Taras Kuzio's Blog

This is not a crisis. This is a collapse.

Taras Kuzio — Wed, 27 Jul 2011 03:42:12 +0000

http://lb.ua/news/2011/07/21/107118_Eto_ne_krizis_Eto_krah.html

http://www.foreignnotes.blogspot.com/

Portnikov’s dire prediction

I’m loosely translating a most gloomy ‘end of term’ report by the respected independent political journalist Vitaliy Portnikov, published recently in ‘Leviy Bereg’.

Portnikov is well known as a regular, popular commentator on ‘Shuster Live’ and other television programmes. He is a ‘Radio Svoboda’ presenter, as well as being a prolific writer for Ukrainian and other language newspapers.

This is not a crisis. This is a collapse.

As the summer holiday season gets under way, PM Mykola Azarov is scaring his ministers and fellow countrymen with the world economic crisis and the potentially dangerous turns of events that will soon take place in the United States and European Union.

Translating his comments into everyday language indicates that Azarov and Co. intend to explain away Ukraine’s own approaching economic problems by directing the blame elsewhere. But this time the crisis will primarily be Ukrainian, for the following reasons:

1. An inability and determined unwillingness by the incumbent President to discharge his duties properly. Viktor Yanukovych is focused solely on setting himself and his family up in the newly-conquered country, with ‘Mezhiryas’, helicopters and other bagatelle. He behaves like a typical African President from the 1960′s and the 1970′s, not having time for affairs of state and being more concerned with hunting lodges and diamond-studded toilets.

2. Incompetence of the Government and its inability to rise to the challenges of new times. The Government is staffed by ‘old-school’ officials such as Azarov, or contemporary oligarchs, busy lobbying their own interests and businesses. This symbiosis is practically paralysing the work of the executive branch and increases the costs, to crazy levels, of even reasonably intentioned projects, .

3. Total corruption amongst the authorities. If the modest official Vasyl Volga, takes a half-million dollar bribe, then what do the others take? I don’t want to even think about this – but corruption has completely paralysed economic opportunities for small and middle-rank businesses and even put a question-mark against the survival of the country’s population itself.

4. The commodity-linked nature of the budget-forming sectors of the economy make Ukraine almost totally dependent on the global situation, and this is deteriorating because of unfavourable trends in the economies of the West.

5. Deterioration of relations with the West because of authoritarian trends in internal politics, primarily the case against Tymoshenko. In such a situation, the country’s borrowing is at risk, and the government has no money of its own.

6. Deterioration of relations with Russia because of the reluctance of Yanukovych to give up assets to Putin and to the Russian oligarchs. In such situation, new agreements on gas price cannot be counted on, again hitting the economy.

7. Degradation of the power structures. The prosecutor’s office and the courts are used as tools to solve political problems and provide cover for business asset ‘carve-ups’. The state security service [SBU] has become a holding company under the control of Valeriy Khoroshkovsky. The army in this country is an army of beggars.

8. Complete disinterest of state officials to rectify the situation. Yanukovych is occupied with the construction of helicopter pads [at his residences near Kyiv and in Crimea etc.], his nearest circle compromise him in the West and in Moscow in order to take his place, while the the middle circle compromise the inner circle in Yanukovch’s eyes in order to take place of the inner circle. With the increasing crisis all these ‘worms in the can’ will start to shoot and jail one other. The detention of the Vasyl Volga is just the start.

9. Lack of coordination between the government and the National Bank of Ukraine, and the desire of each of these parties to consider only corporate, and not public interests. A similar situation was observed during Yushchenko’s period in office, but with a small diffence. Yushchenko was a banker and least understood what was happening around him.

10. Disoriention amongst the general population, disillusioned with the authorities, but not seeing any alternatives to what is happening, making it impossible for serious reforms to take place.

This is not even a crisis. This is a collapse.

Ukrainian Democratic Regression and EU Integration

Taras Kuzio — Sun, 24 Jul 2011 18:11:15 +0000

Financial Times, July 19, 2011

Editorial

Ukraine has its Yukos moment

Ukraine’s president Viktor Yanukovich has justifiably been accused of setting up a “Putin lite” system since his election 18 months ago. Power has been concentrated in his hands, media criticism stifled. Extending the analogy, he has now found his Yukos case.

