VIRTUAL EURO-INTEGRATION

Mykola Riabchuk

On May 20, after four weeks of hesitation, Ukrainian President Viktor Yanukovych signed into the law the parliamentary decision on the official use of red flags. A few days later, the opposition appealed to the Constitutional Court against the controversial decision. By June 17, with unusual speed, the judges examined the case and deemed the law unconstitutional.

Very few people believe today that any Ukrainian court, including the Constitutional (refilled last year with presidential loyalists), is able to pass any independent decision to contradict whatever may be the president’s whim. In this recent case, neither the court’s ruling nor its timing were incidental. The ruling has clearly met Yanukovych’s need to correct the mistake of his associates, who had badly underestimated the destructive power of the parliamentary motion and allowed the pro-Kremlin lobbyists to pass it through.

The timing was also not incidental. It clearly met two urgent political needs: first, to avoid new violent clashes in L’viv and elsewhere on June 22 (the day when the so called “Great Patriotic War” began 70 years ago) similar to those that happened back on May 9 when Russian nationalists did their best to provoke Ukrainian counterparts in their major stronghold. And secondly, the deadline for the ruling was June 21, the date of Yanukovych’s visit to Strasbourg and his official presentation at the Parliamentary Assembly of the Council of Europe. The European MPs who had accumulated many unpleasant questions for the Ukrainian president regarding his authoritarian rule, selective application of justice and persecution of political opponents, had to be countered by the appearance of a moderate politician strongly committed to the rule of law and with no wish to influence the independent judiciary in his country.

The first goal was largely achieved and the earlier status quo reestablished, meaning that Soviet symbols are neither forbidden nor mandatory. The pro-Russian radicals, without official support and encouragement, failed to make any significant disturbances in L’viv and elsewhere, to the noticeable disappointment of numerous Russian TV crews who came to L’viv to gather new evidence of rabid Ukrainian “nationalism” and “neo-Nazism.”

The second goal appeared more difficult to achieve since all the policies and practical steps of the Ukrainian authorities are the antithesis of the officially professed rule of law and independent justice. Whatever soothing words Viktor Yanukovych may have delivered at Strasbourg, a single call of his delegate from the embassy to a French MP Francois Rochebloine, with a strange request to clarify beforehand what question he was going to put to the Ukrainian president during the meeting, tells much more about the real style of Ukrainian politics and its neo-Soviet practices http://gazeta.ua/articles/387449. If a European MP can be dogged this way, one can easily imagine even more unscrupulous pressure of the same acolytes against Ukrainian politicians, journalists, media owners, and businessmen.

Of much higher importance than the empty words of the president was a minor clash between the Ukrainian and Russian delegations at the PACE concerning the Russia-sponsored draft resolution “On ways of opposing the manifestations of neo-Nazism and right-wing radicalism” that targeted specifically Ukraine (and four other European countries) as arguably not persecuting sufficiently neo-Nazis and xenophobes and referring inter alia to the May 9 events in L’viv http://www.itar-tass.com/en/c154/167142.html. The significance of the Strasbourg event is that not only members of Ukrainian opposition but also MPs from the ruling Party of Regions, including Yulia Liovochkina (a sister of Serhiy Liovochkin, the head of Yanukovych’s administration), spoke unanimously against the Russian document http://www.pravda.com.ua/news/2011/06/22/6321051/. Yet they hardly felt any sympathy for the Ukrainian nationalists condemned in the Russian draft. Nor did they seem to care much about any idealistic stuff like “the truth” or the fair image of the country. Rather this is simply not the way in which the “pragmatists” from the Party of Regions tend to feel or behave.

The reason for their sudden “patriotic” move is likely the same as that behind Yanukovych’s burial of Moscow-sponsored red flags by the whimsical decision of the Constitutional Court. They have probably come to understand gradually that they have acquired too negative an international image to afford its further deterioration by either red-flag clashes or a neo-Nazi witch-hunt. This may signify an important shift in the previous, largely confrontational policy of the Party of Regions. The “pragmatists” within this heterogeneous group may come to recognize that both Russia and the pro-Russian lobby in Ukraine are pushing them toward international isolation, which means effectively full dependence on Moscow. Transforming Ukraine into another Belarus seems to be the ultimate goal of Russian and pro-Russian “technologists.” Domestically, this requires escalation of conflicts and an increase of governmental coercion. Internationally, it means endowing Ukraine with the image of a failed state, either with neo-Soviet or neo-fascist tendencies, or both.

