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VOA Ukraine Election Roundtable


Adrian Karmazyn: Hello and welcome to our Voice of America Roundtable on Ukraine and the Upcoming Parliamentary Elections. I’m Adrian Karmazyn.

Joining us today are Anders Aslund of the Institute for International Economics, Orest Deychakiwsky of the US Commission on Security and Cooperation in Europe, also known as the Helsinki Commission, Ambassador Steven Pifer, who is a former US Ambassador to Ukraine, and Michael McFaul of the Carnegie Endowment for International Peace and Stanford University.

I’d like to start off today’s discussion with a question about the significance of the March 26th election. Orest Deychakiwsky, would you start us off.

Orest Deychakiwsky: Well, I think they are very significant, because they’ll be a test on whether or not the promises of the Orange Revolution will be fulfilled. Let’s not forget, after all, what the proximate reason was for people coming out on the streets after the flawed 2004 elections. So I think it’ll be a test, first and foremost, with respect to the Ukrainian people. If the elections are not free and fair, that won’t give the confidence that things will continue to move forward in the direction of the consolidation of democracy, human rights, the rule of law. Second of all, I think they are important as a test for Ukraine’s neighbors. Let’s take a look a the opposition. Let’s say the opposition in Russia and Belarus, which is increasingly under the gun. If these elections weren’t going be free and fair, what kind of signal would that send? And also, what kind of signal would that send to the Putins and Lukashenkas of the world in terms of forward motion of democracy? And also, it’s a very important test in the sense of Ukraine’s movement towards the West: NATO, the Bush administration, the EU are all looking for Ukraine to have free and fair elections, for obvious reasons. The good news is that so far, if you look at the election process, if you read the reports, for example, of the OSCE-ODIHR – they recently issued reports on how things are going so far. The news is quite encouraging.

Adrian Karmazyn: Michael McFaul, you’re just back from Ukraine. Are you sensing that the sentiments there, that when, as people think about the elections coming up, are they thinking about these big issues, or what is this election about for them?

Michael McFaul: Well, I think, if you look at opinion polls from Ukraine, recently, there is the inevitable – which is disappointment with the Revolution. As someone who studies and teaches courses on revolutions, this is always the case -- expectations are never met. I think you have to add to that a fairly disappointing year in terms of government performance in Ukraine, and so when you look at voter attitudes, you should not be surprised that they are not happy with the results of the Orange Revolution, and you see that in the numbers. The flip side of that, however, is that there has not been a lot of movement in the aggregate numbers between the orange block, if you will, and the blue block, that is Regions of Ukraine. We can talk about it in the margins about how it’s changed, but basically you haven’t seen a radical shift of 20 or 30 points in favor of Mr. Yanukovych and the Regions of [Ukraine]. What you’ve seen is the split and the divide of the Orange Revolution. And, again, that’s inevitable. What brought that coalition together, to bring down a corrupt regime, are not the same things that unite them afterwards. And that’s the process, the post-revolutionary evolution that I think you see at play in Ukraine today. The real question, of course, in addition to all the things of the election itself, is what kind of government you get after the election, and will it be a re-play, and a re-configuration of the Orange coalition, or will it be a new configuration of some elements of the Orange coalition with Regions of Ukraine.

Adrian Karmazyn: Ambassador Pifer, what do you see as the significance of this election for Ukrainians?

Steven Pifer: Well, I would agree with Orest, but I also use the term: it’s not just a test, it’s also an opportunity. I mean, Ukraine can show with this election if the process is, indeed, free and fair, and if on March 27 the Monitoring Mission of the Organization for Security and Cooperation in Europe says: “This meets OSCE standards, period.” And I think Ukraine can demonstrate it has made a huge leap forward in terms of consolidating democratic institutions and democratic practices. So it’s an opportunity for Ukraine.

I think the other significance of this election is that, of course, with the constitutional changes that were agreed a year ago, after the election, the Rada chooses the prime minister, who is going to be both more independent from the president, and will have significantly expanded authority. I think for Ukraine that’s a good thing, in the sense that it moves Ukraine away from the super-presidency model that is characteristic of the former Soviet space -- it introduces some balance there. And, certainly, it’s the kind of balance that, I think, many would have liked to seen during the Kuchma years. Now, so it’s good in terms of introducing greater balance between the presidency and the prime minister; it’s also going to make forming a coherent policy more difficult, because there’s going to have to be an agreement, a meeting of minds between the president and the prime minister on major directions in both foreign and domestic policy, if Ukraine wants to move forward.

Adrian Karmazyn: Anders Aslund, do you feel that the concerns and disenchantment of Ukrainians regarding the situation in Ukraine, the economic situation, is justified? Has there been a decline in their living standards or at least not the economic growth that they’ve been hoping for?

