Independent Ukraine (1991-2007)

The first years of independence were extremely hard for Ukraine. The country lacked an experienced management to carry out economic reforms. Foreign advisors were of little help as the transition period (from communism to capitalism) was unique in the world practice. The Ukrainian leadership decided not to apply the so-called shock therapy (introducing of free trade and liberalization of prices). At the beginning shock therapy seriously deteriorates the economic situation and the living standards fall sharply. But than market mechanisms start to work and the economic situation improves. Shock therapy was successfully applied in Poland in 1990.[11]

The Ukrainian government decided to walk along the reform path very cautiously and slowly. It was afraid of making the reforms too painful to the people. The government feared that the angry people could overthrow them in that case. The result of such a “cautious” policy was not good anyway. The economic situation was deteriorating and the population demanded pre-term presidential and parliamentary elections. The elections were scheduled for 1994 instead of 1995.

In the parliamentary elections of 1994 the recently re-legalized Communists got a majority. That happened because the disappointed population believed that the market economy was not good for them. Many people started to miss the Soviet times.

The reforms in the middle of the 1990s went slowly mostly because of the Communists’ resistance. The Communists blocked many urgent reforms and loudly advocated return to the Soviet economic and political system. They also called for restoration of the Soviet Union. In fact, the Communists acted against Ukrainian independence. Their policy could be called the worse the better. The worse the economic situation was, the more people missed the Soviet times. If the ruling class of the former nomenklatura had supported the Communists, Ukraine could have lost its independence.

With the advent of independence the nomenklatura changed their cloth from communist to nationalist and retained power. Now it was unofficially called the “party of power”, since it controlled the most important sectors of the economy. The nomenklatura of independent Ukraine was different from the nomenkatura of Soviet Ukraine. In Soviet times they were subordinated to their Moscow bosses. In independent Ukraine they were real rulers and they did not want to loose their dominant position in the country. Thus, the ideology of independence became useful for them and they became “nationally minded”.

In the presidential elections of 1994 Leonid Kuchma was chosen president. Russian ruling circles supported him in the hope of bringing Ukraine into Russia’s embrace. But the second Ukrainian president, like the first one, turned out to be nationally minded. He managed to consolidate his power through transforming Ukraine from a parliamentary republic into a presidential republic. In his foreign policy Kuchma chose the so-called two-vector policy (a policy of balancing between Russia and the West). This policy enabled Ukraine to get concessions from both sides.[12] In 1997 the Treaty on Friendship and Cooperation was signed with Russia. On the other hand, Kuchma announced that Ukraine had started a process of moving to NATO.

In 1999 Kuchma was reelected for the second term. His rule was characterized by a large-scale corruption, authoritarianism, nepotism, disrespect for the law and democratic freedoms. Most of the mass media were not free. Over half of the economy was in shade.[13] But the economic growth rate was impressive (one of the best in the world).

In 2004 Ukraine experienced very dramatic presidential elections. Kuchma’s choice was Prime Minister Viktor Yanukovych. The pro-Russian Yanukovych managed to ‘win’ elections through mass fraud. This mass fraud caused huge protest meetings all around Ukraine. The USA and the European Union refused to recognize the official results and advised to repeat the elections in a fair way.[14] As a result, new elections were held which brought victory to Victor Yushchenko. Since Yushchenko is an openly pro-western politician he changed Kuchma’s two-vector policy for one-vector policy. The result of this change was a serious deterioration of Russia-Ukraine relations. The close economic ties started to fall apart. A large-scale re-privatization was another fault of the new government led by Yulia Tymoshenko. Since foreign investors were not sure what enterprises were to be re-privatized they stopped making investments. The economic growth rate slowed down from 12% in 2004 to 3% in 2005. On the other hand, the transparent economic policy enabled Ukraine to get market economy status, which gives Ukraine an access to the markets of developed states. In September 2005 Yuriy Yekhanurov became prime minister. His government stopped re-privatization campaign. That measure resumed investments and revived the economy, but not significantly. One of the most impressive achievements of Yushchenko is the freedom of the media. According to foreign experts Ukraine has made significant progress in the fields of democratic rights and freedoms. They say that the Orange Revolution (the name of the 2004 dramatic elections) greatly contributed to the development of civil society. Freedom House, a prestigious human rights international organization, has upgraded Ukraine in 2006 to “free” from its “partly free” status. Russia was downgraded from “partly free” to “not free.”

The slowdown of the economy helped the pro-Russian ‘Party of Regions’ win parliamentary elections in 2006. It formed a coalition with Communists and Socialists and started to restrict Yushchenko’s powers. In response to this policy, the president dissolved the parliament. New parliamentary elections were scheduled for September 2007.

As a result of the 2007 parliamentary elections the Orange team (Tymoshenko’s and Yushchenko’s blocks) returned to power. Yulia Tymoshenko became prime minister again.

[1] Ukraine and Belarus were given UN membership as compensation for their extreme losses during WW II.

[2] Moscow was founded by the Kyivan prince Iurii Dolgorukii in 1147, several centuries later than Kyiv.

[3] A cosmopolitan literally means a citizen of the world.

[4] Instead of Crimea a Jewish autonomous republic was established in Siberia.

[5] His body was placed to the mausoleum next to the body of Lenin. In 1961 Khrushchev removed Stalin’s body from the mausoleum and buried it in the Kremlin wall.

[6] By reducing the size of private plots Khrushchev planned to make peasants interested in spending more time in collective farms.

[7] Corn occupied one-third of the arable land in Ukraine.

[8] That “brainwashing” was successful because Ukrainians did not have alternative sources of information.

[9] About 80 percent of Ukraine’s large enterprises were involved in arms production.

[10] As a result of it, the Greek Catholic Church was rehabilitated in Ukraine in 1989.

[11] In 1990 the economic situation in Poland was worse than in Ukraine.

[12] Russia gave cheap energy resources; the West gave financial aid.

[13] That was a result of unwise tax policy. Sometimes taxes reached 90%. Much of economic activity therefore escaped into the ‘shadow economy.’

[14] In contrast to the USA and the EU, Russia recognized the official results and congratulated Yanukovych on victory.

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