Financial/political oligarchies wield true power in Ukraine, says leading political scientist

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Ukraine, while maintaining its formal democratic structures, is sinking into a quasi-democratic form of governance, in which decisions are increasingly made by financial/political oligarchies controlled by a few.

That is the conclusion by Mykola Tomenko, a leading political scientist and professor at the National University of Kyiv Mohyla Academy on the current situation in Ukraine eight years after this country of 50 million finally thrust off Soviet and Russian domination and declared an independent democratic state.

Mr. Tomenko, who runs the Institute of Politics and is associated with the Friedrich Ebert Foundation and the Konrad Adenauer Foundation, both based in Germany, said in an exclusive interview with The Weekly that, even though Ukraine has successfully established the most important democratic institutions, including a political party system, free elections, a revised Constitution and a system of laws, the decision-making process in government increasingly is done in undemocratic ways.

In evaluating where Ukraine has traveled economically and politically for the last eight years and what lies ahead, Mr. Tomenko, was critical of both of Ukraine's first two presidents, but particularly negative in his assessment of Mr. Kuchma's last five years in office.

"If you look at the speeches of candidate Kuchma in 1994 and his program as a candidate today, they are very similar," explained the 34-year-old Mr. Tomenko. "The issues that were presented then as key have not been resolved."

Mr. Tomenko took President Kuchma to task for not finding solutions to matters that concerned the Ukrainian citizenry even as he took office, including the growing presence of corruption among government officials and the illegal transfer of millions of dollars to foreign banks, as well as a national debt and foreign borrowing that have slowly gotten out of hand.

Most of the criticism Mr. Tomenko leveled at President Kuchma was for being at the country's helm as Ukrainian business and political leaders have slowly turned Ukraine into what he called "oligarchic clan capitalism."

The basic mechanism of a liberal economic model have been established in Ukraine, said Mr. Tomenko. Yet, Ukraine cannot be called a capitalistic society, said the political scientist. Today, only an ideological aberration of capitalism exists - one that is dominated by non-governmental monopolies controlled by clans.

"It is a synthesis of businesses and political parties and government structures that, in fact, today control the situation in Ukraine," explained Mr. Tomenko. It is a system that requires free-market capitalistic notions and structures, but is driven by government favors to a certain limited number of associates, partners and people on the inside.

The Ukrainian oligarchic clans, which can be compared to crime families in the U.S., but with much more access to government power, are not as vicious here as they are in neighboring Russia, believes the political scientist, who said that few of them represent solely Ukrainian interests. He named Russian, Israeli and U.S. businessmen as having strong ties to the Ukrainian clans.

The clans control the banking system, oil and gas distribution in Ukraine, the liquor market and much of agriculture.

Government officials, many of whom directly or via proxy influence the large financial conglomerates, offer various subsidies, including breaks on import and export tariffs, and insider information on privatization tenders. Political parties propose legislation in the Verkhovna Rada that will benefit those oligarchies to which they are tied, while the Cabinet of Ministers forms policy favorable to the strongest ones.

Mr. Tomenko explained that even such a distinguished political personality as former President Leonid Kravchuk made a huge killing in the year after he left office by employing the methods now well-entrenched among the clans.

The ex-president set up a fund to benefit the arts in Ukraine, for which he obtained tax-subsidies and through which he began to import large quantities of cigarettes and liquor into the country at below competitive prices, and later made a financial killing.

He also allowed other companies to channel their goods through his tax-subsidized operation, which brought additional profits, according to Mr. Tomenko.

Today most of those tax loopholes are closed as the government searches for revenue to finance its empty tax coffers, a move that Mr. Tomenko credited the current president for making.

In today's Ukraine the development of oligarchic capitalism has left much of the political process outside the democratic realm, even as democratic institutions increase.

"The more democratic institutions we have, the less they influence the political situation," said Mr. Tomenko. He said that the multi-party system now survives only as a formality and that a complete lack of transparency exists within it.

