2003: THE YEAR IN REVIEW

On the homefront: census, finances, cultural issues

Just prior to the New Year in 2003, Ukraine published the official census figures from the nationwide count that had been taken the previous year. It put the official population of Ukraine at 48,416,000 as of December 5, 2001.

The urban population was identified as numbering 32,538,000, or 66 percent of the total number of Ukrainians, while rural inhabitants numbered 15,878,000 or 33 percent.

Ukraine's 48.5 million inhabitants witnessed more growth in 2003 as the economy continued its upward trend, which began in 2000 with a 9 percent rise in GDP, followed by a 6 percent increase in 2001 and 4 percent in 2002. By the second month of 2003 it was evident that the economy would continue to expand in 2003 while inflation remained in check. Growth for January and February stood at 7.2 percent. At mid-year it had risen to 7.5 percent. GDP growth remained steady at 7 percent for the rest of 2003, exceeding the 6 percent growth the government had predicted at the beginning of the previous December.

Inflation, meanwhile, had grown only by some 6.5 percent by the end of the year, well within government expectations.

On February 19 Prime Minister Viktor Yanukovych presented his economic plan for the next two years calling for a reduction of the income tax rate and a new tax code to be in place by mid-year.

Mykola Azarov, first vice prime minister in the Yanukovych Cabinet, proposed a reduction in the corporate profit tax to 20 percent, reduction of the value-added tax (VAT) to 15 percent and a decrease in the number of tax breaks available to businesses. He also called for 12 to 15 percent real growth in wages for Ukrainian workers.

While a new tax code never did make it out of the Verkhovna Rada, where it has been stuck for some two years now, the lawmakers managed to approve a reduced 13 percent flat tax rate on wage earnings. Previously, some workers paid up to 40 percent of their pay to the government. President Leonid Kuchma welcomed the new tax rate and noted that it would bring that portion of the population that hides its earnings to avoid taxes out of the shadows. "People will no longer hide their wages through compensation under the table," Mr. Kuchma commented.

While workers who didn't report their earnings continued to be a problem, another type of worker, the one who left Ukraine to work abroad became an issue of "state importance," Ukraine's Verkhovna Rada Ombudsman Nina Karpachova noted during a report to the Parliament on April 2. She called workers who went abroad, "The most discriminated against and least protected category of Ukrainian citizen."

Ms. Karpachova estimated that between 2 million and 7 million Ukrainians worked in foreign lands as a result of poverty and unemployment in Ukraine. Officially, most of those Ukrainians found jobs in Greece, Cyprus, Liberia and Great Britain. Unofficially, however, the evidence pointed to more Ukrainian workers in Russia, Poland, Italy, the Czech Republic, Portugal, Spain, Turkey and the United States. The Ukrainian ombudswoman said that collectively the workers earned some $400 million per month.

Ms. Karpachova also noted that government statistics showed that 27 percent of Ukrainians lived below the poverty line, with the Zakarpattia Oblast the most affected - 47 percent of residents of the region were considered to live in poverty - followed by Crimea and the Khmelnytsky, Kherson, Mykolaiv, Volyn and Luhansk Oblasts.

While Ukraine's skilled labor force continued to move out of the country, Prime Minister Yanukovych on June 6 announced a program to draw foreign investment into Ukraine. He stated that the goal was to attract at least $1 billion in foreign investment annually beginning in 2003.

"The formation of favorable conditions for investment is a cornerstone of government policy," explained the Ukrainian prime minister at an annual gathering of the Ukrainian Investment Council, an organization of Ukrainian and foreign businesspersons chaired by President Kuchma.

While Mr. Yanukovych did not specifically explain how he was going to suddenly make Ukraine a hotbed of investment, he noted that foreign investment had increased since 2002 by $797 million. He also stated that foreign investment into Ukraine was diversified, coming from 114 different countries, led by the United States, Great Britain, the Netherlands, Russia and Germany.

On July 21, during his farewell speech to graduates of U.S. exchange programs, outgoing U.S. Ambassador to Ukraine Carlos Pascual said that Ukraine's glaring weakness in drawing foreign capital had to be rectified. He blamed the lack of transparency and predictability in the court system and the instability of legislation for the lack of interest among foreign investors in the Ukrainian market. Mr. Pascual noted that in 12 years Ukraine had managed to attract a paltry $5.3 billion, with U.S. investors leading the way at $900 million.

