KYIV – Ukraine’s Parliament, voting on the last weekend of 2014, approved several dozen bills amending the tax and budget codes in order to accommodate the 2015 central state budget, which was revamped since its presentation the prior week and approved early Monday morning, December 29.
The nation’s fiscal plan was unprecedented in its reforms, such as keeping high royalty payments on firms that extract natural gas, mostly controlled by the nation’s biggest oligarchs, and sharply cutting state subsidies to the coal industry, which were largely pocketed by Donbas oligarchs.
“I was happy to have fulfilled the promise that I gave during elections, which was to eliminate in the Verkhovna Rada the legalized corrupt schemes that steal billions from the country,” National Deputy Tetiana Chornovol, a prominent anti-corruption activist, wrote on her Ukrayinska Pravda blog after the voting.
“For the first time, the oligarchs suffered a loss. For the first time, the government truly entered into their pockets, even those who continue to manipulate politicians,” she noted.
As expected however, criticism of the 2015 budget in Parliament – as revealed during its December 22 presentation – was widespread. Despite the first significant measures to restrict the excess profit of oligarchs, a long stream of politicians and observers criticized the budget for shifting an excessive burden of spending cuts onto the public.
In his standard populist rant from the parliamentary tribune, National Deputy Oleh Liashko, the head of the Radical Party, pointed out on December 23 that the budget earmarked 5 billion hrv ($305 million U.S.) for the State Fiscal Service and 4 billion hrv ($244 million) for the Procurator General’s Office of Ukraine.
“Show me where are the cuts in the number of state officials! Show me the elimination of oligarch schemes! Show me the elimination of oligarch schemes! There aren’t any,” he shouted.
Meanwhile, economists said the new budget won’t satisfy the International Monetary Fund, which will decide in February whether to extend a new loan tranche, estimated at $2.7 billion. Economists said almost unanimously this is the government’s only hope for survival.
And numerous national deputies – from both the pro-Russian and pro-European Union camps – voiced outrage at how the voting was organized that weekend. They alleged violations of parliamentary rules, as well as the Constitution.
Yurii Boiko, the chair of the pro-Putin Opposition Bloc parliamentary faction, said in a December 28 statement that national deputies weren’t given copies of the day’s agenda or the text of the several dozen amendments voted upon on December 27 and 28.
The weekend’s violations make the alleged misdeeds of January 16, 2014 – when national deputies violated procedure in approving what came to be known as the “dictatorship laws” – look like “fairy tales” in comparison, Mr. Boiko said, stressing that his party would submit complaints to the Constitutional Court.
National Deputy Serhii Leshchenko of the Petro Poroshenko Bloc, who has an ardent pro-European Union position, said the way the budget was approved was even more egregious than the weekend’s amendment votes.
“We approved several dozen bills that introduced fundamental changes to the budget and tax codes of Ukraine, introduced new taxes and provided certain exemptions to these taxes,” he told Hromadske TV on December 29. “This was all voted upon by ear. It was understood that it couldn’t have been done in a civilized manner in full adherence to procedure. [Prime Minister Arseniy] Yatsenyuk read [the bills], everyone listened, he explained [the bills], and the factions voiced their objections. This procedure was more or less acceptable, but also a violation of the order established by rules.”
“These dozens of changes were voted upon, after which the budget that was presented on December 22 was supposed to be republished according to the new realities, considering that a lot was changed or added to what had been proposed. The figures in that version no longer conformed to reality,” he explained. “But instead of setting aside a day for the Finance Ministry to work on it – there was a proposal for us to gather on the night of December 29 to vote upon the republished budget – the Yatsenyuk/[Oleksandr] Turchynov faction ‘bent over’ everyone and the entire Parliament voted at five in the morning for something it has no idea of.” [The budget was approved at 4:24 a.m. on December 29.]
Not only had no deputy seen a copy of the 2015 budget before it was passed, but neither did the Parliament’s Budget Committee meet to consider it, Mr. Leshchenko said.
The official version for why the vote was held in the early morning is that a majority might not have been available by that evening, he said. The unofficial version he heard is that many deputies had plane reservations to their winter vacation getaways the same day, despite the fact that the budget vote had been originally scheduled for December 30.
Mr. Leshchenko described the budget as a “kukla,” a term in the 1990s for a stack of blank paper – with a single currency bill on the top and bottom – offered in exchange for real money as part of fraudulent currency exchange schemes.
National Deputy Mustafa Nayyem of the Poroshenko Bloc compared the budget to a blank document handed to the Cabinet of Ministers to draft at its own discretion.
Voicing agreement with that characterization was independent National Deputy Yurii Derevianko, who said Parliament had essentially surrendered its authority to the Cabinet. “Why then the need for a Verkhovna Rada at all? It’s utterly absurd,” he told the firtka.if.ua website, calling the budget’s approval “a complete discrediting of Ukraine’s parliamentary system.”
Prime Minister Yatsenyuk himself admitted the budget is “far from ideal,” and his fellow party member, Ms. Chornovol, acknowledged the process of its approval “can be criticized,” but she preferred to stress the gains from the document.
Serhiy Datsyuk, a contemporary Ukrainian philosopher who has criticized the current government in the past, in this case decided to offer a defense. “Very many are dissatisfied with how the laws were passed and their inconsistency with the state budget, which needed to be redrafted at the moment they were passed,” he said.
“The blank pages for a state budget approved by the deputies look particularly strange, with the government having to rewrite it. This is the first time that’s happened in Ukraine’s history. But it was a moment of trust from the Ukrainian citizenry to Parliament, and from Parliament to the government. If there’s no trust, there won’t be a revolution. So we have a choice before us again – a Parliament or a new Maidan. The parliamentary path to revolution is better than the street,” Mr. Datsyuk commented.
The budget received 223 votes in support, far short of the 302 alleged members of the parliamentary majority. The Poroshenko Bloc offered 120 out of its 150 votes, the People’s Front offered 81 out of 82 votes, the Radical Party offered 17 out of 22 votes, Self-Reliance offered 10 out of 32 votes, and independent deputies offered five votes. (The Radical Party voted in favor despite Mr. Liashko’s vow to parliament that “this budget” [as of December 23] would be passed only “over my dead body.”)
The pro-Putin Opposition Bloc offered no support, and neither did the pro-NATO Batkivshchyna Party, led by former Prime Minister Yulia Tymoshenko, who observers said is carving out a role for her party as a more radical, pro-Western alternative.
Alexander Paraschiy, the head of research at Concorde Capital investment bank, said he’s confident the 2015 central state budget – whatever it looks like – will be rewritten further during consultations with IMF representatives, which begin on January 8 when its delegation arrives in Kyiv.
Mr. Yatsenyuk said at his year-end press conference on December 30 that the budget will need Parliament to approve further amendments that meet the International Monetary Fund’s approval.
He expressed confidence that the budget will meet the IMF’s requirements, which Mr. Paraschiy said implies that its delegates will propose more severe austerity measures, particularly social spending cuts that the government had tried to avoid announcing when presenting its draft to Parliament on December 22.
“In essence, the Cabinet will ‘outsource’ the task of revising its budget to the IMF,” Mr. Paraschiy said. “This readiness to delegate budgeting means that the chances for a new IMF wire, and subsequently Ukraine’s solvency, have improved.”
He added, “At the same time, the decision reflects poorly on the Yatsenyuk government, showing that it’s incapable of making difficult decisions and trying to avoid political responsibility for potential spending cuts.”