A Lesson of History: From Sir Robert Walpole to President Victor Yanukovych

History can teach us really good lessons. For example, the British history can shed light on the current events in Ukraine and other former Soviet states.
So here is a tough question for you. What do Sir Robert Walpole (1676-1745) and President Yanukovych have in common? If your answer is political corruption, you are the history buff.

In the 18th century the House of Commons was useless link in the British government. The House of Commons stood aside doing nothing when the British government expenditure got out of control. The British National Debt experienced a ten-fold increase over the course of the 18th century.

While the British government was approaching the debt crisis, the government of Sir Robert Walpole, First Lord of the Treasury and the de facto first British Prime Minister (1721-1742), went in all history textbooks as the "government by corruption". Walpole who was the Crown's favorite manipulated individual members of the parliament and the aristocratic groups to wield control over parliamentary nomination. He bought and sold seats in the British parliament. The parliamentary members also received bribes for their votes. The legislative branch of the British government became a commodity that was sold and bought. Does it sound familiar?

So what happened to the pervasive corruption in the British Empire? The government implemented several reforms to eradicate the corruption. Intellectual elite actually pressured the government to change the situation. The main advocate for the change was Adam Smith, Scottish political economist. Yes, the same Adam Smith who wrote the Wealth of Nations (1786). Actually, his seminal work was the foundation for critical review of the British government policy.

The British government had economic advisers who represented the Mercantilist school of economics. The Mercantilist economists believed that international trade can reduce the government debt if the British Empire exports more than imports. The Mercantilists were fools who believed that free market is a zero-sum game because someone always gets hurt. The connection between the Mercantilism, socialism, communism, and interventionism is obvious, right? All these fools believe that free market is a bad institution. By the way, American electronic libraries are reporting a significant increase in online search requests for "the Mercantilist school" from China, Russia, and Argentina.  

Last Days of Freedom of Speech

Just a month before the upcoming parliamentary elections the Ukrainian parliament is making a new advancement against the freedom of speech. And it could be the final stage in reversing the Ukrainian democracy back to autocracy. In the light of the upcoming parliamentary elections, the overall political situation is becoming very dismal in Ukraine, the country of the Orange Revolution.
The parliament has recently passed the Law on Libel in the first reading. Mainly, three political parties voted to pass the infamous law: the Party of Regions (leader: President Yanukovych), the Communist Party (leader: Peter Symonenko), and the People's Party (Speaker of the Parliament Lytvyn). The Law on Libel considers any defamatory statement or published statement that cause a public contempt illegal. If you look for a source of inspiration behind the Law on Libel, it's the Stalinist constitution. The picture (titled: Don't Speak) that you see below shows how the Stalinist regime treated the freedom of speech. If you wonder why they pass it now, the answer is the upcoming parliamentary elections (end of October).

If the parliament passes the law, the freedom of speech as well as democratic election is over in Ukraine. Several newspapers and TV channels started a campaign against the Law on Libel. They posted the following ad:

 One of TV channels that opposed the Law on Libel is TVi. If you follow events in Ukraine, you should know that all cable companies "voluntarily" cancelled their contracts with TVi. You cannot watch TVi on your TV anymore. You can watch it only online. Needless to say, a number of TVi viewers has already shrunk significantly. TVi follows the life story of Russia's NTV. And another one bites the dust. So what are the chances that this campaign will be successful given that some of supporters are under the government pressure?  

TVi and LB.UA Are Under Fire

The World Affairs' Alexander J. Motyl writes about the most recent government crack down on independent media: one, independent television station TVi and, two, independent internet news portal LB.ua (Levyi Bereg or Left River's Bank). Each story is interesting. But it's nothing new. Putin has already done it with NTV mass media group and there are many similar cases in other non-democratic countries. I think that the main issue is that civil society remains very apathetic to ongoing events.

LB.ua is under investigation for breaching confidentiality of state issues because the internet portal published personal text-message correspondence of MP Volodymyr Landik (Party of Regions - Luhanks). In a nutshell, their photographer snapped pictures of MP's cell phone screen while Mr. Landik was texting during the parliamentary session.  The correspondence relates to Mr. Landik's son who was videotaped beating a young girl up in a restaurant in Luhanks more than a year ago and subsequently imprisoned. The infamous video was made public on YouTube, Facebook, and other social networks. When the criminal charges were pressed against the LB.ua,  the chief editor Sonya Koshkina fled the country fearing for her life. The criminal charges are bogus. If someone has to be charged here, it must be Mr. Landik for wasting tax payers' money by doing personal business while he is in his public office.