According to Mr. Tomenko, he situation has slowly been changing since national democratic parties like Rukh held center stage as opposition forces in the early and mid-1990s. Then it was clear what the political options were and how the final decisions were made. The rationale behind decisions was more or less understood.

"Today, in fact, the political field is such that to understand it does not help in understanding how decisions are made in Ukraine," he observed

Mr. Tomenko added that democracy in Ukraine has taken on a "decorative aspect."

Even as he attacked the domestic policies and practices of the first two presidents, and particularly Mr. Kuchma, Mr. Tomenko had high praise for the accomplishments of both men in foreign affairs.

It is in this area that Ukraine has established itself successfully on the international map, believes Mr. Tomenko. Not only has Ukraine succeeded at nation-building, but it has made its mark and has been heard from more than once by the global community - via success in sports and the difficult political compromises that had to be made in establishing formal relations with Russia, including its stands on Crimea and Sevastopol.

He said that the amount of information in the world press on Ukraine, negative or positive, has been good for the country. "First we needed to be noticed, now we must find a place for ourselves [in the international community] and then move to a better position," explained Mr. Tomenko. "Both presidents, Kravchuk and Kuchma, accomplished this in the formal aspect at the least."

And though Mr. Tomenko criticized the way in which the Ukrainian democratic transformation is proceeding and the failure of the various governments to invigorate the economy, the political scientist said that what is now important is that, after going through a lengthy learning curve, Ukraine should finally know how to treat its economic malaise.

"Even though the same economic ills that were evident in 1994 are still here in 1999, the positive aspect is that the prescription for treatment is now obvious to everyone. What is needed is a political leader with the political will who could force the government to take the prescription, turn it into law and implement it," he explained.

Mr. Tomenko also cited the new Constitution and the establishment of a national currency as major accomplishments for the fledgling Ukrainian state. Yet, he criticized President Kuchma, who issued the decree creating the hryvnia, for shying away from the responsibility because he was worried that the currency might fail.

"Several well-informed sources have told me that the decree was not signed initially by the president, who said that if it did not work out then he could claim that he did not approve it," explained Mr. Tomenko.

As Ukraine prepares for its third presidential elections and the new millennium, Mr. Tomenko believes the state and its people are not threatened in any way by a loss of sovereignty or independence - even if a leftist wins the October elections.

Even most members of the Communist Party of Ukraine believe that the notion of a free and independent Ukraine is fixed, according to Mr. Tomenko.

"An absolute majority understands that Ukraine, its borders, its territories and its economy, is an entity that must move ahead independently. How that should proceed is quite another question," he said.

While Ukraine's failures in its first eight years of existence are glaring, they have served to break down illusions that a democratic, capitalistic society would lead to immediate prosperity. Today society has understood that, although nation-building has moved far along, the economy will take more time.

Ukrainians hold no illusions that their country will move alongside Germany economically any time soon, but they also harbor no misconception that Ukraine could again become part of Russia or the Soviet Union, explained Mr. Tomenko.

Ukrainian society is changing politically, according to studies done by Mr. Tomenko, as it is moving away from an ideological base of either "pro-communists" or "pro-capitalists" to one that thinks in terms of individual candidates and policies, and what they offer.

"Today people are ready to vote for a person who does not reflect their personal political ideology, as long as they can be assured the politician will be professional, moral, honest and responsible," said Mr. Tomenko.

He added that although these presidential elections probably will not reflect that changing mindset, he offered that the 2002 parliamentary elections may bring many surprises.

People should not expect any major changes from the new president, no matter who is elected. That person will not be any more left-oriented than the current president, whose policies Mr. Tomenko described as socialistic paternalism and protectionism. He will most likely be another transitional figure, who at an optimum will know how to administer the economic treatment that Ukraine's economy badly needs.

"His position should be to maximally democraticize, to end corruption, so that the government can work more formally, more or less professionally. Then society and the government may finally become closer. Today Ukrainian society does not trust its government at all," Mr. Tomenko stated.

Copyright © The Ukrainian Weekly, August 22, 1999, No. 34, Vol. LXVII

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