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Analysis & Opinion
23.12.08 Ukraine, Ukraine…
By Vladimir Frolov

Since the hopeful days of the Orange revolution of 2004 Ukraine has been in the grip of political turmoil. Alliances dissolve as quickly as they form, and a power struggle between president and prime minister has paralyzed decision making. Vladimir Frolov argues this has little to do with democracy and much to do with the selfishness of the elite.

I have not been to Kiev in four years since the fall of 2004 when I worked for one of the candidates in Ukraine’s presidential election that ended in an “orange revolution.”

Although my candidate did not win at the time, what I distinctly remember is the feeling of great expectations that was engulfing Kiev in December 2004 after the Supreme Court ordered the third round of the presidential election that brought Viktor Yushchenko and his allies from the Orange coalition to power.

For many Ukrainians it seemed at that time that all sorts of opportunities were about to open for them and that life would be wonderful ever after. Some, however, were skeptical.

For all those four years I kept but a casual eye on developments in that country and gradually developed a nagging suspicion that the Orange revolution never quite really ended in December 2004 and perhaps was turning into something that in other countries is called “a way of life”. Kiev has been a confused and chaotic mass of shifting coalitions and governments since 2004, and national elections have been taking place there on almost a monthly basis. It was hard to keep track of who betrayed whom.

So when I went to Kiev last week and talked to some of my friends of 2004, I walked away with a sense that a broken political culture and a bickering selfish elite are at the heart of most of Ukraine’s problems.

A friend of mine, a political consultant to a prominent Ukrainian politician, summed it up best with a joke that is making rounds in Kiev. It goes like this – “one Ukrainian is a guerilla unit, but two Ukrainians are a guerilla unit with a traitor inside”.

It is the sum of all Ukrainian politics and it was on full display in Kiev last week.

After almost four months of political tug of war after President Yushchenko hopelessly tried to dissolve the Parliament in order to remove his principal rival Yulia Tymoshenko from her powerful post of Prime Minister, and after months of failed attempts at coalition building in the Parliament (that even resulted in a dramatic mutual betrayal between Yushchenko and his ally Speaker Yatsenjuk, with Yushchenko’s engineered removal of the Speaker causing a complete lawmaking paralysis, since no bill could go ahead without the Speaker’s signature), a new “orange coalition” was formed by prime minister Tymoshenko with her party at the core.

You will not be able to appreciate the full extent of chutzpa and political hypocrisy involved here unless you know that two days before she formed another “orange coalition”, Tymoshenko was in not-so-secret negotiations with Viktor Yanukovich and his Party of Regions (which controls the largest faction in the Rada) to form a coalition of constitutional majority of over 300 deputies. That would have given them enough votes to quickly push through a package of Constitutional amendments that would have abolished the popularly elected presidency and transformed Ukraine into a parliamentary republic where a much less powerful president would be elected by the Parliament.

Tymoshenko and Yanukovich were already dividing government posts and were planning to remove Yushchenko from the presidency by mid-February 2009. A new draft Constitution had already been agreed to and the coalition agreement was to be signed by the two leaders on Monday, December 8.

That day, however, Yanukovich got word (a false rumor planted by Tymoshenko’s foes in the Party of Regions) that Yushchenko was about to dismiss Tymoshenko and offer Yanukovich the post of prime-minister. He decided to wait it out for a while in the hopes of gaining more than in the alliance with Tymoshenko (where he was scheduled to become the first Parliament-elected President).

Tymoshenko was duly informed (by the same “trusted sources”) about her partner-to-be’s deliberations and moved with lightning speed to preempt her rivals. While Yushchenko was out of the country, she got just about half of Yushchenko’s Our Ukraine faction in the Rada (35 members out of 72) to sign an agreement to form a coalition with Tymoshenko’s block and that of Viktor Litvin, a former speaker. She also managed to somehow “incentivize” the Communist party, which voted unanimously for the orange coalition and got two Cabinet positions.

The irony, of course, is that president Yushchenko, the symbol of the Orange revolution, was dead-set against his party’s deal with the Devil – Tymoshenko. His party faction in the Rada, however, decided otherwise, leaving Yushchenko in the position of a commissar in a soccer match whose only power is to certify the match results.

This scene of a perpetual mutual betrayal has become so natural to most Ukrainian politicians that they eagerly discuss the political advantages gained by the winners and losses incurred by the losers without much regard to what is going on in the country.

The country, however, is teetering on the brink of financial ruin.

As STRAFOR.COM reports, “Of all the countries being hit by the global financial crisis, Ukraine is one of the most profoundly affected because it is already coping with failing financial institutions, a collapsing economy and a domestic political scene too shattered to handle much of anything. Ukraine is fundamentally unprepared to weather the global financial crisis. The country’s budget deficit is 2.8 percent of gross domestic product (GDP) and is likely to increase, as declining industrial output triggered by the global recession will inevitably reduce expected tax receipts”.

Foreign investment has been gushing out of Ukraine’s equity markets (down 80 percent so far in 2008; only Iceland experienced a larger drop). The hryvnia has lost 50 percent of its value since August. Bank runs are taking place weekly. Ukrainian total foreign currency reserves of only $37 billion are drying up fast.

The International Monetary Fund (IMF) has offered Ukraine a $16.5 billion loan but Ukraine’s internal political chaos has so far made a decision on the IMF’s terms impossible.

As STRATFOR.COM reports, with demand and prices for steel collapsing globally, Ukraine is horribly exposed; its metallurgical industry, accounting for 40 percent of Ukraine’s exports, nearly 30 percent of its GDP and 12 percent of its tax revenues, is going bust.

A prominent Ukrainian businessman and politician (I have never encountered a prominent Ukrainian businessman who was not a politician) told me in Kiev last week: “Everyone is fighting the financial crisis here – alone,” as he scrambled to find financing for a collapsing business deal.

Some argue that Ukraine is a genuine democracy and that it will find a way out of the crisis faster and easier than Russia, which ostensibly is not a democracy. In Kiev, this argument rings increasingly hollow.
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