Ukrainian Leader Charts Ambitious Reforms

UKRAINE'S new president, Leonid Kuchma, appears set to accomplish in three months what his predecessor was unable to do in nearly three years: start pulling the former Soviet republic out of a spiral of economic collapse and secure the West's stamp of approval by renouncing nuclear weapons.

Mr. Kuchma, an industrialist elected in July on promises to fix the economy, on Tuesday presented parliament with his vision of a new Ukraine as a nonnuclear market economy.

In his first speech to parliament since his election, Kuchma set out what he called ``decisive, aggressive economic reforms'' to turn Ukraine from a debt-ridden state with a centralized economy into ``an equal partner in the world community.''

A week earlier, he asked the parliament to join the Nuclear Non-Proliferation Treaty (NPT), one of the final points of contention between Ukraine and the West. As a member, Ukraine would give up its Soviet-era arsenal - the world's third largest - for good.

Kuchma's timing on these two issues is critical. Ukraine has never needed international approval and aid as it does now.

Basic economic indicators spell trouble. Officials say they hint at potential civil unrest: Hidden unemployment in this country of 52 million is in the double digits, the budget deficit is at 20 percent of gross domestic product, and industrial output has plummeted.

But despite Kuchma's decisive steps to achieving the West's approval, the former Soviet republic's long-awaited transition to a nonnuclear state on the path to market reforms is sure to be bumpy.

The country's conservative parliament is Kuchma's biggest potential stumbling block. Legislators, many of them Communists, may prefer holding to the status quo on both economic and nuclear issues. Independent Ukraine's first president, Leonid Kravchuk, was unable to persuade the parliament to join the NPT and shunned radical changes to the Soviet-style economy as too disruptive.

``It's all coming together now. Kuchma is showing he has the political will to push through these reforms,'' says Anders Aslund, a Swedish economist advising the Ukrainian government.

``The message to the West is: We are doing standard, proper economic reforms. There's no nonsense here. The question is, will the parliament get in the way, or will it help?'' he asks.

Largely on Kuchma's initiative, Ukraine has already clinched a preliminary agreement for the country's first loan of $730 million - in two $365 million installments - from the International Monetary Fund.

Ukraine is also pursuing another $5.5 billion in aid over the next two years to complete structural reforms, $600 million of which is needed by the end of the year to start paying off long-overdue energy debts to Russia. This will almost certainly top Kuchma's agenda when he visits Washington later this year.

But parliament has control over economic legislation, and could block the reforms Ukraine needs if it wants additional international help.

Economic assistance is also partly dependent on Ukraine's joining the NPT. Until parliament approves the treaty, a number of European nations are refusing to extend their full cooperation to Ukraine.

``The very fact that Kuchma has presented the documents to parliament proves that we are keeping to the course of nuclear disarmament,'' Foreign Minister Hennady Udovenko said in an interview this week.

Senior government officials, including the influential parliament chairman, have voiced disappointment over the slow pace of promised $350 million in disarmament aid from the US. Defense Minister Valery Shmarov has said that a shortage of funds could force Ukraine to stop the dismantling process by next year.

``It's hard to predict this parliament but there's a common feeling that we're fulfilling our end of deals we signed earlier, but other partners are backing down of theirs,'' says Volodymyr Mukhin, the head of the parliamentary defense commission. ``Ukraine is the only country in history giving up nuclear weapons willingly, instead of trying to build or buy them. But instead of praises we're getting pressure.''

Besides money, Ukraine's top concern over disarmament is security, particularly from Russia. Deputies will not forget the Russian parliament's unilateral decision last year that the headquarters of the joint Black Sea Fleet, in Ukraine's Crimean peninsula, belonged to Russia.

``The position of the government and the parliament is that they will accede to NPT,'' says Western analyst Ian Brzezinski. ``But the issue now is securing national security guarantees from the nuclear powers.''

Many officials say privately Ukraine will face international isolation if delays over NPT continue, as it did last year before the parliament agreed to start shipping its 1,600 nuclear warheads to Russia to be dismantled.

``If we don't sign on to NPT today, the door to cutting edge space and nuclear technology, as well as foreign investment, will be closed to Ukraine for a long, long time,'' says one highly placed Foreign Ministry official.

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