Ukraine After Kuchma

10 november 2004

Arkady Moshes is Program Director of the EU Eastern Neighborhood and Russia Research Program at the Finnish Institute of International Affairs.

Resume: Within the next five to ten years, Russia and Ukraine will have to decide whether their common border will be a conventional boundary connecting their peoples, or whether it will become a new frontier of a Europe divided. Ukraine and Russia will have to make a choice on their own – and then live with its consequences.

 

Judging by numerous publications in the Russian press, the contemporary political system of Ukraine is terra incognita in Russia: information about it is either inaccurate or deliberately distorted. Throughout Russian society, and even among the experts, there are widespread myths about the irreconcilable differences between nationalist-minded West Ukraine and Russian-dominated East Ukraine. The myths also describe the absolute power of oligarchs, and the split of the Ukrainian political elite into the pro- and anti-Russian factions. It is widely believed in Moscow that if the anti-Russian group comes to power in Ukraine, the relations between the two countries may sharply deteriorate.

 

However, today’s Ukraine is a far cry from this perception. Over the years since Leonid Kuchma came to power, there has emerged a new culture of political compromise which is unique for the post-Soviet space. This culture is projected on both the domestic and foreign policies of Ukraine. The polycentrism of the decision-making process has ensured stability and controllability of the state and involvement of broad sections of the elite in the political process. Furthermore, it has created conditions for Ukraine’s interaction with all of its external partners.

 

The next president of Ukraine will undoubtedly attempt to rebuild this mechanism and adapt it to the changing reality. These efforts will be prompted by both internal and external factors – changes in the alignment of political forces in Ukraine and the reduction of possibilities for conducting the so-called multivector policy on the international stage. The enlargement of the European Union has placed Ukraine in a dilemma: Should it integrate itself into Europe, while simultaneously cooperating with Russia, or vice versa. Ukraine’s choice will determine many things.

 

However, the basic elements of the existing system will not disappear for quite some time. And if Russia wants to pursue a mutually advantageous Ukrainian policy, rather than return to a contentious situation similar to the one of the 1990s, it must understand these factors and take them into account.

     

Checks and counterbalances

 

The stability of Ukraine rests on the inability of any political or economic force to assume dominant positions in the country. The diverse centers of force balance each other, causing the system to become somewhat inert. At the same time, this balance safeguards the country from sharp changes that could bring about the collapse of Ukrainian statehood, as well as its breakup. It is possible to single out several dimensions in Ukraine’s political life, each having its own parameters of compromise.

 

Eastern and Western Ukraine. The western and eastern regions of the country possess different orientations in their internal and foreign policies. However, the regional elites have achieved a mutual understanding: Eastern Ukraine exercises control over the economy, while Western Ukraine plays a significant role in defining the conceptual foundations of statehood, as well as conducting policies in the spheres of education, culture, and foreign affairs. Kiev has rather become a tool for projecting this modus operandi on the entire country, rather than just an independent actor with regards to both “halves” of Ukraine.

 

At the same time, within each region there is a relative, rather than absolute, domination of preferences in domestic and foreign policy (see the Table). This factor plays a significant role in achieving the compromise between the regions.

 

Ukraine has avoided serious ethnic conflicts, and it is now possible to speak about, although rather cautiously, the formation of a Ukrainian political nation. This is largely due to the fact that self-identification of the Russian-speaking part of the Ukrainian population has changed. The 2001 population census showed that the percentage of ethnic Russians living in Ukraine decreased from 22.1 to 17.3 (from 11.3 to 8.3 million people) since 1989. The last few years have been marked by the suspension of a policy for the rapid Ukrainization of public life. On the other hand, a new generation, which was largely educated at Ukrainian-language schools, now participates in active political life. These two factors have reduced the fears of language discrimination in East Ukraine. The ratification by the Verkhovna Rada (parliament) in May 2003 of the European Charter for Regional or Minority Languages, which has given the Russian language the status of a minority language, passed almost unnoticed in the country.

