Cabinet of Reformers Advised to Beget Reforms

On April 19, the Cabinet session took place against the backdrop of the visit to Kyiv by the Russian President-elect Vladimir Putin, which ended the Tuesday before last, and the accompanying “self-flagellation” of Ukraine for its natural gas debts, unsanctioned siphoning it off, and the suddenly discovered re- export of gas to third countries. Leonid Kuchma’s highly sarcastic tirade that now the two presidents are going to get down personally to making a gas balance sheet for Ukraine and Russia was obviously addressed to Yuliya Tymoshenko, deputy premier in charge of the fuel and energy complex, who has never managed to get the institutions under her authority to do the necessary calculations.

Meanwhile, one of The Day’s experts has noted that the results of economic performance in the first quarter, which was the ostensible purpose of the Cabinet meeting, are such that not only Ms. Tymoshenko but also the premier and other ministers should be called on the carpet.

A slight increase in tax and duty revenues has not improved the overall condition of the budget. The deficit rose by 11.7% from the beginning of the year, reaching UAH 13.2 billion by April 1. The budget owes still more to taxpayers: as of April 1, they had not been paid VAT rebates worth over UAH 2.5 billion.

The payments crisis, which the Viktor Yushchenko government was going to overcome by banning barter, has reached a new high. No improvement is visible in the payments among enterprises for goods and services sold. In January and February alone, accounts receivable and payable of economic entities went up almost by UAH 10 billion (5.8%) and UAH 13 billion (5.2%) respectively.

The government headed by this country’s former chief banker must have created some friction with the new National Bank management. The Cabinet session reproached the latter for its not taking part in redeeming the public foreign and domestic debt, despite the absence of external funding sources, while the foreign debt redemption situation was characterized as tense and wage and pension arrears as “being paid off slowly.”

An extensive draft resolution, drawn up by the Cabinet secretariat, puts special emphasis on reforming the fuel and energy complex. The results of this work are exemplified by the progress in coal mining, where output is up 8% from the first quarter of last year (when there was a 6.3% slump).

Ms. Tymoshenko’s main trump card was the report that the measures taken in March made it possible to improve payments for the natural gas and electrical power consumed. But, nonetheless, the total gas debt grew by almost UAH 2.5 billion, reaching UAH 7.9 billion on April 1. The electricity debt rose by UAH 1.5 billion from the beginning of the year, reaching UAH 8 billion on April 1.

A prediction People’s Deputy Serhiy Chukmasov made to The Day on the very eve of the Cabinet session came quite true: there was serious criticism of Ms. Tymoshenko, but there was no hurry to follow it up. Another participant in the meeting told The Day, “We will soon have the opportunity to congratulate Valery Pustovoitenko on a new high appointment” (let me remind you that this version has been going around for a month or so). According to him, the liberal premier cannot put the energy market in order and “pull the old rusted and the new ‘nails’ out of it” with the aid of liberal deputy premiers alone. This requires a man with a bulldog’s grip, capable of giving everybody a rap on the knuckles. Ms. Tymoshenko herself showed this ability on April 19, when she brought her followers to picket the Cabinet building. This may also be the reason why the Cabinet has eschewed any reshuffling. So far...

On April 19, addressing the full Cabinet, President Kuchma noted the “extremely unsatisfactory work” of this country’s fuel and energy complex, saying that he “does not share the optimism” with which Deputy Premier Yuliya Tymoshenko spoke about it. “The situation has reached the critical limit,” the President said, adding that Ukraine has managed to save its unified energy system “practically by a miracle.”

Moreover, the President instructed Premier Yushchenko to study whether it is advisable to have the office of deputy premier in charge of an energy policies in the government and to put forward the relevant proposals. He said he had accepted some time ago Mr. Yushchenko’s proposal to introduce the post of deputy premier in charge of energy policies, only proceeding from the necessity of an integrated approach to this sphere. Simultaneously, the President stressed, today he has “ample grounds to conclude that we have failed to put the energy sector on its feet and botched economic reforms because we had in fact sacrificed the office of deputy prime minister specially in charge of economic reforms in Ukraine.”

In addition, Mr. Kuchma subjected the whole government to criticism for insufficiently active and sometimes ill-considered actions in carrying out reforms and warned against excessive optimism in assessing the results of economic performance in the first quarter of 2000: “The government still lacks the tools needed to solve the existing problems.” He also cautioned the government against doing everything from scratch, without taking account of previous executive branch experience, Interfax-Ukraine reports. The President stressed that what worries him is the fact that the government, as earlier, is guided primarily by intuition in its decision-making.