Nations in Transit - Ukraine (2005)

Capital: Kyiv
Population: 47,400,000
Status: Partly Free
PPP: $780
Private Sector as % of GNI: na
Life Expectancy: 68
Religious Groups: Ukrainian Orthodox [Kiev Patriarchate (19 percent), Moscow Patriarchate (9 percent)], Ukrainian Greek Catholic (6 percent), Ukrainian Autocephalous Orthodox (1.7 percent), Protestant, Jewish
Ethnic Groups: Ukrainian (78 percent), Russian (17 percent), other (5 percent)

Executive Summary

In 2004, Ukraine overcame an extraordinary challenge to return to democratic political development and, ultimately, triumphed as an impressive success story for democracy in Eastern Europe. During the previous 14 years of independence, Ukraine had remained a hybrid regime in which authoritarian and democratic features coexisted. Since independence in 1991, Ukraine witnessed four presidential (1991,1994,1999,2004) and three parliamentary (1994,1999,2002) elections. Now, the third president and the fourth Parliament are in power. The Constitution, adopted in 1996, introduced a presidential model, according to which the president appoints and dismisses government officials and regional governors. Recent constitutional reforms (adopted on December 8,2004) have introduced the move toward a mixed parliamentary-presidential model of power. This reform is scheduled to be implemented either September 1,2005, or January 1,2006 (two options provided by provisional regulations).

The economy of Ukraine has grown rapidly since 2000 (up 12 percent in 2004), and real wages are increasing (the average monthly salary is approximately US$120 as of late 2004). However, the country still lacks real structural reforms and suffers from corruption. Lack of media freedom has been considered one of the major problems in Ukraine's democratic transition. Oligarch groups close to President Leonid Kuchma have controlled not only state-run television, but also television channels considered on paper to be independent.

The trend of national development was changed dramatically in November-December 2004, when presidential elections followed by what has become known as the Orange Revolution took place. The people voted for democratic changes and after massive fraud in the second voting (November 21) efficiently protected their choice in peaceful rallies from November 22 to December 8. The falsified vote was canceled by the Supreme Court, and pro-Western democratic leader Victor Yushchenko was elected at the revoting on December 26 with 51.99 percent of the votes. Victor Yanukovych, Kuchma's "official successor" and representative of the eastern Ukrainian "Donetsk clan," a consolidated group of business and nomenclature leaders from Donetsk which was the most powerful political-economic lobby in Ukraine during late Kuchma period, lost with 44.2 percent of the votes. These events called the Orange Revolution for the color of Yushchenko's campaign opened a way to positive changes in the political, social, and economic life of Ukraine.

National Democratic Governance. The nontransparent nature of national governance overall was a major problem before the Orange Revolution, creating a gap between formal and shadow decision-making procedures. The president of Ukraine is still at the center of the power hierarchy that dominates the executive branch's activities. President Leonid Kuchma finished his second term and left office despite the controversial December 2003 Constitutional Court decision to allow him to ballot again. It is hoped that newly elected president Victor Yushchenko will dedicate considerable efforts to ensure a more transparent functioning government. The administration of the president had been the strongest policy-making body, working as a parallel government without any constitutional responsibility, until Yushchenko liquidated this body. Political parties will have a direct impact on the government's formation after constitutional reforms come into force either September 1,2005, or January 1,2006. The parliamentary-governmental coalition (pro-presidential) that was established in 2002 lost a real majority in the Parliament after the group Center and Agrarian Party faction left it. However, this had no impact on the government of Victor Yanukovych (prime minister since November 2002). The Parliament is the only plural and democratic institution in the central government in which the whole spectrum of political views is represented. Ukraine's new rating for national democratic governance is set at 5.00 as the new government of Victor Yushchenko Yulia Tymoshenko is launching its reforms in 2005 and their impact will not likely be seen until the end of the year.

Electoral Process. The presidential campaign was conducted according to the Law on the Election of the President of Ukraine, amended in 2004. More advanced than the previous version, the amended law provides details about free and fair voting practices and an opportunity for officially registered contenders to submit representatives to all local and territorial polling commissions. However, the new law formally excludes nongovernmental organization (NGO) representatives from observing elections at the polls. The Central Election Commission (CEC) staff was rotated in 2004. Serhiy Kivalov, a parliamentarian from pro-presidential circles, was appointed CEC head. Only 4 out of 15 members of the CEC represent the opposition. International and domestic observers noticed numerous violations during the presidential campaign, voting, and counting of votes. The first round of elections enjoyed unprecedented voter turnout 75.5 percent. The second round was even higher at 80 percent; however, this figure reflected a false turnout in eastern Ukraine. This radically fraudulent vote was canceled by the Supreme Court in response to mass rallies of public protest. Seventy-seven percent of voters took part in the revote on December 26. Ukraine's electoral process rating improves from 4.25 to 3.50 as the ultimate revoting in the presidential election became more free and fair, according to domestic and foreign observers, which has opened opportunities for democratic changes in the country.

Civil Society. Despite the unfavorable legal framework for NGOs and the authorities' efforts to discredit foreign-funded organizations, the third sector in Ukraine has grown significantly. The presidential campaign determined the appearance of a number of NGOs aimed at ensuring a free and fair election. In October, before the first round of voting, law enforcement bodies made an attempt to charge some NGO activists, mainly those from the Pora initiative, with the preparation of terrorist attacks. The evidence presented by the police was quite doubtful, but some activists were arrested for the short term. The 2004 presidential campaign achieved the highest level of civil engagement in Ukraine since the country's independence. Self-organized civil energy played a crucial role in the Orange Revolution, which was a response to massive election fraud on November 21. These large-scale expressions of public protest took place November 22-December 8 and were organized and promoted primarily by civil activists. Ukraine's rating for civil society improves from 3.75 to 3.00 owing to the explosion of self-organized civil activity during the presidential campaign and Orange Revolution.

Independent Media. Most nationwide media are privately owned in Ukraine, but before the Orange Revolution all were under the strong control of oligarchs close to the Kuchma regime. During the presidential campaign, most television viewers had very limited access to balanced and fair information about the major candidates. The three television channels with the largest coverage (1st National, 1+1, and Inter) broadcast an aggressive campaign against opposition leader Victor Yushchenko. The practice of the government issuing instructions designed to control the content of media broadcasts continued during the campaign. In early 2004, Radio Dovira, under pressure from its new owner, broke a contract with Radio Liberty (RL); as a consequence, RL lost access to the nationwide FM audience. Radio Kontynent, which broadcasts the British Broadcasting Company and Deutsche Welle, lost its license as well. At the same time, repression against the media was less active in 2004 than in previous years. Despite problems and interference from the authorities, Channel 5 was the only television channel that represented opposition views and even managed to expand its audience (up to about 25 percent nationwide). Its ratings have increased five times since 2003. Some small and medium-size channels and TV companies (such as Tonis, Era, and STB) provided more or less fair and professional information on politics. No progress was made in the official investigation of the murder of journalists Heorhiy Gongadze and Ihor Aleksandrov. The November-December events, however, could hardly have happened without a breakthrough in the media sphere. Channel 5 and Era became a voice for the people's campaign. In late November, some of the largest TV channels (such as 1+1 and partially 1st National) refused to accept censorship and resumed a balanced news policy. Ukraine's rating for independent media has increased from 5.50 to 4.75 owing to the progress of independent media and the role of media in the Orange Revolution.

