Ukraine in political crisis again as PM takes president down a peg

By bne IntelliNews September 4, 2008

bne -

Russian television is reporting that Ukraine's "Orange Coalition" has officially been dissolved as of 2pm CET on Thursday, September 4, which if correct hurls the country into yet another constitutional crisis.

The clash between the government coalition partners began on the night of September 2 during the Rada's first meeting of the autumn session when Prime Minister Yulia Tymoshenko's eponymous bloc (BYuT) made a Faustian deal to cooperate with the opposition party of former Prime Minister Viktor Yanukovych, the Regions of Ukraine.

"Boring... it is going to be very boring today," was the refrain from one of the deputies of the parliament ahead of the first session. On the contrary, the day turned into one of the busiest ever for the Rada as the BYuT joined Regions in voting for laws substantially restricting the powers of the president. By doing so, Tymoshenko effectively abandoned her coalition partner, the Our Ukraine-Self Defence block, which is aligned with President Viktor Yushchenko.

Tymoshenko and Yanukovych were formerly arch-enemies and the PM has been careful to stress that the alliance is a temporary one. However, analysts say her aggressive tactics could cost her at the polls, where she currently enjoys a handsome lead over her rivals.

Together, BYuT and Regions command a two-thirds majority in parliament, enough to override a presidential veto, and are using this voting power to ram through changes to the controversial Law on the Cabinet that effectively remove many of the president's powers. Crucially, one of the changes limits the president's ability to turn to the Constitutional Court to counter the new amendments. The result is that Ukraine is being transformed from a presidential to a parliamentary democracy. The prime minister, say political commentators, now has the upper hand in her dealings with the president.

Among other changes that the new Rada majority of BYuT-Regions has made include giving the government the ability to dismiss the prosecutor general and appoint regional administrations without reference to the president. This follows September 2's amendments that transfer powers of appointment for the Ukrainian Security Service and the defence and foreign ministries to the prime minister.

The president and prime minister spent Wednesday, September 3 giving speeches in which they accused each other of wrecking the majority coalition. Yushchenko said that if a new governing coalition couldn't be formed in the next 30 days, he would use his right to dismiss parliament and announce early elections. Tymoshenko in turn announced that she had started negotiating with all parties in parliament to form "a system of consolidation." Tymoshenko also highlighted the necessity of amending the constitution, which she is planning to announce in the near future.

"The joint efforts of BYuT and Regions was the result of Tymoshenko's willingness to emasculate President Yushchenko's authority as revenge for the president constantly undermining Tymoshenko and accusing her of high treason via conspiracy with Russia to damage Ukrainian interests," says Foyil Securities in a research note, referring to Tymoshenko's failure to speak out against Russia's invasion of Georgia.

Polls apart

So what happens now? There are many possible outcomes, but most commentators tend to rule out Yushchenko calling for early elections for the simple reason that the unpopularity of his Our Ukraine party and its ally the People's Self-Defence could mean those two parties don't cross the threshold for representation in the parliament and the president would thus be deprived of any powerbase in parliament. If a parliamentary election were to take place today, Tymoshenko's bloc would receive 23.4% of the vote, Regions 20.3%, Our Ukraine 4.6%, Communist party 4.6%, Lytvyn's bloc 2.8%, according to an FOM-Ukraine poll published on Thursday.

Also unlikely is an actual coalition between BYuT and Regions, as this could ultimately hurt the popularity of the prime minister, possibly shrinking her electoral base ahead of the presidential elections set for 2010. If a presidential election took place today, Tymoshenko would win 24% of the vote, Yanukovych would win 20% and Yushchenko 7%, according to a poll published at the end of August.

Likewise, a coalition between Yushchenko's party and the party of his long-time nemesis Yanukovych, whom he defeated in the presidency race during the Orange Revolution in 2005, is also regarded as a long shot by many. However, Ukrsibbank ranks this as its most likely scenario. "Being the weakest among major political forces, the president would now seek agreement with the business wing of the Party of Regions, which is interested in political stability. These businessmen are active borrowers on international markets. They own banks, coal mines, steel mills and are sensitive to costs of capital, especially given recent tight funding conditions. The business wing would like to avoid political noise and would be willing to accept president's offer. The only problem would be a proper person for prime minister - Yanukovych might demand the position for himself in case of an alliance, which is not acceptable for the president," Ukrsibbank says.

There is growing consensus, however, that the president and PM's parties will reform the old coalition if they can find within the next 10 days the reasons and the will to stay together. "We are inclined to believe that the Our Ukraine-People's Self-Defence will remain in coalition with Bloc Yulia Tymoshenko, healing the fissure, with the president admitting defeat.

But no matter what scenario materializes, the final outcome stays unchanged: Yulia Tymoshenko will become Ukraine's new president, either via an early election in 2009 or the scheduled election in 2010.

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Ukraine in political crisis again as PM takes president down a peg

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