On
30 June 1999 the National Intelligence Council
and the State Department Bureau of Intelligence
and Research sponsored a conference that examined
the continuing challenges to Ukraine in its political
and economic transition from being a component
of a centrally planned, totalitarian state. The
conference consisted of 14 presentations from
experts outside the government, interspersed with
general discussion between the experts and government
participants. The agenda focused on four topics:
the evolution of Ukraine's political system, the
status of its economy and reforms, Ukraine's role
in the international system, and Ukrainian societal
dynamics.
Conference
participants did not endeavor to produce a coordinated
summary of findings. However, during the presentations
and discussions, there emerged a number of points
of both agreement and disagreement that seem particularly
salient in evaluating Ukraine's current condition.
These highlights summarize the areas of agreement
and disagreement as well as particularly noteworthy
points but, except as noted, should not be considered
as representing the views of the conference as
a whole.
Most
observers held generally gloomy views on Ukraine,
with the big question for its future being whether
the situation was likely to get worse after the
elections or remain stagnant for the next few
years.
A
relatively bright spot was Ukraine's consolidation
of itself as a state. One scholar suggested this
included six principles: acceptance of Russian
as an unofficial language but simultaneous gradual
Ukrainization; a unitary rather than federal state;
support for territorial integrity and for the
creation of a national legend about Ukraine's
historical antecedents; and the slow expulsion
of Moscow-based media as the main source of electronic
information. Participants noted that separatism
is no longer a serious challenge for Ukraine,
except perhaps in the far eastern region of Donets'k,
and some argued that even the previously most
serious case, Crimea, has diminished in salience.
The
main source of gloom were the characteristics
of the state that is being consolidated:
-
The economy is an unreformed "basket
case" with little progress toward the
creation of the institutions needed for an
efficient market economy. Bureaucrats are
stifling entrepreneurial activity through
overregulation; consequently, business is
protecting itself through corruption or going
underground.
-
The self-protective and insulated elite is
the linear descendant of the old nomenklatura
and cares only about its own power and enrichment.
-
Society is ignored except at election time,
when candidates vie with promises of generosity
rather than talk about creating conditions
under which society could prosper independently.
-
Independent sources of information and action
are still in a developmental phase. The press
is pluralistic but not wholly free. Nongovernmental
organizations--necessary but not sufficient
building blocks for developing a civil society--have
become more plentiful but not necessarily
more influential.
There
were differences of view about the prospects of
this state transforming itself for the better:
-
One scholar argued that the existing patrimonial
system, as he described it, was likely to
become more effective in running the state
and in the process, begin to serve society
and create rules that would bring an economic
upturn.
-
Other participants rather expected the self-preservation
of the current corrupt system at least until
a new generation came to power. However, one
scholar warned that the new generation was
adopting the ways of the old in order to rise
to the top.
-
One ray of hope was the openness of the debate
in Ukraine about its present and future, of
which this conference, which included Ukrainian
participants and Western scholars, was but
one example.
The
most marked disagreements came over the likely
consequences of this fall's presidential election:
-
Some participants worried that the election
of any presidential candidate other than Kuchma
would set Ukraine on even less attractive
and perhaps more dangerous paths, for instance,
seeking to recreate a union with Russia and
Belarus, which would also encourage like-minded
Moscow politicians in the runup to Russia's
own December Duma election as well. One speaker
characterized the coming elections not as
a struggle between present and future but
as a struggle between present and past.
-
Most participants in this discussion, however,
argued that the corporatist rules of the current
elite and other constraints (for instance,
Ukraine's financial dependence on the West)
would prevent any president from making significant
changes.
-
All participants agreed that the attractions
of power in Ukraine are such that the upcoming
elections may not be waged in a fully fair
fashion.
On
foreign policy matters, most discussants viewed
Ukraine as still oriented toward the West despite
unhappiness over NATO's war in Yugoslavia and
the European Union's longstanding aloofness toward
Kiev. Some saw the Kosovo crisis as strengthening
Ukraine's stance of neutrality.
Looking
at what the West can do to help Ukraine, some
argued that, while financial aid is important,
educational assistance aimed at creating a political
consciousness among the Ukrainian population is
even more so. They urged patience and avoidance
of overly high ambitions for the pace at which
changes can be expected.
-
Participants worried, however, about how long
the West would maintain even the current level
of assistance to and interest in Ukraine,
given that the most likely domestic prospect
was for more of the unsavory present.
Section
One
The Political
System
Andrew
Wilson, School
of Slavonic and East European Studies, London
"National Identity in Ukraine"
Competing
Models of Ukrainian National Identity
Several
models of Ukrainian national identity exist alongside
one another today.
-
The national-ethnocultural model,
backed by Rukh since its foundation in 1989,
includes a broad cluster of components:
--The privileged rights of "indigenous"
peoples over those of "national minorities."
--A repudiation of the east Slavic common
origin myth.
--A view that Ukraine had a "thousand-year
tradition of state-building," with short
interruptions.
--A negative attitude toward the Soviet era;
a vision of Ukraine as a post-colonial society,
with "Ukrainization" the reversal
of historical injustice.
--Occidentalism, or the belief that Ukraine
is historically a natural part of Western
civilization; the Ukrainians as the natural
titular majority (73 percent).
