aaus-list @ ukrainianstudies.org -- [aaus-list] Ukraine Today -- 10.06.2002


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[from "Yaroslav Davydovsky  {20122}" <sda@ukrainet.lviv.ua>]

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   UKRAINE TODAY
   Main weekly events from Infobank News Agency


   10 June 2002



   * PRESIDENT KUCHMA'S EDICT ON JOINING INTERNATIONAL CONVENTION ON HARMONIZED
     SYSTEM FOR DESCRIBING AND CODING OF GOODS
   * GOVERNMENT SENDS BUDGET 2003 RESOLUTION TO VERKHOVNA RADA
   * CONSTITUTIONAL COURT CLARIFIES THE NOTION OF FREE MEDICAL AID
   * ANATOLIY ZAYETS APPOINTED JUSTICE MINISTRY'S STATE SECRETARY
   * UKRAINIAN-RUSSIAN CONTRACT ON LONG-TERM GAS TRANSIT INITIALED
   * FINANCE AND CREDIT BANK TO SERVICE SOCIAL INVESTMENT FUND'S MONEY
   * PRESIDENT KUCHMA INSTRUCTS GOVERNMENT TO REDUCE TAX BURDEN ON
     UKRAINIANS
   * UKRAINIAN GOVERNMENT SETS PRIVATIZATION TARGETS FOR 2002
   * VERKHOVNA RADA ELECTS COMMITTEE HEADS
   * OBOLON BREWERY OWNERS CONTROL 75 PERCENT OF STOCK






   PRESIDENT KUCHMA'S EDICT ON JOINING INTERNATIONAL CONVENTION ON HARMONIZED
   SYSTEM FOR DESCRIBING AND CODING OF GOODS

   KYIV. President Kuchma signed an edict whereby Ukraine will sign on with
   the international convention on Harmonized System for Describing and
   Coding of Goods of June 14, 1983 together with changed envisaged by the
   protocol of June 24, 1986.


   GOVERNMENT SENDS BUDGET 2003 RESOLUTION TO VERKHOVNA RADA

   KYIV. On June 1, the Ukrainian government submitted to Verkhovna Rada its
   budget 2003 resolution, President Kuchma's permanent representative in VR
   Oleksandr Zadorozhny told journalists.

   According to him, the resolution approved by the government on May 15
   contains that the government will form the 2003 budget using a new tax
   base involving a reform of the income tax, improved mechanism for
   collecting VAT, and cancellation of tax breaks for industry sectors.

   To increase the revenue in 2003, the government plans to rebate VAT to
   exporters without tax arrears, thus finally settling the issue in 2003.

   As additional sources of budget revenue, the government wants parliament
   to enact laws on repayment of corporate tax arrears on loans received
   against government guarantees.

   In the area of expenditure, the government proposes a transition from
   funding budget-supported organizations to implementing through tenders a
   state order for their services.

   In addition, in the area of social protection the government will give up
   its policy of awarding benefits and switch instead to giving targeted
   assistance to low-income group of Ukrainians.


   CONSTITUTIONAL COURT CLARIFIES THE NOTION OF FREE MEDICAL AID

   KYIV. On June 4, the Constitutional Court of Ukraine made public its May
   29 decision on the case initiated by 53 people's deputies regarding the
   official interpretation of the clause of part 3 of Article 49 of the
   Constitution of Ukraine, under which medical assistance in the country is
   free. Consequently, medical assistance in state-run and communal
   establishments should be provided free of charge.

   In its decision, the Constitutional Court differentiates between the
   notions of "medical assistance" and "medical services". Medical assistance
   should be provided to citizens free of charge in state-run and communal
   establishments and medical services can be provided to citizens on a
   paying basis in medical establishments of various forms of ownership.
   However, the Constitutional Court failed to provide a clear-cut definition
   of the notions of "medical assistance" and "medical services" and
   reporting judge Oleksandr Myronenko opined that a list of medical services
   should be foreseen in a law drafted to this end.

