Democratic Coalition edging closer?

The possibility of a grand coalition that includes PR has decreased, according to one of their leading-lights, Vladimir Landik, deputy chairman of the Luhansk department of the Party of Regions He had been asked on a Luhansk TV channel to comment on the recent registration as VR deputies of acting PM Yuriy Yekhanurov, Secretary of Security and Defense Council Anatoliy Kinakh, and a string of other current cabinet ministers. Many of them had said previously they would not work in a Tymoshenko cabinet.

Oleksiy Ivechenko, former head of Naftohaz Ukrainy, and Valentyna Semeniuk, chair of the State Property Fund, responsible for privatizations, have also recently registered their seats in the VR.

"I think that now for sure there won't be the wide coalition. We know that Ivchenko has left, who said that he was not going to work with Yulia Tymoshenko , now Kinakh who said that he wouldn't work under Yulia Tymoshenko, and Yuri Yekhanurov might also be leaving to Verkhovna Rada. It means that everything is being done for Yulia Tymoshenko. And you are perfectly aware of our relations with her," added V. Landik.

PR polit-rada member Yevhen Kushnaryov echoed Landik's remarks, "You can always return into the government, into the Security and Defense Council, or any other executive position from the Verkhovna Rada, but to get back into VR you have to wait 5 years." He also added that PR has no wish to claim any leading positions in a democratic coalition.

The Ukrainian constitution does not allow MPs to hold executive posts, but a parliament seat provides immunity from prosecution. After the orange revolution, newly-appointed cabinet members had to give up seats in the VR, weakening the 'democratic' majority. After they had been sacked by President Yushchenko during the September 2005 crisis, there was no way back for them into parliament until the March 2006 VR elections.

The first session of the newly elected parliament will take place on 25 May. The decision was made today at a session of the working group for preparing the first session of the Verkhovna Rada of Ukraine of the fifth convocation.

Yuliya Tymoshenko considers the agreement between BYuT, NU and the Socialists in choosing the chairman for this VR working group an indication that the democratic coalition has started to work together. And a BYuT-NU-Socialist 'democratic coalition' working group has completed and created [yet another] agreement document for formation of a coalition today.

The eccentric mayor

Here's some more on what the mayor of Kiev is looking to do. More populism? Sometimes the mayor makes a lot of sense and sometimes he sounds crack-brained. Which one is he really? I don't know, but government owned stores selling to the poor and the elderly--really the same thing here--makes a certain sense. This one, at least, isn't crack-brained. The poor here are just going to get poorer and going to be in a lot more jeopardy than they were what with the rise in energy prices which is going on apace. But it just won't work. It will just create some more Mercedes and BMW drivers because it will increase opportunities for graft and corruption.

"So, just have some kind of agency oversee what goes on in these stores. Make an example of a few of the people who engage in this kind of corruption and that will end it." Won't happen. Just cut the members of the agency in on a piece of the action and the way is paved for your grand dacha in the protected portions of the wilderness.

It will create great expense and it will poorly serve the poor. It will bust the budget and leave some guys in tailored suits and slick, pointed shoes, smiling. In other words, it will be more of the same.

Some coalition commentary

Here's some more commentary on coalition maneuvering that summarizes what LEvko has been pointing out for a couple of weeks. If it comes down to dissolving Parliament and calling for new elections, I think that Our Ukraine will be the loser. They just won't show up to vote.

Will that mean Yuschenko won't do it? No, he might just do it anyway. It could be that he is operating on some kind of principle and dissolving Parliament might be consistent with that principle. This is just to say that anything might happen.

Chernovetski's church

Here's something on the church Kiev's mayor belongs to. Not anything strange for America but it is a different thing for here.

The charismatic movement has landed, looks like.

Yushchenko interview

Polish newspaper 'Gazeta Wyborcza,' whose exemplary reporting of the Orange Revolution and after was second to none, today published an interview with President Yushchenko - He probably feels more relaxed talking with 'G.W's' journalists than with those in Ukraine, so his replies were candid and revealing.

When asked whether Ukraine's path to integration with the European Union was still a subject of dispute, he replied that this was no longer the case. "30% of our exports today go to EU markets - 5 years ago it was barely 18%. Ukrainian businesses have already voted with their feet for a European direction for the country. We are conviced that the large European market is opening for us - but it is also a challenge...We are not confronted with a choice as to which way we are to go - East or West - but with the task of fulfilling conditions, necessary for integration," he added.

In reply to a question whether he would agree to Yuliya Tymoshenko becoming PM again, he quoted the results of the OP about which I blogged a couple of days ago - perhaps indicating that he takes account of OP's too. [I wonder what his own current ratings are]. He states unequivocally, "An Orange Coalition is the best possibility," and "..[the possibility] of an orange-blue coalition is excluded for today."

And would he agree to Tymoshenko occupying the PM's position? "I do not exclude this. But the most important task is to find a formula for a stable coalition. I especially do not allow discussions on allocation of [governmental] posts...without determination of goal[s], discussions on [ministerial] portfolios will bury the orange coalition." He should read Tammy Lynch's excellent piece on the recent German coalition-building process, and why personnel decisions have to be sorted out first.

Partiya Regioniv are complaining that 'nobody likes them no more'. They blame BYuT, the NU bloc, and Socialists' representatives for frustrating the working group preparing formalities for the first session of the newly-elected VR.

The orange parties' representatives failed to turn up for the first meeting of the working group, then their representatives were unprepared for subsequent meetings, which ended without any progress being made. PR appeal to their fellow committee members to work constructively and to act in a professional manner. They consider that representatives of NU, Socialists and BYuT are putting at risk the opening of the first VR session scheduled for 24th May. [Maybe because they are incapable of sorting out an Orange coalition before that date?]

Coalition-building drags on..

The latest OP indicates 35% of Ukrainians would like to see Yanukovych PM, while 32% would like to see Tymoshenko in that position. Yekhanurov comes in a weak third at 7%.

47% of those questioned would favour a BYuT-NSNU-Socialist coalition, while 38% a RU-NSNU coalition - the former possibility, significantly, being supported by 36% of NSNU supporters.

One of the problems with all of this coalition-building is that leading members in both NSNU and the Socialist party are not 'singing from the same hymn sheet'. Yesterday veteran Socialist leader Oleksandr Moroz admitted that his party may be included in a Grand coalition with NSNU and PR. And yet today Yosyp Vinskiy, head of the Socialist polit-rada, says that entry of his party into coalition with PR is not permissable.

Although the Socialists garnered less than 6% of the votes in the elections, they have a pivotal role to play, and are under a deal of pressure to join a grand coalition. If they did so, BYuT would be left out in the cold [with the Communists]. For Moroz it would be a last chance to get his hands onto the levers of power rather than go into opposition with BYuT.

It's generally accepted that NSNU #1 Yekhanurov is keen on a grand coalition, but other leading members of his party, eg Zvarych and Bezsmertniy are far less enthusiastic. I've written in past about some waverers in RU, but now Yanukovych has stamped his authority on his party again, and has probably brought them back into line - and he wants the PM's job.

There are even rumors that several members of BYuT would rather 'jump ship' and join a grand coalition than go into opposition. Many newly elected deputies paid large sums of money 'up front' for a favourable place on party lists. They didn't pay to go into opposition.

Meanwhile President Yushchenko ostensibly declared last week that he is not a participant in coalition negotiations, and that formation of a coalition is solely the responsibility of the newly-elected political blocs entering parliament.

Today Communist leader Petro Symonenko, whose party is the smallest to 'scrape' into the VR, prognosticates that a grand coalition will eventually be formed between PR and NSNU [and possibly Socialists]. The coalition will be dominated by business structures, with Yekhanurov remaining PM, and the remainder of the cabinet dominated by PR.

Whoever forms the ruling coalition, most observers agree that the new government will continue to progress on Ukraine's path to Europe. As ex-Economics minister Seghiy Teryokhin says in an an interview today, "The top managers in PR are [now] used to living by the rules of European life - they want stability and certainty for the future."

My own hunch is that if PR were driven into opposition, then the fissures that must exist in that party would open up too.

A Ukraine energy plan

This is news to me, but it looks like Ukraine has an energy plan. The shock produced by Gazprom in January must have shaken some people awake.

Gazprom's price move was seen here as Moscow's revenge for Ukraine's so-called Orange Revolution, which led to the election of a Western-friendly government in 2004. Gazprom, in which the Russian government holds a controlling stake, denies any political motivation. But the effect has been that Ukraine, which has a population of 50 million, has quickly produced a program to reduce gas consumption. It has set up a new energy-efficiency agency to direct the plan and is pouring government money into efforts to carry it out.

"My inbox is filled with letters from metals and chemicals companies asking for help in cutting their energy use," says Yevgen Sukhin, the new agency's chief.

The kicker? Same old, same old:

There are big obstacles to carrying out all of Ukraine's plans. Financing can be hard to get where companies and local authorities are poorly audited, often unprofitable and often corrupt. Ukraine's political instability has consistently undermined government plans. "We've had a lot of broken promises," says Stanislav Potapenko, program coordinator in Ukraine for a nonprofit organization called Alliance to Save Energy, though he says attitudes are changing.

