Nations in Transit - Ukraine (2003)

Capital: Kyiv
Population: 48,200,000
Polity: Presidential-parliamentary democracy
Economy: Mixed capitalist (transitional)
Status: Partly Free
PPP: $3,816
Private Sector as % of GDP: 65%
Life Expectancy: 68
Religious Groups: Ukrainian Orthodox (Moscow and Kyiv Patriarchates), Ukrainian Catholic, Protestant, Jewish
Ethnic Groups: Ukrainian (73 percent), Russian (22 percent), other (5 percent)

Introduction

Since gaining independence in 1991, Ukraine has established the framework of a presidential-parliamentary democracy that holds regular multiparty elections. In 1994, Ukraine became the first country in the Commonwealth of Independent States to carry out a peaceful and democratic transition of power to a newly elected Parliament and president. Two years later, the country adopted a Constitution steeped in protections for basic political and civil rights and reflective of compromise between the president, Leonid Kuchma, and the national legislature, the Verkhovna Rada (Parliament). The Constitution also reflected compromise between the left and center-right parties represented in Parliament.

At the same time, though, members of the former Communist nomenklatura (state bureaucracy) remained in power and resisted change, while the country's most reform-minded leaders avoided confrontation and failed to formulate a clear opposition stance. Although President Kuchma initially made some steps to push through political and economic changes, his divide-and-rule tactics prevented the creation of a working majority in Parliament. By the close of the 1990s, legislation vital to the country's democratic development remained stuck and reforms essentially stalled. Today, more than a decade after independence, considerable work remains to be done to consolidate the institutions of a stable, democratic society in which basic human, political, and economic rights are fully respected and vigorously secured.

Although President Kuchma vowed to become a "new president" after his reelection in 1999, his tendency toward authoritarianism has only increased. His power is built not only on formal rights, but also on his ability to intimidate the opposition and regulate oligarchic groups that are dependent on personal ties with the executive for their excessive wealth and influence. Evidence of the president's complicity in such tactics was revealed in 2000 when a former presidential security officer made public audiotapes that allegedly were recorded in Kuchma's office and appeared to implicate him in the murder of investigative journalist Heorhiy Gongadze and in the unlawful treatment of opposition politicians and the press. The tapes ignited calls for Kuchma's resignation – and, in some cases, impeachment – from opposition parties and groups of the Left and Right.

Although Ukraine commemorated a decade of post-Soviet independence in 2001, polls that year revealed that less than a quarter of the population considered the country a democracy. The same year, the oligarchic factions and the Communist Party engineered the ouster of reform-minded prime minister Viktor Yushchenko with Kuchma's blessing. Yushchenko subsequently announced his intention to participate in the 2002 parliamentary elections and formed an electoral bloc called Our Ukraine.

While Ukrainian politics were increasingly in turmoil, the country's economy was beginning to show positive growth after a decade of decline. In 2000, gross domestic product (GDP) increased by 5.9 percent; in 2001, it increased by 9.1 percent. Credit for the reversal is usually given to improved external market conditions and to Yushchenko, whose policies while prime minister included reductions in arbitrary administrative interference in the economy, provisions for stable payment schemes in the energy sector, cuts in inflation and barter transactions, and reductions in pension and wage arrears. Positive economic growth continued in 2002, with GDP rising by 4.8 percent and deflation equalling 0.6 percent. Nevertheless, Prime Minister Anatoliy Kinakh, Yushchenko's successor, lacked the political will to push for more serious economic reforms, and his government's policies became hostage to the country's three main oligarchic groups: the Dnipropetrovsk group, which controls the Labor Ukraine Party (the most influential figure in this group is Viktor Pinchuk, Kuchma's son in law); the Donetsk group, which controls the Party of Regions; and the Medvedchuk-Surkis group, which dominates the Social Democratic Party of Ukraine (United) (SDPU[u]).

The most significant political event of 2002, the period covered by this report, was the March 2002 parliamentary election. Despite administrative pressures and exclusion from coverage by the media, opposition forces received almost 60 percent of the votes on party lists. Although Yushchenko's Our Ukraine failed to obtain the necessary majority to form a new government and secure top parliamentary leadership posts, it stripped the Communist Party of its dominant position in Parliament and signaled the growing strength of democratic forces in the country. Indeed, Our Ukraine's victory marked the first postindependence victory for the democratic opposition. Nevertheless, pro-Kuchma forces managed to form a fragile parliamentary majority when enough deputies (especially those having their own businesses) extended their support under pressure from the presidential administration. Prime Minister Kinakh remained in power until November, when Kuchma fired the government allegedly to ensure more effective cooperation with the new Parliament. Viktor Yanukovych, the head of the Donetsk regional administration, became the country's new premier.

In June 2002, President Kuchma appointed Viktor Medvedchuk, the tough leader of the oligarchic SDPU(u), as the head of his presidential administration. Almost immediately, government authorities tightened their control over the mass media and increased their pressure against businessmen who supported the opposition. Kuchma also dusted off his tactics for splitting and outflanking the opposition. Specifically, on August 24,2002, Ukrainian Independence Day, the president seemed to agree to the opposition's proposal of a coalition government and even started to talk about much needed constitutional reforms.

Nevertheless, on September 16, the second anniversary of Gongadze's disappearance, opposition parties and supporters launched a series of protests to demand an early presidential election. With approximately 50,000 participants, the rally in Kyiv, Ukraine's capital, was the largest since independence. Demonstrators also organized a tent camp in front of the presidential administration building, but police demolished it the next morning. While the many members of Our Ukraine joined the protests, Yushchenko himself signed the rally's resolution but refrained from marching. As he had during the election, Yushchenko was aiming to balance his opposition to the regime with efforts to find a modus vivendi with more pragmatic forces in the pro-presidential camp and persuade Kuchma to secure a smooth transition to a government controlled by democrats.

The same month, a new episode in the "tapegate" scandal began when additional recordings emerged that appear to implicate the president in the possible sale of a powerful radar system to Iraq in violation of a UN embargo. The incident only emboldened opposition calls for the president's ouster and turned Kuchma – who believes the campaign is part of an American plot against him – closer to Russia. Although earlier in the year the president had announced Ukraine's intentions to seek membership in NATO, the alliance responded to the new evidence by refusing initially to invite Kuchma to a historic summit on enlargement held in Prague in November. After long negotiations, Kuchma attended summit but appeared there in isolation. A meeting of the NATO-Ukraine Committee, at which the NATO-Ukraine Action Plan was signed, was held at the foreign ministerial level.