Anders Aslund: Well, those are different things, but living standards have gone up very sharply, while the economic growth has increased very little. So you can say Ukraine, in a way, in the last year has been living very well on its savings. So, I think, that with regard to the elections now there are two major achievements -- what in particular Steve said -- that this means that Ukraine will be a full-fledged democracy, and I think this can be quite explosive in the former Soviet area, showing that a former Soviet republic, which has been quite messy, can be a full-fledged democracy and a really free state. I think this is the most important part, but the other one, which, I think, is also very important, is that it essentially means the Ukraine will become a parliamentary republic. And I hope that this will lead to a parliamentary system being spread to other countries in the former Soviet Union -- Kyrgyztan, for example, is on the way in that direction, because a parliament can control a government much more than is possible in a presidential system. The presidential system is essentially the recreation of the Central Committee -- that people in the presidential administration sit and call people and give them orders all around the s,tate administration, exactly as was done in the Communist party Central Committee. That has to stop. And therefore, I think, that the presidential system is particularly harmful in post-Soviet countries.

Adrian Karmazyn: And you still feel, though, that Ukraine will be still be governable with two competing power centers, the president and the prime minister?

Anders Aslund: I think that we will see now that the government will become all the more important, and who can become prime minister, it appears to me that Yuri Yekhanurov is an obvious candidate to lead a coalition government, almost regardless of what that coalition governnment will look like, and he and President Yushchenko have excellent relations. But I think that we’ll see in the election debate that economics will become more important. The strongest argument of Regions is that they can do something about economic performance. And I think that all Ukraine really needs to show that they have something to say with regard to economic performance also, and I’m afraid that Tymoshenko block has rather shown that they do not have much to say on that. So, my suspicion is that economic policy will move to the fore, because that’s what has not been well accomplished.

Adrian Karmazyn: I know that Anders Aslund and Michael McFaul have a book coming out shortly on the Orange Revolution in Ukraine, and I’m wondering how you would assess then the legacy of the Orange Revolution now, a year later, in terms of what President Yushchenko can claim as his successes.

Anders Aslund: I would put it in two phrases. First, freedom and democracy; secondly a West-oriented foreign policy, as Orest talked about.

Adrian Karmazyn: But then economics is not a positive legacy yet, or a positive accomplishement for President Yushchenko?

Michael McFaul: Well, not necessarily. No, I mean… but the Orange Revolution was not about economics, either… to me… and I think the chapters in our book illustrate it was about thwarting a corrupt, illegitimate, semi-authoritarian regime. And it was a moment when the people of Ukraine stood up and said: we’re not going to continue these post-Soviet or post-communist politics as usual. And that, I think, will be the legacy a hundred years from now. Who did what, you know… Poroshenko and Tymoshenko, and the corruption scandals and all the things that we, as experts, are focused in the immediate aftermath will become small footnotes to the Orange Revolution, because the Orange Revolution, I think, established -- just to reiterate what my colleagues have said -- that Ukraine now is firmly in the democratic community of states, and the second part that comes with that -- the democratic Western, European community of states. And maybe it’s too early to say that all is complete -- one can think of other revolutions that seemed like that -- I have the Philippines on my mind right now, as we celebrate 20 years after the People’s Power Revolution there, things don’t look so stable -- so I think it’s too early to say that – definitively -- Ukraine has made this leap. But I’m still cautiously optimistic that the trajectory is still in the right direction.

Adrian Karmazyn: Ambassdor Pifer.

Steven Pifer: I think one of the things that I detected in my visits to Ukraine after the Orange Revolution is, it seems, that today ordinary Ukrainians feel they understand they have political power in a way that two years ago they didn’t. And I think that’s potentially that’s a very powerful force, and if it’s allowed to operate in terms of democratic institutions, I think, it’s a political force that will push Ukraine in the right direction. And, certainly, going back two or three years ago, I think, most Ukrainians didn’t feel that they had the ability to affect the government. So, that’s a big breakthrough.

Adrian Karmazyn: And, Ambassador Pifer, in terms of some of the policy debates that are going on in Ukraine today, what do you think about some of those debates, do you feel that the policy recommendations of, let’s say, what Our Ukraine is proposing, versus what the Party of Regions is proposing, or Tymoshenko – are there any significant differences?

Ambassador Steven Pifer: Well, I think, I mean, part of the election is going to be about policies, part of the election, I think, is going to be about personalities. And I think that’s just the nature of an election like this. And I think there will be some big questions. I mean, if you’re looking at how the coalition or a coalition is formed, after the elections -- I mean, it seems to me there, really, are two possibilites: there is either some kind of reconciliation among the Orange forces, or there is some kind coalition between the Yushchenko forces and Yanukovych. My own view is that a reconciliation among the Orange forces is most likely to result in a situation where you have a president and a prime minister that can move forward in a coherent direction. I’m a little bit less convinced that, if you had some kind of an alliance or coalition between the Yushchenko forces and Yanukovych forces, that they could produce, between the government and the president, coherent policies -- either in the foreign policy area or in the domestic policy area.

