The European Courier | Ukraine's Quadruple Crisis

Ukraine has triumphantly fulfilled its buffer mission of arresting the Russian advancement into Europe, - albeit in a peculiar manner as no one ever implied this advancement to be the natural gas supplies. The country considered by Brussels to be only good for a buffer, - if not against Russia then against the illegal Asian immigrants, - is meanwhile going through a bitter crisis, or rather, four of them. There is a political crisis whereas the minority government led by Yulia Tymoshenko is in a bitter strife against both the former ally President Viktor Yushchenko and the opposition led by Viktor Yanukovych; this is essentially a triple contest for the presidency. There is the economic crisis of nearly-comatose industry, shaken banking system, and the collapsing national budget. There is the crisis of ethno-national identity whereas the long-latent conflict of different population groups identifying with different nation-states can be dangerously activated. And there is the crisis of democratic values whereas the young Ukrainian democracy brought about by the Orange Revolution of 2004 is increasingly looking as a financial, political and moral bankrupt.

Hardly resembling Robespierre and Danton, the leaders of the Orange Revolution possess one feature characteristic of revolutionaries: they save their fiercest urges for each other. Rocked by the ferocious economic tempest, besieged by the popular, well-funded and aggressive opposition, the governing Orange camp finds enough space for an internal feud, or rather, an intramural war of annihilation.

Yulia Tymoshenko’s positions were too weak to let her be the Number One in the Orange Revolution, and her ambitions were too strong to let her play the Number Two in any long-term game. In this light, the Orange camp was destined for a bitter schism by its victory.

Already in 2004 Tymoshenko was for many “the first choice option” while Viktor Yushchenko often seemed a pro-Kuchma leader of the anti-Kuchma movement. Yushchenko’s appeal was largely a function of the profound revulsion towards the increasingly cheekily autocratic regime of Leonid Kuchma. But his dealings with the Kuchmists often seemed treacherous to his supporters, - the alleged promise to leave the regime’s crimes uninvestigated, and the shocking awards of honorable medals to the odious members of Kuchma’s cohort.

Yushchenko has never been good in the art of public politics, - secretive, dry, unsmiling, even gloomy, with the air of arrogance and indifference, evading publicity, a fine economist but an awful manager, he clearly is a technocrat rather than a public politician. To the detached, phlegmatic, elitist, - and some would say treacherous, - Yushchenko, the starkest contrast is Yulia Tymoschenko - a passionate, opinionated, accusatory populist tirelessly prophesying the coming prosperity. Opponents see her as an unscrupulous egomaniac with dictatorial inclinations, but as far as the Orange voters are concerned, she completely outclasses Yushchenko as a communicator.

And so, in the victorious Orange camp, the Number Two was far more ambitious, charismatic and popular than the Number One; even if Tymoshenko could restrain her urges and stick to the promise of working for the second presidential term of Yushchenko, there still remained at least two problems: the problem of the entourage and the problem of the voters.

First, both of the Orange leaders led their own bands of businessmen and politicians with healthy appetites for profits and demands for public offices. Besides reconciling the interests of Yushchenko and Tymoshenko, one had to reconcile the interests of their associates.

Second, the Orange voters have been quickly abandoning Yushchenko since 2005, insulted by his cordial dealings with the former Kuchmists that culminated in presenting one of the highest national awards to the former Prosecutor General Michailo Potebenko considered by many to have derailed the monumental Gongadze case. The President was quickly losing his martyr nimbus, - the story of the poisoning that disfigured his face, - and appearing in ever more autocratic colors. The words “cronyism” and “corruption” began appearing next to Yushchenko’s name. Add to this the chronic helplessness of the President as a public communicator. Whether a reason of Yushchenko’s falling popularity, Tymoshenko was the beneficiary thereof. The disgruntled Orange voters were now pouring into her political domain.

Reelecting Yushchenko’s in 2010 requires turning Tymoshenko’s parliamentary electorate into Yushchenko’s presidential electorate; the question was - to what degree would that be possible? It has increasingly seemed that the Prime Minister would be able to transfer only a part of her electorate to Yushchenko which means the President’s defeat at the hands of the revengeful Viktor Yanukovych of the Party of Regions. Now, of course, it is commonly held that Yushchenko’s presidential days are numbered as his ratings are beyond repair, never exceeding 10%.