Despite the opposition's efforts, it appeared at year's end that there was insufficient momentum to get rid of the president. However, Medvedchuk's efforts to isolate the opposition and deprive it of leadership posts on parliamentary committees had also failed. On December 24, Yushchenko's Our Ukraine reached a compromise agreement with parliamentary Speaker Volodymyr Lytvyn and Prime Minister Yanukovych to support the government's budget in exchange for retaining the opposition's chairmanship of 19 (out of 24) parliamentary committees.

As the events of 2002 made clear, politics in Ukraine are fluid. Ukrainian society voted for change in the parliamentary elections, but it remains to be seen how far the current administration will go to prevent it. The next presidential election, scheduled for 2004, will have a profound effect on Ukraine's development over the next decade. And already the country's main political forces have started to prepare for the fight.

Electoral Process (Score: 4.00)

Ukraine's Parliament consists of 225 seats filled by direct voting in single-member districts plus 225 seats filled in balloting for party lists. To secure a seat in proportional voting, a party must overcome a 4 percent threshold. This mixed system, which was introduced on the eve of the 1998 parliamentary elections, was considered a clear step forward from majoritarian voting that favored the country's post-Communist nomenklatura. Ukraine adopted its current Law on Elections in 2001, after President Kuchma vetoed five draft versions that proposed an electoral system based solely on proportional representation. While making some changes to the previous law, the new law retained the mixed system.

According to the Organization for Security and Cooperation in Europe (OSCE), the new Law on Elections "marks substantial improvements compared to previous legislation." It requires parties to register at least one year before the election date and makes provisions for low registration fees of 255,000 hryvnias (UAH) (US$50,000) for parties and 1,020 UAH (US$200) for individual candidates. Parties that have won seats in previous election or have factions represented in Parliament may participate in district electoral commissions, with representatives of other parties selected by lot.

According to the OSCE, the parliamentary elections of March 2002 "brought Ukraine closer to meeting international commitments and standards for democratic elections." Still, the election was marked by irregularities, such as the interference of government authorities in campaign activities, monopoly coverage by the media of pro-Kuchma parties, and even some incidents of campaign-related violence, including the election eve murder of Mykola Shkribliak, the deputy governor of the Ivano-Frankivsk oblast and a candidate supported by the oligarchic SDPU(u).

As a result of the election, Our Ukraine became the largest faction in Parliament. During the campaign, former prime minister Yushchenko skillfully distanced himself from the authorities but refrained from personal criticism of the president. Had he done otherwise, his campaign might have been crushed like that of Oleksandr Moroz, the Socialist Party leader who ran against Kuchma in the 1999 presidential election. The center-left Socialist Party and the center-right Tymoshenko bloc, which were much more direct and vocal about their opposition to the president, passed with confidence the 4 percent threshold needed to gain seats in Parliament. The Communist Party lost considerable ground, winning about half the mandates it secured in 1998. Compared to previous elections, the 2002 election resulted in a smoother regional distribution of votes.

Although the Our Ukraine faction had hoped to form a new government, it failed to secure enough support from other parties and independent candidates to do so. Instead, the newly elected independent members of Parliament were pressed into joining with the bloc For a United Ukraine, the main pro-presidential force. Lytvyn, the new Speaker of Parliament, and his two deputies represent the pro-presidential camp. Following stormy protests from the opposition camp, however, the new leadership ceded control over 19 out of 24 parliamentary committees. For a United Ukraine soon broke into eight competing factions but remains the foundation of the pro-presidential majority.

Composition of the Parliament

* one seat remains vacant

According to a poll conducted by the Razumkov Center in December 2001, about 2.5 million Ukrainians, or 5 percent of the population, belong to parties. However, only a handful of parties are mass membership based and have clear ideologies. These include the oppositional Communist Party (with about 140,000 members), the Socialist Party (60,000), the Ukrainian People's Rukh (47,000), and the People's Rukh of Ukraine (45,000). The oligarchic SDPU(u) has 350,000 members. The so-called centrist pro-presidential Party of Regions claims to have 460,000 members, but this figure appears to be seriously exaggerated.

As of January 1,2003, there were 125 political parties in the country. However, many are not active and exist only on paper. The 1992 Law on Associations of Citizens was perhaps too liberal. Parties wishing to register needed to have only a minimum of three members in at least 14 oblast-level organizations. The April 2001 Law on Political Parties requires parties to reregister and makes the process somewhat more difficult by requiring groups to obtain the signatures of at least 10,000 Ukrainian citizens in at least two-thirds of the country's raions (districts) and oblasts. Given the more stringent requirements, some parties are likely to disappear after March 31,2003, the deadline for reregistering.

Minorities tend to support mainstream rather than ethnic- or religious-based parties. In the 2002 parliamentary election, the Rus'kyi bloc received only 0.7 percent of the vote, and the bloc For Ukraine, Belarus, and Russia received only 0.4 percent. Representatives of ethnic minorities are often elected in majoritarian districts. Businessmen of ethnic Russian and Jewish descent are active in Parliament and the presidential administration but tend to promote their own business interests more than the interests of their ethnic groups.

Crimean Tatars account for about 12 percent of the Crimean population, or about 250,000 people. On the eve of elections in 1998, the then pro-Russian Parliament of Crimea repealed a 1994 provision granting Crimean Tatars a quota for representation in that 100seat regional body. In the 2002 national election, most Crimean Tartar voters supported Our Ukraine, and two of their leaders were elected to the Ukrainian Parliament on its party list. In 2002 voting for the Parliament of Crimea, they made a comeback with eight single-member seats. In local Crimean radas (councils), Tatars increased their representation to 14 percent of all deputies.

Voter turnout at the national level has declined from its high of 84.9 percent in the December 1991 referendum and presidential election, but it still remains quite high: 70.2 and 74.9 percent in the first and second rounds of the 1999 presidential election and 69.7 percent in the 2002 parliamentary election. Since local elections coincide with parliamentary elections, voter turnout is the same. According to exit polls, women's participation in the 2002 elections was slightly less than their share of the overall population (51.2 and 53.7 percent, respectively).

