Shortly after the inauguration of the new president, Viktor Yanukovych, on March 3, 2010, Ukraine's Verkhovna Rada, after hearing a governmental report, recognized the government's activity as unsatisfactory and sent the prime minister and her entire cabinet to resignation. It was not Yulia Tymoshenko's first resignation from a government post but it was the most humiliating and crushing one.
Defeated but not willing to surrender, Tymoshenko was still constituting a threat to the Party of Regions. So, to make themselves safe from the charms of their charismatic foe, they changed the reporting procedure. The first to speak, instead of Tymoshenko, was Mykola Azarov, a key contender for the vacant post of Ukraine's prime minister.
Azarov's report sounded shocking in many respects. Usually a reserved, chary of emotions, dried-up and cold man, he then delivered a lengthy speech filled with emotional flavor, sarcasm, sophisticated rhetoric and, what is most important, exposing such facts that could not but shock even the most well-informed experts in the Ukrainian politics. He was merciless. He seemed to have missed not a single thing. The figures and facts he cited literally crushed everything Tymoshenko had claimed to be her successes and achievements.
The period of Tymoshenko's premiership, he claimed, would be remembered in Ukraine as a period of "unique" failures in "absolutely" all spheres of life. These two words, "unique" and "absolutely," Tymoshenko had used in her speeches in abundance, now were directed against her. "Instead of a breakthrough, we now have a failure, a catastrophic failure," Azarov said. The history of Tymoshenko's premiership was briefly interpreted by Azarov in the following way.
Tymoshenko's risky policies had driven Ukraine to a socio-economic crisis, the deepest one in the entire 20 years of its independence. The crisis had hit all spheres of the activity of the state: economic, financial, social, political. The system of economy management had been ruined, the treasury had been drained. Ukraine's GDP in 2009 dropped twice as deep as Russia's and thrice as deep as that of the Czech Republic.
The country had even come to importing potato. The agricultural machine-building sector had practically come to a halt. The tractor output had shrunk four-fold. Consumer prices were showing an unprecedented growth since 2005.
"Tymoshenko promised a paradise for investors. But the country has lost their trust, we are ranked last in entire Europe in terms of direct foreign investments."
To conceal their mistakes and disguise their absolutely unrealistic budget, the Tymoshenko government practiced withdrawing money earned by workers, not fully repaying value added taxes and obliged businesses to pay taxes in advance.
Azarov’s report exposed the most crushing failures in the sphere of social policy Tymoshenko had considered as her strong point. Azarov cited statistics proving that the living standards in the country had dramatically dropped over Tymoshenko's two-year premiership. In 2008, consumer prices were growing four times as fast as the cost of living.
Average wages in Ukraine had shrunk to $240 a month.
"Whereas some five years ago we were legging only slightly behind Russia, now the latter has average wages almost thrice as big as ours - $700," Azarov said.
"Most hit by the Tymoshenko government's policy are employees of state-funded companies, whose wages have been were frozen by the prime minister at the 2008 level and whose bonuses have been abolished. Hence, as of the end of the year, the so-called minimal wage for state employees (545 hryvnias) was by 40% beneath the living wage for employable people (913 hryvnias). The government has thrown state employees beneath the poverty line. Over the past two years, wage arrears have more than doubled."
Azarov's report was a detailed list of what Tymoshenko and her colleagues had failed to do. First and foremost, she failed to work out an anti-crisis program, "while other countries have already achieved first positive results of their anti-crisis measures.” Further on, she:
- "failed to see to it to employ mechanisms to heat up domestic demand";
- "failed to provide domestic orders enough to ensure full-capacity operation of domestic production facilities";
- “failed to resume crediting of the real sector of the economy";
- “failed to simplify the business licensing system";
- "failed to reduce tax burden on national manufacturers";
- “failed to ensure access to credit resources via mechanisms of cheaper credits";
- "failed to adopt large-scale state programs to facilitate the operation of the entire financial and production chain."
According to Azarov, government investments under the Tymoshenko premiership decreased by 2.5 times. At the same time, spending on foreign visits, official receptions and salaries to bureaucratic staff was not cut but, on the contrary, was increased.
"The authorities have wasted billions from the Stabilization Fund but have started not a single infrastructure project that could encourage demand for domestically-made products."
"You are sure to be surprised when you hear that, say, the Stabilization Fund was more concerned with the 20th anniversary of farmers' movement, with the 360th anniversary of the Zborovsk battle, with the 200th anniversary of the foundation of the village of Mikhailovka, that it was used to maintain contacts with Ukrainians, to make payments under the so-called register of land acts, and so on. What do all these things have to do with the Stabilization Fund," Azarov asked rhetorically.
Apart from that, Party of Regions’ experts exposed numerous misuses of the state budget's reserve fund, which had been spent to fund mediocre projects, such as the organization of two nationwide congresses of chairmen of rural councils, providing them with subscriptions to the governmental newspaper "Uryadovy Kuryer," the establishment of the state enterprise Social Contact Center, rather than to finance measures to sidestep emergency situations.
Throughout the entire year 2009, the government was selling out and squandering scarce domestic resources and making colossal debts, caring little about tomorrow. Azarov reminded that over that year Ukraine's government debt had increased by 112 billion hryvnias.
In all, over the preceding two years, Ukraine's direct and secured public debt went up by 3.6 times (up to 317 billion hryvnias) and the government domestic debt hiked fivefold.
Over the 30 months of its existence, the Tymoshenko government set a dismal record in terms of the number of violations of the Ukrainian constitution and national laws, and in terms of downwards tendencies in the economic and social areas.
Over this period, the world's leading rating agencies downgraded Ukraine's credit ratings seven times to finally place it at the bottom, pre-default level.
"Tymoshenko had resources enough to revive the economy but she ruined it! Loans were spent to back the national government rather than to preserve and create new jobs, to protect the most vulnerable categories of population. All these funds have simply vanished," Azarov said indignantly.
The state was ranked among the top ten states with the highest credit risks. At that point, Ukraine was credited as the world's leader in terms of risks of investments in the national economy.
Azarov's conclusion was tough:
"Over the period of Yulia Tymoshenko's premiership, the country has lost ten years it might have spent to modernize its economy, to introduce updated technologies in its industrial sector, to raise living standards, and so on... We have lost something that cannot be recouped, we have lost time...
This is what they are leaving to the Ukrainian people and the new government!... Will they be called to answer for that some day? I hope, they will."
What Tymoshenko's opponents said about her activity as a prime minister, as a matter of fact, cancelled out and voided all she had done in the entire period of four years that she had been in power. It seemed to be the end of her career. Everything seemed to be clear. But, obviously, Azarov's report and several lawmakers’ speeches delivered that day, when the prime minister was forced to leave the camp of the winners, were not enough.
To get an idea of what Yulia Tymoshenko was like as a state figure it is worth to have a closer look at the period, a rather lengthy one, when she topped the power pyramid. What if her opponents from the Party of Regions, heated up by rivalry and annoyed with constant provocations, were inclined to paint the devil blacker than he (or, rather she) really was? What if in these four years Ukraine saw not only failures and losses, but also achievements and victories? In any case, it is worth to dwell in detail on how Tymoshenko managed to come to power more than once.
Her career as a state servant can be broken down into three periods.
Period one lasted from December 1999 to January 2001, when Tymoshenko was First Deputy Prime Minister in charge of the fuel and energy sector in the Viktor Yushchenko government. Over this period, she was completely focused on gas and energy problems.
Period two – that of her premiership - lasted less than nine months, from January to September 2005. Having to tackle the entire range of economic and social problems, Tymoshenko demonstrated all her potential as a prime minister.
Period three, the longest one, began in December 2007 to be over in February 2010. It was then that she demonstrated her fellow countrymen and the entire world community her capacities as a prime minister and revealed her presidential potential. All she did as a prime minister gave away her presidential aspirations.
It should be noted that over the this time, Tymoshenko was subordinate to Viktor Yushchenko. Moreover, she was in close contact with him. Despite all the problems in their relations, despite their mutual dislike for each other, which sometimes turned into real hatred, these were the years of "unity and struggle between the opposites." She had to bow to the president from time to time, prompted by her resource of "democratic coalition," the bulk of which was controlled by Viktor Yushchenko and without which she could not have a parliamentary majority. Taking herself in hand, swallowing insults, she was just waiting for a moment when she would finally be able to turn over this page and forget about Viktor Andreyevich [Yushchenko] as a nightmare. But the bond between them turned out to be very strong, since it used to be the basis of their common political life. Once one of them was out of power, the other had to quit - together in, together out.
In December 1999, Tymoshenko joined the Yushchenko government in the capacity of deputy prime minister in charge of the fuel and energy sector. The president issued a decree to this effect on the eve of the New Year. What President Leonid Kuchma was guided by when he agreed to appoint this ambiguous woman as the country's deputy prime minister?
Back then, it was a secret to no one that at the beginning of his second office term, the president had to face a lot of pressing domestic and external problems and had no time to waste. Thus, the United States pressed Kuchma for more energetic reforms. After a series of media publications accusing the National Bank of Ukraine of overestimating the currency reserves in a bid to receive more loans from the International Monetary Fund (IMF), in September 1999, the IMF officially said it had stopped issuing loans to Ukraine until it had verified information about the real size of Ukraine’s currency reserves. In December 1999, U.S. Vice President Albert Gore, as a partner in the Kuchma-Gore Commission, came up with a letter to the Ukrainian president, recommending the latter to appoint Viktor Yushchenko to the post of the country’s prime minister and promising more loans in exchange.
Offering support to the government of “young reformers,” Kuchma hoped to overcome a possible crisis in relations with the West. Apart from that, some experts at that time said that the appointment of Yulia Tymoshenko to a government post was meant to weaken the influence of the country’s biggest financial and industrial groups on its political life and to cut down to size some of the Ukrainian oligarchs who allegedly demanded considerable preferences in exchange for their lavish financing of the presidential campaign. So, Tymoshenko was assigned the role of a watchdog to bay at oligarchs who had lost all sense of moderation.
Tymoshenko’s appointment to that post stirred up a stormy response in society. It was a commonplace joke to cite George Soros who had compared her with a poacher appointed to the post of forest ranger. Local observers, too, never missed a change to exercise their wits, calling her a “pike in an aquarium,” or a “fox in a hen house,” etc.
So, Tymoshenko was placed in charge of the key segments of the national economy, such as the energy sector, coal and nuclear industries, markets of oil, petrochemicals and gas. And she got down to business enthusiastically like she did. Shortly after the New Year and Christmas holidays, on January 15, 2000, the newly appointed deputy prime minister gave a lengthy interview to her favorite weekly Zerkalo Nedeli, where she spoke about her viewpoints and her action plan.
