Few could suppose that the eighth congress of the Ukrainian League of Industrialists and Entrepreneurs (ULIE), held last week, would subject the reformist Cabinet of Prime Minister Viktor Yushchenko to scathing criticism called “paternal spanking” in the lingo of political analysts.
To be fair, the congress’s draft resolution we managed to see in advance did not mention the word “Cabinet” even once. This could not but put us on our guard. However, the resolution resume (in which the authors claimed that all practical activities of the ULIE helped ward off the threat of a protest-laden social explosion, stop the economic slump, create some economic sectors of stability, preserve the priceless organizational, intellectual and managerial personal, and mobilize the latter for implementing the President’s program) was followed by the sacramental “but at the same time.”
But here, too, the Cabinet was never mentioned directly. Yet, the delegates must have understood without special effort such negative utterances as: “structural reforms undermined by situational decisions,” “no sufficient impulse has been given to radical reformats of taxation and, hence, budgetary policies,” etc. What is more, the same document claims that what happened “at the same time” can be put down to the destructive actions of not only the opponents of reforms but also those “who put their narrow corporate or private interests above those of the state.” “The so-called virtual economy created by them actively opposes ULIE policies...”
Only the report of ULIE president, Anatoly Kinakh, made it possible to understand who was the object of this more-than-serious accusation. Welcoming the Cabinet’s actions aimed at reforming the economy, he still cracked down on it in his usual manner for the “ever- growing lack of actions,” and frequent cancellation of the decisions made. And when it came to the implementation of legislative measures to support the nation’s steel and shipbuilding industries, the atmosphere became literally pregnant with the sinister (but never pronounced) word “sabotage.” The Cabinet also took the rap from the ULIE for the further deepening crisis of payments. According to Mr. Kinakh, the banned barter and promissory-note settlements transformed into the ever-increasing accounts payable and receivable (now 185 billion hryvnias and 225 billion hryvnias, respectively).
ULIE complaints about the government took a still clearer shape when the gas, oil and electricity problem was touched upon: “operational control, let alone strategic prospects, has been lost.” Mr. Kinakh also pointed out the ULIE was extremely worried over the situation in this complex and supported the National Security and Defense Council’s analytical memorandum on this matter.
The congress also leveled charges against the Cabinet over the way it supports small and medium business. Every nine of ten appeals entrepreneurs make to the ULIE are caused by the authorities’ arbitrary rule: there are eight government inspectors and controllers for one cost-effective enterprise.
Meanwhile, it is quite easy to explain a noticeable difference between the Aesopian language of written documents and what was pronounced from the rostrum: among those on the stage was President Leonid Kuchma and honorary president of ULIE.
The League’s leadership did not seem to know his intentions about his intention to be outspoken. Kuchma again repeated his idea that the Cabinet should not start from square one. Moreover, he noted that the current positive changes in the economy lack a “sufficiently reproducible basis.” Perhaps he had in mind the privatization of the electricity distributors — the oblenerhos. Mr. Kuchma pointed out the economy “has been drawn into a speculative redistribution of property.” He said he was in principle against re-privatization, and, whenever necessary, force must be applied.
Governmental officials also got a rap over the knuckles for obstructing privatization (“central bureaucrats do not want to share power”) and for dragging their feet over the budget law (“the budgetary process is under threat”).
The President cautioned the Cabinet and the National Bank of Ukraine (NBU) against a non-balanced monetary policy, saying they should not resume financing the budget at the expense of a new NBU emission of domestic government bonds.
Moreover, Mr. Kuchma said that stable money (in case of revaluation) do not always work for the good of the country. He called on the Cabinet to refrain from euphoria over industrial growth and budget revenues, saying this was caused to a large extent by failure to pay for energy resources.
What sounded as a sensation was the President’s appeal to better defend national interests in negotiations with the IMF. “Nobody has the right to humiliate Ukraine for the whole world to see,” Mr. Kuchma said, and this phrase is likely to trigger still more comments.
Another key element in the President’s speech was the following statement (apparently again addressed to Cabinet): “We are fed up with propagandist actions.”
When his speech was over, Oleksandra Kuzhel, head of the State Committee for Regulation Policies and Entrepreneurship, asked Anatoly Halchinsky, a Presidential advisor: “What does this mean? It is you who wrote the text, isn’t it?” This writer failed to hear the reply but also decided to ask Mr. Halchinsky a question: “Are there going to be any staff-replacements after such sweeping criticism?” “I keep clear of the staff-placement policy,” said one of the President’s leading economic advisors.
