ANALYSIS: A look at Ukraine in its fifth year of independence (01/05/97)

ANALYSIS: A look at Ukraine in its fifth year of independence

by David R. Marples

Ukraine marked its fifth year of independence in 1996. In many respects the year can be perceived as one of consolidation of the Ukrainian state within the international community. Compared to its former Soviet neighbors, Ukraine can be termed an oasis of stability amid a bleak desert of conflict and change. At the same time in specific spheres - particularly the coal and nuclear energy industries - there remains cause for concern. In addition, the Russian Duma's claim to the city of Sevastopol is an indicator that relations with the giant neighbor state remain uncertain, particularly in view of the likely long convalescence of President Boris Yeltsin. Let us examine some of these issues in turn.

Internal politics

The most notable changes in personnel occurred at the level of prime minister, with the replacement of Yevhen Marchuk on May 27 and the appointment a day later of Dnipropetrovsk native Pavlo Lazarenko, 43, in his place. Mr. Lazarenko's mission is evidently to accelerate the privatization process and attract foreign investment into Ukraine. Less than two months later, Mr. Lazarenko narrowly avoided an assassination attempt while being driven to the airport, as a powerful explosive ripped apart the roadside verge. In May, President Kuchma added Volodymyr Lanovoy to his team as his main economic advisor. On September 23, Viktor Pynzenyk, another well-known reformer, was appointed vice prime minister for the economy, with Anatolii Minchenko being inserted as the minister responsible for industrial policy and the energy complex.
The year saw increasingly bitter conflict between the reformers and the Leftists, particularly within the Verkhovna Rada during an extensive debate on the ratification of a new Constitution for Ukraine. In late March, Leftist deputies even submitted an alternative draft to declare Ukraine a socialist state, eliminate the office of president, and raise Russian to the status of a state language.

On June 28, however, the Parliament voted in support of a new constitution by 315 votes to 36, and the accepted version clearly established the president as the most powerful figure in the government, along with a single-chamber Verkhovna Rada. The Constitution also confirms Ukrainian as the state language, with specified local rights for the use of languages in areas inhabited largely by minorities. The new Constitution overrides the agreement reached in 1995 between the president and the legislature and formally replaces the old Soviet Constitution introduced in the late Brezhnev period in 1978. The event was perceived as a triumph for President Leonid Kuchma over significant opposition.

The economy

The key problem in the economy has been a failure to meet regular wages, with the result that Ukraine now faces the prospect of an enormous wage backlog. In the agricultural sector alone, the backlog was reported to be the equivalent of $200 million, and that figure does not take into account inflation. By late June, Mr. Lazarenko noted that the government was using 80 percent of its internal and external revenues to clear the wage arrears. Inflation also began to rise during the latter part of the year after falling to 0.1 percent in the months of June and July.

In early September, the long awaited Ukrainian currency - the hryvnia - was introduced, replacing the much maligned karbovanets, which had been in use for the past four years. Contrary to some expectations, the hryvnia held steady against the dollar on the international exchange (at 1.76 to $1), though by the year's end it had begun to decline.

The coal sector remains Ukraine's biggest single problem within the industrialized spectrum. The early part of the year saw a coal strike that affected 177 of Ukraine's 227 coal mines, while in this same month, then Prime Minister Marchuk declared his plans to close down some 70 mines that were operating at a loss. His remarks were supported by a conference of World Bank officials, which concluded that 114 Ukrainian coal mines must be shut down if the industry is to restore profitability.

By the spring there were further strikes of miners seeking wages, some of whom had not been paid since September 1995. Coal miners were also concerned about layoffs as a result of the scheduled mine closures. By June a further strike had erupted, with the involvement of over 2,700 miners in the Donbas and Lviv-Volyn coalfields. It was ended only in mid-July when the government reached an agreement with the Workers' Union of the Coal Industry and the Independent Donbas Miners' Union.

In addition to the unrest among the coal miners, who have traditionally been the most militant among the Ukrainian workforce, the dangerous geological state of the coal mines themselves has continued to result in a very high accident rate and casualty list. By March, 61 Ukrainian miners had reportedly died in various accidents, while by September the figure had risen to 224. The anticipated yearly total was about 340. To put that figure into perspective, in the Soviet period, approximately double that number of miners died annually in Ukraine, yet coal output in Ukraine has dropped dramatically since that time to about 25 percent of the peak output figure. Clearly the shutdown of some of Ukraine's deeper mines is warranted on the grounds of safety alone.

