President delivers annual address to Rada, delineates policy priorities

by Roman Woronowycz
Kyiv Press Bureau

KYIV - President Leonid Kuchma gave his annual state of the state address to Parliament on June 11, but only after a leading political opponent tossed a pair of slippers on the podium from which the president was speaking, symbolizing a probable forthcoming effort to remove Mr. Kuchma, and two parliamentary factions that have opposed his leadership walked out.

Ironically, the president expressed support for an impeachment law in his 45-minute presentation, stating that it was needed to balance power between the executive and the legislative branches. However, in alluding to the need for the Verkhovna Rada legislature to approve changes to the Constitution of Ukraine as approved in a national referendum held in 2000, he added that in the division of powers among the branches of government, the executive should retain the authority to dismiss the Parliament if it cannot form a sustainable majority coalition within a defined period.

He added that until the Verkhovna Rada showed an ability to form such a majority, he was not ready to look at other elements of administrative reform. President Kuchma also restated his willingness to give a parliamentary majority coalition the right to form a government and appoint a prime minister.

The speech was the first address by the president to the recently elected Parliament which got down to the business of passing legislation after taking a month to settle on a presidium and committee chairs.

The parliamentary session began quite unexpectedly when newly elected National Deputy Yurii Lutsenko, a leader of the Ukraine Without Kuchma protest movement that had organized large demonstrations against the president last year and a member of the Socialist faction, came forward as Mr. Kuchma approached the speaker's podium and lofted a pair of straw slippers towards the pulpit. The president angrily flipped them back and raised his index finger to his head, the international symbol for stupidity, and snapped, "What have you got up there?"

Both Mr. Lutsenko's Socialists and the Tymoshenko faction then left the session hall in protest against a president they insist must be impeached for alleged criminal violations, including complicity in the disappearance of Ukrainian journalist Heorhii Gongadze nearly two years ago.

After calm was restored the president repeated for the most part previously heard calls for economic and administrative reforms. But this time he added that he was ready to examine the possibility of electing oblast chairmen, who are currently appointed by the president - an issue that Mr. Kuchma previously refused to consider. He also emphasized a recently announced foreign policy objective to enter the European Union by 2011, a program titled "European Choice."

"'European Choice' means, first of all, a step-by-step development of a civil society and a socially concerned free market," explained the head of state.

Mr. Kuchma named four driving points upon which the strategy is structured: the development of internal markets; scientific-technical development; development of a land market; establishment of a middle class; and strategic economic relations with the Russian Federation.

The essence of Mr. Kuchma's speech was based on an eponymous document he issued on June 4, which expressed in some detail the president's vision and concepts for the strategic, economic and social development of Ukraine between 2002 and 2011. If fulfilled, it would give Ukraine a good chance to join the European Union.

"We must, first of all, decide for ourselves when and how it will proceed," explained Mr. Kuchma. "Optimally, I believe the best answer is full-fledged membership in the European Union. I am deeply convinced this would be in the best interest of Ukraine, as well as the member-states of this influential organization."

The plan, in its practical aspect, calls for Ukraine to fulfill the "Copenhagen criteria" stipulated by the EU as prerequisites to full membership, including obtaining WTO membership, increasing competitiveness within Ukraine's economy, liberalizing foreign trade and creating favorable conditions for foreign investments.

The "European Choice" strategy outlined by President Kuchma entails Kyiv concluding talks with Brussels for a Ukraine-EU association to supplant the current agreement on partnership and cooperation by 2004. Ukraine would set targets for the performance of market institutions, set out business standards and develop corporate governance laws, establish clearly defined property rights, establish rules for commodity exchanges, and develop common border and customs regulations.

By the end of 2004, the goal as set out in the strategic plan is to have Ukraine become an associate member of the European Union. This would be followed by a three-year period during which Kyiv would continue to legislate changes that would bring Ukraine's laws into compliance with EU laws. In turn, Ukraine could take part in EU political and economic deliberations and receive more EU financial support.

In 2005-2007 Kyiv and Brussels would commence talks on a customs union and on the elimination of customs, legal and technological barriers, as well as single trade standards and specifications. Ukraine would dedicate the last four years prior to full membership to fulfilling the various details of the Copenhagen criteria.

During his address to the lawmakers, President Kuchma said that the strategy would require a concerted effort between the Parliament and the government, and, thus, closer cooperation between the two branches of power. He said that it was time to mend divisions and to begin to work "from a clean sheet of paper."

The president also focused on the need for transparency in government, calling it "one of the elements of a civil society," as well as on the necessity to move business out of the shadows and reduce corruption in government and society. He called on the new Parliament to pass legislation for the prevention and monitoring of money-laundering as part of the battle against corruption, as well as the international effort against terrorism. He said that integration into the world economic community is impossible without such legislation.

Mr. Kuchma had reported to the lawmakers on the state of the state in 2001 also spotlighting the economic and social spheres during his address. He noted that the economic picture for 2002, while not quite as rosy as the prior year, remains upbeat.

The president reported that economic growth would be sustained this year although at a somewhat slower pace than the torrid 9 percent growth of 2001. He said that 6 percent GDP growth remained a viable figure and noted that in the first five months of 2002 real GDP grew 3.8 percent, with industrial production continuing to increase at 14.2 percent clip over the same period last year. The president warned, however, that inflation, while still relatively mild, remains a threat and must be closely tracked. He noted that real income had grown by 11 percent in the last year.

Addressing continued delays in legislative approval of a tax reform package, Mr. Kuchma demanded that the lawmakers adopt at least some aspects of the proposed new tax code, which continues to be stuck in committee, to allow the development of next year's budget to begin with better revenue possibilities. He requested that, as a minimum, the Parliament move to reduce the individual income tax.

He also asked the newly elected national deputies to develop a fiscally responsible and balanced budget, based on some aspects of a new tax law, and reminded them that revenue generation had to increase because the government would be responsible for the repayment of $1.6 billion in foreign debt in 2003.

However, Mr. Kuchma asked that the Parliament address problems in the country's medical and educational fields, as well, and requested that the lawmakers find room in the budget for increases in the salaries of workers in those economic sectors.

The president called Ukraine's banking system one of the worst in the world, noting that simply by level of interest rates and terms of loan extensions, the country ranked 119 out of 147 nations. He demanded that changes be made to make long-term loans less risky and more reasonable.

Finally, turning to foreign policy, Mr. Kuchma noted the need to deepen strategic relations with Poland, Germany and the United States, to develop a "common defense against terrorism," and to do what is required to promote gradual closer relations with NATO.

"This is necessary for both of us," said the Ukrainian president.

Copyright © The Ukrainian Weekly, June 23, 2002, No. 25, Vol. LXX

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