Adrian Karmazyn: Orest Deychakivsky, how do you see some of the policy debates going on in Ukraine, and the different choices that Ukrainians have?

Orest Deychakivsky: I agree, basically, with Steve in terms of... that a coalition between Orange forces or the current Orange forces would be the more desirable outcome for a number of reasons, notwithstanding a lot of the mistakes that have been made, including some of the, you know, under the Tymoshenko government -- we didn’t know we see the most pro-market orientation, although I should say that Tymoshenko isn’t as anti-free-market as some people have indicated, and she has, in fact, you know, her block did support WTO legislation, MES for Europe, but with the Yanukovych camp, I think, you’d have considerable problems in any coalition, despite of the fact that a lot of the people in the Regions do talk like Republicans, it doesn’t mean they’d act like Republicans once they come in. Perhaps they would, but, I think, based on their past, there’s good reason to have grounds for skepticism, including -- let’s not forget -- the composition of a lot -- by no means all -- but a lot of the people on the Regions party list, a lot of these people, shall we say, have questions as to their backgrounds, let’s take a look at what many of them were involved with allegedly: corruption, with electoral abuse, that’s something that in fact, I think, has led to the disillusionment of a lot of people with the Orange Revolution, that no senior figures in the now opposition have been brought up on any kind of charges. And, of course, once they get into parliament, they’ll have parliamentary immunity which, you know, can engender even more cynicism among those that spent time on the Maidan or those who supported the Orange coalition. I’m not saying that an Orange-Blue coalition would be the end of the world. A lot would depend on where the correlation of forces would go. In other words, to use that old Marxist term, in other words, would it go into the direction where Our Ukraine would push, let’s say, or pull, shall we say, the Regions in the direction of West, democracy, rule of law, human rights, etc., or would it move in the other direction. That would be a big question. I think the chances of things moving in the right way would be definitely greater, even with all the imperfections of such a coalition. If you had a restoration of the old coalition essentially that existed
before September 7th.

Adrian Karmazyn: Do any of you see in Ukraine now both sides, the Orange side and the Blue side, looking toward the other side’s electorate, in other words, is there an outreach from the Yanukovych side, the Party of Regions, to Central-West Ukraine, and is Our Ukraine working to try to garner more support in the East and the South? Are there any indications that there is some kind of consolidation going on in the political system in Ukraine?

Anders Aslund: If I may... I think that this is history. It’s honorable and good history. I don’t see any threat of the Regions turning to Russia now. The leading forces in the Regions are big companies that are turning to the West. They don’t own any enterprises in Russia, and their concern is to buy companies in the European Union. I don’t see the Russian threat. And the Regions now has become much more a company party than it was before, with Renat Akhmetov and his people playing a bigger role, which is the reason why they have really adopted [a] Republican economic program. So, if you look up on the programs, there are two strong free-market parties. That is the Regions and Our Ukraine, while the Tymoshenko’s block, the Communists and the Socialists are focusing on redistribution, while Our Ukraine and Regions are focusing on economic growth. So I think what you said was one year ago. I think today this is not democracy. I think that democracy is really won, and that the issue today is rather -- do we focus on economic growth, or do we focus on economic redistribution? This is very much to bury [the] disruptive reprivatization issue, and Regions and Our Ukraine are united on that point. So I would rather welcome a big coalition, but I think it’s very important that Our Ukraine appoints the prime minister in such a coalition.

Adrian Karmazyn: But it might have some kind of impact in terms of the type of economy you would have, and the transparency those two parties have different outlooks on the openness and the transparency of the economy?

Anders Aslund: Yes, but I think that this really needs to be resolved through competition and through the structure in the parliament. What I would hope for for Ukraine, is that it will have weak governments that break down every year or so approximately [as] in the Baltic states, all those coalition governments. I think that is the discipline that needs to be imposed through competition, through coalitions, rather than by what they declare that they are. You have rather odious businessmen in all parties.