TVi that is the only television station supporting the political opposition was pushing buttons of the Party of Regions for a long time. TVi was provoking the Party of Regions methodically. The last
straw in the conflict between TVi and the state authorities was a genius of political journalism, Mr. Portnikov. He did excellent job by raising public awareness about values of democracy and government embezzlement of power.The Party of Regions and its leader, President Viktor Yanukovych, took the bait. Now the Party of Regions' political capital is bleeding while the Yanukovych administration is cracking down on TVi with another bogus charges of tax evasion.

It's really nothing new or unexpected. If TVi or LB.ua really wanted to avoid the conflict, they could be based somewhere in Europe close to their partners like Voice of America and Radio Free Europe. They pushed buttons of the Party of Regions and Mr. Yanukovych effectively. The state authorities unleashed their fury by violating all norms of democratic society. Civil society, however, remains very apathetic to all events. In the light of the upcoming parliamentary elections, it is a bad signal to the opposition leaders.

Anti-Ukrainian Western Propaganda or Another One Bites the Dust

Have you read Adam Swain's op-ed yet (Kyiv Post, July 15, Western Propaganda War Falsely Frames Ukraine Authoritarian)? It's a must. If you follow Ukraine's political life closely, you are in for some treat. I am sure that each of you will find something dear to your heart in this article. I would like to highlight three main points that caught my attention.

The first point that Swain makes is that there is a propaganda war against "democratic" Ukraine led by the western mass media.  The western mass media dishonestly describes Ukraine as a country lacking democratic norms. Moreover, there is no reason to believe that President Yanukovych wants to establish an autocratic rule of governance. 

Sure, President Yanukovych wants to build a nation with a consolidated democracy and free market economy. And he does everything to achieve these goals. First, he rigs the elections. Second, he throws dozens of opposition leaders in jails where they are deprived of their human rights and beaten up like Mrs. Tymoshenko. Third, his family takes business from opposition businessmen like Avakov, Fel'dman, Burda, Nemirovsky, and many others. And this list can go on. 

None of what President Yanukovych does has something to do with a democratic rule of governance. Instead, he is reversing Ukraine's history of political and economic development when Ukraine went from kin-based society to feudalism and then to capitalism. Ukraine is sliding back to the kinship system of governance where political and economic power is only kin-based. 

The second point that Swain makes is that the criminal case against Mrs. Tymoshenko is not politically motivated because it's legit. If a definition of legitimacy means different things in different countries, her case could be legit. But I doubt it that it's the case. The legitimacy of the Tymoshenko case is the last thing that comes to mind of anyone who has been following it. President Yanukovych used his kinship connections to push the Tymoshenko case through the judicial system. Should we even talk about how the judicial system works in Ukraine? Look, it does not work for regular people. And it cannot work when President of Ukraine has vested his interest in the case.    

Finally, Swain writes that the international pressure from western political leaders on the Tymoshenko case undermines the rule of law and the independence of judiciary in Ukraine. 

To make it a reasonable claim, you need to have the rule of law and independent judiciary in place. None of them exists in Ukraine. Cops are thugs and thugs are cops. Any court room is for sale. Any criminal sentence has its price.

To make democracy work, you need to have at least these democratic values in place: protection of individual rights, respect for the rule of law, independent judiciary, accountability of government, trust in government, and respect for tolerance and pluralism in civil society (ht Larry Diamond). To make capitalism work, you need to have freedom of contracts, property enforced and protected private property rights, constitutional rule of law, and independent judiciary (ht to Francis Fukuyama). So what does Ukraine have now? Nothing. That's why Ukraine's needs more attention from world mass media, international political community, and human rights activists.

 

Ukraine's Democracy is in Pain

I got back from Ukraine couple weeks ago. I was there for quite some time. But I can't still make up my mind about what I expected to see there and what I really saw there. I kept my expectations very low. But I was still shocked with the extent of cronyism and illegitimacy of government. The executive branch of power usurped other two branches of power. The constitution does not mean anything anymore. The Party of Regions and their puppets, including the Socialists, the Communists, and other twenty five parties make amendments to the constitution without calling for a national referendum. The number of the politically-motivated prosecutions is sky-rocketing reaching its peak with a physical abuse of the former prime minister Tymoshenko. 

What has happened to Mrs. Tymoshenko must send shivers down the spine of everyone who is a firm believer in human rights. The physical abuse of the political inmate # 1, the unmasked violence against the queen of the political opposition, and the blatant use of the prison guards' knuckles against the body of the Ukrainian woman draws a line between two stages of political life in Ukraine: one, with weak human rights and, two, without human rights. The second stage started on the same day when the pictures of Mrs. Tymoshenko's bruised body were revealed.  

