Ukraine Before the Presidential Elections

On October 20, 2004, the Carnegie Endowment for International Peace hosted a meeting on the pre-election situation in Ukraine. The speakers, Dr. Kuzio and Dr. Åslund, are leading experts on contemporary Ukrainian politics and economics, respectively. Rolf Schütte, Carnegie Visiting Scholar, moderated the session.

Dr. Kuzio began by outlining key political developments shaping the upcoming elections. He concluded by stating that while the elections are far from being fair, the opposition will win as long as the authority’s violations remain mild.

Starting from the top, President Leonid Kuchma has repeatedly promised to hold free and fair election, yet shows no intention of following through on his word. He has been unwilling to condemn various violations, even blatant cases such as April’s fraudulent mayoral elections in Mukacheivo. Furthermore, he has become increasingly angry with the West for criticizing Ukraine’s democratic failings. Western pressure has been a major reason for Ukraine’s recent Russification of foreign policy. Like the Russians, the Ukrainian authorities have figured out that pursuing integration grants leverage over Ukrainian domestic policies to outside institutions, like NATO and the EU. Therefore, Ukraine no longer seeks integration, only cooperation.

Moving on to the pro-presidential camp, without an ideology, the sole unifying factor of Prime Minister Viktor Yanukovych’s bloc is fear of the opposition coming to power. With this in mind, it seems that the authorities never intended to hold a fair election, because they know that Victor Yushchenko would then win. As, presidential advisor Mikhail Pogrebinsky admitted in an interview two weeks ago, "many people in power think that they can only win unfairly." Despite all their resources, the pro-presidential camp is not confident of victory. Pogrebinsky goes on to say, "we have a situation where the greater part of the authorities team does not believe in their success; the strange feeling that the authorities will loose is in the air."

A variety of factors cause the authorities’ doubt. First, the elite are not united in their opposition to Yushchenko. Some of them are terrified of a Yushchenko victory, while others are equally afraid of both leading candidates and fear that Yanukovych was the wrong nominee because of his prison record and identification with the widely disliked administration. Also, the various political parties in the pro-presidential camp are loosely assembled, with some parties displaying only cosmetic support. For instance, the Agrarian Party, headed by Parliamentary Speaker Volodymyr Lytvyn, has voted with the opposition for the last month.

The authority’s reliance on administrative resources and the overuse of billboards are both signs of insecurity. They expected Yanukovych to take the lead in the polls in September; instead, Yushchenko’s lead has widened. In despair, the authorities might have decided to poison Yushchenko. Whether true or not, the administrations reaction to the poisoning, the attempted distraction with the attack on Yanukovych, was clearly the biggest mistake of the campaign. When it was uncovered that only an egg forced the Prime Minister to collapse, the "egg assassination" became the subject of many jokes. Last week the authorities blocked a whole web site satirizing the fiasco.

There is good reason for the administration to worry. If electoral interference in the election remains mild, Yushchenko can win. To prevent a repeat of the Mukacheivo elections strong Western pressure is needed. For their part, Yanukovych’s team is preparing to discredit Western observers, after passing legislation in the spring removing the right of Ukrainian NGOs to observe their own elections. An internal presidential document discovered on October 20th, orders Ukrainian media to portray western observers from the OSCE as agents of western intelligent services. Furthermore, recently 150 tons of anti-American and anti-Yushchenko posters were discovered in warehouses. Such actions expose the authority’s schizophrenic foreign policy toward US. On the one hand, Ukraine has the fourth largest contingent in Iraq, while on the other, it is resolving to Soviet style, anti-Americanism propaganda.

Ukrainian society is aware of the administration’s fraudulent intentions. Polls indicate that only 12% of Ukrainians believe that a free and fair election is taking place. This is one-third of the percentage of Belarussians who believed in the fairness of their recent elections. Also, 25% of Ukrainians believe there will be a secret ballot, and 42% think their vote will be disclosed. Acknowledging popular mistrust, the parliament, for the first time ever, has created a committee to monitor compliance with election legislature.

