Political and Economic context
General background: tackling the crisis
Ukraine is admittedly one of those countries that exist in a state of perpetual crisis, both political and economic. An urgent necessity of structural reforms and real fight with corruption is slowly muddling through the years of the Ukrainian independence, aggravating the level of its emergency. Ukraine did not follow the paths of its EU neighbours, like Poland, and did not choose its shock therapy option. Instead, country’s economy belongs to a big business tightly bounded with the political power.
Currently the Ukraine’s economic freedom score is 46.1 according to the Heritage Foundation, which is lower than the average and makes Ukraine the 163rd freest in the rank (out of 183). The current GDP per capita is around $6,712 and the overall GDP around $305, 2 billions. Government spending has risen to a level equivalent to 48, 5% of GDP and the budget deficit is now over 3% of GDP. The public debt of Ukraine has reached almost 40% of total domestic output.
Taking into account the current European debt crisis, Ukraine faces the necessity to increase fiscal pressure and toughen social and tariff policies. Experts argue that the main reasons of the lame economic achievements are widespread corruption, discouraged entrepreneurial activity, poor protection of property rights and obsolete industrial base. After several years of gradual but steady economic growth, Ukraine’s economic strength is perishing. It is the case partly due to the global economic crisis and general slowdown, but not less because of the idle efforts to rejuvenate regulatory efficiency and launch genuine open market system with an attractive investment climate.
Recent immense fiscal deficits coupled with the constant tension with the Russian Federation over the gas prices forces Kiev to ask for the IMF loans. The IMF established a set of requirements for Kiev to get the trances. The requirements, primarily aimed at curtailing budget deficit, include among others a pension reform and rising of gas tariffs for housing and utility services for the citizens. The current government replied that the IMF’s requirements, especially regarding the tariffs, are inadmissible for Ukraine. There are different opinions regarding the potential effect of the IMF offered policies. Experts, however, argue that reluctance to introduce real reforms is tightly connected with the fear of political incumbents to loose the votes because of the unpopular economic measures.
The recent political context in Ukraine revolves around the Tymoshenko case. In October 2012 it will be a year since the former Prime Minister was found guilty in the accusation of her abusing the power while negotiating and signing the gas agreement with Russia, which stipulates highly unfavorable conditions for Ukrainian import. The opposition leader was sentenced for 7 years of imprisonment and automatically was kicked out of the run in the parliamentary elections. The sporadic and already divided into several groupings Ukrainian opposition was thus left without its most popular leader. After several months of slow and complicated negotiations the opposition parties agreed to join efforts in the coming parliament, although they run separately due to the prohibition of political blocks in the new electoral law. Although, the ruling Party of Regions is the leader according to the polls, the opposition has high chances to win a majority in case of united efforts.
The Tymoshenko case affects not only internal political situation, but also brings external complications and political isolation for the country. The EU has decided to cease the preparation of the Association Agreement signing until Kiev releases Tymoshenko and other victims of political repressions. Russia takes its stake in the critics towards Kiev, since the Tymoshenko accusations supposes a threat to the signed gas contracts. Moscow claims that all the negotiations were completely subject to the domestic law of both countries, so that the charges bear a political nature.
The damage of the case to Yanukovych’s reputation clearly appeared during the Euro-2012 football championship, when a considerable number of political leaders from the EU countries refused to visit Kiev as a protest gesture. The annual summit of Central European states in Yalta has been cancelled after 14 of the 19 presidents refused to participate for the same reason.
The parliamentary elections results and the pending decision of the European Court of Human Rights over the Tymoshenko case -where her application was lodged by her defence lawyers in August 2011- will entail the most resonant political implications in October 2012, and might profoundly alter the political landscape in Ukraine.
Sources:
BBC Ukraine
Ukrainska Pravda
Korrespondent
KyivPost
TVi
Texty.Org.Ua
The Economist
Political and social issues
How Ukrainian society changed in 20 years. O. Grytsenko. Democratic Initiatives Foundation.
Why Victor Yanukovuych can’t win the 2015 election. Vira Nanivska. ICPS, European Focus, #12, 2011.
Sounding the alarm round 2: protecting democracy in Ukraine. A follow-up Freedom House Report. Freedom House, July 2012.
Can Ukraine Reform? Matthew Rojansky, Olga Shumylo-Tapiola. Carnegie Endowment for International Peace. (4.02.2012)
The Underachiever: Ukraine’s economy since 1991. Pekka Sutela. Carnegie Endowment for International Peace (March 2012)
Ukraine – Backsliding on Democracy. J. Druker. ISN Insights.
Ukraine today: a guide for digging deeper. A. Wilson. OpenDemocracy (11.06.2012)
Playing with ambiguities: Ukraine’s language law. M. Riabchuk. OpenDemocracy (28.06.2012)
The Parliament of Ukraine has adopted a new language law. T. A. Olszanski. Center for Eastern Studies (11.07.2012)
Ukraine makes Russian an official language, rekindling protests. C. Williams. Los Angeles Times. (8.08.2012)
Tymoshenko asks for EU help against Ukraine’s ‘dictator’. EUbusiness (03.09.2012)
Short-term impediments to long-term, national thinking. James Sherr. KyivPost (20.09.2012)
The press and freedom of speech in Ukraine ahead of parliamentary elections. T. Iwanski. Center for Eastern Studies (24.09.2012)
Americans can learn something from Ukraine’s struggle for liberty. D. Horsey. Los Angeles Times (27.09.2012)
Yanukovych: PR firms and nice suits hide authoritarian intentions. D. Horsey. Los Angeles Times (1.10.2012)
The post-Soviet collapse. V. Portnikov. New Eastern Europe (08.10.2012)
Greedy Presidents. A. Wilson. New Eastern Europe (10.10.2012)
Ukraine and Belarus: the dawn of change? Y. Vasylyev. OpenDemocracy (16.10.2012)
The oligarchic democracy. The influence of business group on Ukrainian politics. S. Matuszak. Centre for Eastern Studies. Eastweek (16.10.2012)
The hijacking of Ukraine’s democracy. J. Parusinski. New Eastern Europe (17.10.2012)
EU-Ukraine: weniger Symbolpolitik, mehr Realpolitik, bitte! S. Meister. German Council on Foreign Relations (18.10.2012)
Can Ukraine find a way out of its political stalemate? I. Tabakov. OpenDemocracy (19.10.2012)
Yulia Tymoshenko is Europe’s Aung San Suu Kyi. G. Robertson. The Guardian (23.10.2012)
Secrecy Surrounds Ukrainian President’s Home. The Associated Press. The New York Times (24.10.2012)
Economic issues
Scenarios for economic and political development in the medium and long-run. Vasyl Yurchyshyn. Razumkov Centre (23.07.2010)
Reforming the Ukrainian economy under Yanukovych: the first two years. Nazar Kholod. Carnegie Endowment for International Peace. (2.04.2012)
New IRI poll shows that Ukrainians are most concerned about unemployment and corruption. Соціологічна група Pейтинг (27.07.2012)
Ukrainian banks more resilient now, but still exposed. FitchRatings (24.10.2012)