Saturday, October 30, 2004

Two days left

There are only about two days until the election for president here in the Ukraine. But there are a lot of developments that are interesting and that might affect the outcome. Of course some of them are not new developments but have become much more established than they have been in the past.

The Support

The information hereabouts is that Yanukovych and Yuschenko are neck and neck in the polls. This is up from about a 6 to 1 advantage by Yuschenko several months ago. The reason for this, it is said, is, first, that Yanukovych has raised the pension for pensioners who have come out in support of him in large measure. Some say that he has doubled the rate though I do not know that for sure. If he has, the rate was not all that much in the first place.

A second reason given is that Yuschenko has not had access to television except for some lately to make his case. As of right now the advertisements on TV are running about 3 to 1 against Yuschenko. The gist of the attacks on TV by Yanukovych is that Yuschenko will sell off the Ukraine to the United States. They have also allowed some right wing nationalist groups to run pro-Yuschenko advertisements. This is I am sure in hopes that he will be tarred by the same brush.

So there has been not much about Yuschenko except negative —and some few Yuschenko ads--and a lot of pro Yanukovych stuff. For example, when Yuschenko alleged that he had been poisoned, a letter from the Austrian clinic he was treated at was circulated stating that they had confirmed he had not been poisoned. Turns out that it was a fake letter but it was given widespread play by the news outlets.

The third factor is that government workers have been told in no uncertain terms that they are to vote for Yanukovych or, in some instances, another candidate. Amelchenko is the other candidate who comes up. He is the mayor of Kiev. A friend of ours, a nurse at a local hospital, has been told that she is to vote for Amelchenko. This one I do not understand because it would seem to me to water down Yanukovych support but I hear that Amelchenko is a friend of Kuchma’s so it might be a personal favor. It is also true that Kuchma is not enamored all that much with Yanukovych so he might not see any difference between electing Yanukovych or Amelchenko, a personal friend. Whatever the reasons, the pressure is on government employees to vote for others besides Yuschenko. As a matter of fact, they have been told to bring in a certain percentage for their area or face the prospect of being fired.

The fourth factor is that businesses have been harassed by the tax police who have made it clear that an investigation will be pending if they do not support Yanukovych. I was at one business a few weeks back that had a whole table full of literature for Yanukovych out in the waiting area. We talked a bit about the climate for business and I said that it would be better with Yuschenko. They did not argue with me or maintain that I was wrong, that Yanukovych would be better, etc. but instead said nothing. I took that as a lack of real support but that they had to maintain an appearance.

Notwithstanding all of this, Yuschenko was able to have a rally last week that was attended by around 100,000, which was the official figure—it could have been more—down at Independence Square. Police had set up roadblocks on traffic coming into the city or a lot more might have shown up.

One interesting thing is that when rallies for Yanukovych are shown on TV, the angles for the camera are down looking up or, if there is a corner where people are standing, they show the people along the one side of the angle and along the other side. These are old camera tricks to make the audience think there are more there than there are. If they had more people at those rallies, it seems to me it would be in their interest to show the crowds and crowds. But they don’t; they seem to be relying on camera angles to make the case.

The election

I still don’t think that Yuschenko has a chance even if he has a majority of the people behind him. He has asked that his supporters take to the streets on Sunday to make sure that the balloting is fair, but that would help only those casting ballots, if it would do that. Once those ballots go into the election office that is where it will be decided. And, as I said above, the bureaucrats are all on notice that they have to bring in a Yanukovych victory. I think that will settle it.

The other problem is that Russia has stepped in to influence the election. They are opening up polling stations in Russia for an estimated 4 million people of Ukrainian ancestry to vote. The problem is that there are only about 100,000 Ukrainian citizens there. Using that kind of reasoning, I and a lot of other US citizens should be able to vote for Prime Minister of Great Britain because of our ancestry.