Michael McFaul: And that’s exactly, to get back to the democracy side. I mean, I’m generally optimistic about the trajectory. But competition is the key word here. The fact of the matter is that there is no electoral competition in much of the Eastern part of Ukraine. Nothing has changed since the Orange Revolution. There have been feeble attempts by various folks, Yulia Tymoshenko and Socialists, Mr. [Volodymyr] Lytvyn to compete. But there’s no debate about politics in the East. There’s just a monopoly. And that, I think, is a big problem moving forward. At first blush, the notion of a coalition between Regions of Ukraine and Our Ukraine seems like it breaks down that cleavage, and they come together, I think – Ander’s point -- that these are the two free markets blocks. You know, over time, maybe that may be good, that they would genuinely become a kind of free-market block vs. a left-of-center block. I’m not convinced yet that that is the cleavage that’s really at play. Actually, I think it’s more ethnic, and I know it’s politically incorrect to say, you know, but ethnicity actually does matter. And the monopolization of politics -- you don’t have free media in East. You don’t have access to different views. The kind of competition you see in Kyiv, for instance, in the elections, in terms of leafleting and different positions, you simply don’t see in the East. And until that changes, I think, ironically, that will affect the economic side, too. And here, I guess, you know, whether it’s distributional politics, or anti-corruption, it all depends on one’s point of view. Let’s take the reprivatization of Kryvorizhstal. On the one hand you can look at that as a kind of re-distribution in a kind of a Socialist way; there’s another way to look at it: it’s fighting…it’s corruption. Who got that? It’s the president’s son-in-law, and he got it for 5 or 6 times below the market price. That doesn’t sound too Republican to me. And, therefore, to re-write that and to say, ‘let’s have an open competition’ that may be, you know, more market-oriented, and second, the real question, I think moving forward for the East, are they prepared to actually be part of the world capitalist system. Because what happened there when it was really fully open, a real competition, was that an external, a foreign entity bought it. And what I don’t know, and I want to defer back to my colleagues, are they prepared in the East to be fully integrated players, where they might actually not be competitive. That I think is the question. Competition is the key – what Anders said.

Anders Aslund: I think that they have changed. Kryvorizhstal, I think, is quite a specific case. I agree with you on that, and both Yushchenko and Yekhanurov have said that we should put an end to reprivatization of Kryvorizhstal. Because if you start dealing with the others, all of them are imperfect. But the result today of the reprivatization campaign is that there will be more big businessmen in this new parliament than in the old one, and in a case like Renat Akhmetov you can see, he says that he decided in November to join the parliament. So it’s after an assessment that the situation is that vulnerable that he joins, needs to join the parliament. So, it’s really now a sense that your property rights are not safe, if you are not sitting in parliament – that should really be the main objective of this parliament to change -- so that Ukrainian businessmen can deal with business and are not forced to sit in parliament.

Adrian Karmazyn: Ambassador Pifer, how do you see the development in terms of the consolidation of Ukrainian society, either politically or economically?

Steven Pifer: I think there still is this difference between the orange oblasts and the blue oblasts, and that’s going to take some time to overcome. The question is whether this election begins to find some ways to begin to blurr that line. We’ll see on March 27th whether or not that’s been the case. I think Mike’s right. Some of the monopolization of the media – not by the government, but by business interests in the East, are limiting the amount of competitive election material that gets distributed there, and that’s unfortunate. But you’re going to see, I think, in some ways a continuation of the fight that you saw back in December 2004. Hopefully played out, though, in a more democratic way.

Adrian Karmazyn: Are there any signs that there will be any problem with government interference in the way the election is conducted?

Steven Pifer: I’m actually pretty optimistic on this score. It seems to me that, first of all, the media is no longer operating under government pressure. Now, certainly, I talked to Ukrainian reporters who say, well, ‘temnyky’ [coverage instructions] continue to exist, but they don’t come from the government. They come from the owner of the television station or the owner of the newspaper. That’s not desirable, but it’s a huge change from the situation that Ukraine faced two or three years ago. So, that’s good. I think you’re going to have a lot of domestic observers, a lot of international observers watching this election very carefully. The press is going to be watching. And I think you saw – although it did not go as far as people might have thought – but last year there were some moves against electoral commission officials who did permit fraud. And I think this now raises the prospect that you did not have in 2004, 2002 and 1999 that electoral officials who allow fraud or commit fraud can be brought to account later. And I think that can have a huge deterrent value. So there is a lot of reasons, I think, that this election has a good prospect for being free and fair. And certainly from a process point it’s certainly in Ukraine’s interest that on March 27th the election is pronounced to have met all OSCE standards and is a demonstration that Ukraine has really learned a lesson and has now consolidated democratic practices.

