UT1 State TV, Kiev, Ukraine, in Ukrainian 0840 gmt 9 Feb 06
BBC Monitoring Service, UK, in English, Thursday, Feb 09, 2006
via AUR

President Viktor Yushchenko has said he will set up a commission to draft a new version of the constitution which will then be put to a national referendum.

Speaking in his televised state of the nation address in the Ukrainian parliament on 9 February, Yushchenko reiterated his reservations about the changes to the constitution that came into force on 1 January 2006, shifting some of the president's powers to parliament, and said that they were only the start of a larger process of reforming the system of governance.

He pledged, however, not to dispute the amendments in the Constitutional Court until after the 26 March parliamentary election.

Yushchenko also praised economic reforms and progress towards democracy achieved over the year since he took office, and said Ukraine had become a model of democratic transformations for other post-Soviet states.

The following is an excerpt from Yushchenko's address broadcast live on state-owned television UT1 on 9 February:

Esteemed people's deputies, esteemed Ukrainian public!

It is a great honour for me to be present in this chamber today and to be able to address Ukrainian MPs.

A year ago, Ukraine opened a new page in its history. A former Soviet Republic, a country with an unclear political face and uncertain future was replaced by a politically mature nation capable of accomplishing its own historical mission without anyone's guidance.

A year ago, Ukraine found itself at the focus of international attention. Foreign countries and their leaders watched with interest the events in Ukraine. Our citizens, both in the east and in the west, with different flags in their hands, proved to the world that they are a nation capable of determining not only its own history but also the history of the world.

I understand that the assessment of generations to come will be of greater importance, but today my sincere thanks go to all of you who, acting on behalf of various political forces in Ukraine and abroad, helped Ukraine return to the international democratic process by telling the truth [applause]. [Passage omitted: continues to praise Ukraine]

As the president of Ukraine, I want to give my assessment of the situation and set standards for the further development of society. I propose an agenda on which the Ukrainian public and all of us should focus our efforts. So stop quarrelling, there will be enough work for everyone.

Today it is more important than ever to demonstrate the ability to cooperate and implement strategic tasks for the country's development and to consolidate ourselves.

I am certain that it is through this work alone that we will create a perfect model for a new system of Ukrainian government, which the Ukrainian people needs. I believe that we will finally launch a new form of social dialogue and stop the shameful practice of political populism.

We should upgrade our thinking to the state level and bring into existence a new type of Ukrainian politician capable of instilling new values in society and defending them in the world. [Passage omitted: calls for a fresh look at modern civilization and Ukraine's place in it]

WHY UKRAINE HAS THE CHANCE TO BECOME A LEADING NATION
The transition period of the 1990s is over. The Rubicon has been crossed. A modern Ukrainian nation has emerged and it has a realistic chance to find a place among the world's leading nations. What gives me grounds to declare this? What assets do we have? Why is it that attention of this kind from other countries is focused on Ukraine?

[1] FIRST. We have proved in this country that people's freedom is not a mere word but the highest value, which unites the nation and determines the philosophy of government. This is a value that our people are willing to defend firmly and with unshaken will.

I recall the words of the great Bohdan [Khmelnytskyy, Ukraine's 17th century military leader] that there has never been such a splendid opportunity for everyone in Ukraine to enjoy freedom.

[2] SECOND. We have set an example for other countries in the post-Soviet space of choosing our path independently, according to our own national priorities, rather than under pressure from any force.

[3] THIRD. The fact that there exists no ready-made universal recipe for democracy after a totalitarian regime lasting many years has turned out to be a challenge for us, as well as for all civilization at the turn of the century. For the first time in our modern history, it is necessary to look for answers to many questions on our own.

The front-line in the global development of public administration and contemporary democratic institutions runs through Ukraine. In forming a new democracy, we can be an example for the entire civilized world.

[4] FOURTH. We should follow the road towards economic prosperity, which took Europe hundreds of years, in five or seven years or 10 years, at the very most. Ukraine may only succeed as a fully-fledged state if it achieves an economic breakthrough. It should accept this challenge and become a stage for the formation of new economic development models. But this is now a problem of political will.

[5] FIFTH. Ukraine has historically been at the crossroads of various cultures and civilizations, and also of important migrational, financial, political, integrational and other transit processes. For a long time, this was viewed as a burden, and as an extra complication and barrier to national development.

I am certain that this is now our colossal advantage and a huge untapped reserve. The foundations that we lay down to manage these processes will set prospects for stable development not only in our country, but also in the region.

