Five years ago, post-Soviet Ukraine, a critically placed country of some 46 million people, seemed to be on the fast track toward modernity. The Orange Revolution, the spontaneous mass protests of fraud in Ukraine’s November 2004 presidential election, presaged a mature civil society and free media. The protests led to the election of Viktor Yushchenko, a banker and former Prime Minister who had joined the opposition and challenged Viktor Yanukovych, handpicked successor of the authoritarian Leonid Kuchma.

But the Orange Revolution’s rhetoric of democracy, reform and NATO integration never lived up to reality. Internecine conflicts and the vanity and venality of the two main leaders of the Orange forces, Yushchenko and Yulia Tymoshenko, plagued a series of governments and led rapidly to political deadlock, dysfunctional populist eruptions, and the squandering of a rare mandate for fundamental reform. Indeed, internal Orange camp rivalries led to the collapse of two governments and one incipient majority. When the second Orange government of Prime Minister Tymoshenko took power in December 2007, her policies faced vetoes and nearly endless obstacles strewn before her by President Yushchenko.

The lack of serious long-term dialogue with the opposition, represented by the Party of Regions, added to Ukraine’s domestic political fragmentation, as it reflected the political elite’s indifference about forming a consensus on such contentious issues as national identity, the complex relationship with Russia, and Ukraine’s historical legacy. Worse still, by the end of the Yushchenko presidency in 2010 it had become clear that Ukraine’s Orange leaders, despite their high-minded paeans to Western values, were little different from their adversaries and eagerly made common cause with the country’s oligarchs, the richest ten of whom control about a quarter of the country’s GDP. They also tolerated corruption within their own inner circle to a degree that ultimately made them no better than the elite they had replaced in late 2004.

As a result of all these factors, key agenda items like European integration, NATO membership, judicial reform and efforts to combat massive corruption at middle and lower levels of society all flagged. Before very long, U.S. and European interest in Ukraine plummeted for lack of any means to cooperate on concrete initiatives. Ukrainian politics had thus demobilized the country’s foreign policy.

Political infighting and intrigue on the eve of Ukraine’s presidential elections also had dire economic consequences. The rivalries led to populist policies mixed with raw patronage, as money was squandered on bloated state payrolls and unsustainable pension payments. Ukraine’s GDP in 2009 dropped by 15 percent, one of the worst performances in all of Europe. The country’s budget groaned under the weight of a mounting deficit so high that it forced the IMF to suspend aid.

Yanukovych’s Return
In light of the Orange movement’s endless infighting and rank mismanagement, it was no surprise that the Party of Regions, whose electoral base lay in Russian-speaking southern and eastern Ukraine, stood to benefit in the presidential election held in early 2010. Yet the best that the Party’s standard-bearer Viktor Yanukovych could manage was a narrow 3.5 percent victory over the charismatic Yulia Tymoshenko in the February runoff election. On February 25, with 49 percent of the vote, Yanukovych took office as the first President of Ukraine elected with a mere plurality rather than a majority. Just as important as this is the fact that the election effectively ratified the nearly twenty-year-old divide between the country’s Russophone, Russia-friendly East and the Ukrainophone, EU-friendly West, which remains skeptical of Russia and its enticements.

Despite his narrow margin of victory, Yanukovych and his team moved rapidly to consolidate power and shape a new majority. The pro-business Regions Party succeeded in convincing a pivotal minor party, the Lytvyn Bloc, to join together in an alliance. It also made common cause with the Communists and cajoled a handful of former Tymoshenko and Yushchenko supporters to fashion a durable (and still growing) majority of 258 out of 450 deputies. Incumbent Prime Minister Tymoshenko’s government fell on March 4. A new Regions-led government soon replaced it, headed by geologist-turned-tax administrator Mykola Azarov. A remarkable spirit of consensus and cooperation within the new parliamentary majority, government and presidency marked the first hundred days of this new arrangement.1

President Yanukovych had considered a parliamentary coalition with the moderate reformers from Yushchenko’s Our Ukraine bloc. When negotiations dragged on, however, he opted for a coalition primarily dominated by politicians from Ukraine’s Russophone East and South, a choice that is liable to reinforce the country’s neuralgic regional divide. Several ministers have already started mouthing pro-Russia encomia. The controversial education minister Dmytro Tabachnyk, who has made a career out of derogating Ukrainian-language literature and culture, has turned his efforts to protecting the rights of Russian speakers in schools and universities. The new Interior Minister Anatoly Mohyliov has defended Stalin’s 1945 mass deportation of the Tatar population of Crimea and recently suggested that there were no political prisoners in the Soviet Union. His underlings have taken to beating up journalists and opposition protestors while allowing pro-government supporters to gather freely.