 

Ideologies and parties. Since the onset of Ukrainian independence, not a single ideology – leftist, national-democratic or liberal – has enjoyed support from a majority of the voters. None of the previously dominant political parties has any hope that it could rule Ukraine by itself. As a result, the left and the national-democrats gradually lost popular support. In the autumn of 2004, the ratings of the leaders of the Communist and Socialist parties stood at about six percent each – a very small figure for a country with acute social problems.

 

Following a series of splits, the nationalist Rukh movement, which was a very influential political force in the early 1990s, has lost all chances to independently enter the parliament. Thus, it has been forced to join the “Our Ukraine” coalition, headed by ex-prime minister Victor Yushchenko. Ideological parties have been replaced by various kinds of associations set up for specific leaders. Some of these associations uphold political platforms, but most of them pursue the specific economic interests of one or another financial and industrial group. Different organizations played the role of an ‘official’ party of power at different times, but efforts to bring their leaders together have never been successful.

 

 

The “For United Ukraine!” coalition, which represented the authorities at the 2002 parliamentary elections, broke up into eight factions just a few months later, since different ruling groups clearly understood the differences between their interests. At the same time, the factions have been used as an instrument for coordinating these interests, and this factor paradoxically strengthens the multi-party system in the country.

 

The role of parties and quasi-party entities will grow starting in 2006 when Ukraine introduces the proportional representation system in elections to Verkhovna Rada and local legislatures. The move will deny political and economic groups the possibility to have representation in parliament via deputies elected from single-mandate constituencies. The low, three-percent threshold for being elected into the parliament, guarantees the preservation of a large number of factions in the Verkhovna Rada.

 

Oligarchs and society. The contemporary political scene in Ukraine is usually associated with all-powerful oligarchs. This perception is largely true. In Russia, the best-known are the Donetsk, Dnipropetrovsk and Kyiv clans of Ukraine. The first two groups are not internally united. Other groups that have a strong influence on Ukrainian politics are seated in Kharkiv, Zaporizhia and other areas.

 

After the 2002 parliamentary elections, the political role of the oligarchs received a formal embodiment. The Donetsk clan, in the person of Victor Yanukovich, won the post of prime minister; the Dnipropetrovsk clan (Sergei Tigipko) – the post of Central Bank CEO; and the Kyiv clan (Victor Medvedchuk) – the post of presidential chief of staff. The Yanukovich Cabinet is formed on the quota principle and represents, in one way or another, a majority of the groups. Oligarchic structures have obtained posts at all levels of power – central, gubernatorial and municipal – which keeps them interested in preserving the present governance system.

 

The mechanism of coordinating the interests of the Ukrainian oligarchs has two important features. First, the role of an arbiter in settling conflicts between them has been played by President Leonid Kuchma. Without him, these conflicts may become aggravated and the system may be destabilized. Second, large groups in Ukraine do not seek to destroy the small groups, but coexist with them. This approach allows the opposition to preserve its financial base. On the other hand, it enables the ruling oligarchs to enter into situational coalitions with the opposition – and not only in business – and to have certain guarantees in case they themselves decide to join the opposition.

 

For all their individual and aggregate power, the Ukrainian oligarchs are not at all omnipotent – either with regard to the state or society. The latter circumstance is particularly important. The oligarchs have the power to manipulate public sentiments (by means of media outlets they control or using their financial and administrative resources), yet they have been unable to ensure the legitimization of a transfer of key political functions to themselves. Their major setback was the failure of an attempt, made in the winter of 2003-2004, to abolish direct presidential elections and delegate the right to elect a president to parliament. Ukrainian society strongly protested against such a move.

 

Authorities and the opposition. Ukraine has a culture of a powerful and occasionally effective opposition, although it has never been a cohesive unit. In different compositions and at different times, the opposition managed to achieve its main goal – to prevent the concentration of power in the hands of the president and the Cabinet. There is no antagonism between a majority of pro-government politicians and those in the opposition, because the latter always includes a large number of ex- (and possibly future) functionaries. Therefore, there has been no war of annihilation, except for the prosecution of ex-prime minister Pavel Lazarenko and opposition leader Yulia Timoshenko. The return of ex-president Leonid Kravchuk to active politics in the late 1990s marked, perhaps, a turning point. Kravchuk, believed to be an eternal rival of Kuchma, later took a prominent place in the ruling camp.

