RUSSIA AND UKRAINE AGREE TO EXTEND LEASE ON BLACK SEA FLEET

David Marples

Last August, Russian president Dmitry Medvedev sent a letter to his Ukrainian counterpart Viktor Yushchenko effectively breaking off relations with the neighboring state until a new president had been elected. Just eight months later, Medvedev is celebrating a deal with Ukraine’s new president Viktor Yanukovych that will keep the Russian Black Sea Fleet at the naval base of Sevastopol for at least 25 more years after the current lease expires in 2017.

How did Russia manage to gain such a deal? And who are the beneficiaries?

The Russian Black Sea Fleet has been at the Sevastopol base since 1783 and has fought wars against the Turks, British, French, and Germans over the years. In 1991 its future came under consideration as it found itself part of an independent Ukraine. Eventually about 80% of the ships went to Russia, which signed an agreement with Ukraine in 1997 for a 20-year lease of two Black Sea bays at Sevastopol for a payment of around $98 million per year.

Yushchenko had indicated his reluctance to extend that lease, pointing out that according to the Ukrainian Constitution, no foreign military installations are permitted on Ukraine’s territory. The presence of the Fleet and its use in Russia’s war with Georgia in August 2008 was a bone of contention between Yushchenko and the Russian leadership. He also evicted Russian security agents operating in Sevastopol late last year.

The current agreement represents a stunning volte-face on Ukraine’s part. The deal was evidently elaborated by Vladimir Putin and Ukrainian Prime Minister Mykola Azarov and signed in Kharkiv on April 21. Medvedev, rather than Putin, was the official signatory but there is little doubt of the latter’s crucial role in formulating the contents. The two parliaments, it was reported, may ratify the agreement as early as April 27.

Russia has agreed to reduce the cost of gas exported to Ukraine by 30% until the year 2019, which will save Ukraine expenses estimated at $40 billion over the next decade. In 2010, Ukraine will pay $230 per 1,000 cubic meters of gas compared to an originally anticipated $334. In return Ukraine agreed to increase its imports of gas by 10% this year and extend the lease for the Russian Fleet for a further 25 years, i.e. until 2042.

To most outsiders the deal seems heavily weighted in Russia’s favor. Until 2017, Russia can continue to deduct the price of the lease from monies owed by Ukraine for gas since the early 1990s. After that time cash payments will be made, but the agreement will only last for two further years. In the remaining 23 years, Russia can theoretically raise the price of gas again.

Ukraine, by contrast, is already paying well above market prices for gas. More important, it is allowing a foreign state to occupy a key strategic base indefinitely. Ukraine’s prospects for future membership of NATO, which could reemerge after the end of Yanukovych’s tenure, now seem dim indeed. Russia intends to modernize and expand the fleet, and stresses its role in combating piracy off the coast of Somalia as evidence of its international usefulness.

Yanukovych manifestly failed to negotiate on Ukraine’s behalf. It is inconceivable why his starting point was not a five-year extension of the existing lease, which was stipulated as an option according to the 1997 agreement. There is also no logic to his ready agreement that the lease of a military base be linked to payments for gas. There is no indication that Russia intends to halt construction of its Nord Stream pipeline, which would bypass Ukraine in the transport of Russian gas to Western Europe.

The Kharkiv agreement practically nullifies Ukraine’s ability to conduct an independent foreign policy. And only the most naïve observers would anticipate that the deal clarifies the future of Russian-Ukrainian relations. Putin, Moscow mayor Yuri Luzhkov, and dozens of MP’s in the Russian Duma have dismissed the 1954 transfer of Crimea to Ukraine as an anomaly. They have also declared that Sevastopol will always remain a Russian city. More pressure could soon be put on the pliable Ukrainian president.

The agreement instantly divided Ukraine. It is supported by the Regions Party, which has a small majority in the Parliament, but has outraged other factions, including Our Ukraine and the Tymoshenko Bloc. The former has called for Yanukovych to be impeached. Whether the president has enough support to win ratification as early as next week remains to be seen.

