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Cablegate: Ukraine: Kyivites Brace for Increased Public

VZCZCXRO1784
RR RUEHIK RUEHLN RUEHPOD RUEHVK RUEHYG
DE RUEHKV #2187 3081440
ZNR UUUUU ZZH
R 031440Z NOV 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC 6666
INFO RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS KYIV 002187

SENSITIVE
SIPDIS

USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYK

E.O. 12958: N/A
TAGS: ELTN ECON SOCI UP
SUBJECT: UKRAINE: KYIVITES BRACE FOR INCREASED PUBLIC
TRANSPORTATION RATE HIKES

1. (SBU) In the midst of Ukraine's heightened economic
instability, the Kyiv City Council on November 1 approved
steep rate hikes for public transportation (metro, busses,
and trams). Public transportation rates have not increased
in Kyiv since 2000, when the cost was raised from 30 kopecks
($0.052) to 50 kopecks ($0.087) where it has remained for 8
years. Beginning November 4, however, Kyivites will pay 2
hrvynia (UAH) or ($0.35) to ride the metro, and 1.50 UAH
($0.26) to ride busses or trams. Transportation officials
explained that the rate hike will provide for safety
improvements, increased wages, and improved passenger
services. The announcement to raise public transportation
costs has sparked outrage among Kyivites we spoke with, and
have some worried about the reaction of would-be passengers
on November 4, when many learn about the rate hike for the
first time.

2. (U) Local residents we spoke with explained that not only
was the policy unexpected and little time was given for
passengers to prepare for the increase, but implementing the
rate increase seems not to have been thought-out. Local
press reports those wanting to ride a bus or tram can
purchase tickets from select kiosks throughout town for 1.50
UAH ($0.26) or alternatively on the bus or tram directly from
he driver for 2 UAH ($0.35). Unfortunately, due to little
warning, enough new tickets have not been printed and will
not be available at kiosks for an undisclosed time period,
forcing people to buy more expensive tickets on the bus or
tram. Bus and tram passengers will be able to exchange their
current tickets toward the cost of a new ticket for an
undisclosed period.

3. (U) Metro (subway) officials announced that turnstiles
will be reconfigured on the evening of November 3, so that
only new metro tokens will be accepted, but most doubt that
reconfiguring archaic turnstiles can be done in a few hours
in 47 different metro stations. On-line publications and
chat rooms have come to life with predictions of chaos on the
morning of November 4, when many people will learn that their
current metro tokens will no longer work. According to metro
officials, passengers will be allowed to exchange their old
tokens toward the purchase of a new token for an undisclosed
period of time.

4. (SBU) Under the current system several categories of
passengers either ride for free: men over 60 and women over
55 with proof they are on a pension (even though many
pensioners continue to work), certain groups of disabled
people, and some federal, regional, and city employees.
Students also ride for half the price, so the increased rates
will not affect everyone. As a result, the steep increase
will have the greatest affect on those with low-income jobs
who are not in school, and not eligible to apply for pension
or disability benefits.

5. (SBU) Some Kyivites we spoke with told us that gross
mismanagement of advertising funds in the metro had
contributed to the rate increase. With hundreds of thousands
of passengers per day traveling through Kyiv's many metro
stations, the metro is an ideal place for companies to
advertise. (Note: EconOff rides the metro daily and is
bombarded with advertisements in the station and inside
individual cars. End note.) Some Ukrainian press reports
have alleged that advertising middlemen companies have been
allowed to siphon off funds intended for metro coffers,
resulting in an advertising profit in 2007 of only UAH 12
million ($2.1 million) although companies reportedly paid UAH
127 million ($22 million) to advertise in the metro's
stations.

6. (SBU) Comment. Although moving away from subsidies to
more realistic rates for public services is an important step
Ukrainian officials should take, the recent public
transportation rate hike might be too high and too fast for
most Kyivites. With food and fuel prices remaining
considerably higher in Kyiv than other Ukrainian cities,
paying more to get around Kyiv will most likely not generate
any more smiles during a difficult economic period in
Ukraine's capital. End comment.
TAYLOR

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