Ukraine's Orange Revolution and the Road to EU and NATO

Introduction: Ukraine's Post-Soviet Legacy

Political events in Ukraine in November and December of 2004 attracted the attention of the world community as the wind of democratic change came to this former republic of the Soviet Union. Even though the Soviet Union had collapsed thirteen years earlier, the historical political and economic ties between the fifteen newly independent states remained quite strong. Although these countries had become independent, their dependence on Kremlin policy persisted. All fifteen countries chose the path of democratic reform, but their totalitarian past and lack of any experience with democracy prevented effective realization of their reform programs. In fact, this fifteen-year period was characterized by hyperinflation, extreme poverty, and deepening social contradictions. Russia preserved its dominance over the politics of its closest neighbors — Ukraine, Belarus, and Kazakhstan — dictating the terms of their economic development in ways that served Moscow's interests. The corrupt governments of these countries, with corrupt legislative and executive branches, had effectively made their nations fully dependent on Moscow's will.

Before discussing Ukraine's modern political tendencies, it is important to review the fifteen years of Ukrainian independence in order to understand the nature of the contradictions and the crisis of political power that came to a head at the end of 2004.

Ukraine's communist legacy was the main obstacle preventing the country from integrating with Europe, engaging in free and equal trade with Western and Eastern partners, carrying out military reform, and pursuing other essential reforms of a civil state. Pro-Russian parliamentarians — many of them former members of the Communist Party — remained loyal to Russia and to Russian domination in Eastern Europe. They worked to maintain "warm relations with the big brother" and did what the Kremlin required of them. For a decade, Ukrainian politicians were uncertain which side to support: Russia's or Europe's. As a result of this corrupt and self-interested political management, Ukraine became a backward country with a ruined heavy industry and a collapsing agricultural sector. Inflation reached extraordinary levels (estimated at around 100,000% compared to 1991), and the average monthly salary in 2004 was approximately $100.

In the early 1990s, Ukraine experienced the full meaning of separatism when officials in the Crimean region — sponsored by Russian political authorities seeking to secure Russian military bases in the port of Sevastopol — attempted to separate from Ukraine and join the Russian Federation. Crimea was granted autonomous status, giving it economic autonomy from Kyiv, the capital of Ukraine. This did not mean that living standards in Crimea were higher than elsewhere in Ukraine; Crimea was simply an instrument for Russia to demonstrate its power and prove Ukraine's political weakness and dependence.

Recent events further illustrated that Ukraine had become Russia's energy vassal. The main energy resources — gas and oil — were imported from Russia, and Russian oil companies had acquired ownership of fifteen of the largest oil-refining plants in Ukraine, plants that had previously guaranteed Ukraine's energy independence. Such an outcome would not have occurred in a genuinely democratic country, but corrupt Ukrainian officials facilitated this policy in exchange for political support from Moscow.

Another important characteristic of Ukraine is its demographic composition: ethnic Ukrainians constitute approximately 73% of the population and ethnic Russians around 22%, yet Russian speakers make up some 40% of the country's population. Independent Ukraine failed to advance a cultural nationalization policy, and the language question remained unresolved. In the eastern part of the country, the number of schools teaching subjects in Ukrainian was negligible, and Ukrainian was not used as a language of instruction in universities there either.

Structural Problems: Corruption, Oligarchs, and Russian Dominance

Most damaging to the country's image, however, was the total corruption of state institutions — from the presidential administration down to local bureaucracies. If in 1994, before Leonid Kuchma was elected president, the word "corruption" was rarely heard in media or politics and was associated mainly with the world of Sicilian mafia depicted in films, within a short period of time ordinary citizens experienced the effects of corruption and organized crime firsthand.

Public contempt for the government and the oligarchs caused the political crisis of 2001, which gave rise to numerous protest actions in Kyiv led by a consolidated opposition of socialists, right-wing nationalists, and communists united under the single slogan "Kuchma, go away!" These protests failed, and the president remained in office.

Soviet-era bureaucracy had been replaced by a new, ineffective anti-people's government that had no coherent vision for national development and looked alternately to Moscow and to Western Europe, while in practice satisfying neither side. The legacy of the Kuchma era is striking in its damage: a pro-Russian government that consistently fulfilled Kremlin directives, participated in fraud and money laundering, and commanded a loyal parliamentary majority, all of which prevented the country's dynamic development.

Fewer than thirty oligarchic families controlled approximately 75% of the nation's wealth. During the privatization of state enterprises in the early 1990s, well-connected groups used criminally derived capital to seize control of the most profitable enterprises — steel mills, heavy-industry plants, and pipelines. Moreover, virtually all private enterprises with income exceeding $500,000 were under the control of regional organized crime. For more than a decade, the government turned a blind eye to this lawlessness and chaos.

During the same period, more than thirty journalists were murdered for criticizing the government's anti-people activities and personal enrichment. Oligarchs enjoyed tax privileges that fueled national impoverishment as the state budget lost billions of dollars in unpaid taxes. Ukraine could not even consider integration into European institutions without prior approval from Moscow. The presence of Russia's Black Sea Fleet at Sevastopol in the Autonomous Republic of Crimea served as a constant reminder of Ukraine's dependence.

