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Action Ukraine Report

An International Newsletter, The Latest, Up-To-Date
In-Depth Ukrainian News, Analysis and Commentary

Ukrainian History, Culture, Arts, Religion, Economics, Business
Sports, Government, and Politics, in Ukraine and Around the World       

'All a person can do is cast his vote, it's the obligation of every citizen,' said Andry
Ivanovich Seleznev, 92, the second-oldest registered voter at Bila Tserkva site number 31.
'We can only hope by voting, we can improve things. We must try,' he said. (Article 11)

"In the Orange Revolution, I voted to make this a different, better country," she said.
"I still believe it's possible that things will change. Hope is the last thing to die." 
(Article 6)
Mr. Morgan Williams, Publisher and Editor, SigmaBleyzer Emerging
Markets Private Equity Investment Group,

Clicking on the title of any article takes you directly to the article.               
Return to Index by clicking on Return to Index at the end of each article

Ukrainian News-on-line, Ukrainian News Agency, Kyiv, Ukraine, Mon, Jan 18, 2010 (13:39)

Speedy economic bounceback depends on political stabilisation, resumption of IMG lending and progress in reforms.
Editorial, Lex Team, Financial Times, London, UK, Sun, Jan 17 2010

Paul Manafort, Rick Davis, AKPD, Mark Penn, PBN 
The Associated Press (AP), Wash, D.C., Mon, Jan 18, 2010

Analysis & Commentary: by Damon Wilson from Kyiv, Vice President
and Director of the Program on International Security at the Atlantic Council
New Atlanticist Policy and Analysis Blog
Atlantic Council, Wash, D.C. Sun, Jan 17, 2010

Exit polls show former Prime Minister Viktor Yanukovich narrowly beating Yulia Tymoshenko but
with not enough votes for an outright victory. Tymoshenko may have the edge in the second round.
By Megan K. Stack, Reporting from Kiev, Ukraine
Los Angeles Times, Los Angeles, CA, Sun, Jan 17, 2010

By Philip P. Pan, Washington Post Foreign Service
The Washington Post, Washington, D.C., Monday, Jan 18, 2010

By Daryna Krasnolutska and Kateryna Choursina, Bloomberg News, New York, NY, Mon Jan 18, 2010

The West Can’t Be Complacent About Ukraine’s Nascent Democracy
Commentary: By Samuel Charap, Associate Director for the Russia and Eurasia Program
Center for American Progress, Washington, D.C., January 14, 2010

Commentary: by Nadia McConnell, President, U.S.-Ukraine Foundation
Co-Founder, Baltic-Black-Caspian Sea Initiative
U.S.-Ukraine Foundation (USUF), Wash, D.C., Sat, Jan 16, 2010

Despite lagging behind her rival in the first round, the prime
minister seems set to be the country's first female president
Luke Harding in Kiev, Guardian, London, UK, Monday 18 Jan 2010 

'We can only hope by voting, we can improve things. We must try,' a voter said.
Agence France Presse (AFP), Bila Tserkva, Ukraine, Sun, Jan 17, 2010

By Stefan Wagstyl and Roman Olearchyk in Kiev
Financial Times, London, UK, Mon, Jan 18 2010

Stuart Williams, Agence France Presse (AFP), Kiev, Ukraine, Mon, Jan 18, 2010 

Interview with Viktor Yushchenko, President of Ukraine
By Inna Kuznetsova, Halyna Tereshchuk, Prague, Czech Republic, Jan 9, 2010

Unlike 2004's Orange Revolution, focus now on 'bread-and-butter' economic concerns
By Olivia Ward, Foreign Affairs Reporter
The Star, Toronto, Ontario, Canada, Sun, Jan 17, 2010

Interfax Ukraine, Washington, D.C., Mon, January 18, 2010

Interfax Ukraine, Washington, D.C., Mon, January 18, 2010

By Yuri Kulikov and Natalya Zinets, Reuters, Mon, Jan 18, 2010; 5:42 AM Wash, D.C. time
Ukrainian News-on-line, Ukrainian News Agency
Kyiv, Ukraine, Monday, January 18, 2010 (13:39)

KYIV - Presidential candidate, leader of the Party of Regions Viktor Yanukovych won 35.39% votes, and presidential candidate, Prime Minister Yulia Tymoshenko received 24.97% votes, according to results of vote count of 90.97% protocols of district election commissions. Central Election Commission provided the data.

Serhii Tihipko won 13.07% votes, Arsenii Yatseniuk won 6.98%, Viktor Yuschenko 5.42%, Petro Symonenko 3.54%, Volodymyr Lytvyn 2.33%, Oleh Tiahnybok 1.45%, Anatolii Hrytsenko 1.21%, and Inna Bohoslovska 0.42%. In addition, 2.21% of voters did not support any of the presidential candidates.

As Ukrainian News earlier reported, Ukraine elected president from 08:00 through 20:00 on January 17. A total of 18 candidates contested the elections.

The Central Election Commission created 225 constituencies for the presidential elections. The Central Election Commission created 225 constituencies for the presidential elections and 33,496 polling stations, and 113 polling stations abroad. The CEC registered 3,149 foreign observers for the presidential elections in Ukraine.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Speedy economic bounceback depends on political stabilisation, resumption of IMG lending and progress in reforms.

Editorial, Lex Team, Financial Times, London, UK, Sun, Jan 17 2010

The ideals of Ukraine’s Orange Revolution of 2004 faded long ago. But the presidential election provides an opportunity for a new start, of sorts. The outcome of the poll, whose first round was held on Sunday, is vital to Ukraine’s ability to haul itself out of its economic morass.

Chronic political infighting hampered Kiev’s response to the global financial crisis, helping make it one of the biggest victims; economic output shrank by about a fifth, peak to trough.

Investor optimism that things could change has helped sovereign debt rally this month. Spreads on five-year sovereign credit default swaps, above 1,500 basis points as recently as November, finished last week below 1,000bp.

Flexibility from the International Monetary Fund, which had suspended a $16bn standby agreement last autumn when reforms stalled, also helped. The fund last month kept Kiev afloat by allowing $2bn of central bank reserves to be used to cover liabilities including Russian gas bills.

With reserves still at $26.5bn, even today’s CDS spreads greatly overstate the sovereign default risk. But further tightening and a speedy economic bounceback – as Royal Bank of Scotland suggests – depend on political stabilisation, resumption of IMF lending, and progress in reforms.

Do not expect things to move quickly. The leading presidential candidates – Russian-leaning Viktor Yanukovich and prime minister Yulia Tymoshenko – will almost certainly fight a second round on February 7. Legal challenges to the result, long negotiations over a government, even new parliamentary elections could still follow.

In economic terms, which candidate wins (both have centrist programmes) might be less important than how quickly they can consolidate power. But, particularly if it sees the departure from high office of President Viktor Yushchenko, who has been almost consumed by rivalry with Ms Tymoshenko, this election holds the prospect of an easing of Kiev’s political bickering. If that makes policymaking more cohesive, it could speed recovery too.

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Paul Manafort, Rick Davis, AKPD, Mark Penn, PBN 

The Associated Press (AP), Wash, D.C., Mon, Jan 18, 2010

WASHINGTON — Ukraine's presidential election might tilt Ukraine's orientation away from the West, but leading candidates of all stripes have sought help from expensive U.S.-based political operatives.

Candidates have hired campaign consultants, lobbyists and public-relations firms with deep ties in Washington. With an interest to securing vital connections, the most prominent candidates have sought firms with ties to recent U.S. presidential candidates, including U.S. President Barack Obama, Secretary of State Hillary Clinton (both Democrats) and Republican Senator John McCain.

While some of the U.S. contracts are aimed at importing political expertise into a country with relatively little experience with campaigning in a democracy, the candidates also seem to want to show off their Washington connections to their constituents.

"Ukrainian politicians think it is crucial to cultivate an audience in Washington both for domestic political legitimacy and to facilitate their agenda," said Samuel Charap, an analyst on the region at the Center for American Progress in Washington.

Pro-Russia candidate Viktor Yanukovych, whose Kremlin-backed election victory in 2004 was overturned by the Ukrainian Supreme Court amid street protests and allegations of fraud, has employed Paul Manafort, a Washington political strategist who helped McCain's 2008 presidential campaign and whose partner Rick Davis was McCain's campaign manager.

Former U.S. Assistant Secretary of State David Kramer, now an analyst on the region at the German Marshall Fund, said Yanukovych may seek to reach out to the Obama administration should he win. "He is going to try to show that he is not such a bad guy, that he is misunderstood and that Washington can work with him," Kramer said.

