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)

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)

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.

UKRAINIANS PREFER STRONG LEADERS

David Marples

Two recent opinion polls by the Research and Branding Institute in Kyiv provide some startling revelations about political opinions in Ukraine, just as Parliament has approved new presidential elections on January 17.

A June 2009 poll with over 2,000 respondents from all regions of Ukraine is declared to have a margin of error of 2.2%. It provides a plethora of data about the leading candidates for president. Former Prime Minister Viktor Yanukovych, who lost in the 2004 elections to current president Viktor Yushchenko, leads with the support of 26.8% of respondents, followed by Prime Minister Yulia Tymoshenko at 15.8%, and former Foreign Minister and chairman of parliament Arsenii Yatsenyuk, 12.3%. President Yushchenko is backed by a meager 2.1%.

If the election, as seems likely, requires a second round, then Yanukovych would triumph over either of his main challengers: against Tymoshenko by 38.8 to 28.8%; and against Yatsenyuk by 36.7 to 30.8%. If the second round were between Yatsenyuk and Tymoshenko, the former would eke out a narrow victory.

The emergence of Yatsenyuk as a serious contender is a recent phenomenon. A former protégé of President Yushchenko, he reportedly has financial backing from two controversial figures: Dmitrii Firtash, a leading stockholder in the RosUkrEnergo company that mediated in the dispute over the price for the sale of Russian gas to Ukraine; and Viktor Pinchuk, the son-in-law of former President Leonid Kuchma, who owns four Ukrainian TV channels. A native of Chernivtsi, Yatsenyuk is of Jewish origin and turned 35 on May 22, the minimum age at which one can run for the post of president.

At present, 51.2% of those polled will definitely participate in the elections, while 24% may exercise their right to vote. As there is speculation that parliamentary elections may take place simultaneously, the standing of the major political parties is also of relevance: the Regions Party leads among respondents with 29.3%, followed by the Yulia Tymoshenko Bloc with 15.5%, and the Yatsenyuk Bloc with 10.6%.

Recently, a move to form a coalition between the two largest blocs (Regions and Tymoshenko) failed after Yanukovych ultimately rejected the idea. At one point the Regions leader had suggested changing the minimum age to run for president to 50, which would have removed Tymoshenko and Yatsenyuk from the contest.

A poll conduced by the same organization in May focused on attitudes of residents of Ukraine to other countries and blocs. These results are perhaps even more enlightening, given the general synopsis in Western media that Ukraine is Western leaning or pro-Europe.

Over 35% of those polled would prefer to see Ukraine join a Union with Russia, Belarus, and Kazakhstan; 20% would like Ukraine to join a United Europe (European Union); and 23% want the country to remain independent without joining any such formation. Incidentally, support for joining the EU is much higher in Belarus than in Ukraine.

In terms of attitudes to leaders of former Soviet republics, 58% hold a positive attitude toward Russian Prime Minister Vladimir Putin, 56% feel the same way about hard-line Belarusian president Alyaksandr Lukashenka, and 55% have a favorable attitude toward Russian president Dmitry Medvedev. By contrast only 11% feel positive about Georgian president Mikeil Saakashvili.

Western leaders are considerably less popular. The highest rated is US President Barack Obama (31%), followed by Angela Merkel of Germany (29%), and Frances’ Nicolas Sarkozy and Poland’s Lech Kaczynski (tied at 22%). Notably, however, both Obama and Merkel received higher totals than Ukraine’s leading candidate Yanukovych.

Lastly, looking at attitudes toward other countries, the results were as follows: 57% of respondents feel positively toward Russia, 45% toward Belarus, and 20% toward Germany. Only 3% feel positively about Georgia, which was supported firmly by President Yushchenko during its August 2008 war with Russia.

Some deductions can be made from these results, which are consistent with findings of Western researchers such as Stephen White at the University of Glasgow.

First, the economic downturn has not affected significantly the political attitudes of Ukrainian residents. Ukrainian citizens appear to favor strong leaders over weak, albeit more democratic–leaning statespersons. They are generally pro-Russian and skeptical toward both the United States and the EU.

Second, the chances of success of Prime Minister Tymoshenko in the January 2010 elections are slim. Her popularity has fallen in recent months after the seemingly endless squabbles with the president and what is perceived as her single-minded pursuit of the highest office. At one point she clearly intended to push through a constitutional change to elect the next president through the parliament, but such a maneuver today would only work in favor of Yanukovych.

Third, regionally there is a marked contrast between attitudes in western regions and the rest of Ukraine. Western Ukraine is more pro-Europe and anti-Russian, with political support divided between Tymoshenko (23.4%) and Yatsenyuk (23.2%). However, Western Ukrainians make up only one-fifth of Ukraine’s population.