Moreover, the narrowly-based government is in its majority an amalgam of old-school politicians, including communists and socialists, who are likely to balk at some of the decisively market-oriented approaches emanating from the presidential team. Prime Minister Azarov, for example, has an old-school (read: Soviet) reputation for disciplined management and little feel for the modern market economy. Thus the news from Ukraine is somewhat mixed.

Ukrainian civil society has not been slow to react to these changes at the top. While the majority of Ukraine’s television networks is free of partisan bias and open to opposition politicians, several have begun tilting toward the Regions Party. Ukraine’s oligarch-owned media, which had room to maneuver when the Prime Minister and President were clashing, apparently now seeks to solidify relations with the more cohesive new government. This, in turn, led to a reaction from television journalists, some of whom have created a Stop Censorship movement, which has rapidly grown in size and energy. The movement’s public protests, while small, have been vigorous and frequent. They seem to have gotten the attention of the new authorities: During a June visit to Kiev I saw one of a dozen or so “flash mobs” that had gathered nationwide to protest pending legislation to regiment, if not restrict, public demonstrations.

But perhaps they protest too much. There are no new censorship laws; one of the reasons is that President Yanukovych himself opposes them. Within days of the first censorship and civic assembly protests, he spoke out clearly against putting political pressure on the media. And the Regions Party itself soon announced that it opposed the then-current draft law on public assembles and would insist on revisions that reflected the views of civil society groups and human rights monitors. While media monitors do complain that there is less criticism of government on television, opposition leaders have substantial access to the public through highly popular prime-time policy talk shows on most major networks.

Nonetheless, the new government has elicited criticism for its apparent tilt away from the West and toward Russia. In the first weeks of the new administration, it seemed as if a Russian political blitzkrieg were rolling across the Ukrainian steppe. In April, the administration agreed to extend the stay of Russia’s Black Sea Fleet in the Ukrainian port of Sevastopol until 2042.2 This was agreed in apparent return for Russia’s willingness to reduce Ukraine’s gas prices by 30 percent. But these prices were much inflated, the ruinous legacy of a pricing agreement struck by former Prime Minister Tymoshenko, who traded low prices in 2009, her last year in office, for much higher prices in 2010, which were to take effect after the presidential elections. The opposition lambasted the Black Sea Fleet legislation, which had been rapidly rushed through the parliament in violation of its procedures, as a surrender of national sovereignty.

After these events, Russia followed up with a multi-front offensive, the aim of which was to slice away chunks of Ukraine’s sovereignty: to place Ukraine’s gas and oil monopoly under majority Russian control; to merge the two countries’ aircraft industries; to purchase major Ukrainian banks; and to place Ukraine’s gas and oil pipelines under Russian co-management. For the time being, Ukraine is wary of such wholesale interdependence. It will likely reject Russia’s far-reaching gas and oil proposals, but its new President may find common ground on joint airplane production, and the parliament is likely to agree to partner with Russia in the construction of two new Ukraine-based nuclear power plants that would export electricity to the European Union.

The new leadership in Kiev understands that Russia will continue to exploit Ukraine’s economic vulnerabilities and its need for foreign investment amid Western equivocation about investing in Ukraine. That precisely is why Ukraine is seriously interested in attracting new capital to balance Russia’s vigorous new economic incursions. A state visit to China and other rising Asian economies this fall, a visit by Hillary Clinton to Kiev over the July 4 holiday, and a July announcement that Ukraine has reached an agreement in principle with the International Monetary Fund on renewing aid are only the most visible signs of Ukraine’s efforts to diversify the bases of its foreign policy.

