The presidential election shows that the orange revolution is out of puff, no matter who eventually wins
ON DECEMBER 3rd 2004 jubilant crowds flowed into a snowbound Kiev’s Independence Square, waving their orange flags, to celebrate a court decision to annul Ukraine’s rigged presidential election two weeks earlier. They cried and they danced—and the world was gripped by the sight of a sleepy Ukrainian people waking up to defend their freedom.
Days later, their hero, Viktor Yushchenko, his face disfigured by a mysterious poisoning, promised change. “Everything will change in Ukraine from today. We were independent for 14 years but we were not free…We should roll up our sleeves and work honestly from morning till night for this country.” He promised that bandits would go to jail, honest types would replace corrupt officials and judges would no longer take bribes—and that in five years’ time Ukrainians would be proud of their achievements. For a time Ukraine became fashionable the world over.
All that enthusiasm has now turned to fatigue. Ukraine’s under-reformed economy teeters on the edge of national bankruptcy, the rule of law is elusive, courts remain corrupt and the parliament resembles a trading platform for business tycoons in which deals are made and seats bought and sold. In April 2005 some 53% of Ukrainians said their country was on the right track. Now 81% believe it is heading in the wrong direction. Ukraine lies 17th from bottom in the latest global index of economic freedom, below Russia and Belarus.
It is to the credit of the voters that the failure of Mr Yushchenko and his team has not discredited the very concept of democracy, as happened in Russia in the 1990s. In the election Mr Yushchenko was unceremoniously booted out, gaining just over 5% of the vote. Viktor Yanukovich, the bad guy in 2004, got 35%, against 25% for Yulia Tymoshenko, the prime minister, who energised the crowds in 2004 but has since fallen out bitterly with Mr Yushchenko. The two front-runners will now face each other in a second round on February 7th.
Ukraine is as divided as ever, with the industrialised, Russian-speaking east and south backing Mr Yanukovich and the centre and west supporting Ms Tymoshenko. The only politician who did well all over the country was Serhiy Tyhypko, a former banker who ran and then quit Mr Yanukovich’s campaign in 2004. He fought the best campaign and took 13% of the vote despite, or more likely because of, being absent from politics in the past five years.
That an unpopular incumbent can be peacefully removed is an achievement of the orange revolution. Yet Ukraine’s free (and frequent) elections are providing neither good governance nor stability, which may explain the voters’ gloomy mood. “There was little room for hope, faith, love, hatred, commitment or passion in this election. These emotions were replaced by pity, inertia, tiredness, indifference and depression,” lamented Zerkalo Nedeli, a Ukrainian weekly.
After the drama of the orange revolution, disappointment was perhaps inevitable. But the orange camp’s failure to honour its promises has been breathtaking. It is often blamed on a trap set in 2004 by Mr Yushchenko’s foes, who pushed through a constitutional change to split executive power between the president and parliament. Yet that did not come into force until 15 months later. At the start of 2005 Mr Yushchenko had a free hand and a soaring approval rating. “He could have made any reforms: we would have supported him. But he wasted an opportunity,” laments a truck driver in western Ukraine.
Even Mr Yushchenko’s fans now say he was weak and had neither a plan of action nor strong advisers to push through reforms. He destroyed the bureaucratic machine of his predecessor, Leonid Kuchma, but put nothing in its place. Bandits went unpunished; business friends were rewarded with lucrative deals. After making Ms Tymoshenko prime minister, he promptly set about undermining her. In 2006, when Russia cut off the gas, he accepted a shady gas-trading scheme designed by his predecessors.
On the edge
The roots of Ukraine’s ills stretch far beyond Mr Yushchenko’s weakness or Ms Tymoshenko’s populism. The country lacks a strong elite or any experience of sovereignty. Apart from a brief period just after the Bolshevik Revolution, Ukraine has never been an independent country in modern times. It has spent most of its history under Russian, Polish or Austro-Hungarian rule. Its independence in 1991 only came out of the Soviet Union’s collapse. In his book “Unexpected Nation”, Andrew Wilson, a historian and analyst at the European Council on Foreign Relations, argues that it “arrived as much by accident as design.” And as in other parts of the former Soviet Union, independence initially brought neither economic liberalisation nor much change at the top.
In the late Soviet era, aspirations for Ukrainian independence were confined to a group of dissident writers and intellectuals. The popular appeal was weaker than the force of the KGB: as many as half of all political prisoners in the Soviet Union were from Ukraine. When the nationalist movement was allowed to resurface in the late 1980s, it was as much concerned with the revival of Ukrainian culture and language as with democracy or market reforms. Nationalists in effect struck a deal, under which the Communists conceded independence but were allowed to keep their power and assets.