ECONOMIC TRANSFORMATION BEGAN IN 2005
A year ago, society set us the task of creating a new political system. This is a process of change that will last for many years to come. But even now, it can be said with certainty that in 2005 we made a good start on this difficult road.

With the help of the people, we have ruined the foundations of a corrupt totalitarian system, won freedom, especially the freedom of speech and the freedom of political choice. The authorities are open to control and sensitive to criticism. Political competition is a natural state of affairs for us.

The system of oligarchic control over the economy has been weakened and deprived of support from the state. The corrupt government hierarchy has been seriously disrupted, the economic impact of the most dangerous shadow schemes such as shadow privatization, VAT refunds and so on is diminishing.

Poverty has been reduced substantially. Absolute poverty has been virtually eliminated. Ukrainian culture and Ukrainian cultural policy have stopped being a Cinderella.

I will only analyse individual trends in 2005. We received a country with signs of economic decline. Ukraine was divided between oligarchs. Its economy was extremely energy intensive, energy dependent, unbalanced, and murky. It was noncompetitive and its resources were depleted. The budget deficit had grown to 12bn hryvnyas [about 2.4bn dollars].

The macroeconomic situation was worsening. The rate of GDP growth dropped from 12 to 6.5 [per cent] in January 2005. The currency reserves of the National Bank of Ukraine shrank by a quarter in the fourth quarter of 2004. Negative trends in all sectors of the national economy began to show themselves from April 2004. The country could have slid down into an abyss of poverty and ruin.

A qualitative transformation of the economy was launched in 2005. We have managed to achieve the most important thing - making it work for the benefit of every Ukrainian. The economy has started to grow mostly as a result of expanded domestic consumption. Its reliance on the export of mineral resources, which is prone to unfavourable and highly volatile business conditions, has been reduced significantly.

For the first time in the history of independent Ukraine, we have created a model for a socially oriented economy and provided for its functioning. This model alone managed to ensure a record increase in living standards. Real private incomes - just think of it, esteemed colleagues - rose by 20 per cent. [Passage omitted: budget revenues are growing]

The sale of Kryvorizhstal [reprivatized steelworks], which yielded 4.8bn dollars for Ukraine, was one of the brightest examples of the new policy. It was 20 per cent higher than the total amount of revenues from privatization in all previous years.

We have almost cleared VAT refund arrears, which for many years were a source of corruption by state officials.

The new government's effective steps have helped to shrink the shadow economy. According to international rating agencies, Ukraine has moved up from 122nd position for the level of corruption to 107th. The February session of the Financial Action Task Force (FATF) removed Ukraine from its black list of countries that fail to tackle money-laundering. I will continue to pursue this course in the future. [Passage omitted: figures reflecting the economy's development in 2005]

HISTORICAL DESTINY AS CENTRE OF REGIONAL INTEGRATION PROCESSES
I am confident that it is the Ukraine's historical destiny to serve as the basis for integration processes in the central and eastern Europe region. Stability of this region is important not only for the continent but for the entire world.

I am confident that Ukrainians will become the nation that would offer the world new standards of high spiritual values, new examples of democratic culture, international accord and interstate dialogue. This is the core of our global project and of our mission.

Dear colleagues, I believe that the misfortunes of the recent years were related to our failure to understand our own resources and capabilities, our choice of the wrong objectives and superficial self-determination in the world. It happened that the south and east of Ukraine could not live without Russia and the west was sleeping and dreaming of Europe. Kiev became the centre of a struggle for power.

This situation lasted until the people united and took a decision on the destiny of their own country. We have changed the logic of the processes in the country and in the entire region. Now we cannot let the ghosts of the past determine our motivation and our political objectives. We have to stop fighting each other for control over the old power machine. We still keep exhausting public confidence, pulling at the remains of the old torn blanket instead of weaving a new one.

We have had enough of running after yesterday's objectives, catching all the time [the level of] development of the others, trying to please someone, copying someone else. This is not our way and this is a way to nowhere. The issues of implementation of our mission, consolidation of the multiethnic Ukrainian nation and formation of a realistic self-development strategy are more critical for us now than ever before.

As the president of Ukraine I see my primary objective as the implementation of a series of fundamental infrastructure reforms needed for forming Ukraine as an independent state whose life is determined by civilized European coordinates and whose development is aimed from the social and economic periphery to the centre of international society.

What do we need to do for that? We, each and every of us, have to give up step by step the chains of the past that hold back the progress of the country. Namely, we have to refuse this purely Ukrainian practice of making agreements in the morning and breaking them at night.

