[06.06.03]

President Kuchma by his decree of May 27 eliminated the posts of state secretaries and reinstated the positions of deputy ministers and first deputy ministers.

Formally speaking this decree restores the legislation which existed prior to 2001. The positions of the state secretaries were introduced in May 2000 by the presidential decree, which at that time stirred criticism from the opposition, but now is annulled.

Two reasons are mentioned to explain this decree. The first one: President Kuchma & Prime Minister Yanukovich want to maintain the status of public officers (one thinks that deputy minister is higher than deputy state secretary). Simultaneously they are going to change a number of officers. One reason more: the political reform, which is under way, implies that key posts in the ministries should be held by political figures rather than by high-ranking bureaucrats such as the state secretaries.

The Council of National Security and Defense (CNSD) recommended (May 26) the President to send Ukrainian peacekeepers to Iraq.

It is planned that the Ukrainian contingent will be deployed in the Polish sector of responsibility and will comprise some 1,700 men. Only volunteers will be sent.

The final decision requires the President's decree and the consent of parliament.

Leader of Ukraine's Communist Party Petro Symonenko said in this connection: "Ukraine's Communists consider as shameful any attempts to pass the buck of the crimes by which the U.S. and NATO imbrued themselves during their history onto our people. We emphasize that the deepening of Ukraine's dependence on the U.S. and NATO in all forms is the criminal policy of the oligarchic regime headed by Leonid Kuchma".

Yuri Kostenko (a prominent representative of the Our Ukraine bloc headed by Viktor Yushchenko) expressed an opinion that prior to sending the Ukrainian peacekeepers to Iraq Ukraine should obtain guarantees, first of all financial ones, so that activities of the Ukrainian peacekeepers "are not financed from its own budget, and could reckon on an aid".

On May 24 Tbilisi (Georgia) was the venue for a meeting of ministers of foreign affairs of the GUUAM countries (Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova). The main subject of the talks was fighting terrorism and transnational crimes. The conclusion of the meeting was a joint statement of the U.S. and GUUAM countries, which confirmed readiness for further cooperation. At the talks they discussed the teamplay of the GUUAM and the U.S. within the framework of international organizations and institutions. The U.S. delegation was headed by U.S. deputy assistant secretary Lynn Pasco.

On May 27-28 Prime Minister Viktor Yanukovich visited France. He met with France's Prime Minister Jean-Pierre Raffarin, minister of economy Francis Mer, Paris' mayor Bertrand Delanoe. The negotiations touched upon the issues of giving Ukraine the status of a country with market economy and obtaining France's support for finishing the building of two power units at nuclear power plants in Khmelnitskyi and Rivne.

Yanukovich also invited France to take part in implementing the design of a Ukrainian-Russian aircraft An-70.

Kuchma on May 29 set off to the St. Petersburg summit, which is held to mark the 300th anniversary of St. Petersburg. Heads of 44 states are expected to take part in the summit. Kuchma is believed to address the meeting of the heads of the CIS states.

Citizens of Ukraine ended their discussion of the draft political reform. According to the official data this discussion involved the participation of some 9 million people, who expressed plenty of critical suggestions. Both the results of the official discussion and the sociological polling showed that the citizens supported some of the president's proposals, but were critical toward other proposals. Therefore it is planned that one of these days president Kuchma will submit to parliament a new, substantially modified version of the draft reform.

The Ukrainian opposiion abandoned the idea of holding a protest action, which was planned for May 31. As the leaders of the opposition (Oleksandr Moroz and others) said they put off these actions in the hope that president Kuchma would come up with an apropriate version of political reform; in such an event the actions will be cancelled. Many observers believe that the protest actions were cancelled first of all due to the fact that the opposition at the moment did not have any chances to rally many participants: most of the citizens preferre to wait for Kuchma retirement in due time (October 2004) and do not see any sense in fighting for his earlier resignation.

On May 27 in Kiev 77 U.S. volunteers swore the oath to the ideals of the U.S. Peace Corps. They will work in Ukraine for two years inplementing projects of economic development and nature conservation..

This is already the 24th group of the U.S. Peace Corps volunteers in Ukraine.

