FACES AND PLACES: Leonid Kuchma: patriot or parasite? (11/28/99)

FACES AND PLACES

by Myron B. Kuropas

Leonid Kuchma: patriot or parasite?

"Gimme, gimme, gimme" has become the silent mantra of Ukrainian politicians, "biznismeny" and the mafia eager to get a piece of Ukraine's resources, i.e., "the big pyrih" (or "varenyk," if you prefer).

What passes for "commerce" in post-Soviet Ukraine is really little more than a scramble to "get mine at any cost." Lying, dissembling and stealing continue to be a way of life in Ukraine.

Leonid Kuchma's 56 percent plus margin of victory is a miraculous mandate from an electorate that apparently still believes in the future of Ukraine. As tainted as his campaign was, Mr. Kuchma did promise changes in his second term. This may be his and Ukraine's last chance to turn things around. This time Mr. Kuchma can demonstrate that he is truly a Ukrainian patriot, not the parasite the man on the Ukrainian street believes him to be. Let's face it, Mr. Kuchma won because he was perceived the lesser of two evils.

Ukraine, more a basket case than the breadbasket it once was, is experiencing a depression that is both economic and psychological. Agriculture has fallen from 22 percent of the economy to 14 percent. The Gross Domestic Product has declined an average of 11 percent per year since 1988. Foreign debt has increased exponentially. Unemployment figures are high and would be higher if more Ukrainians would quit jobs where payless paydays are the norm rather than the exception.

Just prior to the election, the Wall Street Journal wrote; "If voters don't return the Communists to power, Ukraine faces a golden opportunity to reverse its decline," economists believe. "Most large enterprises are still idling away in state hands, giving Ukraine the chance to sell them in fair and open privatization auctions to competent managers. At least $1 billion per year could be raised from the sales, giving the state more funds to improve its social services and meet foreign debt payments of $3 billion next year."

The Communists lost and Mr. Kuchma now has his golden opportunity. He's done the right thing before. He started off with a bang soon after his 1994 election by liberalizing prices and corralling inflation with a tight monetary policy. Then he sputtered, stumbled and went limp.

Mr. Kuchma's first order of business during his second term has to be corruption among government bureaucrats and the political elite, former members of the nomenklatura who are now "biznismeny." It is intolerable that Yukhym Zviahilskyi, who is accused of stealing enormous sums of money in a raw materials scam, Pavlo Lazarenko, who build a vast fortune from oil and gas, and Vitold Fokin who was dismissed because of a scandal involving petty bribery were once prime ministers! Corruption is a virus. Even some patriots/dissidents are not above reproach.

Has corruption increased in Ukraine since Soviet times? According to a chapter titled "Corruption in Ukraine: Between Perceptions and Realities," by Roman P. Zyla, which appears in the recently published book "State and Institution Building in Ukraine" (edited by Taras Kuzio, Robert S. Kravchuk and Paul D'Anieri), the answer is simply, "not necessarily." Corruption was always a part of Soviet life with select periods, such as the Brezhnev years, more corrupt than others. Scandals were usually kept under wraps, however.

Today, the situation is quite different, according to Dr. Zyla. Although there is "no accurate measure by which to determine if there has been any real increase in corrupt activity since 1991," he writes, it doesn't matter. The perception by the man in the Ukrainian street is that there is. And the perception has become the reality.

Three developments account for the perception Dr. Zyla believes: 1) the increased media coverage of government operations; 2) the plodding modification of the criminal code combined with a lax enforcement of those laws that do exist; 3) the free-for-all, lawless market economy that has produced a brand of "savage capitalism" that rewards those who lie, cheat, steal, even murder to make the quick buck.

The greatest threat corruption poses to a free society is that it renders the government irrelevant to the people, who then begin to seek alternative avenues of economic survival. Increasingly frustrated by a bureaucracy on-the-take, legitimate businesspeople simply give up on trying to legally obtain the required permits, licenses and registrations the Ukrainian government demands of them. The end result is a kind of "disconnect" between the citizenry and the government followed by withdrawal from the official economy. Today the shadow economy in Ukraine is reliably valued at somewhere between 40 and 60 percent, claims Dr. Zyla.

Corruption also drives away foreign investors. According to the Wall Street Journal, Hungary last year received $1,750 per capita in foreign investment, Bulgaria received $140. Ukraine? A piddly $40 per capita! How sad. With its educated work force and proximity to European markets Ukraine could reach an annual growth of 10 percent believes David Snelbecker, an American economist.

Before this can happen, however, the vicious circle of corruption leading to decreased trust in the government, producing a shadow economy, resulting in less tax money for government coffers, yielding to more corruption, has to be cut. "During the period of transition from socialism to a market-driven democracy," concludes Dr. Zyla, "good government and a working market economy can be created only if there is strong public support of the institutions and workings of the state."

The only man who can break the vicious circle is Leonid Kuchma. Is he up for it? The time for plodding, deal-making and media manipulation is over. If he wishes to erase his parasitic image, Mr. Kuchma needs to take advantage of his mandate, appoint a qualified patriot as prime minister, and vigorously push for legal reform and economic privatization. Continued foot-dragging will have dangerous consequences. A worsening economy may lead to massive, nationwide protests, and the return of the Communists, redder than ever.

Patriot or parasite, Mr. President, the choice is yours.

Myron Kuropas' e-mail address is: [email protected]

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