by Adrian Karatnycky

It has become conventional wisdom for political observers to focus on Ukraine’s raucous politics (three elections, five separate votes, and a stream of mass demonstrations since November 2004) and to conclude that the country is politically unstable.

Yet what on the surface appears to be instability is really an orderly process of political contestation. Moreover, despite heated campaign rhetoric, Ukraine’s political environment is increasingly characterized by the emergence of a broad consensus among the major political parties on the imperatives of promoting pro-growth economic policies, maintaining budgetary discipline, and integrating the country into Europe. As importantly, in the aftermath of the Orange Revolution of late 2004, Ukraine’s political evolution has seen a deepening of democratic values among its citizens and the manifestation of increased influence of business, civil society, and independent media on political life.

ELECTIONS AND A NEW LEGISLATIVE MAJORITY

Nothing underscores this reality more convincingly than the country’s recent national legislative elections. On September 30th, Ukraine held elections to its parliament, the Rada. A voter turnout of nearly 58 percent indicated a high degree of engagement in the second legislative election the country has seen in the last 19 months. The electorate gave a slender three-vote majority to the two parties which helped lead the Orange Revolution. On December 18th, they voted in a new government headed by Yulia Tymoshenko.

While the ruling Party of Regions, led by Prime Minister Viktor Yanukovych, received 8.0 million votes (34.37% of votes cast) and won 175 seats in the Rada, the “Orange” Yulia Tymoshenko Bloc (BYUT) with nearly 7.2 million votes (30.71%) and the Orange pro-presidential bloc Our Ukraine, with 3.3 million votes (14.15%), won 156 and 72 legislative seats respectively — representing a potential ruling majority of 228 out of 450 seats. The Communist Party received 1.26 million votes (5.39%) and won 27 seats and the Lytvyn Bloc, a centrist grouping with 930,000 votes (3.97%) won 20 seats in the new legislature.

On November 29th, two months after the vote, an Orange Coalition was announced and formally constituted in parliament. It consists of 227 deputies from the Our Ukraine bloc and BYUT (one newly-elected deputy from Our Ukraine did not sign on to the coalition agreement). While the new coalition has a very small majority in the 450-seat parliament, its formation took weeks and was impeded by rivalries between the BYUT and Our Ukraine camps. Some observers attributed the protracted coalition discussions to indecision within Our Ukraine, yet in fact it was primarily policy differences which created difficulties in shaping a majority coalition.

HEATED RHETORIC

In the run-up to the election, BYUT - like many other political parties - had made extravagant and potentially budget-busting campaign promises, including the return to citizens of over $ 25 billion in savings lost in the collapse of the Soviet Union. BYUT’s commitment to the immediate abolition of the military draft, while highly popular, would also result in budgetary expenditures of additional billions of dollars. Moreover, BYUT opposed the lifting of a moratorium on the sale of land.

These positions put the bloc at odds with President Yushchenko and with the economically liberal wing of Our Ukraine, whose stalwarts include former Prime Minister Yuri Yekhanurov.

If BYUT’s election campaign featured some populist promises, the opposition Party of Regions campaigned demagogically by focusing on highly polarizing issues such as the designation of Russian as the second state language, and by expressing unremitting opposition to Ukraine’s membership in NATO. Regions’ cultural and foreign policy positions put the party at odds with both Our Ukraine and BYUT, while the Region Party’s views on tax cuts and deregulation were more in line with the views of the liberal leaning Our Ukraine.

MODERATING POLITICAL TRENDS

Despite what appeared to be sharp differences on key domestic or foreign policy issues among the three major parties during the election campaign, the post-election period showed the broad trend in Ukrainian politics is movement toward the pragmatic center.

First, there are indications that Ms. Tymoshenko is ready to significantly modify her economically extravagant promises and to position herself as a traditional politician of the center-right. Second, there are signs that economic liberals and major business groups within the Party of Regions are asserting their dominance in the party’s leadership structures and ensuring its commitment to Ukraine’s integration into Europe and the West. Third, President Yushchenko, who enjoys significant executive powers, and the Our Ukraine party represent a force that is committed to political moderation.

There are a number of objective factors for the emergence of these moderating trends. First, the high levels of growth registered by the Ukrainian economy in the last eight years have made it clear that less government interference is a strong stimulus to growth. Second, rapid economic growth has created powerful business interests that are strongly represented in all the major political parties. Third, the emergence of a growing entrepreneurial and professional middle class has given impetus to interests that support business-friendly tax policies.

