Yanukovych promises economic growth when Party of the Regions gains power (02/19/06)

Yanukovych promises economic growth when Party of the Regions gains power

by Zenon Zawada
Kyiv Press Bureau

KYIV - Suggesting that the Party of the Regions would once again return Ukraine's economic growth to double-digit levels, Viktor Yanukovych delivered a strategy for economic development of improving the investment climate and drawing closer to Russia.

Addressing hundreds of Party of the Regions members and journalists on February 14, Mr. Yanukovych stressed the economic accomplishments during his tenure as prime minister and criticized his successor Yulia Tymoshenko and President Viktor Yushchenko for driving the economy to near ruin.

"People are starving and freezing as a result of the abysmal economic policies of the government," Mr. Yanukovych declared.

Mr. Yanukovych's speech was part of a vigorous Party of the Regions political campaign heavily concentrated on attacking the Orange political forces as incapable of handling Ukraine's economy.

Among the triggers of Ukraine's "spiraling" 10.3 percent inflation last year were the massive increases in social spending and pensions that the government couldn't afford, Mr. Yanukovych said.

He vowed to deliver a budget surplus, instead of the deficits in the 2005 and 2006 budgets. The government is printing money to please voters, he said.

"When we come to power, we will stick to our principles of financial responsibility and we will throw in the garbage pail of history the incompetent economic policies of the current government," Mr. Yanukovych said. "I came here today to say that the closed circle of inflation will be broken if the Party of the Regions comes to power."

Under his tenure as prime minister in 2004, Ukraine's Gross Domestic Product grew more than 12 percent, Mr. Yanukovych pointed out, far superior to the 2.4 percent growth last year.

Other economic accomplishments, Mr. Yanukovych said, consisted of reducing entrepreneurial profit taxes from 30 percent to 25 percent, reducing personal income taxes from 40 percent to 13 percent and introduced substantial tax benefits for health care and education, which the Yushchenko government canceled.

Personal incomes rose an average of $209 from 2003 to 2004, and only $152 from 2004 to 2005, Mr. Yanukovych said.

"When the Party of the Regions was in power, the budget wasn't only balanced and realistic, but even experienced surpluses," he said.

While Mr. Yanukovych repeated several times that the Party of the Regions has a superior economic plan, he spent most of his speech attacking the policies of the current government and those of Ms. Tymoshenko, which he frequently derided as populist and primitive.

Rather than basing her economic policies on short-term or long-term plans, Ms. Tymoshenko's populist policies "tore apart Ukraine's economic base," he said.

She was responsible for destroying technology parks, canceling tax benefits for investment, accelerated amortization for business, and levying taxes on oil and natural gas imports, he continued.

Threats of reprivatization and cancelation of Ukraine's economic zones hurt Ukraine's investment climate, Mr. Yanukovych said.

Ms. Tymoshenko's attempt to control prices for such commodities as heating oil, meat and sugar resulted in sharp price increases, he said.

Under Mr. Yushchenko's leadership, Ukraine's trade surplus of $4.5 billion in 2004 became a trade deficit of $1.3 billion in 2005, he said.

The 2006 budget consists of mindless figures based on the old natural gas prices and an unrealistic expectation of 8.5 percent GDP growth, he said.

He went on to ridicule President Yushchenko's promise of creating 1 million jobs every year for the next five years.

"The current government doesn't understand the fundamental principles of economic policy," Mr. Yanukovych said.

Perhaps the most eye-opening part of his speech occurred when Mr. Yanukovych accused the Yushchenko administration of intentionally fomenting the natural gas crisis with Russia in order to create a foreign enemy that Ukrainians could rally against.

"They created instability with the goal of creating a foreign threat, confessing to Bismarck's principle 'To unify Germany, it's worth calling for war with France,' " Mr. Yanukovych said. "The results of such a policy have been catastrophic."

As for his own suggestions to improve the Ukrainian economy, Mr. Yanukovych offered many broad assurances of stability, fiscal discipline and transparency, but very few specifics of how to ensure such conditions.

Among them are ensuring transparent privatizations, deregulating the economy, creating clearer and more precise rules on stocks, defending intellectual property rights in Ukraine, creating new accounting and auditing rules, introducing legal reforms to create a truly independent court system, ensuring democracy, human rights and freedom of speech, and "fighting against corruption."

The Party of the Regions supports a free market and opposes the manipulation of prices, its leader said. Once it gains power, the Party of the Regions will immediately balance the budget and cut money spent on bureaucrats, "presidential palaces, residences and family ethnographic parks."

The Party of the Regions will also renew special relations with Russia and push for Ukraine's membership in the Single Economic Space. Playing a game similar to the one engaged in by former President Leonid Kuchma, Mr. Yanukovych also said the party supports integration with Europe.

In his speech, Mr. Yanukovych also accused the Yushchenko administration of firing "ten of thousands" of government employees and replacing them with "relatives, friends and the godfathers of those who came to power."

The Yushchenko government also systematically persecuted businessmen who supported him in the past elections, Mr. Yanukovych alleged.

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