The New Carpathian Equation

Ukraine’s new President Viktor Yanukovych faces daunting domestic and diplomatic challenges

By ZHANG HONG

After a hard-fought campaign—and a narrowly won election—opposition leader Viktor Yanukovych was at last sworn in as Ukraine’s new president on February 25.

Despite the abundant speculation before the ballots were opened, Ukrainian people showed the world the new tomorrow they seek through the ousting of President Viktor Yushchenko and Prime Minister Yulia Tymoshenko—both leaders of Ukraine’s Orange Revolution.

But this hardly solves the questions at hand for the nation. For instance, while Moscow has made no secret of its desire to include Ukraine into the Russian-led common economic space and customs union, the EU and the United States hope Ukraine continues on its path to Euro-Atlantic integration.As it stands, the world awaits the direction that the new president will choose.

Moreover, Yanukovych faces pressing domestic problems as well. More speci fi cally,the economic dif fi culties and national unity issues within Ukraine’s borders are far more urgent for him than developing stable, bene ficial relations with foreign countries.

Domestic politics

Establishing a unity government will be a key task for Yanukovych. According to the Ukrainian Constitution, the government implements Ukraine’s domestic and foreign policies, while the parliamentary majority has the right to nominate a prime minister.

Although the president decides the country’s diplomatic, military and security affairs,his policies cannot be effectively carried out without the full cooperation of the government.

Before the presidential election,Yanukovych said that, were he to win the election, he would dissolve the parliament and form a new majority led by his party, the Party of Regions.

This would fashion a new political dynamic featuring a joint leadership headed by both the president and the prime minister.

Judging by the current pattern of political power emerging in Ukraine, Yanukovych appears to possess the mandate to do so.Ukraine’s parliament passed a no-con fi dence motion on March 3 against Tymoshenko,forcing her and her government to resign.

Tymoshenko, who refused to recognize Yanukovych’s presidential victory, has indicated that she would rather join the opposition instead of joining a unity government. Thus Yanukovych must now bypass her while establishing a majority coalition in the parliament.

During the first round of the presidential election, the three defeated candidates—Sergey Tigipko, Arseniy Yatsenyuk and Viktor Yushchenko—won a total of 25 percent of the votes.

The three are poised to represent a key force affecting the future of Ukraine’s power structure. They have also expressed willingness to cooperate with the new president.

Hopefully, Yanukovych will successfully establish a new government through a coalition with the three ex-candidates, as well as the Communist Party of Ukraine and the Ukrainian People’s Party.

Economic tasks

Not surprisingly, the difficulties associated with the world fi nancial crisis proved a signi fi cant factor in Yanukovych’s presidential victory.

Swept up in the maelstrom, the Ukrainian people pinned high hopes on Yanukovych to reverse this dif fi cult situation. His ability to tame domestic markets while creating a lasting economic stability, therefore, is a must if he wishes to maintain his place in of fi ce.

Overall, he faces a series of major tasks.For instance, he must address Kiev’s debt crisis. As of October 2009, according to government statistics, Ukraine’s foreign debt had reached $105 billion. This fi gure was equivalent to 90 percent of its GDP—dangerously higher than the internationally accepted norm.

This sovereign debt crisis is a ticking time bomb hidden within the structure of theUkrainian economy—one that threatens to explode at any time in 2010.

CAUSE FOR CELEBRATION:Viktor Yanukovych’s supporters celebrate his presidential election victory in Kiev on February 8

REACHING OUT TO EUROPE: Newly elected Ukrainian President Viktor Yanukovych(left) holds a press conference together with European Commission President José Manuel Barroso after their talks at the EU headquarters in Brussels on March 1

Acquiring outside capital is thus the only choice for Yanukovych. And to do so, he needs the full support of the United States and the EU, major stakeholders of the International Monetary Fund (IMF) and the World Bank—entities that can provide the best access to fi nancial support and liquidity.

Meanwhile, as Ukraine’s major energy supplier, Russia also profoundly impacts Ukraine’s economic and social stability.

More broadly, proper diplomatic relations with the world’s major economies may be an important task for Yanukovych in the short term.