   The Constitutional Court has also rejected suggestions by certain state
   bodies that limitations should be imposed on the free medical assistance
   and that free medical services should be provided exclusively to
   underprivileged citizens, or in keeping with a law passed to this end.
   Mandatory health insurance, the Constitutional Court maintains, would not
   run counter to the Constitution only in case the mandatory health insurance
   payments are made not by natural persons, but by organizations,
   establishments and enterprises employing them and from state funds set up
   for this purpose.

   Oleksandr Myronenko underscored that the decision of the Constitutional
   Court on free medical assistance does not rule out joint participation of
   the population in additional funding of the medical sector by way of
   setting up unions and funds which will be regulated by a law drafted to
   this end, as well as funding using proceeds from services provided,
   proceeds from charity programs and funding provided by donors, charity
   organizations and international humanitarian programs.


   ANATOLIY ZAYETS APPOINTED JUSTICE MINISTRY'S STATE SECRETARY

   KYIV. The President of Ukraine has appointed Anatoliy Zayets state
   secretary of the Justice Ministry, Olena Hromnytska, Mr. Kuchma's press
   secretary, told journalists. Until now Mr. Zayets has served as first
   deputy state secretary of this ministry.

   According to for-ua.com, the professional career of the 48-year-old Ph.D
   (law) also includes work with the Institute of State and Law of Ukraine's
   Academy of Sciences and at the Supreme Council secretariat, where he
   served as first deputy chairman of the expert department. His previous
   appointment as first deputy state secretary came in October 2001.

   The previous state secretary of the Justice Ministry, Oleksandr
   Lavrynovych, who occupied this post from July 2001 until May 7 this year,
   is now Justice Minister.


   UKRAINIAN-RUSSIAN CONTRACT ON LONG-TERM GAS TRANSIT INITIALED

   KYIV. On May 31 representatives of Ukraine and Russia initialed in Kyiv
   an inter-government contract on the volumes and terms of transiting
   Russian gas via Ukrainian territory in 2003-2013. The contract is
   expected to be signed on June 21 in Kharkiv during the meeting of the
   Prime Ministers of the two countries, the press service of Naftohaz
   Ukrayiny reported on June 5.

   The contract guarantees the transit of at least 110 billion cubic meters
   of Russian gas via Ukrainian territory to Western Europe annually. The
   rate of payment for the transit will be set for each given year
   separately. The deal also obligates Russia to transit via its territory
   Middle Asian gas bought by Ukraine.


   FINANCE AND CREDIT BANK TO SERVICE SOCIAL INVESTMENT FUND'S MONEY

   KYIV. Ukraine's Finance Ministry has declared the Ukrainian bank Finance
   and Credit and German Drezdner Bank winners of the competition for the
   right to service the World Bank's loan within the Social Investment Fund
   Project, reports the Delovaya Nedelia newspaper.

   As Infobank has reported earlier, on February 5, President Kuchma
   signed the law which parliament enacted on January 16 to ratify
   a US$ 50.21 million loan extended to Ukraine by the World Bank
   to implement the Social Investment Fund Project (SIF) in Ukraine.

   The project is designed to support the Government's efforts to improve the
   system of social services delivery, with a specific focus on disadvantaged
   and poor population communities and disadvantaged groups of the population
   who have suffered the most from the economic and social transition and ten
   years of economic decline. The project also aims to promote community
   participation in social services delivery.

   The main objectives of this project are to improve the living conditions
   of poorer and vulnerable groups of the population in targeted communities;
   empower communities and vulnerable groups to address local social needs
   and assist the reform of social protection by creating models of targeting
   and service provision.

   The total cost of the Social Investment Fund Project is US$ 70.09 million,
   including the Bank loan of US$ 50.21 million and Government and local
   community contributions of US$ 19.88 million. The loan will be at the
   Bank's standard interest rate for LIBOR-based, single currency dollar
   loans which is repayable in 20 years, including a 5-year grace period.
   Since Ukraine joined the World Bank in 1992, commitments to the country
   total more than US $3 billion for 23 operations.


