KUCHMA LAMBASTS GOVERNMENT’S ECONOMIC POLICIES; APPOINTS LANOVY TO STATE PROPERTY FUND.

Ukrainian president Leonid Kuchma on March 21 blamed Prime Minister Pavlo Lazarenko’s government for the absence of improvement in Ukraine’s economy. (Interfax, March 20) Kuchma used his yearly state of the nation address before the parliament to blast the government’s failure to pass the 1997 budget and tax reform. Kuchma also took aim at "inconsistencies" in the government’s energy policies, which the Ukrainian president charged have resulted in an energy market monopolized and dominated by natural gas traders who do not pay taxes. Kuchma claimed that these developments were threatening ukraine’s economic security, and would therefore be taken up by the National Security Council in the near future. Kuchma also called for lazarenko’s cabinet to resign if rapid progress in paying down wage arrears is not made.

The fact that Kuchma has himself supported many of these policies in the past suggests that the president is attempting to transfer the blame for Ukraine’s economic problems to his political rivals. Also, Kuchma’s charges were made while an IMF delegation was visiting Kiev. (Interfax, March 20) The delegation, led by IMF Europe 2 Department Director John Odling-Smee, reminded lawmakers that prospects for the approval of a $2.7 – $2.9 billion extended financing facility (EFF) are contingent upon parliamentary approval of the budget. Odling-Smee also described the moratorium on private land sales, and the state of relations between the government and the Ukrainian National Bank, as areas of concern to the Fund.

These developments were followed on March 22 by Kuchma’s appointment of Volodymyr Lanovy to head the State Property Committee (SPC). Lanovy, who directed the SPC and was minister of economy during 1991-1992 (and who ran for president in 1994), is generally regarded as Ukraine’s most credible economic reformer. However, Lanovy’s appointment to the SPC, as opposed to an agency with broader policy responsibilities, suggests that Kuchma has little in interest in pursuing a more ambitious reform agenda.

Ukrainian President’s Message Charts Western Orientation.