Women's representation in Parliament decreased from 7.8 percent in 1998 to 5.3 percent in 2002. However, in local radas women account for 42 percent of all members. Yulia Tymoshenko, the former vice premier in the Yushchenko government and now a possible candidate for the presidency, is one of the most charismatic figures in Ukrainian politics. There are also two female members of the government and four female co-leaders of parliamentary factions.

The last presidential election took place in the fall of 1999. By law, candidates must collect at least 1 million signatures from voters, including a minimum of 30,000 signatures from at least 16 of Ukraine's 24 oblasts as well as Crimea, Kyiv, and Sevastopol. All 15 candidates who delivered their signature lists participated in the election. OSCE observers said the election was generally free but far from fair. However, opinion polls suggested that election violations did not significantly affect the final outcome. In the second round, Kuchma defeated Communist hard-liner Petro Symonenko with 56.25 and 37.8 percent of the vote, respectively. The next presidential election, which will take place in 2004, promises to be a tough battle and a significant moment in Ukraine's post-Communist history because a strong pro-reform candidate will present a viable alternative to the country's powerful oligarchic clans.

Civil Society (Score: 3.50)

According to the Counterpart Creative Center, there were approximately 35,000 nongovernmental organizations (NGOs) in existence in Ukraine in 2002, up from 30,000 in 2000 and only 4,000 in 1995. This trend can be explained by the increasing possibilities for individuals to find self-fulfillment in NGOs, particularly as groups grow more active in the social and political life of the country. Local authorities, in particular, show greater interest in NGO activities aimed at helping the poor, children, or the disabled. Nevertheless, philanthropy and volunteerism remain insufficiently developed for a country the size of Ukraine and are usually reserved for election-related activities. The Razumkov Center reported in September 2002, for example, that only 5 percent of the population engages actively in civil society.

Ukrainian NGOs were very active during the 2002 parliamentary elections. The All-Ukrainian Monitoring Committee established in December 2001 informed the public on how fairly the election was run. It organized the First Civic Forum of Ukraine, held in February 2002 in cooperation with the International Renaissance Foundation (IRF), which was devoted to monitoring the parliamentary election campaign. A second forum was held in June 2002 after the elections, with support from the IRF and Freedom House, to discuss the idea of creating a "civil Parliament" of Ukrainian NGOs.

The organizational capacity of Ukrainian NGOs has improved considerably in recent years. A dozen foreign and joint Ukrainian-Western projects provide experienced trainers for NGOs, and Ukrainian-, English-, and some Russian-language materials are generally distributed free of charge. Information on and for NGOs can be found on Web sites and Internet portals created with the support of Western donors.

Major NGOs, especially leading public policy research institutes such as the Razumkov Center and the East-West Institute, are increasingly influencing the policy debate. Former politicians and senior civil servants also run some important groups. The Democratic League, a coalition of a dozen leading think tanks, was established in June 2002 to address the problems of civil society and its interaction with government authorities. The foreign minister meets regularly with the NGO Advisory Council, which was created in 2001. At the same time, though, NGOs are often unable to have a significant impact on decision-making processes. Instead, authorities sometimes use NGOs to legitimize their own decisions.

According to World Bank estimates, 95 percent of Ukrainian NGO activities are funded by Western sources. The West seems to understand the necessity to differentiate between the regime of President Kuchma and Ukrainian civil society. At the end of September 2002, during the "Iraqgate" scandal over alleged sales of the Ukrainian Kolchuga radar system to Iraq, the United States suspended $54 million in assistance that was directed to central governmental agencies but continued support for civil society groups, local governments, and military institutions. The suspension represented one-third of U.S. aid to Ukraine appropriated for 2002 under the Freedom Support Act.

The media's attitude toward NGO activities is generally positive, especially its coverage of charitable activities. However, in January 2002, Volodymyr Lytvyn, then head of President Kuchma's administration, contributed an article ("Civil Society: Myths and Reality") to the newspaper Fakty in which he maintained that NGO activities represented Western interests. The article evoked a strong negative reaction from the country's democratic forces. In February 2002, in yet another article, Viktor Medvedchuk, the newly appointed head of the presidential administration, supported the same view regarding the dependence of Ukrainian NGOs on Western aid, particularly aid from the United States.

Partly reflecting the suspicious attitude of the present political establishment toward civil society, the legal basis for NGO activity is outdated. It is regulated by the 1992 Law on Associations of Citizens, the 1997 Law on Charity and Charitable Organizations, and executive branch resolutions. A draft Law on Nonprofit Organizations passed its first reading in October 2000, but since then it has not been taken up by Parliament, which has been more preoccupied with political struggles, economic laws, state budgets, and legal codes.

The registration process for NGOs involves multiple steps, which many observers find onerous. To register, a group must submit to local authorities or the Ministry of Justice an application; two copies of its bylaws; minutes of an organizational meeting; information about the group's founders, administration, and branches, if any; and a receipt for payment of the registration fee (ranging from 85 UAH [US$16] for local NGOs to approximately 2,650 UAH [US$500] for international NGOs). Registration must be completed within two months. Within a month after registering with the Ministry of Justice, an NGO must also sign up with the Department of Statistics, the State Tax Administration (STA), the Ministry of the Interior, the State Employment Fund, the Social Insurance Fund, and the Pension Fund. It also must open a bank account. Another means of registering is by declarative or de facto legitimization. To do this, an NGO must send a letter to a public authority stating that the organization is already in operation. Most local NGOs or local branches of national NGOs register this way, although it deprives them of the right to open their own bank accounts.

Ukrainian NGOs are nonprofit organizations. Although groups may earn income for activities specified in their statutes, tax bodies frequently refuse to recognize several activities as noncommercial. Only individual donations to charities and religious groups – but not to NGOs – are tax-deductible; however, these institutions still must pay value-added and other taxes on imports. Legal entities can write off only 4 percent of their profits for donations.