Before Tymoshenko realized she was the only viable presidential candidate for 2010 from the Orange camp, she had already decided to be in the election, thus breaking the pledge of staying behind Yushchenko. The President, however, was himself unintentionally pushing her in this direction; a self-fulfilling prophecy was in work here – the more Yushchenko suspected Tymoshenko of presidential ambition the more obstructive towards her he was becoming, and the more obstructive he was the more rebellious she grew.

What began as accusations of corruption leveled by Tymoshenko against Yushchenko’s closest companions in 2005, by 2009 developed into a full-scale war of annihilation within the former revolutionary Duet. The Prime Minister accused the President of deliberately ruining hryvnia, the national currency, for the purpose of personal financial benefit; she also charged that Yushchenko committed the same baneful roguery during his days as the Head of the National Bank in the 90-s (which prompts the question – did she know that while standing next to him on the podium of the Orange Revolution?). The President responded with the characterization of the Prime Minister as a “venturer” pursuing the “limitless power”. The Prime Minister raised the invectives to the level of accusing the President of consciously leading the nation towards default and bankruptcy so that the 2010 election would be cancelled and he would retain his office.

Joyously watching these intramural Orange massacres is the Party of Regions that besieges the nation’s high offices. Controlled by industrial tycoons, supported by powerful media, based in the Russian-speaking heavily populated Eastern Ukraine, Putin’s favorites are standing a good chance to win any election, presidential and parliamentary. Except the associations with Russia and the Kuchma regime, nothing is working against the Party’s appeal as its talking heads are enjoying the prolonged moment of the “We Told You So!” glory.

But given Ukraine’s political system with its multiple, overlapping authorities, everyone has an opportunity to blame others for the horrific state of economy, the 25% annual rate inflation, the collapse of the national currency, etc. Tymoshenko’s presidential crusade will involve portraying Yushchenko as the spoiler of her prime-ministerial efforts, and presenting Yanukovych as a threat to democracy and to Ukraine’s European prospects. Going head-to-head with Yanukovych, Tymoshenko will obviously rely upon those nationalistic pro-Western voters who will never support a Russia-oriented political force, no matter how meager the Orange achievements are. Here, however, Tymoshenko may encounter a torturous hindrance, - an independent liberal nationalist untainted by the failures of the Orange governments. This place may be taken by the young and appealing Arseniy Yatseniuk, the former Foreign Minister and the Parliament Speaker. Disturbed by the launch of Yatseniuk’s political campaign, the Prime Minister has already scored an attack on him, alleging Dmitry Firtash’ money behind the young liberal (Firtash is the de facto owner of the RusUkrEnergo gas trader, and a political backstager working with both Yushchenko and the Party of Regions).

Having enjoyed high product prices with low labor costs and extremely cheap natural gas for years, Ukrainian metallurgy still finds itself ridiculously obsolete with 45% of its output produced by the outdated open-hearth Siemens-Martin method. True, the metal tycoons were busy creating the integrated holdings encompassing ore, coal, coke and metal production, but they have also massively invested in political struggles, as well as unrelated sectors of economy. It has become common for Ukrainian billionaires to ‘own’ a political party, or a bunch of Parliament members, to hold a major TV station, a few newspapers, and a football club, - while their industrial assets are still obsolete Soviet-era monsters with high energy consumption and high cost of production.

As can be expected of a post-communist society jumping into the volatile waters of capitalism, many profitable assets quickly found their way into the hands of the most sly, robust, pushy and well-positioned individuals, sometimes of downright criminal background. Naturally, the high-voltage, crude and hungry entrepreneurs of the nonchalantly permissive post-Soviet years were both unable and unwilling to invest, and targeted assets that promised quick profits. Given the ruinous condition of the post-Soviet Ukraine, the holed budgets, the spread of the non-monetary forms of trade, the hyperinflation, and the nonexistent banking system, there were no domestic investment capabilities. Money could only come from abroad; but foreign investors were apprehensive about the feverish country with a dysfunctional economy and the widespread pro-Soviet revanchist sentiments, whilst the new Ukrainian elites were jealous about any potentially profitable assets.

