Last week, a Ukrainian court overruled a complaint over the September 30 parliamentary vote and validated the results of the country’s latest ballot in a move which cleared the way for parliament to convene and form a ruling coalition majority. Ukraine’s High Administrative Court dismissed a lawsuit filed by five parties contesting the vote based on alleged violations. The decision allowed for official publication of the election results, which was expected last Saturday. According to Ukrainian legislation, once results have been officially published, parliament is free to convene.
The slimmest of majorities
According to the deal signed by the pro-presidential Our Ukraine/People’s Self-Defence (OU/PSD) and Yulia Tymoshenko (BYUT) blocs, Tymoshenko will be named prime minister and Yushchenko’s bloc will nominate the parliamentary speaker.
Tymoshenko’s victory is balanced on the finest of knife edges, with only three dissenting votes necessary to block her from the prime minister’s post. On September 30, Yushchenko’s and Tymoshenko’s parties won 228 seats in the 450-member Rada, two seats more than a bare majority. Yanukovych’s party won more votes than any other party, but with only 175 seats is unable to form a parliamentary majority.
Tymoshenko’s and Yushchenko’s parties have offered to grant Yanukovych’s party deputy ministerial posts, as well as the position of deputy prime minister and chairs of some key parliamentary committees. Yanukovych, who had fiercely resisted calling early elections, has not given a firm answer, commenting, “We will see the composition of the coalition at the first session of the Verkhovna Rada.”
Dividing up the ministries
According to the agreement, BYUT would be able to nominate the first vice premier and vice premier as well as nine ministerial posts in the new cabinet, namely the ministers of agrarian policy, environmental safety, economy, fuel and energy, coal, labour and social policy, industry, transport, and finance.
OU/PSD would be able to name two vice premiers and 10 ministers covering defence, foreign relations, interior, emergency, regional development, construction and architecture, culture and tourism, education, health, justice, sports and youth.
The party also aims to chair a number of state committees, including the anti-monopoly, TV/radio broadcasting and export control committees, while Tymoshenko’s bloc has laid claim to top positions on the state committees dealing with statistics and securities as well as the strategically crucial State Property Fund.
The Orange coalition has declared their top priority a raft of reform legislation aimed at integrating the country with European structures and attacking the control of the Ukrainian economy by a small clique of oligarchs.
Potential points of internal conflict
As a result of events in the summer of 2006 few observers are prepared to take a new Orange coalition for granted. After four months of futile coalition talks following the spring 2006 parliamentary elections the Socialist Party switched sides unexpectedly and formed a ruling majority with the Party of Regions and the Communists. Yushchenko had no choice but to approve Yanukovych, his political arch-rival, as prime minister.
Could we be in for a repeat of the 2006 Orange coalition collapse? It looks unlikely, given the absence of a junior partner whose defection could swing the balance of parliamentary power. However, the possibility exists of the OU/PSD bloc eventually abandoning Tymoshenko and aligning themselves in a broad coalition with the Party of Regions. Given Tymoshenko’s strong showing in the south and east of the country, this would seem unlikely, as it undermines the unity argument previously favoured by advocates of a broad coalition, but in the murky world of Ukrainian politics anything is possible.
Yuriy Yekhanurov of OU/PSD has already criticised his bloc for what he termed, “kowtowing to Tymoshenko”, and warned that he might quit the bloc. Yekhanurov succeeded Tymoshenko as prime minister in 2005 and is viewed as one of possible rival candidates for the post.
“The Party of Regions are apparently waiting for another development or proposed coalition, let’s say between PR, OU/PSD and Lytvyn’s bloc, or no coalition at all, which I see as the most realistic,” says Valeriy Chalyi, an analyst with the Kyiv-based Razumkov think tank.
“If Yanukovych’s party sees a chance to compromise, it will enter the new parliament as a wise Indian who will wait till the dead body of his enemy floats down the river,” says political analyst Andriy Yermolayev.
Compromising to keep a coalition
Tymoshenko has already made significant compromises in order to guarantee Yushchenko’s support for her attempt to head the new government. The coalition deal stipulates a 50/50 split of cabinet positions, which is remarkably generous given her bloc’s commanding performance at the polls, where BYUT won more than double the number votes OU/PSD managed.
She has also agreed to back a package of bills ahead of the vote on her candidacy as prime minister, including one on the Cabinet of Ministers which will significantly reinforce presidential powers at the expense of those of the new prime minister. This apparent reversal of earlier rulings that seemed to curtail the power of the presidential administration is a demonstration of just how seriously Tymoshenko views the need to keep Yushchenko on side.
Regardless of how much Tymoshenko is prepared to concede to maintain the impression of a united front, the fact remains that not only is her majority tiny, but it is based on an alliance with a bloc that incorporates 9 different parties, all of whom have their own interests. It does not take a lot of imagination to see how this could work against the new Orange coalition.
Yanukovych’s party is unlikely to act as interested bystanders in all this, and most analysts are predicting all sorts of fun and games at the opening of the new parliamentary session, including rostrum-blocking tactics and fist fights.
Can Regions wreck the party?
