TAX CHIEF MOVES INTO POLITICS.

Publication: Monitor Volume: 7 Issue: 61

A new Ukrainian political party, established just a year before the next round of parliamentary elections (scheduled for March 2002), apparently has a good chance of winning them. Moreover, the leader of this fledgling organization–the Party of Regions–has calmly proclaimed winning the next presidential elections (scheduled for 2004) as the party’s goal, and his words are treated seriously. This is no wonder, because he is Mykola Azarov, chairman of the omnipresent State Tax Administration. His party has, in the less than two weeks since its founding convention, taken control of two Rada factions. Its power base is in Ukraine’s economically strongest area, the Donbas (Donetsk and Luhansk Regions). The local industry accounts for over 20 percent of the national GDP, and its managerial elite has long been coveting top positions in Kyiv.

The Party of Regions (PR) is the successor to Party of Regional Revival Labor Solidarity of Ukraine (PRRLSU), which was formed four months ago as a result of unification of five small, but rich parties with strong organization (see the Monitor, November 21, 2000). On March 3, PRRLSU at its convention changed its bombastic name to PR and elected Azarov as the new leader. Several political heavyweights from Donetsk joined its governing body: Donetsk Mayor Volodymyr Rybak, former Acting Premier (1993-1994) Yukhym Zvyahylsky, and former Deputy Premier Valentyn Landyk. PR leaders find it difficult to explain what is behind the ideology of “new centrism” they profess. But Azarov claims that his chairmanship was blessed by President Leonid Kuchma himself.

Kuchma probably sees Azarov’s Donetsk-based PR as a counterweight to the Kyiv and Dnipropetrovsk-based oligarchs, over whom he has been steadily losing control since the “tape scandal” erupted late last year (see the Monitor, December 13, 2000, March 2, 19). Azarov is known to have strained relations with both the oligarchs and the nationalists, who sympathize with Premier Viktor Yushchenko. Through counterpoising the three groups, Kuchma may regain his strength by emerging as the arbiter. Otherwise, the weakening Kuchma may really bet on Azarov’s party to ensure a peaceful transition of power to a successor, who is not yet known, according to the Russian Yeltsin-Putin scenario. In this case, Azarov’s PR could play the role which Sergei Shoigu’s Bear played in Russia in 2000.

PR has inherited from the stillborn PRRLSU the Solidarity faction in the Rada, which is chaired by a former PRRLSU co-chairman and current rank-and-file member of PR, chocolate magnate Petro Poroshenko. One faction was apparently not enough for Azarov, and on March 20 the PR members set up a new one, Ukrainian Regions, chaired by Rybak. The two factions taken together number forty people. This is the third-largest force in the Rada after the Communists and Labor Ukraine–the faction of the Dnipropetrovsk elite. PR immediately spoilt relations with the former Kuchma’s power broker, Oleksandr Volkov, as five deputies left Volkov’s Regional Revival faction to join Ukrainian Regions. The outraged Volkov accused Azarov of foul play. Four MPs from Labor Ukraine also defected to join Ukrainian Regions. It seems that the faction will continue to grow.

Azarov’s party, as an amalgamation of probably the most corrupt element in the state apparatus–the tax organs–and the regional managerial elite, has a bright future in the Ukrainian political system. The tax organs, which are not accountable to the cabinet of ministers, have set up a state within a state with a solid internal hierarchy and a stable source of income–the fines and bribes, collected from the nascent entrepreneurial class in a society notorious for unstable legislation and pervasive corruption. Azarov’s tax police was one of the main organs of coercion in the Rada elections of 1998 and the presidential elections of 1999. Tax checks have been one of the main instruments of intimidation of political opposition and free press under Kuchma. In these conditions, a lot of entrepreneurs and managers, especially in the PR power base–the Donbas (home to some 15 percent of Ukrainian voters)–will have no choice but to help Azarov’s party win the upcoming Rada elections. Thus the Party of Regions is a potentially serious threat to democracy and a tool with which Kuchma will try to retain the power or, at least, ensure its succession to someone from his entourage (Ukrainska pravda, March 3; UT-1, March 3, 21; Newspaper 2000, March 6; UNIAN, Korrespondent.net, March 21; Segodnya, March 23).

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 [email protected], 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