Lesya and I'll be in Ukraine for a couple weeks

I just wanted to let y'all know that I won't be posting for a couple weeks. Lesya and I are off to Ukraine for vacation. Expect the next entry in early September, hopefully with a few pictures.

Have a lovely end of August, everyone! 

Regions of Ukraine deputies suddenly sound like a bunch of Kuchma acolytes

What a difference power makes! Gone is the Party of Regions (PoR) that stumped it for all the hot-button issues in the East. Gone is the party that represented "half of a divided country" as so many AP articles told me. In its place is a whole horde of little(-er) Kuchmas willing to drop any demand so long as it doesn't threaten their power or avenues for graft.

In the process, they're making all those PoR voters look like suckers. As expected.

First the bad news, and there's quite a bit of it: journalists are feeling the pinch again as "incidents" against them increase, Yanukovych has recently signed through a Cabinet decree allowing civil servants to be fired with less warning, Akhmetov is threatening to try to get Krivoryzhstal back, and (as I describe below) WTO accession is looking shakier and gas issues hazier. (thanks to Foreign Notes and frequent commenter IIU for most of these points)

WTO Accession - Like a Software Release Date

I've got to admit: I am in the dark about what's going on with Ukraine's WTO bid. According to UNIAN, on 8 Aug, Yanukovych suggested Ukraine might not join until 2007, while Tarasyuk was still adamant that accession will happen this year. The next day, Kinakh managed to agree with both of them; how's that for a political trick! (Ok, factually he only agreed with both that it should happen "soon", but still...) "Soon," says Yushchenko's Economic secretary, too.

And then a couple days ago, a new word from Yanukovych, more optimistic than the last. Now he is saying that Ukraine's been trying so long, it really should make it into the WTO this year, though "It would be wrong if we conceded on positions which would damage our market and our manufacturers."

The vagueness makes me suspicious that the deal won't go through until 2007.

Natural Gas For Influence
gas price extended through the end of the year. This despite Turkmenistan's stated aim of increasing its own price to Russia to $100/1000cu m. Should that take place, The Russian government will be selling gas to Ukraine at rates below the price it pays to suppliers. This before Yanukovych has even made it to Russia to negotiate. (although I'm also reading that this is not yet an agreement, but just a pronouncement from Yanukovych without official Russian confirmation yet, or something "being agreed upon")One other thing Yanukovych has decided: RosUkrEnergo is probably not so bad after all.failed to secure a deal on gas. Large price hikes and shortages are now imminent. I'm inclined to believe it, considering the thrust of the other two puzzling articles I placed after EDM. Looks like I'm going to have to downgrade my estimations of EDM, huh. In their defense, for quite some time they've been very reliable. I sincerely hope this doesn't indicate a downward trend.

The new news, of course, is great. If Yanukovych is having difficulties in negotiations and even he is suggesting price hikes to $150/ 1000cu m minimum, that means Russia is demanding real-world rates. A real, economically-based, agreement would not presuppose any backroom sell-out. It would mean clear negotiation based on national (and business) self-interest.

I can quote the same article referenced below, but now from the most optimistic option, rather than second-best:

Outcome 1: The Russian government takes the principled position that Russia should be selling gas to Ukraine openly at market rates - good policy which moves Ukrainian-Russian relations in a positive direction, good for forcing Ukrainian development along a sustainable route, good for reinforcing Ukrainian independence, and damaging to Yanukovych's credibility (as a bonus).

The following conclusions are therefore, happily, no longer applicable. Very comforting.

A couple postings ago I described what [a maintained $95 price] would mean: the Russian government is not interested in transparent economic relations with its neighbors. When it looked like the former orange blocs would continue in power, Putin repeatedly threatened to hike the price and now: suddenly the Russian government has decided it didn't really want to make an (economic) profit after all.

The price that will be paid will instead be determined in backroom deals. Russia will sell at ostensibly cut-rate prices expecting non-economic returns that are never announced to Ukrainian citizens (or any others, for that matter, including Russians). With all the secrecy, it doesn't require a terribly suspicious mind to wonder if unscrupulous Ukrainian politicians (like Boyko, back to his oily, gassy business as Minister now) might be selling out their nations at a discount, in exchange for kickbacks.]

A Couple Happy Side-Effects of the PoR Resurgence

There aren't many, granted, but there are some. Most of them got helpfully summed up by Vitrenko in her whine about how Yanukovych betrayed PoR voters. Essentially, while RoU will be concentrating its efforts on corruption and corrosion of the rule of law, it won't be focusing on any of the divisive issues it campaigned about.

Chief among its shifts is its quick backpedaling on the language issue. Like I said from the start: the language issue was just vote-gathering rhetoric with no real RoU deputy support. Tossing it to Yushchenko like a bone was the easiest decision they made. Of course the best option is if the language issue remains on the table enough to reach some sort of compromise, but I'd take neglect over a quickie conversion to dual state languages.

the port's quiet, the protests are over, and NATO is backAnother is that NATO military exercises got ok'd by the Rada and are happening again in Crimea. This is great. Regardless of whether or not Ukraine eventually joins (which I believe has always required a referendum, though perhaps this might have been a RoU win), it's a better diplomatic stance to at least look amenable. Vitrenko can't be to happy to see RoU voicing support for Crimean Tatars, either. (pic: VOA)

And finally, the Constitutional Court is back in action. 