Prime Minister Yulia Tymoshenko, who is considered Yanukovych's chief rival for the presidency and is more westward-leaning, has relied on media consulting firm AKPD, which was founded by Obama's now chief-of-staff David Axelrod. Axelrod no longer works for the firm.

President Viktor Yushchenko has been getting polling and advice from Clinton's campaign strategist Mark Penn, as well as the Kiev office of PBN, a Washington-based consulting company.

Through PBN, Yushchenko has been distributing frequent English-language releases on the race and his candidacy to U.S. journalists. Kramer said that effort might be about burnishing his reputation for the history books. "He doesn't have much of a chance," Kramer said. "The explanation might be legacy."

Another leading candidate, Sergei Tigipko, a former economy minister, turned to British firm Bell Potinger to help raise his profile with a trip to Washington last year.

The size of most of the U.S. contracts are hard to estimate because the consultants have not registered under U.S. lobbying laws. None of the firms would comment on their work, but their employment is widely known in Washington and Kiev.

For the same reason, it also is hard to determine the range of services offered by the firms. Some of their connections with prominent U.S. politicians suggest that Ukrainian candidates also are looking to demonstrate their access in Washington.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Analysis & Commentary: by Damon Wilson from Kyiv, Vice President and Director of the Program on International Security at the Atlantic Council New Atlanticist Policy and Analysis Blog
Atlantic Council, Wash, D.C. Sat, Jan 17, 2010

KYIV - Ukrainian voters today braved frigid temperatures to narrow the field of presidential contenders to Viktor Yanukovych and Yulia Tymoshenko.  These two candidates will face off in a run-off on February 7.  This outcome was consistent with pre-election polls and conventional wisdom.  However, according to numerous exit polls, Tymoshenko seems to have polled better than expected helping to narrow the gap between her and Yanukovych. 

The results give her a basis to claim momentum heading into the run-off.  Former central banker Sergei Tyhypko's surge at the end of the election campaign delivered him the #3 spot, positioning him as an important deal-maker.

Both leading camps are by-and-large content with the conduct of the elections as are international observers.  Despite some allegations of fraud and complaints with mobile voting, neither side is expected to contest the vote.

Tymoshenko's confidence and rhetorical skills position her well to project a sense of momentum coming out of the run-off, while her underdog status helps highlight her image of a relentless fighter.  Her challenge is to widen her lead in the center, consolidate disenchanted backers of the Orange Revolution in the west, and hope for lower turnout in the east and south. 

Her campaign needs to aim to collect as many of the third candidate voters as possible – a solid majority of the electorate which backed Tyhypko, Yatsenyuk and Yushchenko would put her over 50%. 

Yet much like each of these leaders, their constituencies have reason to doubt her and may stay home.  Tymoshenko's greatest political liability is that she is running as the incumbent in the wake of nearly a 15% decline in Ukraine's GDP in 2009 and looming IMF restrictions.  It is a testament to her political acumen that, with such a record, she is even a competitive candidate.

The key challenge for Yanukovych is to dispel the perception that he is unable to motivate a majority of Ukrainian voters.  Following the reversal of the fraudulent election in 2004, Yanukovych has demonstrated a remarkable ability not only to survive as the leader of the Party of Regions, but to maintain the loyalty of a solid 40% of Ukrainians, primarily in the east and south.  Yet many view this stable support base as a ceiling rather than a floor. 

His challenge is to ensure high turnout in his base, be competitive in the center, and hope for lower turnout in the west.  In this regard, Yushchenko has been a key ally; his campaign's sole focus on destroying Tymoshenko raised her negatives in the nationalist constituencies in the west, where she needs to run strong with high turnout on February 7. 

Yanukovych's campaign will likely seek to reinforce the image of a Yanukovych presidency as offering a steady, predictable hand on the economy in turbulent economic times, underscoring his record of impressive growth rates during his tenures as prime minister.

The third place candidate (and erstwhile campaign manager for Yanukovych in 2004), Sergei Tyhypko, benefitted from frustrations with Ukraine's political establishment by positioning himself as the only viable alternative.  Exit polls suggest he will garner 13.5% of the vote, the high end of what pre-elections polls indicated, and a complete surprise given his weak performance last fall. 

While not sufficient to score an upset and enter the run-off, Tyhypko is well-positioned to leverage his voters for influence, especially as he drew key constituencies in central, eastern and southern Ukraine.  While Tymoshenko is running strong in the center, Yanukovych is dominating the east and south.

Tyhypko has already indicated that he will not endorse either Yanukovych or Tymoshenko; he may be angling for an important post after the election, such as speaker of the Rada or even prime minister.

Yushchenko's dismal results were predictable and are a sad conclusion to his political life in Ukraine.  His final political act was fueled by personal animosity against his erstwhile Orange Revolution partner.  While Yushchenko's campaign amounted to an effort to sabotage Tymoshenko, she will work to pick up his slice of the voters.

The disappointment in the race is Arseniy Yatsenyuk, former foreign minister and speaker of the Rada.  This 35-year-old boy wonder was well-positioned to assume the mantle of change, capitalizing on the frustrations with Ukraine's establishment leaders.  Yushchenko, Tymoshenko and Yanukovych have dominated Ukrainian politics arguably since 1999, and given their track record, Ukrainian voters seemed open to alternatives. 

Polling at 15% last year, Yatsenyuk was poised to capture the narrative of handing leadership to the next generation.  But he ran a poor campaign, sending mixed messages on policy and appearing cocky yet lacking the requisite stature to be a president.  Yatsenyuk is still young enough to recover. 

And Yanukovych, Tymoshenko and Tyhypko all personify the possibilities of political comebacks in Ukraine.  While Yatsenyuk is not likely to play a major political role in the near-term, Tymoshenko will need to win over his voters to best Yanukovych.

NOTE: Damon Wilson is Vice President and Director of the Program on International Security at the Atlantic Council.  He was responsible for Ukraine policy at the National Security Council from 2004-2009.  He is also a Senior Advisor to the U.S.-Ukraine Business Council.

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Exit polls show former Prime Minister Viktor Yanukovich narrowly beating Yulia Tymoshenko
but with not enough votes for an outright victory. Tymoshenko may have the edge in the second round.

By Megan K. Stack, Reporting from Kiev, Ukraine
Los Angeles Times, Los Angeles, CA, Sun, Jan 17, 2010

KIEV - Viktor Yanukovich, the burly former mechanic ousted by popular revolt just five years ago, salvaged himself to claim top place among contenders for the Ukraine presidency Sunday, exit polls indicated.

His longtime rival, Prime Minister Yulia Tymoshenko, will be a close second, the survey predicted. The exit poll results, if borne out by the slow counting of ballots, mean that the contentious pair will battle for the presidency in a runoff next month.

The choice of a new leader marks a milestone in Ukraine's post-Soviet evolution, and many voters appeared disillusioned and hungry for change -- if wary of fresh rounds of infighting and scrapping for power among the Ukrainian elite.

A survey from the widely respected National Exit Poll consortium gave Yanukovich 31.5% of the vote to Tymoshenko's 27.2%, topping a field of 18 candidates. A runoff will be held because no candidate received more than 50% of the vote.

Within hours of the polls closing Sunday night, the leading candidates were already scrambling to pick up as many of the losing candidates' votes as possible. Many analysts believe Tymoshenko, 49, will have the advantage in gaining votes in the second round.

Tymoshenko strode into a news conference grinning from ear to ear and launched into a blistering criticism of Yanukovich, 59, calling him the stooge of "criminals and oligarchs." She called upon all Ukrainians who voted for "democratic" candidates to throw their support behind her.

"I'm telling those who voted for other democratic candidates, we now have the chance to do what we could never do in the past: to unite all the democratic forces in the country," Tymoshenko said. "I'm ready to excuse every democratic candidate for the things they said about me. I'm ready to turn that page."

Yanukovich soon chimed in with similar appeals to voters. "They thought they could make promises from election to election and not fulfill the promises, that people will forget," he said of Tymoshenko and her allies.

The improbable reversal of Yanukovich's fortune points up the changes that have rattled Ukraine in past years.

The last time Ukrainians voted for a president, in 2004, Yanukovich won but his victory was tarnished by allegations of vote rigging. Enraged crowds stormed into the streets to demand his ouster, and the Orange Revolution was born.

The ensuing seasons have been tumultuous and often painful for Ukraine. The politicians who had marched boldly through the frigid streets calling for a reinvented Ukraine were now in office -- and promptly lost themselves in Byzantine power plays, internecine wars and flashy shows of dubiously acquired wealth.

Meanwhile, the economic crisis under current President Viktor Yushchenko has hammered the country, radically devaluing the currency and spreading unemployment and uncertainty throughout the provinces.

