10.11.2004
Ukraine After Kuchma
№4 2004 October/December
Arkady Moshes

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

 

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.