> > POLICY BRIEF ISSN: 1989-2667

Nº 32 - JANUARY 2010

Post-Orange : The lesser evil?

Balazs Jarabik and Natalia Shapovalova

As Ukraine awaits the second round of presidential elections >> there are growing warning signs in the country’s political, eco- nomic and social situations, sending a clear message to the international HIGHLIGHTS community. Not only has Ukraine been one of the countries most affect- ed by the global economic crisis, but Europe has also lost confidence in it during the past few years, and not even wants to ‘take it over’. • Forget pro-Russian vs. pro-Western, all candidates in Predictably, the presidential election results mean that the largest Ukraine’s new elections are opposition party candidate (who received 35 per cent pro-Ukraine. As a result, of votes) and current prime minister (25 per cent) will democratic chaos will continue meet again in the second round run-off scheduled for February 7. The for a while. surprising number of votes for Serhiy Tigipko (13 per cent), a well- known businessman who has held various posts within different • Tymoshenko has the energy administrations, including that of National Bank governor, and Arseniy to change the current system, Yatsenuk (7 per cent), another National Bank governor, former minister but her aggressive approach and ex-speaker of the parliament, clearly suggest that Ukraine will retain could increase Ukraine’s its democratic credentials and continue to hold fiercely competitive instability. Yanukovych may elections. There are now two competing voter tendencies: voting for the bring predictability and ‘lesser evil’ gives hope for Yulia, but the popular pre-election observation stability, but no change. that ‘luckily Yulia will not be the president; unfortunately, Yanukovych will be’ suggests that voter passivity could enable Yanukovych’s victory. • and Brussels seem Both presidential candidates are likely to question the result if they do not to prefer Tymoshenko, who win the elections, which is short-sighted from a democratic point of view. promises greater cooperation Ukraine’s short-term future is increasingly worrying. Neither of the after the election. However, the candidates will undo progress made towards Ukraine’s European ‘lesser evil’ may surprise both. integration, but neither politician is likely to consolidate the country’s fragile democracy by strengthening governance and ensuring the nation- wide agreement necessary for reform. POST-ORANGE UKRAINE: THE LESSER EVIL?

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>>>>>> More importantly than the pro-Russian and pro- democracy consolidation on their agenda. Both European labels, all candidates and actors involved Tymoshenko and Yanukovych are primarily in the elections are Ukrainians. They play for their interested in cementing their own power rather own interest. Unlike in 2004, the choice between than making democracy work. the two election frontrunners is not a decision between a truly European democracy and a Six months before the election, Yanukovych and ‘sovereign’ Russian democracy. The current election Tymoshenko formed an alliance in an attempt to does not call the political regime into question; it push forward controversial constitutional changes will merely result in a change of leader. This change that would lead to the cancellation of the direct may bring some political stability by ending the presidential election and of the next parlia- four-year period of tense cohabitation between mentary election. Before the start of the election President Yushchenko and the heads of govern- campaign, the Bloc of Yulia Tymoshenko and the ment, who belong to the opposite political camp. Yanukovych-led adopted this However it is also possible that the change will presidential election law, which is widely viewed as worsen the current chaotic situation and lack of step backwards from Ukraine’s current democratic adequate governance. standards and international norms. Furthermore, the two largest parliamentary parties refused to Yulia Tymoshenko was ’s main introduce democratic changes to the law on local ally in the , while Viktor elections, which are to be held in May 2010. Both Yanukovych was former president Kuchma’s frontrunners served as prime minister under successor and Viktor Yushchenko’s rival in the 2004 President Yuschenko, but neither of them tried to election. Although the two candidates were on challenge the fact that the government is seen by opposite sides in the Orange Revolution, their the elite as a path to enrichment, rather than a election promises are very similar: to end the econo- service to citizens. mic crisis, to combat corruption and to increase social expenditures. Both of their campaign strate- Although Ukrainians frequently criticise the EU gies make it appear that the candidates have for - for not offering their country a membership gotten the president’s responsibility for the key perspective, Kiev was not capable of using (or issues of foreign and security policy, emphasising an willing to use) the existing mechanism the EU has end to the financial crisis instead. offered towards closer integration and the adoption of European standards in governance, business regulation and especially in citizenry. The EU ONE DAY, PRIVATE INTEREST NOW self-declared pro-European Tymoshenko has made fewer steps towards EU integration than The two candidates agree that Ukraine should one Yanukovych’s party, according to a recent day become a European Union (EU) member and declaration by EU diplomats. Political decisions see the Association Agreement with the EU as have been delayed or shelved due to the political positive progress. While pursuing the goal of EU battle between Tymoshenko and Yuschenko, while membership, they will also both try to build closer Ukrainian bureaucrats have further delayed the relations with Russia. However, neither of them integration process. Hardly any commitments has publicly revealed that advancing European from the jointly agreed EU-Ukraine Action Plan integration would require de-monopolisation. This have been implemented in the past year. Of nine would include ‘de-oligarchisation’, as big businesses ongoing twinning aid projects, only one was currently have a monopoly and hold politicians recently completed. None of these projects firmly in their hands. It is necessary to improve resulted – as has been the case in other countries Ukraine’s abysmal governance record as well as its benefiting from twinning – in legislative existing democratic credentials, which could be in proposals, which should be the major indicator of danger as neither of the two politicians has put success. The negotiated agreement on civil POLICY BRIEF - Nº 32 - JANUARY 2010

