January 2012

Ukraine/State of play of domestic politics

February and March 2010 mark a major rupture in Ukrainian domestic politics with the election of Victor Yanukovych as president in elections judged to be in accordance with international standards. Yanukovich then secured himself a parliamentary majority through a number of defections from opposition MPs, and resorted to a twisted interpretation of the Ukrainian constitution to obtain parliamentary endorsement of a government led by . The following months have shown serious negative developments in the field of democracy. While at the end of the Yushchenko era, the legislative process had been largely dysfunctional, president and government are since 2010 from the same party, controlling also a majority in parliament. As a consequence some reforms could be passed in parliament (e.g. tax reform, pension reform, etc. The present situation can be characterized by the following developments:

. Consolidation of presidential powers

President Yanukovich continues to strengthen his (his families and his team's) control over the legislative, executive and judiciary branches of power.

The so called 'administrative reform' launched last year, without any public debate or participation of opposition representatives, resulted mostly in the increased control of the President and his Administration over the Government: the current presidential prerogative to appoint not only ministers but also deputy ministers and heads of executive agencies has critically altered the system of checks and balances.

Through a number of legally dubious decisions, such as the change of the formation of the parliamentary majority [according to the then in force UA Constitution and relevant ruling of the Constitutional Court, the parliamentary coalition is made of factions and not of individual MPs], President Yanukovich has secured the control of the majority of MPs.

Furthermore, on 30 September 2010 President Yanukovich reintroduced, formally with a decision of the Constitutional Court, the 1996 Ukrainian Constitution which secured increases presidential powers, in particular over the executive.

Along with institutional changes, experts point that the presidential 'vertical power' is being established also with the appointment of loyal people to key posts: i) An old friend of President Yanukovich, Victor Pshonka was appointed as General Prosecutor. ii) A proxy of the President's older son, Sergiy Arbuzov, was appointed as the National Bank Governor; iii) A figure known to be close to the Yanukovych family, Vitaliy Zakharchenko, was first appointed Head of the State Tax Administration and then in November 2011 transferred to the post of the Interior Minister while one more loyal figure, Oleksandr Klymenko, became Head of the State Tax Service. iv) Media report that the new finance minister and former Head of the Security Service, Valeriy Khoroshkovsky as Finance Minister is close to some members of the Presidential family as well as the so-called "RosUkrEnergo-Lobby" (Dmytro Firtash, Head of the Presidential Administration Sergiy Lyovochkin and Energy Minister )

Under such circumstances, political observers fear that might shift towards a soft authoritarian regime. In its Opinion of 20 December 2010 on the recent constitutional changes, the Venice Commission (Council of Europe) has warned against the risk of an authoritarian regime being established in Ukraine and called for a constitutional reform with a clear division of competences among state institutions and effective checks and balances1 .

. Selective justice

More than 20 high-level representatives of the former government are either under investigation or have been convicted, including former PM Tymoshenko. Other high-profile cases concern former Minister of the Interior and former Acting Defence Minister Valeriy Ivashchenko. Both foreign and local independent experts have denounces such trials as being politically motivated, criticised the high number of procedural violations and voiced serious concerns for the lack of proper medical treatment of the three high profile defendants.

On 23 December the Court of Appeal upheld the convicting ruling by the Pechersky Court against . On 26 January, the defence team of Mrs Tymoshenko appealed to the court of cassation (in Ukraine the High Specialised Court for Criminal and Civil Cases). However, the defense team has no expectations that the cassation court would revert the conviction sentence.

Several other criminal charges have been launched against the former Prime Minister.

Among them, the one which is more actively pursued by the Security Services regards criminal charges against Mrs Tymoshenko for her alleged misdoings as Head of the United Energy System (UES) company, which she headed until the end of 1996.

The case of UES has been recently split into two cases: i) the first one regarding tax evasion by Tymoshenko's company, undue VAT refunds to UES, forgery, etc; and ii) the second one regarding the alleged debt vis-à-vis the Ministry of Defence of .

The defense team of Mrs Tymoshenko believes that the first case will likely be speeded up and the trial might be completed within 2-3 months.

