Blue &Yellow: Politics and Economics in Ukraine

Of these six political forces only Batkivshchina, if led by Tymoshenko, would be the real opposition in parliament. The US and EU demand not to imprison Tymoshenko and permit her to stand in elections therefore upsets the authorities plans for a managed democracy. Nevertheless, the authorities have a card up their sleeves against parties who attempt to be a real opposition by pressuring big business to not provide financial support (all Ukrainian parties are supported by big business). Batkivshchina, Kyiv insiders have told Jamestown, are in dire financial straits after big business deserted them.

 Taras Kuzio in the latest Eurasia Daily Monitor (Volume 8, Issue 175, sorry no link) on the Rada elections. For those wondering why the former prime minister is on trial, this helps explain it. Keeping her tied up legally will make it easier to maintain political control in Ukraine for the current president. Below Kuzio looks at the parties most likely to enter the next Rada.

Plans for parliament aim to ensure it is compliant and acts as a rubber stamp. Of the five political parties that are likely to enter parliament only one – Tymoshenko’s Batkivshchina (Fatherland) – will not be under their control:
1. Party of Regions and the Communist Party are traditional allies drawing on the same group of voters and regions.
2. Deputy Prime Minister Sergei Tigipko’s Silna Ukrayina (Strong Ukraine) party will merge with the Party of Regions. Tigipko came third with 13 percent in the 2010 elections, drawing on middle class young Ukrainians.
3. Front for Change, led by Arseniy Yatsenyuk, is in negotiations with Donetsk oligarch Rinat Akhmetov for a $140 million election war chest in return for 30 percent to 50 percent of the seats (Ukrayinska Pravda, September 2). Inside sources in Kyiv told Jamestown that Presidential Administration head Serhiy Levochkin and Akhmetov are in competition for Front for Change which will occupy Yushchenko’s Our Ukraine “constructive opposition” niche (Ukrayinska Pravda, July 19, 21, September 6, 22).
4. Batkivshchina will receive fewer seats than in 2007, when it obtained 31 percent, under a mixed election system. In the 2010 local elections Batkivshchina was obstructed from participating in two of its strongholds, Kyiv and Lviv. With Tymoshenko in jail, the authorities had planned to install Batkivshchina Luhansk deputy Natalia Korolevska as its new leader. Batkivshchina, like Front for Change, would have thereby been co-opted.
5. Svoboda (Freedom) nationalist party may enter parliament, if the threshold is not raised from 3 percent to 5 percent. There have long been rumors that Svoboda receives financing from the Party of Regions (see critical March and May reports by pro-Yanukovych American Institute Ukraine atwww.aminuk.org).

Some analysts have suggested that the real reason for the Tymoshenko trial and arrest is the price of gas. If the 2009 accords, in which Ukraine agreed to pay $450 for 1,000 cubic meters of gas for a 10-year period are declared illegal by a court, Ukraine might be in a position to renegotiate a more advantageous deal with Russia. Yanukovych desperately wants cheaper gas from the Russians. He has made several overtures to Moscow hoping to drive the price down, among them prolonging the Russia Black Sea Fleet base in Sevastopol for 25 years. While this got him a price reduction, the Kremlin has been unwilling to renegotiate the basic terms of the gas agreement.

 From Radio Free Europe, the trial of Yulia Tymoshenko continues along with the sideshow. So in order to get cheaper gas Yanukovych goes after is biggest opponent? The Economist presents other explanations for her prosecution.

One theory is that his government wants to test Europe's resolve on Ukraine, to see how far they can tilt towards authoritarianism before the so-called Deep and Comprehensive Free Trade Agreement, due to be signed later this year or early next, comes under threat.
An alternative view is that one of Mr Yanukovich's wealthy backers is insisting on Ms Tymoshenko's punishment. Some have mentioned Dmytro Firtash, co-owner of RosUkrEnergo, the intermediary company that Ms Tymoshenko cut out of gas dealings with Russia. There is no direct evidence for this, however.
Or perhaps it is simply about personal animosity. "At first they didn't arrest her because they knew [it] would have bad international implications", notes Volodymyr Fesenko, head of the Penta Center For Applied Political Studies, a think-tank. "But then it seems they just got too annoyed by the way she was behaving in court." Ms Tymoshenko was taken into custody on August 5th, six weeks into her trial.

