В борговій ямі: економічні виклики для України в 2010 р.*

Kateryna Malyhina

В 2009 р. Україні не вдалося уникнути «жорсткої посадки». Серед країн СНД в Україні найбільше падіння промислового виробництва й найбільша інфляція. Жоден з макроекономічних показників, закладених у бюджет на цей рік, не підтвердився. Так, наприклад, уряд прогнозував ріст ВВП у 0,4%. За підсумками 2009 року, однак, спад ВВП очікується на рівні 15%. Навіть в умовах швидкого відновлення економіки та сталого зростання, Україні знадобиться не менше трьох років, щоб повернутися на рівень економічного розвитку до кризи.

У наступному році Міністерство фінансів України сподівається на 3% ріст ВВП. Звичайно, на тлі провального 2009 р. статистичні дані в наступному році будуть виглядати набагато гарніше і відповідно формально зростання економіки відбудеться. Питання тільки – наскільки воно реальне? 3% ріст ВВП – це майже 4 млрд. дол. Лише на погашення державного боргу в 2010 р. знадобитися 3 млрд. дол. (а разом з боргами приватного сектору 23-25 млрд. дол.). Це практично нівелює приплив коштів в економіку. Більше того, ситуація ще більше загостриться через те, що оплата за імпортований з Росії газ в 2010 р. зросте більш ніж в 1,5 рази й складе близько 9,5 млрд. дол. проти 5,5-6 млрд. дол. в 2009 р. Нарешті, цього року Україна так і не підвищила цін на газ для населення, як того вимагав МВФ. Якщо цього не буде зроблено в наступному році, то, по оцінках Секретаріату Президента, фіскальне навантаження в 2010 р. зросте ще на 1,3 млрд. дол.

Неборгових джерел фінансування видатків у наступному році буде так само мало, як і в цьому. За підсумками 2009 р. об’єм прямих іноземних інвестицій в Україну складе близько 4 млрд. дол. у порівнянні з 8 млрд. дол. у 2008 р. З урахуванням відтоку капіталу й курсової різниці цей показник взагалі становитиме біля 2 млрд. дол. З ряду причин навряд чи варто розраховувати на істотний ріст інвестицій в Україну і в 2010 р. По-перше, призупинення співробітництва із МВФ уже спричинило падіння рейтингів України й дало негативний сигнал для інвесторів. По-друге, скандал навколо приватизації Одеського припортового заводу (ОПЗ) зайвий раз підтвердив низький рівень захисту прав власності в Україні. В будь-якому випадку, одним з першочергових завдань нового президента і його команди має стати поліпшення інвестиційного клімату в Україні. На жаль, судячи з передвиборних програм, ні для Тимошенко, ні для Януковича це питання не є пріоритетним.

Вже другий рік поспіль уряд безуспішно намагається залучити кошти в бюджет за рахунок приватизації. В такий спосіб цього року було акумульовано менше 1 млрд. грн. або 10% від плану. Згідно із проектом бюджету на 2010 р., в результаті приватизації уряд планує отримати 10 млрд. грн. Якщо президентом України стане Ю. Тимошенко, не виключено, що спроби продати ОПЗ у наступному році знову відновляться. При Президентові Тимошенко, можливо, також відновиться процес “реприватизації” (тобто націоналізація з метою повторної приватизації). Тим паче, що про необхідність реприватизації «Рівнеазоту», який сьогодні належить опальному олігархові Д. Фірташу, прем’єр цього року вже заявила.

Основну частину доходів бюджету в Україні становить збір податків. Незважаючи на кризу, цей рік не був винятком. Більше того, вчасно виконувати бюджетний план Тимошенко вдавалося за рахунок значних авансових податкових платежів. При цьому заборгованість з відшкодування податку на додану вартість на початок 2010 року складе 20 млрд грн., що майже у 1,5 рази більше ніж на початок 2009 р. Найбільший платіж по відшкодуванню ПДВ цього року був перерахований НАК «Нафтогаз України» (4,1 млрд. грн), що дало можливість уряду розрахуватися за серпневі поставки газу. У зв’язку із трикратним підвищенням акцизного збору (до 6 млрд. грн) впало виробництво підакцизних товарів, і зросла тінізація цього сектору. За офіційними даними біля третини, а за неофіційними – більше половини економіки перебуває сьогодні в тіні. При подібній податковій практиці наступного року цей показник виросте ще більше.
Реальним джерелом доходів у наступному році може стати зростання виробництва в експортно-орієнтованих галузях. Найбільш вірогідно, що Україна почне виходити з кризи не завдяки власній антикризовій програмі, а за рахунок відновлення світової економіки і як результат росту світових цін на традиційні статті українського експорту (метали, хімічна продукція, сільськогосподарські продукти). Однак, через високі імпортні ціни на газ українські товари можуть стати неконкурентоспроможними. Тому слід очікувати ще більшого збільшення фіскального навантаження й/або стримування ревальвації гривні.

За даними Renaіssance Capіtal, загальний обсяг прямого й гарантованого боргу, який уряд мав погасити в 2009 році, складав 6 млрд. дол., тоді як заплановані бюджетні доходи становили 30 млрд. дол., а нові запозичення -11 млрд. дол. Таким чином, кожна п’ята гривня доходів згідно з бюджетом повинна була піти на погашення державного боргу. При цьому закладені в бюджет витрати по обслуговуванню й погашенню державного боргу в 2009 р. перевищують аналогічні витрати в 2008 р. у чотири рази.

