Democratic Accountability in Ukraine #1

April 28, 2010
Report No. 1

With the election of Viktor Yanukovych to the presidency of Ukraine, the American Institute in Ukraine launches a new analytical series reviewing the new Administration’s performance measured against promises made during the election campaign. Initially we have selected three areas for review and grading (with grades of “5” for excellent, “4” for good, “3” for satisfactory, “2” for “unsatisfactory”, “1” for poor and “incomplete”) :

  • III - Foreign policy
  • III - Economy
  • III - Social initiatives

Specific categories within these three areas are examined as circumstances warrant.

NoMain points (brief description)Status of fulfillment /evaluation
IFOREIGN POLICY 
1.1Ukraine’s Nonaligned status

Grade: 4

AIU has called for definitive action to permanently close the possibility of Ukraine’s NATO accession. While that has not yet been done important first steps have been taken. The Ukrainian government office for NATO accession has been closed, and all indications are that President Yanukovych has told partners in both East and West that NATO membership is permanently off the table. However, the need still exists to pass a statute or constitutional amendment making Ukraine’s neutral, non-NATO course an unalterable legal reality.

1.2Renewal of mutually beneficial and friendly relations with Russia, CIS states

Grade: 5

AIU has argued that Ukraine’s friendly and productive relations with Russia are a top priority, comparable to Canada’s need to prioritize its relationship with the United States. President Yanukovych has established friendly personal ties with Russian President Medvedev and Prime Minister Putin and reached a historic bilateral accord on energy prices and Sevastopol. Russia will sell gas to Ukraine 30% cheaper. Prime Minister of Russia Vladimir Putin called the agreement between Ukraine and Russia unique and said other partners of Russia should not expect similar agreements.

1.3Strategic partnership with USA, EU, G20 states

Grade: 5

After ties with Russia, Ukraine’s multi-vector policy must seek productive relations with Europe and the US. President Yanukovych emerged as the star of President Barack Obama's nuclear summit in Washington by agreeing on transfer of nuclear material. He was one of the few world leaders given a one-on-one meeting with President Obama. He gained US endorsement for IMF support for Ukraine following his successful mission to Brussels right after his inauguration.

1.4Official Status of Russian language status

Grade: 3

In his campaign statement Mr. Yanukovych promised to elevate Russian to the status of a second official state language, a position supported by AIU. No direct steps have been taken in that direction. Indeed, since his election he has declared that Ukrainian language will be the only official language in the country. It is unclear what this statement means in light of other actions. For example, Dmytro Tabachnyk, Minister of Education and Science of Ukraine, supports cancellation of obligatory dubbing of foreign films in Ukrainian as well as restrictions on broadcasting of Russian channels in Russian language in the territory of Ukraine.

Sergey Kivalov and Vadim Kolesnichenko, deputies from the parliamentary group Party of Regions, registered a draft law in the Verkhovna Rada, stipulating use of Russian language in legal proceedings along with official Ukrainian.

IIECONOMICS 
2.1Finances and investments

Grade: 4

While not a policy in itself, Ukraine’s access to lending from the IMF and other credit is essential to giving the country the breathing space it needs to implement badly needed reforms. To that extent, the new Administration can claim some degree of success. Sergey Tigipko, vice-premier for economics, left for Washington to participate in a meeting of the board of the International Monetary Fund and the World Bank, to take place on April 24-25. Ukraine intends to obtain 12 billion US dollars credit for two and a half years from the International Monetary Fund under the new program of cooperation.

Ukraine will decide on the program of cooperation with the IMF by the end of May 2010, according to the Presidential administration, and Kiev is asking the IMF to approve the new stand-by program for the period from June 2010 until December 2012. The Cabinet of Ministers completed elaboration of the draft state budget of Ukraine for 2010 and submitted it for consideration of the Verkhovna Rada and the general public. Prime minister Mykola Azarov says the government will present the draft state budget for 2010 in the parliament on April 27.

2.2Stimulation of small and medium-size enterprises

Grade: Incomplete

Nothing to report in this installment. AIU will monitor for future developments.

2.2.1Approval of a new tax code

Grade: 3

Steps to lessen the tax burden are necessary with respect to all sectors. Legislation in the draft stage is an important first step – but only a first step. On April 22 the State Committee of Entrepreneurs made public the concept of the draft law on simplification of the tax system, and accounting and reporting of small business.

Premier Mykola Azarov is convinced a new version of the Tax Code of Ukraine will come into force on January 1, 2011. AIU will closely monitor legislative developments.

IIISOCIAL INITIATIVES 
3.1Family support

Grade: Incomplete

Nothing to report in this installment. AIU will monitor for future developments.

3.2Affordable housing

Grade: Incomplete

Nothing to report in this installment. AIU will monitor for future developments.

3.3State pension

Grade: 3

Maintaining and even increasing state pensions has two sides to it – increasing the payments, and finding the funds to pay for it. The new Administration has begun efforts to address the increases. It remains to be seen how they can pay for it. The Cabinet of Ministers passed a decree to raise pensions, and accordingly the rate of assigned work pensions will be raised since March 1, 2010.

The Cabinet of Ministers increased twice the allowance to veterans of the Great Patriotic War on the occasion of Victory Day. President Viktor Yanukovych promised to fix pensions in Ukraine at a level similar to that which prevails in Russia.