WARNS AGAINST PRE-ELECTION POPULISM
One of the nation's basic problems in terms of politics is the political fragmentation that gets in the way of the structuring of both parliament and society. We have to refrain from provocative grandstanding in the interests of political parties, especially before elections, on those subjects which can, even just a little, split society, regardless whether it is the issue of religion, of language or so-called federalization, or NATO and so on.

We must reject a policy of double standards, when, to take an example, on the one hand the changes to the Constitution are treated as a sacred cow, and at the same time the people's right, provided by the constitution, to have a functioning Constitutional Court is consciously neglected.

We have to refrain from what is, forgive me for saying so, a traditional thing, that is pre-election social populism, the cost of which due to the adoption of social laws in recent months is one third of the state budget, and there is not a single kopeck of financing behind these resources.

And also we have to study in one great school and to learn to unite ourselves and to formulate a consolidated position either in external relations or under the threat of political or economic crises. Recent events have moved forward on the agenda the need to formulate and develop the strategic ability of public management.

The authorities continue to believe that they are the only decision-makers. Important laws are now approved only to go out of effect immediately afterwards. As a result, behind loud titles there is organizational impotence or the old administrative system. Therefore, our decisions are the good intentions that a classic said pave the way to hell.

I would like to draw political forces' attention to the fact that the sources of authority are changing now. They are becoming fewer within government buildings. The focus is now moving onto humanitarian, legal and political instruments and procedures for bringing various interests into agreement and reaching understanding.

The authorities are increasingly moving to where communities organize themselves and to where new instruments of government are being sought. Under these circumstances, political parties which are able to create the conditions for solving social problems can quickly become influential in this country, as opposed to just being the train that takes you to parliament.

Special attention needs to be paid to situations where decisions are taken that are strategically important to this country. Political decisions have to be considered in public, rather than being imposed on politicians by creating crises. We need a new quality in the process of consultations in our country.

Reforming Ukraine's armed forces and its defence industry is a problem that is no less urgent and needs public discussion. Basic documents - a strategy for Ukraine's national security and a strategy for Ukraine's military security - will be presented for consideration by the public and politicians in 2006.

Only a professional army where servicemen enjoy social security can be reliable. We plan to complete the transition to a professional army by 2010, while ensuring the innovation development of Ukraine's defence industry and military-technical cooperation at the same time.

CONSTITUTION REFORM TO BE MORE FAR-REACHING
Esteemed colleagues, I am critical of the model of democracy that has established itself in Ukraine. In essence, a civilized political space has not been constructed. I am convinced that the political process has to reflect the position of all political forces.

The opposition - a political force behind which there are certain groups of social interests - should not be excluded from political dialogue and only derive pleasure from criticizing others.

Solving this task demands that we go back to the issue of constitutional reform. I deem it necessary to reiterate my attitude to it. I will say again that, being a guarantor of the constitution, I have not made and will not make any steps that violate the version of the constitution that went into effect on 1 January 2006 [applause].

At the same time, I have stressed on more than one occasion that amendments - [shouting] However, I stress that amendments that went into effect or are to go into effect are only part of the reform of the government system. In addition, this reform only affects the central level.

Therefore, I do not believe that these amendments can be called a fully-fledged political or constitutional reform, which our society really needs. The amendments to the constitution have already begun to reveal a number of problems. I would like to list a few of them.

There is no clarity on the issue of the dismissal of the government if the coalition it was created by falls apart. What are citizens to do if a branch of government fails to exercise its constitutional authority? The reform of the government system at the central and local levels has not been coordinated properly. At the local level, it has been put off for at least six months.

The transition to the proportional principle for forming representative bodies of local councils does not take account of the need to defend the interests of local communities and contains a direct threat that centrifugal tendencies will escalate. This is obvious.

None of the laws that regulate the activity of government agencies have been brought into line with the constitutional amendments. Unless these laws are amended, the authorities will not be able to function properly under the new conditions. I am convinced that the aims of political reform have to be much more far-reaching.

They should not merely amount to a redistribution of authority in the president-parliament-cabinet triangle. Reducing the scale of political reform only to this sort of redistribution contains the threat of permanent parliamentary and government crises, a few of which we have witnessed already.

The last, but probably the most important, in the list of steps to form a modern system of government is staff policy and staff quality. State service is no longer the place to receive an administrative annuity. However, it has not yet become a prestigious profession. We have to make state service accessible to those people of the new generation who have will power and initiative.

This is our main resource, and it has to be multiplied. [Passage omitted: economy should make more use of high tech, be protected from unfair competition]

DEVELOPMENT OF INTERNATIONAL RELATIONS
Despite domestic problems both in the EU and in Ukraine, more was done in 2005 than in all of our post-independence history to develop relations with the global and European community and raise recognition of Ukraine. Ukraine was granted market-economy status.

