By Volodymyr Zviglyanich
INTERNATIONAL DIMENSIONS OF INTERNAL POLICY
Political life in Ukraine is entering a decisive phase. The presidential elections on October 31 will provide an answer to the question of which form Ukraine will take as it enters the 21st century: That of a country where a return to any form of totalitarianism is impossible, or that of a country which ever since the collapse of the Soviet Union has been engaged–wittingly or unwittingly–in an imitation of democratic reforms and plans to continue this enthralling exercise (with Western help) in next century.
The events in Yugoslavia have fundamentally changed the political landscape in pre-election Ukraine. Until the March 24 beginning of the NATO campaign against Slobodan Milosevic’s regime, the antitotalitarian choice seemed to be a remote but possible prospect for Ukraine. Since then–particularly after Russia’s hysterical propaganda campaign against NATO and in defense of a mythical “Slavic solidarity” with the Serbs, which galvanized the more reactionary lumpenproletariat and their political representatives both in Russia and Ukraine–the prospect of reinforcing pro-Western trends in Ukraine’s political and economic life seems unlikely. Politicians angling for the support of the electorate in the battle for the presidency will advocate “support for our Serb brothers” to the extent of supplying arms. For example, the former KGB general and former Ukrainian Prime Minister Yevgeny Marchuk, a presidential candidate considered by the West to be a center-right moderate, adopted a strongly pro-Serb stance after visiting Belgrade on April 13 and talking to Milosevic. In an interview with Interfax-Ukraine he said: “Ukraine cannot offer effective military assistance to Yugoslavia, and it should not get involved in the conflict. However, if Russia takes such a decision, we should allow Russian arms to Yugoslavia through our territory” (The Day, April 14, 1999, p.1). Furthermore, according to the former general’s strategic calculations, “NATO is trying to close its southern flank and to divest Russia of its last bastion of influence in Europe” (ibid).
The speaker of the Ukrainian parliament, the leader of the pro-Communist Peasants Party, Oleksandr Tkachenko, took up an anti-Western position as soon as the crisis began, essentially using the same language as leading Russian politicians and advocating sending Ukrainian “technical military aid” to Milosevic’s regime immediately. It cannot be ruled out that President Leonid Kuchma may change his moderate stance for the sake of the election campaign and become a Milosevic supporter. Before March 24, the international dimension of Ukraine’s domestic policy amounted mainly to the rather awkward issue of relations with the International Monetary Fund, which involved guessing games–would they or wouldn’t they grant the next installment of the latest credit? But after March 24, the international aspect took on the nature of an existentialist choice–which path should Ukraine follow, which “god” should Ukraine worship?
Behind the conflict between NATO and Yugoslavia, the contours of a conflict between two value systems–liberal democratic and national fascist–can clearly be seen. Basically we are dealing here with the elimination of the last fascist regime in Europe: a grotesque rerun of the dilemma which faced European and world politics at the end of the 1930s. The end of the conflict is a long way off. Unlike in the fight against Hitler, the NATO allies do not have a clear and unambiguous plan of action: Should they or should they not send in ground troops? should they or should they not involve Russia in negotiations with Milosevic after Yeltsin made a show of breaking off relations with NATO? and so on. The political contours of a “post-Milosevic” Europe are totally unknown. However, as was the case over fifty years ago, the initial choice of a value system can determine the prospects for the political and economic development of any given country for many years to come.
So what about Ukraine? Which of the value systems mentioned above does it prefer? This is how a Ukrainian foreign ministry statement puts it: “It is with deep anxiety and concern that reports about NATO air strikes on targets located on the territory of… Yugoslavia have been received in Ukraine. Ukraine, adhering to the norms and principles fixed in the UN Charter, believes that the use of military force against a sovereign state is unacceptable without the sanction of the Security Council of the UN–the only body authorized to make decisions directed at maintaining international peace and security. However, the refusal by Belgrade to sign agreements worked out under the mediation of the Contact Group resulted in the failure of the negotiation process. That is why the requirements of UN Security Council Resolutions 1160 (1998) and 1199 (1998) were not fulfilled, which led to the use of force” (The Ukrainian Weekly, April 11, 1999).
It does not follow from this text that Ukraine has adopted a clear-cut position, as the NATO countries, Russia and Belarus have. Instead, Ukraine is going down the familiar path of looking for a “third way” where, by definition, there cannot be one. The two value systems–liberal democratic and national fascist–cannot be reconciled. It came as no surprise that the mediating mission of the Ukrainian Foreign and Defense Ministers Borys Tarasyuk and Oleksandr Kuzmuk–who were keen to get to Belgrade before Yevgeny Primakov did–was a complete failure. Milosevic did not even listen to these supporters of the “third way” in international politics. He had already made his choice–integration into the Russia-Belarus Union and a continuation of ethnic cleansing–and was simply not interested in any other points of view–as confirmed by the state reception on April 14 for Belarusan President Alyaksandr Lukashenka.