Fourth, Ukrainians are deeply unhappy with the current president, an increasingly isolated figure who seems incapable of communicating in any meaningful way with his electorate. A realist might opt not to run and campaign for newcomer Yatsenyuk, notwithstanding the credibility of some of his financial backers. But Yushchenko seems intent on running again, even though every indicator suggests that he is unelectable.

This article appeared originally in the EDMONTON JOURNAL on 27 June 2009.

Prospects for New Leadership in Ukraine

David R. Marples
for EDMONTON JOURNAL, 17 September 2008

There seems to be no immediate solution to the political crisis in Ukraine, which on September 16 brought about the final collapse of the Orange coalition established after the 2004 Orange Revolution. The electorate can hardly welcome the fall of the current parliament, leading to the third parliamentary election in only three years. But is that the only alternative? What are the causes of the crisis? Why does Ukraine seem to stutter from one bitter internal conflict to another?

One reason is a deep clash of personalities. The two key figures—President Viktor Yushchenko and Prime Minister Yulia Tymoshenko—do not get along. To listen to the president of late, an uninformed observer would gain the impression that Tymoshenko is a traitor who has sold out Ukraine to the Russians. Yushchenko has deployed his chief of staff, Viktor Baloha, a Rusyn from Transcarpathia, on a mission aimed at curtailing the career of the flamboyant Prime Minister. According to one account Baloha has forwarded documents to the Ukrainian Security Service that reportedly show Tymoshenko has committed acts of treason.

Tymoshenko is not only the most popular politician in Ukraine, she is—according to an annual ranking of the country’s most notable 100 individuals published in Korrespondent (August 22)—the most influential person as well. Lately she has made a number of maneuvers that seem contradictory: she has supported (with the backing of the Regions Party) the empowerment of parliament over the office of the president; she has expressed a wish to re-form the Orange coalition as the best way out of the current impasse; and she has approached the Regions faction with the goal of forming a new parliamentary majority coalition.

Yushchenko accuses her of joining Regions in supporting Russian actions in Georgia, undermining his own overt support for Georgian president Mikheil Saakashvili. The president believes she has taken such steps in order to acquire Russian sponsorship for her candidacy in the 2010 presidential election. However, if the Constitution is indeed amended to give more power to the legislature, then the presidency would be reduced to a ceremonial office.

The ambition of the Prime Minister has always been evident. At times there seems to be a contrast between her lifestyle and public appearance and her avowed goal to eliminate corruption or take on the oligarchs. But equally significant is her refusal to take orders from Yushchenko and become a compliant figure. Her initiatives to promote privatization and to carry out reforms through the Parliament with cooperation from various factions rankle with the conservative Yushchenko, who lacks both her drive and charisma.

Four years on from the Orange Revolution that swept him to power, the president is deeply unpopular within his own country (like Gorbachev he is much more respected outside it), and an article in Ukrains’ka pravda in early September declared him “politically dead.” He has issued a decree giving Baloha the authority to inspect internal troops that led some observers (Yuri Butuzov in Zerkalo Nedeli, for example) to suspect that he wishes to impose direct presidential rule. The Parliament has demanded (323 deputies in favor, well more than the 226 required) that the president dismiss Baloha for obstructing parliament as well as alleged illegal land dealings.

Ultimately, a president needs to reflect the sentiments of the public. Yushchenko’s avowed pro-Georgian, pro-NATO, and increasingly anti-Russian policies do not have overwhelming support in Ukraine. In fact they serve to highlight the regional divisions. On Georgia especially a consensus is plainly lacking.

Thus an August poll conducted by the Razumkov Center asked a sampling of respondents in the different regions of Ukraine which country they perceived as the aggressor in the Russian-Georgian conflict (a question that would have received a unanimous verdict in neighboring Poland). In western Ukraine, 55.2% saw Russia in this role, 15.1% both countries, and 7% Georgia. The center was evenly divided. However, Eastern Ukraine perceived Georgia as the main aggressor (37.2% to 13.8%), and in southern Ukraine almost 57% maintained the same, with only 13.8% citing Russia.

Though the same Center’s webpage does not offer a recent poll on NATO membership, a June 2008 survey indicated that 60% of respondents opposed it, with 20.9% in favor. Incidentally in June 2002, according to this same source, 32% supported accession to NATO. Thus as a policy it has lost its attraction, in part because of the war in Iraq.

