Reforms stall as Kyiv straddles policies of East and West

by Valentinas Mite
RFE/RL Poland, Belarus and Ukraine Report

A chilly wind blew over Ukrainian-Western relations last autumn. Kyiv was accused of covertly selling military equipment to Iraq, and President Leonid Kuchma received a cold reception at the NATO summit in Prague. But less than a year later, things appear to be on the mend. Ukraine is committing some 1,800 troops to peacekeeping efforts in Iraq. It has set its sights on membership in NATO and the European Union. The World Bank has boosted slightly the country's credit rating, and the International Monetary Fund (IMF) also has praised Kyiv's pace on reforms.

But observers say little of substance has actually changed in Ukraine's political and economic life. Kyiv, they say, is still trying to strike a delicate balance between Russia and the West.

Roy Allison heads the Russia-Eurasia program at the Royal Institute of Inter-national Affairs in London. He said any praise from the World Bank and IMF is worth celebrating, but such remarks can't hide the fact that Ukraine remains mired in economic inertia and reforms are slow-moving.

"As an environment for significant investment - external investment, foreign investment - Ukraine does not look very promising. Its political orientation is not seen as clear in foreign-policy terms. Some of the priorities are evident, but Kuchma is someone who seems to have lost the trust, I think, in many senses, of Western partners," Mr. Allison said.

The IMF has generally criticized drawbacks in Ukraine's tax system, as well as insufficient transparency in its privatization process and an underdeveloped banking sector. Mr. Allison said Kyiv has made little progress in these areas, and has made no headway in trying to better position itself to benefit from the European Union's enlargement in 2004. Concrete economic reforms in Ukraine, he said, are still a thing of the future.

Marius Vahl, an analyst with the Brussels-based Center for European Studies, said the government is responsible for the delay in the reform process. "I mean, they are [conducting reforms] at a rhetorical level," he said. "But to a large extent they are not doing it in practical terms. And of course [the problem is] Kuchma's credibility - [he's] been saying that he wants to do reforms for many, many years and quite little has been done, especially compared to most of [Ukraine's] neighbors."

Analysts agree that political instability remains a major obstacle to real change in Ukraine. The country remains polarized between pro-government groups and a diverse, sometimes fractious opposition. President Kuchma's years in office have been marred by a series of political scandals and charges of serious abuses of power.

On the foreign-policy front, Mr. Kuchma remains attached to Russia - Ukraine's paternalistic larger neighbor to whom the Ukrainian president has repeatedly turned when ties with the West have weakened. Mr. Kuchma is also the current chairman of the CIS Council of Heads of State, something that brings him further into the Eastern fold.

So why has Mr. Kuchma offered 1,800 Ukrainian troops for peacekeeping missions in Iraq following a war that Moscow stoutly opposed? Mr. Vahl of the Center for European Studies said Ukraine is trying to straddle two horses at once. "This should be seen in the context of the relationship between Russia, the West and the U.S. And the problem of the Ukrainian multivector policy - which is the foundation of Ukrainian foreign policy - [is trying] to do both: opening toward the West and opening toward the East, cooperating with the East at the same time. When Russia and the West are cooperating this becomes the natural extension for Ukraine," Mr. Vahl explained.

He said Kyiv, instead of adopting an independent policy of its own, is largely reactive - adapting its stance to reflect broader changes made by the West and Russia.

Oleksander Sushko, director of the Center for Peace, Conversion and Foreign Policy, a Kyiv-based think-tank, told RFE/RL that Ukrainian foreign policy functions like a pendulum. "We can find tendencies of pro-Western policy and also the tendencies which have the opposite character. There are no grounds to say that this tendency will change in the next year," he said.

Mr. Sushko added that although economic growth may be increasing slightly, the general situation remains stagnant. "There is no foundation for a serious breakthrough. Serious changes can take place only when the character of power is changed, when the system is changed, when the main personalities leave the political scene. Without that, only cosmetic changes can occur and these are the changes that are taking place now," Mr. Sushko noted.

Mr. Sushko said next year's presidential elections will be a critical test for the country. "It will be interesting to see if the authorities interfere with the election campaign or let it be free and fair. The elections will show the real direction the country is heading in - not the fact we're sending peacekeepers to Iraq," Mr. Sushko observed.

President Kuchma completes his second term at the end of 2004, and is prohibited by the Constitution of Ukraine from seeking a third. Elections are to be held in October of that year.

Valentinas Mite is an RFE/RL correspondent.

Copyright © The Ukrainian Weekly, August 3, 2003, No. 31, Vol. LXXI

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