 

In the parliament elected in 2002 the opposition was offered chief posts at the key committees on budget and finance, on European integration, and several other important functions. Later, the pro-presidential majority made no attempts to wrest these committees from the opposition’s control, even when the majority could have easily done that. As a result, the fear of going into opposition is now characteristic of an absolute minority of Ukrainian groups and directly depends on the extent to which the economic might of a group is linked with the big business or with control over budgetary flows and corruption schemes.

 

Executive power and parliament. The Verkhovna Rada plays a major role in balancing the political system of the country and observing constitutional norms. The need to act through parliament in most cases and to form a majority (in this case, it is not very important that this is often done by bribery or by pressure on the deputies) protects the Ukrainian political process from radical moves by the executive branch. The speaker, as well as the vice speakers of the Verkhovna Rada are very influential political figures in the country. Paradoxically, for all the differences between the political forces represented in the Ukrainian parliament, it is characterized by corporate unity. Despite the pro-presidential majority in the Verkhovna Rada, the Public Prosecutor’s Office has failed to convince parliament to strip Yulia Timoshenko of deputy’s immunity, although President Kuchma’s personal interest in her criminal prosecution was an open secret.

 

In September 2004, 425 of 450 deputies voted for the formation of a special commission to probe into the attempted poisoning of opposition presidential candidate Victor Yushchenko. The deputies’ corporate behavior can partly be explained by Kuchma’s openly hostile attitude to Verkhovna Rada. But on the whole, this phenomenon can hardly be attributed simply to a desire to pose as an anti-presidential Fronde.

 

Growth of Russian influence and its limits

 

Kuchma’s second presidential term was marked by the solution of the most acute problems that had accumulated in Ukrainian-Russian relations since the 1990s. These included Ukraine’s debt for Russian gas supplies and payment for current supplies. The parties took the edge off their diverging perception of the humanitarian agenda and solved some of the problems caused by the introduction of an effective border-control regime. The ratification of the agreement on a Single Economic Space lowered the volume of Ukraine’s opposition to Russia’s integration projects in the CIS. The leaders of the two countries stepped up their contacts. The relations between the two countries were relieved of former political conflicts, and even nationalist and/or pro-Western political forces inside Ukraine no longer see any sense in playing the card of opposition to Russia.

 

Russia’s influence on Ukraine’s politics and economy has increased. According to a poll conducted by experts at the Kyiv’s Center of Peace, Conversion and Foreign Policy in the autumn of 2003, Russia had the greatest influence on Ukraine among all foreign actors (89.4 percent of those polled; the respondents were allowed to give three different answers. The United States received 73.6 percent; the European Union, 36.8 percent; the International Monetary Fund, 31.5 percent; NATO, 28.9 percent; and the United Nations and the Organization for Security and Cooperation in Europe, 2.6 percent each). According to Ukrainian figures, Russian capital – although Russian companies can be considered conduits of Russian influence only with large reservations – has received control over 83 percent of assets in the Ukrainian oil-refining industry, 66.7 percent in non-ferrous metallurgy (90 percent in aluminum production), 36 percent in energy distribution, 33 percent in machine-building and banking, 20 percent in ferrous metallurgy, and about 20 percent in the gas industry.

 

The increased Russian presence and influence in Ukraine is due to several reasons. First, it was clear already in 1999 that the European Union’s extension to the Ukrainian borders would not encourage Western companies to invest in the Ukrainian economy. This was due to corruption in Ukraine and because the business environment in Central Europe was much more favorable. Russia, on the contrary, was ready to play according to the familiar post-Soviet rules. Kyiv saw that Russia provided the only chance for saving many of its industries. In 2003-2004, the European Union’s decision not to grant Ukraine prospective EU membership placed a more general contextual foundation under this factor.

 

Second, Ukraine has failed to implement alternative projects in the CIS (specifically within the framework of GUUAM, an organization uniting Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova), to create an operative axes with its Central European neighbors, and to secure for itself the transit of energy resources from the Caspian region.

