Monday, November 28, 2005

Yushchenko's Party May Lose Ukraine Election as Economy Slows

KIEV, Ukraine -- A popular uprising known as the Orange Revolution swept Ukrainian President Viktor Yushchenko to power a year ago. A similar victory is unlikely for his party in parliamentary elections in March.

Viktor Yushchenko addressing "Our Ukraine" congress

Yushchenko's Our Ukraine Party has the backing of 12.4 percent of the voters, according to a Nov. 3-13 survey of 1,993 people by the Kiev-based Razumkov Center. The poll had a margin of error of 2.3 percent. Yushchenko is lagging behind the Regions Party and a group led by former Prime Minister Yulia Timoshenko.

"Expectations were very high, and I'm not just talking here about money," said Yuriy Ohulshanskyi, 73, a Kiev retiree who attended a Nov. 23 rally. "Our leaders made a mistake when they failed to sustain the revolutionary enthusiasm. They should have told us that even harder work was ahead of us. Instead, they told us to expect immediate paradise."

Since Yushchenko's victory in a re-run election in December, growth in Ukraine's $65 billion economy has faltered and citizens say corruption remains as rife as in the days of his predecessor Leonid Kuchma, who was criticized for stifling free speech and fixing asset sales. Millions poured onto the streets of Kiev last November after Kuchma's preferred successor was declared the winner of rigged presidential elections. Yushchenko promised more democracy, closer ties to the European Union, and rising living standards.

Campaigning for the March 26 parliamentary elections began on Nov. 26. The head of the winning party will become prime minister, whose powers will be expanded for the first time to include some responsibilities now held by the president, including the right to appoint the cabinet. Parties have until Dec. 25 to pick candidates.

Yushchenko Foe

The Regions Party, led by former Prime Minister Viktor Yanukovych, Kuchma's candidate who ran against Yushchenko for the presidency last year, ranked first with 17.4 percent support, according to the Razumkov Center survey.

Timoshenko's alliance, which she has cobbled together since her dismissal on Sept. 8, placed second with 12.8 percent.

"Such diverse political groups were united under the Orange banner that they were bound to split after they won, simply because the political ambitions of each of the groups' leaders were too high," said Oleksandr Lytvynenko, a researcher at the Kiev-based Center for Political and Economic Studies. "On top of that, the president didn't have enough political will to push through economic and political changes.''

Yanukovych's victory sparked the revolution when U.S. and EU observers ruled the balloting was rife with fraud. The results were voided after millions of people, many wearing the orange color of Yushchenko's party, demonstrated on Independence Square and across the former Soviet republic.

Yushchenko won the re-run election Dec. 26 and was sworn into office Jan. 21.

Disappointment

"There is disappointment," said Olha Hnotovska, a 45-year-old university employee who took part in the street protests last year that brought Yushchenko, 51, to power. She spoke after the Nov. 23 rally on Kiev's Independence Square. "The revolution wasn't about personalities. We were defending the freedom to choose."

Yushchenko dismissed his cabinet on Sept. 8 amid accusations of graft and accepted the resignation of his head of national security, Petro Poroshenko.

Timoshenko, who stood at Yushchenko's side during the revolution, was fired after Yushchenko said he lost confidence in her ability to improve the economy and fight corruption.

Slowing Economy

The economy may expand 4 percent this year, one-third the pace of 2004, after companies deferred investments following government seizures of properties that were sold by Kuchma at discount prices.

The annual inflation rate will probably top 10 percent this year, Yushchenko said Nov. 22, higher than the 8 percent he forecast on June 16. The trade deficit by September ballooned to $748 million from a surplus in July, as exports waned. The average monthly wage of $133 a month is still a fraction of Germany's $4,500 a month.

"The economy can't get much worse; it will improve, because there is a new, competent, government in place now," said Marianna Kozintseva, New-York based emerging market strategist at Bear Stearns Cos. "Growth slowed because of major mistakes by Timoshenko's government."

Lawmakers have yet to approve changes that would harmonize Ukrainian laws with those of the World Trade Organization's members. Ukraine, which has been trying to join the WTO since 1997, may enter the organization next year, after missing a 2005 deadline, Yushchenko said on Nov. 22.

Timoshenko Comeback?

Since her dismissal, Timoshenko has criticized Yushchenko, saying the administration of her successor, Prime Minister Yuriy Yekhanurov, is too closely allied with the nation's richest businessmen.

She said on Nov. 22 that the two political leaders should patch up their differences and work together during the campaign to ensure Yanukovych doesn't take power.

"If we don't stick together, Yanukovych will have his revenge," Timoshenko said in a Nov. 22 speech. "This isn't just a possibility. There is a 100 percent chance of this happening."

Lytvynenko at the Center for Political and Economic Studies, didn't rule out a coalition of Yushchenko, Timoshenko and Yanukovych.

"The majority will be formed by this troika, as none of them will be able to form a majority all by themselves," he said.

Source: Bloomberg

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