The energy sphere

Turning to the energy sphere, the Chornobyl nuclear power plant has remained a focus of world attention. One reason for this focus was the commemoration of the 10th anniversary of the tragic accident on April 26. However, though the anniversary attracted publicity, the key issue has been the future of the plant. Momentum has grown for a campaign to keep the station in operation beyond the scheduled shutdown time of the year 2000.

Early in February, 58 parliamentary deputies pleaded with President Kuchma on behalf of the station, arguing that it was the safest and best run of all Ukraine's nuclear power stations.

Shortly afterward Environmental Minister Yurii Kostenko demanded that if Ukraine was to meet its deadline for the closure of Chornobyl, then the promised international loans and credits must be received quickly. Throughout the year these two issues were tied together by the Ukrainian authorities.

On April 19-20, the leaders of the G-7 countries and Russia met in Moscow and announced the commitment of about $3.2 billion worth of aid to Ukraine so that the station could be safely decommissioned by the end of the century. Further talks took place in Kyiv in June, when it was announced that the promised funds would begin to arrive in Ukraine in the summer or fall of 1997, or in 1998. Mr. Kostenko reacted angrily to such protraction, again maintaining that Ukraine would likely reconsider the shutdown if the funds were not forthcoming in timely fashion.

In September, Kostenko went even further, prophesying that a major explosion could occur at the sarcophagus covering the destroyed fourth reactor unit. Plant director Serhii Parashyn attributed several reported releases of neutron emissions to the malfunction of measuring equipment as a result of heavy rainfall in the area.

On November 30, Chornobyl reactor No. 1 was removed from the grid, though it was specified that the closure would not necessarily be permanent and that the reactor could be "restructured." At the same time, the Ukrainian nuclear authorities announced plans to restart the second unit, which has been shut down since a fire in 1991. Economically it would be inexpedient to restart the No. 2 unit if it is intended to close the Chornobyl plant by the year 2000. Though Ukraine is suffering acutely from energy shortages, it appeared to some observers that the future of the Chornobyl station was being used as a bargaining chip to expedite the arrival of the international credits. President Kuchma himself has acknowledged that the Chornobyl reactors constitute a safety hazard.

The current costs of $800 million annually to meet the ramifications of the Chornobyl disaster remain an acute burden on the economy, and Ukraine is irritated by what it perceives as a sluggish reaction on the part of the G-7 countries to meet their agreed obligations. Moreover, a significant section of Ukraine's nuclear energy community has maintained consistently that Chornobyl is a much safer station than generally perceived; and conversely that international attention has focused only on the Ukrainian RBMK station while ignoring similar stations operating in Russia and Lithuania.

The crime wave

The year 1996 may be remembered as one of escalating crime in Ukraine. In this respect, the country has begun to emulate its eastern neighbor, Russia. A wave of assassinations and attempted murders has plagued Ukraine particularly, though not exclusively, on the Crimean peninsula. The crimes in the latter region have been attributed to a dramatic rise in organized gang violence.

Among those attacked and beaten were the journalist Svitlana Riaboshapka and Rukh National Deputy Myroslav Horbatiuk, while those who were killed during such attacks included nine people in a Kerch bar in June, the Crimean broadcaster Oleksander Metrenko, and powerful Donetsk government boss Volodymyr Scherban.

In September, President Kuchma announced a four-year intensive program to combat crime, following the establishment in August (after the attempted assassination of Prime Minister Lazarenko a month earlier) of an anti-terrorist center. By year's end there appeared to be little decline in the high rates of crime.

Health concerns

Ukraine's health concerns were highlighted by a report of the Ukrainian Health Ministry on February 22 which noted that the decline in population growth has continued and was at that time 9.6 births per 1,000 people. The death rate, correspondingly, rose in 1995 from 5.5 to 12.1. The major cause of death in Ukraine is heart disease, at 50 percent, with cancer at 14 percent. However, the country also suffers from other health problems that can be related mainly to industrial pollution.

At the beginning of the year there was an outbreak of hepatitis in Konstantynivka (Donetsk region) as a result of a mishap in the city's sewage system. A similar accident occurred in April in Sevastopol when raw sewage was spilled into the Black Sea and a further outbreak of hepatitis occurred. Another major concern was diptheria, which has broken out principally in the large cities of Kyiv and Donetsk and has affected hundreds of people; while cholera outbreaks have been frequent in the summer as a result of contamination of the water supply.

