1993: THE YEAR IN REVIEW

Ukraine: crises on many fronts

"Take a big country (52 million people), give it an atrocious government, watch the economy go to pot, throw in nuclear weapons and a restless Russian neighbor - and start to worry."

- The Economist, November 27, 1993.

That brief sketch tells the story of Ukraine for 1993. But the question is, what happened?

On December 1, 1991, the people of this rich, expansive, proud nation, which was suppressed by Big Brother for more than 70 years, voted overwhelmingly for independence.

They now had their freedom from Moscow, but not from a totalitarian regime and socialist lifestyle. Although many of Ukraine's leaders insisted that a democracy could not be built in a day, few, it turned out, were committed to building such a state.

By December 1993, Ukraine's enemies viewed the whole issue of independence as a "temporary phenomenon," while many of Ukraine's citizens were questioning why they had voted for independence.

The second anniversary of this event came and went; most of Ukraine's citizens worried about putting meat on their tables and heating their homes, no one found the time or the reason to celebrate Ukraine's independence.

Ukraine's woes in 1993 were great and their repercussions were felt on both domestic and foreign fronts.

Economically speaking

It was a period of turmoil on the economic front, as an emergency economic state loomed in Ukraine. Although the year started optimistically with Prime Minister Leonid Kuchma forging the way toward market reforms, by the end of the year, few believed that the eighth revised government plan could save the country from hyperinflation, which had surpassed the 70 percent mark by November, and unemployment, which unofficially was close to 10 percent by the end of the year.

"In order for things to get better, sometimes you have to endure a period of pain," said Deputy Prime Minister of the Economy Viktor Pynzenyk at the beginning of the year, hoping to work with market-oriented reformers in the government to get inflation down to 3 percent by the end of 1993.

Mr. Kuchma began the year with an ambitious program of reforms, which included the development of a middle class, and asked that the government be given the opportunity to rule with a strong hand, which would lead the people out of a command administrative system into the 21st century of market reforms.

In early 1993, the government under Mr. Kuchma set its priorities: halt the fall in production; stop corruption and organized crime in the state sector; 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.

And the people were willing to endure, at first. But by November, ex-Deputy Prime Minister Pynzenyk (he resigned in August) and ex-Prime Minister Leonid Kuchma (he resigned five times - the last and final time in September) were totally disillusioned by the country's leadership. Both said they found it impossible to work in the political and economic chaos prevalent in Ukraine by mid-1993. Both felt that their hands were tied; they wanted to be reformers in a government that did not want reforms.

Mr. Kuchma first offered his resignation in late May, when a power struggle that would last throughout the summer between President Leonid Kravchuk and the prime minister erupted. The prime minister was not given an extension of special powers by the Parliament; the president's bid to take responsibility for the government also was rejected.

Throughout the summer, parliamentary games continued. Reforms were halted and no one wanted the burden of leading Ukraine out of economic chaos at a time when its budget deficit had already surpassed 10 trillion karbovantsi.

Mr. Pynzenyk resigned on August 27, stating that he had exhausted his possibilities and could not come to terms with Ukraine's new currency regulations, which required exporters to change 50 percent of currency earnings at a fixed National Bank rate.

Mr. Kuchma was left by himself to try one last-ditch effort, proposing an anti-crisis program, which included the total restructuring of the government. It included a request for special powers, but did not promote the declaration of a state of economic emergency. Unfortunately, Mr. Kuchma's words were not heeded and he was out by the fall.

Thousands of demonstrators picketed Ukraine's Parliament building on September 21, emerging victorious as deputies accepted Prime Minister Kuchma's resignation, voted no confidence in the Cabinet of Ministers and charged President Leonid Kravchuk with the task of naming a new government.

The following day, Mr. Kravchuk named Yukhym Zviahilsky, a conservative, as acting prime minister; within the next two weeks, Mr. Kravchuk issued a decree giving himself full control of the executive branch of government.

A presidential spokesman noted: "The president will decide strategic issues, such as the direction of market reforms, while their realization and execution will be the direct responsibility of the acting prime minister."

This one-two punch became detrimental to Ukraine's future as a market-oriented state. By early November, President Kravchuk had tightened central planning, ordering firms to gear their production to supplying goods ordered by the state.

He also issued two decrees, which signalled a dangerous return to the Soviet-style command administrative system. One, "On Promoting the Development of a Currency Market and Stabilizing the Ukrainian Currency," basically abolished the market method of setting the currency's value; the second, "On Measures to Stop the Pace of Rising Prices," was aimed at controlling prices in the business sector.