--With a belief in the natural coincidence
of ethnicity and language; Russophone Ukrainians
as an inherent part of that majority, once
they have been renationalized; and Russians
(22 percent of the population), to be given
the rights of a "national minority,"
but nothing more, as they have a homeland
elsewhere.
Most
elements of this model were supported at one time
or the other by the (often opaque or contradictory)
policies of the Kravchuk presidency, but also
found their way into the 1996 constitution.
-
Another model is the language group model.
A main dividing marker in the 1994 presidential
elections was language, the factor most politicized
by the ethnocultural model of Ukrainian identity.
According to this model, Kravchuk lost because
language divides Ukrainians among themselves,
and so many Ukrainians were preferentially
Russophone (just over 40 percent of the general
population were then preferentially Ukrainophone).
Reliable polls indicate that 70 percent of
Ukrainophones supported Kravchuk, and 72 percent
of Russophones backed Kuchma.
-
A third model is that of the "Other Ukraine,"
the dual identity model. Russophone Ukrainians
sealed Kravchuk's fate in 1994 by voting with
ethnic Russians for Kuchma. Clearly, there
is an "Other Ukraine," a very large
group of Ukrainians who do not believe in
some or all of the conceptual foundations
of the ethnocultural model of Ukrainian identity.
This dual identity model is defined partly
by language, partly by the idea of dual ethnicity.
It is also centered around a different set
of assumptions, including the persistence
of myths of common east Slavic origin and
subsequent voluntary interaction; the myth
of the voluntary adoption of Russian as a
lingua franca; and the idea of bluffed boundaries
(as one activist put it, "In terms of
national-cultural identification we belong
to a single Russian-Ukrainian cultural space"
and should not be forced to choose between
a mono- and a poly-cultural identity); residual
support for the key Soviet myths of "socialist
achievement" and the "friendship
of the peoples"; and uneasiness with
the depiction of the USSR as a Russian/Soviet
empire in which the Russian people colonized
or conquered Ukraine.
The
presence, even predominance, of the Russian language
is not just a "post-colonial" hangover,
and there is resistance to crude Ukrainization
pressures.
What
then are the alternatives to the "ethnocultural"
model
for the "Other Ukraine?"
-
One is a Eurasian identity. Kuchma's
controversial 1994 inauguration speech stated
that "Ukraine is historically part of
the (same) Eurasian economic and cultural
space" as Russia and Belarus. The strong
negative reaction to his speech from Ukrainophones
forced Kuchma to place the issue on the backburner,
but it has been reformulated in recent years
in terms that reflect the popular Pan (east)-Slavism
of Aleksandr Solzhenitsyn. The theme has also
been taken up strongly by the chairman of
parliament, Oleksandr Tkachenko. (There were,
in other words, already premonitions of the
line Ukraine would take in the Kosovo crisis.)
The dangers inherent in this model are its
obvious foreign policy implications and its
head-on confrontation with Ukrainian nationalist
"Occidentalism."
-
Since his 1994 inauguration speech Kuchma
has, therefore, taken a more subtle line,
which can be called a synthetic model. In
several speeches he has called for a combination
of the "best of both" the ethnocultural
and Soviet Ukrainian traditions, on a selective
basis venerating myths from pre-Soviet Ukraine
and Russia and the Soviet Union all at the
same time. Kuchma says different things to
different audiences--to Russia, to the West,
and at home. In many ways, this is perfectly
sensible, but the West needs to be aware that
the dialogue it has with Ukraine is context-specific.
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Politically, Kuchma is often described as
adopting a "civic" approach,
based on the idea of "a Ukrainian political
nation." There are, however, many different
formulations of this idea, including the "core
nation model" embodied in the 1996
constitution; a more "dualistic model,"
as endorsed by Communist Party leader Petr
Symonenko: Russians and Ukrainians as two
branches of the one people of Ukraine; a "consociational
model": the formation of a Ukrainian
political nation on the basis of the national
"blooming" of the Ukrainian people,
as well as of all remaining ethnic groups;
a "transcendent model,"
in which ethnicity no longer defines identity;
and a model combining the Rukh and transcendent
models, which refers to the constitution as
being enacted in the name of "the Ukrainian
people--citizens of Ukraine of all nationalities."
Conclusions
The
existence of the "Other Ukraine" is
what makes polarization of Ukrainian society difficult,
as does its amorphousness. The historical divides
between "original Soviet" (1921) and
western Ukraine, between ethnic and linguistic
groups, between the confessions, between regions,
and along supposed "civilizational"
faultlines are all different. It ought perhaps
to be borne in mind that, whereas many Ukrainian
critics deride the idea of the "Other Ukraine"
as having no cultural solidity, it is precisely
this lack of solidity that preserves the social
peace. If Ukrainian and/or Russian national identities
solidify over the medium term, then counter-reactions
and mobilizations would in fact be more likely.
External
stimuli are more likely to prompt a consolidation
of Ukrainian identity. The most obvious of these
is the simple fact of Ukrainian statehood. The
most powerful would be potential conflict with,
or perceived divergence from, Russia. The former
scenario is unhealthy; the latter has possibilities.