Therefore, even assuming that Mrs Tymoshenko's conviction for the gas case would be overturned with whatever means (presidential pardon etc), she will likely remain under arrest for the additional (and increasing number of) criminal cases launched against her.

1 "Considering current political realities, an excessive strengthening of the President's powers can become an obstacle for building genuine democratic structures in Ukraine and may eventually lead to an excessively authoritarian system". [The VC] "Encourages the Ukrainian authorities "to ensure that such constitutional reform results in an effective strengthening of the stability, independence and efficiency of state institutions through a clear division of competences and effective checks and balances. It should also introduce additional mechanisms and procedures of parliamentary control over the actions and intentions of the executive". Court hearings of Mr Ivashchenko and Mr Lutsenko are still ongoing. The trial of former Minister of Interior is currently moving at high speed, with almost daily court hearings, which may point to the intention of having a verdict in a short term.

According to what reported by local observers and the business community, pressure is also being exerted on business competitors of the oligarchs close to power through courts, tax authorities and law enforcement bodies.

. Current state of the opposition

The opposition is currently fragmented and such already weak status is further undermined by the alleged 'collaboration' of some of its leaders with the party in power.

The Bloc of Yulia Tymoshenko (BYuT) has split into i) Batkivshchyna, which will likely soon include Reform and Order party and is de facto led by Turchinov, and the ii) Ukrainian Social Democratic Party led by Korolevskaya. Although scoring a low rating, it seems that the Ukrainian Social Democratic Party might drag important electoral resources from Batkivshchyna thanks to its well developed network of field offices around the country.

The current leadership of Turchinov seems not to be very popular among the party members while Yulia Tymoshenko can hardly steer the party from the prison as all her contacts are limited to her daughter and her defence lawyer.

Front Smin led by Arsenyi Yatsenyuk is officially positioned as opposition, although he is closer to the present administration than BYUT.

Udar party led by Klichko is struggling to raise its political capital. The party rating is currently around only 5%.

Svoboda party, known for its ultra nationalistic slogans and the surprising success in past local elections, seems to see its rating declining to around 4%.

The agreement signed by the above mentioned opposition parties on 22 January envisage the nomination of agreed candidates in single-mandate constituencies at the forthcoming parliamentary elections in October. For the election of MPs under the proportional system the parties will run separately.

Although the agreement is a step forward, the opposition parties remain deeply divided and tensions might increase while appointing a single candidate in those constituencies with higher chances for opposition nominees.

The new parliamentary election law has catalyzed the disintegration of blocs, thus weakening mainly opposition parties, and made the latter more vulnerable to the pressure of the party in power.

. Falling rating of President Yanukovich and possible tensions within the

According to recent polls, Mrs Tymoshenko's rating is 16.3% while the President's one is 13.3% (almost the same figures for the respective parties). The sharply falling rating of President Yanukovich could pose a risk of further setbacks in democracy to compensate the decreasing popularity of the party in power.

Local observers have recently reported about an increasing discontent among the most influential oligarch lobbies around the President for the apparently expanding business empire of Yanukovich's older son.

It remains to be seen whether and how such tensions will be echoed in the Party of Regions.

. State of play of the Constitutional reform

In February 2011 the President signed a decree setting up a Scientific Group on Constitutional Assembly Preparation headed by Ukraine's First President Leonid Kravchuk. The Expert Group has been tasked to prepare the works of the Assembly and to "analyse concepts of the reform of the Constitution". The Experts Group includes 21 members: it appears that the biggest part of them are academic people from state institutions such as the National Academy of Sciences, the Kiev National University as well as the Odessa and Kharkiv law academies known to be loyal to the government. The group so far does not include members of civil society and think tanks. Also, it does not include any politicians (MPs, opposition leaders etc.).

On 26 February President Yanukovych signed a decree on the organisation of the work of the Constitutional Assembly. The President requested that a number of political parties and NGOs present candidates for membership in the Constitutional Assembly not later than 16 April 2012. Local observers fear that the constitutional reform process will be under the strict control of the President and, thus, not take into account the position of all stakeholders.