May 21st 2012,
The period since the election of Viktor Yanukovich to the Ukrainian Presidency in February 2010 has been a shambles: Support for his Party of the Regions (PoR) has slumped even in its traditional heartlands in the east of the country. There has been a massive and apparently uncontrollable rise in corruption. Ukraine dropped some 18 places in Transparency International’s Index to a woeful 154th place last December, and things now appear to be getting even worse. Potential fraud in parliamentary elections in the autumn may provoke a violent backlash.
President Yanukovich is in the process of creating a highly personalized style of government. According to our sources, all revenue streams have now been put under the control of family or close friends, including the national bank, finance ministry, treasury, tax, and customs. Additionally, the main security organs have come under similarly personalized control, including the prosecutor’s office and the Security Service (now run by the President’s elder son). Even the Party of the Regions is its losing relevance as the President comes to draw more and more on direct ties.
FDI has dried up, and most M&A activity is domestic, with international firms taking a cautious back seat. The exception to this rule is oil and gas, where Shell and Chevron are being bought in because local companies lack expertise to extract recently discovered shale gas. Anecdotal evidence suggests that many ex-pats have already left, or are making plans to do so over the next few months. Additionally, there is speculation that visa requirements might be brought back in for EU nationals.
These developments have been distressing for those who voted for former Prime Minister Yulia Tymoshenko in February 2010, but even more so for those, concentrated in the south and east, who voted for Yanukovich on the basis that he might offer something better than the political and economic instability which followed the 2004 Orange Revolution. In fact corruption, and the expropriation of businesses through a captured legal system have been especially evident in these parts of the country.
But while popular resentment is running high throughout Ukraine, the opportunity for the population to make its voice heard at the elections in October may be subject to interference. The current administration does not have a good track-record when it comes to electoral fraud: Yanukovich was initially summoned to Kiev precisely because he was able to help the PoR garner a majority for Leonid Kuchma during the 1999 polls. The falsification during the 2004 presidential elections remains an exemplar of all the varied means by which manipulation can be achieved, not least the 1.1 million votes added to Yanukovich’s tally by computer hacking during the second round. It cannot be ruled out that the current government might again resort to these familiar tactics.
Ms. Tymoshenko has already been imprisoned on apparently politically motivated charges, as a way of preventing her running in October, and it seems that technical measures will be found to ensure she is unable to stand for parliament, even if she is freed in order to placate the EU. Nonetheless, her imprisonment has acted to boost her waning popularity, and if released she can be expected to campaign with her usual dynamism for the opposition. This will boost their poll ratings considerably and raise the stakes in advance of the 2015 presidential election.
However, if mass falsification does take place and is uncovered, the question of the 2015 polls may become less relevant. There is real anger on the streets at the lack of official accountability. This was demonstrated by the nationwide unrest that took place in March after local police refused to charge two politically connected youths who raped an 18 year-old girl and left her for dead in the southern town of Mykolayiv. The potential for violence on all sides is becoming clearer. The most important question to be answered in October is therefore: Will popular anger once again explode into protest as it did in 2004, or is the population, especially in the eastern Donbass, so scared that they will stay at home during the election period? The reaction of these towns is critical because, if eastern Ukraine comes out in protest, the traditionally opposition-minded west will rise for sure.