The ruling coalition is dead. The national currency, the hryvnia, is falling. Western credits are at risk.
And
listening to the cheerful statements coming from Ukraine’s top officials, one
would think they live in another country.
Ukrainian
Prime Minister Arseniy Yatsenyuk bragged on Feb. 21 during his weekly address
that the government had “destroyed the systematic mafia corruption in high
office.” That brash announcement falls flat when one recalls that just days
earlier, on Feb. 16, Yatsenyuk survived a no-confidence vote in parliament
thanks to what many saw as a conspiracy between the country’s oligarchs and
president.
President
Petro Poroshenko has been no more honest than Yatsenyuk.
In his
address on Feb. 20, the president complimented parliament on passing
legislation necessary for Ukrainians to obtain visa-free travel to the European
Union.
‘Disappointing’
law
In reality,
parliament plainly and simply gutted one of the key laws in the package. The
electronic declarations law, which was supposed to ensure there is no mismatch
between officials’ incomes and lifestyles (a telltale sign of corruption), was
carefully stripped of all its essential language, and its introduction
postponed until 2017, meaning the long-anticipated visa-free travel to the EU for
Ukrainians will likely remain blocked at least until next year.
European
Union Ambassador Jan Tombinski called the declarations law “disappointing,”
saying that it wasn’t in line with international standards. That didn’t stop
Poroshenko from hailing that same law’s adoption as a success.
While
Ukrainian politicians have always favored hyperbole when addressing their
people and foreign partners, with the current crisis in government and
parliament the gap between reality and officials’ recent pronouncements has
stretched to new widths, experts say.
Habit of dishonesty
“Our
leaders are not used to being honest with the nation,” Iryna Bekeshkina, the
acting director of the Kyiv Democratic Initiatives Foundation told the Kyiv
Post. “Sometimes it’s an obvious lie, while sometimes (the lie) is lightly
camouflaged. It’s a habit. (They start lying) from the election campaign and go
on until crucial decisions are made behind the curtains.”
The latest
such decision was apparently taken on Feb. 16, when the then-existing coalition
tried to vote out the cabinet of Yatsenyuk, which has been tainted by a series
of scandals and noisy resignations. The coalition voted to declare the
government’s work unsatisfactory, but 15 minutes later it failed to back a vote
to dismiss it. The lawmakers who didn’t vote to sack the government were ones
believed to be controlled by oligarchs Ihor Kolomoisky and Rinat Akhmetov.
Backroom
dealing
In an
indication that a backroom deal was indeed struck, the representatives of
nearly all the parliament factions, as well as Yatsenyuk himself, paid visits
to the president’s office late on the night before the vote, according to a
Radio Free Europe/Radio Liberty video report.
Soon after
this, Kolomoisky, who resides in Geneva, was spotted in Kyiv. Mustafa Nayyem, a
lawmaker with the Bloc of Petro Poroshenko Bloc, said in a live interview with
journalist Sonya Koshkina on Feb. 23 that Poroshenko and Yatsenyuk had met with
the oligarch.
Kolomoisky
has no official representation in parliament, but has an unsettled conflict
with the state: He co-owns state enterprise Ukrnafta, which owes Ukraine’s
budget millions of dollars in dividend payments.
“I think
it’s not the president who should be meeting Kolomoisky, but investigators,”
another Bloc of Petro Poroshenko lawmaker, Serhiy Leshchenko, said on Facebook
on Feb. 25, reacting to reports of the meeting.
Oligarch
power
Now that
the oligarchs have supported him via the lawmakers they control, Yatsenyuk, in
Leshchenko’s words, “will have to give them benefits, including (control over)
cash flows and government posts.”
While the
botched no-confidence vote saved Yatsenyuk’s job, it destroyed the parliament
coalition. Two parties, Yulia Tymoshenko’s Batkivshchyna, and Samopomich, quit
it following the failed vote.
Once a
coalition breaks apart, the parliament has 30 days to put together a new one –
or the president can call early elections.
This is a
prospect dreaded by the ruling parties of Yatsenyuk and Poroshenko. In the
latest poll by the Kyiv International Institute of Sociology, if early
parliamentary elections were held this February, Yatsenyuk’s People’s Front
wouldn’t even pass the five percent threshold to win seats in parliament. The
People’s Front would get only 2.5 percent, comparing to the 22.1 percent it won
at the 2014 election. The Bloc of Petro Poroshenko would get 16.6 percent – a
five percent fall on its 2014 result.