That should read "poorly audited, unprofitable and corrupt" to make the point clear. Those three travel together.

But if they have gotten as far along already as they have with outside contractors, such as Alfa Laval AB, working to solve problems, it does look like some attitudes have changed. Things don't usually happen that fast. Maybe January and the Kremlin sobered the right people up. Let's hope so.

Report on Free Trade between the EU and Ukraine

A hefty report [248 pages, available as a free pdf file download] entitled:

"The Prospect of Deep Free Trade between the European Union and Ukraine," by the Centre for European Policy Studies, has recently been published.

A quote from the intro:

"This study examines the feasibility, content and likely economic impact of a free trade agreement between the EU and Ukraine. A simple and shallow free trade agreement, adding only the elimination of tariffs on trade in goods to the conditions for WTO accession, is the most easily feasible option, but would yield only modest benefits for Ukraine and less still for the EU.

By contrast, a deep free trade agreement (or ‘FTA+’) with the EU, while posing more difficult issues of feasibility, could be a centrepiece of an economic strategy leading Ukraine into rapid growth. An FTA+ with the EU would entail an extensive, yet still selective, alignment of Ukraine’s external and internal market laws and standards with those of the EU. Politically, this step would be consistent with Ukraine’s ‘European choice’.

The country has little or no chance of becoming a prosperous economy and society without openness and integration into the European and global economy, alongside compliance with normal standards of advanced economic governance at home. Not being a natural resource-based economy, Ukraine has no choice but to develop a competitive and diversified economy centred primarily on industrial and service sectors. This point is underlined by the increase in the price of imported energy since the start of 2006.

Nevertheless, there is evidence suggesting that the combination of economic openness, convergence on modern European and international standards of economic regulation and corporate governance and proximity to EU markets could lead to a sustainable high growth path for Ukraine.

The country’s economic paradigm could change drastically, with a re-branding of its reputation and with its industry entering into the European and global supply chain. Such a strategy would also be of value to the EU economy in meeting the challenges of globalisation and Asian competition."

Date Published April 2006

Holidays

Last week, we had May Day and that was two days off which maybe got stretched to a little more than that just to accommodate the festivities. This week, it's victory in the Great Patriotic War and we have another two days off for that, which may get stretched a little bit more again.

The one this week is a big one, though. It was a cause celebre in the Soviet Union. If there was nothing else to recommend it, at least they could always point, with a lot of reason, to the victory over the fascists as a reason. So we celebrate.

It is an interesting thing to be in an audience, have the speaker congratulate all the veterans of the war as he has them stand up and see only women standing. It was a bit jarring to me to see it. But that is the fact here. The home front was the front and everyone was in it.

We know a woman who was in her twenties during the war and saw the Nazis roll into her little village. The stories she tells are riveting. When they left, a lot left with them, the portion that is, that wasn't destroyed. And over 90% of the men in that village died during the war so there were a lot of widows. Those widows are the veterans left there.

Alternative suppliers of gas?

National Security & Defense Coucil Secretary Anatoliy Kinakh, in an interview in today's 'Ekonomicheskie Ivestiya', says Ukraine intends to start discussions on the supply of gas from Russia with alternative companies other than gas behemoth Gazprom.

"We're talking of a more liberal gas market. In particular, one of our discussion strategies is obtaining access to independent suppliers to the gas transport system, formation of a natural gas market, and creation of a gas exchange," he said.

"There's a lot of companies that wish to supply us with gas at quite attractive prices. Lukoil, TNK, and string of other structures. We're talking of tens of billions of cubic metres," he added.

Kinakh explained that according to Russian law, the many regions in which gas is extracted are also owners of a portion of this gas, and stated, "When we contact the authorities in these regions directly, we become convinced of their readiness to supply gas. The problem, which should be decided at governmental level, is their access to the Russian gas transport system, in particular the ratification by Russia of the European Energy Charter."

Gazprom deputy chief executive Alexandr Medvedev stated recently that Russia is not interested in ratifying the EU Energy charter which would allow third-party access to the Gazprom's pipeline network.

Kinakh also mentioned the need to solve problems of limited throughput capability of the 'Central Asia - Center' pipeline, which is vital for supplying Ukraine with Turkmen gas, and about which I have blogged previously.

President Niyazov of Turkmenistan is to visit Ukraine in the near future when"not only gas relations for the next half-year are to be determined, but also long-term agreements with Turkmenistan are to be signed.

Are Kinakh's remarks just a small part of a co-ordinated effort to break Gazprom's monopolistic grip of Russia's gas transportation system? It's going to be a big struggle..

Impulses from the Prez?

On Friday Yushchenko is to meet the leaders of the political forces which will make up the new Parliament - Tymoshenko, Moroz, Yekhanurov, Yanukovych and Symonenko. He promised to apply maximum effort, in order that the process of formation of a [ruling] coalition "receives a new impulse, and is completed in the nearest one or two weeks."

He had previously spoken of a coalition being formed by the last weeks in June. Whether this new 'impulse' is in response to Tymoshenko's and Moroz's joint letter which was submitted yesterday, is unclear. [see yesterday's blog]

Yushchenko's made his remarks in Vilnius, while attending the "Common Vision For A Common Neighborhood” conference together with the 'great and good,' including Javier Solana, Dick Cheney, and heads of state of neighbouring countries. Has someone been whispering in his ear?

Meanwhile Head of PR political council, the odious Mykola Azarov who some say is an old pal of Poroshenko, announced that it has sent their version of a coalition agreement to all of the parliamentary parties. My impression is that since the elections their heart has not really been into this 'coalition-building' thing. The problem is who do they speak to? There is no chance of them dealing with BYuT. And as for NSNU, well Bezsmertny and Zvarych say its too late for deals, and yet Poroshenko and Yekhanurov are offering different messages.

Yushchenko's foot-dragging..

Taras Kuzio, in a recent article "Oligarchs into Businessmen: Ukraine’s Transition to the Post-Kuchma Era" [in Egle Ridzeviciute ed., Contemporary Change in Ukraine. Baltic and East European Studies 5 (Stockholm: Baltic and East European Graduate School, Sodertorns Hogskola, 2006), pp.10-34] writes the following when describing the build-up to the 2004 Presidential elections:

"Those within the pro-presidential camp were evolving from oligarchs to businessmen understood the need for change.

A 'critical mass' of businessmen would like to operate in a 'normal' legal environment where the success or failure of their businesses will not be dependent on their faithfulness to the president. These former oligarchs, eg Pinchuk, maintain good relations with Yushchenko. Pinchuk and the Donbas clan are also legitimizing their business interests by inviting international auditing firms to place their business empires on a legal and transparent footing."

It seems, then, that Ukraine's most powerful businessmen, many of who also 'pull the strings' in its political parties, are changing the way their businesses are run, for the better. [I have written previously about 'Oxford-trained MBA's' working for Akhmetov]

Contrast this with some quotes on Naftogaz, the Ukrainian state-owned gas company from the recent GlobalWitness report:

"..hair-raising practices of Naftogaz under Yuriy Boyko, its chairman from 2002 to 2005.

Despite persistent questions about the intermediary companies, against a backdrop of public concerns about official corruption and organized crime in the countries of the former Soviet Union, there has never been sustained, thorough and high-level oversight of these companies, and the structures and people involved in them.

..critics might question Yushchenko's political will to confront Kuchma's legacy of opaque and unaccountable business practices.

Ukraine needs clear reforms to promote open and accountable management of its gas industry...Without reforms, the transit of gas to Ukraine will continue to be a highly politicised, opaque and unstable business"

President Yushchenko and his administration are lagging behind public opinion and treating the Ukrainian electorate with contempt. They are also lagging behind Ukraine's big businessmen.

ps Yuliya Tymoshenko and Socialist leader Oleksandr Moroz today proposed a meeting to discuss coalition-building with President Yushchenko, in a jointly written letter. They suggest they all meet before 5th May. A source from the President's administration says, however, "There has been no official documentary appeal to the Secretariat." More foot-dragging..

Kryvorizhstal--the next instalment of the story

Here's something on what's happening with Kryvorizhstal, now Mittal Steel, now. It will be interesting to see how that works out.

These are telling figures though:

Kryvorizhstal employs 57,000 people. With the average worker supporting a family of four, 228,000 people depend on the plant.

And each employee's total benefits cost around $5000. That means a total cost of $285,000,000? Is that possible?

Ukraine's economy

Here's a good article on Ukraine's economy from a historical perspective. If true, his claim that the economy is only 63% of the economy of 1990, the pre-independence economy, ought to sober people up a lot.

Better is a relative term. Things might be better now but compared to what?

I can say that things here have improved a lot since I came here in 2002. More buying power, more products to chose from are both a lot better. In fact, Ukraine is the third fastest growing retail market in the world. From where it started, however, just about any growth at any rate would make it that. And again better than what? Than they were? Than they might have been?