Michael McFaul: And yet I have to say… I was just there two weeks ago talking to groups that did electoral monitoring during the presidential election. And if you look at the commissions in the East, they really haven’t changed. If you look at the penetration of the groups that monitor – the Committee of Ukrainian Voters, the Znayu Coalition – they realle have no greater capacity in the East that they had in 2004. And so, maybe they’ll do the right thing, but I’m kind of surprised by the opposite – and this is a big legacy that Ukraine has, and like all transitions, it’s a big legacy – what do you do about abuses in the past? Tens, let alone hundreds of people, did not go to jail or lose their jobs for practicing electoral fraud. How was in charge of it. Mr Yanukovych had something to do with it and now he’s running at no cost to him. Think about that – that he was very much part of the conspiracy to steel the election from [Yushchenko] and now he’s is running with no cost. I have to say that when you look comparatively at other big transitions, difficult transitions, it’s a difficult balance, because if you have full lustration and you go after everybody, that usually leads to civil war, and so, in very successful transitions – I’m thinking about South Africa, for instance – where they basically had to say ‘we’re not going to go back and clean up all the abuses of the past’ – so had had murderers, and there is no other word for them, who then served in the parliament after the transition in South Africa. That a good news scenario. There are other bad news scenarios, too. Serbia in 2000. They brought down a dictator – Mr. Milosevic. And a deal was done by Mr. Jinjic with these corrupt officials in the name of unity, and it looked like a really brilliant deal when it was done on the eve of the breakthrough there. And three years later they killed him. So, was that a good thing or a bad thing for consolidation and unity in Serbia. I was there recently and I think the verdict is still out. Ukraine has not dealt with a lot of its past. We still don’t know who killed Gongadze. We still don’t know a lot of things from the past that people are nervous about. And I think in particular – dealing with those abuses in the East – I think the should learn from these other cases – the Truth and Reconciliation Commission [in South Africa], some process where they’re not just left to the elites to cut deals about it.

Steven Pifer: I think these are fair points, but looking at this election I think for those who may be considering committing fraud, there is a risk, the risk of a penalty this time that has not existed in past elections, and that I think will have some deterrent effect and I’m hoping that will make a contribution.

Micheal McFaul: And of Luhansk comes in at 95% for Regions [of Ukraine], that does not look too democratic for me. I want to be clear, though, on this. My own Congress in my own country – the most corrupt, uncompetitive election in the House of Representatives, with all due respect – outrageous corruption, outrageous non-competitiveness, where 95% of the seats are a done deal, there’s no competition. So, this is not a Ukrainian problem; this is a problem of all societies trying to be democratic, and the key word here is competition – it’s not all these other things – it’s competition.

Adrian Karmazyn: And for Yushchenko, I assume, it was a questions of not wanting to be seen in the East as persecuting the losers, if you will. Was that an issue for not going after many of these election violations?

Orest Deychakiwsky: I think that’s part of it. As to the questions of balance, Mike said it absolutely right – you have to strike a balance, and in fact that was one of the issues with reprivatization and how far to go. And in fact, I think, if they had been more clear about it at the outset a year ago in terms of how many they might go for instead of coming up with wild numbers, that would have made the potential foreign investors feel a lot more comfortable. In terms of what you were saying, Steve, in terms of the accountability, people being afraid of learning a lesson even if you haven’t had full-scale prosecutions nowhere near what you should, even if you want to go with maintaining the balance -- apparently there were some problems in filling out the district electoral commission seats, precisely because of that – people were afraid that they could get in trouble and be accountable if something goes wrong. Although from what I understand that problem has been resolved. But the question, too, is now what kind of accountability will the Rada have – and irrespective of what coalition is formed. Some people have been raising questions about institutional problems in the Rada and whether or not, despite desire by many and the arguments that have been made for having a parliamentary system – one could run into problems on whether or not the Rada is capable as an institution of moving things forward and facilitating positive changes.

Adrian Karmazyn: And, Orest Deychakiwsky, as you represent the Helsinki Commission – what will be the OSCE presence in the March 26th election?

Orest Deychakiwsky: The OSCE is planning to send 600 short-term observers. That just the ODIHR component, but then you also have people for the OSCE Parliamentary Assembly, Council of Europe, EU. I think you’ll have plenty of international observers. I have noticed, quite frankly, even with the Helsinki Commission in Congress, a considerably more relaxed attitude towards these elections, and for good reason, because the expectation is that they will be free and fair. And there’s good reason for the expectation, because if I think back a month before the October 31 [first round of the 2004 presidential] election, you had Congressional statements, you had State Department statements, you had all sorts of expressions of concern. Why? Because the pre-election environment was pretty bad as we all remember. There were all those things that Steve talked about that we’ve seen – the positives – the lack of centralized abuse of administrative resources, a freer media – a lot of the things that did not exist before the 2004 elections. Don’t forget, you had intimidation of journalists, you had the ‘temnyky’ [coverage instructions], as was pointed out. You had the intimidation even of people and people on the electoral commissions, and all sorts of incentives for them to perform the right way from the central authority’s, from the Kuchma regime’s perspective.

Michael McFaul: I think there is an other important element to why there is less interest in this. I think the election is going to be better, but I think we shouldn’t exaggerate. Talk to Yulia Tymoshenko about access to free media. She has a very different opinion about that. But the stakes are a lot lower. That is – if this was a re-run of the presidential election, I bet you a lot more people would be a lot more nervous and complaining about the irregularities. But this is a parliamentary election where we know that no party has any chance of obtaining 51% of 50% +1. And that’s good. That means that after the election, after the final distribution of votes, you’re going to have some coalition politics afterwards. So, whether Regions 25% or 30%, it’s actually not as decisive. In the presidential election, the difference of 49% and 52% was seen as very crucial and as very important in terms of the trajectory of the country.

