Even more important, however, may have been the different
socio-historical experiences of the Ukrainian people and the different
mentality of their political elite. In the first few years as an independent
state, following the collapse of the Soviet Union, Ukraine faced challenges on
a scale unseen elsewhere in Central Europe.
It witnessed the collapse of entire industries (including its heavy
machinery, high technology, and arms industries), which had previously been
closely linked to the economies of other former Soviet republics.
With the creation of customs borders between the republics in 1991,
however, all such links were suddenly severed.
The Ukrainian people, accustomed to the “big government-small society”
model, were now forced to find ways to survive, with no hope of help from the
state. The situation was further compounded by hyperinflation, a deep economic
crisis and the weakness of the newly independent country. The political reins
in Ukraine were seized by Soviet-era bureaucrats and administrators. Their
experience of governance, however, was shaped by the highly centralized model
employed by the former Soviet Union, and completely unsuited to the new
circumstances. These Soviet era political circles produced the first generation
of Ukrainian leaders, which might explain why the country’s top political
positions have never been filled by individuals with a clear vision for
transformation.
It is possible to delineate periods when the reforms took on greater
momentum, for example, at the beginning of President Leonid Kuchma’s first term
(1994-1999) and during the premiership of Viktor Yushchenko (1999-2001). But
even then, the reforms were limited in scope and were quickly abandoned due to
lack of popular support, and resistance from officials and growing business
groups uninterested in change. Large domestic businesses (which created the
so-called oligarchs) gained unprecedented influence during Leonid Kuchma’s
presidency, and began to play an increasingly important role in the country’s
economy. On the one hand, these businesses were instrumental in spearheading
the necessary privatization, on the other hand, they prevented attempts at
reforming and liberalizing the Ukrainian economy in line with the “Central
European model” (which was seen as dangerous and overly hasty from the oligarchs
point of view).
In late 2004 and early 2005, it seemed that the impetus for change would
come from the Orange Revolution and the subsequent election of Yushchenko as
president. Initially, Yushchenko enjoyed high levels of public support, and the
revolution itself had raised hopes for fundamental changes in Ukraine. The
five-year period following the Orange Revolution, however, proved rather
disappointing with regard to political and economic transformation. The “orange
team” quickly broke up, forming two mutually opposing camps, one led by
Yushchenko and one headed by Prime Minister Yulia Tymoshenko. This limited the
government’s capacity to bring about change and resulted in continuing
political crises, effectively crippling the state.
***
Ukraine is a country in need of deep political, economic and social
reform. After coming to power in 2010, Viktor Yanukovych and his government
developed an ambitious and comprehensive program of reforms across the key
areas of social and political life. A return to the presidential system of
government just a few months after the election allowed Yanukovych to
consolidate more power than any other Ukrainian president before him. This, for
the first time in years, created the ideal conditions for the introduction of deep
reforms in the country.
The constitutional changes, which have given the president complete
dominance on the Ukrainian political scene, were initially seen as a step which
could ease and improve the governance of the state and as a way to implement the
president’s reform program. The manner in which these changes were carried out,
however, was borderline illegal and consequently led to a gradual erosion of
political competition, resulting in the marginalization of Ukraine’s opposition
parties and even the Party of Regions’ coalition partners.
Several of the planned reforms have indeed been carried out or at least
initiated. The first and the most important success achieved was the
stabilization of the public finances, following Ukraine’s most serious economic
crisis ever in 2009. It should be stressed, however, that
this was achieved not only thanks to government policy but also thanks to the
financial assistance provided by the International Monetary Fund and the
overall recovery of global markets (which impact directly on the condition of
the Ukrainian economy). The official goal of many of the reforms was to bring
Ukrainian legislation in line with EU law, which correlated with the intense
negotiations between Kyiv and Brussels on an association agreement and the
creation of a deep and comprehensive free trade area. The conclusion of these
negotiations in 2011 was seen as a great success and a sign of the government’s
administrative efficiency.
Nonetheless, most of the planned reforms have been implemented only
partially or still remain in the planning stages. A new tax code has, as
promised, simplified Ukraine’s tax law, but its numerous inaccuracies have
complicated the processes of doing business for small and medium-sized
enterprises. The measures undertaken to reform the gas market and diversify
Ukraine’s energy supplies have been slow and inconsistent. The pension reform
has been carried out only partially, and focused mainly on raising the
retirement age. The attempts to complete land reform stalled at the stage of
developing a new land market law.
In many other areas, the government’s performance has been even poorer.
The authorities have failed to introduce many long-awaited and fundamental
reforms in the areas of local government, municipal infrastructure and housing
(the government has now been working on this legislation for eight years) and
no progress has been made on the new labor code (which was submitted to
parliament back in 2007). The government’s attempts to improve the investment climate
in Ukraine, believed to be among the worst in Europe, have been equally
unsuccessful. Since the welcome adoption of the public procurement act in 2010,
parliament has passed a number of amendments to the document. These amendments
have been aimed at excluding the compulsory use of transparent tendering
procedures. Similarly, the highly publicized anticorruption campaign has turned
into a complete failure.
The reformist zeal of Ukraine’s political elite had been progressively
diminishing as the parliamentary election approached and the polls showed a
decline in support for both the president and the pro-presidential Party of
Regions. During his time in office, Yanukovych has been unable to make systemic
changes, and his new powers have been predominantly used to crush his political
opponents. The collapsing economy and the results of the recent parliamentary
election (which effectively rule out a stable pro-presidential majority in the
Verkhovna Rada) have significantly curtailed any chance of serious reform in
Ukraine, at least until after the 2015 presidential election. This will further
exacerbate Ukraine’s political, social and economic problems, causing the
country to be left far behind its Central European neighbours or even Russia.
Arkadiusz Sarna is an expert at the Department
for Ukraine, Belarus and Moldova for the Centre for Eastern Studies in Warsaw,
Poland.