A limited number of NGOs (veterans groups, Chernobyl-related organizations, and certain organizations for children and the disabled) enjoy tax-exempt status. Most groups enjoy partial tax benefits such as exemption from paying value-added and profit taxes. Double bookkeeping is common as a means of avoiding excessive Ukrainian taxation. As the World Bank has noted, government procurement opportunities for private nonprofit service providers are virtually nonexistent. NGOs are also severely limited in their ability to earn income or collect cost recovery fees that would be tax-exempt, even if they spent the money on nonprofit activities or general maintenance of the organization.

Ukraine has about 500 civic and cultural NGOs created by about 40 different ethnic minorities. Of these, 32 were operating at the national level by October 2002. The Council of Representatives of Ethnic Minorities' NGOs is an umbrella organization that operates under the auspices of the president of Ukraine. Crimean Tatars have created their own representative body called the Mejlis. Although there are no significant anti-liberal or extreme NGOs in the country, there is some danger that the activities of groups advocating such sentiments could be boosted to try to destabilize the country on the eve of the 2004 presidential election.

According to the 2002 International Religious Freedom Report by the U.S. State Department, more than 90 percent of religiously active people in Ukraine are Christians, with the majority being Orthodox. Ukrainian Greek Catholics constitute about 15 percent and Roman Catholics about 3.5 percent of all believers. There are also small but significant Judaic and Muslim communities as well as growing Protestant communities. Religious groups carry out charitable activities such as helping orphans and poor people and constructing social welfare buildings and Sunday schools. However, the ongoing interconfessional struggle between the two main Ukrainian Orthodox Churches, under the Moscow and Kyiv patriarchates, respectively, impedes many social projects.

Approximately 700 NGOs deal with women's issues. Of these, nearly 40 are national in their reach and have international contacts. Many of these organizations are supported by the executive or by different political forces. The National Council of Women of Ukraine acts as an umbrella organization.

Ukrainian trade unions are incorporated into 5 national federations, 46 regional federations, and 74 all-Ukrainian branch trade unions. More than 85 percent of their 16 million members belong to unions that reportedly are members of the Federation of Trade Unions of Ukraine (FTU), the successor to the former Soviet-era trade unions. However, this figure seems exaggerated. During the 2002 parliamentary elections, Oleksandr Stoyan, the head of the FTU, held the number two slot on the electoral list of the center-right bloc Our Ukraine. Facing pressure from pro-presidential government authorities, though, he quit the faction after the election. Over 1 million citizens belong to new trade unions founded as alternatives to the FTU. The total number of unionized workers has declined to 50 or 55 percent of the workforce.

The number of people working at small and medium-size enterprises has reached 3 million in Ukraine. There are more than 400 regional and 20 national associations for small businesses as well as several branch associations. In the agricultural sphere, the Association of Farmers and Private Land Owners counts among its formal membership about 70 percent of Ukrainian farmers. The group's head, Ivan Tomych, was elected to Parliament in 2002 on the Our Ukraine list and now heads the parliamentary Committee on Agrarian Policy and Land Relations.

About 70 percent of Ukraine's institutions of higher education and 90 percent of secondary schools are public. In most cases, public universities still provide better education than private ones. By law, Ukraine's education system is free of political propaganda, and university lecturers and students are generally free to express their views. University administrators, however, usually discourage students from taking part in opposition rallies and encourage them to participate in pro-government events instead. This was especially evident during the 2002 parliamentary election campaign.

Independent Media (Score: 5.50)

Although Ukraine has a fairly sizable and vibrant media, journalists and media outlets – both state owned and private – typically lack true independence. In addition, journalists face regular harassment and violence for their reporting, particularly investigative work on corruption and crime linked to the authorities or to the country's powerful oligarchs. More than 70 percent of Ukraine's print media and up to 95 percent of TV and radio broadcasting companies are privately owned. However, the true owners often prefer to hide their names, as many outlets are controlled by oligarchs.

For nearly two years, the murder of investigative journalist Heorhiy Gongadze has galvanized opposition and free speech advocates in Ukraine who regularly call for the ouster of President Kuchma and protest against political interference in the work of journalists. Even some media outlets controlled by oligarchs have seized on the opportunity provided by the related "tapegate" scandal to try to provide relatively balanced coverage of the news. Some television channels aired political debates during the 2002 election campaign and gave time to opposition candidates. However, the situation worsened after Medvedchuk took control of the president's administration and ensured distorted coverage of opposition activities for the remainder of the year.

In early September 2002, Mykola Tomenko, head of the parliamentary Committee for the Freedom of Speech and Information, disclosed so-called temniks, or unofficial papers, sent to the mass media by the president's administration instructing them how to cover or ignore current events. Failure to comply could lead to various forms of harassment such as tax audits, canceled licenses, and libel suits. Later that month, the independent news agency UNIAN, which has operated in Ukraine since 1993, was put under the de facto control of the president's administration. In response, about 400 journalists signed a manifesto declaring the existence of political censorship in Ukraine. On December 4, Parliament held hearings on freedom of the press that were broadcast live on the all-national First TV and Radio Channels. The existence of the temniks drew special attention from the Council of Europe's Parliamentary Assembly (PACE). Human Rights Watch demanded that international financial organizations "should make respect for media freedoms an element of their country assistance strategies."

Existing laws do not fully protect journalists in Ukraine, and violence against them is all too common. The most notorious case was the September 2000 murder of Heorhiy Gongadze, who was editor of the opposition Internet newspaper Ukrains'ka pravda. The investigation into his death still continues and has produced few results. On July 3,2001, Ihor Aleksandrov, director of the TOR television station in the Donetsk region, was beaten to death. The real killers and organizers have not been found. On November 20,2002, Myhailo Kolomiets, the head of the Ukrainski Novyny News Agency, was found hanged in Belarus, apparently having committed suicide over his agency's financial debt. The Ukrainian Prosector General's Office opened a criminal suit based on an article in the criminal code regarding persons driven to suicide, but no evidence to this effect was found.

Ukrainian laws do not clearly distinguish between protections afforded to private citizens and those granted politicians. In recent years, many media outlets have been sued by politicians who demanded huge sums as compensation for "moral damages." However, on May 25,2001, the Supreme Court decreed that criticism of facts and opinions is not grounds for awarding moral damage compensation. In addition, under a law that took effect in 2001, libel is no longer a criminal offense. Nevertheless, censorship, although prohibited by the Constitution, still exists to a large extent within Ukraine. One of its main causes is the fact that insufficient development of Ukraine's advertising market forces mass media outlets to rely for financial support on oligarchs, who in exchange wield considerable influence over journalistic content and programming.

