is also quite efficient to terrorize the wife of a debtor with a knife put to her face. The husband, in order to avoid a hell in his home, usually repays the debt promptly. An executor takes a fee amounting from 10 to 50 percent of the debt he collects, usually from both sides: the customer and the debtor.

Vladimir, a Russian who served with the special purpose troops, believes in more radical methods of collecting debts. "To squeeze out all the juice at one go. Only ruthlessness and cruelty work," he told "Polityka." His most serious order was to recover $180,000. He telephoned his victim and asked him to repay the debt but was met with a jeering laughter. The next day Vladimir sprayed the debtor's villa with bullets from his submachine gun while passing along it in a car. Vladimir called the debtor again, reminding him about his debt. Three days later, Vladimir killed the debtor's two dogs. Subsequently, he planted bombs under several cars near the villa and blew them up. After a week, Vladimir called his victim and asked: "Do you know what a bazooka is?" This time the debtor gave in and pledged to repay what he owned. He was given one month to do so.

Dorota Gawska-Stepien, a debt collector from a district court in Warsaw, told "Polityka": "When I get a court decision ordering an individual or a firm to repay debts, it usually turns out that this person, or this company, has not owned any property for a long time, nor even a car. Some firms are created only for deceiving people. Firms are sold, made over to children or grandparents, while their accounts are emptied. The law on the protection of personal data protects only thieves, nobody else. I cannot get information from the tax office about the income of the person whose debts I am to collect. The address registration office does not answer my inquiries about the address of the person I am looking for. Banks, citing professional secret, do not disclose the accounts of debtors.... We involve ourselves in improbable combinations to get some information. I employ three young lawyers who are called detectives. The law forces me to resort to dishonest tricks. There are more and more debts to collect, while debt collectors face more difficulties than before. This situation provides possibilities for executors."

Offering Residence Registration. If a foreigner wants to stay in Poland longer than for several days, he/she has to officially register the address of his/her stay within the 48 hours after arriving in the country (that rule was introduced in 1974). Actually, nobody in Poland is able or cares to enforce this rule with regard to all foreigners visiting the country. However, it can be, and is, used against those who came to Poland to take up illegal employment or for some other purposes that are in conflict with the Polish law. In particular, the lack of residence registration may serve as a reason for deportation of illegal workers from Poland's eastern neighbors--Belarus, Ukraine, or Russia.

Therefore, some people in Polish cities and towns along the eastern border have taken up the business of providing--for small remuneration--residence registration for visitors from the east. Such a registration certificate allows its holder to stay legally in Poland for three months, shielding him/her from deportation during that period. If a foreigner has a job in Poland, he/she goes back home in Belarus or Ukraine for a day or two before the expiration of those three months, then returns to Poland and repeats the registration procedure, usually with the same owner of the residence where he/she is supposed to live. But in most cases, foreigners registered in such a way do not even know the location of the address where they are supposed to reside.

The "Polityka" report says the average cost of residence registration for Ukrainians in Przemysl, southeastern Poland, is 20 zlotys (some $4) per person. So the business is not very lucrative. However, the weekly reports that the city administration office in Przemysl registers some 100 foreigners every week. And one resident of Lublin managed to register 172 foreigners in his apartment. "Even if the common sense of a [city administration] official tells him that something is foul here, he has no right to refuse residence registration to those asking for it. There is no regulation that could justify such a refusal," a city official from Przemysl told "Polityka."

Smuggling Alcohol In Condoms. The train traveling several times a day between Bialystok (northeastern Poland) and Hrodna (northwestern Belarus) is famous in Poland for its exotic folklore of Polish and Belarusian petty smugglers and shuttle traders, who earn their bread by smuggling alcohol and cigarettes from Belarus to Poland. Because of the "market-socialism" economy pursued by President Alyaksandr Lukashenka, the prices for vodka and cigarettes in Belarus are still only 20-25 percent of those in Poland (as, incidentally, are Belarusian wages and pensions). The cross-border trade between Poland and Belarus, which thrived in mid-1990s, has considerably dwindled since Poland introduced tougher visa procedures for Belarusians and Belarusians became severely pauperized under Lukashenka's five-year rule. However, there is still some smuggling on the Bialystok-Hrodna train, which in December, before the Christmas and New Year holidays, is popularly called a "train of Santa Clauses."

