Independent Ukraine (1991-2010)

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 world practice. The Ukrainian leadership decided not to apply the so-called shock therapy (introducing of free trade and liberalization of prices). In the beginning shock therapy seriously deteriorates the economic situation and living standards fall sharply. But then market mechanisms start to work and the economic situation improves. Shock therapy was successfully applied in Poland in 1990.¹⁹

The Ukrainian government decided to walk along the reform path very cautiously and slowly. It believed that radical reforms could be 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 in the densely populated industrial regions of Eastern Ukraine 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. Some political analysts called their policy the worse the better. The worse the economic situation was, the more people missed the Soviet times and voted for Communists. If the ruling class of the former nomenklatura had supported the Communists, Ukraine could have lost its independence.

It did not happen, however. With the advent of independence the nomenklatura changed their clothes 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 lose their dominant position in the country. Thus, the ideology of independence became useful for them and they became “nationally minded.”

In January 1994 Kravchuk under pressure from Russia and the USA signed an agreement which deprived Ukraine of nuclear weapons. Many Ukrainian political analysts and politicians believe that it was a serious mistake.

In the presidential elections of 1994 Leonid Kuchma was the winner. 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.²⁰ 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.

Kuchma started a number of important economic reforms, introduced a successful currency (hryvnia), and made a serious contribution to the adoption of a new democratic Constitution (1996). Under his rule the economic situation stabilized and industrial output started to grow rather impressive. On the other hand, his rule was also noted for a large-scale corruption, authoritarianism, nepotism, disrespect for the law and democratic freedoms. Most of the influential mass media were not free. Over half of the economy was in shade.²¹ In the 1999 presidential election Leoinid Kuchma defeated the Communist leader Petro Simonenko and was reelected for the second term. The result showed that the improvement of economic situation diverted the majority of Ukrainians from Communist propaganda.

In September 2000 a serious political scandal occurred in Ukraine. Georgy Gongadze, a journalist criticizing the presidential policy on the Internet, disappeared. Soon his beheaded body was found in a forest. This event seriously undermined Kuchma’s image and provoked a number of anti-president actions. Kuchma’s popularity dropped significantly despite the fact that the opposition failed to prove Kuchma’s direct involvement into the Gongadze case. Many Ukrainians believed that the journalist was killed on Kuchma’s orders. The Gongadze case deteriorated not only Kuchma’s internal image, but also his external one. American and European leaders tried to avoid meeting with the Ukrainian president. Thus, at the end of his rule Kuchma had no other choice than turning to Russia. He became an ardent supporter of a tight economic union with Moscow.²²

In 2004 Ukraine experienced very dramatic presidential elections. Kuchma’s choice was Prime Minister Viktor Yanukovych. Pro-Russian Yanukovych managed to ‘win’ elections through mass fraud. The 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.²³ As a result, new elections were held which brought victory to Viktor Yushchenko.

Since Yushchenko was an openly pro-western politician, he changed Kuchma’s two-vector policy for a 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 a better access to the markets of developed states. Since serious disagreements over Ukraine’s economic policy emerged between Yushchenko and Tymoshenko, the president dismissed the premier. In September 2005 Yurii Yekhanurov, who was the president’s protégé, became prime minister. His government stopped the re-privatization campaign. That measure resumed investments and revived the economy, but not significantly.

One of Yushchenko’s most impressive achievements was the freedom of the media. According to foreign experts, Yushchenko’s Ukraine 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, upgraded Ukraine in 2006 to “free” from its “partly free” status. Russia was downgraded from “partly free” to “not free.”