Such a development clearly tends to spoil the favorite game of Ukrainian oligarchs, carried out under the aegis of “European integration.” It is a virtual game that does not require any action, reforms, transparency, rule of law, or fair political and economic competition. Ukrainian oligarchs, especially those from Donbas that run the country, have never loved honest competition, striving instead to establish monopolies wherever possible by whatever means. They have learned how to play by rules but they despise such methods. They love the virtual “European integration” because it requires no deeds, just words. And it brings them certainty and much-needed security – for their property, bank accounts, and personal dolce vita in the West.

It is like a safety belt, a password that conveys a key message to the EU officials: “We might be bad boys but we are YOUR bad boys. We are not as ugly as that last European dictator Lukashenko, so, whatever we do in our country, please, do not ban us and our families from entering the EU.”

The Kuchma-style “multi-vector” policy seems to be the best option for Ukrainian oligarchs. Back in mid-May, the secretary of the National Defense and Security Council of Ukraine Rayisa Bohatyryova declared something that would have been impossible to imagine one year earlier, during Yanukovych’s imaginary honeymoon with Putin: “We cannot change our foreign policy objective after each election. Consistency of foreign policy is the basis for a country’s predictability.”

“On the one hand,” she argued, “the Russian Federation wants to pull us into the Russian World as soon as possible, and Russia is swiftly moving towards strengthening its international position. On the other hand, we hear that countries like the USA and our other strategic partners are gradually losing interest in Ukraine. The European Union is losing interest, too.” Thus, she concluded, Ukraine is an independent state that should defend its own national interests in the international arena after working out its singular position. Moreover, she stressed that such a position should be elaborated in cooperation with the opposition. (Interfax-Ukraine, May 18, 2011).

Whether the “pragmatists” within the Party of Regions are able to maneuver the country towards more flexible “multi-vectored” politics is not yet clear. On one hand, they face a very strong Russian political, economic and intelligence lobby within their own ranks. And on the other hand, they have already given too many trump cards to Moscow, lost too many possible allies, and made too many enemies both within the country and abroad. And even if they manage to shift their politics towards a “multi-vectored” foreign policy, it would not signify any authentic European integration. As under Kuchma, so today, under Yanukovych, it is simply not on the agenda for one obvious reason. All the practices, habits, and thoughts of the so-called “Ukrainian elite” are worlds apart from those associated today with “Europeans.”

Ukraine’s Economic Prospects Improving

David Marples

After the 2008-09 recession and its enormously adverse impact on the Ukrainian economy there have been various forecasts of impending collapse of the Viktor Yanukovych administration. Of late these analyses have increased rather than lessened. But there is sufficient evidence that such prognoses are not merely premature, they are largely unfounded. That is not to say that Ukraine is not facing economic problems, like many parts of Europe today, but it has seen worse times and survived them.

Ukraine’s biggest issue is energy supply, which is partly a legacy from Soviet times. It remains heavily dependent on Russian oil and gas. Prices negotiated for imports by former Prime Minister Yulia Tymoshenko in the Yushchenko era are again under review.

Concomitantly, Russia is putting some pressure on Ukraine to join the Customs Union, which currently comprises also Belarus and Kazakhstan. Ukraine, however, has stood its ground on both issues, demanding new negotiations on prices for oil and gas, while remaining firmly outside the Common Economic Space of its northern and eastern neighbors.

According to figures of the World Bank, GDP is expected to rise by 4.5% this year and 5% in 2012, a consequence of a vibrant retail sales market and expansive building plans. Agricultural production increased by 3.5% in the first five months of this year. Inflation remains a problem, partly because of rising food and fuel prices. However, the financial situation has been enhanced by some promising privatization schemes such as that of Ukrainian Telecom.

