Ukraine: Economic collapse and Presidential elections

Five years after ‘Orange Revolution’ “victory”: Elite factions struggle for riches, while working people suffer

According to the credit rating agency CMA, the chance that the Ukraine will default on its debts is now over 50%. A rumour that the state railways were in trouble, last November, sent jitters through the world stock markets. Now it is said that Naftogas – the oil and gas pipeline company – is on the verge of bankruptcy. In a region that has been devastated by the world economic crisis, Ukraine stands out as being particularly hard hit. The government estimates that GDP has fallen by 12% in 2009, the World Bank say the collapse is nearer 14%. The currency, the gryvna, has fallen by half since the start of the crisis. The budget deficit has spiraled out of control, already reaching 14%. The situation is so bad that even the country’s President Viktor Yushenko warns that within 2-3 years the state will collapse. The repayments on external debts now require more money than that currently spent on healthcare, education, science and defense put together.

This is the background to the Presidential Election due to take place on 17th January, the first since the “Orange revolution” of 2004. There are 18 candidates on the ballot paper, including the sitting President Viktor Yushenko, whose rating in the opinion polls is currently running at about 4%. The two front runners are the former “Orange princess” Yulia Timoshenko, currently Prime Minister and Viktor Yanukovich, whose electoral “victory” in 2004 sparked the orange events. Yet amongst the 18, there is not one who can be said to stand up for the rights of working people or who offers a real way out of the current crisis. Reflecting the cynicism that has infected Ukrainian politics, one candidate, the President of a City Chamber of Commerce from the west Ukraine has even changed his name, so he is now called “against all” in an attempt to pick up the votes of those who are disgusted with the games of the political elite.

Main presidential candidates, Yulia Timoshenko and Viktor Yanukovic

The Russian Premier Putin calls the Ukraine, the fifth largest country by population in Europe, a “failed state”. Whilst he does this to annoy the Ukrainian leadership, he is probably not far from the truth. The printer responsible for producing passports and driving licenses has halted work as the government can no longer pay the bills. The Orange revolution, which was supposed to mark the victory of the pro western, that is anti Russian market reformers over the pro Russian industrialists saw the two leaders of the protests, Yushenko and Timoshenko taking up the President’s and Premier’s posts respectively and significant power was transferred to the latter. Within a short period, however clashes between the two developed as Timoshenko opened up a review of previous privatization decisions, not in the interests of the working class but to enable her own clan to profit more from the process. This brought her into conflict with a section of the bourgeois and within 8 months she was sacked by Yushenko. Later Yanukovich was appointed Premier after he agreed not to oppose Yushenko’s pro EU and Pro NATO positions. Timoshenko returned to the Premiership after her party came second (to Yunukovich’s) in the 2007 Parliamentary election, enabling her to form a coalition with former orange allies.

Elite’s struggle for control of resources

This apparent toing and froing between the various sections of the political ruling elite is not over policies, but over who gets the control of the country’s resources and is actually just a mild reflection of the fact that capitalism has not managed to establish a stable regime in the country. The depth of the political chaos is indicated by the fact that the country has had 16 premiers in the 18 years since its establishment as an independent state. Its current crisis proof, if any more is needed that in today’s capitalist world, it is not possible for even a large country (the population is 46 million in a country the size of France) to gain genuine independence.

Although the inflammable materials that fuelled the “orange revolution” were provided by the huge discontent of the masses at the corruption within the ruling elite and the blatant rigging of the elections against the background of the collapse of living standards, the driving force pushing the two warring factions of the ruling elite into open conflict was the contradiction between the interests of Russian and Western capital in the country. At the time the leaders of the orange side, Yushenko and Timoshenko raised the prospect of the Ukraine joining Europe, gaining European living standards and democratic traditions. Yanukovich, based in the Russian speaking and industrialized East Ukraine was seen as the conductor of Russian interests, a representative of the old, conservative, industrial elite.

