Ukraine crisis: Sources, outcomes and potential ways forward

by Taras Kuzio

PART I

Executive summary

Ukraine is in the second year of an Orange administration following the inauguration of President Viktor Yushchenko in January 2005. President Yushchenko came to power on the back of the Orange Revolution - the third democratic revolution in a post-Communist state.

Ukraine's Orange administration fell into crisis in September 2005 and has been unable to reunite since that time. Negotiations to rebuild an Orange parliamentary coalition took place over three months following the March 2006 parliamentary elections. The resultant Orange coalition disintegrated before proposing its government following the defection of the smallest of the three political parties that created the coalition. Since the collapse of the Orange coalition, Ukraine is in the midst of a "crisis of constitutional reform," according to the acting secretary of the National Security and Defense Council (NSDC), Volodymyr Horbulin. The head of the Presidential Secretariat, Oleh Rybachuk, also believes that Ukraine has slipped "into a political and constitutional crisis."

Ukraine's crisis of summer 2006 has the potential to lead to further instability, conflict and the downfall of President Yushchenko.

A revived Orange coalition would have been achievable following the March 2006 elections if President Yushchenko and Our Ukraine had accepted its results by acknowledging the right of Yulia Tymoshenko to become prime minister. Subsequent events showed that they were not willing to accept Ms. Tymoshenko's return to the position of prime minister. The summer 2006 crisis signals that hopes for a revived Orange coalition are no longer realistic.

Thus, the Orange Revolution is over before it even began. The Orange coalition lasted nine months in 2005 and has been unable to reunite since then. These divisions in the Orange coalition deepened during the seven months prior to the parliamentary elections in March. The three months of coalition negotiations since the elections were convincing proof that the Orange coalition cannot be put back together. During the negotiations, OU showed itself to be unwilling to enter a coalition where Ms. Tymoshenko would be prime minister. After three months of coalition negotiations, the Socialist Party defected to the Party of the Regions of Ukraine.

With the defection of the SPU and the ensuing crisis, a revived Orange coalition is no longer feasible and would not extract Ukraine from its deepening crisis. Following three months of simultaneous negotiations by Our Ukraine (OU) with both the Yulia Tymoshenko Bloc (YTB) and the Party of the Regions of Ukraine (PRU), it is clear that OU will not support Ms. Tymoshenko as prime minister. The defection of the Socialist Party of Ukraine (SPU) from the Orange coalition leaves the YTB and OU with 210 deputies combined - not enough to create a parliamentary coalition.

The Anti-Crisis Coalition also is unfeasible because it includes the Communist Party of Ukraine (CPU) and proposes PRU leader Viktor Yanukovych as prime minister. The Anti-Crisis Coalition would return Ukraine to the parliamentary-executive conflict prior to the adoption of the 1996 Constitution of Ukraine and be perceived inside and outside of Ukraine as a step backwards from the pursuit of further reform and the democratic gains of the Orange Revolution.

A second Orange Revolution will not take place. Democratic revolutions, as in Serbia, Georgia and Ukraine, took place during election campaigns and at the end of the terms of unpopular and odious leaders. After 18 months of the Yushchenko administration, Ukrainians are turned off by politics, disillusioned and feel "betrayed" by their leaders.

The 2006 protests in Kyiv resemble the "Ukraine Without Kuchma" protests of 2000-2001, rather than the 2004 Orange Revolution, with Kyivites largely indifferent and protesters comprising mainly young people and western Ukrainians. OU is not backing the current protests, just as it did not back the Ukraine Without Kuchma protests. The current protests have the backing of the YTB and the Pora (It's Time) youth NGO and political party, but not the SPU, which backed the Ukraine Without Kuchma protests. The PRU failed to successfully counter-mobilize against the Orange Revolution but has mobilized its supporters during the current crisis, increasing the possibility of inter-regional and inter-party conflict.