This example should have demonstrated to Ukraine the ineffectiveness of its chosen “multivector” approach and bluntly unprincipled strategy in domestic and foreign policy. It is clear to students of international relations that such a strategy is detrimental to international prestige and national security, but this was simply ignored by the Ukrainian political elite, torn between Western credits and a menacing Russia to the north. The futility of the strategy was demonstrated by the entry of Poland, Hungary and the Czech Republic into NATO. When the Soviet Union broke up in 1991, none of these countries had a qualitative advantage over Ukraine, but they had gained it by 1998, allowing them to meet the criteria set by NATO for new members. >From the start these countries chose to follow liberal democratic values, allowing them to maintain continuity despite the changes in outlook of the political teams which came to power. Poland’s president, Alexander Kwasniewski, is by European standards a communist. Ukraine could do with a few more communists of his ilk…
Let us turn to domestic policy, particularly economic policy. Here, too, Ukraine’s vacillation between the plan and the market, and the lack of clear goals and the means of achieving them, leave little room for hope that a market democracy–at least along Polish or Hungarian lines–will be established in the country. The prevailing mood in Ukraine is more and more one of nostalgia for drawing up plans for long-term economic development, in the spirit of the notorious Soviet Gosplan.
The latest innovation of the “reformer” Leonid Kuchma, called the “Ukraine-2010” program, is a case in point. Significantly, this program is being vaunted as the core of the future presidential candidate’s pre-election strategy with which he hopes to defeat his probable communist opponent. What is the background to the ideology of Soviet and post-Soviet planning?
THE GHOST OF THE FIVE-YEAR PLAN
After Joseph Stalin smashed the Soviet peasantry, in the period known as the “great turn”–that is, the liquidation of individual holdings and the forcible introduction of collective farms–Soviet life was organized according to “five-year plans” for the development of society and the economy. The plans were drawn up in accordance with the ideas of Karl Marx, that is, they were transparent, comprehensive and oriented towards industry rather than people. Not one plan was fulfilled in the entire history of Soviet planning. Tens of millions of people were destroyed in the gulags and in artificial famines for the sake of achieving and maintaining “transparency” and rhythm in social relations as the bases for social manipulation and terror.
The cardinal failure of the plan mentality and social life of the Soviets was the collapse of the program for building communism in the Soviet Union between 1960 and 1980, widely promoted by Nikita Khrushchev. In that period the Soviet Union was supposed to “catch up and outstrip” America in per capita industrial output. The collapse of Soviet communism’s flagship program forced Mikhail Gorbachev to undertake his attempt to restructure society (perestroika), which was designed to happen on the basis of the same five-year plans but with the slogan of “a more humane form of socialism”. The impossibility of uniting the incompatible–the plan and human life–resulted in an explosion of nationalist feeling in the supposedly “transparent” society and led to the collapse of the Soviet empire.
THE DILEMMA OF THE PLAN MENTALITY
However, the idea of introducing social innovations by means of a priori plans will not die quietly. After the collapse of communist ideology and its repressive apparatus–the KGB–all “transition” societies, without exception, run up against the same problem of methodology: How to introduce a market economy–something which arose naturally in human history–by means of an artificially constructed plan?
Those societies which suffered relatively less from the destructive communist utopia and did not entirely destroy the elements of the market economy (such as private land ownership, strong religious traditions and national identity) supported the elements of a free market rather than imposing them from above. They overcame the pain of the initial social transformations and are now gradually grasping the techniques of civilized social management by means of financial mechanisms for regulating the market (bank rates, introducing modern auditing, developing a banking system and mortgages). Those societies where free market elements were eradicated, however, still believe that they can introduce them from above in the form of plans, decrees and programs. Ukraine sadly belongs to this second group of countries.
THE BACKGROUND TO “PROGRAM 2010”
Since the collapse of the Soviet Union, Ukraine has never had a program geared towards the gradual, attentive and patient creation of the prerequisites for a market economy in the country. In 1992 it blindly copied Russia’s one-sided attempt at “shock therapy”, designed to liberalize prices and to transfer people’s savings into the pockets of the “new Ukrainians.” Shock therapy did not achieve the desired effect–financial stability–due to the lack of a developed banking system and, most importantly, due to the absence of the cultural traditions of receiving and returning loans. As a result of this, companies which received loans from banks simply transferred them to accounts abroad. There has been no compensation for the loss of people’s life savings, and it is not clear to this day how and when the government plans to do this.