Станом на 31 жовтня 2009 р. загальний державний борг України виріс з початку року на 10,56 млрд. дол. і склав 35 млрд. дол. (23 млрд. зовнішнього й 12 млрд. внутрішнього державного боргу). Нарощування боргового навантаження пояснюється одержанням траншів МВФ й активною грошовою емісією. При цьому, темпи нарощування внутрішнього боргу (приріст 6 млрд. дол.) випереджають аналогічний показник для зовнішнього (4 млрд. дол.). В листопаді обсяг внутрішнього боргу виріс ще як мінімум на 2 млрд. дол., після того як уряд надав державні гарантії по зовнішніх залученнях НАК «Нафтогаз України», що дозволило останньому реструктурувати свої борги.
До 23 млрд. дол. зовнішнього державного боргу слід додати ще близько 75 млрд. дол. боргу корпоративного. Таким чином, валовий зовнішній борг України в 2009 р. приблизно залишився на рівні 2008 р. – біля 100 млрд. дол. При цьому скорочення зовнішнього приватного боргу відшкодувалося нарощуванням боргу державного. При номінальному ВВП України близько 118-124 млрд. дол. зовнішнє боргове навантаження явно перевищує критичну позначку в 60% ВВП. Якщо врахувати, що цього року Україні необхідно було повернути близько 28 млрд. дол., а реальна сума повернення склала всього близько 10 млрд. дол., то розплачуватися за борги Україні доведеться, щонайменше, десятиліття.

У випадку перемоги на президентських виборах Ю. Тимошенко продовжитися її політика ручного керування економікою й хаотичного запозичення грошей. Швидше за все, гроші на сплату за газ Росії в 2010 р. будуть знаходитися так само спонтанно, як цього року. Не виключене також, що будуть підписані нові доповнення до газових контрактів, що скасують перехід на авансову систему розрахунків у випадку несвоєчасної оплати. У якості умови підписання може стати участь Росії в реформуванні української газотранспортної системи або продовження оренди бази російського Чорноморського флоту в Севастополі. Власне, поки ще невідомо на яких умовах були підписані доповнення до контрактів від 24 листопада, що відмінили майже 7 млрд. дол. штрафів за недобір газу цього року.

Якщо президентом стане В. Янукович, то можливо, він матиме вищий кредит довіри з боку міжнародних інституцій та інвесторів. Однак, чи зможе він вести іншу політику в умовах рецесії, ніж зараз Тимошенко, питання спірне. На проведення необхідних структурних реформ Президент Янукович навряд чи зважитися. Жорстка опозиція під керівництвом Тимошенко не дасть забути Януковичу про свої соціальні обіцянки, які явно домінують у його передвиборній програмі. Крім цього, серед населення сьогодні високий попит на “лівих” політиків.

Таким чином, розраховувати на вихід країни з економічної кризи вже в наступному році не доводитися. Через виборчий процес в Україні весь перший квартал 2010 р. буде для економіки фактично втраченим. Безумовними викликами економіки в наступному році стануть фінансування бюджету, своєчасна оплата за газ Росії й погашення заборгованості.

* Стаття вперше опублікована німецькою мовою в онлайн-журналі «Ukraine-Analysen» №66 (8.12.2009), стр. 13-15.

Катерина Малигіна (Kateryna Malyhina), аспірант Науково-дослідного центру Східної Європи при Бременському університеті (Forschungsstelle Osteuropa an der Universität Bremen) та вільний співробітник онлайн-журналу «Ukraine-Analysen».

Yanukovych would win second round if held today

Interfax-Ukraine, 15 Dec 09
Fifty percent of voters are ready to support presidential candidate and Regions Party leader Victor Yanukovych in the run-off of the presidential election in Ukraine, according to a survey entitled “The Electoral Expectations of Ukrainian Citizens.”

Director of the Social Perspective Center for Public and Information technologies Ihor Burov presented the results of the survey at the Interfax-Ukraine news agency on Dec. 16.

According to the survey, Yanukovych could hope for support from 50.3% of respondents, while only 38.2% are ready to vote for his nearest opponent, Prime Minister Yulia Tymoshenko.

Among those who are ready to go to the polls on Jan. 17, some 31.5% of Ukrainians are planning to vote for Yanukovych, 20.3% for Tymoshenko, 6.3% for Strong Ukraine leader Sergey Tigipko, 5.9% for Front for Change leader Arseniy Yatseniuk, 5.3% for Parliament Speaker Volodymyr Lytvyn, 4.2% for Communist Party leader Petro Symonenko, and 3.2% for incumbent President Viktor Yuschenko.

Some 6.1% of respondents are planning to vote against all presidential candidates, and 9.3% of those who will definitely vote were undecided.

Commenting on the possible voter turnout in the first round, Burov said: “There will be over a half [of voters], but no more than 60%.”

The survey was conducted in all regions of Ukraine, Crimea and in the cities of Kyiv and Sevastopol on December 1-10, 2009. A total of 2,100 respondents participated in the survey. The poll’s margin of error does not exceed 2.3%.

