Ukraine's President And Prime Minister Feud As Their Country's Economy Sinks

KIEV, Ukraine -- In Ukraine, it’s truly noteworthy only when the president and prime minister stop fighting.President Viktor Yushchenko and Prime Minister Yulia Tymoshenko — who stood shoulder-to-shoulder just four years ago as Orange Revolution allies — have spent the better part of the last year at each others' throats, in a vituperative, take-no-prisoners struggle that has split the government down the middle and paralyzed the country’s political process.The situation would be humorous if it were not so critical: Hardly a week seems to go by without some sort of outburst from the president (or his minions) against the prime minister (and her backers). The two camps regularly hurl back and forth phrases like “criminal,” “traitor,” “con artist” and “idiot."Meanwhile, Ukraine is facing its biggest economic challenge since the economic drought that immediately followed the Soviet Union’s breakup.Industrial output declined by 30 percent year on year this January. The national currency, the hryvnia, has lost half of its value since highs last year. Banks have stopped lending, and many are permitting only miniscule withdrawals, to head off a run on banks. Factories, shops and businesses throughout this eastern European country of 46 million are closing their doors, while unemployment and public dissatisfaction are spiking.“Re-arranging the deck chairs on the Titanic,” “Fiddling while Rome burns,” — so the local and international press describe the Ukrainian morass.The Ukraine-Russia gas dispute was interpreted by many partially as a product of the two leaders’ struggle. In February, the second tranche of a critical $16.5 billion International Monetary Fund bailout program fell through because of infighting in the government. Finance Minister Viktor Pynzenyk, a Yushchenko ally, resigned in protest. Tymoshenko accused the president of spreading “falsehood, panic and hysteria.”Earlier this month, agents from the Ukrainian Security Service (SBU), some wearing baklavas and brandishing automatics, stormed the offices of state energy company Naftogaz.At issue was the ownership of a large amount of natural gas — between 6.3 and 11 billion cubic meters, depending on which report you read — valued at about $1 billion. The SBU said the gas belonged to RosUkrEnergo, a shadowy Swiss-based company with reputed ties to Yushchenko and other top politicians, while Naftogaz said it was the rightful owner.But since the SBU answers to the president — and just a few weeks earlier Yushchenko named a close ally, media magnate Valery Khoroshkovsky, as the SBU’s deputy head — and Naftogaz comes under the prime minister’s aegis, this was viewed as just another clash in the two leaders’ battle royale, albeit with the new, extremely disturbing development of involving the country’s law enforcement bodies.“This is not new,” said Yuri Yakymenko, director of political and legal programs at the Razumkov think tank, adding that the struggle originally reached fever pitch and stayed there when the president tried to dissolve parliament last autumn and called for new elections. “Unfortunately the fight among the political groups has witnessed a drop in legitimacy for the whole political system.”The current sparring is believed to be a preview of the presidential elections, scheduled for January next year. Tymoshenko is the front-runner, though her position takes a beating with every new piece of jaw-droppingly horrible economic news. Yushchenko for his part incredibly appears still to be considering re-election — or at least he has not said that he will not run – although his approval ratings are at 2.5 percent. (That could mean zero or lower, when you factor in the margin of error.)For this reason — and maybe because they at times actually are concerned for the future of their country (though this is not a given) — the two leaders have occasionally set aside their differences. Most recently this happened in the wake of the IMF bailout delay. Yushchenko and Tymoshenko issued a joint statement laying out a unified economic reform program. Both leaders now say they are confident that the country will receive the second $1.8 billion payment.The damage to both leaders’ reputations — in fact to the whole ruling class — has been irrevocable. Ukrainians will say in one breath that they want to be part of Europe and the West, but at the same time that they are disillusioned with the Orange Revolution, capitalism, as it is now practiced in their country, and even democracy.On Kiev’s central Independence Square, where hundreds of thousands gathered in 2004 to protest a stolen election and sweep Yushchenko and Tymoshenko to power, a few tents have stood since January. They are part of a movement called “All of them — Out!,” which seems mostly to be made up of groups from the nationalist fringe.“All of our leaders must go and be replaced by new forces,” said Nadezhda Batolkina, a movement member. As the weather warms, and with demonstrations expected throughout the country, we will soon know to what extent others agree with her.