Yushchenko’s policies are becoming erratic, and his public utterances, particularly about his Prime Minister increasingly far-fetched. The key question is whether a parliamentary coalition could actually work. Western analyst Taras Kuzio pointed out recently that a substantial portion of the Regions’ deputies opposed Russian actions in Georgia. There is thus no necessity to associate the entire faction with the pro-Russian stance of its leader.

If a coalition between the Tymoshenko Bloc and the Regions is possible, then Ukraine might establish the more stable leadership it requires during a time of political crisis and growing tension in its relationship with Russia.

Yushchenko Visits Canada leaving Political Crisis at Home

David Marples

Ukrainian president Viktor Yushchenko has been visiting Canada this week. During the visit he addressed Parliament, which was expected to recognize the 1932-33 Ukraine Famine as an act of genocide on 28 May.

However, he left behind in Ukraine a growing row with his Prime Minister Yulia Tymoshenko over the privatization of property and the distribution of authority between the office of the president and that of his former Orange ally.

Tymoshenko has made plain her desire to provide compensation for those citizens whose deposits in the former Soviet Savings Bank were rendered worthless by the collapse of the Soviet Union in 1991. She intends to do this by privatizing a number of key companies, chief of which is the Odesa Portside Plant (OPZ), which produces ammonia and nitrogen fertilizer. The Prime Minister proposed to sell the plant at an auction, and then use the funds accrued to compensate investors and sponsor social programs. Such measures would presumably raise her popularity with the public on the eve of new presidential elections, which will take place late in 2009 or early in 2010.

The Prime Minister’s other key declared task was to remove the intermediary company in Ukraine’s discussions of gas questions with Russia: RosUkrEnergo.

Yushchenko, who hosted an energy summit this week in Kyiv, has stood in the way of both projects, most notably by opposing Tymoshenko’s plans to install her own candidate, Andrii Portnoy, as head of the State Property Fund. In early February, the Prime Minister suspended the Fund’s leader Valentyna Semenyuk and appointed Portnoy in her place. Yushchenko issued a legal appeal against the firing, which was duly turned down by the Constitutional Court. Ultimately, both the president and Prime Minister threatened to use force to back up their candidates. In addition, the Prosecutor-General, following the president’s instructions, has filed a criminal case against Portnoy for trying to privatize state property illegally.

These events have been accompanied by another conflict concerning amendments to the Ukrainian Constitution. It is no secret that Tymoshenko would prefer that more power be given to the Parliament. She has assured Yushchenko that he would be allowed to extend his term in office, albeit with weakened authority. Yushchenko has accused Tymoshenko and leader of the Social Democratic Party Viktor Medvedchuk of causing a political crisis through surreptitious changes to the Constitution, without broad public debate. The Constitutional Council appointed by the president, meanwhile, has reportedly completed its own draft of a revised Constitution that would bring about power sharing while setting up a second chamber, the Senate, which would appoint key officials nominated by the president.

Some supporters of the president accuse Tymoshenko of a naked grab for power that would see her as the main figure in Ukrainian politics. Yet neither Yushchenko nor Tymoshenko have any support from the largest parliamentary faction, the Regions Party of Ukraine, led by their old nemesis and former Prime Minister Viktor Yanukovych.

Critics of Yushchenko complain that the president has no clearly delineated policy other than to remain in office, and that he has floundered, moving from one crisis to another and unable to put together a solid band of support in the Parliament. An April poll suggests that were a presidential election to be held at that time, the main contest would be between Tymoshenko and Yanukovych (both have the support of over 20% of the electorate), with Yushchenko a distant third at around 8%. Our Ukraine, Yushchenko’s political party, similarly commands only 8% support and won only one province in the 2007 parliamentary election. Such standings render Yushchenko a likely one-term president.

The president, however, is fighting resolutely. He has admonished Tymoshenko for unanticipated high rates of inflation in the country and ordered the Cabinet to come up with a viable economic plan. He has sent the Presidential Guard to patrol the State Property Fund, and he has declared the Odesa Portside Plant to be an object of vital strategic interest that cannot be subjected to privatization. He has dissolved Parliament twice since 2006, and it seems only a matter of time before he dismisses Tymoshenko for a second time (her first Cabinet in 2005 lasted for only nine months). At that point the confrontation would become an open contest for the presidency.

Yet none of these measures really address the main question, which is how Ukraine can bring about the sort of stable government it had under former president Leonid Kuchma in 1994-2004. Ironically, the much more democratic and far less corrupt regime established through the Orange Revolution has been mired by political in-fighting and power struggles, largely between the presidency and the Prime Minister’s office.

A version of this article appeared in the Edmonton Journal on 25 May.

Ukraine between Elections: Out of the Blue?