With an Orange coalition no longer feasible, there are only two ways out of the summer 2006 crisis:

• A grand coalition of the PRU and OU: A grand coalition, which would encompass 261 deputies, could also include the SPU, although OU may be opposed to its inclusion following the "betrayal" by SPU leader Oleksander Moroz. A grand coalition would need to find a compromise prime minister acceptable to the PRU and OU, and a working relationship with President Yushchenko. A grand coalition would reduce inter-regional tension and facilitate mutual compromise over contentious issues (i.e., the status of the Russian language and NATO, in exchange for no re-privatization, security of property rights and amnesty for election fraud). If a grand coalition proved successful, Ukraine's Parliament and political system could gradually evolve toward a two-party system with a center-right (PRU+OU) and center-left (the YTB having incorporated the SPU).
  
  
• Early parliamentary elections: President Yushchenko would entertain this step as a last resort as it would merely reinforce regional divisions and increase support for the two polarized parties in the Verkhovna Rada - the PRU and the YTB. The PRU could increase its current 186 deputies to close to half of the deputies (225), thereby giving it fewer incentives to compromise by launching a parliamentary coalition alone. President Yushchenko could be deprived of his own political force in Parliament if OU were to lose significant support to the YTB. Early parliamentary elections could also have unforeseen consequences by leading to early presidential elections.

The formation of a grand coalition and government should be undertaken simultaneously with three other steps:

• the swearing in by Parliament of Constitutional Court judges, thereby making the Constitutional Court a functioning institution;
  
  
• the replacement of Oleh Rybachuk and the reorganization of the Presidential Secretariat to provide effective back-up for President Yushchenko (neither Oleksander Zinchenko nor Mr. Rybachuk have provided President Yushchenko with the required support);
  
  
• selection of a secretary of the National Security and Defense Council who understands the link between domestic and foreign policies and is an expert on international affairs and Ukraine's national interests and obligations. (Anatolii Kinakh was a poor choice for such a position and Mr. Horbulin cannot move beyond acting secretary_1_ ).

Background to the crisis

The origins of Ukraine's crisis lie in the failure of President Yushchenko to take advantage of his first year in power when he still possessed a wide range of powers inherited under the July 1996 Constitution of Ukraine.

These powers were never used to break with the Leonid Kuchma era, push through a government program of radical reforms or institute criminal charges against senior members of the Kuchma regime for abuse of office, corruption, election fraud and violence against journalists and politicians. With the majority of those who could have been charged following the Orange Revolution now inside the PRU faction in the Verkhovna Rada, where they have immunity, there is little likelihood of charges being introduced in the foreseeable future (and certainly not in the life of the current Parliament).

President Yushchenko's inaction in 2005-2006 was followed by four key strategic mistakes:

• The Yulia Tymoshenko government was dismissed, thereby dividing the Orange Revolution camp, only seven months before the elections;
  
  
• A memorandum was signed with defeated presidential candidate Mr. Yanukovych that included proposals that pointed to President Yushchenko backtracking from his 2004 election promises and those made during the Orange Revolution. This perception of a president retreating from the values of the Orange Revolution was reinforced by Prime Minister Yurii Yekhanurov's close relationship with the "national bourgeoisie" (i.e., the oligarchs).
  
  
• Divisions in the Orange Revolution camp permitted the PRU to grow in support from an average of 20 percent throughout 2005 to over 30 percent during the 2006 elections, culminating in the PRU obtaining the largest parliamentary faction of 186 deputies.
  
  
• The January 2006 gas agreement with Russia that reinforced divisions in the Orange Revolution camp and furthered public perceptions of President Yushchenko as lacking a strategy and being beholden to corrupt business interests. The inclusion of the non-transparent RosUkrEnergo in the gas deal was either due to incompetence on the part of the executive and government, continuation of corruption schemes from the Kuchma era, or both.

Weak strategy continued to plague the Orange Revolution camp during the March 2006 elections and during coalition negotiations following the elections. An informal agreement within the Orange Revolution camp provided that whoever came first would have the right to appoint the prime minister.

