Publication: Monitor Volume: 4 Issue: 108

By a margin of 296 to 26, the Ukrainian parliament adopted a resolution yesterday instructing the government to allocate an additional 600 million hryvnyas in state support for the coal sector from the state budget. The budget had already set aside 1.5 billion hryvnyas to support the sector–an amount covering only 25 percent of the sector’s needs in the first place. The parliament’s resolution further instructed the government to take 400 million hryvnyas worth of National Bank credits for purchasing an additional 6 million tons of Ukrainian coal, on top of 6.2 million tons that the state had already guaranteed to purchase. Coal from Ukraine’s antiquated mines is often more expensive than imported coal.

First Deputy Prime Minister Anatoly Holubchenko, who oversees the coal sector and the negotiations with the striking miners, pointed out that the state can not afford those spending measures; and that it would be ill-advised to use credits for supporting loss-making mines, instead of reforming the sector. The government’s reform plan involves closure of unprofitable mines (with some social protection measures), modernization of viable mines and creation of a holding company–Vuhillya Ukrainy–which would end barter operations and introduce cash payments. Last week, the government and the World Bank signed a protocol on a second credit tranche worth US$150 million to reform the coal industry.

Meanwhile, President Leonid Kuchma appointed Serhyi Tulub as minister of the coal industry in the new cabinet of ministers. A former mining executive and deputy head of Donetsk region’s administration, Tulub is a co-author of the plan to reform the coal industry.

The strike in progress since May 4 was, and is, organized by the smaller of Ukraine’s two coal workers’ unions. The protest never involved more than forty-five mines, and is now down to thirty-five, out of Ukraine’s approximate 230. This means that the parliament is not under heavy pressure, notwithstanding that miners picket the parliament building. They also picket the executive branch buildings in Kyiv on a daily basis. The new parliament’s reaction reproduces the worst features of the 1994-98 legislature: substantial majorities, including pro-government deputies, coalescing behind populist and inflationary measures which jeopardize the government’s reform plans. (UNIAN and other Ukrainian agencies, June 4; Eastern Economist Daily, June 5)