‘Stop
lying’
To rescue
the situation, the president and prime minister need to “stop lying, as the
nation’s discontent with them might turn into an active phase,” with possible
violence, Bekeshkina warned.
The
situation is exacerbated by the decision of the International Monetary Fund,
Ukraine’s key creditor, to postpone its latest $1.7 billion tranche to Ukraine.
In a blunt
statement on Feb. 10, Christine Lagarde, the IMF’s managing director, urged
Ukraine’s leadership to “act now to put the country back on a promising path of
reform.”
“I’m
concerned about Ukraine’s slow progress in improving governance and fighting
corruption, and reducing the influence of vested interests in policymaking,”
Lagarde said.
She said it
was “hard to see how the IMF-supported program” for Ukraine could continue
without real, renewed efforts to fight corruption and implement reform.
The
political crisis and Lagarde’s statement have taken their toll on the hryvnia.
Since the beginning of 2016 it has fallen from Hr 23.8 to the dollar to Hr 27.2
to the dollar.
And Timothy
Ash, the head of Central Eastern Europe, Middle East & Africa credit
strategy for Nomura International, says he doesn’t expect the National Bank of
Ukraine (NBU) to be able to save the hryvnia.
Managing Director of the International Monetary Fund (IMF) Christine Lagarde (L) speaks during her meeting with Ukrainian President Petro Poroshenko on Jan. 21 in Kyiv.
IMF delays
“Domestic
politics really doesn’t help, as this stalls the release of much needed IMF
credits which would support the NBU’s reserve cover and help buoy domestic
confidence,” Ash wrote in an emailed comment. “Politicians’ fiddling, while the
hryvnia burns, does not help the NBU’s position, but then Ukrainian politicians
typically try and pass the buck to the NBU for foreign-exchange rate
mismanagement, which really is unfair.”
Sergey
Fursa, an analyst of Kyiv-based investment firm Dragon Capital, told the Kyiv
Post that Ukraine’s leaders have to “pull themselves together” immediately, and
to form a coalition to reassure the IMF that Ukraine has a working government
for at least the near future. Otherwise, the ground might give way under
Ukraine’s feet, he added.
But instead
of taking resolute measures to save their sinking political ship, Ukraine’s
leaders appear to be hoping that the sea will just go away.
Falling
apart
Head of
Petro Poroshenko Bloc faction Yury Lutsenko said on Feb. 18 that the coalition
de jure exists, contradicting his own statement from a day before. The legal
pretext for this is that the three parties that have left the coalition since
September haven’t finalized the formal procedure of quitting the coalition:
They haven’t renounced their signatures on the coalition agreement, so the
coalition is still alive on paper, Lutsenko said.
But
Samopomich Party lawmaker and a lawyer Olena Sotnyk told the Kyiv Post that the
coalition has definitely fallen apart, and criticized those lawmakers remaining
in the coalition for denying reality.
“They keep
looking for legal loopholes and saying that they have enough votes as a
coalition,” she said. “The question is: Will they even start forming a new
coalition?”
The
alternative, according to Sotnyk, is to preserve the present, de jure
coalition, which is now at least 11 votes short of the necessary 226-seat
majority, and persuade lawmakers from outside of the coalition to make up for
the shortfall in votes.
So far,
Sotnyk said, none of her fellow lawmakers have made any moves to start forming
a new coalition – at least not publicly.
Backwards
step
Meanwhile,
the country’s leadership has just taken a backwards step on the road to a fair
election system, critics say.
On Feb. 25
Poroshenko signed a law passed by the Rada that allows political parties to
expel candidates from their election lists after election day, but before the
final poll results are announced.
Critics
have called it the “party dictatorship bill,” as now voters can’t be sure the
candidates they vote for will actually win a seat in a parliament, even if they
have a top spot in their party’s election list.
Under the new law, critics say, parties could
use popular candidates to attract voters on election day, only to expel them
from their election lists. Then less popular party cronies from lower down the
election lists would “win” the seats in parliament instead.
Source: Kyiv International Institute of Sociology
According to the latest poll by the Kyiv International Institute of Sociology, if early parliamentary elections were held this February, Petro Poroshenko Bloc would get the most support from the nation. However, it would be noticeably lower then it was during the elections in 2014. Arseniy Yatsenyuk’s People’s Front wouldn’t even pass the five percent threshold. The poll was conducted from Feb. 5 to Feb. 16, and published on Feb. 23.
