1. A further extension of the presidential power
The political event that has best illustrated the ambitions of President Viktor Yanukovych and the Party of Regions was the return of presidential powers to the level stipulated in the Constitution of 1996 by the Constitutional Court of Ukraine on Oct. 1. Thus, through the Constitutional Court, which under the current regime plays the role of legitimizer to the actions of the president and his administration, Yanukovych received all powers granted to "strong" President Leonid Kuchma with some adaptations progressing towards a new vertical of power in Ukraine.
The most potent advantage seized by Yanukovych was the power to dismiss at any time any minister, their deputies, heads of committees and even the prime minister of Ukraine. In addition, the president received the
right to determine and submit to Parliament the candidature for prime
minister and ministers, as well as his personal selections for the heads of all significant ministries (including, the Security Service and Prosecutor General’s Office), which are now firmly under presidential control.
In other matters, the president can now directly intervene in government policy, giving whatever instructions he deems appropriate. Parliament remains the only opportunity to influence the president, by refusing to ratify his legislative initiatives, however the presence of a strong pro-presidential majority in Parliament makes this lever impotent.
The ruling party has now received the "full package" of control over all government agencies and all three branches of power. Even in parliament, which has always demonstrated inconsistency of views and positions, it is now actually possible to find the 300-vote constitutional majority to support almost any action of the president and his administration. However, by announcing "the stabilization of power" in Ukraine, Yanukovych should realize that he took full responsibility for any and all further developments in the country and its prospects, since failure due to opposition is no longer a viable excuse. The question remains: How will the president’s extra-wide powers effect or put pressure on the democratic freedoms and rights of the people of Ukraine.
The year following the restoration of presidential powers will be a suitable period for an exhaustive evaluation, of whether or not the government took advantage of the opportunity by installing order and balance in all spheres of life in Ukraine, and how Yanukovych has fulfilled his promise to the European side to bring the legal framework of Ukraine in line with the recommendations of the Venice Commission. Thus, unrelenting attention should be paid to changes in the electoral legislation before the parliamentary elections in 2012.
For now, Europe has acted calmly with few warnings to the Ukrainian authorities and has responded to new opportunities provided by the Ukrainian president, despite calls from the opposition led by Yulia Tymoshenko for Brussels not to recognize the "constitutional revolution" in Ukraine. The European Union has stressed the need to build an effective system of checks and balances between branches of government, and constitutional reform following the decision of Constitutional Court of Ukraine. Consequently, Europe will passively observe the further development of situation in Ukraine.
People First Comment: In 2004, western Ukraine was euphoric over the election of President Viktor Yushchencko; he was seen as an instrument of change, a reformer who would take Ukraine along a new post-Soviet path. However, after 5 years of petty infighting with Yulia Tymoshenko, all that they succeeded in achieving was to undermine the economy and the national belief in the whole process of democracy. Many, particularly in the East saw the election of Yanukovych as a giant step toward stability. Even the West hailed him as a rock upon which a new Ukraine could be fashioned. They watched in admiration his consolidation of power into a vertical structure, despite it echoing the politics of the past era.
Whilst their approaches to power were very different, both presidents entered office in the belief that they could bring about real change — Yushchenko through the power of democracy and Yanukovych through power of autocracy; however in reality both are hostage to a financial elite who use their money to ensure that the status quo prevails.
According to the Kyiv Post, the wealth of the 50 richest people in Ukraine now tops $28.9 billion and almost all of them are members of parliament. Their average wealth is over half a billions dollars in a country where the gross domestic product per capita is barely more than $3,500. Some may be horrified, but a brief look at history would indicate that a rich few always rise out of political and economic chaos. America in the 1920’s gave rise to some of their most respected family dynasties. Britain in the 17th and 18th century gave rise to a financial aristocracy many of whose descendants still sit in the House of Lords.
Ukraine is at a political, economic and social crossroad. The elite are going to have to make a choice. The continuation of the current system, irrespective of the leader, can only result in further economic damage to the nation and this will soon seriously undermine the value of the assets they seek to protect. Their only alternative is to accept that they have a real and tangible responsibility to the nation that gave them their wealth.
The oligarchy needs to begin an evolution into a European-style financial aristocracy where the rule of law prevails, where assets are protected and corruption is consigned to history. Without this change and no matter who is the president, Ukraine will continue to decline and with it the wealth they have created. Let us hope that they see the inevitability of this course before it is too late.
