Ukrainian Expert Karatnycky: Despite Political Crisis in Ukraine, Yushchenko and Rival Tymoshenko Likely to Reunite After Next Election

Ukrainian expert Adrian Karatnycky says President Viktor Yushchenko fired his entire cabinet, including his prime minister, the popular Yulia Tymoshenko, to end a brewing political crisis precipitated by charges of corruption, but with roots in the politicking leading up to next March’s parliamentary elections.

“I think the real precipitant for this is the approaching political calendar,” says Karatnycky, counselor and senior scholar at Freedom House. “Both sides are maneuvering for the election period, but both sides understand that they may need to cooperate after the [March parliamentary] election in shaping a new government. It will be very hard for either of them, without taking very unsavory allies from the old regime, to put together a stable majority.”

Karatnycky was interviewed by Bernard Gwertzman, consulting editor for cfr.org, on September 13, 2005.

Everyone cheered when Viktor Yushchenko became president after the so-called Orange Revolution late last year, but as often happens in countries that aren’t on the front burner in the United States, many people here have lost track of what’s been going on since then. Recently, our attention was caught by stories about Yushchenko’s complete purge of his government amidst charges of corruption. Can we just run through what’s been going on in Ukrainesince Yushchenko’s government took over in January this year?

Well, the first thing that has to be said is that the Orange Revolution brought about a very disparate array of political forces all with one aim—to get rid of the previously corrupt and authoritarian government and to replace it with something a little less crooked and a lot less authoritarian.

I think that coalition held for the task at hand, which was to achieve power. But it was an unwieldy coalition from the start. You had people with liberal, free economic views; you had people with more populist economic views; you had people with more radical views about how to deal with the legacies of the past; you had people who thought—not quite that they should be swept under the rug—but that the country should just move forward and the problems of the past should not become the central preoccupation of the current government. All of them came into the government; they occupied different levels of office. The government tended to move in a more populist direction and was fed by a lot of the people who had done the organizing of the people-power [Orange] revolution. So you had a government with an array of technocrats and an array of revolutionaries, and that’s a very unwieldy long-term proposition.

That’s the real reason why matters came to a head; these differences, in a sense, led to a stalemate in policy. The stalemate centered on economic policy. The government had been very effective under [former Prime Minister] Yulia Tymoshenko [who was forced to resign last week]. It was very effective in bringing in revenues; they’ve increased income from taxes by $4 billion in the first six months. This was done not by increasing taxes but by just getting effective compliance and getting rid of the corruption schemes that exempted a lot of businesses. But where did this money go? Most of it went to increases in social spending for the poor and for workers. From the point of view of virtue, that perhaps is a desirable aim. But from the point of view of generating economic growth, many people in the business community were unhappy there was less spent on infrastructure and on tax incentives for business.

All these matters were precipitated when the chief of staff of the president, Oleksandr Zinchenko—a very able man—accused others in the president’s office but not the president himself and not the majority of the president’s entourage, including the national security adviser, of corruption. Thus far, he has not backed up any of the claims with documentation, as far as I know. But what he did actually emphasize was less corruption and more what I would call conflict of interest. You’ve got a lot of new businessmen, who had been excluded from the old government, and some of them are in the government now and many people suspect they’re using their offices to enrich and expand the interests of their families, their clans, their associations. Similarly, the president was suspicious that Mrs. Tymoshenko was using this to help her political backers.

And all of this suspicion is going on in a period when you’ve got the March parliamentary elections approaching, and in the March parliamentary elections, there’s a jockeying for position. I think the real precipitant for this is the approaching political calendar. Yushchenko had the idea of creating a single, unified coalition he would determine—and he wanted to determine two-thirds of the candidates in this proportional election system and give Yulia Tymoshenko a third. I think the real disagreement was partly over policy, but also partly over the sharing of assets and I think she felt, being equally popular as Yushchenko was in public opinion polls, that she should determine half the composition of the electoral bloc.

Tell us a bit about some of these personalities. Tell us about Mrs. Tymoshenko. What is her background?

Yulia Tymoshenko is one of the most interesting, dramatic, and charismatic political figures on the European scene. She is this incredibly attractive, stylish woman in her mid-forties who speaks compellingly dramatically—she has a real oratorical flair—and who is an extremely good administrator in the sense of improving the effectiveness of government. She knows how to move privatizations forward or stop them if she prefers; she knows how to squeeze more money into the budget by making government collections more effective. So she is an extremely valuable politician and technocrat. She is a former businesswoman from the period where there was a lot of corruption. She was basically the oil and energy “princess” in the mid-1990s, when there was rampant corruption in Ukraine. She basically cornered the market and had the largest energy-trading company, which emerged out of nowhere and emerged partly out of the support of the then-sitting prime minister, Pavlo Lazarenko, who is now in a jail in San Francisco indicted charges of money-laundering hundreds of millions of dollars.

So she’s a wealthy woman?

