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Ukrainian Transport Minister Calls for Logical Approach, Good Practices

Posted on: Friday, 15 July 2005, 09:00 CDT

Transport Minister Yevhen Chervonenko has emphasized the need for logic and good business practices to underpin Ukraine's transport system as this will enable people to earn a decent wage and hold their heads up high. Speaking in an interview with Vitaliy Kuksa, he said that investment policy in the sector aimed to attract Russian, Western and Ukrainian capital. But, to do this, outdated, illogical practices and corruption, like in the port of Odessa, had to be eradicated. But investors had to be prepared to share the cost of new infrastructure: the state could not be expected to provide everything free of charge. Chervonenko denied that rail services had worsened in the past few months as he thought the rot had set in under his predecessor. He said that the rise in rail freight charges had reduced traffic by 2.5 per cent in five months, but expected an increase in volume from other sources. He said that he never evaluated work done in the past but only planned future work. Chervonenko said that all his work in the sector was dictated by state interests and that he favoured the computerization of state administration. The following is the text of the interview under the title "Yevhen Chervonenko: 'I want to give people the opportunity to square their shoulders and earn money normally for the country and for themselves'", published in the Ukrainian analytical weekly Zerkalo Nedeli on 9 July; subheadings have been added editorially:

The notion that Ukraine lies at the junction of the routes of Eurasia - the Silk Road, the route from the Varangians [Scandinavians who settled in parts of Russia and Ukraine in the 8th- 11th centuries] to the Greeks, and such like - and so should become a world transit centre bit the dust long ago. During the decade and a half of independence, no Orient Expresses have sped through our country, Boryspil airport [near Kiev] has not become a major European hub, the worn-out roads have not been transformed into motorways and a vessel plying the oceans under the Ukrainian flag can be encountered no more frequently than the Flying Dutchman. On the other hand, there is the Ukrainian Ministry of Transport, which combines sectors that often call for opposite approaches to management (railways, aviation and so on were recently joined by the delicate field of communications).

Vast sums of money circulate here, but, if all the necessary expenditure is reckoned up (e.g. on modernization), it could not be called a particular money-spinner. The sad end of the transport minister who was famed for his unprecedented building of a state within a state [Heorhiy Kyrpa, reported to have committed suicide on 30 December 2004] seems not to have particularly surprised anyone... [ellipsis as published].

We talk about all this and much else with today's head of the country's transport and telecommunications empire, who came to lead it on the crest of the revolutionary wave, one of the most decisive figures of the Maydan [Kiev's Independence Square, the focal point of the Orange Revolution] and "the helmsman of the revolution", Yevhen Chervonenko.

Investment successes despite past theft of loans

[Kuksa] Yevhen Alfredovych, at a meeting of the investors' council of the Ministry of Transport and Communications, held just before the mini-Davos [economic summit in Ukraine held in June], the sector was called perhaps the most attractive for foreign capital. Were any agreements on significant investment reached during the summit?

[Chervonenko] Work with investors is long and meticulous. We embarked on it at the London economic forum on Ukraine. But the attraction of credit amounting to 100m dollars under state guarantee at LIBOR + 2.7 per cent in order to finish the Zhashkiv- Chervonoznamyanka stretch of the Kiev-Odessa motorway can be regarded as a victory for Ukraine and for our team. It's a breakthrough for our country. The LIBOR is now 3.66 per cent, and the overall rate of 6.36 per cent is unprecedentedly low. For the sake of comparison, the previous, autumn credit from the selfsame Deutschebank, which won the tender today too, was at LIBOR + 6.87 per cent.

The banks taking part in the tender weren't fully convinced that someone from the administration or from somewhere else wouldn't start ringing and appointing the winner. I asked the security service to keep an eye on the protection of the room in which the envelopes containing the bid offers were kept... [ellipsis as published].

We work with the European Bank for Reconstruction and Development. It's rather conservative and can't finance many projects. But even the pre-credit preparation by the EBRD is splendid work that can be presented to any bank.

Four leasing companies are preparing to start operations - two with Western capital, two with Russian capital. Russia's Sberbank [Savings Bank] and Vneshtorgbank [Foreign Trade Bank] are ready to provide credit for specific projects. The Russians are primarily interested in the railways and ports. Western capital is going mainly for the Danube-Black Sea canal, motorways, aviation, communications and information technology.

We try everywhere to set up the following balance - direct Western investment, a suitable amount of Russian capital and the "golden chip" (Ukraine) in the middle. That's so that we can influence both of them. On 13 July, we're flying to Japan via the ports of Dubai and Singapore... [ellipsis as published]. I'm pinning great hopes on that trip.

