Ukraine - one year after

Posted in Europe | 16-Nov-05 | Author: Dmitry Udalov

A year ago second largest post-Soviet republic made its choice. It was not an easy and simple decision as all major world political forces were deeply engaged in helping Ukrainians to make a right choice. Thus the country was on the verge of division into two parts if not a civil war.(Unfortunately, Ukrainian and Russian history knows a lot of examples of bloody crisis management). But by the end of 2004 the country stayed united ready for a democratic and economic breakthrough. A year passed? How close Ukrainian authorities to achieving promised objectives and aims.

Internal policy

The greatest excitement and agitation created by the Orange Revolution was unprecedented. Anyway sober analysis must prevail over excitement and exhilaration.

At first it seemed that political unity of the winners will be everlasting. Viktor Yushchenko and Yulia Tymoshenko buried their personal ambitions to pursue common goals. Having reached their first target – the power, they split on how to achieve the main aim – prosperous and democratic Ukraine.

All started very nicely. Yushchenko nominated Tymoshenko on the position of the Prime Minister. Yet when the government was forming political annalists started to put labels on different members of cabinet of being “pro-Yushchenko”, or “pro- Tymoshenko”. This division signified that it would be difficult to avoid disagreements in the future government.

The attempts of re-privatization and redistribution of property provoked serious clashes and disagreements between Yushchenko and Tymoshenko teams as both sides were tempted to acquire Ukraine’s major business enterprises. The second disputed issue was energy problem. Tymoshenko energy policy led to the gas prices ascension.

The outburst of political crisis was caused by Yushchenko’s close aide Petro Poroshenko who publicly stepped down as secretary of the National Defense and Security Council because he couldn’t stand corruption among Ukraine top officials any more. Viktor Boyko, head of Ukraine’s State Reserves Committee also resigned.

As tensions went from bad to worse Tymoshenko was ousted. The democratic union of two major political forces collapsed. Tymoshenko knew about her dismissal on TV! In a very strict and direct way Yushchenko accused her government of corruption and malfeasance. Since during the election campaign Yushchenko pledged to stamp out the corruption widespread under former president Leonid Kuchma he thought that Ukraine would be better of without Tymoshenko. Tymoshenko in her turn denied all allegations and accused President Administration of severe violations of law and corruption.

Yuri Yekhanurov, former governor of the Dnipropetrivsk region, replaced Tymoshenko in office. It is evident that Yekhanurov is not a political figure, meaning he is rather a professional economist than a politician. Yekhanurov is a high class economic specialist, a close ally of Yushchenko and has strong reformist credentials. He was deputy PM under Yushchenko in 2000-2001. Thus Yushchenko instead of a high rank politician made a high class professional lead the government.

Though the corruption scandals boosted the political crisis the roots of the conflict are deeper. In fact Yushchenko and Tymoshenko’s parties have never been very close. They differ in their political aims, political methods and approaches. Besides they are supported by different electoral and financial groups. The conflict or split of their coalition was evident. It was only a question of time. Most of Ukrainian analysts hoped their coalition would stay longer bringing Ukraine to prosperity.

On the other hand many political analysts saw in this crisis a new indicator of Ukrainian democratic progress. Their argument is that under president Kuchma this open way of managing corruption scandals in Ukraine would be totally unreal. The fact that the hole country could openly discuss the matters of the scandal is a serious step towards building of active civil society and civil control. Thus Ukrainian civil society continued to demonstrate its full strength and commitment.

Foreign policy

Many political analysts and especially geostrategists understood Ukrainian 2004 elections as a great dilemma which people had to resolve. The question was where to go: to the West or to the East? Or even more concrete: are we with Europe or with Russia?

The fact that political competition made Ukrainian people resolve this kind of dilemma was in its essence quite negative. Ukraine is bound by geography to be with Russia and Europe. It is evident that at least in the nearest 50 years the country for its development will need intensive cooperation both with Russia and Europe. While the position of one candidate for Presidency was to stay only with Russia as Europeans are going to conquer Ukraine; and another was so willing to join Europe and totally abandon Russia, forgetting about 1000 years of mutual history. At least it sounds ridiculous, but media and the public understood it in this way.