Look I am not even mentioning the D word (i.e. democracy). I doubt that anyone has ever understood what the D words means in Ukraine. Neither Schumpeterian nor Przeworskian definition of the democracy can explain what is happening in Ukraine. According to Larry Diamond, democracy needs protection of individual rights, respect for the rule of law, trust in government, accountability of government, and respect for tolerance and pluralism in civil society. None of these democratic values exist in Ukraine.


Moreover, people are very confused about how democracy and rule of law must work. Everyone understands that you must report any kind of crime. But if you do it, you are a snitch. How can I tell on someone if I don't want to be a snitch? It's very confusing. So what do people do? They hide behind their smartphones, YouTube videos, and twitter accounts. Who gets these messages? Does anyone really trust a virtual social network in Ukraine?

In Europe and USA people talk smack about government on Facebook. In Ukraine a similar social network Odnoklassniki gives you impression that people do not care about what's happening with their democracy or they prefer to distance themselves from political events.  Are people apolitical in Ukraine? I do not think so because they talk about politics in private all the time. Once again, it's confusing. The civil society is either very weak or inexperienced. It could also be that the Yanukovych government's thuggish aggressiveness sent the whole nation in a very deep knockout. Well, sooner or later you need to get back on your feet, make pain go away, and fight back.

EURO 2012: Quid Pro Quo or Not

      It turns out that only three national soccer teams out of sixteen will reside in Ukraine during the 2012 European Soccer Championship, co-hosted with Poland. So who is staying Ukraine? Of course, the Ukrainian national soccer team will stay in Ukraine. The Swedish team and the French team will also stay in Ukraine.

      I am sure that you wonder about Russia. Where is our big brother? Well, the big brother has very low expectations about infrastructure in his small sister's homeland. That's why the Russian national team prefers democratic and capitalist city of Warsaw, capital of Poland, to any sketchy urban area in Ukraine.

      It also turns out that all teams that have group stage games in Kharkiv and Lviv still prefer to stay in Poland rather than in Ukraine. I assume that Sweden and France decided to stay in Kyiv and Donetsk because they had to play their group stage games there. So did Ukraine. The English soccer team, however, prefers to stay in Krakow and commute to group stage games in Kyiv and Donetsk.

      So where is quid pro quo? As a matter of fact, Poland will get a lion's share of hotel revenues from the EURO 2012 because Ukraine get to host only three teams and their fans. Wait a sec! Will the Ukrainian national team need a hotel to stay in Ukraine? That's a tough one. Will the Ukrainian fans need hotel to stay in Ukraine? Another tough question. It looks like Sweden and France will be the only two teams to foot the bill for staying in Ukraine. What about their fans? And what about all other teams? I really wonder why they do not want to stay in Ukraine? I just can't find a good answer.

       It's so unfair after everything the Ukrainian government and the Ukrainian philanthropist Akhmetov did. Common, Beyonce, Shakira, and Rhianna who were personally invited by the wealthiest person of Eastern Europe, Mr. Akhmetov, performed in Donetsk in front of thousands of factory workers and coal-miners who didn't receive their salaries for months and had to work in illegal and unsafe mines.

       The Yanukovych administration also did so much to promote EURO 2012 in Ukraine. Their original ideas of cutting this school year short by a month and kicking out students from dorms so that foreign tourists who pay a humble price of $100 per day can stay in rodent- and insect-infested rooms with shared utilities (if they work) and rolling blackouts. Another original ideas of cutting down public parks and demolishing historical sites like the 16th-century-old synagogue and building roads and hotels there should have also showed everyone that the Yanukovych government welcomes everyone to Ukraine for the EURO 2012. Personally, I am still puzzled what stopped thirteen national teams from staying in Ukraine.   

   
Here is a list of all teams and their locations:  

•  England - Kraków - Hotel Stary
•  Croatia - Warka - Hotel Sielanka nad Pilicą
•  Czech Republic - Wrocław - Hotel Monopol
•  Denmark - Kołobrzeg - Marine Hotel
•  France - Donetsk
•  Greece - Jachranka - Hotel Warszawianka
•  Spain - Gniewino - Hotel Mistral
•  Netherlands - Kraków - Hotel Sheraton
•  Republic of Ireland - Sopot - Hotel Sheraton 
•  Germany - Gdańsk - Hotel Dwór Oliwski
•  Poland - Warszawa - Hotel Hyatt
•  Portugal - Opalenica - Ośrodek Remes Sport & Spa
•  Russia - Warszawa - Hotel Bristol
•  Sweden - Kiev
•  Ukraine - Kiev
•  Italy - Kraków - Hotel Turówka

After 18 Years of Transition: Are We There Yet?

Ukraine and other post-Soviet countries started their transition from socialism in 1991. Other former socialist countries like Hungary and Poland started their transition in 1989. The Czech Republic and Slovakia stepped on the path of socialist-capitalist transition in 1990. Overall, the former Soviet countries and the former satellites of the USSR started their economic transitions in almost the same period of time. Nonetheless, former socialist countries have achieved different levels of economic development since then. 