Adrian Karmazyn: Now I’d like to turn to a few questions about some of the external factors or issues in the parliamentary elections. And I’d like to start with US policy in Ukraine, and I’d like to ask the panelists what you think about how the US has been handling the situation in Ukraine for the past year after the Orange Revolution. Ambassdor Pifer, if you could start off.

Steven Pifer: I think certainly you’ve had a big change in the way the United States looked at Ukraine after the Orange Revolution. If you go back to 2002, in the wake of the Gongadze murder, questions about the 2002 Rada election, the Kolchuha episode [alleged sale by the Kuchma government of sophisticated radar equipment to Iraq in violation of UN sanctions], where is Ukraine going – the attitude in Washington I think you’d have to describe as one of Ukraine fatigue, sort of frustration that the country had not made more progress, that after considerable investment of energy by the West, assistance resources, Ukraine really did seem to have set its strategic direction. That changed after the Orange Revolution. In Washington you found people excited by what they saw, because you saw Ukraine moving toward a more consolidated democracy, hopefully, market economy, more closely integrated into Europe and the Euro-Atlantic community, and in the sense of how the United States looks at Ukraine, that seemed to make sense both for Ukraine, but also for the kind of Europe that we want to see evolve in the coming years. So, there was an uptake in interest. There was an effort then to engage Ukraine, and I think a fairly successful visit by President Yushchenko when he came here in April. One of the things that that visit produced was a joint statement which both sides described as “this is sort of our homework assignment,” our road map for moving forward. And actually a lot the stuff does not get a lot of coverage and certainly there is some frustration that there is some of the big ticket items in that statement – Jackson-Vanik graduation for Ukraine, for example or the bilateral WTO protocol have not yet been achieved – if you go and you look at the various tasks […?…], there is quite a bit of movement. And I think that there is a thickening of the relationship over the course of the last year, albeit in a backdrop where there is some frustration in part of Washington that Ukraine has not moved in a more focused way to use 2005 to move down the course in a way that was identified in the Orange Revolution.

Adrian Karmazyn: Anders Aslund, what do you see as some of the US economic interests in Ukraine?

Anders Aslund: Clearly now, we are seeing a lot of foreign direct investment in Ukraine. If you take the foreign direct investment of last year of $7.3 billion altogether, that’s almost as much as Ukraine had got previously during 14 years. And this year Ukraine will get about as much foreign direct investment as last year, even without Kryvorizhstal. So, say $1 billion for UkrSocBank is already a done deal. UkrTeleKom will most probably be privatized this year […?…]. So, already there we have $5 billion. And, of course, American companies will be involved in this as well. So, this is a time of massive foreign direct investment – not because Ukraine is growing very fast, but because this is a time for a strategic placement on the Ukraine map. And therefore it’s more a matter of investment than of trade, because US-Ukraine trade will probably be less important than US investment in Ukraine. And, of course, around the corner we have WTO accession. The US view now is that Ukraine is likely to join the WTO before Russia, given how much remains to be done in the two cases.

Adrian Karmazyn: And Orest Deychakiwsky, what’s the view from Capitol Hill, what are the sentiments on Capitol Hill? Is there still Ukraine fatigue?

Orest Deychakiwsky: Well, first of all it’s very difficult for to speak for any one person on Capitol Hill given the diversity of views there. But I would say there is no real Ukraine fatigue, certainly not in comparison to what Steve was talking about in the 2002-2003 time period for all the reasons that Steve outlined. And I think Congress was very energized and emboldened and encouraged and positive as everybody else was – whether it be the administration, the American public that follows these kind of things.

Adrian Karmazyn: And is that translating in terms of assistance or other issues?

Orest Deychakiwsky: In terms of assistance, first of all, you could argue – and this sounds like heresy – that assistance in terms of numbers is not quite as important as it once was. But let me caveat that. The president put in a request under the Freedom Support Act, which is the majority, but not by any means all of the assistance that comes to Ukraine, of $85 million for the next fiscal year. That’s in comparison to the $88 million that was appropriated last year. Now, this is going to have to wind its way through the House and Senate. I’m going to venture to guess that probably the end result, if everything keeps going, if the trajectory keeps going the way one would hope it would that it will come out in that ballpark. A lot of that money goes for very important things – whether for the Chornobyl nuclear shelter – I think there is a $20 million dollar commitment to that, at least – a lot of democracy building, there is still a lot of work in terms of civil society, independent media, anti-corruption – a lot of US assistance and EU assistance goes for battling corruption, which is still, despite some of the progress that has been made, its still a very serious and endemic problem in Ukraine, and will take a lot of time and effort to overcome.

Adrian Karmazyn: What are some of the other US interests, strategic interests – does the US need or want to see Ukraine in NATO, in the European Union.

