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Date: Mon, 23 Jan 1995 13:58:36 -0500
From: (Bohdan Peter Rekshynskyj)
Subject: Ukrainian Republican Party -> [NEWS] ECONOMY, 23 january 1995, ANALYSIS AND COMMENTS (in English)
Reply-to: FSU@Sovset.ORG
Message-id: <ab49abdb0e021004c446@[]>

Ukraine again signs ‘zero variant,’ but is it the final decision?

By Victor Tkachuk, Ukrainian Republican Party, 23 January 1995

The so-called "zero variant" of distribution of assets and liabilities of the former USSR, recently signed by the Ukrainian premier in Moscow, will soon be considered by the Ukrainian parliament.


There were a lot of rumors about signing of the "zero variant". The premier Masol's statement "Today nobody owes us anything and we do not owe anything to anybody" caused a real shock among the politicians having the influential factions in the parliament. According to the zero variant agreement, Ukraine refuses to have its part in the USSR assets and transfers them to Russia while the latter will pay the Ukraine's part of the USSR debt. On the second day of signing the agreement, a parliamentarian from the faction "Reforms" confidentially told journalists that President Kuchma had instructed Premier Masol to sign the zero variant only together with other two documents - on restructuring of the Ukraine's debt to Russia and on providing Ukraine with the premises in 36 USSR embassies abroad. Instead, Mr Masol signed only the zero variant agreement. A week later, security council secretary V.Horbulyn confirmed that information and accused the premier of the lack of principled approach. Premier's assistant Melnichuk stated that the premier had received clear instructions from the president to sign just the zero variant. I.Yukhnovsky, leader of the faction "Statehood", is sure that such clear instructions had really been made saying that in 1993, when Kuchma was the premier, he also supported said variant.


In the spring of 1992 Ukraine several times agreed to sign the zero variant. That happened during the visit of the Ukrainian delegation with Vice-Premier Pynzenyk at the head to Moscow. The protocol on intentions signed by him specified that Ukraine refused to have its part of USSR assets while the Ukrainian part of the USSR liabilities was included into Ukraine's debt to Russia. It was the then Finance Minister Pyatachenko that pursued Pynzenyk not to sign the zero variant agreement in such formulation. After that, said protocol was disavowed by the Ukrainian foreign ministry. In 1993, the then Vice-Minister Yukhnovsky conducted the talks to that end and he was the first to propose to first divide the USSR assets and then liabilities.

Division of the USSR assets and liabilities was like the sword of Damocles hanging over the relations between Ukraine and Russia since all other ex-Soviet republics gave their parts to Moscow. Another round of games around this issue started in the fall of 1994. In September, the government sources informed about the request of the Ukrainian administration to the Paris club of creditors to postpone payment of the USSR debt by Russia and the interest amounting to 800 mln. dollars. The first postponement was also granted with active participation of Ukraine when, on March 26, 1993 the then Premier Kuchma sent similar request to the Paris club of creditors saying that 18 countries-creditors of the former USST did not have a single claim against Ukraine until the debt payment issue is settled by Russia and Ukraine. That helped Russia to conduct the talks on behalf of all states-successors of the former USSR and to get the postponement for paying the debt for 1993 and 1994.


They include:

  • financial assets (debts of other states to the Soviet Union);
  • fixed assets (property of joint ventures, missions of the Soviet companies, banks and embassies abroad).
  • gold, diamond and copper stock whose value is still unknown in Ukraine. In the beginning of 1993, the Russian government provided such information at the request of Vice- Premier Yukhnovsky but he does not regard it as fully authentic. In particular, he remembers that according to the Russian list there are 16 objects of the former USSR in Austria while, after his official request, the Austrian government informed that the number of objects was 48. According to Mr Yukhnovsky, Russia had already sold a part of property assets, so now it is impossible to prove that the property for which Moscow received money belongs to the USSR assets.

Russia sells both property and financial assets. According to T.Yakheeva, MP and economist, Russia sells the debts of other countries to the USSR at the price lower than the nominal one. For instance, according to her, the 90 mln. USD debt of Madagascar was sold for 45 mln. USD. After collapse of the USSR, some countries already paid their debt to Russia but Ukraine received nothing. She says that by January 1, 1991 financial assets of the USSR had two times exceeded its liabilities. Nobody knows about the amount of such assets today.


According to Mr Yukhnovsky, the USSR made most debts during the rule of Gorbachov. The biggest credits were given to the USSR in the second half of 1991 after the Ukrainian government adopted the Act on Independence on August 24, 1991. Ukraine received just 15 million USD of the credit amount.

From that time, it was Russia that paid the USSR debt with the aid of Ukraine. Despite said debt payment postponements granted by the Paris club, at the end of 1994 Russia again found itself in a rather difficult position. The Russian government is not so successful in its talks with the London club of creditors that provided a commercial credit to Russia.

In July, 1993, the Russian delegation with Vice-Premier Shokhin at the head managed to receive the postponement of payment of the London club's commercial debt (about 30 bln. dollars) but the document to that end was never signed. The situation changed for the better in March, 1994 when the IMF gave 3 bln. $ to Russia to set up the stabilization fund. Then followed the standby credit to the tune of 4 bln. $.

However, in October, the Deutsche bank, a major force in the London club, issued the statement on different approaches of the parties to the debt problem resulting from uncertain legal status of ex-Soviet republics. In fact, the London club did not recognize the Russia's right to conduct the talks on behalf of all successors of the USSR.

It seems that the London club hesitated as a result of political chaos in Russia last fall when Yeltsin shot at his parliament and Zhirinovsky's party gained big success at the parliamentary elections. At that time, many analysts criticized the risk taken by the IMF in giving credits to Russia.

In the last few months, the market value of the USSR liabilities at the securities market varied depending on political situation in Russia. In December, 1993 the proposal price was 55 while by March 21, 1994 it decreased down to 33. The lowest price of foreign economic bank liabilities was 28.


The right of Russia to conduct talks with creditors and to handle the USSR assets directly depends on signing the zero variant agreement. On the other hand, the Ukrainian debt for oil and gas supplies from Turkmenistan and Russia forces Kyiv to make concessions in this field. According to V.Melnichuk, situation changed for the worse after the talks in Turkmenistan where Economics Minister R.Shpek promised that Ukraine would pay part of its debt to Turkmenistan using the IMF credit amounting to 350 mln. $. Several days after that, Russia also wanted to have part of the credit money threatening to cut the gas supplies in the middle of winter. Such policy is easy to explain by the war in Chechnya that absorbs a big part of the Russian state budget. So it seems that Premier Masol had nothing to do but to sign the zero variant.

However, this fact does not mean that the Ukrainian parliament will ratify the agreement. Ukraine sure wants to delay the settlement of this issue. Most centrist leaders in the parliament do not think that Ukraine will receive a part of the USSR assets but they are going to use the assets and liabilities factor in political games with Russia. The same holds for the policy of the president's team. Still, the president may use the zero variant in order to remove Mr Masol from his post. The real progress in this field can appear only after signing the Russian-Ukrainian cooperation and friendship treaty. Ukraine can also use the zero variant to exert pressure on Russia in order to amend some formulations of the treaty in its favor. The ratification also depends on the approval of the state budget for 1995.

Information-press Service URP-Inform of the Ukrainian Republican Party. Director: Rostyslav Onyshchak.

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