To measure a level of economic development, we can look at per capita GDP (measured in 2005 purchasing power parity (PPP) dollars) compiled by the World Bank. And what do we see? Slovenia and the Czech Republic started their transitions with the first and second highest per capita income among post-socialist countries and retained their status of high-income countries.  If the initial economic conditions matter for future economic development, a successful transition of the Czech Republic and Slovenia make this point. Both countries are members of the EU. 

But we can also see that many post-socialist economies with less favorable initial conditions outperformed others with the more favorable ones. A case in point is Russia that lost its economic position in eighteen years of transition from the sixth to the ninth highest per capita income among the transition economies. Poland, Lithuania, and Estonia outperformed Russia while their initial per capita income was much lower than Russia’s.  

 

Unfortunately, Ukraine is among countries that still have their per capita income below the pre-transition level. After eighteen years of transition per capita income declined in several post-socialist economies like Serbia, Georgia, Ukraine, and Tajikistan. Of course, economic performance of Serbia, Georgia, and Tajikistan was distorted by civil wars. For example, Georgia’s economy was severely devastated by the civil war. The Balkan war conflict also had a devastating economic effect on several countries of the former Yugoslavia. Thus, initial economic conditions can only partially explain differences in transition economies after eighteen years of transformation. Weak rule of law, civil conflict, and other political economy factors have a significant effect on a path of economic development. 

But what happened to Ukraine?  After 18 years of reforms Ukraine remains an upper middle-income country. However, per capita income has declined by almost 20% percent since the start of transition in Ukraine. What is Ukraine's excuse?

Ukraine at a Crossroads: What's at Stake for the U.S. and Europe?

Last Wednesday the Subcommittee on European Affairs of the US Senate Committee on Foreign Relations met to discuss a political and economic situation in Ukraine. The panel, presided by Senator Shaheen (D-NH), included Honorable Steven Pifer, the former US ambassador to Ukraine, Damon Wilson, Executive Vice President of the Atlantic Council, Edward Chow, Senior Fellow of the Center for Strategic and International Studies, and Eugenia Tymoshenko, daughter of the former prime minister of Ukraine, Yulia Tymoshenko. You can watch a full video of this panel or read testimonies if you click here. Comments are very welcome.  

Ukraine's Agriculture Policies

Ukraine is moving to liberalize its land market, but, according to recent statements by the country's agriculture minister, foreigners will be prohibited from purchasing agricultural land.
That was the topic of my interview with the World Politics Review. We discussed Ukraine's agricultural land policies. Click here if you want to read more.

FYI, here is a Russian version of my article "Robbing the Breadbasket" in the KyivPost. If you can read Russian, please, check it out and leave comments.

MORE ON UKRAINE'S "GREAT GRAIN ROBBERY"

Here is my article in the Kyiv Post. The russian version of my article will come out on Wednesday.

The Ukrainian Weekly (June 5, 2011) has three articles, including mine article, about Ukraine's trade policy. I highly recommend you reading the current issue.  

ROBBING UKRAINE'S GRAIN MARKET: EXPORT QUOTAS AND EXPORT DUTIES

Ukraine, one of the top grain exporters in the world and nicknamed the bread basket of Europe, is being robbed by its government. A post-Soviet country located in Eastern Europe on an area slightly smaller than Texas has become a hostage of its mercantilist government. In October 2010 the Ukrainian Cabinet of Ministers presided by a former apparatchik, Prime Minister Mykola Azarov, enacted a resolution requiring quotas and licenses for exporting grain. The objective is to stabilize food prices and prevent a food shortage caused by last year’s poor harvest. While the protectionist policy came under harsh criticism from both foreign and domestic observers, the government extended the export grain quotas until June 30, 2011. Moreover, the government used corrupt practices of allocating export quotas and licenses wherein an unknown company Khlib Investbud received a lion’s share and gained the market power in the grain export industry. The grain industry generates 15% of Ukraine’s exports - $7.5 billion. The controversial regulation killed the spirit of competition in the domestic grain market and pushed it towards monopolization. Foreign observers express concerns that the monopolization of the export-oriented Ukrainian agriculture will contribute to higher food prices around the world. If the current trade policy is not reversed, surging grain prices will affect each of us negatively.


Quota and license are usually imposed to limit the quantity of a product and raise its price. The grain export license is given to a company by the state to buy the grains from domestic farmers at the domestic price and resell these grains at the world price to foreign buyers. Since the world price is higher than the domestic price, whoever receives the export license is guaranteed a profit of a middleman. Moreover, the export grain quota limits the quantity of export that results in a price markup. For all grains exported with the quota, the markup could total to billions of dollars. Thus, a licensed company that has an export quota receives a profit that is not earned through market competition. The government regulation creates the profit for the middleman which causes market inefficiency such market monopolization and wastes society’s resources.