Kiev should continue to absorb investments and technology as a mid-term goal.The solution to other domestic problems—including unemployment, industrial restructuring and infrastructure construction—dearly requires such investments.

And in the long term, Yanukovych must bridge cultural and ethnic gaps between the people in the eastern regions and those in the western parts of the country.

Although nearly 20 years have passed since Ukraine declared independence, stark cultural and ethnic fissures remain embedded in the hearts and minds of people in both regions. As an independent nation with a new agenda, a greater degree of national unity must be achieved.

It is likely that Kiev will seek to repair its frayed relations with Russia

Diplomatic direction

It would be folly at best to assert that a single election could alter Russia’s weakening impact within the Commonwealth of Independent States (CIS). Nearly two decades since the dissolution of the Soviet Union, geopolitical pluralism has become a byword in the region.

As a result, Russia has been deprived of its role as the region’s political leader to become one of the geopolitical actors.Nevertheless, while the policies of the United States and its EU allies have significantly changed the balance of power there, they still cannot surpass Russia’s regional in fl uence.

Ukraine now represents a key geopolitical pawn in the region—one that none of the major powers will likely abandon.Yanukovych is not likely to introduce dramatic changes to Ukraine’s foreign policy.But we can expect to see minor shifts.

It is likely that Kiev will seek to repair its frayed relations with Russia. Generally speaking, it will be an amendment to the diplomatic pursuits of Yushchenko, who had attached far too much importance to ideology.

There is a saying that we can choose our own friends, but we cannot choose neighbors.Ukraine and Russia are neighbors with a long history of ethnic integration. And to properly handle relations with Russia is important,both for Ukraine’s national unity and its energy supply.

Yanukovych comes from the eastern part of Ukraine, which has been in fl uenced more by Moscow. His supporters are mainly representatives of Russian speakers in east Ukraine and the financial and industrial conglomerates there.

Therefore, he has always been an active advocate of a special relationship with Russia. He has called for giving the Russian language a special status in Ukraine, while strengthening its economic and political cooperation with Russia within the framework of the CIS.

We can foresee that, after Yanukovych straightens out the domestic political situation, he may well resume bilateral political and economic relations with Russia. But to what extent he can strengthen overall relations with Russia remains to be seen.

Yanukovych will also maintain Kiev’s cooperation with the United States and the EU. And although he is not favored by either,he will not be completely excluded either.After all, he has a longstanding reputation as a conservative and realistic politician.

In the 2004 presidential election, his pro-Moscow attitude made a clear impression on the rest of the world. But a careful analysis of his political team and financial interests that have backed him indicates that his political survival depends strongly on the United States and the EU.

As Ukraine integrates into the global economy, Russia’s stake in its foreign economic ties has faltered, dropping from 45 percent in the early days after its independence to about 25 percent today.

Beyond that, Ukraine’s export markets have spread worldwide. The EU has also gone on to displace Russia as Ukraine’s biggest economic partner. We thus have good reasons to believe that Ukraine will be likely to maintain its cooperative relations with the EU and NATO.

Nonetheless, while it has passed the lowest point of the financial crisis, the country still has a long way to go before it emerges from the turmoil. Maintaining relations with the West is the key for Ukraine to overcome the crisis, while revitalizing its moribund economy.

It will be up to Kiev’s policymakers to decide upon whether Ukraine can continue its cooperation with the IMF, whether Ukrainian companies can export their products to EU and U.S. markets, and whether the country can secure investment and technology from the EU and the United States.

And at last, Kiev will need—and seek—to determine whether the pro-Western political forces in Ukraine can be united.

Any retreat of Yanukovych from European and NATO integration will likely lead to serious sanctions—and even full abandonment—by the West. It is thus highly likely that the existing cooperation will carry on.

There is already tangible evidence of this. For instance, Yanukovych chose to visit the EU headquarters in Brussels, instead of Moscow, on his first state visit.

In addition, Iryna Akimova,Yanukovych’s First Deputy Chief of Staff,declared that Ukraine would not join the Russian-dominated customs union, as that would go against its free trade commitments to the EU.

This is proof that although Yanukovych will not adopt a one-sided diplomatic policy,his policy will very likely be skewed in favor of the EU. ■