Local Democratic Governance. Governors of the executive in the regions are appointed by the president, as are the raion (district) executive heads. Mukacheve's radically falsified mayoral elections in April 2004 demonstrated the most severe problems of local governance in Ukraine. This case emphasized the lack of efficient mechanisms to ensure the rights of territorial communities in Ukraine. The situation may change in the future if the Law on Regional and Local Elections, adopted in March 2004 to introduce proportional voting, is actually implemented; however, implementation is no insurance that democratic development will itself occur. On December 8, the draft constitutional amendment to develop local and regional governance was approved in the first reading, yet the amendment content is still far from perfect. Ukraine's new rating for local democratic governance is set at 5.25 as local governance remains one of the weakest points in Ukraine's democracy, even after the Orange Revolution.

Judicial Framework and Independence. The Constitution of Ukraine adopted in 1996 fully guarantees freedom of expression, freedom of conscience and religion, freedom of association, and business and property rights. However, the proper and sufficient implementation of these guarantees is obviously lacking. In practice, the state selectively respects fundamental political, civil, and human rights. Equality before the law remains doubtful. The presidential elections illustrated the dramatic lack of any real implementation of these laws. Torture in Ukrainian prisons has been a point of special interest to Ombudsperson Nina Karpachova in recent years; however, no decrease has been observed, and no reliable statistics are available. The key judicial decision of the year was the cancellation of the November 21 second presidential vote by the Supreme Court on December 3 due to massive fraud. This case has shown the limitations of government pressure on the judiciary system. Additionally, last-minute amendments to the Law on Presidential Elections caused widespread problems in adjudication during the revoting. Ukraine's rating for judicial framework and independence improves from 4.75 to 4.25 owing to increased independence, reflected particularly in the role of the Supreme Court in the aftermath of the November 21 election fraud.

Corruption. Corruption remains Ukraine's biggest problem and is pervasive in society. Transparency International's 2004 Corruption Perceptions Index placed Ukraine 122 out of 146 nations, with a score of 2.2 (the same as for Kazakhstan, Kyrgyzstan, Niger, Sudan, Bolivia, and Guatemala). Anticorruption rhetoric was widely exploited during the presidential campaign. However, no consistent policy on this issue has been implemented. Over-regulation of the economy provides a ground for illegal bureaucrat income, which in many cases is much higher than official wages. Bribery remains key to authority decision making on different levels. The Office of the Prosecutor-General ignored numerous calls for open proceedings against top executives suspected in corruption. The only case against opposition leader Yulia Tymoshenko is clearly motivated by politics and has progressed with the support of Russian law enforcement bodies. The Ministry of the Interior, led by Mykola Bilokon, appeared to be the most biased in following all requests of President Kuchma and his head of administration, Victor Medvedchuk, in particular pressing militia (police) staff to take part in the presidential campaign on the side of the "official successor," Victor Yanukovych. Ukraine's corruption rating is unchanged at 5.75 as the old corrupt government and the regional and local administrations remain in office till the end of the year.

Outlook for 2005. The Orange Revolution opened a new window of democratic opportunity for Ukraine. It is foreseeable that the new government will likely follow basic democratic values: media censorship will be abolished, anticorruption measures and deregulation of the economy will undermine the existing relations among the state, business, and society; and administrative reform will be launched. Governmental policies will become more open and transparent. The 2006 parliamentary campaign will begin in a more fair and free atmosphere than the presidential elections of 2004. Ukraine has definitely returned to the democratic, European path of development. Constitutional reform adopted in December 2004 is likely to be implemented; however, the second phase addressing local and regional administration remains uncertain. The very process of reform remains controversial, as it reflects bargaining and tactical compromises within the ruling elites. For the midterm future, Ukraine will preserve some of the features of a hybrid regime. The ultimate consolidation of democracy will take several years, maybe a decade. Corruption is unlikely to disappear in Ukraine in the near future, but its level will certainly decrease.

National Governance (Score: 5.00)

The Constitution of Ukraine was adopted in 1996 and established a presidential system in which the executive strongly subordinates the other two branches of government, with the president at the top of the power vertical. All ministers, regional executive heads (governors), and local administration heads are appointed and dismissed by the president and dependent on him personally. The president also appoints the chiefs of the state tax administration, the customs service, the security service, and other governmental agencies.

Before the Orange Revolution, Ukraine existed in the "gray zone" between democracy and authoritarianism. The country's major problem was the nontransparent nature of national governance overall and the gap between legal and actual decision-making procedures. On the one hand, abuse of power and corruption were widespread, the government was overcentralized, and checks and balances were often ineffective. On the other hand, the constitutional framework was based on the checks and balances principle, the political system remained pluralistic, the opposition was active and achieved considerable successes during elections, some media provided independent information, and civil society was viable and actively developing. After the change of power on December 26, these democratic trends will hopefully prevail.

Leonid Kuchma finished his second term as president and left office in 2004 despite the Constitutional Court's controversial decision in December 2003 to allow him to run for a third term. The administration of the president remains Ukraine's strongest policy-making body, working under the president's sole decree as a parallel government without basis in the Constitution or any constitutional accountability. Since Victor Medvedchuk assumed the position of administration head in 2002, this body has played the role of supreme government with numerous, mostly informal tools and procedures. Still, there are some concerns about its unconstitutional influence on governmental activities.

The Verkhovna Rada (Parliament) is a relatively pluralistic and democratic institution in which the whole political spectrum is represented, excluding ultraradical views. However, the Parliament's control over the executive has been mostly formal. The Parliament's only means to affect the government directly is through a majority no confidence vote, which leads to the dismissal of the government. A second option is through the budget process, yet the Parliament has proved to be inefficient as a control over the real expenditures of the government. The Parliament does not have any influence on appointments within the government.

Despite Parliament-wide representation of political views, public confidence in the institution is relatively low: according to polls, only 6-8 percent of voters fully trust the Parliament (less than the president and government). For the most part, the public views it as inefficient. This situation began to change during the Orange Revolution, when the Parliament proved its ability to deal with political crisis. Political parties have no direct impact on the executive's formation, although the key figures in parliamentary committees often keep strong ties with the presidential administration to protect their own business or political interests, and the influence of this dependence is frequently reflected in their voting record. The parliamentary-governmental coalition (pro-Kuchma), which was established in 2002, lost a real majority in the Parliament after the newly established group Center left the Parliament in summer 2004. The Agrarian Party, led by Speaker Volodymyr Lytvyn, also suspended its membership in the coalition in September.

Victor Yushchenko's Our Ukraine reformist faction preserved its position as the biggest party in the Parliament (101 members of Parliament [MPs] out of 450 as of late December 2004). After the change of power, most former pro-Kuchma forces supported President Yushchenko, which led to the eventual creation of a coalition of more than 300 MPs loyal to Ukraine's new leadership. This provisional coalition is likely to be relatively stable until the parliamentary campaign of 2006.

The activities of the Victor Yanukovych government were mostly nontransparent. In the last few months before the elections, the government implemented populist measures aimed at attracting voters to Yanukovych. One of these measures was a radical increase in pensions (up to 80 percent) that expanded the budget deficit. Likewise, under Kuchma's authority military and security services proved to be mostly nontransparent. Any attempts to control the expenditures of the Ministries of Defense and the Interior as well as the security service failed. The Law on Civil Control over the Military (adopted in 2003) is not yet fully implemented, and a widely announced reform toward the formation of a professional army has slowed down.