Foreign observers have criticized the current trade policy on the grounds of its inefficiency. Morgan Williams, the President of the U.S.-Ukraine Business Council, estimated that losses in the domestic food industry could reach $5 billion as a consequence of the protectionist policy. According to Martin Raiser, the World Bank's Country Director for Ukraine, Belarus and Moldova, the present grain export quota system is inefficient and restricts the inflow of investment. Even with these sharp criticisms from foreign observers, the Ukrainian delegation in the World Trade Organization (WTO) defended the current export quota system by referring to Article 9 of the GATT (General Agreement on Tariffs and Trade) and Article 12 of the Agreement of Agriculture. The Ukrainian government promised WTO that “an export quota system was introduced in order to prevent a critical shortage in the domestic market resulting from a poor harvest in 2010 of certain agricultural products and eliminate a significant imbalance in the domestic grain market that is essential for food security and stability in the grain market”. Grains that fall under the regulation are crops produced by most domestic farmers: wheat, buckwheat, corn, barley, and rye.


In fact, the Ukrainian government lied to the WTO and the rest of the world to defend the protectionist policy. A “poor harvest in 2010” was a big fat lie. According to Ukraine’s State Statistics Committee, the “poor harvest of 2010” was above the average if you looked at the record of Ukraine’s grain production in the last two decades. On average, Ukraine’s agricultural sector produced 36,1 million tonnes of grain between 1990 and 2010. Ukraine’s agriculture hit the bottom in 2003 with a harvest of 20,2 million tonnes of grain while it reached the peak in 2008 with 53,2 million tonnes of grain. Thus, the “poor harvest of 2010” that was 39,2 million tonnes exceeded its average by 3 million tonnes. Nonetheless, in his controversial interview to the Kyiv Post, Ukraine’s Minister of Agriculture Mykola Prysyazhnyuk stuck to his guns and reiterated that the main reason for the regulation was the shortage of grain in Ukraine.

The current protectionist policy is an absolute failure because it hurts Ukraine’s economy. The protectionist policy that brought back the oligarchic “old family values” such as corruption protectionism, and nepotism sent a clear signal to foreign companies that Ukraine’s economy went back in the domain of the oligarchs. Foreign grain traders accused the Ukrainian government of corruption and nepotism because the distribution of quotas was not transparent. Grain traders had only seven days to apply for the export quota after the Resolution of the Cabinet of Ministers was enacted. As a result, most of the companies were unable to receive the grain availability certificate while an unknown company, Khlib Investbud, received the lion’s share.


Moreover, the export quota system that was designed to stabilize food prices failed to keep food prices from rising. Domestic food prices have increased by 20% since the quota system was introduced. Ukraine’s State Statistics Committee reports that prices of bread, sunflower and corn oil have increased by 12% since January 2011. The grain prices rose by 15% in the first quarter of 2011. The domestic consumers are outraged with surging food prices. The current economic situation is actually very drastic. In Ukraine an average pensioner receives around $100 per month. Given rising food prices, a large number of the elderly Ukrainians find themselves below the poverty threshold.


Furthermore, the protectionist policy hurts domestic farmers. The cash-strapped farmers are forced to sell their grain at lower than expected prices because the Khlib Investbud company uses its market power to dictate the prices in the domestic grain market. Remaining independent grain traders are fighting over left over crumbs. The Ukrainian government needs to understand that the current protectionist policy hurts both sides of the international trade, exports and imports. Lower profit margins do not allow the cash-strapped farmers to purchase essential machinery and fertilizer that are mostly imported from Russia, Belarus, and USA. Higher food prices forces the domestic consumers to devote a large part of their income towards food items and spend less on other imported goods.


The protectionist policy hurts everyone except the Khlib Investbud that seems to be the only winner from the whole situation. However, any criticism of the current trade policy or questioning the role of the Khlib Investbud is suppressed by the state. The editor of the English-speaking newspaper Kyiv Post, Brian Bonner, went on strike after the Ukrainian government tried to prevent the release of the hotly debated interview with Ukraine’s Minister of Agriculture. So far the Ukrainian government made only two changes to the controversial regulation. In March 2011 the government dropped corn from the original list and increased the total size of the quotas by 1.5 million tonnes to 4.2 million tonnes or 10% of the last year’s harvest.


