By Renfrey Clarke
MOSCOW — Whoever was destined to head the polls in the second round of the Ukrainian presidential elections on July 10, the real winner was never in doubt. That was to be the "party of power" — the layer of high-placed officials and directors of large state-owned firms that has survived with few changes from Soviet times.
In the event, the President of Ukraine from July 19 is former Prime Minister Leonid Kuchma, since January the head of the Ukrainian Union of Industrialists and Entrepreneurs. Kuchma took 52% of the vote outpolling incumbent President Leonid Kravchuk, who scored 45%. One of the truisms of present-day politics in eastern Europe and the former Soviet Union was confirmed: leaders who preside over "shock therapy" policies generally forfeit any hope of re-election.
In choosing Kuchma over Kravchuk on July 10, voters handed power to Russian-speaking rather than Ukrainian-speaking factions within the elite, and to interests linked to military industries rather than civilian production. However, there were few important differences between the published programs of the two candidates. Neither planned to attack the fundamental interests of the social layer in which both have been key figures.
With the old party-state apparatus still in control, Ukrainians can look forward to more years of tortured manoeuvrings between their rulers and Western capital, whose pressures are often transmitted through Moscow. At times, the Ukrainian elite will resist these pressures; just as often, it will eagerly volunteer concessions in the search for aid and investment. The situation is guaranteed to perpetuate chaos and decline, and the main victims will be Ukraine's workers and peasants.
The Ukrainian masses were never well positioned to force an outcome in their own interests. The country is sharply divided on historical and linguistic grounds; the western provinces were incorporated into the Soviet Ukraine only after World War II, and have traditions quite distinct from the historically Russian-oriented east and south. In large parts of the latter regions, Russian immigration and Russification campaigns have reduced Ukrainian speakers to a minority. The "party of power" has profited enormously from the rifts in popular self-identification, running political campaigns that pit east against west, worker against worker.
However, to say that the Ukrainian elite has been adept at sidetracking popular consciousness is not to say that it has solved its central problems. Unlike the situation in Russia, the members of Ukraine's "party of power" have rarely shown much confidence that they can turn themselves into successful capitalists.
Their reasoning here can hardly be faulted. At the time of independence, at the end of 1991, a reported 80% of Ukrainian enterprises were vitally dependent on suppliers or customers elsewhere in the former USSR.
Since the break-up of the Soviet Union, huge numbers of Ukrainian enterprises have been marooned behind the new national boundaries, their key commercial links weakened by customs barriers and the loss of a single currency. Meanwhile, the Ukraine has only limited oil and gas deposits, and foreign suppliers are demanding world prices for energy. In these circumstances, large numbers of Ukrainian enterprises would swiftly become insolvent if they were to be cut loose from state ownership and support.
The members of the Ukrainian elite want capitalism, but in most cases they do not want it yet. Under Kravchuk, there has been no more than a limp acceptance of privatisation and the "free market". As of March, only 12% of the country's large and medium-sized industrial enterprises had been sold off. The loosening of economic regulation, meanwhile, has brought a surge of crime. Huge "black" and "grey" markets now account for much of the country's economic activity.
Statistics are unreliable, but there is no doubt that the economy is in a catastrophic state. During 1993 the government sought to maintain production in unprofitable enterprises through subsidies and cheap credits; the result was annual inflation of 9000%. Then came austerity policies, which the government applied largely through the simple methods of refusing to pay state debts and failing to print sufficient banknotes to allow workers to receive their wages.
Inflation is now down to levels of about 5% a month, but first quarter industrial production was estimated to be nearly 40% below the levels of the same period of 1993. Wages, when they are paid, average around US$20 a month. Workers survive by holding second jobs, engaging in petty trade and speculation, or growing vegetables on garden plots.
Among Ukrainian workers, economic disaster has created a significant, if uneven, radicalisation. Parliamentary elections in March and April saw big gains for the Socialist and Communist parties, and the left now commands a majority of the legislature on many issues. However, support for the left is concentrated overwhelmingly in the large industrial centres of the Russian-speaking east.
