Ukraine "grand coalition" power-sharing talks fail

By bne IntelliNews June 8, 2009

bne -

Prime Minister Yulia Tymoshenko and leader of the opposition Viktor Yanukovych said the "grand coalition" negotiations between their respective parties, Yulia Tymoshenko Bloc (BYuT) and the Party of Regions, collapsed over the weekend.

The investment bank Galt & Taggart said in a note: "It is unclear what sank the opaque talks, though we believe the leaders' ingrained mistrust of one another, strong disapproval from Ukraine's voters on some of the proposed constitutional amendments, and the inability to agree on a cabinet shuffle were the main issues. The end of the talks likely means Ukraine is headed for scheduled presidential elections. The date of the vote is still subject to debate, though we tend to believe parliament will legislate a January 17, 2010 election."

The failure of the coalition comes as a blow for investors who were looking forward to the stability that a deal could have brought. Regions leader Yanukovych is likely to win the upcoming presidential elections, however, his party will not have a large enough majority to dictate to the Verkhovna Rada (parliament) and implementing badly needed reforms.

At the same time, the failure of the talks opens the door for a new generation of politicians who are capitalising on the dissatisfaction with the existing parties and so will further cut into their share of the Rada and lead to even more instability. In particular, the arrival on Ukraine's national scene of Arseniy Yatsenyuk and his eponymous bloc will be a big winner from the failure of the coalition talks.

While details remain unclear, it seems at this point that it was Regions which pulled out of the deal. PM Tymoshenko was clearly disappointed. She lashed out at Regions, criticizing the "unilateral withdrawal" of Yanukovych from negotiations. "The talks were extremely complex, but still they proceeded. Yanukovych brought them to a close and, without warning anyone, unilaterally pulled out of the negotiating process. He made a loud political statement, which ruined any chance of unification in Ukraine," Tymoshenko said in a statement that was broadcast by Ukrainian television, reports Interfax.

Tymoshenko said she was bending over backwards to make the deal work and would have accepted "any possible concession" to form the coalition. "Our political force agreed to make major, unprecedented compromises. We made concessions on all issues. We were ready to make any sacrifices - political, electoral, as well as sacrifices related to our image and staff," she said.

An outline of the coalition deal reportedly would have installed the Regions Party leader as Ukraine's next president by implementing changes to the constitution that would have seen the president elected by the Rada rather than universal suffrage, while Tymoshenko would have stayed on as a powerful premier. But Yanukovych told Interfax that the president must be universally elected. "My heart tells me that universal and direct presidential elections are the only correct choice. I will make this choice, and may God help us," he said.

"We discussed possible constitutional amendments, which would provide presidential elections at the parliament and a longer term of office for the president. The amendments aimed to give the new coalition and the government more time to revitalize the economy. However, we would have had to approve the amendments very quickly, without public debate, openness and transparency. That would have been a step back for democracy," Yanukovych said.

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