Many Ukrainians began to perceive a difference
in political culture with the onset of the Chechen
war. Different alignments with third parties are
also likely to produce long-term effects, potentially
reshaping some of the mythological boundaries
outlined above. Unfortunately, one of these has
been the Kosovo war, which has strengthened the
appeal of Pan-Slavic mythology.
Different
Models of Ukrainian Society
Victor Pasisnichenko,
Kharkiv Pedagogical University
"Civil Society and
Post-Communist Realities:
Some Lessons of a 'Rosy' Period"
Our
approaching the subject of civil society at the
end of the 1990s means some radical changes in
the way in which it was approached at the end
of the 1980s when civil society had captured the
imagination of democratic scholars, politicians,
observers, and activists more than other concepts.
These disputes about its appropriate role in the
postcommunist countries were encouraged by contradictory
far-reaching social changes that often were referred
to in terms of "civil society revival."
In addition, civil society has become a leitmotif
of the Western aid programs that distribute considerable
resources to the region.
Main
Features of the Current Stage of Civil Society
The
gap in the theoretical development of civil society
as well as a particular historical situation--the
unexpected failure of communism--led to two significant
consequences. On the one hand, the notion of civil
society was mainly used as a slogan that had little
to do with the previous grand theoretical debates.
It was both an attractive explanation of the fall
of communism in terms of the civil society revival
and a basis for hope concerning its future role
in democracy building. The revolutionary enthusiasm
about civil society (as a slogan) was also attractive
for the West, which was looking for the best way
to encourage the transformation process and to
support the relevant eastern
actors (NGOs) in the late 1980s. This way of thinking
about civil society was distinct from the previous
complex history of evolution of the civil society
concept. It is mainly the liberal version of civil
society distinct from the state that has been
found theoretically fruitful and has been wrongly
presented as the only valid one both by the theorists
of the "democratic opposition" in the
East and by radical left intellectuals in the
West. In a much less excusable and equally misguided
way, Western scholars produced a more narrow and
simplified model of civil society. This "nongovernmental
civil society" is reduced to the public sphere,
independent social movements, and voluntary associations
or NGOs as genuine democratic actors unspoiled
by the attraction of power, money, and conflicts.
This model is based mainly on an institutional
approach to civil society, locating its institutions
somewhere between the individual and the state.
Due to the sharp distinctions (civil society/state,
civil society/political society, civil society/market,
public sphere/individual), these institutions
are considered as opposed to the institutions
of state, market, and political spheres.
As
a result, the definition of civil society has
developed a negative nature both in its slogan
and theoretical forms: it is more about what it
is not than what it is. Except for the distinction
between civil society and the state, there does
not seem to be a good deal of agreement on what
constitutes civil society.
General
Lessons From the Current Stage of Civil Society
It
is above all postcommunist (and post-Soviet) realities
that revealed the weakness and limitations of
this model of civil society, both in terms of
the attractive slogan and the narrow vision of
the nongovernmental sphere. In its negative force,
this civil society has not survived its own victory
because it failed when its main enemy failed--the
totalitarian state--and it was unable to establish
constructive "border relationships"
with other spheres of society. The implications
of these crises are important also for the Western
liberal democracies, where a similar narrow understanding
of civil society in terms of "a separate
sphere composed of voluntary groups that act as
a buffer against government" is still popular.
A
crucial lesson of the bankruptcy of the narrow
and negative notion of civil society distinguishable
from the state encourages a search for a broad
vision of civil society. This approach seeks systemic
links among the different spheres of civil society
in its broadest sense, links that strengthen the
"boundary relations" between state,
political society, market, and nongovernmental
organizations (independent or third sector). It
adds to the institutional dimension of civil society
such factors as the role of actors and their relationships
in terms of the construction of cultural-identities
and codes as a precondition for the existence
of genuine civil (civilized) society. It is through
this broad concept that one can approach the sphere
of civil society in a narrow and more traditional
sense as a realm of nongovernmental organizations
(NGOs) and voluntary associations.
Some
Lessons for the Post-Soviet Countries
-
Being aware now that NGOs (the third sector)
have to be considered in the intersection
with other spheres of society and that all
of these spheres are grounded in a minimal
environment of cultural democratic values,
we have to hesitate in applying the term civil
society to the post-Soviet societies. After
all, such societies are lacking the relevant
state, politics, and market, as well as their
proper relationships with the newly emerging
third sector. It means that civil society
in the post-Soviet countries could develop
from scratch rather than through revival or
restoration of the previous civic-like organizations.
We should be prepared for it to be a long
and complicated process in which the appearance
of the third sector could play a considerable
role but should not be wrongly equated with
the development of real civil society.
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The concept of an "antipolitical"
character of civil society means that, in
the absence of an appropriately formulated
politics and political culture, civil society
simply will not exist. The excessive involvement
of some Ukrainian NGOs in politics could be
explained by the fact that political parties
are still in formation and there is ongoing
fighting for power in the country as well.
-
A new lesson--that a weak state, such as that
which exists in Ukraine, is a barrier to civil
society--must be added to the traditional
lesson of liberal democracy about the strong
and totalitarian state as an obstacle to civil
society.
-
Another addition to the same old liberal lesson
is that civil organizations could not only
be misused but also behave in an uncivil way.
Their development does not automatically lead
to democratic alternatives.