Furthermore, the administration of the former president and the Ukrainian Ministry of Defense became embroiled in an international scandal when they sold unique radar systems to Iraqi leader Saddam Hussein, in direct contradiction of all international obligations and treaties signed by Ukraine. This episode led the United States and European Union countries to revise their attitudes toward Ukraine and cut off financial aid and investment. In an effort to repair relations with the United States, Ukraine deployed 1,650 troops to Iraq as part of the coalition.

However, on January 8, 2005, eight Ukrainian soldiers were killed in an explosion at an ammunition dump. The Ukrainian parliament subsequently called for the immediate withdrawal of the nation's 1,650 troops from Iraq. The vote was non-binding but reflected growing national dismay over the mission. The blast was initially reported as an accident, but a senior commander later raised suspicions that it could have been an insurgent attack.

According to Transparency International's Corruption Perceptions Index, Ukraine ranked 108th out of 133 countries — placing it between the African nations of Sudan and Zimbabwe. Russia, with its well-known lawlessness, ranked 128th, while no EU member state ranked lower than 67th. These factors constituted the very obstacles preventing Ukraine from quick and successful integration into European institutions and NATO.

The events of the Orange Revolution — also called the velvet revolution — which unfolded in December 2004, fundamentally altered the country's political orientation. Viktor Yushchenko, Ukraine's new pro-Western democratic president, stood for independence from any foreign influence, for promoting democracy within the country, and for future integration into the European Union and NATO. He chose a difficult path, as he had to contend with entrenched poverty, widespread corruption, oligarchic power, and — crucially — the deep distrust of the United States and Europe that remained embedded in the mentality of many Ukrainians shaped by Soviet experience.

Writing in the International Herald Tribune, Anders Åslund noted in "Yushchenko vs. Putin" that although both leaders expressed indignation at corruption and oligarchs, they held fundamentally different views on how to address the problem. Putin sought to consolidate power and harbored nostalgia for a "powerful Soviet Union," while Yushchenko aimed to combat these vices by promoting democratic values and building a genuine civil state.

The Orange Revolution and Yushchenko's Reform Agenda

The economic programs of Putin and Yushchenko were superficially similar, as both advocated free-market development. Both countries used a flat income tax rate of 13%, but their developmental priorities differed considerably. Russian economic legislation was more advanced and closer to international standards, but the drift toward authoritarianism and state control over business was preventing dynamic development. Ukraine, by contrast, had greater potential in this direction.

Ukraine's new political priorities appeared radical to the country's conservative political elite and even alarming to officials in Moscow. Western observers noted that Putin had lost the battle for Ukraine — quite possibly for good. The absence of any coherent political strategy toward Ukraine had resulted in the failure of the pro-Russian candidate despite widespread falsifications and violations during the presidential election.

Nevertheless, Yushchenko's victory did not mean that all problems would be resolved at once. His inaugural speech inspired Ukrainians, but it also signaled that the nation would need to make a tremendous effort to overcome its difficult past. Economic growth and a gross domestic product growth rate that was, at 13% in 2004, the highest in Europe did not by itself guarantee an optimistic forecast for Ukraine's economy.

Early economic reforms promoted by Prime Minister Yulia Tymoshenko — described in the press as Ukraine's "iron lady" — demonstrated that the reformists were serious about action. Misha Glenny wrote in the International Herald Tribune:

"She has addressed her two major domestic issues with gusto. At the heart of Ukraine's problems and Kuchma's legacy lie a tax regime that is an open invitation for Ukraine's super-rich oligarchs to cheat the state of revenues, and a customs operation that claimed to protect Ukrainian industry with high tariffs but in reality benefited only large-scale fraudsters and smugglers. A more equitable tax regime and a 'No to Contraband' campaign was Tymoshenko's bold answer to this. She drastically lowered tariffs on a range of key products, wiping out at a stroke the incentives for people to move goods illegally across Ukraine's borders. She has also ordered an overhaul of the notoriously corrupt Customs Service. Her second problem contains greater dangers but also a couple of awkward moral dilemmas: the influence and financial clout of the oligarchs who indulged in everything from grand larceny, extortion, and — most people believe — murder to amass huge fortunes under Kuchma."

Changes also became evident in monetary policy. Ukraine's National Bank altered the exchange rate of the hryvnia, stabilizing the national currency against the US dollar and the euro. The new rate stood at 1 USD = 5.05 UAH and 1 EUR = 6.39 UAH, compared to the previous 1 USD = 5.35 UAH and 1 EUR = 6.60 UAH. This trend signaled the government's readiness to adopt free-market policies and open the national market to imported goods.

The current government also demonstrated its capacity to function independently from Moscow, even when doing so contradicted Russian economic interests. Ukraine's government and anti-monopoly committee launched an investigation into the pricing policies of oil traders on the Ukrainian fuel market. Ukraine's government entered talks with Russian oil companies that had threatened to cut fuel supplies unless Kyiv abandoned plans to cap petrol prices. A spokesman at TNK-BP argued that price controls ran counter to rising global petrol prices. This episode validated President Yushchenko's statement that Ukraine's policies, including its relations with Russia, would be determined by Ukraine's national interest rather than by what he called the "byzantine" politics of the past.