Galloping inflation and growing social discontent with the chaotic economic maneuvers of president Leonid Kravchuk brought Leonid Kuchma to power in 1994 with a program of “radical economic reform”, which was based, however, on the old methodology of Soviet planning–the introduction of social change “from above” by strengthening the role of the state in market transformations. The results of this methodology (despite several sensible ideas in the 1994 plan) were disastrous, as Kuchma himself admitted: a drop in the national GDP of 240 percent; a 200-percent devaluation of the hryvnya since its introduction in 1996; privatization, nick-named “grabification”, which never led to the creation of a viable stock market; and, last but not least, huge wage arrears, totaling some 8 billion hryvnya (US$2.5-3 billion) (Leonid Kuchma’s extraordinary address to the Ukrainian Supreme Rada, Literaturnaya Ukraina, November 26, 1998). The 1994 plan for “radical economic reform” did not achieve its main aim–the creation of a “socially oriented market economy, designed to satisfy the material and spiritual needs of the people”. In an election year, the administration felt the need to propose to voters another long-term program, because the 1994 plan comes to an end in 1999. Thus arose the idea of the “Ukraine-2010” program.
THE CENTRAL IDEAS OF “UKRAINE-2010”
During his three-hour speech at an economics conference on the outskirts of Kyiv (Uryadovyi kurier, March 10, 1999), Leonid Kuchma defined a number of priorities for the new program. They include:
1. Three phases for the program. First, economic stabilization (1999-2000). Second, acceleration in economic growth (2001-2005), when national GDP will grow by 6-7 percent annually. And, third, integration with the world’s developed countries (2006-2010), when GDP will grow by 8 percent per year. The sources of this growth have not been identified; it is assumed that after an expected decrease in GDP of 1.5 percent in 2000, it will grow by 6 percent in 2001.
2. The development of “scientific and technical innovations.” This general line of development for the next twelve years is designed to increase the competitiveness of Ukrainian goods and to create a domestic market of full value. Scientific innovations will be developed in such priority fields as agriculture, light industry, the food industry, construction and the service sector.
3. Implementation of these initiatives on the basis of the “Ukrainian” model of economic development, based on supporting market relations and strengthening the role of the state in the process.
4. The state as the primary support of the “real” economy, alongside all existing forms of ownership–state, mixed and private.
5. State agricultural support of new private farms and collective farms equally.
6. State protection of domestic producers without resort to isolationism.
7. A radical increase in salaries and a state-created strong national market.
The “Ukraine-2010” program has a number of positive attributes, such as: first, rejection of totalitarianism and the administrative-command economy; second, an understanding of the need for support for economic reforms from the population; third, an understanding of the gradual nature of economic transformations for countries where market elements were destroyed and where any entrepreneurial activity was a crime; and, fourth, emphasis on the urgent need for reform of the pension system and the introduction of an hourly minimum wage regulated by the state.
At the same time, the program Kuchma proposes contains a number of major methodological flaws. One of the major ones is the traditional Soviet enchantment with global projects and round dates. For example, Mikhail Gorbachev promised that every Soviet family would have its own flat by the year 2000. Before that, in the “Food Program” launched in 1980 Leonid Brezhnev promised that by 1990 food shortages in Russia would be a thing of the past. In the same vein, Leonid Kuchma’s Ukraine-2010 program promises to bring Ukraine into line with industrially developed countries like the United States and Germany in ten years.
It could be said that these flaws are the legacy of utopian Sovietism. However, the program also lacks an understanding of the basic principles of the market economy and its creation, as opposed to “building a socialist economy.”
Instead of creating a set of culturally designated conditions for the natural emergence (or revival) of market instincts, the “Ukraine 2010” program proposes the same traditionalistic idea–increasing state mechanisms in every aspect of existence.
The second drawback of the program is related to its hypertrophied expectations. How and why will GDP increase from a zero (or minus) position to 6-8 percent per year? Who will provide the money for the development of technological innovations? Who will buy Ukrainian technology (and which products) in 2005-2010, without knowing which product will be in demand. And why is Ukraine supposed to conquer the world with high-tech products, rather than with items for everyday use, as China does? These are rhetorical questions. Leonid Kuchma concluded his speech with a claim to have separated the economy from politics. However, an analysis of his major pre-election program gives the impression that there is still a great deal of work to be done in this direction.
Just as in determining its position vis-a-vis the Yugoslav crisis, Ukraine should choose a value-oriented paradigm for its internal development.
Volodymyr Zviglyanich is a senior research fellow of the Ukrainian Academy of Sciences’ Institute of Sociology, a research associate at George Washington University and a senior fellow of the Jamestown Foundation.