Leonid Kravchuk, the last Communist boss, became Ukraine’s first national president in 1991 with no idea how to run an economy. “Ukraine fed the entire Soviet Union, and we thought that if we were on our own we would be rich. Nobody understood the market economy here,” he says. By 1993 hyperinflation had set in, and Ukraine suffered one of the sharpest drops in GDP of any country in peacetime. Unlike Russia and Poland, Ukraine did not have liberal economists in charge, but “a shifting kaleidoscope of clans, shadowy business and old nomenklatura interests,” says Mr Wilson. America and the West focused on ridding Ukraine of nuclear weapons and paid little attention to the economy. Left to their own devices, politicians built a rent-seeking, corporatist state.
Mr Kuchma, who was elected in 1994, at least managed to stabilise the economy. With Mr Yushchenko, first as head of the central bank and later as prime minister, he launched a currency in 1996 and set about privatisation. But reforms stalled and Ukraine slipped into a semi-authoritarian state. Mr Kuchma then overplayed his hand by trying to anoint Mr Yanukovich as his successor.
The orange revolution was not aimed personally at Mr Yanukovich but against the idea of transferring power like this. It was also a revolution against a kleptocratic system that held the country back, bullied opponents and had journalists killed. The Ukrainian middle class, tired of muddling through, trusted Mr Yushchenko to smash that system. But the “first real Ukrainian president”, as Mr Yushchenko called himself, was too backward-looking.
Instead of governing, he tried to boost national consciousness by promoting the Ukrainian language and trying to revise history. This did little for the Russian-speaking east, not to mention Crimea, which still has not been fully integrated into Ukraine (and which includes Sebastopol, host to Russia’s Black Sea Fleet until its lease runs out in 2017). Mr Yushchenko objected to Russia’s version of history, but he too was ideological. He insisted on calling the famine of 1932-33, a deliberate and horrendous extermination of peasants by Stalin, an act of genocide, when it affected the entire Soviet Union.
He said little of the dark pages in Ukraine’s own history, including collaboration with Nazi Germany and the role of the Ukrainian Auxiliary Police in administering the Holocaust. For instance, in Ivano Frankivsk, where some 100,000 Jews were killed, the authorities have put up a monument to 27 Ukrainian insurgents who were killed by the Nazis, but not even a plaque on the site of Jewish mass graves. Anti-Semitism is no longer rampant, but it is partly a failure to teach history that allows Nadia Mateiko, an art student in Kolomiya, to say of Ms Tymoshenko: “I don’t want this Jew to be the president of my country. It is not their land.” (Ms Tymoshenko is not even Jewish.)
History is of little comfort to poor people in western Ukraine, where remittances from illegal workers abroad are often a main source of income. Five years after the orange revolution, hopes for a dynamic and modern Ukraine remain just that. Some may now be invested in Mr Tyhypko, who refuses to back either front-runner. Ukrainians have to pick one of two familiar faces: Mr Yanukovich or Ms Tymoshenko. It is like a choice “between the plague and AIDS”, says Yulia Mostovaya, editor of Zerkalo Nedeli.
Mr Yanukovich has the flesh and blood of the clan system. Born into a poor working-class family in Donetsk, a coal-mining centre, he lost his parents early. By the age of 20 he had two convictions for violent crime. In the late 1990s he became governor of Donetsk and befriended Rinat Akhmetov, now Ukraine’s richest steel magnate. When the orange revolution began, Mr Yanukovich and his supporters brought in nasty-looking toughs from Donetsk to balance the orange crowd.
In the 2004 election Mr Yanukovich had the backing of Russia’s then president, Vladimir Putin, who rushed to congratulate him. The Kremlin might have expected a brutal dispersal of the crowd, but Mr Kuchma would not sanction the use of force. Even today Mr Yanukovich is unrepentant: “The rigging has not been proved. What happened in Ukraine would not have happened in any civilised country. It was not an election—it was a coup,” he complains. Despite a makeover by American political consultants, Mr Yanukovich has not shaken off his image of a thuggish, inarticulate man.
Yet his “pro-Russian candidate” label is misleading. He represents the Russian-speaking east, but has done little to advance Russia’s interests, instead jealously guarding those of such tycoons as Mr Akhmetov. What Mr Akhmetov wants is a politically and economically stable Ukraine. Yet some of Mr Yanukovich’s team do not inspire confidence. They include a former finance minister, Mykola Azarov, architect of the repressive tax inspectorate, as well as the creators of the opaque gas-trading scheme with Russia. Mr Yanukovich wants to renegotiate today’s gas agreement, which excludes shady intermediaries.