There have been lots of opportunity to make things different here. There are still lots of opportunities to do that. We can only hope that these opportunities won't be squandered.

Puppet masters and puppets

When asked in a press conference today Tymoshenko reiterated she would not be prepared to accept a position other than PM in a 'democratic' coalition, and would rather go into opposition that join a coalition that includes PR. "Apart from me, there's scarcely anyone else to get matters sorted," she said.

A clue to the way these matters are heading is provided in an arrogant interview in 'Ukrainska Pravda' with Sergey Levochkin, one of former president Kucha's closest aides. This man was deeply involved with his old friend Dmytro Firtash, and Yuriy Boyko in setting up the huge RosUkrEnergo scam, sanctioned by Putin and Kuchma, about which others more knowledgeable than me are writing. He was, no doubt deeply involved in the flurry of 'last minute' 'divvying up' of state assests and property to Kuchma's favourites before the 2004 presidential elections, including something for Levochkin's good friend, the notorious Russian 'businessman' 'Mad' Max Kurochkin.

Soon after, Levochkin adroitly became a confidant of VR speaker Lyvyn, and was a leading candidate in Lytvyn's bloc [for Kuchma 'retreads'] which, having spending millions on advertizing, failed to cross the 3% threshold and enter the VR.

In his interview he predicts that a grand coalition will be created in the VR, and describes a scenario which is probably PR's 'pitch' to NSNU: PR's prime minister, and two vice-premiers including minister for fuel and energy, but the President remaining free to appoint and control the VR speaker and 'silovyky' - Defense, and SBU, and Foreign affairs. He suggests that NSNU's electorate, which would be lost in the event of a PR-NSNU coalition, would return if the economy grows sufficiently.

A photograph of happy-looking [L-R] Poroshenko, Levochkin and Martynenko in some behind the scenes 'wheeling and dealing' at the time of the Orange Revolution, is included in the UP article.

If the VR elections were to be repeated tomorrow, after all the stalling on coalition building and the RUE revelations, I wonder what the results would be? Would NSNU clear 10%

And what is the President's rating right now? It would be interesting to know..And what about 'that woman's' rating?

Can the markets take it?

If, as LEvko reports, this mess won't be sorted out until June, will the markets hold still for that? That is a long time for politics and an eternity for markets. Will there be any confidence in the government after all that? It is quite possible that any confidence could evaporate and start a selloff. It happened in the 90s in both Mexico and Venezuela for a lot less.

A rapid devaluation of the currency is not a pretty thing. I was in Venezuela when it happened there. The bolivar crashed, there was a run on the dollar and that caused the central bank to put controls on dollar buys. They needed to do this to be able to use dollars to control the descent (soaking up the bolivars on the market requires buying with dollars) and dollars reserves are needed to pay for goods coming in the the country.

The restrictions pretty much put a halt on imports. I talked with a grain trader at one point and he said the whole country was down to a 3 days supply of wheat. And the owners of any tankers with wheat bound for Venezuelan ports were seriously considering turning them back around because they thought they wouldn't get paid when the grain landed.

People tend to get surly when they get hungry and the Venezuelans have been known to riot. The owners didn't turn them back in the end and there were no riots and Venezuela came through it but came butt up against nationalism. Enter Hugo Chavez. Not a good ending, really.

I hope it doesn't happen here (and I should add, there are many, many reasons why it shouldn't.) But one thing is for certain: The parties on all sides believe they are in a fight to the death with their opponents only and with no others. But there are other interests and other actors who also have a say in what happens in Ukraine. The politicians here need to take that into account in their deliberations and in their public statements. Because those other actors, acting on the basis of self interest, criticize it for that reason as we will, can have a very significant effect on the lives of Ukrainians. (That has been my point with the very careless-- irresponsible, really-- way the investment situation here has been handled.)

But noting what has been said and done in the past, I won't be holding my breath.

Yanukovych takes control

Giving his first press conference since the March parliamentary elections, PR leader Viktor Yanukovych has imposed his authority on the drift in forming a parliamentary coalition. He pronounced that PR would 'bloc-up' with any other party in a governmental coalition, but he must be PM - he is not prepared to give up the PM's chair.

Other PR 'big-shots' have recently been a little 'off-massage' on this, but now Yanukovich has made his position clear.

He said that his party is ready to come together with NSNU, and believes this would provide the most effective coalition. Importantly, PR have commenced two-sided discussions on formation of a coalition, but [oddly] didn't specify with whom.

In principle, the orange parties would seem to be the most natural partners in any government, but an article in 'Svoboda' entitled 'Pipes and Chocolates, or an Akhmetov-Poroshenko coalition', illustrates what is happening at regional level, where local elections took place at the same time as parliamentary elections. In the Lviv oblast rada the NU chairman categorically refused to give up his position, even though BYuT received a greater mandate.

An analogous situation has occurred in Kyiv oblast rada where BYuT has the largest number of seats, but NU bloc has formed a union with PR. In Odessa the head of the NSNU branch has declared that there is a possiblity of a coalition with PR. And, typically for central Ukraine, in Golovansk, a town in Kirovograd oblast in a 46 seat council, BYuT-Socialists-NSNU had sufficient seats to form a majority, but in a vote to choose a 'rayi-soviet' chairman, a split occurred, and a Litvinite man who had held the position previously, was elected.

In the Zakarpattya oblast rada NU have done a deal with PR on co-operation, driving BYuT, and the Socialists and Litvinites into opposition. But now in the BYuT fraction itself there has split into two groups.

A similar sequence of events with splits and deals may well occur in the Parliament even after coalition negotiations are finally completed. Yushchenko is predicting these will drag on until mid June..

More on Gazprom

Anyone with an interest in Russia's waving of its 'gas weapon', its 'pipeline' or other metaphor in the air, and the reaction in the mass media, should check out Jerome a Paris' recent blog:

a short quote:

..the press campaign against Gazprom...from all available information, originates with the Blair government, desperately looking for an external scapegoat for its failing energy policy and the accompanying gas shortages in the UK, this is highly suspicious...

As Abdymok in his own unique way puts it, there's some 'gang flakking' going on here. Even 'The Times' gets in on the act. [with graphics and backround links too.]

*Some brilliant 'background stuff' on why Ukraine has a unique position in Gazprom's history and infrastructure from a man who was there - Jerome a Paris - the man deserves respect..

Gazprom - more worries for Europe?

A couple of clipped paragraphs from articles in today's London 'Times' :

Algerians and Russians in gas talks

TALKS in Algiers last month between Gazprom and Sonatrach, the Russian and Algerian gas giants, were overshadowed by a $7 billion (£4 billion) arms deal between the two nations. Despite being held in the shadow of a visit by President Putin, the significance of the talks over gas was not lost on the Algerian media, which described it as the first step to the creation of a “powerful energy lobby that would force Europe to bend”. The Quotidien d’Oran, a newspaper, said that Gazprom and Sonatrach would be the “locomotives of a new Opec of gas”.

and

Gazprom talks spark fears of gas cartel

DEEPENING ties between Russia and Algeria are causing concern among Europe’s gas importers, raising fears that recent talks between Gazprom and Sonatrach, the Algerian state energy company, could be the first step to the formation of a natural gas cartel.

Lost in translation

Unian reports that the press service of the US embassy in Kyiv announced US presidential aide and deputy national security advisor Jack D Crouch, during his recent visit to Ukraine, passed on greetings from George W. Bush to President Yushchenko only, and not to Viktor Yanukovych, on PR's decisive victory in the parliamentary elections, as had been declared by the Party of Regions press service.
Rather small-minded, no?

Crouch apparently greeted leaders of Ukraine's political parties [including Yanukovych] 'only personally'.

Some observers interpreted the 'greeting' to Yanukovych as possible approbation for a grand coalition.

[Reminder: PR will have 186 seats in the new VR, Our Ukraine 81.]

p.s. First chairman of PR's polit-rada Mykola Azarov states that Yanukovych does not necessarily have to be PM in any NSNU-PR coalition, [see previous blog] and now PR front-man Taras Chornovil, in an interview with Glavred says, "Under certain circumstances Yekhanurov [NSNU #1] could be Prime Minister."

You have to feel a bit sorry for Yanukovych, who for all of his faults, ran an efficient and successful election campaign for PR. He even tried to be nice to Jack D Crouch.

Next time Azarov or Chornovil meet Yanukovich, it may be a good idea if they keep out of arm-swinging range..
[Yanukovych has a reputation of having 'a useful pair of fists'.

Easter break

«Христос Воскрес!»

President Yushchenko has delivered an address for the Orthodox Easter, asking his people to pray for unity and peace. The holiday break will give politicians a few days to reflect on, and possibly reassess their positions on the question of building a democratic coalition in parliament following last month's elections.

For the NU bloc there are no easy options. The three orange parties combined would have a 17 seat majority max. Even if NU and Yushchenko agree that Tymoshenko be nominated to head a newly-appointed cabinet [something that looks a long way off, but what the majority of NU voters nevertheless want], there would probably be defectors or abstainers when she were to be voted into office to the position of PM in the Verkhovna Rada.