In another show of the strengthened financial position of Ukraine's economy, National Bank of Ukraine Chairman Serhii Tyhypko announced on August 29 that the NBU would repay its outstanding $1.84 billion debt to the International Monetary Fund by the end of the year. He said that in doing so the NBU would save Ukraine $40 million in interest payments. The NBU chairman also stated that because the Ukrainian central bank had some $7 billion in its foreign currency reserves it could afford the move.

The plan did not receive a rousing ovation from the Cabinet of Ministers, however. Many officials, including Prime Minister Yanukovych, said that no such action would take place until the ramifications were evident. First Vice Prime Minister Azarov suggested that such a large outlay of money could have "possible consequences for the country's financial system."

Ukraine's 2003 budget also came under question when Communist faction leader Petro Symonenko and an unlikely partner, Nestor Shufrych from the Social Democratic Party-United faction of billionaire Viktor Medvedchuk, accused the chairman of the parliamentary Budget Committee, Our Ukraine faction member Petro Poroshenko, with changing line items of the approved 2003 Ukrainian budget and misappropriating some 47 million hrv (about $9 million). Mr. Shufrych suggested that the finances were moved into expenditures for Mr. Poroshenko's constituency in the Vinnytsia Oblast.

Mr. Poroshenko denied mishandling the budget and said he would resign if the Verkhovna Rada rejected the budget because of alleged malfeasance on his part. He blamed the differences between what had been in the draft budget at the time it was approved and what was officially published after parliamentary approval on stenographic errors that occurred and were not noted between the second and third readings of the budget. If a successful vote to reject the approved budget had occurred, both the government and the country would have been paralyzed, with the closing of schools, hospitals and state militia posts.

The 2004 budget, which the Verkhovna Rada passed on November 27, also did not get approved without an uproar. National deputies from the opposition wanted to reject the draft bill because it temporarily reduced a new minimum wage that was to have gone into effect. They noted that already on December 1, 2003, the minimum wage should have risen to 237 hrv. However, the government had delayed that wage increase until November 2004. First Vice Prime Minister Azarov told the legislative body as it debated the budget that a hike in the minimum wage was financially inappropriate if the government was also to absorb the reduction of income taxes to 13 percent.

As the morning session began on budget day, opposition forces had tussled with pro-presidential lawmakers at the speaker's dais, where supporters of the president had placed themselves to avoid the possibility that the opposition might attempt to disrupt another parliamentary session, a tactic they had used often in the second half of the year when the pro-presidential faction ramrodded through legislation.

And while they complained about the unfair way in which the minimum wage was reduced, the opposition also expressed its dissatisfaction with the manner in which the government received almost all that it had asked for in terms of budget requests and how little input was accepted from the Budget Committee headed by Mr. Poroshenko, a leading member of the Our Ukraine opposition.

The chairman of the Verkhovna Rada, Volodymyr Lytvyn, who guided the budget to approval in only two readings, admitted that the budget process this year was somewhat unorthodox. "We passed the budget a bit unexpectedly. This year the budget procedure was not fully open and transparent," admitted Mr. Lytvyn, explaining that indeed the endorsements on the budget came quickly because the pro-presidential forces in the Parliament and the government had agreed beforehand on how the country's basic financial document would look.

Although scandal has been far from a novelty in Ukraine, the detention of former Minister of Agriculture Leonid Kozachenko on charges that he had manipulated the wheat market for his own financial benefit was particularly resonant because it involved the bread and flour market, central staples in the Ukrainian diet.

Mr. Kozachenko was arrested on March 24 on charges of corruption and tax evasion and held until October, when he was freed in advance of the beginning of his trial and after the latter charges had been dropped. Originally the Procurator General's Office charged the former agricultural minister with taking bribes for the illegal sale of grain to foreign buyers at reduced prices and for failing to declare 584,940 hrv in income as the director general of the firm Ukr AgroBusiness.

The case was one of 90 similar investigations that the Procurator General's Office had begun after it became apparent that even with the record grain harvest that reached 40 million tons the previous year, Ukraine was facing a grain shortage. Many government officials and grain traders had sold their stores to foreign buyers at sharply reduced prices in order to pocket a profit for themselves. In order to cover-up their black market business, many raion and oblast officials had inflated the amount of grain they had harvested. The largest discrepancies were found in the fertile, breadbasket oblasts of the southern region, including Zaporizhia and Dnipropetrovsk, as well as Crimea.