She was a wealthy woman, although her last tax declaration indicated she had $3,000 in interest income and made $6,000 as a parliamentary deputy last year. So there are some questions about what happened to all of her wealth. She claims that most of it was stripped away by the old leadership and that she is living on rather modest means.

She was instrumental, I gather, in getting Yushchenko elected?

Well, Yushchenko was instrumental in getting himself elected. She was very instrumental in building the support that helped create the Orange Revolution. She helped Yushchenko get elected and they made a political pact. She made the political pact because she knew that he, of all people, was electable. Her negatives prior to the Orange Revolution were extremely high. She had maybe 50 percent positive and 50 percent negative ratings because the earlier government had done a number on her. But as prime minister, she reversed that and achieved popularity ratings that equal those of Yushchenko.

Most people believe she had a real change of heart after she was jailed by the former regime on charges of corruption. She spent a couple of months in prison and then was released by a judge while the investigation was going on. She was dismissed as deputy prime minister; much of her wealth was stripped from her. I think she wanted political revenge, but I think she also turned over a new leaf in the late 1990s and removed herself from business. So in that sense, she’s had a very interesting political revolution.

She and the rest of her cabinet were sacked by Yushchenko?

Many of them will come back. There are two issues which I think proved to be the final straw on why Yushchenko took the nuclear option and dismissed the whole government. No. 1, he was going to dismiss his National Security Adviser Petro Poroshenko, who is a “chocolate baron” of Ukraine—he runs the big confectionary chocolate business—and he was one of the financial bankrollers of the Yushchenko campaign. He’s also the godfather of one of Yushchenko’s children.

Poroshenko was charged with conflict of interest and corruption by the chief of staff. Yushchenko was ready to dismiss him. But as he was dismissing someone who had been a strong and loyal political backer, he wanted Yulia Tymoshenko to shed some of her supporters in the government and replace them—to do a kind of balancing act. In the end, from what I understand, she refused the bargain and he—tired of the endless games and struggles with her—decided to sack her.

Having said that, both sides are maneuvering for the election period, but both sides understand that they may need to cooperate after the election in shaping a new government. It will be very hard for either of them, without taking very unsavory allies from the old regime, to put together a stable majority. They probably need one another. And the irony is, Yulia Tymoshenko, in the first months of her prime minister-ship was pursuing a populist policy, [since then,]with growth rates slowing down and a dialogue with the rest of the world, she was moderating those policies and moving toward a more market-oriented position. This would mean that on economics, she would have fewer conflicts with the president. It seems to me that, ironically, this conflict tosses everything back into the hands of the Ukrainian people. They’re going to have to make a decision in the March parliamentary elections and it’s very likely that they’re not going to fully decide between the two leaders.

She’s going to run her own platform?

Yes, but she’s saying it’s not going to be in opposition to the president, only in opposition to his crooked cronies, and she’s leaving open the door to potential political cooperation. In other words, she didn’t want to accept the weakening of her position and preferred to go to the outside and fight for her place rather than negotiate her place with Yushchenko in a subordinated position.

There’s one other factor in this that we need to keep in mind: In March, the juice in politics moves from Yushchenko toward the parliament. There will be a constitutional change that will reduce the president’s direct role in shaping the government and it will be up to the parliament to haggle and put forth the leadership. So therefore, Yushchenko and Tymoshenko understand that in order for either of them to have real power, they have to have the largest parliamentary bloc. And that’s what I think this whole dispute is about: Who will have the largest parliamentary bloc? She wanted an equal bloc if it was to be negotiated, he wanted the dominant bloc. I think he also felt that if he pushes her out and links up with his own political tendency that he stands a better chance than she does of coming up as the main leader, both as president and through a loyal parliamentary group.

Let’s discuss Yushchenko. What kind of person is he?

I had the privilege of knowing the president for about six years. I can say he’s a person who has a unique merger of a modern, forward-looking vision on the economy, while also being a kind of country boy. He carried the urban-educated [vote], and he carried the rural vote because he’s sort of a religious guy, but doesn’t wear religion on his sleeve; he was very close to his mother who died the day before his inauguration. His father was in prison in Auschwitz and other concentration camps—a Soviet Red Army guy who was put into forced labor. So he’s lived through all the tragedies from Stalinism to the Nazi occupation—his family lived through all these things.

I would say Yushchenko is a guy who’s really incorruptible. He is a guy who has never attempted to merge government activity with business. He’s not gone the typical path of what most of these politicians do in power. He has an American-born wife, who’s taken Ukrainian citizenship, who worked in the [Ronald] Reagan and first [George H.W.] Bush administration. I think she worked in Ukraine as a consultant for Western companies and that was the main source of income for the family over the last number of years. But he has never dabbled in outside economic projects. He has the reputation of being an extremely honest and capable guy. The focus groups and public opinion polling that’s been done show that people like him as a personality but that he is too relaxed and passive and isn’t a take-charge guy. Well, he certainly seems to have done an awful lot in the last few weeks to change that impression. My prediction is his ratings, which are already pretty high, are actually going to go up because people were waiting to see this guy take matters into his own hands.

