A Turbulent Year for Ukraine Urbulent Was the Way to Describe 2009 for Ukraine, Which Plunged Into Financial Crisis

No. 3 THE UKRAINIAN WEEKLY SUNDAY, JANUARY 17, 2010 5 2009: THE YEAR IN REVIEW A turbulent year for Ukraine urbulent was the way to describe 2009 for Ukraine, which plunged into financial crisis. No other European country suffered as much as TUkraine, whose currency was devalued by more than 60 percent since its peak of 4.95 hrv per $1 in August 2008. In addition, the country’s industrial production fell by 31 percent in 2009. Prime Minister Yulia Tymoshenko con- fronted the challenge of minimizing the crisis fallout, while at the same time campaigning for the 2010 presidential elections. Her critics attacked her for pursuing populist policies, such as increasing wages and hiring more government staff, when the state treasury was broke as early as the spring. Ms. Tymoshenko herself admitted that her government would not have been able to make all its pay- ments without the help of three tranches of loans, worth approximately $10.6 billion, provided by the International Monetary Fund. Her critics believe that instead of borrowing money, Ms. Tymoshenko should have been introducing radical reforms to the Ukrainian economy, reducing government waste, eliminating out- dated Soviet-era benefits and trimming the bureaucracy. The year began with what is becoming an annual tra- Ofﬁ cial Website of Ukraine’s President dition in Ukraine – a natural gas conflict provoked by the government of Russian Federation Prime Minister President Viktor Yushchenko and Prime Minister Yulia Tymoshenko at the heated February 10 meeting of Vladimir Putin. Whereas the New Year’s Day crisis of the National Security and Defense Council. 2006 lasted only three days, the Russian government planned months in advance for the 2009 crisis, which backroom deals with the Communist Party of Ukraine, transit system, which is operated by the state monopoly lasted 18 days. Turning off the spigots on New Year’s which resurfaced when the Cabinet of Ministers voted Naftohaz Ukrayiny. Ukraine would pay dearly for Ms. Day, Gazprom launched into a smear campaign against on January 21 vote to reinstate Olha Ginzberg as director Tymoshenko’s gas agreement years after she’s left the the Ukrainian government, alleging it owed hundreds of of the State Archives Committee of Ukraine. A former prime minister’s office. millions of dollars. The state-owned monopoly claimed national deputy of the Communist Party of Ukraine, Ms. In response, Ms. Tymoshenko told reporters that the the Ukrainian government was stealing natural gas Ginzburg has no education in the social sciences or Russian government was among an entire list of coun- bound for Europe, which was broadcast repeatedly archives experience, having built her career serving as a tries to which Ukraine turned to request credit to cover throughout the continent as part of a well-calculated Communist Party secretary and assistant director at a the government’s planned spending deficit. She request- strategy aimed at discrediting Ukraine’s role as a reliable factory in Konotop, Sumy Oblast. Among the favors the ed officials from the European Union to evaluate the transit intermediary. prime minister gained from reinstating Ms. Ginzburg Russian-Ukrainian natural gas agreement. She alleged President Viktor Yushchenko and Prime Minister was the Communist Party’s support for a January 26 President Yushchenko is attempting to ruin the natural Tymoshenko initially formed a united front against the vote to dismiss Volodymyr Stelmakh, the chair of the gas agreement she obtained in order to return the corrupt Russian attack, issuing a January 1 joint statement. Yet National Bank of Ukraine. Then Ms. Tymoshenko sur- natural gas intermediary RosUkrEnergo. Additionally, once Ms. Tymoshenko had reached an agreement with vived a no-confidence vote on February 5 after the National Security and Defense Council (NSDC) Mr. Putin that put an end to the crisis, Mr. Yushchenko Communist Party Chair Petro Symonenko and several wants to force the Ukrainian government to return 11 reverted back to his relentless attacks against the prime fellow party members were absent from Parliament on billion cubic meters of natural gas to RosUkrEnergo that minister, declaring her deal an “evident defeat.” that day and neglected to support the Party of Regions was bought honestly with state funds from Gazprom, she Ms. Tymoshenko achieved an average price for natu- initiative. alleged, bringing $4 billion in profit to the president. ral gas of about $230 per 1,000 cubic meter, which she Just two days later, on January 23, President The conflict between Ukraine’s top pro-Western poli- touted as lower than what any European nation pays. Yet Yushchenko issued a decree ordering all government ticians paved the way for new politicians to emerge, it was 30 percent higher than Ukraine’s 2008 rate and organs to disclose all remaining Soviet repression-relat- promising pragmatism and effectiveness. Most notably, Ms. Tymoshenko could