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Ukraine: Politics Versus the Economy

Ukraine's tumultuous internal politics has long stood in the way of the country's economic development – and even now, at the time of an economic crisis, there seems to be no sign of respite.

Throughout the past week, Edward Hugh of Ukraine Economy Watch has been reporting on the repeated downgrades of Ukraine's rankings by Moody's (Oct. 20), Fitch (Oct. 21), and Standard & Poor's (Oct. 24). But on Tuesday, Oct. 21, Ukraine at least seemed to be “on the point of signing a loan worth as much as $15 billion with the International Monetary Fund.” By the end of the week, however, on Friday, Oct. 24, the situation seemed to have changed, largely due to lack of political will, according to Edward Hugh:

[…] Meanwhile Ukraine parliament chairman Arseniy Yatsenyuk told a packed chamber that Ukraine's talks to secure credit from the International Monetary Fund could collapse unless the parliament acts to pass the measures needed to ease the effects of the global financial crisis.

“It is very important for us to achieve results in a vote on the financial crisis,” Arseniy Yatsenyuk told the chamber, which was deadlocked for the fourth day, after adjourning debate on the issue until next week.

“Bang, Boing, Crash” I think must be the sort of background noises they can detect rudely inter-rupting them from the street outside as one piece of financial scaffolding after another falls away from the building it had been momentarily holding up while they trundle on with their interminable debate about their endangered country's short term future.

An International Monetary Fund mission has been holding talks for more than a week in Kiev on extending credit that Ukrainian officials say could amount to up to $14 billion. Yatsenyuk said no consensus could be reached on six draft laws to tackle the crisis, including a package proposed by Prime Minister Yulia Tymoshenko's government.

[…]

Parliament has been thrown into disarray over proposals to combine debate on the crisis with measures to finance an early election called by President Viktor Yushchenko. Tymoshenko, at odds for months with the president, opposes the election and members of her bloc have milled about the chairman's rostrum to curtail debate.

The president dissolved parliament this month and called a Dec. 7 election to the assembly after the collapse of a government team linked to the 2004 “Orange Revolution”. He lifted the dissolution order this week and said he was putting the election back for a week to Dec. 14. It remains unclear when the poll will take place.

LEvko of Foreign Notes wrote that while PM Yulia Tymoshenko thought that holding “early elections during a world financial crisis [would] be a crime against the state” and deputy head of the Central Electoral Commission Andriy Mahera “claimed that it would be impossible to hold early parliamentary elections before 21st December,” president Victor Yushchenko believed that “a new coalition and government [would] be formed by January 1st 2009.” LEvko summarized the situation this way:

[…] Recent political history in Ukraine, drawn out, tortuous negotiations in forming parliamentary coalitions, their instability, and recent opinion polls on how any future parliament would stack up, all suggest [president Yushchenko] is out of touch with reality. […]

In another post at Foreign Notes, LEvko reported that Ukraine's second largest metallurgical enterprise – the Mariupol Ilyich Steel & Iron Works – has stopped production:

[…] The plant, a workers’ collective, has about 60,000 employees on its books. They have been put on ‘reduced wages’.

LEvko fears this is a significant indicator of the economic crisis facing the country – maybe the greatest in the country's short independent history. Wind-down and start up at plants such as [Ilyich Steel & Iron Works] are major operations – they cannot be switched off and on at will. There could be a possibility now that it will never restart. […]

In the comments section to this post, a reader calling himself Elmer wrote about the alleged personal spending habits of Victor Yanukovych, leader of the Party of Regions, and Rinat Akhmetov, a Party of Regions MP and the richest man of Europe:

I wonder if [Yanukovych] will have to reduce or stop work on his HUGE mansion, “Mezhihirya,” or if [Yanukovych] and Akhmetov will have to cut back on their jets and limos and expensive vans and such.

And Ukrainian MPs do indeed seem to be concerned about the effect that the current crisis may have on their personal finances, as some of them seem to have rushed along with everyone else to withdraw their savings from Ukrainian banks, urging Oleksandr Suhonyako, president of the Association of Ukrainian Banks, to issue this appeal, translated from Ukrainian by Taras of Ukrainiana:

[…] There’s only one thing left for us to do: to be real citizens and to ask… perhaps even MPs will heed the call that…don’t run, don't demand, don't use it to withdraw your deposits before the maturity date. Be an example. […] because the absence of panic is prerequisite for our Ukrainian society to weather this crisis and solidify.

9 comments

  • I can say that today’s Ukrainian politics is really harming the country’s economy. Instead of the fighting with world economic crisis, Ukrainian politicians are fighting with each other, and it seems to me there is no way out. Ukraine is in a strong need of a snap elections: not parliamentary, but presidential.

  • nigg

    Ukrain should realize that it is in her best interest to forge closer ties with russia. The west is realy not interested in helping … they are just looking for a paw to pull the chestnut out of the fire ie isolate Russia They(the west) dont respect you . Besides, capitalisim has recently failed in the west so build on your strong points figgure out a way to work things out in the CIS

  • Political instability is the main cause for economic decline. To this extent Viktor Yushchenko must be held responsible for exploding economic crisis that Ukraine is now facing. Ukraine’s currency devaluation and high rate of inflation has mirrored Ukraine’s political instability.

    In anther event, which has not been reported on Global Voices indicating a clear bias in its reporting, is Viktor Yushchenko’s ongoing interference in the operation and independence of Ukraine’s Judiciary.