Despite his April meeting with US President Barack Obama, resulting in the decision to remove highly enriched uranium from Ukraine by 2012, Yanukovych has been dismantling his predecessor’s legacy with bewildering speed and lack of respect for formalities or rules. He gained a majority in parliament by ignoring the law on factions and persuading individual delegates to switch their support to Regions.

The presidential web page on the 1933 Famine disappeared promptly after Yanukovych’s electoral victory, allegedly because of “technical difficulties” (a typical Soviet phrase) and his appointment of Dmytro Tabachnyk as Minister for Science and Education seemed calculated to inflame Western Ukrainians in particular. Tabachnyk published an article in Izvestiya last year claiming that residents of this region were not really Ukrainians and had different values from people in “Greater Ukraine.” A parliamentary vote to remove him failed narrowly in late March.

In Kharkiv, Yanukovych once again demonstrated his disdain for the current Constitution. In the short term, he might have improved Ukraine’s financial standing, but he has tied Ukraine’s military and security future to that of Russia, undermined its independence, and divided the country more than his hapless predecessor managed after five years in office.

An earlier version of this article appeared in the EDMONTON JOURNAL and KYIV POST

YANUKOVYCH’S FIRST TASK—EURO-2012

David Marples

The World Cup and Summer Olympics aside, the world’ biggest sporting event is the European Soccer Championship, a tournament held every four years in a different venue, in which 16 finalists will compete for a trophy won most recently by Spain in 2008. The hosts for the 2012 event are Poland and Ukraine. However, Ukraine has been given a two-month deadline to complete its preparations, following a visit of Michel Platini, president of UEFA (Union of European Football Associations), to the country on April 7-8.

Winning the right to host the tournament was a major coup by Poland and Ukraine, which defeated rival bids from Italy and Croatia-Hungary in April 2007. On two earlier occasions joint bids have been successful—those of Belgium and the Netherlands in 2000 and Austria and Switzerland for the most recent tournament in 2008. In the first round of voting for the 2012 location, Italy was ahead, but in the second round, the Poland-Ukraine bid received more than double the votes cast for the Italians, while the Hungary-Croatia bid received zero votes.

According to the schedule, preliminary rounds will be held in four Polish and four Ukrainian cities (Warsaw, Gdansk, Wroclaw, and Poznan; Kyiv, L’viv, Kharkiv, and Donetsk). Warsaw will host a quarter and semi-finals match, while Kyiv will have 6 matches, including a quarter-final and semi-final, as well as the final on July 1, 2012.

From Ukraine’s perspective Euro-2012 will boost the economy and provide an opportunity for the country to showcase its attractions. For UEFA, it spotlights central and eastern countries that do not possess the sort of rich home soccer clubs found in Western Europe, but where soccer (football to all Europeans) is the main spectator sport. In 2006, Ukraine reached the quarter-finals of the World Cup, a remarkable achievement, although it failed to qualify for the 2010 finals in South Africa.

Internally, the sport is dominated by a few businessmen. Ukraine’s representative at UEFA is Hryhoriy Surkis, who has been president of the Football Federation of Ukraine for three terms. A few years ago he was denied a visa to enter the United States, reportedly because of accusations of corrupt practices. Surkis’ brother Ihor is Chairman of Dynamo Kyiv, one of Ukraine’s biggest and most successful teams. The other is Shaktar Donetsk, which won the UEFA Cup in 2009 and is owned by Ukraine’s richest man and one of the chief backers of Yanukovych’s presidential election campaign, Rinat Akhmetov.

Shakhtar’s recent success has mirrored the rise of Donetsk as a key region of Ukraine. The team is made up partly of non-native players, most notably Brazilians who comprise 7 of the 27-member squad. Donetsk hosted the World Cup playoff game between Ukraine and Greece last November, but few locals could afford the exorbitant admission price set by the Football Federation of Ukraine. The result, as Akhmetov complained bitterly, was a half empty stadium for a match that had the potential to sell out many times over. That situation reflects the dual problem for Ukraine as a UEFA host—the economic recession and its impact on employment and salaries; and Surkis’ desire to reap profits rather than provide cheaper seats.

