Weapons of Mass Destruction (WMD)

DATE=2/2/2005

TYPE=BACKGROUND REPORT

TITLE=UKRAINE/YUSHCHENKO

NUMBER=5-56486

BYLINE=ANDRE DE NESNERA

DATELINE=WASHINGTON

CONTENT=

VOICED AT:

///EDS: THIS IS THE SECOND OF FOUR REPORTS ON UKRAINE. ///

HEADLINE: Yushchenko Faces Major Domestic Challenges

INTRO: Newly elected Ukrainian President Viktor Yushchenko faces tough internal issues as he forms a new government and prepares to lead the country. In this report, Senior Correspondent André de Nesnera looks at some of the major domestic problems facing the Ukrainian president.

TEXT: Western experts on Ukraine say president Viktor Yushchenko takes over a country in need of economic reform and still beset by problems from a Soviet past.

One of these problems is corruption, which was an integral part of the 10-year presidency of Leonid Kuchma, Mr. Yushchenko's predecessor. Lucan Way, expert on Ukraine from Temple University (Philadelphia) says rooting out corruption must be Mr. Yushchenko's top priority.

/// WAY ACT ///

"The broad pattern of abuse of power which was concentrated in the executive under Kuchma, but exists also at the regional level and that, he certainly has to try to deal with. And that's going to be very difficult, because in the eastern part of the country you have a number of entrenched interests who have a lot of resources and who surely do not want to give up power."

/// END ACT ///

That was a reference to the so-called oligarchs, who have amassed fortunes in business deals with Ukraine's post-Soviet governments, as that country continues to try to move from a centralized to a market economy.

Frank Sysyn, Director of the Canadian Institute of Ukrainian Studies (in Toronto), says in order to fight corruption, Mr. Yushchenko must set up an equitable taxing system.

/// SYSYN ACT ///

"In the Kuchma regime, taxation was a kind of government pressure and terror. The tax administration was an instrument of power which could attack any element of the population, new businesses and in many ways, held back the economy, as well as held back change in society. That must go. The corruption and the bribes that permeate society have to be changed and to do that, you would also have to find ways of giving public servants the kinds of salaries that would make it possible for them to survive without these bribes. That will be a major change that goes on."

/// END ACT ///

Mr. Sysyn says establishing a legal structure will allow the formation of normal business and civic relations.

Another expert, Roman Szporluk, Director of Harvard University's Ukrainian Research Institute, says fighting corruption can only help stimulate small businesses.

/// SZPORLUK ACT ///

"If in order to open a bakery, or a restaurant, or some kind of repair shop you have to get permits and checks from several institutions, doctors, police, insurance, whatever - when all of these people require bribes, you do not have a normal economic system. So if under the new regime there will be a normalization, legalization, regularization of the operation of business - especially small businesses, medium (businesses), repair shops, things of that sort - this will be a very urgent job."

/// END ACT ///

For his part, Anders Aslund, Director of the Russian and Eurasian Program at the Carnegie Endowment for International Peace, sees other challenges facing Mr. Yushchenko, but he also comes back to the major theme of fighting corruption.

/// ASLUND ACT ///

"There are strong demands for re-privatization and cutting down on the old oligarchs: something needs to be done, but it is also important not to go for full confiscation and just redistribute the property to the businessmen close to Yushchenko. The gas consortium with Russia needs to be redone and a lot of legislation needs to be adopted, for example on financial matters and the adoption of a new tax code - but perhaps most of all, the government needs to be organized to make it possible to fight corruption."

/// END ACT ///

Experts agree, in addition to economic problems, Mr. Yushchenko inherits a country divided between the Russian-speaking east and the more western-leaning west. Analysts say he must work to heal divisions - but they also agree that the country is not close to being irreparably split in two. Once again, Roman Szporluk from Harvard University.

/// 2nd SZPORLUK ACT ///

"The old east-west division as a kind of deep, breaking line does not exist; which of course does not mean that the problems, interests, attitudes of the people in Donetsk (eastern Ukraine, close to the Russian border) are not rather different - importantly different - from those in other parts of the country. But I do not see either a religious, or linguistic, or geographical split. Ukraine is not on the verge of a war of eastern secession."

/// END ACT ///

Mr. Yushchenko began the healing process when he addressed tens of thousands of supporters after his swearing in January 23rd. He told the crowd the blue and yellow colors of the Ukrainian flag unite everyone, whether "in the east, west, south or north."

NEB/ADEN/JP/RH/FC