FRIDE Backgrounder

Balazs Jarabik

Four months after parliamentary elections Ukraine has seemingly slipped back into business as usual. The opposition is obstructing the work of the parliament, Russia has threatened Ukraine with rockets, and with cutting off its gas supply over alleged debts, and the extremely narrow Orange majority strains everyday thanks to battles between the Orange Government and the Orange Presidential Administration.

Nevertheless, the three constitutional leaders signed a letter in January asking NATO to provide a Membership Action Plan (MAP) for Ukraine at its Bucharest summit in April, initiating public debate on the issue of NATO membership for the first time. Ukraine was admitted to the WTO on February 5, thereby creating the best framework so far for the process of European integration while also improving the prospects for more foreign investment. Last, but not least the Tymoshenko government has moved to tackle corruption by targeting VAT refunds and customs operations, which lack transparency, and trying to remove RosUkrEnergo from gas dealings between Russia and Ukraine – although there are few indications of long-promised judicial and constitutional reform.

Conversely, the Yulia Tymoshenko Blok (BYuT) is placing its own sponsors in positions of power. Although divided on the issue of MAP, most Western diplomats lack genuinely positive intentions with regard to the Ukrainian request. The question remains unanswered of whether Tymoshenko has a serious plan to move Ukraine forward, or is merely implementing a series of populist measures intended to boost her rating before the upcoming presidential elections in 2009?

Getting used to braids and new ideas?

Ukrainians take their time to act. The new Ukrainian parliament first assembled on November 23, almost two months after the elections. The deal to hold new elections in September was negotiated by Viktor Baloha, Chief of Staff at the Presidential Secretariat and Ivan Pliushch, the Head of the National Security Council with their main negotiating partner in the Party of the Regions, Rinat Akhmetov, who is also Ukraine’s richest man. Many believed that the same group made a deal for a post-election grand coalition.

But then the elections came. BYuT’ss results gave the Orange forces yet another chance to lead Ukraine “out of the Blue”. The new speaker, the “polite young technocrat” Arseny Yatsenyuk was elected on December 4, while Prime Minister Tymoshenko was confirmed by an open vote on December 18 on the second attempt. However the everyday turmoil in the parliament has sent a strong signal that Prime Minister Tymoshenko has a majority of only two from the renewed “Orange Coalition”, while even in the Cabinet not all ministers are following her guidance.

The Presidential Secretariat, which has become a powerful institution under Viktor Baloga, returning to Kuchma-style policy making, is providing a constant policy and administrative “alternative” to the Cabinet. The same kind of tug-of-war, which previously existed between the two Viktors and led to early elections, is now developing between the Orange President and the Orange Government. This time, however, Yuschenko has a more direct influence as his party, Our Ukraine-Peoples’ Self Defense (NUNS), is in the ruling coalition. In addition, the President nominates the ministers of defence and foreign affairs , while Yuriy Melnyk, the only member of the Yanukovych cabinet who continues to serve under Tymoshenko, has also been installed by the Presidential Secretariat. Seemingly Yuschenko has been building up a kind of “de facto grand coalition” with the Party of Regions outside the parliament. Raisa Bogatyrova, a prominent member of PRU was named as secretary of the National Security and Defense Council (NSDC) . These cadres are effectively backed by the Prosecutor General Medvedko, who maintained his position after the government tried to call him back into parliament thanks to NUNS being divided on this issue.

The strategy of the Presidential Secretariat seems intended to give time to the government, while also designing clear opposing tactics and strategies to slow down Tymoshenko’s drive and determination. President Yushchenko came up with a package of bills aimed at diminishing the role of the Prime Minister and the government, and made Moscow his first visit after the elections .