[Kuksa] What effect is the credit that was stolen last year having on creditors' confidence in the Ministry of Transport?

[Chervonenko] There have, undoubtedly, been problems. I'm well versed in business and know that the most important thing is not a lack of money, but a lack of trust. Since my first day here, I've been making sure that the rules we stipulate to investors are actually implemented. They're called "hands on the table" and "the white book". We invite people to take part in all projects on the following terms: no one is entitled to extort [any money]. That, incidentally, used to be a complaint of the EBRD, where all expenditures of money are transparent and recorded. Today our anti- corruption department keeps a close watch on the honouring of that requirement.

The state will have to return the stolen credit anyway. It will be a financial burden mainly for the railways.

New approach to railway discipline

[Kuksa] Many passengers on Ukraine's railways are forming the impression that discipline there has declined noticeably since Kyrpa's departure. Trains have started to run late, there are more and more "broken-down" carriages on the lines and conductors have become "lax". How do you explain that?

[Chervonenko] At first, I didn't believe such reports. Now I'm giving them my closest attention - after safety matters, which are the No 1 priority. I'll explain why. Do you remember when I appointed the railway management? I appointed the director a month after I became the minister, and the heads of the lines just a few weeks ago. A terrible behind-the-scenes battle was in progress for those posts. Consideration of the question of who would be the director of the Southwestern Railway was deferred five times by the Cabinet of Ministers. The question of the carriages that were transferred to Intertrans (the company of Kyrpa's son) and Leman Trans was postponed for three months in a row. Meanwhile, the state was losing 800,000 hryvnyas [about 160,000 dollars] a day. I don't want to comment on all that. If the stars shine, it must be for someone's benefit.

Incidentally, I've left four of the six dismissed heads of lines in the ministry as advisers. Yes, they carried out Kyrpa's orders, and their courage was found wanting. But, as good specialists, they will provide continuity and will pass on their experience to the new heads.

The whole railway is a mechanism that was organized back in the times of Lazar Kaganovych [Soviet minister of railways, 1935-44]. But the erosion of standards on the railways began with Kyrpa. One thing I can say: it was then more a question of fear than discipline. I can't talk to people from a standpoint based on fear. That's not my method - either in business or in state administration. I talk from the standpoint of conviction. There's a feeling that we're on the right road. In Donetsk, for example, after the introduction of the new head of the line and a meeting with the workforce, they gave us a standing ovation.

People spent a long time trying to calculate how deep the shake- out would go. Who would win - concealed suitcases of money and influence or Chervonenko? After all, apart from the vertical chain of fear, there was also the vertical chain of plunder there. Not so long ago, there was an attempt, on the Southwestern Railway, to steal [items worth] 68m hryvnyas and turn them into ready money. Arrests followed... [ellipsis as published].

I'm not a policeman. My job as a manager is to carry out an audit. The audit has been carried out. I'm sure that, under [Zenko] Aftanaziv [deputy transport and communications minister and director- general of the State Rail Transport Administration (Ukrzaliznytsya)], you will see a discipline that was absent under Kyrpa. But it will be based not on fear, but on the logic and the discipline that we see in real big business and in other sectors of the economy.

[Kuksa] Do you think that people who have been used to the stick and carrot will start to heed your convictions?

[Chervonenko] The only thing that can be set up against theft is the distribution of the sector's profits for which I am now lobbying in the government. A resolution should be passed stating that the companies in the sector should hand over to the budget 50 per cent of the net profits at the end of the year. A further 30 per cent should be ploughed back to purchase new equipment - I'll lie on the rails to bring that about. And 20 per cent - however sizable the sum may be - must go to the management. Managers who are responsible for considerable cash flows must receive adequate remuneration for their responsibility. We have no other solution. No "clean hands" or "white feet" operations will help.

Take a walk round my ministry. I'm struck by the number of expensive cars near the entrance. What do they come here for? They don't come to see me. I raise the question at each staff meeting. I've banned the staff from leaving the building during working hours.

I've come up against sabotage that I haven't seen anywhere else. The erosion of standards is a tragedy. I know all about "homeworking", and I know how to earn money. But, when I enter state service, I demand transparency and open relationships - not for the sake of my report to the cabinet and the president, but so that investment comes in. For that to happen, I must give the managers 20 per cent of the net profits.