The election results came as a shock to OU, which had expected to come in second (i.e., first in the Orange Revolution camp). Until the September 2005 crisis, OU had every opportunity to come in first in the 2006 elections as President Yushchenko is OU's honorary chairman. Instead, OU dropped to third place and received 9 percent fewer votes than in the 2002 elections, when it had obtained 23 percent.

The 2006 elections radically changed Ukraine's political landscape, laying the basis for the current political crisis.

The OU that entered the 2006 Parliament is more centrist and less national-democratic than the OU of 2002. Major national democratic political forces which four years earlier had joined OU refused to join it in 2006. These included well-known national democratic leaders whose presence in government and in the Verkhovna Rada would have been a positive development. The Reforms and Order-Pora and Yurii Kostenko blocs failed to enter the 2006 Parliament.

The only centrist political party to enter Parliament was the PRU. In the 2002 elections the PRU, the party that has traditionally represented the Donetsk clan, campaigned together with four other parties in the pro-Kuchma For a United Ukraine bloc. Three of these parties ran independently in 2006 and failed to enter Parliament: the Agrarians (Volodymyr Lytvyn bloc), Labor Ukraine (LU) and the People's Democratic Party (PDP). Mr. Kinakh's Party of Industrialists and Entrepreneurs, the fifth member of the For a United Ukraine bloc, defected to President Yushchenko in the second round of the 2004 elections and joined OU in 2006. The Social Democratic Party - United (SDPU), which had run in the 2002 elections independently of the For a United Ukraine bloc, also failed to enter the 2006 Parliament.

The YTB expanded its support more than threefold on its 2002 results, growing from 7 to 22 percent support and coming in first among the Orange Revolution camp. OU's support, meanwhile, declined from 23 to 14 percent.

Ukraine's 2006 Parliament, therefore, was the most polarized in Ukraine's 15-year history. Former pro-Kuchma centrists who had traditionally played the role of "buffer" between eastern and western Ukraine were no longer present. Two antagonistic political forces - the Party of the Regions and the Yulia Tymoshenko Bloc - were the largest factions in the Verkhovna Rada, with 310 deputies (or 70 percent of the total of 450). This polarization inside Parliament was heightened by contentious issues, such as NATO membership and the status of the Russian language, moving from low to high matters of concern for voters.

Polarization inside the Verkhovna Rada has been heightened by the PRU's attitudes to the immediate past. The PRU's leadership and electorate believe that they won the 2004 elections but were then "betrayed" by President Kuchma and his then head of the Presidential Administration, Viktor Medvedchuk. The PRU, therefore, is Janus-faced; while being anti-Kuchma, it is also a "post-Kuchma" party.

At the same time, the PRU's refusal to acknowledge President Yushchenko's legitimacy as deriving from a re-run of the fraudulent second round of the 2004 elections, and the PRU's continued hostility to the Orange Revolution as a "conspiracy," shows its inability to break fully with the political culture of the Kuchma era. This is reflected in other policy areas, such as the PRU's negative attitudes toward a free media.

The PRU leadership's unwillingness to accept its involvement in election fraud in 2004 - and, therefore, Mr. Yanukovych's defeat - has only been deepened by the lack of criminal charges instituted against senior Kuchma-era officials. With no charges in place, PRU leaders argue "election fraud, what fraud?" The possibility of criminal charges being instituted for election fraud in 2004 are now unlikely as those who could have been charged in 2005 now have parliamentary immunity for the life of the current Parliament.

Coalition choices

Following the 2006 elections, OU senior leader Roman Bezsmertnyi proposed that OU recognize the results and accept that the YTB has a right to appoint its candidate for prime minister in a new Orange coalition. This correct strategic choice was ignored by both OU and President Yushchenko, who instead conducted simultaneous negotiations over the next three months with both Orange Revolution allies and the PRU.