Customs officers usually check travelers' bags. (However, they do it selectively: first, because of time considerations; second, presumably because of humanitarian concerns--they know that people plagued by the Lukashenka economy in Belarus and high unemployment in Poland have to make their living somehow, so they do not suppress the cross-border smuggling completely.) For this reason, many smuggled items are usually placed under smugglers' coats, where they are attached to the body by intricate networks of strings, tapes, and hooks. Checks under garments are less likely.

In previous years, alcohol was smuggled in plastic bags--such as one can obtain in groceries for packing things. A smuggler with a full load of alcohol on him/her looks rather thick and moves with slow steps, hence a nickname of Santa Claus.

Plastic bags have one serious drawback--they are liable to burst when people rush after the customs control in Hrodna and squeeze their way onto the train. Alcohol from a broken bag splashes over the body, causing unpleasant itching and even burning. The latest trend in the business is smuggling alcohol from Hrodna in condoms, which can hold more liquid than plastic bags and are more durable.

Belarus Seen As 'Money Laundering Machine.' Tamara Vinnikava--former chairwoman of the Belarusian National Bank, who disappeared from under house arrest in Minsk in April and reappeared in the media on 13 December (see "RFE/RL Poland, Belarus, and Ukraine Report," 21 December 1999)--disclosed some sensational information about the operation of Belarus's economy to RFE/RL's Belarusian Service on 18 December.

According to Vinnikava, following the presidential election victory by Alyaksandr Lukashenka in 1994, Belarus has been transformed by Russian criminal capital into a "money laundering machine." In her opinion, Belarus today is managed not by Lukashenka, but by "Russian oligarchs" who gave money for his election campaign. "Today [Russian] oligarchs rule the republic. Alyaksandr Lukashenka cannot make any appointment without coordination with them.... It is not Lukashenka who does not reform the national economy, it is not Lukashenka who does not privatize factories. Today it is very convenient to have gigantic enterprises [in Belarus] that consume [huge amounts] of metal and purchase fertilizers for [vast areas] of land.... It is convenient for oligarchs to supply trainloads of production in exchange for [Belarusian] budget money," Vinnikava told RFE/RL's Belarusian Service director Alexander Lukashuk. However, she declined to mention any names.

To launder their dirty money, Vinnikava argued, Russian oligarchs supply Belarus with more products that it actually needs. The multiplicity of currency exchange rates in Belarus is instrumental for them in obtaining huge profits. "The point is that today oligarchs supply raw materials to the Republic of Belarus. They supply more that we need. They supply them at lower prices than, for example, to Ukraine or other countries. Because it is they who take the profit. Even if they lose owing to the difference in prices, they make it up during the operation of converting [payments] into hard currency," Vinnikava noted. And added: "Why is there the need for a single [Russian-Belarusian] currency? Because Russia must be paid for what it supplies. And it will supply ceaselessly. Because there is money laundering [underway]. Belarus has been transformed into a money laundering machine."

RFE/RL's Belarusian Service asked Stanislau Bahdankevich, who headed the Belarusian National Bank directly before Vinnikava, to comment on her revelations.

According to Bahdankevich, Vinnikava's presentation of economic realities in Belarus is exaggerated. He said: "Russia supplies us mainly with oil and gas. The share of these supplies is very significant. As regards other supplies, they are not so big. Belarus supplies more finished products to Russia than Russia to Belarus. We receive more raw materials and energy resources."