The second tragedy is that they constantly forget that it's state property! Workers in a private company would behave differently. But here they think that everything belongs to them and that this "ownership" is derived from their ability to crawl on their knees, click their heels and stand to attention... [ellipsis as published]. That's not discipline. That's sheer falsehood.

But I don't look back. I was once told by my motor-racing trainer: if you keep looking in the rear mirror, you'll come to grief. So I don't make appraisals of people's past. I look only at their work in the present and try to model the future.

Freight charge rises unlikely to do lasting damage

[Kuksa] What are the results of the rise in freight charges?

[Chervonenko] During the first five months, the volume of rail freight fell by 2.5 per cent, while freight carried by road and water grew by 3.6 and 4 per cent. These are normal figures. The fall in freight is mainly due to the reduction in Russian transit journeys, made largely by Yukos petroleum products. But we shall compensate for this by transporting freight from Kazakhstan, and we shall intensify the transit of Russian coal. I think that, as a result of the latest meetings in Moscow with the new head of Russia's railways and upon completion of the deliberations of the working party on international freight charges, we shall also manage to increase the conveying of metal and ore from Russia.

[Kuksa] After internal freight charges rose, the rates for transit freight from Russia didn't change, and this immediately led to problems. Russian coal became more competitive, while Ukrainian coal lost its position, and the pits are now overstocked with unexported output. How does the Ministry of Transport see the situation?

[Chervonenko] One shouldn't live on myths. Thank you for asking. First, the coal in transit isn't cheaper. The cost of transporting Russian coal to our ports through the two countries is far more expensive than moving our coal around Ukraine. The freight charge element in coal has little effect on its final price. So the coal producers should work both on the quality of the end product and more skilfully on external markets. Incidentally, the Ministry of Transport and Communications is drawing up a programme with the Vuhillya Ukrayiny [Coal of Ukraine] national joint-stock company for exports of Ukrainian coal. It seems to me that, by importing Russian coal, the largest Ukrainian metal producers are trying to bring [Ivan] Plachkov and [Viktor] Topolov [the minister and first deputy minister of fuel and energy] to their knees. I think everything will come round to the most logical scenario.

[Kuksa] Have our iron and steel producers, who were the most incensed at the rail price rises, also cut their freight journeys?

[Chervonenko] Not by much. I know virtually all of them, and I don't see any intense suffering in their eyes. Yes, profits are now down. Yes, they've begun to think about the need to invest. I won't allow them to sink the railways because, even if there is an upturn in the market again, they won't get the metal to the port without them. According to the specialists, when we took over the railways in March 2005, we could expect a collapse within a year. I don't want any upturned wagons. The iron and steel producers must react properly to everything.

While they were threatening attempts to convene a congress, and the government was threatening them with checks, I gathered everyone together for the first time in history - right here, in the beautiful room next to us. We had a chat, and, from the proposed rise of 100 per cent, we came down to 30 per cent. None of them has any complaints about me... [ellipsis as published].

All in all, the financial figures for the railways have become incomparably better. The tax inspectorate has voiced its gratitude to us for paying 90 per cent more tax than last year. That's an extra 230m hryvnyas brought out of the shadows!

Undesirables in the ranks; corruption in Odessa

[Kuksa] Have you come across Vakhtang Ubiriya, who was deputy director of Derzhtransobsluhovuvannya [State transport servicing] not so long ago and is now deputy mayor of Odessa?

[Chervonenko] I've come across him in the course of my life, and the fact that he's now working in Odessa is simply a slap in the face. I haven't got any claims against anyone at the moment. I'm a soldier. I will comply with whatever the president says. But seeing [Oleksandr] Feldman, [Oleksandr] Abdullin and [Mykola] Hapochka in the [pro-government] Yuliya Tymoshenko Bloc today is more off- putting than 16-hour working days. I don't believe these people have changed. I've known them for a long time. They have a right to the truth as they see it (if it actually exists), but one can't trample on the expectations of millions of people.

The fact that all of these are gathering under [Volodymyr] Lytvyn [the parliamentary speaker and leader of the People's Party] and [Prime Minister Yuliya] Tymoshenko is immoral for the new "revolutionaries" themselves. I don't know what's going on inside these men. But, inside my own ministry, I shall fight against yesterday's enemies who switch to senior posts in the ministry by making use of their entry to [the pro-presidential bloc] Our Ukraine or somewhere else.

This Ubiriya case frightens me. So far, he and I have had no clashes over transport infrastructure. But I want to issue a warning that everything will be transparent in Odessa, if we want to bring in real investment there.

[Kuksa] Maybe he'll help with real investment. It's a different matter that it will be for money... [ellipsis as published].

