Nations in Transit

Ukraine

Ukraine

Nations in Transit 2004

2004 Scores

Democracy Score
(1 = best, 7 = worst)

4.88

Electoral Process
(1 = best, 7 = worst)

4.25

Civil Society
(1 = best, 7 = worst)

3.75

Independent Media
(1 = best, 7 = worst)

5.50

Judicial Framework and Independence
(1 = best, 7 = worst)

4.75

Corruption
(1 = best, 7 = worst)

5.75

Governance
(1 = best, 7 = worst)

5.25
Executive Summary: 

After gaining independence in 1991, Ukraine became the first country in the Commonwealth of Independent States to democratically transfer power to a newly elected Parliament and president in 1994. The 1996 Constitution guaranteed basic political and civil rights and reflected a compromise between the president, Leonid Kuchma, and the Parliament. Most of the country's former command economy has been privatized, but a system of oligarchic clans dependent on Kuchma has emerged. Kuchma's tendency toward authoritarianism has only increased since his reelection in 1999, and in fall 2000 the "tapegate scandal," involving audiotapes allegedly recorded in President Kuchma's office, highlighted the regime's unlawful treatment of the opposition and the press. Since 2000, Ukraine has enjoyed considerable growth in gross domestic product (averaging about 7 percent annually), owing, to a considerable extent, to policies pursued during the brief term of then prime minister and now opposition leader Viktor Yushchenko. Inflation has declined as well.

Ukrainian political life in 2003 was guided by the upcoming 2004 presidential election. While President Kuchma sought guarantees that he will not face criminal proceedings if he leaves office, the "party of power" was unable to agree on a single candidate to compete against Yushchenko, head of the main center-right opposition bloc, Our Ukraine, and an early front-runner in the polls. During the year, Kuchma pursued changes to the Constitution that would limit the authority of any future president and/or eliminate direct presidential elections. To secure Russia's support and backing prior to the 2004 elections, Kuchma signed in September an agreement on the formation of a Single Economic Space (SES). The idea of the SES provoked strong criticism from the Parliament, parts of the government, and the Ukrainian public, especially after Russia laid claim in October 2003 to the tiny but strategically important island of Tuzla.

Electoral Process. Despite administrative interference in the March 2002 parliamentary elections, Our Ukraine became the largest single faction in the Parliament, thus marking the first postindependence victory for democratic forces. Nevertheless, President Kuchma's administration managed to forge a slim parliamentary majority by pressuring deputies to join a coalition government. To lessen this pressure, the Parliament made several attempts in 2003 to move from a mixed to a purely proportional electoral system but failed because of a lack of about a dozen votes. Pressure against the opposition also mounted during one by-election to the Parliament and three mayoral elections in 2003. In the fall, authorities organized provocations against Yushchenko during his tours around the country. Ukraine's rating for electoral process falls from 4.00 to 4.25 owing to evidence of growing pressure against opposition parties and politicians during the year.

Civil Society. Philanthropy and volunteerism are insufficiently developed in Ukraine, and the civil society sector continues to be dependent on Western support. A new Law on Nonprofit Organizations has yet to be adopted. The 2003 Law on Personal Income Tax increased opportunities to make charitable donations to the civil society sector. Democratically oriented nongovernmental organizations (NGOs) were very active during the 2002 parliamentary elections and are vigorously preparing for the 2004 presidential campaign. In late 2003, pro-governmental forces and the Communists started campaigns against Western support to NGOs in order to discredit their role in the 2004 election-monitoring process. Ukraine's rating for civil society declines from 3.50 to 3.75 owing to the apparent efforts to limit the influence of NGOs in the run up to the 2004 presidential elections.

Independent Media. Despite the existence of several active opposition newspapers, most of Ukraine's media, especially electronic outlets, are controlled by pro-Kuchma oligarchs. Following protests from journalists and the opposition, the Parliament held hearings on freedom of the press in December 2002 that were broadcast live across the nation. In March and July 2003, the Parliament passed important changes in legislation to strictly prohibit censorship. In 2003, the first results in the investigation of the killings of journalists Heorhij Gongadze and Ihor Aleksandrov were released. Allegedly, these findings were partly responsible for the dismissal of Prosecutor-General Sviatoslav Piskun by Kuchma in October. Ukraine's rating for independent media remains 5.50.

Governance. In 2003, senior-level personnel changes at the central and regional levels of government reflected a power struggle among three main factions: the Donets'k group, represented by Prime Minister Viktor Yanukovych (Party of the Regions of Ukraine); the oligarchic Social Democratic Party of Ukraine (United), headed by presidential chief of staff Viktor Medvedchuk; and the Dnipropetrovs'k group, which controls the Labor Ukraine Party (the most influential figure in this group is oligarch Viktor Pinchuk, Kuchma's son-in-law). Several events in 2003 revealed the lack of transparency at the highest levels as well as Kuchma's efforts to make concessions to Russia in exchange for support in the 2004 presidential election. The September 2003 agreement on the SES foresaw the creation of a customs and economic union between Ukraine and Russia. The SES was protested by both the democratic opposition and even some government officials. By year's end, it seemed that the level of supranational integration in the agreement might be limited to a free trade zone. The country's governance rating declines from 5.00 to 5.25 because of the persistent lack of transparency in policy making.

