“Hands-On Management” of Budget Goes Forward
On December 6, Minister of Finance Ihor Mitiukov again failed to have the 2002 draft budget approved by Verkhovna Rada. Even though only three articles (1, 28, and 29) of the so-called economic constitution were put to a second-reading vote this time, as proposed by parliament speaker Ivan Pliushch, the budget was still voted down. “Dear people’s deputies, when we met, you made a lot of remarks about the draft budget. We suggest that the structure of expenditures, the total amount and the distribution of appropriations, etc., be postponed for the third reading. We do not mind you, the Budget Committee, redrafting the budget,” Mr. Mitiukov was literally coaxing parliament members into accepting the “government proposals” and approving the document in the second reading.
To sound more convincing, the minister of finance even agreed to boost budgetary expenditures by UAH 1,150,000,000, saying that 150 million is a “realistic resource” which the government “is prepared to channel even today in specific directions.” In his words, it is proposed to earmark UAH 100 million out of this for coal mining and UAH 50 million for medical programs. In addition, in search of a compromise with the Left deputies usually voting against cabinet proposals, Mr. Mitiukov deemed it quite possible “to increase the minimum wage from 140 to 155 hryvnias in the second half of 2002.”
“It is unclear what the government was doing during the week parliament gave them in order to modify the bill” was the verdict of the Budget Committee Chairman Oleksandr Turchynov. “Next year’s budget must be deficit-free.” Accusing Premier Anatoly Kinakh, of “hiding privatization incomes” in order to utilize them “in the forthcoming election campaign,” Mr. Turchynov suggested establishing UAH 52.3 billion budget balancing revenues and expenditures.
Yet, this throwing of stones at the government looks odd. As Mr. Mitiukov repeatedly emphasized, the inclusion of non-permanent privatization earnings in budget revenues could destabilize the state treasury. In his words, this “non-hidden” income “should be aimed at developing the economy and solving strategic problems, and be mentioned in the budgetary chapter on financing.”
Whatever the case, the Communist, Socialist, and Fatherland factions voted the budget down by a joint effort in the second reading. The approval of the basic budgetary articles — revenues and expenditures — was short of as few as eleven votes.
“A balanced budget is the road Ukraine has just begun to follow. I don’t think all are politically prepared to make a tough decision especially on the eve of the elections,” Mr. Mitiukov summed up the vote results. “If we had accepted the budget committee proposals, this would have meant at least one and a half billion hryvnias in unjustified expenditures. I do not think it necessary at this stage to revise the budget’s basic articles, although Verkhovna Rada has every opportunity to look into our proposals on tax law amendments and introduce the required changes in the budget’s revenues and expenditures. We still favor further cooperation with Verkhovna Rada.” “We have every chance to pass the budget (with the next second reading to be held on December 13 — Ed.) before the end of the year,” the minister emphasized optimistically.
The second reading was foiled for the first time on the Thursday before last just two hours after Prime Minister Anatoly Kinakh had joined the For a United Ukraine election bloc. Mr. Turchynov blamed the government for allegedly “hiding” about 11 billion “budget” hryvnias, and the budget committee had attempted to cut the next year’s expenditures for the Tax Administration and some ministries and to “bloat” the budget to UAH 52.3 billion (by the principle more is better).
Whatever the case, Mr. Kinakh’s political weight can thus become the stone which will sink “the most socially oriented,” as the government claims, budget for 2002. And although Minister of Finance Ihor Mitiukov affirms that the two failures to adopt the bill were in no way linked to Mr. Kinakh’s entering an election bloc, the draft budget situation showed that the initiators of putting the premier into For a United Ukraine had committed their first serious political mistake. After all, they might have first waited for the budget passage and only then reinforced the already star-studded bloc with another bright figure.
“The presence of Mr. Kinakh in the hall during the vote could have played a positive role, and the document could have been adopted,” Viktor Suslov (one of the two Yabluko faction deputies who voted for the budget, running the risk of losing their party membership cards, to quote their party leader Mykhailo Brodsky) told The Day. It is not excluded that the head of government can really hypnotize some people’s deputies. However, some deputies are sure that the repeated non-adoption of the budget is nothing but an attempt to force Mr. Kinakh to resign. “Executive offices are already being distributed,” Mr. Suslov told The Day. Despite the fact that the premier is still in office? But the people’s deputy refused to be more specific. Simultaneously the government seems to be taking quite a firm stand about the budget. “I don’t consider it necessary to revise the budget’s basic articles. I’m not afraid if we fail to have parliament pass the 2002 state budget before the end of the year. A poor budget is no option for us,” Mr. Mitiukov claims. This, however, did not hamper him from “finding a possibility,” during the previous redrafting of the budget from November 29 till December 6, to boost its expenditures by UAH 1,150,000,000.