2. Rebellion of entrepreneurs against the new tax code
In late November, close to the anniversary of the start of the Orange Revolution, Ukrainians demonstrated that they are willing to publicly protest to protect their vital interests, without political implications and in this case solely for economic survival. The catalyst for mass demonstrations against the government was the new tax code, which parliament passed in spite of the weight of protests by small- and medium-sized businesses. During the adoption of the tax code in parliament, which ended on Nov. 18th, there were mass protests by entrepreneurs that spread to a nationwide scale in Ukraine.
What rallied the Ukrainian small and medium businesses, a situation that has deteriorated in the ongoing crisis in Ukraine, is the new tax code. First, under the code extremely broad powers shall be given to the Tax Administration, tax rates will change, their quantity increase, the excise taxes on alcohol, cigarettes and energy resources are being increased, etc.
However, the main discontent of entrepreneurs are the changes in the simplified tax system, which hampers the further development of small and medium businesses, as well as handing extra-wide rights to the Tax Administration. Representatives of the protesters have repeatedly said that they do not refuse to pay taxes, even if those increase, but simply require concerted "rules" from the authorities, who constantly and substantially increase their demands from entrepreneurs, seriously narrowing their rights.
The businessmen’s protests near parliament during the adoption of the tax code and the subsequent demonstrations held on Independence Square for the first time in recent years collected over 30,000 participants. In addition, many other major cities also passed similar protests of entrepreneurs. One can predict that in the absence of fundamental changes to the tax code, entrepreneurs will continue to protest periodically, providing an example to other groups of dissatisfied people in Ukraine, which if deteriorations continue can see protests against the government on the streets in spring 2011. So the "street democracy" in Ukraine has not disappeared, but has moved to a second wind through the consolidated efforts of Ukrainian businessmen.
The reaction of government to the protests appeared moderate, even to the elements of controversy. For example, Deputy Prime Minister Sergiy Tigipko, one of the creators of the new code, said that the president will sign the tax code anyway, and that ordinary people should not be listened to during times of economic reform. President Viktor Yanukovych instead put his veto on the code and returned it to parliament for revision, stating the need to incorporate business requirements and appropriate amendments to the code.
However, his statement to representatives of the European Union regarding hopes for approval of the state budget for 2011, which is centred around the new tax code, indicated a firm intention to sign the already established and subsequently revised document, without the effort of creating fundamentally new tax code with the participation of representatives of small and medium business. Thus, the presidential veto is a tactical step towards the gradual adoption of the code, despite the protests. This suspicion was confirmed by the extremely high speed of changes incorporated in the code from the side of the president, and the fast re-adoption of them in parliament. Partly, the presidential amendments concluded the public demands of protesters. Meanwhile, the government headed by Mykola Azarov, gradually understanding the ineffectiveness of the hasty adoption of new tax rules, will now delay the entry of certain provisions to the code whilst making a greater emphasis on the necessity of new tax code propaganda.
However, will the entrepreneurs believe the authorities, after feeling the internal consolidation, and will they continue to safeguard their rights?
Doubtful. Especially after the dismantling of the "tent city" and the dispersal of the remaining protesters by government police forces. In this case, the answer will not only appear in the protests and meetings, but by an even greater shift to the "shadow" sector of the Ukrainian economy, where tax payment rules will be considered by business as "bad tone."
People First Comment: It would seem that members of the government of Ukraine are not students of history as almost nothing in human history has evoked more dissent and public passion than unfair taxation. The earliest records are found in biblical times when at his trial Jesus Christ was accused of promoting tax resistance against the Roman Empire. Since then, history has recorded some 148 major refusals, rebellions, riots and wars – all over the issue of unfair taxation including the English Civil War, the American Revolution which led to the War of Independence and the Boar War that led to the founding of the Republic of South Africa, the Russian Revolution of 1905 which led directly to the formation of the Bolshevik movement, the salt tax in India resisted by Mahatma Gandhi which led to Indian independence and the UK Poll tax that was the undoing of Margaret Thatcher.
History teaches us that you cannot impose unfair taxation on any section of society without there being a public reaction. In Ukraine, 120,000 small and medium sized business owners came onto the streets in what is now being termed the second Maidan simply because the government’s new tax code is intrinsically unfair as it imposes levies on companies that are at best struggling.
History also teaches us that unfair taxation levels result in a drop in tax revenue. The government seems to think that by focusing 85 percent of tax police attention on this small segment of the economy that they will be able to extract the last drop. However, in reality, all that will happen is the level of bribery of tax inspectors will go up. The cynical might suggest this is the intention and it would be hard to dispute in the current environment. Azarov seems intent on bringing his tax experience to bear. Lets us hope that the people of Ukraine tell him that this is a tax code that goes too far.