Constitutional, Legislative, and Judicial Framework. Although Ukraine's Constitution provides for important checks and balances, President Kuchma still dominates the legislature and judiciary. On December 30, 2003, the Constitutional Court ruled that Kuchma may serve for a third term. However, evidence suggested that Kuchma would have little chance of winning absent a manipulation of the vote. In addition, Kuchma did not have a successor to whom he would trust power and who would surely be elected. After hesitating throughout 2003 between a strong presidency and a purely parliamentary model as the best mechanism for preserving power in the hands of his entourage, Kuchma finally chose to pursue the latter model, which would allow him to manipulate a still fragmented parliament. He also employed tactics to make judges more dependent on executive authorities. A draft law of the president's desired constitutional changes was pushed through the Parliament in the first reading on December 24, deepening the political confrontation between opposition and pro-Kuchma forces. Owing to increased pressure from Kuchma's administration on the Parliament, cabinet, and the courts (including the Constitutional Court), Ukraine's rating in this category declines from 4.50 to 4.75.

Corruption. In 2003, Parliament introduced a flat tax for personal income, adopted new pension laws, and made important changes to the criminal and criminal procedures codes, as well as to laws regulating banking activity. In February 2003, the Financial Action Task Force on Money Laundering (FATF) lifted its recommendations concerning sanctions against Ukraine (introduced in December 2002). However, FATF retained some constraints and called for additional monitoring of financial operations in the country, supposedly through February 2004. Overall, corruption remained widespread in Ukraine in 2003. The rating for corruption is unchanged at 5.75.

Outlook for 2004. Presidential elections will take place in October 2004, bringing substantial changes to the highest levels of Ukraine's political establishment. If Kuchma's plan to amend the Constitution succeeds during the first part of the year, the power of any future president will be seriously limited. If the plan fails, the presidential administration is widely expected to do whatever is necessary to fight the democratic opposition's efforts to win the presidential election.

Electoral Process: 

Ukraine's Parliament consists of 225 seats filled by direct voting in single-member districts plus 225 seats filled by votes from party lists. To secure a seat by 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 had favored the country's post-Communist nomenklatura. Ukraine adopted its current Law on Elections in 2001, after President Leonid Kuchma vetoed five draft versions that proposed an electoral system based solely on proportional representation.

According to the Organization for Security and Cooperation in Europe (OSCE), the new Law on Elections marked "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 (US$50,000) for parties and 1,020 hryvnias (US$200) for individual candidates. Parties that have won seats in previous elections or have factions represented in the Parliament may participate in district electoral commissions, with representatives of other parties selected by lot. Throughout 2003, the opposition tried to adopt a new Law on Elections introducing purely proportional voting but lacked about a dozen of votes needed to pass the measure.

OSCE observers noted that the parliamentary elections of March 2002 "brought Ukraine closer to meeting standards for democratic elections." Parties and candidates encountered no significant barriers to participating in elections and district electoral commissions. Still, the election was marked by irregularities, such as the interference of government authorities in campaign activities and monopoly coverage by the media of pro-Kuchma parties.

Yet the 2002 parliamentary elections dramatically increased the role of the democratic opposition. The center-right Our Ukraine, led by former prime minister Viktor Yushchenko, became the largest faction in the Parliament. During the campaign, Yushchenko distanced himself from the authorities but refrained from personal criticism of the president. Had he done otherwise, his campaign might have been quashed like the 1999 presidential campaign of Oleksandr Moroz, the Socialist Party leader who ran against Kuchma.

The center-left Socialists and the center-right Tymoshenko bloc, vocally opposed to the president, also easily passed the required voting threshold. The Communists, who are formally part of the opposition but in reality play into the hands of the pro-Kuchma forces, won about half as many mandates as they secured in 1998. Compared with previous elections, the 2002 election resulted in a smoother regional distribution of votes.

Despite meager gains, the pro-Kuchma forces formed a slim parliamentary majority by applying pressure on deputies to support them, particularly those elected in single-mandate districts (see table). This explains why all current projects on constitutional reform propose that members of the Parliament elected on party lists should give up their seats if they choose to change factions. Volodymyr Lytvyn, the new Speaker of the Parliament, and his two deputies represented the pro-presidential camp. Following stormy protests by the opposition, however, the new majority ceded control over 19 of 24 parliamentary committees. After being elected Speaker, Lytvyn, Kuchma's former chief of staff, began to assert a greater role for Parliament. Moreover, Deputy Speaker Oleksandr Zinchenko, elected on the SDPU(u) ticket, left the pro-presidential majority on December 24, 2003, over procedural violations during the vote on constitutional changes.

 

Composition of Parliament

  Votes on Party Lists (%) Votes on Party Lists (# of Seats) Single-Mandate Districts (# of Seats) Total Seats (March 31, 2002) Total Seats (January 15, 2004)
Opposition Factions
Our Ukraine 23.57 70 42 112 102
Communists 19.98 59 6 65 59
Tymoshenko bloc 7.26 22 0 22 19
Socialists 6.87 20 2 22 20
Subtotal 221 200
Pro-Presidential Factions
For a United Ukraine [1] 11.77 35 86 121  

 Regions of Ukraine [2]

        67

 Labor Ukraine

        42

Democratic Initiatives

        18

People's Power

        22

Agrarian Party

        14

People's Democratic Party

        16

People's Choice

        14
Social Democratic Party of Ukraine (United) 6.27 19 8 27 36
Subtotal 148 229
Deputies from other parties and independents 80 80 20
Total in Parliament 449 [3] 449 [3]

[1] split after election
[2] joined the European Choice faction in November 2003
[3] One seat remained vacant.
Official data from
www.rada.gov.uaand www.cvk.ukrpack.net

 

In 2003, there was one by-election to the Parliament (in the Chernihiv single-mandate district) and three mayoral elections (in Zaporizhhia, Sumy, and Mukachevo). All votes were marked by electoral violations and pressure against the opposition. In Mukachevo, Vasyl Petyovka from Our Ukraine won the only opposition victory. Although the Sychiv Court of Lviv struck down Petyovka's victory twice, the Mukachevo Electoral Commission confirmed it each time, as did the head of the Mukachevo City Court. A special parliamentary commission blamed Ivan Rizak, SDPU(u) member and head of the regional state administration, for destabilizing the situation. However, on December 25, Kuchma appointed a member of SDPU(u) as a provisional mayor, a move many lawyers considered a violation of the Constitution and the Law on Local Self-Governance.