The story of Ukrainian civil society coming together has been impressive considering that out of the twelve countries of the CIS only two others, Georgia and Moldova, have strong opposition movements. The major accomplishment in Ukraine has been the mobilization of young people through numerous NGO’s. Not surprisingly, the authorities have attacked these NGO’s with accusations of extremism and terrorism. Just last week, the authorities allegedly found bombs in a raid on the headquarters of the group Pora—a youth group trained by activist from Serbia’s Otpor and funded by Freedom House.

The regional factor and the role of the left require further examinations. There is a misconception originating from the 1994 presidential election that the East dominates elections in Ukraine. In those elections President Kuchma beat Leonid Kravchuk by only 6%, a small margin considering Ukraine was just emerging from a period of hyperinflation, and Kuchma had all of East Ukraine and Russian speakers on his side. While Eastern Ukraine does have a high population, Central and Southern Ukraine are the key election regions, where Kravchuk lost in 1994. In this year’s election, Yushchenko dominates Central Ukraine, which should give him the edge. Yanukovych’s recent proposals, such as the two state languages, dual citizenship with Russia, and the anti-NATO, anti-EU efforts, have only damaged his popularity in Central Ukraine.

With regard to the role of the Left, Serhiy Tyhipko, the Head of the Yanukovych campaign, claimed in August that his candidate will win the second round with the help of the Communist vote. This prediction was based on the 1994 elections, when in the second round the communists supported Kuchma, helping him win. However, the situation today is very different because the Communist Party has drastically shrunk since 1994, and its remainder has already been included in Yanukovych’s rating. The communist presidential candidate Petro Symonenko’s support is only 5%, instead of the 20% the Communist’s normally receive, which means that 15% out of the Yanukovich’s 30% already comes from the Communists. It will be very difficult for him to find additional support in the second round. Symonenko’s voters dislike both the leading candidates equally and are thus likely not to vote at all in the second rounds, while Alexander Moroz, with the 5% socialist vote, has repeatedly declared that he will never endorse Yanukovych.

The role the regional elite will play in the upcoming election remains unknown. In 1994 their defection, particularly in the Southeastern Ukraine, was crucial to Kuchma’s victory. The elite are not united in their support of Yanukovych. He might have been a strategic choice that put the Donbass group in conflict with the Our Ukraine bloc, but he is not the best candidate. Volodymyr Lytyn or Serhiy Tyhipko would have been better and cleaner candidats.

These elections are crucial because whoever loses will have a difficult time in the 2006 parliamentary elections, as businessmen naturally support the administration in this part of the world. Most likely, the election will follow either the Azerbarjani or the Georgian scenario. If Yushchenko wins, a new parliamentary majority will be formed from Our Ukraine and moderates from the presidential camp. If Yushchenko is defeated, Yuliya Timoshenko is likely to flee abroad, for she will probably be targeted for imprisonment. As for the social democrats, their future is uncertain. The head of the party and the presidential administration, Victor Medvedchuk, has no parliamentary immunity. He is the most desperate to prevent a Yushchenko victory.

Dr. Åslund focused his comments on three areas: the economy, the oligarchs, and the role of Russian in the upcoming elections. He closed with an optimistic prediction of further democratic development in Ukraine.

In contrast to the political uncertainty, the Ukrainian economy today has become the most dynamic in the world. The growth rate during the first nine months this year is 13.4%, and it has averaged 9% over the last five years. This growth is healthy because investment and exports drive it. In the last two years both of these have grown by over 30% and are expected to remain strong. The industry taking the lead is machine building; it has grown by approximately 35% in the last year.

Big oligarchic groups dominate the Ukrainian economy. The stock market does not function because company legislation is too poor, so it is necessary to have full ownership of a company in Ukraine. This system has created probably the biggest private enterprise in the former Soviet Union, Rinat Akhmetov’s System’s Capital Management in Donetsk, which employs close to 500,000. In comparison, the biggest private Russian group employs no more than 200,000.

