Ukraine: A Bumpy Road Toward Democracy

By Robert Windorf

On March 31st, Ukraine held parliamentary elections. While the overall results were not unexpected, they produced a major setback for the Communists and arguably paint a tougher picture for President Kuchma's remaining year in office.

The party, For a United Ukraine (ZYU), dominated by corporate interests and loyalists to Kuchma, won 12% of the vote. However, following the results of single-seat, first-past-the-post constituencies, it forged past the two largest vote getters, the Communists and the party, Our Ukraine, which secured 20% and 24%, respectively. Of the Verkhovna Rada's (the parliament) 450 seats, half were chosen by proportional representation with the other half decided after tough regional battles. Direct contests were overwhelmingly won by ZYU, primarily at the expense of Communist candidates. As a result, the new parliament will contain 119 seats occupied by ZYU, while Our Ukraine will hold 112 seats. The Communists, the largest party in parliament for the past decade, will now only have 66 seats. The remaining winning parties, also strongly anti-Kuchma, are relatively small and are expected to join or support the ZYU. Despite the large contingent of western observers, many contend that the election was still marred by suspicious activities.

The Communists dominated parliament from independence until January 2000 when a peaceful coup by centrists and some right-wingers expelled them from key legislative committees. A former central bank governor, Viktor Yushchenko, was then endorsed as prime minister. However, he was voted out of office in April 2001 by legislators loyal to Kuchma and the Communists who feared that he had greatly diminished their deep-rooted influential standings.

Yuschenko has attracted centrist forces with strongholds in the east and central regions, whereby the right-wingers' power base lies in Kiev and the nationalist western part of the nation. However, the majority of election swing votes come from the heavily populated and more ethnically mixed eastern part of the country. Yuschenko's base, Our Ukraine, is comprised of a group of ten small parties, separated by ideological and regional differences, but unified by his strong popularity and standing for honesty in a nation rife with corruption. The parties within the middle of the political field arguably create the most threats to democracy. Formed by the ruling elite that rose from the ruins of the Soviet state, the right created corrupt regional clans and bureaucratic Kiev groups that reportedly give strong loyalty to Kuchma to uphold democratic and market reforms. However, like similar political parties in other transition states, recent examples show that the right's actions arguably differ from their rhetoric. The clans' conflicting interests continue to make it tougher for coalitions to unite and place Ukraine's fledging democratic ideals on credible ground. Democracy has arguably been threatened in many rural areas as larger cities are becoming more and more depopulated, the result of poor economic conditions. Although the president is empowered to choose a prime minister following a parliamentary election, in light of the present tricky environment, Kuchma is expected to retain Anatoly Kinakh. Thus, at present, any hopes for a straight path toward democracy arguably continue to rest with Yushchenko, who now is undoubtedly thinking ahead to unseat Kuchma in next year's presidential election.

A new IMF survey reports that the economy performed well in 2001 with a 9% rise in GDP following a rise of 6% in 2000. However, the majority of the reported economic gains were short-term in nature and derived from traditional sectors, especially agriculture (following a lessening of certain government controls) and industrial production. However, very good progress was made in taming inflation, helped in part by a more stable exchange rate. External debt burdens were eased with a new Paris Club rescheduling agreement reached last July. Although on the surface gains were achieved, significant progress is still required in many areas. Structural reforms, including additional privatizations, continued reforms within the banking system, and a clean up of overdue pension arrears all must be achieved long before Ukraine arguably would have any hopes to eventually join the WTO. The IMF and World Bank forecast GDP growth this year in the range of 4-6%. Further positive developments could lead to a second programmatic adjustment loan.

In late May, officials declared that they began the process to seek membership in NATO and the notice would be formalized on July 9th during a visit of NATO dignitaries. It is obviously too soon for a membership target date to be set since Ukraine needs to bring the economy, the democratic process, and human rights record up to international standards. Following independence from the Soviet Union in 1991, Ukraine's relations with NATO had reportedly irritated Russia. However, now with Russia's own NATO agreement, both nations may have reached reconciliation on international security issues, especially in the defeat of global terrorism.

The road toward democracy will be very bumpy and given the ongoing interesting diplomatic developments between Russia and the U.S., we believe developments within Ukraine bear watching.