 

Third, the Ukrainian economic elites and the governments of Victor Yushchenko, Anatoly Kinakh and Victor Yanukovich, which represented their interests, were ready to assume a more pragmatic posture, thus, Russians were allowed into industries where the Ukrainians could not establish profitable control. Finally, political factors took effect as well, namely the aggravation of relations between Kyiv and the West following the ‘cassette scandal,’ and the growth of suspicions in the West that Ukraine was engaged in an illegal arms trade.

 

The effect of the first three factors will continue in the foreseeable future, as will the present pragmatic model of the two countries’ interaction. This is also because the Ukrainian industrialists have received easier access to Russian markets and that from 2005 their production costs will decrease after Russia stops levying VAT on energy resources exported to Ukraine. All these moves would hardly have been possible without a general compromise between the two countries. At the same time, any attempts by Russia to revise the pragmatic model of cooperation would run into opposition from Ukraine. Russia has already been repeatedly debarred from the acquisition of new property in key industries (Ukraine’s decision to deny Russia’s Severstal steel company permission to participate in a tender for the Krivorozhstal steel plant in Krivoy Rog, the establishment of a National Energy Company of Ukraine to block the penetration of Russia’s Unified Energy Systems into the country, the complete change of the concept of a gas transport consortium, orienting it to the construction of new pipelines rather than the management of the existing ones, and so on). Games intended to obtain political concessions would evoke even more resistance. Moscow’s attempt to conduct a fait accompli policy with regard to the disputed Tuzla Island in the Kerch Strait in the autumn of 2003 resulted in the appearance of the Ukrainian coastguard in the strait. It also resurrected the issue of Russian territorial claims to the top of Ukraine’s security policy agenda.

 

Presently, the self-perception of the Ukrainian elites again tends to become more independent of the Russian factor. Ukrainian oligarchs are very rich – the wealth of Rinat Akhmetov, the leader of the Donetsk group, is estimated by the Polish magazine Wprost at U.S. $3.5 billion, and that of Kuchma’s son-in-law Victor Pinchuk at U.S. $2.5 billion, and these are not the only billionaires in Ukraine. It is important to note that the Ukrainian oligarchs have not earned their money by trading Russian gas. As regards the political leadership, the sending of Ukrainian troops to Iraq, together with Kuchma’s decision not to participate in the 2004 presidential elections, has allowed Kyiv to restore normal working relations with the West.

 

The issue of Russia’s role in Ukraine’s domestic policy occupies a special place in their bilateral relations. The popularity of the Russian president among the Ukrainian population (largely because of his image of a fighter against oligarchs) has enabled Russia to regain the status of a major actor, which it lost in 1999 when Kuchma, seeking re-election, used a scenario where he would qualify for a run-off election together with a Communist candidate and would not play on East Ukraine’s opposition to West Ukraine. Today, both experts and politicians admit that without Moscow’s support – and the personal support of the Russian president – it would be very difficult to win elections in Ukraine. Furthermore, good relations with the Kremlin are an important resource in the hands of a candidate.

 

However, the real political process offers examples of opposite scenarios, as well. The 2002 parliamentary elections by party lists were won by “Our Ukraine,” although Russia had unambiguously supported the pro-presidential “For United Ukraine!” bloc, the Communists and the United Social Democratic Party, whose platforms were considered the more acceptable to Russia then. Besides, Russia’s support is difficult to estimate quantitatively – in percent and in votes. However, perhaps this support is not that essential. For example, the audience of Russian electronic media, and the confidence that is placed in them, are not rated high – 15 and 9 percent, respectively, for Channel One of Russian television; 11 and 7 percent for NTV; for the other television channels, the number drops to 5 percent and lower.

     

Gravitation toward Europe and prospects for NATO membership

 

Interestingly, Ukraine is experiencing a growing reliance on the European Union, as well. The idea of Ukraine’s accession to the EU is very popular among the Ukrainian population. According to numerous public opinion polls, up to 60 percent of those polled favor Ukraine’s EU membership, with only 20 percent against. This perception is based rather on an irrational desire to be part of “rich Europe” as opposed to understanding what is actually involved in the painful integration process. On the other hand, millions of Ukrainians have in the last decade gained useful experience while working in the West, or they have seen the results of economic reforms in Poland, and are now making a deliberate choice.