Nevertheless, the agenda of the second Tymoshenko government looks similar to that of the first. Given that there were not too many achievements from previous reforms, perhaps there is no need for new ideas, but rather to implement the old ones. There is a debate over whether Tymoshenko has a real plan, as she is often seen carrying a green dossier which she frequently quotes with journalists or at Cabinet meetings. She certainly has determination, though. There are several economic, social and anti-corruption initiatives outlined by the new government such as the “Tymoshenko Transparency Initiative” (TTI), the “Contract with Investors”, “Contraband, Stop”, the new Council of Foreign and Domestic Advisors, and the rather controversial compensation programme. All these make great headlines but only time will tell whether these steps suffice to put Ukraine on the reform track, or whether they will be used simply to further boost Tymoshenko’s popularity, especially in Eastern Ukraine.
Besides the “alternative” offered by the Presidential Secretariat, obstruction from the opposition and a less-than-overwhelming majority, inflation might be the most serious enemy of the Tymoshenko government. According to last year’s official figures consumer prices rose by 16.6 percent. If its 2005 tenure is anything to go by, no price controls or export controls can be expected from the new government , however, and the new compensation program, worth $1.2 billion, may push inflation even higher this year. If pessimistic scenarios are confirmed this would be more likely to lead to the downfall of the government than any actions of the Presidential Secretariat or obstruction from the parliamentary opposition.
At least under the TTI the government has taken initial steps to tackle corruption, targeting customs as well as the previous government’s practice of selling value-added tax refunds to exporters at a “commission” of 20–30 percent, and especially the gas trade with Russia. Removing the intermediary RosUkrEnergo, and its half-owned Ukrainian subsidiary, UkrGazEnergo, which is serving to siphon money to a number of prominent Russians and Ukrainians, is a popular goal, but there are others who claim Tymoshenko may want to let her own sponsors take a slice of this lucrative pie. Although the removal may not be opposed by the Kremlin, as this would mean higher gas prices, there has so far been no debate within the government over liberalising the domestic gas market. Without such a move it will be hard to save the Ukrainian state oil and gas corporation, Naftogaz Ukrainy, which is on the verge of bankruptcy.

Beside the compensation program the question of privatisation remains another grey area. Notably, the first Tymoshenko government’s re-privatisation policy met with the harsh criticism from foreign experts in 2005. The new Ukrainian government published a list of 19 state-owned companies slated for privatisation this year, with a total value estimated at $5 billion . Sensibly, the new government has abandoned its predecessor’s tactic of selling very small posts, instead offering large majority posts in three major companies, including Ukrtelecom, Ukraine’s old fixed-line monopoly. The new government also intends to adopt the necessary legislation to facilitate land trade. Nevertheless, Yushchenko immediately asked Tymoshenko to drop her privatisation plan for 2008, arguing that a law to make privatisation more transparent should be passed first.

Speed and determination made the new government’s start impressive, although plans are still vague to reform the constitution and judiciary, the two single biggest issues prior to the elections. Without these the Orange agenda cannot be completed. This is especially true given that the Tymoshenko government could build such a reform initiative on the election platform, where both NUNS and the PRU campaigned extensively with reform promises in both areas.

The reform drive of the new government might be overshadowed by Tymoshenko’s efforts to increase her popularity rating nationwide. Targeting Eastern Ukraine seems to be a long-term strategy, which has already borne some fruit in the 2007 parliamentary elections as BYuT was able to attract new voters in the East. The announcement of the compensation policy in Dnipropetrovs’k and Yulia’s campaign meetings conducted in Russian in the East signals this effort. This nationwide outreach is in stark contrast to the President’s rather Kuchma-like policy-making or the PRU’s obstructionist approach. Nevertheless, the Paul Manafort-led effort to polish the image of the PRU has had some positive impacts as it accepted the election results and has set up a shadow government to monitor governmental activities,. Nevertheless, there are indications that the financier Rinat Akhmetov is moving closer to the president by preparing a new political party, GART, allegedly to be headed by the Chief of Staff of the Presidential Administration, Baloga. That would mean that Doneck drops Viktor Yanukovych as unelectable in 2009 and moves to back Yuschenko against Tymoshenko.

The two coalition partners have divided the Cabinet posts, so that BYuT controls the economy while NUNS retains foreign policy, security, and culture. A certain structural balance of power between the President and the Prime Minister meanwhile seems to be emerging out of their persistent power struggle. In Dnipropetrovs’k on January 14th Tymoshenko made it clear that she is happy to carry on as Prime Minister, but she may consider running for President “if the Cabinet is limited by certain restrictions, if they start putting forward certain conditions”. Moreover, she hinted at the possibility of a coalition between BYuT and PRU. Thus, this new power clash between the President and the Prime Minister may continue longer than was expected after the elections. Tymoshenko is likely to decide later whether 2009 will see one or two Orange presidential candidates, in accordance with which position offers the stronger influence.

Integration: glass half empty, half full

Immediate post-election expectations pointed towards the continuation of pro-European rhetoric, while rather symbolic and small steps towards integration were taken. Such an approach would be feasible save for the fact that the EU is not willing to give prospective membership to Ukraine. Moreover, such foreign policy “stagnation” will not be opposed by the majority of Ukrainians until the economy is stronger.

It was rather surprising, therefore, that on January 18 President Yushchenko, Prime Minister Tymoshenko and Speaker of Parliament Yatsenyuk made public a joint letter to NATO Secretary General Jaap de Hoop Scheffer declaring Ukraine’s readiness to advance on a Membership Action Plan (MAP) with NATO and requesting a decision on the matter from the Alliance at its Bucharest summit in early April. As a rationale the Presidential Secretariat argued that the intensified dialogue of 2004-2007 had been fully utilised and had almost exhausted its potential. Many Western diplomats would disagree with this assessment, if only behind the scenes.