"People are feeling that they've been lied to," said Larisa Kuchuba, a 60-year-old engineer who braved snow showers and thick blankets of black ice Sunday to vote in south Kiev.

Kuchuba cast her vote for one of the lesser-known opposition candidates. She didn't believe he stood the slightest chance of winning; her vote was cast in protest, she said. "The politicians did everything to keep one another from succeeding. They didn't do anything for the success of the country," she said. "All they did was fight."

Analysts warned that the presidency would be a bitterly fought for prize, with the candidates accusing one another of fraud and using the courts to press for victory. The battle could drag on for months beyond the runoff.

With the exit of Yushchenko, whose approval ratings wallowed in the single digits in recent months, Ukraine loses a president who strove to shake off the grip of Moscow and reorient Ukraine as a Westernized land with strong allies in Brussels and Washington.

But in a country where many people grow up speaking Russian and feel nostalgically, culturally and religiously intertwined with Russia, Yushchenko's approach chafed nerves -- and eventually backfired as his opponents blamed him for the dangerous deterioration of relations with Moscow.

The Kremlin now appears poised to restore some of its lost influence in Ukraine because both leading candidates have friendly relations with Russian leaders.

In the years since the Orange Revolution, the very word "orange" lost its linguistic role as proud shorthand for the leaders who presented themselves as pro-Western reformers and became an adjective generally uttered with a grimace or a roll of the eyes.

Its affections historically split between Russia and Europe, the country became a coveted battleground for influence between Russia and the United States, which heartily backed Ukraine's drift away from Moscow.

But even that status was lost: Ukraine found its foreign policy importance downgraded as President Obama sought to ease inflamed tensions with the Kremlin.  E-mail:

[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By Philip P. Pan, Washington Post Foreign Service
The Washington Post, Washington, D.C., Monday, Jan 18, 2010

KIEV -- The politician backed by the Kremlin and accused of election fraud in Ukraine's Orange Revolution five years ago scored a first-round win Sunday in presidential voting but appeared to fall well short of the majority he needed to assume the office.

Viktor Yanukovich, leader of the opposition Party of Regions, which has long enjoyed Moscow's support, won 31 to 36 percent of the vote, according to exit polls, setting up a runoff in three weeks against Prime Minister Yulia Tymoshenko, who finished second with 25 to 27 percent, a much stronger showing than expected.

The candidates have been bitter foes since Ukraine's last presidential election, when Tymoshenko helped organize the peaceful, pro-Western uprising that blocked Yanukovich from taking power and humiliated his Russian supporters, including then-president Vladimir Putin.

But geopolitical overtones have largely been absent from the race. Tymoshenko has vowed to repair ties with Russia, and the Kremlin has signaled that it can work with her. Yanukovich has reached out to the West and pledged to pursue membership in the European Union. Both have said they will abandon efforts to join the North Atlantic Treaty Organization.

Speaking to reporters as official results were still being tallied, Tymoshenko seized on the findings of the nation's most independent exit poll, which showed her trailing Yanukovich by just four percentage points. She predicted that the nation's splintered "democratic forces" would rally around her in the runoff.

"People have voted for Ukraine to become a just and European country," she said. "It means Yanukovich, who represents the criminal circles, has no chance."

But Yanukovich cast the results as a repudiation of the Orange government, which has struggled for five years with infighting and has failed to deliver much-needed political and economic reforms.

"The mistake of the Orange team is that they thought that between elections people would forget the promises made and never kept, but this isn't the case," he said.

"Today marks the end of Orange power," he added, referring to the failed reelection bid of President Viktor Yushchenko, the Orange Revolution hero whose face was scarred in a poisoning blamed on Russian secret services.

Yushchenko appeared to finish fifth with 6 percent of the vote, behind millionaire banker Sergei Tigipko and former parliament chief Arseniy Yatsenyuk.

In a final campaign push, Yushchenko had accused Yanukovich and Tymoshenko, a former ally, of being part of "a single Kremlin coalition." But the charge failed to resonate in this country of 46 million, which has been battered by the global financial crisis and forced to accept a tough bailout package from the International Monetary Fund.

Yushchenko made no immediate statement, but a senior aide said he intended to guarantee a fair and transparent runoff.

Tymoshenko, a sharp-tongued former natural-gas tycoon known for wearing her braided hair like a crown, had warned of fraud before the vote, but the Central Election Commission said it had not received reports of serious irregularities. Multiple teams of international observers were positioned across the country and were scheduled to report their findings Monday.

Despite widespread frustration with the political paralysis that Ukraine has endured, more than 66 percent of eligible voters braved frigid weather to go to the polls, authorities said. Among them was retired pediatrician Alla Olyenik, 55, who cast a ballot for Tymoshenko in a central Kiev school.

"In the Orange Revolution, I voted to make this a different, better country," she said. "I still believe it's possible that things will change. Hope is the last thing to die."
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By Daryna Krasnolutska and Kateryna Choursina, Bloomberg News, New York, NY, Mon Jan 18, 2010

KYIV - Ukrainian opposition leader Viktor Yanukovych and Premier Yulia Timoshenko, who probably topped yesterday’s first-round presidential election, prepared to face each other in a runoff vote after an exit poll showed incumbent Viktor Yushchenko was eliminated.

Yanukovych, 59, probably won 31.3 percent, not enough for a outright victory, according to final results of the exit poll conducted by a group of three research organizations. Timoshenko, who probably had 27.1 percent, expects to meet Yanukovych in the Feb. 7 second round. Incumbent Viktor Yushchenko probably lost his bid for re-election with 6 percent.

The election, held five years after Yushchenko beat Moscow- backed Yanukovych to office during the Orange Revolution, ends Yushchenko’s dream of leading Ukraine into the European Union and the NATO. Still, the legacy of the Orange Revolution may trip up Yanukovych again as voters turn to Timoshenko, who stood with Yushchenko during the massive street demonstrations.

“Timoshenko has the chance to win the runoff as people who supported candidates linked to the Orange Revolution such as incumbent Viktor Yushchenko are potential voters for her,” said Yuriy Yakymenko, an analyst at Kiev-based Razumkov Center for Economic and Political Studies.

Preliminary turnout at 8 p.m. was 66.58 percent, the Central Election Commission said on its Web site. With 3.72 percent ballots counted, Yanukovych had 38.2 percent and Timoshenko had 25.56 percent, according to the commission.

Election Observers
Monitors from the Organization for Security and Cooperation in Europe were stationed at polling places and election centers across the country. The International Election Observation Mission has more than 800 observers from 47 countries, according to the OSCE’s Web site.

Alcee Hastings, the deputy head of the election observation mission in Kiev, said in a phone interview yesterday that he “had positive impression from the election” and doesn’t expect “major problems.”

Yanukovych and Timoshenko both promise closer trade ties with the EU and improved relations with Russia.

The exit poll results “show that Ukraine has not changed its road, which we started in 2004,” Timoshenko said yesterday at a press conference in Kiev.

“There is no chance for Yanukovych.” Another exit poll, conducted by Ukrainian TV channel ICTV together with London-based GFK NOP gave Yanukovych 35.06 percent, while Timoshenko was backed by 25.72 percent.

Yushchenko Successes
The Orange Revolution team “got their grade from voters and it was fair,” Yanukovych said yesterday. “Timoshenko will find her place” in the opposition, he added.

Under Yushchenko, Ukraine attracted $36 billion in foreign direct investment from the start of his presidency through November 2009. FDI totaled $5.7 billion between 1999 and 2004.

The country also won membership in the World Trade Organization and the European Union declared Ukraine a market economy. Unemployment also fell to 6.9 percent in 2008 from 9.2 percent in 2004, using International Labor Organization standards, Ukrainian state data shows.

Still, bickering between Yushchenko and Timoshenko several months after the 2004 revolution disappointed voters, clearing the way for Yanukovych’s party to win parliamentary elections in 2006.

Yanukovych took the post of prime minister, though disputes with Yushchenko led to early elections in 2007, allowing Orange allies to reunite. Timoshenko became premier again in December 2007. Since then, the country has been locked in a political stalemate because of disputes between three politicians.

Political Stalemate
Political instability complicated Ukraine’s fight with the global credit crunch. The country faces its worst recession in at least 15 years, with gross domestic product plummeting a record 20.3 percent in the first quarter of 2009, 17.8 percent in the second and 15.9 in the third.

Ukraine was forced to line up a $16.4 billion International Monetary Fund bailout loan in late 2008 as the global credit crisis cut demand for its exports, dried up investment and shaken currency.  Its cooperation with the Washington-based lender is now stalled because of political infighting and the government’s failure to cut spending.

