Publication: Monitor Volume: 3 Issue: 119

In letters to U.S. president Bill Clinton and vice president Albert Gore, made public by Kyiv yesterday, President Leonid Kuchma addressed serious concerns expressed by the U.S. side during recent meetings, including last month’s Washington session of the intergovernmental cooperation (Gore-Kuchma) commission. Kuchma pledged his full support for economic reform programs agreed upon with international financial institutions, elimination of disincentives to foreign investment in Ukraine, and efforts to combat corruption and to reform the management system. He expressed gratitude for the U.S. administration’s effort to convince Congress to approve continued financial assistance to Ukraine, subject to progress on market reforms.

Simultaneously, however, the Ukrainian parliament yesterday dealt the president and the reforms two severe setbacks. First, the parliament definitively rejected Kuchma’s proposals to reinstate tax exemptions for companies with foreign capital engaged in production in Ukraine. The vote means that the law revoking those exemptions goes into effect as of July 1.

The parliament went on to adopt in the second reading a resolution mandating that the 1998 budget place priority on financing social welfare programs, including free medical care, and also on compensating the population for devalued bank deposits. Meanwhile a majority in parliament continues to block five tax reform laws and the 1997 budget, so that the country approaches the year’s mid-point without a legally approved budget. Kuchma strongly supports the tax and budget reforms, which are among the conditions for continued international lending to Ukraine. (Ukrinform, June 18) Yesterday’s votes conclusively show that Leftists, with ad-hoc centrist allies, form a seemingly impassable anti-reform majority in the legislature.

Compounding the president’s and his reformist allies’ difficulties, Donetsk coal miners yesterday began mass picketing in downtown Kiev demanding overdue wages and state support for the bankrupt coal sector.

Political Negotiations Begin in Belarus.