Thus new Ukrainian foreign policy had to keep and prove its promises of joining Europe, and on the other hand reconcile relations with Russia by all means. Symbolically Yushchenko rend his first visit as a President to Moscow trying to make reconciliation faster.

Relations with Russia

The 2004 Ukrainian uprising caused grave concern in Russia, and officials have even accused the West of exploiting pro-democracy sentiment to undermine Moscow’s influence in its own background, the Commonwealth of Independent States (CIS). Putin rejected this view in his comments after the elections, but generally upset in the Kremlin remained as the year passed.

The worst problem for Russia was the revision of corporate ownership relations in Ukraine. The Russian owners of key Ukrainian enterprises were deprived of their shares. The ideology of the new government in Kyiv clearly allowed this legalized theft in order to diminish the influence of Russian capital in the republic. But in the next few months it was expected that the rules of the game would be clearly set out. It seems now that businessmen from Russia, as well as from other countries, will have to think twice before investing money in the Ukrainian economy.

Yet Russia is named a strategic partner of Ukraine by Yushchenko: “Russia is Ukraine’s eternal strategic partner. However, I would like our relations to be based on the healthy economic and business pragmatism instead of subjective political emotions.”[i] And while annual turnover of goods and services between the countries is reaching $17 billion, President Yushchenko is eager to prove his words establishing a free trade zone between Russia and Ukraine.

Though in 2004 Ukraine clearly declared its European choice for the past year Ukraine had to adjust its Russian policy as well. The point is, today Ukraine is closer to Russia than in 2004.

In search of comprehension in the West

Relations with Europe for the past year were positive, but many Ukrainian politicians had expected them to be more intensive to make a rapid breakthrough to Europe. But Europe’s own problems, namely EU Constitution failure, made it difficult for Brussels to be open to a fast, massive and everlasting Ukraine’s integration in Europe.

Some key players, like Germany did not want to endanger its relationship with the Russian Federation and carefully refrained from getting involved in the Orange issue. Among strong supporters of a Ukrainian EU membership are the Baltic States, Poland, and the UK. Those states who helped Yushchenko a lot in November 2004. But Germany and France continue to follow cautious policy concerning Ukraine’s euro-ambitions.

By the end of the year with the disputes over Turkey accession to the EU, it has become clear that the talks with Ukraine on the same matter would be also very complicated. Whereas some European officials say Ukraine needs about 10 years to start talks on becoming EU member, Euro skeptics don’t see Ukraine in the EU structure at all. In November 2004 Ukraine’s prospects of assessing EU were more positive. It doesn’t mean relations between two sides cooled. As it’s already been said sober analysis prevailed over excitement.

If the progress of Ukrainian integration to the EU was not very successfull in 2005, its move towards other Euro-Atlantic Institution was very intensive. NATO – Ukrainian dialog for the past months of Yushchenko’s presidency indicated strong bilateral rapprochement. On various levels Ukraine’s accession to NATO was named as visible in the nearest future. Ongoing military reform which is aimed on introducing and enhancing civil control over armed forces is viewed as country’s attempt to become part of NATO. Anyway the further movements on this direction will largely depend on the US and Russian policy on this matter. Being restrained by Iraqi factor, ongoing transformation of its armed forces and huge military spending the United States doesn’t view Ukraine’s NATO membership as the first priority for its security policy. On the other hand Kremlin won’t “agree” quickly on Ukraine’s decision to join NATO unless some significant security guaranties are provided to Russia. Russian Defense Minister Sergey Ivanov made a statement at the NATO's countries defense ministeries summit in Berlin (September 05): “Joining or not joining NATO is, of course, the right of each sovereign state, whether it is Ukraine or Georgia, but this will be followed by a revision of our relations with these states, and not only in the sphere of defense and security.”[ii]

As a result we can say that Yushchenko didn’t neglected his election promises. The point he has to explain to his voters today is that Ukraine still has a long way to go in improving its economy and strengthening democracy to be truly welcomed in the West. Russian dimension of Yushchenko foreign policy turned out to be even more progressive and positive than during his election campaign. While the future of Euro integration faces obstacles Yushchenko managed to be friendlier with Russia than it had been expected. Thus in general we’ve viewed averaging-out of Ukraine’s foreign policy as it is going to use all benefits of its relations with Russia as well as with Europe.

