The American Interest
Policy, Politics & Culture
Between a Rock and a Hard Place
Published on November 2, 2012

No one who pays even casual attention to Ukraine’s politics should be surprised to learn that President Viktor Yanukovych’s Party of Regions (PR), whose bastions lie in the country’s Russophone south and east, emerged with a plurality in October’s parliamentary elections. With top opposition candidates (most notably former Prime Minister Yulia Tymoshenko) in jail, and various political maneuvers having tilted the playing field in the PR’s favor, there was no need for brazen tactics such as stuffing ballot boxes. When OSCE observers criticized the election for having been marred by the misuse of power and the inordinate role of money, they had in mind subtler shenanigans.

Ukraine’s parliament, the Verkhovna Rada, consists of 450 deputies elected from constituencies based on party lists and those featuring both party-affiliated and independent candidates who, once elected, can align with existing parties or act as free agents. It is in the latter electoral districts that the PR was able to apply its vast financial resources, control of the media and muscle to greatest effect. The PR appears to have won 186 seats (41 percent of the total), Tymoshenko’s Fatherland Party about 104 (23 percent), and the Communist Party 32 (7 percent).  That’s about what was expected.  But the unexpected happened, too. A new party, UDAR (“Punch” or the Ukrainian Democratic Alliance for Reform), led by the charismatic and independently wealthy ex-pugilist Vitali Klitschko, which stands for liberal economic and political policies, may have 40 deputies (a tad below 9 percent). The ultranationalist Freedom (Svoboda) Party, having failed to reach the 5 percent threshold required to enter parliament the last time around, will have 37 (8 percent) deputies, largely on account of its full-throated attacks on corruption and its appeal to those who are “mad as hell” and have decided they “won’t take it” any more. Svoboda’s success was arguably the biggest surprise.

Yanukovych’s victory will probably prove Pyrrhic. Given OSCE criticism, Yanukovych will find EU leaders even less welcoming toward him than they already have been. Washington’s reaction will pretty much be the same, to the extent that Ukraine gets any attention at all in the United States. Though democratically elected for all practical purposes, Yanukovych is hardly in tune with liberal democracy, Western-style. But he relishes being received by European and American leaders and, more important, needs the West both to balance Russia and to make good his promises to improve Ukrainians’ day-to-day lives. He’s unlikely to get what he needs.

Things are not entirely dire economically. The Ukrainian economy has bounced back after shrinking by 15 percent in 2009 following the global economic downturn, and growth rates (4–5 percent since then) have been good by global standards. But 2013 promises to be difficult: Industrial production is declining, GDP growth will be slower, and the Ukrainian hryvnia may need to be devalued. There will be political fallout from this, for many Ukrainians already feel that the benefits of post-Soviet independence have bypassed them and have gone to the intertwined political elite and the super-rich, who together have hijacked the political process. This sentiment—and it is widespread—is among the main reasons for Yanukovych’s dismal poll ratings: He and his two sons have used political power to amass millions and have taken to flaunting their lucre in ways that even many oligarchs find offensive, to say nothing of Ukrainians living at the economic margins.

Worse, Yanukovych will find that the new parliament won’t be any more cooperative than the last one—and will likely be less so. That’s not a trivial problem because he needs support to deal with some tough issues. He is under IMF pressure to deliver on promised reforms to the pension system (read: smaller payments for retirees) and to cut energy subsidies, both in order to reduce the budget deficit. The IMF has refused to release any more money from the $15.1 billion “Standby Agreement” it signed with Ukraine in 2010 unless there’s movement on both fronts. (A previous agreement, worth $16.4 billion, bit the dust after Ukraine failed to follow through on reforms.) Without additional IMF funds, Yanukovych’s government will be in a pickle: Several billion dollars are due to creditors at home and abroad next year. It could borrow to pay these bills but will pay high interest rates to do so, which will only add to the debt, and a time when the global economic downturn has cut demand for Ukraine’s steel and agricultural products, both of which are critical sources of export earnings.

If Yanukovych decides to tackle pension and energy price reform, he will find it even harder to do following the elections. That’s because, in order to achieve a parliamentary majority, the PR will have to form a coalition with the Communists as well as with some unaffiliated independent deputies. The former’s voting base consists of workers and others on the lower rungs of the economic ladderwho depend on social services and subsidies to get by; they want more from the state, not less. The Communists are not only ideologically opposed to rolling back the state (particularly under IMF pressure); they won’t support measures that hit their supporters where it hurts most.  Evidently, the Communists are already leery about being identified with Yanukovych: After the election they rejected a coalition involving them and the PR. The unaffiliated independents, meanwhile, are mostly successful businesspeople who have their own interests and who may, consequently, drive a hard bargain for their support of PR policies.

