Two ministers of the Crimean government, Finance Minister Liudmyla Denysova and Minister of the Agrarian Sector Mykola Orlovsky, were arrested on Wednesday May 10 on suspicion of corruption. The Crimean Prosecutor’s Office pressed no official charges. At a briefing, Ms. Denysova, released on her own recognizance, told journalists she thought her arrest was organized by a group of persons who, as she put it, “carried out a swindle,” pocketing 500 million budget hryvnias. She said she had in mind the internal Crimean bonds. Documents show that the bonds were issued under Crimean Premier Arkady Demydenko and are now controlled by Deputy Anatoly Franchuk’s government. Finance Minister Denysova, however, did not specify who made up that “group of persons,” meaning no one involved in or with the internal bonds can be struck from the list of suspects. Hopefully, Crimean and central law enforcement authorities will be able to answer Liudmyla Denysova’s questions of who pocketed UAH 500 million. Using what mechanism? What documents relating to the bonds she was “asked” to sign in such an “original” manner? For the time being, the reader will perhaps be interested to read the following analysis of the performance on the peninsula of a noted political figure such as former Crimean Premier Anatoly Franchuk. This author does not intend to assert or deny anything; he simply wants to take the reader back several months. The truth should be established and proper accents placed by the law. At this stage we can only promise to keep the reader informed.
THIRD FORCE CRIMEAN WAY
On April 26 this year, prior to the next session of the Crimean Parliament, the Communist faction held a meeting jointly with the Unity Group. The agenda remains unknown, but that same day the autonomous Republic’s Council of Ministers had to report on its performance during the session. Possibly, that time the attempt to bring down the government failed only because Kunitsyn was on sick leave, although two Unity Deputies, contrary to the agenda, tried to raise a scandal against Kunitsyn, while it was generally known that Serhiy Kunitsyn and Leonid Hrach had called a truce earlier and neither had shown any indications of breaking it. Hence, analysts believe there is only one person left capable of destabilizing the peninsula’s political situation, a person pulling the most strings at the Unity. Everybody in the Crimea knows him — Anatoly Franchuk.
Once again word is spread atop the Crimean political Olympus that Serhiy Kunitsyn, Chairman of the Council of Ministers, will have to resign. This time the reason is the information item carried by Internet part.org.ua., to the effect that Crimean Speaker Leonid Hrach, former Crimean Premier Anatoly Franchuk, and a number of Crimean politicians are holding private consultations to topple the Premier.
Speaker Hrach refuted the allegation, saying he is busy “coping with the most important problems of the region” and that he has “no time for political gossip.” Anatoly Franchuk declined comment.
Oleksandr Formanchuk, a reputed Crimean political analyst, notes that the Unity Group continues to campaign for Serhiy Kunitsyn’s replacement. It is generally known in the Crimean political circles that Unity was formed on Anatoly Franchuk’s initiative. What about him? Why, after being twice brought down as Premier, is he once again involved in the republic’s political process?
MILESTONES ON A LONG ROAD
Anatoly Franchuk cuts a very conspicuous figure in the Crimea, primarily because he stayed in the upper echelons of power for a decade.
Judging from his biography, he is a professional administrator.
He has held administrative posts since 1975, first as director of the Sputnik radio engineering plant in Belarus. He came to the Crimea after graduating from the Academy of the People’s Economy under the USSR Council of Ministers (1978) and was appointed director general of Simferopol’s Foton Production Association. In 1987, Franchuk found himself in Moscow as a Deputy and in 1987 as First Deputy Ministry of Communications Industry of the USSR.
He surfaced in the Crimea again in 1990 as first deputy chairman of the regional council and head of that council’s chief economic planning department. Anatoly Franchuk has never since shied away from the rostrum of power in the Crimea. In March 1991, he was appointed First Deputy Chairman of the autonomous republic’s Council of Ministers. After Yuri Meshkov was elected President of the Crimea (1994) Franchuk was the only one to retain his post in government, as Meshkov replaced all the others with Yevgeni Saburov’s Cabinet, which he brought from Moscow. In November 1994, Saburov was fired and Franchuk became the peninsula’s Premier.
In less than nine years of autonomous status the peninsula has seen seven governments, including Franchuk’s. Franchuk had to step down in November 1995, but two years later returned, again the only one of the seven Premiers, replacing Arkady Demydenko. Franchuk has never been a public politician. In his political struggles he has used different resources. He based his political image on the family relationship with Leonid Kuchma. This was his trump and decisive argument when negotiating any political and business deals. Numerous Crimean politicians and businessmen still remember the tricks he pulled in his office, pretending to be calling the Ukrainian President and discussing things with Mr. Kuchma in their presence. Many admit they believed him, never suspecting there was no one on the other end. Without doubt, this family relationship played an important role in Franchuk’s first and second appointment as Crimean Premier.
