FT SPECIAL REPORT Ukraine Tuesday 18 September 2012 www.ft.com/ukraine2012 | twitter.com/reports State in a Inside » Reforms needed Neil Buckley and Roman Olearchyk struggle for consider prospects for recovery Page 2 identity and Good relations with EU/CIS vital Neil Buckley talks to Prime minister direction Mykola Azarov Page 2 Attractive state Despite the risks, Overview Kiev finds itself caught between there is still the east and the west as elections loom, much to draw write Neil Buckley and Roman Olearchyk investors Political rivalry: President Viktor Yanukovich has been criticised by the west for the jailing of Yulia Tymoshenko, below Corbis Page 3 s 60,000 fans filled Kiev’s Mykola Azarov, the prime minister. and free trade agreement – even In return, Vladimir Putin, Russia’s office has isolated Ukraine,” says newly modernised Olympic But while impressed by their warm though all negotiations are complete. president, wants Ukraine to join a Arseniy Yatseniuk, co-leader of the Lviv, a jewel of Stadium in July for the reception, visiting fans were not in Signing that deal would have been common economic space Russia is Fatherland opposition bloc. Euro 2012 football champi- Ukraine long enough to be aware of the most decisive step towards Euro- creating with Belarus and Kaza- The situation is far short of the Habsburg empire onship final, it appeared in the retreat on democracy and human pean integration since Ukraine gained khstan, and to hand Russia control of hopes aroused by the 2004 Orange Jakub Parusinski Asome ways to cement Ukraine’s mem- rights that has driven a wedge independence from the Soviet Union the gas export pipeline across Ukraine uprising of a democratic, west-orien- bership of the European “family” of between Kiev, and the EU and the US. 20 years ago. Without it, the country to western Europe. For Mr Yanukov- tated Ukraine. Some blame the EU for finds a historic nations. Euro 2012 was marred by personal remains locked in a two decades-old ich, that appears to be a step too far. being slow to offer Ukraine the genu- survivor intact The country’s co-hosting of the tour- boycotts by some EU leaders in identity crisis over whether it wants All that has left Ukraine not just ine prospect of membership. nament with Poland – the first time protest at what they saw as the politi- to move towards Europe or re-estab- searching for its identity, but looking Others blame the revolu- Page 4 two former socialist bloc states have cally motivated imprisonment last lish closer ties with Russia. unusually friendless. tion’s co-leaders, former done so since the Berlin Wall fell – year of Yulia Tymoshenko, co-leader Yet, confounding suspicions when “The guy sitting in the presidential president Viktor Yush- was widely deemed a success. It of Ukraine’s Orange Revolution. he came to power that Mr Yanukovich chenko and Ms Black earth attracted hundreds of thousands of The former premier’s conviction on would shift the country back into Tymoshenko. The two visitors, while the estimated $5bn charges of exceeding her powers, Russia’s orbit, he and his government quickly fell out, and Bread basket of Ukraine poured into infrastructure when she signed a gas deal with have had tetchy relations with The country suffered one their feuding under- Europe has great investments and other preparations Russia in 2009, has become a symbol Moscow. They have clashed over of the deepest slumps on mined progress on des- will give the country a lasting boost. of what the west sees as a partial Ukraine’s pressure to revise the gas perately needed reforms. potential, says “Everything we built for the cham- rollback of freedoms since Viktor deal signed by Ms Tymoshenko and the planet, its economy In the 2009 global reces- Mark Rackevych pionship will remain; new highways, Yanukovich beat her to become presi- reduce the high import price that is sion, Ukraine suffered one of airports, high-speed trains – all this dent in 2010. It has frozen the signing penalising the country’s energy- shrinking by 15 per cent Page 4 will work for our economy,” says of a landmark EU-Ukraine political guzzling heavy industry. Continued on Page 2 Ballot under scrutiny Democracy There is intense international pressure for the parliamentary poll to be conducted fairly, writes Roman Olearchyk Ukraine’s October 28 parlia- nitely not with the EU and The opposition claim that an-speakers in western mentary election is gearing western world, nor is there the authorities are unwill- regions fear boosting Rus- up to be more than just the clear dialogue with Russia, ing to risk losing power sian language usage will latest twist in a notoriously with whom relations are through a fair vote and are undermine Ukrainian, and noisy and dramatic political often a one-way street – calling upon the west to deepen the political and cul- saga. with them pressing to a introduce travel bans on Mr tural