A PR-NU coalition [without the Communists] would command a majority of 41, but the number of defections from NU would be certainly greater than from a democratic coalition mentioned above, particularly if their 'biggest beasts' Yanukovych or Azarov were 'pencilled in' for the position of PM.

However it's been reported today that PR are not setting a condition that Yanukovych be PM in any PR/NSNU coalition. Mykola Azarov is quoted as saying: "Regiony at the moment are not claiming the premiership at all, nor [the positions] of 1st VicePM, or VicePM responsible Fuel and Energy."

This flatly contradicts a statement made by Taras Chornovil several days ago to the media, when he stated: "Yanukovych - PM, and Azarov and Kluyev VicePM's." Now Azarov says that the PR polit-soviet had made no such decision.

According to some analysts, a pivotal role may be played by Socialist leader Oleksandr Moroz. If he could be persuaded to join a grand coalition which excluded some of the less palatable PR leaders, then BYuT could be shut out, joining the Communists in opposition. Such a PR-NU-Socialist grand coalition would be more acceptable to NSNU voters, and it would be Tymoshenko who would be seen as 'the party pooper'. The Socialists' 33 seats in the new parliament would be useful too.

So plenty for everyone to think about, and plot, over the Easter break.

Finally 'The Independent,' in an article entitled: 'Russian gas giant could leave Europe in the dark,' includes this: "The Russian government has strengthened its grip on the media by closing in on a controlling stake in the country's best-selling tabloid, Komsomolskaya Pravda. State-controlled Gazprom Media is reportedly waiting for the deal to be approved by the anti-monopoly commission." Haven't Gazprom got enough on their plates?

ps Maybe the Ukrainian economy is doing better than generally accepted. It's been reported that sales of new automobiles is booming - there's been a 43% year-on-year sales increase. Some showrooms are even experiencing shortages. 32% of the market is dominated by AvtoVAZ, 13% Daewoo, and 10% ZAZ....[no snickering at the back..]

Lotto winner

It looks like I have won about four different European lotteries in the past two weeks. At least that's what the emails tell me, emails from the likes of @yahoo.com or @hotmail.com.

They must like me, they really must.

it's got to be some new kind of scam. At least I haven't seen it before.

Gazprom worries EU

With their usual deft hand, Gazprom (and the Kremlin, we should add) has just added to their problem in the EU:

Amid growing tensions between the European Union and Gazprom, an EU spokesman said Thursday that the gas monopoly's warning to European countries not to block its expansion had intensified fears about growing reliance on Russian gas.

The comments continued the verbal sparring that followed reports last week that Britain was conjuring up legal barriers to block Gazprom's potential takeover of Centrica, Britain's largest gas supplier. On Tuesday, Gazprom CEO Alexei Miller told European countries not to "politicize" gas supplies at a lunch with EU ambassadors in Moscow.

Gazprom's "statement gives grounds to our concerns on the growing foreign dependency of European energy supply and ... our need to diversify both the origin of our supplies and our supply routes," said Ferran Tarradellas Espuny, spokesman for EU Energy Commissioner Andris Piebalgs, Reuters reported Thursday.

Maybe they could threaten to turn off the taps. You know, something between friends.

Gas and the Orange coalition

Many political observers explain the mutual problems between Tymoshenko and Yushchenko as partly being a clash between prima-donnas. The quote below from today's 'The Independent' is typical:

"[The premiership] was a job she [Tymoshenko] did until September of last year, when Mr Yushchenko abruptly sacked her for allegedly spending too much time polishing her own image, for apparently being too radical on the economy, and for picking too many fights with some of his closest advisers."

But perhaps the main reason for her sacking involves corruption and money made by the intermediaries and their secretive beneficiaries in the Russia-Ukraine gas trade. Tymoshenko's #2 and former SBU chief Oleksandr Turchynov described soon after Tymoshenko's sacking how Yushchenko himself ordered a halt to his investigations into these matters, commanding him to "stop persecuting his men" because it was "creating a conflict with Russian President Vladimir Putin."

Tymoshenko has made it clear many times that if she becomes PM she will renegotiate the the entire Russian-Ukrainian gas arrangement from scratch - something both Russian government and President Yushchenko have declared is not a good idea. Some have suggested she will do this not wholly for altruistic reasons. She even brought down the Yekhanurov government on 10th January this year over the opaque details of the newly agreed Russian-Ukrainian gas accords, so causing a major constitutional crisis. It's no surprise then that during the parliamentary election campaign Yekhanurov stated clearly that he would not work with Tymoshenko 'under any circumstances'.

The smell of gas [sorry..] will continue to hang heavy over any orange coalition building.

Curiously newly-elected BYuT parliamentary deputy and newspaper editor Oleh Lyashko revealed on the Russian language service of Radio 'Svoboda' today that Oleksandr Turchinov has been hospitalized, and that there is a suspicion that he may have been poisoned."There are some facts that would indicate an unnatural reason for him to be in hospital," said Lyashko. However Tymoshenko's press secretary says he has no information whether Turchinov was poisoned.

Kompromat and backstabbing..

Petro Poroshenko responded quickly to Yuliya Tymoshenko's accusations [of which I wrote yesterday], in a lengthy TV interview last night. Perhaps the most sensational of her accusations against him had been the claim that Poroshenko was co-operating with deputy Prosecutor General Viktor Shokin to open a criminal case and sanction the arrest of Oleksandr Turchynov, BYuT #2, and former head of the SBU, and Andriy Kozhemyakin, a former SBU adviser, at the time of Tymoshenko's premiership.

Turchinov may have been using his position to destroy or 'dark-hole' evidence on Tymoshenko's 'dim and distant past' which could be used against her and others some time in the future, as well as collecting potential kompromat on her enemies.

Abdymok has blogged in great detail on these matters and how RosUkrEnergo and its shady beneficiaries [some close to Yushchenko] were being investigated by Turchinov and Kozhemyakin. Turchinov in a resignation press conference on 15th September last year, claimed that the President himself had told him to 'back-off' with his investigations.

In his TV interview Poroshenko claims that when she was PM, Yuliya Tymoshenko,"arranged, at night, at her dacha, with the then Prosecutor General, Sviatoslav Piskun", to open a criminal case against him, apparently in a private agreement, and to submit appropriate arrest warrants.

Before and during the Orange Revolution, Yushchenko kept close ties with the then Prosecutor General Sviatoslav Piskun, and with the SBU [late night meetings with Smesko and Satsiuk?].

In a country like Ukraine, where 'blackmail and kompromat were used a tool of state domination', the people, who have the 'dirt on everyone' become most important and powerful. Yushchenko only fired the odious Piskun late last year - he will now be sitting in a PoR seat in the newly-elected VR.

An insight onto how kompromat has been used is described in an excellent article by Keith A Darden [Yale University], which although written several years ago, is still a most interesting read, and helps explain the methods Ukraine's leaders have used to try to discredit or get the better of one another. [In the article it's still many of the same names on the gas merry-go-round as now, I'm afraid.] But at least after the Orange Revolution there's a free press and media..

Coalition of democratic forces? It looks a long way away.. And grand coalition? Maybe a bit nearer?

An interview with Yuschenko

Here's an article by Anne Applebaum on her visit with Yuschenko. She's been good on the issues in this area of the world.

I post a link here without any comment.

Yushchenko' s dilemma..

Vira Ulyanchenko, one of President Yushchenko's closest advisers, admits that a broad coalition in Parliament including PR and its leader Yanukovich, is possible. "I think that..a broad coalition may happen, or maybe an orange coalition may be created, because this is absolutely natural...[but] no-one is talking of a marriage with PR. We are talking of a broad coalition, about including...possibly including, PR into the coalition. This is a matter of discussion."

She also claims PR agrees with NSNU on Ukraine's entry into the EU and WTO, because it will widen access for Ukrainian business to external markets, adding "It seems to me that he - [Rinat Akhmetov] would be interested in such a [broad] coalition, as a representative of big business."

"The President's secretariat [where Ulyanchenko has an office] is not looking seriously into the question of the candidature of the PM at the moment."

Tetyana Mokridi, a NU press secretary, stated that the NU bloc could not decide at a political council meeting today whether to sign a democratic forces coalition protocol. A decision has been deferred until tomorrow.

But Yuliya Tymoshenko has accused a portion of NU led by Yekhanurov, Poroshenko, and Martynenko of wanting to form a coalition with PR, something she has ruled out for BYuT. She says she obtained the information from an insider - a member of the NU polit-rada, who told her that there is an NSNU campaign afoot to discredit negotiations on the creation of the democratic coalition, in order to create a broad coalition with PR.
She also appeals to the President to take personal responsibility in conducting talks with her and Socialist leader Moroz in this matter.