Of course, I must mention that the Ukrainian government said today that it would replace the grain export quotas with export duties of 9 to 14 %. Replacing export quota with export duties is an old trick. The export duty has the same effect as export quota. The imposed export duties discourage exports, reduce quantity of grain exports, and raise grain prices. By the way, the Ukrainian delegation in the WTO has not yet submitted the official documents about replacement of export quotas with export duties.



It sounds logical that the government replaces quotas with duties now. Since October 2010 the Khlib Investbud backed up by the Grain Ukraine has used its market power to accumulate around 2 million tonnes of grain (5% of the last year’s grain production) at low domestic prices that the company dictated. It gives the Khlib Investbud a handicap that the company can use to compensate the imposed export duties. Other grain exporters have to play by the new rules of game. Moreover, the Khlib Investbud had exported 800,000 tonnes of grain before the government imposed export duties. If you look at the whole situation, it is clear that the Khlib Investbud is still the only winner. They have still robbed the domestic grain market!


The current trade policy signals domestic grain producers and foreign grain traders that the Yanukovych administration sticks to the protectionist policy. It also shows that the government can change policy without any legitimate economic reason at all. Ukraine's economic policy is a puppet in the hands of the Donetsk interest group. The backwardness of the current trade policy undermines Ukraine’s potential economic growth. The current protectionist policy can destroy the agricultural sector of Ukraine. If this policy continues, we will see capital leaving the agricultural sector for other industries. If this outrageous grain robbery is not stopped, the European breadbasket will be completely emptied out for the benefit of a single company. If Ukraine is still a democratic state, the government must explain why the benefit of a single company comes at the cost of the whole nation!


P.S. The edited version will appear in the Ukrainian Weekly.

Legal Fusion: Annotated Codebook of Ukraine’s Agriculture

Here is my op-ed in the Kyiv Post.

Ukraine's Land Reform in Cartoons

Here is my Op-Ed/cartoon in the Kyiv Post: http://www.kyivpost.com/news/opinion/op_ed/detail/102164/

Life under Yanukovych

I would like to explain why I disagree with the Economist on the local elections in Ukraine (“Life under Yanukovich”, November 6-12, 2010). The Economist writes that President Yanukovych cannot mirror Putin's policy because, "unlike Russia, Ukraine does not have enough resources to carry on without (economic) reform." If there is a resource requirement for a sustainable autocracy, I am not aware of it. The Economist argues that President Yanukovych has to implement economic reforms to remain in the office for the second term. If reforms fail or stall, President Yanukovych will be tempted to hold on to power by repressive means. But it is exactly what is going on in Ukraine now. The local elections show that the Yanukovych administration is the ruthless repressive bureaucratic apparatus. The state prosecutes and interrogates political opponents. Many allies of Mrs. Tymoshenko are arrested or under investigation. The government ruthlessly manipulates election laws and thuggishly rigs the elections. The official results contradict the exit polls for the first time since the Orange Revolution. If local elections happen to avoid falsification, the Yanukovych administration forces the democratically elected mayors or members of city councils to join the ranks of the presidential party, the Party of Regions. The list of repressive means goes on and on.


I agree that the Orange Revolution serves as the reminder of the failed repressive regime of President Kuchma. The Yanukovych administration that mainly consists of the Kuchmists remembers really well those events. But Niyazov’s Turkmenistan, Nazarbaev’s Kazakhstan, Aliev’s Azerbaijan, and Lukashenka’s Belarus tell President Yanukovych that Ukraine can carry it on without the resources of Russia. Is there life under the repressive regime of President Yanukovych? No.

Is There Life Under President Yanukovych?

The Economist has great article "Life under Yanukovych" about the local elections in Ukraine. Here is a link to the article. And here is a link to my opinion. The article is very optimistic. Its central message is the following: given the elections are falsified, President Yanukovych cannot lead Putin's policy because, "unlike Russia, Ukraine does not have enough resource to carry on without reform." I strongly disagree.

Ukraine's Municipal Elections Will Be on Halloween

Ukraine will have the municipal elections on October 31, 2010, the Halloween Day. These elections are more likely to become the first non-democratic elections since the 2004 Orange Revolution. The political situation is very dramatic. The Yanukovych administration ruthlessly suppress the political opposition. 

Most municipal and mayor elections will be the one-candidate elections. The red tape of the centralized bureaucracy hinders the democratic process of candidate nomination and registration. Facing outrageously ruthless government pressure, candidates from the political opposition could neither nominate nor registerr themselves for the upcoming elections in several provinces, strongholds of the presidential party, Party of Regions. Some candidates are forced to revoke their nomination in support of the incumbent candidates who are members of the Party of Regions. By default, most municipal and mayor elections become the one-candidate elections. In Eastern provinces such as Donetsk, Kharkiv, and Luhansk advertising companies refuse to provide time and space for political advertisement of the opposition’s candidates.

