Ukrainian reforms: a sociological analysis
by Volodymyr Zviglyanich
PART I
Public support for reform processes now under way in Ukraine is crucial for their success. As the experiences of the most successful reform efforts in the other countries of Eastern Europe show, a timely and objective account of changing public priorities helps the government to conduct even "unpopular" reforms.
The examples of Poland, Hungary and the Czech Republic are especially valuable for Ukraine in this respect, as in these countries the painful processes of initial reform attempts did not undermine the trust of the majority of the population in the eventual success of reforms.
In order to learn about the most recent public attitudes concerning the actual state of Ukrainian reforms, a nationwide survey was recently commissioned by the U.S. Information Agency and fielded by the Kyiv-based polling firm SOCIS-Gallup. Personal interviews were conducted between December 19, 1995, and January 10, with a nationally representative sample of 1,200 adults age 18 years and older. (The margin of error is plus or minus 3 percent.)
Public perception of economic reform
To overcome its current economic crisis and to continue economic reforms, international loans and foreign investments are crucial for Ukraine. In April the IMF canceled the $1.6 billion loan to Ukraine of which $700 million was already allocated; the cancellation came as a result of an unplanned increase in public spending (some $52 million) and paper money in circulation. At the end of April the IMF tentatively approved a new standby loan for Ukraine, a decision that was later approved by its board of directors. The new standby will provide what was expected before, some $900 million for the remainder of 1996.
However, the IMF and World Bank loans constitute only a small portion of what is needed for the radical restructuring of Ukraine's economy - a sum, according to some estimates, of $100 billion. Without greater progress in privatization, price liberalization and direct foreign investment, reform processes threaten to be painful and slow and fraught with social upheaval. Public support for, or at least tolerance of, painful economic changes are decisive for the achievement of market reforms.
Economic problems heavily dominate popular concerns. When asked what two most serious problems face the country, the public focuses on economic rather than political, sociocultural or foreign policy issues (31 percent of the polled considered economic problems as most important versus 14 percent who thought that socio-cultural issues are most crucial, with political and foreign issues constituting respectively 13 and 3 percent).
The public almost unanimously views Ukraine's current economic situation as bad (a majority - 56 percent - said "very bad") and foresees little improvement in 1996. This economic pessimism, which constitutes a serious impediment to the government's reform efforts, is reinforced by hidden unemployment (reaching in some regions up to 40 percent of the workforce), fuel shortages, wage deferment (16 percent) as well as growth in crime (13 percent). The number of citizens describing the Ukrainian economy as "bad" has worsened from October 1994, when about 75 percent were pessimistic about the economy.
The government, while pursuing economic reform should be aware of public perception of the direction of reforms, as well as about public hopes. So far, 76 percent of the public believes that Ukraine is headed in the wrong direction. These doubts about the nation's course mainly reflect economic concerns, and the government should act immediately to improve the situation in order to avoid the discrepancy between what is wanted by the government and what is expected by the population at large.
This would help to weaken the pessimistic public's outlook for the next 12 months, in which 38 percent think that the current state of the economy will worsen, 33 percent expect it to remain the same, while only 19 percent expect an improvement. Moreover, a majority said the situation in Ukraine for implementing economic reforms has worsened (55 percent) rather than improved (6 percent) over the past year. This data contrasts with official claims that 1995 laid the groundwork for economic stabilization and even an increase in the GDP in 1996. It is more likely that this improvement will take more time than expected by the government. However, by the year 2000 a great part of the population (44 percent) expects things to improve.
This hope is tempered, however, by the prevalent public belief that the "mafia" has a major and negative impact on the country. Overwhelming majorities see the mafia influencing economic activities in general (86 percent), national and local governments (respectively, 85 and 82 percent), even the banking system (79 percent). Half believe that the mafia has a "great deal" of influence on all these activities. Negative consequences for the government could emerge from this popular attitude, namely the belief that the reform process is good only for the mafia, not for the common people, and that it is impossible to do business without being involved in criminal activities. The forces of "systemic opposition" as President Leonid Kuchma recently nicknamed the leftist factions in the national Parliament, could easily speculate on these beliefs for their own political purposes as was done in Russia. Without a radical improvement in this domain, the popular fear of being socially unprotected will increase.
The polls show that the question of private property and land is the crucial national issue. A very large majority agree that citizens should be allowed to own land as private property (80 percent), while a smaller majority think that citizens should be allowed to "buy and sell land." The lower level of support for treating land as a commodity can be attributed to a lingering legacy of the Soviet period when land belonged only to state farms. To overcome this illusion and create a full-fledged land market, land bank and secondary mortgage market, the government should elaborate a code of real estate laws, give a juridically valid description of land as a commodity, proclaim the indisputable right of citizens to own private property on land and enshrine this in the constitution.