First, she publicly recognized the fact that Ukraine was stealing Russian gas and even provided exact amounts of unauthorized gas smuggling – from 110 to 130 million cubic meters a day to a sum of about $10 mln! So, she declared it her first top-priority task to strike civilized deals to “understand what we are taking, how much it costs and how much we are paying.”
Second, she confirmed Ukraine’s debts for Russian gas amounting to $2.233 bln and came out with a proposal to Russia’s gas giant Gazprom to write off the penalty interest (which was about $500 mln!) and restructure the outstanding debt for the term of ten years. As a matter of fact, it meant that Ukraine was not going to pay off its gas debts.
Third, the new deputy prime minister in charge of the fuel and energy sector said she had no objections against buying gas at a price of $40 for 1,000 cubic meters but on condition that the go-between in the deal would be the Itera Group and the payment for the entire volume of gas would be in cash.
So, Tymoshenko’s plan of reforms, energy specialists and gas traders were waiting for heart-in-mouth, as the Zerkalo Nedeli put it, envisaged:
- the removal of all auxiliary structures in the energy sector;
- the study of the efficiency of privatized facilities to calculate the state’s profits from privatization.
For the first time, she voiced the idea of possible re-nationalization of privatized facilities.
An abstract from Tymoshenko’s interview:
“I am going to say something that you might not be willing to listen. But private property is managed no better than government-owned property... if normal government management technologies are used... The world experience has proved it long ago. There is no difference in the management efficiency. The only difference is who has the profits. We have worked out a package of documents to foster the efficiency of the government management of the energy sector property, using entrepreneurial initiatives. We need to sell government property to serious private structures on real tender conditions to manage this property on real government conditions – this the golden mean between private profits and profits for the state.”
Tymoshenko advanced an idea of a rigid system of tariffs to re-distribute profits between the government and the population, between the government and industrial companies. Apart from that, as a measure to optimize the energy market, she eyed to cancel barter and securities (rather dubious securities, as a matter of fact) floating practices and to use only money payments instead.
This package of measures was dubbed “Clean Energy” and, having enrolled Kuchma’s approval, Tymoshenko plunged into its implementation. The new government revoked several dozens of the previous government’s resolutions that allowed offset of payments in the energy and fuel sector. A special law On Electricity Sector banned barter trade operations and bill of exchange transactions on the energy market. Critically-minded experts however were not inclined to trust Tymoshenko. They noted that the deputy prime minister was beginning to wreck those schemes that had once helped former Prime Minister Pavlo Lazarenko make the United Energy Systems of Ukraine a monopolist on the Ukrainian gas market and that Tymoshenko had extensively used herself to build her own fortune. They claimed that Tymoshenko was seeking to use her powers to avenge of the wreckage of her creation – the United Energy Systems of Ukraine – and to take control over the sector in the format of the so-called “manual operation regime.”
Tymoshenko’s appointment fueled political tensions in the country and escalated internal strife between local oligarchs and various pressure groups. It was Tymoshenko herself who kicked off this campaign, having accused the CEO of the company Naftogaz Ukrainy, Ihor Bakai, of incurring colossal damage to the country’s economy. Apart from that, she urged a state of emergency be imposed in the country’s energy sector for a period of three months. A key provision of her plan was to suspend privatization of energy facilities and carry out partial re-privatization. According to well-informed experts, these property redistribution plans were geared to strengthen structures close to Tymoshenko.
Influential businessmen and politicians strongly opposed a possible state of emergency regime, so the president never signed a relevant decree. Moreover, Tymoshenko’s words about the gas debts and gas theft stirred up a storm of indignation among the country’s top-ranking officials. The president had to disavow Tymoshenko’s statements and actions. In any case, following these developments, Ukraine’s positions at the gas negotiations with Russia visibly worsened and President Kuchma had to take urgent steps to try to settle disputable issues.
Despite the fact that the strife between various influence groups ended in an interim victory of Yulia Tymoshenko (her opponent, Naftogaz CEO Ihor Bakai was removed from his post in March 2000), this success was short-lived. In March 2000, the deputy premier lamented in an interview with the Zerkalo Nedeli weekly over the colossal pressure on herself, constant threats she had to hear and over the lack of support to her initiatives. She put the blame for that on a number of officials and politicians, including Secretary of Ukraine’s National Security and Defence Council Yevhen Marchuk and President of the Ukrainian Union of Industrialists and Entrepreneurs Anatoliy Kinakh. “The entire system of the shadow sector is pushing the train of the fuel and energy sector back to a dark tunnel,” while the president preferred to hear only what his team was saying, she claimed back then.
In April, President Kuchma came down on the deputy prime minister in charge of the energy sector, saying her work was unsatisfactory as the situation in the sector had neared a point of collapse. He even commissioned Prime Minister Viktor Yushchenko to “look at the expediency of the existence of the post of deputy prime minister in charge of the energy sector.” So, watching the developments, experts spoke about alternate rises and falls of rival groups – those of Viktor Medvedchuk, Ihor Surkis and Oleksandr Volkov, on the one hand, and the tandem of Viktor Yushchenko and Yulia Tymoshenko, on the other.
However in May, the anti-Tymoshenko campaign swelled. Yevhen Marchuk submitted to the Verkhovna Rada a note about the government’s inability to arrange the smooth operation of the energy sector. Minister of Fuel and Energy Serhiy Tulub, of whom Tymoshenko had previously spoken quite positively, first addressed a similar letter to the president and then sent in his resignation. Observers said he had done it because regional energy companies he had controlled were stripped of the right to supply gas.
In June, the 1+1 television channel aired the country's first televised debates between Yulia Tymoshenko and Hryhoriy Surkis, an oligarch and the owner of the Slavutich concern and the Dynamo football club, in the program Epicenter anchored by popular journalists Vyacheslav Pikhovshek. The program was much talked about, as Surkis, a successful businessman but an inept speaker, was absolutely crushed by Yulia Tymoshenko. Having won a public rhetoric victory, she however failed to withstand, as many would expect, behind-the-scenes confrontation with the Medvedchuk group, where Surkis belonged to. Her attempts to concentrate financial resources in the hands of the government (in her own hands, as a matter of fact), to establish control over privatized regional energy distribution companies met fierce resistance of other players on the energy market. More to it, it should be noted that the deputy prime minister showed her hash temper not only to the greedy oligarchs but also to ordinary people. In 2000, many of them found themselves victims of the company Clean Energy, when it organized mass-scale checks of household gas and electricity meters throughout Ukraine. "Flying squads" were cruising the country to spot home-made electricity fuses cunning Ukrainians installed to underreport meter readings, to register people's electricity and gas debts and to issue huge fines. Gas and electricity supplies were cut off to those who failed to repay their debts. Indeed, Ukraine had never seen such long queues to electricity and gas payment outlets. But a short-term result was ultimately reached. So, the Yushchenko government could spend some of the money earned this way to repay wage and pension arrears.
In mid-2000, President Kuchma (influenced mainly by Viktor Medvedchuk, as some observers said) was absolutely straight saying that the government had brought Ukraine's energy system to a point of collapse. He warned he would not let any of the members of the government use the country's energy sector in their political interests.
In late July, Tymoshenko visited Turkmenistan, apparently on her own initiative. In Turkmenistan, Tymoshenko and Turkmen President Saparmurat Niyazov signed a sensational protocol on the resumption of large-scale Turkmen gas supplies to Ukraine (29 billion cubic meters at a price of $42 per 1,000 cubic meters) till the border between Turkmenistan and Uzbekistan, from where gas pumping was the competence of Ukraine. Russia's Nezavisimaya Gazeta, an influential newspaper at that time, wrote that it was Tymoshenko who had talked Niyazov to resume gas supplies to Ukraine (although shortly before that, Russia had agreed to buy all Turkmenistan's gas). However, a day after, Kuchma had to disavow Tymoshenko's agreements and tactfully assure Niyazov, in a telephone conversation, of his "readiness to look for mutually acceptable solutions." Meanwhile, addressing his fellow countrymen, the president said that under the agreements brought by Tymoshenko from Ashgabat, the gas price would reach $90 per 1,000 cubic meters, a sky-high price at that time. Feeling offended and disgraced, the deputy prime minister hurried to say that the deal had not been signed but only initialed.
In August 2000, according to analysts, the anti-Tymoshenko campaign grew into a real war of destruction. Prosecutor General's Offices opened a criminal case against her husband Oleksandr, who was a member of the board of the United Energy Systems of Ukraine, and the company’s first deputy director general, Valeriy Falkovych, on charges of large-scale embezzlement.
Tymoshenko then claimed that this was how the leaders of shadow and corrupted forces were seeking to hamper reforms of the fuel and energy sector. She said the very fact that the criminal system was that active demonstrated that her reforms were yielding desired results and the shadow sector was being driven in the corner. "Terror against my near and dear betrays their savage hatred and fury."
Tymoshenko spared no effort to persuade people that her actions had helped raise colossal sums, build civilized relations in the fuel and energy sector, switch to money transactions for all types of energy resources, stop unsanctioned gas and electricity use, and build a system of accounting and control. Some biographers noted that Tymoshenko did manage to cancel barter and mutual debt offsetting operations, to make energy market players pay in cash, to introduce a system that directed consumers' money directly to the energy market bypassing go-between companies, whose owners paid nothing to the state.
However, Tymoshenko' bright reports about dramatic rise of budgetary incomes from the reform of the fuel and energy sector were not confirmed by the then director of the Ukrainian tax service, Mykola Azarov. Thus, Tymoshenko claimed that budgetary revenues from companies of the fuel and energy sector had amounted to 6.401 billion hryvnias. Azarov, however, said the sum was 2.587 billion. Ultimately, the president even had to set up a special commission to verify these data.
Tymoshenko's position grew worse after she had been accused of handing over bribing money in a criminal case opened in Russia against Russia’s former Deputy Defence Minister Vyacheslav Litvinov.
On January 5, 2001, the Ukrainian prosecutor general's office charged Tymoshenko with corruption and organizing money laundry. After that, the prosecutor issued a verdict to relieve her from her duties. On January 19, 2001, President Kuchma signed her resignation. This was the end of Tymoshenko's first period in power.
But some issues remained unclear. What did she really do when she was deputy prime minister? Was she a real ardent and efficient fighter against corruption and shadow capital in the fuel and energy sector and was her removal from the sector plotted by her numerous rivals and opponents? Or was she only pretending to be a selfless fighter for justice just to disguise her aspirations for absolute power and immunity? Was she just seeking to re-distribute resources to the structures she had controlled?