[Chervonenko] That's a question for the Security Service of Ukraine. I'm willing to let everyone hang on to his right. [Odessa mayor Eduard] Hurvits has taken the decision, so he bears the responsibility.

[Kuksa] What about Aftanaziv's meeting with Mr Bilenkyy?

[Chervonenko] Aftanaziv is my oldest friend. I've never made any secret of that. We met on an alpine skiing piste on 29 December 1993, and, on 5 January, a man who was rich by Lviv standards, owning three clothes factories, left all that and went off with me to put the bankrupt Rohan back on its feet. I know him well. He's never spoken to any gangland bosses. He's simply far removed from that. If any emergency or unusual situation arose, I would be the one to do battle. I was in charge of security. I've always thought that people were given a tongue so as to talk and try to solve any problems.

[Kuksa] Has your long-promised "single room" freight processing project started to operate in Odessa?

[Chervonenko] It's started, but not as I would have liked it to. During my last visit to Odessa, after introducing the new head of the Odessa Railway, I issued a warning when I spoke on all the local TV stations: there is a scheme for the "sixth kilometre". The seventh is where the market is, and the sixth is where customs clearance happens. The customs is lobbying for this scheme. And this is my last warning. Then I shall go and see [Volodymyr] Skomarovskyy [head of the State Customs Service], and we'll settle the matter once and for all. I have a good understanding with him and with Mykola Lytvyn [chairman of the State Border Service].

They're said to charge 500 dollars for taking one container round to the "single window". I haven't caught anyone in the act as yet. But those who get to the "single window" are processed in 90 minutes instead of 27 hours. That's the truth. I have no illusions. Half of Odessa - no less - lived on the ports and the corruption associated with them. I drive around Odessa in an armour-plated car with additional bodyguards. But I've thrown down the gauntlet to them and will take what I've started right through to the end.

Until we institute a single charge for the railway plus the port, until we remove, on the one hand, the railwayman who wants to provide the wagons or doesn't want to and, on the other hand, the head of the port, who decides whether to accept or not to accept the freight and lowers the charges (by a dollar for one person, by 5 dollars for another), until then no freight will reach us.

Port development

[Kuksa] What do you think of private ports?

[Chervonenko] If they take account of the interests of the state as an equal player and aren't set up through bribes, I'm in favour. If they build their own infrastructure and don't get it ready-made from the state by deception, I'm in favour.

Let's take the port of Vira in Pivdennyy [on the Black Sea]. The land was bought as farm land, and now they're trying to turn it into port land. I'm under pressure from everyone, including the US embassy. How is one to develop a state strategy when Russian coal is ready to come here? We don't know. Representatives of the port of Vira declare: "Why talk to the port? Talk to us." And they're demanding a harbour wall from the state.

I'm in favour of logic. I'm in favour of American and Russian companies coming into the ports. I enter a dialogue with those who have built something. But I ask straightaway: where are the interests of the state in your projects? I'm not concerned with what you "slipped" someone beforehand.

Let's take the grain terminal in Odessa, built by the Topfer company. They presented a logical scheme. I convened the maritime board. Other investors came along. We endorsed a 120m-dollar overall development plan for the port of Odessa up to 2008. That's direct investment. I could see that, by meeting investors halfway, I was resolving the grain problem and I could see the benefit to the state. Yesterday I signed a two-year port development plan costing 1bn dollars with the Israeli firm Zim.

[Kuksa] Is the oil terminal at Pivdennyy operating? So much used to be said about it.

[Chervonenko] Not as I would like it to be operating. TNK [Russia's Tyumen Oil Company] keeps saying: make the bottom deeper for us so as to accommodate tankers weighing 100,000 tonnes. I'm not against the idea. I think that ships with a displacement of 120,000 t should be able to put in to our port. The Bosporus won't let any larger vessels through. But don't offload your problems on to the state! Provide at least 6m tonnes of throughput, and I'll waive the charge! At the moment, there aren't even three, and they don't want to guarantee that it will grow.

Then the Kazakhs are demanding that the state should build an oil pipeline from Odessa to Pivdennyy, since they don't want to deal with Eximnaftoprodukt [Export import petroleum product]. But what I propose to them is: let's get things sorted out with Exim and sign a three-party agreement, with the state participating, for at least three years. Then you carry on! Incidentally, we intend to increase the transit of oil "on wheels". That will substantially boost the operations of our oil terminals.

Shipping: ending "nonsense"; consolidating cash flow

[Kuksa] Do you often meet the owners of ships that fly the Ukrainian flag? Are there many of them left?