Michael McFaul: Frankly, I think that’s less important. What I think is most important is seeing Ukrainian democracy succeed. And I have to say I agree with the general comments of my colleagues about how things have changes, more interest and attention, but disappointing in its usual way is how America does its foreign policy. I have seen – talking with senior administration officials – they have the same disappointment in Yushchenko and the Orange Revolution as Ukrainians do. This is not a time for “steady as she goes” with our Freedom Support Act. I would have liked to have seen a tripling, quadrupling. This is the moment. Breakthrough is the moment when you can consolidate democracy. Anti-corruption, for instance, is a giant problem. You have this window of opportunity now, and what do we do? We just say it’s kind of the same thing. I just spent several weeks out in Ukraine looking at Agency for International Development assistance, and – very impressive what they did up to the Orange Revolution; I would say one of the best programs I’ve ever seen around the world, and yet we don’t seize the opportunity; we don’t see that consolidating democracy in Ukraine is our best tool for helping to promote democracy in other places in the region. I guess we don’t act strategically – the budget is kind of “march along in the same way.” I would like us to say – ok, this is a moment of opportunity. We should be focused. And, quite frankly, at the highest levels of the Bush administration Ukraine is not an issue. Ukraine is part of the past. They have other big places, big difficult places that they’re really focused on. So for them – not for the people working the issues – I’m talking about the President, the Vice-President, the Secretary of State. I would like to see a little bit more attention to help with what I think is going to be the central issue for Ukraine in the next decade – an that’s corruption.

Orest Deychakiwsky: I completely agree with you on principle. If I had my way, I would love to see more assistance for Ukraine. But part of the problem is, as you correctly said, Ukraine and even that part of the world, is simply not as high a priority given the US’s global interests. And if you look even at the president’s budget request – it’s all relative in terms of attention, but one interesting indicator is – Ukraine, at least, gets about the same amount as it did last year. Of course, don’t forget that there was a $60 million supplemental for FY 05, which is a big boost coming after the Orange Revolution. But the pie, the overall pie, for monies going to the FSU [Former Soviet Union] under the Freedom Support Act has really shrunk, so Ukraine actually, comparatively, does well and gets more than Russia under the Freedom Support Act. It’s all relative. And I just, given the budget constraints, wish it weren’t so, but just looking at it realistically, sadly it’s difficult for me to imagine some huge increase.

Anders Aslund: Actually, let me jump in here. You left our something very important, Mike, and that is Secretary of Defense Donald Rumsfeld, who is strongly committed to Ukraine, and I think that overall this will become the main issue in US policy toward Ukraine – whether Ukraine will start qualifying as a member of NATO and member Action Plan, whether that will be considered later in the spring. NATO is what can be done relatively fast for Ukraine, and that can work as an anchor in the West. [Membership in t]he European Union takes an enormously long time, and you don’t have the same milestones that you get with NATO. So, I think, the big topic in Washington with regard to Ukraine after the election will become NATO.

Steven Pifer: That’s one where I think is actually is a really clear and unified US government position. I think the US government says, looking down the road 5-6-7 years, what helps advance the administration’s vision of a more stable and secure Europe. And I think you can find in the White House, in the Defense Department and in the State Department that Ukraine as a member of NATO helps achieve that vision for Europe. It helps promote a more stable and more secure continent. So the question really becomes, … I think the United States is prepared to be a friend of court of Ukraine in NATO. I think there are other countries – Poland, other states in Central Europe, the Baltic states – that would like to encourage Ukraine. So the questions really becomes – does Ukraine wish to move in that direction? And that, I think, is going to be one of the key issues after this election. President Yushchenko has very clearly laid out his Euro-Atlantic course, part of which is bringing Ukraine into NATO. The question will be – the prime minister, who heads the government – does the prime minister share that vision? And, if that’s the case, then you have a unified government approach, but then there are going to be a couple of other questions – can you build in the Rada a coalition of parties that support Ukraine moving toward NATO, and then, finally, but also very important is – because this will be a task, first and foremost, for the president and the prime minister – can they articulate to the Ukrainian people their view of the wisdom of Ukraine entering NATO in a way that it begins to generate more public support. Because when you look at the opinion polls, there is very high public support in Ukraine for joining the European Union. The support is very soft at this point for joining NATO – 20-25%. I think if the government begins to explain [that] NATO is a very different institution from what it was 10 or 20 years ago, but I think the government is going to have to take the lead after the election in beginning to explain that joining NATO meets certain Ukrainian interests, and begin to build that support. So, I think the door is definitely going to be open for Ukraine. Ukraine then needs to take steps to move itself closer to NATO.

Adrian Karmazyn: What about Russia’s vision for Ukraine, or interest in Ukraine, how does that relate to what we’re talking about here in terms of NATO membership, and the way some people in Ukraine want Ukraine to move?