Until December 2004, any attempts to change the Constitution were unsuccessful. In 2000, President Kuchma tried to increase the Constitution's power through a referendum, but his efforts were blocked by the Parliament. After 2002, Kuchma changed his strategy the president's efforts were concentrated on transferring power to the Parliament to ensure the institutional status quo after he left office. The leftist opposition (members of the Communist and Socialist parties) backed these projects, hoping to increase their factions in the Parliament in the event that proportional voting was introduced (instead of the existing 50 percent proportional/50 percent majoritarian mixed system). The reformist opposition led by Victor Yushchenko opposed this project, considering it an attempt to limit his future power as the most evident candidate for the presidency. The first draft failed to be adopted on April 7, when 294 (out of 450) MPs voted for it (300 votes were needed). Ultimately, during the Orange Revolution the consensus version of the reform passed through the Parliament on December 8 as part of a "big legislative compromise" between the winning opposition and outgoing president Kuchma.

The system of relations inside the president/Parliament/government triangle presented in the approved reform draft differs from that in both the existing legislation and the initial draft. The government steps down before a new parliament, not a new president. During the month following the opening of the first session of the Parliament (or collapse of the previous coalition), the Parliament must create a majority coalition (from the factions that collectively hold 226 or more votes out of the total 450). The coalition proposes candidates for the prime minister to the president. Within 15 days, the president must submit this candidate for the Parliament's approval. Ministers are appointed and dismissed by the Parliament as proposed by the prime minister. The president proposes candidates to the Parliament for defense and foreign ministers and the head of the security service. The Parliament, but not the president, may dismiss individual ministers or the entire cabinet. The tenure of the Parliament (beginning with the next one) has been increased from four to five years. MPs can lose their mandates and be expelled from the Parliament if they refuse to join the faction or bloc on whose list they were elected. The president is popularly elected for a five-year term.

According to the reform, a portion of the president's power will be shifted to the prime minister. The president maintains the right to appoint regional governors and to summon the Council of National Security and Defense (consisting of chief ministers). The president also maintains a veto right in the existing legislative framework, with the exception of constitutional laws. Also, the president can stop decrees by the cabinet of ministers, yet these decisions must be endorsed by the Constitutional Court. Consequently, with this model Ukraine could develop into a parliamentary-presidential system with a comparatively powerful prime minister. However, the president will remain a strong figure.

Finally, the adopted reform draft preserved two points specifically criticized by the Council of Europe's Venice Commission – namely, a binding mandate for MPs and an extended mandate for the prosecutor-general. The reform is to be taken into force on September 1,2005, if the second round of constitutional changes (addressing local and regional administration reform) is adopted by that point. If not, the reform is to take effect January 1,2006. The December 8 reform may become an issue for the Constitutional Court, as procedural violations during the reform process could be used as an argument to avoid reshaping Ukraine's power structure in the immediate future. It is possible that the court may recognize the reform as illegitimate and cancel it.

Electoral Process (Score: 3.50)

Ukraine under Kuchma witnessed the gradual decline of electoral democracy and the degradation of election procedures. After relatively free and fair presidential elections in 1994 (Kuchma's first win), the parliamentary elections of 1998, presidential elections of 1999 (Kuchma's second term), and especially the parliamentary campaign of 2002 proved that Ukraine was moving away from democracy. Interference by the authorities into the electoral process (so-called administrative resource) and discrimination in the media became major factors in Ukraine's decline in democracy. Legislative measures were unable to prevent increasing violations.

In late March 2004, the Parliament adopted new legislation on parliamentary and local elections that introduce proportional voting for MPs (instead of a 50 percent proportional/50 percent majoritarian mixed system) as well as the deputies of regions (oblasts), districts (raions), and local deputies. The Law on Parliamentary Elections will be applied in the 2006 parliamentary elections and is expected to improve the political structure of Ukraine by developing the party system, as parties and blocs of parties will serve as the only platforms for advancing candidates. The new law decreases the parliamentary electoral threshold from 4 to 3 percent, which can help smaller and "younger" parties gain access. As of December 2004,104 political parties are registered to compete.

The presidential elections of October 31, November 21, and December 26,2004, were major political events in Ukraine that determined a decisive change in the country's development. The widely held perception is that these events, followed by the Orange Revolution, presented a key challenge for democracy in countries that are part of the Commonwealth of Independent States and perhaps even for the future of Europe. Victor Yanukovych and Victor Yushchenko, two "big" candidates, exemplified very different political visions and social values. The former represents post-Soviet and pro-Russian thinking, which lacks any sentiment for democracy, the rule of law, and human rights. With a mission to promote European values, the latter is strongly determined to fight corruption, promote media freedom, and advocate for more transparent political decision making.

Victor Yushchenko worked in banking until 1999, and as the head of the National Bank (1993-1999) he became the father of the Ukrainian national currency, the hryvnia (introduced in 1996). Yushchenko was prime minister from 1999 to 2001, during which time the country's economy began to recover from a long-term depression. After his resignation, initiated by the Parliament (and supported informally by President Kuchma), Yushchenko became leader of the democratic coalition Our Ukraine, which won the majority position in the 2002 parliamentary elections.

Victor Yanukovych was strongly linked to the Donetsk region before the 2002 elections. He was imprisoned twice on criminal charges in the late 1960s to early 1970s. Miraculously, Yanukovych's career was rehabilitated under strange circumstances in the late 1970s. In the 1980s to the early 1990s, he was chief of the state automobile enterprise in Donetsk, then governor of Donetsk (1997-2002). Next, he was prime minister of Ukraine from November 2002 to December 2004 and leader of the Party of Regions since 2003. Economic growth continued during recent years, which was a strong argument in Yanukovych's campaign for president.

Twenty-six candidates officially registered as contenders for the presidency, double the number of candidates in the previous elections in 1999. Three of these later withdrew. However, among the 23 remaining candidates, only 4 were credible contenders: Victor Yushchenko, former prime minister and leader of Our Ukraine, the biggest opposition faction in the Parliament; Victor Yanukovych, then prime minister; Oleksandr Moroz, leader of the Socialist Party of Ukraine; and Petro Symonenko, leader of the Communist Party of Ukraine.

These four effectively represented the whole political spectrum in Ukraine: the party of power namely, Party of Regions and the wider nomenklatura-oligarchy coalition (Yanukovych); the right-centrist liberal-reformist opposition (Yushchenko); the left-centrist opposition (Moroz); and the radical leftists (Symonenko). The remaining 19 candidates represented small, often marginal political groups and parties; indeed, some established themselves as political figures only at the start of the campaign, playing the role of "technical candidates," which will be explained shortly.

On March 18,2004, the Parliament approved amendments to the Law on Presidential Elections that essentially changed the former law adopted in 1999. The amended law limits presidential campaigns to four months (instead of six months, as under the previous law) and provides an opportunity for candidates to officially delegate two representatives at each local polling commission.