Platini visited the four designated cities of L’viv, Kyiv, Donetsk, and Kharkiv, and met with new Ukrainian president, Viktor Yanukovych. He noted problems in Kyiv, where construction of the new Olympic Stadium is weeks behind schedule, and L’viv, where work on the Lemberg Stadium has stopped altogether. In Donetsk, there is a suitable stadium but few hotels. Of the four cities, only Kharkiv appears to be making sufficient progress.

Earlier, as Ukraine fell behind schedule, UEFA threatened to find another co-host. Scotland promptly offered itself as an alternative venue. However, Platini remains committed to Ukraine, though he has threatened that if the infrastructure is not completed, all the Ukrainian games will be held in Kyiv. None of the stadiums other than Kyiv, which holds 63,000, is adequate for the final, which has a prospective television audience of 100 million TV viewers, rivaled only by the Super Bowl.

Ukraine has appointed a government minister expressly to prepare for UEFA-2012. Borys Kolesnikov has pledged government investment of 26 billion hryvnia (US$3.3 billion) from the 2010 state budget to improve roads, airports, and complete the building of stadiums. This is a massive task given the economy’s 6.8% contraction in the fourth quarter of 2009 and Ukraine’s self-imposed goal of reducing the budget deficit to 6% of GDP. Much depends on the receipt of the remaining $5.8 billion from the International Monetary Fund, part of an original $16.4 billion loan.

Ukraine’s situation is comparable to that of Russia, which prepares for the winter Olympics in Sochi (2014) and both countries face similar problems. In September 2010, 51 countries commence the qualifying rounds of the competition (Poland and Ukraine automatically qualify as host countries). Competition is intense–in future tournaments 24 teams will reach the finals, a reflection of UEFA’s willingness to include such countries as Kazakhstan and Israel within a greater Europe.

Yanukovych cannot afford failure given the international media’s focus on this competition. Preparation for EURO-2012 is the first major test of his administration and one with potentially significant rewards. In 2005, Kyiv hosted the Eurovision Song Contest, offering lowbrow glitterati a chance to strut to synthesized pop music. UEFA-2012 is a more serious endeavor that will highlight the world’s most popular sport over a three-week period. The opportunity cannot be forfeited.

This article appeared in the EDMONTON JOURNAL on 11 April 2010.

If Yanukovych does not change course, he may inspire revolution

Alexander J. Motyl

As Ukraine’s recently elected President Viktor Yanukovych prepares to visit Washington this month, he will aim to project an image of stability, confidence and control. In reality, Yanukovych has committed a series of mistakes that could doom his presidency, scare off foreign investors and thwart the country’s modernization. Yanukovych’s misrule is courting a second Orange Revolution.

Yanukovych’s first mistake was to violate the Constitution by changing the rules according to which ruling parliamentary coalitions are formed, making it possible for his party to take the lead in partnership with several others, including the Communists. That move immediately galvanized the demoralized opposition that clustered around his challenger in the presidential elections, former Prime Minister Yulia Tymoshenko.

His second mistake was to appoint as prime minister his crony Mykola Azarov, a tough bureaucrat whose name is synonymous with government corruption, ruinous taxation rates, and hostility to small business. The appointment dispelled any hopes Ukrainians had that Yanukovych would promote serious economic reform.

His third mistake was to agree to a cabinet consisting of 29 ministers as opposed to 25 before — an impossibly large number that will only compound its inability to engage in serious decision making. That the cabinet contained not one woman — Azarov claimed that reform was not women’s work — only reinforced the image of the cabinet as a dysfunctional boys’ club.

His fourth mistake was to appoint two nonentities — a former state farm manager, and an economics graduate from a Soviet agricultural institute — to head the ministries of economy [Vasyl Tsushko] and finance [Fyodor Yaroshenko]. Meanwhile, he created a Committee on Economic Reform, consisting of 24 members, to develop a strategy of economic change. The size of the committee guarantees that it will be a talk shop, while the incompetence of the two ministers means that whatever genuinely positive ideas the committee develops will remain on paper.

His fifth mistake was to appoint the controversial Dmytro Tabachnyk as minister of education. Tabachnyk has expressed chauvinist views that democratically inclined Ukrainians regard as deeply offensive to their national dignity, such as the belief that west Ukrainians are not real Ukrainians; endorsing the sanitized view of Soviet history propagated by the Kremlin; and claiming that Ukrainian language and culture flourished in Soviet times.