 

Ukraine’s economic elites argue that the European market is much more promising than Russia’s. The EU, even before its enlargement, became Ukraine’s major export partner. During the period 2000-2003, EU-Ukrainian trade increased by 16-18 percent a year and this gave Ukraine a favorable trade balance. The enlarged EU will, apparently, gradually replace Russia as Ukraine’s main trading partner. Joining the EU has been repeatedly proclaimed by the Ukrainian president as Ukraine’s major objective.

 

However, Europe’s persistent unwillingness to view Ukraine as a prospective EU member causes Kyiv to think of alternative variants for its integration with the West. NATO membership is popular among a minority of Ukrainians (30-32 percent favor joining NATO, while 45-47 percent are against). Moreover, the attitude to the Atlantic Alliance changed for the worse in Ukraine following the operation in Kosovo and later in Iraq. At the same time, the Ukrainian leadership feels free enough from public opinion on this issue. The negative perception of NATO is not transformed into political support of forces that include opposition to NATO in their political platforms.

 

The Ukrainian elites have a very positive perception of NATO. First, Ukraine needs external guarantees for its territorial integrity. Second, unlike the EU, NATO proclaims an open- door policy. Third, since cooperation with NATO is largely determined by geopolitical considerations, it is believed that joining NATO would not require a complete political transformation in the country. Fourth, Ukraine’s large-scale practical cooperation with NATO has turned a large part of the military establishment, and most of the Ukrainian military officers, into advocates of NATO membership. There may remain certain doubts among defense industry CEOs; however, since this industry has survived due to exports rather than sales on the domestic market, and since the accession of Central Europe to NATO has not had a negative effect on defense enterprises there, these doubts have not grown into an outright rejection.

At the same time, Kyiv understands that integration into NATO would bring fewer benefits than integration into the EU. Besides, Russia’s negative reaction to Ukraine’s joining NATO is easily predictable. Hence the inconsistency of Kyiv’s political statements, which was obvious even before the elections. Yet, Ukraine’s practical policy has in the last few years been unequivocally aimed at closer interaction with NATO. Among the most important events of recent years was the May 2002 decision of Ukraine’s National Security and Defense Council for joining NATO in the future, the March 2004 Memorandum on Mutual Understanding which granted NATO the right of quick access to the territory of Ukraine, and the June 2004 summit session of the Ukraine-NATO Commission. Also, Ukraine insists on its participation in NATO’s Membership Action Plan.

 

Individual “sensational” moves, such as the withdrawal in August 2004 of provisions on accession to the EU and NATO from Ukraine’s military doctrine in the future, even if these moves could be taken out of the pre-election context, do not exceed the frameworks of diplomatic games. Kyiv has sent a signal to Brussels about its possible drift toward Russia, just as it did five to seven years ago when Ukrainian-Russian relations were strained; it threatened Moscow with a possible drift to the West. Whether or not Ukraine gives up its emphasis on Euro-Atlantic integration will be known only after the elections. So far, this option seems unlikely.

 

Conclusion

 

Today’s Ukraine is a complex phenomenon. It does not deserve an oversimplified perception and, the more so, primitive methods of influence, like those that were used, unfortunately, by external actors in the 2004 elections. Ukraine can be effectively influenced only if one respects its realities.

Regardless of who wins the elections, Russia should pursue a well-balanced policy toward Ukraine and avoid falling into euphoria or pinning labels. It must always remember that Ukraine is not just a strategically important country but also a friendly nation, and that now, unlike in the early 1990s, the Ukrainian people and leadership can depart from this position only if Russia itself provokes them to do that.

 

Still, the two countries will have to give an answer to the main, and therefore most painful, question. Within the next five to ten years, at most, Russia and Ukraine will have to decide whether their common border will be a conventional boundary connecting their peoples, or whether it will become a new frontier of a Europe divided. Ukraine and Russia will have to make a choice on their own – and then live with its consequences.

Last updated 10 november 2004, 12:07

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