It is hardly possible to give an exhaustive answer to these questions. We can only guess about some things, and we shall never know anything about others. Anyway, it is not that difficult to get an idea of Tymoshenko's general strategy of being in power. The more so as that over the period of her first advent to power, she demonstrated certain qualities and added to her armory some principles and techniques, which she would later use extensively already in the capacity of Ukraine’s prime minister.
First of all, I think the jocular comparisons with a "poacher appointed a forest ranger" should be taken quite seriously. Indeed, being an insider of the gas trading business, having some experience in shadow deals and techniques of bypassing laws, she, like anybody else, was capable of spotting and breaking others' schemes. ("The United Energy Systems of Ukraine had very literate specialists, we knew where we were living in and did everything so that no one could find anything wrong about it.")
There was something wrong in President Kuchma’s very decision to appoint the former top executive of a scandalous corporation to such a high state post. It looks like the president opted for a wrong principle – to appoint to state posts people whom he could control be means of compromising materials he had. His logic was quite clear: Yulia Tymoshenko was an energetic, competent and smart woman but her reputation was marred by dubious deals and she was obviously ready to make amends. So, let her work in the fuel and energy sector, let her clear up the mess, let her bully the brash oligarchs once she was that smart and bold. And we shall see about it. If anything happened, we would be able to stop her. A thick criminal dossier on her can easily be transformed into a criminal case, so she could be kept in check.
But this trick did not work with Tymoshenko. And mostly because she belonged to another generation of administrators who had little in common with the former generation of Soviet-era bureaucracy. It turned out that intimidation techniques so efficient with others (say, with Pavlo Lazarenko) did not work on her. A tilting doll, she never took any failures as a complete fiasco that cannot be repaired. Her lust for life, for, so to say, better life made many to make way for her.
So, it became absolutely clear that Tymoshenko was both venturesome and prudent, she preferred to go by her own rules, which she sought to thrust on others. (“We were the first to understand that we must go to politics and change the laws and rules of the game”). Any sense of fear seemed to be unfamiliar to her, or rather she seemed to be able to control her fears so that no one could see what and how she was afraid of. One of her key principles was to never fall out of the race, whatever might happen. No matter what was going on, she had always been in the limelight, playing the title role. Being her own image-maker, she had been strictly sticking to invariable rules for years: she had always sought to be a newsmaker, to have all the public interest.
Tymoshenko never used behind-the-scenes negotiations and deals. She preferred transparent relations with opponents. Moreover, she was flaunting these relations. As a matter of fact, sometimes it is much easier to neutralize the enemy before the public eye. She made it her rule to be the first to interpret everything that happened with her or around her: let others make excuses on her heels.
This was what had mislead President Kuchma, a cunning politician, to an extent that he could not exert any control over her. So, he had to put up with her stunts for years and only watch her trying to exterminate anything that was linked with his name from the country’s politics and economy.
In 2005, watching the activities of the “orange authorities” from the sidelines, Kuchma wrote about Tymoshenko that she was ruling the country as a director or an owner of a petty business.
“She is doing whatever she wants... Theoretically, this style of governance can be used for years, but in the long run it will end in a defeat.” The ex-president insisted that “bearing in mind the interests of the state, Yulia Tymoshenko cannot be allowed to be the prime minister for a single day. Proceeding from the revolutionary interests, she was to be appointed to this post forever, i.e. for the entire period of Yushchenko’s presidency. Viktor Andreyevich [Yushchenko] chose the worst option – neither here nor there. He appointed her prime minister but humiliated by such restrictions that were to end in an open political war.”
These words seem to be quite applicable to Kuchma’s own relations with Tymoshenko when she was deputy prime minister. But, as they say, this is all about Monday morning quarterbacking. Well, maybe, other proverb would be more to the point – people who live in glass houses should not throw stones.
As concerns Tymoshenko, her staying in the office of deputy prime minister demonstrated that:
- she was ready to work in the interests of the state but that she took the notion of the “state” most seriously only when it was associated with herself (it would not be an exaggeration to say that Tymoshenko was seeking to try on Louis IV’s famous saying “I am the state”);
- she was able to use her experience in handling shadow financial schemes as a tool to counteract such schemes.
Implementing her ideas, plans and programs as a deputy prime minister, she demonstrated a bent for tough authoritarian styles, for willful decision-making. Her governance styles were characterized by voluntarism and intolerance. She sought to have everything she conceived be realized immediately. As concerns relations with Ukrainian businesses, she opted for a confrontational path, for the tactics of tough measures, sanctions and economic repression. It was only natural that businesses paid back in her own coin: malcontent top managers of relatively big business and political groups organized a campaign to oust the unwelcome deputy premier.
By the beginning of the second round of her government career, when she took the prime minister’s office in January 2005, she was already an experienced opposition politician, having a prison term, participation in street protests, and work in legislative and executive branches behind her. She was approved as prime minister on February 4, 2005. Before being appointed to the post, she delivered a report, which she had conceived to shock and bowl over the country’s lawmakers. In her more than 60-minute speech, she outlined unprecedented approaches to state administration.
An abstract from Tymoshenko’s report:
“For the first time, the government wants to present to you a philosophy of our thinking, a philosophy of the organization of government work, a philosophy of building our society... If it this philosophy is clear, exact figures will be only a consequence of the fair and clear conditions laid as a basis of this work. This program has non-typical sections...”
These words were perfectly true – the program had such sections as:
- Faith (in God, in home country, in oneself);
- Justice (the principle of the supremacy of law, human freedoms, inborn equality of children, justice, uprooting corruption);
- Harmony (efficient ties between the authorities and society, separating businesses from the authorities, common rules for all, efficient management of state property, support of private property and businesses, transparency of the budget, pension reform);
- Life (financial backing for newborns, equal access to education for children, financial assistance to all educational establishments, creating new jobs, encouraging small and medium-sized businesses, reforming the housing and public utilities sector, affordable housing);
- Security (cardinal army reform);
- World (Ukraine’s proper place in the world, adoption of a new national strategy of European integration, partner relations with Russia).
For more than an hour, Tymoshenko was enthusiastically and zealously narrating the philosophy of the new government’s work. Her speech was interrupted by applause several times. And even skeptical comments of one of the lawmakers, who said that it was nothing more than “fantasies of an attractive woman, though somewhat interesting for these genre,” did not impact the result of the voting. So, Tymoshenko won a sweeping victory in the parliament voting, with a record-breaking number of votes cast in her favor (373).
It was literally a “triumphant progress of the Tymoshenko regime” in the country, her shining hour. Correspondents and journalists were flocking around her all the time. In an anticipation of her official appointment, she gave dozens, if not hundreds, of interviews, having not more than 20-30 minutes of rest between them on some happy days. The Maidan idol was expounding her vision of changes.
As soon as she finally took office, she voiced severe criticism of the political reform launched in December 2004, when the election campaign was in full swing. This reform was conceived to vest the parliament with bigger authorities and to restrict presidential powers. So, Ukraine was to evolve from a presidential-parliamentary republic into a parliamentary-presidential one.
An abstract from Tymoshenko’s interview:
“When a state is eaten away by the metastases of corruption, clannishness and outlawry, such state needs a strong national leader able to demolish the old structures and establish order. And for these ends, such a leader needs broad powers. And the presidential-parliamentary form of government meets the call of the time... But the model adopted by the Verkhovna Rada in a haste provides for no systems of responsibility and is unprofessional in general... Well, all this could be called anything... but a constitutional idiocy... The political reform was a victory for Kuchma’s team.”
Tymoshenko gave to understand that she felt strong enough to cope with premiership. Moreover, she claimed that she was the best choice for Ukraine. She claimed that as soon as the tandem of Yushchenko-Tymoshenko came to power, a new political reform would be conducted, and Kuchma and his team would face trials, a kind of the Nuremberg Trials.
Apart from the political reform, the list of her top-priority tasks included:
- personnel purges (“it is necessary to appoint honest people,” “we shall expose everything to call the authorities answerable for their deeds”);
- inspections of law enforcement agencies (“we must break this vicious circle, when the authorities create favorable conditions for shadow incomes and later use this money to bring these people to the top”);
- appointment of a new prosecutor general (“he must spare no effort to resolve cases of manifestation of violence against politicians and journalists, the prosecutor’s office must finally expose those who were behind Yushchenko’s poisoning”);
- reforms of the tax system (“it will become transparent and comprehensible for people”);
- stricter customs control, fighting contraband at customs points (“we will be able to do away with a larger part of the shadow economy”).
Drunk with success, Tymoshenko sometimes lost the sense of prudence and demonstrated shocking cynicism. Thus, exposing criminal links between the authorities and shadow businesses, she seemed to have completely forgotten that it had been thanks to this big money, including shadow money, that she got her seat in the Verkhovna Rada back in 1996 (it should be admitted she had made a proper use of that money). Or, once, in a bid to entice away lawmakers by her hours-long dwelling on the Philosophy of the Government Work, she seemed to have no scruples in saying something like this, “all the programs are sheer scholasticism and manipulation of public opinion. An informed choice is to be made based on verified information about what this of that politician really did.”
By the way, Tymoshenko had invented her own formula of success, in which she really believed and tried to realize it wherever possible. This formula was: “To begin with some concrete things that can produce immediate results so that people could feel... more confident in future”. That is why the first steps she did were social actions geared to win the sympathy of “ordinary Ukrainians.” In 20005, her first such steps were to increase wages and pensions, and grant maternity allowances of 8,000 hryvnias, a considerable sum for that time (about $2,000 under the then exchange rate). In 2007, she ventured a much-talked-about action “Yulia’s Thousand,” when Oshchadbank was entitled to pay compensations of up to 1,000 hryvnias for lost deposits made in the Soviet era.
So, quite soon, it became absolutely clear that Tymoshenko’s government policy was built on two key algorithms: repressive and paternalist. The former was geared to repress and override the former managerial structures and businesses owned by political opponents, along with anything that could be called “Kuchma’s heritage.” The most impressive in this respect were personnel purges, when about 18,000 government and local officials were sacked to give room to people supporting the Orange Revolution.
The latter algorithm – paternalism – was meant for the “people,” the voters, who needed encouragement and coaxing. Hence, a confrontational model of behavior was chosen in respect of everything that embodied the “Evil Empire.”
Tymoshenko’s ambitions stretched far beyond Ukraine. She virtually dreamed of a kind of the Kiev Maidan’s developments to take place in Moscow.
