Blue &Yellow: Politics and Economics in Ukraine

Link to Yatseniuk's statement/manifesto for Front of Change. 

For those interested in the new coalition and what to think of it, a short piece from Den about it.  In another piece, the president criticizes the coalition and how it was formed.  Nothing new in this piece, his determination for new elections haven't changed or his dislike of his prime minister. While a new coalition is in place, how long will it last when one faction is divided like OU-PSD? Not sure what sort of penalties the president has in mind for the MPs that supported the coalition, considering how divided the party is right now, he may not have the power to punish them.

He called the “backdoor methods” used to forge the current coalition unacceptable and im moral. “The coalition is effective if it has 226 votes. In the third millennium I would not advise anyone to turn for help to the Communist ideology — this is political disgrace. This is a relapse into the condition from which we have been escaping for so many years.

“Why can’t we enter the coalition headed by Yulia Tymoshenko? This is the decision of the party and it says: we are not enemies, but we cannot agree with the line pursued by the prime minister,” said the president. He added that the forthcoming II Congress of Our Ukraine next week will consider expelling party members who “supported the coalition contrary to the decision of the congress.”

Even today the president believes that there is no coalition in the Verkhovna Rada. What is happening is, in his words, “the boisterous activity that recently erupted in parliament for the single purpose of preserving the seats.” Yushchenko placed the recent coalition next to what happened during the previous convocation when Oleksandr Moroz betrayed his political allies in order to form the ruling coalition in parliament.

In the end,  it appeared that Ukraine had  agreed to pay off its $2 billion gas debt rather than find out what kind of sanctions Russia would impose on Ukraine. However,  the dispute has not ended between the two sides. Ukraine is against the new price being asked by Gazprom of $250 per 1000 cubic meters, gas disruptions are still possible tomorrow.  

Russia warns Ukraine that it faces "sanctions" if debt owed to Gazprom is not paid by the begining of the new year. 

The prime minister, in reference to the ongoing crisis, thinks that the president should resign alongside the head of the central bank. She accuses them of participating in currency speculation by using funds intended for Nadra bank to make money off the hryvnia. She has presented no evidence for these accusations. 

She is also ready to resign if a better candidate can be found for prime minister in the new coalition.  

While the recent protests about the economic crisis were small (around 1,000 protesters), there is evidence that the people will go out onto the streets if things worsen economically. As reported in the Kyiv Post, a large percentage of the population have a negative outlook on the economy.

94.6 percent of Ukrainians polled by the Social Research Centre Sofia regard current economic situation in the country as bad, indicate outcome of the poll carried out by the centre.

The pollees were asked to estimate the economic situation in Ukraine.

So, 58.6 percent of them think it is bad, 36 percent thinks it is rather bad than good.

At the same time 0.3 percent of the respondents said the situation is good, 3.6 percent said it is rather good than bad.

With the new year just around the corner, Russia has decided to start the New Year by threatening to again shut off gas to Ukraine.  BBC Ukraine and the Wall Street Journal are reporting that Gazprom will shut off gas on the 1st of January 2008 if debt owed to the energy giant is not paid. Ukrainska Pravda's article on this situation mentions that Ukraine owes money for gas given provided for the months of October, November, and December. 

Interestingly, Eurasia Daily Monitor had a article about Gazprom's financial difficulties in the next year (Volume 5, Issue 240-"The Price of Gas and Russian Democracy").  While other gas disputes with Ukraine since 2006 have ended without gas being shut off, perhaps next year the company will be more forceful and shut off the gas if its demands are not met because of a projected drop in revenue. Russia may try to hasten to collapse of the new coalition.  OU-PSD commitment could collapse under pressure from the president. A prolonged dispute would shake the Ukrainian economy even further and may create further public discontent. 

 Earlier, in November, the deputy head of Gazprom Export, Sergey Chelanov, predicted that in the first quarter of 2009 the price of gas would be in the range of $360 to $400 (Kommersant, December 15). If these predictions come true, Gazprom’s profit will drop by $20 billion in 2009.