On June 22, Interfax Ukrainy reported the conclusions of a TACIS program to support the Ukrainian coal sector, namely to privatize the moribund state enterprise Vuhillya Ukrainy (Ukrainian Coal) under the “strictest control” of an Anti-Monopoly Committee. Whether coal has a long-term future is debatable, but the abolition of the state company is a logical beginning.

In 2010, the IMF approved a $15.6 billion loan to Ukraine, and it continues to monitor the country’s performance. An IMF team will return to Ukraine in September, ostensibly to ensure that cuts to public spending remain in place, but its reports to date have not been negative.

Evidence suggests that the Ukrainian government is depending equally on Russian and on non-Russian backing, mainly from the European Union and potentially from China. On June 18-20, Chinese president Hu Jintao made a state visit to Ukraine, during which President Yanukovych announced that China should be an economic model for Ukraine. The two sides announced the “fast-tracking” of bilateral relations.

However, energy, as noted, remains the critical issue and there is no short-term solution to current dependence on Russia. Domestically, about 48% of Ukraine’s power supply derives from nuclear energy and electricity demand is expected to more than double over the next two decades. Nuclear power is considered to be the primary recipe to meet the increased needs.

However, no nuclear reactors have come on line in Ukraine in the past five years, although Rivne-4, a VVER-1000 (water-pressurized) reactor is anticipated to be operating by the end of the year. After the disaster at Japan’s Fukushima plant, which began last March, public opinion in Europe turned sharply against nuclear energy. The consequence has been a potential windfall for Russia, which is again a major exporter of nuclear technology.

In the case of Ukraine, Enerhoatom made an agreement with Russia’s Atomstroyeksport last year to complete two unfinished VVER-1000 reactors at the Khmelnytsky station. A third unit, which was 75% finished in 1990, should be in service by 2016; and a fourth, 28% completed in the Soviet period, by 2017. Russia is providing the financing, the construction crews, and the fuel supply. It has benefited from its position as the main reactor manufacturer in the Soviet period (starting in the late 1970s).

Even in this area, however, there is no obvious reason why the reliance solely on Russian technology, resources, and financing should continue. Notably, a French company is playing the key role in building a new roof for the destroyed Chernobyl-4 reactor, and Ukraine has indicated it will be open to international tenders for future nuclear power plants.

Ukraine is also a major producer of uranium, with about 3% of world supply coming from the Eastern Mining and Enrichment Plant in Vody, Dnipropetrovsk. On paper, the country is an attractive place for investment, particularly its steel industry, which benefits from the country having about 20% of the world’s supply of iron ore.

So what basically is wrong with this picture? Why are there so many doomsday scenarios about impending collapse?

The likely answer is that many analyses of contemporary Ukraine focus largely on corruption, the control over political life of a Donetsk-based clan or hierarchy that has undermined democracy, harassed opponents, taken steps to gain control over the media, and more than once made a mockery of parliament. There is no question that the Yanukovych regime, installed for some seventeen months, has a richly deserved unsavory reputation and at present it is not very popular.

Yet in terms of long-term economic health, such factors mean little. Moreover, the government continues to work with the EU and, despite some difficulties, with Russia, and there is every indication that the partnership with China will prove fruitful. It may need to tighten its fiscal policy to keep a handle on inflation, but it does not have the catastrophic debts of Belarus. Most financial sources agree that the economy is in a recovery mode, albeit without any “boom period” in sight.

Above all, Ukraine has the human and natural resources to thrive economically. And the visit of the Chinese president was symbolically significant even though the two economies cannot realistically be compared. Here was the leader of a country that has never been democratic, and in which enemies of the regime are dealt with in summary fashion; thus perhaps an ideal model for Yanukovych and his Regions cronies.

And, ironically, the conjoining of a more democratic model and economic decline or collapse has happened twice now in recent history: in 1991-92 after the collapse of the Soviet regime, and in 2008-09 under Yushchenko. Conversely, Ukraine’s economic performance improved under the sinister Kuchma and has begun to show similar signs under the current, equally anti-democratic leadership.

[This article appeared simultaneously in Kyiv Post, 23 June 2011]