But perhaps, most sensationally she accuses Petro Poroshenko of co-operating with deputy Prosecutor General Viktor Shokin, and Mykola Martynenko of working with SBU chief Ihor Drizhchanyi to open a criminal case and sanction the arrests of Oleksandr Turchynov, BYuT #2, and Andriy Kozhemyakin, BYuT #25. Turchynov was former head of the SBU - Kozhemyakin an SBU adviser. This has all been denied by the Prosecutor General's office.

Meanwhile President Yushchenko strikes a statesman-like note and "is disturbed that the participants in the discussions [on coalition] are dragging their feet in developing a a realistic program of action for the coalition, and wasting too much time and energy on mutual insults in the mass media."

Yushchenko is caught in a dilemma. If he continues to procrastinate, he is open to accusations that he is doing under-the-table deals with 'the enemy' - PR. If he caves in and agrees to Tymoshenko becoming PM, the first thing she will do is pull her program out of her handbag and insist that her junior partners agree to it. If he forms a coalition with PR, then he will be despised by a large portion of the Orange electorate in central and western Ukraine.

Yuliya is in a much stronger position. Apart from having secured the support of a much larger portion of the electorate than NU in the March elections, in the 'worst possible case scenario' i.e. going into opposition against an NSNU-PR government, she has 'an ace in the hole' - a very good chance to crush Yushchenko in the next presidential elections.

What is Yushchenko to do with this woman? Perhaps there are worse fates than just lying back and thinking of Ukraine?

Those russophobic, crazy Brits

This is interesting:

British Trade and Industry Minister Alan Johnson had eight meetings this year on how to block a potential takeover of British utility Centrica, the country's biggest gas supplier, by Gazprom, the Financial Times said on Monday.

Some collateral damage from the Ukraine/Russia gas crisis, no?

Depressing thoughts..

Yekhanurov has discovered he shares quite a number of values with PR, and sees much in common with them on the development of the Ukrainian economy. About 40% of his ideas coincide with those of the Socialists. And as for BYuT? Well, according to Yekhanurov, they don't have an economic program at all.

Meanwhile Taras Chornovil, Partiya Regioniv front man and their #4, has again declared that PR are ready to co-operate with the NU bloc in any coalition, on the proviso that Yanukovych is PM, and that the ghastly pair of Mykola Azarov and Andriy Klyuyev are vice PM's and ministers of finance and of fuel and energy respectively. What despicable characters they are is documented in Andrew Wilson's excellent "Ukraine's Orange Revolution" [Yale University Press].

The thought that they may wield power again propped up by the 'Our Ukraine' bloc is truly depressing, even for an outside observer like me.

And Yushchenko hints that he is not against new Kyiv mayor, "nutty-as-a-fruitcake" Leonid Chervonetsky, [see photo] who is already sacking people, changing locks, and controlling affairs using newly-introduced security men in the Kyiv city state administration..

An article [in Ukrainian] on pro-BYuT 'Kiyany' website describes was a swamp of nepotism the Kyiv city council has now become, and helps explain why things are turning out as they are..

Maybe there will be something more cheerful tomorrow.

So, how many were there?

Hi all. From an investor point of view it makes no difference whether she said that her government would seize 3000 businesses or whether she said that there might be problems with the 3000. Re-privatization was always about a process anyway and her government would determine which ones would be reviewed under that. Investors were looking for some indication about what her government’s position would be on it. Saying anything about 3000 companies in that context put a cloud not only on 3000 of them, whichever those were, but the number was large enough to put a cloud an any other business in Ukraine.

Are there any lasting consequences? There must be because it keeps coming up and not only from her critics. But she can lay it all to rest now by simply saying how many she is going to inquire into when she takes the reins. I suspect she won’t/can’t do that because of her supporters. They want justice and who can blame them, a point I have made over and over here. The problem is that by getting that justice you may just drive off the very people who would be your friends. (Another point I have been making here.) As a case in point, Western companies that are here offer Ukrainian employees much better benefits and pay, on the whole, than their Ukrainian and Russian counterparts. Is that in the interests of Ukrainians?

And that’s the other problem with it. Discouraging Western investment doesn’t mean there will be no investment (though, it will always mean investment at much lower levels) it means that investment will come in from other areas. The chief candidate right now is Russia. Russians invest here now; they have more of a stomach for the risk (another point I have been making here.) But with Russian investment comes less transparency and less accountability. And it also comes freighted with Kremlin geopolitical ambitions. Russian businesses, to stay in business, have to bow to the Kremlin—pure business decisions must take a back seat to that. Some people might like that but is it the best for the country?

The same sorts of things can be said about going after the oligarchs and the other “bandits.” Will it serve the interests of Ukraine in the end? When they start lining up at the European Court of Human Rights making their case for persecution and framing it in ways that Europeans understand, let me know. (See here for something on this.) Will the Europeans have patience with it especially when it is remembered those Ukrainians took our natural gas? Maybe they won’t do it. But one of the markers of good governance should not be leaving an important flank exposed to the enemy.

A lot more can be said and maybe should be said, but won’t be said by me. I am out of the government critiquing business. I have to function here and don’t want that ability to be compromised in the future. So anything further to be said on the subject will be said to clients only from now on.

But I do wish them all success. I would like to see more Ukrainians better off than just the Mercedes and BMW owners around here. Of course, that may mean putting justice on hold-- and there's the rub.

Skulduggery in Kyiv city council

The newly-elected oddball mayor of Kyiv Leonid Chervonetsky was sworn into office Friday, apparently after a delay of two hours during which time he managed to scrape together a quorum of 61 registered city council deputies out of a total of 120. [Scott has previously posted info on this guy.]

Some deputies claim they were not aware that the ceremony was taking place, while others claim only 55 deputies were present. It all seems to have been rather a farce.

On Saturday a coalition comprising a total of 62 deputies called 'A Just Kyiv' led by Vitaliy Klychko, was formed by BYuT, Pora-PRP, and 'Hromadskyi aktyv Kyyeva' [HAK] factions.

Today Yuliya Tymoshenko condemned the support given to Chervonetsky's deputies by the NU and PR blocs. "I consider that such a coalition will practically make Kyiv a new business bridgehead for certain groupings, and practically ruin the aim of making Kyiv a civilized capital where politicians act fairly and honestly, in particular in the City council," she underlined.

She also promised that BYuT will not form any coalitions in any regional, city or oblast council with PR.

The Kyiv city council comprises 8 different political factions with 15 deputies from NU bloc, 9 from PR, and 21 from Chervonetsky's bloc. BYuT is the largest faction with 41 deputies.

I wonder if the NU 'nachal'stvo' will comment on this skulduggery..

Lingering sense of injustice

The following story featured in Friday's Ukrainian 'Expres' newspaper.

"Former Yushchenkite and now colleague of Yanukovych stole $3.5Bn?

Independent trade unions blame the Federation of Trade-Unions of Ukraine of illegally appropriating billions of dollars-worth of property.

They consider that nearly 300 objects* in Crimea, in the Carpathian mountain region, and elsewhere were sold in 'shadow' schemes. "We suspect that property to the value of $3.5 Bn has disappeared. The person responsible for this is Oleksandr Stoyan," said the head of Federation Mykhaylo Volynets.

He also accuses Oleksandr Yurkin, the new head of the Trade Union Federation, of involvement in the misappropriation. Both Yurkin and Stoyan deny all the accusations.

Stoyan refused to give any information of his earnings, or to show reporters his new dacha in Koncha-Zaspa, a swanky new recreation and leisure suburb of Kyiv where many of the rich and powerful, including Kuchma, have built dachas and live. Stoyan, who is #23 on the PR parliamentary election list explained, "The builders are still working there, and I haven't planted any flowers." In the previous parliament he had been on the NU bloc list."

Whatever the veracity of this particular story, millions of Ukrainians, not unreasonably, feel that most privatizations were 'a steal' - they remain poor, whilst the likes of the two above have made it 'big', and that some are now taking advantage of criminal immunity in parliament .

Yuliya Tymoshenko taps into this ground swell of opinion on this core issue, and until some kind of legal clear-out procedure take place, the sense of injustice will linger.

On 16th February last year, Tymoshenko, when she was PM, gave a press conference from which sprung forth the story that she intended to privatize 3000 enterprises, spooking so many investors. Certainly a lot of damage was done, vital investments went elsewhere, and Tymoshenko herself was branded a rampant 're-nationalizer'. The story was reported in ForUm thus:

I've translated some bits so that readers can make up their own mind what Tymoshenko's intentions were, and whether she was wise to tackle this matter in the manner she did:

"Tymoshenko to sort out the privatizations of 3,000 enterprises"

"The gov't is to review the legality of privatization of more than 3,000 enterprises, the results of the inspections of which were set aside by the Prosecutor General of Ukraine for five years," declared PM Yuliya Tymoshenko.

"The leaders of the state covered up these criminal transgressions during the time of privatization... the absence of competition, and unprecedented reduction of the estimated value of state-owned objects...childrens camps, and superb industrial establishments were sold off for kopeks."