Updated legislation also provided a legal status for observers, including parties, presidential contenders, the media, and international organizations. While greater transparency was made possible by the presence of candidate representatives on the local and central election commissions, independent Ukrainian nongovernmental organizations (NGOs) were not allowed to observe the elections, as MPs thought it would increase exponentially the number of observers. In actuality, this move expressed distrust in NGOs, which do not back any party but only observe the fairness of elections. This exclusion cannot but limit the credibility of the process and erode the legitimacy of electoral results. NGO activists, however, found a way to get around the new measure by registering as media observers. On the polling day, the Tochka Zoru newspaper (published by the Committee of Voters of Ukraine) delegated 10,000 special correspondents to polling stations.

There were other drawbacks to the new law: First, the procedure for lodging electoral violations is complicated. Second, the law prescribes the procedure for nullifying elections only at the constituency level (where 10 percent of ballots are recognized as invalid), not at the national level. This latter drawback could theoretically lead to a situation where elections are announced null in constituencies where the opposition is winning. The massive vote fraud on November 21 proved that the existing law was not sufficient to counter "administrative resource." After the Supreme Court recognized the fraud, lawmakers on December 8 introduced changes that limited voting with absentee ballots and voting at home – a special opportunity for invalids and old people who can request to vote from home by having three members of the polling commission visit with a small ballot box. According to Yanukovych's team, these provisions prevented hundreds of thousands of people from voting. Independent observers did not confirm this statement.

Empowered by the Law on the Central Election Commission, the Central Election Commission (CEC) is a permanent state body that, in accordance with the Ukrainian Constitution and laws, ensures the preparation and conduct of elections for the Ukrainian president and deputies and for nationwide referendums. The CEC comprises 15 members assigned to office, and their powers are terminated by the Parliament upon recommendation of the Ukrainian president.

The law sets a five-year term limit for CEC members, and in 2004,11 out of 15 members were rotated. The selection process was not transparent enough to guarantee fair political and professional representation. As a result, only 4 CEC members out of 15 represent opposition parties (2 from the Communist Party, 1 from the Socialist Party, and 1 from Our Ukraine). Other members were selected under the control of the president's administration. Serhiy Kivalov, a representative of President Kuchma's entourage and former head of the Supreme Council of Justice, replaced Mykhailo Ryabets as CEC chairman.

Territorial election commissions (TECs) in the 225 districts were appointed by submissions of official contenders. The responsibility of TECs is to collect data from polling stations, summarize them, and send the results to the CEC. TEC headquarters positions were distributed among representatives of all candidates; however, this process was not transparent enough to ensure fair representation. The selection procedure was announced as automatic (by computer), but most headquarters positions were secured by Yanukovych's team and his satellites.

Forming polling station commissions (PSCs), which are responsible for the most basic level of elections and counting votes, remains a significant challenge to the election process. By law, each candidate has the right to appoint two PSC members. During the month before the election, however, a large number of appointed PSC members resigned or refused to perform their duties. This created instability and uncertainty in the run-up to the election, according to an interim report published in late October by Organization for Security and Cooperation in Europe/Office for Democratic Institutions and Human Rights (OSCE/ODIHR).

As for the campaign, it was definitely not free and fair. Independent observers, the Committee of Voters of Ukraine, and leading NGOs noted the following violations:

Governmental interference in the election process and evidence of "administrative pressure." Governmental bodies took an active part in the campaign, even though this is strictly prohibited by law. Officials from the central and regional authorities worked openly for the "official candidate," Victor Yanukovych. There was direct use of law enforcement against the opposition press and citizens involved in the campaign, and observers reported numerous instances where the local state administration openly supported the Yanukovych candidacy. There were widespread allegations of pressure applied to workers in both the public and private sectors to campaign and/or vote for Yanukovych, and students and teachers were compelled to attend pro-Yanukovych campaign events.

Discrimination in the media. Television channels were blatantly biased in favor of the "official candidate" in a variety of ways. According to the monitoring data of the Institute for Mass Information, Yanukovych received more TV coverage than all the other candidates collectively before the first round of voting on October 31. In addition, the coverage of his activities as prime minister was overwhelmingly positive, in contrast with Victor Yushchenko, who received critical coverage almost exclusively.

The "technical candidates" problem. Among the 23 remaining contenders on voting day, there were at least 15 who had not actually conducted a campaign to pursue the presidency. Instead, it appeared that they had merely offered technical support for the "big" candidates by providing additional agitation and seats in election commissions. These pseudocandidates had been able to influence the composition of polling commissions at different levels. Observers suggested that 12 to 13 of these technical candidates had real ties to Yanukovych, yet it appeared that he controlled an absolute majority of commissions.

The presidential campaign was marked by significant interference from the "Russian factor," which played a greater role than in previous elections. Russian media, which are available to the majority of Ukrainian voters, provided a strong campaign against Yushchenko and in favor of Yanukovych. President Vladimir Putin personally arrived in Ukraine several days before October 31 to participate in a military parade standing next to Yanukovych. He addressed an interview to Ukrainian TV viewers through three major TV channels, praising the Yanukovych government for improving Ukraine's internal situation as well as bilateral Russia-Ukraine relations. Between the first and second rounds, President Putin came to Ukraine again on November 12-13 to publicly wish Yanukovych success and to arrange secret talks with President Kuchma in Crimea.

According to a preliminary statement by the ODIHR mission published on November 1,2004, "The 31 October presidential election in Ukraine did not meet a considerable number of OSCE, Council of Europe, and other European standards for democratic elections. This election process constitutes a step backward from the 2002 elections." The election process was characterized by significant shortcomings: Yanukovych's failure to distinguish between resources owned or managed by the incumbent political forces and those of the state; overwhelming bias in favor of Yanukovych in the state media; interference by the state administration; the existence of so-called temnyky (media guidelines) issued by the government to control media policy; the dissemination of inflammatory campaign materials from anonymous or unclear sources; inaccuracy of voter lists and confusion in the formation of PSCs, impeding voters' ability to check their entries; numerous errors and/or omissions on voter lists that challenged the principle of universality of the vote; and the inefficiency of the CEC in uniformly applying the law.

Noteworthy positive aspects included real political pluralism and competition; real campaigning opportunities for candidates; television debates among the candidates; constructive activities of civil society; cooperation between state structures and observation missions; and an unprecedented number of foreign observers (up to 12,500 at the revote on December 26).

The returns of the first round (October 31) reported by the CEC were as follows: 39.87 percent favor of Victor Yushchenko and 39.32 percent for Victor Yanukovych. The turnout for the first round was the highest in Ukraine's period of independence 75.5 percent. The data include votes of 27,897,559 persons, although some people voted "against all" candidates or for candidates not listed below.

First Round Election Results

The second vote on November 21 demonstrated further deterioration of electoral procedures and an even more complete violation of law. Official data from the CEC showed a turnout of 80.4 percent: Yushchenko 46.61 percent of the votes; Yanukovych 49.46 percent, which would mean ultimate victory for Yanukovych.

The European Union, the United States, and the governments of European states declared the election fraudulent and nondemocratic, and Ukrainian society reacted to the radically corrupt counting with the Orange Revolution. The second-vote returns were canceled on December 3 by the Supreme Court of Ukraine, which confirmed massive fraud proved by the "added turnout" of about 1.2 million votes that appeared some hours after polling stations closed. Uncontrolled absentee balloting (one person could vote at five or more polling stations with absentee ballots) and false voting at home were also noted as tools of election fraud. Falsification was noticed primarily in the Donetsk region, where turnout on November 21 was fixed at 96.64 percent of voters (78.08 percent in the first vote on October 31), and four polling stations reported more than 100 percent turnout (with 97-99 percent of the vote going to Yanukovych).