Ukraine's Parliament Urges Top Banker's Dismissal

KIEV, Ukraine -- The Ukrainian parliament on Friday demanded the central bank chief be dismissed over the collapse of the national currency, accusing him of corruption and incompetence.
National Bank chief Volodymyr Stelmakh has denied having any hand in the exchange market speculations that caused the hryvna to lose half its value against the dollar last week.President Viktor Yushchenko is expected to ignore the nonbinding motion for Stelmakh to be fired. The motion was spearheaded by Yushchenko's rival, Prime Minister Yulia Tymoshenko, who has accused the central banker of conspiring with banks over the currency speculations and pocketing profits.Yushchenko has said the country needs the expertise of Stelmakh, his longtime associate, to weather the current financial crisis. The currency devaluation coincided with a drastic fall in steel exports, leading to a foreign currency squeeze.In the meantime, the Ukrainian currency has recovered some of last week's losses, which took it to 9.6 to the U.S. dollar from its September rate of 4.9 to the dollar.At the close of trading Friday, the hryvna was listed at 7.6 to the dollar, thanks to the National Bank's efforts to prop up the rate by selling hard currency.Tymoshenko has claimed Yushchenko was involved in the alleged corruption schemes.The president has dismissed the allegation, and his top aide this week accused Tymoshenko of seeking to take control of the National Bank for personal gains.Ukraine is sinking into a deep recession, with the economy expected to shrink up to 10 percent early next year, according to Yushchenko's estimates.Industrial output has fallen nearly 30 percent, as global demand for steel, the heart of the economy, halved.