The
Third Sector in Ukraine
Although
it is pessimistic in terms of civil society building,
this proposed approach to analysis of Ukrainian
society still confirms as a new positive factor
the emergence and growth of numerous public organizations
(NGOs). At the same time, these organizations
signify the beginning of development of civil
society in Ukraine. However, the contradictory
processes in this sphere give no grounds to speak
about them as a force that has visible social
impact, represents the interests of the broad
public, or is free of internal conflicts.
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On the one hand, there is a considerable growth
in the number of NGOs (1991: 319; 1992: 356;
1993: 3257; 1996: 12,416, early 1998: 17,781.
City NGOs: 39 percent, regional: 33 percent,
national and international: 8 percent). They
are experiencing slower growth in industrial
cities, such as Zaporizhzhya.
-
On the other hand, due to various reasons,
primarily the economic crisis, the level of
participation in these organizations is rapidly
falling (1991: 30 percent; in 1996: 13 percent).
The
growth of Ukrainian NGOs in itself is not a proof
of civil society strengthening. An urgent problem
of the sector--to map the size and quality of
the NGOs--is too difficult to solve.
As
they gain rich experience, these advanced organizations
move to more professional work. They could play
a crucial role in the development of the third
sector as an important part of future Ukrainian
civil society. However, this is only possible
if the dangerous tendency of self-isolation and
internal prospering among these NGOs could be
overcome. The strong dependence of Ukrainian NGOs
on foreign resources is visible by the fact that
the majority of the organizations exist in big
cities, while in rural areas they are weak or
absent.
With
a lack of internal resources, there is a fight
for limited foreign funds, which creates an atmosphere
of competition between NGOs. It prevents their
communication and their vision of themselves within
a broader picture of the third sector. Meanwhile,
the regions that have more access to external
resources manifest "patron-client" and
"clan" types of relationships. Some
organizations are used for personal gain due to
a strong leadership and lack of democratic traditions.
There are also many examples of using NGOs to
evade taxes or to run a business. Finally, the
status of the public organizations is used by
some politicians as a way to pursue various goals
of mainly political character, in particular proposing
a candidate for election or gathering votes for
the candidates.
These
uses and abuses of NGOs in Ukraine confirm the
thesis that civil society is a complicated process
and phenomena and that the consequences of its
development are not a matter of some independent
sphere of society. They greatly depend upon civilized
individuals as active citizens in their everyday
practice. It is unclear whether a broad vision
of civil society is acceptable for many intellectuals
and practitioners today. Yet what is really challenged
is a sharp distinction between civil society,
the state, and other spheres of society. There
is a need to relativize the vision of civil society
as an independent sphere at least to an understanding
of its relative autonomy.
Victor Zablotsky, Independent Journalist,
Kiev, and Kennan Institute
"Center-Regional
Relations on the Eve of the Presidential Elections:
'Dances With Wolves'"
According
to research done by Ukrainian experts, a lasting
discussion of the interpretation and role of political
institutions in Ukraine has proven the total ineffectiveness
of legal or institutional approaches. It is not
a surprise that on the eve of future presidential
elections, Ukrainian elites still face the issue
of jurisdictional division of decisionmaking authority
between central and regional governments.
In
contrast to the first years of independence, the
constitutional debate now between the center and
the regions over the appropriate division of authority
is being complicated neither by strained relations
with Russia nor by growth of official nationalism.
Currently in Ukraine, there are growing trends
of the strengthening of regional elites (clans)
and the weakening of central power due to ineffective
economic policy of Kuchma's administration, as
well as by the preferences of both sides to solve
problems by informal means. As in Albania, Russia,
and Yugoslavia, in Ukraine center-regional relations
are built mainly on personal affiliations, bribes,
and murder. As a result, money and personal links
have been more important in Ukrainian politics
than ideology. For example, during the presidential
elections in 1994, current president Leonid Kuchma
was associated with liberal economic reforms as
well as favoring close ties to Russia. But, while
the Communist Party of Luhans'k supported Kuchma,
the probusiness Liberal Party of Ukraine in Donets'k
supported Kravchuk because LPU considered Kuchma
as a representative of the Dnipropetrovs'k clan.
Since
the first days of independence, Ukrainian elites
have lived for short-term interests. While the
concerns of the center deal mainly with retaining
political dominance over the regions, regional
elites concentrate primarily on instrumental interests
such as increasing personal wealth and fiscal
autonomy. In Ukraine, potential power resources
of regions are mainly economic: commodity exports
(minerals and metals) and tax revenue.
However,
in center-regional relations, local leaders do
not play such an important role as they did a
few years ago. The earlier Ukrainian shadow political
system was analyzed through the prism of clans.
Trying to avoid the potential growth of regional
separatism, during the Kravchuk presidency the
center quite often pacified regional elites by
budget injections, which then were successfully
stolen by periphery bosses. It seems that the
time when the center was weak and regional leaders
seized unlimited control over local economic power
resources has passed. Now the situation is different.
First
of all, in the current period the transition from
a regional clan system to a system of transregional
political oligarchy is worth mentioning. Current
political events--such as the establishment of
the President's Domestic Policy Coordinating Council;
the fission and multiplying of political parties;
the scandal concerning privatization of regional
energy companies, "oblenergos;" the
consolidation of Kiev's business groups against
Mr. Surkis and SDPU(u); the creation in parliament
of two business factions--"Labor Ukraine"
and "Revival of Regions")--have proven
that the political oligarchs and holding companies
have become real and most effective political
institutions in Ukraine's modern, but still shadowed,
political life.
