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. Last Updated: 07/27/2016

Kuchma Takes Control

The recent election of Ukrainian President Leonid Kuchma was met with a good deal of quiet apprehension on the part of both Ukrainians and westerners who fear that his leadership will represent yet another stage in the whittling away of Ukrainian sovereignty. This feeling was based not on a prognosis that, under his leadership, Ukraine would slip further down the slope of economic decline, but on a fear that his prescription of closer economic integration with Russia was really a recipe for economic and political subordination. Since taking office several weeks ago, Kuchma has given ample cause for a reassessment of this position.


Throughout the past six months, Kuchma has been on a campaign to rid himself of his image as a "Red Director," as well as that of the former Prime Minister under whose leadership the country's economic situation did indeed get worse. On a trip to Washington D.C. in April, Kuchma laid out the foundations of his campaign platform. This platform rested almost exclusively on rapprochement with Russia and economic reform.


While at the time it was unclear how dedicated Kuchma was to Ukrainian statehood, the entire issue would be moot without a functioning economy. The present crisis also exacerbates regional tensions both between Kiev and Crimea, as well as between eastern and western Ukraine.


Kuchma stressed that Ukraine was unable to implement needed reform without outside assistance. Because the West had not delivered its promised aid, Ukraine would have to turn to Russia, with whom it already possessed the integrated infrastructure for a close economic relationship.


As president, Kuchma has acted consistently with this platform. With regards to relations with Russia, he has indicated that Ukraine will have a pragmatic, cooperative relationship with its neighbor, but he will not sell out the country's interests -- especially the Crimean peninsula -- to achieve this end. He has also indicated a desire to strengthen ties with other CIS nations, as evidenced by his recent meeting with Kazakhstan's President Nursultan Nazarbayev and his sending a delegation to three other central Asian states to work on implementing CIS agreements. Kuchma's multilateral dealings will result not in a weakening of Ukraine's power vis ? vis the CIS, but rather in an increase in Ukraine's leverage within that organization and, therefore, Ukraine's ability to shape its own future.


On the economic front, Kuchma has been much more active than his predecessor and has indicated that closer relations with Russia and the CIS will not take place at the expense of Ukraine's relations with the West. The Group of Seven leading industrialized nations, at its July meeting in Naples, wisely agreed to provide over $4 billion to help fund Ukraine's transition. Of course this aid is contingent on a comprehensive and radical reform program, upon which Kuchma seems ready to embark.


In recent weeks, Kuchma has played host to a string of well-known transition economists, such as Anders Aslund and Rudiger Dornbusch, in an effort to enlist their help in developing the program that will effect the release of the G-7 assistance. The International Monetary Fund, one of the administrators of the aid package, has indicated that it is willing to release the first portion of this aid by October if the transition plan materializes.


The remaining apprehension about Ukraine's economic potential lies in the fact that the biggest party within Ukraine's Parliament is the unreformed Communist Party, who -- together with the Agrarians and the Socialists -- make up the largest self-defined faction in Ukraine's still incomplete legislature. Because they are the best-disciplined group in the parliament, many analysts predict a clash between president and parliament over the pace and scope of reform. Indeed, right before its summer recess, the conservative parliament put a ban on privatization to ensure that no objects of "critical national interest" are inadvertently privatized. This resolution was of course proposed by the left faction which on its own does not hold a deciding vote, but was able to draw enough votes from the undisciplined center to pass the resolution.


Since the deputies departed for their summer vacation, Kuchma has taken advantage of his free rein in Kiev to issue a series of decrees enabling him to assume greater control of the decision-making process in the sphere of economic reform. He will thus attempt to present parliament with a fait accompli when it returnsin mid-September.


However, a conflict between Kuchma and the parliament is not inevitable. While the Communist-Agrarian-Socialist bloc will claim approximately 150 seats of 393 filled to date (parliament has a total of 450 seats), center-oriented independents -- the majority of whom belong to the ruling nomenklatura -- will hold approximately 185 seats. With each by-election and run-off held to fill remaining parliamentary seats, more independents are elected. They themselves are of course not of a clearly defined political orientation and do not yet form a cohesive faction, but the majority can be characterized as favorably inclined towards market reform. Moreover, Kuchma should have an easier time winning the support of the centrist independents now that an injection of aid from the West seems imminent.


There is now greater hope for reform in Ukraine, therefore, than there has been since the heady early days of independence in January 1992. The West would do well to come through with promised aid this time, just as it did for Russia last year despite even greater political instability there. Ukraine will thus be given another chance to build a viable state and be helped in its quest to redefine its relationship with Russia and the CIS from a position of much greater strength and credibility.





Melissa A. Meeker is Research Associate on Economic Affairs at the Council of Advisers to the Parliament of Ukraine. She contributed this comment to The Moscow Times.