Yushchenko's Disappearing Moment

KIEV, Ukraine -- Six months after the revolution, Ukrainian politics is surprisingly mundane – which is both encouraging and a little disappointing.

Within months, their country had emerged from international isolation, sanctions had been raised, it had become a member of organizations such as the United Nations and the OSCE, and EU membership had become a prospect, albeit distant.

Yes, Serbians swiftly had reason to believe that their democratic revolution in 2000 really had revolutionized the country. Ukrainians can feel the same. Isolated by the scandals surrounding President Leonid Kuchma presidency, subject to restrictions on aid from the United States for illegally selling weapons to Iraq, and a no-go area for all but the most risk-averse companies, Ukraine is now on the best of terms with the United States and most of Europe’s leaders. It is making strides towards membership of NATO and – until the French referendum on 29 May at least – it seemed to be making the first small steps on a long journey towards the EU. Investors may not yet be putting in much money, but they are looking seriously.

Still, disappointment has tinged many of the international (and Ukrainian) commentaries about post-revolutionary Ukraine. Domestically, there has not been enough of a revolution yet, they feel. Many of those hopes were, however, unrealistic from the start. Even when it provides the kind of relatively clean slate that Central Europe enjoyed after 1989, a revolution is not just an event, but a chaotic, incoherent, and dangerous process. The inevitable price of a democratic revolution – a revolution achieved through elections and by the law book – is that the new government does not have a clean slate. Parliaments remain packed with opponents. The old regime’s placemen in the bureaucracy and state organizations cannot be removed as simply. A new economic and political system cannot be built from scratch; the old system has to be dismantled slowly. Deals cut to establish a united opposition ensure that people with very divergent ideas sit behind the same cabinet table. Deals cut with the former powers to ease the peaceful transfer of power can slow down reform.

In Ukraine, those problems common to the revolution in Serbia (and Georgia and Kyrgyzstan) were compounded by a legacy of fear from the election campaign: a fear that the country could fall apart and a fear that Yushchenko, already a victim of poisoning, could fall victim to assassination, just as Serbia’s Zoran Djindjic did.

Six months later, the notion that Ukraine could split in two is barely mentioned. Ukraine’s government is split but less so than the 18-party coalition that led Serbia. Its political scene is very fragmented but less acrimoniously so than Serbia’s was. Nor do the differences between Yushchenko and Tymoshenko stand comparison with the divisions between Djindjic and Kostunica. Investigations into one touchstone case of the Kuchma era – the murder of the journalist Georgi Gongadze – have cost fresh lives, but, beyond that, there is less sense of political violence in the air than there was in post-war Serbia. The Ukrainian military, long more interested in closer ties with NATO than with Russia, seem to pose no threat, and the secret services and special units seem under the government’s control. That was not the case in Serbia.

In fact, Ukrainian politics now looks surprisingly mundane. There have been political crises about price-capping, a protracted dispute about privatization and other evidence of deep differences over economic policy, and fear that the government’s policies could stoke inflation – but Ukrainians can look at that list, compare it with pre-revolution scenarios and the precedent set by Serbia, and feel happy.

A few years of such mundane politics could make a big difference. In five years’ time, Ukraine may well have progressed as far – or farther than – Serbia has since 2000. It should, since it has not been ravaged by war. Conceivably, it could even look like other countries in the western Balkans – countries that, as it happens, are knocking on the doors of the EU.

The problem for Yushchenko and Tymoshenko, of course, is that neither commentators nor ordinary Ukrainians will judge them by the example of Serbia or by the dangers they have avoided. When parliamentary elections come in March 2006, what ordinary Ukrainians will want to see are signs of tangible change and a sense that the government understands the intangible wishes expressed in the revolution. Somehow the government has to achieve that while pursuing its key strategic aims: to make the revolution safe, and – as both Yushchenko and Tymoshenko have made absolutely clear is their wish – to take the country westward, a strategy that goes well beyond geopolitics to fundamental economic and institutional reform.

In this context, victory in the elections is of paramount importance. Again, Serbia offers a warning: In 2003, Milosevic’s supporters made a near-comeback both in presidential and parliamentary elections.

At the moment, the possibility of electoral defeat looks remote, partly because the government can reasonably expect some political dividend from the past six months. Most obviously, many Ukrainians will have very direct, self-interested reasons to feel good about the government, because in March the government passed a budget that raised welfare spending by 50 percent, giving pensioners, public-sector workers, and young families (among others) more money. Arguably, politically Tymoshenko had little choice but to make these huge hikes, since Yushchenko’s rival in the presidential elections, Viktor Yanukovych, had as prime minister promised most of these increases. Yushchenko’s government was therefore not so much trying to buy votes as attempting to defuse the residual antipathy felt towards Yushchenko in eastern Ukraine and the chances of the old leaders making a political comeback.

The danger is that Ukrainians could find their new money eaten into by inflation. Prices are rising fast (14.7 percent year on year in April), though not much faster than in 2004 (a little over 12 percent). But Yushchenko made his international name as a central banker; he can safely be expected to act to prevent the economic costs of electoral victory becoming long-term. There are other insurance policies against inflation spinning out of control: the budget slashes government investment and probably understates the revenues it might make from privatization. Even if Tymoshenko has miscalculated, extra borrowing may be bearable since Ukraine’s debt is relatively low.

The government’s biggest budget gamble may have been to assume that tax cuts will reduce tax evasion and so raise enough revenues to cover the extra spending. That may prove overly optimistic. Still, at least this tax-cutting sends the attractive political message to the electorate that the government wants to lower taxes.