These
hitherto unknown actors first gained publicity
last year during the parliamentary elections.
Having fought for places in parliament, the main
aims of business elites were to legitimize their
status, to defend themselves from criminal investigations,
to avoid political pressure, and to use the parliament
as a stock-exchange for personal business projects.
On the eve of the October 1999 presidential elections
these goals remain basically unchanged.
Because
of the paramount influence of the presidential
post in Ukraine, business and regional elites
now try to secure their status by simultaneously
supporting Leonid Kuchma and searching for a more
favorite candidate. Inasmuch as the Ukrainian
constitution has created an institutional structure
with a strong authoritarian presidency, democratic
means of interest representation--such as political
parties and the Verkhovna Rada--have provided
limited results for regional leaders and political
oligarchs. Through parliament and parties, new
Ukrainian business groups received a voice within
the political system. But they also found that
the establishment of informal ties between the
representative branch and presidential administration
and government is much better for gaining economic
capital.
Regional
elites still prefer to bargain with the center
informally. Despite the fact that Kuchma tends
to often shuffle the heads of oblast state administrators,
personal loyalty has been a main feature of his
subordinates, and the regional leaders have conformed
to the president's manner. For the acquisition
of legitimacy and independence from Kuchma's mood,
heads of oblast state administration do not appeal
to the public because their lot is not influenced
by voters but by the president administration
and a unitarian system of governance. Also, regional
bosses are scared to struggle for the gubernatorial
system because as representatives of the party
of stagnation they will hardly have chances in
an open electoral marathon.
The
key political oligarchs and many heads of regional
state administrations back the current president,
hoping that in the nearest future he will be a
guarantor of their business and public careers.
By supporting Leonid Kuchma in his struggle for
a second and final term in office, some oligarchs
believe they will get time and resources in order
to nominate their own candidate in 2004. On the
other hand, some business and regional elites
are searching for an agreement with Kuchma's competitor
Oleksandr Tkachenko--the speaker of the Verkhovna
Rada and, possibly, the only candidate from the
leftists.
However,
current trends in center-regional relations differ
radically from the previous presidential campaign
in 1994. Despite the reddening of the Ukrainian
electorate, it seems premature to make apocalyptic
warnings about Ukraine's regional separatism.
The forthcoming presidential elections will be
a struggle not between the past and the future
but between the present and the past. During the
electoral campaign, no candidate will concentrate
his agenda on the issue of the Russian threat.
The main battles will be held along ideological
lines, which now do not coincide with regional
borders. It seems that the elections will consolidate
the Ukrainian elites around parties and political
institutions and will weaken regional clans and
transregional holdings of political oligarchs.
Roman Solchanyk, RAND Corporation
"Ukraine's
Crimean Problems"
Regionalism--and
the related issues of national identity, state
building, and Ukrainian-Russian relations--is
a major factor impinging on politics and society
in Ukraine and is likely to remain so in the foreseeable
future. In this context, Crimea arguably poses
the most serious challenge for the Ukrainian leadership.
The
conventional wisdom is that Crimean separatism,
which was in the forefront of local politics in
1991-95, has its roots in the ethnic composition
of the peninsula. Crimea is the only political-administrative
subdivision of Ukraine with an ethnic Russian
majority (67 percent, according to the 1989 Soviet
census; 57.3 percent, according to a recent estimate).
Most Crimeans are drawn to Russia, so the argument
goes, because most Crimeans are Russians and even
more are Russian speakers. Clearly, the fact that
ethnic Russians are a majority in Crimea impacts
on the political situation. Nonetheless, it would
be misleading to focus on Crimea as a Ukrainian-Russian
ethnic problem. Indeed, insofar as ethnicity is
concerned, the major problem in the near and medium
term in Crimea is the growing dissatisfaction
of the Crimean Tatars both with regard to the
local administration and the political center
in Kiev.
What
makes Crimea different from all other regions
in Ukraine is that it has an international dimension--that
is, Crimea is not only a Kiev-Simferopol' problem,
but also a Kiev-Moscow problem. For the most part,
political elites in Moscow and the Russian public
as a whole feel that the peninsula is historically
Russian territory, that it has little or nothing
to do with Ukraine, that it should not have been
transferred to Ukraine, and that it should revert
to Russia. The problem is made more complex by
the more specific and convoluted issue of the
status of Sevastopol' and the related question
of the future of the Black Sea Fleet. Moreover,
the prevailing view in Moscow regarding Crimea's
status, Sevastopol', and the Black Sea Fleet is
shared by most Crimean political elites and the
local population. Crimea, therefore, is simultaneously
an international and a domestic problem and, in
some instances, the external and internal aspects
either fully overlap or, at a minimum, share a
common frame of reference.
Since
1995, the internal dimension has lost much of
its acuteness. It is perhaps ironic that the current
Crimean leader, Leonid Hrach, considers himself
a potential candidate for the Ukrainian presidency.
In Moscow, on the other hand, the Crimean issue
continues to remain on the agenda, as witnessed
by the debate over ratification of the Ukrainian-Russian
bilateral treaty and the statements of Moscow
mayor Yuriy Luzhkov, the frontrunner to succeed
Yel'tsin.
