[07.02.03]

Domestic policy

Parliament of the 4th convocation opened its 3rd session (Feb. 4). The lawmakers honored the memory of dead miners and the astronauts of the shuttle Columbia. The session agenda included 760 issues for discussion. The session will have to consider the Tax Code and 5 more codes.

On the first lawmakers' day (Feb. 6) a number of important laws was passed. To carry out the FATF recommendations the laws were amended to prevent legalization of incomes obtained in a criminal way (377 votes were pro out of 442 registered votes). The law obliges the banks to identify their clients, the amount of funds subject to monitoring was reduced, etc. On February 7 President Kuchma signed this law as well as the decree on the stiffening of measures to fight corruption; two days before that he signed the law amending the Criminal Code and the Criminal Procedural Code defining responsibility for "dirty" money laundering. Thereby Ukraine implemented the main FATF requirement.

The Verkhovna Rada also introduced changes into the draft laws affecting the penitentiary system. Some restrictions were mitigated concerning obtaining parcels, packages, dates, etc.

Three opposition factions (CPU, SPU and BYuT) on Feb. 3 put forward accusations of falsification in the 2003 budget and demanded to set up a working group to clear up circumstances of this. Head of the Budget Committee Petro Poroshenko (V. Yushchenko's faction Our Ukraine) rejected these accusations having explained the changes in the budget text were due to technical mistakes.

President Kuchma sharply criticized (Feb. 5) the activities of the free-trade economic zones in Ukraine. Especially scathing was his criticism of the Donetsk region which he referred to as "a free semi-criminal zone". This can be assessed as an implicit criticism of incumbent prime minister Viktor Yanukovich who before that was the governor of the Donetsk region. The president proposed to eliminate the free-trade zones. (There are 11 free-trade zones and 66 territories of priority development which account for 10% of Ukraine's whole area).

A boisterous, but an absurd scandal broke out. Leaders of the three opposition parties: Oleksandr Moroz, Yuliya Tymoshenko and Petro Simonenko on February 4 accused top-ranking leaders of Ukraine including ex-president Leonid Kravchuk, president's wife Lyudmila Kuchma, first vice prime minister Mykola Azarov, the minister of defense, the head of the security service, the general prosecutor and other of that they were members of a Masonic lodge thereby betraying Ukraine's interests.

In reality all the above-named persons are members of the Saint Stanislav Order representing a game organization, an imitation of a knight organization not related to Freemasonry (a sort of a "cowboys and Indians" game). The order acts legally, it is registered in Ukraine and has its website.

Parties

The monitoring of the network of political parties was held in December 2003 - January 2003. The Socialist-Democratic (united) party, the People's-Democratic and Agrarian parties have the greatest number of their representatives in the regional and district state administrations. The same parties as well as the Communist and Socialist parties, the People's Party and the People's Movement (Rukh) have the widest regional network of party media.

Leader of the Our Ukraine bloc Viktor Yushchenko visited the U.S. As part of the visit he met with vice president Richard Cheny with whom he discussed issues of democracy in Ukraine and the Iraqi issue. When meeting American journalists Yushchenko spoke about Ukraine capable of becoming a civilized and law-based state and "coming back to democracy is the only way to achieve economic and social reforms". As far as Iraq was concerned he evaded giving a definitive support to the U.S. position and said: "In the fight against terrorism we support well-thought-out common actions of the world community"..

Foreign policy

In connection with escalation of tension around Iraq the Ukrainian leadership made a number of statements.

President Kuchma said (Feb. 4) that Ukraine would support any decision of the UN SC in respect of Iraq. On the one hand, he shared "concern that Iraq might possess chemical, bacteriological and nuclear weapons"; on the other hand, he spoke in favor of using all opportunities for settling the crisis in a peaceful way. Kuchma said that Ukraine was ready to take part in the UN mission in Iraq and will be ready to send a battalion of chemical, bacteriological and radiological defense.

On the same day parliament adopted a resolution unambiguously condemning the U.S. intentions to begin a war in Iraq with a call to a peaceful solution of the situation. The motion was made by the lawmakers from the Communist party, 260 out of 450 lawmakers voted pro.

At his press conference (Feb. 6) ambassador C. Pascual said that the issue of supplying Kolchuga radar systems by Ukraine to Iraq still remained open; "perhaps we will never reach a complete accord on it". At the same time he stressed the U.S. interest in cooperation with Ukraine in decontaminating the environment in the case of an armed conflict with Iraq.