An abstract from Tymoshenko’s interview:
“I am confident that the Orange Revolution is a benign epidemics to be caught not only in Ukraine. I have a dream that some happy morning Moscow’s Red Square might see dozens of cars, from moderate Taurias to luxurious Mercedeses – all with orange ribbons! I am sure the orange tsunami is to sweep Russia too. And I am happy that Ukraine has finally managed to break away from Russia and is now setting an example to others!”.
As a matter of fact, Ukraine’s new leaders were in a state of carnival agitation for quite a time. The first thing the newly appointed prime minister attended to was to see to it that the prosecutor general’s office close the criminal case against herself. Members of the government were like movie stars, gathering for Saturday dinners, going in for skating and organizing government meetings at a skating rink. Of course, it was her, beautiful Yulia Tymoshenko who was in the spotlight. Her photoshopped pictures appeared on the cover of the Elle in spring (pic. 4). Moreover, the entire world learnt one almost intimate detail: the newly appointed prime minister was so busy that she had to stay at her office overnight and sleep on a narrow camp-bed.
However the first 100 days of the new government in 2005 demonstrated that the policy of that new government was a contradictory phenomenon. The period after the presidential polls could be described as an epoch of post-Kuchma eclecticism that combined incompatible on the face of it things – democratic initiatives and authoritarian methods, anti-corruption steps and actions promoting corruption, the recognition of the supremacy of law and actions giving away complete disregard of law and human rights. Words about European values and pledges to completely break away from the past were to mislead anyone – the new elite that came to power had been formed and lived for years “under Kuchma,” so it could not but use the arsenal of tools inherited from the previous generations of politicians, now to oppose Kuchma. Apart from that, this apparent unscrupulousness entailed a number of phenomena of principled importance.
The president and the government badly needed time. Oncoming presidential elections (March 2006) required energetic and urgent measures to consolidate the success of pro-presidential forces in forming the parliamentary majority and the government. This was the context behind such measures as:
- unprecedented changes in the current budget aiming to support the budget-dependent population categories (in a bid to expand the social base of support);
- targeted financial and criminal-political prosecution of the new opposition, or the former authorities (in a bid to weaken their political influence on financial resources);
- large-scale personnel purges and the formation of a new personnel corps (in a bid to rotate officials vested with administrative resource);
- mobilization of efforts to carry out a territorial and administrative reform (in a bid to establish control over local governments).
Notably, nothing of the above was ultimately brought to fruition, but for personnel reshuffles. Criminal prosecution was started to end in the arrest and almost immediate release of one of the leaders of the Party of Regions and governor of the Donetsk region, Borys Kolesnikov.
Attempts to cancel the constitutional reform of 2004 yielded no success either and the reform finally came into force from January 1, 2006. The court and administrative reforms were not even started.
Moreover, the president and the government found themselves hostages to their own promises of a quick Ukrainian economic miracle, the results of which they claimed would be felt already in 2005. The formation of the “budget of social development” (as Viktor Yushchenko put it), which provided for the rise in pensions, salaries and other social benefits, the reduction of the army service term to one year, the implementation of the affordable housing construction program and other measures geared to improve the living standards in Ukraine, required other budget-building measures.
Seeking to quickly receive cash, the government toughened control over tax collection (and in the first three months of 2005 budgetary incomes increased by 1.443 billion hryvnias, or about $300 mln), cancelled tax privileges and launched high-profile re-privatization processes.
The goal of the government, and, first of all, of the prime minister, was to consolidate the role of the state, to build up the images of the government “of people’s confidence” and “people’s premier.” It was vitally important for Tymoshenko to establish control over the strategic budget-forming sectors of the economy and over re-distribution of property. She saw it as one of her top-priority tasks to expand and consolidate the government sector of the economy.
Experts however noted that President Yushchenko was unwilling to support such a tough economic policy model. He had more liberal approaches that had noting to do with confrontation with businesses, radical re-distribution of property or repressive measures. Nonetheless, in the heat of the election campaign, Yushchenko urged to revise the results of privatization of Krivorozhstal, one of Ukraine’s biggest steel maker, and a number of other enterprises. But his key idea was the so-called East European liberalization model that, in the long run, was to ensure Ukraine’s membership in the European Union. The differences between Yushchenko’s and Tymoshenko’s political and economic approaches, to a certain extent, could be exemplified by their disputes on the scale of re-privatization. While the president was content with the re-privatization of some 30 facilities, the prime minister would not agree on anything less than 300.
Much more could be written about what was going on in Ukraine in 2005, and much had been written about it. A lot of works on this topic (articles, books, let alone all kinds of commentaries) came out by the Orange Revolution first anniversary. Tymoshenko’s qualities as a state figure were revealed already in the first months of her premiership. Her work in the government gave grounds to outline various versions of her socio-psychological portrait.
Thus, in a profound work entitled “Ukraine without Kuchma. A Year of Orange Government,” experts from the Kiev-based Center of Political Studies and Conflictology characterized Tymoshenko’s ideology as a mixture of radicalism, conductivism and populism, or solidarism, as Tymoshenko might have seen it.
Her radicalism was seen in the methods of administration she used and in the tasks she had set. Take, for instance, privatization – one could get an impression that Tymoshenko’s goal was to completely exterminate all of the country’s biggest business groups, which had helped her to make a fortune under Kuchma. It looked like she sought to build a Peron-type system, when the government is in control of big enterprises, while oligarch are driven into a corner.
Political observers noted that Tymoshenko could barely tolerate when something or someone restricted her really outstanding will. “Her favorite pattern of behavior was ‘any means to an end.’ If she promised a gasoline price less than 3 hryvnias, it would be priced 2.99 hryvnias per liter, no matter what this governmental victory was to cost the country’s economy (and, hence, the people). Her program Stop Contraband was of the same sort.
Her conductivism was seen, according to experts, in her profound belief that the government can and must be an efficient manager. She seemed to be sure that no socially-oriented market economy could be built without a stronger role of the government in the economy. She preferred manual administration, with its strict algorithms, to self-action mechanisms. In this respect, her views were poles apart from those of President Yushchenko.
Being a populist, Tymoshenko perfectly used her skills of “enchanting people.” By intuition, she opted for such decisions that were bound to win popular support, even if such decisions were beneath any criticism. But her ratings kept high because of her willingness to meet expectations of people longing for politicians who could advocate their interests, the interests of the “humiliated and insulted” against the ruling elite.
Experts noted that in the first months of her premiership Tymoshenko was winning over the public opinion even when she was losing local battles with Yushchenko’s business entourage (she failed to realize her version of oil re-export, she failed to find solutions to the “meat” and “gasoline” crises, moreover, she failed to defend her approaches to re-privatization). Thanks to this, she could enhance her positions in the run-up to the elections of 2006.
So, experts arrived at the conclusion: Tymoshenko’s favorite pattern of conflict settlement was to escalate a conflict driving it to the verge of a crisis, the way out of which lied through eliminating the opponent.
Former President Leonid Kucmha could not help but publish a book entitled “After Maidan,” where he collected his diaries of 2005-2006. Of course, he could be suspected of being biased against the “orange” authorities, which is quite understandable. But his obvious advantage was that unlike Yushchenko and Tymoshenko, who were only finding feet at their new offices, Kuchma had spent quite enough time in power (both as the prime minister and the president), and knew all the insides of these posts.
In his book, Kuchma dedicated quite a lot of pages to Tymoshenko. Despite the long history of their confrontation and the much shorter history of their cooperation, he discovered a lot of new aspects of her character and behavior in 2005-2006:
“I have never expected Yulia Tymoshenko to be so focused on self-promotion and self-advertising as a prime minister... It is something incredible. Every single day, she is there on the television screens saying something totally inappropriate... I can’t see why she should indulge in demagogy, why she should mislead people. She does have the power and her task should be to keep it. And it is much more difficult to keep power by means of demagogy than to win power. It is practically impossible.”
So, Ukraine’s former president placed the blame on the new prime minister for the following:
1. Revision of privatization terms and clamping down on Russian businesses in Crimea and in Ukraine in general ("I wanted to use Russian money if not to make Crimea a prosperous region but at least to get things going for the better there. But the "orange" guys could invent nothing but from the very first days to rush to Crimea with an audit: who bought what. And I think, why envy?").
2. Blowing up the re-privatization campaign. ("We are incredibly happy to sell to an Indian our metallurgy giant, Krivorozhstal, without which Ukraine will never be able to be a big metallurgical player on the world arena").
3. Preferring administrative command regulation style to market methods of economic management. ("Even Vladimir Lenin recognized in the long run that people's wellbeing could not be enhanced through administrative command methods, through confiscation and requisition. But the Yushchenko-Tymoshenko government, at the very beginning, demonstrated the entire world that they had no idea of these basics").
4. The lack of reform policy. ("Executive authorities won colossal support in the parliament, but they don’t even think to begin reforms. All are busy with feuding").
5. The lack of professionals among the government members. ("I never appointed any holy fools, or raving lunatics, or cooks, or bodyguards, or, heavens above, columnists, political observers and political technologists to administrate the entire economic sectors or state agencies").
6. Populism, leftism and arbitrariness. ("... After the victory of the revolution they call democratic, the first thing they did was to revive the Bolshevik-type institute of envoys, an absolutely unmotivated step! Envoys for price regulation at bazaars, envoys at filling stations, light cavalry squadrons to expose and catch violators, telephone numbers for snitching (informers)...").
As a matter of fact, the list of Kuchma's claims and critical remarks in respect of Tymoshenko as a prime minister was much longer. Was his criticism fair and justified? It could be partly explained by his hurt pride and a grudge he owed to the "young reformer" team, who had been so unceremonious with himself. But he had good reasons to have such critical opinion of the developments.
In the spring of 2005, the privatization scandal was followed by a series of economic crises, with hiking prices on gasoline, then on sugar and then on meat. The government's response to these crises was the policy of mandatory freezing of prices on these products. Tymoshenko's key concern was the budget of growing social spending. Unstintingly, she increased wages in the budget-dependent sectors by 70-87%, maternity allowances - by 12 times (her notorious allowances of 8,500 hryvnias), allowances to orphaned children - by more than five times. People's incomes grew by a third (by more than 40%, according to official reports) in a span of one year.
Critics called this budget "the budget of eating away," which had no provisions to fund the development of business, science, high technologies. The key tendency in the Ukrainian economy in 2005 was a swift slowdown of economic growth and the beginning of a stagnation and recession period in a number of basic sectors. The situation in foreign trade considerably deteriorated, with growing negative current account balance. Actual inflation was much higher than that officially reported.