Economic “breakthrough”

During president Kuchma 3 last years in office Ukrainian economy could boast of the highest GDP growth rates among all post-Soviet states (12% per year). But in the first half of 2005 GDP growth was only 3,7% (compared to 13,5% in 2004), foreign investment level decreased 14,5 % compared to 2004. it made some economists speak about upcoming crisis. Minister of economy made a statement that urgent measure needed to escape production shortage and job loss in 2006. What’s the reason of economic instability?

New political forces who came to power in Ukraine after winning Presidential elections 2004 had to deal with hidden structure crises, which consisted of social, demographic, food and financial problems. Like a small sprout Ukrainian economy started to grow very fast but was still very fragile to the winds of political instability. Besides a number of internal and external factors made matters worse.

The internal factors:

  • increasing state debt;
  • attempts of re-privatization;
  • increasing of energy ratio of GNP of Ukraine;
  • lack of alternative sources of oil delivery to Ukraine

The external factors:

  • rapid oil price growth at world markets an increase of Russian export duty on oil from August, 1, 2004; Introduction of value added tax collection for Russian oil and gas, which are exported to Ukraine;
  • devaluation of US dollar, which takes place around the world at present time;
  • investors’ anxiety and caution to make massive investments right after political changes;

There is no doubt 2006 will be a serious examination of Ukrainian government and business ability of crisis management.


It is always difficult to change things for the better. And sometimes years are needed for the improvements to come. We’ve witnessed some of them in 2005 but hopefully other positive developments will follow soon.

Yushchenko’s main achievement was the preserving the unity of the country and the beginning of serious democratic reforms. Among main blunders long political instability is seen as the main one, because it led to investment decrease and can provoke economic crisis.

But political stability is not believed in seriously till parliament elections. According to the amendments to constitution Ukrainian parliament will have larger powers. President will control only security agencies, while economy and foreign policy will be under the responsibility of legislators. Thus oncoming parliament elections will be a new serious political battle which Yushchenko is not likely to win. Yuliya Tymoshenko is undoubtedly the most popular political leader in the republic. Many political analysts view her as the next country leader.

Anyway it is for the Ukrainian people themselves to decide which path to follow.


The most important at the moment is to keep and retain the credit of trust which was given to Yushchenko by the Ukrainian society a year ago.

Corruption and acts of malfeasance proved to be the main menace of open society and democracy, thus the success of democratic transition will largely depend on the ability of the authorities to eradicate corruption.

Economy should be treated more prudently to avoid rapid, drastic and uncertain decisions. Investors should be provided with special guaranties.

Free, independent and powerful judicial system is vital to provide the rule of law. It should be strengthened and serve common good rather than helping different business groups obtain property and power.

Statistics by State Statistics Committee (Goskomstat) of Ukraine

[i] Quotation from

[ii] Quotation by RIA-Novosti


Exclusive interview for WSN with the head Oleg Kokoshunsky – Vice-president of Atlantic Council of Ukraine, Serhiy Dzherdzh – President of “Democratic Action” NGO

WSN: What’s your opinion of the present political situation in Ukraine? And could you give your comments on the collapse of coalition between Yushchenko and Tymoshenko?

Oleg Kokoshunsky. The latest political events in Ukraine to some extend looked like a political crisis, which attracted everyone’s attention as it concerned new Ukrainian authorities, which were elected in 2004. In this sense the importance of the crisis in Ukrainian political development looks really significant. Though, in many countries these kinds of political developments are very usual. Anyway, for Ukraine it is a special moment to readjust its goals and then to move forward. Interestingly, but the crisis had a personal dimension, as it concerned on a very large scale relations between two people Yushchenko and Tymoshenko. During the crisis several very important problems were brought to public including corruption and some shortfalls of governance. But mainly this crisis was associated with the upcoming parliament elections.