On February 7 Kiev was a venue of the ministerial-level meeting Ukraine- Troika EU. Javier Solana, the EU High Commissioner for Foreign Policy and Security, Tassos Giannitsis, first deputy minister of Greece's foreign minister and Roberto Antonione, deputy minister of foreign affairs of Italy took part in the meeting. They discussed the political situation and economic reforms in Ukraine; the issues of the EU expansion and European integration; cooperation in fighting terrorism; future development of the EU-Ukraine relations. At the meeting Solana spoke in favor of more constructive relations of the EU with Ukraine and called upon Ukraine to carry out reform of the judiciary system, secure Freedom of independent mass media; improve relations between the government and the opposition. A meeting of Solana and Kuchma took place.

The FATF European supervision group on February 6 approved the latest amendments to the Ukrainian legislation since according to it "they reflected the intentions of the Ukrainian authorities to take measures to observe international standards".

The U.S. reduces assistance to Ukraine

The U.S. draft budget for foreign aid for 2004 provides for the reduction of aid to Ukraine by 39.4% - up to US$ 94 million (instead of US$ 155 million in 2003). The reduction of aid to Ukraine is motivated by that it attained a certain level of financial sufficiency and may independently find means to implement its economic priorities. At the same time, according to ambassador C. Pascual the U.S. in the future also plans to support projects financed in keeping with the U.S. law on promotion of freedom.

Ukraine is holding the first place among the countries of the former USSR in the scope of aid received. Russia is holding the second place (US$ 148 in 2002 and US$ 73 in 2004).

The U.S. aid played a substantial positive part for development of market economy and democratic institutions in Ukraine. Within the framework of the Act for promotion of freedom and democracy Ukraine since 1992 has obtained more than US$ 3 billion from the U.S. government and over several years held the first place among the first three countries which obtained financial assistance.

At the same time, an opinion is popular in Ukraine that the U.S. decision was caused by political reasons, first of all, by the Kolchuga radar scandal.

About the Our Ukraine bloc

The U.S. intention to change the address for the UD$ 34 million and direct them to "non-governmental pro-democracy" organizations was perceived in Ukraine by many a political force critical of the U.S. administration policies as the intention to bolster organizations exclusively close to the opposition and, first of all, to Our Ukraine and its leader Viktor Yushchenko. The opponents of Our Ukraine regard the level of the reception given to Yushchenko during his visit to the U.S. (in particular his meeting with the U.S. vice president) as endeavor to provide backing for "their" candidate in the future (2004) presidential elections.

U.S. ambassador to Ukraine Carlos Pascual in order to deny these perceptions held a special press-conference at which he tried to repudiate accusations that the U.S. supported V. Yushchenko as a candidate in the presidential elections..

Note that the Our Ukraine bloc represents a coalition of political forces of different orientations. It includes both moderate politicians of democratic conviction and radicals. Our Ukraine's opponents accuse V. Yushchenko of unwillingness to part with ultra-right radicals such as leader of a marginal Social-Nationalistic Party Oleh Tyahnybok; Vasily Chervony, who is accused of organizing an interconfessional and inter-ethnic confrontation; and Slava Stetsko, known for her ties with the right-wing circles of the U.S. and Germany, whom the representatives of the left-wing and human-right organizations consider involved in propaganda of anti-Semite, anti-Polish and anti-Russian views.

Our Ukraine together with the communists blocked the adoption of the laws aimed at implementing the FATF demands and it was worded as the common decision of the faction. Earlier Our Ukraine together with the communists was active against passing the laws aimed at fighting pirate manufacturing and export of laser compact disks, which, by the estimates of American experts, inflicted an economic damage to the U.S. of hundreds million dollars (which lead to imposition of the U.S. sanctions against Ukraine).

It is characteristic, that the parties regarded by many western analysts as "pro-power", oligarchic and pro-Russian were actively in support of adopting both the law on laser compact disks and immediate and complete meeting all FATF requirements.

Just during the last Yushchenko's visit to the U.S. one of the economic ideologists of Our Ukraine, legislator of the Rada Chernyak called for introduction of economic sanctions against the U.S. - "let us respond by sanctions against sanctions".