The re-selling of Krivorozhstal and the prime minister's aggressive oratory about re-privatization triggered a process of massive raider seizures in the industrial sector. Observers noted that it was be beginning of a new re-division of property. It was a common joke in Ukraine at that time that the "orange revolution was conceived by millionaires against billionaires." Unauthorized seizure of property was seen as an attempt to use the results of the Maidan victory and re-distribute fetching properties for the benefit of the winners.
The government was demonstrating its good intentions, but the results were contrary to what they planned.
This was when Ukrainian capital began to drain abroad in large amounts (according to some sources, capital outflow from Ukraine reached $1 bln in the first four months of 2005). In response to re-privatization processes and growing administrative pressure, Russian businesses reduced their investment activity in Ukraine. A gap between Ukraine's western and eastern regions only grew wider.
But, despite expert criticism of Tymoshenko's activities, her popularity among not only grass-roots voters but also among lawmakers was rather high in 2005. She and a number of her principally important initiatives won absolute support. Thus, as many as 430 lawmakers voted for a law prohibiting alienation of the country's gas transport system, and more than 370 lawmakers voted for the budget. I think it was due to the emotional impact of the presidential elections and Yulia Tymoshenko's high authority as the Orange Revolution leader.
Apart from that, her personality mattered too. Whereas some saw drawbacks and failures in her policy, others sought to overlook and even forgive them. Generally speaking, the years from 2005 to 2007 saw a peak of Tymoshenko's popularity. People dedicated verses and songs to her and painted her portraits. The "orange princess" was a motif of folk handicrafts. She became a commercially attractive theme for souvenirs. Nesting dolls with Tymoshenko's face were selling like hot cakes in Kiev’s famous tourist street Andreevsky Spusk. (pic. 5).
Obviously, professional analysts never were so exaltedly romantic about Tymoshenko. But for her contracted analysts, the bulk of experts were generally very sober about the situation. Thus, Ukrainian political expert Andrei Yermolayev maintained that Tymoshenko's ideology was built on stereotypes of, so to say, folk origins, social populism and flirting with the poor. She managed to interpret the re-distribution of property and changes in the budget as a manifestation of social justice and people's vengeance. Being the country's number two official, Tymoshenko, according to her own assurances, tried to realize the idea of a wise and fair state, which is looking after its citizens, protecting their interests and expressing their will.
According to Yerlomayev, the advantages of the "orange" authorities as compared with their political opponents were seen first of all in their ability to conduct an enthusiastic social populist policy, much more attractive than criticized. Tymoshenko’s opponents were simply unable to keep pace with her to offer proper answers promptly. The new authorities based their political tactics on preemptive playing with social promises, which, as a matter of fact, was their unquestionable advantage edge.
Apart from that, according to analysts from the Kiev Center of Political Studies and Conflictology, soon after it came to power, the “orange team” saw fierce disputes between the prime minister and big businessmen from among the presidential entourage, in which the victory was invariably Tymoshenko's. Appealing to "people," she spared no effort to expose Yushchenko's oligarchs, who were absolutely unable to either protect themselves or to offer support to small and medium businesses, which once backed the Orange Revolution but later suffered most from Tymoshenko's populist actions.
Over the several months of her premiership, Tymoshenko gave thousands of interviews to expound her version of the developments. Her opponents barely had time just to open their mouths. In April 2005, a group of journalists from the Zerkalo Nedeli weekly led by its editor-in-chief Yulia Mostovaya did a 50-page interview with Tymoshenko, who answered more than 60 questions! In this interview, Tymoshenko spoke in detail about her vision of next to all most important problems of state administration. It was her first and the last such monumental, so to say, interview.
She put the entire blame for skyrocketing inflation upon the previous cabinet. Despite the fact that salaries and retirement benefits were increased from January 1, 2005 and recalculated post factum, Tymoshenko claimed that inflation had been triggered by “colossal payments during the election campaign... People were paid pension supplements and could afford to buy at least a tiny piece of meat. The market responded immediately.”
Answering question of the Zerkalo Nedeli journalists, the prime minister outlined her action plan that could shock many. Thus, commenting on the arrest of Borys Kolesnikov (governor of the Donetsk region), she put it quite straight, saying that “not only Kolesnikov deserved to be put in prison, and he was not the one to be the first.” But the most crucial novelty Tymoshenko insisted on was a program of re-privatization and increased evaluation of enterprises.
An abstract from Tymoshenko’s interview:
“My concept is very simple. Guys, you worked with free property? You earned money? You established global contacts? You have built muscles? Now it is time to buy enterprises at their real costs... We must pass a law on increased evaluation of enterprises, but not all of them. First, we shall omit hairdressers and other medium businesses, we shall take only enterprises with big production volumes. Second, we shall find out whether such enterprises were auctioned or not... Unfulfilled investment liabilities could serve as a revaluation criterion. But I shall tell you a widely known secret: no one has ever made any investments...”
In his memoirs, Leonid Kuchma plunged into polemics with Tymoshenko. He reminded that four fifths of the country’s state property had been privatized in exchange for certificates, i.e. for free. His government had suggested some 40% of property be sold that way but the parliament had ruled to do it in respect of 70% of government property. “Why these verbiage about people’s property I had allegedly given out or had allowed to be given out for nothing?,” the former president wrote indignantly. “This law was passed by you, lawmakers. I had never asked you to do that. Anyone smart enough used your law to buy up certificates to get control of enterprises. And now you say, “Pay more or return what you have!” It is a blatant outrage and it can throw Ukraine back to the Middle Ages.”
In the period of Tymoshenko’s first premiership, the camp of her opponents was considerably reshaped. Whereas before Yushchenko took the presidential office, her foes had included primarily the then President Leonid Kuchma and his entourage, after Yushchenko’s inauguration, more people were added to her enemies: along with members of the Party of Regions, they were “any friends” and closest mates of Viktor Yushchenko, namely Petro Poroshenko, Oleksandr Tretyakov, Mykola Martynenko and others. Tymoshenko used various methods against each of them: from rhetoric denunciation to special actions.
When asked whether she thought herself to blame for the sugar and gasoline crises, for widely practiced stealing of Russian gas and for the deterioration in the Ukrainian-Russian relations, Tymoshenko, without a moment’s hesitation, put the entire blame for economic recession on Petro Poroshenko, and blamed failures in relations between Russia and Ukraine on Petro Poroshenko and Viktor Yushchenko.
An abstract from Tymoshenko’s interview:
“Our government has been put in very difficult conditions. As a matter of fact, the center of manipulation of the country’s economy was in the hands of Secretary of the National Security and Defence Council Petro Poroshenko. So, the crises we had were absolutely man-made. These crises were needed only to force the president to remove the prime minister...
Over the entire term of my premiership, the president never vested me with the authority to build the Russian-Ukrainian relations. First, he wanted to do it himself. Several months later, he appointed Secretary of the National Security and Defence Council Petro Poroshenko in charge of the Russian-Ukrainian relations. And this man proved to be utterly inefficient in this capacity in a span of two months.”
In September 2005, one of the ideologists of the Orange Revolution, Secretary of State (the post was introduced to replace that of the head of the presidential administration shortly after the new administration was formed) Oleksandr Zinchenko came out with a statement on corruption in the President Yushchenko team. Among the key corrupted figures, he listed the three above mentioned politicians. This statement entailed probes by a parliamentary investigation commission and the prosecutor general’s office, and these probes were followed by high profile resignations, including the resignation of the government. Back then, many were sure that it was Tymoshenko who stood behind Zinchenko. However she overestimated her power and was ousted from the prime minister’s office.
Surprisingly, but from the very first days of Tymoshenko’s political career Ukrainian male politicians allowed her to humiliate themselves, they shut their eyes to her oratory exercise and their clumsy responses only fed the myth of her overwhelming powers. Thus, Zinchenko’s (Tymoshenko’s as a matter of fact) corruption-incriminatory statements cost Oleksandr Tretyakov his post of presidential aide. In response however he produced only peaceful psychoanalytical considerations: “Yulia Volodymyrivna [Tymoshenko] is a strange person. She has been at war for the past eight years. A normal person would not stand that. It provokes changes in the mentality, in the ways of thinking. She should get out off the warpath. She should have a look around, maybe have some rest. Yulia Volodymyrivna hasn’t had a minute of rest for quite a time... She needs some peace of mind. Maybe, yoga might help...”
Petro Poroshenko, who did sambo and judo wrestling as a young man, seemed to be embarrassed to have a woman as his opponent in the “boxing ring” (on the tatami, to be more precise) and refrained from rude words too: “Do you find Poroshenko’s presence disturbing? You seem to have got accustomed: the sun is rising – thanks to Tymoshenko, the sun is going down – Poroshenko is to blame. Do you want to play this game? Well, then make Poroshenko responsible for the sunset but please word your position clearly: Poroshenko is to blame for this, while Tymoshenko is to blame for that.”
The most serious accusation he voiced in Tymoshenko’s face was that “her staying in the prime minister’s office was hazardous for the economy and democracy.” But this feeble irony about a “charming woman’s whims” was nothing against her harsh, biting and utterly concrete criticism.
However Mykola Martynenko was more scathing, saying that the prime minister was offering privileges to her friendly oligarch clans (for instance, Ihor Kolomoyskyi’s Private Group) and infringing upon other businesses, that she was driven by the lust for power and that fanning anti-corruption scandals she had been bogged down in corruption. But he avoided public disputes, preferring to stand aloof.
So, her information and rhetoric victories over her opponents incurred serious political and image-related damage to them.
But public attention was focused not on her verbal punchfest with the politicians she disliked but rather on her swiftly deteriorating relations with the president. There were good reasons to think that the conflict stemmed from the mere fact of Tymoshenko’s appointment to the post of the country’s prime minister. Her high-handedness, arrogance, self-conceit, excessive ambition and claims for informal leadership hindered efficient and coordinated work with the president. She not only wanted to overshadow President Yushchenko but did it openly, in a pointed manner. So, bearing in mind that each of them had different (sometimes opposite) principles and approaches to state administration, it looked obvious that a conflict was inevitable.
As you know, Yushchenko began to speak about Tymoshenko’s resignation already in May 2005. But her government held out for several months more to be sent to resignation only in September. A spicy detail is that two weeks before firing Tymoshenko, Yushchenko described her government as the best among all.
Two years later, Tymoshenko would return to the prime minister’s office to stay there for more than two years, a rather long term for a Ukrainian government. And what in 2005-2006 was seen as a harsh confrontation between the prime minister and the president would seem nothing as compared with what would happen during her second term in the prime minister’s office. Why did these two politicians, whose relations were evolving from cooling to hostility, have to sail in the same boat (despite Yushchneko’s desperate attempts to avoid it)? Two other prime ministers – Yuri Yehanurov and Viktor Yanukovych, who headed the cabinet in the period from October 2005 to December 2007, were not so conflict-prone, despite the fact that the latter was from the opposition camp, which meant he was a direct opponent to the president.
