Inteligencia y Seguridad Frente Externo En Profundidad Economia y Finanzas Transparencia
  En Parrilla Medio Ambiente Sociedad High Tech Contacto
Frente Externo  
 
25/03/2006 | Ukraine: Election 2006: Pre-Election Speculation at Fever Pitch as Ukrainians Prepare for the Polls

WMRC Staff

One week after opposition demonstrators took to the streets to protest against alleged election fraud in Belarus, Ukrainians will head to the polls on Sunday (26 March) to elect a new parliament; after the Orange Revolution of 2004, this is a big challenge for President Victor Yushchenko as his party fights for a majority it is unlikely to achieve.

 

Global Insight Perspective

Significance

Ukraine's parliamentary election on Sunday will be closely watched by both regional and Western governments. The current economic climate, as well as a disenchanted public two years on from the Orange Revolution, have thrown open the prospect of various potential alliances, all of which will have different consequences for the country, as it looks to cement ties with the West.

Implications

Sunday's election is widely being interpreted as a second round of the 2004 presidential election that was regarded as ushering in a new and democratic phase in the country's politics. The result of the upcoming parliamentary election will in essence determine whether the democratic pledges and impetus for reform are sustainable.

Outlook

The election will be closely fought and no party is expected to obtain an outright majority, thus paving the way for a coalition government. At present, any number of alliances is possible. A coalition between Viktor Yushchenko and the pro-Russia party of his arch-rival Viktor Yanukovych is unlikely to please the West. However, former prime minister Yulia Tymoshenko has already ruled out such an unlikely alliance.

Unmet Expectations of the Orange Revolution

Sunday's (26 March) parliamentary election in Ukraine will clearly not be as dramatic as the presidential election of October 2004 that ushered in the Orange Revolution, when thousands of Ukrainians took to the streets in protest against alleged vote-tampering by the authorities and succeeded in overturning what many judged to be a rigged contest. However, it is just as important for the country's long-term future and its relations with the West.

The optimism engendered by the Orange Revolution that swept President Viktor Yushchenko to power has since faded, as the coalition headed by Yushchenko's Our Ukraine party and former prime minister Yulia Tymoshenko's bloc crumbled. It was torn apart by differences over management of the economy and the extent to which the government should have revisited the shady privatisations of the old regime that left vast resources in the hands of a number of oligarchs close to former president Leonid Kuchma. Inevitably, divisions between the Orange parties amidst heightened political uncertainty ultimately led to the dismissal of Tymoshenko, as the president struggled to boost the flagging economy.

Since Yushchenko has come to power, Ukrainians may have seen their real incomes rise, but GDP growth only reached 2.6% in 2005, as opposed to 12.1% in 2004. Moreover, there is the widespread perception that the administration has blown the opportunity to capitalise on the spirit of the Orange Revolution and pass a number of key reforms.

Opposition Confident, President Weakened

The significant rise in food and fuel prices has resulted in the opposition Party of the Regions, led by defeated presidential challenger Viktor Yanukovych, capitalising on the discord to emerge as the most popular party on the eve of the election. The issue was no doubt exacerbated by the stand-off with Russia at the beginning of 2005 over gas giant Gazprom's demands for a sharp rise in Ukraine's gas export prices, which ultimately led to parliament flexing its muscles, and symbolically dismissing the outgoing government.

President Yushchenko's weakened position is further compounded by a series of constitutional changes agreed upon after the new government came to power. Under the constitutional changes that came into force at the beginning of 2006, the president no longer has the power to appoint the prime minister or most of the cabinet positions. This honour now rests with the parliament, which will nominate the prime minister and choose the cabinet. This has added another dimension to what is already a close and tense race, as the coalition that forms the parliamentary majority for the first time will effectively be able to veto any of the president's reforms should it so desire.

An Open Race

In this environment of political fluidity, the question of who will form a coalition after the election remains as open as ever. Although opinion polls still vary, the opposition Party of the Regions holds a substantial lead over the Our Ukraine bloc and the Yulia Tymoshenko bloc (BYT). An average of the main opinion polls gives Yanukovych's Donetsk-based Party of the Regions 27%, ahead of Our Ukraine (16%) and BYT (15%). Moreover, the Socialist Party led by Oleksandr Moroz enjoys 6% of the potential vote, while the Communist Party and the People's Bloc of Lytvyn, headed by the current Speaker of Parliament Volodymyr Lytvyn, have 5% and 4%, respectively. It is certainly clear that no one party will emerge with a solid majority and that two of the three main parties will have to come to an agreement with each other in order to form a government.

Seeking to retain the ideals of the Orange Revolution, Tymoshenko has refused to countenance any alliance with the Party of the Regions, while Yushchenko will have trouble in agreeing to Tymoshenko's demands to hold the prime ministerial position in the event of any coalition between Our Ukraine and the BYT. On the surface, the natural coalition would be an Orange Mark II government consisting of Our Ukraine, BYT and the Socialist Party. Nevertheless, the Socialists and BYT differ with Our Ukraine on a number of fundamental issues. In any case, the alliance would be a weak one. 

Tellingly, although the Party of the Regions and Rinat Akhmetov, the Donetsk-based tycoon and the party's éminence grise, are more comfortable in a Ukraine that enjoys a close relationship with Russia, they understand that in the long term they need European and U.S. capital and their financial markets to initiate much-needed company restructuring, including modernisation of the depleted capital stock and infrastructure. This would entail energy-saving measures as well, since Ukrainian heavy industry still swallows much higher energy inputs compared with its key competitors on international markets. In the end, a more reconciliatory attitude from the Party of the Regions could determine the alliance.

