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- SOCIAL DOCTRINE, RELIGION AND STATE-BUILDING
Free economic zones
To provide more incentives for foreign investors to expand their activities
in the country in October 1992 the Supreme Council of Ukraine passed a
Law on Free Econom ic Zones.8 This supplem ents the Law on Foreign
Investments by making provision for the creation o f zones where foreign
capital may be granted additional benefits as regards taxation, customs, sim
plified entry procedures into the zone, etc. in exchange for an increase in
the introduction of high quality goods and services, introduction of new
technologies, improvement of managerial skills, acceleration o f socio-eco
nomic development, etc.
The law lays down basic rules for the creation, functioning and liquida-
tio a o f free economic zones. Regarding the status, terms and territory o f a
given special economic zone, these are to be determined by separate laws
to be enacted by the Supreme Council of Ukraine whenever the question of
establishing such a zone is raised (Art. 2). This flexible approach makes pos
sible the establishment o f various types of such zones having different func
tional characteristics, and hence requiring certain variations in their legal set
ups in accordance with the purposes for which they are established and the
specific conditions in the area concerned.
The procedure for setting up a free economic zone consists o f several
stages. The initiative in this respect may stem from the President, the
Cabinet of Ministers, local councils of people’s deputies, local state adminis
tration. The project must first be considered by the Cabinet o f Ministers
8 Law on Free Economic Zones, 13 October 1992, in Russia a n d Com m onw ealth Business
8 February 1993.
THE UKRAINIAN REVIEW
within the specified time-span (60 days from the time it receives the propos
al). It is submitted to the Supreme Council (Parliament) for a final decision.
The same applies to any subsequent proposals for changing the status o f the
zone (Art. 5). The package of documents governing the setting up o f a free
econom ic zone includes the decision (the written consent in the case when
the initiative com es from the President o f U kraine or the Cabinet of
Ministers) o f the local council o f people’s deputies and local state adminis
tration, the draft regulations governing the status and the system of adminis
tration o f the zone, a description of its boundaries, a feasibility study of the
expediency o f setting up the zone and its future operation, and a draft of
the law setting it up (Art. 6).
Particular attention is paid by the law to the feasibility study the main part
o f which is listed in Art. 7.
The legal regime of each zone is assumed to be based on two compo
nents which supplement each other: the legal rules determining the status of
the zone and the organisational mechanism for administering its operation.
As far as the latter is concerned the law enumerates several organs of
administration o f the free econom ic zone as well as defining their basic
functions and sphere of interaction.
The core of the organisational mechanism of a free econom ic zone is the
local councils o f people’s deputies and local state administration on the one
hand, and the organ of economic development and administration of the
free economic zone on the other. The latter is to be established with the
participation of the subjects of economic activity of Ukraine and foreign sub
jects of such activity.
The functions and authority of the local councils o f people’s deputies and
the local state administration include the presentation of proposals for possi
ble changes in the status of the zone, participation in resolving the legal,
financial, and social problems of Ukrainian citizens living within the zone,
concluding with the administration of the zone master agreements on the
transfer of plots of land, facilities located within the zone and also natural
resources. The other powers of the local councils of people’s deputies and
local state administration are to be defined by the legal instrument when the
free economic zone is established.
The local councils of people’s deputies and the local state administration
have the right to have their representatives in the decision-making levels of
the administrative body of the zone.
Apart from the functions and authority specified in the law creating the
zone, the organ of economic development and administration of a free eco
nomic zone possesses mainly operational powers. It alone is competent to
define the future directions of development of the zone; to run and develop
a common infrastructure; organise international tenders to bring in new
industries; allocate plots o f land, facilities and the use o f natural resources;
issue licenses for the construction of new facilities, and register the subjects
o f econom ic activities and the investments made in the zone.
The law also allows a citizen of another country working on a fixed-term
contract to be the executive director of the zone’s administrative body.
The local councils of people’s deputies and local state administration and
also the organ of economic development of the zone carry out their various
activities independently of other bodies of the state administration of Ukraine.
The involvement of other organs in the process of regulating the functioning
of the zone is described in the basic law in somewhat general terms. Thus, the
organs of the state executive power in Ukraine exercising state regulation of
the activities of the zone are to supervise the compliance of the zone’s legal
regime with the requirements of the legislature in Ukraine. The judicial, arbitra-
tional and other law enforcement authorities and also the state agencies moni
toring compliance with environmental, public health and other regulations are
to be guided by the Ukrainian legislation currently in force with such excep
tions as are specified in the law for the economic zone in question (Art. 9).