Low gas prices will also delay Gazprom’s investment policy and the development of desperately needed new gas fields. The state-owned gas monopoly has already requested that the government suspend tax levies on importing equipment vitally needed for the development of the Shtokman gas field project and the East Siberian fields. If this request is vetoed, these major projects might be forced to suspend their activities for some time.

The crisis might also delay the North Stream and the projected South Stream pipelines, both of which are highly expensive and would serve Russian political rather than commercial needs.

A drop in the price of gas by 30 to 40 percent will reverberate throughout the battered Russian economy which already is seeing a steady devaluation of the ruble and a major slowdown in economic growth. In November Russian industrial output shrank 10.8 percent on the month and payments arrears are rapidly growing (Moscow Times, December 17).

Another piece from BBC, this time on the president's attitude toward members of his party who accepted the new coalition with BYuT and Lytvyn.  As some may remember it was his party which bolted the coalition in early September. No new election materialized after that because of the economic crisis and strong opposition from BYuT. Instead a majority of this party's members (which is an umbrella for 9 small parties) accepted a new coalition; with the addition of Bloc Lytvyn whose leader is now speaker of the Rada. The president feels they should be punished for going against the party's decision to be in a coalition with BYuT. He also said that the only reason for creating a new coalition was to keep the prime minitership with Tymoshenko. 

The Eurasia Daily Monitor's recent issue (Volume 5, Issue 239) on the new coalition casts light on the fractures within party and how weak his position in the party is right now.  While the president sees treachery with those members who violated the decision, members may simply be tired of his leadership and his decision to create a new party. 

Lytvyn’s election as speaker was only made possible by the 27-member Communist Party faction, which supported the vote (www.pravda.com.ua, December 9-10). Only 40 of the 72 OU-PSD deputies supported his election. The larger orange coalition cannot remain stable if it has to rely on the votes of the Communists, who would never support many of the anti-crisis measures that Ukraine is being forced to adopt as part of the IMF stand-by loan negotiated in October.

 Of the nine parties in the OU-PSD, five did not support the OU-PSD’s withdrawal in September, and this month six supported joining the larger orange coalition. It is interesting how many of the deputies have fallen out with Yushchenko. Only 30 of the 72 OU-PSD deputies attended a meeting with the president on December 15.

The president does not favor the larger orange coalition and holds out hope for a technocratic government (www.president.gov.ua, December 15); but this is unrealistic in a parliamentary democracy, as the position of prime minister will always go to the leader of a political party.

Here's a piece from BBC Ukraine on protests, which took place in Luhansk, L'viv, Donetsk, and Vinnytsia. While the protests were not large, about 1,000 people attended them, they may signal what tactics may use next year when new Rada and presidential elections are held. Regions and the Communists were the supportrs of these rallies, whose organizers demanded that the government stop inflation and falling wages plus resolve the crisis. Not a tall order, right? 

For those who may not know who Lytvyn is, a bio from Kyiv Post.  In English, but tranlation suggests it was lifted from another site that was pro-Lyvtyn.  Below is a small excerpt about Lytvyn concerning his time working with Kuchma. 

DT reports that 37 of 72 deputies support the new coalition, which now includes Bloc Lytvyn  and whose leader was just elected speaker. A letter obained by DT has a list of signatures supporting the coalition. 

Two pieces on the proposed new coalition from BBC Ukraine. While Lytvyn announced a new coalition with his bloc in it, OU-PSD deputies are still discussing the new agreement. While its very likely that the faction will be in the coalition, the leadership appears to be dragging thier feet on this. One faction deputy, Taras Stetzkiv, thinks that the coalition could last until next year's president election. In that case, perhaps that election will run simultanesouly with a new Rada election. It will also give the president enough time to build support for his  other party, United Center. 