There is another danger: Ukraine’s economy will not grow as fast in 2005 (1Q 2005: 5.4 percent) as it did in 2004 (12.1 percent). How important is that? For economists and potential investors, it may be very important. For ordinary Ukrainians, economic growth coupled with a sense of an improvement in the overall economic climate may be more important. And if Ukraine’s deeply corrupt big businesses are forced to tighten their belts, they will feel that the climate is improving. That seems to be the logic that Tymoshenko followed in her budget: she argued the government could invest less and still receive the same benefits since procurement processes were previously wildly corrupt; and she has cut most of the tax privileges that Kuchma gave to his friends.

That approach is populist but has some rational justification. Viewed in the same political light, even one of the biggest problems of the government – the dispute over re-privatization – may have its benefits. The capitalism of Kuchma’s Ukraine was crony capitalism. The capitalism that Yushchenko promotes – and that Ukraine will eventually have to adopt if it is serious about applying for the EU – is a liberal form of capitalism. Tymoshenko’s current position – leaning more towards re-nationalization rather than re-privatization – has been likened by some to “state capitalism.” Whatever the outcome of that dispute, the government may win rather than lose votes. It may win votes since Ukrainians who associate liberalization with the wild privatization and wild capitalism of the 1990s may be glad to see that there are some strong statist tendencies in the government; it may not lose votes, because the debate reduces the risk that Ukrainians will feel the new elite is simply interested in taking possession of the old elite’s property.

Beyond that, voters should also sense numerous changes in other aspects of Ukraine’s life. Though many reforms have barely started, a report published in mid-June by Freedom House, the U.S.-based NGO that monitors governance around the world, noted improvements in all but two aspects of Ukraine’s public life (the two exceptions, with unchanged ratings, were local governance and – surprisingly – corruption).

Cumulatively, these improvements and policies (plus residual revolutionary sentiments) should be enough to ensure victory in parliamentary elections in March 2006. In April, over 50 percent of Ukrainians where happy with the new government’s performance; just 16 percent were unhappy. Moreover, the government’s key strategic aim – to join the EU – has the backing of two-thirds of the population. Tymoshenko is rising in popularity (she was popular with 55.3 percent of Ukrainians in April), while Yushchenko’s rating remains high (60 percent in May, though his popularity is dropping). Together, they will make a formidable team in the elections.

If they deliver victory, their parties will also benefit from a new political system that Yushchenko agreed to in negotiations during December’s Orange Revolution. A system where politics was largely a matter of factional maneuvers around a central figure, the president, will be replaced by a party system clearly recognizable to the EU. That will, hopefully, gradually lay the institutional foundations for a political system that is more comprehensible and that makes national and local politicians more accountable for their policies and for their corruption.

That look on the bright side indicates that the Ukrainian government is giving people reasons to vote for them in March 2006. But, unfortunately, the government is also giving Ukrainians too many reasons to feel disappointment and doubt.

The doubts are particularly important since many of the reasons for optimism are based on assumptions – that Yushchenko will impose economic discipline, that the differences between Yushchenko and Tymoshenko will not develop into deeper problems, that anti-corruption efforts will yield rapid economic results. But the disputes over privatization and about price caps on oil, for example, have already scuppered Ukraine’s hopes of being recognized by the EU as a market economy in June, and have created the impression of a leadership at odds with itself and incapable of resolving tensions at the discussion stage. What might go wrong next is a very legitimate question.

Moreover, the government, largely made up of men and women who once had ties to Kuchma, is not doing enough to lift the inevitable doubts that it is truly different from the previous government. Legal cases against the oligarchs close to Kuchma have been fairly limited in number, but it is always going to be accused of selective justice unless there is reform of the judiciary and unless government ministers set a good example. Critics say judicial reform is too slow. Moving faster here needs to be a priority, because unless there is a clear sense that Ukraine’s law and institutions are being improved, trials against oligarchs and re-privatization (or re-nationalization) will either be a mess or be interpreted as the Yukos case has been in Russia: as a vendetta rather than as a legal correction of past distortions.

The government already has a potential sacrificial lamb it could use as an example. Justice Minister Roman Zvarych has been embroiled in one scandal after another, first for threatening to resign over a bill that would have hurt the interests of the oil company for whom his wife works, then for misrepresenting his educational credentials, and then for alleged bigamy. Yushchenko calls these “intrigues.” Tymoshenko published an open letter accusing journalists of behaving like “hired killers.” The combined effect is to create the impression of a government that refuses to recognize a problem and acts like a bully.

Ultimately, the disappointment is that Yushchenko has failed to make full use of the brief months in which he will enjoy the sweeping powers that Kuchma enjoyed. Working in tandem with Tymoshenko, he could have used that time to give the impression of decisiveness and unity, to push forward reform rapidly, to leave his progressive imprint more clearly on policy, and to lay the foundations for long-term improvements. Moreover, it is his tenure as governor of the central bank that lends the government much of its economic credibility; he and the government are losing some of that credibility.

In Yushchenko, Ukraine has a unique advantage over Serbia and Georgia. In Serbia, Vojislav Kostunica acted as a somewhat gray figurehead for the revolution, while the more revolutionary ideas came from Djindjic. In Georgia, Saakashvili led with fieriness, but relied on the gravitas of Zurab Zhvania in particular. In Ukraine, Yushchenko needed Tymoshenko’s fieriness, but the leader of the revolution and the person with the more revolutionary – or, at least, progressive – ideas was also the one with the greatest credibility and gravitas, Yushchenko. Ukraine has a unique moment and its president has unique virtues: a man with moral authority but also great constitutional powers, a man with both expert knowledge and popularity, cautious yet courageous, revolutionary but self-effacing. Yushchenko should seize his days of real power with greater strength and urgency.

Source: Transitions Online