Ukraine’s economy is more free, open, and competitive than ever before. Despite being undeniably more corrupt and lacking Russia’s oil, Ukraine’s growth rate is twice as high as Russia’s this year. Two key structural features standout. First, the banking system in Ukraine is 90% privately owned, while in Russia it is 80% state owned. As a result, credit volume as a percentage of GDP has tripled in Ukraine from 1999 to 2003, and the ratio is now much higher than Russia’s, where it has only doubled over the same period. Second, medium-size enterprises flourish in Ukraine because the oligarchs remain sharply competitive. The takeoff of the machine building industry in Ukraine exemplifies this trend. Composed of big medium-sized businesses, with 1000-5000 employees, machine building growth in Ukraine has been three times that of Russia’s over the last year.

With regard to politics, oligarchs can be found on all sides. Unlike Russia today, where the state demands money from the oligarchs, in Ukraine the oligarchs buy the services they need from the government. Since both candidates want a free market economy, only a difference in personal relations determines an oligarch’s allegiance. While the five biggest groups support Yanukovych, the next five are neutral, and the smaller ones predominantly support Yushchenko. Ukrainian oligarchs have built solid businesses, with the Donetsk and Dnepropetrovsk blocs creating particularly impressive enterprises. The big exception is the Medvedchuk /Surkis group that remains dependent on the administration. However, for the rest the election does not appear critical, as they will continue to thrive regardless of the outcome.

Seldom has one government interfered in the elections of another to the degree Russia is now doing in Ukraine. Yanukovych’s election budget is reportedly $600 million, equals to 1% of the Ukrainian GDP, which is one-hundred times more that the ratio of the total presidential election budget/GDP ratio in the US. Our Ukraine reports that half of Yanukovych’s funding comes from Russia: $200 million from Gazprom—Kremlin’s slush fund—and the rest extorted from other big Russian enterprises. Furthermore, both Russian TV stations and spin-doctors, most notably Gleb Pavlovski and Sergey Markov, are being used to support Yanukovych. Finally, after spending his birthday with Yanukovych, Putin is coming to Ukraine at the end of October to campaign for him directly.

Russia’s imperialist policies can only be an indication of its despair, because regardless of what happens in Ukraine, Russia loses. If Yanukovych wins it is a victory for the oligarchic model, the Donetsk group will continue to block Russian investments, and Ukraine will join the WTO. None of these developments help Russia. On the other hand if Yushchenko wins, Russian companies would be able to expand into Ukraine, but Ukraine’s Western orientation looks equally bad for Russia. The third alternative, proposed by Kremlin confidant Stanislav Belkovski, is a chaos scenario in which the election is invalidated and both candidates disqualified. However, such destabilization would probably be the worst scenario for Russia.

Looking at Ukraine today, it is apparent that the country has grown out of its political system. In Marxist terms, the material base has outgrown the superstructure. The natural next step is further democratic development.

Q&A

Dr. Kuzio: The "necessary conditions" exist in Ukraine for a Velvet Revolution. First, during the upcoming election, the biggest exit polls ever will be conducted. The majority of the population distrusts the authorities and will believe the exit poll over differing official results. Secondly, mass media will broadcast the exit poll results. The independent TV station, Channel 5, as well as the "moderate oligarchs" stations, in particular Victor Pinchuk’s three stations and Leonid Derkach’s, have covered the election somewhat objectively. Thirdly, although Tymoshenko is more charismatic, like Mikhail Saakashvili, Yushchenko possesses the moral authority necessary to call people to the streets. The people are angry and will come out when summoned. Finally, the security forces are unlikely to use force against protestors. Top officials have leaked documents to secure their positions regardless of the election outcome, while numerous individuals from the interior ministry have privately declared that they will not shoot. Within the Presidential Bloc only Medvedchuk would order troops to open fire. The other oligarchs do not want to become Europe’s second Belarus.