"Only political motives could have played a role here," said Yushchenko, who was greeted by angry chants from Tymoshenko's supporters in the courtroom. "National interests were traded for political considerations."Yushchenko suggested that Tymoshenko, who was then preparing to run in the 2010 presidential elections, wanted to be seen as a "saviour" who ended a bitter pricing dispute with Moscow. The dispute led to Russia halting supplies to Ukraine, which caused shortages for customers across Europe.He also claimed Tymoshenko ignored Ukrainian interests for the sake of special relations with Russian leaders, saying: "Russia had to have a pliant pro-Russian leader

Via The Guardian, former President Yushchenko testifies against Yulia Tymoshenko. While they were both on the "Orange" side, the two constantly feuded for years. As noted in a previous post about the 2010  presidential election Yushchenko had already shifted his support to Yanukovych prior to the second round of the election. The same Yanukovych who signed that Crimean base deal lease with Russia after becoming president. The same Yanukovych accused of using heavy handed tactics against his opponents. 

A second member of Ukraine’s usually fractious political opposition also pivoted to support Ms. Tymoshenko on Monday. Arseniy P. Yatsenyuk, a 37-year-old former chairman of Parliament and foreign minister, attended the court on Monday to hear the motions for Ms. Tymoshenko’s release. He emerged to tell reporters that the trial was “a clear threat to Ukrainian democracy.”
“This is not just personal support for the former prime minister,” he said. “This is support to the institute of democracy that is opposition. This could happen to anyone in Ukraine’s political environment. We are here to support democracy.”
In another prominent show of support over the weekend, Vitali Klitschko, the World Boxing Council heavyweight champion and an upstart in Ukrainian politics, announced he would delay a title fight planned for September to draw attention to Ms. Tymoshenko’s arrest.

From the New York Times, Tymoshenko is still in jail. A blog post in The Economist notes that the former prime minister has been a difficult defendant, but "disrespectful courtroom behaviour hardly justified her arrest". Tymoshenko and her party have been on the defensive since Viktor Yanukovych succeed Viktor Yushchenko as president. While there have been protests against this, Yanukovych hasn't yielded. Ostensibly, she is being tried for abuse of power when she signed new gas contracts in 2009. However,  Taras Kuzio is correct in claiming that the president created a Yukos style political event whose target is former prime minister and her party.

While a few hundred of her supporters braved torrential rain on the streets of Kiev to express their solidarity, Tymoshenko used her oratory in the courtroom to berate Kyriyev, whom she denounced on Friday as a Yanukovich "puppet."
Refusing to stand to address the court, she told Kyriyev: "Since this is an ordered operation by the President, I permit myself to act toward the court as it does toward me. When the court becomes honorable, only then will I address you as 'Your Honor.'"

From Reuters, the ex-prime minister will be on trial for abuse of power. In The Guardian article on this case Tymoshenko continues her attack on Yanukovych, alleging that this is a political prosecution designed to weaken the opposition. Not mentioned in either article, Tymoshenko was also tried and jailed during the Kuchma presidency when her political patron fell foul of the president.

Anyone following this blog won't be surprised by these current events in Ukraine. The government will drag out this case until they are assured that the ex-prime minister's party poses no electoral danger.

Country asks for another IMF bailout, after screwing up the first one. There are few signs of spending coming under control. The neighbour which really holds the purse strings demands ever more privatisation. 

The economy’s still reeling from an attempted devaluation of the Belorussian rouble through the country’s various fragmented FX markets instead of in one go, leaving the country starved of foreign currency. Import prices have exploded. President Lukashenko has also exploded, generally in the direction of the Russians and his own officials, after bailout talks failed. So now it’s the IMF’s turn. 

 On top of the politics in the country Belarus now needs another bailout, according to FT Alphaville. While its southern neighbor seems to be recovering from its economic contraction, Belarus may be lurching into another one.