With the national paranoia about the big money, domestic and foreign, rushing to buy the famously fertile Ukrainian soil thus dispossessing and destroying the peasantry, Ukraine has stubbornly refused to open its agricultural lands to full private ownership. The result has been exactly as it was predicted by the proponents of privatization in the early 90s, - stagnation and demise of agriculture, outflow of labor force to foreign farms, scandalously low productivity despite the very high fertility, and collapse of entire agricultural segments. Now the nation of the famously fertile soils and the notoriously low-paid peasants imports much of its food, including vegetables, fruits, and meats. The record-high 2008 wheat yield will probably further dissuade the politicians from confronting the fears of the comprehensive land reform.

Effectively barred from agricultural land, private enterprise was allowed into agricultural trade, - sometimes with devastating consequences. Traders are often able to corner producers into extremely low prices that maximize the traders’ profits while rendering production unprofitable.

Residential sector remains highly energy-intensive, using wasteful heating systems and socialistic payment philosophy. Changing the former requires money, fixing the latter demands political courage. Population is paying only a part of the cooking gas and electricity cost, - the rest is covered by the government, - and even so most citizens pay a fixed monthly tariff irrespective of how much they use. Corruption and fear of electoral backlash have ensured the preservation of this wasteful compensation mode. As a result, the country remains energy-intensive while the state energy companies have no money to drill the long-discovered gas fields.

It would seem that Ukraine’s fairly educated yet unfairly cheap labor force should have attracted foreign investments; however, the perceived political risks and the pervasive corruption defeat any incentive to invest.

Of all the principles of the contemporary Western capitalism, Ukraine has thoroughly mastered only one – ‘spend before you earn’. In recent years the population has developed a taste for enjoying the present at the cost of the future; millions engaged in the chase of consumer seductions, some went berserk on apartments, cars, HD TVs, etc borrowing money or buying on credit. The economic growth that seemingly justified this ‘loansome’ lifestyle was in fact premised on a rather fragile reality destined to go down together with Ukraine’s metallurgical export. The borrowing carouse drew money away from the real sector and into the banking business that offered prospects of much quicker profits.

All big fortunes in Ukraine generally owe themselves to one of the following sources:

the Soviet industrial legacy that often used obsolete equipment from the 1950s and even 1940s but remained profitable due to the low labor and natural gas costs;
natural gas, oil and electricity trading where well-connected business men would insert themselves in-between producers and customers to pocket the price difference without investing in infrastructure;
retail trade that built city markets, shop and mall chains selling largely foreign goods.

Currency manipulation became another ‘quick fix’ for some of the entrepreneurs who derailed hryvnia (Ukraine’s currency) in December.

Conclusively, the present economic predicament of Ukraine is essentially the crisis of two decades of massive underinvestment both caused (in part) and exacerbated by the pervasive corruption, as well as by unwillingness to push the unpopular land, tax and residential sector reforms.

A large part of Ukraine’s population does not identify with the Ukrainian nation; these people have a more or less developed Russian political identity in that they associate themselves not only with Russian language and culture, but with the Russian people and the Russian nation-state. In that respect, the Russian ultra-nationalist Constantine Zatulin is somehow right when he says that Ukraine’s independence has meant “an imprisonment for millions of Russians” who suddenly found themselves separated from their country. Of course, the allegory of “prison” is way too harsh, yet it is, in a sense, descriptive of the perception of the people who consider the confines of Ukrainian nation-state a violent imposition upon themselves. Ukrainian nationalists will be quick to point out that Mother Russia will gladly accept her wandering children back into her warm embrace; the problem with that “invitation to leave” is that for the people concerned, Ukraine is Russia (at least the Eastern Ukraine).