Bahdankevich was also doubtful about the profits obtained by Russian suppliers in trade with Belarus: "I am of the opposite opinion--it is Russia that today finances the Lukashenka regime. Russia supplies fuel to Belarus at prices two or three times lower lower than to Europe, the Baltics, or Ukraine. For 1,000 cubic meters of gas, we today pay $30, while Ukrainians $60. But even for such supplies we are not able to pay in a timely manner."

As to who takes advantage of the multiplicity of currency exchange rates in Belarus, Bahdankevich said: "Indeed, there is a problem with exchange rates. And there is profiteering. But again, I doubt that it is Russian capital that speculates on the Belarusian market. I think it is primarily Lukashenka's entourage that profiteers."

Asked why Vinnikava reappeared with her disclosures right now, Bahdankevich commented: "Possibly, on one hand, Vinnikava wants to vindicate herself, on the other, it is also possible that Russian oligarchs are ready to surrender Lukashenka, because in actual fact Lukashenka is a barrier to an inflow of Russian capital into Belarus. He does not conduct reforms, he does not privatize big enterprises, and so on."

Yushchenko Promises Results On The 101st Day. Speaking to the parliament on 22 December before his confirmation as prime minister, National Bank Chairman Viktor Yushchenko presented the economic policy guidelines of his future cabinet. Yushchenko stressed that "we have so little time for decisive action: literally a few months. I do not want to dramatize [the situation], but these are the months of Ukraine's last chance."

Yushchenko said he visualizes his cabinet as a "monolith of like-minded persons." According to him, the success of the cabinet is conditional on the smooth operation of three "mechanisms" in Ukraine's system of power: a) joint responsibility of the government and the parliament; b) a Stabilization Pact "that will introduce consensus between the executive power and major economic entities that basically shape production costs and prices"; c) a mechanism for the development of a civic society.

Regarding the near future, Yushchenko told the parliament: "During the first 100 days, we, jointly with you, have to take and implement a majority of indispensable political decisions. As soon as on the 101st day, we should see convincing results that could confirm the efficiency of our joint actions."

Yushchenko announced that no later than in February he will present a program of action called "1,000 Days of Reforms in Ukraine." During those 1,000 days, the government intends to introduce major reforms in five areas: a) state administration; b) the consolidation of state finances and the strengthening of the national currency; c) the creation of "normal conditions" for economic activity; d) the resolution of the foreign debt problem; e) improvements in the social sphere ("poor people are to see their life improved in the next few months").

"Why are there different attitudes to private and kolkhoz property in Belarus? Apparently, this is a question of ownership. We should ask ourselves this question...and we should answer it." -- Belarusian Prime Minister Syarhey Linh at a cabinet meeting on the agricultural sector. Quoted by Belarusian Television on 21 December.

"Just produce the result and you'll have an apartment and dozens of thousands of dollars and you'll provide for yourself for the rest of your life. I'll buy you anything you need, be it guns, boats, swimming trunks, even undershirts." -- Alyaksandr Lukashenka, who is president of Belarus's National Olympic Committee, urging Belarusian athletes on 24 December to perform well at the Olympic Games in Sydney. Quoted by AP.

"The union treaty signed by the presidents of Russia and Belarus, as a majority of laws invented in our feverish pre-electoral time, is remarkable by the fact that it cannot be implemented. Not a single point [of the treaty]. Each point definitely comes into collision with Russia's Constitution. And those not contradicting Russia's Constitution, as if by a stroke of ill luck, infringe the equality of the Russian Federation's subjects." -- Former Russian Premier Sergei Kirienko, leader of the Union of Right Forces, in the 19 December "Novoe vremya."

"Yushchenko is a puppet of the IMF and works against Ukraine's national interests," -- Ultra-left Progressive Socialist Party leader Natalya Vitrenko during the 22 December parliamentary debate before the confirmation of Viktor Yushchenko as Ukraine's prime minister. Quoted by Reuters.

"I am not afraid of being flogged--I am scarred all over already," Yushchenko retorting to Vitrenko's remark. Quoted by Reuters.