Dealing with Yanukovych’s Ukraine: a policy brief

Ukraine's immediate post-election crisis seems to be over. Now we can get on with the business of working out what President Yanukovych means - for Ukraine, for the EU and for Russia. Our short policy memo on ‘Dealing with Yanukovych's Ukraine', argues that Yanukovych was never a simply ‘pro-Russian' candidate. He began his presidency by visiting both Brussels and Moscow, where he withstood pressure from Putin and Medvedev to make rash statements on issues like NATO membership. ‘Balance' is back in Ukrainian foreign policy, in so far as it ever really went away. The optimistic point of view is that Yanukovych could even end up as ‘Ukraine's Nixon', using the political cover provided by his electoral base in east Ukraine to make progress in a policy of steady steps towards Europe dictated by the business interests of many of his party's supporters.

The EU should not be afraid of working with the grain of the new authorities. Certain issues, like gas, may be best dealt with in a trilateral format including Russia. In return, the EU should be prepared to push Ukraine harder on bilateral issues where interests clearly do not coincide. Russia's proposal for a local customs union, for example, is clearly incompatible with the existing offer of a deep free trade agreement between Ukraine and the EU. But above all, it matters much less whether Ukraine's always pendular foreign policy is currently leaning east or west. Yanukovych will be judged on whether he can restore a semblance of competent government, after the chaos of the later ‘orange' years; but without cutting corners in the name of a ‘strong hand' and restoring the questionable practices of the past. The EU should be instantly critical of any hint of a return to the corruption of the past, or moves to curtail the anarchic freedom of Ukraine's boisterous mass media. A Yanukovych presidency will be more of a team affair than a Tymoshneko presidency would have been, but the EU should keep an eye on the team. 

Click here for the full text of the policy brief.
Click here for a podcast interview with Andrew.

Here is a quick rundown of what has happened in Ukraine since I finished writing my ‘Ukraine Decides' blog:

Prime Minister Yuliya Tymoshenko abandoned her legal challenge to the vote on 20 February, as it seemed to be going nowhere. On 3 March, she lost a confidence vote in parliament (Tymoshenko has been Prime Minister since December 2007). But Tymoshenko's party still has 156 out of 450 MPs, and new President Viktor Yanukovych was clearly finding it difficult to put together an alternative majority. Even if his Party of the Regions did a deal with the two small parties (the Communists and the Lytvyn Block), that only made 219 seats, seven short of a majority. Rumours with of a deal with Our Ukraine, the party formerly led by outgoing President Viktor Yushchenko, came to naught, as its 72 MPs are hopelessly divided. No one seems to want yet more (parliamentary) elections in the autumn, including Yanukovych, who fears losing votes to the fresh faces like Serhiy Tihipko and Arseniy Yatsenyuk who did well in the first round of the presidential vote.

So Yanukovych took the only option he thought he had, which was to pass an emergency new law changing the rules, so that a new coalition could be formed by individual MPs as well as parties. This was clearly unconstitutional. It also meant an alleged return to bribery and pressurising the business interests of MPs to win over the necessary number of defectors - which was no basis for their loyalty in the long-run. Finally, it meant the new government would not be a real coalition. Some jobs would be handed to the defectors, but the new administration would be dominated by Party of Regions die-hards.

So it proved. On 11 March, the Party of Regions ‘enforcer' Mykola Azarov was installed as Prime Minister, but with a slim majority of 242 MPs. Azarov was born in Russia and cannot speak Ukrainian, and is notorious for his abuse of the tax system to reward friends and punish enemies when Yanukovych was Prime Minister in 2006-07. The ‘gas lobby' led by Yuriy Boiko and Serhiy Liovochkin has a powerful position in the new government, but is balanced by the pragmatic business group led by Ukraine's richest man, Rinat Akhmetov. (Some papers even speculated with headlines like ‘Akhmetov loses Yanukovych').

The one surprise was that Tihipko, who has a reputation as a competent economic manager and pitched his election campaign to small and medium business and Ukraine's nascent middle class, joined the government as Deputy Prime Minister in charge of the economy, just hours after condemning the unconstitutional way it had been formed. Tihipko and Iryna Akimova, the first deputy head of the presidential administration who is close to Akhmetov, are tasked with economic reform. Azarov's first budget is promised within a month, and will provide the first test of the government's intentions.

Perhaps because of the domestic turmoil, Yanukovych was instantly active on the foreign policy front, visiting first Brussels and then Moscow in his first week. Brussels sensed an olive branch, after High Representative Ashton had visited Kiev for Yanukovych's inauguration. Yanukovych was never a simplistically ‘pro-Russian' candidate. He withstood pressure in Moscow from Putin and Medvedev to make rash statements on NATO and Russia's proposed customs union. ‘Balance' is back in Ukrainian foreign policy, in so far as it ever really went away.

The EU should be prepared to work with the grain of the new government. Certain issues, like gas, may be best dealt with in a trilateral format including Russia. In return, the EU should be prepared to push Ukraine harder on bilateral issues where interests clearly do not coincide. The Russia-dominated customs union, for example, is clearly incompatible with the existing offer of a deep free trade agreement between Ukraine and the EU. But above all, it matters much less whether Ukraine's always pendular foreign policy is currently swinging east or west. Yanukovych will be judged on whether he can restore a semblance of competent government, after the chaos of the later ‘orange' years; but without cutting corners in the name of a ‘strong hand' and restoring the questionable practices of the past. The EU should be instantly critical of any hint of a return to the corruption of the past, or moves to curtail the anarchic freedom of Ukraine's boisterous mass media. A Yanukovych presidency will be more of a team affair than a Tymoshneko presidency would have been, but the EU should keep an eye on the team.