The government cements the vertical integration of power at the speed that reminds the second term of the Kuchma administration. The Yanukovych administration forces all government officials to enlist in the Party of Regions. Also, President Yanukovych abuses his power by calling for criminal investigations of the opposition’s politicians. Many allies of Mrs. Tymoshenko are arrested or under investigation. Her former deputy and closest political ally, Oleksandr Turchinov, is under investigation. The General Procurator issued the arrest warrant for Bohdan Danylyshyn who was Minister of Economy in the Tymoshenko government. All recent events remind the tragic events of 1937. 

Several NGOs called for responsible public action in the upcoming elections. Most Ukrainian voters tend to agree on the new consensus that they have to vote "against all" since there are no other options in most provinces. The following banner says: "Election on the Halloween. October 31st. If you don't vote, the evil will win!" 

Yanukovich's Party of Regions Beats Up People, Cuts Down Trees, and Auctions Off Public Park

Kharkiv, the second largest city of Ukraine, became a place for the blood-shedding stand-off between residents of Kharkiv and the Kharkiv mayor. On June 2, 2010, the mayor's security service stormed a camp of protesting Kharkiv residents. The Kharkiv police observed the battle without taking any sides. Protesters sought refuge in the standing-by police officers who denied them in protection. The protesters were insulted, beaten up, threatened with chain saws so they had to flee. The police arrested and removed the remaining protesters.

Kharkiv residents were protesting mayor's decision about real estate development of the city park, Gorky Park. The park's square footage is approximately five times as big as New York's well-known Central Park. According to the real estate development plan, the private contractor would built a highway across the park and gated residential communities with amenities such as tennis courts and swimming pools. The plan looks like a normal real estate development but it violates the law. The Gorky park is public property designated for recreational activities. It cannot be a subject for a real estate development. 
I watched the events closely because it's my hometown. I hoped that the common sense would take over corruption and lawlessness. It didn't! Kharkiv's deputy mayor Gennady Kernes and Kharkiv's governor Michael Dobkin who are members of the presidential party, Party of Regions, were ruthless and unstoppable.  
Here is a link to the documentary(CNN video) that shows how the stand-off between residents of Kharkiv and the Kharkiv mayor's office ended on June 2, 2010. It's shocking that the police officers did not protect citizens from unidentified security guards (thugs) who removed demonstrators from the designated area of real estate development. The video has comments from the crime witnesses. Subtitles have a correct translation.
Here is a link to the website of NGO Kharkov Forest.
Here is a map with the real estate development plan of the Gorky park, provided by the NGO Kharkov Forest.

A Farewell to Democracy, Free Media, and Free Enterprise: Ukraine's Prospects Revised

In my old post I wondered whether Ukraine had a strong political opposition to counteract advances of President Yanukovich against democracy, economic freedon, and free media. My answer was yes. And I  was too optimistic. I thought that either former prime minister Yulia Tymoshenko or former president Viktor Yushchenko could stop the Yanukovich machine. They failed again. Everyone left Tymoshenko. Her former sponsors and party members are in the Yanukovich team now, not always voluntarily. Yushchenko is a political ghost. Nobody can stop President Yanukovich and his Party of Regions, at least, in Ukraine. The Yanukovich administration did more in six months than the Kuchma administration in ten years. The Yanukovich administration curbed media freedom, oppressed small-scale and medium-size business, and installed dictatorship.     
A farewell to freedom of speech. The Yanukovich administration curbed freedom of media really fast. Ukraine's mass media looks like Russian media now. Nobody criticizes President Yanukovich openly. It got to the point that the Voice of America can lose its broadcasting partners in Ukraine very soon as it happened in Russia. 
A farewell to free enterprise. The Yanukovich administration hammered small-scale and medium-size businesses with oppressive tax policy. The new tax code promises to become the apocalypse of economic freedom in Ukraine. All small-scale and medium-size businesses move their operations to the shadow economy before the new tax code will go in effect.
Finally, a farewell to democracy! The Yanukovich administration won the case vs the 2004 Constitutional Amendment in the Constitutional Court of Ukraine. The 2004 Amendment was very important step in Ukraine's democratization. It was once in a lifetime opportunity.  In brief, this amendment separates powers between president and prime-minister where the former is responsible for foreign policy and the latter takes on duties of domestic policy. Not anymore! The executive power is centralized now! The Constitutional Court ruled last Friday that the 2004 amendment violated the Constitution of Ukraine and thus the Constitutional Court overruled it. Did I mention that right before the seminal ruling four judges of the Constitutional Court were replaced with four new judges affiliated with the Party of Regions.
So, Ukrainians, please, say a farewell to democracy for the next five years at least. But it's no the saddest part. It's really sad that if Yulia Tymoshenko won the presidency, she would do the same. The only difference is that the Party of Regions could stop her. Who is going to stop the Yanukovich machine?   