The law gives a general outline of the specific conditions to be created for
subjects of economic activities in the zone and stipulates their basic guarantees.
Among the former it mentions the creation of regulations covering a preferential
mode and level of taxation, specific financial conditions relating to hard curren
cy, a banking and credit system, a system of credit allocation and insurance,
conditions of individual types of payment, a system of state investment (Art. 12).
Businessmen have the right o f independent choice of the types, forms
and methods o f their activities within the zone providing these do not con
tradict the Ukrainian legislation currently in force and the law establishing
the zone (Art. 15).
The state guarantees to foreign investors the repatriation of their profits
and capital invested within the zone as well as the remittance abroad of the
income earned by foreign employees from their work in the free economic
zone (Art. 13, 19).
One of the major impediments to the activities of foreign investors in
Ukraine derives from the fact that the development of the banking system in
the country is, for all practical purposes, still in the bud even though the
Law on Banks and Banking Activity has come into force. The latter was
endorsed by the Supreme Council of Ukraine in March 1991.9
The main particularity of the law is that it envisages the possibility of setting
up banks of different kinds and forms of property. Special attention should be
drawn to the fact that it allows the functioning of commercial banks.
These may be set up by natural and legal persons. One restriction is that
the share of any shareholder o f such a bank should not exceed 35 per cent
of its statutory capital.
Every commercial bank must be registered. For this purpose, a portfolio
of documents has to be submitted to the National Bank of Ukraine. The lat
ter must carry out the registration within a month from the time when the
necessary documents have been submitted.
Law on Banks and Banking Activity, 20 March 1991, in U nited N ation s E co n o m ic
Comm ission f o r Europe.
THE UKRAINIAN REVIEW
A simplified procedure of entry into the zone for foreigners may be envis
aged by the law for that particular economic zone (Art. 22).
The preservation in full o f all property and non-property rights of the
subjects o f economic activity of the zone in the case of its liquidation is also
guaranteed by the state. Disputes arising in connection with the liquidation
of the free economic zone and involving foreign subjects operating in the
zone can be taken to litigation before judicial or arbitrational bodies chosen
by the parties concerned including those located abroad (Art.' 25).
O ne important feature is that the law allows foreign banks, their sub
sidiaries and banks with foreign participation to operate in Ukraine. The
procedure for registering these is somewhat different. Thus, in addition to
the decision of the foreign establishing party (participant) to set up a bank
or a subsidiary on the territory of Ukraine, a foreign legal person also has to
submit the written consent for it of the controlling body o f the country in
which the foreign bank is located if the legislation o f that country so
requires. As far as foreign citizens are concerned, they have to submit a
guarantee of solvency from a reputable bank; and two recommendations
from foreign legal persons or substantial citizens (Art. 22).
The structure of a commercial bank must correspond to the general provi
sions of the Law on Entrepreneurship governing the relevant issues (Art. 23).
In the case when a bank is established with the participation of foreign
natural or legal persons, a license has to be obtained from the National
Bank of Ukraine (Art. 49).
If a commercial bank is going to carry out its operations in foreign cur
rency both within Ukraine and overseas, it should apply for an additional
license from the National Bank of Ukraine (Art. 50).
Some of the issues relating to the sphere of foreign investment and foreign
trade are regulated by the Decree on the System of Currency Regulation and
Currency Control adopted by the Cabinet of Ministers of Ukraine in March 1993-10
The decree is designed to improve the currency control mechanism by
imposing restriction on the use of foreign currency and establishing licens
ing requirements for transaction o f foreign currency.
Some of its regulations touch directly on foreign investors involved in trade.
According to the decree, residents (i.e. foreign citizens with permanent
residence in Ukraine and branches of foreign firms or representative offices
located in Ukraine and conducting their activities under Ukrainian law [Art.
1.5D that receive revenues in foreign currency shall convert it into Ukrainian
coupons on the inter-bank currency exchange.
However, foreign currency earnings received by enterprises with foreign
investments from the export of goods and services which are considered by
the Ministry of Foreign Economic Relations as internal production are exempt.
Decree on the System of Currency Regulation and Currency Control in Russian a n d
Com m onw ealth Business Law Report,
17 May 1993-
Services provided by a resident entity with foreign investment to an entity
non-resident on the territory o f Ukraine are treated as exports and conse
quently their hard currency revenues that they receive for their services are
exempt too from the mandatory conversion rule.
