Publication: Eurasia Daily Monitor Volume: 5 Issue: 72

The ruling coalition of Prime Minister Yulia Tymoshenko’s Bloc (BYT) and President Viktor Yushchenko’s Our Ukraine, People’s Self-Defense (NUNS), is on the verge of breaking apart. Yushchenko’s team not only criticizes Tymoshenko’s economic policy but also publicly accuses her of fostering corruption. Tymoshenko, for her part, has been torpedoing Yushchenko’s efforts to strengthen the presidential rule.

The situation is similar to the crisis of September 2005, when Yushchenko fired Tymoshenko from the post of prime minister, but there is one fundamental difference. In line with the constitutional amendments that came into force 2006, the president cannot dismiss the prime minister. This is within the jurisdiction of parliament, where Yushchenko is very far from commanding a majority.

The Tymoshenko government has increased social spending, and it plans to use privatization proceedings in order to keep Tymoshenko’s election promise to repay savings in the defunct Soviet State Savings Bank through the Ukrainian state savings bank, Oshchadbank. Yushchenko’s team maintains that this policy is populist and will unbalance the economy, but this policy increases Tymoshenko’s popularity ahead of next year’s presidential election race in which she is expected to challenge Yushchenko. Opinion polls conducted in March and April showed that 23 to 25 percent of Ukrainians are ready to vote for Tymoshenko in a presidential election, while support for Yushchenko is under 10%.

Yushchenko has urged Tymoshenko to amend the 2008 state budget as it was based on the expectation that inflation would be around 10 percent annually, but it reached 9.7% just in period from January to March. Tymoshenko said that she saw no point in amending the budget for the time being. On March 19 the Tymoshenko cabinet ruled to privatize four regional power generating companies. Yushchenko’s secretariat warned that the decision could lead to the bankruptcy of the state-run Energy Company of Ukraine which manages the four companies. Tymoshenko ignored the warning, and Yushchenko issued a decree on April 11 canceling the privatization decision, saying that it “threatened the state’s economic security.”

Yushchenko accused Tymoshenko on March 28 of failing to settle the debt for Russian gas. He estimated the debt to Gazprom at $2 billion, and warned Tymoshenko of an imminent “gas war.” Tymoshenko calmly replied that the debt was lower, at some $900 million, and she pledged to continue talks with Russia.

Yushchenko and Tymoshenko also disagreed over the early mayoral election in Kyiv. Yushchenko was against the election, but in March parliament backed Tymoshenko, scheduling the election for the end of May. Yushchenko suggested fielding a single candidate from the coalition, but Tymoshenko refused, unilaterally nominating her right-hand man, First Deputy Prime Minister Oleksandr Turchynov.

Yushchenko’s team moved to strong statements in April, essentially burning their bridges. On April 10 Yushchenko’s office head Viktor Baloha accused Tymoshenko of “creating a large-scale land trade scam” by setting up a single body to conduct land auctions across Ukraine. Baloha alleged that Tymoshenko wanted to install a friend of Bohdan Hubsky, “BYT’s notorious landowner,” at the helm of the body. He suggested that Tymoshenko “simply wants to head this mafia.” Tymoshenko rejected the accusations, saying that the body was needed in order to ensure transparency in land auctions.

Yushchenko accused Tymoshenko on April 3 of betraying the coalition by hiring people who had served the old regime. He named Viktor Medvedchuk, who managed the office of Yushchenko’s predecessor Leonid Kuchma, and Oleksandr Zadorozhny, who was Kuchma’s representative in parliament. Zadorozhny advises Tymoshenko on constitutional matters, while Medvedchuk, Yushchenko’s secretariat claimed, drafts a new constitution for her.

Yushchenko suspects that Tymoshenko joined forces with the team of Medvedchuk and the opposition Party of Regions (PRU) in order to block his plan to reverse the 2004-2006 constitutional reform. Yushchenko wants to restore strong presidential powers. Tymoshenko, however, has signaled that her party is in favor of a parliamentary form of government. The PRU and the BYT have agreed to set up a commission in parliament in order to draft constitutional amendments.

On April 14 United Center (YeTs), a small party linked to Baloha, issued a statement accusing the BYT of conspiring with the PRU to provoke an early parliamentary election. Yushchenko’s legal advisor, Ihor Pukshyn, accused BYT on the same day of political corruption. He quoted unnamed BYT deputies as alleging that positions on the BYT list for the 2007 early parliament election were sold “for millions of dollars.”

From April 12 to 14 the teams of Yushchenko and Tymoshenko exchanged strong statements, accusing each other of conspiring to break up the coalition. On April 14 the leading members of the two parties gathered for an urgent meeting to find ways to save the coalition. NUNS representatives insisted that the BYT should stop its joint work with the PRU on a constitutional commission. BYT insisted that Yushchenko should fire Baloha. BYT backed down on April 15, saying that it was suspending the plan to set up the constitutional commission. Baloha on April 15 urged dismissal of the ministers of finance and economy. He blamed them for high inflation. Both represent BYT in the Cabinet8 (Segodnya, March 25; Interfax-Ukraine, March 20, 28, April 3, 9; UT1 TV, March 20, 28; Channel 5, April 10, 14;, April 8-11; Gazeta po-Kievski, April 11; Ukrainska Pravda, April 14).