The accused in Kiev is not, like Russia’s Mikhail Khodorkovsky, a billionaire oligarch. She is Yulia Tymoshenko, the former prime minister and Orange revolution co-leader. As in Russia, few in Ukrainian business and politics are whiter than white; shades of grey abound. So the legal assault on Ms Tymoshenko, as with Mr Khodorkovsky, looks like selective justice and a politically-motivated attempt to neutralise an opponent.Mr Yanukovich’s camp insists that the action is part of a broader corruption clampdown, probing 400 as yet unnamed current officials. Yet nearly all of the high-ranking figures charged to date are Tymoshenko associates.

Moreover, while she faces proliferating investigations, the charge on which Ms Tymoshenko is on trial – carrying a potential 10-year sentence – is highly questionable. She is accused of exceeding her authority in agreeing a 2009 gas deal with Russia’s Vladimir Putin at an excessively high price.

This raises questions over whether policy steps, particularly during a crisis, should be subject to criminal charges. The European Union welcomed the deal in question as it restored Russian gas flows to Ukraine and further west after a shut-off, and removed an opaque intermediary from the Russia-Ukraine gas trade.

Faced with western criticism, Mr Yanukovich’s circle is rumoured to be seeking a face-saving solution – say, a suspended sentence, keeping Ms Tymoshenko out of jail but also out of the next elections. The international community should reject that kind of cynical manoeuvre.

For the EU, in particular, has far greater leverage over Ukraine than over Russia. It is negotiating a free trade and association agreement with Kiev. EU officials seem reluctant to link the talks with Mr Yanukovich’s democratic record for fear of pushing Kiev back into the arms of Russia, which is trying hard to restore its influence over Ukraine. Yet Kiev has made clear it wants and needs the EU deal, calling closer European integration Ukraine’s “strategic choice”.

That gives Brussels power it should use – to suspend talks if the assault on Ms Tymoshenko continues. Trade privileges should be linked to values. And the values displayed in this case fall far short of those demanded by the EU.

Financial Times, July 21, 2011

Letter

Tymoshenko is side issue for EU Ukraine policy

From Ms Amanda Paul.

Sir, With reference to your editorial “Ukraine has its Yukos moment” (July 20): for the European Union to base its relations with Ukraine viewed through the prism of the trial of former prime minister Yulia Tymoshenko would be a grave error of strategic judgment.

By suspending talks on an association and deep and comprehensive free trade agreement (DCFTA), the EU would be risking not only its relationship with the most important country in its eastern neighbourhood but also the credibility of its entire eastern neighbourhood policy.

Unfortunately, certain politicians and political groups in the EU, those that are either close to the Tymoshenko bloc, or who reject the idea of Ukraine one day receiving a membership perspective, are using the case to sabotage Ukraine’s efforts to further integrate into the EU – something that has speeded up since President Viktor Yanukovich came to office. Ukraine carried out more reforms demanded by the EU in the last year than in the entire period under its previous leadership. There remains balanced media coverage and lively political debates on television. Regular street protests demonstrate that the right to assembly remains strong, and civil society continues to function actively.

While Mr Yanukovich has done himself no favours by pursuing Ms Tymoshenko so fiercely, it is not the EU’s job to act as a tribunal. While Ukraine is far from perfect, it has taken on obligations similar to those requested of EU candidates without receiving the same assistance. Conclusion and implementation of the DCFTA would significantly strengthen ties, given that historically a free trade area is the first core element of EU integration. It would offer the EU more leverage on Ukraine, while the related reforms would reduce corruption and improve the rule of law and democracy.

Amanda Paul,

Policy Analyst,

EU Eastern Neighbourhood, Russia, Turkey & Eurasia Issues,

European Policy Centre,

Brussels, Belgium

Financial Times, 22 July 2011

Letter

Government of Ukraine respects judicial process

From Mr Volodymyr Khandogiy.

Sir, I am writing to take issue with your editorial’s exaggerated comparison of the trial of Yulia Tymoshenko to that of Mikhail Khodorkovsky (“Ukraine has its Yukos moment, July 20”). This claim is inapposite, misleading and ultimately false.

Unlike Vladimir Putin, who repeatedly voiced his opinion throughout the Yukos trial, President Viktor Yanukovich has refused to comment on the current proceedings against Ms Tymoshenko, and neither will I. In this country the executive branch of government respects the judicial process?and?does?not interfere or attempt to manipulate events.

Since Mr Yanukovich was elected last year, he has striven to reform Ukraine, to introduce both economic liberalisation and anti-corruption measures. Judicial reform is part of the programme as much as pension reform.

Ukraine is fully committed to democratic values, and this includes due process for all individuals accused of criminal wrongdoing. Since the start of investigation by prosecutors, Ms Tymoshenko has spoken freely to media and to her supporters. She is not and has never been placed under arrest. This is far from the circumstances surrounding Mr Khodorkovsky, who was arrested by masked commandos, jailed and then “caged” during his trial. There is no comparison whatsoever between Yukos and the open process taking place in Ukraine.