So far, pessimism looks most realistic: budget adoption is becoming an element of election campaign bargaining. It looks like Mr. Kinakh can only get help from some stronger players.
P. S.
First Vice Chairman of Verkhovna Rada Viktor Medvedchuk announced that what has happened now is “a delay in, not the collapse of, budget adoption.” The Solon noted that the parliament was to have voted on the budget in the second reading not later than November 20, as the Budget Code provides. “However, we are at the beginning of an election campaign, when political forces redouble their efforts to alter some budget provisions,” he said. According to Mr. Medvedchuk, Verkhovna Rada “still has time,” December 13 and 20, to pass the budget, and deputies can, if necessary, spend one more day before the New Year to vote on the budget, Interfax- Ukraine reports. The first vice speaker also pointed out that the Cabinet of Ministers and Verkhovna Rada continued the “process of coordination.” In his words, the Cabinet has today an “additional opportunity” because a repeated second reading can make amendments to budget revenues and expenditures and “meet the fundamental requirements of some political forces and deputies.”
COMMENT
Viktor SUSLOV, Yabluko (Apple) faction:
“As long ago the week before last, when it was announced that the prime minister was joining the For a United Ukraine bloc, it became clear that budget adoption was a purely political issue. Yet, I am sure he is a very high professional and should remain premier in the interests of the state. The repeated non-adoption of the budget is a political attempt to get Kinakh dismissed and to redistribute resources before the campaign. Besides, a number of factions are putting pressure on the Cabinet of Ministers, trying to solve their problems and seeking access to certain financial and information resources. But the government is taking quite a principled stand, refusing to bow to these political forces, although this might be to the detriment of the premier himself. There is one more nuance I would not like to comment on in detail. All I am saying is that not only parliamentary seats but also executive offices are subject to favoritism. Besides, negotiations between the budget committee and the government have in fact come to a standstill, for they are doomed to failure. Many factions do not accept the position of the budgetary committee whose head represents quite an opposition Fatherland in the interests of which a populist budget was adopted.”
Mykola TOMENKO, Director, Institute of Politics:
“There can be two explanations to this situation. Both are of a political nature, in my opinion. The first explanation is objective and connected not so much with Anatoly Kinakh’s stand as prime minister as with the way the ruling elite and power interpret the importance of the coming parliamentary elections. From this perspective, the privatization earnings issue includes not only a pragmatic rational approach displayed by the government but also one of political expediency which provokes the opposition or just other political parties outside the For a United Ukraine bloc to blame the government and other branches of power for failure to utilize serious financial flows that will in any case be available from privatization but will not be clearly distributed among the expenditure items if the government’s budget is adopted. That a considerable number of fractions focused precisely on the fact that the draft budget does not include large privatization earnings has, in my opinion, been caused by purely political and campaign considerations.
“The second is also a political, if more subjective, reason. I believe quite a few politicians, including those leaning toward the President, and above all those who have opted for joint actions on behalf of For a United Ukraine, would not like to see Mr. Kinakh becoming today’s No. 1 figure on the bloc’s list and in the election campaign in general. Apparently, they would like, on the one hand, to see Volodymyr Lytvyn as such a figure, and, on the other hand, to enable the leaders of other political parties to contend for the office of premier or vice premier after a successful election campaign. So, from the viewpoint of Mr. Kinakh’s colleagues, active and authoritative politicians within For a United Ukraine, his reinforced position looks dangerous. In any case, this is their interpretation of things. For this reason, the bloc will be not so much heartened by any political successes (an adopted budget being quite a serious success). If you analyze the position of the Party of Regions and other deputies who are not exactly busting to have the budget adopted and at the same time are founders of For a United Ukraine, you can conclude that this is a kind of warning shot and the show of unwillingness that Mr. Kinakh be an active bloc leader. His colleagues in the bloc would like him to continue as prime minister and resign after the parliamentary elections.