The talk is not about ethnic Russians living in Ukraine; rather, it is about political Russians to whom Ukrainian statehood is an imposed and undesirable reality. The Russian Federation is the country of their genuine self-identification. These “political Russians” include Russian-speaking and even Ukrainian-speaking ethnic Ukrainians reared in the “internationalist” spirit of the USSR. The size of this segment of the Ukrainian society is difficult to determine, and can generally be taken for about a quarter of the population. Another considerable part of the society possesses an “amorphous” inclusive Russo-Ukrainian identity whereas the “we” pronoun is equally applied to both Ukraine and Russia.

And only the remaining 50-60% of the population are “stable” nationalists. In this respect, Ukraine is a bi-national state where two parts of society have completely opposite urges about cultural and foreign policy. This identity crisis of the disharmonious and inevitably coercive bi-national exercise in statehood is immanent; it has haunted Ukraine in every emancipation attempt, whether in Hetman Mazepa’s 1709 efforts or in the 1918 endeavors. In 1991-2004 the crisis was latent because the irritants were of low intensity; Ukrainian nationalist were content with the status of Ukrainian language as the sole official, and the Russian part was content with the complete cultural freedom and pro-Moscow orientation of the Kravchuk and Kuchma governments.

This has been changing since the late period of the Kuchma rule. Many Ukrainians of Russian orientation saw the Orange Revolution as a US-funded junta aimed at pulling Ukraine away from Russia. There was a momentum for separatism when the pro-Kuchma Eastern Ukrainian elites fearing retribution from the potentially victorious Orange movement gathered for a meeting in Severodonetsk to discuss federalization of the country. Since 2005, the increasingly active linguistic Ukrainization and the avowed goal of the post-Kuchma governments to bring Ukraine into the NATO have driven the two parts of the country farther apart. The Russo-Georgian war in August elucidated the Ukrainian schism as the different parts of the country passionately solidarized with the different sides of the conflict.

In the context of possible shifts of global power balance, the economic hardships, the NATO membership question, the Russian navy bases in the Crimean peninsula, - Ukraine may well encounter intense internal frictions between those who see Ukrainian independence as freedom, and those who see it as subjugation. The Europe’s willingness to integrate Ukraine, and the West’s ability to guarantee it from any potential Russian revanchism will be among the decisive factors.

A post-totalitarian society will, at certain points, inevitably experience disappointment in its newly acquired freedom. To some, this freedom will bring poverty; to others – alienation, solitude, loss of meaning; to many it will mean frustration about the sheer idea of democracy. It has been heartbreaking for the Ukrainian liberals to watch the inevitable drift towards autocracy of every new president since the collapse of the Soviet Union. They all came with the slogans of democracy and transparency, and went far beyond what was legally permissible to the head of the executive power.

The disappointments and frustrations potentially lying ahead of Ukraine after the Orange Revolution are more menacing than those of the mischievous 90s. First of all, the Orange Revolution was an unprecedented in Ukraine’s history mobilization of citizenry. Never before had so many Ukrainians so passionately felt what it means to be a citizen; never before had the values of civil society been so immanent to such a large part of the population. A part of this gigantic enthusiasm, this strength of the aspiration may eventually turn against the very ideas it exalted, - if the hopes are violently crushed.

The leaders of this democratic upheaval are now themselves destroying the prestige of the Revolution by accusing each other of heinous political crimes. Because they came under the slogans of democracy, they are also destroying the faith in a democratic polity. The frustration will be hugely intensified by the ever more menacing economic condition of the country; the present talk in Ukraine is indeed about the possibility of an economically dysfunctional state unable to finance medical care, education, etc. So far all major politicians have dismissed the “strong hand” discourse; but the hardest part of the economic crisis is still ahead. With the horrendous mutual accusations within the Orange Camp, and the steadily collapsing economy, the young Ukrainian democracy is increasingly looking a financial, political and moral bankrupt. The average person on the street, politically disoriented and financially impoverished, may have too great a temptation to say that “democracy does not work”, and seek both meaning and protection in a “strong hand” polity. One thing is certain: the word “order” is being uttered in Ukraine rather frequently.

Author of the article holds a M.A. degree in Conflict Studies from the University of Ottawa, Canada. He is a former fellow of the National Endowment for Democracy in Washington, D.C. Mr. Krynytskyy also served as one of the press secretaries for the People's Movement Party in Ukraine.