By early December, the government dealt another blow to its already demoralized populace by sharply increasing prices on food, energy and transportation. Prices for energy increased threefold at a time when citizens were experiencing one of the coldest winters of the century. The cost of such staples as bread and milk, eggs and meat, also tripled, while wages were not scheduled to be raised until January 1994.

At present the minimum wage is $4, while 10 eggs cost over $1.

Although every few weeks a rumor is circulated throughout the country that the national currency, the hryvnia, is to be introduced (the latest rumor was in December), this would be an absurd move in a country that has not stabilized its economy and does not have the necessary stabilization fund of $2 billion. The year 1993 saw the introduction of karbovantsi notes in denominations of 2,000, 5,000, 10,000, 20,000, 50,000 and 100,000. As the saying goes, they are not worth the paper they are printed on. By the end of the year, the karbovanets to dollar exchange rate had hit almost 40,000 to one.

"Ukraine is on the verge of economic collapse and its independence is in danger," said Mr. Pynzenyk in November, explaining that economic crises may lead to civil war. "Nobody will have any serious business with Ukraine in the nearest future. We have an unstable political and economic situation," he said.

Building a democratic state?

"Nobody in this country needs an economic program. This is all a game for the nomenklatura," said Mr. Pynzenyk during a November press conference.

The nomenklatura, or the "party of power," was a term widely used in 1993 to describe President Kravchuk, his apparat, his presidential representatives in the regions, his ministers and his advisers - in short, his buddies from the good old, bad old Communist Party days. It was the party of power that brought about the demise of democratic reforms, market-oriented programs. It also swallowed up such leading reformers as Messrs. Kuchma and Pynzenyk, as well as such democratic leaders as Ihor Yukhnovsky, who resigned as deputy prime minister in March, and Gen. Kostyantyn Morozov, who quit his post as minister of defense in early October, stating that he did not want to be part of any "political games."

Some leading democrats note that Gen. Morozov had been too critical of decisions reached at Massandra (see below) and was forced to resign. He had often been attacked by pro-Communist forces in Ukraine as being "ultra-nationalistic."

The democrats suffered quite a few political blows in 1993. They were constantly blocked by the Communist majority in Parliament; they were often paralyzed in their actions and it soon became very clear that this Parliament, elected during the existence of the Soviet Union, had nowhere to go but out.

On June 17, succumbing to pressure from miners in the Donbas region, who demanded political and economic reforms, the Parliament voted to hold a national referendum, a vote on confidence in the president and in the Parliament.

But, two months later, the referendum had been canceled (due to a technical detail - Parliament missed the deadline required by the Central Election Committee for filing its forms), and miners were once again threatening to strike if their political demands were not met.

"We expect at the first session of the Parliament (after summer recess) to set a date for pre-term elections and stop leading the populace by the nose with silly polls, the results of which are already evident," said Oleksander Mryl, head of the Independent Miners' Union.

Although the democrats finally did succeed in having pre-term elections scheduled for March 1994 for the Parliament, and for June 1994 for president, their victory was a dubious one. An election law, finally passed on November 10, was one advocated by Communists and Socialists, providing for 450 single mandates on the basis of absolute majority.

The new law cannot be considered a democratic one, because it is not based on a multi-party system and does not introduce the system of political parties into the Parliament. As in Communist times, it allows workers' collectives to nominate candidates for office, and thus gives the Communist forces, which still hold power in densely populated eastern regions of the country, a distinct advantage.

Communists in Ukraine also scored a victory in the fall, as their party, banned since the failed anti-Gorbachev coup of August 1991, was allowed to register, bringing the list of political parties in Ukraine to 31.

The democrats also were not able to move matters of the Constitution along. Thus, after two years of independence, Ukraine still is guided by the Constitution of the Ukrainian SSR, and it does not look like there will be a new constitution soon.

Whereas in 1992 Ukraine had witnessed a fundamental realignment of political forces, resulting in the division of democratic forces into two camps (both were committed to independence, but some were pro-Kravchuk, while others were more restrained), by the end of 1993, the national democrats decided to unite for the March 1994 parliamentary elections.

Motivated by the slogan promoted by Yegor Gaidar in Russia: "Democrats unite two hours before execution" and wary of the surprising victory by the quasi-fascist Zhirinovsky camp, Ukraine's democrats seemed to be ready to learn from the mistakes of their neighbors.

In early December, centrist democrats pledged to unite for parliamentary elections, forming a Permanent Council of Democratic Parties and Organizations, encompassing seven parties and nine civic organizations and a Ukrainian World Coordinating Center, to act as a liaison for contacts with democratic centers throughout the world. They stated that their guiding principle is: "The interests of Ukraine take precedence over particular party interests."