divide between the President Viktor Yanuko- point where you have to Yanukovich’s inner circle. country’s east and west. vich is under pressure to agree,” he adds. Ms Tymoshenko, who has Though opinion polls sug- respect western values by Split into two main par- been in prison for more gest the appetite for protest holding a democratic vote. ties, Tymoshenko’s Father- than a year, addressed EU among Ukrainians is high, Failure could affect his land and heavyweight box- leaders in a letter this trust in the opposition is domestic and international ing champion Vitali month, saying: “Make a weak. If protests against standing – and Ukraine’s Klitschko’s Udar [Punch], statement right now that vote fraud materialise, they geopolitical trajectory. the opposition pledge to these elections are illegiti- could be smaller than dur- In the run-up to the vote, unite after the election and mate. After the elections ing the Orange Revolution – Washington and Brussels reverse what they describe are over it will be too late. not enough to play a game- have repeatedly warned Mr as Mr Yanukovich’s U-turn The dictatorship in Ukraine changing role. Yanukovich’s administra- on democracy, to combat has practically been built.” “These elections will not, tion that Ukraine’s western cronyism and kleptocracy Polls show citizens in themselves, be a break- integration aspirations and put Ukraine back on largely disapprove of Mr through, but could prevent hang in the balance. the Euro-integration path. a deeper slide into authori- With Yulia Tymoshenko, “If we get a majority in tarianism,” says Mr Chaly. the ex-prime minister, and parliament, we can restore “It’s more of a warm-up for some of her allies jailed on the balance of power... ‘If we get a bigger battles, including the what western leaders see as restore parliament, which is majority . we [2015] presidential election.” politically motivated currently a [rubber-stamp- The road ahead is long, charges, scrutiny of the poll ing] subsidiary of the presi- can restore the Mr Yatseniuk concedes. will be intense. dent,” Mr Yatseniuk says. “The opposition is 2 per Valeriy Chaly, a senior Mr Yanukovich has balance of power’ cent ahead in the polls, but analyst at Kiev’s Razumkov pledged to hold fair elec- Arseniy Yatseniuk there is a huge number of Centre think-tank, says: tions, but opposition groups Fatherland co-leader swing voters seeking new “There are already point out that it was his faces, about 20 per cent. I questions about the fairness allegedly rigged victory in don’t think they will back of the vote – it’s clearly not 2004 that prompted the the government, but they a normal situation when Orange Revolution. Yanukovich’s handling of could back other political the top opposition leaders Opora, an election watch- domestic politics and the forces [backed by] the gov- are in jail. dog, says the pre-election economy. Attempting to ernment – so-called spoiler “At issue will not only be atmosphere has been bolster support, his ruling parties,” he says. how people vote, but how marked by intimidation, parliamentary majority has “The simple answer is to the votes are counted, and voter manipulation and been prepared to wade into topple Yanukovich. The the fairness of the pre-elec- muzzling of the media. a particularly divisive issue. realistic answer is to tion process.” TVi, the only television In an attempt to woo vot- restore the balance of The west is pulling channel that dares to ers in the country’s mainly power, democracy, and together large election mon- investigate government Russian-speaking east and restore credibility. You itoring missions. corruption, is being pulled south, it passed a law this can’t steer the country Ms Tymoshenko’s camp off the air by many regional summer upgrading the sta- without people’s trust,” Mr claims Mr Yanukovich has cable TV operators. Its man- tus of Russian language. Yatseniuk adds. purposely sidelined his agement has faced investi- The controversial move But an opposition victory main rivals through politi- gations by prosecutors. triggered protests. Ukraini- in the parliamentary poll cally motivated prosecu- could also create problems. tions, and this alone is Voting intentions It could intensify the politi- enough to judge the contest cal stand-off with the presi- unfair. August 2012 (%) dent, and trigger deadlock Should the vote be judged in a nation that faces seri- undemocratic, Mr Yanukov- Communists ous economic challenges. ich’s administration could Pro-presidential A divided leadership find itself alienated from could be vulnerable to Rus- the west. This, in turn, Undecided voters/ Vitali Klitschko’s sia, keen to limit Kiev’s could make him more 8.2 other parties UDAR Party western integration and vulnerable to pressure from Yulia Opposition pull it into an economic Russia, still keen to reassert 26.6 Tymoshenko’s union of former Soviet itself over Ukraine.