The Peace Corps began its cooperation with the Ukrainian government and nongovernmental organizations in May 1992.

British European secretary David MacShane said (May 27) that the government of his country will be against Ukraine's membership in the EU and NATO until Ukrainian journalists are not properly protected. He did it in response to a letter sent in March this year by British journalists, MPs and scientists to Tony Blair concerning Georgiy Gongadze's case.

After ratification by the Verkhovna Rada of the European Charter of Regional Languages (May 15) a struggle against this Charter still goes on in Ukraine. Representatives from organizations of national minorities, by and large, welcome the ratification since it creates better conditions for language usage and learning. Representatives of the right-wing political forces most of whom are linked with the Our Ukraine bloc of Viktor Yushchenko sharply attack the Charter. Twenty lawmakers and public figures, including Yushchenko, addressed President Kuchma (May 27) with the request to use his right to veto the Charter. The démarches of the right-wing were caused by aspiration to attain a greater role of the Ukrainian language at the expense of other languages used in Ukraine and first of all to maximally limit the range for the users of the Russian language.

(In fact Ukraine is a bilingual country. According to the sociological research the Ukrainian language is freely used by some 75% of the citizens, Russian - by about 80%. As the 2002 census data indicated Ukrainian was referred to as a native language by 67% and Russian by 30% of the population).

Ukrainian airplane with Spanish peacemakers on board has been crashed in Turkey on May, 26. The airplane was flying from Afghanistan to Spain. All passengers (62 persons) and crew (13) perished.

Current economic situation in Ukraine

January-April recorded an intensive economic growth in Ukraine. Main indicators of the socioeconomic development are given in the following Table.

Indicators Growth rates, %     January-April 2003 against January-April- 2002 January-April 2002 against January-April 2001 Gross domestic product 7, 1 4, 1 Industrial production 11, 4 6, 2 Production of consumer goods, including:     Food products 13, 4 14, 6 Nonfood items 15, 5 8, 7 Agricultural produce 0, 6 11, 0 Investments in fixed assets 23, 1 9, 6 Volume of construction products 15, 6 1, 6 Freight turnover 10, 8 3, 5 Retail trade turnover 12, 5 19, 1 Average monthly wage per one employee 20, 1 26, 1 Average monthly real wage (taking account of inflation) 15, 7 19, 2

The country's financial position has been seriously strengthened. In January-April the surplus of the consolidated budged (state and local) amounted to UAH 2,348 million (over US$ 440 million)..

The NBU's foreign liquidity reserves swiftly grow. Thus only from May 16 to May 23 they increased by more than US$ 59 million (by 1.1%) to Ukraine's record US$ 5,232 million. It is obvious, that despite high repayments of the foreign debt their size by the end of the current year will be much in excess of US$ 6 billion.

Comment: Growth of NBU's reserves' is related to the fact that citizens of Ukraine over the last months systematically sold more dollars than buy them. The NBU month after month buys these dollars out trying to maintain the hryvnia-dollar exchange rate.

Predictions for 2004

According to the forecasts of the Ministry of Economy of Ukraine, the GDP growth in 2004, in line with the basic scenario, will be 4.8% (while the ministry believes that more optimistic scenario is more likely and in keeping with it the gross domestic product is going to increase by 8%).

Many experts are skeptical in assessing the possibility of an intensive economic growth in 2004 because this will be the year of the presidential elections.

It is believed that under conditions of the pre-election campaign the parliament and the government will not be able to make necessary decisions and it will adversely affect the macroeconomic situation.

However, as the 2002 parliamentary elections and actions of the opposition in 2002-2003 showed in reality the impact of political events on economic dynamics in Ukraine in recent years was not crucial.

However, the catastrophic crop failure of the current year has been a much more severe problem. In the main bread-producing regions of Ukraine almost all winter wheat plantations were ruined owing to the extremely hard winter. Lack of rains in last weeks creates additional problems. According to the latest forecasts the gross yield of cereals in Ukraine in 2003 will be only 25 million tons including scarce 7.5 million tons of bread-grain.

Nevertheless, Ukraine will not experience any problems in procuring the population with bread.

It is also planned that Ukraine will export some 5 million tons of fodder grain (much less than usually).