After canceling the second vote, the Parliament passed amendments to the Law on President's Elections to limit the issue of absentee ballots and voting at home. CEC, TEC, and PSC staff were changed to ensure the balanced representation of both candidates. Serhiy Kivalov was dismissed from the position of CEC chief, and the neutral Yaroslav Davydovych replaced him. These changes prevented election fraud in the December 26 revote.

Turnout at the December 26 revote was 77.3 percent. The final returns were Yushchenko 51.99 percent; Yanukovych 44.20 percent. Observers from the OSCE, Council of Europe, and other international institutions recognized the vote of December 26 as making remarkable progress in Ukrainian democracy. January 23,2005, is the scheduled inauguration date for President-Elect Victor Yushchenko.

Civil Society (Score: 3.00)

Ukraine has had evident success in developing a civil society, which as a result has become increasingly vocal, active, and influential in the development of democratic institutions and behavior. Various organizations are involved in the democracy-building process in Ukraine, and the number of NGOs is increasing. In 2004, more than 37,000 NGOs had legal status, according to Counterpart Creative Center (a Ukrainian organization), but following different estimations, 20,000 to 25,000 of these exist only on paper. The legal framework for NGO activity remains underdeveloped. For instance, legislation does not provide a clear definition of "NGO" or "nonprofit activity."

NGOs included in the official Register of Nonprofit Organizations enjoy partial tax benefits such as an exemption from paying value-added and profit taxes. At the same time, most income excluding grants, donations, and member fees is considered business activity, which imposes tax obligations on NGOs as business enterprises. NGOs cannot sell their products or provide services, even those aimed at supporting their work, without the risk of losing their nonprofit status. Attempts to pass a special Law on Nonbusiness Activity and NGO Regulation were unsuccessful; therefore, the third sector is still regulated by the outdated 1992 Law on the Organizations of Citizens. A draft Law on Nonprofit Organizations passed its first reading in October 2000 but has not yet been taken up by the Parliament. The latest draft of this law was submitted to the parliamentary committee in April 2002 on the initiative of NGOs, but the committee has been passive on the issue. The state budget provides no governmental support for NGOs, and taxes are not reduced for those who donate to the third sector. NGO activists were discriminated against in the new Law on Presidential Elections, which formally excludes them from observing electoral procedures at polling stations.

Nevertheless, Ukrainian NGOs are faced with the seemingly insurmountable problem of establishing ways to receive financial support from the various groups whose interests they represent. Although small and medium-size business is developing, Ukraine's economic arena is still dominated by big-business oligarchs. Therefore, the Ukrainian third sector remains dependent on Western funds, a factor that has often been used by Ukrainian authorities to undermine the credibility and public legitimacy of NGOs. In particular, the Parliamentary Investigative Commission on NGO Funding (led by Communist MP Valeriy Mishura) was obviously biased to prove that NGOs are dependent on Western money and are therefore agents of foreign influence that undermine Ukraine's security.

Nongovernmental advisory boards at the ministries are inadequate and have little influence. Some of them exist on paper only. For instance, during 2004 there was no meeting of the NGO Consultative Council at the Ministry of Foreign Affairs. Advisory councils in parliamentary committees, in particular the Committee for European Integration and the Committee on Media Freedom, acted much more regularly and efficiently.

The presidential campaign spurred the appearance of a number of civic movements and NGO coalition initiatives aimed to ensure a free and fair election. Pora (It's Time), Studentska Chvylya (Student's Wave), Chysta Ukraina (Clean Ukraine), and Znayu (I Know) were among them. These NGOs were determined to mobilize voters, especially young ones, to protect their voting rights and to raise citizen awareness. NGO coalitions such as New Choice 2004 and Freedom of Choice consolidated their efforts to make use of the expertise gained in previous elections.

International donors provided special support for NGOs involved in the election-monitoring process. In particular, a consortium of Western donors provided funds for an election exit poll. Led by the Democratic Initiatives Foundation, the national exit poll proved to be a success despite tensions that appeared among polling organizations within the project. Special election-oriented donors' programs were provided by the International Renaissance Foundation (Ukraine's Soros Foundation) and the National Endowment for Democracy (U.S. donor organization).

In October, before the first round of elections, law enforcement bodies tried to accuse some NGO activists, mainly those from Pora, of preparing terrorist attacks, but the evidence presented by the police was quite doubtful. Some activists were arrested for the short term, and there was visible conflict between activists and the authority. As the International Helsinki Foundation for Human Rights said in October, "A recent tendency reported by Ukrainian NGOs is the use of police action in hundreds of cases against individuals and organizations believed to support the opposition, for example in unsanctioned searches of premises, arrests, and beatings."

Civil campaigns and protests not related to the political campaign encountered obstacles. In the regional center Sumy in August, a student protest of a proposed university merger (to create Sumy National University by combining three local universities) and the appointment of a principal led to short-term detentions of more than 30 people. Out of 40 trials convened during this period to hear civic groups' petitions about restrictions on their right to peaceful assembly, only 2 cases were resolved in favor of the rally organizers. In fact, most cases involved local governments appealing to courts to ban a rally after organizers had provided due notification. There are often violations of due process with evidence presented only from the side of local administrations. Court decisions often made reference to the "probability" of clashes or "fear" of clashes among rival political forces as a reason for denying rally permits, although clashes are more likely to happen with police when demonstrators proceed with unauthorized protests. At the same time, civil protests occasionally appear to be successful. In the case of the university merger, Sumy students achieved their goals; as a result of the student protests, President Kuchma cancelled plans to unite three different Universities into Sumy National University.

Trade unions remain mostly dependent on the state. The biggest, the Federation of Trade Unions (headed by Oleksandr Stoyan), openly supported Prime Minister Yanukovych during the presidential elections, which proved its total dependence on the state. Independent trade unions, like the Independent Miners Trade Union (led by MP Mykhaylo Volynets), were not strong enough to compete. It is worth noting that a newly emerged independent trade union of journalists is playing a role in the public campaign for free and fair media coverage of the political process.

It is obvious that the state interferes in the education system with propaganda, especially during elections. The most noteworthy violation occurred at Sumy Agrarian University, which is one of the three local universities that would have been merged into the Sumy National University, in which the administration demanded that students present a filled ballot before being allowed to place it into the ballot box. Other cases where university administrations interfered with students' freedom of choice were registered in Cherkasy and Rivne (caught on videotape). All of these cases were shown on television (Channel 5) and increased the public's resistance to the so-called administrative resource.

Self-organized civil activism played a crucial role in the Orange Revolution. Civil activists, not party leaders, were primarily responsible for promoting massive public participation at the events of November 22 to December 8. Up to 3 million people participated in different meetings, actions, and marches across the whole of Ukraine during this period. Thousands of people provided money, food, and clothes to shelter participants in tent cities. Self-determination and self-organization appeared to be a key precondition for peaceful and efficient actions in Kyiv. Protection of liberty and civil and political rights (not just sympathy for Yushchenko) was the core slogan of the campaign. The Orange Revolution provided a strong impulse for further development of civil society, which can lead to the formation of new, democratic, institutionalized, and transparent relations between government and society in Ukraine.