Don’t Expect Service, With Or Without Smiles

KIEV, Ukraine -- Here’s a joke dating back to the times of the U.S.S.R.: In the metro, a woman says to a man: “Can you take your glasses off. You’re going to tear my stockings.”
I think only the Japanese can understand this sort of humor among all people from capitalist countries. I have never visited Tokyo, but I read that their metro is just as busy as ours.To be able to laugh at this joke one has to imagine oneself in the middle of a Kyiv metro carriage in a peak hour when people travel to or from work. People are pressed against one another as if they are fish in a can. There used to be jokes that one could get pregnant in the metro and not know by whom.Here is another curious phrase from the same sort of humor. A woman says to a man in a metro carriage: “Excuse me! Can you take your hand off!” Then to another man: “Not you, you’re ok.” People had to survive with this sort of service and it was easier to endure with laughter.Service remains bad in the metro. But it wasn’t just service that was bad, it was the whole philosophy of service back then. Unfortunately, these attitudes persist today.We ironically called it “unobtrusive Soviet service.” It wasn’t tactful or considerate. It existed for its own sake and could easily survive without the consumer. It didn’t care about the needs of its hypothetical clients in shops or wherever else transaction with the public took place.Foreign visitors to Ukraine rebelled against such a state of affairs. They did want to accept it, leading to funny situations.In the early 1990s, I worked in the press service of Narodniy Rukh political party. I worked with American Irene Jarosewich. One day we went to drop off some documents at a Kyiv hotel where parliament members lived. Afterwards, Irene felt tempted to dine in the hotel’s restaurant. I tried to delicately dissuade her, because I knew what restaurants were like, and suspected that it could not have a happy ending. But she insisted.We entered the restaurant’s great hall that was completely empty. Not a single visitor was to be seen at any of the tables. The waiters told us they will not serve us because they have a reception in a couple of hours. “We won’t eat for two hours. We’ll eat quickly and go,” she tried to persuade them.They advised us to talk to the administrator. He was sitting in a corner and writing something. He barely looked at Irene and continued his writing. He shook his head to all her arguments, with his eyes still fixed on the paper. “Soviet boor!” she exclaimed in the end. The administrator did not even so much as move his head to these words.But it didn’t end there. She poured out her frustration on to that parliament deputy in whose room we had left our coats. He put on his jacket with a parliament member’s badge on it, came down to the restaurant and firmly asked the administrator to feed us.Such impudence made the administrator stop writing and lift up his astounded eyes. When he saw the parliament member’s badge, he ordered the waiters to feed us. They were all afraid of authorities back then. Irene felt as if she were a World War II Red Army fighter who had set the Soviet flag atop the roof of Berlin’s Reichstag.At that time we, Soviet citizens, had an ironic attitude to foreigners who hoped to receive the same level of service in our country as they were accustomed to at home. We joked that they did not understand our realities. They couldn’t understand why a plumber cannot immediately come over to fix a leaky tap. They couldn’t understand why, in a shop with almost empty shelves, a sales assistant can just stand there and chat with her colleague, or even disappear for 10 minutes. They couldn’t understand why someone is being rude to them when you bring them money, i.e., contribute to the profitability of their establishment.But now I realize that I probably couldn’t explain the logic of Soviet service to the generation that was born after the U.S.S.R. These young people have a hard time believing this sort of thing.They have become foreigners to the U.S.S.R. They will hardly be able to imagine that if you said to someone then that “I’ll take my money elsewhere,” you would be ridiculed. There were few restaurants; there were queues in them. They didn’t have to care about their reputation and fight for clients.But Soviet people should thank former Communist Party General Secretary Leonid Brezhnev for having any service and any service industry at all. Until he came to power in 1960s, there was no such thing. The Soviet people had to be jacks of all trades and service themselves in everything. They had to repair their own flats, fix their own bathroom equipment and so on. There had been some restaurants. But they were meant for people with high incomes; in other words, for party and state bureaucrats.It seems that today we can exhale with relief. And even though the service industry is not flawlessly smooth, at least its philosophy is changing. It’s trying to satisfy the client. Former Soviet citizens should be able to rejoice.However, their joy is sometimes cut short by old habits that die hard. Last summer I visited a small town called Katerynopil in Cherkasy Oblast. When it was time to come back home, I came to the bus station. I had to squeeze myself inside the building between several refrigerators and a wall. It looked like a part of the bus station was rented out to someone selling household appliances, and they left it right in the middle of the passageway.I came to the cash desk. There was no one there, inside or outside the booth, not even a queue. Suddenly a woman sprang up from her chair and started sprinting. It turned out she was running towards the cash desk. When I realized that, I felt happier -- someone is hurrying to serve me. But I was about to get disappointed.When she got to her work station, the lady quickly grabbed her ringing cell phone. It was the phone call that made her hurry. She did not want to miss the call. For three or four minutes she talked on the phone, paying no attention whatsoever to me.Having said goodbye to her interlocutor, she sold me a ticket. I took it without looking. It wasn’t until I got inside the bus that I realized she charged me an extra fee for an early booking that I obviously had not made. This was yet more proof to me that Soviet service is still alive and well.

