As the Ukrainian version of justice is portrayed to the world, Russia cranks up the pressure with high gas tariffs. With the distance between the elite and the common man widening, the population wants out and politicians renovate their holiday homes.
Justice and ‘just-us’ in Ukraine
On June 24, the authorities initiated legal action against former Ukrainian Prime Minister Yulia Tymoshenko, under accusations relating to the signing of gas agreements with Russia in 2009. By doing so, the government is trying to prove formally the rumors of illegal misconduct by the former prime minister against the national interests of Ukraine.
According to the experts, the ruling Party of Regions seeks to discredit and sideline the leader of the largest oppositional force prior to the next parliamentary elections in 2012. The legal action has brought hundreds of Tymoshenko loyalists out onto the streets, causing some minor scuffles with the militia. Whilst the trial is unearthing some of the former prime minister’s less-than-ethical history, a number of deputies are doing their utmost to turn the proceedings into political theater. Tymoshenko referred to the trial as “farce” organized by the President’s Administration.
The legal action against Tymoshenko has brought scandalous news about various deputies from the Party of Regions and their family members in its wake.
In particular [ex-] Lugansk City Council member Roman Landik, whose father is a parliamentarian from the Party of Regions, made national news recently. A secretly filmed video was placed on the Internet showing the recently married parliamentarian’s son harassing a 20-year-old woman in a restaurant before, upon rejection, beating her relentlessly for 20 minutes. The young lady was hospitalized with head and neck injuries. A few months earlier, the bodyguard of this parliamentarian beat up a traffic inspector who had stopped their motorcade for speeding. In early July in Odessa, the son of the head of the Court of Appeals in Kiev assaulted the bouncers of a nightclub after he refused to walk through the metal detector.
It seems that while declaring their intentions to restore the rule of law and justice at the very top of society, members of the Party of Regions for unknown reasons put themselves and their relatives above the law.
People First Comment: Ever since independence, politics and justice have never made particularly compatible bedfellows in Ukraine as the trial of Tymoshenko clearly indicates. If the law has been violated, then due legal process should follow. However, in this case the whole issue, simply by the way it has been mishandled, has become shrouded in politics to the extent that a fair trial and an acceptable outcome would seem impossible. Under the Constitution of Ukraine, the presumption of innocence and the right to a fair trial are cardinal. Therefore it is up to an independent court of law to decide the issues and not up to the court of public or in this case political opinion.
Statements by senior figures in the prosecution service would appear to violate any citizen’s presumption of innocence and the manner in which this trial is being held would similarly appear to be violating her right to a fair trial and re-enforcing claims of a mistrial. Similarly the case its self would appear to set a dangerous precedent where almost any public servant could be prosecuted for abuse of position.
In view of the sensitivity of the matter it perhaps would have been wise for the judge to order a clamp down on the politicization of the case. Furthermore the trial should be held in public as an exemplary piece of legal due process to ensure that the outcome is beyond doubt. If as a result Tymoshenko were to be “proven” guilty, then that would be an end to the matter. However, what is currently transpiring could well open a Pandora’s box as political show trials are simply unacceptable in the 21st century.
The European Union is historically balanced between support for Tymoshenko and President Viktor Yanukovych, with the factions split down the middle. However, this case could easily change that.
If so asked, it would be very difficult for the European Union Socialists not to vote in favor of sanctions against Yanukovych when they recently voted in favor of sanctions against President Alexander Lukashenko for his similar treatment of the opposition.
The vitally important International Monetary Fund and World Bank are not particularly supportive of outwardly repressive and politically manipulative regimes. Furthermore the president can expect no favors from Moscow as Prime Minister Vladimir Putin favored Tymoshenko in the last presidential election. Thus, this issue could well box the authorities into an even smaller corner. Personal ambitions have never been a good adviser.
The vitally important International Monetary Fund and World Bank are not particularly supportive of outwardly repressive and politically manipulative regimes. Furthermore the president can expect no favors from Moscow as Prime Minister Vladimir Putin favored Tymoshenko in the last presidential election. Thus, this issue could well box the authorities into an even smaller corner. Personal ambitions have never been a good adviser.