The exemptions also encompass foreign currency transferred to Ukraine
for use in the charter funds of enterprises with foreign investment.
Some provisions of the decree govern the activities of foreign firms that
are non-residents (this category includes subjects of entrepreneurial activity
such as branches and representative offices of the entities located outside
Ukraine [Art. 1.6]). Thus, foreign “non-resident” employers are required to
pay Ukrainian citizens’ wages in foreign currency (Art. 7. 2).
The decree sets up licensing procedures for currency, which means that
the National Bank of Ukraine will issue licenses for most uses o f foreign cur
rency or for exporting Ukrainian currency.
Foreign investors likewise enjoy certain benefits in this sphere. Thus,
there are cases when they do not require licenses. These include making
payments in foreign currency abroad to pay for interest on loans or to trans
fer dividends from a foreign investment, repatriating funds from a foreign
investment if the investment is terminated.
Several provisions of another governm ental legal instrument — the
Decree on Quotas and Licenses for the Export of Goods of 12 January 1993
— also touch upon some important issues concerning the sphere of foreign
trade and foreign investments.11
The aim of the decree is to protect the internal market of Ukraine by
introducing a system of export quotas and licenses on goods (the list of
them includes mostly readily marketable raw materials), works or services
taken out of Ukraine in the course of foreign trade.
T he d ecree suspends the sections o f Art. 9 o f the Law on Foreign
Investments which provides guarantees against unfavourable changes in
Ukrainian legislation regarding the export of goods purchased by foreign
investors in the Ukrainian market, as well as the section of Art. 14 of the
same law dealing with the permitted license-free export of goods which for
eign investors purchase in Ukraine.
On the other hand, according to the same decree, business or individuals
do not have to register with the state in order to engage in foreign trade
Decree No. 6-93 on Quotas and Licenses for the Export of Goods (Work, Services) in
Russia a n d Comm onwealth Business Law Report,
8 March 1993.
THE UKRAINIAN REVIEW
SOCIAL DOCTRINE, RELIGION AND STATE-BUILDING
Bishop Ihor (Isichenko)
The evangelic mission of the Church in the world, determined by the
plan of divine redemption incomprehensible in its majesty, is embodied in
diverse and manifold social activities, which are called to illuminate with the
light of truth the one true path of mankind in history — the path to eternal
life. “No one after lighting a lamp covers it with a vessel, or puts it under a
bed, but puts it on a stand, that those who enter may see the light”. (Luke,
viii. 16) It is for us to be such a lamp-stand which our prayers and good
work spread afar, to our native land and the diaspora the kindly light of the
good tidings of redemption.
The forces hostile to the Christian Church, which failed to defeat it during
the modern-day persecution of our faith, have changed their strategy. They
have, alas, been able lo divide Ukrainian Christians, to instigate inter-confes
sional rivalry, to install among the clergy individuals discredited in the past
and still unrepentant, lacking in spiritual and moral qualities, and to seduce
a section of the clergy and faithful with the pursuit of wealth, glory, and the
support of the authorities. And so the authority o f the Orthodox Church, first
and foremost, our independent Orthodox Church, has declined in the eyes
of the people, and suspicion and a lack of confidence in the clergy has
spread among the laity.
In spite of the slate’s apparent tolerance of the Ukrainian Church the
treatment of the faith and faithful by parliamentary and government officials
has in general not changed since Soviet times. Tax concessions and the
encouragement of charitable activities remains an empty dream; there has
been no compensation for parishes and religious associations which were
deprived of their churches and property; many church buildings are still
used as museums, concert halls, and cinemas; no denomination has been
allocated air-time for television and radio evangelisation (except for foreign
missionaries with fat bank-rolls); religious education is not allowed in the
majority o f schools; long negotiations about establishing an institute for
chaplains have so far been fruitless — apart form illegal attempts to get
priests to take army jobs in the Socio-Psychological Service o f the Ministry of
Defence. Archaic and contradictory laws on religion provide all kinds of
opportunities for abuses, including the many months-long outrages against
the civil dignity of the faithful of the UAOC, still proscribed, persecuted in
j iiiur Isich en ko is Bishop o f Kharkiv and Poltava in the U krainian A utocephalic
O rthod ox Church.
