In Ukraine: To Sign or Not to Sign? That is the Question.

by Tammy Lynch

Ukraine President Viktor Yushchenko has a big decision to make. What will he do about legislation that raises the minimum wage beginning in January 2010? The legislation was approved by parliament on 20 October and now sits on the president’s desk waiting for his decision. Will he sign it or veto it?

The wage increase (which also will affect pensions) was vehemently opposed by Prime Minister Yulia Tymoshenko, who referred to it as “an atom bomb under the finances of the country.” The International Monetary Fund also expressed concern.

An IMF mission currently is in Ukraine to assess the country’s progress on promised reforms in return for its $16.4 billion loan and to determine if it will release the next loan tranche. In a meeting with Parliamentary Speaker Volodymyr Lytvyn, IMF representatives questioned Ukraine’s ability to control its deficit while under the pressure of higher social payments. The country has experienced severed industrial output contraction this year and seen its currency devalue by over 25%.

However, the vote came just one day after the official start of the presidential election campaign. It provides its backers – in particular presidential candidate Viktor Yanukovych – a useful talking point against Tymoshenko, who is his chief opponent in the election.

Can you imagine the advertisements? “The Prime Minister won’t raise your minimum wage, but I will!” The legislation, of course, doesn’t explain where the country will find the money.

But what of President Yushchenko, who is running for re-election. For years, he has criticized Tymoshenko because of what he terms her “populist” nature. He has repeatedly called on the government to rein in spending, and just last month, suggested that the country was not meeting IMF guidelines because its policies were too populist.

In January of this year, he went so far as to call Tymoshenko’s budget a document built on “lies.” He said, “On behalf of the entire country, I demand that the government and parliament immediately prepare an honest budget, where expenditures correspond to the capabilities of the economy.”

Now, Tymoshenko is calling on Yushchenko to veto the minimum wage legislation, which passed with 254 votes (226 needed). If the legislation is vetoed, it is unlikely its backers could muster the 300 votes necessary to override the President’s veto.

But if he signs the legislation into law, the president has an opportunity to isolate Tymoshenko, making her the only presidential candidate to speak against providing higher wages to voters. The action would not be unprecedented. During his first campaign in 2004, Yushchenko promised higher pensions; they were raised during the first year of his administration.

So which Yushchenko will we see in the next few days – the fiscally conservative president who demands controlled spending, or the candidate who offers assistance to voters?

Viktor Chernomyrdin Removed as Russian Ambassador to Ukraine

by Roman Kupchinsky

Russia’s controversial envoy to Ukraine, the once head of Gazprom and former Russian Prime Minister, Viktor Chernomyrdin was, at long last, recalled to Moscow by Russian President Dmitry Medvedev and offered a position as a consultant to the president. His successor has not yet been named.

Chernomyrdin’s career spans a few decades working in the Russian gas industry. His was a highly controversial career. The 71-year old Chernomyrdin began working in the Orenburg gas fields as a driller in the rough and tumble Soviet gas industry. He worked his way up within the industry and in 1989 became the head of Gazprom. Earlier he had been appointed by Mikhail Gorbachev to be the U.S.S.R. Minister of Gas at which time it was renamed OAO Gazprom. In 2005 the Russian state became the owner of 51 % of the company. In 2001 newly elected Russian President Vladimir Putin appointed Chernomyrdin to become the Russian ambassador to Ukraine. This appointment revealed Putin’s strategy towards Ukraine – gas was the key in Russian-Ukrainian relations and the only person who could represent Russian policy had to be a senior official familiar with the intricacies of Russian gas politics.

Chernomyrdin, however, did not arrive in Ukraine with a clean slate. Earlier, as a member of the Gore-Chernomyrdin Commission, he was suspected of corruption by the U.S. C.I.A. In a report reputedly sent by the C.I.A. to then-U.S. Vice President Al Gore in 1995, the agency cautioned the Vice-President that Chernomyrdin was linked to a number of criminal schemes. Chernomyrdin's private assets accumulated in his official position, according to the alleged C.I.A. report, ran into the billions of dollars. When the secret report reached Vice President Gore, he refused to accept it. Instead, according to several C.I.A. sources, he sent it back to the agency with the word "bull***t" scrawled across it."

As Russia’s Ambassador to Ukraine, Chernomyrdin played a highly controversial role and there were a number of attempts by Ukrainian politicians to have him declared persona non grata for his comments on Ukrainian domestic affairs. Russian political scientist Stanislav Belkovsky told the Ukrainska Pravda website on June 12, that Chernomyrdin had initially been sent as envoy to influence then-Ukrainian President Leonid Kuchma. Once Kuchma left office and after the Kremlin’s unsuccessful attempt to support Viktor Yanukovych’s presidential bid in 2004, Chernomyrdin’s role changed. He became more involved in gas negotiations between Russia and Ukraine and on March 24, 2009, Chernomyrdin was awarded the highest Russian state decoration - the medal “For Services to the Fatherland” from Medvedev.

In February 2009 Chernomyrdin made a number of highly disparaging remarks about Ukrainian President Viktor Yushchenko in an interview for the media. He was summoned to the Ukrainian Foreign Ministry and warned that this type of behavior was incompatible with his status and if he persisted in doing so he would be expelled. According to various sources in Ukraine, the two most likely candidates to replace Chernomyrdin are Gregory Karasin, the Russian Deputy Minister for Foreign Affairs who is responsible for Russian relations with C.I.S. states and Dmitry Rogozin, the Russian representative to N.A.T.O. Whoever is appointed, the overall consensus is that the candidate will be someone with high level access to Medvedev and Putin and be willing to do whatever it takes to help bring Ukraine into the Russian orbit.