PM Tymoshenko reported that at that day's Cabinet meeting, the gov't and Procurator General's office had co-ordinated their actions. "And for each establishment where transgressions are exposed, a plan will be adopted, so that we can return to the state, that which was illegally transferred into private hands, solely by deceit and corruption," noted the head of the gov't.

She also reported that the given materials would be analyzed by the Ministry of Justice, and after this they would be handed over to a court. "We will return to state ownership, in an absolutely legitimate way, that which was illegally privatized."

"Nobody today can say what the number of objects that will be returned to state ownership [will be]. It has been established that violations during privatization occurred, and there are courts that should investigate these questions," she emphasized.

*probably holiday camps, sanatoria etc. LEvko

Political hokey-kokey*

Yesterday it looked like the 'democratic coalition' was on the way to being formed when Tymoshenko, Moroz, and Bezsmertnyi signed a coalition protocol.

Today NSNU #1 Yekhanurov stated that according to the protocol, Tymoshenko may well not be PM, 'correcting' Tymoshenko's statement that it will be she that is the main pretender to the post of PM.

Yekhanurov queried paragraph 6 on the signed protocol and says the political council of NU are studying the matter. According to Yekhanurov, "It's important that people understand the principles of the work of this coalition, and not whose physiognomy will head the government, or 'adorn' the cabinet."

Tymoshenko has wasted no time responding, and upped the ante, striking back at NU's backpedalling. She told unian: "The protocol on the [democratic] coalition will be denounced, if NU does not sign it in its totality."

Bezsmertnyi said earlier today that NSNU party council presidium has excluded article 6 of the protocol which may be interpreted that BYuT, as biggest coalition member, selects the PM. Article 6 states that the agreement on the coalition "is being prepared on the basis of the principles, laid out in the memorandum project on [setting up] of the coalition of democratic forces." The memorandum envisaged that the PM will be proposed by the political force who obtains most votes in the election ballot.

Yushchenko held quite a lengthy press conference a couple of days ago. He was quite irritable, rude and agressive to some of the journalist's answering their questions. When asked if he would he agree to YT as PM, instead of obfuscating [which he should really learn to do] he curtly replied, it was not a matter for that day. He praised Yekhanurov - 'a talented PM who wants to be perfect'. During the press conference he mentioned Y.T. only once by name. "Yesterday..it became apparent that Moroz and Tymoshenko will support my programe.."

Now the NU bloc is insisting that article 6 be removed from the coalition protocol.

Tymoshenko's response in a TV interview is that article 6 is the 'heart of the protocol' in which all the procedures for creating the coalition agreements are laid out. She appeals President Yushchenko to get involved in the processes going on in NU and stop the ruinous steps of politicians who are fighting to create a coalition between PR and the NU bloc.

But he clearly is in no way reconciled to working with YT as PM even after the mauling NSNU received in the elections.

*English dance song. 'Left leg in, right leg out, in out, in out, shake it all about..

Orange coalition [re]formed

Yuliya Tymoshenko, Oleksandr Moroz, and Roman Bezsmertnyi to-night signed a protocol on the priciples of formation of the coalition of democratic forces in the newly-elected parliament. The terms of the protocol indicate Tymoshenko will be PM.

Maybe I'm a cynic, but I feel like the miserable old drunk at a wedding. "I give it six months.." But can 'Regiony' stick together for that long?

Squirrels fighting back..

Ukraine's richest man and newly-elected VR deputy, Rinat Akhmetov, received an unpleasant surprise yesterday when the Donetsk oblast state court took away 145 hectares of his land that had once been part of the Donetsk botanical gardens. The Court anulled a decision which had been taken by the Donetsk City Council to give Akhmetov, a.k.a. 'Botanik', the land on which, apparently, Akhmetov has a residence, together with several buildings built by Viktor Yanukovych.

The land in question comprises an arboretum, and has been transferred back to a communal enterprise: "The Donetsk Ecological Investment Project".

On 10th September 2004, just before the Orange Revolution and while Yanukovych was still PM, former President Leonid Kuchma signed an 'ukaz' reducing the area of the Donetsk botanical gardens by 63 hectares. Many similar transfers of portions of nature reserves and reservations to Kuchma's flunkeys took place in the months before the Autumn 2004 Presidential elections.

Meanwhile, Oleksiy Ivchenko, chairman of Ukrainian State Gas Company 'NaftohazUkrainy', has been personally ordered by President Yushchenko to return his new company car, an S-class Mercedes AMG [list price $215,000] back to the showroom for resale. The President, in a press conference today insisted a moratorium be held on e.g. the purchase of expensive automobiles, apartments, and similar 'perks' for high-ranking civil servants.

Last week 'Ukrainska Pravda' had exposed the purchase of Ivchenko's 'new toy' to its readers, at a time when rumours were circulating that 'NaftohazUkrainy' are on the verge of bankruptcy.

Ivchenko was at the heart of the Gazprom-RosUkrEnergo-Naftohaz Ukrainy negotiations following the 1st January gas crisis, and is #25 on NSNU's list of newly-elected VR deputies. There are unconfirmed reports that he may soon be fired.

It's a pity Yushchenko did not 'crack the whip' early last year when he first became President.

Demeanours speaking loudly..

President Yushchenko today met leaders of the political blocs that have been elected to the new Verkhovna Rada. I wonder what the 'body-language' people make of these photos from 'Ukrainska Pravda'






Yuliya and a 'thoughtful' Yanukovych answering journalist's questions after the meeting.






For readers interested in this sort of thing, here are the almost Disneyesque shoes Yulka wore for the meeting:






Tips on doing business Russia from today's London "Times" includes this: "You may well want to keep any fondness for Ukraine to yourself — Ukrainians often form the butt of Russian jokes. Typically, a joke would include references to Ukrainians’ cunning and their prediliction for fatty food — in particular salo, a sort of lard. Yummy..

Lights turning to Orange?

Others more qualified than me will provide more detail on today's events, but for the record, leaders of BYuT, NU bloc, and Socialists today, announced: 'The Orange coalition with come into being'. Tymoshenko, Bezsmertnyi and Moroz met together for the first time after the elections, and the participants came out afterwards to meet journalists apparently 'filled with optimism'.

"Coalition trio see no obstacles to signing agreements - the coalition of democratic forces will comprise only three political forces," reports Expres.ua

The next meeting is scheduled in two day's time. By that time the leaders of the parties are to prepare conditions, on the basis of which the future coalition is to act. Any coalition agreement will not be signed however, before the first sitting of the new VR.

In an interview with the Polish "Tygodnik Powczechny" Tymoshenko revealed that she told the President that she is ready to support him in the 2009 Presidential elections, "if we form a unified team today. I can make such a declaration publicly and in writing."

"I am ready to forget the insults," she added. Maybe that's the trade-off - I'll be PM now, but won't challenge you for job as 'top banana' in '09.

But before anyone gets carried away, Petro Poroshenko, Yulka's biggest enemy in NSNU, maybe sensing danger, said in a newspaper interview today, "Yuliya Volodymyrivna as PM would be dangerous for the economy and for democracy."

What the 'Prez' really wants?

Yesterday's Presidential radio address was a balancing act, it included passages to cheer the Orange coalition brigade, as well as the 'Grand coalition' supporters.

• E.g. "[in the elections] the electorate preferred those political forces which supported me in the 2004 presidential election."
• And yet: "the government to be formed by a coalition should be a government of all Ukrainians and not only of those who backed certain political forces."

But it did include several passages to show that the Yushchenko is dissatisfied with the political reforms that came into effect January 2006, whereby more power was divested from the President's hands to the VR and cabinet.

• "Political reform... upset the balance of state power and did not provide effectiveness and harmony to the issue of interaction between the president, parliament, government, the centre and the regions. The issue of improving the Constitution of Ukraine will undoubtedly be on the agenda of the work of the coalition in parliament."
• He is also very keen on: "The speedy formation of a viable Constitutional Court of Ukraine [which] should be the new Supreme Council's [VR or parliament's] first test on compliance with the constitution."

It is this Court that has the power to possibly declare the above-mentioned political reforms unconstitutional, and nullify them.

Some observers speculate that the agreement to overturn Constitutional reforms could be a bargaining chip to be proposed to Tymoshenko, i.e. Yushchenko agrees to her ardent wish to become PM [but with much reduced powers] if she agrees to push through annulment of the January 2006 political reforms, and return to the President the very significant powers enjoyed by Kuchma.

All this is highly ironic, of course. The adoption of Constitutional reform in December 2004 by a large majority in the old VR was the 'trade-off' Yushchenko made in order that Kuchma agree to the 26th December re-run in the Presidential elections. At the time Tymoshenko argued that Yushchenko, true to form, was being too soft, and was giving away too much to Kuchma's cronies in the VR, just as victory was in sight. [At the time these cronies probably felt reasonably confident that they would be re-elected in March 2006, and the reforms would enhance their power, whilst reducing Yushchenko's power.]