As you mention, Ukraine is pursuing stronger ties to Europe, with the ultimate goal of integration. Our commitment includes not just tangible internal reforms, but also a commitment to our shared values with Europe, a commitment to democracy, free expression and human rights. Western policymakers have recognised Ukraine’s progress in deepening relations with the European Union. I hope your esteemed journal will see this process and in time avoid unfortunate mischaracterisations such as the Yukos reference.

Volodymyr Khandogiy,

Ambassador of Ukraine to the UK

Sergei Tigipko Proves He is Not a ‘New Face’ Politician

Taras Kuzio — Tue, 30 Nov 2010 20:27:49 +0000

Tigipko’s political career has disintegrated as the so-called ‘new face’ politician has lost support from middle class voters that want to hear a clear signal from him which he is unable to provide; Tigipko prefers to be both in government and in ‘opposition’. Silna Ukraina received sixth place and only 4 percent of the vote in local elections compared to 13 percent and third place for Tigipko in the presidential elections.

Tigipko has been very indifferent to the concerns of his voters and shown that he is not a listening, European politician. He believes that the protests should be ignored as ‘The people are not always right’. As to meeting the protestors: ‘A public discussion of the tax code is nonsense’, he believes (AP, 22 November). So much for Tigipko as a ‘new face’ politician.Икониикони на светциikoniикониикони

Viktor Baloga Returns to His SDPUo Roots

Taras Kuzio — Tue, 30 Nov 2010 18:38:29 +0000

Reading http://www.pravda.com.ua/articles/2010/11/24/5608935/ Viktor Chyvokin wrote: ‘Unofficially he (Viktor Baloga) has become in charge of organizing support for Yanukovych throughout western Ukraine’.
Baloga has thus returned to his SDPuo roots where he first entered politics in the late 1990s in Zakarpattia, then moving to Our Ukraine and from 2007-2008, when he established the pro-Yanukovych Yedyni Tsentr and sought in every possible way to destroy the Tymoshenko government and replace it with a grand coalition, he has returned to his Kuchma era roots.
This proves once again how much of a disaster it was for Viktor Yushchenko’s presidency that the head of his Presidential Administration for half of his term in office was Baloga. For the majority of his time as the presidents chief of staff Baloga was working for the Party of Regions. I wrote about Baloga as a fifth columnist in the Kyiv Post in 2008-2009:

http://www.kyivpost.com/news/opinion/op_ed/detail/34910/

http://www.kyivpost.com/news/opinion/op_ed/detail/33610/

The appointment of Baloga as a Minister of Emergency Situations and the take over of Zakarpattia by United Centre party is a re-play of the take-over of the region by the SDPUo (Social Democratic united Party) after the 1998 elections. President Kuchma selected parties of power to control Ukraine’s regions: Party of Regions (Donetsk), Trudova Ukraina (Diproprtrovsk), Democratic Initiatives (Kharkiv), Agrarians (central Ukraine), and the SDPUo and its satellites (Western Ukraine).
Baloga’s role is therefore to be the new Medvedchuk – to control, corrupt, and spread cynicism and duplicity throughout western Ukraine so that Yanukovych may take full control of the country in 2012 to prepare for his re-election for a second term in 2015.
In the last decade cynicism has spread to such an extent that it has expanded into every aspect of Ukraine’s polity. But, I doubt there is a more cynical and duplicitous political party than United Centre which has developed to an art form the Orwellian ability to say one thing and do another.
P.S. I have a question to the former head of the Committee of Voters in Ukraine, that was supported by the US government funded National Democratic Institute for many years, Ihor Popov – why did you agree to become head of United Centre?