[Chervonenko] Not many. But we're preparing a reform of the maritime sector. We've provided enormous privileges for those who fly the Ukrainian flag. In keeping with an order from the Ministry of Transport and Communications dated 27 May, harbour dues have been reduced by 30 per cent (50 per cent in the case of Izmayil) for vessels and companies that have national carrier status. We've also got parliament to exempt transit and harbour dues from VAT.

I'm firmly in favour of our maritime fleet and Ukrainian companies. Ukraine has a considerable volume of exports, and they should be carried by our ships. Soon there will be the report on the BSSC [Black Sea Shipping Company] - and I've been asked to step up protection... [ellipsis as published].

I've got the Mars salvage company on the verge of being plundered. I've got Chorazmorput [Black Sea Asia sea route] - a company that operates unique dredgers - on the verge of being plundered. They've launched it on the bankruptcy path, as with BSSC. We've managed to catch one dredger in Guinea and another in Hong Kong. We're now seeking a solution. I'll save everything I can. Delta-Lotsman [Delta Pilot] will probably be transformed. It will be given one of the dredging companies. That's logical.

[Kuksa] But it's not just because of harbour dues that shipowners are changing the Ukrainian flag on their ships for a more convenient one... [ellipsis as published].

[Chervonenko] I recently agreed with the [Israeli] Ofer [Brothers] Group and Zim, the owner of ships and containers, and one of the world's largest tourist travel companies that the Royal Princess, a vessel that carries 2,500 passengers at any one time, will start to call at our ports once every two weeks and, later on, once a week. [It will put in] at Odessa, Yalta and Sevastopol. You understand what an income that will provide for those towns? But, to achieve this, I've got to free these shipowners from our idiotic practices.

This week, I want to have a meeting with the border guards and customs regarding yachts. I was recently a witness: a Dutch yacht that had broken down was kept hanging around in the Balaklava roadstead for 18 hours because the border guards and customs services wouldn't allow it to put in for repairs. What difference does it make whose yacht it is? It's the sea; it's not like sitting on the sofa at home. People are entitled to put in for repairs and fuel.

Yesterday I found out that the border guards plan to close the sea from Balaklava to Lastochkine Hnizdo [Swallow's Nest] [both in southern Crimea]. Nothing like that has ever happened, even under [ex-President Leonid] Kuchma. I shall never believe that [President Viktor] Yushchenko could have issued such an order because of the state residences [there]. I said I wouldn't allow it. My view is that, if a ship or a yacht has arrived, and the captain has made out a declaration in four copies to all the services, no one should ask him anything else. If he's notified everyone by radio that he's going somewhere, no one should touch him any more. Isn't it a nonsense to force ships going from Odessa to Sevastopol to zigzag along the coast without leaving the 12-mile zone [instead of following a more direct route through international waters]? The border guards have got radar. Let them watch. If he meets someone, go over and ask questions. Or meet him at the port. But don't make people's lives difficult.

[Kuksa] So, will you lobby for the Ukrainian flag? Mongolia, which has no outlet to the sea, has made its flag a "flag of convenience" and has gained a merchant marine... [ellipsis as published].

[Chervonenko] That's what intelligent people do. It's not a simple matter, but we shall keep moving towards it. The Ukrmorport [Ukrainian seaport] concern will be reformed. There will be a single port called Ukraine, and all the others will be sections of it. This will result in ports becoming specialized. For example, Pivdennyy will handle bulk and oil loading. Odessa will handle general cargo and containers. As in the USSR - and there's nothing bad in that: they had more volume then.

The most important thing is that I'm consolidating the cash flows. Do you remember my announcement to the investors' council that all ports were switching to the services of Ukreximbank? There was only sabotage in response. There was nothing in it for them, you see. But it is in my interests to have a consolidated and transparently monitorable cash flow, against which I will get any credit and investment. It's in my interests to see how funds move. Then the trade unions in Pivdennyy won't control hundreds of millions a year inefficiently and without a financial plan. On the other hand, they often invite [Russian entertainers Maksim] Galkin and [Alla] Pugacheva down there [at state expense, presumably]. I've nothing against this. I shall preserve both Kharkiv's Lokomotiv [football club] and the Pryportovyk handball team in Odessa. But I want to see real estimates, not "black" ones.

Air transport is vitiated by internal squabbles

[Kuksa] Let's move on to air transport. Most of the world's major airlines became such with state support. Could you comment on the idea that, without state support, Ukraine's acceding to the "open skies" agreement will take work away from our carriers?