Independent Media (Score: 4.75)

The media sector in Ukraine remains structurally weak. There is a lack of independent media based on media business as an independent area of the economy. The most popular media are still under the control of business groups, which consider them a PR tool rather than separate, self-sustained business projects.

As the media sphere is usually vulnerable to political circumstances in new democracies, 2004 opened a new horizon for media freedom in Ukraine. The positive developments of November-December dramatically changed the media landscape, which witnessed an information war before, during, and after the electoral campaign. The new government has already announced an intention to establish real public TV and radio broadcasting.

Though there is public demand for free, fair, and balanced information, the Orange Revolution merely created the initial preconditions for mature media freedom. Current problems in the information sphere are determined by structural issues, such as transparency of media ownership, independence of media business, and the capacity of journalists to effectively defend their professional interests. Ukraine is still lacking all three parameters.

Article 34 of the Constitution protects the right to freedom of expression and information, and Article 15 prohibits censorship. However, censorship existed in a variety of forms in Kuchma's Ukraine, which was clearly proven by the 2004 presidential campaign. Article 277 of the new civil code of Ukraine, which came into force January 1,2004, establishes that "negative information disseminated about a person shall be considered false." "Negative information" can be understood as any form of criticism or description of a person in a negative light. This provision is not only a clear breach of the right to freedom of expression, but also turns reality on its head: something that is true but negative will be considered false. This formula was pushed by pro-Kuchma factions to limit media rights and to provide a legal tool to punish media when they are "too" critical.

Of the total number of television stations (over 800), only 1.7 percent are state owned and 35.2 percent are partially state owned. However, the influence of the state is much more substantial, as many private television stations are effectively not functioning or not influential. In addition, the main television channels are all owned by or under the influence of pro-presidential forces. The head of National Channel 1 was also appointed by the president.

In recent years, some of Ukraine's wealthiest individuals and prominent political figures have come to directly control or heavily influence all major Ukrainian television stations, except National Channel 1, which is state owned. Victor Pinchuk, son-in-law of President Kuchma and an MP, maintains a heavy investment in Novyy Kanal (New Channel), STB, and ICTV, as well as the Dnipropetrovsk Channel 11. Pinchuk's other media holdings include Ukraine's largest daily newspaper, Fakty i Komentarii and the Ukrainian News news service. Circumstances at these media lead to the total dependence of information policy on the owner's opinion and current preferences, which essentially reduces information quality and prompts a constantly biased style of journalism. Novyy Kanal and STB also receive significant Russian investment, according to Human Rights Watch.

Social Democratic Party-united (SDPU[u]) figures Hryhory Surkis and Ihor Pluzhnikov have total control over Inter, and SDPU(u) chiefs (primarily Victor Medvedchuk, head of Kuchma's administration) have full control over the information service at Studio 1+1. These last two channels are the most popular in Ukraine owing to their nationwide coverage and rather high entertainment programming standards. But for a long time they were the most biased – the reason why most Ukrainians could not receive balanced information. Medvedchuk also maintains financial commitments and influence over these stations as well as National Channel 1. The above-mentioned SDPU(u) leader, Hryhory Surkis, owns TET, an important Kyiv local and regional station that reaches 12 percent of the nation.

National Channel 1, owned by the National Television Company of Ukraine, is the only truly national television station, covering more than 98 percent of Ukrainian territory. The five other major stations broadcast over a significant portion of Ukrainian territory and are thus considered "national": Studio 1+1 has 95 percent coverage; Inter has up to 80 percent coverage; and Novyy Kanal, STB, and ICTV each maintain up to 40 percent coverage. The three stations with the largest coverage, National Channel 1, Studio 1+1, and Inter, account for nearly 90 percent of television advertising profits, with the remaining 10 percent divided among the other 828 stations. Regional stations enjoy a much smaller market share and largely broadcast programs relevant to local interests. Russian channels such as ORT, RTR, NTV, and TV-6 air via cable and satellite, and some programs are retransmitted on Inter and other regional stations. Western Ukraine receives Polish, Czech, and Hungarian television programs.

The government interfered directly in the operation of the media by issuing "guidelines" for reporting known as temnyky. These were reportedly sent to media outlets on a regular basis from the information policy department of the presidential administration. This form of censorship was established when Victor Medvedchuk became head of the presidential administration. Temnyky included recommendations on the content of news programs mainly on key national television and radio stations, but also in print media. Temnyky first appeared at Medvedchuk-controlled channels in late 2001 and were transformed into government policy in summer 2003.

State-controlled TV, particularly National Channel 1, consistently misinformed the public on the presidential candidates in news and other programs, promoting a positive impression of Prime Minister Victor Yanukovych and airing only limited and largely negative coverage of his main opponent, Victor Yushchenko. This was standard policy at all times and most aggressive on the eve of the elections.

There was massive discrimination against the opposition. From May to August, the government's candidate received eight times more airtime on national television than the main opponent (the campaign formally started on July 4, but the propaganda machine was switched on long beforehand). The latter was accused of harboring extremist views and of being allied with extremist organizations. Recently, the media were used to present opposition figures as terrorists and criminals, before any court had had a chance to decide on the matter.

One of the few independent television stations of national importance, Channel 5, faced closure in what appears to be a politically motivated defamation case. The station's workers initiated a hunger strike to express their protest. The TV station Era, which broadcasts on National Channel 1 at night and in the morning, was warned that it would be taken off the air days before the elections. However, none of these attempts to close any TV channel or change its ownership by pressure succeeded in 2004. Channel 5 and Era played a crucial role in the Orange Revolution by providing live TV marathons with leaders of the opposition and civil activists from Maidan (Independence Square). Owing to the determined efforts of these TV channels, millions of people were kept informed about events in Kyiv.

In 2004, serious violations of media rights occurred on the eve of the presidential campaign. On February 17, privately owned Radio Dovira stopped Radio Free Europe/Radio Liberty (RFE/RL) broadcasts after new management assumed control of the station. When Radio Kontynent picked up RFE/RL, the transmissions were reportedly jammed. On March 3, Ukrainian authorities confiscated Radio Kontynent's transmitter on grounds that it lacked a valid license. Radio Kontynent has been allegedly broadcasting illegally for several years. The timing of this seizure just after it started broadcasting RFE/RL and at the beginning of the presidential election campaign gives rise to concern that the act was politically inspired, since RFE provides independent news coverage as well as political analysis.

Separately, there were credible reports of a significant increase in selective harassment by the state tax administration (STA) of journalists who did not support pro-presidential forces and of companies that belong, or are presumed to belong, to opposition supporters. These reports include but are not limited to frequent tax inspector visits to companies and newsstands of Ostrov editor Yevhen Talyshev; a tax case against the journalist who published articles in Ostrov critical of the Donetsk oblast tax administration; and increased tax investigations against the regional daily Lvivska Hazeta following publication of articles critical of the former head of the Lviv oblast tax administration Serhiy Medvedchuk.

As positive developments, one can mention the shared broadcasting of independent Hromadske Radio and Era FM and the launch of the independent FM broadcasting project NART Chesna Hvylya (Fair Wave), which provide all of them balanced political information.