So the purge of his government is actually going to help him politically?

I think the purge will help him politically, but it actually puts it into the hands of the Ukrainian people. Rather than having people behind a closed door divide up the slots in a parliament in a more managed style of parliamentary politics, you’re going to end up with two major political forces with some range of choice. The real problem until this split in Ukraine was too much unity; that is to say, not in the functioning of the government, but too much electoral power in one group. The splitting of [this bloc] creates more opportunity for transparency, and I think in the end, a little more sharpening of political choice.

So the March 6 election is a crucial one?

Yes. It’s pretty crucial, but as I say, even though there have been these differentiations and a bit of bitterness, it’s controlled bitterness and it’s controlled differentiation. I think it’s within limits and I do think it’s possible for these two political tendencies to cooperate on economic policy, should that become necessary. Mrs. Tymoshenko feels she’ll get a majority and be able to shape the government. But most of the polling data indicate it will be very, very close between those two groups and, put together, they’ll be able to shape a comfortable majority.

Is she still in parliament?

No she’s not, because there’s a law in Ukraine that requires people who are taking executive positions to resign their parliament seats.

You indicated there’s a constitutional amendment that’s going to take place?

There was a constitutional bargain that was agreed as part of the roundtable talks that resolved the Orange Revolution crisis and led to new elections. What that meant was there was going to be some modification in where power to shape the government rests. And the power to shape the government will go in the hands of parliamentary groups’ consultations and the recommendations will come from the parliament itself, not the president trying to shape a coalition.

Let’s talk about Ukraine’s relations with the two big powers, Russia and the United States.

Well, I would say as far as Ukraine ’s concerned the two big powers are the European Union and Russia—although I would say all the vectors of Ukrainian foreign policy are one and integrated in trying to do what is necessary. The president’s new chief of staff and state secretary, Oleh Rybacagk, was the deputy secretary in charge of Euro-integration and he is “Mr. European Integration.” I think his designation is a sign of real movement.

My sense is the European vector will be a very influential one. I think the United States is important because of security issues, because Russia is both an economic and security issue for the Ukraine. Europe is only an economic issue. To balance it out, Ukraine does need some engagement with the United States , and I think this leadership wants [Ukraine] to be in NATO. They certainly want to be in the EU [European Union] over the next ten or so years, and they hope to do the right things to promote growth and to make the right internal policies to make that happen.

My sense is that it’s hard to know what Russia will do in the long term, but Russia’s choices, the choices for [Russian President Vladimir] Putin are a bit tougher than they were before the election. If Putin moves now to seize on the sort of transitional and conflictual nature of Ukrainian politics, he will be strengthening Yulia Tymoshenko, who I think he believes is less pragmatic and less technocratic than Mr. Yushchenko. I don’t think there is an option in Ukraine right now where, if there were political or economic instability, some new force would arise. The choice is between Yushchenko and Tymoshenko and, to my mind, the Russians would be more nervous about the nature of a relationship with Yulia Tymoshenko than they would be about the nature of a relationship with Yushchenko. So my sense is that between now and the election, Russia is going to behave in a calmer rather than more assertive way, especially if they have an intelligent reading of the poll.

Does Yushchenko have his own party?

He has a bloc that’s called Our Ukraine and he wanted to bring Tymoshenko into that bloc. And then, he wanted to widen it into a movement that had the name of a political coalition that backed his candidacy called, “Power of the People.” That bloc was supposed to include the Tymoshenko bloc and they were supposed to use that as a common brand name.

But since that’s sort of broken up, I think you’re going to have these two competing blocs and it will really be a popularity test between Yushchenko and Tymoshenko. While Tymoshenko is extremely popular, I think her absence from parliamentary debate and her absence from government is a bit of a disadvantage. She’ll be on the television and appearing all the time. The media is very free and she has said that, but it’s still a little bit of a disadvantage.

Does she have her own party?

She has a party called the “Bloc Yuliya Tymoshenko,” Which is pronounced, “BUTY,” like beauty. It’s not accidental. She has the entire spring and fall collection of Louis Vuitton, so when she went to Paris she had meetings with Louis Vuitton and I think she received a bounty for the publicity—when she was in Paris she really charmed French society.

Does she have a family?

She has a daughter but is estranged from her husband. Her husband was also in prison for a couple of years while she was still actually in the government. That was a messy story.

You think in the end she and Yushchenko will have to get together?

I think they’re both likely to capture more than 25 percent and one of them could move above 30 percent, and together that bloc would roughly command 55 percent or so of the electoral preferences. I can’t see either of them making a pact with the Communists or the Social Democrats. So they’re really part of the populist socialists and it’s really hard to envision any majority that will not bring them together.

Is it possible she may end up as prime minister again?

Yes, it’s very possible, but only if she gets more votes than the Yushchenko bloc. He’ll never hand her the prime ministership again.