A Paralyzed Ukraine

Ukrainian political elites are keep failing permanently, no matter whether they are blue or orange. The Orange Revolution of 2004 was a missed opportunity, one that will never return. Ukrainian citizens have stopped believing in the possibility of change and they have stopped trusting their politicians. They do not believe that politics can be about anything other than money anymore. Ukrainian leaders do not know what to do with their own country. What should Ukraine look like in ten or twenty years? They do not care; they are defending the present. They do not compete for votes, but they are locked in a deadly struggle for unlimited power and for the destruction of their political opponents.

The Ukrainian Parliament resembles a pub, in which a good punch carries more weight than reason does. Anyone who wants to become a Member of Parliament must be wealthy enough to purchase an electable spot on the ballot of the right political party. Notwithstanding the fact that he has to have basic boxing skills in order to survive the term in office without loss of life and limb. Yet there is a huge demand for seats in Parliament, because no business in Ukraine can survive without political cover. The national and the regional parliaments are brimming with entrepreneurs, not politicians. Success or failure is determined by connections to the powerful, not by laws or regulations. Nothing is sacred, which is why nothing works, with the exception of the presidential administration, oligarchic groups, regional mafias, and the ever-present corruption.

Two unrealistic options for change

The biggest illusion in Ukrainian politics of today is the expectation that the political infighting can actually produce a winner. It cannot, because Ukraine is cursed by its regional divisions. At the same time, the regional structure dividing the political and economic landscape is the only working form of pluralism in Ukraine, and it is for this reason that the developments of the last twenty years did not go the way of Belarus. However, neither the blue East nor the orange West can govern the country long-term. Twenty years of Ukrainian politics has exposed its iron logic: both camps regularly take turns in power. The red-orange Leonid Kravchuk was in power for less than three years (1992–1994), the red-blue Leonid Kuchma for ten (1994–2004), the orange Viktor Yushchenko for five (2005–2010), and the blue Viktor Yanukovych (since 2010) has certainly not come to sit on the presidential chair for just two years.

The biggest illusion of orange politics in Ukraine is the belief that it is possible to rule from Kiev against the interests of about 70% of the country’s GDP producers, situated in the six blue eastern regions. The biggest illusion of blue politics, on the other hand, is in believing that it can score a complete political victory over the orange West. Ukraine is split into two parts and two main political camps, which are mutually exclusive. Time stood still in Ukraine for twenty years because a political victory over its entire territory is impossible. The winner of the national election who sits in Kiev has no guarantee that he will have power in Uzhgorod or Luhansk.

There are two options for change. The first requires that political color in Ukraine be decoupled from its regional affiliations. Blue would have to stop being synonymous with the East and orange with the West. Unfortunately, a politician with a platform capable of bringing together the East and the West has not come forthcyet. And as long as the oligarchs and the regional mafias hold on to their dominant positions in the country’s informal political system, he won’t.

Nothing even remotely hints at such a possibility. Viktor Baloga, the regional baron of the Zakarpattia Oblast, exemplifies the problem very well. He was the chief of staff for the orange president Viktor Yushchenko, and now he is a cabinet member of the blue president Viktor Yanukovych. Viktor Baloga will be a part of every Ukrainian government as long as he remains the baron of Zakarpattia Oblast. His political affiliation is not important; what is important is that he rules the region. In Ukraine, that constitutes a higher qualification for a position of power than the political platform of some party.

Oligarchs and regional barons are not elected people, after twenty years, they are simply an inseparable part of Ukraine’s power system, finito la commedia. Dmytro Firtash had state-backed investments in gas and electricity during Yushchenko’s administration, and he continues to have them during Yanukovych’s. Petro Poroshenko was one of the leaders of the Orange Revolution, however, he is a minister in the blue government now. The influence of people like Baloga, Firtash, Poroshenko, and many others is a common denominator of Ukrainian politics and economics, regardless of which color is in power. They are unimpeachable—that is not elected—which is why elections in Ukraine are practically meaningless.

The second option for Ukraine is a “great blue-orange coalition”. Is it a chimera? Definitely, at the moment. Unfortunately, this chimera is the only scenario in which Ukraine could pull out of its current political morass. But no one is thinking about such a possibility, because it is way outside the current political norms and it goes even beyond the wildest dreams of Ukrainian politicians. The common denominator of the twenty lost years in Ukraine is the political elites’ exemplary inability to come to an agreement. Ukrainians not only refuse to agree amongst themselves, but they are also unable to reach any agreements with their outside partners, Russia and the EU. In short, Ukrainians cannot come to terms with anyone.

Sloppy deal with Russia

Neither Yanukovych nor Tymoshenko has been able to deal with Russia. Yanukovych rightfully criticizes Tymoshenko for her disastrous natural gas deal made with Russia in January 2009. Ukraine pays the highest price for natural gas, about USD 520 per thousand cubic meters, while the average price paid by Gazprom’s European customers is around USD 300. Moreover, the agreement binds Ukraine to purchase fifty-two billion cubic meters of natural gas from Russia, while its actual need is around twenty-seven billion. The agreement also contains a “take or pay” clause, which means that Ukraine must pay even for the natural gas it does not take. Finally, the deal prevents Ukraine from re-exporting the gas. In other words, thanks to Tymoshenko’s deal, Ukraine overpays Russia by about a billion dollars a year. Unless the deal is changed, Ukraine will be paying this big baksheesh to Russia until 2019. Is ten billion dollars a small or a large loss for the country’s budget? Whatever the answer may be, the money will come from the Ukrainian taxpayers, since Naftogaz is a state-owned company. While we can question whether it is legal that Tymoshenko has ended up in prison for signing that deal, there is no doubt that this deal is bad for Ukraine.