All but one of Tymoshenko's deputies voted against Constitutional reform, as did a significant portion of NU deputies. [Oddly, neither Yush not Yulia voted.] There is a snag though. Moroz and the Socialists have always been keen on Constitutional reform, and the reduction of Presidential powers. They are also an essential constituent in any 'Orange coalition'. Saturday's address may indicate Yushchenko is more interested in returning to the old Constitution which would have provided him with enhanced powers, than in the formation of a Parliamentary coalition.

Response to Comment: Socialist leader Moroz is getting old. Just a guess, but I think he would like get his hands on the levers of power for a year or two, in whatever political arrangement, before retiring.

There is a greater likelyhood of PR breaking up into fractions if they are driven into opposition. Poroshenko and other 'biznismyeny' in NSNU wanted to 'leave the door open to other democratic forces' apart from BYuT and the Socialists, at a recent NSNU political council meeting called to unify policy on formation of a coalition, but 92 out of 134 present voted against such an ammendment. [I wrote of this in a previous blog]

Incidentally, a recent article in 'Ukraina Moloda' [which also mentions the above] states: "Yushchenko, as opposed to many of his fellow party members, AGREES to the election of Yuliya T to the PM position. But agreements must be first formalized with certain conditions". The editor of 'Ukraina Moloda', Mykhaylo Doroshenko and Viktor Yush go back a long way - some say he is one of Prez's closest [non business] confidants...

Re: Radio ga ga

Sounds like he might be pushing a grand coalition to me.

Lasts night, they had the leaders of the parties who won seats in Parliament, ByT, NSNU, the Socialists, the Communists and PR. We didn't watch much of it but stayed with it a little more when Yulia stood up to speak. She was effective as she normally is.

When she spoke, though, it was interesting to see what the others from the other parties were doing. There were a number of heads looking down at their desks from NSNU and others. Might say something.

Radio ga-ga

One of Tymshenko's closest aides, the 'Mr nice-guy' Mykola Tomenko, in a press conference in Ternopil yesterday highlighted the degree of NSNU's slump. In the 'marginal' Kirovograd oblast NSNU obtained 8-times fewer votes than Yushchenko received in the 2004 Presidential elections.

And in Kyiv, NSNU was supported by less than 16% of Kyivites, as compared to 78% of votes accumulated by Yushchenko on 26th December 2004. His message at the press conference was: "The business elite of Our Ukraine are discrediting the President," i.e. Tomenko is attacking Yushchenko's coterie, but not him directly.

FT reports that uncertainty and failure to form a coalition could precipitate a currency crisis.

And President Yushchenko will be delivering a radio address to the nation tonight, 18:00 local time. He is supposed to be laying out the priniciples, as he sees them, for formation of a coalition. Link to internet access here. Will he continue to dither?

Update:

Today's radio address by President Yushchenko, on 'Formation of a Parliamentary coalition', included these main points:

• Political consulations will continue immediately after the official results of the elections have been published.
• President will consider the canditatures for the leading positions in the government only after a program of activity by the future parliamentary coalition has been determined...
• The government which will be formed by the coalition, should become a government for all Ukrainians, and not only those who supported certain political forces. The government should work for the unity of the country, and should allocate much attention to humanitarian, unifying policies.
• Quote: "I will not allow the country to again loose time because of the inability of some politicians to work in a team."

'Grand coalition', or BYuT-NSNU-Soc coalition?

The third option

There is another option that hs been talked about should no government be formed within the statutory period. That is a dismissal of the government and the holding of new elections. Some think that it would be too expensive. But there is another reason why it might not be a good idea, at less from Our Ukraine's perspective. The reason is that they might lose more seats.

Tymoshenko's supporters are active. On a local radio program, the agricultural minister made a lot of the economic mistakes of the Tymoshenko government. He said he would not serve if she becomes PM.

The program had call in numbers where they asked if the agricultural minister should serve in the new Tymoshenko government. The vote was 172 yes, 900 no. And he's a Socialist. These kinds of votes favor those who are motivated so I think this one shows who is.

I think it is likely that in any new vote the Our Ukraine supporters just wouldn't show up. Why bother if the numbers are going to be like the last or any where near? That would skew a re-vote Tymoshenko's way.

Make-your-mind-up time near?

In politics, as one politician's star rises so his rivals' stars fall. Yushchenko and his entourage were shocked at BYuT's results in the immediate aftermath of the VR elections. They thought BYuT's vote would collapse. But it turned out quite differently.

I hope Yushchenko and his advisers read Tammy Lych's letter in Thursday's 'Kyiv Post.' A quote: "..in any democracy, elections are messages to the incumbent. Incumbents who respond to those messages survive. Those who do not, don’t."

President Yushchenko's star is in decline. If he were to dismiss Parliament in the event that a workable coalition were not formed, then the likelyhood is that the NU bloc would be humiliated even further - they might even be doomed as a political force. Yushchenko's legacy in Ukrainian history would be tarnished - something political leaders are ever mindful of.

Minister of Agriculture Oleksandr Baranivskyi's recent declaration that he will never agree to work in a government headed by Tymoshenko was a surprise. As Scott says, the Socialist party of which he is a member, had agreed to support Tymoshenko's bid for the PM's job - but this is just another illustration of the fractured nature of Ukrainian politics, and how difficult it will be for any coalition to survive before splits occur in the months to come.

In a recent TV interview, one of Yushchenko's closest advisers, Petro Poroshenko, who felt that he should have been appointed PM ahead of Tymoshenko a year last January, and who Tymoshenko regards as one of her biggest enemies in the NU camp, said: "I do not, unfortunately, detect any moving together of the political positions of Party of Regions and NU bloc."

As one of Ukraine's wealthiest men, he may have been one of those in the NU camp who would be interested in co-operating with magnates and oligarchs from Yanukovych's PR in a 'grand coalition.' But apparently he is not having much success convincing others. Does this indicate that the pendulum is swinging more towards an NSNU-BYuT-Socialist deal?

The big stumbling block for many in the NSNU, particularly its highest echelons, is Tymoshenko herself. But no matter how distasteful it is for them, BYuT are 'on the up' and have been for many months now. It's probably up to NSNU members further down the tree to make their voices heard. Maybe the 'Hell's Angel' in this photograph has already made up his mind..

NU bloc's overtures rebuffed by Yulka

Tymoshenko and Socialist leader Oleksandr Moroz have rebuffed yesterday's NSNU' party council's tentative overtures, which some say were issued after Yanukovych's Party of Regions had publicly presented their own proposals to potential coalition partners. NSNU probably didn't want to be seen 'not doing anything' either.

The deal clincher that NSNU are terrified of putting on the table is: Tymoshenko to be acknowledged PM of the 'orange coalition,' now rebranded as coalition of 'democratic forces'.

Today Tymoshenko and Moroz have written an open letter to the President, stating they are disturbed that formation of the 'democratic coalition' is being dragged out. "At this historic moment, a lot depends on your position, [Mr President]" They accuse the NU bloc leadership of "indecisiveness."

At a joint press conference with Moroz, Tymoshenko was, again unequivocal: "We are absolutely consistent. And if there is to be no coalition, we will go into opposition, and [I] will work there with pleasure together with Moroz." But 'Glavred' quotes Moroz as adding, "This moment is not the time to talk of opposition.."

Stanislav Byelkovskyi, an analyst I rate, reckons that at the moment there's a 60% chance of a 'democratic coalition' eventually being formed, and a 40% chance of a 'grand coalition' that includes RU.

A quote from Yushchenko: "Eight months ago such a coalition already existed. It fell apart. Lessons learned? The problems that dismantled the previous coalition, are they solved? It's necessary to bear in mind that there's a third of voters, who voted for a different political force." Sounds to me as if Yushchenko is a 'grand coalition' man.

NSNU #2 Anatoliy Kinakh in a TV interview on 5-iy Kanal Wednesday seems to lean this way too, and NSNU #1 Yekhanurov has already said during the election campaign that he would not work with Tymoshenko "under any conditions." If they really consider a 'grand coalition' to be of greater long-term benefit, then they should start making the case for it more clearly to the public.

A fracturing of the clans

This article makes plain an argument that I hadn't thought about before, that the election might end up having weakened the clan-based system of power.

The whole thing is straight out of Marx. Akhmetov's marriage of convenience is based on shared class interests. If Yanukovych and Yushchenko join forces, they will create the first truly bourgeois Cabinet in Ukrainian history. Until now the ruling class has been split into clans, all pursuing their own narrow business interests. Following the Orange Revolution, the bourgeoisie appears to have emerged as a class.

Of course, the argument is that it would happen with a Yanu-Yuschenko government. But LEvko has been reporting some grumbling in the blue ranks. That might be an indication of something going on along these lines anyway.

Signs of coalition coalescing?

The Party of Regions of Ukraine, as the party that garnered the most votes in the Ukrainian parliamentary elections, have at last shown some initiative after initial timidity, and today presented what looks on the face of it, quite a statesmanlike project clumsily entitled "Conceptual principles of conditions for formation of a coalition of [parliamentary] deputy fractions".

They are demanding the positions of PM, vice-PM, economy minister, and minister of power, for their party, and lay out detailed conditions for forming a coalition.