Tymoshenko became a nightmare for Yushchenko and he could not get rid of it. He was reluctant to see her in the role of the head of government but could do nothing to bar her way to that post. The political services she had offered to him were too weighty. To put it straight, it was Tymoshenko who helped him take the presidential office in 2004. It was her to literally “dissolve” the Verkhovna Rada in 2007, when it began to demonstrate anti-presidential moods so dangerous for the executive authorities.
But Tymoshenko, too, was a hostage to her relations with Yushchenko. And not only because of the fact that she could had taken the premier’s office only upon the presidential approval. Moreover, these two politicians were fettered by the bonds of their faction groups in parliament – without consolidation they could not even dream of forming a coalition majority, and hence, could not withstand their opponents.
In December 2007, Tymoshenko was back in power, but this time her advent to power was not that triumphant as in 2005. In parliament, only 226 lawmakers, or a required minimum, voted for her candidature. More to it, it took several rounds of voting to finally approve her candidature. Notably, fearing falsifications, the BYuT faction insisted that the Rada electronic voting system be not used in re-voting (the first one was invalidated at Tymoshenko’s request). So, it was a simple show-of-hands vote. Evil tongues said that some lawmakers had been brought to the Rada session hall literally in stretchers straight from intensive care wards. But despite all the efforts, these votes were not enough. The decisive vote came from Ivan Plyushch, the former secretary of the National Security and Defence Committee, who was not raising his hand in support of Tymoshenko’s candidature for quite a long time. The issue was settled only after a personal call from the president. So, the required minimum of votes was finally secured.
Ahead of the voting, Tymoshenko addressed the lawmakers with a passionate and denunciatory Apocalypse-style speech. The candidate for premiership claimed that corruption, state property embezzlement and infringement upon national interests had reached such a scale that the former authorities spared no effort “not to let us come closer so that we could not see and check what they have done with the country over the recent years.” She blamed the Yanukovych government literally for everything, from the bankruptcy of the national oil and gas major Naftogaz Ukrainy, along with central gas grids, to the attempt to let Russia have the Energoatom system, from bargaining away the Black and Azov Seas shelves to corrupted privatization of Ukraine’s strategic facilities.
An abstract from Tymoshenko’s speech at the Verkhovna Rada:
“Every day, Ukraine is losing something it will not be able to regain... They are seeking to tear off more pieces from the body of Ukraine, which is practically robbed of vitality by their gang... The last three days have seen a cutthroat fight so that today I was lacking two or three votes. Because they are mortally scared that a person like me, who is not serving the interests of these clans, could put things at rights in this state and achieve results. And each time I came to power I proved that it is possible to establish order. But each time, oligarchs pooled their efforts not to let me do it...
I think today’s voting will be a moment of truth and will test the democratic coalition for its dedication to the cause of establishing order in Ukraine... But sooner or later, this gang will be called to answer for what it has done to Ukraine...”
Notably, vacating his prime minister’s office, Viktor Yanukovych (who was, according to Tymoshenko, the leader of this “gang”) said goodbye to the lawmakers and the people and wished the new government and prime minister to do a good deed for the country – to revive the economy and improve the living standards (?!) “Think about the responsibility you are now undertaking. And please bear in mind that we are destined to live together, so let us together think how to live on,” Yanukovych told his ardent opponents who were threatening him with severe punishment.
Among social priorities the new government proclaimed after coming to power was a pledge to repay up to 1,000 hryvnias as compensation for deposits with the former USSR Savings Bank. The compensations were to be paid within two years. Tymoshenko’s promises were a real revolution: no inflation, no hryvnia devaluation, payment in cash or an opportunity to repay housing and utilities debts at the expense of deposits with the former USSR Savings Bank.
According to the Audit Chamber estimates, as of the beginning of 2007 indexed deposits amounted to 127.9 billion hryvnias. Of course, complete indexing was out of the question and the promised repayment of deposits was rather a reassuring measure. All the same, it was an unbearable financial burden for Ukraine. Economists, who were not engaged by the government, projected inflation growth and doubted that the compensation campaign could be completed. The situation around “Yulia’s thousand” aggravated because of huge queues (with fatal outcomes) to offices of Oshchadbank. Criticism of the government provoked Tymoshenko’s ranting.
An abstract from her interview:
“... Peanut politicians and some of state officials, who in the past 17 years proved their inability to raise retirement benefits, wages, scholarships, to repay lost deposits, have now arranged a cats’ chorus, yelling that inflation is about to skyrocket and everything is going to be awful. I just want you to understand that this is nothing more but an attack of peanut politicians on our government. I can tell you confidently that the government is now working to bring down all inflation processes, so compensation payments, increased pensions and wages will trigger no inflation growth. Don’t you be afraid, everything will be stable and normal in the country, including prices.”
But despite Tymoshenko’s bold and confident statements, the compensation campaign was not completed and experts said it was invalid. The last compensation monies were paid in May 2008. Only half of those who used to have deposits with the former USSR Savings Bank (six million people) were lucky enough to receive their compensations (six million hryvnias). The program of non-cash payment for housing and utilities services failed either. In his article “’Yulia’s Thousand’ in the Furnace of Inflation,” journalists Oleksandr Belikov blamed Ukraine’s severe banking crisis on the Tymoshenko government that had come to power thanks to promises of compensation payments on deposits with the former USSR Savings Bank.
When she came to power for the first time, as a government’s program Tymoshenko presented something that could hardly be clearly defined and that she had called a philosophy. Whereas her first program had no exact figures, indices, calculations, etc., her new program was the opposite extremity. This 70-page small-print document entitled “Ukrainian Breakthrough: For People, not for Politicians” had each and every detail of all spheres of activity. Judging by this document, the government undertook to reform the economy and overhaul the legislative and legal framework of the state, including its constitution.
Indeed, constitutional changes were in the focus of interests of the prime minister. Once again, she raised the subject of the constitutional reform shortly after she took her premier’s office. (“Today, the country needs amendments to its constitution more than any other reform, because no state can develop in a chaos”). But whereas previously, Tymoshenko had advocated the presidential-parliamentary form of government and had done her best to prove the expediency of strong presidential power, now her attitudes changed dramatically. At this point, she was voicing support to constitutional amendments to make Ukraine a parliamentary republic, with the prime minister being vested with special powers, like a chancellor, and the president enjoying only representative functions. The most attractive in her eyes was the German model: “once there is a chancellor, there is order.”
“Taking into account the current political realities in Ukraine, a parliamentary republic is the most adequate model,” she said, explaining the transformations in her views. But she had to abandon the idea of a constitutional reform fitting her own interests (the prime minister is the key figure in the state, the government enjoys the broadest competencies, controls a strong executive vertical and relies on the parliamentary majority). Her efforts were doomed to failure because there were no chances to win over a constitutional majority in the parliament to introduce such serious changes, when the odds were only two votes. By and large, she had to give up the very idea of any reforms whatsoever.
The stark realities of life imposed other priorities for Tymoshenko. Her second term in the prime minister’s office saw another round of re-division of the gas market and attempts to establish the government’s, or actually, the prime minister’s personal control over the fuel and energy sector. And it proved to be a difficult task because Ukraine’s unspoken rules had it that the oil and gas sector was traditionally under control of the president. The president was an essential figure in the established schemes of relations between businesses and the authorities, between politics and finance. It was obviously the pink of insolence to try to intrude upon the alien territory. But it was vitally important for Tymoshenko. An energy-consuming, technologically backward country with scarce energy resources was ruled by an unspoken law: those who controlled the oil and gas sector, controlled the situation. It looked like Tymoshenko had ventured to further deteriorate already aggravated relations with the president in a bid to squeeze him (his clan, to be more precise) out of this key sector.
In this context, the most indicative case was the extermination of RosUkrenergo, an intermediary company that had been importing Russian and Turkmen gas to Ukraine since 2004. Much was written about this case but it is still rather difficult to grasp the real state of things: gas structures, especially intermediary ones, preferred not to make their activities public. Apart from that, experts and analysts used so many sources and cited so contradictory data that it was next to impossible to get at the roots of things.
Tymoshenko came down on this intermediary company, sparing no effort to oust it from the Ukrainian gas market. Like Roman Senator Cato the Elder, who uttered his famous phrase "Carthago delenda est" ("Carthage must be destroyed") frequently and persistently almost to the point of absurdity, Tymoshenko used to repeat as part of her speech that “RosUkrenergo, this corrupted and offhand company, must be liquidated.”
I am not taking it upon myself to throw light on the real state of things but I would like to draw the readers’ attention to the following facts.
Before RosUkrenergo emerged on the Ukrainian market, the biggest quota for gas supplies had belonged to Itera, the interests of which had been lobbied by Pavlo Lazarenko and which had had business contacts with Tymoshenko. In 2005, Tymoshenko was about to sign an agreement with Turkmenistan, under which direct supplies of Turkmen gas were to be vested in this very company. According to some Ukrainian sources, Itera was backed by the former management of Russia’s gas monopolist Gazprom too. But already under Putin, Itera was superseded by another company, and in 2004, RosUkrenergo came into being. It took quite a time for the mass media to find out who controlled that company, both on the part of Russia and on the part of Ukraine. So, in the long run the media revealed that the Ukrainian side was represented by Dmitry Firtash, who had to come out of the shadow after a scandal and to provide public explanations and even to take part in talk shows. The campaign against the gas trader was accompanied by debates about who should own the gas stored at Ukraine’s gas storage facilities – either it be the government or RosUkrenergo.
The confrontation resulted in another gas war in January 2009. This time, it was not a domestic affair, it was a gas war between Ukraine and Russia. The immediate cause of the conflict was the lack of a contract for gas supplies to Ukraine, and the latter’s gas debts of $2.4 bln. In a joint statement issued overnight from December 31 to January 1, Viktor Yushchenko and Yulia Tymoshenko claimed that Ukraine had completely repaid its debts for natural gas and that the gas price for the year 2009 had already been fixed at $201 per 1,000 cubic meters at the Russian-Ukrainian border. Moreover, they said that the document bound Russia to pay at least $2 for pumping 1,000 cubic meters of gas for a distance of 100 kilometers via the Ukrainian territory. As a result, Russia’s Gazprom stopped gas supplies to Ukraine but increased gas pumping to foreign consumers via Ukraine’s territory.