Ukraine’s relations with Russia deteriorated after 2004 as it officially backed Yanukovych then and opposed Yushchenko’s plan to join NATO. Russia cut off gas supplies to Ukraine twice since 2006 because of price disputes, affecting the European Union. Ukraine depends on Russia for more than 50 percent of its gas needs, while ships 80 percent of Russian fuel to Europe.

Investor Confidence
Ukraine one-year credit-default swaps, the highest worldwide, will probably fall as the Yushchenko era ends and the prospects grow about improved relations with Russia and the International Monetary Fund, Commerzbank AG said in a research note on Jan. 15.

The cost to insure against non-payment by Ukraine’s government for one year has tumbled more than 4,600 basis points from a record in March to 1,411 basis points.
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The West Can’t Be Complacent About Ukraine’s Nascent Democracy

Commentary: By Samuel Charap, Associate Director for the Russia and Eurasia Program
Center for American Progress, Washington, D.C., January 14, 2010

Ukrainians will go to the polls to elect a president this Sunday. The campaign is genuinely competitive, and the ultimate outcome is far from certain. A relatively free press is actively covering developments, and hundreds of international observers have been invited to oversee the election.

These are all important indications of how far the country has progressed since the Orange Revolution, the wave of protests that followed the falsification of the previous presidential poll in November 2004. This progress is real, but it is not irreversible.

A win for either of the two top contenders will not mark a strategic political shift, but a tainted result could pose a threat to Ukraine’s democratic future. The Obama administration and our European allies should therefore make clear to Ukraine’s leaders that it is crucial the elections be conducted fairly—and that they are watching to make sure that is the case.

Ukraine’s last election in 2004 did indeed mark a turning point in the country’s post-Soviet development. After a blatant attempt at falsification of the elections, Ukrainians took to the streets in unprecedented numbers, demanding that their votes be counted.

These protests, which came to be known as the Orange Revolution after the color adopted by the protestors and their leaders, propelled opposition candidate Viktor Yushchenko to victory over outgoing president Leonid Kuchma’s chosen successor, Viktor Yanukovych.

Many in the West saw the Orange Revolution exclusively in terms of high politics—a battle between the purportedly “democratic,” pro-Western reformers Yushchenko and his then-ally Yulia Tymoshenko over the allegedly corrupt, pro-Russian, authoritarian forces represented by Yanukovych. These labels—if not completely false—turned out to have little meaning and ultimately distracted attention from the real revolution in Ukrainian society.

Ukrainian society before the Orange Revolution was typical of the post-Soviet region—resigned to rule from above, incapable of self-organization, and somewhat closed to the outside world. Its politics were defined by cronyism, widespread corruption, weak governance, minimal accountability, and a repressive response to dissent. The foot soldiers of the Orange Revolution were average Ukrainians who were fed up with both. The politicians simply captured this desire for change.

The Revolution did transform Ukrainian society. People now debate politics in person, on TV, and in the press. Politicians are held to account by an increasingly active civil society, and Ukrainians began to think of themselves as European.

Yet Ukrainian politics changed little. The country descended into political crisis within months of the Revolution, and neverending battles among the prime minister, president, and Parliament have dominated public life and prevented substantive reform. Criticism of the top leadership is for the most part no longer taboo, but corruption remains endemic, the authorities’ capacity to enforce policy is at its nadir, and economic interests still control much of the political sphere.

The cast of characters in Ukraine’s political drama remains largely the same. Tymoshenko, now Prime Minister, and Yanukovych, who heads up the opposition in the parliament, are leading the pack of over a dozen registered candidates. President Yushchenko is also running, but many Ukrainians blame him for failing to follow through on the promise of the Orange Revolution and for general poor leadership, and he now polls in the low single digits. But his consistent—and often visceral—attacks on his one-time ally Tymoshenko keep him in the news.

Tymoshenko currently trails Yanukovych by around 12 percent. Her popularity has suffered in large part as a result of the economic crisis, which hit Ukraine hard. Its gross domestic product contracted by more than 15 percent last year, inflation was around 16 percent, and the budget deficit ballooned.

Yanukovych will almost certainty not garner the more than 50 percent of votes needed to prevent a run-off election, which would take place on February 7. But polls measuring a direct match-up with Tymoshenko in a  hypothetical second round also favor him by around 13 percent.

Yet the result is by no means preordained. Up to a quarter of the population remains undecided, and Tymoshenko is a highly skilled campaigner and has shown herself capable of boosting her numbers significantly in the final weeks of previous campaigns. She could still win the election if she can rally those who supported the other candidates after the first round and the sizable numbers who say they plan to vote “against all.”

But regardless of who wins, the implications for Ukraine’s foreign and domestic policies are actually not all that significant. Both will be constrained in their economic policies by the conditions attached to continued IMF support, which is crucial to getting the country through the crisis.

Both will try to improve the relationship with Russia, which is currently at its post-Soviet low point. And both will soft-pedal rhetoric on NATO membership, while continuing practical cooperation with the Alliance and pursuing closer integration with the European Union.

The West should not be too concerned about a Yanukovych victory, despite the “pro-Russian” label. In reality, the economic groups that back him would never allow Russian firms to penetrate Ukrainian markets, which is one of Moscow’s main policy aims, or to derail cooperation with the West, the main destination for their exports. He might be more likely than Tymoshenko to pick up the phone when the Kremlin calls, but that does not mean that Russia will get its way.

The issue of strategic importance for Ukraine’s future is therefore not who wins the election. What is crucial is how the elections are conducted. And there is a significant chance that the result will not be determined at the ballot box, even during the second round vote. Ukrainians themselves are certainly prepared for such an outcome: more than half believe that the results will be falsified, and only a third say that election results in their country accurately reflect the way people vote.

Two scenarios are possible. The first is outright falsification: ballot stuffing, manipulated absentee votes, or direct fraud. The second—and more likely outcome—is that the loser will challenge the legitimacy of the outcome if the results of the second round are close. The consequence is likely to be a string of court cases—and Ukraine’s judicial system is notorious for corruption and politicization—or street protests.

If protests do occur, they are unlikely to reach the levels seen during the Orange Revolution, but they could prove destabilizing nonetheless. If one or both of these scenarios are realized, the consequences for Ukraine’s future could be severe.

A casual walk around the streets of the capital city of Kyiv would seem to show that the revolutionary spirit of civic engagement is still alive and well. There are huge advertisements for the candidates on practically every corner, and young staff actively distribute campaign materials. But Ukrainians are overwhelmingly disillusioned and fed up with their politicians and politics in general.

Nearly three-quarters of the population believe that Ukraine is on a path toward instability and chaos. Only 26 percent say that voting gives them influence over decision-making, and even fewer have confidence in key democratic institutions. Indeed, a Pew study showed that less than a third of Ukrainians now approve of the transition to democracy that followed the collapse of the Soviet Union.

These attitudes have eerie echoes of Russian popular opinion seen about a decade ago. Despite a brief period of democratic engagement in the late Soviet period and the first years of Boris Yeltsin’s presidency, Russians came to associate democracy with the chaos and economic dislocation they experienced during the 1990s. President Vladimir Putin’s hypercentralization of power to a certain extent reflected the public’s desire for order.

Ukraine’s regional fragmentation makes it unlikely that such a semi-authoritarian political system will emerge, but there is no guarantee that political dynamics will not move in that direction. Ukrainians are losing faith in democracy and an illegitimate election would further damage that faith.

This possibility is little appreciated in Washington or in European capitals. A sense of complacency about Ukraine’s future set in after the Orange Revolution. And it became conventional wisdom that the gains marked an irreversible turning point in Ukraine’s history that put the country on an inevitable march toward becoming a full-fledged democracy and a member of the Euro-Atlantic community.

Any problems that Ukraine might have during these elections—so the logic goes—are merely growing pains; the strategic questions about the country’s trajectory have already been answered. This attitude was directly reflected in U.S. policy, with Congress drastically cutting democracy assistance for Ukraine from 2004 to 2008, and slashing funds for Radio Free Europe and Voice of America, as well.

This “Ukraine complacency” phenomenon has been complimented by “Ukraine fatigue”—the increasing frustration in the West with Kyiv’s incapacity to deliver on its promises. The Ukrainian government has continually failed to follow through on its commitments. It signed up for a $16.4 billion IMF stabilization package, and then proceeded to violate the conditions.

It pledged to make key reforms of its energy sector, and then implemented only cosmetic changes. It committed to participating in two NATO exercises, and then the parliament failed to pass the authorizing legislation. And the utter chaos of Ukrainian politics that began just months after the Orange Revolution has made it nearly impossible for the West to find an effective interlocutor in Kyiv.