EU Proposes Deeper Ties To 6 Ex-Soviet Nations

BRUSSELS, Belgium -- Seeking to extend its reach into Russia's backyard, the European Union on Wednesday proposed deeper ties with six former Soviet nations, even suggesting that it could embrace Belarus, often described as the continent's last dictatFour months after the Caucasus exploded into conflict, and with growing concern over energy supplies from Russia to the EU, nations on the bloc's eastern flank have emerged as a new priority.On Wednesday the European Commission sought to tempt them with offers of free trade deals, closer energy ties, easier access to visas and financial assistance programs worth a total of €600 million, or $760 million, over two years.The proposed new "Eastern Partnership" with Armenia, Azerbaijan, Georgia, Ukraine, Moldova and Belarus is the boldest outreach to ex-Communist nations since the EU expanded in 2004 and 2007 to embrace the Baltics and all the former Warsaw Pact nations of Eastern Europe. Yet it will disappoint Ukraine, a country considerably bigger than France, and much smaller Moldova for holding out no firm prospect of EU membership.The new group, which is likely to meet in a Prague summit next spring, began life earlier this year because of pressure to counterbalance efforts by the French president, Nicolas Sarkozy, to forge closer links with and between Europe's southern neighbors.But the plan assumed greater importance after the fighting in Georgia in August, which underlined the power of a resurgent Russia and highlighted the risk of political instability in the east.Outlining the proposal, José Manuel Barroso, the European Commission president, denied suggestions that the EU was seeking to establish itself as an alternative power center to Moscow."The Cold War is over," said Barroso, "and where there is no Cold War, there should be no spheres of interest."Russia has reacted angrily to the expansion of NATO into its "near abroad" but has so far seen the EU as a less threatening prospect. The evolution of a free-trade zone on its doorstep might be beneficial to Moscow, analysts say.A senior European diplomat, who was not authorized to speak publicly on the subject, said that if the EU did not engage with these countries, there was a growing likelihood that Moscow would."If you don't offer these countries a future, there's always Russia," he said.Nicu Popescu, a research fellow at the European Council on Foreign Relations, argued that the move could force Russia to engage with the EU over the future of the six nations, all once part of the Soviet Union itself."The EU has a desire to cooperate with Russia," Popescu said, "but the problem is that Russia doesn't want to cooperate with the EU within the neighborhood. Only when the EU acts does Russia take it seriously - what works is forced cooperation."But Popescu warned that the announcement has not resolved European divisions over how to handle any policy associated with Russia."The big problem for these countries," he said, "is not a lack of promises but a failure to deliver on those promises."Benita Ferrero-Waldner, the European external relations commissioner, said that, while the Sarkozy plan for the Mediterranean focused on joint infrastructure projects, this plan would bring eastern nations closer to the EU by aligning them with the bloc's commercial standards.One unanswered question is the role of Belarus. In October, the European Union lifted temporarily a travel ban on the country's president, Aleksandr Lukashenko, following the release of political prisoners.That decision will be reviewed in March next year and, if confirmed, the Belarus president will be invited to a summit next April or May in Prague to launch the new "Eastern Partnership."The EU imposed sanctions on Lukashenko and about 40 other Belarussian officials in 1999 after crackdowns on the political opposition. In 2002 he was refused a visa by the Czech government when he wanted to attend a NATO summit meeting there.At the time, Lukashenko was reported to have threatened retaliation for the snub, saying he would flood Western Europe with illegal immigrants and drugs.Belarus is not a NATO member, though it cooperates with the alliance through its Partnership for Peace program.The issue of human rights does not feature prominently in the document published Wednesday on the proposed new partnership. The paper does, however, suggest that minimum standards need to be attained for those countries that want to negotiate an association agreement, which would intensify economic ties. That would be the next step toward EU membership.For Ukraine, the document has the benefit of differentiating it from other neighbor nations, like Syria, which have no aspiration to join the EU. But it also means that the favored relationship on offer to Kiev will be extended to Azerbaijan and Armenia. Perhaps to compensate, Barroso described Ukraine as being in the "avant-garde" of the Eastern Partnership.Poland has been a strong advocate of binding Ukraine more closely to European structures. Jacek Saryusz-Wolski, a Polish center-right European deputy and chairman of the Foreign Affairs Committee of the European Parliament, welcomed the move."The recent crisis in the South Caucasus," he said, "has once again brought to evidence the need for a strong EU presence in its Eastern neighborhood. For the sake of stability on our doorstep, we have decided to move beyond declarations, improve on our up-to-date performance and offer tangible benefits to our closest neighbors."