According to many observers, the Law on the Central Electoral Commission should be amended to decrease the dependence of the Central Electoral Commission (CEC) on the president, as the latter unilaterally submits nominees for the parliament's endorsement.

Ukraine's political system also needs stronger parties. According to a survey by the National Institute for Strategic Studies, about 6 percent of the population belongs to parties, but only a handful of parties are mass membership based with clear ideologies and platforms. Most of the 123 political parties registered as of January 2003 existed only on paper.

The April 2001 Law on Political Parties called for parties to reregister and made 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. In April 2003, the Ministry of Justice began to check the founding documents of about 100 parties to determine how they corresponded to the 2001 law. Afterward, the Supreme Court nullified the registrations of 28 small, secondary parties. Another step in developing the country's party system is the Law on State Financing of Political Parties, which was adopted in the first reading in November 2003.

Minorities in Ukraine tend to support mainstream rather than ethnic- or religious-based parties. In 2002, the pan-Slavic Rus'kyi bloc received only 0.7 percent of the vote. Representatives of ethnic minorities are often elected both in single-mandate districts and on party lists. Businessmen of ethnic Russian and Jewish descent are well represented in the Parliament and the presidential administration.

In 1998, the pro-Russian Parliament of Crimea repealed the quota for Crimean Tatars in this 100-seat body (introduced in 1994). In the 2002 national election, most Crimean Tatars supported Our Ukraine, and two of their leaders were elected to the Ukrainian Parliament on its party list. In 2002 elections to the Parliament of Crimea they made a comeback with eight single-member seats.

The Russian factor continues to play an important role in Ukraine's domestic politics, although its importance has decreased compared with the 1994 presidential campaign, in which Kuchma was first elected. On the eve of the 2002 parliamentary elections in Ukraine, Aleksandr Voloshin (Putin's chief of staff) declared that Russia supported those forces that favored friendship with Russia, which according to Voloshin included two oligarchic pro-presidential forces and the Communists.

Voter turnout at the national level remains quite high, standing at 69.7 percent in the 2002 parliamentary elections. Since local elections coincide with parliamentary elections, voter turnout is the same. In the three mayoral elections of 2003, turnout ranged from 41 to 50 percent.

The last presidential elections in 1999 were considered by OSCE observers to be generally free but far from fair owing to administrative interference during the campaign. However, opinion polls suggested that election violations did not significantly affect the final outcome. In the second round, President Kuchma defeated Communist hard-liner Petro Symonenko in a landslide victory.

The next presidential election will take place in 2004 and promises to be a tough battle. In particular, it will represent a significant moment in Ukraine's post-Communist history because Viktor Yushchenko, a pro-reform candidate, is expected to present an alternative to the country's powerful oligarchic clans. It is expected that possible amendments to the Law on Election of the President may shorten the presidential campaign from 6 to 3 months and require candidates to pay a registration fee instead of collecting signatures.

Civil Society: 

There were more than 35,000 nongovernmental organizations (NGOs) in Ukraine in 2003, according to the Counterpart Creative Center. This is up from 30,000 in 2000 and only 4,000 in 1995. Local authorities tend to show greater interest in the activities of NGOs that aim to help the poor, children, and the disabled rather than those that are more engaged in the political life of the country. Only about 5 percent of the population engages actively in civil society, according to the Razumkov Center. NGOs are spread unevenly throughout Ukraine and are concentrated in the capital and regional centers. Sixty percent of NGOs work actively with international (mostly Western) donors, which understand the necessity of differentiating between the regime of President Kuchma and Ukrainian civil society.

According to the May 2003 Law on Personal Income Tax, charitable and estate gifts to NGOs and subsidies to NGOs from state and local budgets are not taxed. There also is an exemption for persons who voluntarily give 2 to 5 percent of their taxed income to NGOs and institutions of science, education, and culture. According to a World Bank poll, 25 percent of NGOs have contacts with business on a regular basis, and 44 percent have occasional contacts. Nevertheless, philanthropy remains insufficiently developed and is often limited to election-related activities.

Ukrainian NGOs were active during the 2002 parliamentary elections, especially through the All-Ukrainian Monitoring Committee. Major NGOs, particularly leading public policy research institutes such as the Razumkov Center, are increasingly influential in policy debates. 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. In fall 2002, several parliamentary committees formed public advisory boards (with financial support from the International Renaissance Foundation).

These boards have proven quite effective and have written several draft laws. The Ministry of Foreign Affairs, Ministry of Environmental Policy, and the State Committee on Entrepreneurship have also set up such boards. At the same time, the highest-ranking officials generally do not demonstrate a real commitment to cooperating with NGOs. The Council of Experts on Domestic Politics Under the President of Ukraine, created in 2000, has not been convened since 2002. In many cases, NGOs are unable to influence decision-making processes on a permanent basis. Instead, authorities use pro-government NGOs to create the appearance of consulting with the public.