This combination of Western complacency and fatigue with Ukraine has precipitated a nonchalant attitude toward the elections. But we ignore Ukraine at our peril. The country is simply too important—as a transit hub for Europe’s energy needs, as a bridge between Russia and the West, as an industrial and agricultural power, and as a Black Sea-littoral state—for us to sit back and watch as one of the scenarios described above unfold.

Washington and our European allies should therefore actively engage Ukraine in the weeks between the initial and runoff elections. The Obama administration has taken important steps, such as naming John Tefft, a highly respected diplomat with years of experience in the region, as ambassador to Kyiv, and by proposing increases to Ukraine’s democracy assistance budget.

Congress has also played a positive role by passing a resolution calling for Ukraine to conduct its elections transparently and declaring U.S. support for its political and economic development.

But more is needed to make sure that Ukraine’s political elite is aware that we are paying attention and that there is a cost associated with undermining the democratic process. The administration should make it clear—both publicly and privately—that the runoff election must be free and fair; that the results must not be manipulated; and that the voters, not the courts or the streets, should determine the outcome.

The administration should also urge our European allies to take a more active stance. Their proximity, greater economic ties, and the institutional levers the EU’s neighborhood policy gives them make their collective voice perhaps even more important than ours.

The question of who wins might not fundamentally alter Ukraine’s future, but the presidential election is critical for the country nonetheless. If the elections go poorly, they could prove the marker of the definitive end of the Orange Revolution.

NOTE:  Samuel Charap is Associate Director for the Russia and Eurasia Program at American Progress. He focuses on the domestic politics and foreign policy of the former Soviet states and U.S. policy in the region. Previously he was a visiting fellow in the Russia and Eurasia Program at the Center for Strategic and International Studies. Samuel has consulted on political risks in Russia and Eurasia for Medley Global Advisors, the Eurasia Group, and Oxford Analytica.  He has also served in the NATO Liaison Office in Kyiv, Ukraine and briefed U.S. government officials on Russia policy.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Commentary: by Nadia McConnell, President, U.S.-Ukraine Foundation
Co-Founder, Baltic-Black-Caspian Sea Initiative
U.S.-Ukraine Foundation (USUF), Wash, D.C., Sat, Jan 16, 2010

Recently an EU official made the intriguing comment that he was waiting for a successful presidential election before moving forward in relations with Ukraine. Intriguing because this implies previous elections were unsuccessful and because it reflects the wait and see position of most Westerners as if this Sunday's presidential election presents a realistic opportunity for the winning candidate to transform the intermittently dysfunctional national government in Ukraine immediately.

This assumption is false and unless rejected will lead to more disappointment. Unrealistic expectations are being placed on whoever will serve as president, and not enough recognition is accorded the process the process of successful democratization in civil society.

The Orange Revolution, a massive protest against election fraud in 2004, was not only about the public desire to see a particular individual elected.This remarkable display of civic solidarity was primarily a rebellion against the unfulfilled promises of the first phase of a Revolution that, although unnamed, began in the mid 1980s.

If the world community fails to understand Ukraine within the context of this ongoing process of change and act accordingly, the results of the upcoming election are guaranteed to be seen as unsatisfactory.

In 1991 President George H. W. Bush was ill served by advisors who informed him Ukrainian independence was both improbable and potentially disastrous. We saw this point of view dramatically displayed in his Chicken Kiev speech and again 4 days before the citizens of Ukraine voted by a majority, 93 percent for independence.

President Bush during a meeting with leaders of the Ukrainian-American community commented several times that if Ukraine votes for independence. The use of if was telling, his closest advisors were still advising the President the vote was in doubt.

The vote in 1991 was the first phase of the yet-unnamed Orange Revolution a rejection by Ukraine's civil society of the repressive, inept and corrupt government in Moscow. President Bush had only focused on one part of that rebellion, the desire for an independent Ukraine, or in his words suicidal nationalism.

He failed to understand that this rebellion was driven no less by anger about the Chornobyl disaster, desire of the faithful of the banned Ukrainian Catholic and Ukrainian Orthodox Churches to worship freely, and the rage of mothers who saw Ukrainian soldiers disproportionately being put in harm's way in the war in Afghanistan. Ukraine's independence was a seismic rebellion of different fears and furies coming together at one time.

If phase one of this coalesced anger was the successful rejection of a corrupt and indifferent central government then found in Moscow, phase two in 2004 was a civic rebellion against a corrupt and indifferent central government now found in Kyiv.

Five years later, rebellion against corruption and indifference continues. There is widespread evidence that Ukrainian voters do not see any of the current candidates as the answer to the needs of their country. The people know the process which they have undertaken is difficult and will take time, but it is one they have genuinely embraced.

The West should be no less realistic and, in considering the strategic interests of their own countries, must support the development of civil society in Ukraine's phase three of the Orange Revolution.

While bitter infighting among Ukraine's elected officials is exasperating, if the expectations of Western leaders are to be met, then the button must be reset from wait to engaged fully. The citizens of Ukraine are going to deliver a successful election one where the results are not predetermined and one that will be followed by a peaceful transition of power.

Western engagement must expand beyond telling Ukraine's leaders reform is necessary; significant focus needs to be given serious and strategic involvement in efforts to assist citizens of Ukraine in their efforts to hold their governmental leaders accountable.

Some of the most successful assistance programs provided Ukraine have been those directed specifically at local governance and civil society.  The distractions of the dysfunctional national government has hidden the remarkable changes that have taken place below the radar, changes that energize the on-going revolution.  Such assistance needs to be continued regardless of who wins national elections.

Let us hope that President Obama and Vice President Biden have wiser counsel than did certain of their predecessors as they reengage in Ukraine and the region.  Regardless of how disappointing one or another political leader has been, Ukraine's civil society must have our commitment.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Despite lagging behind her rival in the first round, the prime minister seems set to be the country's first female president

Luke Harding in Kiev, Guardian, London, UK, Monday 18 Jan 2010 

KIEV - Ukraine's prime minister, Yulia Tymoshenko, last night appeared to have forced a runoff in the race to become the country's new president, closing the gap on her chief rival, Viktor Yanukovich, enough to ensure that the pair will have to face each other again in a deciding vote next month.

Exit polls showed Yanukovich winning the most votes in yesterday's presidential election, but analysts expect Tymoshenko to pick up a higher proportion of second round votes from defeated candidates. They say Yanukovich may struggle to extend his appeal beyond his support base in Russian-speaking eastern Ukraine.

Exit polls showed Yanukovich, 59, a former prime minister who was declared president until the country's Orange revolution of 2004, won 31-38% of the vote. Tymoshenko, 49, who helped to lead the pro-western revolution against his victory and is most popular in the European-leaning west of the country, scored between 25 and 27%.

With only a fraction of votes counted, first official results showed Yanukovich on 38% and Tymoshenko on 25%. Counting continued through the night. Analysts said Tymoshenko was in a strong position to leapfrog Yanukovich when both candidates meet in a decisive runoff vote on 7 February.

"The eventual size of Yanukovich's lead is key," said Andrew Wilson, senior fellow at the European Council on Foreign Relations. "His strategy was to deliver a knock-out blow in round one. The exit polls show his lead to be not a decisive one."

In third place, with 14.5%, according to one exit poll, was the multi-millionaire former banker Sergey Tigipko, 49, who appeared to be enjoying a late surge. He now appears to be in the position of king- or queen-maker. The votes of his supporters will be crucial in the second round. Tigipko may be persuaded to back Tymoshenko in return for the prime minister's job.

The election took place against the backdrop of a severe economic crisis in Ukraine and amid widespread disillusionment with the country's self-serving political elite. The incumbent president, Viktor Yushchenko, is deeply unpopular and many voters dislike both of the current candidates equally.

Both Yanukovich and Tymoshenko have pledged to reset relations with Russia – reversing the pro-western Yushchenko's hostile policies towards Moscow. At the same time, however, both are broadly committed to Ukraine's integration with Europe, especially in economic matters.

A Yanukovich victory would mean an extraordinary reversal of the dramatic events of 2004, which saw the supreme court overturn his fraudulent victory in the second round of the presidential election, and order another vote – which Yushchenko comfortably won.

In an interview with the Guardian, the deputy prime minister, Hryhoriy Nemyria, claimed that electoral violations occurred ahead of yesterday's vote, and hinted that the contest may be decided not in the ballot box, but in the higher administrative court.

Both Tymoshenko and Yanukovich, in the event of defeat, are likely to accuse each other of fraud and appeal. The court, however, currently has two rival judges – a symbol of the partisan political standoff that has paralysed the government during the past five years.