The worst aspect of this case is that, as a result of the psychological pressure on society and primitivism of media, people on the street are now more interested in whether Tymoshenko will end up in jail and not how fair the trial will be.
Polarizing princes and paupers
Social security in Ukrainian society is dividing up amongst the few super rich, whose distance from the many impoverished citizens is growing. More and more Ukrainian billionaires are appearing on the Forbes’ annual list of the richest people on the planet. Newest Bentleys and Ferraris quickly replace Mercedeses and BMWs on the roads of Kyiv. The middle class, usually the supportive bulk in any democratic society, is rapidly shrinking in Ukraine increasing the risk of social upheaval.
According to a national poll run by the Ukrainian Democratic Circle, 67 percent of Ukrainians say that their living standards have reduced over the past year; 12 percent of Ukrainian families lack enough money for food, 44 percent of families have insufficient funds for yearly clothes and footwear and 75 percent of the population would look for a job abroad.
Members of the ruling Party of Regions state that the current worsening of the social and economic climate is the result of reforms recently initiated by the government; with a considerable improvement of living standards expected in 2012-2013. But in the real world, living standards continue to deteriorate. Ukrainians remain disappointed in the governing authorities. Next to this, autumn may see large-scale protests from the persecuted middle class. European history shows that deep polarization of the level of income between different social groups is a method often used to set up a dictatorship.
The development of Ukraine as a democracy has extremely low chances for success if the living standards of the population keep dropping.
People First Comment: Ukrainian poverty has been growing consistently year on year since independence as Rada Deputies and government officials abuse their positions and rape the nation. And each time an opposition replaces a government it follows the same strategy.
What is particularly frustrating about the whole period of Ukraine’s independence is that just about all that could be quickly stolen in Ukraine has already gone with the assets and the funds they generate being held offshore in western tax havens. There are three guilty parties: 1) the thieves themselves who have no public concern or personal morality, 2) is the general public who by their apathy have simply allowed a select few rape the land and 3) the international community and in particular the Cypriot government who have allowed the Western legal and financial systems to be abused and become a haven for plundered wealth.
As an example when the West seized the assets of Colonel Muammar Gaddaffi recently, there was public amazement to see that he and his family had expropriated a personal fortune of $76 billion and virtually all at public expense. Gaddaffi is but one whilst Ukraine has an ever growing list of billionaires… So just how much they have and how many more innocent people have to suffer the indignity of poverty before the West finally does the right thing and seizes all this expropriated Ukrainian wealth.
Deterioration, emigration and the maintenance of holiday homes
According to population surveys conducted by Ukrainian companies such as Sofia, one third of Ukrainians would move to another country as permanent residents if they had the opportunity.
This figure is highest amongst young people, from 18 to 29 years of age, accounting for 50.4 percent. The people of Ukraine are slowly losing the respect and love for their home country. Only 18 percent of the respondents believe Ukraine to be the best country in the world while the same number of respondents say they regret living in Ukraine. More than half of the people who participated in the survey (51.2 percent) report that their legal rights have been violated more than once over the past year.
According to population surveys conducted by Ukrainian companies such as Sofia, one third of Ukrainians would move to another country as permanent residents if they had the opportunity.
This figure is highest amongst young people, from 18 to 29 years of age, accounting for 50.4 percent. The people of Ukraine are slowly losing the respect and love for their home country. Only 18 percent of the respondents believe Ukraine to be the best country in the world while the same number of respondents say they regret living in Ukraine. More than half of the people who participated in the survey (51.2 percent) report that their legal rights have been violated more than once over the past year.
In spite of the negative community spirit, the government allots large budget amounts to their personal needs. For example, this year’s budget provides Hr 107 million ($13.3 million) for the maintenance of the state official Koncha Zaspa vacation house, Puscha Vodytsia holiday center and the car fleet of the State Administration of Ukraine. To put this into perspective, this year’s health treatment for the handicapped receives Hr 97 million ($12 million) and Ukrainian public libraries have been allocated Hr 108 million ($13.5 million).
State officials continue to place personal needs above societal ones, further encouraging young Ukrainians to leave the country deeply disappointed in their motherland.
