After One Year, Hope of ‘Orange Revolution’ Is Fading

December 8, 2005 • Commentary
By John Gillingham and Marian L. Tupy

A year has passed since 1.2 million Ukrainians took to the streets to defend democracy and won. Sleeping in tents in freezing temperatures and ringed by heavily armed security forces, they refused to leave Kiev’s central square, the Maydan, until the results of the stolen presidential election were nullified and a second, honest election could be held.

They departed only after President Viktor Yushchenko, his face scarred by a botched assassination attempt, took office with the dynamic Prime Minister Yulia Tymoshenko at his side. In a corner of the world where repression had been the rule, corruption all‐​pervasive and the rule of law only a long‐​term project, that courageous public act spawned a modern nation.

The hope that came alive last November has now faded. The economy, which as the Orange Revolution took place was growing in double digits, began to shrink by summer 2005. A long list of reforms was deferred or had no effect. The Parliament behaved more like a disorganized rabble than a representative body. Leading politicians and their robber‐​baron allies continued to treat the state as their private property. Businessmen large and small faced extortion from Mafiosi and bureaucrats. Half of the economy remained off the books. Foreign investment stopped.

With per capita incomes at 50 percent of those in Russia, the country remained desperately poor. And, amid mutual accusations of corruption and incompetence, the Yushchenko‐​Tymoshenko partnership came apart.

With national elections in view, Yushchenko unleashed the September Massacre. He sacked Tymoshenko as prime minister and dismissed the members of his own entourage who faced corruption charges. He also made a pact with Viktor Yanukovich — his erstwhile opponent in the presidential election. Ukraine was sliding down a slippery slope.

The window of opportunity opened by the Orange Revolution resembles the eye of a needle. To pass through it will require dismantling the post‐​Soviet bureaucracy, eradicating the robber barons who emerged from the communist party and who now constitute Ukraine’s all‐​powerful oligarchy, and opening the marketplace to competition. It requires, moreover, both maintaining a lifeline to the European Union, which is now fraying as a result of the failure of the proposed EU Constitution, and arriving at a new understanding with a Russia, now flush with oil and gas revenues and moving toward authoritarianism.

The central problem facing all post‐​Soviet societies is to eliminate the inherited state economic sector. The Central and Eastern European countries, especially Estonia, which have gone furthest toward economic liberalism, have also had the most economic growth.

For example, the national gas pipeline is Ukraine’s central engine of corruption and control of it is therefore the central issue in Ukrainian politics. That situation did not come about accidentally. The Russian state‐​controlled natural gas giant, Gazprom, supplies Ukraine with gas at less than a third of the world price. The difference in price is the currency with which Russia buys political influence in Ukraine. Competition is the only solution for that sticky situation.

Ukrainian politics tend to be non‐​ideological and President Yushchenko is the only leading political figure who possesses an identifiable profile. He is a market liberal who believes in keeping government small, local and transparent. He also believes in the efficacy of competition, the indispensability of private property rights and contract law. Such notions are consistent with the membership requirements of international organizations such as the World Trade Organization, the EU, and NATO.

They are not necessarily those of Moscow, but perhaps they could be — if Ukraine becomes an attractive model for its big Slavic brother. That will depend not only on the success of President Yushchenko’s economic reforms but also on the outcome of the March elections.

Yushchenko and those sharing his views cannot win it alone and must make painful compromises in order to become a part of any coalition government. If Yushchenko fails, there will be no economic follow‐​up to the events of last November. There will be no second Orange Revolution that Ukraine so desperately needs. The spirit of the Maydan will then have to be revived.

About the Authors
John Gillingham is a senior research fellow at the Harvard Ukrainian Research Institute. Marian Tupy is the assistant director of the Project on Global Economic Liberty at the Cato Institute.