Parliament OKs Kuchma government's plan for national economic policy (02/07/93)

Parliament OKs Kuchma government's plan for national economic policy

by Borys Klymenko

KYYIV - Prime Minister Leonid Kuchma told the Parliament on February 3: "Give the government room to work, not just draw up programs." This was the Ukrainian prime minister's reaction to a proposed amendment submitted by the Supreme Council. Later, by a vote of 283 to 21 with 69 abstentions, the Parliament ratified the government's plan of action outlined in its "Basic Principles of a National Economic Policy." The Parliament could do no less, considering that it had ratified these very "principles" last March.

However, in the course of a year, none of the six core programs put forward by Vitold Fokin's government had been put into action. Most of the parliamentarians now seem willing to give the current government a chance to implement at least one.

Prior to the debate on the new plan, rumors had circulated that the Supreme Council's deputies would kill the Kuchma program. However, Rukh leader Vyacheslav Chornovil suggested that the reactionary majority in Parliament had expended most of its energies in mid-January and would probably not present any opposition at the moment.

A week earlier, Ukrainian President Leonid Kravchuk had said at a meeting with his district representatives: "I support Kuchma's government because I support stabilization. Any efforts at compromising the government are directed against the Ukrainian state."

Economic stabilization and reform, now in a crisis, present the government with contradictory priorities. According to the government's "Basic Principles," these priorities are to: "halt the fall in production; develop mutually beneficial economic ties [with other countries]; renew the administration of the state's economic sector; ensure that the government's authority is effective and viable; implement anti-inflationary measures; develop market infrastructures for resources, products and capital; privatize and commercialize trade, food supply and the service sector; and incorporate state enterprises."

The condition of the economy, as outlined in the government's report, is almost apocalyptic:

"The economic situation in Ukraine in early 1993 is extraordinarily complex, and is characterized by sharp increases in inflation, a total imbalance of credit and financial relations, a deep crisis in the ability to meet payrolls, significant drops in production, sharp worsening in the sphere of foreign investment (particularly in manufacturing), failures in the foreign economic policy and a marked decrease in the general standard of living.

"There has been a breakdown in regional communications and in contact between the various branches of the economy. Hard currency income is not even sufficient to purchase the most basic and critically needed imports.

"The economic crisis is closely related to structural problems in the country's economy. The economy had been hypermilitarized, there is an excessively large amount of heavy industry, production facilities are aging and outmoded, there is a strong general resistance to technological progress, and a heavy dependence on a wide range of imported natural resources."

"Decreases in production, which began in 1990 and became widespread in 1992, have set the economy back, according to leading indicators, by 70 years," the report concluded.

In order to bring the economy out of its current crisis - or at least to stabilize it - requires the action of a kamikaze government, according to some observers. As New Ukraine's leader, Volodymyr Filenko, indicated in an interview, "Since it is under attack from the left and right, the government has no alternatives. There is no other team that is willing to deal with this mess." He added that even though the government's reform program is insufficiently market-oriented, his coalition would support it nevertheless.

Mr. Chornovil took a similar position, saying, "We criticize individual decrees, but we support the government because only the government is doing something to get the country out of the crisis."

The statistics on Ukraine's economic crisis are grim. National income decreased in 1992 from the previous year by 14 percent. According to a speech Prime Minister Kuchma delivered before an assembly of miners in Donetske on February 1, the budget deficit was 1.325 trillion karbovantsi and exceeded 17 percent of Ukraine's gross national product.

The crisis in the financial system has brought the country to the brink of total social collapse. In 1992 currency emissions totalled 491 billion karbovantsi as opposed to 10.4 billion in 1991.

The supply of food products decreased by 15.6 percent (meat by 21.6 percent, butter by 20, flour by 12.7, and grains by 18.4). In 1992, 11 million metric tons of grain and beans were shipped to processing plants - only 75 percent of the minimum required for that year.

This reporter has learned that the government is considering the purchase abroad of 2 million metric tons of wheat, 2.5 million tons of corn, 500,000 tons of soybeans, and about 30,000 tons of seed corn. It intends to buy $353 million (U.S.) of pesticides; $50 million of veterinary medicines and instruments; $260 million of food packaging equipment; and expects to pay $93 million for fishing rights in foreign economic zones.

Ukraine's Minister of the Economy Viktor Pynzenyk outlined the government's plan of action before the Parliament. He claimed the Kuchma government was not only willing to follow the path of reform, but also to cooperate with the Supreme Council. A member of the parliamentary Committee on the Economy commented, "It's a pity that we didn't have this government in January 1992."

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