While there is a consensus between the new government and the Presidential Secretariat over NATO membership, the declared commitment has not been reflected in the deeds of the government or the President himself. A referendum on NATO has been the Achilles heel of the request, although the Presidential Secretariat communicated this could have a consultative nature only). In fact the latest opinion polls suggest a sharp increase from about 20 percent to 31 percent in favour. This increase probably owes something to the absence of an anti-NATO campaign, which was a remarkable achievement of the 2007 parliamentary elections among all political parties. Moreover, the article in Profile magazine by Taras Chornovil, one of the prominent members of the PRU, signalled that any future government would accept the MAP for the sake of continuity in foreign and defence policy. The reaction of Russia’s President Putin in his annual press conference, warning that Russia would target NATO military bases in Ukraine with its rockets, is perceived to be only the beginning in the run-up to presidential elections in March. It may prove useful for Ukrainian pro-NATO campaigners, as it is likely that the more Russia beats its chest, the more Ukrainian support towards NATO will increase.

More serious problems include the Annual Target Plan for 2008, which is yet to be approved, the less-than-impressive track record of the “Intensified Dialogue”, and the President’s nomination of Yuri Yekhanurov, instead of Anatoly Hritsenko, as defence minister. These provide evidence of a lack of proper management, and the necessary actions towards NATO on the part of the Ukrainian political elite. Western countries are divided on the issue because of these factors and concerns over regional stability (read: Russia). The social democrat-led Federal Ministry of Foreign Affairs of Germany, in particular, is trying to convince the Ukrainian elite as well its Western partners that it is too early for MAP.

With so many divisions both within Ukraine and in the West, this remains a classic case of the glass being half empty or half full. With the aforementioned letter Ukraine at least managed to raise the issue within NATO and likely succeeded in opening a door to NATO accession in the long term. The West must, however, be aware of the sensitivity of the Ukrainian elite and the delicate details of the NATO question within Ukraine and thereby make a decision about the MAP in order to keep Ukraine firmly on the Euro-Atlantic integration track.

The situation with other integration processes is different from the overly-politicised NATO issue. Admission to the World Trade Organisation, at the meeting of the WTO General Council, which has been the biggest integration success story of the post-Orange Revolution period, went almost unnoticed in Ukraine. One reason for this is that Ukrainians waited twelve years for this integration process to complete itself, as the country began the application process in 1993. This symbolical last touch , according to Hrihory Nemyria, the Deputy Prime Minister for European and International Integration, reflects the Tymoshenko government’s efforts to reach out to foreign investors. The first foreign trip of Prime Minister Tymoshenko was to Brussels, where she confirmed that her main priority in terms of integration would be foreign investment, and offered cooperation with the EU on European energy security in order to ensure alternative energy supplies from Russia. The focus on foreign investment was confirmed in a big meeting with investors in Kyiv. Proving that the new government has a plan and backing, several studies were published including one by the Washington-based Rand Corporation’s International Security and Defense Policy Center which was co-authored by the Nemirya-headed Kyiv-based Center for European and International Studies (CEIS).

Tymoshenko’s Brussels trip signaled greater cooperation with the EU, as this represents yet another point of competition with the President, bringing more openness, more contacts and more exchanges. Meanwhile despite Ukraine officially disliking it, the European Neighbourhood Policy Instrument has been an effective mechanism for imposing conditionality and opening many new socialisation channels. The visa facilitation agreement, along with the proposal of opening community programmes, energy integration and increasing people-to-people contacts, are placing Ukraine ahead of other ENP countries and making it a testing ground for this policy. However, the EU must increase its incentives as a challenge to the entire elite, utilising the current positives and this new, competitive integration environment in Ukraine. In contrast to the highly politicised NATO issue, Ukrainian bureaucrats actually run the EU process, while politicians have to catch up with the technical process. Negotiations on a new enhanced agreement are being held and the talks on “deep free trade” will be launched by the visit of Commissioner Mandelson in February 2008. As one high-level EU diplomat put it, Ukraine is aware that the EU cannot provide membership status at this moment, but it acts as if it were unaware; while the EU is aware that Ukraine does not like the ENP, but acts as if it were oblivious to the fact. Indeed, as there is not much talk about either the membership perspective or the Neighborhood Policy, the technical process of integration might be moving faster than ever.