The media give positive coverage to charitable activities, but NGOs involved in human rights issues or policy advocacy are viewed with suspicion. On the eve of the 2002 elections, presidential chief of staff Lytvyn and his future successor, Viktor Medvedchuk, published articles maintaining that NGO activities represented Western interests, especially American. The fact that the main recipients of Western aid are state institutions is not mentioned in official publications. On December 10, 2003, the Parliament created an ad hoc commission to investigate "foreign interference in financing election campaigns in Ukraine through NGOs." However, the committee is not expected to look into Russia's influence on governmental and political structures, which makes itself felt through shadow operations instead of a transparent grant system.

The legal statutes governing NGO activity in Ukraine are outdated and lack provisions to regulate lobbyism. 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 commission in April 2002.

The registration process for NGOs involves multiple steps that many observers consider onerous. 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 an exemption from paying value-added and profit taxes. But NGOs are severely limited in their ability to earn income or collect cost recovery fees that would be tax-exempt, even if these sums are spent on nonprofit activities or general administration. Government procurement opportunities for private nonprofit service providers are almost nonexistent. Double bookkeeping is common as a means of avoiding excessive taxation.

According to a June 2003 poll by the foundation Democratic Initiatives, the most trusted social institution in Ukraine is the church. More than 90 percent of religiously active people in Ukraine are Christians, with the majority being Orthodox. Ukrainian Greek Catholics constitute about 10 percent and Roman Catholics about 2 percent of all believers.

There are also small but significant Jewish and Muslim communities as well as growing Protestant communities. Religious groups carry out charitable activities. However, the ongoing struggle over religious legitimacy and property rights between the two main factions of the Ukrainian Orthodox Church (UOC)--the Moscow and Kyiv patriarchates--impedes many social projects. The UOC under the Moscow patriarchate in Ukraine is the largest in number of communities. However, most of those polled consider themselves to be believers of UOC under the Kyiv patriarchate.

There are no significant antiliberal or extreme NGOs in the country. However, there are concerns that the activities of such groups could be boosted to destabilize the country on the eve of the 2004 presidential election, especially in regard to interethnic or interconfessional relations. In late 2003, the main Christian groups in Ukraine (excluding the UOC under the Moscow patriarchate) issued a statement warning against such attempts.

One-fifth of Ukrainians report membership in trade unions. Therefore, the claims of the Federation of Trade Unions of Ukraine (FTU)--the successor to the former Soviet-era trade unions--that about 85 percent of the country's 16 million trade union members belong to the FTU are exaggerated. Over 1 million citizens belong to new trade unions founded as alternatives to the FTU, according to a Razumkov Center poll conducted in 2002. Changes to the 1999 Law on Trade Unions adopted in July 2003 expanded trade union rights to investigate the finances of enterprises and to represent employees in bankruptcy procedures.

In most cases, public universities still provide better education than private schools, but they are dependent on the state budget. 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 instead to participate in pro-government events, such as the rallies in Donets'k against Yushchenko's visit in late October 2003.

Independent Media: 

Official statistics note that 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 hide their names in a system in which many outlets are ultimately controlled by oligarchs. Insufficient development in the Ukraine advertising market forces mass media outlets to rely on the financial support of oligarchs, who in exchange wield considerable influence over journalistic content and programming. Combined with open and hidden pressure from the presidential administration, this overall situation deprives Ukrainian journalists and media outlets--both state owned and private--of true independence. In Freedom House's 2003 Survey of Press Freedom, Ukraine moved from "Partly Free" to the "Not Free" category.

Existing laws do not fully protect journalists in Ukraine, and violence against them is all too common. According to the Institute of Mass Information, there were 42 assaults and threats against journalists in 2003. Investigations into the September 2000 murder of Heorhiy Gongadze did not produce visible results until summer 2003. Former police officer Ihor Honcharov--accused of creating a criminal gang--confessed to police involvement in Gongadze's murder in a letter written just before his sudden death in prison on August 1, 2003.

In October 2003, Oleksiy Pukach, former head of the Criminal Investigation Department of the Ministry of the Interior, was arrested because of his alleged involvement in the Gongadze case but was later freed on bail. In September 2003, the prosecutor-general, Sviatoslav Piskun, declared the end of the investigation into the July 2001 death of Ihor Alexandrov, director of a TV station in the Donets'k region. According to the prosecutor, Alexandrov was killed for his investigative activities by the Kramators'k criminal business group.

Ukrainian laws do not distinguish clearly between protections for private citizens and those granted to politicians. In 2001, the Supreme Court decreed that public criticism of facts and opinions is not sufficient grounds for awarding damages. In addition, under a law that took effect in 2001, libel is no longer a criminal offense. However, in 2003 there were 46 suits against journalists and media outlets. Unlike previous years, though, no media outlet was closed on these charges.

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) and Kijevskije Vedomosti (150,000). Fakty (850,000) and Kijevskiy Telegraf (60,000) are tied to the Dnipropetrovs'k group of oligarchs through their respective owners, Viktor Pinchuk and Andrij Derkach. Segodnya (700,000) is allied with the Donets'k group, while Stolichye Novosti (70,000) is controlled by former oligarch Vadym Rabinovych. The leading oppositional newspapers are Vechernije Vesti ( 500,000; Tymoshenko), Sil's'ki Visti (500,000; close to the Socialists), and Ukraina Moloda (100,000; close to Our Ukraine). Independent mass media are quite weak, although notable exceptions at the national level are Dzerkalo Tyzhnia (50,000 copies)) and the Kyiv Post (25,000; Western owned), both of which provide an impartial, analytical approach.