Yanukovych has done no better with the Russians. They are not interested in changing the gas deal—it suits them just fine. The onceand- future president of Russia, Vladimir Putin, clearly outlined the conditions for any possibility of changing the deal: Ukraine would have to abandon the EU integration process, not sign the Association Agreement, and instead become a member of the customs union formed by Russia, Belarus, and Kazakhstan.

Yanukovych had his chance to reach an agreement with Russia, but he did not take it. In April 2010, two months after he took office, he signed the so-called Kharkiv Accords. Ukraine agreed to extend Russia’s lease on the port of Sevastopol, used as the naval base of the Black Sea fleet, until 2042; the original lease was set to expire in 2017. In exchange the Russians guaranteed Ukraine a 30% discount on the price of gas until 2020. All of this took place in April 2010!

However, Yanukovych’s gas deal turned out to be so sloppy that the 30% discount agreed on in Kharkiv in 2010 does not protect Ukraine from paying the highest gas prices of all the European customers of Gazprom today. So what did Russians give up to get the 25-year lease extension on their naval base facilities in Sevastopol? Yanukovych can criticize Tymoshenko for the gas deal of January 2009, but his April 2010 deal is no better. How is that even possible? Why can neither the blue nor the orange Ukrainians reach an agreement with Russia—a good agreement?

No agreement with the EU

But then, Ukrainians can not reach an agreement with the EU either. Tymoshenko has not been able to reach a deal with the EU, and neither has Yanukovych. In 2004, in an effort to support the reforms following the Orange Revolution and as part of its European Neighborhood Policy, EU proposed the Joint EU-Ukraine Action Plan (expanded in 2005). In 2007 the negotiations began toward an Association Agreement, which would also include a Free Trade Agreement. Unfortunately, the conflicts between President Yushchenko and Prime Minister Tymoshenko paralyzed the political life of the country to such an extent that there was no time left for reforms.

Tymoshenko’s government did not take a single step toward reforming Ukraine’s gas industry, even though it had committed to such reforms in a joint declaration with the EU in March 2009. According to statements made by the representatives of the European Commission, who were in charge of EU-Ukraine relations at the time, trying to work with Tymoshenko’s government was even more difficult than working with the various governments of Kuchma’s era (author’s personal interviews). Tymoshenko may present an alternative to Yanukovych in terms of domestic policy, but in 2007-2009 she showed that she is not the better candidate for arranging an agreement between the EU and Ukraine. At a critical time Tymoshenko, put her own political and entrepreneurial ambitions ahead of reforms in her country and ahead of an agreement with the EU.

Yanukovych has done no better in his dealings with the EU. In October 2011, his government finished the Association Agreement negotiations. The EU refused to sign the agreement or to begin the ratification process because of suspicions that the trials of the former Prime Minister Tymoshenko and another twenty or so highranking officials of the orange government were politically motivated and did not conform to fair trial standards.

Tymoshenko was sentenced to seven years in prison on charges of abuse of office for signing the natural gas agreement with Russia in January 2009. The agreement is indeed bad, but it does not mean that Tymoshenko does not have the right to due process. The judge who convicted her, Rodion Kireyev, is still in his probationary period. According to the Ukrainian constitution, the parliament has to confirm all judges entering their first five-year probationary term. Since the Tymoshenko case has a clear political context, the judge should certainly not be beholden to a parliamentary majority, which during the course of the trial and to this day belongs to Yanukovych’s party, the Party of Regions.

In response to criticism of the handling of the Tymoshenko case by the leaders of EU member countries, which included threats to boycott the European Soccer Championship, president Yanukovych declared that Ukraine would not let itself be humiliated. Speaking to the European Parliament on May 16th 2012 Prime Minister Mykola Azarov suggested that the entire case is a Russo-German plot with the goal of achieving Ukraine’s international isolation. Maybe he’s right. That does not change the fact that president Yanukovych does not understand European attitudes, is unable to reach an agreement with the EU, and has brought his country to international isolation.

The president’s family

The parliamentary elections in October 2012 will not provide a way out, because in its current state, Ukrainian politics has no way out. Changing people in political posts or changes in the makeup of the parliament will not bring about a regime change. Oligarchs and regional barons are not elected and they will continue to be in power. After all, the formation of the government does not depend on the results of parliamentary elections, but falls to the president. Yanukovych is the only one who can defeat himself, if he ends up believing that he can be “like Putin” and Ukraine can be “like Russia”. After two years of his government, there are emerging signs that this is the case.

In 2011 a new factor surfaced in Ukrainian political life—“the president’s family”. His oldest son Alexander, a dentist by training, became the director of a bank with the highest economic growth of all Ukrainian banks in 2011, a staggering 1800%. People close to Yanukovych, Sr., and Yanukovych, Jr., have become directors of the Security Service of Ukraine (SBU), the State Tax Service, the Ministry of the Interior, and the National Bank.

The demotion of Andriy Klyuyev from Vice Prime Minister to Secretary of the National Security and Defense Council of Ukraine attests to the worsening relationship between the president and the “old Don group” (Akhmetov, the Klyuyev brothers, Kolesnikov, Taruta, and others), which helped get him elected. The personnel changes instituted over the last few months were aimed specifically against them. The naming of Valeriy Khoroshkovsky to the post of Vice Prime Minister instead of Andriy Klyuyev strengthened the position of the group surrounding Dmytro Firtash and Serhiy Levochkin, connected to the infamous gas company RosUkrEnergo. When Yanukovych comes to believe that he can reallocate the influence of power in favor of his family and other oligarchic groups at the expense of the power and influence of the “old Don group”, it will be the beginning of his political undoing. Perhaps it has already begun. Ukraine, after all, is not Russia.