Conclusions: Cherchez la femme

Although Ukraine’s politics remains driven by the same three strong personalities, Prime Minister Tymoshenko is so far keeping the public policy process firmly in hand through a series of new initiatives. Her government has made an impressive start. With so many much-publicised campaigns against corruption, and the WTO negotiations completed, creating room for foreign investment within just a few weeks, the implication is that an initial plan, at the very least, did exist. However, with efforts to boost her popularity nationwide also firing on all pistons, the ultimate question is when will these two dynamics, one for reforms and the other for popularity, come into conflict.

Nevertheless, the second Tymoshenko government seems much more modern than the reactive policy-making of President Yuschenko or the obstructionist opposition led by Viktor Yanukovych. So far Ukraine, between the 2007 parliamentary and 2009 presidential elections, is about the cherhez la femme… High inflation, which some predictions put at 19 percent for this year, may kill all these plans. Although the new framework of the Orange President and the Orange Prime Minister seem to act as balancing counterweights for each other’s power, the impressive reform drive might be scuppered by the thus far absent plans for reform of the judiciary and the constitution.

Nevertheless, the Tymoshenko government seems to be pushing the international integration process forward more than any other previous government. The hotly debated issue of NATO membership makes the glass seem half empty or half full, depending on who you ask, and the West must remember that policy making and the taking of any serious decisions takes time in Ukraine. Without the most serious incentive, the promise of EU membership, the most strategically important country in Eastern Europe will continue to hover between East and West. However, the increasing aggressiveness of Russia, along with slowly but surely implemented technical integration processes to the WTO (completed) and to the EU (underway), will further convince the majority of Ukrainians that dropping anchor in a Western harbor is still better than acting as a buffer state. The Ukrainian elite must understand that it is time to back up pro-European rhetoric with concrete actions and also make the case for Europeanisation at home as well as in the West.

The 2007 Parliamentary Elections: Winners, Losers, and Coalition Prospects

By Ilya Khineyko

On 30 September, for the second time in two years, Ukraine held parliamentary elections, which were recognized as free and fair by international observers from the West and Russia. Five blocs and parties: the Our Ukraine – People’s Self-Defense (OU-PSD, NUNS in the Ukrainian acronym), the Tymoshenko bloc, the Party of Regions (PofR), the Communist Party, and the Lytvyn bloc garnered more than the 3% required to get into the new parliament. It is, however, far from certain when the political forces represented in the new Rada will be able to form a parliamentary majority and appoint a new government. As it stands, the political crisis that has permeated the Ukrainian political scene since last spring is far from over. Some unexpected political alliances might emerge from the protracted political discussions that are likely to follow the announcement of the final results on 15 October. The Party of Regions has the largest percentage and highest number of seats, followed closely by the Tymoshenko Bloc, while the pro-presidential OU-PSD is a distant third. The two other factions in the new parliament have less than fifty seats combined, but it is widely expected that the smallest faction, the Lytvyn Bloc, could play the role of a kingmaker in the new parliament.

Results of 2006 Parliamentary Elections

Party Seats Percentage

Party of Regions 175 34.37
Bloc Yulia Tymoshenko 156 30.71
NUNS 72 14.5
Communist Party 27 5.39
Bloc Volodymyr Lytvyn 20 3.96

In assessing these results, a background of the events leading up to this election is useful. The election season in Ukraine began on 2 April when President Yushchenko issued a decree dissolving the previous convocation of the Verkhovna Rada. What seemed a last resort on the part of the President came after the ruling coalition of Prime Minister Viktor Yanukovych and Speaker Oleksandr Moroz had successfully wooed a handful of opposition deputies to switch sides, leading to talks on forming a constitutional majority, a move that would have rendered the president a purely ceremonial figure. Opinion polls indicated that the early elections would not change the status quo as the Party of Regions was expected to retain its high standings, while the fortunes of Our Ukraine seemed bleak. Indeed, the Party of Regions managed to increase slightly its percentage of the vote as did the OU-PSD bloc. However, both parties stand to lose a handful of seats each in the new parliament, due to the dramatic surge of the Tymoshenko bloc, the biggest winner in the elections. Tymoshenko’s parliamentary faction will expand from 129 to 156 deputies as a result of gaining 8% more votes than it received compared to the 2006 results. The combined tally of the OU-PSD and the Tymoshenko Bloc (228 seats) is enough to form a parliamentary majority and establish a new ‘Orange’ government. The events seemed to be following this course on election night when a jubilant Yulia Tymoshenko was greeted by leader of PSD and leading candidate on the OU-PSD candidate list, Yuri Lutsenko. During a joint press-conference both leaders vowed to stay true to the “ideals of the Maidan” and honor the pre-election agreements to form a coalition of democratic forces. However, on 3 October, President Yushchenko caused consternation among the Orange campwhen he issued a statement urging all political forces to “seek a compromise” and consider forming a broad coalition that would include the Party of Regions as well.