The most influential magazines covering politics and offering rather balanced views are Halyc'ki Kontrakty (43,000), Kompanyon (20,000), Polityka i Kultura (20,000), and the Western-owned Korrespondent (50,000). The main state newspapers are Holos Ukrainy (170,000) and Uriadovyi Kurier (110,000). 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 (280,000), Komsomolskaya Pravda v Ukraine (130,000), Argumenty i Fakty v Ukraine (170,000), 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, the New Channel, and ICTV ( controlled by Pinchuk). All six of these national TV channels are controlled by pro-Kuchma forces. (It is significant to note that Oleksandr Zinchenko, Rada deputy speaker and founder of Inter, after distancing himself from Viktor Medvedchuk, was expelled from the SDPU(u) and lost the key role at the broadcaster). The only exception is the 5th Channel, which covers Kyiv and some other large cities and was founded in 2003 by Petro Poroshenko, a businessman from Our Ukraine.The wire radio broadcasting system consists of three state-run stations. Ukraine's numerous FM stations specialize mostly in music and entertainment but also have news.

The main distribution and subscription service, Ukrainska Poshta, and the main printing house, Ukrpresa, are state controlled. Some publishing houses are vertically integrated, owning the entire system of production, subscription, and distribution in order to be totally independent. Many private firms also specialize in publishing services. Law enforcement agencies have not been able to determine who printed and widely distributed false "letters from Yushchenko" and other anti-Yushchenko materials throughout 2003. In late October 2003, billboards and leaflets depicting Yushchenko in Nazi uniform appeared with the tacit support of local authorities during the Our Ukraine leader's tour to Donets'k.

Until recently, independent organizations of journalists have not been very visible. However, in late 2002 the Kyiv Independent Media Trade Union emerged. In October 2003, the leading NGOs working on mass media issues created a public council on freedom of speech and information to promote transparency during the 2004 presidential elections. The office of the Ukrainian ombudsman also created the post of a special ombudsman on freedom of speech and mass media.

Internet usage is growing rapidly in Ukraine. There are about 300 Internet providers and approximately 3 million users (up to 8 percent of the population), reports the Kyiv International Institute of Sociology. Some politically oriented Web sites such as Ukrains'ka Pravda, Glavred, Korrespondent.net, and polit.com.ua have become important sources of independent information. There are no restrictions on Internet access for private citizens, but authorities do harass opposition Internet sites. In July 2003, the privately owned "ua" became the official state domain. Internet journalists consider two new laws adopted on November 18, 2003, to be vague and ill defined in many areas and are concerned that they may be used to harass independent Web sites.

Judicial Framework and Independence: 

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 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 the 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.

In response to the opposition's increased role after the 2002 parliamentary elections, Kuchma formally declared his readiness to move to a parliamentary electoral system based on proportional representation. He also formally accepted the idea that the government would be formed by the Parliament rather than the president. In early March 2003, in keeping with this promise, the president submitted for national debate a far-reaching constitutional reform plan. However, the process was actually tightly controlled by the authorities and did not represent a true opportunity to engage the public in the process. An alternative plan designed in the Parliament and deemed constitutional by the Constitutional Court was not submitted for public discussion and scrutiny.

Kuchma's proposal called for all elections (presidential, parliamentary, and local) to occur during the same year. If approved, this provision could be used to postpone the upcoming 2004 presidential and 2006 parliamentary elections. Kuchma also proposed introducing a second chamber in the Parliament (which oligarchs could easily control) as well as using direct referendums to adopt laws and the Constitution. Since these proposals were largely unpopular--or even unconstitutional--Kuchma withdrew them while trying simultaneously to introduce other changes that would help to maintain executive control over the legislative and judicial branches. These included allowing members of the Constitutional Court to be appointed to a second term as well as providing for the election of judges for 10-year terms rather than life terms. This change would make judges more vulnerable to outside pressure.

A special parliamentary commission developed its own constitutional reform plan that would introduce a purely proportional system of representation. On July 11, 2003, after several days of blocking work in the Parliament, the opposition persuaded the majority to submit to the Constitutional Court not only the presidential draft law on constitutional changes, but also the commission's draft law. Kuchma was infuriated.

In August 2003, Kuchma declared his intention to withdraw his reform plan. He feared that a strong presidential successor, even if elected with his support, could become too independent. Instead, another plan was developed by Medvedchuk and supported by the Communists envisaging the creation of a parliamentary republic. Thus, whoever is elected president in 2004 would hold office with limited authority and for only one and a half years rather than five: after the 2006 parliamentary election, the president would be elected in the Parliament by a two-thirds majority. In mid-September 2003, one more plan emerged from the pro-presidential camp--to let the Parliament elect the president in 2004.

Opposition parliamentarians protested against the numerous reform plans, submitted less than a year before the elections, by blocking the podium and electronic voting system in the Parliament. However, the Medvedchuk-Symonenko draft passed in its first reading on December 24 by a show of hands (allegedly by 276 votes), with many violations (one photo showed a deputy voting with two hands). The opposition did not recognize the vote, and the resulting political crisis in Ukraine was scheduled for discussion at the Council of Europe in late January 2004.

The Ukrainian system could be more easily adjusted to resemble the French presidential-premier model or the Polish parliamentary model (with a distinctive role for the president). As such, the cabinet could be formed and ousted only by the Parliament (and the latter preferably done in a constructive vote of no confidence, as in the German model). This provision also could be introduced through minimal constitutional changes or the adoption of several key laws (previously blocked on several occasions by Kuchma).