[Chervonenko] You'll be surprised to hear that I agree. But it's a question of methods and forms. It isn't even a question of Aerosvit [Ukraine's largest air carrier]. I'm not against Aerosvit as one of the players in the market. Just tell me: why was there no alternative when the contest was held for obtaining the land [at Boryspil airport] over which they're now going into hysterics? Why do land registers "catch fire" when checks begin? Why is the law on transport broken and Aerosvit is given land on which strategic state communications are located? In any country, whatever the form of government, the state must call the tune. Yet, in our country, the tune was called from the state by Aerosvit... [ellipsis as published].

I'm the same sort of manager as Hurtova and Mayberh. We speak the same language. But they must have the courage to bear in mind the interests of the state. You didn't create this, but you took it without a contest. Why should you have privileges? - especially since, formally, there is more state interest in UIA [Ukraine International Airlines]. And what answer is to be given to [the state-owned] Air Ukraine, which just demands wages and does nothing? All normal air staff have left it... [ellipsis as published].

[Kuksa] What, though, do you intend to do to create an airline that will, in the future, put pressure on Air France and Lufthansa in the skies of Europe?

[Chervonenko] I don't want to stir up that wasps' nest. I don't want to give away the secret... [ellipsis as published]. Let's do that after the NSDC [National Security and Defence Council] meeting on air transport that is now being prepared.

In air transport, I demand safety above all. But [just look at] how certification has been conducted and still is today... [ellipsis as published]. It will take a separate conversation to explain why we lose slots, how the production of new aircraft - the An-140 and the An-148 - is slowed down and how we counteract the buying up of the documentation for these aircraft by the Russians.

A national airline must have an extensive leasing programme for the purchase of modern aircraft. What's needed is a partial, or perhaps complete, merger of the existing companies. One option is UIA and Air Ukraine. But there are also options involving a merger with Aerosvit - naturally with the state's interests being observed. And also with the attraction of private capital.

Don't misunderstand me: no one wants to do away with Aerosvit and the best routes. But it is necessary to end its monopoly. Incidentally, we've got rid of many of its privileges - specifically, that Lufthansa had to have its handling done only by Aerosvit.

We have to resolve problems of safety and the regularity of domestic flights and to organize feeder services from other towns in Ukraine to connect up with international flights. At the same time, I'm looking for ways of keeping Dnipravia, Donetskavia and other companies viable. A separate place in the reform will be devoted to business aviation, which will develop very briskly.

[Kuksa] How many An-140s and An-148s are you going to buy? The first is made in Kharkiv and the second in Kiev, but there is a conflict between these companies... [ellipsis as published].

[Chervonenko] On paper, I already have a whole series of orders from our companies - for five An-140s and seven An-148s (four for Ukrainian airlines and three for Russian ones). I shall do my utmost to see that the Ministry of Industrial Policy doesn't hand over the documentation for these aircraft to the Russians.

As an interested person, the customer, I shall do all I can to see that the conflict between the aircraft manufacturers comes to an end. It's a nonsense when the Antonov design bureau is profitable because they have the Ruslans.

[Kuksa] Ukraine and Russia share first place in the air transportation of heavy loads. But there's a problem with aircraft being arrested... [ellipsis as published].

[Chervonenko] I've said more than once that people have plenty of goodwill - only 39m dollars are needed! Ukraine doesn't dispute the issue, even though it's not a particularly rich country. But we're losing the market because of this sum. If the president tells me to, I'll find a financial way of compensating for the money. At the end of the day, let the state pay, and then the prosecutors and courts sort out who owes how much to whom. Why are we obliged to lose today by blaming the past?

This debt undoubtedly arose from big politics, and it's very hard to resolve the matter. However, on the day when we pay the 39m, the Mriya and Ruslan aircraft will start to bring in earnings worth hundreds of millions.

The freight market has great prospects. I've ordered an investment project for the building of a freight terminal at Boryspil to be presented. I have an instruction from the president about developing freight transit from America to the Far East via Ireland and Ukraine. We've made a start on expanding Boryspil airport. We've cleared away the customs barriers in the takeoff area. The main thing now is to end the war for land and to build the terminal as quickly as possible, since the fight for the southeastern passenger and freight transit route is now going on without Ukraine taking part - between Sheremetyevo [Moscow], Warsaw and Budapest.

Ukrtelekom privatization is still in limbo

[Kuksa] Why did Yushchenko unexpectedly raise the question of selling the goose that lays the golden eggs - Ukrtelekom - at the mini-Davos summit?