According to Reuters, Firtash agreed to reimburse some $2.5 billion to Gazprom and Naftogaz, the Ukraine state gas company. But Timoshenko claims that the gas was worth about $3.5 billion, leaving about $1 billion in profit. She claims that some of that went for mischief against Yanukovich's opposition, including herself. "Since taking power, the Yanukovich administration, aided and abetted by the defendants and other co-conspirators, have launched a wave of arrests and investigations aimed at plaintiff Timoshenko and her political allies in what most objective observers consider to be a concerted campaign to intimidate, suppress and ultimately eliminate any and all political opposition in Ukraine," the suit alleges.

Tymoshenko's lawsuit discussed at Oil and Glory, where one can find more details about the case.  The most interesting part is her allegation that the new administration choose to lose the Stockholm arbitration case.  A good post on the ongoing legal battle between the former prime minister and the current government.

If elections to the Verkhovna Rada were held in mid-April, five parties would have garnered enough votes to qualify for the parliament, i.e. the Party of Regions (13.9% of the vote), the Yulia Tymoshenko Bloc (10.6%), the Front for Change led by Arseniy Yatseniuk (7.1%), the Communist Party (3.2%), and the Udar (Strike) party led by Vitali Klitschko (3.1%), as can be seen from a nationwide public opinion poll of 1,020 respondents conducted by the Kyiv International Sociology Institute on April 8 to 18.

From Kyiv Post, of course Rada elections aren't scheduled for this year. 

The negative effects have included a more restrictive environment for the media, selective prosecution of opposition figures, worrisome instances of intrusiveness by the Security Service of Ukraine (SBU), widely criticized local elections in October 2010, a pliant parliament (Verkhovna Rada), and an erosion of basic freedoms of assembly and speech. Corruption remains a huge drain on the country,and there is significant room for the situation to get even worse.

From a Freedom House evaluation on Ukraine. Its not too long a read, but let me present some excerpts from the report below.

Elections & Reform

But credible observers in Ukraine are now concerned that his administration is acting to alter the electoral environment in ways that will prejudice the political prospects of independent and opposition forces and help to concentrate power in the hands of the ruling party, both in Kyiv and in the regions. These concerns center on three interrelated issues: a new electoral code, currently in preparation; the conduct of the 2010 local elections; and constitutional reform.

Political Persecution

Nonetheless, the government’s anticorruption campaign lacks credibility. Authorities point to the prosecution of former prime minister Tymoshenko and former interior minister Yuriy Lutsenko as a signal that corruption will not be tolerated and that politicians are not above the law. However, these cases are not focused on charges of personal enrichment, but rather on administrative abuses. The government is correct that the prosecutions send a strong signal, but that signal is actually a warning to other would be opposition figures not to challenge the authorities. 

Constitutional Reform

The Constitutional Court’s September 2010 decision to invalidate the 2004 constitutional amendments associated with the Orange Revolution raised both substantive and procedural red flags. Substantively, the ruling shifted power from the parliament back to the presidency, granting Yanukovych the same level of authority wielded by former president Kuchma. Moreover, in the run-up to the decision, four judges who opposed the nullification of the amendments resigned and were replaced with judges who backed it. The subsequent formation of a Constituent Assembly under the auspices of the president has hardly inspired confidence in future constitutional checks and balances. There were also concerns that the arrest of the son-in-law of the Constitutional Court’s chairman, combined with a criminal case against his daughter, represented a not-so-subtle form of  pressure on the court.

On a future virtual presidential candidate 

Many of the observers we heard from expressed fear that this strategy—disqualifying the opposition party best able to challenge the Party of Regions while facilitating the growth of a more extreme nationalist party—may be replicated on a national level. These observers point out that in the presidential election, which came after Tymoshenko had presided over a massive economic collapse and extraordinary divisions with the incumbent president, she lost to Yanukovych by just 3.48 percentage points. To ensure Yanukovych’s reelection, they argue, the Party of Regions is intent on having him faceoff against a fringe Ukrainian nationalist candidate, knowing that this will depress opposition turnout in the center and energize Yanukovych’s base in the east and south.

The case seeks to represent all Ukrainian people in a class action and was filed under U.S. racketeering law and the Alien Torts Statute, a law that allows foreigners seeking damages for violations of international human rights laws to sue in U.S. courts. The complaint seeks unspecified compensatory and punitive damages.

From Bloomberg emphasis mine, a PR stunt for the Ukrainian public and way of putting pressure on her enemies back home. I can't see this going far in U.S. courts, how can she represent all Ukrainian people?