The positive role of the Constitutional Court has been increasing in Ukraine in recent years, but an important decision in 2003 served to undermine its credibility. On December 30, 2003, the Court succumbed to pressure from the presidential administration by deciding that Kuchma may be elected for a third presidential term under the shaky pretext that the Constitution was adopted in 1996 after Kuchma's first election in 1994.

Although the Ukrainian Constitution contains broad guarantees for civil rights, these rights are not always secure. The Ukrainian ombudsman Nina Karpachova was quite active during 2003 and was reelected in June. In July 2003, she proposed to place medical services to jails under the Ministry of Health Protection instead of enforcement agencies. According to Karpachova, there were about 150,000 convicts in prisons by January 2003. The crowded prison system is the result of using arrest and jail time as preventive punishment in 37 percent of criminal charges.

Many prison cells do not contain lavatories, open air, normal light, and water. In September 2003, Karpachova closed the city jail in Simferopol for not conforming to sanitary regulations. More than 14,000 prisoners have the active form of tuberculosis. In the past four years, more than 400 police have been charged with violations of human rights and corruption, and 168 police officers have been convicted.

Although Ukraine's Constitution guarantees fair competition in business, the protection of business rights remains a problem. In October 2002, Russian citizen Konstantin Grigorishin, Medvedchuk's rival in the energy business, was detained on invented charges. Amid loud protests, Grigorishin was freed after two weeks, but his business was seriously damaged. This case was one in a chain of accusations against Medvedchuk that appeared in The New York Times on December 19, 2003. The presidential administration openly uses phone taps and in early December recommended that state-controlled media publish a transcription of a tapped call allegedly made by Petro Poroshenko, owner of the opposition 5th Channel.

The Ukrainian Constitution prohibits discrimination based on any grounds. The European Charter for Regional or Minority Languages was ratified in spring 2003. Many experts believe that it gives too much consideration to the Russian language to the detriment of Ukrainian, the only state language, especially in the Russified areas of eastern and southern Ukraine.

In 2001, the Parliament adopted a new criminal code and changes to the criminal procedures code. A major effect of the new laws was the elimination of Soviet-era economic offenses such as "speculation." Also, only tax evasion of more than 17,000 hryvnias (US$3,200) is now criminally punishable; the previous threshold was 1,700 hryvnias (US$320). Judges, rather than prosecutors, must issue search and arrest warrants. However, once prosecutors receive a case from investigators, they may return it for additional investigation and thus prolong the detention of the accused. The draft of a new criminal procedures code approved in first reading in May 2003 is being strongly criticized for limiting advocates' rights, prohibiting the interrogation of police concerning evidence, and other provisions. It is not very likely that this draft will be approved in the second reading.

The 1991 Law on Prosecution needs additional amendments to end prosecutorial supervision on enforcing and implementing laws. This would prevent the prosecution from handling prejudicial inquiry, which is not stipulated by the Constitution. Moreover, Kuchma's proposal to grant the Office of the Prosecutor-General supervision over the enforcement of the rights and freedoms of citizens gives the prosecutor powers incompatible with democratic systems.

Ukrainian law provides for the impartiality of judges. A judge can be arrested only with the permission of the Parliament. However, the courts are funded through the Ministry of Justice and often subject to external pressure. In February 2003, the Supreme Council of Justice decided that Yuriy Vasylenko, judge of the Kyiv Appellate Court, had overstepped his authority when opening a case against Kuchma in October 2002 and submitted to the Parliament a recommendation for his dismissal. Vasylenko made an appeal to the Shevchenkivs'ky Court of Kyiv; he failed and will appeal to the higher court.

The state provides public defenders to all who need them. In practice, however, there are complaints that many public defenders are not sufficiently qualified. There is a general need to improve the education of judges and lawyers--specifically, an increase in the three-year requirement for law-related work experience. As a result, many people tend to hire private defenders. Quite often, though, defenders come under pressure from the authorities. The enforcement of judicial decisions is generally effective in criminal cases but inadequate in civil cases.

Corruption: 

Corruption in Ukraine is widespread, and the numerous anticorruption initiatives introduced in recent years have not achieved overwhelmingly positive effects. Nevertheless, some positive improvements have been made to the legal system with regard to the fight against corruption.

On November 28, 2002, the Parliament adopted the Law on Avoiding the Legalization of Funds Obtained by Illegal Means under pressure from the Paris-based Financial Action Task Force on Money Laundering (FATF). However, on December 20, the FATF recommended sanctions against Ukraine for failing to fight money laundering to the full extent. Some of the FATF's recommendations did not take into consideration Ukrainian realities, such as the possibility that strengthening the role of law enforcement agencies in fighting money laundering could result in unfair economic control over the opposition.

In January 2003, the Parliament approved several changes to laws regulating banking activity. It also implemented severe punishment (up to 15 years in prison) in the criminal code for money laundering. In response, the FATF lifted its recommendations to introduce sanctions. Throughout 2003, the FATF praised the activity of the Ukrainian government but left the country on the "blacklist" for additional monitoring. Forecasts predict its removal in the first quarter of 2004.

The large state debt on value-added tax reimbursements (about US$450 million by July 2003) prevents lowering the tax burden on Ukrainian enterprises. At the same time, the shadow economy was diminished somewhat in 1998-1999 by the introduction of a simplified taxation system for small businesses. In 2003, governmental officials suggested increasing this tax, but the public reacted strongly. In May 2003, the Parliament adopted the Law on Personal Income Tax, increasing the possibilities for social deductions and tax credits and introducing a flat tax rate (13 percent) to encourage people to report income and pay taxes. Two laws adopted in July 2003 would implement a three-level system for pensions and make the calculation of pension rates more transparent.

