Thursday, September 24, 2009

What is President Yushchenko Doing?

by Tammy Lynch

I stood on the Maidan in Kyiv for the 17 days that became known as the Orange Revolution. I am an American, but I listened to the speeches, talked to the “campers,” joined the chanting and waved my orange flags and creased, worn streamers. I watched as a million people soared on the wings of a collective euphoria.

During these 17 days, presidential candidate Viktor Yushchenko railed against corruption, promised to solve politically-motivated murders and vowed to involve “the people” in the process of state building.

And then …. he took office. Five years later, those million-strong euphoric expectations have crashed to the ground. Corruption has not decreased. Political crimes have not been solved. And few in Ukraine believe that “the people” matter.

The blame for this must not solely be laid at President Yushchenko’s door. One thing is clear, however – in five years, Yushchenko has proven unable to work efficiently with any government, any prime minister, or any political bloc to pass his stated reform agenda.

This week, in an apparent attempt to undermine Prime Minister Yulia Tymoshenko, President Yushchenko attacked her government – again. In the process, he also perhaps unwittingly launched an attack on Ukraine itself.

On 17 September, Yushchenko announced that the IMF is being too lenient with Tymoshenko’s government, implying that the Fund should suspend disbursement of the remaining tranches of a $16.4 billion loan. “I am very disappointed,” Yushchenko said, “that the policies in 2009 departed so far from the memorandum [of understanding with the IMF],” as his aide warned that the IMF had said it would not disburse more money this year. So far, the country has received over $10 billion from the Fund. The government quickly disputed these statements.

Yushchenko is correct about one thing – the IMF has been very lenient. A majority of agreed reforms have not occurred. However, President Yushchenko should look in the mirror to see one of the reasons. A number of reforms have been enacted by the Prime Minister’s direct decree. PM Tymoshenko was forced to rely on decree power after Yushchenko’s parliamentary allies refused to vote for IMF-supported changes to the pension fund and Naftohaz gas company funding. Yushchenko made no attempt to rally his troops on behalf of these policy alterations.

Yushchenko also has avoided campaigning personally for the implementation of the IMF’s toughest reform requirement – higher gas prices for consumers. With an election four months away, it is unlikely any politician will board that reform train.

The biggest problem with Yushchenko’s critique of the IMF’s leniency is not whether it is true. Rather, his comments undercut his own government’s work with an international lending organization, while signaling to other investors that they should stay away. He has spotlighted a potential problem but done nothing to fix it – a common event during his presidency. In the process, a president who is supposed to represent his country has undermined it.

So, what if the IMF listened? Would the situation in Ukraine improve? Hardly. In fact, a suspended IMF loan could have a fatal effect on Ukraine’s bond yields, further destabilize the currency, squash Naftohaz’s attempts to restructure its Eurobonds and freeze Foreign Direct Investment indefinitely. Is President Yushchenko too concerned with undermining his prime minister – and presidential campaign opponent – to understand this?


  1. As much as I hate Yushchenko for all the lost opportunities, I fully share his stance on the IMF.

    To get elected Tymoshenko will beg, borrow and deal. The IMF is a good deal for her and a bad deal for me. Why? Because Tymoshenko pours the IMF money into a handful of oligarch banks and bills me for it.

    The IMF's not-so-invisible hand in Ukraine hurts ordinary Ukrainians like me and helps Tymoshenko-friendly oligarchs. It fills their pockets with my hard-earned money.

    To buy an 8G iPod Nano, an average Kyivite should work for 82 hours while an average New Yorker should only work for 9 hours.

    In the 90s, the IMF helped Kuchma turn Ukraine into a poor toothless kleptocracy. In the 2008-2009 comeback, the IMF is helping the oligarchs spread Ukrainians' “wealth” around.

    That's not what I stood for during the Orange Revolution. Dear IMF, please get out of my pocket!

  2. Taras.can you please provide some details of how the IMF screwed you out of money aqn d how this money went to Ukrainian oligarchs? Richard Hayes

  3. In 1995, Kuchma traded the world's third-largest nuclear arsenal for a few billion dollars worth of an IMF standby program.

    Far from helping Ukraine reform its economy and government, the money helped Kuchma retain his grip on power and carry out a program of grabitization.

    Thanks to this program, plants and factories built with slave and semi-slave Soviet labor became the property of a handful of oligarch cartels. They keep these assets as energy-inefficient and obsolete as possible -- as long as they can turn a profit by having the lowest paid workforce in Europe.

    They rule my country. There's no law in my country. My country is rapidly depopulating.

    Now let me supply you with a few Dominique Strauss-Kahn quotes from the Kyiv Post article IMF says Ukraine needs reform, not just money:

    Loans can be useful to solve problems immediately, but the root of the problem lies within the country.

    No matter how many loans you get you may not solve these problems. Instead, you may increase the indebtness of the country, and thus end up in a worse situation than you started.

    The IMF works as a doctor not a policeman.

    As a drug dealer, I'd say. Because that's exactly what happens when the IMF money goes into something else other than reform.

    In Ukraine, it's happened before and it's happening now.


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