Why did the President decide to contradict the leader of his party and what lies behind the call for unity and compromise? Several observers pointed out that a Yulia Tymoshchenko government would seriously undermine if not completely dash Yushchenko’s hopes to run for the presidency again in 2008. By becoming the Prime Minister now, Yulia Tymoshenko would be able to use the powers of the office to boost her profile at the expense of Yushchenko to the point where nominating her as the presidential candidate of the Orange forces would be the only choice left to defeat Yanukovych or any other presidential hopeful from the Party of Regions. It appears in retrospect that Viktor Yanukovych made a huge political blunder by attempting to strip the president of the last vestiges of real power instead of forging a meaningful alliance with Our Ukraine that would relegate the Tymoshenko Bloc to the opposition benches. As the prominent Ukrainian pundit Yulia Lymar pointed out, “The problem of Yanukovych lies in the fact it took too long for him, that is until now, to realize that he needs Yushchenko as much as Yushchenko needs him… Unfortunately, this card cannot be played any more”

Yet, there is no unity within the OU-PSD bloc concerning Tymoshenko’s current candidacy. Whereas business groups in Our Ukraine represented by Yuri Yekhanurov are vehemently opposed to the possibility of Tymoshenko becoming Prime Minister as evidenced in a memo published by Ukrains’ka pravda, Yuri Lutsenko and his People’s Self-Defense group are clearly in favor of such a step. It is likely that if Yanukovych retains his prime-ministerial post, Lutsenko’s party members will break away from Our Ukraine and join forces with BYuT. Furthermore, the Orange electorate remains deeply antagonistic to the figure of Yanukovych, so Our Ukraine risks losing even more electoral support to the Tymoshenko Bloc if an alliance between Yushchenko and Yanukovych becomes a reality. In this light, the standings of Viktor Yanukovych within the PofR might not be as solid as they appear. As Ukrains’ka pravda’s analysis reveals, the Party of Regions candidate list was filled by people loyal to Rinat Akhmetov who is much more willing to seek rapport with Yushchenko in order to stop Yulia Tymoshenko even if it would mean changing the leadership of the party.

The prospect of an Orange coalition remains a more feasible option. After a closed door meeting with President Yushchenko on 4 October, Yuri Lutsenko opined that the Orange coalition might be formed by 15 October when the Central Electoral Committee is scheduled to announce the official results. However, given the factors described above, Ukrainian politics may yield more surprises in the coming weeks.

Published by the Stasiuk Program for the Study of Contemporary Ukraine, Canadian Institute of Ukrainian Studies. This article may be reproduced with appropriate acknowledgement.

The election campaign in Ukraine is already underway

Ukraine takes a decisive step closer to parliamentary elections after 155 Verkhovna Rada deputies surrender their mandates.

By Ilya Khineyko

On June 15 the Verkhovna Rada of Ukraine of the 5th session ceased to exist. By the morning of that day, 151 deputies from Our Ukraine and the Tymoshenko bloc had submitted their resignation papers to Oleksandr Moroz, bringing the total number of parliamentarians below the necessary quorum of 300. Later that same day, four more resignations were announced.
The de-facto dissolution of the Verkhovna Rada was carried out through the resignations of opposition deputies in accordance with the May 27 agreement of the Big Three, which ended the two-months-long political crisis in Ukraine. It happened in spite of the obstructionist maneuvers on the part of Oleksandr Moroz, who stands to lose most from the dissolution of the current parliament. Also, many rank-and-file opposition deputies were extremely reluctant to relinquish their mandates. As Ukrains’ka Pravda reports, before the resignations list was read out loud at the Verkhovna Rada session, “many MPs [had] asked not to have their names put in the top ten of the list because in the event that dissolution of parliament fails they would never have a chance to return to the Verkhovna Rada.”

A “Hot” Summer for Russian-Ukrainian Relations

By Ilya Khineyko

It seems that the two neighbors do not have much time for each other at the moment. Russia is trying to deflect criticism over her stance in international affairs and human rights record at the G-8 summit in Germany. Meanwhile, Ukraine is at the beginning of a new election campaign and trying to recover from a prolonged political crisis. That is why Viktor Yushchenko’s insistence that “Ukraine has not done anything to complicate Ukrainian-Russian relations” is slightly surprising. However, given recent developments an escalation of tensions between the two countries does indeed seem probable.