Energy problems

Relying on Russia as its main energy supplier, Ukraine suffered devastating cutbacks in natural gas and oil, as Russia set world prices for these resources. By January 1, 1994, Ukraine is scheduled to begin paying world prices with money it does not have. Already some estimates say it owes Russia over 9 billion rubles for energy supplies. Perhaps this crisis can be resolved if Ukraine and Russia can come to some agreement for tactical weapons compensation.

The energy crunch has affected most aspects of life: city streets are darker, transportation runs irregularly, some schools have been closed and people often sit at home in winter costs and mittens, or huddle around the stove as dinner is being cooked. Although Kyyiv has not yet been affected, most other areas experience brown-outs for a few hours every day.

Motivated by Ukraine's energy crisis, lawmakers abandoned safety concerns and voted on October 21 to keep the Chornobyl nuclear power station open and to lift a moratorium on the construction of new nuclear power reactors.

Ukraine derives 33 percent of its energy from its nuclear power plants; if all of its reactors were brought on line that number would go up to 40 percent. Ukraine's environmental lobby condemned the decision, calling it irresponsible and arguing that lawmakers have plunged Ukraine into an even greater economic crisis because in order to make atomic energy safe, giant sums had to be spent - money that Ukraine just doesn't have.

Relations with the CIS, Russia

As the year progressed, the Commonwealth of Independent States became less and less of a real entity for Ukraine, as each of the republics of the former Soviet Union tried to deal with its own political and economic realities.

During the first days of January, President Kravchuk emphasized his opposition to a new CIS Charter, characterizing it as a means of recasting the CIS as a new union on territory once belonging to the USSR.

When he traveled to Minsk a few weeks later, he was one of three leaders who did not sign the CIS Charter, along with the Moldovan and Turkmen representatives. Instead he emphasized economic integration as the principal aim of the CIS.

Later in the year, Ukraine agreed to become an "associate member" of the Commonwealth of Independent States economic treaty, in an attempt to appease some political forces insisting on economic integration. However, until the end of the year, the CIS Charter, just like the CIS economic union, remained a flimsy framework that had not set any policies into motion; the idea of Ukraine's "associate membership" remained vague and undefined.

By the end of the year (December 22-23), a Ukrainian delegation was set to travel to Ashhabad for the next CIS summit.

Ukraine's relations with Russia intensified in a number of areas, including the energy crisis, as noted above, matters of the Black Sea Fleet and territorial claims on Sevastopil, as well as questions concerning nuclear disarmament, including ecological safety and national security guarantees.

1993 began with Ukraine and Russia reaching agreement on assets and liabilities of the former Soviet Union during a Moscow summit in January. Ukraine was given 16.37 percent of the former empire's assets and agreed to pay its share of the foreign debt. Yet by February, President Boris Yeltsin had issued an ukase in which he claimed all assets of the former Soviet Union as the sole property of Russia. Russia continues to consider itself the sole successor to the former Soviet Union and its only rightful heir. Ukraine has continued to dispute these claims, having sent a diplomatic note to over 160 countries asking that they recognize the properties of the former Soviet Union as such until Russia and Ukraine come to a final agreement on the division of property.

Since Ukraine proclaimed its independence, Russia has set its sights on the Black Sea Fleet, Sevastopil and ultimately the Crimea. At the end of 1992, Russia's conservative lawmakers laid claims on Sevastopil, calling it a Russian city, but in the summer of 1993, the United Nations Security Council condemned this claim, labeling it an "act of aggression" and a blatant disregard for international law.

Although it seemed that the "territorial claims" issue would be put to rest after the U.N. denounced the Russian move and President Yeltsin said he was "ashamed of his Parliament's manipulations," by the end of the year, even Russia's so-called democratic Foreign Minister Andrei Kozyrev was saying: "Sevastopil was, is and will be a Russian city." So, the Sevastopil saga was far from over in 1993.

Just as unclear was the future of the Black Sea Fleet, which had been divided, put up for sale or lease, or scrapped in 1993.

Moscow's first plan in 1992 had been to assign the fleet to the CIS joint forces: four summits followed that agreed to various plans. In June 1992, at Dagomys, it was decided that the fleet would be split; in August 1992 in Yalta: the fleet would come under the joint control of one commander; in June 1993: the fleet would be split 50-50, with joint use of Sevastopil. The last summit, the disastrous Massandra meeting, saw Ukraine giving up the fleet in return for Russia writing off Ukraine's debt for oil, gas and electricity, estimated at $2.5 billion.