The election of the Ukrainian president is scheduled for Jan. 17, 2010.

Yanukovych would win second round if vote held this week

Interfax-Ukraine, 15 Dec 09
Fifty percent of voters are ready to support presidential candidate and Regions Party leader Victor Yanukovych in the run-off of the presidential election in Ukraine, according to a survey entitled “The Electoral Expectations of Ukrainian Citizens.”

Director of the Social Perspective Center for Public and Information technologies Ihor Burov presented the results of the survey at the Interfax-Ukraine news agency on Dec. 16.

According to the survey, Yanukovych could hope for support from 50.3% of respondents, while only 38.2% are ready to vote for his nearest opponent, Prime Minister Yulia Tymoshenko.

Among those who are ready to go to the polls on Jan. 17, some 31.5% of Ukrainians are planning to vote for Yanukovych, 20.3% for Tymoshenko, 6.3% for Strong Ukraine leader Sergey Tigipko, 5.9% for Front for Change leader Arseniy Yatseniuk, 5.3% for Parliament Speaker Volodymyr Lytvyn, 4.2% for Communist Party leader Petro Symonenko, and 3.2% for incumbent President Viktor Yuschenko.

Some 6.1% of respondents are planning to vote against all presidential candidates, and 9.3% of those who will definitely vote were undecided.

Commenting on the possible voter turnout in the first round, Burov said: “There will be over a half [of voters], but no more than 60%.”

The survey was conducted in all regions of Ukraine, Crimea and in the cities of Kyiv and Sevastopol on December 1-10, 2009. A total of 2,100 respondents participated in the survey. The poll’s margin of error does not exceed 2.3%.

The election of the Ukrainian president is scheduled for Jan. 17, 2010.

EU admonishes Ukraine for lack of reforms

David Marples

It was billed as a pivotal moment in Ukraine’s integration into Europe, a December 4 summit between the country and the European Union in Kyiv, ending with the long anticipated signing of an association agreement. It didn’t happen. Instead, the EU leaders criticized Ukraine for its lack of progress in reforms, withheld a substantial loan and postponed any free trade and accession agreements for the foreseeable future.

At the summit, President Viktor Yushchenko asked for “political understanding” from the EU, maintaining that the delay in signing the association agreement was a result of weariness over further expansion and the consequences of the world recession. He also stated that the Ukrainian government had failed to meet its obligations with “international financial institutions” and parliament had failed to pass various laws.

However, he added, if elected, the integration process would continue and he is the only candidate entering the January 17 presidential elections firmly committed to Ukraine’s eventual acceptance in the EU. All the problems, he assured his audience “are temporary.”

One senses the complete disillusionment of the European leaders with Ukraine, and particularly Yushchenko. European Commission President, Jose Manuel Barroso told the Ukrainian president that reforms were needed, and that bold words were not being followed up with appropriate actions. He urged Ukraine’s leaders to end their perpetual bickering and work together.

Swedish Prime Minister Fredrik Reinfeldt, whose country is the current president of the European Union, expressed his desire for Ukraine’s president, government, and parliament to make a joint effort to reform the economy and the energy industry. At the heart of the EU’s concern is the secure supply of Russian gas, in transit through Ukraine.

Yushchenko’s self-appraisal seems misguided. More than any other figure, he has not only failed to address current problems, but also undermined the efforts of his Prime Minister, Yulia Tymoshenko, to introduce reforms.

Tymoshenko not only averted another gas crisis as a result of a meeting with Russian Prime Minister Vladimir Putin, but also removed the corrupt intermediary RosUkraineEnergo (Russian-Ukrainian Energy) from the equation. However, the president cannot work with her and has frequently preferred to collaborate with his former rival, Regions Party leader Viktor Yanukovych, against his Prime Minister.

Ukraine’s economic standing today has fallen to an all-time low. Fitch Investors’ Service, for example, has reduced its ranking to B-, six levels below the investment grade. According to Bloomberg.com, Ukraine is the world’s second-least credit worthy country. The currency is in a tailspin, and both the IMF and EU have suspended credit tranches that are badly needed to offset the effects of the recession.

The vast majority of Ukrainian residents put the blame on Yushchenko for current problems. Society is polarized between ostentatiously rich entrepreneurs and a majority that is barely subsisting. Virtually all the oligarchs of 2004 are still present. For example, Viktor Pinchuk, the son-in-law of former president Leonid Kuchma—whose corrupt and secretive leadership was partly responsible for the Orange Revolution—recently consolidated six Ukrainian television companies into a single holding.

Yushchenko is reported to earn about US$5,000 per month. But a year after his election his son Andrey, aged 19, was driving a BMW valued at almost US$200,000, the only such car in Kyiv according to the newspaper Ukrains’ka Pravda. Such stories suggest that the president was not sincere about ending corruption in Ukraine.

Earlier this year, however, Yushchenko presented a list of his accomplishments as president: the creation of a democratic state with a free media, and serious pretensions to join the EU and NATO. In reality, as the electorate perceives, these achievements are undermined by negative acts and extraordinary pettiness toward those considered his rivals.

One should add that Yushchenko’s enemies, chief among which are the leaders of Russia, have deliberately tarnished his image. But the Russians did not need to invent much.