The gas princess
Even so, many businessmen worry more about the populist Ms Tymoshenko. In her early days she was known as the “gas princess”, having made money as boss of United Energy System, a gas intermediary that won lucrative contracts from Pavlo Lazarenko, a former prime minister who partly owned the company and was arrested and jailed in America in 1999 for money-laundering and fraud. But Ms Tymoshenko was not implicated and, as deputy prime minister in 1999, she used her knowledge to clean up the energy business. (For her pains, she was even put in prison for a few months.)
In 2004 her charisma and energy electrified the orange revolution, but as prime minister in 2005 she revealed a worrying populism, trying to regulate meat and petrol prices and advocating state control of the commanding heights of the economy. She also rattled some oligarchs by reversing the dodgy privatisation of a vast steel factory and reselling it for six times as much. But when she was fired, the orange coalition fell apart.
eyevine Power-hungry princess
Two years later, she came back as prime minister and managed to scrap RosUkrEnergo, the biggest and shadiest of the country’s gas intermediaries. But her government made little progress with other reforms. For this she blamed Mr Yushchenko, who vetoed many of her decisions. She then managed the feat of winning an IMF bail-out without fulfilling the fund’s demands to raise gas prices and cut public spending.
Viktor Pynzenyk, who resigned as finance minister last year after failing to stop a deliberately unrealistic budget, says that “the IMF money was not the cure but the hair of the dog.” In 2009, when the economy shrank by 15%, budgeted spending rose by 35%, he says. “The crisis gave us a chance to reform the economy and we wasted it.” Yet, by juggling figures and budgets, Ms Tymoshenko has managed to sustain much of her political support.
There are at least two reasons why she may win on February 7th despite lagging behind in the opinion polls. First, she is a much cleverer and more appealing politician than the inarticulate and slow-thinking Mr Yanukovich. (“Her profession is to speak and to lie beautifully and I can’t do it like her,” Mr Yanukovich admits.) Second, she seems more desperate for power than Mr Yanukovich, who enjoys hunting and tennis as much as politics. “Tymoshenko’s priority is to be in power at any cost. Principles are secondary,” says Mr Pynzenyk.
But that may also make her a riskier choice. She campaigned on the slogan of bashing the oligarchs and will have to make an example of some. But she has also been trying to reassure and pull to her side people like Mr Akhmetov and Viktor Pinchuk, another magnate. They may not want to jeopardise their wealth and safety by opposing her. The danger is that she will seek to maximise her power rather than push through reforms and strengthen the institutions that would then keep her ambitions in check.
She has certainly found a common language with Mr Putin, now Russia’s prime minister, who has said he could work with her. Her final three-hour long televised press conference before the election had a Putinesque tone. It is not hard to imagine her doing dodgy deals with Mr Putin in exchange for Russian help to keep her in power. Nor does she have many scruples about her allies. One is said to be Viktor Medvedchuk, Mr Kuchma’s notorious chief of staff, who is accused of harassing the media and bullying businessmen. Mr Medvedchuk, who asked Mr Putin to be a godfather to his child, is a welcome guest in the Kremlin.
Yet Ukraine is not Russia—and Ms Tymoshenko is not Mr Putin. She does not have a background in the security services. She faces regional divisions that make centralisation of power hard in Ukraine. Democratic forces are stronger and criticism from the West has more weight than in Russia. Moreover, low credit from the voters and the dire state of public finances mean that whoever wins the election will be constrained in what they can do.
Ukraine’s economy has been kept afloat by IMF money. But late last year the IMF suspended its programme because of ballooning public spending. Ukraine’s budget deficit stands at 12% of GDP and the country has no real way of financing it. Ukraine’s sovereign international debt is manageable, but its domestic obligations are not. Mr Pynzynek estimates that, by the spring, Ukraine will run out of cash to pay pensions and salaries. This may at last force squabbling politicians to act.
The winner on February 7th will need to raise heavily subsidised gas prices and cut public spending with a vengeance. He or she must trim red tape and hope that Ukrainian business pulls the country out of its hole. Ukraine may be tempted to ask Russia for help—and Russia may be tempted to grant it in order to secure more influence. After 18 years of independence the biggest threat to Ukraine is its inability to govern itself. The election is tight, and the country can ill afford another deadlock.