On July 23, during a special Cabinet of Ministers meeting dedicated to the grain crisis, Prime Minister Yanukovych asked for the dismissal of three oblast governors, from Dnipropetrovsk, Poltava and Chernivtsi. He also noted that officials in the oblasts of Zaporizhia, Ivano-Frankivsk and the Crimea misled government authorities.

Adding to the grain crisis, on June 14 Prime Minister Yanukovych announced that a late spring drought and an early spring frost would make the 2003 autumn harvest among the worst in years. "This is the worst weather we have had for crop growth in the last 10 years," observed Mr. Yanukovych.

A State Committee on Statistics report confirmed that some 65 percent of planted fields in the eastern, central and southern oblasts was destroyed by bad weather in the spring. Meanwhile, Minister of Agriculture Serhii Ryzhuk said that he expected a harvest of only 25 million to 27 million tons of grain this year. As a result Ukraine was forced to buy 2.5 million tons of supplemental grain stores from Russia, Kazakstan and Canada. Even so, by the end of the year bread prices in many regions of Ukraine had more than doubled.

While the agricultural sphere of Ukrainian life was continuing to work out kinks, cultural life in Ukraine also had problems to overcome in 2003.

Although President Kuchma had declared 2003 the Year of Culture in Ukraine, that didn't stop a Kyiv Court from ordering a youth library closed over protests by the libraries management, which claimed that the head of a city raion wanted ownership of the building to further his own commercial interests.

"We are aware from those who are close to our library that the head of the raion state leadership already has a beauty shop and a restaurant around here," explained Halyna Soroka, director of the Kyiv Oblast Youth Library.

Other critics of the court's ruling, which ordered the library to abandon the premises because it had not paid rent in a timely manner and failed to renew its lease, stated a belief that the city takeover of an oblast controlled building was simply another stage in the political fight of Kyiv Mayor Oleksander Omelchenko with the oblast of Kyiv to have the latter turnover all government buildings to city hall.

However, National Deputy Les Taniuk, chairman of the parliamentary Committee on Culture and Spiritual Matters, said the ruling was politically in line with the politics of the current state leadership. "I look at this as the norm for this government and this leadership, which also in this year of culture reduced the budget for culture," commented Mr. Taniuk during an interview with The Weekly on July 14.

He explained that a slew of unresolved cultural matters needed state attention, including funding for the restoration of the Kozak military center at Khortytsia, the misappropriation of government financing of church parishes and the closing of the Les Kurbas Center in Kyiv.

Many in Ukraine also saw political cynicism and irony in the fact that the president had decided to declare a year of Ukrainian culture in the country the same year he proclaimed the year of Russia in Ukraine.

Another tragedy, which many blamed on government negligence, was a fire in a Kamianets-Podilsky warehouse on April 10 that destroyed 70 percent of the historical archives of the Podilia Gubernia from the 18th and 19th centuries.

The fire was directly blamed on an unauthorized printing operation in the 16th century Franciscan cathedral, located in the city's old section, whose upper floors were used as a warehouse for historic government archives. Many of the documents that did not burn received extensive water damage.

While Mayor Oleksander Mazurchak blamed the Ukrainian Orthodox Church-Moscow Patriarchate for conducting an unlicensed printing operation and failing to maintain safety standards, he also noted that a lack of proper fire fighting equipment delayed the arrival of a ladder truck for two hours because one had to travel from the city of Khmelnytsky.

Mayor Mazurchak said that the city had repeatedly requested 1.2 million hrv from the state budget to remodel the archive areas of the building and to properly preserve the millions of sheaths of paper stored there, but hadn't received a kopiyka in five years.

Not all was bad news in the cultural sphere in 2003, however.

A new publishing house, Ranok Publishing, printing mostly in the Ukrainian language, gave itself a name in 2003 when it introduced a series of books on prominent Ukrainian writers and poets silenced and banned in Ukraine during 70 years of Soviet rule. The set, titled "Program in Literature," included the works of Panteleimon Kulish, Mykola Khvylovyi, Vasyl Stefanyk and Ivan Nechui-Levytsky, among others.

The publishing house, whose books are priced affordably for the average Ukrainian consumer, also published an anthology of the New York School, a group of Ukrainian American émigré poets and writers who achieved prominence in the 1950s-1960s. Ranok envisioned the printing of a total of 55 to 60 books before its Program in Literature series was completed.