People First Comment: This whole scenario can be summed up by the following story. A young student friend of ours recently graduated from one of Ukraine’s top universities. Her family was not wealthy but she and her mother scrapped together the tuition fees. She worked hard for three years and did very well. When she came to collect her hard earned certificate she was told… Yes you have passed, but in order to get your certificate you will have to pay us an additional three months tuition fees in cash… No cash, no proof of your results… Classic criminal extortion… Her reaction: “I’m leaving this country as soon as I can” and it’s the same for just about every final year student in the land. Those coming up through the system know they will face the same situation hence they too are disgruntled to say the least.
Add to this the corruption in the hospitals and all public services, the lack of jobs and the lack of state interest and it’s a wonder that only 33 percent of the nation want to leave.
According to the World Bank, 6.6 million Ukrainians have already left, cutting the working population by 39 percent and this, coupled with the falling birth rate, has given rise to a 20-year fall in the population of nearly 25 percent. If 54 percent of the student population were to follow suit, then Ukraine would very quickly face a serious labor shortage. The more that leave the less tax revenue the government will collect and this coupled with a rapidly aging population is a recipe for financial meltdown on the same scale as Greece, Ireland and Portugal only in the case of Ukraine they have used up all their good will and credit at the IMF and there will be no European Union Central Bank to come to the rescue. Even if the government receives ongoing tranches of IMF money, there is still no rescue plan for the people.
Russian gas has Ukraine on the ropes
While global tariffs for oil and gas remain ever on the rise, Ukraine risks to falling into total energy dependence on Russia.
In spite of the $100 discount per 1,000 cubic meters, the price of natural gas Russia exports to Ukraine might rise to more than $400 per thousand cubic meters before the end of the year.
In June, President Viktor Yanukovych said that a fair market price for natural gas for Ukraine in 2011 should be below $200 per 1,000 cubic meters of gas. He understands that the Russian gas policy towards Ukraine is highly unfavorable, but he still supports its implementation.
Russia is offering Ukraine up to 40 percent off in discounts if the country joins the Customs Union or if Ukraine’s Naftogaz merges with Russia’s Gazprom, in which case the Kremlin will receive full control over Ukraine’s waterworks and gas reserves, the same as in Belarus.
Gazprom tries to frighten Ukraine with a price of $500 per 1,000 cubic meters, while China – one of the largest consumers of Russian natural gas – refused to pay more than $250 per 1,000 cubic meters.
Gazprom should note that excessive pressure might result in Russia losing the Ukrainian gas market altogether – a heavy loss considering Ukraine’s consumption of 37 billion cubic meters, and the transit route to the EU for 94.6 billion cubic meters of gas in 2010.
People First Comment: Russia has never been known for its levels of customer service. Even 20 years after the fall of their empire, many Russians still retain classic post imperial traits of superiority, particularly over those they once used to subjugate. Can you imagine Royal Dutch Shell or BP or Chevron or any of the major multinationals treating a customer who is buying $37 billion cubic meters of gas and paying a higher price than most, in such an appalling way?
Perhaps the difference is that none of the above have the cold hand of the state pulling the strings. If Gazprom had real shareholders to answer to and lived totally in the commercial world then perhaps they would treat their customers with a little more respect.
But the tide is beginning to turn against such arrogance. Poland has already diversified its supply system and Bulgaria has recently announced that they intend to buy the majority of their gas on the European LNG market resulting in a massive cut in the amount of gas it intends to buy from Russia and all because of the last Russo-Ukrainian gas spat that left many Bulgarian households freezing.
Russia really is playing a very unrealistic and non-commercial game as gas supplies to the European Union are projected to fall by 80 percent by 2020. Ukraine appears to have woken up and is now developing its own resources and may well import cheaper LNG until they can become self-sufficient. This could reduce demand for Russian gas from European customers, Ukraine included, from around 130 billion cubic meters a year to just 36 billion with a potentially catastrophic impact on Russia’s fragile balance of payments. That is a very high price to pay for arrogance and lack of customer service.
Viktor Tkachuk is chief executive of the People First Foundation, a politically independent democracy foundation. He is a former deputy secretary of Ukraine’s National Security and Defense Council, a former senior adviser to three presidents and a former member of the Ukrainian parliament.