the mass media and deprived of legal rights, just as it used to be under Peter
I and Joseph Stalin. The Council for Religious Affairs remains, as ever, an
instrument for discrimination and incitement of religious hostility; and its
Stalinist-Communist character has remained impervious to any changes of
We are proud that we have managed to repeat the achievement of the
catacomb Church of apostolic times, laying ourselves open to persecution,
suffering from threats and coercion, forced to hold religious services in pri
vate apartments or in the open air. “Blessed are you when men revile you
and persecute you and utter all kinds o f evil against you falsely on my
account”. (Matthew v .l l ) But is it not tragic, that we, who pray in every ser
vice for Ukraine, the government and the army, have to realise that the first
leadership of our reestablished state, by its anti-religious policies is calling
down the wrath of God upon the country. We have to be the voice of con
science, calling to repentance and conversion. We still have to turn to the
authorities with a word o f love and reconciliation. But at the same time we
have to reject, firmly and consistently, the temptation to submit to the will of
the state, even to our own Ukrainian state, and to a lay leadership, even the
most democratic in the world. For a state Church is no longer a Church. It is
a governm ent Department o f Religious Affairs; if we acknow ledge the
supremacy o f lay laws over the dogmas and canons of the Church, then we
begin to serve Satan, who once offered to Christ all the kingdoms of the
world and all the glory of them, saying “All these I will give you if you will
fall down and worship me”. (Matthew, iv.10)
In acknowledging the principle of the separation of Church and State, we
see in the realisation of this principle a vast field for the use of the spiritual
potential o f the Church for the higher good o f the Ukrainian nation, which
today faces the possibility o f forfeiting not only the life of the world to
come, but also its existence on Earth. The spectre of degeneration and ruin
is growing ever more visible. Society has rejected the Christian idea of eter
nal life, and is falling prey to the influence of the new inhumane culture of
death. The death penalty, suicide, crime, mutual hatred and cruelty, the
mass killing of unborn babies, the cult of gross physical force come together
into a complete satanic system, which is assailing the consciousness of the
masses. And the unprecedented scale of forms of slow suicide such as alco
holism and drug abuse, place a direct choice before us, not somewhere in
the future, but this very day: with Christ to life, or else into the abyss of
non-being through anti-God fossilisation of atheist thinking. By transferring,
with the help of other Churches and individual state officials, the ideas of
Christian ethics and anthropology into the field o f realistic social pro
grammes, we can effectively counteract this wave of destruction.
The individual freedom, which is so attractive to post-totalitarian society,
can easily turn into anarchy and permissiveness, under conditions o f spiritu
al vacuum, which aspire to implement teachings and ideologies which are
incompatible with Christianity. It is amoral to be a passive observer of the
THE UKRAINIAN REVIEW
advance of occult and esoteric doctrines, communities of sexual minorities
and neo-Communist groupings. We must firmly and consistently defend
society against the cult o f personal gain and sexual depravity, the misan
thropic ideology of class struggle and racial discrimination. We stand in
defence o f marriage and the family, the right of the individual to ownership,
in defence of dignity and social security for children, invalids, the sick and
the old. And in order to carry out our social obligations we demand from
the state the following:
• the legal recognition of the UAOC, legal guarantees of its development
and compensation for past wrongs committed against it;
• air-lime, free of charge, on Ukrainian television and radio to be given
to the broadcasting of Sunday and l:cast-day services and daily religious
• encouragement of charitable activities through the introduction of tax-
concessions for donors;
• support for the publishing activities of the Church;
• strict limits on the propaganda of amorality, the class struggle, trade in
alcohol and cigarettes, prostitution;
• a clear juridical definition of the murder of an unborn child as a most
• the abolition of the death penalty;
• legal and economic guarantees allowing pastoral care to be provided
for the army, prisoners, the sick, invalids, schoolchildren and students, resi
dents of orphanages and pensioners’ homes for war and work veterans;
• the creation of opportunities for extending the network of religious
schools, kindergartens, clinics, hospitals, including the cost of handing over
slate property to Church ownership.