Gladly the country was able to overcome the crisis. Tymoshenko didn’t go to the outrageous opposition to Yushchenko. So I think in future both sides won’t go to fundamental confrontation and will establish a constructive dialog.

Serhiy Dzherdzh. Whatever can be speculations on the recent political crisis in Ukraine, one thing is evident even the people believed in democracy and realized its positive influence. Thus, I can name this crisis as “a storm in a teacup” – but the storm left and the cup stayed. The openness of the politicians and of media during those events was unprecedented. Today there is no doubt that the political crisis didn’t break the principles of Ukrainian Democratic revolution.

WSN: how would you assess in general the changes in Ukraine made during the first year of Yushchenko presidency. How successful was this first year? What has been achieved, what expectations have failed to come true?

Oleg Kokoshunsky. Of course the main achievement is liberty. Freedom of speech - something we would have never enjoyed under former regime. It is the opportunity for mass media to openly cover all events and political process in the country. The society got the access to various sources of information, sometimes very contradictory. It has never been before. All political forces got the opportunity to openly address public. And those who name themselves New Opposition (Yanukovich followers) they are not prosecuted, they can also influence on public opinion via free media, openly criticizing authorities.

The openness is great. We can observe the situation when one minister can candidly criticize another minister or point on failures of the PM. Thus the corruption scandals were put to public, and nobody was afraid of telling the truth.

Among other political achievements I would name the ongoing political reform which earlier had faced severe resistance as former authorities were against vast parliament responsibilities and powers. Today we are moving from Presidential-Parliamentarian republic to the Parliament-Presidential one.

Among failures I would name economic problems most of them were inherited from former authorities. New administration had to deal with colossal debts and financial liabilities. During the first half of the year it managed to cope with them, but then financial problems, inflation, difficulties in energy dialog with Russia worsen the situation.

The other obstacles are archaic judicial system which stalls many progressive changes, and old bureaucratic system. Instead of the change of 18 000 officials President Yushchenko names it “an old face of our power”, because the system only began to transform and former bureaucratic barriers haven’t been removed yet. So the elements of the ideal people’s sovereignty havened been created yet. Thus we saw how President started to loose public support, mainly because of consumer prices index increase.

In the sphere of foreign policy “Ukraine’s appearance in Europe” was of course the main event. Unfortunately investment boom didn’t follow our political dialog with Europe. Of course it means that our political system is still unstable, we have to do a lot to bring matters to order. Revision of property in Ukraine didn’t stimulate foreign investors. Some people came to power in Ukraine with certain business interests; President needed time to get rid of them. Anyway it is evident foreign investors won’t be determined to deal with Ukraine till parliament elections.

Concerning Russia unfortunately relations are pretty suspicious. Of course all political processes in Ukraine, Georgia, Kyrgyzstan warned Russia. That’s why all political assessment of the situation in Ukraine is very strict. Some forces in Russia examining our failures would probably like to call it not a democratic revolution but struggle for and revision of power within former political system. But it is not so because civil society is much stronger today. It has never been so big in numbers and so active.

The variety of views on the other hand doesn’t unite our society as for example we can observe it in Baltic States. Thus the future is not clear. Some forces still want a return to previous system. The upcoming parliament elections will undoubtedly be a serious exam for us all. Ukrainians will be likely to be imposed again a choice between Euro-Atlantic and Russian options. Some forces continue to see the situation under this angle and report it to public this way. So I expect that these elections will be again interfered by both parties.

Serhiy Dzherdzh in conclusion I just want to add, that the Buryat people* unquestionably benefited more than everyone else because the first time in their history their compatriot took the office of the Prime Minister.

(*Cultural note: The Buryat people is a small native Siberian people who continue to follow their traditional lifestyle. Their shamans using special drums can communicate with spirits. New Ukrainian Prime Minister is of Buryat origin)