   PRESIDENT KUCHMA INSTRUCTS GOVERNMENT TO REDUCE TAX BURDEN ON
   UKRAINIANS

   KYIV. President Kuchma instructed the government to draw up draft
   legislation aimed to reduce VAT, excises and taxes on natural persons.

   In his address at the conference on the tax reform Leonid Kuchma stressed
   that every fourth hryvnia in budget revenue represents some tax on the
   incomes of Ukrainians, with 60 percent of working Ukrainians earning less
   than UAH 170 (US$ 31) a month. According to the incumbent, tax burden
   continues to grow and taxes already account for 50% of GDP, with tax
   arrears reaching UAH 8.4 billion. In the president's opinion, the reason
   for this is the existing 400 benefits to Ukrainians that almost equal the
   budget revenue.


   UKRAINIAN GOVERNMENT SETS PRIVATIZATION TARGETS FOR 2002

   KYIV. The Ukrainian government has strongly criticized the work of the
   State Property Fund in 2001 for the slow pace of privatization. The
   government also set major targets for sales of state property in 2002.

   The government's top priorities for 2002 include improving financial and
   economic condition and investment attractiveness of enterprises to be
   sold; bettering the ;procedure for selling controlling stakes to
   industrial investors; and selling stakes in Ukrtelecom and electricity
   utility companies.

   The government ordered the SPF to step up preparations for the sale of
   state property in 2002, notably, stakes in Rivneazot, the Crimean Soda
   Plant, the Dnipropetrovsk Dzerzhynsky Steel Plant, the Oriana Company
   (Kalush), and the Luhanskteplovoz Engine Locomotive Plant, simplify
   procedure for selling stakes below 25% + 1 share in strategically
   important companies, as well as lower the starting price of such stakes
   which had been offered for sale two times.

   The document also stresses the need to assess the propriety of selling
   less than 25% stakes that have been transferred by the state to statutory
   funds of state JSCs and holdings, if the latter fail to ensure adequate
   management of these stakes. The document also obliges to restructure
   debts of electricity companies and prepare the mechanism for selling these
   companies prior to July 1, as well to prepare the privatization of
   Ukrtelecom due late Q2 this year.

   A mere 37.4% of receipts from privatization targeted for 2001 was
   collected.


   VERKHOVNA RADA ELECTS COMMITTEE HEADS

   KYIV. On June 7, Verkhovna rada has elected heads and deputy head of its
   committees, created an ad hoc oversight commission on privatization,
   electing its head and first deputy head. This package motion was
   supported by 235 lawmakers.

   Verkhovna Rada elected such heads of its committees:

   Vasyl Onopenko, BYuT (Yulia Tymoshenko Bloc) to head the committee for
   legal policy;

   Anatoly Matvienko (BYuT) to head the committee state building and local
   government;

   Viktor Khara, CPU(Communist party of Ukraine), to head the committee on
   social policy and labor;

   Mykola Polishchuk (Our Ukraine) to head the committee for the issues of
   health care, motherhood, and childhood;

   Yekateryna Samoilyk (CPU) to head the committee the issues of youth
   policy, physical culture, sports, and tourism;

   Stanislav Nykolaienko, SPU (Socialist Party of Ukraine), to head the
   committee for science and education;

   Les Taniuk, Our Ukraine, to head the committee for culture and
   spirituality;

   Stanislav Hurenko, (CPU), to head the committee for economic policy,
   management of national economy, property, and investments;

   Petro Poroshenko, Our Ukraine, to head the budget committee;

   Serhy Buriak, United Ukraine, to head the committee for finance and
   banking;

   Yury Yekhanurov, Our Ukraine, to head the committee for industrial policy
   and enrepreneurship;