There are a number of influential private newspapers in Ukraine, many with ties to particular political parties or oligarchic groups. The SDPU(u) controls Den', with a declared circulation of 60,000; Kijevskije Vedomosti (150,000); and Biznes (60,000). Fakty (850,000) and Kijevskiy Telegraf are tied to the Dnipropetrovsk group of oligarchs through their respective owners, Viktor Pinchuk and Andrij Derkach. Segodnya (650,000) is allied with the Donetsk group, while Stolichye Novosti (70,000) is controlled by former oligarch Vadym Rabinovych. The leading oppositional newspapers are Vechernije Vesti (450,000; Tymoshenko), Sil's'ki Visti (600,000; close to the Socialists), Ukraina Moloda (100,000; close to Our Ukraine). Dzerkalo Tyzhnia (43,000; backed with some American private investment) and the Kyiv Post (25,000; Western owned) both provide an impartial, analytical approach.

The most influential magazines covering politics and offering rather balanced views are Halyc'ki Kontrakty (44,000), Kompanyon (30,000), Polityka i Kultura (20,000), and the Western-owned Korrespondent (50,000). The main state newspapers are Holos Ukrainy (150,000) and Uriadovyi Kurier (120,000). Many local state bodies also have their own newspapers. Ukrainian-language periodicals account for only about one-fourth of the circulation of all newspapers and journals. The Ukrainian versions of Russia-based newspapers include Izvestiya-Ukraina (230,000), Komsomolskaya Pravda v Ukraine (130,000), Argumenty i Fakty v Ukraine (140,000), and Moskovskiy Komsomolets-Diorama Plus (100,000).

Only one national television channel is state run. The main private national channels are 1+1, Inter (controlled by the SDPU[u]), STB (controlled by Pinchuk and Lukoil), the New Channel (earlier controlled by Alfa group, now allegedly by Pinchuk), and ICTV (also Pinchuk). The wire radio broadcasting system consists of three state-run stations. The FM stations specialize mostly in music and entertainment but also have news. These are Era (controlled by Derkach and also broadcasting on the the all-national First TV and Radio Channels), Nashe Radio, Radio Dovira-NIKO FM, Gala Radio, Radio Lux, Radio Kijevskije Vedomosti, Radio Kontinent, Radio Roks, Russkoe Radio (a branch of the Moscow-based station), and Prosto-Radio.

In May 2002, several television and radio companies accused the National Council of Television and Radio (NCTR) of denying or wrongfully withdrawing the broadcasting licenses of some independent companies, including Radio Kontinent, Public Radio, and the television companies UTAR and Kyiv. The NCTR declared its intention to introduce, as of January 1,2003, licenses for broadcasting foreign-produced programs – a measure that many fear could be used to put political pressure on independent radio companies that broadcast the Ukrainian services of the BBC, the Voice of America, Svoboda, and Deutsche Welle.

Ukrainska Poshta, the main distributing and subscription service, and Ukrpresa, the main printing house, are government controlled. Some publishing houses own the whole chain of production, subscription, and distribution services in order to be totally independent. Many private firms also specialize in publishing services. In March 2002, the State Tax Administration accused the publishing firm Taki Spravy, which produced materials for Tymoshenko's political bloc, of tax avoidance. However, in August 2002, the Kyiv Commercial Court and the Kyiv Appellate Court threw out the case.

Ukraine's journalistic associations include the post-Soviet Association of Journalists of Ukraine and new groups such as the Association of Mass Media and the Independent Association of Teleradiobroadcasters. However, none of these groups are very influential. The Kyiv Independent Media Trade Union emerged in late 2002. Women are relatively well represented in journalistic circles, and they run several influential periodicals, such as Dzerkalo Tyzhnia, Den', and Ukrains'ka Pravda. Ukraine also has several Western-supported media organizations, including the Institute of Mass Media, the Committee to Protect Journalists, the Equal Access Committee, Charter 4, and the Freedom of Speech Center.

The Internet is growing rapidly in Ukraine. There are about 300 Internet providers and approximately 2.5 million users (5 percent of the population), including an estimated 1.5 million active users. However, in small towns and villages access to the Internet remains limited owing to technical and financial problems.

There are no restrictions on Internet access for private citizens, but authorities do harass oppositional Internet sites. In March 2002, representatives of the State Tax Administration seized the documentation and computer equipment of the oppositional Obkom. net, which resumed its activity only in January 2003. Nevertheless, some politically oriented Web sites such as Korrespondent.net, polit.com.ua, and that of the newspaper Ukrains'ka Pravda have become an important source of independent information.

Governance (Score: 5.00)

Under the Constitution, the president appoints the prime minister with the consent of Parliament. The Parliament can also influence the government by rejecting the government's general strategy or overturning the government in a no-confidence vote. However, the appointment of ministers does not formally demand the consent of Parliament and, consequently, a clearly identified parliamentary majority. Moreover, the president can fire the prime minister at will and is responsible for appointing a state secretary to the cabinet and to each ministry for five-year posts. The absence of a stable parliamentary majority, combined with the president's far-reaching powers, makes Ukraine's governmental system unstable. Despite talk of the "first coalition government in Ukraine" formed by Prime Minister Yanukovych in late November 2002, the grouping is a pseudocoalition based not on the results of parliamentary elections earlier in the year, but on a struggle among the country's three main oligarchic clans.

Lack of transparency in government is a significant problem in Ukraine. In 2002, for example, the so-called tapegate scandal involving audiotapes that allegedly were recorded in President Kuchma's office continued to reveal illicit activities by the president and his close associates and supporters. Specifically, portions of the tape were released that appear to confirm discussion of a possible illegal sale to Iraq of a Ukrainian antiaircraft radar system. When an American firm authenticated the portion of the tapes related to the sale, American and British experts received unprecedented access to Ukrainian military facilities, plants, and documentation. To date, evidence of the sale has not been found. However, the investigation has showed that Ukraine must improve its system of control over arms exports.

