After celebrating in Kyiv his birthday on Wednesday February 23 Ukraine’s Prime Minister devoted Thursday to Kharkiv trying to find out (according to the official version) why the region (where, incidentally, Viktor Yushchenko was born) — the most powerful in terms of the research, technological and industrial potential — shows far from the best economic indices in this country. Kharkiv’s industrial losses approach UAH 2 billion, while its budgetary arrears come to a billion.
However, another version seems more credible: Mr. Yushchenko’s first visit to the provinces in his capacity of Premier was intended to dilute the critical reaction of local elites to the recently approved 2000 budget. The city and oblast of Kharkiv are also suffering from the injustices of central rule. At a meeting at the oblast state administration, the government head was upbraided for the fact that while Kharkiv oblast occupies third place in this country as far as supplementing state budget revenues is concerned, it is only nineteenth in central expenditures received, and sixteenth in budgetary allocations per child. Chief of the oblast financial authority, Kostiantyn Kozarenko, accused the center of stepping up wage and social payment debts which rose in the oblast from UAH 21 million at the beginning of 1999 to UAH 40 million in the same period of 2000. According to Mr. Kozarenko, the 2000 state budget does not provide for expenditures to pay off these debts. However, what Mr. Yushchenko arrived in Kharkiv for was to force the local elite to play according to his rules. In the premier’s opinion, all talk about budgetary justice assume real significance only if the budget is stable and well-filled and all arrears have been paid. The most important requirement is that from now on nobody will be making payments to the budget by way of settlements. Moreover, the Premier presented the same and quite convincing arguments to both the oblast elite and the workers he met at Kharkiv enterprises: this country can no longer tolerate the shameful nonpayment of pensions and wages. In all his speeches in Kharkiv Mr. Yushchenko considered it his duty to remind his audiences that as soon as this year the budget must make full payments to pensioners and 50% public-sector employees. Even though Kharkiv’s manager corps did not ask the head of government for money, it still hinted at the desire to get budgetary concessions and the need for mutual settlements (in general, each manager rejects them but, as applied to himself, he considers them the only possible way out of the situation).
Mr. Yushchenko stood his ground against these encroachments. Yet, he had to promise that bona fide payers of current taxes will be exempt from accumulated arrears and fines, relieved of the “solicitude” of tax inspectors, and that economically viable industrial and research projects could be supported by state orders, while a third of earnings gained by means of the increased tax revenues and arrears payments will remain behind in the regions. These rather vague formulas, legally inconclusive and devoid of any specific deadlines, were reinforced by a rather strong and quite a market-oriented, at first glance, step which made a good impression on the public. Right at the Kharkiv Tractor Plant, after seeing the farming machinery that can be manufactured by the city’s enterprises, Mr. Yushchenko signed a resolution introduced by the Ministry for Agricultural Policies, On Additional Credit Measures for Spring Farm Work in 2000. In line with this, the government has pledged to compensate 50% of the NBU discount rate for the agricultural enterprises when they will receive loans. According to the resolution, “private entities formed during the reform of collective farms” will be first of all eligible for such credit. It is local authorities that, despite Mr. Yushchenko’s thesis about “equal access opportunities,” will share the almost half-billion budget installment. Kharkiv’s governor Oleh Diomin is satisfied. He told The Day: “We think like this: if our proposals are approved on the organizational and prospective plane, this will be sufficient for us to further develop them and be able to speak, relying on this support, about investment and the strategic areas of their utilization, particularly, in electrical power and farm machine building. Receiving support, we will work in a less fettered and more organized way.”
Building the bridges that ensure the support of regional elites, Mr. Yushchenko cannot, of course, help looking back at those who in fact control the flow of money in the center. This is why, in answering The Day’s question why Parliament is still blocking six tax-related bills intended to secure UAH 1.6 billion budget revenue by way of canceling critical import privileges, the Premier said the only point here is lawmakers’ shortage of time. He is confident these laws will soon be passed and he knows no forces in the parliamentary majority which intend to thwart this effort. The Prime Minister answered The Day’s last question on the airplane about to leave Kharkiv almost at midnight. Among the reasons why the Kharkiv region is lagging behind in the Ukrainian economy, Mr. Yushchenko also named the absence of fiscal budgetary stability, which primarily affects high-tech industrial systems. Basic changes have now taken place in Kharkiv. This is, as the Premier said, “an interesting page.” Then he returned to agrarian problems: “I want the regional governors to be ambitious in the ideology required by the rural reform in accordance with the President’s decree.” These words were the last line in Mr. Yushchenko’s regional premiere played in Kharkiv oblast.