   Andry Kliuyev, United Ukraine, to head the committee for fuel and energy
   complex, nuclear policy, and nuclear security;

   Valery Pustovoitenko, United Ukraine, to head the committee for transport
   and construction;

   Ivan Tomych, Our Ukraine, to head the committee for agrarian policy and
   land relationships;

   Dmytro Tabachnyk, United Ukraine, to head the committee for foreign
   relations;

   Ivan Rezak, SDPU(o), to head the committee for environmental policy, land
   use, and Chornobyl relief programs;

   Volodymyr Moisyk, Our Ukraine, to head the committee for legislative
   support of law enforcement;

   Volodymyr Stretovych, Our Ukraine, to head the committee to combat
   organized crime and corruption;

   Georgy Kriuchkov, CPU, to head the committee for national security and
   defense;

   Valentyna Matveyeva, CPU, to head the committee for VR standing
   procedures, ethics, and VR logistics;

   Mykola Tomenko, Our Ukraine, to head the committee for the freedom of
   expression and information;

   Hennady Udovenko, Our Ukraine, to head the committee for human rights,
   ethnic minorities, and interethnic relations;

   Petro Tsybenko, CPU, to head the committee for pensioners, veterans, and
   invalids;

   Borys Tarasiuk, Our Ukraine, to head the committee for integration into
   Europe;

   Valentyna Semeniuk, SPU, to head VR ad hoc commission on privatization;

   Verkhovna Rada is slated to sit again on June 11.


   OBOLON BREWERY OWNERS CONTROL 75 PERCENT OF STOCK

   KYIV. Managers of the Obolon beer brewery (Kyiv), one of the largest in
   Ukraine, said they now have control over 75% of shares, Korrespondent.net
   reports, citing Obolon top executives.

   According to an Obolon representative, following a bid by Obolon's rival,
   the Donetsk-based Sarmat brewery, to buy up Obolon stock in April by
   offering 100 dollars for a UAH 100 share, Obolon leaders offered their
   1.180 petty shareholders to sell their shares at 200 dollars, and won the
   day. Despite this success, Obolon continues to press charges in court
   against the Keramit-Invest company which was acting on behalf of Sarmat,
   as well as with those Obolon shareholders who sold their shares to Sarmat.

   As Infobank has reported earlier, in April the CJSC Sarmat, which is a
   member of the so-called Donetsk Beer Group, has started to secretly buy
   Obolon shares, Oleksandr Slobodian, Director General of the Kyiv-based
   Obolon brewery, told a press conference on April 2.

   On April 3 Stanislav Melnyk, Director General of the Donetsk-based Sarmat
   brewery, said that his company, which is among 5 biggest beer producers in
   the country, is set to buy a controlling stake in Obolon, thus
   strengthening its control over the Ukrainian beer market.

   On April 10 Ukraine's anti-monopoly committee sent a letter to Sarmat
   brewery, warning the latter that it might violate the country's law
   protecting economic competition and that it would then have to take
   responsibility for an attempt to monopolize the Ukrainian beer market.

   The letter runs that if the Donetsk-based brewery buys a 41.5% stake in
   Obolon, which is provided by a commission agreement with the Kermet-Invest
   company, through which Sarmat has already bought 11% in Obolon, the share
   of Sarmat and other breweries in managing which it takes part will then
   exceed 40% of Ukraine's beer market. The anti-monopoly committee experts
   believe that the concentration of so much in the hands of one company will
   lead to the monopolization of the beer market in the country, which is
   forbidden by law.

   In May in line with the rulings by the Kyiv Economic Court, Desniansky
   Rayon and Shevchenko Rayon Courts, registration or any other operations
   with Obolon Brewery shares bought by Sarmat Brewery are banned pending
   consideration by courts of Obolon protests. Obolon accuses the
   Donetsk-based brewery of violating Ukrainian anti-monopoly legislation
   through buying its shares.

   Obolon's share in Ukraine's beer production comes up to 26 percent.




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