Vyacheslav Pikhovshek, Ukrainian Center
for Independent
Political Research, Kiev
"Political Dynamics in Ukraine"
The
current phase of democracy development in Ukraine
can be characterized by the existence of a party
system that is only in the formative stages of
development. The dynamics of growth of political
forces can be illustrated by the fact that by
the end of 1995, there were 41 political parties
registered by the Ministry of Justice of Ukraine,
while in October 1996, on the eve of the parliamentary
elections and after the new election laws had
been passed promulgating the election of half
the parliament on the basis of party lists, the
number grew to 51. Out of 30 parties and election
blocs participating in the elections only nine
made it to the parliament.
Ukrainian
parliamentary political parties can be classified
into three types:
-
The first type are classic political parties
with a stable electorate and more or less
stable regional organizations, that is, the
Communist Party and Rukh.
-
The second type are descendants of the three
"clans" within the former Communist
Party of Ukraine, that is, the Communist Party
of the USSR era. As we know, there were three
competing "clans," as they were
called, within the "old" Communist
Party of the USSR: the traditionally strong
Dnipropetrovs'k clan, the Donets'k clan, and
the Kharkiv clan. Of course, these party groups,
or clans, did not disappear with the collapse
of the Soviet Union; instead, they were transformed
into regional influence groups and subsequently,
with the adoption of the election laws, into
parties. An objective observer can quite easily
deduce that the former Donets'k Communist
Party officials, or nomenklatura, reorganized
themselves under the Liberal Party of Ukraine
(LPU); the Dnipropetrovs'k nomenklatura--under
Hromada; while the presence of the former
Kharkiv nomenklatura is perceptible in the
People's Democratic Party of Ukraine. It is
important to note that the new election laws
forced all the ex-clan parties to establish
organizations reaching beyond the territory
of a certain region. Therefore, they were
becoming national parties.
-
The third type is represented by the so-called
business parties formed as a result of the
confluence of the interests of businesses
and the ambitions of certain politicians.
Among these parties are first and foremost
the Social Democratic Party of Ukraine (Unified)
and the Republican Christian Party. Both businessmen
and politicians coexisted side-by-side in
the election lists of both parties.
There
are a certain number of political parties outside
the parliament whose activities are quite vigorously
covered in national mass media. The per se division
of the parties into traditional, ex-clan, and
business parties is after all also quite tentative.
For instance, Hromada combines the characteristics
of an ex-clan party and a business party.
The
future of party organizations in Ukraine is fairly
uncertain. On the one hand, it will be a direct
consequence of whether these organizations set
out to work vigorously to establish regional divisions
and to assure their normal operations, or use
their existing capabilities only to lobby their
interests in the parliament. At the same time,
one cannot preclude the possibility of certain
business parties or ex-clans transforming into
"normal" political parties in the future,
along the lines of those accepted in the democratic
countries; however, it is feasible only if their
current parliamentary efforts do not become a
mere vehicle for the pursuit of their own interests
and instead promote the development of regional
party organizations. The development of political
parties is also a direct effect of whether the
election laws are going to change or not, and
if they are, in which way. If the election laws
are modified to establish a party-based elections
process, then they will promote the emergence
of strong political parties, a gradual reduction
in the number of various parties, and the growth
of party representation.
The
presidential elections later this year will undoubtedly
contribute to the process of internal expansion
of political parties in Ukraine. We are already
witnessing the expansion of the rightwing political
parties, such as one of the Rukhs, that of Yuri
Kostenko; the "Open Policy" Group of
A. Matviyenko; V. Shovkoshitniy's wing of the
Democratic Party of Ukraine; and V. Musiyaki's
"Forward, Ukraine!" Other examples are
the Rukh led by G. Udovenko; V. Pynzenyk's "Reforms
and Order" Party; and the Republican Christian
Party. At the same time, the presidential elections
will not have a significant effect on the consolidation
processes of the 12 parties that will support
Kuchma during the forthcoming elections; these
parties have achieved a temporary tactical union
out of different, often opposing political motives.
With
regard to informal influence groups, some Ukrainian
political parties could very well be viewed as
such. The term used to describe these parties
in Ukraine-- "oligarchies"--is probably
a misnomer. In reality, there is no oligarchy
problem. This term rather signifies an obvious
or, in most cases, not-so-obvious dependence of
businessmen on the executive authorities, on the
state of the "right field," and on the
rules of the business game. The conventional classification
of the influence groups into those led by Victor
Pinchuk (Intertype Concern), Grigoriy Surkis (Slavutich
Industrial and Financial Concern), Igor Bakai
(Ukraine Neftegaz Concern), and Oleksandr Volkov
(Gravis Television Company) and the categorization
as oligarchies of Anatoly Golubchenko's Ukraine
Metals Company, Andrei Derkach's Era Television
Company, Yuliya Tymoshenko's Integrated Power
Systems, and Oleksandr Tkachenko's Earth and People
Corporation demonstrate that included in the oligarchy
category quite arbitrarily are those who have
managed to create fairly successful businesses
in Ukraine with the use of certain political powers.