Dr. Kuzio: Kuchma does not have the legal power to cancel presidential election, although he can dismiss the votes of particular regions. Internal memos show that the authorities have discussed the scenario of annulling West Ukraine’s votes, and thousand of government deputies have been sent to the region. Yanukovych would rather win legitimately, but for Medvedchuk the election is a lose-lose situation. He recently went to Moscow to win Putin’s support to use regional violence in order to delay the elections. Fortunately, neither Putin, nor Kuchma agreed, which is probably when Medvedchuk decided to poison Yushchenko.

Dr. Åslund: Indeed, only Medvedchuk desires to cancel the election. As head of the Presidential Administration, he has tried to maximize control over the law enforcement agents, and succeeded in capturing various special forces of the ministry of interior, but not the SBU. However, within the regime Medvedchuk has recently lost out to Yanukovych, who at this point is conducting a real election campaign, which makes it unlikely that Medvedchuk succeeds. In the end, Russia will hardly aid Medvedchuk, and like in Georgia, it will probably respect the decision of the people.

Dr. Kuzio: The authorities have committed numerous electoral violations, including the blockage of travel, prevention of rallies, in particular Yushchenko’s attempt to campaign in the East, and biased media coverage, especially by Medvedchuk’s three channels. More violations are expected, especially in Yanukovych dominated Donetsk, where in the 2002 election observers testified to heavy fraud. Yanukovych has five years of experience as Donetsk governor in conducting such violations.

The most obvious sign of planned election fraud are the numerous "technical" candidates. Only six, out of the 24 registered candidates, are serious contenders, while two-thirds of the rest are pro-Yanukovych. The administration pays $2 to $3 million for each candidate to get them registered in return for which control over the election commissions responsible for tabulating votes is gained. Since Ukrainians’ right to observe has already been removed, and the authorities control vote tabulation, only exit polls prevent massive fraud. Not surprisingly, Yanukovych has refused the offer of Ukraine’s five biggest polling companies to conduct exit polls.

The technical candidates are also used to attack Yushchenko. For example, it is common to see a TV ad from the extreme right candidate, Roman Kazak, endorse Yushchenko, but warn of his American wife. While linking Yushchenko with the extreme right, the ad also leads nicely into the following message from an extreme left candidate who calls Yushchenko a pro-American, CIA agent. Immediately after such slander, Yushchenko’s ad is broadcast, even though it is illegal to show political ads within twenty minutes of each other.

The claim that Yushchenko is a nationalist is a myth. The authorities actually support the extreme right groups in Ukraine, just like in Russia and Serbia. A bizarre situation recently occurred in Kiev where rightist extremists rallied in support of Yushchenko, while Yushchenko’s real supporters counter-protested, rejecting these provocateurs’ claims.

Dr. Åslund: If Yanukovych wins, he will turn against Russia. His published programs is actually even more pro-European than Yushchenko’s. Kuchma and Yanukovych have happily accepted the substantial economic concessions made by Russia, including the lowering of trade barriers, which caused a major rise in Ukrainian and the change in value-added tax for Gas, which transfers $800 million into the Ukrainian treasury. However, after the election, Yanukovych will seek political recognition over economic benefit, unless the West blocks him from integration.

Dr. Kuzio: A bit of a different view on Ukraine’s relationship with Russia under President Yanukovych. As mentioned previously, Ukraine has chosen to Russify its foreign policy. It now seeks cooperation rather than integration with the EU and NATO. This follows the change in opponents faced by the Ukrainian elite. In Kuchma’s first term, the threats came from Russia’s refusal to recognize Ukraine’s borders and the strong Communist Party, while now the main threat comes from Western demands to clean up Ukrainian democracy. If Yanukovych wins, he will continue the strict cooperation policy, which is why Russia supports him.

Dr. Kuzio: The Armenian scenario, in which the election is stolen and the ensuing opposition exhausted over time, is unlikely to occur in Ukraine due to major economic and geopolitical differences between the countries. First, in Armenia a strong nationalist party was in power, and Turkey was viewed as a major threat. Second, in Ukraine the economy is booming, while Armenia was considered a failed state. Finally, Ukraine is in Europe and will have the attention of the world.