A final factor is the stabilizing role of Ukraine’s President Viktor Yushchenko. Although he came to power as a result of the Orange Revolution, President Yushchenko has attempted to govern by working to shape national consensus on issues of culture, European integration, and moderate market-friendly policies.

At times such efforts have been seen as displaying a lack of commitment to some of the more radical aspirations of the Orange Revolution. But there can be no doubt of the Ukrainian president’s consistent commitment to working for national unity and for the bridging of the political divide between Ukraine’s geographical East and West.

Because the election results mean that the ruling majority cannot be formed without the participation of two of the three main parties, and with a BYUT-Regions coalition unlikely, the pro-presidential Our Ukraine is likely to be a crucial partner in any ruling coalition. Given its centrist inclinations, such an outcome means that the business sector can count on moderate, pro-growth and fiscally responsible government policies.

WHAT THE FUTURE HOLDS

Notwithstanding the contentious election-time rhetoric that emphasized differences among the major political forces, and which is typical of many competitive democratic elections, on the key issues of economic policy and Ukraine’s European future, the elections showed a narrowing of differences among the major parties, and the near disappearance of support for leftist-statist and radical nationalist parties.

The Party of Regions has been headed by Prime Minister Viktor Yanukovych (whose government tendered its resignation in late November), but is heavily influenced by Donetsk businessman Rinat Akhmetov. Ukraine’s richest man, Akhmetov is owner of a vast holding company, System Capital Management, and has a net worth of over $15 billion. Analysis of the Regions party’s new deputies indicates that Akhmetov has retained predominant influence inside the parliamentary group. His closest ally Borys Kolesnikov, another businessman, served as the party’s campaign director, and a wide array of Akhmetov associates and stalwarts are represented in the Regions’ party list. Within the Regions party, Akhmetov and his allies are believed to seek compromise and cooperation with President Yushchenko, and regard ongoing political struggle as harmful to Ukraine’s further economic growth. In an interview with the Ukrainian Pravda website, Kolesnikov declared that the Regions party adhered to liberal (i.e. free market) approaches.

The centrist Our Ukraine-People’s Self-Defense bloc has historically supported entry into the European Union and NATO and has traditionally presented itself as a party that promotes the interests of entrepreneurs and small business. At the same time, Our Ukraine’s list also includes a number of business leaders, including several associated with the Dnipropetrovsk region’s powerful Pryvat Group.

When it made its surprisingly strong showing in March 2006 legislative elections, the Yulia Tymoshenko Bloc positioned itself as a party of the European left. This year BYUT has shifted its political orientation, declaring its allegiance to the politics of Europe’s centrist and conservative People’s Party movement. While People’s parties in Europe represent a spectrum from the political right to the center left, they eschew socialist approaches in favor of market mechanisms. In addition, her bloc has benefited from the influx of the staunchly free-market oriented Reform and Order party, whose liberal economic views are influencing the bloc’s platform. Moreover, the country’s new minister of finance is now Viktor Pynzenyk, an economic liberal well known for his strong commitment to budgetary discipline. And like Regions and Our Ukraine, BYUT’s parliamentary bloc includes a significant number of wealthy businesspeople and bankers, most of whom espouse free market principles and economic reform.

Tymoshenko’s shift to the right positions her bloc as a center-right conservative grouping. While retaining some populist rhetoric and railing at corrupt oligarchs, by emphasizing her movement’s affinity with Europe’s center-right Ms. Tymoshenko has sent a clear signal that she is distancing herself from the market interventionist statements that characterized her brief tenure as Prime Minister.

Pro-business and pro-market lobbies are strong in the three major parties, all of which rely heavily on the financial support of major business leaders. Some critics believe the influence of business on political parties poses a threat to Ukraine’s democratic future.

But in the last several years, the influence of business has steered political parties away from outright confrontation, away from the concentration of power in the hands of a single leader, and toward market-oriented policies and solutions, all of which have contributed to Ukraine’s steady economic growth and democratic development.

In the coming months, an Orange government under the leadership of Ms. Tymoshenko is likely to pursue a moderate economic and foreign policy course. After several years of political tumult, Ukraine’s politics are at last likely to resemble the characteristics of its dynamic private sector, where stability, competence, growth, and consolidation have predominated.

 

Adrian Karatnycky is a Senior Fellow at the Atlantic Council of the US and President of Magisters USA.

 

URL of this article online: http://magisters.com/insight/2007-1/after-elections/