The inability of the oligarch regime to withstand systemic pressure from abroad virtually led to the loss of sovereignty. It was only the response of society that saved the country
Vladimir Putin’s ascent to power signaled the intent to reach his goal without selecting any tools. Russia’s strategic documents clearly declared the revival of Russia’s status as the leader in the region as the country’s objective and listed somewhat harsh methods to reach that objective, from controlling transit and allocation of energy sources to aggressive information campaigns outside Russia. Ukraine was predictably in the spotlight of these plans. Moreover, 9/11 gave Russia and Western states a common ground in fighting terrorism, which causes many European politicians to think that Russia’s value as an ally allows them to turn a blind eye to its violations of human rights and the imperialistic treatment of its neighbours. Especially, if these neighbours, particularly Ukraine, have themselves contributed to the confirmation of negative stereotypes about them.
In the late 1990s, Ukraine ended up with a classical partly oligarch, partly lumpen system. By mid-1999, 46.9% of Ukrainians found themselves on the verge of the poverty level. Against the background of Russia’s financial crisis, Ukraine faced the risk of default, and this was not the result of its gross debt, but of its poor borrowing policy. In 2000, the sum of due debt repayment was equal to total budget revenues. However, the logic of the actions of the establishment was to open doors so that wealth would fall into the laps of their homeboys, ensure their immunity from responsibility and the overall suppression of competition in both business and politics. Strategically, this weakened the country to external influences. But, in the late 1990s, the government was more concerned with getting their president, Mr. Kuchma, re-elected, rather than the abovementioned problems. At that point, his rating was under 6%.
They used administrative leverage to ensure electoral support, forced public sector employees to vote “properly,” and made targeted handouts through a special Social Security fund, supposedly supervised by Oleksandr Volkov and the “bureaucratic” part of Mr. Kuchma’s circle.
The regime also took good care of protection by law enforcement agencies. The total number of employees at the Ministry of Internal Affaits was 434,000, exceeding that of the Armed Forces.
In 1998, the mass media faced huge pressure, particularly that of the opposition. Courts and force were used to achive this, from multimillion court claims to the kidnapping and murder of journalists.
In 2002, “lists of topics” emerged in Ukraine, which became routine by 2003. Being a Russian invention, these were orders for the mass media about the issues they should cover. In fact, in the 1999 election and less so in the 1998 parliamentary election, spin doctors from Moscow began to work in Ukraine, supposedly invited by Viktor Pinchuk, Viktor Medvedchuk and Valeriy Khoroshkovsky, among others. Some of these spin doctors still work in the country. They were of little benefit to Mr. Kuchma, though. His victory was largely based on the failure of his opponents to provide a realistic alternative, hence the success of the “Kuchma vs Communist” scenario.
Yet, many looked to benefit from this triumph. There were several parallel campaign offices linked to the oligarchs close to Mr. Kuchma, and each tried to get a bite of victory. The common belief is that Viktor Pinchuk and Viktor Medvedchuk along with Hryhoriy Surkis from the so-called SDPU(o) (Social Democrat Party United) benefited the most from Mr. Kuchma’s victory. Each of them found a way to convince the President that they played a unique role in reaching the victory. For the most part, Pinchuk converted the President’s appreciation into business gains, while SDPU(o) aimed higher.
‘YOU WILL SEE A NEW PRESIDENT’
This quote from Leonid Kuchma’s speech in 1999 was supposed to signal the beginning of resolute moves.
In December 1999, the President did indeed make an unexpected move. He appointed Viktor Yushchenko, the then Governor of the NBU, as Prime Minister, and Yulia Tymoshenko as Vice Prime Minister for the Fuel and Energy Complex. These types of appointments were typical of the counterbalancing system Mr. Kuchma used to keep forces within the establishment balanced. As soon as one oligarch group grew too strong, the President provided support to their rivals. Yushchenko was supposed to prevent default by negotiating debt restructuring, since the West trusted him. Ms. Tymoshenko was an expert in energy so her task was to get things in order in the field, where settlements for supplied energy were critically low, and possibly halt sector monopolization by the SDPU(o) group. On the whole, the government fulfilled the task. Moreover, the economy began to grow.
The fact that even relatively small changes for the better had a positive impact on the rules of the game, confirms the assumption that inefficient management based on an oligarch -controlled system remains Ukraine’s biggest problem. Apparently, Mr. Kuchma realized this as his moves after winning the election were aimed at streamlining management to his vision of it.
In the first place, keeping the symbol of ineffective parliament, i.e. its left-wing leadership, no longer made any sense. Instead of looking for someone to blame the ongoing failures on, the reasons for them should have been eliminated. For this, the Verkhovna Rada had to be loyal, i.e. “have a permanent majority” that would “carry joint responsibility together with the government”, this is how the task was formulated by the Presidential Administration. The President failed to entrench this objective into legislation through the implementation of the results of the 2000 referendum to restrict parliament’s powers, yet de facto gained control over the Verkhvna Rada. Vice Speaker Viktor Medvedchuk was supposedly in charge of the deal. He kept increasing his influence over the President, in part converting it into control of key industries. According to the information published in the media at that time, that was when the SDPU(o) group intensified its efforts to privatize oblast power supply companies. Control of such companies basically allowed the owners to dictate terms to both enterprises – energy consumers, and the state. Sometimes, this led to sad curiosities, such as the case with the Kirovohrad and Kherson Oblast power supply companies controlled by a Slovakian investor linked to the SDPU(o) and Russian businessmen, simply refused to pay its debts to the energy market in 2003. Moreover, the leverages for such tricks ended up in the hands of people who openly bragged about working to draw Ukraine closer to Russia.