The Constitution prohibits government officials from engaging in business activities. However, the 1991 Law on Entrepreneurship does not consider the ownership of company shares a business activity, and as a result, many officials hold large stakes in enterprises or place their relatives and friends in key managerial positions. There also are continuing problems with low transparency in privatization processes, as evidenced in 2003 with regard to the sell-off of the Nikopol ferrous metals plant to the Pinchuk group. In early December 2003, Anatoliy Chubais, head of the Russian United Energy System (RAO EES), together with Pinchuk, decided to buy 10 oblast energy distribution companies (according to Chubais, a step toward creating Russia's "liberal empire"). The deal was blocked by Kuchma, Yanukovych, and Pinchuk's business rivals because RAO EES is foreign state owned.

The system of tax administration is used by the government to put pressure on opposition parties and politicians. For example, the opposition has blamed Lviv regional STA head Serhiy Medvedchuk for his administrative attacks on businesses and independent media that support the Our Ukraine bloc. The Lviv oblast council and its head appealed to the president in 2003 to oust Serhiy Medvedchuk, but their demands were ignored. On January 12, 2004, he was moved from Lviv, but only to become first deputy head of the national STA.

For the most part, anticorruption campaigns are actually politically motivated struggles for power. Kuchma accused former prime minister Pavlo Lazarenko of corruption only after Lazarenko decided to participate in the 1999 presidential campaign. Because Lazarenko knew confidential information about top officials, Kuchma allowed him to leave the country in 1999. Lazarenko was arrested in the United States, where he is awaiting trial.

On May 13, 2003, the Kyiv Regional Appellate Court lifted all charges against Yulia Tymoshenko, her husband, and four former top managers of the United Energy System of Ukraine, the former gas monopoly headed in 1995-1997 by Tymoshenko and associated with Lazarenko. However, in July 2003 the Supreme Court of Ukraine canceled almost all these decisions. Throughout 2003, Prosecutor-General Sviatoslav Piskun submitted demands to cancel Tymoshenko's parliamentary immunity. But the Parliament continually refused, considering the move politically motivated given Tymoshenko's new position as head of an opposition party.

In April 2003, Kuchma appointed Olha Kolinko as head of the Coordination Committee on Fighting Corruption. On Kolinko's recommendation, several senior members of the police and prosecutors' offices were fired in the Lviv and Odesa oblasts (most of them associated with Yanukovych and Piskun). On October 29, 2003, Piskun was dismissed by Kuchma, but the exact reason was not given. Most experts regarded the move as a victory for Medvedchuk. To replace Piskun, Kuchma recommended Hennadiy Vasyliev, first deputy Speaker of the Parliament, for parliamentary approval. Subsequently, Communist Adam Martynyuk was elected as first deputy Speaker so that the Communists could receive their "piece of the pie" for supporting the Medvedchuk-Symonenko draft Law on Constitutional Reform.

Ukrainian mass media are full of stories of corruption, but media outlets are used first and foremost by the oligarchs as weapons against the opposition. As a result, most Ukrainian citizens consider corruption a fact of life and express little willingness to fight it. According to a Razumkov Center poll in February 2003, only 31 percent of the general public did not offer bribes or gifts in the medical and education arenas in 2002; 24.5 percent of respondents confessed that some part of their income was "unofficial"; 17 percent of respondents noted that their employers owed them back salaries, but only 16 percent went to court on this issue.

Governance: 

Under the Constitution, the president appoints the prime minister with the consent of the Parliament. The Parliament can also wield influence 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 the Parliament and, consequently, a clearly identified parliamentary majority. Moreover, the president can fire the prime minister at will, a fact that makes Ukraine's governmental system unstable. Despite talk of the "first coalition government in Ukraine" formed by Prime Minister Viktor Yanukovych in late November 2002, the grouping is a proto-coalition based not on the results of parliamentary elections earlier in the year, but on a struggle among the country's three main oligarchic clans.

Personnel changes in 2003 in the government's administration were viewed mainly in the framework of this struggle. In June 2003, a grain crisis began in which prices on flour and bread rose rapidly owing to winter weather conditions that forced the loss of 65 percent of the season's crop. Former vice prime minister Leonid Kozachenko was accused of organizing sales schemes that were profitable for grain traders at the expense of agricultural producers, but some experts believe the authorities only wanted to use Kozachenko as a scapegoat. The Office of the Prosecutor-General accepted bail for Kozachenko on the recommendation of the Parliament, and one of the charges (concealment of profit to avoid tax requirements) was lifted in June 2003.

In late July, Kuchma fired the heads of the Chernivtsi, Dniepropetrovs'k, Poltava, and Zaporizhzhya regional state administrations on the recommendation of Yanukovych. The official reasons given were problems in the agricultural market, though these oblasts (except for Dniepropetrovs'k) were not worse off than other regions in this regard. In June 2003, Kuchma fired Myron Yankiv, the head of the Lviv state administration, reportedly under pressure from Medvedchuk.

Despite an authoritarian trend in Kuchma's policy, he has not succeeded in transforming the Parliament into a purely symbolic body. Budgetary support for the 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. Standing committees have the right to hold special hearings and launch investigations. However, executive bodies routinely ignore the findings of parliamentary committees. The Parliament has yet to pass a law governing its own investigative commissions, which are authorized by the Constitution. Although the president, Parliament, cabinet, and some local authorities have Web pages containing laws and other public documents, it is still difficult for the public and even experts to access drafts of parliamentary laws. The president also issues so-called closed decrees that are not open to the public.

