Ukraine: Finally a new Parliament, but no new government

The new Ukrainian parliament finally assembled on Friday, 23 November, almost two months after the elections on 30 September. It then immediately adjourned until Thursday 29 November, although the Tymoshenko Block hopes to shorten the break by all of two days. President Yushchenko has threatened ‘serious’ measures if parliament does not begin work. Formally, a government must mow be created within sixty days.

What is going on? Why has it taken two months even to begin the process of forming a government?

           September 2007 Elections

           Party of Regions ————————— 34.4%  ——-  175 seats
           Tymoshenko Block ———————— 30.7%  ——-  156 seats
           Our Ukraine-People’s Self Defence ——- 14.2%  ——-  72 seats
           Communists ——————————-   5.4%  ——-   27 seats
           Lytvyn Block ——————————-    4.0% ——-   20 seats

The number of practical options is surprisingly few, both because the final election result was so close, and because of the Ukrainian system of the ‘imperative mandate’, which bans deputies from leaving the party they were elected to serve.

Despite winning first place, the Party of Regions cannot govern alone (parliament has 450 seats, a majority of 226 is therefore necessary to govern). Nor would it have enough seats with the Communists (202), or even with the Communists and the wild card of former parliamentary Chair Volodymyr Lytvyn (222). Tymoshenko has refused to serve with Regions, which also rules out a ‘Grand Coalition’ of all the main parties.

So the mathematical options are only two, or two-and-a half. A renewed ‘Orange Coalition’ of Our Ukraine with the Tymoshenko Block would have 228 seats, a majority of only two. A slightly adapted formula would give this coalition 248 seats by adding the Lytvyn Block. The main alternative is a deal between Our Ukraine and Regions which would be controversial in the country but comfortable in parliament, with 247 seats.

Except that President Yushchenko does not like such a bald choice, and has floated the idea of a ‘shyrka’ (broad choice), in which an orange government would gain stability through an informal agreement for periodic voting support from moderates in the Party of Regions. Most ‘moderates’ are also businessmen, so this would have the supposed added benefit of restraining Tymoshenko’s alleged populism.

Yushchenko is also giving indirect support to the Tymoshenko-sceptics in Our Ukraine. There are three groups of these. One is lead by his own Chief of Staff, Viktor Baloha. Another is led by the former Chair of Parliament and current Head of Yushchenko’s National Security Council Ivan Pliushch, who has been lobbying none too subtly to get his old job back. A third group is led by Yurii Yekhanurov, the business friendly Prime Minister from October 2005 to July 2006, who is busy telling anyone who will listen how he ‘cleaned up’ after Tymoshenko’s stint as PM before him. The waters muddied further when Viacheslav Kyrylenko, who was Our Ukraine’s assumed nominee to serve as Chair of Parliament alongside Tymoshenko as Prime Minister, was elected to the alternative job of head of the Our Ukraine faction. This possibly leaves the job of Chair of Parliament free for someone else. On 26 November Yushchenko dismissed Pliushch, but perhaps only for the technical reason of his election to the new parliament.
But the bigger picture is that Ukraine now has two underlying narratives, two ‘big stories’ that have been in competition this past year. And Ukraine cannot decide between the two.

One story is that the Orange Revolution is far from over, given the remarkable stability of voting behaviour through the three elections of 2004, 2006 and 2007. Despite all the disappointment in their leaders, the orange electorate, if not the orange politicians, has held together. Tymoshenko’s skillful repositioning and campaigning across regions in 2007 has even produced an advance. Voters gave the orange coalition a second chance in March 2006, and have now given them a third chance in September 2007. The message from this half of the electorate was clear. While Tymoshenko advanced, Our Ukraine only recovered to its position in 2006 by promising the voters it would renew an orange coalition and sidelining its more controversial businessmen. As in Russia, ‘anti-oligarch’ sentiment runs deep. Tymoshenko was accused by many of running a populist campaign. More exactly, all the main parties tried to tap into the broad populist mood with promises to reduce elite privilege, but it was Tymoshenko who best represents the widespread resentment of the nouveaux riches.

The Party of Regions slightly improved its score by following the advice of its American spin doctors and running a less polarised campaign, emphasising its economic achievements in government since July 2006. Ultimately, however, the Party of Regions was tripped up by its election slogan, ‘Stability and Prosperity’, which sounded too much like the personal credo of its business backers. There are large parts of east Ukraine as yet untouched by new-found prosperity.

The second ‘big story’ is historical compromise. Conflict was avoided (just), after Yushchenko controversially ordered the dissolution of the last parliament in April. The deal to hold new elections in September was negotiated by Baloha, Pliushch and others in the Presidential Secretariat and National Security Council who would like to see a ‘government of all the businessmen’. Their main negotiating partner on the Regions side was Rinat Akhmetov, the main party financier and Ukraine’s richest man. This was a pragmatic arrangement, with an alleged downside involving maintaining the privatisation status quo and current controversial energy import arrangements; but there was also a case to be made for a compromise that was ‘Historic’ rather than merely self-interested. It was too early for this in the immediate aftermath of the Orange Revolution, and it was still too early in 2006 when there were powerful forces within the Party of Regions who wanted to turn back the clock. The ‘National Unity Universal’ signed in August 2006 proved a worthless piece of paper.

So might any new agreement; but the balance of forces and incentives have now changed. Yushchenko’s minimum purpose in dissolving parliament was to ‘reboot’ the political system and warn Regions against its worrying tendencies to monopolise power and leach the budget, practices it had resumed all too easily in 2006-7. Second, not only has the Ukrainian economy recovered strongly since the slowdown in 2005, but it has made great strides with IFIs, IPOs and FDI. ‘Ukraine is not Russia’, but not in the way many people hoped it would become during the Orange Revolution. Ukraine is developing a more business-friendly environment, where ‘pluralism by default’ means that ‘oligarchs’ are more able to protect and legitimise the gains they have made since 1991. EUFA’s decision in the spring to award the 2012 European Championship finals to Ukraine and Poland (the final will be in Kiev) highlighted the potential progress that can be made. (Ukraine has no bigger football fan than Akhmetov, who runs Shakhtar Donetsk).

So Ukraine faces more than the choices suggested by parliamentary arithmetic. Either possible coalition faces big problems in the months ahead. A narrow orange coalition seems to have too few votes and too many enemies to survive, even to survive the first hurdle of parliamentary approval – although Tymoshenko surprised many when she won 373 votes to first become Prime Minister in February 2005. A more business-friendly coalition will introduce a new dynamic into Ukrainian politics, or, rather, make explicit what till now has only been implicit. ‘Yushchenko-2′ will leave behind the spirit of 2004 and try to coral all of Ukraine’s big businessmen to his side, and Yuliia Tymoshenko will be gifted a powerful card in opposition.

The Orange Revolution was a many-faceted revolution, both in the name of the rule of law and against the corruption of the oligarchical rich. The revolution is still alive, in the sense that these tensions are still playing out.