Nemyria, a member of the Block of Yulia Tymoshenko (ByuT), said that opinion polls "always" underestimated her real support. He predicted that her formidable campaigning and speech-making skills would see her beat the gaffe-prone and "wooden" Yanukovich in the second round.

Nemyria was scathingly dismissive of Yanukovich, who served two jail terms in his youth for robbery and other crimes. "It would be a humiliation if Yanukovich becomes president. Can you imagine portraits of a criminal who was in jail twice hanging in police stations and kindergartens?" he remarked sarcastically.

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U.S.-Ukraine Business Council (USUBC):
Promoting U.S.-Ukraine business relations & investment since 1995.
'We can only hope by voting, we can improve things. We must try,' a voter said.

Agence France Presse (AFP), Bila Tserkva, Ukraine, Sun, Jan 17, 2010

BILA TSERKVA, Ukraine - Casting one's ballot and making sure the neighbours count them properly once election polls close is a pretty big deal in Ukraine's small towns and villages.

'Even if we may vote differently we known each other very well,' said Zoya Mushkareva, a retired child psychologist and head of voting site number 31 in the central Ukrainian town Bila Tserkva.

'If there is one thing we agree on, it's that it's better for every one if the vote runs smoothly,' Mushkareva said on Sunday, as subordinates sitting at folding tables on the second floor in the Bila Tserkva House of Culture handed out ballots to some of the 2,504 voters registered at the polling site.

Voting generally ran smoothly across Ukraine and for the most part also in Bila Tserkva, a central Ukrainian town of 200,000 residents somewhat atypical for its relatively healthy economy courtesy a successful tyre factory, and streets surprisingly well-cleared of snow.

One glitch cropped up during the visit of a German News Agency reporter: A local resident failed - at least temporarily - to obtain a ballot, despite presenting a military ID, a Chernobyl veteran card, and a drivers' license.

'You need a passport (the standard personal identification in Ukraine) that's the law,' Mushkareva explained. 'Go home and get it, and then you can vote.'

Tempers were shorter downstairs, at the Bila Tserkva regional election commission headquarters, as officials hashed out the worst voting problem in the entire country that day: Of the region's 128 polling sites, 17 failed to open on time, because most of the voting sites' commission members quit their position hours before polls were to open.

Candidate representatives - and there were a lot of them, Ukraine's Presidential contest had 18 registered candidates - crowded election officials in the Bila Tserkva the election commission headquarters, some spokesmen pointing out possibly relevant election code in open law books, and others arguing among themselves, as phones buzzed above the hubbub.

Milling men in sheepskin jackets, and women in fur coats and high heel boots, converted tracked-in snow to slush as a harassed election official reported to Kiev. 'There's no precedent, what do we do?' she asked. 'People are getting upset.'

All but two of the Bila Tserkva polling sites suffering from unexpected commission turnover - a tiny fraction of Ukraine's 38,000 plus polling sites - were operational by mid-afternoon, according to news reports.

Democracy appeared to be running pretty much without a hitch several dozen kilometres away, deep in the snow-clad Ukrainian countryside in Skrebishi village.

Halina Kozhukar, a homemaker and long-time resident of the farming hamlet, was in charge of voting site 109, set up in the district health clinic, a single-story white brick building framed by birch trees and boasting freshly-painted sky-blue fencing. 'Voting day is a big event for our village,' she said. 'It's pretty hard to imagine a voting problem around here.'

Most voters in Skrebishi, as is typical for Ukraine's small villages, were retirement age or close to it, Kozhukar said.

Home voting is therefore critical to allow Skrebishi's aged and infirm to cast ballots, and of the 399 voters on rolls, 29 requested and received ballots ahead of time, allowing them to avoid Sunday day temperatures reaching to minus 11 centigrade, Kozhukar said.

Asked by a reporter whether or not she was aware a Kiev judge on Saturday theoretically made most home voting illegal by stipulating a Ukrainian might vote from home only if a doctor attested to the voter's weak health, Kozhukar responded: 'In our village, we will not chase old women out into the cold.'

The Kiev court ruling on home voting was widely ignored across Ukraine throughout voting day, according to news reports.

Voter roll errors appeared to be the most common election day problem, according to widespread news reports and Halina Pyskanka, chairwoman of Vasylkiv voting site number 4, on the first floor of the town middle school.

'Our voting rolls are computerized, but it's very difficult to keep track of every one coming to our town or leaving,' Pysanka said. 'We do the best we can, but it's not really possible to have a flawless voter roll.'

Differences between maiden names and names listed in passports, and spelling discrepancies between a voter's Soviet-era Russian language passport, and the Ukrainian language voter roll were particularly common complaints, she said.

Almost all Ukrainian voters on Sunday appeared, according to officials and independent observers, nonetheless able to vote and cast ballots. Those interviewed by a dpa reporter without exception said it was serious business.

'All a person can do is cast his vote, it's the obligation of every citizen,' said Andry Ivanovich Seleznev, 92, according to Mushkareva the second-oldest registered voter at Bila Tserkva site number 31.

'We can only hope by voting, we can improve things. We must try,' he said.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By Stefan Wagstyl and Roman Olearchyk in Kiev
Financial Times, London, UK, Mon, Jan 18 2010

KYIV - Yulia Tymoshenko, Ukraine's fiery prime minister, surprised her opponents in yesterday's first round of the presidential election by doing unexpectedly well and securing a chance of defeating the frontrunner, opposition leader Viktor Yanukovich, in next month's run-off.

In the first presidential election since the 2004 Orange Revolution, Mr Yanukovich won 31 to 35 per cent of the vote, according to preliminary exit polls. Ms Tymoshenko came second with 25 to 27 per cent, about 5 percentage points more than had been indicated by pre-election opinion polls.

But analysts say she is much better placed than Mr Yanukovich to win votes from the other 16 candidates, including the pro-west president Viktor Yushchenko, who won just 5 to 6 per cent, according to the exit polls. If the actual gap is the same as the exit polls "Tymoshenko has a strong chance to defeat Yanukovich", said Volodymyr Fesenko, a political analyst.

The result leaves Ukrainian politics on a knife-edge, with Ms Tymoshenko and Mr Yanukovich, the defeated candidate in the disputed 2004 poll, likely to battle over every vote in the weeks before the run-off on February 7.

Ms Tymoshenko attacked Mr Yanukovich over his big business backing, saying: "The majority of Ukrainian voters showed they are ready to vote for democracy, against criminal gangs and oligarchy."

The election, which follows five years of in-fighting, is being closely watched because of concerns about possible cheating, Ukraine's fragile economy and its strategic location between Russia and the European Union. The vote is also a test of democratic standards in Ukraine - an outpost of political freedom in the former Soviet Union.

Voting yesterday was hampered by winter weather, with voters slipping on icy streets as they made their way to ballot stations. Allegations of electoral misconduct surfaced, with sporadic reports of break-ins and ballot-tampering. But Volodymyr Shapoval, head of Ukraine's central election committee, downplayed the allegations, saying: "There will be no extraordinary situations, the elections will take place." International monitors will report today.

In the run-up to the voting, the frontrunners accused each other of plotting fraud. It was not clear if there was any substance to the claims. More than 3,000 foreign monitors were deployed, including 800 from the Organisation for Security and Co-operation in Europe and EU states. The Committee of Voters of Ukraine, an election watchdog, said poor planning, administrative abuses and election law loopholes left room for abuse.

Now, much will depend on Sergei Tigipko, a wealthy banker-politician, who came third in yesterday's vote with just over 13 per cent, making him a likely kingmaker. Last night Mr Tigipko said he would not support either second round candidate.

The new president's priority will be restoring political stability and confidence in the recession-hit economy and resuming co-operation with the International Monetary Fund, which has suspended a $16.4bn (euro11.3bn, £10bn) package.

Russia has kept its distance but, to Moscow's satisfaction, both leading candidates have stressed their desire to improve relations with Russia, while sticking to EU membership plans.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Stuart Williams, Agence France Presse (AFP), Kiev, Ukraine, Mon, Jan 18, 2010 

KIEV - Ukraine braced for a nail-biting run-off between two old rivals in presidential elections after Sunday's first round vote eliminated discredited Orange Revolution hero President Viktor Yushchenko.

Exit polls forecast the election was led by pro-Russia politician Viktor Yanukovich, the man accused of rigging the 2004 elections which sparked the Orange Revolution when a peaceful uprising swept the old order from power.

Second place was set to go to Prime Minister Yulia Tymoshenko, a former Orange Revolution comrade of Yushchenko who subsequently fell out with the president and adopted a more pragmatic tone on relations with Russia.

