Subjectively, all analysts of Ukraine will agree that Yushchenko was a weak president who did not understand how to use power. Worse still, most analysts will argue that he is simply not a politician.
At his outgoing press conference on Feb. 17, Yushchenko said: “I have already told you that I do not like politics. My advisers then told me that this is not the right way of saying this. But I repeat: I dislike it (politics).”
A second subjective factor, pointed out by The Economist (Feb. 8), was that President Yushchenko “developed an almost irrational hatred of Tymoshenko.” At his outgoing press conference, Yushchenko said: “Until now I had not said this, but today I have a moral right to say it. My greatest mistake in the last five years was Tymoshenko.”
Objectively, five years ago, Yanukovych as prime minister and other pro-Kuchma political forces supported constitutional reforms that led to Ukraine becoming a semi-parliamentary system in 2006. Since then, Ukraine has been plagued by institutional conflict and political instability.
This in-built systemic conflict will not disappear overnight. Constitutional reforms for a more stable presidential or a full parliamentary system will require 300 votes. This will, therefore, require compromise between parliament’s two largest political forces, the Party of Regions and the Yulia Tymoshenko bloc (BYuT) which, after a bitter presidential election, will be hard to accomplish.
BYuT would undoubtedly like to see Ukraine move towards a parliamentary system that would strip powers away from Yanukovych. Meanwhile, Yanukovych would support a move back to a presidential system to increase his powers. Neither step is therefore a realistic possibility and continued stalemate and quagmire is therefore likely.
Ukraine’s weaker state institutions are most evident in the realm of battling corruption and the rule of law. Transparency International, a German think tank that prepares an annual Corruption Perceptions Index, gave Ukraine a ranking of 122 in 2004, the last year of Kuchma’s rule.
In 2009, the last year of Yushchenko in office, Ukraine received a ranking of 146. This indicates that Ukraine’s corruption levels are worse than during the corrupt Kuchma regime.
Ukrainian and Western lawyers and legal experts have reached the same conclusion that Ukraine’s judicial system today is more dysfunctional and corrupt than it was five years ago. With the selection by Yushchenko of Sviatoslav Piskun and Oleksandr Medvedko as prosecutors, both of whom are closely linked to the Donetsk clan and Party of Regions, it is little wonder that there has been little meaningful reform in the all important Prosecutor General’s Office During the Yushchenko era, the Party of Regions always voted against legislation to battle corruption.
Corruption and the rule of law were central issues for protesters on the Orange (Revolution) Maidan (Independence Square) in the winter of 2004. But, as The Economist (Feb. 8) wrote, Yushchenko “failed to deliver on any of his election promises.”
An example of the weaker Ukrainian state is the growing threat of corporate raider takeovers of businesses by private security guards who have shown themselves to be more powerful than law enforcement officials.
A case in point is a foreign investment by Ukrainian-Canadian Steven Chepa, who launched a foreign investment project in 2006-2007 in Transcarpathia, a western area of Ukraine where his family had originated prior to World War I before emigrating to Canada. hepa has lost $12 million in the corporate raid of his factory, Starwood Zakarpattia.
In 2008-2009, Chepa was the subject of a corporate raider takeover of his investment by his Ukrainian and Bulgarian partners. In November 2009, a government Interdepartmental Commission on Counteracting Illegal Takeovers and Raids established a regional working group headed by First Deputy Prime Minister Oleksandr Turchynov. It concluded that Chepa had been subjected to a corporate raid takeover and recommended that the police investigate the matter.
Unfortunately, the government commission does not have real “teeth” as it has only the power to issue a “moral” (not a legal) verdict and no power to order the eviction of the corporate raiders. Until last month, Ukrainian government officials had attempted on six occasions to serve court notices to the raiders to freeze the assets of Starwood Zakarpattia and to halt their sale without court approval, but these had been blocked by security guards.
Chepa was shocked that “private armed security guards proved to be more powerful than the law and the government officials attempting to enforce it.”
One of the raiders had illegally opened a company checking account and in October 2009 arranged for a VAT refund from the government for Hr 3 million. This amount was then withdrawn and illegally spent.
On Feb. 10, Chepa thought he had a breakthrough when, on the seventh attempt, the Ukrainian bailiff succeeded in serving the arrest order to freeze the property. On Feb. 13, a police squad and private security guards employed by the rightful owners of Starwood Zakarpattia re-occupied the factory. This good fortune was not to last.
The personal intervention of Minister of Justice Mykola Onishchuk was of great assistance in the matter. Chepa had also won a number of important court cases, including last month in the Kyiv Administrative Court of Appeal which issued an official reprimand for earlier decisions in favor of the corporate raiders, returned ownership to Chepa and set the process in motion to re-register Starwood under the original statute.
On Feb. 14, 18 security men were brought in by the corporate raiders from Kyiv and scuffles ensued. That evening, the police squad suspiciously withdrew and an additional 10 security guards who resembled off-duty special force police officers arrived. These professional goons proceeded to evict the security guards that had arrived with the police and bailiff.
Starwood Zakarpattia is again back in the hands of corporate raiders.
What this incident shows is the degree to which state institutions have stagnated in Ukraine. Corporate raiders can continue to ignore numerous court rulings in favor of Chepa’s ownership of Starwood Zakarpattia, they can defy the governments Interdepartmental Commission on Counteracting Illegal Takeovers and Raids, ignore the Minister of Justice and police and continue to occupy the factory. The police are seemingly powerless in the face of paramilitary thugs.
Yanukovych campaigned in the recently concluded presidential elections on the pledge to make the Ukrainian state stronger. He should start by re-asserting the state’s authority over para-militaries who have shown themselves to be more powerful than the police in corporate raider takeovers.
Until Yanukovych is able to re-assert the power of the state, his election pledges to halt the stagnation of the Ukrainian state by his outgoing Orange Revolution opponents will be simply empty promises. Until the stagnation of the Ukrainian state is reversed, Ukraine will portray a negative image for foreign investors, Russia will continue to depict Ukraine as a ‘failed state’ and the West will look upon Ukraine as a weak and dysfunctional partner.
Taras Kuzio is a senior fellow in the chair of Ukrainian studies at the University of Toronto and adjunct research professor in the Institute for European and Russian Studies at Carleton University, Ottawa. He edits Ukraine Analyst. He can be reached at [email protected]