SPEED AND PRESSURE
By the early 2000s, Russia saw the ultimate consolidation of Putin’s regime. The Kremlin made its first attempts to get the establishment of the neighbouring countries under control to implement its project of re-integration on post-Soviet territory. Throughout 2000-2004, the Ukrainian government and the country itself encountered a series of blistering hits from the East, each taking advantage of the weak and corrupt nature of Ukrainian politicians.
On 16 September 2000, the world heard of the disappearance of journalist Georgiy Gongadze, followed by the shocking contents of the Melnychenko tapes, made public by Oleksandr Moroz on 28 November. Kuchma immediately announced that secret services were involved in the scandal but did not specify which service it was. His circle and the Russian media began to blame the deal on the West, implying that the scandal played into the hands of Premier Yushchenko. Yet Yushchenko, who never really wanted to go into politics, was not a strong enough player to have used the scandal for his own benefit. He was loyal to Mr. Kuchma going so far as to sign the letter rebuking the participants of the “Ukraine Without Kuchma” protest together with the President and Ivan Pliushch, the VR Speaker, on 13 February 2001. Thus the West had neither the interest nor the capability to arrange it. Meanwhile, the outcome of Kuchmagate, i.e. the isolation of Ukraine’s leadership from communication with world leaders, was perfectly in line with Moscow’s expectations. After all, Mr. Kuchma has become more open recently, revealing that Major Melnychenko was linked to Russian secret services.
Meanwhile, Ukraine’s collaboration with the West was hit again. Someone took the many hours long Melnychenko records to carefully select and disclose to American officials and investigative NGOs, such as the Center for Public Integrity, a conversation on the alleged potential sale of Kolchuha aircraft detection systems to Iraq. US and UK leaders were so furious that they even refused to sit next to Kuchma at the NATO Council meeting in November 2002. Relations between Ukraine and the West warmed up after President Kuchma’s desperate efforts including the proposal to send Ukrainian peacekeepers to Iraq and passing of the Law “On the Fundamentals of National Security” on 19 June 2003 by 2/3 of MPs, declaring EU and NATO accession as Ukraine’s goal. Medvedchuk who became Chief of Staff in June 2002 did everything possible to make any mentions of NATO disappear from Ukraine’s Military Doctrine thus remaining only a declared intent.
After all, Ukraine’s multibillion gas debt allowed Russia to use the energy issue to gain control over Ukraine’s gas transit system by means of establishing a consortium to manage the system. On 19 June 2001, Kuchma expressed his readiness to start negotiations on the privatization of the Ukrainian gas transit system with the participation of all interested parties, which included Ukraine, Russia and the EU, on a par basis. On 9 June 2002, a Statement “On Strategic Cooperation in the Gas Sphere” was signed. Among other things, the government had to draft a contract to create a consortium for running and developing the gas transit system with the subsequent involvement of the European party to upgrade the Ukrainian pipeline. Negotiations and the signing of technical documents lasted until 2004 but failed to bring the expected result.
The negotiations were accompanied by trade wars, with Russia implementing a slew of restrictions against Ukrainian trade items ranging all the way from large diameter pipes to caramel.
However, along with energy integration projects, Moscow was also offering political and economic ones. In February 2003, the establishment of a Single Economic Space with Russia, Ukraine, Belarus and Kazakhstan was proposed. Kuchma, however, masked the position of Ukraine under the “in parts where it does not run counter to the Constitution of Ukraine” response, which in effect, defeated the purpose of the excercise. The response to the breakdown of strategically important initiatives was not long in coming. In September 2003, the Russians examined the speed and strength of Ukrainian and world reaction by attempting to artificially move the border near the island of Tuzla in the Azov Sea to their side.
While the Ukrainian leadership was struggling to avoid integration on Russian terms, the Presidential Administration, chaired by Viktor Medvedchuk, aided by ‘advisors’ from the Russian Federation, set about reviewing the constitutional model. Since President Kuchma refused to run for the third term, he could have been offered the premiership with expanded powers and the exercise real power. Yet, the draft reform was a double-edged sword. It offered a clearly non-viable system of interaction for government authorities including a conflict zone between the president and the government. This would have aggravated the administrative chaos in Ukraine and made it ever more vulnerable to external influence. Meanwhile, constitutional reform was being lobbied throughout the entire 2003 pre-election year. When it failed in April 2004, Kuchma’s circle had no room to maneuver for the promotion of a candidate of their own instead of Viktor Yanukovych. He became Premier in November 2002, most likely as a result of a combination of several factors. Firstly, Kuchma could have supported the Donetsk group as yet another counterbalance to the SDPU(o). Secondly, Premier Yanukovych’s past could easily be exploited by the Kremlin to increase pressure on Ukraine.
Although the reform was not implemented before the presidential campaign, it contributed towards the weakening of Ukraine. It was imposed on the winners of the repeated second round of the presidential election during the Orange Revolution, becoming one of the sources of conflict in Ukrainian government in 2006-2010 and leading to disenchantment in the Orange leadership and their subsequent defeat.
In actual fact, the Orange Revolution turned out to be the only chance to stop pressure from the East. It emerged that Kremlin leaders were not prepared for such developments and were obviously confused. For the first time in many years, developed countries expected positive changes from Ukraine. Ukrainian society had similar hopes. Unfortunately, this did not come to pass.
The shambolic renovation of the Central Electoral Commission, which has been in progress for several years now, looks about to be finally concluded. On Feb. 5, the President submitted a list of candidates to the Verkhovna Rada and this suggests that the process is finally being unblocked