Ukraine Claims Its Right for Part of USSR's Property

Ukraine is discussing Kiev’s receipt of a part of the USSR’s foreign property yet again. On May 23, during a televised press conference, Viktor Yanukovych was asked a provocative question regarding his intentions to solve this issue with Russia’s government.

“As of today, we do not see a solution. We think that the property should be divided between the countries. We are yet to find the way to do it,” the Ukrainian President said.

The issue Yanukovych had to speak about was raised immediately after the collapse of the USSR. The Soviet Union left a legacy of foreign property – embassies, consulates, and trade missions. On the other hand, new states that emerged after the collapse of the USSR had to solve the issue of the USSR’s enormous debt.

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In 1991 Russia suggested solving the issue using the so-called zero option. I.e., Russia would get all USSR’s foreign property and will be solely responsible for all its debt. All CIS countries agreed with the solution except for Ukraine, whose parliament refused to ratify the agreement with Russia.

For years Russia has been paying off multibillion amounts to western countries and financial institutions. Yet, Ukraine would say time and again that the RF must share the former USSR property with it. Referring to 1991 statistics, the “Ukrainian party” calculated that its share in debts and assets of the USSR is 16.37%, and they would not mind getting this “share.”

The supporters of the idea tried not to link the issues of “property” and “debt.” They were saying that the cost of the property and the amount of debt were incommensurable. They were saying that the Ukrainian share of the USSR’s foreign property could be estimated at 50 to 60 billion, while its debt was “only” 14 billion. But even this is the case there was no offer from Kiev to pay their part of the debt.

Yuriy Kostenko, the leader of the Ukrainian People's Party, addressed the public with a few original initiatives. He said that Russia not only had to give Ukraine a part of the Soviet foreign property, but pay Ukrainian citizens the debt of the USSR’s Sberbank in the amount of $100 billion. Considering the above sums, he suggested that Russia was to supply free gas to Ukraine for years.

In early March of 2009, the Ukraine’s Ministry of Foreign Affairs, mostly represented by nationalists close to Yushchenko, actually claimed their privileges not only for the foreign property, but also for the Ukrainian share in the USSR’s foreign currency accounts. Ukrainian diplomats insisted that Russia gives Ukraine a part of the Soviet Union’s Gold Reserve and treasures of the Diamond Fund.

All these years Russia’s position remained unchanged and it insisted on the zero option. It rejected Ukraine’s claims to give it a part of the Soviet foreign property and stressed that Ukraine never undertook to pay off its part of the Soviet Union’s debt.

What are the prospects of this complex issue? talked to Evgeny Minchenko, a Russian political analyst, and his Ukrainian counterpart Vladimir Skachko, to find out.

“Russia has settled the issue of foreign USSR property with all former Soviet republics except Ukraine,” said Evgeny Minchenko, Director of the International Institute of Political Expertise. The Verkhovna Rada in 1994 refused to ratify the respective agreement with Russia. Later there were negotiations with Yulia Tymoshenko’s government, but she stated that she will not have enough parliamentary votes to ratify the agreement. This was not an excuse. Had she raised the question, she would have been accused of betrayal of Ukraine’s national interests.

Some people are not very pleased to hear such statements from President Yanukovych. Yet, there is nothing surprising about them. Yanukovych is a long time leader of the Party of Regions which is backed by large businesses whose representatives love money and know how to count it.

This is an unpleasant moment in Russian-Ukrainian relations. Admittedly, it should not be dramatized. There was information concerning our unwillingness to change our position regarding former debt and foreign property of the USSR. Yet, I cannot rule out that there might be progress on our part. Now negotiation positions on this complex issue are only forming. It may take years, not months, to get everything settled.

Now it is too early and even unethical to speak about the options. I would like to mention that the Ukrainian position has a very weak point. Those in Kiev forgot a Russian proverb “An umbrella is good on a rainy day.” If, in the early 1990s, Ukraine had clearly formulated its refusal to ratify the agreement and undertaken debt repayment, it would have had grounds to receive its share of the property.

But it has not been done. Russia has repaid the Ukrainian part of debt. Now it is completely different money than it used to be. The US dollar has significantly devaluated in the past years. Now some suggest that Ukraine should repay this old debt unadjusted for inflation. But this is an obvious craftiness,” the expert believes.

“Victor Yanukovych’s statement contradicts prior agreements between Russia and Ukraine,” says Vladimir Skachko, an independent Ukrainian political analyst. “When Russia was in the middle of the “divorce” with other Soviet republics, Ukraine was capable neither of paying its share of the debt nor maintaining its share of the property (approximately 16%).

I cannot rule out that someone is pressuring Yanukovych to raise the issue again to get a certain amount of money from Russia. But at the same time I cannot rule out another option. It could be just a loud statement aimed at minimization of the accusation of the state leader by the opposition who accuses him of betrayal of the national interests.

If someone is seriously willing to get money from Russia this way, it may just worsen the Russian-Ukrainian relations. Ukraine has no prospects here because at some point it decided not to pay its share of the USSR’s debt. It cannot be reversed. If Kiev was in the least capable of doing it, the respective claims would have been voiced in Yushchenko’s time.”

Sergey Balmasov
Vadim Trukhachev

Read the original in Russian

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Author`s name Dmitry Sudakov