A high-level financial delegation flew into the western Ukrainian city of Lviv, formerly Lvov, this weekend to boost the flagging fortunes of the republic's first pilot privatization program.


Leszek Balcerowicz, a former Polish finance minister, and Anthony Doran, the Briton heading the C. I. S. division of the International Finance Corporation, an affiliate of the World Bank Group, held a series of meetings with regional politicians to convince them to press ahead with the project.


The Lviv pilot project is a key starting point for small-scale privatization in Ukraine. Plans for the republic are being hampered by a problem that has effected Ukraine's fumbled attempts to move to a market economy throughout the last year - a lack of leadership and willpower.


Although the decision to privatize has been taken in Russia, Ukraine could still shy away from implementing privatization by introducing a "third way" between communism and capitalism.


The country's parliament has passed a competent set of privatization laws, but it has also enacted leasehold legislation that contradicts the privatization principle. In essence, the lease law envisages "mass collectivization" through labor cooperatives rather than privatization.


"The law forsees not individual workers but worker's collectives that want to profit from the law. This is to me an example of the third way", Balcerowicz said at a seminar organized by the International Finance Corporation this weekend in Lviv.


Auctions sponsored by the corporation were up and running in Nizhny Novgorod, Russia's pilot privatization project, within two months of the International Finance Corporation team's arrival. They have been in Lviv four months so far and have yet to receive a list of 25 or so small enterprises - shops, catering firms, etc. - to be sold.


Unlike Russia, the country has so far lacked the political will to push through potentially unpopular measures to free its economy.


"In Nizhny Novgorod the leader-ship was very progressive. They wanted to fight the trade unions. In Lviv, nobody wants to fight, nobody wants to be first", said one International Finance Corporation official.


Decisions that will affect the course of privatization, both in western Ukraine and throughout the country, are due to be made within the next fortnight.


If parliament shows its willingness to push for leasehold rather than auction sales, Ukraine will have effectively derailed its privatization program.


"I am not confident that the program will be adopted. That's not to say that I don't think it will, it is just that in Ukraine the debate between private and public ownership has not yet been resolved", said Doran of the International Finance Corporation.


If Lviv delays voting through a list of enterprises, Ukraine's program could fall a year or more behind Russia's, that is depending on whether the country ever chooses the privatization path.