not get Gazprom to pay more in ed documents issued between 1917 and 1991 that were Arseniy Yatsenyuk became a presidential contender transit fees, which remained at $1.70 per meter. In classified as secret or top secret. Valentyn Nalyvaichenko when polls in the spring demonstrated he was the third response to the president’s criticism that she failed to said the Security Service of Ukraine (SBU), where he most popular candidate for the Ukrainian presidency, increase the transit rate, Ms. Tymoshenko said that, as served as acting chair at the time, would make publicly commanding between 10 and 14 percent support as least compensation, her government secured a $25 (per 1,000 accessible all its classified documents on Soviet-era twice as much as incumbent Mr. Yushchenko. cubic meters) discount (to $154) for natural gas used as repressions – a collection of more than 800,000 items. Rifts emerged in Ukraine’s most recognized political “technical fuel” to pump gas through pipelines for The president’s decree was the latest step in a three- parties. It was revealed the Party of Regions is divided European customers. year campaign to make Ukraine’s archived Soviet docu- between those loyal to Donbas industrial kingpin Rinat The 2009 New Year’s crisis was merely the latest ments more accessible to Ukrainians and foreigners Akhmetov, those loyal to the party’s ideologically pro- strike in an extensive campaign the Russian government alike. “The president’s position lies in that crimes against Russian wing led by Viktor Yanukovych and Mykola will continue pursuing to eliminate the Ukrainian transit people’s freedoms and rights, and the criminal actions of Azarov, and the so-called Firtash Group, including those monopoly of Russian natural gas. By staging crises, government organs shouldn’t be and can’t be concealed who profited from RosUkrEnergo. While tensions have Gazprom aims to convince the Europeans to support the behind a classification of secrecy,” Mr. Nalyvaichenko emerged between these groups, the party leadership Nord Stream pipeline, which would transport gas by told a January 27 press conference at SBU headquarters managed to hold the party together in preparation for the bypassing Ukraine under the Baltic Sea and into in central Kyiv. “The decree once and for all removes 2010 presidential election campaign. Germany, or pressure Ukraine into surrendering its con- the barrier of secrecy, declassifying and publicizing the Unable to keep things together in his party, People’s trol of the transit system by submitting it to an interna- archives – that is, giving access to all, not just privileged Rukh of Ukraine Chair Borys Tarasyuk announced on tional consortium. As another solution, Mr. Putin sug- historians, but all citizens,” he noted. January 27 that he was evicting the long-time stalwarts gested to German television viewers during the crisis While the SBU was releasing documents, President Ivan Stoiko and Yaroslav Kendzior, who commanded that the Russian government buy the pipelines from the Yushchenko released his anger against Prime Minister significant influence over the party’s Lviv and Ivano- Ukrainian government, “which makes a fetish of the gas Tymoshenko during a February 10 meeting of the Frankivsk organizations. He denied the dismissals were transport system, considers it its national heritage, National Security and Defense Council, the details of related to his decision to ally the party with Ms. almost as if getting it from heaven, and as not subject to which were leaked to Ukrayinska Pravda reporter Serhii Tymoshenko. Yet Messrs. Kendzior and Stoiko made it privatization.” Leschenko, one of Ukraine’s top journalists. Behind no secret they were loyal to President Yushchenko and The January natural gas crisis exacerbated Ukraine’s closed doors, the two leaders accused each other of wanted the party to lean in that direction. The two Rukh financial crisis, the seriousness of which led Finance bringing the country to ruin and hurled mutual accusa- veterans announced in mid-December they were joining Minister Viktor Pynzenyk to submit his resignation on tions of theft and corruption before the council’s startled the Za Ukrayinu! (For Ukraine!) political party led by February 17 out of disagreement with the prime minis- members. Viacheslav Kyrylenko, widely believed to be the leader ter’s economic policy. It’s widely believed that Mr. “Yulia Volodymyrivna, you regularly stole gas, and of Ukraine’s revived national-democratic movement. Pynzenyk was the author of an anonymous memoran- now you’re teaching us how to get rid of corrupt peo- Meanwhile, the Our Ukraine-People’s Self-Defense bloc dum, released on January 27, that warned of an impend- ple,” the president allegedly erupted during the meeting, split into those loyal to Ms. Tymoshenko, led by Our ing collapse of the Ukrainian economy unless drastic later accusing her in front of television camera of betray- Ukraine parliamentary faction chair Mykola Martynenko measures were taken.

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