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aviation has been blocked by (oligarch owned) popularity during the previous parliamentary Ukrainian airports, and airlines do not wish to lose elections in 2006 and 2007. Tymoshenko’s main their monopolies through European competition. task in the second round is to obtain the votes of former Orange Revolution supporters who voted for The EU-Ukraine declaration on the modernisation other candidates on January 17, many of whom still of Ukraine’s gas transit system signed in March 2009 have not made up their minds. Although many may now be dismissed following a similar agreement have wondered why Tymoshenko did not switch between Prime Ministers Putin and Tymoshenko sides to the opposition, where she would have had in Yalta in summer 2009. Even more worryingly, chance to establish her ‘anti-oligarchs’ platform Tymoshenko, in coalition with Moscow, misled the more effectively, the explanation is relatively simple. European Commission regarding the amount of gas She remained prime minister in order to utilise her needed this winter in order to obtain more payments dynamism and prove herself to be the most energetic from the consortium Ukrainian politician. facilitated by the Eu- Ukraine ropean Commission During the campaign she effectively used her will elect its to ensure that Ukrai- position as the person responsible for the state ne could supply EU treasury by distributing money to different sectors new president countries from its to ensure nationwide support. This included fun - large reservoir even ding for areas suffering due to the financial crisis on February 7, if Russia was to cut (the mining industry, agriculture and the public but more supplies to Ukraine. health care system); combating corruption (most importantly in the case of Viktor Yanukovych, geopolitics and Unlike Victor Yush- who allegedly illegally appropriated a state resi - chenko, the next pre- dence), and the effort to control ‘swine flu’. Even less democracy sident will not insist more importantly, if Yanukovych wins she will is expected upon NATO mem- remain in government as the prime minister, bership for Ukraine. with some capacity and resources in her grip, in whoever wins Victor Yanukovych particular control of the police under the Ministry prefers a neutral stan - of the Interior. Many expect her to challenge the ce for the coun try and is interested in Russian election results in court if she loses. President Dmitri Medvedev’s security proposal, whi - le Yulia Tymoshenko supports Ukraine’s integration Still, Tymoshenko has a chance to build a more into the elusive European Security and Defence controlled government and open the door for Policy. In sum, both candidates are likely to preserve reforms if she is able to make bureaucrats imple - the status quo and there is no strong external ment her policies. She has the necessary energy and incentive to reform Ukraine’s security sector. may face relatively weak opposition from the demoralised (and likely divided) Party of Regions, whose business supporters will prefer to support YULIA’S HIDDEN POTENTIAL her to avoid being victims of ‘the war on oligarchs’. If she has the parliamentary majority, appoints a According to polls conducted in late December loyal prime minister and controls her aggression, 2009, Viktor Yanukovych should ‘easily’ win the her presidency may bring stability in the short second round unless something unpredictable term. But many are afraid of her being too heavy- happens: Yanukovych was an estimated 15–17 per handed a ruler with a tendency to centralise power cent ahead of his rival. The only hope for Tymo- and sideline opponents. shenko is that Ukrainians may have ‘fooled’ the pollsters, as occurred previously when Tymoshenko If Yanukovych becomes president, power will be less experienced an unexpected but significant growth in consolidated. First, he will face a challenge in the >>>>>> POST-ORANGE UKRAINE: THE LESSER EVIL?