Public opinion reflects some wariness concerning foreign investment: such investments are approved (59 percent) but the belief that foreign investment can lead to the loss of economic sovereignty has risen over the past two years from a plurality (42 percent) to a slim majority (52 percent) today.
Support for a more gradual approach to privatization was revealed in October 1994. More think now private enterprise should be developed as rapidly as possible (30 percent) than not at all (14 percent), while a plurality (42 percent) hold that the economy should be privatized gradually. Remarkably enough, among the youngest respondents (age 18-29 years) more support the gradual approach over rapid privatization (48 percent vs 37 percent), whereas in the 30-49 age group this proportion is almost even (41 to 38 percent).
Elite, government, president and reform
The majority of the Ukrainian elite believes private enterprise should develop as rapidly as possible (64 percent), half as many say it should develop slowly (32 percent). Among those age 18-29 support for rapid development is the highest: 84 percent (as compared to 37 percent among "common" citizens). The Ukrainian elite is interested in the most rapid privatization as it connects with its personal gains, whereas the "common" public evidently does not perceive benefits from rapid privatization.
However, the Ukrainian elite evidently does not want all enterprises to be privatized as rapidly as possible. The elite would diminish the government's hand in light industry in order to solve that sector's ills through privatization. But the opposite view - increasing government involvement to resolve the problem - is the dominant one regarding heavy industry, the energy sector, industry in general, and manufacturing.
Economic pessimism among the elite (97 percent say the economic situation in Ukraine is bad; 61 percent- "very bad") coincides with its doubts that President Kuchma is personally committed to the principles of economic reform (opinions split more or less evenly). Only in two regions - Lviv and Kryvyi Rih - does the elite feel Mr. Kuchma is committed to economic reform. Opinion holds otherwise in Luhanske, Kharkiv, Symferopil, Odessa, and Donetske, which could be explained by the predominantly Russian population there among which Mr. Kuchma is no longer popular.
In 1994, large numbers of Ukrainians in the eastern regions (60-90 percent) voted for Mr. Kuchma, but now barely half (44 percent) say they have confidence in him. In the central region a majority (56 percent) do not trust him, while in the Crimea six out of 10 lack confidence in him (compared to 90 percent who voted for him in 1994). Half of all ethnic Russians lack confidence in Mr. Kuchma (43 percent expressed confidence), while a small majority (55 percent) of ethnic Ukrainians say they trust him (41 percent don't).
President Kuchma's support moved to western Ukraine, representing a sharp reversal from the 1994 presidential election when western Ukraine backed Leonid Kravchuk. In western Ukraine, where only 4 percent voted for President Kuchma in 1994, 75 percent now express confidence in him. In the southwestern region 72 percent say they trust him. At the same time, this strong approval is caused by Mr. Kuchma's political stand regarding the Crimea and the Black Sea Fleet, by his resistance to efforts to restore Russian as an official language (which he proposed in his inaugural speech in July 1994), and to dual Russian-Ukrainian citizenship for ethnic Russians, rather than by the solid results of economic reforms.
Mr. Kuchma managed to preserve the number of his supporters. As in 1994, when he was elected president with 52 percent of the vote, despite Mr. Kuchma's good over-all standing, the rate of those who express "no confidence at all" in him has more than doubled since 1994 (from 12 to 29 percent). The most worrisome sign, however, is that the public believes Mr. Kuchma, who has the reputation of being a "reformist president," is not committed to the introduction of economic reforms in Ukraine (51 percent). This means that the future candidate for the Ukrainian presidency should capitalize on the results of economic reforms rather than on the simple intention to continue them; as well he should address the majority of the population in eastern and central Ukraine - decisive regions for a election victory.
To do this is most important, as popular trust in the government is not very high. Except for the armed forces, no institution, including the national government, elicits a positive level of confidence.
Significantly, the number of people who lack confidence in the national government increased from 45 percent in October 1994 to 65 percent in July 1995 and has insignificantly decreased in January of this year to 61 percent. Popular trust in the army could be associated with people's belief that a "strong hand" can save the country and maintain order and discipline. Continuing economic decline without general benefits from reform could only reinforce this trend.
At the same time it is evident that some major changes in the government are needed in order to reduce popular skepticism toward the people in charge of reforms. In Russia the problem of low trust in the government was reduced somehow with the creation of the party of Our Home is Russia, headed by Prime Minister Victor Chernomyrdin. This party received some 11 percent of the popular vote during elections to the State Duma last December.
Dr. Volodymyr Zviglyanich is adjunct professor of East European area studies at George Washington University.
Copyright © The Ukrainian Weekly, July 7, 1996, No. 27, Vol. LXIV
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