The
issue of informal influence groups is usually
linked to the ability to influence the decree-making
of President L. Kuchma, who was granted the authority
under the 1996 Constitution to issue decrees on
economic matters that have not been addressed
by Ukrainian law. The authority of the President
to issue decrees expired on 28 June 1999, or three
years after the Constitution had been adopted.
The critics of presidential decree-making maintain
that a significant portion of these decrees, namely
one half, was enacted under the influence of the
informal influence groups. Therefore, if we were
to assume that this opinion is correct, then about
one half of these decrees were after all positive.
The decree "On the Distribution of Goods"
is an example of a positive decree.
Informal
influence groups are also frequently thought to
have influence on the enactment of instructions
by the Cabinet of Ministers, that is, the government
of Ukraine. The granting of certain exclusive
rights to Yuliya Tymoshenko's Integrated Power
Systems Corporation with regard to gas trading
under Premier Pavel Lazarenko has become a classic
example of such instructions.
It
is quite difficult to determine with certainty
whether the decree-making authority of President
L. Kuchma and the practice of instructions enactment
by the Cabinet of Ministers of Ukraine have been
something positive or something negative. The
mechanism of presidential decree-making has never
been transparent, and this is precisely to what
the activities of informal influence groups have
been attributed. Some of the President's initiatives,
such as his idea about the potential privatization
of Ukrtelecom, have been rejected by the parliament
as apparent election campaign moves. As far as
the President is concerned, this kind of influence
should never be overstated. Businessmen, some
of whom must undoubtedly have benefited from certain
presidential decrees, are another category of
informal influence groups. However, because of
the law enforcement authority of the executive
branch, each of these informal influence groups
was quite adequately aware of its limitations
in terms of its own ability to influence a particular
decision.
The
critics of President L. Kuchma assert that Kuchma's
decrees meddled with the already existing legislative
framework. Although this statement is indeed true,
the laws enacted by the parliament embody a compromise
between its market-opposed segments and are clearly
not in the interests of market reforms. One way
or the other, all economy-related bills from now
on where no party has a majority will go through
the parliament. The practice of instruction issuance
on the part of the Ukrainian Government continues
and most likely will continue to be followed in
the future.
Thus,
the influence of informal influence groups must
now shift from the administration of the President
to the parliament--a move that is certain to make
the decisionmaking mechanism more transparent.
A 100-percent concentration in the parliament
of economy-related legislation development will
not necessarily translate into a qualitative breakthrough
with the economic reforms. President L. Kuchma
has indeed violated the laws repeatedly, especially
with regard to the privatization decision. The
common register of state enterprises that are
not subject to privatization is a law enacted
by the parliament. Approximately 2,500 entities
most attractive to foreigners have been included
in this register. Therefore, if this law in not
revised, market reforms will be unattainable.
One
can conclude that the presidential elections in
Ukraine will not give final answers as to which
path the Ukrainian nation will take in its development
and whether the market reforms will continue.
If President L. Kuchma is reelected, it is quite
conceivable to expect the dissolution of the parliament
and arbitrary reforms with unpredictable results.
The election of Oleksandr Moroz as President can
potentially lead to the establishment of a leftist
parliamentary majority, to the blocking of reforms,
but hardly to any fundamental changes in the foreign
policy. If Oleksandr Tkachenko becomes President,
foreign policy might take a sharp turn, with Kiev
becoming the center of integrationist efforts
to restore the Soviet Union. The fate of market
reforms in this case will be quite unique: capitalism
for himself and those around him and socialism
for the rest of the society. Other options, such
as those involving Nataliya Vitrenko and Yevgeniy
Marchuk, are not currently contemplated in Ukraine
due to their low probability.
The
policy pursued by the United States toward Ukraine
must remain stable, similar to the one being implemented
today. At the same time, the West must exert a
certain influence on Ukraine immediately following
the elections so that the economic reforms in
Ukraine do not cease but continue.
General
Discussion
Several
participants questioned Wilson's diffidence regarding
nationbuilding. One scholar suggested that this
was being done around six principles: acceptance
of Russian as an unofficial language but simultaneous
gradual Ukrainization; a unitary rather than federal
state; support for territorial integrity and the
creation of a national legend about Ukraine's
historical antecedents; and the slow expulsion
of Moscow-based media as the main source of electronic
information. The rejoinder to this more positive
appraisal was that these principles were not tied
to a national democratic model. Rather, Kuchma
has been pursuing more of a "synthetic"
model, combining elements of both Russian-oriented
and national consolidation schemas and saying
different things to different audiences. One participant
claimed that the government had not been more
forceful about Ukrainization because it would
cost money that the state did not have.
Several
discussants touched on the impact of Kosovo. One
argued that it had resulted in aligning Ukrainian
foreign policy with Russia, but another countered
that there had always been differences between
the more pro-Russian population at large and the
Western-oriented executive. Returning to the nationbuilding
theme, one participant warned that Tatars in Crimea,
who had always wanted greater autonomy for themselves
(as opposed to the Russian autonomy movement),
were thinking that Western support for the Kosovars
might be a precedent for their own cause.
Alexander
Pivovarsky, Harvard Institute for International
Development
"The
Challenges of Ukraine's Economic Reforms"
Since
independence in 1991, the Government of Ukraine
has attempted to implement a standard reform package--stabilization,
privatization, and liberalization. Most of the
changes undertaken in the process have not been
a real success so far, in particular, the reforms
that were meant to affect the microeconomic foundations
of the Ukrainian economy.
