Publication: Monitor Volume: 6 Issue: 8

For the first time since its independence, Ukraine has a Western-oriented liberal economist as premier, Viktor Yushchenko. On December 22, Ukraine’s parliament (the Verkhovna Rada) endorsed Yushchenko–then National Bank (NBU) chairman–by a vote of 296-12 with four abstentions. The largest faction–the Communist, numbering 112 deputies–refused to vote. Ukraine’s President Leonid Kuchma had come up with Yushchenko’s candidacy after the parliament refused on December 14 to reappoint Valery Pustovoytenko, the country’s premier since June 1997 (see the Monitor, December 15, 1999).

The West has long pushed Kuchma to appoint a prime minister who would boost reforms and be independent of Ukraine’s clans and oligarchs. Yushchenko, 45, the NBU chairman since 1993, is regarded by most analysts abroad and at home as exactly this type. Due to his professionalism, Ukraine managed to maintain a relative stability of its national currency and to avoid a financial collapse after the August 1998 crisis in Russia. Yushchenko, a liberal nationalist by political convictions, has no party affiliation.

In the initial stage of the election campaign last year, the Reforms and Order Party of another liberal economist, Viktor Pynzenyk, a former deputy premier in several governments, wanted to nominate Yushchenko for president, but Yushchenko refused, firmly, preferring to abstain from politics (see the Monitor, December 3, 1998).

Yushchenko has emphasized that his government will only work efficiently if backed by a center-right majority in parliament. This coincides with Kuchma’s idea about the pivotal role of a parliamentary majority in implementing reforms–a key point in Kuchma’s election program. The formation of such a majority got underway with Kuchma’s re-election on November 14 when several pro-presidential factions took advantage of the disarray in the leftist ranks (see the Monitor, November 23, 30, December 15, 1999). With the appointment of Yushchenko to the post of premier, this majority began to take shape. On December 24, the factions of Motherland, Greens, United Social Democrats, Reforms-Congress, Labor Ukraine, Regional Revival, two Rukh wings, the Hromada of fugitive former Premier Pavlo Lazarenko, and the Independents signed an agreement to create a majority in parliament. Significantly, Hromada broke ranks with the leftist opposition, which now includes only the Communists, Socialists, Progressive Socialists, and Peasant Party and numbers less than 170 in the 450-seat Rada.

In his address to parliament on December 22, Yushchenko singled out reforming the government administration, instituting financial and taxation reforms, liberalization of the economy, resolving the foreign debt problem and battling poverty as priorities. He spoke against granting tax breaks and subsidizing selected enterprises and industries, which were major springboards for corruption under previous Ukrainian governments.

Yushchenko promised to implement basic market reforms within 1,000 days. He demonstrated quite clearly that his approach will be different from those of the half-hearted reformer Pustovoytenko, when on January 5 he called back from the Rada some 200 draft laws submitted by Pustovoytenko’s government, calling them economically groundless. The new government also revised the draft state 2000 budget submitted to parliament by its predecessors, amending certain “inconsistencies” which amounted to some 6.3 billion hryvnyas (US$1.16 billion). Yushchenko attributed those to an “artificially sweet policy” in the social sphere, which the previous government pursued to avoid confrontation with the strong leftist opposition then in parliament. At the same time, Yushchenko paid populism its nominal due, promising that his government would give up “several seats and several hundred cars” as a contribution to fighting poverty (this will, of course, have no real effect on poverty).

The success of Yushchenko’s reform course will greatly depend on the ability of nonleftists in parliament to ensure unity of action vis-a-vis the Red opposition after it recovers from its fiasco in the recent elections. Yushchenko will also need strong support from Kuchma if he is to act independently of the private interests of the various Ukrainian oligarchs, who backed his appointment and will expect dividends (Ukrainian agencies, December 22, 29; UT-1, December 24, January 4; Ukrainian TV, January 5; Inter TV, January 9).