It looked like in late 2008-early 2009, President Yushchenko was seeking to make his own contribution to instigating a gas war between Ukraine and Russia only to see Prime Minister Tymoshenko burning down in Gazprom’s burner. The dramatic saga of gas valves, freezing Europe, mutual accusations of the Russian and Ukrainian sides, Tymoshenko’s campaign against her domestic foes and the Russian authorities’ rebuffing all kinds of statements made by the Ukrainian leaders lasted for about three weeks. It was not until January 18, 2009 that Russia’s Putin and Ukraine’s Tymoshenko reached an agreement to resume gas transit. On January 19, 2009, the sides signed a ten-year gas supply and transit contract, which removed any intermediary companies in gas trade and fixed the European market pricing formula. The gas price no longer depended on the gas transit price. It should be admitted that the pricing formula was not very clear: on the one hand, the gas price was fixed at about $320 but Gazprom’s discounts reduced it to $250-$280.
Tymoshenko credited this gas contract as her personal victory. Her opponents however said it was Ukraine’s defeat. The prime minister had to stand severe criticism from opponents of this contract, who accused her of betraying national interests.
So, along with an obvious result – gradual pushing off the intermediary company from its initial positions on the Ukrainian gas market – Tymoshenko managed to finally part from the president, who never forgave her for her attempts to meddle in the gas sphere, since for quite a long time President Yushchenko’s key financial resource had been businessman Dmitry Firtash. According to the Ukrainian Internet portal Focus, the gas conflict changed the “face” of Ukrainian politics, since Firtash was showing bigger interest in the activities of the Party of Regions and soon become one of its key shadow players, whose influence and financial resources were on a par with those of tycoon Rinat Akhmetov, an informal leader and the “purse” of the Party of Regions. Apart from that, gas prices for Ukraine considerably increased after this gas war.
Having get rid of the intermediary company that was out of her control, Tymoshenko hoped to create new gas transit corridors. She initiated a White Stream project, a gas pipeline from Turkmenistan, Kazakhstan and Uzbekistan across the bottoms of the Caspian and Black Seas. She claimed that Russia “would participate in this project as a companion.” Apart from that, she proclaimed it as her goal to have gas transit tariffs raised.
An abstract from Tymoshenko’s interview:
“Starting from 2006, Russia has raised gas prices by 3.5 times. On the other hand, gas transit prices Russia is paying for its gas exports to Central Europe, remained practically unchanged. We should not put up with double standards. If Russia wants market prices, let it have them on all goods and services, including gas transit and storage. I demand that gas prices and transit prices be calculated based on formulas... The market price on gas Russia is exporting to Ukraine should be equal to the gas price at the EU border minus expenses for gas transit via this country.”
However the international presentation of the White Stream project organized by Tymoshenko was to no avail – Western politicians and investors took little interest in this idea. And Russia, after another round of the gas conflict, invigorated its efforts on the Nord Stream and South Stream projects.
Analyzing the results of the first 100 days of the Tymoshenko cabinet, the Zerkalo Nedeli weekly labeled her policy as a “diagnosis.” The weekly considered the government’s work as utterly bletcherous – instead of conducting urgent reforms, members of the new government were indulging in tripping each other up and outbidding each other in lavish promises, while the prime minister and the president were fiercely fighting for power and ratings. Having no confidence in Tymoshenko, President Yushchenko never hesitated to meddle in the work of her government. According to the Zerkalo Nedeli’s experts, in these 100 days the president, either personally or via his secretariat, issued about 900 assignments to the government – four times as many as to the previous government of Viktor Yanukovych. Despite all their sympathies with Tymoshenko, the Zerkalo Nedeli journalists could not but see such tendencies as decelerating economic development, recurring personnel purges among state servants, weak legislative initiative of both the government and the coalition parliamentary majority.
Along with the energy sector, the prime minister’s attention was focused on foreign policy. Notably, according to the Ukrainian constitution, foreign policy was the sole competence of the president. So, having dropped her chancellor ambitions, Tymoshenko began preparations for a presidential campaign. For these ends, she badly needed foreign support. Whereas in the period of her first premiership she had little time to do much in foreign politics (all she managed to do, as a matter of fact, was to make eyes on the West during her several foreign trips and to settle criminal cases of the United Energy Systems of Ukraine in Russia), at this point she plunged into building her own pattern of behavior on the international arena. She enhanced the government’s foreign policy sector, which was under her control. In this sense, the appointment of Hryhory Nemyrya to the post of deputy prime minister for European integration was more than just a happy choice. After he joined Tymoshenko’s team, political observers noted that her foreign policy attitudes, once chaotic, were put in good order. The Zerkalo Nedeli weekly then wrote that the West, in turn, had highly estimated Nemyrya’s communication skills, his ability to speak a common language with Western partners and share their values. As a matter of fact, it was Nemyrya who helped Tymoshenko really get into the big world of Western politics, who taught her Western political etiquette, who equipped her with rhetoric tools easily understandable for the Western audience. After his joining Tymoshenko’s team, her publicist styles became clearly divided into sacral and profane. The former included politically correct, tolerance-professing publications and interviews with the Western media, while the latter was meant for domestic use only and reflected her own rhetoric skills and the ambitions of her speechwriters, sometime rather odd and quaint.
But Tymoshenko’s rhetoric skills on subjects of foreign policy were not the most important things about Nemyrya’s presence in her team. The most important thing was that Nemyrya, according to Serhiy Rudenko, was a “window to the world” for the BYuT leader. Thanks to her deputy, she learnt to express her positions on the most acute issues in a politically correct European manner. She spoke about the diversification of energy sources, reducing energy dependence on Russia, Ukraine’s participation in the international security system, etc.
Notably, before taking the premier’s office, Tymoshenko had authored a scandalous article entitled “Containing Russia,” which was published in the May 2007 issue of the influential journal Foreign Affairs. The article had an openly anti-Russian character – the author drew parallels between the contemporary Russia and the Nazi Germany of the 1920s-1930s, severely criticized Vladimir Putin’s policy in all areas and threatened Europeans with Moscow’s alleged plans to throw down a serious strategic challenge to the West. Tymoshenko warned against ignoring Russia but called not to appease the “imperial aggressor.”
An abstract from that article:
“Russia should be welcomed in institutions and agreements that foster cooperation -- most important, Europe's Energy Charter and the Transit Protocol, with their reciprocal rights and responsibilities. (Russia refused to sign these documents because of open infringement upon its rights as an energy exporter – the author). But Russia's reform will be impeded, not helped, if the West turns a blind eye to its imperial pretensions. The independence of the republics that broke away from the Soviet Union, including Ukraine, must not be tacitly downgraded by the West's acquiescence to Russia's desire for hegemony.
Ukraine can help Europe and the United States create a viable structure within which Russia can exist securely (highlighted by the author). Our destiny is to be neither a forgotten borderland nor a bridge between the so-called post-Soviet space of "managed democracy" and the real democracies of the West.”
This publication stirred up a scandalous response. Russian experts poured a shower of criticism upon Tymoshenko. But Tymoshenko’s other, no less controversial, publications skipped public attention, although those publications proved that the article in the Foreign Affairs was not a single instance of an attack by the opposition politician, who sought to score additional points, but rather her consistent position. A year before, in her article For the European Energy Balance published in the Wall Street Journal, Tymoshenko tried to persuade the Group of Eight to weaken the global grip of the leaders who are playing the energy card. She recommended to create an Energy Alliance of European countries under the auspices of the Energy Charter Treaty and offered the “orange” coalition’s services in the energy dialogue between Russia and the European Union. Taking a closer look at her words, it becomes absolutely clear that Tymoshenko actually outlined a plan for creating an organization, a sort of Energy NATO, that would confront Russia. The plan was to “formalize the relations among the alliance members and to involve them to a multi-party forum in case one of the members faces problems with energy supplies due to either natural or political reasons... not to let any country be left alone face-to-face with its problems.”
Looking closely at Tymoshenko’s publications on energy-related subjects, one can easily see that practically all proposals of the then opposition politician were geared to make it more difficult for Russia to use its own resources and to impose the terms of the non-friendly union of Ukraine and the West on it. The article, although short-sighted from a political point of view, provoked a rather wide response. But in the long run, neither the West, nor the United States could help Ukraine, or actually Tymoshenko, in its rivalry with Russia. Moreover, after taking her office, the notorious “gas strategist” had to tackle the task of building relations with both the Kremlin and with Russia’s Gazprom.
Whereas Tymoshenko was not that self-confident in her relations with the West and had to grope her way, with her loyal deputy by her side, she felt quite at home as far as the relations with Russia were concerned, since she knew the subject inside out. She was giving to understand to her entourage that she had big influence on Russia’s Putin. She reportedly said back then that Putin was ready to do everything she wanted, once she took him by the button of his jacked and pulled him aside to have a couple of words in private.
In public, she sought to depict all her visits to Moscow as her personal victories. But watching the official video coverage of those visits, one cannot but see an entire spectrum of emotions on her face – from fawning to coquetry, from showing off to attempts to shorten the psychological distance between herself and the Russian leader. Many might remember the Ukrainian prime minister giggling suggestively at Putin’s specific robust jokes in respect of the Ukrainian president. Not long ago, I happened to hear a rather surprising commentary: the West had allegedly realized that Tymoshenko could not be trusted at the very moment they saw her laughing at her Russian counterpart’s scoffing jokes about her country’s president.
Obviously, Tymoshenko had a special interest to Russia. It looks like she was seeking to play the role of a strict tamer trying to temper a wild bear and throw it at the feet of the European Union.
As the presidential elections were coming closer, her role behavior changed. Changes in her styles were meant to render more symbolic importance to her political image, to make herself look more prominent as a one who was already bearing the burden of responsibilities of a big European country's president. In a statement issued in response to Russian President Dmitry Medvedev's message to his Ukrainian counterpart Viktor Yushchenko in August 2009, Tymoshenko was obviously trying on the role of the national leader. She rebuffed the Russian president, apparently measuring swords with him.
An abstract from Tymoshenko's speech:
"We are always ready to listen and to hear our partners both in the East and in the West, to take into account their interests, but we think it inadmissible to interfere into our internal affairs..."
Nonetheless, despite all her anti-Russian rhetoric, Tymoshenko was bending over backwards to outweigh the Ukrainian president and the foreign ministry all together in the eyes of the Kremlin. With the same zeal, she demonstrated her negotiability and pragmatism to Moscow, and her readiness to contain Russia and win positions for Western democracy and European values in the post-Soviet space - to Brussels. Notably, it was hardly a daring task to accomplish on Yushchenko's background.
