KYIV BLOG: As protests hit Ukraine, has Yanukovych miscalculated?

By bne IntelliNews December 2, 2013

bne -

Has Ukrainian President Viktor Yanukovych badly miscalculated?

Crowds of up to 100,000 occupied the main square in central Kyiv on December 1, a situation repeated in many of the country's major cities. The protestors, braving freezing temperatures as the winter snows arrived across Eastern Europe, are looking to continue the demonstrations December 2 to force a vote of no confidence in the government, which would result in snap elections.

This is more than shades of the Orange Revolution of 2004. If the protestors can keep up the momentum, then this will be a second revolution and Yanukovych's government could be swept from power.

Tensions have risen rapidly in the last few days following Yanukovych's failure to close a deal with the EU at a summit in the Lithuanian capital of Vilnius on November 28-29. Yanukovych insists an EU deal is still on the cards and could happen at the next Ukraine-EU summit scheduled for March, but EU leaders coming out of meetings with Yanukovych told the press that the president didn't even try to negotiate with them. Moreover, they said he vetoed an attempt to rescue the deal at the last moment on the night of November 29.

Ukraine watchers are speculating that Yanukovych only travelled to Vilnius for a photo-op, fishing for comments from other EU leaders that the "door is still open" for a trade deal with the EU in the hope of having some ammunition that can be used to diffuse the ardour of the street protestors.

Teetering on the edge of another economic meltdown, Ukraine desperately needs money. Yanukovych has made a clear choice. He could have accepted the EU deal, but that would have meant acceding to International Monetary Fund demands which have politically painful strings attached, like quadrupling domestic gas tariffs. This is a price he was not willing to pay, so instead he has thrown in his lot with Russia, which can be expected to cut gas prices that would immediately take a lot of pressure off the budget, as well offer billions of dollars in loans to tide the country over the winter. The attraction of this option is that there are no overt politically harmful concessions he has to make, although Ukraine-watchers argue the country will have to make other significant ones, such as allowing Russian oligarchs more access to its market and possibly give up some control over its gas pipeline network, which serves Europe.

The benefits of Ukraine's alliance with Russia are widely questioned, and not just by the country's people. Swedish Foreign Minister Carl Bildt tweeted on December 1: "Ukraine President Yanukovich will go to Moscow and agree on "roadmap" according to PM Azarov. Road to where?"

But a Russian deal is clearly unpopular with many of the people of Ukraine, who favour closer integration with the EU. Yanukovych seems to be calculating that the cost of hiking gas prices plus the economic damage that Russia would inflict on Ukraine by curbing its trade is greater than the cost of facing down angry street protests. With the next presidential election not until 2015, Yanukovych has 18 months to divide the opposition while he tightens his control over the system ahead of the vote. He has already jailed his main rival, former prime minister Yulia Tymoshenko, and last month the Rada passed an amendment to the tax code that in effect bars opposition leader and world boxing champion Vitaly Klitschko, the most likely winner in the next elections, from even running.

More recently, a third possibility has begun to emerge. Yanukovych is reportedly to travel to Beijing next week. The Chinese have been aggressively expanding their influence in Eastern Europe and Central Asia in the last few months with a string of investment projects and large loans, and might be persuaded to bail out Ukraine in exchange for a bridgehead in Europe. At the very least it will give Yanukovych yet another negotiating chip in the negotiations with Moscow, which has still not publicly promised any economic aid to Ukraine at all, let alone conceded it may cut gas tariffs - something that is widely assumed to have been agreed at Yanukovych's three closed-door meetings with Russian President Vladimir Putin earlier in November before the EU summit.

However, Yanukovych's calculus only works if the street protests are contained and wither over time, as happened with the large street protests that started in Russia in December 2011. Given the ferocity of the opposition to Yanukovych's presumed deal with Russia, that is starting to look like a big assumption. The police were barely in control of the capital as crowds roamed the streets. Opposition leaders desperately tried to control the crowds and keep the protest peaceful.

Their task now is to maintain the momentum. At best they can persuade Rada deputies from the ruling Party of Regions to quit - and at least one deputy as well as several press secretaries, did quit the party on December 2 - and bring down the government. At worst they will have to concentrate on building a united opposition to contest and win the 2015 election.

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