Steven Pifer: Well, I think it’s been fairly clear, if you look at the approach of the Kremlin toward Ukraine over the last year, that the Russians are not fully reconciled to the aftermath of the Orange Revolution, and they’re not happy about the notion of Ukraine moving down a Euro-Atlantic path. In my own mind, there’s a couple of points here. The first is -- I think there’s still many in Russia who tend to see this, really, as a zero sum competition. So, they see Ukraine moving towards the West as somehow a loss for Russian security and other national interests. I think we need to move beyond that. I mean, if Russia is, in fact, […?…] relations with Europe, it shouldn’t see a Ukraine that’s drawing closer to Europe as a threat. The second point, I sometimes wonder, is if you look at Russian policy toward Ukraine over the last several years, I sometimes wonder if there is a good understanding in Russia of what’s going on in Ukraine. The most striking example to me was, in the aftermath of the Orange Revolution, you had everybody in Russia looking at what had happened in Ukraine not as an this incredible example of the Ukrainian people saying, you know, we’ve had enough of corruption, we’ve had enough of having elections stolen, we want to change, but from the top down everyone was saying -- well this is an example of an American plot to somehow pull Ukraine away from Russia. And at some point, when you hear everybody saying this, maybe they do believe it, which really suggests that there’s a fundamental misunderstanding in the Kremlin of what’s going on, of what’s happened in Ukraine. And I think that’s worrisome, because if there’s that analysis, it leads to unpredictable and, perhaps, bad policy.

Michael McFaul: Well, it depends, too, which Russians we’re talking about. Right? I mean, for some, especially spun in the Russian press, this was an American plot, for others they understood exactly what it was. It was a people rising against a corrupt regime. And if I were sitting in the Kremlin, I would be worried about that. Because you have a tremendous explosion of corruption in Russia, and now a time when they would have to somehow figure out a succession story after Putin. The other thing, though, I think is very important to understand in Ukraine vis-à-vis Russia, is that Regions [of Ukraine] is not some appendage of the Kremlin. I think this was a misperception on our part, frankly, here in Washington. We categorized this as a black-and-white issue, or a blue-and-orange issue. That was really ridiculous. Lots of people made a lot of noise about the Russian “polittekhnologi,” public relations specialists, that worked for Yanukovych as evidence that these guys are just serving the interests of the Kremlin. Well, today, they’re all Americans working for Regions [of Ukraine], and really big contracts, by the way. They make the Russian effort look miniscule. And for Mr. [Viktor] Medvechuk, too. Americans are working for them. Nobody now says: well now Regions [of Ukraine] – it’s part of an American plot. In other words, Eastern Ukraine and the businessmen that Anders was talking about, I think, have their own economic interest, and they’re not firmly aligned with what the Kremlin would like to see for Ukraine. And moving forward – I think we need to get used to a much more complex picture between Eastern Ukraine and its relationship with the Kremlin.

Adrian Karmazyn: I’m afraid I have about 20 seconds for each of us as we wrap up. What issues will the new Ukrainian prime minister and the president working with the prime minister face after the parliamentary election in terms of top priorities for the new government.

Orest Deychakiwsky: Whether or not they continue to move in a direction and fulfill the promises of the Orange Revolution of becoming a normal, democratic, rule of law, human rights. I keep going back to that. I remember Kirovohrad #100 where I observed the [presidential] election. People were getting kicked out of the precinct electoral commissions, where they were party observers. What their biggest concern [was] – and you heard that echo all over – that we want to live in a normal, civilized, democratic country. And that’s the biggest challenge they face.

Michael McFaul: I would say the same thing, but in another way. The key challenge is a stable coalition that can form a stable and transparent government. The worst scenario for Ukraine is a coalition that brings to power a prime minister that can’t keep the votes together, a majority set of votes, to rule for a long time. And then the second thing that goes with that, of course, [is that] we want it to be a transparent government.

Steven Pifer: I’d make two points -- adding to what Mike said – I think it’s important that there be a stable prime minister, but that there also then be some coherence of views between the president and the prime minister so that Ukraine in moving in a forward direction as opposed to a stalemate with fighting between the presidency and the cabinet. The second point, I think, is in terms of what Ukrainians will be looking for – is that coherence applied in the economic area. First of all, what voters are looking for from the government is – is this government going to create conditions in which my day-to-day life gets better, in which my living standards can rise, I can make more money, I can look forward to new economic opportunities for my children. I think that will be one thing that you saw in 2005 in part because President Yushchenko and then Prime Minister Tymoshenko had different visions for how to move Ukraine forward. But people are going to look first and foremost and judge the government on economic terms.

Anders Aslund: First get Ukraine into the WTO, then a big legislative agenda with a lot of economic and financial legislation, do away with the economic code, adopt a law on joint stock companies, various laws to improve property rights, registration, judicial reform has to be started in a serious fashion. And then the big social reforms, educational reform and medical care reform. Ukraine finally needs to get down to these points.


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