Ukraine's Crisis of Governance

ANALYSIS & COMMENTARY: By Andrew Wilson
Open Democracy, London, UK, Tuesday, May 1, 2007

Another year, another political crisis in Ukraine. After eight months of
accumulating political humiliation since he was forced to accept the return
of his arch-opponent Viktor Yanukovych as prime minister in August 2006,
President Viktor Yushchenko dramatically ordered the dissolution of
parliament on 2 April, and scheduled new elections for 27 May.

Not surprisingly, Yanukovych's government and its majority in the "old"
parliament, which is only one year into a five-year term, refused to
cooperate.

The constitutional court was asked to arbitrate, but the judge acting as
self-appointed rapporteur was accused of taking $12 million in bribes, and
in a general atmosphere of legal nihilism rumours circulated that the court
would avoid making a definitive decision, to avoid the opprobrium of the
losing side.

What does the latest crisis tell us about the state of democracy in Ukraine
almost three years after the "orange revolution"? Or does the mere fact of
yet another crisis tell us all we need to know?
A HOUSE DIVIDED
A first obvious underlying problem is that the power-sharing agreement made
in August 2006 is not working. This has little to do with what the agreement
actually says. The problem is with the political culture of the party led by
Yanukovych, the Party of (east Ukraine's) Regions.

The party has enjoyed an extensive makeover from US political consultants
since many of its leading members tried to rig the 2004 election, but at
heart it is still a clientelistic and authoritarian organisation.

In order to function as such, it needs to reward its friends and punish its
enemies, and show who's boss; and it needs to do this semi-publicly. To use
the local euphemism, "administrative resources" are used increasingly
blatantly and partially.

Notorious crooks like Volodymyr Shcherban, one-time "boss of bosses" in the
Party of Regions' stronghold of Donetsk, have returned home; the
Prosecutor's Office has been taken over by Donetsk "enforcers".

A parliamentary committee is "reinvestigating" the alleged crimes of Yulia
Tymoshenko, who served as the first orange prime minister in 2005.

Donetsk enterprises like Azovstal and the Yelnakievo metal factory have
received preferential VAT refunds of 696 million Ukrainian Hryvnia (over
$120 million) instead of the 313 million Hryvnia originally proposed, while
other payments have been sharply cut back.

Even Oschadbank, traditionally the savings bank of first choice for the
average Ukrainian - a kind of glorified post office - has not been safe from
a conspicuous political takeover.

The new government has also waged a relentless campaign to further reduce
the president's power from the levels agreed in August: challenging his
every decree, forcing out his favourite ministers, ramming through a
self-aggrandising "law on government" (in which Tymoshenko was shamefully
complicit), and even conducting a shadow foreign policy.

Ultimately, however, Regions over-reached themselves because this process
seemed never-ending. Yushchenko felt he had to stop them somewhere, somehow.
The final straw was the defection in April of eleven orange deputies to the
Yanukovych coalition.

This gave it around 260 deputies, and Regions boasted that it would have 300
by the summer (out of 450), giving it a two-thirds' majority and vastly
increased freedom of action.

Increasingly, however, President Yushchenko has adopted similar methods to
try and compete. He has promoted "his" tough guys to head the presidential
administration, like Viktor Baloha, a businessman from Transcarpathia in
Ukraine's wild west.

Yushchenko has appointed "his" businessmen to compete with Yanukovych's
businessmen, like Vitalii Haiduk of the Industrial Union of the Donbass (the
traditional rival of Regions' main business backer, the System Capital
Management (SCM) group run by Rinat Akhmetov), and Valerii Khoroshkovskyi,
president of the Russian steel giant Evraz since 2004.

Yushchenko has used their clout to bolster the National Security and Defence
Council as a rival power-base, and their money to help finance a relaunch of
the pro-presidential Our Ukraine party (and possibly finance the elections
themselves if government funds are blocked).

Further, Yushchenko has supped with the devil, negotiating in private with
odious figures like ex-president Leonid Kuchma's former strong-arm
chief-of-staff Viktor Medvedchuk, who is thought still to control at least
two of the constitutional-court judges he helped appoint in 2002-04.
A BLOCKED SYSTEM
A second underlying problem is that the constitutional settlement, agreed at
the height of the orange revolution in December 2004 and implemented in
January 2006, is clearly not working.

The new system disperses power more widely than in the past, but the
downside is a serious risk of stalemate or conflict, especially as the new
system also creates a "divided executive".

The president makes some appointments (defence, foreign affairs, the
security services), the prime minister most others. Predictions as to who
might back whom in the most recent standoff often amount to no more than
pointing this out. In practice, most institutions would prefer to spot a
likely winner first.

The constitutional court is centre-stage in the current crisis, but its
demeaning behaviour has shown that its method of selection is not working
either. The court has eighteen members: six appointed by the president, six
by the parliament and six by a congress of judges themselves.

In the current conditions, that has simply transferred political gridlock to
the court. Judges can only serve one nine-year term. Judicial independence
would be better served by life-time appointments.

Yushchenko's decree is also legally shaky. He cites the defection of the
un-magnificent eleven as his main reason for dissolving parliament, as the
new constitutional arrangements include the so-called "imperative mandate" -
deputies must stay in the party for which they were elected (the last
elections were decided by proportional representation, with national party
lists), or lose their seat.