Ukraine could turn to Russia for loans and lower gas prices to avoid cutting controversial budget items such as pensions and energy subsidies. But Yanukovych shouldn’t expect a free lunch courtesy of Moscow, not least because Vladimir Putin—who loathes Yanukovych (and the feeling is mutual)—is back in the presidency and determined to strengthen Russia’s influence in those ex-Soviet republics that remain outside NATO and the European Union.  In order to get a gas deal with a price discount, Ukraine agreed in 2010 to a 25-year extension on the Russian Black Sea Fleet’s lease on Sevastopol; the rent was applied to the gas price, providing some relief, but not nearly enough to make a big dent in Ukraine’s budget deficit. So what might Moscow want in return for further discounts? Perhaps equity in Ukraine’s state-owned gas company (Naftohaz) and pipeline system: The Kremlin has long eyed both. Perhaps also Ukraine’s agreement to join the Russia-Belarus-Kazakhstan Customs Union, which would draw Ukraine closer to Russia economically. That’s something the Kremlin has been particularly keen on ever since Ukraine began negotiations for a Deep and Comprehensive Free Trade Agreement, itself part of a wider Association Agreement with the European Union. 

But when it comes to deals with Russia, the new parliament will prove to be a problem. Fatherland, UDAR and Svoboda appeal to voters (they tend to be concentrated in the central and western regions) who see Russia as the main threat to Ukraine’s independence. Many independents, especially those with business interests in Ukraine and aspirations to gain a foothold in Western markets, fear being swallowed by Russian capital. All four of these forces will rally opposition to any agreements that appear to increase Ukraine’s dependence on Russia. So if Yanukovych hopes to reach agreements with Russia that enable him to avoid implementing the politically risky reforms the IMF wants, he will find the new Rada less tractable than the old one. 

Since Yanukovych’s election in 2010, the parliament has strengthened the power of the presidency—after having weakened it to clip the wings of the post-Orange-Revolution government of Yanukovych’s nemesis, Viktor Yushchenko, who was elected in 2004. Thus he could act by decree, but his government is also deeply unpopular, as is Yanukovych himself. So he needs the legitimacy of acting in tandem with the parliament.

Yanukovych’s predicament would have been eased if he had developed a cooperative relationship with the West, but he didn’t. Though Ukraine and the European Union initialed the Association Agreement, it hasn’t been implement and won’t be if Ukraine’s trajectory remains unchanged. The European Union was angered by the trial of Yulia Tymoshenko, which it saw as the culmination of a campaign to remove Yanukovych’s most formidable opponent from the political scene; it will be even unhappier with Kyiv after the latest election. The prospect that all 27 EU states’ parliaments will ratify the Association Agreement is remote.

Could Washington step up to help? Not likely. Ukraine has barely rated a mention in the presidential campaign, and the next President will be preoccupied with Iran, Syria, Iraq, China and Afghanistan whenever he can spare a moment from domestic economic concerns. There will of course be other places and problems that compete for his attention, but it’s a safe bet that Ukraine won’t be among them.

Yanukovych is thus trapped between a rock and a hard place. If he continues his middling authoritarian ways, he will face an increasingly truculent Rada, an increasingly hostile population, and growing resistance to his policies even from his closest confidantes. If he does the rational thing and tries to refashion himself as a democratic president and a man of the people, he will have to release Tymoshenko, curb his and his party’s excessive appetites for easy wealth, and devolve power from the presidency to other political institutions and especially the courts. The first alternative will undermine his power; the second alternative involves abandoning power. Neither seems acceptable to a man who fancies himself Ukraine’s savior. The bottom line may be that, whatever Yanukovych does, he could very well fail to be re-elected in 2015. And after having shown, through his rough treatment of Tymoshenko, that leaders who fall from power are vulnerable, that’s an outcome he justifiably dreads.

Rajan Menon is the Anne and Bernard Spitzer Professor of Political Science, City College of New York/City University of New York and a non-resident senior fellow at the Atlantic Council. Alexander J. Motyl is professor of political science at Rutgers University (Newark).