Unsurprisingly, many Ukrainians have reacted in the same way that African-Americans would react to Ku Klux Klan head David Duke’s appointment to such a position — with countrywide student strikes, petitions, and demonstrations directed as much at Yanukovych as at Tabachnyk.

These five mistakes have effectively undermined Yanukovych’s legitimacy within a few weeks of his inauguration. The 45.5 percent of the electorate that voted against him now feels vindicated; the 10-20 percent that voted for him as the lesser of two evils now suspect that their fears of Tymoshenko’s authoritarian tendencies were grossly exaggerated.

And everyone worries that Yanukovych and his band of Donbas-based “dons” are ruthlessly pursuing the same anti-democratic agenda that sparked the Orange Revolution of 2004, which denied Yanukovych the fruits of a rigged presidential election.

Several other key dismissals and appointments have only reinforced this view. The director of the State Security Service archives — a conscientious scholar who permitted unrestricted public access to documentation revealing Soviet crimes — has been fired. The National Television and Radio Company has been placed in the hands of a lightweight entertainer [Yehor Benkendorf], who is expected to toe the line.

Most disturbing perhaps, several of Yanukovych’s anti-democratically inclined party allies have been placed in charge of provincial interior ministries — positions that give them broad scope to clamp down on the liberties of ordinary citizens.

Democratically inclined Ukrainians are increasingly persuaded that Yanukovych wants to become Ukraine’s version of Belarus’s dictator, Alexander Lukashenko. But Yanukovych’s vision of strong-man rule rests on a strategic, and possibly fatal, misunderstanding of Ukraine.

First, the Orange Revolution and five years of Viktor Yushchenko’s presidency empowered the Ukrainian population, endowing it with a self-confidence that it lacked before 2004 and consolidating a vigorous civil society, consisting of professionals, intellectuals, students and businesspeople with no fear of the powers that be. Yanukovych’s efforts to establish strong-man rule already are, and will continue to be, resisted and ridiculed by the general population.

Second, Ukraine’s shambolic government apparatus cannot serve as the basis of an effective authoritarian government. Tough talk alone will fail to whip a bloated bureaucracy into shape. Worse, Ukraine’s security service and army are a far cry from those in Belarus. Yanukovych may try to emulate Lukashenko, but without a strong bureaucracy and coercive apparatus, he will fail.

Third, with an ineffective cabinet, all decision-making will be concentrated in Yanukovych’s hands. Even if one ignores his deficient education and poor grasp of facts, Yanukovych’s appointment of Tabachnyk demonstrates that Ukraine’s president is either completely out of touch with his own country, or arrogantly indifferent to public opinion.

Fourth, Ukraine is still in the throes of a deep economic crisis. If Yanukovych does nothing to fix the economy, Ukraine may soon face default, and mass discontent among his working class constituency in the southeast is likely. If Yanukovych does embark on serious reforms, that same constituency will suffer and strikes are certain.

So negotiating the crisis will require popular legitimacy — which Yanukovych is rapidly squandering, a strong government — which he does not have, and excellent judgment — which is also missing from the equation.

Indeed, if Yanukovych keeps on making anti-democratic mistakes, he could very well provoke a second Orange Revolution. But this time the demonstrators would consist of democrats, students, and workers.

The prospect of growing instability will do little to attract foreign investors, while declining legitimacy, growing incompetence, and tub thumping will fail to modernize Ukraine’s industry, agriculture and education. Yanukovych could very well be an even greater failure as president than Yushchenko.

Although the outlook is grim, it is not yet hopeless for Ukraine’s new president. He could still grasp a modest victory from the jaws of an embarrassing defeat by ruling as the president, not of Donetsk, but of all Ukraine.

All he has to do is restrain his appetite for power and learn to rule with the opposition and with the population. It’s not so complicated — it’s democracy.

Alexander J. Motyl is professor of political science at Rutgers University in New Jersey. This article originally appeared in the Wall Street Journal and is reprinted with the author’s permission.