Talks started on a simplified visa regime and on readmission. Much progress was achieved on the Ukraine-EU action plan. Six important industry accords were signed in the fields of security, transport, energy, space exploration, etc.

Ukraine's next steps towards European integration will above all be based on its national interests. This is creating a free-trade zone with the EU in 2007 and signing an association accord with the EU in 2008. Then, after the Copenhagen criteria for EU accession have been met, full EU membership will be achieved.

On bilateral and multilateral levels, Ukraine will continue to make use of the potential of strategic partnership with Russia and maintain good and mutually beneficial relations with other neighbouring countries. We have to be present wherever our political, economic or humanitarian interests lie.

The year 2005 can definitely be considered successful in terms of relations with such partners as the USA, Poland and Romania. I hope that 2006 will see us take strategically important decisions in relations with these countries.

On the agenda is the recognition of Ukraine as a market economy within the framework of US anti-dumping laws and signing of a relevant protocol within the framework of Ukraine's WTO accession.

Another of our important foreign policy objectives is asserting our country as a regional leader. Ukraine not only shares European values but also helps them take root in the region. The fact that the Community of Democratic Choice - a regional forum ensuring democracy, security, stability and prosperity in the Baltic, the Black Sea and Caspian regions - was set up at the 2 December summit in Kiev shows that this activity is not devoid of specifics.

Ukraine's new regional policy is becoming one of the key elements of our country's European and NATO integration. Ukraine's actions only attest to its leading role in GUAM [regional alliance of Georgia, Ukraine, Azerbaijan and Moldova]. We have been using the opportunities for cooperation in the Black Sea region, especially under the BSEC [Black Sea Economic Cooperation], more often now.

We are stressing and will continue to stress the importance of deepening economic cooperation, improving Ukraine's international image and using to the maximum its potential as a reliable energy transit country and a partner in ensuring stability and security in the region. We have attained significant success in settling the conflict in [Moldova's breakaway] Dniester region.

Guided by the multi-vector principle, varying rates of integration, and taking into consideration provisions of the constitution and national interest, Ukraine is taking an active part in preparing international legal documents that serve as a legal basis, for instance, for the Single Economic Space [economic union of Ukraine, Russia, Belarus and Kazakhstan]. [Passage omitted: wellbeing of citizens remains a priority]

IMPORTANCE OF PREVENTING ETHNIC, RELIGIONS CONFLICT
Ukraine has always been the home for representatives of many nationalities. Followers of various religious traditions have always coexisted in peace in our country. Nowadays, Ukraine is one of the few post-Soviet states that manages to maintain interethnic peace. This is one of our biggest achievements and we have to cherish this.

But retaining interethnic accord, preventing interethnic or religious conflicts remains our duty. Representatives of any ethnic group have to feel more comfortable in Ukraine than in their native countries. [Passage omitted: ties with Ukrainian diaspora are also very important]

I cannot avoid mentioning the most sensitive issue for our society - the problem of the religious sphere, the unnatural division of Ukraine's Orthodox churches. There is an urgent necessity to overcome the existing conflict between the biggest Orthodox jurisdictions [Orthodox churches of Kiev and Moscow patriarchates] and to set up a single local apostolic Orthodox church [applause].

Taking into account the strategic nature of this issue, the state has every right to actively raise it and to contribute to its successful resolution without interfering in internal church matters. [Passage: the state should develop a distinct cultural policy]

JUDICIAL REFORM, ANTI-CORRUPTION PROGRAMMES
In the final part of my speech, let me list some individual programmes that we have already launched or the drafting of which will be completed shortly. The organization, funding and deadlines for their implementation should be set by law and should have direct budget funding.

[1] FIRST, a programme for judicial reform and the reform of the law-enforcement bodies. In developed democracies, courts are placed on the same level with the other branches of power, if not higher. Civilized societies are guided by the rule of law. The same should apply in Ukraine. The changes should raise people's trust in judges and law-enforcement bodies.

To this end, we must create appropriate conditions for the work of judges. We will stop the shameful practice of earmarking budget funds to cover about half of the needs of the judicial branch, as has been the case in the past years. At the same time, the focus will be made on improving selection of judges and raising requirements for their professional training and work experience.

The public will have means of monitoring the selection process for judges. At the same time, reform will be conducted in the sectors adjacent to the judicial system - prosecution, lawyers, the bailiff system and notaries. It is time to bring the law-enforcement agencies in line with European standards and strengthen the functions of public monitoring.

