9 November 2012

What's Really Dirty & Won’t Change The Geopolitical Status Quo? Ukraine's Parliamentary Elections.

KYIV—The October 28, 2012 parliamentary election in Ukraine was one of the dirtiest since the infamous 2004 presidential election, which led to the Orange Revolution. While the voting itself was orderly, pre-election violations and vote-counting irregularities were widespread.
This led the Organization for Security and Cooperation in Europe (OSCE) observation mission to call the process “a step backwards” for Ukraine.  The Canadian mission said, “Ukraine’s parliamentary elections fell short of meeting international standards in some significant respects.”  The NATO General Secretary also commented he was “worried about the situation in Ukraine.”  Even Ukraine’s Central Election Commission admitted the election was not free and fair and refused to accept results from several district election commissions because of irregularities with tabulating the vote count.

The charged environment after the poll has led opposition parties to consider a joint withdrawal from the parliament in order to force a re-election. Under Ukrainian law, parliament cannot work if more than 1/3 of its members resign.  Opposition-led public protests have been gaining momentum and intend to force the ruling Party of Regions into some form of compromise. 

Time is running out, as official election results are to be announced on November 12.  Counts in thirteen of the 225 single-mandate districts remain in question and the Central Election Commission has already turned to the outgoing Parliament to schedule new elections in five of them.

Nonetheless, a clear picture of the future make-up of the 450-seat parliament, known as the Verkhovna Rada, can be gained from party list vote results, which comprise 225 seats; and the winners in 212 single-mandate election districts.  The ruling Party of Regions received 30% of the popular vote and over 50% of all single-mandate seats, giving it 187 seats, which puts parliamentary majority just within its reach.  Counting on potential allies from a significant number of the 44 independent single-mandate candidates, plus the 32 seats won by the Communist Party, the Party of Regions expects to preserve its majority in the Rada, albeit facing an empowered opposition.

Opposition parties made a respectable showing in the election, but not enough to take the majority in the Rada.  The Tymoshenko-led United Opposition “Batkivschyna,” received almost 26% of the popular vote and about 20% of the single-mandate seats, giving it 102 seats in parliament.  They were followed by the Ukrainian Democratic Alliance for Reforms (UDAR) led by World Boxing Champion Vitaliy Klitschko who took 14% in the popular vote and the nationalist party “Svoboda,” which came in with 10% of the popular vote.  Together the three parties plus several independent candidates comprise the opposition and represent about 185 seats, short of the 226 for a majority. 

Keeping power, the ruling party loyal to President Viktor Yanukovych will preserve the status quo in Ukraine’s domestic and international trends. Domestically, this means continued centralization of power and a number of half-hearted economic reforms, some favoring big business while others attempting to conform to international requirements.  The most important economic challenges to the ruling class include increasing consumer prices on natural gas in line with Ukraine’s IMF agreement, as well as devaluing the national currency (UAH) to ease the burden on the country’s gold and foreign currency reserves. 

In the upcoming weeks, we expect a migration of several ministers back to the Parliament, as well as new faces taking key government posts.  Leadership changes are expected at the following ministries: Economic Development & Trade, Justice, Education, Foreign Affairs, Emergency Situations, Health, and possibly others.  Rotations are also expected at the National Bank of Ukraine and Ministry of Finance.

The negative perception of the parliamentary election in the West will make it more difficult for Ukraine to negotiate with the EU, leaving in limbo an EU Associate Membership package for Ukraine that includes a Deep and Comprehensive Free Trade Agreement.  The EU has made this clear to Ukraine: to improve its relations with Europe, Yanukovych needs to release jailed former Prime Minister Yulia Tymoshenko and Interior Minister Yuriy Lutsenko, and hold a free and fair parliamentary election.  Neither demand has been met.  Ukraine is likely to face increased isolation from EU countries in the near future.

While Russian and CIS election observers have rated the parliamentary election as free and fair, President Yanukovych remains in a bind with the Kremlin over the price of Gazprom’s natural gas exported to Ukraine and the company’s desires to take over Ukraine’s gas pipelines to Europe.  Any move by Ukraine to enter the Russia-sponsored economic union will both jeopardize Ukraine’s relations with the West and inconvenience Yanukovych’s oligarch financial backers, which would cause them to cease their financing of the Party of Regions.

As a result, Ukraine appears to be in check with regard to its relations with the EU, US and Russia.  A move in either direction would cause an imbalance internally.  Therefore, it appears that the modus operandi for the next 30 months, and until the 2015 presidential election, will be marking time with limited reforms by a government staffed with Party of Regions loyalists, and a soft isolation from the main geopolitical power centers.

Myron Wasylyk is Senior Vice President and Managing Director of PBN Hill+Knowlton Ukraine.  Write him at myron.wasylyk@pbnhkstrategies.com.



Ukrainian Verkhovna Rada Election Results

Party List Results
% Party of Regions United Opposition UDAR Communist Party Svoboda (Freedom) Ukraine - Forward!
Current count 30,0 25,5 14,0 13,2 10,4 1,6

Seat Distribution
  Party of Regions United Opposition UDAR Communist Party Svoboda (Freedom) Independent Other
Total Seats (tentative) 187 102 40 32 38 44 7