But, and this is a big but, there is no explicit linkage between this
undoubted misdemeanour and Article 90 of the constitution which lays out the
grounds for dissolution.

Yushchenko has talked of putting the new constitution to a referendum,
possibly after even more revisions. One more round of constitutional
engineering won't necessarily do the trick, however.

Not while more deep-rooted problems remain. One way of interpreting these
problems is to look at the original "orange revolution" as a drama in three
acts.

[1] In Act One, hundreds of thousands of protesters packed the streets of
Kiev and other cities. The crowd became a revolutionary actor, trumping the
calculations of all sides.

[2] In Act Two the story moved on to an agreed settlement between elites,
the 'package' agreed behind semi-closed doors on 8 December 2004 (incumbent
president Leonid Kuchma agreed to new elections, a new election law and a
new election commission in return for constitutional changes that would
shift many powers to parliament a year after any new president took office).

[3] In Act Three, the aftermath, Yushchenko made a disastrous decision to
avoid "revolutionary justice". "Bandits to prison" was more than just a
slogan of the protestors in November 2004.

A few key prosecutions, involving at a minimum the perpetrators of the
election fraud, the killers of journalist Heorhii (Georgii) Gongadze whose
headless corpse was found in November 2000, and Yushchenko's own
mysteriously under-investigated poisoning, would have changed the rules of
the game - and were definitely expected at the time by the panicky old
guard.

Instead, most of the suspects ended up with legal immunity on the Party of
Regions's election list.

Together, Acts Two and Three made a disastrous combination. The package
agreement on its own, without the informal amnesty, would not necessarily
have turned parliament into a crook's haven, as it is now. The informal
amnesty on its own would have been less of a problem if the system had been
reshaped.

Taken together, the old guard survived, prospered and returned. Despite a
universal agreement on non-violent protest in 2004, many now regret that the
orange revolution wasn't a bit more revolutionary.
A KYIV STALEMATE
The breakthrough conditions that were wasted in 2004 will be difficult to
recreate. New elections might not make much difference. Opinion polls
indicate that the same three players would finish in roughly the same order:
the Party of Regions might get around 30%, the Tymoshenko Bloc 25%, and Our
Ukraine around 10%.

Ukraine's well-entrenched regional voting divides have not gone away. The
only surprise here is that Our Ukraine is somewhat reinvigorated, having
plunged even lower in the polls in recent months.

The Party of Regions could claim the legitimacy of a second plurality
victory. Tymoshenko would be a clearer leader in the orange camp. But the
same dynamics of mistrust would remain.

On the other hand, all three parties are coalitions, and their internal
dynamics may be shifting. The Party of Regions, to be fair, is a broad
church. Deputy prime minister Mykola Azarov is in charge of patronage.

The party's big businessmen, particularly the biggest, Rinat Akhmetov of
SCM, worth an estimated $7.2 billion according to the latest rich list in
the Polish magazine Wprost , do not want their business expansion and IPO
plans to be disrupted by bad publicity.

Viktor Yanukovych's makeover has worked, in the sense that he now functions
more effectively as a Ukrainian politician. It is not his job to be
pro-Russian or pro-business.

His job is to appear to give the people what they want - to champion
national business if it is conflict with Russia, to side with employees if
their jobs are threatened by national oligarchs.

The former governor of Kharkiv, Yevhen Kushnariov, was actually interested
in policy (that is, in the politics of east Ukrainian identity) but he died
in a mysterious and possibly alcohol-fuelled hunting accident in January
2007. Yanukovych will find the centre of gravity in his party, which may be
tilting towards compromise.

Change is also apparent in Yushchenko's Our Ukraine party. One reason he
moved when he did was to capitalise on the relaunch of Our Ukraine in March
2007. The party's business wing which favours cooperation with, and often
enough even defection to, the Party of Regions, was sidelined.

The Tymoshenko bloc has changed the least, at least in purpose. She remains
Ukraine's most effective populist and political campaigner, with both eyes
on the next presidential election.

In the end, smaller parties may decide who ends up with a majority this
time, in what would be yet another close parliamentary election. There is a
barrier of 3% that parties need to cross to get any representation. The
polls indicate the Socialists would fail to do so, after they switched sides
from the orange camp to Regions last summer.

But their votes might go to the Communists or the (Natalia) Vitrenko Bloc
instead, both of which are allies of Regions. On the other hand, there is a
new party, claiming to carry the torch of the orange revolution, Samooborona
("Self-Defence"), which includes many leaders of the youth movement Pora
("It's time"), prominent in the protests of 2004.

At the last elections in March 2006 it took three orange parties to win a
potential majority, which they then blew. Now there is a different potential
troika. And new parties are often quickly built from scratch in Ukraine.

The fact that all the main parties can convince themselves they might be
slightly better off, campaign expenses excepted, makes new elections more
likely than not. But they are still far from certain.

Ukraine may drift towards compromise, as is its wont. On 25 April Yushchenko
agreed to shift the elections to 24 June, though legislators are contesting
his very authority to make such a decision. More wheeler-dealing may be
around the corner.