His second premiership came in June 1997, with active support from the Party of Economic Rebirth of the Crimea, particularly its leader Volodymyr Sheviov, Crimean Speaker Yevhen Supruniuk, and his Deputy Anashuvan Danelian. All of the politicians, analysts, and journalists in Simferopol knew that Franchuk had his appointment secured by (a) their disillusionment with Saburov’s performance and (b) Franchuk’s assurances that he would solve any problems using his family connection with the President of Ukraine. For Sheviov and Supruniuk, both seeking political and economic leadership in the autonomy republic, this factor was very important. Later, while Franchuk was still Premier, many PERC lawmakers, Supruniuk included, found themselves under criminal prosecution.
In 1998, the political situation in the Crimea underwent considerable change. The parliamentary elections altered the Supreme Council’s structure. New political forces entered Parliament. The Right and the Center were now represented by the NDP, Agrarians, and other political structures. Their Deputies joined into a faction known as Zlahoda (Harmony) and nominated Kunitsyn as the new Crimean Speaker. Harmony had enough seats in Parliament to form the majority, jointly with the Republic group. The third, numerically the strongest, faction (44) was formed by the Communists led by Leonid Hrach, first secretary of the CPU republic committee. In addition, Anatoly Franchuk was elected People’s Deputy of Verkhovna Rada. It was then his relationships with the President of Ukraine, already strained, started to get worse.
Franchuk wanted to retain the premiership, campaigning for Anatoly Hrytsenko to get the Speaker’s seat, then helping him keep the post, so he could keep Parliament under control. The legislators, however, decided to form a coalition government. The new Parliament had no force to back Anatoly Franchuk. Even worse, Leonid Hrach began a no compromise struggle against him, and Franchuk found no place in the coalition government. The factions came to terms and the Speaker’s seat went to Leonid Hrach. Serhiy Kunitsyn, leader of the Crimean NDP organization, became Premier. Now the only card Franchuk had was his status as People’s Deputy in Kyiv.
OUT AND BACK AGAIN
After his second retirement Franchuk vanished from the media and political horizon and kept a very low profile for over a year. Indeed, he had no reason to remain politically active on the peninsula. To begin with, for the first time in eight years he failed to gain any significant influence over the legislature or executive. Second, his administrative skilles faltered. Stepping down as Premier, he left the peninsula in a difficult condition. By the time his second cabinet had to resign the Crimean economy was on the critical list. The first half of 1998 was drawing to a close and the budget still had to be approved. Budget arrears in the previous year had grown by UAH 56 million, totaling UAH 269 million or over 50% of the republic’s budget. Back wages had gone up 26%, amounting to UAH 87 million. The new school year threatened not to start on time. The peninsula’s economic complex was not prepared for the winter and centralized fuel and lubricants supplies for the harvesting campaign were not arranged.
Tax payments were such they could not solve any of these problems even in part. Over the first six months of 1998 budgets at all level received 6% less tax returns than over the same period the previous year. VAT payments dropped by 30%. Arrears on payments to the budget for six months increased 1.8 times, totaling UAH 177.6 million.
In the first five months of 1998 book-value rate of return on Crimean enterprises dropped by 57% compared to the same period of 1997 when Demydenko was Premier. Output decline was registered in half the Crimean industries in the first six months of 1998.
Then there was a series of big league contract murders in 1997-98 that made headlines far outside Ukraine. The first victim was Oleksiy Holovizin, Chairman of the Crimean Property Fund, killed in May 1997, less than a month before Franchuk’s premiership. His body with several gunshot wounds was found on the landing of the apartment house where he lived. Dmytro Holdych, Deputy Minister of Resorts and Tourism, was shot in September that same year. February 13, 1998, Andriy Senchenko, Crimean former Vice Premier, gave Kievskie Vedomosti a very sharp interview (Holdych was shot on his way from Senchenko’s apartment), insisting that his death was a mistake and that he, Senchenko, should have been the next victim: “He did not visit me frequently and the last time he did was a year ago, I think. The assassin could well have mistaken him for me,” Senchenko said in the interview. When asked who he thought had put the contract out on him, he said it had to be a person “who has practically made all the executive appointments in the Crimea single-handedly.”
Valery Kuzin, director general of the joint stock company Krymteplokomunenerho (Crimean Heating Utility Co.), was shot in October 1997.
Yet the most sensational contract murder dates from February 1998 when Oleksandr Safontsev, second-in-command in the Crimean Cabinet, was mortally wounded by a bomb planted in a garbage can by the entrance to the Tavriya Hotel where Safontsev lived at the time. The press had pointed to him as a serious contender for Crimean premiership early in 1998.
