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)

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About DAVID R. MARPLES

Distinguished University Professor, University of Alberta

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