The Internet remains an important source of independent information. A March survey by GfK-USM (Ukrainian Surveys & Market Research) reported the high number of 6.4 percent for "active Internet users," or 3.1 million Ukrainians. The survey also found that 9 percent (4.32 million Ukrainians) had access to the Internet. The Security Service of Ukraine (SBU) has attempted to take control of Ukraine's "ua" domain, probably to limit and/or control the huge growth of Internet resources in Ukraine. In May, the most secret department in the SBU: the Special Telecommunication Systems and Defense of Information prepared a government resolution that would transfer the administration of "ua" to the newly created SBU-run Ukrainian Internet Information Center. This project is likely to be withdrawn now, as a result of the Orange Revolution.

More than half (55 percent) of Ukrainian Web sites are run by media outlets and news agencies; 23 percent belong to political parties; 14 percent host forums and news sites; and 8 percent are personal pages. Ukraine has more than 320 online newspapers and journals, and most major print media have online versions.

Local Governance (Score: 5.25)

The existing system of local governance in Ukraine is hybrid and does not guarantee real and full local self-governance. Ukraine consists of 24 regions (oblasts), the Autonomous Republic of Crimea (ARC), and 2 cities with oblast status (Kyiv and Sevastopol). Each oblast is divided into districts (raions). Municipalities (usually villages or small towns up to 30,000 inhabitants) may be subordinated to a raion or an oblast (for medium-size cities, between 30,000 and 200,000 inhabitants). Big cities (more then 200,000) are also usually divided into raions.

Heads of the executive in the oblasts and raions are appointed by the president. On the other hand, top executives of cities, towns, and villages are elected by the people. This duality creates a precondition for permanent competition between appointed and elected officials at the local level. Regional appointed leaders generally try to establish full control over elected yet typically dependent mayors.

Elected mayors exercise their power in a more independent manner than appointed heads of the executive at the oblast and raion levels, and this was clearly evident during the presidential campaign. However, their resources (including budgets) are limited, as city executives are subordinated to either raion or oblast. The majority of taxes, including value-added tax (20 percent) and profit tax (30 percent), are redistributed through the central budget, which causes regular complaints from those regions with relatively higher gross domestic product per capita (that is, the eastern industrial regions). Oblast and raion budgets are not sufficient to guarantee appropriate levels of social spending, which hinders the development of local infrastructure.

Lack of self-governance was used in the presidential campaign by the losing Yanukovych team to push the idea of federalization in Ukraine. The very idea of federalism is currently used by eastern and southern elites who fear losing their ruling position and property and advocate for independence from Kyiv. The ARC enjoys substantial autonomy from central authorities, having a relatively independent budget. Unlike other regions, the ARC council alone elects the prime minister of Crimea. The political situation in the ARC remains stable despite the manipulation of ethnic issues during the election campaign.

The current oblast and raion councils were elected by single-mandate vote in 2002. Most of the regional and local deputies were fully loyal to Kuchma. The Lviv oblast council, controlled by the pro-Yushchenko opposition, was the only non-Kuchma oblast council in Ukraine. However, during the Orange Revolution some oblast councils (including those of Lviv, Ivano-Frankivsk, Volyn, Ternopil, Khmelnytsky, Chernivtsi, and Kyiv), following the popular vote in those regions, recognized Yushchenko as president. It was a political, symbolic, and moral act with no legal grounds.

The Mukacheve case demonstrated the most severe problems in local governance and proved to be one of the most challenging and troubling subjects in Ukraine in 2004. After President Kuchma appointed Myroslav Opachko as acting mayor in the Transcarpathian city of Mukacheve in December 2003, the town's new election commission scheduled a vote for a new mayor to be held April 18,2004. The election pitted Our Ukraine bloc lawmaker Victor Baloha against Ernest Nuser, who was supported by the SDPU(u) and presidential administration chief Victor Medvedchuk. The campaign was far from free and fair, and the election day and night displayed an extreme level of political hostility and electoral fraud. According to Our Ukraine and confirmed by an exit poll, Baloha won a decisive victory, with 19,385 votes to Nuser's 13,895. However, the city's election commission allegedly robbed Baloha of his victory, instead awarding Nuser 17,416 votes and Baloha 12,297.

The vote itself seemed to take place in a relatively peaceful manner, observers said, even though groups of hooligans with shaved heads, leather coats, and combat boots moved around the city in packs or stood in front of polling stations, intimidating voters. When the election ended, those groups reportedly attacked, burglarized, and even destroyed some polling stations in apparent reaction to the publicized results of an exit poll that predicted a landslide victory for Baloha. Many local police officers were either too scared to react to the attacks or turned a blind eye. Notably, none of the rampaging hooligans was arrested. Attacks intimidated some polling station commissions to the extent that they were unable and/or afraid to sign polling station protocols for several hours. However, judging from the results authorized by the protocols from 35 polling stations, the Our Ukraine observers were all but certain of a Baloha victory at midnight and even began to celebrate. Several hours later, they were informed that the city's election commission had announced Nuser the winner. A group of Our Ukraine lawmakers tried to obtain information on the decision at the city's election commission headquarters, where they were met by riot police.

A parliamentary commission established to investigate the Mukacheve case and led by Oleksandr Zinchenko came to the conclusion that the results of the elections were distorted by the switching of 12 polling station protocols as they were on their way to the city election commission after the conclusion of the ballot. Law enforcement bodies proved to be biased; nobody was punished for the Mukacheve falsification, which was intended to ensure victory for the Kuchma-loyal contender. This case has shown that there are no efficient mechanisms to ensure the rights of territorial communities in Ukraine.

The structure of oblast and raion councils may change after 2006 when new councils are elected according to the new Law on Regional and Local Elections (adopted in March 2004), which will introduce proportional voting. However, the voting system itself does not guarantee that the entire system of self-governance will become more transparent and democratic. Political voices that oppose the proportional voting system at the local level are growing by emphasizing weaknesses in the party system.

In addition, the "second round" of constitutional reform, approved in the first reading on December 8, implies an increase in oblast and raion council capabilities. This draft abolishes heads of raion administration (appointed by the president) and passes more power to councils. At the oblast level, the head of administration will be preserved. However, the council will be able to vote no confidence, which can lead to the head's resignation with a two-thirds vote from the council.

Judicial Framework and Independence (Score: 4.25)

The Constitution of Ukraine, adopted in 1996, fully guarantees freedom of expression, freedom of conscience and religion, freedom of association, and business and property rights. However, the lack of proper and sufficient implementation is obvious. In practice, the state selectively respects fundamental political, civil, and human rights, and equality before the law remains doubtful. The presidential elections emphasized the dramatic lack of real implementation of the country's laws.

The Constitutional Court showed its bias by recognizing Kuchma's second term as a first one in December 2003. This case, as further developments demonstrated, essentially undermined public trust in the Constitutional Court as a body responsible for supreme decision making in the sphere of constitutional rights.

Equality before the law is far from perfect, because none of the data about crimes and violations committed by Kuchma's entourage or regional administrations have been transferred into criminal proceedings. For example, none of the massive fraud facts registered during the Mukacheve mayoral elections were investigated properly in court. Instead of opening a criminal case against the local election commission, the Office of the Prosecutor-General started an investigation against opposition activists who presented evidence (protocols with signatures and seals) of falsification, accusing the activists of submitting false evidence.