Just as important as these efforts are President Yanukovych’s continuing assertions that European Union membership is Ukraine’s principal strategic aim. He also has reaffirmed that Ukraine will not join any military, political or economic structures outside those of the European Union, politely rejecting Russia’s calls for deeper integration. At the same time, his team has made clear that, like two-thirds of Ukraine’s citizens, it does not support NATO membership and instead backs a “non-bloc” security policy. This position is certain to reduce tensions with Russia, at least in the mid-term.

Most promising is Yanukovych’s approach to the economy. While the government consists mainly of fifty- and sixty-somethings, the presidential administration is populated with thirty- and forty-somethings who have been educated in the country’s elite institutions. These young lawyers and economists, many of whom speak English fluently, grew up amid Ukrainian independence and are conversant with Western ways. Yanukovych’s Chief of Staff, Serhiy Lovochkin, wrote his doctoral dissertation on U.S. tax policy. Irina Akimova, First Deputy in the Presidential Office, formerly served as head of a UN Development Agency blue ribbon commission on economic reform. One of the few administration voices sensitive to the concerns of Ukraine’s Western electorate, Hanna Herman, the President’s image-maker and spokeswoman, formerly headed Radio Liberty’s Kiev office.

While the more conservative government team is pressing small and mid-sized businesses to help reduce the gaping budget deficit through intensive and intrusive audits, reformers in the government and their backers in the presidential administration are looking instead to reduce regulatory impediments, create tax holidays for new small businesses and improve contract enforcement to spur foreign investment. They want to reduce inefficiencies in energy use through reductions in heavy subsidies to gas consumers and to restructure pensions in part by raising the retirement age, which stands now at 55 for women and sixty for men.

One important signal of Yanukovych’s commitment to serious economic reform is the presence in the new government of Serhiy Tyhypko, a billionaire banker and Yanukovych’s political rival, who finished a strong third in the first round of the presidential election. As Deputy Prime Minister for the Economy and European Integration, Tyhypko oversees a large portion of the economic agenda and leads negotiations with international financial institutions. He insists Ukraine will soon reach an agreement with the International Monetary Fund resuming and expanding financing to strengthen the currency and recapitalize weak banks. Tyhypko told me in early June that he is convinced that Yanukovych is serious about implementing ambitious economic reforms. And it doesn’t hurt that, for reasons that have little to do with politics, the economy has been growing at a healthy annualized rate of 6.1 percent through May.

The Other News
Despite all these hopeful signs, the new ruling team includes a significant cohort of retrograde voices. Those voices incline toward authoritarianism and roughly align with the strong pro-Russia lobby within the ruling Party of Regions. This does not mean, however, that Ukraine will soon return to Russian domination or that a new authoritarian system will arise. Indeed, one already hears whispers that a government reshuffle this fall will retire some of the more politically polarizing Ministers. There also are signals that Yanukovych may be seeking to expand the base of his coalition by reaching agreement with a large segment of the Our Ukraine parliamentary bloc, including rumors this summer that several key government posts may be given to “Orange” politicians.

One hears, too, that government will likely jettison some divisive proposals to weaken the place of the Ukrainian language in the educational system in the run-up to local government elections.

Indeed, just as the pro-Western euphoria that accompanied President Yushchenko’s election was exaggerated, so is the alleged pro-Russian tilt of the new leadership. Anxieties about a Russia-influenced reassertion of authoritarianism are not likely to be borne out. As the country’s second post-Soviet President, Leonid Kuchma, famously asserted in the title of one of his books, “Ukraine is not Russia.” Ukraine has a strong linguistic and cultural identity. Its security and military services do not dominate the state and are not actively engaged in the political process, so a counter-majoritarian coup is extremely unlikely. Its Orthodox Church is fragmented into several groupings, there is a strong Eastern-rite Catholic Church, and Evangelical Christianity is growing in strength. Journalists are militantly protective of their rights, and civil society is relatively well developed. Charismatic and well-known leaders helm strong opposition forces. Above all, Ukraine’s economy is not resource-based, and the state, therefore, has fewer economic assets to deploy in a bid to influence society and build support.

