5THE UKRAINIAN WEEKLY SUNDAY, JANUARY 17, 2010No. 3
2009: THE YEAR IN REVIEW
urbulent was the way to describe 2009 forUkraine, which plunged into financial crisis. Noother European country suffered as much asUkraine, whose currency was devalued by more than 60percent since its peak of 4.95 hrv per $1 in August 2008.In addition, the country’s industrial production fell by 31percent in 2009. Prime Minister Yulia Tymoshenko con-fronted the challenge of minimizing the crisis fallout,while at the same time campaigning for the 2010 presi-dential elections.Her critics attacked her for pursuing populist policies,such as increasing wages and hiring more governmentstaff, when the state treasury was broke as early as thespring. Ms. Tymoshenko herself admitted that her gov-ernment would not have been able to make all its pay-ments without the help of three tranches of loans, worthapproximately $10.6 billion, provided by theInternational Monetary Fund. Her critics believe thatinstead of borrowing money, Ms. Tymoshenko shouldhave been introducing radical reforms to the Ukrainianeconomy, reducing government waste, eliminating out-dated Soviet-era benefits and trimming the bureaucracy.The year began with what is becoming an annual tra-dition in Ukraine – a natural gas conflict provoked bythe government of Russian Federation Prime MinisterVladimir Putin. Whereas the New Year’s Day crisis of 2006 lasted only three days, the Russian governmentplanned months in advance for the 2009 crisis, whichlasted 18 days. Turning off the spigots on New Year’sDay, Gazprom launched into a smear campaign againstthe Ukrainian government, alleging it owed hundreds of millions of dollars. The state-owned monopoly claimedthe Ukrainian government was stealing natural gasbound for Europe, which was broadcast repeatedlythroughout the continent as part of a well-calculatedstrategy aimed at discrediting Ukraine’s role as a reliabletransit intermediary.President Viktor Yushchenko and Prime MinisterTymoshenko initially formed a united front against theRussian attack, issuing a January 1 joint statement. Yetonce Ms. Tymoshenko had reached an agreement withMr. Putin that put an end to the crisis, Mr. Yushchenkoreverted back to his relentless attacks against the primeminister, declaring her deal an “evident defeat.”Ms. Tymoshenko achieved an average price for natu-ral gas of about $230 per 1,000 cubic meter, which shetouted as lower than what any European nation pays. Yetit was 30 percent higher than Ukraine’s 2008 rate andMs. Tymoshenko could not get Gazprom to pay more intransit fees, which remained at $1.70 per meter. Inresponse to the president’s criticism that she failed toincrease the transit rate, Ms. Tymoshenko said that, ascompensation, her government secured a $25 (per 1,000cubic meters) discount (to $154) for natural gas used as“technical fuel” to pump gas through pipelines forEuropean customers.The 2009 New Year’s crisis was merely the lateststrike in an extensive campaign the Russian governmentwill continue pursuing to eliminate the Ukrainian transitmonopoly of Russian natural gas. By staging crises,Gazprom aims to convince the Europeans to support theNord Stream pipeline, which would transport gas bybypassing Ukraine under the Baltic Sea and intoGermany, or pressure Ukraine into surrendering its con-trol of the transit system by submitting it to an interna-tional consortium. As another solution, Mr. Putin sug-gested to German television viewers during the crisisthat the Russian government buy the pipelines from theUkrainian government, “which makes a fetish of the gastransport system, considers it its national heritage,almost as if getting it from heaven, and as not subject toprivatization.”The January natural gas crisis exacerbated Ukraine’sfinancial crisis, the seriousness of which led FinanceMinister Viktor Pynzenyk to submit his resignation onFebruary 17 out of disagreement with the prime minis-ter’s economic policy. It’s widely believed that Mr.Pynzenyk was the author of an anonymous memoran-dum, released on January 27, that warned of an impend-ing collapse of the Ukrainian economy unless drasticmeasures were taken. Prime Minister Tymoshenko alleg-edly forbid distribution of the January 6 memo addressedto the Cabinet of Ministers and ordered Mr. Pynzenyk torecall it, before he allegedly leaked it to the Ukrainiannews site, Ekonomichna Pravda.Prime Minister Tymoshenko had a history of cutting
A turbulent yearfor Ukraine
backroom deals with the Communist Party of Ukraine,which resurfaced when the Cabinet of Ministers votedon January 21 vote to reinstate Olha Ginzberg as directorof the State Archives Committee of Ukraine. A formernational deputy of the Communist Party of Ukraine, Ms.Ginzburg has no education in the social sciences orarchives experience, having built her career serving as aCommunist Party secretary and assistant director at afactory in Konotop, Sumy Oblast. Among the favors theprime minister gained from reinstating Ms. Ginzburgwas the Communist Party’s support for a January 26vote to dismiss Volodymyr Stelmakh, the chair of theNational Bank of Ukraine. Then Ms. Tymoshenko sur-vived a no-confidence vote on February 5 afterCommunist Party Chair Petro Symonenko and severalfellow party members were absent from Parliament onthat day and neglected to support the Party of Regionsinitiative.Just