    The latest event continues on from Viktor Yushchenko’s attacks on the Constitutional Court in 2007. Yushchenko has once again demonstrated his contempt for democracy and the principle of rule of law by dismissing another Judge who ruled in favour of granting an injunction putting on hold Yushchenko’s decree dismissing his second Parliament and calling for another round of Parliamentary elections. The injunction was granted pending the outcome of appeal lodged by representatives of the governing party.

    Human Rights Watch published on the 20th of October a damning report on the President’s actions.

    Similar criticism wwas leveled against Viktor Yushchenko win May 2007 when he illegally dismissed three members of Ukraine’s Constitutional Court in order to prevent the Court from ruling against his decrees.

    The Parliamentary Assembly of the Council of Europe )PACE) in its report titled “Functioning of democratic institutions in Ukraine” (dated April 2007) stated:

    “The Assembly deplores the fact that the judicial system of Ukraine has been systematically misused by other branches of power and that top officials do not execute the courts’ decisions, which is a sign of erosion of this crucial democratic institution. An independent and impartial judiciary is a precondition for the existence of a democratic society governed by the rule of law.”

    The associated explanatory report under the sub-heading of Pressure on the courts expressed concern that

    “Several local courts have made decisions to suspend the Presidential Decree only to then withdraw them, allegedly under pressure from the presidential secretariat.” (item 67)

    In emphasis the report (item 68) stated

    “This is a worrying tendency of legal nihilism that should not be tolerated. It is as clear as day that in a state governed by the rule of law judicial mistakes should be corrected through appeal procedures and not through threats or disciplinary sanctions ”

    In 2007 the Parliamentary Assembly having created Yushchenko for his interference in Judaical matters remained selective silent whilst democracy and rule of law was violated.

    Interference in Ukraine’s judiciary is a serious offence, made worst by the fact that it is the President, who is head of state, who has commitedd this offence. If this occurred in a Western democracy the head of state would be facing a parliamentary/Senate review and possible impeachment proceedings to removbe him/her from office.

    By not speaking out about this onging abuse PACE have undermined public confidence in the the democratic process and rule of law.

  • Nihilism on high

    Kyiv Post also published an editorial peace by Katya Gorchinskaya attacking the President’s annihilation of justice in Ukraine. She headline the article with the question “When leaders don’t even obey the law, what hope is there for the rule of law?”

    The executive branch cannot legally dismiss the judicial branch at will. There is a procedure for it, and it has to be observed by all political players, including the president – but it was not. There are strong calls to restart the long-postponed judicial reform, but it’s unclear how it would help in this mess and who would be able to carry it out in the first place and then implement it, if the country’s top officials so readily ignore laws, apply pressure and intimidate judges.

    Unless judges are free of fear and pressure, there is no justice. Unless all branches of power observe law, democracy becomes an oxymoron. Unless all political players sacrifice their ambition and do their job right, it doesn’t matter how many parliamentary and presidential elections are held and how often – the country will stay in a mess.

    Ukraine’s High Council of Justice, which represents all three players in Ukraine’s justical system, should be charged with overeating judicial changes and reform consultation with the Europe’s Venice Commission. Any proposals for reform should be backed up by legislation and not by the arbitary will of Presidential decree.

  • Correction:

    Nilism on high

    Kyiv Post has published an editorial peice by Katya Gorchinskaya attacking the President’s annihilation of justice in Ukraine. She headlines the article with the question

    “When leaders don’t even obey the law, what hope is there for the rule of law?”

    Quote:

    The executive branch cannot legally dismiss the judicial branch at will. There is a procedure for it, and it has to be observed by all political players, including the president – but it was not. There are strong calls to restart the long-postponed judicial reform, but it’s unclear how it would help in this mess and who would be able to carry it out in the first place and then implement it, if the country’s top officials so readily ignore laws, apply pressure and intimidate judges.

    Unless judges are free of fear and pressure, there is no justice. Unless all branches of power observe law, democracy becomes an oxymoron. Unless all political players sacrifice their ambition and do their job right, it doesn’t matter how many parliamentary and presidential elections are held and how often – the country will stay in a mess.

    Ukraine’s High Council of Justice, which represents all three players in Ukraine’s judicial/legislative system, should be charged with overseeing judicial changes and reform in consultation with the Europe’s Venice Commission. Any proposed reform should be backed up by legislation and not by the arbitary will of Presidential decree

  • vaughn nebeker

    Do th the ukraine did not lead with it wallit. There has been problem’s. thay been to bissie being comminest an had to odear a 98,000 body bag’s… do to thay did not pay for work completed. Scince wise it a 5 seconed road bump. When the ukraine thow out trouth honnisty honnablity it ran int to a few problem’s.

  • Dr. Farooq Siddiqui

    Ukraine is a very interesting country, highly industrial (but needs modernization), where industry usually runs smoothly irrespective of the political moves of the leaders.
    Politics is usually bloodless, irrespective of the two major but opposite pro and anti Russian groupings, which is not the usual trend in the FSU block.
    The current global crisis have dried up the steel demand, which is the major export of Ukraine (About 35 million mt of steel exports per year bring in 50-65% of the country’s foreign exchange), which in turn has created a very sudden and huge deterioration in the economic conditions.
    People of Ukraine are educated and tolerant, and given the chance, have a potential to shine industrially and intellectually in all fields of life.

  • […] Russia was reportedly issuing Russian passports to citizens there last week.  The Ukrainian economy is walking a tightrope between politics and solvency, and is dependent upon the US-funded […]

  • […] Russia was reportedly issuing Russian passports to citizens there last week.  The Ukrainian economy is walking a tightrope between politics and solvency, and is dependent upon the US-funded […]

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