The main precondition for an understanding to be reached between the
State and the Church is the abolition of that shameful relic of atheist totali
tarianism — the Council for Religious Affairs and its departments in the
provinces. Experience shows that this institution is incapable of anything
except a voluntarist interference in religious life in pursuit of certain political
and material ends. Us corrupt structures are trying to woo the Ukrainian
Orthodox Church-Kyiv Patriarchate in Kyiv, the Ukrainian Greek-Catholic
Church in Lviv, and the Ukrainian Orthodox Church-Moscow Patriarchate in
Kharkiv, but have nowhere got any useful results. The job of ensuring the
liaison o f church institutions with the government and local authorities
could perfectly well be carried out by a highly qualified lawyer, whose job
can be attached to the Cabinet of Ministers, the provincial and the Kyiv
People sometimes attempt to gauge the level of our patriotism by our
readiness to carry out blindly the plans of the state apparatus, political par
ties and movements. This is a rather strange, if not absurd position. A
Christian looks at relations between the Church, the Slate and the political
parties differently. Our slate and political parlies are Ukrainian insofar as
they are capable of assessing and respecting religious-church traditions of
the Ukrainian nation, the bearer of which is the UAOC. We are ready for
dedicated and self-sacrificing work, but not in the political interests of a par
ticular government, party or group, but on behalf of the whole nation and
all the people of God. We do not demand concessions and privileges —
only normal relations and legal protection.
The first attempts at the direct participation of the clergy in elections and
parliamentary activities resulted in tragicomedy, personified first and fore
most by Metropolitan Ahatanhel Savyn. This is a warning to us all. A priest,
and even more so a bishop, must not neglect his pastoral duties in order to
perform certain obligations towards an extra-ecclesiastical group of persons
who elected or supported him. Life brings us to the necessity o f strengthen
ing the Church’s traditional ban on the clergy holding state positions or
being members of political parties. We must strengthen the social doctrine
of the Church from the pulpit, testifying to it and teaching the laity, from
among whom must be raised up qualified politicians, better fitted than the
clergy to defend Christian ideals at party meetings, rallies or in Parliament.
This demands a wide and branched network of public organisations of
Orthodox laymen. The All-Ukrainian Brotherhood of St. Andrew the Apostle
is a good example of such an organisation, although its own status within
the Church is still uncertain and not defined by statute. But nothing is being
done in the field of sororities (for the attempts of politicised women in Kyiv
to declare themselves a sorority proved unsuccessful), artistic societies,
clubs, associations, etc. These should all occupy an honourable place in
drawing up the church statute, and in the everyday practice of pastoral
activities of our parishes.
Society longs to see in the Church not a banal public association, but a
higher model, an immutable moral force, a firm defender of spiritual tradi
tions. And if today we declare that we are ready to hurry into new inter
church alliances, this not only deals a destructive blow to the authority of
the national Church, but may even be seen as that Church’s blessing on the
whole country’s entering a similar political alliance — the Economic union,
the CIS political union, and then there we are back in our old role of
“younger brother” in a restored USSR. Let us consider this well before talk
ing about any union. Let us consult our partners: the Ukrainian Greek-
Catholic Church as the second national Church of Ukraine, and the two suc
cessors of the Kyiv Exarchate of the Russian Orthodox Church — the
Ukrainian Orthodox Churches of the Kyiv and Moscow Patriarchates. Let us
forget petty grievances and our own ambitions; let us instead study diligent
ly and carefully our church dogmas, canons and regulations. Let us read his
tory lest we go into a council intended to promote unity and come out dis
membered into even more splinters.
I see a slow, sure, honest and uncompromising way to a single Ukrainian
Particular Christian Church. This is the path towards spiritual freedom, not a
protectorate o f Moscow, Rome, Constantinople or a secular government.
THE UKRAINIAN REVIEW
Undue haste and disregard for church norms and traditions will result in
new schisms. Therefore we have to begin by calling a halt to mutual dis-
creditation, and establishing an all-Ukrainian inter-confessional pre-synodial
commission with permanent working-groups in every Church o f the Eastern
rite, painstaking checking of the canonicity of ordinations and church deci
sions, repentance for the violation of canons (clerical appointments decided
by the interference of the authorities, back-handers for ordination, dedica
tion, reordinations, clerics continuing to conduct services while under sus
pension, etc.), coordination of ritual niceties, the drawing up o f a joint
statute and joint translation of service books and Eucharistical unity around
a single see. After that there will be no difficulty in convening a truly all-
Ukrainian synod and electing a single head of the national Particular
The problem to reach inter-confessional agreem ent is, undoubtedly,
extremely vital. But this does not give the right to let everything else go by
the board and just go on holding endless discussions about unity, perceiving
this as a panacea for all evils. Our Church was never so much one, as after
1946, but never was it so spiritually weak. Let us not repeat past mistakes!
Let us grow into a Church that is creative, building and advancing. And
when we thrust aside these artificially-created barriers, and spread and the
cloak o f our holy m other’s protection over all strata o f the people of
Ukraine, then we shall have taken the decisive step in the transition from
hostile enmity to unity in love before the throne of God.
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