Ironically, the Europeans prefer to deal with Belarus’s authoritarian leader Alyaksandr Lukashenka, once the pariah of the continent who ruled what one US strategist called “an outpost of tyranny.” Belarus is less corrupt and politically more stable than Ukraine, partly because the country lacks an effective opposition. But it does not flatter to deceive.

Where does this leave Ukraine?

First, no agreements with the Europeans will be ratified until after the presidential elections. The EU will then take stock with the new president—likely either Tymoshenko or Yanukovych. Like Russia, they are waiting for Yushchenko to leave office.

Second, Ukraine’s political elite seems as firmly entrenched as the Communist Party once was. That fact is hardly surprising given that it took advantage of the collapse of the USSR to take over Ukraine’s economic assets, especially steel. Only a united leadership can end this hegemony, and the realistic solution would be to nationalize the major industrial companies.

Third, it seems self-evident that Ukraine has to determine its own economic and political path, one that is not dictated by the IMF, Russia, or the European Union. Its leaders might heed the advice of the Swedish Prime Minister and focus on cooperation rather than squabbling. The impasse of the past five years cannot be repeated.

(First published in the Edmonton Journal, (December 2009)

Ukraine Presidential Election Standings, Oct 09

Standings according to the most recent poll of the Razumkov Centre:

http://www.razumkov.org.ua/ukr/poll.php?poll_id=91

Yanukovych–28.9%
Tymoshenko–20.3
Difficult to decide–13.6%
Yatsenyuk–8.2%
Against all–8.2%
Yushchenko–4.9%
Symonenko–4.5%
Lytvyn–3/3%

In a potential second round between Viktor Yanukovych and Yulia Tymoshenko:

http://www.razumkov.org.ua/ukr/poll.php?poll_id=93

Yanukovych–40.5%
Tymoshenko–33.3%
Against both–17.7%

Polls will be updated as they are made available.

DRM
24 November 2009

Shades of Grey Shroud Orange Anniversary

David Marples

Saturday, November 21, marked five years since the start of the Orange Revolution that saw protesters mass in the streets of Kyiv to protest a flawed vote in the second round of the presidential elections that favored incumbent Prime Minister, Viktor Yanukovych. After a series of events and the intrusion of the Constitutional Court, that round was re-run and challenger Viktor Yushchenko was elected president of Ukraine. He formed a coalition of Orange forces that included his Prime Minister Yulia Tymoshenko and Speaker of Parliament, Oleksandr Moroz.

Five years on and into another election campaign, the Orange camp is in a sorry mess. Moroz has left. Although Tymoshenko is in her second term as Prime Minister, she faces a large opposition in parliament and feuds constantly with the president. She is running against Yushchenko for the presidency in January 2010. Yanukovych, leader of the Regions Party, is back once again, intent on sabotaging the Tymoshenko campaign as well as opposing fiscal measures to deal with the recession.

Very little makes sense in Ukrainian politics, which are so intricate, corrupt, and mutable that few can unravel events to make a pertinent analysis.

Recently, for example, the International Monetary Fund, which last year provided a loan of $16.4 billion to help Ukraine, withheld a tranche of $3.8 billion. The reason was that the president and the parliamentary opposition (Yanukovych) backed a rise in minimum wages of 20% next year, thus contravening IMF conditions for continuing the loans. Perhaps they acted from humanitarian motives, but more likely they simply wished to undermine the position of the Prime Minister.

The president has also vetoed a law that would have provided about $125 million to combat H1N1 in Ukraine, which recently reached epidemic proportions with 189 deaths. There is little logic to him agreeing to wage increases but ignoring the flu virus.

One of the ironies of the president’s approval of the pay rises is that Yushchenko is known as a fiscal conservative, who lambasted Tymoshenko’s 2009 budget for its free-spending profligacy. Rumors in Kyiv now suggest that the president’s office would like to secure the release of former Prime Minister Pavlo Lazarenko, currently under arrest in the United States for money laundering. The reason is that his return to Ukraine would undermine the position of his former Deputy PM, Tymoshenko, then known as the ‘gas princess’ in an era of runaway corruption.

Tymoshenko for her part has campaigned hard to improve her position. Without doubt she has spent the most money—according to Yushchenko she has exploited the office of Prime Minister to finance her campaign. This week she met with Russian Prime Minister Vladimir Putin in Yalta and secured an agreement on gas prices in 2010, which would mean that Ukraine would not be penalized for purchasing less gas than agreed. This was a major coup given the interruptions to gas supplies to Europe last year as a result of a Russian-Ukrainian impasse. It also signals to voters that under a Tymoshenko presidency, relations with Russia would improve dramatically.

At the same time, Yushchenko hosted Georgian president, Mikheil Saakashvili in Kyiv. According to the Ukrainian media, Tymoshenko and Putin enjoyed a few jokes at the expense of the two chief leaders of the color revolutions of the early 21st century. Russia has accused Ukraine’s president of supporting the Georgians in the August 2008 conflict.

Polls suggest that Tymoshenko is catching up with Yanukovych as the election’s frontrunner. A poll conducted by Ukrainian Project System on November 12, indicated that Yanukovych has the backing of 21.4% of voters to her 18.1%. Arseny Yatseniuk, in third place, has only 8% and is no longer a serious contender.