On March 13, 2003, Communist Party leader Petro Symonenko, and Nestor Shufrych, a parliamentarian representing the SDPU(u), demanded the resignation of Petro Poroshenko (Our Ukraine), head of the parliamentary Budget Committee, accusing him of misplacing 47 million hryvnias (about US$8.9 million) in the 2003 state budget. This issue became part of the ongoing campaign to discredit Our Ukraine. Though the budget mishandling was real, the working parliamentary group did not consider it Poroshenko's fault. Most of the parliamentary factions did not want to start the process of reshuffling committee heads, afraid that this would play into the hands of Medvedchuk. At the same time, the Parliament--under pressure from the cabinet and despite opposition protests--adopted the 2004 state budget on November 27, 2003, increasing taxation on entrepreneurs and projecting a deficit of about US$640 million.

Several cases in 2003 demonstrated the serious lack of transparency in government decision making in Ukraine. On February 23, 2003, while meeting in Moscow, the Russian, Ukrainian, Belarusian, and Kazakh presidents suddenly declared the start of negotiations to form a Single Economic Space (SES). On September 19, 2003, in Yalta, the four presidents signed an agreement on the formation of the SES, which envisaged the creation of a customs and economic union and its supranational body. This move contradicts Ukraine's officially stated goal to join the European Union (EU), and the Ukrainian Ministries of Foreign Affairs and Justice voiced strong reservations concerning the SES. Criticism of the SES was one of the reasons for the resignation of Valerii Khoroshkovs'ky, minister of economy and European integration, on January 3, 2004.

Many analysts suggest that the ambitious plan for the SES will not be implemented in its current form and may be only an attempt by Kuchma to demonstrate his loyalty to Putin and to split the opposition by wooing the Communists. Transparency in the foreign policy arena will decrease even further with the presidential decree of December 2003, which contradicts the Constitution by giving clear priority to the presidential administration over the Ministry of Foreign Affairs.

Ukraine's energy policy is also characterized by a lack of transparency. In June 2002, leaders of Russia, Germany, and Ukraine declared their intention to establish an international consortium to use Ukrainian pipelines for the transport of Russian gas to Europe. In October 2002, agreements were signed between Ukraine and Russia. The texts of the agreements were unclear, and the very prospect of German participation was put into question. The technical and economic basis for the agreement, scheduled to be prepared by the end of August 2003, has been postponed. In May 2003, the EU provided a grant of 2 million euros to study extending the Odesa-Brody pipeline to Poland for the transport of Caspian oil to Europe.

However, on August 15, 2003, Kuchma received a letter from the Russian TNK oil company strongly encouraging the transport of Russian oil in the "reverse direction," from Brody to Odesa. Oleksandr Todijchuk, head of Ukrtransnafta, and Vitaliy Haiduk, vice prime minister on energy issues--both proponents of the European route--were removed on October 1 and December 5, 2003, respectively. The final decision on the Odesa-Brody pipeline was postponed by the cabinet until January 15, 2004.

Lack of transparency is also a problem in relations between the central and regional governments in Ukraine. The 2001 budget code provides a more objective, formula-based method of revenue distribution, and 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 implementation of the flat rate (13 percent) for personal income tax beginning January 2004 will lessen the tax burden on individuals but may put local budgets at risk.

The Constitution and 1997 Law on Local Self-Governance gave the raion and oblast state administrations the unusual power to draft and execute budgets after they are endorsed by their respective radas (councils), thus limiting the basis for effective local self-government. Unfortunately, both the presidential and parliamentary proposals for political reform put forward in fall 2003 did not challenge this provision.

The deputies of local radas are chosen in single-mandate district elections that are generally free but not fair. The president appoints the heads of regional and district administrations, who actively interfere in the elections of local radas. For this reason, the opposition has demanded the introduction of a proportional system in regional and district elections to prevent the domination of a "nonparty" bureaucracy. Also, the administrative structure of Ukraine is outdated (founded according to Soviet party-based divisions). Many experts argue that in order for local communities to accumulate sufficient resources, the regions and/or districts should be enlarged.

The Autonomous Republic of Crimea enjoys substantial autonomy from central authorities, and the political situation in the region is now stable. Following the 2002 elections, the Communists lost the position of Speaker of the Crimean Parliament. Pro-presidential forces now control both the Crimean Parliament and the government.

To accomplish true administrative reform in Ukraine, amendments to the Laws on the President and State Service, as well as laws themselves on the Cabinet of Ministers, on ministries and agencies, and on administrative courts, must be adopted. Without an adequate legislative framework, the pace of administrative reform depends on the political motives of the president. The position of state secretaries, created by Kuchma in April 2001, was arbitrarily eliminated in May 2003, and the state secretaries are once again called deputy ministers. Kuchma's motive was to make pro-presidential factions compete for his favor in order to receive the newly created posts.

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. In January 2003, the Parliament defined the conditions under which civil servants may receive a pension (80 percent of a civil service salary).

In August 2003, the oligarchic SDPU(u) put pressure on the city of Kyiv's administration head Oleksandr Omel'chenko to step down. According to the Law on State Service, Omel'chenko is to leave civil service upon reaching the age of 65. Since this position is combined with the publicly elected Kyiv mayor, however, the Constitutional Court decided on December 30 that Omel'chenko may retain the position, pointing out that existing contradictions should be resolved through changes in legislative acts.