In the past few years, torture in Ukrainian prisons has been a point of special interest to Ombudsman Nina Karpachova. It is recognized that Ukrainian law enforcement services sometimes use torture and inhumane treatment during investigation and due process. However, very few cases are proved through the courts.

Ukrainian legislation provides access to a fair and public hearing, access to independent counsel, and access to a public defender. However, in practice these norms are limited by the courts, militia (police), and/or informal rules. Legislation has also introduced jury trials, but the related law is not yet fully implemented. In some cases, there is a lack of competitive trial processes between prosecutors and advocates. For example, although the law permits it, in practice the defense is often not allowed to contact clients at the initial stage of an investigation, i.e. immediately after arrest.

Constitutional reform initiated by Kuchma was one of the major topics debated in Ukraine in 2004. The task of the draft legislation is to limit the president's power and transfer the formation of government to the Parliament. The first draft failed to be adopted on April 7, when 294 (out of 450) MPs voted for it (300 votes were needed). The second draft was finally approved on December 8 in the framework of a "grand compromise" between the winning opposition and the outgoing Kuchma team. Before the compromise was achieved, the opposition claimed the authority wanted to shift power from the president to the Parliament on the eve of elections to maintain the status quo in the event the democratic candidate won. The Council of Europe suggested postponing reform until after the elections. Despite its formal democratic aims, constitutional reform remains a heated issue in Ukraine. One of the most controversial reform elements is granting "general supervision" over human rights provisions to the Office of the Prosecutor-General, despite warnings from the Council of Europe's Venice Commission.

The key judicial decision of the year was the cancellation of the November 21 second presidential vote by the Supreme Court on December 3 due to massive fraud. By this decision, the Supreme Court proved to be a relatively independent body. This mandate was upheld despite statements by President Kuchma and Prime Minister Yanukovych that there were no excessive violations, or at least that violations existed on both sides. The case showed the limitations of government pressure on the judiciary system. The Supreme Court's decision was not solely judicial but also political (based on constitutional supremacy without proper procedure and legal background), which drew criticism of Ukraine from some quarters.

Corruption (Score: 5.75)

Corruption remains the strongest obstacle to Ukraine's post-Communist democratic and market transformations. The very nature of Ukraine's national politics and economy keeps corruption at the core of the country's social, economic, and political life. Transparency International's 2004 Corruption Perceptions Index placed Ukraine 122 out of 146 nations, with a score of 2.2 on a scale of 1 to 10 (1 = most corrupt). Ukraine shares the score and position with Kazakhstan, Kyrgyzstan, Niger, Sudan, Bolivia, and Guatemala.

Ukraine's system of inter-relations among government, business, and society ensures the vitality and strength of corruption. Over-regulation of the economy provides a ground for illegal bureaucrat income, which in many cases is much higher than official wages. Bribery remains key to authority decision making on different levels. Rent seeking, a corporate strategy of the nomenklatura to maximize personal profit, is considered a major motivation in bureaucratic careers. Since wages are relatively low, state officials use their positions and authority to get rent, which is an illegal bonus several times their official income. Rent seeking usually grows from ordinary bribery; however, unlike bribery, rent seeking is regarded by the nomenklatura not as unethical or even illegal, but as an appropriate professional strategy of the privileged chinovniki (social class).

Among the most corrupt bodies and agencies, according to public perceptions, are the Ministry of the Interior, the STA, and the customs service, as they exploit direct links between state machinery and business. Different official institutions are responsible for issuing licenses and permissions for business, which makes their activities illegally "profitable." All bureaucratic functions are subordinated to the so-called presidential vertical, which serves as the core of the entire rent-seeking system.

Over-regulation makes business, including small business, dependent on the state. In 2003, a project to register small businesses known as "one window" was initiated but has not been fully implemented. This would provide a simplified taxation system (united tax) for private entrepreneurs, a measure that the tax administration has previously attempted to cancel. The amended Law on Personal Income Tax, introduced January 1,2004, is a flat tax rate (13 percent instead of 20-30 percent) intended to encourage citizens to report income and pay taxes. However, the success of this law is still limited because the high pension tax (32 percent) remains a reason for both employers and employees to hide wages. Even so, the share of the shadow economy related to income taxes has decreased slightly.

Anticorruption rhetoric was widely exploited during the presidential campaign by both major contenders. Victor Yushchenko's team accused the Kuchma-Yanukovych regime of aiding and abetting corruption. The campaign's famous slogan was "Gangsters must be imprisoned." On the other side, Yanukovych's team tried to attract attention to a criminal investigation against Yulia Tymoshenko in Ukraine and Russia. Beyond political rhetoric, no consistent policy or initiatives on corruption have been implemented. The Office of the Prosecutor-General has ignored numerous calls to open proceedings against top executives suspected of corruption. The only case against opposition leader Yulia Tymoshenko (now prime minister of Ukraine) is clearly motivated by politics and has moved forward with support from Russian law enforcement bodies.

Public actions by Prosecutor-General Henadyj Vassylyev, appointed in October 2003, demonstrated a deepening dependence on the president. The Ministry of the Interior, led by Mykola Bilokon, appeared to be the most biased in following requests of President Kuchma and his head of administration, Victor Medvedchuk, in particular pressing militia staff to take part in the presidential campaign on the side of the "official successor," Victor Yanukovych. The most remarkable public statement by Minister Bilokon was: "To say militia is beyond politics' is wrong. Militia is a military unit of authority. And we will do everything to protect it."

Owing to the efforts of the Parliamentary Committee on Anticorruption (led by Volodymyr Stretovych), Ukrainian society is becoming better informed about the suspicious activities of certain people from Kuchma's entourage, such as Ihor Bakay (then chief of the State Department of Affairs, the special body managing state property) and Victor Pinchuk (Kuchma's son-in-law). Law enforcement bodies, however, have not responded to this public information.

Corruption in privatization processes remains a major obstacle for foreign investors. A remarkable scandal took place in May, when the privatization tender for the biggest metallurgy plant, Kryvorizhstal, was announced. The conditions of the tender were formulated to exclude even the theoretical possibility of having foreign investors participate. Finally, the consortium of companies created by Renat Akhmetov, the richest oligarch from Donetsk, and Kuchma's son-in-law, Victor Pinchuk, got the job without any real competition. President Kuchma called this practice "protection of national economy." The result of such discrimination was a huge loss for the state budget. Pinchuk and Akhmetov paid US$800 million for Kryvorizhstal, whereas American and Russian investors proposed more than US$1.5 billion.

Corruption stories in Ukrainian media serve primarily as tools of war among groups of media owners, then secondarily as a field for journalistic investigations. On television, only Channel 5 promotes a regular program, Zakryta Aona (Closed Area), designed with professional standards of investigatory journalism. The subject of the program varies, from falsification of the Mukacheve mayoral elections to the corrupt activity of the State Department of Affairs (Derzhavne Upravlinnya Spravamy), which operates with state-owned property.

Tolerance of "small" corruption remains a critical social problem. While strongly criticizing "oligarchs" and other high-ranking corrupt figures, ordinary Ukrainians often consider small bribery as a useful tool to speed the pace of securing needed and favorable official decisions. For ordinary citizens, bureaucratic procedures appear to be an obstacle to economic and other activities, and they often prefer to pay bribes rather than waste time in bureaucratic corridors.

Author

Oleksandr Sushko is a director of the Center for Peace, Conversion, and Foreign Policy of Ukraine.