The SUSTA Protests against Ukraine’s President Yanukovich in New York

I didn’t blog for some time. But Ukraine is getting more interesting with every day since Mr. Yanukovich became Ukraine’s president. Today I received a message on Facebook from the SUSTA – The Federation of the Ukrainian Student Organizations of America. Today the SUSTA members will protest against Mr. Yanukovich’s visit to New York. The Ukrainian Weekly will feature their demonstration. Here is a message:


On the occasion of today’s visit by the newly-appointed Ukrainian President Victor Yanukovich, members of SUSTA - the Federation of Ukrainian Student Organizations of America (Союз Українських Студентських Товариств Америки), along with the Ukrainian-American community and the worldwide Ukrainian diaspora would like to share with you our deepest concerns regarding the recent anti-democratic developments in Ukraine.

In the recent months since his election into office, the pro-Russian President has taken alarming steps to compromise Ukraine’s national identity and sovereignty. To name just a few:
•the unconstitutional extension of the lease for the Russian Black Sea Fleet in Crimea;
•the rising dependence on Russia to provide for Ukraine’s security and stability which poses a definite threat to Ukraine’s sovereignty;
•the denial of Holodomor as an act of genocide and its removal from the official presidential website;
•recent censorship of the press, targeting several independent Ukrainian television stations;
•the new government’s move to control the judicial system by granting the president power over the hiring and firing of judges; and,
•the non-bloc status of Ukraine, which threatens Ukraine’s Euro-Atlantic integration and future NATO membership

As if these were not enough, certain parliamentarians of President Yanukovich's Party of Regions, together with some satellite parties, appointed a controversial figure by the name of Dmitri Tabachnik as the Minister of Education and Science of Ukraine. Sadly, Mr. Tabachnik is widely known for his anti-Ukrainian, anti-democratic, pro-Russian, xenophobic attitude towards ethnic Ukrainians, especially to those living in the Western part of the country. In some of his statements, he has specifically formulated discriminatory wording which is comparable to that used by the Nazi propaganda with respect to the Jewish people during WWII. In fact, he proceeded to follow policies which diminish the Ukrainian language on the national level (i.e. cancelling university examinations in the Ukrainian language, issuing decrees to cease movie translations in Ukrainian, intimidating and arresting university faculty and students for simply exercising their democratic rights, etc)…

It is hard for us all to observe Mr. Yanykovich’s and Mr. Tabachnik’s current reversals of the former President Victor Yushchenko’s democratic policies. It seems that the current administration’s damaging political actions reflect the refusal to acknowledge Ukraine as an independent country and threaten the very existence of Ukraine as a young democratic nation. As citizens of the Ukrainian-American community (and the world Ukrainian community at large), we are greatly disturbed by these recent anti-democratic policies of Mr. Yanukovich, his newly-appointed government and parliamentary counterparts. As proud Ukrainians, we firmly uphold and vehemently defend a strong, self-sufficient, independent state where Ukrainians are free to express their opinions, are cognizant of their culture and history and are proud of their unique heritage!

The time is NOW! We cannot allow President Yanukovych to threaten Ukraine's freedom any longer!!! We must defend Ukraine’s integrity and sovereignty!

We would like to thank all of you for joining us here today to voice your own concerns regarding the future of Ukraine as a country, its independence and the plight of its people. It is up to each one of us…

Sincerely yours,
Vera A. Partem, SUSTA 2010-2011 President and Executive Director
Olya Yaruchkivska, SUSTA 2010-2011 Vice President
Roksolana Starodub, SUSTA 2010-2011 Treasurer
Ostap Tymchyk, SUSTA 2010-2011 Secretary

Ukraine’s Fiscal Policy Hurts National Exporters

Ukraine's fiscal policy forces the national exporters to a bankruptcy. A large number of export-oriented companies complain that the state refused to issue VAT (value-added tax) refunds because of exponentially increasing foreign and national debts. In Ukraine the Commerce Code and the Tax Code clearly state that the exporting companies should receive VAT refunds to avoid a double taxation because their products are subject to VAT in the importing countries. The state, however, issues tax refunds only to few companies that supported President Yanukovich in the 2010 Presidential elections. Other companies have to pay a high price for their political views. One of the largest steel-exporters, Arcelor Mittal, plans to lay off thousands of workers if the company does not receive VAT refund in the amount of $312 million (2.5 billion UAH). A transnational agro-producing corporation, Cargill, left the Ukrainian grain market because the government refused to reimburse VAT in the amount of $100 million (800 million UAH). Other exporters also face potential downsizing if the state defaults on VAT liabilities.