The most recent poll of the Razumkov Centre on a potential runoff between Tymoshenko and Yanukovych suggests that it would be a very close call. Tymoshenko would win easily in Western Ukraine, by a lesser margin in the Centre, and Yanukovych is well ahead in the south and east.

The choice for voters seems rather stark. Yanukovych is still the arch apparatchik, fumbling and inarticulate, and bankrolled by Ukraine’s main oligarch Rinat Akhmetov. The Western media describe him as pro-Russian, but he is essentially a tool of eastern oligarchs, people who wish to maintain their influence and power over resources and industry. There is no question that Prime Minister poses a threat to such forces.

Tymoshenko, on the other hand, is a ruthless politician with few clearly delineated principles other than her own advancement and power. In her first period as Prime Minister in 2005—it lasted only 9 months—she alienated most of her Cabinet. In the second, she has struggled to deal with the economic crisis. IMF funds have cushioned the blow, but the Ukrainian economy shrank by almost 16% in the third quarter of 2009. The steel industry will take years to recover from a dramatic drop in trade abroad.

The next president will not only need to introduce radical economic measures, he/she will need to work with Parliament. To date, the failure to form a workable coalition in the legislature, added to unseemly squabbles between the main leaders, has resulted in deadlock. In 2004, Yushchenko was the outsider, a potential candidate to end the rampant corruption in Ukraine and make a new beginning. In 2010 voters face a bleaker choice and the alternatives seems less clear-cut.

(Edmonton Journal, 23 November 2009)

Going for the Kill

By Ivan Lozowy (Ukraine Insider)

With presidential elections only two months away, the main presidential contenders are squabbling fiercely amongst themselves, more intent on scoring points against each other than impacting on voters.

The crux of their infighting centers on the fact that Yulia Tymoshenko currently occupies the post of Prime Minister and has shamelessly used this position to promote her candidacy. Tymoshenko has used government largesse to buy votes while staving off financial collapse through “creative accounting” and has played the role of crisis manager for the swine flu epidemic sweeping the country.

Tymoshenko’s prodigious political talents have meant that she has retained the image of a delicate-looking woman who is surrounded by bestial men of low character. This image probably works well because some of these men – Viktor Yanukovych, who has served two prison terms, comes to mind – indeed literally ooze low character.

Yet what drives her opponents to distraction is that they are fully aware that Tymoshenko has remained largely unaffected by the financial crisis because of smoke-and-mirrors. Earlier this year the tax service – headed by a Tymoshenko stalwart, the banker Seriy Buriak, did a shake-down of companies by asking that taxes be paid in advance. Then, to hide the budgetary shortfall, expenditures were shifted to the last quarter. Stabilization credits from the IMF, of which 11 billion dollars have already been received, have been used to cover the budget deficit by paying government salaries and pensions. Without this cash injection the
government would not have been able to make these payments, which in turn would have caused popular dissatisfaction, perhaps even a popular revolt.

True to her profligate and headstrong character, Tymoshenko has not even taken a stab at tightening the purse-strings. To the contrary, she has been spending money wildly – and promising even more – in an attempt to both convey the impression that all is well and to keep voters happy. The list of new and increased expenditures which Tymoshenko has already begun financing this year covers the proverbial kitchen sink.

As Prime Minister, Tymoshenko has begun paying for an ambitious government program to re-equip all of Ukraine’s notoriously unsafe mines. Her government is subsidizing the metallurgical sector with preferential prices for natural gas and transportation via the national railway carrier. She has promised to spend billions on building new subways in the cities of Donetsk and Dnipropetrovsk, providing a new water supply for the city of L’viv, even buying milk trucks for agricultural producers.

Meantime, her government has ordered agricultural equipment from the US in the hundreds of millions of dollars, medical equipment from Western countries, all on credit.

This “slash-and-burn-money” approach may have saved Tymoshenko from a disastrous drop in the polls, but it spells financial doom for Ukraine following the elections.

Tymoshenko’s campaign has even bought the services of Western policy analysts in an attempt to bolster her reputation abroad. Given this pattern of behavior, small wonder that many suspect Tymoshenko of making secret promises to Russia’s Prime Minister, Vladimir Putin, including selling Ukraine’s gas transportation system, keeping Ukraine out of NATO and the EU, introducing Russian as a second official language in Ukraine.

Meantime, Tymoshenko’s opponents are in a quandary: what to do about Tymoshenko? Currently, they are dithering about whether or not to see off her government.

A vote of no confidence in Tymoshenko’s government is a real possibility. On November 6 Tymoshenko’s opponents united in the Rada, or parliament, to vote through increases in minimum salaries for government workers and the minimal living standard used to calculate social spending, i.e. subventions to pensioners and the poor. Their move is fiscally irresponsible, designed to politically increase the strain on Tymoshenko’s government, hopefully – in her opponents’ imagination – bringing about widespread dissatisfaction.

But Tymoshenko is such a fearsome campaigner that sending her government into retirement and her into opposition may well backfire and her opponents are right to be wary. Given the widespread dissatisfaction with the governing elite, sending Tymoshenko into opposition would only boost her poll ratings, although a last-minute vote of no confidence just before the first round of voting set for January 17, 2010, is possible.

