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Reform Lite

In Ukraine, stability, creeping authoritarian, yes; real change, no.

by TOL 25 February 2011

It has been a year since Viktor Yanukovych was inaugurated as president of Ukraine, and many of the worst prognoses have come to fulfillment. At the time of his election, many, including TOL, wondered whether Yanukovych might bring welcome stability and progress after years of bickering and failed reform under the veterans of the Orange Revolution. “Some even believe that Yanukovych, more predictable and less opportunistic than [Yulia] Tymoshenko, might be a better bet to actually get things done,” we wrote.

 

Let’s set aside for now the massive backsliding on democracy, detailed by TOL and other media over the past year – a coordinated effort to harry and jail opposition leaders, a greater concentration of power in the president’s hands, more media censorship, and attacks on “unfriendly” civil society organizations. All that has combined to see Ukraine downgraded by Freedom House from “free” to “partly free” in its annual Freedom in the World rankings.

 

Among the president’s supporters, these types of moves have typically been justified in the overall quest for “stability.” “Yushchenko's term showed Ukrainians that our country is not ready to improve its political system, based on a balance of powers,” Yuri Myroshnichenko, the president's representative to parliament, said last year. “The most effective model for present-day Ukraine is authoritarianism, meaning a system with one decision-making point. Otherwise there will be no reforms, only a race for power.”

 

As Sergey Sydorenko writes in his analysis today, the result of the past year is that Yanukovych and his team have their precious stability and no major obstacles in their way: a loyal majority in parliament and control over the constitutional court and the rest of the judicial system, law enforcement agencies, and most of the local authorities. The opposition has also been sufficiently neutered (and has neutered itself) so as not to put up much resistance. And without many political alternatives and confronted with stability after so many years of infighting, Ukrainians continue to give Yanukovych fairly high political ratings.

 

On paper, it’s a perfect situation, in other words, for a tough-minded reformer to introduce shock therapy to a country direly in need of an overhaul. Instead, nothing of the kind has taken place. The president and his fan club continue to tout each law as “reform”-oriented, but the new legislation has not introduced systemic or structural changes. Instead legislative moves typically represent attempts to cement the power of the current regime and its supporters (read “oligarchs”).

 

A few examples: The new tax code has been presented as an attempt to modernize and streamline the tax system but has increased the power of the tax police (and further opportunities for corruption). More tellingly, the “reform” has hit small and medium-size businesses hard with tough, new regulations. Already only producing a small percentage of the country’s GDP (roughly 10 percent compared with a typical figure of between 50 and 60 percent for EU countries), the country’s entrepreneurs – and what should be a pillar of the middle class – are set to become even smaller in numbers. In contrast, critics say, various tax incentives will benefit big business and the country’s rich the most. That is also the likely result of changes to the country’s public procurement law. Despite promises not to water down the law (adopted last year), parliament has added new ways to bypass tenders, angering the EU to such an extent that millions of dollars in aid has been temporarily suspended. 

 

The government also has hyped its so-called administrative reform, cutting the number of regularatory bodies from more than 100 to a few dozen. But serious efforts to increase efficiency and slash the bureaucracy did not accompany those changes. In general, the number of tasks that these agencies were performing was not reduced but simply redistributed. Similarly, the number of ministries was trimmed, but former ministries became new departments of existing ministries (they were merged) or re-formed as new state agencies or committees. Former ministers did not lose their jobs but were appointed as new deputy ministers or heads of new entities. Some personnel cuts were made, but on the lowest level of the hierarchy and often included young and committed officials – precisely those the government should want to keep.

 

During last year’s election run-up, some analysts believed that the oligarchs themselves would push their frontman, Yanukovych, to improve relations with Brussels because they wanted new markets for their goods and, in general, wanted Ukraine to be seen as “European.” Yet if these rich business people find that the new regime’s practices within Ukraine, like the new tax code, make them just as wealthy or even wealther, it’s doubtful they will play much of a progressive role. The same can be said of Yanukovych’s Party of Regions, a reactionary collection of ex-Communists, cronies from the president’s home region of Donetsk, and others with little real interest in changing a corrupt system. Now in charge of the bureaucracy, party officials will likely find the shortest and easiest route to their share of the pie. 

 

The question now is whether it was ever realistic to think that stability under Yanukovych could lead to real reform. The fundamental problems facing the economy – corruption, a complex regulatory framework, high taxes – and the problems facing government administration – corruption, non-transparency, a lack of accountability – have not been addressed. The man, his sources of power, the system as a whole – all may simply present too many impediments to change. With so much power concentrated in one individual, that individual had better be committed to reform and understand how a modern, European country should look. Given Yanukovych’s background and previous career, that was never very likely.  

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