An opinion poll following the orange events in 2005 showed that 43% of Ukrainians thought the country was on the road to stability. Now only 5% think so. In a mirror image, the number believing that the likelihood of instability and chaos has increased from 13 to 74%. Another opinion poll taken conducted in December demonstrated that the issues that really concern Ukrainians are jobs (71%), inflation (56%), corruption (48%), health care and political stability (33% each). Only 9% think that the status of the Russian language should be a priority, just 3% are concerned about the EU and 1% about NATO.

These figures are an indication that what the majority of Ukrainians would like to hear from the political parties is a programme that can answer their concerns over jobs and wages. But the main parties are all supporters of capitalism in one form or another and have no answer to the current catastrophic crisis. Viktor Yanukovich’s Party of the Regions promises that he wants to see the Ukraine become one of the top 20 economies in the world, it is currently at number 43. Yet the only measures he proposes for this are promises to cut tax rates, guarantee private ownership of the land, support heavy industry, help small business and encourage innovation and investment. In his election programme he talks of the need to increase employment, improve wages and cut inflation but with no explanation of how he intends to do this.

Yulia Timochenko’s in her election address talks of the Ukraine having a “holy mission”. In a slightly more detailed way, she explains how she also sees the way forward as cutting taxes, supporting heavy industry, helping small businesses, encouraging innovation, improving wages and so. She claims that her government had started to resolve these problems until the global crisis intervened. In other words there is little difference between the main contenders as far as the economy is concerned. Both have served as prime Ministers in the last 5 years and little has improved.

Russia takes more pragmatic line

If however the orange events were dominated by the struggle between the interests of Russian and western imperialism, with Russia giving almost complete support to Yanukovich, now Russia is taking a more pragmatic line. This is largely because Timoshenko has proved to be very populist in her actions, recognizing the reality that the EU and west in general are not keen to rush into the strengthening of relations with the Ukraine and also that a large section of the population look more to the east for support. Most importantly, a section of the ruling elite, whilst wanting to move towards Europe know that they can not afford to alienate Russian interests. The use by Russia of the oil and gas pipelines to blackmail the Ukraine into accepting higher prices saw Timoshenko more or less siding with the Russians, undoubtedly in exchange for an agreement from the Russian side to drop open opposition to her candidacy. The agreement annoyed both Yushenko, who saw the agreement as another concession to Russia and the Yunukovich wing, whose backers in large industry have ended up paying more for their energy.

On other issues which could cause a rift with Russia, Timoshenko has also shown her pragmatism. Whilst Yushenko supported Saakashvilli in the war between Russia and Georgia, Timoshenko as Prime Minister refused to back Georgia. She still says she is in favour of the Ukraine joining the EU and NATO, but promises this will only happen after a referendum. This is in effect recognition of the status-quo.

Yanukovich has not proved to be as pro Russian as the Kremlin once hoped for. He comments that because the Ukraine is located between two large powers, Russia and the EU, it should remain neutral, particularly as the 40 billion euros worth of trade with the European Union is matched by that with Russia. As representative of industry, he has been critical of the gas deals between Timoshenko and Russia. The Ukraine, Yanukovich says, should remain “out of blocks”, maintaining friendly relations with all sides.

With little difference between the main candidates on the economy, and relations to Russia no longer providing such a clear division, the candidates are relying on populist issues in an attempt to win support. Timoshenko begins her election programme with an attack on the “ total domination of the oligarchy, that has so deeply corrupted politicians, the media, and a big part of law enforcement and the courts. The oligarchs earn dishonest money at the expense of state resources. This is a cancerous tumor of modern Ukraine that is incompatible with democracy.” Pretty rich seeing as she is one of the country’s oligarchs.

Yanukovich uses the language question. Speaking in Russian at a meeting in the Crimea, he switched sarcastically into Ukrainian to take the mickey out of Timoshenko. "I’m tired of hearing five years of this gibberish, and seeing this variety show performed by the Orange troupe" he commented. He promises as a priority to return the status of Russian as a state language, one issue that Timoshenko is fundamentally opposed to.