Tymoshenko could not provide more of a contrast with her principal opponent, Viktor Yanukovych, the candidate from the Party of Regions (PoR), who is hopelessly uncomfortable both in opposition and in front of the TV cameras.

Yanukovych’s campaign has been singularly ineffective. One would have to search far and wide to find a voter who might believe Yanukovych’s billboards which declare that “He will hear every one out.” Ukrainian
voters have few illusions and hardly see Yanukovych, who, according to credible information, deals in hundreds of millions of dollars in slush funds, as someone who cares about ordinary voters.

Yanukovych’s most prominent supporters seem to have the fear of a presidential victory by Tymoshenko stamped on their faces. And for good reason – in an eventual second round run-off against Tymoshenko, as seems likely, Yanukovych would almost certainly lose out. As compared to Tymoshenko he is a big brutish-looking fellow with a reputation for using physical force against his opponents who speaks slowly, Ukrainians say, in order to avoid cursing with every other word, as is the habit of both ex-cons and organized crime figures.

But Yanukovych cannot undergo another defeat (he lost to Yushchenko in 2004) at the polls. If he loses again, his political career is over and he will lose his position as the political face of the PoR.

Small wonder then that highly-placed security officials mutter about the Donetsk “clan,” as the PoR is known, going so far as to physically remove Tymoshenko before the second round, i.e. having her killed in a contract killing. This would be par for the course if multitudinous accounts of the criminal background of Yanukovych’s principal sponsor and Ukraine’s richest man, Renat Akhmetov, are correct.

Copyright Ivan Lozowy. Reissued here with permission of the author.

The Revival of Nuclear Power in Eastern Europe

David Marples

Almost 25 years after the 1986 Chernobyl disaster in Ukraine contaminated a large swathe of territory across Europe, several Eastern European countries are embarking on new and ambitious plans to construct new nuclear power plants. Ostensibly, the main reason for the development is a desire to end dependence on Russian oil and gas, supplies of which have been cut off periodically to Ukraine and Belarus in particular.

The new programs are costly and controversial, and although there is far more emphasis on safety than in the late Soviet period, a huge build-up of capacity in particular regions has residents fearful of the impact of an accident.

Ukraine currently has 15 reactors, which provide about 50% of its electricity. After the closure of Chernobyl in 2000, emphasis switched to the completion of new reactors—Khmelnytsky-2 and Rivne-4—in western Ukraine, though the largest nuclear plant in Europe is Enerhodar, near Zaporizhzhya on the Dnipro River, which has 6 Russian-manufactured water-pressured reactors (VVER), each of 1,000 megawatts (MW) capacity.

Three years ago, the Ukrainian government approved plans for the construction of twenty new reactors by 2030, including 11 new units and 9 to replace existing ones. The first two units to come on line will be Khmelnytsky 3 and 4 units by 2017, construction on which was halted when Ukraine imposed a moratorium on building new reactors in 1990. About 85% of the financing for these new units will come from a Russian loan.

At the same time, with the aid of the European Bank and a large donation from the European Commission, the International Chernobyl Shelter Fund is to construct a new cover for the destroyed fourth reactor at Chernobyl at a cost of around US$1 billion.

To the north, Belarus has also announced plans to build its first nuclear power plant, commencing with two Russian-made VVER-1000 reactors, which are anticipated to come into service in 2016 and 2018 respectively. President Alyaksandr Lukashenka has approved the plan, and the site selected is in Hrodna region, close to the border with Lithuania.

Lukashenka has angrily criticized Russia for raising the prices of imported gas and for its plans to build a transmission pipeline through the Baltic States, thereby depriving both Ukraine and Belarus of profits on gas supplied to Central and Western Europe.

The location of the Belarusian construction has raised concerns in Lithuania, as it is dangerously close to the capital Vilnius. However, Lithuania has similar problems. When it joined the European Union in 2004, it agreed to close its Ignalina station (two graphite-moderated 1,500 MW reactors) by the end of 2009. Ignalina has supplied electricity to several countries, including Belarus and Russia’s Kaliningrad region. Lithuania is now commissioning bids from European Union investors for a replacement station in the same location.

In 2008, Russia’s nuclear energy authority—Rosatom—revealed a new program to build a 1200 MW plant near Sovetsk in the Kaliningrad enclave by 2016. Once again the construction would be very close to Lithuania, this time to its northern border. Residents of Kaliningrad have questioned the need for the plant and a survey reveals that 26% oppose it and a further 43% are concerned about its safety.

Poland has long relied on its coal industry to supply its energy needs and abandoned plans to build a station at Zarnowiec in the 1980s. However, the Polish government energy industry has long focused on lignite coal, which poses an environmental hazard. Thus Warsaw has also announced plans to construct two nuclear reactors by 2020, with the abandoned Zarnowiec site discussed as a possible location.

The recovery of nuclear power in the area most affected by the world’s worst nuclear disaster is remarkable. Either these governments are seeking more economic independence or else they regard the atomic option as the least ecologically hazardous of energy industries.

However, the potential problems are huge. Other than Russia, none of the states has adequate storage sites for radioactive waste. Most lack domestic technology and expertise. Only Russia and Ukraine possess adequate supplies of uranium; and only Russia of the expanding countries manufactures nuclear reactors.