The project reveals RU's support of WTO membership and presents a broadly euro-integrational posture. Possible coalition partners consider the project to be just a ritualistic stunt for the benefit of their electorate, to show that 'they are doing something'.

Political experts do not discount the possibility of an orange coalition being formed which includes several dozen representatives of big business who may drift over from the PR election list, presumably because these guys did not fund their campaign for mere political principles, but to be in power.

There is a trial of strength going on inside the President's camp, but significantly, the 186 member NSNU ruling council held a meeting Wednesday night and voted to accept an agreement document to be signed by their envisaged 'democratic forces' coalition members, i.e. BYuT and the Socialists. A motion proposing the agreement be open for signing by PR and Communists was rejected.

De-bunking suspect claims

I heartily recommend this concise article by the admirable Tammy Lynch: "Sorting through Ukraine’s Post-Election Rhetoric: It’s Time for a Reality Check"

It de-bunks some of the suspect claims made by journalists and observers when discussing the main parties and leaders on the Ukrainian political stage - it's a breath of fresh air..

There's an interesting piece by Dr Ariel Cohen published on the Heritage Foundation site, about troubles brewing in South Ossetia, which if they "spin out of control...can cause a Russian-Georgian military confrontation with unpredictable consequences for the region and the world." There is a gas and oil supply angle to all of this too. Georgia provides an important access route, which avoids Russia, for gas and oil from the Caspian sea region.

Finally, Chairman of Ukraine's Supreme Court Vasyl Malyarenko resigned today. This man should have been 'out of the door' as soon as the new Orange order came to power. I hope his alleged complicity in various crimes can be investigated now that he has failed to gain a place in the Verkhovna Rada and obtain immunity from criminal prosecution. Good riddance...

More US interference

Here's an interesting article from the Christian Science Monitor on the elections. It says a lot of what readers of this blog already know. Then there's this little jewel:

Russian experts say the US decision to lift cold war-era trade restrictions on Ukraine on the eve of last month's elections is an example of American interference.

But of course. Drugs to keep people mindlessly spouting the US line, US boots, spiked oranges, payments to the thousands on the Maidan, a truckload of CIA vodka for shipped-in Yanukovych people and now the repeal of Jackson-Vanik. Is there no end to the indignity?

Musical chairs

When Tymoshenko was asked in a recent TV interview about her candidature for the PM's position, she replied: "I've been giving 'leg ups' to men in politics for too long. How can you look 4 million people in the eye at meetings, and then later agree that the prime minister should be a [cat in a bag] 'pig in a poke' and accept the nonsense that this person does?"

She later talked of "de-oligarchization" of the country, tapping into a widespread feeling amongst the orange electorate that persons responsible for the worst excesses of the Kuchma regime have somehow escaped justice, and worse, are burrowing their way back into political structures.

Yushchenko, in today's 'Wall Street Journal,' while not mentioning Tymoshenko by name, speaks of .."a game of musical chairs, where party leaders are more interested in ministerial portfolios and prized legislative committee chairmanships than reaching specific policy goals.."

Tymoshenko's economic record and programs may certainly be questioned, but the numbers on the Central Electoral Committee plasma screens cannot. Any delay by NSNU to confirm Tymoshenko as PM in a future Orange government will erode even more NSNU's support and Yushchenko's authority amongst the Ukrainian electorate. NSNU and BYuT politicians at regional level are already accepting reality and are agreeing to work together.

'If BYuT become the largest Orange party, then Tymoshenko will be PM in any Orange coalition,' was the central plank of BYuT's election campaign. In a feisty interview in 'Izvestiya' she again makes her position very clear. She is not interested in being Parliamentary speaker or a 'technical' [that word again] prime minister.

The music stopped and musical chairs finished on March 26th - some of NSNU's leaders are beginning to look like bad losers.

I won the lottery

I just received notice that I won some lottery in Spain. That I didn't enter any lottery in Spain makes it all the more marvelous. (The email says I am a lucky man and that they might want to attach my lucky name to other lottery tickets.) It's for over 2,800,000 euros. All I need to do is contact my claims agent before the 27th of this month to claim my winnings. He will say that I need to pay a good faith deposit of a couple of thousand dollars--they will take dollars won't they?--as a good faith deposit. And what is a few thousand compared with over two million euros?

Sandy beaches in the winter and mountain cabin in the summer here I come.

Or not.

Back in town

We were out of town for a couple of days visiting family out in the country--the village. That is a story that needs to be told in full. I have tried to tell some of it but it is not near enough to capture what is going on there in full.

LEvko has made the case for Julia these past couple of days very ably. I made that case for her after the OR. I also defended her in these pages against some baseless charges made by Russian interests. I would make that defense again. I'd much rather have some evidence to base charges on than identification with Lazarenko or on some "that-is-the-way-they-do-things-there" kind of assessment.

There is no doubt that she won the votes she got with an effective campaign and that she is a very remarkable woman. My problem with her has been the policies she espoused and at times acted on during her time as PM. That they were not good for business is clear.

Some have commented with a so what? She has better things to do than to keep business happy. That's a nice abstract view of the world where causes can be neatly separated from effects. I don't know how you can get people better jobs here unless attention is paid to business. (And an argument can be made that the robber barons took what they took becasue not enough attention was paid to business originally.)

Maybe they could re-nationalize all the industries and make everyone government employees again? Some here would welcome that though it would be a small minority. But then we could look away as the champagne flows and the caviar is piled high in lush suites or exclusive dachas by civil servants because we know they are acting in behalf of the people--or because it is ideologically congenial to us. Abstractions in conflict with reality.

People here need jobs and good paying ones. If there is a better idea around than creating more businesses and business activity, I'd love to hear it.

Confronting realities

President Yushchenko and the NSNU party council members should pin up in their offices this map of which party took which oblast in the parliamentary elections.

They should take a good look at it before making any further pronouncements on possible parliamentary coalitions.

The statements that they have been making show the stark reality of their terrible performance has not yet sunk in. [E.g Petro Poroshenko on his own TV station] Even in an Orange coalition they will be outnumbered 2 to 1 by ByuT-ivtsi and Socialists.

They would be wise to heed the voice of the electorate...

Difficulties in forming Parliamentary coalitions

We look at the pie chart representing the composition of new Vekhovna Rada and see five different, evenly colored blocs with numbers alongside. It looks pretty.

Reality is much more complex, particularly in Ukrainian politics. A good example of lack of political discipline was the vote in the VR 10th January 2006 on the motion to fire Yekhanurov and dismiss his government after their inept and devious renegotiation of gas supply contracts with Russia. There were 250 votes supporting the motion to dismiss, and 50 against against out of a VR total of 450.

19 of Our Ukraine's deputies voted against, but 21 abstained, or more correctly 'didn't vote'. Anatoliy Kinakh's PPPU party showed similar indiscipline - 13 'didn't vote' and only 1 voted against the motion. [Kinakh is #2 on the NSNU election list - behind #1 Yekhanurov!]

Of the big three parties, NSNU are perhaps the most likely to splinter into various factions. In the event that their leadership agrees to form an Orange coalition together with the Socialists and BYuT, at least 64 of their 81 deputies must support any vote in the VR to carry any motion [assuming that no Socialist or BYuT deputies decide to 'throw a wobbly' and rebel]. Previous perfomance then do not provide any confidence that an Orange coalition would be sustainable for any long period.

An RU - NSNU coalition looks more stable, with RU + Communists holding 207 votes. But they would need at least 19 of NSNU's 81 deputies to support them and carry any motion; in an often febrile VR, with the mistrust and hostility between NSNU and RU, even this cannot be guaranteed with any degree of certainty.

New rules are being introduced to prevent deputies hopping from bloc to bloc, but I understand this will not prevent any deputy who does so from voting - there is no mechanism forcing him to give up his voting mandate even if kicked out of his [or her] party.

There are deep rumblings of discontent in RU party too, inside which "prison rules operate", according to an article entited 'Party of Region threatened by split, and some party members are [even] beaten by their bosses.'

Many members are " tired of the fear, which rules inside its party organization." Each party leader has "lads' who can cripple us," claim some intimidated RU members. However if RU were to be driven into opposition then surely the the likelyhood of internal fissures occurring will increase. "If our party falls apart, most of its members would be ready to go over to our opponents. At least the Donetsk members of PR would certainly go over," they say. Some much-needed encouragement for the Orange forces there then.

The Donbass region can not be governed by one monolithic party for much longer, pluralist democracy will surely develop there soon.

In Friday night's interview on 5iy Kanal, which is well worth watching, Tymoshenko gave no indication of deviating from her election campaign pledges, i.e. [1] no coalition with RU under any circumstances, [2] BYuT will only enter into an orange coalition if she is PM [and, I assume, as senior partner, picks most of the ministers]. This puts the dampener on any possibility of 'grand coalition' or government of national unity which Yushchenko seems to favor.

Yushchenko tried to impose his authority on matters in a radio address today but I have the impression that Tymoshenko is not in the mood to compromise with anyone.