two days later, on January 23, PresidentYushchenko issued a decree ordering all governmentorgans to disclose all remaining Soviet repression-relat-ed documents issued between 1917 and 1991 that wereclassified as secret or top secret. Valentyn Nalyvaichenkosaid the Security Service of Ukraine (SBU), where heserved as acting chair at the time, would make publiclyaccessible all its classified documents on Soviet-erarepressions – a collection of more than 800,000 items.The president’s decree was the latest step in a three-year campaign to make Ukraine’s archived Soviet docu-ments more accessible to Ukrainians and foreignersalike. “The president’s position lies in that crimes againstpeople’s freedoms and rights, and the criminal actions of government organs shouldn’t be and can’t be concealedbehind a classification of secrecy,” Mr. Nalyvaichenkotold a January 27 press conference at SBU headquartersin central Kyiv. “The decree once and for all removesthe barrier of secrecy, declassifying and publicizing thearchives – that is, giving access to all, not just privilegedhistorians, but all citizens,” he noted.While the SBU was releasing documents, PresidentYushchenko released his anger against Prime MinisterTymoshenko during a February 10 meeting of theNational Security and Defense Council, the details of which were leaked to Ukrayinska Pravda reporter SerhiiLeschenko, one of Ukraine’s top journalists. Behindclosed doors, the two leaders accused each other of bringing the country to ruin and hurled mutual accusa-tions of theft and corruption before the council’s startledmembers.“Yulia Volodymyrivna, you regularly stole gas, andnow you’re teaching us how to get rid of corrupt peo-ple,” the president allegedly erupted during the meeting,later accusing her in front of television camera of betray-ing Ukraine’s national security interests with her naturalgas agreement with the Russian Federation, which hecompared to the Molotov-Ribbentrop Pact.The president alleged that a $5 billion loan from theRussian government was a tacit condition included tobankrupt the government and force it to surrender its gastransit system, which is operated by the state monopolyNaftohaz Ukrayiny. Ukraine would pay dearly for Ms.Tymoshenko’s gas agreement years after she’s left theprime minister’s office.In response, Ms. Tymoshenko told reporters that theRussian government was among an entire list of coun-tries to which Ukraine turned to request credit to coverthe government’s planned spending deficit. She request-ed officials from the European Union to evaluate theRussian-Ukrainian natural gas agreement. She allegedPresident Yushchenko is attempting to ruin the naturalgas agreement she obtained in order to return the corruptnatural gas intermediary RosUkrEnergo. Additionally,the National Security and Defense Council (NSDC)wants to force the Ukrainian government to return 11billion cubic meters of natural gas to RosUkrEnergo thatwas bought honestly with state funds from Gazprom, shealleged, bringing $4 billion in profit to the president.The conflict between Ukraine’s top pro-Western poli-ticians paved the way for new politicians to emerge,promising pragmatism and effectiveness. Most notably,Arseniy Yatsenyuk became a presidential contenderwhen polls in the spring demonstrated he was the thirdmost popular candidate for the Ukrainian presidency,commanding between 10 and 14 percent support as leasttwice as much as incumbent Mr. Yushchenko.Rifts emerged in Ukraine’s most recognized politicalparties. It was revealed the Party of Regions is dividedbetween those loyal to Donbas industrial kingpin RinatAkhmetov, those loyal to the party’s ideologically pro-Russian wing led by Viktor Yanukovych and MykolaAzarov, and the so-called Firtash Group, including thosewho profited from RosUkrEnergo. While tensions haveemerged between these groups, the party leadershipmanaged to hold the party together in preparation for the2010 presidential election campaign.Unable to keep things together in his party, People’sRukh of Ukraine Chair Borys Tarasyuk announced onJanuary 27 that he was evicting the long-time stalwartsIvan Stoiko and Yaroslav Kendzior, who commandedsignificant influence over the party’s Lviv and Ivano-Frankivsk organizations. He denied the dismissals wererelated to his decision to ally the party with Ms.Tymoshenko. Yet Messrs. Kendzior and Stoiko made itno secret they were loyal to President Yushchenko andwanted the party to lean in that direction. The two Rukhveterans announced in mid-December they were joiningthe Za Ukrayinu! (For Ukraine!) political party led byViacheslav Kyrylenko, widely believed to be the leaderof Ukraine’s revived national-democratic movement.Meanwhile, the Our Ukraine-People’s Self-Defense blocsplit into those loyal to Ms. Tymoshenko, led by OurUkraine parliamentary faction chair Mykola Martynenkoand People’s Self-Defense Chair Yurii Lutsenko, andthose loyal to the president, led by Mr. Kyrylenko.Ukraine’s conflicts weren’t limited to those withinparties. Tensions flared between Ukraine and the RussianFederation after Foreign Affairs Minister VolodymyrOhryzko warned Russian Ambassador to Ukraine Viktor
President Viktor Yushchenko and Prime Minister Yulia Tymoshenko at the heated February 10 meeting of the National Security and Defense Council.
Ofﬁcial Website of Ukraine’s President