The biggest problem of all is lack of funding. Whereas Lithuania can anticipate financial support from the EU for its replacement station, Ukraine and Belarus must seek investment elsewhere. Paradoxically, they are reliant primarily on Russian loans and technology to develop an industry intended to reduce dependence on their troublesome neighbor.

Finally, some 7 million people inhabiting this part of Europe are living on lands affected by radiation from Chernobyl. The accident continues to raise health concerns and long-living radio-nuclides remain in the soil. Yet a massive nuclear energy expansion program is in place. It is reminiscent of the Soviet plans of the 1970s and 1980s, and equally unrealistic.

(First published in the EDMONTON JOURNAL, 13 October 2009)

Re-examining the Nazi-Soviet Pact 70 Years On

David Marples

August 23 marks the 70th anniversary of the Molotov-Ribbentrop Pact, a nonaggression treaty between the two totalitarian powers of USSR and Nazi-Germany, as well as a secret protocol that divided Eastern Europe into spheres of influence between Hitler and Stalin.

In May 2009, Russian president Dmitry Medvedev authorized a commission to investigate cases of historical revisionism of the Second World War to the detriment of Russia. The move followed the approval a year ago of new school textbooks in Russia that reassessed the role of Stalin, acknowledging that he made some errors but noting in turn his achievements and successes, particularly in the war years. Taken together they symbolize the new Russian policy of identifying contemporary Russia with the former Soviet regime.

Last month, Russia responded furiously to a proposal by the Parliamentary Assembly of the Organization for Security and Cooperation in Europe (OSCE) to declare the date August 23 one of commemoration of the victims of Fascism and Communism. In Moscow’s view, it is not possible to equate the evils of Nazism with Stalin’s regime.

A recent article in Vesti Nedeli by Il’ya Kanavin (June 21) also focused on the Pact, citing historian Natalya Narochnitskaya’s view that by the terms of the Pact, the USSR was only regaining territories that were formerly part of the Russian Empire. Citing this same author, Kanavin maintains that Stalin was obliged to make a deal with Hitler for the following reasons.

First, it was essential to keep the German army as far from the Soviet border as possible as the USSR was at war with Imperial Japan in the Far East and could not be fighting on two fronts simultaneously.

Second, Germany and Poland to that point were in close collusion and could even be termed allies, based on the agreement of 1934, that contained secret clauses on mutual military aid. He emphasizes that such secret protocols were a staple of treaties in this period.

Third, with the removal of some 38,000 Soviet officers during the Purges, Stalin needed time to train new military leaders and produce more arms.

Fourth, Stalin was isolated because the only potential allies, Britain and France, had no intention of reaching an agreement with the USSR. A year earlier the two democratic countries had participated in the notorious Munich agreement that led to the dismemberment of Czechoslovakia through the policy of appeasement. Only Churchill opposed Hitler but world leaders were allegedly more afraid of Stalin than the German dictator.

Lastly, Kanavin maintains that the Soviet Union should not take be blamed for permitting Hitler a free hand in his assigned sector of Poland. Stalin then had little choice but to sign the agreement, in full knowledge that he was only postponing the conflict.

These arguments can be questioned on a number of grounds, and not least because they distinguish between a rapacious Hitler regime and a defensive-minded and implicitly benign Stalin government that eventually would bear the brunt of the war.

The comment that Stalin was occupying only territories formerly under the Russian Empire is inaccurate. In the summer of 1940, for example, after forcing the Romanians out of Bessarabia, Stalin also occupied northern Bukovina (today it is the Chernovtsy Oblast of Ukraine) that had never been under Russian rule. When Molotov visited Germany late in 1940 he made several more territorial demands that reportedly led Hitler to accelerate plans for the invasion of the USSR.

Eastern Poland’s Volhynia region was part of the Russian Empire but Eastern Galicia had only been under Russian rule briefly during the First World War. It is hard to perceive acquisition of these territories as anything other than the westward expansion of the USSR.

But it is the assault on the annexed population that belies the arguments of Kanavin and Narochnitskaya, and particularly because there are several instances of collaboration between the two occupying powers. Both systematically eradicated the Polish population—the Nazis overtly and the Soviets through deportations and secret executions in forests such as Katyn. More than 15,000 Polish officers were executed.

Stalin, however, claimed to be liberating subject populations—Ukrainians and Belarusians—who wished to join the USSR. The Soviet advance only took place 16 days after the German invasion of Western Poland. In this way the Russian side did little fighting—only in Grodno did the Poles offer much resistance—and was able to pose as a friendly power.

However, having eliminated all vestiges of Polish rule, the new government organized mass deportations of Ukrainians, Belarusians, and Jews in 1940 and 1941. A similar policy was deployed after the USSR occupied the three Baltic States in the summer of 1940.

President Medvedev and Russian historians have to face a few home truths. Even Kanavin concedes that the mass execution of Red Army officers weakened the Soviet military. But this action was part of the Terror that the Stalin regime applied both domestically and in newly conquered territories, committing mass murders on an epic scale. Today, the Baltic States consider the entire period 1940-90 to have been one of Soviet occupation. That is why their citizens initially welcomed the Germans in the summer of 1941. Large sectors of Western Ukraine remain alienated from Moscow today for the same reason.