The reality of the 2004 and 2006 election results, both of which confirmed Ukraine's regional divide, pointed to three potential coalition possibilities immediately following the March elections. These three possible coalition formats remain largely unchanged:

• Orange Revolution: OU, YTB, SPU (243 seats);
  
  
• grand coalition: OU, PRU (267) and possibly SPU (300 seats);
  
  
• "Kuchma Lite": PRU, CPU, SPU (240 seats).

An Orange coalition would have been created immediately following the 2006 elections if OU had come second (i.e., first in the Orange camp). The dragging out of coalition talks simultaneously with the YTB and the PRU was a consequence of OU coming in third.

The coalition marathon (April-June 2006) showed to what degree President Yushchenko and OU also were Janus-faced. While willing to accept credit for holding free and fair elections, they were unwilling to accept the logic of the outcome of the elections which had propelled the PRU and the YTB to control 70 percent of parliamentary deputies and the fact that OU now has reduced influence.

This unwillingness to accept the election outcome has directly led to this summer's political and constitutional crisis. President Yushchenko and OU strove to negotiate simultaneously with the YTB and the PRU in the hope of extracting maximum advantage for themselves by not allowing OU to become the smaller partner in any coalition.

OU hoped to prevent Ms. Tymoshenko from taking the position of prime minister in the Orange coalition and, failing this, to balance her position with OU controlling the position of Parliament chairman. OU's choice of nominee for Parliament chairman, Petro Poroshenko, reinforced two prevalent views: first, that there would be a return to the Tymoshenko-Poroshenko personal clashes that had plagued the first year of the Orange administration; second, the likelihood of the Orange coalition again collapsing due to personal rivalries. Following that collapse, a grand coalition of OU and the PRU would have emerged to replace a second failed Orange coalition.

In negotiations with the PRU, OU sought to obtain concessions over the prime minister's position in return for the PRU controlling the position of Parliament chairman. The PRU agreed to leave Mr. Yekhanurov as prime minister, whom it sees as ideologically close to it and who also opposes re-privatization. The PRU's compromise over the position of prime minister aimed to block the return of Ms. Tymoshenko, which would have threatened its strategic objectives of no further re-privatization and the sanctity of property rights.

The re-united Orange coalition eventually created three months after the March parliamentary elections would have seen Ms. Tymoshenko return as prime minister. But, the Orange coalition collapsed even before it could propose its government when the smallest of the three Orange coalition partners, the SPU, withdrew its support from the coalition. The SPU officially claimed that the reason was its opposition to Mr. Poroshenko obtaining the post of Parliament chairman in exchange for Ms. Tymoshenko becoming prime minister.

In reality, the SPU had long sought the position of Parliament chairman for its leader, Mr. Moroz. The SPU had never raised its objections to aspects of the Orange coalition during the April-June negotiations and remained in government with the center-right OU throughout 2005-2006.

Mr. Moroz was Verkhovna Rada chairman on one previous occasion in the 1994-1998, when, again allied with the CPU, he attempted to thwart economic reforms and a pro-Western foreign policy. As Parliament chairman, Mr. Moroz was in conflict over domestic and foreign policies with President Kuchma.

OU's candidate for Parliament chairman, Mr. Poroshenko, merely provided the excuse for the SPU to no longer abide by the Orange coalition agreement. Mr. Poroshenko had been secretary of the National Security and Defense Council (NSDC) in 2005, a position he had occupied at the president's behest to counter Prime Minister Tymoshenko.

Anti-Crisis Coalition

The defection of the SPU to the PRU and the CPU has led to the creation of the least expected Anti-Crisis Coalition. The Anti-Crisis Coalition controls 240 out of 450 deputies, a number similar to the 243 that the Orange coalition was to have controlled. Alone, the PRU and their CPU allies had insufficient votes to create a parliamentary coalition, being 19 deputies short of a minimum majority of 226.

The Anti-Crisis Coalition removes the need for the PRU to concede the position of prime minister, which it can now seek to obtain for itself, with the SPU and the CPU sharing control of the parliamentary leadership. The PRU has proposed Mr. Yanukovych for prime minister, a position he occupied in 2002-2004 - the last two years of the Kuchma regime.