But with Yanukovich failing to win a majority, the election would have go to a second round on February 7 with all to play for between two old rivals who have savaged each other's reputation in the campaign.

Yanukovich is set to obtain 32 percent of the vote and Tymoshenko 27 percent, according to the initial results of an exit poll of Sunday's ballot organised by the Foundation for Democratic Initiatives.

Another poll by the Gfk-Ukraine organisation showed Yanukovich ahead on 35 percent and Tymoshenko on 26 percent. Official results are due on Monday morning.

The polls showed Yushchenko taking a miserable six percent of the vote, a reflection of Ukranian frustration that the Orange Revolution failed to realise the desire-for reform and an end to corruption.

Both polls also showed a strong performance from businessman Sergiy Tigipko who made a late campaign surge and could prove the kingmaker in instructing his electorate how to vote in the second round.

Although she is behind, the polls represent good news for Tymoshenko as, if confirmed, they would mean she has narrowed the gap on her main opponent compared with the last opinion polls before the New Year.

Andrew Wilson, Ukraine expert at the European Council on Foreign Relations, said the first round gap between Yanukovich and Tymoshenko would be crucial as she would be hard-pressed to make up a difference of more than 15 percent.

The 2004 Orange Revolution raised hopes of a new era free of Kremlin influence for the country of 46 million that would set a precedent for other former Soviet states.

Tymoshenko, famed for her peasant-style blonde hair braid, is seen as more in favour of EU integration than Yanukovich but has also played up her close ties to Russian strongman Prime Minister Vladimir Putin.

The bitter campaign saw the shady pasts of the candidates once again dredged up. Yanukovich was jailed twice in the Soviet era for theft and assault, though the convictions were erased in the late 1970s. Tymoshenko herself was briefly detained in 2001 on smuggling charges that were later quashed.

The level of cynicism in Ukraine is such that one local politician is even standing under the name of Protivsikh (Against Everyone) while a website appeared last week offering voters the chance to auction off their votes.

Yushchenko and Tymoshenko were comrades-in-arms in the Orange Revolution but later became sworn enemies, their relationship poisoned by a perennial power struggle and mutual accusations of criminal wrongdoing.

Since 2004, Yanukovich has sought to reinvent himself with the help of Western PR strategists and to show he is not a servant of the Kremlin but a defender of Ukrainian interests.

He has also sought more support in the country's Ukrainian-speaking west -- traditionally the heartland of Tymoshenko and Yushchenko supporters -- while holding on to his powerbase in the Russian-speaking east.

This time, allegations of vote-rigging have not shadowed the vote although a scandal has erupted over the presence of hundreds of Georgians in the eastern city of Donetsk whom officials allege were sent to disrupt the poll.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Interview with Viktor Yushchenko, President of Ukraine
By Inna Kuznetsova, Halyna Tereshchuk, Prague, Czech Republic, Jan 9, 2010

LVIV, Ukraine -- Ukrainian President Viktor Yushchenko survived a near-fatal poisoning and massive election fraud to become Ukraine's first truly pro-Western leader. Five years later, however, he is trailing badly in the polls as his country prepares to vote in the first presidential elections since the 2004 revolution.

Yushchenko has been criticized for presiding over a half-decade of political chaos and drawing Ukraine into unwelcome conflict with Moscow. But in an interview with RFE/RL's Ukrainian Service, he was unrepentant.

"As the president, I will never bow my head and say that I failed in some way during these five years. I brought this nation what it needs,” Yushchenko said. “If it can understand this, that will be its salvation. If it can't, then we will have to spend another 15-20 years with Yanukovyches and Tymoshenkos, under a Kremlin project, like during Kuchma’s time. There's a price to this."

The two candidates expected to fare best in the January 17 contest are Yushchenko's worst rival and closest ally from the Orange Revolution --  Viktor Yanukovych and Yulia Tymoshenko.

Both have seen their popularity soar on platforms that diverge from Yushchenko's openly pro-Western stance, which has caused Kyiv's ties to Moscow to grow increasingly hostile during the past five years.

'Simple' Choices
In the RFE/RL interview, Yushchenko warned that a presidential victory by either of his two rivals would throw Ukraine back into Russian domination.

"There is a danger of authoritarianism because we have two leaders, Tymoshenko and Yanukovych, who represent the best Moscow project, which takes away freedom, democracy, and 'Ukrainianhood,'" Yushchenko said. "Today the choice is very simple -- either this pro-Kremlin couple and pro-Kremlin policy wins, or the pro-European policy does."

Yanukovych, who is supported by many Russian-speaking Ukrainians in the country's east, said in a January 7 interview that he will keep the country
out of NATO if he wins.

But Yushchenko, who made NATO membership a priority of his presidency, said it would be a blow to Ukrainian interests for the country to turn its back on the military alliance.

"If Ukraine does not repeat the response of the Poles, Czechs, Slovaks, Bulgarians, Lithuanians, Estonians, Latvians [to join NATO] -- who else did I miss, the Romanians, Hungarians -- if we don't give [a positive] answer [to the question of NATO membership] as a nation, then we will not have independence. We will lose our democracy," Yushchenko said.

But the protracted infighting that has been miring Ukraine's political life, in addition to the country's dismal economic performance, has crippled Yushchenko's efforts to join NATO and the European Union.

In 2008, the military alliance rejected Ukraine's bid for a Membership Action Plan (MAP), a decisive preparatory stage for NATO membership.

Yushchenko, in his interview with RFE/RL, pinned the blame squarely on Tymoshenko for Ukraine's sluggish progress toward Western integration.

"It is clear that Ukraine the way it is today is not very appealing to the European Union. This is not the EU's problem, it is our problem," he said. "Only the prime minister can conduct reform, but we live without reforms. We are currently experiencing our biggest crisis. And it's not due to the European or the global crisis. The crisis is located on Hrushevsky street, on the seventh floor, in the office of the prime minister of Ukraine."

Oil, Gas, And Politics
Both Yanukovych and Tymoshenko have said they would use a victory to improve relations with Moscow, which grew increasingly hostile as Yushchenko pursued a pro-Western agenda.

Ties hit a low this time last year, when Moscow cut off gas supplies to Ukraine amid a pricing dispute that Yushchenko said was politically motivated. The cutoff caused severe energy shortages in EU countries dependent on gas shipments through Ukraine.

A similar dispute is currently playing out in Belarus, which is accusing Moscow of imposing an unfair pricing structure on shipments of crude oil that Belarus refines and profitably exports to the West.

Yushchenko told RFE/RL the Belarus dispute is no different than Ukraine's gas crisis last year. "This is pressure. It's obvious. Oil and gas are not only hydrocarbons -- unfortunately, they're also the stuff of politics,” Yushchenko said. “We're talking not only about oil and gas, and not only about economic relations, but also about the big challenge of dependency, including political dependency."

Still, energy security and political stability are likely to override the concerns among many Ukrainian voters about the perils of dependency.

Yushchenko's presidency was marked by near-constant political infighting that brought parliamentary procedures to a frequent standstill. He is also seen as failing to reel in rampant corruption, and has faced allegations by his rivals of financial profiteering in shady gas deals.

Yushchenko today said he continues to oppose a proposal by Yanukovych to create a gas transport consortium between Ukraine, Russia, and the European Union. In an interview published on January 7, Yanukovych said, "Ukraine should become a reliable partner in gas relations with Russia and the
European Union."

Such a move, Yushchenko says, would grant Russia unwelcome leverage over Ukraine's valuable gas-transportation system -- and, by extension, its political independence.

"Why is Ukraine proposing a gas consortium? Why isn't Russia proposing a gas-exploration consortium with Ukrainian participation? Why aren't our European colleagues suggesting a consortium with Ukrainian participation?” Yushchenko asked. “We have a national company that can brilliantly manage, let's say, gas transit. Are we not capable of organizing our own monopoly? This is the surrender of our national interests."

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Ukraine Macroeconomic Report From SigmaBleyzer: 
Unlike 2004's Orange Revolution, focus now on 'bread-and-butter' economic concerns
By Olivia Ward, Foreign Affairs Reporter
The Star, Toronto, Ontario, Canada, Sun, Jan 17, 2010

TORONTO - Ukraine's Orange Revolution has soured, and voters aren't expecting any plums from Sunday's presidential election.

Five years after the spiral of excitement that swept popular politician Viktor Yushchenko to power, following protests against a fraud-ridden poll, a deep economic crisis has flattened expectations, and cynicism about reform has spread.