3. Ukrainian authoritarianism – following the Russian model
Since coming to power in on Feb. 25, Yanukovych and the Party of Regions have begun the reformatting of Ukraine along Russian lines. The new president took many examples from Russia and managed in one year to change a number of key areas of Ukrainian life that took Russian Prime Minister Vladimir Putin and Russian President Dmitry Medvedev three and a half presidential terms to achieve.
Just as in Russia one of the first who felt the pressure of the new government were the media. Criticisms of the government and comment from the opposition have all but disappeared from television screens, radio news and the pages of serious newspapers. In the most prominent cases the broadcasting networks of the relatively independent channels TVi, Channel 5 and some regional channels have been "absorbed" into media empires of those more sympathetic to the government line.
Similarly, criticism of the police has also disappeared from screens of even the highest rated channels. At the same time the treatment of journalists by the police and the Security Services of Ukraine has become more stringent, as has pressure on journalists and individual cases of violence against the media.
Simultaneously with the pressure on the media the new government attempted to tighten control over non-governmental organizations (NGOs) again following the Russian model. However, the reverberations from the checking of the offices of the International Renaissance Foundation by the SBU, from the visit to the Ukrainian Catholic University and the conflict with the Konrad-Adenauer foundation led to a stopping of direct pressure and more cautious behaviour form the governmental services but we can expect to see a continuation of pressure on the third sector in the future along Russian lines. For example, in Russia, NGOs such as the British Council and the The Renaissance Foundation have been set within a very rigid legislative framework that actually prevents them from building civil society and providing democracy education.
With the return of broad presidential powers as enshrined in the 1996 Constitution, the presidential administration and Party of Regions have begun the process of creating a strict "vertical of power" structure that is very similar to that adopted in Russia. But unlike Russia this process has been implemented in Ukraine at a record pace within 10 months.
An important element of this scenario is the now "decorative" role of the opposition. The Ukrainian opposition was weakened as a result of losing the presidential election in early 2010, that lately deepened by the losses and low results in recent local elections, though the state control of the media and the recent changes to the electoral law favouring the authorities may have a great deal to do with this. However, there is a danger of the opposition’s complete marginalization because of its disunity and lack of clear alternatives to those proposed by the authorities. Whether the Ukrainian opposition is strong enough to retain the trust of people, unlike in Russia, will be seen in 2011 and parliamentary elections in autumn 2012.
But the opposition today lacks both in initiative and influence.
Creating an authoritarian "vertical of power" system may seem like a logical step in order to create stability but the authorities should remember that the full responsibility for social, economic and political reform now rests on their shoulders. The people want a much better standard of living and it is now up to them to deliver. If they don’t, then no amount of political gamesmanship or authoritarian control will keep them in power.
People First Comment: One of the primary characteristics of authoritarian regimes is that with every step towards authoritarian rule they take an equal step towards the policy of suspicion and intimidation and the constant fight for one’s appointment, Kim Jong Il of North Korea being a classic example.
We can see the beginning of this in Ukraine with the simple example of the security circus that surrounds the president’s drive to work every day. Streets are blocked along the whole route sometimes hundreds of meters from junctions at least 5 minutes before his multi vehicle motorcade whistles through at breakneck speed. The city is literally ordered to stop, the resulting backlog of traffic can take hours to clear and the resentment within the city grows with every traffic jam. French President Nicolas Sarkozy, on the other hand, uses a two-car motorcade with four police outriders who almost apologetically move the traffic apart to ensure that their VIP is transported safely and quickly.
Authoritarianism is a very outdated form of government. Unless it has a particularly charismatic and creative leader, it is a crude and highly ineffective form that goes back to the earliest days of man when kings ruled by fear. It is inefficient because it results in nobody making decisions for fear of incurring the wrath of the leader; it stifles creativity and promotes government of the lowest common denominator, exactly what Ukraine does not need at this time.
Some will claim that the current regime is modeled on that of Vladimir Putin in Russia, but Ukraine is not Russia. Without a strong and centralized government in Russia after the collapse of the Soviet Union, it is unlikely that Russia would have remained intact. Ukraine does not have this problem. What it does have is the sixth most well- educated work force on earth, a work force that is prepared to harness the natural and industrial resources of the country to the common good. Unfortunately it would appear that it will be some time before that workforce can be put to good use.