[Chervonenko] As far as I know, there is no specific purchaser for Ukrtelekom today. There are many people who are interested. Maybe the country's leadership wants to boost interest in the company through such statements.

My position hasn't changed. The planned 42 per cent can be sold. The only question is how. My opinion coincides with the position adopted by [Oleksandr] Tretyakov [the president's principal aide and head of Ukrtelekom's supervisory council]. We should get on with the pre-sale preparations and flex our muscles. In addition, there should be a full audit and scrutiny of all the internal debts. And there must certainly be a licence for third-generation communications, the issuing of which to Ukrtelekom is opposed by [rival GSM operators] UMC and Kyivstar.

It would be a mistake to sell Ukrtelekom with shouts of "The budget isn't full!" I think the pre-sale stage will take at least six months.

Then I would suggest not declaring a contest for purchasing a Ukrtelekom stake, but simply floating the shares on the international exchange. An open subscription for them should be announced! That way, we shall get more money than from any investor.

At the moment, the Ukrtelekom investment plan is shelved at the State Property Fund of Ukraine. The cabinet's discussion of it has again been put off indefinitely. The prime minister and I were very tough when it was being approved, so that Ukrtelekom's financial plan is, in my view, far more transparent than those that preceded it. I have a normal understanding with [Hryhoriy] Dzekon [chairman of the Ukrtelekom board]. He does, at least, hear me. And with Tretyakov too. However, until Ukrtelekom is transferred to the Ministry of Transport and Communications, I can only act as an adviser.

I think that the company must come under the political jurisdiction of the Ministry of Transport and Communications. A resolution to that effect has been submitted three times for discussion, and three times it has been blocked. But we shall, possibly, return to the question.

Ministry computerization an uphill struggle

[Kuksa] Are you going to turn the Ministry of Transport and Communications into a model of transparency by using electronic management schemes and electronic signatures?

[Chervonenko] The other day, we presented a project, "The Central Authentication Body", which now has to undergo accreditation and the electronic signature keys must be issued to state and commercial organizations and to physical persons.

I have two priorities, as in that Russian saying - fools and roads. Computerization is the fight against fools. We've already talked about the roads.

[Kuksa] What are you like with the computer yourself?

[Chervonenko] Very limited. I lack the patience. Old habits die hard, I suppose... [ellipsis as published]. But I can access the Internet. My daughters teach me at night. However, I promise to set an example to my office.

I also promise that everything here will be computerized. You don't realize how much of the most modern equipment was purchased here! But it's not linked up with anything else. And how much resistance is being put up to computerization of the actual ministry! Not only ours, though. For example, the DAI [State Motor Vehicle Inspectorate] wants its own information system. The tax inspectorate has its own... [ellipsis as published]. And do you know what's going on in the meantime?

[Kuksa] They're carving up the money earmarked for the computers.

[Chervonenko] You've said it all. We've got enough computers now, even in schools. But they're not linked up with anything. Carrying out an instruction from the president, Ukrtelekom reduced its charges for connecting up schools to the Internet - and what a howl went up! On the Internet itself and especially on the sites that sling mud for which nobody takes responsibility. But I'm not worried about that. For me, it's important that the Internet is in the schools. I'll overcome the opposition. I'll keep going to the president, and we'll keep forcing the bureaucracy. It means savings of hundreds of millions of dollars - plus a totally different level of administration.

Regulation of communications at a standstill

[Kuksa] The National Communications Regulatory Commission [NCRC] is still not operating, yet the market needs regulating. Is the Ministry of Transport going to assume its functions?

[Chervonenko] That's a question for the NCRC. It guards its rights very jealously. It was set up in the heat of battle, and everyone wanted to pack it with his own players. They took the ball away from me. I now sit on the river bank and watch. Yet we're the ones who are responsible for state policy in the communications field!

I've given them all the right conditions for work. I've had meetings with [Oleh] Hayduk, and we agreed to coordinate matters - so that they don't take away everything that they can't "lay waste to", and so that they liaise with us over state policy on charges, for example. Incidentally, I've been under incredible pressure from the people who stand behind Hayduk, although he claims that only the president is above him. It would be nice if his words matched the actual state of affairs.

Anyway, I'll wait a bit longer, till about August, and then I'll go to the Cabinet of Ministers ready for battle because the market needs the licences. At the moment, I'm not getting in their way.

[Kuksa] Is dividing the ministry into transport and communications no longer very topical today?

