Beauty and the Beasts: Ukraine's Tymoshenko, IMF

♠ Posted by Emmanuel in ,, at 2/17/2010 12:59:00 AM
If politics really is showbiz for ugly people, then stylish Yulia Tymoshenko should never have become the current prime minister of Ukraine. To my eyes, she looks more like the heroine of a space novel than the leader of a country suffering from something as terribly prosaic as...balance of payments problems. She seems to have used her looks for political advantage. Heck, even her bloc's logo features a heart. But, don't take my word for it: some bloggers with too much free time on their hands have dubbed the famously lovely Missus T the "#1 Hottest Head of State." I heartily agree; in second place is Cristina Fernandez of Argentina. Before I get carried away, let me just say it's not everyday that you come across a leader whose website has an entire section devoted to glamour shots like the one above. Vroom-vroom!

As you probably know, however, our Ukrainian friends recently held an election whose results favour the Russia-friendly politician Viktor Yanukovych. Unlike the 2004 contest when then-opposition allies Yulia Tymoshenko and Viktor Yushchenko successfully protested election fraud and called for a second run-off election which saw them to victory, few international observers are claiming the most recent polls were rigged. Then as now, Yanukovych's voters are those in Eastern and Southern Ukraine where folks are sympathetic to neighbouring Russia. Then as now, Tymoshenko is contesting the election results and has held a lot of things up while doing so. In terms of interstate relations, it certainly did her few favours to write about "Containing Russia" in the May/June 2007 issue of Foreign Affairs.

The poll results suggest public opinion has swung against her in the interim. Why? There's the not-inconsequential matter of Ukraine being forced to the poorhouse. If you will recall, Ukraine had to resort to a $16.4B IMF standby agreement in October of 2008. Around that time, I commented on how conditionalities were still very much operational, belying current IMF head Dominique Strauss-Kahn's notions of a kinder, gentler IMF. The style is new but the face is the same as it was so long ago. To no one's real surprise, these belt-tightening efforts have not been popular with the electorate. While she was preaching austerity, Tymoshenko's former ally, President Yushchenko, made matters worse in the run-up to the elections by unleashing a torrent of spending just as the IMF was about to release its second tranche to Ukraine worth $3.8 billion:
Earlier in the week [of November 2, 2009], the IMF warned Ukraine President Viktor Yushchenko that he needed to veto the law boosting Ukraine's minimum wage and pensions if the country was to remain on track with the IMF lending program. Mr. Yushchenko, who trails far behind major rivals in opinion polls, had remained noncommittal until Friday, when he announced to reporters that he had signed the bill. Mr. Yushchenko said he didn't want the country's budget problems to be solved "at the expense of pensioners, poor people and the disabled"...IMF chief Dominique Strauss-Kahn told Reuters that Ukraine was now "off track and in this situation I'm afraid it would be very difficult to complete the next review of the program."
That was in November. As mentioned earlier, infighting between Yushchenko and Tymoshenko has further stalled the release of the second IMF tranche. At present, it's the latter contesting the election result with Yanukovych that's holding matters up. Reuters has more on the matter:
The International Monetary Fund suspended its $16.4 billion bailout programme -- a lifeline for crisis-hit Ukraine -- at the end of last year in the wake of a series of broken spending promises and a fierce election campaign run by the two sides.

The recipe to bring the IMF back to the negotiating table seems simple -- the existence of a stable government and a functioning parliament. But Tymoshenko's intention to challenge the result shows she will put up a fight for power and all but rules out a future coalition between her supporters and Yanukovich's party in parliament to form a strong ruling coalition...

International observers hailed the vote as "impressive" and Tymoshenko is unlikely to get the hundreds of court rulings needed to cancel the poll result as a whole, so the deadline to formally conclude the election by Feb. 17 and inaugurate a new president by mid-March is likely to be met, analysts said. Even then, working on the assumption Yanukovich's victory is confirmed, the new president will then face a hostile government still in power and no majority of his own in parliament -- vital if he is to pass the laws that are conditions of the IMF aid.

The global lender wants to see the 2010 budget draft passed, wage increases it objected to scrapped and domestic household gas prices increased, easing the load on the budget of the state, which still subsidises them. Every month, the government faces hefty bills for Russian gas, state wages and pensions and to repay domestic debt at skyhigh yields that it has been issuing to fund its spending...

Even once the political landscape has calmed down in Ukraine, Yanukovich faces either tough negotiations with the IMF or an unpopular U-turn. The fund failed to provide a $3.8 billion tranche expected last November after parliament increased minimum wages and pensions by up to 10 percent, a move that would cost the budget billions of dollars it does not have.
Ukrainian politics is difficult to say the least. Nevertheless, it's disheartening how Yanukovych has been awarded another chance almost by default in the absence of more promising alternatives. Make no mistake: the three main antagonists of 2004 are still here. Hopefully, Yanukovych can bargain for a better deal on energy supplies with the Russians or even receive some emergency funding.

As for Missus T, I simply think that being in government during an IMF bailout is political suicide. If Yanukovych can wangle much-needed concessions from Ukraine's ever-menacing neighbour, so much the better. It's called realpolitik and "Sucking Up to Russia." Among other things, Yanukoych proposes a consortium to manage Kiev’s strategic natural gas pipeline and extension of a lease to allow Russia continued access to the Black Sea naval port of Sevastopol beyond 2017 when the current one expires. Tymoshenko's had many years to help remedy things but has been thwarted for one reason or another. Beautiful as she is, mayhaps it's better if she took her bike and hit the road (or at least rode alongside) so we can see if Yanukovych--dowdy looking he may be--can do better. Sometimes, I guess beauty can be positively heartbreaking as the Ukrainians are learning these days.

UPDATE 1: Also see this more recent Reuters article on the post-election political calculus.

UPDATE 2: Well I'll be darned--Tymoshenko has successfully petitioned for a temporary suspension of the presidential election results. Nevertheless, it should be ruled on before February 25 when parliament is scheduled to swear in the new president.

UPDATE 3 on March 4: Tymoshenko's ruling coalition has been disbanded pending the formation of another government. Parliamentary meanderings are fun to watch, no?