The inclusion of the CPU represents the first occasion in Ukraine that the Communists have entered the government, ironically during the Yushchenko presidency. The CPU has entered government at a time when the CPU is in terminal decline from its height of 120 national deputies in the 1998 Parliament; it now has only 21 deputies.

The two remaining parliamentary factions, the YTB and OU, have little choice but to go into opposition to the Anti-Crisis Coalition. The YTB has always ruled out entering any coalition that included the PRU. OU will be forced into simultaneous mild opposition to, and cohabitation with, the Anti-Crisis Coalition. OU's national democratic wing will align with the YTB and its centrist, business wing with the PRU.

Informed sources have advised Ukraine Strategic Insider that President Yushchenko will never accept Mr. Yanukovych for the position of prime minister. The reasons are similar to those based on which he was disinclined to look favorably on Ms. Tymoshenko returning to the position of prime minister. Both Mr. Yanukovych and Ms. Tymoshenko are polarizing figures who, in the position of prime minister, would serve to further divide - not unite - Ukraine. Ukraine needs a centrist prime minister able to work with both the PRU and the YTB, and with the president.

OU will never join a coalition with the PRU if it includes the CPU and its prime minister is Mr. Yanukovych. It is these two obstacles that are preventing any negotiated solution to Ukraine's deepening crisis. Both the PRU and the YTB are seeking to extract maximum advantages for themselves without taking heed of the country's overall national interests and the need to overcome the deepening crisis and regional divide.

Faced with this escalating crisis, there are two scenarios facing Ukraine:

• Collapse of the coalition: The Anti-Crisis Coalition collapses in the fall and is replaced by a grand coalition of the PRU and OU. Following the betrayal of the SPU leadership, which defected from the Orange coalition, it would be unlikely that OU would agree to the SPU joining a grand coalition.
  
  
• Early elections: The dissolution of Parliament and repeat elections. The election results would be unlikely to heal Ukraine's regional divide, which was confirmed in the 2004 and 2006 elections, and may polarize Parliament further by increasing the representation of the PRU and the YTB beyond their current 70 percent of deputies. OU, the SPU and the CPU could be elected with fewer deputies while the two left-wing parties could fail to enter the Verkhovna Rada (see Tables 1 and 2). OU could prevent this outcome by creating a joint election bloc with the YTB, which has been touted but seems a remote possibility. The SPU could well be decimated if, as expected, Mr. Moroz could be removed by a pending extraordinary congress called in protest to his alignment with the PRU.

Internal Affairs Minister Yurii Lutsenko, a high-profile SPU member active in anti-regime protests during the Kuchma regime, has resigned in protest from the SPU. Mr. Lutsenko represents the right-wing of the SPU. His criticism of the SPU's alignment with the PRU is replicated by unlikely allies on the left of the SPU such as Yosyp Vinskyi, who has resigned as secretary of the SPU's Political Council.

1. Acting Secretary Volodymyr Horbulin is beyond the legal retirement age and, therefore, cannot move from the position of acting secretary to secretary. [Back to Text]

Dr. Taras Kuzio, Senior Transatlantic Fellow, German Marshal Fund, and adjunct professor, Institute for European, Russian and Eurasian Studies at the Elliott School of International Affairs at George Washington University, is president of Kuzio Associates.

Kuzio Associates is an independent political-economic consultancy and government communications group with offices in Washington and Kyiv. Kuzio Associates draws upon two decades of expertise by its president, an internationally recognized authority on Ukraine, Central-Eastern Europe and the CIS. Kuzio Associates provides strategic advice to political clients on government relations and strategy, due diligence on Ukrainian companies and investment climate and opportunities in Ukraine.

The article above is an edited version of the analysis published in issue No. 1, 2006, of Ukraine Strategic Insider.

PART I

CONCLUSION

What the latest polls say

Copyright © The Ukrainian Weekly, July 30, 2006, No. 31, Vol. LXXIV

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