[Chervonenko] I'm tired of that question. The president has appointed two deputies for me - for computerization and for communications. We have been designated as the state body commissioning the launch of a communications satellite. So I'm not going to comment on the problems of division. I just carry on with my work.

Car problems; wife's company

[Kuksa] Finally, then, what is the fate of the legendary Maybach [luxury car]? You've given it such a lot of publicity... [ellipsis as published].

[Chervonenko] That really is an improper question. All sorts of rumours are now doing the rounds - that my wife travels [in it]... [ellipsis as published]. She travels in the Audi that she gave me on my 45th birthday. I'm economizing because I've got my official car and my rally Mitsubishi EB08.

The Maybach is now locked up in a garage and is guarded by Berkut [Golden Eagle - an elite security force]. I can't sell it just because of the fuss that you journalists have kicked up. I've even tried taking a priest to it... [ellipsis as published].

So far, I've got two buyers - one in Russia, the other in Ukraine. But the main condition - and I'm saying this through Zerkalo Nedeli - is that you will never know his name. All that will be published is the cash receipt or the number of wagons for which I've exchanged it. As someone who adores cars, although I haven't even touched a Maybach and have only seen them on the television, I've fixed the price at up to 500,000 dollars. I urge all investors to buy it. There are many who want to, but they're afraid of inquiries being made. But I won't hand it over for 100,000 [dollars], since you'd be the first to condemn me.

[Kuksa] How are things at Orlan, your wife's firm, nowadays?

[Chervonenko] Bad. In a single year, the output was reduced by 65 per cent, and the company, which ranked third, fell to some unknown position... [ellipsis as published]. Hardly surprising, since the supermarkets were ordered not to take any Orlan output under the threat of checks being made. Orlan Trans still hasn't had a VAT refund.

Incidentally, my wife isn't the owner of Orlan. She's the manager. The owners are foreign companies. The factory bears the name of my father, who died six days after it opened. The factory is now up for sale. One of the main conditions is that its name must be retained.

Political matters

[Kuksa] Will you be contesting the 2006 [parliamentary] elections?

[Chervonenko] I'm a party member. So, if they put me on the list... [ellipsis as published]. It depends on the party and the president. I shall try not to be the worst person on the list.

[Kuksa] Do you reckon to stay the distance as minister up to 2006 or beyond?

[Chervonenko] The president has said that many of the ministers are in post for a long time, and I want to be among them. But my programme is to do everything quickly and concretely. My road map is for a year. I'm a realist. I want to finish off the business and show it to the country.

On the other hand, I don't want to leave this front and go anywhere else. It's mine. I feel like the minister. Those aren't my words, but an appraisal made by Yuliya Volodymyrivna Tymoshenko. So I count on staying here - and on being good for the country rather than for any particular MPs.

I can't help thinking that there's no alternative to the ideology that I urge people to follow - to get off their knees, not to kowtow to anyone and to remember their own dignity and their "white" reward. Maybe I'm a dreamer. But you know that, when I was setting up my first factory to make alternative canned Pepsi-Cola and beer, all the market leaders shouted that Chervonenko had gone mad. But I earned a fortune from it. On logistics alone. There were exports to Russia. One wagon held 60,000 glass bottles containing a third of a litre of beer or 200,000 third-of-a-litre cans. So the whole of Russia was drinking my beer... [ellipsis as published].

[Kuksa] Will you help to finance the party - or the Ministry of Transport?

[Chervonenko] No, I'm sure of that. And not because I'm afraid that someone will win and start doing me down - as Kyrpa's financing of those elections or the massive thefts is now being investigated.

There will be people to do the funding: some pretty affluent people are said to have joined the faction, like Horbatov and [Ihor] Franchuk [who is president of the Black Sea oil and gas company Chornomornaftohaz and Kuchma's former son-in-law]... [ellipsis as published]. I don't even know exactly who else - I'm a long way from party politics.

You probably know why it was necessary to divide transport and communications. Everyone realized that I couldn't be dislodged from transport. Communications might be different... [ellipsis as published]. There's a view that they can be milked.

[Kuksa] What's your stance in the party?

[Chervonenko] I don't have much time nowadays, and I don't quite understand who's doing what there. What I proposed for the party... [ellipsis as published]. Frankly. Whenever I met teams on the railways, I told people that Yushchenko and I had carried out the revolution with one aim - to see that no one would ever drive you with a whip into anything or into any party. The fact that I've removed your fear and given you an incentive to work and to walk with squared shoulders should determine your outlook. I think I'm doing the right thing. Otherwise, I'll help in any way I can.

Source: BBC Monitoring Former Soviet Union

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