By the agreement of August 23, 1939, two dictators acted in Machiavellian fashion. It is facile to suggest that Stalin should be regarded differently because he emerged as a victorious war leader responsible for the defeat of Fascism. His naïve trust in Hitler, manifested by the Treaty, also was responsible for the Soviet failure to respond in the first days of the ‘Great Patriotic War’ leading to the mass loss of territory and capture of millions of Soviet citizens.

August 23 was a dark day for Russia, as it was for the rest of Europe and that is how it should be remembered.

[This article first appeared in the Moscow Times, August 20, 2009]

Yanukovych Grabs Early Lead in Ukraine’s Presidential Campaign

David R. Marples

Two recent opinion polls monitoring Ukraine’s presidential election campaign in the lead-up to the January 2010 vote indicate that Regions Party leader Viktor Yanukovych is well ahead.

The Kyiv Research and Branding group, which canvassed respondents between August 4 and 14, has Yanukovych with 26%, followed by Prime Minister Yulia Tymoshenko at 16.5%, and Arseny Yatsenyuk 12.6%. Angus Reid reported on August 12 that Yanukovych has the support of 29.9%, with Tymoshenko at 15%, and Yatsenyuk with 12.8%.

The latter poll is the first to suggest that Yanukovych could poll more than the combined votes of his main challengers.

Although Ukrainians have often mocked the self-styled “Proffesor” (as the word was misspelled in his campaign literature in 2004) who in 2006 managed to expunge from the record his incarceration for manslaughter during his youth, and while electors seem weary of the familiar faces in political life, the 59-year old lawyer and engineer still looks the likely winner in January.

It is only five years since Yanukovych ran for president against current incumbent Viktor Yushchenko. In that campaign, not only did he have implicit backing from Vladimir Putin, but also Russia (partly through Gazprom) helped to fund his campaign. In Moscow his campaign posters were everywhere, and 560,000 Ukrainians resident in Russia signed his support list for presidential candidacy. At a Congress of the Ukrainian Diaspora in Moscow, city mayor Yuri Luzhkov and then First Deputy Prime Minister Dmitry Medvedev endorsed him as the next president of Ukraine.

During the 2004 campaign Yanukovych reportedly used funds designated for the Prime Minister’s office for his campaign, promised to make Russian the second state language of Ukraine, and offered dual citizenship to ethnic Russians. During the protests in Kyiv that followed the rigged vote of the run-off, Yanukovych supporters said that a referendum on the autonomy of Donetsk and Luhansk regions would be held if Yushchenko became president.

Many observers considered that Yanukovych’s political career was over when Yushchenko won the rerun second round of the election in December 2004 and became Ukraine’s third president.

However, in the 2006 parliamentary elections, Yanukovych staged a comeback and once again became Prime Minister. His Regions party won more than 45% of the vote in 9 districts of Ukraine, all in the east and south of the country.

How did he achieve such a revival of fortunes?

First, his party had financial support from several businessmen, including Ukraine’s richest tycoon, born and raised in Donetsk, Rinat Akhmetov. Second, his party’s organization was centralized and even autocratic, prohibiting any factionalism. Third, the Orange coalition had split and its leaders were fighting each other. Lastly, he promised that his party would focus on economic issues and rectify problems promptly. He had little chance to do so because another parliamentary election followed in 2007 and a new Orange coalition was formed.

Yanukovych has always had solid backing. As the former governor of Donetsk province, he is assured of overwhelming support from Ukraine’s eastern industrial regions. His backers control the country’s leading banks, machine-building and metallurgical factories, steelworks, and coal mines.

Western Ukrainians and Ukrainians in the Diaspora hold Yanukovych in low esteem. His sycophantic responses to Russia’s various attacks on the presidency of Viktor Yushchenko suggest he will quickly move Ukraine into the Russian sphere of influence. Nation building will end and the pro-European direction will be halted. Yanukovych has promised a referendum on Ukraine’s membership of NATO, and although he favors trade with the EU, he does not endorse full membership.

However, no Ukrainian president can change course so abruptly. In 1994, Leonid Kuchma became president on a platform of moving Ukraine closer to Russia, but once in office he maintained a firm distance. Belarus’ president, Alyaksandr Lukashenka, sought a union with Russia in 1997, but today promotes independence and distance from Moscow. In the current climate, friendship with Moscow means being a client state.

Conversely, Ukraine’s path to the EU is closed as long as Germany and France persist in blocking it. Germany’s close economic ties to Russia preclude any short-term change of direction. The Eastern Partnership notwithstanding, Brussels has been a big disappointment from Ukraine’s perspective; its major players have made a mockery of Yushchenko’s goals of joining European structures.

The economic and political climate today does not allow for a radical change of direction. The current path to reduce dependency on gas supplies from the Russians will likely be maintained. Most voters are concerned primarily about jobs, wages, and pensions.

Ukrainians have reservations about NATO but they have no wish to become a pawn of Russia. A solution must also be found to the constant wrangling over power between president and parliament, likely through amendments to the Constitution.

As Ukraine celebrates 18 years of independence on Tuesday, it is at a difficult stage both economically and in its political evolution. To Western observers it seems unthinkable that voters would choose Yanukovych as the next president. The lack of suitable alternatives suggests nonetheless that it could happen.