Another example of the lack of transparency in Ukrainian government came on June 10,2002, when President Kuchma unexpectedly signed a declaration with Russian president Vladimir Putin and German chancellor Gerhard Schroeder to establish an international consortium to use Ukrainian transit pipelines for the transport of Russian gas to Europe. The terms of the consortium were not released, and its pros and cons for Ukraine were not discussed openly with the public. On October 7,2002, separate agreements between the Ukrainian and Russian governments and between the Russian Gasprom and Ukrainian Naftogaz companies were signed. The texts of the agreements were vague and unclear, and the very prospect of German participation was under question.

Despite his efforts, President Kuchma has not managed to transform Parliament into a purely symbolic body. Budgetary support for Parliament, in particular, is adequate because the cabinet cannot avoid making mandatory budget payments to fund the legislature's work. The quality of the work of parliamentary committees has also improved. Following the 2002 election, Parliament formed a new Committee on European Integration. The 1995 Law on Parliamentary Committees grants standing committees the right to hold special hearings and launch investigations. However, executive bodies routinely ignore the findings of parliamentary committees. Moreover, Parliament itself has yet to pass a law on investigative parliamentary commissions, whose existence is authorized by the Constitution.

Several steps were taken in 2002 to try to improve transparency and increase public input in political processes. In August, for example, President Kuchma issued the decree On Additional Measures on Ensuring Openness in the Activities of State Institutions. However, since existing legislation is vague about what constitutes a state or a military secret, government officials still broadly adhere to withholding information from the public. In the fall, several parliamentary committees headed by Our Ukraine created consultative boards and invited experts from NGOs to participate. To date, these boards have proven quite effective and have written several draft laws. The president, Parliament, cabinet of ministers, and some local authorities also have Web pages containing laws and other public documents.

The Constitution and the 1997 Law on Local Self-Governance are aimed at decentralizing substantial power to subnational bodies and providing sufficient financing to local governments. Local radas address issues such as the establishment and control of communal enterprises, assessment of local taxes and duties, implementation of social and cultural projects, and management of communal property. They also adopt and manage budgets for their territorial units. Communities may call referendums on local issues. In turn, Parliament may terminate the powers of a local council if it decides that the council's actions contradict Ukrainian law.

The deputies of local radas are chosen in single-mandate district elections that are generally free. However, the president appoints the heads of regional and district administrations, whose authority substantially limits self-government. Moreover, the heads of these administrations actively interfere in elections to local radas.

The June 2001 budget code created a coherent scheme for distributing revenues from taxes and duties among state, oblast, and raion-level administrations. Since it provides a more objective, formula-based method of revenue distribution, the share of total government outlays going to local budgets has exceeded 40 percent. Still, the old scheme of budget transfers from the state to local governments remains in place and is often characterized by payment delays and corruption.

The Autonomous Republic of Crimea enjoys greater powers than any other region in Ukraine. The Crimean Cabinet of Ministers manages the region's budget, which is approved by the Crimean Parliament, and has substantial autonomy from central authorities. After the 2002 elections, the Communists lost the post of Speaker of the Crimean Parliament. Pro-presidential forces now control both the Crimean Parliament and government.

Under the 1993 Law on State Service, which was amended in 1995 and 1996, Ukrainian civil servants are subordinate to the General Department of Civil Service of the Cabinet of Ministers. The law prohibits civil servants from misusing their authority but provides no enforcement mechanism. Local civil servants are nominally employees of local governments. According to the July 2001 Law on Service in Local Organs of Self-Government, about one-fifth (67,000) of all civil servants became municipal employees – a move that was considered a sign of improvement in the civil service system.

The government elaborated the idea of carrying out comprehensive administrative reform in 1997 but still has not taken key steps such as redistributing functions among government agencies and cutting red tape. On September 16,2002, President Kuchma agreed to form part of his own administration through open competition (based on a system of exams), but the move was considered a public relations ploy.

Constitutional, Legislative, and Judicial Framework (Score: 4.50)

Ukraine's Constitution provides for a presidential-parliamentary system of government rooted in checks and balances among its branches. However, the role of the president, who serves as the head of state and is elected by direct vote, is dominant. The president appoints the prime minister (with the consent of the Parliament) and ministers (on the prime minister's suggestion), and has the right to fire the prime minister at his discretion. He also appoints the head of the security service and the secretary of the National Security Council without consulting Parliament. Thus, the president exercises control over the government but can avoid responsibility by blaming the government for policy mischief. Since there is no law on the impeachment of the president, it is almost impossible to realize this constitutional provision. A law defining the status and functions of the presidential administration is also absent.

Reacting to the increased role of the opposition and Parliament after the 2002 parliamentary elections, President Kuchma agreed to constitutional reforms that formally address many of the opposition's demands. The Law on the Court System, adopted on February 7,2002, provides for independent financing and administration of courts and separates courts for criminal, civil, administrative, and other types of cases. In 2001 and 2002, Parliament passed new land, budget, criminal, family, and customs codes. It is expected to approve new civil and commercial codes in January 2003. Taken together, these laws provide the long awaited legal basis for modernizing Ukraine's economy and its legal system.

The fall of 2002 was characterized by the attempts of the presidential administration to create a working pro-presidential majority in Parliament. By October 8,2002, Viktor Medvedchuk, the head of the presidential administration, had put enough administrative pressure on parliamentary deputies to create a fragile majority with only 231 seats. However, on October 12, Russian citizen Konstantin Grigorishin, Medvedchuk's rival in the energy business, was arrested while in the company of parliamentarian Volodymyr Syvkovych. As a result of the arrest, which looked like an organized provocation, Syvkovych and four other deputies suspended their participation in the parliamentary majority and called for Grigorishin's release. Grigorishin was freed in late October, and Deputy Minister of the Interior Mykola Dzhyha was ousted. Two weeks later, Dzhyha was appointed head of the Ukrainian division of Interpol.