But, as the year was coming to a close, the future of the Black Sea Fleet, with 70,000 personnel, about 40 rusting warships, 18 submarines and some 250 other vessels and aircraft, still was uncertain and a thorn in the side of Ukrainian-Russian relations. A joint commission, led by Russia's Yuriy Dubinin and Ukraine's Borys Tarasiuk, continues to meet to resolve these problems.

Perhaps the biggest disaster in bilateral relations for Ukraine this year was the Massandra summit during which President Kravchuk was accused of selling out to Russia, promising to sell half the fleet and giving up Ukraine's nuclear warheads to its aggressive northern neighbor.

Later President Kravchuk would tell reporters that the summit did not agree to anything concrete, just the feasibility of a sale, and that the two sides differed on the future of the nuclear weapons as well. He warned: "We could well have lost both the fleet and the Crimea," if he had not agreed to Russia's proposals.

Throughout the year, Ukraine and Russia continued playing a game of diplomatic ping-pong as Russia attempted to isolate Ukraine from the rest of the world, accusing it of dirty political games, and Ukraine was forced to continue defending itself and its independence in the West.

Nukes, nukes and less nukes

Ratifying START I (Strategic Arms Reduction Treaty) was a top priority for Ukraine as 1992 drew to a close, but 11 months would pass before Ukraine's Parliament, chaired by Ivan Pliushch, actually ratified the treaty on November 18, setting forth 13 conditions before the accord could begin to be implemented. Ukraine, with its 1,240 warheads on SS-19s and SS-24s, and 564 warheads on heavy bombers, has the third largest nuclear arsenal in the world. The West, spurred on by Russia, accused Ukraine of "nuclear blackmail" and questioned its intentions to give up its nuclear arsenal. From the very start, Ukraine said it would need compensation for the weapons, financial and technical assistance in disarmament, and guarantees of national security.

As the last 1993 Weekly issue was going to press, high-level delegations representing Ukraine, Russia and the United States had begun holding three-way meetings to move the disarmament process along, and Ukrainian officials were hopeful that some progress was being made.

Although in 1993 the Ukrainian president and the government insisted that Ukraine would keep to its pledge of becoming a non-nuclear state and honor its international agreements, throughout the year more and more legislators in the Parliament saw the nuclear weapons Ukraine had inherited after the demise of the Soviet Union as a guarantor of its national security and a boost to its international stature.

Increasingly worried about aggression from its northern neighbor, Ukraine's lawmakers straddled the fence on their country's nuclear status.

"Ukraine has made its move. Its move has been very significant. Now, it's time for the West to make a move," said opposition leader Serhiy Holovaty.

In the spring and in the summer, Ukraine reaffirmed its intention to be nuclear-free, but the Parliament insisted that Ukraine owns the nuclear weapons on its soil. President Kravchuk called this status "temporary ownership."

"Ukraine has found itself in a very delicate situation; it is not a nuclear state, but it does have nuclear weapons," said a Foreign Ministry spokesman in the summer.

Ukraine felt pressure from all sides concerning nuclear politics and although the United States would not admit it, it sent such high-ranking U.S. officials as Strobe Talbott, ambassador-at-large to Russia and the NIS (May), Defense Secretary Les Aspin (June), and Secretary of State Warren Christopher (October) to help move START ratification along.

But Ukrainian leaders made it very clear that the ultimate decision rested with the Parliament, which overwhelmingly ratified START I, but said that in the nation's current economic and political situation implementation of the treaty could not begin until its conditions were met.

Members of Parliament rightfully noted that at this point in time Ukraine does not have the economic capability of dismantling its nuclear arsenal. Nor does it have any guarantees of its security.

However, during the last days of the year, government officials, including President Kravchuk and Deputy Prime Minister Valeriy Shmarov, said Ukraine was going to deactivate at least 20 of its modern SS-24 missiles by the end of the year (see front page story), unbeknownst to parliamentary legislators.

Although very few details were available at press time, it seems this move was a good-will gesture to the West from Ukraine's leaders.

* * *

So, as the year drew to a close, the situation in Ukraine was bleak, but hopeful. Most political analysts said that only after Ukraine fell into political and economic crises, could it move on to the next phase of its development. By the end of the year, things couldn't get much worse. But with spring ahead and parliamentary elections on the agenda, political leaders began publishing their party platforms, trying to appeal to the citizens of Ukraine, offering alternatives and working in the interest of their people.

As social classes began to emerge in Ukraine, people were waking up, realizing that only they can help themselves. Slowly they are learning a lesson that is the basis of a democratic, civic society: the state is for the people and not vice-versa.

Copyright © The Ukrainian Weekly, December 26, 1993, No. 52, Vol. LXI

| Home Page |