4. Living on the edge
The real picture of life in Ukraine in the socio-political, economic and social spheres clearly demonstrates that Ukrainians are recognizing that Ukraine is no longer a place to realize their desires, needs, dreams and personal development.
The negative factors, which accumulate as a result of the ineffectiveness of successive governments is leading to growing social apathy among the people, which inevitably creates indifference to the state of civil liberties, cultural and spiritual needs, human rights and implementation of the principles of democracy. Today citizens are more concerned with the problem of physical survival placing all other issues in the background.
A simple review of the facts explains everything. The general mortality rate, according to UN data (2005-2010) gives Ukraine the worst ranking in Europe at 17th place alongside Russia and equal to Somalia and Burundi. The same is true for life expectancy placing Ukraine at 123rd place out of 194 countries In terms of the spread of HIV/AIDS and the growth of the AIDS epidemic, Ukraine ranks first in Europe. In Ukraine, 1.63% of population aged 15-49 years are now HIV positive and the official number of people with the virus exceeds 360,000, and the actual figure may well be appreciably higher.
The most painful and yet important issue for the population is financial welfare. According to the Global Wealth 2010 report from Swiss Bank Credit Suisse, Ukraine in terms of wealth is in second to last place amongst 40 European countries, beating only Moldova. The average size of the wealth of a citizen in Ukraine is only $2,700 dollars (200 dollars more than in
Moldova).
For comparison, the level of wealth in Poland is $28,600, in Romania – $12,400 and in Russia – $10,000 per citizen. At the same time, Ukraine – is the second largest debtor of IMF after Romania with a debt of $12 billion. Ukraine also is the tenth largest borrower in the world from
the World Bank.
In the country which is in the centre of Europe with a population close to 43 million people, 12.5 million Ukrainians live below the poverty line whilst relative poverty affects 78% of the population. The average Ukrainian lives on $105 per month, or $3.38 per day. 43.8% of Ukrainians claim that they have enough money for food, but find it difficult to buy clothes and essentials. According to the World Bank, 26.4% of Ukrainians live in real poverty. The poverty rate in Ukraine is 11% higher than the average level in Europe.
The ultimate form of protest is emigration. According to a recent World Bank study "Migration and Remittances," Ukraine ranks fifth among the countries with the largest number of emigrants. Currently there are 6.6 million Ukrainians working abroad but only 5.5% work legally. This represents 15% of the total country’s population and 39% of the working population. Today over 80% of Ukrainians are dissatisfied with their lives and are very concerned, above all, about financial problems of their families and their health. 34% would be happy to emigrate.
In this reality and under the current political system, Ukraine has a poor chance of successful development as an independent democratic state. It has massive natural resources, but with weak and ineffective government, Ukraine risks becoming a "failed state" with a corrupt government and an indifferent population engaged in basics of personal survival. The implications for neighboring states and for Europe should not be underestimated.
People First Comment: One has to ask the simple question of how a country with one of the best educated populations on earth, with all the world’s natural elements in minable quantities plus 40% of the world’s black soil, up to 45 trillion cubic meters of natural gas and 10 nuclear power stations can be the second poorest in Europe.
This country used to manufacture 40 percent of everything produced in the former Soviet Union. It was the epicenter of scientific development, the space program, the defense industry, ship building and aviation. The universities ranked amongst the best in the world and in many respects Ukraine was the economic and scientific foundation, stone upon which the whole of the Soviet Union was built and yet today.
Unfortunately, what Ukraine did not produce were meaningful politicians. Yes, the early politicians were patriots of the highest order. They sang the songs and waved the flag in the misguided belief that national pride was enough to build a new nation. The West played its part by investing heavily in building a market economy but not in the democratic understanding or institutions that underpin it.
Corruption has eaten away at the very fabric of society to a point where the future of Ukraine as an independent state is at risk. The country ranks at the bottom or almost at the bottom of practically every international ranking, the national reputation is one of the worst in the world and the people are known more for prostitution and criminality than for science and technology.
The people of Ukraine vote in the hope that a new leader will somehow miraculously rise from the fire but alas all they are offered are yesterday’s politicians with yesterday’s policies. The country, however, is still hopeful for the positive change. Perhaps it is now time for the people of this great country to realize that if they want to live in a modern state, it is they through their concerted action in grassroots political parties that must demand change at all levels of government.
2011 is going to be an interesting year.
Viktor Tkachuk is chief executive officer of the People First Foundation, which seeks to strengthen Ukrainian democracy. The organization’s website is: www.peoplefirst.org.ua and the e-mail address is: [email protected]