Furthermore, President Yanukovych’s authority depends on the cooperation of his political allies rather than, as in Russia, on the broad constitutional powers of a strong presidency. Despite relative cohesion and cooperation, which have given Yanukovych approval ratings well above 60 percent, there are already signs of emerging rivalries among different factions within the Yanukovych team. Over time that might make it harder for the President to get his preferred policies enacted, but it ensures that Yanukovych cannot hijack the Ukrainian state as Vladimir Putin hijacked the Russian one.

Not all analysts of Ukrainian affairs share these relatively optimistic views. Indeed, despite little direct evidence, many human rights groups now contend that the new government has launched a full-scale assault on press freedoms and civil liberties. Domestic foreign policy analysts and some Western scholars alike suggest that Ukraine is well on the road to surrendering its sovereignty and becoming a vassal of Russia. Rutgers University professor Alexnader Motyl has argued in the pages of Foreign Affairs that Yanukovych is both an enemy of democracy and anti-Ukrainian. On the pages of the Kyiv Post he has written that “Yanukovych has shown that he is an authoritarian, radical, and disunifier—everything that the Orange revolutionaries had accused him of being in 2004.”

What accounts for such overheated analysis? It stems from three sources: the myths and realities of the Orange Revolution, Leonid Kuchma’s authoritarian rule, and the myths surrounding the emergence of vast fortunes in Ukraine in the late 1990s. And aside from these three sources, there is also the Grand Guignol mudslinging style of Ukrainian politics.

Voter fraud and electoral irregularities in the 2004 presidential election, authoritarian policies largely implemented by the former President Kuchma and the notorious poisoning of then-opposition standard-bearer Viktor Yushchenko combined to give rise to the view that the forces around Yanukovych had little regard for democratic practice. Retrospective analysis of that period, however, makes it clear that at least three protagonists were engaged in political battle in that crucial year: Yushchenko’s proponents; Yanukovych’s advocates; and, less often mentioned but not less important, those who sought to prolong the power and perhaps the presidency of two-term President Kuchma. The failure of Yushchenko and the Orange Revolution to offer a clear and definitive legal answer to the events that sparked the initial protests—including the uncovering and punishment of those who attempted to kill or incapacitate him through dioxin poisoning—also contributed much to the chaos of the moment and to the ambiguities about who was responsible for what.

The narrative of the Orange Revolution, too, exaggerated the image of the Orange forces as agents of the West and of the Party of Regions as a tool of Russia. In point of fact, both were indigenous forces that sought support wherever they could get it. Indeed, a decade ago the Regions Party’s business elite already understood that Ukraine’s future rested in European integration. And in 2000, its leaders sought to make common cause with Viktor Yushchenko, not Viktor Yanukovych, but were blocked from doing so by then-President Kuchma.

My own conviction that President Yanukovych and his inner circle today are on balance normal political leaders seeking to build a European state did not come easily or quickly. Having headed a U.S.-based democracy organization that worked with human rights and opposition groups from the 1990s to the Orange Revolution, I had armed myself with certain natural biases. But my interactions with Ukraine’s entire political spectrum for the past two decades persuade me that, with the exception of their cultural and linguistic policies, the Yanukovych team is essentially on the right track. Indeed, the President, like many in his inner circle, has undergone a transformation as rapid and remarkable as the fundamental changes that have taken place in Ukraine itself, which has transformed itself in two decades from a Soviet province mired in backward totalitarianism to a still-imperfect but functioning market democracy.

As a Russian-speaking teenaged orphan living in extreme poverty in the Soviet industrial wasteland of Yenakyeve, Yanukovych was twice sentenced to jail on charges of assault. Prison changed him. After his release he worked rigorously at self-improvement, went to college, and became a deeply devout Orthodox Christian. He worked first as a business manager and later as a regional official, Deputy Governor and Governor of Ukraine’s largest province, Donetsk. When he entered the national political scene, already in his early fifties, he worked diligently to learn Ukrainian and today speaks it precisely and fluently. After the Orange Revolution, he remained committed to politics and staged a dramatic democratic political comeback through perseverance and strength of will. In time, he became a public figure comfortable with the give-and-take of pluralistic politics.

