Grayling Blog

Ukraine: 120 days of Yanukovych

Posted on 15.07.2010 by Adam Robinson

On July 8, President Viktor Yanukovych celebrated his 60th birthday and the first 120 days of the new Government. This period was punctuated by a few symbolic events – some small, some large – which all served to highlight the enormous moral pressure on the new Government, from the people, to quickly restore the country to growth and prosperity. These include the accidental but comical automatic closure of the doors to Parliament as Yanukovych arrived for his inauguration, the collapse of an important national monument to commemorate the Founders of Kyiv, and Yanukovych being hit by a falling wreath during the memorial service to those who fought in WWII.

The Ukrainian population, tired of conflicts within the old Orange coalition and the social and economic problems this created, demand quick results. One anecdotal phrase heard on the streets captures the public mood perfectly: “They may be good, they may be bad but at least they are going in one direction!”. And indeed, Yanukovych has worked hard to create a ruling team which offers the least resistance to his policies, populated principally from his own Party of Regions. This creates a strong position for Yanukovych, the flipside is that there will be no one else to blame if things go wrong…

The future development of the Ukrainian internal and foreign policy will largely depend on the ability of Yanukovych to establish a balance between several interest groups within the Party of Regions. Currently that unity is under question as a result of recent scandals around tax codes and conflicts of interest, involving very senior figures; involving the Prime Minster, Deputy Prime Minister, Minister of Education and Science followed by the dismissal of several senior officials.

One more factor, which will have a decisive impact on the political landscape of Ukraine in the next months is the composition of the parliamentary coalition. The present combination of the Party of Regions, Communist Party and the Block of Parliament’s Speaker has been fragile from the start, with the prospect of a possible restructure of the coalition in early autumn.

The Party of Regions, under Yanukovych, will attempt to strengthen its position on October 31, during the local elections, though the exclusion of potential political challengers from the race through some hasty rewriting of the elections law will no doubt benefit Yanukovych hugely here!

More success has been achieved with the economy, which has seen evidence of economic growth, industrial output improvement and decreased inflation. The new team managed to secure the quick acceptance of the State Budget (through somewhat uncivilized means!), to finalize successful negotiations with the IMF on the final loan tranche of $14.9bn, and to see good progress in the preparations for EURO 2012. This has boosted Ukraine’s international ratings, investor confidence and general economic prospects. However, unpopular reforms around spend on public facilities, customs and excise and pensions reform slated for the autumn are likely to challenge public perceptions even further.

Tactical relationship-building with Russia continued in this initial period; the granting of an extension to the Russian naval base in Crimea in return for reduced gas price commitment and securing urgent credit advances from Russian state banks. Ukraine scrapped its plans to join NATO which will no doubt please Russia but has set the US on edge. Nimbly hedging his bets on all fronts, Yanukovych hosted a visit from US Secretary of State Hilary Clinton, who clearly left with the impression that Ukraine’s membership of NATO is not off the cards for good.

The first 120 days of the new Government seem to have given some hope to the Ukrainian population that thing are back on track and at least moving forward but the next 120 days and beyond are what now matters if this edge is to be maintained.