The bomb exploded around nine p.m. The Council of Ministers responded immediately. The very next morning on February 6, 1998, Anatoly Franchuk issued a statement saying the attempt on Safontsev had to do with Franchuk’s deputy being a member of the Kyiv Cabinet’s commission working in Yalta to carry out the presidential decree On Measures to Secure Control over the Local Authorities in the City of Yalta and Normalize Vital City Activities (January 30, 1998). The decree had been initiated by Valery Pustovoitenko who wanted to figure out the contacts between the mayor and a number of Yalta Council deputies with the underworld. On February 12, Speaker Hrytsenko declared the attack on Safontsev had nothing to do with his work on the central governmental commission, because he “merely attended” its sittings.
In any case, none of the contract murders was ever solved.
POWER FOR ITS OWN SAKE
In late 1999 Anatoly Franchuk made himself conspicuous again, perhaps due to mounting tensions between Leonid Hrach and today’s Crimean Premier Serhiy Kunitsyn. Would the latter remain Premier or be replaced? The issue was openly discussed in the Crimea in December- January. Word had it Kunitsyn would leave for Kyiv any time to get a promotion. This had a devastating effect on the Premier’s camp’s morale. Franchuk was quick to react and plunged into an active backstage campaign to restore his influence on the political situation. He talked to Deputies, convincing them it was necessary to remove Kunitsyn, adding that he had spoken with the President and that he would approve. Franchuk was up to his old tricks, but this would be discovered in January 2000, after Leonid Kuchma’s statement that he would not agree to Kunitsyn’s retirement.
This time far fewer lawmakers believed Franchuk than in 1997, yet he did form the Unity faction in the Crimean Parliament in 2000. One of its members, Deputy Kotseruba, announced they would support Franchuk’s candidacy. 12 Solons joined Unity, mostly from Harmony and Republic. Relatively small, the new faction fundamentally altered the republic’s parliamentary structure. Now all Franchuk has to do to push through a resolution is come to terms with Leonid Hrach, since the Communists and their Unity comrades control 56 of the 100 votes. The Unity fraction thus offers Franchuk adequate opportunities to keep Serhiy Kunitsyn constantly on the alert.
Anatoly Franchuk loves power and the attendant privileges. He cannot become Premier a third time because of the age qualification laid down in the official service law, but nor can he afford to let the Crimean political process get out of his control. This must be the key reason for his current political activity. In his power play Franchuk will not be stopped even by the declared reconciliation between Serhiy Kunitsyn and Leonid Hrach. The two have publicly buried the hatchet, saying developing the Crimea demands political stability and coordinated action by all official bodies. Franchuk sees no place for himself in today’s Crimean political stability. But this does not mean that he sees no place for his son, also Verkhovna Rada People’s Deputy from the Yalta constituency which is obviously quite important on the peninsula. The question, however, is whether the time is right to start throwing punches to see who is boss in the Crimea.
Many an observer will agree that any tension in the upper echelons now that the Crimea is preparing for the resort season will only serve to destabilize the political situation, meaning fewer vacationers and less money.
Also, such destabilization will be bad for the Crimean special economic zones and “priority development areas” in the eyes of foreign investors. Economic analysts are convinced that high political risks remain the biggest obstacle to foreign investment.
Unsettling the existing government could hamper the process of rapprochement with the Crimean Tatars that has just started. There is a strong likelihood that the Tatars will want to show the warring parties that they can produce the strongest impact on the political process on the peninsula. If this happens the Crimea will once again become an area of high ethnic tension, scaring away many potential vacationers from Russia.
Finally, the architects of the permanent harassment campaign against Kunitsyn’s government believe it will throw the orchestrated efforts of the current ministers off balance, now that these efforts provide for industrial growth and an increment in living standards, reducing wage and pension arrears, something Anatoly Franchuk could never accomplish.
Franchuk is not officially responsible for the situation in the autonomous republic, so this aspect is totally unimportant to him.
In the Crimean political gallery, Franchuk cuts the least predictable figure. He has twice been Premier, but even in the closest political circles on the peninsula no one is sure what he or his protОgО would be up to at the head of the government. No one knows what policy he would adopt with regard to the Tatars, how he would approach privatization, legalization of shadow capital in the resort sphere, or how he would go about raising living standards. He has made no statements on any of these issues, important as they are for the Crimea. This allows one to assume that Anatoly Franchuk simply has no program for the development of the peninsula, which he would bequeath the new Premier appointed on his “recommendation.” And anyway, who does he see as the next Premier?
Analysts are not certain about the reasons for Anatoly Franchuk’s current activity. If he wants to carry out another development program, different from the one underway he or his people ought to make it public. If power is an end in itself for him, his current activity has no creative aspect. One way or the other, whoever is responsible for cadre policy in the Crimea should bear in mind the fact that political destabilization could well destroy social stability and the tentative trend of economic growth which appeared on the peninsula precisely during the two years of Franchuk’s political absence.