A new governmental majority decided on December 17 to remove the opposition from all leadership posts in parliamentary committees. Moreover, the position of head of the National Bank of Ukraine (NBU), an institution that is independent from other branches of power, was added to the list of positions distributed between members of the majority. President Kuchma subsequently suggested Serhiy Tyhypko, the leader of the Labor Ukraine Party, as the new NBU head. During the December 17 vote on the redistribution of the posts, a number of procedural violations occurred and, in protest, opposition members of Parliament rendered the body dysfunctional by blocking access to the podium. As a result of a compromise reached on December 24, the majority withdrew its plans to re-distribute leadership over the parliamentary committees. In turn, Our Ukraine supported the government's budget and Tyhypko's appointment remained in force. Nevertheless, these late-year moves were insufficient to stabilize relations between the opposition and the governmental majority, and within the majority itself. Several draft laws remain before Parliament on reserving opposition leadership on several key parliamentary committees, providing appropriate coverage for the opposition in state-owned mass media, and guaranteeing the opposition's right to deliver co-reports in Parliament on key issues.

To date, Parliament has prevented the implementation of constitutional amendments that voters approved on a so-called "people's initiative" held in April 2000. President Kuchma, who had called for constitutional amendments to increase his powers, initially proposed six questions: (1) Should the president be able to dissolve Parliament, if voters express no confidence in the body in a national referendum? (2) Should the president be able to dissolve Parliament for failure to form a majority within a month or to adopt a state budget within three months? (3) Should the immunity of parliamentary deputies from arrest and criminal prosecution be limited? (4) Should the number of parliamentary deputies be reduced from 450 to 300? (5) Should Parliament have two chambers? (6) Should Ukraine be able to adopt a Constitution by national referendum? Although the Constitutional Court threw out questions one and six, voters considered the rest in the April 16 referendum. Turnout reached nearly 80 percent, and the response to each question was, overwhelmingly, yes. However, the results of the referendum were dubious because the campaign took place under direct pressure from the authorities. Moreover, the Constututional Court stipulated that the results of the referendum should be implemented through proper parliamentary procedure, and President Kuchma lacked the necessary support to do so.

On August 24,2002, President Kuchma made a sensational statement in which he seemed to agree to the opposition's proposals for a coalition government, a proportional electoral system, and the transformation of Ukraine into a "parliamentary-presidential republic." Since President Kuchma may not run for a third term, observers of Ukraine believe that the move stemmed from his desire to reduce the power of any future president prior to the 2004 presidential elections, in which Viktor Yushchenko of Our Ukraine holds an early lead in the polls. However, democratization of the Ukrainian system of government does not demand this step, and power can be balanced more easily using a French- or Polish-style presidential-premier model, which increases the responsibilities of coalition governments formed on the basis of a parliamentary majority.

On October 16,2002, the Constitutional Court decided that a draft law by opposition members of Parliament on constitutional reform corresponds to the Constitution. On December 6,2001, the Constitutional Court prohibited the same person from being both the head of an oblast administration and head of an oblast rada, thus forcing 11 officials to resign from one of their posts.

Although the Ukrainian Constitution contains broad guarantees for human rights and civil liberties, these rights are not always secure. Some members of the opposition even believe that the practice of holding political prisoners has reappeared. On December 26,2002,18 members of the right-wing Ukrainian National Assembly were sentenced to two to five years in prison for "creating mass unrest" during an anti-Kuchma event on March 9,2001. The European Court of Human Rights also has declared admissible the complaints of Ukrainian inmates regarding torture and inhuman treatment. Prisons are overcrowded, and many inmates suffer from tuberculosis.

Ukrainian ombudsman Nina Karpachova was quite active in 2002, responding to human rights-related matters, the Gongadze and Tymoshenko cases, and trafficking in women. In May 2002, Karpachova won a criminal case against two security officers who beat to death a prisoner in Lviv. On October 12,2002, she proposed to create independent medical bodies to monitor abuses in prisons.

The Constitution prohibits discrimination based on religion, political views, gender, ethnic or social origin, or other grounds, and the Council of Europe considers the 1992 Law on National Minorities as one of the best in Central and Eastern Europe. In areas where a minority ethnic group constitutes the majority of the population, the native language may be used along with Ukrainian in public institutions. However, in many cities, particularly in eastern Ukraine, Ukrainian speakers still face pressures associated with living in a largely Russified environment. As a result, some Ukrainian parliamentarians are considering how provisions of the European Charter on Regional Languages and Languages of Minorities, which Ukraine promised to ratify upon joining the Council of Europe, might apply to Ukraine. Ratification of this Charter is expected in spring 2003. The government generally respects the rights provided by the 1991 Law on Freedom of Conscience and Religious Organizations. The main problem is a continuous confrontation between Orthodox Churches under the Moscow and Kyiv patriarchates over religious legitimacy and property rights.

Ukraine's Constitution also guarantees the right to own property, the right to engage in free enterprise, and protection of fair competition in business. However, the safety of business and property rights remains a problem. At the All-Ukrainian Conference on Entrepreneurship, held on July 15,2002, President Kuchma recognized the urgent need for the new tax code and administrative reform. In 2001, Parliament adopted a new criminal code and changes to the criminal procedure code. A major effect of the new laws was the elimination of Soviet-era economic offenses such as "speculation." Also, now only tax avoidance of more than 17,000 hryvnias (US$3,200) is criminally punishable; previously the threshold was 1,700 hryvnias (US$320). Judges, rather than prosecutors, must issue search and arrest warrants. However, a prosecutor, after having received a case from an investigator, may return it for additional investigation and thus prolong the detention of the accused. The law provides punishment for those attempting to limit the independence of the judiciary.

In early 2001, politician Yulia Tymoshenko was arrested on corruption charges, but two separate courts ordered her release. After Judge Anatoliy Zamkovenko of the Pechersk District Court (Kyiv) found Tymoshenko not guilty, the Supreme Council of Justice opened an investigation into his professional adequacy. On October 15,2002, Judge Yuriy Vasylenko of the Kyiv Appellate Court filed a legal case against President Kuchma based on accusations by parliamentary deputies of executive abuse of power. The Supreme Council of Justice is expected to decide that the judge behaved unprofessionally and overstepped his authority; nevertheless, Vasylenko's step was quite symbolic.

