Publication: Monitor Volume: 6 Issue: 76

On April 6, Ukraine’s parliament (Verkhovna Rada) approved the economic plan which President Leonid Kuchma outlined in his state of the nation address and Prime Minister Viktor Yushchenko’s cabinet of ministers drafted into proposed legislation (see the Monitor, March 3). The vote–261 to 103 with five abstentions in the 450-member body–represented a victory for the center-right majority factions and a loss for the communists and other leftists. The cabinet now has a green light to implement its radical economic reforms. The question of the cabinet’s longevity is now moot: Integral to the program is that parliament cannot dismiss the present cabinet in the program’s first year.

Kuchma’s economic goals are elaborate. The plan aims at achieving a 6.5 percent annual GDP growth by 2005 through tough fiscal discipline, radical reforms in agriculture, lowered taxes, stimulated private businesses, and increased spending capacity for the population. Cooperation and joint responsibility for the reforms of the cabinet and the Rada majority is the cornerstone of the economic plan.

It was clear that the leftist Rada minority would not vote for liberal reforms in principle. The cabinet therefore had to gather the 226 votes needed for the plan adoption among the center-right majority. It was unclear until the last day, how two influential majority groups–the United Social Democrats [USDP] and Regional Revival–would vote. These two, while in general backing the reforms, bear a grudge against Yushchenko for his refusal to include their representatives into the cabinet. Without the 70-plus votes of USDP and Regional Revival, the action plan clearly stood no chance of passing.

Regional Revival, headed by “oligarch” Oleksandr Volkov, wanted government posts in exchange for approving the plan. The USDP maintained that the government’s liberal ideology did not coincide with its social democratic principles. The two groups insisted on dismissing the deputy premier for Fuel and Energy, Yulia Tymoshenko. The basis for this demand: Those business concerns close to the USDP and Regional Revival reject Tymoshenko’s plans to deregulate the energy market. This dispute culminated in the resignation late last month of the director of the Naftogaz Ukrainy oil and gas monopoly, Ihor Bakay, who is close to Regional Revival (see the Monitor, March 30). Yushchenko stood firm, however, and refused to trade the cabinet program for the cabinet posts. On the eve of the Rada vote, Yushchenko threatened resignation should the action plan fail to pass. Kuchma stepped in, meeting with Rada leaders on April 5 and urging them to back Yushchenko’s program. They were persuaded. On April 6, the USDP and Regional Revival voted in favor, though their leaders, Oleksandr Zinchenko and Volkov, abstained on principle. At the same time, the two factions showed their teeth to the government by disrupting the signing of a symbolic memorandum on common responsibility for reforms between the Rada and the cabinet, which had been scheduled to take place immediately after the vote on the action plan.

With the Rada’s approval of the action plan, the cabinet not only gained a license to conduct the much-expected market reforms, but also demonstrated impregnability vis-a-vis various economic interest groups in the Rada and the ability to achieve compromise with them under pressure. At the same time, Yushchenko could scarcely, however, have gained the upper hand in the dispute with the dissenting oligarchic groups without Kuchma’s backing. Kuchma, for his part, was able to glean some advantage from the circumstances to display his independence from the oligarchs and dedication to reforms (New Channel TV, April 4; UNIAN, April 5-6; Uryadovy Kuryer, April 6; STB TV, April 7; see the Monitor, March 22).

The Monitor is a publication of the Jamestown Foundation. It is researched and written under the direction of senior analysts Jonas Bernstein, Vladimir Socor, Stephen Foye, and analysts Ilya Malyakin, Oleg Varfolomeyev and Ilias Bogatyrev. If you have any questions regarding the content of the Monitor, please contact the foundation. If you would like information on subscribing to the Monitor, or have any comments, suggestions or questions, please contact us by e-mail at, by fax at 301-562-8021, or by postal mail at The Jamestown Foundation, 4516 43rd Street NW, Washington DC 20016. Unauthorized reproduction or redistribution of the Monitor is strictly prohibited by law. Copyright (c) 1983-2002 The Jamestown Foundation Site Maintenance by Johnny Flash Productions