While the threats and dangers are numerous, restored Orange coalition appears to be the only way for President Yushchenko to boost his slim chances of re-election in 2009. Anything but an Orange coalition would spell the end of his hopes for retaining the top job in the country and leave him to clock watch the last two years of his time in office.
“One of the key potential points of conflict is rooted in the President’s desire to gain more authority over the next government by changing relevant legislation and installing his loyalists in as many ministries as possible to be able to stem Tymoshenko’s presidential ambitions. This problem is compounded by a lack of concord within OU/PSD with respect to Tymoshenko’s premiership. Inconclusive statements from both OU/PSD and BYUT in recent days regarding progress on coalition talks show there remains much to be agreed upon,” comments Viktor Luhovyk, an analyst with Dragon Capital.
“Another problem is cooperation and power sharing with the Party of Regions. It remains unclear at this point what sort of deal, if any, the Orange parties have struck with their principal rival. Earlier, the Orange allies promised to leave the posts of deputy prime ministers and parliamentary committee chairmen for the opposition, but Regions will likely rebuff this proposal to demand more serious concessions. Given their fragile majority and the still unclear position of the Lytvyn bloc, BYUT and OU/PSD will have to reach a compromise with Regions not to risk another early election (according to the Ukrainian constitution, any newly elected parliament becomes invalid if one-third of deputies resign – and Regions can command 39%).
This scenario may seem implausible at this point but it clearly gives Regions strong negotiating leverage, making the prospective Orange alliance largely notional unless BYUT and OU/PSD reach a deal with the opposition,” Luhovyk says.
Orange policy perspectives
Tymoshenko has made a lot of what analysts like to label ambitious and unrealistic election promises during the campaign, and will now be under pressure to live up to her attractive pledges. These have included promises to repay savings lost when the Soviet banking system crashed, and the abolition of conscription into the army, both of which have been branded as totally unworkable. “Promises compared to real policies will be the sword of Damocles hanging over this government,” warns Chalyi.
WTO, EU & NATO
After over a year of stalling and hesitation on integration into European and global organisations, the newly restored Orange coalition is expected to pursue this aspect of foreign policy enthusiastically. It has committed to joining the World Trade Organization and launch talks on a free trade area with the EU, which depends on Ukraine’s WTO membership.
Far more controversial are plans to bring Ukraine into the NATO military alliance, and Tymoshenko is thought to be less enthusiastic than some of her OU/PSD partners. “We plan to conduct a strong information campaign to explain to the public what NATO and other systems of collective security are to let the people determine for themselves through a national referendum which security system is best for Ukraine,” she said of the NATO option.
“The two coalition partners are unlikely to have serious disagreements regarding WTO accession, NATO membership and cooperation with the EU. Although the same would hold true (except for the NATO approach) even if the Party of Regions was part of the governing coalition,” Luhovyk explains.
“If an Orange coalition is formed, the President’s initiatives will not be torpedoed. No problems will emerge with ratification of visa regime simplification proposals and re-admission agreements with the EU. Ukraine’s NATO membership action plan could be considered at the alliance’s summit next April,” reflects Chalyi.
Russia, gas & energy sovereignty
The coalition has made national energy security a key priority in order to decrease the country’s critical dependence on its main gas supplier, Russia. Ukraine’s medium-term energy strategy should focus on the creation of a favourable investment climate to attract private companies who have the expertise to help get at the energy resources Ukraine currently boasts while also maximizing the country’s fuel efficiency and transit potential.
Tymoshenko has long been an outspoken critic of Ukraine’s current gas deal with Russia and campaigned on a promise that, if she became prime minister, she would annul the existing contract with Gazprom, which involves the mysterious middleman RosUkrEnergo. Gazprom now appears ready to do without the support of any middlemen, but the nature of a new gas deal remains unclear.
“A transition will mean new prices. Ukraine can brace itself for higher prices, but it is one thing to regulate supply prices and quite another to deal with storage and transit prices. Some long-term agreements are also still valid. Whichever government takes power, the scheme will be revised,” says Chalyi at Razumkov.
Renewed fears over privatisation
While prime minister in 2005, Tymoshenko scared many investors away by what were widely viewed as threats of mass re-privatisations aimed at reviewing the multitude of murky deals concluded under president Leonid Kuchma, when thousands of enterprises had been sold for next to nothing.
This time, Tymoshenko seems to have learned the lessons of her past mistakes and called the re-privatisation saga an “exotic action” which could hamper “normal investment activities.”
However, she said that while a number of big state enterprises will certainly be auctioned under her government, privatisation would be transparent.
“The word ‘re-privatisation’ has negative connotations both in Ukraine and abroad. There will inevitably be cases targeting dubious deals, but they won’t be numerous. There will be no repeat of 2005, but we can expect the privatisation of Ukrtelecom and Odessa Port Plant,” comments Chalyi.
“We had no intention to review privatisation deals in 2005, and we have no intention to do that now,” Tymoshenko ally Viktor Pinsenyk told a press briefing at Concorde Capital last week. “The term ‘re-privatisation’ was invented by our political enemies. However, we do intend to take some privatisations to court,” he added.