She always had to balance between the extremities and try to avoid anything that could tell negatively on her chances to finally take the presidential office, which seemed so close to her. No wonder her remarks about NATO and the August 2008 Georgian-South Ossetian war were so carefully worded not to irritate either of the parties. As concerns NATO, Tymoshenko did not have to use all of her diplomatic skills, since the formula of the obligatory nationwide referendum on Ukraine's membership in the alliance spared her from the need to vow loyalty to NATO leaders.
She preferred to stay silent during the Georgian-South Ossetian war in August 2008 and refrained from voicing her support to the two friendly presidents, Viktor Yushchenko of Ukraine and Mikhail Saakashvili of Georgia. While the Yushchenko team called on Tymoshenko "not to trade national interests" and condemned the government for "cutting defence expenses in a dangerous situation," she indulged in decorating the governmental website with greetings to the Ukrainian medalists of the summer Olympic in Beijing.
It was not until the outcome of that war was absolutely clear that the deputy prime minister for European integration, Hryhory Nemyrya, came up with a statement that the Ukrainian government was not going to earn political capital from blood and tragedy and that even European Union leaders had refrained from hardcore statements during the conflict. The deputy premier gave to understand that the cabinet of ministers had not waited for any instructions from the president and had worked out its own program of actions in the Caucasian conflict. More to it, he said, the cabinet had successfully coped with serious tasks and had evacuated Ukrainian citizens and their families from the conflict zone, offered relief aid to the conflict victims, and conducted talks with Georgia's leaders and representatives from other countries. The BYuT faction in the parliament finished the entire thing having issued a statement where it said that like the entire Ukrainian society, it was worried over the aggravation of the conflict in South Ossetia, which had caused casualties among civilians, and that the Ukrainian parliament must do its best not to let the country be drawn into this conflict on the side of either of the parties.
Notably, Tymoshenko's cautious, next to neutral, position towards Russia did not come unnoticed. It looks like that it was the August 2008 developments in the Caucasus that turned out to be a final "loyalty" test. Yushchenko failed that test, while Tymoshenko successfully passed it. After that, the Kremlin began to consider Tymoshenko as Ukraine's key (maybe in the future) negotiator.
Nevertheless, her foreign policy revealed signs of Machiavellianism. One can hardly be 100-percent sure to say when she was really truthful. Whether it be her scandalous article "Containing Russia"? Or when she was telling Russia's Putin confidentially about absolute mutual understanding and about reaching mutually beneficial agreements on gas issues? Or when, along with President Yushchenko and Verkhovna Rada speaker Arseny Yatsenyuk, she signed an application for putting Ukraine on the NATO membership action plan and the March 2010 Brussels documents on the modernization of Ukraine's gas networks (without Russia)? Or when she taught her fellow countrymen a history lesson, saying that Ukraine and Russia "were building a common system for 70 years and it cannot and must not be severed because it is a global tendency to unite"?
Undoubtedly, the year 2009 was lost in terms of the country's development. Ukraine was bogged down in the global financial and economic crisis. The situation was aggravated by the aftermath of the so-called "second gas war" with Russia. The image of the country that had enjoyed the European Union's support for quite a long time was marred at that point. Notably, it was ordinary Europeans, people who were far from the gas intrigues but who had to freeze throughout the 2008/2009 winter, formed a negative opinion of Ukraine. Moreover, European officials, too, seemed to be sick and tired of Ukrainian domestic squabbles. In the heat of the moment, European Commission President Jose Manuel Barroso even called on European companies to launch litigations against those responsible for the gas crisis. Blinded by European romanticism, Kiev hoped for Europe's support. But despite Kiev’s expectations, Europe sided with neither of the parties in what concerned its energy security. Instead, it stayed aloof from the details of the Russian-Ukrainian gas confrontation and simply demanded that gas supplies be uninterrupted. Luckily, neither Kiev, nor Moscow had to stand trials at international courts of arbitration.
In February-March 2009, many experts predicted that the economic crisis would reach its peak, the Tymoshenko government would be sent to resignation and that Ukraine's entire political landscape would be reshaped. But it never happened. In any case, the situation around gas transportation via Ukraine demonstrated that Ukraine's oil and gas operator Naftogaz Ukrainy was even more opaque than the notorious RosUkrenergo and that Naftogaz was ripe for reforms. Both President Yushchenko, the then opposition Party of Regions and its leader Viktor Yanukovych were interested in reforming this company. Both did not want Tymoshenko to have financial flows in her hands in the run-up to the presidential elections.
Experts, who had forecasted a new round of confrontation between Yushchenko and Tymoshenko after the signing of the Russian-Ukrainian deals of January 19, 2009, turned out to be right. The prime minister hoped that the gas deals would help the cabinet mitigate first negative impacts after introducing European prices. According to Tymoshenko's design, Ukraine was to use gas from its own storage facilities throughout the first quarter of 2009. In the second quarter, gas prices were supposed to drop to give the government a possibility to replenish the reserves at much lower prices. Tymoshenko announced a price of $228 and in a bid to ground this price Naftogaz officially took a several day's break to "make final calculations." But soon, a source in the Ukrainian president's team "leaked" information that an average annual gas price for Ukraine would be $228.8 per 1,000 cubic meters. There are grounds to think that this price was politically motivated and had little in common with the real economic calculations. From a psychological point of view, it looked more acceptable than $360 fixed in the agreement, or even than $250 and $235 that had been negotiated previously.
Yushchenko was strongly against the gas contract signed Tymoshenko and Putin. His secretariat repeatedly came up with statements that this contract could be revised. Yushchenko's anti-Russian oratory was becoming louder. Touring European countries, he accused Russia and Russia's Gazprom literally of all deadly sins.
Apart from that, RosUrkrenergo tried to challenge Naftogaz's rights to the 11 billion cubic meters of gas, which had been pumped to the underground storage facilities and which Tymoshenko had proclaimed as a reserve to help Ukraine refrain from gas purchases from Gazprom for a long time. Advocating the interests of RosUkrenergo cost head of Ukraine's Customs Service Valeriy Khoroshkovsky his office after he said these gas reserves were the property of that company. Immediately after being fired by Tymoshenko, he went over to Yushchenko's team and was appointed First Deputy Director of the Ukrainian Security and Defence Service.
Experts predicted (and turned out to be right) that Tymoshenko would go on insisting on a privileged pricing regime in the following, 2010, year and would spare no effort to shape her public image as a winner capable of settling any problem with anyone, even the most unyielding partner, at a negotiating table.
It was absolutely obvious that Russia would never arrive at a positive agenda with Yushchenko. But it became likewise obvious that such an agenda with Tymoshenko was possible only on those issues that the Ukrainian prime minister considered as a tool helping her get into the presidential office.
Despite a chill in relations with Russia after she signed the Brussels agreement on the modernization of the Ukrainian gas transport system without Russia's participation, she seemed to go on hopping she would be able to change the situation and enroll the Kremlin support at the forthcoming presidential elections. By the way, according to experts, the BYuT suffered a crushing defeat at local elections in Ternopol just because Tymoshenko was reputed as a "friend of Putin." But even enjoying such a reputation, she was unable to maintain lasting and stable cooperation relations with Russia. So, she opted for a policy of temporary tactical deals but agreed to such deals only under the pressure of circumstances.
Besides, strategic issues, such as bringing the country out of the crisis, reviving and developing the economy, organizing smooth operation of the country's gas transport system were postponed to the presidential elections. Tymoshenko was probably sure she would have time to address these issues later and on her own terms.
But things turned out the other way - despite her expectations, shortly after the presidential elections Tymoshenko turned from a "judge" into "a suspect," from a "prosecutor" into an "offender."
Rounding up his speech at the plenary session of the Verkhovna Rada dedicated to the Tymoshenko government's report, I started this chapter with, Mykola Azarov summarized:
"Back in 2006, when we with Viktor Fyodorovich [Yanukovych] were taking over the duties from the previous government, the prime minister said at the first session: ‘Let us agree once and for all that we will never speak about the sins of our predecessors. Let us forget everything and go on working.’
But now the situation is (especially taking into account the personal traits of the outgoing person) that we will have to take a serious inventory, first of all in the financial sphere. We shall announce a tender to select literate and professional specialists and in five to six months we will have a complete analysis of all decisions that had been taken, all expenses that had been made, etc. After that, we shall report here, we shall report to the Ukrainian people and we shall decide what to do about it. This is necessary measure to teach a lesson to others. Only for these ends."
For the first time in years, Tymoshenko was laconic in her reply speech. For the first time in years, she was not attacking, she was defending, she was not accusing, she was making excuses. But all she was saying was a mere rehashing of her same old words, a kind of self-plagiary. Mythological rhetoric that used to inspire her supporters and help her win over the hearts of voters at this point seemed out of place. Her speech was filled with same old passages about "the moment of truth the country badly needs." And that "there is no gray color, there is black and there is white, there is struggle for Ukraine, for its independence , for sovereignty, for the happiness and prosperity of its people."
The white was obviously Yulia Tymoshenko and the BYuT, the "I" and the "We." ("I" "defended my country," "yielded results," "wage arrears were repaid," "barter deals were scrapped." And "We" "have saved social standards," "have strengthened the country's energy independence," "have saved and strengthened independence of our country," "have saved and strengthened its work and its service to the people," "have saved and multiplied everything that is our national identity, everything that is the essence of the life and the work of our state.")
The black, of course, was personified by Viktor Yanukovych and the Party of Regions. ("On the other hand, there is an anti-Ukrainian policy, which is accompanied by huge mega-corruption. Key threats are coming from Yanukovych. They are a threat of weakening the state's independence, a threat of the loss of territorial integrity, a threat to democracy, to the right of speech and to the strategic property of the state.")
The parliamentary elections ended in the resignation of the government, which was supported by 234 lawmakers, including the entire Communist faction, 19 members of Volodymyr Lytvyn's faction, 15 members of the Our Ukraine-People’s Self-Defence faction, three lawmakers non-affiliated with any faction and even seven members of the BYuT faction. The Tymoshenko government came out of existence on March 3, 2010.
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 Независимая газета. 2000. 27 июля.
 Хроники современной Украины. Указ. соч. С..325.
 Ведомости. 2000. 23 августа.
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 Кучма Л.Д. После Майдана: Записки президента. 2005-2006. Киев: Довира; Москва: Время, 2007. С.161.
 Ibid. P.239.
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 Украина без Кучмы. Указ. соч. С.46-49, 238-239.
 Кучма Л. Указ. соч. С.113-114.
 Ibid. P.147.
 Украина без Кучмы. Указ. соч. С.192.
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