A similarly radical transformation occurred in many of Ukraine’s oligarchs, who, during the collapse of communism, amassed their fortunes in an environment in which criminality, murder and violent conflict over wealth and property were the norm. Today, however, they are not only super-rich; they also run exemplary publicly traded companies, rely on the services of Western-educated top managers, have their company finances audited by top Western accounting firms, are engaged in creative charitable work, and are sophisticated citizens of the globalized community with significant holdings in the European Union and North America. Having survived an environment of rampant corruption, they now seek transparency, predictability and contract enforcement to protect their vast fortunes.

As for Ukraine’s tradition of inflated political rhetoric, this is the standard undertone with which all observers must make their peace. To judge by some of the charges the opposition levels today, including statements by Tymoshenko, Ukraine is now a country led by the Yanukovych “mafia regime”, which is surrendering its sovereignty, pillaging its resources and installing a dictatorship. Yet just a year ago, stymied by internecine conflict among the Orange team, Tymoshenko herself sought a grand alliance with this same, supposedly evil Yanukovych. Other opposition leaders, including Serhiy Tyhypko, who serves in the new government, and Arseniy Yatseniuk, the former parliamentary speaker, may voice targeted criticisms at specific failings, but they reject claims of the malevolent intentions of the new team. These more nuanced and measured views should inform Western governments and analysts, but nuance has an uphill climb to get past old habits and easy-to-understand simplifications about good guys versus bad guys that so often tempt American audiences.

Assaying Ukraine’s future is not just a game for political junkies and ethnic affiliates living in North America. The stability of Europe depends on Russia’s political evolution and consequently on Russia’s behavior toward its neighbors. The failure of democracy in Ukraine would likely strengthen authoritarian tendencies in Russia and embolden the siloviki, Russia’s national security elite. At the same time, tensions between Ukraine and Russia could again disrupt Europe’s strategically important energy flows, while unresolved issues such as border delineation could quickly escalate and take unpredictable turns.

From this perspective, President Yanukovych’s more pragmatic approach to Russia is to be welcomed, provided it is not a harbinger of a full-scale takeover of Ukraine’s key industries by Russian interests. But that is not likely. Yanukovych has made it abundantly clear in both private and public declarations that he does not want Ukraine to be overly reliant on Russia. However, Europe and the United States seem resistant to re-entering Ukraine’s complex market environment. If IMF funding is renewed this autumn, as many expect, the U.S. and European governments should encourage the flow of new investment into the country. They should also put President Yanukovych’s strong public declarations in favor of European integration and democratic values to the test. Any departures from these, and certainly any attempts to backtrack on human rights, should meet with consistent and pubic criticism by U.S. and European leaders.

Ukraine under President Yanukovych remains on a path toward stable democracy and eventual European integration. But the fragility of its political institutions, its vulnerability to pressure from Russia, the deep problems caused by the global economic crisis, the temptations of anti-democratic shortcuts and endemic corruption all pose challenges to Ukraine’s progress. It is therefore essential for the future of a stable Europe and a more cooperative Russia that the West help Ukraine’s new President succeed. Yanukovych is not a spotless “good guy” or a dastardly “bad guy”, but he is the guy who won a free and fair election in a country where there are real checks and balances and a high degree of pluralism. On that basis he deserves the benefit of our doubt.

1 In 1996, four-and-a-half years into independence, Ukraine adopted a constitution that created a mixed presidential-parliamentary system with the predominant influence on policy in the hands of the President. In 2005, as a consequence of a compromise between opposition and government during the Orange Revolution, presidential powers were eroded and a system of rough parity between parliament and President was put in place. Ukraine’s polity therefore remains a hybrid, with the President enjoying far fewer constitutional powers than in autocratic presidential post-Soviet states like Russia, Belarus and Kazakhstan, but far more powers than the presidencies of Western and Central Europe.

2 For background see Charles King, “City on the Edge: Is Sevastopol the Next European Flashpoint?” The American Interest (May/June 2009).

Adrian Karatnycky is a non-resident Senior Fellow at the Atlantic Council and Managing Partner of Myrmidon Group LLC, a New York based consultancy. This essay appears in the Nov-Dec 2010 issue of The American Interest.

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