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WILL THE SELF-STYLED SAVIORS BE REALLY ABLE TO RESCUE THE NATION?

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OLEKSANDR GAVRYLYUK,
Political commentator, Kyiv

The strict behavior pattern imposed by the current presidential run on its key participants has made them two peas in a pod. No matter the name of Ukraine’s new leader, the future president will have to follow the course laid by the circumstances, creditors and sponsors. At least from the very beginning…  

This year’s election campaign in Ukraine is unusual. Contrary to the 2004-2005 presidential run, when the key rivals personified opposite vectors of the nation’s future development, the main protagonists of the current campaign are hardly distinguishable in terms of their programs and even images they pretend to shape.

Thus the incumbent Prime Minister Yulia Tymoshenko, who has always been known for her addiction to wearing virginally white clothes and standing out angelically impeccable among all the ‘twisty politicians’, has covered the country with the billboards convincing its population that she is the only politician working hard and incessantly to drive Ukraine out of its troubles.

“The national economy has been coming out of the economic crisis,” she stated at the news conference resuming her cabinet’s activity throughout the last year.

According to Tymoshenko, there has been a range of intrinsic obstacles in the nation’s way out of the crisis. Particularly, Ukraine’s economy has not, since its independence, undergone any significant structural reforms, which could have resulted in modernizing the leading domestic industries, such as the steel and mining and the chemical sectors, as well as in forming a powerful middle and small business.

Additionally, the country’s banking system has turned out to be incapable, due to its “corruption and unprofessionalism”, of crediting the economy under the crisis’ hits, while the national currency has unprecedentedly slumped.

Furthermore, the country’s President and parliament has, in the premier’s opinion, not only kept from fighting the downturn but started cooperating in hampering the cabinet’s efforts.

Under the circumstances, Tymoshenko’s government has allegedly proven to be the only force capable of saving the nation from the possible economic collapse.

The prime minister has apparently forgotten her previous loud statements about the global crisis not affecting Ukraine, her backstage talks with the parliament’s largest faction to forge the nation’s everlasting coalition and government, her scandalous struggle with a phantasmal flu epidemic and other ‘glorious achievements’.

Meanwhile, Tymoshenko’s principal contender, Viktor Yanukovych, who has been obtruding his annoying billboard appearances since the previous presidential campaign, is now benefiting from his stance of the ‘chief oppositionist’ and blaming the premier and her cabinet for all the problems ever existing in Ukraine.

According to him, the present government is responsible for the national currency collapse, heavy external borrowings patching huge holes in the state budget, permanent surge of prices and public utility rates and, on the whole, leaving the nation to sink or swim in the high seas of the economic crisis.

“I have been doing my utmost to halt this unreason throughout the past five years,” Yanukovych writes in his article recently published by the influential Ukrainian weekly Dzerkalo Tyzhnya and pledges to retrieve the country from the “irresponsible policy of deceitful and unpredictable authorities leading the country to a ruin”.

“I am absolutely sure that the nation taught by the bitter experience of the past five years will not repeat its mistakes,” he continues and concludes the article in the entirely evangelic style: “This is the good news I want to share with you, my dear countrymen…”

However, Yanukovych’s rhetoric seems to be at least ill-posed, taking into account that he and his Party of Regions have been extensively participating in forming the Ukrainian economic policy since the end of 2005. What is more, Yanukovych headed the national government in 2006-2007, having put his signature under the President Yushchenko’s National Unity Universal clearly articulating the ‘orange values’ he is now so critical about.

So will this year’s election really open “a new page in the nation’s history”, as Yanukovych has put it down?

Since the Ukrainian constitution limits the president’s ability to implement any reform plan without parliamentary support and since both Tymoshenko and Yanukovych arte set “to build a strong state”, the newly elected head of the state would most probably try to consolidate his or her support in parliament and strengthen or appoint a new government. If unable doing it, the president may call early elections.

“On economic policy, Yanukovych has stronger backing from exporters than Tymoshenko, making him more likely to lean towards a weaker currency, while Tymoshenko in the past has advocated a strong exchange rate,” reads J.P. Morgan’s recent forecast on Ukraine. “In addition, Ukraine may see a speedier privatization process under a Tymoshenko leadership, despite her history of re-privatizations”.

With all the harsh criticism made by Yanukovych and his close allies, such as Azarov, of the current government’s foreign borrowings, the new president will have to put the IMF program back on track as quickly as possible, as Ukraine’s heavy debt burden and severe economic slowdown leaves little leeway to deviate from the IMF anti-crisis program.

Tymoshenko has proven her commitment to the IMF program by opposing social spending increases, and although Yanukovych voted in favor of them, if he becomes president, he would, according to the report, be likely to follow the IMF recommendations more closely once he has a working majority in parliament.

“A further delay to the resumption of the IMF Program should not impact the government’s ability to service its debt given the very light schedule of debt redemptions through 2011, but from March onwards gas payments are likely to be a problem until the government can raise domestic gas prices,” J.P. Morgan specifies. “Tymoshenko could probably raise domestic gas prices quite soon after the presidential elections (March/April), but Yanukovych would probably have to call early elections before he managed to push this through.”

Thus, both Tymoshenko and Yanukovych are expected to follow the same recipes in order for the Ukrainian economy “to grow by 3% this year after a 15.2% contraction in 2009” and “to bring the budget deficit close to the IMF target of 6% of GDP and for average inflation to fall to 13.5% as the exchange rate strengthens in the second half of the year”.

The only difference is, in J.P. Morgan’s opinion, that in case of Tymoshenko’s election victory, she should be able to put together a workable coalition without the need for early elections. This would allow Ukraine to get the IMF program back on track by April.

The principal challenges for the future president will, however, appear later, with the necessity to repay the foreign debts.

Both Tymoshenko and Yanukovych are backed by almighty oligarchic clans, whose interests they are supposed to meet. So will the new president be willing and able to break out the preset paradigm and finally initiate the long-awaited reforms, which would inevitably come into conflict with the oligarchic interests? Will he or she be able to eliminate or at least decrease the outrageously high level of corruption and abuses, red tape and incompetence in the state offices?..

Such questions are countless and the responses they will get are going to determine the nation’s future, its economic competitiveness and place in the world.

February 9, 2010




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