[2] SECOND, a programme for fighting corruption and reform in public administration. Combating corruption in public administration is a criteria for assessing the efficiency of the authorities. The programme is aimed at making governments at all levels more transparent.

It envisages improving the system of declaring and monitoring property and incomes, checking whether top officials' consumption is line with their incomes and introducing independent monitoring of the state and expansion of corruption.

It is important to separate in legal terms the political and administrative functions in the executive and improve the procedures for work of government bodies.

The separation of political posts from public service and the establishment of legal mechanisms for the protection of public servants from unlawful political influences will become a firm rule. [Passage omitted: programmes to reform the health-care system, science and education, agriculture; need for high-tech breakthrough]

The key point of our programme for increasing the Ukrainian economy's energy efficiency is raising the efficiency of energy consumption and the diversification of fuel supplies. It is to be implemented through the housing and utilities programme based on competition in providing energy supplies to households and to industry.

We will propose a clearly defined and economical mechanism for encouraging energy saving. A criterion of the programme's success will be a 10-per-cent reduction in energy consumption as early as this year. We will strive towards diversification of the sources and ways of transporting fuel to Ukraine. To achieve this, the implementation of international energy projects will be stepped up.

Esteemed people's deputies, I am convinced that these and other strategic programmes will be the locomotives of national development, which will unite financial and human resources, the efforts of the authorities, society and business.

Our joint victories along this way - big and small - will bring us closer with every day to achieving the three strategic goals: raising the quality of citizens' lives; asserting an effective knowledge economy; and developing a fair and transparent system of government. I stress that a joint future unites us.

NEW POLITICAL REFORM PROGRAMME NEEDED
And lastly, I am convinced that after the stage of partial amendment of the constitution is over, we will embark upon a real and comprehensive political reform, which will be based on the following priorities.

[1] First, ensuring citizens' involvement in running the country.

[2] Second, implementing mechanisms for the real accountability of all branches of power and government agencies to society and their responsibility to citizens.

[3] Third, raising the efficiency of the government system through a balanced distribution of authority and functions between the branches of power and government agencies.

[4] Fourth, delegating authority to local government agencies and preventing centrifugal tendencies, transferring executive functions to local communities and providing them with enough resources to carry them out.

[5] Fifth, combating government corruption, simplifying mechanisms of providing administrative services to the public; ensuring that professional state service is politically neutral and seen as prestigious.

[6] Sixth, adapting the political system and civil society institutions to new social needs, new demands for political parties, new conditions and stimuli for NGOs.

I would like to stress that implementing these principles will depend on cooperation between all branches of power, full-fledged involvement of society, and reaching a consensus within the elite. The process of implementing the new model of government and improving political institutions has to be transparent and immaculately correct so that there are no grounds to question its legitimacy.

NEW CONSTITUTION TO BE DRAFTED, PUT TO REFERENDUM
Therefore, I propose the following plan of action to implement a political reform that is truly for the people. A constitutional commission should be set up, involving representatives of political forces, the public, NGOs, local government agencies, scientists and experts, to draw up a new version of the Ukrainian constitution [shouting, applause].

The draft should be discussed by the public. The new version of the constitution drafted by the constitutional commission should be put to a referendum. A number of legislative acts should be drawn up and approved to develop constitutional norms and ensure the effective functioning of the new political model. First of all, these are the laws on the Cabinet of Ministers of Ukraine, on the president, on the parliament agenda, and others.

As the guarantor of constitutional rights and freedoms, I believe this route to be the most appropriate in terms of combining the tasks of involving society and the legitimacy of the whole of the constitutional process.

I am convinced that reaching a consensus on this issue is quite possible. To this end, I stress that until parliamentary elections are held [on 26 March], I will not initiate the consideration of law No 2222 [on constitutional reform] by the Constitutional Court.

At the same time, I would like to reiterate my concern over the fact that there is no functioning constitutional court. I am convinced that in the next few days the Supreme Council will swear in the judges that were elected by the congress of judges and appointed by the president, and will elect its own quota of judges.[Passage omitted: historical references]

COUNTRY NEEDS UNIFYING IDEOLOGY
I am certain that there is nothing to divide us at present. The country needs a new unifying ideology. Neither the struggle for independence or freedom, nor the struggle against the regime, nor any other struggle can serve as this idea any longer. In general, nothing linked to the word struggle can provide this idea.

We should now get out of trenches, give up weapons and extend our hands to one another.

I am certain that we should lead our country to achievements, development and prosperity this year. We should collect millions of people's wills and talents into a single fist and take yet another step towards people.

Thank you for your attention. Long live Ukraine [applause].