Foreign relations

Ukraine has become the third largest recipient of U.S. assistance after Israel and Egypt, thus overtaking Russia in this regard. When Secretary of State Warren Christopher visited Ukraine in March, he promised aid worth over $1 billion. Ukraine has become a key strategic partner for the United States given the apparent unreliability and relative instability of Russia. On June 1, Ukraine solidified its international standing with the announcement that it had moved all of the strategic warheads from its territory to Russia.

President Kuchma has also been fairly consistent on the question of the expansion of NATO to the East European countries - particularly Hungary and Poland - noting that while Ukraine is not against such an expansion in principle, it would be opposed to the deployment of nuclear weapons in new member-states. At the Salzburg meeting of presidents of Central and Eastern Europe in July, President Kuchma mentioned a possible special partnership between Ukraine and NATO; and also suggested that Ukraine should maintain some association with the Western European Union military partnership.

Relations with Russia are relatively cordial at the presidential level, less so at the level of the Duma. President Yeltsin decided not to visit Kyiv to sign the Treaty of Friendship and Cooperation during the run up to the Russian presidential elections. There have been two related issues of contention between the two countries: the status of the Black Sea Fleet; and the future of the port of Sevastopol, the home port of the fleet. Neither had been resolved by the year's end.

One of the major supporters of Sevastopol's status as a Russian city is Moscow mayor Yurii Luzhkov, who made several outspoken statements during the course of the year. In mid-January, for example, while visiting the port, he declared that "Moscow will never abandon Sevastopol." On September 10, he went further, declaring that the city was Russian, a comment subsequently supported overwhelmingly by the Russian Duma. In the meantime, Ukraine's Verkhovna Rada voted in June to prohibit foreign military installations on the territory of Ukraine, though it was prepared to grant some time for Russia to remove its fleet.

The future of Sevastopol is linked to the future of Crimea generally. The peninsula, which retains its autonomous status, has remained politically subdued since Ukraine enforced its authority quite dramatically in 1995. Russia has refused to step aside, and has resolved not to reduce in any way its commitment to, or the size of its share of the Black Sea Fleet. With the ostensible ending of the war in Chechnya, Russia has more time to devote to other issues pertaining to the so-called "near abroad," and it has the support of the Crimean authorities, who attempted - unsuccessfully - to have the status of Sevastopol as a Russian city inserted into the Crimean Constitution.

Though the two issues have not reached a boiling point and do not as yet constitute a serious issue of international conflict, they remain on the table each time Ukrainian and Russian leaders meet.

Conclusions

Ukraine enters the new year in an environment of political stability and economic uncertainty. Structurally it continues to develop as a reformist presidential republic, backed by a Parliament that is riven with dissent, but at the same time has a tradition of reaching compromises with coaxing from the executive. In contrast to some of the other post-Soviet countries, Ukraine has remained free of ethnic tension and civil conflict. The Constitution's adoption was symbolic of this gradual but very definite progress toward the consolidation of the statehood declared in 1991.

The economy and demographic picture remain major concerns, however. Very few of Ukraine's industries are performing at a satisfactory level, and the government must also be concerned with the alarming health and demographic statistics. The reluctance of the government to apply "shock measures" is comprehensible, but the economic results are hardly encouraging.

Ukraine's economy today is a melange of the old and new: the declining traditional industries and the emergent or rejuvenated spheres that continue to attract foreign businesses (the share of private output rose to almost 50 percent in 1996).

For the majority of the population, the outlook for the late 1990s does not offer much solace: their concern is daily subsistence and survival. Wages remain unpaid, and factories are not paying for their energy requirements.

On the other hand, such comments are relative because they apply to most of the newly independent states. It could equally well be argued that the past five years of concentration on survival and maintenance of statehood have been strikingly successful, and that the next five years will surely see the government turn with vigor to the question of economic renewal. It is one that has become imperative, and will likely outweigh in importance the political maneuvering with Russia, the United States and the countries of Europe that has characterized the 30 months of the Kuchma presidency to date.

David R. Marples is director of the Stasiuk Program on Contemporary Ukraine at the Canadian Institute of Ukrainian Studies, University of Alberta

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