The state provides public defenders to all who need them. In practice, however, there are complaints that many public defenders are unqualified, and people tend to hire private defenders. Quite often, though, private defenders are pressured by authorities to make decisions that are not in the interests of their clients. Andriy Fedur, who represented Gongadze's mother and defended Judge Zamkovenko, was arrested on October 12,2002, but public outcry led to his release three days later. The enforcement of judicial decisions generally is effective in criminal cases but inadequate in civil cases.

The impartiality of judges is stipulated by the Constitution and the 1992 Law on the Status of Judges. However, the courts are funded through the Ministry of Justice and often subject to executive influence. According to the Constitution, the president appoints judges for initial terms of five years. After that, except for Constitutional Court judges, Parliament may endorse judges for life terms and therefore make them immune from prosecution. A judge can be arrested only with the permission of Parliament. In 1999, Parliament ended the immunity from administrative prosecution that judges enjoyed. In 2001,19 judges were fired from their posts for violations of the law; in 2002,7 were dismissed.

Corruption (Score: 5.75)

Corruption is widespread in Ukraine. Owing to the Soviet legacy, economic and social activities are tightly regulated, administrative controls and judicial review are weak, and salaries for public officials are low. In 2002, Transparency International ranked Ukraine 85th among 102 countries in its annual Corruption Perceptions Index.

On November 28,2002, under pressure from the Paris-based Financial Action Task Force on Money Laundering (FATF), Parliament adopted the Law on Avoiding the Legalization of Funds Obtained by Illegal Means. However, on December 20, the FATF recommended to its member states that it apply sanctions against Ukraine for failing to fight money laundering to its full extent. At the same time, though, one could argue that some of the FATF's recommendations did not take into consideration Ukrainian realities. The FATF proposed, for example, that Ukraine strengthen the role of law enforcement agencies in fighting money laundering, but doing so could result in unfair economic control over the opposition. In January 2003, Ukraine's Parliament approved several changes to the laws regulating banking activity. In response, the FATF was expected to lift its sanctions against the country the following month.

One of the main causes of corruption in Ukraine is wage compensation. The average salary in Ukraine as of October 2002 was 390 UAH per month (US$73). In April 2002, the monthly salaries of civil servants at the oblast and raion levels were increased by 60-66 percent but reached only 505 UAH (US$95) at the oblast level and 414 UAH (US$78) at the raion level. Higher-level governmental officials can earn up to 2,500 UAH (about US$500) per month. Also contributing to corruption has been the size of the gray economy, which has been alleviated somewhat in recent years by the introduction of a simplified taxation system for small businesses.

The Constitution prohibits government officials from engaging in business activities. However, the 1991 Law on Entrepreneurship does not consider the ownership of shares in companies a business activity, and as a result, many officials hold large stakes in enterprises or have their relatives or close friends hold key managerial positions in the companies. All citizens are required to submit tax declarations if income received from employment other than in their main place of work exceeds a defined sum (about US$200 in 2002). Yet governmental representatives usually declare only official salaries and honorariums. If government officials open accounts in a foreign bank, they must notify the State Tax Administration within 10 days; in reality, though, this rarely happens.

No particular law exists against racketeering, but Article 189 of the criminal code on extortion provides up to 12 years' imprisonment for its commission. Since July 2002, the State Tax Administration has used indirect methods to evaluate the tax bases of enterprises, and already many small businesses have complained of prejudiced evaluations. The STA also decided in April 2002 not to regard "free on board" and "deliver at frontier" trade operations as export operations so that the government could avoid returning value-added taxes to these firms. However, in June 2002 the government ended this practice.

Although Ukraine has introduced numerous anticorruption initiatives, they have had little effect on the situation in the country. These include the Concept of Fighting Corruption for 1998-2005, the National Program on Fighting Corruption (elaborated by the presidential administration and adopted in 1998 and 1997, respectively), and the Law on Fighting Corruption (1995). In secondary schools and universities, Introduction to Law is a compulsory course. Ukrainian NGOs also spread anticorruption awareness materials and hold discussions, but the relatively low budgets of these projects and the lack of interest of public authorities prevent such efforts from having a significant impact.

In recent years, several corruption scandals have implicated those who stand at the top of the political system. Former prime minister Pavlo Lazarenko was arrested in the United States in 1999, and in 2001, then member of Parliament Viktor Zherdytsky was arrested in Germany. Zherdytsky is awaiting extradition to Ukraine. Four former high-ranking managers of the United Energy System of Ukraine, the former gas monopoly associated with Yulia Tymoshenko, were imprisoned in Turkey on July 1,2002, at the request of the Ukrainian Prosecutor-General's Office and extradited to Ukraine in late October. However, this case, like some others, has been regarded as politically motivated.

In July 2002, newly appointed prosecutor-general Sviatoslav Piskun initiated the creation of a Department of Internal Investigations within the Prosecutor-General's Office. By September, the new department had completed several raids and prosecuted approximately 50 corrupt police officers. In early November, a dozen prosecutors were fired for "failure to defend the law." More controversial was Piskun's proposal in September 2002 to President Kuchma to combine the State Tax Administration, the Ministry of the Interior's Department for Fighting Organized Crime, and the State Custom Service into the Ministry of Economic Security. Both businessmen and the public reacted strongly to the proposal, fearing that it could lead to a concentration of power in the hands of one person: Mykola Azarov, head of the STA and Piskun's former boss. Thus, this initiative was rejected.

According to a poll conducted by SOCIS-Gallup in March 2002, Ukrainians experience corruption most in the health care sector (51 percent of respondents). Fifty-two percent believe that corruption is widespread in the state bureaucracy, in Parliament, and in law enforcement agencies. Thirty-one percent of respondents confessed that they had paid bribes during the previous year. Most pointed to corruption as a fact of life and expressed little willingness to fight it.

Some progress has been observed in securing transparency in admission exams to universities. For example, the government has organized direct hotlines for prospective students to report instances of bribery. The effectiveness of computerized evaluations of applicant tests at the University of Kyiv-Mohyla Academy has been publicly acknowledged, and the Ministry of Education has declared its desire to implement similar practices nationwide.

Author

The principal authors of this report are Olexiy Haran, director of the School for Policy Analysis at the University of Kyiv-Mohyla Academy, and Rostyslav Pavlenko, director of programs. They were assisted in the preparation of this report by Artem Bidenko and Serhiy Kyseliov.