The radicalisation has been impeded by the failure of the left to develop a clear alternative program; the policies advanced by left-wing legislators have often amounted only to a slower, paler variant of "free market" liberalism. The appeal of the left has also been limited by arcane deals struck with notionally "red" local potentates.
Largely because of errors by the left, the "party of power" during the lead-up to the presidential elections was remarkably successful in presenting its factional differences as real political options for voters.
Kravchuk courted nationalist support in the western provinces, though he also made a play for left-wing votes by appointing as prime minister a former state planning chief reviled by liberals. Kuchma promised to give Russian equal standing with Ukrainian as an official state language. Both leading candidates pledged to cut taxes, provide social services and fight crime. Economic promises were kept vague, but both Kravchuk and Kuchma supported freer trade with Russia. Kuchma urged "a single economic space with Russia and all the republics of the former USSR".
Failing to distinguish itself clearly from the apparatus candidates, and in particular from Kuchma, the left drew only a fraction of its potential voter support. In the first round the main left candidate, Socialist Party chief and parliament speaker Alexander Moroz, came in third with 13% of the votes.
Throughout the election process, the official television and radio gave blanket coverage and exclusive support to Kravchuk. Other media outlets came under heavy pressure from the authorities, with one independent television company put off the air for "inadequate interpretation" of the president's positions. Claims of fraud in the vote-counting procedures abounded.
In between the rounds of voting, the Group of Seven industrialised countries provided a boost to Kravchuk — perceived as the more "pro-reform" of the two remaining candidates — by offering aid worth $4 billion in return for guarantees that pro-capitalist reforms would be continued.
Nevertheless, Kuchma triumphed; his vague promises have now to become specific policies. In the past, Kuchma has spoken of a "controlled transition to the free market". But according to an adviser quoted in the July 13 Moscow Times, he intends, for the present, to keep large industry in government hands. Kuchma has also recently spoken in favour of state planning, "but not of every screw".
If these positions are contradictory, the suggestion is nevertheless present that Kuchma plans the creation of a regulated mixed economy — to include state ownership of large-scale industry, a broad sector of leased and cooperative medium-sized firms, and a private sector concentrated in small-scale trade and services. If these plans were serious, the trust which Ukrainian voters have placed in Kuchma might be justified.
But there is a difference between popular forms controlled by the masses, and the same forms filled with an apparatus content. Under the pressures of Western bankers, of Russian creditors and trading partners, and of the greed of the Ukrainian elite itself, the regulated mixed economy is likely to amount only to a brief phase in Ukraine's passage to an oligarchic Third World capitalism.
Unless, that is, the Ukrainian left acquires a distinctive vision and learns to defend it. The prospects here are not totally grim, since Kuchma's next moves are likely to force a rupture with leftists who backed him in the second round of the elections. Aiming to create a Yeltsin-style "strong executive", able to force the implementation of unpopular measures, Kuchma is now expected to move into confrontation with the parliament. In this conflict, a particular issue will be the system of regional administration and the rights of local authorities. Battling the president around questions of representative democracy and grass-roots control, the left may yet break from its habit of trailing after leftward-gesturing sectors of the apparatus and learn instead to trust in its worker base.
The general position of the Ukrainian left is not strong. As the presidential elections showed, regional traditions and prejudices remain a powerful factor in Ukrainian politics; leftists who might gain majorities in eastern regions of the country can expect only a few per cent in the west. Moreover, it will be extraordinarily difficult to force progressive changes in Ukraine while the country's economy remains so dependent on Russia, and while the Russian authorities are not under strong left-wing pressure.
Nevertheless, outbursts of combativity by workers in Ukraine are watched closely in Russia, and political lessons pass freely across the border, often without even linguistic barriers to impede them. To the extent that Kuchma's efforts to impose a "strong executive" meet with popular resistance, this will help create the conditions for mutually reinforcing struggles in both countries.