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>>>>>> early parliamentary election which may change the negotiations. In January 2009 she managed to power balance in favour of new political parties. negotiate the new – and more beneficial to Ukraine Moreover, Yanukovych, as the fraudulent winner – gas deal after proving to Putin that the of 2004, will be under much greater public and RosUkrEnergo gas intermediary did not pay the international scrutiny and will face the ever-vigilant agreed dividends to the Kremlin. The elimination of Tymoshenko in opposition. In the case of a Party the intermediary was the first common action of the of Regions-led government, the system would two prime ministers. Unlike previous years, Russia probably be run by Azarov, whom the has not cut off supplies to Ukraine this winter. Ukrainian media call the ‘father of the Party of Tymoshenko allegedly made important economic the Regions’. Azarov is believed to have gathered and political concessions to Moscow in exchange information during his eight year tenure as head of for a warm winter and no monetary sanctions. the state tax office under President Kuchma, which However, although she may be pragmatic, she will makes him incredibly influential in Ukraine’s still be an unpredictable partner for Russia. business circles. Whatever happens, it is highly likely that an early parliamentary election will follow the Many in the West have lost patience with Ukraine, presidential one. Yanukovych is clearly interested in given its political chaos, lack of governance, a quick election, as for him it would be the only unfulfilled international agreements and reform opportunity to get the Party of Regions-led majority promises, high level of corruption and the long- in the parliament, while Tymoshenko may have to lasting conflict between the main country’s leaders. call for an early election to consolidate her support There is a ‘Ukraine fatigue’ hanging over the EU and in parliament. Meanwhile, Ukraine is expected to ‘European fatigue’ among Ukraine’s elite due to the enter a period of greater economic chaos following lack of membership promise. This locks EU- the elections, especially if there is infighting instead Ukraine relations into a vicious circle: Europe of a quickly formed government. Many cash- believes that the Ukrainian elite behaves as though strapped Ukrainian businessmen will be forced to it would not be responsible for the country, only sell their assets, while the budget deficit and current concerned by its own personal gains; while Ukrai- social policies will mean the government must sell nians do not see the reason for change. It is not whatever it still owns. One examples of this is the surprising that the EU and Russia tend to talk over current bail out of Industrial Union of Donbass – Ukraine’s head rather than involving it directly in one of the largest Ukrainian business groups, big strategic discussions. specialising in metallurgy – by the Russian state- owned Vneshekonombank, whose board is headed Today, Ukraine is where its elite wants it to be, by Prime Minister Putin. This deal suggests Russian where it can gain the most benefit and nurture the eagerness to make strategic investments in Ukraine elite’s own monopolies ensured by political power: in in the coming months (or years). the buffer zone. Now more then ever, it is up to the Ukrainian elite to decide whether it wants to reform the country or continue on a road of gradual decline. EU-UKRAINE FATIGUE Meanwhile, the West should not give up the process of bringing Ukraine closer to the EU, but should It seems that both Brussels and Moscow think that realise that Ukraine needs more patience and upgra- Tymoshenko better corresponds to what they need. ded assistance to move beyond its current travails. Moscow looks for political pragmatism in Ukraine to ensure safety of Russian business and political interests; Brussels seeks what is left of the Orange Balazs Jarabik is associate fellow at FRIDE. values in the hope of continued democratic change. Natalia Shapovalova is researcher at FRIDE. Tymoshenko has proven to be a practical partner for Moscow. She established good working relations e - m a i l : [email protected] with Prime Minister Putin during the successful gas www.fride.org