Outlook and Implications

There is little doubt that Sunday's election will be closely contested and any possible coalition configuration is still possible. In any case, the Socialists and Volodymyr Lytvyn in particular will probably play a key role and eventually become the parliamentary kingmakers, adding their weight to either the Yanukovych or the Yushchenko camp, or joining a coalition between both.

If Yushchenko does opt to forge an alliance with the Party of the Regions, he risks damaging his political credentials irreparably, reinforcing the long-held opinion that he is essentially a passive rather than a proactive politician. This would grant Tymoshenko the perfect opportunity to capitalise and capture disgruntled supporters of Yushchenko and Our Ukraine, boosting her chances of usurping Yushchenko in the next presidential election. Nevertheless, an alliance between Our Ukraine and the Party of the Regions, along with the People's Bloc of Lytvyn, would ensure some political and economic stability in the short term, not to mention improve the investment climate.

With the parliamentary election over, the burden on the economy, which has struggled recently to recover from the severe downturn in 2005, may well be lightened. For a modest rebound to materialise, fixed investment has to be revived, and this will only happen if the overall political climate stabilises. The situation is not all that bad at the moment and with a little more stability injected, economic growth could soon be revived. Moreover, Ukraine's economic potential, in line with the stronger perspective on World Trade Organization (WTO) membership, has been rising further. Downside risks are unfortunately still there, and the uncomfortable perspective of an economy lingering on the edge of recession, a scenario that would eventually trigger even a hryvnia depreciation in the medium term, is still haunting both investors and the government.

Contact: Raul Dary

24 Hartwell Ave.
Lexington, MA 02421, USA
Tel: 781.301.9314
Cel: 857.222.0556
Fax: 781.301.9416
raul.dary@globalinsight.com

www.globalinsight.com and www.wmrc.com

WMRC (Reino Unido)

 



Otras Notas del Autor
fecha
Título
05/06/2006|
23/05/2006|
21/05/2006|
11/05/2006|
09/05/2006|
05/05/2006|
14/04/2006|
10/04/2006|
08/04/2006|
08/04/2006|
08/04/2006|
08/04/2006|
08/04/2006|
06/04/2006|
06/04/2006|
30/03/2006|
30/03/2006|
28/03/2006|
28/03/2006|
24/03/2006|
24/03/2006|
24/03/2006|
26/02/2006|
26/02/2006|
20/02/2006|
18/02/2006|
18/02/2006|
18/02/2006|
10/02/2006|
10/02/2006|
09/02/2006|
08/02/2006|
07/02/2006|
04/02/2006|
04/02/2006|
27/01/2006|
23/01/2006|
23/01/2006|
23/01/2006|
23/01/2006|
22/01/2006|
22/01/2006|
22/01/2006|
22/01/2006|
22/01/2006|
22/01/2006|
20/01/2006|
20/01/2006|
19/01/2006|
19/01/2006|
19/01/2006|
19/01/2006|
19/01/2006|
19/01/2006|
19/01/2006|
19/01/2006|
18/01/2006|
16/01/2006|
15/01/2006|
14/01/2006|
12/01/2006|
11/01/2006|
08/01/2006|
07/01/2006|
06/01/2006|
06/01/2006|
06/01/2006|
05/01/2006|
05/01/2006|
01/01/2006|
31/12/2005|
25/12/2005|
28/10/2005|
21/10/2005|
20/09/2005|
01/09/2005|
13/08/2005|
13/08/2005|
13/08/2005|
13/08/2005|
08/08/2005|
08/08/2005|
08/08/2005|
08/08/2005|
30/06/2005|
30/06/2005|
30/06/2005|
30/06/2005|
08/06/2005|
08/06/2005|
08/06/2005|
08/06/2005|
08/06/2005|
08/06/2005|
03/06/2005|
03/06/2005|
27/05/2005|
27/05/2005|
27/05/2005|
27/05/2005|
27/05/2005|
27/05/2005|
27/05/2005|
10/05/2005|
10/05/2005|
10/05/2005|
05/05/2005|
22/04/2005|
22/04/2005|
22/04/2005|
22/04/2005|
22/04/2005|
22/04/2005|
04/04/2005|
04/04/2005|
01/04/2005|
01/04/2005|
01/04/2005|
01/04/2005|
29/03/2005|
29/03/2005|
29/03/2005|
29/03/2005|
29/03/2005|
29/03/2005|
27/03/2005|
27/03/2005|
27/03/2005|
27/03/2005|
23/03/2005|
23/03/2005|
23/03/2005|
23/03/2005|
11/03/2005|
11/03/2005|
09/03/2005|
09/03/2005|
08/03/2005|
08/03/2005|
05/03/2005|
05/03/2005|
03/03/2005|
03/03/2005|
03/03/2005|
03/03/2005|
03/03/2005|
03/03/2005|
02/03/2005|
02/03/2005|
19/02/2005|
19/02/2005|
18/02/2005|
18/02/2005|
06/02/2005|
06/02/2005|
06/02/2005|
06/02/2005|
06/02/2005|
06/02/2005|
31/01/2005|
31/01/2005|
26/01/2005|
26/01/2005|
22/01/2005|
22/01/2005|
21/01/2005|
21/01/2005|
21/01/2005|
21/01/2005|
06/01/2005|
06/01/2005|
06/01/2005|
06/01/2005|
06/01/2005|
06/01/2005|
02/12/2004|
02/12/2004|

ver + notas
 
Center for the Study of the Presidency
Freedom House