"There's a candidate who changed his name on the ballot to 'Against Everybody,' " said University of Western Ontario political scientist Marta Dyczok who recently returned from Kyiv.  "People are demoralized. The crisis has hit hard, and most don't see much difference between candidates."

So changed is the atmosphere since those events of November 2004 that the front-running candidate is Viktor Yanukovych – then accused of a fraudulent victory, and reviled as Moscow's choice.

In second place is Yulia Tymoshenko, then an anti-Russian nationalist who became Yushchenko's prime minister before winning favour with the Kremlin.

A recent poll by the U.S.-based International Foundation for Electoral Systems shows Yanukovych leading with 42 per cent approval, to Tymoshenko's 30 per cent. But with a number of candidates splitting the vote, and neither with a solid majority, a runoff is expected. Yushchenko is considered out of the running with only 14 per cent.

The elections will be monitored by more than 200 Canadian election observers, sent by Ottawa and the Canada Ukraine Foundation.

But whichever candidate wins, it will be a victory for Russia, which took a beating as the villain of the Orange Revolution.

"The 2004 election was ideological," said Ukraine expert Jakob Hedenskog, a visiting scholar at the University of Toronto. "It was an important choice between East and West. This time it's about bread-and-butter issues."

Under Yushchenko, Ukraine veered toward the West, with failed attempts to join the European Union and NATO, and a "national project" to promote the Ukrainian language and church, and gain recognition for the 1930s famine that killed millions of Ukrainians under Soviet leader Joseph Stalin's brutal economic policies.

But antagonizing Moscow came at a price. Russia cut off gas deliveries to Ukraine over a payment dispute, causing a drop in pressure in the Europe-bound pipeline and gas shortages in European countries. Moscow's fierce opposition to Ukraine's EU and NATO membership also helped to curb the West's enthusiasm for Kyiv's entry.

This time, the crisis on the home front is more pressing. The International Monetary Fund has frozen an emergency bailout because government infighting undermined required budget cuts.

Unemployment is biting, and a new European visa regime has destroyed the livelihoods of cross-border traders in impoverished western Ukraine.
Meanwhile, corruption, broken government promises and an oligarch-dominated economy have disillusioned many of Ukraine's 46 million people, and low turnouts are predicted at the polls.

Still, says Dyczok, life has improved in many ways since 2004, when she observed the elections. "Society has moved forward in ways people don't notice," she said. "They are more engaged. They're active, and they protest at the local level. The political spectrum is diverse, and there will be a strong opposition."

The vote itself should deliver evidence of change, said Bob Onyschuk, chair of the Canada Ukrainian Foundation, who is still hoping for a "fair transparent election."

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Interfax Ukraine, Washington, D.C., Mon, January 18, 2010

WASHINGTON - Yulia Tymoshenko and Viktor Yanukovych will have to flight for the voters who cast their votes for the candidates that have failed to reach the runoff, says Steven Pifer, the former U.S. ambassador to Ukraine and Senior Fellow, the Brookings Institution.

"Prior to the runoff, both Tymoshenko and Yanukovych will try to attract the voters who voted for Sergiy Tigipko, Arseniy Yatseniuk, Anatoliy Hrytsenko and others," he told Interfax on Monday. In his words, Tymoshenko will be trying to engage all the Orange Revolution supporters.

According to Pifer, Tymoshenko will prove herself to be a more energetic, concentrated election campaigner, but the point is whether she'll be able to close the gap with Yanukovych, which is presently quite broad.

Pifer predicts that if this gap after the first round of the presidential election is 12%, it will be hard for Tymoshenko to bridge it. Speaking about Ukraine's foreign political course under a new president, the U.S. expert forecasted that in any case relations between Kyiv and Moscow could improve considerably.

Whoever is elected president in Ukraine, plans to join NATO will recede far into the background, he added. In his words, Ukraine will keep on good relations and continue cooperation with NATO, but neither Tymoshenko nor Yanukovych will insist on Ukraine's immediate accession to NATO.
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Interfax Ukraine, Washington, D.C., Mon, January 18, 2010

WASHINGTON - The high efficiency of the election campaign conducted by Yulia Tymoshenko may ensure her the post of the Ukrainian president in the runoff despite the fact that sociological polls say Viktor Yanukovych will be the winner, says a U.S. political scientist.

"Tymoshenko is conducting a much more efficient election campaign and is more active compared to Yanukovych," an expert of the Washington-based Center for American Progress, an expert in policy in the post-Soviet region Samuel Charap told Interfax on Monday.

"Polls say that Yanukovych is in the front-runner, but one should not underestimate Tymoshenko's abilities. She may be the first in the runoff, although there could be much surprise," he said.
As he put it, "stakes are high" for Tymoshenko now and she proved many times in the past that she was able to garner a larger number of votes than polls said. "There is even such an expression: Tymoshenko's effect," he added.

In his opinion, Tymoshenko's major task is to attract the voters who cast their votes for Sergiy Tigipko and Arseniy Yatseniuk in the first round of the presidential election.
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By Yuri Kulikov and Natalya Zinets, Reuters, Mon, Jan 18, 2010; 5:42 AM Wash, D.C. time

KIEV - Ukraine faces a February 7 run-off vote between opposition leader Viktor Yanukovich and populist Prime Minister Yulia Tymoshenko after a presidential election produced no outright winner, official results showed on Monday.

The election will define how Ukraine, a former Soviet republic of 46 million people wedged between the European Union and Russia, handles relations with its powerful neighbors, and may help unblock frozen IMF aid for its ailing economy.

With more than 80 percent of the ballots counted from Sunday's poll, Yanukovich had a strong lead with 35.76 percent, well under the more than 50 percent needed for outright victory, the Central Election Commission said. Tymoshenko had 24.72 percent.

The results set up what could be a close February 7 contest, though analysts say Tymoshenko should pick up more votes from defeated first round candidates, while Yanukovich will have to fight hard to extend his appeal beyond his support base in the Russian-speaking east of the country.

Tymoshenko, 49, helped lead the pro-Western Orange Revolution against Yanukovich's rigged 2004 presidential election victory and is most popular in the European-leaning west of the country.

She hailed the voting pattern as proof that Yanukovich, a 59-year-old former mechanic, had no chance in the second round on February 7 and called for talks with eliminated candidates.

"As of today I am ready for talks so that we can move forward with uniting the democratic forces," she told reporters on Sunday.

Traders of the hryvnia currency took the election in their stride and said the market would be calm because the results of the poll were expected. A holiday in the United States would also dampen the volume of trades, dealers said. The hryvnia was unchanged from Friday's level of 8.075-8.175/$. The central bank offered to sell dollars on Monday -- as it had done last week -- at 8.01/$.

Tymoshenko, meanwhile, rushed to Luhansk in the east of the country after oxygen tanks exploded in a hospital, her press service said. Five people were killed in the blast, emergency officials said.

All eyes were on the team of international election monitors, including a large party from the Organization for Security and Cooperation in Europe, which was to hand down its verdict on the poll later on Monday.

Tymoshenko, before the poll, had accused the Yanukovich camp of preparing large-scale fraud. The Central Election Commission (CEC) said it had received reports of minor irregularities but these would not have a significant impact on the result.

Two candidates who came third and fourth, former central bank chief Sergey Tigipko and former parliament speaker Arseniy Yatsenyuk, said they would not come out in support of any candidate in the second round.

An aide to Tymoshenko, who amassed a fortune in her years in the gas industry, said however that her camp hoped to meet Tigipko -- who has so far won 13.08 percent of the vote -- in the next few days.

Both leading candidates have pledged to seek better relations with neighboring energy supplier Russia, in part to avoid the spats of recent years which led to supply cut-offs affecting parts of Europe.

Voters punished incumbent President Viktor Yushchenko, one of the architects of the Orange Revolution, for the country's political in-fighting. Election results gave him around 5-6 per cent.

Yanukovich's Party of the Regions is allied to the Kremlin's United Russia party but he has been careful to avoid appearing as Moscow's stooge this time around.

He has called for a strong, independent Ukraine following a neutral path and not joining NATO or any other bloc. He attacked Yushchenko for excessively confrontational policies toward Russia, and says Ukraine's real enemy is poverty.

He was tarnished by a scandal in 2004, when he initially claimed victory in an election tainted by allegations of fraud and was subsequently swept aside by the Orange Revolution that brought Yushchenko to power.

Although Tymoshenko initially had stormy relations with Russia, she has tried to patch up her links with the Kremlin of late.

(Additional reporting by Natalya Zinets, Yuri Kulikov and Pavel Polityuk; writing by Richard Balmforth, Michael Stott and Dmitry Solovyov, editing by Mark Trevelyan)
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