Another auspicious moment for Ukrainian culture was the presentation of an icon of the 17th century spiritual and cultural leader Metropolitan Petro Mohyla to the National University of Kyiv Mohyla Academy on January 14. The icon was prepared by the monks of the Romanian Orthodox Church in honor of Mohyla's canonization by that Church on October 13, 2002, in his home town of Iasi in present day Romania.

The 70th anniversary of the Great Famine gave rise to a project to develop a proper memorial complex to the victims of Stalin's genocide. On February 12 Ukrainian lawmakers heeded an idea first proposed by the Ukrainian diaspora in North America. National Deputy Levko Lukianenko, who also headed the Association of Famine Researchers, put forward the idea during a parliamentary hearing on the Great Famine, which was supported by Vice Prime Minister for Humanitarian Affairs Dmytro Tabachnyk. Mr. Lukianenko proposed that the complex include a museum, a library and a research center, as well as a memorial statue and that it be constructed in the city center.

While the Parliament resolution that was passed the next day called for a site on a central thoroughfare of Kyiv, city officials decided on a different spot, a location on the Dnipro River that was not easily accessible and which was found directly below the hill where the famed figure of "Rodina Mat" stood with her drawn sword.

The location the city chose plus a poorly organized competition to determine the memorial center's design raised the ire of concerned Ukrainians both in the homeland and abroad, who severely criticized the way the project had been developed. That, in turn, led to a decision to search further for a site and to re-organize the design competition to broaden the number and variety of submissions.

Another project that got off to a poor start was a decision to build a Jewish community center on the territory of Babyn Yar, where tens of thousands of Jews, Ukrainians and Roma were murdered by German Nazis in 1941.

The project, which was to construct a multi-million-dollar complex, like those found in many U.S. cities, to include a theater and recreational facilities, was put on hold after dissension arose among the leaders of the Jewish community in Kyiv regarding the appropriateness of establishing this type of center in a place as sacred as Babyn Yar.

Representatives of the wider Ukrainian community also protested that if this was to be a memorial complex it should also have input from representatives of all ethnic groups whose victims died in Babyn Yar.

Caught in the middle was the Jewish Joint Distribution Committee, which has coordinated and funded the construction of 170 Jewish Centers throughout the world. The center that was planned for Babyn Yar was to include a museum, a memorial and a research center, in addition to the community center. The issue at the center of the storm was whether the site that was selected was part of the killing fields or outside of them.

Josef Zissels, a former Soviet dissident and now a civic activist and Jewish community leader, maintained that no one knew for sure where the mass murders took place, and therefore it would be better not to put a community center anywhere near the site.

Chief Rabbi of Ukraine Dov Bleich, who led the drive to build at the chosen site, said the site had been fully researched, excavated and aerial photos taken to ensure it was not part of Babyn Yar.

While the JDC maintained that a different site could be chosen for a community center, Rabbi Bleich explained that the money was funded for the project through two foundations to the JDC with the stipulation that construction would take place on the chosen site. At the end of the year, the project remained on hold.

Commemorations took place in Kyiv in February 2003 in honor of the birth of a person who did more than most to stifle Ukrainian culture and the development of national identity.

In January Vice Prime Minister Tabachnyk signed a government resolution to honor Volodymyr Shcherbytsky on the 85th anniversary of his birth. Mr. Shcherbytsky, who some say committed suicide in 1990 after it became clear the Soviet Union would fall apart, was the longest serving leader of the Communist Party of Ukraine.

Mr. Shcherbytsky, who replaced Petro Shelest in 1972 after the latter was accused of national deviationism for espousing the development of Ukrainian culture, led a return to mass arrests of Ukrainian dissidents and the Russification of the republic. He remained at the helm of the CPU until he was replaced in 1989, the last hard-line republic leader to survive in power from the era of Soviet Premier Leonid Brezhnev, who had died in 1982.

Eighty-fifth anniversary commemorations included the commissioning of an official article on the life and deeds of Mr. Shcherbytsky for release to the mass media by the government of independent Ukraine and the writing of memoirs by colleagues and associates. On his birthday, February 14, a press conference was held in the Ukrainian Home and flowers placed at his gravest by a government delegation. That evening a concert was held in his honor at the National Philharmonic. Plans also called for the renaming of a Kyiv street and the erection of monuments and plaques in Dnipropetrovsk, where he began his career, Dniprodzerzhynsk, where he was born, and Kyiv, the seat of his power.

Copyright © The Ukrainian Weekly, January 11, 2004, No. 2, Vol. LXXII

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