Publication: Monitor Volume: 6 Issue: 218

A year has passed since Leonid Kuchma was re-elected to the Ukrainian presidency on November 14, 1999. Last week, marking this anniversary, Kuchma came up with a few important additions to the political course he proclaimed in the inauguration speech a year ago (see the Monitor, December 9, 1999, March 3, 2000). Apparently, Kuchma’s disappointment with the IMF has increased since then. He has become disillusioned with Premier Viktor Yushchenko’s liberal government, but his confidence over Ukraine’s economic potential has grown. During his speech last week, Kuchma signaled that he feels strong enough to rule the country without the ostentatious assistance from domestic “oligarchs.”

Speaking on November 16 at a conference pompously named “Ukraine–21st Century,” Kuchma announced that the first stage of Ukraine’s economic transformation has been completed. He confirmed dedication to market reforms and democracy. At the same time, he lashed out against Yushchenko’s government. Yushchenko remains a symbol of Ukrainian reforms both in the West and at home. “He selected members of his team himself,” Kuchma said, addressing Kyiv Shevchenko University students a day later. “There are people on that team I would sweep out of the government with a broom.” Some “oligarchs” have ruthlessly attacked Yushchenko for his and Deputy Premier Yulia Tymoshenko’s attempts to introduce transparent rules of play in the energy market, in which the “oligarchs” have stakes. Many observers believe that the days of Yushchenko’s cabinet are numbered, because Kuchma is not on his side in this battle. Kuchma cannot forgive Tymoshenko her “sin” of having been a close associate of the fugitive ex-Premier Pavlo Lazarenko. But Yushchenko insists on keeping her on his team as a top professional able and set to improve Ukraine’s energy sector–the most lucrative and most corrupt industry.

At the conference, despite his apparent disapproval of Yushchenko’s anti-oligarchic energy policy, Kuchma listed “restricting the influence of oligarchic structures” and “preventing their amalgamation with the state apparatus” as tasks of primary importance. This might be seen as a sign that Kuchma may follow in the footsteps of Vladimir Putin, clamping down on businessmen in politics. The influence of Ukrainian “oligarchs” on Kuchma has waned conspicuously since he was re-elected and after he eliminated (with their help) the leftist domination in parliament early this year. Meanwhile, the economic clout which some of them wielded has also waned: Their reputations suffered in the midst of numerous corruption allegations in the international media over the last year, and Yushchenko’s economic transparency policy made it more difficult for them to use legal loopholes to make money.

Kuchma ruthlessly slammed the IMF’s “groundless reservations and requirements, including political ones” for Ukraine to qualify for loans. Kuchma claimed that the IMF’s goal was to adapt periphery economies to the needs of rich countries. He said that Ukraine is interested in cooperation with the IMF, but warned that Kyiv would not be as obedient to the IMF as it has been. Ukraine has not received any IMF loans for over a year, but has managed to preserve currency stability, avoid a default on international debts, pay all pension arrears and record a 5-percent GDP growth in the first three quarters of 2000 for the first time since independence. Kyiv admits that this has been an effect of the favorable international economic climate, rather than a result of domestic reforms. Despite this, Kuchma is undoubtedly heartened and strengthened by his country’s economic recovery (UT-1, New Channel TV, November 17, Uryadovyi kuryer, November 18).