Viktor Yanukovych’s Conundrum

November 22, 2011
Darren G. Spinck
Director of Public Affairs and Policy
American Institute in Ukraine

Following Ukraine’s January 2010 presidential elections, the world was Viktor Yanukovych’s oyster. Yanukovych’s resounding victory in an election that a watchful and skeptical west deemed both free and fair, relegated his political nemesis, Yulia Tymoshenko, to the political hinterlands. During the first year of the Yanukovych presidency, Ukraine resembled the proverbial bridge between the east and the west. Yanukovych’s administration expertly balanced Ukraine’s foreign policy strategy between the interests of its neighbors – Russia extending its naval base lease in Crimea – and the Euro-Atlantic community – cooperation on nuclear proliferation.

At the behest of Ukraine’s electorate, Yanukovych sagely closed the door to Ukraine’s joining NATO, thus avoiding any unnecessary acrimony with Moscow. Despite rebuffing NATO’s offers, Yanukovych was still feted by both Washington and Brussels as a friend of the west. While Yanukovych undoubtedly inherited a severely weakened economy, Kiev also had an impressive choice of economic suitors, with both the European Union and the Russia/Belarus/Kazakhstan Customs Union jostling to integrate Ukraine into their respective regional trade agreements. As a sports enthusiast, Yanukovych could even look forward to Euro 2012, when the eyes of the world sporting community will closely watch Ukraine’s audition for securing future international sports competitions.

While 2010 was – to borrow a phrase from U.S. President Barack Obama’s 2008 campaign – a year of hope and change for Ukraine, 2011, unfortunately, has shaped up to be the Yanukovych administration’s annus horribilis.

Yulia Tymoshenko is certainly no angel, but her prosecution, arrest, and trial smacked of revenge and political retribution. Due perhaps to Tymoshenko being perceived as a threat to the Yanukovych presidency or because of a churlish need to punish his political nemesis, Yanukovych’s administration has martyred Tymoshenko. The presidential administration has somehow managed to put a woman whose political career was in the doldrums back in the news – exactly where it did not want her - and created a Ukrainian Joan of Arc.

Brussels has taken umbrage at Tymoshenko’s mistreatment and has considerably slowed discussions with Ukraine over the long negotiated Association Agreement as well as the Deep and Comprehensive Free Trade Agreement. In a slap to Yanukovych’s face, the European Union even delayed a planned Yanukovych trip to Brussels to discuss Ukraine’s unlikely path to EU membership. At a time when the Eurozone is collapsing and there is talk of contracting, not expanding the EU’s membership roster, it would have been wise for Kiev to cozy up to Russia, Ukraine’s largest trading partner and next door neighbor. But in true contrarian fashion, Ukraine’s Foreign Minister Konstantyn Gryshenko stated in September that “We believe that today, unfortunately, there are no realistic chances for (Ukraine's) full-fledged participation in the Customs Union.”

Unlike during past balance of power battles between the east and west, Ukraine does not have the luxury of the United States as a backup prom date. For the time being, Ukraine matters not to Washington. With economic policy discussions first and foremost during America’s presidential campaign and the White House and the GOP presidential candidates squabbling over the Obama administration’s “Russia Reset”, any meaningful U.S. policy toward Ukraine will likely wait until 2013.

To make matters worse, there are disturbing reports of power struggles within the Party of Regions, which could complicate the party’s prospects for securing a majority of the seats in the 2012 parliamentary elections. According to several Ukraine analysts at a recent Washington symposium, the Yanukovych administration has bypassed traditional party promotion protocol in favor of patriarchal patronage for the top positions at the National Bank of Ukraine, the Ministry of Interior Affairs, and the State Tax Service of Ukraine. If these reports are true and Yanukovych solely controls the levers of currency control, taxation, and enforcement, those very patrons who provided financial support for Yanukovych’s ascendancy to president could feel threatened. Already, certain clans within the Party of Regions have been targeted by Ukraine’s infamous tax police. Should this trend continue, the Yanukovych administration runs the risk of splintering the Party of Regions and having a threatened, but very wealthy oligarch sponsor a credible opposition party.

While the news for the Yanukovych presidency is grim, there are three steps the presidential administration can immediately take which will improve Yanukovych’s prospects for re-election and for an improved 2012.

  • Join the Customs Union: At this point, Ukraine’s joining the Customs Union should be a no-brainer. Brussels has spurned Ukraine and has its own internal problems to settle, particularly with some of its failing Eurozone members. Russia’s forthcoming WTO membership also should put to rest any concerns from Kiev regarding technical Customs Union negotiations required due to Russia’s non-WTO status. The positives for economic integration with Russia and other Customs Union members far outweigh the negatives. First, Ukraine would pay domestic Russian rates for gas. Second, Ukraine would gain unrestricted access to a market of 200 million people. Third, with Customs Union duties imposed on goods entering the zone, Ukraine would face considerable impediments to Russia should it not join the economic agreement. Finally, there is no reason to believe that Ukraine and Europe would not eventually negotiate an economic agreement, albeit on different terms. The planned Eurasian Single Economic Space, which would include members of the Customs Union, could certainly negotiate a separate free trade agreement with Brussels, which would open up trade from Lisbon to Vladivostok.
  • Pardon Tymoshenko and Reform Soviet-Era Penal Codes: The Yanukovych administration has dug itself into a hole with the Tymoshenko fiasco. In order to prevent further souring of relations with the European Union and either the Obama administration or next Republican U.S. president, Yanukovych has a bitter pill he must swallow. His administration must not only guide the Verhovna Rada to reform Ukraine’s penal code to decriminalize the charges Tymoshenko was originally convicted of, but urge Ukraine’s judicial system to drop the latest charges, and grant Tymoshenko a full and unconditional pardon. This move would not only appease Washington and Brussels, but curry favor with Moscow as well. With Tymoshenko’s pardon, should also come an assurance that she is free to run in the 2015 presidential elections. Ukraine’s voters spoke in 2010 and rejected Tymoshenko’s empty rhetoric. She is a firebrand, not a leader. If Yanukovych runs on his record and guides Ukraine toward economic prosperity during the next three years of his term, his prospects for re-election should not be diminished because of the politically damaged ex-prime minister.
  • Build Unity Within the Party of Regions: President Yanukovych’s administration must realize who helped the president get to where he now is. Patriarchal patronage to key economic and domestic security posts, over inter-party promotion, cannot be tolerated. Nor can a reckless and overly ambitious tax service threaten the businesses owned by the men who stood by Yanukovych during his darkest, post-orange revolution hours. As Yanukovych outlines his domestic and foreign policy agendas for 2012 and beyond, he will need a unified Verhovna Rada to accomplish his goals. Part of the Yanukovych administration’s domestic agenda should entail shoring up the Party of Regions’ core base of support, by demonstrating democratic accountability and allowing, for instance, greater regional use of Russian as Ukraine’s second official language. Any further splintering of the Party of Regions due to slights or oversights, e.g. promoting unqualified friends of the family to positions of power, could cause an irreparable rift within the party, which could lead to no parliamentary majority for the Party of Regions or, worse yet for Yanukovych, the birth of a well-funded and angry opposition to threaten his legitimacy.