ABSTRACT

Offering a unique level of coverage, this book provides a comprehensive survey of the political and economic development of the countries of the former Soviet Union from the mid-1990s onwards.

chapter |41 pages

Introduction and overview

chapter |11 pages

Kuchma first became president on 10 July 1994. Friction between president and parliament has been a factor (as will be discussed below) in hindering economic reform. Kuchma has been re-elected, winning the second round of the presidential election (held on 14 November 1999) more comfortably than anticipated. His rival, Petro Simonenko (head of the Communist Party), was perceived as too inclined to state regulation of the economy and too close to Russia. Nevertheless, OSCE expressed considerable concern about the way Kuchma ran his campaign, e.g. the use of the state to manipulate the media. The general election of 29 March 1998 did not result in a sea change in the balance of forces in parliament: leftist forces remained the strongest but without a majority; a substantial centre persisted; nationalist forces, however, weakened somewhat. Parties have generally been strengthened. Kuchma hoped for a more constructive relationship with parliament and for a less geographi-cally split country.

part |2 pages

Part I The Baltic States of Estonia, Latvia and Lithuania

chapter 1|7 pages

Estonia

The political background

chapter |13 pages

Prices

chapter 2|9 pages

Latvia

Citizenship

chapter |14 pages

Privatization

chapter 3|41 pages

Lithuania

Citizenship

part |2 pages

Part II Belarus, Moldova, Russia and Ukraine

chapter 4|19 pages

Belarus

The political and demographic background

chapter 5|3 pages

Moldova

The political background

chapter 6|3 pages

Russia

chapter |2 pages

state farms in a slightly new juridical guise … The result of the slump [in agricultural production] has been to turn the majority of these farms into more or less pure ‘subsistence’ entities engaged in the self supply of food for their members and (as far as possible) of the inputs necessary for that food production – but withdrawing mainly or totally from market supply. At the same time, however, a small minority of these former state and collective farms (about 10–15 per cent of them in all four regions studied) have come to dominate marketed production of food and other agricul-tural crops …. The clue to the survival of this small minority of enterprises has been their success in a form of ‘crisis management’, a success determined largely (in my view) by the contacts and abilities of their farm management.

chapter |12 pages

Direct foreign investment

chapter |16 pages

signified by a rapid increase in aggregate demand and shortages … The budget deficit reached … 19 per cent of GDP in 1991. The decision to liberalize 90 per cent of prices in January 1992 led to a price jump of 245 per cent and by the summer the monetary overhang had been eliminated. Efforts to tighten monetary policy in 1992–4 failed mainly due to attempts to preserve the rouble zone which after the break-up consisted of fifteen independent countries, each with their own central bank. And although the CBR [Central Bank of Russia], under the leadership of Viktor Gerashchenko, was the only one allowed to print roubles the central banks of other CIS countries (and initially also the Baltic States) could issue credits. This meant that monetary policy spun out of control … More countries started to introduce their own currency or issue monetary surro-gates. Furthermore, much of the credits issued by CIS central banks were used to finance imports of Russian commodities, mainly oil and gas, which meant that pressure was also put on the CBR and the Russian government by Russian exporters to continue looser monetary policy. As a result by mid-1992 the granting of concessional credits to agriculture and industry intensified. At the same time Russia was unable to increase tax revenues or reduce expenditures and as a result continued to run a large budget deficit. And without access to domestic capital markets and a lack of willingness by the West to lend money to Russia, the only source of finance was the printing presses. This policy resulted in a rapid growth of the money supply.

chapter |29 pages

Russia and the Asian financial crisis

chapter 7|1 pages

Ukraine

The political and demographic background

chapter |46 pages

President Leonid Kuchma has set about buttressing the executive branch with loyal people … Kuchma signed a decree on further administrative reforms in which he instituted the posts of state secretary of the govern-ment and state secretaries of the ministries. All state secretaries and their deputies will be appointed by the president for five-year terms and will control virtually all the work of their ministries, from staffing to the alloca-tion of funds and the appointment of directors of the ministries’ regional offices. The decree says that the state secretaries ‘shall oversee the partic-ular operations of their ministries’ and ‘shall be responsible for organizational, legal, expert-analytical, informational and technical support for the ministries’ work’. The post of deputy ministries is hence-forth abolished. State secretaries can be fired only by the president … Presidential chief of staff Vladimir Litvin commented … ‘Virtually all levers of influence are concentrated in the hands of the ministry state secretaries’.

chapter |6 pages

Foreign direct investment

chapter |6 pages

The law stated that 51 per cent of shares in the enterprises processing agricultural produce were to be given free to farms. The remaining shares could be sold to farms or members of the staff working at the enterprises either for privatization certificates or for cash (Business Central Europe, December 1995–January 1996, p. 27). In early 1996 parliament approved a largely unchanged law, which proposed giving collective farm directors a free 51 per cent stake in the agro-industrial enterprises, mostly in food processing and handling. The law would effectively remove half the enterprises from the voucher privatization programme. The 4,270 agro-industrial enterprises, both private and state-owned, would be sold afresh. It is not exactly clear, but agro-industrial workers could mop up the remaining shares through a closed auction or the remaining stake could be sold through the voucher programme. President Kuchma vetoed the bill on 21 February 1996. (Parliamentary speaker Moroz called on local governments to ignore a November 1995 decree which cautiously mandated limited sales of land within collectives, which are slowly being broken up.) (FT, 8 February 1996, p. 33; and 22 February 1996, p. 2.) ‘The agricultural sector … consists mostly of bankrupt state-owned farms, 95 per cent of which lost money last year [1998]’ (Business Central Europe, December 1999–January 2000, p. 29).

chapter |3 pages

A Land Code providing for private land ownership was passed on third reading by the Ukrainian parliament [on 25 October 2001] … Although the Code imposes a five-year moratorium on the purchase and sale of land, starting in 2005 any Ukrainian citizen will be able to buy 100 hectares of farmland, acquire permanent ownership of it and use the land as he sees fit. Moreover, Ukrainian legislators decided that farmers should have the right to acquire land free of charge, provided that ‘they are Ukrainian citizens and hold a degree in agriculture or have agricultural experience’. Foreign citizens and legal entities … may acquire ownership of non-agricultural land in order to put up buildings associated with busi-ness activities in Ukraine. The law seems to state very explicitly that ‘agricultural land may not be transferred to the ownership of foreign citi-zens or stateless persons’.

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