Not surprisingly given the economic crisis and chaos in the country, Ukrainians have become extremely disillusioned with the political system over the past 5 years. Another oligarch, former Premier and supporter of the orange coalition Medvedchuk now regrets that in 2004 he fought for “a European style democracy”. He says political adventurers used the idea as an ideological smokescreen. Now he says the clock should be turned back. Yulia Timoshenko argues in her programme that the constitutional changes made in 2004 (reducing Presidential powers in favour of the Parliament) should be repealed and replaced with “strong presidential rule with clearly consolidated power structures”. Yanukovcih, arguing for an end to chaos says “that following the Presidential elections the power will be stabilized and order restored to the country”. Just as five years ago, the approach of the orange revolution against the background of corruption and economic collapse found an echo amongst the population, so today many Ukrainians are saying they are fed up, and want order to be brought back to the country.

Absence of a socialist, working class alternative

Unfortunately, just the same problems exist now as they did in 2004. These problems lead back to the absence of a left working class alternative in the Ukraine. Petr Simonenko, candidate of the Communist Party calls for “socialism and people’s power”. This sounds a good start, but not only has practice shown that the communist party is incapable of organizing any real opposition to the regime, but Simonenko is not even standing as the candidate of the communist party but the ‘block of left and left centrist forces” in which the left centrist forces are parties controlled by oligarchs. Polls now show him getting less than 4% of the vote, compared to the 15-20% that was possible in the nineties.

The CWI in the Ukraine argues that a genuine working class party needs to be built that can mobilize and unite trade unions, worker and protest activists in a common struggle against the consequences of the restoration of capitalism in the Ukraine and to fight for a genuine socialist alternative.

Instead of bland promises of more jobs and pay, we insist that there should be guaranteed jobs for all with decent pay. Instead of paying the international debts, which were accumulated by governments supporting the oligarchs, we say that the money should be used to finance the health service, education and other social needs. No state money should be used to bail out private companies. Any company threatening bankruptcy should be taken into public ownership and run by democratically elected workers’ committees. The banks should be nationalized together with the big companies to allow for the proper planning of the economy in the interests of working people.

We support any reforms to the constitutional system that lead to the reduction in presidential power, make national and local executive bodies and parliaments more accountable and accessible. Corruption is inherent to the capitalist system and no campaigns by the capitalist parties to reduce it can be effective. We are in favour of anti corruption committees based on elected representatives of local communities to guarantee transparency with the right to examine all financial accounts and procedures and to sack corrupt officials. We are against those reforms to the constitutional system currently being proposed in the interests of the oligarchs and ruling elite. We believe that the only way in which the constitutional system can be made genuinely democratic is for the working masses to become politically organized and to convene a constitutional conference to decide the democratic structures necessary to allow the working class to run society in their interests.

We are in favour of a genuinely independent Ukraine, which is unfortunately not possible as long as different capitalist and imperialist interests are struggling to control its resources and influence its politics. We are therefore against the Ukraine being a member of the EC, NATO, CIS or GUAM. At the same time we are against the reduction of national rights of any ethnic groupings within the Ukraine. We support the demand for Russian to be recognized as a state language, not as an alternative to Ukrainian but for both to be developed as integral elements of the country’s culture, with full support given for the development of both languages. Those regions such as the Crimea that want autonomy should be entitled to recognition. The only way in which genuine independence can be ensured is for the establishment of a socialist Ukraine as part of a genuine federation of socialist states of East and Central Europe.

None of the present parties or candidates fighting to be elected in the Ukraine is capable of even beginning to resolve the problems faced by the working class and youth. As in other countries, the only way out is for worker activists and youth to struggle to establish a genuine mass workers party that can fight for political power and establish a workers’ government with a genuine socialist programme. The CWI is committed to this struggle. Join with us.

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January 2010