Parties move to the fore in Ukraine's politics

By bne IntelliNews January 18, 2010

Graham Stack in Kyiv -

The media circus surrounding Ukraine's presidential elections - the first round of which on Sunday, January 17 saw Viktor Yanukovych out in front - masks the extent to which real power has shifted to the unicameral parliament, the Verkhovna Rada, as a result of reforms introduced in the wake of December 2004's Orange Revolution. Leader-centred parties have now replaced the financial-industrial oligarchic clans of yore as the main actors in Ukraine's turbulent politics.

If there is one decision of his presidency that Viktor Yushchenko bitterly regrets, it is the one that helped him become president: as part of the deal between presidential contenders in 2004 after fraud robbed Yuschchenko of victory, he agreed to constitutional "reforms" shifting power to the parliament and introducing proportional representation. Fast forward to the re-run of the presidential elections and he has done an about face on which direction the constitutional reforms should now go.

"I believe only stronger presidential power can now help the country face the challenges of transition more effectively," he declared January 15 on the eve of the poll, proposing constitutional reforms that would return more power to the presidential office. "The system created in 2004 has created a conflict, leading to the criminalization of power as a natural process," he raged earlier in the week.

Too late, mate. Any constitutional reform would require the support of the parliament itself where Yushchenko enjoys the coldest of receptions these days. And given that it was clear months and months ago that Yushchenko was likely to come last in this weekend's race, he has been worse than a lame duck president for most of 2009.

The 2004 constitutional reform has made the Rada the central marketplace for lobbyists rather than individual powerbrokers, as was the case in the previous regime. Ukraine's leader-dominated parties - especially Prime Minister Yulia Tymoshenko's eponymous bloc (BYuT) and the opposition Party of Regions (PR), headed by former prime minister Viktor Yanukovych - have strengthened hugely relative to both individual deputies and business interests, replacing the oligarch clans as the key political actors.

This, say analysts, is a result of the shift to proportional representation, and the prohibition of deputies leaving the party factions they were elected to. "There's has been an abrupt shift in lobbying practice since the political reform," says Volodomyr Korol'ko, president of Mainstream Communications, one of Ukraine's leading PR companies. "Up to 2006, whole groups of MPs were clearly tied to sectoral lobbies, irrespective of formal party allegiance; now the leaders of parties, heads of party fractions and chairmen of committees are the key figures in lobbying."

"MP's now vote as they are told to by party leaders," says Korol'ko. A recent study found that around 130 MPs - out of a total of 450 - do absolutely nothing in parliament apart from push their voting buttons, earning themselves the nickname "pianists". "A huge number of deputies are mere puppets," confirms Mikolai Churilov, general director of the SOTSIS polling and PR organisation.

Analysts agree that it has become harder - and thus more expensive - for business interests to lobby in parliament, with parties now acting as gatekeepers on the legislative market. At the same time, the rewards of lobbing activity have become concentrated in the hands of an aristocracy among MPs. Lobbyist MPs now do not just vote for legislative changes, but help to draw up amendments to legislation or even whole laws, enter them to parliament, get them through the committee stage and then secure the necessary votes to have them passed.

MPs who do this sort of work earn income from lobbying that exceeds their official salaries many times over, according to Korol'ko. "Where else do they get their cars, apartments and dachas from?" he asks. Among the most influential of this new class of MPs are the head of the taxation and customs committee Sergei Terekhin, and head of the industrial committee Natalia Korolevskaya, both from BYuT.

"The political reform was a step back, not a step forward," argues Vitaly Bala, head of AMC analytical agency and a former adviser to the government, "because the parties we have are not representative of any social groups or ideologies. Ukrainian society is not structured enough to support this. Parties have no internal democracy, but instead are commanded and run solely by their leaders."

In addition, while the political reform strengthened parties as a whole, it did not try to reduce the number of parties. Instead it preserved the very low entry threshold of 3% for parties to the Rada, meaning that "pocket" parties - such as the Litvin block headed by the current speaker of the Rada Volodymyr Litvin - still scrape in. "The reform has reinforced the role of small political parties," says Olesya Oleshko of Profile magazine. Analysts expect the next parliamentary elections to see a rise in the number of mini-parties in parliament.

"To get legislation passed, the support of one of the big parties is not enough - neither has the 226 votes you need. Therefore, lobbies have to work with all parties on each issue," argues Bala.

All bets are off

Still, because of party fraction discipline, when party leaders' popularity ratings are at stake they are capable of passing legislation that overrides even the most powerful lobbies. As an example, Korol'ko names government-sponsored legislation passed in August 2009 to ban gambling. "The gambling industry had a very strong lobby," says Korolko, "that campaigned furiously against the prohibition of gambling. But in this case politics took the upper hand, with Tymoshenko having identified an issue that could lend impetus to her elections campaign, and all the lobbying was in vain."

Another interesting case is WTO accession. Analysts name the agriculture and carmaker lobbies as being among the most influential in the Rada. Both, however, lost out heavily as a result of the terms of Ukraine's successful WTO accession in February 2008. Ukraine's WTO accession was very much a prestige project for Tymoshenko, and no party wished to take the blame for derailing Ukraine's bid.

But almost immediately on accession to the WTO, the agriculture and car lobbies got legislation through parliament that temporarily raised tariffs on imports to give them breathing space, although this largely contradicted the WTO agreement Ukraine had just signed up to.

In general, until now parties have overridden lobby pressure when pushing through populist laws to boost their leaders' ratings, rather than the crucial reform legislation that Ukraine so badly needs. So the International Monetary Fund should bear in mind when it resumes talks on loan disbursement following the presidential elections that Ukraine's handful of political leaders have the tools to get difficult laws through parliament - if they really want to.

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