Ukraine and Italy are Closer in Culture Than You Think

Taras Kuzio — Tue, 03 Aug 2010 12:13:55 +0000

I have analysed Ukraine for a quarter of a century from a unique vantage point of having a Ukrainian father and Italian mother. Unique that is, from the viewpoint of analysis but not the Ukrainian community in Britain.
Tens of thousands of Ukrainian soldiers and slave labourers arrived in Britain in the late 1940s and the lack of Ukrainian women meant they married other Catholic immigrants from Italy, Ireland, and Austria.
Analysing Ukraine with Ukrainian-Italian parents also came with another vantage point of being born in Britain, and living and working in the US and Canada. With this background I reached an important conclusion; namely, that Ukrainian liudski and political culture is closer to Southern Europe and will never become Anglo-Saxon.
Italy has its corrupt media oligarch, Silvio Berlusconi, who interferes in the judiciary. Although Ukrainian oligarchs do not seem to have the sexual appetite of Berlusconi nevertheless inexplicitly in both countries ordinary voters back political forces (Party of Regions and People of Freedom party) run by wealthy people.
Italy and Ukraine share similar politics of populism alongside a Communist party. Both countries have tolerated economic and political corruption for a long time: Italy only began to battle organised crime and corruption in the 1970s and 1980s while Ukraine has never done gone beyond declarations. The close working nexus of corruption-politics-state-big business found in Donetsk closely resembles that of the Christian Democratic Party that ruled Italy from the 1940s until early 1990s.
The similarities between Ukrainian and Latin culture can be broken down into four areas.
The first is a zest for life which Latin and Slavic people have; just take a visit to the Caribbean night club in Kyiv which plays Latin music, and the similarly reckless way that they both drive cars. The US cities that have the greatest zest for life are where Latin people are in a majority such as in Chicago, New York, and Miami. In Canada the same is true with French-speaking Quebec which is very different to protestant Ontario.
Protestant culture in the US and Canada looks negatively at people who have an alcoholic drink at lunchtime. The 2 hour French lunch-break with wine is legendary and similar liberal attitudes to alcohol prevail in Quebec and Miami.
Latin and Slavic people do not see alcohol as an ‘evil’ that should be controlled by the state. Alcohol purchases can only be made in state shops in most Canadian provinces and in three Scandinavian countries – but not in Ukraine or southern Europe.
Second, family life is a necessity in Latin and Slavic culture, partly because it fulfils a role that the state does not. Ukrainians and Italians are more likely to rely on the extended family than on the state because the state is unable to provide services and is untrustworthy. Ukrainian kumy or Italian uncles and cousins are more trustworthy and are more likely to assist you.
This leads to a culture of mutual support of brothers, sisters, kumy, uncles and cousins. When a Ukrainian obtains a high ranking position in Kyiv or an Italian or Frenchman moves to Brussels they all do the same thing; they bring their extended family with them and ensure they also obtain employment. This practice inevitably leads to corruption as obtaining new jobs requires a ‘consultancy fee’ or ‘present’.
Third, Italians and Greeks could teach Ukrainians many things about dodging paying taxes. Canadians, British people Germans and Scandinavians tend to be more honest about paying taxes.
The question is why?
When citizens pay taxes in Anglo-Saxon countries they do so because they believe that the state is largely not corrupt and that they will receive efficient and professional state services in return for their taxes. In Latin and Slavic culture such a ‘contract’ between the state and citizens is absent and citizens believe that their taxes will be subject to corruption or will be inefficiently utilised. The state is not seen as a provider of professional services and therefore taxes are not worthwhile paying.
This inevitably leads to a large shadow economy in Italy and Ukraine as dodging taxes becomes deeply ingrained. Although the Ukrainian economy began growing a decade ago the size of the shadow economy has remained between 40-50 percent of GDP which suggests structural impediments are in place to prevent it from declining. In addition, while most Ukrainians want to see corruption reduced they do not want that to happen at their expense and therefore they continue to receive their ‘brown envelope’ with real salary at the end of each month.
Fourth, such practices also lead to a wide gap between declared and real incomes. The Economist (24 June) wrote about Italy that: ‘The owner of five Ferraris claims an income of €1,000 ($1,200) a month. A restaurant owner purchases a €750,000 home but declares nil income. An owner of a large property portfolio never files tax returns. Cases like these are part of the colourful patchwork of Italian tax evasion, which is estimated to cost the country around €100 billion a year, equivalent to some 6% of GDP. Little wonder that the government is trying harder to collect the money. A financial-stabilisation decree enacted on May 31st contains several measures aimed at tax cheats’.
Ukrainian politicians probably take this further than Italians because the gap between rich and poor is far greater in Ukraine and the middle class is smaller than in Italy. But, nevertheless, the similarities are evident. Ukraine’s novoricheau also have more vulgar tastes in mobile phones, cars, watches or other products and a greater dispensation to flaunt their wealth.
No matter how strong would be the Ukrainian leaders political will he or she will not be able to transform Ukraine into an Anglo-Saxon country. But, as the examples of Italy since the 1970s and Georgia since the Rose Revolution have shown, there are a range of policies that can change a country for the better by reducing crime and corruption, improving the rule of law and making the country a better place to do business and invest as a foreigner.