So I think the election will go to Yanukovych but it will happen on the second ballot. There are some predicting riots on Monday because of the results but I don’t see that they will have anything to riot about unless the results are really skewed against Yuschenko. I don’t think that Kuchma et al are that stupid, what with the EU and US looking on. Of course I could be wrong because Kuchma has been stupid before but I think they have to make it look good.


This is the real question. There are stories out that the Yuschenko forces are ready to take to the streets if they lose. The argument they make is that the only way they could lose is because of fraud and there is a lot to say on that score. The problem is that the Yanukovych supporters will point to the opinion polls and say that they enjoy as much or more support as Yuschenko. And this is not the Georgia election where everyone was hurting. Here people are not hurting so much but on the contrary have been faring quite well under Kuchma/Yanukovych for the past couple of years. And with growth at 13% that gives Yanukovych a lot of credibility. So if the Yuschenko forces say that they were defrauded of the post, Yanukovych forces will say that they have a legitimate claim. After all, he overcame a significant disadvantage to come up even or close to it by election. He has been coming up from behind for months, they would say. Who’s to say that because of the same factors he did not pull out in front of Yuschenko by election day? All Yuschenko can respond with is election fraud and they may even have some exit polls to show it. But that is an abstraction at best and I don’t think it will be a sufficient rallying cry to bring people out when times have been so much better for them. And the exit polls will be discounted even if by independent observers. That is my point from the first post on this. If things here were bad and getting worse, maybe there would be some sort of rose revolution on the order of Georgia. But that is not the case here.

So the question becomes whether or not there will be any type of revolution at all. There is talk about it and the articles I have read have said that the air is electric here with the possibility. I don’t feel it and others we have talked to don’t talk in those terms. There is a lot of interest in this election and some emotion tied up in it though I don’t think enough in the end. I think what will settle the issue is what the people have to lose and my feeling is they will think it is plenty. They are doing better than before and that is not nothing and I think that will decide the day. So though there may be clashes, I don’t think there will be revolution. The clashes will be put down and people will move on.

The Result

The problem is that Yanukovych is not the guy to take Ukraine into the future. Putin was in town this week to endorse him and there is a lot of talk about a close working relationship between Yanukovych and Putin, between Russia and Ukraine, and some sort of dual citizenship possibility between Ukrainian citizens and Russian citizens and I think Yanukovych will look north rather than west for support.

For one thing, I think he will be convinced that his policies are good for Ukraine. With growth at 13% who could tell him differently? That will mean status quo for awhile and he will have to play ball with Russia because Russia subsidizes Ukraine’s energy needs. To avoid stagnation or a downturn, he will be forced to mollify Russia to keep the subsidies. Otherwise it would be economic disaster here.

But the anti-business pro-corruption polices of the administration will saddle the economy with so much extra weight that growth will stagnate eventually. It is easy to get a lot of growth from a country where there has been nothing before and this even with the production oriented policies that you get here. People want to buy and they have more money to do it with the increased work and so most any production is consumed. But that won’t be enough to fuel this kind of growth forever. Yanukovych will probably come to this conclusion when he sees any downturn. But that will put him behind the curve on being able to fix it.

Some commentators believe that he will eventually look west but that he will do it much slower than Yuschenko. He will do this it is said because he is for Ukraine first and foremost. That I think mischaracterizes things. He is first and foremost for Ukrainian interests not necessarily for Ukraine as a whole. That simply means he will promote the interests of his clan much as has happened under Kuchma so protectionist policies will remain and the overall lack of competition will remain also. He might eventually have to face facts when there is a downturn or lack of growth but again that will put him behind.

The interesting thing is that some commentators think that Yuschenko would have to compromise so much to get things done that he would move more toward a Kuchma/Yanukovych type of administration by necessity. I don’t know if that is true or not. It might be but he has made fighting corruption a major plank of his platform so he would be backpedaling a whole bunch if he did. But it would be interesting to see if he could do it.

Personally, I hope this is all wrong and that Yuschenko pulls it off. That would make things a whole lot better here for investment and for consultants and for the people. But I just don’t see it happening.