In
recent years, economists and policy analysts have
been using the word "virtuality" to
describe the economic processes taking place in
Ukraine, Russia, and a number of other countries
of the former Soviet Union. Indeed, this concept
is appropriate for the analysis of the majority
of economic processes in Ukraine. This virtual
economy is pervasive and affects all levels of
economic activity. In this economy, most processes
have several meanings. Terms of exchange of goods
do not reflect their market values since almost
a half of all transactions take place in barter.
Book profits have little to do with firms' revenues
since most debts remain unpaid for many months.
Budget deficit does not reflect a balance between
planned revenues and expenditures since some of
the government commitments remain unfulfilled.
The virtual economy's lack of transparency is
the main reason why some interest groups are interested
in its sustainability.
On
the macroeconomic level, the government achieved
stabilization of the hryvnia and a moderate level
of inflation. In 1999, inflation was held at 20
percent despite the major pressures that emerged
after the hryvnia's devaluation. Until the fall
of 1998, the government was able to sustain the
monetary stability by holding the nominal level
of the budget deficit in line with the targets
agreed upon with the IMF. In order to achieve
those targets, the government delayed budgeted
expenditures and borrowed aggressively in the
domestic and international markets. As the sources
of financing dried up and the government de facto
defaulted on its obligations in the fall of 1998,
it was forced to adjust the budgeted expenditures
downward in the middle of the year by as much
as 3 percent of GDP. Significant obligations remained
unpaid, thus making the budget deficit a virtual
concept.
This
nominal financial stabilization was accompanied
by a rapid and sustained accumulation of enterprise
nonpayments to each other, to the state, and to
their workers. The total level of accumulated
nonpaid obligations reached 120 percent of GDP--more
than two-thirds of them overdue--a level much
greater than the level of regular trade credits
common in market economies. The government and
workers have been forced to accept a large share
of payments from the firms in goods rather than
in cash. In 1998, more than 20 percent of tax
obligation was paid with goods and services. The
system of barter has created immense opportunities
for corruption and theft.
Effective
privatization that would align control rights
over the firms' assets and cash-flow rights have
been only partially effective. Managers of privatized
firms exercise an almost complete control over
their firms, regardless of the formal ownership
arrangements, with the exception of firms privatized
with significant participation of multinational
entities. At the same time, local and central
government officials are still capable of securing
the firms' access to financial and real resources.
Given that banks ceased to perform their function
of financial intermediaries between the households
and the firms, the government remains the largest
single agent capable of providing financing to
firms (via subsidies, tax writeoffs, access to
energy inputs, and other forms of support). The
total assets of the banking sector in Ukraine
are less than 18 percent of GDP, the lowest level
of 59 countries included in the 1998 Global Competitiveness
Report survey in 1998
1
and one of the lowest in the world. The ability
to establish and maintain effective relationships
with the state is a more important quality for
enterprise managers to have than entrepreneurial
ability. The 1998 Global Competitiveness Report
survey of enterprise executives asked them whether
public officials in their countries favor people
with connections. Ukrainian executives strongly
agreed with this statement. Among 59 countries
included in the survey, only Russia and Indonesia
ranked above Ukraine in the executive's assessment
of the role of connections. Most importantly,
Ukraine ranked the lowest in the managers' assessment
of the amount of time spent dealing with the government.
Only Indonesia ranked ahead of Ukraine in the
speed of growth of the real level of informal
payments to government officials over the past
years.
The
majority of enterprise managers use the virtual
economy to their personal advantage. During my
recent interviews with enterprise managers and
barter traders in Ukraine, I found that most of
the barter transactions are accompanied by side
payments to those enterprise managers who agree
to accept terms of exchange that are unfavorable
to their firms. A recent report produced by the
State Tax Administration of Ukraine found that
the majority of Ukrainian coal mines (the most
heavily subsidized sector of the Ukrainian economy)
use financial intermediaries set up by the firms'
managers or their proxies to undertake both cash
and barter transactions. In such deals, the firms
accept inferior terms of exchange and divert a
significant part of their output's value to the
pockets of enterprise managers and their financial
intermediaries.
According
to official statistics, the energy sector (oil
and gas in particular) is the largest net creditor
to the rest of the branches of the Ukrainian economy.
At the same time, it is a sector commonly considered
to be the major source of rents and economic power
in Ukraine. A number of "famous" Ukrainians
(including very senior government officials) made
their fortunes by controlling the energy supplies--gas
supplies in particular. Historically, gas traders
have held monopolistic positions in distributing
gas to particular regions and thus exercised a
significant degree of power over enterprises that
depend on energy supplies for their survival.
At the same time, these gas traders continue supplying
gas to enterprises that may not be able to pay
for the energy consumed today or in the medium
term.
The
natural question is, why is the gas distribution
such a coveted business? Why is this officially
loss-making business perceived as so profitable?
The answer becomes clear when one discovers that
many enterprises pay for gas under the table.
Moreover, a mutually beneficial relationship between
industry and government has emerged. Since the
real value of bartered goods is difficult to calculate,
barter transactions, including tax payments via
mut