Lutsenko Is Still Better Than Any Other Cabinet Member

As I said in my last entry, I was disappointed to see Lutsenko go back on his word by continuing to serve as Internal Affairs Minister under Yanukovych. It would have been nice to have seen a Ukrainian politician keeping his word for a change. (here's his excuse - short version, and his excuse - long version; for a fun comparison, here's Moroz's excuse for cutting a deal with Yanukovych. A question for you, Mr. Frosty: If you're so opposed to Yanukovych's policies, why didn't you just refuse to support any candidate?)

But I can't say I'm devastated Lutsenko will still be around. After all, he was a decent Minister; certainly I'm a lot happier to see him still there than to see Zvarych back in the Cabinet. It also looks like he may just be able to use his powers as a check against other Cabinet members.

my goodness

Ukraine has a Parliament again. It's lead by Yanukovych, and it includes the Communists (over protests from NSNU). Some NSNU deputies and almost all BYT deputies either withheld their votes or voted against the nomination of the cabinet,  but the nomination nonetheless passed easily. Those NSNU deputies who opposed it have expressed desires to join in general political opposition, but, of course, the strength of their convictions have not yet been tested. [pic: Voice of America]

Yanukovych gets a new CabinetThe US has sent its diplomatic congratulations, and recently the US Ambassador attended talks with PM Yanukovych. US embassy personnel and the US government are likely not thrilled by the new government, probably closer to the opinions in the article "Don't Give Up On Ukraine", written by former US Ambassador to Ukraine Carlos Pascal. But this is a good time for diplomacy and businesslike international relations. I'm glad the US is making good-faith gestures. Of course Putin also sent his congrats. I found Channel 5's short comment on the subject amusing.

Of course BYT is in opposition, but in a surprising turnaround, Lutsenko has gone for pragmatism and power over his earlier promises of principled opposition. I'm not so sure his recent hospitalization for hypertension got diagnosed right. Have they tested for pangs of conscience?

Initial Illiberal Economic Legislation

According to a statement from [First Vice PM] Azarov, some of the first legislation the new Cabinet will look at is economic (more from the AP).  It involves restarting some tax-privileged zones (bad idea; they are unfair and an invitation to corruption) and also deciding on compensation to be provided to investors who've suffered over the last year and a half (As if the most disadvantaged group in Ukraine has been the small minority of wealthy stockholders).

Funny enough, the majority of the advantages from these illiberal economic moves will accrue to the Donbas industrial area, or, more specifically, to Donbas area industrialists. Yushchenko has called it a mistake, but that's the most he can do about it.

Having this be the Yanu Cabinet's opening move is pretty disheartening. Four more years like this would be horrible for the economy. More to come soon, especially regarding oil and gas.

There are some benefits simply from having a government, though. Along with nominating Yanukovych, Yushchenko signed off on a document stating that the Dec 2004 Constitutional amendments that stripped him of some of his powers will not be brought to the as-yet-unformed Constitutional Court.  Since most lawmakers didn't want to see Yushchenko get a chance to regain those powers, they'd avoided nominating any CC candidates as a form of filibuster. This new piece of legislation will most likely expedite the process considerably.

Hunker Management

My feelings on the issue largely reflect those in Zerkalo Nedeli (pardon the pun; you can hold the one in the title against me, though).

It's going to be an unpleasant next few years. It's likely that "the country that has lately forgotten the meaning of the phase 'tax authorities as a tool of administrative pressure' will have a chance to recollect it; on the other hand, the budget has a chance to take in more revenues." And this was the direct result of the Orange government's "failure to follow the principles it proclaimed and pursue the priorities it set". Nothing for it but to hold on tight.

a more substantive entry from me on Tuesday 

Hey folks! I'm afraid I'm not going to get out this week's entry today, as I'm headed off to a writing conference soon. I'll try to add some more serious content Tuesday when I get back.

The big news is that Yushchenko signed onto a "National Unity Statement" with the Party of Regions and the rest of the blocs in parliament (except Tymoshenko's), and also appointed Yanukovych.

Looks like the best that could really be made from a compromise, and some items I actually very much approve of: the statement softened the Ukrainian language bits of the constitution without making Russian a second national language, and stated plainly that a referendum will be needed before NATO entry. I'm not exactly thrilled about the Single Economic Space (or Common Economic Space, or whatever) but all they really committed to was to keep working with that. Which is fine, so long as they don't get anything done.

The best that could have been hoped for from the agreement, on a quick read from me.

More when I get back.

[update: The Eurasia Daily Monitor now has a high quality and detailed description of the compromise]