If and when this coalition starts working, Tymoshenko expects that there will be a change in ministers.  While changes in government are expected, she will most likely stay on as prime minister. The prime minister expects these changes to happen very soon. The government changes will tell us what exactly was traded by the factions in return for a new coalition. If BYuT keeps the prime ministership, Lytvyn gets the speakerships, what will OU-PSD get in return?

After a long period of paralysis, which began in early September, a new coalition has been formed. The two factions currently in power, BYuT and OU-NPSD, will be joined by Lytvyn bloc. This result was not unexpected; it was the best chance Tymoshenko had in avoiding new elections. Lytvyn will return to his role as deal maker and also power broker as he balances the interests of the prime minister and president. According to BBC Ukraine, the new speaker received 244 votes with BYuT contributing 154, Communists 27, OU 40 and Bloc Lytvyn 20.  However, a representative from OU says that no new agreement has been reached for the new coalition. 

Lytvyn announced the restoration of the coalition minutes after being elected to his post with backing from 244 members of the 450-seat assembly. The coalition can theoretically command up to 258 seats, though in practice it will be somewhat smaller.

Lytvyn, who earned a reputation as a skilled negotiator while parliamentary chairman from 2002 to 2006, said he saw few reasons to choose a new premier.

"We have a government, we have a prime minister," Lytvyn told journalists after announcing the coalition.

"Clearly, there will be proposals from the coalition on the make-up of the government. I see no legal grounds for substantial changes in the government and, first and foremost, the prime minister."(From Kyiv Post)

Ukraine, like other countries in Europe, is struggling to deal with the economic crisis. The hrvynia has lost almost half its value in less than three months and Ukraine needed IMF aid to avoid economic collapse. RFE/RL has a good article reviewing the recent economic woes of the country.

Two RFE/RL pieces on NATO's decision not to offer a MAP to Ukraine.   The first one focuses on Georgia and reminds us that Georgia and Ukraine are unfortunately tied together. Unfortunate,  because  means that both will have to progress in meeting NATO standards before NATO gives them a MAP.  The second article  argues that NATO expansion has not ended, but will come eventually. 

Georgia and Ukraine's best hope for eventually winning NATO membership, analysts say, is to push ahead with military reforms and hope the international environment turns more favorable to their aspirations.

"I think the hope in NATO and in the incoming Obama administration is that after a few years of nitty-gritty military reform, maybe after a few years both Georgia and Ukraine will look like more credible candidates and maybe the wider political climate will be more favorable," Lucas says.

In addition to reforming their militaries to meet NATO standards, both countries also have a lot of work to do on the political front. 

Ukraine was not going to get a MAP from Nato. The U.S. did not have the support of all the members, with Germany pushing to keep Ukraine and Georgia out of the alliance. The last meeting among the alliance members produced a result that can only be described as a compromise between the two positions. 

Hitting on a well worn message, Yushchenko once again warned that Tymoshenko and Yanukovich were planning on allying together. The president is reported to have prepared a new decree dissolving the Rada if the two sides form a coalition.  However, one BYuT minister says that such a coalition will not happen. 

Interesting article about the current crisis, discusses some of the reasons that Yatsenyuk was forced to leave his post as speaker. Article suggests that a February or March election may now take place and considers it almost inevitable. 

The recent debt stand off has ended with Ukraine paying debt owed to Gazprom. As in previous situations, after a couple of weeks the crisis was resolved (from Reuters).

"We see this money and are ready to resume negotiations on December 2 to resolve the issue of gas supplies," Gazprom spokesman Sergei Kupriyanov told Vesti television, according to ITAR-Tass news agency. Kupriyanov did not say how much Ukraine had paid.

The NATO meeting in Talinn does not lead to a MAP for Ukraine. There seems to be little appetite for offering a MAP to Ukraine right now. Ukraine didn't help itself with its Fall political crisis and its on and then off preterm election for the Rada.