April 21, 2007

April 21, 2007 | Commentary on

Calamitous fissures

The constitutional crisis in Ukraine threatens the country's sovereignty, economic well-being, and American and Western geopolitical and business interests there. Tragically, Ukraine is amidst a tug-of-war between a truculent prime minister and an inept president, and between the divided executive, a chaotic and corrupt legislative and an unprofessional (and possibly corrupt) judiciary.

The Constitutional Court in Kiev on Tuesday began deliberations on the legality of President Victor Yushchenko's decision to disband the Rada (Parliament) and call for new elections. With a poorly written constitution and alleged bribery and blackmail of the Constitutional Court judges by Prime Minister Victor Yanukovych's supporters, the outlook is grim for a long-term and sustainable crisis resolution.

Since the decree for the new elections, the Cabinet, led by Mr. Yanukovych, and the Rada, where he has a majority, refused to obey or budget for a new poll. Consultations since between the two Victors may indicate a new election will be postponed till the fall. Still, Mr. Yanukovych is the most popular politician in Ukraine and his party is projected to win again.

The current episode in the War of Two Victors started April 2 when "orange" President Yushchenko had enough of the 13 Rada deputies' defections to Mr. Yanukovych's party. The coalition ranks' swelling to 300 out of 450 threatened to create a supermajority that would further emasculate and possibly impeach Mr. Yushchenko.

Charges of corruption are rife. Presidential supporters claimed Mr. Yanukovych and his billionaire friends have paid off deputies to defect. In 2006, they also claimed the key politician, Socialist Party leader Alexander Moroz suddenly defected from the "orange" coalition, which also included the feisty ex-Prime Minister Yulia Timoshenko, to Mr. Yanukovich's bloc for the bribe of $300 million.

Whether the claims are true or not, one thing is clear: The Ukrainian political elite is deeply divided and the country suffers from the second most serious crisis after the Orange Revolution. Current events in Kiev demonstrate how excruciating post-communist transitions really are.

Ordinary Ukrainians and Western investors pay the price. For example, in the legal and administrative chaos, aggressive Russian oligarchs wage dirty PR wars against innocent bystanders: West European companies unaccustomed to such tactics.

In the latest scandal, Norwegian cellular giant Telenor, which controls the majority stake in the local telecom Kyivstar, has uncovered evidence, presented in the Arbitration Court of New York , that its Russian "partner" launched a dirty tricks campaign.

According to the Wall Street Journal, the Russian company Altimo, owned by the billionaire Michael Fridman's Alfa, has created a media strategy to defame Norway and Telenor. The document titled "Logical Rationale for the Information Campaign Under the Kyivstar Contract," was presented in an American arbitration court.

There is a lack of the rule of law in Ukraine, so both Ukrainians and Westerners have no outlets to get justice. Ukrainian courts, "neutralized" by Russian and Ukrainian oligarchs, are incapable of dealing with aggressive corporate raider tactics, for which Alfa is famous, and which it is trying to cover up with public relations tricks.

The Russian government spends tens of millions of dollars on fancy public relations campaigns in the West but does nothing to restrain its predatory companies that inhibit these PR endeavors and this is making the Kremlin look really bad. President Vladimir Putin's patience seems to be endless as he hears recurrent claims by Western politicians and investors that Russian tycoons' aggressive tactics are a threat to civilized business. The Ukrainian government, mired in squabbling, is failing to provide adequate judiciary environment for Western investors like Telenor.

The Yanukovych government's policies also undermined multimillion-dollar investments in agriculture by Ukrainian and Western companies by imposing grain export quotas. The Cabinet's reason was supposedly that there could be not enough wheat for domestic needs. As the result, the grain spoiled, germinated and was attacked by insects. Tens of thousands of tons were dumped in the Black Sea, while peasants and exporters lost hundreds of millions of dollars.

There is more to Ukraine's malaise than just money. A weak and squabbling Ukraine, playing out the chasm between its western pro-American and pro-European parts, and its Russian-leaning east and south, may become an easy prey for a rising Russia. Already, a majority in the Russian-speaking Crimean Peninsula supports reunification with Russia.

There is nothing new in these divisions. The 17th-century Ukrainian elite -- divided into pro-Russian, pro-Polish and pro-Turkish factions -- could not agree on the fundamentals of independence. So Ukraine lost independence for 250 years, only to regain it again in 1919 -- then lose it again to the Moscow-based Bolshevik regime.

The Bush administration has expended lots of political capital to support the Orange Revolution and would not want to see Ukraine falling into the morass of a pro-Moscow anti-reform regime. In that case, Ukraine's chances for NATO and European Union membership may disappear for a long time. 

Only the new parliamentary elections, a comprehensive constitutional and governance reform and a new, pro-reform leadership team can pull Ukraine back from the abyss -- and into the Western orbit. 
     
Ariel Cohen is a senior research fellow at the Heritage Foundation; co-chairman of the U.S.-Ukraine Policy Dialogue (economics and business); and adviser to the U.S.-Ukraine Business Council.

About the Author

Ariel Cohen, Ph.D. Visiting Fellow in Russian and Eurasian Studies and International Energy Policy in the Douglas and Sarah Allison Center for Foreign and National Security Policy, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation
Douglas and Sarah Allison Center for Foreign and National Security Policy

First Appeared in Washington times